Document:

ex10-2.htm

    Exhibit
10.2

     

    
      MASTER PROFESSIONAL SERVICES
AGREEMENT

      

      This Master Professional Services
Agreement (this “Agreement”) is made and entered into effective the ___ day of
February 2010, by and between Core Equity Group LLC, with its offices located at
501 Madison Avenue, Suite 501, New York, NY 10022 and (“Consultant”) and Advance
Nanotech, Inc., with its offices located at 400 Rella Boulevard, Suite 160,
Montebello, New York 10901 (“Company”).

      

      Company desires that Consultant provide
certain services to Company and Consultant desires to do so.

      

      It is therefore agreed as
follows:

      

      1.      Services.

      

      (a)      Consultant
shall perform the services described and agreed upon by both Company and
Consultant in all Exhibits
hereto for consulting with respect to certain projects agreed between the
parties (collectively, the “Services”). Consultant shall perform the Services
and provide the deliverables in connection therewith (the “Deliverables”) in
accordance with the milestones set forth in all Exhibits, if any, and Company
policies and procedures and under the direction of Company or such other
person(s) as Company may designate.  Consultant agrees to perform the
Services in accordance with the specifications set forth in all Exhibits and the highest
professional standards applicable to the performance of like services and to
Company’s satisfaction. Consultant shall devote as much time as reasonably
required to complete the Services in the time frame designated by Company, and
Consultant shall meet with Company regularly on such days as may be designated
by Company.  Consultant shall also be available for regular telephone
conferencing with Company.

      

      (b)      Company
may periodically request reasonable written reports concerning Consultant's
progress, project status, billing data, and other matters pertaining to the
Services, and Consultant shall promptly provide such reports to Company at no
additional charge.

      

      (c)      Consultant
acknowledges that Consultant is and its employees are acting as independent
consultants and not as an employee or employees of Company and that neither
Consultant nor its employees shall be eligible for any benefits made available
to employees of Company.

      

      2.      Term.  Unless
earlier terminated as provided herein below, the term of Consultant’s Services
under this Agreement shall commence on the date set forth above and shall
continue for a period of twelve (12) months.  Thereafter, this
Agreement may continue on a month to month basis upon mutual agreement of the
parties.  Company shall have the right to terminate this Agreement at
any time upon sixty (60) days’ notice, subject to completion of work in
progress, without liability or continuing obligation.  In the event of
such termination, Company’s liability to Consultant for such termination shall
be to pay Consultant any unpaid balance due for Services delivered or performed
before receipt of Company’s termination notice and up to the effective
termination date, and pay for any unpaid expenses the Consultant incurred
through the effective termination date.

      

      3.      Fee.  In
consideration of Consultant’s providing the Services, the rights assigned to
Company and the obligations assumed by Consultant hereunder, Company shall pay
Consultant the fee set forth in all Exhibits hereto.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      4.      Expenses.  Company
shall reimburse Consultant in accordance with Company’s regular policy for all
reasonable expenses incurred by Consultant in connection with the Services upon
presentation of appropriate documentation covering those
expenses.  Expenses are due upon receipt of invoice.

      

      5.      Confidentiality; Warranties;
Indemnification.

      

      (a)      In
connection with the Services, Consultant will have access to information of a
nature not generally disclosed to the public. Consultant agrees to keep
confidential and not disclose to anyone, unless legally compelled to do so,
Company Confidential and Proprietary Information.  “Company
Confidential and Proprietary Information” includes but is not limited to all
Company business and strategic plans, financial details, computer programs,
manuals, contracts, current and prospective client and supplier lists, and all
other documentation, business knowledge, data, material, property and supplier
lists, and developments owned, possessed or controlled by
Company.  Such confidential information may or may not be designated
as confidential or proprietary and may be oral, written or electronic
media.  Consultant understands that such information is owned and
shall continue to be owned solely by Company.  In addition, Consultant
may become privy to private or confidential information relating to the
customers or other employees of Company, such as credit card account numbers and
employee productivity results. Consultant agrees that throughout the Term of
this Agreement and thereafter, Consultant will not disclose, directly or
indirectly, in whole or in part, any of Company Confidential and Proprietary
Information, or any private information relating to a customer or other
employee.  Upon termination of this Agreement, Consultant shall, at
Company’s option, either return or destroy all Company Confidential and
Proprietary Information in its possession and promptly certify in writing that
it has done so.

      

      (b)      The
company agrees to indemnify Consultant in accordance with the indemnification
provisions (the “Indemnification Provisions”) attached to this agreement as
Annex A., which Indemnification provisions are incorporated herein and made a
part thereof.

      

      6.      Miscellaneous.

      

      (a)      Any
notice or other communication under this Agreement shall be in writing and shall
be considered given when delivered personally, mailed by registered or certified
mail, return receipt requested, delivered by overnight courier or faxed (with
confirmation receipt report) to the parties at the addresses set forth below (or
at such other address as a party may specify by notice to the
other):

      

      
        	
                If to the
      Company:

                Advance
      Nanotech, Inc.

                Attn:  Board
      of Directors

                400
      Rella Boulevard, Ste 160

                Montebello,
      NY 10901

                +1
      845 533-4225

              	
                If to the
      Consultant:

                Core
      Equity Group LLC

                Attn:
      Jon Buttles

                501
      Madison Avenue, Ste 501

                New
      York, NY 10022

                +1
      212 561-5689

              

      

      

      (b)      This
Agreement contains, and is intended as, a complete statement of all the terms of
the arrangements among the parties with respect to this subject matter,
supersedes all previous agreements and understandings with respect to those
matters, and cannot be changed except by an agreement in writing signed by the
parties.

      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      (c)      This
Agreement shall be governed by and construed in accordance with the laws of the
state of New York applicable to agreements made and to be performed in the New
York, and each party submits to the jurisdiction and venue of New York
state.

      

      (d)      The
failure of a party to insist upon strict adherence to any term of this Agreement
on any occasion shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term of any other term
of this Agreement.  Any waiver must be in writing.

      

      (e)      The
parties acknowledge that this Agreement contemplates certain personal services
of Consultant and accordingly neither this Agreement nor any obligation of
Consultant or its employees may be assigned or delegated without Company’s prior
consent.

      

      

      
        	
                CORE
      EQUITY GROUP LLC

              	
                ADVANCE
      NANOTECH, INC.

              
	
                 

                 

                By:      
             /s/ Jon
      Buttles

                 

                Name:         Jon
      Buttles

                 

                Title:           Managing
      Partner

                 

                Date:           February 23,
2010

              	
                 

                 

                By:         
      /s/ Peter Rugg

                 

                Name:    
      Peter Rugg

                 

                Title:       Director

                 

                Date:       February 23,
  2010

              
	 
      	 
      
	 
      	 
      

      

      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      Exhibit
A

       

      Statement
of Work:  AVNA_001

       

      Financial
Advisory

       

      Background

       

      General
Overview

       

      Core
Equity Group LLC (“Consultant”) shall provide financial advisory services to
Advance Nanotech, Inc. (“Company”).  Consultant shall be responsible
for (a) developing and executing strategies to eliminate or reduce the
convertible debt outstanding, (b) developing and executing strategies to
complete an exchange agreement with Owlstone, and (c) developing, implementing
and maintaining an investor relations strategy.

       

      Duties
and Responsibilities

      

      Consultant
has identified broadly the following objectives and activities that Consultant
intends to fulfill under this Statement of Work:

      

      Function

      

      
        	
                 
      

              	
                ·

              	
                To
      develop, implement and manage an investor relations strategy suitable to
      the Company

              

      

      
        	
                 
      

              	
                ·

              	
                To
      develop and execute strategies to eliminate or reduce the convertible debt
      outstanding

              

      

      
        	
                 
      

              	
                ·

              	
                To
      develop and execute strategies to complete an exchange agreement with
      Owlstone

              

      

       

      Roles

      

      
        	
                 
      

              	
                ·

              	
                Investor
      relations

              

      

      
        	
                 
      

              	
                o

              	
                Developing
      the strategic messaging for the
Company

              

      

      
        	
                 
      

              	
                o

              	
                Developing
      and managing an investor packet suitable for shareholders upon
      request

              

      

      
        	
                 
      

              	
                o

              	
                Drafting
      all investor communication including shareholder letters, press releases
      and text needed for public filings

              

      

      
        	
                 
      

              	
                o

              	
                Maintaining
      the Company’s website for investor
relations

              

      

      
        	
                 
      

              	
                o

              	
                Communicating
      with shareholders and other stakeholders as
  warranted

              

      

      
        	
                 
      

              	
                o

              	
                Developing
      a system for tracking and responding to inbound shareholder
      requests

              

      

      
        	
                 
      

              	
                o

              	
                Evaluating
      third party resources for further investor relations support, as
      required

              

      

      
        	
                 
      

              	
                ·

              	
                Convertible
      debt elimination

              

      

      
        	
                 
      

              	
                o

              	
                Develop
      strategies amenable to the Company to eliminate the convertible debt
      outstanding or provide amendments that free the Company of restrictive
      provisions

              

      

      
        	
                 
      

              	
                o

              	
                Negotiate
      with noteholders on behalf of the
Company

              

      

      
        	
                 
      

              	
                o

              	
                Pursue
      outside sources for inclusion in the strategies, if
    applicable

              

      

      
        	
                 
      

              	
                ·

              	
                Exchange
      agreement

              

      

      
        	
                 
      

              	
                o

              	
                Develop
      strategies amenable to the Company to affect an exchange agreement with
      Owlstone whereby the companies become one
  organization

              

      

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      
        	
                 
      

              	
                o

              	
                Negotiate
      with Owlstone on behalf of the
Company

              

      

      
        	
                 
      

              	
                o

              	
                Pursue
      outside sources and advisors for execution of the strategies on terms and
      conditions acceptable to the Board

              

      

       

      Approach
Overview

      

      Consultant
has identified the above objectives in conjunction with Company based on its
current needs.  It is understood that such services will be provided
to Company by Consultant on an as needed basis.  Company acknowledges
that given the nature of the work to be completed, it is difficult to quantify
time necessary to complete the objectives.  Consultant shall be
responsible for dedicating the time necessary to the projects at its
discretion.  It is understood that there may be related projects and
activities that are needed underneath this objective, given the nature of the
function.  As such, this Statement of Work shall be evaluated by the
parties on a regular basis for consistency with the overall
objectives.

      

      Jon
Buttles shall serve as lead on this Statement of Work.

       

      Pricing

      

      For its
services as defined in this Statement of Work, and subject to the terms and
conditions of the Master Professional Services Agreement between the parties,
Core shall be entitled to fees as follows, to be paid as set forth
below.

      

      
        	
                 
      

              	
                a)

              	
                Consulting
      Fee.

              

      

      
        	
                 
      

              	
                o

              	
                As
      consideration for its services, Consultant shall receive $5,000 per month
      in cash paid in advance on the first day of each month, with the first
      payment commencing upon execution of this Statement of Work and the second
      payment on March 1, 2010

              

      

       

      
        	
                 
      

              	
                b)

              	
                Incentive
      Compensation

              

      

      
        	
                 
      

              	
                o

              	
                Consultant
      shall receive a one time share grant of 250,000 restricted shares of
      common stock of the Company

              

      

      
        	
                 
      

              	
                o

              	
                Consultant
      shall receive a share grant of 500,000 restricted shares of common stock
      of the Company upon completion of an agreement, acceptable to the board of
      directors of the Company, with all of the holders of the convertible notes
      to settle or convert the convertible notes or waive restrictive provisions
      satisfactory to the Company

              

      

      
        	
                 
      

              	
                o

              	
                Consultant
      shall receive a fee of 2% on the value of the Company upon completion of
      an agreement with Owlstone to exchange, merge or consolidate (the
      “Exchange Transaction”) to create one go-forward
      organization.  The fee shall only be payable on the value
      attributed to the Company as set forth in the Exchange Transaction with
      Owlstone.  The fee will be paid 50% in cash and 50% in shares of
      the Company, valued at the per share price of the Company as set forth in
      the Exchange Transaction.  In the event the Exchange Transaction
      takes place in phases, the entire fee shall be payable upon completion of
      the first phase.

              

      

       

      Term

      

      This
Statement of Work shall become effective _________ and last for a period of
twelve months.  Termination provisions set forth in the master PSA
shall apply.  Notwithstanding the foregoing, such termination shall
not affect compensation due to the Consultant that is deemed earned, as set
forth above with respect to the fees set forth in Incentive
Compensation.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      Points
of Contact

      

      
        	
                Jon
      Buttles

                Managing
      Partner

                501
      Madison Avenue, Suite 501

                New
      York, NY 10022

                jon@coreequitygroup.com

              	 
      

      

       

      Acceptance

      

      The
parties acknowledge and agree that this Statement of Work (SOW) shall be
governed by the Master Professional Services Agreement (“PSA”) dated
___________, by and between Core Equity Group LLC and Advance Nanotech,
Inc.

      

      IN
WITNESS WHEREOF, the Parties have executed this Statement of Work effective
___________.

      

      
        	
                By:  ADVANCE NANOTECH
      INC.

              	
                By:  CORE EQUITY GROUP
      LLC

              
	
                Signature: 
      /s/ Peter Rugg

              	
                Signature: 
      /s/ Jon Buttles

                 

                 

              
	
                Name:        
      Peter Rugg

              	
                Name:  Mr.
      Jon Buttles

              
	
                Title:           Director

              	
                Title:  Managing
      Partner

              

      

      

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      Annex
A

      

      INDEMNIFICATION
PROVISIONS

      

      

      Advance Nanotech, Inc. (the “Company”),
agrees to indemnify and hold harmless Core Equity Group LLC (“Consultant”)
against any and all losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses, and disbursements (and any and all
actions, suits, proceedings, and investigations in respect thereof and any and
all legal and other costs, expenses, and disbursements in giving testimony or
furnishing documents in response to a subpoena or otherwise), including, without
limitation the costs, expenses, and disbursements, as and when incurred, of
investigating, preparing, or defending any such action, suit, proceeding, or
investigation (whether or not in connection with litigation in which Consultant
is a party), directly or indirectly, caused by, relating to, based upon, arising
out of, or in connection with Consultant’s acting for the Company, including,
without limitation, any act or omission by Consultant in connection with its
acceptance of or the performance or non-performance of its obligations under the
Master Professional Services Agreement dated __________, including exhibits and
related Statements of Work, between Consultant and the Company, as it may be
amended from time to time (the “Agreement”); provided, however, such indemnity
agreement shall not apply to any portion of any such loss, claim, damage,
obligation, penalty, judgment, award, liability, cost, expense, or disbursement
to the extent it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily and
directly from the bad faith or willful misconduct of Consultant. The Company
also agrees that Consultant shall not have any liability (whether direct or
indirect, in contract or tort or otherwise) to the Company for or in connection
with the engagement of Consultant, except to the extent that any such liability
is found in a final judgment by a court of competent jurisdiction (not subject
to further appeal) to have resulted primarily and directly from Consultant’s bad
faith or willful misconduct.

      

      These Indemnification Provisions shall
be in addition to any liability which the Company may otherwise have to
Consultant or the persons indemnified below in this sentence and shall extend to
the following: Consultant, its affiliated entities, managers, directors,
officers, employees, legal counsel, agents, and controlling persons (within the
meaning of the federal securities laws).  All references to Consultant
in these Indemnification Provisions shall be understood to include any and all
of the foregoing.

      

      If any action, suit, proceeding, or
investigation is commenced, as to which Consultant proposes to demand
indemnification, it shall notify the Company with reasonable promptness;
provided, however, that any failure by Consultant to notify the Company shall
not relieve the Company from its obligations hereunder.  Consultant
shall have the right to retain counsel of its own choice to represent it, and
the Company shall pay the reasonable fees, expenses, and disbursements of such
counsel; and such counsel shall, to extent consistent with its professional
responsibilities, cooperate with the Company and any counsel designated by the
Company.  The Company shall be liable for any settlement of any claim
against Consultant made with the Company’s written consent, which consent shall
not be unreasonably withheld.  The Company shall not, without the
prior written consent of Consultant, settle or compromise any claim, or permit a
default or consent to the entry of any judgment in respect thereof, unless such
settlement, compromise, or consent includes, as an unconditional term thereof,
the giving by the claimant to Consultant of an unconditional release from all
liability in respect of such claim.

      

      In order to provide for just and
equitable contribution, if a claim for indemnification pursuant to these
Indemnification Provisions is made, but it is found in a final judgment by a
court of competent jurisdiction (not subject to further appeal) that such
indemnification may not be enforced in such case, even though the express
provisions hereof provide for indemnification in such case, then the Company, on
the one hand, and Consultant, on the other hand, shall contribute to the losses,
claims, damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses, and disbursements to which the indemnified persons may be subject in
accordance with the relative benefits received by the Company, on the one hand,
and Consultant, on the other hand, and also the relative fault of the Company,
on the one hand, and Consultant on the other hand, in connection with the
statements, acts, or omissions which resulted in such losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses, or
disbursements and the relevant equitable considerations shall also be
considered.  No person found liable for a fraudulent misrepresentation
shall be entitled to contribution from any person who is not also found liable
for such fraudulent misrepresentation.  Notwithstanding the foregoing,
Consultant shall not be obligated to contribute any amount hereunder that
exceeds the amount of fees previously received by Consultant pursuant to the
Agreement.

      

      Neither termination nor completion of
the engagement of Consultant referred to above shall affect these
Indemnification Provisions which shall then remain operative and in full force
and effect.

      

      7ex10-3.htm

    Exhibit 10.3

     

    
      MANAGEMENT SERVICES
AGREEMENT

      

      

      This Management Services Agreement
(this “Agreement”) is made and entered into effective the ___ day of February,
2010 by and among Core Equity Group LLC, with its offices located at 501 Madison
Avenue, Suite 501, New York, New York 10022 (the “Consultant”), Jon Buttles, an
individual and a principal of the Consultant (the “Executive”), and Advance
Nanotech, Inc., with its offices located at 400 Rella Boulevard, Suite 160,
Montebello, New York 10901 (the “Company”).

      

      The Company desires to have the
Consultant provide the Company with the management services described more fully
herein, the Consultant desires to provide such services and the Executive is
willing to serve the Company in the capacities described more fully
herein.

      

      It is therefore agreed as
follows:

      

      1.      Management
Services.

      

      (a)      The
Consultant shall provide the Company with the management services (collectively,
the “Services”) of an individual to serve as (i) a member for the Company’s
Board of Directors (the “Board”), (ii) the Principal Executive Officer of the
Company reporting to the Board and (iii) the Principal Financial Officer of the
Company reporting to the Board.

      

      (b)      Unless
and until the Company and the Consultant determine otherwise, the Executive
shall be the individual to serve as the director on the Board, the Principal
Executive Officer and the Principal Financial Officer of the Company pursuant to
this Agreement.  The Executive hereby consents to serve in such
capacities, accepts such management responsibility and agrees to render his
services hereunder fully, faithfully and to the best of his ability subject to
the direction of the Board.

      

      (c)      The
Company shall provide the Consultant and the Executive with such financial and
administrative support as either of them may reasonably request in connection
with the performance of the services.

      

      (d)      The
Company agrees to nominate the Executive for election to the Board by the
Company’s stockholders and for election as an officer of the Company by the
Board.

      

      (e)      In
such capacity, the Executive shall provide reports to the Board on issues,
resolutions and strategy regularly for review by the Board at scheduled
meetings

      

      2.      Term and
Termination.  Unless earlier terminated as provided herein
below, the term for the Consultant’s providing the Services under this Agreement
shall commence on the date hereof, shall continue for a period of twelve (12)
months and shall thereafter continue on a month to month basis with the mutual
agreement of the parties.  The Company shall have the right to
terminate this Agreement (i) at any time effective immediately upon delivery of
notice to the Consultant if such termination is for Cause or is because of the
Executive’s death, resignation or failure to be reelected to the Board or as an
officer of the Company and (ii) at any time upon sixty (60) days’ notice if such
termination without Cause.  The Consultant and the Executive shall
have the right to terminate at any time effective immediately upon delivery of
notice.  Upon termination, the Company shall pay the Consultant all
amounts for the Services performed and the unpaid expenses incurred through the
effective termination date.  As used herein, “Cause” means (i) the
conviction of the Executive of a felony or of any criminal act involving moral
turpitude, (ii) the Executive’s deliberate or recurrent refusal to perform
duties reasonably requested by the Board, (iii) intentional fraud or
embezzlement, (iv) violation of the Federal securities laws, (v) gross
misconduct or gross negligence in connection with the performance of the
Executive’s duties, or (vi) a material breach of any term or condition of this
Agreement and the failure by the Consultant or the Executive to cure any such
breach within 15 days after receipt of written notice from the Company
describing such breach in reasonable detail and identifying such occurrence or
circumstance as Cause hereunder.

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      3.      Compensation.  In
consideration for providing the Services, the Company shall pay the Consultant
as follows:

      

      (a)      cash
consideration of $7,500 per month with the first payment to be made upon full
execution of this Agreement and the second payment on March 1, 2010 and each
subsequent payment made on the first of the month thereafter;

      

      (b)      equity
consideration of 25,000 shares of the Company’s common stock per month,
beginning upon execution of this Agreement; and

      

      Notwithstanding
the foregoing, in the event the Consultant or the Executive find that they are
spending more or less time than the anticipated in performing the Services, the
Consultant and the Company shall renegotiate the compensation to be paid the
Consultant hereunder.

      

      4.      Expenses.  The
Company shall reimburse the Consultant in accordance with Company’s regular
policy for all reasonable expenses incurred by the Consultant in connection with
the performance of the Services upon presentation of appropriate documentation
covering those expenses.

      

      5.      Confidentiality.  The
Consultant and the Executive acknowledge that each of them will have access to
information of a nature not generally disclosed to the public. Each of them
agrees throughout the term of this Agreement and thereafter to keep confidential
and not disclose to anyone, unless legally compelled to do so, such information
as the Company deems confidential and proprietary, including without limitation
the Company’s business and strategic plans, financial details, computer
programs, manuals, contracts, current and prospective client and supplier lists
and all other documentation, business knowledge, data, material, property and
supplier lists and developments owned, possessed or controlled by the
Company.  Such confidential information may or may not be designated
as confidential or proprietary and may be in oral, written or electronic
format.  Upon termination of this Agreement, the Consultant and the
Executive shall, at Company’s option, either return to the Company or destroy
all of the Company’s confidential and proprietary information in its possession
and promptly certify in writing that it has done so.

      

      6.      Indemnification.  The
Company agrees to indemnify the Consultant and the Executive in accordance with
the indemnification provisions attached to this Agreement as Annex A and
incorporated herein and made a part thereof.

      

      7.      Miscellaneous.

      

      (a)      Any
notice or other communication under this Agreement shall be in writing and shall
be considered given when delivered personally, mailed by registered or certified
mail, return receipt requested, delivered by overnight courier or faxed (with
confirmation receipt report) to the parties at the addresses set forth below (or
at such other address as a party may specify by notice to the
other):

      

      
        	
                If to the
      Company:

                Advance
      Nanotech, Inc.

                Attn:  Board
      of Directors

                400
      Rella Boulevard, Ste 160

                Montebello,
      NY 10901

              	
                If to the Consultant or the
      Executive:

                Core
      Equity Group LLC

                Attn:
      Jon Buttles

                501
      Madison Avenue, Ste 501

                New
      York, NY 10022

              	 
      

      

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      (b)      The
relationship between the Consultant and the Company is that of independent
contractors.  The Executive, the Consultant and the Consultant’s other
employees are independent consultants to the Company and not employees of
Company.  Neither the Executive nor the Consultant nor any of the
Consultant’s other employees shall be eligible for any benefits made available
to employees of the Company.

      

      (c)      This
Agreement contains, and is intended as, a complete statement of all the terms of
the arrangements among the parties with respect to this subject matter,
supersedes all previous agreements and understandings with respect to those
matters, and cannot be changed except by an agreement in writing signed by the
parties.

      

      (d)      This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in New York
and each party submits to the jurisdiction and venue of the courts situated in
New York.

      

      (e)      The
failure of a party to insist upon strict adherence to any term of this Agreement
on any occasion shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term of any other term
of this Agreement.  Any waiver must be in writing.

      

      (f)      The
parties acknowledge that this Agreement contemplates certain personal services
of the Consultant and the Executive and accordingly neither this Agreement nor
any of the obligations of the Consultant or its employees including the
Executive may be assigned or delegated without Company’s prior
consent.

      

      
        	
                CORE
      EQUITY GROUP LLC

              	
                ADVANCE
      NANOTECH, INC.

              
	
                 

                 

                By:              
      /s/ Jon
      Buttles

                 

                Name:          Jon Buttles  

                 

                Title:           Managing Partner

                 

                Date:           February 23,
      2010                     

                 

                 

              	
                 

                 

                By:          
      /s/ Peter
      Rugg

                 

                Name:     
       Peter
      Rugg                                                    

                 

                Title:         Director                                    

                 

                Date:         February
      23, 2010                                         

                 

              
	
                JON
      BUTTLES

              	 
      
	
                 

                 

                By:             
      /s/ Jon
      Buttles

                 

                Name:        Jon
      Buttles                                                      

                 

                Title:          Individual  

                 

                Date:         
      February 23,
      2010                                  

              	 
      

      

       

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      Annex
A

      

      INDEMNIFICATION
PROVISIONS

      

      

      Advance Nanotech, Inc. (the “Company”),
agrees to indemnify and hold harmless Core Equity Group LLC (“Consultant”) and
Jon Buttles (“Executive”) against any and all losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses, and
disbursements (and any and all actions, suits, proceedings, and investigations
in respect thereof and any and all legal and other costs, expenses, and
disbursements in giving testimony or furnishing documents in response to a
subpoena or otherwise), including, without limitation the costs, expenses, and
disbursements, as and when incurred, of investigating, preparing, or defending
any such action, suit, proceeding, or investigation (whether or not in
connection with litigation in which Consultant or Executive is a party),
directly or indirectly, caused by, relating to, based upon, arising out of, or
in connection with Consultant’s or Executive’s acting for the Company,
including, without limitation, any act or omission by Consultant or Executive in
connection with its acceptance of or the performance or non-performance of its
obligations under the Management Services Agreement dated as of February __,
2010 by and among Consultant, Executive and the Company, as it may be amended
from time to time (the “Agreement”); provided, however, such indemnity agreement
shall not apply to any portion of any such loss, claim, damage, obligation,
penalty, judgment, award, liability, cost, expense, or disbursement to the
extent it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) to have resulted primarily and directly from the bad
faith or willful misconduct of Consultant or Executive. The Company also agrees
that Consultant and Executive shall not have any liability (whether direct or
indirect, in contract or tort or otherwise) to the Company for or in connection
with the engagement of Consultant or Executive, except to the extent that any
such liability is found in a final judgment by a court of competent jurisdiction
(not subject to further appeal) to have resulted primarily and directly from
Consultant or Executive’s bad faith or willful misconduct.

      

      These Indemnification Provisions shall
be in addition to any liability which the Company may otherwise have to
Consultant or Executive or the persons indemnified below in this sentence and
shall extend to the Consultant, its affiliated entities, managers, directors,
officers, employees, legal counsel, agents, and controlling persons (within the
meaning of the federal securities laws).  All references to Consultant
in these Indemnification Provisions shall be understood to include any and all
of the foregoing including Executive.

      

      If any action, suit, proceeding, or
investigation is commenced, as to which Consultant or Executive proposes to
demand indemnification, it shall notify the Company with reasonable promptness;
provided, however, that any failure by Consultant or Executive to notify the
Company shall not relieve the Company from its obligations
hereunder.  Consultant and Executive shall have the right to retain
counsel of its own choice to represent it, and the Company shall pay the
reasonable fees, expenses, and disbursements of such counsel; and such counsel
shall, to extent consistent with its professional responsibilities, cooperate
with the Company and any counsel designated by the Company.  The
Company shall be liable for any settlement of any claim against Consultant
and/or Executive made with the Company’s written consent, which consent shall
not be unreasonably withheld.  The Company shall not, without the
prior written consent of Consultant and/or Executive, settle or compromise any
claim, or permit a default or consent to the entry of any judgment in respect
thereof, unless such settlement, compromise, or consent includes, as an
unconditional term thereof, the giving by the claimant to Consultant and
Executive of an unconditional release from all liability in respect of such
claim.

      

      In order to provide for just and
equitable contribution, if a claim for indemnification pursuant to these
Indemnification Provisions is made, but it is found in a final judgment by a
court of competent jurisdiction (not subject to further appeal) that such
indemnification may not be enforced in such case, even though the express
provisions hereof provide for indemnification in such case, then the Company, on
the one hand, and Consultant and Executive, on the other hand, shall contribute
to the losses, claims, damages, obligations, penalties, judgments, awards,
liabilities, costs, expenses, and disbursements to which the indemnified persons
may be subject in accordance with the relative benefits received by the Company,
on the one hand, and Consultant and Executive, on the other hand, and also the
relative fault of the Company, on the one hand, and Consultant and Executive on
the other hand, in connection with the statements, acts, or omissions which
resulted in such losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses, or disbursements and the relevant
equitable considerations shall also be considered.  No person found
liable for a fraudulent misrepresentation shall be entitled to contribution from
any person who is not also found liable for such fraudulent
misrepresentation.  Notwithstanding the foregoing, Consultant and
Executive shall not be obligated to contribute any amount hereunder that exceeds
the amount of fees previously received by Consultant and/or Executive pursuant
to the Agreement.

      

      Neither termination nor completion of
the engagement of Consultant and Executive referred to above shall affect these
Indemnification Provisions which shall then remain operative and in full force
and effect.

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