Document:

REGISTRATION RIGHTS AGREEMENT

                  This REGISTRATION RIGHTS AGREEMENT (this  "Agreement"),  dated
as of _______, 2003, is entered into by and among Altair  Nanotechnologies Inc.,
a corporation  incorporated under the Business  Corporation Act of Canada,  with
headquarters located at 204 Edison Way, Reno, Nevada 89502 (the "Company"),  and
the  undersigned  buyers,  each of which is listed on and has  signed a separate
counterpart  signature  page  hereto  (each,  a "Buyer"  and  collectively,  the
"Buyers").

                                    WHEREAS:

         A. Pursuant to a Confidential Offering Summary dated September 26, 2003
(the  "Summary"),  the Company has offered and sold certain Units (as defined in
the Summary) to the Buyers; and

         B. To induce the Buyers to purchase  the Units,  the Company has agreed
to provide  certain  registration  rights under the  Securities  Act of 1933, as
amended,  and the rules and  regulations  thereunder,  or any similar  successor
statute (collectively, the "1933 Act"), and applicable state securities laws, as
set forth herein,

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and sufficiency of which are hereby  acknowledged,  the Company and each
of the Buyers hereby agree as follows:

1.       DEFINITIONS.
         ------------

         As used in this Agreement, the following terms shall have the following
meanings:

         a. "Common Stock" means the common shares of the Company, no par value.

         b. "Investor" means a Buyer, any transferee or assignee thereof to whom
a Buyer  assigns its rights under this  Agreement and who agrees to become bound
by the  provisions  of this  Agreement  in  accordance  with  Section 10 and any
transferee  or assignee  thereof to whom a  transferee  or assignee  assigns its
rights under this  Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 10.

         c.  "Person"  means a  corporation,  a limited  liability  company,  an
association,  a partnership,  an  organization,  a business,  an  individual,  a
governmental or political subdivision thereof or a governmental agency.

         d. "Register," "registered," and "registration" refer to a registration
effected by preparing and filing one or more Registration Statements (as defined
below) in  compliance  with the 1933 Act and pursuant to Rule 415 under the 1933
Act or any  successor  rule  providing  for offering  securities on a continuous
basis ("Rule 415"),  and the  declaration or ordering of  effectiveness  of such
Registration   Statement(s)  by  the  United  States   Securities  and  Exchange
Commission (the "SEC").

         e.  "Registrable  Securities"  means,  with respect to each Buyer,  the
Common Stock  included in the Units  purchased  by such Buyer,  the Common Stock
issuable upon exercise of the Warrants  included in the Units  purchased by such
Buyer and any shares of capital  stock  issued or issuable  with respect to such
Common Stock,  Warrants or Warrant shares as a result of any stock split,  stock

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dividend,  recapitalization,  exchange, anti-dilution rights, liquidated damages
payment or similar event or otherwise,  without  regard to any limitation on the
exercise of the Warrants.

         f.  "Registration  Statement"  means a  registration  statement  of the
Company filed pursuant to Rule 415 under the 1933 Act.

         g. "Warrants" means the Series 2003F Warrants included in the Units.

2.       REGISTRATION.
         -------------

         a. Mandatory  Registration.  The Company shall prepare, and, as soon as
practicable, but in no event later than thirty (30) calendar days after the date
hereof,  file with the SEC a Registration  Statement or Registration  Statements
(as is necessary) on Form S-3 (or if such form is  unavailable,  such other form
as is available for registration)  covering the resale of all of the Registrable
Securities.  The initial  Registration  Statement prepared pursuant hereto shall
register for resale at least that number of shares of Company Common Stock equal
to the number of Registrable Securities as of the date immediately preceding the
date the  Registration  Statement  is initially  filed with the SEC,  subject to
adjustment as provided in Section  3(b).  The Company shall use its best efforts
to have the  Registration  Statement  declared  effective  by the SEC as soon as
practicable,  but in no event later than one hundred  twenty (120) calendar days
after the date hereof.

         b. Piggy-Back Registrations.  If at any time prior to the expiration of
the  Registration  Period (as defined in Section 3(a)),  the Company proposes to
file with the SEC a Registration  Statement  relating to an offering for its own
account  or the  account of others  under the 1933 Act of any of its  securities
(other than on Form S-4 or Form S-8 (or their equivalents at such time) relating
to  securities to be issued solely in  connection  with any  acquisition  of any
entity or business or equity securities issuable in connection with stock option
or other employee benefit plans),  if all of the Registrable  Securities are not
then registered under a currently effective Registration Statement,  the Company
shall promptly send to each Investor  written notice of the Company's  intention
to file a  Registration  Statement  and of such  Investor's  rights  under  this
Section 2(b) and, if within twenty (20) days after receipt of such notice,  such
Investor  shall so  request  in  writing,  the  Company  shall  include  in such
Registration  Statement  all or any  part  of the  Registrable  Securities  such
Investor  requests  to be  registered,  subject to the  priorities  set forth in
Section 2(b) below.  No right to registration  of Registrable  Securities  under
this Section 2(b) shall be construed to limit any  registration  required  under
Section  2(a).  The  obligations  of the Company  under this Section 2(b) may be
waived by the Buyers.  If an offering  in  connection  with which an Investor is
entitled to registration  under this Section 2(b) is an  underwritten  offering,
then  each  Investor   whose   Registrable   Securities  are  included  in  such
Registration  Statement shall, unless otherwise agreed by the Company, offer and
sell such  Registrable  Securities in an  underwritten  offering  using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and  conditions as other shares of Company  common stock included
in such underwritten  offering.  If a registration pursuant to this Section 2(b)
is to be an underwritten public offering and the managing  underwriter(s) advise
the Company in writing that in their reasonable good faith opinion, marketing or
other  factors  dictate  that a  limitation  on the  number of shares of Company
common stock which may be included in the Registration Statement is necessary to
facilitate  and not  adversely  affect the proposed  offering,  then the Company
shall  include in such  registration:  (1) first,  all  securities  the  Company
proposes  to sell for its own  account;  (2)  second,  up to the full  number of
securities  proposed  to be  registered  for  the  account  of  the  holders  of
securities  entitled  to  inclusion  of  their  securities  in the  Registration
Statement by reason of demand registration rights; and (3) third, the securities
requested to be  registered  by the  Investors  and other  holders of securities
entitled to participate in the registration,  as of the date hereof,  drawn from
them pro rata based on the number  each has  requested  to be  included  in such
registration.
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         c.  Allocation  of  Registrable  Securities.   The  initial  number  of
Registrable  Securities included in any Registration Statement and each increase
in the number of Registrable  Securities included therein shall be allocated pro
rata among the Investors based on the number of Registrable  Securities held, or
which could be held,  by each  Investor at the time the  Registration  Statement
covering such initial  number of Registrable  Securities or increase  thereof is
declared  effective by the SEC. In the event that an Investor sells or otherwise
transfers any of such Person's Registrable Securities,  each transferee shall be
allocated  a pro  rata  portion  of the then  remaining  number  of  Registrable
Securities  included in such  Registration  Statement for such  transferor.  Any
shares of Common Stock  included in a  Registration  Statement  and which remain
allocated to any Person which ceases to hold any Registrable Securities shall be
allocated  to  the  remaining  Investors,  pro  rata  based  on  the  number  of
Registrable Securities then held by such Investors.

         d. Legal  Counsel.  Subject to Section 5 hereof,  each Buyer shall have
the right to select  one  legal  counsel  to review  and  oversee  any  offering
pursuant  to this  Section 2 ("Legal  Counsel").  The Company  shall  reasonably
cooperate with Legal Counsel in performing the Company's  obligations under this
Agreement.

         e.  Ineligibility  for Form  S-3.  In the  event  that  Form S-3 is not
available for any registration of Registrable Securities hereunder,  the Company
shall (i) register the sale of the Registrable Securities on another appropriate
form and (ii)  undertake to register the  Registrable  Securities on Form S-3 as
soon as such form is available,  provided  that the Company  shall  maintain the
effectiveness of the Registration  Statement then in effect until such time as a
Registration  Statement on Form S-3 covering the Registrable Securities has been
declared effective by the SEC.

         f. Rule 416. The Company and the Investors each  acknowledge  that each
Registration  Statement  prepared  in  accordance  hereunder  shall  include  an
indeterminate  number of Registrable  Securities  pursuant to Rule 416 under the
1933 Act so as to cover any and all  Registrable  Securities  which  may  become
issuable (i) to prevent dilution resulting from stock splits, stock dividends or
similar   transactions   and  (ii)  if  permitted  by  law,  by  reason  of  the
anti-dilution  provisions contained in the Warrants in accordance with the terms
thereof (collectively,  the "Rule 416 Securities").  In this regard, the Company
agrees to use all  reasonable  efforts  to  ensure  that the  maximum  number of
Registrable  Securities  which may be registered  pursuant to Rule 416 under the
1933 Act are covered by each  Registration  Statement and,  absent guidance from
the SEC or other definitive authority to the contrary, the Company shall use all
reasonable efforts to affirmatively support and to not take any position adverse
to the position that each  Registration  Statement filed hereunder covers all of
the  Rule 416  Securities.  If the  Company  determines  that  the  Registration
Statement  filed  hereunder does not cover all of the Rule 416  Securities,  the
Company shall  immediately (i) provide to each Investor written evidence setting
forth the basis for the Company's  position and the authority  therefor and (ii)
prepare  and  file  an  amendment  to  such  Registration  Statement  or  a  new
Registration Statement in accordance with Section 2(g).

         g. Sufficient Number of Shares  Registered.  In the event the number of
shares  available under a Registration  Statement filed pursuant to Section 2(a)
is  insufficient  to cover all of the  Registrable  Securities  or an Investor's
allocated  portion of the Registrable  Securities  pursuant to Section 2(c), the
Company  shall  amend the  Registration  Statement,  or file a new  Registration
Statement (on the short form available therefor, if applicable),  or both, so as
to cover at least one hundred  twenty-five  percent  (125%) of such  Registrable
Securities in each case, as soon as practicable, but in any event not later than
fifteen (15) days after the necessity  therefor arises. The Company shall use it

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best efforts to cause such amendment and/or new Registration Statement to become
effective as soon as practicable  following the filing thereof.  For purposes of
the foregoing  provision,  the number of shares  available  under a Registration
Statement  shall  be  deemed  "insufficient  to  cover  all of  the  Registrable
Securities" if at any time the number of Registrable  Securities is greater than
the  number  of  shares  of  Common  Stock   available  for  resale  under  such
Registration  Statement.  For  purposes  of the  calculation  set  forth  in the
foregoing sentence, any restrictions on the exercisability of the Warrants shall
be  disregarded  and such  calculation  shall  assume that the Warrants are then
exercisable into shares of Common Stock.

3.       RELATED OBLIGATIONS.
         --------------------

         Whenever an Investor has requested that any  Registrable  Securities be
registered  pursuant to Section 2(b) or at such time as the Company is obligated
to file a Registration  Statement with the SEC pursuant to Section 2(a) or 2(g),
the  Company  will  use its best  efforts  to  effect  the  registration  of the
Registrable  Securities in accordance  with the intended  method of  disposition
thereof and, pursuant thereto, the Company shall have the following obligations:

         a.  Registration.  The Company shall promptly prepare and file with the
SEC a Registration  Statement with respect to the Registrable  Securities (on or
prior to the  thirtieth  (30th)  calendar  day  after  the date  hereof  for the
registration  of  Registrable  Securities  pursuant to Section 2(a)) and use its
best efforts to cause such  Registration  Statement  relating to the Registrable
Securities to become  effective as soon as possible after such filing (but in no
event later than one hundred  twenty (120)  calendar  days after the date hereof
for the  registration of Registrable  Securities  pursuant to Section 2(a)), and
keep such  Registration  Statement  effective  pursuant to Rule 415 at all times
until the earlier of (i) the date as of which the  Investors may sell all of the
Registrable  Securities without restriction  pursuant to Rule 144(k) promulgated
under  the 1933 Act (or  successor  thereto)  or (ii) the date on which  (A) the
Investors  shall have sold all the  Registrable  Securities  and (B) none of the
Warrants  is  outstanding  (the  "Registration   Period"),   which  Registration
Statement  (including  any amendments or  supplements  thereto and  prospectuses
contained  therein) shall not contain any untrue statement of a material fact or
omit to state a material  fact  required to be stated  therein,  or necessary to
make the statements  therein,  in light of the  circumstances in which they were
made, not misleading.

         b.  Amendments.  The Company  shall  prepare and file with the SEC such
amendments   (including   post-effective   amendments)   and  supplements  to  a
Registration   Statement  and  the  prospectus  used  in  connection  with  such
Registration  Statement,  which  prospectus is to be filed  pursuant to Rule 424
promulgated  under the 1933 Act, as may be necessary  to keep such  Registration
Statement  effective at all times during the  Registration  Period,  and, during
such  period,  comply with the  provisions  of the 1933 Act with  respect to the
disposition  of all  Registrable  Securities  of the  Company  covered  by  such
Registration  Statement  until such time as all of such  Registrable  Securities
shall  have  been  disposed  of in  accordance  with  the  intended  methods  of
disposition by the seller or sellers  thereof as set forth in such  Registration
Statement.

         c.  Disclosure  Materials.  The Company  shall furnish to each Investor
whose Registrable Securities are included in any Registration Statement, without
charge,  upon request (i) promptly after the same is prepared and filed with the
SEC,  at least  one copy of such  Registration  Statement  and any  amendment(s)
thereto,   including   financial   statements  and   schedules,   all  documents
incorporated therein by reference and all exhibits,  (ii) upon the effectiveness
of any Registration  Statement,  (10) copies of the prospectus  included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may  reasonably  request) and (iii) such other

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documents,  including  copies of any  preliminary or final  prospectus,  as such
Investor may  reasonably  request from time to time in order to  facilitate  the
disposition of the Registrable Securities owned by such Investor.

         d. State Securities  Laws. The Company shall use reasonable  efforts to
(i) register and qualify the  Registrable  Securities  covered by a Registration
Statement under such other  securities or "blue sky" laws of such  jurisdictions
in the United States as Legal Counsel or any Investor reasonably requests,  (ii)
prepare   and  file  in  those   jurisdictions,   such   amendments   (including
post-effective   amendments)   and   supplements  to  such   registrations   and
qualifications as may be necessary to maintain the effectiveness  thereof during
the  Registration  Period,  (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration  Period and (iv) take all other  actions  reasonably  necessary  or
advisable to qualify the Registrable  Securities for sale in such jurisdictions;
provided,  however,  that  the  Company  shall  not be  required  in  connection
therewith  or as a  condition  thereto  to (x)  qualify  to do  business  in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
Section 3(d), (y) subject itself to general taxation in any such jurisdiction or
(z) file a general consent to service of process in any such  jurisdiction.  The
Company  shall  promptly  notify  Legal  Counsel  and each  Investor  who  holds
Registrable  Securities of the receipt by the Company of any  notification  with
respect to the suspension of the  registration  or  qualification  of any of the
Registrable  Securities  for sale under the securities or "blue sky" laws of any
jurisdiction  in the  United  States  or its  receipt  of  actual  notice of the
initiation or threatening of any proceeding for such purpose.

         e. Underwriting  Agreement.  In the event Investors who hold a majority
of the Registrable  Securities being offered in the offering select underwriters
for the offering, the Company shall enter into and perform its obligations under
an  underwriting  agreement,  in usual and customary  form,  including,  without
limitation,  customary  indemnification and contribution  obligations,  with the
underwriters of such offering.

         f.  Notification.  As promptly as  practicable  after becoming aware of
such event,  the Company shall notify Legal Counsel and each Investor in writing
of the happening of any event as a result of which the prospectus  included in a
Registration  Statement,  as then in effect,  includes an untrue  statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made,  not  misleading,  and promptly  prepare a  supplement  or
amendment to such  Registration  Statement  to correct such untrue  statement or
omission,  and deliver ten (10) copies of such  supplement or amendment to Legal
Counsel and each  Investor (or such other  number of copies as Legal  Counsel or
such Investor may reasonably  request).  The Company shall also promptly  notify
Legal  Counsel  and  each  Investor  in  writing  (i) when a  prospectus  or any
prospectus  supplement or  post-effective  amendment has been filed,  and when a
Registration  Statement or any  post-effective  amendment  has become  effective
(notification of such effectiveness shall be delivered to Legal Counsel and each
Investor by  facsimile  on the same day of such  effectiveness  and by overnight
mail),  (ii) of any  request  by the  SEC for  amendments  or  supplements  to a
Registration Statement or related prospectus or related information and (iii) of
the Company's  reasonable  determination  that a  post-effective  amendment to a
Registration Statement would be appropriate.

         g. Stop-Order and Suspension. The Company shall use its best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of a
Registration  Statement,  or the suspension of the  qualification  of any of the
Registrable  Securities  for sale in any  jurisdiction  and, if such an order or
suspension  is issued,  to obtain the  withdrawal of such order or suspension at
the earliest  possible  moment and to notify Legal Counsel and each Investor who
holds  Registrable  Securities  being sold (and, in the event of an underwritten
offering,  the  managing  underwriters)  of the  issuance  of such order and the
resolution  thereof or its receipt of actual notice of the  initiation or threat
of any proceeding for such purpose.
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         h. Requested  Information.  At the request of any Investor, the Company
shall  furnish  to  such  Investor,  on the  date  of the  effectiveness  of the
Registration  Statement  and  thereafter  from time to time on such  dates as an
Investor may  reasonably  request (i) if required by an  underwriter,  a letter,
dated such date, from the Company's  independent certified public accountants in
form and  substance as is  customarily  given by  independent  certified  public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters,  and (ii) if required by an underwriter,  an opinion,  dated as of
such date, of counsel representing the Company for purposes of such Registration
Statement,  in  form,  scope  and  substance  as  is  customarily  given  in  an
underwritten public offering, addressed to the underwriters and the Investors.

         i.  Inspection.  In connection with the preparation of any Registration
Statement,  the Company shall make available for inspection by (i) any Investor,
(ii) Legal  Counsel,  (iii) any  underwriter  participating  in any  disposition
pursuant to a  Registration  Statement,  (iv) one firm of  accountants  or other
agents retained by the Investors and (v) one firm of attorneys  retained by such
underwriters (collectively,  the "Inspectors") all pertinent financial and other
records,  and  pertinent  corporate  documents  and  properties  of the  Company
(collectively,  the "Records"),  as shall be reasonably deemed necessary by each
Inspector,  and cause the Company's officers,  directors and employees to supply
all information which any Inspector may reasonably request;  provided,  however,
that  each  Inspector  shall  hold in strict  confidence  and shall not make any
disclosure  (except to an  Investor)  or use of any Record or other  information
which the  Company  determines  in good faith to be  confidential,  and of which
determination the Inspectors are so notified,  unless (a) the disclosure of such
Records is  necessary  to avoid or correct a  misstatement  or  omission  in any
Registration  Statement  or is  otherwise  required  under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final,  non-appealable subpoena
or order from a court or government  body of competent  jurisdiction  or (c) the
information  in such  Records has been made  generally  available  to the public
other than by  disclosure  in violation of this or any other  agreement of which
the Inspector has knowledge.  Each Investor agrees that it shall,  upon learning
that disclosure of such Records is sought in or by a court or governmental  body
of competent  jurisdiction  or through  other means,  give prompt  notice to the
Company and allow the Company, at its expense,  to undertake  appropriate action
to prevent  disclosure  of, or to obtain a  protective  order for,  the  Records
deemed confidential.

         j. Confidential  Information.  The Company shall hold in confidence and
not make any  disclosure of information  concerning an Investor  provided to the
Company  unless (i)  disclosure of such  information is necessary to comply with
federal or state  securities  laws,  (ii) the disclosure of such  information is
necessary  to avoid or correct a  misstatement  or omission in any  Registration
Statement,  (iii) the  release  of such  information  is ordered  pursuant  to a
subpoena or other final,  non-appealable order from a court or governmental body
of  competent  jurisdiction  or (iv) such  information  has been made  generally
available to the public other than by disclosure in violation of this  Agreement
or any other  agreement.  The Company  agrees that it shall,  upon learning that
disclosure of such information concerning an Investor is sought in or by a court
or  governmental  body of competent  jurisdiction  or through other means,  give
prompt  written  notice  to  such  Investor  and  allow  such  Investor,  at the
Investor's expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

         k. Listing.  The Company  shall use  reasonable  efforts  either to (i)
cause all the Registrable  Securities covered by a Registration  Statement to be
listed on each  securities  exchange  on which  securities  of the same class or
series  issued by the  Company are then  listed,  if any, if the listing of such
Registrable  Securities  is then  permitted  under the rules of such exchange or
(ii) secure designation and quotation of all the Registrable  Securities covered
by the  Registration  Statement  on the Nasdaq  National  Market  System or, if,

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despite the Company's best efforts to satisfy the preceding  clause (i) or (ii),
the Company is unsuccessful  in satisfying the preceding  clause (i) or (ii), to
secure  the  inclusion  for  quotation  on The Nasdaq  SmallCap  Market for such
Registrable Securities and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. as such with respect to such Registrable Securities.
"Reasonable  efforts"  shall  not  include  approving  a  reverse  stock  split,
consolidation  or  similar  transaction.  The  Company  shall  pay all  fees and
expenses in connection with satisfying its obligation under this Section 3(l).

         l.  Certificates.  The Company shall  cooperate  with the Investors who
hold Registrable  Securities being offered to facilitate the timely  preparation
and delivery of certificates (not bearing any restrictive  legend)  representing
the Registrable  Securities to be offered  pursuant to a Registration  Statement
and enable such certificates to be in such denominations or amounts, as the case
may be, as the Investors may reasonably  request and registered in such names as
the Investors may request.

         m.  Transfer  Agent.  The Company  shall  provide a transfer  agent and
registrar of all such  Registrable  Securities not later than the effective date
of such Registration Statement.

         n. Underwriter  Requests.  If requested by the managing underwriters or
an Investor,  the Company  shall:  (i)  immediately  incorporate in a prospectus
supplement  or  post-effective   amendment  such  information  as  the  managing
underwriters  and the Investors agree should be included therein relating to the
sale and distribution of Registrable Securities,  including, without limitation,
information  with respect to the number of Registrable  Securities being sold to
such  underwriters,  the purchase price being paid therefor by such underwriters
and any other terms of the underwritten (or best efforts underwritten)  offering
of the  Registrable  Securities  to be sold  in such  offering;  (ii)  make  all
required filings of such prospectus  supplement or  post-effective  amendment as
soon as notified of the matters to be incorporated in such prospectus supplement
or  post-effective  amendment;  and (iii)  supplement or make  amendments to any
Registration  Statement if requested by an Investor or any  underwriter  of such
Registrable Securities.

         o. Best  Efforts.  The Company  shall use its best efforts to cause the
Registrable  Securities covered by the applicable  Registration  Statement to be
registered with or approved by such other  governmental  agencies or authorities
as  may  be  necessary  to  consummate  the  disposition  of  such   Registrable
Securities.

         p.  Compliance  With Laws.  The Company  shall  otherwise  use its best
efforts  to  comply  with all  applicable  rules and  regulations  of the SEC in
connection  with any  registration  hereunder and the Company shall use its best
efforts  to file  with the SEC in a timely  manner  all  reports  and  documents
required  of the  Company  under  the 1933 Act and the 1934 Act (as  defined  in
Section 6(a)).

         q. Confirmation.  Upon request, within five (5) business days after the
Registration  Statement  which  includes the  Registrable  Securities is ordered
effective by the SEC, the Company shall  deliver,  and shall cause legal counsel
for  the  Company  to  deliver,  to the  transfer  agent  for  such  Registrable
Securities  (with  copies to the  Investors  whose  Registrable  Securities  are
included in such  Registration  Statement)  confirmation  that the  Registration
Statement has been declared  effective by the SEC in the form attached hereto as
Exhibit A.

         r.  Disposition.  The Company shall take all other  reasonable  actions
necessary to expedite and facilitate disposition by the Investors of Registrable
Securities pursuant to a Registration Statement.

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4.       OBLIGATIONS OF THE INVESTORS.
         -----------------------------

         a. At least seven (7) days prior to the first  anticipated  filing date
of the Registration Statement, the Company shall notify each Investor in writing
of the information the Company requires from each such Investor if such Investor
elects to have any of such Investor's  Registrable  Securities  included in such
Registration  Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable  Securities of a particular Investor that such Investor shall
furnish to the Company such  information  regarding  itself and the  Registrable
Securities held by it as shall be reasonably required to effect the registration
of such  Registrable  Securities  and shall execute such documents in connection
with such registration as the Company may reasonably request.

         b. Each  Investor  by such  Investor's  acceptance  of the  Registrable
Securities  agrees to cooperate with the Company as reasonably  requested by the
Company  in  connection  with the  preparation  and  filing of any  Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such  Investor's  election  to  exclude  all  of  such  Investor's   Registrable
Securities from such Registration Statement.

         c. In the event any Investor  elects to participate in an  underwritten
public  offering  pursuant to Section 2, each such Investor agrees to enter into
and perform such  Investor's  obligations  under an underwriting  agreement,  in
usual   and   customary   form,   including,   without   limitation,   customary
indemnification and contribution  obligations,  with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable Securities.

5.       EXPENSES OF REGISTRATION.
         -------------------------

         All  reasonable  expenses,   other  than  underwriting   discounts  and
commissions,   incurred   in   connection   with   registrations,   filings   or
qualifications pursuant to Sections 2 and 3, including,  without limitation, all
registration, listing and qualifications fees, printers and accounting fees, and
fees  and   disbursements   of  counsel  for  the  Company  (but  not  fees  and
disbursements of Legal Counsel) shall be paid by the Company.

6.       INDEMNIFICATION.
         ----------------

                  In the event any  Registrable  Securities  are  included  in a
Registration Statement under this Agreement:

         a. To the fullest extent permitted by law, the Company will, and hereby
does,  indemnify,  hold  harmless  and  defend  each  Investor  who  holds  such
Registrable Securities, the directors,  officers,  partners,  employees, agents,
representatives  of, and each Person,  if any, who controls any Investor  within
the meaning of the 1933 Act or the  Securities  Exchange Act of 1934, as amended
(the  "1934  Act"),  and any  underwriter  (as  defined in the 1933 Act) for the
Investors,  and the  directors  and officers  of, and each  Person,  if any, who
controls,  any such  underwriter  within the meaning of the 1933 Act or the 1934
Act (each,  an  "Indemnified  Person"),  against  any losses,  claims,  damages,
liabilities,  judgments,  fines,  penalties,  charges,  costs,  attorneys' fees,
amounts  paid  in  settlement  or  expenses,  joint  or  several  (collectively,
"Indemnified  Damages"),  incurred in investigating,  preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing  by or  before  any  court or  governmental,  administrative  or other
regulatory  agency,  body or the SEC, whether pending or threatened,  whether or
not an Indemnified Person is or may be a party thereto (collectively, "Claims"),

                                       8
<PAGE>

to which any of them may become  subject  insofar as such  Claims (or actions or
proceedings,  whether commenced or threatened,  in respect thereof) arise out of
or are based upon:  (i) any untrue  statement or alleged  untrue  statement of a
material  fact  in a  Registration  Statement  or any  post-effective  amendment
thereto  or in any  filing  made in  connection  with the  qualification  of the
offering  under the securities or other "blue sky" laws of any  jurisdiction  in
which Registrable Securities are offered ("Blue Sky Filing"), or the omission or
alleged  omission  to state a material  fact  required  to be stated  therein or
necessary  to make the  statements  therein  not  misleading,  (ii)  any  untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in any
preliminary  prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,  if
the Company files any amendment  thereof or supplement  thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein,  in light of the circumstances under which the
statements  therein were made,  not  misleading,  (iii) any violation or alleged
violation  by the  Company  of the  1933  Act,  the 1934  Act,  any  other  law,
including,  without  limitation,  any  state  securities  law,  or any  rule  or
regulation  thereunder  relating  to  the  offer  or  sale  of  the  Registrable
Securities  pursuant to a Registration  Statement or (iv) any material violation
of this Agreement (the matters in the foregoing  clauses (i) through (iv) being,
collectively,  "Violations"). The Company shall reimburse the Investors and each
such underwriter or controlling  person,  promptly as such expenses are incurred
and  are due and  payable,  for any  legal  fees or  other  reasonable  expenses
incurred by them in connection with  investigating  or defending any such Claim.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement  contained in this Section 6(a):  (i) shall not apply to a Claim by an
Indemnified  Person  arising  out of or based upon a Violation  which  occurs in
reliance upon and in  conformity  with  information  furnished in writing to the
Company by such Indemnified  Person or underwriter for such  Indemnified  Person
expressly  for  use in  connection  with  the  preparation  of the  Registration
Statement  or  any  such  amendment  thereof  or  supplement  thereto,  if  such
prospectus  was timely made  available by the Company  pursuant to Section 3(d);
(ii) with respect to any preliminary prospectus,  shall not inure to the benefit
of any such Person from whom the Person  asserting any such Claim  purchased the
Registrable  Securities  that are the subject  thereof (or to the benefit of any
Person  controlling such Person) if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected in the prospectus, as
then amended or  supplemented,  if such  prospectus was timely made available by
the Company  pursuant to Section 3(d), and the  Indemnified  Person was promptly
advised in writing not to use the incorrect  prospectus  prior to the use giving
rise to a violation and such Indemnified  Person,  notwithstanding  such advice,
used it;  (iii)  shall not be  available  to the extent such Claim is based on a
failure of the  Investor to deliver or to cause to be delivered  the  prospectus
made available by the Company,  if such  prospectus was timely made available by
the Company  pursuant to Section  3(d);  (iv) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company,  which consent shall not be unreasonably  withheld;  and
(v) shall not apply to the extent  such  Claim is based  upon the  failure of an
Investor to comply with governing  laws and  regulations.  Such indemnity  shall
remain in full force and effect  regardless of any  investigation  made by or on
behalf  of  the  Indemnified  Person  and  shall  survive  the  transfer  of the
Registrable Securities by the Investors pursuant to Section 10.

         b. In connection with any  Registration  Statement in which an Investor
is  participating,  each such  Investor  agrees  to  severally  and not  jointly
indemnify,  hold harmless and defend,  to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, each Person, if any, who controls
the Company within the meaning of the 1933 Act or the 1934 Act (collectively and
together with an Indemnified Person, an "Indemnified Party"),  against any Claim

                                       9
<PAGE>

or Indemnified Damages to which any Indemnified Party may become subject,  under
the 1933 Act, the 1934 Act or  otherwise,  insofar as such Claim or  Indemnified
Damages  arise  out of or are  based  upon any  Violation,  in each  case to the
extent, and only to the extent,  that such Violation (i) occurs in reliance upon
and in  conformity  with  written  information  furnished to the Company by such
Investor  expressly for use in connection with such Registration  Statement (ii)
is based on a failure of the Investor to deliver or to cause to be delivered the
prospectus  made  available by the Company,  if such  prospectus was timely made
available  by the  Company  pursuant to Section  3(d),  or (iii) is based on the
failure of the  Investor to comply with  governing  laws and  regulations;  and,
subject  to  Section  6(d),  such  Investor  will  reimburse  any legal or other
expenses  reasonably  incurred  by  them in  connection  with  investigating  or
defending  any such  Claim;  provided,  however,  that the  indemnity  agreement
contained in this Section 6(b) and the  agreement  with respect to  contribution
contained  in Section 7 shall not apply to  amounts  paid in  settlement  of any
Claim if such  settlement is effected  without the prior written consent of such
Investor, which consent shall not be unreasonably withheld;  provided,  further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified  Damages as does not exceed the net proceeds to
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration  Statement.  Such  indemnity  shall remain in full force and effect
regardless of any  investigation  made by or on behalf of such Indemnified Party
and shall  survive the transfer of the  Registrable  Securities by the Investors
pursuant  to Section 10.  Notwithstanding  anything  to the  contrary  contained
herein,  the  indemnification  agreement  contained  in this  Section  6(b) with
respect  to any  preliminary  prospectus  shall not inure to the  benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.

         c.  The  Company  shall  be  entitled  to  receive   indemnities   from
underwriters,  selling brokers,  dealer managers and similar securities industry
professionals participating in any distribution,  to the same extent as provided
above,  with  respect  to  information  such  persons  so  furnished  in writing
expressly for inclusion in the Registration Statement.

         d. Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the  commencement  of any action or proceeding
(including  any  governmental  action or  proceeding)  involving  a Claim,  such
Indemnified  Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any  indemnifying  party under this Section 6, deliver to the
indemnifying  party  a  written  notice  of the  commencement  thereof,  and the
indemnifying  party shall have the right to  participate  in, and, to the extent
the indemnifying  party so desires,  jointly with any other  indemnifying  party
similarly  noticed,  to assume  control  of the  defense  thereof  with  counsel
mutually  satisfactory to the indemnifying  party and the Indemnified  Person or
the  Indemnified  Party,  as  the  case  may  be;  provided,  however,  that  an
Indemnified  Person or Indemnified  Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying  party, if, in
the  reasonable  opinion of counsel  retained  by the  indemnifying  party,  the
representation  by such counsel of the Indemnified  Person or Indemnified  Party
and the  indemnifying  party would be  inappropriate  due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party  represented by such counsel in such  proceeding.  The Company shall
pay reasonable  fees for only one separate legal counsel for the Investors,  and
such legal  counsel  shall be  selected by the  Investors  holding a majority in
interest of the Registrable Securities included in the Registration Statement to
which the Claim  relates.  The  Indemnified  Party or  Indemnified  Person shall
cooperate fully with the  indemnifying  party in connection with any negotiation
or  defense  of any such  action  or claim by the  indemnifying  party and shall
furnish to the indemnifying  party all information  reasonably  available to the
Indemnified  Party or Indemnified  Person which relates to such action or claim.

                                       10
<PAGE>

The indemnifying  party shall keep the Indemnified  Party or Indemnified  Person
fully  apprised at all times as to the status of the  defense or any  settlement
negotiations with respect thereto. No indemnifying party shall be liable for any
settlement  of any  action,  claim or  proceeding  effected  without its written
consent,  provided,  however, that the indemnifying party shall not unreasonably
withhold,  delay or condition its consent. No indemnifying party shall,  without
the consent of the Indemnified Party or Indemnified Person,  consent to entry of
any judgment or enter into any  settlement  or other  compromise  which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party or Indemnified  Person of a release from all liability
in respect to such claim or litigation.  Following  indemnification  as provided
for hereunder,  the indemnifying  party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations  relating to the matter for which indemnification has been made.
The  failure  to  deliver  written  notice to the  indemnifying  party  within a
reasonable  time of the  commencement  of any such action shall not relieve such
indemnifying  party of any liability to the  Indemnified  Person or  Indemnified
Party under this Section 6, except to the extent that the indemnifying  party is
prejudiced in its ability to defend such action.

         e. The  indemnification  required  by this  Section  6 shall be made by
periodic  payments of the amount thereof during the course of the  investigation
or defense, as and when bills are received or Indemnified Damages are incurred.

         f. The indemnity  agreements  contained  herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the  indemnifying  party or others and (ii) any  liabilities  the
indemnifying party may be subject to pursuant to law.

7.       CONTRIBUTION.
         -------------

         To  the  extent  any   indemnification  by  an  indemnifying  party  is
prohibited or limited by law, the indemnifying  party agrees to make the maximum
contribution  with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable  Securities guilty of fraudulent  misrepresentation
(within  the  meaning of Section  11(f) of the 1933 Act)  shall be  entitled  to
contribution  from any seller of  Registrable  Securities  who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds  received by
such seller from the sale of such Registrable Securities.

8.       REPORTS UNDER THE 1934 ACT.
         ---------------------------

         With a view to making  available to the  Investors the benefits of Rule
144  promulgated  under the 1933 Act or any other  similar rule or regulation of
the SEC that may at any time  permit the  Investors  to sell  securities  of the
Company to the public without  registration ("Rule 144"), the Company agrees to,
until  such  time  as all of the  Registrable  Securities  may be  sold  without
restriction pursuant to Rule 144(k):

         a.  make and keep  public  information  available,  as those  terms are
understood and defined in Rule 144;

         b. file with the SEC in a timely manner all reports and other documents
required  of the  Company  under  the  1933  Act and the 1934 Act so long as the
Company remains subject to such  requirements and the filing of such reports and
other documents is required for the applicable provisions of Rule 144; and

                                       11
<PAGE>

         c. furnish to each Investor so long as such  Investor owns  Registrable
Securities,  promptly upon request,  (i) a written statement by the Company that
it has complied  with the reporting  requirements  of Rule 144, the 1933 Act and
the 1934 Act, (ii) a copy of the most recent  annual or quarterly  report of the
Company and such other  reports and  documents so filed by the Company and (iii)
such other information as may be reasonably requested to permit the investors to
sell such securities pursuant to Rule 144 without registration.

9.       LIQUIDATED DAMAGES.
         -------------------

         The Company  agrees that the Buyers will suffer  damages if the Company
violates any provision of or fails to fulfill its  obligations  pursuant to this
Agreement  (a  "Registration  Default")  and that it would  not be  possible  to
ascertain  the  extent  of  such  damages.  Accordingly,  in the  event  of such
Registration  Default,  the  Company  hereby  agrees to pay  liquidated  damages
("Liquidated   Damages")  to  each  Buyer   following  the  occurrence  of  such
Registration Default in an amount determined by multiplying (i) one percent (1%)
of such  Buyer's  portion of the  Purchase  Price (as defined in the  Securities
Purchase  Agreement) by (ii) the  percentage  derived by dividing (A) the actual
number of days elapsed from the last day of the date of the Registration Default
or the prior 30-day period, as applicable,  to the day such Registration Default
has been completely  cured by (B) 30, in cash, or at the Buyer's option,  in the
number of shares of Company common stock equal to the quotient of (v) the dollar
amount of the  Liquidated  Damages on the Payment Date (as defined below) by (w)
the  closing  bid  price  of the  Company's  common  stock as of the date of the
Registration  Default  (as  quoted  in the  Principal  Market  or the  market or
exchange  where the  Company's  common  stock is then  traded).  The  Liquidated
Damages  payable  pursuant hereto shall be payable within five (5) business days
from the end of the calendar  month  commencing on the first  calendar  month in
which the Registration Default occurs (each, a "Payment Date").

10.      ASSIGNMENT OF REGISTRATION RIGHTS.
         ----------------------------------

         The rights under this Agreement  shall be  automatically  assignable by
the Investors to any transferee of all or any portion of Registrable  Securities
if: (i) the Investor agrees in writing with the transferee or assignee to assign
such rights,  and a copy of such  agreement is furnished to the Company within a
reasonable time after such assignment;  (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such  transferee or assignee,  and (b) the  securities  with
respect to which such  registration  rights are being  transferred  or assigned;
(iii) immediately  following such transfer or assignment the further disposition
of such  securities by the  transferee or assignee is restricted  under the 1933
Act and applicable state securities laws; provided, however, that the transferee
or  assignee  may  subsequently  transfer  or assign  all or any  portion of the
Registrable  Securities if an exemption from registration  under the 1933 Act is
applicable  to such  transfer  or  assignment;  (iv) at or  before  the time the
Company receives the written notice contemplated by clause (ii) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions  contained herein;  and (v) such transfer shall have been made
in  accordance  with the  applicable  requirements  of the  Securities  Purchase
Agreement.

11.      AMENDMENT OF REGISTRATION RIGHTS.
         ---------------------------------

         Provisions of this Agreement may be amended and the observance  thereof
may  be  waived  (either  generally  or  in a  particular  instance  and  either
retroactively  or  prospectively),  only with the written consent of the Company
and Investors who then hold two-thirds (2/3) of the Registrable Securities.  Any

                                       12
<PAGE>

amendment or waiver effected in accordance with this Section 11 shall be binding
upon each Investor and the Company.  No such amendment shall be effective to the
extent  that it  applies  to less  than all of the  holders  of the  Registrable
Securities.  No consideration shall be offered or paid to any Person to amend or
consent to a waiver or  modification  of any provision of any of this  Agreement
unless the same  consideration  also is  offered  to all of the  parties to this
Agreement.

12.       MISCELLANEOUS.
          -------------

         a. A Person is deemed to be a holder of Registrable Securities whenever
such Person owns or is deemed to own of record such Registrable  Securities.  If
the Company receives conflicting instructions,  notices or elections from two or
more Persons with respect to the same Registrable Securities,  the Company shall
act upon  the  basis of  instructions,  notice  or  election  received  from the
registered owner of such Registrable Securities.

         b. Any notices,  consents,  waivers or other communications required or
permitted to be given under the terms of this  Agreement  must be in writing and
will be  deemed  to have  been  delivered:  (i)  upon  receipt,  when  delivered
personally;  (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending  party);  or (iii) one  business  day after  deposit  with a  nationally
recognized  overnight  delivery service,  in each case properly addressed to the
party to  receive  the  same.  The  addresses  and  facsimile  numbers  for such
communications shall be:

If to the Company:

                  Altair Nanotechnologies Inc.
                  1725 Sheridan Avenue, Suite 140
                  Cody, Wyoming  82414
                  Telephone:        (307) 587-8245
                  Facsimile:        (307) 587-8357
                  Attention:        William P. Long, Chief Executive Officer

With a copy to:

                  Altair Nanotechnologies Inc.
                  204 Edison Way
                  Reno, Nevada  89502
                  Telephone:        (775) 858-3750
                  Facsimile:        (775) 856-1619
                  Attention:        Edward Dickinson, Chief Financial Officer

                  Stoel Rives LLP
                  201 South Main Street
                  Suite 1100
                  Telephone:         (801) 578-6908
                  Facsimile:         (801) 578-6999
                  Attention:         Bryan T. Allen, Esq.

If to a Buyer,  to it at the  address  and  facsimile  number  set  forth on the
Schedule of Buyers attached hereto, with copies to such Buyer's  representatives
as set  forth  on the  Schedule  of  Buyers,  or at such  other  address  and/or
facsimile  number  and/or to the attention of such other person as the recipient
party has specified by written  notice given to each other party five days prior
to the effectiveness of such change.

                                       13
<PAGE>

         c.  Failure  of any party to  exercise  any right or remedy  under this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

         d. This Agreement shall be governed by and construed in all respects by
the internal laws of the State of Illinois (except for the proper application of
the United States federal securities laws),  without giving effect to any choice
of law or conflict of law provision or rule (whether of the State of Illinois or
any other  jurisdictions)  that would cause the  application  of the laws of any
jurisdictions  other than the State of Illinois.  Each party hereby  irrevocably
submits  to the  non-exclusive  jurisdiction  of the  state and  federal  courts
sitting the City of Chicago,  for the adjudication of any dispute hereunder.  If
any  provision  of this  Agreement  shall be  invalid  or  unenforceable  in any
jurisdiction,  such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or  enforceability  of any  provision  of this  Agreement  in any other
jurisdiction.

         e. This Agreement  constitutes  the entire  agreement among the parties
hereto with respect to the subject  matter  hereof.  There are no  restrictions,
promises, warranties or undertakings,  other than those set forth or referred to
herein. This Agreement  supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.

         f.  Subject to the  requirements  of Section 10, this  Agreement  shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

         g. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

         h. This  Agreement may be executed in identical  counterparts,  each of
which shall be deemed an original but all of which shall  constitute one and the
same agreement.  This Agreement,  once executed by a party,  may be delivered to
the other party hereto by  facsimile  transmission  of a copy of this  Agreement
bearing the signature of the party so delivering this Agreement.

         i. Each party shall do and perform,  or cause to be done and performed,
all such further acts and things,  and shall  execute and deliver all such other
agreements,  certificates,  instruments  and  documents,  as the other party may
reasonably  request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

         j. All consents and other  determinations  to be made by the  Investors
pursuant to this Agreement  shall be made,  unless  otherwise  specified in this
Agreement,  by  Investors  holding a  majority  of the  Registrable  Securities,
determined as if all of the Warrants then  outstanding  have been converted into
Registrable  Securities  without  regard to any  limitation  on  exercise of the
Warrants.

         k.  The  language  used in this  Agreement  will  be  deemed  to be the
language  chosen by the parties to express  their mutual  intent and no rules of
strict construction will be applied against any party.

         l. This Agreement is intended for the benefit of the parties hereto and
their respective  permitted  successors and assigns,  and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.

                                   * * * * * *

                                       14
<PAGE>

                  IN WITNESS WHEREOF,  the parties have caused this Registration
Rights Agreement to be duly executed as of day and year first above written.

COMPANY:

ALTAIR NANOTECHNOLOGIES INC.

By: _________________________________________________

Name:  William P. Long
Title:  CEO

BUYER:

_____________________________________________________
[print name]

By: _________________________________________________
Name: _______________________________________________
Title: ______________________________________________

Contact Information for Buyer:
_____________________________________________________
_____________________________________________________
Attn:________________________________________________
Phone:_______________________________________________
Facsimile:___________________________________________

                                       15

                                       20

                                                                    EXHIBIT A

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[TRANSFER AGENT]
Attn: ___________________

Re: Altair Nanotechnologies Inc.

Ladies and Gentlemen:

                  We are counsel to Altair  Nanotechnologies Inc., a corporation
incorporated under the laws of the Canada (the "Company"),  and have represented
the Company in  connection  with that certain  Stock  Purchase and  Subscription
Agreement (the "Purchase  Agreement")  entered into by and among the Company and
the buyers named therein  (collectively,  the  "Holders")  pursuant to which the
Company  issued to the  Holders  shares of its common  stock,  no par value (the
"Common  Stock") and Warrants  exercisable  into its Common Stock (the  "Warrant
Shares").  Pursuant to the Purchase Agreement, the Company also has entered into
a  Registration  Rights  Agreement  with the Holders (the  "Registration  Rights
Agreement")  pursuant  to which the  Company  agreed,  among  other  things,  to
register  the  Registrable  Securities  (as defined in the  Registration  Rights
Agreement),  including the Common Stock and Warrant Shares, under the Securities
Act of 1933,  as amended  (the "1933 Act").  In  connection  with the  Company's
obligations under the Registration  Rights Agreement,  on __________,  2003, the
Company filed a Registration Statement on Form S-3 (File No. _____________) (the
"Registration  Statement")  with the  Securities  and Exchange  Commission  (the
"SEC") relating to the Registrable Securities which names each of the Holders as
a selling stockholder thereunder.

                  In connection with the foregoing,  we advise you that a member
of the SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF  EFFECTIVENESS]  on [ENTER DATE OF  EFFECTIVENESS]  and we have no knowledge,
after  telephonic  inquiry of a member of the SEC's  staff,  that any stop order
suspending its  effectiveness  has been issued or that any  proceedings for that
purpose  are  pending  before,  or  threatened  by, the SEC and the  Registrable
Securities  are  available  for  resale  under  the  1933  Act  pursuant  to the
Registration Statement.

                                               Very truly yours,

                                               [ISSUER'S COUNSEL]

                                               By:_________________________

cc:      [LIST NAMES OF HOLDERS]Exhibit 4.07

                             AMBAC 1997 EQUITY PLAN
                           (amended as of May 6, 2003)

1.  Purposes

    The purposes of the Ambac 1997 Equity Plan (the "Plan") are to attract,
retain and motivate key employees of the Company, to compensate them for their
contributions to the growth and profits of the Company and to encourage them to
own Common Stock.

2.  Definitions

    For purposes of the Plan, the following terms shall be defined as follows:

    "Administrator" means the individual or individuals to whom the Committee
delegates authority under the Plan in accordance with Section 3(d).

    "Ambac" means Ambac Financial Group, Inc., a Delaware corporation.

    "Award" means an award made pursuant to the terms of the Plan to an Eligible
Individual in the form of Stock Options, Stock Appreciation Rights, Stock
Awards, Restricted Stock Units, Performance Units or Other Awards.

    "Award Agreement" means a written document approved in accordance with
Section 3 which sets forth the terms and conditions of the Award to the
Participant. An Award Agreement may be in the form of a certificate issued by
Ambac or one of its Subsidiaries which is executed by an officer on behalf of
Ambac or such Subsidiary but does not require the signature of the Participant.

    "Board" means the Board of Directors of the Company.

    "Code" means the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations (including any proposed regulations)
thereunder.

    "Committee" means the Compensation and Organization Committee of the Board,
any successor committee thereto or any other committee appointed from time to
time by the Board to administer the Plan. The Committee shall consist of at
least two individuals and shall serve at the pleasure of the Board.

    "Common Stock" means the Common Stock, par value $.01 per share, of the
Company.

    "Company" means Ambac and its Subsidiaries.

    "Eligible Individuals" means the individuals described in Section 6 who are
eligible for Awards under the Plan.

    "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the applicable rulings and regulations thereunder.

    "Excluded Individual" means (i) any individual who is designated by the
Company at the time of hire as not eligible to participate in the Plan or (ii)
any individual who is treated or designated by the Company as an independent
contractor, leased employee (including, without limitation, a "leased employee"
as defined in Section 414(n) of the Code) or consultant. Excluded Individuals
are not eligible to participate in or receive benefits under the Plan. If any
Excluded Individual pursuant to the preceding clauses (i) or (ii) shall be
determined by a court or federal, state or local regulatory or administrative
authority to have served as a common law employee of the Company, such
determination shall not alter such person's status as an Excluded Individual for
purposes of the Plan

<PAGE>

    "Fair Market Value" means, with respect to a share of Common Stock, the fair
market value thereof as of the relevant date of determination, as determined in
accordance with a valuation methodology approved by the Committee. In the
absence of any alternative valuation methodology approved by the Committee, the
Fair Market Value of a share of Common Stock shall equal the average of the
highest and the lowest quoted selling price of a share of Common Stock as
reported on the composite tape for securities listed on the New York Stock
Exchange, or such other national securities exchange as may be designated by the
Committee, or, in the event that the Common Stock is not listed for trading on a
national securities exchange but is quoted on an automated system, on such
automated system, in any such case on the valuation date (or, if there were no
sales on the valuation date, the average of the highest and the lowest quoted
selling prices as reported on said composite tape or automated system for the
most recent day during which a sale occurred).

    "Incentive Stock Option" means a Stock Option which is an "incentive stock
option" within the meaning of Section 422 of the Code and designated by the
Committee as an Incentive Stock Option in an Award Agreement.

    "Nonqualified Stock Option" means a Stock Option which is not an Incentive
Stock Option.

    "Other Award" means any other form of award authorized under Section 13 of
the Plan.

    "Participant" means an Eligible Individual to whom an Award has been granted
under the Plan.

    "Performance Unit" means a performance unit granted to an Eligible
Individual pursuant to Section 12 hereof.

    "Predecessor Plan" means the Ambac Inc. 1991 Stock Incentive Plan, as
amended.

    "Restoration Option" means a Stock Option that is awarded upon the exercise
of a Stock Option earlier awarded under the Plan or the Predecessor Plan (an
"Underlying Option") for which the exercise price is paid in whole or in party
by tendering shares of Common Stock owned by the Participant, where such
Restoration Option (i) covers a number of shares of Common Stock no greater than
the number of shares tendered in payment of the exercise price of the Underlying
Option plus the number of shares withheld to pay taxes arising upon such
exercise, (ii) the expiration date of the Restoration Option is no later than
the expiration date of the Underlying Option and (iii) the exercise price per
share of the Restoration Option is no less than the Fair Market Value per share
of Common Stock on the date of exercise of the Underlying Option.

    "Restricted Stock Unit" means a restricted stock unit granted to an Eligible
Individual pursuant to Section 11 hereof.

    "Stock Appreciation Right" means a right to receive all or some portion of
the appreciation on shares of Common Stock granted to an Eligible Individual
pursuant to Section 9 hereof.

    "Stock Award" means a share of Common Stock granted to an Eligible
Individual for no consideration other than the provision of services or offer
for sale to an Eligible Employee at a purchase price determined by the
Committee, in either case pursuant to Section 10 hereof.

    "Stock Option" means an Award to purchase shares of Common Stock granted to
an Eligible Individual pursuant to Section 8 hereof, which Award may be either
an Incentive Stock Option or a Nonqualified Stock Option.

    "Subsidiary" means (i) a corporation or other entity with respect to which
Ambac, directly or indirectly, has the power, whether through the ownership of
voting securities, by contract or otherwise, to elect at least

                                       2
<PAGE>

a majority of the members of such corporation's board of directors or analogous
governing body, or (ii) any other corporation or other entity in which Ambac,
directly or indirectly, has an equity or similar interest and which the
Committee designates as a Subsidiary for purposes of the Plan.

    "Substitute Award" means an Award granted in connection with a corporate
transaction, such as a merger, combination, consolidation or acquisition of
property or stock upon assumption of, or in substitution for, outstanding awards
previously granted by a company or other entity.

3.  Administration of the Plan

    (a) Power and Authority of the Committee. The Plan shall be administered by
the Committee, which shall have full power and authority, subject to the express
provisions hereof:

         (i) to select Participants from the Eligible Individuals;

        (ii) to make Awards in accordance with the Plan;

       (iii) to determine the number of shares of Common Stock subject to each
    Award or the cash amount payable in connection with an Award;

        (iv) to determine the terms and conditions of each Award, including,
    without limitation, those related to vesting, forfeiture, payment and
    exercisability, and the effect, if any, of a Participant's termination of
    employment with the Company, and including the authority to amend the terms
    and conditions of an Award after the granting thereof to a Participant in a
    manner that is not, without the consent of the Participant, prejudicial to
    the rights of such Participant in such Award;

        (v) to specify and approve the provisions of the Award Agreements
    delivered to Participants in connection with their Awards;

       (vi) to construe and interpret any Award Agreement delivered under the
    Plan;

       (vii) to prescribe, amend and rescind rules and procedures relating to
    the Plan;

      (viii) to vary the terms of Awards to take account of tax, securities
    law and other regulatory requirements of foreign jurisdictions;

        (ix) subject to the provisions of the Plan and subject to such
    additional limitations and restrictions as the Committee may impose, to
    delegate to one or more officers of the Company some or all of its authority
    under the Plan;

        (x) to employ such legal counsel, independent auditors and consultants
    as it deems desirable for the administration of the Plan and to rely upon
    any opinion or computation received therefrom; and

       (xi) to make all other determinations and to formulate such procedures
    as may be necessary or advisable for the administration of the Plan.

    (b) Plan Construction and Interpretation. The Committee shall have full
power and authority, subject to the express provisions hereof, to construe and
interpret the Plan.

    (c) Determinations of Committee Final and Binding. All determinations by the
Committee in carrying out and administering the Plan and in construing and
interpreting the Plan shall be final, binding and conclusive for all purposes
and upon all persons interested herein.

    (d) Delegation of Authority. The Committee may, but need not, from time to
time delegate some or all of its authority under the Plan to an Administrator
consisting of one or more members of the Committee or

                                       3
<PAGE>

of one or more officers of the Company; provided, however, that the Committee
may not delegate its authority (i) to make Awards to Eligible Individuals who
are officers of the Company who are delegated authority by the Committee
hereunder, or (ii) under Section 16 of the Plan. Any delegation hereunder shall
be subject to the restrictions and limits that the Committee specifies at the
time of such delegation or thereafter. Nothing in the Plan shall be construed as
obligating the Committee to delegate authority to an Administrator, and the
Committee may at any time rescind the authority delegated to an Administrator
appointed hereunder or appoint a new Administrator. At all times, the
Administrator appointed under this Section 3(d) shall serve in such capacity at
the pleasure of the Committee. Any action undertaken by the Administrator in
accordance with the Committee's delegation of authority shall have the same
force and effect as if undertaken directly by the Committee, and any reference
in the Plan to the Committee shall, to the extent consistent with the terms and
limitations of such delegation, be deemed to include a reference to the
Administrator.

    (e) Liability of Committee. No member of the Committee shall be liable for
any action nor determination made in good faith, and the members of the
Committee shall be entitled to indemnification and reimbursement in the manner
provided in Ambac's Certificate of Incorporation and the By-laws as they may be
amended from time to time. In the performance of its responsibilities with
respect to the Plan, the Committee shall be entitled to rely upon information
and advice furnished by the Company's officers, the Company's accountants, the
Company's counsel and any other party the Committee deems necessary, and no
member of the Committee shall be liable for any action taken or not taken in
reliance upon any such advice.

    (f) Action by the Board. Anything in the Plan to the contrary
notwithstanding, any authority or responsibility which, under the terms of the
Plan, may be exercised by the Committee may alternatively be exercised by the
Board.

4.  Effective Date and Term

    The Plan became effective on May 15, 1997 after approval by the Board and
the stockholders of Ambac. Upon recommendation by the Board, on May 6, 2003 the
stockholders of Ambac adopted certain amendments to the Plan, including
extending the term of the Plan by seven years to May 6, 2011.

5.  Shares of Common Stock Subject to the Plan

    (a) General. Subject to adjustment as provided in Section 15(b) hereof, the
number of shares of Common Stock that may be issued pursuant to Awards under the
Plan (the "Section 5 Limit") shall not exceed, in the aggregate:

       (I) 14,000,000 shares; plus

       (II) the number of shares of Common Stock that remain available for
    issuance under the Predecessor Plan as of the date this Plan is approved by
    the stockholders of the Company (increased by any shares of Common Stock
    subject to any award (or portion thereof) outstanding under the Predecessor
    Plan on such date which lapses, expires or is otherwise terminated without
    the issuance of such shares or is settled by the delivery of consideration
    other than shares).

Shares issued under this Plan may be either authorized but unissued shares,
treasury shares or any combination thereof.

    (b) Rules Applicable to Determining Shares Available for Issuance. For
purposes of determining the number of shares of Common Stock that remain
available for issuance, the following shares shall be added back to the Section
5 Limit and again be available for Awards:

        (x) The number of shares tendered to pay the exercise price of a Stock
Option or other Award; and

                                       4
<PAGE>

        (y) The number of shares withheld from any Award to satisfy a
    Participant's tax withholding obligations or, if applicable, to pay the
    exercise price of a Stock Option or other Award.

In addition, any shares underlying Substitute Awards shall not be counted
against the Section 5 Limit and shall not be subject to Section 5(c) below.

    (c) Special Limits. Anything to the contrary in Section 5(a) above
notwithstanding, but subject to Section 15(b) below, the following special
limits shall apply to shares of Common Stock available for Awards under the
Plan:

        (i) The maximum number of shares that may be issued in the form of Stock
    Awards, or issued upon settlement of Restricted Stock Units or Other Awards,
    shall equal 4,000,000 shares, of which no more than a number of shares equal
    to 10% of the Section 5 Limit shall be in the form of Other Awards,
    provided, however, that any such Stock Awards, Restricted Stock Units or
    Other Awards that are issued in lieu of cash compensation that otherwise
    would be paid to a Participant, or in satisfaction of any other obligation
    owed by the Company to a Participant, shall not be counted against such
    limitation; and

        (ii) The maximum number of shares of Common Stock that may be subject to
    Stock Options or Stock Appreciation Rights granted to any Eligible
    Individual in any fiscal year of the Company shall equal 600,000 shares plus
    any shares which were available under this Section 5(c) (ii) for Awards of
    Stock Options or Stock Appreciation Rights to such Eligible Individual in
    any prior fiscal year but which were not covered by such Awards.

    (d) No Further Awards under Predecessor Plan. From and after the date this
Plan is approved by the stockholders of the Company, no further awards shall be
made under the Predecessor Plan.

6.  Eligible Individuals

    Awards may be granted by the Committee to individuals ("Eligible
Individuals") who are: (i) officers or other key employees of the Company; (ii)
employees of joint ventures, partnerships or similar business organizations in
which the Company has a direct or indirect equity interest; and individuals who
provide services to any joint ventures or business organizations in which the
Company may participate in the future. Excluded Individuals are not eligible to
receive Awards under the Plan. Members of the Committee will not be eligible to
receive Awards under the Plan. An individual's status as an Administrator will
not affect his or her eligibility to participate in the Plan.

                                       5
<PAGE>

7.  Awards in General

    (a) Types of Award and Award Agreement. Awards under the Plan may consist of
Stock Options, Stock Appreciation Rights, Stock Awards, Restricted Stock Units,
Performance Units or Other Awards. Any Award described in Sections 8 through 13
of the Plan may be granted singly or in combination or tandem with any other
Award, as the Committee may determine. Awards may be made in combination with,
in replacement of, or as alternatives to grants of rights under any other
employee compensation plan of the Company, including the plan of any acquired
entity, or may be granted in satisfaction of the Company's obligations under any
such plan.

    (b) Terms Set Forth in Award Agreement. The terms and provisions of an Award
shall be set forth in a written Award Agreement approved by the Committee and
delivered or made available to the Participant as soon as practicable following
the date of the Award. The vesting, exercisability, payment and other
restrictions applicable to an Award (which may include, without limitation,
restrictions on transferability or provision for mandatory resale to the
Company) shall be determined by the Committee and set forth in the applicable
Award Agreement. Notwithstanding the foregoing, the Committee may accelerate (i)
the vesting or payment of any Award, (ii) the lapse of restrictions on any Award
or (iii) the date on which any Stock Option, Stock Appreciation Right or other
Award first becomes exercisable.

    (c) Termination of Employment and Change in Control. The Committee shall
also have full authority to determine and specify in the applicable Award
Agreement the effect, if any, that a Participant's termination of employment for
any reason will have on the vesting, exercisability, payment or lapse of
restrictions applicable to an Award. The date of a Participant's termination of
employment for any reason shall be determined in the sole discretion of the
Committee. Similarly, the Committee shall have full authority to determine the
effect, if any, of a change in control of Ambac on the vesting, exercisability,
payment or lapse of restrictions applicable to an Award, which effect may be
specified in the applicable Award Agreement or determined at a subsequent time.

    (d) Dividends and Dividend Equivalents. The Committee may provide
Participants with the right to receive dividends or payments equivalent to
dividends or interest with respect to an outstanding Awards, which payments can
either be paid currently or deemed to have been reinvested in shares of Common
Stock, and can be made in Common Stock, cash or a combination thereof, as the
Committee shall determine.

8.  Stock Options

    (a) Terms of Stock Options Generally. A Stock Option shall entitle the
Participant to whom the Stock Option was granted to purchase a specified number
of shares of Common Stock during a specified period at a price that is
determined in accordance with Section 8(b) below. Stock Options may be either
Nonqualified Stock Options or Incentive Stock Options. The Committee will fix
the vesting and exercisability conditions applicable to a Stock Option, provided
that no Stock Option shall vest sooner than one year from the date of grant
(subject to early vesting, if so provided by the Committee, upon death,
disability, termination of employment or a change in control of the Company).

    (b) Exercise Price. The exercise price per share of Common Stock purchasable
under a Stock Option shall be fixed by the Committee at the time of grant or,
alternatively, shall be determined by a method specified by the Committee at the
time of grant; provided, however, that the exercise price per share shall be no
less than 100% of the Fair Market Value per share on the date of grant (or it
the exercise price is not fixed on the date of grant, then on such date as the
exercise price is fixed); and provided further, that, except as provided in
Section 15(b) below, the exercise price per share of Common Stock applicable to
a Stock Option may not be adjusted or amended, including by means of amendment,
cancellation or the replacement of such Stock Option with a subsequently awarded
Stock Option. Notwithstanding the foregoing, the exercise price per share of a
Stock Option that is a Substitute Award may be less than the Fair Market Value
per share on the date of award, provided that the excess of:

                                       6
<PAGE>

        (i) the aggregate Fair Market Value (as of the date such Substitute
    Award is granted) of the shares of Common Stock subject to the Substitute
    Award, over

       (ii) the aggregate exercise price thereof,

does not exceed the excess of:

       (iii) the aggregate fair market value (as of the time immediately
    preceding the transaction giving rise to the Substitute Award, such fair
    market value to be determined by the Committee) of the shares of the
    predecessor entity that were subject to the award assumed or substituted for
    by the Company, over

       (iv) the aggregate exercise price of such shares.

    (c) Option Term. The term of each Stock Option shall be fixed by the
Committee and shall not exceed ten years from the date of grant.

    (d) Method of Exercise. Subject to the provisions of the applicable Award
Agreement, the exercise price of a Stock Option may be paid in cash or
previously owned shares or a combination thereof and, if the applicable Award
Agreement so provides or the Committee otherwise so determines, in whole or in
part through the withholding of shares subject to the Stock Option with a value
equal to the exercise price. In accordance with the rules and procedures
established by the Committee for this purpose, the Stock Option may also be
exercised through a "cashless exercise" procedure approved by the Committee
involving a broker or dealer approved by the Committee, that affords
Participants the opportunity to sell immediately some or all of the shares
underlying the exercised portion of the Stock Option in order to generate
sufficient cash to pay the Stock Option exercise price and/or to satisfy
withholding tax obligations related to the Stock Option.

9.  Stock Appreciation Rights

    (a) General. A Stock Appreciation Right shall entitle a Participant to
receive, upon satisfaction of the conditions to the payment specified in the
applicable Award Agreement, an amount equal to the excess, if any, of the Fair
Market Value on the exercise date of the number of shares of Common Stock for
which the Stock Appreciation Right is exercised, over the exercise price for
such Stock Appreciation Right specified in the applicable Award Agreement. The
exercise price per share of Common Stock covered by a Stock Appreciation Right
shall be fixed by the Committee at the time of grant or, alternatively, shall be
determined by a method specified by the Committee at the time of grant;
provided, however, that, except as provided in Section 9(b) below, the exercise
price per share shall be no less than 100% of the Fair Market Value per share on
the date of grant (or if the exercise price is not fixed on the date of grant,
then on such date as the exercise price is fixed); and provided further, that,
except as provided in Section 15(b) below, the exercise price per share of
Common Stock subject to a Stock Appreciation Right may not be adjusted or
amended, including by means of amendment, cancellation or the replacement of
such Stock Appreciation Right with a subsequently awarded Stock Appreciation
Right. Notwithstanding the foregoing, the exercise price per share of a Stock
Appreciation Right that is a Substitute Award may be less than the Fair Market
Value per share on the date of award, provided, that such exercise price is not
less than the minimum exercise price that would be permitted for an equivalent
Stock Option as determined in accordance with Section 8(b) above. At the sole
discretion of the Committee, payments to a Participant upon exercise of a Stock
Appreciation Right may be made in cash, in shares of Common Stock having an
aggregate Fair Market Value as of the date of exercise equal to such amount, or
in a combination of cash and shares having an aggregate value as of the date of
exercise equal to such amount.

    (b) Stock Appreciation Rights in Tandem with Stock Options. A Stock
Appreciation Right may be granted alone or in addition to other Awards, or in
tandem with a Stock Option. A Stock Appreciation Right granted in tandem with a
Stock Option may be granted either at the same time as such Stock Option or
subsequent thereto. If granted in tandem with a Stock Option, a Stock
Appreciation Right shall cover the same number of shares of Common Stock as
covered by the Stock Option (or such lesser number of shares

                                       7
<PAGE>

as the Committee may determine) and shall be exercisable only at such time or
times and to the extent the related Stock Option shall be exercisable, and shall
have the same term and exercise price as the related Stock Option (which, in the
case of a Stock Appreciation Right granted after the grant of the related Stock
Option, may be less than the Fair Market Value per share on the date of grant of
the tandem Stock Appreciation Right). Upon exercise of a Stock Appreciation
Right granted in tandem with a Stock Option, the related Stock Option shall be
canceled automatically to the extent of the number of shares covered by such
exercise; conversely, if the related Stock Option is exercised as to some or all
of the shares covered by the tandem grant, the tandem Stock Appreciation Right
shall be canceled automatically to the extent of the number of shares covered by
the Stock Option exercise.

10.  Stock Awards

    (a) General. A Stock Award shall consist of one or more shares of Common
Stock granted to a Participant for no consideration other than the provision of
services (or, if required by applicable law in the reasonable judgment of the
Company, for payment of the par value of such shares). Stock Awards shall be
subject to such restrictions (if any) on transfer or other incidents of
ownership for such periods of time, and shall be subject to such conditions of
vesting, as the Committee may determine and as shall be set forth in the
applicable Award Agreement.

    (b) Distributions. Any shares of Common Stock or other securities of the
Company received by a Participant to whom a Stock Award has been granted as a
result of a stock distribution to holders of Common Stock or as a stock dividend
on Common Stock shall be subject to the same terms, conditions and restrictions
as such Stock Award.

11.  Restricted Stock Units

    An Award of Restricted Stock Units shall consist of a grant of units, each
of which represents the right of the Participant to receive one share of Common
Stock, subject to the terms and conditions established by the Committee in
connection with the Award and set forth in the applicable Award Agreement. Upon
satisfaction of the conditions to vesting and payment specified in the
applicable Award Agreement, Restricted Stock Units will be payable in Common
Stock or, if the Committee so determines, in cash, equal to the Fair Market
Value of the shares subject to such Restricted Stock Units. Restricted Stock
Units that are granted to an Eligible Individual in respect of corporate
performance shall vest no sooner than one year from the date of grant, and
Restricted Stock Units that are granted in connection with hiring or retention
arrangements between the Company and a Participant shall vest no sooner than
three years from the date of grant (subject, in either case, to early vesting,
if so provided by the Committee, upon death, disability, termination of
employment or a change in control of the Company).

12.  Performance Units

    Performance units may be granted as fixed or variable share- or
dollar-denominated units subject to such conditions of vesting and time of
payment as the Committee may determine and as shall be set forth in the
applicable Award Agreement relating to such Performance Units. Performance Units
may be paid in Common Stock, cash or a combination of Common Stock and cash, as
the Committee may determine.

13.  Other Awards

    The Committee shall have the authority to specify the terms and provisions
of other forms of equity-based or equity-related Awards not described above
which the Committee determines to be consistent with the purpose of the Plan and
the interests of the Company, which Awards may provide for cash payments based
in whole or in part on the value or future value of Common Stock, for the
acquisition or future acquisition of Common Stock, or any combination thereof.
Other Awards shall also include cash payments (including the cash payment of
dividend equivalents) under the Plan which may be based on one or more criteria
determined by the Committee which are unrelated to the value of Common Stock and
which may be granted in tandem with, or independent of, other Awards under the
Plan.

                                       8
<PAGE>

14.  Certain Restrictions

    (a) Transfers. Unless the Committee determines otherwise, no Award shall be
transferable other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order; provided, however, that the
Committee may, in its discretion and subject to such terms and conditions as it
shall specify, permit the transfer of an Award for no consideration to a
Participant's family members or to one or more trusts or partnerships
established in whole or in part for the benefit of one or more of such family
members (collectively, "Permitted Transferees"). Any Award transferred to a
Permitted Transferee shall be further transferable only by will or the laws of
descent and distribution or, for no consideration, to another Permitted
Transferee of the Participant. The Committee may in its discretion permit
transfers of Awards other than those contemplated by this Section.

    (b) Exercise. During the lifetime of the Participant, a Stock Option, Stock
Appreciation Right or similar-type Other Award shall be exercisable only by the
Participant or by a Permitted Transferee to whom such Stock Option, Stock
Appreciation Right or Other Award has been transferred in accordance with
Section 14(a).

15.  Recapitalization or Reorganization

    (a) Authority of the Company and Stockholders. The existence of the Plan,
the Award Agreements and the Awards granted hereunder shall not affect or
restrict in any way the right or power of the Company or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of stock or of options, warrants or
rights to purchase stock or of bonds, debentures, preferred or prior preference
stocks whose rights are superior to or affect the Common Stock or the rights
thereof or which are convertible into or exchangeable for Common Stock, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.

    (b) Change in Capitalization. Notwithstanding any provision of the Plan or
any Award Agreement, the number and kind of shares authorized for issuance under
Section 5(a) above, including the maximum number of shares available under the
special limits provided for in Section 5(c) above, may be equitably adjusted in
the sole discretion of the Committee in the event of a stock split, stock
dividend, recapitalization, reorganization, merger, consolidation, extraordinary
dividend, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below Fair
Market Value or other similar corporate event affecting the Common Stock in
order to preserve, but not increase, the benefits or potential benefits intended
to be made available under the Plan. In addition, upon the occurrence of any of
the foregoing events, the number of outstanding Awards and the number and kind
of shares subject to any outstanding Award and the purchase price per share, if
any, under any outstanding Award may be equitably adjusted (including by payment
of cash to a Participant) in the sole discretion of the Committee in order to
preserve the benefits or potential benefits intended to be made available to
Participants granted Awards. Such adjustments shall be made by the Committee,
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final. Unless otherwise determined by the Committee, such
adjusted Awards shall be subject to the same vesting schedule and restrictions
to which the underlying Award is subject.

                                       9
<PAGE>

16.  Amendments

    The Board or Committee may at any time and from time to time alter, amend,
suspend or amend the Plan in whole or in part; provided, however, that any
amendment which under the requirements of any applicable law or stock exchange
rule must be approved by the stockholders of the Company shall not be effective
unless and until such stockholder approval has been obtained in compliance with
such law or rule; and provided further, that, except as contemplated by Section
15(b) above, the Board or Committee may not, without the approval of the
Company's stockholders, increase the maximum number of shares issuable under the
Plan or reduce the exercise price of a Stock Option or Stock Appreciation Right.
No termination or amendment of the Plan may, without the consent of the
Participant to whom an Award has been granted, adversely affect the rights of
such Participant under such Award. Notwithstanding any provision herein to the
contrary, the Board or Committee shall have broad authority to amend the Plan or
any Award under the Plan to take into account changes in applicable tax laws,
securities laws, accounting rules and other applicable state and federal laws.

17.  Miscellaneous

    (a) Tax Withholding. The Company may require any individual entitled to
receive a payment in respect of an Award to remit to the Company, prior to such
payment, an amount sufficient to satisfy any Federal, state or local tax
withholding requirements. The Company shall also have the right to deduct from
all cash payments made pursuant to or in connection with any Award any Federal,
state or local taxes required to be withheld with respect to such payments. In
the case of an Award payable in shares of Common Stock, the Company may permit
such individual to satisfy, in whole or in part, such obligation to remit taxes
by directing the Company to withhold shares of Common Stock that would otherwise
be received by such individual, pursuant to such rules as the Committee may
establish from time to time.

    (b) No Right to Grants or Employment. No Eligible Individual or Participant
shall have any claim or right to receive grants of Awards under the Plan.
Nothing in the Plan or in any Award or Award Agreement shall confer upon any
employee of the Company any right to continued employment with the Company or
interfere in any way with the right of the Company to terminate the employment
of any of its employees at any time, with or without cause.

    (c) Other Compensation. Nothing in this Plan shall preclude or limit the
ability of the Company to pay any compensation to a Participant under the
Company's other compensation and benefit plans and programs.

    (d) Other Employee Benefit Plans. Payments received by a Participant under
any Award made pursuant to the Plan shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit plan
or similar arrangement provided by the Company, unless otherwise specifically
provided for under the terms of such plan or arrangement or by the Committee.

    (e) Unfunded Plan. The Plan is intended to constitute an unfunded plan for
incentive compensation. Prior to the payment or settlement of any Award, nothing
contained herein shall give any Participant any rights that are greater than
those of a general creditor of the Company. In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Common Stock or payments in lieu
thereof with respect to Awards hereunder.

    (f) Securities Law Restrictions. The Committee may require each Eligible
Individual purchasing or acquiring shares of Common Stock pursuant to a Stock
Option or other Award under the Plan to represent to and agree with the Company
in writing that such Eligible Individual is acquiring the shares for investment
and not with a view to the distribution thereof. All certificates for shares of
Common Stock delivered under the Plan shall be subject to such stock-transfer
orders and other restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any exchange upon which the Common Stock is then listed, and any
applicable

                                       10
<PAGE>

federal or state securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference to such
restrictions. No shares of Common Stock shall be issued hereunder unless the
Company shall have determined that such issuance is in compliance with, or
pursuant to an exemption from, all applicable federal and state securities laws.

    (g) Compliance with Rule 16b-3. Notwithstanding anything contained in the
Plan or in any Award Agreement to the contrary, if the consummation of any
transaction under the Plan would result in the possible imposition of liability
on a Participant pursuant to Section 16(b) of the Exchange Act, the Committee
shall have the right, in its sole discretion, but shall not be obligated, to
defer such transaction or the effectiveness of such action to the extent
necessary to avoid such liability, but in no event for a period longer than six
months.

    (h) Award Agreement. In the event of any conflict or inconsistency between
the Plan and any Award Agreement, the Plan shall govern, and the Award Agreement
shall be interpreted to minimize or eliminate any such conflict or
inconsistency.

    (i) Expenses. The costs and expenses of administering the Plan shall be
borne by the Company.

    (j) Application of Funds. The proceeds received from the Company from the
sale of Common Stock or other securities pursuant to Awards will be used for
general corporate purposes.

    (k) Applicable Law. Except as to matters of federal law, the Plan and all
actions taken thereunder shall be governed by and construed in accordance with
the laws of the State of Delaware without giving effect to conflicts of law
principles.

                                       11

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