Exhibit 10.5 


 


ORIGINCLEAR,
INC. 


INCENTIVE
STOCK OPTION AGREEMENT


 



 


This
Incentive Stock Option Agreement ("Agreement") is made and entered into as of the date set forth below,
by and between OriginClear, Inc., a Nevada corporation (the "Company"), and the employee of the Company or any
subsidiary thereof named in Section 1(b) ("Optionee").


 


In consideration
of the covenants herein set forth, the parties hereto agree as follows:


 


1.
Option Information.


 


	 	 	(a)	Date
    of Option:	October
    6, 2015	 
	 	 	 	 	 	 
	 	 	(b)	Optionee:	William
Charneski	 
	 	 	 	 	 	 
	 	 	(c)	Number
    of Shares:	5,000,000	 
	 	 	 	 	 	 
	 	 	(d)	Exercise
    Price:	$0.0375	 








 2.
Acknowledgements.


 


(a)Optionee is
an employee of the Company or a subsidiary of the Company.


 


(b)The Board of Directors (the
"Board" which term shall include an authorized committee of the Board of Directors) of the Company have heretofore
adopted a 2015 Equity Incentive Plan (the "Plan"), pursuant to which this Option is being granted.


 


(c)The
Board has authorized the granting to Optionee of an incentive stock option ("Option") as defined in Section 422
of the Internal Revenue Code of 1986, as amended, (the "Code") to purchase shares of common stock of the Company
("Stock") upon the terms and conditions hereinafter stated and pursuant to an exemption from registration under
the Securities Act of 1933, as amended (the "Securities Act") provided by Section 4(a)(2) thereunder.


 


3.
Shares; Price. The Company hereby grants to Optionee the right to purchase, upon and subject to the terms and conditions
herein stated, the number of shares of Stock set forth in Section 1(c) above (the "Shares") for cash (or other
consideration as is authorized under the Plan and acceptable to the Board, in their sole and absolute discretion) at the price
per Share set forth in Section 1(d) above (the "Exercise Price"), such price being not less than the fair market
value per share of the Shares covered by this Option as of the date hereof (unless Optionee is the owner of Stock possessing ten
percent or more of the total voting power or value of all outstanding Stock of the Company, in which case the Exercise Price shall
be no less than 110% of the fair market value of such Stock).


 



     


     

    




 


4.
Term of Option; Continuation of Employment.
This Option shall expire, and all rights hereunder to purchase the Shares shall terminate four years from the date
hereof. This Option shall earlier terminate subject to Sections 7 and 8 hereof upon, and as of the date of, the termination of
Optionee's employment if such termination occurs prior to the end of such four year period. Nothing contained herein shall confer
upon Optionee the right to the continuation of his or her employment by the Company or to interfere with the right of the Company
to terminate such employment or to increase or decrease the compensation of Optionee from the rate in existence at the date hereof.


 


5. Vesting of
Option. Subject to the provisions of Sections 7 and 8 hereof, this Option shall become exercisable during the term of Optionee's
employment. An initial amount of fifty percent (50%) of the Shares shall vest on the Date of Option set forth in Section 1 above
and fifty percent (50%) shall vest on the one year anniversary of the Date of Option set forth in Section 1 above.


 


6. Exercise.
This Option shall be exercised by delivery to the Company of (a) written notice of exercise stating the number of Shares being
purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Appendix
A, (b) a check or cash in the amount of the Exercise Price of the Shares covered by the notice (or such other consideration as
has been approved by the Board of Directors consistent with the Plan) and (c) a written investment representation as provided
for in Section 12 hereof. This Option shall not be assignable or transferable, except by will or by the laws of descent and distribution,
and shall be exercisable only by Optionee during his or her lifetime, except as provided in Section 8 hereof.


 


7. Termination
of Employment. If Optionee shall cease to be employed by the Company for any reason, whether voluntarily or involuntarily,
other than by his or her death, Optionee (or if the Optionee shall die after such termination, but prior to such exercise date,
Optionee's personal representative or the person entitled to succeed to the Option) shall have the right at any time within three
(3) months following such termination of employment or the remaining term of this Option, whichever is the lesser, to exercise
in whole or in part this Option to the extent, but only to the extent, that this Option was exercisable as of the date of termination
of employment and had not previously been exercised; provided, however: (i) if Optionee is permanently disabled (within the meaning
of Section 22(e)(3) of the Code) at the time of termination, the foregoing three month (3) period shall be extended in the discretion
of the Board of Directors to up to one (1) year; or (ii) if Optionee is terminated "for cause" as defined in any applicable
employment, or in the absence of an employment agreement then defined as (i) Optionee’s conviction of or entrance of a plea
of guilty or nolo contendere to a felony; or (ii) Optionee is engaging or has engaged in material fraud, material dishonesty,
or other acts of willful and continued misconduct in connection with the business affairs of the Company, this Option shall automatically
terminate as to all Shares covered by this Option not exercised prior to termination. Unless earlier terminated, all rights under
this Option shall terminate in any event on the expiration date of this Option as defined in Section 4 hereof.


 


8. Death of Optionee.
If the Optionee shall die while in the employ of the Company, Optionee's personal representative or the person entitled to
Optionee's rights hereunder may at any time within six (6) months after the date of Optionee's death, or during the remaining
term of this Option, whichever is the lesser, exercise this Option and purchase Shares to the extent, but only to the extent,
that Optionee could have exercised this Option as of the date of Optionee's death, as such may be accelerated by the Board of
Directors; provided, in any case, that this Option may be so exercised only to the extent that this Option has not previously
been exercised by Optionee.


 



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9. No Rights as
Shareholder. Optionee shall have no rights as a shareholder with respect to the Shares covered by any installment of this
Option until the effective date of issuance of Shares following exercise of this Option, and no adjustment will be made for dividends
or other rights for which the record date is prior to the date such stock certificate or certificates are issued except as provided
in Section 8 of the Plan.


 


10. Additional
Consideration. Should the Internal Revenue Service determine that the Exercise Price established by the Board as the fair
market value per Share is less than the fair market value per Share as of the date of Option grant, Optionee hereby agrees to
tender such additional consideration, or agrees to tender upon exercise of all or a portion of this Option, such fair market value
per Share as is determined by the Internal Revenue Service.


 


11. Modifications,
Extension and Renewal of Options. The Board or Committee, as described in the Plan, may modify, extend or renew this Option
or accept the surrender thereof (to the extent not theretofore exercised) and authorize the granting of a new option in substitution
therefore (to the extent not theretofore exercised), subject at all times to the Plan, and Section 422 of the Code.


 


12. Investment
Intent; Restrictions on Transfer.


 


(a)
Optionee represents and agrees that if Optionee exercises this Option in whole or in part, Optionee will in each case acquire
the Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution
thereof; and that upon such exercise of this Option in whole or in part, Optionee (or any person or persons entitled to exercise
this Option under the provisions of Sections 7 and 8 hereof) shall furnish to the Company a written statement to such effect,
satisfactory to the Company in form and substance. If the Shares represented by this Option are registered under the Securities
Act, either before or after the exercise of this Option in whole or in part, the Optionee shall be relieved of the foregoing investment
representation and agreement and shall not be required to furnish the Company with the foregoing written statement.


 


(b)
Optionee further represents that Optionee has had the opportunity to ask questions of the Company concerning its business, operations
and financial condition, and to obtain additional information reasonably necessary to verify the accuracy of such information.


 


(c)
Unless and until the Shares represented by this Option are registered under the Securities Act, all certificates representing
the Shares and any certificates subsequently issued in substitution therefor and any certificate for any securities issued pursuant
to any stock split, share reclassification, stock dividend or other similar capital event shall bear legends in substantially
the following form:


 








			THESE
                                         SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF
                                         1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE.
                                         NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR
                                         OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY
                                         APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.



 


			THE
                                         SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN INCENTIVE
                                         STOCK OPTION AGREEMENT DATED __10/06/15__ BETWEEN THE COMPANY AND THE ISSUEE WHICH
                                         RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY
                                         UNDER CERTAIN CONDITIONS.



 


such other legend or legends as the Company
and its counsel deem necessary or appropriate. Appropriate stop transfer instructions with respect to the Shares have been placed
with the Company's transfer agent.


 


(d) For the purpose
of any transfer of any Shares represented by this Option under Rule 144 promulgated under the Securities Act (and for that purpose
only), the Optionee shall be considered an affiliate of the Company, regardless of whether the Optionee is an affiliate of the
Company as such term affiliate is defined in Rule 144, and shall be subject to the same limitations on the amount that can be
sold pursuant to Rule 144(e) or any successor rule.






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13. Effects of
Early Disposition. Optionee understands that if an Optionee disposes of shares acquired hereunder within two (2) years after
the date of this Option or within one (1) year after the date of issuance of such shares to Optionee, such Optionee will be treated
for income tax purposes as having received ordinary income at the time of such disposition of an amount generally measured by
the difference between the purchase price and the fair market value of such stock on the date of exercise, subject to adjustment
for any tax previously paid, in addition to any tax on the difference between the sales price and Optionee's adjusted cost basis
in such shares. The foregoing amount may be measured differently if Optionee is an officer, director or ten percent holder of
the Company. Optionee agrees to notify the Company within ten (10) working days of any such disposition.


 


14. Stand-off
Agreement. Optionee agrees that in connection with any registration of the Company's securities under the Securities Act,
and upon the request of the Company or any underwriter managing an underwritten offering of the Company's securities, Optionee
shall not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Shares (other than Shares included
in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period of
at least one year following the effective date of registration of such offering.





15. Notices.
Any notice required to be given pursuant to this Option or the Plan shall be in writing and shall be deemed to be delivered upon
receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed to
Optionee at the address last provided to the Company by Optionee for his or her employee records.


 


16. Agreement
Subject to Plan; Applicable Law. This Option is made pursuant to the Plan and shall be interpreted to comply therewith. A
copy of such Plan is available to Optionee, at no charge, at the principal office of the Company. Any provision of this Option
inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. This Option has been
granted, executed and delivered in the State of Nevada, and the interpretation and enforcement shall be governed by the laws thereof
and subject to the exclusive jurisdiction of the courts therein.


 


[SIGNATURE
PAGE FOLLOWS]









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In
Witness Whereof, the parties hereto have executed this Option as of the date first
above written.


 


	COMPANY: 	OriginClear, Inc.	 
	 	 	 
	 	By:	 
	 	Name:T. Riggs Eckelberry	 
	 	Title: President & CEO	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	OPTIONEE:	By:	 
	 	(signature)	 
	 	 	 
	 	Name:William Charneski	 


 


(one of the following,
as appropriate, shall be signed)


 


	I certify that as of the date hereof I am unmarried	 	
        By
        his or her signature, the spouse of Optionee hereby agrees to be bound by the provisions of the foregoing INCENTIVE STOCK OPTION
        AGREEMENT

         

	 	 	 
	Optionee	 	Spouse of Optionee


 








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Appendix
A


 


NOTICE
OF EXERCISE


 


OriginOil,
Inc. 


 


Re: Incentive Stock
Option


 


Notice is hereby
given pursuant to Section 6 of my Incentive Stock Option Agreement that I elect to purchase the number of shares set forth below
at the exercise price set forth in my option agreement:


 


Incentive Stock Option
Agreement dated: ____________


 


Number of shares
being purchased: ____________


 


Exercise Price: $____________


 


A check in the amount
of the aggregate price of the shares being purchased is attached.


 


I hereby confirm
that such shares are being acquired by me for my own account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof. I will not sell or dispose of my Shares in violation of the Securities Act of 1933,
as amended, or any applicable federal or state securities laws. Further, I understand that the exemption from taxable income at
the time of exercise is dependent upon my holding such stock for a period of at least one year from the date of exercise and two
years from the date of grant of the Option.


 


I understand that
the certificate representing the Option Shares will bear a restrictive legend within the contemplation of the Securities Act and
as required by such other state or federal law or regulation applicable to the issuance or delivery of the Option Shares.


 


I agree to provide
to the Company such additional documents or information as may be required pursuant to the Company's 2015 Equity Incentive Plan.




 








	 	By:	 
	 	(signature)	 
	 	 	 
	 	Name:	 
	 	 	 



 






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