**Exhibit 10.03**

 

**INSIGNIA SOLUTIONS plc**

 

**1995 INCENTIVE STOCK OPTION PLANFOR U.S. EMPLOYEES**

 

As AdoptedFebruary 9, 1995

AmendedApril 20, 1999, April 12, 2000, June 8, 2001 and June 5,2002Amended and Restated April 30, 2004

 

1.                                       PURPOSE.  The purpose of the Plan is to provideincentives to attract, retain and motivate eligible persons whose present andpotential contributions are important to the success of the Company, itsParent, Subsidiaries and Affiliates, by offering them an opportunity toparticipate in the Company’s future performance through awards of shareoptions.  Capitalized terms not definedin the text are defined in Section 20.

 

2.                                       SHARESSUBJECT TO THE PLAN.

 

2.1                                 Number of Shares Available.  Subject to Sections 2.2 and 14 of the Plan,the total number of Shares issued and reserved and available for grant andissue pursuant to options under the Plan, the UK Employee Share Option Scheme1996 (the “UK Plan”), the 1988 U.S. Stock Option Plan (the “PriorPlan”) and the Company’s Inland Revenue approved share option scheme (the “InlandRevenue Plan”) (the “Plan”, the “UK Plan”, the “Prior Plan”and the “Inland Revenue Plan”, collectively, the “Option Plans”),shall be eight million seventy two thousand and seventy one (8,572,071)Shares.  As of the Effective Date,options will no longer be granted pursuant to the Prior Plan.  As of the date of expiration of the InlandRevenue Plan in December 1996, options will no longer be granted pursuantto the Inland Revenue Plan.  Sharesshall again be available for grant and issue in connection with future awardsof options under the Plan and the UK Plan if such Shares cease to be subject toan option granted pursuant to the Option Plans.  To the extent Shares are subject to options granted pursuant tothe UK Plan, the Inland Revenue Plan or the Prior Plan, such Shares shall beunavailable for issue under this Plan until such options expire or becomeunexercisable without having been exercised in full.  To the extent Shares are subject to options granted pursuant tothis Plan, such Shares shall be unavailable for issue under the UK Plan untilsuch options expire or become unexercisable without having been exercised infull.

 

2.2                                 Adjustment of Shares.  In the event that the number of Shares inissue is changed by a consolidation or sub-division of ordinary shares of theCompany or any bonus or other capitalization issue of ordinary shares or anysimilar change in the capital structure of the Company without consideration,or by a Corporate Transaction (as defined in Section 14.1) then, unlesssuch change results in the termination of all outstanding Awards as a result ofthe Corporate Transaction, (a) the number of Shares reserved for issue underthe Plan and (b) the Exercise Prices of and number of Shares subject tooutstanding Awards shall be proportionately adjusted, subject to any requiredaction by the Board or the shareholders of the Company and compliance withapplicable securities laws; provided, however, that fractions ofa Share shall not be issued but shall either be paid in cash at Fair MarketValue or shall be rounded

 

----

 

up to the nearest Share,as determined by the Committee; and provided, further, that theExercise Price of any Award may not be decreased to below the U.S. Dollarequivalent of the par value of the Shares calculated by reference to theConversion Rate prevailing at the date of exercise of an Award.

 

3.                                       ELIGIBILITY.  ISOs (as defined in Section 5 below)may be granted only to employees (including officers and directors who are alsoemployees) of the Company or of a Parent or Subsidiary of the Company.  NQSOs (as defined in Section 5 below)may be granted to employees, officers, directors, consultants, independentcontractors and advisors of the Company or any Parent, Subsidiary or Affiliateof the Company; provided such consultants, contractors and advisorsrender bona fide services not in connection with the offer and sale ofsecurities in a capital-raising transaction. A person may be granted more than one Award under the Plan.  Each person is eligible to receive an Awardof up to an aggregate maximum of five hundred thousand (500,000) Shares perfiscal year.

 

4.                                       ADMINISTRATION.

 

4.1                                 Committee Authority.  The Plan shall be administered by theCommittee.  Subject to the generalpurposes, terms and conditions of the Plan, the Committee shall have full powerto implement and carry out the Plan. The Committee shall have the authority to:

 

(a)                                  construeand interpret the Plan, any Stock Option Agreement and any other agreement ordocument executed pursuant to the Plan;

 

(b)                                 prescribe,amend and rescind rules and regulations relating to the Plan;

 

(c)                                  selectpersons to receive Awards;

 

(d)                                 determinethe form and terms of Awards;

 

(e)                                  determinethe number of Shares subject to Awards;

 

(f)                                    determinewhether Awards will be granted in replacement of, or as alternatives to, otherAwards under the Plan or any other incentive or compensation plan of theCompany or any Parent, Subsidiary or Affiliate of the Company;

 

(g)                                 grantwaivers of Plan or Award conditions;

 

(h)                                 determinethe vesting and exercisability of Awards;

 

(i)                                     correctany defect, supply any omission, or reconcile any inconsistency in the Plan,any Award or any Stock Option Agreement;

 

(j)                                     determinethe disposition of Awards in the event of a Participant’s divorce ordissolution of marriage; and

 

2

----

 

(k)                                  makeall other determinations necessary or advisable for the administration of thePlan.

 

4.2                                 Committee Discretion.  Any determination made by the Committee withrespect to any Award shall be made in its sole discretion at the time of grantof the Award or, unless in contravention of any express term of the Plan orAward, at any later time, and such determination shall be final and binding onthe Company and all persons having an interest in any Award under thePlan.  The Committee may delegate to oneor more officers of the Company the authority to grant an Award under the Planto Participants who are not Insiders of the Company.

 

4.3                                 Committee Requirement.  If two or more members of the Board areOutside Directors, the Committee shall be comprised of at least two members ofthe Board, all of whom are Outside Directors.

 

5.                                       STOCKOPTIONS.  The Committee may grant Awardsto eligible persons and shall determine whether such Awards shall be IncentiveStock Options within the meaning of the Code (“ISOs”) or NonqualifiedStock Options (“NQSOs”), the number of Shares subject to the Award, theExercise Price of the Award, the period during which the Award may beexercised, and all other terms and conditions of the Award, subject to thefollowing:

 

5.1                                 Form of Option Grant.  Each Award granted under the Plan shall beevidenced by a Stock Option Agreement which shall expressly identify the Awardas an ISO or NQSO, and be in such form and contain such provisions (which neednot be the same for each Participant) as the Committee shall from time to timeapprove, and which shall comply with and be subject to the terms and conditionsof the Plan.

 

5.2                                 Date of Grant.  The date of grant of an Award shall be thedate on which the Committee makes the determination to grant such Award, unlessotherwise specified by the Committee. The Stock Option Agreement and a copy of the Plan will be delivered tothe Participant within a reasonable time after the granting of the Award.

 

5.3                                 Exercise Period.  Awards shall be exercisable within the timesor upon the events determined by the Committee as in the Stock OptionAgreement; provided, however, that no Award shall be exercisableafter the expiration of ten (10) years from the date the Award is granted; and providedfurther that no ISO granted to a person who directly or by attributionowns more than ten percent (10%) of the total combined voting power of allclasses of stock or shares of the Company or any Parent or Subsidiary of theCompany (“Ten Percent Shareholder”) shall be exercisable after theexpiration of five (5) years from the date the Award is granted.  The Committee also may provide for theexercise of Awards to become exercisable at one time or from time to time,periodically or otherwise, in such number or percentage as the Committeedetermines.

 

5.4                                 Exercise Price.  The Exercise Price shall be determined bythe Committee when the Award is granted subject to the following:

 

(a)                                  TheExercise Price shall not be less than 100% of the Fair Market Value of theShares on the date of grant; provided, that the Exercise Price of anyISO

 

3

----

 

granted to a Ten PercentShareholder shall not be less than 110% of the Fair Market Value of the Shareson the date of grant.  Payment for theShares subscribed for may be made in accordance with Section 6 of thePlan.

 

(b)                                 TheExercise Price shall be in U.S. Dollars.

 

(c)                                  TheExercise Price shall not be less than the U.S. Dollar equivalent of the parvalue of the Shares calculated by reference to the Conversion Rate prevailingat the date of exercise of an Award.

 

5.5                                 Method of Exercise.  Awards may be exercised only by delivery tothe Company of a written exercise agreement (the “Exercise Agreement”)in a form approved by the Committee (which need not be the same for eachParticipant), stating the number of Shares being subscribed for, therestrictions imposed on the Shares, if any, and such representations andagreements regarding Participant’s investment intent and access to informationand other matters, if any, as may be required or desirable by the Company tocomply with applicable securities laws, together with payment in full of the ExercisePrice for the number of Shares being subscribed for.

 

5.6                                 Termination.  Notwithstanding the exercise periods setforth in the Stock Option Agreement, exercise of an Award shall always besubject to the following:

 

(a)                                  Ifthe Participant is Terminated for any reason except death or Disability, thenParticipant may exercise such Participant’s Awards only to the extent that suchAwards would have been exercisable upon the Termination Date no later thanthree (3) months after the Termination Date (or such longer time period notexceeding five (5) years as may be determined by the Committee), but in anyevent, no later than the expiration date of the Awards.

 

(b)                                 Ifthe Participant is terminated because of death or Disability (or theParticipant dies within three (3) months of such termination), thenParticipant’s Awards may be exercised only to the extent such Awards would havebeen exercisable by Participant on the Termination Date and must be exercisedby Participant (or Participant’s legal representative or authorized assignee)no later than****(i) twelve (12) months after the Termination Date in the caseof disability or (ii) eighteen (18) months after the Termination Date in thecase of death (or such longer time period not exceeding five (5) years as may bedetermined by the Committee), but in any event no later than the expirationdate of the Awards.

 

5.7                                 Limitations on Exercise.  The Committee may specify a reasonableminimum number of Shares that may be subscribed for on any exercise of anAward; provided that such minimum number will not prevent Participantfrom exercising the Award for the full number of Shares for which it is thenexercisable.

 

5.8                                 Limitations on ISOs.  The aggregate Fair Market Value (determinedas of the date of grant) of Shares with respect to which ISOs are exercisablefor the first time by a

 

4

----

 

Participant during anycalendar year (under the Plan or under any other incentive stock option plan ofthe Company or any Affiliate, Parent or Subsidiary of the Company) shall notexceed $100,000.  If the Fair MarketValue of Shares on the date of grant with respect to which ISOs are exercisablefor the first time by a Participant during any calendar year exceeds $100,000,the Awards for the first $100,000 worth of Shares to become exercisable in suchcalendar year shall be ISOs and the Awards for the amount in excess of $100,000that become exercisable in that calendar year shall be NQSOs.  In the event that the Code or theregulations promulgated thereunder are amended after the Effective Date of thePlan to provide for a different limit on the Fair Market Value of Sharespermitted to be subject to ISOs, such different limit shall be automaticallyincorporated herein and shall apply to any Awards granted after the effectivedate of such amendment.

 

5.9                                 Modification, Extension or Renewal.  The Committee may modify, extend or renewoutstanding Awards and authorize the grant of new Awards in substitutiontherefor; provided that any such action may not, without the writtenconsent of Participant, impair any of Participant’s rights under any Awardpreviously granted.  Any outstanding ISOthat is modified, extended, renewed or otherwise altered shall be treated inaccordance with Section 424(h) of the Code.  The Committee may reduce the Exercise Price of outstanding Awardswithout the consent of Participants affected by a written notice to them; provided,however, that the Exercise Price may not be reduced below the minimumExercise Price that would be permitted under Section 5.4 of the Plan forAwards granted on the date the action is taken to reduce the Exercise Price.

 

5.10                           No Disqualification.  Notwithstanding any other provision in thePlan, no term of the Plan relating to ISOs shall be interpreted, amended oraltered, nor shall any discretion or authority granted under the Plan beexercised, so as to disqualify the Plan under Section 422 of the Code or,without the consent of the Participant affected, to disqualify any ISO underSection 422 of the Code.

 

6.                                       PAYMENTFOR SHARES.  Payment for Sharessubscribed for pursuant to the Plan may be made in cash (by check) or, whereexpressly approved for the Participant by the Committee and where permitted bylaw:

 

(a)                                  bywaiver of compensation due or accrued to Participant for services rendered;

 

(b)                                 providedthat a public market for the Shares exists:

 

(1)                                  througha “same day sale” commitment from Participant and a broker-dealer that is amember of the National Association of Securities Dealers (a “NASD Dealer”)whereby the Participant irrevocably elects to exercise the Award and to sell aportion of the Shares so subscribed for in order to pay for the Exercise Price,and whereby the NASD Dealer irrevocably commits upon receipt of such Shares toforward the Exercise Price directly to the Company; or

 

(2)                                  througha “margin” commitment from Participant and a NASD Dealer whereby Participantirrevocably elects to exercise the Award

 

5

----

 

and to pledge the Sharesso subscribed for to the NASD Dealer in a margin account as security for a loanfrom the NASD Dealer in the amount of the Exercise Price, and whereby the NASDDealer irrevocably commits upon receipt of such Shares to forward the ExercisePrice directly to the Company; or

 

(c)                                  byany combination of the foregoing.

 

7.                                       WITHHOLDINGTAXES.

 

7.1                                 Withholding Generally.  Whenever Shares are to be issued insatisfaction of Awards granted under the Plan, the Company may require theParticipant to remit to the Company an amount sufficient to satisfy federal,state and local withholding tax requirements prior to the delivery of anycertificate or certificates for such Shares. Whenever, under the Plan, payments in satisfaction of Awards are to bemade in cash, such payment shall be net of an amount sufficient to satisfyfederal, state, and local withholding tax requirements.

 

7.2                                 Stock Withholding.  When, under applicable tax laws, aParticipant incurs tax liability in connection with the exercise of any Awardthat is subject to tax withholding and the Participant is obligated to pay theCompany the amount required to be withheld, the Committee may allow theParticipant to satisfy the minimum withholding tax obligation by electing tohave the Company withhold from the Shares to be issued that number of Shareshaving a Fair Market Value equal to the minimum amount required to be withheld,determined on the date that the amount of tax to be withheld is to bedetermined (the “Tax Date”). All elections by a Participant to have Shares withheld for this purposeshall be made in writing in a form acceptable to the Committee and shall besubject to the following restrictions:

 

(a)                                  theelection must be made on or prior to the applicable Tax Date;

 

(b)                                 oncemade, then except as provided below, the election shall be irrevocable as tothe particular Shares as to which the election is made;

 

(c)                                  allelections shall be subject to the consent or disapproval of the Committee.

 

8.                                       PRIVILEGESOF STOCK OWNERSHIP.

 

8.1                                 Voting and Dividends.  No Participant shall have any of the rightsof a shareholder with respect to any Shares until the Shares are issued to theParticipant.  After Shares are issued tothe Participant, the Participant shall be a shareholder and have all the rightsof a shareholder with respect to such Shares, including the right to vote andreceive all dividends or other distributions made or paid with respect to suchShares.

 

8.2                                 Financial Statements.  The Company shall provide financialstatements to each Participant prior to such Participant’s subscription forShares under the Plan, and to each Participant annually during the period suchParticipant has Awards outstanding; provided, however, theCompany shall not be required to provide such financial statements toParticipants whose services in connection with the Company assure them accessto equivalent information.

 

6

----

 

9.                                       TRANSFERABILITY.  Subject to Section 4.1(j), Awardsgranted under the Plan, and any interest therein, shall not: (a) betransferable or assignable by the Participant, (b) be made subject toexecution, attachment or similar process, otherwise than by will or by the lawsof descent and distribution or as consistent with the specific Plan and StockOption Agreement provisions relating thereto or (c) during the lifetime of theParticipant, be exercisable by anyone other than the Participant, and anyelections with respect to an Award, may be made only by the Participant.

 

10.                                 CERTIFICATES.  All certificates for Shares or othersecurities delivered under the Plan shall be subject to such stock transferorders, legends and other restrictions as the Committee may deem necessary oradvisable, including restrictions under any applicable federal, state orforeign securities law, or any rules, regulations and other requirements of theSEC or any stock exchange or automated quotation system upon which the Sharesmay be listed.

 

11.                                 SECURITIESLAW AND OTHER REGULATORY COMPLIANCE.  AnAward shall not be effective unless such Award is in compliance with allapplicable federal and state securities laws, rules and regulations of anygovernmental body, and the requirements of any stock exchange or automatedquotation system upon which the Shares may then be listed, as they are in effecton the date of grant of the Award and also on the date of exercise or otherissue.  Notwithstanding any otherprovision in the Plan, the Company shall have no obligation to issue or delivercertificates for Shares under the Plan prior to (a) obtaining any approvalsfrom governmental agencies that the Company determines are necessary oradvisable, and/or (b) completion of any registration or otherqualification of such shares under any state or federal law or ruling of anygovernmental body that the Company determines to be necessary oradvisable.  The Company shall be underno obligation to register the Shares with the SEC or to effect compliance withthe registration, qualification or listing requirements of any state securitieslaws, stock exchange or automated quotation system, and the Company shall haveno liability for any inability or failure to do so.

 

12.                                 EMPLOYMENTWITH COMPANY.

 

12.1                           NoObligation to Employ.  Nothing inthe Plan or any Award granted under the Plan shall confer or be deemed toconfer on any Participant any right to continue in the employ of, or tocontinue any other relationship with, the Company or any Parent, Subsidiary orAffiliate of the Company or limit in any way the right of the Company or anyParent, Subsidiary or Affiliate of the Company to terminate Participant’semployment or other relationship at any time, with or without cause.

 

12.2                           NoRight to Compensation.  In the eventthat any person holding an Award under the Plan ceases to be employed by, orotherwise has ceased to provide services to, the Company or a Parent,Subsidiary or Affiliate for whatever reason, he shall have no right to anycompensation in respect of this loss of right to receive Shares under thisPlan.

 

13.                                 EXCHANGEAND BUYOUT OF AWARDS.  The Committee may,at any time or from time to time, authorize the Company, with the consent ofthe respective Participants, to issue new Awards in exchange for the surrenderand cancellation of any or all outstanding Awards.  The Committee may at any time buy from a Participant an Award

 

7

----

 

previously granted withpayment in cash, Shares or other consideration, based on such terms andconditions as the Committee and the Participant shall agree.

 

14.                                 CORPORATETRANSACTIONS.

 

14.1                           Assumptionor Replacement of Awards by Successor. In the event of (a) a sale of theentire share capital of the Company to another corporation (whether forconsideration in cash or in the form of securities of any kind), (b) adissolution or liquidation of the Company, (c) the sale of substantially all ofthe assets of the Company, or (d) any other transaction which qualifies as a“corporate transaction” under Section 424(a) of the Code wherein theshareholders of the Company give up all of their equity interest in the Company(“Corporate Transaction”), any or all outstanding Awards may be assumedor replaced by the purchasing or successor corporation, which assumption orreplacement shall be binding on all Participants.  In the alternative, the purchasing or successor corporation maysubstitute equivalent Awards or provide substantially similar consideration toParticipants as was provided to shareholders (after taking into account theexisting provisions of the Awards).  Thepurchasing or successor corporation may also issue, in place of outstandingShares of the Company held by the Participant, substantially similar shares orother property subject to repurchase restrictions no less favorable to theParticipant.

 

14.2                           Expiration of Awards.  In the event such purchasing or successorcorporation, if any, refuses to assume or substitute the Awards, as providedabove, pursuant to a transaction described in Subsection 14.1(a) above,such Awards shall expire on such transaction at such time and on such conditionsas the Board shall determine.  In theevent such purchasing or successor corporation, if any, refuses to assume orsubstitute the Awards as provided above, pursuant to a corporate transactiondescribed in Subsections 14.1(b), (c) or (d) above, or there is no purchasingor successor corporation, and if the Company ceases to exist as a separatecorporate entity, then, notwithstanding any contrary terms in the Stock OptionAgreement, the Awards shall expire on a date at least twenty (20) days afterthe Board gives written notice to Participants specifying the terms andconditions of such termination.

 

14.3                           Other Treatment of Awards.  Subject to any greater rights granted toParticipants under the foregoing provisions of this Section 14, in theevent of the occurrence of any Corporate Transaction described inSection 14.1, any outstanding Awards shall be treated as provided in theapplicable agreement or plan of such Corporate Transaction.

 

14.4                           Assumption of Awards by the Company.  The Company, from time to time, also maysubstitute or assume outstanding awards granted by another company, whether inconnection with an acquisition of such other company or otherwise, by either(a) granting an Award under the Plan in substitution of such other company’saward, or (b) assuming such award as if it had been granted under the Plan ifthe terms of such assumed award could be applied to an Award granted under thePlan.  Such substitution or assumptionshall be permissible if the holder of the substituted or assumed award wouldhave been eligible to be granted an Award under the Plan if the other companyhad applied the rules of the Plan to such grant.  In the event the Company

 

8

----

 

assumes an award grantedby another company, the terms and conditions of such award shall remainunchanged (except that the exercise price and the number and nature ofShares issuable upon exercise of any such option will be adjusted appropriatelypursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Award rather thanassuming an existing option, notwithstanding Section 5.4(a), such newAward may be granted with a similarly adjusted Exercise Price.

 

15.                                 ADOPTIONAND SHAREHOLDER APPROVAL.  The Planshall become effective at such date and time as the Registration Statementfiled with the SEC relating to the Company’s securities is declared effective(and then only provided that the initial public offering later closes) (the “Effective Date”).  The Plan shall be approved by theshareholders of the Company (excluding Shares issued pursuant to this Plan),consistent with applicable laws, within twelve months before or after the datethe Plan is adopted by the Board.  Uponthe Effective Date, the Board may grant Awards pursuant to the Plan; provided,however, that: (a) no Award may be exercised prior to initialshareholder approval of the Plan and (b) no Award granted pursuant to anincrease in the number of Shares approved by the Board shall be exercised priorto the time such increase has been approved by the shareholders of the Company.

 

16.                                 TERMOF PLAN.  The Plan will terminate ten(10) years from the date the Plan (as amended and restated) is adopted by theBoard or, if earlier, the date of shareholder approval of the amended andrestated Plan.

 

17.                                 AMENDMENTOR TERMINATION OF PLAN.  The Board mayat any time terminate or amend the Plan in any respect, including withoutlimitation amendment of any form of Stock Option Agreement or instrument to beexecuted pursuant to the Plan; provided, however, that the Boardshall not, without the approval of the shareholders of the Company, amend thePlan in any manner that requires such shareholder approval pursuant toapplicable corporate law or the Code or the regulations promulgated thereunderas such provisions apply to ISO plans; provided, further, that noamendment may be made to outstanding Awards without the consent of theParticipant.

 

18.                                 NONEXCLUSIVITYOF THE PLAN.  Neither the adoption ofthe Plan by the Board, the submission of the Plan to the shareholders of theCompany for approval, nor any provision of the Plan shall be construed ascreating any limitations on the power of the Board to adopt such additionalcompensation arrangements as it may deem desirable, including, withoutlimitation, the granting of stock options otherwise than under the Plan, andsuch arrangements may be either generally applicable or applicable only inspecific cases.

 

19.                                 GOVERNINGLAW.  The Plan and all agreements,documents and instruments entered into pursuant to the Plan shall be governedby and construed in accordance with the internal laws of the State ofCalifornia, excluding that body of law pertaining to conflict of laws.

 

20.                                 DEFINITIONS.  As used in the Plan, the following terms shallhave the following meanings:

 

“Affiliate” meansany corporation that directly, or indirectly through one or moreintermediaries, controls or is controlled by, or is under common control withthe Company

 

9

----

 

where “control”(including the terms “controlled by” and “under common control with”) means thepossession, direct or indirect, of the power to cause the direction of themanagement and policies of the corporation, whether through the ownership ofvoting securities, by contract or otherwise.

 

“Award” means anaward of an option to subscribe for Shares.

 

“Board” means theBoard of Directors of the Company.

 

“Code” means theInternal Revenue Code of 1986, as amended.

 

“Committee” meansthe committee appointed by the Board to administer the Plan, or if no committeeis appointed, the Board.

 

“Company” meansInsignia Solutions plc, a corporation organized under the laws of England, orany successor corporation.

 

“Conversion Rate”means the average currency conversion rate quoted by the Bank of America inLondon as the price for Pounds Sterling purchased with U.S. Dollars.

 

“Disability” meansa disability, whether temporary or permanent, partial or total, within themeaning of Section 22(e)(3) of the Code, as determined by the Committee.

 

“Exercise Price”means the price per share at which a holder of an Award may subscribe for theShares issuable upon exercise of the Award.

 

“Fair Market Value”means the value of a share of the Company’s Ordinary Shares of 20p eachdetermined as follows:

 

(a)                                  ifsuch Ordinary Shares, or instruments evidencing such Ordinary Shares (e.g.,American Depository Shares or American Depository Receipts), are then quoted onthe Nasdaq National Market the closing price on the Nasdaq National MarketSystem on the trading day immediately preceding the date on which Fair MarketValue is determined, or, if no such reported sale takes place on such date, theclosing price on the next preceding trading date on which a reported saleoccurred;

 

(b)                                 ifsuch Ordinary Shares, or instruments evidencing such Ordinary Shares (e.g.,American Depository Shares or American Depository Receipts), are publiclytraded and are then listed on a national securities exchange, the closing priceor, if no reported sale takes place on such date, the closing price on the nextpreceding trading day on which a reported sale occurred;

 

(c)                                  ifsuch Ordinary Shares, or instruments evidencing such Ordinary Shares (e.g.,American Depository Shares or American Depository Receipts), are publiclytraded but are not quoted on the Nasdaq National Market nor listed or admittedto trading on a national securities exchange, the average of the

 

10

----

 

closing bid and askedprices on such date, as reported by The Wall Street Journal, for theover-the-counter market; or

 

(d)                                 ifnone of the foregoing is applicable, by the Board in good faith.

 

“Insider” means anofficer or director of the Company or any other person whose transactions inthe Company’s ordinary shares are subject to Section 16 of the SecuritiesExchange Act of 1934, as amended.

 

“Outside Director”means any outside director as defined in Section 162(m) of the Code andthe regulations issued thereunder.

 

“Parent” means anycorporation (other than the Company) in an unbroken chain of corporationsending with the Company, if at the time of the granting of an Award under thePlan, each of such corporations other than the Company owns stock possessing50% or more of the total combined voting power of all classes of stock in oneof the other corporations in such chain.

 

“Participant”means a person who receives an Award under the Plan.

 

“Plan” means thisInsignia Solutions plc 1995 Incentive Stock Option Plan for U.S. Employees, asamended from time-to-time.

 

“SEC” means theSecurities and Exchange Commission.

 

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

 

“Shares” meansOrdinary Shares of 20p each in the Company, reserved for issue under the OptionPlans, as adjusted pursuant to Sections 2 and 14 of the Plan, any instrumentsevidencing such Ordinary Shares (e.g., American Depository Shares or AmericanDepository Receipts) and any successor security.

 

“StockOption Agreement” means, with respect to each Award, the signed writtenagreement between the Company and the Participant setting forth the terms andconditions of the Award.

 

“Subsidiary” meansany corporation (other than the Company) in an unbroken chain of corporationsbeginning with the Company if, at the time of granting of the Award, each ofthe corporations other than the last corporation in the unbroken chain ownsstock possessing 50% or more of the total combined voting power of all classesof stock in one of the other corporations in such chain.

 

“Termination” or “Terminated”means, for purposes of the Plan with respect to a Participant, that theParticipant has ceased to provide services as an employee, director,consultant, independent contractor or advisor, to the Company or a Parent,Subsidiary or Affiliate of the Company, except in the case of sick leave,military leave, or any other leave of absence approved by the Committee; provided,that such leave is for a period of not more than ninety (90) days, orreinstatement upon the expiration of such leave is guaranteed by contract orstatute.  The

 

11

----

 

Committee shall have solediscretion to determine whether a Participant has ceased to provide servicesand the effective date on which the Participant ceased to provide services (the“Termination Date”).

 

12

----