Document:

Exhibit
      10.17

    

    NEITHER
      THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
      WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN
      MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
      PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS
      OR
      AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE
      OPINION OF COUNSEL FOR THE COMPANY, IS AVAILABLE.

    

    Void
      after 5:00 P.M. New York City time on the last day of the Exercise
      Period,

    as
      defined in the Warrant

     

    CLASS
      B

    COMMON
      STOCK PURCHASE WARRANT

    OF

    SHUMATE
      INDUSTRIES, INC.

     

    This
      is
      to certify that, FOR VALUE RECEIVED, ______________________________ (“Holder”),
      is entitled to purchase, subject to the provisions of this warrant
      (“Warrant”
or
      “Class
      B Warrant”),
      from
      Shumate Industries, Inc., a Delaware corporation (the “Company”),
      at an
      exercise price per share of $2.00, subject to adjustment as provided in this
      Warrant (the “Warrant
      Exercise Price”),
      __________________ (___________) shares of common stock, par value $0.001 per
      share (“Common
      Stock”).
      The
      shares of Common Stock deliverable upon such exercise, and as adjusted from
      time
      to time (including shares issued as dividends or upon any stock split or
      recapitalization), are hereinafter sometimes referred to as “Warrant
      Shares.”
      

     

    1. ISSUANCE
      OF WARRANT.
      This
      Warrant is being issued pursuant to the exercise of a like number of Series
      A
      Warrants by the Holder hereof previously issued to the Holder in connection
      with
      its participation in the Company’s Placement (as defined below) as otherwise
      described in the Company’s Private Placement Memorandum dated as of September
      20, 2006, as amended (“Memorandum”).
      Capitalized terms used herein and not otherwise defined shall have the meanings
      ascribed thereto in the Subscription Agreement or Memorandum, as the case may
      be. In addition, the following terms have the meanings set forth below:

     

    “Class
      A Warrants”
shall
      mean the Class A Warrants issued in connection with the Placement. 

    

    “Convertible
      Securities”
shall
      mean evidences of indebtedness, shares of stock or other securities, which
      are
      convertible into or exchangeable, with or without payment of additional
      consideration in cash or property, for shares of Common Stock, either
      immediately or upon the occurrence of a specified date or a specified
      event.

     

    
      
         

      

      
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    “Exercise
      Period”
shall
      mean the period commencing on the date hereof and ending at 5 p.m., Eastern
      Time
      on March 31, 2012. 

    

    “Permitted
      Issuances”
shall
      mean (i) Common Stock issued pursuant to a stock split or
      subdivision,
      or (ii)
      Common Stock issuable or issued to employees, consultants or directors of the
      Company directly or pursuant to a stock plan or other compensation arrangement
      (including upon exercise of options or warrants) approved by the Board of
      Directors of the Company at the then fair market value, or (iii) capital stock,
      debt instruments convertible into capital stock or warrants or options to
      purchase capital stock issued in connection with bona fide acquisitions,
      mergers, purchases, corporate partnering agreements, consulting agreements,
      joint ventures or similar transactions, the terms of which are approved by
      the
      Board of Directors of the Company, or (iv) Common Stock issued or issuable
      upon
      conversion of the Class A Warrants, or (v) Common Stock issuable upon exercise
      of warrants issued to First Montauk Securities Corp. (or its assignees) as
      compensation in connection with the Offering, or (vi) Common Stock or any other
      securities exercisable or exchangeable for, or convertible into shares of Common
      Stock outstanding as of September 20, 2006.

    

    “Placement”
means
      the private placement by the Company of up to $6,000,000 worth of its
      securities, including the over-allotment option, consisting of shares of the
      Company’s Common Stock and Class A Warrants, as described in the Memorandum. The
      Placement was completed on December 14, 2006 and an aggregate of $3,787,550
      worth of the Company’s securities were sold therein.

    

    2. EXERCISE
      OF WARRANT.
      (a)
      This Warrant may be exercised in whole or in part at any time or from time
      to
      time from the date hereof until the end of the Exercise Period by presentation
      and surrender hereof to the Company at its principal office, or at the office
      of
      its stock transfer agent, if any, with the Purchase Form annexed hereto duly
      executed and accompanied by payment of the Warrant Exercise Price for the number
      of shares of Common Stock specified in such form. If this Warrant should be
      exercised in part only, the Company shall, upon surrender of this Warrant for
      cancellation, execute and deliver a new Warrant evidencing the rights of the
      Holder hereof to purchase the balance of the shares of Common Stock purchasable
      hereunder. Upon receipt by the Company of this Warrant at its office, or by
      the
      stock transfer agent of the Company at its office, in proper form for exercise,
      the Holder shall be deemed to be the holder of record of the shares of Common
      Stock issuable upon such exercise, notwithstanding that the stock transfer
      books
      of the Company shall then be closed or that certificates representing such
      shares of Common Stock shall not then be actually delivered to the Holder.
      As
      soon as practicable after each exercise of this Warrant, in whole or in part,
      and in any event within five (5) days thereafter, the Company at its expense
      (including the payment by it of any applicable issue or transfer taxes and
      transfer agent fees or opinions of counsel) will cause to be issued in the
      name
      of and delivered to the Holder hereof or, subject to Section 6 hereof, as the
      Holder may direct a certificate or certificates (with appropriate restrictive
      legends, as applicable) for the number of duly authorized, validly issued,
      fully
      paid and non-assessable shares of Common Stock to which the Holder shall be
      entitled upon exercise plus, in lieu of any fractional share to which the Holder
      would otherwise be entitled, all issuances of Common Stock shall be rounded
      up
      to the nearest whole share.

     

    
      
         

      

      
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    (b) Notwithstanding
      the foregoing, at any time after March 31, 2008 that a registration statement
      covering the resale of the Warrant Shares is not effective or is suspended,
      or
      that the related prospectus is outdated, defective or requires a supplement
      or
      amendment for any reason, the Holder may, at its option during such time, elect
      to pay some or all of the Exercise Price payable upon an exercise of this
      Warrant by canceling a portion of this Warrant exercisable for such number
      of
      Warrant Shares as is determined by dividing (i) the total Exercise Price
      payable in respect of the number of Warrant Shares being purchased upon such
      exercise by (ii) the excess of the Fair Market Value per share of Common
      Stock as of the effective date of exercise, as determined pursuant to Section
      3(d) below (the “Exercise
      Date”)
      over
      the Exercise Price per share. If the Holder wishes to exercise this Warrant
      pursuant to this method of payment with respect to the maximum number of Warrant
      Shares purchasable pursuant to this method, then the number of Warrant Shares
      so
      purchasable shall be equal to the total number of Warrant Shares, minus the
      product obtained by multiplying (x) the total number of Warrant Shares by
      (y) a fraction, the numerator of which shall be the Exercise Price per
      share and the denominator of which shall be the Fair Market Value per share
      of
      Common Stock as of the Exercise Date. 

    

    (c) For
      purposes of this Warrant, “Fair Market Value” shall mean, on any
      day:

    

    (i) the
      closing price of the Common Stock on a national securities exchange or as quoted
      on the Nasdaq Global Select Market, Nasdaq Global Market or the Nasdaq Capital
      Market on such day, as reported by the Wall Street Journal; or 

    

    (ii) if
      the
      Common Stock is quoted on the Nasdaq Global Select Market, Nasdaq Global Market
      or the Nasdaq Capital Market but no sale occurs on such day, the average of
      the
      closing bid and asked prices of the Common Stock on the Nasdaq Global Select
      Market, Nasdaq Global Market or the Nasdaq Capital Market on such day, as
      reported by the Wall Street Journal; or

    

    (iii) if
      the
      Common Stock is not so listed or quoted, the average of the closing bid and
      asked prices of the Common Stock in the U.S. over-the-counter market; or

    

    (iv) if
      no
      such trading market is readily available, the fair market value of the Common
      Stock as determined in good faith and certified by a majority of the members
      of
      the Board of Directors of the Company. 

     

    3. RESERVATION
      OF SHARES/FRACTIONAL SHARES.
      The
      Company hereby agrees that at all times there shall be reserved for issuance
      and/or delivery upon exercise of this Warrant such number of shares of Common
      Stock as shall be required for issuance and delivery upon exercise of this
      Warrant. No fractional shares or script representing fractional shares shall
      be
      issued upon the exercise of this Warrant. Instead, the Company will round up
      to
      the nearest whole share.

     

    
      
         

      

      
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    4. EXCHANGE,
      TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
      This
      Warrant is exchangeable, without expense, at the option of the Holder, upon
      presentation and surrender hereof to the Company for other Warrants of different
      denominations entitling the holder thereof to purchase in the aggregate the
      same
      number of shares of Common Stock purchasable hereunder. Upon surrender of this
      Warrant to the Company or at the office of its stock transfer agent, if any,
      with the Assignment Form annexed hereto duly executed and funds sufficient
      to
      pay any transfer tax, the Company shall, without charge, execute and deliver
      a
      new Warrant in the name of the assignee named in such instrument of assignment
      and this Warrant shall promptly be canceled. This Warrant may be divided or
      combined with other Warrants which carry the same rights upon presentation
      hereof at the office of the Company or at the office of its stock transfer
      agent, if any, together with a written notice specifying the names and
      denominations in which new Warrants are to be issued and signed by the Holder
      hereof. The term “Warrant” as used herein includes any Warrants into which this
      Warrant may be divided or exchanged. Upon receipt by the Company of evidence
      satisfactory to it of the loss, theft, destruction or mutilation of this
      Warrant, and (in the case of loss, theft or destruction) of reasonably
      satisfactory indemnification, and upon surrender and cancellation of this
      Warrant, if mutilated, the Company will execute and deliver a new Warrant of
      like tenor. Any such new Warrant executed and delivered shall constitute an
      additional contractual obligation on the part of the Company, whether or not
      this Warrant so lost, stolen, destroyed, or mutilated shall be at any time
      enforceable by anyone.

     

    5. RIGHTS
      AND OBLIGATIONS OF THE HOLDER.
      The
      Holder shall not, by virtue of this Warrant, be entitled to any rights of a
      stockholder in the Company, either at law or equity, and the rights of the
      Holder are limited to those expressed in the Warrant and are not enforceable
      against the Company except to the extent set forth herein. In addition,
      no
      provision hereof, in the absence of affirmative action by Holder to purchase
      shares of Common Stock, and no enumeration herein of the rights or privileges
      of
      Holder hereof, shall give rise to any liability of such Holder for the purchase
      price of any Common Stock or as a stockholder of the Company, whether such
      liability is asserted by the Company or by creditors of the
      Company.

     

    6. ANTI-DILUTION
      PROVISIONS.
      The
      Warrant Exercise Price in effect at any time and the number and kind of
      securities purchasable upon exercise of each Warrant shall be subject to
      adjustment as follows and the Company shall give each Holder notice of any
      event
      described below which requires an adjustment pursuant to this Section 6 at
      the
      time of such event:

     

    (a) Stock
      Dividends, Subdivisions and Combinations.
      If at
      any time the Company shall:

     

    (i) take
      a
      record of the holders of its Common Stock for the purpose of entitling them
      to
      receive a dividend payable in, or other distribution of, shares of Common
      Stock,

     

    (ii) subdivide
      or reclassify its outstanding shares of Common Stock into a larger number of
      shares of Common Stock, or 

     

    
      
         

      

      
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    (iii) combine
      or reclassify its outstanding shares of Common Stock into a smaller number
      of
      shares of Common Stock or otherwise effect a reverse stock split,

     

    then
      (i)
      the number of shares of Common Stock for which this Warrant is exercisable
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Common Stock which a record holder of the same number
      of
      shares of Common Stock for which this Warrant is exercisable immediately prior
      to the occurrence of such event, or the record date therefor, whichever is
      earlier, would own or be entitled to receive after the happening of such event,
      and (ii) the Warrant Exercise Price(s) shall be adjusted to equal (A) the
      Warrant Exercise Price immediately prior to such event multiplied by the number
      of shares of Common Stock for which this Warrant is exercisable immediately
      prior to the adjustment divided by (B) the number of shares for which this
      Warrant is exercisable immediately after such adjustment.

     

    (b) Certain
      Other Distributions and Adjustments.
      

     

    (i) If
      at any
      time the Company shall take a record of the holders of its Common Stock for
      the
      purpose of entitling them to receive any dividend or other distribution of:
      

     

    (A) cash,
      

     

    (B) any
      evidences of its indebtedness, any shares of its stock or any other securities
      or property of any nature whatsoever (other than Convertible Securities or
      shares of Common Stock), or

     

    (C) any
      warrants or other rights to subscribe for or purchase any evidences of its
      indebtedness, any shares of its stock or any other securities or property of
      any
      nature whatsoever (other than Convertible Securities or shares of Common
      Stock),

     

    then,
      upon exercise of this Warrant, Holder shall be entitled to receive such dividend
      or distribution with respect to the amount of Common Stock received on such
      exercise, and, if such dividend or distribution shall have been securities,
      any
      property subsequently distributed with respect thereto. However, in the event
      that at the time the Company has taken a record of the holders of its Common
      Stock for the purposes described above: (i) the resale of the shares of Common
      Stock issuable upon exercise of this Warrant is not registered with the SEC
      for
      resale to the public under an effective registration statement; and (ii) the
      Common Stock issuable upon exercise of this Warrant is not quoted on the OTCBB
      or a similar electronic quotation system or stock exchange, Holder shall be
      entitled to receive such dividend or distribution as if Holder had exercised
      this Warrant.

     

    (ii) A
      reclassification of the Common Stock (other than a change in par value, or
      from
      par value to no par value or from no par value to par value) into shares of
      Common Stock and shares of any other class of stock shall be deemed a
      distribution by the Company to the holders of its Common Stock of such shares
      of
      such other class of stock and in such event, upon exercise of this Warrant,
      Holder shall be entitled to receive such distribution with respect to the amount
      of Common Stock received on such exercise, and, if such dividend or distribution
      shall have been securities, any property subsequently distributed with respect
      thereto, and, if the outstanding shares of Common Stock shall be changed into
      a
      larger or smaller number of shares of Common Stock as a part of such
      reclassification, such change shall be deemed a subdivision or combination,
      as
      the case may be, of the outstanding shares of Common Stock within the meaning
      of
      Section 6(a). However, in the event that at the time the Company has
      reclassified its Common Stock, as described above: (i) the resale of the shares
      of Common Stock issuable upon exercise of this Warrant is not registered with
      the SEC for resale to the public under an effective registration statement;
      and
      (ii) the Common Stock issuable upon exercise of this Warrant is not quoted
      on
      the OTCBB or a similar electronic quotation system or stock exchange, Holder
      shall be entitled to receive such distribution, and, if such dividend or
      distribution shall have been securities, any property subsequently distributed
      with respect thereto, as if Holder had exercised this Warrant.

     

    
      
         

      

      
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    (c) Issuance
      of Additional Shares of Common Stock.
      

     

    (i) (A)
      If
      the Company at any time prior to the earlier to occur of: (i) the date that
      is
      fifteen (15) months after the date of the final Closing; or (ii) the Company
      and
      @Balance Americas, a Shell Technology Ventures company, entering into a
      definitive distribution agreement for the Company’s Hemiwedge®
      DIV product, shall
      sell shares of Common Stock (or securities convertible into shares of Common
      Stock) at a price per share (or having a conversion price per share, if a
      security convertible into Common Stock) which is less than the then applicable
      exercise price of the Class A Warrants (a “Subsequent
      Offering Price”),
      other
      than Permitted Issuances, then the Warrant Exercise Price shall be reduced
      to
      equal the Subsequent Offering Price. 

     

    (B) If,
      at
      any time after the earlier to occur of: (i) the date that is fifteen (15) months
      after the date of the final Closing; or (ii) the Company and @Balance Americas,
      a Shell Technology Ventures company, entering into a definitive distribution
      agreement for the Company’s Hemiwedge®
      DIV product,
      the
      Company shall issue or sell any shares of Common Stock in exchange for
      consideration in an amount per share of Common Stock less than the then
      applicable, or last applicable, exercise price of the Class A Warrants (the
      “Discounted
      Price,”
each
      such sale or issuance a “Discounted
      Price Transaction”
and
      the
      number of shares sold or issued in such Discounted Price Transaction the
“Discounted
      Sale Volume”),
      other
      than Permitted Issuances, then (a) the Warrant Exercise Price then in effect
      shall be adjusted so that it shall equal the price determined by multiplying
      the
      Warrant Exercise Price in effect immediately prior to such event by a fraction,
      of which the numerator shall be the sum of the amount of Common Stock
      outstanding immediately before such Discounted Price Transaction, plus the
      quotient obtained by dividing the total proceeds of such Discounted Price
      Transaction by such Warrant Exercise Price, and of which the denominator shall
      be the amount of Common Stock outstanding immediately following such exercise
      (for purposes of determining the amount of Common Stock outstanding, all
      outstanding securities exercisable for or convertible into Common Stock shall
      be
      deemed to have been so exercised or converted), and (b) the number of shares
      of
      Common Stock for which this Warrant is exercisable shall be adjusted to equal
      the product obtained by multiplying the Warrant Exercise Price in effect
      immediately prior to such Discounted Price Transaction by the number of shares
      of Common Stock for which this Warrant is exercisable immediately prior to
      such
      Discounted Price Transaction and dividing the product thereof by the Warrant
      Exercise Price resulting from the adjustment made pursuant to clause (a)
      above.

     

    
      
         

      

      
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    For
      purposes of Sections 6(c)(i)(A) and (B) hereof, in the event that the Class
      A
      Warrants have all been exercised and are no longer outstanding, then the
      applicable exercise price of the Class A Warrants shall be the exercise price
      at
      which the last Class A Warrant was exercised.

    

    (ii) The
      provisions of paragraph (i) of this Section 6(c) shall not apply to any issuance
      of shares of Common Stock for which an adjustment is provided under Section
      6(a)
      or 6(b). No adjustment of the number of shares of Common Stock for which this
      Warrant shall be exercisable shall be made under paragraph (i) of this Section
      6(c) upon the issuance of any shares of Common Stock which are issued pursuant
      to the exercise of any warrants or other subscription or purchase rights or
      pursuant to the exercise of any conversion or exchange rights in any Convertible
      Securities, if any such adjustment shall previously have been made upon the
      issuance of such warrants or other rights or upon the issuance of such
      Convertible Securities (or upon the issuance of any warrant or other rights
      therefor) pursuant to Section 6(d) or Section 6(e).

     

    (d) Issuance
      of Warrants or Other Rights.
      If at
      any time the Company shall: (i) take a record of the holders of its Common
      Stock
      for the purpose of entitling them to receive a distribution of, or (ii) in
      any
      manner issue or sell, any warrants or other rights to subscribe for or purchase
      any shares of Common Stock or any Convertible Securities, whether or not the
      rights to exchange or convert thereunder are immediately exercisable, and the
      price per share for which Common Stock is issuable upon the exercise of such
      warrants or other rights or upon conversion or exchange of such Convertible
      Securities shall be less than the Warrant Exercise Price, then the number of
      shares for which this Warrant is exercisable and the Warrant Exercise Price
      shall be adjusted as provided in Section 6(c) on the basis that the maximum
      number of shares of Common Stock issuable pursuant to all such warrants or
      other
      rights or necessary to effect the conversion or exchange of all such Convertible
      Securities shall be deemed to have been issued and outstanding and the Company
      shall be deemed to have received all the consideration payable therefor, if
      any,
      as of the date of issuance of such warrants or other rights. No further
      adjustment of the Warrant Exercise Price(s) shall be made upon the actual issue
      of such Common Stock or of such Convertible Securities upon exercise of such
      warrants or other rights or upon the actual issuance of such Common Stock upon
      such conversion or exchange of such Convertible Securities.

     

    (e) Issuance
      of Convertible Securities.
      If at
      any time the Company shall take a record of the holders of its Common Stock
      for
      the purpose of entitling them to receive a distribution of, or shall in any
      manner (whether directly or by assumption in a merger in which the Company
      is
      the surviving corporation) issue or sell, any Convertible Securities, whether
      or
      not the rights to exchange or convert thereunder are immediately exercisable,
      and the price per share for which Common Stock is issuable upon such conversion
      or exchange shall be less than the Warrant Exercise Price, then the number
      of
      shares of Common Stock for which this Warrant is exercisable and the Warrant
      Exercise Price shall be adjusted as provided in Section 6(c) on the basis that
      the maximum number of shares of Common Stock necessary to effect the conversion
      or exchange of all such Convertible Securities shall be deemed to have been
      issued and outstanding and the Company shall have received all of the
      consideration payable therefor, if any, as of the date of issuance of such
      Convertible Securities. If any issue or sale of Convertible Securities is made
      upon exercise of any warrant or other right to subscribe for or to purchase
      any
      such Convertible Securities for which adjustments of the number of shares of
      Common Stock for which this Warrant is exercisable and the Warrant Exercise
      Price have been or are to be made pursuant to Section 6(d), no further
      adjustment of the number of shares of Common Stock for which this Warrant is
      exercisable and the Warrant Exercise Price shall be made by reason of such
      record, issue or sale.

     

    
      
         

      

      
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    (f) Superseding
      Adjustment.
      If at
      any time after any adjustment of the number of shares of Common Stock for which
      this Warrant is exercisable and the Warrant Exercise Price(s) shall have been
      made pursuant to Section 6(d) or Section 6(e) as the result of any issuance
      of
      warrants, rights or Convertible Securities, 

     

    (i) such
      warrants or rights, or the right of conversion or exchange in such other
      Convertible Securities, shall expire, and all or a portion of such warrants
      or
      rights, or the right of conversion or exchange with respect to all or a portion
      of such other Convertible Securities, as the case may be, shall not have been
      exercised, or

     

    (ii) the
      consideration per share for which shares of Common Stock are issuable pursuant
      to such warrants or rights, or the terms of such other Convertible Securities,
      shall be increased solely by virtue of provisions therein contained for an
      automatic increase in such consideration per share upon the occurrence of a
      specified date or event,

     

    then
      for
      each outstanding Warrant such previous adjustment shall be rescinded and
      annulled and the shares of Common Stock which were deemed to have been issued
      by
      virtue of the computation made in connection with the adjustment so rescinded
      and annulled shall no longer be deemed to have been issued by virtue of such
      computation made in connection with the adjustment so rescinded and annulled
      shall no longer be deemed to have been issued by virtue of such computation.
      Thereupon, a re-computation shall be made of the effect of such rights or
      options or other Convertible Securities on the basis of:

     

    (A) treating
      the number of shares of Common Stock or other property, if any, theretofore
      actually issued or issuable pursuant to the previous exercise of any such
      warrants or rights or any such right of conversion or exchange, as having been
      issued on the date or dates of any such exercise and for the consideration
      actually received and receivable therefor, and

     

    (B) treating
      any such warrants or rights or any such other Convertible Securities which
      then
      remain outstanding as having been granted or issued immediately after the time
      of such increase of the consideration per share for which shares of Common
      Stock
      or other property are issuable under such warrants or rights or other
      convertible Securities; whereupon a new adjustment of the number of shares
      of
      Common Stock for which this Warrant is exercisable and the Warrant Exercise
      Price(s) shall be made, which new adjustment shall supersede the previous
      adjustment so rescinded and annulled.

     

    
      
         

      

      
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    (g) No
      adjustment in the Warrant Exercise Price shall be required unless such
      adjustment would require an increase or decrease of at least one cent ($0.01)
      in
      such price; provided, however, that any adjustments which by reason of this
      Section 6(g) are not required to be made shall be carried forward and taken
      into
      account in any subsequent adjustment. All calculations under this Section 6(g)
      shall be made to the nearest cent or to the nearest one-hundredth of a share,
      as
      the case may be. 

     

    (h) The
      Company may retain a firm of independent public accountants of recognized
      standing selected by the Board (who may be the regular accountants employed
      by
      the Company) to make any computation required by this Section 6.

     

    (i) In
      the
      event that at any time, as a result of an adjustment made pursuant to Section
      6(a), (b) or (c) of this Warrant, the Holder of any Warrant thereafter shall
      become entitled to receive any shares of the Company, other than Common Stock,
      thereafter the number of such other shares so receivable upon exercise of any
      Warrant shall be subject to adjustment from time to time in a manner and on
      terms as nearly equivalent as practicable to the provisions with respect to
      the
      Common Stock contained in Sections 6(a) through (h), inclusive, of this
      Warrant.

     

    (j) Notwithstanding
      the foregoing, no adjustment shall be effected due to, or as a result of, any
      Permitted Issuances except for Common Stock issued pursuant to a stock split
      or
      subdivision.

     

    (k) Other
      Action Affecting Common Stock.
      In case
      at any time or from time to time the Company shall take any action in respect
      of
      its Common Stock, other than any action described in this Section 6, then,
      unless such action will not have a materially adverse effect upon the rights
      of
      the Holders, the number of shares of Common Stock or other stock for which
      this
      Warrant is exercisable and/or the purchase price thereof shall be adjusted
      in
      such manner as may be equitable in the circumstances.

     

    7. REDEMPTION
      OF WARRANT.
      If
      at
      anytime during the Exercise Period the Common Stock trades at or above $4.00
      per
      share (subject to adjustment for forward and reverse stock splits,
      recapitalizations, stock dividends and the like) (the "Threshold
      Price")
      during
      10 consecutive Trading Days (the "Measurement
      Period"),
      then
      the Company may, upon 30 days prior written notice “Redemption
      Notice”),
      call
      for redemption (“Call”)
      of all
      but not less than all of the Warrants then outstanding provided that the Common
      Stock has traded an
      average of 100,000 shares per day during the Measurement Period (“Threshold
      Volume”).
      If the
      conditions set forth below for such Call are satisfied from the period from
      the
      date of the Redemption Notice through and including the Redemption Date (as
      defined below), then this Warrant for which a Notice of Exercise shall not
      have
      been received by the Redemption Date will be cancelled
      at 5:00 p.m. (New York City time) on the 30th day after the date the Call Notice
      is placed in the United States mail (by first class mail) (such date, the
      "Redemption
      Date").
      In
      furtherance thereof, the Company covenants and agrees that it will honor all
      Notices of Exercise with respect to Warrant Shares subject to a Redemption
      Notice that are tendered prior to 5:00 p.m. (New York City time) on the
      Redemption Date. Notwithstanding anything to the contrary set forth in this
      Warrant, the Company may not deliver a Redemption Notice or require the
      cancellation of this Warrant (and any Redemption Notice will be void), unless,
      from the beginning of the 10th consecutive Trading Day used to determine whether
      the Common Stock has achieved the Threshold Price through the Redemption Date,
      the Company has effective under the Securities Act of 1933, as amended, a
      registration statement providing for the resale of the Warrant Shares and the
      prospectus thereunder available for use by the Holders for the resale of all
      such Warrant Shares. 

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    8. PIGGYBACK
      REGISTRATION RIGHTS.
      

    

    (a)
      Grant
      of Right.
      the
      Holder shall have the right during the Exercise Period to include the Warrant
      Shares as part of any other registration of securities filed by the Company
      (other than in connection with a transaction contemplated by Rule 145(a)
      promulgated under the Act or pursuant to Form S-8 or any equivalent form)
      (“Registration
      Statement”);
      provided,
      however,
      that if,
      solely in connection with any primary underwritten public offering for the
      account of the Company, the managing underwriter(s) thereof shall, in its
      reasonable discretion, impose a limitation on the number of shares of Common
      Stock which may be included in the Registration Statement because, in such
      underwriter(s)’ judgment, marketing or other factors dictate such limitation is
      necessary to facilitate public distribution, then the Company shall be obligated
      to include in such Registration Statement only such limited portion of the
      Warrant Shares with respect to which the Holder requested inclusion hereunder
      as
      the underwriter shall reasonably permit. Any exclusion of Warrant Shares shall
      be made pro rata among the Holders seeking to include Warrant Shares in
      proportion to the number of Warrant Shares sought to be included by such
      Holders; provided,
      however,
      that
      the Company shall not exclude any Warrant Shares unless the Company has first
      excluded all outstanding securities, the holders of which are not entitled
      to
      inclusion of such securities in such Registration Statement or are not entitled
      to pro rata inclusion with the Warrant Shares.

    

    (b)
      Terms.
      The
      Company shall bear all fees and expenses attendant to registering the Warrant
      Shares pursuant to Section 8(a) hereof, but the Holders shall pay any and all
      underwriting commissions and the expenses of any legal counsel selected by
      the
      Holders to represent them in connection with the sale of the Warrant Shares.
      In
      the event of such a proposed registration, the Company shall furnish the then
      Holders of outstanding Warrant Shares with not less than thirty (30) days
      written notice prior to the proposed date of filing of such registration
      statement. Such notice to the Holders shall continue to be given for each
      registration statement filed by the Company until such time as all of the
      Warrant Shares have been sold by the Holder. The holders of the Warrant Shares
      shall exercise the “piggy-back” rights provided for herein by giving written
      notice, within ten (10) days of the receipt of the Company’s notice of its
      intention to file a registration statement. The Company will provide written
      notice to each holder of Class B Warrants at least twenty (20) days prior to
      its
      intention to file a registration statement.

    

    9. OFFICER’S
      CERTIFICATE.
      Whenever the Warrant Exercise Price(s) shall be adjusted as required by the
      provisions of Section 6 of this Warrant, the Company shall forthwith file in
      the
      custody of its Secretary or an Assistant Secretary at its principal office
      and
      with its stock transfer agent, if any, an officer’s certificate showing the
      adjusted Warrant Exercise Price(s) and the adjusted number of shares of Common
      Stock issuable upon exercise of each Warrant, determined as herein provided,
      setting forth in reasonable detail the facts requiring such adjustment,
      including a statement of the number of additional shares of Common Stock, if
      any, and such other facts as shall be necessary to show the reason for and
      the
      manner of computing such adjustment. Each such officer’s certificate shall be
      forwarded to Holder as provided in Section 14. 

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    10. NOTICES
      TO WARRANT HOLDERS.
      So long
      as this Warrant shall be outstanding, (1) if the Company shall pay any dividend
      or make any distribution upon Common Stock, or (2) if the Company shall offer
      to
      the holders of Common Stock for subscription or purchase by them any share
      of
      any class or any other rights, or (3) if any capital reorganization of the
      Company, reclassification of the capital stock of the Company, consolidation
      or
      merger of the Company with or into another entity, tender offer transaction
      for
      the Company’s Common Stock, sale, lease or transfer of all or substantially all
      of the property and assets of the Company, or voluntary or involuntary
      dissolution, liquidation or winding up of the Company shall be effected, or
      (4)
      if the Company shall file a registration statement under the Securities Act
      of
      1933, as amended (the “Act”),
      on
      any form other than on Form S-4 or S-8 or any successor form, then in any such
      case, the Company shall cause to be mailed by certified mail to the Holder,
      at
      least ten days prior to the date specified in clauses (1), (2), (3) or (4),
      as
      the case may be, of this Section 10 a notice containing a brief description
      of
      the proposed action and stating the date on which (i) a record is to be taken
      for the purpose of such dividend, distribution or rights, or (ii) such
      reclassification, reorganization, consolidation, merger, tender offer
      transaction, conveyance, lease, dissolution, liquidation or winding up is to
      take place and the date, if any is to be fixed, as of which the holders of
      Common Stock or other securities shall receive cash or other property
      deliverable upon such reclassification, reorganization, consolidation, merger,
      conveyance, dissolution, liquidation or winding up, or (iii) such registration
      statement is to be filed with the SEC.

     

    11. RECLASSIFICATION,
      REORGANIZATION OR MERGER.
      In case
      of any reclassification, capital reorganization or other change of outstanding
      shares of Common Stock of the Company, or in case of any consolidation or merger
      of the Company with or into another corporation (other than a merger with a
      subsidiary in which merger the Company is the continuing or surviving
      corporation and which does not result in any reclassification, capital
      reorganization or other change of outstanding shares of Common Stock of the
      class issuable upon exercise of this Warrant) or in case of any sale, lease
      or
      conveyance of all or substantially all of the assets of the Company, the Company
      shall, as a condition precedent to such transaction, cause effective provisions
      to be made so that (i) the Holder shall have the right thereafter by exercising
      this Warrant, to purchase the kind and amount of shares of stock and other
      securities and property receivable upon such reclassification, capital
      reorganization and other change, consolidation, merger, sale or conveyance
      by a
      holder of the number of shares of Common Stock which could have been purchased
      upon exercise of this Warrant immediately prior to such reclassification,
      change, consolidation, merger, sale or conveyance, and (ii) the successor or
      acquiring entity shall expressly assume the due and punctual observance and
      performance of each covenant and condition of this Warrant to be performed
      and
      observed by the Company and all obligations and liabilities hereunder (including
      but not limited to the provisions of Section 3 regarding the increase in the
      number of shares of Warrant Shares potentially issuable hereunder). Any such
      provision shall include provision for adjustments which shall be as nearly
      equivalent as possible to the adjustments provided for in this Warrant. The
      foregoing provisions of this Section 11 shall similarly apply to successive
      reclassifications, capital reorganizations and changes of shares of Common
      Stock
      and to successive consolidations, mergers, sales or conveyances. In the event
      that in connection with any such capital reorganization or reclassification,
      consolidation, merger, sale or conveyance, additional shares of Common Stock
      shall be issued in exchange, conversion, substitution or payment, in whole
      in
      part, for a security of the Company other than Common Stock, any such issue
      shall be treated as an issuance of Common Stock covered by the provisions of
      Section 6 of this Warrant. 

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    12. TRANSFER
      TO COMPLY WITH THE SECURITIES ACT OF 1933; REGISTRATION
      RIGHTS.
      This
      Warrant or the Warrant Shares or any other security issued or issuable upon
      exercise of this Warrant may not be sold or otherwise disposed of except as
      follows:

     

    (i) to
      a
      person who, in the opinion of counsel for the Company, is a person to whom
      this
      Warrant or Warrant Shares may legally be transferred without registration and
      without the delivery of a current prospectus under the Act with respect thereto
      and then only against receipt of an agreement of such person to comply with
      the
      provisions of this Section 12 with respect to any resale or other disposition
      of
      such securities which agreement shall be satisfactory in form and substance
      to
      the Company and its counsel; or

     

    (ii) to
      any
      person upon delivery of a prospectus then meeting the requirements of the Act
      relating to such securities and the offering thereof for such sale or
      disposition.

     

    (iii) The
      Holder of this Warrant shall be entitled to the registration rights as described
      in the Subscription Agreement with respect to the Warrant Shares.

    

    13. GOVERNING
      LAW; JURISDICTION.
      The
      corporate laws of the State
      of
      Delaware shall govern all issues concerning the relative rights of the Company
      and its stockholders. All issues concerning the construction, validity,
      enforcement and interpretation of this Warrant shall be governed by and
      construed in accordance with the internal laws of the State of Delaware without
      giving effect to the principles of conflicts of law thereof. The
      parties hereto agree that venue in any and all actions and proceedings related
      to the subject matter of this Warrant shall be in the state and federal courts
      in and for New York, New York, which courts shall have exclusive jurisdiction
      for such purpose, and the parties hereto irrevocably submit to the exclusive
      jurisdiction of such courts and irrevocably waive the defense of an inconvenient
      forum to the maintenance of any such action or proceeding. Service of process
      may be made in any manner recognized by such courts. This Warrant and any term
      hereof may be changed, waived, discharged or terminated only by an instrument
      in
      writing signed by the party against which enforcement of the change, waiver,
      discharge or termination is sought.

     

    14. NOTICES.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (i) the date of transmission, if such notice or communication
      is delivered via
      facsimile at the facsimile telephone number specified in this Section prior
      to
      6:30 p.m. (New York City time) on a Business Day, (ii) the Business Day after
      the date of transmission, if such notice or communication is delivered
via
      facsimile at the facsimile telephone number specified in this Agreement later
      than 6:30 p.m. (New York City time) on any date and earlier than 11:59 p.m.
      (New
      York City time) on such date, (iii) the Business Day following the date of
      mailing, if sent by nationally recognized overnight courier service, or (iv)
      upon actual receipt by the party to whom such notice is required to be given.
      The address for such notices and communications shall be as
      follows:

    

      
        	
                If
                  to the Company:

              	
                Shumate
                  Industries, Inc.

              
	 	
                Attention:
                  Matthew C. Flemming

              
	 	
                12060
                  FM 3083

              
	 	
                Conroe,
                  Texas 77301

              
	 	 
	 	
                Tel:
                  (936) 539-9533

              
	 	
                Fax:
                  (936) 539-9396

              
	 	 
	
                If
                  to the Holder:

              	
                To
                  the Address Set Forth In the Records of the Company

              
	 	 
	
                With
                  copies to:

              	
                First
                  Montauk Securities Corporation

              
	 	
                328
                  Newman Springs Road

              
	 	
                Red
                  Bank, NJ 07701

              
	 	
                Fax:
                  (732) 783-0212

              
	 	
                Attn:
                  Ernest Pellegrino

              

      

    

    

    15. PAYMENT
      OF TAXES.
      The
      Company will pay all documentary stamp taxes attributable to the issuance of
      shares of Common Stock underlying this Warrant upon exercise of this Warrant;
      provided,
      however,
      that
      the Company shall not be required to pay any tax which may be payable in respect
      of any transfer involved in the registration of any certificate for shares
      of
      Common Stock underlying this Warrant in a name other that of the Holder. The
      Holder is responsible for all other tax liability that may arise as a result
      of
      holding or transferring this Warrant or receiving shares of Common Stock
      underlying this Warrant upon exercise hereof.

    

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF,
      this
      Warrant has been duly executed as of March 31, 2007.

    
      	 	 	 
	 	
              SHUMATE
                INDUSTRIES, INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:
                

              Title:
                

            

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    PURCHASE
      FORM

     

    To
      Shumate Industries, Inc.:

    

    In
      accordance with the Warrant enclosed with this Form of Election to Purchase,
      the
      undersigned hereby irrevocably elects to purchase _____________ shares of common
      stock (“Common Stock”), $0.001 par value per share, of Shumate Industries, Inc.
      The undersigned herewith makes payment of $____________, representing the full
      purchase price for such shares at the Exercise Price provided for in such
      Warrant, together with any applicable taxes payable by the undersigned pursuant
      to the Warrant. Such payment takes the form of (check applicable box or
      boxes):

    

    
      	 ̈	
              $______
                in lawful money of the United States;
                and/or

            

    

    

    
      	
               ̈

            	
              The
                cancellation of such portion of the attached Warrant as is exercisable
                for
                a total of _____ Warrant Shares (using a Fair Market Value of $_____
                per
                share for purposes of this
                calculation).

            

    

    

    The
      undersigned requests that certificates for the shares of Common Stock issuable
      upon this exercise be issued in the name of:

    

    _________________________________

      (Name)

    

    _________________________________

    

    _________________________________

      (Address)

     

    _________________________________

      (SSN
      or
      Tax ID No.)

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    ASSIGNMENT
      FORM

     

    FOR
      VALUE RECEIVED,
      _______________________________________ hereby sells, assigns and transfer
      unto:

    

    Name:_______________________________________________

    (Please
      typewrite or print in block letters)

     

    Address:_____________________________________________

     

    Social
      Security or Employer Identification No.:__________________________

     

    The
      right
      to purchase Common Stock represented by this Warrant to the extent of shares
      as
      to which such right is exercisable and does hereby irrevocably constitute and
      appoint attorney to transfer the same on the books of the Company with full
      power of substitution.

     

    Dated:
      _________________, 200_.

     

    Signature:________________________________

     

    Signature
      Guaranteed:

     

    ___________________________________1999
        STOCK
        OPTION
        PLAN

      OF

      IRIS
        BIOTECHNOLOGIES
        INC.

       

    

    1. PURPOSES
      OF THE PLAN

     

    The
      purposes of the 1999
      Stock
      Option Plan (the “Plan”)
      of
      Iris BioTechnologies Inc., a California corporation (the “Company”),
      are
      to:

     

    (a) Encourage
      selected employees, directors and consultants to improve operations and increase
      profits of the Company;

     

    (b) Encourage
      selected employees, directors and consultants to accept or continue employment
      or association with the Company or its Affiliates; and

     

    (c) Increase
      the interest of selected employees, directors and consultants in the Company’s
      welfare through participation in the growth in value of the common stock of
      the
      Company (the “Common
      Stock”).

     

    Options
      granted under this Plan (“Options”)
      may be
“incentive stock options” (“ISOs”)
      intended to satisfy the requirements of Section 422 of the Internal Revenue
      Code
      of 1986, as amended (the “Code”),
      or
“nonqualified options” (“NQOs”).

     

    2. ELIGIBLE
      PERSONS

     

    Every
      person who at the date of grant of an Option is an employee of the Company
      or of
      any Affiliate (as defined below) of the Company is eligible to receive NQOs
      or
      ISOs under this Plan. Every person who at the date of grant is a consultant
      to,
      or nonemployee director of, the Company or any Affiliate (as defined below)
      of
      the Company is eligible to receive NQOs under this Plan. The term “Affiliate”
as
      used
      in the Plan means a parent or subsidiary corporation as defined in the
      applicable provisions (currently Sections 424(e) and (f), respectively) of
      the
      Code. The term “employee”
      includes an officer or director who is an employee of the Company. The term
      “consultant”
      includes persons employed by, or otherwise affiliated with, a
      consultant.

     

    3. STOCK
      SUBJECT TO THIS PLAN

     

    Subject
      to the provisions of Section 6.1.1 of the Plan, the total number of shares
      of
      stock which may be issued under options granted pursuant to this Plan and the
      total number of shares provided for issuance under this Plan shall be 863,147
      shares of Common Stock and shall at no time exceed the applicable percentage
      as
      calculated in accordance with Section 260.140.45 of Chapter 3 of Title 10 of
      the
      California Code of Regulations. The shares covered by the portion of any grant
      under the Plan which expires unexercised shall become available again for grants
      under the Plan.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4. ADMINISTRATION

     

    4.1 General.
      This
      Plan shall be administered by the Board of Directors of the Company (the
“Board”)
      or,
      either in its entirety or only insofar as required pursuant to Section 4(b)
      hereof, by a committee (the “Committee”)
      of at
      least two Board members to which administration of the Plan, or of part of
      the
      Plan, is delegated (in either case, the “Administrator”).

     

    4.2 Public
      Company. From
      and
      after such time as the Company registers a class of equity securities under
      Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”),
      it is
      intended that this Plan shall be administered in accordance with the
      disinterested administration requirements of Rule 16b-3 promulgated by the
      Securities and Exchange Commission (“Rule
      16b-3”),
      or
      any successor rule thereto.

     

    4.3 Authority
      of Administrator.
      Subject
      to the other provisions of this Plan, the Administrator shall have the
      authority, in its discretion: (i) to grant Options; (ii) to determine the
      fair market value of the Common Stock subject to Options; (iii) to determine
      the
      exercise price of Options granted; (iv) to determine the persons (each an
“Optionee”)
      to
      whom, and the time or times at which, Options shall be granted, and the number
      of shares subject to each Option; (v) to interpret this Plan; (vi) to prescribe,
      amend, and rescind rules and regulations relating to this Plan; (vii) to
      determine the terms and provisions of each Option granted (which need not be
      identical), including but not limited to, the time or times at which Options
      shall be exercisable; (viii) with the consent of the Optionee, to modify or
      amend any Option; (ix) to defer (with the consent of the Optionee) the exercise
      date of any Option; (x) to authorize any person to execute on behalf of the
      Company any instrument evidencing the grant of an Option; and (xi) to make
      all
      other determinations deemed necessary or advisable for the administration of
      this Plan. The Administrator may delegate nondiscretionary administrative duties
      to such employees of the Company as it deems proper.

     

    4.4 Interpretation
      by Administrator.
      All
      questions of interpretation, implementation, and application of this Plan shall
      be determined by the Administrator. Such determinations shall be final and
      binding on all persons.

     

    4.5 Rule
      16b-3.
       With
      respect to persons subject to Section 16 of the Exchange Act, if any,
      transactions under this Plan are intended to comply with the applicable
      conditions of Rule 16b-3, or any successor rule thereto. To the extent any
      provision of this Plan or action by the Administrator fails to so comply, it
      shall be deemed null and void, to the extent permitted by law and deemed
      advisable by the Administrator. Notwithstanding the above, it shall be the
      responsibility of such persons, not of the Company or the Administrator, to
      comply with the requirements of Section 16 of the Exchange Act; and neither
      the Company nor the Administrator shall be liable if this Plan or any
      transaction under this Plan fails to comply with the applicable conditions
      of
      Rule 16b-3 or any successor rule thereto, or if any such person incurs any
      liability under Section 16 of the Exchange Act.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    5. GRANTING
      OF OPTIONS; OPTION AGREEMENT

     

    5.1 Termination
      of Plan.
      No
      options shall be granted under this Plan after ten years from the date of
      adoption of this Plan by the Board.

     

    5.2 Stock
      Option Agreement. Each
      Option shall be evidenced by a written stock option agreement (the “Option
      Agreement”),
      in
      form satisfactory to the Company, executed by the Company and the person to
      whom
      such Option is granted; provided, however, that the failure by the Company,
      the
      Optionee, or both, to execute the Option Agreement shall not invalidate the
      granting of an Option, although the exercise of each option shall be subject
      to
      Section 6.1.3.

     

    5.3 Type
      of Option.
      The
      Option Agreement shall specify whether each Option it evidences is an NQO or
      an
      ISO. 

     

    5.4 Early
      Approval of Grants. Subject
      to Section 6.3.3 with respect to ISOs, the Administrator may approve the grant
      of Options under this Plan to persons who are expected to become employees,
      directors or consultants of the Company, but are not employees, directors or
      consultants at the date of approval.

     

    6. TERMS
      AND CONDITIONS OF OPTIONS

     

    Each
      Option granted under this Plan shall be subject to the terms and conditions
      set
      forth in Section 6.1. NQOs shall be also subject to the terms and conditions
      set
      forth in Section 6.2, but not those set forth in Section 6.3. ISOs shall
      also be subject to the terms and conditions set forth in Section 6.3, but
      not those set forth in Section 6.2.

     

    6.1 Terms
      and Conditions to Which All Options Are Subject.
      Options
      granted under this Plan shall be subject to the following terms and
      conditions:

     

    6.1.1 Changes
      in Capital Structure.
      Subject
      to Section 6.1.2, if the stock of the Company is changed by reason of a stock
      split, reverse stock split, stock dividend, or recapitalization, combination
      or
      reclassification, appropriate adjustments shall be made by the Board in (a)
      the
      number and class of shares of stock subject to this Plan and each Option
      outstanding under this Plan, and (b) the exercise price of each outstanding
      Option; provided, however, that the Company shall not be required to issue
      fractional shares as a result of any such adjustments. Each such adjustment
      shall be subject to approval by the Board in its absolute
      discretion.

     

    6.1.2 Corporate
      Transactions.

     

    (a) Dissolution
      or Liquidation.
      In the
      event of the proposed dissolution or liquidation of the Company, the
      Administrator shall notify each Optionee at least 30 days prior to such proposed
      action. To the extent not previously exercised, all Options will terminate
      immediately prior to the consummation of such proposed action.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

       

    

    (b) Merger
      or Asset Sale.
      In the
      event of a merger of the Company with or into another corporation, or the sale
      of substantially all of the assets of the Company:

     

    (i) Options.
      Each
      Option shall be assumed or an equivalent option substituted by the successor
      corporation (including as a “successor” any purchaser of substantially all of
      the assets of the Company) or a parent or subsidiary of the successor
      corporation. In the event that the successor corporation refuses to assume
      or
      substitute for the Option, the Optionee shall have the right to exercise the
      Option as to all of the shares of Common Stock covered by the Option, including
      Shares as to which it would not otherwise be exercisable. If an Option is
      exercisable in lieu of assumption or substitution in the event of a merger
      or
      sale of assets, the Administrator shall notify the Optionee that the Option
      shall be fully exercisable for a period of 15 days from the date of such notice,
      and the Option shall terminate upon the expiration of such period. For the
      purposes of this paragraph, the Option shall be considered assumed if, following
      the merger or sale of assets, the option confers the right to purchase or
      receive, for each share of Common Stock subject to the Option immediately prior
      to the merger or sale of assets, the consideration (whether stock, cash, or
      other securities or property) received in the merger or sale of assets by
      holders of Common Stock for each share held on the effective date of the
      transaction (and if holders were offered a choice of consideration, the type
      of
      consideration chosen by the holders of a majority of the outstanding shares);
      provided, however, that if such consideration received in the merger or sale
      of
      assets was not solely common stock of the successor corporation or its parent
      entity, the Administrator may, with the consent of the successor corporation,
      provide for the consideration to be received upon the exercise of the Option,
      for each Share of Common Stock subject to the Option, to be solely common stock
      of the successor corporation or its parent entity equal in fair market value
      to
      the per share consideration received by holders of Common Stock in the merger
      or
      sale of assets.

     

    6.1.3 Time
      of Option Exercise.
      Subject
      to Section 5 and Section 6.3.4, Options granted under this Plan shall be
      exercisable (a) immediately as of the effective date of the Option Agreement
      granting the Option, or (b) in accordance with a schedule related to the date
      of
      the grant of the Option, the date of first employment, or such other date as
      may
      be set by the Administrator (in any case, the “Vesting
      Base Date”)
      and
      specified in the Option Agreement relating to such Option; provided, however,
      that with respect to Options granted to employees who are not officers,
      directors or consultants, the right to exercise an Option must vest at the
      rate
      of at least 20% per year over five years from the date the Option was granted.
      Options granted to officers, directors or consultants may become fully
      exercisable, subject to reasonable conditions such as continued employment,
      at
      any time or during any period established by the Board of the Administrator
      in
      accordance with this Plan. In any case, no Option shall be exercisable until
      a
      written Option Agreement in form satisfactory to the Company is executed by
      the
      Company and the Optionee.

     

    6.1.4 Option
      Grant Date.
      Except
      in the case of advance approvals described in Section 5.4, the date of grant
      of
      an Option under this Plan shall be the date as of which the Administrator
      approves the grant. 

     

    
      
         

      

      
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    6.1.5 Nonassignability
      of Option Rights.
      Except
      as otherwise determined by the Administrator and expressly set forth in the
      Option Agreement, no Option granted under this Plan shall be assignable or
      otherwise transferable by the Optionee except by will or by the laws of descent
      and distribution. During the life of the Optionee, except as otherwise
      determined by the Administrator and expressly set forth in the Option Agreement,
      an Option shall be exercisable only by the Optionee.

     

    6.1.6 Payment.
      Except
      as provided below, payment in full, in cash, shall be made for all stock
      purchased at the time written notice of exercise of an Option is given to the
      Company, and proceeds of any payment shall constitute general funds of the
      Company. At the time an Option is granted or exercised, the Administrator,
      in
      the exercise of its absolute discretion after considering any tax or accounting
      consequences, may authorize any one or more of the following additional methods
      of payment:

     

    (a) Acceptance
      of the Optionee’s full recourse promissory note for all or part of the Option
      price, payable on such terms and bearing such interest rate as determined by
      the
      Administrator (but in no event less than the minimum interest rate specified
      under the Code at which no additional interest would be imputed and in no event
      more than the maximum interest rate allowed under applicable usury laws), which
      promissory note may be either secured or unsecured in such manner as the
      Administrator shall approve (including, without limitation, by a security
      interest in the shares of the Company); and

     

    (b) Delivery
      by the Optionee of Common Stock already owned by the Optionee for all or part
      of
      the Option price, provided the value (determined as set forth in
      Section 6.1.11) of such Common Stock is equal on the date of exercise to
      the Option price, or such portion thereof as the Optionee is authorized to
      pay
      by delivery of such stock; provided, however, that if an Optionee has exercised
      any portion of any Option granted by the Company by delivery of Common Stock,
      the Optionee may not, within six months following such exercise, exercise any
      Option granted under this Plan by delivery of Common Stock without the consent
      of the Administrator.

     

    6.1.7 Termination
      of Employment.

     

    (a) If,
      for
      any reason other than death, disability or “cause” (as defined below), an
      Optionee ceases to be employed by the Company or any of its Affiliates (such
      event being called a “Termination”),
      Options held at the date of Termination (to the extent then exercisable) may
      be
      exercised in whole or in part at any time within three months of the date of
      such Termination, or such other period of not less than 30 days after the date
      of such Termination as is specified in the Option Agreement (but in no event
      after the Expiration Date); provided,
      that if
      such exercise of the Option would result in liability for the Optionee under
      Section 16(b) of the Exchange Act, then such 90-day period automatically
      shall be extended until the tenth day following the last date upon which
      Optionee has any liability under Section 16(b) (but in no event after the
      Expiration Date).

     

    (b) If
      an
      Optionee dies while employed by the Company or an Affiliate or within the period
      that the Option remains exercisable after Termination, Options then held (to
      the
      extent then exercisable) may be exercised, in whole or in part, by the Optionee,
      by the Optionee’s personal representative, or by the person to whom the Option
      is transferred by devise or the laws of descent and distribution, at any time
      within 12 months after the death of the Optionee, or such other period of not
      less than six months from the date of Termination as is specified in the Option
      Agreement (but in no event after the Expiration Date). 

     

    
      
         

      

      
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    (c) If
      an
      Optionee ceases to be employed by the Company as a result of his or her
      disability, the Optionee may, but only within six months after the date of
      Termination (and in no event after the Expiration Date), exercise the Option
      to
      the extent otherwise entitled to exercise it at the date of Termination;
      provided, however, that if such disability is not a “disability” as such term is
      defined in Section 22(e)(3) of the Code, in the case of an ISO such ISO shall
      automatically convert to an NQO on the day three months and one day following
      such Termination. To the extent that the Optionee was not entitled to exercise
      the Option at the date of Termination or if the Optionee does not exercise
      such
      Option to the extent so entitled within the time specified herein, the Option
      shall terminate, and the Shares covered by such Option shall revert to the
      Plan.

     

    (d) If
      an
      Optionee is terminated for “cause” all Options then held by such Optionee shall
      terminate and no longer be exercisable as of the date of
      Termination.

     

    (e) For
      purposes of this Section 6.1.7, “employment”
      includes service as an employee, a director or as a consultant.

     

    (f) For
      purposes of this Section 6.1.7, an Optionee’s employment shall not be deemed to
      terminate by reason of sick leave, military leave or other leave of absence
      approved by the Administrator, if the period of any such leave does not exceed
      three months or, if longer, if the Optionee’s right to reemployment by the
      Company or any Affiliate is guaranteed either contractually or by
      statute.

     

    (g) For
      purposes of this Section 6.1.7, “cause”
shall
      mean Termination (i) by reason of Optionee’s commission of a felony,
      misdemeanor or other illegal conduct involving dishonesty, fraud or other
      matters of moral turpitude, (ii) by reason of Optionee’s dishonesty
      towards, fraud upon, or deliberate injury or attempted injury to the Company
      or
      any of its Affiliates, or (iii) by reason of Optionee’s willfully engaging
      in misconduct which is materially and demonstrably injurious to the Company
      or
      any of its Affiliates.

     

    
      
         

      

      
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    6.1.8 Withholding
      and Employment Taxes.
      At the
      time of exercise of an Option or at such other time as the amount of such
      obligations becomes determinable (the “Tax
      Date”),
      the
      Optionee shall remit to the Company in cash all applicable federal and state
      withholding and employment taxes. If authorized by the Administrator in its
      absolute discretion, after considering any tax or accounting consequences,
      an
      Optionee may elect to (i) deliver a full recourse promissory note on such terms
      as the Administrator deems appropriate, (ii) tender to the Company previously
      owned shares of Stock or other securities of the Company, or (iii) have shares
      of Common Stock which are acquired upon exercise of the Option withheld by
      the
      Company to pay some or all of the amount of tax that is required by law to
      be
      withheld by the Company as a result of the exercise of such Option, subject
      to
      the following limitations:

     

    (a) Any
      election pursuant to clause (iii) above by an Optionee subject to Section 16
      of
      the Exchange Act shall either (x) be made at least six months before the Tax
      Date and shall be irrevocable; or (y) shall be made in (or made earlier to
      take
      effect in) any ten-day period beginning on the third business day following
      the
      date of release for publication of the Company’s quarterly or annual summary
      statements of earnings and shall be subject to approval by the Administrator,
      which approval may be given at any time after such election has been made.
      In
      addition, in the case of (y), the Option shall be held at least six months
      prior
      to the Tax Date.

     

    (b) Any
      election pursuant to clause (ii) above, where the Optionee is tendering Common
      Stock issued pursuant to the exercise of an Option, shall require that such
      shares be held at least six months prior to the Tax Date.

     

    Any
      of
      the foregoing limitations may be waived (or additional limitations may be
      imposed) by the Administrator, in its absolute discretion, if the Administrator
      determines that such foregoing limitations are not required (or that such
      additional limitations are required) in order that the transaction shall be
      exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3, or any
      successor rule thereto. In addition, any of the foregoing limitations may be
      waived by the Administrator, in its sole discretion, if the Administrator
      determines that Rule 16b-3, or any successor rule thereto, is not applicable
      to
      the exercise of the Option by the Optionee or for any other reason.

     

    Any
      securities tendered or withheld in accordance with this Section 6.1.9 shall
      be
      valued by the Company as of the Tax Date.

     

    6.1.9 Other
      Provisions.
      Each
      Option granted under this Plan may contain such other terms, provisions, and
      conditions not inconsistent with this Plan as may be determined by the
      Administrator, and each ISO granted under this Plan shall include such
      provisions and conditions as are necessary to qualify the Option as an
“incentive stock option” within the meaning of Section 422 of the Code. If
      Options provide for a right of first refusal in favor of the Company with
      respect to stock acquired by employees, directors or consultants, such Options
      shall provide that the right of first refusal shall terminate upon the earlier
      of (i) the closing of the Company’s initial registered public offering to the
      public generally, or (ii) the date ten years after the grant date as set forth
      in Section 6.1.4.

     

    6.1.10 Determination
      of Value.
      For
      purposes of the Plan, the value of Common Stock or other securities of the
      Company shall be determined as follows:

     

    (a) If
      the
      stock of the Company is listed on any established stock exchange or a national
      market system, including without limitation the National Market System of the
      National Association of Securities Dealers, Inc. Automated Quotation System,
      its
      fair market value shall be the closing sales price for such stock or the closing
      bid if no sales were reported, as quoted on such system or exchange (or the
      largest such exchange) for the date the value is to be determined (or if there
      are no sales for such date, then for the last preceding business day on which
      there were sales), as reported in the Wall
      Street Journal
      or
      similar publication.

     

    
      
         

      

      
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    (b) If
      the
      stock of the Company is regularly quoted by a recognized securities dealer
      but
      selling prices are not reported, its fair market value shall be the mean between
      the high bid and low asked prices for the stock on the date the value is to
      be
      determined (or if there are no quoted prices for the date of grant, then for
      the
      last preceding business day on which there were quoted prices).

     

    (c) In
      the
      absence of an established market for the stock, the fair market value thereof
      shall be determined in good faith by the Administrator, by consideration of
      such
      factors as the Administrator in its discretion deems appropriate among the
      recent issue price of other securities of the Company, the Company’s net worth,
      prospective earning power, dividend-paying capacity, and other relevant factors,
      including the goodwill of the Company, the economic outlook in the Company’s
      industry, the Company’s position in the industry and its management, and the
      values of stock of other corporations in the same or a similar line of
      business.

     

    6.1.11 Option
      Term.
      Subject
      to Section 6.3.5, no Option shall be exercisable more than ten years after
      the
      date of grant, or such lesser period of time as is set forth in the Option
      Agreement (the end of the maximum exercise period stated in the stock option
      agreement is referred to in this Plan as the “Expiration
      Date”).

     

    6.1.12 Exercise
      Price.
      The
      exercise price of any Option granted to any person who owns, directly or by
      attribution under the Code (currently Section 424(d)), stock possessing
      more than ten percent of the total combined voting power of all classes of
      stock
      of the Company or of any Affiliate (a “Ten
      Percent Shareholder”)
      shall
      in no event be less than 110% of the fair market value (determined in accordance
      with Section 6.1.11) of the stock covered by the Option at the time the Option
      is granted.

     

    6.2 Exercise
      Price of NQOs.
      Except
      as set forth in Section 6.1.13, the exercise price of any NQO granted under
      this
      Plan shall be not less than 85% of the fair market value (determined in
      accordance with Section 6.1.11) of the stock subject to the Option on the date
      of grant.

     

    6.3 Terms
      and Conditions to Which Only ISOs Are Subject.
      Options
      granted under this Plan which are designated as ISOs shall be subject to the
      following terms and conditions:

     

    6.3.1 Exercise
      Price.
      Except
      as set forth in Section 6.1.13, the exercise price of an ISO shall be
      determined in accordance with the applicable provisions of the Code and shall
      in
      no event be less than the fair market value (determined in accordance with
      Section 6.1.11) of the stock covered by the Option at the time the Option is
      granted.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    6.3.2 Disqualifying
      Dispositions.
      If
      stock acquired by exercise of an ISO granted pursuant to this Plan is disposed
      of in a “disqualifying disposition” within the meaning of Section 422 of the
      Code, the holder of the stock immediately before the disposition shall promptly
      notify the Company in writing of the date and terms of the disposition and
      shall
      provide such other information regarding the Option as the Company may
      reasonably require.

     

    6.3.3 Grant
      Date.
      If an
      ISO is granted in anticipation of employment as provided in Section 5.4, the
      Option shall be deemed granted, without further approval, on the date the
      grantee assumes the employment relationship forming the basis for such grant,
      and, in addition, satisfies all requirements of this Plan for Options granted
      on
      that date.

     

    6.3.4 Vesting.
      Notwithstanding any other provision of this Plan, ISOs granted under all
      incentive stock option plans of the Company and its subsidiaries may not “vest”
for more than $100,000 in fair market value of stock (measured on the grant
      dates(s)) in any calendar year. For purposes of the preceding sentence, an
      option “vests” when it first becomes exercisable. If, by their terms, such ISOs
      taken together would vest to a greater extent in a calendar year, and unless
      otherwise provided by the Administrator, the vesting limitation described above
      shall be applied by deferring the exercisability of those ISOs or portions
      of
      ISOs which have the highest per share exercise prices; but in no event shall
      more than $100,000 in fair market value of stock (measured on the grant date(s))
      vest in any calendar year. The ISOs or portions of ISOs whose exercisability
      is
      so deferred shall become exercisable on the first day of the first subsequent
      calendar year during which they may be exercised, as determined by applying
      these same principles and all other provisions of this Plan including those
      relating to the expiration and termination of ISOs. In no event, however, will
      the operation of this Section 6.3.4 cause an ISO to vest before its terms or,
      having vested, cease to be vested.

     

    6.3.5 Term.
      Notwithstanding Section 6.1.12, no ISO granted to any Ten Percent Shareholder
      shall be exercisable more than five years after the date of grant.

     

    7. MANNER
      OF EXERCISE

     

    7.1 Written
      Notice; Payment.
      An
      Optionee wishing to exercise an Option shall give written notice to the Company
      at its principal executive office, to the attention of the officer of the
      Company designated by the Administrator, accompanied by payment of the exercise
      price as provided in Section 6.1.6. The date the Company receives written notice
      of an exercise hereunder accompanied by payment of the exercise price will
      be
      considered as the date such Option was exercised.

     

    7.2 Delivery
      of Stock.
      Promptly after receipt of written notice of exercise of an Option, the Company
      shall, without stock issue or transfer taxes to the Optionee or other person
      entitled to exercise the Option, deliver to the Optionee or such other person
      a
      certificate or certificates for the requisite number of shares of stock. An
      Optionee or permitted transferee of an Optionee shall not have any privileges
      as
      a shareholder with respect to any shares of stock covered by the Option until
      the date of issuance (as evidenced by the appropriate entry on the books of
      the
      Company or a duly authorized transfer agent) of such shares.

     

    
      
         

      

      
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    8. EMPLOYMENT
      OR CONSULTING RELATIONSHIP

     

    Nothing
      in this Plan or any Option granted thereunder shall interfere with or limit
      in
      any way the right of the Company or of any of its Affiliates to terminate any
      Optionee’s employment or consulting at any time, nor confer upon any Optionee
      any right to continue in the employ of, or consult with, the Company or any
      of
      its Affiliates, nor interfere in any way with provisions in the Company’s
      charter documents or applicable law relating to the election, appointment,
      terms
      of office, and removal of members of the Board.

     

    9. FINANCIAL
      INFORMATION

     

    The
      Company shall provide to each Optionee during the period such Optionee holds
      an
      outstanding Option, and to each holder of Common Stock acquired upon exercise
      of
      Options granted under the Plan for so long as such person is a holder of such
      Common Stock, annual financial statements of the Company as prepared either
      by
      the Company or independent certified public accountants of the Company. Such
      financial statements shall include, at a minimum, a balance sheet and an income
      statement, and shall be delivered as soon as practicable following the end
      of
      the Company’s fiscal year. The provisions of this Section 9 shall not apply
      with respect to Optionees who are key employees of the Company whose duties
      in
      connection with the Company assures them access to information equivalent to
      the
      information provided in the financial statements.

     

    10. CONDITIONS
      UPON ISSUANCE OF SHARES

     

    Shares
      of
      Common Stock shall not be issued pursuant to the exercise of an Option unless
      the exercise of such Option and the issuance and delivery of such shares
      pursuant thereto shall comply with all relevant provisions of law, including,
      without limitation, the Securities Act of 1933, as amended (the “Securities
      Act”).

     

    11. NONEXCLUSIVITY
      OF THE PLAN

     

    The
      adoption of the Plan shall not be construed as creating any limitations on
      the
      power of the Company to adopt such other incentive arrangements as it may deem
      desirable, including, without limitation, the granting of stock options other
      than under the Plan.

     

    12. MARKET
      STANDOFF

     

    Each
      Optionee, if so requested by the Company or any representative of the
      underwriters in connection with any registration of the offering of any
      securities of the Company under the Securities Act shall not sell or otherwise
      transfer any shares of Common Stock acquired upon exercise of Options during
      the
      180-day period following the effective date of a registration statement of
      the
      company filed under the Securities Act; provided, however, that such restriction
      shall apply only to the first two registration statements of the Company to
      become effective under the Securities Act which includes securities to be sold
      on behalf of the Company to the public in an underwritten public offering under
      the Securities Act. The Company may impose stop-transfer instructions with
      respect to securities subject to the foregoing restriction until the end of
      such
      180-day period.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    13. AMENDMENTS
      TO PLAN

     

    The
      Board
      may at any time amend, alter, suspend or discontinue this Plan. Without the
      consent of an Optionee, no amendment, alteration, suspension or discontinuance
      may adversely affect outstanding Options except to conform this Plan and ISOs
      granted under this Plan to the requirements of federal or other tax laws
      relating to incentive stock options. No amendment, alteration, suspension or
      discontinuance shall require shareholder approval unless (a) shareholder
      approval is required to preserve incentive stock option treatment for federal
      income tax purposes, or (b) the Board otherwise concludes that shareholder
      approval is advisable.

     

    14. EFFECTIVE
      DATE OF PLAN

     

    This
      Plan
      shall become effective upon adoption by the Board provided, however, that no
      Option shall be exercisable unless and until written consent of the shareholders
      of the Company, or approval of shareholders of the Company voting at a validly
      called shareholders’ meeting, is obtained within 12 months after adoption by the
      Board. If such shareholder approval is not obtained within such time, Options
      granted hereunder shall terminate and be of no force and effect from and after
      expiration of such 12-month period. Options may be granted and exercised under
      this Plan only after there has been compliance with all applicable federal
      and
      state securities laws.

     

    
      	Plan adopted by the Board of Directors
              on: 	February 17, 1999
	Plan approved by Shareholders on:	April 28,
              1999

    

    

    
      
         

      

      
        11

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