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      ADVANCE
        NANOTECH, INC.

      2008
        EQUITY INCENTIVE PLAN

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      TABLE
        OF CONTENTS

      

        
          	
                  ARTICLE
                    I INTRODUCTION

                	
                  1

                
	
                  1.1

                	
                  Purpose

                	
                  1

                
	
                  1.2

                	
                  Definitions

                	
                  1

                
	
                  1.3

                	
                  Shares
                    Subject to the Plan

                	
                  5

                
	
                  1.4

                	
                  Administration
                    of the Plan

                	
                  6

                
	
                  1.5

                	
                  Granting
                    of Awards to Participants

                	
                  6

                
	
                  1.6

                	
                  Leave
                    of Absence

                	
                  6

                
	
                  1.7

                	
                  Term
                    of Plan

                	
                  7

                
	
                  1.8

                	
                  Amendment
                    and Discontinuance of the Plan

                	
                  7

                
	 	 
	
                  ARTICLE
                    II NON-QUALIFIED OPTIONS

                	
                  7

                
	
                  2.1

                	
                  Eligibility

                	
                  7

                
	
                  2.2

                	
                  Exercise
                    Price

                	
                  7

                
	
                  2.3

                	
                  Terms
                    and Conditions of Non-Qualified Options

                	
                  7

                
	
                  2.4

                	
                  Option
                    Repricing

                	
                  9

                
	
                  2.5

                	
                  Vesting

                	
                  9

                
	 	 
	
                  ARTICLE
                    III INCENTIVE STOCK OPTIONS

                	
                  10

                
	
                  3.1

                	
                  Eligibility

                	
                  10

                
	
                  3.2

                	
                  Exercise
                    Price

                	
                  10

                
	
                  3.3

                	
                  Dollar
                    Limitation

                	
                  10

                
	
                  3.4

                	
                  10%
                    Stockholder

                	
                  10

                
	
                  3.5

                	
                  Incentive
                    Stock Options Not Transferable

                	
                  10

                
	
                  3.6

                	
                  Compliance
                    with Code Section 422

                	
                  11

                
	
                  3.7

                	
                  Limitations
                    on Exercise

                	
                  11

                
	 	 
	
                  ARTICLE
                    IV RESTRICTED STOCK

                	
                  11

                
	
                  4.1

                	
                  Eligibility

                	
                  11

                
	
                  4.2

                	
                  Restrictions,
                    Restricted Period and Vesting

                	
                  11

                
	
                  4.3

                	
                  Forfeiture
                    of Restricted Stock

                	
                  12

                
	
                  4.4

                	
                  Delivery
                    of Shares of Common Stock

                	
                  12

                
	 	 
	
                  ARTICLE
                    V PERFORMANCE AWARDS

                	
                  12

                
	
                  5.1

                	
                  Performance
                    Awards

                	
                  12

                
	
                  5.2

                	
                  Performance
                    Goals

                	
                  13

                
	 	 
	
                  ARTICLE
                    VI OTHER STOCK OR PERFORMANCE-BASED AWARDS

                	
                  14

                
	 	 
	
                  ARTICLE
                    VII CERTAIN PROVISIONS APPLICABLE TO ALL AWARDS

                	
                  15

                
	
                  7.1

                	
                  General

                	
                  15

                
	
                  7.2

                	
                  Stand-Alone,
                    Additional, Tandem and Substitute Awards

                	
                  15

                
	
                  7.3

                	
                  Term
                    of Awards

                	
                  16

                
	
                  7.4

                	
                  Form
                    and Timing of Payment under Awards; Deferrals

                	
                  16

                
	
                  7.5

                	
                  Issuance
                    of Restricted Stock/Forfeiture

                	
                  16

                
	
                  7.6

                	
                  Securities
                    Requirements

                	
                  17

                

        

         

        
          
            
            

          

          
            i

            
              

            

          

          
            
            

          

        

         

        
          	
                  7.7

                	
                  Transferability

                	
                  17

                
	
                  7.8

                	
                  No
                    Rights as a Stockholder

                	
                  17

                
	
                  7.9

                	
                  Listing
                    and Registration of Shares of Common Stock

                	
                  17

                
	
                  7.10

                	
                  Termination
                    of Employment, Death, Disability and Retirement

                	
                  18

                
	
                  7.11

                	
                  Change
                    of Control

                	
                  19

                
	
                  7.12

                	
                  First
                    Refusal Rights

                	
                  20

                
	
                  7.13

                	
                  Stockholder
                    Agreements/Investment Representations

                	
                  20

                
	
                  7.14

                	
                  Exemptions
                    from Section 16(b) Liability

                	
                  20

                
	 	 
	
                  ARTICLE
                    VIII WITHHOLDING FOR TAXES

                	
                  21

                
	 	 
	
                  ARTICLE
                    IX MISCELLANEOUS

                	
                  21

                
	
                  9.1

                	
                  No
                    Rights to Awards or Uniformity Among Awards

                	
                  21

                
	
                  9.2

                	
                  Conflicts
                    with Plan

                	
                  21

                
	
                  9.3

                	
                  No
                    Right to Employment

                	
                  21

                
	
                  9.4

                	
                  Governing
                    Law

                	
                  21

                
	
                  9.5

                	
                  Gender,
                    Tense and Headings

                	
                  22

                
	
                  9.6

                	
                  Severability

                	
                  22

                
	
                  9.7

                	
                  Other
                    Laws

                	
                  22

                
	
                  9.8

                	
                  Funding

                	
                  22

                
	
                  9.9

                	
                  No
                    Guarantee of Tax Consequences

                	
                  22

                
	
                  9.10

                	
                  Stockholder
                    Agreements

                	
                  23

                
	
                  9.11

                	
                  Specified
                    Employee under Section 409A of the Code

                	
                  23

                
	
                  9.12

                	
                  No
                    Additional Deferral Features

                	
                  23

                

        

      

      [End
        of Table of Contents]

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

      ADVANCE
        NANOTECH, INC.

       

      2008
        EQUITY INCENTIVE PLAN

       

      ARTICLE
        I

      INTRODUCTION

       

      1.1 Purpose.
        The
        Advance Nanotech, Inc. 2008 Equity Incentive Plan (the “Plan”)
        is
        intended to promote the interests of Advance Nanotech, Inc., a Colorado
        corporation (the “Company”),
        and
        its stockholders by encouraging Employees, Service Providers and Non-Employee
        Directors of the Company or its Affiliates (as defined below) to acquire
        or
        increase their equity interests in the Company, thereby giving them an added
        incentive to work toward the continued growth and success of the Company.
        The
        Board of Directors of the Company (the “Board”)
        also
        contemplates that through the Plan, the Company and its Affiliates will be
        better able to compete for the services of the individuals needed for the
        continued growth and success of the Company. The Plan provides for payment
        of
        various forms of incentive compensation, and accordingly, is not intended
        to be
        a plan that is subject to the Employee Retirement Income Security Act of
        1974,
        as amended, and shall be administered accordingly.

       

      1.2 Definitions.
        As used
        in the Plan, the following terms shall have the meanings set forth
        below:

       

      “Affiliate”
means
        (i) any entity in which the Company, directly or indirectly, owns 50% or
        more of
        the combined voting power, as determined by the Committee, (ii) any “parent
        corporation” of the Company (as defined in Section 424(e) of the Code), (iii)
        any “subsidiary corporation” of any such parent corporation (as defined in
        Section 424(f) of the Code) of the Company and (iv) any trades or businesses,
        whether or not incorporated, which are members of a controlled group or are
        under common control (as defined in Sections 414(b) or (c) of the Code) with
        the
        Company; provided, however, that with respect to grants of Non-Qualified
        Options
        to purchase Common Stock of the Company, the term “Affiliate” shall mean only a
        corporation or other entity in a chain of corporations and/or other entities
        in
        which the Company has a “controlling interest” within the meaning of Treas. Reg.
§1.414(c)-2(b)(2)(i), but using the threshold of 50% ownership wherever 80%
        appears.

       

      “Awards”
means,
        collectively, Options, Restricted Stock, Performance Awards or Other Stock
        or
        Performance-Based Awards.

       

      “Change
        of Control”
shall
        be deemed to have occurred upon any of the following events:

       

      (a) any
        “person” or “persons” (as defined in Section 3(a)(9) of the Exchange Act, and as
        modified in Section 13(d) and 14(d) of the Exchange Act) other than and
        excluding (i) the Company or any of its subsidiaries, (ii) any employee benefit
        plan of the Company or any of its subsidiaries, (iii) any Affiliate of the
        Company,
        (iv) an
        entity owned, directly or indirectly, by stockholders of the Company in
        substantially the same
        proportions as their ownership of the Company or (v) an underwriter temporarily
        holding securities pursuant to an offering of such securities (a “Person”),
        becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),
        directly or indirectly, of securities of the Company representing more than
        50%
        of the shares of voting stock of the Company then outstanding; provided,
        however,
        that an
        initial public offering of Common Stock shall not constitute a Change of
        Control;

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

      (b) the
        consummation of any merger, organization, business combination or consolidation
        of the Company or one of its subsidiaries with or into any other entity,
        other
        than a merger, reorganization, business combination or consolidation which
        would
        result in the holders of the voting securities of the Company outstanding
        immediately prior thereto and their respective Affiliates holding securities
        which represent immediately after such merger, reorganization, business
        combination or consolidation more than 50% of the combined voting power of
        the
        voting securities of the Company or the surviving company or the parent of
        such
        surviving company;

       

      (c) the
        consummation of a sale or disposition by the Company of all or substantially
        all
        of the Company’s assets, other than a sale or disposition if the holders of the
        voting securities of the Company outstanding immediately prior thereto and
        their
        respective Affiliates hold securities immediately thereafter which represent
        more than 50% of the combined voting power of the voting securities of the
        acquiror, or parent of the acquiror, of such assets;

       

      (d) the
        stockholders of the Company approve a plan of complete liquidation or
        dissolution of the Company; or

       

      (e) individuals
        who, as of the Effective Date, constitute the Board (the “Incumbent
        Board”)
        cease
        for any reason to constitute at least a majority of the Board; provided,
        however,
        that
        any individual becoming a director subsequent to the Effective Date whose
        election by the Board was approved by a vote of at least a majority of the
        directors then comprising the Incumbent Board shall be considered as though
        such
        individual were a member of the Incumbent Board, but excluding, for this
        purpose, any such individual whose initial assumption of office occurs as
        a
        result of an election contest with respect to the election or removal of
        directors or other solicitation of proxies or consents by or on behalf of
        a
        person other than the Board.

       

      Notwithstanding
        the foregoing, solely with respect to any Award that is subject to Section
        409A
        of the Code and payable upon a Change of Control, the term “Change of Control”
shall mean an event described in one or more of the foregoing provisions
        of this
        definition, but only if it also constitutes a “change of control event” within
        the meaning of Treas. Reg. §1.409A-3(i)(5). 

       

      “Code”
means
        the Internal Revenue Code of 1986, as amended from time to time, and the
        rules
        and regulations thereunder.

       

      “Committee”
means
        the committee of one or more persons designated by the Board to administer
        the
        Plan or if no such committee is designated, “Committee” shall mean the Board;
        provided however, that with respect to an Award granted to a Covered Employee
        that is intended to be “performance-based compensation” as described in Section
        162(m)(4)(c) of the Code, the Committee shall consist solely of two or more
        “outside directors” as described in Section 162(m)(4)(c)(i) of the Code; and if
        the Company is subject to the Exchange Act, the Committee shall mean the
        Committee of the Board, which shall consist of not less than two independent
        members of the Board, each of whom shall qualify as a “non-employee director”
(as that term is defined in Rule 16b-3 under the Exchange Act).

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      “Common
        Stock”
means
        the common stock, $.001 par value per share, of the Company.

       

      “Company”
means
        the corporation described in Section
        1.1
        or any
        successor thereto which assumes and continues the Plan.

       

      “Covered
        Employee”
        means
        the Chief Executive Officer of the Company and the three highest paid officers
        of the Company other than the Chief Executive Officer or the Chief Financial
        Officer as described in Section 162(m)(3) of the Code, as well as any person
        designated by the Committee, at the time of grant of a Performance Award,
        who is
        likely to be a Covered Employee with respect to that fiscal year.

       

      “Disability”
means
        an inability to perform the Employee’s or Non Employee Director’s material
        services for the Company for a period of 90 consecutive days or a total of
        180
        days, during any 365-day period, in either case as a result of incapacity
        due to
        mental or physical illness, which is determined to be total and permanent.
        A
        determination of Disability shall be made by a physician reasonably satisfactory
        to both the Participant (or his guardian) and the Company, provided that
        if the
        Employee or Non-Employee Director (or his guardian) and the Company do not
        agree
        on a physician, the Employee or Non-Employee Director and the Company shall
        each
        select a physician and these two together shall select a third physician,
        whose
        determination as to Disability shall be final, binding and conclusive with
        respect to all parties. Notwithstanding the above, eligibility for disability
        benefits under any policy for long-term disability benefits provided to the
        Participant by the Company shall conclusively establish the Participant’s
        disability. Solely with respect to any Award that is subject to Section 409A
        of
        the Code and payable upon Disability, the term “Disability” shall mean (i) an
        inability of the Participant to engage in any substantial gainful activity
        by
        reason of any medically determinable physical or mental impairment that can
        be
        expected to result in death or can be expected to last for a continuous period
        of not less than twelve months or (ii) the receipt of income replacements
        by the
        Participant, by reason of any medically determinable physical or mental
        impairment that can be expected to result in death or can be expected to
        last
        for a continuous period of not less than 12 months, for a period of not less
        than three months under the Company’s accident and health plan.

       

      “Effective
        Date”
means,
        with respect to the Plan, the date that the Plan is (a) adopted by the Board
        and
        (b) approved by stockholders of the Company, provided that such stockholder
        approval occurs not more than one year prior to or after the date of such
        adoption.

       

      “Employee”
means
        any employee (and former employee) of the Company or an Affiliate, including
        any
        such employee who is an officer or Director of the Company or an
        Affiliate.

       

      “Employment”
        includes any period in which a Participant is an Employee of the Company
        or an
        Affiliate.

       

      “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended.

       

      “Fair
        Market Value”
or
“FMV
        Per Share” mean, with respect to shares of Common Stock, the fair market value
        of such shares determined in good faith by the Committee, using a reasonable
        application of any fair and reasonable method selected in the Committee’s
        discretion. If the shares of Common Stock are traded on any exchange, the
        Fair
        Market Value or FMV Per Share shall be the closing sales price (or, if
        applicable, the highest reported bid price) of a share of Common Stock on
        the
        applicable date (or if there is no trading in the Common Stock on such date,
        on
        the next preceding date on which there was trading) as reported in The
        Wall Street Journal
        (or
        other reporting service approved by the Committee). 

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      “Incentive
        Stock Option”
means
        any option that satisfies the requirements of Code Section 422 and is granted
        pursuant to Article III of the Plan.

       

      “Non-Employee
        Director”
means
        a
        person who is a member of the Board but who is neither an Employee nor a
        Service
        Provider of the Company or any Affiliate.

       

      “Non-Qualified
        Option”
means
        an option not intended to satisfy the requirements of Code Section 422 and
        which
        is granted pursuant to Article II of the Plan.

       

      “Option”
means
        an option to acquire Common Stock granted pursuant to the provisions of the
        Plan, and refers to either an Incentive Stock Option or a Non-Qualified Option,
        or both, as applicable.

       

      “Option
        Expiration Date”
means
        the date determined by the Board or the Committee, which shall not be more
        than
        ten (10) years after the date of grant of an Option.

       

      “Optionee”
means
        a
        Participant who has received or will receive an Option.

       

      “Other
        Stock or Performance-Based Award”
        means an
        award granted pursuant to Article VI of the Plan.

       

      “Participant”
means
        any Non-Employee Director, Employee or Service Provider granted an Award
        under
        the Plan.

       

      “Performance
        Award”
        means an
        Award granted pursuant to Article V of the Plan, which, if earned, shall
        be
        payable in shares of Common Stock, cash, or any combination thereof as
        determined by the Committee.

       

      “Performance
        Period”
        means a
        period of not less than one year and not more than five years during which
        the
        Committee may grant Performance Awards.

       

      “Restricted
        Period”
means
        the period established by the Board or the Committee with respect to an Award
        during which the Award either remains subject to forfeiture or is not
        exercisable by the Participant.

       

      “Restricted
        Stock”
means
        one or more shares of Common Stock, prior to the lapse of restrictions thereon,
        granted under Article IV of the Plan.

       

      “Retirement”
means
        termination of Employment of an Employee, or if determined by the Committee,
        termination of service of a Non-Employee Director, under circumstances as
        shall
        constitute retirement, as determined by the Committee or the Board. In the
        event
        an Award issued under the Plan is subject to Section 409A of the Code, then,
        to
        the extent necessary to comply with the requirements of Section 409A of the
        Code, the definition of “separation from service” provided for under Section
        409A of the Code and the regulations or other guidance issued thereunder
        shall
        be used in determining whether an Employee’s Employment has been terminated or a
        Non-Employee Director’s or Service Provider’s service has been
        terminated.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      “Service
        Provider”
means
        any individual, other than a Non-Employee Director or an Employee, who renders
        services to the Company or an Affiliate, whose participation in the Plan
        is
        determined to be in the best interests of the Company by the
        Committee.

       

      1.3 Shares
        Subject to the Plan. The maximum number of shares of Common Stock that
        may be issued under the Plan shall be 40,462,293. The maximum number of shares
        of Common Stock that may be issued under the Plan pursuant to the exercise
        of
        Incentive Stock Options is 40,462,293. No more than 4,000,000 shares of Common
        Stock shall be issued to any one Participant pursuant to this Plan in any
        one
        calendar year. With respect to Performance Awards paid in cash or a combination
        of cash and Common Stock, the sum of such cash and Common Stock underlying
        an
        Award paid to any one individual in any one year shall not exceed $1,000,000.
        Notwithstanding the above, in the event that at any time after the Effective
        Date the outstanding shares of Common Stock are changed into or exchanged
        for a
        different number or kind of shares or other securities of the Company by
        reason
        of a merger, consolidation, recapitalization, reclassification, stock split,
        stock dividend, combination of shares or the like, the aggregate number and
        class of securities available under the Plan shall be ratably adjusted by
        the
        Board. Upon the occurrence of any of the events described in the immediately
        preceding sentence, in order to preserve the fair value of Awards subject
        to the
        Plan, the Board shall adjust any or all of the following so that the fair
        value
        of the Award immediately after the event is equal to the fair value of the
        Award
        immediately prior to the event: (a) the number of shares of Common Stock
        not
        subject to outstanding Awards with respect to which Awards may be granted,
        (b)
        the number of shares of Common Stock subject to outstanding Awards and (c)
        the
        grant or exercise price with respect to an Award. Such adjustment in an
        outstanding Option shall be made (i) without change in the total price
        applicable to the Option or any unexercised portion of the Option (except
        for
        any change in the aggregate price resulting from rounding-off of share
        quantities or prices) and (ii) with any necessary corresponding adjustment
        in
        exercise price per share. The Board’s determinations shall be final, binding and
        conclusive with respect to the Company and all other interested
        persons.

       

      In
        the
        event the number of shares to be delivered upon the exercise or payment of
        any
        Award granted under the Plan is reduced for any reason other than the
        withholding of shares or the payment of taxes or exercise price, or in the
        event
        any Award (or portion thereof) granted under the Plan can no longer under
        any
        circumstances be exercised or paid, the number of shares no longer subject
        to
        such Award shall thereupon be released from such Award and shall thereafter
        be
        available under the Plan for the grant of additional Awards. Shares that
        cease
        to be subject to an Award because of the exercise of the Award, or the vesting
        of a Restricted Stock Award, shall no longer be subject to or available for
        any
        further grant under the Plan. Shares issued pursuant to the Plan (x) may
        be
        treasury shares, authorized but unissued shares or, if applicable, shares
        acquired in the open market and (y) shall be fully paid and nonassessable.
        No
        fractional shares shall be issued under the Plan. Payment for any fractional
        shares that would otherwise be issuable hereunder in the absence of the
        immediately preceding sentence shall be made in cash.

       

      
        
          
          

        

        
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      1.4 Administration
        of the Plan.
        The
        Plan shall be administered by the Committee. Subject to the provisions of
        the
        Plan, the Board or Committee shall (a) interpret the Plan and all Awards
        under
        the Plan, (b) make, amend and rescind such rules as it deems necessary for
        the
        proper administration of the Plan, (c) make all other determinations necessary
        or advisable for the administration of the Plan and (d) correct any defect
        or
        supply any omission or reconcile any inconsistency in the Plan or in any
        Award
        under the Plan in the manner and to the extent that the Committee deems
        desirable to effectuate the Plan. Any action taken or determination made
        by the
        Committee pursuant to this and the other sections of the Plan shall be final,
        binding and conclusive on all affected persons, including, without limitation,
        the Company, any Affiliate, any grantee, holder or beneficiary of an Award,
        any
        stockholder and any Employee, Service Provider or Non-Employee Director.
        No
        member of the Board or the Committee shall be liable for any action or
        determination made in good faith with respect to the Plan or any Award granted
        hereunder, and the members of the Board and the Committee shall be entitled
        to
        indemnification and reimbursement by the Company and its Affiliates in respect
        of any claim, loss, damage or expense (including legal fees) arising therefrom
        to the fullest extent permitted by law.

       

      1.5 Granting
        of Awards to Participants.
        The
        Committee shall have the authority to grant, prior to the expiration date
        of the
        Plan, Awards to such Employees, Service Providers and Non Employee Directors
        as
        may be selected by it, subject to the terms and conditions set forth in the
        Plan. In selecting the persons to receive Awards, including the type and
        size of
        the Award, the Board or the Committee may consider the contribution the
        recipient has made and/or may make to the growth of the Company or its
        Affiliates and any other factors that it may deem relevant. No member of
        the
        Committee shall vote or act upon any matter relating solely to himself. Grants
        of Awards to members of the Committee must be ratified by the Board. In no
        event
        shall any Employee, Service Provider or Non-Employee Director, nor his, her
        or
        its legal representatives, heirs, legatees, distributees or successors have
        any
        right to participate in the Plan, except to such extent, if any, as permitted
        under the Plan and as the Board or the Committee may determine.

       

      1.6 Leave
        of Absence.
        If an
        employee is on military, sick leave or other bona fide leave of absence,
        such
        person shall be considered an “Employee” for purposes of an outstanding Award
        during the period of such leave, provided that it does not exceed 90 days
        (or
        such longer period as may be determined by the Committee in its sole
        discretion), or, if longer, so long as the person’s right to reemployment is
        guaranteed either by statute or by contract. If the period of leave exceeds
        90
        days (or such longer period as may be determined by the Committee in its
        sole
        discretion), the employment relationship shall be deemed to have terminated
        on
        the ninety-first (91st) day (or the first day immediately following any period
        of leave in excess of 90 days as approved by the Committee) of such leave,
        unless the person’s right to reemployment is guaranteed by statute or
        contract.

       

      1.7 Term
        of Plan.
        If not
        sooner terminated under the provisions of Section 1.8, the Plan shall terminate
        upon, and no further Awards shall be made, after the tenth (10th) anniversary
        of
        the Effective Date.

       

      1.8 Amendment
        and Discontinuance of the Plan.
        The
        Board may amend, suspend or terminate the Plan at any time without prior
        notice
        to or consent of any person; provided,
        however,
        that
        subject to Article
        VII,
        no
        amendment, suspension or termination of the Plan may without the consent
        of the
        holder of an Award, terminate such Award or adversely affect such person’s
        rights with respect to such Award in any material respect unless or to the
        extent specified in the Award itself; and provided further
        that, no
        amendment shall be effective prior to its approval by the stockholders of
        the
        Company, to the extent such approval is required by (a) applicable legal
        requirements, (b) the requirements of any securities exchange on which the
        Company’s stock may be listed or (c) the requirements of any exchange on which
        the Company’s stock may be listed. Notwithstanding the foregoing, the Board may
        amend the Plan or any Award in such manner as it deems necessary in order
        to
        permit Awards to meet the requirements of the Code or other applicable laws,
        or
        to prevent adverse tax consequences to the Participants.

       

      
        
          
          

        

        
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      ARTICLE
        II

      NON-QUALIFIED
        OPTIONS

       

      2.1 Eligibility.
        The
        Committee may grant Non-Qualified Options to purchase shares of Common Stock
        to
        any Employee, Service Provider and Non-Employee Directors according to the
        terms
        set forth below. Each Non-Qualified Option granted under the Plan shall be
        evidenced by a written agreement between the Company and the individual to
        whom
        such Non-Qualified Option was granted in such form as the Committee shall
        provide.

       

      2.2 Exercise
        Price.
        The
        exercise price to be paid for each share of Common Stock deliverable upon
        exercise of each Non-Qualified Option granted under this Article
        II
        shall
        not be less than one hundred percent (100%) of the FMV Per Share on the date
        of
        grant of such Non Qualified Option. The exercise price for each Non-Qualified
        Option granted under Article
        II
        shall be
        subject to adjustment as provided in Section
        2.3(e).

       

      2.3 Terms
        and Conditions of Non-Qualified Options.
        Non-Qualified Options shall be in such form as the Board or the Committee
        may
        from time to time approve, shall be subject to the following terms and
        conditions and may contain such additional terms and conditions, not
        inconsistent with this Article
        II,
        as the
        Committee shall deem desirable:

       

      (a) Option
        Period and Conditions and Limitations on Exercise.
        No
        Non-Qualified Option shall be exercisable later than the Option Expiration
        Date.
        To the extent not prohibited by other provisions of the Plan, each Non-Qualified
        Option shall be exercisable at such time or times as the Board or the Committee,
        in its discretion, may determine at the time such Non-Qualified Option is
        granted.

       

      (b) Manner
        of Exercise.
        In
        order to exercise a Non-Qualified Option, the person or persons entitled
        to
        exercise such Non-Qualified Option shall deliver to the Company payment in
        full
        for (i) the shares being purchased and (ii) unless other arrangements have
        been
        made with the Committee, any required withholding taxes. The payment of the
        exercise price for each Non-Qualified Option shall be made (i) in cash or
        by
        certified check payable and acceptable to the Company, (ii)
        with
        the consent of the Committee, by tendering to the Company shares of Common
        Stock
        owned by the person for more than six months having an aggregate Fair Market
        Value as of the date of exercise that is not greater than the full exercise
        price for the shares with respect to which the Non-Qualified
        Option
        is
        being exercised and by paying any remaining amount of the exercise price
        as
        provided in (i) above, or (iii) subject to such instructions as the Committee
        may specify, at the person’s written request the Company may deliver
        certificates for the shares of Common Stock for which the Non-Qualified Option
        is being exercised to a broker for sale on behalf of the person; provided
        that the
        person has irrevocably instructed such broker to remit directly to the Company
        on the person’s behalf the full amount of the exercise price from the proceeds
        of such sale. In the event that the person elects to make payment as allowed
        under clause (ii) above, the Committee may, upon confirming that the Optionee
        owns the number of additional shares being tendered, authorize the issuance
        of a
        new certificate for the number of shares being acquired pursuant to the exercise
        of the Non-Qualified
        Option
        less the number of shares being tendered upon the exercise and return to
        the
        person (or not require surrender of) the certificate for the shares being
        tendered upon the exercise. If the Committee so requires, such person or
        persons
        shall also deliver a written representation that all shares being purchased
        are
        being acquired for investment and not with a view to, or for resale in
        connection with, any distribution of such shares.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      (c) Proceeds.
        The
        proceeds received from the sale of shares of Common Stock pursuant to exercise
        of Non-Qualified Options exercised under the Plan will be used for general
        corporate purposes.

       

      (d) Non-Qualified
        Options Not Transferable.
        Except
        as provided below, no Non- Qualified Option granted hereunder shall be
        transferable other than by (i) will or by the laws of descent and distribution
        or (ii) pursuant to a domestic relations order, and during the lifetime of
        the
        Participant to whom any such Non-Qualified Option is granted, it shall be
        exercisable only by the Participant (or his guardian). Any attempt to transfer,
        assign, pledge, hypothecate or otherwise dispose of, or to subject to execution,
        attachment or similar process, any Non-Qualified Option granted hereunder,
        or
        any right thereunder, contrary to the provisions hereof, shall be void and
        ineffective, shall give no right to the purported transferee and shall, at
        the
        sole discretion of the Board or the Committee, result in forfeiture of the
        Non-Qualified Option with respect to the shares involved in such attempt.
        With
        respect to a specific Non-Qualified Option, in accordance with rules and
        procedures established by the Board or the Committee from time to time, the
        Participant (or his guardian) may transfer, for estate planning purposes,
        all or
        part of such Non-Qualified Option to one or more immediate family members
        or
        related family trusts or partnerships or similar entities as determined by
        the
        Board or the Committee. Any Non-Qualified Option that is transferred in
        accordance with the provisions of this Section
        2.3(d)
        may only
        be exercised by the person or persons who acquire a proprietary interest
        in the
        Non-Qualified Options pursuant to the transfer.

       

      (e) Adjustment
        of Non-Qualified Options.
        In the
        event that at any time after the Effective Date the outstanding shares of
        Common
        Stock are changed into or exchanged for a different number or kind of shares
        or
        other securities of the Company by reason of merger, consolidation,
        recapitalization, reclassification, stock split, stock dividend, combination
        of
        shares or the like, the Board shall make appropriate and equitable adjustments
        to all Non Qualified Options then outstanding as provided in Section
        1.3.

       

      (f) Listing
        and Registration of Shares.
        Each
        Non-Qualified Option shall be subject to the requirement that if at any time
        the
        Board or the Committee determines, in its discretion, that the listing,
        registration or qualification of the shares subject to such Non-Qualified
        Option
        under any securities exchange or under any state or federal law, or the consent
        or approval of any governmental regulatory body, is necessary or desirable
        as a
        condition of, or in connection with, the issue or purchase of shares thereunder,
        such Non-Qualified Option may not be exercised in whole or in part unless
        such
        listing, registration, qualification, consent or approval shall have been
        effected or obtained and the same shall have been free of any conditions
        not
        acceptable to the Board.

       

      
        
          
          

        

        
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      2.4 Option
        Repricing.
        The
        Board or the Committee may, subject to stockholder approval, grant to holders
        of
        outstanding Non-Qualified Options, in exchange for the surrender and
        cancellation of such Non-Qualified Options, new Non-Qualified Options having
        exercise prices lower (but not lower than the FMV Per Share on the date of
        grant
        of the new Non-Qualified Option) or higher (with any required consent from
        the
        holder) than the exercise price provided in the Non-Qualified Options so
        surrendered and canceled and containing such other terms and conditions as
        the
        Board or the Committee may deem appropriate, other than any changes, terms
        or
        conditions that would cause the affected Non-Qualified Options to become
        subject
        to Section 409A of the Code, whether by reason of an extension of the term,
        an
        additional deferral feature, or otherwise.

       

      2.5 Vesting.
        Subject
        to Sections
        7.10
        and
7.11,
        unless
        otherwise provided in an Award, one-fourth
        (1/4th)
        of
        the
        Options granted to a Participant shall vest on each anniversary of the date
        of
        grant of such Options until all Options are fully vested or any unvested
        Options
        are forfeited. 

       

      ARTICLE
        III

      INCENTIVE
        STOCK OPTIONS

       

      The
        terms
        specified in this Article III shall be applicable to all Incentive Stock
        Options. Except as modified by the provisions of this Article III, all the
        provisions of Article II shall be applicable to Incentive Stock Options.
        Options
        which are specifically designated as Non-Qualified Options shall not
        be
        subject to the terms of this Article III.

       

      3.1 Eligibility.
        Incentive Stock Options may only be granted to Employees of the Company or
        its
        parent or subsidiary as defined in Sections 424(e) or (f) of the Code, as
        applicable, while each such entity is a “corporation” described in Section
        7701(a)(3) of the Code and Treas. Reg. §1.421-1(i)(1).

       

      3.2 Exercise
        Price.
        Subject
        to Section
        3.4,
        the
        exercise price per share shall not be less than one hundred percent (100%)
        of
        the FMV Per Share on the date of grant of the Incentive Stock
        Option.

       

      3.3 Dollar
        Limitation.
        The
        aggregate Fair Market Value (determined as of the respective date or dates
        of
        grant) of shares of Common Stock for which one or more Options granted to
        any
        Employee under the Plan (or any other option plan of the Company or any
        Affiliate which is a parent or subsidiary as defined in Code Sections 424(e)
        or
        (f), as applicable) may for the first time become exercisable as Incentive
        Stock
        Options during any one (1) calendar year shall not exceed the sum of $100,000.
        To the extent the Employee holds two (2) or more such Options which become
        exercisable for the first time in the same calendar year, the foregoing
        limitation on the exercisability of such Options as Incentive Stock Options
        shall be applied on the basis of the order in which such Options are
        granted.

       

      
        
          
          

        

        
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      3.4 10%
        Stockholder.
        If any
        Employee to whom an Incentive Stock Option is granted owns stock possessing
        more
        than ten percent (10%) of the total combined voting power of all classes
        of
        stock of the Company or any “parent corporation” of the Company (as defined in
        Section 424(e) of the Code) or any “subsidiary corporation” of the Company (as
        defined in Section 424(f) of the Code), then the exercise price per share
        under
        such Incentive Stock Option shall not be less than one hundred ten percent
        (110%) of the FMV Per Share on the date of grant, and the Option term shall
        not
        exceed five (5) years measured from the date of grant. For purposes of the
        immediately preceding sentence, the attribution rules under Section 424(d)
        of
        the Code shall apply for purposes of determining an Employee’s
        ownership.

       

      3.5 Incentive
        Stock Options Not Transferable.
        No
        Incentive Stock Option granted hereunder (a) shall be transferable other
        than by
        will or by the laws of descent and distribution and (b) except as permitted
        in
        regulations or other guidance issued under Section 422 of the Code, shall
        be
        exercisable during the Optionee’s lifetime by any person other than the Optionee
        (or his guardian).

       

      3.6 Compliance
        with Code Section 422.
        All
        Options that are intended to be Incentive Stock Options described in Code
        Section 422 shall be designated as such in the Option grant and in all respects
        shall be issued in compliance with Code Section 422.

       

      3.7 Limitations
        on Exercise.
        No
        Incentive Stock Option shall be exercisable more than three (3) months after
        the
        Optionee ceases to be an Employee for any reason other than death or Disability,
        or more than one (1) year after the Optionee ceases to be an Employee due
        to
        death or Disability.

       

      ARTICLE
        IV

      RESTRICTED
        STOCK

       

      4.1 Eligibility.
        All
        Employees, Service Providers and Non-Employee Directors shall be eligible
        for
        grants of Restricted Stock.

       

      4.2 Restrictions,
        Restricted Period and Vesting.

       

      (a) The
        Restricted Stock shall be subject to such forfeiture restrictions (including,
        without limitation, limitations that qualify as a “substantial risk of
        forfeiture” within the meaning given to that term under Section 83 of the Code)
        and restrictions on transfer by the Participant and repurchase by the Company
        as
        the Committee, in its sole discretion, shall determine. Prior to the lapse
        of
        such restrictions, the Participant shall not be permitted to transfer such
        shares. The Company shall have the right to repurchase or recover such shares
        for the lesser of (i) the amount of cash paid therefor, if any, or (ii) the
        Fair
        Market Value of the shares if (x) the Participant shall terminate Employment
        from, or services to, the Company prior to the lapse of such restrictions
        under
        circumstances that do not result in full vesting or (y) the Restricted Stock
        is
        otherwise forfeited by the Participant pursuant to the terms of the
        Award.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      (b) Vesting.
        Subject
        to Sections
        7.10
        and
Section
        7.11,unless otherwise provided in an Award, one-fourth (1/4th)
        of
        the Restricted Stock granted to a Participant shall vest on each anniversary
        date of the grant of such Restricted Stock until all Restricted Stock is
        fully
        vested or any unvested Restricted Stock is forfeited.

       

      (c) Immediate
        Transfer Without Immediate Delivery of Restricted Stock.
        Each
        certificate representing Restricted Stock awarded under the Plan shall be
        registered in the name of the Participant and, during the Restricted Period,
        shall be left on deposit with the Company, or in trust or escrow pursuant
        to an
        agreement satisfactory to the Committee, along with a stock power endorsed
        in
        blank until such time as the restrictions on transfer have lapsed. The grantee
        of Restricted Stock shall have all the rights of a stockholder with respect
        to
        such shares including the right to vote and the right to receive dividends
        or
        other distributions paid or made with respect to such shares; provided,
        however,
        that
        the Committee may in the Award restrict the Participant’s right to dividends and
        voting until the restrictions on the Restricted Stock lapse. Any certificate
        or
        certificates representing shares of Restricted Stock (vested or unvested)
        shall
        bear a legend similar to the following:

       

      “The
        shares represented by this certificate have been issued pursuant to the terms
        of
        the Advance Nanotech, Inc. 2008 Equity Incentive Plan and may not be sold,
        pledged, transferred, assigned or otherwise encumbered in any manner except
        as
        is set forth in the terms of such award dated _______________,
        200___.”

       

      In
        addition, during any periods when restricted stock awards are made and the
        Company does not have in place an effective registration statement on Form
        S-8
        or other available form permitted by the Securities and Exchange Commission,
        any
        certificate or certificates representing shares of Restricted Stock (vested
        or
        unvested) shall bear a legend similar to the following:

       

      “The
        shares represented by this certificate have not been registered under the
        Securities Act of 1933, as amended (the “Act”), or any other securities law. No
        sale, transfer or other disposition of such securities, or of any interest
        therein, may be made or shall be recognized unless in the satisfactory written
        opinion of counsel for, or other counsel satisfactory to, the issuer such
        transaction would not violate or require registration under the Act or other
        law.”

       

      4.3 Forfeiture
        of Restricted Stock.
        If, for
        any reason, the restrictions imposed by the Committee upon Restricted Stock
        are
        not satisfied at the end of the Restricted Period, any Restricted Stock
        remaining subject to such restrictions shall thereupon be forfeited by the
        Participant and reacquired by the Company at the lower of (a) the price per
        share paid for such Restricted Stock (if any) by the Participant or (b) its
        Fair
        Market Value on the date of forfeiture.

       

      4.4 Delivery
        of Shares of Common Stock.
        Subject
        to the withholding and other requirements of Article VIII
        and provisions of the Award,
        at the
        expiration of the Restricted Period, a stock certificate evidencing the
        Restricted Stock (to the nearest full share) with respect to which the
        Restricted Period has expired shall be delivered without charge to the
        Participant, or his personal representative, free of all vesting restrictions
        under the Plan, but subject to any restrictions under the Securities Act
        of
        1933, as amended, or any other securities statute.

       

      
        
          
          

        

        
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      ARTICLE
        V

      PERFORMANCE
        AWARDS

       

      5.1 Performance
        Awards.
        To the
        extent the Committee determines that any Award granted pursuant to this Plan
        shall be contingent upon performance goals or shall constitute performance-based
        compensation for purposes of Section 162(m) of the Code, the grant or settlement
        of the Award shall, in the Committee’s discretion, be subject to the achievement
        of performance goals determined and applied in a manner consistent with this
        Section 5.1. The Committee may grant Performance Awards based on performance
        criteria measured over a Performance Period. The Committee may use such business
        criteria and other measures of performance as it may deem appropriate in
        establishing any performance conditions, and may exercise its discretion
        to
        increase the amounts payable under any Award subject to performance conditions
        except as limited under Section 5.2 hereof in the case of a Performance Award
        granted to a Covered Employee.

       

      5.2 Performance
        Goals.
        The
        grant and/or settlement of a Performance Award shall be contingent upon the
        terms set forth in this Section 5.2.

       

      (a) General.
        The
        performance goals for Performance Awards shall consist of one or more business
        criteria and a targeted level or levels of performance with respect to each
        such
        criteria, as specified by the Committee. In the case of any Award granted
        to a
        Covered Employee, performance goals shall be designed to be objective and
        shall
        otherwise meet the requirements of Section 162(m) of the Code and regulations
        thereunder (including Treas. Reg. §1.162-27 and successor regulations thereto),
        including the requirement that the level or levels of performance targeted
        by
        the Committee are such that the achievement of performance goals is
“substantially uncertain” at the time the Award is granted. The Committee may
        determine that such Performance Awards shall be granted and/or settled upon
        achievement of any one performance goal or that two or more of the performance
        goals must be achieved as a condition to the grant and/or settlement of such
        Performance Awards. Performance goals may differ among Performance Awards
        granted to any one Participant or for Performance Awards granted to different
        Participants.

       

      (b) Business
        Criteria.
        One or
        more of the following business criteria for the Company, on a consolidated
        basis, and/or for specified subsidiaries, divisions or business or geographical
        units of the Company (except with respect to the total stockholder return
        and
        earnings per share criteria), shall be used by the Committee in establishing
        performance goals for Performance Awards granted to a Participant: (i) earnings
        per share; (ii) increase in revenues; (iii) increase in cash flow; (iv) increase
        in cash flow return; (v) return on net assets; (vi) return on assets; (vii)
        return on investment; (viii) return on capital; (ix) return on equity; (x)
        economic value added; (xi) gross margin; (xii) net income; (xiii) pretax
        earnings; (xiv) pretax earnings before interest, (xv) pretax earnings before
        interest, depreciation and amortization; (xvi) pretax operating earnings
        after
        interest expense and before incentives, service fees and extraordinary or
        special items; (xvii) operating income; (xviii) total stockholder return;
        (xix)
        debt reduction; (xx) increases in grants awarded through new grant applications;
        (xxi) successful completion of an acquisition, initial public offering, private
        placement of equity or debt; or (xxii) reduction of expenses. Any of the
        above
        goals may be determined on the absolute or relative basis or as compared
        to the
        performance of a published or special index deemed applicable by the Committee,
        including, but not limited to, the Standard & Poor’s 500 Stock Index or a
        group of comparable companies.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      (c) Timing
        for Establishing Performance Goals.
        Performance goals in the case of any Award granted to a Participant who is
        a
        Covered Employee shall be established not later than 90 days after the beginning
        of any Performance Period applicable to such Performance Awards, or at such
        other date as may be required or permitted for “performance-based compensation”
under Section 162(m) of the Code.

       

      (d) Settlement
        of Performance Awards; Other Terms.
        After
        the end of each Performance Period, the Committee shall determine the amount,
        if
        any, of Performance Awards payable to each Participant based upon achievement
        of
        business criteria over a Performance Period. The Committee may not exercise
        discretion to increase any such amount payable in respect of a Performance
        Award
        to a Covered Employee that is designed to comply with Section 162(m) of the
        Code. The Committee shall specify the circumstances in which such Performance
        Awards shall be paid or forfeited in the event of termination of Employment
        by
        the Participant prior to the end of a Performance Period or settlement of
        Performance Awards.

       

      (e) Written
        Determinations.
        All
        determinations by the Committee as to the establishment of performance goals,
        the amount of any Performance Award, and the achievement of performance goals
        relating to Performance Awards shall be made in writing in the case of any
        Award
        granted to a Participant. The Committee may not delegate any responsibility
        relating to Performance Awards discussed in this Section 5.2(e).

       

      (f) Status
        of Performance Awards under Section 162(m) of the Code.
        It is
        the intent of the Company that Performance Awards granted to persons who
        are
        designated by the Committee as likely to be Covered Employees within the
        meaning
        of Section 162(m) of the Code and regulations thereunder (including Treas.
        Reg.
§1.162-27 and successor regulations thereto) shall, if so designated by the
        Committee, constitute “performance-based compensation” within the meaning of
        Section 162(m) of the Code and regulations thereunder. Accordingly, the terms
        of
        this Section 5.2 shall be interpreted in a manner consistent with Section
        162(m)
        of the Code and regulations thereunder. If any provision of the Plan as in
        effect on the date of adoption or any agreements relating to Performance
        Awards
        that are designated as intended to comply with Section 162(m) of the Code
        does
        not comply or is inconsistent with the requirements of Section 162(m) of
        the
        Code or regulations thereunder, such provision shall be construed or deemed
        amended to the extent necessary to conform to such requirements.

       

      ARTICLE
        VI

      OTHER
        STOCK OR PERFORMANCE-BASED AWARDS

       

      The
        Committee is hereby authorized to grant to Employees, Service Providers and
        Non-Employee Directors Other
        Stock or Performance-Based Awards,
        which
        shall consist of a right which (a) is not an Award described in any other
        Article of this Plan and (b) is denominated or payable in, valued in whole
        or in
        part by reference to, or otherwise based on or related to, shares of Common
        Stock (including, without limitation, units or securities convertible into
        shares of Common Stock) or cash as deemed by the Committee to be consistent
        with
        the purposes of this Plan. Subject to the terms of this Plan, the Committee
        shall determine the terms and conditions of any such Other Stock or
        Performance-Based Awards, which shall be contained in a written agreement
        or
        other document covering such Awards.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      ARTICLE
        VII

      CERTAIN
        PROVISIONS APPLICABLE TO ALL AWARDS

       

      7.1 General.
        Awards
        shall be evidenced by a written agreement or other document and may be granted
        on the terms and conditions set forth herein. In addition, the Committee
        may
        impose on any Award or the exercise thereof, such additional terms and
        conditions, not inconsistent with the provisions of the Plan, as the Committee
        shall determine, including terms requiring forfeiture of Awards in the event
        of
        termination of employment by the Participant and terms permitting a Participant
        to make elections relating to his or her Award; provided,
        however,
        that
        any such election would not (i) cause the application of Section 409A of
        the
        Code to the Award or (ii) create adverse tax consequences under Section 409A
        of
        the Code should Section 409A apply to the Award. The terms, conditions and/or
        restrictions contained in an Award may differ from the terms, conditions
        and
        restrictions contained in any other Award. The Board may amend an Award;
        provided,
        however,
        that,
        subject to Section
        7.11,
        no
        amendment of an Award may, without the consent of the holder of the Award,
        adversely affect such person’s rights with respect to such Award in any material
        respect. The Board or the Committee shall retain full power and discretion
        to
        accelerate or waive, at any time, any term or condition of an Award that
        is not
        mandatory under the Plan; provided,
        however,
        that,
        subject to Section
        7.11,
        the
        Board or the Committee shall not have not have discretion to accelerate or
        waive
        any term or condition of an Award (i) if such discretion would cause the
        Award
        to have adverse tax consequences to the Participant under Section 409A of
        the
        Code, or (ii) if the Award is intended to qualify as “performance-based
        compensation” for purposes of Section 162(m) of the Code and such discretion
        would cause the Award not to so qualify. Except in cases in which the Board
        or
        the Committee is authorized to require other forms of consideration under
        the
        Plan, or to the extent other forms of consideration must be paid to satisfy
        the
        requirements of the Delaware Corporation Law, no consideration other than
        services may be required for the grant of any Award.

       

      7.2 Stand-Alone,
        Additional, Tandem and Substitute Awards.
        Subject
        to Section
        2.4,
        Awards
        granted under the Plan may, in the discretion of the Board or the Committee,
        be
        granted either alone or in addition to, in tandem with, or in substitution
        or
        exchange for, any other Award or any award granted under another plan of
        the
        Company, any Affiliate or any business entity to be acquired by the Company
        or
        an Affiliate, or any other right of a Participant to receive payment from
        the
        Company or any Affiliate; provided,
        however,
        that no
        Award shall be issued under the Plan if issuance of the Award would result
        in
        adverse tax consequences under Section 409A of the Code. Such additional,
        tandem
        and substitute or exchange Awards may be granted at any time. If an Award
        is
        granted in substitution or exchange for another Award, the Board or the
        Committee shall require the surrender of such other Award for cancellation
        in
        consideration for the grant of the new Award. In addition, Awards may be
        granted
        in lieu of cash compensation, including in lieu of cash amounts payable under
        other plans of the Company or any Affiliate. Any such action contemplated
        under
        this Section
        7.2
        shall be
        effective only to the extent that such action will not cause any Award that
        is
        subject to Section 409A of the Code to result in adverse consequences under
        Section 409A of the Code.

       

      
        
          
          

        

        
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      7.3 Term
        of Awards.
        The
        term or Restricted Period of each Award that is an Option or Restricted Stock
        shall be for such period as may be determined by the Board or the Committee;
        provided,
        however,
        that in
        no event shall the term of any such Award exceed a period of ten years (or
        such
        shorter terms as may be required in respect of an Incentive Stock Option
        under
        Section 422 of the Code).

       

      7.4 Form
        and Timing of Payment under Awards; Deferrals.
        Subject
        to the terms of the Plan and any applicable Award agreement, payments to
        be made
        by the Company or an Affiliate upon the exercise of an Option or other Award
        or
        settlement of an Award may be made in a single payment or transfer, in
        installments or on a deferred basis. The settlement of any Award may, subject
        to
        any limitations set forth in the Award agreement, be accelerated and cash
        paid
        in lieu of shares in connection with such settlement, in the discretion of
        the
        Board or the Committee or upon occurrence of one or more specified events;
        provided,
        however,
        that
        such discretion may not be exercised by the Board or the Committee if the
        exercise of such discretion would result in adverse tax consequences to the
        Participant under Section 409A of the Code. Installment or deferred payments
        may
        be required by the Committee (subject to Section
        1.8,
        including the consent provisions thereof in the case of any deferral of an
        outstanding Award not provided for in the original Award agreement) or permitted
        at the election of the Participant on terms and conditions established by
        the
        Committee; provided,
        however,
        that no
        deferral shall be required or permitted by the Committee if such deferral
        would
        result in adverse tax consequences to the Participant under Section 409A
        of the
        Code. Payments may include, without limitation, provisions for the payment
        or
        crediting of reasonable interest on installment or deferred payments or the
        grant or crediting of amounts in respect of installment or deferred payments
        denominated in shares. Any deferral shall only be allowed as is provided
        in a
        separate deferred compensation plan adopted by the Company. The Plan shall
        not
        constitute an “employee benefit plan” for purposes of Section 3(3) of the
        Employee Retirement Income Security Act of 1974, as amended.

       

      7.5 Issuance
        of Restricted Stock/Forfeiture.
        After
        the satisfaction of all of the terms and conditions set by the Committee
        with
        respect to an Award of Restricted Stock, a certificate for the number of
        shares
        that are no longer subject to such restrictions, terms and conditions shall
        be
        delivered to the Employee. The number of shares of Common Stock which shall
        be
        issuable upon earning of an Award denominated in cash shall be determined
        by
        dividing (A) by (B) where (A) is the amount of Award that is earned and payable,
        as applicable, and (B) is the FMV Per Share of Common Stock on the date the
        Award is earned and payable, as applicable. Upon termination, resignation
        or
        removal of a Participant under circumstances that do not cause such Participant
        to become fully vested, any remaining unvested Options, shares of Restricted
        Stock, or other unvested Awards, as the case may be, shall either be forfeited
        back to the Company or, if appropriate under the terms of the Award, shall
        continue to be subject to the restrictions, terms and conditions set by the
        Committee with respect to such Award.

       

      7.6 Securities
        Requirements.
        No
        shares of Common Stock will be issued or transferred pursuant to an Award
        unless
        and until all then-applicable requirements imposed by federal and state
        securities and other laws, rules and regulations and by any regulatory agencies
        having jurisdiction and by any stock market or exchange upon which the Common
        Stock may be listed, have been fully met. As a condition precedent to the
        issuance of shares pursuant to the grant or exercise of an Award, the Company
        may require the grantee to take any reasonable action to meet such requirements.
        The Company shall not be obligated to take any affirmative action in order
        to
        cause the issuance or transfer of shares pursuant to an Award to comply with
        any
        law or regulation described in the second preceding sentence.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

      7.7 Transferability.

       

      (a) Non-Transferable
        Awards and Options.
        Except
        as otherwise specifically provided in the Plan, no Award and no right under
        the
        Plan, contingent or otherwise, other than Restricted Stock as to which
        restrictions have lapsed, will be (i) assignable, saleable or otherwise
        transferable by a Participant except by will or by the laws of descent and
        distribution or pursuant to a qualified domestic relations order or (ii)
        subject
        to any encumbrance, pledge or charge of any nature. No transfer by will or
        by
        the laws of descent and distribution shall be effective to bind the Company
        unless the Board or the Committee shall have been furnished with a copy of
        the
        deceased Participant’s will or such other evidence as the Board or the Committee
        may deem necessary to establish the validity of the transfer. Any attempted
        transfer in violation of this Section
        7.7(a)
        shall be
        void and ineffective for all purposes.

       

      (b) Ability
        to Exercise Rights.
        Except
        as otherwise specifically provided under the Plan, only the Participant or
        his
        guardian (if the Participant becomes Disabled), or in the event of his death,
        his legal representative or beneficiary, may exercise Options, receive cash
        payments and deliveries of shares or otherwise exercise rights under the
        Plan.
        The executor or administrator of the Participant’s estate, or the person or
        persons to whom the Participant’s rights under any Award will pass by will or
        the laws of descent and distribution, shall be deemed to be the Participant’s
        beneficiary or beneficiaries of the rights of the Participant hereunder and
        shall be entitled to exercise such rights as are provided
        hereunder.

       

      7.8 No
        Rights as a Stockholder.
        Except
        as otherwise provided in Section
        4.2(c),
        a
        Participant who has received a grant of an Award or a transferee of such
        Participant shall have no rights as a stockholder with respect to any shares
        of
        Common Stock until such person becomes the holder of record. Except as otherwise
        provided in Section
        4.2(c),
        no
        adjustment shall be made for dividends (ordinary or extraordinary, whether
        in
        cash, securities or other property) or distributions or other rights for
        which
        the record date is prior to the date such stock certificate is
        issued.

       

      7.9 Listing
        and Registration of Shares of Common Stock.
        The
        Company, in its discretion, may postpone the issuance and/or delivery of
        shares
        of Common Stock upon any exercise of an Award until completion of such stock
        exchange listing, registration or other qualification of such shares under
        any
        state and/or federal law, rule or regulation as the Company may consider
        appropriate, and may require any Participant to make such representations
        and
        furnish such information as it may consider appropriate in connection with
        the
        issuance or delivery of the shares in compliance with applicable laws, rules
        and
        regulations.

       

      7.10 Termination
        of Employment, Death, Disability and Retirement.

       

      (a) Termination
        of Employment.
        Unless
        otherwise provided in the Award, if Employment of an Employee or service
        of a
        Non-Employee Director is terminated for any reason whatsoever other than
        death,
        Disability or Retirement, or if service of a Service Provider is terminated
        for
        any reason whatsoever other than death, any nonvested Award granted pursuant
        to
        the Plan outstanding at the time of such termination and all rights thereunder
        shall wholly and completely terminate and no further vesting shall occur,
        and
        the Employee, Service Provider or Non Employee Director shall be entitled
        to
        exercise his or her rights with respect to the portion of the Award vested
        as of
        the date of termination for a period that shall end on the earlier of (i)
        the
        expiration date set forth in the Award with respect to the vested portion
        of
        such Award or (ii) the date that occurs three (3) months after such termination
        date.
        In the
        event an Award issued under the Plan is subject to Section 409A of the Code,
        then, to the extent necessary to comply with the requirements of Section
        409A of
        the Code, the definition of “Separation from service’ provided for under Section
        409A of the Code and the regulations or other guidance issued thereunder
        shall
        be used in determining whether an Employee’s Employment has been terminated or a
        Non-Employee Directors or Service Provider’s service has been
        terminated.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      (b) Retirement.
        Unless
        otherwise provided in the Award, upon the Retirement of an Employee or, if
        applicable, Non-Employee Director:

       

      (i) any
        nonvested portion of any outstanding Award shall immediately terminate and
        no
        further vesting shall occur; and

       

      (ii) any
        vested Award shall expire on the earlier of (A) the expiration date set forth
        in
        the Award or (B) the expiration of (1) twelve (12) months after the date
        of
        Retirement in the case of any Award other than an Incentive Stock Option
        and (2)
        three (3) months after the date of Retirement in the case of an Incentive
        Stock
        Option.

       

      (c) Disability
        or Death.
        Unless
        otherwise provided in the Award, upon termination of Employment or service
        from
        the Company or any Affiliate that is a parent or subsidiary of the Company
        as a
        result of Disability of an Employee or Non-Employee Director or death of
        an
        Employee, Non Employee Director or Service Provider, or with respect to a
        Participant who is either a retired former Employee or Non-Employee Director
        who
        dies during the period described in Section
        7.10(b),
        hereinafter the “Applicable
        Retirement Period,”
or
        a
        disabled former Employee or Non-Employee Director who dies during the period
        that expires on the earlier of the expiration date set forth in any applicable
        outstanding Award or the first anniversary of the person’s termination of
        Employment or service due to Disability, hereinafter the “Applicable
        Disability Period”:

       

      (i) any
        nonvested portion of any outstanding Award that has not already terminated
        shall
        immediately terminate and no further vesting shall occur; and

       

      (ii) any
        vested Award shall expire upon the earlier of (A) the expiration date set
        forth
        in the Award or (B) the later of (1) the first anniversary of such termination
        of Employment as a result of Disability or death or (2) the first anniversary
        of
        such person’s death during the Applicable Retirement Period or the Applicable
        Disability Period.

       

      (d) Continuation.
        Notwithstanding any other provision of the Plan, the Board or the Committee,
        in
        its discretion, may provide for the continuation of any Award for such period
        and upon such terms and conditions as are determined by the Board or the
        Committee in the event that a Participant ceases to be an Employee, Service
        Provider or Non-Employee Director, except to the extent that such continuation
        would cause the Award to become subject to the provisions of Section 409A
        of the
        Code or if the Award is intended to qualify as “performance-based compensation”
for purposes of Section 162(m) of the Code and such continuation would cause
        the
        Award to not so qualify.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

      7.11 Change
        of Control.

       

      (a) Change
        of Control.
        Unless
        otherwise provided in the Award, in the event of a Change of Control, the
        Board
        shall have the authority in its sole discretion to take any one or more of
        the
        following actions with respect to the Awards:

       

      (i) the
        Board
        may accelerate vesting and the time at which all Options then outstanding
        may be
        exercised so that those types of Awards may be exercised in full for a limited
        period of time on or before a specified date fixed by the Board or the
        Committee, after which specified date all unexercised Options and all rights
        of
        Participants thereunder shall terminate, or the Board or the Committee may
        accelerate vesting and the time at which Options may be exercised so that
        those
        types of Awards may be exercised in full for their then remaining
        term;

       

      (ii) the
        Board
        may waive all restrictions and conditions of all Restricted Stock then
        outstanding with the result that those types of Awards shall be deemed
        satisfied, and the Restriction Period or other limitations on payment in
        full
        with respect thereto shall be deemed to have expired, as of the date of the
        Change of Control or such other date as may be determined by the
        Board;

       

      (iii) the
        Board
        may cause the acquirer to assume the Plan and the Awards or exchange the
        Awards
        for awards for the acquirer’s stock; and

       

      (iv) the
        Board
        may terminate the Plan and all outstanding unvested or unexercised Awards
        as of
        the date of the Change of Control.

       

      (b) Notwithstanding
        the above provisions of this Section
        7.11,
        the
        Board shall not be required to take any action described in the preceding
        provisions of this Section
        7.11,
        and any
        decision made by the Board, in its sole discretion, not to take some or all
        of
        the actions described in the preceding provisions of this Section
        7.11
        shall be
        final, binding and conclusive with respect to the Company and all other
        interested persons.

       

      (c) Right
        of Cash-Out.
        If
        approved by the Board prior to or within thirty (30) days after such time
        as a
        Change of Control shall be deemed to have occurred, the Board shall have
        the
        right for a forty-five (45) day period immediately following the date that
        the
        Change of Control is deemed to have occurred to require all, but not less
        than
        all, Participants to transfer and deliver to the Company all Awards previously
        granted to the Participants in exchange for an amount equal to the “cash value”
(defined below) of the Awards. Such right shall be exercised by written notice
        to all Participants. For purposes of this Section
        7.11,
        the
        cash value of an Award shall equal the sum of (i) the cash value of all benefits
        to which the Participant would be entitled upon settlement or exercise of
        any
        Award which is not an Option or Restricted Stock and (ii) (A) in the case
        of any
        Award that is an Option, the excess of the FMV Per Share over the option
        price
        or (B) in the case of an Award that is Restricted Stock the FMV Per Share
        of
        Restricted Stock, multiplied by the number of shares subject to such Award.
        The
        amount payable to each Participant by the Company pursuant to this Section
        7.11
        shall be
        in cash or by certified check and shall be reduced by any taxes required
        to be
        withheld.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      7.12 First
        Refusal Rights.
        If so
        provided in the Award agreement, the Company shall have the right of first
        refusal with respect to any proposed disposition by the Participant (or any
        successor in interest) of any shares of Common Stock issued under the Plan.
        Such
        right of first refusal shall be exercisable and lapse in accordance with
        the
        terms established by the Board or the Committee and set forth in the Award
        agreement.

       

      7.13 Stockholder
        Agreements/Investment Representations.
        As a
        condition to the exercise of an Option or the issuance of Common Stock
        hereunder, the Committee or the Board may require the Participant to enter
        into
        such agreements (including but not limited to a buy/sell or voting trust
        agreement) with respect to the Shares as may be required of other stockholders
        of the Company. In addition, the Committee or the Board may require the
        Participant to represent and warrant at the time of any such exercise or
        issuance that the Shares are being purchased only for investment and without
        any
        present intention to sell or distribute such Shares, if, in the opinion of
        counsel for the Company, such a representation is required by any relevant
        provisions of law.

       

      7.14 Exemptions
        from Section 16(b) Liability.
        It is
        the intent of the Company that the grant of any Awards to or other transaction
        by a Participant who is subject to Section 16 of the Exchange Act shall be
        exempt from Section 16(b) of the Exchange Act pursuant to an applicable
        exemption (except for transactions acknowledged by the Participant in writing
        to
        be non-exempt). Accordingly, if any provision of this Plan or any Award
        agreement does not comply with the requirements of Rule 16b-3 under the Exchange
        Act as then applicable to any such transaction, such provision shall be
        construed or deemed amended to the extent necessary to conform to the applicable
        requirements of Rule 16b-3 so that such Participant shall avoid liability
        under
        Section 16(b).

       

      ARTICLE
        VIII

      WITHHOLDING
        FOR TAXES

       

      Any
        issuance of Common Stock pursuant to the exercise of an Option or in payment
        of
        any other Award under the Plan shall not be made until appropriate arrangements
        satisfactory to the Company have been made for the payment of any tax amounts
        (federal, state, local or other) that may be required to be withheld or paid
        by
        the Company with respect thereto at the minimum statutory rate. Such
        arrangements may, at the discretion of the Board or the Committee, include
        allowing the person to tender to the Company shares of Common Stock owned
        by the
        person if such tendered shares of Common Stock have been held by such person
        for
        at least six months, or to request the Company to withhold shares of Common
        Stock being acquired pursuant to the Award, whether through the exercise
        of an
        Option or as a distribution pursuant to the Award, which have an aggregate
        FMV
        Per Share as of the date of such withholding that is not greater than the
        sum of
        all tax amounts to be withheld with respect thereto, together with payment
        of
        any remaining portion of such tax amounts in cash or by certified check payable
        and acceptable to the Company. Notwithstanding
        the foregoing, if on the date of an event giving rise to a tax withholding
        obligation on the part of the Company the person is an officer or individual
        subject to Rule 16b-3 under the Exchange Act, such person may direct that
        such
        tax withholding be effectuated by the Company withholding the necessary number
        of shares of Common Stock (at the tax rate required by the Code) from such
        Award
        payment or exercise.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      ARTICLE
        IX

      MISCELLANEOUS

       

      9.1 No
        Rights to Awards or Uniformity Among Awards.
        No
        Participant or other person shall have any claim to be granted any Award;
        there
        is no obligation for uniformity of treatment of Participants, or holders
        or
        beneficiaries of Awards; and the terms and conditions of Awards need not
        be the
        same with respect to each recipient.

       

      9.2 Conflicts
        with Plan.
        In the
        event of any inconsistency or conflict between the terms of the Plan and
        an
        Award, the terms of the Plan shall govern.

       

      9.3 No
        Right to Employment.
        The
        grant of an Award shall not be construed as giving a Participant the right
        to be
        retained in the employ of the Company or any Affiliate. Further, the Company
        or
        any Affiliate may at any time dismiss a Participant from employment, free
        from
        any liability or any claim under the Plan, unless otherwise expressly provided
        in the Plan or in any Award.

       

      9.4 Governing
        Law.
        The
        validity, construction and effect of the Plan and any rules and regulations
        relating to the Plan shall be determined in accordance with applicable federal
        law and the laws of the State of Delaware, without regard to any principles
        of
        conflicts of law.

       

      9.5 Gender,
        Tense and Headings.
        Whenever the context requires such, words of the masculine gender used herein
        shall include the feminine and neuter, and words used in the singular shall
        include the plural. Section headings as used herein are inserted solely for
        convenience and reference and constitute no part of the Plan.

       

      9.6 Severability.
        If any
        provision of the Plan or any Award is or becomes or is deemed to be invalid,
        illegal or unenforceable in any jurisdiction or as to any Participant or
        Award,
        or would disqualify the Plan or any Award under any law deemed applicable
        by the
        Board or the Committee, such provision shall be construed or deemed amended
        as
        necessary to conform to the applicable laws, or if it cannot be construed
        or
        deemed amended without, in the determination of the Board or the Committee,
        materially altering the intent of the Plan or the Award, such provision shall
        be
        stricken as to such jurisdiction, Participant or Award, and the remainder
        of the
        Plan and any such Award shall remain in full force and effect.

       

      9.7 Other
        Laws.
        The
        Board or the Committee may refuse to issue or transfer any shares or other
        consideration under an Award if, acting in its sole discretion, it determines
        that the issuance or transfer of such shares or such other consideration
        might
        violate any applicable law.

       

      9.8 Funding.
        Except
        as provided under Article
        IV
        of the
        Plan, no provision of the Plan shall require or permit the Company, for the
        purpose of satisfying any obligations under the Plan, to purchase assets
        or
        place any assets in a trust or other entity to which contributions are made
        or
        otherwise to segregate any assets, nor shall the Company maintain separate
        bank
        accounts, books, records or other evidence of the existence of a segregated
        or
        separately maintained or administered fund for such purposes. Participants
        shall
        have no rights under the Plan other than as unsecured general creditors of
        the
        Company, except that insofar as they may have become entitled to payment
        of
        additional compensation by performance of services, they shall have the same
        rights as other Employees, Service Providers or Non-Employee Directors under
        general law.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      9.9 No
        Guarantee of Tax Consequences.
        The
        Participant shall be solely responsible for and liable for any tax consequences
        (including but not limited to any interest or penalties) as a result of
        participation in the Plan. Neither the Board, nor the Company nor the Committee
        makes any commitment or guarantee that any federal, state or local tax treatment
        will apply or be available to any person participating or eligible to
        participate hereunder and assumes no liability whatsoever for the tax
        consequences to the Participants.

       

      9.10 Stockholder
        Agreements.
        The
        Board of the Committee may, from time to time, condition the grant, exercise
        or
        payment of any Award upon such Participant entering into a stockholders’
agreement, voting agreement, repurchase agreement or lockup or market standoff
        agreement in such form or forms as approved from time to time by the
        Board.

       

      9.11 Specified
        Employee under Section 409A of the Code.
        Subject
        to any other restrictions or limitations contained herein, in the event that
        a
“specified employee” (as defined under Section 409A of the Code) becomes
        entitled to a payment under the Plan that is subject to Section 409A of the
        Code on account of a “separation from service” (as defined under
        Section 409A of the Code), such payment shall not occur until the date that
        is six months plus one day from the date of such “separation from service.” Any
        amount that is otherwise payable within the 6-month period described herein
        will
        be aggregated and paid in a lump sum amount with interest at the prime rate
        as
        reported in The
        Wall Street Journal.

       

      9.12 No
        Additional Deferral Features.
        No
        Award shall contain or reflect, or be amended or affected or supplemented
        by any
        other agreement to contain or to be part of, a “deferral feature” or an
“additional deferral feature” within the meaning and usage of those terms under
        Section 409A of the Code and the Treasury Regulations and other administrative
        guidance thereunder.

       

      
        
          [END
            OF 2008 EQUITY INCENTIVE PLAN]

          
            
              
              

            

            
              21Unassociated Document

    FORM
      OF

     

    ADVANCE
      NANOTECH, INC.

    EQUITY
      INCENTIVE AGREEMENT

    (Fully
      Vested Option Grant)

     

    Advance
      Nanotech, Inc. (the “Company”) has adopted the Advance Nanotech, Inc. 2008
      Equity Incentive Plan (the “Plan”) under which the Company can grant options to
      purchase shares of the Company’s Common Stock (the “Common Stock”). We are
      pleased to inform you that our Board of Directors (the “Board”) has decided to
      grant you an option under the Plan (your “Option”).

     

    Your
      Option shall be fully vested as of the Date of Grant. Your Option will be
      governed by the Plan, the attached Standard Terms and Conditions (the “Terms”)
      and the following specific provisions (which are subject to adjustment under
      the
      Plan and the Terms):

     

    The
“Date
      of Grant” for your Option is:     .

     

    The
      “Expiration Date” of your Option is:     .

     

    The
      “Number of Shares” covered by your Option is:   .

     

    The
      “Exercise Price” per share for your Option is:    .

     

    Your
      Option is not intended to qualify as an “incentive stock option” under Section
      422 of the Internal Revenue Code.

     

    Your
      Option shall terminate:

    □
      as
      provided by the Terms; or

    □
      upon the
      Expiration Date

    

    Please
      review the Plan and the Terms carefully, as they control your rights under
      your
      Option. Then sign one copy of this letter and return it to Liza Mullins at
      the
      Company’s New York office. If you have any questions, please contact Liza
      Mullins at (212) 583-0080.

     

    Dated: ____________,
      2008.

    
      
        	 	 	 	 
	 	 	 	 
	
                PARTICIPANT

              	 	
                ADVANCE
                  NANOTECH, INC.

              
	 	 	 	 
	 	 	 	 
	 	 	_________________________
	
                Print
                  Name: _________________________

              	 	
                Print
                  Name:

              	_________________________
	 	 	
                Title:

              	_________________________
	
                Address:
                  _________________________

              	 	
                Address:  

              	
                600
                  Lexington Avenue, 29th Floor

              
	 	 	
                    

              	
                New
                  York, NY 10022

              

      

    

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    STANDARD
      TERMS AND CONDITIONS

     

    These
      Standard Terms and Conditions are intended to govern that Option. All
      capitalized terms not specifically defined in these Standard Terms and
      Conditions have the meanings set forth in the Company’s 2008 Equity Incentive
      Plan.

     

    1. Option.
      You may
      exercise the Option to buy all or any part of any Number of Shares of Common
      Stock that are then exercisable at the Exercise Price per share until the
      Expiration Date.

     

    2. Manner
      of Exercise.
      This
      Option may be exercised only (i) during your lifetime, by you; (ii) by your
      spouse if your spouse obtained the Option pursuant to a qualified domestic
      relations order as defined by the Code or Title I of ERISA, or the rules
      thereunder (“Qualified Domestic Relations Order”); and (iii) after your death,
      by your transferees by will or the laws of descent or distribution. To exercise
      this Option, you must provide the Company with (a) a written notice of exercise,
      specifying the number of shares to be purchased and (b) consideration as
      permitted under the Plan, valued at fair market value. This Option may not
      be
      exercised for a fraction of a share and no partial exercise of this Option
      may
      be for less than (a) one hundred (100) shares or (b) the total number of shares
      then eligible for exercise, if less than one hundred (100) shares.

     

    3. Withholding
      of Taxes.
      Upon
      the exercise of this Option, the Company shall require the person entitled
      to
      exercise it to pay the Company the amount of any taxes that the Company is
      required to withhold with respect to the exercise.

     

    4. Fair
      Market Value of Common Stock.
      The
      fair market value of a share of Common Stock shall be determined for purposes
      of
      Sections 2 and 8 of this Agreement by reference to the closing price on the
      principal stock exchange on which such shares are then listed or, if the shares
      are not then listed on a stock exchange, by reference to the closing price
      (if
      approved for quotation on the NASDAQ National Market) or the highest reported
      bid price (if other over-the-counter issue) of a share as supplied by the
      National Association of Securities Dealers, Inc. through NASDAQ (or its
      successor in function), in each case as reported by The
      Wall Street Journal,
      for the
      applicable date (or if there is no trading in the Common Stock on such date,
      on
      the next preceding date on which there was trading), or, in the absence of
      any
      established market for the Common Stock, the Fair Market Value shall be
      determined in good faith by the Committee.

     

    5. Termination
      of Service; Death or Disability.
      Unless
      the applicable stock option agreement provides otherwise, each Option shall
      generally terminate upon the first to occur of the events listed
      below:

     

    a. The
      Expiration Date;

     

    b. The
      expiration of three months from the date of the Participant’s termination of
      employment or other association with the Company for a reason other than the
      Participant’s death, Disability or Retirement;

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    c. The
      expiration of twelve months from the date of the Participant’s termination of
      employment by reason of death, Disability or Retirement. 

     

    6. Committee
      Discretion.
      The
      Committee shall provide, in the terms of each individual Option, when such
      Option expires and becomes unexercisable. After the Option is granted, the
      Committee, in its sole discretion may extend the maximum term of such Option
      or
      accelerate the exercisability of the Option.

     

    7. No
      Assignment or Transfer.
      This
      Option and all other rights and privileges granted hereby shall not be
      transferred, either voluntarily or by operation of law except (i) by will or
      the
      laws of descent and distribution or (ii) pursuant to a Qualified Domestic
      Relations Order to the extent permitted by the Committee. If there is any other
      attempt to transfer this Option or any other right or privilege granted hereby,
      this Option and all rights and privileges granted hereby shall immediately
      become null and void and be of no further force or effect.

     

    8. Adjustments.
      If the
      outstanding shares of Common Stock of the Company (or any other class of shares
      or securities which shall have become issuable upon the exercise of this Option
      pursuant to this sentence) are increased or decreased or changed into or
      exchanged for a different number or kind of shares or securities of the Company
      through reorganization, recapitalization, reclassification, stock dividend,
      stock split, reverse stock split or other similar transaction, an appropriate
      and proportionate adjustment shall be made in the Number of Shares, without
      change in the aggregate purchase price applicable to the unexercised portion
      of
      this Option, but with a corresponding adjustment in the price for each share
      or
      other unit of any security covered by this Option. Adjustments under this
      Section 8 will be made by the Board, and its determination as to what
      adjustments to make will be final, binding and conclusive. No fractional shares
      of stock shall be issued under this Option on any such adjustment.

     

    9. Participation
      in Other Company Plans.
      The
      grant of this Option will not affect any right you might otherwise have to
      participate in and receive benefits under the then current provisions of any
      pension, insurance, or profit sharing program of the Company or of any
      subsidiary of the Company.

     

    10. Not
      an Employment or Service Contract.
      Nothing
      in this Option is to be construed as an agreement, express or implied, by the
      Company or any of its subsidiaries to employ you or contract for your services,
      nor will it restrict the Company’s or such subsidiary’s right to discharge you
      or cease contracting for your services or to modify, extend or otherwise affect
      in any manner whatsoever, the terms of any employment agreement or contract
      for
      services which may exist between you and the Company or any of its
      subsidiaries.

     

    11. No
      Rights as a Stockholder Until Issuance of Stock
      Certificate.
      Neither
      you nor any other person legally entitled to exercise this Option will be
      entitled to any of the rights or privileges of a stockholder of the Company
      with
      respect to any shares issuable upon any exercise of this Option unless and
      until
      a certificate or certificates representing the shares shall have been actually
      issued and delivered.

     

    12. Controlling
      Terms.
      In the
      event there is a discrepancy between the Plan and this Agreement, the Plan’s
      provisions shall be controlling. The Participant acknowledges receipt of a
      copy
      of the Plan, a copy of which is annexed hereto, and represents that he or she
      is
      familiar with the terms and provisions thereof.

     

    
      
         

      

      
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    13. Governing
      Law.
      The
      interpretation, performance and enforcement of this Agreement shall be governed
      by the internal substantive laws of the State of Delaware, without regard to
      the
      conflict of laws provisions of that or any other State. The Option can only
      be
      amended in a writing executed by a duly authorized officer of the
      Company.

     

    
      
         

      

      
        4

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