ADVANCED MATERIALS GROUP INC, S-8, 1997-10-29

ADVANCED MATERIALS GROUP INC
S-8, 1997-10-29
PLASTICS FOAM PRODUCTS

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As filed with the Securities and Exchange Commission on October 29, 1997
Registration No. _________

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------

FORM S-8

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

ADVANCED MATERIALS GROUP, INC.
------------------------------
(Exact Name of Registrant as Specified in Its Charter)

NEVADA
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(State or Other Jurisdiction of Incorporation or Organization)

33-0215295
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(I.R.S. Employer Identification No.)

20211 S. SUSANA ROAD, RANCHO DOMINGUEZ, CALIFORNIA 90221
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(Address of Principal Executive Offices) (Zip Code)

1993 STOCK OPTION PLAN
------------------------
(Full title of the plan)

J. Douglas Graven, Advanced Materials Group
20211 S. SUSANA ROAD, RANCHO DOMINGUEZ, CALIFORNIA 90221
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(Name and Address of Agent For Service)

(310) 537-5444
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(Telephone Number, Including Area Code, of Agent For Service)

CALCULATION OF REGISTRATION FEE
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- --------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
To Be To Be Price per Offering Registration
Registered Registered(1) Share(2) Price(2) Fee(2)
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Common Stock,
$.001 par value 1,250,000 shares $4.56 $5,700,000 $1,728
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(1) The number of shares being registered is the maximum aggregate number of
shares presently issuable under the Plan. The registration statement also
includes an indeterminable number of additional shares that may become
issuable under the 1993 Stock Option Plan pursuant to anti-dilution
provisions.

(2) Computed pursuant to Rule 457(h) on the basis of the average of the bid and
asked price of the Common Stock on October 24, 1997.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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EXPLANATORY NOTE

This Registration Statement has been prepared in accordance with the
requirements of Form S-8 under the Securities Act of 1933, as amended (the
"Act") to register shares of common stock, $.001 par value ("Common Stock") of
Advanced Materials Group, Inc., issuable pursuant to the Registrant's 1993 Stock
Option Plan (the "Plan).

PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

Pursuant to Rule 428(b)(1) under the Act, an information statement
containing the information specified in Part I of this Form S-8 (an "Information
Statement") will be distributed to participants under the Plan. Each
Information Statement, taken together with the documents incorporated by
reference herein pursuant to Item 3 of Part II below, constitutes a prospectus
meeting Section 10(a) of the Act pursuant to Rule 428(a)(1) under the Act, and
each Information Statement is hereby incorporated by reference in this
Registration Statement.

Under cover of this Form S-8 is a reoffer prospectus prepared in accordance
with Part I of Form S-3 under the Act (the "Reoffer Prospectus"). The Reoffer
Prospectus may be utilized for reofferings and resales of up to
1,250,000 shares of Common Stock acquired by selling stockholders through
participation in the Plan.

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REOFFER PROSPECTUS

ADVANCED MATERIALS GROUP, INC.
20211 S. SUSANA ROAD
RANCHO DOMINGUEZ, CALIFORNIA 90221
(310) 537-5444

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1,250,000 SHARES OF COMMON STOCK

----------------------------------

The shares of Common Stock of Advanced Materials Group, Inc. ("AMG" or the
"Company") offered hereby (the "Shares") will be sold from time to time by the
stockholders described herein (the "Selling Stockholders") in transactions in
the national over-the-counter market or in negotiated transactions or otherwise
at prices prevailing at the time of the sale. The Company will not receive any
of the proceeds from such sales. The expenses incurred in registering the
Shares will be paid by the Company.

The Shares which are the subject of this Prospectus have been or may be
acquired by certain officers, directors and employees of the Company and
independent contractors and consultants who perform services for the Company
pursuant to the Company's 1993 Stock Option Plan and are or will be "restricted
securities" under the Securities Act of 1933, as amended (the "Act"), prior to
their sale hereunder. This Prospectus has been prepared for the purpose of
registering the Shares under the Act to allow for future sales by the Selling
Stockholders to the public without restriction. To the knowledge of the
Company, the Selling Stockholders have made no arrangement with any brokerage
firm for the sale of the Shares. The Selling Stockholders may be deemed to be
"underwriters" within the meaning of the Act. Any commissions received by a
broker or dealer in connection with resales of the Shares may be deemed to be
underwriting commissions or discounts under the Act.

Brokers or dealers effecting transactions in the Shares should confirm the
registration of the Shares under the securities laws of the states in which such
transactions occur or the existence of an exemption from such registration, or
should cause such registration to occur in connection with any offer or sale of
the Shares.

The Common Stock of the Company is traded in the over-the-counter market
and quoted on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), under the NASDAQ symbol "ADMG". The bid and asked prices for
the Common Stock on October 24, 1997, as reported on NASDAQ were $4 3/8 and
$4 3/4 per share, respectively.

THE COMMON STOCK OFFERED HEREBY IS HIGHLY SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS."

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

----------------------------------

The date of this Prospectus is October 29, 1997

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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SHARES
TO WHICH IT RELATES OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

TABLE OF CONTENTS

Available Information . . . . . . . . . . . . . . I-4
The Company . . . . . . . . . . . . . . . . . . . I-5
Risk Factors. . . . . . . . . . . . . . . . . . . I-6
Use of Proceeds . . . . . . . . . . . . . . . . . I-10
Selling Stockholders. . . . . . . . . . . . . . . I-10
Plan of Distribution. . . . . . . . . . . . . . . I-11
Description of Capital Stock. . . . . . . . . . . I-12
Legal Matters and Interest of Named
Counsel . . . . . . . . . . . . . . . . . . . . I-12
Experts . . . . . . . . . . . . . . . . . . . . . I-13
Incorporation of Certain Documents
by Reference. . . . . . . . . . . . . . . . . . I-13
Other Matters . . . . . . . . . . . . . . . . . . I-13

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934 (the "1934 Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's regional offices at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Northwest Atrium
Building, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, the Commission maintains a Web site, located at
http://www.sec.gov, that contains reports, proxy and information statements and
other information regarding issuers, including the Company, that file
electronically.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in or incorporated by reference into this Prospectus
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general business conditions,
including a worsening economy which might slow the overall demand for the
Company's products; increased inflationary pressures which might lead to
increasing prices for raw materials, labor, and increases of interest costs
based on the Company's borrowing activities; competitive factors, including the
entry of new competitors into the marketplace and/or heightened competition from
existing competitors; and the introduction of new products or technologies by
customers or competitors; under utilization of the Company's factories and
plants, or of any new plants; concentrations of sales in markets and customers;
failure to obtain new customers, retain customers or volume reductions by
current customers; concentrations of raw material suppliers, including
difficulties or delays in obtaining raw materials; inability to execute
marketing and sales plans, including price increases; failure to attract and
retain R&D/engineering staffing to support sales efforts; inability to develop
cost effective means for timely production of new product orders in required
quantities; delays or cancellations of orders; timing of significant orders, and
introduction of new products; short-term fluctuations in margins due to yields
and efficiencies; loss of executive management or other key employees; changes
in financing amount, availability or cost; the effects of changes in costs and
availability of insurance coverage; the effects of changes in compensation or
benefit plans; adoptions of new, or changes in, accounting policies and
practices and the application of such policies and practices; adverse results in
significant litigation matters; and other factors referenced in the Prospectus.

THE COMPANY

GENERAL

The Company, through its subsidiaries and division, develops, manufactures
and markets a wide variety of industrial products. The Company's principal
subsidiary, Advanced Materials, Inc. (formerly known as Wilshire Advanced
Materials, Inc.) ("AM"), is the successor to a forty-four year old business that
converts specialty materials including foams, foils, films and adhesive
composites into components and finished products such as printer cartridge
inserts and inking felts, disk drive gaskets, automobile air conditioning
insulators, water and dust seals, surgical pads and applicators for the medical,
electronics, automotive and consumer products markets. The Company's Condor
Utility Products, Inc. ("Condor") subsidiary produces specialized systems for
mixing and dispensing multi-component chemicals which, when combined, form
sealants which are sold to end-users, chemical manufacturers and repackagers for
use in the telecommunications and power utility industries. The Company's
Performance Polymer Division plans, under license, to manufacture and market a
hydrophilic polymer developed by Innovative Technologies, Ltd. ("IT") assuming
satisfactory results are obtained in testing the product. Product testing is
ongoing and the Company is unable to predict when, if ever, such new product
will be commercialized.

The Company, which was formerly known as Far West Ventures, Inc., was
incorporated in Nevada in October, 1986. The Company was inactive from January
1990 until April 1993, when it acquired AM. AM had previously been formed as a
California corporation in August, 1992 for the purpose of acquiring the assets
of the General Foam Products division of Wilshire Technologies, Inc. ("WTI").
The assets acquired by AM constituted a portion of the business and assets
previously acquired by WTI from Wilshire Foam Products, Inc. in November, 1990.

The Company's principal executive offices are located at 20211 S. Susana
Road, Rancho Dominguez, California 90221, and its telephone number is
(310) 537-5444.

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RISK FACTORS

THE SECURITIES WHICH ARE OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK INCLUDING,
BUT NOT NECESSARILY LIMITED TO, THE RISK FACTORS SET FORTH BELOW. PROSPECTIVE
PURCHASERS SHOULD CAREFULLY CONSIDER THE RISK FACTORS INHERENT IN AND AFFECTING
THE BUSINESS OF THE COMPANY AND THIS OFFERING IN MAKING AN INVESTMENT DECISION.

LOSSES FROM OPERATIONS; ACCUMULATED DEFICIT

The Company realized net income of $4,184,000 in fiscal 1996 (ending
November 30, 1996) (which included a $4,310,000 gain resulting from sales of
securities previously held for investment and an extraordinary gain of $508,000
from the early extinguishment of debt), and incurred net losses of $2,979,000
and $2,756,000 in fiscal 1995 (ending November 30, 1995) and fiscal 1994 (ending
November 30, 1994) respectively. Past losses have been funded by borrowings and
by the sale of the Company's securities in private placements. In addition, the
Company had an accumulated deficit as at August 31, 1997, of $1,558,000. There
is no assurance that the Company's operations will be profitable in the future.
If additional losses are sustained, or profits are not generated in an amount
sufficient to diminish the accumulated deficit, the accumulated deficit will
continue to negatively affect the value of stockholders' equity and,
accordingly, the value of each share of Common Stock. In addition, losses from
operations would, and the accumulated deficit will, continue to impair the
Company's ability to raise additional financing, including debt financing.

RISKS OF BORROWING; RISK OF INABILITY TO SERVICE DEBT IN EVENT OF FLUCTUATIONS
IN INTEREST RATES OR INSUFFICIENT CASH FLOW

AM has established a revolving line of credit with a commercial lender, and
also owes $465,000 to the holders of 7 1/2% convertible debentures issued in the
first half of 1994. If the Company is unable to generate sufficient cash flow
from operations in the future, it may be unable to pay principal or interest on
its borrowings when due and may be required to refinance all or a portion of its
existing debt or to obtain additional financing. There can be no assurance that
any such refinancing would be possible or that any additional financing could be
obtained on terms that are favorable or acceptable to the Company.

PROCEEDS TO BENEFIT SELLING STOCKHOLDERS

The Company will not receive any of the proceeds from the sale of shares
hereunder, but will receive payment upon exercise of the warrants. The sale by
the Selling Stockholders of all or substantially all of the shares owned or
issuable upon the exercise of warrants or options held by them could also have a
negative effect on the market price of shares of the Company's Common Stock. In
addition, as noted above, a change in control of the Company could result in a
change in the Company's management which, in turn, could result in a change in
the Company's business plans and policies or other aspects of the Company's
business. There can be no assurance that a new control person or group would
continue to pursue the policies or business practices of existing management,
and there can likewise be no assurance that such a change in control will not
have a material adverse affect on the Company's financial condition or results
of operations, or on the value of the Common Stock, or on the ability of the
Company to attract additional financing.

The average of the bid and asked prices of the Common Stock as reported by
NASDAQ on October 24, 1997, was $4.56. Of the 1,250,000 shares being registered
for sale hereunder, 35,000 have previously been acquired upon exercises of
options and 1,215,000 may be acquired upon exercise of options at exercise
prices ranging from $0.30 to $4.00.

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RELATED PARTY TRANSACTIONS WITH TRILON

In 1994, a major shareholder sold shares of the Company's common stock to
Dominion Capital, Inc. ("Dominion"), which also purchased shares directly from
the Company. William J. Hopke, an officer of Dominion, was named Chairman of
the Company. As a result, immediately prior to June 30, 1995, Dominion owned
approximately 32% of the Company's outstanding common stock. In a transaction
reported on a Schedule 13D filed by Dominion and others dated June 30, 1995,
Dominion contributed its ownership of such common stock, including warrants to
acquire common stock of the Company and a line of credit, to Trilon Dominion
Partners, LLC, a Delaware limited liability company in exchange for a non-voting
Class B membership interest in Trilon. Mr. Hopke became Executive Vice
President and Director of Trilon. Subsequently, Mr. Hopke was replaced as a
director and as Chairman of the Board of the Company by Ronald W. Cantwell, the
President of Trilon. Trilon subsequently acquired additional shares of the
Company's common stock in a private placement.

When Trilon advised the Company that it proposed to sell its holdings in
the Company the Company formed an independent committee of the Board of
Directors to determine whether it would be fair to the stockholders of the
Company from a financial point of view to repurchase some of those shares from
Trilon. The independent committee, after deliberation, recommended to the Board
of Directors that the Company purchase 2,000,000 shares from Trilon at a price
of $1.75 per share, and further agreed to recommend to the Board of Directors to
register the remainder of the shares, including shares issuable upon exercise of
warrants, on the registration statement of which this Prospectus forms a part,
on behalf of Trilon or any approved purchaser from Trilon. Trilon subsequently
sold its shares, and its warrants to acquire shares, of the Company's common
stock to certain of the Selling Stockholders named herein. Mr. Cantwell then
resigned from the Board and was replaced as a director by Timothy R. Busch.

COMPETITION; OBSOLESCENCE

The custom materials fabrication industry in which AM competes is highly
competitive. High barriers to entry and fragmented competition characterize the
industry. Barriers to entry are high because most of the products must be
produced by customized, proprietary equipment which is designed and/or built
in-house and cannot be produced with standard equipment. Most of the Company's
competitors are small, privately held companies, which generally specialize in
only one product or process. Three of the Company's principal competitors are
Boyd Industrial, which has four locations in the Western United States,
Packaging Alternatives Corp. and Foam Molders. AM competes primarily on the
basis of its ability to meet customers' specifications promptly and cost
effectively, and on the quality of its products.

Current competitors or new market entrants could introduce new or enhanced
products with features which render AM's products obsolete or less marketable,
or could develop means of producing competitive products at a lower cost. The
ability of AM to compete successfully will depend in large measure on its
ability to adapt to technological changes in the industry. There can be no
assurance that AM will be able to keep pace with the technological demands of
the market place or successfully develop new products, which are in demand by
the industry.

The market in which Condor competes is competitive. Condor competes
against one large competitor, Courtaulds Aerospace, which has substantially
greater financial, marketing, personnel, and other resources than Condor, and at
least three smaller competitors, which supply only small segments of the market.
Condor competes primarily on the basis of the quality and utility of its
products rather than on the basis of price.

GOVERNMENT REGULATION

The manufacture of certain products by AM and Condor requires the purchase
and use of chemicals and other materials, which are or may be, classified as
hazardous substances. The Company and its subsidiaries do not maintain
environmental impairment insurance. There can be no assurance that the Company
and its subsidiaries will not incur environmental liability or that hazardous
substances are not or will not be present at their facilities.

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The Company and its AM and Condor subsidiaries are subject to regulations
administered by the United States Environmental Protection Agency, various state
agencies and county and local authorities acting in conjunction with federal and
state agencies. Among other things, these regulatory bodies impose restrictions
to control air, soil and water pollution. The extensive regulatory framework
imposes significant complications, burdens and risks on the Company.
Governmental authorities have the power to enforce compliance with these
regulations and to obtain injunctions and/or impose civil and criminal fines or
sanctions in the case of violations.

The Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict joint and several
liability on the present and former owners and operators of facilities which
release hazardous substances into the environment. The Federal Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), regulates the
generation, transportation, treatment, storage and disposal of hazardous waste.
In California, the handling and disposal of hazardous substances is governed by
the law, which contains the California counterparts of CERCLA and RCRA. The
Company and its subsidiaries believe that their manufacturing activities are in
substantial compliance with all material Federal and state laws and regulations
governing their respective operations. Amendments to existing statutes and
regulations could require the Company or its subsidiaries to modify or alter
methods of operations at costs which could be substantial. There can be no
assurance that the Company or its subsidiaries will be able, for financial or
other reasons, to comply with applicable laws and regulations.

Various laws and regulations relating to safe working conditions, including
the Occupational Safety and Health Act ("OSHA"), are also applicable to the
Company and its subsidiaries. The Company believes it and its subsidiaries are
in substantial compliance with all material Federal, state and local laws and
regulations regarding safe working conditions.

RELIANCE ON MAJOR CUSTOMERS; REGIONAL BUSINESS

AM generally sells its products pursuant to customer purchase orders.
There can be no assurance that any such customers will continue to purchase
products from AM in the future. These customers are in the computer printer,
medical disposables, automotive air conditioning and consumer cleaning supply
markets. Management believes that this diversity spreads the risk of dependence
upon one customer or one market sector. However, one customer accounted for 28%
and 13% of consolidated revenue for the year ended November 30, 1996 and 1995,
respectively. While AM has acquired new customers as well as orders for new
products from existing customers, the loss of one or more of its largest
customers or a decline in the economic prospects of such customers could, and in
the case of its largest customer would, have an adverse effect on AM's business.

AM's prices are competitive with other fabricators of custom materials. AM
sales are typically made on terms which require payment of the net amount due in
30 days.

Major customers for Condor are primarily in the telecommunications and
power utility business. Condor has identified the electronics and aerospace
industries as future target markets for a new line of adhesive products, which
Condor has developed and is launching in the near future.

AM's domestic customers are located primarily in the West, Southwest and
Southeast regions of the United States. For bulky, low value products, high
freight costs on long distance shipments from AM's Rancho Dominguez, Portland,
Denver and Dallas facilities make it difficult for AM to be competitive in other
regions of the United States or internationally.

DEPENDENCE ON MAJOR SUPPLIERS

AM purchases raw materials primarily consisting of polyurethane foam,
crosslinked polyolefin foams and pressure sensitive adhesives. Polyurethane
foam accounted for approximately 48% of the raw materials purchased by AM in
fiscal 1996 and fiscal 1995. The Company's largest supplier of raw materials is
Foamex Engineered

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Polyurethanes ("Foamex"), which in fiscal 1996 and fiscal 1995 supplied
approximately 31% and 39%, respectively, of AM's raw materials' requirements.

AM is an authorized fabricating distributor for a number of raw material
suppliers, including Foamex, Voltek, Avery Dennison (pressure sensitive
adhesives), Zotefoam (crosslinked polyethylenes) and Ensolite (vinyl foam).
Management believes that these supply arrangements, many of which have been
active for 25 years or more, provide AM with a diverse mix of raw materials at
the best available prices. AM purchases raw materials pursuant to purchase
orders placed from time to time in the ordinary course of business. Failure or
delay by such suppliers in supplying necessary raw materials to AM could
adversely affect AM's ability to manufacture and deliver products on a timely
and competitive basis. AM purchases its raw materials on standard credit terms
and considers its relationship with its suppliers to be good.

Management believes that the loss of either Foamex or Voltek as a major
supplier of foam would not have a materially adverse effect on AM's business in
the long term because other suppliers of foam could be relied upon to meet AM's
requirements at a comparable cost. However, the loss of either Foamex or Voltek
would have a materially adverse effect on AM's business in the short term
(approximately three months), and the Company has secured contingent business
interruption insurance to offset such losses. Management believes that the loss
of any other supplier would not have a material adverse effect on AM.

AM's business is subject to the risk of price fluctuations and periodic
shortages of raw materials. AM purchases raw materials pursuant to purchase
orders placed from time to time in the ordinary course of business. Failure or
delay by such suppliers in supplying necessary raw materials to AM could
adversely affect AM's ability to manufacture and deliver products on a timely
and competitive basis.

PROPRIETARY RIGHTS; LACK OF PATENT PROTECTION

None of AM's current manufacturing processes or products are protected by
patents. AM relies on proprietary know-how and employs various methods to
protect its processes. However, such methods may not afford complete
protection, and there can be no assurance that others will not independently
develop such processes.

DEPENDENCE UPON KEY PERSONNEL

The Company is dependent upon the efforts and abilities of its senior
management, especially its Chairman, President and Chief Executive Officer,
Steve F. Scott. The loss of any of the Company's senior management could have
an adverse effect on its business and prospects. The Company has not obtained
any key man life insurance on any of its senior management other than a $500,000
policy on Mr. Scott. The Company has, however, entered into employment
agreements with Mr. Scott and with two other senior officers, David Lasnier and
J. Douglas Graven.

NO DIVIDENDS CONTEMPLATED ON COMMON STOCK

To date, no dividends have been paid on the Common Stock, and the Company
does not currently anticipate paying any such cash dividends in the foreseeable
future, but rather intends to invest profits, if any, in its business.

EXERCISE OF OUTSTANDING WARRANTS AND OPTIONS

Warrants and options to acquire 2,538,467 shares of Common Stock are
outstanding as of October 17, 1997. During the terms of such options and
warrants, the holders thereof will have the opportunity to profit from an
increase in the market price of Common Stock with resulting dilution in the
interest of holders of Common Stock. The existence of such options and warrants
may adversely affect the terms on which the Company can obtain additional
financing, and the holders of such options and warrants can be expected to
exercise such options and warrants at a time when the Company, in all
likelihood, would be able to obtain additional capital by offering shares of its
Common Stock on terms more favorable to the Company than those provided by the
exercise of such options and warrants.

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LITIGATION

In October 1996, the Company was notified that it was named in a bodily
injury lawsuit pending in 192nd Judicial District Court of Dallas County Texas,
involving silicon breast implants. The suit alleges that AMI supplied certain
foam "wipers" which were incorporated into certain implants by manufacturers
also named in the suit, which have allegedly caused adverse effects to the
plaintiffs. The suit asks for unspecified damages. The Company believes it has
no exposure in this case as: (1) AMI was not incorporated at the time of such
implants; (2) AMI has had no involvement with silicone or other breast implants;
(3) AMI has never marketed such "wipers"; and, (4) there exists two
indemnification agreements with sellers of businesses acquired by the Company
that provide protection to the Company. The Company believes the aforementioned
provide several layers of protection in the event this case progresses.
Accordingly, no provision for any liability has been made in the Company's
financial statements. An adverse ruling could, however, have a marked adverse
effect on the Company's financial condition.

AMI currently maintains product liability insurance in the amount of
$1,000,000, with excess umbrella coverage in the amount of $10,000,000. Except
for the breast implant suit, no product liability claims have been made to date.
However, there can be no assurance that any such claims will not be made in the
future in excess of such limits or that any such claims, if successful and in
excess of such limits, will not have a material adverse effect on AMI's assets
and its ability to conduct its business.

The Company's Condor subsidiary was named in a lawsuit originally filed in
the Superior Court of California, San Joaquin County, on January 24, 1992 by
Vern Auten and Shirley Auten, doing business as Aglo Plastics Company.
Plaintiffs alleged that Condor breached a supply contract by obtaining various
molds from a competing supplier, and are seeking damages therefor. Plaintiffs
are also seeking damages based upon an alleged intentional infliction of
emotional distress upon plaintiffs by a Condor employee and by its then owner
(and current President). Condor filed a cross-complaint alleging that
plaintiffs breached the contract. Plaintiffs received a nonbinding arbitration
award of approximately $267,000 plus interest. Condor had requested a trial de
novo. Condor subsequently received notice from an attorney representing the
plaintiffs of an alleged infringement by Condor of a patent held by the
plaintiffs. Condor believes the plaintiff's claims to be without merit, intends
to vigorously defend against the claims, and moved for declaratory relief in
federal district court for the eastern district of California, and joined the
actions that were the subject of claims between Condor and the plaintiffs in
state court. Trial has been set to commence in June, 1998.

The sellers of Condor have agreed to indemnify the Company with respect to
any potential liability from the alleged breach of contract. The ultimate
outcome of this litigation cannot presently be determined. Accordingly, no
provision for any liability that may result upon adjudication has been made in
the Company's financial statements. An adverse ruling could, however, have a
material adverse effect on the Company's financial condition.

USE OF PROCEEDS

All of the Shares offered hereby are being offered by the Selling
Stockholders. The Company will not receive any proceeds from the sales of the
Shares by the Selling Stockholders.

SELLING STOCKHOLDERS

The Selling Stockholders consist of officers, directors and employees of
the Company as well as certain independent contractors and consultants who
perform or have performed services for the Company. The following table sets
forth certain information with respect to the beneficial ownership of the
Company's Common Stock by the Selling Stockholders as of October 22, 1997, and
as of the completion of this offering. In addition to those named in the
following table, certain unnamed non-affiliates, each of whom may sell up to
1,000 shares, may use this Prospectus for reoffers and resales. The inclusion
of the named parties in the table shall not be deemed to be an admission that
any such individuals are "affiliates" of the Company.

I-10
<PAGE>

Number of Shares Number of Shares Shares Beneficially
Beneficially Owned to Be Sold Pursuant Owned After
Offering
Selling Stockholder Prior to Offering to this Prospectus Number Percent
- ------------------- ----------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Supriya Vohra 5,000 5,000 0 0%

</TABLE>

PLAN OF DISTRIBUTION

The Shares will be offered and sold by the Selling Stockholders for their
own accounts. The Company will not receive any of the proceeds from the sale of
the Shares pursuant to this Prospectus. The Company has agreed to bear the
expenses of the registration of the Shares, including legal and accounting fees,
and such expenses are estimated to be $15,000.

The Selling Stockholders may, from time to time, offer and sell all or part
of the shares acquired by them pursuant to the Plan on the over-the-counter
market at market prices prevailing at the time or in negotiated transactions at
negotiated prices. The Selling Stockholders have advised the Company that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their Shares, nor is there
an underwriter or coordinating broker acting in connection with the proposed
sale of Shares by the Selling Stockholders. Sales may be made directly or to or
through broker-dealers who may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders or the purchasers of
Shares for whom such broker-dealers may act as agent or to whom they may sell as
principal, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions).

The Selling Stockholders and any broker-dealers acting in connection with
the sale of the Shares hereunder may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Act, and any commissions received by them and
any profit realized by them on the resale of Shares as principals may be deemed
underwriting compensation under the Act.

The Company has informed the Selling Stockholders that the
anti-manipulative Regulation M under the Securities Exchange Act of 1934, as
amended, may apply to their sales in the market and has furnished each Selling
Stockholder with a copy of these Rules and has informed them of the need for
delivery of copies of this Prospectus.

Selling Stockholders may also use Rule 144 under the Act to sell the Shares
if they meet the criteria and conform to the requirements of such Rule.

There is no assurance that the Selling Stockholders will sell any or all of
the Shares offered hereby.

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

The Company's Articles of Incorporation authorize the issuance of
25,000,000 shares of Common Stock, par value $.001 per share, of which 8,585,097
were outstanding as of October 22, 1997. All outstanding shares of Common
Stock, including the Shares offered hereby, are fully paid and nonassessable.
All Shares to be issued upon due and proper exercise of outstanding options and
warrants, assuming full payment of the exercise price in connection therewith,
will be fully paid and nonassessable. Holders of Common Stock have no
preemptive, redemption or conversion rights, and are entitled to one vote for
each share held on each matter submitted to a vote of stockholders. Cumulative
voting for the election of directors is not permitted so that holders of more
than 50% of the outstanding Common Stock can elect all of the directors.
Subject to preferences that may be applicable to any outstanding preferred

I-11
<PAGE>

stock, holders of the Company's Common Stock are entitled to receive ratably
such dividends as may be declared by the Board of Directors out of funds legally
available therefor and in liquidation proceedings.

PREFERRED STOCK

The Company's Articles of Incorporation authorize the issuance of 5,000,000
shares of Preferred Stock, par value $.001 per share. None of the Company's
Preferred Stock is issued and outstanding. The Company's Board of Directors has
authority, without action by the stockholders, to issue all or any portion of
the authorized but unissued Preferred Stock in one or more series and to
determine the voting rights, preferences as to dividends and liquidation,
conversion rights, and other rights of such series. The Preferred Stock, if and
when issued, will likely carry rights superior to those of the Common Stock.

DEBENTURES

The Company has issued convertible debentures in the aggregate principal
amount of $535,000 which bear interest at the rate of 7 1/2% per annum (the
"Debentures"), of which $70,000 in principal amount had converted as at October
22, 1997. The Debentures are convertible into shares of the Company's Common
Stock at the initial conversion rate for each of the Debentures of 125% of the
closing bid price of the Common Stock on the day prior to the day of sale of the
respective Debentures. The term of the Debentures is 10 years. The Debentures
may be pre-paid, in whole or in part, after 18 months from the issue date, but
not before, upon 20 days' prior notice, at a price equal to the face value of
the Debenture plus accrued and unpaid dividends to the payment date. The
Company has the right to require conversion of the Debentures after 18 months
from the issue date, if the average closing bid or sale price per share of
Common Stock, for a period of 10 consecutive trading days, equals or exceeds
150% of the closing bid price for the Common Stock on the day prior to the day
of sale of the respective Debentures. The holders of the Debentures have no
voting rights. The Debentures have not been registered under the Act; however,
the Company has agreed to register the shares of Common Stock underlying the
Debentures. The Company has terminated its Debenture offering and has no
present plans to offer or sell any additional debentures. The proceeds from the
sale of the Debentures were used to reduce payables and for general corporate
purposes.

TRANSFER AGENT

The Transfer Agent and Registrar with respect to the Company's Common Stock
is American Stock Transfer and Trust Company.

LEGAL MATTERS AND INTEREST OF NAMED COUNSEL

The validity of the Common Stock offered hereby will be passed upon for the
Company by Day Campbell & McGill, 3070 Bristol Street, Suite 650, Costa Mesa,
California.

EXPERTS

The audited financial statements of the Company as of November 30, 1995 and
November 30, 1996, and for the years then ended incorporated herein by reference
in this Prospectus and the related Registration Statement, have been audited by
Corbin & Wertz, independent auditors, as set forth in their report thereon, and
are incorporated herein by reference in reliance upon such reports given upon
the authority of such firm as experts in accounting and auditing.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The documents listed below have been filed by the Company with the
Securities and Exchange Commission and are incorporated herein by reference:

I-12
<PAGE>

(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended November 30, 1996;

(b) The Company's Quarterly Reports on Form 10-QSB for the quarters
ended February 28, 1997, June 1, 1997 and August 31, 1997;

(c) The Company's current reports on Forms 8-K dated December 3,
1996, August 7, 1997 and September 27, 1997, and on Form 8-K/A filed
October 7, 1997; and

(d) The description of the Company's Common Stock contained in the
Registration Statement filed pursuant to Section 12 of the Exchange Act,
together with all amendments or reports filed for the purpose of updating
such description.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering of Common Stock offered hereby shall be deemed to be
incorporated by reference into this Prospectus and to be part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents referred to above which have been incorporated into this Prospectus by
reference (other than exhibits to such documents). Requests for such copies
should be directed to Steve F. Scott, President, Chief Executive Officer and
Secretary, Advanced Materials Group, Inc., 20211 South Susana Road, Rancho
Dominguez, California 90221 (Telephone (310) 537-5444).

OTHER MATTERS

The Company's Articles of Incorporation provides that (a) the personal
liability of a director or officer to the Company or its stockholders for
damages for breach of fiduciary duty as a director or officer shall be
eliminated to the fullest extent permissible under Nevada law except for: (i)
acts or omissions which involve intentional misconduct, fraud or a knowing
violation of law; or (ii) the payment of distributions in violation of Section
78.300 or the Nevada Revised Statutes, and (b) if the Nevada Revised Statutes
are hereinafter amended to authorize the further elimination or limitation of
the liability of a director or officer, then the liability of a director or
officer of the corporation shall be eliminated or limited to the fullest extent
permitted by the Nevada Revised Statutes, so as amended.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended (the "Securities Act") and
is therefore unenforceable.

PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

The following documents of Advanced Materials Group, Inc., a Nevada
corporation (the "Company") filed with the Securities Exchange Commission are
incorporated by reference into this Registration Statement:

II-1
<PAGE>

(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended November 30, 1996 filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");

(b) The Company's Quarterly Reports on Form 10-QSB for the quarters
ended February 28, 1997, June 1, 1997 and August 31, 1997;

(c) The Company's current reports on Forms 8-K dated December 3,
1996, August 7, 1997 and September 27, 1997, and on Form 8-K/A filed
October 7, 1997; and

All documents filed by the Registrant pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date of this Registration Statement and
prior to the filing of a post-effective amendment hereto that indicates that all
securities offered have been sold or that deregisters all such securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be a part hereof from the date of filing of such documents.

Any statement contained in a document incorporated in this Registration
Statement by reference shall be deemed to be modified or superseded for the
purpose of this Registration Statement to the extent that a statement contained
in this Registration Statement or in any other document subsequently filed
pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, which also is or is deemed to be incorporated in this Registration
Statement by reference modifies or replaces such statement.

ITEM 4. DESCRIPTION OF SECURITIES.

The securities that are offered hereby are shares of the Company's Common
Stock. The Company's total authorized Common Stock consists of 25,000,000
shares, par value of $0.001 per share, of which 8,585,097 were outstanding as of
October 22, 1997. All outstanding shares of Common Stock, including the shares
offered hereby, are fully paid and nonassessable. All Shares to be issued upon
due and proper exercise of outstanding options and warrants, assuming full
payment of the exercise price in connection therewith, will be fully paid and
non assessable. Holders of Common Stock have no preemptive, redemption or
conversion rights. Each share of Common Stock is entitled to one vote at
shareholders' meetings and is equal to each other share with respect to voting
rights, liquidation rights and dividend rights. Cumulative voting is not
permitted so that holders of more than 50% of the issued and outstanding shares
present at a meeting would be able to elect the entire Board of Directors and
the minority shareholders would not be able to elect a representative. Subject
to preferences that may be applicable to any outstanding preferred stock,
holders of the Company's Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor and in liquidation proceedings. Although there is presently
no Preferred Stock issued and outstanding, the Company's Articles of
Incorporation authorize the issuance of 5,000,000 shares of Preferred Stock
which, if and when issued, will likely carry rights superior to those of the
Common Stock.

ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.

The validity of the Common Stock offered hereby will be passed upon for the
Company by Day Campbell & McGill, 3070 Bristol Street, Suite 650, Costa Mesa,
California.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

II-2
<PAGE>

Statutes, and (b) if the Nevada Revised Statutes are hereinafter amended to
authorize the further elimination or limitation of the liability of a director
or officer, then the liability of a director or officer of the corporation shall
be eliminated or limited to the fullest extent permitted by the Nevada Revised
Statutes, so as amended.

ITEM 7. EXEMPTION FROM REGISTRATION.

Any restricted securities to be offered or resold pursuant to this
Registration Statement are exempt under Section 4(2) of the Securities Act, as
amended, as a non-public offering of securities.

ITEM 8. EXHIBITS.

EXHIBIT DESCRIPTION

5 Opinion of Day Campbell & McGill as to the legality of
the securities being registered.

10.1 The Company's 1993 Incentive Stock Option Plan

24.1 Consent of Corbin & Wertz.

24.2 Consent of Day Campbell & McGill (included in Exhibit
5).

ITEM 9. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; and

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to that information in the registration statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.

II-3
<PAGE>

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

(b) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rancho Dominguez, State of California, on October 28,
1997.

ADVANCED MATERIALS GROUP, INC.

By: /s/ STEVE F. SCOTT
-----------------------------------------
Steve F. Scott
President, Chief Executive Officer (principal
executive officer) and Chairman

POWER OF ATTORNEY

Each of the undersigned constitutes and appoints J. Douglas Graven,
Secretary of the Registrant, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission and any other regulatory
authority, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

Date Signature Title
- ---- --------- -----

/s/ STEVE F. SCOTT
October 28, 1997 --------------------- President, Chief Executive Officer
Steve F. Scott (principal executive officer) and
Chairman

October 28, 1997 /s/ J. DOUGLAS GRAVEN Vice President, Secretary and Chief
--------------------- Financial Officer (principal
J. Douglas Graven financial officer)

October 28, 1997
--------------------- Director
Timothy R. Busch

October 28, 1997
--------------------- Director
Michael A. Ledeen

October 28, 1997 /s/ ALLAN H. MELTZER
--------------------- Director
Allan H. Meltzer

October 28, 1997 /s/ N. PRICE PASCHALL
--------------------- Director
N. Price Paschall

II-5
<PAGE>

EXHIBIT INDEX

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

5 Opinion of Day Campbell & McGill as
to the legality of securities being
registered.

10.1 The Company's 1993 Stock Option Plan.

24.1 Consent of Corbin & Wertz.

24.2 Consent of Day Campbell & McGill
(included as Exhibit 5).

II-6

<PAGE>
EXHIBIT 5

DAY CAMPBELL & McGILL
3070 Bristol, Suite 650
Costa Mesa, CA 92626
(714) 429-2900
FAX (714) 429-2901

October 28, 1997

Advanced Materials Group, Inc.
20211 South Susana Road
Rancho Dominguez, California 90221

Re: Registration Statement on Form S-8
----------------------------------

Ladies and Gentlemen:

You have requested our opinion as counsel for Advanced Materials Group,
Inc., a Nevada corporation (the "Company"), as to the matters set forth below in
connection with the registration under the Securities Act of 1933 on Form S-8,
of 1,250,000 shares of the Company's Common Stock, $.001 par value per share
(the "Shares"), including Shares (the "Option Shares") issuable upon exercise of
outstanding options (the "Options"). The Shares are to be sold by the Company
under its 1993 Stock Option Plan.

We have examined the Company's Registration Statement on Form S-8 filed
with the Securities and Exchange Commission ("Commission") on or about
today's date (the "Registration Statement"). We have also examined the
Articles of Incorporation of the Company, as amended, the Bylaws and the
minute books of the Company, and such other documents as we deemed pertinent
as a basis for the opinion hereinafter expressed. For these purposes, we have
relied, without independent investigation, upon certificates provided by
public officials and by officers of the Company on certain factual matters.
We have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to the original
documents of documents submitted to us as certified or photostatic copies,
and the authenticity of the originals of the latter documents.

Based on the foregoing, it is our opinion that:

The Shares have been duly authorized and are, or in the case of the Option
Shares upon exercise of the respective Options and upon payment therefor will
be, validly issued, fully paid and non-assessable.

No opinion is expressed herein as to the application of State Securities
or Blue Sky laws.

We consent to the inclusion of our name in the Registration Statement under
the caption "Legal Matters" and the filing of this opinion as an exhibit to the
Registration Statement.

In giving this consent we do not hereby admit that we are in the category
of persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission thereunder.

Very truly yours,

/s/ DAY CAMPBELL & McGILL

<PAGE>

EXHIBIT 10.1

ADVANCED MATERIALS GROUP, INC.
1993 STOCK OPTION PLAN

1. PURPOSE OF THE PLAN.

The purpose of this 1993 Stock Option Plan ("Plan") of Advanced
Materials Group, Inc. (formerly known as Far West Ventures, Inc.), a Nevada
corporation ("Company") is to provide the Company with a means of attracting and
retaining the services of highly motivated and qualified key employees
(including officers), directors and consultants. The Plan is intended to
advance the interests of the Company by affording to key employees (including
officers), directors and consultants, upon whose skill, judgment, initiative and
efforts the Company is largely dependent for the successful conduct of its
business, an opportunity for investment in the Company and the incentives
inherent in stock ownership in the Company. In addition, the Plan contemplates
the opportunity for investment in the Company by employees of companies that do
business with the Company. For purposes of this Plan, the term Company shall
include subsidiaries, if any, of the Company.

2. LEGAL COMPLIANCE.

It is the intent of the Plan that all options granted under it
("Options") shall be either "Incentive Stock Options" ("ISOs"), as such term is
defined in Section 422 of the Internal Revenue Code of 1986, as amended
("Code"), or non-qualified stock options ("NQOs"); provided, however, ISOs shall
be granted only to employees of the Company. An Option shall be identified as
an ISO or an NQO in writing in the document or documents evidencing the grant of
the Option. All Options that are not so identified as ISOs are intended to be
NQOs. In addition, the Plan provides for the grant of NQOs to employees of
companies that do business with the Company. It is the further intent of the
Plan that it conform in all respects with the requirements of Rule 16b-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended ("Rule 16b-3"). To the extent that any aspect of the Plan or its
administration shall at any time be viewed as inconsistent with the requirements
of Rule 16b-3 or, in connection with ISOs, the Code, such aspect shall be deemed
to be modified, deleted or otherwise changed as necessary to ensure continued
compliance with such provisions.

3. NON-EXCLUSIVITY OF THE PLAN.

Nothing contained in the Plan is intended to amend, modify, or rescind
any previously approved compensation plans, programs or options entered into by
the Company. This Plan shall be construed to be in addition to and independent
of any and all such other arrangements. Neither the adoption of the Plan by the
Board nor the submission of the Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the power or
authority of the Board to adopt, with or without stockholder approval, such
additional or other compensation arrangements as the Board may from time to time
deem desirable.

<PAGE>

4. ADMINISTRATION OF THE PLAN.

4.1 PLAN COMMITTEE.

The Plan shall be administered by a committee ("Committee"). The
members of the Committee shall be appointed from time to time by the Board of
Directors of the Company ("Board") and shall consist of not less than two (2)
nor more than five (5) persons who are not eligible to receive Options under the
Plan and who are not, and have not at any time within one year (except as
provided in SECTION 4.6), been eligible to receive stock options pursuant to the
Plan or the terms of any other plan of the Company or its affiliates. Such
persons shall be directors of the Company.

4.2 GRANTS OF OPTIONS BY THE COMMITTEE.

In accordance with the provisions of the Plan, the Committee, by
resolution, shall select those eligible persons to whom Options shall be granted
("Optionees"); shall determine the time or times at which each Option shall be
granted, whether an Option is an ISO or an NQO and the number of shares to be
subject to each Option; and shall fix the time and manner in which the Option
may be exercised, the Option exercise price, and the Option period.

The Committee shall determine the form of option agreement to evidence the
foregoing terms and conditions of each Option, which need not be identical, in
the form provided for in SECTION 8. Such option agreement may include such other
provisions as the Committee may deem necessary or desirable consistent with the
Plan, the Code and Rule 16b-3.

4.3 COMMITTEE PROCEDURES.

The Committee from time to time may adopt such rules and
regulations for carrying out the purposes of the Plan as it may deem proper and
in the best interests of the Company. The Committee shall keep minutes of its
meetings and records of its actions. A majority of the members of the Committee
shall constitute a quorum for the transaction of any business by the Committee.
The Committee may act at any time by an affirmative vote of a majority of those
members voting. Such vote may be taken at a meeting (which may be conducted in
person or by any telecommunication medium) or by written consent of Committee
members without a meeting.

4.4 FINALITY OF COMMITTEE ACTION.

The Committee shall resolve all questions arising under the Plan
and option agreements entered into pursuant to the Plan. Each determination,
interpretation, or other action made or taken by the Committee shall be final
and conclusive and binding on all persons, including, without limitation, the
Company, its stockholders, the Committee and each of the members of the
Committee, and the directors, officers, employees and consultants of the
Company, including Optionees and their respective successors in interest.

4.5 NON-LIABILITY OF COMMITTEE MEMBERS.

No Committee member shall be liable for any action or
determination made by him in good faith with respect to the Plan or any Option
granted under it.

2
<PAGE>

4.6 DIRECTOR NQOS.

(a) As of May 22, 1993, or on the date of their first election
or appointment as directors, whichever is later, each director of the Company
shall be automatically granted an NQO to purchase 20,000 shares of the Company's
Common Stock (as defined in Section 6), and thereafter on each anniversary of
their first election or appointment as director, each director of the Company
shall be automatically granted an NQO to purchase 10,000 shares of the Company's
Common Stock (as defined in SECTION 6).

(b) Except as expressly authorized by this SECTION 4.6, directors of
the Company who are members of the Committee are not otherwise eligible to
participate in the Plan.

(c) Upon the grant of an NQO to a director, the director shall
receive a written option agreement substantially in the form provided for in
SECTION 8. Such director shall not be an "Optionee" as defined in SECTION 4.2 of
the Plan.

(d) The exercise price for each NQO granted under this Section shall
be one hundred percent (100%) of the Fair Market Value (as defined in SECTION 9)
of the Company's Common Stock (as defined in SECTION 6) on the date of grant as
determined by the Committee pursuant to SECTION 9 of the Plan. Each NQO granted
under this Section shall be for a term of five years and shall be subject to
earlier termination as hereinafter provided.

(e) An NQO granted under this Section may be exercised in whole
or consecutive installments, cumulative or otherwise, during its term; provided,
however, no NQO granted under this Section shall be exercisable before six (6)
months after the date of grant of such NQO. In addition, NQOs granted under
this Section are subject to the rights and obligations of Optionees, as provided
in SECTION 12 of the Plan; provided, however, that the "stock swap feature"
provided for in SECTION 12 of the Plan shall be available with respect to all
NQOs granted under this Section.

(f) NQOs granted under this Section shall be subject to the exercise
and non-transferability terms of SECTION 15 of the Plan. In the event of the
termination of service on the Board by the holder of any NQO granted under this
Section, then the outstanding NQOs of such holder shall expire one year after
such termination, or their stated expiration date, whichever occurs first.

(g) Notwithstanding SECTIONS 4.1 AND 7 of the Plan, the grant of an
NQO under this Section shall not disqualify such director as a disinterested
person for purposes of serving on the Committee. The Committee shall have no
power under SECTIONS 4.2 AND 8 of the Plan to determine the grant or terms of
NQOs under this Section, but shall retain its general authority under SECTION
4.4 of the Plan to interpret and administer the Plan; provided, however, that,
to the extent practicable, an individual member of the Committee should
disqualify himself or herself from participation on any question which is unique
to his or her NQOs.

5. BOARD POWER TO AMEND, SUSPEND, OR TERMINATE THE PLAN.

The Board may, from time to time, make such changes in or additions to
the Plan as it may deem proper and in the best interests of the Company and its
stockholders. The Board may also suspend or terminate the Plan at any time,
without notice, and in its sole discretion.

Notwithstanding the foregoing, no such change, addition, suspension,
or termination by the Board shall (i) materially impair any option previously
granted under the Plan without the express written consent

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of the optionee; or (ii) materially increase the number of shares subject to the
Plan, materially increase the benefits accruing to optionees under the Plan,
materially modify the requirements as to eligibility to participate in the Plan
or alter the method of determining the option exercise price described in
SECTION 9, without stockholder approval.

6. SHARES SUBJECT TO THE PLAN.

For purposes of the Plan, the Committee is authorized to grant Options for
up to 1,250,000 shares of the Company's common stock ("Common Stock"), or the
number and kind of shares of stock or other securities which, in accordance with
SECTION 14, shall be substituted for such shares of Common Stock or to which
such shares shall be adjusted. The Committee is authorized to grant options
under the Plan with respect to such shares. Any or all unsold shares subject to
an Option which for any reason expires or otherwise terminates (excluding shares
returned to the Company in payment of the exercise price for additional shares)
may again be made subject to grant under the Plan.

7. OPTIONEES.

Options shall be granted only to full-time elected or appointed
officers or other full-time key employees of the Company, to employees of
companies that do business with the Company or to consultants to the Company
designated by the Committee from time to time as Optionees, including, without
limitation, members of the Board who are also full-time officers or key
employees at the time of grant. In no event, however, may a member of the
Committee be granted an Option under the Plan. Any Optionee may hold more than
one option to purchase Common Stock, whether such option is an Option held
pursuant to the Plan or otherwise. An Optionee who is an employee of the
Company ("Employee Optionee") and who holds an Option must remain a continuous
full or part-time employee of the Company from the time of grant of the Option
to him until the time of its exercise, except as provided in SECTION 11.3.

8. GRANTS OF OPTIONS.

The Committee shall have the sole discretion to grant Options under
the Plan and to determine whether any Option shall be an ISO or an NQO. The
terms and conditions of Options granted under the Plan may differ from one
another as the Committee, in its absolute discretion, shall determine as long as
all Options granted under the Plan satisfy the requirements of the Plan. Upon
determination by the Committee that an Option is to be granted to an Optionee, a
written option agreement evidencing such Option shall be given to the Optionee,
specifying the number of shares subject to the Option, the Option exercise
price, whether the Option is an ISO or an NQO, and the other individual terms
and conditions of such Option. Such option agreement may incorporate generally
applicable provisions from the Plan, a copy of which shall be provided to all
Optionees at the time of their initial grants under the Plan. The Option shall
be deemed granted as of the date specified in the grant resolution of the
Committee, and the option agreement shall be dated as of the date of such
resolution.

9. OPTION EXERCISE PRICE.

The price per share to be paid by the Optionee at the time an ISO is
exercised shall not be less than one hundred percent (100%) of the Fair Market
Value (as hereinafter defined) of one share of the optioned Common Stock on the
date on which the Option is granted. No ISO may be granted under the Plan to
any person who, at the time of such grant, owns (within the meaning of Section
424(d) of the Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any parent
thereof, unless the exercise price of such ISO is at least equal to one hundred
and

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ten percent (110%) of Fair Market Value on the date of grant. The price per
share to be paid by the Optionee at the time an NQO is exercised shall not be
less than eighty-five percent (85%) of the Fair Market Value on the date on
which the NQO is granted, as determined by the Committee.

For purposes of the Plan, the "Fair Market Value" of a share of the
Company's Common Stock as of a given date shall be: (i) the closing price of a
share of the Company's Common Stock on the principal exchange on which shares of
the Company's Common Stock are then trading, if any, on such date, or, if shares
were not traded on such date, then on the next preceding trading day during
which a sale occurred; or (ii) if the Company's Common Stock is not traded on an
exchange but is quoted on NASDAQ or a successor quotation system, (1) the last
sales price (if the Common Stock is then listed as a National Market Issue under
the NASD National Market System) or (2) the mean between the closing
representative bid and asked prices (in all other cases) for the Common Stock on
such date as reported by NASDAQ or such successor quotation system; or (iii) if
the Company's Common Stock is not publicly traded on an exchange and not quoted
on NASDAQ or a successor quotation system, the mean between the closing bid and
asked prices for the Common Stock on such date as determined in good faith by
the Committee; or (iv) if the Company's Common Stock is not publicly traded,
the fair market value established by the Committee acting in good faith. In
addition, with respect to any ISO, the Fair Market Value on any given date
shall be determined in a manner consistent with any regulations issued by the
Secretary of the Treasury for the purpose of determining fair market value of
securities subject to an ISO plan under the Code.

10. CEILING OF ISO GRANTS.

The aggregate Fair Market Value (determined at the time any ISO is
granted) of the Common Stock with respect to which an Optionee's ISOs, together
with incentive stock options granted under any other plan of the Company and any
parent, are exercisable for the first time by such Optionee during any calendar
year shall not exceed $100,000. In the event that an Optionee holds such
incentive stock options that become first exercisable (including as a result of
acceleration of exercisability under the Plan) in any one year for shares having
a Fair Market Value at the date of grant in excess of $100,000, then the most
recently granted of such ISOs, to the extent that they are exercisable for
shares having an aggregate Fair Market Value in excess of such limit, shall be
deemed to be NQOs.

11. DURATION, EXERCISABILITY, AND TERMINATION OF OPTIONS.

11.1 OPTION PERIOD.

The option period shall be determined by the Committee with
respect to each Option granted. In no event, however, may the option period
exceed ten (10) years from the date on which the Option is granted, or five (5)
years in the case of a grant of an ISO to an Optionee who is a ten percent (10%)
shareholder at the date on which the Option is granted as described in SECTION
9.

11.2 EXERCISABILITY OF OPTIONS AND ACCELERATION OF EXERCISABILITY.

Each Option shall be exercisable in whole or in consecutive
installments,cumulative or otherwise, during its term as determined in the
discretion of the Committee; provided, however, no Option shall be exercisable
before six (6) months after the date of grant of such Option.

Notwithstanding the foregoing, the Committee at the time of grant
may provide that the vesting of the right to exercise a given Option or portion
thereof may be accelerated, during the term of the Option, under one or more of
the following circumstances: (i) if the Common Stock of the Company shall be

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<PAGE>

the subject of a tender offer by any person other than the Company which, by its
terms, could result in the offerer acquiring more than twenty-five percent (25%)
of the then outstanding shares of Common Stock of the Company, or (ii) if the
shareholders shall consider, or be asked to consider, merging or consolidating
the Company with any other person, or transferring all or substantially all of
its assets to any other person, or (iii) if more than twenty-five percent (25%)
of the Company's then outstanding voting shares shall be purchased by any person
other than the Company, such that granted but unexercisable Options may be
exercised at any time following the first public announcement of such event;
provided, however, that in no event shall an option be exercised prior to six
months after the date of grant or beyond its stated term.

11.3 TERMINATION OF OPTIONS DUE TO TERMINATION OF EMPLOYMENT,
DISABILITY, OR DEATH OF OPTIONEE; TERMINATION FOR "CAUSE",
OR RESIGNATION IN VIOLATION OF AN EMPLOYMENT AGREEMENT.

All Options granted under the Plan to any Employee Optionee shall
terminate and may no longer be exercised if the Employee Optionee ceases, at any
time during the period between the grant of the Option and its exercise, to be
an employee of the Company; provided, however, the Committee may alter the
termination date of the Option if the Optionee transfers to an affiliate of the
Company.

Notwithstanding the foregoing, (i) if the Employee Optionee's
employment with the Company shall have terminated for any reason (other than
involuntary dismissal for "cause" or voluntary resignation in violation of any
agreement to remain in the employ of the Company, including, without limitation,
any such agreement pursuant to Section 16), he may, at any time before the
expiration of three (3) months after such termination or before expiration of
the Option, whichever shall first occur, exercise the Option (to the extent that
the Option was exercisable by him on the date of the termination of his
employment); (ii) if the Employee Optionee's employment shall have terminated
due to disability (as defined in Section 22(e)(3) of the Code and subject to
such proof of disability as the Committee may require), such Option may be
exercised by the Employee Optionee (or by his guardian(s), or conservator(s), or
other legal representative(s)) before the expiration of twelve (12) months after
such termination or before expiration of the Option, whichever shall first occur
(to the extent that the Option was exercisable by him on the date of the
termination of his employment); (iii) in the event of the death of the Employee
Optionee, an Option exercisable by him at the date of his death shall be
exercisable by his legal representative(s), legatee(s), or heir(s), or by his
beneficiary or beneficiaries so designated by him as permitted by Section 15, as
the case may be, within twelve (12) months after his death or before the
expiration of the Option, whichever shall first occur (to the extent that the
Option was exercisable by him on the date of his death); and (iv) if the
Employee Optionee's employment is terminated for "cause" or in violation of any
agreement to remain in the employ of the Company, including, without limitation,
any such agreement pursuant to Section 16, he may, at any time before the
expiration of thirty (30) days after such termination or before the expiration
of the Option, whichever shall first occur, exercise the Option (to the extent
that the Option was exercisable by him on the date of termination of his
employment). For purposes of the Plan, "cause" may include, without limitation,
any illegal or improper conduct (1) which injures or impairs the reputation,
goodwill, or business of the Company; (2) which involves the misappropriation of
funds of the Company, or the misuse of data, information, or documents acquired
in connection with employment by the Company; or (3) which violates any other
directive or policy promulgated by the Company. A termination for "cause" may
also include any resignation in anticipation of discharge for "cause" or
resignation accepted by the Company in lieu of a formal discharge for "Cause."

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<PAGE>

12. MANNER OF OPTION EXERCISE; RIGHTS AND OBLIGATIONS OF OPTIONEES.

12.1 WRITTEN NOTICE OF EXERCISE.

An Optionee may elect to exercise an Option in whole or in part,
from time to time, subject to the terms and conditions contained in the Plan and
in the agreement evidencing such Option, by giving written notice of exercise to
the Company at its principal executive office.

12.2 CASH PAYMENT FOR OPTIONED SHARES.

If an Option is exercised for cash, such notice shall be
accompanied by a cashier's or personal check, or money order, made payable to
the Company for the full exercise price of the shares purchased.

12.3 STOCK SWAP FEATURE.

At the time of the Option exercise, and subject to the discretion
of the Committee to accept payment in cash only, the Optionee may determine
whether the total purchase price of the shares to be purchased shall be paid
solely in cash or by transfer from the Optionee to the Company of previously
acquired shares of Common Stock, or by a combination thereof. In the event that
the Optionee elects to pay the total purchase price in whole or in part with
previously acquired shares of Common Stock, and subject to the discretion of the
Committee to accept payment in cash only, the value of such shares shall be
equal to their Fair Market Value on the date of exercise, determined by the
Committee in the same manner used for determining Fair Market Value at the time
of grant for purposes of SECTION 9.

12.4 INVESTMENT REPRESENTATION FOR NON-REGISTERED SHARES AND LEGALITY
OF ISSUANCE.

The receipt of shares of Common Stock upon the exercise of an
Option shall be conditioned upon the Optionee (or any other person who exercises
the Option on his or her behalf as permitted by SECTION 11.3) providing to the
Committee a written representation that, at the time of such exercise, it is the
intent of such person(s) to acquire the shares for investment only and not with
a view toward distribution. The certificate for unregistered shares issued for
investment shall be restricted by the Company as to transfer unless the Company
receives an opinion of counsel satisfactory to the Company to the effect that
such restriction is not necessary under then pertaining law. The providing of
such representation and such restrictions on transfer shall not, however, be
required upon any person's receipt of shares of Common Stock under the Plan in
the event that, at the time of grant of the Option relating to such receipt or
upon such receipt, whichever is the appropriate measure under applicable federal
or state securities laws, the shares subject to the Option shall be (i) covered
by an effective and current registration statement under the Securities Act of
1933, as amended, and (ii) either qualified or exempt from qualification under
applicable state securities laws. The Company shall, however, under no
circumstances be required to sell or issue any shares under the Plan if, in the
opinion of the Committee, (i) the issuance of such shares would constitute a
violation by the Optionee or the Company of any applicable law or regulation of
any governmental authority, or (ii) the consent or approval of any governmental
body is necessary or desirable as a condition of, or in connection with, the
issuance of such shares.

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12.5 STOCKHOLDER RIGHTS OF OPTIONEE.

Upon exercise, the Optionee (or any other person who exercises
the Option on his behalf as permitted by SECTION 11.3) shall be recorded on the
books of the Company as the owner of the shares, and the Company shall deliver
to such record owner one or more duly issued stock certificates evidencing such
ownership. No person shall have any rights as a stockholder with respect to any
shares of Common Stock covered by an Option granted pursuant to the Plan until
such person shall have become the holder of record of such shares. Except as
provided in SECTION 14, no adjustments shall be made for cash dividends or other
distributions or other rights as to which there is a record date preceding the
date such person becomes the holder of record of such shares.

12.6 HOLDING PERIODS FOR TAX PURPOSES.

The Plan does not provide that an Optionee must hold shares of
Common Stock acquired under the Plan for any minimum period of time. Optionees
are urged to consult with their own tax advisors with respect to the tax
consequences to them of their individual participation in the Plan.

13. SUCCESSIVE GRANTS.

Successive grants of Options may be made to any Optionee under the
Plan.

14. ADJUSTMENTS.

If the outstanding Common Stock shall be hereafter increased or
decreased, or changed into or exchanged for a different number or kind of
shares or other securities of the Company or ofanother corporation, by reason of
a recapitalization, reclassification, reorganization, merger, consolidation,
share exchange, or other business combination in which the Company is the
surviving parent corporation, stock split-up, combination of shares, or dividend
or other distribution payable in capital stock or rights to acquire capital
stock, appropriate adjustment shall be made by the Committee in the number and
kind of shares for which options may be granted under the Plan. In addition,
the Committee shall make appropriate adjustment in the number and kind of shares
as to which outstanding and unexercised options shall be exercisable, to the end
that the proportionate interest of the holder of the option shall, to the extent
practicable, be maintained as before the occurrence of such event. Such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of the option but with a
corresponding adjustment in the exercise price per share.

In the event of the dissolution or liquidation of the Company, any
outstanding and unexercised options shall terminate as of a future date to be
fixed by the Committee.

In the event of a Reorganization (as hereinafter defined), then,

a. If there is no plan or agreement with respect to the Reorganization
("Reorganization Agreement"), or if the Reorganization Agreement does not
specifically provide for the adjustment, change, conversion, or exchange of the
outstanding and unexercised options for cash or other property or securities of
another corporation, then any outstanding and unexercised options shall
terminate as of a future date to be fixed by the Committee; or

b. If there is a Reorganization Agreement, and the Reorganization
Agreement specifically provides for the adjustment, change, conversion, or
exchange of the outstanding and unexercised options for

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<PAGE>

cash or other property or securities of another corporation, then the Committee
shall adjust the shares under such outstanding and unexercised options, and
shall adjust the shares remaining under the Plan which are then available for
the issuance of options under the Plan if the Reorganization Agreement makes
specific provisions therefor, in a manner not inconsistent with the provisions
of the Reorganization Agreement for the adjustment, change, conversion, or
exchange of such options and shares.

The term "Reorganization" as used in this SECTION 14 shall mean any
reorganization, merger, consolidation, share exchange, or other business
combination pursuant to which the Company is not the surviving parent
corporation after the effective date of the Reorganization, or any sale or lease
of all or substantially all of the assets of the Company. Nothing herein shall
require the Company to adopt a Reorganization Agreement, or to make provision
for the adjustment, change, conversion, or exchange of any options, or the
shares subject thereto, in any Reorganization Agreement which it does adopt.

The Committee shall provide to each optionee then holding an outstanding
and unexercised option not less than thirty (30) calendar days' advanced written
notice of any date fixed by the Committee pursuant to this SECTION 14 and of the
terms of any Reorganization Agreement providing for the adjustment, change,
conversion, or exchange of outstanding and unexercised options. Except as the
Committee may otherwise provide, each optionee shall have the right during such
period to exercise his option only to the extent that the option was exercisable
on the date such notice was provided to the optionee.

Any adjustment to any outstanding ISO pursuant to this SECTION 14, if made
by reason of a transaction described in Section 424(a) of the Code, shall be
made so as to conform to the requirements of that Section and the regulations
thereunder. If any other transaction described in Section 424(a) of the Code
affects the Common Stock subject to any unexercised ISO theretofore granted
under the Plan (hereinafter for purposes of this SECTION 14 referred to as the
- -old option"), the Board of Directors of the Company or of any surviving or
acquiring corporation may take such action as it deems appropriate, in
conformity with the requirements of that Code Section and the regulations
thereunder, to substitute a new option for the old option, in order to make the
new option, as nearly as may be practicable, equivalent to the old option, or to
assume the old option.

No modification, extension, renewal, or other change in any option granted
under the Plan may be made, after the grant of such option, without the
optionee's consent, unless the same is permitted by the provisions of the Plan
and the option agreement. In the case of an ISO, optionees are hereby advised
that certain changes may disqualify the ISO from being considered as such under
Section 422 of the Code, or constitute a modification, extension, or renewal of
the ISO under Section 424(h) of the Code.

All adjustments and determinations under this SECTION 14 shall be made by
the Committee in good faith in its sole discretion.

15. NON-TRANSFERABILITY OF OPTIONS.

An Option shall be exercisable only by the Optionee, or in the event
of his disability, by his guardian(s), conservator(s), or other legal
representative(s), during the Optionee's lifetime. In the event of the death of
the Optionee, an Option shall be exercisable by his legal representative(s),
legatee(s), or heir(s), as the case may be, or by such person(s) as he may
designate as his beneficiary or beneficiaries in a signed statement included as
a part of the option agreement.

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No Option shall be transferable by the Optionee, either voluntarily or
involuntarily, except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act, or the rules thereunder.

Any attempt to exercise, transfer or otherwise dispose of an interest in an
Option in contravention of the terms and conditions of the Plan, or of the
option agreement for the Option, shall immediately void the Option.

16. CONTINUED EMPLOYMENT.

As determined in the sole discretion of the Committee at the time of grant
and if so stated in a writing signed by the Company, each Option may have as a
condition the requirement of an Employee Optionee to remain in the employ of the
Company, or of its affiliates, and to render to it his or her exclusive service,
at such compensation as may be determined from time to time by it, for a period
not to exceed the term of the Option, except for earlier termination of
employment by or with the express written consent of the Company or on account
of disability or death. The failure of any Employee Optionee to abide by such
agreement as to any Option under the Plan may result in the termination of all
of his or her then outstanding Options granted pursuant to the Plan.

Neither the creation of the Plan nor the granting of Option(s) under it
shall be deemed to create a right in an Employee Optionee to continued
employment with the Company, and each such Employee Optionee shall be and shall
remain subject to discharge by the Company as though the Plan had never come
into existence. Except as specifically provided by the Committee in any
particular case, the loss of existing or potential profit in options granted
under this Plan shall not constitute an element of damages in the event of
termination of the employment of an employee even if the termination is in
violation of an obligation of the Company to the employee by contract or
otherwise.

17. TAX WITHHOLDING.

The exercise of any option granted under the Plan is subject to the
condition that if at any time the Company shall determine, in its discretion,
that the satisfaction of withholding tax or other withholding liabilities under
any federal, state or local law is necessary or desirable as a condition of, or
in connection with, such exercise or a later lapsing of time or restrictions on
or disposition of the shares of Common Stock received upon such exercise, then
in such event, the exercise of the option shall not be effective unless such
withholding shall have been effected or obtained in a manner acceptable to the
Company. When an optionee is required to pay to the Company an amount required
to be withheld under applicable income tax laws in connection with the exercise
of any option, the optionee may, subject to the approval of the Committee, which
approval shall not have been disapproved at any time after the election is made,
satisfy the obligation, in whole or in part, by electing to have the Company
withhold shares of Common Stock having a value equal to the amount required to
be withheld. The value of the Common Stock withheld pursuant to the election
shall be determined by the Committee, in accordance with the criteria set forth
in SECTION 9, with reference to the date the amount of tax to be withheld is
determined ("Tax Determination Date"). The optionee shall pay to the Company in
cash any amount required to be withheld that would otherwise result in the
withholding of a fractional share. The election by an optionee who is a
director or officer of the Company within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended ("Section 16 of the 1934 Act"), to
be effective, must meet all of the following requirements: (i) the election must
be made on or prior to Tax Determination Date; (ii) the election must be
irrevocable; (iii) the exercise of an option may only be made six months or more
subsequent to the grant of that option (except that this limitation will not
apply in the event death or disability of the

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optionee occurs prior to the expiration of the six-month period); and (iv) the
election must be made either (a) six months or more prior to the Tax
Determination Date, or

(b) within a ten-day "window period" beginning on the third business day
following the release of the Company's annual or quarterly summary statement of
sales and earnings and ending on the twelfth business day following the date of
such release. Where the Tax Determination Date of a director or officer of the
Company within the meaning of Section 16 of the 1934 Act is deferred until six
months after exercise and that director or officer elects to have the Company
withhold shares pursuant to the terms of this SECTION 17, the full amount of
option shares shall be issued or transferred to him upon exercise but he will be
unconditionally obligated to tender back to the Company on the Tax Determination
Date the proper number of shares of Common Stock to satisfy withholding
requirements, plus cash for any fractional amount.

18. TERM OF PLAN.

18.1 EFFECTIVE DATE.

Subject to shareholder approval, the Plan shall become effective on
April 1, 1993.

18.2 TERMINATION DATE.

Except as to options previously granted and outstanding under the
Plan, the Plan shall terminate at midnight on April 30, 2002, and no Option
shall be granted after that time. Options then outstanding may continue to be
exercised in accordance with their terms. The Plan may be suspended or
terminated at any earlier time by the Board within the limitations set forth in
SECTION 5.

19. GOVERNING LAW.

The Plan and all rights and obligations under it shall be construed and
enforced in accordance with the laws of the State of California.

<PAGE>
EXHIBIT 24.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Advanced Materials Group, Inc.

We hereby consent to the incorporation by reference in this Registration
Statement on form S-8 of our report dated January 23, 1997 appearing in the
Annual Report on form 10-KSB of Advanced Materials Group, Inc. for the year
ended November 30, 1996 and to the reference to our firm as experts.

CORBIN & WERTZ

Irvine, California
October 28, 1997