Document:

EXHIBIT 4.1

     

    2005
      EQUITY INCENTIVE PLAN
OF

    INTERACTIVE
      TELEVISION NETWORKS, INC.

     

    
      
        	
                1.

              	
                PURPOSES
                  OF THE PLAN

              

      

       

      The
        purposes of the 2005 Equity Incentive Plan (“Plan”) of INTERACTIVE TELEVISION
        NETWORKS, INC., a Nevada corporation (the “Company”), are to:

       

      1.1 Encourage
        selected employees, directors, consultants and advisers to improve operations
        and increase the profitability of the Company;

       

      1.2 Encourage
        selected employees, directors, consultants and advisers to accept or continue
        employment or association with the Company or its Affiliates; and

       

      1.3 Increase
        the interest of selected employees, directors, consultants and advisers in
        the
        Company’s welfare through participation in the growth in value of the common
        stock of the Company, par value $.001 per share (the “Common
        Stock”).

       

      
        	
                2.

              	
                TYPES
                  OF AWARDS; ELIGIBLE
                  PERSONS

              

      

       

      2.1 The
        Administrator (as defined below) may, from time to time, take the following
        action, separately or in combination, under the Plan: (i) grant “incentive stock
        options” (“ISOs”) intended to satisfy the requirements of Section 422 of the
        Internal Revenue Code of 1986, as amended, and the regulations thereunder
        (the
“Code”); (ii) grant “non-qualified options” (“NQOs,” and together with ISOs,
“Options”); (iii) grant or sell Common Stock subject to restrictions
        (“restricted stock”) and (iv) grant stock appreciation rights (in general, the
        right to receive the excess of the fair market value of Common Stock on the
        exercise date over its fair market value on the grant date (“SARs”)), either in
        tandem with Options or as separate and independent grants. Any such awards
        may
        be made to employees, including employees who are officers or directors,
        and to
        individuals described in Section 1 of this Plan who the Administrator believes
        have made or will make a contribution to the Company or any Affiliate (as
        defined below); provided,
        however,
        that
        only a person who is an employee of the Company or any Affiliate at the date
        of
        the grant of an Option is eligible to receive ISOs under the plan. The term
        “Affiliate” as used in this Plan means a parent or subsidiary corporation as
        defined in the applicable provisions (currently Sections 424(e) and (f),
        respectively) of the Code. The term “employee” includes an officer or director
        who is an employee of the Company. The term “consultant” includes persons
        employed by, or otherwise affiliated with, a consultant. The term “adviser”
includes persons employed by, or otherwise affiliated with, an adviser.

       

      2.2 Except
        as
        otherwise expressly set forth in this Plan, no right or benefit under this
        Plan
        shall be subject in any manner to anticipation, alienation, hypothecation,
        or
        charge, and any such attempted action shall be void. No right or benefit
        under
        this Plan shall in any manner be liable for or subject to debts, contracts,
        liabilities, or torts of any option holder or any other person except as
        otherwise may be expressly required by applicable law.

       

      
        	
                3.

              	
                STOCK
                  SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF
                  GRANTS

              

      

       

      Subject
        to the provisions of Sections 6.1.1 and 8.2 of this Plan, the total number
        of
        shares of Common Stock which may be offered, or issued as restricted stock
        or on
        the exercise of Options or SARs under the Plan shall not exceed three million
        (3,000,000) shares of Common Stock. The shares subject to an Option or SAR
        granted under the Plan which expire, terminate or are cancelled unexercised
        shall become available again for grants under this Plan. If shares of restricted
        stock awarded under the Plan are forfeited to the Company or repurchased
        by the
        Company, the number of shares forfeited or repurchased shall again be available
        under the Plan. Where the exercise price of an Option is paid by means of
        the
        optionee’s surrender of previously owned shares of Common Stock or the Company’s
        withholding of shares otherwise issuable upon exercise of the Option as may
        be
        permitted herein, only the net number of shares issued and which remain
        outstanding in connection with such exercise shall be deemed “issued” and no
        longer available for issuance under this Plan. No eligible person shall be
        granted Options or other awards during any twelve-month period covering more
        than four hundred thousand (400,000) shares.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                4.

              	
                ADMINISTRATION

              

      

       

      4.1 This
        Plan
        shall be administered by the Board of Directors of the Company (the “Board”) or
        by a committee (the “Committee”) to which administration of this Plan, or of
        part of this Plan, is delegated by the Board (in either case, the
“Administrator”). The Board shall appoint and remove members of the Committee in
        its discretion in accordance with applicable laws. At the Board’s discretion,
        the Committee may be comprised solely of “non-employee directors” within the
        meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
        (the
“Exchange Act”), or “outside directors” within the meaning of Section 162(m) of
        the Code. The Administrator may delegate non-discretionary administrative
        duties
        to such employees of the Company as the Administrator deems proper and the
        Board, in its absolute discretion, may at any time and from time to time
        exercise any and all rights and duties of the Administrator under this
        Plan.

       

      4.2 Subject
        to the other provisions of this Plan, the Administrator shall have the
        authority, in its discretion: (i) to grant Options and SARs and grant or
        sell
        restricted stock; (ii) to determine the fair market value of the Common Stock
        subject to Options or other awards; (iii) to determine the exercise price
        of
        Options granted, the economic terms of SARs granted, or the offering price
        of
        restricted stock; (iv) to determine the persons to whom, and the time or
        times
        at which, Options or SARs shall be granted or restricted stock granted or
        sold,
        and the number of shares subject to each Option or SAR or the number of shares
        of restricted stock granted or sold; (v) to construe and interpret the terms
        and
        provisions of this Plan, of any applicable agreement and all Options and
        SARs
        granted under this Plan, and of any restricted stock award under this Plan;
        (vi)
        to prescribe, amend, and rescind rules and regulations relating to this Plan;
        (vii) to determine the terms and provisions of each Option and SAR granted
        and
        award of restricted stock (which need not be identical), including but not
        limited to, the time or times at which Options and SARs shall be exercisable
        or
        the time at which the restrictions on restricted stock shall lapse; (viii)
        with
        the consent of the grantee, to rescind any award or exercise of an Option
        or SAR
        and to modify or amend the terms of any Option, SAR or restricted stock;
        (ix) to
        reduce the exercise price of any Option, the base value from which appreciation
        is to be determined with respect to an SAR or the purchase price of restricted
        stock; (x) to accelerate or defer (with the consent of the grantee) the exercise
        date of any Option or SAR or the date on which the restrictions on restricted
        stock lapse; (xi) to issue shares of restricted stock to an optionee in
        connection with the accelerated exercise of an Option by such optionee; (xii)
        to
        authorize any person to execute on behalf of the Company any instrument
        evidencing the grant of an Option. SAR or award of restricted stock; (xiii)
        to
        determine the duration and purposes of leaves of absence which may be granted
        to
        participants without constituting a termination of their employment for the
        purposes of the Plan; and (xiv) to make all other determinations deemed
        necessary or advisable for the administration of this Plan, any applicable
        agreement, Option, SAR or award of restricted stock.

       

      4.3 All
        questions of interpretation, implementation, and application of this Plan
        or any
        agreement or Option, SAR or award of restricted stock shall be determined
        by the
        Administrator, which determination shall be final and binding on all
        persons.

       

      
        	
                5.

              	
                GRANTING
                  OF OPTIONS AND SARS;
                  AGREEMENTS

              

      

       

      5.1 No
        Options or SARs shall be granted under this Plan after ten (10) years from
        the
        date of adoption of this Plan by the Board.

       

      5.2 Each
        Option and SAR shall be evidenced by a written agreement, in form satisfactory
        to the Administrator, executed by the Company and the person to whom such
        grant
        is made. In the event of a conflict between the terms or conditions of an
        agreement and the terms and conditions of this Plan, the terms and conditions
        of
        this Plan shall govern.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      5.3 Each
        agreement shall specify whether the Option it evidences is an NQO or an ISO,
        provided,
        however,
        all
        Options granted under this Plan to non-employee directors, consultants and
        advisers of the Company are intended to be NQOs.

       

      5.4 Subject
        to Section 6.3.3 with respect to ISOs, the Administrator may approve the
        grant
        of Options or SARs under this Plan to persons who are expected to become
        employees, directors, consultants or advisers of the Company, but are not
        employees, directors, consultants or advisers at the date of
        approval.

       

      
        	
                6.

              	
                TERMS
AND CONDITIONS OF OPTIONS AND
SARS 

              

      

       

      Each
        Option and SAR granted under this Plan shall be subject to the terms and
        conditions set forth in Section 6.1. NQOs and SARs shall also be subject
        to the
        terms and conditions set forth in Section 6.2, but not those set forth in
        Section 6.3. ISOs shall also be subject to the terms and conditions set forth
        in
        Section 6.3, but not those set forth in Section 6.2. SARs shall be subject
        to
        the terms and conditions of Section 6.4.

       

      6.1 Terms
        and Conditions to Which All Options and SARs Are Subject. All Options and
        SARs granted under this Plan shall be subject to the following terms and
        conditions:

       

      6.1.1 Changes
        in Capital Structure.
        Subject
        to Section 6.1.2, if the stock of the Company is changed by reason of a stock
        split, reverse stock split, stock dividend, recapitalization, combination
        or
        reclassification, or if the Company effects a spin-off of the Company’s
        subsidiary, appropriate adjustments shall be made by the Administrator, in
        its
        sole discretion, in (a) the number and class of shares of stock subject to
        this
        Plan and each Option and SAR outstanding under this Plan, and (b) the exercise
        price of each outstanding Option; provided,
        that
        the Company shall not be required to issue fractional shares as a result
        of any
        such adjustments. Any adjustment, however, in an outstanding Option shall
        be
        made without change in the total price applicable to the unexercised portion
        of
        the Option but with a corresponding adjustment in the price for each share
        covered by the unexercised portion of the Option. Adjustments under this
        Section
        6.1.1 shall be made by the Administrator, whose determination as to the nature
        of the adjustments that shall be made, and the extent thereof, shall be final,
        binding, and conclusive. If an adjustment under this Section 6.1.1 would
        result
        in a fractional share interest under an option or any installment, the
        Administrator’s decision as to inclusion or exclusion of that fractional share
        interest shall be final, but no fractional shares of stock shall be issued
        under
        the Plan on account of any such adjustment.

       

      6.1.2 Corporate
        Transactions.
        Except
        as otherwise provided in the applicable agreement, in the event of a Corporate
        Transaction (as defined below), the Administrator shall notify each holder
        of an
        Option or SAR at least thirty (30) days prior thereto or as soon as may be
        practicable. To the extent not then exercised all Options and SARs shall
        terminate immediately prior to the consummation of such Corporate Transaction
        unless the Administrator determines otherwise in its sole discretion;
provided.
        however,
        that
        the Administrator, in its sole discretion, may (i) permit exercise of any
        Options or SARs prior to their termination, even if such Options or SARs
        would
        not otherwise have been exercisable, and/or (ii) provide that all or certain
        of
        the outstanding Options and SARs shall be assumed or an equivalent Option
        or SAR
        substituted by an applicable successor corporation or entity or any Affiliate
        of
        the successor corporation or entity. A “Corporate Transaction” means (i) a
        liquidation or dissolution of the Company; (ii) a merger or consolidation
        of the
        Company with or into another corporation or entity (other than a merger with
        a
        wholly-owned subsidiary); (iii) a sale of all or substantially all of the
        assets
        of the Company; or (iv) a purchase or other acquisition of more than 50%
        of the
        outstanding stock of the Company by one person or by more than one person
        acting
        in concert.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      6.1.3 Time
        of Option or SAR Exercise.
        Subject
        to Section 5 and Section 6.3.4, an Option or SAR granted under the Plan shall
        be
        exercisable (a) immediately as of the effective date of the applicable agreement
        or (b) in accordance with a schedule or performance criteria as may be set
        by
        the Administrator and specified in the applicable agreement. However, in
        no case
        may an Option or SAR be exercisable until a written agreement in form and
        substance satisfactory to the Company is executed by the Company and the
        grantee.

       

      6.1.4 Grant
        Date.
        The
        date of grant of an Option or SAR under the Plan shall be the effective date
        of
        the applicable agreement.

       

      6.1.5 Non-Transferability
        of Rights.
        Except
        with the express written approval of the Administrator, which approval the
        Administrator is authorized to give only with respect to NQOs and SARs, no
        Option or SAR granted under this Plan shall be assignable or otherwise
        transferable by the grantee except by will or by the laws of descent and
        distribution. During the life of the grantee, an Option or SAR shall be
        exercisable only by the grantee.

       

      6.1.6 Payment.
        Except
        as provided below, payment in full, in cash, shall be made for all stock
        purchased at the time written notice of exercise of an Option is given to
        the
        Company and the proceeds of any payment shall be considered general funds
        of the
        Company. The Administrator, in the exercise of its absolute discretion after
        considering any tax, accounting and financial consequences, may authorize
        any
        one or more of the following additional methods of payment:

       

      (a) Subject
        to the Sarbanes-Oxley Act of 2002, acceptance of the optionee’s full recourse
        promissory note for all or part of the Option price, payable on such terms
        and
        bearing such interest rate as determined by the Administrator (but in no
        event
        less than the minimum interest rate specified under the Code at which no
        additional interest or original issue discount would be imputed), which
        promissory note may be either secured or unsecured in such manner as the
        Administrator shall approve (including, without limitation, by a security
        interest in the shares of the Company);

       

      (b) Subject
        to the discretion of the Administrator and the terms of the stock option
        agreement granting the Option, delivery by the optionee of shares of Common
        Stock already owned by the optionee for all or part of the Option price,
        provided the fair market value (determined as set forth in Section 6.1.9)
        of
        such shares of Common Stock is equal on the date of exercise to the Option
        price, or such portion thereof as the optionee is authorized to pay by delivery
        of such stock; 

       

      (c) Subject
        to the discretion of the Administrator, through the surrender of shares of
        Common Stock then issuable upon exercise of the Option, provided the fair
        market
        value (determined as set forth in Section 6.1.9) of such shares of Common
        Stock
        is equal on the date of exercise to the Option price, or such portion thereof
        as
        the optionee is authorized to pay by surrender of such stock; and

       

      (d) By
        means
        of so-called cashless exercises as permitted under applicable rules and
        regulations of the Securities and Exchange Commission and the Federal Reserve
        Board.

       

      6.1.7 Withholding
        and Employment Taxes.
        At the
        time of exercise and as a condition thereto, or at such other time as the
        amount
        of such obligation becomes determinable, the grantee of an Option or SAR
        shall
        remit to the Company in cash all applicable federal and state withholding
        and
        employment taxes. Such obligation to remit may be satisfied, if authorized
        by
        the Administrator in its sole discretion, after considering any tax, accounting
        and financial consequences, by the holder’s (i) delivery of a promissory note in
        the required amount on such terms as the Administrator deems appropriate,
        (ii)
        tendering to the Company previously owned shares of Common Stock or other
        securities of the Company with a fair market value equal to the required
        amount,
        or (iii) agreeing to have shares of Common Stock (with a fair market value
        equal
        to the required amount), which are acquired upon exercise of the Option or
        SAR,
        withheld by the Company.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      6.1.8 Other
        Provisions.
        Each
        Option and SAR granted under this Plan may contain such other terms, provisions,
        and conditions not inconsistent with this Plan as may be determined by the
        Administrator, and each ISO granted under this Plan shall include such
        provisions and conditions as are necessary to qualify the Option as an
“incentive stock option” within the meaning of Section 422 of the
        Code.

       

      6.1.9 Determination
        of Value.
        For
        purposes of this Plan, the fair market value of Common Stock or other securities
        of the Company shall be determined as follows:

       

      (a) If
        the
        stock of the Company is listed on a securities exchange or is regularly quoted
        by a recognized securities dealer, and selling prices are reported, its fair
        market value shall be the closing price of such stock on the date the value
        is
        to be determined, but if selling prices are not reported, its fair market
        value
        shall be the mean between the high bid and low asked prices for such stock
        on
        the date the value is to be determined (or if there are no quoted prices
        for the
        date of grant, then for the last preceding business day on which there were
        quoted prices).

       

      (b) In
        the
        absence of an established market for the stock, the fair market value thereof
        shall be determined in good faith by the Administrator, with reference to
        the
        Company’s net worth, prospective earning power, dividend-paying capacity, and
        other relevant factors, including the goodwill of the Company, the economic
        outlook in the Company’s industry, the Company’s position in the industry, the
        Company’s management, and the values of stock of other corporations in the same
        or a similar line of business.

       

      6.1.10 Option
        and SAR Term.
        No
        Option or SAR shall be exercisable more than 10 years after the date of grant,
        or such lesser period of time as is set forth in the applicable agreement
        (the
        end of the maximum exercise period stated in the agreement is referred to
        in
        this Plan as the “Expiration Date”).

       

      6.2 Terms
        and Conditions to Which Only NQOs Are Subject.
        Options
        granted under this Plan which are designated as NQOs shall be subject to
        the
        following terms and conditions:

       

      6.2.1 Exercise
        Price.
        The
        exercise price of an NQO shall be no less than the fair market value of the
        Common Stock on the date of grant.

       

      6.2.2 Termination
        of Employment.
        Except
        as otherwise provided in the applicable agreement, if for any reason a grantee
        ceases to be employed by the Company or any of its Affiliates, Options that
        are
        NQOs and SARs held at the date of termination (to the extent then exercisable)
        may be exercised in whole or in part at any time within ninety (90) days
        of the
        date of such termination (but in no event after the Expiration Date). For
        purposes of this Section 6.2.2, “employment” includes service as a director,
        consultant or adviser. For purposes of this Section 6.2.2, a grantee’s
        employment shall not be deemed to terminate by reason of the grantee’s transfer
        from the Company to an Affiliate, or vice versa, or sick leave, military
        leave
        or other leave of absence approved by the Administrator, if the period of
        any
        such leave does not exceed ninety (90) days or, if longer, if the grantee’s
        right to reemployment by the Company or any Affiliate is guaranteed either
        contractually or by statute.

       

      6.3 Terms
        and Conditions to Which Only ISOs Are Subject.
        Options
        granted under this Plan which are designated as ISOs shall be subject to
        the
        following terms and conditions:

       

      6.3.1 Exercise
        Price.
        The
        exercise price of an ISO shall not be less than the fair market value
        (determined in accordance with Section 6.1.9) of the stock covered by the
        Option
        at the time the Option is granted. The exercise price of an ISO granted to
        any
        person who owns, directly or by attribution under the Code (currently Section
        424(d)), stock possessing more than ten percent (10%) of the total combined
        voting power of all classes of stock of the Company or of any Affiliate (a
“Ten
        Percent Stockholder”) shall in no event be less than one hundred ten percent
        (110%) of the fair market value (determined in accordance with Section 6.1.9)
        of
        the stock covered by the Option at the time the Option is granted.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      6.3.2 Disqualifying
        Dispositions.
        If
        stock acquired by exercise of an ISO granted pursuant to this Plan is disposed
        of in a “disqualifying disposition” within the meaning of Section 422 of the
        Code (a disposition within two (2) years from the date of grant of the Option
        or
        within one year after the issuance of such stock on exercise of the Option),
        the
        holder of the stock immediately before the disposition shall promptly notify
        the
        Company in writing of the date and terms of the disposition and shall provide
        such other information regarding the Option as the Company may reasonably
        require.

       

      6.3.3 Grant
        Date.
        If an
        ISO is granted in anticipation of employment as provided in Section 5.4,
        the
        Option shall be deemed granted, without further approval, on the date the
        grantee assumes the employment relationship forming the basis for such grant,
        and, in addition, satisfies all requirements of this Plan for Options granted
        on
        that date.

       

      6.3.4 Term.
        Notwithstanding Section 6.1.10, no ISO granted to any Ten Percent Stockholder
        shall be exercisable more than five (5) years after the date of
        grant.

       

      6.3.5 Termination
        of Employment.
        Except
        as otherwise provided in the stock option agreement, if for any reason an
        optionee ceases to be employed by the Company or any of its Affiliates, Options
        that are ISOs held at the date of termination (to the extent then exercisable)
        may be exercised in whole or in part at any time within ninety (90) days
        of the
        date of such termination (but in no event after the Expiration Date). For
        purposes of this Section 6.3.5, an optionee’s employment shall not be deemed to
        terminate by reason of the optionee’s transfer from the Company to an Affiliate,
        or vice versa, or sick leave, military leave or other leave of absence approved
        by the Administrator, if the period of any such leave does not exceed ninety
        (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.

       

      6.4 Terms
        and Conditions Applicable Solely to SARs.
        In
        addition to the other terms and conditions applicable to SARs in this Section
        6,
        the holder shall be entitled to receive on exercise of an SAR only Common
        Stock
        at a fair market value equal to the benefit to be received by the
        exercise.

       

      
        	
                7.

              	
                MANNER
                  OF EXERCISE

              

      

       

      7.1 An
        optionee wishing to exercise an Option or SAR shall give written notice to
        the
        Company at its principal executive office, to the attention of the officer
        of
        the Company designated by the Administrator, accompanied by payment of the
        exercise price and/or withholding taxes as provided in Sections 6.1.6 and
        6.1.7.
        The date the Company receives written notice of an exercise hereunder
        accompanied by the applicable payment will be considered as the date such
        Option
        or SAR was exercised.

       

      7.2 Promptly
        after receipt of written notice of exercise and the applicable payments called
        for by Section 7.1, the Company shall, without stock issue or transfer taxes
        to
        the holder or other person entitled to exercise the Option or SAR, deliver
        to
        the holder or such other person a certificate or certificates for the requisite
        number of shares of Common Stock. A holder or permitted transferee of an
        Option
        or SAR shall not have any privileges as a stockholder with respect to any
        shares
        of Common Stock to be issued until the date of issuance (as evidenced by
        the
        appropriate entry on the books of the Company or a duly authorized transfer
        agent) of such shares.

       

      
        	
                8.

              	
                RESTRICTED
                  STOCK

              

      

       

      8.1 Grant
        or
        Sale of Restricted Stock. 

       

      8.1.1 No
        awards
        of restricted stock shall be granted under this Plan after ten (10) years
        from
        the date of adoption of this Plan by the Board.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      8.1.2 The
        Administrator may issue shares under the Plan as a grant or for such
        consideration (including services, and, subject to the Sarbanes-Oxley Act
        of
        2002, promissory notes) as determined by the Administrator. Shares issued
        under
        the Plan shall be subject to the terms, conditions and restrictions determined
        by the Administrator. The restrictions may include restrictions concerning
        transferability, repurchase by the Company and forfeiture of the shares issued,
        together with such other restrictions as may be determined by the Administrator.
        If shares are subject to forfeiture or repurchase by the Company, all dividends
        or other distributions paid by the Company with respect to the shares may
        be
        retained by the Company until the shares are no longer subject to forfeiture
        or
        repurchase, at which time all accumulated amounts shall be paid to the
        recipient. All Common Stock issued pursuant to this Section 8 shall be subject
        to a purchase or grant agreement, which shall be executed by the Company
        and the
        prospective recipient of the shares prior to the delivery of certificates
        representing such shares to the recipient. The purchase or grant agreement
        may
        contain any terms, conditions, restrictions, representations and warranties
        required by the Administrator. The certificates representing the shares shall
        bear any legends required by the Administrator. The Administrator may require
        any purchaser of restricted stock to pay to the Company in cash upon demand
        amounts necessary to satisfy any applicable federal, state or local tax
        withholding requirements. If the purchaser fails to pay the amount demanded,
        the
        Administrator may withhold that amount from other amounts payable by the
        Company
        to the purchaser, including salary, subject to applicable law. With the consent
        of the Administrator in its sole discretion, a purchaser may deliver Common
        Stock to the Company to satisfy this withholding obligation. Upon the issuance
        of restricted stock, the number of shares reserved for issuance under the
        Plan
        shall be reduced by the number of shares issued. 

       

      8.2 Changes
        in Capital Structure.
        In the
        event of a change in the Company’s capital structure, as described in Section
        6.1.1, appropriate adjustments shall be made by the Administrator, in its
        sole
        discretion, in the number and class of restricted stock subject to this Plan
        and
        the restricted stock outstanding under this Plan; provided,
        however,
        that
        the Company shall not be required to issue fractional shares as a result
        of any
        such adjustments.

       

      8.3 Corporate
        Transactions.
        In the
        event of a Corporate Transaction, as defined in Section 6.1.2 hereof, to
        the
        extent not previously forfeited, all restricted stock shall be forfeited
        immediately prior to the consummation of such Corporate Transaction unless
        the
        Administrator determines otherwise in its sole discretion; provided,
        however,
        that
        the Administrator, in its sole discretion, may remove any restrictions as
        to any
        restricted stock. The Administrator may, in its sole discretion, provide
        that
        all outstanding restricted stock participate in the Corporate Transaction
        with
        an equivalent stock substituted by an applicable successor corporation subject
        to the restriction.

       

      
        	
                9.

              	
                EMPLOYMENT
                  OR CONSULTING
                  RELATIONSHIP

              

      

       

      Nothing
        in this Plan or any Option granted hereunder shall interfere with or limit
        in
        any way the right of the Company or of any of its Affiliates to terminate
        the
        employment, consulting or advising of any optionee or restricted stock holder
        at
        any time, nor confer upon any optionee or restricted stock holder any right
        to
        continue in the employ of, or consult or advise with, the Company or any
        of its
        Affiliates.

       

      
        	
                10.

              	
                CONDITIONS
                  UPON ISSUANCE OF
                  SHARES

              

      

       

      10.1 Securities
        Act.
        Shares
        of Common Stock shall not be issued pursuant to the exercise of an Option
        or the
        receipt of restricted stock unless the exercise of such Option or such receipt
        of restricted stock and the issuance and delivery of such shares pursuant
        thereto shall comply with all relevant provisions of law, including, without
        limitation, the Securities Act of 1933, as amended (the “Securities
        Act”).

       

      10.2 Non-Compete
        Agreement.
        As a
        further condition to the receipt of Common Stock pursuant to the exercise
        of an
        Option or the receipt of restricted stock, the optionee or recipient of
        restricted stock may be required not to render services for any organization,
        or
        engage directly or indirectly in any business, competitive with the Company
        at
        any time during which (i) an Option is outstanding to such Optionee and for
        six
        (6) months after any exercise of an Option or the receipt of Common Stock
        pursuant to the exercise of an Option and (ii) restricted stock is owned
        by such
        recipient and for six (6) months after the restrictions on such restricted
        stock
        lapse. Failure to comply with this condition shall cause such Option and
        the
        exercise or issuance of shares thereunder and/or the award of restricted
        stock
        to be rescinded and the benefit of such exercise, issuance or award to be
        repaid
        to the Company.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                11.

              	
                NON-EXCLUSIVITY
                  OF THIS PLAN

              

      

       

      The
        adoption of this Plan shall not be construed as creating any limitations
        on the
        power of the Company to adopt such other incentive arrangements as it may
        deem
        desirable, including, without limitation, the granting of stock options other
        than under this Plan.

       

      
        	
                12.

              	
                MARKET
                  STAND-OFF

              

      

       

      Each
        optionee, holder of an SAR or recipient of restricted stock, if so requested
        by
        the Company or any representative of the underwriters in connection with
        any
        registration of the offering of any securities of the Company under the
        Securities Act, shall not sell or otherwise transfer any shares of Common
        Stock
        acquired upon exercise of Options, SARs or receipt of restricted stock during
        the 180-day period following the effective date of a registration statement
        of
        the Company filed under the Securities Act; provided,
        however,
        that
        such restriction shall apply only to a registration statement of the Company
        which includes securities to be sold on behalf of the Company to the public
        in
        an underwritten public offering under the Securities Act and the restriction
        period shall not exceed 90 days after the registration statement becomes
        effective.

       

      
        	
                13.

              	
                AMENDMENTS
                  TO PLAN

              

      

       

      The
        Board
        may at any time amend, alter, suspend or discontinue this Plan. Without the
        consent of an optionee, holder of an SAR or holder of restricted stock, no
        amendment, alteration, suspension or discontinuance may adversely affect
        such
        person’s outstanding Option(s), SAR(s) or the terms applicable to restricted
        stock except to conform this Plan and ISOs granted under this Plan to the
        requirements of federal or other tax laws relating to incentive stock options.
        No amendment, alteration, suspension or discontinuance shall require stockholder
        approval unless (a) stockholder approval is required to preserve incentive
        stock
        option treatment for federal income tax purposes or (b) the Board otherwise
        concludes that stockholder approval is advisable.

       

      
        	
                14.

              	
                EFFECTIVE
                  DATE OF PLAN;
                  TERMINATION

              

      

       

      This
        Plan
        shall become effective upon adoption by the Board; provided,
        however,
        that no
        Option or SAR shall be exercisable unless and until written consent of the
        stockholders of the Company, or approval of stockholders of the Company voting
        at a validly called stockholders’ meeting, is obtained within twelve (12) months
        after adoption by the Board. If any Options or SARs are so granted and
        stockholder approval shall not have been obtained within twelve (12) months
        of
        the date of adoption of this Plan by the Board, such Options and SARs shall
        terminate retroactively as of the date they were granted. Awards may be made
        under this Plan and exercise of Options and SARs shall occur only after there
        has been compliance with all applicable federal and state securities laws.
        This
        Plan (but not Options and SARs previously granted under this Plan) shall
        terminate within ten (10) years from the date of its adoption by the Board.
        Termination shall not affect any outstanding Options or SARs or the terms
        applicable to previously awarded restricted stock.EX 10.1

    EXHIBIT
      10.1

     

    
      EMPLOYMENT
        AGREEMENT

       

      AGREEMENT
        ("Agreement")
        made this 27th day of December 2005 ("Effective Date"), by and between Positron
        Corporation (the "Company") and Joseph G. Oliverio ("Employee").

       

      RECITALS:

       

      WHEREAS,
        the Company is engaged in the business of manufacturing, research and
        development, sales and service of Positron Emission Tomography (PET) products
        and technologies;

       

      WHEREAS,
        the Company wishes to employ Employee as an Employee upon the terms hereinafter
        set forth; and

       

      WHEREAS,
        Employee wishes to be so employed by the Company.

       

      AGREEMENT:

       

      NOW,
        THEREFORE, in consideration of the premises and the mutual covenants and
        agreements herein contained, the Company and Employee agree as
        follows:

       

      1.    Employment/Duties:
        The
        Company hereby agrees to employ Employee, and Employee hereby agrees to serve,
        subject to the provisions of this Agreement, as President of the Company.
        Employee shall perform such duties and responsibilities as are from time
        to time
        assigned to Employee by the Chairman of the Board of Directors of the Company
        and shall report directly to the Chairman of the Board. Such duties and
        responsibilities shall include full authority (i) to shape and implement
        the strategic business plan of the Company; (ii) to direct the development
        and monitoring of operating goals and objectives; (iii) to oversee
        financial operations and (iv) to provide leadership, direction and
        administration of all aspects of Company activities, in all cases subject
        to the
        supervision and authority of the Company's Board of Directors. Employee agrees
        to devote sufficient attention and energies to the performance of the duties
        assigned to him hereunder, and to perform such duties faithfully and to the
        best
        of his abilities and subject to such laws, rules, regulations and policies
        from
        time to time applicable to the Company's employees to the best of his knowledge.
        Without limiting the generality of the foregoing, Employee shall perform
        the
        duties associated with the position of President.

       

      During
        the Term of this Agreement, including any renewals hereof, Employee shall
        be a
        voting member of the Board of Directors of the Company and entitled to such
        compensation as may be provided by the Company to Board members,

       

      Upon
        consultation with the Board of Directors of the Company, Employee may serve
        on
        the boards or committees of corporate, civic or charitable organizations
        so long
        as such activities do not interfere materially with the performance of his
        duties and responsibilities hereunder. Additionally, Employee shall be permitted
        to act and serve as an officer, director, general partner, equity owner,
        or
        other principal or fiduciary of other entities or ventures, whether related
        or
        unrelated to the Company, provided such activities are not in direct competition
        with the Company and do not interfere materially with the performance of
        his
        duties and responsibilities hereunder.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Company
        shall provide suitable office space and equipment, and mutually agreeable
        office
        personnel, including without limitation, personal secretarial and other
        assistance, at the offices of the Company, to enable Employee to perform
        his
        duties hereunder, Employee shall perform the services required hereunder
        at
        offices currently located at Niagara Falls, New York, and at such other mutually
        agreeable Company sites, except for required travel in furtherance of Company
        business.

       

      2.    Term:
        The
        term of this Agreement shall be for a period of two (2) years commencing
        on the
        Effective Date and ending on December 27, 2007 (the "Initial Term"), unless
        terminated sooner pursuant to Section 7 of this Agreement. Thereafter the
        Agreement is subject to automatic renewals of two (2) successive one year
        periods (each a "Renewal Term" and collectively with the Initial Term, the
        "Term") unless Employee or Company notifies the other in writing of its election
        not to renew, such notice to be provided not less than ninety (90) days prior
        to
        the end of the Initial Term or the end of any Renewal Term. 

       

      3.    Compensation:

       

      (a)    Base
        Compensation:
        For the
        services of the Employee to be rendered under this Agreement the Company
        shall
        pay Employee an initial base salary ("Base Compensation") of One Hundred
        Thousand Dollars ($100,000.00) on a pro-rated basis according to the Company's
        payroll schedule and subject to applicable withholdings and other payroll
        deductions. However, effective as of March 1, 2006 the Company shall pay
        the
        Employee Base Compensation of One Hundred Fifty Thousand Dollars ($150,000.00.),
        payable on a pro-rated basis according to the Company's payroll schedule
        and
        subject to applicable withholdings and other payroll deductions. The Company's
        Board of Directors will in good faith review Employee's performance and Base
        Compensation every six (6) months. The Base Compensation may be increased
        from
        time to time upon review by and within the sole and absolute discretion of
        the
        Board of Directors of the Company.

       

      (b)    Stock
        Options.
        The
        Company shall grant to Employee an option to purchase 7,500,000 shares of
        the
        Company's common stock (as adjusted for stock splits, combinations and the
        like), at a price of $0.05 per share, determined by the Board of Directors
        to be
        the fair market value of such shares on the Effective Date. The option shall
        be
        granted pursuant to the Company's 2005 Stock Incentive Plan. Such options
        shall
        vest 2,000,000 of the shares subject to the option on the Effective Date,
        2,000,000 shares on December 27, 2006 and 3,500,000 on December 27, 2007.
        The
        other terms and conditions of the Option shall be set forth in a stock option
        agreement in the form customarily utilized by the Company for the grant of
        options to similarly situated executives. 

       

      (c)    Other
        Benefits.
        Subject
        to the terms of the plans, Employee will be eligible to receive such other
        benefits or rights as may be provided under any employee benefit plans provided
        by the Company to its executives that are now or hereafter will be in effect,
        including participation in life, medical, disability and dental insurance
        plans,
        vacation and sick leave, expense reimbursement and long-term incentive plans.
        Notwithstanding anything to the contrary set forth in this Agreement, any
        restricted stock awards, stock options or other equity incentives of the
        Company
        (including, without limitation, those outstanding at the time of termination
        of
        employment with the Company) shall be subject to the terms set forth in such
        long-term incentive plans, as such plan may be in effect from time to time,
        and
        in any restricted stock award, stock option or other agreements (including,
        without limitation, those provisions relating to vesting, exercisability,
        forefeitability), as may be entered into between Employee and the Company
        pursuant to such long-term incentive plans. Employee shall be entitled to
        such
        paid holidays as are provided to the Company's employees generally.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      (d)    Compensation
        in Event of Disability.
        In the
        event Employee is not able to perform his duties as a result of personal
        injury,
        disability or illness, Employee shall be eligible to receive as a disability
        wage continuation payment from Company the percentage of Employee's Base
        Compensation than in effect in accordance with the following schedule: 100%
        thereof for the first three months of disability; 75% thereof for the next
        three
        months of disability; 50% thereof for the next three months of disability;
        and
        25% thereof for the next three months of disability ("Disability
        Compensation").

       

      In
        the
        event of such disability, there shall be offset against Employee's Disability
        Compensation (i) the proceeds of any disability insurance which the Company
        may provide, (ii) the proceeds of any disability insurance received as New
        York State Disability insurance benefits; and (iii) Social Security
        Disability Benefits.

       

      For
        the
        purposes of this Agreement, Employee shall be deemed to be "Disabled" or
        have a
        "Disability" if, because of Employee's personal injury, disability or illness,
        he has been substantially unable to perform his duties hereunder for sixty
        (60)
        days in any one hundred eighty (180) day period. Employee shall be considered
        to
        have been substantially unable to perform his duties hereunder only if he
        is
        either (i) unable to reasonably and effectively carry out his duties with
        reasonable accommodations by the Company or (ii) unable to reasonably and
        effectively carry out his duties because any reasonable accommodation which
        may
        be required would cause the Company undue hardship.

       

      The
        determination as to whether and when the Employee has suffered a personal
        injury, disability or illness so as to bring into effect the provisions of
        Section 3(c) or Section 7(4) of this Agreement shall be made by a
        physician mutually agreed upon by the Company and the Employee. Should they
        be
        unable to agree on a physician, the Company and the Employee shall each
        designate a physician specializing in the area of Employee's disability who
        together shall designate a third physician similarly qualified. The three
        physicians then shall make the determination regarding the Employee's condition
        with the opinion of the majority final and binding on the parties.

       

      When
        the
        disabled Employee returns to work after exhausting his disability benefits
        hereunder, he shall not again be entitled to the full disability benefits
        provided for in this Section 3(c) unless and until he has returned to work
        for a period of at least two (2) consecutive years. Notwithstanding the
        foregoing, if the disabled Employee again becomes disabled after he has returned
        to work for a period of at least twelve (12) consecutive months, he shall
        be
        entitled to receive additional Disability Compensation at a reduced level
        of
        benefits in accordance with the following schedule: 50% of Employee's Base
        Compensation then in effect for the first three months of the second period
        of
        disability; 25% thereof for the next three months of disability; and 121⁄2%
        thereof for the next three months of disability.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      In
        the
        event the disabled Employee returns to work without having exhausted his
        disability benefits hereunder, and again becomes disabled within twelve (12)
        months after returning to work, Employee shall be entitled to receive his
        remaining, unused disability benefits hereunder during the second period
        of
        disability. Thereafter, he shall not again be entitled to the full disability
        benefits provided for in this Section 3(c) unless and until he has returned
        to work for a period of at least two (2) consecutive years..

       

      4.    Vacation:
        Employee shall be entitled to receive (i) three (3) weeks paid vacation
        time per year for the first year of employment under this Agreement and
        (ii) four (4) weeks paid vacation time thereafter. Any vacation time which
        remains unused at the end of a year of employment may be carried over to
        a
        succeeding year. Upon expiration or termination of this Agreement, Employee
        shall receive a cash payment in lieu of the unused vacation time.

       

      5.    Business
        Expenses:
        The
        Company will reimburse or advance Employee promptly for his reasonable and
        documented out-of-pocket business expenses for travel, meals and similar
        items
        incurred in connection with the performance of Employee's duties, and which
        are
        consistent with the Company's general policies in effect regarding the
        reimbursement of business expenses as the Company may from time to time
        establish. All payments for reimbursement of such expenses shall be made
        to the
        Employee only upon the presentation to the Company of appropriate vouchers
        or
        receipts.

       

      6.    Confidentiality,
        Non-Competition:

       

      (a)    Employee
        acknowledges that: (1) the Company's industry is intensely competitive and
        that Employee's employment by the Company will require that Employee have
        access
        to and knowledge of confidential information of the Company, including, but
        not
        limited to, the identity of the Company's customers, the identity of the
        representatives of customers with whom the Company has dealt, the kinds of
        services provided by the Company to customers and offered to be performed
        for
        potential customers, the manner in which such services are performed or offered
        to be performed, the service needs of actual or prospective customers, pricing
        information, information concerning the creation, acquisition or disposition
        of
        products and services, customer maintenance listings, computer software
        applications and other programs, personnel information and, other trade secrets
        (the "Confidential Information"); and (2) the engaging by Employee in any
        of the activities prohibited by this Section 6 may constitute improper
        appropriation and/or use of such information and trade secrets. Employee
        expressly acknowledges the trade secret status of the Confidential Information
        and that the Confidential Information constitutes a protected business interest
        of the Company. Accordingly, the Company and Employee agree as
        follows:

       

      (b)    For
        purposes of this Section 6, the Company shall be construed to include the
        Company and its parents, subsidiaries and affiliates directly engaged in
        or
        involved with the business of manufacturing, research and development, sales
        and
        service of PET products and technologies, including any divisions managed
        by
        Employee.

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

      (c)    During
        the Term of this Agreement and at all times after the termination of Employee's
        employment by expiration of the Term or otherwise, Employee shall not, without
        the Company's written consent, directly or indirectly, whether individually,
        as
        a director, stockholder, owner, partner, employee, principal or agent of
        any
        business, or in any other capacity, make known, disclose furnish, make available
        or utilize any of the Confidential Information, not generally available to
        the
        public, other than in the proper performance of the duties contemplated herein,
        or as required by a court of competent jurisdiction or other administrative
        or
        legislative body; provided that, prior to disclosing any of the Confidential
        Information to a court or other administrative or legislative body, Employee
        shall promptly notify the Company so that the Company may seek a protective
        order or other appropriate remedy. Employee agrees to return all Confidential
        Information, including all photocopies, extracts and summaries thereof, and
        any
        such information stored electronically on tapes, computer disks or in any
        other
        manner to the Company at any time upon request by the Company and upon the
        termination of his employment for any reason.

       

      (d)    For
        a
        period of one (1) year after he ceases to be employed hereunder by the Company,
        whether upon expiration of the Term or otherwise, Employee agrees that he
        will
        not, without the Company's written consent, directly or indirectly, for his
        benefit or for the benefit of any other person, firm or entity, do any of
        the
        following:

       

      (i)    Solicit,
        from any customer doing business with the Company as of Employee's termination,
        business of the same or of a similar nature to the business of the Company
        with
        such customer;

       

      (ii)    Solicit
        from any known potential customer of the Company business of the same or
        of a
        similar nature to that which has been the subject of a known written or oral
        bid, offer or proposal by the Company, or of substantial preparation with
        a view
        to making such a bid, proposal or offer, within three (3) months prior to
        Employee's termination;

       

      (iii)    Solicit
        the employment or services of, or hire, any person who was known to be employed
        by or was a known employee to the Company upon the termination of Employee's
        employment, or within three (3) months prior thereto; or

       

      (iv)    Otherwise
        interfere with the business accounts of the Company.

       

      (e)    Employee
        further acknowledges and agrees that due to the uniqueness of his services
        and
        confidential nature of the information he will possess, the covenants set
        forth
        herein are reasonable and necessary for the protection of the business and
        goodwill of the Company.

       

      7.    Termination:

       

      (a)    Termination
        of Employment With Cause:
        In
        addition to any other remedies available to the Company at law, in equity
        or as
        set forth in this Agreement, the Company shall have the right, upon written
        notice to Employee, to terminate his employment hereunder without any further
        liability or obligation to him in respect of his employment (other than its
        obligation to pay Base Compensation and vacation time accrued but unpaid
        as of
        the date of termination and reimbursement of expenses incurred prior to the
        date
        of termination in accordance with Section 3(b) above) if Employee:
        (i) breaches any material provision of this Agreement; or (ii) has
        committed an act of gross misconduct in connection with the performance of
        his
        duties hereunder, as determined in good faith by the Board of Directors of
        the
        Company; or (iii) demonstrates habitual negligence in the performance of
        his duties, as determined by the Board of Directors of the Company; or
        (iv) is convicted of or pleads nolo contendere to any felony; or
        (v) is convicted of or pleads nolo contendere to any misdemeanor involving
        moral turpitude and the conduct underlying such misdemeanor has an adverse
        or
        detrimental effect on the Company, its reputation, or its business, as
        determined by the Board of Directors of the Company; or (vi) has committed
        any act of fraud, misappropriation of funds or embezzlement in connection
        with
        his employment hereunder (a "Termination With Cause").

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

      Notwithstanding
        the foregoing, no purported Termination With Cause pursuant to (i), (ii)
        or
        (iii) of this Section 7(a) shall be effective unless all of the following
        provisions shall have been complied with: (x) Employee shall be given
        written notice by the Board of Directors of the Company of the intention
        to
        effect a Termination With Cause, such notice to state in detail the particular
        circumstances that constitute the grounds on which the proposed Termination
        With
        Cause is based; and (y) Employee shall have ten (10) business days after
        receiving such notice in which to cure such grounds, to the extent such cure
        is
        possible, as determined in the sole discretion of the Board of Directors
        of the
        Company.

       

      (b)    Termination
        of Employment Without Cause:
        The
        Company may at any time, in its sole discretion, terminate the employment
        of
        Employee hereunder for any reason (other than those set forth in
        Section 7(a) above) upon written notice (the "Termination Notice") to
        Employee (a "Termination Without Cause"). In such event, the Company shall
        pay
        Employee an amount equal to the sum of the following:

       

      
        	 	
                (i)

              	
                any
                  Base Compensation and vacation time accrued but unpaid as of the
                  date of
                  termination;

              

      

       

      
        	 	
                (ii)

              	
                subject
                  to Section 7(1) below, an amount (the "Severance Payment") equal to
                  Employee's monthly Base Compensation in effect on the date of termination
                  for six (6) months payable as and when such amounts would have
                  been due
                  and payable hereunder had such termination not occurred (the "Severance
                  Period");

              

      

       

      
        	 	
                (iii)

              	
                any
                  portion of stock options that has become vested on or before the
                  date of
                  such termination or shall become vested on or before the end of
                  the
                  calendar year of such termination shall be exercisable in accordance
                  with
                  the terms of the applicable plan, and all unvested shares shall
                  terminate;
                  and 

              

      

       

      
        	 	
                (iv)

              	
                any
                  reimbursement for expenses incurred in accordance with
                  Section 5.

              

      

       

      Employee
        acknowledges that the payments and benefits referred to in both
        Section 3(b) and this Section 7, together with any rights or benefits
        under any written plan or agreement which have vested on or prior to the
        termination date of Employee's employment under this Section 7, constitute
        the only payments which Employee shall be entitled to receive from the Company
        hereunder in the event of any termination of his employment pursuant to this
        Section 7, and the Company shall have no further liability or obligation to
        him hereunder or otherwise in respect of his employment.

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

       

      (c)    Termination
        of Employment With Good Reason:
        In
        addition to any other remedies available to Employee at law, in equity or
        as set
        forth in this Agreement, Employee shall have the right during the Term, upon
        written notice to the Company, to terminate his employment hereunder upon
        the
        occurrence of any of the following events without the prior written consent
        of
        Employee: (a) a reduction in Employee's then current Base Compensation; or
        (b) a breach by the Company of any material provision of this Agreement (a
        "Termination With Good Reason").

       

      Notwithstanding
        the foregoing, no purported Termination With Good Reason pursuant to this
        Section 7(c) shall be effective unless all of the following provisions
        shall have been complied with: (i) the Company shall be given written
        notice by Employee of the intention to effect a Termination With Good Reason,
        such notice to state in detail the particular circumstances that constitute
        the
        grounds on which the proposed Termination With Good Reason is based and to
        be
        given no later than ninety (90) days after Employee first learns of such
        circumstances; and (ii) the Company shall have fifteen (15) days after
        receiving such notice in which to cure such grounds, to the extent such cure
        is
        possible.

       

      In
        the
        event that a Termination With Good Reason occurs, then, subject to
        Section 7(f) below, Employee shall have the same entitlement to the amounts
        and benefits as provided under Section 7(b) for a Termination Without
        Cause.

       

      Employee
        acknowledges that the payments and benefits referred to in both
        Section 3(b) and this Section 7, together with any rights or benefits
        under any written plan or agreement which have vested on or prior to the
        termination date of Employee's employment under this Section 7(c),
        constitute the only payments which Employee shall be entitled to receive
        from
        the Company hereunder in the event of any termination of his employment pursuant
        to this Section 7(c), and the Company shall have no further liability or
        obligation to him hereunder or otherwise in respect of his
        employment

       

      (d)    Death;
        Disability:
        In the
        event that Employee dies or becomes Disabled (as defined herein) during the
        Term, Employee's employment shall terminate when such death or Disability
        occurs
        and the Company shall pay Employee (or his legal representative, as the case
        may
        be) as follows:

       

      
        	 	
                (i)

              	
                any
                  Base Compensation and vacation time accrued but unpaid as of the
                  date of
                  death or termination for
                  Disability;

              

      

       

      
        	 	
                (ii)

              	
                any
                  reimbursement for expenses incurred in accordance with
                  Section 3(b);

              

      

       

      
        	 	
                (iii)

              	
                any
                  portion of stock options that has become vested on or before the
                  date of
                  such termination shall be exercisable in accordance with the terms
                  of the
                  applicable plan, and all unvested shares shall terminate;
                  and

              

      

       

      
        	 	
                (iv)

              	
                an
                  amount equal to Employee's monthly base Compensation in effect
                  on such
                  termination date for six (6) months, payable as and when such amounts
                  would have been due and payable hereunder had such termination
                  not
                  occurred.

              

      

       

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

       

      Notwithstanding
        the foregoing, to the extent and for the period required by any state or
        federal
        family and medical leave law, upon Employee's request (i) he shall be
        considered to be on unpaid leave of absence and not terminated, (ii) his
        group health benefits shall remain in full force and effect, and (iii) if
        Employee recovers from any such Disability, at that time, to the extent required
        by any state or federal family and medical leave law, upon Employee's request,
        he shall be restored to his position hereunder or to an equivalent position,
        as
        the Company may determine, and the Term of Employee's employment hereunder
        shall
        be reinstated effective upon such restoration. The Term shall not be extended
        by
        reason of such intervening leave of absence or termination, nor shall any
        compensation or benefits accrue in excess of those required by law during
        such
        intervening leave of absence or termination. Upon the expiration of any such
        rights, unless Employee has been restored to a position with the Company,
        he
        shall thereupon be considered terminated.

       

      Employee
        acknowledges that the payments referred to in both Section 3(b) and this
        Section 7(d) together with any rights or benefits under any written plan or
        agreement which have vested on or prior to the termination date of Employee's
        employment under this Section 7(d), constitute the only payments which
        Employee (or his legal representative, as the case may be) shall be entitled
        to
        receive from the Company hereunder in the event of a termination of his
        employment for death or Disability, and the Company shall have no further
        liability or obligation to him (or his legal representatives, as the case
        may
        be) hereunder or otherwise in respect of his employment.

       

      (e)    No
        Mitigation by Employee.
        Except
        as otherwise expressly provided herein, Employee shall not be required to
        mitigate the amount of any payment provided for in this Agreement by seeking
        other employment or otherwise, nor shall the amount of any payment provided
        for
        herein be reduced by any compensation earned by Employee as the result of
        employment by another employer.

       

      (f)    Severance
        Agreement and Release.
        In the
        event that Employee incurs a termination of employment pursuant to (i) a
        Termination Without Cause (as defined in Section 7(b) above), or
        (ii) a Termination With Good Reason (as defined in Section 7(c)
        above), payment by the Company of the amounts described in said sections
        shall
        be subject to the execution by Employee of the Company's standard severance
        agreement and release (the "Release"), a copy of which is attached hereto
        as
        Exhibit "A" and made a part hereof.

       

      The
        Release shall be delivered to Employee, in the case of a Termination Without
        Cause, at the time of delivery of the Termination Notice, and, in the case
        of a
        Termination With Good Reason, upon delivery of written notice by the Employee
        to
        the Company. Employee shall have a period of thirty (30) days after the
        effective date of termination of this Agreement (the "Consideration Period")
        in
        which to execute and return the original, signed Release to the Company.
        If
        Employee delivers the original, signed Release to the Company prior to the
        expiration of the Consideration Period, then the Severance Period shall be
        deemed to have commenced as of the first day of the Consideration Period
        and
        Employee shall be entitled to the amounts and benefits set forth in
        Section 7(b) or 7(c), as the case may be.

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

       

      If
        Employee does not deliver the original, signed Release to the Company prior
        to
        the expiration of the Consideration Period, then:

       

      
        	 	
                (i)

              	
                the
                  Company shall pay Employee an amount equal to the sum of (i) any Base
                  Compensation and vacation time accrued but unpaid as of the date
                  of
                  termination, plus (ii) any reimbursement for expenses incurred in
                  accordance with Section 3(b);

              

      

       

      
        	 	
                (ii)

              	
                the
                  Company shall have no obligation to (i) pay to Employee the Severance
                  Payment (as that term is defined in Section 7(b)(ii) above;
                  and

              

      

       

      
        	 	
                (iii)

              	
                any
                  portion of stock options that has become vested on or before the
                  date of
                  such termination shall be exercisable in accordance with the terms
                  of the
                  applicable plan, and all unvested shares shall
                  terminate.

              

      

       

      (g)    Continued
        Compliance.
        Employee and the Company hereby acknowledge that the amounts or benefits
        payable
        by the Company under Sections 7(b)(ii), 7(c), and 7(d)(iv) are part of the
        consideration for Employee's undertakings under Article V below. Such amounts
        and benefits are subject to Employee's continued compliance with the provisions
        of Sections 6, 8 and 9 hereof, If Employee violates the provisions of such
        Sections, then the Company will have no obligation to make any of the payments
        that remain payable by the Company under Sections 7(b)(ii), 7(c), and
        7(d)(iv) on or after the date of such violation.

       

      8.    Ownership
        of Company Property:

       

      (a)    All
        Confidential Information shall be the sole property of the Company and its
        assigns, and the Company and its assigns shall be the sole owner of all patents,
        copyrights and other rights in connection therewith, including but not limited
        to the right to make application for statutory protection. Employee hereby
        assigns to the Company any rights be may have or acquire in such Confidential
        Information. The parties hereto acknowledge that for the purpose of this
        subparagraph, the term "Confidential Information" does not include
        (i) information in the public domain not as a result of a breach of this
        Agreement, and (ii) information received by Employee at a time when
        Employee is no longer employed by the Company from a third party who is not
        subject to any confidentiality or nondisclosure obligation to the Company
        either
        by contract or operation of law.

       

      (b)    (i)    Employee
        will
        promptly disclose to the Company, or any persons designated by it, all
        improvements, inventions, designs, ideas, works of authorship, copyrightable
        works, discoveries, trademarks, copyrights, trade secrets, formulas, processes,
        techniques, know-how, source code and data, whether or not patentable, made
        or
        conceived or reduced to practice or learned by Employee, during the period
        and
        normal course of his employment (whether or not during normal working hours,
        and
        whether or not at the Company's premises) which are related to the Business
        of
        the Company, or result from tasks assigned Employee by the Company or result
        from use of premises or equipment owned, leased or contracted for by the
        Company
        (all of the foregoing shall be collectively herein called "Inventions");
        and
        (ii) Employee hereby assigns to the Company any rights he may have or
        acquire is all Inventions, and agrees that all Inventions shall be the sole
        property of the Company and its assigns, and the Company and its assigns
        shall
        be the sole owner of all patents, copyrights and other rights in connection
        therewith. Employee further agrees to assist the Company, as requested by
        the
        Company, and at no cost or expense to the Employee (and with compensation
        to be
        mutually agreed by the parties, acting reasonably if the Employee is no longer
        employed with the Company), to obtain and from time to time enforce patents,
        copyrights or other rights in said Inventions in any and all
        countries.

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

       

      9.    Return
        of Company Property:
        Employee agrees that following the termination of his employment for any
        reason,
        he shall return all property of the Company, its subsidiaries, affiliates
        and
        any divisions thereof he may have managed which is then in or thereafter
        comes
        into his possession, including, but not limited to, documents, contracts,
        agreements, plans, photographs, books, notes, electronically stored data
        and all
        copies of the foregoing as well as any automobile or other materials or
        equipment supplied by the Company to Employee.

       

      10.    Each
        Party, the Drafter:
        This
        Agreement and the provisions contained in it shall not be construed or
        interpreted for or against any party to this Agreement because that party
        drafted or caused that party's legal representative to draft any of its
        provisions.

       

      11.    Waiver:
        The
        failure of either party to this Agreement to enforce any of its terms,
        provisions or covenants shall not be construed as a waiver of the same or
        of the
        right of such party to enforce the same. Waiver by either party hereto of
        any
        breach or default by the other party of any term or provision of this Agreement
        shall not operate as a waiver of any other breach or default

       

      12.    Severability:
        In the
        event that any one or more of the provisions of this Agreement shall be held
        to
        be invalid, illegal or unenforceable, the validity, legality and enforceability
        of the remainder of the Agreement shall not in any way be affected or impaired
        thereby. Moreover, if any one or more of the provisions contained in this
        Agreement shall be held to be excessively broad as to duration, activity
        or
        subject, such provisions shall be construed by limiting and reducing them
        so as
        to be enforceable to the maximum extent allowed by applicable law.

       

      13.    Entire
        Agreement:
        The
        provisions contained herein (including any schedules, exhibits and documents
        delivered herewith or attached hereto) constitute the entire agreement between
        the parties hereto with respect to the subject matter hereof and supersede
        and
        replace any and all previous agreements between the parties, whether written
        or
        oral with respect to such subject matter.

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

       

      14.    Independent
        Counsel:
        Employee and the Company each acknowledge that each of them has had the
        opportunity to seek independent legal counsel in connection with entering
        into
        this Agreement, and has either done so or has voluntarily chosen not
        to.

       

      15.    Notices:
        Any
        notice given hereunder shall be in writing and shall be deemed to have been
        given when delivered by messenger or courier service (against appropriate
        receipt), or mailed by registered or certified mail (return receipt requested),
        addressed as follows:

       

      If
        to the
        Company:

      Positron
        Corporation

      1304
        Langham Creek Dr. #300

      Houston,
        TX 77084

      If
        to
        Employee:

      Joseph
        O.
        Oliverio

      631
        Morgan Dr.

      Lewiston,
        N.Y. 14092

      With
        a
        copy to:

      Hurwitz
        & Fine, P.C.

      1300
        Liberty Building

      Buffalo,
        New York 14202

      Attention:
        Robert P. Fine, Esq.

       

      Or
        at
        such other address as shall be indicated to either party in writing. Notice
        of
        change of address shall be effective only upon receipt.

       

      16.    Governing
        Law:
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of Texas, without regard to its conflict of law rules.

       

      17.    Descriptive
        Headings:
        The
        paragraph headings contained herein are for reference purposes only and shall
        not in any way affect the meaning or interpretation of this
        Agreement.

       

      18.    Counterparts:
        This
        Agreement may be executed in one or more counterparts, which, together, shall
        constitute one and the same agreement.

       

      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
        first written above.

      
        	 	 
	 	 
	
                POSITRON
                  CORPORATION

              	 
	 	 
	 	 
	
                By:  
                  /s/ Patrick G. Rooney

                
                  

                

                Patrick
                  G. Rooney

                Chairman
                  of the Board

              	
                /s/
                  Joseph G. Oliverio 
                  

                

                Joseph
                  G. Oliverio

              

      

       

      

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

      EXHIBIT
        "A"

      

      SEVERANCE
        AGREEMENT AND RELEASE

       

      Employee
        hereby agrees to end his relationship with Positron Corporation (the "Company")
        on the following basis:

       

      1.    In
        reliance on such representations and releases in this Agreement, Employee's
        relationship with the Company will end effective ________, _____ and he will
        be
        paid the amounts set forth in Section 7 of his Employment Agreement dated
        December 27, 2005. 

       

      2.    Employee
        represents that he is signing this Agreement voluntarily and with a full
        understanding of and agreement with its terms, for the purpose of receiving
        additional pay and benefits from the Company beyond that provided by normal
        Company policy. 

       

      3.    Employee
        agrees that he is not entitled to receive, and will not claim, any right,
        benefit, or compensation other than what is expressly set forth in this
        Agreement, and hereby expressly waives any claim to any compensation, benefit,
        or payment which is not expressly referenced in this Agreement.

       

      4.    In
        consideration of this Agreement, Employee agrees to forever waive, release
        and
        discharge the Company, and each of its affiliated or related entities,
        organizations, corporations, shareholders, owners, directors, officers,
        employees, representatives, agents, attorneys, successors and assigns
        (collectively, "Released Parties") from any and all known and/or unknown
        claims,
        complaints, actions, grievances, controversies, disputes, suits, charges
        of
        discrimination or harassment, contracts or agreements of any nature whatsoever
        which you ever had, now have or may claim to have as of the moment you sign
        this
        Agreement, including but not limited to (a) any claim arising out of your
        relationship with the Company or the cessation of that relationship,
        (b) any claims for violations of the Texas Labor Code, claims for
        additional compensation, wages, salary, commissions, bonuses, expenses or
        benefits of any kind, or any additional claims with the Division of Labor
        Standards Enforcement, (c) any common law actions or torts, and/or
        (d) any federal, state or governmental constitution, statute, regulation or
        ordinance, including but not limited to, Title VII of the Civil Rights Act
        of
        1964 and the Age Discrimination in Employment Act. You are not waiving rights
        to
        claims that may arise after you enter into this Agreement.

       

      5.    In
        exchange for the additional pay and benefits provided in Paragraph 1, Employee
        agrees to refrain from making any disparaging or unfavorable comments, in
        writing or orally, about the Company, including but not limited to press
        releases, communication with employees, vendors, customers, professional
        references, and others.

       

      6.    This
        Release shall be governed by the substantive law of the State of Texas. In
        the
        event of any dispute concerning the validity, interpretation, enforcement
        or
        breach of this Release or in any way related to Employee's employment or
        termination of employment, the dispute shall be resolved by arbitration within
        the County of Houston, Texas, in accordance with the then existing rules
        for
        employment arbitration of the American Arbitration Association, and judgment
        upon any arbitration award may be entered by any state or federal court having
        jurisdiction thereof. The Arbitrator's decision in any such arbitration shall
        be
        final and binding on the parties. Employee intends that this arbitration
        provision to be valid, enforceable, irrevocable and construed as broadly
        as
        possible. The prevailing party in such arbitration shall recover its reasonable
        costs and attorneys' fees.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      7.    Employee
        will have twenty-one (21) days to consider this Agreement, although he may
        sign
        it sooner than that if Employee so desires. Employee may also retain the
        right
        to revoke the Agreement at any time during the seven (7) day period following
        execution of the Agreement. The Agreement will not become effective or
        enforceable until such seven (7) day period has expired ("Effective
        Date").

       

      8.    Employee
        agrees that the terms of this Agreement are confidential and he will not
        disclose to any other person any information contained herein with the exception
        of his tax and legal advisors and his immediate family. Employee acknowledges
        that he continues to be bound by the terms of confidentiality, non-competition
        and non-solicitation as stated in Section 6 of the Employment Agreement with
        the
        Company dated December 27, 2005.

       

      9.    By
        signing below Employee acknowledges that (i) he has carefully read and
        considered the matters set forth in this Agreement, (ii) understands the
        terms
        of this Agreement, (iii) has had a sufficient opportunity to review this
        Agreement, and (iv) is signing this Agreement voluntarily for the purpose
        of
        receiving additional compensation beyond that provided by normal Company
        policy.

       

      10.    Nothing
        contained in this Agreement or the fact that Employee has signed this Agreement
        shall be considered an admission of any liability whatsoever.

       

      I
        HAVE
        READ THIS RELEASE THOROUGHLY, UNDERSTAND ITS TERMS AND HAVE SIGNED IT KNOWINGLY
        AND VOLUNTARILY. I UNDERSTAND THAT THIS RELEASE IS A LEGAL DOCUMENT AND WILL
        HAVE LEGAL CONSEQUENCES.

      

       

      I
        AGREE
        TO THE ABOVE:

      

      __________________________________

      (Employee
        Signature)

      __________________________________

      (Print
        Name)

      _______________________

      (Date)

      
        	 	 	 	 
	
                A-2

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