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PACIFIC FUEL CELL CORP.
 Type of Option (check one): o Incentive o Nonqualified
 
 1 Grant of Option.
 
 2 Vesting of Option.
 2.1 Vesting Schedule.
  On or After:
    
    Option Exercisable As To:First anniversary of Vesting Measurement Date:
    
    50 % of the SharesLast day of each calendar month after such first anniversary
    
    4.17 % of the Shares
  2.2 Change in Control.
  (i)
    
    provide for the purchase or exchange of this Option for an amount of cash or other
property having a value equal to the difference, or spread, between
 (x)
    
    the value of the cash or other property that the Optionee would have received
pursuant to such Change in Control transaction in exchange for any shares issuable upon
exercise of this Option, in the amount that the Optionee would have received had the
then exercisable portion, if any, of this Option been exercised immediately prior to
such Change in Control transaction, and(y)
    
    the Exercise Price,
 (ii)
    
    adjust the terms of this Option in a manner determined by the Administrator to reflect
the Change in Control,




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(iii)
    
    cause this Option to be assumed, or new rights substituted therefor, by another
entity, through the continuance of the Plan and the assumption of this Option, or the
substitution for this Option of a new option of comparable value covering shares of a
successor or parent corporation, with appropriate adjustments as to the number and kind of
 shares and Exercise Price, in which event the Plan and this Option, or the new option
substituted therefor, shall continue in the manner and under the terms so provided,(iv)
    
    cancel this Option if this Option is deemed to have no net value on the basis
described in paragraph 2.2(i) above or if the Option is not then exercisable by virtue of
this Agreement, as then in effect, or(v)
    
    make such other provision as the Administrator may consider equitable.
  3 Term of Option.
  3.1 Maximum Term.
  3.2 Involuntary Termination without Cause.
 other than
 3.3 Voluntary Resignation.
  3.4 Permanent Disability.
  3.5 Death.
  3.6 Change in Control.
  3.7 Termination for Cause.




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3.8 Breach and Non-Competition.
  4 Exercise of Option.
 4.1 Persons Permitted to Exercise Option.
  4.2 Exercise as to Vested Portion of Option.
  4.3 No Exercise after Termination.
  4.4 Mechanics of Exercise.
  (a)
    
    a written notice of exercise which identifies this Agreement and states the number of
Shares then being purchased (but no fractional Shares may be purchased);(b)
    
    a check or cash in the amount of the Exercise Price (or payment of the Exercise Price
in such other form of lawful consideration as the Administrator may approve from time to
time under the provisions of the Plan);(c)
    
    a check or cash in the amount reasonably requested by the Company to satisfy the
Companys withholding obligations under federal, state or other applicable tax laws with
respect to the taxable income, if any, recognized by the Optionee in connection with the
exercise of this Option (unless the Company and Optionee shall have made other arrangements
for deductions or withholding from Optionees wages, bonus or other compensation payable to
Optionee, or by the withholding of Shares issuable upon exercise of this Option or the
delivery of Shares owned by the Optionee in accordance with the provisions of the Plan,
provided such arrangements satisfy the requirements of applicable tax laws); and(d)
    
    a letter, if requested by the Company, in such form and substance as the Company may
require, setting forth the investment intent of the Optionee, or of a Successor designated
in Section 5, as the case may be.




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4.5 Exercise Prior to Vesting; Purchase of Restricted Stock.
  5 Transfers on Death of Optionee; Restrictions on Lifetime Assignments.
  5.1 No Assignment of Incentive Stock Options.
  (a)
    
    the rights of the Optionee under this Agreement may not be assigned or
transferred except by will or by the laws of descent and distribution,(b)
    
    this Option may be exercised during the lifetime of the Optionee only by such
Optionee;(c)
    
    if the Optionees Continuous Service terminates as a result of his or her
death, and provided Optionees rights hereunder shall have vested pursuant to Section 2
hereof, Optionees legal representative, his or her legatee, or the person who acquired
the right to exercise this Option by reason of the death of the Optionee (with regard
to incentive stock options, each individually, a Successor) shall succeed to the
Optionees rights and obligations under this Agreement; and(d)
    
    after the death of the Optionee, only a Successor may exercise this Option.
  5.2 Limited Assignability of Nonqualified Stock Options.
  (a)
    
    the rights of the Optionee under this Agreement may be assigned or transferred
by will or by the laws of descent and distribution, and Optionees legal
representative, his or her legatee, or the person who acquired the right to exercise
this Option by reason of the death of the Optionee shall succeed to the Optionees
rights and obligations under this Agreement, and(b)
    
    the rights of the Optionee under this Agreement also may be assigned and
transferred by the Optionee for estate planning purposes to members of the immediate
family of the Optionee, including for this purpose, but not limited to, spouses,
parents, descendants, brothers and sisters, or to trusts established for the benefit of
such persons.
  5.3 Additional Limitations on Transfer of Options and Shares




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6 Representations and Warranties of Optionee.
 6.1 Investment Intent as to Options.
  6.2 Investment Intent as to Shares.
  (a)
    
    The Optionee is purchasing the Shares solely for the Optionees own account for
investment and not with a view to or for sale or distribution of the Shares or any portion
thereof and not with any present intention of selling, offering to sell or otherwise
disposing of or distributing the Shares or any portion thereof. The Optionee also
represents that the entire legal and beneficial interest of the Shares the Optionee is
purchasing is being purchased for, and will be held for the account of, the Optionee only
and neither in whole nor in part for any other person.(b)
    
    The Optionee has discussed the Company and its plans, operations and financial
condition with its officers and that the Optionee has received all such information as the
Optionee deems necessary and appropriate to enable the Optionee to evaluate the financial
risk inherent in making an investment in the Shares of the Company, and has received
satisfactory and complete information concerning the business and financial condition of
the Company in response to all inquiries in respect thereof.(c)
    
    The Optionee realizes that the purchase of the Shares will be a highly speculative
investment.(d)
    
    The Optionee is able, without impairing the Optionees financial condition, to hold
the Shares for an indefinite period of time and to suffer a complete loss on the
investment.(e)
    
    The Optionee acknowledges that he is aware that the Shares to be issued to him by the
Company pursuant to this Agreement have not been registered under the Act, and
 (i)
    
    the Shares must be held indefinitely unless a transfer of them is subsequently
registered under the Act or an exemption from such registration is available;(ii)
    
    the share certificate(s) representing the Shares will be stamped with the
legends restricting transfer as specified in this Agreement in Section 13 below; and(iii)
    
    the Company will make a notation in its records of the aforementioned
restrictions on transfer and legends as described in Section 14 below.
 (f)
    
    The Optionee understands that the Shares are restricted securities within the meaning
of Rule 144 promulgated under the Act; that the exemption from registration under Rule 144
will not be available in any event for at least one year from the date of sale of the
Shares to the Optionee, and even then will not be available unless (i) a public trading
market then exists for the Shares of the Company, (ii) adequate current public information
concerning the Company is then available to the public, (iii) the Optionee has been the
beneficial owner and the Optionee has paid the full purchase price for the Shares at least
one year prior to the sale, and (iv) other terms and conditions of Rule 144 are complied
with; and that any sale of the Shares may be made by it only in limited amounts in
accordance with such terms and conditions of Rule 144, as amended from time to time.(g)
    
    Without in any way limiting any of the other provisions of this Agreement, Optionees
further agreement that the Optionee shall in no event make any disposition of all or any
portion of the Shares which the Optionee is purchasing unless and until:
 (i)
    
    there is then in effect a Registration Statement under the Act covering such
proposed disposition and such disposition is made in accordance with said Registration
Statement; or(ii)
    
    (A) the Optionee shall have notified the Company of the proposed disposition
and shall have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, (B) the Optionee shall have furnished the Company
with an opinion of counsel to the effect that such disposition will not require
registration of such shares under the Act, and (C) such opinion of counsel
shall have been concurred in by counsel for the Company and the Company shall have
advised the Optionee of such concurrence.




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(h)
    
    The Optionee represents and warrants that he or she has not engaged in any Adverse
Activity as defined in Section 3.8.(i)
    
    The Optionee acknowledges that the Optionee has been furnished with a copy of the Plan,
has read the Plan and this Agreement, and understands that all rights and obligations
connected with this Agreement are set forth in this Agreement and in the Plan.(j)
    
    The Optionee is a citizen or permanent resident of the United States.
 6.3 Adjustments Upon Changes in Capital Structure.
  7 No Creation or Enlargement of Optionees Rights to Continue in any Capacity.
  8 Rights as Shareholder.
  9 Market Stand-Off Agreement.
  10 Restrictive Legends.




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11 Stop-Transfer Notices.
  12 Interpretation.
  13 Notices.
  14 Governing Law.
  15 Severability.
  16 Entire Agreement.




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17 Amendment.
  18 Counterparts.
   COMPANYPacific Fuel Cell Corp.By:Name:Title:OPTIONEE(Signature)(Type or Print Name)Address: