Document:

FRACTIONAIR HOLDINGS, INC.
                              A NEVADA CORPORATION

                            2005 STOCK INCENTIVE PLAN
                          NOTICE OF STOCK OPTION AWARD

      Grantee's Name and Address:
                                  ----------------------------------------------

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

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

      You have been granted an option to purchase shares of Common Stock,
subject to the terms and conditions of this Notice of Stock Option Award (the
"Notice"), the FractionAir Holdings, Inc. 2005 Stock Incentive Plan, as amended
from time to time (the "Plan") and the Stock Option Award Agreement (the "Option
Agreement") attached hereto, as follows. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Notice.

      Award Number
                               -------------------------------------------------

      Date of Award
                               -------------------------------------------------

      Vesting Commencement Date
                               -------------------------------------------------

      Exercise Price per Share $
                               -------------------------------------------------

      Total Number of Shares Subject
      to the Option (the "Shares")
                               -------------------------------------------------

      Total Exercise Price        $
                                  ----------------------------------------------

      Type of Option:             ----------      Incentive Stock Option

                                  ----------      Non-Qualified Stock Option

      Expiration Date:
                                  ----------------------------------------------
      Post-Termination Exercise Period:           Three (3) Months

Vesting Schedule:

      Subject to Grantee's Continuous Service and other limitations set forth in
this Notice, the Plan and the Option Agreement, the Option may be exercised, in
whole or in part, in accordance with the following schedule:

      25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 25% of the Shares subject to the Option shall
vest on each yearly anniversary of the Vesting Commencement Date thereafter.

                                       1
STOCK OPTION AWARD (FORM 1)
<PAGE>

      During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall be suspended after the leave of absence exceeds
a period of ninety (90) days. Vesting of the Option shall resume upon the
Grantee's termination of the leave of absence and return to service to the
Company or a Related Entity. The Vesting Schedule of the Option shall be
extended by the length of the suspension.

      In the event of termination of the Grantee's Continuous Service for Cause,
the Grantee's right to exercise the Option shall terminate concurrently with the
termination of the Grantee's Continuous Service, except as otherwise determined
by the Administrator.

      In the event of the Grantee's change in status from Employee to Consultant
or from an Employee whose customary employment is 20 hours or more per week to
an Employee whose customary employment is fewer than 20 hours per week, vesting
of the Option shall continue only to the extent determined by the Administrator
as of such change in status consistent with any minimum vesting requirements set
forth in the Plan.

      IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice
and agree that the Option is to be governed by the terms and conditions of this
Notice, the Plan, and the Option Agreement.

                                        FRACTIONAIR HOLDINGS, INC.,
                                        a Nevada corporation

                                        By:
                                            ------------------------------------

                                        Title:
                                             -----------------------------------

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY
RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE'S CONTINUOUS
SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT OR THE RIGHT
OF THE GRANTEE'S EMPLOYER TO TERMINATE GRANTEE'S CONTINUOUS SERVICE, WITH OR
WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS
THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY,
GRANTEE'S STATUS IS AT WILL.

      The Grantee acknowledges receipt of a copy of the Plan and the Option
Agreement, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts the Option subject to all of the terms
and provisions hereof and thereof. The Grantee has reviewed this Notice, the
Plan, and the Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Notice, and fully
understands all provisions of this Notice, the Plan and the Option Agreement.
The Grantee hereby agrees that all disputes arising out of or relating to this
Notice, the Plan and the Option Agreement shall be resolved in accordance with
Section 15 of the Option Agreement. The Grantee further agrees to notify the
Company upon any change in the residence address indicated in this Notice.

                                       2
STOCK OPTION AWARD (FORM 1)
<PAGE>

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

                                        Name:
                                             -----------------------------------

                                       3
STOCK OPTION AWARD (FORM 1)
<PAGE>

                                               AWARD NUMBER:
                                                            --------------------

                           FRACTIONAIR HOLDINGS, INC.
                            2005 STOCK INCENTIVE PLAN
                          STOCK OPTION AWARD AGREEMENT

      1. Grant of Option. FractionAir Holdings, Inc., a Nevada corporation (the
"Company"), hereby grants to the Grantee (the "Grantee") named in the Notice of
Stock Option Award (the "Notice"), an option (the "Option") to purchase the
Total Number of Shares of Common Stock subject to the Option (the "Shares") set
forth in the Notice, at the Exercise Price per Share set forth in the Notice
(the "Exercise Price") subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the "Option Agreement") and the Company's 2005
Stock Incentive Plan, as amended from time to time (the "Plan"), which are
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Option
Agreement.

      If designated in the Notice as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by the Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the date the Option with respect to such
Shares is awarded.

      2. Exercise of Option.

            (a) Right to Exercise. The Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be
subject to the provisions of Section 11 of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction, Change in Control or Related Entity Disposition. The Grantee shall
be subject to reasonable limitations on the number of requested exercises during
any monthly or weekly period as determined by the Administrator. In no event
shall the Company issue fractional Shares.

            (b) Method of Exercise. The Option shall be exercisable only by
delivery of an exercise notice (in a form determined by the Administrator from
time to time, which may include electronic methods of exercise) which shall
state the election to exercise the Option, the whole number of Shares in respect
of which the Option is being exercised, and such other provisions as may be
required by the Administrator. The Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the Exercise Price,
which, to the extent selected, shall be deemed to be satisfied by use of the
broker-dealer sale and remittance procedure to pay the Exercise Price provided
in Section 4(d), below.

                                       1
STOCK OPTION AWARD (FORM 1)
<PAGE>

            (c) Taxes. No Shares will be delivered to the Grantee or other
person pursuant to the exercise of the Option until the Grantee or other person
has made arrangements acceptable to the Administrator for the satisfaction of
applicable income tax and employment tax withholding obligations, including,
without limitation, such other tax obligations of the Grantee incident to the
receipt of Shares or the disqualifying disposition of Shares received on
exercise of an Incentive Stock Option. Upon exercise of the Option, the Company
or the Grantee's employer may offset or withhold (from any amount owed by the
Company or the Grantee's employer to the Grantee) or collect from the Grantee or
other person an amount sufficient to satisfy such tax obligations and/or the
employer's withholding obligations.

      3. Acceleration of Option Vesting Schedule Upon Corporate
Transaction/Change in Control/Related Entity Disposition.

            (a) Corporate Transaction. In the event of a Corporate Transaction
the Option shall become fully vested and exercisable and be released from any
repurchase or forfeiture rights (other than repurchase rights exercisable at
fair market value), immediately prior to the specified effective date of such
Corporate Transaction, for all of the Shares at the time represented by the
Option, irrespective of whether the Option is Assumed.

            (b) Change in Control. In the event of a Change in Control (other
than a Change in Control which also is a Corporate Transaction), the Option
shall become fully vested and exercisable and be released from any repurchase or
forfeiture rights (other than repurchase rights exercisable at fair market
value), immediately prior to the specified effective date of such Change in
Control, for all of the Shares at the time represented by the Option.

            (c) Related Entity Disposition. Effective upon the consummation of a
Related Entity Disposition, if the Continuous Service of the Grantee (who is at
the time engaged primarily in service to the Related Entity involved in such
Related Entity Disposition) shall be deemed terminated as set forth in Section
11(a) of the Plan, the Option shall become fully vested and exercisable and be
released from any repurchase or forfeiture rights (other than repurchase rights
exercisable at fair market value) for all of the Shares at the time represented
by the Option, irrespective of whether the Option is Assumed.

      4. Method of Payment. Payment of the Exercise Price shall be made by any
of the following, or a combination thereof, at the election of the Grantee;
provided, however, that such exercise method does not then violate any
Applicable Law and, provided further, that the portion of the Exercise Price
equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by Applicable Law:

            (a) cash;

                                       2
STOCK OPTION AWARD (FORM 1)
<PAGE>

            (b) check;

            (c) surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares as the Administrator may require (including
withholding of Shares otherwise deliverable upon exercise of the Option) which
have a Fair Market Value on the date of surrender or attestation equal to the
aggregate Exercise Price of the Shares as to which the Option is being exercised
(but only to the extent that such exercise of the Option would not result in an
accounting compensation charge with respect to the Shares used to pay the
exercise price); or

            (d) payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (i) shall provide written instructions to a
Company designated brokerage firm to effect the immediate sale of some or all of
the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (ii) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction.

      5. Restrictions on Exercise. The Option may not be exercised if the
issuance of the Shares subject to the Option upon such exercise would constitute
a violation of any Applicable Laws.

      6. Termination or Change of Continuous Service. In the event the Grantee's
Continuous Service terminates, other than for Cause, the Grantee may, but only
during the Post-Termination Exercise Period, exercise the portion of the Option
that was vested at the date of such termination (the "Termination Date"). In the
event of termination of the Grantee's Continuous Service for Cause, the
Grantee's right to exercise the Option shall, except as otherwise determined by
the Administrator, terminate concurrently with the termination of the Grantee's
Continuous Service (also the "Termination Date"). In no event shall the Option
be exercised later than the Expiration Date set forth in the Notice. In the
event of the Grantee's change in status from Employee, Director or Consultant to
any other status of Employee, Director or Consultant, the Option shall remain in
effect and, except to the extent otherwise determined by the Administrator,
continue to vest; provided, however, with respect to any Incentive Stock Option
that shall remain in effect after a change in status from Employee to Director
or Consultant, such Incentive Stock Option shall cease to be treated as an
Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on
the day three (3) months and one (1) day following such change in status. Except
as provided in Sections 7 and 8 below, to the extent that the Option was
unvested on the Termination Date, or if the Grantee does not exercise the vested
portion of the Option within the Post-Termination Exercise Period, the Option
shall terminate.

      7. Disability of Grantee. In the event the Grantee's Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only
within twelve (12) months from the Termination Date (and in no event later than
the Expiration Date), exercise the portion of the Option that was vested on the
Termination Date; provided, however, that if such Disability is not a
"disability" as such term is defined in Section 22(e)(3) of the Code and the
Option is an Incentive Stock Option, such Incentive Stock Option shall cease to
be treated as an Incentive Stock Option and shall be treated as a Non-Qualified
Stock Option on the day three (3) months and one (1) day following the
Termination Date. To the extent that the Option was unvested on the Termination
Date, or if the Grantee does not exercise the vested portion of the Option
within the time specified herein, the Option shall terminate.

                                       3
STOCK OPTION AWARD (FORM 1)
<PAGE>

      8. Death of Grantee. In the event of the termination of the Grantee's
Continuous Service as a result of his or her death, or in the event of the
Grantee's death during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee's termination of Continuous Service as a
result of his or her Disability, the Grantee's estate, or a person who acquired
the right to exercise the Option by bequest or inheritance, may exercise the
portion of the Option that was vested at the date of termination, within twelve
(12) months from the date of death (but in no event later than the Expiration
Date). To the extent that the Option was unvested on the date of death, or if
the vested portion of the Option is not exercised within the time specified
herein, the Option shall terminate.

      9. Transferability of Option. The Option, if an Incentive Stock Option,
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution and may
be exercised, during the lifetime of the Grantee, only by the Grantee. The
Option, if a Non-Qualified Stock Option may be transferred by will, by the laws
of descent and distribution, and to the extent and in the manner authorized by
the Administrator, to members of the Grantee's Immediate Family. The terms of
the Option shall be binding upon the executors, administrators, heirs and
successors of the Grantee.

      10. Term of Option. The Option may be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein.

      11. Tax Consequences. Set forth below is a brief summary as of the date of
this Option Agreement of some of the federal tax consequences of exercise of the
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

            (a) Exercise of Incentive Stock Option. If the Option qualifies as
an Incentive Stock Option, there will be no regular federal income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as income for purposes of the alternative minimum tax for federal tax
purposes and may subject the Grantee to the alternative minimum tax in the year
of exercise.

            (b) Exercise of Incentive Stock Option Following Disability. If the
Grantee's Continuous Service terminates as a result of Disability that is not
total and permanent disability as defined in Section 22(e)(3) of the Code, to
the extent permitted on the date of termination, the Grantee must exercise an
Incentive Stock Option within three (3) months of such termination for the
Incentive Stock Option to be qualified as an Incentive Stock Option.

                                       4
STOCK OPTION AWARD (FORM 1)
<PAGE>

            (c) Exercise of Non-Qualified Stock Option. On exercise of a
Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.

            (d) Disposition of Shares. In the case of a Non-Qualified Stock
Option, if Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes and subject to tax at a maximum rate of 20%. In the case of
an Incentive Stock Option, if Shares transferred pursuant to the Option are held
for more than one year after receipt of the Shares and are disposed more than
two years after the Date of Award, any gain realized on disposition of the
Shares also will be treated as capital gain for federal income tax purposes and
subject to the same tax rates and holding periods that apply to Shares acquired
upon exercise of a Non-Qualified Stock Option. If Shares purchased under an
Incentive Stock Option are disposed of prior to the expiration of such one-year
or two-year periods, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (i) the Fair Market
Value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.

      12. Entire Agreement: Governing Law. The Notice, the Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan and this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance
with and governed by the internal laws of the State of California (as permitted
by Section 16.46.5 of the California Civil Code, or any similar successor
provision) without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties. Should any
provision of the Notice, the Plan or this Option Agreement be determined by a
court of law to be illegal or unenforceable, such provision shall be enforced to
the fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable.

      13. Headings. The captions used in the Notice and this Option Agreement
are inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.

      14. Dispute Resolution The provisions of this Section 14 shall be the
exclusive means of resolving disputes arising out of or relating to the Notice,
the Plan and this Option Agreement. The Company, the Grantee, and the Grantee's
assignees (the "parties") shall attempt in good faith to resolve any disputes
arising out of or relating to the Notice, the Plan and this Option Agreement by
negotiation between individuals who have authority to settle the controversy.
Negotiations shall be commenced by either party by notice of a written statement
of the party's position and the name and title of the individual who will
represent the party. Within thirty (30) days of the written notification, the
parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to resolve the dispute. If the dispute
has not been resolved by negotiation, the parties agree that any suit, action,
or proceeding arising out of or relating to the Notice, the Plan or this Option
Agreement shall be brought in the United States District Court for the Southern
District of California (or should such court lack jurisdiction to hear such
action, suit or proceeding, in a California state court in the County of Los
Angeles) and that the parties shall submit to the jurisdiction of such court.
The parties irrevocably waive, to the fullest extent permitted by law, any
objection the party may have to the laying of venue for any such suit, action or
proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT
THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If
any one or more provisions of this Section 19 shall for any reason be held
invalid or unenforceable, it is the specific intent of the parties that such
provisions shall be modified to the minimum extent necessary to make it or its
application valid and enforceable.

                                       5
STOCK OPTION AWARD (FORM 1)
<PAGE>

      15. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail (if the parties are within
the United States) or upon deposit for delivery by an internationally recognized
express mail courier service (for international delivery of notice), with
postage and fees prepaid, addressed to the other party at its address as shown
beneath its signature in the Notice, or to such other address as such party may
designate in writing from time to time to the other party.

                  [Remainder of Page Left Blank Intentionally]

                                       6
STOCK OPTION AWARD (FORM 1)
<PAGE>

                           FRACTIONAIR HOLDINGS, INC.
                              A NEVADA CORPORATION

                            2005 STOCK INCENTIVE PLAN
                          NOTICE OF STOCK OPTION AWARD

      Grantee's Name and Address:
                                  ----------------------------------------------

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

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

      You have been granted an option to purchase shares of Common Stock,
subject to the terms and conditions of this Notice of Stock Option Award (the
"Notice"), the FractionAir Holdings, Inc. 2005 Stock Incentive Plan, as amended
from time to time (the "Plan") and the Stock Option Award Agreement (the "Option
Agreement") attached hereto, as follows. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Notice.

      Award Number
                               -------------------------------------------------

      Date of Award
                               -------------------------------------------------

      Vesting Commencement Date
                               -------------------------------------------------

      Exercise Price per Share $
                               -------------------------------------------------

      Total Number of Shares Subject
      to the Option (the "Shares")
                               -------------------------------------------------
      Total Exercise Price        $
                                  ----------------------------------------------

      Type of Option:             ----------      Incentive Stock Option

                                  ----------      Non-Qualified Stock Option

      Expiration Date:
                                  ----------------------------------------------
      Post-Termination Exercise Period:           Three (3) Months

Vesting Schedule:

      Subject to Grantee's Continuous Service and other limitations set forth in
this Notice, the Plan and the Option Agreement, the Option may be exercised, in
whole or in part, in accordance with the following schedule:

      25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 25% of the Shares subject to the Option shall
vest on each yearly anniversary of the Vesting Commencement Date thereafter.

                                       1
STOCK OPTION AWARD (FORM 2)
<PAGE>

      During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall be suspended after the leave of absence exceeds
a period of ninety (90) days. Vesting of the Option shall resume upon the
Grantee's termination of the leave of absence and return to service to the
Company or a Related Entity. The Vesting Schedule of the Option shall be
extended by the length of the suspension.

      In the event of termination of the Grantee's Continuous Service for Cause,
the Grantee's right to exercise the Option shall terminate concurrently with the
termination of the Grantee's Continuous Service, except as otherwise determined
by the Administrator.

      In the event of the Grantee's change in status from Employee to Consultant
or from an Employee whose customary employment is 20 hours or more per week to
an Employee whose customary employment is fewer than 20 hours per week, vesting
of the Option shall continue only to the extent determined by the Administrator
as of such change in status consistent with any minimum vesting requirements set
forth in the Plan.

      IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice
and agree that the Option is to be governed by the terms and conditions of this
Notice, the Plan, and the Option Agreement.

                                        FRACTIONAIR HOLDINGS, INC.,
                                        a Nevada corporation

                                        By:
                                            ------------------------------------

                                        Title:
                                             -----------------------------------

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY
RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE'S CONTINUOUS
SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT OR THE RIGHT
OF THE GRANTEE'S EMPLOYER TO TERMINATE GRANTEE'S CONTINUOUS SERVICE, WITH OR
WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS
THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY,
GRANTEE'S STATUS IS AT WILL.

      The Grantee acknowledges receipt of a copy of the Plan and the Option
Agreement, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts the Option subject to all of the terms
and provisions hereof and thereof. The Grantee has reviewed this Notice, the
Plan, and the Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Notice, and fully
understands all provisions of this Notice, the Plan and the Option Agreement.
The Grantee hereby agrees that all disputes arising out of or relating to this
Notice, the Plan and the Option Agreement shall be resolved in accordance with
Section 15 of the Option Agreement. The Grantee further agrees to notify the
Company upon any change in the residence address indicated in this Notice.

                                       2
STOCK OPTION AWARD (FORM 2)
<PAGE>

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

                                        Name:
                                             -----------------------------------

                                       3
STOCK OPTION AWARD (FORM 2)
<PAGE>

                                               AWARD NUMBER:
                                                            --------------------

                           FRACTIONAIR HOLDINGS, INC.
                            2005 STOCK INCENTIVE PLAN
                          STOCK OPTION AWARD AGREEMENT

      1. Grant of Option. FractionAir Holdings, Inc., a Nevada corporation (the
"Company"), hereby grants to the Grantee (the "Grantee") named in the Notice of
Stock Option Award (the "Notice"), an option (the "Option") to purchase the
Total Number of Shares of Common Stock subject to the Option (the "Shares") set
forth in the Notice, at the Exercise Price per Share set forth in the Notice
(the "Exercise Price") subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the "Option Agreement") and the Company's 2005
Stock Incentive Plan, as amended from time to time (the "Plan"), which are
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Option
Agreement.

      If designated in the Notice as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by the Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the date the Option with respect to such
Shares is awarded.

      2. Exercise of Option.

            (a) Right to Exercise. The Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be
subject to the provisions of Section 11 of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction, Change in Control or Related Entity Disposition. The Grantee shall
be subject to reasonable limitations on the number of requested exercises during
any monthly or weekly period as determined by the Administrator. In no event
shall the Company issue fractional Shares.

            (b) Method of Exercise. The Option shall be exercisable only by
delivery of an exercise notice (in a form determined by the Administrator from
time to time, which may include electronic methods of exercise) which shall
state the election to exercise the Option, the whole number of Shares in respect
of which the Option is being exercised, and such other provisions as may be
required by the Administrator. The Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the Exercise Price,
which, to the extent selected, shall be deemed to be satisfied by use of the
broker-dealer sale and remittance procedure to pay the Exercise Price provided
in Section 4(d), below.

                                       1
STOCK OPTION AWARD (FORM 2)
<PAGE>

            (c) Taxes. No Shares will be delivered to the Grantee or other
person pursuant to the exercise of the Option until the Grantee or other person
has made arrangements acceptable to the Administrator for the satisfaction of
applicable income tax and employment tax withholding obligations, including,
without limitation, such other tax obligations of the Grantee incident to the
receipt of Shares or the disqualifying disposition of Shares received on
exercise of an Incentive Stock Option. Upon exercise of the Option, the Company
or the Grantee's employer may offset or withhold (from any amount owed by the
Company or the Grantee's employer to the Grantee) or collect from the Grantee or
other person an amount sufficient to satisfy such tax obligations and/or the
employer's withholding obligations.

      3. Acceleration of the Option Vesting Schedule Upon Corporate
Transaction/Change in Control/Related Entity Disposition.

            (a) Corporate Transaction. In the event of a Corporate Transaction
and:

                  (i) for the portion of the Option that is Assumed, then the
Option (if assumed), the replacement Option (if replaced), or the cash incentive
program automatically shall become fully vested, exercisable and payable and be
released from any repurchase or forfeiture rights (other than repurchase rights
exercisable at fair market value) for all of the Shares at the time represented
by such Assumed portion of the Option, immediately upon termination of the
Grantee's Continuous Service (substituting the successor employer corporation,
if any, for "Company or Related Entity" in the definition of "Continuous
Service") if such Continuous Service is terminated by the successor company or
the Company without Cause or voluntarily by the Grantee with Good Reason (as
defined below) within twelve (12) months of the Corporate Transaction; and

                  (ii) for the portion of the Option that is not Assumed, such
portion of the Option shall automatically become fully vested and exercisable
and be released from any repurchase or forfeiture rights (other than repurchase
rights exercisable at fair market value) for all of the Shares at the time
represented by such portion of the Option, immediately prior to the specified
effective date of such Corporate Transaction.

            (b) Change in Control. Following a Change in Control (other than a
Change in Control which also is a Corporate Transaction) and upon the
termination of the Grantee's Continuous Service if such Continuous Service is
terminated by the Company or Related Entity without Cause or voluntarily by the
Grantee with Good Reason within twelve (12) months of a Change in Control, the
Option automatically shall become fully vested and exercisable and be released
from any repurchase or forfeiture rights (other than repurchase rights
exercisable at fair market value) for all of the Shares at the time represented
by the Option, immediately upon such termination of the Grantee's Continuous
Service.

                                       2
STOCK OPTION AWARD (FORM 2)
<PAGE>

            (c) Related Entity Disposition. In the event of a Related Entity
Disposition and the Grantee is at the time engaged primarily in service to the
Related Entity involved in such Related Entity Disposition, then:

                        (i) for the portion of the Option that is Assumed, then
the Option (if assumed), the replacement Option (if replaced), or the cash
incentive program automatically shall become vested, exercisable and payable and
be released from any repurchase or forfeiture rights (other than repurchase
rights exercisable at fair market value) for all of the Shares at the time
represented by such Assumed portion of the Option, immediately upon termination
of the Grantee's Continuous Service (substituting the successor employer
corporation, if any, for "Company or Related Entity" for the definition of
"Continuous Service") if such Continuous Service is terminated by the successor
company without Cause or voluntarily by the Grantee with Good Reason within
twelve (12) months of the Related Entity Disposition; and

                        (ii) for the portion of the Option that is not Assumed,
such portion of the Option automatically shall become fully vested and
exercisable and be released from any repurchase or forfeiture rights (other than
repurchase rights exercisable at fair market value) for all of the Shares at the
time represented by such portion of the Option, immediately prior to the
specified effective date of such Related Entity Disposition.

            (d) Definition of "Good Reason." For purposes of this Section 3 of
the Option Agreement, "Good Reason" means the occurrence after a Corporate
Transaction, Change in Control or Related Entity Disposition of any of the
following events or conditions unless consented to by the Grantee (and the
Grantee shall be deemed to have consented to any such event or condition unless
the Grantee provides written notice of the Grantee's non-acquiescence within 30
days of the effective time of such event or condition):

                        (i) a change in the Grantee's responsibilities or duties
which represents a material and substantial diminution in the Grantee's
responsibilities or duties as in effect immediately preceding the consummation
of a Corporate Transaction, Change in Control or Related Entity Disposition;

                        (ii) a reduction in the Grantee's base salary to a level
below that in effect at any time within six (6) months preceding the
consummation of a Corporate Transaction, Change in Control or Related Entity
Disposition, or at any time thereafter; or

                        (iii) requiring the Grantee to be based at any place
outside a 50-mile radius from the Grantee's job location or residence prior to
the Corporate Transaction, Change in Control or Related Entity Disposition,
except for reasonably required travel on business which is not materially
greater than such travel requirements prior to the Corporate Transaction, Change
in Control or Related Entity Disposition.

                                       3
STOCK OPTION AWARD (FORM 2)
<PAGE>

4. Method of Payment. Payment of the Exercise Price shall be made by any of the
following, or a combination thereof, at the election of the Grantee; provided,
however, that such exercise method does not then violate any Applicable Law and,
provided further, that the portion of the Exercise Price equal to the par value
of the Shares must be paid in cash or other legal consideration permitted by
Applicable Law:

            (a) cash;

            (b) check;

            (c) surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares as the Administrator may require (including
withholding of Shares otherwise deliverable upon exercise of the Option) which
have a Fair Market Value on the date of surrender or attestation equal to the
aggregate Exercise Price of the Shares as to which the Option is being exercised
(but only to the extent that such exercise of the Option would not result in an
accounting compensation charge with respect to the Shares used to pay the
exercise price); or

            (d) payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (i) shall provide written instructions to a
Company designated brokerage firm to effect the immediate sale of some or all of
the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (ii) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction.

      5. Restrictions on Exercise. The Option may not be exercised if the
issuance of the Shares subject to the Option upon such exercise would constitute
a violation of any Applicable Laws.

      6. Termination or Change of Continuous Service. In the event the Grantee's
Continuous Service terminates, other than for Cause, the Grantee may, but only
during the Post-Termination Exercise Period, exercise the portion of the Option
that was vested at the date of such termination (the "Termination Date"). In the
event of termination of the Grantee's Continuous Service for Cause, the
Grantee's right to exercise the Option shall, except as otherwise determined by
the Administrator, terminate concurrently with the termination of the Grantee's
Continuous Service (also the "Termination Date"). In no event shall the Option
be exercised later than the Expiration Date set forth in the Notice. In the
event of the Grantee's change in status from Employee, Director or Consultant to
any other status of Employee, Director or Consultant, the Option shall remain in
effect and, except to the extent otherwise determined by the Administrator,
continue to vest; provided, however, with respect to any Incentive Stock Option
that shall remain in effect after a change in status from Employee to Director
or Consultant, such Incentive Stock Option shall cease to be treated as an
Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on
the day three (3) months and one (1) day following such change in status. Except
as provided in Sections 7 and 8 below, to the extent that the Option was
unvested on the Termination Date, or if the Grantee does not exercise the vested
portion of the Option within the Post-Termination Exercise Period, the Option
shall terminate.

                                       4
STOCK OPTION AWARD (FORM 2)
<PAGE>

      7. Disability of Grantee. In the event the Grantee's Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only
within twelve (12) months from the Termination Date (and in no event later than
the Expiration Date), exercise the portion of the Option that was vested on the
Termination Date; provided, however, that if such Disability is not a
"disability" as such term is defined in Section 22(e)(3) of the Code and the
Option is an Incentive Stock Option, such Incentive Stock Option shall cease to
be treated as an Incentive Stock Option and shall be treated as a Non-Qualified
Stock Option on the day three (3) months and one (1) day following the
Termination Date. To the extent that the Option was unvested on the Termination
Date, or if the Grantee does not exercise the vested portion of the Option
within the time specified herein, the Option shall terminate.

      8. Death of Grantee. In the event of the termination of the Grantee's
Continuous Service as a result of his or her death, or in the event of the
Grantee's death during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee's termination of Continuous Service as a
result of his or her Disability, the Grantee's estate, or a person who acquired
the right to exercise the Option by bequest or inheritance, may exercise the
portion of the Option that was vested at the date of termination, within twelve
(12) months from the date of death (but in no event later than the Expiration
Date). To the extent that the Option was unvested on the date of death, or if
the vested portion of the Option is not exercised within the time specified
herein, the Option shall terminate.

      9. Transferability of Option. The Option, if an Incentive Stock Option,
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution and may
be exercised, during the lifetime of the Grantee, only by the Grantee. The
Option, if a Non-Qualified Stock Option may be transferred by will, by the laws
of descent and distribution, and to the extent and in the manner authorized by
the Administrator, to members of the Grantee's Immediate Family. The terms of
the Option shall be binding upon the executors, administrators, heirs and
successors of the Grantee.

      10. Term of Option. The Option may be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein.

      11. Tax Consequences. Set forth below is a brief summary as of the date of
this Option Agreement of some of the federal tax consequences of exercise of the
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

            (a) Exercise of Incentive Stock Option. If the Option qualifies as
an Incentive Stock Option, there will be no regular federal income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as income for purposes of the alternative minimum tax for federal tax
purposes and may subject the Grantee to the alternative minimum tax in the year
of exercise.

                                       5
STOCK OPTION AWARD (FORM 2)
<PAGE>

            (b) Exercise of Incentive Stock Option Following Disability. If the
Grantee's Continuous Service terminates as a result of Disability that is not
total and permanent disability as defined in Section 22(e)(3) of the Code, to
the extent permitted on the date of termination, the Grantee must exercise an
Incentive Stock Option within three (3) months of such termination for the
Incentive Stock Option to be qualified as an Incentive Stock Option.

            (c) Exercise of Non-Qualified Stock Option. On exercise of a
Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.

            (d) Disposition of Shares. In the case of a Non-Qualified Stock
Option, if Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes and subject to tax at a maximum rate of 20%. In the case of
an Incentive Stock Option, if Shares transferred pursuant to the Option are held
for more than one year after receipt of the Shares and are disposed more than
two years after the Date of Award, any gain realized on disposition of the
Shares also will be treated as capital gain for federal income tax purposes and
subject to the same tax rates and holding periods that apply to Shares acquired
upon exercise of a Non-Qualified Stock Option. If Shares purchased under an
Incentive Stock Option are disposed of prior to the expiration of such one-year
or two-year periods, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (i) the Fair Market
Value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.

12. Entire Agreement: Governing Law. The Notice, the Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan and this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance
with and governed by the internal laws of the State of California (as permitted
by Section 16.46.5 of the California Civil Code, or any similar successor
provision) without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties. Should any
provision of the Notice, the Plan or this Option Agreement be determined by a
court of law to be illegal or unenforceable, such provision shall be enforced to
the fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable.

                                       6
STOCK OPTION AWARD (FORM 2)
<PAGE>

13. Headings. The captions used in the Notice and this Option Agreement are
inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.

14. Dispute Resolution The provisions of this Section 14 shall be the exclusive
means of resolving disputes arising out of or relating to the Notice, the Plan
and this Option Agreement. The Company, the Grantee, and the Grantee's assignees
(the "parties") shall attempt in good faith to resolve any disputes arising out
of or relating to the Notice, the Plan and this Option Agreement by negotiation
between individuals who have authority to settle the controversy. Negotiations
shall be commenced by either party by notice of a written statement of the
party's position and the name and title of the individual who will represent the
party. Within thirty (30) days of the written notification, the parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to resolve the dispute. If the dispute has not been
resolved by negotiation, the parties agree that any suit, action, or proceeding
arising out of or relating to the Notice, the Plan or this Option Agreement
shall be brought in the United States District Court for the Southern District
of California (or should such court lack jurisdiction to hear such action, suit
or proceeding, in a California state court in the County of Los Angeles) and
that the parties shall submit to the jurisdiction of such court. The parties
irrevocably waive, to the fullest extent permitted by law, any objection the
party may have to the laying of venue for any such suit, action or proceeding
brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR
MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or
more provisions of this Section 19 shall for any reason be held invalid or
unenforceable, it is the specific intent of the parties that such provisions
shall be modified to the minimum extent necessary to make it or its application
valid and enforceable.

15. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail (if the parties are within
the United States) or upon deposit for delivery by an internationally recognized
express mail courier service (for international delivery of notice), with
postage and fees prepaid, addressed to the other party at its address as shown
beneath its signature in the Notice, or to such other address as such party may
designate in writing from time to time to the other party.

                  [Remainder of Page Left Blank Intentionally]

                                       7
STOCK OPTION AWARD (FORM 2)
<PAGE>

                           FRACTIONAIR HOLDINGS, INC.
                              A NEVADA CORPORATION

                            2005 STOCK INCENTIVE PLAN
                          NOTICE OF STOCK OPTION AWARD

      Grantee's Name and Address:
                                  ----------------------------------------------

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

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

      You have been granted an option to purchase shares of Common Stock,
subject to the terms and conditions of this Notice of Stock Option Award (the
"Notice"), the FractionAir Holdings, Inc. 2005 Stock Incentive Plan, as amended
from time to time (the "Plan") and the Stock Option Award Agreement (the "Option
Agreement") attached hereto, as follows. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Notice.

      Award Number
                               -------------------------------------------------

      Date of Award
                               -------------------------------------------------

      Vesting Commencement Date
                               -------------------------------------------------

      Exercise Price per Share $
                               -------------------------------------------------

      Total Number of Shares Subject
      to the Option (the "Shares")
                               -------------------------------------------------

      Total Exercise Price        $
                                  ----------------------------------------------

      Type of Option:             ----------      Incentive Stock Option

                                  ----------      Non-Qualified Stock Option

      Expiration Date:
                                  ----------------------------------------------
      Post-Termination Exercise Period:           Three (3) Months

Vesting Schedule:

      Subject to Grantee's Continuous Service and other limitations set forth in
this Notice, the Plan and the Option Agreement, the Option may be exercised, in
whole or in part, in accordance with the following schedule:

      25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 25% of the Shares subject to the Option shall
vest on each yearly anniversary of the Vesting Commencement Date thereafter.

                                       1

STOCK OPTION AWARD (FORM 3)
<PAGE>

      During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall be suspended after the leave of absence exceeds
a period of ninety (90) days. Vesting of the Option shall resume upon the
Grantee's termination of the leave of absence and return to service to the
Company or a Related Entity. The Vesting Schedule of the Option shall be
extended by the length of the suspension.

      In the event of termination of the Grantee's Continuous Service for Cause,
the Grantee's right to exercise the Option shall terminate concurrently with the
termination of the Grantee's Continuous Service, except as otherwise determined
by the Administrator.

      In the event of the Grantee's change in status from Employee to Consultant
or from an Employee whose customary employment is 20 hours or more per week to
an Employee whose customary employment is fewer than 20 hours per week, vesting
of the Option shall continue only to the extent determined by the Administrator
as of such change in status consistent with any minimum vesting requirements set
forth in the Plan.

      IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice
and agree that the Option is to be governed by the terms and conditions of this
Notice, the Plan, and the Option Agreement.

                                        FRACTIONAIR HOLDINGS, INC.,
                                        a Nevada corporation

                                        By:
                                            ------------------------------------

                                        Title:
                                             -----------------------------------

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY
RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE'S CONTINUOUS
SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT OR THE RIGHT
OF THE GRANTEE'S EMPLOYER TO TERMINATE GRANTEE'S CONTINUOUS SERVICE, WITH OR
WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS
THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY,
GRANTEE'S STATUS IS AT WILL.

                                       2
STOCK OPTION AWARD (FORM 3)
<PAGE>

      The Grantee acknowledges receipt of a copy of the Plan and the Option
Agreement, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts the Option subject to all of the terms
and provisions hereof and thereof. The Grantee has reviewed this Notice, the
Plan, and the Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Notice, and fully
understands all provisions of this Notice, the Plan and the Option Agreement.
The Grantee hereby agrees that all disputes arising out of or relating to this
Notice, the Plan and the Option Agreement shall be resolved in accordance with
Section 14 of the Option Agreement. The Grantee further agrees to notify the
Company upon any change in the residence address indicated in this Notice.

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

                                        Name:
                                             -----------------------------------

                                       3
STOCK OPTION AWARD (FORM 3)
<PAGE>

                                               AWARD NUMBER:
                                                            --------------------

                           FRACTIONAIR HOLDINGS, INC.
                            2005 STOCK INCENTIVE PLAN
                          STOCK OPTION AWARD AGREEMENT

      1. Grant of Option. FractionAir Holdings, Inc., a Nevada corporation (the
"Company"), hereby grants to the Grantee (the "Grantee") named in the Notice of
Stock Option Award (the "Notice"), an option (the "Option") to purchase the
Total Number of Shares of Common Stock subject to the Option (the "Shares") set
forth in the Notice, at the Exercise Price per Share set forth in the Notice
(the "Exercise Price") subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the "Option Agreement") and the Company's 2005
Stock Incentive Plan, as amended from time to time (the "Plan"), which are
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Option
Agreement.

      If designated in the Notice as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by the Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the date the Option with respect to such
Shares is awarded.

      2. Exercise of Option.

            (a) Right to Exercise. The Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be
subject to the provisions of Section 11 of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction, Change in Control or Related Entity Disposition. The Grantee shall
be subject to reasonable limitations on the number of requested exercises during
any monthly or weekly period as determined by the Administrator. In no event
shall the Company issue fractional Shares.

                                       1
STOCK OPTION AWARD (FORM 3)
<PAGE>

            (b) Method of Exercise. The Option shall be exercisable only by
delivery of an exercise notice (in a form determined by the Administrator from
time to time, which may include electronic methods of exercise) which shall
state the election to exercise the Option, the whole number of Shares in respect
of which the Option is being exercised, and such other provisions as may be
required by the Administrator. The Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the Exercise Price,
which, to the extent selected, shall be deemed to be satisfied by use of the
broker-dealer sale and remittance procedure to pay the Exercise Price provided
in Section 3(d), below.

            (c) Taxes. No Shares will be delivered to the Grantee or other
person pursuant to the exercise of the Option until the Grantee or other person
has made arrangements acceptable to the Administrator for the satisfaction of
applicable income tax and employment tax withholding obligations, including,
without limitation, such other tax obligations of the Grantee incident to the
receipt of Shares or the disqualifying disposition of Shares received on
exercise of an Incentive Stock Option. Upon exercise of the Option, the Company
or the Grantee's employer may offset or withhold (from any amount owed by the
Company or the Grantee's employer to the Grantee) or collect from the Grantee or
other person an amount sufficient to satisfy such tax obligations and/or the
employer's withholding obligations.

      3. Method of Payment. Payment of the Exercise Price shall be made by any
of the following, or a combination thereof, at the election of the Grantee;
provided, however, that such exercise method does not then violate any
Applicable Law and, provided further, that the portion of the Exercise Price
equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by Applicable Law:

            (a) cash;

            (b) check;

            (c) surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares as the Administrator may require (including
withholding of Shares otherwise deliverable upon exercise of the Option) which
have a Fair Market Value on the date of surrender or attestation equal to the
aggregate Exercise Price of the Shares as to which the Option is being exercised
(but only to the extent that such exercise of the Option would not result in an
accounting compensation charge with respect to the Shares used to pay the
exercise price); or

            (d) payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (i) shall provide written instructions to a
Company designated brokerage firm to effect the immediate sale of some or all of
the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (ii) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction.

      4. Restrictions on Exercise. The Option may not be exercised if the
issuance of the Shares subject to the Option upon such exercise would constitute
a violation of any Applicable Laws.

                                       2
STOCK OPTION AWARD (FORM 3)
<PAGE>

      5. Termination or Change of Continuous Service. In the event the Grantee's
Continuous Service terminates, other than for Cause, the Grantee may, but only
during the Post-Termination Exercise Period, exercise the portion of the Option
that was vested at the date of such termination (the "Termination Date"). In the
event of termination of the Grantee's Continuous Service for Cause, the
Grantee's right to exercise the Option shall, except as otherwise determined by
the Administrator, terminate concurrently with the termination of the Grantee's
Continuous Service (also the "Termination Date"). In no event shall the Option
be exercised later than the Expiration Date set forth in the Notice. In the
event of the Grantee's change in status from Employee, Director or Consultant to
any other status of Employee, Director or Consultant, the Option shall remain in
effect and, except to the extent otherwise determined by the Administrator,
continue to vest; provided, however, with respect to any Incentive Stock Option
that shall remain in effect after a change in status from Employee to Director
or Consultant, such Incentive Stock Option shall cease to be treated as an
Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on
the day three (3) months and one (1) day following such change in status. Except
as provided in Sections 6 and 7 below, to the extent that the Option was
unvested on the Termination Date, or if the Grantee does not exercise the vested
portion of the Option within the Post-Termination Exercise Period, the Option
shall terminate.

      6. Disability of Grantee. In the event the Grantee's Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only
within twelve (12) months from the Termination Date (and in no event later than
the Expiration Date), exercise the portion of the Option that was vested on the
Termination Date; provided, however, that if such Disability is not a
"disability" as such term is defined in Section 22(e)(3) of the Code and the
Option is an Incentive Stock Option, such Incentive Stock Option shall cease to
be treated as an Incentive Stock Option and shall be treated as a Non-Qualified
Stock Option on the day three (3) months and one (1) day following the
Termination Date. To the extent that the Option was unvested on the Termination
Date, or if the Grantee does not exercise the vested portion of the Option
within the time specified herein, the Option shall terminate.

      7. Death of Grantee. In the event of the termination of the Grantee's
Continuous Service as a result of his or her death, or in the event of the
Grantee's death during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee's termination of Continuous Service as a
result of his or her Disability, the Grantee's estate, or a person who acquired
the right to exercise the Option by bequest or inheritance, may exercise the
portion of the Option that was vested at the date of termination, within twelve
(12) months from the date of death (but in no event later than the Expiration
Date). To the extent that the Option was unvested on the date of death, or if
the vested portion of the Option is not exercised within the time specified
herein, the Option shall terminate.

      8. Transferability of Option. The Option, if an Incentive Stock Option,
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution and may
be exercised, during the lifetime of the Grantee, only by the Grantee. The
Option, if a Non-Qualified Stock Option may be transferred by will, by the laws
of descent and distribution, and to the extent and in the manner authorized by
the Administrator, to members of the Grantee's Immediate Family. The terms of
the Option shall be binding upon the executors, administrators, heirs and
successors of the Grantee.

                                       3
STOCK OPTION AWARD (FORM 3)
<PAGE>

      9. Term of Option. The Option may be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein.

      10. Tax Consequences. Set forth below is a brief summary as of the date of
this Option Agreement of some of the federal tax consequences of exercise of the
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

            (a) Exercise of Incentive Stock Option. If the Option qualifies as
an Incentive Stock Option, there will be no regular federal income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as income for purposes of the alternative minimum tax for federal tax
purposes and may subject the Grantee to the alternative minimum tax in the year
of exercise.

            (b) Exercise of Incentive Stock Option Following Disability. If the
Grantee's Continuous Service terminates as a result of Disability that is not
total and permanent disability as defined in Section 22(e)(3) of the Code, to
the extent permitted on the date of termination, the Grantee must exercise an
Incentive Stock Option within three (3) months of such termination for the
Incentive Stock Option to be qualified as an Incentive Stock Option.

            (c) Exercise of Non-Qualified Stock Option. On exercise of a
Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.

            (d) Disposition of Shares. In the case of a Non-Qualified Stock
Option, if Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes and subject to tax at a maximum rate of 20%. In the case of
an Incentive Stock Option, if Shares transferred pursuant to the Option are held
for more than one year after receipt of the Shares and are disposed more than
two years after the Date of Award, any gain realized on disposition of the
Shares also will be treated as capital gain for federal income tax purposes and
subject to the same tax rates and holding periods that apply to Shares acquired
upon exercise of a Non-Qualified Stock Option. If Shares purchased under an
Incentive Stock Option are disposed of prior to the expiration of such one-year
or two-year periods, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (i) the Fair Market
Value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.

                                       4
STOCK OPTION AWARD (FORM 3)
<PAGE>

      11. Entire Agreement: Governing Law. The Notice, the Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan and this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance
with and governed by the internal laws of the State of California (as permitted
by Section 16.46.5 of the California Civil Code, or any similar successor
provision) without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties. Should any
provision of the Notice, the Plan or this Option Agreement be determined by a
court of law to be illegal or unenforceable, such provision shall be enforced to
the fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable.

      12. Headings. The captions used in the Notice and this Option Agreement
are inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.

      13. Dispute Resolution The provisions of this Section 13 shall be the
exclusive means of resolving disputes arising out of or relating to the Notice,
the Plan and this Option Agreement. The Company, the Grantee, and the Grantee's
assignees (the "parties") shall attempt in good faith to resolve any disputes
arising out of or relating to the Notice, the Plan and this Option Agreement by
negotiation between individuals who have authority to settle the controversy.
Negotiations shall be commenced by either party by notice of a written statement
of the party's position and the name and title of the individual who will
represent the party. Within thirty (30) days of the written notification, the
parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to resolve the dispute. If the dispute
has not been resolved by negotiation, the parties agree that any suit, action,
or proceeding arising out of or relating to the Notice, the Plan or this Option
Agreement shall be brought in the United States District Court for the Southern
District of California (or should such court lack jurisdiction to hear such
action, suit or proceeding, in a California state court in the County of Los
Angeles) and that the parties shall submit to the jurisdiction of such court.
The parties irrevocably waive, to the fullest extent permitted by law, any
objection the party may have to the laying of venue for any such suit, action or
proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT
THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If
any one or more provisions of this Section 19 shall for any reason be held
invalid or unenforceable, it is the specific intent of the parties that such
provisions shall be modified to the minimum extent necessary to make it or its
application valid and enforceable.

                                       5
STOCK OPTION AWARD (FORM 3)
<PAGE>

      14. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail (if the parties are within
the United States) or upon deposit for delivery by an internationally recognized
express mail courier service (for international delivery of notice), with
postage and fees prepaid, addressed to the other party at its address as shown
beneath its signature in the Notice, or to such other address as such party may
designate in writing from time to time to the other party.

                  [Remainder of Page Left Blank Intentionally]

                                       6
STOCK OPTION AWARD (FORM 3)
<PAGE>SECOND AMENDMENT TO SECURITIES PURCHASE AGREEMENT

      THIS SECOND AMENDMENT, dated as of October 7, 2005 (this "Second
Amendment") is entered into by and among the undersigned parties to amend the
Securities Purchase Agreement (the "Securities Purchase Agreement"), dated as of
September 23, 2005 by and among Composite Technology Corporation and the Buyers
party thereto, as amended on October 3, 2005. Capitalized terms used in this
Second Amendment without definition shall have the respective meanings given to
them in the Securities Purchase Agreement, as amended.

      WHEREAS, Section 1 of the Amendment to Securities Purchase Agreement
entered into by the undersigned parties on October 3, 2005 provides that in the
event the parties cannot agree on a revised definition of Conversion Price, as
contained in the Form of Note, on or before 4pm Pacific Daylight Time on October
7, 2005, the Securities Purchase Agreement shall immediately terminate without
further action by any party;

      WHEREAS, the undersigned parties have agreed on the Conversion Price, as
set forth herein; and

      WHEREAS, the undersigned parties wish to set the Conversion Price at $1.55
and to move forward with closing the transaction contemplated by the Securities
Purchase Agreement, as amended.

      NOW THEREFORE in consideration of valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the undersigned hereby
agrees as follows:

      1. Agreement on Conversion Price. The undersigned parties hereby agree to
a Conversion price of $1.55 and that the condition set forth in Section 1 of the
Amendment to Securities Purchase Agreement with respect to agreement to a
definition of the term Conversion Price shall be deemed satisfied and the
parties hereby agree to close the transactions set forth in the Securities
Purchase Agreement, as amended, subject to such other conditions set forth in
the Securities Purchase Agreement, as amended.

      2. Adjustment to Conversion Price. In the event the change in Conversion
Price from $1.60 to $1.55 would result in the inability of the Bankruptcy Court
to approve the Securities Purchase Agreement and the financing contemplated
therein on October 11, 2005, then the Conversion Price shall remain $1.60 to
enable the Bankruptcy Court to approve the Securities Purchase Agreement and the
financing contemplated therein on October 11, 2005.

      3. Scope of Amendment. All other terms and provisions of the Securities
Purchase Agreement, as amended, not expressly modified by this Second Amendment
shall remain in full force and effect and are hereby expressly ratified and
confirmed; provided, that representations and warranties contained in the
Securities Purchase Agreement, as amended, that relate to the "date hereof"
shall continue to relate to September 23, 2005.

<PAGE>

      4. Section Headings; Construction. The headings of sections in this Second
Amendment are provided for convenience only and will not affect its construction
or interpretation. All words used in this Second Amendment will be construed to
be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.

      5. Counterparts. This Second Amendment may be executed in counterparts,
each of which shall be deemed an original and each of which shall constitute one
and the same instrument.

      6. Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Second Amendment
shall be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Second Amendment and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS SECOND AMENDMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

                            [Signature pages follow]

<PAGE>

      IN WITNESS WHEREOF, the parties have caused this Second Amendment to
Securities Purchase Agreement to be duly executed as of the date first written
above.

                                       Composite Technology Corporation

                                       By:  __________________________
                                                Benton H Wilcoxon
                                                Chief Executive Officer

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