Document:

EXHIBIT
10.2

 

NEITHER THIS WARRANT NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND NEITHER THIS WARRANT NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT MAY BE TRANSFERRED EXCEPT AS PROVIDED IN SECTION 3 OF THIS
WARRANT.

 

WARRANT

to Purchase Common Stock of

Advanced Materials Group, Inc.

Expiring May 13, 2008

 

This Warrant certifies that [ROBERT E. DELK] [TIMOTHY R. BUSCH] or
registered assigns (the “Holder”), is entitled to subscribe for and purchase
from Advanced Materials Group, Inc., a Nevada corporation (the “Company”), all
or any part of duly authorized, validly issued, fully paid and nonassessable
shares of the Company’s common stock, $.001 par value per share (the common
stock, including any stock into which it may be changed, reclassified, or
converted, is herein referred to as the “Common Stock”), as comprise 50,000
Units (as defined below) at a purchase price per Unit equal to $0.363 (the
“Exercise Price”).  A “Unit” shall
consist initially of one share of Common Stock of the Company as such stock is
constituted on the date of this Warrant, subject to adjustment as set forth
herein.  The Warrant may be exercised at
any time, and from time to time, during the period from the date hereof and
ending at 5:00 p.m., New York, New York time on May 13, 2008.

 

This Warrant is issued pursuant to that certain Promissory Note dated
as of April 22, 2004 by and between the Company and the Holder (the
“Note”).  Pursuant to the Note, the
Holder has agreed, among other things, to loan the Company the amount of
$150,000 for a period of ninety (90) days.

 

This Warrant is subject to the following provisions, terms and
conditions:

 

Section 1.                                          EXERCISE.

 

To exercise this Warrant in whole or in part, the Holder shall deliver
to the Company at its principal office in Rancho Dominguez, California, (a) a
written notice, in substantially the form of the Subscription Notice appearing
at the end of this Warrant, of the Holder’s election to exercise this Warrant,
which notice shall specify the number of shares of Common Stock to be
purchased, (b) cash or a certified check payable to the Company, or by
cancellation of indebtedness of the Company to the Holder hereof, if any, at
the time of exercise, in an amount equal to the aggregate purchase price of the
number of shares of Common Stock being purchased and (c) this Warrant.  The Company shall as promptly as
practicable, and in any event within 15 days thereafter, execute and deliver or
cause to be executed and delivered, in accordance with

 

 

such notice, a certificate or certificates representing the aggregate
number of shares of Common Stock specified in such notice.   The stock certificate or certificates so
delivered shall be in the denomination of 100 shares each or such lesser or
greater denomination as may be specified in such notice and shall be issued in
the name of the Holder or such other name as shall be designated in such
notice.  Such certificate or
certificates shall be deemed to have been issued and the Holder or any other
person so designated to have been issued and the Holder or any other person so
designated to be named therein shall be deemed for all purposes to have become
a holder of record of such shares as of the date such notice is received by the
Company as aforesaid.  If this warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of said certificate or certificates, deliver to the Holder a new
Warrant evidencing the rights of the Holder to purchase the remaining shares of
Common Stock called for by this Warrant, which new Warrant shall in all other
respects be identical to this Warrant, or, at the request of the Holder,
appropriate notation may be made on this Warrant and the same returned to the
Holder.   The Company shall be pay all
expenses, taxes and other charges payable in connection with the preparation,
issue and delivery of such stock certificates and new Warrants, except that, in
case such stock certificates or new Warrants shall be registered in a name or
names other than the name of the Holder, funds sufficient to pay all stock
transfer taxes that are payable upon the issuance of such stock certificate or
certificates or new Warrants shall be paid by the Holder at the time of
delivering the notice of exercise mentioned above.

 
All shares of Common Stock issued upon the exercise of this Warrant shall be validly issued, fully paid and nonassessable and, if the Common Stock is then listed on a national securities exchange or quoted on an automated quotation system, shall be duly listed or quoted thereon.
 
The Company shall not be required upon any exercise of this Warrant to issue a certificate representing any fraction of a share of Common Stock, but, in lieu of thereof, shall pay to the Holder cash in an amount equal to a corresponding fraction (calculated to the nearest 1/100 of a share) of the purchase price of one share of Common Stock as of the date of receipt by the Company of notice of exercise of this Warrant.
 
Section 2.                                          TRANSFER, DIVISION AND COMBINATION.
 
The Company agrees to maintain at its principal office in Rancho Dominguez, California, books for the Registration and transfer of this Warrant, and, subject to the provisions of Section 3 hereof, this Warrant and all rights hereunder are transferable, in whole, on such books at such office, upon surrender of this Warrant at such office, together with a written assignment of this Warrant duly executed by the Holder or his agent or attorney and funds sufficient to pay any stock transfer taxes payable upon the making of such transfer.  Upon such surrender and payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and this Warrant shall promptly be canceled.  A Warrant may be exercised by a new holder for the purchase of shares of Common Stock without having a new Warrant issued.

 

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This Warrant may be divided or combined with other Warrants upon presentation hereof at such principal office in Rancho Dominguez, California, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or his agent or attorney. Subject to compliance with the preceding paragraph as to any transfer that may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.
 
Section 3.                                          RESTRICTIONS ON EXERCISE AND TRANSFER OF WARRANTS AND COMMON STOCK
 
This Warrant shall be exercisable (a) only under circumstances such that the issue of Common Stock issuable upon such exercise is exempt from the requirements of registration under the Securities Act of 1933, as amended (or any similar statute then in effect) (the “1933 Act”) and any applicable state securities law or (b) upon registration of such Common Stock in compliance therewith.  This Warrant shall be transferable only under circumstances such that the transfer is exempt from the requirements of registration under the 1933 Act and any applicable state securities law.  By acceptance hereof, the Holder agrees to comply with such legislation.
 
Before any transfer or attempted transfer of all or any part of this Warrant or such Common Stock, the Holder shall give the Company written notice of its intention so to do describing briefly the manner of such proposed transfer.  Promptly after receiving such written notice, the Company shall present copies thereof to Company counsel and, if the Company requests the Holder to designate special counsel therefor, to any special counsel designated by the Holder that is reasonably satisfactory to the Company.  If, in the opinion of counsel for the Company and counsel, if any, for the Holder, the proposed transfer may be effected without registration under the 1933 Act and any applicable state securities law of any such securities, the Company, as promptly as practicable, shall notify the Holder of such opinion, whereupon the securities proposed to be transferred may be transferred in accordance with the terms of such notice.  The Company shall not be required to effect any such transfer before the receipt of such favorable opinion or opinions or the effectiveness of registration.
 
Section 4.                                          CERTAIN COVENANTS.
 
The Company covenants and agrees that it will at all times reserve and set apart and have, free from preemptive rights, a number of shares of authorized but unissued Common Stock, or other stock or securities deliverable pursuant to this Warrant, sufficient to enable it at any time to fulfill all its obligations hereunder.
 
Section 5.                                          NOTICES.
 
In the event that:

 

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(a)                                  the Company proposes to pay any dividend payable in stock (of any class or classes) or in Convertible Securities, as defined below, upon its Common Stock or make any distribution (other than ordinary cash dividends) to the holders of its Common Stock,
 
(b)                                 the Company proposes to grant to the holders of its Common Stock generally any rights or options,
 
(c)                                  the Company proposes to effect any capital reorganization or reclassification of capital stock of the Company,
 
(d)                                 the Company proposes to consolidate with, or merge into, any other corporation or to transfer its property as an entirety or substantially as an entirety, or
 
(e)                                  the Company proposes to effect the liquidation, dissolution or winding up of the Company,
 

then the Company shall cause notice of any such intended action to be
given to all holders of record of outstanding Warrants not less than 30 days
before the date on which the transfer books of the Company shall close or a
record shall be taken for such stock dividend, distribution or granting of
rights or options, or the date when such capital reorganization,
reclassification, consolidation, merger, transfer, liquidation, dissolution or
winding up shall be effective, as the case may be.

 
Any notice or other document required or permitted to be given or delivered to holders of record of Warrants shall be delivered by facsimile, reliable courier or first-class mail postage prepaid to each such holder at the last address shown on the books of the Company maintained for the registry and transfer of the Warrants.  Any notice or other document required or permitted to be given or delivered to holders of record of Common Stock issued pursuant to Warrants shall be delivered by facsimile, reliable courier or first-class mail postage prepaid to each such holder at such holder’s address as the same appears on the stock records of the Company.  Any notice or other document required or permitted to be given or delivered to the Company shall be delivered by facsimile, reliable courier or first-class mail postage prepaid to the principal office of the Company, at Rancho Dominguez, California or delivered to the office of one of the Company’s executive officers at such address, or such other address as shall have been furnished by the Company to the holders of record of such Warrants and the holders of record of such Common Stock.
 
Section 6.                                          LIMITATIONS OF LIABILITY; NOT SHAREHOLDERS.
 
No provision of this Warrant shall be construed as conferring upon the Holder the right to vote or to consent or to receive dividends or to receive notice as a shareholder in respect of meetings of shareholders for the election of directors of the Company or any other matter whatsoever as shareholders of the Company.  No provision hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no mere enumeration herein of

 

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the rights or privileges of the Holder, shall give rise to any
liability of Holder for the purchase price or as a shareholder of the Company,
whether such liability is asserted by the Company, creditors of the Company or
others.

 
Section 7.                                          LOSS, DESTRUCTION, ETC, OF WARRANT.
 
Upon receipt of evidence satisfactory to the Company of loss, theft, mutilation or destruction of any Warrant, and in the case of any such loss, theft or destruction upon delivery of a bond of indemnity in such form and amount as shall be reasonably satisfactory to the Company, or in the event of such mutilation upon surrender and cancellation of the Warrants, the Company will make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen, destroyed or mutilated Warrant.  Any Warrant issued under the provisions of this Section 7 in lieu of any Warrant alleged to be lost, destroyed or stolen, or of any mutilated Warrant, shall constitute an original contractual obligation on the part of the Company.
 
Section 8.                                          EXERCISE AND EXPIRATION OF WARRANT.
 
This Warrant shall become exercisable immediately upon its issuance to the initial Holder.  The expiration time and date of the Warrant shall be 5:00 p.m. New York, New York time, April 21, 2008.
 
Section 9.                                          ADJUSTMENT OF NUMBER OF SHARES ISSUABLE PURSUANT TO THIS WARRANT.
 
The number of shares of Common Stock comprising a Unit shall be subject to adjustment from time to time as follows:
 
(a)                                  Stock Splits; Stock Dividends.  If at any time or from time to time the Company shall subdivide as a whole, by reclassification, by the issuance of a stock dividend on the Common Stock payable in Common Stock, or otherwise, the number of shares of Common Stock, with or without par value, comprising a Unit that may be purchased hereunder shall be increased proportionately as of the effective or record date of such action.  The issuance of such a stock dividend shall be treated as a subdivision of the whole number of shares of Common Stock outstanding immediately before the record date for such dividend into a number of shares equal to such whole number of shares so outstanding plus the number of shares issued as a stock dividend. In case at any time or from time to time the Company shall combine as a whole, by reclassification or otherwise, the number of shares of Common Stock then outstanding into a lesser number of shares of Common Stock, with or without par value, the number of shares of Common Stock comprising a Unit that may be purchased hereunder shall be reduced proportionately as of the effective date of such action.
 
(b)                                 Effect of Certain Dividends.  If on any date the Company makes a distribution to holders of its Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of its

 

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indebtedness or assets, the number of shares of Common Stock
theretofore comprising a Unit shall be adjusted as at the close of business on
said date to a number determined by multiplying the number of shares
theretofore comprising a Unit by a fraction, the numerator of which shall be
the Current Price immediately prior to such distribution, and the denominator
of which shall be such Current Price minus the fair market value (as determined
by a single qualified appraiser (which shall be either a national accounting
firm or a national or regional major investment bank) selected by mutual
agreement between the Company and the Holder) of the portion of the assets or
evidences of indebtedness so to be distributed to one share of Common Stock.

 
(c)                                  Effect of Merger or Consolidation.  If the Company shall, while this Warrant remains outstanding, enter into any consolidation with or merge into any other corporation wherein the Company is not the continuing corporation, or wherein cash or securities of a corporation other than the Company are distributable to holders of Common Stock of the Company, or sell or convey its property as an entirety or substantially as an entirety, and in connection with such consolidation, merger, sale or conveyance, shares of stock or cash or other securities shall be issuable or deliverable in exchange for the Common Stock of the Company, the Holder shall thereafter be entitled to purchase pursuant to this Warrant (in lieu of the number of shares of Common Stock that the Holder would have been entitled to purchase or acquire immediately before the effective date of such consolidation, merger, sale or conveyance) the shares of stock or cash or other securities to which such number of shares of Common Stock would have been entitled at the time of such consolidation, merger, sale or conveyance, at an aggregate purchase price equal to that which would have been payable if such number of shares of Common Stock had been purchased upon exercise of a Warrant immediately prior thereto.  In cash of any such consolidation, merger, sale or conveyance, appropriate provision (as determined by a resolution of the Board of Directors of the Company) shall be made with respect to the rights and interests thereafter of the Holder, to the end that all the provisions of this Warrant (including adjustment provisions) shall thereafter be applicable as nearly as reasonably practicable, in relation to such stock or other securities.
 
(d)                                 Reorganization and Reclassification.  In case of any capital reorganization or any reclassification of the capital stock of the Company (except as provided in Section 9(a) hereof) while this Warrant remains outstanding, the Holder shall thereafter be entitled to purchase pursuant to this Warrant (in lieu of the number of shares of Common Stock comprised in the number of Units that the Holder would have been entitled to purchase immediately before such reorganization or reclassification) the shares of stock of any class or classes or other securities or cash or property to which such number of shares of Common Stock comprised in such number of Units would have been entitled if such shares of Common Stock had been purchased immediately before  such reorganization or reclassification.  In case of any such reorganization or reclassification, appropriate provision (as determined by resolution of the Board of Directors of the Company) shall be made with respect to the rights and in thereafter of the Holder, to the end that all the provisions of this Warrant (including adjustment provisions) shall thereafter be applicable, as nearly as reasonably practicable, in relation to such stock or other securities or property.
 
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(e)                                  Adjustment of Unit After a “Diluting Issue”.  If on any date on or after the date of this Warrant any additional shares of Common Stock (other than shares of Excluded Stock) shall be issued for a consideration per share (or, in the case of any transactions contemplated in paragraphs (2) or (3) of this Section 9(e), shall be deemed to be issued for a Presumed Consideration per share) less than the Current Price on the date such Common Stock was issued or deemed to have been issued, the number of shares of Common Stock theretofore comprising a Unit shall be adjusted as at the close of business on such date to a number equal to the product (computed to the nearest ten thousandth of a share) resulting from the multiplication of (i) the total number of shares comprising a Unit immediately before such adjustment by (ii) a fraction, the numerator of which is the Current Price on the date such Common Stock was issued or deemed to have been issued, and the denominator of which is the consideration received (or, without duplication, the Presumed Consideration deemed to have been received) per share for such additional shares so issued.
 
For the purpose of this Section 9(e), the following provisions shall be applicable with respect to the issuance of additional shares of Common Stock and the computation set forth in the immediately preceding paragraph:
 
(1)                                  Stock Dividends, Etc.  In case any additional shares of Common Stock shall be issued as a dividend on Common Stock, the number of shares of Common Stock comprising a Unit shall be adjusted as provided in Section 9(a) hereof.
 
In case any additional shares of Common Stock shall be issued as a dividend on any class of stock of the Company other than Common Stock, or in case any obligations or stock convertible into or exchangeable for shares of Common Stock (such convertible or exchangeable obligations or stock being hereinafter called “Convertible Securities”) shall be issued as a dividend on any class of stock of the Company, such shares of Common Stock or Convertible Securities shall be deemed to have been issued without consideration on the day next succeeding the date for the determination of stockholders entitled to such dividend.
 
(2)                                  Rights or Options Below Current Price.  In case the Company shall on or after the date of this Warrant grant any rights or options (other than those exercisable for Excluded Stock) to subscribe for or to purchase additional shares of Common Stock or Convertible Securities, and the Presumed Consideration per share received and receivable by the Company for such additional shares under such rights or options or pursuant to the terms of such Convertible Securities shall be less than the Current Price in effect immediately prior to the time of the granting of such rights or options, the maximum number of additional shares of Common Stock issuable pursuant to such rights or options or necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued as of the date of the granting of such rights or options, and the Company shall be deemed to have received the Presumed Consideration therefor.  No adjustment (except as provided in paragraph (4) of this Section 9(e) shall be made upon the actual issuance of Common Stock upon the exercise of rights or options referenced in this paragraph (2) or the conversion of Convertible Securities referenced in this paragraph (2).

 

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(3)                                  Securities Convertible Below Current Price. In case:
 
(i)                                     the Company shall issue any Convertible Securities (other than those convertible into Excluded Stock or pursuant to the exercise of rights or options therefor in respect of which an adjustment shall have theretofore been made under the foregoing paragraph (2)), and
 
(ii)                                  the Presumed Consideration per share for additional shares of Common Stock issuable pursuant to the terms of such Convertible Securities shall be less than the Current Price in effect immediately prior to the time of the issuance of such Convertible Securities,
 
then the issuance of such Convertible Securities shall be deemed to be an issuance (as of the date of issuance of such Convertible Securities) of the maximum number of additional shares of Common Stock necessary to effect the conversion or exchange of all such Convertible Securities, and the Company shall be deemed to have received the Presumed Consideration therefor as of the date of issuance of such Convertible Securities.  No further adjustment, except as provided in paragraph (4) of this Section 9(e), shall be made upon the actual issuance of Common Stock upon the conversion of Convertible Securities.
 
(4)                                  Superseding Adjustment of Number of Shares of Common Stock Comprising a Unit. If, at any time after any adjustment of the shares of Common Stock comprising a Unit shall have been made on the basis of shares of Common Stock deemed to be issued by reason of the provisions of the foregoing paragraphs (2) or (3) of this Section 9(e) on the basis of the granting of certain rights or options or the issuance of certain Convertible Securities, or after any new adjustments of the shares of Common Stock comprising a Unit shall have been made on the basis of shares of Common Stock deemed to be issued by reason of the provisions of this paragraph (4), such rights or options or the right of conversion or exchange in any such Convertible Securities (for which, or purchased pursuant to any rights or options for which, such an adjustment shall previously have been made) shall expire, and a portion of such rights or options, or the right of conversion or exchange in respect of a portion of such Convertible Securities, as the case may be, shall not have been exercised, then such previous adjustment shall be rescinded and annulled and the shares of Common Stock that were deemed to have been issued by virtue of the computation made in connection with the adjustment so rescinded and annulled, shall no longer be deemed to have been issued by virtue of such computation.  Thereupon, a recomputation shall be made of the effect of such rights or options or such Convertible Securities on the basis of:

 

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(i)                                     treating the number of additional shares of Common Stock, if any, theretofore actually issued pursuant to the exercise of such expired rights or options or such expired right of conversion or exchange, as having been issued on the date or dates of such exercise for the consideration actually received therefor (computed as provided in paragraph (6) of this Section 9(e)); and
 
(ii)                                  treating the maximum number of additional shares of Common Stock, if any, thereafter issuable pursuant to the conversion or exchange of any Convertible Securities actually issued or issuable pursuant to the previous exercise of such rights or options as having been issued as of the date of the granting of such rights or options and treating the Presumed Consideration therefor as received as of such date,
 
and, on such basis, such new adjustment, if any, of the number of shares of Common Stock comprising a Unit shall be made as may be required by the first paragraph of this Section 9(e), which new adjustment shall supersede the previous adjustment so rescinded and annulled for the Warrant exercised after such new adjustment.
 
(5)                                  Effect of Stock Split on “Deemed Issued” Shares.  Upon the effective or record date for any subdivision or combination of the Common Stock of the character described in Section 9(a) hereof, including the issuance of a stock dividend which is treated as such a subdivision under paragraph (1) of this Section 9(e), the number of the shares of Common Stock which are at the time deemed to have been issued by virtue of paragraphs (2), (3) or (4) of this Section 9(e), but have not actually been issued, shall be deemed to be increased or decreased proportionately.
 
(6)                                  Computation of Consideration and Presumed Consideration.  For the purposes of this Section 9:
 
(i)                                     The consideration received by the Company upon the actual issuance of additional shares of Common Stock shall be deemed to be the sum of the amount of cash and the fair value of property (as determined by a single qualified appraiser (which shall be either a national accounting firm or a national or regional major investment bank) selected by mutual agreement between the Company and the Holder as at the time of issue or “deemed issue” in the case of the following paragraph (ii)) received or receivable by the Company as the consideration or part of the consideration (v) at the time of issuance of the Common Stock, (w) for the issuance of any rights or options upon the exercise or conversion of which such Common Stock was issued, (x) for the issuance of any rights or options to purchase Convertible Securities upon the conversion of which such Common Stock was issued, (y) for the issuance of the Convertible Securities upon conversion of which such Common Stock was issued and (z) at the time of the actual exercise of such rights, options or conversion privileges upon the exercise or conversion of which such Common Stock was issued, in each case without deduction for commissions and expenses incurred by the Company for any underwriting of, or otherwise in connection with the issue or sale of, such rights, options, Convertible

 

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Securities or Common Stock, but after deduction of any sums paid by the Company in cash upon the exercise of, and pursuant to, such rights, options or conversion privileges in respect of fractional shares of Common Stock;
 
(ii)                                  The consideration deemed to have been received by the Company for additional shares of Common Stock deemed to be issued pursuant to rights, options and conversion privileges by reason of transactions of the character described in paragraphs (2), (3) and (4)(ii) of this Section 9(e) (herein called the “Presumed Consideration” therefor) shall be the consideration (determined as provided in the foregoing paragraph (i)) that would be received or receivable by the Company at or before the actual issue of such shares of Common Stock so deemed to be issued, if all rights, options and conversion privileges necessary to effect the actual issue of the number of shares deemed to have been issued had been exercised (successively exercised in the case of rights or options to purchase Convertible Securities), and the minimum consideration received or receivable by the Company upon such exercise had been received; all computed without regard to the possible future effect of anti-dilution provisions on such rights, options and/or conversion privileges.
 
(f)                                    Statement of Adjustment of Unit and Current Price.  Whenever the number of shares of Common Stock comprising a Unit is adjusted pursuant to any of the foregoing provisions of this Section 9, the Company shall promptly prepare a written statement signed by the chief executive officer of the Company, setting forth the adjustment in the number of shares comprising a Unit purchasable hereunder, determined as provided in this Section, and the amount of the then effective Current Price, and in reasonable detail the facts requiring such adjustment and the calculation thereof. Such statement shall be filed among the permanent records of the Company and a copy thereof shall be furnished to the Holder without request and shall at all reasonable times during business hours be open  to inspection by the Holder. The Company shall also promptly cause a notice, stating that such an adjustment has been effected and setting forth the increased or decreased number of shares purchasable and the amount of the then effective Current Price, to be delivered by facsimile, reliable courier or first-class mail postage prepaid to the Holder.
 
(g)                                 Determination By the Board of Directors.  All determinations by the Board of Directors of the Company under the provisions of this Section 9 shall be made in good faith with due regard to the interests of the Holder and the other holders of securities of the Company and in accordance with good financial practice, and all valuations made by the Board of Directors of the Company under the terms of this Section 9 must be made with due regard to any market quotations of securities involved in, or related to, the subject of such valuation.
 
(h)                                 Definitions.  For all purposes of this Section 9 and this Warrant, unless the context otherwise requires, the following terms have the following respective meanings:
 
“Common Stock” shall mean (i) the Company’s presently authorized Common Stock as such class exists on the date of this Warrant; and (ii) stock of the Company of any class

 

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thereafter authorized that ranks, or is entitled to a participation, as to assets or dividends, substantially on a parity with Common Stock.
 
“Company” shall mean Advanced Materials Group, Inc., a Nevada corporation, and any other corporation assuming the Company’s obligations with respect to this Warrant pursuant to this Section 9.
 
“Convertible Securities” shall have the meaning specified in Section 9(e)(1).
 
“Current Price” per share of Common Stock, shall mean the amount equal to the quotient resulting from dividing (i) the Exercise Price per Unit herein provided by (ii) the number of shares (including any fractional share) of Common Stock comprising a Unit on such date.
 
“Excluded Stock” shall mean the shares of Common Stock issued (i) upon exercise of this Warrant, (ii) in respect of which an adjustment is required to be made pursuant to Section 9(a), (b), (c) or (d) hereof, or (iii) pursuant to the exercise or conversion of any options, warrants, convertible securities or other securities issued and outstanding on the date hereof.
 
“Presumed Consideration” shall have the meaning specified in Section 9(e)(6)(ii).
 
Section 10.                                   CURRENT REPORTING.

 

With a view to making available to the Holder the benefits of Rule 144 promulgated under the 1933 Act and any other rule or regulation of the Securities and Exchange Commission that may at any time permit a holder to sell securities of the Company to the public without registration, the Company agrees to use its reasonable best efforts to: (a) make and keep public information available, as those terms are understood and defined in Rule 144, at all times; (b) file with the Securities and Exchange Commission in a timely manner all reports and other documents required of the Company under the 1933 Act and the Securities Exchange Act of 1934 (the “1934 Act”); and (c) furnish to any Holder so long as such Holder owns any shares of Common Stock or warrants to acquire any shares of Common Stock forthwith upon request a written statement by the Company that it has complied with the reporting requirements of Rule 144 and of the 1933 Act and the 1934 Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed by the Company as may be reasonably requested in availing any holder of any rule or regulation of the Securities and Exchange Commission permitting the selling of any such securities without registration.
 
Section 12.                                   AMENDMENTS.
 
Neither this Warrant nor any term hereof may be changed, waived, discharged or terminated orally or in writing, provided that any term of this Warrant may be amended or the observance of such term may be waived (either generally or in a particular instance and either

 

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retroactively or prospectively) with, but only with, the written
consent of the Company and the Holder of this Warrant.

 
Section 13.                                   GOVERNING LAW.
 
This Warrant shall be governed by the laws of the State of Nevada without regard to its conflict of laws principles or rules.
 
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name by its duly authorized officer.

 

Dated:  May 14, 2004

 

 

	 
	ADVANCED MATERIALS GROUP, INC.

	 
	 

	 
	 

	 
	By:
	 
	 

	 
	Robert E. Delk,

	 
	President and Chief Executive Officer

 

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SUBSCRIPTION NOTICE
 
The undersigned, the Holder, hereby elects to exercise purchase rights represented by the Warrant dated May 14, 2004 for, and to purchase thereunder,                       shares of the Common Stock covered by such Warrant and herewith makes payment in full therefor of $                     cash and/or by cancellation of $                  of indebtedness of the Company to the Holder hereof and requests that certificates for such shares (and any securities or property deliverable upon such exercise) be issued in the name of and delivered to                                                                                                                                                                          whose address is                                                                                                          
 
The undersigned agrees that, in the absence of an effective registration statement with respect to Common Stock issued upon this exercise, the undersigned is acquiring such Common Stock for investment and not with a view to distribution thereof and that the certificate or certificates representing such Common Stock may bear a legend substantially as follows:
 
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS.  UNLESS THEY ARE SOLD PURSUANT TO RULE 144 PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER SAID ACT, THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN ABSENCE OF SUCH REGISTRATION AND QUALIFICATION WITHOUT AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.

 

 

	Dated: 
	 
	 
	 
	,
	 
	 
	 

	 
	 

	 
	 

	 
	 
	 

	 
	 
	 

	 
	Signature guaranteed:

 
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ASSIGNMENT
 
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                                                                                                   the rights represented by the foregoing Warrant of                                                                                and appoints                                                                                                 attorney to transfer said rights on the books of said corporation, with full power of substitution in the premises.

 

 

	Dated: 
	 
	 
	 
	,
	 
	 
	 

	 
	 

	 
	 

	 
	 
	 

	 
	 
	 

	 
	Signature guaranteed:

 

 

NOTICE:   The signature to this
assignment must correspond with the name as written upon the face of the within
Warrant in every particular, without alteration or enlargement or any change
whatsoever.

 

14Exhibit 10.03

 

INSIGNIA SOLUTIONS plc

 

1995 INCENTIVE STOCK OPTION PLAN
FOR U.S. EMPLOYEES

 

As Adopted
February 9, 1995

Amended
April 20, 1999, April 12, 2000, June 8, 2001 and June 5,
2002

Amended and Restated April 30, 2004

 

1.                                       PURPOSE.  The purpose of the Plan is to provide
incentives to attract, retain and motivate eligible persons whose present and
potential contributions are important to the success of the Company, its
Parent, Subsidiaries and Affiliates, by offering them an opportunity to
participate in the Company’s future performance through awards of share
options.  Capitalized terms not defined
in the text are defined in Section 20.

 

2.                                       SHARES
SUBJECT 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 and
issue pursuant to options under the Plan, the UK Employee Share Option Scheme
1996 (the “UK Plan”), the 1988 U.S. Stock Option Plan (the “Prior
Plan”) and the Company’s Inland Revenue approved share option scheme (the “Inland
Revenue 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 Inland
Revenue Plan in December 1996, options will no longer be granted pursuant
to the Inland Revenue Plan.  Shares
shall again be available for grant and issue in connection with future awards
of options under the Plan and the UK Plan if such Shares cease to be subject to
an option granted pursuant to the Option Plans.  To the extent Shares are subject to options granted pursuant to
the UK Plan, the Inland Revenue Plan or the Prior Plan, such Shares shall be
unavailable for issue under this Plan until such options expire or become
unexercisable without having been exercised in full.  To the extent Shares are subject to options granted pursuant to
this Plan, such Shares shall be unavailable for issue under the UK Plan until
such options expire or become unexercisable without having been exercised in
full.

 

2.2                                 Adjustment of Shares.  In the event that the number of Shares in
issue is changed by a consolidation or sub-division of ordinary shares of the
Company or any bonus or other capitalization issue of ordinary shares or any
similar change in the capital structure of the Company without consideration,
or by a Corporate Transaction (as defined in Section 14.1) then, unless
such change results in the termination of all outstanding Awards as a result of
the Corporate Transaction, (a) the number of Shares reserved for issue under
the Plan and (b) the Exercise Prices of and number of Shares subject to
outstanding Awards shall be proportionately adjusted, subject to any required
action by the Board or the shareholders of the Company and compliance with
applicable securities laws; provided, however, that fractions of
a Share shall not be issued but shall either be paid in cash at Fair Market
Value or shall be rounded

 

 

up to the nearest Share,
as determined by the Committee; and provided, further, that the
Exercise Price of any Award may not be decreased to below the U.S. Dollar
equivalent of the par value of the Shares calculated by reference to the
Conversion 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 also
employees) 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, independent
contractors and advisors of the Company or any Parent, Subsidiary or Affiliate
of the Company; provided such consultants, contractors and advisors
render bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction. 
A person may be granted more than one Award under the Plan.  Each person is eligible to receive an Award
of up to an aggregate maximum of five hundred thousand (500,000) Shares per
fiscal year.

 

4.                                       ADMINISTRATION.

 

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

 

(a)                                  construe
and interpret the Plan, any Stock Option Agreement and any other agreement or
document executed pursuant to the Plan;

 

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

 

(c)                                  select
persons to receive Awards;

 

(d)                                 determine
the form and terms of Awards;

 

(e)                                  determine
the number of Shares subject to Awards;

 

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

 

(g)                                 grant
waivers of Plan or Award conditions;

 

(h)                                 determine
the vesting and exercisability of Awards;

 

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

 

(j)                                     determine
the disposition of Awards in the event of a Participant’s divorce or
dissolution of marriage; and

 

2

 

(k)                                  make
all other determinations necessary or advisable for the administration of the
Plan.

 

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

 

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

 

5.                                       STOCK
OPTIONS.  The Committee may grant Awards
to eligible persons and shall determine whether such Awards shall be Incentive
Stock Options within the meaning of the Code (“ISOs”) or Nonqualified
Stock Options (“NQSOs”), the number of Shares subject to the Award, the
Exercise Price of the Award, the period during which the Award may be
exercised, and all other terms and conditions of the Award, subject to the
following:

 

5.1                                 Form of Option Grant.  Each Award granted under the Plan shall be
evidenced by a Stock Option Agreement which shall expressly identify the Award
as an ISO or NQSO, and be in such form and contain such provisions (which need
not be the same for each Participant) as the Committee shall from time to time
approve, and which shall comply with and be subject to the terms and conditions
of the Plan.

 

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

 

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

 

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

 

(a)                                  The
Exercise Price shall not be less than 100% of the Fair Market Value of the
Shares on the date of grant; provided, that the Exercise Price of any
ISO

 

3

 

granted to a Ten Percent
Shareholder shall not be less than 110% of the Fair Market Value of the Shares
on the date of grant.  Payment for the
Shares subscribed for may be made in accordance with Section 6 of the
Plan.

 

(b)                                 The
Exercise Price shall be in U.S. Dollars.

 

(c)                                  The
Exercise Price shall not be less than the U.S. Dollar equivalent of the par
value of the Shares calculated by reference to the Conversion Rate prevailing
at the date of exercise of an Award.

 

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

 

5.6                                 Termination.  Notwithstanding the exercise periods set
forth in the Stock Option Agreement, exercise of an Award shall always be
subject to the following:

 

(a)                                  If
the Participant is Terminated for any reason except death or Disability, then
Participant may exercise such Participant’s Awards only to the extent that such
Awards would have been exercisable upon the Termination Date no later than
three (3) months after the Termination Date (or such longer time period not
exceeding five (5) years as may be determined by the Committee), but in any
event, no later than the expiration date of the Awards.

 

(b)                                 If
the Participant is terminated because of death or Disability (or the
Participant dies within three (3) months of such termination), then
Participant’s Awards may be exercised only to the extent such Awards would have
been exercisable by Participant on the Termination Date and must be exercised
by Participant (or Participant’s legal representative or authorized assignee)
no later than  (i) twelve (12) months after the Termination Date in the case
of disability or (ii) eighteen (18) months after the Termination Date in the
case of death (or such longer time period not exceeding five (5) years as may be
determined by the Committee), but in any event no later than the expiration
date of the Awards.

 

5.7                                 Limitations on Exercise.  The Committee may specify a reasonable
minimum number of Shares that may be subscribed for on any exercise of an
Award; provided that such minimum number will not prevent Participant
from exercising the Award for the full number of Shares for which it is then
exercisable.

 

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

 

4

 

Participant during any
calendar year (under the Plan or under any other incentive stock option plan of
the Company or any Affiliate, Parent or Subsidiary of the Company) shall not
exceed $100,000.  If the Fair Market
Value of Shares on the date of grant with respect to which ISOs are exercisable
for 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 such
calendar year shall be ISOs and the Awards for the amount in excess of $100,000
that become exercisable in that calendar year shall be NQSOs.  In the event that the Code or the
regulations promulgated thereunder are amended after the Effective Date of the
Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISOs, such different limit shall be automatically
incorporated herein and shall apply to any Awards granted after the effective
date of such amendment.

 

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

 

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

 

6.                                       PAYMENT
FOR SHARES.  Payment for Shares
subscribed for pursuant to the Plan may be made in cash (by check) or, where
expressly approved for the Participant by the Committee and where permitted by
law:

 

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

 

(b)                                 provided
that a public market for the Shares exists:

 

(1)                                  through
a “same day sale” commitment from Participant and a broker-dealer that is a
member of the National Association of Securities Dealers (a “NASD Dealer”)
whereby the Participant irrevocably elects to exercise the Award and to sell a
portion 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 to
forward the Exercise Price directly to the Company; or

 

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

 

5

 

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

 

(c)                                  by
any combination of the foregoing.

 

7.                                       WITHHOLDING
TAXES.

 

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

 

7.2                                 Stock Withholding.  When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having 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 be
determined (the “Tax Date”). 
All elections by a Participant to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Committee and shall be
subject to the following restrictions:

 

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

 

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

 

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

 

8.                                       PRIVILEGES
OF STOCK OWNERSHIP.

 

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

 

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

 

6

 

9.                                       TRANSFERABILITY.  Subject to Section 4.1(j), Awards
granted under the Plan, and any interest therein, shall not: (a) be
transferable or assignable by the Participant, (b) be made subject to
execution, attachment or similar process, otherwise than by will or by the laws
of descent and distribution or as consistent with the specific Plan and Stock
Option Agreement provisions relating thereto or (c) during the lifetime of the
Participant, be exercisable by anyone other than the Participant, and any
elections with respect to an Award, may be made only by the Participant.

 

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

 

11.                                 SECURITIES
LAW AND OTHER REGULATORY COMPLIANCE.  An
Award shall not be effective unless such Award is in compliance with all
applicable federal and state securities laws, rules and regulations of any
governmental body, and the requirements of any stock exchange or automated
quotation system upon which the Shares may then be listed, as they are in effect
on the date of grant of the Award and also on the date of exercise or other
issue.  Notwithstanding any other
provision in the Plan, the Company shall have no obligation to issue or deliver
certificates for Shares under the Plan prior to (a) obtaining any approvals
from governmental agencies that the Company determines are necessary or
advisable, and/or (b) completion of any registration or other
qualification of such shares under any state or federal law or ruling of any
governmental body that the Company determines to be necessary or
advisable.  The Company shall be under
no obligation to register the Shares with the SEC or to effect compliance with
the registration, qualification or listing requirements of any state securities
laws, stock exchange or automated quotation system, and the Company shall have
no liability for any inability or failure to do so.

 

12.                                 EMPLOYMENT
WITH COMPANY.

 

12.1                           No
Obligation to Employ.  Nothing in
the Plan or any Award granted under the Plan shall confer or be deemed to
confer on any Participant any right to continue in the employ of, or to
continue any other relationship with, the Company or any Parent, Subsidiary or
Affiliate of the Company or limit in any way the right of the Company or any
Parent, Subsidiary or Affiliate of the Company to terminate Participant’s
employment or other relationship at any time, with or without cause.

 

12.2                           No
Right to Compensation.  In the event
that any person holding an Award under the Plan ceases to be employed by, or
otherwise has ceased to provide services to, the Company or a Parent,
Subsidiary or Affiliate for whatever reason, he shall have no right to any
compensation in respect of this loss of right to receive Shares under this
Plan.

 

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

 

7

 

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

 

14.                                 CORPORATE
TRANSACTIONS.

 

14.1                           Assumption
or Replacement of Awards by Successor. In the event of (a) a sale of the
entire share capital of the Company to another corporation (whether for
consideration in cash or in the form of securities of any kind), (b) a
dissolution or liquidation of the Company, (c) the sale of substantially all of
the assets of the Company, or (d) any other transaction which qualifies as a
“corporate transaction” under Section 424(a) of the Code wherein the
shareholders of the Company give up all of their equity interest in the Company
(“Corporate Transaction”), any or all outstanding Awards may be assumed
or replaced by the purchasing or successor corporation, which assumption or
replacement shall be binding on all Participants.  In the alternative, the purchasing or successor corporation may
substitute equivalent Awards or provide substantially similar consideration to
Participants as was provided to shareholders (after taking into account the
existing provisions of the Awards).  The
purchasing or successor corporation may also issue, in place of outstanding
Shares of the Company held by the Participant, substantially similar shares or
other property subject to repurchase restrictions no less favorable to the
Participant.

 

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

 

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

 

14.4                           Assumption of Awards by the Company.  The Company, from time to time, also may
substitute or assume outstanding awards granted by another company, whether in
connection with an acquisition of such other company or otherwise, by either
(a) granting an Award under the Plan in substitution of such other company’s
award, or (b) assuming such award as if it had been granted under the Plan if
the terms of such assumed award could be applied to an Award granted under the
Plan.  Such substitution or assumption
shall be permissible if the holder of the substituted or assumed award would
have been eligible to be granted an Award under the Plan if the other company
had applied the rules of the Plan to such grant.  In the event the Company

 

8

 

assumes an award granted
by another company, the terms and conditions of such award shall remain
unchanged (except that the exercise price and the number and nature of
Shares issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). 
In the event the Company elects to grant a new Award rather than
assuming an existing option, notwithstanding Section 5.4(a), such new
Award may be granted with a similarly adjusted Exercise Price.

 

15.                                 ADOPTION
AND SHAREHOLDER APPROVAL.  The Plan
shall become effective at such date and time as the Registration Statement
filed 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 the
shareholders of the Company (excluding Shares issued pursuant to this Plan),
consistent with applicable laws, within twelve months before or after the date
the Plan is adopted by the Board.  Upon
the Effective Date, the Board may grant Awards pursuant to the Plan; provided,
however, that: (a) no Award may be exercised prior to initial
shareholder approval of the Plan and (b) no Award granted pursuant to an
increase in the number of Shares approved by the Board shall be exercised prior
to the time such increase has been approved by the shareholders of the Company.

 

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

 

17.                                 AMENDMENT
OR TERMINATION OF PLAN.  The Board may
at any time terminate or amend the Plan in any respect, including without
limitation amendment of any form of Stock Option Agreement or instrument to be
executed pursuant to the Plan; provided, however, that the Board
shall not, without the approval of the shareholders of the Company, amend the
Plan in any manner that requires such shareholder approval pursuant to
applicable corporate law or the Code or the regulations promulgated thereunder
as such provisions apply to ISO plans; provided, further, that no
amendment may be made to outstanding Awards without the consent of the
Participant.

 

18.                                 NONEXCLUSIVITY
OF THE PLAN.  Neither the adoption of
the Plan by the Board, the submission of the Plan to the shareholders of the
Company for approval, nor any provision of the Plan shall be construed as
creating any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.

 

19.                                 GOVERNING
LAW.  The Plan and all agreements,
documents and instruments entered into pursuant to the Plan shall be governed
by and construed in accordance with the internal laws of the State of
California, excluding that body of law pertaining to conflict of laws.

 

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

 

“Affiliate” means
any corporation that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with
the Company

 

9

 

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

 

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

 

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

 

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

 

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

 

“Company” means
Insignia Solutions plc, a corporation organized under the laws of England, or
any successor corporation.

 

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

 

“Disability” means
a disability, whether temporary or permanent, partial or total, within the
meaning 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 the
Shares issuable upon exercise of the Award.

 

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

 

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

 

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

 

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

 

10

 

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

 

(d)                                 if
none of the foregoing is applicable, by the Board in good faith.

 

“Insider” means an
officer or director of the Company or any other person whose transactions in
the Company’s ordinary shares are subject to Section 16 of the Securities
Exchange Act of 1934, as amended.

 

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

 

“Parent” means any
corporation (other than the Company) in an unbroken chain of corporations
ending with the Company, if at the time of the granting of an Award under the
Plan, each of such corporations other than the Company owns stock possessing
50% or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.

 

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

 

“Plan” means this
Insignia Solutions plc 1995 Incentive Stock Option Plan for U.S. Employees, as
amended from time-to-time.

 

“SEC” means the
Securities and Exchange Commission.

 

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

 

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

 

“Stock
Option Agreement” means, with respect to each Award, the signed written
agreement between the Company and the Participant setting forth the terms and
conditions of the Award.

 

“Subsidiary” means
any corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the time of granting of the Award, each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all classes
of 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 the
Participant 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, or
reinstatement upon the expiration of such leave is guaranteed by contract or
statute.  The

 

11

 

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

 

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