Is&s 1988 Incentive Stock Option Plan

Exhibit 10.1


INNOVATIVE SOLUTIONS AND SUPPORT, INCORPORATED
1988 INCENTIVE STOCK OPTION PLAN


1. PURPOSE. Innovative Solutions and Support, Incorporated, a Pennsylvania corporation (the "Company"), hereby adopts the Innovative Solutions and Support, Incorporated 1988 Incentive Stock Option Plan effective August 4, 1988 (the "Plan"). The Plan is intended as an additional incentive to individuals to enter into or remain in the employ of the Company or any Affiliate (as defined below) and to devote themselves to the Company's success by providing them with an opportunity to acquire or increase their proprietary interest in the Company through receipt of rights (the "Options") to acquire the Company's Common Stock, par value $0.001 (the "Common Stock"). Each Option granted under the Plan is intended to be an incentive stock option ("ISO") within the meaning of Section 422A(b) of the Internal Revenue Code of 1986 (the "Code") for federal income tax purposes. For purposes of the Plan, the term "Affiliate" shall mean a corporation which is a parent corporation or a subsidiary corporation with respect to the Company within the meaning of section 425(e) or (f) of the Code.


2. ADMINISTRATION. The Plan shall be administered by the Board of Directors of the Company; however, subject to compliance with any applicable by-law or agreement binding upon the Company, the Board of Directors may designate a committee composed of two or more of its members to operate and administer the Plan in its stead. The committee or the Board of Directors


in its administrative capacity with respect to the Plan is referred to as the "Committee".


(a) MEETINGS. The Committee shall hold meetings at such times and places as it may determine. Acts approved at a meeting by a majority of the members of the Committee or acts approved in writing by the unanimous consent of the members of the Committee shall be the valid acts of the Committee.


(b) GRANTS. The Committee shall from time to time at its discretion direct the Company to grant Options pursuant to the terms of the Plan. The Committee shall have plenary authority to determine the employees to whom and the times at which Options shall be granted, the number of Option Shares (as defined in Section 4) to be granted and the price and other terms and conditions thereof, subject, however, to the express provisions of the Plan. In making such determinations the Committee may take into account the nature of the employee's services and responsibilities, the employee's present and potential contribution to the Company's success and such other factors as it may deem relevant. The interpretation and construction by the Committee of any provision of the Plan or of any Option granted under it shall be final, binding and conclusive.


(c) EXCULPATION. No member of the Board of Directors or of the Committee shall be personally liable for monetary damages as such for any action taken or any failure to take any action in connection with the administration of the Plan


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or the granting of Options under it unless (i) the director or member of the Committee has breached or failed to perform the duties of his office under Section 8363 of the Pennsylvania Directors' Liability Act (relating to standard of care and justifiable reliance), and (ii) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness; provided, however, that the provisions of this subsection 2(c) shall not apply to the responsibility or liability of a director or a member of the Committee pursuant to any criminal statute or to the liability of a director or a member of the Committee for the payment of taxes pursuant to local, state or federal law.


(d) INDEMNIFICATION. Each member of the Board of Directors or of the Committee shall be entitled without further act on his part to indemnity from the Company to the fullest extent provided by applicable law and the Company's Articles of Incorporation and/or by-laws in connection with or arising out of any action, suit or proceeding with respect to the administration of the Plan or the granting of Options under it in which he may be involved by reason of his being or having been a member of the Board of Directors or the Committee, whether or not he continues to be such member of the Board or the Committee at the time of the action, suit or proceeding.


3. ELIGIBILITY. All employees of the Company or its Affiliates (who may also be directors of the Company or its Affiliates) shall be eligible to receive Options hereunder. An employee who receives an Option is referred to as an "Optionee."


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The Committee, in its sole discretion, shall determine whether an individual qualifies as an employee. An employee may receive more than one Option, but only on the terms and subject to the restrictions of the Plan.


4. OPTION SHARES. The aggregate maximum number of shares of the Common Stock for which Options may be issued under the Plan is 45,000 shares, adjusted as provided in Section 8 (the "Option Shares"). Option Shares shall be issued from authorized and unissued Common Stock or Common Stock held in or hereafter acquired for the treasury of the Company. If any outstanding Option granted under the Plan expires, lapses or is terminated for any reason, the Option Shares allocable to the unexercised portion of such Option may again be the subject of an Option granted pursuant to the Plan.


5. TERM OF PLAN. The Plan is effective as of August 4, 1988, the date on which it was adopted by the Board of Directors. If the Plan is not approved by vote of a majority of the outstanding voting stock of the Company on or before August 4, 1989, no Option granted pursuant to the Plan shall be an ISO and all Options granted under the Plan shall remain outstanding but shall not be treated as ISOs. No Option may be granted under the Plan after August 4, 1998.


6. TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the Plan shall be evidenced by written documents (the "Option Documents") in such form as the ...