Document:

F10Q09302010EX10-12

__________

 

 

 

 

 

 

 

 

 

2010 FIXED SHARE OPTION PLAN

 

 

 

 

 

 

For:

 

 

 

 

NATURALLY ADVANCED TECHNOLOGIES INC.

 

 

 

 

 

 

 

Naturally Advanced Technologies Inc.

Suite 402 - 1008 Homer Street, Vancouver, British Columbia, Canada, V6B 2X1

NATURALLY ADVANCED TECHNOLOGIES INC.

(the "Company")

2010 FIXED SHARE OPTION PLAN

Dated for reference effective on September 22, 2010

ARTICLE 1

PURPOSE AND INTERPRETATION

Purpose and Entire Plan

1.1The purpose of this Plan is to advance the interests of the Company by encouraging equity participation in the Company through the acquisition of Common Shares of the Company.  It is the intention of the Company that this Plan will at all times be in compliance with the TSX Venture Policies (or, if applicable, the NEX Policies) and any inconsistencies between this Plan and the TSX Venture Policies) (or, if applicable, the NEX Policies) will be resolved in favour of the latter.

1.2This Plan supersedes and replaces each of the Company's previously ratified stock option plans and including, without limitation, the Company's most recent and existing "2008 Fixed Share Option Plan", dated as ratified by the Board of the Company on September 24, 2008, except that any "Options" theretofore granted by the Company under its 2008 Stock Option Plan are necessarily brought forward by the Company under this Plan without restriction by the terms and conditions of this Plan going forward.

Definitions

1.3In this Plan:
(a)"Affiliate" means a company that is a parent or subsidiary of the Company, or that is controlled by the same entity as the Company;

(b)"Associate" has the meaning set out in the Securities Act;

(c)"Black-out Period" means an interval of time during which the Company has determined that one or more Participants may not trade any securities of the Company because they may be in possession of undisclosed material information pertaining to the Company, or when in anticipation of the release of quarterly or annual financials, to avoid potential conflicts associated with a company's insider-trading policy or applicable securities legislation, (which, for greater certainty, does not include the period during which a cease trade order is in effect to which the Company or in respect of an Insider, that Insider, is subject);

(d)"Board" means the board of directors of the Company or any committee thereof duly empowered or authorized to grant Options under this Plan;

(e)"Change of Control" includes situations where after giving effect to the contemplated transaction and as a result of such transaction: 

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(i)any one Person holds a sufficient number of voting shares of the Company or resulting company to affect materially the control of the Company or resulting company, or,

(ii)any combination of Persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, holds in total a sufficient number of voting shares of the Company or its successor to affect materially the control of the Company or its successor, 

where such Person or combination of Persons did not previously hold a sufficient number of voting shares to affect materially control of the Company or its successor. In the absence of evidence to the contrary, any Person or combination of Persons acting in concert by virtue of an agreement, arrangement, commitment or understanding, holding more than 20% of the voting shares of the Company or resulting company is deemed to materially affect control of the Company or resulting company;

(f)"Common Shares" means common shares without par value in the capital of the Company providing such class is listed on the TSX Venture (or the NEX, as the case may be);

(g)"Company" means the company named at the top hereof and includes, unless the context otherwise requires, all of its Affiliates and successors according to law;

(h)"Consultant" means an individual or Consultant Company, other than an Employee, or a Director of the Company that: 
(i)is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Company or an Affiliate of the Company, other than services provided in relation to a Distribution;

(ii)provides the services under a written contract between the Company or an Affiliate and the individual or the Consultant Company;

(iii)in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or an Affiliate of the Company; and

(iv)has a relationship with the Company or an Affiliate of the Company that enables the individual or Consultant Company to be knowledgeable about the business and affairs of the Company;

(i)"Consultant Company" means for an individual consultant, a company or partnership of which the individual is an employee, shareholder or partner;

(j)"Directors" means the directors of the Company as may be elected from time to time;

(k)"Discounted Market Price" has the meaning assigned by Policy 1.1 of the TSX Venture Policies;

(l)"Disinterested Shareholder Approval" means approval by a majority of the votes cast by all the Company's shareholders at a duly constituted shareholders' 

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meeting, excluding votes attached to Common Shares beneficially owned by Insiders who are Service Providers or their Associates;

(m)"Distribution" has the meaning assigned by the Securities Act, and generally refers to a distribution of securities by the Company from treasury;

(n)"Effective Date" for an Option means the date of grant thereof by the Board;

(o)"Employee" means: 
(i)an individual who is considered an employee of the Company or its subsidiary under the Income Tax Act (i.e. for whom income tax, employment insurance and CPP deductions must be made at source);

(ii)an individual who works full-time for the Company or a subsidiary providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source; or

(iii)an individual who works for the Company or its subsidiary on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions need not be made at source;

(p)"Exercise Price" means the amount payable per Common Share on the exercise of an Option, as determined in accordance with the terms hereof; 

(q)"Expiry Date" means the day on which an Option lapses as specified in the Option Commitment therefore or in accordance with the terms of this Plan;

(r)"Insider" means an insider as defined in the TSX Venture Policies or as defined in securities legislation applicable to the Company;

(s)"Investor Relations Activities" has the meaning assigned by Policy 1.1 of the TSX Venture Policies;

(t)"Management Company Employee" means an individual employed by a Person providing management services to the Company which are required for the ongoing successful operation of the business enterprise of the Company, but excluding a Person engaged in Investor Relations Activities;

(u)"NEX" means a separate board of the TSX Venture for companies previously listed on the TSX Venture or the Toronto Stock Exchange which have failed to maintain compliance with the ongoing financial listing standards of those markets;

(v)"NEX Issuer" means a company listed on the NEX;

(w)"NEX Policies" means the rules and policies of the NEX as amended from time to time;

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(x)"Officer" means a Board appointed officer of the Company;

(y)"Option" means the right to purchase Common Shares granted hereunder to a Service Provider;

(z)"Option Commitment" means the notice of grant of an Option delivered by the Company hereunder to a Service Provider and substantially in the form of Schedule A attached hereto;

(aa)"Optioned Shares" means Common Shares that may be issued in the future to a Service Provider upon the exercise of an Option;

(bb)"Optionee" means the recipient of an Option hereunder;

(cc)"Outstanding Shares" means at the relevant time, the number of issued and outstanding Common Shares of the Company from time to time;

(dd)"Participant" means a Service Provider that becomes an Optionee;

(ee)"Person includes a company, any unincorporated entity, or an individual;

(ff)"Plan" means this "2010 Fixed Share Option Plan", the terms of which are set out herein or as may be amended;

(gg)"Plan Shares" means the total number of Common Shares which may be reserved for issuance as Optioned Shares under the Plan as provided in Section 2.2;

(hh)"Regulatory Approval" means the approval of the TSX Venture and any other securities regulatory authority that has lawful jurisdiction over the Plan and any Options issued hereunder;

(ii)"Securities Act" means the Securities Act, R.S.B.C. 1996, c. 418, or any successor legislation;

(jj)"Service Provider" means a Person who is a bona fide Director, Officer, Employee, Management Company Employee, Consultant or Company Consultant, and also includes a company, 100% of the share capital of which is beneficially owned by one or more Service Providers;

(kk)"Share Compensation Arrangement" means any Option under this Plan but also includes any other stock option, stock option plan, employee stock purchase plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Common Shares to a Service Provider;

(ll)"Shareholder Approval" means approval by a majority of the votes cast by eligible shareholders of the Company at a duly constituted shareholders' meeting;

(mm)"Take Over Bid" means a take over bid as defined in subsection 92(1) of the Securities Act or the analogous provisions of securities legislation applicable to the Company;

(nn)"Termination Date" has the meaning ascribed thereto in Section 3.10;

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(oo)"TSX Venture" means the TSX Venture Exchange and any successor thereto; and

(pp)"TSX Venture Policies" means the rules and policies of the TSX Venture as amended from time to time.

Other Words and Phrases

1.4Words and phrases used in this Plan but which are not defined in the Plan, but are defined in the TSX Venture Policies (and, if applicable, the NEX Policies), will have the meaning assigned to them in the TSX Venture Policies (and, if applicable, the NEX Policies).

Gender

1.5Words importing the masculine gender include the feminine or neuter, words in the singular include the plural, words importing a corporate entity include individuals, and vice versa.

ARTICLE 2

SHARE OPTION PLAN

Establishment of the Share Option Plan

2.1The Plan is hereby established to recognize contributions made by Service Providers and to create an incentive for their continuing assistance to the Company and its Affiliates. 

Maximum Plan Shares

2.2The maximum aggregate number of Plan Shares that may be reserved for issuance under the Plan at any point in time is 7,057,640 Shares (which represents 20% of the Company's issued and outstanding Common Shares on the effective date of this Plan), less any Common Shares reserved for issuance under share options granted under Share Compensation Arrangements other than this Plan, unless this Plan is amended pursuant to the requirements of the TSX Venture Policies and, if applicable, the NEX Policies.

Eligibility

2.3Options to purchase Common Shares may be granted hereunder to Service Providers from time to time by the Board. Service Providers that are not individuals will be required to undertake in writing not to effect or permit any transfer of ownership or option of any of its securities, or to issue more of its securities (so as to indirectly transfer the benefits of an Option), as long as such Option remains outstanding, unless the written permission of the TSX Venture and the Company is obtained.

Options Granted Under the Plan

2.4All Options granted under the Plan will be evidenced by an Option Commitment in the form attached as Schedule A, showing the number of Optioned Shares, the term of the Option, a reference to vesting terms, if any, and the Exercise Price.

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2.5Subject to specific variations approved by the Board, all terms and conditions set out herein will be deemed to be incorporated into and form part of an Option Commitment made hereunder.

Limitations on Issue

2.6Subject to Section 2.10, the following restrictions on issuances of Options are applicable under the Plan:
(a)no Service Provider can be granted an Option if that Option would result in the total number of Options, together with all other Share Compensation Arrangements granted to such Service Provider in the previous 12 months, exceeding 5% of the Outstanding Shares unless the Company has obtained Disinterested Shareholder Approval to do so;

(b)the aggregate number of Options granted to Service Providers conducting Investor Relations Activities in any 12-month period cannot exceed 2% of the Outstanding Shares, calculated at the time of grant; and

(c)the aggregate number of Options granted to any one Consultant in any 12-month period cannot exceed 2% of the Outstanding Shares, calculated at the time of grant.

Options Not Exercised

2.7In the event an Option granted under the Plan expires unexercised or is terminated by reason of dismissal of the Optionee for cause or is otherwise lawfully cancelled prior to exercise of the Option, the Optioned Shares that were issuable thereunder will be returned to the Plan and will be eligible for re-issuance.

Powers of the Board

2.8The Board will be responsible for the general administration of the Plan and the proper execution of its provisions, the interpretation of the Plan and the determination of all questions arising hereunder. Without limiting the generality of the foregoing, the Board has the power to
(a)allot Common Shares for issuance in connection with the exercise of Options;

(b)grant Options hereunder;

(c)subject to any necessary Regulatory Approval, amend, suspend, terminate or discontinue the Plan, or revoke or alter any action taken in connection therewith, except that no general amendment or suspension of the Plan will, without the prior written consent of all Optionees, alter or impair any Option previously granted under the Plan unless the alteration or impairment occurred as a result of a change in the TSX Venture Policies or the Company's tier classification thereunder; and

(d)delegate all or such portion of its powers hereunder as it may determine to one or more committees of the Board, either indefinitely or for such period of time as it may specify, and thereafter each such committee may exercise the powers and discharge the duties of the Board in respect of the Plan so delegated to the same extent as the Board is hereby authorized so to do.

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Amendment of the Plan by the Board of Directors

2.9Subject to the requirements of the TSX Venture Policies and the prior receipt of any necessary Regulatory Approval, the Board may in its absolute discretion, amend or modify the Plan or any Option granted as follows:
(a)it may make amendments which are of a typographical, grammatical or clerical nature only;

(b)it may change the vesting provisions of an Option granted hereunder;

(c)it may change the termination provision of an Option granted hereunder which does not entail an extension beyond the original Expiry Date of such Option;

(d)it may make amendments necessary as a result in changes in securities laws applicable to the Company;

(e)if the Company becomes listed or quoted on a stock exchange or stock market senior to the TSX Venture, it may make such amendments as may be required by the policies of such senior stock exchange or stock market; and

(f)amend this Plan (except for previously granted and outstanding Options) to reduce the benefits that may be granted to Service Providers (before a particular Option is granted) subject to the other terms hereof.

Terms or Amendments Requiring Disinterested Shareholder Approval

2.10The Company shall obtain Disinterested Shareholder Approval prior to any of the following actions becoming effective:
(a)the Plan, together with all of the Company's other Share Compensation Arrangements, could result at any time in:
(i)the aggregate number of Common Shares reserved for issuance under Options granted to Insiders exceeding 10% of the Outstanding Shares; 

(ii)the number of Optioned Shares issued to Insiders within a one-year period exceeding 10% of the Outstanding Shares; or, 

(iii)the issuance to any one Optionee, within a 12-month period, of a number of Common Shares exceeding 5% of Outstanding Shares; or

(b)any reduction in the Exercise Price of an Option previously granted to an Insider.

Options Granted Under the Company's Previous Share Option Plans

2.11Any option granted pursuant to a stock option plan previously adopted by the Board which is outstanding at the time this Plan comes into effect shall be deemed to have been issued under this Plan and shall, as of the date this Plan comes into effect, be governed by the terms hereof.

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ARTICLE 3

TERMS AND CONDITIONS OF OPTIONS

Exercise Price

3.1The Exercise Price of an Option will be set by the Board on the Effective Date of the Option and cannot be less than the Discounted Market Price.

Term of Option

3.2An Option can be exercisable for a maximum of 10 years from the Effective Date. 

Option Amendment

3.3Subject to Section 2.10(b), the Exercise Price of an Option may be amended only if at least six (6) months have elapsed since the later of the Effective Date, the date the Common Shares commenced trading on the TSX Venture, and the date of the last amendment of the Exercise Price.

3.4An Option must be outstanding for at least one year before the Company may extend its term, subject to the limits contained in Section 3.2.

3.5Any proposed amendment to the terms of an Option must be approved by the TSX Venture prior to the exercise of such Option.

Vesting of Options

3.6Subject to Section 3.7, vesting of Options shall be in accordance with Schedule B attached hereto or otherwise, at the discretion of the Board, and will generally be subject to:
(a)the Service Provider remaining employed by or continuing to provide services to the Company or any of its Affiliates as well as, at the discretion of the Board, achieving certain milestones which may be defined by the Board from time to time or receiving a satisfactory performance review by the Company or any of its Affiliates during the vesting period; or

(b)the Service Provider remaining as a Director of the Company or any of its Affiliates during the vesting period.

Vesting of Options Granted to Consultants Conducting Investor Relations Activities

3.7Notwithstanding Section 3.6, Options granted to Consultants conducting Investor Relations Activities will vest:
(a)over a period of not less than 12 months as to 25% on the date that is three months from the date of grant, and a further 25% on each successive date that is three months from the date of the previous vesting; or

(b)such longer vesting period as the Board may determine.

Effect of Take Over Bid

3.8If a Take Over Bid is made to the shareholders, all options issued to directors, officers, employees and consultants that are not yet fully vested will immediately become fully 

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vested, unless such options are subject to vesting restrictions in accordance with TSX Venture policies.

3.9If a Take Over Bid is made to the shareholders generally then the Company shall, immediately upon receipt of notice of the Take Over Bid, notify each Optionee currently holding an Option of the Take Over Bid, with full particulars thereof whereupon such Option may, subject to receipt of Regulatory Approval, be immediately exercised in whole or in part by the Optionee.

Extension of Options Expiring During Blackout Period

3.10Should the Expiry Date for an Option fall within a Blackout Period, or within nine (9) Business Days following the expiration of a Blackout Period, such Expiry Date shall be automatically extended without any further act or formality to that day which is the tenth (10th) Business Day after the end of the Blackout Period, such tenth Business Day to be considered the Expiry Date for such Option for all purposes under the Plan.  Notwithstanding Section 2.8, the tenth Business Day period referred to in this Section 3.10 may not be extended by the Board.

Optionee Ceasing to be Director, Employee or Service Provider

3.11No Option may be exercised after the earlier of the date the Service Provider has left his employ/office and the date that the Service Provider has been advised by the Company that his services are no longer required or his service contract has expired (the "Termination Date"), except as follows:
(a)in the case of the death of an Optionee, any vested Option held by him at the date of death will become exercisable by the Optionee's lawful personal representatives, heirs or executors until the earlier of one year after the date of death of such Optionee and the date of expiration of the term otherwise applicable to such Option;

(b)Options granted to a Service Provider conducting Investor Relations Activities will expire 90 days after the Termination Date, but only to the extent that such Option has vested as at the Termination Date;

(c)any Option granted to an Optionee other than one conducting Investor Relations Activities will expire one yearafter the Termination Date, but only to the extent that such Option has vested as at the Termination Date; and

(d)in the case of an Optionee being dismissed from employment or service for cause, such Optionee's Options, whether or not vested at the date of dismissal will immediately terminate without right to exercise same.

Non Assignable

3.12Subject to Section 3.11, all Options will be exercisable only by the Optionee to whom they are granted and will not be assignable or transferable.

Adjustment of the Number of Optioned Shares

3.13The number of Common Shares subject to an Option will be subject to adjustment in the events and in the manner following:

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(a)in the event of a subdivision of Common Shares as constituted on the date hereof, at any time while an Option is in effect, into a greater number of Common Shares, the Company will thereafter deliver at the time of purchase of Optioned Shares hereunder, in addition to the number of Optioned Shares in respect of which the right to purchase is then being exercised, such additional number of Common Shares as result from the subdivision without an Optionee making any additional payment or giving any other consideration therefore;

(b)in the event of a consolidation of the Common Shares as constituted on the date hereof, at any time while an Option is in effect, into a lesser number of Common Shares, the Company will thereafter deliver and an Optionee will accept, at the time of purchase of Optioned Shares hereunder, in lieu of the number of Optioned Shares in respect of which the right to purchase is then being exercised, the lesser number of Common Shares as result from the consolidation;

(c)in the event of any change of the Common Shares as constituted on the date hereof, at any time while an Option is in effect, the Company will thereafter deliver at the time of purchase of Optioned Shares hereunder the number of shares of the appropriate class resulting from the said change as an Optionee would have been entitled to receive in respect of the number of Common Shares so purchased had the right to purchase been exercised before such change;

(d)in the event of a capital reorganization, reclassification or change of outstanding equity shares (other than a change in the par value thereof) of the Company, a consolidation, merger or amalgamation of the Company with or into any other company or a sale of the property of the Company as or substantially as an entirety at any time while an Option is in effect, an Optionee will thereafter have the right to purchase and receive, in lieu of the Optioned Shares immediately theretofore purchasable and receivable upon the exercise of the Option, the kind and amount of shares and other securities and property receivable upon such capital reorganization, reclassification, change, consolidation, merger, amalgamation or sale which the holder of a number of Common Shares equal to the number of Optioned Shares immediately theretofore purchasable and receivable upon the exercise of the Option would have received as a result thereof. The subdivision or consolidation of Common Shares at any time outstanding (whether with or without par value) will not be deemed to be a capital reorganization or a reclassification of the capital of the Company for the purposes of this Section 3.13;

(e)an adjustment will take effect at the time of the event giving rise to the adjustment, and the adjustments provided for in this section are cumulative;

(f)the Company will not be required to issue fractional shares in satisfaction of its obligations hereunder. Any fractional interest in a Common Share that would, except for the provisions of this Section 3.13, be deliverable upon the exercise of an Option will be cancelled and not be deliverable by the Company; and

(g)if any questions arise at any time with respect to the Exercise Price or number of Optioned Shares deliverable upon exercise of an Option in any of the events set out in this Section 3.13, such questions will be conclusively determined by the Company's auditors, or, if they decline to so act, any other firm of Chartered Accountants, in Vancouver, British Columbia (or in the city of the Company's principal executive office) that the Company may designate and who will be 

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granted access to all appropriate records. Such determination will be binding upon the Company and all Optionees.

ARTICLE 4

commitment and exercise PROCEDURES

Option Commitment

4.1Upon grant of an Option hereunder, an authorized officer of the Company will deliver to the Optionee an Option Commitment detailing the terms of such Options and upon such delivery the Optionee will be subject to the Plan and have the right to purchase the Optioned Shares at the Exercise Price set out therein subject to the terms and conditions hereof.

Manner of Exercise

4.2An Optionee who wishes to exercise his Option may do so by delivering
(a)a written notice to the Company specifying the number of Optioned Shares being acquired pursuant to the Option; and

(b)a certified cheque, wire transfer or bank draft payable to the Company for the aggregate Exercise Price by the Optioned Shares being acquired.

Delivery of Certificate and Hold Periods

4.3As soon as practicable after receipt of the notice of exercise described in Section 4.2 and payment in full for the Optioned Shares being acquired, the Company will direct its transfer agent to issue a certificate to the Optionee for the appropriate number of Optioned Shares. Such certificate issued will bear a legend stipulating any resale restrictions required under applicable securities laws.  Further, if the Exercise Price is set below than the then current market price of the Common Shares on the TSX Venture, the certificate will also bear a legend stipulating that the Optioned Shares are subject to a four-month TSX Venture hold period commencing the date of the grant of the Option.

ARTICLE 5

GENERAL

Employment and Services

5.1Nothing contained in the Plan will confer upon or imply in favour of any Optionee any right with respect to office, employment or provision of services with the Company, or interfere in any way with the right of the Company to lawfully terminate the Optionee's office, employment or service at any time pursuant to the arrangements pertaining to same. Participation in the Plan by an Optionee is voluntary.

No Representation or Warranty

5.2The Company makes no representation or warranty as to the future market value of Common Shares issued in accordance with the provisions of the Plan or to the effect of the Income Tax Act (Canada) or any other taxing statute governing the Options or the Common Shares issuable thereunder or the tax consequences to a Service Provider.  Compliance with 

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applicable securities laws as to the disclosure and resale obligations of each Participant is the responsibility of each Participant and not the Company.

Interpretation

5.3The Plan will be governed and construed in accordance with the laws of the Province of British Columbia.

Effective Date of Plan

5.4The Plan will become effective from and after September 22, 2010.

Schedule A

SHARE OPTION PLAN

OPTION COMMITMENT

Notice is hereby given that, effective this ________ day of ________________, ________ (the "Effective Date"), NATURALLY ADVANCED TECHNOLOGIES INC. (the "Company") has granted to ___________________________________________ (the "Optionee") an Option to acquire ______________ Common Shares (collectively, the "Optioned Shares") up to 5:00 p.m. Vancouver Time on the ________ day of ________________, ________ (the "Expiry Date") at an Exercise Price of US$________(CDN$$____________) per Optioned Share.

At the date of grant of the Option the Company is classified as  .

Optioned Shares will vest and may be exercised as follows: 

{COMPLETE ONE}
____________In accordance with the vesting provisions set out in Schedule B of the Plan;

or

____________As follows: 

The grant of the Option evidenced hereby is made subject to the terms and conditions of the Plan, which are hereby incorporated herein and forms part hereof.

To exercise your Option, deliver a written notice specifying the number of Optioned Shares you wish to acquire, together with a certified cheque, wire transfer or bank draft payable to the Company for the aggregate Exercise Price. A certificate for the Optioned Shares so acquired will be issued by the transfer agent as soon as practicable thereafter and will bear a minimum four month non-transferability legend from the date of this Option Commitment, the text of which is as follows. [The Company may grant stock options without a hold period, provided the exercise price of the options is set at or above the market price of the Company's shares rather than below.].
"WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL 12:00 A.M. (MIDNIGHT) ON .".

The Company and the Optionee represent that the Optionee under the terms and conditions of the Plan is a bona fide Service Provider (as defined in the Plan), entitled to receive Options under TSX Venture Policies.

The Optionee also acknowledges and consents to the collection and use of Personal Information (as defined in the Policies of the TSX Venture Exchange) by both the Company and the TSX Venture (or the NEX, as the case may be) as more particularly set out in the Acknowledgement - Personal Information in use by the TSX Venture (or the NEX, as the case may be) on the date of this Share Option Plan.

NATURALLY ADVANCED TECHNOLOGIES INC.

                Authorized Signatory

_____________________________________

     (SIGNATURE OF OPTIONEE)

__________

Schedule B

SHARE OPTION PLAN

[TSX Venture policy only requires that Options vest over 18 months]

VESTING SCHEDULE

1.Options granted pursuant to the Plan to Directors, Officers and all Employees and Consultants employed or retained by the Company will vest as follows:
(a)1/12 of the total number of Options granted will vest one month after the date of grant;

(b)a further 1/12 of the total number of Options granted will vest in equal monthly proportions over a period of 11 months thereafter.

2.Options granted to Consultants retained by the Company pursuant to a short term contract or for a specific project with a finite term, will be subject to such vesting provisions determined by the Board of Directors of the Company at the time the Option Commitment is made, subject to Regulatory Approval.

3.Options granted to Service Providers involved in Investor Relations Activities shall vest in accordance with Section 3.7 of the Plan and any policies of the TSX Venture Exchange.

__________ex10-8.htm

Exhibit 10.8

 

SUBSIDIARY PURCHASE AGREEMENT

 

This SUBSIDIARY PURCHASE AGREEMENT (the “Agreement”) is made and entered into effective as of September 30, 2010 (the “Effective Date”) by and among Todd Torneo, an individual (“Torneo”), Rubicon Financial Incorporated, a Delaware corporation (“RBCF”), Rubicon Financial Insurance Services, Inc., a California corporation and wholly-owned subsidiary of RBCF (“Rubicon Insurance” or the “Subsidiary”).

This Agreement sets forth the terms and conditions upon which RBCF will sell and convey to Torneo, and Torneo will purchase from RBCF, 100% of the issued and outstanding shares of the Subsidiary.

RECITALS

WHEREAS, Torneo is desirous of purchasing and RBCF is desirous of selling 100% of the Subsidiary in exchange for 50,000 shares of RBCF common stock currently held by Torneo; and

In consideration of the mutual agreements contained herein, intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

PURCHASE AND SALE OF SUBSIDIARY; CLOSING

	
1.01.

	
Purchase and Sale of Subsidiary. Subject to the terms and conditions of this Agreement, at the Closing, RBCF agrees to sell, transfer, convey, assign and deliver to Torneo, and Torneo agrees to purchase, acquire and accept from RBCF, free and clear of all liens, charges or encumbrances of whatsoever nature, 100% of the issued and outstanding share of the Subsidiary. As part of the purchase, Torneo will receive all of the assets of the Subsidiary of any kind, character, or description, known or unknown, whether accrued, absolute, or otherwise (and regardless of whether reflected on each of the Subsidiary’ Financial Statements), all as they exist on the Closing Date, including without limitation:

	
  

	
(a)

	
All right, title and interest of the Subsidiary in and to all of the Subsidiary’s inventory, wherever located, including raw material, work in process, and finished goods;

	
  

	
(b)

	
All of the Subsidiary’s cash, cash on hand, cash on deposit, accounts, accounts receivable (subject to the provisions referenced in Section 1.04(b) hereof), trade receivables and notes receivable;

(c)           All of the Subsidiary’s fixtures, machinery, equipment, furniture, and supplies;

	
  

	
(d)

	
All right, title and interest of the Subsidiary in and to all prepaid rentals and other prepaid expenses, bonds and deposits (including those for health insurance);

(e)           All vehicles owned or leased by the Subsidiary;

 

  

Page 1 of 14

  

 

 

SUBSIDIARY PURCHASE AGREEMENT

 

	
  

	
(f)

	
All Business records including all drawings, bills of materials and lists, vendor agreements and lists, credit files, sales records, warranty records, inventory records, product literature and marketing studies;

	
  

	
(g)

	
All licenses, permits and other intellectual property used in connection with the Business of the Subsidiary.

	
  

	
(h)

	
All other books and records associated with the Business of the Subsidiary (including the Subsidiary’s corporate minute books and related corporate records);

	
  

	
(i)

	
To the extent assignable, all rights of the Subsidiary under the contracts and leases entered into by the Subsidiary in connection with the Business (the “Assumed Contracts”); and

(j)            All customer, distributor and supplier files and mailing lists of the Subsidiary.

 

   All of the assets referenced above and being purchased under this Agreement are collectively referred to herein as the “Assets.”

	
1.02.

	
Assumption of Liabilities. On the Closing Date, Torneo shall assume all charges, debts, obligations, contracts, agreements, and liabilities of the Subsidiary (the “Assumed Liabilities”). The Assumed Liabilities shall include, but shall not be limited to:

	
(a)  

	
All liabilities of the Subsidiary on the Financial Statements;

	
(b)  

	
Accounts payable;

	
(c)  

	
Accrued employee vacation and sick pay;

	
(d)  

	
Warranty claims;

	
(e)  

	
Any and all automobile leases;

	
(f)  

	
All liabilities under the Assumed Contracts, to the extent the liabilities or claims arise either prior to or subsequent to the Subsidiary’s Ownership Period;

	
(g)  

	
Federal and state income taxes, federal and state employment taxes and state sales taxes due and payable; and

	
(h)  

	
All other liabilities of the Subsidiary, whether fixed or contingent, known or unknown, arising out of the operation of the Business either prior to or subsequent to the Subsidiary’s Ownership Period; save and except for any Retained Liabilities as defined in Section 1.03.

 

  

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SUBSIDIARY PURCHASE AGREEMENT

 

	
1.03.

	
Liabilities to be Retained by RBCF. RBCF shall retain only the following liabilities of the Subsidiary (the “Retained Liabilities”):

	
  

	
(a)   

	
Professional fees owed by the Subsidiary with regard to this transaction and/or this Agreement, which shall be paid from funds of RBCF rather than from any funds of the Subsidiary;

	
1.04.  

	
Consideration. As payment in full for the Subsidiary, subject to the terms and conditions of this Agreement, and in reliance on the representations, warranties and agreements of the Subsidiary and RBCF contained herein, Torneo shall transfer to RBCF 50,000 shares of RBCF common stock issued in the name of Torneo (the “Purchase Price.”)

	
1.05.  

	
Closing. The Closing of the transactions contemplated by this Agreement will take place at the offices of RBCF, at 18872 MacArthur Blvd., First Floor, Irvine, California, or at such other location or by such other means as the parties may agree, including exchange of signatures via express mail or facsimile, at 9:30 a.m. on a date not later than the Effective Date.

	
1.06.

	
Effective Time. The “Effective Time” shall mean 9:00 a.m., Pacific Standard Time, on the Effective Date.

1.07.           Deliveries at Closing.

	
  

	
(a)   

	
At the Closing, RBCF will deliver to Torneo certificate(s) representing 100% of the issued and outstanding shares of the Subsidiary along with all corporate documents of the Subsidiary, which will effectuate the transfer of the Subsidiary’s Assets by RBCF to Torneo and the acquisition of the Subsidiary by Torneo.

	
  

	
(b)   

	
At the Closing, Torneo will deliver to RBCFthe Purchase Price. 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SUBSIDIARY AND RBCF

The Subsidiary and RBCF hereby jointly and severally represent, warrant and covenant to Torneo as set forth below in this Article II. All representations and warranties in this Article II are deemed to be made by the Subsidiary and RBCF on, and be effective as of, both the date hereof and the Closing Date.

	
2.01.

	
Corporate Organization; Power, Etc. The Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation and has full corporate power and authority to carry on the Business as it is now being conducted and to own the Assets it now owns and is duly qualified or licensed to do business as a foreign corporation and is in good standing in each other jurisdiction in which it owns or leases any real property or in which the nature of the Business transacted by it makes such licensing or qualification necessary.

 

  

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SUBSIDIARY PURCHASE AGREEMENT

 

	
2.02.

	
No Affiliates. The Subsidiary does not own, directly or indirectly, any capital stock or other equity securities of any corporation, partnership, limited liability company, trust, joint venture or other entity nor have any direct or indirect equity or ownership interest in any business.

	
2.03.

	
Authorization of Agreements, Validity, Etc. The execution, delivery and performance by the Subsidiary and RBCF of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action and will not violate any provision of law, any order of any court or other agency of government, the Certificate of Incorporation or Bylaws (or similar governing documents) of the Subsidiary or RBCF, any judgment, award or decree or any indenture, agreement or other instrument to which the Subsidiary or RBCF is a party, or by which any of them or any of their properties or assets is bound or affected, or result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument, or result in the creation of imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the Assets of the Subsidiary. This Agreement has been duly executed and delivered by the Subsidiary and RBCF and constitutes the legal, valid and binding agreement of the Subsidiary and RBCF enforceable in accordance with its terms, except that such enforcement may be subject to traditional equitable remedies, bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditor’s rights.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF TORNEO

Torneo represents and warrants to the Subsidiary and RBCF as follows:

	
3.01.

	
Authorization; Etc. Torneo has full power and authority to enter into this Agreement and to carry out the transactions contemplated hereby. This Agreement is a valid and binding agreement of Torneo enforceable in accordance with its terms except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefore may be brought.

	
3.02

	
Validity. This Agreement has been duly executed and delivered by Torneo and constitutes the legal, valid and binding obligation of Torneo, enforceable against it in accordance with its terms.

	
3.03.

	
No Violation. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate or be in conflict with, or constitute a default under, or cause the acceleration of the maturity of any debt or obligation pursuant to, any agreement or commitment to which Torneo is a party or by which Torneo is bound, or violate any statute or law or any judgment, decree, order, regulation or rule of any court or governmental authority.

	
3.04.

	
Litigation. To Torneo’s knowledge, there is no action, suit, inquiry, proceeding or investigation by or before any court or governmental or other regulatory or administrative agency or commission pending or threatened against or involving Torneo, or which questions or challenges the validity of this Agreement or any action taken or to be taken by Torneo pursuant to this Agreement or in connection with the transactions contemplated hereby.

  

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SUBSIDIARY PURCHASE AGREEMENT

 

ARTICLE IV

CONDITIONS PRECEDENT TO CLOSING

Prior to the signing and Closing of this Agreement, the following conditions precedent shall have been satisfied or waived:

	
4.01.

	
Consents Obtained.  All consents from third parties, including without limitation all lenders and secured parties, required to consummate the transactions contemplated hereby shall have been obtained by RBCF and the Subsidiary.

	
4.02.

	
No Government Proceeding or Litigation. No suit, action, investigation, inquiry or other proceeding-by any governmental body or other person or legal or administrative proceeding shall have been instituted or threatened against any Subsidiary which questions the validity or legality of any of the transactions contemplated by this Agreement.

	
4.03.

	
No Injunction. On the Closing Date there shall be no effective threatened injunction, writ, preliminary restraining order or any order of any nature issued by a court of competent jurisdiction directing that the transactions provided for herein or any of them not be consummated as so provided or imposing any conditions on the consummation of the transaction contemplated hereby which Torneo deems unacceptable in its sole discretion.

ARTICLE V

ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES

	
5.01.

	
Survival of Obligations. Notwithstanding any provisions of this Agreement or of any agreement, document, certificate or other instrument delivered in connection with the terms of this Agreement shall survive the Closing of the transactions contemplated by this Agreement.

	
5.02.

	
Further Assurances. After the Closing, RBCF shall from time to time, at the reasonable request of Torneo, without cost or expense to Torneo, execute and deliver such other instruments of conveyance and transfer and take such other reasonable actions as are contemplated by this Agreement.

	
5.03.

	
Reliance. Except as otherwise represented, warranted or set forth in this Agreement, Torneo specifically agrees that it has purchased the Assets and assumed the Assumed Liabilities “as is,” “where is” and “with all faults” and defects, both latent and patent, known or unknown. Further, Torneo specifically agrees that it is not relying upon any oral discussions between its representatives and any other representative of the Subsidiary or RBCF in entering into this Agreement. Torneo agrees that it has performed a due diligence review of the Assets, Assumed Liabilities and of the financial condition and prospects of the Business in making Torneo’s voluntary decision to enter into this Agreement. Further, Torneo specifically agrees that it will not hold RBCF, or their employees, agents or owners, responsible for any information about the Subsidiary that Torneo did not know at the time it entered into this Agreement as Torneo agrees that nothing the Subsidiary or RBCF, or its agents, employees or owners, said or did, save and except for the agreements, covenants, representations and warranties specifically set forth within this Agreement, induced Torneo into entering into this Agreement.

 

  

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ARTICLE VI

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

	
6.01.

	
Investigations; Survival of Warranties. The respective representations, warranties and covenants of the Subsidiary, RBCF and the Torneo contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party hereto. Each and every such representation, warranty, covenant and agreement shall survive for a period of one (1) year after the date such representation and warranty is deemed made, except that (i) the other covenants and agreements to be performed subsequent to the Closing, including without limitation those covenants contained in Articles IV and V above, shall survive and be enforceable for period of the applicable statute of limitations, and (ii) nothing in the foregoing shall be deemed to diminish any Indemnifying Party’s (as hereinafter defined) indemnification obligations to an Indemnified Party respecting (a) any matter for which written notice to the Indemnifying Party has been given prior to the end of the applicable indemnification period, and (b) claims for indemnification for tax matters and common law fraud, which shall survive for the duration of the applicable statutes of limitations.

6.02.         Indemnification.

	
  

	
(a)

	
RBCF agrees to save harmless, defend and indemnify Torneo, and any of Torneo’s respective officers, directors, agents, attorneys, accountants, or other representatives of such parties against, and hold them harmless from any and all liabilities, of every kind, nature and description, fixed or contingent (including, without limitation, reasonable counsel fees, expert witness fees, and expenses in connection with any action, claim or proceeding relating to such liabilities) arising out of or relating to a breach of any of the representations and warranties or covenants contained in this Agreement.

	
  

	
(b)

	
Torneo agrees to save harmless, defend and indemnify RBCF and its officers, directors, agents, attorneys, accountants, or other representatives against, and hold them harmless from any and all liabilities, of every kind, nature and description, fixed or contingent (including, without limitation, reasonable counsel fees, expert witness fees, and expenses in connection with any action, claim or proceeding relating to such liabilities) arising out of a the purchase of the Subsidiary or the breach of any of the representations and warranties or covenants contained herein.

 

  

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6.03.

	
Escrow of RBCF Shares. Torneo hereby agrees to deposit 100,000 shares of RBCF common stock with DeMint Law, PLLC, as escrow agent (the “Escrow Agent”), to be used to collateralize the indemnification requirements of Torneo set forth herein. The Escrow Agent shall hold the shares of RBCF common stock and release such shares to RBCF or Torneo upon the terms and conditions set forth in the Escrow Agreement attached hereto as Exhibit A.

	
6.04.

	
Injunctive Relief. Notwithstanding the provisions of Section 6.04 hereof, in the event of a breach or threatened breach by RBCF, on the one hand, or Torneo on the other hand, of the provisions of this Agreement, Torneo on the one hand, or RBCF on the other hand, shall be entitled in order to maintain the status quo ante pending the outcome of any arbitration pursuant to Section 6.05 hereof to seek an injunction or similar equitable relief restraining the other party or RBCF, as the case may be, from committing or continuing any such breach or threatened breach or granting specific performance of any act required to be performed by the other party or RBCF, as the case may be, under any such provision. The parties hereto hereby consent to the jurisdiction of the federal courts located in Orange County, California and the California state courts located in Orange County for any proceedings under this Section 6.04. The parties hereto agree that the availability of arbitration in Section 6.05 hereof shall not be used by any party as grounds for the dismissal of any injunctive actions instituted by Torneo pursuant to this Section 6.04.

	
6.05.

	
Dispute Resolution. The parties acknowledge and agree that this Agreement and any dispute hereunder shall be subject to and governed by the dispute resolution provisions set forth in this section 6.05.

	
  

	
(a)

	
DISPUTES. RBCF and Torneo recognize that disputes as to certain matters of this Agreement may from time to time arise which relate to either party’s rights and/or obligations hereunder or thereunder. It is the objective of the parties to establish procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation. To accomplish this objective, the parties agree to follow the procedures set forth in this Article if and when a dispute arises under this Agreement. In the event of a dispute between the Parties, any party may, by written notice to the other, have such dispute referred to their respective chief executive officers for attempted resolution by good faith negotiations within fourteen (14) days after such notice is received. In the event the chief executive officers are not able to resolve such dispute, either party may at any time after the fourteen (14) day period seek to resolve the dispute through the other means provided in Section 6.05(b)

	
  

	
(b)

	
ALTERNATIVE DISPUTE RESOLUTION. Any dispute, controversy or claim arising out of or relating to this Agreement, including, without limitation, disputes relating to alleged breach or to termination, shall be settled by binding Alternative Dispute Resolution (“ADR”) in the manner described below.  If a party intends to begin an ADR to resolve a dispute, such party shall provide written notice (the “ADR Request”) to the other party informing such other party of such intention and the issues to be resolved. Within fifteen (15) business days after receipt of the ADR Request, the other party may, by written notice to counsel for the party initiating ADR, add additional issues to be resolved.

	
  

	
(c)

	
ARBITRATION PROCEDURE. The ADR shall be conducted pursuant to the Commercial Arbitration Rules of the American Arbitration Association for Large, Complex Cases then in effect. Notwithstanding those rules, the following provisions shall apply to the ADR hereunder.

 

  

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SUBSIDIARY PURCHASE AGREEMENT

 

	
  

	
(i)

	
ARBITRATOR. The arbitration shall be carried out by a single arbitrator, who shall be a retired United States judge or justice or magistrate and shall be selected by the parties within thirty (30) days of receipt of the ADR Request in accordance with the procedure described below.

	
  

	
(1)The parties shall select an arbitrator as described in subsection (2) below, which arbitrator may but need not be selected from a list of arbitrators such as the CPR Panel of Distinguished Neutrals of the Center for Public Resources, subject to: (i) his/her availability and willingness to serve, (ii) his/her availability to commence the arbitration within a reasonable period of time, (iii) his/her agreement to charge fees and expenses that are reasonable under the circumstances, and (iv) his/her commitment to render his/her award within the time periods provided in this Section 6.04.

	
  

	
(2)

	
Each party will exchange a list of ten (10) qualified arbitrators and in the event that both parties agree to a single common name that person shall be the arbitrator. In submitting the ten names, each party shall prioritize from one to ten the persons on their respective lists. In the event that there is more than one common name on the parties’ lists, the person having the lowest combined priority number shall be the selected arbitrator. The combined priority number shall be the sum of the order numbers assigned to that person by the parties. Thus, if one person was RBCF’s number two priority and Torneo’s number three priority, and another person was RBCF’s number two priority and Torneo’s number four priority, the former would be appointed. If more than one person has the lowest combined priority number, the person for whom there is less difference between the order numbers assigned by the parties shall be appointed. Thus, if one person was RBCF’s number one priority and Torneo’s number four priority, and another person was RBCF’s number two priority and Torneo’s number three priority, the latter person would be appointed. If this method does not produce a sole arbitrator or if there are no common names, the parties shall alternatively strike from the combined list until one name remains, which shall be the selected arbitrator. The party to strike first shall be determined by the toss of a coin.

	
  

	
(3)

	
In the event the arbitrator is unable to meet the requirements set forth in subsection (i) above, then, in the event the first selected arbitrator was common to both lists and there was more than one common name on the parties’ lists, the arbitrator having the next lowest combined priority number who is able and willing to serve pursuant to these requirements shall be selected. If there is no such individual, then the parties shall use the alternate strike method set forth above. In the event an arbitrator selected by the alternate strike methodology is unable or unwilling to serve consistent with the requirements set forth above, then the alternate striking procedure shall be retraced in reverse order until an arbitrator is selected.

The arbitrator shall be neutral, disinterested, impartial, and independent of the parties and others having any known interest in the outcome, and shall abide by the AAA/ABA Code of Ethics for Arbitrators in Commercial Disputes. There shall be no ex parte communications with the arbitrator either before or during the arbitration, relating to the dispute or issues involved in the dispute or the arbitrator’s views on any such issue.

 

  

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(ii)

	
INTERIM REVIEW. Either party may apply to any court having jurisdiction hereof and seek preliminary injunctive relief until such time as the arbitration award is rendered or the controversy is otherwise resolved.

	
  

	
(iii)

	
LOCATION. Any arbitration under Section 6.05 shall be conducted in Orange County, California.

	
  

	
(iv)

	
DISCOVERY PROCEEDINGS AND HEARINGS. The parties shall have the right to undertake such limited discovery as is expressly authorized by the arbitrator upon a determination that such discovery is reasonably necessary to enable the requesting party to prepare and present its claims and/or defenses at the hearing. Discovery shall be conducted pursuant to Rules 26-37 of the Federal Rules of Civil Procedure (with references to “court” in those Rules being considered references to the “arbitrator”) except as they may be modified by the arbitrator. In addition:

	
  

	
(1)

	
The arbitrator will determine the specific location within the State of California and the date and time of the arbitration hearing, which will commence no later than ninety (90) days after the date of the appointment of the arbitrator. The arbitrator will provide reasonable notice of the hearing date and time.

	
  

	
(2)

	
The arbitrator will ordinarily conduct the arbitration hearing in the manner set forth in this Section 6.05 except that the Federal Rules of Evidence shall apply. The arbitrator shall render its decision in writing. If the AAA rules and the rules of this subsection (2) conflict in any manner, the rules of this subsection (2) shall prevail. The arbitrator must hold an oral hearing, but may impose reasonable time limits on each phase of the proceeding and may limit testimony to exclude evidence that would be immaterial or unduly repetitive, provided that all parties are afforded the opportunity to present material and relevant evidence and that each party is given at least an approximately equal amount of time for presentation of its case.

	
  

	
(3)

	
The arbitrator will require witnesses to testify under oath if requested by any party.

	
  

	
(4)

	
Any party desiring a stenographic record may secure a court reporter to attend the proceedings.

	
  

	
(5)

	
The arbitrator will determine the order of proof, which will generally be similar to that of a court trial, including opening and closing statements.

	
  

	
(6)

	
When the arbitrator determines that all relevant and material evidence and arguments have been presented, the arbitrator will declare the hearing closed. The arbitrator may defer the closing of the hearing for up to ten (10) days to permit the parties to submit post-hearing briefs and or to make closing arguments, as the arbitrator deems appropriate, before rendering an award.

 

  

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(7)

	
The arbitrator will render the award and its decisions within thirty (30) days after the date of the closing of the hearing or, if an arbitration hearing has been waived, within thirty (30) days after the date of the arbitrator’s receiving all materials specified by the parties. The decision and award of the arbitrator will constitute the arbitration award and will be binding on the parties.

	
  

	
(8)

	
The arbitrator shall, in rendering its decision and award, apply the substantive law of the State of California, without regard to its conflict of laws provisions, except that the interpretation of and enforcement of this Article shall be governed by the Federal Arbitration Act. The costs of the winning party and its reasonable attorney’s fees shall be paid by the losing party which shall be designated by the arbitrator. If the arbitrator is unable to designate a losing party, it shall so state and each party shall bear its own costs and attorneys fees.

	
  

	
(v)

	
AWARD. The arbitrator is empowered to award any remedy allowed by law, including money damages, prejudgment interest and attorneys’ fees, and to grant final, complete, interim, or interlocutory relief, including injunctive relief. Notwithstanding the foregoing, punitive or multiple damages may not be awarded. Judgment upon any arbitration award hereunder may be entered and enforced in any court having jurisdiction thereof.

	
  

	
(vi)

	
ARBITRATION FEES. The fees of the arbitrator shall be split equally between the parties.

	
  

	
(d)

	
CONFIDENTIALITY. The ADR proceeding shall be confidential and the arbitrator shall issue appropriate protective orders to safeguard each party’s confidential Information. Except as required by law, no party shall make (or instruct the arbitrator to make) any public announcement with respect to the proceedings or decision of the arbitrator without prior written consent of each other party. The existence of any dispute submitted to ADR, and the award, shall be kept in confidence by the parties and the arbitrator, except as required in connection with the enforcement of such award or as otherwise required by applicable law.

	
6.06.

	
Limitation on Claims. Torneo shall not be entitled to make any claim under this Article VI unless and until the amount of such claim is reasonably believed by Torneo to be $10,000 or more or the aggregate of all claims for misrepresentation or breach of warranty made by the claimant, shall exceed $20,000. A single claim which exceeds $10,000 may be collected from the first dollar owed through the total amount of such claim. Multiple claims each of which is less than $10,000 but which in the aggregate exceed $20,000 may be collected from dollar $10,001 through the total amount of such claim. The aggregate obligation of RBCF to indemnify Torneo under this Agreement shall be limited to the amount of the Purchase Price received by RBCF pursuant to this Agreement.

 

  

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6.07.

	
Settlement of Third Party Claims. Should any claim be made by a person or entity not a party to this Agreement with respect to any matter covered by the indemnities contained in this Article VI, including without limitation, any claim by a governmental body in connection with the audit of any federal, state or local tax return, the party or parties being indemnified (the “Indemnified Party”), on not less than 30 days’ notice to the party making the indemnification (the “Indemnifying Party”), may make settlement (including payment in full) of such claim and such settlement shall be binding upon all parties hereto for the purposes hereof, unless within said 30-day period the Indemnifying Party shall have requested the Indemnified Party to contest such claim at the expense of the Indemnifying Party. In such event, the Indemnified Party shall, upon posting of the bond or alternative security described below, comply with such request and the Indemnifying Party shall have the right to direct the defense of such claim or any litigation based thereon at the Indemnifying Party’s expense through counsel of its own choosing on condition that such counsel agrees to look solely to the Indemnifying Party for payment of its fees. If the Indemnifying Party does retain counsel on such terms, then the Indemnified Party shall not be entitled to indemnification under the next sentence of this paragraph for the cost of any separate counsel it may retain in the matter. In the event the Indemnifying Party shall so request the Indemnified Party to contest such claim, the Indemnifying Party shall first furnish to the Indemnified Party as indemnity against the contested claim a bond in the amount of the third party claim plus the amount of any expenses reasonably likely to be incurred by the Indemnified Party in contesting, defending and litigating the same. In no event shall the Indemnifying Party or its counsel, without the prior written consent of the Indemnified Party, settle or compromise any claim or consent to the entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party a release from all liability in respect of such claim.

	
6.08.

	
Remedies Cumulative.  The remedies provided in this Article VI shall be cumulative and shall not preclude assertion by any party hereto of any other rights or the seeking of and other remedies against the other party hereto.

ARTICLE VII

MISCELLANEOUS PROVISIONS

	
7.01.

	
Amendments, Supplements, Etc. At any time this Agreement may be amended or supplemented by such additional agreements, articles or certificates, as may be determined by the parties hereto to be necessary, desirable or expedient to further the purposes of this Agreement, or to clarify the intention of the parties hereto, or to add to or modify the covenants, terms or conditions hereof or to effect or facilitate any governmental approval or acceptance of this Agreement or to effect or facilitate the filing or recording of this Agreement or the consummation of any of the transactions contemplated hereby. Any such instrument must be in writing and signed by both parties.

 

  

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SUBSIDIARY PURCHASE AGREEMENT

	
7.02.

	
Waiver of Compliance. Any failure of RBCF or Torneo to comply with any obligation, covenant, agreement or condition herein may be expressly waived in writing by RBCF or Torneo, respectively, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

	
  

	
7.03.Expenses; Transfer Taxes, Etc. Whether or not the transaction contemplated by this Agreement shall be consummated, RBCF agrees that all fees and expenses incurred by it in connection with this Agreement shall be borne by RBCF and Torneo agrees that all fees and expenses incurred by it in connection with this Agreement shall be borne by Torneo, including, without limitation as to RBCF or Torneo, all fees of counsel, actuaries and accountants.

	
7.04.

	
Notices. All notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered mail with postage prepaid:

 

	(a)           If to RBCF, to:	Rubicon Financial Incorporated
	 	18872 MacArthur Blvd., First Floor
	 	Irvine, CA  92612
	 	Attention: Chief Executive Officer

                                                                                                                                                                                          

or to such other person or address as RBCF shall furnish to Torneo in writing.

 

	(b)           If to Torneo, to:	Todd Torneo
	 	________________________________
	 	________________________________

                               

or to such other person or address as Torneo shall furnish to RBCF in writing.

	
7.05.

	
Assignment; Merger. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties, except by operation of law.

	
7.06.

	
Governing Law. This Agreement and the legal relations among the parties hereto shall be governed by and construed in accordance with the laws of the State of California without regard.

	
7.07.

	
Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

  

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7.08.

	
Headings. The headings of the Sections and Articles of this Agreement are inserted for convenience only and shall not constitute a part hereof or affect in any way the meaning or interpretation of this Agreement.

	
7.09.

	
Entire Agreement. This Agreement, including the exhibits and schedules hereto and the other documents and certificates delivered pursuant to the terms hereof, set forth the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein, and supersede all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto.

	
7.10.

	
Third Parties. Except as specifically set forth or referred to herein, nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or corporation other than the parties hereto and their successors or assigns, any rights or remedies under or by reason of this Agreement.

	
  

	
7.11.Severability. Should any provision of this Agreement be held by a court or arbitration panel of competent jurisdiction to be enforceable only if modified, such holding shall not affect the validity of the remainder of this Agreement, the balance of which shall continue to be binding upon the parties hereto with any such modification to become a part hereof and treated as though originally set forth in this Agreement. The parties further agree that any such court or arbitration panel is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement, or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law. The parties expressly agree that this Agreement as modified by the court or the arbitration panel shall be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this Agreement be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and if such provision or provisions are not modified as provided above, this Agreement shall be construed as if such invalid, illegal or unenforceable provisions had never been set forth herein.

	
7.12.

	
Counsel. Each party acknowledges that it has been represented by, or had the opportunity to be represented by, independent counsel of its own choice in connection with the negotiations preceding the execution of this Agreement, and the preparation and execution of this Agreement.  Each party acknowledges that no person or entity, including but not limited to a party or agent or attorney of any party, has made any promise, representation or warranty, express or implied, not contained in this Agreement, to induce the other party to execute this Agreement.  Each party acknowledges that it has read this Agreement, accepts and agrees to the provisions it contains, and hereby executes it voluntarily and with full understanding of its consequences.

 

  

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above mentioned.

RBCF:

Rubicon Financial Incorporated,

a Delaware corporation

By: /s/ Joseph Mangiapane, Jr.                                                      

       Joseph Mangiapane, Jr., CEO                                                                           

 

 

RUBICON INSURANCE:

Rubicon Financial Insurance Services, Inc.,

a California corporation

­By: /s/ Joseph Mangiapane, Jr.                                                      

       Joseph Mangiapane, Jr., CEO

       Rubicon Financial Incorporated

       Sole Stockholder of Rubicon Insurance

Torneo:

By: /s/ Todd Torneo                                                                

       Todd Torneo

  

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