Document:

Form of Severance Agreement (Messrs Coggins and Strauss)

 EXHIBIT 10.3 
  
 ACTUATE CORPORATION LETTERHEAD 
  
 [Coggins and Strauss] 
 [Address] 
  
 Dear                     :

  
 We are pleased to inform you that the Compensation Committee
of the Company’s Board of Directors has approved a special severance benefit program for you. The purpose of this letter agreement is to set forth the terms and conditions of your severance benefits and to explain the limitations that will
govern their overall value. 
  
 Your severance package will become
payable should your employment terminate under certain circumstances following the Company’s execution of a definitive agreement to effect a change in ownership or control of the Company. To understand the full scope of your benefits, you
should familiarize yourself with the definitional provisions of Part One of this letter agreement. The benefits comprising your severance package are detailed in Part Two, and the dollar limitation on the overall value of your benefit package and
other applicable restrictions are specified in Part Three. Part Four deals with ancillary matters affecting your severance arrangement. 
  
 PART ONE — DEFINITIONS 
  
 For purposes of this letter agreement, the following definitions will be in effect: 
  
 Average Bonus means the greater of (i) the average of the bonuses paid to you under the
Company’s cash incentive bonus program for the three (3) fiscal years of the Company (or such fewer number of fiscal years during which you were employed with the Company) ended immediately prior to the fiscal year in which the Change of
Control is effected, or (ii) the average of the bonuses paid to you under such program for the three (3) fiscal years of the Company (or such fewer number of fiscal years during which you were employed with the Company) ended immediately
prior to the fiscal year in which your Involuntary Termination occurs. Any bonus payment for a partial year of employment will be annualized before inclusion in your Average Compensation. 
  
 Average Compensation means the average of your W-2 wages from the Company for the five (5) calendar years (or
such fewer number of calendar years of your employment with the Company) completed immediately prior to the calendar year in which the Change in Control is effected. Any W-2 wages for a partial year of employment will be annualized, in accordance
with the frequency which such wages are paid during such partial year, before inclusion in your Average Compensation. 

 Base Salary means the annual rate of base salary in effect for you immediately prior to the Change
in Control or (if greater) the annual rate of base salary in effect at the time of your Involuntary Termination. 
  
 Board means the Company’s Board of Directors. 
  
 Change in Control means: 
  
 (i) the consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization,
provided and only if more than fifty percent (50%) of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who
were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization; 
  
 (ii) the sale, transfer or other disposition of all or substantially all of the Company’s assets; 
  
 (iii) any transaction as a result of which any person becomes
the “beneficial owner” (as defined in Rule 13d-3 of the Securities Exchange Act or 1934, as amended (the “Exchange Act”)), directly or indirectly, of securities of the Company representing at least fifty percent (50%) of the
total voting power represented by the Company’s then outstanding securities; or 
  
 (iv) a change in the composition of the Board such that fewer than two-thirds of the incumbent directors are directors who either
(A) had been directors of the Company on the date twenty-four (24)- months prior to the date of the event that may constitute a Change in Control (the “Original Directors”) or (B) were elected or nominated for election to the
Board with the affirmative vote of at least a majority of the aggregate of the Original Directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved.

  
 For purposes of subparagraph (iii) above, the term
“person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act, but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a parent or a
subsidiary and (ii) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company. 
  

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 A transaction shall not constitute a Change of Control if its sole purpose is to change the state of the
Company’s incorporation or to create a holding company that will be owned in the same proportions by the persons who held the Company’s securities immediately before such transaction. 
  
 Change in Control Severance Benefits means the various payments and
benefits to which you may become entitled under Part Two of this Agreement upon your Involuntary Termination in connection with a Change in Control or upon any earlier termination of your employment by the Company during the Pre-Closing Period other
than a Termination for Cause. Such Change in Control Severance Benefits may include one or more of the following: the accelerated vesting of your Options, a lump sum severance payment and continued health care coverage provided for you and your
spouse and eligible dependents at the Company’s expense. 
  
 Code means the Internal Revenue Code of 1986, as amended. 
  
 Common Stock means the Company’s common stock. 
  
 Company means Actuate Corporation, a Delaware corporation, and any successor corporation, whether or not resulting from a Change in Control. 
  
 Fair Market Value means, with respect to the shares of Common Stock subject to your Options, the closing selling
price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market and published in The Wall Street Journal. If there is no closing selling price
reported for the Common Stock on the date in question, then the Fair Market Value will be the closing selling price on the last preceding date for which such report exists. 
  
 Independent Auditors means the accounting firm serving as the Company’s independent certified public accountants
immediately prior to the Change in Control; provided, however, that in the event such accounting firm also serves as the independent certified public accountants for the corporation or other entity effecting the Change in Control
transaction with the Company or such accounting firm concludes that the services required of it hereunder would adversely affect its independent status under applicable accounting standards or the performance of such services would otherwise be in
contravention of applicable law, then the Independent Auditors shall mean a nationally-recognized public accounting firm mutually acceptable to both you and the Company. 
  
 Involuntary Termination means the termination of your Service which occurs by reason of: 
  
 (i) your involuntary dismissal or discharge by the Company
other than a Termination For Cause, or 
  

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 (ii) your voluntary resignation within one hundred eighty (180) days following
(A) a change in your position with the Company which materially reduces your duties and responsibilities or the level of management to which you report, (B) a reduction in your level of compensation (including base salary, fringe benefits
and target bonus under any corporate-performance based bonus or incentive program) by more than ten percent (10%) or (C) a relocation of your place of employment by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected by the Company without your consent. 
  
 A greater than ten percent (10%) aggregate reduction in your base salary, fringe benefits and target bonus shall not constitute grounds for an Involuntary Termination under clause (ii)(C) above if
substantially all of the other executive officers of the Company are subject to the same aggregate reduction to their base salary, fringe benefits and target bonuses. 
  
 Option means any option granted you to purchase shares of Common Stock under the Plan or other arrangement which is
outstanding at the time of the Change in Control (or, if earlier, upon the Company’s termination of your employment during the Pre-Closing Period ) or upon your Involuntary Termination following such Change in Control. Your Options will be
divided into two (2) separate categories as follows: 
  
 Acquisition-Accelerated Options: any outstanding Option (or installment thereof) which automatically accelerates, pursuant to the acceleration provisions of the agreement evidencing that Option, upon a Change
in Control. 
  
 Severance-Accelerated
Options: any outstanding Option (or installment thereof) which, pursuant to Part Two of this letter agreement, accelerates upon the termination of your employment by the Company during the Pre-Closing Period for any reason other than a
Termination for Cause or upon your Involuntary Termination following the Change in Control. 
  
 Option Parachute Payment means, with respect to any Acquisition-Accelerated Option or any Severance-Accelerated Option, the portion of that Option deemed to be a parachute payment under Code Section 280G
and the Treasury Regulations issued thereunder. The portion of such Option which is categorized as an Option Parachute Payment will be calculated in accordance with the valuation provisions established under Code Section 280G and the applicable
Treasury Regulations. 
  
 Other Parachute Payment means any
payments in the nature of compensation (other than your Option Parachute Payment and any other Change in Control Severance Benefits to which you become entitled under Part Two of this letter agreement) which are made to you in connection with the
Change in Control and which accordingly qualify as parachute payments within the meaning of Code Section 280G(b)(2) and the Treasury Regulations issued thereunder. 
  

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 Parachute Payment means (i) any Change in Control Severance Benefits provided you under Part
Two of this letter agreement which is deemed to constitute a parachute payment within the meaning of Code Section 280G(b)(2) and the Treasury Regulations issued thereunder and (ii) any Option Parachute Payment attributable to your
Acquisition-Accelerated Options. 
  
 Plan means
(i) the Company’s 1998 Equity Incentive Plan, as amended or restated from time to time, and (ii) any other stock incentive plan implemented or established by the Company. 
  
 Pre-Closing Period means the period commencing with the Company’s execution of the definitive agreement for a
Change in Control transaction and ending upon the earliest to occur of (i) the closing of the Change in Control contemplated by such definitive agreement, (ii) the termination of such definitive agreement without the consummation of
the contemplated Change in Control or (iii) December 31, 2007. 
  
 Present Value means the value, determined as of the date of the Change in Control, of any payment in the nature of compensation to which you become entitled in connection with the Change in Control or your
subsequent Involuntary Termination, including (without limitation) the Option Parachute Payment attributable to your Severance-Acceleration Options and the additional Change in Control Severance Benefits to which you become entitled under Part Two
of this letter agreement. The Present Value of each such payment will be determined in accordance with the provisions of Code Section 280G(d)(4), utilizing a discount rate equal to one hundred twenty percent (120%) of the applicable
Federal rate in effect at the time of such determination, compounded semi-annually to the effective date of the Change in Control. 
  
 Termination for Cause means the termination of your employment for any of the following reasons: (i) your conviction of a felony or your
commission of any act of personal dishonesty involving the property or assets of the Company intended to result in your financial enrichment, (ii) your material breach of one or more of your obligations under your Proprietary Information and
Inventions Agreement with the Company or your unauthorized use or disclosure of any material trade secrets or other material confidential information of the Company or any affiliate, (iii) any intentional misconduct on your part which has a
materially adverse effect upon the Company’s business or reputation, (iv) your failure to perform the major duties, functions and responsibilities of your executive position with the Company, (v) your material breach of any of your
fiduciary obligations as an officer of the Company or (vi) your intentional and knowing participation in the preparation or release of false or materially misleading financial statements relating to the Company’s operations and financial
condition or your intentional and knowing 

  

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submission of any false or erroneous certification required of you under the Sarbanes-Oxley Act of 2002 or any securities exchange on which shares of the
Common Stock are at the time listed for trading. However, prior to any termination of your employment for any of the reasons specified in clauses (ii) through (iv), the Company shall give you written notice of the actions or omissions deemed to
constitute the grounds for a Termination for Cause, and you shall have a period of not less than thirty (30) days in which to cure the specified default in performance and thereby remedy the actions or omissions which would otherwise constitute
grounds for a Termination for Cause. 
  
 PART TWO — CHANGE
IN CONTROL BENEFITS 
  
 Should your employment with the
Company terminate by reason of an Involuntary Termination within twelve (12) months after a Change in Control, or should your employment be terminated by the Company during the Pre-Closing Period for any reason other than a Termination for
Cause, then you will become entitled to receive the applicable Change in Control Severance Benefits provided under this Part Two, provided you execute and deliver to the Company a general release (substantially in the form of attached Exhibit A)
which becomes effective under applicable law and pursuant to which you release the Company and its officers, directors, stockholders, employees and agents from any and all claims you may otherwise have with respect to the terms and conditions of
your employment with the Company and the termination of that employment. In no event, however, shall such release cover any claims, causes of action, suits, demands or other obligations or liabilities relating to: 
  
 (a) any payments, benefits or indemnification to which you
are or become entitled pursuant to the provisions of this Agreement (including, without limitation, the severance benefits provided under this Part Two and the continued indemnification coverage under Paragraph 2 of Part Four of this Agreement); and

  
 (b) any claims for workers’ compensation
benefits under any of the Company’s workers’ compensation insurance policy or fund. 
  
 The Change in Control Severance Benefits provided under this Part Two shall be in lieu of any other severance benefits to which you might otherwise become entitled under any other severance plan, program or
arrangement of the Company upon a termination of your employment either during the Pre-Closing Period or within twelve (12) months following a Change in Control. 
  
 1. Accelerated Vesting. 
  
 Each outstanding Option which you hold at the time of your Involuntary Termination or at any earlier termination of your employment by the Company during
the Pre- 

  

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Closing Period other than a Termination for Cause, to the extent that Option is not otherwise exercisable for all the shares of Common Stock or other
securities at the time subject to that Option, will immediately vest and become exercisable for all those option shares and may be exercised for any or all of those shares as fully vested shares. Each such accelerated Option will remain so
exercisable until the earlier of (i) the expiration of the option term or (ii) the post-service exercise period specified in the agreement evidencing your Option. Any Options not exercised prior to the expiration of the applicable
post-service exercise period will terminate and cease to remain exercisable for any of the option shares. 
  
 2. Severance Payment. 
  
 (a) In the event your employment terminates pursuant to an Involuntary Termination within twelve (12) months following a Change in Control, the
Company will make a lump-sum cash severance payment to you as soon as administratively practicable following the date of your Involuntary Termination in an amount equal to one-half (0.5) times the sum of your annual rate of Base Salary and Average
Bonus (the “Severance Payment”). The Severance Payment shall be subject to the Company’s collection of all applicable withholding taxes, and you will only be paid the amount remaining after such withholding taxes have been collected.

  
 (b) In the event your employment is terminated by the Company
during the Pre-Closing Period for any reason other than a Termination for Cause, you will subsequently become entitled to the Severance Payment upon the closing of the Change in Control, provided and only if that Change in Control is in fact
consummated prior to the expiration of the Pre-Closing Period. The Company will make such lump-sum cash Severance Payment to you as soon as administratively practicable following the effective date of the Change in Control. The Severance Payment
shall be subject to the Company’s collection of all applicable withholding taxes, and you will only be paid the amount remaining after such withholding taxes have been collected. In no event, however, will you become entitled to all or any
portion of the Severance Payment if the Change in Control is not consummated prior to the expiration of the Pre-Closing Period. 
  
 3. Continued Health Care Coverage. 
  
 Should you elect under Code Section 4980B to continue health care coverage under the Company’s group health plan for yourself, your spouse and
your eligible dependents following your Involuntary Termination or any earlier termination of your employment by the Company during the Pre-Closing Period other than a Termination for Cause, then the Company shall provide such continued health care
coverage for you and your spouse and other eligible dependents at its sole cost and expense. Such health care coverage at the Company’s expense shall continue until the earliest of (i) the expiration of the six (6)-month period
measured from the date of your Involuntary Termination or any earlier termination of your employment by the Company during the Pre-Closing Period, (ii) the first date you are covered under another 

  

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employer’s heath benefit program which provides substantially the same level of benefits without exclusion for pre-existing medical conditions or
(iii) the date the definitive agreement for the Change in Control is terminated without consummation of that Change in Control prior to the expiration of the Pre-Closing Period. Should the Company’s provision of such continued health care
coverage result in the recognition of taxable income (whether for federal, state or local income tax purposes) by you or your spouse or other eligible dependent, then each of you will be responsible for the payment of the income and employment tax
liability resulting from such coverage, and the Company will not provide any tax gross-up payments to you (or any other person) with respect to such tax liability. 
  
 PART THREE — LIMITATION ON BENEFITS 
  
 1. Benefit Limit. 
  
 The amount of the Change in Control Severance Benefits otherwise due you under Part Two of this Agreement shall be reduced to the extent necessary to
assure that the Present Value of the Parachute Payment attributable to those Change in Control Severance Benefits does not exceed the greater of the following dollar amounts (the “Benefit Limit”): 
  
 - the dollar amount equal to (i) 2.99 times your
Average Annual Compensation less (ii) the aggregate Present Value of the Option Parachute Payment attributable to your Acquisition-Accelerated Options and any Other Parachute Payments to which you may be entitled, or 
  
 - the greatest after-tax amount of Change in Control
Severance Benefits which can be paid to you under Part Two after taking into account any excise tax imposed under Code Section 4999 on those payments, the Option Parachute Payment attributable to your Acquisition-Accelerated Options and any
Other Parachute Payments to which you might be entitled. 
  
 The
Option Parachute Payment attributable to the accelerated vesting of your Acquisition-Accelerated Options at the time of the Change in Control shall also be subject to the Benefit Limit. 
  
 2. Benefit Reduction. 
  
 (a) To the extent the aggregate Present Value, measured as of the Change in Control, of (i) the Option Parachute Payment attributable to the
Acquisition-Accelerated and Severance-Accelerated Options (or installments thereof) plus (ii) the Parachute Payment attributable to your other Change in Control Severance Benefits under Part Two of the Agreement would, when added to the Present
Value of all of your Other Parachute Payments, exceed the Benefit Limit, then the following reductions shall be made to the Change in Control 

  

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Severance Benefits to which you are otherwise entitled under Part Two of this Agreement and your Acquisition-Accelerated Options, to the extent necessary to
assure that such Benefit Limit is not exceeded: 
  
 first, the dollar amount of the Severance Payment to which you would otherwise be entitled shall be reduced, and 
  
 then the number of shares which would otherwise be purchasable under your Acquisition-Accelerated and Severance-Accelerated Options
shall be reduced (based on the amount of the Option Parachute Payment attributable to each such Option) to the extent necessary to eliminate such excess, with the actual Options to be so reduced to be determined by you. 
  
 (b) In the event your employment is terminated by the
Company during the Pre-Closing Period for any reason other than a Termination for Cause, the Benefit Limit shall be calculated in good faith first at the time of such termination, with such calculation to be based upon the probability of the
consummation of the contemplated Change in Control within the Pre-Closing Period, and any benefit reduction required by Paragraph 2 of this Part Three on the basis of such good-faith calculation shall be applied at that time. The Benefit Limit shall
be recalculated in accordance with this Part Three as soon as administratively practicable following the expiration of the Pre-Closing Period. To the extent any Options are reduced and terminated in connection with the initial calculation made at
the time of your termination of employment, those Options will not be subsequently restored in connection with the re-calculation of the Benefit Limit following the expiration of the Pre-Closing Period, even if those terminated Options could have
otherwise fallen within the Benefit Limit as so re-calculated. 
  
 3. Resolution Procedures. 
  
 In the event there
is any disagreement between you and the Company as to whether one or more payments to which you become entitled in connection with the Change in Control or your subsequent Involuntary Termination constitute Parachute Payments, Option Parachute
Payments or Other Parachute Payments or as to the determination of the Present Value thereof, such dispute will be resolved as follows: 
  
 (i) In the event the Treasury Regulations under Code Section 280G (or applicable judicial decisions) specifically address the status
of any such payment or the method of valuation therefor, the characterization afforded to such payment by the Regulations (or such decisions) will, together with the applicable valuation methodology, be controlling. 
  

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 (ii) In the event Treasury Regulations (or applicable judicial decisions) do not address
the status of any payment in dispute, the matter will be submitted for resolution to the Independent Auditors. The resolution reached by the Independent Auditors will be final and controlling; provided, however, that if in the judgment
of the Independent Auditors, the status of the payment in dispute can be resolved through the obtainment of a private letter ruling from the Internal Revenue Service, a formal and proper request for such ruling will be prepared and submitted by the
Independent Auditors, and the determination made by the Internal Revenue Service in the issued ruling will be controlling. All expenses incurred in connection with the retention of the Independent Auditors and (if applicable) the preparation and
submission of the ruling request shall be shared equally by you and the Company. 
  
 (iii) In the event Treasury Regulations (or applicable judicial decisions) do not address the appropriate valuation methodology for any
payment in dispute, the Present Value thereof will, at the Independent Auditor’s election, be determined through an independent third-party appraisal, and the expenses incurred in obtaining such appraisal shall be shared equally by you and the
Company. 
  
 PART FOUR — MISCELLANEOUS 
  
 1. Delayed Commencement of Benefits. Notwithstanding any
provision to the contrary in this Agreement, no Severance Payment or no Company-paid health care coverage to which you otherwise become entitled under Part Two of this Agreement shall be made or provided to you prior to the earlier of
(i) the expiration of the six (6)-month period measured from the date of your “separation from service” with the Company (as such term is defined in Treasury Regulations issued under Code Section 409A) or (ii) the date of
your death, if you are deemed at the time of such separation from service to be a “key employee” within the meaning of that term under Code Section 416(i) and such delayed commencement is otherwise required in order to avoid a
prohibited distribution under Code Section 409A(a)(2). Upon the expiration of the applicable Code Section 409A(a)(2) deferral period, all payments and benefits deferred pursuant to this Paragraph (whether they would have otherwise been
payable in a single sum or in installments in the absence of such deferral) shall be paid or reimbursed to you in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal
payment dates specified for them herein. You shall be entitled to interest on the deferred benefits and payments for the period the commencement of those benefits 

  

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and payments is delayed by reason of Code Section 409A(a)(2), with such interest to accrue at the prime rate in effect from time to time during that
period and to be paid in a lump sum upon the expiration of the deferral period. 
  
 2. Continued Indemnification. The indemnification provisions for Officers and Directors under the Company’s bylaws, the Directors and Officers Liability Insurance Policy (if any) and any
Indemnification Agreement between you and the Company shall (to the maximum extent permitted by law) be extended to you during the period following your resignation or termination of employment for any reason (other than a Termination for Cause),
whether or not in connection with a Change in Control, with respect to all matters, events or transactions occurring or effected during your period of employment with the Company. 
  
 3. No Mitigation Duty. The Company shall not be entitled to set off any of the following amounts against the
Change in Control Severance Benefits to which you may become entitled under Part Two of this Agreement: (i) any amounts which you may subsequently earn through other employment or service following his termination of employment with the Company
or (ii) any amounts which you might have potentially earned in other employment or service had you sought such other employment or service. 
  
 4. Death. Should you die before your receive the full amount of payments and benefits to which you may become entitled under this Agreement,
then the balance of such payments shall be made, on the due dates hereunder had you survived, to the executors or administrators of your estate. Should you die before you exercise all your outstanding Options as accelerated hereunder, then such
Options may be exercised, within the applicable exercise period following your death, by the executors or administrators of your estate or by the persons to whom those Options are transferred pursuant to your will or in accordance wit the laws of
inheritance. In no event, however, may any such Option be exercised after the specified expiration date of the option term. 
  
 5. Successors and Assigns. The provisions of this Agreement shall inure to the benefit of, and shall be binding upon, (i) the Company
and its successors and assigns, including any successor entity by merger, consolidation or transfer of all or substantially all of the Company’s assets (whether or not such transaction constitutes a Change in Control), and (ii) you, the
personal representative of your estate and your heirs and legatees. 
  
 6. General Creditor Status. The benefits to which you may become entitled under Part Two of this Agreement shall be paid, when due, from the Company’s general assets. No trust fund, escrow arrangement or other segregated
account shall be established as a funding vehicle for such payments. Your right (or the right of the executors or administrators of your estate) to receive such benefits shall at all times be that of a general creditor of the Company and shall have
no priority over the claims of other general creditors. 
  

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 7. Amendment and Termination. 
  
 (a) This letter agreement may only be amended by written instrument signed
by you and an authorized officer of the Company. This letter agreement shall remain in effect through December 31, 2007. 
  
 (b) Once a Change in Control has been effected, this letter agreement may not be terminated at any time prior to the expiration of the twelve (12)-month
period following the effective date of that Change of Control, and no subsequent termination of this letter agreement shall adversely affect your right to receive any benefits to which you may have previously become entitled hereunder in connection
with your Involuntary Termination following that Change in Control. 
  
 (c) In the event your employment is terminated by the Company during the Pre-Closing Period for any reason other than a Termination for Cause, then the termination of this letter agreement on December 31, 2007 shall not adversely
affect your right to receive any benefits which previously became due and payable to you, in accordance with the applicable provisions of Part Two, at the time of your pre-January 1, 2008 termination. 
  
 8. Termination for Cause. In the event of your Termination for
Cause or your resignation under circumstances which would otherwise constitute grounds for a Termination for Cause, the Company will only be required to pay you (i) any unpaid compensation earned for services previously rendered through the
date of such termination and (ii) any accrued but unpaid vacation benefits or sick days, and no benefits will be payable to you under Part Two of this letter agreement. 
  
 9. Governing Law/Other Agreements. This letter agreement is to be construed and interpreted under the laws of
the State of California. This letter agreement supersedes all prior agreements between you and the Company relating to the subject of severance benefits payable upon a change in control or ownership of the Company, and you will not be entitled to
any other severance benefits upon such a termination other than those that are provided in this letter agreement. 
  
 10. At Will Employment. Nothing in this letter agreement is intended to provide you with any right to continue in the employ of the Company
(or any subsidiary) for any period of specific duration or interfere with or otherwise restrict in any way your rights or the rights of the Company (or any subsidiary), which rights are hereby expressly reserved by each, to terminate your employment
at any time and for any reason, with or without cause. 
  

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 Please indicate your agreement with the foregoing terms and conditions of your change in control
severance package by signing the Acceptance section of the enclosed copy of this letter and returning it to the Company. 
  

			
	Very truly yours,
	
	ACTUATE CORPORATION
		
	By:	 	  

	 	 	Kenneth E. Marshall
	Title:	 	Director

  
 ACCEPTANCE

  
 I hereby agree to all the terms and provisions of the
foregoing letter agreement governing the special benefits to which I may become entitled in the event my employment should terminate under certain prescribed circumstances following a substantial change in control or ownership of the Company.

  

			
	Signature:	 	  

	Dated:	 	  

	Address	 	  

	 	 	  

  

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 EXHIBIT A 
  

GENERAL RELEASE 

 RELEASE AND WAIVER OF CLAIMS 
  
 In consideration of the severance payments and other benefits to which I have become entitled, pursuant to that certain
letter agreement between Actuate Corporation, a Delaware corporation (the “Company”), and myself dated     , 2005 (the “Severance Agreement), in connection with the termination of my employment on this date,
I,                     , hereby furnish the Company with the following release and waiver (“Release and Waiver”). 
  
 I hereby release and forever discharge the Company, its officers, directors,
agents, employees, stockholders, successors, assigns and affiliates from any and all claims, liabilities, demands, causes of action, costs, expenses, attorney fees, damages, indemnities and obligations of every kind and nature, in law, equity or
otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising from or relating to my employment with the Company and the termination of that employment, including (without limitation) claims of wrongful discharge,
emotional distress, defamation, fraud, breach of contract, breach of the covenant of good faith and fair dealing, discrimination claims based on sex, age, race, national origin, disability or any other basis under Title VII of the Civil Rights Act
of 1964, as amended, the California Fair Employment and Housing Act, the Federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”), the Americans with Disability Act, contract claims, tort claims, and wage or benefit
claims, including (without limitation) claims for salary, bonuses, commissions, stock grants, stock options, vacation pay, fringe benefits, severance pay or any other form of compensation (other than the payments and benefits to which I am entitled
under the Severance Agreement, my vested rights under the Company’s Section 401(k) Plan and any worker’s compensation benefits under any Company workers’ compensation insurance policy or fund). 
  
 In releasing claims unknown to me at present, I am waiving all rights and
benefits under Section 1542 of the California Civil Code, and any law or legal principle of similar effect in any jurisdiction: “A general release does not extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.” 
  
 This Release and Waiver does not pertain to any claims which may subsequently arise in connection with the Company’s default in any of its payment
obligations under the Severance Agreement or its indemnification obligations to me thereunder. 
  
 I acknowledge that, among other rights subject to his Release and Waiver, I am hereby waiving and releasing any rights I may have under ADEA, that this release and waiver is knowing and voluntary, and that the
consideration given for this release and waiver is in addition to anything of value to which I was already entitled as an executive of the Company. I further acknowledge that I have been advised, as required by the Older Workers Benefit Protection
Act, that: (a) the release and waiver granted herein does not relate to claims which may arise after this release and waiver is executed; (b) I have the right to consult with an attorney prior to executing this release and waiver (although
I may choose voluntarily not to do so); and if I am 

 
over 40 years old upon execution of this (c) I have twenty-one (21) days from the date of termination of my employment with the Company in which to
consider this release and waiver (although I may choose voluntarily to execute this release and waiver earlier); (d) I have seven (7) days following the execution of this release and waiver to revoke my consent to this release and waiver;
and (e) this release and waiver shall not be effective until the seven (7)-day revocation period has expired. 
  

					
	 Date:
                        
	 	

	 	 	 	 	EXECUTIVE

  

 Page 3Form of Securities Purchase Option to be granted to the Representative

 Exhibit 4.3 
  

THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN
PROVIDED. 
  
 VOID AFTER 5:00 P.M. EASTERN TIME,
                            , 2010. 
  
 PURCHASE OPTION 
  
 For the Purchase of up to 
  
 280,000 Shares of Common Stock 
  
 and/or 
  
 280,000 Common Stock Purchase Warrants 
  
 of 
  
 AMERICAN TELECOM SERVICES INC. 
 (A Delaware Corporation) 
  
 1. Purchase Option. 
  
 THIS CERTIFIES THAT, in consideration of $100.00 duly paid by or on behalf of
                                        
(“Holder”), as registered owner of this Purchase Option, to American Telecom Services Inc. (“Company”), Holder is entitled, at any time or from time to time at or after
                        , 200   (“Commencement Date”), and at or before 5:00 p.m., Eastern
Time, October 13, 2009 (“Expiration Date”), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to Two Hundred Eighty Thousand (280,000) shares of Common Stock of the Company, $.001 par value
(“Common Stock”) and/or Two Hundred Eighty Thousand (280,000) Redeemable Common Stock Purchase Warrants, each to purchase one share of Common Stock (“Warrants”). Each Warrant is the same as the Redeemable Common Stock
Purchase Warrants (“Public Warrants”) that have been registered by the Company for sale to the public pursuant to the Registration Statement on Form S-1
(No.333-            ) (“Registration Statement”), which was declared effective on
                        , 200   (“Effective Date”). The shares of Common Stock and Warrants are
sometimes collectively referred to herein as the “Securities.” The Holder can purchase, upon exercise of the Purchase Option, either shares of Common Stock or Warrants or both. If the Expiration Date is a day on which banking institutions
are authorized by law to close, then this Purchase Option may be exercised on the next succeeding day that is not such a day in accordance with the terms herein. This Purchase Option is initially exercisable at $5.555 per share of Common Stock and
$0.055 per Warrant purchased; provided, however, that upon the occurrence of any of the events 

 
specified in Section 6 hereof, the rights granted by this Purchase Option, including the exercise price and the number of shares of Common Stock and
Warrants to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price” shall mean the initial exercise price or the adjusted exercise price, depending on the context of a share of Common Stock or a
Warrant. 
  
 2. Exercise. 
  
 2.1 Exercise Form. In order to exercise this Purchase Option, the
exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Option and payment of the Exercise Price in cash or by certified check or official bank check for the Securities being
purchased. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Purchase Option shall become and be void without further force or effect, and all rights represented
hereby shall cease and expire. 
  
 2.2 Legend. Each
certificate for Securities purchased under this Purchase Option shall bear a legend as follows (as a substantially similar legend) unless such Securities have been registered under the Securities Act of 1933, as amended: 
  
 “The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (“Act”) or applicable state law. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or
pursuant to an exemption from registration under the Act and applicable state law.” 
  
 2.3 Conversion Right. 
  
 2.3.1 Determination of Amount. In lieu of the payment of the Exercise Price in the manner required by Section 2.1, the Holder shall have the right (but not the obligation) to convert any exercisable but unexercised portion of
this Purchase Option into either Common Stock or Warrants (“Conversion Right”) as provided in this Section 2 below. 
  
 2.3.2 Common Stock. Upon exercise of the Conversion Right, the Company shall deliver to the Holder (without payment by the Holder of any of the
Exercise Price in cash) that number of shares of Common Stock equal to the quotient obtained by dividing (x) the “Stock Value” (as defined below), at the close of trading on the next to last trading day immediately preceding the
exercise of the Conversion Right, of the portion of the Purchase Option being converted by (y) the Market Price at that same time. The “Stock Value” of the portion of the Purchase Option being converted shall equal the remainder
derived from subtracting (a) the Exercise Price multiplied by the number of shares of Common Stock underlying that portion of the Purchase Option being converted from (b) the Market Price of the Common Stock multiplied 

  

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by the number of shares of Common Stock underlying that portion of the Purchase Option being converted. As used in this Section 2.3.2, the term
“Market Price” at any date shall be deemed to be the average of the last reported sale price of the Common Stock for the three consecutive trading days ending on such date, as officially reported by the principal securities exchange on
which the Common Stock is listed or admitted to trading, or, if the Common Stock is not listed or admitted to trading on any national securities exchange or if any such exchange on which the Common Stock is listed is not its principal trading
market, the last reported sale price for the three consecutive trading days ending on such date as furnished by the NASD through the Nasdaq National Market or SmallCap Market, or, if applicable, the OTC Bulletin Board, or if the Common Stock is not
listed or admitted to trading on any of the foregoing markets, or similar organization, as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it. 
  
 2.3.3 Mechanics of Conversion. The Conversion Right may be exercised
by the Holder on any business day on or after the Commencement Date and not later than the Expiration Date by delivering the Purchase Option with a duly executed exercise form attached hereto with the conversion right section completed to the
Company, exercising the Conversion Right and specifying the total number of shares of Common Stock and/or Warrants that the Holder will purchase pursuant to such Conversion Right. 
  
 3. Transfer. 
  
 3.1 General Restrictions. The registered Holder of this Purchase Option, by its acceptance hereof, agrees that it will not sell, transfer or assign
or hypothecate this Purchase Option prior to the Commencement Date to anyone other than (i) an officer or partner of such Holder, (ii) an officer of HCFP/Brenner Securities LLC (“Underwriter”) or an officer or partner of any
Selected Dealer or member of the underwriting syndicate in connection with the Company’s public offering with respect to which this Purchase Option has been issued, or (iii) any Selected Dealer or member of the underwriting syndicate. On
and after the Commencement Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached
hereto duly executed and completed, together with the Purchase Option and payment of all transfer taxes, if any, payable in connection therewith. The Company shall immediately transfer this Purchase Option on the books of the Company and shall
execute and deliver a new Purchase Option or Purchase Options of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of shares of Common Stock and Warrants purchasable hereunder or such portion
of such number as shall be contemplated by any such assignment. 
  
 3.2 Restrictions Imposed by the Act. This Purchase Option and the Securities underlying this Purchase Option shall not be transferred unless and until (i) the Company has received the opinion of counsel for the Holder that this
Purchase Option or the Securities, as the case may be, may be transferred pursuant to an exemption from registration under the Act and 

  

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applicable state law, the availability of which is established to the reasonable satisfaction of the Company (the Company hereby agreeing that an opinion of
Graubard Miller in form and substance reasonably satisfactory to the Company or its counsel shall be deemed satisfactory evidence of the availability of an exemption), or (ii) a registration statement relating to such Purchase Option or
Securities, as the case may be, has been filed by the Company and declared effective by the Securities and Exchange Commission and compliance with applicable state law. 
  
 4. New Purchase Options to be Issued. 
  
 4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Option may be exercised or assigned in whole
or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Option for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or
transfer tax, the Company shall cause to be delivered to the Holder without charge a new Purchase Option of like tenor to this Purchase Option in the name of the Holder evidencing the right of the Holder to purchase the aggregate number of shares of
Common Stock and Warrants purchasable hereunder as to which this Purchase Option has not been exercised or assigned. 
  
 4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase
Option and of reasonably satisfactory indemnification, the Company shall execute and deliver a new Purchase Option of like tenor and date. Any such new Purchase Option executed and delivered as a result of such loss, theft, mutilation or destruction
shall constitute a substitute contractual obligation on the part of the Company. 
  
 5. Registration Rights. 
  
 5.1 Demand
Registration. 
  
 5.1.1 Grant of Right. The Company,
upon written demand (“Initial Demand Notice”) of the Holder(s) of at least 51% of the Purchase Options and/or the underlying shares of Common Stock and Warrants (“Majority Holders”), agrees to register on one occasion, all of the
Securities underlying such Purchase Options, including the Common Stock, the Warrants and the Common Stock underlying the Warrants (collectively the “Registrable Securities”). On such occasion, the Company will file a registration
statement covering the Registrable Securities within sixty (60) days after receipt of the Initial Demand Notice and use its reasonable best efforts to have the registration statement declared effective promptly thereafter. If the Company fails
to comply with the provisions of this Section 5.1.1, the Company shall, in addition to any other equitable or other relief available to the Holder(s), be liable for any and all incidental, special and consequential damages sustained by the
Holder(s). The demand for registration may be made at any time during a period of four years beginning one year from the Effective Date. The Company covenants and agrees to give written notice of its receipt of any Initial Demand 

  

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Notice by any Holder(s) to all other registered Holders of the Purchase Options and/or the Registrable Securities within ten days from the date of the
receipt of any such Initial Demand Notice. 
  
 5.1.2 Terms.
The Company shall bear all fees and expenses attendant to registering the Registrable Securities, but the Holders shall pay any and all underwriting and brokerage commissions discounts and fees, the expenses of any legal counsel selected by the
Holders to represent them in connection with the sale of the Registrable Securities. The Company agrees to use its reasonable best efforts to cause the filing required herein to become effective promptly and to qualify or register the Registrable
Securities in such States as are reasonably requested by the Holder(s); provided, however, that in no event shall the Company be required to register the Registrable Securities in a State in which such registration would cause (i) the Company
to be obligated to register or license to do business in such State or submit to general service of process in such State, or (ii) the principal stockholders of the Company to be obligated to escrow their shares of capital stock of the Company.
The Company shall cause any registration statement filed pursuant to the demand right granted under Section 5.1.1 to remain effective for a period of at least twelve consecutive months from the date that the Holders of the Registrable
Securities covered by such registration statement are first given the opportunity to sell all of such securities. 
  
 5.2 “Piggy-Back” Registration. 
  
 5.2.1 Grant of Right. In addition to the demand right of registration, the Holders of the Purchase Options shall have the right for a period of six
(6) years commencing one year from the Effective Date, to include the Registrable Securities as part of any other registration of securities filed by the Company (other than in connection with a transaction contemplated by Rule 145(a)
promulgated under the Act or pursuant to Form S-8 or any equivalent form); provided, however, that if, in the determination of the Company’s managing underwriter or underwriters, if any, for such offering, the inclusion of the Registrable
Securities, when added to the securities being registered by the Company or the selling stockholder(s), will exceed the maximum amount of the Company’s securities which can be marketed (i) at a price reasonably related to their then
current market value, or (ii) without adversely affecting the entire offering, the Company shall not be obligated to negotiate such Registrable Securities. 
  

5.2.2 Terms. The Company shall bear all fees and expenses attendant to registering the Registrable Securities, but the Holders shall pay any and
all underwriting and brokerage commissions, discounts and fees and the expenses of any legal counsel and other professionals selected by the Holders to represent them in connection with the sale of the Registrable Securities. In the event of such a
proposed registration, the Company shall furnish the then Holders of outstanding Registrable Securities with not less than ten (10) days written notice prior to the proposed date of filing of such registration statement. Such notice to the
Holders shall continue to be given for each registration statement filed by the Company until such time as the Holder has sold all of the Registrable Securities. The holders of the Registrable 

  

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Securities shall exercise the “piggy-back” rights provided for herein by giving written notice, within ten (10) days of the receipt of the
Company’s notice of its intention to file a registration statement. 
  
 5.3 General Terms. 
  
 5.3.1 Indemnification. The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of
Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses
reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement but only to the same extent and
with the same effect as the provisions pursuant to which the Company has agreed to indemnify the Underwriter contained in Section 5 of the Underwriting Agreement between the Underwriter and the Company, dated the Effective Date (but not with
respect to information furnished (or not furnished in the case of an omission) by the Holders. The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not
jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including all reasonable attorneys’ fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to
which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished (or not furnished in the case of an omission or alleged omission) by or on behalf of such Holders, or their successors or assigns, in
writing, for specific inclusion in such registration statement to the same extent and with the same effect as the provisions contained in Section 5 of the Underwriting Agreement pursuant to which the Underwriter has agreed to indemnify the
Company. 
  
 5.3.2 Exercise of Warrants. Nothing contained
in this Purchase Option shall be construed as requiring the Holder(s) to exercise their Purchase Options or Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof. 
  
 5.3.3 Documents Delivered to Holders. Subject to the execution of
appropriate confidentiality agreements, the Company shall deliver promptly to each Holder participating in the offering requesting the correspondence and memoranda described below and to the managing underwriter copies of all correspondence between
the Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to the registration statement and permit each Holder and underwriter to do such investigation, upon
reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of the National Association of Securities Dealers,
Inc. (“NASD”). Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, 

  

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all to such reasonable extent and at such reasonable times as any such Holder shall reasonably request, provided that all such persons sign a confidentiality
agreement. 
  
 5.3.4 Documents to be Delivered by
Holder(s). Each of the Holder(s) participating in any of the foregoing offerings shall furnish to the Company a completed and executed questionnaire provided by the Company requesting information customarily sought of selling securityholders as
a condition to the inclusion of such Holder’s Registrable Securities in any registration statement. 
  
 6. Adjustments. 
  
 6.1
Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of shares of Common Stock underlying the Purchase Option and underlying the Warrants underlying the Purchase Option shall be subject to adjustment from
time to time as hereinafter set forth: 
  
 6.1.1 Stock
Dividends - Recapitalization, Reclassification, Split-Ups. If after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of
Common Stock or by a split-up, recapitalization or reclassification of shares of Common Stock or other similar event, then, on the effective date thereof, the number of shares of Common Stock issuable on exercise of the Purchase Option and the
Warrants underlying the Purchase Option shall be increased in proportion to such increase in outstanding shares; provided, however, that nothing in this Section 6.1 is intended to provide for an adjustment with respect to the Warrants beyond
that provided for in the Warrant Agreement between the Company and Continental Stock Transfer & Trust Company. For example, if the Company declares a two-for-one stock dividend and at the time of such dividend the Purchase Option is for the
purchase of 1,000 shares of Common Stock at $5.505 per share and 1,000 Warrants at $0.055 per Warrant (each Warrant exercisable for $5.05 per share), upon effectiveness of the dividend, the Purchase Option will be adjusted (disregarding for purposes
of this example that adjustments shall be rounded to the nearest cent, as provided in Section 6.1.3) to allow for the purchase of 2,000 shares at $2.7525 per share and 2,000 Warrants at $0.0275 (each Warrant exercisable for $2.525 per share).

  
 6.1.2 Aggregation of Shares. If after the date hereof,
and subject to the provisions of Section 6.3, the number of outstanding shares of Common Stock is decreased by a consolidation, combination or reclassification of shares of Common Stock or other similar event, then, upon the effective date
thereof, the number of shares of Common Stock issuable on exercise of the Purchase Option and the Warrants underlying the Purchase Option shall be decreased in proportion to such decrease in outstanding shares. 
  
 6.1.3 Adjustments in Exercise Price. Whenever the number of shares of
Common Stock purchasable upon the exercise of this Purchase Option is adjusted, as provided in this Section 6.1, the Exercise Price shall be adjusted (to the nearest cent) by multiplying such 

  

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Exercise Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable
upon the exercise of this Purchase Option immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter. If it is determined that such Exercise Price
and number of shares of Common Stock must be adjusted, then the Exercise Price of the Purchase Option with respect to the underlying Warrants and the number of Warrants purchasable hereunder shall also be similarly adjusted. 
  
 6.1.4 Replacement of Securities upon Reorganization, etc. In case of
any reclassification or reorganization of the outstanding shares of Common Stock other than a change covered by Section 6.1.1 hereof or which solely affects the par value of such shares of Common Stock, or in the case of any merger or
consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification or reorganization of the outstanding shares of
Common Stock), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase
Option shall have the right thereafter (until the expiration of the right of exercise of this Purchase Option) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and
amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or other transfer, by a Holder of the number of
shares of Common Stock of the Company obtainable upon exercise of this Purchase Option immediately prior to such event; and if any reclassification also results in a change in shares of Common Stock covered by Section 6.1.1, then such
adjustment shall be made pursuant to Sections 6.1.1, 6.1.3 and this Section 6.1.4. The provisions of this Section 6.1.4 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other
transfers. 
  
 6.1.5 Changes in Form of Purchase Option.
This form of Purchase Option need not be changed because of any change pursuant to this Section, and Purchase Options issued after such change may state the same Exercise Price and the same number of shares of Common Stock and Warrants as are stated
in the Purchase Options initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Options reflecting a required or permissive change shall not be deemed to waive any rights to a prior adjustment or the
computation thereof. 
  
 6.2 [Intentionally Omitted] 

 
 6.3 Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock or Warrants upon the exercise or transfer of the Purchase Option, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the
intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down to the nearest whole number of Warrants, shares of Common Stock or other securities, properties or rights. 
  

 8 

 7. Reservation and Listing. The Company shall at all times reserve and keep available out of its authorized shares
of Common Stock, solely for the purpose of issuance upon exercise of the Purchase Options or the Warrants, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Purchase Options and payment of the Exercise Price therefor, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable
and not subject to preemptive rights of any stockholder. The Company further covenants and agrees that upon exercise of the Warrants underlying the Purchase Options and payment of the respective Warrant exercise price therefor, all shares of Common
Stock and other securities issuable upon such exercises shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any stockholder. As long as the Purchase Options shall be outstanding, the Company shall
use its reasonable best efforts to cause all (i) shares of Common Stock issuable upon exercise of the Purchase Options and the Warrants, and (ii) the Warrants underlying the Purchase Options to be listed (subject to official notice of
issuance) on all securities exchanges (or, if applicable on Nasdaq) on which the Common Stock or the Public Warrants issued to the public in connection herewith are then listed and/or quoted. 
  
 8. Certain Notice Requirements. 
  
 8.1 Holder’s Right to Receive Notice. Nothing herein shall be
construed as conferring upon the Holders the right to vote or consent or to receive notice as a stockholder for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company. If, however, at any
time prior to the expiration of the Purchase Options and their exercise, any of the events described in Section 8.2 shall occur, then, in one or more of said events, the Company shall give written notice of such event at least ten
(10) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or
entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be. 
  
 8.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, or (ii) the Company shall
offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the 

  

 9 

 
Company, or any option, right or warrant to subscribe therefor, or (iii) a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed. 
  
 8.3 Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to
Section 6 hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall describe the event causing the change and the method of calculating same and shall be certified as being true and accurate
by the Company’s President and Chief Financial Officer. 
  
 8.4 Transmittal of Notices. All notices, requests, consents and other communications under this Purchase Option shall be in writing and shall be deemed to have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgement of receipt to the party to which notice is given, or on the fifth day after mailing if mailed to the party to whom notice is to be given, by registered or certified mail, return receipt requested, postage
prepaid and properly addressed as follows: (i) if to the registered Holder of the Purchase Option, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to its principal executive office.

  
 9. Miscellaneous. 
  
 9.1 Amendments. The Company and the Underwriter may from time to time
supplement or amend this Purchase Option without the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or
to make any other provisions in regard to matters or questions arising hereunder which the Company and the Underwriter may deem necessary or desirable and which the Company and the Underwriter deem shall not adversely affect the interest of the
Holders. All other modifications or amendments shall require the written consent of the party against whom enforcement of the modification or amendment is sought. 
  
 9.2 Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in
any way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Option. 
  
 9.3 Entire Agreement. This Purchase Option (together with the other agreements and documents being delivered pursuant to or in connection with this
Purchase Option) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.

  
 9.4 Binding Effect. This Purchase Option shall inure
solely to the benefit of and shall be binding upon, the Holder and the Company and their respective successors, legal 

  

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representatives and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or
by virtue of this Purchase Option or any provisions herein contained. 
  
 9.5 Governing Law; Submission to Jurisdiction. This Purchase Option shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws. The Company hereby
agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Option shall be brought and enforced in the courts of the State of New York or of the United States of America for the Southern District
of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to
be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder, by acceptance hereof, agree that the prevailing party(ies) in any such action shall be entitled to recover from the
other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. 
  
 9.6 Waiver, Etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this
Purchase Option shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Option or any provision hereof or the right of the Company or any Holder to thereafter enforce each and
every provision of this Purchase Option. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Option shall be effective unless set forth in a written instrument executed by the party or parties against
whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment. 
  

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 IN WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by its duly authorized
officer as of the      day of                         , 200  . 
  

			
	AMERICAN TELECOM SERVICES INC.
		
	By:	 	  

	 	 	Bruce Hahn
	 	 	Chief Executive Officer

  

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 Form to be used to exercise Purchase Option: 
  
 American Telecom Services Inc. 
  
 Date:
                        , 200   
  
 The undersigned hereby elects irrevocably to exercise the within Purchase Option and to purchase
                     shares of Common Stock and/or Warrants to purchase shares of Common Stock of American Telecom Services Inc. and
hereby makes payment of $             (at the rate of $             per share of Common Stock and $ per
Warrant) in payment of the Exercise Price pursuant thereto. Please issue the Common Stock and Warrants as to which this Purchase Option is exercised in accordance with the instructions given below. 
  
 or 
  
 The undersigned hereby elects irrevocably to exercise the within Purchase Option and to purchase
                     shares of Common Stock and/or Warrants to purchase
                     shares of Common Stock of American Telecom Services Inc. by surrender of the unexercised portion of the within Purchase
Option (with a “Stock Value” of $             based on a “Market Price” of $             and a
“Warrant Value” of                      based on a “Market Price” of
$            ). Please issue the Common Stock and Warrants as to which this Purchase Option is exercised in accordance with the instructions given below. 
  

	
	  

	Signature

  
 NOTICE: The
signature to this form must correspond with the name as written upon the face of the within Purchase Option in every particular without alteration or enlargement or any change whatsoever. 
  
 INSTRUCTIONS FOR REGISTRATION OF SECURITIES 
  

			
	Name	 	  

	 	 	(Print in Block Letters)
	Address	 	  

  

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 Form to be used to assign Purchase Option: 
  
 ASSIGNMENT 
  
 (To be executed by the registered Holder to effect a transfer of the within
Purchase Option): 
  
 FOR VALUE
RECEIVED,                                      
   does hereby sell, assign and transfer unto                              the right to
purchase                      shares of Common Stock and/or Warrants to purchase
                     shares of Common Stock of American Telecom Services Inc. (“Company”) evidenced by the within Purchase Option
and does hereby authorize the Company to transfer such right on the books of the Company. 
  
 Dated:                        , 200   

	
	
	  

	 Signature

  

	
	
	  

	Signature Guaranteed

  
 NOTICE: The
signature to this form must correspond with the name as written upon the face of the within Purchase Option in every particular without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank,
or by a trust company or by a firm having membership on a registered national securities exchange. 
  

 14

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