Document:

Stock Option Agreement

 Exhibit 10(iii) 
 STOCK OPTION AGREEMENT 
 This Stock Option Agreement (the “Agreement”) dated
as of June 19, 2006 (the “Effective Date”) by and between Atmospheric Glow Technologies, Inc., with its principal office at 924 Corridor Park Boulevard, Knoxville, Tennessee 37932 (the “Company”), and W. Scott McDonald (the
“Optionee”). 
 WHEREAS, the Company has adopted the 2006 Equity Incentive Plan (the “Plan”) to permit grants of
options to purchase Common Shares of Atmospheric Glow Technologies, Inc., to certain employees of the Company; 
 WHEREAS, the
Optionee is expected to be an employee of the Company and pursuant to the Employment Agreement between the Company and the Optionee, the Optionee is entitled to receive options to purchase Common Shares of the Company; and 
 WHEREAS, the Company desires to encourage the Optionee to remain in such employ by granting the Optionee options to acquire shares of the Company
and thereby increasing the Optionee’s proprietary interest in the Company’s success; 
 NOW, THEREFORE, in consideration of
the premises and of the covenants and agreements herein set forth, the parties hereby agree as follows: 
 1. Subject to the terms and
conditions of the Plan, a copy of which is attached hereto, incorporated by reference and made a part hereof, and this Agreement, the Company grants to the Optionee the option (the “Options”) to purchase from the Company all or any part of
an aggregate number of 6,000,000 of the Company’s Common Shares (the “Optioned Shares”) upon the terms and conditions and vesting as provided below. 
 2. The purchase price of the Optioned Shares shall be as provided in the table below. 
  

					
	Vesting Date Based upon
Completed Years of Employment
from Option Issue	 	Number of Options
@ Exercise Price
per Share	 	Term of Options
from Grant Date
	<1 Year	 	0	 	0
	1 Year	 	2M @ $0.12	 	5 Years
	2 Years	 	2M @ $0.18	 	5 Years
	3 Years	 	2M @ $0.27	 	5 Years

 Subject to the terms and conditions of the Plan and this Agreement, the Optionee may purchase Optioned Shares
pursuant to this Agreement at any time and from time to time commencing upon the vesting date provided in the table above and continuing for a period of five (5) years from such vesting date. All Options must be exercised within five
(5) years of the date the Options vest, and in accordance with the Plan and this Agreement, and if not exercised within such period, will expire. 
  

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 3. Except in the case of death of the Optionee, the Optionee may exercise an Option only during the
Optionee’s lifetime by giving thirty (30) days written notice of exercise, delivered or mailed by postpaid registered or certified mail addressed to the President of the Company (“President”) at the principal offices of the
Company, on the attached form or in a document containing the information specified in the attached form. Options must be exercised in increments of at least ten thousand (10,000), unless the Optionee holds fewer than ten thousand
(10,000) Options, in which case all remaining Options held by the Optionee must be exercised. After the death of the Optionee, an Option may be exercised by the Optionee’s personal representative or other person entitled by law to the
Optionee’s rights under the Option to the extent that the Optionee was entitled to exercise the Option at death for the period described in paragraph 5(c) of this Agreement. The notice must be accompanied by payment in full of the Option price
in cash as otherwise provided in the Plan. The Company will cause the certificate representing purchased shares to be delivered to the Optionee as soon as practicable after payment in full of the exercise price. 
 4. This Agreement shall terminate as provided below: 
 (a) If the Optionee’s employment with the Company is terminated for Cause, this Agreement shall terminate simultaneously therewith and Optionee shall have no right to exercise any Options thereafter. For purposes
of this paragraph, “for Cause” shall have the same definition as in Section 7(c) of the Employment Agreement between the Optionee and the Company and be determined by the board of directors of the Company and any such determination
shall be final, binding and conclusive. 
 (b) If the Optionee ceases to be an employee of the Company or any of its
subsidiaries for any reason other than (i) termination for Cause as set forth in paragraph 4(a) above, or (ii) death or disability, all Options shall expire the earlier of three (3) months after termination and the expiration date of
the Options. 
 (c) If the Optionee ceases to be an employee of the Company or any subsidiary of the Company by reason of
disability or death, all Options shall expire on a date which is the earlier of six (6) months following the date of death or disability and the expiration date of the Options. 
 5. The Options shall not be transferable by the Optionee otherwise than by will or the laws of descent and distribution. Any attempted transfer,
assignment, pledge or other disposition or levy of attachment or similar process not specifically permitted herein or in the Plan shall be null and void and without effect. 
 6. The Optionee agrees and understands that: 
 (a) The Employee understands that neither the Options nor the underlying Optioned Shares have been registered under the Securities Act of 1933, as amended (the “Act”), in reliance on exemptions from
registration provided by the Act and the rules and regulations promulgated thereunder. Neither the Options nor the underlying Optioned Shares have been registered or qualified with any state securities regulatory authority under state securities
laws, also, in reliance on exemptions from registration provided by state laws. The above-described securities may not be resold unless they are registered under the Act and registered or qualified 

  

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under applicable state securities laws or unless an exemption from registration or qualification is available. The Company does not contemplate registering
such securities and is under no obligation to do so. 
 (b) The Employee understands that any securities purchased hereunder
are purchased for the Employee’s own account, for investment purposes only. The Employee does not intend to divide such interest or to resell or otherwise dispose of or distribute all or any part of such securities. The securities are subject
to the restrictions on transfer required by the Act, the rules promulgated by the Securities and Exchange Commission thereunder, and the applicable state securities laws. Any certificate issued representing ownership of such securities shall bear a
legend describing the restrictions. 
 (c) The Employee is personally convinced, and, if necessary, advised by a qualified
advisor chosen by the Employee that this investment is financially suitable in light of such information and advice and of the Employee’s financial situation. The Employee has had the opportunity to ask questions and receive answers concerning
the terms and conditions of the Options and the Optioned Shares, to inspect and copy all material documents relating thereto, and to obtain all additional information necessary to verify the accuracy of information furnished that the Company
possesses or can acquire without unreasonable effort or expense. The Employee, either alone or with the purchaser representative, if any, chosen by the Employee has such knowledge and experience in financial matters to be capable of evaluating the
merits and risks of the investment. 
 (d) The Employee is prepared to hold the securities purchased for an indefinite period
of time and is aware that a substantial or total loss of the investment is possible. The Employee understands and has considered the restrictions on the transfer of the securities, their lack of liquidity and all other possible risks of the
investment. 
 (e) The Employee understands that the Company is relying on certain exemptions from registration under federal
and state securities laws and is basing its reliance on the representations contained herein. 
 (f) The Optionee will not be
deemed for any purpose to be a shareholder of the Company with respect to any of the Optioned Shares, until such time as, and except to the extent that, the Options have been exercised and the exercise price for the Optioned Shares has been paid in
full. 
 (g) The Optionee has no obligation to exercise the Options. 
 (h) The existence of the Options will not affect in any way the right or power of the Company to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in capital structure or business, or any merger or consolidation of the Company or its subsidiaries, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the
Common Shares or the rights thereof, or dissolution or liquidation of the Company or its subsidiaries or any sale or transfer of all or any part of their assets or business or any other corporate act or proceeding, whether of a similar character or
otherwise and the number of Options or Optioned Shares may be affected by such actions as described in the Plan. 
  

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 (i) As a condition of the granting of the Options, the Optionee agrees that any dispute
or disagreements which may arise under or as a result of or pursuant to this Agreement will be determined by the board of directors of the Company in its sole discretion, and that any interpretation by the board of directors of the terms of this
Agreement will be final, binding and conclusive. 
 (j) Neither this Agreement nor the Plan confers any right with respect to
continuance of employment by the Company or its related corporations and neither this Agreement nor the Plan will interfere in any way with the right of the Company to terminate the Optionee’s employment at any time. 
 (k) All the agreements, representations and warranties made by the Employee herein shall survive the issuance of the Options and the
underlying Optioned Shares. 
 7. Notwithstanding anything to the contrary contained in this Agreement, the board of directors of the Company
in its discretion may delay issuance of shares upon exercise of any Options for such time period as is necessary to enable the Company to comply with any federal or state securities laws. In addition, certificates for shares will be subject to such
transfer orders, legends or other restrictions as the Company may deem necessary or advisable and the Optionee may be required to make certain representations and execute a subscription agreement in connection with exercise of the Options.

 8. This Agreement shall be governed and interpreted by the laws of the State of Tennessee. 
 9. This Agreement, the Plan and the Employment Agreement constitute the entire agreement between the parties with respect to the subject matter hereof,
and no change or modification shall be valid unless made in writing and signed by the party against whom such change or modification is sought to be enforced. 
 IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer, and the Optionee has executed this Agreement as of the day and year first above written. 
  

			
	The Company:
	
	Atmospheric Glow Technologies, Inc.
		
	By:	 	 /s/ Steven D. Harb

	Title:	 	Chairman
	
	The Optionee:
	
	 /s/ W. Scott McDonald

	W. Scott McDonald

  

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 EXERCISE OF OPTIONS 
 The undersigned hereby irrevocably elects to exercise the right, represented by a Stock Option Agreement, to purchase
                     Common Shares and herewith tenders in payment for such Shares cash or a certified or official bank check payable to this
order of Atmospheric Glow Technologies, Inc. in the amount of $            . The undersigned requests that a certificate for such Shares be registered in the undersigned’s name
and that such certificate be delivered to the undersigned at: 
                                       
                                        
                                     
                                       
                                        
                                     
                                       
                                        
                                     
 Dated:
                                 
  

	
	  
 W. Scott McDonald

  

 5Severance Agreement

 Exhibit 10(iv) 
 SEVERANCE AGREEMENT 
 THIS SEVERANCE AGREEMENT (this “Agreement”) is made and
entered into as of June 19, 2006, by and between ATMOSPHERIC GLOW TECHNOLOGIES, INC, a Tennessee corporation (together with its successors and assigns permitted under this Agreement, the “Company”), and W. SCOTT McDONALD
(the “Employee”). 
 WHEREAS, the Board of Directors of the Company (the “Board”) has determined that the Employee
will play a critical role in the operations of the Company; and 
 WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued employment and dedication of the Employee; 
 NOW, THEREFORE, as an inducement for and
in consideration of the Employee remaining in its employ, the Company agrees that the Employee shall receive severance benefits set forth in this Agreement in the event the Employee’s employment with the Company is terminated under the
circumstances described below: 
 1. Separate Employment Agreement. The Employee acknowledges that this Agreement does not constitute a
contract of employment or impose on the Company any obligation to retain the Employee as an employee and that this Agreement does not prevent the Employee from terminating his employment. Employee understands and acknowledges that he is an employee
at will and that either he or the Company may terminate the employment relationship between them at any time and for any reason. 
 2.
Severance Pay. 
 (a) Severance Pay Following a Change in Control. In the event a Change in Control (as defined
below) occurs and, within one (1) year thereafter, the employment of the Employee is terminated by the Company for a reason other than for Cause (as defined in separate employee agreement and below) or by the Employee for Good Reason (as
defined below), then the Company shall pay to the Employee (as severance pay) a lump sum payment equal six (6) months base salary. The Employee agrees that after the Termination Date (as defined below), but prior to payment of the severance pay
pursuant to this paragraph, he shall execute a copy of the Company’s form of general release of any and all claims he may have against the Company and its officers, employees, directors, parents and affiliates. The Employee understands and
agrees that the payment of the severance pay pursuant to this paragraph is contingent on his execution of the previously described release of claims. 
 (b) Severance Pay Absent a Change in Control. In the event the employment of the Employee is terminated by the Company for a reason other than for Cause (as defined below), then the Company shall continue to
pay to the Employee (as severance pay) his regular base salary as in effect on the Employee’s last day of employment (exclusive of bonus or any other compensation) for six (6) months following the Termination. Unless the parties agree
otherwise, the severance pay provided for in this Section 2(b) shall be paid in installments, in accordance with the Company’s regular payroll practices. The Employee agrees 

 
that after the Termination Date, but prior to payment of the severance pay pursuant to this paragraph, he shall execute a copy of the Company’s form of
general release of any and all claims he may have against the Company and its officers, employees, directors, parents and affiliates. The Employee understands and agrees that the payment of the severance pay pursuant to this paragraph is contingent
on his execution of the previously described release of claims. 
 (c) Sole Remedy. The payment to the Employee of the
amounts payable under this Section 2 shall constitute the sole remedy of the Employee in the event of a termination of the Employee’s employment by the Company or a resignation by the Employee that results in payment of benefits under this
Section 2, with the exception of outstanding stock option grants covered under separate agreement. 
 3. Definitions. For
purposes of this Agreement, the following terms shall have the following meanings: 
 (a) “Cause” shall mean
a good faith finding by the Company of: (i) gross negligence or willful misconduct by the Employee in connection with his employment duties, (ii) failure by the Employee to perform his duties or responsibilities required pursuant to his
employment, after written notice and an opportunity to cure, (iii) misappropriation by the Employee of the assets or business opportunities of the Company, or its affiliates, (iv) embezzlement or other financial fraud committed by the
Employee, (v) the Employee knowingly allowing any third party to commit any of the acts described in any of the preceding clauses (iii) or (iv), or (vi) the Employee’s indictment for, conviction of, or entry of a plea of no
contest with respect to, any felony. For purposes of this Agreement, termination for Cause shall also include termination of the Employee for Cause as described under the Employment Agreement between the Employee and the Company dated 19 June,
2006. 
 (b) “Good Reason” shall mean: (i) the unilateral relocation by the Company of the
Employee’s principal work place for the Company to a site more than 60 miles from the location of Employee’s principal work place at the time of the Change in Control; (ii) a reduction in the Employee’s then current base salary,
without the Employee’s consent; or (iii) the Employee’s assignment to a position where the duties of the position are outside his area of professional competence. 
 (c) “Change in Control” shall mean the consummation of any of the following events: (i) a sale, lease or disposition
of all or substantially all of the assets of the Company, or (ii) a sale, merger, consolidation, reorganization, recapitalization, sale of assets, stock purchase, contribution or other similar transaction (in a single transaction or a series of
related transactions) of the Company with or into any other corporation or corporations or other entity, or any other corporate reorganization, where the stockholders of the Company immediately prior to such event do not retain (in substantially the
same percentages) beneficial ownership, directly or indirectly, of more than fifty percent (50%) of the voting power of and interest in the successor entity or the entity that 

  

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controls the successor entity, provided, however, that a Change in Control shall not include a sale, lease, transfer or other disposition of all or
substantially all of the capital stock, assets, properties or business of the Company (by way of merger, consolidation, reorganization, recapitalization, sale of assets, stock purchase, contribution or other similar transaction) that involves the
Company. 
 (d) “Termination Date” shall mean the Employee’s last day on the payroll of the Company.

 4. Miscellaneous. 
 (a) Notices. All notices, requests and demands given to or made upon the respective parties hereto shall be deemed to have been given or made three (3) business days after the date of mailing when mailed
by registered or certified mail, postage prepaid, or on the date of delivery if delivered by hand, or by any nationally-recognized overnight delivery service, addressed to the parties at their addresses set forth below or to such other addresses
furnished by notice given in accordance with this Section 20: (a) if to the Company, 924 Corridor Park Boulevard, Knoxville, Tennessee 37932-3723, Attn: Kimberly Kelly-Wintenberg, and (b) if to the Employee, W. Scott McDonald, 912
Vista Oaks Lane, Knoxville, Tennessee 37919. 
 (b) Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa. 
 (c) Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this Agreement. 
 (d) Amendment. This
Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee. 
 (e)
Jurisdiction. The Company and the Employee hereby irrevocably agree that any legal action, suit or proceeding with respect to the obligations and liabilities of the Employee under this Agreement or any other matter under or arising out of or
in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding may be brought in the courts of Knox County, Tennessee, and by execution and delivery of this Agreement, the Company
and the Employee hereby irrevocably accept and submit to the non-exclusive jurisdiction of such court in personam generally and unconditionally with respect to any such action, suit or proceeding involving the enforcement of the obligations
and liabilities of the Employee under this Agreement or any other matter under or arising out of or in connection with this Agreement. The Company and the Employee further agree that final judgment against the Company or the Employee in any action,
suit or proceeding referred to herein shall be conclusive after all appeals have been exhausted or waived by the 

  

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Company or the Employee, and may thereafter be enforced in any other jurisdiction, within or outside the United States of America, by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact and of the amount of the obligations and liabilities of the Company and the Employee. The Company and the Employee further irrevocably consent and agree to the service
of any and all legal process, summons, notices and documents out of any of the aforesaid courts in any such action, suit or proceeding by mailing copies thereof by registered or certified air mail, postage prepaid, to the Company or the Employee at
the address set forth in Section 20 hereof or by serving copies thereof upon any statutory or registered agent for service of process of the Company or the Employee. The Company and the Employee each agrees that service upon such party as
provided for herein shall constitute valid and effective personal service upon the Company and the Employee and that the failure of any statutory or registered agent to give any notice of such service to the Company or the Employee shall not impair
or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon. Nothing herein shall, or shall be construed so as to, limit the right of the Company to bring actions, suits or proceedings with
respect to the obligations and liabilities of the Employee under, or any other matter arising out of or in connection with, this Agreement, or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, in the
courts of whatever jurisdiction as shall seem appropriate to the Company, or to affect the rights to service of process in any jurisdiction in any manner permitted by law. In addition, the Company and the Employee each hereby irrevocably and
unconditionally waives any objection which the Company or the Employee may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Agreement brought in the courts
of Knox County, Tennessee, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim that any such action, suit or proceeding brought in such court has been brought in an inconvenient forum. 
 (f) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective
successors and assigns, including any corporation with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Employee are personal and shall not be assigned by
him. 
 (g) Waivers. No delay or omission by the Company in exercising any right under this Agreement shall operate as
a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion. 
 (h) Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or
affect the scope or substance of any section of this Agreement. 
  

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 (i) Severability. In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. 
 THE EMPLOYEE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT. 
 IN WITNESS WHEREOF, the Company and the Employee have executed and delivered this Amended and Restated Employment Agreement as of the date first above written. 
  

			
	The Company:
	
	Atmospheric Glow Technologies, Inc.
		
	By:	 	 /s/ Steven D. Harb

	Title:	 	Chairman
	
	The Employee:
	
	 /s/ W. Scott McDonald

	W. Scott McDonald

  

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