Document:

Exhibit 4.2

 

Exhibit 4.2

ARS NETWORKS, INCORPORATED

NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN FOR THE

YEAR 2003

        1.                   
Introduction.  This Plan shall be known as the "ARS Networks,
Incorporated Non-Employee Directors and Consultants Retainer Stock Plan for the
Year 2003", and is hereinafter referred to as the "Plan."  The purposes of this
Plan are to enable ARS Networks, Incorporated, a New Hampshire corporation (the
"Company"), to promote the interests of the Company and its stockholders by
attracting and retaining non-employee Directors and Consultants capable of
furthering the future success of the Company and by aligning their economic
interests more closely with those of the Company's stockholders, by paying
their retainer or fees in the form of shares of the Company's common stock, par
value $0.0001 per share (the "Common Stock").

        2.                   
Definitions.  The following terms shall have the meanings set
forth below: 

        "Board" means the Board of Directors of the
Company.

        "Change of Control" has the meaning set forth
in Paragraph 12(d) hereof.

        "Code" means the Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder. References to any
provision of the Code or rule or regulation thereunder shall be deemed to
include any amended or successor provision, rule or regulation.

        "Committee" means the committee that
administers this Plan, as more fully defined in Paragraph 13 hereof.

        "Common Stock" has the meaning set forth in
Paragraph 1 hereof.

        "Company" has the meaning set forth in
Paragraph 1 hereof.

        "Deferral Election" has the meaning set forth
in Paragraph 6 hereof.

        "Deferred Stock Account" means a bookkeeping
account maintained by the Company for a Participant representing the
Participant's interest in the shares credited to such Deferred Stock Account
pursuant to Paragraph 7 hereof.

        "Delivery Date" has the meaning set forth in
Paragraph 6 hereof.

        "Director" means an individual who is a member
of the Board of Directors of the Company.

        "Dividend Equivalent" for a given dividend or
other distribution means a number of shares of the Common Stock having a Fair
Market Value, as of the record date for such dividend or distribution, equal to
the amount of cash, plus the Fair Market Value on the date of distribution of
any property, that is distributed with respect to one share of the Common Stock
pursuant to such dividend or distribution; such Fair Market Value to be
determined by the Committee in good faith.

        "Effective Date" has the meaning set forth in
Paragraph 3 hereof.

        "Exchange Act" has the meaning set forth in
Paragraph 13(b) hereof.

 

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        "Fair Market Value" means the mean between the
highest and lowest reported sales prices of the Common Stock on the New York Stock
Exchange Composite Tape or, if not listed on such exchange, on any other
national securities exchange on which the Common Stock is listed or on The
Nasdaq Stock Market, or, if not so listed on any other national securities
exchange or The Nasdaq Stock Market, then the
average of the bid price of the Common Stock during the last five trading days
on the OTC Bulletin Board immediately
preceding the last trading day prior to the date with respect to which
the Fair Market Value is to be determined.  If the Common Stock is not then
publicly traded, then the Fair Market Value of the Common Stock shall be the
book value of the Company per share as determined on the last day of March,
June, September, or December in any year closest to the date when the determination
is to be made.  For the purpose of determining book value hereunder, book value
shall be determined by adding as of the applicable date called for herein the
capital, surplus, and undivided profits of the Company, and after having
deducted any reserves theretofore established; the sum of these items shall be
divided by the number of shares of the Common Stock outstanding as of said
date, and the quotient thus obtained shall represent the book value of each
share of the Common Stock of the Company.

        "Participant" has the meaning set forth in
Paragraph 4 hereof.

        "Payment Time" means the time when a Stock
Retainer is payable to a Participant pursuant to Paragraph 5 hereof (without
regard to the effect of any Deferral Election).

        "Stock Retainer" has the meaning set forth in
Paragraph 5 hereof.

        "Third Anniversary" has the meaning set forth
in Paragraph 6 hereof.

        3.                   
Effective Date of the Plan.  This Plan was adopted by the Board
effective June 24, 2003 (the "Effective Date").

        4.                   
Eligibility.  Each individual who is a Director or Consultant on
the Effective Date and each individual who becomes a Director or Consultant
thereafter during the term of this Plan, shall be a participant (the
"Participant") in this Plan, in each case during such period as such individual
remains a Director or Consultant and is not an employee of the Company or any
of its subsidiaries.  Each credit of shares of the Common Stock pursuant to
this Plan shall be evidenced by a written agreement duly executed and delivered
by or on behalf of the Company and a Participant, if such an agreement is
required by the Company to assure compliance with all applicable laws and
regulations.

        5.                   
Grants of Shares.  Commencing on the Effective Date, the amount
of compensation for service to directors or consultants shall be payable in
shares of the Common Stock (the "Stock Retainer") pursuant to this Plan at the
deemed issuance price of $0.10 per Share.

        6.                   
Deferral Option.  From and after the Effective Date, a
Participant may make an election (a "Deferral Election") on an annual basis to
defer delivery of the Stock Retainer specifying which one of the following ways
the Stock Retainer is to be delivered (a) on the date which is three years
after the Effective Date for which it was originally payable (the "Third
Anniversary"), (b) on the date upon which the Participant ceases to be a
Director or Consultant for any reason (the "Departure Date") or (c) in five
equal annual installments commencing on the Departure Date (the "Third
Anniversary" and "Departure Date" each being referred to herein as a "Delivery
Date").  Such Deferral Election shall remain in effect for each Subsequent Year
unless changed, provided that, any Deferral Election with respect to a
particular Year may not be changed less than six months prior to the beginning
of such Year, and provided, further, that no more than one Deferral Election or
change thereof may be made in any Year.

        Any Deferral Election and any change or
revocation thereof shall be made by delivering written notice thereof to the
Committee no later than six months prior to the beginning of the Year in which
it is to be effected; provided that, with respect to the Year beginning on the
Effective Date, any Deferral Election or revocation thereof must be delivered
no later than the close of business on the 30th day after the Effective Date.

 

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        7.                   
Deferred Stock Accounts.  The Company shall maintain a Deferred
Stock Account for each Participant who makes a Deferral Election to which shall
be credited, as of the applicable Payment Time, the number of shares of the
Common Stock payable pursuant to the Stock Retainer to which the Deferral
Election relates.  So long as any amounts in such Deferred Stock Account have
not been delivered to the Participant under Paragraph 8 hereof, each Deferred
Stock Account shall be credited as of the payment date for any dividend paid or
other distribution made with respect to the Common Stock, with a number of
shares of the Common Stock equal to (a) the number of shares of the Common
Stock shown in such Deferred Stock Account on the record date for such dividend
or distribution multiplied by (b) the Dividend Equivalent for such dividend or
distribution.

        8.                   
Delivery of Shares.

        (a)           The shares of the Common Stock in
a Participant's Deferred Stock Account with respect to any Stock Retainer for
which a Deferral Election has been made (together with dividends attributable
to such shares credited to such Deferred Stock Account) shall be delivered in
accordance with this Paragraph 8 as soon as practicable after the applicable
Delivery Date.  Except with respect to a Deferral Election pursuant to
Paragraph 6(c) hereof, or other agreement between the parties, such shares
shall be delivered at one time; provided that, if the number of shares so
delivered includes a fractional share, such number shall be rounded to the
nearest whole number of shares. If the Participant has in effect a Deferral
Election pursuant to Paragraph 6(c) hereof, then such shares shall be delivered
in five equal annual installments (together with dividends attributable to such
shares credited to such Deferred Stock Account), with the first such
installment being delivered on the first anniversary of the Delivery Date;
provided that, if in order to equalize such installments, fractional shares
would have to be delivered, such installments shall be adjusted by rounding to
the nearest whole share.  If any such shares are to be delivered after the
Participant has died or become legally incompetent, they shall be delivered to
the Participant's estate or legal guardian, as the case may be, in accordance
with the foregoing; provided that, if the Participant dies with a Deferral
Election pursuant to Paragraph 6(c) hereof in effect, the Committee shall
deliver all remaining undelivered shares to the Participant's estate immediately. 
References to a Participant in this Plan shall be deemed to refer to the
Participant's estate or legal guardian, where appropriate.

        (b)           The Company may, but shall not be
required to, create a grantor trust or utilize an existing grantor trust (in
either case, "Trust") to assist it in accumulating the shares of the Common
Stock needed to fulfill its obligations under this Paragraph 8.  However,
Participants shall have no beneficial or other interest in the Trust and the
assets thereof, and their rights under this Plan shall be as general creditors
of the Company, unaffected by the existence or nonexistence of the Trust,
except that deliveries of Stock Retainers to Participants from the Trust shall,
to the extent thereof, be treated as satisfying the Company's obligations under
this Paragraph 8.

        9.                   
Share Certificates; Voting and Other Rights.  The certificates
for shares delivered to a Participant pursuant to Paragraph 8 above shall be
issued in the name of the Participant, and from and after the date of such issuance
the Participant shall be entitled to all rights of a stockholder with respect
to the Common Stock for all such shares issued in his name, including the right
to vote the shares, and the Participant shall receive all dividends and other
distributions paid or made with respect thereto.

        10.                
General Restrictions.

                (a)           Notwithstanding
any other provision of this Plan or agreements made pursuant thereto, the
Company shall not be required to issue or deliver any certificate or
certificates for shares of the Common Stock under this Plan prior to
fulfillment of all of the following conditions: 

                                (i)            Listing
or approval for listing upon official notice of issuance of such shares on the
New York Stock Exchange, Inc., or such other securities exchange as may at the
time be a market for the Common Stock;

                                (ii)           Any
registration or other qualification of such shares under any state or federal
law or regulation, or the maintaining in effect of any such registration or
other qualification which the Committee shall, upon the advice of counsel, deem
necessary or advisable; and

                                (iii)          Obtaining
any other consent, approval, or permit from any state or federal governmental
agency which the Committee shall, after receiving the advice of counsel,
determine to be necessary or advisable.

 

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                (b)           Nothing contained
in this Plan shall prevent the Company from adopting other or additional
compensation arrangements for the Participants.

        11.                
Shares Available.  Subject to Paragraph 12 below, the maximum
number of shares of the Common Stock which may in the aggregate be paid as
Stock Retainers pursuant to this Plan is 2,000,000.  Shares of the Common Stock
issueable under this Plan may be taken from treasury shares of the Company or
purchased on the open market.

        12.                
Adjustments; Change of Control.

                (a)           In the event that
there is, at any time after the Board adopts this Plan, any change in corporate
capitalization, such as a stock split, combination of shares, exchange of
shares, warrants or rights offering to purchase the Common Stock at a price
below its Fair Market Value, reclassification, or recapitalization, or a
corporate transaction, such as any merger, consolidation, separation, including
a spin-off, stock dividend, or other extraordinary distribution of stock or
property of the Company, any reorganization (whether or not such reorganization
comes within the definition of such term in Section 368 of the Code) or any
partial or complete liquidation of the Company (each of the foregoing a
"Transaction"), in each case other than any such Transaction which constitutes
a Change of Control (as defined below), (i) the Deferred Stock Accounts shall
be credited with the amount and kind of shares or other property which would
have been received by a holder of the number of shares of the Common Stock held
in such Deferred Stock Account had such shares of the Common Stock been
outstanding as of the effectiveness of any such Transaction, (ii) the number
and kind of shares or other property subject to this Plan shall likewise be
appropriately adjusted to reflect the effectiveness of any such Transaction,
and (iii) the Committee shall appropriately adjust any other relevant
provisions of this Plan and any such modification by the Committee shall be
binding and conclusive on all persons.

                (b)           If the shares of
the Common Stock credited to the Deferred Stock Accounts are converted pursuant
to Paragraph 12(a) into another form of property, references in this Plan to
the Common Stock shall be deemed, where appropriate, to refer to such other
form of property, with such other modifications as may be required for this
Plan to operate in accordance with its purposes.  Without limiting the
generality of the foregoing, references to delivery of certificates for shares
of the Common Stock shall be deemed to refer to delivery of cash and the
incidents of ownership of any other property held in the Deferred Stock
Accounts.

                (c)           In lieu of the
adjustment contemplated by Paragraph 12(a), in the event of a Change of
Control, the following shall occur on the date of the Change of Control (i) the
shares of the Common Stock held in each Participant's Deferred Stock Account
shall be deemed to be issued and outstanding as of the Change of Control; (ii)
the Company shall forthwith deliver to each Participant who has a Deferred
Stock Account all of the shares of the Common Stock or any other property held
in such Participant's Deferred Stock Account; and (iii) this Plan shall be
terminated.

                (d)           For purposes of
this Plan, Change of Control shall mean any of the following events:

                                (i)            The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20 percent or more of either
(1) the then outstanding shares of the Common Stock of the Company (the
"Outstanding Company Common Stock"), or (2) the combined voting power of then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); provided,
however, that the following acquisitions shall not constitute a Change of
Control (A) any acquisition directly from the Company (excluding an acquisition
by virtue of the exercise of a conversion privilege unless the security being
so converted was itself acquired directly from the Company), (B) any
acquisition by the Company, (C) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (D) any acquisition by any corporation pursuant to
a reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (A), (B) and (C)
of paragraph (iii) of this Paragraph 12(d) are satisfied; or

 

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                                (ii)           Individuals
who, as of the date hereof, constitute the Board of the Company (as of the date
hereof, "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or

                                (iii)          Approval
by the stockholders of the Company of a reorganization, merger, binding share
exchange or consolidation, unless, following such reorganization, merger,
binding share exchange or consolidation (1) more than 60 percent of,
respectively, then outstanding shares of common stock of the corporation
resulting from such reorganization, merger, binding share exchange or
consolidation and the combined voting power of then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
binding share exchange or consolidation in substantially the same proportions
as their ownership, immediately prior to such reorganization, merger, binding
share exchange or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (2) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger, binding
share exchange or consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger, binding share exchange or consolidation,
directly or indirectly, 20 percent or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 20 percent or more of, respectively,
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger, binding share exchange or consolidation or the combined
voting power of then outstanding voting securities of such corporation entitled
to vote generally in the election of directors, and (3) at least a majority of
the members of the board of directors of the corporation resulting from such reorganization,
merger, binding share exchange or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement providing for such
reorganization, merger, binding share exchange or consolidation; or 

                                (iv)          Approval
by the stockholders of the Company of (1) a complete liquidation or dissolution
of the Company, or (2) the sale or other disposition of all or substantially
all of the assets of the Company, other than to a corporation, with respect to
which following such sale or other disposition, (A) more than 60 percent of,
respectively, then outstanding shares of common stock of such corporation and
the combined voting power of then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding the Company and
any employee benefit plan (or related trust) of the Company or such corporation
and any Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20 percent or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities, as the case may
be) beneficially owns, directly or indirectly, 20 percent or more of,
respectively, then outstanding shares of common stock of such corporation and the
combined voting power of then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (3) at least a
majority of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition
of assets of the Company.

 

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        13.                
Administration; Amendment and Termination.

                (a)           This Plan shall
be administered by a committee consisting of two members who shall be the
current directors of the Company or senior executive officers or other
directors who are not Participants as may be designated by the Chief Executive
Officer (the "Committee"), which shall have full authority to construe and
interpret this Plan, to establish, amend and rescind rules and regulations
relating to this Plan, and to take all such actions and make all such
determinations in connection with this Plan as it may deem necessary or
desirable.

                (b)           The Board may from
time to time make such amendments to this Plan, including to preserve or come
within any exemption from liability under Section 16(b) of the Exchange Act, as
it may deem proper and in the best interest of the Company without further
approval of the Company's stockholders, provided that, to the extent required
under New Hampshire law or to qualify transactions under this Plan for
exemption under Rule 16b-3 promulgated under the Exchange Act, no amendment to
this Plan shall be adopted without further approval of the Company's
stockholders and, provided, further, that if and to the extent required for
this Plan to comply with Rule 16b-3 promulgated under the Exchange Act, no
amendment to this Plan shall be made more than once in any six month period
that would change the amount, price or timing of the grants of the Common Stock
hereunder other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the regulations
thereunder.  The Board may terminate this Plan at any time by a vote of a
majority of the members thereof.

        14.                
Miscellaneous.

                (a)           Nothing in this
Plan shall be deemed to create any obligation on the part of the Board to
nominate any Director for reelection by the Company's stockholders or to limit the
rights of the stockholders to remove any Director.

                (b)           The Company shall
have the right to require, prior to the issuance or delivery of any shares of
the Common Stock pursuant to this Plan, that a Participant make arrangements
satisfactory to the Committee for the withholding of any taxes required by law
to be withheld with respect to the issuance or delivery of such shares,
including, without limitation, by the withholding of shares that would
otherwise be so issued or delivered, by withholding from any other payment due
to the Participant, or by a cash payment to the Company by the Participant.

        14.1             
Governing Law.  The Plan and all actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of New
Hampshire.

        14.2             
Information to Shareholders.  The Company shall furnish to each
of its stockholders financial statements of the Company at least annually.

        IN WITNESS WHEREOF, this Plan has been executed
effective as of June 24, 2003.

  	ARS NETWORKS, INCORPORATED

 
	By/s/ Sydney A. Harland                                                   

    Sydney A. Harland, President

 

6Exhibit 10.1
                                                                    ------------

                             INSIGHTFUL CORPORATION
                        2003 EMPLOYEE STOCK PURCHASE PLAN

SECTION 1.     PURPOSE

     Insightful Corporation hereby establishes the Insightful Corporation 2003
     Employee Stock Purchase Plan in order to provide eligible employees with
     the opportunity to purchase Common Stock through payroll deductions. The
     Plan is intended to qualify as an employee stock purchase plan under
     section 423(b) of the Code.

SECTION 2.     DEFINITIONS

     (a) "1934 Act" means the Securities Exchange Act of 1934, as amended.
     Reference to a specific section of the 1934 Act or regulation thereunder
     shall include such section or regulation, any valid regulation promulgated
     under such section, and any comparable provision of any future legislation
     or regulation amending, supplementing or superseding such section or
     regulation.

     (b) "Board" means the Board of Directors of the Company.

     (c) "Code" means the Internal Revenue Code of 1986, as amended. Reference
     to a specific section of the Code or regulation thereunder shall include
     such section or regulation, any valid regulation promulgated under such
     section, and any comparable provision of any future legislation or
     regulation amending, supplementing or
     superseding such section or regulation.

     (d) "Committee" shall mean the committee appointed by the Board to
     administer the Plan. Any member of the Committee may resign at any time by
     notice in writing mailed or delivered to the Secretary of the Company. As
     of the effective date of the Plan, the Plan shall be administered by the
     Compensation Committee of the Board.

     (e) "Common Stock" means the common stock of the Company.

     (f) "Company" means Insightful Corporation, a Delaware corporation.

     (g) "Compensation" means a Participant's regular wages. The Committee, in
     its discretion, may (on a uniform and nondiscriminatory basis) establish a
     different definition of Compensation prior to an Enrollment Date for all
     options to be granted on such Enrollment Date.

     (h) "Eligible Employee" means every Employee of an Employer, except (i) any
     Employee who immediately after the grant of an option under the Plan, would
     own stock and/or hold outstanding options to purchase stock possessing five
     percent (5%) or more of the total combined voting power or value of all
     classes of stock of the Company or of any Subsidiary or Parent of the
     Company (including stock attributed to such Employee pursuant to section
     424(d) of the Code), or (ii) as provided in the following sentence. The
     Committee, in its discretion, from time to time may, prior to an Enrollment
     Date for all options to be granted on such Enrollment Date, determine (on a
     uniform and nondiscriminatory basis) that an Employee shall not be an
     Eligible Employee if he or she: (A) has not completed at least two years of
     service since his or her last hire date (or such lesser period of time as
     may be determined by the Committee in its discretion), (B) customarily
     works not more than 20 hours per week (or such lesser period of time as may
     be determined by the Committee in its discretion), or (C) customarily works
     not more than 5 months per calendar year (or such lesser period of time as
     may be determined by the Committee in its discretion).

     (i) "Employee" means an individual who is a common-law employee of any
     Employer, whether such employee is so employed at the time the Plan is
     adopted or becomes so employed subsequent to the adoption of the Plan.

<PAGE>
     (j) "Employer" or "Employers" means any one or all of the Company, and
     those Subsidiaries or Parent which, with the consent of the Board, have
     adopted the Plan.

     (k) "Enrollment Date" means such dates as may be determined by the
     Committee (in its discretion and on a uniform and nondiscriminatory basis)
     from time to time.

     (l) "Grant Date" means any date on which a Participant is granted an option
     under the Plan.

     (m) "Parent" means a "parent corporation" whether now or hereafter
     existing, as defined in section 424(e) of the Code.

     (n) "Participant" means an Eligible Employee who (i) has become a
     Participant in the Plan pursuant to Section 4(a) and (ii) has not ceased to
     be a Participant pursuant to Section 8 or Section 9.

     (o) "Plan" means the Insightful Corporation 2003 Employee Stock Purchase
     Plan, as set forth in this instrument and as hereafter amended from time to
     time.

     (p) "Purchase Date" means such dates as may be determined by the Committee
     (in its discretion and on a uniform and nondiscriminatory basis) from time
     to time prior to an Enrollment Date for all options to be granted on such
     Enrollment Date.

     (q) "Share" means a share of Common Stock.

     (r) "Subsidiary" means a "subsidiary corporation" whether now or hereafter
     existing, as defined in section 424(f) of the Code.

SECTION 3.     SHARES SUBJECT TO THE PLAN

     (a) Number Available. A maximum of 300,000 shares of Common Stock shall be
     available for issuance pursuant to the Plan. Beginning with the first
     fiscal year of the Company beginning after the effective date of the Plan,
     on the first day of each fiscal year of the Company, Shares will be added
     to the Plan equal to the lesser of (i) 1% of the outstanding Shares on the
     last day of the prior fiscal year, (ii) 150,000 Shares, or (iii) such
     lesser amount as determined by the Board. Shares sold under the Plan may be
     newly issued shares or treasury shares.

     (b) Adjustments. In the event of any reorganization, recapitalization,
     stock split, reverse stock split, stock dividend, combination of shares,
     merger, consolidation, offering of rights or other similar change in the
     capital structure of the Company, the Board may make such adjustment, if
     any, as it deems appropriate in the number, kind and purchase price of the
     shares available for purchase under the Plan and in the maximum number of
     shares subject to any option under the Plan.

SECTION 4.     ENROLLMENT

     (a) Participation. Each Eligible Employee may elect to become a Participant
     by enrolling or re-enrolling in the Plan effective as of any Enrollment
     Date. In order to enroll, an Eligible Employee must complete, sign and
     submit to the Company an enrollment form in such form, manner and by such
     deadline as may be specified by the Committee from time to time (in its
     discretion and on a nondiscriminatory basis). Any Participant whose option
     expires and who has not withdrawn from the Plan automatically will be
     re-enrolled in the Plan on the Enrollment Date immediately following the
     Purchase Date on which his or her option expires. Any Participant whose
     option has not expired and who has not withdrawn from the Plan
     automatically will be deemed to be un-enrolled from the Participant's
     current option and be enrolled as of a subsequent Enrollment Date if the
     price per Share on such subsequent Enrollment Date is lower than the price
     per Share on the Enrollment Date relating to the Participant's current
     option.

                                        2
<PAGE>
     (b) Payroll Withholding. On his or her enrollment form, each Participant
     must elect to make Plan contributions via payroll withholding from his or
     her Compensation. Pursuant to such procedures as the Committee may specify
     from time to time, a Participant may elect to have withholding equal to a
     whole percentage from 1% to 10% (or such lesser, or greater, percentage
     that the Committee may establish from time to time for all options to be
     granted on any Enrollment Date). A Participant may elect to increase or
     decrease his or her rate of payroll withholding by submitting a new
     enrollment form in accordance with such procedures (including, but not
     limited to, limitations on the frequency of such changes) as may be
     established by the Committee from time to time. A Participant may stop his
     or her payroll withholding by submitting a new enrollment form in
     accordance with such procedures as may be established by the Committee from
     time to time. In order to be effective as of a specific date, an enrollment
     form must be received by the Company no later than the deadline specified
     by the Committee, in its discretion and on a nondiscriminatory basis, from
     time to time. Any Participant who is automatically re-enrolled in the Plan
     will be deemed to have elected to continue his or her contributions at the
     percentage last elected by the Participant.

SECTION 5.     OPTIONS TO PURCHASE COMMON STOCK

     (a) Grant of Option. On each Enrollment Date on which the Participant
     enrolls or re-enrolls in the Plan, he or she shall be granted an option to
     purchase shares of Common Stock.

     (b) Duration of Option. Each option granted under the Plan shall expire
     upon the conclusion of the option's offering period which will end on the
     earliest to occur of (i) the completion of the purchase of shares on the
     last Purchase Date occurring within 27 months of the Grant Date of such
     option, (ii) such shorter option period as may be established by the
     Committee from time to time prior to an Enrollment Date for all options to
     be granted on such Enrollment Date, or (iii) the date on which the
     Participant ceases to be such for any reason. Until otherwise determined by
     the Committee for all options to be granted on an Enrollment Date, the
     period referred to in clause (ii) in the preceding sentence shall mean the
     period from the applicable Enrollment Date through the last business day
     prior to the immediately following Enrollment Date.

     (c) Number of Shares Subject to Option. The number of shares available for
     purchase by each Participant under the option will be established by the
     Committee from time to time prior to an Enrollment Date for all options to
     be granted on such Enrollment Date.

     (d) Other Terms and Conditions. Each option shall be subject to the
     following additional terms and conditions:

          (1) payment for shares purchased under the option shall be made only
          through payroll withholding under Section 4(b);

          (2) purchase of shares upon exercise of the option will be
          accomplished only in accordance with Section 6(b);

          (3) the price per share under the option will be determined as
          provided in Section 6(a); and

          (4) the option in all respects shall be subject to such other terms
          and conditions (applied on a uniform and nondiscriminatory basis), as
          the Committee shall determine from time to time in its discretion.

SECTION 6.     PURCHASE OF SHARES

     (a) Exercise of Option. Subject to Section 6(b), on each Purchase Date, the
     funds then credited to each Participant's account shall be used to purchase
     whole shares of Common Stock. Any cash remaining after whole shares of
     Common Stock have been purchased shall be carried forward in the
     Participant's account for the purchase of shares on the next Purchase Date.
     The price per Share of the Shares purchased under any option granted under
     the Plan shall be eighty-five percent (85%) of the lower of:

                                        3
<PAGE>
          (i) the closing price per Share on the NASDAQ National Market on the
          business day preceding the Grant Date for such option; or

          (ii) the closing price per Share on the NASDAQ National Market on the
          Purchase Date.

     (b) Delivery of Shares. As directed by the Committee in its sole
     discretion, shares purchased on any Purchase Date shall be delivered
     directly to the Participant or to a custodian or broker (if any) designated
     by the Committee to hold shares for the benefit of the Participants. As
     determined by the Committee from time to time, such shares shall be
     delivered as physical certificates or by means of a book entry system.

     (c) Exhaustion of Shares. If at any time the shares available under the
     Plan are over-enrolled, enrollments shall be reduced proportionately to
     eliminate the over-enrollment. Such reduction method shall be "bottom up,"
     with the result that all option exercises for one share shall be satisfied
     first, followed by all exercises for two shares, and so on, until all
     available shares have been exhausted. Any funds that, due to
     over-enrollment, cannot be applied to the purchase of whole shares shall be
     refunded to the Participants (without interest thereon).

SECTION 7.     WITHDRAWAL

     A Participant may withdraw from the Plan by submitting a completed
     enrollment form to the Company. A withdrawal will be effective only if it
     is received by the Company by the deadline specified by the Committee (in
     its discretion and on a uniform and nondiscriminatory basis) from time to
     time. When a withdrawal becomes effective, the Participant's payroll
     contributions shall cease and all amounts then credited to the
     Participant's account shall be distributed to him or her (without interest
     thereon).

SECTION 8.     CESSATION OF PARTICIPATION

     A Participant shall cease to be a Participant immediately upon the
     cessation of his or her status as an Eligible Employee (for example,
     because of his or her termination of employment from all Employers for any
     reason). As soon as practicable after such cessation, the Participant's
     payroll contributions shall cease and all amounts then credited to the
     Participant's account shall be distributed to him or her (without interest
     thereon). If a Participant is on a Company-approved leave of absence, his
     or her participation in the Plan shall continue for so long as he or she
     remains an Eligible Employee and has not withdrawn from the Plan pursuant
     to Section 7.

SECTION 9.     DESIGNATION OF BENEFICIARY

     (a) Designation. Each Participant may, pursuant to such uniform and
     nondiscriminatory procedures as the Committee may specify from time to
     time, designate one or more Beneficiaries to receive any amounts credited
     to the Participant's account at the time of his or her death.
     Notwithstanding any contrary provision of this Section 9, Sections 9(a) and
     9(b) shall be operative only after (and for so long as) the Committee
     determines (on a uniform and nondiscriminatory basis) to permit the
     designation of Beneficiaries.

     (b) Changes. A Participant may designate different Beneficiaries (or may
     revoke a prior Beneficiary designation) at any time by delivering a new
     designation (or revocation of a prior designation) in like manner. Any
     designation or revocation shall be effective only if it is received by the
     Committee. However, when so received, the designation or revocation shall
     be effective as of the date the designation or revocation is executed
     (whether or not the Participant still is living), but without prejudice to
     the Committee on account of any payment made before the change is recorded.
     The last effective designation received by the Committee shall supersede
     all prior designations.

     (c) Failed Designations. If a Participant dies without having effectively
     designated a Beneficiary, or if no Beneficiary survives the Participant,
     the Participant's Account shall be payable to his or her estate.

                                        4
<PAGE>
SECTION 10.     ADMINISTRATION

     (a) Plan Administrator. The Plan shall be administered by the Committee.
     The Committee shall have the authority to control and manage the operation
     and administration of the Plan.

     (b) Actions by Committee. Each decision of a majority of the members of the
     Committee then in office shall constitute the final and binding act of the
     Committee. The Committee may act with or without a meeting being called or
     held and shall keep minutes of all meetings held and a record of all
     actions taken by written consent.

     (c) Powers of Committee. The Committee shall have all powers and discretion
     necessary or appropriate to supervise the administration of the Plan and to
     control its operation in accordance with its terms, including, but not by
     way of limitation, the following discretionary powers:

          (i) To interpret and determine the meaning and validity of the
          provisions of the Plan and the options and to determine any question
          arising under, or in connection with, the administration, operation or
          validity of the Plan or the options;

          (ii) To determine any and all considerations affecting the eligibility
          of any employee to become a Participant or to remain a Participant in
          the Plan;

          (iii) To cause an account or accounts to be maintained for each
          Participant;

          (iv) To determine the time or times when, and the number of shares for
          which, options shall be granted;

          (v) To establish and revise an accounting method or formula for the
          Plan;

          (vi) To designate a custodian or broker to receive shares purchased
          under the Plan and to determine the manner and form in which shares
          are to be delivered to the designated custodian or broker;

          (vii) To determine the status and rights of Participants and their
          Beneficiaries or estates;

          (viii) To employ such brokers, counsel, agents and advisers, and to
          obtain such broker, legal, clerical and other services, as it may deem
          necessary or appropriate in carrying out the provisions of the Plan;

          (ix) To establish, from time to time, rules for the performance of its
          powers and duties and for the administration of the Plan;

          (x) To adopt such procedures and subplans as are necessary or
          appropriate to permit participation in the Plan by employees who are
          foreign nationals or employed outside of the United States;

          (xi) To delegate to any one or more of its members or to any other
          person, severally or jointly, the authority to perform for and on
          behalf of the Committee one or more of the functions of the Committee
          under the Plan.

     (d) Decisions of Committee. All actions, interpretations, and decisions of
     the Committee shall be conclusive and binding on all persons, and shall be
     given the maximum possible deference allowed by law.

     (e) Administrative Expenses. All expenses incurred in the administration of
     the Plan by the Committee, or otherwise, including legal fees and expenses,
     shall be paid and borne by the Employers, except any stamp duties or
     transfer taxes applicable to the purchase of shares may be charged to the
     account of each Participant. Any brokerage fees for the purchase of shares
     by a Participant shall be paid by the

                                        5
<PAGE>
     Company, but fees and taxes (including brokerage fees) for the transfer,
     sale or resale of shares by a Participant, or the issuance of physical
     share certificates, shall be borne solely by the Participant.

     (f) Eligibility to Participate. No member of the Committee who is also an
     employee of an Employer shall be excluded from participating in the Plan if
     otherwise eligible, but he or she shall not be entitled, as a member of the
     Committee, to act or pass upon any matters pertaining specifically to his
     or her own account under the Plan.

     (g) Indemnification. Each of the Employers shall, and hereby does,
     indemnify and hold harmless the members of the Committee and the Board,
     from and against any and all losses, claims, damages or liabilities
     (including attorneys' fees and amounts paid, with the approval of the
     Board, in settlement of any claim) arising out of or resulting from the
     implementation of a duty, act or decision with respect to the Plan, so long
     as such duty, act or decision does not involve gross negligence or willful
     misconduct on the part of any such individual.

SECTION 11.     AMENDMENT, TERMINATION, AND DURATION

     (a) Amendment, Suspension, or Termination. The Board, in its sole
     discretion, may amend or terminate the Plan, or any part thereof, at any
     time and for any reason. If the Plan is terminated, the Board, in its
     discretion, may elect to terminate all outstanding options either
     immediately or upon completion of the purchase of shares on the next
     Purchase Date, or may elect to permit options to expire in accordance with
     their terms (and participation to continue through such expiration dates).
     If the options are terminated prior to expiration, all amounts then
     credited to Participants' accounts which have not been used to purchase
     shares shall be returned to the Participants (without interest thereon) as
     soon as administratively practicable.

     (b) Duration of the Plan. The Plan shall commence on the date specified
     herein, and subject to Section 11(a) (regarding the Board's right to amend
     or terminate the Plan), shall remain until December 31, 2013.

SECTION 12.     GENERAL PROVISIONS

     (a) Participation by Subsidiaries. One or more Subsidiaries of the Company
     may become participating Employers by adopting the Plan and obtaining
     approval for such adoption from the Board. By adopting the Plan, a
     Subsidiary shall be deemed to agree to all of its terms, including (but not
     limited to) the provisions granting exclusive authority (i) to the Board to
     amend the Plan, and (ii) to the Committee to administer and interpret the
     Plan. An Employer may terminate its participation in the Plan at any time.
     The liabilities incurred under the Plan to the Participants employed by
     each Employer shall be solely the liabilities of that Employer, and no
     other Employer shall be liable for benefits accrued by a Participant during
     any period when he or she was not employed by such Employer.

     (b) Inalienability. In no event may either a Participant, a former
     Participant or his or her Beneficiary, spouse or estate sell, transfer,
     anticipate, assign, hypothecate, or otherwise dispose of any right or
     interest under the Plan; and such rights and interests shall not at any
     time be subject to the claims of creditors nor be liable to attachment,
     execution or other legal process. Accordingly, for example, a Participant's
     interest in the Plan is not transferable pursuant to a domestic relations
     order.

     (c) Severability. In the event any provision of the Plan shall be held
     illegal or invalid for any reason, the illegality or invalidity shall not
     affect the remaining parts of the Plan, and the Plan shall be construed and
     enforced as if the illegal or invalid provision had not been included.

     (d) Requirements of Law. The granting of options and the issuance of shares
     shall be subject to all applicable laws, rules, and regulations, and to
     such approvals by any governmental agencies or securities exchanges as the
     Committee may determine are necessary or appropriate.

     (e) Compliance with Rule 16b-3. Any transactions under this Plan with
     respect to officers (as defined in Rule 16a-1 promulgated under the 1934
     Act) are intended to comply with all applicable conditions of

                                        6
<PAGE>
     Rule 16b-3. To the extent any provision of the Plan or action by the
     Committee fails to so comply, it shall be deemed null and void, to the
     extent permitted by law and deemed advisable by the Committee.
     Notwithstanding any contrary provision of the Plan, if the Committee
     specifically determines that compliance with Rule 16b-3 no longer is
     required, all references in the Plan to Rule 16b-3 shall be null and void.

     (f) No Enlargement of Employment Rights. Neither the establishment or
     maintenance of the Plan, the granting of options, the purchase of shares,
     nor any action of any Employer or the Committee, shall be held or construed
     to confer upon any individual any right to be continued as an employee of
     the Employer nor, upon dismissal, any right or interest in any specific
     assets of the Employers other than as provided in the Plan. Each Employer
     expressly reserves the right to discharge any employee at any time, with or
     without cause.

     (g) Apportionment of Costs and Duties. All acts required of the Employers
     under the Plan may be performed by the Company for itself and its
     Subsidiaries, and the costs of the Plan may be equitably apportioned by the
     Committee among the Company and the other Employers. Whenever an Employer
     is permitted or required under the terms of the Plan to do or perform any
     act, matter or thing, it shall be done and performed by any officer or
     employee of the Employers who is thereunto duly authorized by the
     Employers.

     (h) Construction and Applicable Law. The Plan is intended to qualify as an
     "employee stock purchase plan" within the meaning of section 423(b) of the
     Code. Any provision of the Plan which is inconsistent with section 423(b)
     of the Code shall, without further act or amendment by the Company or the
     Committee, be reformed to comply with the requirements of section 423(b) of
     the Code. The provisions of the Plan shall be construed, administered and
     enforced in accordance with such Section and with the laws of the State of
     Washington (excluding Washington's conflict of laws provisions).

     (i) Captions. The captions contained in and the table of contents prefixed
     to the Plan are inserted only as a matter of convenience, and in no way
     define, limit, enlarge or describe the scope or intent of the Plan nor in
     any way shall affect the construction of any provision of the Plan.

SECTION 13.     EXECUTION.

     To record the adoption of the Plan by the Board, the Company has caused its
     duly authorized officer to execute this Plan on behalf of the Company.

                                     INSIGHTFUL CORPORATION

                                     By:  /s/ Shawn F. Javid
                                          ------------------

                                     Title:  President & Chief Executive Officer
                                             -----------------------------------

                                        7
<PAGE>

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