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                                                                   Exhibit 10.13

                               NANODYNAMICS, INC.

                               2007 INCENTIVE PLAN

     1. Purpose. NanoDynamics, Inc., a Delaware corporation ("NanoDynamics"),
desires to attract and retain the best available talent and to encourage the
highest level of performance. The NanoDynamics, Inc. 2007 Incentive Plan (the
"Plan") is intended to contribute significantly to the attainment of these
objectives by affording eligible employees and independent contractors of
NanoDynamics and its Affiliates (as defined in Section 19) (collectively, with
NanoDynamics, the "Company") the opportunity to acquire a proprietary interest
in NanoDynamics through the grant of (i) stock options ("Options") to purchase
shares of common stock, $.001 par value per share, of NanoDynamics (the "Common
Stock"), (ii) restricted shares of Common Stock ("Restricted Stock") and (iii)
stock appreciation rights to receive a payment in Common Stock (or, if permitted
by Section 409A of the Internal Revenue Code of 1986, as amended (the "Code")
without causing the stock appreciation rights to be treated as deferred
compensation subject thereto, cash) equal to the amount of the excess of the
Fair Market Value of the Common Stock on the date of exercise over the Fair
Market Value of the Common Stock on the date of grant ("Stock Appreciation
Rights"; and collectively with Options and Restricted Stock, "Awards", and each
individually an "Award").

     2. Administration.

          (a) The Plan shall be administered by a committee (the "Committee") of
not fewer than two members of the board of directors of NanoDynamics (the
"Board") who shall be appointed by and serve at the pleasure of the Board. To
the extent necessary to comply with Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act) and, to the extent necessary to exclude
Options granted under the Plan from the calculation of the income tax deduction
limit under Section 162(m) of the Code, each member of the Committee shall be an
"outside director" within the meaning of Section 162(m) of the Code and Treasury
Regulations promulgated thereunder. A majority of the Committee shall constitute
a quorum.

          (b) The Committee shall have and may exercise all of the powers of the
Board under the Plan, other than the power to appoint a director to Committee
membership. The Committee shall have plenary authority in its discretion,
subject to and consistent with the express provisions of the Plan, to direct the
grants of Awards; to determine the numbers of shares of Common Stock covered by
each Award, the purchase price, if any, of the Common Stock covered by each
Award, the individuals to whom an Award is given (each a "Grantee"), the time or
times at which the Award shall be granted or may vest; to prescribe, amend and
rescind rules and regulations relating to the Plan, including, without
limitation, such rules and regulations as it shall deem advisable so that
transactions involving Awards may qualify for exemption under such rules and
regulations as the Securities and Exchange Commission may promulgate from time
to time exempting transactions from Section 16(b) of the Exchange Act; to
determine the terms and provisions of, and to cause the Company to enter into,
agreements with Grantees in connection with Awards under the Plan ("Award
Agreements"), which Award Agreements may vary from one another, as the Committee
shall deem appropriate; to amend any Award Agreement from time to time with the
consent of the Grantee; and to make all other

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determinations the Committee may deem necessary or advisable for the
administration of the Plan. Every action, decision, interpretation or
determination made by the Committee or the Board with respect to the application
or administration of the Plan shall be conclusive and binding upon the Company
and any person having or claiming any interest pursuant to any Award granted
under the Plan.

          (c) Except as otherwise required by law, no member of the Board or the
Committee shall be liable for anything whatsoever in connection with the
administration of the Plan other than such member's own willful misconduct.
Under no circumstances shall any member of the Board or the Committee be liable
for any act or omission of any other member of the Board or the Committee. The
Board and the Committee shall be entitled to rely, in the performance of its
functions with respect to the Plan, upon information and advice furnished by
NanoDynamics's officers, NanoDynamics's accountants, NanoDynamics's legal
counsel and any other party the Board and Committee deems necessary. No member
of the Board or Committee shall be liable for any action taken or not taken in
reliance upon any such advice.

          (d) Each Award under the Plan shall be deemed to have been granted
when the determination of the Committee with respect to such Award is made. Once
an Award has been granted, all conditions and requirements of the Plan with
respect to such Award shall be deemed conditions on exercise, not grant.

          (e) Notwithstanding the forgoing or any other provision of the Plan,
the Committee shall have no authority to issue Awards under the Plan under terms
and conditions which would cause such Awards to be considered nonqualified
"deferred compensation" subject to the provisions of Code Section 409A,
including by way of example but not limitation, no Options or Stock Appreciation
Rights shall be issued with an exercise price below Fair Market Value and all
Restricted Stock shall be issued and reported as income to the Grantee no later
than two and one half (2 1/2) months after the end of the calendar year in which
the right to the shares covered by such Award becomes vested.

     3. Eligible Persons. Subject in the case of ISOs to Section 7(g)(i), Awards
may be granted to employees, officers and directors of, and consultants and
advisors to, the Company; provided, however, that Restricted Stock may not be
granted to any employee or officer of the Company. In determining the persons to
whom Awards shall be made and the number of shares to be covered by each Award,
the Committee shall take into account the duties of the respective persons,
their present and potential contributions to the success of the Company and
other factors deemed relevant by the Committee in connection with accomplishing
the purposes of the Plan.

     4. Share Limitations under the Plan.

          (a) Subject to adjustment as provided in Section 13 and the provisions
of this Section 4, a maximum of Three Million (3,000,000) shares of Common Stock
shall be reserved for issuance pursuant to Awards granted under the Plan. If an
Award is forfeited or expires without being exercised, or if Restricted Stock is
repurchased by the Company as provided in Section 8(c), the shares of Common
Stock subject to the Award shall be available for additional grants under the
Plan. If an Option is exercised in whole or in part by a Grantee tendering
previously owned shares of Common Stock, or if any shares are withheld in
connection with the

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exercise of its Option to satisfy the Grantee's tax liability, the full number
of shares in respect of which the Option has been exercised shall be applied
against the limit set forth in this Section 4(a).

          (b) NanoDynamics may grant Options under the Plan in substitution for
options held by employees of another corporation who become employees of
NanoDynamics or an Affiliate as the result of a merger or consolidation of the
employing corporation with NanoDynamics or an Affiliate, or as a result of the
acquisition by NanoDynamics or an Affiliate of property or stock of the
employing corporation. Substitute Options shall be granted on such terms as the
Committee considers appropriate in the circumstances. Substitute Options shall
be in addition to the limit set forth in Section 4(a).

          (c) The maximum aggregate number of shares of Common Stock issuable
pursuant to Awards that a Grantee may be granted within one fiscal year of
NanoDynamics shall be two hundred fifty thousand (250,000).

          (d) The aggregate numbers set forth in this Section 4 shall be subject
to adjustment as provided in Section 13.

     5. Term of Award. The term of each Award shall be fixed by the Committee
and specified in the applicable Award Agreement, but in no event shall it be
more than ten years from the date of grant. Subject in the case of ISOs to
Section 7(g), the term of an Award may be extended from time to time by the
Committee, provided that no extension shall extend the term beyond ten years
from the date of grant.

     6. Vesting. The Committee shall determine the vesting schedule applicable
to a particular Award and specify the vesting schedule in the applicable Award
Agreement. Notwithstanding the foregoing the Committee may accelerate the
vesting of an Award at any time.

     7. Options.

          (a) Type of Options. Options granted under the Plan may be either
incentive stock options ("ISOs") intended to meet the requirements of Code
Section 422 or nonqualified stock options ("NSOs") which are not intended to
meet such Code requirements.

          (b) Rights to Purchase. The Committee may grant Options to employees,
officers and directors of, and consultants and advisors to, the Company, in such
amounts, and subject to such terms and conditions as the Committee may determine
in its sole discretion, including such restrictions on transferability and other
restrictions as the Committee may impose, which restrictions may lapse
separately or in combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee shall determine.

          (c) Option Agreement. The terms and conditions of each Option shall be
set forth in an Option Agreement in the form approved by the Committee. Each
Option Agreement shall, at a minimum, specify (i) the number of shares of Common
Stock subject to the Option, (ii) whether the Option is intended to be an ISO or
NSO, (iii) the provisions related to vesting

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and exercisability of the Option, including the Option exercise price, and (iv)
that the Option is subject to the terms and provisions of the Plan. Option
Agreements may differ from one another.

          (d) Termination of Relationship to the Company.

               i. With respect to an Option granted to an individual who is an
employee of the Company at the time of Option grant, unless the Option Agreement
expressly provides to the contrary, (i) the Option shall terminate immediately
upon the Grantee's termination of employment for Cause (as defined in Section
19); (ii) subject in the case of ISOs to Section 7(g), the Option shall
terminate six months following the Grantee's termination of employment by reason
of death or Disability (as defined in Section 19); (iii) subject in the case of
ISOs to Section 7(g), the Option shall terminate six months after Retirement (as
defined in Section 19); (iv) the Option shall terminate one month after the
Grantee's termination of employment for any other reason; and (v) vesting of an
Option will terminate in all cases immediately upon termination of employment.
In no event shall an Option remain exercisable beyond the expiration date
specified in the applicable Option Agreement. An Option Agreement may contain
such provisions as the Board shall approve with reference to the determination
of the date employment terminates for purposes of the Plan and the effect of
leaves of absence, which provisions may vary from one another.

               ii. With respect to an Option granted to an individual who is not
an employee of the Company at the time of Option grant, the Board shall
determine and specify in the applicable Option Agreement the consequences, if
any, of the termination of the Grantee's relationship with the Company.

          (e) Option Price. Subject in the case of ISOs to Section 7(g), the
exercise price per share of Common Stock covered by an Option shall be
established by the Committee; provided, however, that (a) the exercise price per
share for any Option shall not be less than one hundred percent (100%) of the
Fair Market Value of a share of Common Stock on the date the Option is granted
and (b) no ISO granted to a 10% Shareholder (as defined in Section 7(g)) shall
have an exercise price per share less than one hundred ten percent (110%) of the
Fair Market Value of a share of Common Stock on the date the Option is granted.
Notwithstanding the foregoing, an Option (whether an ISO or NSO) may be granted
with an exercise price lower than the minimum exercise price set forth above if
such Option is granted pursuant to an assumption or substitution for another
option in a manner qualifying under the provision of Section 424(a) of the Code.

          (f) No Stockholder Rights. No Grantee shall have the rights of a
stockholder with respect to shares covered by an Option until such person
becomes the holder of record of such shares.

          (g) ISO Provisions.

               i. Employment Requirement; Termination of Employment, Death or
Disability. ISOs may only be awarded to employees of NanoDynamics or a
corporation which, with respect to NanoDynamics, is a "parent corporation" or
"subsidiary corporation" within the meaning of Code Sections 424(e) and (f). No
ISO may be exercised unless, at the time of such

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exercise, the Grantee is, and has been continuously since the date of grant of
his or her option, employed by the Company, except that:

                    (1) an ISO may be exercised within the period of one month
after the date the Grantee ceases to be an employee of the Company (or within
such lesser period as may be specified in the applicable Option Agreement),
provided, that the Option Agreement may designate a longer exercise period and
that the exercise after a three-month period shall be treated as the exercise of
a NSO under the Plan;

                    (2) if the Grantee dies while in the employ of the Company,
or within one month after the Grantee ceases to be such an employee, the ISO may
be exercised by the person to whom it is transferred by will or the laws of
descent and distribution within the period of six months after the date of death
(or within such lesser period as may be specified in the applicable Option
Agreement); provided, that the Option Agreement may designate a longer exercise
period and that the exercise after a one-year period shall be treated as the
exercise of a NSO under the Plan; and

                    (3) if while in the employ of the Company the Grantee
becomes disabled within the meaning of Section 22(e)(3) of the Code or any
successor provisions thereto, the ISO may be exercised within the period of six
months after the date the Grantee ceases to be such an employee because of such
disability (or within such lesser period as may be specified in the applicable
Option Agreement) provided, that the Option Agreement may designate a longer
exercise period and that the exercise after a one-year period shall be treated
as the exercise of a NSO under the Plan.

               For all purposes of the Plan and any Option granted hereunder,
"employment" shall be defined in accordance with the provisions of Section
1.421-7(h) of the Income Tax Regulations (or any successor regulations).
Notwithstanding the foregoing provisions, no ISO may be exercised after its
expiration date.

               ii. 10% Shareholders. In the case of an individual who at the
time the Option is granted owns stock possessing more than 10% of the total
combined voting power of all classes of the stock of NanoDynamics or of a parent
or subsidiary corporation of NanoDynamics (a "10% Shareholder"), (i) the Option
exercise price of any ISO granted to such person shall in no event be less than
110% of the Fair Market Value of the Common Stock on the date the ISO is granted
and (ii) the term of an ISO granted to such person may not exceed five years
from the date of grant.

               iii. $100,000 Limit. The aggregate Fair Market Value (determined
at the time an ISO is granted) of the Common Stock covered by ISOs exercisable
for the first time by an employee during any calendar year (under all plans of
the Company) may not exceed $100,000.

               iv. Options Which Do Not Satisfy ISO Requirements. To the extent
that any Option which is issued under the Plan exceeds the limit set forth in
paragraph (c) or otherwise does not comply with the requirements of Code Section
422, it shall be treated as a NSO.

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          (h) Cancellation and New Grant of Options, Etc. The Committee shall
have the authority to effect, at any time and from time to time, with the
consent of the affected Grantees, (i) the cancellation of any or all outstanding
Options under the Plan and the grant in substitution therefor of new Options
under the Plan covering the same or different numbers of shares of Common Stock
and having an Option exercise price per share which may be lower or higher than
the exercise price per share of the cancelled Options or (ii) the amendment of
the terms of any and all outstanding Options under the Plan to provide an Option
exercise price per share which is higher or lower than the then-current exercise
price per share of such outstanding options; provided, however, that the
Committee shall not take any of the actions described in (i) or (ii) hereof
without receiving the approval of NanoDynamics's stockholders. The provisions of
this Section 7(h) may not be altered or amended without stockholder approval.

          (i) Buyout Provisions. The Committee may at any time offer to buy out
for a payment in cash or shares, an Option previously granted, based on such
terms and conditions as the Committee shall establish and communicate to the
Grantee at the time that such offer is made.

          (j) No Deferral Feature. The Option Agreement shall not provide for
any deferral feature with respect to an Option constituting a deferral of
compensation under Section 409A of the Code.

     8. Restricted Stock.

          (a) Rights to Purchase. The Committee may grant Restricted Stock to
non-employee directors of, and consultants and advisors to, the Company, in such
amounts, and subject to such terms and conditions as the Committee may determine
in its sole discretion, including such restrictions on transferability and other
restrictions as the Committee may impose, which restrictions may lapse
separately or in combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee shall determine. Grantees shall not
be required to pay cash or other consideration for Restricted Stock granted
hereunder, other than in the form of services performed under such terms and
conditions as the Committee may determine.

          (b) Restricted Stock Grant Agreement. Restricted Stock shall be
granted under a Restricted Stock Grant Agreement and shall be evidenced by
certificates registered in the name of the Grantee and bearing an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock. The Company may retain physical possession of any such
certificates, and the Company may require a Grantee Awarded Restricted Stock to
deliver a stock power to the Company, endorsed in blank, relating to the
Restricted Stock for so long as the Restricted Stock is subject to a risk of
forfeiture.

          (c) Termination of Employment Prior to Vesting of Restricted Stock.
Immediately upon the termination of the Grantee's status as a director of, or
consultant or advisor to, the Company for any reason other than the death or
Disability of the Grantee, Restricted Stock granted to such Grantee that has not
vested prior to such time may no longer vest, and Grantee shall forfeit all
rights (and the Company shall have no further obligations) with respect to such
Restricted Stock. In the event of the death or Disability of the Grantee, the
Award shall immediately vest in full.

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          (d) Repurchase Right. Unless the Committee determines otherwise, the
Restricted Stock Grant Agreement shall grant the Company the right to repurchase
the Restricted Stock upon the termination of the purchaser's status as an
employee, officer or director of, or consultant or advisor to, the Company for
any reason. The purchase price for the Restricted Stock repurchased by the
Company pursuant to such repurchase right and the rate at which such repurchase
right shall lapse shall be determined by the Committee in its sole discretion,
and shall be set forth in the Restricted Stock Grant Agreement.

          (e) Other Provisions. The Restricted Stock Grant Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Committee in its sole discretion.

          (f) Rights as a Shareholder. The holder of Restricted Stock shall have
rights equivalent to those of a stockholder and shall be a stockholder when the
Restricted Stock grant is entered upon the records of the duly authorized
transfer agent of the Company.

          (g) No Deferral Provisions. A Restricted Stock Award shall not provide
for any deferral of compensation recognition after vesting with respect to
Restricted Stock which would cause the Award to constitute a deferral of
compensation subject to Section 409A of the Code.

     9. Stock Appreciation Rights.

          (a) Rights to Purchase. The Committee may grant Stock Appreciation
Rights to employees, officers and directors of, and consultants and advisors to,
the Company, in such amounts, and subject to such terms and conditions as the
Committee may determine in its sole discretion, including such restrictions on
transferability and other restrictions as the Committee may impose, which
restrictions may lapse separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the Committee shall
determine. No Stock Appreciation Rights shall be granted under the term and
conditions which would cause such rights to be treated as deferred compensation
subject to Section 409A of the Code. Grantees shall not be required to pay cash
or other consideration for Stock Appreciation Rights granted hereunder, other
than in the form of services performed under such terms and conditions as the
Committee may determine.

          (b) Stock Appreciation Rights Agreement. Stock Appreciation Rights
shall be granted under a Stock Appreciation Rights Agreement.

          (c) Termination of Employment Prior to Vesting of Stock Appreciation
Rights. Immediately upon the termination of the Grantee's status as an employee,
officer or director of, or consultant or advisor to, the Company for any reason
other than the death or Disability of the Grantee, Stock Appreciation Rights
granted to such Grantee that have not vested prior to such time may no longer
vest, and Grantee shall forfeit all rights (and the Company shall have no
further obligations) with respect to such Stock Appreciation Rights. In the
event of the death or Disability of the Grantee, the Award shall immediately
vest in full.

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          (d) Other Provisions. The Stock Appreciation Rights Agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Committee in its sole discretion.

          (e) Rights as a Shareholder. The Grantee of an Award of Stock
Appreciation Rights shall have none of the rights of a shareholder with respect
to the Stock Appreciation Rights, until and unless shares of Common Stock are
actually issued with respect to the Stock Appreciation Rights.

     10. Exercise of Awards.

          (a) An Award other than a Restricted Stock Award may be exercised at
any time and from time to time, in whole or in part, as to any or all full
shares as to which such Award is then exercisable. An Award may not be exercised
with respect to a fractional share. A Grantee (or other person who, pursuant to
Section 11, may exercise the Award) shall exercise the Award by delivering to
NanoDynamics at the address provided in the Award Agreement a written, signed
notice of exercise, stating the number of shares of Common Stock with respect to
which the exercise is being made, indicate whether the Grantee wishes to be paid
in cash or Common Stock, if applicable, and, if the Award is an Option, satisfy
the requirements of paragraph (b) of this Section 10. Upon receipt by
NanoDynamics of any notice of exercise, the exercise of the Award as set forth
in that notice shall be irrevocable.

          (b) Upon exercise of an Option, the Grantee shall pay to NanoDynamics
the Option exercise price per share of Common Stock multiplied by the number of
full shares as to which the Option is then exercised. A Grantee may pay the
Option exercise price by tendering or causing to be tendered to NanoDynamics
cash, by delivery or deemed delivery of shares of Common Stock owned by the
Grantee for at least six months preceding the date of exercise of the Option (or
such shorter or longer period as the Committee may approve or require from time
to time) having a Fair Market Value equal to the exercise price or other
property permitted by law and acceptable to the Board or Committee, or by any
other means which the Board or Committee determines are consistent with the
purpose of the Plan and with applicable laws and regulations (including, without
limitation, the provisions of Rule 16b-3 and Regulation T promulgated by the
Federal Reserve Board).

          (c) The Company shall, in its sole discretion, take any action
reasonably believed by it to be necessary to comply with and local, state or
federal tax laws relating to the reporting or withholding of taxes. In the event
a Grantee has exercised an Award, a Grantee shall, upon notification of the
amount due and prior to or concurrently with delivery of the certificate
representing the shares as to which the Award has been exercised if the Grantee
is entitled to receive shares, or upon exercise of the Award if the Grantee is
not entitled to receive shares, promptly pay or cause to be paid the amount
determined by the Company as necessary to satisfy all applicable tax withholding
requirements. A Grantee may satisfy his or her tax withholding requirement in
any manner satisfactory to the Company.

          (d) Any certificates representing the shares as to which an Award has
been exercised shall bear an appropriate legend setting forth the restrictions
applicable to such shares.

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     11. Nontransferability.

          (a) Except as provided in paragraph (b), Awards granted under the Plan
shall not be assignable or transferable other than by will or the laws of
descent and distribution and Options may be exercised during the lifetime of the
Grantee only by the Grantee or by the Grantee's guardian or legal
representative. In the event of any attempt by a Grantee to transfer, assign,
pledge, hypothecate or otherwise dispose of an Award or any right thereunder,
except as provided for herein, or in the event of the levy of any attachment,
execution or similar process upon the rights or interest hereby conferred,
NanoDynamics may terminate the Award (making such Award null and void) or
Repurchase the Restricted Stock as provided in Section 8(c) by notice to the
Grantee.

          (b) Notwithstanding paragraph (a), if (and on the terms) so provided
in the applicable Option Agreement, a Grantee may transfer a NSO, by gift or a
domestic relations order, to a Family Member (as defined in Section 19) of the
Grantee. If a NSO is transferred in accordance with this subparagraph, the
Option shall be exercisable solely by the transferee, but the determination of
the exercisability of the Option shall be based solely on the activities and
state of affairs of the Grantee. Thus, for example, if, after a transfer with
respect to an Option, the Grantee ceases to be an employee of the Company, such
termination shall trigger the provisions of Section 7(d) hereof. Conversely, if
after a transfer the transferee ceases to be an employee of the Company, such
termination shall not trigger the provisions of Section 7(d) hereof.

     12. Compliance with Law; Registration of Shares.

          (a) The Plan and any grant hereunder shall be subject to all
applicable laws, rules, and regulations of any applicable jurisdiction or
authority or agency thereof and to such approvals by any regulatory or
governmental agency which, in the opinion of Company's counsel, may be required
or appropriate.

          (b) Notwithstanding any other provision of the Plan or Award
Agreements made pursuant hereto, the Company shall not be required to issue or
deliver any certificate or certificates for shares of Common Stock under the
Plan prior to fulfillment of all of the following conditions:

               i. Effectiveness of any registration or other qualification of
such shares of the Company under any law or regulation of any applicable
jurisdiction or authority or agency thereof which the Board shall, in its
absolute discretion or upon the advice of counsel, deem necessary or advisable;
and

               ii. Grant of any other consent, approval or permit from any
applicable jurisdiction or authority or agency thereof or securities exchange or
quotation system which the Board shall, in its absolute discretion or upon the
advice of counsel, deem necessary or advisable.

          The Company shall use all reasonable efforts to obtain any consent,
approval or permit described above; provided, however, that except to the extent
as may be specified in an Award Agreement with respect to any particular grant,
the Company shall be under no obligation

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to register or qualify any shares of Common Stock subject to an Award under any
federal or state securities law or on any exchange.

     13. Adjustments upon Changes in Capitalization.

          (a) In the event that NanoDynamics or the division, subsidiary or
other Affiliate for which a Grantee performs services is sold (including a stock
or an asset sale), spun off, merged, consolidated, reorganized or liquidated,
the Board may determine that (i) any Option shall be assumed, or a substantially
equivalent Award shall be substituted, by an acquiring or succeeding entity (or
an affiliate thereof) on such terms as the Board determines to be appropriate;
(ii) upon written notice to the Grantee, provide that the Award shall terminate
immediately prior to the consummation of the transaction unless exercised by the
Grantee within a specified period following the date of the notice; (iii) in the
event of a sale or similar transaction under the terms of which holders of
Common Stock receive a payment for each share of Common Stock surrendered in the
transaction (the "Sales Price"), make or provide for a payment to each Grantee
equal to the amount by which (A) the Sales Price times the number of shares of
Common Stock subject to the Award (to the extent such Award is then exercisable)
exceeds (B) the aggregate exercise price, if any, for all such shares of Common
Stock; or (iv) may make such other equitable adjustments as the Board deems
appropriate.

          (b) In the event of any stock dividend or split, recapitalization,
combination, exchange or similar change affecting the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company, the Committee shall make any or
all of the following adjustments as it deems appropriate to equitably reflect
such event: (i) adjust the aggregate number of shares (or such other security as
is designated by the Board) which may be acquired pursuant to the Plan, (ii)
adjust the purchase price to be paid for any or all such shares subject to the
then outstanding Awards, (iii) adjust the number of shares of Common Stock (or
such other security as is designated by the Board) subject to any or all of the
then outstanding Awards and (iv) make any other equitable adjustments or take
such other equitable action as the Board, in its discretion, shall deem
appropriate. For purposes hereof, the conversion of any convertible securities
of the Company shall not be deemed to have been "effected without receipt of
consideration."

          (c) Any and all adjustments or actions taken by the Board pursuant to
this Section 14 shall be conclusive and binding for all purposes.

     14. No Right to Continued Employment. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee or any independent
contractor any right to continue in the employ of or to be engaged as an
independent contractor by the Company or affect the right of the Company to
terminate such person's employment or other relationship with the Company at any
time.

     15. Amendment; Early Termination. Subject to Section 7(h), the Board may at
any time and from time to time alter, amend, suspend or terminate the Plan in
whole or in part; provided, however, that no amendment requiring stockholder
approval by law or by the rules of any stock exchange, inter-dealer quotation
system, or other market in which shares of Common Stock are traded, shall be
effective unless and until such stockholder approval has been obtained

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in compliance with such rule or law; and provided, further, that no such
amendment shall materially adversely affect the rights of a Grantee in any Award
previously granted under the Plan without the Grantee's written consent.

     16. Effective Date. The Plan shall be effective as of the date of its
adoption by the Board (the "Effective Date"), subject to the approval thereof by
the stockholders of NanoDynamics entitled to vote thereon within 12 months of
such date. In the event that such stockholder approval is not obtained within
such time period, the Plan and any Awards granted under the Plan on or prior to
the expiration of such 12 month period shall be void and of no further force and
effect.

     17. Termination of Plan. Unless terminated earlier by the Board in
accordance with Section 16 above, the Plan shall terminate on, and no further
Awards may be granted after, the tenth anniversary of the Effective Date.

     18. Severability. In the event that any one or more provisions of the Plan
or an Award Agreement, or any action taken pursuant to the Plan or an Award
Agreement, should, for any reason, be unenforceable or invalid in any respect
under the laws of the United States, any state of the United States or any other
jurisdiction, such unenforceability or invalidity shall not affect any other
provision of the Plan or Award Agreement, but in such particular jurisdiction
and instance the Plan and/or Award Agreement, as applicable, shall be construed
as if such unenforceable or invalid provision had not been contained therein or
if the action in question had not been taken thereunder.

     19. Definitions.

          (a) Affiliate. The term "Affiliate" means any entity, whether or not
incorporated, that directly or through one or more intermediaries is controlled
by NanoDynamics.

          (b) Cause. The term "Cause" when used herein in conjunction with
termination of employment (or other service relationship) means (i) if the
Grantee is a party to an employment or similar agreement with the Company which
defines "cause" (or a similar term), the meaning set forth in such agreement
(other than death or disability), or (ii) otherwise, termination by the Company
of the employment (or other service relationship) of the Grantee by reason of
the Grantee's (1) intentional failure to perform reasonably assigned duties, (2)
dishonesty or willful misconduct in the performance of his duties, (3)
involvement in a transaction which is materially adverse to the Company, (4)
breach of fiduciary duty involving personal profit, (5) willful violation of any
law, rule, regulation or court order (other than misdemeanor traffic violations
and misdemeanors not involving misuse or misappropriation of money or property),
(6) commission of an act of fraud or intentional misappropriation or conversion
of any asset or opportunity of the Company, or (7) material breach of any
provision of the Company's Stock Incentive Plan, the Grantee's Award Agreement
or any other written agreement between the Grantee and the Company, in each case
as determined in good faith by the Board, whose determination shall be final,
conclusive and binding on all parties.

                                       11

<PAGE>

          (c) Disability. Except as otherwise specified in the applicable Award
Agreement or in the Grantee's Employment Agreement with the Company, the Grantee
shall be deemed to have a "Disability" if the Grantee is unable to engage in any
substantial gainful activity by reason of any medically determined physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve (12)
months, as reasonably determined by the Board in good faith and in its
discretion.

          (d) Fair Market Value. As used herein, the term "Fair Market Value" of
a share of Common Stock as of a specified date for the purposes of the Plan
shall mean the value of a share of Common Stock determined consistent with the
requirements of Sections 422 and 409(A) of the Code as follows: the arithmetic
mean of the high and low sales prices of a share of Common Stock on the date of
grant on the principal securities exchange (including the Nasdaq National
Market) on which such shares are traded on the relevant date for which Fair
Market Value is being determined, or if the shares are not traded on a
securities exchange, Fair Market Value shall be deemed to be the average of the
high bid and low asked prices of the Common Stock on the date of grant in the
over-the-counter market on which such shares are traded on the relevant date for
which Fair Market Value is being determined. If the shares are not publicly
traded, Fair Market Value of a share of Common Stock (including, in the case of
any repurchase of shares, any distributions with respect thereto which would be
repurchased with the shares) shall be determined in good faith by the Board or
the Committee. In no case shall Fair Market Value be determined with regard to
restrictions other than restrictions which, by their terms, will never lapse.

          (e) Family Member of the Grantee. As used herein, "Family Member of
the Grantee" means the Grantee's child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons have more than 50% of the beneficial interest, a foundation in which
these persons (or the Grantee) control the management of assets, and any other
entity in which these persons (or the Grantee) own more than 50% of the voting
interests.

          (f) Retirement. As used herein, "Retirement" means the termination of
employment of a Grantee over the age of 62 with at least 10 years of continuous
service to the Company.

                                       12<PAGE>

                                                                   Exhibit 10.14

                                 LEASE AGREEMENT

       THIS AGREEMENT, made the 15th day of November, 2002 by and between

                    NIAGARA FRONTIER TRANSPORTATION AUTHORITY
                               181 Ellicott Street
                             Buffalo, New York 14203

hereinafter referred to as "NFTA" or as "Landlord"

                                       and

                               NanoDynamics, Inc.
                                63 Morris Avenue
                             Buffalo, New York 14214

hereinafter referred to as "Tenant."

                                   WITNESSETH:

     1.   PREMISES:

     NFTA hereby leases to Tenant and Tenant hereby hires and takes from NFTA
the following described premises:

     40,500 square feet of office and factory space (9,500 office, 31,000
     factory) on the second floor of Port Terminal A, 901 Fuhrmann Boulevard,
     Buffalo.

     2. USE:

     The premises and any part thereof shall be used solely, wholly, and
exclusively for the following purposes:

     Office and factory space.

     3. TERM:

     The term of this lease shall commence on December 1, 2002 and shall end on
November 30, 2006 unless sooner terminated as hereinafter provided. Tenant shall
have two three-year renewal options.

<PAGE>

     4. RENT:

     The rent shall be payable at the offices of NFTA in equal monthly
installments the first and last of which shall be tendered herewith as a deposit
pending approval and authorization of this agreement by the NFTA Board of
Commissioners and the second and subsequent installments (excepting the final
installment which shall have been pre-paid as above provided) shall be payable
respectively on the first day of the second month and each subsequent month
during the term hereof in advance without notice.

     The rental reserved shall be in the following amounts:

     Office space:  Rent will be waived for years 1-4 in exchange for the
                    renovation of the offices into Class A space at an estimated
                    cost of up to $300,000 by tenant. Rent for Year 5 will be
                    $10 per square foot with an annual escalator of 3% per year
                    for the remaining years.

     Factory Space: Year 1 at $1 per sq. ft. with an annual escalator of 3% for
                    Years 2-4 Year 5 at $1.30 per sq. ft. with an annual
                    escalator of 3% per year for the remaining years.

     In the event that the NFTA Board of Commissioners fails to approve this
lease, the sum tendered as a deposit shall be refunded to Tenant without
interest and this writing shall be canceled and annulled and neither party shall
have any claim whatsoever against the other by reason hereof.

     5. COVENANTS AND AGREEMENTS:

     This lease shall be subject, in addition to the foregoing, to all of the
covenants and agreements set forth in the "Appendix of Standard Covenants and
Agreements for Niagara Frontier Transportation Authority Leases" a copy of which
is hereto annexed and by this reference incorporated herein and to the following
special provisions, if any:

     Substitute Section 1.g. Utilities: Tenant agrees to pay a proportionate
                                        share of the utilities used in the
                                        warehouse on a per square foot basis.

                                       2

<PAGE>

     AND it is mutually understood and agreed that all of the provisions hereof
shall be binding upon the parties hereto and their respective representatives,
assigns and/or successors in interest.

     IN WITNESS WHEREOF the parties have respectively caused these presents to
be signed and sealed the day and year first above written.

(SEAL)                                  NIAGARA FRONTIER TRANSPORTATION
                                        AUTHORITY

                                        BY: /s/ Lawrence M. Meckler
                                            ------------------------------------
                                            Lawrence M. Meckler
                                            Executive Director

(SEAL)                                  NanoDynamics, Inc.

                                        BY: /s/ Richard L. Berger
                                            ------------------------------------
                                            Richard L. Berger

                                       3

<PAGE>

                                    APPENDIX
                                       OF
                        STANDARD COVENANTS AND AGREEMENTS
                                       FOR
                NIAGARA FRONTIER TRANSPORTATION AUTHORITY LEASES

     1. The party named as Tenant in any lease agreement between such Tenant and
the Niagara Frontier Transportation Authority which by its terms incorporates
this Appendix therein does, by execution of such lease agreement, COVENANT AND
AGREE as follows:

          (a) Payment: To pay the Rent at the times and in the manner as in said
          lease agreement provided.

          (b) Non-Assignment: Not to assign or sublet the Premises or any part
          thereof for the whole or any part of the term without the prior
          written consent of NFTA, which consent shall not be unreasonably
          withheld.

          (c) Inspection: To allow NFTA, or its agent, to enter the Premises at
          all reasonable times of the day by appointment and to inspect the same
          to insure compliance herewith.

          (d) Hazardous Materials:

               (1)  The Tenant shall promptly respond to and clean up any
                    release or threatened release of any Hazardous Material into
                    the drainage systems, soils, groundwater, waters, or
                    atmosphere caused by the Tenant, in a safe manner, in
                    accordance with applicable federal, State, and local
                    statutes, ordinances, and regulations, and as authorized or
                    approved by all federal, State, or local agencies having
                    authority to regulate the permitting, handling, and cleanup
                    of Hazardous Materials.

                                       4

<PAGE>

               (2)  Any Hazardous Materials shall be handled, stored,
                    transported, and disposed of in accordance with all
                    applicable federal, State, and local statutes, ordinances,
                    and regulations. The term "Hazardous Materials" shall mean
                    any substance, chemical, or waste which at any time shall be
                    deemed as hazardous, toxic, or dangerous under applicable
                    federal, State, or local laws or regulations that govern (i)
                    the existence, cleanup, or remedy of contamination on
                    property; (ii) the protection of the environment from
                    spilled, deposited or otherwise emplaced contamination;
                    (iii) control of hazardous wastes; or (iv) the use,
                    generation, transport, treatment, removal or recovery of
                    hazardous substances, including building materials.

               (3)  The Tenant shall not store, use, or dispose of on the
                    Premises, any Hazardous Materials which are explosive, toxic
                    or otherwise hazardous unless the Tenant has first received
                    the written authorization of the NFTA and the Tenant
                    complies with any conditions as the NFTA may impose,
                    including the submission to the NFTA of all Material Safety
                    Data Sheets (MSDS) for the chemicals stored on the Premises.

               (4)  Correction of Hazardous Condition. If the NFTA reasonably
                    determines that a condition on the Premises, caused by the
                    Tenant, is hazardous or potentially hazardous to persons or
                    property, it may, either in writing or orally, direct the
                    Tenant to correct the

                                       5

<PAGE>

                    condition, and the Tenant shall at its own cost and expense
                    immediately comply with such directive.

          (e) Compliance:

               To comply with all federal, state, county, local and NFTA laws,
          rules, regulations and ordinances in connection with the use and
          occupancy of the Premises, and to obey all lawful requirements of the
          New York Fire Insurance Rating Organization or any similar body with
          reference thereto and the use thereof. In the event that the insurance
          premium rate upon the building shall be increased by reason of any act
          of omission or commission on the part of Tenant or by reason of the
          occupancy of the Premises, Tenant agrees to pay the amount of any such
          increase. Tenant further agrees to save NFTA harmless from any
          expense, loss or damage by reason of the violation of any of such
          laws, rules, regulations, ordinances and requirements or by reason of
          any damage that might be sustained by reason of Tenant's negligence.

          (f) Return: To return the Premises broom clean at the expiration or
          earlier termination of such lease agreement and in the same condition
          as when taken, reasonable wear and depreciation excepted.

          (g) Utilities: To pay the costs for all utilities consumed and for
          sewer service when and as the same are metered to the Premises.

          (h) Signs: To obtain prior written approval for the display of any
          signs at the Premises.

                                       6

<PAGE>

          (i) Liability Insurance:

               To maintain during the term of such lease agreement a policy(ies)
          acceptable to the NFTA of general liability insurance $1,000,000 per
          occurrence/$2,000,000 aggregate, workers' compensation in compliance
          with New York State laws with an acceptable insurer(s) and naming NFTA
          as an additional insured, such coverage to be evidenced by
          certificate(s) thereof delivered to NFTA.

          (j) Indemnity:

               To the extent not otherwise covered by Landlord furnished
          insurance, Tenant shall pay and discharge, and shall protect, defend,
          Tenant indemnify and hold the NFTA harmless and its members, agents
          and employees from and against all causes of action claims, damages,,
          liabilities, losses, costs, expenses (including reasonable attorneys'
          fees, expenses and litigation costs), or judgments or fines of any
          nature arising or alleged to arise from or in connection with the
          following events occurring within the Premises and/or resulting from
          acts of Tenant, its employees or agents (except to the extent caused
          by NFTA's negligence): (1) any accident, injury to, or the death of,
          any person; (2) damage to or destruction or property, in connection
          with Tenant's use or occupancy of the Leased Premises or the storage
          of any property at the Leased Premises, whether the same be asserted
          by third parties, Tenant's agents, Concessionaires, employees,
          invitees or licensees; (3) the introduction, disposal, escape,
          seepage, leakage, spillage, discharge, emission, release, or
          threatened release of any Hazardous Materials as defined in 1(d) (2)
          above, from, or affecting the Leased Premises or any other

                                       7

<PAGE>

          property; (4) any personal injury (including wrongful death) or
          property damage (real or personal) arising out of or related to such
          Hazardous Materials; (5) any lawsuit brought or threatened, settlement
          reached, or government order relating to such Hazardous Materials; or
          (6) any violation of laws, orders, regulations, requirements, or
          demands of government authorities, which are based upon or in any way
          related to such Hazardous Materials including, without limitation, the
          costs and expenses or any remedial action, attorney and consultant
          fees, investigation and laboratory fees, court costs and litigation
          expenses.

               The obligation of Tenant under this Section shall survive the
          expiration or earlier termination of this Lease. All such obligations
          are expressly made for the benefit of, and shall be enforceable by,
          the NFTA without necessity of declaring this Lease to be in default
          and the NFTA may initially proceed directly against Tenant under this
          Section without first resorting to any other rights of indemnification
          it may have. All payments required to be paid pursuant to this Section
          shall be made directly to, or as otherwise requested by, the NFTA,
          upon written demand by the NFTA. All such written demands shall
          specify the amounts payable and the facts upon which the right to
          indemnification is based. Tenant shall not be required to make any
          payment pursuant to this Section until such time as the NFTA shall be
          obligated to make payment in respect of the liability indemnified
          against hereunder or a final judgment of a court or other competent
          tribunal shall have been entered that the NFTA is obligated to make
          payment in respect of the liability indemnified against hereunder.

                                       8

<PAGE>

          (k) Maintenance and Repairs:

               To take good care of the Premises, and at its own cost and
          expense, to make all repairs (except structural repairs) unless due to
          the negligence, willful act, or omission of NFTA.

          (l) Non-Discrimination:

               Tenant for itself, its personal representatives, successors in
          interest and assigns, as a part of the consideration hereof, hereby
          covenants and agrees as follows:

               (1)  No person, on the ground of race, color, religion, sex, age,
                    national origin, marital status or handicap, shall be
                    excluded from participation in, denied the benefits of, or
                    be otherwise subjected to discrimination in the use or
                    operation of Tenant's services or facilities;

               (2)  In the construction of any improvements on, over or under
                    the Premises and in the furnishing of services thereat, no
                    person, on the grounds of race, color, religion, sex, age,
                    national origin and marital status or handicap, shall be
                    excluded from participation in, denied the benefits of, or
                    otherwise be subjected to discrimination;

               (3)  Tenant shall use the Premises in compliance with all other
                    requirements imposed by or pursuant to Title 49, Code of
                    Federal Regulations, Department of Transportation, Subtitle
                    A, Office of the Secretary, Part 21, Non-Discrimination in
                    Federally Assisted Programs in the Department of
                    Transportation, effectuation of Title

                                       9

<PAGE>

                    VI of the Civil Right Act of 1964, and as said regulations
                    may be amended.

     2. Such Tenant and the NFTA further COVENANT AND AGREE as follows:

          (a) Improvements:

               Alterations, additions, other leasehold improvements, except
          trade fixtures installed by Tenant, shall be subject to the prior
          written approval of NFTA and shall be and become the property of NFTA
          at the expiration of such lease agreement, and shall remain on and be
          surrendered with the Premises as part thereof upon the expiration or
          earlier termination of such lease agreement.

          (b) Relocation:

               NFTA reserves the right to relocate the Premises in whole or in
          part, temporarily or permanently, as it may deem necessary, convenient
          or desirable. In the event that any such permanent relocation area is
          unacceptable to Tenant, Tenant shall have the right to terminate such
          lease agreement upon sixty (60) day prior written notice to NFTA. All
          expenses incurred by Tenant in connection with any such relocation
          shall be paid by NFTA. Any such relocation shall be made upon
          reasonable notice to Tenant, and shall be to a site equally
          appropriate to the continued conduct of Tenant's business operations.

          (c) Housekeeping: Tenant shall not permit the accumulation of rubbish,
          debris, trash, waste materials or anything detrimental to health or
          offensive in appearance, or likely to cause injury or to create a fire
          or environmental hazard, and shall promptly and appropriately dispose
          of same off NFTA property.

                                       10

<PAGE>

          (d) Damage and Liability Disclaimer: NFTA shall not be liable for any
          damage to person or property sustained by Tenant or others, due to the
          Premises or any part thereof or any appurtenances thereto coming into
          disrepair, or due to the happening of any accident in or about the
          Premises, or due to any act or neglect of anyone else in or about the
          building of which Premises may be a part, including without limitation
          damage caused by water, steam, sewerage, gas, bursting or leaking
          pipes or plumbing, or electrical causes, or the negligence of
          contractors, employees, agents or licensees of NFTA, unless the damage
          is proven to be caused by negligence, willful act, or omission of
          NFTA.

          (e) Damage or Destruction: Tenant shall take good care of the Premises
          and shall return the same at the expiration or earlier termination of
          such lease agreement in as good order as received ordinary wear and
          depreciation excepted, unless the Premises should be destroyed by
          lightening or other natural causes, or fire proven not to be caused by
          the negligence or fault of Tenant or Tenant's agents, servants,
          employees or licensees. If any destruction proven to be without fault
          of Tenant occurs during the term of such lease agreement, the
          following shall apply:

               (1)  If the Premises are partially damaged by fire or other
                    casualty without fault of Tenant, but not rendered wholly
                    untenantable, as determined solely by NFTA, the same shall
                    be repaired with due diligence by NFTA at NFTA's sole cost
                    and expense, and Tenant's rent shall be abated in proportion
                    to the untenantable portion for the

                                       11

<PAGE>

                    period from the occurrence of the damage to the completion
                    of the repairs.

               (2)  If the Premises are completely destroyed by fire or other
                    casualty, or so damaged that they shall remain untenantable
                    for more than ninety (90) days, as determined solely by
                    NFTA, NFTA shall be under no obligation to repair or
                    reconstruct the same and the rent payable shall be
                    proportionately paid to the time of such damage or
                    destruction. NFTA shall notify Tenant within thirty (30)
                    days of the occurrence of such casualty whether repair or
                    reconstruction of the Premises shall be accomplished. If
                    NFTA elects to repair or reconstruct, it shall commence and
                    prosecute such repair or reconstruction with due diligence.
                    Should NFTA elect not to repair or reconstruct, such lease
                    agreement shall terminate upon the date of such
                    notification; provided however, in such eventuality NFTA
                    agrees to use its best efforts to provide substitute space
                    for Tenant at a suitable NFTA property. In the event
                    substitute space is provided and accepted by Tenant, all
                    terms and conditions of such lease agreement shall apply
                    thereto.

          (f) Access: Subject to NFTA Rules and Regulations, Tenant, its agents,
          servants, patrons, suppliers of material and invitees shall have
          reasonable ingress to and egress from the Premises.

                                       12

<PAGE>

          (g) Cancellation by Tenant: Such lease agreement shall be subject to
          cancellation by Tenant upon the happening of any one or more of the
          following events:

               (1)  The lawful assumption by the United States of America, or
                    any authorized agency thereof, of the operation, building of
                    which premises is a part or of the surrounding land areas or
                    any substantial part or parts thereof in such a manner as to
                    substantially restrict Tenant from operating therefrom for a
                    period of ninety (90) days.

               (2)  Issuance by any court of competent jurisdiction of any
                    injunction which in any way prevents or restrains the use of
                    the said building or surrounding lands and which remains in
                    force for a period in excess of ninety (90) days.

               (3)  The default by NFTA in the performance of any covenant or
                    agreement herein required to be performed by NFTA, and the
                    failure of NFTA to remedy such default for a period of
                    thirty (30) days after receipt by NFTA of written notice to
                    remedy same.

               (4)  The damage or destruction of all or a substantial part of
                    the Premises or damage or destruction of all or a part of
                    the said building which is necessary to the operation of
                    Tenant's business, except to the extent and in the event
                    such damage or destruction results from acts or negligence
                    of Tenant.

                                       13

<PAGE>

          (h) Removal and Restoration:

               Upon the expiration or earlier termination of this lease for
          whatever reason, Tenant, at its sole expense, shall remove all signs,
          personal property, equipment, fixtures and materials which Tenant is
          permitted to remove hereunder and Tenant shall restore the Premises to
          the condition that existed immediately prior to the commencement of
          such lease agreement, reasonable wear and depreciation excepted. If
          Tenant shall fail to do so within thirty (30) days, NFTA may effect
          such removal or restoration at Tenant's expense and Tenant agrees to
          pay NFTA such expense promptly including reasonable attorney's fees
          incurred thereby upon receipt of proper invoice therefor.

          (i) Cancellation by NFTA:

               In addition to all other termination rights herein or in such
          lease agreement contained, such lease agreement shall be subject to
          cancellation by NFTA should any one or more of the following events or
          defaults occur:

                    (1)  If Tenant should breach or fail to perform any of the
                         terms, covenants or conditions herein contained or fail
                         to keep in force any of the required insurance
                         policies.

                    (2)  If Tenant should fail to abide by all applicable laws,
                         ordinances, rules and regulations of the United States,
                         State of New York, County of Erie and NFTA.

                    (3)  If Tenant should abandon and discontinue the operation
                         of its business for a continuous period of fifteen (15)
                         days except when such abandonment and cessation are due
                         to fire, earthquake,

                                       14

<PAGE>

                         governmental action, employee strikes, or other causes
                         beyond Tenant's reasonable control.

                    (4)  If Tenant should default in or fail to make payments at
                         the times and in the amounts required under such lease
                         agreement.

     Upon the happening of any of the events or defaults recited hereinabove,
NFTA shall give written notice to Tenant to correct or cure such default,
failure or breach. If, within thirty (30) days from the date of such notice,
Tenant has not corrected such condition or conditions, or taken positive steps
to correct same in a manner satisfactory to NFTA, then, and in such event, NFTA
shall have the right at once and without further notice to Tenant to declare
such lease agreement terminated and to enter upon and take all possession of the
Premises; provided however, that the thirty (30) day period specified herein
shall not apply to termination or cancellation declared for failure of Tenant to
make money payments hereunder, for which, termination or cancellation may be
declared by NFTA upon ten (10) days written notice, and unless such payment is
made during such ten (10) day period, such lease agreement shall become at the
option of NFTA terminated and canceled.

     In addition, NFTA may in like manner declare, such lease agreement
terminated and canceled upon giving (5) days notice thereof, in the event that
Tenant files a voluntary petition in bankruptcy, or if a receiver is appointed
for the property or affairs of Tenant and such receivership is not vacated
within thirty (30) days after the appointment of such receiver, or should the
right of Tenant to operate the business activities authorized hereunder be lost
by operation of law.

                                       15

<PAGE>

          (j) Forfeiture and Waiver of Default:

               The failure of either party to enforce any default or right to
          termination of such lease agreement shall not constitute a waiver of
          the right to enforce the same with respect to any other violation. If
          such lease agreement should at any time become void or forfeited, no
          demand shall be necessary to recover possession of the Premises, and
          NFTA shall be entitled to receive the rent, whether the same became
          due before or after forfeiture, and such receipt of rent shall not be
          deemed or considered a confirmation or renewal of such lease
          agreement. In the event of forfeiture of Tenant's interest in such
          lease agreement, NFTA shall make reasonable efforts to release the
          Premises, and Tenant shall be responsible for the payment of all rent
          not recovered by NFTA during the remaining term of such lease
          agreement.

          (k) Forcible Detention:

               In the event that Tenant should continue to occupy the Premises
          after the expiration or earlier termination hereof, with or against
          the consent of NFTA, such tenancy shall be at sufferance only, but in
          all other respects in accordance with the terms herein and in such
          lease agreement contained.

          (l) Surrender:

               Upon the expiration or earlier termination of such lease
          agreement, Tenant's rights to use the Premises, facilities, rights,
          licenses, services or privileges herein agreed upon shall cease and
          Tenant shall upon such expiration or termination surrender the same
          forthwith.

                                       16

<PAGE>

          (m) Liens:

               Tenant shall, within thirty (30) days of the filing thereof,
          cause the removal of any mechanics', laborers' or materialmen's lien,
          filed on account of labor or material furnished to Tenant, or claimed
          to have been furnished to Tenant in connection with work of any
          character performed or claimed to have been performed on the Premises,
          by or at the direction or sufferance of Tenant.

          (n) Non-brokerage: Tenant represents and warrants to NFTA that the
          Premises were not brought to the attention of Tenant by any broker and
          that all negotiations were had by Tenant directly with NFTA.

          (o) Right to Show: Tenant shall permit NFTA or its agents to enter the
          Premises at all reasonable hours by appointment for the purpose of
          showing same to persons wishing to purchase or lease the same.

          (p) Paragraph Headings: Paragraph headings contained herein are for
          convenience in referring to portions or particular provisions hereof
          and are not intended to define extend or limit the scope of any
          provision hereof.

                                       17

<PAGE>

                                 LEASE AMENDMENT

       THIS AGREEMENT, made the 19th day of September, 2006 by and between

                    NIAGARA FRONTIER TRANSPORTATION AUTHORITY
                               181 Ellicott Street
                             Buffalo, New York 14203

hereinafter referred to as "NFTA" or as "Landlord"

                                       and

                               NanoDynamics, Inc.
                             901 Fuhrmann Boulevard
                             Buffalo, New York 14203

hereinafter referred to as "Tenant."

WHEREAS, Landlord and Tenant entered into a Lease Agreement dated November 15,
2002 with respect to a portion of the premises located at Port Terminal A, 901
Fuhrmann Blvd, Buffalo, New York (hereinafter collectively referred to as the
"Lease"); and

WHEREAS, Landlord and Tenant now wish to amend the Lease.

                                   WITNESSETH:

A. Section 1 "TERM" of the Lease is hereby amended and restated in its entirety
as follows:

"1.  TERM:

The term of the Lease shall end on November 30, 2009 unless sooner terminated as
hereinafter provided. Tenant shall have the option to renew the Lease for one
additional three year period."

B. The second paragraph of Section 2 "RENT" of the Lease is hereby amended and
restated in its entirety as follows:

2.   RENT:

     ****

     The rental reserved shall be in the following amounts:

<TABLE>
<S>                          <C>
Second Floor Office Space:   There will be no rent charged on this space
                             until December 1, 2006. Commencing on December
                             1, 2006, the rent for this space will be $10 per
                             square foot and
</TABLE>

                                         18

<PAGE>

<TABLE>
<S>                          <C>
                             annually thereafter, the rent for this space
                             will escalate 3% per year.

Factory Space:               The current rent for this space is $1.09 per
                             square foot. Commencing on December 1, 2006, the
                             rent for this space will be $1.30 per square
                             foot and annually thereafter, the rent for this
                             space will escalate 3% per year.
</TABLE>

C. Except as expressly modified and amended by this Lease Amendment, the Lease
shall continue in full force and effect.

     IN WITNESS WHEREOF the parties have respectively caused these presents to
be signed and sealed the day and year first above written.

                                        NIAGARA FRONTIER TRANSPORTATION
                                        AUTHORITY

                                        BY: /s/ Peter J. Burke
                                            ------------------------------------

                                        NANODYNAMICS, INC.

                                        BY: /s/ Richard L. Berger
                                            ------------------------------------
                                            Richard L. Berger, President

                                       19

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