EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement") is made and entered into on this 20th day of

December, 2014, by and between Abakan Inc., of 0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000

XXX (the "Company"), and Xxxxxxx X. Xxxx (hereinafter, the "Executive").

W I T N E S S E T H :

WHEREAS, the Executive is to be employed as Chief Operating Officer (“COO”) of the

Company and Chief Executive Officer (“CEO”) of the Company’s subsidiary, MesoCoat Inc.

WHEREAS, the Executive possesses intimate knowledge of the business and affairs of the

Company, its policies, methods and personnel;

WHEREAS, the Board of Directors of the Company recognizes that the Executive will contribute

to the growth and success of the Company, and desires to assure the Company of the Executive's

continued employment and to compensate him therefor;

WHEREAS, the Board has determined that this Agreement will reinforce and encourage the

Executive's continued attention and dedication to the Company;

WHEREAS, the Executive is willing to make his services available to the Company on the terms

and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, and

for other good and valuable consideration, the receipt and sufficiency of which are mutually

acknowledged, the Company and the Executive hereby agree as follows:

Definitions.

When used in this Agreement, the following terms shall have the following meanings:

(a)

"Accrued Obligations" means:

(i)

all accrued but unpaid Base Salary through the Termination Date;

(ii)

any unpaid or un-reimbursed expenses incurred in accordance with

Company policy, including amounts due under Article 5(a) hereof, to the extent incurred during the Term

of Employment; and

(iii)

those vested benefits provided under the Company's employee benefit

plans, stock options plans, deferred compensation plans, programs or arrangements in which the

Executive participates, in accordance with the terms thereof.

(iv)

any earned unpaid Bonus in respect to any completed fiscal year that has

ended on or prior to the end of the Term of Employment; and

(v)

rights to indemnification by virtue of the Executive's position as an

officer or director of the Company or its subsidiaries and the benefits under any directors' and officers'

liability insurance policy maintained by the Company, in accordance with its terms thereof.

(b)

"Affiliate" means any entity that controls, is controlled by, or is under common

control with, the Company.

(c)

"Base Salary" means the salary provided for in Article 4(a) hereof or any

increased salary granted to Executive pursuant to Article 4(a) hereof.

(d)

"Beneficial Ownership" shall have the meaning ascribed to such term in Rule

13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

(e)

"Board" means the Board of Directors of the Company.

(f)

"Bonus" means any bonus payable to the Executive pursuant to Article 4(b)

hereof

(g)

"Bonus Period" means the period for which a Bonus is payable. Unless

otherwise specified by the Board, the Bonus Period shall be the fiscal year of the Company.

(h)

"Cause" means:

(i)

a conviction of the Executive, or a plea of nolo contendere, to a felony

involving moral turpitude; or

(ii)

willful misconduct or gross negligence by the Executive resulting, in

either case, in material economic harm to the Company or any Related Entities; or

(iii)

a willful continued failure by the Executive to carry out the reasonable

and lawful directions of the Board; or

(iv)

fraud, embezzlement, theft or dishonesty of a material nature by the

Executive against the Company or any Affiliate or Related Entity, or a willful material violation by the

Executive of a policy or procedure of the Company or any Affiliate or Related Entity, resulting, in any

case, in material economic harm to the Company or any Affiliate or Related Entity; or

(v)

a willful material breach by the Executive of this Agreement.

An act or failure to act shall not be "willful" if (i) done by the Executive in good faith or (ii) the

Executive reasonably believed that such action or inaction was in the best interests of the Company and

the Related Entities.

(i)

"Change in Control" means:

(i)

the acquisition by any Person of Beneficial Ownership of more than

fifty percent (50%) of the then outstanding shares of common stock of the Company (the "Outstanding

Company Common Stock") (the foregoing Beneficial Ownership hereinafter being referred to as a

"Controlling Interest"); provided, however, that for purposes of this definition, the following acquisitions

shall not constitute or result in a Change of Control: (v) any acquisition directly from the Company; (w)

any acquisition by the Company; (x) any acquisition by any person that as of the Commencement Date

owns Beneficial Ownership of a Controlling Interest; (y) any acquisition by any employee

benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the

Company; or (z) any acquisition by any corporation pursuant to a transaction which complies with

clauses (A), (B) and (C) of subsection (iii) below; or

(ii)

during any period of two (2) consecutive years (not including any period

prior to the Commencement Date) individuals who constitute the Board on the Commencement Date (the

"Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided,

however, that any individual becoming a director subsequent to the Commencement Date whose

election, or nomination for election by the Company's shareholders, was approved by a vote of at least a

majority of the directors then comprising the Incumbent Board shall be considered as though such

individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual

whose initial assumption of office occurs as a result of an actual or threatened election contest with

respect to the election or removal of directors or other actual or threatened solicitation of proxies or

consents by or on behalf of a Person other than the Board; or

(iii)

consummation of a reorganization, merger, statutory share exchange or

consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or

other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or

stock of another entity by the Company or any of its subsidiaries (each a "Business Combination"), in

each case, unless, following such Business Combination, (A) all or substantially all of the individuals and

entities who were the Beneficial Owners, respectively, of the Outstanding Company Common Stock and

Outstanding Company Voting Securities immediately prior to such Business Combination beneficially

own, directly or indirectly, more than fifty percent (50%) of the then outstanding shares of common stock

and the combined voting power of the then outstanding voting securities entitled to vote generally in the

election of directors, as the case may be, of the corporation resulting from such Business Combination

(including, without limitation, a corporation which as a result of such transaction owns the Company or all

or substantially all of the Company's assets either directly or through one or more subsidiaries) in

substantially the same proportions as their ownership, immediately prior to such Business Combination of

the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may

be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or such

corporation resulting from such Business Combination beneficially owns, directly or indirectly, twenty

percent (20%) or more of, respectively, the then outstanding shares of common stock of the corporation

resulting from such Business Combination or any Person that as of the Commencement Date owns

Beneficial Ownership of a Controlling Interest beneficially owns, directly or indirectly, more than fifty

percent (50%) of the then outstanding shares of common stock of the corporation resulting from such

Business Combination or the combined voting power of the then outstanding voting securities of such

corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at

least a majority of the members of the Board of Directors of the corporation resulting from such Business

Combination were members of the Incumbent Board at the time of the execution of the initial agreement,

or of the action of the Board, providing for such Business Combination; or

(iv)

approval by the shareholders of the Company of a complete liquidation

or dissolution of the Company.

(j)

"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985,

as amended from time to time.

(k)

"Code" means the Internal Revenue Code of 1986, as amended.

(1)

"Commencement Date" means 1^st of January, 2015.

(m)

"Common Stock" means the common stock of the Company, par value $0.0001

per share.

(n)

"Competitive Activity" means an activity that is in material or direct competition

with the Company in any of the States within the United States, or countries within the world, in which

the Company conducts business or intends to conduct business with respect to a business in which the

Company engaged while the Executive was employed by the Company.

(o)

"Confidential Information" means all trade secrets and information disclosed to

the Executive or known by the Executive as a consequence of or through the unique position of his

employment with the Company or any Related Entity (including information conceived, originated,

discovered or developed by the Executive and information acquired by the Company or any Related

Entity from others) prior to or after the date hereof, and not generally or publicly known (other than as a

result of unauthorized disclosure by the Executive), about the Company or any Related Entity or its

business.

(p)

"Disability" means the Executive's inability, or failure, to perform the essential

functions of his position, with or without reasonable accommodation, for any period of three months or

more in any 12 month period, by reason of any medically determinable physical or mental impairment

which can be expected to result in death or can be expected to last for a continuous period of not less

than 12 months.

(q)

"Equity Awards" means any stock options, restricted stock, restricted stock

units, stock appreciation rights, phantom stock or other equity based awards granted by the Company or

any of its Affiliates to the Executive.

(r)

"Excise Tax" means any excise tax imposed by Section 4999 of the Code,

together with any interest and penalties imposed with respect thereto, or any interest or penalties incurred

by the Executive with respect to any such excise tax.

(s)

“Expiration Amount” means an amount of $100,000 payable to Executive on

the expiration of the Initial Term of Employment.

(t)

"Expiration Date" means the date on which the Term of Employment, including

any renewals thereof under Article 3(b), shall expire.

(u)

"Good Reason" means:

(i)

the assignment to the Executive of any duties inconsistent in any

material respect with the Executive's position (including status, titles and reporting requirements),

authority, duties or responsibilities as contemplated by Article 2(b) of this Agreement, or any other action

by the Company that results in a material diminution in such position, authority, duties or responsibilities,

excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith which is

remedied by the Company promptly after receipt of notice thereof given by the Executive;

(ii)

any material failure by the Company to comply with any of the

material provisions of this Agreement, other than an isolated, insubstantial and inadvertent failure

not occurring in bad faith that is remedied by the Company promptly after receipt of notice thereof

given by the Executive;

(iii)

any instruction by the Company to act in any manner that is unlawful

or contrary to Securities and Exchange Commission rules and regulations, other than an isolated,

insubstantial or inadvertent instruction not given in bad faith that is remedied by the Company

promptly after receipt of notice thereof given by the Executive; and

(iv)

any termination by the Company of the Executive's employment other

than for Cause pursuant to Article 6(b), or by reason of the Executive's Disability pursuant to Article 6(c)

of this Agreement, prior to the Expiration Date

(v)

"Group" shall have the meaning ascribed to such term in Section 13(d) of

the Securities Exchange Act of 1934.

(w)

"Initial Term" means January 1^st, 2015 to December 31^st, 2016.

(x)

"Person" shall have the meaning ascribed to such term in Section 3(a)(9) of

the Securities Exchange Act of 1934 and used in Sections 13(d) and 14(d) thereof.

(y)

"Related Entity" means any subsidiary, and any business,

corporation, partnership, limited liability company or other entity designated by Board in which the

Company or a subsidiary holds a substantial ownership interest.

(z)

"Restricted Period" shall be the Term of Employment and if the Term

of Employment is terminated for any reason other than by the Company without Cause or by the

Executive for Good Reason, the eighteen (18) month period immediately following termination of

the Term of Employment. Notwithstanding the foregoing, the Restricted Period shall end in the event

that (i) the Company fails to make any payments or provide any Benefits required by Article 6 hereof

with 15 days of written notice from the Executive of such failure or (ii) the Company no longer has

the rights to the confidential information.

(aa)

"Severance Amount" shall be in the event of termination of the Executive's

employment by the Company without Cause, or by the Executive with Good Reason, prior to the

expiration of the Initial Term, an amount equal to the greater of the Base Salary remaining payable for the

Initial Term as of the Termination Date or $100,000. The total amount shall be due within one month of

the effective date of the Termination Date.

(bb)

"Severance Term" means the one (1) year period following the Termination

Date.

(cc)

"Stock Option" means a right granted to the Executive under Article 5(d) hereof

to purchase Common Stock under the Company's Stock Option Plan.

(dd)

"Stock Option Plan" means the Amended Abakan Inc. 2009 Stock Option Plan

adopted by the Company on December 14, 2009, as amended from time to time, and any successor plan

thereto.

(ee)

"Term of Employment" means the period during which the Executive shall be

employed by the Company pursuant to the terms of this Agreement.

(ff)

"Termination Date" means the date on which Executive's employment ends.

Employment.

(a)

Employment and Term.

The Company hereby agrees to employ the Executive and the Executive hereby agrees to

serve the Company during the Term of Employment on the terms and conditions set forth herein.

(b)

Duties of Executive.

During the Term of Employment, the Executive shall be employed and serve as Chief

Operating Officer of the Company and Chief Executive Officer of Mesocoat, Inc, and shall have such

duties typically associated with such titles, including, without limitation, coordinating the day to day

management of the Company with the Board. The Executive shall faithfully and diligently perform all

services as may be reasonably assigned to him for his position by the Board of the Company, and shall

exercise such power and authority as may from time to time be delegated to him by the Board. The

Executive shall devote no less than 100% of his business time, attention and efforts to the performance

of his duties under this Agreement, render such services to the best of his ability, and use his reasonable

best efforts to promote the interests of the Company. The Executive shall not engage in any other

business or occupation, other than as declared and existing at the Commencement Date during the Term

of Employment, including, without limitation, any activity that (i) conflicts with the interests of the

Company or its subsidiaries, (ii) interferes with the proper and efficient performance of his duties for the

Company, or (iii) interferes with the exercise of his judgment in the Company's best interests.

Notwithstanding the foregoing or any other provision of this Agreement, it shall not be a breach or

violation of this Agreement for the Executive to (x) serve on civic or charitable boards or committees, or

(y) deliver lectures, or fulfill speaking engagements, or (z) advise companies, so long as such activities

do not interfere with or detract from the performance of the Executive's responsibilities to the Company

in accordance with this Agreement.

Term.

(a)

Initial Term.

The Initial Term of Employment under this Agreement, and the employment of the

Executive hereunder, shall commence on the Commencement Date and shall expire on the 31^st of

December, 2016, unless sooner terminated in accordance with Article 6 hereof.

(b)

Renewal Terms.

At the end of the Initial Term, the Term of Employment automatically shall renew for two (2)

successive one (1) year terms (subject to earlier termination as provided in Section 6 hereof), unless the

Company or the Executive delivers written notice to the other at least three (3) months prior to the

Expiration Date of an intention or election not to renew the Term of Employment.

Compensation.

(a)

Base Salary.

The Executive shall earn a Base Salary at the annual rate of $240,000 ($20,000 per

month) during the Term of Employment, with such Base Salary payable in installments consistent with

the Company's normal payroll schedule, subject to applicable withholding and other taxes. The Base

Salary shall be reviewed, at least annually, for merit increases and may, by action and in the discretion

of the Compensation Committee of the Board, be increased at any time or from time to time, but may not

be decreased from the then current Base Salary. Once the Company has achieved annual revenues of no

less than $50,000,000 it is agreed that the Executive may request that the Compensation Committee

retain a firm specializing in corporate compensation to make Base Salary and Bonus recommendations

in the specific case of the Executive and that the Compensation Committee will act on such

recommendations.

The Base Salary shall accrue at a rate of thirty seven and one half percent (37.5%) of

each installment payable from the Commencement Date until such time as the Company realizes a

cumulative financing of not less than three million dollars ($3,000,000), subsequent to which time, all

amounts due to Executive as accrued Base Salary shall be payable forthwith and the Base Salary shall no

longer be accrued.

(b)

Bonuses.

(i)

The Executive shall receive such additional bonuses, if any, as the

Compensation Committee and the Board of Directors may in its sole and absolute discretion determine.

(ii)

Any Bonus payable pursuant to this Article 4(b) shall be paid by the

Company to the Executive within 2½ months after the end of the Bonus Period for which it is payable.

(c)

Stock Options.

The Executive shall be granted 1,000,000 Stock Options, from the Amended Abakan Inc.

2009 Stock Option Plan, at an exercise price of $0.60 per share, which Stock Options shall vest as

follows: 500,000 options on May 31, 2015, and 500,000 options on May 31, 2016, subject to the terms

and conditions of the Stock Option Agreement (attached hereto as Appendix A) subject to all terms and

conditions of the Stock Option Plan and all rules or regulations of the Securities and Exchange

Commission applicable thereto. Future stock option grants, and the terms and conditions thereof, shall be

determined by the Compensation Committee and the Board, or by the Board in its discretion and pursuant

to the Stock Option Plan or the plan or arrangement pursuant to which they are granted.

Expense Reimbursement and Other Benefits

(a)

Reimbursement of Expenses.

Upon the submission of proper substantiation by the Executive, and subject to such

rules and guidelines as the Company may from time to time adopt with respect to the reimbursement of

expenses of executive personnel, the Company shall reimburse the Executive for all reasonable

expenses actually paid or incurred by the Executive in the course of and pursuant to the business of the

Company. The Executive shall account to the Company in writing for all expenses for which

reimbursement is sought and shall supply to the Company copies of all relevant invoices, receipts or

other evidence reasonably requested by the Company.

(b)

Compensation Benefit Programs.

During the Term of Employment, the Executive shall be entitled at his election to

participate in any medical, dental, hospitalization, accidental death and dismemberment, disability, travel

and life insurance plans, and any and all other plans as are presently and hereinafter offered by the

Company or a Related Entity to its executive personnel, including savings, pension, profit-sharing and

deferred compensation plans, subject to the general eligibility and participation provisions set forth in

such plans.

(c)

Working Facilities.

During the Term of Employment, the Company shall furnish the Executive with an

office, accounting assistant and such other facilities at the Company's headquarters in Miami, Florida

and services suitable to his position and adequate for the performance of his duties hereunder.

(d)

Automobile.

After the realization of an accumulative combination of proceeds from equity, debt, sales

or leasing of technology rights, not including any amounts raised by a Related Entity, of no less than three

million dollars ($3,000,000) the Company shall provide to Executive an automobile allowance of no more

than $500.00 per month.

(e)

Other Benefits.

The Executive shall be entitled to four (4) weeks of paid vacation each calendar year

during the Term of Employment on the first anniversary of the Commencement Date to be taken at such

times as the Executive and the Company shall mutually determine and provided that no vacation time

shall significantly interfere with the duties required to be rendered by the Executive hereunder. Any

vacation time not taken by Executive during any calendar year may be carried forward into any

succeeding calendar year, subject to a maximum accrual of ten (10) weeks. The Executive shall receive

such additional benefits, if any, as the Board of the Company shall from time to time determine.

Termination.

(a)

General.

The Term of Employment shall terminate upon the earliest to occur of (i) the Executive's

death, (ii) a termination by the Company by reason of the Executive's Disability, (iii) a termination by the

Company with or without Cause, or (iv) a termination by Executive with or without Good Reason. Upon

termination of Executive's employment for any reason, except as may otherwise be requested by the

Company in writing and agreed upon in writing by Executive, the Executive shall resign from any and all

directorships, committee memberships or any other positions Executive holds with the Company or any

of its subsidiaries.

(b)

Termination by Company for Cause.

The Company shall at all times have the right, upon written notice to the Executive, to

terminate the Term of Employment, for Cause. In no event shall a termination of the Executive's

employment for Cause occur unless the Company gives written notice to the Executive in accordance

with this Agreement stating with reasonable specificity the events or actions that constitute Cause and

providing the Executive with an opportunity to cure (if curable) within a reasonable period of time. No

termination of the Executive's employment for Cause shall be permitted unless the Termination Date

occurs during the 120-day period immediately following the date that the events or actions constituting

Cause first become known to the Board. Cause shall in no event be deemed to exist except upon a

decision made by the Board, at a meeting, duly called and noticed, to which the Executive (and the

Executive's counsel) shall be invited upon proper notice. If the Executive's employment is terminated by

the Company for Cause by reason of Article 6(b) hereof, and the Executive's conviction is overturned on

appeal, then the Executive's employment shall be deemed to have been terminated by the Company

without Cause in accordance with Article 6(e) below. In the event that the Term of Employment is

terminated by the Company for Cause, Executive shall be entitled only to the Accrued Obligations.

(c)

Disability.

The Executive's employment hereunder shall terminate upon his Disability. The

Executive's employment shall terminate in such a case on the last day of the applicable period.

In the event that the Term of Employment is terminated due to the Executive's Disability, in

addition to any benefits available from applicable insurance, the Executive shall be entitled to:

(i)

the Accrued Obligations;

(ii)

the continuation of the health benefits provided to Executive and

his covered dependents under the Company or Related Entity health plans as in effect from time to

time after the Termination Date at the same cost applicable to active employees until the expiration

of the Severance Term, and

(d)

Death.

(i)

In the event that the Term of Employment is terminated due to the

Executive's death, the Executive shall be entitled to the Accrued Obligations; and

(ii)

the Severance Amount.

(e)

Termination Without Cause.

The Company may terminate the Term of Employment at any time without Cause, by

written notice to the Executive of not less than 180 days prior to the effective date of such termination. In

the event that the Term of Employment is terminated by the Company without Cause (other than due to

the Executive's Death or Disability) the Executive shall be entitled to:

(i)

the Accrued Obligations; and

(ii)

the Severance Amount.

(f)

Termination by Executive for Good Reason.

The Executive may terminate the Term of Employment for Good Reason by providing

the Company thirty (30) days' written notice setting forth in reasonable specificity the event that

constitutes Good Reason, which written notice, to be effective, must be provided to the Company within

one hundred and twenty(120) days of the occurrence of such event. During such thirty (30) day notice

period, the Company shall have a cure right (if curable), and if not cured within such period, the

Executive's termination shall be effective upon the date immediately following the expiration of the thirty

(30) day notice period, and the Executive shall be entitled to the same payments and benefits as provided

in Article 6(e) above for a termination without Cause.

(g)

Termination by Executive Without Good Reason.

The Executive may terminate his employment without Good Reason by providing the

Company thirty (30) days' written notice of such termination. In the event of a termination of

employment by the Executive under this Section 6(g), the Executive shall be entitled only to the Accrued

Obligations. In the event of termination of the Executive's employment under this Article 6(g), the

Company may, in its sole and absolute discretion, by written notice, accelerate such date of termination

and still have it treated as a termination without Good Reason.

(h)

Termination Upon Expiration Date.

In the event that Executive's employment with the Company terminates upon the

expiration of the Initial Term of Employment, the Executive shall be entitled to and the Company shall

pay the Executive the Expiration Amount.

(i)

Change in Control of the Company.

If the Executive's employment is terminated by the Company without Cause or by the

Executive for Good Reason during (y) the 6-month period preceding the date of the Change in Control or

(z) the two 2 year period immediately following the Change in Control, the Executive shall be entitled to:

(i)

the Accrued Obligations, payable as and when those amounts would

have been payable had the Term of Employment not ended; including the immediate vesting of Stock

Options; and

(ii)

a payment equal to the Severance Amount.

(j)

Release.

Any payments due to Executive under this Article 6 (other than the Accrued

Obligations or any unpaid expenses or payments due on account of the Executive's death) shall be

conditioned upon Executive's execution of a general release of claims in the form attached hereto as

Exhibit A (subject to such modifications as the Company reasonably may request).

(k)

Cooperation.

Following the Term of Employment, the Executive shall give his assistance and

cooperation willingly, upon reasonable advance notice with due consideration for his other business or

personal commitments, in any matter relating to his position with the Company, or his expertise or

experience as the Company may reasonably request, including his attendance and truthful testimony

where deemed appropriate by the Company, with respect to any investigation or the Company's defense

or prosecution of any existing or future claims or litigations or other proceedings relating to matters in

which he was involved or potentially had knowledge by virtue of his employment with the Company. In

no event shall his cooperation materially interfere with his services for a subsequent employer or other

similar service recipient. To the extent permitted by law, the Company agrees that (i) it shall promptly

reimburse the Executive for his reasonable and documented expenses in connection with his rendering

assistance and/or cooperation under this Article 6(k) upon his presentation of documentation for such

expenses and (ii) the Executive shall be reasonably compensated for any continued material services as

required under this Article 6(k).

(1)

Return of Company Property.

Following the Termination Date, the Executive or his personal representative shall return

all Company property in his possession, including but not limited to all computer equipment (hardware

and software), telephones, facsimile machines, palm pilots and other communication devices, credit cards,

office keys, security access cards, badges, identification cards and all copies (including drafts) of any

documentation or information (however stored) relating to the business of the Company, its customers

and clients or its prospective customers and clients.

(m)

Section 409A.

To the extent that the Executive otherwise would be entitled to any payment (whether

pursuant to this Agreement or otherwise) during the six months beginning on the Termination Date that

would be subject to the additional tax imposed under Section 409A of the Code ("Section 409A"), (x) the

payment shall not be made to the Executive during such six month period and instead shall be made to a

trust in compliance with Revenue Procedure 92-64 (the "Rabbi Trust") and (y) the payment shall be paid

to the Executive on the earlier of the six-month anniversary of the Termination Date or the Executive's

death or Disability. Similarly, to the extent that the Executive otherwise would be entitled to any benefit

(other than a payment) during the six months beginning on the Termination Date that would be subject to

the Section 409A additional tax, the benefit shall be delayed and shall begin being provided (together, if

applicable, with an adjustment to compensate the Executive for the delay) on the earlier of the six-month

anniversary of the Termination Date, or the Executive's death or Disability.

(i)

The Company shall not take any action that would expose any payment or

benefit to the Executive to the additional tax of Section 409A, unless (w) the Company is obligated to take

the action under an agreement, plan or arrangement to which the Executive is a party, (x) the Executive

requests the action, (y) the Company advises the Executive in writing that the action may result in the

imposition of the additional tax, and (z) the Executive subsequently requests the action in a writing that

acknowledges that the Executive shall be responsible for any effect of the action under Section 409A.

(ii)

It is the Company's intention that the benefits and rights to which the

Executive could become entitled in connection with termination of employment comply with Section

409A. If the Executive or the Company believes, at any time, that any of such benefit or right does not

comply, it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the

terms of such benefits and rights such that they comply with Section 409A (with the most limited possible

economic effect on the Executive and on the Company).

(n)

Clawback of Certain Compensation and Benefits.

If within the three year period after the termination of the Executive's employment with

the Company for any reason other than by the Company for Cause:

(i)

it is determined in good faith by the Board and in accordance with the

due process requirements of Article 6(b) that the Executive's employment could have been terminated by

the Company for Cause under Article 6(b) (unless the Board knew or should have known that as of the

Termination Date the Executive's employment could have been terminated for Cause in accordance with

Article 6(b)); or

(ii)

if the Company determines that the Executive has engaged in fraudulent

or intentional misconduct related to or materially affecting the Company's business operations or the

Executive's duties at the Company; or

(iii)

the Executive breaches Article 7, then the Executive's employment shall

be deemed to have been terminated for Cause retroactively to the Termination Date, and in addition to

any other remedy that may be available to the Company in law or equity and/or pursuant to any other

provisions of this Agreement, the Executive shall also be subject to the following provisions:

(a)

he Executive shall be required to pay to the Company,

immediately upon written demand by the Board, (a) notwithstanding Article 1 (a)(iii), Article 1(a)(iv)

and Article 6(b), any additional amounts paid to Executive as a Bonus, deferred compensation, or

Severance; that Executive would not have received had Executive's employment been terminated for

Cause; and

(b)

the Executive shall be required to pay to the Company any

additional amounts paid to Executive on or after the Termination Date (including the pre-tax cost to the

Company of any benefits that are in excess of the total amount that the Company would have been

required to pay and the pre-tax cost of any benefits that the Company would have been required to

provide) that are in addition to those amounts Executive would have received if the Executive's

employment with the Company had been terminated by the Company for Cause in accordance with

Article 6(b) above; and

(c)

notwithstanding Article 1 (a)(iii) and Article 6(b), the Executive

shall forfeit at the discretion of the Board, based on the facts and circumstances surrounding the

Executive's culpability, all or a portion of the Stock Options granted pursuant to this Agreement, vested

and unvested, or if Stock Options have been exercised, all or a portion of the shares so issued for

cancellation upon payment by Company to Executive the full exercise price, while any remaining Stock

Options, if any, may be rescinded by the Board.

Restrictive Covenants.

(a)

Non-competition.

At all times during the Restricted Period, the Executive shall not, directly or indirectly

(whether as a principal, agent, partner, employee, officer, investor, owner, consultant, board member,

security holder, creditor or otherwise), engage in any Competitive Activity, or have any direct or indirect

interest in any sole proprietorship, corporation, company, partnership, association, venture or business or

any other person or entity that directly or indirectly (whether as a principal, agent, partner, employee,

officer, investor, owner, consultant, board member, security holder, creditor, or otherwise) engages in a

Competitive Activity; provided that the foregoing shall not apply to the Executive's ownership of

Common Stock of the Company or the acquisition by the Executive, solely as an investment, of securities

of any issuer that is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, and

that are listed or admitted for trading on any United States national securities exchange or that are quoted

on the NASDAQ Stock Market, or any similar system or automated dissemination of quotations of

securities prices in common use, so long as the Executive does not control, acquire a controlling interest

in or become a member of a group which exercises direct or indirect control of, more than five percent

(5%) of any class of capital stock of such corporation.

(b)

Non-solicitation of Employees and Certain Other Third Parties.

At all times during the Restricted Period, the Executive shall not, directly or indirectly,

for himself or for any other person, firm, corporation, partnership, association or other entity (i) employ

or attempt to employ or enter into any contractual arrangement with any employee, consultant or

independent contractor performing services for the Company, or any Affiliate or Related Entity, unless

such employee, consultant or independent contractor, has not been employed or engaged by the

Company for a period in excess of six (6) months, and/or (ii) call on or solicit any of the actual or

targeted prospective customers or clients of the Company or any Affiliate or Related Entity on behalf of

any person or entity in connection with any Competitive Activity, nor shall the Executive make known

the names and addresses of such actual or targeted prospective customers or clients, or any information

relating in any manner to the trade or business relationships of the Company or any Affiliates or Related

Entities with such customers or clients, other than in connection with the performance of the Executive's

duties under this Agreement, and/or (iii) persuade or encourage or attempt to persuade or encourage any

persons or entities with whom the Company or any Affiliate or Related Entity does business or has some

business relationship to cease doing business or to terminate its business relationship with the Company

or any Affiliate or Related Entity or to engage in any Competitive Activity on its own or with any

competitor of the Company or any Affiliate or Related Entity.

(c)

Confidential Information.

The Executive shall not at any time divulge, communicate, use to the detriment of the

Company or for the benefit of any other person or persons, or misuse in any way, any Confidential

Information pertaining to the business of the Company. Any Confidential Information or data now or

hereafter acquired by the Executive with respect to the business of the Company (which shall include, but

not be limited to, information concerning the Company's financial condition, prospects, technology,

customers, suppliers, sources of leads and methods of doing business) shall be deemed a valuable, special

and unique asset of the Company that is received by the Executive in confidence and as a fiduciary, and

the Executive shall remain a fiduciary to the Company with respect to all of such information.

Notwithstanding the foregoing, nothing herein shall be deemed to restrict the Executive from disclosing

Confidential Information as required to perform his duties under this Agreement or to the extent required

by law. If any person or authority makes a demand on the Executive purporting to legally compel him to

divulge any Confidential Information, the Executive immediately shall give notice of the demand to the

Company so that the Company may first assess whether to challenge the demand prior to the Executive's

divulging of such Confidential Information. The Executive shall not divulge such Confidential

Information until the Company either has concluded not to challenge the demand, or has exhausted its

challenge, including appeals, if any. Upon request by the Company, the Executive shall deliver promptly

to the Company upon termination of his services for the Company, or at any time thereafter as the

Company may request, all memoranda, notes, records, reports, manuals, drawings, designs, computer files

in any media and other documents (and all copies thereof) containing such Confidential Information.

(d)

Ownership of Developments.

All processes, concepts, techniques, inventions and works of authorship, including new

contributions, improvements, formats, packages, programs, systems, machines, compositions of matter

manufactured, developments, applications and discoveries, and all copyrights, patents, trade secrets, or

other intellectual property rights associated therewith conceived, invented, made, developed or created

by the Executive during the Term of Employment either during the course of performing work for the

Company, Affiliate, Related Entity or their clients or which are related in any manner to the business

(commercial or experimental) of the Company or its clients (collectively, the "Work Product"), within

the field of use of wear and corrosion resistant coatings shall belong exclusively to the Company and

shall, to the extent possible, be considered a work made by the Executive for hire for the Company

within the meaning of Title 17 of the United States Code. To the extent the Work Product within the

wear and corrosion coatings field of use may not be considered work made by the Executive for hire for

the Company, the Executive agrees to assign, and automatically assign at the time of creation of the

Work Product, without any requirement of further consideration, any right, title, or interest the Executive

may have in such Work Product. Upon the request of the Company, the Executive shall take such further

actions, including execution and delivery of instruments of conveyance, as may be appropriate to give

full and proper effect to such assignment. The Executive shall further: (i) promptly disclose the Work

Product to the Company; (ii) assign to the Company, without additional compensation, all patent or

other rights to such Work Product for the United States and foreign countries; (iii) sign all papers

necessary to carry out the foregoing; and (iv) give testimony in support of his inventions, all at the sole

cost and expense of the Company.

(e)

Books and Records.

All books, records, and accounts relating in any manner to the customers or clients of the

Company, whether prepared by the Executive or otherwise coming into the Executive's possession, shall

be the exclusive property of the Company and shall be returned immediately to the Company on

termination of the Executive's employment hereunder or on the Company's request at any time.

(f)

Acknowledgment by Executive.

The Executive acknowledges and confirms that the restrictive covenants contained in

this Article 7 (including without limitation the length of the term of the provisions of this Article 7) are

reasonably necessary to protect the legitimate business interests of the Company, and are not overbroad,

overlong, or unfair and are not the result of overreaching, duress or coercion of any kind. The Executive

further acknowledges and confirms that the compensation payable to the Executive under this

Agreement is in consideration for the duties and obligations of the Executive hereunder, including the

restrictive covenants contained in this Article 7, and that such compensation is sufficient, fair and

reasonable. The Executive further acknowledges and confirms that his full, uninhibited and faithful

observance of each of the covenants contained in this Article 7 will not cause him any undue hardship,

financial or otherwise, and that enforcement of each of the covenants contained herein will not impair

his ability to obtain employment commensurate with his abilities and on terms fully acceptable to him or

otherwise to obtain income required for the comfortable support of him and his family and the

satisfaction of the needs of his creditors. The Executive acknowledges and confirms that his special

knowledge of the business of the Company is such as would cause the Company serious injury or loss if

he were to use such ability and knowledge to the benefit of a competitor or were to compete with the

Company in violation of the terms of this Article 7. The Executive further acknowledges that the

restrictions contained in this Article 7 are intended to be, and shall be, for the benefit of and shall be

enforceable by, the Company's successors and assigns. The Executive expressly agrees that upon any

breach or violation of the provisions of this Article 7, the Company shall be entitled, as a matter of right,

in addition to any other rights or remedies it may have, to (i) temporary and/or permanent injunctive

relief in any court of competent jurisdiction as described in Article 7(i) hereof, and (ii) such damages as

are provided at law or in equity. The existence of any claim or cause of action against the Company or

its affiliates, whether predicated upon this Agreement or otherwise, shall not constitute a defense to the

enforcement of the restrictions contained in this Article 7.

(g)

Reformation by Court.

In the event that a court of competent jurisdiction shall determine that any provision of

this Article 7 is invalid or more restrictive than permitted under the governing law of such jurisdiction,

then only as to enforcement of this Article 7 within the jurisdiction of such court, such provision shall be

interpreted or reformed and enforced as if it provided for the maximum restriction permitted under such

governing law.

(h)

Extension of Time.

If the Executive shall be in violation of any provision of this Article 7, then each time

limitation set forth in this Article 7 shall be extended for a period of time equal to the period of time

during which such violation or violations occur. If the Company seeks injunctive relief from such

violation in any court, then the covenants set forth in this Article 7 shall be extended for a period of time

equal to the duration of such proceeding including all appeals by the Executive.

(i)

Injunction.

It is recognized and hereby acknowledged by the parties hereto that a breach by the

Executive of any of the covenants contained in Article 7 of this Agreement will cause irreparable

harm and damage to the Company, the monetary amount of which may be virtually impossible to

ascertain. As a result, the Executive recognizes and hereby acknowledges that the Company shall be

entitled to an injunction from any court of competent jurisdiction enjoining and restraining any

violation of any or all of the covenants contained in Article 7 of this Agreement by the Executive or

any of his affiliates, associates, partners or agents, either directly or indirectly, and that such right to

injunction shall be cumulative and in addition to whatever other remedies the Company may

possess.

Representations and Warranties of Executive.

The Executive represents and warrants to the Company that:

(a)

the Executive's employment will not conflict with or result in his breach of any

agreement to which he is a party or otherwise may be bound;

(b)

the Executive has not violated, and in connection with his employment with the

Company will not violate, any non-solicitation, non-competition or other similar covenant or agreement

of a prior employer by which he is or may be bound;

(c)

in connection with Executive's employment with the Company, he will not

use any confidential or proprietary information that he may have obtained in connection with

employment with any prior employer, with the exception of current or former affiliates, parents, or

subsidiaries of the company;

(d)

the Executive has not (i) been convicted of any felony; or (ii) committed any

criminal act with respect to Executive's current or any prior employment; and

(e)

the Executive is not dependent on alcohol or the illegal use of drugs.

Mediation.

Except to the extent the Company has the right to seek an injunction under Article 7(i) hereof, in

the event a dispute arises out of or relates to this Agreement, or the breach thereof, and if the dispute

cannot be settled through negotiation, the parties hereby agree first to attempt in good faith to settle the

dispute by mediation administered by the American Arbitration Association under its Employment

Mediation Rules before resorting to the jurisdiction of federal or state courts to resolve any dispute.

10.

Taxes.

Anything in this Agreement to the contrary notwithstanding, all payments required to be

made by the Company hereunder to the Executive or his estate or beneficiaries shall be subject to

the withholding of such amounts relating to taxes as the Company may reasonably determine it

should withhold pursuant to any applicable law or regulation. In lieu of withholding such amounts,

in whole or in part, the Company may, in its sole discretion, accept other provisions for payment of

taxes and withholding as required by law, provided it is satisfied that all requirements of law

affecting its responsibilities to withhold have been satisfied.

11.

Assignment.

The Company shall have the right to assign this Agreement and its rights and obligations

hereunder in whole, but not in part, to any corporation or other entity with or into which the Company

may hereafter merge or consolidate or to which the Company may transfer all or substantially all of its

assets, if in any such case said corporation or other entity shall by operation of law or expressly in writing

assume all obligations of the Company hereunder as fully as if it had been originally made a party hereto,

but may not otherwise assign this Agreement or its rights and obligations hereunder. The Executive may

not assign or transfer this Agreement or any rights or obligations hereunder.

12.

Governing Law.

This Agreement shall be governed by and construed and enforced in accordance with the internal

laws of the State of Florida, without regard to principles of conflict of laws.

13.

Jurisdiction and Venue.

The parties acknowledge that a substantial portion of the negotiations, anticipated performance

and execution of this Agreement occurred or shall occur in Miami, Florida, and that, therefore, without

limiting the jurisdiction or venue of any other federal or state courts, each of the parties irrevocably and

unconditionally (i) agrees that any suit, action or legal proceeding arising out of or relating to this

Agreement which is expressly permitted by the terms of this Agreement to be brought in a court of law,

shall be brought in the courts of record of the State of Florida or the court of the United States; (ii)

consents to the jurisdiction of each such court in any such suit, action or proceeding; (iii) waives any

objection which it or he may have to the laying of venue of any such suit, action or proceeding in any of

such courts; and (iv) agrees that service of any court papers may be effected on such party by mail, as

provided in this Agreement, or in such other manner as may be provided under applicable laws or court

rules in such courts.

14.

Survival.

The respective rights and obligations of the parties hereunder shall survive any termination of the

Executive's employment hereunder, including without limitation, the Company's obligations under Article

6 and the Executive's obligations under Article 7 above, and the expiration of the Term of Employment,

to the extent necessary to the intended preservation of such rights and obligations.

15.

Notices.

All notices required or permitted to be given hereunder shall be in writing and shall be

personally delivered by courier, sent by registered or certified mail, return receipt requested or sent by

confirmed facsimile transmission addressed as set forth herein. Notices personally delivered, sent by

facsimile or sent by overnight courier shall be deemed given on the date of delivery and notices mailed

in accordance with the foregoing shall be deemed given upon the earlier of receipt by the addressee, as

evidenced by the return receipt thereof, or three (3) days after deposit in the U.S. mail. Notice shall be

sent (i) if to the Company, addressed to 2665 South Bayshore Drive, Suite 450, Miami, Florida 33133

USA Attention: Xxxxxx Xxxxxx, CEO, and (ii) if to the Executive, to his address as reflected on the

payroll records of the Company, or to such other address as either party shall request by notice to the

other in accordance with this provision.

16.

Benefits; Binding Effect.

This Agreement shall be for the benefit of and binding upon the parties hereto and their respective

heirs, personal representatives, legal representatives, successors and, where permitted and applicable,

assigns, including, without limitation, any successor to the Company, whether by merger, consolidation,

sale of stock, sale of assets or otherwise.

17.

Right to Consult with Counsel; No Drafting Party.

The Executive acknowledges having read and considered all of the provisions of this Agreement

carefully, and having had the opportunity to consult with counsel of his own choosing, and, given this, the

Executive agrees that the obligations created hereby are not unreasonable. The Executive acknowledges

that he has had an opportunity to negotiate any and all of these provisions and no rule of construction

shall be used that would interpret any provision in favor of or against a party on the basis of who drafted

the Agreement.

18.

Severability.

The invalidity of any one or more of the words, phrases, sentences, clauses, provisions, sections

or articles contained in this Agreement shall not affect the enforceability of the remaining portions of this

Agreement or any part thereof, all of which are inserted conditionally on their being valid in law, and, in

the event that any one or more of the words, phrases, sentences, clauses, provisions, sections or articles

contained in this Agreement shall be declared invalid, this Agreement shall be construed as if such invalid

word or words, phrase or phrases, sentence or sentences, clause or clauses, provisions or provisions,

section or sections or article or articles had not been inserted. If such invalidity is caused by length of time

or size of area, or both, the otherwise invalid provision will be considered to be reduced to a period or

area which would cure such invalidity.

19.

Waivers.

The waiver by either party hereto of a breach or violation of any term or provision of this

Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation.

20.

Damages; Attorneys Fees.

Nothing contained herein shall be construed to prevent the Company or the Executive from

seeking and recovering from the other damages sustained by either or both of them as a result of its or

his breach of any term or provision of this Agreement. In the event that either party hereto seeks to

collect any damages resulting from, or the injunction of any action constituting, a breach of any of the

terms or provisions of this Agreement, then the party found to be at fault shall pay all reasonable costs

and attorneys' fees of the other.

21.

No Set-off or Mitigation.

The Company's obligation to make the payments provided for in this Agreement and otherwise to

perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense

or other claim, right or action which the Company may have against the Executive or others.

22.

Section Headings.

The article, section and paragraph headings contained in this Agreement are for reference

purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

23.

No Third Party Beneficiary.

Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon

or give any person other than the Company, the parties hereto and their respective heirs, personal

representatives, legal representatives, successors and permitted assigns, any rights or remedies under or

by reason of this Agreement.

24.

Counterparts.

This Agreement may be executed in one or more counterparts, each of which shall be deemed to

be an original but all of which together shall constitute one and the same instrument and agreement.

25.

Indemnification.

(a)

Subject to limitations imposed by law, the Company shall indemnify and hold

harmless the Executive to the fullest extent permitted by law from and against any and all claims,

damages, expenses (including attorneys' fees), judgments, penalties, fines, settlements, and all other

liabilities incurred or paid by him in connection with the investigation, defense, prosecution, settlement or

appeal of any threatened, pending or completed action, suit or proceeding, whether civil, criminal,

administrative or investigative and to which the Executive was or is a party or is threatened to be made a

party by reason of the fact that the Executive is or was an officer, employee or agent of the Company, or

by reason of anything done or not done by the Executive in any such capacity or capacities, provided that

the Executive acted in good faith, in a manner that was not grossly negligent or constituted willful

misconduct and in a manner he reasonably believed to be in or not opposed to the best interests of the

Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his

conduct was unlawful. The Company also shall pay any and all expenses (including attorney's fees)

incurred by the Executive as a result of the Executive being called as a witness in connection with any

matter involving the Company and/or any of its officers or directors.

(b)

Except in the event that the Company is involved in an adversarial claim either

against or initiated by Executive, the Company shall pay any expenses (including attorneys' fees),

judgments, penalties, fines, settlements, and other liabilities incurred by the Executive in investigating,

defending, settling or appealing any action, suit or proceeding described in this Article 25 in advance of

the final disposition of such action, suit or proceeding. Subject to the limited exception conditioned

above, the Company shall promptly pay the amount of such expenses to the Executive, but in no event

later than 10 days following the Executive's delivery to the Company of a written request for an advance

pursuant to this Article 25, together with a reasonable accounting of such expenses.

(c)

The Executive hereby undertakes and agrees to repay to the Company any

advances made pursuant to this Article 25 if and to the extent that it shall ultimately be found that the

Executive is not entitled to be indemnified by the Company for such amounts.

(d)

The Company shall make the advances contemplated by this Article 25

regardless of the Executive's financial ability to make repayment, and regardless whether indemnification

of the Indemnitee by the Company will ultimately be required. Any advances and undertakings to repay

pursuant to this Article 25 shall be unsecured and interest-free. The provisions of this Article 25 shall

survive the termination of the Term of Employment or expiration of the term of this Agreement.

(e)

The provisions of this Article 25 shall survive the termination of the Term of

Employment or expiration of the term of this Agreement.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first

above written.

“EXECUTIVE”

Xxxxxxx X. Xxxx

/s/ Xxxxxxx X. Xxxx

Xxxxxxx X. Xxxx

“COMPANY”

ABAKAN INC.

/s/ Xxxxxx X. Xxxxxx

By: Xxxxxx X. Xxxxxx

On Behalf of Abakan Inc.’s Board of Directors

EXHIBIT A

FORM OF RELEASE

GENERAL RELEASE OF CLAIMS

Xxxxxxx X. Xxxx ("Executive"), for himself and his family, heirs, executors, administrators, legal

representatives and their respective successors and assigns, in exchange for the consideration received

pursuant to this Employment Agreement to which this release is attached as Exhibit A (the "Employment

Agreement"), does hereby release and forever discharge Abakan Inc. (the "Company"), its subsidiaries,

affiliated companies, successors and assigns, and its current or former directors, officers, employees,

shareholders or agents in such capacities (collectively with the Company, the "Released Parties") from

any and all actions, causes of action, suits, controversies, claims and demands whatsoever, for or by

reason of any matter, cause or thing whatsoever, whether known or unknown including, but not limited

to, all claims under any applicable laws arising under or in connection with Executive's employment or

termination thereof, whether for tort, breach of express or implied employment contract, wrongful

discharge, intentional infliction of emotional distress, or defamation or injuries incurred on the job or

incurred as a result of loss of employment. Executive acknowledges that the Company encouraged him to

consult with an attorney of his choosing, and through this General Release of Claims encourages him to

consult with his attorney with respect to possible claims under the Age Discrimination in Employment

Act ("ADEA") and that he understands that the ADEA is a Federal statute that, among other things,

prohibits discrimination on the basis of age in employment and employee benefits and benefit plans.

Without limiting the generality of the release provided above, Executive expressly waives any and all

claims under ADEA that he may have as of the date hereof. Executive further understands that by signing

this General Release of Claims he is in fact waiving, releasing and forever giving up any claim under the

ADEA as well as all other laws within the scope of this paragraph 1 that may have existed on or prior to

the date hereof. Notwithstanding anything in this paragraph 1 to the contrary, this General Release of

Claims shall not apply to (i) any rights or claims that may arise as a result of events occurring after the

date this General Release of Claims is executed, (ii) any indemnification rights Executive may have as a

former officer or director of the Company or its subsidiaries or affiliated companies, (iii) any claims for

benefits under any directors' and officers' liability policy maintained by the Company or its subsidiaries or

affiliated companies in accordance with the terms of such policy, and (iv) any rights as a holder of equity

securities of the Company.

Executive represents that he has not filed against the Released Parties any complaints, charges,

or lawsuits arising out of his employment, or any other matter arising on or prior to the date of this

General Release of Claims, and covenants and agrees that he will never individually or with any person

file, or commence the filing of, any charges, lawsuits, complaints or proceedings with any governmental

agency, or against the Released Parties with respect to any of the matters released by Executive pursuant

to paragraph 1 hereof (a "Proceeding"); provided, however, Executive shall not have relinquished his

right to commence a Proceeding to challenge whether Executive knowingly and voluntarily waived his

rights under ADEA.

Executive hereby acknowledges that the Company has informed him that he has up to twenty-one

(21) days to sign this General Release of Claims and he may knowingly and voluntarily waive that

twenty-one (21) day period by signing this General Release of Claims earlier. Executive also understands

that he shall have seven (7) days following the date on which he signs this General Release of Claims

within which to revoke it by providing a written notice of his revocation to the Company.

Executive acknowledges that this General Release of Claims will be governed by and construed

and enforced in accordance with the internal laws of the State of Florida applicable to contracts made and

to be performed entirely within such State.

Executive acknowledges that he has read this General Release of Claims, that he has been advised

that he should consult with an attorney before he executes this general release of claims, and that he

understands all of its terms and executes it voluntarily and with full knowledge of its significance and the

consequences thereof.

This General Release of Claims shall take effect on the eighth day following Executive's

execution of this General Release of Claims unless Executive's written revocation is delivered to the

Company within seven (7) days after such execution.

____________________

Xxxxxxx X. Xxxx

Date: __________________________.

Appendix A

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Amended Abakan Inc., 2009 Stock

Option Plan shall have the same defined meanings in this Stock Option Agreement.

NOTICE OF STOCK OPTION GRANT

The undersigned Optionee, Xxxxxxx X. Xxxx, has been granted an option (herein referred to as the

“Option”) to purchase up to an aggregate of One Million (1,000,000) shares of Common Stock of the

Corporation, subject to the terms and conditions of the Plan and this Stock Option Agreement, as follows:

Optionee:

Xxxxxxx X. Xxxx

Date of Grant:

January 1, 2015

Exercise Price per Share:

$0.60

Total Number of Shares:

1,000,000 Shares of Common Stock

Total Exercise Price:

$600,000

Type of Option:

Incentive Stock Option

Non-Statutory Stock Option

Term/Expiration Date:

Ten (10) years from Date of Grant

Vesting Schedule: This Option shall be exercisable, in whole or in part, according to the

following vesting schedule:

(a)

On May 31, 2015, Optionee shall have the right to exercise that portion of the

Option granted herein for five hundred thousand (500,000) shares of Common Stock.

(b)

On May 31, 2016, Optionee shall have the right to exercise that portion of the

Option granted herein for five hundred thousand (500,000) shares of Common Stock.

Termination:

(a)

In the event of Optionee’s Involuntary Termination, as that term is defined in the

Plan, this Option shall immediately vest in full and shall be exercisable as to all Shares of

Common Stock subject to this Option for a period of twelve (12) months after Optionee

ceases to be an Employee.

(b)

In the event of Optionee’s termination of employment for any reason other than

Involuntary Termination, the Optionee’s death or Disability, all outstanding options with

respect to all unvested shares at the date of such termination held by the Optionee shall

terminate and cease to remain outstanding, and Optionee shall have a period of twelve

(12) months after Optionee ceases to be an Employee in which to exercise any vested

options.

(c)

Upon Optionee’s death or Disability, all outstanding options with respect to all

unvested shares at the date of such termination held by the Optionee shall terminate and

cease to remain outstanding, and Optionee, or the personal representative of his estate, as

the case may be, shall have a period of thirty-six (36) months after Optionee ceases to be

an Employee in which to exercise any vested options.

(d)

In no event may Optionee exercise this Option after the Term/Expiration Date

provided above in the Notice of Grant.

II.

AGREEMENT

Grant of Option.

(a)

The Plan Administrator of the Corporation hereby grants to the Optionee named

in the Notice of Grant (the “Optionee”), the Option to purchase the number of Shares set

forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of

Grant (the “Exercise Price”), and subject to the terms and conditions of the Plan, which is

incorporated herein by reference. In the event of a conflict between the terms and

conditions of the Plan and this Option Agreement, the terms and conditions of the Plan

shall prevail.

(b)

If designated in the Notice of Grant as an Incentive Stock Option, this Option

shall qualify as an Incentive Stock Option as defined in Section 422 of the Code.

Nevertheless, to the extent that this Option exceeds the $100,000 rule of Code Section

422(d) or fails to comply with any other requirement of Code Section 422 or regulations

issued thereunder, such Option shall be treated as a Non-Statutory Stock Option.

Exercise of Option.

(a)

Right to Exercise. This Option shall be exercisable during its term in accordance

with the Vesting Schedule set out in the Notice of Grant and with the applicable

provisions of the Plan and this Option Agreement.

(b)

Method of Exercise. This Option shall be exercisable by delivery of an exercise

notice in the form attached as Exhibit A (the “Exercise Notice”), which shall state the

election to exercise the Option, the number of Shares with respect to which the Option is

being exercised, and such other representations and agreements as may be required by the

Corporation. The Exercise Notice shall be accompanied by payment of the aggregate

Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised

upon receipt by the Corporation of such fully executed Exercise Notice accompanied by

the aggregate Exercise Price.

(c)

Compliance with Law. No Shares shall be issued pursuant to the exercise of an

Option unless such issuance and such exercise comply with Applicable Law. Assuming

such compliance, for income tax purposes the Shares shall be considered transferred to

the Optionee on the date on which the Option is exercised with respect to such Shares.

Optionee’s Representations. In the event the Shares have not been registered under the

Securities Act of 1933, as amended (the “Securities Act”), at the time this Option is exercised, if

required by the Corporation, the Optionee shall deliver to the Corporation, concurrently with the

exercise of all or any portion of this Option, his or her Investment Representation Statement in

the form attached hereto as Exhibit B.

Method of Payment. Payment of the aggregate Exercise Price shall be made by any

manner provided in the Plan. However, following the registration of the Shares under Section

12(g) of the Securities Exchange Act of 1934, the Exercise Price also may be paid as follows:

(a)

in shares of Common Stock held for the requisite period necessary to avoid a

charge to the Corporation’s earnings for financial reporting purposes and valued at Fair

Market Value on the Exercise Date; or

(b)

to the extent the Option is exercised for vested shares through a special sale and

remittance procedure pursuant to which the Optionee (or any other person or persons

exercising the Option) concurrently will provide irrevocable written instructions to (i) a

brokerage firm designated by the Corporation to effect the immediate sale of the

purchased shares and remit to the Corporation, out of the sale proceeds available on the

settlement date, sufficient funds to cover the aggregate exercise price payable for the

purchased shares, plus all applicable Federal, state and local income and employment

taxes required to be withheld by the Corporation by reason of such exercise and (ii) the

Corporation to deliver the certificates for the purchased shares directly to such brokerage

firm in order to complete the sale.

Restrictions on Exercise. This Option may not be exercised if the issuance of such

Shares upon such exercise or the method of payment of consideration for such shares would

constitute a violation of any Applicable Law.

Limited Transferability of Option; Restrictions on Transfer of Shares. If this Option is

designated as an Incentive Stock Option in the Option Grant Notice, this Option may not be

transferred or assigned in any manner by Optionee other than by will or by the laws of descent

and distribution, and during the lifetime of Optionee, may be exercised only by Optionee. If this

Option is designated as a Non-statutory Stock Option in the Option Grant Notice, at the discretion

of the Plan Administrator and in connection with Optionee’s estate plan, this Option may be

assigned in whole or in part during Optionee’s lifetime to one or more members of Optionee’s

immediate family or to a trust established exclusively for the benefit of one or more such family

members.

Successors and Assigns. The terms of the Plan and this Option Agreement shall be

binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

Term of Option. This Option may be exercised only within the term set out in the Notice

of Grant, and may be exercised during such term only in accordance with the Plan and the terms

of this Option Agreement.

Entire Agreement, Governing Law. The Plan is incorporated herein by reference. The

Plan and this Option Agreement, together with all Exhibits attached hereto, constitute the entire

agreement of the parties with respect to the subject matter hereof and supersede in their entirety

all prior undertakings and agreements of the Corporation and Optionee with respect to the subject

matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a

writing signed by the Corporation and Optionee. This Option Agreement is governed by the

internal substantive laws but not the choice of law rules of Florida.

10.

No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES

THAT THE VESTING OF ANY PORTION OF THIS OPTION PURSUANT TO THE

VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A

CONSULTANT OR SERVICE PROVIDER. OPTIONEE FURTHER ACKNOWLEDGES AND

AGREES THAT THIS OPTION AGREEMENT, THE TRANSACTIONS CONTEMPLATED

HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT

CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS

A CONSULTANT OR SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY

PERIOD, OR AT ALL.

11.

Conflict. If there is a conflict between this Agreement and the Plan, the provisions of the

Plan shall control.

12.

Acknowledgement. Optionee acknowledges receipt of a copy of the Plan and represents

that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option

granted hereunder subject to all of the terms and provisions thereof. Optionee has reviewed the

Plan and this Option Agreement in their entirety, has had an opportunity to obtain the advice of

counsel prior to executing this Option Agreement and fully understands all provisions of this

Option Agreement. Optionee hereby agrees to accept as binding, conclusive and final all

decisions or interpretations of the Plan Administrator on any questions arising under the Plan or

this Option Agreement. Optionee further agrees to notify the Corporation upon any change in the

residence address indicated below.

ABAKAN INC.

By: /s/ Xxxxxx X. Xxxxxx

Name: Xxxxxx X. Xxxxxx

Title: On Behalf of the Board of Directors

OPTIONEE

/s/ Xxxxxxx X. Xxxx

Xxxxxxx X. Xxxx

EXHIBIT A

AMENDED ABAKAN INC.

2009 STOCK OPTION PLAN

EXERCISE NOTICE

Abakan Inc.

2600 X. Xxxxxxxx Xxxxx, Xxxxx 000

Xxxxx, Xxxxxxx 00000

Attention: ___________________

Exercise of Option. Effective as of this ____________________day of _________, 20__

the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase shares of Common

Stock (the “Shares”) of Abakan Inc. (the “Corporation”) granted under and pursuant to the Amended

Abakan 2009 Stock Option Plan (the “Plan”) and the Stock Option Agreement dated January 1, 2015 (the

“Option Agreement”).

Delivery of Payment. Optionee herewith delivers to the Corporation the full exercise

price of the Shares, as set forth in the Option Agreement.

Representations of Optionee. Optionee acknowledges that Optionee has received, read

and understands the Plan and the Option Agreement and agrees to abide by and be bound by their terms

and conditions.

Rights as Shareholder. Until the issuance of the Shares (as evidenced by the appropriate

entry on the books of the Corporation or of a duly authorized transfer agent of the Corporation), no right

to receive dividends or any other rights as a shareholder shall exist with respect to the Shares,

notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as

practicable after the Option is exercised. No adjustment shall be made for a dividend or other right for

which the record date is prior to the date of issuance.

Tax Consultation. Optionee understands that Optionee may suffer adverse tax

consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that

Optionee has consulted with any tax consultants Optionee deems advisable in connection with the

purchase or disposition of the Shares and that Optionee is not relying on the Corporation for any tax

advice.

Restrictive Legends and Stop-Transfer Orders.

(a)

Legends. Optionee understands and agrees that, in addition to any other legends

the Board determines, in its discretion, are necessary or appropriate, the Corporation shall cause

the legends set forth below or legends substantially equivalent thereto, to be placed upon any

certificate(s) evidencing ownership of the Shares together with any other legends that may be

required by the Corporation or by state or federal securities laws:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY

NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE

ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH

RESPECT TO THE SHARES OR AN EXEMPTION FROM THE

REGISTRATION REQUIREMENTS OF SAID ACT THAT IS THEN

APPLICABLE TO THE SHARES, AS TO WHICH A PRIOR OPINION OF

COUNSEL ACCEPTABLE TO THE ISSUER OR TRANSFER AGENT MAY

BE REQUIRED.

(b)

Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with

the restrictions referred to herein, the Corporation may issue appropriate “stop transfer”

instructions to its transfer agent, if any, and that, if the Corporation transfers its own securities, it

may make appropriate notations to the same effect in its own records.

(c)

Refusal to Transfer. The Corporation shall not be required (i) to transfer on its

books any Shares that have been sold or otherwise transferred in violation of any of the

provisions of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to

vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been

so transferred.

Interpretation. Any dispute regarding the interpretation of this Exercise Notice shall be

submitted by Optionee or by the Corporation forthwith to the Administrator which shall review such

dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final

and binding on all parties.

Governing Law; Severability. This Exercise Notice is governed by the internal

substantive laws but not the choice of law rules, of the State of Florida.

Entire Agreement. The Plan and Option Agreement are incorporated herein by reference.

This Exercise Notice, the Plan, the Option Agreement and the Investment Representation Statement

constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in

their entirety all prior undertakings and agreements of the Corporation and Optionee with respect to the

subject matter hereof, and may not be modified adversely-to the Optionee’s interest except by means of a

writing signed by the Corporation and Optionee.

Submitted by:

Accepted by:

OPTIONEE

ABAKAN INC.

_____________________________

Signature

Name

Title

XXXXXXX X. XXXX

Print Name

_____________________________

Date Received

Address

EXHIBIT B

AMENDED ABAKAN INC.

2009 STOCK OPTION PLAN

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:

XXXXXXX X. XXXX

CORPORATION:

ABAKAN INC.

SECURITIES:

COMMON STOCK

AMOUNT:

______________________

DATE:

______________________

In connection with the purchase of the above-listed Securities, the undersigned Optionee

represents to the Corporation the following:

(a)

Optionee is aware of the Corporation’s business affairs and financial condition and has

acquired sufficient information about the Corporation to reach an informed and knowledgeable decision

to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own

account only and not with a view to, or for resale in connection with, any “distribution” thereof within the

meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(b)

Optionee acknowledges and understands that the Securities constitute “restricted

securities” under the Securities Act and have not been registered under the Securities Act in reliance upon

a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature

of Optionee’s investment intent as expressed herein. In this connection, Optionee understands that, in the

view of the Securities and Exchange Commission, the statutory basis for such exemption may be

unavailable if Optionee’s representation was predicated solely upon a present intention to hold these

Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or

until an increase or decrease in the market price of the Securities, or for a period of one year or any other

fixed period in the future. Optionee further understands that the Securities must be held indefinitely unless

they are subsequently registered under the Securities Act or an exemption from such registration is

available. Optionee further acknowledges and understands that the Corporation is under no obligation to

imprinted with a legend that prohibits the transfer of the Securities unless they are registered or such

registration is not required in the opinion of counsel satisfactory to the Corporation, and any other legend

required under applicable state securities laws.

(c)

Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated

under the Securities Act, which, in substance, permit limited public resale of “restricted securities”

acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction

of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant

of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act.

In the event that the Corporation does not qualify under Rule 701 at the time of grant of the

Option, then the Securities may be resold in certain limited circumstances subject to the provisions of

Rule 144, including: (i) the resale may occur not less than six (6) months after the date the Securities were

sold by the Corporation, (ii) the resale may be made through a broker in an unsolicited “broker’s

transaction” or in transactions directly with a market maker (as said term is defined under the Securities

Exchange Act of 1934); and, in the case of an affiliate, (iii) certain public information must be made

available about the Corporation, (iv) the amount of Securities being sold during any three month period

may not exceed the limitations specified in Rule 144(e), and (v) a Form 144 must be timely filed, if

applicable.

(d)

Optionee further understands that in the event all of the applicable requirements of Rule

701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some

other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701

are not exclusive, the staff of the Securities and Exchange Commission has expressed its opinion that

persons proposing to sell private placement securities other than in a registered offering and otherwise

than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an

exemption from registration is available for such offers or sales, and that such persons and their respective

brokers who participate in such transactions do so at their own risk. Optionee understands that no

assurances can be given that any such other registration exemption will be available in such event.

Signature of Optionee:

Date: ___________________________

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