Document:

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                                                                    EXHIBIT 10.2

Legal Services Agreement with Neil S. Baritz

                            LEGAL SERVICES AGREEMENT

         THIS LEGAL SERVICES AGREEMENT (the "Agreement") dated July 10, 2002, is
made by and between Spantel Communications, Inc., a Florida corporation
("Spantel") and Neil S. Baritz, an individual resident of Florida ("NSB").

         WHEREAS, NSB has previously provided legal services to Spantel; and

         WHEREAS, it is anticipated that NSB will continue to provide legal
services to Spantel in the future, and NSB has agreed to make himself available
as is reasonably necessary to provide such future services; and

         WHEREAS, the legal services covered by this Agreement that have been
provided and that are to be provided in the future by NSB, including making
himself available as is reasonably necessary to provide such services in the
future, are hereinafter referred to as the "Services"; and

         WHEREAS, as partial consideration for the Services, Spantel has agreed
to issue shares of its common stock to NSB as hereinafter set forth.

         NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties hereto,
intending to be legally bound, agree as follows:

         1. CONSIDERATION. As partial consideration for the Services, Spantel
hereby agrees to forthwith issue to Neil S. Baritz, 50,000 shares of the common
stock, par value $.001, of Spantel (the "Shares").

         2. REGISTRATION RIGHTS. Spantel agrees that promptly following
execution of this Agreement, it will prepare and file with the United States
Securities and Exchange Commission, a registration statement on Form S-8
covering the Shares.

         3. ACKNOWLEDGEMENT. The parties hereby confirm and acknowledge that the
Services (a) consist and will consist of bona fide services rendered and to be
rendered to Spantel, (b) are not and will not be in connection with the offer or
sale of securities in capital raising transactions, and (c) do not and will not
promote or maintain a market for the securities of Spantel.

         4. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.

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         5. FURTHER ASSURANCES. From and after the date of this Agreement, upon
the request of a party, each other party shall execute and deliver such
instruments, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.

         6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Florida or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Florida.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.

SPANTEL COMMUNICATIONS, INC.

By: /s/ JOSE RAMON BASTERRA
    -----------------------------
Name: Jose Ramon Basterra
Its:  Managing Director

/s/ NEIL S. BARITZ
-------------------
Neil S. Baritz

                                        2<PAGE>
                                                                EXHIBIT 10.3(A)

THIS OFFERING EXPIRES AT 5:00 P.M EASTERN STANDARD TIME, AUGUST 19, 2002

                          KENSINGTON BANKSHARES, INC.
                    SUBSCRIPTION FOR SHARES OF COMMON STOCK

         The registered owner named below is entitled to purchase
_______________ shares of Common Stock of Kensington Bankshares, Inc. at a
price of $7.50 per share, at any time during the period commencing
________________________________, 2002, and ending at 5:00 P.M., Eastern
Standard Time on August 19, 2002, upon the terms specified herein and in the
Prospectus relating thereto.

NAME:
     -----------------------------------------------
     (please print)

         The undersigned irrevocably subscribes for the following shares upon
the terms and conditions specified in the Prospectus of Kensington Bankshares,
Inc., dated July _____, 2002, (receipt of which is acknowledged):

<TABLE>
<S>                                                           <C>
BASIC SUBSCRIPTION PRIVILEGE:

         Shares Subscribed For:                                                                   shares
                                                               ----------------------------------

         Cost of Shares Subscribed
         For at $7.50 per share                               $
                                                               ----------------------------------

Check Enclosed:  Total payable to:
Kensington Bankshares, Inc.                                   $
                                                               ----------------------------------

OVER SUBSCRIPTION REQUEST

         In addition to the above, the undersigned
         desires to purchase additional shares at a                                               shares
         price of $7.50 per share.                              ---------------------------------
</TABLE>

                  THESE SECURITIES ARE NOT FEDERALLY INSURED.

Signature:
                          -----------------------------------------------------

Address:
                          -----------------------------------------------------

Telephone Number:
                          -----------------------------------------------------

Social Security Number:
                          -----------------------------------------------------

                                    ACCEPTED

KENSINGTON BANKSHARES, INC.
13246 North Dale Mabry Highway
Tampa, Florida  33624
Telephone Number:  (813) 961-6200
                                             By:
                                                -------------------------------<PAGE>

                                                                EXHIBIT 10.3(B)

THIS OFFERING EXPIRES AT 5:00 P.M EASTERN STANDARD TIME, SEPTEMBER 16, 2002

                          KENSINGTON BANKSHARES, INC.
                    SUBSCRIPTION FOR SHARES OF COMMON STOCK

         The Company is offering to the public shares of Common Stock of
Kensington Bankshares, Inc. at a price of $7.50 per share, at any time during
the period commencing __________________________, 2002, and ending at 5:00
P.M., Eastern Standard Time on September 16, 2002, upon the terms specified
herein and in the Prospectus relating thereto.

NAME:
                      --------------------------------------------

EXPIRATION DATE:
                      --------------------------------------------

SUBSCRIPTION PRICE:
                      --------------------------------------------

         The undersigned irrevocably subscribes for the following shares upon
the terms and conditions specified in the Prospectus of Kensington Bankshares,
Inc., dated July _____, 2002, (receipt of which is acknowledged):

<TABLE>
<S>                                                           <C>
BASIC SUBSCRIPTION PRIVILEGE:

         Shares Subscribed For:                                                                  shares
                                                               ---------------------------------

         Cost of Shares Subscribed
         For at $7.50 per share                               $
                                                               ----------------------------------

Check Enclosed:  Total payable to:
Kensington Bankshares, Inc.                                   $
                                                               ----------------------------------
</TABLE>

                  THESE SECURITIES ARE NOT FEDERALLY INSURED.

Signature:
                          -----------------------------------------------------

Address:
                          -----------------------------------------------------

Telephone Number:
                          -----------------------------------------------------

Social Security Number:
                          -----------------------------------------------------

                                    ACCEPTED

KENSINGTON BANKSHARES, INC.
13246 North Dale Mabry Highway
Tampa, Florida  33624
Telephone Number:  (813) 961-6200
                                             By:
                                                -------------------------------EXHIBIT 4.1

                                POWERSMART, INC.
                            1998 STOCK INCENTIVE PLAN

SECTION 1. PURPOSE

     The purpose of the PowerSmart,  Inc. 1998 Stock Incentive Plan (the "Plan")
is to  promote  the  best  interests  of  PowerSmart,  Inc.  (together  with any
successor  thereto,  the  "Company")  and its  Subsidiaries,  as  defined in the
Internal  Revenue  Code of 1986,  as amended (the  "Code"),  and any entities of
which at least twenty  percent (20%) of the equity  interest is held directly or
indirectly by the Company (together "Affiliates"),  by encouraging and providing
for the  acquisition  of an equity  interest  in the  success of the  Company by
employees,   non-employee   members  of  the  Board  of  Directors  and  certain
consultants  and  advisors  and by enabling  the Company and its  Affiliates  to
attract  and retain  the  services  of such  individuals  upon  whose  judgment,
interest,  skills, and special effort the successful conduct of their operations
is largely dependent.

SECTION 2. EFFECTIVE DATE

     The Plan shall become effective on June 1, 1998,  subject,  however, to the
approval of the Plan by the  Company's  stockholders  within  twelve (12) months
before or after the date of  adoption of the Plan by the Board of  Directors  of
the Company (the "Board"). To the extent that any awards are made under the Plan
prior to its approval by  stockholders,  they shall be contingent on approval of
the Plan by the Company's stockholders.

SECTION 3. ADMINISTRATION

     The Plan shall be administered by the Board.  The Board may allocate all or
any  portion of its  responsibilities  to any one or more of its members and may
delegate  all or any part of its  responsibilities  and powers to a committee of
the  Board  consisting  of at least two  members  or to any  person  or  persons
selected  by it,  except  to the  extent  prohibited  by  applicable  law or the
applicable  rules  of a  stock  exchange  or  market.  Any  such  allocation  or
delegation  may be  revoked  by the Board at any time.  Subject  to the  express
provisions  of the  Plan,  the  Board  shall  have  complete  authority,  in its
discretion,  to determine those individuals to whom awards shall be granted.  In
making such  determinations,  the Board may take into  account the nature of the
services  rendered by the  respective  individuals,  their present and potential
contributions to the success of the Company, and such other factors as the Board
in its discretion shall deem relevant.  Subject to the express provisions of the
Plan,  the Board shall also have  complete  authority to determine  the types of
awards and the number of shares covered by the awards, to interpret the Plan, to
prescribe,  amend and rescind  rules and  regulations  relating to the Plan,  to
determine the terms,  conditions,  performance criteria,  restrictions and other
provisions of such awards (which need not be identical among  participants)  and
to make all other  determinations  necessary or advisable for the administration
of the Plan.  The  Board's  determinations  on the  matters  referred to in this
paragraph shall be conclusive.

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SECTION 4. ELIGIBILITY AND PARTICIPATION

     Participants  in the Plan shall be  selected  by the Board from among those
individuals who are an employee or a non-employee  director of the Company or of
any of its Affiliates,  consultants,  or advisors providing valuable services to
the  Company  (irrespective  of  their  respective  citizenship,   residence  or
domicile),  as the Board may designate  from time to time (the  "Participants").
The Board shall  consider  such  factors as it deems  appropriate  in  selecting
Participants and in determining the type and amount of their respective  awards.
The Board's designation of a Participant in any year shall not require the Board
to designate such person to receive an award in any other year.

SECTION 5. STOCK SUBJECT TO PLAN

          5.1 NUMBER.  Subject to  adjustment  as provided in Section  5.3,  the
maximum  number  of  shares  of  common  stock of the  Company,  $0.01 par value
("Stock"),  which may be issued under the Plan shall be 2,250,000. The shares to
be delivered under the Plan may consist,  in whole or in part, of authorized but
unissued Stock or treasury Stock.

          5.2 UNUSED STOCK;  UNEXERCISED RIGHTS. If, after the effective date of
the Plan,  any shares of Stock covered by an award granted under the Plan, or to
which any award  relates,  are  forfeited or if an award  otherwise  terminates,
expires or is canceled prior to the delivery of all of the shares of Stock or of
other consideration  issuable or payable pursuant to such award, then the number
of shares of Stock counted against the number of shares available under the Plan
in  connection  with the grant of such award,  shall again be available  for the
granting of  additional  awards  under the Plan to the extent  determined  to be
appropriate by the Board.

          5.3 ADJUSTMENT IN CAPITALIZATION.

          (a) In the event that the Board shall  determine  that any dividend or
     other distribution (whether in the form of cash, Stock, other securities or
     other property),  recapitalization,  stock split, reorganization, merger as
     to which the Company is the surviving corporation, consolidation, split-up,
     spin-off, combination,  repurchase or exchange of Stock or other securities
     of the Company,  issuance of warrants or other rights to purchase  Stock or
     other securities of the Company, or other similar corporate  transaction or
     event  affects the Stock such that an adjustment is determined by the Board
     to be appropriate in order to prevent dilution or enlargement of the awards
     or potential  awards intended to be made available under the Plan, then the
     Board may,  in such manner as it may deem  equitable,  adjust any or all of
     (i) the  number  and type of shares of Stock  subject to the Plan and which
     thereafter  may be made the  subject  of awards  under  the Plan;  (ii) the
     number and type of shares of Stock subject to outstanding awards; and (iii)
     the grant,  purchase or exercise  price with  respect to any award,  or, if
     deemed  appropriate,  make provision for a cash payment to the holder of an
     outstanding award;  PROVIDED,  HOWEVER,  in each case, that with respect to
     awards of incentive stock options no such adjustment shall be authorized to
     the extent that such adjustment would cause such options previously awarded
     to cease to be treated as incentive  stock options;  and PROVIDED  FURTHER,
     HOWEVER, that the number of shares of Stock subject to any award payable or
     denominated in Stock shall always be a whole number.

          (b) In the event of a merger or  similar  reorganization  in which the
     Company does not survive,  or a sale of substantially  all of the assets of
     the Company, the Company shall use commercially  reasonable efforts to make

                                       2
<PAGE>
     adequate  provisions such that incentive options and non-qualified  options
     outstanding  hereunder,  to the  extent not then  exercised,  shall vest in
     accordance  with  the  express  provisions  of the  Plan.  Subject  to such
     vesting,  the options shall continue to represent the right to purchase the
     number of shares of stock to which the  holder of such  option  would  have
     been entitled had the  non-exercised  portion of such option been exercised
     in full on the date of such corporate action.

SECTION 6. TERM OF THE PLAN

     No award  shall be  granted  under the Plan  after May 31,  2008.  However,
unless  otherwise  expressly  provided  in the  Plan or in an  applicable  award
agreement, any award theretofore granted may extend beyond such date and, to the
extent  set  forth in the Plan,  the  authority  of the  Board to amend,  alter,
adjust,  suspend,  discontinue  or  terminate  any such  award,  or to waive any
conditions or restrictions  with respect to any such award, and the authority of
the Board to amend the Plan, shall extend beyond such date.

SECTION 7. STOCK OPTIONS

          7.1 GRANT OF OPTIONS.  Options may be granted to  Participants  at any
time and from time to time as shall be determined by the Board.  The Board shall
have complete  discretion in  determining  the number,  terms and  conditions of
options  granted to a  Participant.  The Board also shall  determine  whether an
option is intended to be an incentive stock option within the meaning of Section
422 of the Code or a nonqualified  stock option;  PROVIDED,  HOWEVER,  that only
Participants  who are employees of the Company or one of its Subsidiaries at the
time of grant may receive grants of incentive stock options.

          7.2 INCENTIVE STOCK OPTIONS.

          (a)  EXERCISE.  Except as provided in paragraph  (b) below,  incentive
     stock  options shall be  exercisable  at option prices of not less than one
     hundred percent (100%) of the fair market value of the Stock on the date of
     grant,  as  such  fair  market  value  is  determined  by such  methods  or
     procedures  as shall be  established  from time to time by the Board ("Fair
     Market Value"),  and shall be exercisable over not more than ten (10) years
     after the date of grant.

          (b)  TEN-PERCENT  OWNERS.  Anything  in  this  Plan  to  the  contrary
     notwithstanding,   the  following  terms  and  conditions  shall  apply  to
     incentive stock options granted hereunder to a "10-percent owner." For this
     purpose, a "10-percent owner" shall mean a Participant who, at the time the
     incentive  stock  option is granted,  owns stock  possessing  more than ten
     percent (10%) of the total combined voting power of all classes of stock of
     the Company or of any Subsidiary  thereof.  In determining stock ownership,
     an optionee  shall be  considered  as owning the stock  owned,  directly or
     indirectly,  by or for his  spouse  (other  than a  spouse  who is  legally
     separated  from  the  optionee  under  a  decree  of  divorce  or  separate
     maintenance), and his children,  grandchildren and parents. With respect to
     a  10-percent  owner,  the price at which  shares of Stock may be purchased
     under an incentive stock option granted  pursuant to this Plan shall be not
     less than one hundred ten percent  (110%) of the Fair Market Value  thereof

                                       3
<PAGE>
     on the date of grant. Incentive stock options granted to a 10-percent owner
     shall be  exercisable  over not more than five (5) years  after the date of
     grant.

          (c)  TERMINATION  IN EMPLOYMENT.  Except as otherwise  provided by the
     Board,  no incentive  stock option may be exercised more than (i) three (3)
     months after a Participant  terminates his employment  with the Company for
     any reason other than death or  disability  as  determined  by the Board or
     (ii) twelve (12) months after a Participant  terminates his employment with
     the Company by reason of death or disability as determined by the Board. In
     all other  respects,  the terms of any incentive stock option granted under
     the Plan are intended to comply with the  provisions  of Section 422 of the
     Code (or any successor  provision thereto) and any regulations  promulgated
     thereunder.

          (d) LIMITS ON  INCENTIVE  STOCK  OPTIONS.  The  aggregate  Fair Market
     Value,  as  determined  by the Board,  of the Stock  with  respect to which
     incentive stock options are exercisable for the first time by a Participant
     during  any  calendar   year  under  all  plans  of  the  Company  and  its
     Subsidiaries shall not exceed one hundred thousand dollars ($100,000),  and
     any grant of an  incentive  stock  option  that is in excess of such  limit
     shall be treated as a  nonqualified  stock  option.  For  purposes  of this
     paragraph, the Fair Market Value of the Stock subject to an incentive stock
     option shall be  determined  as of the date the  incentive  stock option is
     granted.

          (e) REDESIGNATION AS NONQUALIFIED  STOCK OPTION. If an incentive stock
     option at any time fails to meet the  requirements  of  Section  422 of the
     Code,  such option,  to the extent the  requirements  of Section 422 of the
     Code are not met,  shall be  treated  as a  nonqualified  stock  option for
     Federal  income tax purposes  automatically  without  further action by the
     Board, effective as of the first date on which any such requirement was not
     met. The  requirements for incentive stock options under Section 422 of the
     Code include  minimum  holding  period  requirements  that specify that the
     stock acquired upon exercise of an incentive  stock option must be held for
     at least  two  years  from the date of grant  and one year from the date of
     exercise.

     7.3  NONQUALIFIED  STOCK  OPTIONS.   Nonqualified  stock  options  will  be
exercisable at option prices of not less than one hundred  percent (100%) of the
Fair Market Value of the Stock on the date of grant, unless otherwise determined
by the Board.  Nonqualified  stock options will be exercisable at such times and
subject  to such terms and  conditions  as  determined  by the Board at grant or
thereafter.

     7.4 AWARD  AGREEMENT.  Each option shall be evidenced by an award agreement
that shall specify the type of option granted, the option price, the duration of
the option,  the number of shares of Stock  covered by the option and such other
provisions as the Board shall determine.

     7.5 PAYMENT.  Subject to the following  provisions of this Section 7.5, the
full option price for shares of Stock  purchased upon the exercise of any option
shall  be paid at the  time of such  exercise  (except  that,  in the case of an
exercise  arrangement  approved by the Board and described in clause (b) of this
Section 7.5, payment may be made as soon as practicable after the exercise). The
Board shall  determine  the  methods  and the forms for payment of the  purchase

                                       4
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price of options,  including (a) by effective  receipt of cash or, to the extent
permitted by the Board,  other mature  shares of the Company (as defined by U.S.
Generally Accepted Accounting  Principles) having a then Fair Market Value equal
to the  purchase  price of such  shares or any  combination  thereof;  or (b) by
authorizing  a third party to sell shares of Stock (or a  sufficient  portion of
the  shares)  acquired  upon  exercise  of the option and remit to the Company a
sufficient  portion of the sale  proceeds to pay the entire option price and any
tax withholding resulting from such exercise.  Shares of Stock tendered shall be
duly  endorsed in blank or  accompanied  by stock powers duly endorsed in blank.
Upon  receipt  of the  payment  of the  entire  option  price for the  shares so
purchased, certificates for such shares shall be delivered to the Participant.

SECTION 8. STOCK APPRECIATION RIGHTS

          8.1 GRANT OF STOCK APPRECIATION  RIGHTS. Stock appreciation rights may
be granted to Participants.  Each grant of stock appreciation rights shall be in
writing.  A stock  appreciation  right may relate to a specific  option  granted
under the Plan and may, in such case, relate to all or part of the option shares
covered by the related  option,  or may be granted  independently  of any option
granted  under the  Plan.  Stock  appreciation  rights  granted  in tandem or in
addition to an option may be granted either at the same time as the option or at
a later  time.  Subject  to the  terms  of the  Plan,  the  grant  price,  term,
calculation  of Fair Market  Value,  and any other terms and  conditions  of any
stock appreciation right shall be as determined by the Board.

          8.2 EXERCISE OR MATURITY OF STOCK  APPRECIATION  RIGHTS. The Board may
impose such conditions or restrictions on the exercise of any stock appreciation
right as it may deem appropriate.  A stock  appreciation right shall entitle the
Participant  to receive  from the  Company an amount  equal to the excess of the
Fair  Market  Value of a share of Stock  on the date of  exercise  of the  stock
appreciation  right over the exercise price thereof.  The Board shall  determine
the  time  or  times  at  which  or the  event  or  events  upon  which  a stock
appreciation  right may be exercised in whole or in part, the method of exercise
and whether such stock  appreciation  right shall be settled in cash,  Stock,  a
combination of cash and Stock or some other form; PROVIDED, HOWEVER, that unless
otherwise  determined by the Board, stock  appreciation  rights that relate to a
specific  option  granted under the Plan shall be exercisable or shall mature at
such time or times,  on the conditions and to the extent and in the  proportion,
that any related option is exercisable and may be exercised or mature for all or
part of the shares of Stock subject to the related option.

SECTION 9. RESTRICTED STOCK

          9.1 AWARDS.  The Board is hereby  authorized to issue restricted stock
to Participants,  with or without payment therefor, as additional  compensation,
or in lieu of other  compensation,  for their services to the Company and/or any
Affiliate. Restricted stock shall be subject to such terms and conditions as the
Board determines  appropriate,  including,  without limitation,  restrictions on
sale or  other  disposition  and the  right of the  Company  to  reacquire  such
restricted  stock  upon  termination  of  the  Participant's  employment  within
specified periods, as prescribed by the Board.

          9.2 OTHER RESTRICTIONS.  Without limitation, such terms and conditions
may provide that restricted  stock shall be subject to forfeiture if the Company
or the Participant  fails to achieve certain goals established by the Board over

                                       5
<PAGE>
a designated  period of time.  The goals  established by the Board may relate to
any one or more of the  following:  revenues,  earnings  per  share,  return  on
shareholder  equity,  return on average  total capital  employed,  return on net
assets  employed  before  interest and taxes,  economic  value added and/or such
other goals as may be established by the Board in its  discretion.  In the event
the minimum goal established by the Board is not achieved at the conclusion of a
period,  all shares of  restricted  stock shall be  forfeited.  In the event the
maximum  goal is achieved,  no shares of  restricted  stock shall be  forfeited.
Partial  achievement of the maximum goal may result in forfeiture  corresponding
to the degree of  nonachievement to the extent specified in writing by the Board
when the grant is made.  The Board shall  certify in writing as to the degree of
achievement after completion of the performance period.

          9.3  REGISTRATION.  Any  restricted  stock granted under the Plan to a
Participant  may be evidenced in such manner as the Board may deem  appropriate,
including,  without limitation,  book-entry  registration or issuance of a stock
certificate  or  certificates.  In the event any stock  certificate is issued in
respect of shares of restricted  stock granted under the Plan to a  Participant,
such  certificate  shall be registered in the name of the  Participant and shall
bear an appropriate  legend (as determined by the Board) referring to the terms,
conditions and restrictions applicable to such restricted stock.

          9.4 OTHER RIGHTS. Unless otherwise determined by the Board, during the
period of restriction,  Participants  holding shares of restricted stock granted
hereunder may exercise full voting rights with respect to those shares and shall
be entitled to receive all dividends and other  distributions  paid or made with
respect to those  shares  while they are so held;  PROVIDED,  HOWEVER,  that the
Board may  provide in any grant of shares of  restricted  stock that  payment of
dividends thereon may be deferred until termination of the period of restriction
and may be made subject to the same restrictions  regarding  forfeiture as apply
to such shares of restricted  stock. If any such dividends or distributions  are
paid in shares of Stock, the shares shall be subject to the same restrictions on
transferability  as the shares of  restricted  stock with  respect to which they
were paid.

          9.5  FORFEITURE.  Unless the Board  otherwise  determines  at or after
grant,  upon  termination  of employment  or service of a  Participant  with the
Company (as determined  under criteria  established by the Board) for any reason
during the  applicable  period of  restriction,  all shares of restricted  stock
still  subject to  restriction  shall be  forfeited  by the  Participant  to the
Company;  PROVIDED,  HOWEVER,  that the Board  may,  when it finds that a waiver
would be in the best interests of the Company,  waive in whole or in part any or
all remaining  restrictions with respect to shares of restricted stock held by a
Participant.

SECTION 10. PERFORMANCE SHARES AND PERFORMANCE UNITS

          10.1  ISSUANCE.  The Board is hereby  authorized to grant  performance
shares and performance units to Participants.  Subject to Section 5.1, the Board
shall have complete  discretion in determining  the number of performance  units
and  performance  shares  granted  to a  Participant  and the  other  terms  and
conditions of such awards.

                                       6
<PAGE>
          10.2  PERFORMANCE  SHARES.  The Board  may grant the right to  receive
shares of Stock ("performance shares") to a Participant that the Participant may
earn in whole or in part if the  Company  or the  Participant  achieves  certain
performance  goals  established by the Board over a designated period of time as
determined  by the Board.  Any such grant shall be in  writing.  The Board shall
have the  discretion  to  satisfy  an  obligation  to  deliver  a  Participant's
performance shares by delivery of less than the number of shares earned together
with a cash  payment  equal to the then  Fair  Market  Value of the  shares  not
delivered.  The number of shares of Stock  reserved for issuance  under the Plan
shall be  reduced  only by the number of shares  delivered  in respect of earned
performance  shares. At the time of making an award of performance  shares,  the
Board shall set forth the  consequences  of the  termination of a  Participant's
employment or service with the Company or an Affiliate  prior to the  expiration
of the designated  performance period in respect of which the performance shares
are awarded.

          10.3 PERFORMANCE  UNITS. The Board may grant the right to receive cash
or shares of Stock  ("performance  units") to a Participant that the Participant
may earn in whole or in part if the Company or the Participant  achieves certain
performance  goals  established by the Board over a designated period of time as
determined  by the  Board.  Any such  grant  shall be in  writing.  Payment of a
performance unit earned may be in cash or in shares of Stock or in a combination
of both, as the Board in its sole discretion determines. The number of shares of
Stock  reserved for issuance  under the Plan shall be reduced only by the number
of shares  delivered in payment of performance  units.  At the time of making an
award of performance  units,  the Board shall set forth the  consequences of the
termination  of a  Participant's  employment  or service  with the Company or an
Affiliate  prior to the  expiration  of the  designated  performance  period  in
respect of which the performance units are awarded.

          10.4 PERFORMANCE GOALS.  Unless the Board otherwise  determines at the
time of grant of  performance  shares  or  performance  units,  the  performance
objectives  with  respect  to such  award  shall  include  at  least  one of the
following  criteria,  which  may  be  determined  solely  by  reference  to  the
performance of the Company or a Subsidiary or based on  comparative  performance
relative to other companies:  (i) total return to  shareholders,  (ii) return on
equity,  (iii)  operating  income or net income,  (iv)  return on  capital,  (v)
economic value added, (vi) earnings per share of Stock, or (vii) market price of
the Stock.  Except to the extent otherwise  expressly provided herein, the Board
may,  at any time  and from  time to time,  change  the  performance  objectives
applicable  with  respect  to any  performance  shares or  performance  units to
reflect such factors, including, without limitation,  changes in a Participant's
duties or  responsibilities  or  changes  in  business  objectives  (e.g.,  from
corporate to  Subsidiary  or business unit  performance  or vice versa),  as the
Board shall deem necessary or appropriate.

          10.5  TERMINATION.  Unless the Board otherwise  determines at or after
grant,  the rights of a  Participant  with  respect  to an award of  performance
shares  or  performance  units  outstanding  at the  time  of the  Participant's
termination  of employment or services to the Company shall be determined  under
this section.  In the event that a  Participant's  employment or services to the
Company  terminate due to the  Participant's (i) death, (ii) disability or (iii)
retirement,  with the consent of the Board,  any award of performance  shares or
performance  units  shall  become  vested and  nonforfeitable  at the end of the
measurement  period as to that  number of shares or units which is equal to that
percentage,  if any,  of such award that  would  have been  earned  based on the
attainment or partial  attainment of such performance goals. In all other cases,

                                       7
<PAGE>
any portion of any award of performance shares or performance units that has not
become  nonforfeitable at the date of a Participant's  termination of employment
or service to the Company shall be forfeited as of such date.

SECTION 11. OTHER AWARDS

          11.1 OTHER  STOCK-BASED  AWARDS.  Other awards,  valued in whole or in
part by reference  to, or otherwise  based on,  shares of Stock,  may be granted
either alone or in addition to or in  conjunction  with any awards  described in
this Plan for such  consideration,  if any,  and in such amounts and having such
terms and conditions as the Board may determine.

          11.2 OTHER  BENEFITS.  The Board shall have the right to provide types
of  benefits  under the Plan in addition to those  specifically  listed,  if the
Board  believes that such benefits would further the purposes for which the Plan
was established.

SECTION 12. TRANSFERABILITY

     Each award granted under the Plan shall not be  transferable  other than by
will or the laws of descent and distribution,  except that a Participant may, to
the  extent  allowed  by the  Board and in a manner  specified  by the Board (a)
designate in writing a beneficiary to exercise the award after the Participant's
death;  or (b)  transfer  any  award;  PROVIDED,  HOWEVER,  that in no event may
incentive stock options be transferred other than by will or the laws of descent
and distribution.

SECTION 13. RIGHTS OF PARTICIPANTS

     Nothing in the Plan shall  interfere  with or limit in any way the right of
the Company or any  Affiliate  to  terminate  any  Participant's  employment  or
service at any time nor confer upon any Participant any right to continue in the
employ or service of the Company or any Affiliate.  The Plan does not constitute
a contract of employment, and any grant of Options or Stock pursuant to the Plan
will not give any employee or Participant the right to be retained in the employ
or service of the  Company or any  Affiliate.  The grant of an Option  under the
Plan shall not confer upon the holder  thereof any right as a shareholder of the
Company.  As of the date on which an optionee  exercises an Option, the optionee
shall have all rights of a  shareholder  of record with respect to the number of
shares of Stock as to which the  Option is  exercised,  irrespective  of whether
certificates to evidence the shares of stock have been issued on such date.

SECTION 14. [Intentionally Omitted]

SECTION 15. AMENDMENT, MODIFICATION AND TERMINATION OF PLAN

          15.1  AMENDMENTS  AND  TERMINATION.  The Board may at any time  amend,
alter,  suspend,  discontinue  or terminate the Plan;  PROVIDED,  HOWEVER,  that
stockholder approval of any amendment of the Plan shall be obtained if otherwise
required by the Code or any rules promulgated  thereunder (in order to allow for
incentive  stock options to be granted under the Plan).  Termination of the Plan
shall not affect the rights of  Participants  with respect to awards  previously

                                       8
<PAGE>
granted to them,  and all  unexpired  awards shall  continue in force and effect
after termination of the Plan except as they may lapse or be terminated by their
own terms and conditions.

          15.2 WAIVER OF CONDITIONS.  The Board may, in whole or in part,  waive
any conditions or other restrictions with respect to any award granted under the
Plan.

SECTION 16. TAXES

     The Company shall be entitled to withhold the amount of any federal,  state
and local income and  employment  taxes  attributable  to any amount  payable or
shares of Stock  deliverable  under the Plan after giving the person entitled to
receive such amount or shares of Stock notice as far in advance as  practicable,
and the  Company  may defer  making  payment or  delivery if any such tax may be
pending unless and until indemnified to its satisfaction.  The Board may, in its
discretion  and subject to such rules as it may adopt,  permit a Participant  to
pay all or a portion of the Federal,  state and local  withholding taxes arising
in  connection  with an award under the Plan by electing to (i) have the Company
withhold  shares  of Stock  with a value  equal  to the  amount  required  to be
withheld,  (ii)  tender back shares of Stock  received in  connection  with such
award,  or (iii) deliver other  previously  owned shares of Stock,  in each case
having  a Fair  Market  Value  equal to the  amount  to be  withheld;  PROVIDED,
HOWEVER,  that the amount to be  withheld  shall not  exceed  the  Participant's
estimated  total Federal,  state and local tax  obligations  associated with the
transaction.  The  election  must be made on or before  the date as of which the
amount of tax to be  withheld is  determined  and  otherwise  as required by the
Board.  The Fair Market  Value of  fractional  shares of Stock  remaining  after
payment of the withholding taxes shall be paid to the Participant in cash.

SECTION 17. MISCELLANEOUS

          17.1 STOCK TRANSFER RESTRICTIONS.  (a) Shares of Stock purchased under
the Plan may not be sold or  otherwise  disposed  of except (i)  pursuant  to an
effective  registration  statement  under the Securities Act of 1933, as amended
(the  "Act"),  or in a  transaction  which,  in the  opinion of counsel  for the
Company,  is exempt from registration under the Act; and (ii) in compliance with
state securities laws. The Board may waive the foregoing restrictions,  in whole
or in part, in any particular  case or cases or may terminate such  restrictions
whenever  the Board  determines  that such  restrictions  afford no  substantial
benefit to the Company.

          (b) All  certificates  for shares delivered under the Plan pursuant to
any award or the exercise thereof shall be subject to such stock transfer orders
and other  restrictions  as the Board may deem advisable  under the Plan and any
applicable federal or state securities laws, and the Board may cause a legend or
legends to be put on any such  certificates  to make  appropriate  references to
such restrictions.

          17.2 OTHER PROVISIONS.  The grant of any award under the Plan may also
be subject to other provisions (whether or not applicable to the benefit awarded
to any  other  Participant)  as the  Board  determines  appropriate,  including,
without limitation,  provisions for (a) the Participant's  agreement to abide by
any  non-disclosure or non-compete  requirements or restrictions as specified in

                                       9
<PAGE>
the Participant's award agreement;  (b) one or more means to enable Participants
to defer  recognition  of taxable  income  relating  to awards or cash  payments
derived  therefrom,  which means may provide  for a return to a  Participant  on
amounts  deferred as  determined  by the Board  (PROVIDED  that no such deferral
means  may  result in an  increase  in the  number  of shares of Stock  issuable
hereunder); (c) the purchase of Stock under options in installments;  or (d) the
financing of the purchase of Stock under the options in the form of a promissory
note issued to the Company by a Participant  on such terms and conditions as the
Board determines.

          17.3 AWARD AGREEMENT.  No person shall have any rights under any award
granted under the Plan unless and until the Company and the  Participant to whom
the award was granted  shall have  executed an award  agreement  in such form as
shall have been approved by the Board.

SECTION 18. LEGAL CONSTRUCTION

          18.1  REQUIREMENTS  OF LAW.  The granting of awards under the Plan and
the issuance of shares of Stock in connection with an award, shall be subject to
all  applicable  laws,  rules  and  regulations,  and to such  approvals  by any
governmental  agencies or  national  securities  exchanges  or markets as may be
required.

          18.2 GOVERNING LAW. The Plan, and all agreements  hereunder,  shall be
construed in accordance with and governed by the laws of the State of Delaware.

          18.3 SEVERABILITY. If any provision of the Plan or any award agreement
or any award is or becomes or is deemed to be invalid,  illegal or unenforceable
in any jurisdiction, or as to any person or award, or would disqualify the Plan,
any award  agreement or any award under any law deemed  applicable by the Board,
such  provision  shall be construed or deemed  amended to conform to  applicable
laws,  or if it  cannot  be so  construed  or  deemed  amended  without,  in the
determination  of the Board,  materially  altering  the intent of the Plan,  any
award  agreement  or the award,  such  provision  shall be  stricken  as to such
jurisdiction,  person or award,  and the  remainder of the Plan,  any such award
agreement and any such award shall remain in full force and effect.

                                       10
<PAGE>
                                POWERSMART, INC.
                        INCENTIVE STOCK OPTION AGREEMENT

          THIS AGREEMENT  made and entered into as of the 1st day of ____,  2001
(the "Grant Date"), by and between POWERSMART, INC., a Delaware corporation (the
"Company"),   and   ______________________,   an   employee   of   the   Company
("Participant").

                                 R E C I T A L S

          WHEREAS,  the Company has in effect the  PowerSmart,  Inc.  1998 Stock
Incentive  Plan (the "Plan"),  which permits  options to purchase  shares of the
Company's common stock, $0.01 par value ("Stock"), to be granted to employees of
the Company and other eligible individuals.

          WHEREAS,  the Company  believes it to be in the best  interests of the
Company and its shareholders for employees and others  interested in the Company
to obtain or  increase  their stock  ownership  interest in the Company in order
that they will have a greater  incentive  to work for and manage  the  Company's
affairs.

          WHEREAS,  the  Participant has been selected by the Board of Directors
of the Company  (the  "Board")  and is  eligible to receive an option  under the
Plan.

                                A G R E E M E N T

          NOW, THEREFORE,  in consideration of the promises and of the covenants
and agreements  herein set forth, the parties hereby mutually covenant and agree
as follows:

          1.   GRANT. Subject to the terms and conditions of the Plan, a copy of
which is attached hereto and made a part hereof, and this Agreement, the Company
hereby grants to  Participant  an option to purchase from the Company all or any
part of an aggregate  number of  __________  shares of Stock  (hereinafter  such
shares of Stock are  referred  to as the  "Optioned  Shares",  and the option to
purchase  the  Optioned  Shares is referred to as the  "Option").  The Option is
intended to qualify as an "Incentive Stock Option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").

          2.   VESTING.   The  Option  shall  vest  and  become  exercisable  by
Participant  during the period of his continuous  employment by the Company with
respect to  one-quarter of the Optioned  Shares on the first  anniversary of the
grant date, as to an additional one-quarter of the Optioned Shares on the second
anniversary  of the grant date, as to an additional  one-quarter of the Optioned
Shares  on the third  anniversary  of the grant  date,  and as to the  remaining
one-quarter of the Optioned Shares on the fourth  anniversary of the grant date.
If the  Participant's  employment  with the Company  changes  from  full-time to
part-time status or is interrupted by a leave of absence, the Board, in its sole
discretion, may delay the vesting of the Option pursuant to this paragraph 2 for
such period as it reasonably deems appropriate.
<PAGE>
          3.   PRICE.  The  price to be paid for the  Optioned  Shares  shall be
$____ per share,  which  represents not less than one hundred  percent (100%) of
the Fair Market Value of the Optioned Shares on the Grant Date.

          4.   TERM;  EXERCISE.  Subject to the terms and conditions of the Plan
and this Agreement,  the Option may be exercised by the Participant while in the
employ of the  Company,  in whole or in part,  from time to time with respect to
any  shares  for which the right to  exercise  shall have  accrued  pursuant  to
paragraph  2 hereof,  but only during the period  beginning  on the date of this
Agreement and ending on the tenth anniversary of this Agreement.

          5.   LIMIT  ON  INCENTIVE  STOCK  OPTIONS.  To  the  extent  that  the
aggregate  fair market  value,  as  determined  by the Board,  of the Stock with
respect  to  which  Incentive  Stock  Options  are  first   exercisable  by  the
Participant  during any calendar year (under the Plan and all other plans of the
Company and its Subsidiaries)  exceeds One Hundred Thousand Dollars  ($100,000),
such Option as to the excess shall be treated as a Non-Qualified Stock Option.

          6.   METHOD OF EXERCISE.

          (a) The Option may be exercised only by written  notice,  delivered or
     mailed by postpaid registered or certified mail, addressed to the treasurer
     of the Company at the Company's  principal executive offices specifying the
     number of Optioned Shares being purchased. Such notice shall be accompanied
     by  payment  of the  entire  Option  price  of the  Optioned  Shares  being
     purchased:  (i) by a cashier's or certified check in United States dollars;
     (ii) with the consent of the Board, by tendering previously acquired shares
     of Stock which have been held for at least six (6) months and are valued at
     their Fair Market Value at the time of exercise;  or (iii) with the consent
     of the Board,  by any  combination  of (i) and (ii).  For  purposes of this
     paragraph,  Fair Market Value shall be determined in the same manner as the
     Fair Market Value of the Stock on the Grant Date was determined pursuant to
     paragraph 3 hereof.

          (b)  Shares  of  Stock  tendered  shall be duly  endorsed  in blank or
     accompanied  by stock  powers duly  endorsed in blank.  Upon receipt of the
     payment of the entire  purchase price of the Optioned  Shares so purchased,
     certificates  for such Optioned Shares shall be issued to the  Participant.
     The Optioned Shares so purchased shall be fully paid and nonassessable.

          (c) The  requirements for incentive stock options under Section 422 of
     the Code include minimum holding period requirements that require the Stock
     acquired upon exercise of the Option to be held for at least two years from
     the date of grant and one year from the date of exercise.

          7.   TERMINATION OF EMPLOYMENT.

          (a) Except as  otherwise  provided  by the Board,  if the  Participant
     ceases to be an employee of the Company for any reason other than for cause
     or due to death or disability (as defined below),  then the Participant may

                                      -2-
<PAGE>
     exercise the Option, to the extent vested and exercisable as of the date of
     the Participant's termination,  for a period of thirty (30) days after such
     termination  of employment,  but in no event beyond the expiration  date of
     the Option as specified in paragraph 4 hereof (the "Expiration Date").

          (b) If the  Participant  ceases to be an  employee  of the  Company or
     ceases to be otherwise eligible by reason of death or disability as defined
     in Section  22(e)(3) of the Code, then,  notwithstanding  the provisions of
     paragraph  2,  the  Option  shall  be 100%  vested  on the date of death or
     disability and the Participant (or the Participant's  beneficiary or estate
     in the event of the  Participant's  death)  may  exercise  the Option for a
     period of one (1) year following the date of death or disability, but in no
     event beyond the Expiration Date.

          (c) If the  Participant's  employment  is terminated  for "cause",  as
     determined by the Board,  the Option shall terminate  immediately upon such
     termination of employment.

          8.   NO RIGHTS  AS A  SHAREHOLDER.  The  grant of an Option  hereunder
shall not confer upon the Participant any rights as a shareholder of the Company
until  and  unless  the  Option is duly  exercised.  As of the date on which the
Participant  exercises  an Option,  the  Participant  shall have all rights of a
shareholder  of record with respect to the number of shares of Stock as to which
the Option is exercised,  irrespective  of whether  certificates to evidence the
shares of Stock have been issued on such date.

          9.   NONTRANSFERABILITY;   COLLATERAL.   The   Option   shall  not  be
transferable  by the  Participant  otherwise than by will or the laws of descent
and  distribution,  except that a Participant  may, to the extent allowed by the
Board (a)  designate  in writing a  beneficiary  to exercise the award after the
Participant's death; or (b) transfer any award;  provided,  however,  that in no
event may incentive stock options be transferred  other than by will or the laws
of  descent  and  distribution.  The Option may not be  assigned,  mortgaged  or
pledged as any type of security or collateral.

          10.  RESTRICTIONS ON TRANSFERS OF STOCK.  The  Participant  agrees for
himself and his heirs, legatees and legal  representatives,  with respect to all
shares of Stock acquired  pursuant to the terms and conditions of this Agreement
(or any shares of Stock  issued  pursuant  to a stock  dividend  or stock  split
thereon or any securities  issued in lieu thereof or in substitution or exchange
therefor),  that he and his heirs,  legatees and legal  representatives will not
sell or  otherwise  dispose  of such  shares  except  pursuant  to an  effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
or except in a transaction  that, in the opinion of counsel for the Company,  is
exempt from registration under the Act. As further conditions to the issuance of
the Optioned Shares, the Participant agrees for himself, and his heirs, legatees
and legal representatives, prior to such issuance, to execute and deliver to the
Company such investment  representations and warranties,  and to take such other
actions,  as counsel for the Company  determines may be necessary or appropriate
for compliance with the Act and any applicable securities laws. Unless otherwise

                                      -3-
<PAGE>
determined  by  the  Board,   the   Participant   agrees  that  any  certificate
representing shares of Stock acquired upon exercise of the Option shall bear the
following legend:

     The shares of Stock  represented  by this  certificate  are restricted
     securities  as that term is defined under Rule 144  promulgated  under
     the Securities  Act of 1933, as amended (the "Act").  These shares may
     not be sold,  transferred  or disposed  of unless they are  registered
     under  the  Act,  or  sold  in  a  transaction  that  is  exempt  from
     registration under the Act and any applicable state securities laws.

          11.  ADJUSTMENTS.  If the Company  shall at any time change the number
of shares of its Stock  without new  consideration  to the  Company  (such as by
stock dividend, stock split or similar transaction),  the total number of shares
then remaining  subject to purchase  hereunder shall be changed in proportion to
the change in issued shares, and the Option price per share shall be adjusted so
that the total  consideration  payable to the Company  upon the  purchase of all
shares not theretofore  purchased shall not be changed. In the event there shall
be any  change,  other  than  as  specified  above,  in the  number  or  kind of
outstanding  shares of Stock or of any stock or other securities into which such
Stock shall have been changed or for which it shall have been exchanged, then if
the Board shall in its sole  discretion  determine  that such  change  equitably
requires an  adjustment  in the number or kind of shares  subject to the Option,
such adjustment  shall be made by the Board.  The Option price for each share of
Stock or other securities  substituted or adjusted as provided in this paragraph
shall be  determined  by dividing  the Option price for each share prior to such
substitution  or  adjustment  by the number of shares or the fraction of a share
substituted  for such share or to which such share shall have been adjusted.  No
adjustment  or  substitution  provided for in this  paragraph  shall require the
Company to sell a fractional share.

          12.  POWERS OF  COMPANY  NOT  AFFECTED.  The  existence  of the Option
herein  granted shall not affect in any way the right or power of the Company or
its shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations  or other  changes in the  Company's  capital  structure  or its
business,  or any merger or  consolidation  of the  Company,  or any issuance of
bonds,  debentures,  preferred,  or prior preference stock ahead of or affecting
the Stock or the rights  thereof,  or dissolution or liquidation of the Company,
or any sale or  transfer  of all or any part of its assets or  business,  or any
other corporate act or proceeding, whether of a similar character or otherwise.

          13.  INTERPRETATION. As a condition of the granting of the Option, the
Participant agrees for himself and his legal  representatives,  that any dispute
or  disagreement  which may arise  under or as a result of or  pursuant  to this
Agreement  shall be  determined  by the  Board in its sole  discretion,  and any
interpretation  by the  Board of the  terms of this  Agreement  shall be  final,
binding and  conclusive.  Without  derogation  of the  foregoing,  whenever  the
context  requires,  the gender of all words used herein shall not be restrictive
in application, and the singular shall include the plural and vice versa.

                                      -4-
<PAGE>
          14.  AMENDMENT OR MODIFICATION. No term or provision of this Agreement
may be amended,  modified or supplemented  orally,  but only by an instrument in
writing  signed  by the  party  against  whom or which  the  enforcement  of the
amendment, modification or supplement is sought.

          15.  GOVERNING LAW. This  Agreement  shall be governed by the internal
laws of the State of Delaware as to all matters,  including, but not limited to,
matters of validity, construction, effect, performance and remedies.

          16.  TERMS OF PLAN GOVERN. All parties acknowledge that this option is
granted  under  and  pursuant  to the  Plan,  which  shall  govern  all  rights,
interests, obligations and undertakings of both the Company and the Participant.
All  capitalized  terms not  otherwise  defined  herein  shall have the meanings
assigned to such terms in the Plan.

          IN WITNESS  WHEREOF,  the  Company has caused  this  instrument  to be
executed  by its  duly  authorized  officers  and its  corporate  seal  hereunto
affixed,  and the  Participant  has  hereunto  affixed his hand the day and year
first above written.

                                       POWERSMART, INC.

                                       By:
                                           -------------------------------------
                                           PRESIDENT AND CHIEF EXECUTIVE OFFICER

                                       PARTICIPANT:

                                       -----------------------------------------

                                       -5-
<PAGE>
                                POWERSMART, INC.
                       NONQUALIFIED STOCK OPTION AGREEMENT

          THIS  AGREEMENT  made and entered  into as of the 5th day of February,
2002 (the "Grant Date"), by and between POWERSMART, INC., a Delaware corporation
(the "Company"),  and _______, an eligible individual  ("Participant") under the
terms of the PowerSmart, Inc. 1998 Stock Incentive Plan ("Plan").

                                 R E C I T A L S

          WHEREAS,  the Company has in effect the Plan, which permits options to
purchase shares of the Company's common stock, $0.01 par value ("Stock"),  to be
granted to employees of the Company and other eligible individuals.

          WHEREAS,  the Company  believes it to be in the best  interests of the
Company and its shareholders for employees and others  interested in the Company
to obtain or  increase  their stock  ownership  interest in the Company in order
that they will have a greater  incentive  to work for and manage  the  Company's
affairs.

          WHEREAS,  the  Participant has been selected by the Board of Directors
of the Company  (the  "Board")  and is  eligible to receive an option  under the
Plan.

                                A G R E E M E N T

          NOW, THEREFORE,  in consideration of the promises and of the covenants
and agreements  herein set forth, the parties hereby mutually covenant and agree
as follows:

          1.   GRANT. Subject to the terms and conditions of the Plan, a copy of
which is attached hereto and made a part hereof, and this Agreement, the Company
hereby grants to  Participant  an option to purchase from the Company all or any
part of an aggregate number of ____ shares of Stock  (hereinafter such shares of
Stock are referred to as the "Optioned  Shares",  and the option to purchase the
Optioned  Shares is referred to as the "Option").  The Option is not intended to
qualify as an "Incentive  Stock Option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").

          2.   VESTING.  Notwithstanding  any provision  hereof to the contrary,
the Option shall be exercisable by Participant only to the extent the option has
vested as  provided  herein.  The Option  shall vest and become  exercisable  by
Participant  the  next  day  after  the  Grant  Date.  The  Board,  in its  sole
discretion, may delay the vesting of the Option pursuant to this paragraph 2 for

                                   Page 1 of 5
<PAGE>
such period as it reasonably  deems 2. appropriate in respect of any Participant
whose  status as a  consultant,  employee  of a  consultant  or  employee of the
Company changes or is interrupted by a leave of absence.

          3.   PRICE.  The price to be paid for the Optioned  Shares shall be US
$0.77 per share,  which  represents not less than one hundred  percent (100%) of
the Fair Market Value of the Optioned Shares on the Grant Date.

          4.   TERM;  EXERCISE.  Subject to the terms and conditions of the Plan
and this Agreement, the Option may be exercised by the Participant while serving
as consultant to, an employee of a consultant to, or an employee of the Company,
in whole or in part,  from time to time with respect to any shares for which the
right to exercise  shall have accrued  pursuant to paragraph 2 hereof,  but only
during  the period  beginning  on the date of this  Agreement  and ending on the
tenth anniversary of this Agreement;  provided, however, that if the Participant
is not a consultant  to, an employee of a  consultant  to, or an employee of the
Company as of the date of this  Agreement,  the  Participant  may  exercise  the
Option at any time,  in whole or in part,  from time to time with respect to any
shares for which the right to exercise shall have accrued  pursuant to paragraph
2 hereof, but only during the period beginning on the date of this Agreement and
ending on the tenth anniversary hereof.

          5.   METHOD OF EXERCISE.

          (a) The Option may be exercised only by written  notice,  delivered or
     mailed by postpaid registered or certified mail, addressed to the treasurer
     of the Company at the Company's  principal executive offices specifying the
     number of Optioned Shares being purchased. Such notice shall be accompanied
     by  payment  of the  entire  Option  price  of the  Optioned  Shares  being
     purchased:  (i) by a cashier's or certified check in United States dollars;
     (ii) with the consent of the Board, by tendering previously acquired shares
     of Stock  valued at their Fair  Market  Value at the time of  exercise;  or
     (iii) with the consent of the Board,  by any  combination  of (i) and (ii).
     For purposes of this  paragraph,  Fair Market Value shall be  determined in
     the same manner as the Fair Market Value of the Stock on the Grant Date was
     determined pursuant to paragraph 3 hereof.

          (b)  Shares  of  Stock  tendered  shall be duly  endorsed  in blank or
     accompanied  by stock  powers duly  endorsed in blank.  Upon receipt of the
     payment of the entire  purchase price of the Optioned  Shares so purchased,
     certificates  for such Optioned Shares shall be issued to the  Participant.
     The Optioned Shares so purchased shall be fully paid and nonassessable.

          6.   TERMINATION.

          (a)  Except  as  may  otherwise  be  provided  by  the  Board,  if the
     Participant  is as of the  date of  this  Agreement  a  consultant  to,  an
     employee of a  consultant  to, or an employee of the Company and  hereafter
     ceases  service as such (without  contemporaneously  commencing  service in
     another of such roles) or to be otherwise  eligible  under the Plan for any

                                  Page 2 of 5
<PAGE>
     reason other than a termination for cause or due to death or disability (as
     defined below), then the Participant's right to exercise the Option, to the
     extent (if any) vested and exercisable as of the date of the termination of
     such service by Participant,  shall  terminate  thirty (30) days after such
     termination of consulting,  employment or eligible status,  but in no event
     beyond the expiration date of the Option as specified in paragraph 4 hereof
     (the "Expiration Date").

          (b) If,  by  reason  of death or  disability  as  defined  in  Section
     22(e)(3) of the Code,  the  Participant  ceases to be a  consultant  to, an
     employee  of a  consultant  to,  or an  employee  of the  Company  (without
     contemporaneously commencing service in another of such roles) or ceases to
     be otherwise eligible then,  notwithstanding the provisions of paragraph 2,
     the Option shall be 100% vested on the date of death or disability  and the
     Participant (or the Participant's beneficiary or estate in the event of the
     Participant's  death) may  exercise the Option for a period of one (1) year
     following  the date of  death or  disability,  but in no event  beyond  the
     Expiration Date.

          (c) If the  Participant's  status as a consultant to, an employee of a
     consultant  to, or as an employee of the Company is terminated for "cause,"
     as determined  by the board of directors of the  consultant or the Board of
     the Company, respectively, the Option shall terminate immediately upon such
     termination of such consultancy or employment.

          (d) If the  Participant  is not a  consultant  to,  an  employee  of a
     consultant  to,  or an  employee  of the  Company  as of the  date  of this
     Agreement,  the Option  shall be  exercisable  for a period of one (1) year
     following the date of death of the Participant,  but in no event beyond the
     Expiration Date.

          7.   NO RIGHTS AS A SHAREHOLDER.  The Participant  shall not be deemed
for any purposes to be a  shareholder  of the Company with respect to any shares
that may be acquired  hereunder  except to the extent that the Option shall have
been exercised with respect thereto and a stock certificate issued therefore.

          8.   NONTRANSFERABILITY;  COLLATERAL. The grant of an Option hereunder
shall not confer upon the Participant any rights as a shareholder of the Company
until  and  unless  the  Option is duly  exercised.  As of the date on which the
Participant  exercises  an Option,  the  Participant  shall have all rights of a
shareholder  of record with respect to the number of shares of Stock as to which
the Option is exercised,  irrespective  of whether  certificates to evidence the
shares of Stock have been issued on such date.

          9.   RESTRICTIONS ON TRANSFERS OF STOCK.  The  Participant  agrees for
himself and his heirs, legatees and legal  representatives,  with respect to all
shares of Stock acquired  pursuant to the terms and conditions of this Agreement
(or any shares of Stock  issued  pursuant  to a stock  dividend  or stock  split
thereon or any securities  issued in lieu thereof or in substitution or exchange
therefor),  that he and his heirs,  legatees and legal  representatives will not
sell or  otherwise  dispose  of such  shares  except  pursuant  to an  effective
registration statement under the Securities Act of 1933, as amended (the "Act"),

                                  Page 3 of 5
<PAGE>
or except in a transaction  that, in the opinion of counsel for the Company,  is
exempt from registration under the Act. As further conditions to the issuance of
the Optioned Shares, the Participant agrees for himself, and his heirs, legatees
and legal representatives, prior to such issuance, to execute and deliver to the
Company such investment  representations and warranties,  and to take such other
actions,  as counsel for the Company  determines may be necessary or appropriate
for compliance with the Act and any applicable securities laws. Unless otherwise
determined  by  the  Board,   the   Participant   agrees  that  any  certificate
representing shares of Stock acquired upon exercise of the Option shall bear the
following legend:

     The shares of Stock  represented  by this  certificate  are restricted
     securities  as that term is defined under Rule 144  promulgated  under
     the Securities  Act of 1933, as amended (the "Act").  These shares may
     not be sold,  transferred  or disposed  of unless they are  registered
     under  the  Act,  or  sold  in  a  transaction  that  is  exempt  from
     registration under the Act and any applicable state securities laws.

          10.  ADJUSTMENTS.  If the Company  shall at any time change the number
of shares of its Stock  without new  consideration  to the  Company  (such as by
stock dividend, stock split or similar transaction),  the total number of shares
then remaining  subject to purchase  hereunder shall be changed in proportion to
the change in issued shares, and the Option price per share shall be adjusted so
that the total  consideration  payable to the Company  upon the  purchase of all
shares not theretofore  purchased shall not be changed. In the event there shall
be any  change,  other  than  as  specified  above,  in the  number  or  kind of
outstanding  shares of Stock or of any stock or other securities into which such
Stock shall have been changed or for which it shall have been exchanged, then if
the Board shall in its sole  discretion  determine  that such  change  equitably
requires an  adjustment  in the number or kind of shares  subject to the Option,
such adjustment  shall be made by the Board.  The Option price for each share of
Stock or other securities  substituted or adjusted as provided in this paragraph
shall be  determined  by dividing  the Option price for each share prior to such
substitution  or  adjustment  by the number of shares or the fraction of a share
substituted  for such share or to which such share shall have been adjusted.  No
adjustment  or  substitution  provided for in this  paragraph  shall require the
Company to sell a fractional share.

          11.  POWERS OF  COMPANY  NOT  AFFECTED.  The  existence  of the Option
herein  granted shall not affect in any way the right or power of the Company or
its shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations  or other  changes in the  Company's  capital  structure  or its
business,  or any merger or  consolidation  of the  Company,  or any issuance of
bonds,  debentures,  preferred,  or prior preference stock ahead of or affecting
the Stock or the rights  thereof,  or dissolution or liquidation of the Company,
or any sale or  transfer  of all or any part of its assets or  business,  or any
other corporate act or proceeding, whether of a similar character or otherwise.

                                  Page 4 of 5
<PAGE>
          12.  INTERPRETATION. As a condition of the granting of the Option, the
Participant agrees for himself and his legal  representatives,  that any dispute
or  disagreement  which may arise  under or as a result of or  pursuant  to this
Agreement  shall be  determined  by the  Board in its sole  discretion,  and any
interpretation  by the  Board of the  terms of this  Agreement  shall be  final,
binding and  conclusive.  Without  derogation  of the  foregoing,  whenever  the
context  requires,  the gender of all words used herein shall not be restrictive
in application, and the singular shall include the plural and vice versa.

          13.  AMENDMENT OR MODIFICATION. No term or provision of this Agreement
may be amended,  modified or supplemented  orally,  but only by an instrument in
writing  signed  by the  party  against  whom or which  the  enforcement  of the
amendment, modification or supplement is sought.

          14.  GOVERNING LAW. This  Agreement  shall be governed by the internal
laws of the State of Delaware as to all matters,  including, but not limited to,
matters of validity, construction, effect, performance and remedies.

          15.  TERMS OF PLAN GOVERN. All parties acknowledge that this option is
granted  under  and  pursuant  to the  Plan,  which  shall  govern  all  rights,
interests, obligations and undertakings of both the Company and the Participant.
All  capitalized  terms not  otherwise  defined  herein  shall have the meanings
assigned to such terms in the Plan.

          IN WITNESS  WHEREOF,  the  Company has caused  this  instrument  to be
executed  by its  duly  authorized  officers  and its  corporate  seal  hereunto
affixed,  and the  Participant  has  hereunto  affixed his hand the day and year
first above written.

                                       POWERSMART, INC.

                                       By:
                                           -------------------------------------
                                           J. Norman Allen
                                           President and CEO

                                       PARTICIPANT:

                                       -----------------------------------------

                                  Page 5 of 5

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