Document:

Unassociated Document

    Exhibit 10.22

    

    

    AMENDMENT
TO EXECUTIVE EMPLOYMENT AGREEMENT

    

    This
Executive Employment Agreement (the “Agreement”) is deemed effective as of
January 1, 2009, by and between AltiGen Communications, Inc., existing under the
laws of the State of Delaware with its principal office located at 4555 Cushing
Parkway, Fremont, CA 94538 (the “Company”), and Philip McDermott
(“Executive”).

    

    NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein, the Company and Executive hereto, each intending to be legally bound
hereby, agree as follows:

    

    SECTION
ONE

    

    AT-WILL
EMPLOYMENT

    

    Executive
and the Company agree that Executive’s employment with the Company constitutes
“at-will” employment.  Executive and the Company acknowledge that this
employment relationship may be terminated at any time, upon written notice to
the other party, with or without good cause or for any or no cause, at the
option either of the Company or Executive.  However, as described in
this Agreement, Executive may be entitled to severance benefits depending upon
the circumstances of Executive’s termination of employment.

    
      
         

      

      
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    SECTION
TWO

    

    DUTIES OF
EXECUTIVE

    

    A.           As
of January 1, 2009 (the “Effective Date”), Executive will continue to serve as
the Company’s Chief Financial Officer, reporting to the Chief Executive Officer
(CEO).  Executive will perform those duties which are normal and
customary in the industry for like positions, including, but not limited to,
those duties identified in the Chief Financial Officer Job
Description.  Executive will be responsible to perform other such
duties consistent with Executive’s position, as reasonably assigned by the
CEO.  The period Executive is employed by the Company under this
Agreement is referred to herein as the “Employment Term”.

    

    B.           During
the Employment Term, Executive will devote Executive’s full business efforts and
time to the Company and will use good faith efforts to discharge Executive’s
obligations under this Agreement to the best of Executive’s ability and in
accordance with the Company’s policies.  For the duration of the
Employment Term, Executive agrees not to actively engage in any other
employment, occupation, or consulting activity for any direct or indirect
remuneration without the prior approval of the CEO (which approval will not be
unreasonably withheld); provided, however, that Executive may, without the
approval of the CEO, serve in any capacity with any civic, educational, or
charitable organization, provided such services do not interfere with
Executive’s obligations to Company.

    

    C.           Executive
hereby represents and warrants to the Company that Executive is not party to any
contract, understanding, agreement or policy, written or otherwise, that would
be breached by Executive’s entering into, or performing services under, this
Agreement.  Executive further represents that he has disclosed to the
Company in writing all threatened, pending, or actual claims that are unresolved
and still outstanding as of the Effective Date, in each case, against Executive
of which he is aware, if any, as a result of his employment with his current
employer (or any other previous employer) or his membership on any boards of
directors.

    

    SECTION
THREE

    

    EXECUTIVE
COMPENSATION

    

    A.           As
compensation for services that Executive will provide to the Company under the
terms of this Agreement, Executive shall initially receive from the Company base
compensation in the amount of Two Hundred Thousand Dollars ($200,000) per annum
(the “Base Salary”).  The Base Salary will be paid in accordance with
the Company’s normal payroll practices and be subject to the usual, required
withholdings.

    

    B.           In
addition to the Base Salary, Executive is also eligible to receive incentive
compensation, including bonuses, commission and stock options, based on factors
including, but not limited to, Executive’s performance and the Company’s overall
performance.  The Base Salary and all incentive compensation are
referred to herein as “Total Compensation.”  Any agreement for
additional incentive compensation must be set forth in a written agreement
executed by both the Company and Executive.

    

    C.           The
Company shall review Executive’s compensation annually, to determine whether a
change in Base Salary and/or incentive compensation is warranted as a result of
Executive’s and the Company’s performance.

    
      
         

      

      
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    D.           Executive
shall be eligible to participate in all Executive benefit plans now existing or
hereafter established by the Company that are applicable to other executive
officers of the Company according to their terms, including but not limited to,
any bonus and incentive plan, stock option plan, hospital, surgical or medical
benefit plan, dental plan, group health, life or disability insurance plan,
pension or profit sharing plan, and any other benefit plan or arrangement made
available from time to time to executive officers of the Company.

    

    E.           Executive
will be entitled to receive paid annual vacation in accordance with Company
policy for other senior executive officers.  In no event will
Executive receive less than three (3) weeks of paid vacation time per calendar
year.

    

    F.           The
Company will reimburse Executive for reasonable travel, entertainment and other
expenses incurred by Executive in the furtherance of the performance of
Executive’s duties hereunder, in accordance with the Company’s expense
reimbursement policy as in effect from time to time.

    

    G.           In
the event of a Change of Control of the Company that occurs during the
Employment Term, all of Executive’s outstanding stock options immediately will
vest and become exercisable.

    

    SECTION
FOUR

    

    NON-DISCLOSURE
OF CONFIDENTIAL INFORMATION

    

    As a condition of employment, Executive agrees to execute the
Company’s standard form of At-Will Employment, Confidential Information,
Invention Assignment and Arbitration Agreement, attached hereto as Exhibit A (the
“Confidentiality Agreement”).

    

    SECTION
FIVE

    

    TERMINATION

    

    In the
event Executive’s employment with the Company terminates for any reason,
Executive will be entitled to any (a) unpaid Total Compensation accrued up
to the effective date of termination; (b)  pay for accrued but unused
vacation; (c) benefits or compensation as provided under the terms of any
employee benefit and compensation agreements or plans applicable to Executive;
(d) unreimbursed business expenses required to be reimbursed to Executive,
and (e) rights to indemnification Executive may have under the Company’s
Certificate of Incorporation, Bylaws, the Agreement, or separate indemnification
agreement, as applicable.  In addition, if the termination is by the
Company without Cause or Executive resigns for Good Reason, Executive will be
entitled to the amounts and benefits specified in Section 6.

    
      
         

      

      
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    SECTION
SIX

    

    SEVERANCE

    

    A.           Termination Without Cause or
Resignation for Good Reason.  If Executive’s employment is
terminated by the Company without Cause or if Executive resigns for Good Reason,
then, provided that Executive signs and does not revoke the Termination
Certification attached as Exhibit B and a Separation Agreement and Release of
Claims in a form acceptable to the Company, and provided that such Separation
Agreement and Release of Claims becomes effective and irrevocable no later than
sixty (60) days following the termination date or such earlier date required by
the Separation Agreement and Release of Claims (such deadline, the “Release
Deadline”), then subject to Section 8(B), Executive will receive: (i) payment of
Executive’s Total Compensation (including any approved bonus payments)
for six (6) months, less applicable tax withholdings, such amount to
be  paid out in a single lump sum within ten (10) days of the date the
Separation Agreement and Release of Claims becomes effective and irrevocable;
(ii) full accelerated vesting with respect to the shares subject to Executive’s
then outstanding, unvested equity awards and (iii) reimbursement for premiums
paid for continued health benefits for Executive (and any eligible dependents)
under the Company’s health plans until the earlier of (x) six (6) months
following Executive’s termination, payable when such premiums are due (provided
Executive validly elects to continue coverage under COBRA within the time period
prescribed pursuant to COBRA), or (y)  the date upon which Executive and
Executive’s eligible dependents become covered under similar plans.

    

    B.           Release.  In
no event will severance payments or benefits be paid or provided until the
Separation Agreement and Release of Claims actually becomes effective and
irrevocable.  If the Separation Agreement and Release of Claims does
not become effective by the Release Deadline, Executive will forfeit any rights
to severance or benefits under this Agreement.  It is expected that
all severance under this Agreement will be exempt from Section 409A (as defined
below) as a payment that satisfies the requirements of the “short-term deferral”
rule set forth in Section 1.409A-1(b)(4) of the Treasury
Regulations.  However, if this is not the case, then any severance
payments or benefits under this Agreement that would be considered Deferred
Compensation Separation Benefits (as defined herein) will be paid on the
sixtieth (60th) day
following Executive’s separation from service, or, if later, such time as
required by the provisions of Section 409A (see Section 8(B)
below).  If Executive should die
before all of the severance amounts to which Executive is entitled have been paid, such unpaid
amounts will be paid in a lump-sum payment promptly following such event to
Executive’s designated beneficiary, if
living, or otherwise to the personal representative of Executive’s estate.

    

    C.           Voluntary Termination
Without Good Reason or Termination for Cause.  If Executive’s
employment is terminated voluntarily, including due to death or Disability,
without Good Reason or is terminated for Cause by the Company, then, except as
provided in Section 5, (i) all further vesting of Executive’s outstanding
equity awards will terminate immediately and (ii) all payments of
compensation by the Company to Executive hereunder will terminate immediately,
subject to the terms of this agreement.

    

    
      
         

      

      
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    SECTION
SEVEN

    

    DEFINITIONS

    

    A.           Cause.  For
purposes of this Agreement, “Cause” is defined as (i) an act of fraud made by
Executive related to Executive’s responsibilities as an employee; (ii)
Executive’s material misconduct with regard to the performance of Executive’s
employment duties; provided
however, that Executive shall not be required to materially increase
Executive’s normal business travel in accordance with Executive’s employment
duties; (iii) Executive’s material violation of any Company employment policy,
or (iv) Executive’s breach of any confidentiality or proprietary information
agreement with the Company.

    

    B.           Good
Reason.  For purposes of this Agreement, “Good Reason” means
Executive’s termination of employment within thirty (30) days following the
expiration of any cure period (as discussed below) following the occurrence of
any of the following, without Executive’s express written consent: (i) a
material reduction of Executive’s authority, duties or responsibilities,
relative to Executive’s authority, duties or responsibilities in effect
immediately prior to such reduction; (ii) a material reduction in Executive’s
base compensation; or (iii) a material change in the geographic location of
Executive’s principal place of employment; provided that a change in either the
geographic location of the Company or Executive’s principal place of employment
(if other than the Company)of less than fifty (50) miles shall not be deemed to
be a “material change” for purposes of this
Agreement.  Notwithstanding the foregoing, Executive will not be
deemed to have resigned for “Good Reason” for purposes of this Agreement unless
(a) Executive provides written notice specifically identifying the acts or
omissions constituting the grounds for Good Reason to the Company of the
condition or event that constitutes Good Reason within thirty (30) days of its
occurrence and (b) the Company has been given a period of no less than thirty
(30) days to remedy the event or condition that constitutes Good Reason and has
failed to do so.

    

    C.           Change of
Control.  For purposes of this Agreement, “Change of Control”
will mean the occurrence of any of the following events: (i) the consummation by
the Company of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
(ii) the approval by the stockholders of the Company, or if stockholder approval
is not required, approval by the Company’s Board of Directors (the “Board”), of
a plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets;
(iii) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than 50% of the total voting power
represented by the Company’s then outstanding voting securities; or (iv) a
change in the composition of the Board within a one (1) year period, as a result
of which fewer than a majority of the directors are Incumbent
Directors.  “Incumbent Directors” will mean directors who either (A)
are directors of the Company as of the date hereof, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of those directors whose election or nomination was not in connection
with any transactions described in subsections (i), (ii), or (iii) or in
connection with an actual or threatened proxy contest relating to the election
of directors of the Company.  Notwithstanding the foregoing provisions
of this definition, a transaction will not be deemed a Change of Control unless
the transaction qualifies as a change of control event within the meaning of
Section 409A.

    
      
         

      

      
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    D.           Disability.  For
purposes of this Agreement, “Disability” will mean Executive’s absence from his
responsibilities with the Company on a full-time basis for 120 calendar days in
any consecutive twelve (12) months period as a result of Executive’s mental or
physical illness or injury.

    

    E.           Section 409A
Limit.  For purposes of this Agreement, “Section 409A Limit”
will mean the lesser of two (2) times: (i) Executive’s annualized compensation based upon
the annual rate of pay paid to Executive during Executive’s taxable year
preceding Executive’s taxable year of Executive’s termination of employment as
determined under, and with such adjustments as are set forth in, Treasury
Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service
guidance issued with respect thereto; or (ii) the maximum amount that may be
taken into account under a qualified plan pursuant to Section 401(a)(17) of the
Code for the year in which Executive’s employment is terminated.

     

    

    SECTION
EIGHT

    

    A.           Excise Tax
Gross-Up.  In the event that the benefits provided for in this
Agreement constitute “parachute payments” within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended (the “Code”) and will be subject
to the excise tax imposed by Section 4999 of the Code, then Executive will
receive (i) a payment from the Company sufficient to pay such excise tax, and
(ii) an additional payment from the Company sufficient to pay the federal and
state income and employment taxes and additional excise taxes arising from the
payments made to Executive by the Company pursuant to this
sentence.  Unless Executive and the Company agree otherwise in
writing, the determination of Executive’s excise tax liability, if any, and the
amount, if any, required to be paid under this Section 8 will be made in writing
by the independent auditors who are primarily used by the Company immediately
prior to the Change of Control (the “Accountants”).  For purposes of
making the calculations required by this Section 8(A), the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code.  Executive and the Company agree
to furnish such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 8(A).  The
Company will bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 8.  The Company
will pay all amounts required by this Section 8(A) as soon as reasonably
practicable, but in no event later than the end of Executive’s taxable year next
following Executive’s taxable year in which Executive remits the related
taxes.

    
      
         

      

      
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    B.           Code Section
409A.

    

    (i)           Notwithstanding
anything to the contrary in this Agreement, no severance payable to Executive,
if any, pursuant to this Agreement, when considered together with any other
severance payments or separation benefits that are considered deferred
compensation under Section 409A of the Code and the final regulations and any
guidance promulgated thereunder (“Section 409A”) (together, the “Deferred
Compensation Separation Benefits”) shall be payable until Executive has a
“separation from service” within the meaning of Section 409A.

    

    (ii)           Notwithstanding
anything to the contrary in this Agreement, if Executive is a “specified
employee” within the meaning of Section 409A at the time of Executive’s termination of employment (other than
due to death), then the Deferred Compensation Separation Benefits, if any,
otherwise due to Executive on or within the six (6) month period following the
Termination Date will accrue during such six (6) month period and will become
payable in a lump sum payment (less applicable withholding taxes) on the date
six (6) months and one (1) day following the Termination Date.  All
subsequent payments, if any, will be payable in accordance with the payment
schedule applicable to each payment or benefit.  Notwithstanding
anything herein to the contrary, if Executive dies following his termination of
employment but prior to the six (6) month anniversary of the Termination Date,
then any payments delayed in accordance with this paragraph will be payable in a
lump sum (less applicable withholding taxes) to Executive’s estate as soon as
administratively practicable after the date of Executive’s death and all other
Deferred Compensation Separation Benefits will be payable in accordance with the
payment schedule applicable to each payment or benefit.  Each payment
and benefit payable under this Agreement is intended to constitute separate
payments for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations.

    

    (iii)           Any
amount paid under this Agreement that satisfies the requirements of the
“short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury
Regulations shall not constitute Deferred Compensation Separation Benefits for
purposes of clause (i) above.

    

    (iv)           Any
amount paid under this Agreement that qualifies as a payment made as a result of
an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii)
of the Treasury Regulations that do not exceed the Section 409A Limit shall not
constitute Deferred Compensation Separation Benefits for purposes of clause (i)
above.

    

    (v)           This
provision is intended to comply with the requirements of Section 409A so that
none of the severance payments and benefits to be provided hereunder will be
subject to the additional tax imposed under Section 409A, and any ambiguities
herein will be interpreted to so comply.  The Company and Executive
agree to work together in good faith to consider amendments to this Agreement
and to take such reasonable actions which are necessary, appropriate or
desirable to avoid imposition of any additional tax or income recognition prior
to actual payment to Executive under Section 409A.

    

    
      
         

      

      
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    SECTION
NINE

    

    ASSIGNMENT

    

    This
Agreement will be binding upon and inure to the benefit of (a) the heirs,
executors and legal representatives of Executive upon Executive’s death, and
(b) any successor of the Company.  Any such successor of the
Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes.  For this purpose, “successor” means any
person, firm, corporation, or other business entity which at any time, whether
by purchase, merger, or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company.  None of
the rights of Executive to receive any form of compensation payable pursuant to
this Agreement may be assigned or transferred except by will or the laws of
descent and distribution.  Any other attempted assignment, transfer,
conveyance, or other disposition of Executive’s right to compensation or other
benefits will be null and void.

    

    SECTION
TEN

    

    NOTICES

     

    All
notices, requests, demands and other communications called for hereunder will be
in writing and will be deemed given (a) on the date of delivery if
delivered personally; (b) one (1) day after being sent overnight by a
well-established commercial overnight service, or (c) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in
writing:

    

    
      	
              If
      to the Company:    

            	
              Attn: Gilbert
      Hu

              AltiGen
      Communications, Inc

              4555 Cushing Parkway

              Fremont, CA
94538

            

    

                                     

                                    

    
      

      
        	
                  If
      to Executive: 

              	
                Philip McDermott

                4555 Cushing Parkway

                Fremont, CA
94538

              

      

                                       

    

                                                         

                         

    SECTION
ELEVEN

    

    OTHER
PROVISIONS

    

    A.           Governing
Law.  This Agreement will be governed by the laws of the state
of California without regard to its conflict of laws provisions.

    

    B.           Severability.  If
any provision hereof becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable, or void, this Agreement will continue in full
force and effect without said provision.

    

    C.           Waiver of
Breach.  The waiver of a breach of any term or provision of
this Agreement, which must be in writing, will not operate as or be construed to
be a waiver of any other previous or subsequent breach of this
Agreement.

    
      
         

      

      
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    D.           Acknowledgment.  Executive
acknowledges that he has had the opportunity to discuss this matter with and
obtain advice from his private attorney, has had sufficient time to, and has
carefully read and fully understands all the provisions of this Agreement, and
is knowingly and voluntarily entering into this Agreement.

    

    E.           Counterparts.  This
Agreement may be executed in counterparts, and each counterpart will have the
same force and effect as an original and will constitute an effective, binding
agreement on the part of each of the undersigned.

    

    SECTION
TWELVE

    

    ENTIRE
AGREEMENT

    

    

    This
Agreement, together with the Confidentiality Agreement attached as Exhibit A,
represents the entire agreement and understanding between the parties as to the
subject matter herein and supersedes all prior or contemporaneous agreements
whether written or oral, including any prior agreements with the Company or its
agents.  No waiver, alteration, or modification of any of the
provisions of this Agreement will be binding unless in a writing and signed by
duly authorized representatives of the parties hereto.  In entering
into this Agreement, no party has relied on or made any representation,
warranty, inducement, promise, or understanding that is not in this
Agreement.

    

    IN WITNESS WHEREOF each party
to this agreement has caused it to be executed on the date indicated
below.

     

    
      	
              ALTIGEN
      COMMUNICATIONS, INC.:

               

            	 	 	 	 
	
              /s/
      Gilbert Hu

            	 	Date:
      March 6,
      2009 	 
	
              Gilbert
      Hu

            	 	 	 	 
	
              Chairman
      and Chief Executive Officer

            	 	 	
               

            	 

    

     

    
      
        
          
            	
                    EXECUTIVE:

                     

                  	 	 	 	 
	
                    /s/
      Philip McDermott

                  	 	Date:
      March 6,
      2009	 
	
                    Philip
      McDermott

                  	 	 	 	 
	
                    Chief
      Financial Officer

                  	 	 	
                     

                  	 

          

        

      

    

    

     

     

    

     

    

                                                                                  

     

     

    

    

    
      
         

      

      
        Page
9warrant_w10.htm

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,

    AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT ONE OF THE FOLLOWING (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY

    SATISFACTORY
TO THE COMPANY, THAT SUCH
REGISTRATIONS ARE NOT REQUIRED,

    (iii)
RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL

    AUTHORITIES,
OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THIS
WARRANT.

    

    ECOLOGY
COATINGS, INC.

    

    
    

    

    WARRANT
TO PURCHASE 11,500 SHARES

    OF
COMMON STOCK

    

    WARRANT
NO.  W-10

    

    THIS
CERTIFIES THAT, once this warrant becomes effective, for value received, Equity
11, Ltd. and its assigns are entitled to subscribe for and purchase 11,500
shares common stock (as adjusted pursuant to Section 4 hereof, the "SHARES") of the fully paid
and nonassessable common stock, par value $0.001 per share ("COMMON STOCK"), of Ecology
Coatings, Inc., a Nevada corporation (the "COMPANY"), at the price of
$0.75 per share (such price and such other price as shall result, from time to
time, from the adjustments specified in Section 4 hereof is herein referred to
as the "WARRANT
PRICE"), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, (a) the term "DATE OF GRANT" means August
28, 2008, and (b) the term "OTHER WARRANTS" means any
other warrants issued by the
Company in connection with the transaction with respect to which this
Warrant was issued, and any warrant issued upon transfer or partial exercise of
this Warrant. This Warrant shall become effective upon Equity 11, Ltd.’s
acquisition of an additional 30 Convertible Preferred Shares under the
Securities Purchase Agreement bringing its total acquisition of Convertible
Preferred Shares to 2,246.  The term "Warrant" as used herein
shall be deemed to include Other Warrants unless the context clearly requires
otherwise.

    

    1. Term.
The purchase right represented by this Warrant is exercisable, in whole or in
part, at any time and from time to time from the Date of Grant through five (5)
years after the Date of Grant.

    

    2. Method
of Exercise; Payment; Issuance of New Warrant. Subject to Section 1 and 4
hereof, the purchase right represented by this Warrant may be exercised by the
holder hereof, in whole or in part and from time to time, at the election of the
holder hereof, by (a) the surrender of this Warrant (with the notice of exercise
substantially in the form attached hereto as Exhibit A-1 duly completed and
executed) at the principal office of the Company and
by the  payment to the
Company, by certified or bank check, or by wire transfer to an account
designated by the Company
(a "WIRE TRANSFER") of
an amount that is $.75 multiplied by the number of Shares then being purchased,
or (b) if in connection with a registered public offering of the Company's
securities, the surrender of this Warrant (with the notice of exercise form
attached hereto as Exhibit A-2 duly completed and executed) at the principal
office of the Company together with notice of arrangements reasonably satisfactory to
the Company for payment to
the Company either by
certified or bank check or by Wire Transfer from the proceeds of the sale of
shares to be sold by the holder in such public offering of an amount equal to
the then applicable Warrant Price per share multiplied by the number of Shares
then being purchased, or (c) exercise of the "net issuance" right provided
for in Section 10.2 hereof. The person or persons in whose name(s) any
certificate(s) representing the Shares shall be issuable   upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the shares
represented thereby (and such shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, certificates for the shares of stock so purchased shall be
delivered to the holder hereof as soon as practicable and, if requested by the
holder of this Warrant, the
Company shall cause its transfer agent to deliver the certificate
representing Shares issued upon exercise of this Warrant to a broker or other
person (as directed by the holder exercising this Warrant) within the time
period required to settle any trade made by the holder after exercise of this
Warrant.

    

    3. Stock
Fully Paid; Reservation of Shares. All Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance pursuant
to the terms and conditions herein, be fully paid and nonassessable, and free
from all taxes, liens and charges with respect to the issue
thereof.  During the period within which the rights represented by
this Warrant may be exercised, the Company will at all times
have authorized, and reserved for the purpose of the issue upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by this
Warrant.

    

    4.
Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:

    

    (a)
Reclassification or Merger. In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in case of any
merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the Company, or
such successor or purchasing corporation, as the case may be, shall duly execute
and deliver to the holder of this Warrant a new Warrant (in form  and
substance satisfactory to the holder of this Warrant), or the Company shall make
appropriate provision without the issuance of a new Warrant, so that the holder
of this Warrant shall have the right to receive upon exercise of this Warrant,
at a total purchase price not to exceed that payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the shares of Common Stock
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change or merger by a holder of the number of shares of Common
Stock then purchasable under this Warrant. Such new Warrant shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. The provisions of this subparagraph
(a) shall similarly apply to successive reclassifications, changes, mergers and
transfers.

    

    (b)
Subdivision or Combination of Shares. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its
outstanding shares of Common Stock, the Warrant Price shall be proportionately
decreased and the number of Shares issuable hereunder shall
be  proportionately increased in the case of a subdivision or the
Warrant Price shall be proportionately increased and the number of Shares
issuable hereunder shall be proportionately decreased in the case of a
combination.

    

    (c) Stock
Dividends and Other Distributions. If the Company at any time while
this Warrant is outstanding and unexpired shall (i) pay a dividend with respect
to its Common Stock payable in Common Stock, then the Warrant Price shall be
adjusted, from and after the date of determination of stockholders entitled to
receive such dividend or distribution, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of determination by a
fraction (A) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(B) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution; or (ii) make any
other distribution with respect to Common Stock (except any distribution
specifically provided for in Sections 4(a) and 4(b)), then, in each such case,
provision shall be made by
the Company such
that the holder of this Warrant shall receive upon exercise of this Warrant a
proportionate share of any such dividend or distribution as though it were the
holder of the Shares as of the record date fixed for the determination of the
shareholders of the Company entitled to receive
such dividend or distribution.

    

    (d)
Adjustment of Number of Shares. Upon each adjustment in the Warrant Price, the
number of Shares purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately prior to such
adjustment and the denominator of which shall be the Warrant Price immediately
thereafter.

    

    5. Notice
of Adjustments. Except for the circumstances of Section 4(a), whenever the
Warrant Price or the number of Shares purchasable hereunder shall be adjusted
pursuant to Section 4 hereof, the Company shall make a certificate signed by its
chief executive officer, chief financial officer or any vice president setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, and shall cause copies of such certificate to be mailed
(without regard to Section 13 hereof, by first class mail, postage prepaid) to
the holder of this Warrant at such holder's last known address.

     

    6.
Fractional Shares. No fractional shares of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash
payment therefore based on the fair market value of the Common Stock on the date
of exercise as reasonably determined in good faith by the Company's Board of Directors.

    

    7.
Compliance with Securities Act; Disposition of Warrant or Shares of Common
Stock.

    

    (a)
Compliance with Securities Act. The holder of this Warrant, by acceptance
hereof, agrees that this Warrant, and the Shares to be issued upon exercise
hereof are being acquired for investment and that such holder will not offer,
sell or otherwise dispose of this Warrant, or any Shares except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended (the "ACT") or any applicable
state securities laws. Upon exercise of this Warrant, unless the Shares being
acquired are registered under the Act and any applicable state securities laws
or an exemption from such registration is available, the holder hereof shall
confirm in writing that the Shares so purchased are being acquired for
investment and not with a view toward distribution or resale in violation of the
Act and shall confirm such other matters related thereto as may be reasonably
requested by the
Company. This
Warrant and all Shares issued upon exercise of this Warrant (unless registered
under the Act and any applicable state securities laws) shall be stamped or
imprinted with a legend in substantially the following form:

    

    "THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE

    SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO

    SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT ONE OF THE FOLLOWING (i) AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER
EVIDENCE, REASONABLY SATISFACTORY TO THE
COMPANY, THAT
SUCH

    REGISTRATIONS
ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE
GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING

    WITH
THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH THESE

    SECURITIES
WERE ISSUED, DIRECTLY OR INDIRECTLY."

    

    This
legend shall be removed by
the Company, upon
the request of a holder, at such time as the restrictions on the transfer of the
applicable security shall have terminated. In addition, in connection with the
issuance of this Warrant, the holder specifically represents to the Company by acceptance of this
Warrant as follows:

    

    (1) The
holder is aware of the
Company's business
affairs and financial condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant. The holder is
acquiring this Warrant for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any "distribution" thereof in
violation of the Act.

    

    (2) The
holder understands that this Warrant has not been registered under the Act in
reliance upon a specific exemption therefrom, which exemption depends upon,
among other things, the bona fide nature of the holder's investment intent as
expressed herein.

    

    (3) The
holder further understands that this Warrant must be held indefinitely unless
subsequently registered under the Act and qualified under any applicable state
securities laws, or unless exemptions from registration and qualification are
otherwise available. The holder is aware of the provisions of Rule 144,
promulgated under the Act.

    

    (4) The
holder is an "accredited
investor" as such term is defined in Rule 501 of Regulation D promulgated
under the Act.

    

    (b)
Disposition of Warrant or Shares. With respect to any offer, sale or other
disposition of this Warrant or any Shares acquired pursuant to the exercise of
this Warrant prior to registration of such Warrant or Shares, the holder hereof
agrees to give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of such
holder's counsel, or other evidence satisfactory to the Company, to the effect that such offer,
sale or other disposition may be effected without registration or qualification
(under the Act as then in effect or any federal or state securities law then in
effect) of this Warrant or the Shares and indicating whether or not under the
Act certificates for this Warrant or the Shares to be sold or otherwise disposed
of require any restrictive legend as to applicable restrictions on
transferability in order to ensure compliance with such law. Upon receiving such
written notice and reasonably satisfactory opinion or other evidence, the Company, as promptly as
practicable but no later than fifteen (15)days after receipt of the written
notice, shall notify such holder that such holder may sell or otherwise dispose
of this Warrant or such Shares, all in accordance with the terms of the notice
delivered to the
Company. If a
determination has been made pursuant to this Section 7(b) that the opinion of
counsel for the holder or other evidence is not reasonably satisfactory to the
Company,
the Company shall
so notify the holder promptly with details thereof after such determination has
been made. Notwithstanding the foregoing, this Warrant or such Shares may, as to
such federal laws, be offered, sold or otherwise disposed of in accordance with
Rule 144 or 144A under the Act, provided that the Company shall have been
furnished with such information as the Company may reasonably request to provide
a reasonable assurance that the provisions of Rule 144 or 144A have been
satisfied. Each certificate representing this Warrant or the Shares thus
transferred (except a transfer pursuant to Rule 144 or 144A) shall bear a legend
as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the
holder, such legend is not required in order to ensure compliance with such
laws. The Company may issue stop
transfer instructions to its transfer agent in connection with such
restriction.

    

    (c)
Applicability of Restrictions. The restrictive legend described in this Warrant
and the requirements of Section 7(b) above shall apply to any transfer or grant
of a security interest in this Warrant (or the Common Stock obtainable upon
exercise thereof) or any part hereof (i) to a partner of the holder if the
holder is a partnership or to a member of the holder if the holder is a limited
liability company, (ii) to a partnership of which the holder is a partner or a
limited liability company of which the holder is a member, or (iii) to any
affiliate of the holder if the holder is a corporation; provided, however, in
any such transfer, if applicable, the transferee shall on the Company's request agree in writing to
be bound by the terms of this Warrant as if an original holder
hereof.

    

    8. Rights
as Shareholders; Information. No holder of this Warrant, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Common Stock or
any other securities which may at any time be issuable on the exercise hereof
for any purpose, nor shall anything contained herein be construed to confer upon
the holder of this Warrant, as such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to receive notice of meetings, or to receive dividends
or subscription rights or otherwise until this Warrant shall have been exercised
and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein. Notwithstanding the foregoing, the Company will
transmit to the holder of this Warrant such information, documents and reports
as are generally distributed to the holders of any class or series of the
securities of the Company concurrently with
the distribution thereof to the shareholders.

    

    9.
Additional Rights.  The
Company shall
provide the holder of this Warrant with at least twenty (20) days' written
notice prior to the closing thereof of the terms and conditions of any of the
following transactions: (i) the sale, lease, exchange, conveyance or other
disposition of all or substantially all of the Company's property or business,
or (ii) its merger into or consolidation with any other corporation (other than
a wholly-owned subsidiary of the
Company), or (iii) any transaction (including a merger or other
reorganization) or series of related transactions, in which more than 50% of the
voting power of the
Company is disposed of.

    

    10.
Representations and Warranties. The Company represents and warrants to
the holder of this Warrant as follows:

    

    (a) This
Warrant has been duly authorized and executed by the Company and is a valid and
binding obligation of the
Company enforceable
in accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency, moratorium, reorganization and the relief of debtors and
the rules of law or principles at equity governing specific performance,
injunctive relief and other equitable remedies (regardless of whether
enforcement is sought in equity or at law);

    

    (b) The
Shares have been duly authorized and reserved for issuance by the Company and, when issued in
accordance with the terms hereof will be validly issued, fully paid and
non-assessable;

    

    (c) The
execution and delivery of this Warrant are not, and the issuance of the Shares
upon exercise of this Warrant in accordance with the terms hereof will not be,
inconsistent with the
Company's
certificate of incorporation or by-laws, do not and will not contravene
any law, governmental rule or regulation, judgment or order applicable to the Company, and do not and will not
conflict with or contravene any provision of, or constitute a default under, any
material indenture,
mortgage, contract or
other instrument of which the
Company is a party or by which it is bound or require the consent or
approval of, the giving of notice to, the registration or filing with or the
taking of any action in respect of or by, any Federal, state or local government
authority or agency or other person, except for the filing of notices pursuant
to federal and state securities laws, which filings will be effected by the time
required thereby; and

    

    (d) There
are no actions, suits, audits, investigations or proceedings pending or, to the
knowledge of the Company,
threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, will have a
material adverse effect on the ability of the Company to perform its obligations
under this Warrant.

    

    11.
Modification and Waiver. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the same is sought.

    

    12.
Notices. Any notice, request, communication or other document required or
permitted to be given or delivered to the holder hereof or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
each such holder at its address as shown on the books of the Company or to the Company at the address indicated
therefore on the signature page of this Warrant.

    

    13.
Binding Effect on Successors. This Warrant shall be binding upon any corporation
succeeding the Company by
merger, consolidation or acquisition of all or substantially all of the Company's assets, and all of the
obligations of the Company
relating to the Shares issuable upon the exercise or conversion of this Warrant
shall survive the exercise, conversion and termination of this Warrant and all
of the covenants and agreements of the Company shall inure to the
benefit of the successors and assigns of the holder hereof.

    

    14. Lost
Warrants or Stock Certificates. The Company covenants to the holder
hereof that, upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such
mutilation upon surrender and cancellation of such Warrant or stock certificate,
the Company will make and deliver a
new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.

    

    15.
Descriptive Headings. The descriptive headings of the several paragraphs of this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant. The language in this Warrant shall be construed as to its fair meaning
without regard to which party drafted this Warrant.

    

    16.
Governing Law. This Warrant shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the laws of the State of
Michigan.

    

    17.
Survival of Representations, Warranties and Agreements. All representations and
warranties of the
Company and
the holder hereof contained herein shall survive the Date of Grant, the exercise
or conversion of this Warrant (or any part hereof) or the termination or
expiration of rights hereunder. All agreements of the Company and the holder
hereof contained herein shall survive indefinitely until, by their respective
terms, they are no longer operative.

    

    18.
Remedies. In case any one or more of the covenants and agreements contained in
this Warrant shall have been breached, the holders hereof (in
the  case of a breach by the Company), or the Company (in the case of a
breach by a holder), may proceed to protect and enforce their or its rights
either by suit  in equity and/or by action at law, including, but not
limited to, an action for damages as a result of any such breach and/or an
action for specific performance of any such covenant or agreement contained in
this Warrant.

    

    19. No
Impairment of Rights. The
Company will not, by amendment of its certificate of incorporation or
through any other means, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights of
the holder of this Warrant against impairment.

    

    20.
Severability. Whenever possible, each provision of this Warrant shall be
interpreted in such a manner as to be valid, legal and enforceable under all
applicable laws and regulations. If, however, any provision of this Warrant
shall be invalid, illegal or unenforceable under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed to be so modified, it shall be invalid, illegal or
unenforceable only to the extent of such invalidity, illegality or limitation on
enforceability without affecting the remaining provisions of this Warrant or the
validity, legality or enforceability of such provision in any other
jurisdiction.

    

    21.
Entire Agreement; Modification. This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.

    

    

    Ecology
Coatings, Inc.

    

    By:
/s/ Robert G.
Crockett

    Robert G. Crockett

    

    Title:  CEO

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
A-1

    

    NOTICE
OF EXERCISE

    

    TO:   ECOLOGY
COATINGS, INC. (THE "COMPANY")

    

    1. The
undersigned hereby:

    

     [ ] elects to purchase _____
shares of Common Stock of the Company pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.

    

    

    2. Please
issue a certificate or certificates representing said shares in the name of the
undersigned or in such other name or names as are specified below:

    

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

    (Name)

    

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

    

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

    (Address)

    

    3. The
undersigned represents that the aforesaid shares are being acquired for the
account of the undersigned for investment and not with a view  to, or
for resale in connection with, the distribution thereof and that the undersigned
has no present intention of distributing or reselling such shares, all except as
in compliance with applicable securities laws.

    

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

    (Signature)

    

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

    (Date)

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

     EXHIBIT
A-2

    

    NOTICE
OF EXERCISE

    

    TO:   ECOLOGY
COATINGS, INC. (THE "COMPANY")

    

    1.
Contingent upon and effective immediately prior to the closing (the "Closing") of the Company's public offering
contemplated by the Registration Statement on Form S_, filed, _____________,
200__, the undersigned hereby:

    

    [ ]
elects to purchase _____ shares of Common Stock of the Company or such lesser
number of shares as may be sold on behalf of the undersigned at the Closing)
pursuant to the terms of the attached Warrant.

    

    2. Please
deliver to the custodian for the selling shareholders a stock certificate
representing such _____________ shares.

    

    3. The
undersigned has instructed the custodian for the selling shareholders to deliver
to the Company $_____ or,
if less, the net proceeds due the undersigned from the sale of shares in the
aforesaid public offering. If such net proceeds are less than the purchase price
for such shares, the undersigned agrees to deliver the difference to the Company prior to the
Closing.

    

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

    (Name)

    

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

    

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

    (Address)

    

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

    (Date)

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