Document:

EmpAgtGilMelman

Employment Agreement
Spark Energy, Inc.

This Employment Agreement (this “Agreement”) dated April 15, 2015 is between Gil Melman  (“Employee”) and Spark Energy, Inc. (the “Company”).  Capitalized terms that are not otherwise defined are defined in Exhibit B to this Agreement.
1.Employment.  The Company will employ Employee in accordance with the terms and conditions set forth in this Agreement and Exhibit A to this Agreement. During the Term (as defined in Exhibit A to this Agreement), Employee will devote his full business time, attention and best efforts to the business of the Company, as may be requested by the Company’s Board of Directors (the “Board”).  Employee acknowledges and agrees that he owes the Company fiduciary duties, including duties of loyalty and disclosure, and that the obligations described in this Agreement are in addition to, and not in lieu of, the obligations owed to the Company and its subsidiaries under common law. 
2.    Termination of Employment.
(a)    Right to Terminate for Convenience.  Either the Company or Employee shall have the right to terminate the employment under this Agreement for convenience at any time and for any reason, or no reason at all, upon written notice to the other party. Such termination shall be effective immediately unless otherwise agreed between the parties.
(b)    Company’s Right to Terminate Employee’s Employment for Cause.  The Company shall have the right to terminate Employee’s employment at any time for Cause.  
(c)    Employee’s Right to Terminate for Good Reason.  Employee shall have the right to terminate Employee’s employment with the Company at any time for Good Reason.  Any assertion by Employee of a termination for Good Reason shall not be effective unless all of the following conditions are satisfied: (i) the condition giving rise to Employee’s termination of employment must have arisen without Employee’s written consent; (ii) Employee must provide written notice to the Board of the existence of such condition(s) within 30 days of the initial existence of such condition(s); (iii) the condition(s) specified in such notice must remain uncorrected for 30 days following the Board’s receipt of such written notice; and (iv) the date of Employee’s termination of employment must occur within 75 days after the initial existence of the condition(s) specified in such notice. 
(d)    Death or Disability.  Upon the death or Disability of Employee, Employee’s employment with Company shall terminate with no further obligation under this Agreement of either party hereunder. 
(e)    Effect of Termination.
(i)    If Employee’s employment is terminated by the Company without Cause pursuant to Section 2(a) above, is terminated as a result of a non-renewal of the Term of this Agreement by the Company pursuant to Exhibit A, or is terminated by Employee for Good Reason pursuant to Section 2(c) above, and Employee: (A) executes within 50 days following the date on which Employee’s employment terminates, and does not revoke within the time provided by the Company to do so, a release of all claims in a form reasonably acceptable to the Company (the “Release”); and (B) abides by Employee’s continuing obligations under Sections 3 and 4 of this Agreement, then the Company shall pay to Employee any bonus earned for the calendar year prior to the year in which the termination occurs but which is unpaid as of the date of termination (which shall be paid to Employee on the same date as such bonus would have been paid had Employee remained in employment) (the “Post-Termination Bonus Payment”) and make severance payments to Employee in a total amount equal to: (X) 12 months’ worth of Employee’s Base Salary; plus (Y) an additional amount equal to the target annual bonus for the Employee for the year in which Employee is terminated prorated up to the date of termination for the number of days worked during such calendar year and calculated based on relative achievement of key performance targets as determined by the Compensation Committee of the Board in its reasonable discretion (such total severance payments being referred to as the “Severance Payment”).  For the avoidance of doubt, a non-renewal of the Term of this Agreement by Employee, a termination by reason of Employee’s death or Disability, a termination by the Company for Cause or a termination of employment by Employee without Good Reason under Section 2(a) above shall not give rise to a right to the Severance Payment or Post-Termination Bonus Payment. 
(ii)    The Severance Payment will be paid in substantially equal monthly installments in accordance with the Company’s normal payroll practices, beginning on Company’s first pay date that is on or after the 60th day following the date of termination of employment; provided, however, that the first installment payment shall include all amounts that would otherwise have been paid to Employee during the period beginning at termination and ending on the first payment date (without interest) if no delay had been imposed. Any Severance Payment is conditional upon Employee’s compliance with Sections 3 and 4.  Each payment of a portion of the Severance Payment under this Agreement is intended to be a series of separate payments and not as the entitlement to a single payment for purposes of Section 409A.  For purposes of this Agreement, references to Employee’s termination of employment shall mean, and be interpreted in accordance with, Employee’s “separation from service” from the Company within the meaning of Treasury Regulation § 1.409A-1(h)(1)(ii).
(iii)    Upon a termination of employment by Employee for Good Reason, by the Company for convenience or non-renewal by the Company, then all outstanding unvested long term incentive awards granted to the Employee during his employment with the Company under the Long Term Incentive Plan shall become fully vested and exercisable for the remainder of their full term in accordance with, and subject to, any applicable agreements and plan documents as may be amended from time to time.
(iv)     Upon a Change of Control, the Employee shall retain all outstanding long term incentive awards previously granted to Employee under the Long Term Incentive Plan subject to existing vesting schedules, provided that all such awards shall be modified by the Compensation Committee in its discretion to reflect the consideration, whether in shares of stock, other securities, cash or property that the Employee would be entitled to receive had he vested into such awards immediately prior to the Change of Control. For the avoidance of doubt, all such modified awards shall remain subject to the vesting requirements in effect for such awards prior to the Change of Control and shall remain subject to all applicable agreements and plan documents as may be amended from time to time.
3.    Confidentiality.  The Company will provide Employee and give Employee access to Confidential Information during the Term. Employee will hold all Confidential Information in a fiduciary capacity for the benefit of the Company.  During the Term and at all times after termination of Employee’s employment hereunder, Employee will: (a) not disclose any Confidential Information to any person or entity other than in the proper performance of his duties during the Term; (b) not use any Confidential Information except for the benefit of the Company; and (c) take all such precautions as may be reasonably necessary to prevent the disclosure to any third party of any of the Confidential Information.    
Upon termination of employment, Employee will surrender and deliver to the Company all documents (including electronically stored information) and other materials of any nature containing or pertaining to all Confidential Information and any other Company property or property of its subsidiaries (including, without limitation, any Company-issued computer, mobile device, credit card, or other equipment or property), in Employee’s possession, custody and control and Employee will not retain any such document or other materials or property.  
4.    Non-Competition and Non-Solicitation.
(a)    The Company shall provide Employee access to the Confidential Information for use only during the Term, and Employee acknowledges and agrees that the Company will be entrusting Employee, in Employee’s unique and special capacity, with developing the goodwill of the Company and its subsidiaries, and in consideration thereof and in consideration of the access to Confidential Information and as a condition to the Company’s entry into this Agreement and employment of Employee, and Employee’s receipt of equity-based compensation pursuant to the Long-Term Incentive Plan as described in Exhibit A, Employee has voluntarily agreed to the covenants set forth in this Section 4.  Employee further agrees and acknowledges that the limitations and restrictions set forth herein, including geographical and temporal restrictions on certain competitive activities, are reasonable in all respects and are material and substantial parts of this Agreement intended and necessary to prevent unfair competition and to protect the Company’s and its subsidiaries’ legitimate business interests, including the protection of its Confidential Information and goodwill.
(b)    Employee agrees that, during the period that he is employed by the Company or any of its subsidiaries and continuing through the date that is 12 months following the date that Employee is no longer employed by the Company or any of its subsidiaries, Employee shall not, without the prior written approval of the Company, directly or indirectly, for himself or on behalf of or in conjunction with any other person or entity of whatever nature engage in any Prohibited Activity.
(c)    During the Term and at all times following the termination of Employee’s employment for whatever reason, Employee shall not (except to the extent required by law) disparage, and shall cause the Employee’s affiliates not to disparage, either orally or in writing, the Company or any of its subsidiaries or affiliates, or any of their directors, officers, managers, agents, representatives, stockholders, investors, partners, members, or employees, or any of their respective businesses, products, services or practices. During the Term and at all times following the termination of Employee’s employment for whatever reason, the Company shall not (except to the extent required by law) disparage, and shall cause the Company’s subsidiaries not to disparage, either orally or in writing, the Employee.
(d)    Because of the difficulty of measuring economic losses to the Company as a result of a breach of the foregoing covenants, and because of the immediate and irreparable damage that would be caused to the Company for which it would have no other adequate remedy, Employee agrees that the Company and its subsidiaries shall be entitled to enforce the foregoing covenants, in the event of a breach, by injunctions and restraining orders and that such enforcement shall not be the Company’s or such subsidiary’s exclusive remedy for a breach but instead shall be in addition to all other rights and remedies available to the Company or its subsidiaries at law and equity.
(e)    The covenants in this Section 4, and each provision and portion thereof, are severable and separate, and the unenforceability of any specific covenant shall not affect the provisions of any other covenant.  Moreover, in the event any arbitrator or court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which the arbitrator or court deems reasonable, and this Agreement shall thereby be reformed.
5.    Stock Ownership Policy.  On and after April 1, 2019, Employee is expected to hold a number of shares of Class A common stock, par value $0.01 per share, of the Company (“Stock”) with an aggregate value equal to two times Employee’s Base Salary (such value to be determined based on the closing price of a share of Stock as of December 31 of the prior year (the “Stock Ownership Requirement”).   The Stock Ownership Requirement shall be measured on April 1 of each year beginning in 2019. Until the applicable Stock Ownership Requirement is achieved, Employee is encouraged to retain the net shares obtained through the Company’s stock incentive plans.   “Net shares” are those shares that remain after shares are sold or netted to pay the exercise price of stock options (if applicable) and withholding taxes.  To the extent Employee falls below the Stock Ownership Requirement after April 1, 2019, Employee will be required to retain 100% of the net shares obtained through the Company’s stock incentive plans until the Stock Ownership Requirement is met.  In the event of a drop in the share price of the Stock from the beginning of each fiscal year through the end of such year commencing with fiscal year 2018 and for each fiscal year thereafter of more than twenty-five percent (25%), Employee will be entitled to an additional twelve month period commencing on April 1 of the next year to comply with the Stock Ownership Requirement.  Failure to satisfy the Stock Ownership Requirement may impact Employee’s eligibility to receive future cash and equity incentive compensation awards.  All shares of Stock held by Employee (including (i) shares purchased on the open market or (ii) shares held indirectly by Employee (a) under any retirement or deferred compensation plan or (b) held by a spouse or other immediate family member residing in the same household or (c) in a trust for the benefit of  Employee or his family (whether held individually or jointly)) and all shares of Stock underlying awards granted under the Company’s long term incentive plan and which can be settled in Stock (whether vested or unvested, exercised or unexercised, or settled or unsettled) will count towards the Stock Ownership Requirement.  Performance awards held by Employee will count towards the Stock Ownership Requirement at the target level of such awards until settled.
6.    Applicable Law; Submission to Jurisdiction.  This Agreement shall in all respects be construed according to the laws of the State of Texas without regard to its conflict of laws principles that would result in the application of the laws of another jurisdiction.  With respect to any claim or dispute related to or arising under this Agreement or relating to Employee’s employment or the termination thereof, the parties hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Houston, Texas.  Notwithstanding the foregoing, the Company and its subsidiaries shall be entitled to enforce their rights under Section 4 in any court of competent jurisdiction.
7.    Entire Agreement and Amendment.  This Agreement, the Long Term Incentive Plan and the award agreement evidencing any equity compensation awards granted under the Long Term Incentive Plan contains the entire agreement of the parties with respect to the matters covered herein; moreover, this Agreement supersedes all prior and contemporaneous agreements and understandings, oral or written, between the parties hereto concerning the subject matter hereof.  This Agreement may be amended only by a written instrument executed by both parties hereto. 
8.    Waiver of Breach.  Any waiver of this Agreement must be executed by the party to be bound by such waiver.  No waiver by either party hereto of a breach of any provision of this Agreement by the other party, or of compliance with any condition or provision of this Agreement to be performed by such other party, will operate or be construed as a waiver of any subsequent breach by such other party or any similar or dissimilar provision or condition at the same or any subsequent time.  The failure of either party hereto to take any action by reason of any breach will not deprive such party of the right to take action at any time while such breach continues.
9.    Assignment.  This Agreement is personal to Employee, and neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise transferred by Employee.  The Company may assign this Agreement without Employee’s consent, including to any subsidiary of the Company and to any successor (whether by merger, purchase or otherwise) to all or substantially all of the equity, assets or businesses of the Company.
10.    Notices.  Notices provided for in this Agreement shall be in writing and shall be deemed to have been duly received when delivered in person or on the third business day following deposit in the United States mail, registered or certified mail, return receipt requested:  to the address of the Company’s principal offices, Attention: General Counsel, if to the Company; and to the home address of the Employee on file with the Company if to the Employee.
11.    Section 409A.  If any provision of this Agreement does not satisfy the requirements of Section 409A, then such provision shall nevertheless be applied in a manner consistent with those requirements.  Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement are exempt from, or compliant with, Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Employee on account of non-compliance with Section 409A.  If any payment or benefit provided to the Employee in connection with his termination of employment is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A and the Employee is determined to be a "specified employee" as defined in Section 409A(a)(2)(b)(i), then all such payments or benefits shall not be paid until the first payroll date to occur following the six-month anniversary of the Termination Date  in a lump sum, and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.
12.    Effect of Termination.  The provisions of Sections 2(e), 3, 4, 6 and 11 and those provisions necessary to interpret and enforce them, shall survive any termination of this Agreement and any termination of the employment relationship between Employee and the Company.
13.    Third-Party Beneficiaries.  Each subsidiary of the Company that is not a signatory to this Agreement is an intended, third-party beneficiary of Employee’s obligations under Sections 3 and 4 above and shall be entitled to enforce such obligations as if a party hereto. 
14.    Severability.  If an arbitrator or court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement and all other provisions shall remain in full force and effect.

/s/ Gil Melman
Employee Name: Gil Melman 

SPARK ENERGY, INC.

By: /s/ Nathan Kroeker
Name: Nathan Kroeker
Title: President and Chief Executive Officer

EXHIBIT A TO EMPLOYMENT AGREEMENT
OF GIL MELMAN 

Title:  Vice President, General Counsel and Corporate Secretary 

Duties: Those normally incidental to the title identified above, as well as such additional duties as may be assigned to Employee by the Board from time to time.

Term:  The initial term of this Agreement shall be for the period beginning on the date of the Agreement and ending on December 31, 2015.  On January 1, 2016 and on each subsequent anniversary thereafter, this Agreement shall automatically renew and extend for a period of 12 months unless written notice of non-renewal is delivered from either party to the other not less than 30 days prior to the expiration of the then-existing Term.  The Term shall include the initial term and any renewal periods.  The Term shall end effective as of the date of termination of Employee’s employment for any reason.
Base Salary:  Annual base salary of $265,000.00 (less applicable taxes and withholdings) (the “Base Salary”) payable in conformity with the Company’s customary payroll practices for similarly situated employees as may exist from time to time, but no less frequently than monthly.

Bonus:  Employee shall be eligible to participate in such annual bonus plan as may be established by the Company in its discretion from time to time and in which other similarly situated Company employees are eligible to participate, subject to the terms and conditions of the applicable plan in effect from time to time. The Company shall not, however, be obligated to institute, maintain, or refrain from changing, amending, or discontinuing, any bonus plan, so long as such changes are similarly applicable to similarly situated Company employees generally.  Except to the extent specifically provided for in Section 2(e)(i), any bonus shall not be payable unless Employee remains continuously employed within the Company to the date on which such bonus is paid.
Equity Based Compensation:  Employee will be eligible to receive equity based compensation awards pursuant to, and subject to the terms of, an equity compensation plan adopted by the Company, as such plan may be amended by the Company from time to time (the “Long Term Incentive Plan”).  Such awards will be in an amount determined by the Company and subject to the terms and conditions established by the Board or a committee thereof.  

Benefits:  Employee shall be eligible to participate in the same benefit plans and programs in which other similarly situated Company employees are eligible to participate, subject to the terms and conditions of the applicable plans and programs in effect from time to time.  The Company shall not be obligated to institute, maintain, or refrain from changing, amending, or discontinuing, any such plan or policy, so long as such changes are similarly applicable to similarly situated Company employees.
Indemnity and D&O Insurance:  The Company will indemnify and hold Employee harmless for all acts and omissions occurring during his employment to the maximum extent provided under the Company’s certificate of incorporation, by-laws and applicable law (as each may be amended from time to time). During the Term, the Company will purchase and maintain, at its own expense, directors’ and officers’ liability insurance providing coverage for Employee in the same amount as for similarly situated executives of the Company.  

EXHIBIT B
TO EMPLOYMENT AGREEMENT OF GIL MELMAN 
DEFINITIONS

“Business” means the products or services offered, marketed, or sold, or with respect to which there are active plans to offer, market or sell, by the Company or its subsidiaries during the period in which Employee is employed by the Company or any of its subsidiaries and for which Employee has material responsibility or about which Employee obtains Confidential Information, which such products and services include, without limitation, the business of supplying electricity and natural gas to homes and businesses.
“Business Opportunity” means any commercial, investment or other business opportunity relating to the Business.
“Cause” means:
(i)    Employee’s material breach of this Agreement, or any other material obligation owed to the Company or any of its subsidiaries; provided that, if the Company determines that any such breach is capable of cure by Employee, written notice of such breach must be delivered to Employee and Employee must be given a period of 15 days following delivery of such notice to cure the breach;
(ii)    the commission of an act of gross negligence, willful misconduct, breach of fiduciary duty, fraud, theft or embezzlement on the part of Employee, which such act has an adverse effect on the Company or any of its subsidiaries or can reasonably be expected to have an adverse effect on the Company or any of its subsidiaries;
(iii)    the conviction or indictment of Employee, or a plea of nolo contendere by Employee, to any felony or any crime involving moral turpitude; 
(iv)    Employee’s willful failure or refusal to perform Employee’s obligations pursuant to this Agreement or willful failure or refusal to follow the lawful instructions of the Board; provided that, if the Company determines that any such failure is capable of cure by Employee, written notice of such failure must delivered to Employee and Employee must be given a period of 15 days following delivery of such notice to cure the failure; or
(v)    any conduct by Employee which is materially injurious (monetarily or otherwise) to the Company or any of its subsidiaries.
“Change of Control” has the meaning given to it in the Company’s Long Term Incentive Plan.
“Confidential Information” means: all non-public information, designs, ideas, concepts, improvements, product developments, discoveries and inventions, whether patentable or not, that are conceived, made, developed or acquired by or disclosed to Employee, individually or in conjunction with others, during or prior to the Term that relate to the Company’s or its subsidiaries businesses or properties, products or services (including all such information relating to hedging strategies and current, prospective and historic customer segmentation analysis, corporate opportunities, business plans, strategies for developing business and market share, research, financial and sales data, pricing terms, evaluations, opinions, interpretations, acquisition prospects, customer requirements, the identity of key contacts within customers’ organizations or within the organization of acquisition prospects, or marketing and merchandising techniques, prospective names and marks).  All documents, videotapes, written presentations, brochures, drawings, memoranda, notes, records, files, correspondence, manuals, models, specifications, computer programs, e-mail, voice mail, electronic databases, maps, drawings, architectural renditions, models and all other writings or materials of any type including or embodying any Confidential Information shall be deemed Confidential Information and be subject to the same restrictions on disclosure applicable to Confidential Information pursuant to this Agreement. For purposes of this Agreement, Confidential Information shall not include any information that (i) is or becomes generally available to the public other than as a result of a disclosure or wrongful act of Employee; (ii) was available to Employee on a non-confidential basis before its disclosure by the Company; or (iii) becomes available to Employee on a non-confidential basis from a source other than the Company, provided that such source is not bound by a confidentiality agreement with the Company or any of its subsidiaries.
“Covered Vendor or Supplier” means any individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, or other entity who is or was: (A) a vendor or supplier of  the Company or any of its subsidiaries at any time during the last 12 months of Employee’s employment with the Company or any of its subsidiaries; or (B) a prospective vendor or supplier of the Company or any of its subsidiaries about which Employee had confidential information or with which Employee had contact in Employee’s capacity as a representative of the Company or any of its subsidiaries. 
“Covered Employee or Agent” means any individual, corporation, partnership, limited liability company, association, trust, unincorporated organization, or other person or entity who is or was an employee, director, officer, contractor, consultant, or vendor of the Company or any of its subsidiaries at any time during the Term and for a period of twelve months after termination of Employee’s employment.
 “Disability” shall exist if Employee is unable to perform the essential functions of Employee’s position, with reasonable accommodation, due to an illness or physical or mental impairment or other incapacity that continues, or can reasonably be expected to continue, for a period in excess of 90 days, whether or not consecutive.  The determination of whether Employee has incurred a Disability will be made in good faith by the Board.
“Good Reason” means:
(i)    the material diminution of Employee’s Base Salary; 
(ii)    the material diminution in Employee’s title, duties, authority or responsibilities at the Company;
(iii)    the relocation of the Company’s corporate offices at which Employee is required to perform services by more than fifty (50) miles from its location as of the date of this Agreement; or
(iv)    a material breach by the Company of any other material obligation under this Agreement or any other written agreement between Employee and the Company.
“Market Area” means that geographic area in the United States of America in which the Company or any of its subsidiaries (A) engages in business, (B) sells or markets to, or obtains products or services from, Covered Customers or Suppliers, (C) has Covered Employees or Agents located, or (D) contemplates doing any of the foregoing, which such area includes Texas, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Arizona, California, Colorado, Florida, Indiana, Michigan, Nevada, and Ohio.

“Prohibited Activity” means:
(a)    to engage in or participate within the Market Area in competition with the Company or any of its subsidiaries in any aspect of the Business, including directly or indirectly owning, managing, operating, joining, becoming an employee or consultant of, or loaning money to or selling or leasing equipment or real estate to or otherwise being affiliated with any person or entity engaged in, or planning to engage in, the Business in competition, or anticipated competition, in the Market Area, with the Company or any of its subsidiaries;
(b)    to appropriate any Business Opportunity of, or relating to, the Company or any of its subsidiaries located in the Market Area;
(c)    to solicit, canvass, approach, entice or induce any Covered Customer or Supplier to cease, fail to establish, or lessen such Covered Customer or Supplier’s business with the Company or any of its subsidiaries; or
(d)    to solicit, canvass, approach, entice or induce any Covered Employee or Agent to alter, lessen or terminate his, her or its employment, engagement or relationship with the Company or any of its subsidiaries.

1Exhibit 10.1

 

 

PRECISION OPTICS CORPORATION, INC.

2011 EQUITY INCENTIVE PLAN

 

Adopted by the Board on October 13, 2011

Amended by the Board on April 16, 2015

 

 

 

 

 

 

 

 

    	 

    	 

    

 

	1.	ESTABLISHMENT AND PURPOSE

 

The Plan was adopted by the Board of Directors
on October 13, 2011 and shall be effective as of the date of the initial offering of Stock to the public pursuant to a registration
statement filed by the Company with the Securities and Exchange Commission (the “Effective Date”). The purpose of the
Plan is to encourage and enable the officers, employees, directors and other key persons (including consultants and prospective
employees) of Precision Optics Corporation, Inc. (the “Company”), upon whose judgment, initiative and efforts
the Company largely depends for the successful conduct of its business, to acquire a proprietary interest in the Company. It is
anticipated that providing such persons with a direct stake in the Company’s welfare will assure a closer identification
of their interests with those of the Company and its stockholders, thereby motivating their efforts on the Company's behalf and
strengthening their desire to remain with the Company.

 

	2.	DEFINITIONS

 

The following terms, when used in the Plan,
will have the meanings and be subject to the provisions set forth below:

 

“Administrator”: The
Board, except that the Board may delegate (i) to one or more of its members such of its duties, powers and responsibilities as
it may determine; (ii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate; and
(iii) to the compensation committee of the Board, if the Board shall have constituted such a committee, some or all of its powers
with respect to the Plan, in which event, except as the context otherwise clearly requires, all references in this Plan to the
Board shall be deemed to refer to the compensation committee. In the event of any delegation described in clause (i) or (ii) of
the preceding sentence, the term “Administrator” shall include the person or persons so delegated to the extent of
such delegation.

 

“Affiliate”: a “parent”
or “subsidiary” (as each is defined in Section 424 of the Code) of the Company and other entity that the Board or Administrator
designates as an “Affiliate” for purposes of this Plan.

 

“Award”: Any or a combination
of the following:

 

(i) Stock Options.

 

(ii) Restricted Stock.

 

(iii) Unrestricted Stock, or stock
not subject to any restrictions under the terms of the Award.

 

(iv) Stock Units, including Restricted
Stock Units.

 

(v) Performance Awards.

 

(vi) Awards (other than Awards
described in (i) through (v) above) that are convertible into or otherwise based on Stock.

 

“Board”: The Board of
Directors of the Company.

 

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“Code”: The U.S. Internal
Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.

 

“Company”: Precision
Optics Corporation, Inc.

 

“Covered Transaction”: Any
of (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition
of stock, in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all
of the Company’s then outstanding common stock by a single person or entity or by a group of persons and/or entities acting
in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation
of the Company. Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger
described in clause (i) (as determined by the Administrator), the Covered Transaction shall be deemed to have occurred upon consummation
of the tender offer.

 

“Employee”: Any person
who is employed by the Company or an Affiliate.

 

“Employment”: A Participant’s
employment or other service relationship with the Company and its Affiliates. Employment will be deemed to continue, unless the
Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a
capacity described in Section 5 to the Company or its Affiliates. If a Participant’s employment or other service relationship
is with an Affiliate and that entity ceases to be an Affiliate, the Participant’s Employment will be deemed to have terminated
when the entity ceases to be an Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates.

 

“Participant”: A person
who is granted an Award under the Plan.

 

“Performance Award”:
An Award subject to Performance Criteria. The Administrator in its discretion may grant Performance Awards that are intended to
qualify for the performance-based compensation exception under Section 162(m) and Performance Awards that are not intended so to
qualify.

 

“Performance Criteria”:
Specified criteria, other than the mere continuation of Employment or the mere passage of time, the satisfaction of which is a
condition for the grant, exercisability, vesting or full enjoyment of an Award. For purposes of Awards that are intended to qualify
for the performance-based compensation exception under Section 162(m), a Performance Criterion will mean an objectively determinable
measure of performance relating to any or any combination of the following (measured either absolutely or by reference to an index
or indices and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business,
project or geographical basis or in combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction
for all or any portion of interest, taxes, depreciation, or amortization, whether or not on a continuing operations or an aggregate
or per share basis; return on equity, investment, capital or assets; one or more operating ratios; borrowing levels, leverage ratios
or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular products
or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); joint ventures and strategic
alliances; spin-offs, split-ups and the like; reorganizations; or recapitalizations, restructurings, financings (issuance of debt
or equity) or refinancings. A Performance Criterion and any targets with respect thereto determined by the Administrator need not
be based upon an increase, a positive or improved result or avoidance of loss. To the extent consistent with the requirements for
satisfying the performance-based compensation exception under Section 162(m), the Administrator may provide in the case of
any Award intended to qualify for such exception that one or more of the Performance Criteria applicable to such Award will be
adjusted in an objectively determinable manner to reflect events (for example, but without limitation, acquisitions or dispositions)
occurring during the performance period that affect the applicable Performance Criterion or Criteria.

 

    	3

    	 

    

 

“Plan”: Precision Optics
Corporation, Inc. 2011 Equity Incentive Plan, as from time to time amended and in effect.

 

“Restricted Stock”: Stock
subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified conditions are not satisfied.

 

“Restricted Stock Unit”:
A Stock Unit that is, or as to which the delivery of Stock or cash in lieu of Stock is, subject to the satisfaction of specified
performance or other vesting conditions.

 

“Section 409A”: Section
409A of the Code.

 

“Section 162(m)”: Section
162(m) of the Code.

 

“Stock”: Common Stock
of the Company, par value $ .01 per share.

 

“Stock Option”: An option
entitling the holder to acquire shares of Stock upon payment of the exercise price.

 

“Stock Unit”: An unfunded
and unsecured promise, denominated in shares of Stock, to deliver Stock or cash measured by the value of Stock in the future.

 

	3.	ADMINISTRATION

 

The Administrator has discretionary authority,
subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine,
modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures; and otherwise do all things necessary
to carry out the purposes of the Plan. In the case of any Award intended to be eligible for the performance-based compensation
exception under Section 162(m), the Administrator will exercise its discretion consistent with qualifying the Award for that exception.
Determinations of the Administrator made under the Plan will be conclusive and will bind all parties.

 

	4.	LIMITS ON AWARDS UNDER THE PLAN

 

(a)Number
of Shares. The number of shares of Stock available for delivery in satisfaction of
Awards under the Plan shall be determined in accordance with this Section 4(a).

 

(1) Subject to Section 7(b), the
maximum aggregate number of shares of Stock that may be delivered in satisfaction of Awards under the Plan shall be 1,825,000.

 

    	4

    	 

    

 

The number of shares of Stock delivered
in satisfaction of Awards shall be the number of shares of Stock subject to an Award reduced by the number of shares of Stock (a) withheld
by the Company in payment of the exercise price of the Award or, if elected by the Administrator, in satisfaction of tax withholding
requirements with respect to the Award, or (b) awarded under the Plan as Restricted Stock but thereafter forfeited, or (c) made
subject to an Award that is exercised or satisfied, or that terminates or expires, without the delivery of such shares.

 

(2) To the extent consistent with
the requirements of Section 422 and with other applicable legal requirements (including applicable stock exchange requirements),
Stock issued under awards of an acquired company that are converted, replaced, or adjusted in connection with the acquisition shall
not reduce the number of shares available for Awards under the Plan.

 

(b)Type
of Shares. Stock delivered by the Company under the Plan may be authorized but unissued
Stock or previously issued Stock acquired by the Company. No fractional shares of Stock will be delivered under the Plan.

 

	5.	ELIGIBILITY AND PARTICIPATION

 

The Administrator
will select Participants from among those key Employees and directors of, and consultants and advisors to, the Company or its Affiliates
who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and
its Affiliates. 

 

	6.	RULES APPLICABLE TO AWARDS

 

(a)All
Awards

 

(1) Award Provisions. The
Administrator will determine the terms of all Awards, subject to the limitations provided herein. By accepting (or, under such
rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant agrees to the terms of the Award
and the Plan. Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced
or adjusted in connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions
specified herein, as determined by the Administrator.

 

(2) Term of Plan. No Awards
may be made after October 14, 2021 but previously granted Awards may continue beyond that date in accordance with their terms.

 

(3) Transferability. Awards
may be transferred during a Participant’s lifetime only on a gratuitous basis and then only to the extent, if any, determined
and approved by the Administrator.

 

(4) Vesting, etc. The Administrator
may determine the time or times at which an Award will vest or become exercisable and the terms on which an Award requiring exercise
will remain exercisable. Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability
of an Award, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration. Unless the Administrator
expressly provides otherwise, however, the following rules will apply: immediately upon the cessation of the Participant’s
Employment, each Award requiring exercise that is then held by the Participant or by the Participant’s permitted transferees,
if any, will cease to be exercisable and will terminate, and all other Awards that are then held by the Participant or by the Participant’s
permitted transferees, if any, to the extent not already vested will be forfeited, except that:

 

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(A) subject to (B) and (C) below,
all Stock Options held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation
of the Participant’s Employment, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of
three months or (ii) the period ending on the latest date on which such Stock Option could have been exercised without regard to
this Section 6(a)(4), and will thereupon terminate;

 

(B) all Stock Options held by
a Participant or the Participant’s permitted transferees, if any, immediately prior to the Participant’s death, to
the extent then exercisable, will remain exercisable for the lesser of (i) the one year period ending with the first anniversary
of the Participant’s death or (ii) the period ending on the latest date on which such Stock Option could have been exercised
without regard to this Section 6(a)(4), and will thereupon terminate; and

 

(C) all Stock Options held by
a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s
Employment will immediately terminate upon such cessation if the Administrator in its sole discretion determines that such cessation
of Employment has resulted for reasons which cast such discredit on the Participant as to justify immediate termination of the
Award.

 

(5) Taxes. The Administrator
will make such provision for the withholding of taxes as it deems necessary. The Administrator may, but need not, hold back shares
of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements
(but not in excess of the minimum withholding required by law).

 

(6) Dividend Equivalents, etc.
The Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to
Stock subject to an Award. Any entitlement to dividend equivalents or similar entitlements shall be established and administered
consistent either with exemption from, or compliance with, the requirements of Section 409A to the extent applicable.

 

(7) Rights Limited. Nothing
in the Plan will be construed as giving any person the right to continued employment or service with the Company or its Affiliates,
or any rights as a stockholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit
in Awards will not constitute an element of damages in the event of termination of Employment for any reason, even if the termination
is in violation of an obligation of the Company or Affiliate to the Participant.

 

(8) Section 162(m).  This
Section 6(a)(8) applies to any Performance Award intended to qualify as performance-based for the purposes of Section 162(m) other
than a Stock Option. In the case of any Performance Award to which this Section 6(a)(8) applies, the Plan and such Award will be
construed to the maximum extent permitted by law in a manner consistent with qualifying the Award for such exception. With respect
to such Performance Awards, the Administrator will preestablish, in writing, one or more specific Performance Criteria no later
than 90 days after the commencement of the period of service to which the performance relates (or at such earlier time as is required
to qualify the Award as performance-based under Section 162(m)). Prior to grant, vesting or payment of the Performance Award, as
the case may be, the Administrator will certify whether the applicable Performance Criteria have been attained and such determination
will be final and conclusive.

 

    	6

    	 

    

 

(9) Section 409A. Except
as the Administrator expressly determines in any case, each Award shall contain such terms, and shall be construed and administered,
such that the Award either (i) qualifies for an exemption from the requirements of Section 409A, or (ii) satisfies such requirements.

 

(10) Certain Requirements of Corporate
Law. Awards shall be granted and administered consistent with the applicable requirements of Massachusetts law relating
to the issuance of stock and the consideration to be received therefor and with the applicable requirements of Nasdaq (if, at such
time, the Company’s Stock is listed on a Nasdaq market).

 

(b)Awards
Requiring Exercise

 

(1) Time And Manner Of Exercise.
Unless the Administrator expressly provides otherwise, an Award requiring exercise by the holder will not be deemed to have
been exercised until the Administrator receives a notice of exercise (in form acceptable to the Administrator) signed by the appropriate
person and accompanied by any payment required under the Award. If the Award is exercised by any person other than the Participant,
the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so.

 

(2) Exercise Price. The exercise
price (or the base value from which appreciation is to be measured) of each Award requiring exercise shall be not less than 100%
of the fair market value of the Stock subject to the Award, determined as of the date of grant. Fair market value shall be determined
by the Administrator consistent with the requirements of Section 409A, as applicable. No such Award, once granted, may be repriced
other than in accordance with the applicable stockholder approval requirements of Nasdaq, if, at such time, the Company’s
Stock is listed on a Nasdaq market.

 

(3) Payment Of Exercise Price.
Where the exercise of an Award is to be accompanied by payment, payment shall be made by delivery of cash or check acceptable to
the Administrator, or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of shares of Stock
that have been outstanding for at least six months (unless the Administrator approves a shorter period) and that have a fair market
value equal to the exercise price, (ii) through a broker-assisted exercise program acceptable to the Administrator, (iii) by other
means acceptable to the Administrator, or (iv) by any combination of the foregoing permissible forms of payment. The delivery of
shares in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive
delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.

 

	7.	EFFECT OF CERTAIN TRANSACTIONS

 

(a)Mergers,
etc. Except as otherwise provided in an Award, the following provisions shall apply
in the event of a Covered Transaction:

 

(1)  Assumption or Substitution.
If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may provide for the assumption
of some or all outstanding Awards or for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate
of the acquiror or survivor. Any substitution or assumption of a Stock Option exempt from the requirements of Section 409A shall
be accomplished on a basis that preserves such exemption.

 

    	7

    	 

    

 

(2)  Cash-Out of Awards.
If the Covered Transaction is one in which holders of Stock will receive a payment upon consummation, the Administrator may provide
for payment (a “cash-out”), with respect to some or all Awards or portions thereof, equal in the case of each affected
Award or portion thereof to the excess, if any, of (A) the fair market value of one share of Stock (as determined by the Administrator
in its reasonable discretion) times the number of shares of Stock subject to the Award or such portion, over (B) the aggregate
exercise or purchase price, if any, under the Award or such portion, in each case on such payment terms (which need not be the
same as the terms of payment to holders of Stock) and other terms, and subject to such conditions, as the Administrator determines;
provided, that the Administrator shall not exercise its discretion under this Section 7(a)(2) with respect to an Award providing
for “nonqualified deferred compensation” subject to Section 409A in a manner that would constitute an extension or
acceleration or, or other change in, payment terms if such change would be inconsistent with the requirements of Section 409A.

 

(3) Acceleration of Certain Awards.
If the Covered Transaction (whether or not there is an acquiring or surviving entity) is one in which there is no assumption, substitution
or cash-out, each Award requiring exercise will become fully exercisable, and the delivery of shares of Stock deliverable under
each outstanding Award of Stock Units (including Restricted Stock Units and Performance Awards to the extent consisting of Stock
Units) will be accelerated and such shares will be delivered, prior to the Covered Transaction, in each case on a basis that gives
the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery
of the shares, as the case may be, to participate as a stockholder in the Covered Transaction; provided, that to the extent
acceleration pursuant to this Section 7(a)(3) of an Award subject to Section 409A would cause the Award to fail to satisfy the
requirements of Section 409A, the Award shall not be accelerated and the Administrator in lieu thereof shall take such steps as
it deems necessary or appropriate to ensure that payment of the Award is made in a medium other than Stock and on terms that as
nearly as possible, but taking into account adjustments required or permitted by this Section 7, mirror the prior terms of the
Award.

 

(4) Termination of Awards Upon Consummation
of Covered Transaction. Each Award will terminate upon consummation of the Covered Transaction, other than the following:
(i) Awards assumed pursuant to Section 7(a)(1) above; (ii) Awards converted pursuant to the proviso in Section 7(a)(3) above into
an ongoing right to receive payment other than Stock; and (iii) outstanding shares of Restricted Stock (which shall be treated
in the same manner as other shares of Stock, subject to Section 7(a)(5) below).

 

(5) Additional
Limitations. Any share of Stock delivered pursuant to Section 7(a)(2) or Section
7(a)(3) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator
deems appropriate to reflect any performance or other vesting conditions to which the Award was subject. In the case of Restricted
Stock, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection
with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate
to carry out the intent of the Plan.

 

    	8

    	 

    

 

(b)Change
in and Distributions With Respect to Stock

 

(1) Basic Adjustment Provisions.
In the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other
change in the Company’s capital structure, the Administrator shall make appropriate adjustments to the maximum number of
shares specified in Section 4(a) that may be delivered under the Plan and shall also make appropriate adjustments to the number
and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating
to Awards and any other provision of Awards affected by such change.

 

(2) Certain Other Adjustments.
The Administrator may also make adjustments of the type described in Section 7(b)(1) above to take into account distributions to
stockholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that
adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder,
having due regard for the requirements of Section 409A, and the performance-based compensation rules of Section 162(m), where applicable.

 

(3) Continuing Application of Plan
Terms. References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an
adjustment pursuant to this Section 7.

 

	8.	LEGAL CONDITIONS TO DELIVERY OF STOCK

 

The Company will not be obligated to deliver
any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan
until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been
addressed and resolved; (ii) if the outstanding Stock is at the time of delivery listed on any stock exchange or national market
system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice
of issuance; and (iii) all conditions of the Award have been satisfied or waived. If the sale of Stock has not been registered
under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations
or agreements as counsel for the Company may consider appropriate to avoid violation of such Act. The Company may require that
certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable
to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.

 

    	9

    	 

    

 

	9.	AMENDMENT AND TERMINATION

 

The Administrator may at any time or times
amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate
the Plan as to any future grants of Awards; provided, that except as otherwise expressly provided in the Plan the Administrator
may not, without the Participant’s consent, alter the terms of an Award so as to affect adversely the Participant’s
rights under the Award, unless the Administrator expressly reserved the right to do so at the time of the Award. Any amendments
to the Plan shall be conditioned upon stockholder approval only to the extent, if any, such approval is required by law (including
the Code and applicable stock exchange requirements), as determined by the Administrator.

 

	10.	OTHER COMPENSATION ARRANGEMENTS

 

The existence of the Plan or the grant of
any Award will not in any way affect the Company’s right to Award a person bonuses or other compensation in addition to Awards
under the Plan.

 

	11.	MISCELLANEOUS

 

(a)Clawback.
Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation
or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to
such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such
law, government regulation or stock exchange listing requirement).

 

(b)Waiver
of Jury Trial. By accepting an Award under the Plan, each Participant waives any right
to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment,
waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith,
and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a jury. By accepting
an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented,
expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the
foregoing waivers

 

(c)Limitation
of Liability. Notwithstanding anything to the contrary in the Plan, neither the Company,
any Affiliate, nor the Administrator, nor any person acting on behalf of any of them, shall be liable to any Participant or to
the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any
additional tax, asserted by reason of the failure of an Award to satisfy the requirements of Section 409A or by reason of Section
4999 of the Code; provided, that nothing in this Section 11(b) shall limit the ability of the Administrator or the
Company to provide by separate express written agreement with a Participant for a gross-up payment other payment in connection
with any such tax or additional tax.

 

(c)Governing Law. This
Plan, and all actions taken thereunder, and all Awards shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Massachusetts, applied without regard to the conflict of law principles.

 

	12.	EFFECTIVE DATE OF THE PLAN

 

This Plan shall become effective upon approval
by the Company’s Board. No grants of Stock Options and other Awards may be made hereunder after the tenth (10th)
anniversary of the Effective Date.

 

    	10

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