exhibit 10. 7 march 10, 2014 dr. zvi yaniv president and chief operating officer applied nanotech holdings, inc. 3006 longhorn boulevard, suite 107 austin, texas 78758 dear zvi, as you know, the board of applied nanotech holdings, inc. ( the “ company ” ) has approved today the agreement and plan of merger and exchange ( the “ merger agreement ” ) by and among the company, nanomerger sub inc., pen inc., nanoholding inc. and carl zeiss, inc.. if the transactions contemplated by that merger agreement become effective with the company merging into pen, inc. ( “ pen ” ), you agree that at the closing you and pen and its subsidiaries, as applicable, will execute and deliver the following documents : 1. termination of employment agreement and mutual releases in the form attached to this letter as annex a ; 1. termination of employment agreement and mutual releases in the form attached to this letter as annex a ; 1. 2. letter agreement regarding continued employment attached as annex b ; 2. letter agreement regarding continued employment attached as annex b ; 2. 3. restricted stock agreement attached as annex c ; 3. restricted stock agreement attached as annex c ; 3. 4. piggyback registration rights agreement attached as annex d ; and 4. piggyback registration rights agreement attached as annex d ; and 4. 5. form of confidentiality agreement executed by all employees of pen. 5. form of confidentiality agreement executed by all employees of pen. 5. in addition, on the closing date, the company ( or its successor ) will enter into a services agreement in the form attached as annex e with a service company that you identify. your stock options, along with other options of the company, will not be affected by the mergers. you will agree to amend your convertible note and convert it to stock of pen on terms substantially the same as those agreed to by the other non - employee noteholders who hold similar notes. you have indicated that you plan to continue to follow the direction of the company ’ s board of directors with respect to the transactions described in the merger agreement and the implementation of any board approved budget and other matters. however, you are authorized and requested to work with scott rickert and any others associated with nanofilm that he may identify in order to help them better understand the technology of the company and its subsidiaries and potential applications of that technology to products that can be developed by the