Document:

Unassociated Document

     

    EXECUTIVE
      EMPLOYMENT AGREEMENT

     

    THIS
      EXECUTIVE EMPLOYMENT AGREEMENT
      (the
      "Agreement") is entered into and made effective as of September 1, 2007 (the
      "Effective Date"), by and between Homeland Security Capital Corporation., a
      Delaware corporation, having its principal offices at 1005 North Glebe Road,
      Suite 550, Arlington, Virginia 22201 (the
      "Company"), and C. Thomas McMillen, whose address is 1103 South Carolina Avenue,
      S.E., Washington, D.C.
      20003 (the "Executive").

     

    RECITALS:

    

    WHEREAS,
      the
      Company desires to employ and retain the Executive for the term specified herein
      in order to advance the business and interests of the Company on the terms
      and
      conditions set forth herein; and

     

    WHEREAS,
      the
      Executive desires to provide his services to the Company in such capacities,
      on
      and subject to the terms and conditions hereof; and

     

    WHEREAS,
      the
      Company desires to provide the Executive with certain options to acquire stock
      in the Company in order that the Executive may have the opportunity to
      participate in the growth and performance of the Company, as set forth
      herein.

     

    NOW,
      THEREFORE,
      for and
      in consideration of the foregoing premises, the mutual covenants and agreements
      herein contained, and for other good and valuable consideration, the receipt
      and
      adequacy of which is hereby acknowledged, the parties hereto, intending to
      be
      legally bound, hereby agree as follows:

     

    1. Employment
      and Term.
      Subject
      to the terms and conditions hereof, the Company does hereby employ and agree
      to
      employ the Executive as its President and Chief Executive Officer for and during
      the Employment Term (as defined below), and the Executive does hereby accept
      such employment. The initial term of employment shall commence on September
      1,
      2007 and shall continue for two (2) years thereafter unless earlier terminated
      as herein provided (the "Employment Term"), and thereafter shall be renewed
      for
      additional terms of one (1) year, unless either party provides the other with
      notice, as provided for herein, at least ninety (90) days prior to the date
      the
      Employment Term would otherwise renew, of that party's intention not to so
      renew
      such term.

     

    2. Duties
      of Executive.
      The
      Executive shall, during the Employment Term hereunder, perform the executive
      and
      administrative duties, functions and privileges incumbent with the position
      of
      President and Chief Executive Officer and such other duties as reasonably
      determined by the Board of Directors of the Company (the "Board") from
      time-to-time. The Executive shall report to the Board and if appointed by the
      Board, shall serve as the Chairman of the Board without additional compensation
      therefor. The Executive agrees to serve the Company faithfully, conscientiously
      and to the best of his ability, and to devote at least twenty-five (25) hours
      per week to the business and affairs of the Company (and, if requested by the
      Board, any subsidiary or affiliate of the Company) so as to promote the profit,
      benefit and advantage of the Company and, if applicable, any subsidiaries or
      affiliates of the Company. The Executive agrees to accept the compensation
      to be
      made to him under this Agreement as full and complete compensation for the
      services required to be performed by, and the covenants of, the Executive under
      this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3. Location
      and Travel.
      The
      Executive shall not be required to relocate outside the greater Washington,
      D.C.
      metropolitan area without his consent. The Executive acknowledges, however,
      that
      significant domestic and international travel may be required as part of his
      duties hereunder and the Executive agrees to undertake such travel as may be
      reasonably required by the business of the Company from
      time-to-time.

     

    4. Compensation.

     

    4.1 Base
      Salary.
      The
      Executive shall initially be paid a base salary (the "Base Salary") of Two
      Hundred Thousand Dollars ($200,000) per year, which shall be periodically
      reviewed and increased by the Board, in its sole discretion, during the
      Employment Term. The Base Salary shall be increased by Twenty Thousand Dollars
      ($20,000) or pro rata for every Ten Million Dollars ($10,000,000) or
      pro rata of equity the Company sells during the Employment Term (“New
      Equity”); provided, however, that any equity securities (i) issued to employees
      or consultants as compensation, (ii) issued in any acquisition or merger or
      (iii) purchased by employees, consultants or directors upon the exercise or
      conversion of any Company stock option or other security issued for compensatory
      purposes, shall not be deemed New Equity. All compensation shall be made in
      accordance with the standard payroll practices of the Company.

     

    4.2 Regular
      Benefits.
      The
      Executive shall be entitled to participate in any health insurance, accident
      insurance, hospitalization insurance, life insurance, pension, or any other
      similar plan or benefit provided by the Company to its executives or employees
      generally, including, but not limited to any stock option plan, if and to the
      extent that the Executive is eligible to participate in accordance with the
      provisions of any such insurance, plan or benefit generally (such benefits,
      collectively, the "Regular Benefits").

     

    4.3 Vacation.
      The
      Executive shall be entitled to four (4) weeks paid vacation with such vacation
      to be taken at times mutually agreeable to the Executive and the Company. The
      Executive shall further be entitled to the number of paid holidays, and leaves
      for illness or temporary disability in accordance with the policies of the
      Company for its senior executives.

     

    4.4 Term
      Life Insurance.
      The
      Company shall have the right from time-to-time to purchase, modify or terminate
      insurance policies on the life of the Executive for the benefit of the Company
      in such amount as the Company shall determine in its sole discretion. In
      connection therewith the Executive shall, at such time(s) and at such place(s)
      as the Company may reasonably direct, submit himself to such physical
      examinations and execute and deliver such documents as the Company may deem
      necessary or desirable; provided, however, that the eligibility of the Executive
      for, or the availability of, such insurance shall not be deemed to be a
      condition of continued employment hereunder.

     

    
      
        
        

      

      
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    4.5 Expense
      Reimbursement.
      The
      Company shall reimburse the Executive for all expenses reasonably incurred
      by
      him in connection with the performance of his duties hereunder and the business
      of the Company upon the submission to the Company of appropriate receipts
      therefor, in accordance with the expense reimbursement policy of the
      Company.

     

    4.6 Annual
      Bonus.
      The
      Executive shall be eligible to receive an annual bonus equal to one hundred
      percent (100%) of the Base Salary then in effect based on the achievement of
      performance metrics established by the Board and the Executive on each
      anniversary of the Effective Date during the Employment Term, with the metrics
      for the first twelve months of the Employment Term to be established by the
      Board and the Executive on or before the date which is sixty (60) days from
      the
      date hereof. All such metrics shall be evidenced in a document signed by the
      Board and timely provided to the Executive.

     

    4.7 Signing
      Bonus.
      The
      Company shall pay to the Executive a signing bonus (the "Signing Bonus") in
      the
      amount of Fifty Thousand Dollars ($50,000), with such Signing Bonus to be paid
      on the date on which this Agreement is executed by the last of the Company
      or
      the Executive, provided that the other party has already executed this
      Agreement.

     

    4.8 Options.
      During
      the Employment Term and within five (5) business days from the date, if any,
      the
      Company issues New Equity, the Company shall issue to the Executive options
      to
      acquire an amount of shares of the Company’s common stock, par value $0.001 per
      share, equal to 8% of the additional shares of the Company's common stock
      represented by the New Equity (on an as-converted or as-exercised basis), which
      options shall vest ratably on a quarterly basis over the Employment Term. Except
      as otherwise expressly provided in this Agreement, all terms and conditions
      concerning the granting and exercise of any options awarded to the Executive
      hereunder, including any cashless exercise provisions, shall be governed by
      the
      Company's option plan, as such plan may be amended from time to time. The
      Executive options shall be memorialized by a stock option agreement between
      the
      Company and the Executive.

     

    4.9 Automobile
      Allowance.
      The
      Company shall pay to the Executive (or to an entity he designates) a monthly
      automobile allowance in the amount of One Thousand Dollars
      ($1,000).

     

    4.10 Tax
      Reimbursement.
      The
      Company reimburse the Executive for any additional taxes (the “Tax Reimbursement
      Payment”) he is required to pay as a result of the cancellation of any
      provisions of that certain Promissory Note, dated August 29, 2005, issued
      by the Executive to Cornell Capital Partners, L.P., as amended. Any Tax
      Reimbursement Payment will be “grossed-up” by the Company to cover Executive’s
      anticipated income tax obligations; provided, however, that the amounts to
      be
      received by the Executive pursuant to this Section 4.10 for the Tax
      Reimbursement Payment and any “gross-up” thereof shall not exceed $200,000 in
      the aggregate. For purposes of determining the amount of the “gross-up”, the
      Executive shall be deemed to pay federal, state and/or local income taxes at
      the
      highest applicable marginal rate of income taxation for the calendar year in
      which the Tax Reimbursement Payment is made or is to be made. Any payments
      under
      this Section 4.10 will be included in Executive's IRS Form W-2 for the year
      in
      which payments thereof are made to the Executive.

     

    
      
        
        

      

      
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    5. Termination
      and Severance Arrangements.

     

    5.1 Termination
      by the Company.
      Except
      as set forth in Section 5.3 hereof, the Company may terminate this Agreement
      at
      any time by providing at least thirty (30) days' prior written notice to the
      Executive. In the event that the Company terminates this Agreement (a) other
      than in connection with a Change of Control (as defined in Section 6 hereof),
      and (b) other than for Cause (as defined in Section 5.3 hereof), the Company
      shall, notwithstanding such termination, in consideration for all of the
      undertakings and covenants of the Executive contained herein, continue to pay
      to
      the Executive the Base Salary and the Regular Benefits for the remainder of
      the
      then-current Employment Term. In addition, in the event the Company terminates
      this Agreement as described in the immediately preceding sentence, any and
      all
      options granted to the Executive by the Company shall become automatically
      and
      immediately vested and exercisable. In no event however, shall the continuation
      of such payments during such post-termination period be deemed to be employment
      hereunder for purposes of calculating any bonus due to the Executive or for
      purposes of determining the vesting or exercise period of any stock options
      granted hereunder, or otherwise.

     

    5.2 Termination
      by Executive.
      The
      Executive may terminate his employment at any time for Good Reason and receive
      the payments and benefits specified in Section 5.1 hereof in the same manner
      as
      if the Company had terminated his employment without Cause. For purposes of
      this
      Agreement, "Good Reason" will exist if any one or more of the following occur:
      failure by the Company to honor any of its material obligations under this
      Agreement, including, without limitation, its obligations under Section 4 hereof
      concerning compensation, Section 9 hereof concerning indemnification, and
      Section 11.4 hereof concerning successor obligations.

     

    5.3 Termination
      for Cause.
      Notwithstanding the Employment Term, the Company may terminate the Executive
      for
      Cause upon a resolution duly adopted by the affirmative vote of not less than
      a
      majority of the entire membership of the Board (excluding the Executive, if
      a
      director at such time). In the event that the employment of the Executive is
      terminated by the Company for Cause, no severance or other post-termination
      payment shall be due or payable by the Company to the Executive (except solely
      such Base Salary or other payments as may have been accrued but not yet paid
      prior to such termination). For purposes hereof, "Cause" shall mean: (a) the
      conviction with respect to any felony or misdemeanor involving theft, fraud,
      dishonesty or misrepresentation; (b) any misappropriation, embezzlement or
      conversion of the Company's or any of its subsidiary's or affiliate's property
      by the Executive; (c) willful misconduct by the Executive in respect of the
      material duties or obligations of the Executive under this Agreement; or (d)
      a
      material breach by the Executive of any of his material obligations hereunder,
      after written notice thereof and a reasonable opportunity of thirty (30) days
      to
      cure the same, provided that the same is not caused by the physical disability
      including mental disease or defect of the Executive, in which event Section
      5.4
      hereof shall apply.

     

    5.4 Death
      or Disability.
      In the
      event that the employment of the Executive by the Company is terminated by
      reason of the death of the Executive or by reason of medical or psychiatric
      disability which prevents the Executive from satisfactorily performing a
      material portion of his duties for ninety (90) consecutive calendar days or
      one
      hundred twenty (120) days in any three hundred sixty-five (365) day period (a
      "Disability"), the Company shall, promptly upon such termination, pay the
      Executive an amount equal to six (6) months of his then-current Base Salary,
      in
      a single lump sum.

     

    
      
        
        

      

      
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    6. Proprietary
      Rights.

     

    6.1 Non
      Competition.
      Except
      for (i) the Executive's position as an officer of Fortress International Group
      and its successors, (ii) the Executive's ownership interest in Global Secure
      Corporation, and (iii) the Executive's ownership interest and/or position in
      any
      future special purpose acquisition corporations, the Executive covenants and
      agrees that for so long as he shall be employed by the Company and for a period
      of two (2) years from the date of the termination of such employment for any
      reason (the "Restricted Period") the Executive shall not directly or indirectly,
      own, manage, control, operate invest in or become principal of employee of,
      director of, or consultant to, any business, entity or venture which is
      competitive with the business of the Company as conducted at such time;
      provided, however, that it shall not be a violation of this Agreement for the
      Executive to have beneficial ownership of less than five percent (5%) of the
      outstanding amount of any class of securities of any enterprise (but without
      otherwise participating in the activities of such enterprise) if such securities
      are listed on a national securities exchange or quoted on an inter-dealer
      quotation system.

     

    6.2 Confidentiality.
      The
      Executive recognizes and acknowledges that certain confidential business and
      technical information used by the Employee in connection with his duties
      hereunder that includes, without limitation, certain confidential and
      proprietary information relating to the designing, development, construction
      and
      marketing of computer hardware, is a valuable and unique asset of the Company.
      Executive agrees that he shall at all times maintain the confidentiality of
      the
      proprietary information and trade secrets of the Company, and that he shall
      during the Restricted Period refrain from disclosing any such information to
      the
      disadvantage of the Company.

     

    6.2.1
      During the Restricted Period the Executive shall not, directly or indirectly:
      (a) solicit, in competition with the Company, any person who is a customer
      of
      any business conducted by the Company, or (b) in any manner whatsoever induce,
      or assist others to induce, any supplier of the Company to terminate its
      association with such entity or do anything, directly or indirectly, to
      interfere with the business relationship between the Company, and any of their
      respective current or prospective suppliers.

     

    6.2.2
      During the Restricted Period the Executive shall not, directly or indirectly,
      solicit or induce any employee of the Company to terminate his or her employment
      for any purpose, including without limitation, in order to enter into employment
      with any entity which competes with any business conducted by the
      Company.

     

    6.3 Ownership
      by Company.
      The
      Executive acknowledges and agrees that any of his work product created, produced
      or conceived in connection with his association with the Company shall be deemed
      work for hire and shall be deemed owned exclusively by the Company. The
      Executive agrees to execute and deliver all documents required by the Company
      to
      document or perfect the Company's proprietary rights in and to the Executive's
      work product.

     

    
      
        
        

      

      
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    6.4 Remedies.
      It is
      expressly understood and agreed that the services to be rendered hereunder
      by
      the Executive are special, unique, and of extraordinary character, and in the
      event of the breach by the Executive of any of the terms and conditions of
      this
      Agreement on his part to be performed hereunder, or in the event of the breach
      or threatened breach by the Executive of the terms and provisions of this
      Section 6, then the Company shall be entitled, if it so elects, to institute
      and
      prosecute any proceedings in any court of competent jurisdiction, either in
      law
      or equity, for such relief as it deems appropriate, including without limiting
      the generality of the foregoing, any proceedings, to obtain damages for any
      breach of this Agreement, or to enforce the specific performance thereof by
      the
      Executive.

     

    7. Market
      Standoff Agreement.
      The
      Executive hereby agrees that if so requested by the Company or by any
      representative of any underwriters in connection with any registration of the
      offering of any securities of the Company under the Securities Act, the
      Executive shall not sell or otherwise transfer any securities of the Company
      during the ninety (90) day period following the effective date of a registration
      statement of the Company filed under the Securities Act of 1933, as
      amended.

     

    8. Director's
      and Officer's Liability Insurance.
      To
      protect the Executive from any liability, loss, claims, damages, or costs,
      including legal fees and costs, prior to any public offering of any securities
      of the Company, the Company may purchase and maintain director's and officer's
      liability insurance (the "D&O Insurance") in an amount not less than Two
      Million Dollars ($2,000,000), or in such amount as is later agreed upon by
      the
      Executive and the Company.

     

    9. Indemnification.
      As an
      employee, officer and director of the Company, the Executive shall be
      indemnified against all liabilities, damages, fines, costs and expenses by
      the
      Company in accordance with the indemnification provisions of the Company's
      Certificate of Incorporation as in effect on the date hereof, and otherwise
      to
      the fullest extent to which employees, officers and directors of a corporation
      organized under the laws of the state of incorporation of the Company may be
      indemnified pursuant to the laws of such state, as the same may be amended
      from
      time-to-time (or any subsequent statute of similar tenor and effect), subject
      to
      the terms and conditions of such statute.

     

    10. Independent
      Representation.
      The
      Executive acknowledges that he has had the opportunity to seek independent
      legal
      counsel and tax advice in connection with the execution of this Agreement,
      and
      the Executive represents and warrants to the Company (a) that he has sought
      such
      independent counsel and advice as he has deemed appropriate in connection with
      the execution hereof and the transactions contemplated hereby, and (b) that
      he
      has not relied on any representation of the Company as to tax matters, or as
      to
      the consequences of the execution hereof.

     

    10.1 Neutral
      Construction.
      No
      party may rely on any drafts of this Agreement in any interpretation of the
      Agreement. Each party to this Agreement has reviewed this Agreement and has
      participated in its drafting and, accordingly, no party shall attempt to invoke
      the normal rule of construction to the effect that ambiguities are to be
      resolved against the drafting party in any interpretation of this
      Agreement.

     

    10.2 Attorneys'
      Fees.
      In the
      event that either party hereto commences litigation against the other to enforce
      such party's rights hereunder, the prevailing party shall be entitled to recover
      all costs, expenses and fees, including reasonable attorneys' fees (including
      in-house counsel), paralegals, fees, and legal assistants' fees through all
      appeals.

     

    
      
        
        

      

      
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    11. General.

     

    11.1 Applicable
      Law.
      This
      document shall in all respects be governed by the laws of the State of
      Delaware.

     

    11.2 Successor
      Obligations.
      The
      Company shall require any successor (whether direct or indirect, by purchase,
      merger, consolidation or otherwise) to all or substantially all of the business
      and/or assets of the Company to expressly assume by written agreement and to
      agree to perform this Agreement in the same manner and to the same extent that
      the Company would be required to perform it if no such succession had taken
      place.

     

    11.3 Survival.
      The
      parties hereto agree that the covenants contained in Section 6 hereof shall
      survive any termination of employment by the Executive and any termination
      of
      this Agreement.

     

    11.4 Assignability.
      All of
      the terms and provisions contained herein shall inure to the benefit of and
      shall be binding upon the parties hereto and their respective heirs, personal
      representatives, successors and assigns. The obligations of the Executive
      however, may not be assigned, and the Executive may not, without the Company's
      written consent, assign, transfer, convey, pledge, encumber, hypothecate or
      otherwise dispose of this Agreement or any interest therein. Any such attempted
      assignment or disposition shall be null and void and without effect.
      Notwithstanding anything in this Section 11.4 to the contrary, the Company
      and
      the Executive agree that this Agreement and all of the Company's rights and
      obligations hereunder may be assigned or transferred by the Company to and
      may
      be assumed by and become binding upon and may inure to the benefit of any
      affiliate of or successor to the Company. The term "successor" shall mean,
      with
      respect to the Company or any of its subsidiaries, and any other corporation
      or
      other business entity which, by merger, consolidation, purchase of the assets,
      or otherwise, acquires all or a material part of the assets of the Company,
      including but not limited to HSCC. Any assignment by the Company of its rights
      and obligations hereunder to any affiliate of or successor shall not be
      considered a termination of employment for purposes of this Agreement.

     

    11.5 Notices.
      Any and
      all notices required or desired to be given hereunder by any party shall be
      in
      writing and shall be validly given or made to another party if delivered either
      personally, by telex, facsimile transmission, same-day delivery service,
      overnight expedited delivery service, or if deposited in the United States
      Mail,
      certified or registered, postage prepaid, return receipt requested. If notice
      is
      served personally, notice shall be deemed effective upon receipt. If notice
      is
      served by telex or by facsimile transmission, notice shall be deemed effective
      upon transmission, provided that such notice is confirmed in writing by the
      sender within one (1) day after transmission. If notice is served by same day
      delivery service or overnight expedited delivery service, notice shall be deemed
      effective the day after it is sent, and if notice is given by United States
      mail, notice shall be deemed effective five (5) days after it is sent. In all
      instances, notice shall be sent to the parties at the following
      addresses:

     

    
      
        
        

      

      
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                If
                  to the Company:

              	
                Homeland
                  Security Capital Corporation

              
	 	
                1005
                  North Glebe Road, Suite 550

              
	 	
                Arlington,
                  Virginia 22201

              
	 	
                Fax:
                  (703) 528-7073

              
	 	
                Attention:
                  Board of Directors

              
	 	 
	
                With
                  a copy to:

              	
                Kirkpatrick
                  & Lockhart Preston Gates Ellis, LLP

              
	 	
                200
                  South Biscayne Boulevard, 20th Floor

              
	 	
                Miami,
                  FL 33131

              
	 	
                Fax:
                  (305) 358-7095

              
	 	
                Attention:
                  Clayton Parker, Esq.

              
	 	 
	
                If
                  to the Executive:

              	
                C.
                  Thomas McMillen

              
	 	
                1103
                  South Carolina Avenue, S.E.

              
	 	
                Washington,
                  D.C. 20003

              
	 	
                Fax:
                  (202) 758-3327

              

      

    

     

    Any
      party
      may change its address for the purpose of receiving notices by a written notice
      given to the other party.

    

    11.6 Modifications
      or Amendments.
      No
      amendment, change or modification of this document shall be valid unless in
      writing and signed by all of the parties hereto.

     

    11.7 Waiver.
      No
      reliance upon or waiver of one or more provisions of this Agreement shall
      constitute a waiver of any other provisions hereof.

     

    11.8 Severability.
      If any
      provision of this Agreement as applied to either party or to any circumstances
      shall be adjudged by a court of competent jurisdiction to be void or
      unenforceable, the same shall in no way affect any other provision of this
      Agreement or the validity or enforceability of this Agreement. If any court
      construes any of the provisions to be unreasonable because of the duration
      of
      such provision or the geographic or other scope thereof, such court may reduce
      the duration or restrict the geographic or other scope of such provision and
      enforce such provision as so reduced or restricted.

     

    11.9 Separate
      Counterparts; Signatures Transmitted Via Facsimile Machines.
      This
      document may be executed in one or more separate counterparts, each of which,
      when so executed, shall be deemed to be an original. Such counterparts shall,
      together, constitute and shall be one and the same instrument. This Agreement,
      and the counterparts thereto, may be executed by the parties using their
      respective signatures transmitted via facsimile machines.

     

    11.10 Headings.
      The
      captions appearing at the commencement of the sections hereof are descriptive
      only and are for convenience of reference. Should there be any conflict between
      any such caption and the section at the head of which it appears, the
      substantive provisions of such section and not such caption shall control and
      govern in the construction of this document. 

     

    
      
        
        

      

      
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    11.11 Further
      Assurances.
      Each of
      the parties hereto shall execute and deliver any and all additional papers,
      documents and other assurances, and shall do any and all acts and things
      reasonably necessary in connection with the performance of their obligations
      hereunder and to carry out the intent of the parties hereto.

     

    11.12 Entire
      Agreement.
      This
      Agreement constitutes the entire understanding and agreement of the parties
      with
      respect to the subject matter of this Agreement, and any and all prior
      agreements or representations are hereby terminated and canceled in their
      entirety (including the Executive Employment Agreement, dated August 30, 2005,
      by and between the Company and the Executive).

     

    [SIGNATURE
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    IN
      WITNESS WHEREOF,
      the
      parties hereto have caused this Executive Employment Agreement to be effective
      as of the Effective Date.

     

    
      	 	
              THE
                COMPANY:

            
	 	 
	 	
              HOMELAND
                SECURITY CAPITAL CORPORATION

            
	 	 
	 	
              By:

            	
              /s/ Michael
                T. Brigante

            
	 	
              Name:

            	Michael
              T. Brigante
	 	
              Title:

            	Chief
              Financial Officer
	 	 
	 	
              THE
                EXECUTIVE:

            
	 	 
	 	
              /s/
                C. Thomas McMillen 

            
	 	
              C.
                Thomas McMillen

            

    

    

    
      
        
        

      

      
        10Unassociated Document

     

     

    THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
      AND
      THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO ADVANCE NANOTECH, INC. THAT SUCH REGISTRATION IS NOT
      REQUIRED.

    

    
      	 	
              Right
                to Purchase ____________ shares of Common Stock of Advance Nanotech,
                Inc.
                (subject to adjustment as provided
                herein)

            

    

    

    COMMON
      STOCK PURCHASE WARRANT

     

    
      	No. 2007-A-001	
              Issue
                Date: December ___, 2007

            

    

     

    ADVANCE
      NANOTECH, INC., a corporation organized under the laws of the State of Delaware
      (the “Company”), hereby certifies that, for value received,
      ________________________,
      _____________________________________________________________, or its assigns
      (the “Holder”), is entitled, subject to the terms set forth below, to purchase
      from the Company at any time after the Issue Date until 5:00 p.m., E.S.T on
      the
      fifth anniversary of the Issue Date (the “Expiration Date”), up to ____________
      fully paid and nonassessable shares of Common Stock at a per share purchase
      price of $_____. The afore described purchase price per share, as adjusted
      from
      time to time as herein provided, is referred to herein as the “Purchase Price.”
The number and character of such shares of Common Stock and the Purchase Price
      are subject to adjustment as provided herein. The Company may reduce the
      Purchase Price for all (but not less than all) of the Warrants, temporarily
      or
      permanently. Capitalized terms used and not otherwise defined herein shall
      have
      the meanings set forth in that certain Subscription Agreement (the “Subscription
      Agreement”), dated as of December ___, 2007, entered into by the Company and the
      Holder.

    

    As
      used
      herein the following terms, unless the context otherwise requires, have the
      following respective meanings: 

     

    (a) The
      term
“Company” shall include Advance Nanotech, Inc. and any corporation which shall
      succeed or assume the obligations of Advance Nanotech, Inc. hereunder.

     

    (b) The
      term
“Common Stock” includes (a) the Company's Common Stock, $0.001 par value per
      share, as authorized on the date of the Subscription Agreement, and (b) any
      other securities into which or for which any of the securities described in
      (a)
      may be converted or exchanged pursuant to a plan of recapitalization,
      reorganization, merger, sale of assets or otherwise (including warrants to
      purchase any of the securities described in (a)).

     

    (c) The
      term
“Other Securities” refers to any stock (other than Common Stock) and other
      securities of the Company or any other person (corporate or otherwise) which
      the
      holder of this Warrant at any time shall be entitled to receive, or shall have
      received, on the exercise of this Warrant, in lieu of or in addition to Common
      Stock, or which at any time shall be issuable or shall have been issued in
      exchange for or in replacement of Common Stock or Other Securities pursuant
      to
      Section 5 or otherwise. 

     

    (d) The
      term
“Warrant Shares” shall mean the Common Stock issuable upon exercise of this
      Warrant.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    1. Exercise
      of Warrant.

     

    1.1. Number
      of Shares Issuable upon Exercise.
      From
      and after the Issue Date through and including the Expiration Date, the Holder
      hereof shall be entitled to receive, upon exercise of this Warrant in whole
      in
      accordance with the terms of subsection 1.2 or upon exercise of this Warrant
      in
      part in accordance with subsection 1.3, shares of Common Stock of the Company,
      subject to adjustment as described herein.

     

    1.2. Full
      Exercise.
      This
      Warrant may be exercised in full by the Holder hereof by delivery of an original
      or facsimile copy of the form of subscription attached as Exhibit A hereto
      (the
“Subscription Form”) duly executed by such Holder, with an executed copy thereof
      delivered on the same day to the Company together with payment, in cash, by
      wire
      transfer or by certified or official bank check payable to the order of the
      Company, in the amount obtained by multiplying the number of shares of Common
      Stock for which this Warrant is then exercisable by the Purchase Price then
      in
      effect. The original Warrant is not required to be surrendered to the Company
      until it has been fully exercised. 

     

    1.3. Partial
      Exercise.
      This
      Warrant may be exercised in part (but not for a fractional share) by surrender
      of this Warrant in the manner and at the places provided in subsection 1.2
      except that the amount payable by the Holder on such partial exercise shall
      be
      the amount obtained by multiplying (a) the number of whole shares of Common
      Stock designated by the Holder in the Subscription Form by (b) the Purchase
      Price then in effect. On any such partial exercise provided the Holder has
      surrendered the original Warrant, the Company, at its expense, will forthwith
      issue and deliver to or upon the order of the Holder hereof a new Warrant of
      like tenor, in the name of the Holder hereof or as such Holder (upon payment
      by
      such Holder of any applicable transfer taxes) may request, the whole number
      of
      shares of Common Stock for which such Warrant may still be
      exercised.

     

    1.5. Company
      Acknowledgment.
      The
      Company will, at the time of the exercise of this Warrant, upon the request
      of
      the Holder hereof acknowledge in writing its continuing obligation to afford
      to
      such Holder any rights to which such Holder shall continue to be entitled after
      such exercise in accordance with the provisions of this Warrant. If the Holder
      shall fail to make any such request, such failure shall not affect the
      continuing obligation of the Company to afford to such Holder any such
      rights.

     

    1.6. Trustee
      for Warrant Holders.
      In the
      event that a bank or trust company shall have been appointed as trustee for
      the
      Holder of this Warrant pursuant to Subsection 3.2, such bank or trust company
      shall have all the powers and duties of a warrant agent (as hereinafter
      described) and shall accept, in its own name for the account of the Company
      or
      such successor person as may be entitled thereto, all amounts otherwise payable
      to the Company or such successor, as the case may be, on exercise of this
      Warrant pursuant to this Section 1.

     

    1.7 Delivery
      of
      Stock Certificates, etc. on Exercise.
      The
      Company agrees that the shares of Common Stock purchased upon exercise of this
      Warrant shall be deemed to be issued to the Holder hereof as the record owner
      of
      such shares as of the close of business on the date on which this Warrant shall
      have been surrendered and payment made for such shares as aforesaid. As soon
      as
      practicable after the exercise of this Warrant in full or in part, and in any
      event within four (4) business
      days
      thereafter (“Warrant Share Delivery Date”), the Company at its expense
      (including the payment by it of any applicable issue taxes) will cause to be
      issued in the name of and delivered to the Holder hereof, or as such Holder
      (upon payment by such Holder of any applicable transfer taxes) may direct in
      compliance with applicable securities laws, a certificate or certificates for
      the number of duly and validly issued, fully paid and non-assessable shares
      of
      Common Stock (or Other Securities) to which such Holder shall be entitled on
      such exercise, plus, in lieu of any fractional share to which such Holder would
      otherwise be entitled, one full share of Common Stock, together with any other
      stock or other securities and property (including cash, where applicable) to
      which such Holder is entitled upon such exercise pursuant to Section 1 or
      otherwise. In the event that the Company fails for any reason to effect delivery
      of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke
      all or part of the relevant Warrant exercise by delivery of a written notice
      to
      such effect to the Company provided
      that in
      the case of such a notice the notice shall be delivered by registered mail
      or by
      recognized overnight courier service, whereupon
      the Company and the Holder shall each be restored to their respective positions
      immediately prior to the exercise of the relevant portion of this
      Warrant.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    1.8 Limitation
      on Exercise.
      Notwithstanding the provisions of this Warrant or the Subscription Agreement,
      in
      no event (except (i) as specifically provided in this Warrant as an exception
      to
      this provision, (ii) while there is outstanding a tender offer for any or all
      of
      the shares of the Common Stock, or (iii) at the Holder’s option, on at least
      sixty-five (65) days advance written notice from the Holder) shall the Holder
      be
      entitled to exercise this Warrant, or shall the Company have the obligation
      to
      issue shares upon such exercise of all or any portion of this Warrant to the
      extent that, after such exercise the sum of (1) the number of shares of Common
      Stock beneficially owned by the Holder and its affiliates (other than shares
      of
      Common Stock which may be deemed beneficially owned through the ownership of
      the
      unexercised portion of this Warrant or other rights to purchase Common Stock
      or
      through the ownership of the unconverted portion of the Notes (as defined in
      the
      Subscription Agreement) or other convertible securities), and (2) the number
      of
      shares of Common Stock issuable upon the exercise of this Warrant with respect
      to which the determination of this proviso is being made, would result in
      beneficial ownership by the Holder and its affiliates of more than 4.99% of
      the
      outstanding shares of Common Stock (after taking into account the shares to
      be
      issued to the Holder upon such exercise). For purposes of the proviso to the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
      (the “1934 Act”), except as otherwise provided in clause (1) of such sentence.
      The Holder, by its acceptance of this Warrant, further agrees that if the Holder
      transfers or assigns this Warrant to a party who or which would not be
      considered such an affiliate, such assignment shall be made subject to the
      transferee’s or assignee’s specific agreement to be bound by the provisions of
      this Section 1.8 as if such transferee or assignee were the original Holder
      hereof.

     

    2. Law
      Governing This Warrant.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of New York without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Warrant shall be brought only in the state courts of New
      York in the County of New York or in the federal courts located in the State
      and
      County of New York. Subject to the foregoing, the parties to this Warrant hereby
      irrevocably waive any objection to jurisdiction and venue of any action
      instituted hereunder and shall not assert any defense based on lack of
      jurisdiction or venue or based upon forum
      non conveniens.
      The
      Company and Holder waive trial by jury. The prevailing party shall be entitled
      to recover from the other party its reasonable attorney's fees and costs. In
      the
      event that any provision of this Warrant or any other agreement delivered in
      connection herewith is invalid or unenforceable under any applicable statute
      or
      rule of law, then such provision shall be deemed inoperative to the extent
      that
      it may conflict therewith and shall be deemed modified to conform with such
      statute or rule of law. Any such provision which may prove invalid or
      unenforceable under any law shall not affect the validity or enforceability
      of
      any other provision of any agreement.

     

    3. Adjustment
      for Reorganization, Consolidation, Merger, etc.

     

    3.1. Reorganization,
      Consolidation, Merger, etc.
      In case
      at any time or from time to time, the Company shall (a) effect a reorganization,
      (b) consolidate with or merge into any other person or (c) to the extent not
      covered by Section 3.5, transfer all or substantially all of its properties
      or
      assets to any other person under any plan or arrangement contemplating the
      dissolution of the Company, then, in each such case, as a condition to the
      consummation of such a transaction, proper and adequate provision shall be
      made
      by the Company whereby the Holder of this Warrant, on the exercise hereof as
      provided in Section 1, at any time after the consummation of such
      reorganization, consolidation or merger or the effective date of such
      dissolution, as the case may be, shall receive, in lieu of the Common Stock
      (or
      Other Securities) issuable on such exercise prior to such consummation or such
      effective date, the stock and other securities and property (including cash)
      to
      which such Holder would have been entitled upon such consummation or in
      connection with such dissolution, as the case may be, if such Holder had so
      exercised this Warrant, immediately prior thereto, all subject to further
      adjustment thereafter as provided in this Section 3.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    3.2. Dissolution.
      In the
      event of any dissolution of the Company following the transfer of all or
      substantially all of its properties or assets, the Company, prior to such
      dissolution, shall at its expense deliver or cause to be delivered the stock
      and
      other securities and property (including cash, where applicable) receivable
      by
      the Holder of this Warrant after the effective date of such dissolution pursuant
      to this Section 3 to a bank or trust company (a “Trustee”) having its principal
      office in New York, NY, as trustee for the Holder of this Warrant. 

     

    3.3. Continuation
      of Terms.
      Upon
      any reorganization, consolidation, merger or transfer (and any dissolution
      following any transfer) referred to in this Section 3, this Warrant shall
      continue in full force and effect and the terms hereof shall be applicable
      to
      the Other Securities and property receivable on the exercise of this Warrant
      after the consummation of such reorganization, consolidation or merger or the
      effective date of dissolution following any such transfer, as the case may
      be,
      and shall be binding upon the issuer of any Other Securities, including, in
      the
      case of any such transfer, the person acquiring all or substantially all of
      the
      properties or assets of the Company, whether or not such person shall have
      expressly assumed the terms of this Warrant as provided in Section 4. In the
      event this Warrant does not continue in full force and effect after the
      consummation of the transaction described in this Section 3, then only in such
      event will the Company's securities and property (including cash, where
      applicable) receivable by the Holder of this Warrant be delivered to the Trustee
      as contemplated by Section 3.2.

     

    3.4 Share
      Issuance.
      Until
      the Expiration Date, if the Company shall issue any Common Stock, except for
      the
      Excepted Issuances (as defined in the Subscription Agreement), prior to the
      complete exercise of this Warrant for a consideration less than the Purchase
      Price that would be in effect at the time of such issue, then, and thereafter
      successively upon each such issue, the Purchase Price shall be reduced to such
      other lower price for then outstanding Warrants. For purposes of this
      adjustment, the issuance of any security or debt instrument of the Company
      carrying the right to convert such security or debt instrument into Common
      Stock
      or of any warrant, right or option to purchase Common Stock shall result in
      an
      adjustment to the Purchase Price upon the issuance of the above-described
      security, debt instrument, warrant, right, or option if such issuance is at
      a
      price lower than the Purchase Price in effect upon such issuance and again
      at
      any time upon any subsequent issuances of shares of Common Stock upon exercise
      of such conversion or purchase rights if such issuance is at a price lower
      than
      the Purchase Price in effect upon such issuance. The reduction of the Purchase
      Price described in this Section 3.4 is subject to the provisions of, and in
      addition to the other rights of the Holder described in, the Subscription
      Agreement. The
      number of shares of Common Stock that the Holder of this Warrant shall
      thereafter, on the exercise hereof, be entitled to receive shall be adjusted
      to
      a number determined by multiplying the number of shares of Common Stock that
      would otherwise (but for the provisions of this Section 3.4) be issuable on
      such
      exercise by a fraction of which (a) the numerator is the Purchase Price that
      would otherwise (but for the provisions of this Section 3.4) be in effect,
      and
      (b) the denominator is the Purchase Price in effect on the date of such
      exercise.

     

      3.5 Adjustment
      for Spin Off.
      If, for
      any reason, prior to the exercise of this Warrant in full, the Company spins
      off
      or otherwise divests itself of a part of its business or operations or disposes
      all or substantially all of its assets in a transaction (other than Advance
      Display Technologies plc) (the “Spin Off”) in which the Company does not receive
      compensation for such business, operations or assets, but causes securities
      of
      another entity (the “Spin Off Securities”) to be issued to securityholders of
      the Company, then: 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (a)
      the
      Company shall cause (i) to be reserved Spin Off Securities equal to the number
      thereof which would have been issued to the Holder had all of the Holder’s
      unexercised Warrants outstanding on the record date (the “Record Date”) for
      determining the amount and number of Spin Off Securities to be issued to
      security holders of the Company (the “Outstanding Warrants”) been exercised as
      of the close of business on the Trading Day immediately before the Record Date
      (the “Reserved Spin Off Shares”), and (ii) to be issued to the Holder on the
      exercise of all or any of the Outstanding Warrants, such amount of the Reserved
      Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by (y)
      a
      fraction, of which (I) the numerator is the number of the Outstanding Warrants
      then being exercised, and (II) the denominator is the number of Outstanding
      Warrants; and

     

    (b)
      the
      Purchase Price on the Outstanding Warrants shall be adjusted immediately after
      consummation of the Spin Off by multiplying the Purchase Price by a fraction
      (if, but only if, such fraction is less than 1.0), the numerator of which is
      the
      average per share Market Price of the Common Stock for the five (5) Trading
      Days
      immediately following the fifth Trading Day after the Record Date, and the
      denominator of which is the average per share Market Price of the Common Stock
      for the five (5) Trading Days immediately preceding the Record Date; and such
      adjusted Purchase Price shall be deemed to be the Purchase Price with respect
      to
      the Outstanding Warrants after the Record Date. As used herein, “Market Price”
means (i) the last closing bid price of the Common Stock on whichever national
      securities exchange or trading market (including, without limitation, the Nasdaq
      and the OTC Bulletin Board) is the principal trading market where the Common
      Stock is listed by the Company for trading (the “Principal Market”), as reported
      by Bloomberg, or (ii) if the Principal Market should operate on an extended
      hours basis and does not designate the closing bid price, then the last bid
      price of the Common Stock prior to the commencement of extended trading hours
      on
      the applicable date, but in no event later than 4:30:00 p.m., New York local
      time, as reported by Bloomberg, or (iii) if no last bid price is reported for
      the Common Stock by Bloomberg, the average of the bid prices, on the one hand,
      and the ask prices, on the other hand, of all market makers for such security
      as
      reported in the “pink sheets” by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). The applicable trading market for such calculation,
      whether it is the Principal Market or the “pink sheets”, is hereafter referred
      to as the “Trading Market”. The Company shall make all determinations pursuant
      to this paragraph in good faith. In the absence of any available public
      quotations for the Common Stock, the Board of Directors of the Company shall
      determine in good faith the fair value of the Common Stock, which determination
      shall be set forth in a certificate by the Secretary of the Company. As used
      herein, “Trading Day” means a day on which the principal Trading Market with
      respect to the Common Stock is open for the transaction of
      business.

     

    4. Extraordinary
      Events Regarding Common Stock.
      In the
      event that the Company shall (a) issue additional shares of the Common Stock
      as
      a dividend or other distribution on outstanding Common Stock, (b) subdivide
      its
      outstanding shares of Common Stock, or (c) combine its outstanding shares of
      the
      Common Stock into a smaller number of shares of the Common Stock, then, in
      each
      such event, the Purchase Price shall, simultaneously with the happening of
      such
      event, be adjusted by multiplying the then Purchase Price by a fraction, the
      numerator of which shall be the number of shares of Common Stock outstanding
      immediately prior to such event and the denominator of which shall be the number
      of shares of Common Stock outstanding immediately after such event, and the
      product so obtained shall thereafter be the Purchase Price then in effect.
      The
      Purchase Price, as so adjusted, shall be readjusted in the same manner upon
      the
      happening of any successive event or events described herein in this Section
      4.
      The number of shares of Common Stock that the Holder of this Warrant shall
      thereafter, on the exercise hereof, be entitled to receive shall be adjusted
      to
      a number determined by multiplying the number of shares of Common Stock that
      would otherwise (but for the provisions of this Section 4 be issuable on such
      exercise by a fraction of which (a) the numerator is the Purchase Price that
      would otherwise (but for the provisions of this Section 4) be in effect, and
      (b)
      the denominator is the Purchase Price in effect on the date of such
      exercise.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    5. Certificate
      as to Adjustments.
      In each
      case of any adjustment or readjustment in the shares of Common Stock (or Other
      Securities) issuable on the exercise of this Warrant, the Company at its expense
      will promptly cause its Chief Financial Officer or other appropriate designee
      to
      compute such adjustment or readjustment in accordance with the terms of this
      Warrant and prepare a certificate setting forth such adjustment or readjustment
      and showing in detail the facts upon which such adjustment or readjustment
      is
      based, including a statement of (a) the consideration received or receivable
      by
      the Company for any additional shares of Common Stock (or Other Securities)
      issued or sold or deemed to have been issued or sold, (b) the number of shares
      of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
      and (c) the Purchase Price and the number of shares of Common Stock to be
      received upon exercise of this Warrant, in effect immediately prior to such
      adjustment or readjustment and as adjusted or readjusted as provided in this
      Warrant. The Company will forthwith mail a copy of each such certificate to
      the
      Holder of this Warrant and any Warrant Agent of the Company (appointed pursuant
      to Section 11 hereof).

     

    6. Reservation
      of Stock, etc. Issuable on Exercise of Warrant; Financial
      Statements.
      The
      Company will at all times reserve and keep available, solely for issuance and
      delivery on the exercise of this Warrant, all shares of Common Stock (or Other
      Securities) from time to time issuable on the exercise of this Warrant. This
      Warrant entitles the Holder hereof to receive copies of all financial and other
      information distributed or required to be distributed to the holders of the
      Company's Common Stock. 

     

    7. Assignment;
      Exchange of Warrant.
      Subject
      to compliance with applicable securities laws, this Warrant, and the rights
      evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”); provided, however, that by acceptance of this Warrant, Holder
      agrees that it may not and will not assign any portion of this Warrant to any
      competitor of the Company that is engaged in the business of commercializing
      technology in the industry sectors of displays, homeland security and defense.
      On the surrender for exchange of this Warrant, with the Transferor's endorsement
      in the form of Exhibit B attached hereto (the “Transferor Endorsement Form”) and
      together with an opinion of counsel reasonably satisfactory to the Company
      that
      the transfer of this Warrant will be in compliance with applicable securities
      laws, the Company will issue and deliver to or on the order of the Transferor
      thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
      and/or the transferee(s) specified in such Transferor Endorsement Form (each
      a
“Transferee”), calling in the aggregate on the face or faces thereof for the
      number of shares of Common Stock called for on the face or faces of this Warrant
      so surrendered by the Transferor. 

     

    8. Replacement
      of Warrant.
      On
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant and, in the case of any such loss,
      theft or destruction of this Warrant, on delivery of an indemnity agreement
      or
      security reasonably satisfactory in form and amount to the Company or, in the
      case of any such mutilation, on surrender and cancellation of this Warrant,
      the
      Company at its expense, twice only, will execute and deliver, in lieu thereof,
      a
      new Warrant of like tenor.

     

    9. Registration
      Rights.
      The
      Holder of this Warrant has been granted certain registration rights by the
      Company with respect to securities which may be acquired upon exercise of this
      Warrant but not with respect to this Warrant itself. These registration rights
      are set forth in the Subscription Agreement. The terms of the Subscription
      Agreement are incorporated herein by this reference.

     

    10. RESERVED.
      

     

    11. Warrant
      Agent and Transfer Agent.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (a) The
      Company may, by written notice to the Holder of this Warrant, appoint an agent
      (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other
      Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
      this Warrant pursuant to Section 7, and replacing this Warrant pursuant to
      Section 8, or any of the foregoing, and thereafter any such issuance, exchange
      or replacement, as the case may be, shall be made at such office by such Warrant
      Agent. 

     

    (b) The
      Company covenants and agrees that, so long as any portion of this Warrant
      remains unexercised, the Company will, upon reasonable request from the Holder,
      direct the Company’s transfer agent to provide information to the Holder
      relating to (i) the number of shares of Common Stock reserved for issuance
      upon
      conversion of the Notes and exercise of the Warrants, or (ii) the aggregate
      number of outstanding shares of Common Stock of all stockholders of the Company
      as of a current or other specified date.

     

    12. Transfer
      on the Company's Books.
      Until
      this Warrant is transferred on the books of the Company, the Company may treat
      the registered holder hereof as the absolute owner hereof for all purposes,
      notwithstanding any notice to the contrary. 

     

    13. Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: if to the Company, to: Advance Nanotech, Inc, 600
      Lexington Avenue, 29th
      Floor,
      New York, NY, 10022,
      Attn:
Thomas
      Finn, telecopier: 212-583-0001, with a copy by telecopier only to: Andrews
      Kurth
      LLP, 450 Lexington Avenue, New York, NY, 10017, Attn: Richard Kronthal, Esq.,
      telecopier: 212-813-8133, and (ii) if to the Holder, to the address and
      telecopier number listed on the first paragraph of this Warrant, with a copy
      by
      telecopier only to: Axiom Capital Management, Inc., 780 Third Avenue,
      43rd
      floor,
      New York, NY 10017, Attention: Mark Martino, President.

    

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the Company has executed this Warrant as of the date first
      written above. 

     

    
      	 	 	 
	 	ADVANCE
              NANOTECH,
              INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              

            
	 	
              Name:
                Thomas Finn

              Title:
                Chief Financial Officer

            

    

    
       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

     

    Exhibit
      A

    

    FORM
      OF
      SUBSCRIPTION

    (to
      be
      signed only on exercise of Warrant)

     

    TO:
      ADVANCE NANOTECH, INC.

     

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant
      (No.____), hereby irrevocably elects to purchase:

    

    ___________
      shares of the Common Stock covered by such Warrant.

    

    The
      undersigned herewith makes payment of the full purchase price for such shares
      at
      the price per share provided for in such Warrant, which is $___________. Such
      payment takes the form of $__________ in lawful money of the United
      States.

    

    The
      undersigned requests that the certificates for such shares be issued in the
      name
      of, and delivered to _____________________________________________________
      whose
      address is _____________________________________________________________________________________________________________________________________________________________.

    

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable upon exercise of the within Warrant shall be made
      pursuant to registration of the Common Stock under the Securities Act of 1933,
      as amended (the “Securities Act”), or pursuant to an exemption from registration
      under the Securities Act.

     

    
      
        	Dated:___________________	 	 	 
	 	 	 	(Signature
                must
                conform to name of holder as specified on the face of this
                Warrant)
	
              	 	 	
              
	 	 	 	 
	 	 	 	 
	 	 	 	
                (Address)

              

      

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Exhibit
      B

    

    

    FORM
      OF
      TRANSFEROR ENDORSEMENT

    (To
      be
      signed only on transfer of Warrant)

     

    For
      value
      received, the undersigned hereby sells, assigns, and transfers unto the
      person(s) named below under the heading “Transferees” the right represented by
      the within Warrant to purchase the percentage and number of shares of Common
      Stock of ADVANCE NANOTECH, INC. to which the within Warrant relates specified
      under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
      person Attorney to transfer its respective right on the books of ADVANCE
      NANOTECH, INC. with full power of substitution in the premises.

     

    

    
      	
              Transferees

            	
              Percentage
                Transferred

            	
              Number
                Transferred

            
	 	 	 
	 	 	 
	 	 	 

    

     

     

    
      	Dated:
              ______________, ___________	 	 
	 	 	(Signature must conform to name of holder
              as
              specified on the face of this Warrant)
	 	 	 
	Signed in the presence of:	 	 
	 	 	 
	
              (Name)

            	 	 
	 	 	(address)
	 	 	 
	
              ACCEPTED
                AND AGREED:

            	 	 
	
              [TRANSFEREE]

            	 	 
	 	 	(address)
	 	 	 
	
              (Name)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}]]