Document:

Exhibit 10.1

 

ZEDGE,
INC.

2016
STOCK OPTION AND INCENTIVE PLAN

Adopted
as of May 23, 2016

 

(Amended
and Restated on September 29, 2016)

 

1. Purpose;
Types of Awards; Construction.

 

The
purpose of the Zedge, Inc. 2016 Stock Option and Incentive Plan (the “Plan”) is to provide incentives to executive
officers, employees, directors and consultants of Zedge, Inc. (the “Company”), or any subsidiary of the Company which
now exists or hereafter is organized or acquired by the Company, to acquire a proprietary interest in the Company, to continue
as executive officers, employees, directors or consultants, to increase their efforts on behalf of the Company and to promote
the success of the Company’s business. The provisions of the Plan are intended to satisfy the requirements of Section 16(b)
of the Securities Exchange Act of 1934, as amended, and of Section 162(m) of the Internal Revenue Code of 1986, as amended, and
shall be interpreted in a manner consistent with the requirements thereof.

 

2. Definitions.

 

As
used in this Plan, the following words and phrases shall have the meanings indicated:

 

(a) “Agreement”
shall mean a written agreement entered into between the Company and a Grantee in connection with an award under the Plan.

 

(b) “Board”
shall mean the Board of Directors of the Company.

 

(c) “Change
in Control” means a change in ownership or control of the Company effected through either of the following:

 

(i) any
“person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than (A) the Company, (B) any
trustee or other fiduciary holding securities under an employee benefit plan of the Company, (C) any corporation or other entity
owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of
Class B Common Stock, or (D) any person who, immediately following the spin-off of the Company by way of a pro rata distribution
of the Company’s Class B Common Stock to the stockholders of IDT Corporation, owned more than 25% of the combined voting
power of the Company’s then outstanding voting securities), is or becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially
owned by such person any securities acquired directly from the Company or any of its affiliates other than in connection with
the acquisition by the Company or its affiliates of a business) representing 25% or more of the combined voting power of the Company’s
then outstanding voting securities; or

 

(ii) during
any period of not more than two consecutive years, not including any period prior to the initial adoption of this Plan by the
Board, individuals who at the beginning of such period constitute the Board, and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened election contest, including, but not limited to a consent
solicitation, relating to the election of directors of the Company) whose election by the Board or nomination for election by
the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof.

 

(d)
“Class B Common Stock” shall mean shares of Class B Common Stock, par value $.01 per share, of the Company.

 

(e) “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

    	 		 

     

    

  

(f) “Committee”
shall mean the Compensation Committee of the Board or such other committee as the Board may designate from time to time to administer
the Plan. The Board will cause the Committee to satisfy the applicable requirements of any stock exchange on which the Common
Stock may then be listed. For purposes of awards intended to constitute performance awards, to the extent required by Code Section
162(m), Committee means all of the members of the Committee who are “outside directors” within the meaning of Section
162(m) of the Code. For purposes of awards to Grantees who are subject to Section 16 of the Exchange Act, Committee means all
of the members of the Committee who are “non-employee directors” within the meaning of Rule 16b-3 adopted under the
Exchange Act.

 

(g) “Company”
shall mean Zedge, Inc., a corporation incorporated under the laws of the State of Delaware, or any successor corporation.

 

(h) “Continuous
Service” means that the provision of services to the Company or a Related Entity in any capacity of officer, employee, director
or consultant is not interrupted or terminated. Continuous Service shall not be considered interrupted in the case of (i) any
approved leave of absence, (ii) transfers between locations of the Company or among the Company, any Related Entity or any successor
in any capacity of officer, employee, director or consultant, or (iii) any change in status as long as the individual remains
in the service of the Company or a Related Entity in any capacity of officer, employee, director or consultant (except as otherwise
provided in the applicable Agreement). An approved leave of absence shall include sick leave, short-term disability, maternity
leave, military leave (including without limitation service in the National Guard or the Army Reserves) and any other personal
leave approved by the Company or the Committee. For purposes of Incentive Stock Options, no such leave may exceed ninety (90)
days unless reemployment upon expiration of such leave is guaranteed by statute or contract.

 

(i) “Corporate
Transaction” means any of the following transactions:

 

(i) a
merger or consolidation of the Company with any other corporation or other entity, other than (A) 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 or parent entity) 80% or more of the combined
voting power of the voting securities of the Company or such surviving or parent entity outstanding immediately after such merger
or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction)
in which no “person” (as defined in the Exchange Act) acquired 25% or more of the combined voting power of the Company’s
then outstanding securities; or

 

(ii) a
plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially
all of its assets (or any transaction having a similar effect).

 

(j) “Disability”
shall mean cause for termination of a Grantee’s employment or service due to a determination
that the Grantee is disabled in accordance with a long-term disability insurance
program maintained by the Company or a total and permanent disability as defined in Code Section 22(e)(3).

 

(k) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

(l) “Fair
Market Value” per share as of a particular date shall mean (i) the closing sale price per share of Class B Common Stock
on the national securities exchange on which the Class B Common Stock is principally traded for the last preceding date on which
there was a sale of Class B Common Stock on such exchange, or (ii) if the shares of Class B Common Stock are then traded in an
over-the-counter market, the average of the closing bid and asked prices for the shares of Class B Common Stock in such over-the-counter
market for the last preceding date on which there was a sale of Class B Common Stock in such market, or (iii) if the shares of
Class B Common Stock are not then readily tradable on an established securities market, such value as the Committee, in its sole
discretion, shall determine, provided however that such determination (A) with respect to Nonqualified Stock Options, shall be
in good faith using a “reasonable application of a reasonable valuation method” within the meaning of Treasury Regulation
Section 1.409A-1(b)(5)(iv)(B), and (B) with respect to Incentive Stock Options, shall be in a manner that satisfies the applicable
requirements of Code Section 422.

  

(m) “Grantee”
shall mean a person who receives a grant of Options or Restricted Stock under the Plan.

 

(n) “Incentive
Stock Option” shall mean any option intended to be, and designated as, an incentive stock option within the meaning of Section
422 of the Code.

 

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(o) “Insider”
shall mean a Grantee who is subject to the reporting requirements of Section 16(a) of the Exchange Act.

 

(p) “Insider
Trading Policy” shall mean the Insider Trading Policy of the Company, as may be amended from time to time.

 

(q)
“Non-Employee Director” means a member of the Board or the board of directors of any Subsidiary (other than any Subsidiary
that has either (A) a class of “equity securities” (as defined in Rule 3a11-1 promulgated under the Exchange
Act) registered under the Exchange Act or a similar foreign statute or (B) adopted any stock option plan, equity compensation
plan or similar employee benefit plan in which non-employee directors of such Subsidiary are eligible to participate) who is not
an employee of the Company or any Subsidiary.

 

(r)
“Non-Employee Director Annual Grant” shall mean an award of a number of shares of Restricted Stock as shall be equal
up to $50,000 based on the average closing prices of the Class B common stock on the NYSE MKT for the December preceding the date
of grant; provided, however that if the Company’s market cap is below $40 million based on the same formulation, a pro rata
portion (based on the difference between $40 million and the Company’s market cap) will be paid in cash..

 

(s)
“Non-Employee Director Grant Date” shall mean January 5 of the applicable year (or the following business day
if January 5 is not a business day).

 

(t) “Nonqualified
Stock Option” shall mean any option not designated as an Incentive Stock Option.

 

(u) “Option”
or “Options” shall mean a grant to a Grantee of an option or options to purchase shares of Class B Common Stock.

 

(v) “Option
Agreement” shall have the meaning set forth in Section 6 of the Plan.

 

(w) “Option
Price” shall mean the exercise price of the shares of Class B Common Stock covered by an Option.

 

(x) “Parent”
shall mean any company (other than the Company) in an unbroken chain of companies ending with the Company if, at the time of granting
an award under the Plan, each of the companies other than the Company owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other companies in such chain.

 

(y) “Related
Entity” means any Parent, Subsidiary or any business, corporation, partnership, limited liability company or other entity
in which the Company, a Parent or a Subsidiary holds a substantial ownership interest, directly or indirectly. The
term “substantial ownership interest” means the possession, directly or indirectly, of the power to direct the management
and policies of such person or entity, whether through the ownership of voting or other securities, by contract or otherwise.

 

(z)
“Restricted Period” shall have the meaning set forth in Section 9(b) of the Plan.

 

(aa)
“Restricted Stock” means shares of Class B Common Stock issued under the Plan to a Grantee for such consideration,
if any, and subject to such restrictions on transfer, rights of refusal, repurchase provisions, forfeiture provisions and other
terms and conditions as shall be determined by the Committee.

 

(bb) “Related
Entity Disposition” means the sale, distribution or other disposition by the Company of all or substantially all of the
Company’s interest in any Related Entity effected by a sale, merger or consolidation or other transaction involving such
Related Entity or the sale of all or substantially all of the assets of such Related Entity.

 

(cc) “Retirement”
shall mean a Grantee’s retirement in accordance with the terms of any tax-qualified retirement plan maintained by the Company
or any of its affiliates in which the Grantee participates.

 

(dd) “Rule
16b-3” shall mean Rule 16b-3, as from time to time in effect, promulgated under the Exchange Act, including any successor
to such Rule.

 

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(ee) “Subsidiary”
shall mean any company (other than the Company) in an unbroken chain of companies beginning with the Company if each of the companies
other than the last company in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other companies in such chain.

 

(ff)
“Tax Event” shall have the meaning set forth in Section 15 of the Plan.

 

(gg) “Ten
Percent Stockholder” shall mean a Grantee who at the time an Incentive Stock Option is granted, owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary.

 

3. Administration.

 

(a) The
Plan shall be administered by the Committee.

 

(b) The
Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan,
to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary
or advisable in the administration of the Plan, including, without limitation, the authority to grant Options and Restricted Stock;
to determine which options shall constitute Incentive Stock Options and which Options shall constitute Nonqualified Stock Options;
to determine the purchase price of the shares of Class B Common Stock covered by each Option; to determine the persons to whom,
and the time or times at which awards shall be granted; to determine the number of shares to be covered by each award; to interpret
the Plan and any award under the Plan; to reconcile any inconsistent terms in the Plan or any award under the Plan; to prescribe,
amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the Agreements (which need
not be identical) and to cancel or suspend awards, as necessary; and to make all other determinations deemed necessary or advisable
for the administration of the Plan.

 

(c) All
decisions, determination and interpretations of the Committee shall be final and binding on all Grantees of any awards under this
Plan. No member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect
to the Plan or any award granted hereunder.

 

(d) The
Committee may delegate to one or more executive officers of the Company the authority to (i) grant awards under the Plan to employees
of the Company and its Subsidiaries who are not officers or directors of the Company, (ii) execute and deliver documents or take
such other ministerial actions on behalf of the Committee with respect to awards and (iii) to make interpretations of the Plan.
The grant of authority in this Section 3(d) shall be subject to such conditions and limitations as may be determined by the Committee.
If the Committee delegates authority to any such executive officer or executive officers of the Company pursuant to this Section
3(d), and such executive officer or executive officers grant awards pursuant to such delegated authority, references in this Plan
to the “Committee” as they relate to such awards shall be deemed to refer to such executive officer or executive officers,
as applicable.

 

4. Eligibility.

 

Awards
may be granted to executive officers, employees, directors and consultants of the Company or of any Subsidiary. In addition to
any other awards granted to Non-Employee Directors hereunder, awards shall be granted to Non-Employee Directors pursuant to Section 10
of the Plan. In determining the persons to whom awards shall be granted and the number of shares to be covered by each award,
the Committee shall take into account the duties of the respective persons, their present and potential contributions to the success
of the Company and such other factors as the Committee shall deem relevant in connection with accomplishing the purposes of the
Plan.

 

5. Stock.

 

(a) The
maximum number of shares of Class B Common Stock reserved for the grant of awards under the Plan shall be 691,000 (after giving
effect to the stock split of the Company’s shares of common stock to be effective prior to the Company’s spinoff from
IDT Corporation), subject to adjustment as provided in Section 11 of the Plan. Such shares may, in whole or in part, be authorized
but unissued shares or shares that shall have been or may be reacquired by the Company.

 

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(b) If
any outstanding award under the Plan should, for any reason expire, be canceled or be forfeited without having been exercised
in full, the shares of Class B Common Stock allocable to the unexercised, canceled or terminated portion of such award shall (unless
the Plan shall have been terminated) become available for subsequent grants of awards under the Plan, unless otherwise determined
by the Committee.

 

(c)  In
no event may a Grantee be granted during any calendar year Options to acquire more than an aggregate of 60,000 shares of Class
B Common Stock subject to adjustment as provided in Section 11 of the Plan.

 

6. Terms
and Conditions of Options.

 

(a) OPTION
AGREEMENT.  Each Option granted pursuant to the Plan shall be evidenced by a written agreement between the Company and
the Grantee (the “Option Agreement”), in such form and containing such terms and conditions as the Committee shall
from time to time approve, which Option Agreement shall comply with and be subject to the following terms and conditions, unless
otherwise specifically provided in such Option Agreement. For purposes of interpreting this Section 6, a director’s service
as a member of the Board or a consultant’s service shall be deemed to be employment with the Company.

 

(b) NUMBER
OF SHARES.  Each Option Agreement shall state the number of shares of Class B Common Stock to which the Option relates.

 

(c) TYPE
OF OPTION.  Each Option Agreement shall specifically state that the Option constitutes an Incentive Stock Option or
a Nonqualified Stock Option. In the absence of such designation, the Option will be deemed to be a Nonqualified Stock Option.

 

(d) OPTION
PRICE.  Each Option Agreement shall state the Option Price, which, in the case of an Incentive Stock Option, shall not
be less than one hundred percent (100%) of the Fair Market Value of the shares of Class B Common Stock covered by the Option on
the date of grant. The Option Price shall be subject to adjustment as provided in Section 9 of the Plan.

 

(e) MEDIUM
AND TIME OF PAYMENT.  The Option Price shall be paid in full, at the time of exercise, in cash or in shares of Class
B Common Stock having a Fair Market Value equal to such Option Price or in a combination of cash and Class B Common Stock including
a cashless exercise procedure through a broker-dealer or otherwise; provided, however, that in the case of an Incentive Stock
Option, the medium of payment shall be determined at the time of grant and set forth in the applicable Option Agreement.

 

(f) TERM
AND EXERCISABILITY OF OPTIONS.  Each Option Agreement shall provide the exercise schedule for the Option as determined
by the Committee, provided, that, the Committee shall have the authority to accelerate the exercisability of any outstanding option
at such time and under such circumstances as it, in its sole discretion, deems appropriate. The exercise period will be ten (10)
years from the date of the grant of the option unless otherwise determined by the Committee; provided, however, that in the case
of an Incentive Stock Option, such exercise period shall not exceed ten (10) years from the date of grant of such Option. The
exercise period shall be subject to earlier termination as provided in Sections 6(g) and 6(h) of the Plan. An Option may be exercised,
as to any or all full shares of Class B Common Stock as to which the Option has become exercisable, by written notice delivered
in person or by mail to the administrator designated by the Company, specifying the number of shares of Class B Common Stock with
respect to which the Option is being exercised.

 

(g) TERMINATION
OF CONTINUOUS SERVICE. Except as expressly provided for in an applicable Option Agreement or as provided in this Section 6(g)
and in Section 6(h) of the Plan, an Option may not be exercised unless the Grantee is then in the employ of, or maintaining a
director or consultant relationship with, or otherwise a service provider to, the Company or a Subsidiary thereof (or a company
or a Parent or Subsidiary of such company issuing or assuming the Option in a transaction to which Section 424(a) of the Code
applies), and unless the Grantee has remained in Continuous Service with the Company or any Subsidiary since the date of grant
of the Option. In the event that the Continuous Service of a Grantee shall terminate (other than by reason of death, Disability
or Retirement), all Options of such Grantee that are exercisable at the time of Grantee’s termination may, unless earlier
terminated in accordance with their terms, be exercised within one hundred eighty (180) days after the date of termination (or
such different period as the Committee or the applicable Option Agreement shall prescribe).

 

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(h) DEATH,
DISABILITY OR RETIREMENT OF GRANTEE.  Unless otherwise expressly provided for in an Option Agreement, if a Grantee shall
die while providing Continuous Service or if the Grantee’s Continuous Service shall terminate by reason of Disability, all
Options theretofore granted to such Grantee (to the extent otherwise exercisable) may, unless earlier terminated in accordance
with their terms, be exercised by the Grantee or by the Grantee’s estate or by a person who acquired the right to exercise
such Options by bequest or inheritance or otherwise by result of death or Disability of the Grantee, at any time within three
hundred sixty five (365) days after the death or Disability of the Grantee (or such different period as the applicable Option
Agreement or the Committee shall prescribe). In the event that an Option granted hereunder shall be exercised by the legal representatives
of a deceased or former Grantee, written notice of such exercise shall be accompanied by a certified copy of letters testamentary
or equivalent proof of the right of such legal representative to exercise such Option. In the event that the Continuous Service
of a Grantee shall terminate on account of such Grantee’s Retirement, all Options of such Grantee that are exercisable at
the time of such Retirement may, unless earlier terminated in accordance with their terms, be exercised at any time within one
hundred eighty (180) days after the date of such Retirement (or such different period as the applicable Option Agreement or the
Committee shall prescribe).

 

(i) OTHER
PROVISIONS.  The Option Agreements evidencing awards under the Plan shall contain such other terms and conditions not
inconsistent with the Plan as the Committee may determine.

 

7. Nonqualified
Stock Options.

 

Options
granted pursuant to this Section 7 are intended to constitute Nonqualified Stock Options and shall be subject only to the general
terms and conditions specified in Section 6 of the Plan.

 

8. Incentive
Stock Options.

 

Options
granted pursuant to this Section 8 are intended to constitute Incentive Stock Options and shall be subject to the following special
terms and conditions, in addition to the general terms and conditions specified in Section 6 of the Plan:

 

(a) LIMITATION
ON VALUE OF SHARES.  To the extent that the aggregate Fair Market Value of shares of Class B Common Stock subject to
Options designated as Incentive Stock Options which become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company or any Subsidiary) exceeds $100,000, such excess Options, to the extent of the shares covered
thereby in excess of the foregoing limitation, shall be treated as Nonqualified Stock Options. For this purpose, Incentive Stock
Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the shares of Class
B Common Stock shall be determined as of the date that the Option with respect to such shares was granted.

 

(b) TEN
PERCENT STOCKHOLDER.  In the case of an Incentive Stock Option granted to a Ten Percent Stockholder, (i) the Option
Price shall not be less than one hundred ten percent (110%) of the Fair Market Value of the shares of Class B Common Stock on
the date of grant of such Incentive Stock Option, and (ii) the exercise period shall not exceed five (5) years from the date of
grant of such Incentive Stock Option.

 

9. Restricted
Stock. 

 

The
Committee may award shares of Restricted Stock to any eligible executive officer, employee, director or consultant of the Company
or of any Subsidiary. Each award of Restricted Stock under the Plan shall be evidenced by a written Agreement between the Company
and the Grantee, in such form as the Committee shall from time to time approve, which Agreement shall comply with and be subject
to the following terms and conditions, unless otherwise specifically provided in such Agreement:

 

(a)
NUMBER OF SHARES. Each Agreement shall state the number of shares of Restricted Stock to be subject to an award.

 

(b)
RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of, except by will or the laws of descent and distribution, for such period as the Committee shall determine from the
date on which the award is granted (the “Restricted Period”). The Committee may also impose such additional or alternative
restrictions and conditions on the shares as it deems appropriate including, but not limited to, the satisfaction of performance
criteria. Such performance criteria may include sales, earnings before interest and taxes, return on investment, earnings per
share, any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Committee. The Company
may, at its option, maintain issued shares in book entry form. Certificates, if any, for shares of stock issued pursuant to Restricted
Stock awards shall bear an appropriate legend referring to such restrictions, and any attempt to dispose of any such shares of
stock in contravention of such restrictions shall be null and void and without effect. During the Restricted Period, any such
certificates shall be held in escrow by an escrow agent appointed by the Committee. In determining the Restricted Period of an
award, the Committee may provide that the foregoing restrictions shall lapse with respect to specified percentages of the awarded
shares on successive anniversaries of the date of such award.

 

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(c)
FORFEITURE. Subject to such exceptions as may be determined by the Committee, if the Grantee’s Continuous Service
with the Company or any Subsidiary shall terminate for any reason prior to the expiration of the Restricted Period of an award,
any shares remaining subject to restrictions (after taking into account the provisions of Subsection (e) of this Section 9)
shall thereupon be forfeited by the Grantee and transferred to, and retired by, the Company without cost to the Company or such
Subsidiary, and such shares shall become available for subsequent grants of awards under the Plan, unless otherwise determined
by the Committee.

 

(d)
OWNERSHIP. During the Restricted Period, the Grantee shall possess all incidents of ownership of such shares, subject
to Subsection (b) of this Section 9, including the right to receive dividends with respect to such shares and to vote
such shares.

 

(e)
ACCELERATED LAPSE OF RESTRICTIONS. Upon the occurrence of any of the events specified in Section 12 of the Plan
(and subject to the conditions set forth therein), all restrictions then outstanding on any shares of Restricted Stock awarded
under the Plan shall lapse as of the applicable date set forth in Section 12. The Committee shall have the authority (and
the Agreement may so provide) to cancel all or any portion of any outstanding restrictions prior to the expiration of the Restricted
Period with respect to any or all of the shares of Restricted Stock awarded on such terms and conditions as the Committee shall
deem appropriate.

 

10.
Non-Employee Director Restricted Stock. 

 

The
provisions of this Section 10 shall apply only to certain grants of Restricted Stock to Non-Employee Directors, as provided
below. Except as set forth in this Section 10, the other provisions of the Plan shall apply to grants of Restricted Stock
to Non-Employee Directors to the extent not inconsistent with this Section. For purposes of interpreting Section 6 of the
Plan and this Section 10, a Non-Employee Director’s service as a member of the Board or the board of directors of any
Subsidiary shall be deemed to be employment with the Company.

 

(a)
GENERAL. Non-Employee Directors shall receive Restricted Stock in accordance with this Section 10. Restricted Stock
granted pursuant to this Section 10 shall be subject to the terms of such section and shall not be subject to discretionary
acceleration of vesting by the Committee. Unless determined otherwise by the Committee, Non-Employee Directors shall not receive
separate and additional grants hereunder for being a Non-Employee Director of (i) the Company and a Subsidiary or (ii) more
than one Subsidiary.

 

(b)
INITIAL GRANTS OF RESTRICTED STOCK. A Non-Employee Director who first becomes a Non-Employee Director shall receive a pro-rata
amount (based on quarter(s) of service following the date the Non-Employee Director was appointed as a Non-Employee Director on
the next Non-Employee Director Annual Grant..

 

(c)
ANNUAL GRANTS OF RESTRICTED STOCK. On each Non-Employee Director Grant Date, each Non-Employee Director who attended at
least 75% of the regularly scheduled meetings of the Board of Directors during a calendar year shall receive a Non-Employee Director
Annual Grant.

 

(d)
VESTING OF RESTRICTED STOCK. Restricted Stock granted under this Section 10 shall be fully vested upon grant.  

 

11.
Effect of Certain Changes.

 

(a) ADJUSTMENTS
UPON CHANGES IN CAPITALIZATION.  In the event of any extraordinary dividend, stock dividend, recapitalization, merger,
consolidation, stock split, warrant or rights issuance, or combination or exchange of such shares, or other similar transactions,
the Committee shall equitably adjust (i) the maximum number of Options or shares of Restricted Stock that may be awarded to a
Grantee in any calendar year (as provided in Section 5 hereof), (ii) the number of shares of Class B Common Stock available for
awards under the Plan, (iii) the number and/or kind of shares covered by outstanding awards and (iv) the price per share of Options
so as to reflect such event and preserve the value of such awards; provided, however, that any fractional shares resulting from
such adjustment shall be eliminated.

 

(b) CHANGE
IN CLASS B COMMON STOCK.  In the event of a change in the Class B Common Stock as presently constituted that is limited
to a change of all of its authorized shares of Class B Common Stock, into the same number of shares with a different par value
or without par value, the shares resulting from any such change shall be deemed to be the Class B Common Stock within the meaning
of the Plan.

 

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12. Corporate
Transaction; Change in Control; Related Entity Disposition.

 

(a) CORPORATE
TRANSACTION.  In the event of a Corporate Transaction, each award which is at the time outstanding under the Plan shall
automatically become fully vested and exercisable and, in the case of an award of Restricted Stock, shall be released from any
restrictions on transfer (except with regard to the Insider Trading Policy and such other agreements between the Grantee and the
Company) and repurchase or forfeiture rights, immediately prior to the specified effective date of such Corporate Transaction.
Effective upon the consummation of the Corporate Transaction, all outstanding awards of Options under the Plan shall terminate,
unless otherwise determined by the Committee. However, all such awards shall not terminate if the awards are, in connection with
the Corporate Transaction, assumed by the successor corporation or Parent thereof.

 

(b) CHANGE
IN CONTROL.  In the event of a Change in Control (other than a Change in Control which is also a Corporate Transaction),
each award which is at the time outstanding under the Plan automatically shall become fully vested and exercisable and, in the
case of an award of Restricted Stock, shall be released from any restrictions on transfer and repurchase or forfeiture rights,
immediately prior to the specified effective date of such Change in Control.

 

(c) RELATED
ENTITY DISPOSITION.  The Continuous Service of each Grantee (who is primarily engaged in service to a Related Entity
at the time it is involved in a Related Entity Disposition) shall terminate effective upon the consummation of such Related Entity
Disposition, and each outstanding award of such Grantee under the Plan shall become fully vested and exercisable and, in the case
of an award of Restricted Stock, shall be released from any restrictions on transfer (except with regard to the Insider Trading
Policy and such other agreements between the Grantee and the Company). Unless otherwise determined by the Committee, the Continuous
Service of a Grantee shall not be deemed to terminate (and each outstanding award of such Grantee under the Plan shall not become
fully vested and exercisable and, in the case of an award of Restricted Stock, shall not be released from any restrictions on
transfer) if (i) a Related Entity Disposition involves the spin-off of a Related Entity, for so long as such Grantee continues
to remain in the service of such entity that constituted the Related Entity immediately prior to the consummation of such Related
Entity Disposition (“SpinCo”) in any capacity of officer, employee, director or consultant or (ii) an outstanding
award is assumed by the surviving corporation (whether SpinCo or otherwise) or its parent entity in connection with a Related
Entity Disposition.

 

(d) SUBSTITUTE
AWARDS. The Committee may grant awards under the Plan in substitution of stock-based incentive awards held by employees,
consultants or directors of another entity who become employees, consultants or directors of the Company or any Subsidiary by
reason of a merger or consolidation of such entity with the Company or any Subsidiary, or the acquisition by the Company or a
Subsidiary of property or equity of such entity, upon such terms and conditions as the Committee may determine, and such awards
shall not count against the share limitation set forth in Section 5 of the Plan.

 

13. Period
During which Awards May Be Granted.

 

Awards
may be granted pursuant to the Plan from time to time within a period of ten (10) years from May [_], 2016, the date the Board
adopted the Plan.

 

14. Transferability
of Awards.

 

(a) Incentive
Stock Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by the laws
of descent and distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee or his or her guardian
or legal representative.

 

(b) Nonqualified
Stock Options shall be transferable in the manner and to the extent acceptable to the Committee, as evidenced by a writing signed
by the Company and the Grantee. Nonqualified Stock Options shall be transferable by a Grantee as a gift to the Grantee’s
“family members” (as defined in Form S-8) under such terms and conditions as may be established by the Committee;
provided that the Grantee receives no consideration for the transfer. Notwithstanding the transfer by a Grantee of a Nonqualified
Stock Option, the transferred Nonqualified Stock Option shall continue to be subject to the same terms and conditions as were
applicable to the Nonqualified Stock Option immediately before the transfer (including, without limitation, the Insider Trading
Policy) and the Grantee will continue to remain subject to the withholding tax requirements set forth in Section 15 hereof.

 

    	 	8	 

     

    

 

(c) The
terms of any award granted under the Plan, including the transferability of any such award, shall be binding upon the executors,
administrators, heirs and successors of the Grantee.

 

(d)
Each Grantee who receives an award shall comply with any policy adopted by the Company from time to time covering transactions
in the Company’s securities. By way of example, and not limitation, Restricted Stock shall remain subject to the Insider
Trading Policy after the Restricted Period.

 

15. Agreement
by Grantee regarding Withholding Taxes. 

 

If
the Committee shall so require, as a condition of exercise of an Option or the expiration of a Restricted Period (each a “Tax
Event”), each Grantee shall agree that no later than the date of the Tax Event, the Grantee will pay to the Company or make
arrangements satisfactory to the Committee regarding payment of any federal, state or local taxes of any kind required by law
to be withheld upon the Tax Event. Unless determined otherwise by the Committee, a Grantee shall permit, to the extent permitted
or required by law, the Company to withhold federal, state and local taxes of any kind required by law to be withheld upon the
Tax Event from any payment of any kind due to the Grantee. Unless otherwise determined by the Committee, any such above-described
withholding obligation may, in the discretion of the Company, be satisfied by the withholding by the Company or delivery to the
Company of Class B Common Stock.

 

16. Rights
as a Stockholder.

 

Except
as provided in Section 9(d) of the Plan, a Grantee or a transferee of an award shall have no rights as a stockholder with
respect to any shares covered by the award until the date of the issuance of such shares to him or her. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distribution of other rights
for which the record date is prior to the date such shares are issued, except as provided in Section 11(a) of the Plan.

 

17. No
Rights to Employment; Forfeiture of Gains.

 

Nothing
in the Plan or in any award granted or Agreement entered into pursuant hereto shall confer upon any Grantee the right to continue
as a director of, in the employ of, or in a consultant relationship with, the Company or any Subsidiary or to be entitled to any
remuneration or benefits not set forth in the Plan or such Agreement or to interfere with or limit in any way the right of the
Company or any such Subsidiary to terminate such Grantee’s employment or consulting relationship. Awards granted under the
Plan shall not be affected by any change in duties or position of a Grantee as long as such Grantee continues to be employed by,
or in a consultant relationship with, or a director of the Company or any Subsidiary. The Agreement for any award under the Plan
may require the Grantee to pay to the Company any financial gain realized from the prior exercise, vesting or payment of the award
in the event that the Grantee engages in conduct that violates any non-compete, non-solicitation or non-disclosure obligation
of the Grantee under any agreement with the Company or any Subsidiary, including, without limitation, any such obligations provided
in the Agreement.

 

18. Beneficiary.

 

A
Grantee may file with the Committee a written designation of a beneficiary on such form as may be prescribed by the Committee
and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Grantee, the executor
or administrator of the Grantee’s estate shall be deemed to be the Grantee’s beneficiary.

 

19. Approval;
Amendment and Termination of the Plan.

 

(a) APPROVAL.  The
Plan initially became effective when adopted by the Board on May 23, 2016 and shall terminate on the tenth anniversary of such
date (except as to awards outstanding on that date). The Plan was ratified by the Company’s stockholder on May 24, 2016.
The Board amended the Plan on September 29, 2016 to, among other things, (i) increase the amount of authorized shares under the
Plan to 691,000 shares of Class B Common Stock and (ii) change the vesting of the Non-Employee Director Annual Grant to immediate.
The Company’s stockholders ratified such amendment to the Plan on January 18, 2017.

 

    	 	9	 

     

    

 

(b) AMENDMENT
AND TERMINATION OF THE PLAN. The Board, or the Committee if so delegated by the Board, at any time and from time to
time may suspend, terminate, modify or amend the Plan; however, unless otherwise determined by the Board, or the Committee if
applicable, an amendment that requires stockholder approval in order for the Plan to continue to comply with any law, regulation
or stock exchange requirement shall not be effective unless approved by the requisite vote of stockholders. Except as provided
in Section 11(a) of the Plan, no suspension, termination, modification or amendment of the Plan may adversely affect any award
previously granted, unless the written consent of the Grantee is obtained.

 

20. Governing
Law.

 

The
Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Delaware.

 

21. Section
409A of the Code.

 

It
is the intention of the Company that no award shall be “deferred compensation” subject to Section 409A of the Code,
unless and to the extent that the Committee specifically determines otherwise as provided in this Section 21, and the Plan and
the terms and conditions of all awards shall be interpreted accordingly. The terms and conditions governing any awards that the
Committee determines will be subject to Section 409A of the Code shall be set forth in the applicable award Agreement and shall
comply in all respects with Section 409A of the Code. Notwithstanding any provision of this Plan to the contrary, if one or more
of the payments or benefits received or to be received by a Grantee pursuant to an award would cause the Grantee to incur any
additional tax or interest under Section 409A of the Code, the Committee may reform such provision to maintain to the maximum
extent practicable the original intent of the applicable provision without violating the provisions of Section 409A of the Code.
Although the Company intends to administer the Plan so that Awards will be exempt from, or will comply with, the requirements
of Section 409A of the Code, the Company does not warrant that any Award under the Plan will qualify for favorable tax treatment
under Section 409A of the Code or any other provision of federal, state, local or foreign law. The Company shall not be liable
to any Grantee for any tax, interest, or penalties that Grantee might owe as a result of the grant, holding, vesting, exercise,
or payment of any award under the Plan.

 

 

10Blueprint

 

Exhibit 10.1

 

CONFIDENTIAL

 

SUBSCRIPTION
AGREEMENT FOR SHARES OF COMMON STOCK

 

(the
“Common Stock
Offering”)

 

by and
between

 

ZOOM
TELEPHONICS, INC.

a
Delaware corporation (“Zoom” or the
“Company”)

 

and
the

 

SUBSCRIBER
IDENTIFIED BELOW (“Subscriber”)

 

(Note:
If the Subscriber is a corporate entity, trust, joint account or
other than a single individual, the name, address, telephone number
and social security number or employer identification number of
each beneficial owner, other than the Subscriber, should be set
forth on a separate sheet.)

 

	

Name
and Address of the Subscriber

	
 

	
 

	
 

	
 

	
 

	

Tel.
No. of the Subscriber

	
 

	

Email
Address of the Subscriber

	
 

	

Soc.
Sec. No. or EIN of the Subscriber

	
 

	

$
Amount Subscribed

	
 

 

 

 

1

 

 

W
I T N E S S E T H:

 

WHEREAS, Zoom is seeking to raise up to
$3,000,000 through the sale of shares of the Company’s common
stock, par value $0.01 per share (“Common Stock”), at a per
share purchase price equal to $2.60;

 

WHEREAS, the Company will provide
certain registration rights and pre-emptive rights in connection
with Subsequent Financings (as hereinafter defined) to the
Subscriber as provided herein;

 

WHEREAS, Zoom has given the Subscriber
the opportunity to conduct an independent investigation of the
Company and ask pertinent questions regarding an investment in the
Company, and officers of the Company have made themselves available
to the Subscriber for such purposes;

 

WHEREAS, Subscriber has reviewed the
Private Placement Memorandum dated October 21, 2016, including all
exhibits and attachments thereto, (the “Offering Memorandum”);
and

 

WHEREAS, with full consideration of the
risk factors set forth in the Offering Memorandum and otherwise
involved in an investment in the Company, the Subscriber desires to
acquire the shares of Common Stock as provided herein.

 

1.           Subscriber’s
Representations as to Status. The Subscriber represents and
warrants to the Company that it is an "Accredited Investor" within the
meaning of the Securities Act of 1933, as amended (the
“Securities
Act”), and Regulation D promulgated thereunder as
follows (inapplicable
statements should be crossed out.):

 

(a)          The
Subscriber has consulted counsel to the extent it deems necessary
concerning the propriety and appropriateness of making an
investment in the Company.

 

REPRESENTATIONS
FOR INDIVIDUALS

 

(b)(i)
If the Subscriber is an individual, all statements shall apply to you
unless you cross them out:

 

● 

Your net worth
(including assets jointly held with your spouse, if any) including
homes, home furnishings and automobiles, but excluding the value of
your primary residence and excluding the value of any indebtedness
secured by your primary residence, exceeds $1,000,000 (valuing your
assets on the basis of current market value).

● 

Your individual
income1
(as defined in footnote 1) for each of the years 2014 and 2015 was,
and your individual income for 2016 is expected to be, in excess of
$200,000.

 

1 For purposes of
determining whether any of the statements apply to you,
“individual income” means your individual adjusted
gross income (not including that of your spouse) and “joint
income” means the adjusted gross income of both you and your
spouse (even if you file separate tax returns) in all cases
increased by (i) any deduction for depletion under Section 611,
et seq., of the
Internal Revenue Code of 1986, as amended (the “Code”),
(ii) any exclusion for interest under Section 103 of the Code, and
(iii) any losses of a partnership allocated to you as an individual
limited partner as reported on Schedule E of Form 1040.
Notwithstanding the foregoing, if you are self- employed, deduct
any operating expenses of your proprietorship from revenues. Also,
if you are employed and incurred significant expenses in connection
with earning your salary, deduct the amount of such expenses from
your adjusted gross income when computing your income.

 

2

 

● 

Your joint income
(as defined in footnote 1) of you and your spouse for each of the
years 2014 and 2015 was, and the income of you and your spouse for
2016 is expected to be, in excess of $300,000.

● 

You do not expect
your current level of income to significantly decrease in the
foreseeable future.

● 

You do not have any
other investments or contingent liabilities which you reasonably
anticipate could cause you to need sudden cash requirements in
excess of cash readily available to you.

 

REPRESENTATIONS
FOR ENTITIES

 

(b)(ii)
If the Subscriber is an entity, trust, pension fund or IRA account
(an “Entity”), the Entity and
the person signing on its behalf represent and warrant that: (A)
such Entity is an existing entity, and has not been organized or
reorganized for the purpose of making this investment (or if not
true, such fact shall be disclosed to the Company in writing along
with information concerning the beneficial owners of the Entity),
(B) the Subscriber has the authority to execute this Subscription
Agreement, and any other documents in connection with an investment
in shares of Common Stock, on the Entity's behalf, (C) the Entity
has the power, right and authority to invest in shares of Common
Stock and enter into the transactions contemplated thereby, and
that the investment is suitable and appropriate for the Entity and
its beneficiaries (given the risks and illiquid nature of the
investment) and (D) all documents executed by the Entity in
connection with its investment in the Company are valid and binding
documents or agreements of the Entity enforceable in accordance
with their terms.

 

2.           Subscriber’s
Non-Reliance. The Subscriber represents, warrants,
acknowledges and agrees that (the use of “he,”
“his,” “you” or “yours” shall
be deemed to include “she,” “hers” and
“it” where appropriate):

 

(a)          He
is entering into this Subscription Agreement relying solely on the
facts and terms set forth in this Subscription Agreement, and he
has received the Offering Memorandum and copies of all documents
requested and the Company has not made any representations of any
kind or nature to induce the Subscriber to enter into this
Subscription Agreement except as specifically set forth
herein.

 

(b)          He
has made an investigation of the pertinent facts relating to the
operation of the Company and has reviewed the terms of this
Subscription Agreement to the extent that he deems necessary in
order to be fully informed with respect thereto.

 

(c)          He
has such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of an
investment in the Company. The Subscriber is able to bear the
substantial economic risks of an investment in the Company for an
indefinite period of time, has no need for liquidity in such
investment and could afford a complete loss of such investment. He
understands that the purchase of the shares of Common Stock is a
speculative investment that involves a high degree of
risk.

 

 

3

 

 

(d)          He
will be acquiring the shares of Common Stock for investment, for
his own account and not for the interest of any other person and
not for distribution or resale to others, and he will not permit
any other person to acquire a beneficial interest in the shares of
Common Stock being subscribed for without the consent of the
Company. He understands that the shares of Common Stock have not
been registered under the Securities Act, and he agrees that his
interest in the Company may not be sold, transferred, or otherwise
disposed of except pursuant to an effective registration statement
or an exemption from registration under the Securities Act. He
understands and agrees that, until registered under the Securities
Act or transferred pursuant to Rule 144 (as defined herein), all
certificates evidencing any of the shares of Common Stock, whether
upon initial issuance or upon any transfer thereof, shall bear and
legend, prominently stamped or printed thereon, reading
substantially as follows:

 

These
securities have not been registered under the Securities Act of
1933, as amended (the “Securities Act”), or applicable
state securities laws. These securities have been acquired for
investment and not with a view to their distribution or resale, and
may not be sold, pledged, or otherwise transferred without an
effective registration statement for such securities under the
Securities Act and applicable state securities laws, or an opinion
of counsel satisfactory to the Company to the effect that such
registration is not required.

 

(e)          He
understands the effect of the limitations on disposition and of his
representation that his interest in the Company will not be sold,
transferred or otherwise disposed of except pursuant to an
effective registration statement or an exemption from registration
under the Securities Act. He understands that in certain
circumstances transfers can be made only with the consent of the
Company, in its sole discretion.

 

(f)          No
person is acting or authorized to act as his representative in
connection with his subscription.

 

(g)          He
did not learn of the investment in the shares of Common Stock as a
result of any public advertising or general
solicitation.

 

3.           Subscriber’s
Authority. If the Subscriber is a corporation, partnership,
trust or other Entity, the person executing this Subscription
Agreement has the full power and authority under the Subscriber's
governing instruments to do so and the Subscriber has the full
power and authority under its governing instruments to become a
stockholder of the Company.

 

4.          Tax
Matters. If the Subscriber is a pension plan, IRA or other
tax-exempt entity, it is aware that it may be subject to federal
income tax on any unrelated business taxable income from its
investment in the Company.

 

5.          Confirmatory
Representations. The Subscriber hereby agrees that any
representation made hereunder will be deemed to be reaffirmed at
any time the Subscriber makes an additional capital contribution to
the Company and the act of making such additional contribution will
be evidence of such reaffirmation.

 

 

4

 

 

6. 

Registration
Rights.

 

(a)            Registration.
No later than thirty (30) days after the date on which the Company
has closed on an aggregate of at least $3,000,000 in the Common
Stock Offering (the “Closing Date”), the
Company shall prepare and file with the Securities and Exchange
Commission (the “SEC”) a registration
statement (“Registration Statement”)
covering the resale of all of the shares of Common Stock sold in
the Common Stock Offering (the “Registrable Securities”)
for an offering to be made on a continuous basis pursuant to Rule
415 of the Securities Act. The Registration Statement filed
hereunder shall be on Form S-1. The Company shall use its
commercially reasonable efforts to cause such Registration
Statement to be declared effective under the Securities Act not
later than 120 days after the Closing Date. The Company shall use
its commercially reasonable efforts to keep such Registration
Statement continuously effective under the Securities Act until the
earliest of: (i) such time as all Registrable Securities covered by
such Registration Statement have been sold, thereunder or pursuant
to Rule 144, (ii) such time as all Registrable Securities covered
by such Registration Statement (other than Registrable Securities
held by persons who are affiliates of the Company) may be sold
without volume or manner-of-sale restrictions pursuant to Rule 144
and without the requirement for the Company to be in compliance
with the current public information requirement under Rule 144; or
(iii) one year from the Closing Date. The Company shall promptly
notify the Subscriber of the effectiveness of a Registration
Statement.

 

(b)             Limitation
of Registration. Notwithstanding the registration
obligations set forth in Section 6(a), if the SEC informs the
Company that all of the Registrable Securities cannot, as a result
of the application of Rule 415, be registered for resale as a
secondary offering on a single registration statement, the Company
agrees to promptly inform the Subscriber thereof and use its
commercially reasonable efforts to file amendments to the
Registration Statement as required by the SEC, covering the maximum
number of Registrable Securities permitted to be registered by the
SEC, on Form S-1 or such other form as is available to register for
resale the Registrable Securities as a secondary
offering.

 

(c) 

Indemnification.

 

(i)       Indemnification
by the Company. The Company will indemnify and hold harmless
Subscriber and its officers, directors, members, shareholders,
partners, representatives, employees and agents, successors and
assigns, and each other person, if any, who controls such
Subscriber within the meaning of the Securities Act, against any
losses, obligations, claims, damages, liabilities, contingencies,
judgments, fines, penalties, charges, costs (including, without
limitation, court costs, reasonable attorneys’ fees and costs
of defense and investigation), amounts paid in settlement or
expenses, joint or several, (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a
party thereto, to which any of them may become subject insofar as
such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement, any preliminary
prospectus or final prospectus contained therein, or any amendment
or supplement thereof; (ii) any blue sky application or other
document executed by the Company specifically for that purpose or
based upon written information furnished by the Company filed in
any state or other jurisdiction in order to qualify any or all of
the Registrable Securities under the securities laws thereof (any
such application, document or information herein called a
“Blue Sky
Application”); (iii) the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; (iv) any
violation by the Company or its agents of any rule or regulation
promulgated under the Securities Act applicable to the Company or
its agents and relating to action or inaction required of the
Company in connection with such registration; or (v) any failure to
register or qualify the Registrable Securities included in any such
Registration Statement in any state where the Company or its agents
has affirmatively undertaken or agreed in writing that the Company
will undertake such registration or qualification on
Subscriber’s behalf and will reimburse Subscriber, and each
such officer, director or member and each such controlling person
for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such Claim or
action; provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by
Subscriber or any such controlling person in writing specifically
for use in such Registration Statement or prospectus.

 

 

5

 

 

(ii)          Indemnification
by Subscriber. Subscriber agrees to indemnify and hold
harmless, to the fullest extent permitted by law, the Company, its
directors, officers, employees, stockholders, partner,
representatives and each person who controls the Company (within
the meaning of the Securities Act) against any Claims resulting
from any untrue statement of a material fact or any omission of a
material fact required to be stated in the Registration Statement
or prospectus or preliminary prospectus or amendment or supplement
thereto or necessary to make the statements therein not misleading,
to the extent, but only to the extent that such untrue statement or
omission is contained in any information furnished in writing by
Subscriber to the Company specifically for inclusion in such
Registration Statement or prospectus or amendment or supplement
thereto. In no event shall the liability of Subscriber be greater
in amount than the dollar amount of the proceeds (net of all
expense paid by Subscriber in connection with any claim relating to
this Section 6(c) and the amount of any damages Subscriber has
otherwise been required to pay by reason of such untrue statement
or omission) received by Subscriber upon the sale of the
Registrable Securities included in the Registration Statement
giving rise to such indemnification obligation.

 

(iii)          Conduct
of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to
the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate
counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such
person unless (a) the indemnifying party has agreed to pay such
fees or expenses, or (b) the indemnifying party shall have failed
to assume the defense of such claim or employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of
any such person, based upon written advice of its counsel, a
conflict of interest exists between such person and the
indemnifying party with respect to such claims (in which case, if
the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right
to assume the defense of such claim on behalf of such person); and
provided, further, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying
party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation.
It is understood that the indemnifying party shall not, in
connection with any proceeding in the same jurisdiction, be liable
for fees or expenses of more than one separate firm of attorneys at
any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, which
consent shall not be unreasonably withheld or delayed, consent to
entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.

 

 

6

 

 

(iv)          Contribution.
If for any reason the indemnification provided for in the preceding
paragraphs (i) and (ii) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified
therein, then the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such Claim
in such proportion as is appropriate to reflect the relative fault
of the indemnified party and the indemnifying party, as well as any
other relevant equitable considerations. No person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of
the Securities Act shall be entitled to contribution from any
person not guilty of such fraudulent misrepresentation. In no event
shall the contribution obligation of a holder of Registrable
Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder in connection
with any claim relating to this Section 6(c) and the amount of any
damages such holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission) received by it upon the sale of the Registrable
Securities giving rise to such contribution
obligation.

 

(d)            Obligations
of the Subscriber. It shall be a condition precedent to the
obligations of the Company to register the shares of Common Stock
subscribed for under this Subscription Agreement that the
Subscriber furnish to the Company such information regarding the
Subscriber, the shares of Common Stock subscribed for under this
Subscription Agreement and the intended method of disposition of
the shares of Common Stock subscribed for under this Subscription
Agreement as shall be reasonably required to effect the
registration of the shares of Common Stock subscribed for under
this Subscription Agreement and shall execute such documents and
agreements in connection with such registration as the Company may
reasonably request. Subscriber shall cooperate as reasonably
requested by the Company in connection with the preparation of the
registration statement with respect to such registration, and for
so long as the Company is obligated to file and keep effective such
registration statement, shall provide to the Company, in writing,
for use in the registration statement, all such information
regarding the Subscriber and its plan of distribution of the
Registrable Securities included in such registration as may be
reasonably necessary to enable the Company to prepare such
registration statement, to maintain the currency and effectiveness
thereof and otherwise to comply with all applicable requirements of
law in connection therewith. At least ten (10) Business Days (as
hereinafter defined) prior to the first anticipated filing date of
the Registration Statement, the Company shall notify the Subscriber
of the information the Company requires from him (the
“Requested
Information”) to have the shares of Common Stock
subscribed for under this Subscription Agreement included in the
Registration Statement. If within three (3) Business Days of the
filing date the Company has not received the Requested Information
from the Subscriber, then the Company may file the Registration
Statement without including the shares of Common Stock subscribed
for under this Subscription Agreement by the Subscriber. Subscriber
shall furnish to the Company or the
underwriter, as applicable, such information regarding the
Subscriber and the distribution proposed by it as the Company may
reasonably request in connection with any registration or offering
referred to in this Section 6. For the purposes of this
Subscription Agreement, the term “Business Day” means any
day other than a Saturday, a Sunday or a day on which banks are
required or permitted to be closed in the Commonwealth of
Massachusetts.

 

 

7

 

 

(e)            Expenses
of Registration. In connection with any and all
registrations pursuant to this Subscription Agreement, all expenses
other than underwriting discounts and commissions incurred in
connection with registration, filings or qualifications, including,
without limitation, all registration, listing, filing and
qualification fees, printing and accounting fees and costs, the
fees and disbursements of counsel for the Company shall be borne by
the Company.

 

(f) 

Reports Under the Securities Exchange Act of 1934, as amended (the
“Exchange

 Act”). With a view
to making available to the Subscriber the benefits of Rule 144
promulgated under the Securities Act or any other similar rule or
regulation of the SEC that may at any time permit the security
holders to sell securities of the Company to the public without
registration (“Rule
144”), the Company shall at all times:

 

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

 

(ii)            file
with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange
Act.

 

7.            Lock
Up Agreement. Subscriber acknowledges and agrees that he
will not (1) offer, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
pledge, hypothecate, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or
indirectly, the shares of Common Stock subscribed for under this
Subscription Agreement; or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the shares of Common
Stock subscribed for under this Subscription Agreement, whether any
such transaction described in clause (1) or (2) above is to be
settled by delivery of the shares of Common Stock, in cash or
otherwise, for a period of 120 days subsequent to the Closing Date.
Subscriber further agrees not to enter into any private transaction
involving the shares of Common Stock subscribed for under this
Subscription Agreement unless (i) the Company receives an opinion
of counsel acceptable in form and substance to the Company to the
effect that the proposed transaction is exempt from the
registration requirements of the Securities Act and (ii) the
proposed transferee agrees to be bound by all the provisions in
this Section 7 prior to any such private transaction. Any waiver or
termination by the Company of the requirements of this Section 7
shall apply to all Subscribers in the Common Stock Offering, pro
rata, based on the number of shares of Common Stock purchased by
such Subscriber in the Common Stock Offering. Notwithstanding
anything to the contrary contained herein, the restrictions
contained herein shall not apply to the transfer of the shares of
Common Stock subscribed for under this Subscription Agreement to
any trust, partnership or limited liability company for the direct
or indirect benefit of such Subscriber and/or the immediate family
of such Subscriber for estate planning purposes, provided that (i)
the trustee of the trust, partnership or the limited liability
company, as the case may be, agrees in writing to be subject to the
restrictions of this Section 7 and (ii) any such transfer shall not
involve a disposition for value.

 

8

 

(iii) Subsequent
Financings. In the event that prior to the one year
anniversary of the Closing Date, the Company proposes to issue
Common Stock or common stock equivalents for cash consideration of
$500,000 or greater, in one more transactions, with the primary
purpose of raising capital (each, a “Subsequent Financing”),
the Subscriber shall have the right to participate in each such
Subsequent Financing in an amount necessary to maintain the
Subscriber’s pro-rata ownership of the Company (calculated on
a fully-diluted basis) on the same terms, conditions and price
provided for in such Subsequent Financing (the “Participation Rights”).
The Company will provide the Subscriber written notice (the
“Subsequent
Financing Notice”) detailing the terms of the
Subsequent Financing at least ten (10) trading days prior to the
closing of a Subsequent Financing. The Subscriber will have the
option to participate in each Subsequent Financing for a period
commencing on the date the Subsequent Financing Notice is received
by the Subscriber and ending on the date that is five (5) trading
days prior to the closing of a Subsequent Financing. A Subsequent
Financing shall not include Excluded Issuances (as defined below).
In the event any Subscriber in the Common Stock Offering shall
elect not to exercise his Participation Rights in any Subsequent
Financing (a “Nonparticipating
Subscriber”), the Subscribers in the Common Stock
Offering who have elected to exercise their Participation Rights in
full in such Subsequent Financing (each a “Participating
Subscriber”) shall have the right to participate in
such Subsequent Financing, on a pro rata basis, to the extent of
such Nonparticipating Subscriber’s Participation Rights (the
“Over Subscription
Rights”). The Company will provide each Participating
Subscriber written notice of such Over Subscription Rights (the
“Over Subscription
Notice”) at least four (4) trading days prior to the
closing of a Subsequent Financing. The Participating Subscribers
will have the option to exercise such Over Subscription Rights for
a period commencing on the date the Over Subscription Notice is
received by the Subscriber and ending on the date that is two (2)
trading days prior to the closing of a Subsequent Financing.
Notwithstanding the foregoing, in the event the Company determines
in its reasonable discretion that the exercise by a Subscriber of
his Participation Rights or Over Subscription Rights under this
Section 8 would cause the Company to risk losing the benefit of any
tax-loss carryforwards, then such Subscriber will automatically be
deemed to have waived his Participation Rights and/or Over
Subscription Rights, as applicable. “Excluded Issuances” shall
mean (i) equity securities (including options and other convertible
securities) issued by reason of a dividend, stock split, split-up
or other distribution on shares of Common Stock; (ii) equity
securities (including options and other convertible securities)
issued to employees or directors of, or consultants or advisors to,
the Company or any of its subsidiaries pursuant to a plan,
agreement or arrangement approved by the Company’s Board of
Directors; (iii) shares of Common Stock issued upon the exercise of
options or shares of Common Stock issued upon the conversion or
exchange of convertible securities, in each case provided such
issuance is pursuant to the terms of such option or convertible
security; (iv) equity securities (including options and other
convertible securities) issued to banks, equipment lessors or other
financial institution pursuant to a debt financing or equipment
leasing transaction, approved by the Company’s Board of
Directors; (v) equity securities (including options and other
convertible securities) issued in connection with any sponsored
research, collaboration, technology license, development, OEM,
marketing or other similar agreements, joint ventures, corporate
partnerships or strategic alliances, approved by the
Company’s Board of Directors; or (vi) equity securities
(including options and other convertible securities) issued in
connection with a merger, acquisition, or consolidation involving
the Company.

 

8.          Benefit
of Agreement. This Subscription Agreement shall inure to the
benefit of and be binding upon each of the parties hereto, and
their heirs, beneficiaries, successors, assignees and legal
representatives, as may be applicable.

 

 

9

 

 

9.          Subscription
for the Shares of Common Stock. The Subscriber hereby
subscribes for and agrees to purchase the number of shares of
Common Stock that is equal to the quotient of the subscription
amount set forth above, divided by the per share purchase price as
determined in accordance with the terms of this Subscription
Agreement, and has made a wire-transfer payment to the account set
forth below in the subscription amount set forth above or has
included a check for such amount herewith.

 

10.          Acceptance.
The Company shall not be obligated to accept the subscription for
the shares of Common Stock, shall have the right, exercisable at
its sole discretion, to reject the subscription at any time until
the return of a copy of this Subscription Agreement duly executed
by the Company and shall not be deemed to have accepted the
subscription by the passage of time, by depositing the
Subscriber’s check or by any other means except as expressly
stated herein. Upon rejection of the subscription, the payment
tendered by the Subscriber herewith shall be promptly returned,
without interest, and all provisions of this Subscription Agreement
will become null and void except for Section 18.

 

11.          Restriction
on Transfer and Resale. The Subscriber shall not transfer,
assign, hypothecate, pledge, sell or otherwise dispose of the
shares of Common Stock to be purchased pursuant to this
Subscription Agreement, except as may be permitted under the
Securities Act and applicable state securities laws pursuant to
registration or exemption therefrom. The shares of Common Stock
shall bear a legend to the effect that they have not been
registered under the Securities Act, and may not be sold without
registration or exemption therefrom.

 

12.          Adjustments
for Stock Splits, Stock Dividends, Etc. If from time to time
while this Subscription Agreement shall remain in force and effect
there is any stock split-up, stock

dividend, stock
distribution or other reclassification of the capital stock of the
Company, any and all new, substituted or additional securities to
which the Subscriber is entitled by reason of his ownership of the
shares of Common Stock shall be immediately subject to the
restrictions on transfer and other provisions of this Subscription
Agreement in the same manner and to the same extent as such shares
of Common Stock purchased in the Common Stock
Offering.

 

13.          Successors
and Assigns. Except as otherwise expressly provided herein,
this Subscription Agreement shall bind and inure to the benefit of
the Company and the Subscriber and their respective successors and
assigns. Notwithstanding the foregoing, the registration rights
provided in Section 6 are personal to the Subscriber and are not
transferable without the prior consent of the Company. Any transfer
of such rights without the consent of the Company shall be
void.

 

14.          Entire
Agreement. This Subscription Agreement is the complete and
entire understanding between the parties as to the transactions
contemplated hereby, and merges all prior agreements with respect
thereto. This Subscription Agreement may be executed in any number
of counterparts and may not be altered or amended other than by
written agreement signed by all the parties hereto.

 

15.          Amendments,
Waivers and Consents. Any provision in this Subscription
Agreement to the contrary notwithstanding, amendments to, changes
in or additions to this Subscription Agreement may be made, and
compliance with any covenant or provision set forth herein may be
omitted or waived, if the Company shall obtain consent thereto in
writing from Subscribers purchasing at least a majority of the
shares of Common Stock sold in the Common Stock
Offering.

 

 

10

 

 

16.          Governing
Law. This Subscription Agreement shall be governed by the
internal laws of the Commonwealth of Massachusetts. The parties (a)
agree that any legal suit, action or proceeding arising out of or
relating to this Subscription Agreement shall be instituted
exclusively in the Commonwealth of Massachusetts, Suffolk County,
(b) waive any objection which such party may have now or hereafter
to the venue of any such suit, action or proceeding, and (c)
irrevocably consents to the jurisdiction of the Commonwealth of
Massachusetts in any such suit, action or proceeding. The parties
further agree to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding
in the Commonwealth of Massachusetts. THE PARTIES HERETO AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS SUBSCRIPTION AGREEMENT
OR ANY DOCUMENT OR AGREEMENT CONTEMPLATED HEREBY.

 

17.          Confidential
Information. The information contained in this Subscription
Agreement and in the Offering Memorandum is confidential and
proprietary to the Company and is being submitted to prospective
investors in the Company solely for such investors’
confidential use with the express understanding that, without the
prior express written permission of the Company, such persons will
not release this Subscription Agreement or the Offering Memorandum,
discuss the information contained herein or in the Offering
Memorandum or use this Subscription Agreement or the Offering
Memorandum for any purpose other than evaluating a potential
investment in the Company through the purchase of shares of Common
Stock. A prospective investor, by accepting delivery of this
Subscription Agreement, agrees to promptly return to the Company
this Subscription Agreement, the Offering Memorandum and any other
documents or information furnished by the Company if (a) the
prospective investor elects not to purchase the shares of Common
Stock offered hereby, (b) the prospective investor’s
subscription is not accepted by the Company, or (c) the offering of
the shares of Common Stock is terminated or withdrawn.

 

[Signature
page follows]

 

 

11

 

IN
WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement as of the date provided below.

 

 

	

 

	
ZOOM
TELEPHONICS, INC.

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ 

	

 

	

 

	

 

	
Name: Frank B.
Manning

	

 

	

 

	

 

	Title: President
and Chief Executive
Officer	

 

	

 

	

 

	 
 	

 

	

 

	

 

	 
 	

 

	

 

	INVESTORS:	

 

	

 

	

 

	 
 	

 

	

 

	The Investors
executing the Signature Page in the form attached hereto as Annex A
and delivering the same to the Company or its agents shall be
deemed to have executed this Agreement and agreed to the terms
hereof.	

 

 

 

 

12

 

 

Annex
A Subscription Agreement

Investor
Counterpart Signature Page

 

The
undersigned, desiring to: (i) enter into this Subscription
Agreement dated as of October 24, 2016 (the “Agreement”), with the undersigned,
Zoom Telephonics, Inc., a Delaware corporation (the
“Company”), in
or substantially in the form furnished to the undersigned and (ii)
purchase the shares of Common Stock as set forth below, hereby
agrees to purchase such shares of Common Stock from the Company as
of the Closing Date and further agrees to join the Subscription
Agreement as a party thereto, with all the rights and privileges
appertaining thereto, and to be bound in all respects by the terms
and conditions thereof. The undersigned specifically acknowledges
having read the representations of the Subscribers in the Agreement
and hereby represents that the statements contained therein are
complete and accurate with respect to the undersigned as a
Subscriber.

 

	

 

	
Name of
Investor:

	

 

	

 

	
 

	

 

	

 

	
If an entity:	

 

	

 

	
 	

 

	

 

	Print Name of
Entity:	

 

	

 

	 	

 

	

 

	 	

 

	

 

	
 	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
 

	

 

	

 

	

 

	
Name: 

	

 

	

 

	

 

	

Title: 

	

 

	

 

	

 
 

	

 

	

 

	
If an individual:	

 

	

 

	

 
 

	

 

	

 

	Print
Name:	

 

	

 

	

 
 

	

 

	

 

	Signature:	

 

	

 

	

 
 

	

 

	

 

	
If joint individuals:	

 

	

 

	

 
 

	

 

	

 

	Print Name:
  
	

 

	

 

	

 
 

	

 

	

 

	Signature:	

 

	

 

	 	

 

	

 

	
All Investors:	

 

	

 

	 	

 

	

 

	Address:
 
	

 

	

 

	 	

 

	

 

	 	

 

	

 

	Telephone
No.:	

 

	

 

	 	

 

	

 

	Facsimile
No.: 
	

 

	

 

	 
	

 

	

 

	Email
Address:	

 

	

 

	 	

 

	

 

	The Subscriber
hereby elects to purchase ________ Shares (to be completed by Subscriber) at a
purchase price of $2.60 per Share under the Subscription Agreement
at a total Purchase Price of
$______ (to be completed by
Subscriber)	

 

 

 

 

13

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