<PAGE>

                                                                   Exhibit 10.12

                     FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
                                OF ADAM S. TRACY

     THIS FIRST AMENDMENT is made as of the 1st Day of July, 2007 (the
"Amendment Date") by and between Ecology Coatings, Inc. (the "Company") and Adam
S. Tracy, Esq. ("Executive") (collectively, the "Parties"):

     WHEREAS, the Parties previously entered into an employment contract on
November 1, 2006 (the "Effective Date") under which Executive was retained to
serve as Vice President of the Company for a period of twenty-four (24) months
(the "Agreement") (See Exhibit A);

     WHEREAS, the Board of Directors (the "Board") of the Company has determined
that the Company has made a significant investment in Executive's professional
development and has a strong and legitimate business interest in preserving and
protecting such investment, and;

     WHEREAS, the Board has further determined that it is in the Company's best
interest to amend the Agreement so as to ensure the continued availability to
the Company of the Executive's services, and the Executive is willing to accept
such amendment and render such services, all upon and subject to the terms and
conditions contained in this Agreement.

     NOW THEREFORE, in consideration of the mutual obligations and promises as
set forth herein, the Parties do hereby agree as follows:

     I. Employment Period. The term of the Agreement shall expire on November 1,
2009, subject to earlier termination of employment as provided for in the
Agreement.

     II. Position. During the Employment Period, Executive will be employed in
executive capacities in the positions of Vice President, General Counsel and
Secretary of the Company, or in other such positions as designated by the Board,
at its offices in Bloomfield Hills, Michigan, or other such place designated by
the Board.

     III. Compensation.

          a. Base Salary. During the Employment Period, Executive shall receive
     an annual base salary of One Hundred Forty thousand and 00/100 dollars
     ($140,000.00). Thereafter, the Board or the Compensation Committee of the
     Board (the "Committee") may review the Executive's salary and total cash
     compensation within one hundred twenty (120) days of the end of each of the
     Company's fiscal years during the Employment Period to determine what, if
     any, increases shall be made thereto. The base salary payable to the
     Executive in any given year is hereafter referred to as the "Annual Base
     Salary." Any increase in the Annual Base Salary shall not serve to limit or
     reduce any other obligation to the Executive under this Agreement. The
     Annual Base Salary shall not be reduced after any increase and the term
     "Annual Base Salary," as used in this Agreement, shall refer to the Annual
     Base Salary as increased. The Annual Base Salary shall in all instances be
     payable in twenty-four (24) equal semi-monthly installments

<PAGE>

          b. Grant of Stock Options.

               i. The Company shall issue Executive options to purchase Twenty
               Five Thousand (25,000) shares of the Company's common stock (the
               "Immediate Options"). The exercise price of the Immediate Options
               shall be Two and 00/100 dollars ($2.00). The Immediate Options
               shall carry no restriction on exercise and will have a ten (10) -
               year term from the Amendment Date. The Company shall register the
               Immediate Options as part of the first registration statement
               filed with the Securities Exchange Commission from the date
               hereof. See Exhibit "B."

               ii. The Company shall issue Executive options to purchase Thirty
               Seven Thousand five hundred (37,500) shares of the Company's
               common stock (the "Twelve-Month Options"). The exercise price of
               the Twelve-Month Options shall be Two and 00/100 dollars ($2.00).
               The Twelve-Month Options shall be restricted from exercise for a
               period of twelve (12) months from the Amendment Date. The Twelve
               Month Options shall have a ten (10) - year term from the
               Amendment Date. See Exhibit "C."

               iii. The Company shall issue Executive options to purchase Twenty
               Five Thousand (25,000) shares of the Company's common stock (the
               "Twenty-Four Month Options"). The exercise price of the
               Twenty-Four Month Options shall be Two and 00/100 dollars
               ($2.00). The Twenty-Four Month Options shall be restricted from
               exercise for a period of thirty (30) months from the Amendment
               Date. The Twenty-Four Month Options shall have a ten (10) - year
               term from the Amendment Date. See Exhibit "D."

          c. Bonus. The Company shall make a one-time after tax payment of
     Twelve Thousand five hundred and 00/100 dollars (12,500.00) to Executive.

          d. Cellular Phone Expense. The Company shall reimburse Executive for
     all expenses relating to Executive's cellular phones no.'s (248) 495-8550
     and (646) 805-8446. Executive shall provide the Company with a copy of each
     invoice with respect thereto.

          e. Health Care Reimbursement. The Company shall reimburse Executive
     for Executive's monthly premium payment with respect to Aetna policy number
     W155977115. Executive shall provide the Company with a copy of each invoice
     with respect thereto.

     IV. Option Agreements. The Company agrees to duly authorize, properly
execute, acknowledge, and deliver to Executive the Option Agreements attached
hereto. See Exhibits "B", "C" and "D."

     V. Scope of Amendment. All of the terms and conditions of the Consulting
Agreement shall be in full force and effect unless amended and changed by this
First


                                      -2-

<PAGE>

Amendment. This First Amendment shall supersede and replace the terms of the
Consulting Agreement to the extent contemplated and so amended hereby.

     IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have executed this First Amendment as the day and year first above
written.

ADAM S. TRACY, ESQ.


/S/ Adam S. Tracy
-------------------------------------
Adam S. Tracy, Esq.


ECOLOGY COATINGS, INC.


/S/ Richard D. Stromback
-------------------------------------
Richard D. Stromback, Chairman


                                      -3-

<PAGE>

                                   EXHIBIT "A"


                                      -4-

<PAGE>

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is by and between Ecology Coating, Inc., a California
corporation (the "Company"), and Adam S. Tracy (the "Executive") and is entered
to be effective as of November 1, 2006 (the "Effective Date").

                                    RECITALS

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued employment and dedication of the
Executive; and

     WHEREAS, the Board has further determined that it is desirable to provide
the Executive with compensation and benefits terms which adequately compensate
the Executive for the services he renders to the Company, and, to ensure that
such compensation and benefits are consistent with those of like executives of
other public companies.

                                    AGREEMENT

     Now, therefore, it is hereby agreed as follows:

     1. EMPLOYMENT PERIOD. The term of this Agreement shall commence as of the
Effective Date and shall expire, subject to earlier termination of employment as
hereinafter provided, on November 1, 2008 (the "Employment Period"); provided,
however, that on any day prior to and including November 1, 2008, the Employment
Period may be extended by the Company for an additional year unless prior
thereto either party has given written notice to the other that such party does
not wish to extend the term of this Agreement This Agreement may be terminated
prior to or on the last day of the Employment Period by (i) the Company for
Cause (as defined in Section 3.2 below), (ii) the Executive for Good Reason (as
defined in Section 3.3 below) or (iii) (the "Company" or the "Executive") upon
thirty (30) days written notice given by one party to the other party for any
reason except Death or Disability.

     2. TERMS OF EMPLOYMENT.

          2.1 Position and Duties.

               2.1.1 Position. During the Employment Period, the Executive will
be employed in executive capacities in the positions of Vice President of the
Company, or in other such positions as designated by the Board, at its office
in, Bloomfield Hills, Michigan, or such other place designated by the Board.

               2.1.2 Duties.

                    2.1.2.1 During the Employment Period, and excluding any
     periods of vacation and sick leave to which the Executive is entitled, the
     Executive will devote his full attention and time to the business and
     affairs of the Company. In the position of Vice President the Executive
     will supervise the business and affairs of the


                                      -5-

<PAGE>

     Company and the performance by all of its other officers of their
     respective duties, subject to the control of the Board. While acting in any
     other position, the Executive will undertake only such duties and tasks as
     are appropriate for a person in such position. The Executive will report to
     Richard D. Stromback, to such other individual designated by him, or should
     he fail to designate such other individual, the Chairman of the Board. The
     Executive will use his best efforts to perform faithfully and efficiently
     such duties and responsibilities.

                    2.1.2.1 While employed hereunder, the Executive agrees to
     devote all of his business time, attention, skill and efforts to the
     faithful and efficient performance of his duties under this Agreement;
     provided, however, that the Executive may engage in the following
     activities so long as they are approved in advance by the Board and do not
     interfere in any material respect with the performance of Executive's
     duties and responsibilities hereunder: (i) serve on corporate, civic or
     charitable boards or committees and (ii) deliver lectures, fulfill speaking
     engagements or teach on a part-time basis at educational institutions.

          2.2 Compensation.

               2.2.1 Base Salary. The Executive shall receive an annual base
salary of One Hundred thousand dollars 00/100 ($100,000.00) from the Effective
Date through November 1, 2008. Thereafter, the Board or the Compensation
Committee of the Board (the "Committee") may review the Executive's salary and
total cash compensation within one hundred twenty (120) days of the end of each
of the Company's fiscal years during the Employment Period to determine what, if
any, increases shall be made thereto. The base salary payable to the Executive
in any given year is hereafter referred to as the "Annual Base Salary." Any
increase in the Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. The Annual Base Salary shall
not be reduced after any increase and the term "Annual Base Salary," as used in
this Agreement, shall refer to the Annual Base Salary as increased. The Annual
Base Salary shall in all instances be payable in twenty-four (24) equal
semi-monthly installments.

               2.2.2 Annual Bonus and Option Plans. The Executive shall also be
eligible to participate in any applicable Company bonus plan or program, stock
option, restricted stock or other plan or program in effect immediately prior to
the Effective Date, or put into effect by the Board at any time after the
Effective Date or the Amendment Effective Date.

               2.2.3 Grant of Stock Options. The Company shall issue the
Executive options to purchase three hundred thousand (300,000) shares of the
Company's common stock after completion of its first private placement to
investors after the Effective Date of this Agreement. The exercise price of the
options shall be equal to the price of the common stock sold in the private
placement. The options shall vest as follows: 100% on the second anniversary of
the Effective Date. The options issued under this Section 2.2.3 have a ten-year
term from the date of their issue, and will be incentive stock options to the
extent allowable under the Internal Revenue Code and non-qualified options as to
the balance.

               2.2.4 Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive, savings and retirement


                                      -6-

<PAGE>

plans, practices, policies and programs applicable generally to other executives
of the Company, as the same may be amended from time to time, but in no event
shall such plans, practices, policies and programs provide the Executive with
incentive opportunities, savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company to other executives of the Company;
provided, however, the dollar value awarded Executive in the reasonable
discretion of management need not be equal to that awarded to all other
executives.

               2.2.5 Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
and programs, collectively referred to in this Section 2.2.5 as the "Welfare
Benefit Plans") to the extent applicable generally to other executives of the
Company, but in no event shall such Welfare Benefit Plans, programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such Welfare Benefit Plans provided generally at any time
after the Effective Date to other executives of the Company. If the Executive
elects to opt out of any or all of the foregoing Welfare Benefit Plans that the
Company offers because Executive has his own coverage in such areas, the Company
will reimburse the Executive for the reasonable cost of such coverage, but only
to the extent that such cost does not exceed cost of the Company providing
coverage under its own Welfare Benefit Plans directly to the Executive.

               2.2.6 Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in the conduct of Company business.

               2.2.7 Vacation. During the Employment Period, the Executive shall
be entitled to paid vacation of two weeks annually and otherwise be in
accordance with the plans, policies, programs and practices of the Company in
all respects as in effect for the Executive during the one hundred twenty (120)
day period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time after the Effective Date with
respect to other executives of the Company.

               2.2.8 Bar Examination Fees. The Company shall also reimburse the
Executive for any fees related to obtaining membership to the bar of any
jurisdiction.

               2.2.9 No Management Fees. In no event shall the Executive be
entitled to receive any additional compensation for serving as a member and/or
manager of the Company or any affiliate of the Company.

     3. TERMINATION OF EMPLOYMENT.

          3.1 Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that any Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the


                                      -7-

<PAGE>

Executive written notice in accordance with Section 10.2, of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the thirtieth (30th) day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the thirty (30) days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, the term "Disability" shall mean the absence of the
Executive from the Executive's duties with the Company on a full-time basis for
one hundred eighty (180) consecutive business days as a result of incapacity due
to mental or physical illness certified by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative.

          3.2 Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, the term
"Cause" shall mean: (i) the willful and continued failure of the Executive to
perform substantially the Executive's duties with the Company as set forth in
Section 2.1.2, "Duties," (other than any such failure resulting from incapacity
due to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board, accompanied by a
resolution adopted by the vote of two-thirds (2/3) of the entire Board,
excluding the Executive, at a meeting of the Board held for such purpose, which
resolution specifically identifies the manner in which the Board believes that
the Executive has not substantially performed the Executive's duties and
Executive has not cured any such failure to perform within thirty (30) business
days of such demand; (ii) material violation of any of the Company's policies;
(iii) breach by the Executive of his obligations under this Agreement; or (iv)
if the Executive is charged with illegal conduct by a governmental body or
regulatory authority, or has engaged in gross misconduct that is materially
injurious to the Company as determined by a resolution adopted by the vote of
three-fourths (3/4) of the entire Board, excluding the Executive, at a meeting
of the Board held for such purpose, which resolution specifically identifies the
alleged illegal conduct or gross misconduct. For purposes of this provision, no
act or failure to act, on the part of the Executive, shall be considered
"willful" unless it is done, or omitted to be done, by the Executive in bad
faith. The vote of the Board on the resolutions contemplated in (i) and (iv) of
this Section 3.2 will not be taken until after written notice of not less than
five (5) business days to the Executive of the meeting and an opportunity for
Executive to be heard before the Board at such meeting.

          3.3 Good Reason. The Executive may terminate his employment for Good
Reason at any time within ninety (90) days after the Executive first has actual
knowledge of the occurrence of such Good Reason. For purposes of this Agreement,
the term "Good Reason" shall mean:

               3.3.1 the assignment to the Executive of any duties that are not
consistent with the duties set forth in Section 2.1.2, "Duties," or any other
action by the Company that results in a material diminution in any of the
Executive's positions as set forth in Section 2.1.1, "Position," or in the
Executive's authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given by the
Executive;

               3.3.2 any failure by the Company to comply with any of the
provisions of Section 2.2, "Compensation," other than an isolated, insubstantial
and inadvertent failure not


                                      -8-

<PAGE>

occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;

               3.3.3 the Company's requiring the Executive, without the
Executive's consent and full agreement, to be based at any office other than in
the Bloomfield Hills, Michigan area or a position other than as provided in
Section 2.1.1;

               3.3.4 any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement;

               3.3.5 any action taken by the Company or its Board of Directors
in connection with a "Change in Control," as defined in Section 4.5, "Change in
Control," that results in the Executive being removed as the Vice President of
the Company without the Executive's consent; or

               3.3.6 any failure by the Company to comply with and satisfy
Section 9.3.

          3.4 Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 10.2 of
this Agreement. For purposes of this Agreement, the term "Notice of Termination"
means a written notice that:

               3.4.1 indicates the specific termination provision in this
Agreement relied upon;

               3.4.2 to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated; and

               3.4.3 if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies the termination date, which date
shall be not more than thirty (30) days after the giving of such notice. The
failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the rights of the
Executive or the Company under this Agreement.

          3.5 Date of Termination. The term "Date of Termination" means:

               3.5.1 if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of receipt of the
Notice of Termination or any later date specified therein, as the case may be;

               3.5.2 if the Executive's employment is terminated by the Company
other than for Cause or Disability, the date on which the Company notifies the
Executive of such termination; and


                                      -9-

<PAGE>

               3.5.3 if the Executive's employment is terminated by reason of
death or Disability, the date of death of the Executive or the Disability
Effective Date, as the case may be.

          3.6 Resignation as Director. If the Executive's employment under this
Agreement is terminated for any reason, the Executive shall resign as a director
of the Company and as a director, member and/or manager of all affiliates of the
Company of which Executive is a director, member and/or manager. Such
resignation will be effective (i) in the case of a termination by the Executive
pursuant to Section 1, "Employment Agreement," or Section 3, "Termination of
Employment," on the date the Executive delivers the relevant Notice of
Termination in accordance with such Sections; (ii) in the case of a termination
by the Company, on the date Executive receives the relevant Notice of
Termination; and (iii) in the case of a termination for any other reason, no
later than the relevant Termination Date.

     4. OBLIGATIONS OF THE COMPANY UPON TERMINATION.

          4.1 Termination for Good Reason, Other Than for Cause, Death or
Disability. If, during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause, Death or Disability, or the
Executive shall terminate employment for Good Reason, the Company shall pay to
the Executive, or Executive's beneficiary as designated by him in writing to the
Company, within thirty (30) days after the Date of Termination the aggregate of
the amounts set forth in Section 4.1.2 through Section 4.1.6 in a lump sum in
cash and shall pay the amounts due under Section 4.1.1 and Section 4.1.7 as
provided in those Sections:

               4.1.1 the amount of Annual Base Salary compensation that would be
payable to the Executive over a twenty-four (24) month period, provided that the
Company will pay such amount to the Executive over the period that the
compensation would have been due had the termination not occurred;

               4.1.2 any declared and accrued, but as of then unpaid, bonus or
stock options grant (whether or not vested) to which the Execute would have
received but for such termination. Additionally, any stock options owned or
granted shall be deemed immediately vested, not forfeitable, and shall be the
property of Executive, exercisable according to their terms for the balance of
the term of years of the options;

               4.1.3 any accrued vacation pay;

               4.1.4 any amounts payable pursuant to the Company's Defined
Benefit Pension Plan, 401(k) plan, including such amounts which would have
accrued (whether or not vested) if the Executive's employment had continued
after the Date of Termination for the period then remaining under this
Agreement, as it may have been renewed as provided for in Section 1, "Employment
Period";

               4.1.5 any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company (such other amounts
and benefits shall be referred to as the "Other Benefits");


                                      -10-

<PAGE>

               4.1.6 for the remaining term of this Agreement, as it may have
been renewed pursuant to Section 1, "Employment Period," or such longer period
as may be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been provided to
them in accordance with Section 2.2.5, "Welfare Benefit Plans," of this
Agreement if the Executive's employment had not been terminated or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other executives of the Company and their families, provided,
however, that if the Executive becomes re-employed with another employer and is
eligible to receive medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits described herein
shall be secondary to those provided under such other plan during such
applicable period of eligibility, and for purposes of determining eligibility
(but not the time of commencement of benefits) of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed for the remaining term of this
Agreement, as it may have been renewed pursuant to Section 1, "Employment
Period," and to have retired on the last day of such period.

          4.2 Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for (i) payment of any death benefit
compensation under other contracts; (ii) payment of the amounts due under the
term life insurance policy described in Section 2.2.4, "Incentive Savings and
Retirement Plans"; (iii) full vesting and non-forfeiture of stock options
granted to Executive; and (iv) the timely payment or provision of Other
Benefits. Such amounts shall be paid to the Executive's estate or beneficiary,
as applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination. The term "Other Benefits" as utilized in this Section 4.2 shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company to the estates and beneficiaries of other
executives of the Company under such plans, programs, practices and policies
relating to death benefits, if any, as in effect with respect to other
executives and their beneficiaries at any time during the one hundred twenty
(120) day period immediately preceding the Effective Date or, if more favorable
to the Executive's estate and/or the Executive's beneficiaries, as in effect on
the date of the Executive's death with respect to other executives of the
Company and their beneficiaries.

          4.3 Disability. If the Executive's employment is terminated by reason
of the Executive's Disability under Section 3.1, "Death or Disability," during
the Employment Period, this Agreement shall terminate without further
obligations to the Company, other than for the timely payment or provision of
(i) Base Salary through the Termination Date; (ii) accrued bonus through the
Termination Date; (iii) payment of pension, 401(k), and Other Disability
Benefits; (iv) full vesting and non-forfeiture of stock options; and (v) the
receipt of fully-paid Welfare Benefit Plans under Section 2.2.5, "Welfare
Benefit Plans," for the balance of the term of this Agreement. In addition,
Executive shall be paid for the term of this Agreement at regular pay periods
that amount equal to the difference between his Annual Base Salary and the
disability insurance payment received by the disabled Executive under the
Company's disability insurance program. The term "Other Benefits" as utilized in
this Section 4.3 shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other


                                      -11-

<PAGE>

benefits at least equal to the most favorable of those generally provided by the
Company to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other executives and their families at any time
during the one hundred twenty (120) day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with respect to other
executives of the Company and their families.

          4.4 Termination by the Company for Cause; and Termination by the
Executive for Other than for Good Reason. If the Executive's employment shall be
terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Company other than the obligation
to pay to the Executive: (i) the Annual Base Salary through the Date of
Termination; (ii) the amount of any compensation previously deferred by the
Executive; and (iii) Other Benefits under Sections 4.2, "Death," and Section
4.3, "Disability," in each case to the extent therefore unpaid. If the Executive
voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason by the Executive, this Agreement shall terminate
without further obligations to the Company, other than for items (i), (ii) and
(iii) of this paragraph, accrued but unpaid vacation leave, and the timely
payment or provision of Other Benefits. In such case, all accrued obligations
shall be paid to the Executive in a lump sum in cash within thirty (30) days of
the Date of Termination. A termination of the Executive by the Company for Cause
or a termination by the Executive for other than Good Reason shall not affect
the status of any vested stock options.

          4.5 Change in Control. If, during the term of this Agreement and
within one year after a "Change in Control," as defined below, the Company shall
terminate the Executive's employment other than for Cause, Death or Disability
or the Executive shall terminate employment for Good Reason, the Company shall
(i) pay to the Executive the amount of compensation that would have been payable
to the Executive over the period then remaining under this Agreement and on the
same schedule as such payments would have been due had the termination not
occurred, provided that the Company shall pay the Executive for a minimum of
twenty-four (24) months on this basis; and (ii) cause all stock options issued
to the Executive that have not vested as of the termination to be immediately
vested.

               4.5.1 The term "Change in Control" shall mean an event or the
last of a series of related events by which:

               4.5.2 the Company merges or consolidates with or into another
entity or completes any other corporate reorganization, if more than fifty
percent (50%) of the combined voting power of the continuing or surviving
entity's securities outstanding immediately after such merger, consolidation or
other reorganization is owned by persons who were not stockholders of the
Company immediately prior to such merger, consolidation or other reorganization;
or

               4.5.3 the Company sells, transfers or otherwise disposes of all
or substantially all of the consolidated assets of the Company or its
subsidiaries and the Company does not own stock in the purchaser or purchasers
having more than fifty percent (50%) of the voting power in elections for
directors; or


                                      -12-

<PAGE>

               4.5.4 the composition of the Board changes, as a result of which
fewer than one half of the incumbent directors are directors who either:

                    (i)  had been directors of the Company twenty-four (24)
                         months prior to such change; or

                    (ii) were elected, or nominated for election, to the Board
                         with the affirmative votes of at least a majority of
                         the directors who had been directors of the Company
                         twenty-four (24) months prior to such change and who
                         were still in office at the time of the election or
                         nomination.

A transaction shall not constitute a Change of Control if (i) its sole purpose
is to change the state of the Company's incorporation or to create a holding
company that will be owned in substantially the same proportions by the Persons
who held the Company's securities immediately before such transaction or (ii)
the Company acquires another corporation or entity through the purchase or other
acquisition of control of the voting stock or assets of such corporation or
entity; or

               4.5.5 any Person acquires direct or indirect beneficial ownership
of more than thirty-three percent (33%) of the voting power of the Company,
whether in a single transaction or a series of transactions.

               4.5.6 As used in this Agreement, a "Person" means any "person,"
as that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended, together with all of that person's "affiliates" and
"associates," as those terms are defined in Rule 12b-2 of such Act.

          4.6 Life Insurance and Health Plan Coverage. If, during the term of
this Agreement, the Executive's employment terminates for any reason other than
for Cause, the Company shall provide the Executive coverage for a continuation
period beginning on the Effective Date and ending on the earlier of (i) balance
of the Employment Period plus six months, but not more than a total of two (2)
years; or (ii) the date of the Executive's death. During the Continuation
Period, the Executive (and, where applicable, the Executive's dependents) shall
be entitled to continue participation in the group term life insurance plan and
in the health care plan for employees maintained by the Company as if the
Employee were still an employee of the Company. The coverage provided under this
Section 4.6. shall run concurrently with and shall be offset against any
continuation coverage under Part 6 of Title I of the Employee Retirement Income
Security Act of 1974, as amended. Where applicable, the Executive's compensation
for purposes of such plans shall be deemed to be equal to the Executive's
compensation (as defined in such plans) in effect on the date of the employment
termination. To the extent that the Company finds it undesirable to cover the
Executive under the group life insurance and health plans of the Company, the
Company shall provide the Executive (at its own expense) with the same level of
coverage under individual policies or if the Executive has elected to provide
his own coverage under the foregoing plans as contemplated by Section 2.2.5,
"Welfare Benefit Plans," the Company will reimburse the Executive for the cost
of such coverage for the same term provided in the first sentence of this
Section 4.6 and at the same rate as the Company had done prior to the
termination.


                                      -13-

<PAGE>

     5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company and for which the Executive may
qualify, nor, subject to Section 4, "Obligations of the Company Upon
Termination," shall anything herein limit or otherwise affect such rights as the
Executive may have under any other contract or agreement with the Company.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of or any contract or
agreement with the Company at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement. Executive is
currently a party to, and in the future may be a party to other, employment
arrangements, agreements, and incentive plans, including but not limited to, a
death benefit plan, stock option agreements, and a change of control agreement.
This Agreement shall not supersede any of the terms or conditions of such other
agreements. To the extent of any inconsistency in these agreements, the
agreements shall be interpreted and applied in the way to confer upon the
Executive the greatest benefits. The agreements shall be read and applied
consistent with each other, but in the event of a conflict, the terms most
favorable to the Executive will be applied from the various provisions of the
agreements in the aggregate.

     6. FULL SETTLEMENT; LEGAL FEES. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall be subject to any set-off, counterclaim, recoupment, defense or
other claim, right or action that the Company may have against the Executive. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and except as specifically provided in
Section 4.1.6, such amounts shall not be reduced whether or not the Executive
obtains other employment. Provided that the Executive is the prevailing party,
the Company will reimburse the Executive to the full extent permitted by law,
all legal fees and expenses that the Executive may reasonably incur as a result
of any contest by the Company, the Executive or others of the validity or
enforceability of, or liability or entitlement under, any provision of this
Agreement or any guarantee of performance thereof (whether such contest is
between the Company and the Executive or between either of them and any third
party, and including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case interest on
any delayed payment at the applicable Federal rate ("Applicable Federal Rate")
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").

     7. CONFIDENTIAL INFORMATION; NONCOMPETITION.

          7.1 Nondisclosure. The Executive shall hold in fiduciary capacity for
the benefit of the Company all secret, proprietary or Confidential Information,
knowledge or data relating to the Company and its businesses, which shall have
been obtained by the Executive during the Executive's employment by the Company.
During the period the Executive is employed with the Company, and after
termination of the Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it.
The


                                      -14-

<PAGE>

restrictions set forth in this Section 7 will not apply to information which is
generally known to the public or in the trade, unless such knowledge results
from an unauthorized disclosure by the Executive or representatives of the
Executive in violation of this Agreement. This exception will not affect the
application of any other provisions of this Agreement to such information in
accordance with the terms of such provision. All documents and tangible things
embodying or containing Confidential Information are the Company's exclusive
property. The Executive will protect the confidentiality of their content and
will return all copies, facsimiles and specimens of them and any other form of
Confidential Information in the Executive's possession, custody or control to
the Company before leaving the employment with the Company.

          7.2 Definition of Confidential Information. The term "Confidential
Information" includes all information of any nature and in any form which at the
time or times concerned is not generally known to the public, other than by act
or acts of an employee not authorized by Company to disclose such information,
and which relates to any one or more of the aspects of the present and past
business of Company or any of its predecessors, including, but not limited to,
patents and patent applications, inventions and improvements, whether patentable
or not, development projects, policies, processes, formulas, techniques,
know-how and other facts relating to sales, advertising, franchising,
promotions, financial matters, customers, customer lists, customer purchases or
requirements, licenses or trade secrets.

          7.3 Competition. During the term of the Executive's employment with
the Company, and for the period during which he receives compensation from the
Company under Section 4.1.1 after the termination of his employment with the
Company, the Executive will not, directly or indirectly, engage, participate or
invest in or be employed by any business anywhere in the world which:

               7.3.1 develops or manufactures products that are competitive with
or similar to products developed or manufactured by the Company; or

               7.3.2 distributes, markets or otherwise sells products
manufactured by others which are competitive with or similar to products
distributed, marketed or sold by the Company; or provides services which are
competitive with or similar to services provided by the Company, including, in
each case, any products or services the Company has under development or which
are the subject of active planning at any time during the term of the
Executive's employment.

          The foregoing restriction shall apply regardless of the capacity in
which the Executive engages or engaged, participates or participated, or invests
or invested in or is employed by a given business, whether as owner, partner,
shareholder, consultant, agent, Executive, co-venturer or otherwise. In
addition, during the term of the Executive's employment with the Company, and
for a period of twelve (12) months thereafter, the Executive will not, directly
or indirectly, without the prior written consent of the Company, solicit for
hire with any business any person who is employed by the Company at such time or
was employed by the Company within the preceding twelve (12) months. The
provisions of this Section 7 shall not prevent the Executive from acquiring or
holding publicly traded stock or other publicly traded securities of a business,
so long as the Executive's ownership does not exceed ten percent (10%) of the
outstanding securities of such company of the same class as those held by the
Executive or


                                      -15-

<PAGE>

from engaging in any activity or having an ownership interest in any business
that is reviewed by the Board. The Executive understands that the restrictions
set out in this Section 7 are intended to protect the Company's interest in its
secret, proprietary or Confidential Information and established customer
relationships and goodwill, and agrees that such restrictions are reasonable and
appropriate for this purpose.

          7.4 Damages. The Executive agrees that it would be difficult to
measure any damages caused to the Company which might result from any breach by
the Executive of the promises set forth in this Agreement, and that in any event
money damages would be an inadequate remedy for any such breach. Accordingly,
the Executive agrees that in the case of breach, or proposed breach, of any
portion of this Agreement, the Company shall be entitled, in addition to all
other remedies that it may have, to an injunction or other appropriate equitable
relief to restrain any such breach without showing or proving any actual damage
to the Company.

     8. DISPUTE RESOLUTION. If there shall be any dispute between the Company
and the Executive (i) in the event of any termination of the Executive's
employment by the Company, provided such termination was not for Cause, or (ii)
otherwise arising out of this Agreement, the dispute will be resolved in
accordance with the dispute resolution procedures set forth in Exhibit A
attached to this Agreement, the provisions of which are incorporated as a part
of this Agreement, and the parties of this Agreement agree that such dispute
resolution procedures will be the exclusive method for resolution of disputes
under this Agreement; provided, however, that (a) either party may seek
preliminary judicial relief if, in such party's judgment, such action is
necessary to avoid irreparable injury during the pendency of such procedures,
and (b) nothing in Exhibit A will prevent either party from exercising the
rights of termination set forth in this Agreement. IT IS EXPRESSLY UNDERSTOOD
THAT BY SIGNING THIS AGREEMENT, WHICH INCORPORATES BINDING ARBITRATION, THE
COMPANY AND EXECUTIVE AGREE, EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN
SECTION 7, "CONFIDENTIAL INFORMATION; NONCOMPETITION," AND THIS SECTION 8, TO
WAIVE COURT OR JURY TRIAL AND TO WAIVE PUNITIVE, STATUTORY, CONSEQUENTIAL, AND
ANY DAMAGES, OTHER THAN COMPENSATORY DAMAGES.

     9. SUCCESSORS.

          9.1 This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assigned by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal representatives.

          9.2 This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

          9.3 The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such


                                      -16-

<PAGE>

succession had taken place. As used in this Agreement, the term "Company" shall
mean the Company as defined above and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

     10. MISCELLANEOUS.

          10.1 This Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan, without reference to principles of
conflict of laws. The captions of this Agreement are set forth for convenience
only and shall have no separate force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

          10.2 All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:

                              If to the Executive:

                              Adam S. Tracy
                              511 Jacob Way, Suite 203
                              Rochester, Michigan 48307

                              If to the Company:

                              Ecology Coatings, Inc.
                              ATTN: President
                              1238 Brittain Road
                              Akron, Ohio 44310

                              With a copy to:

                              Chairman - Compensation Committee of
                              the Board of Directors
                              c/o Ecology Coatings, Inc.
                              35980 Woodward Avenue, Suite 200
                              Bloomfield Hills, Michigan 48304

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

          10.3 The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

          10.4 The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.


                                      -17-

<PAGE>

          10.5 The failure of the Executive or the Company to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement, except
that if the Executive chooses to terminate employment for Good Reason pursuant
to Section 3.3, "Good Reason," and complies with the provisions of Section 3,
"Termination of Employment," the Executive shall only be entitled to
compensation and benefits applicable to such event of termination.

     IN WITNESS WHEREOF, pursuant to the authorization from its Compensation
Committee and Board of Directors, the Company has caused this Agreement to be
executed in its name on its behalf, as of the dates first above written.

                                        COMPANY:

                                        ECOLOGY COATINGS, INC.


                                        By
                                           -------------------------------------
                                           Richard D. Stromback, Chairman


                                        EXECUTIVE:


                                        By
                                           -------------------------------------
                                           Adam S. Tracy, Esq.


                                      -18-

<PAGE>

                                    EXHIBIT A

                          DISPUTE RESOLUTION PROCEDURES

     1. If a controversy arises that is covered by Section 8, "Dispute
Resolution," of the Agreement, then not later than twelve (12) months from the
date of the event that is the subject of dispute either party may serve on the
other a written notice specifying the existence of such controversy and setting
forth in reasonably specific detail the grounds of the notice ("Notice of
Controversy"); provided that, in any event, the other party will have at least
thirty (30) days from and after the date of the Notice of Controversy to serve a
written notice of any counterclaim ("Notice of Counterclaim"). The Notice of
Counterclaim will specify the claim or claims in reasonably specific detail. If
the Notice of Controversy or the Notice of Counterclaim, as the case may be, is
not served within the applicable period, the claim set forth therein will be
deemed to have been waived, abandoned and rendered unenforceable.

     2. For a three (3) week period following receipt of the Notice of
Controversy or the Notice of Counterclaim, as the case may be, the parties will
make a good faith effort to resolve the dispute through negotiation ("Period of
Negotiation"). Neither party will take any action during the Period of
Negotiation to initiate arbitration proceedings.

     3. If the parties agree during the Period of Negotiation to mediate the
dispute, then the Period of Negotiation will be extended by an amount of time to
be agreed upon by the parties to permit such mediation. In no event, however,
may the Period of Negotiation be extended by more than five weeks or, stated
differently, in no event may the Period of Negotiation be extended to encompass
more than a total of eight weeks.

     4. If the parties agree to mediate the dispute but are thereafter unable to
agree within a week on the format and procedures for the mediation, then the
effort to mediate will cease, and the period of Negotiation will terminate four
weeks from the Notice of Controversy or the Notice of Counterclaim, as the case
may be.

     5. Following the termination of the Period of Negotiation, the dispute,
including the main claim and counterclaim, if any, will be settled by
arbitration, governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et seq.
("FAA"), and judgment upon the award may be entered in any court having
jurisdiction. The format and procedures of the arbitration are set forth below
(referred to below as the "Arbitration Agreement").

     6. A notice of intention to arbitrate ("Notice of Arbitration") will be
served within forty-five (45) days of the termination of the Period of
Negotiation. If the Notice of Arbitration is not served within this period, the
claim set forth in the Notice of Controversy or the Notice of Counterclaim, as
the case may be, will be deemed to have been waived, abandoned and rendered
unenforceable.

     7. The arbitration, including the Notice of Arbitration, will be governed
by the Commercial Rules of the American Arbitration Association ("AAA") in
effect on the date of the Notice of Arbitration, except that the terms of this
Arbitration Agreement will control in the

<PAGE>

event of any difference or conflict between such Rules and the terms of this
Arbitration Agreement.

     8. The arbitrator will reach a decision on the merits on the basis of
applicable legal principles as embodied in the law of the State of Michigan. The
arbitration hearing will take place in Detroit, Michigan.

     9. There will be one arbitrator, regardless of the amount in controversy.
The arbitrator selected, in order to be eligible to serve, will be a lawyer in
Detroit, Michigan with at least fifteen (15) years experience specializing in
either general commercial litigation or general corporate and commercial
matters. In the event the parties cannot agree on a mutually acceptable single
arbitrator from the list submitted by the AAA, the AAA will appoint the
arbitrator who will meet the foregoing criteria.

     10. At the time of appointment and as a condition of the appointment, the
arbitrator will be apprised of the time limitations and other provisions of this
Arbitration Agreement and will indicate such dispute resolver's agreement to the
Tribunal Administrator to comply with such provisions and time limitations.

     11. During the thirty (30) day period following appointment of the
arbitrator, either party may serve on the other a request for limited numbers of
documents directly related to the dispute. Such documents will be produced
within seven (7) days of the request.

     12. Following the thirty-day period of document production, there will be a
forty-five (45) day period during which limited depositions will be permissible.
Neither party will take more than five (5) depositions, and no deposition will
exceed three (3) hours of direct testimony.

     13. Disputes as to discovery or prehearing matters of a procedural nature
will be promptly submitted to the arbitrator pursuant to telephone conference
call or otherwise. The arbitrator will make every effort to render a ruling on
such interim matters at the time of the hearing (or conference call) or within
five (5) business days thereafter.

     14. Following the period of depositions, the arbitration hearing will
promptly commence. The arbitrator will make every effort to commence the hearing
within thirty (30) days of the conclusion of the deposition period and, in
addition, will make every effort to conduct the hearing on consecutive business
days to conclusion.

     15. An award will be rendered, at the latest, within nine (9) months of the
date of the Notice of Arbitration and within thirty (30) days of the close of
the arbitration hearing. The award will set forth the grounds for the decision
(findings of fact and conclusions of law) in reasonably specific detail. The
award will be final and nonappealable except as provided in the FAA and except
that a court of competent jurisdiction will have the power to review whether, as
a matter of law, based upon the findings of fact by the arbitrator, the award
should be confirmed or should be modified or vacated in order to correct any
errors of law made by the arbitrator. Such judicial review will be limited to
issues of law, and the parties agree that the findings of fact made by the
arbitrator will be final and binding on the parties and will serve as the facts
to be relied upon by the court in determining the extent to which the award
should be confirmed, modified or vacated.


                                      -20-

<PAGE>

     The award may only be made for compensatory damages, and if any other
damages (whether exemplary, punitive, consequential, statutory or other) are
included, the award will be vacated and remanded, or modified or corrected, as
appropriate to promote this damage limitation.


                                      -21-

<PAGE>

                                   EXHIBIT "B"


                                      -22-

<PAGE>

     THESE SECURITIES MAY NOT BE OFFERED OR SOLD UNLESS AT THE TIME OF SUCH
    OFFER OR SALE, THE PERSON MAKING SUCH OFFER OR SALE DELIVERS A PROSPECTUS
    MEETING THE REQUIREMENTS OF SECTION 10 OF THE SECURITIES ACT OF 1933, AS
         AMENDED ("ACT"), FORMING A PART OF A REGISTRATION STATEMENT, OR
   POST-EFFECTIVE AMENDMENT THERETO, WHICH IS EFFECTIVE UNDER SAID ACT, UNLESS
   IN THE OPINION OF COUNSEL TO THE CORPORATION, SUCH OFFER AND SALE IS EXEMPT
                  FROM THE PROVISIONS OF SECTION 5 OF SAID ACT.

                             ECOLOGY COATINGS, INC.

                                  STOCK OPTION

     This Stock Option Agreement (the "Agreement") is made and entered into as
of this 1st day of July, 2007 ("Grant Date") between ECOLOGY COATINGS, INC., a
California corporation (the "Company"), and ADAM S. TRACY (the "Holder").

     WHEREAS, the Company, through its Board of Directors (the "Board"), is
issuing this option to Holder in connection with various consulting services
rendered by the Holder to the Company, which services are deemed to have a value
of $500.00; and

     WHEREAS, by this Agreement, the Company and the Holder desire to set forth
terms upon which the Company will grant to the Holder and the Holder will accept
from the Company this Option.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Company and the Holder hereby agree as follows:

1. GRANT AND TERM OF THE OPTION.

     1.1 Grant of Stock Option. Subject to the terms and conditions of this
Agreement, the Company grants to the Holder the right and option (the "Option")
to purchase from the Company all or any part of an aggregate of TWENTY FIVE
THOUSAND (25,000) shares of its Common Stock, authorized but unissued or, at the
option of the Company, treasury if available (the "Shares") of Common Stock, par
value $.001 per share, at a price of $2.00 per share (the "Purchase Price"), as
adjusted from time to time pursuant to the provisions hereunder set forth. This
Option is not granted under any stock option plan of the Company.

     1.2 Time of Exercise. Subject to the provisions of Sections 1.5, "Transfer
and Assignment," and 3.1, "Registration and Legends," this Option may be
exercised at any time and from time to time after 9:00 a.m., E.S.T., on July 1,
2007 (the "Exercise Commencement Date") and will terminate at 5:00 p.m., E.S.T.,
on July 1, 2017 (the "Expiration Date").

     1.3 Manner of Exercise.

          1.3.1 The Holder may exercise this Option, in whole or in part, upon
surrender of this Option with the form of subscription attached hereto duly
executed to the Company at its corporate office together with the full Purchase
Price payable in cash.

          1.3.2 Upon receipt of this Option with the form of subscription duly
executed and accompanied by payment of the aggregate Purchase Price for the
Shares for which this Option is then being exercised, the Company shall cause to
be issued certificates or other evidence of ownership for


                                      -23-

<PAGE>

the total number of whole Shares for which this Option is being exercised in
such denominations as are required for delivery to the Holder, and the Company
shall thereupon deliver such documents to the Holder or its nominee.

          1.3.3 If the Holder exercises this Option with respect to fewer than
all of the Shares that may be purchased under this Option, the Company shall
execute a new Option for the balance of the Shares that may be purchased upon
exercise of this Option and deliver such new Option to the Holder.

          1.3.4 The Company covenants and agrees to pay when due and payable any
and all taxes that may be payable in respect of the issue of this Option, or the
issue of any Shares upon the exercise of this Option. The Company shall not,
however, be required to pay any tax that may be payable in respect of any
transfer involved in the issuance or delivery of this Option or of the Shares in
a name other than that of the Holder at the time of surrender, and until the
payment of such tax, the Company shall not be required to issue such Shares.

          1.3.5 The Company shall, at the time of any exercise of all or part of
this Option, upon the request of the Holder hereof, acknowledge in writing its
continuing obligation to afford to such Holder any rights to which such Holders
shall continue to be entitled after such exercise in accordance with the
provisions of this Option, provided that if the Holder of this Option fails to
make any such request, such failure shall not affect the continuing obligations
of the Company to afford any such rights to such Holder.

     1.4 Exchange of Option. This Option may be split-up, combined or exchanged
for another Option or Options of like tenor to purchase a like aggregate number
of Shares. If the Holder desires to split-up, combine or exchange this Option,
it shall make such request in writing delivered to the Company at its corporate
office and shall surrender this Option and any other Options to be so split-up,
combined or exchanged, the Company shall execute and deliver to the person
entitled thereto an Option or Options, as the case may be, as so requested. The
Company shall not be required to effect any split-up, combination or exchange
which will result in the issuance of an Option entitling the Holder to purchase
upon exercise a fraction of a Share. The Company may require the Holder to pay a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any split-up, combination or exchange of Options. The term
"Option" as used herein includes any Options issued in substitution for or
replacement of this Option, or into which this Option may be divided or
exchanged.

     1.5 Holder as Owner. Prior to due presentment for registration of transfer
of this Option, the Company may deem and treat the Holder as the absolute owner
of this Option (notwithstanding any notation of ownership or other writing
hereon) for the purpose of any exercise hereof and for all other purposes, and
the Company shall not be affected by any notice to the contrary. Irrespective of
the date of issue and delivery of certificates for any Shares issuable upon the
exercise of the Option, each person in whose name any such certificate is issued
shall be deemed to have become the holder of record of the Shares represented
thereby on the date on which all or a portion of the Option surrendered in
connection with the subscription therefore was surrendered and payment of the
purchase price was tendered. No surrender of all or a portion of the Option on
any date when the stock transfer books of the Company are closed, however, shall
be effective to constitute the person or persons entitled to receive Shares upon
such surrender as the record holder of such Shares on such date, but such person
or persons shall be constituted the record holder or holders of such Shares at
the close of business on the next succeeding date on which the stock transfer
books are opened. Each


                                      -24-

<PAGE>

person holding any Shares received upon exercise of Option shall be entitled to
receive only dividends or distributions payable to holders of record on or after
the date on which such person shall be deemed to have become the holder of
record of such Shares.

     1.6 Transfer and Assignment. This Option may not be sold, hypothecated,
exercised, assigned or transferred except in accordance with and subject to the
provisions of the Securities Act of 1933, as amended ("Act") and only upon the
consent of the Company.

     1.7 Method for Assignment. Any assignment permitted under this Option shall
be made by surrender of this Option to the Company at its principal office with
the form of assignment attached hereto duly executed and funds sufficient to pay
any transfer tax. In such event, the Company shall, without charge, execute and
deliver a new Option in the name of the assignee designated in such instrument
of assignment and this Option shall promptly be canceled. This Option may be
divided or combined with other Options that carry the same rights upon
presentation thereof at the corporate office of the Company together with a
written notice signed by the Holder, specifying the names and denominations in
which such new Options are to be issued.

     1.8 Rights of Holder. Nothing contained in this Option shall be construed
as conferring upon the Holder the right to vote or consent or receive notice as
a stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company. If, however, at any time prior to the expiration of
this Option and prior to its exercise, any of the following shall occur:

          1.8.1 The Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company;

          1.8.2 The Company shall offer to the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefore;

          1.8.3 There shall be proposed any capital reorganization or
reclassification of the Common Stock, or a sale of all or substantially all of
the assets of the Company, or a consolidation or merger of the Company with
another entity; or

          1.8.4 There shall be proposed a voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in any one or more of said
cases, the Company shall cause to be mailed to the Holder, at the earliest
practicable time (and, in any event, not less than thirty (30) days before any
record date or other date set for definitive action), written notice of the date
on which the books of the Company shall close or a record shall be taken to
determine the stockholders entitled to such dividend, distribution, convertible
or exchangeable securities or subscription rights, or entitled to vote on such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be. Such notice shall also set forth
such facts as shall indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Purchase Price and the
kind and amount of the Common Stock and other securities and property
deliverable upon exercise of this Option. Such notice shall also specify the
date as of which the holders of the Common Stock of record shall participate in
said distribution or subscription rights or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon


                                      -25-

<PAGE>

such reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be (on which date, in the event of
voluntary or involuntary dissolution, liquidation or winding up of the Company,
the right to exercise this Option shall terminate). Without limiting the
obligation of the Company to provide notice to the holder of actions hereunder,
it is agreed that failure of the Company to give notice shall not invalidate
such action of the Company.

     1.9 Lost Option. Upon receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this Option, and, in the case
of loss, theft or destruction of reasonably satisfactory indemnification,
including a surety bond if required by the Company, and upon surrender and
cancellation of this Option, if mutilated, the Company will cause to be executed
and delivered a new Option of like tenor and date. Any such new Option executed
and delivered shall constitute an additional contractual obligation on the part
of the Company, whether or not this Option so lost, stolen, destroyed, or
mutilated shall be at any time enforceable by anyone.

     1.10 Covenants of the Company. The Company covenants and agrees as follows:

          1.10.1 At all times it shall reserve and keep available for the
exercise of this Option into Common Stock such number of authorized shares of
Common Stock as are sufficient to permit the exercise in full of this Option
into Common Stock; and

          1.10.2 All Shares issued upon exercise of the Option shall be duly
authorized, validly issued and outstanding, fully-paid and non-assessable.

2. Adjustment of Purchase Price and Number of Shares Purchasable Upon Exercise.

     2.1 Recapitalization. The number of Shares purchasable on exercise of this
Option and the purchase price therefore shall be subject to adjustment from time
to time in the event that the Company shall: (i) pay a dividend in, or make a
distribution of, shares of Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares, or (iv) spin-off a
subsidiary by distributing, as a dividend or otherwise, shares of the subsidiary
to its stockholders. In any such case, the total number of shares purchasable on
exercise of this Option immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive, at the same aggregate purchase price, the
number of shares of Common Stock that the Holder would have owned or would have
been entitled to receive immediately following the occurrence of any of the
events described above had this Option been exercised in full immediately prior
to the occurrence (or applicable record date) of such event. An adjustment made
pursuant to this Section 2 shall, in the case of a stock dividend or
distribution, be made as of the record date and, in the case of a subdivision or
combination, be made as of the effective date thereof. If, as a result of any
adjustment pursuant to this Section 2, the Holder shall become entitled to
receive shares of two or more classes of series of securities of the Company,
the Board of Directors of the Company shall equitably determine the allocation
of the adjusted purchase price between or among shares or other units of such
classes or series and shall notify the Holder of such allocation.

     2.2 Merger or Consolidation. In the event of any reorganization or
recapitalization of the Company or in the event the Company consolidates with or
merges into another entity or transfers all or substantially all of its assets
to another entity, then and in each such event, the Holder, on exercise of this
Option as provided herein, at any time after the consummation of such
reorganization, recapitalization, consolidation, merger or transfer, shall be
entitled, and the documents executed to


                                      -26-

<PAGE>

effectuate such event shall so provide, to receive the stock or other securities
or property to which the Holder would have been entitled upon such consummation
if the Holder had exercised this Option immediately prior thereto. In such case,
the terms of this Option shall survive the consummation of any such
reorganization, recapitalization, consolidation, merger or transfer and shall be
applicable to the shares of stock or other securities or property receivable on
the exercise of this Option after such consummation and as an exchange for a
larger or smaller number of shares, as the case may be.

     2.3 Notice of Dissolution or Liquidation. Except as otherwise provided in
Section 2.2, "Merger or Consolidation," in the case of any sale or conveyance of
all or substantially all of the assets of the Company in connection with a plan
of complete liquidation of the Company, or in the case of the dissolution,
liquidation or winding-up of the Company, all rights under this Option shall
terminate on a date fixed by the Company, such date so fixed to be not earlier
than the date of the commencement of the proceedings for such dissolution,
liquidation or winding-up and not later than thirty (30) days after such
commencement date. Notice of such termination of purchase rights shall be given
to the Holder at least thirty (30) days prior to such termination date.

     2.4 Statement of Adjustment. Any adjustment pursuant to the provisions of
this Section 2 shall be made on the basis of the number of Shares which the
Holder would have been entitled to acquire by exercise of this Option
immediately prior to the event giving rise to such adjustment and as to the
Purchase Price in effect immediately prior to the rise to such adjustment.
Whenever any such adjustment is required to be made, the Company shall forthwith
determine the new number of Shares which the Holder hereof shall be entitled to
purchase hereunder and/or such new Purchase Price and shall prepare, retain on
file and transmit to the Holder within ten (10) days after such preparation a
statement describing in reasonable detail the method used in calculating such
adjustment.

     2.5 No Fractional Shares. The Company shall not issue any fraction of a
Share in connection with the exercise of this Option, and in any case where the
Holder would, except for the provisions of this Section 2.5, be entitled under
the terms of this Option to receive a fraction of a Share upon such exercise,
the Company shall upon the exercise and receipt of the Purchase Price, issue the
largest number of whole Shares purchasable upon exercise of this Option. The
Company shall not be required to make any cash or other adjustment in respect of
such fraction of a Share to which the Holder would otherwise be entitled. The
Holder, by the acceptance of this Option, expressly waives his right to receive
a certificate for any fraction of a Share upon exercise hereof.

     2.6 No Change in Form Required. The form of Option need not be changed
because of any change pursuant to this Section 2 in the Purchase Price or in the
number of Shares purchasable upon the exercise of a Option, may state the same
Purchase Price and the same number of shares of Preferred Stock as are stated in
the Options initially issued pursuant to the Agreement.

3. REGISTRATION UNDER THE SECURITIES ACT OF 1933.

     3.1 Registration and Legends. The Holder understands that (i) the Company
has not registered the Option or the Shares under the Act, or the applicable
securities laws of any state in reliance on exemptions from registration and
(ii) such exemptions depend upon the Holder's investment intent at the time
the Holder acquires the Option or the Shares. The Holder therefore represents
and warrants that it is acquiring the Option, and will acquire the Shares, for
the Holder's own account for investment and not with a view to distribution,
assignment, resale or other transfer of the Option or the Shares. Because the
Option and the Shares are not registered, the Holder is


                                      -27-

<PAGE>

aware that the Holder must hold them indefinitely unless they are registered
under the Act and any applicable securities laws or the Holder must obtain
exemptions from such registration. Upon exercise, in part or in whole, of this
Option, the Shares shall bear the following legend:

     The shares of Common Stock represented by this certificate have not been
registered under the Act or any applicable state securities laws, and they may
not be offered for sale, sold, transferred, pledged or hypothecated without an
effective registration statement under the Act and under any applicable state
securities laws, or an opinion of counsel, satisfactory to the company, that an
exemption from such registration is available.

     3.2 No-Action Letter. The Company agrees that it will be satisfied that no
post-effective amendment or new registration is required for the public sale of
the Shares if it shall be presented with a letter from the Staff of the
Securities and Exchange Commission (the "Commission"), stating in effect that,
based upon stated facts which the Company shall have no reason to believe are
not true in any material respect, the Staff will not recommend any action to the
Commission if such Shares are offered and sold without delivery of a prospectus,
and that, therefore, no Registration Statement under which such Shares are to be
registered is required to be filed.

     3.3 INCLUSION IN COMPANY REGISTRATION STATEMENT.

          3.3.1 The Holder of this Option and/or Shares issued to the Holder
pursuant to this Option without an effective registration statement ("Restricted
Shares") under the Act will have the right to join with the Company to register
the Restricted Shares and the Shares underlying this Option (the "Underlying
Shares") in a future registration statement under the Act filed by the Company
with the Commission, which includes a public offering of equity securities for
cash, either for the account of the Company or for the account of any other
person. This right to join with the Company in a registration statement is not
applicable to a registration statement filed by the Company with the Commission
on Form S-4, S-8 or any other inappropriate form. If, at any time, the Company
proposes to file a registration statement as described above with the
Commission, it may, in its sole discretion, offer to include in any such filing
any proposed disposition of the Restricted Shares or the Underlying Shares. In
such event, the Company will, at least thirty (30) days prior to such filing,
give written notice of such proposed filing to the Holder's address appearing
on the records of the Company. Within fifteen (15) days of receipt of the
Company's notice of filing, the Holder may request registration of the
Restricted Shares and/or Underlying Shares pursuant to a written request setting
forth the intended method of distribution and such other data or information as
the Company or its counsel shall reasonably require and such Restricted Shares
and/or Underlying Shares shall be included in the registration statement to the
maximum extent permissible. The Company shall supply the Holder with copies of
such registration statement and of the prospectus included therein in such
quantities as may be reasonably necessary for the purpose of the proposed
disposition.

          3.3.2 If at the time of any request to register the Restricted Shares
or Underlying Shares the Company is engaged or has fixed plans to be engaged
within thirty (30) days of the date of the request in a registered public
offering as to which the Restricted Shares or the Underlying Shares may be
included or is involved in an activity, in the good faith determination of the
underwriter, in the case of such offering, or the Board, in the case of such
other activity, which would be adversely affected by the requested registration
to the material detriment of the offering or the Company's activities, then
the Company may, at its option, direct that the request be delayed for a period
not in


                                      -28-

<PAGE>

excess of six months from the effective date of such offering or the date of
commencement of such proposed offering or such other material activity, as the
case may be, unless the underwriter, in the case of the offering, or the Board,
in the case of such other material activity, specifies a longer period.

     3.4 Covenants Regarding Registration. In connection with any registration
under Section 3.1 hereof, the Company and the Holder covenant and agree as
follows:

          3.4.1 The Company shall use its best efforts to have any Registration
Statement declared effective at the earliest possible time, and shall furnish
such number of prospectuses as shall be reasonably requested.

          3.4.2 The Company and the Holder shall pay their respective shares of
all costs, fees, and expenses in connection with the Registration Statement
under Section 3.3, "Inclusion in Company Registration Statement," in proportion
to the dollar value of the securities being registered by each party, including,
without limitation, the Company's legal and accounting fees, printing expenses,
blue sky fees and expenses, except that the Company shall not pay for any of the
following costs and expenses: (a) underwriting discounts and commissions
allocable to the Shares, (b) state transfer taxes, (c) brokerage commissions,
and (d) fees and expenses of counsel and accountants for the holders of the
Shares.

          3.4.3 The Company will take all necessary action which may be required
in qualifying or registering the Shares included in any Registration Statement
for offering and sale under the securities or blue sky laws of such states as
are requested by the holders of such Shares, provided that the Company shall not
be obligated to execute or file any general consent to service or process or to
qualify as a foreign corporation to do business under the laws of any such
jurisdiction.

     3.5 Indemnity.

          3.5.1 The Company shall indemnify and hold harmless the Holder who is
registering securities pursuant to this Section (the "Seller") and each
underwriter, within the meaning of the Act, who may purchase from or sell for
any Seller any of the Shares from and against any and all losses, claims,
damages, and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any post-effective amendment or new
registration statement or any supplemented prospectus under the Act included
therein required to be filed or furnished by reason of this Section, or caused
by any omission or alleged omission to state therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement or omission or alleged omission based upon information furnished or
required to be furnished in writing to the Company by such Seller or underwriter
within the meaning of such Act; provided, however, that the indemnity agreement
set forth in this Section 3.5 with respect to any prospectus which shall be
subsequently amended prior to the written confirmation of sale of any Shares
shall not inure to the benefit of any Seller or underwriter from whom the person
asserting any such losses, claims, damages or liabilities purchased such Shares
which are the subject thereof (or to the benefit of any person controlling such
Seller or underwriter), if such Seller or underwriter failed to send or give a
copy of the prospectus as amended to such person at or prior to the written
confirmation of the sale of such Shares and if such amended prospectus did not
contain any untrue statement or alleged untrue statement or omission or alleged
omission giving rise to such cause, claim, damage, or liability.


                                      -29-

<PAGE>

          3.5.2 The Seller who uses the procedures under Section 3 shall
indemnify and secure the agreement of any underwriter which the Seller employs
to indemnify the Company, its directors, each officer signing the related
post-effective amendment or registration statement and each person, if any, who
controls the Company, within the meaning of the Act from and against any losses,
claims, damages, and liabilities caused by any untrue statement or alleged
untrue statement of a material fact contained in any post-effective amendment or
registration statement or any prospectus required to be filed or furnished by
reason of this Section or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, insofar as such losses, claims, damages, or
liabilities are caused by any untrue statement or alleged untrue statement or
omission or alleged omission based upon information furnished in writing to the
Company by any such Seller or underwriter expressly for use therein.

     3.6 Agreements. The agreements in this Section shall continue in effect
regardless of the exercise and surrender of this Option.

4. RESERVATION OF SHARES. The Company shall at all times reserve, for the
purpose of issuance on exercise of this Option such number of shares of Common
Stock or such class or classes of capital stock or other securities as shall
from time to time be sufficient to comply with this Option and the Company shall
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized and unissued Common Stock or such other class or
classes of capital stock or other securities to such number as shall be
sufficient for that purpose.

5. SURVIVAL. All agreements, covenants, representations and warranties herein
shall survive the execution and delivery of this Option and any investigation at
any time made by or on behalf of any parties hereto and the exercise, sale and
purchase of this Option (and any other securities or property) issuable on
exercise hereof.

6. REMEDIES. The Company agrees that the remedies at law of the Holder, in the
event of any default or threatened default by the Company in the performance or
compliance with any of the terms of this Option, may not be adequate and such
terms may, in addition to and not in lieu of any other remedy, be specifically
enforced by a decree of specific performance of any agreement contained herein
or by an injunction against a violation of any of the terms hereof or otherwise.

7. OTHER MATTERS.

     7.1 Binding Effect. All the covenants and provisions of this Option by or
for the benefit of the Company shall bind and inure to the benefit of its
successors and assigns hereunder.

     7.2 Notices. Notices or demands pursuant to this Option to be given or made
by the Holder to or on the Company shall be sufficiently given or made if sent
by certified or registered mail, return receipt requested, postage prepaid, and
addressed, until another address is designated in writing by the Company, as
follows:


                                      -30-

<PAGE>

                              Ecology Coatings, Inc.
                              35980 Woodward Ave., Suite 200
                              Bloomfield Hills, Michigan 48304
                              Attn: President

Notices to the Holder provided for in this Option shall be deemed given or made
by the Company if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed to the Holder at the Holder's last
known address as it shall appear on the books of the Company.

     7.3 Governing Law. The validity, interpretation and performance of this
Option shall be governed by the laws of the State of Michigan.

     7.4 Parties Bound and Benefited. Nothing in this Option expressed and
nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any person or corporation other
than the Company and the Holder any right, remedy or claim under promise or
agreement hereof, and all covenants, conditions, stipulations, promises and
agreements contained in this Option shall be for the sole and exclusive benefit
of the Company and its successors and of the Holder, and his successors, heirs
and assignees.

     7.5 Headings. The Article headings herein are for convenience only and are
not part of this Option and shall not affect the interpretation thereof.

     7.6 Disputes or Disagreements. As a condition of granting of the Option
herein granted, the Holder agrees, on Holder's behalf and on behalf of
Holder's personal representatives, that any disputes or disagreements which
may arise under or as a result of or pursuant to this Agreement, shall be
determined by the Board, in its sole discretion, and that any interpretation by
the Board under the terms of this Agreement shall be final, binding and
conclusive.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                      -31-

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Option Agreement on the
day and year first above written. This Agreement has been duly executed and
delivered by the Holder and the Company to be effective on date first above
written.

                                        ECOLOGY COATINGS, INC.


                                        By:
                                            ------------------------------------
                                            Richard D. Stromback
                                            Chairman


                                        Holder:


                                        ----------------------------------------
                                        ADAM S. TRACY

                                        Address: 511 Jacob Way, Suite 203
                                                 Rochester, Michigan 48307


                                      -32-

<PAGE>

                                  EXERCISE FORM

                             ECOLOGY COATINGS, INC.
                         35980 WOODWARD AVE., SUITE 200
                        BLOOMFIELD HILLS, MICHIGAN 48304
                                 ATTN: PRESIDENT

     The undersigned hereby irrevocably subscribes for the purchase of
_____________________ (__________) Shares pursuant to and in accordance with the
terms and conditions of this Option, and herewith makes payment, covering the
purchase of the Shares, which should be delivered to the undersigned at the
address stated below, and, if such number of Shares shall not be all of the
Shares purchasable hereunder, then a new Option of like tenor for the balance of
the remaining Shares purchasable under this Option be delivered to the
undersigned at the address stated below.

     The undersigned agrees that: (1) the undersigned will not offer, sell,
transfer or otherwise dispose of any such Shares, unless either (a) a
registration statement, or post-effective amendment thereto, covering such
Shares have been filed with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and such sale, transfer or
other disposition is accompanied by a prospectus meeting the requirements of
Section 10 of the Act forming a part of such registration statement, or
post-effective amendment thereto, which is in effect under the Act covering the
Shares to be so sold, transferred or otherwise disposed of, or (b) counsel to
the Company satisfactory to the undersigned has rendered an opinion in writing
and addressed to the Company that such proposed offer, sale, transfer or other
disposition of the Shares is exempt from the provisions of Section 5 of the Act
in view of the circumstances of such proposed offer, sale, transfer or other
disposition; (2) the Company may notify the transfer agent for its Common Stock
that the certificates for the Common Stock acquired by the undersigned are not
to be transferred unless the transfer agent receives advice from the Company
that one or both of the conditions referred to in (1)(a) and (1)(b) above have
been satisfied; and (3) the Company may affix the legend set forth in Section
3.1 of this Option to the certificates for Shares hereby subscribed for, if such
legend is applicable.


Dated:                                  Signed:
       -----------------------------            --------------------------------

                                                Address:
                                                         -----------------------

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

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

<PAGE>

                                   EXHIBIT "C"


                                      -34-

<PAGE>

     THESE SECURITIES MAY NOT BE OFFERED OR SOLD UNLESS AT THE TIME OF SUCH
         OFFER OR SALE, THE PERSON MAKING SUCH OFFER OR SALE DELIVERS A
       PROSPECTUS MEETING THE REQUIREMENTS OF SECTION 10 OF THE SECURITIES
        ACT OF 1933, AS AMENDED ("ACT"), FORMING A PART OF A REGISTRATION
       STATEMENT, OR POST-EFFECTIVE AMENDMENT THERETO, WHICH IS EFFECTIVE
      UNDER SAID ACT, UNLESS IN THE OPINION OF COUNSEL TO THE CORPORATION,
   SUCH OFFER AND SALE IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SAID ACT.

                             ECOLOGY COATINGS, INC.

                                  STOCK OPTION

     This Stock Option Agreement (the "Agreement") is made and entered into as
of this 1st day of July, 2007 ("Grant Date") between ECOLOGY COATINGS, INC., a
California corporation (the "Company"), and ADAM S. TRACY (the "Holder").

     WHEREAS, the Company, through its Board of Directors (the "Board"), is
issuing this option to Holder in connection with various consulting services
rendered by the Holder to the Company, which services are deemed to have a value
of $750.00; and

     WHEREAS, by this Agreement, the Company and the Holder desire to set forth
terms upon which the Company will grant to the Holder and the Holder will accept
from the Company this Option.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Company and the Holder hereby agree as follows:

8. GRANT AND TERM OF THE OPTION.

     8.1 Grant of Stock Option. Subject to the terms and conditions of this
Agreement, the Company grants to the Holder the right and option (the "Option")
to purchase from the Company all or any part of an aggregate of THIRTY SEVEN
THOUSAND FIVE HUNDRED (37,500) shares of its Common Stock, authorized but
unissued or, at the option of the Company, treasury if available (the "Shares")
of Common Stock, par value $.001 per share, at a price of $2.00 per share (the
"Purchase Price"), as adjusted from time to time pursuant to the provisions
hereunder set forth. This Option is not granted under any stock option plan of
the Company.

     8.2 Time of Exercise. Subject to the provisions of Sections 1.5, "Transfer
and Assignment," and 3.1, "Registration and Legends," this Option may be
exercised at any time and from time to time after 9:00 a.m., E.S.T., on July 1,
2008 (the "Exercise Commencement Date") and will terminate at 5:00 p.m., E.S.T.,
on July 1, 2017 (the "Expiration Date").

     8.3 Manner of Exercise.

          8.3.1 The Holder may exercise this Option, in whole or in part, upon
surrender of this Option with the form of subscription attached hereto duly
executed to the Company at its corporate office together with the full Purchase
Price payable in cash.

          8.3.2 Upon receipt of this Option with the form of subscription duly
executed and accompanied by payment of the aggregate Purchase Price for the
Shares for which this Option is then being exercised, the Company shall cause to
be issued certificates or other evidence of ownership for


                                      -35-

<PAGE>

the total number of whole Shares for which this Option is being exercised in
such denominations as are required for delivery to the Holder, and the Company
shall thereupon deliver such documents to the Holder or its nominee.

          8.3.3 If the Holder exercises this Option with respect to fewer than
all of the Shares that may be purchased under this Option, the Company shall
execute a new Option for the balance of the Shares that may be purchased upon
exercise of this Option and deliver such new Option to the Holder.

          8.3.4 The Company covenants and agrees to pay when due and payable any
and all taxes that may be payable in respect of the issue of this Option, or the
issue of any Shares upon the exercise of this Option. The Company shall not,
however, be required to pay any tax that may be payable in respect of any
transfer involved in the issuance or delivery of this Option or of the Shares in
a name other than that of the Holder at the time of surrender, and until the
payment of such tax, the Company shall not be required to issue such Shares.

          8.3.5 The Company shall, at the time of any exercise of all or part of
this Option, upon the request of the Holder hereof, acknowledge in writing its
continuing obligation to afford to such Holder any rights to which such Holders
shall continue to be entitled after such exercise in accordance with the
provisions of this Option, provided that if the Holder of this Option fails to
make any such request, such failure shall not affect the continuing obligations
of the Company to afford any such rights to such Holder.

     8.4 Exchange of Option. This Option may be split-up, combined or exchanged
for another Option or Options of like tenor to purchase a like aggregate number
of Shares. If the Holder desires to split-up, combine or exchange this Option,
it shall make such request in writing delivered to the Company at its corporate
office and shall surrender this Option and any other Options to be so split-up,
combined or exchanged, the Company shall execute and deliver to the person
entitled thereto an Option or Options, as the case may be, as so requested. The
Company shall not be required to effect any split-up, combination or exchange
which will result in the issuance of an Option entitling the Holder to purchase
upon exercise a fraction of a Share. The Company may require the Holder to pay a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any split-up, combination or exchange of Options. The term
"Option" as used herein includes any Options issued in substitution for or
replacement of this Option, or into which this Option may be divided or
exchanged.

     8.5 Holder as Owner. Prior to due presentment for registration of transfer
of this Option, the Company may deem and treat the Holder as the absolute owner
of this Option (notwithstanding any notation of ownership or other writing
hereon) for the purpose of any exercise hereof and for all other purposes, and
the Company shall not be affected by any notice to the contrary. Irrespective of
the date of issue and delivery of certificates for any Shares issuable upon the
exercise of the Option, each person in whose name any such certificate is issued
shall be deemed to have become the holder of record of the Shares represented
thereby on the date on which all or a portion of the Option surrendered in
connection with the subscription therefore was surrendered and payment of the
purchase price was tendered. No surrender of all or a portion of the Option on
any date when the stock transfer books of the Company are closed, however, shall
be effective to constitute the person or persons entitled to receive Shares upon
such surrender as the record holder of such Shares on such date, but such person
or persons shall be constituted the record holder or holders of such Shares at
the close of business on the next succeeding date on which the stock transfer
books are opened. Each


                                      -36-

<PAGE>

person holding any Shares received upon exercise of Option shall be entitled to
receive only dividends or distributions payable to holders of record on or after
the date on which such person shall be deemed to have become the holder of
record of such Shares.

     8.6 Transfer and Assignment. This Option may not be sold, hypothecated,
exercised, assigned or transferred except in accordance with and subject to the
provisions of the Securities Act of 1933, as amended ("Act") and only upon the
consent of the Company.

     8.7 Method for Assignment. Any assignment permitted under this Option shall
be made by surrender of this Option to the Company at its principal office with
the form of assignment attached hereto duly executed and funds sufficient to pay
any transfer tax. In such event, the Company shall, without charge, execute and
deliver a new Option in the name of the assignee designated in such instrument
of assignment and this Option shall promptly be canceled. This Option may be
divided or combined with other Options that carry the same rights upon
presentation thereof at the corporate office of the Company together with a
written notice signed by the Holder, specifying the names and denominations in
which such new Options are to be issued.

     8.8 Rights of Holder. Nothing contained in this Option shall be construed
as conferring upon the Holder the right to vote or consent or receive notice as
a stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company. If, however, at any time prior to the expiration of
this Option and prior to its exercise, any of the following shall occur:

          8.8.1 The Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company;

          8.8.2 The Company shall offer to the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefore;

          8.8.3 There shall be proposed any capital reorganization or
reclassification of the Common Stock, or a sale of all or substantially all of
the assets of the Company, or a consolidation or merger of the Company with
another entity; or

          8.8.4 There shall be proposed a voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in any one or more of said
cases, the Company shall cause to be mailed to the Holder, at the earliest
practicable time (and, in any event, not less than thirty (30) days before any
record date or other date set for definitive action), written notice of the date
on which the books of the Company shall close or a record shall be taken to
determine the stockholders entitled to such dividend, distribution, convertible
or exchangeable securities or subscription rights, or entitled to vote on such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be. Such notice shall also set forth
such facts as shall indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Purchase Price and the
kind and amount of the Common Stock and other securities and property
deliverable upon exercise of this Option. Such notice shall also specify the
date as of which the holders of the Common Stock of record shall participate in
said distribution or subscription rights or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon


                                      -37-

<PAGE>

such reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be (on which date, in the event of
voluntary or involuntary dissolution, liquidation or winding up of the Company,
the right to exercise this Option shall terminate). Without limiting the
obligation of the Company to provide notice to the holder of actions hereunder,
it is agreed that failure of the Company to give notice shall not invalidate
such action of the Company.

     8.9 Lost Option. Upon receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this Option, and, in the case
of loss, theft or destruction of reasonably satisfactory indemnification,
including a surety bond if required by the Company, and upon surrender and
cancellation of this Option, if mutilated, the Company will cause to be executed
and delivered a new Option of like tenor and date. Any such new Option executed
and delivered shall constitute an additional contractual obligation on the part
of the Company, whether or not this Option so lost, stolen, destroyed, or
mutilated shall be at any time enforceable by anyone.

     8.10 Covenants of the Company. The Company covenants and agrees as follows:

          8.10.1 At all times it shall reserve and keep available for the
exercise of this Option into Common Stock such number of authorized shares of
Common Stock as are sufficient to permit the exercise in full of this Option
into Common Stock; and

          8.10.2 All Shares issued upon exercise of the Option shall be duly
authorized, validly issued and outstanding, fully-paid and non-assessable.

9. Adjustment of Purchase Price and Number of Shares Purchasable Upon Exercise.

     9.1 Recapitalization. The number of Shares purchasable on exercise of this
Option and the purchase price therefore shall be subject to adjustment from time
to time in the event that the Company shall: (i) pay a dividend in, or make a
distribution of, shares of Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares, or (iv) spin-off a
subsidiary by distributing, as a dividend or otherwise, shares of the subsidiary
to its stockholders. In any such case, the total number of shares purchasable on
exercise of this Option immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive, at the same aggregate purchase price, the
number of shares of Common Stock that the Holder would have owned or would have
been entitled to receive immediately following the occurrence of any of the
events described above had this Option been exercised in full immediately prior
to the occurrence (or applicable record date) of such event. An adjustment made
pursuant to this Section 2 shall, in the case of a stock dividend or
distribution, be made as of the record date and, in the case of a subdivision or
combination, be made as of the effective date thereof. If, as a result of any
adjustment pursuant to this Section 2, the Holder shall become entitled to
receive shares of two or more classes of series of securities of the Company,
the Board of Directors of the Company shall equitably determine the allocation
of the adjusted purchase price between or among shares or other units of such
classes or series and shall notify the Holder of such allocation.

     9.2 Merger or Consolidation. In the event of any reorganization or
recapitalization of the Company or in the event the Company consolidates with or
merges into another entity or transfers all or substantially all of its assets
to another entity, then and in each such event, the Holder, on exercise of this
Option as provided herein, at any time after the consummation of such
reorganization, recapitalization, consolidation, merger or transfer, shall be
entitled, and the documents executed to


                                      -38-

<PAGE>

effectuate such event shall so provide, to receive the stock or other securities
or property to which the Holder would have been entitled upon such consummation
if the Holder had exercised this Option immediately prior thereto. In such case,
the terms of this Option shall survive the consummation of any such
reorganization, recapitalization, consolidation, merger or transfer and shall be
applicable to the shares of stock or other securities or property receivable on
the exercise of this Option after such consummation and as an exchange for a
larger or smaller number of shares, as the case may be.

     9.3 Notice of Dissolution or Liquidation. Except as otherwise provided in
Section 2.2, "Merger or Consolidation," in the case of any sale or conveyance of
all or substantially all of the assets of the Company in connection with a plan
of complete liquidation of the Company, or in the case of the dissolution,
liquidation or winding-up of the Company, all rights under this Option shall
terminate on a date fixed by the Company, such date so fixed to be not earlier
than the date of the commencement of the proceedings for such dissolution,
liquidation or winding-up and not later than thirty (30) days after such
commencement date. Notice of such termination of purchase rights shall be given
to the Holder at least thirty (30) days prior to such termination date.

     9.4 Statement of Adjustment. Any adjustment pursuant to the provisions of
this Section 2 shall be made on the basis of the number of Shares which the
Holder would have been entitled to acquire by exercise of this Option
immediately prior to the event giving rise to such adjustment and as to the
Purchase Price in effect immediately prior to the rise to such adjustment.
Whenever any such adjustment is required to be made, the Company shall forthwith
determine the new number of Shares which the Holder hereof shall be entitled to
purchase hereunder and/or such new Purchase Price and shall prepare, retain on
file and transmit to the Holder within ten (10) days after such preparation a
statement describing in reasonable detail the method used in calculating such
adjustment.

     9.5 No Fractional Shares. The Company shall not issue any fraction of a
Share in connection with the exercise of this Option, and in any case where the
Holder would, except for the provisions of this Section 2.5, be entitled under
the terms of this Option to receive a fraction of a Share upon such exercise,
the Company shall upon the exercise and receipt of the Purchase Price, issue the
largest number of whole Shares purchasable upon exercise of this Option. The
Company shall not be required to make any cash or other adjustment in respect of
such fraction of a Share to which the Holder would otherwise be entitled. The
Holder, by the acceptance of this Option, expressly waives his right to receive
a certificate for any fraction of a Share upon exercise hereof.

     9.6 No Change in Form Required. The form of Option need not be changed
because of any change pursuant to this Section 2 in the Purchase Price or in the
number of Shares purchasable upon the exercise of a Option, may state the same
Purchase Price and the same number of shares of Preferred Stock as are stated in
the Options initially issued pursuant to the Agreement.

10. REGISTRATION UNDER THE SECURITIES ACT OF 1933.

     10.1 Registration and Legends. The Holder understands that (i) the Company
has not registered the Option or the Shares under the Act, or the applicable
securities laws of any state in reliance on exemptions from registration and
(ii) such exemptions depend upon the Holder's investment intent at the time
the Holder acquires the Option or the Shares. The Holder therefore represents
and warrants that it is acquiring the Option, and will acquire the Shares, for
the Holder's own account for investment and not with a view to distribution,
assignment, resale or other transfer of the Option or the Shares. Because the
Option and the Shares are not registered, the Holder is


                                      -39-

<PAGE>

aware that the Holder must hold them indefinitely unless they are registered
under the Act and any applicable securities laws or the Holder must obtain
exemptions from such registration. Upon exercise, in part or in whole, of this
Option, the Shares shall bear the following legend:

     The shares of Common Stock represented by this certificate have not been
registered under the Act or any applicable state securities laws, and they may
not be offered for sale, sold, transferred, pledged or hypothecated without an
effective registration statement under the Act and under any applicable state
securities laws, or an opinion of counsel, satisfactory to the company, that an
exemption from such registration is available.

     10.2 No-Action Letter. The Company agrees that it will be satisfied that no
post-effective amendment or new registration is required for the public sale of
the Shares if it shall be presented with a letter from the Staff of the
Securities and Exchange Commission (the "Commission"), stating in effect that,
based upon stated facts which the Company shall have no reason to believe are
not true in any material respect, the Staff will not recommend any action to the
Commission if such Shares are offered and sold without delivery of a prospectus,
and that, therefore, no Registration Statement under which such Shares are to be
registered is required to be filed.

     10.3 INCLUSION IN COMPANY REGISTRATION STATEMENT.

          10.3.1 The Holder of this Option and/or Shares issued to the Holder
pursuant to this Option without an effective registration statement ("Restricted
Shares") under the Act will have the right to join with the Company to register
the Restricted Shares and the Shares underlying this Option (the "Underlying
Shares") in a future registration statement under the Act filed by the Company
with the Commission, which includes a public offering of equity securities for
cash, either for the account of the Company or for the account of any other
person. This right to join with the Company in a registration statement is not
applicable to a registration statement filed by the Company with the Commission
on Form S-4, S-8 or any other inappropriate form. If, at any time, the Company
proposes to file a registration statement as described above with the
Commission, it may, in its sole discretion, offer to include in any such filing
any proposed disposition of the Restricted Shares or the Underlying Shares. In
such event, the Company will, at least thirty (30) days prior to such filing,
give written notice of such proposed filing to the Holder's address appearing
on the records of the Company. Within fifteen (15) days of receipt of the
Company's notice of filing, the Holder may request registration of the
Restricted Shares and/or Underlying Shares pursuant to a written request setting
forth the intended method of distribution and such other data or information as
the Company or its counsel shall reasonably require and such Restricted Shares
and/or Underlying Shares shall be included in the registration statement to the
maximum extent permissible. The Company shall supply the Holder with copies of
such registration statement and of the prospectus included therein in such
quantities as may be reasonably necessary for the purpose of the proposed
disposition.

          10.3.2 If at the time of any request to register the Restricted Shares
or Underlying Shares the Company is engaged or has fixed plans to be engaged
within thirty (30) days of the date of the request in a registered public
offering as to which the Restricted Shares or the Underlying Shares may be
included or is involved in an activity, in the good faith determination of the
underwriter, in the case of such offering, or the Board, in the case of such
other activity, which would be adversely affected by the requested registration
to the material detriment of the offering or the Company's activities, then
the Company may, at its option, direct that the request be delayed for a period
not in


                                      -40-

<PAGE>

excess of six months from the effective date of such offering or the date of
commencement of such proposed offering or such other material activity, as the
case may be, unless the underwriter, in the case of the offering, or the Board,
in the case of such other material activity, specifies a longer period.

     10.4 Covenants Regarding Registration. In connection with any registration
under Section 3.1 hereof, the Company and the Holder covenant and agree as
follows:

          10.4.1 The Company shall use its best efforts to have any Registration
Statement declared effective at the earliest possible time, and shall furnish
such number of prospectuses as shall be reasonably requested.

          10.4.2 The Company and the Holder shall pay their respective shares of
all costs, fees, and expenses in connection with the Registration Statement
under Section 3.3, "Inclusion in Company Registration Statement," in proportion
to the dollar value of the securities being registered by each party, including,
without limitation, the Company's legal and accounting fees, printing expenses,
blue sky fees and expenses, except that the Company shall not pay for any of the
following costs and expenses: (a) underwriting discounts and commissions
allocable to the Shares, (b) state transfer taxes, (c) brokerage commissions,
and (d) fees and expenses of counsel and accountants for the holders of the
Shares.

          10.4.3 The Company will take all necessary action which may be
required in qualifying or registering the Shares included in any Registration
Statement for offering and sale under the securities or blue sky laws of such
states as are requested by the holders of such Shares, provided that the Company
shall not be obligated to execute or file any general consent to service or
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.

     10.5 Indemnity.

          10.5.1 The Company shall indemnify and hold harmless the Holder who is
registering securities pursuant to this Section (the "Seller") and each
underwriter, within the meaning of the Act, who may purchase from or sell for
any Seller any of the Shares from and against any and all losses, claims,
damages, and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any post-effective amendment or new
registration statement or any supplemented prospectus under the Act included
therein required to be filed or furnished by reason of this Section, or caused
by any omission or alleged omission to state therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement or omission or alleged omission based upon information furnished or
required to be furnished in writing to the Company by such Seller or underwriter
within the meaning of such Act; provided, however, that the indemnity agreement
set forth in this Section 3.5 with respect to any prospectus which shall be
subsequently amended prior to the written confirmation of sale of any Shares
shall not inure to the benefit of any Seller or underwriter from whom the person
asserting any such losses, claims, damages or liabilities purchased such Shares
which are the subject thereof (or to the benefit of any person controlling such
Seller or underwriter), if such Seller or underwriter failed to send or give a
copy of the prospectus as amended to such person at or prior to the written
confirmation of the sale of such Shares and if such amended prospectus did not
contain any untrue statement or alleged untrue statement or omission or alleged
omission giving rise to such cause, claim, damage, or liability.


                                      -41-

<PAGE>

          10.5.2 The Seller who uses the procedures under Section 3 shall
indemnify and secure the agreement of any underwriter which the Seller employs
to indemnify the Company, its directors, each officer signing the related
post-effective amendment or registration statement and each person, if any, who
controls the Company, within the meaning of the Act from and against any losses,
claims, damages, and liabilities caused by any untrue statement or alleged
untrue statement of a material fact contained in any post-effective amendment or
registration statement or any prospectus required to be filed or furnished by
reason of this Section or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, insofar as such losses, claims, damages, or
liabilities are caused by any untrue statement or alleged untrue statement or
omission or alleged omission based upon information furnished in writing to the
Company by any such Seller or underwriter expressly for use therein.

     10.6 Agreements. The agreements in this Section shall continue in effect
regardless of the exercise and surrender of this Option.

11. RESERVATION OF SHARES. The Company shall at all times reserve, for the
purpose of issuance on exercise of this Option such number of shares of Common
Stock or such class or classes of capital stock or other securities as shall
from time to time be sufficient to comply with this Option and the Company shall
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized and unissued Common Stock or such other class or
classes of capital stock or other securities to such number as shall be
sufficient for that purpose.

12. SURVIVAL. All agreements, covenants, representations and warranties herein
shall survive the execution and delivery of this Option and any investigation at
any time made by or on behalf of any parties hereto and the exercise, sale and
purchase of this Option (and any other securities or property) issuable on
exercise hereof.

13. REMEDIES. The Company agrees that the remedies at law of the Holder, in the
event of any default or threatened default by the Company in the performance or
compliance with any of the terms of this Option, may not be adequate and such
terms may, in addition to and not in lieu of any other remedy, be specifically
enforced by a decree of specific performance of any agreement contained herein
or by an injunction against a violation of any of the terms hereof or otherwise.

14. OTHER MATTERS.

     14.1 Binding Effect. All the covenants and provisions of this Option by or
for the benefit of the Company shall bind and inure to the benefit of its
successors and assigns hereunder.

     14.2 Notices. Notices or demands pursuant to this Option to be given or
made by the Holder to or on the Company shall be sufficiently given or made if
sent by certified or registered mail, return receipt requested, postage prepaid,
and addressed, until another address is designated in writing by the Company, as
follows:


                                      -42-

<PAGE>

                              Ecology Coatings, Inc.
                              35980 Woodward Ave., Suite 200
                              Bloomfield Hills, Michigan 48304
                              Attn: President

Notices to the Holder provided for in this Option shall be deemed given or made
by the Company if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed to the Holder at the Holder's last
known address as it shall appear on the books of the Company.

     14.3 Governing Law. The validity, interpretation and performance of this
Option shall be governed by the laws of the State of Michigan.

     14.4 Parties Bound and Benefited. Nothing in this Option expressed and
nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any person or corporation other
than the Company and the Holder any right, remedy or claim under promise or
agreement hereof, and all covenants, conditions, stipulations, promises and
agreements contained in this Option shall be for the sole and exclusive benefit
of the Company and its successors and of the Holder, and his successors, heirs
and assignees.

     14.5 Headings. The Article headings herein are for convenience only and are
not part of this Option and shall not affect the interpretation thereof.

     14.6 Disputes or Disagreements. As a condition of granting of the Option
herein granted, the Holder agrees, on Holder's behalf and on behalf of
Holder's personal representatives, that any disputes or disagreements which
may arise under or as a result of or pursuant to this Agreement, shall be
determined by the Board, in its sole discretion, and that any interpretation by
the Board under the terms of this Agreement shall be final, binding and
conclusive.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                      -43-

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Option Agreement on the
day and year first above written. This Agreement has been duly executed and
delivered by the Holder and the Company to be effective on date first above
written.

                                        ECOLOGY COATINGS, INC.


                                        By:
                                            ------------------------------------
                                            Richard D. Stromback
                                            Chairman


                                        Holder:


                                        ----------------------------------------
                                        ADAM S. TRACY

                                        Address: 511 Jacob Way, Suite 203
                                                 Rochester, Michigan 48307


                                      -44-

<PAGE>

                                  EXERCISE FORM

                             ECOLOGY COATINGS, INC.
                         35980 WOODWARD AVE., SUITE 200
                        BLOOMFIELD HILLS, MICHIGAN 48304
                                 ATTN: PRESIDENT

     The undersigned hereby irrevocably subscribes for the purchase of
_____________________ (__________) Shares pursuant to and in accordance with the
terms and conditions of this Option, and herewith makes payment, covering the
purchase of the Shares, which should be delivered to the undersigned at the
address stated below, and, if such number of Shares shall not be all of the
Shares purchasable hereunder, then a new Option of like tenor for the balance of
the remaining Shares purchasable under this Option be delivered to the
undersigned at the address stated below.

     The undersigned agrees that: (1) the undersigned will not offer, sell,
transfer or otherwise dispose of any such Shares, unless either (a) a
registration statement, or post-effective amendment thereto, covering such
Shares have been filed with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and such sale, transfer or
other disposition is accompanied by a prospectus meeting the requirements of
Section 10 of the Act forming a part of such registration statement, or
post-effective amendment thereto, which is in effect under the Act covering the
Shares to be so sold, transferred or otherwise disposed of, or (b) counsel to
the Company satisfactory to the undersigned has rendered an opinion in writing
and addressed to the Company that such proposed offer, sale, transfer or other
disposition of the Shares is exempt from the provisions of Section 5 of the Act
in view of the circumstances of such proposed offer, sale, transfer or other
disposition; (2) the Company may notify the transfer agent for its Common Stock
that the certificates for the Common Stock acquired by the undersigned are not
to be transferred unless the transfer agent receives advice from the Company
that one or both of the conditions referred to in (1)(a) and (1)(b) above have
been satisfied; and (3) the Company may affix the legend set forth in Section
3.1 of this Option to the certificates for Shares hereby subscribed for, if such
legend is applicable.


Dated:                                 Signed:
       -----------------------------           ---------------------------------

                                               Address:
                                                        ------------------------

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

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

<PAGE>

                                   EXHIBIT "D"


                                      -46-

<PAGE>

     THESE SECURITIES MAY NOT BE OFFERED OR SOLD UNLESS AT THE TIME OF SUCH
         OFFER OR SALE, THE PERSON MAKING SUCH OFFER OR SALE DELIVERS A
       PROSPECTUS MEETING THE REQUIREMENTS OF SECTION 10 OF THE SECURITIES
        ACT OF 1933, AS AMENDED ("ACT"), FORMING A PART OF A REGISTRATION
       STATEMENT, OR POST-EFFECTIVE AMENDMENT THERETO, WHICH IS EFFECTIVE
      UNDER SAID ACT, UNLESS IN THE OPINION OF COUNSEL TO THE CORPORATION,
   SUCH OFFER AND SALE IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SAID ACT.

                             ECOLOGY COATINGS, INC.

                                  STOCK OPTION

     This Stock Option Agreement (the "Agreement") is made and entered into as
of this 1st day of July, 2007 ("Grant Date") between ECOLOGY COATINGS, INC., a
California corporation (the "Company"), and ADAM S. TRACY (the "Holder").

     WHEREAS, the Company, through its Board of Directors (the "Board"), is
issuing this option to Holder in connection with various consulting services
rendered by the Holder to the Company, which services are deemed to have a value
of $500.00; and

     WHEREAS, by this Agreement, the Company and the Holder desire to set forth
terms upon which the Company will grant to the Holder and the Holder will accept
from the Company this Option.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Company and the Holder hereby agree as follows:

15. GRANT AND TERM OF THE OPTION.

     15.1 Grant of Stock Option. Subject to the terms and conditions of this
Agreement, the Company grants to the Holder the right and option (the "Option")
to purchase from the Company all or any part of an aggregate of TWENTY FIVE
THOUSAND (25,000) shares of its Common Stock, authorized but unissued or, at the
option of the Company, treasury if available (the "Shares") of Common Stock, par
value $.001 per share, at a price of $2.00 per share (the "Purchase Price"), as
adjusted from time to time pursuant to the provisions hereunder set forth. This
Option is not granted under any stock option plan of the Company.

     15.2 Time of Exercise. Subject to the provisions of Sections 1.5, "Transfer
and Assignment," and 3.1, "Registration and Legends," this Option may be
exercised at any time and from time to time after 9:00 a.m., E.S.T., on July 1,
2009 (the "Exercise Commencement Date") and will terminate at 5:00 p.m., E.S.T.,
on July 1, 2017 (the "Expiration Date").

     15.3 Manner of Exercise.

          15.3.1 The Holder may exercise this Option, in whole or in part, upon
surrender of this Option with the form of subscription attached hereto duly
executed to the Company at its corporate office together with the full Purchase
Price payable in cash.


                                      -47-

<PAGE>

          15.3.2 Upon receipt of this Option with the form of subscription duly
executed and accompanied by payment of the aggregate Purchase Price for the
Shares for which this Option is then being exercised, the Company shall cause to
be issued certificates or other evidence of ownership for the total number of
whole Shares for which this Option is being exercised in such denominations as
are required for delivery to the Holder, and the Company shall thereupon deliver
such documents to the Holder or its nominee.

          15.3.3 If the Holder exercises this Option with respect to fewer than
all of the Shares that may be purchased under this Option, the Company shall
execute a new Option for the balance of the Shares that may be purchased upon
exercise of this Option and deliver such new Option to the Holder.

          15.3.4 The Company covenants and agrees to pay when due and payable
any and all taxes that may be payable in respect of the issue of this Option, or
the issue of any Shares upon the exercise of this Option. The Company shall not,
however, be required to pay any tax that may be payable in respect of any
transfer involved in the issuance or delivery of this Option or of the Shares in
a name other than that of the Holder at the time of surrender, and until the
payment of such tax, the Company shall not be required to issue such Shares.

          15.3.5 The Company shall, at the time of any exercise of all or part
of this Option, upon the request of the Holder hereof, acknowledge in writing
its continuing obligation to afford to such Holder any rights to which such
Holders shall continue to be entitled after such exercise in accordance with the
provisions of this Option, provided that if the Holder of this Option fails to
make any such request, such failure shall not affect the continuing obligations
of the Company to afford any such rights to such Holder.

     15.4 Exchange of Option. This Option may be split-up, combined or exchanged
for another Option or Options of like tenor to purchase a like aggregate number
of Shares. If the Holder desires to split-up, combine or exchange this Option,
it shall make such request in writing delivered to the Company at its corporate
office and shall surrender this Option and any other Options to be so split-up,
combined or exchanged, the Company shall execute and deliver to the person
entitled thereto an Option or Options, as the case may be, as so requested. The
Company shall not be required to effect any split-up, combination or exchange
which will result in the issuance of an Option entitling the Holder to purchase
upon exercise a fraction of a Share. The Company may require the Holder to pay a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any split-up, combination or exchange of Options. The term
"Option" as used herein includes any Options issued in substitution for or
replacement of this Option, or into which this Option may be divided or
exchanged.

     15.5 Holder as Owner. Prior to due presentment for registration of transfer
of this Option, the Company may deem and treat the Holder as the absolute owner
of this Option (notwithstanding any notation of ownership or other writing
hereon) for the purpose of any exercise hereof and for all other purposes, and
the Company shall not be affected by any notice to the contrary. Irrespective of
the date of issue and delivery of certificates for any Shares issuable upon the
exercise of the Option, each person in whose name any such certificate is issued
shall be deemed to have become the holder of record of the Shares represented
thereby on the date on which all or a portion of the Option surrendered in
connection with the subscription therefore was surrendered and payment of the
purchase price was tendered. No surrender of all or a portion of the Option on
any date when the stock transfer books of the Company are closed, however, shall
be effective to constitute the person


                                      -48-

<PAGE>

or persons entitled to receive Shares upon such surrender as the record holder
of such Shares on such date, but such person or persons shall be constituted the
record holder or holders of such Shares at the close of business on the next
succeeding date on which the stock transfer books are opened. Each person
holding any Shares received upon exercise of Option shall be entitled to receive
only dividends or distributions payable to holders of record on or after the
date on which such person shall be deemed to have become the holder of record of
such Shares.

     15.6 Transfer and Assignment. This Option may not be sold, hypothecated,
exercised, assigned or transferred except in accordance with and subject to the
provisions of the Securities Act of 1933, as amended ("Act") and only upon the
consent of the Company.

     15.7 Method for Assignment. Any assignment permitted under this Option
shall be made by surrender of this Option to the Company at its principal office
with the form of assignment attached hereto duly executed and funds sufficient
to pay any transfer tax. In such event, the Company shall, without charge,
execute and deliver a new Option in the name of the assignee designated in such
instrument of assignment and this Option shall promptly be canceled. This Option
may be divided or combined with other Options that carry the same rights upon
presentation thereof at the corporate office of the Company together with a
written notice signed by the Holder, specifying the names and denominations in
which such new Options are to be issued.

     15.8 Rights of Holder. Nothing contained in this Option shall be construed
as conferring upon the Holder the right to vote or consent or receive notice as
a stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company. If, however, at any time prior to the expiration of
this Option and prior to its exercise, any of the following shall occur:

          15.8.1 The Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company;

          15.8.2 The Company shall offer to the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefore;

          15.8.3 There shall be proposed any capital reorganization or
reclassification of the Common Stock, or a sale of all or substantially all of
the assets of the Company, or a consolidation or merger of the Company with
another entity; or

          15.8.4 There shall be proposed a voluntary or involuntary dissolution,
liquidation or winding up of the Company; then, in any one or more of said
cases, the Company shall cause to be mailed to the Holder, at the earliest
practicable time (and, in any event, not less than thirty (30) days before any
record date or other date set for definitive action), written notice of the date
on which the books of the Company shall close or a record shall be taken to
determine the stockholders entitled to such dividend, distribution, convertible
or exchangeable securities or subscription rights, or entitled to vote on such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be. Such notice shall also set forth
such facts as shall indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Purchase Price and the
kind and amount of the Common Stock and other securities and property


                                      -49-

<PAGE>

deliverable upon exercise of this Option. Such notice shall also specify the
date as of which the holders of the Common Stock of record shall participate in
said distribution or subscription rights or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation or winding up, as the case may be (on which date, in the event of
voluntary or involuntary dissolution, liquidation or winding up of the Company,
the right to exercise this Option shall terminate). Without limiting the
obligation of the Company to provide notice to the holder of actions hereunder,
it is agreed that failure of the Company to give notice shall not invalidate
such action of the Company.

     15.9 Lost Option. Upon receipt by the Company of evidence satisfactory to
it of the loss, theft, destruction or mutilation of this Option, and, in the
case of loss, theft or destruction of reasonably satisfactory indemnification,
including a surety bond if required by the Company, and upon surrender and
cancellation of this Option, if mutilated, the Company will cause to be executed
and delivered a new Option of like tenor and date. Any such new Option executed
and delivered shall constitute an additional contractual obligation on the part
of the Company, whether or not this Option so lost, stolen, destroyed, or
mutilated shall be at any time enforceable by anyone.

     15.10 Covenants of the Company. The Company covenants and agrees as
follows:

          15.10.1 At all times it shall reserve and keep available for the
exercise of this Option into Common Stock such number of authorized shares of
Common Stock as are sufficient to permit the exercise in full of this Option
into Common Stock; and

          15.10.2 All Shares issued upon exercise of the Option shall be duly
authorized, validly issued and outstanding, fully-paid and non-assessable.

16. Adjustment of Purchase Price and Number of Shares Purchasable Upon Exercise.

     16.1 Recapitalization. The number of Shares purchasable on exercise of this
Option and the purchase price therefore shall be subject to adjustment from time
to time in the event that the Company shall: (i) pay a dividend in, or make a
distribution of, shares of Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares, or (iv) spin-off a
subsidiary by distributing, as a dividend or otherwise, shares of the subsidiary
to its stockholders. In any such case, the total number of shares purchasable on
exercise of this Option immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive, at the same aggregate purchase price, the
number of shares of Common Stock that the Holder would have owned or would have
been entitled to receive immediately following the occurrence of any of the
events described above had this Option been exercised in full immediately prior
to the occurrence (or applicable record date) of such event. An adjustment made
pursuant to this Section 2 shall, in the case of a stock dividend or
distribution, be made as of the record date and, in the case of a subdivision or
combination, be made as of the effective date thereof. If, as a result of any
adjustment pursuant to this Section 2, the Holder shall become entitled to
receive shares of two or more classes of series of securities of the Company,
the Board of Directors of the Company shall equitably determine the allocation
of the adjusted purchase price between or among shares or other units of such
classes or series and shall notify the Holder of such allocation.

     16.2 Merger or Consolidation. In the event of any reorganization or
recapitalization of the Company or in the event the Company consolidates with or
merges into another entity or transfers all


                                      -50-

<PAGE>

or substantially all of its assets to another entity, then and in each such
event, the Holder, on exercise of this Option as provided herein, at any time
after the consummation of such reorganization, recapitalization, consolidation,
merger or transfer, shall be entitled, and the documents executed to effectuate
such event shall so provide, to receive the stock or other securities or
property to which the Holder would have been entitled upon such consummation if
the Holder had exercised this Option immediately prior thereto. In such case,
the terms of this Option shall survive the consummation of any such
reorganization, recapitalization, consolidation, merger or transfer and shall be
applicable to the shares of stock or other securities or property receivable on
the exercise of this Option after such consummation and as an exchange for a
larger or smaller number of shares, as the case may be.

     16.3 Notice of Dissolution or Liquidation. Except as otherwise provided in
Section 2.2, "Merger or Consolidation," in the case of any sale or conveyance of
all or substantially all of the assets of the Company in connection with a plan
of complete liquidation of the Company, or in the case of the dissolution,
liquidation or winding-up of the Company, all rights under this Option shall
terminate on a date fixed by the Company, such date so fixed to be not earlier
than the date of the commencement of the proceedings for such dissolution,
liquidation or winding-up and not later than thirty (30) days after such
commencement date. Notice of such termination of purchase rights shall be given
to the Holder at least thirty (30) days prior to such termination date.

     16.4 Statement of Adjustment. Any adjustment pursuant to the provisions of
this Section 2 shall be made on the basis of the number of Shares which the
Holder would have been entitled to acquire by exercise of this Option
immediately prior to the event giving rise to such adjustment and as to the
Purchase Price in effect immediately prior to the rise to such adjustment.
Whenever any such adjustment is required to be made, the Company shall forthwith
determine the new number of Shares which the Holder hereof shall be entitled to
purchase hereunder and/or such new Purchase Price and shall prepare, retain on
file and transmit to the Holder within ten (10) days after such preparation a
statement describing in reasonable detail the method used in calculating such
adjustment.

     16.5 No Fractional Shares. The Company shall not issue any fraction of a
Share in connection with the exercise of this Option, and in any case where the
Holder would, except for the provisions of this Section 2.5, be entitled under
the terms of this Option to receive a fraction of a Share upon such exercise,
the Company shall upon the exercise and receipt of the Purchase Price, issue the
largest number of whole Shares purchasable upon exercise of this Option. The
Company shall not be required to make any cash or other adjustment in respect of
such fraction of a Share to which the Holder would otherwise be entitled. The
Holder, by the acceptance of this Option, expressly waives his right to receive
a certificate for any fraction of a Share upon exercise hereof.

     16.6 No Change in Form Required. The form of Option need not be changed
because of any change pursuant to this Section 2 in the Purchase Price or in the
number of Shares purchasable upon the exercise of a Option, may state the same
Purchase Price and the same number of shares of Preferred Stock as are stated in
the Options initially issued pursuant to the Agreement.

17. REGISTRATION UNDER THE SECURITIES ACT OF 1933.

     17.1 Registration and Legends. The Holder understands that (i) the Company
has not registered the Option or the Shares under the Act, or the applicable
securities laws of any state in reliance on exemptions from registration and
(ii) such exemptions depend upon the Holder's investment intent at the time
the Holder acquires the Option or the Shares. The Holder therefore


                                      -51-

<PAGE>

represents and warrants that it is acquiring the Option, and will acquire the
Shares, for the Holder's own account for investment and not with a view to
distribution, assignment, resale or other transfer of the Option or the Shares.
Because the Option and the Shares are not registered, the Holder is aware that
the Holder must hold them indefinitely unless they are registered under the Act
and any applicable securities laws or the Holder must obtain exemptions from
such registration. Upon exercise, in part or in whole, of this Option, the
Shares shall bear the following legend:

     The shares of Common Stock represented by this certificate have not been
registered under the Act or any applicable state securities laws, and they may
not be offered for sale, sold, transferred, pledged or hypothecated without an
effective registration statement under the Act and under any applicable state
securities laws, or an opinion of counsel, satisfactory to the company, that an
exemption from such registration is available.

     17.2 No-Action Letter. The Company agrees that it will be satisfied that no
post-effective amendment or new registration is required for the public sale of
the Shares if it shall be presented with a letter from the Staff of the
Securities and Exchange Commission (the "Commission"), stating in effect that,
based upon stated facts which the Company shall have no reason to believe are
not true in any material respect, the Staff will not recommend any action to the
Commission if such Shares are offered and sold without delivery of a prospectus,
and that, therefore, no Registration Statement under which such Shares are to be
registered is required to be filed.

     17.3 INCLUSION IN COMPANY REGISTRATION STATEMENT.

          17.3.1 The Holder of this Option and/or Shares issued to the Holder
pursuant to this Option without an effective registration statement ("Restricted
Shares") under the Act will have the right to join with the Company to register
the Restricted Shares and the Shares underlying this Option (the "Underlying
Shares") in a future registration statement under the Act filed by the Company
with the Commission, which includes a public offering of equity securities for
cash, either for the account of the Company or for the account of any other
person. This right to join with the Company in a registration statement is not
applicable to a registration statement filed by the Company with the Commission
on Form S-4, S-8 or any other inappropriate form. If, at any time, the Company
proposes to file a registration statement as described above with the
Commission, it may, in its sole discretion, offer to include in any such filing
any proposed disposition of the Restricted Shares or the Underlying Shares. In
such event, the Company will, at least thirty (30) days prior to such filing,
give written notice of such proposed filing to the Holder's address appearing
on the records of the Company. Within fifteen (15) days of receipt of the
Company's notice of filing, the Holder may request registration of the
Restricted Shares and/or Underlying Shares pursuant to a written request setting
forth the intended method of distribution and such other data or information as
the Company or its counsel shall reasonably require and such Restricted Shares
and/or Underlying Shares shall be included in the registration statement to the
maximum extent permissible. The Company shall supply the Holder with copies of
such registration statement and of the prospectus included therein in such
quantities as may be reasonably necessary for the purpose of the proposed
disposition.

          17.3.2 If at the time of any request to register the Restricted Shares
or Underlying Shares the Company is engaged or has fixed plans to be engaged
within thirty (30) days of the date of the request in a registered public
offering as to which the Restricted Shares or the Underlying Shares may be
included or is involved in an activity, in the good faith determination of the
underwriter, in


                                      -52-

<PAGE>

the case of such offering, or the Board, in the case of such other activity,
which would be adversely affected by the requested registration to the material
detriment of the offering or the Company's activities, then the Company may,
at its option, direct that the request be delayed for a period not in excess of
six months from the effective date of such offering or the date of commencement
of such proposed offering or such other material activity, as the case may be,
unless the underwriter, in the case of the offering, or the Board, in the case
of such other material activity, specifies a longer period.

     17.4 Covenants Regarding Registration. In connection with any registration
under Section 3.1 hereof, the Company and the Holder covenant and agree as
follows:

          17.4.1 The Company shall use its best efforts to have any Registration
Statement declared effective at the earliest possible time, and shall furnish
such number of prospectuses as shall be reasonably requested.

          17.4.2 The Company and the Holder shall pay their respective shares of
all costs, fees, and expenses in connection with the Registration Statement
under Section 3.3, "Inclusion in Company Registration Statement," in proportion
to the dollar value of the securities being registered by each party, including,
without limitation, the Company's legal and accounting fees, printing expenses,
blue sky fees and expenses, except that the Company shall not pay for any of the
following costs and expenses: (a) underwriting discounts and commissions
allocable to the Shares, (b) state transfer taxes, (c) brokerage commissions,
and (d) fees and expenses of counsel and accountants for the holders of the
Shares.

          17.4.3 The Company will take all necessary action which may be
required in qualifying or registering the Shares included in any Registration
Statement for offering and sale under the securities or blue sky laws of such
states as are requested by the holders of such Shares, provided that the Company
shall not be obligated to execute or file any general consent to service or
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.

     17.5 Indemnity.

          17.5.1 The Company shall indemnify and hold harmless the Holder who is
registering securities pursuant to this Section (the "Seller") and each
underwriter, within the meaning of the Act, who may purchase from or sell for
any Seller any of the Shares from and against any and all losses, claims,
damages, and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any post-effective amendment or new
registration statement or any supplemented prospectus under the Act included
therein required to be filed or furnished by reason of this Section, or caused
by any omission or alleged omission to state therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement or omission or alleged omission based upon information furnished or
required to be furnished in writing to the Company by such Seller or underwriter
within the meaning of such Act; provided, however, that the indemnity agreement
set forth in this Section 3.5 with respect to any prospectus which shall be
subsequently amended prior to the written confirmation of sale of any Shares
shall not inure to the benefit of any Seller or underwriter from whom the person
asserting any such losses, claims, damages or liabilities purchased such Shares
which are the subject thereof (or to the benefit of any person controlling such
Seller or underwriter), if such Seller or underwriter failed to send or give a
copy of the prospectus as amended to such person at or prior to the written
confirmation of the sale of such Shares and if such amended


                                      -53-

<PAGE>

prospectus did not contain any untrue statement or alleged untrue statement or
omission or alleged omission giving rise to such cause, claim, damage, or
liability.

          17.5.2 The Seller who uses the procedures under Section 3 shall
indemnify and secure the agreement of any underwriter which the Seller employs
to indemnify the Company, its directors, each officer signing the related
post-effective amendment or registration statement and each person, if any, who
controls the Company, within the meaning of the Act from and against any losses,
claims, damages, and liabilities caused by any untrue statement or alleged
untrue statement of a material fact contained in any post-effective amendment or
registration statement or any prospectus required to be filed or furnished by
reason of this Section or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, insofar as such losses, claims, damages, or
liabilities are caused by any untrue statement or alleged untrue statement or
omission or alleged omission based upon information furnished in writing to the
Company by any such Seller or underwriter expressly for use therein.

     17.6 Agreements. The agreements in this Section shall continue in effect
regardless of the exercise and surrender of this Option.

18. RESERVATION OF SHARES. The Company shall at all times reserve, for the
purpose of issuance on exercise of this Option such number of shares of Common
Stock or such class or classes of capital stock or other securities as shall
from time to time be sufficient to comply with this Option and the Company shall
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized and unissued Common Stock or such other class or
classes of capital stock or other securities to such number as shall be
sufficient for that purpose.

19. SURVIVAL. All agreements, covenants, representations and warranties herein
shall survive the execution and delivery of this Option and any investigation at
any time made by or on behalf of any parties hereto and the exercise, sale and
purchase of this Option (and any other securities or property) issuable on
exercise hereof.

20. REMEDIES. The Company agrees that the remedies at law of the Holder, in the
event of any default or threatened default by the Company in the performance or
compliance with any of the terms of this Option, may not be adequate and such
terms may, in addition to and not in lieu of any other remedy, be specifically
enforced by a decree of specific performance of any agreement contained herein
or by an injunction against a violation of any of the terms hereof or otherwise.

21. OTHER MATTERS.

     21.1 Binding Effect. All the covenants and provisions of this Option by or
for the benefit of the Company shall bind and inure to the benefit of its
successors and assigns hereunder.

     21.2 Notices. Notices or demands pursuant to this Option to be given or
made by the Holder to or on the Company shall be sufficiently given or made if
sent by certified or registered mail, return receipt requested, postage prepaid,
and addressed, until another address is designated in writing by the Company, as
follows:


                                      -54-

<PAGE>

                              Ecology Coatings, Inc.
                              35980 Woodward Ave., Suite 200
                              Bloomfield Hills, Michigan 48304
                              Attn: President

Notices to the Holder provided for in this Option shall be deemed given or made
by the Company if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed to the Holder at the Holder's last
known address as it shall appear on the books of the Company.

     21.3 Governing Law. The validity, interpretation and performance of this
Option shall be governed by the laws of the State of Michigan.

     21.4 Parties Bound and Benefited. Nothing in this Option expressed and
nothing that may be implied from any of the provisions hereof is intended, or
shall be construed, to confer upon, or give to, any person or corporation other
than the Company and the Holder any right, remedy or claim under promise or
agreement hereof, and all covenants, conditions, stipulations, promises and
agreements contained in this Option shall be for the sole and exclusive benefit
of the Company and its successors and of the Holder, and his successors, heirs
and assignees.

     21.5 Headings. The Article headings herein are for convenience only and are
not part of this Option and shall not affect the interpretation thereof.

     21.6 Disputes or Disagreements. As a condition of granting of the Option
herein granted, the Holder agrees, on Holder's behalf and on behalf of
Holder's personal representatives, that any disputes or disagreements which
may arise under or as a result of or pursuant to this Agreement, shall be
determined by the Board, in its sole discretion, and that any interpretation by
the Board under the terms of this Agreement shall be final, binding and
conclusive.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                      -55-

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Option Agreement on the
day and year first above written. This Agreement has been duly executed and
delivered by the Holder and the Company to be effective on date first above
written.

                                     ECOLOGY COATINGS, INC.


                                     By:
                                         ---------------------------------------
                                         Richard D. Stromback
                                         Chairman


                                     Holder:


                                     -------------------------------------------
                                     ADAM S. TRACY

                                     Address: 511 Jacob Way, Suite 203
                                              Rochester, Michigan 48307


                                      -56-

<PAGE>

                                  EXERCISE FORM

                             ECOLOGY COATINGS, INC.
                         35980 WOODWARD AVE., SUITE 200
                        BLOOMFIELD HILLS, MICHIGAN 48304
                                 ATTN: PRESIDENT

     The undersigned hereby irrevocably subscribes for the purchase of
_____________________ (__________) Shares pursuant to and in accordance with the
terms and conditions of this Option, and herewith makes payment, covering the
purchase of the Shares, which should be delivered to the undersigned at the
address stated below, and, if such number of Shares shall not be all of the
Shares purchasable hereunder, then a new Option of like tenor for the balance of
the remaining Shares purchasable under this Option be delivered to the
undersigned at the address stated below.

     The undersigned agrees that: (1) the undersigned will not offer, sell,
transfer or otherwise dispose of any such Shares, unless either (a) a
registration statement, or post-effective amendment thereto, covering such
Shares have been filed with the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"), and such sale, transfer or
other disposition is accompanied by a prospectus meeting the requirements of
Section 10 of the Act forming a part of such registration statement, or
post-effective amendment thereto, which is in effect under the Act covering the
Shares to be so sold, transferred or otherwise disposed of, or (b) counsel to
the Company satisfactory to the undersigned has rendered an opinion in writing
and addressed to the Company that such proposed offer, sale, transfer or other
disposition of the Shares is exempt from the provisions of Section 5 of the Act
in view of the circumstances of such proposed offer, sale, transfer or other
disposition; (2) the Company may notify the transfer agent for its Common Stock
that the certificates for the Common Stock acquired by the undersigned are not
to be transferred unless the transfer agent receives advice from the Company
that one or both of the conditions referred to in (1)(a) and (1)(b) above have
been satisfied; and (3) the Company may affix the legend set forth in Section
3.1 of this Option to the certificates for Shares hereby subscribed for, if such
legend is applicable.


Dated:                                 Signed:
       -----------------------------           ---------------------------------

                                               Address:
                                                        ------------------------

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

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