Document:

Amended and Restated 2004 Non-Employee Directors' Stock Incentive Plan

 Exhibit 10(aa) 
 PARKER-HANNIFIN CORPORATION 
 AMENDED & RESTATED 
 2004 NON-EMPLOYEE DIRECTORS’ STOCK INCENTIVE PLAN 
  

	1.	Purpose 

 The 2004 Non-Employee
Directors’ Stock Incentive Plan is intended to help maintain and develop focused leadership and governance through ownership of Shares of the Corporation by non-employee directors of the Corporation. 
  

	2.	Definitions 

 In this Plan, except where the
context otherwise indicates, the following definitions apply: 
  

	 	(a)	“Award” means a Stock Option, a Stock Appreciation Right, Restricted Stock, or a Dividend Equivalent Right. 

  

	 	(b)	“Board” means the Board of Directors of the Corporation. 

  

	 	(c)	“Change in Control” means the occurrence of one of the following events: 

  

	 	(i)	any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 20% or more of the combined voting power of the Corporation’s then outstanding securities
eligible to vote for the election of the Board (“Corporation Voting Securities”); provided, however, that the event described in this paragraph shall not be deemed to be a Change in Control by virtue of any of the following situations:
(A) an acquisition by the Corporation or any Subsidiary; (B) an acquisition by any employee benefit plan sponsored or maintained by the Corporation or any Subsidiary; (C) an acquisition by any underwriter temporarily holding
securities pursuant to an offering of such securities; (D) a Non-Control Transaction (as defined in paragraph (iii)); (E) as pertains to an individual Grantee, any acquisition by the Grantee or any group of persons (within the meaning of
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) including the Grantee (or any entity in which the Grantee or a group of persons including the Grantee, directly or indirectly, holds a majority of the voting power of such entity’s outstanding
voting interests); or (F) the acquisition of Corporation Voting Securities from the Corporation, if a majority of the Board approves a resolution providing expressly that the acquisition pursuant to this clause (F) does not constitute a
Change in Control under this paragraph (i); 

  

	 	(ii)	 individuals who, at the beginning of any period of twenty-four (24) consecutive months, constitute the Board (the “Incumbent Board”) cease for any
reason to 

  

 - 1 - 

	 	 
constitute at least a majority thereof; provided, that (A) any person becoming a director subsequent to the beginning of such twenty-four
(24) month period, whose election, or nomination for election, by the Corporation’s shareholders was approved by a vote of at least two-thirds of the directors comprising the Incumbent Board who are then on the Board (either by a specific
vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without objection to such nomination) shall be, for purposes of this paragraph (ii), considered as though such person were a
member of the Incumbent Board; provided, however, that no individual initially elected or nominated as a director of the Corporation as a result of an actual or threatened election contest with respect to directors or any other actual or threatened
solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be a member of the Incumbent Board; 

  

	 	(iii)	the consummation of a merger, consolidation, share exchange or similar form of corporate reorganization of the Corporation or any Subsidiary that requires the approval of the
Corporation’s stockholders, whether for such transaction or the issuance of securities in connection with the transaction or otherwise (a “Business Combination”), unless (A) immediately following such Business Combination:
(1) more than 50% of the total voting power of the corporation resulting from such Business Combination (the “Surviving Corporation”) or, if applicable, the ultimate parent corporation which directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Corporation Voting Securities that were outstanding immediately prior to the Business
Combination (or, if applicable, shares into which such Corporation Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power
of such Corporation Voting Securities among the holders thereof immediately prior to the Business Combination, (2) no person (other than any employee benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation)
is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation), and (3) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation), following the Business Combination, were members of the Incumbent
Board at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (a “Non-Control Transaction”) or (B) the Business Combination is effected by means of the acquisition of
Corporation Voting Securities from the Corporation, and a majority of the Board approves a resolution providing expressly that such Business Combination does not constitute a Change in Control under this paragraph (iii); or 

 

 - 2 - 

	 	(iv)	the stockholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or the sale or other disposition of all or substantially all of the
assets of the Corporation and its Subsidiaries. 

 Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any person acquires beneficial ownership of more than 20% of the Corporation Voting Securities as a result of the acquisition of Corporation Voting Securities by the Corporation which, by reducing the number of Corporation
Voting Securities outstanding, increases the percentage of shares beneficially owned by such person; provided, that if a Change in Control would occur as a result of such an acquisition by the Corporation (if not for the operation of this sentence),
and after the Corporation’s acquisition such person becomes the beneficial owner of additional Corporation Voting Securities that increases the percentage of outstanding Corporation Voting Securities beneficially owned by such person, a Change
in Control shall then occur. 
  

	 	(b)	“Code” means the Internal Revenue Code and the regulations promulgated thereunder, as in effect from time to time. 

  

	 	(c)	“Compensation and Management Development Committee” or “Committee” means the committee of the Board so designated. The Committee will be constituted in a manner
that satisfies all applicable legal requirements, including satisfying any independence standard contained in the listing requirements of the New York Stock Exchange. 

  

	 	(d)	“Corporation” means Parker-Hannifin Corporation, an Ohio corporation. 

  

	 	(e)	“Designated Beneficiary” means the person designated by the Grantee of an Award hereunder to be entitled, on the death of the Grantee, to any remaining rights arising out
of such Award. Such designation must be made in writing and in accordance with such regulations as the Committee may establish. 

  

	 	(f)	“Detrimental Activity” means activity that is determined in individual cases, by the Committee or its express delegate, to be detrimental to the interests of the
Corporation or a Subsidiary, including without limitation (i) the rendering of services to an organization, or engaging in a business, that is, in the judgment of the Committee or its express delegate, in competition with the Corporation;
(ii) the disclosure to anyone outside of the Corporation, or the use for any purpose other than the Corporation’s business, of confidential information or material related to the Corporation, whether acquired by the Grantee during or after
service with the Corporation; (iii) fraud, embezzlement, theft-in-office or other illegal activity; or (iv) a violation of the Corporation’s Code of Ethics. 

  

	 	(g)	“Dividend Equivalent Right,” herein sometimes called a “DER,” means the right of the Grantee thereof to receive, pursuant to the terms of the DER, credits based
on the cash dividends that would be paid on the Shares specified in the DER if such shares were held by the grantee, as more particularly set forth in Section 10(a) below. 

  

	 	(h)	“Eligible Director” means a Director who is not an employee of the Corporation. 

  

 - 3 - 

	 	(i)	“Director” means a member of the Board of Directors of the Corporation. 

  

	 	(j)	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. 

  

	 	(k)	“Fair Market Value” in relation to a Share as of any specific time shall mean, except as otherwise provided pursuant to Section 7(a) and 8(a), the closing price as
reported for the New York Stock Exchange—Composite Transactions on such date, or if no shares are traded on that date, the next preceding date on which trading occurred. 

  

	 	(l)	“Grantee” means a recipient of an Award under this Plan. 

  

	 	(m)	“Restricted Stock” means any Share issued with the restriction that the Grantee may not sell, transfer, pledge, or assign such Share and such other restrictions (which may
include, but are not limited to, restrictions on the right to vote or receive dividends) which may expire separately or in combination, at one time or in installments, all as specified by the Award. 

  

	 	(n)	“Rule 16b-3” means Rule 16b-3 (or any successor thereto) under the Exchange Act that exempts from Section 16(b) of the Exchange Act transactions under employee
benefit plans, as in effect from time to time with respect to this Plan. 

  

	 	(o)	“Share” means a common share, par value $.50, of the Corporation issued and reacquired by the Corporation or previously authorized but unissued. 

 

	 	(p)	“Stock Appreciation Right,” herein sometimes called an “SAR,” means the right of the Grantee thereof to receive, pursuant to the terms of the SAR, a number of
Shares or cash or a combination of Shares and cash, based on the increase in the value of the number of Shares specified in the SAR, as more particularly set forth in Section 8 below. 

  

	 	(q)	“Stock Option” means the right of the Grantee thereof to acquire a number of Shares upon payment to the Corporation of the exercise price specified in the Award.

  

	 	(r)	“Subsidiary” means any corporation, partnership, or other entity in which the Corporation, directly or indirectly, owns a 50 percent or greater equity interest.

  

	 	(s)	“Terminate” or “Termination” means cease to be a Director, except by death. 

  

	 	(t)	“1996 Plan” means the Corporation’s 1996 Non-Employee Directors’ Stock Option Plan. 

  

	3.	Eligibility 

 The selection of Eligible
Directors to receive Awards will be within the discretion of the Committee. More than one Award may be granted to the same Eligible Director. 
  

 - 4 - 

	4.	Administration 

  

	 	(a)	The Committee shall administer this Plan. The Committee will, subject to the terms of the Plan, have the authority to (i) select the Eligible Directors who will receive Awards;
(ii) grant Awards; (iii) determine the number and types of Awards to be granted to Directors; (iv) subject to the terms of the Plan, determine the terms, conditions, vesting periods and restrictions applicable to Awards;
(v) adopt, alter and repeal administrative rules and practices governing this Plan; (vi) interpret the terms and provisions of this Plan and any Awards granted under this Plan; (vii) prescribe the forms of any notices of Awards or
other instruments relating to Awards; and (viii) otherwise supervise the administration of this Plan. All decisions by the Committee will be made with the approval of not less than a majority of its members. 

  

	 	(b)	All determinations and interpretations pursuant to the provisions of this Plan shall be binding and conclusive upon the individual Director involved and all persons claiming under
them. 

  

	 	(c)	Transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3. To the extent any provision of this Plan or any action by the Committee under this
Plan fails to so comply, such provision or action shall, without further action by any person, be deemed to be automatically amended to the extent necessary to effect compliance with Rule 16b-3, provided that if such provision or action cannot be
amended to effect such compliance, such provision or action shall be deemed null and void, to the extent permitted by law and deemed advisable by the appropriate authority. Each Award to a Director under this Plan shall be deemed issued subject to
the foregoing qualification. 

  

	 	(d)	Except as otherwise determined by the Committee, an Award under this Plan is not transferable other than by will or the laws of descent and distribution and is not subject, in whole
or in part, to attachment, execution, or levy of any kind. 

  

	 	(e)	Any rights with respect to an Award granted under this Plan existing after the Grantee dies are exercisable by the Grantee’s Designated Beneficiary or, if there is no such
Designated Beneficiary who may, and does, lawfully do so, by the Grantee’s personal representative. 

  

	 	(f)	Except as otherwise provided herein, a particular form of Award may be granted to an Eligible Director either alone or in addition to other Awards hereunder. The provisions of
particular forms of Award need not be the same with respect to each recipient. 

  

	 	(g)	 To the extent permitted by law, the Committee may delegate any of its authority to any other person or persons that it deems appropriate, provided the delegation
does not cause the Plan or any Awards granted under this Plan to fail to qualify for the exemption 

  

 - 5 - 

	 	 
provided by Rule 16b-3 or violate any independence standard contained in the New York Stock Exchange listing requirements. 

  

	 	(h)	This Plan and all action taken under it shall be governed by the laws of the State of Ohio without giving effect to the principles of conflict of laws thereof.

  

	 	(i)	The Committee may permit or require any Grantee to exercise any Stock Options or SARs by means of electronic signature. 

  

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

  

	5.	Awards That May Be Granted 

  

	 	(a)	The aggregate number of Shares that may be delivered (i) upon the exercise of a Stock Option or SAR; (ii) as Restricted Stock and released from a substantial risk of
forfeiture thereof; or (iii) in payment of DERs, subject to adjustment as provided in the Plan, is 250,000 (increased to 375,000 as of 10/1/07 stock split pursuant to adjustments provided in Section 6). 

  

	 	(b)	To the extent that Shares subject to an outstanding Award are not delivered to a Grantee by reason of the expiration, termination, cancellation or forfeiture of such Award or by
reason of the tendering or withholding of Shares to satisfy all or a portion the tax withholding obligations relating to an Award, then such Shares shall not be deemed to have been delivered for purposes of determining the maximum number of Shares
available for delivery under the Plan. If the exercise price of any Stock Option granted under the Plan is satisfied by tendering Shares (by actual delivery or attestation), only the number of shares issued to the participant net of the Shares
tendered shall be deemed to be delivered for purposes of determining the maximum number of Shares available for delivery under the Plan. When an unexercised Award lapses, expires, terminates or is forfeited, the related Shares may be available for
distribution in connection with future Awards. If the benefit provided by any Award is paid in cash, any Shares covered by the Award will be available for distribution in connection with future Awards. 

  

	 	(c)	The assumption of Awards granted by an organization acquired by the Corporation, or the grant of Awards under this Plan in substitution for any such Awards, will not reduce the
number of Shares available for the grant of Awards under this Plan. 

  

	6.	Adjustments 

 In the event that the Committee
shall determine that any (a) stock dividend, stock split, combination of Shares, recapitalization or other change in the capital structure of the Corporation, or (b) merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of assets, issuance of rights or warrants to purchase securities, or (c) other corporate transaction or event having an effect similar to any of 

  

 - 6 - 

 
the foregoing affects the Shares of the Corporation such that an adjustment is required in order to preserve the benefits or potential benefits intended to
be made available under this Plan, then the Committee shall, in its sole discretion, and in such manner as the Committee may deem equitable, adjust any or all of (i) the number and kind of Shares which thereafter may be the subject of Awards
under this Plan, (ii) the number and kind of Shares subject to outstanding Awards, and (iii) the exercise price with respect to any of the foregoing. Moreover, in the event of any such transaction or event, the Committee, in its
discretion, may provide in substitution for any or all outstanding Awards under this Plan such alternative consideration as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender
of all Awards so replaced. 
  

	7.	Stock Options 

  

	 	(a)	One or more Stock Options may be granted to any Eligible Director. Each Stock Option so granted shall be subject to such terms and conditions as the Committee shall impose. The
exercise price per Share shall be specified by the Award, but shall in no instance be less than 100 percent of Fair Market Value at the time of the Award. Payment of the exercise price shall be made in cash, Shares, or other consideration, or any
combination thereof, in accordance with the terms of this Plan and any applicable regulations of the Committee in effect at the time and valued at Fair Market Value on the date of exercise of the Stock Option. Fair Market Value on exercise shall be
determined pursuant to administrative rules established by the Committee from time to time in accordance with applicable law. All Stock Options granted hereunder shall have a maximum life of no more than ten (10) years from the date of issuance
of the Award. In no event shall any Stock Option vest sooner than one (1) year from date of issuance of the Award except in the event of a Change in Control. 

  

	 	(b)	The Committee shall not adjust or amend the exercise price of Stock Options previously awarded to any Grantee, whether through amendment, cancellation and replacement grant, or any
other means. 

  

	 	(c)	The Committee may grant reload Stock Options, separately or together with another Stock Option, pursuant to which, subject to the terms and conditions established by the Committee,
the Grantee would be granted a new Stock Option when the payment of the exercise price of a previously granted Stock Option is made by the delivery of Shares owned by the Grantee, which new Stock Option would be an option to purchase the number of
Shares not exceeding the number of Shares so provided as consideration upon the exercise of the previously granted Stock Option to which such reload Stock Option relates. Reload Stock Options may be granted with respect to Stock Options previously
granted under the Plan or any other Stock Option plan of the Corporation. Reload Stock Options shall have a per Share exercise price equal to the Fair Market Value as of the date of grant of the reload Stock Option. Any Reload Option shall be
subject to availability of sufficient Shares for grant under the Plan. 

  

	8.	Stock Appreciation Rights 

  

 - 7 - 

	 	(a)	An SAR may be granted to an Eligible Director as a separate Award hereunder. Any SAR shall be subject to such terms and conditions as the Committee shall impose, which shall include
provisions that (i) such SAR shall entitle the Grantee, upon exercise thereof in accordance with such SAR and the regulations of the Committee, to receive from the Corporation that number of Shares having an aggregate value equal to the excess
of the Fair Market Value at the time of exercise of such SAR, of one Share over the exercise price per Share specified by the Award of such SAR (which shall in no instance be less than 100 percent of Fair Market Value at the time of the Award) times
the number of Shares specified in such SAR, or portion thereof, which is so exercised. The Fair Market Value at exercise shall be determined pursuant to administrative rules established by the Committee from time to time in accordance with
applicable law. 

  

	 	(b)	Any Stock Option granted under this Plan may include an SAR, either at the time of the Award or by amendment. An SAR included in a Stock Option shall be subject to such terms and
conditions as the Committee shall impose, which shall include provisions that 

  

	 	(i)	such SAR shall be exercisable to the extent, and only to the extent, the Stock Option is exercisable; and 

  

	 	(ii)	such SAR shall entitle the Grantee to surrender to the Corporation unexercised the Stock Option in which the SAR is included, or any portion thereof, and to receive from the
Corporation in exchange therefor that number of Shares having an aggregate value equal to the excess of the Fair Market Value, at the time of exercise of such SAR, of one Share over the exercise price specified in the Award of such Stock Option
times the number of Shares specified in the Award of such Stock Option, or portion thereof, which is so surrendered. 

  

	 	(c)	All SARs granted hereunder shall have a maximum life of ten (10) years from the date of issuance of the Award. In no event shall any SAR vest sooner than one (1) year from
the date of issuance of the Award except in the event of a Change in Control. 

  

	 	(d)	In lieu of the right to receive all or any specified portion of such Shares, a SAR may entitle the holder thereof to receive the cash equivalent thereof as specified by the Award.

  

	 	(e)	An SAR may provide that such SAR shall be deemed to have been exercised at the close of business on the business day preceding the expiration of such SAR or the related Stock
Option, if any, if at such time such SAR has positive value and would have expired. 

  

	9.	Restricted Stock 

  

	 	(a)	An Award of Restricted Stock may be granted hereunder to an Eligible Director for such consideration, if any, as may be required by applicable law. The terms and conditions of
Restricted Stock, including the vesting period, shall be specified by the Committee, at its sole discretion, in the Award. 

  

 - 8 - 

	 	(b)	Any Shares of Restricted Stock issued hereunder may be evidenced in such manner as the Committee in its sole discretion shall deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of shares of Restricted Stock awarded hereunder, such certificate shall bear an appropriate legend with respect to
the restrictions applicable to such award. 

  

	 	(c)	The grant of any Award of Restricted Stock may be conditioned upon the achievement of performance-based criteria. Further, any Award of Restricted Stock may specify
performance-based criteria which, if achieved by the Corporation, will result in termination or early termination of the restrictions applicable to such Shares. 

  

	10.	Dividend Equivalent Rights; Interest Equivalents 

  

	 	(a)	A DER may be granted hereunder to an Eligible Director, as a component of another Award or as a separate Award. The terms and conditions of DERs shall be specified by the Award.
Dividend Equivalents Rights credited to the Grantee of a DER may be paid currently or may be deemed to be reinvested in additional Shares (which may thereafter accrue additional Dividend Equivalents Rights). Any such reinvestment shall be at Fair
Market Value at the time thereof. DERs may be settled in cash or Shares or a combination thereof, in a single installment or installments. A DER granted as a component of another Award may provide that such DER shall be settled upon exercise,
settlement, or payment of, or lapse of restrictions on, such other Award, and that such DER shall expire or be forfeited or annulled under the same conditions as such other Award. A DER granted as a component of another Award may also contain terms
and conditions different from such other Award. 

  

	 	(b)	Any Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide by the Award for interest equivalents to be credited with respect to such cash
payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions as may be specified by the Award. 

  

	11.	Deferral of Payment 

 With the approval of
the Committee, the delivery of Shares, cash or any combination thereof subject to an award may be deferred, either in the form of installments or a single future delivery. The Committee may also permit or require selected Grantees to defer payment
of some or all of their Awards, as well as other compensation, in accordance with procedures established by the Committee to assure that recognition of taxable income is deferred under the Code. 
  

	12.	Termination of Service 

 If the service of a
Grantee as a Director terminates for any reason, all unexercised, deferred and unpaid Awards may be exercisable and paid only as specified in the Award and in accordance with rules established by the Committee. These rules may provide, as the
Committee 

  

 - 9 - 

 
deems appropriate, subject to the terms of the Plan, for the expiration, continuation, or acceleration of the vesting of all or part of the Awards.

  

	13.	Detrimental Activity 

 The Committee may
cancel any unexpired, unpaid or deferred Awards at any time if the Grantee is not in compliance with all applicable provisions of this Plan or with the terms of any notice of Award or if the Grantee engages in Detrimental Activity. The Committee
may, in its discretion and as a condition to the exercise of an Award, require a Grantee to acknowledge that he or she is in compliance with all applicable provisions of the Plan and of any notice of Award and has not engaged in any Detrimental
Activity. Any Award may provide that if a Grantee, either during service as a Director or within a specified period after termination of such service, shall engage in any Detrimental Activity, and the Committee shall so find, forthwith upon notice
of such finding, the Grantee shall: 
  

	 	(a)	return to the Corporation, in exchange for payment by the Corporation of any amount actually paid therefor by the Grantee, all Shares that the Grantee has not disposed of that were
issued pursuant to this Plan within a specified period prior to the date of the commencement of such Detrimental Activity; and 

  

	 	(b)	with respect to any Shares so acquired that the Grantee has disposed of, pay to the Corporation in cash the difference between: 

  

	 	(i)	any amount actually paid therefor by the Grantee pursuant to this Plan; and 

  

	 	(ii)	the Fair Market Value of such Shares on the date of such acquisition. 

 To
the extent that such amounts are not paid to the Corporation, the Corporation may set off the amounts so payable to it against any amounts that may be owing from time to time by the Corporation to the Grantee, whether as director fees, deferred
compensation or in the form of any other benefit or for any other reason. 
  

	14.	Change in Control 

 The Committee may in its
discretion and upon such terms as it deems appropriate, either in the Award or subsequent thereto, accelerate the date on which any outstanding Stock Option or SAR becomes exercisable or waive the restrictions or other terms and conditions on the
vesting of any Restricted Stock in the event of a Change in Control or proposed Change in Control of the Corporation. In addition to the foregoing, the Corporation may, with the approval of the Committee, purchase Stock Options previously granted to
any Grantee who is at the time of any such transaction an Eligible Director of the Corporation for a price equal to the difference between the consideration per Share payable pursuant to the terms of the transaction resulting in the Change in
Control and the exercise price specified in the Award. 
  

 - 10 - 

	15.	Amendments to This Plan; Amendments of Outstanding Awards 

  

	 	(a)	The Board may from time to time amend or terminate this Plan, or any provision hereof, provided, however, approval of the shareholders of the Corporation will be required to the
extent necessary to comply with Rule 16b-3 or any other applicable law, regulation, or stock exchange listing requirement, or to qualify for an exemption or characterization that is deemed desirable by the Board. 

  

	 	(b)	The Committee may, in its discretion, subject to the terms of the Plan, amend the terms of any Award, prospectively or retroactively, but no such amendment may impair the rights of
any Grantee without his or her consent. The Committee may, in whole or in part, subject to the terms of the Plan, waive any restrictions or conditions applicable to, or accelerate the vesting of, any Award. 

  

	16.	Withholding Taxes 

 The Corporation shall
have the right to deduct from any cash payment made under this Plan any federal, state or local income or other taxes required by law to be withheld with respect to such payment. It shall be a condition to the obligation of the Corporation to
deliver Shares upon exercise of a Stock Option or SAR, upon settlement of a DER, upon delivery of Restricted Stock, or upon exercise, settlement, or payment of any other Award under this Plan, that the Grantee of such Award pay to the Corporation
such amount as may be requested by the Corporation for the purpose of satisfying any liability for such withholding taxes. Any Award under this Plan may provide by the Award that the Grantee of such Award may elect, in accordance with any applicable
regulations of the Committee, to pay a portion or all of the amount of such minimum required or additional permitted withholding taxes in Shares. The Grantee shall authorize the Corporation to withhold, or shall agree to surrender back to the
Corporation, on or about the date such withholding tax liability is determinable, Shares previously owned by such Grantee or a portion of the shares that were or otherwise would be distributed to such Grantee pursuant to such Award having a Fair
Market Value on the day prior to the date such payment is made equal to the amount of such required or permitted withholding taxes to be paid in Shares. 
  

	17.	Grants of Awards to Eligible Directors Who are Foreign Nationals 

 Without amending this Plan, but subject to the limitations specified in Section 15 above, the Committee may grant, amend, administer, annul, or terminate Awards to Eligible Directors who are foreign nationals on
such terms and conditions different from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of this Plan. 
  

	18.	Termination 

 No Awards will be made under
this Plan more than ten (10) years after the date on which this Plan is first approved by the shareholders of the Corporation, but all Awards made on or prior to such date will continue in effect thereafter subject to the terms thereof and this
Plan. 
  

 - 11 - 

	19.	Effective Date 

 This Plan was approved by
the Board on August 12, 2004 and became effective on October 27, 2004 upon approval by the shareholders of the Corporation. Upon approval of the Plan by the shareholders of the Corporation, no further Awards may be made by the Corporation
under the 1996 Plan. 
  

 - 12 -Exchange Agreement

 Exhibit 10.1 
 NOVARAY MEDICAL, INC. 
 EXCHANGE AGREEMENT 
 This Exchange Agreement (the “Agreement”) is entered into as of August 21, 2009 by and between NovaRay Medical, Inc., a Delaware
corporation (the “Company”), and WHEATLEY MEDTECH PARTNERS, L.P., LYNDA WIJCIK, W CAPITAL PARTNERS II, L.P., BIOBRIDGE LLC, HEARTSTREAM CAPITAL B.V. and LLOYD INVESTMENTS, L.P. (individually a “Series A Preferred
Stockholder” and collectively, the “Series A Preferred Stockholders”). 
 R E C I T A L S 
 A. The Company, through its Board of Directors, has decided to authorize and issue a new series of stock to be designated Series A-1 Preferred Stock of
the Company (“Series A-1 Preferred Stock”). 
 B. The Company, through its Board of Directors, has decided to offer the
Series A Preferred Stockholder the right to exchange ten (10) whole shares of Series A Preferred Stock of the Company (“Series A Preferred Stock”) for one (1) whole share of Series A-1 Preferred Stock. 
 C. The rights of the Series A-1 Preferred Stock shall be as set forth in the Certificate of Designation of the Relative Rights and Preferences of the
Series A-1 Convertible Preferred Stock of the Company. 
 NOW THEREFORE, in consideration of the foregoing and the mutual promises herein
contained, the parties agree as follows: 
 A G R E E M E N T 
 1. Exchange of Series A Preferred Stock for Series A-1 Preferred Stock. Subject to the terms and conditions hereof, Series A Preferred Stockholder
and the Company hereby exchange all shares of Series A Preferred Stock held by the Series A Preferred Stockholder as follows: (i) for every ten (10) whole shares of Series A Preferred Stock, one (1) whole share of Series A-1 Preferred
Stock until less than ten (10) whole shares of Series A Preferred Stock remains and (ii) such remaining number of whole shares of Series A Preferred Stock (less than ten (10)) for $2.67 in cash for each remaining share of Series A
Preferred Stock. No fractional shares of Series A-1 Preferred Stock shall be issued. To the extent any Series A Preferred Stockholder has any rights under the Series A Convertible Preferred Stock and Warrant Purchase Agreement dated as of
December 27, 2007 with respect to the Series A Preferred Stock, such rights shall hereafter apply mutatis mutandis with respect to the Series A-1 Preferred Stock. 
 2. Representations and Warranties of the Company. The Company represents and warrants to the Series A Preferred Stockholder that (a) the
shares of Series A-1 Preferred Stock have been duly authorized and validly issued and are fully paid and non-assessable, and (b) this Agreement has been duly authorized, executed and delivered by the Company, and this Agreement constitutes the
valid and legally binding obligation of the Company. 

 3. Investment Representations. 
 3.1 This Agreement is made in reliance upon the Series A Preferred Stockholder’s representation to the Company, which by acceptance hereof the Series
A Preferred Stockholder hereby confirms, that the shares of Series A-1 Preferred Stock to be received by the Series A Preferred Stockholder will be acquired for investment for the own account of the Series A Preferred Stockholder, not as a nominee
or agent, and not with a view to the sale or distribution of any part thereof, and that the Series A Preferred Stockholder has no present intention of selling, granting participation in, or otherwise distributing the same, but subject nevertheless
to any requirement of law that the disposition of the property of the Series A Preferred Stockholder shall at all times be within the control of the Series A Preferred Stockholder. 
 3.2 The Series A Preferred Stockholder understands that the Series A-1 Preferred Stock is not registered under the Securities Act of 1933, as amended
(the “1933 Act”), on the basis that the sale provided for in this Agreement and the issuance of securities hereunder is exempt from registration under the 1933 Act pursuant to Section 4(2) and 3(a)(9) thereof, and that the
Company’s reliance on such exemption is predicated on the Series A Preferred Stockholder’s representations set forth herein. The Series A Preferred Stockholder realizes that the basis for the exemption may not be present if,
notwithstanding such representations, the Series A Preferred Stockholder has in mind merely acquiring shares of the Series A-1 Preferred Stock for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not
rise. The Series A Preferred Stockholder does not have any such intention. 
 3.3 The Series A Preferred Stockholder understands that the
Series A-1 Preferred Stock may not be sold, transferred, or otherwise disposed of without registration under the 1933 Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Series A-1 Preferred
Stock or an available exemption from registration under the 1933 Act, the Series A-1 Preferred Stock must be held indefinitely. In particular, the Series A Preferred Stockholder is aware that the Stock may not be sold pursuant to Rule 144
(“Rule 144”) or Rule 701 (collectively, the “Rules”) promulgated under the 1933 Act unless all of the conditions of the applicable Rules are met. Among the conditions for use of Rule 144 is the
availability of current information to the public about the Company. The Series A Preferred Stockholder represents that, in the absence of an effective registration statement covering the Series A-1 Preferred Stock, the Series A Preferred
Stockholder will sell, transfer, or otherwise dispose of the Series A-1 Preferred Stock only in a manner consistent with the representations set forth herein and then only in accordance with the provisions of Section 3.4 hereof. 
 3.4 The Series A Preferred Stockholder agrees that in no event will the Series A Preferred Stockholder make a transfer or disposition of any of the
Series A-1 Preferred Stock (other than pursuant to an effective registration statement under the 1933 Act), unless and until (i) the Series A Preferred Stockholder shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the disposition, and (ii) if requested by the Company, at the expense of the Series A 

  

 2 

 
Preferred Stockholder or transferee, the Series A Preferred Stockholder shall have furnished to the Company either (A) an opinion of counsel, reasonably
satisfactory to the Company, to the effect that such transfer may be made without registration under the 1933 Act or (B) a “no action” letter from the Securities and Exchange Commission to the effect that the transfer of such
securities without registration will not result in a recommendation by the staff of the Securities and Exchange Commission that action be taken with respect thereto. The Company will not require such a legal opinion or “no action” letter
in any transaction in compliance with Rule 144. 
 3.5 The Series A Preferred Stockholder either (A) is an “accredited
investor” within the meaning of Securities and Exchange Commission (“SEC”) Rule 501 of Regulation D, as presently in effect, or (B) (i) certifies that such Series A Preferred Stockholder is not a “U.S. person”
within the meaning of SEC Rule 902 of Regulation S, as presently in effect, and that such Series A Preferred Stockholder is not acquiring the Series A-1 Preferred Stock for the account or benefit of any such U.S. person, (ii) agrees to resell
the Series A-1 Preferred Stock only in accordance with the provisions of such Regulation S, pursuant to registration under the 1933 Act, or pursuant to an available exemption from registration and agrees not to engage in hedging transactions with
regard to the Series A-1 Preferred Stock unless in compliance with the 1933 Act, (iii) agrees that any certificates for any securities issued to such Series A Preferred Stockholder shall contain a legend to the effect that transfer is
prohibited except in accordance with the provisions of such Regulation S, pursuant to registration under the 1933 Act or pursuant to an available exemption from registration and that hedging transactions involving such Series A-1 Preferred Stock may
not be conducted unless in compliance with the 1933 Act, (iv) agrees that the Company is hereby required to refuse to register any transfer of any securities issued to such Series A Preferred Stockholder not made in accordance with the
provisions of such Regulation S, pursuant to registration under the 1933 Act, or pursuant to an available exemption from registration. 
 4.
Miscellaneous 
 4.1 Counterparts Signature; Facsimile Delivery. This Agreement may be executed in any number of counterparts
and delivered by facsimile, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 
 4.2 Additional Documents. Each party hereto agrees to execute any and all further documents and writings and to perform such other actions which may be or become necessary or expedient to effectuate and carry out this Agreement.

 4.3 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York,
without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Agreement shall not be interpreted or construed with any presumption against the party causing
this Agreement to be drafted. 
 4.4 Severability. In case any provision in this Agreement shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and the remaining provisions shall not in any way be affected or impaired thereby. 
  

 3 

 4.5 Notice. Any notice required to be given under the terms of this Agreement shall be addressed
to the Company in care of its Secretary at the office of the Company at 39655 Eureka Drive, Newark, California 94560, and any notice to be given to Series A Preferred Stockholder shall be addressed to the Series A Preferred Stockholder at the
address given by Series A Preferred Stockholder beneath the signature to this Agreement, or such other address as either party to this Agreement may hereafter designate in writing to the other. Any such notice shall be deemed to have been duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, registered or certified and deposited (postage or registration or certification fee prepaid) in a post office or branch post office regularly maintained by the United
States. 
 4.6 Successors. This Agreement shall be binding upon and inure to the benefit of any successor or successors of the
Company. Where the context permits, “Series A Preferred Stockholder” as used in this Agreement shall include Series A Preferred Stockholder’s executor, administrator or other legal representative or the person or persons to
whom Series A Preferred Stockholder’s rights pass by will or the applicable laws of descent and distribution. 
 4.7 California
Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART
OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS
AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. 
 IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first above written. 
  

			
	NOVARAY MEDICAL, INC.
	a Delaware corporation
		
	By:	 	 /s/    William Frederick

	Its:	 	Chief Financial Officer

  

 4 

									
	 SERIES A PREFERRED STOCKHOLDER:
 WHEATLEY
MEDTECH PARTNERS, L.P.
	 		 	 SERIES A PREFERRED STOCKHOLDER:
 LYNDA
WIJCIK

					
	By:	 	 /s/    Barry Rubenstein
	 		 	By:	 	 /s/    Lynda Wijcik

					
	Address:	 	  
	 		 	Address:	 	  

		 	  
	 		 		 	  

			
	 SERIES A PREFERRED STOCKHOLDER:
 W CAPITAL
PARTNERS II, L.P.
	 		 	 SERIES A PREFERRED STOCKHOLDER:
 BIOBRIDGE
LLC

					
	By:	 	 /s/    Stephen Wertheimer
	 		 	By:	 	 /s/    Lynda Wijcik

					
	Address:	 	  
	 		 	Address:	 	  

		 	  
	 		 		 	  

			
	 SERIES A PREFERRED STOCKHOLDER:
 HEARTSTREAM
CAPITAL B.V.
	 		 	 SERIES A PREFERRED STOCKHOLDER:
 LLOYD
INVESTMENTS, L.P.

					
	By:	 	 /s/    George J.M. Hersbach
	 		 	By:	 	 /s/    L.J. Lloyd

					
	Address:	 	  
	 		 	Address:	 	  

		 	  
	 		 		 	  

  

 5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00162-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00162-of-00352.parquet"}]]