Document:

Exhibit 4.2

 

REGISTRATION
RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”) is made and entered into as of May 11, 2017, by and among
InsPro Technologies Corporation, a Delaware corporation (the “Company”), and the investors signatory
hereto (each an “Investor” and collectively, the “Investors”).

 

This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, among the Company and the Investors
(the “Purchase Agreement”).

 

In
consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and the Investors hereby agree as follows, with the intent to be legally
bound hereby:

 

1.           Definitions.
Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given
such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the respective meanings set forth
in this Section 1:

 

“Common
Stock” means the common stock, par value $0.001 per share, of the Company.

 

“Conversion
Shares” means the shares of Common Stock issuable upon conversion of the Preferred Stock.

 

“Demand
Notice” has the meaning set forth in Section 2(a) of this Agreement.

 

“Effective
Date” means the date that the Registration Statement filed pursuant to Section 2(a), 2(b) or 2(c) of this Agreement
is first declared effective by the Commission.

 

“Effectiveness
Date” means: (a) with respect to the initial Registration Statement required to be filed under Section 2(a) to cover
the resale by the Holders of the Registrable Securities the 60th calendar day after the Filing Date (or the 120th calendar day
after the Filing Date in the event that such Registration Statement is subject to review by the Commission) and (b) with respect
to any additional Registration Statements that may be required pursuant to Section 2(b) or 2(c) hereof, the 90th calendar day
following the date on which the Company first knows, or reasonably should have known, that such additional Registration Statement
is required under such Section (or the 150th calendar day after such date in the event that such Registration Statement is subject
to review by the Commission).

 

“Effectiveness
Period” shall have the meaning set forth in Section 2(a).

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

    

     

    

 

“Excluded
Registration” means (i) a registration relating solely to the sale of securities to employees of the Company or a subsidiary
of the Company pursuant to a stock option, stock purchase, or similar plan or (ii) a registration relating to a Rule 145 transaction.

 

“Filing
Date” means, with respect to the initial Registration Statement required to be filed to cover the resale by the Holders
of the Registrable Securities, 30 days following the receipt of a Demand Notice.

 

“Holder”
or “Holders” means an Investor or Investors (as the case may be), or any transferee or assignee of any
Registrable Securities, to whom an Investor assigns its rights under this Agreement and who agrees to become bound by the provisions
of this Agreement in accordance with the Purchase Agreement and any transferee or assignee thereof to whom a transferee or assignee
of any Registrable Securities assigns its rights under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with the Purchase Agreement.

 

“Indemnified
Party” shall have the meaning set forth in Section 5(c).

 

“Indemnifying
Party” shall have the meaning set forth in Section 5(c).

 

“Losses”
shall have the meaning set forth in Section 5(a).

 

“Preferred
Stock” means shares of Series C Convertible Preferred Stock, $0.001 par value per share, of the Company.

 

“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

 

“Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering
of any portion of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements
to such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated
by reference in such prospectus.

 

“register,”
“registered,” and “registration” refer to a registration effected by preparing and filing
one or more Registration Statements (as defined below) in compliance with the Securities Act and pursuant to Rule 415 and the
declaration of effectiveness of such Registration Statement(s) by the Commission.

 

“Registrable
Securities” means (i) the Shares, (ii) the Conversion Shares and (iii) any securities issued or issuable with respect
to the securities referenced in (i) or (ii) above, including, without limitation, as a result of any stock dividend, stock split
or other distribution, recapitalization, merger, consolidation, reorganization, exchange or similar event or otherwise.

 

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“Registration
Statement” means the initial registration statement required to be filed under the Securities Act in accordance with
Section 2(a) and any additional registration statement(s) required to be filed under Sections 2(b) or 2(c), including (in each
case) the Prospectus, amendments and supplements to such registration statements or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such
registration statements.

 

“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“Rule
415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“Rule
424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Shares”
means the shares of Preferred Stock issued or issuable to the Investors by the Company pursuant to the Purchase Agreement.

 

		2.	Demand
Registration.

 

(a)       If
at any time after the date of this Agreement the Company receives a request from a Holder of Registrable Securities that the Company
file a Registration Statement on Form S-1 covering the resale of the Registrable Securities held by such Holder (a “Demand
Notice”), then the Company shall (i) within five (5) days after the date it receives the Demand Notice, give notice
thereof to all other Holders and (ii) as soon as reasonably practicable, but in no event later than the Filing Date, file with
the Commission a Registration Statement on Form S-1 covering the resale of all Registrable Securities of the Holder that provided
the Demand Notice and any additional Registrable Securities requested by the other Holders to be included therein, as specified
by each such other Holder within twenty (20) days after such Holder has received notice from the Company pursuant to clause (i);
provided that such Registration Statement need not include Registrable Securities already covered by an existing and effective
Registration Statement The Registration Statement shall be for an offering to be made on a continuous basis pursuant to Rule 415.
The Registration Statement shall contain (except if otherwise required pursuant to written comments received from the Commission
upon a review of such Registration Statement) the “Plan of Distribution” attached hereto as Annex A. The Company
shall use its reasonable best efforts to cause the Registration Statement to be declared effective under the Securities Act as
soon as practicable but, in any event, no later than the Effectiveness Date, and shall use its reasonable best efforts to keep
the Registration Statement effective under the Securities Act until the date when all Registrable Securities covered by the Registration
Statement have been sold or may be sold without volume restrictions pursuant to Rule 144(b)(i) promulgated under the Securities
Act (the “Effectiveness Period”).

 

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(b)       If
for any reason the Commission does not permit all of the Registrable Securities requested by a Holder to be included in the Registration
Statement filed pursuant to Section 2(a), or for any other reason any such Registrable Securities are not permitted by the Commission
to be included on a Registration Statement filed under this Agreement, then the Company shall prepare and file as soon as possible
after the date on which such filing may be made, an additional Registration Statement covering the resale of all of the Registrable
Securities requested by Holder not already covered by an existing and effective Registration Statement for an offering to be made
on a continuous basis at the market pursuant to Rule 415 or otherwise as may be acceptable to a Holder whose Registrable Securities
were not registered for resale. Each such Registration Statement shall contain (except if otherwise required pursuant to written
comments received from the Commission upon a review of such Registration Statement) the “Plan of Distribution” attached
hereto as Annex A. The Company shall use its reasonable best efforts to cause each such Registration Statement to be declared
effective under the Securities Act as soon as possible but, in any event, no later than its Effectiveness Date, and shall use
its reasonable best efforts to keep such Registration Statement effective under the Securities Act during the entire Effectiveness
Period.

 

(c)       If:
(i) a Registration Statement covering all of the Registrable Securities required to be covered thereby is not filed by the Company
with the Commission on or prior to the Filing Date (or the applicable filing date if the Registration Statement is not the initial
Registration Statement required to be filed under Section 2(a)), (ii) a Registration Statement covering all of the Registrable
Securities is not declared effective by the Commission on or prior to its required Effectiveness Date (it being understood that
if the Company shall not have filed a “final” prospectus for the Registration Statement with the SEC under Rule 424(b)
in accordance with Section 2(f) below (whether or not such a prospectus is technically required by such rule), the Company shall
not be deemed to have satisfied this clause (ii)), (iii) the Company fails to file a request for the acceleration of the Effectiveness
Date of the applicable Registration Statement as required by Section 3(c), (iv) there is a suspension or delisting of the Company’s
Common Stock (or the Company fails to timely list all the Registrable Securities) on its principal trading market or exchange,
(v) after its Effective Date, other than during an Allowable Grace Period (as defined below), such Registration Statement ceases
to be effective and available for use by the Holders as to any Registrable Securities to which it is required to cover at any
time prior to the expiration of its Effectiveness Period for up to no more than 3 consecutive Trading Days (or 20 Trading Days
in any 12 month period in the aggregate) (any such failure or breach being referred to as an “Event,”
and for purposes of clauses (i)-(iv), on the date on which such Event occurs, or for purposes of clause (v), the date on which
the Allowable Grace Period or other specified period is exceeded, being referred to as “Event Date”), then,
in addition to any other rights available to the Holders under this Agreement or under applicable law: (x) on each such Event
Date the Company shall pay to each Holder an amount in cash, as partial damages and not as a penalty, equal to 1.5% of the aggregate
Investment Amount paid by such Holder pursuant to the Purchase Agreement; and (y) on each 30-day anniversary of each such Event
Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay
to each Holder an amount in cash, as partial damages and not as a penalty, equal to 1.5% of the aggregate Investment Amount paid
by such Holder pursuant to the Purchase Agreement. The partial damages pursuant to the terms hereof shall apply on a pro rata
basis for any portion of a month prior to the cure of an Event. Notwithstanding the foregoing, in no event shall the partial damages
under this Section 2(d) exceed an amount equal to 20% of the aggregate Investment Amounts.

 

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(d)       Notwithstanding
anything to the contrary contained in this Agreement, in the event the staff of the Commission (the “Staff”)
or the Commission requires any Holder seeking to sell securities under a Registration Statement filed pursuant to this Agreement to
be specifically identified as an ”underwriter” in order to permit such Registration Statement to become
effective, and such Holder does not consent to being so named as an underwriter in such Registration Statement, then in each
such case, the Company shall reduce the total number of Registrable Securities to be registered on behalf of such Holder, until
such time as the Staff or the Commission does not require such identification or until such Holder accepts such identification
and the manner thereof. Any reduction pursuant to this paragraph will first reduce all Registrable Securities other
than those issued pursuant to the Purchase Agreement and in the event of any reduction pursuant to this paragraph, no Holder shall
have any claim against the Company as a result of such reduction and any Event or other delay or breach of this Agreement occurring
primarily due to such action by the Staff or the Commission and any such relating reduction shall not require the Company to pay
any partial damages or otherwise provide the basis for any claim by any Holder against the Company pursuant to the Transaction
Documents (it being understood that the foregoing does not constitute a waiver of Section 3.2(f) of the Securities Purchase Agreement
by any Holder or the obligations of the Company under this paragraph and elsewhere in relation thereto). In the event of
any reduction in Registrable Securities pursuant to this paragraph, an affected Holder shall have the right to require,
upon delivery of a written request to the Company signed by the Holder, the Company to file a registration statement within 30
days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the Commission) for
re-sale by such Holder in a manner acceptable to such Holder, and the Company shall following such request cause to be and
keep effective such registration statement in the same manner as otherwise contemplated in this Agreement for registration
statements hereunder, in each case until such time as: (i) all Registrable Securities held by such Holder have been registered
pursuant to an effective Registration Statement in a manner acceptable to such Holder or (ii) the Registrable Securities
may be resold by such Holder without restriction (including volume limitations) pursuant to Rule 144(b)(i) of the Securities
Act (taking account of any Staff position with respect to “affiliate” status) or (iii) the Holder agrees to be named
as an underwriter in any such Registration Statement in a manner acceptable to Holder as to all Registrable Securities held by
such Holder and that have not theretofore been included in a Registration Statement under this Agreement (it being understood
that the special demand right under this sentence may be exercised by a Holder multiple times and with respect to limited amounts
of Registrable Securities in order to permit the re-sale thereof by such Holder as contemplated above).

 

(e)       In
the event that Form S-1 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall
use reasonable best efforts to (i) register the resale of the Registrable Securities on another appropriate form reasonably acceptable
to the Holders and (ii) undertake to register the Registrable Securities on Form S-1 as soon as such form is available, provided
that the Company shall use reasonable best efforts to maintain the effectiveness of the Registration Statement then in effect
until such time as a Registration Statement on Form S-1 covering the Registrable Securities has been declared effective by the
Commission. In the event the Company becomes eligible to register the Registrable Securities on Form S-3, the Company shall use
reasonable best efforts to promptly register the Registrable Securities on Form S-3, provided that the Company shall use reasonable
best efforts to maintain the effectiveness of the Registration Statement(s) then in effect until such time as a Registration

 

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Statement
on Form S-3 covering the Registrable Securities has been declared effective by the Commission.

 

(f)       By
5:30 p.m. on the Trading Day immediately following the Effective Date of each Registration Statement, the Company shall file with
the Commission in accordance with Rule 424 under the Securities Act the final prospectus to be used in connection with sales pursuant
to such Registration Statement.

 

		3.	Company
Registration.

 

(a)
       If the Company proposes to register (including for this purpose, a registration effected
by the Company for stockholders other than the Holders), any of its securities under the Securities Act in connection with the
offering of such securities for cash (other than an Excluded Registration), the Company shall, at such time, promptly give each
Holder notice of the proposed registration. Upon the request of each Holder given within twenty (20) days after such notice is
given by the Company, the Company shall, subject to the provisions of Section 3(b), cause to be registered all of the Registrable
Securities that each such holder has requested be included in such registration. The Company shall have the right to terminate
or withdraw any registration initiated by it under this Section 3 before the effective date of such registration, whether or not
any Holder has elected to include Registrable Securities in such registration. The expenses of such withdrawn registration shall
be borne by the Company.

 

(b)       
If a registration under Section 3(a) involves an underwritten offering by the Company, the Company shall not be required to include
any Holder’s Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed
upon between the Company and its underwriters, and then only in such quantity as the underwriters determine will not jeopardize
the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the
underwriters determine is compatible with the success of the offering, then the Company shall be required to include in the offering
only that number of such securities, including Registrable Securities, which the underwriters and the Company determine will not
jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested
to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be
allocated among the selling Holders in proportion (as nearly as practicable) to the number of Registrable Securities owned by
each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders.

 

		4.	Registration
Procedures

 

In
connection with the Company’s registration obligations hereunder, the Company shall:

 

(a)       Not
less than ten (10) Trading Days prior to the filing of a Registration Statement and not less than five (5) Trading Days prior
to the filing of any related Prospectus or any amendment or supplement thereto (except for any amendment or supplement thereto
related

 

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to the filing of an Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar
or successor reports), the Company shall furnish to the Holders copies of such document, as proposed to be filed in substantially
final form. The Company shall (A) permit each Holder to review and comment upon (i) each Registration Statement at least five
(5) Trading Days prior to its filing with the Commission, provided that such comments are received by the Company no later than
three (3) Trading Days after providing such Registration Statement for review, and (ii) all amendments and supplements to all
Registration Statements (except for any amendment or supplement thereto related to the filing of an Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number
of days prior to their filing with the Commission, provided that such comments are received by the Company no later than three
(3) Trading Days after providing such amendment or supplement for review, and (B) shall consider all such reasonable comments
in good faith.

 

(b)       
(i) Prepare and file with the Commission such amendments, including post-effective amendments, to each Registration Statement
and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement continuously effective
as to the applicable Registrable Securities for its Effectiveness Period and prepare and file with the Commission such additional
Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended
to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission
with respect to each Registration Statement or any amendment thereto and, as promptly as reasonably possible provide the Holders
true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that pertain
to the Holders as a Selling Stockholder or to the Plan of Distribution, but would not result in the disclosure to the Holders
of material, non-public information concerning the Company or any of its subsidiaries; and (iv) comply in all material respects
with the provisions of the Securities Act and the Exchange Act with respect to the Registration Statements and the disposition
of all Registrable Securities covered by each Registration Statement. In the case of amendments and supplements to a Registration
Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 4(b)) by reason of the
Company filing a report on Form 10-Q or Form 10-K or any analogous report under the Exchange Act, the Company shall have incorporated
such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the
Commission on the same day on which the Exchange Act report is filed, if practicable. The Company shall ensure that each Registration
Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein
(in the case of prospectuses, in the light of the circumstances in which they were made) not misleading.

 

(c)       Notify
the Holders’ Counsel (which may occur electronically and any other notifications or documents required to be provided to
a Holder or any other party hereunder may be provided electronically pursuant to the notice provisions contained herein) as promptly
as reasonably possible and (if requested by any such Person) confirm such notice in writing no later than one three (3) Trading
Days following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement
is proposed to be filed or is

 

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filed; (B) when the Commission notifies the Company whether there will be a “review”
of a Registration Statement or post-effective amendment and whenever the Commission comments in writing on such Registration Statement
or post-effective amendment (the Company shall provide true and complete copies thereof and all written responses thereto to each
of the Holders, but not information which the Company believes in good faith would constitute material, non-public information);
and (C) with respect to each Registration Statement or any post-effective amendment, when the same has become effective; (ii)
of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to a Registration
Statement or Prospectus or for additional information that pertains to the Holders as a Selling Stockholder or to the Plan of
Distribution; (iii) of the issuance by the Commission of any stop order or other suspension of the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration
Statement ineligible for inclusion therein or any statement made in such Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to
such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
The Company shall submit to the Commission, within two (2) Trading Days after the date that the Company learns that no review
of a particular Registration Statement will be made by the Staff or the Commission or that such Staff has no further comments
on a particular Registration Statement (as the case may be); provided that the financial information included in such Registration
Statement meets all applicable SEC requirements.

 

(d)       Use
its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any stop order or other suspension
of the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification)
of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest practicable moment and each Holder
who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such purpose.

 

(e)       Furnish
to each Holder, without charge, at least one conformed copy of each Registration Statement and each amendment thereto and all
exhibits to the extent requested by such Person (including those previously furnished) promptly after the filing of such documents
with the Commission.

 

(f)       Promptly
deliver to each Holder, without charge, as many copies of each Prospectus or Prospectuses (including each form of prospectus)
and each amendment or supplement thereto as such Persons may reasonably request from time to time and such other documents as
such Holder may reasonably request from time to time in order to facilitate the

 

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disposition of the Registrable Securities owned
by such Holder. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto.

 

(g)       Prior
to any resale of Registrable Securities, use its reasonable best efforts to (i) register or qualify or cooperate with the selling
Holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of those specific jurisdictions within the United States which
the Holders may reasonably request from time to time in writing to the Company, (ii) keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and (iii) do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statements;
provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then
so qualified or subject the Company to any material tax in any such jurisdiction where it is not then so subject. The Company
shall promptly notify each Holder of the receipt by the Company of any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale under the securities or Blue Sky laws of any jurisdiction in the
United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

 

(h)       Cooperate
with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to the Registration Statements, which certificates shall be free, to the extent permitted by the Purchase
Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in
such names as any such Holders may request.

 

(i)       Upon
the occurrence of any event contemplated by Section 4(c)(v), as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the affected Registration Statements or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter
delivered, no Registration Statement nor any Prospectus will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading.

 

(j)       Each
Holder agrees to furnish to the Company a completed Selling Questionnaire in the form attached to this Agreement as Annex B
(a “Selling Holder Questionnaire”). The Company shall not be required to include the Registrable Securities
of a Holder in a Registration Statement and shall not be required to pay any partial or other damages under Section 2(d) hereof
to such Holder who fails to furnish to the Company a fully completed Selling Holder Questionnaire at least five (5) Trading Days
prior to the Filing Date).

 

(k)       If
requested by a Holder, the Company shall as soon as practicable after receipt of notice from such Holder and subject to Section
3(p) hereof, use reasonable best efforts to (i) incorporate in a prospectus supplement or post-effective amendment such information
as a Holder reasonably requests to be included therein relating to the sale and distribution of

 

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Registrable Securities, including,
without limitation, information with respect to the number of Registrable Securities being offered or sold, the purchase price
being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering; (ii) make all
required filings of such prospectus supplement or post-effective amendment after being notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement
if reasonably requested by a Holder holding any Registrable Securities.

 

(l)       The
Company shall use its reasonable best efforts to cause the Registrable Securities covered by a Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be necessary to consummate the disposition of such
Registrable Securities.

 

(m)       The
Company shall otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission
in connection with any registration hereunder. Within one (1) Trading Day after a Registration Statement which covers Registrable
Securities is declared effective by the Commission, the Company shall deliver, and shall cause legal counsel for the Company to
deliver, to the transfer agent for such Registrable Securities (with copies to the Holders whose Registrable Securities are included
in such Registration Statement) confirmation that such Registration Statement has been declared effective by the Commission in
a customary form.

 

(n)       Notwithstanding
anything to the contrary herein (but subject to the last sentence of this Section 4(p), at any time after the Effective Date of
the initial Registration Statement required to be filed hereunder pursuant to Section 2(a), the Company may delay the disclosure
of material, non-public information concerning the Company the disclosure of which at the time is not, in the good faith determination
of the Board of Directors of the Company, in the best interest of the Company and is not, in the opinion of Board of Directors
of the Company, after consultation with the Company’s counsel, otherwise required (a “Grace Period”);
provided, that the Company shall promptly (i) notify the Holders in writing of the existence of material, non-public information
giving rise to a Grace Period (provided that in each notice the Company will not disclose the content of such material, non-public
information to the Holders) and the date on which the Grace Period will begin, and (ii) notify the Holders in writing of
the date on which the Grace Period ends; and, provided that no Grace Period shall exceed thirty (30) consecutive days and during
any three hundred sixty five (365) day period such Grace Periods shall not exceed an aggregate of sixty (60) days and the first
day of any Grace Period must be at least two (2) Trading Days after the last day of any prior Grace Period (each, an “Allowable
Grace Period”); provided further, that no Allowable Grace Period may exist during the first thirty (30) Trading Days
after the Effective Date of the initial Registration Statement required to be filed hereunder pursuant to Section 2(a). For purposes
of determining the length of a Grace Period above, the Grace Period shall begin on and include the date the Holders receive the
notice referred to in clause (i) and shall end on and include the later of the date the Holders receive the notice referred to
in clause (ii) and the date referred to in such notice. Notwithstanding anything to the contrary contained in this Section 4(p),
the Company shall cause its transfer agent to deliver shares of Common Stock to a transferee of a Holder in accordance with the
terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which such Holder has entered
into a contract for sale, and delivered a copy of the prospectus included as part

 

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of the applicable Registration Statement (to
the extent required under applicable securities laws), prior to such Holder’s receipt of the notice of a Grace Period and
for which such Holder has not yet settled.

 

(o)       At
the reasonable request of any Holder, the Company shall use its reasonable best efforts to furnish to such Holder, on the date
of the effectiveness of the Registration Statement or any additional registration statement required by the terms of this Agreement
and thereafter from time to time on such dates as a Holder may reasonably request (i) a letter, dated such date, from the Company’s
independent certified public accountants in form and substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering, addressed to the Holders, and (ii) an opinion, dated as of such date, of counsel
representing the Company for purposes of such Registration Statement or such additional registration statement, in form, scope
and substance as is customarily given in an underwritten public offering, addressed to the Holders.

 

(p)       The
Company shall make available for inspection by (i) any Holder, (ii) legal counsel to any Holder and (iii) one firm of accountants
or other agents retained by the Holders (collectively, the “Inspectors”), all pertinent financial and other
records, and pertinent corporate documents and properties of the Company (collectively, the “Records”), as
shall be reasonably deemed necessary by each Inspector, and cause the Company’s officers, directors and employees, and shall
use its reasonable best efforts to cause its counsel and the Company’s independent certified public accountants to, supply
all information which may be necessary and any Inspector may reasonably request; provided, however, that prior to inspection,
each Inspector shall agree to hold in strict confidence and shall not make any disclosure (except to an Investor) or use of any
Record or other information which the Company determines in good faith to be confidential, pursuant to the terms of a Confidentiality
Agreement in form and substance reasonably satisfactory to the Company. Nothing herein shall be deemed to limit the Holders’
ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations.

 

(q)       If
requested by a Holder, the Company shall, within five days of receipt of notice from such Holder, (i) incorporate in a prospectus
supplement or post-effective amendment such information as an Investor reasonably requests to be included therein relating to
the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of
Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the
Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement if reasonably requested by an Investor holding any Registrable
Securities.

 

(r)       The
Company shall make generally available to its security holders as soon as practical, but not later than 90 days after the close
of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of
Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal
quarter next following the Effective Date of the Registration Statement or any additional registration statement required by the
terms of this Agreement.

 

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5.           Registration
Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without
limitation, fees and expenses (A) with respect to filings required to be made with any Trading Market on which the Common Stock
is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing
of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall
be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated
by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any audit and the fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder.

 

		6.	Indemnification.

 

(a)       Indemnification
by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder,
the officers, directors, agents, investment advisors, partners, members, employees, agents and representatives of each of them,
each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and officers, directors, agents, investment advisors, partners, members, employees, agents and representatives of each such
controlling Person (each an “Indemnified Person”), to the fullest extent permitted by applicable law, from
and against any and all losses, claims, damages, liabilities, judgments, fines, penalties, charges, amounts paid in settlement,
costs and expenses, joint or several, (including, without limitation, reasonable out-of-pocket costs of preparation and reasonable
attorneys’ fees and expenses) (collectively, “Losses”), as incurred, arising out of or relating to (i)
any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus or any form
of prospectus or in any amendment or supplement thereto, in any preliminary prospectus or in any filing made in connection with
the qualification of the offering under the securities or other Blue Sky laws of any jurisdiction in which Registrable Securities
are offered, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light
of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (1) such untrue
statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method
of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use
in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being

 

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understood that the Holder has approved Annex A hereto for this purpose) or (2) in the case of an occurrence of an event
of the type specified in Section 4(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of an
Advice or an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the
amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been corrected and no grounds
for such Loss would have existed; or (ii) any violation or alleged violation by the Company of the Securities Act, the Exchange
Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to
the offer or sale of the Registrable Securities pursuant to a Registration Statement. The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated
by this Agreement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of any of the Registrable Securities by any of the Holders.

 

(b)       Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, arising solely out of or based solely upon: (x) such Holder’s
failure to comply with the prospectus delivery requirements of the Securities Act to the extent applicable or (y) any untrue statement
of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising solely out of or based solely upon any omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading to the extent, but only to the extent that, (1) such untrue statements
or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly
for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution
of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration
Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of
Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in
Section 4(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder
in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of an Advice or an amended or
supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented
Prospectus the misstatement or omission giving rise to such Loss would have been corrected and no grounds for such Loss would
have existed. In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the
net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.
The indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 6(d)
shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the prior written consent of
the applicable Holder, which consent shall not be unreasonably withheld or delayed.

 

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(c)       Conduct
of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder
(an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall
be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that
such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

 

An
Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying
Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party);
provided that the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys
at any time for all Indemnified Parties. The Indemnified Party shall reasonably cooperate with the Indemnifying Party in connection
with any negotiation or defense of any such action or Losses by the Indemnifying Party and shall furnish to the Indemnifying Party
all information reasonably available to the Indemnified Party which relates to such action or Losses. The Indemnifying Party shall
keep the Indemnified Party reasonably apprised at all times as to the status of the defense or any settlement negotiations with
respect thereto. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld, effect any settlement of any pending Proceeding in respect
of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such Proceeding.

 

All
reasonable out-of-pocket fees and expenses of the Indemnified Party (including reasonable out-of-pocket fees and expenses to the
extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses
to the extent it is finally judicially determined that such Indemnified Party is

 

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not entitled to indemnification hereunder).

 

No
Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) in connection with such sale shall be entitled to indemnification from any Person involved in such
sale of Registrable Securities who is not guilty of fraudulent misrepresentation.

 

The
indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party
against the Indemnifying Party or others, and (ii) any liabilities the Indemnifying Party may be subject to pursuant to the law.

 

(d)       Contribution.
If a claim for indemnification under Section 6(a) or 6(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 6(c), any reasonable out-of-pocket
attorneys’ fees or expenses or other reasonable out-of-pocket fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its terms.

 

The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred
to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6(d), (i) no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise
been required to pay, or would otherwise be required to pay under Section 6(b), by reason of such untrue or alleged untrue statement
or omission or alleged omission; (ii) no contribution shall be made under circumstances where the maker would not have been liable
for indemnification under the fault standards set forth in Section 6 hereof and (iii) no Person involved in the sale of Registrable
Securities which Person is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
in connection with such sale shall be entitled to contribution from any Person involved in such sale of Registrable Securities
who was not guilty of fraudulent misrepresentation.

 

The
indemnity and contribution agreements contained in this Section are in

 

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addition to any liability that the Indemnifying Parties
may have to the Indemnified Parties.

 

7.            Reports
Under the Exchange Act. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities
Act or any other similar rule or regulation of the Commission that may at any time permit the Holders to sell securities of the
Company to the public without registration, the Company agrees to use reasonable best efforts to:

 

(a)       make
and keep public information available, as those terms are understood and defined in Rule 144;

 

(b)       file
with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the
Exchange Act so long as the Company remains subject to such requirements (it being understood that nothing herein shall limit
the Company’s obligations under the Purchase Agreement) and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and

 

(c)       furnish
to each Holder so long as such Holder owns Registrable Securities, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company if such
reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to permit the Holders
to sell such securities pursuant to Rule 144 without registration.

 

8.             Miscellaneous.

 

(a)       Remedies.
In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company,
as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this Agreement (without the obligation to post a bond
or any other type of security). The Company and each Holder agree that monetary damages would not provide adequate compensation
for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that,
in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law
would be adequate.

 

(b)       No
Piggyback on Registrations. Except as set forth on Schedule 8(b) attached hereto, neither the Company nor any of its security
holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in a Registration Statement
required to be filed hereunder other than the Registrable Securities, provided that no securities set forth on Schedule 8(b) may
be included in a Registration Statement if including any such securities would adversely affect any of the Holders. The Company
shall not after the date hereof until the initial Effective Date enter into any agreement providing any such right to any of its
security holders.

 

(c)       Compliance.
Each Holder covenants and agrees that it will comply with any prospectus delivery requirements of the Securities Act as applicable
to it and otherwise

 

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comply with all applicable securities laws in connection with sales of Registrable Securities pursuant to
the Registration Statement.

 

(d)       Discontinued
Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in clauses (ii) through (v) of Section 4(c), such Holder will forthwith
discontinue disposition of such Registrable Securities under the Registration Statement until such Holder’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional
or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement.
The Company may provide appropriate stop orders to enforce the provisions of this paragraph. Notwithstanding anything to the contrary
in this Section 7(d), the Company shall cause its transfer agent to deliver shares of Common Stock to a transferee of a Holder
in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities with respect to which
such Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the applicable Registration
Statement (to the extent required under applicable securities laws) prior to such Holder’s receipt of a notice from the
Company of the happening of any event of the kind described in Section 4(c)(ii)-(v).

 

(e)       Amendments
and Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed by the Company
and the Holders of no less than a majority of the outstanding Registrable Securities; provided that any party shall have the right
to provide a waiver with regard to itself. No waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right.

 

(f)       Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing or
via e-mail and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile or e-mail at the facsimile telephone number or e-mail address, as applicable, specified in this Section
prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile or e-mail at the facsimile telephone number or e-mail address, as applicable, specified
in this Agreement later than 6:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such
date, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service (with next
day delivery specified), or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for
such notices and communications shall be as follows:

 

	If to the Company:	InsPro Technologies Corporation
	 	1510 Chester Pike, Eddystone , PA 19022
	 	Facsimile: (484) 654-2209
	 	Attn: Vice President and Controller

 

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	With a copy to:	Morgan, Lewis & Bockius LLP
	 	1701 Market Street, Philadelphia, PA 19103
	 	Facsimile: (215) 963-5001
	 	Attn: James W. McKenzie, Jr., Esq.
	 	 
	If to an Investor:	To the address, e-mail address or facsimile number set forth under such Investor’s name 

on the signature pages hereof;
	 	 
	If to any other Person who is then the registered Holder:
	 
	 	To the address, e-mail address or facsimile number of such Holder as it appears in the stock transfer books of the Company

 

or
such other address, e-mail address or facsimile number as may be designated hereafter, in the same manner, by such Person.

 

(g)       Successors
and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons
as permitted under the Purchase Agreement.

 

(h)       Execution
and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed
to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.
Each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,”
“includes,” “include” and words of like import shall be construed broadly as if followed
by the words “without limitation.” The terms “herein,” “hereunder,” “hereof”
and words of like import refer to this entire Agreement instead of just the provision in which they are found.

 

(i)       Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed
by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles
of conflicts of law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be commenced exclusively in the state and federal courts sitting in the City of Wilmington, State of Delaware,
(the “Delaware Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the
Delaware Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby

 

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irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally
subject to the jurisdiction of any Delaware Court, or that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any Proceeding arising out of or relating to this Agreement or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in
such Proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with
the investigation, preparation and prosecution of such Proceeding.

 

(j)       Cumulative
Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

 

(k)       Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would
have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.

 

(l)       Headings.
The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

(m)       Entire
Agreement. This Agreement, the other Transaction Documents (as defined in the Purchase Agreement), the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof. There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein and therein. This Agreement, the other Transaction Documents, the schedules and
exhibits attached hereto and thereto and the instruments referenced herein and therein supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

 

(n)       Independent
Nature of Holders’ Obligations and Rights. The obligations of each Holder under this Agreement and the other Transaction
Documents are several and not joint with the obligations of any other Holder, and no Holder shall be responsible in any way for
the performance of the obligations of any other Holder under this Agreement or any other Transaction Document. Nothing contained
herein or in any other Transaction Document, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a

 

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presumption
that the Holders are in any way acting in concert or as a group or entity with respect to such obligations or the transactions
contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Holders are not acting in concert
or as a group with respect to such obligations or the transactions contemplated by this Agreement or any of the other the Transaction
Documents. Each Holder shall be entitled to independently protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any other Holder to
be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations
of the Company contained herein was solely in the control of the Company, not the action or decision of any Holder, and was done
solely for the convenience of the Company and not because it was required or requested to do so by any Holder.

 

(o)       No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent and no rules of strict construction will be applied against any party.

 

(p)       No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than
the Persons referred to in Section 5 hereof.

 

(q)       Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents as any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

 

[signature
page follows]

 

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IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

 

	 	INSPRO TECHNOLOGIES CORPORATION
	 	 	 
	 	By:	/s/ Anthony R. Verdi
	 	Name:	Anthony R. Verdi
	 	Title:	Chief Operating
	 	 	Officer and Chief Financial Officer

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES OF INVESTORS TO FOLLOW]

 

    

     

    

 

	 	 	 
	 	Azeez Enterprises, L.P.
	 	 	 
	 	By:	/s/ Michael Azeez
	 	 	 Name:  Michael Azeez
	 	 	 Title:    General Partner
	 	 	 
	 	Investment Amount and Shares Purchased at the Closing:
	 	$150,000 Investment Amount – 75,000 Shares Purchased
	 	 	 
	 	Tax ID No.:
	 	 	 
	 	ADDRESS FOR NOTICE
	 	 	 
	 	Facsimile No.:
	 	*E-mail:

 

By
providing an e-mail address, the party listed above hereby consents to electronic delivery of the documents and notices required
to be delivered pursuant to this Agreement.

 

    

     

    

 

 

	 	John Scarpa
	 	 
	 	/s/ John Scarpa
	 	John Scarpa
	 	 
	 	Investment Amount and Shares Purchased at the Closing:
	 	$150,000 Investment Amount – 75,000 Shares Purchased
	 	 
	 	Tax ID No.:
	 	 
	 	ADDRESS FOR NOTICE
	 	 
	 	c/o Unitel
	 	3122 Fire Road
	 	Suite 200
	 	Egg Harbor Township, NJ 08234
	 	Facsimile No.:
	 	*E-mail:

 

By
providing an e-mail address, the party listed above hereby consents to electronic delivery of the documents and notices required
to be delivered pursuant to this Agreement.Exhibit 10.1

 

OVERSTOCK.COM, INC.

 

AMENDED AND RESTATED 2005 EQUITY INCENTIVE PLAN

 

1.    Purposes of the Plan and Limitation on Awards to Non-Employee Directors.    The purposes of this 2005 Equity Incentive Plan are:

 

a.    to attract and retain the best available personnel for positions of substantial responsibility,

 

b.    to provide additional incentive to Service Providers, and

 

c.    to promote the success of the Company’s business.

 

Awards granted under the Plan may be Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Shares, Performance Units or Deferred Stock Units, as determined by the Administrator at the time of grant.

 

Awards to any non-employee Director during any Fiscal Year plus the cash fees payable to such Director during such Fiscal Year for service as an non-employee Director shall not exceed $400,000 in total value (calculating the value of any such Awards based on the grant date fair value for financial reporting purposes of such Awards), plus up to an additional $200,000 for service on any special committee of the Board. Consulting fees or other compensation the Company may pay or provide to any non-employee Director for services in addition to the services normally performed by a non-employee Director shall not be included in calculating such limits.

 

2.    Definitions.    As used herein, the following definitions shall apply:

 

a.    “Administrator” means the Board or any of its Committees that shall be administering the Plan, in accordance with Section 4 of the Plan.

 

b.    “Applicable Laws” means the requirements relating to the administration of equity compensation plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are granted under the Plan.

 

c.    “Award” means, individually or collectively, a grant under the Plan of Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Shares, Performance Units or Deferred Stock Units.

 

d.    “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

 

e.    “Award Exchange Program” means a program whereby outstanding Awards are surrendered or cancelled in exchange for Awards (of the same or different type), which may have a lower exercise or purchase price, or in exchange for cash or a combination of cash and Awards.

 

f.    “Awarded Stock” means the Common Stock subject to an Award.

 

g.    “Board” means the Board of Directors of the Company.

 

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h.    “Cash Position” means the Company’s level of cash and cash equivalents.

 

i.     “Cause” means (i) an act of personal dishonesty taken by a Participant in connection with his or her responsibilities as a Service Provider and intended to result in personal enrichment of the Participant, (ii) a Participant being convicted of a felony, (iii) a willful act by a Participant which constitutes gross misconduct and which is injurious to the Company, or (iv) following delivery to a Participant of a written demand for performance from the Company which describes the basis for the Company’s reasonable belief that the Participant has not substantially performed his duties, continued violations by the Participant of his or her obligations to the Company which are demonstrably willful and deliberate on the Participant’s part.

 

j.     “Change of Control” means the occurrence of any of the following events:

 

i.      Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than Patrick M. Byrne or Dorothy M. Byrne or an individual or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with Patrick M. Byrne and/or Dorothy M. Byrne, becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; or

 

ii.     The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets;

 

iii.    A change in the composition of the Board occurring within a one-year period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” means directors who either (A) are Directors as of the effective date of this Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or

 

iv.    The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 

Notwithstanding anything herein to the contrary, and only to the extent that an Award is subject to Section 409A of the Code and payment of the Award pursuant to the application of the definition of “Change of Control” above would cause such Award not to otherwise comply with Section 409A of the Code, payment of an Award may occur upon a “Change of Control” only to the extent that the event constitutes a “change in the ownership or effective control” of the Company or a “change in the ownership of a substantial portion of the assets” of the Company under Section 409A of the Code and the applicable Internal Revenue Service and Treasury Department regulations thereunder.

 

k.    “Change of Control Value” means, with respect to a Change of Control, (i) the per share price offered to stockholders of the Company in any merger, consolidation, reorganization, sale of assets or dissolution transaction, (ii) the price per share offered to stockholders of the Company in any tender offer, exchange offer or sale or other disposition of outstanding voting stock of the Company, or (iii) if such Change of Control occurs other than as described in clause (i) or clause (ii), the Fair Market Value per share of the Shares into which Awards are exercisable, as determined by the Administrator, whichever is applicable. In the event that the consideration offered to stockholders of the Company consists of anything

 

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other than cash, the Administrator shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash.

 

l.      “Code” means the Internal Revenue Code of 1986, as amended.

 

m.   “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan.

 

n.     “Common Stock” means the common stock of the Company.

 

o.     “Company” means Overstock.com, Inc.

 

p.     “Consultant” means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

 

q.     “Deferred Stock Unit” means a deferred stock unit Award granted to a Participant pursuant to Section 14.

 

r.      “Director” means a member of the Board.

 

s.     “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

 

t.      “Earnings Per Share” means as to any Fiscal Year, the Company’s or a business unit’s Net Income, divided by a weighted average number of common shares outstanding and dilutive common equivalent shares deemed outstanding, determined in accordance with generally accepted accounting principles.

 

u.     “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the 91st day of such leave any Incentive Stock Option held by the Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option.

 

v.     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

w.    “Expenses” means as to any Performance Period, the Company’s or business unit’s incurred expenses.

 

x.     “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

i.  If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

ii.  If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean

 

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between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

iii.  In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.

 

Notwithstanding the foregoing, for purposes of establishing the exercise price of Options and SARs, the determination of Fair Market Value in all cases shall be in accordance with Section 409A of the Code and the regulations thereunder, with the intent that Options and SARs granted under this Plan shall not constitute deferred compensation subject to Section 409A of the Code.

 

y.    “Fiscal Year” means a fiscal year of the Company.

 

z.    “Gross Margin” means as to any Performance Period, the Company’s Revenues less the related cost of Revenues expressed in dollars or as a percentage of Revenues.

 

aa. “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

 

bb. “Individual Objectives” means, as to any Participant for any Performance Period, the objective and measurable goals set by a process and approved by the Administrator.

 

cc.  “Net Income” means as to any Fiscal Year, the income after taxes of the Company for the Fiscal Year determined in accordance with generally accepted accounting principles.

 

dd. “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

 

ee.  “Notice of Grant” means a written or electronic notice evidencing certain terms and conditions of an individual Award. The Notice of Grant is part of the Option Agreement or Award Agreement.

 

ff.   “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

gg.  “Operating Cash Flow” means the Company’s or a business unit’s sum of Net Income plus depreciation and amortization less capital expenditures plus changes in working capital comprised of accounts receivable, inventories, other current assets, trade accounts payable, accrued expenses, product warranty, advance payments from customers and long-term accrued expenses, determined in accordance with generally acceptable accounting principles.

 

hh. “Operating Income” means the Company’s or a business unit’s income from operations but excluding any unusual items, determined in accordance with generally accepted accounting principles.

 

ii.    “Operating Margin” means, as to any Performance Period, the Company’s or a business unit’s Operating Income divided by Revenue, expressed as a percentage.

 

jj.   “Option” means a stock option granted pursuant to the Plan.

 

kk. “Option Agreement” means a written or electronic agreement between the Company and a Participant evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

 

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ll.    “Parent” means a “parent corporation”, whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

mm.“Participant” means the holder of an outstanding Award granted under the Plan.

 

nn. “Performance Goals” means the goal(s) (or combined goal(s)) determined by the Administrator (in its discretion) to be applicable to a Participant with respect to an Award. As determined by the Administrator, the Performance Goals applicable to an Award may provide for a targeted level or levels of achievement using one or more of the following measures: (a) Cash Position, (b) Earnings Per Share, (c) Expenses, (d) Gross Margin, (e) Individual Objectives, (f) Net Income, (g) Operating Cash Flow, (h) Operating Income, (i) Operating Margin, (j) Return on Assets, (k) Return on Equity, (l) Return on Sales, (m) Revenue, (n) Total Stockholder Return, and/or (o) Unit Sales. The Performance Goals may differ from Participant to Participant and from Award to Award. Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms (including, but not limited to, passage of time and/or against another company or companies), (iii) on a per-share basis, (iv) against the performance of the Company as a whole or of a business unit of the Company or by product or product line, (v) on a pre-tax or after-tax basis, and/or on a GAAP or non-GAAP basis. Prior to the beginning of the applicable Performance Period, the Administrator shall determine whether any significant element(s) shall be included or excluded from the calculation of any Performance Goal with respect to any Participants. For example, but not by way of limitation, the Administrator may determine that the measures for one or more Performance Goals shall consist of non-GAAP variations of any of the foregoing measures. The Committee may set different goals for Awards not intended to qualify for exemption from the limitations of Section 162(m) of the Code.

 

The Administrator is authorized, in its sole and absolute discretion, to adjust or modify the calculation of a Performance Goal for a Performance Period (provided, that if an Award is intended to constitute “performance-based compensation” under Section 162(m) of the Code, such adjustment or modification may be made only to the extent permitted under Section 162(m) of the Code) in order to prevent the dilution or enlargement of the rights of Participants based on the following events: (A) asset write-downs; (B) litigation or claim judgments or settlements; (C) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (D) any reorganization and restructuring programs; (E) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor or pronouncement thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year; (F) acquisitions or divestitures; (G) any other specific unusual or nonrecurring events, or objectively determinable category thereof; (H) foreign exchange gains and losses; and (I) a change in the Company’s fiscal year.

 

oo. “Performance Period” means any Fiscal Year or such other period as determined by the Administrator in its sole discretion.

 

pp. “Performance Share” means a performance share Award granted to a Participant pursuant to Section 12.

 

qq. “Performance Unit” means a performance unit Award granted to a Participant pursuant to Section 13.

 

rr.   “Plan” means this 2005 Equity Incentive Plan, as amended from time to time.

 

ss.   “Restricted Award” means an Award granted pursuant to Section 11 of the Plan.

 

tt.   “Return on Assets” means the percentage equal to the Company’s or a business unit’s Operating Income before incentive compensation, divided by average net Company or business unit, as applicable, assets, determined in accordance with generally accepted accounting principles.

 

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uu. “Return on Equity” means the percentage equal to the Company’s Net Income divided by average stockholder’s equity, determined in accordance with generally accepted accounting principles.

 

vv. “Return on Sales” means the percentage equal to the Company’s or a business unit’s Operating Income before incentive compensation, divided by the Company’s or the business unit’s, as applicable, revenue, determined in accordance with generally accepted accounting principles.

 

ww. “Revenue” means, as to any Performance Period, the Company’s or a business unit’s gross revenues, net sales or gross sales, as determined by the Administrator.

 

xx. “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

 

yy. “Section 16(b)” means Section 16(b) of the Exchange Act.

 

zz. “Securities Act” means the Securities Act of 1933, as amended.

 

aaa. “Service Provider” means an Employee, Director or Consultant.

 

bbb. “Share” means a share of the Common Stock, as adjusted in accordance with Section 16 of the Plan.

 

ccc. “Stock Appreciation Right” or “SAR” means an Award granted pursuant to Section 10 hereof.

 

ddd. “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

eee. “Total Stockholder Return” means the total return (change in share price plus reinvestment of any dividends) of a Share.

 

fff. “Unit Sales” means, as to any Performance Period, gross or net sales of units, consisting of any merchandise or type or category of merchandise or other product or service sold by the Company at any time, now or hereafter, as determined and specified by the Administrator.

 

ggg. “Voluntary Termination for Good Reason” means a Participant voluntarily resigns within ninety (90) days after the occurrence of any of the following, provided the Participant gives notice to the Company of such occurrence within sixty (60) days after such occurrence and the Company does not remedy the condition within thirty (30) days after the Company’s receipt of such notice: (i) without the Participant’s express written consent, a material reduction of the Participant’s duties, title, authority or responsibilities, relative to the Participant’s duties, title, authority or responsibilities as in effect immediately prior to such reduction, or the assignment to Participant of such reduced duties, title, authority or responsibilities; provided, however, that a reduction in duties, title, authority or responsibilities solely by virtue of the Company being acquired and made part of a larger entity (as, for example, when the Chief Executive Officer of the Company remains as such following a Change of Control and is not made the Chief Executive Officer of the acquiring corporation) shall not by itself constitute grounds for a “Voluntary Termination for Good Reason;” (ii) a reduction by the Company in the base salary of the Participant as in effect immediately prior to such reduction; (iii) the relocation of the Participant to a facility or a location outside of a 35 mile radius from the present facility or location, without the Participant’s express written consent; or (iv) any act or set of facts or circumstances which would, under applicable case law or statute constitute a constructive termination of the Participant.

 

3.    Stock Subject to the Plan.    Subject to the provisions of Section 16 of the Plan, the maximum aggregate number of Shares which will be available for grant under the Plan after approval by the stockholders at the 2017

 

6

 

annual meeting of stockholders is 1,978,307, less the number of shares, if any, subjected to Awards between February 15, 2017 and the date of the 2017 annual meeting, and increased by the number of Shares, if any, subject to Awards forfeited back to the Plan between February 15, 2017 and the date of the 2017 annual meeting. The Shares may be authorized, but unissued, or reacquired Common Stock. All shares reserved for issuance under this Plan may be used for Incentive Stock Options.

 

To the extent that Shares subject to an Award are not issued to a Participant because the Award terminates, expires, lapses or becomes unexercisable without having been exercised in full for any reason, or an Award is settled in cash, or is surrendered pursuant to an Award Exchange Program, or, with respect to Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units or Deferred Stock Units, is forfeited to or repurchased by the Company, the unissued Shares (or for Awards other than Options and SARs, the forfeited or repurchased shares) which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, the full number of Stock Appreciation Rights granted that are to be settled by the issuance of Shares shall be counted against the number of Shares available for award under the Plan, regardless of the number of Shares actually issued upon settlement of such Stock Appreciation Rights. Shares that have actually been issued under the Plan under any Award shall not be returned to the Plan and shall not become available for future distribution under the Plan. Shares surrendered or withheld in payment of the exercise price of an Option and Shares withheld by the Company to satisfy any minimum tax withholding obligation shall count against the aggregate plan limit described above. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment shall not result in a reduction to the number of Shares available for issuance under the Plan. Shares repurchased by the Company on the open market with the proceeds of an Option exercise shall not be added to the number of Shares available for grant under the Plan. No fractional shares of Stock may be issued hereunder.

 

4.    Administration of the Plan.

 

a.    Procedure.

 

i.  Multiple Administrative Bodies.    The Plan may be administered by different Committees with respect to different groups of Service Providers.

 

ii. Section 162(m) of the Code.    To the extent that the Administrator determines it to be desirable to qualify Options or other Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code.

 

iii. Rule 16b-3.    To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3, including the composition of the Committee that grants any related Awards.

 

iv.  Other Administration.    Other than as provided above, the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws.

 

b.    Powers of the Administrator.    Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion:

 

i.  to determine the Fair Market Value;

 

ii.  to select the Service Providers to whom Awards may be granted hereunder;

 

7

 

iii.  to determine whether and to what extent Awards or any combination thereof, are granted hereunder;

 

iv.  to determine the number of shares of Common Stock or equivalent units to be covered by each Award granted hereunder;

 

v.  to approve forms of agreement for use under the Plan;

 

vi.  to reduce the exercise price of an Award to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Award shall have declined since the date the Award was granted, provided that such action shall first have been approved by a vote of the stockholders of the Company;

 

vii.  to institute an Award Exchange Program, provided that no exchange shall cause the exercise price of an Option or SAR to be reduced unless such action shall first have been approved by a vote of the stockholders of the Company;

 

viii.  to determine or modify the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder, provided that no such modification may cause an Option or SAR to become deferred compensation subject to Section 409A of the Code. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or SARs may be exercised or other Awards vest (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

 

ix.  to construe and interpret the terms of the Plan and Awards and to reconcile any inconsistency, correct any defect and/or supply any omission in the Plan or Award Agreement;

 

x.  to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

 

xi.  to modify or amend each Award (subject to Section 18.c of the Plan), including the discretionary authority to extend the post-service-termination exercisability period of Options and SARs longer than is otherwise provided for in the Plan, provided that no such modification or extension may cause an Option or SAR to become deferred compensation subject to Section 409A of the Code;

 

xii.  to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

 

xiii.  to allow Participants to satisfy minimum withholding tax obligations by tendering cash or unencumbered Shares owned by the Participant having a Fair Market Value equal to the amount required to be withheld, or electing to have the Company withhold from the Shares or cash to be issued upon exercise or vesting of an Award (or distribution of a Deferred Stock Unit) that number of Shares or cash having a Fair Market Value equal to the minimum amount required to be withheld (but no more). The Fair Market Value of any Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares or cash withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

 

xiv.  to determine the terms and restrictions applicable to Awards; and

 

8

 

xv.  to make all other determinations deemed necessary or advisable for administering the Plan.

 

c.    Effect of Administrator’s Decision.    The Administrator’s decisions, determinations and interpretations shall be final and binding on all Participants and any other holders of Awards.

 

5.    Eligibility.    Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Stock Appreciation Rights, Deferred Stock Units and Nonstatutory Stock Options may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. A Consultant shall not be eligible for the grant of an Award if, at the time of grant, a Form S-8 Registration Statement (“Form S-8”) under the Securities Act, is not available to register either the offer or the sale of the Company’s securities to such Consultant because of the nature of the services that the Consultant is providing to the Company (i.e., capital raising), or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the Company determines both (i) that such grant (A) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (B) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions.

 

6.    No Employment Rights.    Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing the Participant’s employment with the Company or its Subsidiaries, nor shall they interfere in any way with the Participant’s right or the Company’s or Subsidiary’s right, as the case may be, to terminate such employment at any time, with or without cause.

 

7.    Code Section 162(m) Provisions.

 

a.    Option and SAR Annual Share Limit.    No Participant shall be granted, in any Fiscal Year, Options to purchase more than 200,000 Shares or Stock Appreciation Rights covering more than 500,000 Shares; provided, however, that such limits shall be 300,000 Shares with respect to Options and 750,000 shares with respect to Stock Appreciation Rights in the Participant’s first Fiscal Year of Company service.

 

b.    Restricted Awards and Performance Share Annual Limit.    No Participant shall be granted, in any Fiscal Year, more than 100,000 Shares of Restricted Stock, 100,000 shares of Restricted Stock Units or 100,000 Performance Shares; provided, however, that each such limit shall be 250,000 Shares in the Participant’s first Fiscal Year of Company service.

 

c.    Performance Units Annual Limit.    No Participant shall receive Performance Units, in any Fiscal Year, having an initial value greater than $1,000,000, provided, however, that such limit shall be $2,500,000 in the Participant’s first Fiscal Year of Company service.

 

d.    Section 162(m) Performance Restrictions.    For purposes of qualifying grants of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units as “performance-based compensation” under Section 162(m) of the Code, the Administrator, in its discretion, may set restrictions based upon the achievement of Performance Goals. The Performance Goals shall be set by the Administrator on or before the latest date permissible to enable the Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units to qualify as “performance-based compensation” under Section 162(m) of the Code. In granting Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units which are intended to qualify under Section 162(m) of the Code, the Administrator shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance Goals). A Participant shall be eligible to receive payment in respect of an Award that is intended to constitute “performance-based compensation” only to the extent that the applicable Performance Goals are achieved.

 

e.    Changes in Capitalization.    The numerical limitations in Sections 7.a and 7.b shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 16.a.

 

9

 

f.    Certification.    Prior to the payment of any Award that is intended to constitute “performance-based compensation,” the Administrator shall review and certify in writing whether, and to what extent, the Performance Goals have been achieved and, if so, calculate and certify in writing that amount of the Award earned based upon the achievement of the Performance Goals. The Administrator may reduce or eliminate the amount of such an Award earned through the use of negative discretion if, in its sole judgment, such reduction or elimination is appropriate. With respect to any Award intended to constitute “performance-based compensation,” the Administrator shall not have the discretion to (A) grant or provide payment in respect of Awards if the Performance Goals have not been attained; (B) increase an Award above the maximum amount payable under this Section 7; or (C) cause an increase in a Participant’s Award as a result of the use of negative discretion with respect to another Participant’s Award. In addition, if an Award intended to constitute “performance-based compensation” is based, in whole or in part, on a percentage of a Participant’s salary, base pay or other compensation, the maximum amount of the Award must be fixed at the time the Performance Goals are established. Notwithstanding the foregoing, an Award Agreement may provide that an Award may be payable upon death, disability or change of ownership or control prior to the attainment of the Performance Goals, provided that any such Award will not constitute “performance-based compensation” under Section 162(m) of the Code to the extent the Award is actually paid prior to the attainment of the Performance Goals.

 

g.    If, after the attainment of the applicable Performance Goals, payment of an Award intended to constitute “performance-based compensation” in cash is accelerated to an earlier date, the amount paid will be discounted to reasonably reflect the time value of money. Any such Award that has been deferred shall not (between the date as of which the Award is deferred and the payment date) increase (A) with respect to an Award that is payable in cash, by a measuring factor for each fiscal year greater than a reasonable rate of interest set by the Administrator, or (B) with respect to an Award that is payable in Common Stock, by an amount greater than the appreciation of a Share from the date such Award is deferred to the payment date.

 

h.    If an Award is cancelled in the same Fiscal Year in which it was granted (other than in connection with a transaction described in Section 16), the cancelled Award will be counted against the limits set forth in subsections (a) and (b) above. For this purpose, if the exercise price of an Award is reduced, the transaction will be treated as a cancellation of the Award and the grant of a new Award.

 

8.    Effective Date; Term of Plan.    The Plan’s effective date is the date on which it is adopted by the Board, so long as it is approved by the Company’s stockholders at any time within 12 months of such adoption. The Plan will have no fixed expiration date; provided, however, that no Incentive Stock Options may be granted more than 10 years after the later of (a) the Plan’s adoption by the Board, or (b) the adoption by the Board of any amendment to the Plan that constitutes the adoption of a new plan for purposes of Section 422 of the Code.

 

9.    Stock Options.

 

a.    The term of each Option shall be stated in the Notice of Grant; provided, however, that the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Notice of Grant.

 

b.    Option Exercise Price.    The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following:

 

i.  In the case of an Incentive Stock Option:

 

(1)   granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting

 

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power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

 

(2)   granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

 

ii.  In the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the Administrator and shall be no less than 100% of the Fair Market Value per Share on the date of grant.

 

iii.  Notwithstanding the foregoing, an Option may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Sections 409A and 424(a) of the Code and the regulations thereunder. No Option shall include any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the Option.

 

c.    Waiting Period and Exercise Dates.    At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised. In so doing, the Administrator may specify that an Option may not be exercised until the completion of a service period or until performance milestones are satisfied.

 

d.    Form of Consideration.    The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Subject to Applicable Laws, such consideration may consist entirely of:

 

i.  cash;

 

ii.  check;

 

iii.  other Shares which are owned by the Participant and have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;

 

iv.  delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale proceeds required to pay the exercise price;

 

v.  such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws, including, to the extent permitted by Applicable Laws and approved by the Administrator, delivery of a promissory note, consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or a reduction in the amount of any Company liability to the Participant; or

 

vi.  any combination of the foregoing methods of payment.

 

e.    Exercise of Option; Rights as a Stockholder.    Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. An Option may not be exercised for a fraction of a Share. An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of

 

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exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the optioned stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 16 of the Plan. Exercising an Option in any manner shall decrease the number of Shares thereafter available for sale under the Option, by the number of Shares as to which the Option is exercised.

 

f.    Termination of Relationship as a Service Provider.    If a Participant ceases to be a Service Provider, other than upon the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three months following the Participant’s termination. If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

g.    Disability.    If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s termination. If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

h.    Death of Participant.    If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such Option as set forth in the Option Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following Participant’s death. If, at the time of death, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

i.    ISO $100,000 Rule.    Each Option shall be designated in the Notice of Grant as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designations, to the extent that the aggregate Fair Market Value of Shares subject to a Participant’s Incentive Stock Options (determined without regard to this paragraph) granted by the Company, any Parent or Subsidiary, which become exercisable for the first time during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock

 

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Options. For purposes of this Section 9.i, Incentive Stock Options shall be taken into account in the order in which they were granted (or as otherwise provided under applicable regulations), and the Fair Market Value of the Shares shall be determined as of the time of grant.

 

j.    Section 409A of the Code.    Notwithstanding anything herein to the contrary, if an Option is granted to a Service Provider with respect to whom Common Stock does not constitute “service recipient stock” (as defined in Treasury Regulation Section 1.409A-1(b)(5)(iii)), the Option shall comply with Section 409A of the Code to the extent applicable.

 

10.    Stock Appreciation Rights.

 

a.    Grant of SARs.    Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete discretion to determine the number of SARs granted to any Participant. SARs may be granted either alone (“Free Standing Rights”) or in conjunction with all or part of any Option granted under the Plan (“Related SARs”). Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator. Related SARs shall be exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable. No Related SAR may be granted for more shares of Common Stock than are subject to the Option to which it relates. The number of shares of Common Stock subject to an SAR must be fixed on the date of grant of the SAR, and the SAR must not include any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the SAR. The provisions of SARs need not be the same with respect to each Participant.

 

b.    Exercise Price and other Terms.    Subject to Section 7.a of the Plan, the Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of SARs granted under the Plan; provided, however, that no SAR may have a term of more than ten (10) years from the date of grant. An SAR must be granted with an exercise price per Share not less than the Fair Market Value per Share on the date of grant. The exercise price for the Shares or cash to be issued pursuant to an already granted SAR may not be changed without the consent of the Company’s stockholders. This shall include, without limitation, a repricing of the SAR as well as an SAR exchange program whereby the Participant agrees to cancel an existing SAR in exchange for an Option, SAR or other Award. Upon any exercise of a Related SAR, the number of Shares for which the related Option shall be exercisable shall be reduced by the number of Shares for which the SAR shall have been exercised. The number of Shares for which a Related SAR shall be exercisable shall be reduced upon any exercise of the related Option by the number of Shares for which such Option shall have been exercised.

 

c.    Payment of SAR Amount.    Upon exercise of a SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

 

i.  The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

 

ii.  the number of Shares with respect to which the SAR is exercised.

 

d.    Payment upon Exercise of SAR.    At the discretion of the Administrator, payment for a SAR may be in cash, Shares or a combination thereof.

 

e.    SAR Agreement.    Each SAR grant shall be evidenced by an Award Agreement that shall specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, shall determine.

 

f.    Expiration of SARs.    A SAR granted under the Plan shall expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement.

 

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g.    Termination of Relationship as a Service Provider.    If a Participant ceases to be a Service Provider, other than upon the Participant’s death or Disability termination, the Participant may exercise his or her SAR within such period of time as is specified in the Award Agreement to the extent that the SAR is vested on the date of termination (but in no event later than the expiration of the term of such SAR as set forth in the SAR Agreement). In the absence of a specified time in the Award Agreement, the SAR shall remain exercisable for three months following the Participant’s termination. If, on the date of termination, the Participant is not vested as to his or her entire SAR, the Shares covered by the unvested portion of the SAR shall revert to the Plan. If, after termination, the Participant does not exercise his or her SAR within the time specified by the Administrator, the SAR shall terminate, and the Shares covered by such SAR shall revert to the Plan.

 

h.    Disability.    If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her SAR within such period of time as is specified in the Award Agreement to the extent the SAR is vested on the date of termination (but in no event later than the expiration of the term of such SAR as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the SAR shall remain exercisable for twelve (12) months following the Participant’s termination. If, on the date of termination, the Participant is not vested as to his or her entire SAR, the Shares covered by the unvested portion of the SAR shall revert to the Plan. If, after termination, the Participant does not exercise his or her SAR within the time specified herein, the SAR shall terminate, and the Shares covered by such SAR shall revert to the Plan.

 

i.    Death of Participant.    If a Participant dies while a Service Provider, the SAR may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement (but in no event may the SAR be exercised later than the expiration of the term of such SAR as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such SAR may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the SAR is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the SAR Agreement, the SAR shall remain exercisable for twelve (12) months following Participant’s death. If the SAR is not so exercised within the time specified herein, the SAR shall terminate, and the Shares covered by such SAR shall revert to the Plan.

 

j.    Section 409A of the Code.    An SAR that is subject to Section 409A of the Code shall satisfy the requirements of this Section 10.j and the additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code. The requirements herein shall apply in the event any SAR under this Plan is granted with an exercise price less than the Fair Market Value per Share on the date the SAR is granted, is granted to a Service Provider with respect to whom Common Stock does not constitute “service recipient stock” (as defined in Treasury Regulation Section 1.409A-1(b)(5)(iii)), or is otherwise determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code. Any such SAR may provide that it is exercisable at any time permitted under the governing Award Agreement, but such exercise shall be limited to fixing the measurement of the amount, if any, by which the Fair Market Value of a Share on the date of exercise exceeds the exercise price (the “SAR Amount”). However, once the SAR is exercised, the SAR Amount may be paid only on the fixed time, payment schedule or other event specified in the governing Award Agreement.

 

11.    Restricted Awards.

 

a.    Grant of Restricted Awards.    Subject to the terms and conditions of the Plan, Restricted Awards may be granted to Participants at any time as shall be determined by the Administrator, in its sole discretion. A Restricted Award is an Award of Common Stock (“Restricted Stock”) or hypothetical shares of Common Stock (“Restricted Stock Units”) having a value equal to the Fair Market Value of an identical number of shares of Common Stock, which may, but need not, provide that such Restricted Award will be subject to forfeiture and may not be sold, assigned, transferred or otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of any obligation or for any other

 

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purpose for such period as the Administrator shall determine. Subject to Section 7.b hereof, the Administrator shall have complete discretion to determine (i) the number of Shares subject to a Restricted Award granted to any Participant, and (ii) the conditions that must be satisfied, which may include a performance-based component, upon which is conditioned the grant, vesting or issuance of a Restricted Award.

 

b.    Restricted Stock.    Each Participant granted Restricted Stock shall execute and deliver to the Company an Award Agreement with respect to the Restricted Stock setting forth the restrictions and other terms and conditions applicable to such Restricted Stock. If the Administrator determines that the Restricted Stock shall be held by the Company or in escrow rather than delivered to the Participant pending the release of the applicable restrictions, the Administrator may require the Participant to additionally execute and deliver to the Company (i) an escrow agreement satisfactory to the Administrator, if applicable and (ii) the appropriate blank stock power with respect to the Restricted Stock covered by such agreement.

 

Subject to the restrictions set forth in the Award Agreement, the Participant generally shall have the rights and privileges of a holder of Common Stock as to such Restricted Stock, including the right to vote such Restricted Stock. At the discretion of the Administrator, cash dividends and stock dividends with respect to the Restricted Stock may be either currently paid to the Participant on the day on which the corresponding dividend on shares of Common Stock is paid to stockholders, or withheld by the Company for the Participant’s account, and interest may be credited on the amount of the cash dividends withheld at a rate and subject to such terms as determined by the Administrator. Any cash dividends or stock dividends so withheld by the Administrator and attributable to any particular Share (and earnings thereon, if applicable) shall be distributed to the Participant in cash or, at the discretion of the Administrator, in Shares having a Fair Market Value equal to the amount of such dividends, if applicable, upon the release of restrictions on such Shares and, if such Shares are forfeited, the Participant shall have no right to such dividends.

 

Restricted Stock awarded to a Participant shall be subject to the following restrictions until the expiration of such restrictions, and to such other terms and conditions as may be set forth in the applicable Award Agreement: (A) if an escrow arrangement is used, the Participant shall not be entitled to delivery of the stock certificate; (B) the Shares shall be subject to the restrictions on transferability set forth in the Award Agreement; (C) the Shares shall be subject to forfeiture to the extent provided in the Award Agreement; and (D) to the extent such Shares are forfeited, the stock certificates shall be returned to the Company, and all rights of the Participant to such shares and as a stockholder with respect to such Shares shall terminate without further obligation on the part of the Company.

 

Upon the expiration of the restrictions with respect to any Restricted Stock, the restrictions set forth in this Section 11 and the applicable Award Agreement shall be of no further force or effect with respect to such Shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon such expiration, the Company shall deliver to the Participant, or his beneficiary, without charge, the stock certificate evidencing the Restricted Stock which has not then been forfeited and with respect to which the restrictions have expired (to the nearest full Share) and any cash distributions or stock dividends credited to the Participant’s account with respect to such Restricted Stock and the interest thereon, if any.

 

c.    Restricted Stock Units.    The terms and conditions of a grant of Restricted Stock Units shall be reflected in a written Award Agreement. Each Restricted Stock Unit shall be the equivalent of one Share for purposes of determining the number of Shares subject to an Award. No Shares shall be issued at the time a Restricted Stock Unit is granted, and the Company will not be required to set aside a fund for the payment of any such Award. Until the Shares are issued, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Restricted Stock Units. At the discretion of the Administrator, and only to the extent set forth in the applicable Award Agreement, each Restricted Stock Unit may be credited with cash distributions and stock dividends paid by the Company in respect of one share of Stock (“Dividend Equivalents”). At the discretion of the Administrator, Dividend Equivalents may be either currently paid to the Participant on the day on which the corresponding dividend on shares of Common Stock is paid to stockholders, or withheld by the Company for the Participant’s account, and

 

15

 

interest may be credited on the amount of cash Dividend Equivalents withheld at a rate and subject to such terms as determined by the Administrator. Dividend Equivalents credited to a Participant’s account and attributable to any particular Restricted Stock Unit (and earnings thereon, if applicable) shall be distributed in cash or, at the discretion of the Administrator, in Shares having a Fair Market Value equal to the amount of such Dividend Equivalents and earnings, if applicable, to the Participant upon settlement of such Restricted Stock Unit and, if such Restricted Stock Unit is forfeited, the Participant shall have no right to such Dividend Equivalents.

 

Restricted Stock Units awarded to any Participant shall be subject to (A) forfeiture until the expiration of the restrictions applicable to such Award, and satisfaction of any applicable Performance Goals during such period, to the extent provided in the applicable Award Agreement, and to the extent such Restricted Stock Units are forfeited, all rights of the Participant to such Restricted Stock Units shall terminate without further obligation on the part of the Company and (B) such other terms and conditions as may be set forth in the applicable Award Agreement.

 

Except as otherwise provided in the Plan or an Award Agreement, upon the expiration of the restrictions with respect to any outstanding Restricted Stock Units, the Company shall deliver to the Participant, or his beneficiary, without charge, one Share for each such outstanding Restricted Stock Unit (“Vested Unit”) and cash equal to any Dividend Equivalents credited with respect to each such Vested Unit and the interest thereon or, at the discretion of the Administrator, in Shares having a Fair Market Value equal to such Dividend Equivalents’ interest thereon, if any; provided, however, that, if explicitly provided in the applicable Award Agreement, the Administrator may, in its sole discretion, elect to pay cash or part cash and part Shares in lieu of delivering only Shares for Vested Units. If a cash payment is made in lieu of delivering Shares, the amount of such payment shall be equal to the aggregate Fair Market Value of the Shares as of the date on which the restrictions lapsed with respect to such Vested Unit.

 

d.    Other Terms.    The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Restricted Awards granted under the Plan. Restricted Award grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the Restricted Stock or the Restricted Stock Unit is awarded. Any certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator.

 

e.    Restricted Award Agreement.    Each Restricted Award grant shall be evidenced by an Award Agreement that shall specify the purchase price (if any) and such other terms and conditions as the Administrator, in its sole discretion, shall determine; provided; however, that if the Restricted Award grant has a purchase price, such purchase price must be paid no more than ten (10) years following the date of grant.

 

12.    Performance Shares.

 

a.    Grant of Performance Shares.    Subject to the terms and conditions of the Plan, Performance Shares may be granted to Participants at any time as shall be determined by the Administrator, in its sole discretion. Subject to Section 7.b hereof, the Administrator shall have complete discretion to determine (i) the number of Shares subject to a Performance Share award granted to any Participant, and (ii) the conditions that must be satisfied, which typically will be based principally or solely on achievement of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Shares. Performance Shares shall be granted in the form of units to acquire Shares. Each such unit shall be the equivalent of one Share for purposes of determining the number of Shares subject to an Award. Until the Shares are issued, no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the units to acquire Shares.

 

b.    Other Terms.    The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance Shares granted under the Plan. Performance Share grants shall be subject to the terms, conditions, and restrictions determined by the

 

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Administrator at the time the stock is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator. The Administrator may require the recipient to sign an Award Agreement as a condition of the award. Any certificates representing the Shares of stock awarded shall bear such legends as shall be determined by the Administrator.

 

c.    Performance Share Award Agreement.    Each Performance Share grant shall be evidenced by an Award Agreement that shall specify such other terms and conditions as the Administrator, in its sole discretion, shall determine.

 

13.    Performance Units.

 

a.    Grant of Performance Units.    Performance Units are similar to Performance Shares, except that they shall be settled in a cash equivalent to the Fair Market Value of the underlying Shares, determined as of the vesting date. Subject to the terms and conditions of the Plan, Performance Units may be granted to Participants at any time and from time to time as shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete discretion to determine the conditions that must be satisfied, which typically will be based principally or solely on achievement of performance milestones but may include a service-based component, upon which is conditioned the grant or vesting of Performance Units. Performance Units shall be granted in the form of units to acquire Shares. Each such unit shall be the cash equivalent of one Share of Common Stock. No right to vote or receive dividends or any other rights as a stockholder shall exist with respect to Performance Units or the cash payable thereunder.

 

b.    Number of Performance Units.    Subject to Section 7.c hereof, the Administrator will have complete discretion in determining the number of Performance Units granted to any Participant.

 

c.    Other Terms.    The Administrator, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of Performance Units granted under the Plan. Performance Unit grants shall be subject to the terms, conditions, and restrictions determined by the Administrator at the time the grant is awarded, which may include such performance-based milestones as are determined appropriate by the Administrator. The Administrator may require the recipient to sign an Award Agreement as a condition of the award. Any certificates representing the units awarded shall bear such legends as shall be determined by the Administrator.

 

d.    Performance Unit Award Agreement.    Each Performance Unit grant shall be evidenced by an Award Agreement that shall specify such terms and conditions as the Administrator, in its sole discretion, shall determine.

 

14.    Deferred Stock Units.

 

a.    Description.    Deferred Stock Units shall consist of a Restricted Stock, Restricted Stock Unit, Performance Share or Performance Unit Award that the Administrator, in its sole discretion permits to be paid out in installments or on a deferred basis, in accordance with rules and procedures established by the Administrator. Deferred Stock Units shall remain subject to the claims of the Company’s general creditors until distributed to the Participant.

 

b.    Code Section 162(m) Limits.    Deferred Stock Units shall be subject to the annual limits under Section 162(m) of the Code applicable to the underlying Restricted Stock, Restricted Stock Unit, Performance Share or Performance Unit Award as set forth in Section 7 hereof.

 

c.    Code Section 409A Limitations.    If any Deferred Stock Units are considered to be deferred compensation under Section 409A of the Code, then the terms of such Deferred Stock Units shall comply with Section 409A of the Code.

 

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15.    Non-Transferability of Awards.    Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the recipient, only by the recipient. If the Administrator makes an Award transferable, such Award shall contain such additional terms and conditions as the Administrator deems appropriate.

 

16.    Adjustments Upon Changes in Capitalization, Dissolution or Liquidation or Change of Control.

 

a.    Changes in Capitalization.    In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares, then the Administrator shall, in an equitable manner and to the extent necessary to preserve the economic intent of Awards, adjust the number and class of Shares which may be delivered under the Plan, the number, class, and exercise price of Shares covered by each outstanding Award, and the maximum number of Shares with respect to which any one person may be granted Awards during any period stated in Section 7. Unless the Committee specifically determines that such adjustment is in the best interests of the Company, any adjustments under this Section 16.a shall be made in a manner which does not result in a violation of Section 409A of the Code or the modification, extension or renewal of any Incentive Stock Option. Any adjustments under this Section 16.a shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3. Further, with respect to Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code, any adjustments or substitutions will not cause the Company to be denied a tax deduction on account of Section 162(m) of the Code.

 

b.    Dissolution or Liquidation.    In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for a Participant to have the right to exercise his or her Option or SAR until ten (10) days prior to such transaction as to all of the Awarded Stock covered thereby, including Shares as to which the Award would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option or forfeiture rights applicable to any Award shall lapse 100%, and that any Award vesting shall accelerate 100%, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised (with respect to Options and SARs) or vested (with respect to other Awards), an Award will terminate immediately prior to the consummation of such proposed action.

 

c.    Change of Control.

 

i.  Stock Options and SARs.    In the event of a Change of Control, each outstanding Option and SAR shall be assumed or an equivalent option or SAR substituted by the successor entity or a Parent or Subsidiary of the successor entity. Notwithstanding the foregoing, in the event that the successor entity refuses to assume or substitute for the Option or SAR, or if the successor entity does not have outstanding common equity securities required to be registered under Section 12 of the Exchange Act, the Participant shall fully vest in and have the right to exercise the Option or SAR as to all of the Awarded Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or SAR becomes fully vested and exercisable in lieu of assumption or substitution in the event of a Change of Control, the Administrator may take one or more actions with respect to such Option or SAR including, but not limited to, the following: (i) notifying the Participant in writing or electronically that such Option or SAR may be exercised in full for a limited period of time on or before a specified date (before or after the Change of Control) fixed by the Administrator, after which specified date the unexercised portion of such Option or SAR and all rights of the Participant thereunder shall terminate, (ii) requiring the mandatory surrender to the Company by the Participant of some or all of the outstanding Options or SARs held by such Participant as of a date, before or after such Change of Control, specified by the Administrator, in which event the Administrator shall thereupon cancel such Options and SARs and the Company shall pay to such Participant an amount of cash per share equal to the excess, if any, of the Change

 

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of Control Value of the Shares subject to such Options and SARs over the exercise price(s) under such Options and SARs for such Shares, or (iii) making such adjustments to Options and SARs then outstanding as the Administrator deems appropriate to reflect such Change of Control. For the purposes of this paragraph, the Option or SAR shall be considered assumed if, following the Change of Control, the option or stock appreciation right confers the right to purchase or receive, for each Share of Awarded Stock subject to the Option or SAR immediately prior to the Change of Control, the consideration (whether stock, cash, or other securities or property) received in the Change of Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change of Control is not solely common stock of the successor entity or its Parent, the Administrator may, with the consent of the successor entity, provide for the consideration to be received upon the exercise of the Option or SAR, for each Share of Awarded Stock subject to the Option or SAR, to be solely common stock of the successor entity or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change of Control.

 

ii.  Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Deferred Stock Units.    In the event of a Change of Control, each outstanding Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit and Deferred Stock Unit Award shall be assumed or an equivalent Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit or Deferred Stock Unit Award substituted by the successor entity or a Parent or Subsidiary of the successor entity. Notwithstanding the foregoing, in the event that the successor entity refuses to assume or substitute for the Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit or Deferred Stock Unit Award, or if the successor entity does not have outstanding common equity securities required to be registered under Section 12 of the Exchange Act, the Participant shall fully vest in the Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit or Deferred Stock Unit Award, including as to Shares (or with respect to Performance Units, the cash equivalent thereof) which would not otherwise be vested. For the purposes of this paragraph, a Restricted Stock, Restricted Stock Unit, Performance Share, Performance Unit and Deferred Stock Unit Award shall be considered assumed if, following the Change of Control, the award confers the right to purchase or receive, for each Share (or with respect to Performance Units, the cash equivalent thereof) subject to the Award immediately prior to the Change of Control, the consideration (whether stock, cash, or other securities or property) received in the Change of Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change of Control is not solely common stock of the successor entity or its Parent, the Administrator may, with the consent of the successor entity, provide for the consideration to be received, for each Share and each unit/right to acquire a Share subject to the Award, to be solely common stock of the successor entity or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change of Control.

 

d.    Involuntary Termination other than for Cause, Death or Disability or a Voluntary Termination for Good Reason, Following a Change of Control.    If, within eighteen (18) months following a Change of Control, a Participant’s employment is terminated (i) involuntarily by the Company or successor entity other than (A) for Cause, or (B) on account of death or Disability, or (ii) by the Participant by a Voluntary Termination for Good Reason, then the Participant shall fully vest in and receive payment of or have the right to exercise his Award, as applicable, as to all of the Shares subject to each such Award including Shares as to which such Award would not otherwise be vested or exercisable. Notwithstanding the foregoing or anything in an Award Agreement to the contrary, (i) if an Award is subject to Section 409A of the Code and payment of the Award at the time of termination of employment under this paragraph would cause the Award not to comply with Section 409A of the Code, the Award shall be paid only at such time and in such form as will comply with Section 409A of the Code, and (ii) any Restricted Stock, Restricted

 

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Stock Unit, Performance Share, Performance Unit or Deferred Stock Award that is intended to constitute “performance-based compensation” under Section 162(m) of the Code shall not vest in connection with the Participant’s involuntary termination of employment or Voluntary Termination for Good Reason until the end of the applicable Performance Period, and then only to the extent that the applicable Performance Goals have been satisfied.

 

17.    Date of Grant.    The date of grant of an Award shall be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Participant within a reasonable time after the date of such grant.

 

18.    Amendment and Termination of the Plan.

 

a.    Amendment and Termination.    The Board may at any time amend, alter, suspend or terminate the Plan; provided, however, that the Board may not materially amend the Plan without obtaining stockholder approval.

 

b.    Stockholder Approval.    The Company shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Law.

 

c.    Effect of Amendment or Termination.    No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing (or electronic format) and signed by the Participant and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

19.    Conditions Upon Issuance of Shares.

 

a.    Legal Compliance.    Shares shall not be issued pursuant to the exercise of an Award unless the exercise of the Award or the issuance and delivery of such Shares (or with respect to Performance Units, the cash equivalent thereof) shall comply with Applicable Laws.

 

b.    Investment Representations.    As a condition to the exercise or receipt of an Award, the Company may require the person exercising or receiving such Award to represent and warrant at the time of any such exercise or receipt that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

 

20.    Liability of Company.

 

a.    Inability to Obtain Authority.    The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

b.    Grants Exceeding Allotted Shares.    If the Awarded Stock covered by an Award exceeds, as of the date of grant, the number of Shares which may be issued under the Plan without additional stockholder approval, such Award shall be void with respect to such excess Awarded Stock, unless stockholder approval of an amendment sufficiently increasing the number of Shares subject to the Plan is timely obtained in accordance with Section 18 of the Plan.

 

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21.    General Provisions.

 

a.    Section 409A of the Code.    The Plan is intended to comply with Section 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required to avoid accelerated taxation and tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6) month period immediately following a Participant’s “separation from service” within the meaning of Section 409A of the Code shall instead be paid on the first payroll date after the six-month anniversary of the Participant’s separation from service.

 

b.    Section 16.    It is the intent of the Company that the Plan satisfy, and be interpreted in a manner that satisfies, the applicable requirements of Rule 16b-3 so that Participants will be entitled to the benefit of Rule 16b-3, or any other rule promulgated under Section 16 of the Exchange Act, and will not be subject to short-swing liability under Section 16 of the Exchange Act. Accordingly, if the operation of any provision of the Plan would conflict with the intent expressed in this Section 21.b, such provision to the extent possible shall be interpreted and/or deemed amended so as to avoid such conflict.

 

c.    Clawbacks.    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).

 

22.    Reservation of Shares.    The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

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