Document:

Exhibit 10.2

Award No. 1                                                         Attachment I
                                                                    ------------

                    HQ SUSTAINABLE MARITIME INDUSTRIES, INC.
                             2004 STOCK OPTION PLAN

                                OPTION AGREEMENT
                   (INCENTIVE AND NON-QUALIFIED STOCK OPTIONS)
                   -------------------------------------------

         Pursuant to your Option Grant Notice  ("Grant  Notice") and this Option
Agreement   ("Agreement"),   HQ  Sustainable  Maritime  Industries,   Inc.  (the
"Company") has granted you an option ("Option") under its 2004 Stock Option Plan
(the "Plan") to purchase the number of shares of Stock  ("Shares")  indicated in
your Grant Notice at the Exercise Price indicated in your Grant Notice.  Defined
terms not  explicitly  defined in this  Agreement  but defined in the Plan shall
have the same definitions as in the Plan.

         The details of your Option are as follows:

1.       GRANT OF OPTION
         ---------------

         (a) Type of Option.  The type of Option  that you have been  awarded is
referenced in your Grant Notice.

         (b) Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate value (determined as of the time the Option is granted) of the Shares
with respect to which ISOs granted under the Plan become exercisable for the
first time by any Participant in any calendar year exceeds $100,000, such
Options or portions thereof which exceed such limit (according to the order in
which they are granted) shall be treated as NQSO.

         (c) Number of Shares and Exercise  Price.  The number of Shares subject
to your Option and your Exercise Price per share referenced in your Grant Notice
may be adjusted from time to time for capitalization adjustments, as provided in
Section 17.4 of the Plan.

2.       VESTING
         -------

         (a) Upon Termination. Subject to the limitations contained herein, your
Option will vest as provided in your Grant  Notice,  provided  that vesting will
cease upon the termination of your Continuous  Service (as defined below) except
as otherwise  provided in your Grant Notice or the Plan. The unvested portion of
your Option,  after giving effect to the vesting schedule provided in your Grant
Notice,  will terminate  immediately  upon the  termination  of your  Continuous
Service.

         (b) Continuous  Service.  For purposes of this  Agreement,  "Continuous
Service" means the period of time in which you rendered  service to the Company,
whether as an employee,  officer,  director,  adviser or consultant,  and during
which  you did not have a  Termination.  Your  Continuous  Service  shall not be
deemed to have  terminated  merely  because of a change in the capacity in which
you render service to the Company as an employee, officer,  consultant,  adviser

<PAGE>

or  director  or a change  in the  entity  for which you  render  such  service,
provided  that  there  is no  interruption  or  termination  of your  Continuous
Service.  For  example,  a change in status from an employee of the Company to a
consultant  or a director  will not  constitute  an  interruption  of Continuous
Service. The Committee, in its sole discretion, may determine whether Continuous
Service  shall be  considered  interrupted  in the case of any leave of  absence
approved by the  Committee,  including  sick leave,  military leave or any other
personal leave.

3.       EXERCISE OF OPTIONS
         -------------------

         Except as otherwise  provided herein,  and subject to the provisions of
the Plan,  the Option  granted  pursuant to this  Agreement  shall be subject to
exercise as follows:

         (a) You may exercise the vested  portion of your Option during its term
by  delivering  a  Exercise  Agreement  (in a form  designated  by the  Company)
together with the Exercise  Price to the  Committee,  or to such other person as
the Committee may designate,  during regular business hours,  together with such
additional documents as the Company may then require.

         (b) By  exercising  your Option,  you agree that, as a condition to any
exercise of a Option,  the Company may require you to enter into an  arrangement
providing  for  the  payment  by you  to the  Company  of  any  tax  withholding
obligation of the Company  arising by reason of (1) the exercise of your Option,
(2) the lapse of any  substantial  risk of  forfeiture  to which the  Shares are
subject at the time of exercise,  or (3) the disposition of Shares acquired upon
such exercise.

         (c) If your Option is an Incentive  Stock Option,  by  exercising  your
Option,  you agree to notify the  Company in writing  within  fifteen  (15) days
after the date of any  disposition  of any of the Shares issued upon exercise of
your Option  that occurs  within two (2) years after the Date of Grant or within
one (1) year after such Shares are issued upon exercise of your Option.

4.       METHOD OF PAYMENT
         -----------------

         Payment of the  exercise  price is due in full upon  exercise of all or
any part of the Option.  You may elect to make payment of the exercise  price in
any manner permitted by the Grant Notice,  which may include, in the Committee's
sole  discretion  at the time your Option is exercised  and provided that at the
time of exercise the Shares are publicly traded and quoted regularly in The Wall
Street  Journal,   pursuant  to  a  program  developed  under  Regulation  T  as
promulgated by the Federal Reserve Board which, prior to the issuance of Shares,
results in either the  receipt of cash (or check) by the  Company or the receipt
of irrevocable  instructions to pay the aggregate  exercise price to the Company
from the sales proceeds attributable to such Shares.

5.       WHOLE SHARES
         ------------

         You may exercise your Option only for whole Shares.

6.       TERM OF OPTION
         --------------

<PAGE>

         (a) Commencement. The term of your Option commences on the Date of
Grant, which is set forth in the Grant Notice. Your Option may not be exercised
prior to the approval of the Plan by the Company's stockholders. Notwithstanding
anything to the contrary in Section 6(b) below, if the Company's stockholders do
not approve the Plan within twelve (12) months after the date it is adopted by
the Board, then your Option may never be exercised and it shall terminate on the
first anniversary of the date the Plan is adopted by the Board.

         (b)  Expiration.  The term of your Option  expires upon the earliest of
the following:

                  (i)  immediately  upon  the  termination  of  your  Continuous
         Service for "cause" (as such term is defined below);

                  (ii) three (3) months after the termination of your Continuous
         Service for any reason  other than  death,  Disability,  Retirement  or
         Voluntary  Termination  provided  that if during any part of such three
         (3) month period your Option is not  exercisable  solely because of the
         conditions  set forth in  Section  9 below  relating  to  "Other  Legal
         Requirements",  your Option  shall not expire  until the earlier of the
         expiration  date  indicated in your Grant Notice or until it shall have
         been  exercisable for an aggregate period of three (3) months after the
         termination of your Continuous Service;

                  (iii)  twelve  (12)  months  after  the  termination  of  your
         Continuous Service due to death or disability;

                  (iv) the expiration date indicated in your Grant Notice; or

                  (v) the tenth (10th)  anniversary of the Date of Grant, or the
         fifth (5th)  anniversary  of the Date of Grant with  respect to any Ten
         Percent Shareholder.

7.       CAUSE.
         -----

         For purposes of this  Agreement,  the  termination  of your  Continuous
Service for "cause" shall mean  termination  for "cause" as provided for in your
Grant Notice.

8.       INCENTIVE STOCK OPTION EMPLOYEE RULE
         ------------------------------------

         If your Option is an Incentive  Stock  Option,  note that to obtain the
federal income tax advantages  associated with an "Incentive  Stock Option," the
Code  requires  that at all times  beginning on the Date of Grant of your Option
and  ending  on the day  three  (3)  months  before  the  date of your  Option's
exercise,  you must be an employee of the  Company,  except in the event of your
death or  disability.  The Company has provided for extended  exercisability  of
your Option under certain  circumstances  for your benefit but cannot  guarantee
that your Option will  necessarily be treated as an "Incentive  Stock Option" if
you  continue to provide  services to the  Company as a  consultant,  adviser or
director  after your  employment  terminates or if you  otherwise  exercise your
Option more than three (3) months after the date your employment terminates.

<PAGE>

9.       OTHER LEGAL REQUIREMENTS.
         ------------------------

         Notwithstanding anything to the contrary contained herein, the exercise
of your  Option  must also comply  with other  applicable  laws and  regulations
governing  your  Option,  and you may not  exercise  your  Option if the Company
determines that such exercise would not be in material compliance with such laws
and regulations.

10.      NO RIGHT TO CONTINUE EMPLOYMENT OR SERVICE
         ------------------------------------------

         Nothing in this Agreement, the Plan, your Grant Notice or your Exercise
Agreement  shall  confer  upon you any right to continue to serve the Company in
the  capacity in effect at the time the Option was  granted or shall  affect the
right of the Company to terminate (i) your  employment,  if you are an employee,
with or  without  notice  and with or  without  cause,  (ii) your  service  as a
consultant or adviser, if you are a consultant or adviser, pursuant to the terms
of your agreement  with the Company or (iii) your service as a director,  if you
are a  director,  pursuant  to the  Bylaws  of the  Company  and any  applicable
provisions  of  the  corporate  law  of  the  state  in  which  the  Company  is
incorporated, as the case may be.

11.      WITHHOLDING OF TAXES
         --------------------

         (a) At the time you exercise  your Option,  in whole or in part,  or at
any  time  thereafter  as  requested  by  the  Company,   you  hereby  authorize
withholding  from payroll and any other  amounts  payable to you, and  otherwise
agree  to make  adequate  provision  for  (including  by  means  of a  "cashless
exercise"  pursuant to a program  developed under Regulation T as promulgated by
the Federal  Reserve  Board to the extent  permitted by the  Company),  any sums
required  to satisfy the  federal,  state,  local and  foreign  tax  withholding
obligations of the Company, if any, which arise in connection with your Option.

         (b)  You  may not  exercise  your  Option  unless  the tax  withholding
obligations  of the Company are satisfied.  Accordingly,  you may not be able to
exercise  your Option when  desired  even though your Option is vested,  and the
Company  shall have no  obligation  to issue a  certificate  for such  Shares or
release such Shares from any escrow provided for herein or under the Plan.

12.      NON-ASSIGNABILITY
         -----------------

         Your  Option  is not  transferable,  except  by will or by the  laws of
descent and distribution, and is exercisable during your life only by you.

13.      DISCRETIONARY NATURE OF THE PLAN
         --------------------------------

         The Plan is discretionary in nature and limited in duration, and may be
amended, cancelled, or terminated by the Company, in its sole discretion, at any
time. The grant of any Option under the Plan is a one-time  benefit and does not
create any  contractual or other right to receive a grant of Options or benefits
in lieu of Options in the future.  Future  grants,  if any,  will be at the sole

<PAGE>

discretion  of the  Company,  including,  but not  limited to, the timing of any
grant,  the number and type of Options,  vesting  provisions,  and the  Exercise
Price.  Any Options or benefits granted under the Plan will not be considered to
be part of your  salary  for any  reason,  including,  but not  limited  to, the
determination of any severance, redundancy or resignation payments or benefits.

14.      NOTICE
         ------

         Any notice  hereunder  by you to the  Company  shall be in writing  and
shall be delivered in accordance with the Plan requirements.

15.      GOVERNING PLAN DOCUMENT
         -----------------------

         Your Option granted  pursuant to this Agreement is subject to the terms
and  conditions  set  forth in the  Plan,  a copy of which is  attached  to this
Agreement. All the terms and conditions of the Plan, as may be amended from time
to time, and any rules, guidelines and procedures which may from time to time be
promulgated and adopted pursuant to the Plan, are hereby  incorporated into this
Agreement,  without regard to whether such terms and conditions (including,  for
example,  provisions  relating  to  certain  changes  in  capitalization  of the
Company)  are not  otherwise  set forth in this  Agreement.  In the event of any
conflict  between  the  provisions  of  this  Agreement  and  of the  Plan,  the
provisions of the Plan shall govern.

         Executed as of the day and year first written above.

                                        HQ SUSTAINABLE MARITIME INDUSTRIES, INC.

                                        By:_____________________________________
                                        Name:
                                        Title:

                                        PARTICIPANT

                                        ________________________________________Exhibit 10.3

                                                                  Attachment III
                                                                  --------------

                    HQ SUSTAINABLE MARITIME INDUSTRIES, INC.
                             2004 STOCK OPTION PLAN

                               EXERCISE AGREEMENT
                               ------------------

The Committee for the
HQ Sustainable Maritime Industries, Inc.
2004 Stock Option Plan
Attn: ___________________________

To the Committee:

         This constitutes notice under my Option that I,_______________________,

elect to  purchase  the number of shares of Stock  ("Shares")  for the price set
forth below.

o        Date of exercise:                                  ____________________

o        Type of Option (check one):                        Incentive        |_|
                                                            Non-Qualified    |_|

o        Option dated:                                      ____________________

o        Number of Shares as to which Option is exercised:  ____________________

o        Exercise Price per share:                          ____________________

o        Total Exercise Price:                              ____________________

o        Cash payment delivered herewith:                   ____________________

o        Certificates to be issued in name of:              ____________________

By this exercise,  I agree (i) to provide such  additional  documents as you may
require pursuant to the terms of the HQ Sustainable  Maritime  Industries,  Inc.
2004 Stock  Option  Plan,  (ii) to provide  for the payment by me to you (in the
manner  designated by you) of your withholding  obligation,  if any, relating to
the exercise of this Option,  and (iii) if this  exercise  relates to an ISO, to
notify you in writing within fifteen (15) days after the date of any disposition
of any of the Shares  issued upon exercise of this Option that occurs within two
(2) years  after the Date of Grant of this  Option or within  one (1) year after
such  Shares  are  issued  upon  exercise  of this  Option.  Defined  terms  not
explicitly defined in this Exercise Agreement but defined in the Plan shall have
the same definitions as in the Plan.

Signature:_____________________________                 Date:___________________

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