Document:

Letter
      of Engagement

    Biometrx,
      Inc.

    March
      17, 2006

    

    

    The
      following sets forth the agreement (this “Agreement”)
      for
      the engagement of Pasadena Capital Partners, LLC (“Pasadena”)
      by
Biometrx,
      Inc.
      (the
“Company”):

    

    
      	
              1.
                Term

            	
              Three months,
                commencing as of the date set forth above, unless earlier terminated
                pursuant to the terms of this Agreement (the “Initial
                Term”),
                and terminable thereafter by either party upon 30 days’ prior written
                notice.

            
	 	 
	
              2.
                Objective

            	
              The
                development and implementation of a proactive marketing program designed
                to (a) increase the awareness of the Company and (b) generate a
                significant increase in liquidity and market capitalization. In addition,
                upon request, Pasadena may agree to advise the Company in business
                development and strategic advisory services. Any such services, however,
                shall be the subject of a separate agreement.

            
	 	 
	
              3.
                The Program

            	
              3.1
                Pasadena will structure and implement a marketing program designed
                to
                create extensive financial market and investor awareness for the
                Company
                to drive long-term shareholder support. The core drivers of the program
                will be to create institutional and retail buying in the Company’s stock
                through a proactive sales and marketing program emphasizing
                technology-driven communications, direct communication with stock
                brokers
                and leveraging the Company’s image to attract additional long term
                investors and to create additional opportunities in M&A and Business
                Development. Given the reality of various markets factors, Pasadena
                can
                give no assurance that the marketing program will result in an increase
                in
                the Company’s stock price, liquidity or market
                capitalization.

               

              3.2
                Pasadena understands that, during any period in which the Company
                is in
                “registration” for a public offering of securities under the Securities
                Act of 1933 and during the distribution of such securities, the Company’s
                investor relations and marketing efforts will be severely limited.
                However, it will be the responsibility of the Company (with the advice
                of
                its securities counsel) to determine, and to inform Pasadena regarding,
                what investor relations and marketing efforts are permissible and
                non-permissible during such periods. Pasadena will follow the direction
                of
                the Company and its securities
                counsel.

            

    

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    
      	
              4.
                Responsibilities

            	
              4.1
                In addition to marketing and financial public relations, Pasadena
                will
                assume the responsibilities of an in-house Investor Relations Officer
                for
                the Company on a full turnkey basis, including the generation of
                corporate
                and shareholder communications, retail and institutional investor
                contact
                and media. Pasadena will work in conjunction with the Company’s
                management, securities counsel, investment bankers and auditors and
                under
                supervision of management. The content may include the
                following:

               

              ·  Campaign
                Development and Execution

              ·  Consultation
                on Press Announcements

              ·  Database
                Development and Management

              ·  Image
                Analysis: recommendations and implementation 

              ·  Messaging:
                institutional and retail

              ·  Online
                presentations: drafting and production responsibilities 

              ·  Email
                messaging: targets: Retail and Institutional/Other databases

              ·  Direct
                Mail: shareholder, media, the Company’s relationship universe

              ·  Public
                Relations

              ·  Capital
                Conferences

               

              4.2
                Pasadena will not publish or publicly release any press release or
                other
                document (each, an “IR
                Document”)
                regarding the Company that has not been approved by the Company.  The
                Company assumes responsibility for the accuracy and completeness
                of all IR
                Documents and the compliance of such IR Documents with applicable
                laws,
                rules and regulations.  The Company agrees that Pasadena has no
                obligation or duty to verify the accuracy or completeness of the
                IR
                Documents.

            
	 	 
	
              5.
                Fees

            	
              Pasadena
                will be paid $6,000 per month for so long as it is
                retained to provide investor relations services.
                The first payment of $6,000 will be due prior to Pasadena beginning
                the
                implementation its IR program on behalf of BMRX. Wiring information
                is set
                forth below. Any
                fees incurred by Pasadena will be reimbursed by the Company at cost.
                Pasadena agrees to make the Company aware of any costs greater than
                $500
                in
                writing prior to incurring them.

            

    

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    
      	
              6.
                Equity Compensation

            	
              6.1
                Solely in consideration for Pasadena’s execution of this Agreement and
                regardless of when or under what circumstances this Agreement is
                terminated, upon execution of this Agreement, the Company will issue,
                and
                deliver to Pasadena (or such other entity designated by Pasadena)
                20,000
                shares of Rule 144 restricted common stock within 5 business days
                of the
                execution of this Agreement (the “Initial
                Shares”).
                BMRX will have the right to extend this contract through March 16,
                2007
                for an additional 60,000 Rule 144 restricted shares, so long as the
                10-day
                moving average bid of the Company’s stock remains above $6.00 prior to the
                extension of this contract. 

               

            

    

    
      As
        used
        herein, references to the Initial Shares shall also mean all shares of the
        Company’s common stock that are issued or issuable to Pasadena (or such other
        entity designated by Pasadena) on account of any stock split, dividend or
        other
        distribution to the Company’s stockholders. Following the required holding
        period for the shares, upon the request of Pasadena, BMRX agrees to provide,
        at
        its own expense, a valid written legal opinion relative to the sale or proposed
        sale of said Shares within ten calendar days of the date of request of Pasadena.
        BMRX further agrees to cooperate with Pasadena in having the Rule 144 legend
        removed from the certificate(s) representing the shares. BMRX acknowledges
        that
        the Shares are issued to Pasadena as compensation for services rendered.
        BMRX
        shall not obstruct Pasadena’s sale of the shares in any way.

       

      6.2
        The
        Company will issue and deliver the Shares in the name of the entity and to
        the
        entity’s address listed at the bottom of this document. At any time during the
        term of this Agreement, the Company shall deliver, at Pasadena’s request, a
        Letter of Tradability from the Company’s legal counsel and an irrevocable
        guarantee from the Company’s CEO.

       

      6.3
        In
        order to allow Pasadena (or such other entity designated by Pasadena) to
        avail
        itself of Rule 144 in order to sell the Shares, the Company shall, at all
        times
        during the term of this Agreement and for a period of one year after the
        termination of this Agreement, ensure that there is adequate current public
        information available regarding the Company as required by Rule
        144(c).

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      6.4
        The
        Company agrees to include the Shares in any Registration Statement filed
        with
        the Securities and Exchange Commission during the term of this Agreement
        or
        during the one year period immediately following the termination of this
        Agreement, as follows:

       

      (A)
        Piggyback
        Rights.
        (i) If
        the Company proposes to register any of its warrants, outstanding common
        stock
        or any other shares of common stock of the Company under the Securities Act
        (other than a registration (A) on Form S-8 or S-4 or any successor or similar
        forms, (B) relating to Common Stock or any other shares of common stock of
        the
        Company issuable upon exercise of employee share options or in connection
        with
        any employee benefit or similar plan of the Company or (C) in connection
        with a
        direct or indirect acquisition by the Company of another entity or any
        transaction with respect to which Rule 145 (or any successor provision) under
        the Securities Act applies), whether or not for sale for its own account,
        it
        will each such time, give prompt written notice to Pasadena at least 20 days
        prior to the anticipated filing date of the registration statement relating
        to
        such registration, which notice shall set forth such Pasadena’s rights under
        this Section 6.4(A) and shall offer Pasadena (and any transferee, designee
        or
        assignee of Pasadena, collectively referred to for purposes of this section
        as
“Pasadena”), the opportunity to include in such registration statement such
        number of the Shares as Pasadena may request (unless the Shares may be sold
        pursuant to Rule 144(k)). Upon the written request of Pasadena made within
        10
        days after the receipt of notice from the Company (which request shall specify
        the number of the Shares intended to be disposed of by Pasadena), the Company
        will use its best efforts to effect the registration under the Securities
        Act of
        all of the Shares that the Company has been so requested to register by
        Pasadena, to the extent requisite to permit the disposition of the Shares
        so to
        be registered; provided, however, that (A) if such registration involves
        an
        underwritten public offering, Pasadena must sell its Shares to any underwriters
        selected by the Company with the consent of Pasadena on the same terms and
        conditions as apply to the Company and (B) if, at any time after giving written
        notice of its intention to register securities, pursuant to this Section
        6 and
        prior to the effective date of the registration statement filed in connection
        with such registration, the Company shall determine for any reason not to
        register the securities covered by the registration statement, the Company
        shall
        give written notice to Pasadena and, thereupon, shall be relieved of its
        obligation to register the Shares in connection with such
        registration.

       

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      (ii) If
        a
        registration pursuant to this Section 6.4(A) involves an underwritten public
        offering and the managing underwriter thereof advises the Company that, in
        its
        view, the number of shares of common stock that the Company and Pasadena
        intend
        to include in such registration exceeds the largest number of shares of Common
        Stock that can be sold without having an adverse effect on such public offering
        (the “Maximum
        Offering Size”),
        the
        Company will include in such registration only such number of shares of common
        stock as does not exceed the Maximum Offering Size, and the number of shares
        in
        the Maximum Offering Size shall be allocated among the Company, Pasadena
        and any
        other sellers of common stock in such public offering (“Third-Party
        Sellers”),
        first, to the Company until all the shares of common stock originally proposed
        to be offered for sale by the Company have been allocated, second, if the
        filing
        of the registration statement was made upon the demand of any Third Party
        Seller, then pro rata among such Third Party Sellers, and third, pro rata
        among
        Pasadena and any other Third-Party Sellers, in each case on the basis of
        the
        relative number of shares of common stock originally proposed to be offered
        for
        sale under such registration by each of Pasadena and the Third-Party Sellers,
        as
        the case may be. If as a result of the proration provisions of this Section
        6.4(A)(ii), Pasadena is not entitled to include all of the Shares in such
        registration, Pasadena may elect to withdraw its request to include its Shares
        in such registration. With respect to registrations pursuant to this Section
        6.4(A), the number of securities required to satisfy any underwriters’
over-allotment option shall be allocated among the Company, Pasadena and
        any
        Third Party Seller pro rata on the basis of the relative number of securities
        offered for sale under such registration by each of Pasadena, the Company
        and
        any such Third Party Sellers before the exercise of such over-allotment
        option.

       

      (B)
        If,
        and as often as, there are any changes in the Company’s common stock by way of
        stock split, stock dividend, reverse split, combination or reclassification,
        or
        through merger, consolidation, reorganization or recapitalization, or by
        any
        other means, appropriate adjustment shall be made in the provisions hereof,
        as
        may be required, so that the registration rights and privileges granted hereby
        shall continue with respect to the Shares as so changed.

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      6.5
        If,
        and as often as, there are any changes in the Company’s common stock by way of
        stock split, stock dividend, reverse split, combination or reclassification,
        or
        through merger, consolidation, reorganization or recapitalization, or by
        any
        other means, appropriate adjustment shall be to the common stock due to or
        owned
        by Pasadena, as may be required, so that the rights and privileges of Pasadena
        granted hereby and to maintain its equity interest in the Company shall
        continue.

       

      6.6
        The
        Company acknowledges and agrees that all Shares issued to Pasadena (or such
        other entity designated by Pasadena) pursuant to this Agreement are earned
        by
        Pasadena immediately upon, and are being issued solely in consideration for,
        Pasadena’s execution of this Agreement.

       

    

    
      	
              7.
                Marketing Budget

            	
              To
                support the financial marketing program, the Company acknowledges
                that it
                will incur certain third party marketing costs. Pasadena will deliver
                to
                the Company a detailed three month budget setting forth the approximate
                costs associated with the campaign. Pasadena will not incur these
                costs
                without the approval of the Company. At Pasadena’s request, the Company
                will pay these costs directly to the third party.

            
	 	 
	
              8.
                Indemnification

            	
              The
                Company agrees to provide the indemnification set forth in “Exhibit A”
                attached hereto.

            
	 	 
	
              9.
                Obligations

            	
              The
                obligations of Pasadena are solely limited liability company obligations,
                and no officer, manager, employee, agent, member or controlling person
                of
                Pasadena shall be subject to any personal liability whatsoever to
                any
                person, nor will any such claim be asserted by or on behalf of any
                other
                party to this Agreement.

            
	 	 
	
              10.
                Additional Services

            	
              If
                Pasadena is called upon to render services, directly or indirectly
                relating to the subject matter of this Agreement, beyond the services
                contemplated above (including, but not limited to, production of
                documents, answering interrogatories, giving depositions, giving
                expert or
                other testimony, whether by agreement, subpoena or otherwise), the
                Company
                shall pay to Pasadena reasonable hourly rates for the persons involved
                for
                the time expended in rendering such services, including, but not
                limited
                to, time for meetings, conferences, preparation and travel, and all
                related costs and expenses and the reasonable legal fees and expenses
                of
                Pasadena’s counsel.

            

    

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    
      	
              11.
                Survival of Certain Provisions

            	
              Sections
                6.5, 6.6, 8, 9, 10, 12, 13, 14 and 15 and “Exhibit A” shall survive any
                termination of this Agreement and Pasadena’s engagement pursuant to this
                Agreement. In addition, such termination shall not terminate Pasadena’s
                right to compensation accrued through the date of termination and
                for
                reimbursement of expenses. Any purported termination of this Agreement
                by
                the Company prior to the end of the Initial Term, or any termination
                by
                Pasadena as a result of non-payment or other material breach by the
                Company, shall not terminate Pasadena’s right to the
                Shares.

            
	 	 
	
              12.
                Services/Costs

            	
              Except
                as provided in this Agreement, the compensation paid to Pasadena
                under
                this Agreement will cover all costs for Pasadena personnel. Travel
                and
                entertainment costs for Pasadena personnel, in addition to certain
                third-party costs, will be borne by the Company. Pasadena will provide
                reasonable documentation to support reimbursement claims. Pasadena
                will
                not incur any particular reimbursable cost of $500 or more without
                the
                written approval from the Company.

            
	 	 
	
              13.
                Attorneys’ Fees

            	
              If
                any action or proceeding is brought to enforce or interpret any provision
                of this Agreement, the prevailing party shall be entitled to recover
                as an
                element of its costs, and not its damages, reasonable attorneys’ fees to
                be fixed by the court. 

            
	 	 
	
              14.
                Governing Law

            	
              This
                Agreement shall be governed by and construed in accordance with the
                laws
                of the State of Texas, without regard for its conflict of law
                principles.

            
	 	 
	
              15.
                No Material Nonpublic Information

            	
              During
                the last month of the Initial Term and thereafter, the Company shall
                not
                provide Pasadena with any material nonpublic
                information.

            
	 	 
	
              16.
                Termination by Pasadena

            	
              At
                its sole option, Pasadena may choose to pause or discontinue the
                program
                or terminate this Agreement if (a) any fax or e-mail “spam” is being
                distributed regarding the Company which violates any federal or SEC
                regulations - either with or without the Company’s consent, (b) the
                Company fails to deliver the Letter of Tradability or the irrevocable
                guarantee of the Company’s CEO to Pasadena at Pasadena’s request or
                (c) the Company otherwise materially breaches any of the terms or
                conditions of this Agreement.

            

    

    

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    

    
      	Entity to whom the Shares should be
              issued:	 	Pasadena Capital Partners,
              LLC
	 	 	 
	Address
              of the foregoing entity:	 	4949
              Hedgcoxe Rd. #280
              Plano,
                TX 75024

            
	 	 	 
	Wire Instructions:	 	CREDIT TO THE ACCOUNT OF:
              Pasadena
                Capital Partners LLC

              4949
                Hedgcoxe Rd. Suite #280

              Plano,
                TX 75024

              

              Ach
                R/T # 111000025

              ACCOUNT
                # 004789075297

              

              BANK
                OF AMERICA

              2150
                N Josey Ln.

              Carrollton,
                TX  75006 

              972-323-9611

            

    

     

    Agreed
      and Accepted:

    
      	 	 	 	 
	Biometrx,
              Inc.	Pasadena
              Capital Partners, LLC
	 	 
 	 
 	 
 
	By: 	/s/
              Mark R. Basile	By:  	/s/ 
	 	
              
Mark
              R. Baisle
              Chief
                Executive Officer

            	
              
John
              Pentony
              President

            

    

      

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    The
      stock
      certificate shall be assigned and delivered to the following
      entity:

    

    Pasadena
      Capital Partners LLC

    4949
      Hedgcoxe Rd. Suite #280

    Plano,
      TX
      75024

    

    Tax
      ID #
      20-2826562

    

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    

    EXHIBIT
      A

    

    Indemnification
      Provisions

    

    

    Biometrx,
      Inc. (the
      “Company”)
      unconditionally, absolutely and irrevocably agrees to and shall defend,
      indemnify and hold harmless Pasadena Capital Partners, LLC (“Pasadena”)
      and
      its past, present and future directors, managers, officers, affiliates, counsel,
      shareholders, members, employees, agents, representatives, contractors,
      successors and assigns (Pasadena and such persons are collectively referred
      to
      as the “Indemnified
      Persons”)
      from
      and against any and all losses, claims, costs, expenses (including attorneys’
fees), liabilities and damages (or actions in respect thereof) arising out
      of or
      related to this Agreement or any actions taken or omitted to be taken by the
      Company or an Indemnified Person in connection with this Agreement, including,
      but not limited to, (1) any breach by the Company of any of its
      representations or warranties in the Agreement or (2) any failure by the Company
      to perform its obligations under the Agreement (each, an “Indemnified
      Claim”).
      Without limiting the generality of the foregoing, such indemnification shall
      cover losses, claims, costs, expenses, liabilities and damages imposed on or
      incurred by the Indemnified Persons, directly or indirectly, relating to,
      resulting from, or arising out of any misstatement of fact or omission of fact,
      or any inaccuracy in any information provided or approved by the Company in
      connection with the engagement, including information in any SEC filing, press
      release, website, marketing material or other document, whether or not the
      Indemnified Persons relied thereon or had knowledge thereof. In addition, the
      Company agrees to reimburse the Indemnified Persons for legal or other expenses
      reasonably incurred by them in respect of each Indemnified Claim at the time
      such expenses are incurred. Notwithstanding the foregoing, the Company shall
      not
      be obligated under the foregoing for any loss, claim, liability or damage that
      is finally determined to have resulted primarily from the willful misconduct,
      bad faith or gross negligence of the Indemnified Person.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    If
      any
      proceeding shall be brought or asserted under these provisions against an
      Indemnified Person in respect of which indemnity may be sought under these
      provisions from the Company, the Indemnified Person shall give prompt written
      notice of such proceeding to the Company who shall assume the defense thereof,
      including the employment of counsel reasonably satisfactory to the Indemnified
      Person (or if more than one, Pasadena), and the payment of all reasonable
      expenses; provided that any delay or failure to notify the Company shall relieve
      the Company of its obligations hereunder only to the extent, if at all, that
      it
      is materially prejudiced by reason of such delay or failure. In no event shall
      any Indemnified Person be required to make any expenditure or bring any cause
      of
      action to enforce the Company’s obligations and liability under and pursuant to
      the indemnifications set forth in these provisions. The Indemnified Person
      shall
      have the right to employ separate counsel in any of the foregoing proceedings
      and to participate in the defense thereof, but the fees and expenses of such
      counsel shall be at the expense of the Indemnified Person unless: (i) the
      Company has agreed to pay such fees and expenses; or (ii) the Indemnified Person
      shall in good faith determine that there exists actual or potential conflicts
      of
      interest that make representation by the same counsel inappropriate and the
      Company refuses to provide separate counsel. In the event that the Company,
      within five days after notice of any such proceeding, fails to assume the
      defense thereof, the Indemnified Person shall have the right to undertake the
      defense, compromise or settlement of such proceeding, for the account of the
      Company, subject to the right of the Company to assume the defense of such
      proceeding with counsel reasonably satisfactory to the Indemnified Person at
      any
      time prior to the settlement, compromise or final determination thereof by
      reimbursing the Indemnified Person for all fees and costs incurred to date.
      Anything in these provisions to the contrary notwithstanding, the Company shall
      not, without the prior written consent of Pasadena (if Pasadena is an
      Indemnified Person) or the Indemnified Person (if Pasadena is not an Indemnified
      Person), settle or compromise any proceeding or consent to the entry of any
      judgment with respect to any proceeding; provided,
      however,
      that
      the Company may, without the Indemnified Person’s prior written consent, settle
      or compromise any such proceeding or consent to entry of any judgment with
      respect to any such proceeding that requires solely the payment of money damages
      by the Indemnified Person and that includes as an unconditional term thereof
      the
      release by the claimant or the plaintiff of the Indemnified Person from all
      liability in respect of such proceeding.

     

    
      
         

      

      
        -11-ADVANCE
      NANOTECH, INC.

     

    2005
      EQUITY INCENTIVE PLAN

     

    (Effective
      ________________, 2005)

    as
      amended and restated March 23, 2006

    

    Advance
      Nanotech, Inc. hereby adopts this 2005 Equity Incentive Plan, as amended and
      restated as of March 23, 2006, as set forth herein.

    

    

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    CERTIFICATE

     

    I,
      Magnus
      Gittins, the Chief Executive Officer of Advance Nanotech, Inc. do hereby certify
      that the attached is a true and correct copy of the Advance Nanotech, Inc.
      2005 Equity Incentive Plan, as amended and restated on March 23,
      2006.

    
      	 	 	 
	 	 
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name: Magnus
              Gittins
	 	Title: Chief
              Executive Officer

    

     

    Dated
      this ___ day of ____________, 2006.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ADVANCE
      NANOTECH, INC.

    2005
      EQUITY INCENTIVE PLAN

    (as
      amended and restated on March 23, 2006)

    

    1.    Purpose

    

    The
      purpose of this Plan (as amended and restated, the “Plan”)
      is to
      provide a means of rewarding certain individuals and of inducing key employees,
      advisors, consultants and directors (“Participants”)
      to
      remain with ADVANCE NANOTECH, INC. (“ANI”)
      and to
      encourage such individuals to continue to promote the best interests of ANI
      by
      offering them a greater stake in its success and a closer identity with it
      through increased equity participation, and to enable ANI to compete effectively
      for the services of directors and new key personnel who may be needed to help
      carry on ANI’s expanding operations and to insure its continued development.

    

    2.    Eligibility

    

    Grants
      will be made under this Plan only to Participants who are employees, advisors,
      consultants or directors of the Company or its subsidiaries as of the “Grant
      Date.” "Grant Date" means the date a Participant is granted Securities (as
      defined below) under this Plan. 

    

    3.    Effective
      Date; Termination of Old Plans

    

    This
      Plan, as amended and restated, shall become effective upon its adoption by
      the
      Board of Directors of ANI (the “Board”).
      The
      Company’s previously adopted 2005 Stock Option Plan shall terminate effective
      upon Board approval of this Plan, and no further grants of awards shall be
      made
      under that plan after the date of such approval. Concurrently with the
      termination of that plan, the rights of holders of options previously granted
      and outstanding under that plan will terminate and be of no further force.
      All
      participants under that plan shall become Participants under this Plan and
      shall
      be granted rights pursuant hereto.

    

    4.    Stock
      Pool

    

    The
      Board
      is hereby authorized to issue, or reserve for issuance, up to, but not to
      exceed, a maximum of 3,000,000 shares
      of
      ANI common stock (the “Stock”).
      Such
      stock may be unissued shares or previously issued shares reacquired or to be
      reacquired by ANI. Stock received by Participants hereunder will be deemed
      taxable income to the Participants, even though the grants will be a non-cash
      event. To facilitate the payment of the taxes owed for Participant grants,
      Participants may instruct the Company to withhold from any grant that number
      of
      shares with an aggregate Fair Market Value on the date of holdback equal to
      the
      aggregate tax payment due as a result of the Stock grant to Participant (such
      election, a “Net
      Grant”).
      For
      the purposes of satisfying the exemption requirements under Section 16(b),
      the
      Board specifically adopts the foregoing Net Grant election provision. If a
      Participant does not elect to receive a Net Grant of Stock, then participant
      shall advance to the Company cash in the amount equal to the tax payment due
      upon grant of the Stock, in the form of:

    

    (a) cash
      (which may be raised by Participant through the sale of shares Company Common
      Stock only if those shares (i) have been owned by the Participant for more
      than six (6) months on the date of sale);

    

    (b) check;

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (c) a
      reduction in the amount of any Company liability to the Participant, including
      any liability attributable to the Participant's participation in any
      Company-sponsored deferred compensation program or arrangement;

    

    (d) any
      combination of the foregoing methods of payment; or

    

    (e) such
      other consideration and method of payment for the issuance of Shares to the
      extent permitted by applicable laws. 

    

    5.    Equity
      Grants

    

    The
      Board
      hereby authorizes the grant of options to purchase Stock (each an “Option”),
      as
      well as the grant of shares of Stock (the “Shares,”
and,
      together with the Options, the “Securities”)
      under
      this Plan. 

    

    6.    Number
      of Options; Number of Shares; Terms and Conditions of
      Grant

    

    Participants
      shall be entitled to receive that number of Shares or Options, at the prices
      and
      upon such dates as determined by the Committee and set forth in each
      Participant's Equity Incentive Agreement. Securities granted hereunder shall
      be
      subject to the terms and conditions set forth in the Equity Incentive Agreement
      between ANI and each Participant. 

    

    7.    Expiration
      of Options

    

    (a) Expiration
      Date.
      Unless
      the applicable stock
      option
      agreement provides otherwise, each Option shall terminate upon the first to
      occur of the events listed below: 

    

    1.  The
      date
      for termination of Option set forth in the Option Agreement;

    

    2.  Upon
      the
      termination of the Participant’s employment or other association with the
      Company for “Cause;”

    

    3.  The
      expiration of three months from the date of the Participant’s employment or
      other association with the Company for a reason other than “Cause” or the
      Participant’s death, Disability or Retirement, 

    

    4.  The
      expiration of twelve months from the date of the Participant’s Termination of
      Employment by reason of Disability, or 

    

    5.  The
      expiration of twelve months from the date of the Participant’s death, if such
      death occurs while the Participant is in the employ or service of the Company
      or
      an Affiliate. 

    

    "Disability"
      means
      total and permanent disability as defined in Section 22(e)(3) of the Internal
      Revenue Code of 1986.

    

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

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    8.    Exercise
      of Options - Payment.
      The
      Committee shall determine the acceptable form of consideration for exercising
      an
      Option, including the method of payment. Such consideration may consist entirely
      of:

    

    (a) cash;

    

    (b) check;

    

    (c) promissory
      note;

    

    (d) other
      Shares which (i) in the case of Shares acquired upon exercise of an Option,
      have been owned by the Participant for more than six (6) months on the date
      of
      surrender, and (ii) have a Fair Market Value on the date of surrender equal
      to the aggregate exercise price of the Shares as to which said Option shall
      be
      exercised;

    

    (e) consideration
      received by the Company from a licensed broker under a cashless exercise program
      implemented by the Company to facilitate “same day” exercises and sales of
      Options;

    

    (f) a
      reduction in the amount of any Company liability to the Participant, including
      any liability attributable to the Participant's participation in any
      Company-sponsored deferred compensation program or arrangement;

    

    (g) any
      combination of the foregoing methods of payment; or

    

    (h) such
      other consideration and method of payment for the issuance of Shares to the
      extent permitted by applicable laws. 

    

    9.    Restrictions
      on Stock; Conditions to Exercise

    

    (a)
       If
      the
      Grant Date is at a time when ANI’s Stock is not registered under the Securities
      Exchange Act of 1934, as amended (the “1934
      Act”)
      or the
      Securities Act of 1933, as amended (the “1933
      Act”),
      and
      the delivery of the Securities to the Participant pursuant to this Plan would
      cause ANI to become subject to a requirement to register ANI Stock under the
      1934 Act and/or the 1933 Act, the Company may, in lieu of delivery of the
      Securities, pay to the Participant an amount in cash equal to the fair market
      value of such Securities in lieu of issuing such Securities.

    

    (b)
       As
      a
      condition to the grant of Securities hereunder, Participant (i) may be required
      to make representations, warranties and agreements with respect to the
      Securities as ANI may determine; (ii) understands and agrees that he or she
      will
      not offer, resell, transfer or otherwise dispose of the Securities other than
      pursuant to an available exemption from registration under the 1933 Act, as
      amended, and the regulations promulgated thereunder or pursuant to an effective
      registration statement, if any; and (iii) shall agree to be subject to any
      other
      restrictions as ANI may deem necessary to comply with all applicable laws.
      Participant further understands and agrees that ANI is under no obligation
      to
      file any registration statement with the Securities and Exchange Commission
      in
      order to permit transfers of the Securities.

    

    10.    Changes
      in Stock, Adjustments, Etc.

    

    In
      the
      event of any reorganization, recapitalization, stock split, stock dividend,
      combination of shares, merger, consolidation, rights offering or any other
      change in the corporate structure or shares of ANI the Board may appropriately
      adjust the aggregate number and kind of shares available under this
      Plan.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    11.    Administration
      and Amendment of the Plan

    

    (a) The
      Plan
      will be administered by a “Committee”
      consisting of two or more directors who are not employees of the Company, as
      appointed from time to time to serve by the Board. The Committee shall have
      the
      responsibility of construing and interpreting the Plan and of establishing
      and
      amending such rules and regulations, as it deems necessary or desirable for
      the
      proper administration of the Plan. Any decision or action taken or to be taken
      by the Committee, arising out of or in connection with the construction,
      administration, interpretation and effect of the Plan and of its rules and
      regulations, shall, to the extent permitted by law, be within its absolute
      discretion (except as otherwise specifically provided herein) and shall be
      conclusive and binding upon all Participants and any person claiming under
      or
      through any Participant.

    

    (b)
       The
      Committee shall have plenary authority, subject to the provisions of the Plan,
      to grant Securities and to determine to whom such Securities shall be granted
      and the number of shares subject thereto, the terms of each such Security grant
      hereunder, the waiver or acceleration of any terms, including the authority
      to
      accelerate the grant of all or any portion of any Securities.

    

    (c)
       Any
      member of the Board who is an employee of ANI shall be without vote on (i)
      any
      proposed amendment to the Plan, or (ii) any other matter which might affect
      such
      member’s individual interest under the Plan; nor shall such member’s presence be
      counted in determining whether a quorum is present at any meeting at which
      a
      vote involving the Plan or individual rights thereunder is taken.
      Notwithstanding the foregoing, and unless otherwise determined by the Board,
      if
      the Chief Executive Officer is a member of the Committee the Board shall grant
      Securities to the Chief Executive Officer and determine the type and number
      of
      Securities the Chief Executive Officer is to receive; provided however, that
      the
      Chief Executive Officer shall otherwise be entitled to vote on any proposed
      amendment to the Plan, or any other matter which might affect his or her
      individual interest under the Plan. 

    

    (d)
       ANI
      shall
      effect the grant of Securities under this Plan by the delivery of an Equity
      Incentive Agreement executed by ANI and the Participant, which shall incorporate
      the terms of this Plan by reference and contain such other conditions, and
      in
      such form, as may be approved by the Committee, but in no event inconsistent
      with terms and conditions set forth specifically elsewhere in this Plan.

    

    (e)
       Nothing
      contained in this Plan, nor in any Security
      granted
      under this Plan, shall confer upon any Participant any right with respect to
      continuance of employment by ANI or limit in any way the right of ANI to
      terminate the Participant’s association with ANI at any time.

    

    (f) The
      adoption of the Plan of shall not be construed as creating any limitations
      upon
      the right and authority of the Board to adopt such other incentive compensation
      arrangements (which arrangements may be applicable either generally to a class
      or classes of individuals or specifically to a particular individual or
      individuals) as the Board in its discretion determines desirable, including,
      without limitation, the granting of stock options or stock
      appreciation rights other than under the Plan. 

    

    12.    Governing
      Law

     

    The
      interpretation, performance and enforcement of this Plan shall be governed
      by
      the internal substantive laws of the State of New York, without regard to the
      conflict of laws provisions of that or any other State. The Option can only
      be
      amended in a writing executed by a duly authorized Officer of the
      Company.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, ANI has caused this 2005 EQUITY INCENTIVE PLAN to be duly
      executed by its duly authorized officer.

     

    
      	 	 	 
	Dated:
              ____________, 2005 	ADVANCE
              NANOTECH,
              INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	President

    
      
         

      

        5

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