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                                                                   EXHIBIT 10.41

                          POWER EFFICIENCY CORPORATION

        Amended and Restated 2000 Stock Option and Restricted Stock Plan
                         (Adopted as of September, 2000
                                       and
                              amended in June, 2002
                                       and
                      further amended on September 8, 2003
                                       and
                      further amended on February 23, 2004)

                                    RECITALS

         WHEREAS, Power Efficiency Corporation (the "Company") adopted the 2000
Stock Option and Restricted Stock Plan in September 2000 (the "2000 Plan");

         WHEREAS, this Amended and Restated 2000 Plan shall supercede the 2000
Plan; and

         WHEREAS, all grants under the 2000 Plan shall be covered and subject to
the provisions of the Amended and Restated 2000 Plan.

Section 1.        Purpose; Definitions.

         1.1 Purpose. The purpose of the Company's Amended and Restated 2000
Stock Option and Restricted Stock Plan (the "Plan") is to enable the Company to
offer to its key employees, officers, directors and consultants whose past,
present and/or potential contributions to the Company and its Subsidiaries have
been, are or will be important to the success of the Company, an opportunity to
acquire a proprietary interest in the Company. The various types of long-term
incentive awards which may be provided under the Plan will enable the Company to
respond to changes in compensation practices, tax laws, accounting regulations
and the size and diversity of its businesses.

         1.2 Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below:

                  (a) "Agreement" means the agreement between the Company and
the Holder setting forth the terms and conditions of an award under the Plan.

                  (b) "Board" means the Board of Directors of the Company.

                  (c) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto and the regulations promulgated
thereunder.

                  (d) "Committee" means the Compensation Committee of the Board
or such persons as shall be designated by the President of the company, or any
other committee of the Board, which the Board may designate to administer the
Plan or any portion thereof. The Committee shall consist of disinterested
persons appointed by the Board who, during the one year period prior to
commencement of service on the Committee, shall not have participated in, and
while serving and for one year after serving on the Committee, shall not be
eligible for selection as persons to whom awards of Stock may be allocated, or
to whom Stock Options may be granted under the Plan or any other discretionary
plan of the Company, under which participants are entitled to acquire Stock or
Stock Options of the Company. If no Committee is so designated, then all
references in this Plan to "Committee" shall mean the Board.

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                          Power Efficiency Corporation
        AMENDED AND RESTATED 2000 STOCK OPTION AND RESTRICTED STOCK PLAN
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                  (e) "Common Stock" means the Common Stock of the Company, no
par value per share.

                  (f) "Company" means Power Efficiency Corporation, a
corporation organized under the laws of the State of Delaware.

                  (g) "Continuous Status as an Employee" means the absence of
any interruption or termination of service as an Employee. Continuous Status as
an Employee shall not be considered interrupted in the case of sick leave,
military leave, or any other leave of absence approved by the Board.

                  (h) "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company
and for whom a withholding obligation exists under Section 3401 of the Code by
the employing corporation, as applicable. The payment of a director's fee by the
Company shall not be sufficient to constitute "employment" by the Company.

                  (i) "Disability" means disability as determined under
procedures established by the Committee for purposes of the Plan.

                  (j) "Effective Date" means the date set forth in Section 15

                  (k) "Fair Market Value", unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, means, as
of any given date: (i) if the Common Stock is listed on a national securities
exchange or quoted on the NASDAQ National Market or NASDAQ SmallCap Market, the
last sale price of the Common Stock in the principal trading market for the
Common Stock on the last trading day preceding the date of grant of an award
hereunder, as reported by the exchange or NASDAQ, as the case may be; (ii) if
the Common Stock is not listed on a national securities exchange or quoted on
the NASDAQ National Market or NASDAQ SmallCap Market, but is traded in the
over-the-counter market, the closing bid price for the Common Stock on the last
trading day preceding the date of grant of an award hereunder for which such
quotations are reported by the National Quotation Bureau, Incorporated or
similar publisher of such quotations; and (iii) if the fair market value of the
Common Stock cannot be determined pursuant to clause (i) or (ii) above, such
price as the Committee shall determine, in good faith.

                  (l) "Holder" means a person who has received an award under
the Plan.

                  (m) "Incentive Stock Option" means any Stock Option intended
to be and designated as an "incentive stock option" within the meaning of
Section 422 of the Code.

                  (n) "Non-Qualified Stock Option" means any Stock Option that
is not an Incentive Stock Option.

                  (o) "Normal Retirement" means retirement from active
employment with the Company or any Subsidiary on or after age 65.

                  (p) "Parent" means any present or future parent corporation of
the Company, as such term is defined in Section 424(e) of the Code.

                  (q) "Plan" means the Power Efficiency Corporation, Amended and
Restated 2000 Stock Option and Restricted Stock Plan, as hereinafter amended
from time to time.

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                  (r) "Restricted Stock" means Stock, received under an award
made pursuant to Section 7 below, that is subject to restrictions under said
Sections 8-11.

                  (s) "Stock" means the Common Stock of the Company, no par
value per share.

                  (t) "Stock Option" or "Option" means any option to purchase
shares of Stock which is granted pursuant to the Plan.

                  (u) "Subsidiary" means any present or future subsidiary
corporation of the Company, as such term is defined in Section 424(f) of the
Code.

Section  2.       Administration.

         2.1 Committee Membership. The Plan shall be administered by the Board
or a Committee or such persons as shall be designated by the President of the
Company. Committee members shall serve for such term as the Board may in each
case determine, and shall be subject to removal at any time by the Board.

         2.2 Powers of Committee. The Committee shall have full authority,
subject to Section 2.3 hereof, to award, pursuant to the terms of the Plan: (i)
Stock Options and (ii) Restricted Stock grants. For purposes of illustration and
not of limitation, the Committee shall have the authority (subject to the
express provisions of this Plan):

                  (a) to select the officers, key employees, directors and
consultants of the Company or any Subsidiary to whom Stock Options and/or
Restricted Stock, may from time to time be awarded hereunder.

                  (b) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but not
limited to, number of shares, share price, any restrictions or limitations, and
any vesting, exchange, surrender, cancellation, acceleration, termination,
exercise or forfeiture provisions, as the Committee shall determine);

                  (c) to determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder;

                  (d) to determine the terms and conditions under which awards
granted hereunder are to operate on a tandem basis and/or in conjunction with or
apart from other equity awarded under this Plan and cash awards made by the
Company or any Subsidiary outside of this Plan;

                  (e) to determine the extent and circumstances under which
Stock and other amounts payable with respect to an award hereunder shall be
deferred which may be either automatic or at the election of the Holder; and

                  (f) to substitute (i) new Stock Options for previously granted
Stock Options, which previously granted Stock Options have higher option
exercise prices and/or contain other less favorable terms, and (ii) new awards
of any other type for previously granted awards of the same type, which
previously granted awards are upon less favorable terms.

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         2.3      Interpretation of Plan.

                  (a) Committee Authority. Subject to Section 15 hereof, the
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any award issued under the Plan (and to determine the form and
substance of all Agreements relating thereto), and to otherwise supervise the
administration of the Plan. Subject to Section 15 hereof, all decisions made by
the Committee pursuant to the provisions of the Plan shall be made in the
Committee's sole discretion and shall be final and binding upon all persons,
including the Company, its Subsidiaries and Holders.

                  (b) Incentive Stock Options. Anything in the Plan to the
contrary notwithstanding, no term or provision of the Plan relating to Incentive
Stock Options or any Agreement providing for Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of the Holder(s) affected, to disqualify
any Incentive Stock Option under such Section 422.

Section 3.        Stock Subject to Plan.

         The total number of shares of Common Stock reserved and available for
distribution under the Plan shall be 614,286 shares. Shares of Stock under the
Plan may consist, in whole or in part, of authorized and unissued shares or
treasury shares. If any shares of Stock that have been optioned cease to be
subject to a Stock Option, or any shares of Stock that are subject to any
Restricted Stock granted hereunder are forfeited or any such award otherwise
terminates without a payment being made to the Holder in the form of Stock, such
shares shall again be available for distribution in connection with future
grants and awards under the Plan. Only net shares issued upon a stock-for-stock
exercise (including stock used for withholding taxes) shall be counted against
the number of shares available under the Plan.

Section 4.        Eligibility.

         4.1 General. Awards may be made or granted to key employees, officers,
directors and consultants who are deemed to have rendered or to be able to
render significant services to the Company or its Subsidiaries and who are
deemed to have contributed or to have the potential to contribute to the success
of the Company. No Incentive Stock Option shall be granted to any person who is
not an employee of the Company or a Subsidiary at the time of grant.

                                I. STOCK OPTIONS

Section 5.        Stock Options.

         5.1 Grant and Exercise. Stock Options granted under the Plan may be of
two types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. Any
Stock Option granted under the Plan shall contain such terms, not inconsistent
with this Plan, or with respect to Incentive Stock Options, the Code, as the
Committee may from time to time approve. The Committee shall have the authority
to grant Incentive Stock Options, Non-Qualified Stock Options, or both types of
Stock Options and may be granted alone or in addition to other awards granted
under the Plan. To the extent that any Stock Option intended to qualify as an
Incentive Stock Option does not so qualify, it shall constitute a separate
Non-Qualified Stock Option. An Incentive Stock Option granted under this Plan
may only be exercised within ten years of the date of grant (or five years in
the case of an Incentive Stock Option granted to optionee ("10% Stockholder")
who, at the time of grant, owns Stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or a Parent or
Subsidiary.)

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         5.2 Terms and Conditions. Stock Options granted under the Plan shall be
subject to the following terms and conditions:

                  (a) Exercise Price. The exercise price per share of Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant and may be less than 100% of the Fair Market Value of the Stock as
defined above; provided, however, that (i) the exercise price of an Incentive
Stock Option shall not be less than 100% of the Fair Market Value of the Stock
(110%, in the case of 10% Stockholder); and (ii) the exercise price of a
Non-Qualified Stock Option shall not be less than 85% of the Fair Market Value
of the Stock as defined above.

                  (b) Option Term. Subject to the limitations in Section 5.1,
the term of each Stock Option shall be fixed by the Committee.

                  (c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be determined by
the Committee. If the Committee provides, in its discretion, that any Stock
Option is exercisable only in installments, i.e., that it vests over time, the
Committee may waive such installment exercise provisions at any time at or after
the time of grant in whole or in part, based upon such factors as the Committee
shall determine.

                  (d) Method of Exercise. Subject to whatever installment,
exercise and waiting period provisions are applicable in a particular case,
Stock Options may be exercised in whole or in part at any time during the term
of the Option, by giving written notice of exercise to the Company specifying
the number of shares of Stock to be purchased. Such notice shall be accompanied
by payment in full of the purchase price, which shall be in cash or, unless
otherwise provided in the Agreement, in shares of Stock (including Restricted
Stock) or, partly in cash and partly in such Stock, or such other means which
the Committee determines are consistent with the Plan's purpose and applicable
law. Cash payments shall be made by wire transfer, certified or bank check or
personal check, in each case payable to the order of the Company; provided,
however, that the Company shall not be required to deliver certificates for
shares of Stock with respect to which an Option is exercised until the Company
has confirmed the receipt of good and available funds in payment of the purchase
price thereof. Payments in the form of Stock shall be valued at the Fair Market
Value of a share of Stock on the date prior to the date of exercise. Such
payments shall be made by delivery of stock certificates in negotiable form
which are effective to transfer good and valid title thereto to the Company,
free of any liens or encumbrances. A Holder shall have none of the rights of a
stockholder with respect to the shares subject to the Option until such shares
shall be transferred to the Holder upon the exercise of the Option.

                  (e) Transferability. No Stock Option shall be transferable by
the Holder otherwise than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Holder's lifetime, only
by the Holder.

                  (f) Termination by Reason of Death. If a Holder's employment
by the Company or a Subsidiary terminates by reason of death, any Stock Option
held by such Holder that has not fully vested shall be forfeited, unless
otherwise determined by the Committee at the time of grant and set forth in the
Agreement. Any fully vested option may thereafter be exercised by the legal
representative of the estate or by the legatee of the Holder under the will of
the Holder, for a period of one year (or such other greater or lesser period as
the Committee may specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.

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                  (g) Termination by Reason of Disability. If a Holder's
employment by the Company or any Subsidiary terminates by reason of Disability,
any Stock Option held by such Holder that has not fully vested shall be
forfeited, unless otherwise determined by the Committee at the time of grant and
set forth in the Agreement. Any fully vested option may thereafter be exercised
by the Holder for a period of one year (or such other greater or lesser period
as the Committee may specify at the time of grant) from the date of such
termination of employment or until the expiration of the stated term of such
Stock Option, whichever period is the shorter.

                  (h) Other Termination. Subject to the provisions of Section
16.3 below and unless otherwise determined by the Committee at the time of grant
and set forth in the Agreement, if a Holder is an employee of the Company or a
Subsidiary at the time of grant and if such Holder's employment by the Company
or any Subsidiary terminates for any reason other than death or Disability, the
Stock Option shall thereupon automatically terminate, except that if the
Holder's employment is terminated by the Company or a Subsidiary without cause
or due to Normal Retirement, then the portion of such Stock Option which has
vested on the date of termination of employment may be exercised for the lesser
of three months after termination of employment or the balance of such Stock
Option's term.

                  (i) Additional Incentive Stock Option Limitation. In the case
of an Incentive Stock Option, the amount of aggregate Fair Market Value of Stock
(determined at the time of grant of the Option) with respect to which Incentive
Stock Options are exercisable for the first time by a Holder during any calendar
year (under all such plans of the Company and its Parent and any Subsidiary)
shall not exceed $100,000.

                  (j) Buyout and Settlement Provisions. The Committee may at any
time offer to buy out a Stock Option previously granted, based upon such terms
and conditions as the Committee shall establish and communicate to the Holder at
the time that such offer is made.

                  (k) Stock Option Agreement. Each grant of a Stock Option shall
be confirmed by, and shall be subject to the terms of an agreement (a "Stock
Option Agreement"), or an amendment thereto, executed by the company and the
Holder. Each Stock Option Agreement shall set forth (1) the number of shares
underlying the Stock Options awarded to the Holder, (2) the vesting conditions
applicable to the award and (3) such other terms and conditions, not
inconsistent with the Plan, as determined in its discretion by the Committee.
......
Section 6.        [Intentionally omitted.]

                           II. RESTRICTED STOCK GRANTS

Section 7.        Grant of Restricted Stock Awards

         Subject to the provisions of the Plan, the Committee shall have full
and final authority, in its discretion, (1) to determine the eligibility of any
individual to receive an award of Restricted Stock under the Plan, (2) to select
from among the eligible individuals the persons who are to receive such awards
and (3) to determine the number of shares of Restricted Stock to be awarded to
any eligible person selected by the Committee and the terms and conditions of
the award. In determining the number of shares of Restricted Stock to be granted
to any Holder and the terms and conditions of such award, the Committee shall
consider the position and responsibilities of the individual being considered,
the nature and value to the Company of his or her services, his or her present
and/or potential contribution to the success of the Company, and such other
factors as the Committee may deem relevant.

Section 8.        Terms and Conditions of Restricted Stock Awards

         Awards of Restricted Stock granted under the Plan shall be subject to
the following terms and conditions:

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                   8.1 Date of Awards. Awards of Restricted Stock shall be made
only as of a Valuation Date, as defined in Section 8.9.

                   8.2 Vesting Conditions. Awards under the Plan shall consist
of a specified number of shares of Stock ("Restricted Stock") awarded to a
Holder subject to the satisfaction of one or more vesting conditions determined
and specified by the Committee at the time of the award. Such vesting conditions
may include:

                           (i) Service Conditions. A requirement that the Holder
                  remain in the service of the Company as an employee, director,
                  member of an Advisory Board, consultant, advisor and/or in
                  such other capacity or capacities as the Committee may specify
                  (hereinafter referred to as the Holder's "Service") from the
                  date of the award through the Valuation Date or Valuation
                  Dates specified by the Committee at the time of the award;

                           (ii) Performance Conditions. Satisfaction of such
                  requirements relating to the performance of the Company, any
                  department, unit or other portion thereof or the Holder
                  individually as the Committee may determine and specify at the
                  time of the award; and/or

                           (iii) Other Conditions. Such other conditions to the
                  vesting of the shares of Restricted Stock as the Committee
                  may, in its discretion, determine and specify at the time of
                  the award.

                   The vesting conditions to which an award of Restricted Stock
is subject may be stated in the alternative, such that satisfaction of one or
more of such conditions will be sufficient to cause the vesting of the shares of
Restricted Stock, or cumulatively such that vesting will not occur unless and
until all of such conditions is satisfied, or in any combination of the two.
Vesting conditions may also be stated in such a manner that vesting of a
designated portion of the shares awarded will occur on satisfaction of one or
more specified conditions, whereas satisfaction of additional or different
conditions is required for the vesting of another specified portion or portions
of the shares. For example, an award may provide for the vesting of an award in
stages upon satisfaction of conditions relating to specified numbers of years of
Service and/or levels of performance.

                   Unless otherwise specifically determined by the Committee,
the vesting conditions applicable to an award of Restricted Stock shall be
stated in such a manner that vesting of any shares of Restricted Stock shall
occur, if at all, as of one or more Valuation Dates.

                   8.3 Restricted Stock Agreements. All awards of Restricted
Stock shall be confirmed by and subject to the terms of an agreement (a
"Restricted Stock Agreement"), executed by the Company and the Holder. Each
Restricted Stock Agreement shall set forth (1) the number of shares of
Restricted Stock awarded to the Holder, (2) the vesting conditions applicable to
the award and (3) such other terms and conditions, not inconsistent with the
Plan, as determined in its discretion by the Committee.

                   No Holder shall sell, exchange, assign, alienate, pledge,
hypothecate, encumber, charge, give, devise, or otherwise dispose of, either
voluntarily or by operation of law (hereinafter referred to as "transfer"), any
shares of Stock acquired pursuant to the Plan or any rights or interests
appertaining thereto, except as permitted by the Plan.

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                   8.4 Transfer Restrictions; Escrow of Restricted Stock. Unless
and until the vesting conditions prescribed by the Committee for such shares
have been satisfied, a Holder may not sell, exchange, assign, alienate, pledge,
hypothecate, encumber, charge, give, or otherwise dispose of, either voluntarily
or by operation of law (any such action being hereinafter referred to as a
"transfer") any shares of Restricted Stock, or any interest therein, other than
by Will or the laws of descent and distribution on death of the Holder, and any
attempt to make such a transfer shall be null and void. Pending satisfaction of
the vesting conditions with respect thereto, the certificates representing
shares of Restricted Stock awarded under the Plan shall be held in escrow by the
Company, and as a condition of any award of Restricted Stock, the Holder shall
deliver to the Company one or more undated stock powers with respect thereto to
be used by the Company in the event any such shares are forfeited to the Company
pursuant to the terms of the Plan or the Restricted Stock Agreement. As soon as
practicable following satisfaction of the vesting conditions with respect to any
shares of Restricted Stock and payment to the Company of any amount required for
withholding taxes as provided in Section 16.6, the Company will cause a
certificate or certificates for such shares to be delivered to the Holder or in
the event of death to the Holder's personal representative. Following
satisfaction of the vesting conditions and delivery of stock certificates to the
Holder, shares of Stock acquired pursuant to the Plan will remain subject to the
transfer restrictions provided in Section 10.

                   8.5 Custody and Payment of Distributions on Restricted Stock.
Unless and until the vesting conditions with respect to such shares have been
satisfied, any dividends or other distributions paid with respect to shares of
Restricted Stock, whether in cash, securities or other property, and any cash,
securities or other property into which shares of Restricted Stock may be
converted or exchanged by reason of any reorganization, reclassification,
recapitalization, stock split or combination of shares, merger, consolidation or
other change affecting the Company or such shares (collectively
"Distributions"), shall be paid to and held in escrow by the Company subject to
the same vesting conditions as the shares of Restricted Stock to which they
relate. As soon as practicable following satisfaction of the vesting conditions
with respect to any shares of Restricted Stock and payment to the Company of any
amount required for withholding taxes as provided in Section 16.6, the Company
will cause any Distributions held by the Company with respect to such shares to
be paid or delivered to the Holder or in the event of death to the Holder's
personal representative. Notwithstanding the foregoing, if and to the extent
that the Committee shall so determine and specifically provide in the Restricted
Stock Agreement, cash dividends payable from the earnings of the Company may be
paid directly to the Holder, without restrictions, prior to the satisfaction of
the vesting conditions.

                   8.6 Shareholder Status of Holders Of Restricted Stock. As of
the date of any award of Restricted Stock, and unless and until the shares of
Restricted Stock awarded are forfeited to the Company pursuant to the provisions
of the Plan or the Restricted Stock Agreement, the Holder shall be considered
for all purposes to be the beneficial and record owner of the shares of
Restricted Stock awarded to the Holder and to have all rights of a shareholder
with respect to such shares, subject only to the restrictions and other terms
and conditions of the award as specified in the Plan or in the Restricted Stock
Agreement.

                   8.7 Termination of Service of Holders of Restricted Stock.
Unless the Committee, in its discretion, shall otherwise determine and the
Restricted Stock Agreement shall so provide:

                           (i) If the Service of a Holder who is disabled within
                  the meaning of Section 422(c)(6) of the Code (a "Disabled
                  Holder") is voluntarily terminated with the consent of the
                  Company, the vesting conditions applicable to any outstanding
                  Restricted Stock award held by such Holder and not previously
                  forfeited to the Company shall be deemed to have been
                  satisfied as of the date of such termination of Service;

                           (ii) Upon death of a Holder during Service to the
                  Company, the vesting conditions applicable to any outstanding
                  Restricted Stock award held by such Holder and not previously
                  forfeited to the Company shall be deemed to have been
                  satisfied as of the date of death of the Holder; and

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                           (iii) If the Service of a Holder terminates for any
                  reason other than voluntary termination of a Disabled Holder
                  with the consent of the Company or death, all shares of
                  Restricted Stock held by the Holder as to which the vesting
                  conditions have not been satisfied as of the time of such
                  termination of employment shall be automatically be deemed
                  forfeited to the Company, without consideration or further
                  action being required of the Company.

                  Whether a Holder is a Disabled Holder shall be determined in
each case, in its discretion, by the Committee, and any such determination by
the Committee shall be final, binding and conclusive.

                  8.8 Forfeiture of Restricted Stock; Determinations by the
Committee. Except as otherwise specifically provided in the Plan or the
Restricted Stock Agreement, in the event that any of the vesting conditions
applicable to shares of Restricted Stock shall not be satisfied, the shares of
Restricted Stock to which such conditions relates, and any Distributions held by
the Company with respect thereto, shall automatically be deemed to have been
forfeited to the Company, without consideration or further action being required
of the Company. In the event that the nature of a vesting condition is such that
the determination as to its satisfaction or nonsatisfaction cannot be made until
a later date, such as in the case of an earnings test for a specified accounting
period, the shares subject to such condition shall continue to be held in escrow
by the Company pending final determination as to the satisfaction of the
condition, but the earning or forfeiture of the shares and related Distributions
shall be deemed to have occurred as of the date of satisfaction or
nonsatisfaction of the final vesting condition related to such shares. Any
question or dispute which may arise as to the satisfaction or nonsatisfaction of
any vesting condition shall be determined, in its discretion, by the Committee,
and any such determination by the Committee shall be final, binding and
conclusive upon the Company, the Holder and all persons claiming through the
Holder.

                  8.9      Valuation of the Restricted Stock

         (a)      As used for this Section 8 of the Plan, the following terms
shall have the following definitions:

                  (i) "Current Value" as of any date shall mean the Fair Market
Value of a share of Stock as of the most recent Valuation Date for which a
determination of Fair Market Value pursuant to 1.2(k) has been made by the
Committee on or before such date, as adjusted for any stock splits, stock
dividends, recapitalizations, reclassifications or other changes in the Stock
occurring since such Valuation Date.

                  (ii) "Valuation Date" shall mean (1) the date of the first
award of Restricted Stock under the Plan, (2) thereafter, for so long as any
shares of Stock shall remain subject to restrictions under Section 8 or Section
10 hereof, the last day of each fiscal year of the Company and (3) such other
date or dates, if any, as the Committee may, in its discretion, determine.

         (b)      On or before the first Valuation Date, and for each
Valuation Date thereafter (1) if such Valuation Date is the last day of the
Company's fiscal year, not later than 30 days after the date the report of the
Company's independent accountants with respect to the Company's financial
statements for such fiscal year (the "Audit Report") is furnished to the Board,
or (2) in the case of any other Valuation Date, not later than 30 days such
Valuation Date, the Committee shall determine the Fair Market Value of the Stock
as of such Valuation Date. Within 10 days following its determination of Fair
Market Value as of any Valuation Date, the Committee call cause notice thereof
to be furnished to each Holder. In the absence of manifest error, any
determination of Fair Market Value made pursuant to this Section 8.9 shall, for
all purposes of the Plan, be final, binding and conclusive on the Company, on
each Holder, and on any heirs, legatees, personal representatives or any other
person claiming through any Holder.

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Section 9         [Intentionally Omitted]

                            III. GENERAL RESTRICTIONS

Section 10.       General Restrictions Applicable to Grants Under The Plan

                  10.1 Securities Law Restrictions. No shares of Stock shall be
issued under the Plan, and no certificates for such shares shall be delivered to
any Holder, unless the Company shall be satisfied (and if requested by the
Company, unless it has received an opinion of counsel selected by the Company to
such effect) that the issuance or delivery of the shares will not cause the
Company to violate the Securities Act, any applicable state or foreign
securities law or any applicable rules or regulations under the Securities Act
or under any such state or foreign securities law. The Company is under no
obligation to register any shares of Stock issuable under the Plan, or take any
other action, under the Securities Act or under any state or foreign securities
law in connection with any award of Stock Options or Restricted Stock or to
prepare any disclosure document for distribution to Holders under the Securities
Act or any state or foreign securities law in connection with any such award. As
a condition precedent to the issuance or delivery of shares upon an award of
Stock Options or Restricted Stock or upon satisfaction of the vesting conditions
with respect thereto, the person entitled to such shares may be required to
represent, warrant and agree (i) that the shares are being acquired for the
account of such person for investment and not with a view to the resale or other
distribution thereof and (ii) that such person will not, directly or indirectly,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any such
shares unless the transfer, sale, assignment, pledge, hypothecation or other
disposition of the shares is pursuant to effective registrations under the
Securities Act and any applicable state or foreign securities laws or pursuant
to appropriate exemptions from any such registrations. The certificate or
certificates representing the shares to be issued or delivered upon an award of
Stock Options or Restricted Stock or the satisfaction of the vesting conditions
with respect thereto may bear a legend to this effect and other legends required
by any applicable securities laws, and if the Company should at some time engage
the services of a stock transfer agent, appropriate stop-transfer instructions
may be issued to the stock transfer agent with respect to such shares. In
addition, also as a condition precedent to the issuance or delivery of shares
upon an award of Stock Options or Restricted Stock or the satisfaction of the
vesting conditions with respect thereto, the person entitled to the shares may
be required to make certain other representations and warranties and to provide
certain other information to enable counsel for the Company to render an opinion
under the first sentence of this Section 10.1.

         Subject to the foregoing provisions of this Section 8 and the other
provisions of the Plan, any award of Stock Options or Restricted Stock granted
under the Plan may be made subject to such other restrictions and such other
terms and conditions, if any, as shall be determined, in its discretion, by the
Committee and set forth in the Stock Option or Restricted Stock Agreement or an
amendment thereto

                  10.2 Continuing Transfer Restrictions After the satisfaction
of the vesting conditions with respect thereto, all shares of Stock acquired
pursuant to an award of Stock Options or Restricted Stock under the Plan shall
remain subject to the following continuing restrictions on transfer:

                  (a) No Holder shall sell, exchange, assign, alienate, pledge,
hypothecate, encumber, charge, give, devise, or otherwise dispose of, either
voluntarily or by operation of law (hereinafter referred to as "transfer"), any
shares of Stock acquired pursuant to the Plan or any rights or interests
appertaining thereto, except as permitted by the Plan.

                                       10
<PAGE>

                  (b) A Holder shall not transfer any shares of Stock acquired
pursuant to the Plan without first offering to sell such shares to the Company
at a price equal to the Current Value of the shares, determined as provided in
Section 8.9, as of the date of the offer under the following procedure (and, in
the case of a proposed transfer upon the death of the Holder, the procedure
specified in Section 10.2(c) hereof):

                           (i) Each Holder who desires to transfer any shares of
                  Stock acquired pursuant to the Plan shall make the offer
                  required by this Section 10.2(b) by giving written notice by
                  certified mail to the Company to the attention of its
                  President at its principal executive offices. Such written
                  notice shall specify the number of shares of Stock offered,
                  the person or persons to whom the Holder will transfer the
                  shares of Stock offered if the Company does not accept the
                  Holder's offer and the price and form of consideration for
                  which such shares will be transferred. For purposes of this
                  Section 10.2(b) the date of an offer shall be the date on
                  which the written notice pursuant to this paragraph (i) is
                  postmarked;

                           (ii) The offer of a Holder pursuant to paragraph (i)
                  may be accepted by the Company as to all or any portion of the
                  shares offered by written notice of acceptance given to the
                  Holder by certified mail within 30 days after the date of the
                  offer. The date such notice is postmarked shall be deemed the
                  date of acceptance hereunder. All purchases of Stock pursuant
                  to this Section 10.2(b) shall be consummated, and payment in
                  full for the shares purchased shall be made, at the principal
                  executive offices of the Company on such date and at such time
                  as may be reasonably designated by the Company in such written
                  notice delivered to the Holder, but not later than 30 days
                  following the date of such written notice. At such date, time
                  and place, and upon receipt of the purchase price, the Holder
                  shall assign, transfer and deliver the certificates for the
                  purchased Stock to the Company, duly endorsed, with all
                  necessary stock transfer tax stamps duly affixed, together
                  with any and all documents required to effectively transfer
                  the Stock to the Company; and

                           (iii) If the Company does not accept the Holder's
                  offer as to any shares within the required period or if the
                  Company accepts the offer and, through the fault of the
                  Company alone, the Company fails to consummate the purchase of
                  any shares as required by paragraph (ii), the Holder may
                  thereafter transfer the shares not accepted or purchased by
                  the Company to the person or persons specified in the written
                  notice given to the Company pursuant to paragraph (i) at the
                  price and on the terms specified in such notice, but only to
                  such persons and only at such price and on such terms and only
                  if the Holder transfers such shares within 90 days after (a)
                  the expiration of the 30 day period during which the Company
                  may accept the Holder's offer or (b) the expiration of the
                  30-day period during which the Company may consummate the
                  purchase of the shares, as the case may be. The Holder may not
                  thereafter transfer any shares of Stock acquired under the
                  Plan without again complying with the provisions of this
                  Section 10. The Holder may not transfer any shares of the
                  Stock to any person or persons pursuant to this paragraph
                  (iii) unless the Holder delivers to the Company a legal
                  opinion in form and substance reasonably satisfactory to the
                  Company that such transfer will not constitute a violation of
                  any applicable Federal or state securities laws. The
                  restrictions of this Section 10 also shall apply to any
                  transferee of the Holder who acquires shares of Stock pursuant
                  to this Section 10.2(b), and the transferee shall execute a
                  written agreement with the Company agreeing to such
                  restrictions.

                                       11
<PAGE>

                  (c) If the Service of a Holder with the Company terminates for
any reason other than death, retirement under any retirement plan of the Company
or because the Holder becomes a Disabled Holder (including without limitation
the resignation of the Holder or the termination of the Holder's employment by
the Company with or without cause) or if a Holder dies subsequent to any such
termination of Service, all shares of Stock held by the Holder which were
acquired pursuant to the Plan shall be deemed to have been offered for sale to
the Company as of the date of such termination of Service or the date of death,
as the case may be, at a price equal to the Current Value of the shares,
determined as provided in Section 8.9, as of such date. If the Company elects to
purchase any or all of the shares of Stock deemed offered, the Company shall
notify the Holder (or his or her personal representative) by certified mail
within 30 days of the date of termination of the Holder's Service with the
Company or the date the chief executive officer of the Company learns of the
Holder's death, as the case may be, that the Company accepts the deemed offer
and the number of such shares that the Company elects to purchase. If the
Company accepts the deemed offer in whole or in part, the purchase of the shares
of Stock pursuant to this Section 10.2(c) shall be consummated, and payment in
full for the shares purchased shall be made, at the principal executive offices
of the Company on such date and at such time as may be reasonably designated by
the Company in such written notice delivered to the Holder (or his or her
personal representative), but not later than 30 days following the date of such
written notice. Upon receipt of the purchase price of the Stock, the Holder (or
his or her personal representative) shall assign, transfer and deliver to the
Company the certificates for the shares purchased, duly endorsed, with all
necessary stock transfer tax stamps duly affixed, together with any and all
documents required to effectively transfer the shares to the Company. If the
Company decides not to accept the deemed offer in whole or in part, the Company
shall so notify the Holder (or the personal representative of the Holder).
Section 10.2(a), 10.2(b) and 10.2(c) shall continue to apply to the Holder (or
the Holder's personal representative, subject to Section 10.2(e)).

                  (d) If the Service of a Holder with the Company terminates by
reason of retirement under any retirement plan of the Company or because the
Holder becomes a Disabled Holder, the Holder may, within 30 days following such
termination, by written notice to the Company by certified mail, offer to sell
to the Company all, but not less than all, of the shares of Stock held by the
Holder which were acquired pursuant to the Plan at a price equal to the Current
Value of such shares, determined as provided in Section 8.9, on the date of such
termination of employment. If the Service of a Holder with the Company
terminates by reason of death or the Holder dies following a termination of
Service described in the preceding sentence, the Holder's personal
representative may, within one year following the date of the Holder's death, by
written notice to the Company by certified mail, offer to sell to the Company
all, but not less than all, of the shares of Stock held by the Holder which were
acquired pursuant to the Plan at a price equal to the Current Value of such
shares, determined as provided in Section 8.9, on the date of death of the
Holder. The Company shall accept any offer made under this Section 10.2(d) to
the extent Company is legally permitted to acquire the shares of its Stock
offered for purchase, except that if offer is made by a Holder (or his or her
personal representative) who owns more than five percent (5%) of the total
number of shares of the Common Stock of the Company (a "Five Percent Holder"),
the Company shall have the right, but shall not be required, to accept the
offer. If the Company will acquire the shares of the Stock offered, the Company
shall notify the Holder (or his or her personal representative) by certified
mail within 30 days of the date of termination of the Holder's Service with the
Company or the date the chief executive officer of the Company learns of the
Holder's death, as the case may be, that the Company accepts the offer. If the
Company accepts the offer, the purchase of the shares of Stock pursuant to this
Section 10.2(d) shall be consummated, and payment in full for the shares
purchased shall be made, at the principal executive offices of the Company on
such date and at such time as may be reasonably designated by the Company in
such written notice delivered to the Holder (or his or her personal
representative), but not later than 30 days following the date of such written
notice. Upon receipt of the purchase price of the Stock, the Holder (or his or
her personal representative) shall assign, transfer and deliver to the Company
the certificates for the shares purchased, duly endorsed, with all necessary
stock transfer tax stamps duly affixed, together with any and all documents
required to effectively transfer the shares to the Company. If the Company is
not legally permitted to acquire all of the shares offered or the Company
decides not to accept the offer from a Five Percent Holder, the Company shall so
notify the Holder (or the personal representative of the Holder). Section
10.2(a), 10.2(b) and 10.2(d) shall continue to apply to the Holder (or the
Holder's personal representative, subject to Section 10.2(e)).

                                       12
<PAGE>

                  (e) In the event of (1) the death of any Holder and the
non-exercise by the Company of the purchase rights granted in Section 10.2(c) or
10.2(d), (2) the death of a Holder described in Section 10.2(d) and the failure
of the Holder's personal representative to offer the Holder's shares to the
Company or (c) the Company's failure following exercise of such purchase rights,
through the fault of the Company alone, to consummate the purchase of its Stock,
any devisee, legatee or heir of such Holder (including any trustee) shall be
entitled to receive the Stock of the Holder subject to the Plan, but any such
recipient shall be subject to the transfer restrictions of Sections 10.2(a) and
10.2(b) and, in the event of such recipient's death, Section 10.2(c) and this
Section 10.2(e), as if such recipient were the "Holder" (with any reference to
Service of the Holder meaning Service of the original Holder hereunder). The
devisee, legatee or heir of such Holder (including any trustee) who receives the
Stock shall execute a written agreement with the Company agreeing to such
restrictions.

                  (f) Each certificate representing shares of Stock issued
pursuant to the Plan shall have noted on the face of such certificate legends in
substantially the following forms and such other legends as the Company may deem
necessary or appropriate to assure compliance with the requirements of
applicable federal or state securities laws:

                           Notice is hereby given that the shares of stock
                  represented by this certificate are held subject to, and may
                  not be sold, transferred, assigned, pledged, gifted or
                  otherwise disposed of except in accordance with, the terms,
                  conditions and restrictions set forth in the 2000 Stock Option
                  Plan of Power Efficiency Corporation (the "Plan"), a copy of
                  which is on file at the office of Power Efficiency Corporation
                  No such transaction shall be recognized as valid or effective
                  unless there shall have been compliance with the terms and
                  conditions of the Plan. By acceptance of this certificate, the
                  holder (i) represents and warrants that the shares of stock
                  represented hereby are being acquired for investment for the
                  account of the holder and not with a view to the resale or
                  other distribution thereof and (ii) acknowledges that
                  violation of the provisions of the Plan is not adequately
                  compensable by monetary damages and that, in addition to other
                  relief, the terms thereof may be specifically enforced in an
                  action for injunctive relief.

                           In addition, the shares of stock represented by this
                  certificate have not been registered under the Securities Act
                  of 1933, as amended, or any state or foreign securities law
                  (the "Acts") and may not be transferred by the holder except
                  (1) pursuant to a Registration Statement or other appropriate
                  registration effective under the Acts, or (2) pursuant to an
                  exemption from the registration requirements of the Acts and
                  the delivery of a legal opinion satisfactory to counsel for
                  Power Efficiency Corporation that registration is not
                  required.

                                       13
<PAGE>

         The restrictions on transfer contained in this Section 10, and the
rights and obligations of the Company to purchase shares of Stock under this
Section 10, shall expire on such date, if any, as the Company shall become
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, provided, however, that such expiration shall
not affect the rights or obligations of the Company with respect to any offer to
purchase accepted by the Company prior to such date. The expiration of the
restrictions contained in this Section 10 shall not affect the restrictions to
which a holder of shares of Stock acquired under the Plan may be subject under
the Securities Act, any state or foreign securities law or other applicable law
or the right of the Company to require, as a condition to any transfer of its
Stock, an opinion of legal counsel satisfactory to the Company as to whether any
proposed transfer is in compliance with the registration or other requirements
of such laws.

IV.      MISCELLANEOUS

Section 11.       Adjustment and Substitution of Shares

         If a dividend or other distribution shall be declared upon the Stock,
payable in shares of the Stock, the number of shares of Stock remaining
available for the issuance of Stock Options or Restricted Stock awards under the
Plan shall be adjusted by adding thereto the number of shares of Stock which
would have been distributable thereon if such shares had been outstanding on the
date fixed for determining the shareholders entitled to receive such stock
dividend or distribution.

         If the outstanding shares of the Stock shall be converted into or
exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation or entity, whether through
reorganization, reclassification, recapitalization, stock split, combination of
shares, merger or consolidation, then there shall be substituted for each share
of Stock remaining available for the issuance of Stock Options or Restricted
Stock awards under the Plan, the number and kind of shares of stock or other
securities into which each outstanding share of the Stock shall be so converted
or for which each such share shall be exchangeable.

In the event of any such stock dividend or distribution, conversion or exchange
affecting the Stock (1) shares of Stock previously issued under the Plan shall
be treated in the same manner as other outstanding shares of Stock and, in the
case of shares of Stock Options or Restricted Stock which remain subject to
vesting conditions, shall continue to be subject to the provisions of Section
8(i) of the Plan for Restricted Stock and the provisions of the vesting
schedules for Stock Options and (2) unless otherwise determined by the
Committee, any securities of the Company or of another corporation or entity
distributed with respect to shares of Stock acquired under the Plan, or into
which shares of Stock acquired under the Plan shall be converted or for which
such shares of Stock shall be exchanged shall be subject to the provisions of
Section 10 of the Plan in the same manner as the shares of Stock with respect to
which they were distributed or received.

Section 12.       [Intentionally Omitted]

Section 13.       [Intentionally Omitted]

Section 14.       Amendment and Termination.

         The Board may at any time, and from time to time, amend, alter, suspend
or discontinue any of the provisions of the Plan, but no amendment, alteration,
suspension or discontinuance shall be made which would impair the rights of a
Holder under any Agreement theretofore entered into hereunder, without his
consent.

                                       14
<PAGE>

Section 15.       Term of Plan.

         15.1 Effective Date. The Plan shall be effective as of September 2000
("Effective Date"). Any awards granted under the Plan prior to such approval
shall be effective when made (unless otherwise specified by the Committee at the
time of grant), but shall be conditioned upon, and subject to, such approval of
the Plan by the Company's stockholders and no awards shall vest or otherwise
become free of restrictions prior to such approval.

         15.2 Termination Date. Unless terminated by the Board, this Plan shall
continue to remain effective until such time no further awards may be granted
and all awards granted under the Plan are no longer outstanding. Notwithstanding
the foregoing, grants of Incentive Stock Options may only be made during the ten
year period following the Effective Date.

Section 16.       General Provisions.

         16.1 Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms of the Agreement executed by the
Company and the Holder. The Committee may terminate any award made under the
Plan if the Agreement relating thereto is not executed and returned to the
Company within sixty (60) days after the Agreement has been delivered to the
Holder for his or her execution.

         16.2 Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Holder by the Company, nothing contained herein shall
give any such Holder any rights that are greater than those of a general
creditor of the Company.

         16.3 Employees.

                  (a) Engaging in Competition With the Company. In the event an
employee Holder violates a Policy or Agreement of the Company or a subsidiary
pertaining to non-competition, solicitation and/or confidentiality, the
Committee, in its sole discretion may require such Holder to return to the
Company the economic value of any award which was realized or obtained (measured
at the date of exercise, vesting or payment) by such Holder at any time during
the period beginning on that date which is six months prior to the date of such
Holder's violation of the Company's Policy or Agreements.

                  (b) Termination for Cause. The Committee may, in the event an
employee is terminated for cause, annul any award granted under this Plan to
such employee and, in such event, the Committee, in its sole discretion, may
require such Holder to return to the Company the economic value of any award
which was realized or obtained (measured at the date of exercise, vesting or
payment) by such Holder at any time during the period beginning on that date
which is six months prior to the date of such Holder's termination of employment
with the Company.

                  (c) No Right of Employment. Nothing contained in the Plan or
in any award hereunder shall be deemed to confer upon any employee of the
Company or any Subsidiary any right to continued employment with the Company or
any Subsidiary, nor shall it interfere in any way with the right of the Company
or any Subsidiary to terminate the employment of any of its employees at any
time.

         16.4 Investment Representations. The Committee may require each person
acquiring shares of Stock pursuant to a Stock Option or other award under the
Plan to represent to and agree with the Company in writing that the Holder is
acquiring the shares for investment without a view to distribution thereof.

                                       15
<PAGE>

         16.5 Additional Incentive Arrangements. Nothing contained in the Plan
shall prevent the Board from adopting such other or additional incentive
arrangements as it may deem desirable, including, but not limited to, the
granting of stock options and the awarding of stock and cash otherwise than
under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.

         16.6 Withholding Taxes. Not later than the date as of which an amount
first becomes includable in the gross income of the Holder for Federal income
tax purposes with respect to any Option or award of Restricted Stock under the
Plan, the Holder shall pay to the Company, or make arrangements satisfactory to
the Committee regarding the payment of, any Federal, state and local taxes of
any kind required by law to be withheld or paid with respect to such amount. If
permitted by the Committee, tax withholding or payment obligations may be
settled with Common Stock, including Common Stock that is part of the award that
gives rise to the withholding requirement. The obligations of the Company under
the Plan shall be conditional upon such payment or arrangements satisfactory to
the Company and the Company or the Holder's employer (if not the Company) shall,
to the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Holder from the Company or any
Subsidiary.

         16.7 Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of New Jersey (without regard to choice of law provisions).

         16.8 Other Benefit Plans. Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary and shall not affect any benefits under any
other benefit plan no or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).

         16.9 Non-Transferability. Except as otherwise expressly provided in the
Plan, no right or benefit under the Plan may be alienated, sold, assigned,
hypothecated, pledged, exchanged, transferred, encumbranced or charged, and any
attempt to alienate, sell, assign, hypothecate, pledge, exchange, transfer,
encumber or charge the same shall be void.

         16.10 Applicable Laws. The obligations of the Company with respect to
all Stock Options and awards under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
agencies as may be required, including, without limitation, the effectiveness of
a registration statement under the Securities Act of 1933, as amended, and (ii)
the rules and regulations of any securities exchange on which the Stock may be
listed.

         16.11 Conflicts. If any of the terms or provisions of the Plan conflict
with the requirements of (with respect to Incentive Stock Options), Section 422
of the Code, then such terms or provisions shall be deemed inoperative to the
extent they so conflict with the requirements of said Section 422 of the Code.
Additionally, if this Plan does not contain any provision required to be
included herein under Section 422 of the Code, such provision shall be deemed to
be incorporated herein with the same force and effect as if such provision had
been set out at length herein.

         16.12 Non-Registered Stock. The shares of Stock being distributed under
this Plan have not been registered under the Securities Act of 1933, as amended,
or any applicable state or foreign securities laws and the Company has no
obligation to any Holder to register the Stock or to assist Holder in obtaining
an exemption from the various registration requirements, or to list the Stock on
a national securities exchange or inter-dealer quotation system.

                                       16<PAGE>

                                                                   EXHIBIT 10.42

                          POWER EFFICIENCY CORPORATION

                   Amended and Restated 1994 Stock Option Plan
                        (Adopted as of December 31, 1994
                                       and
                          amended on February 23, 2004)

1. Purposes. The purposes of this Stock Option Plan are to attract and retain
the best available personnel for positions of substantial responsibility, to
provide additional incentive to the Employees of the Company or its subsidiaries
(as defined in Section 2 below), and to promote the success of the Company's
business.

            Options granted hereunder may be either "Incentive Stock Options",
as defined in Section 422 of the Internal Revenue Code of 1986, as amended, or
"Nonqualified Stock Options", at the discretion of the Board and as reflected in
the terms of the written option agreement.

2. Definitions. As used herein, the following definitions shall apply:

         a.       "Board" shall mean the Board of Directors of the Company.

         b.       "Common Stock" shall mean the Common Stock of the Company (see
                  Section 3 below).

         c.       "Company" shall mean Power Efficiency Corporation, a Delaware
                  corporation.

         d.       "Committee" shall mean the Committee appointed by the Board of
                  Directors in accordance with paragraph (a) of Section 4 of the
                  Plan or the Board of Directors of the Company, if no Committee
                  is appointed.

         e.       "Continuous Status as an Employee" shall mean the absence of
                  any interruption or termination of service as an Employee.
                  Continuous Status as an Employee shall not be considered
                  interrupted in the case of sick leave, military leave, or any
                  other leave of absence approved by the Board.

         f.       "Employee" shall mean any person, including officers and
                  directors, employed by the Company or any Parent or Subsidiary
                  of the Company. The payment of a director's fee by the Company
                  shall not be sufficient to constitute "employment" by the
                  Company.

         g.       "Exchange Act" shall mean the Securities Exchange Act of 1934,
                  as amended.

         h.       "Incentive Stock Option" shall mean an Option intended to
                  qualify as an Incentive Stock Option within the meaning of
                  Section 422 of the Internal Revenue Code of 1986, as amended.

         i.       "Nonqualified Stock Option" shall mean a stock option not
                  intended to qualify as an Incentive Stock Option.
<PAGE>

         j.       "Option" shall mean a stock option granted pursuant to the
                  Plan.

         k.       "Optioned Stock" shall mean the Common Stock subject to an
                  Option.

         l.       "Optionee" shall mean an Employee or other person who receives
                  an Option.

         m.       "Parent" shall mean a "parent corporation", whether now or
                  hereafter existing, as defined in Section 425(e) of the
                  Internal Revenue Code of 1986, as amended.

         n.       "Share" shall mean a share of the Common Stock, as adjusted in
                  accordance with Section 12 of the Plan.

         o.       "Subsidiary" shall mean a "subsidiary corporation", whether
                  now or hereafter existing, as defined in Section 425(f) of the
                  Internal Revenue Code of 1986, as amended.

3. Stock.

            Subject to the provisions of Section 12 of the Plan, the maximum
aggregate number of shares which may be optioned and sold under the Plan is
Seventy One Thousand Four Hundred Twenty Nine (71,429) shares of authorized, but
unissued, or reacquired $.001 par value Common Stock.

            If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
further grant under the Plan.

4. Administration.

         a. Procedure. The Company's Board of Directors may appoint a Committee
to administer the Plan. The Committee appointed by the Board of Directors shall
consist of not less than three members of the Board of Directors, to administer
the Plan on behalf of the Board of Directors, subject to such terms and
conditions as the Board of Directors may prescribe. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board of
Directors. From time to time the Board of Directors may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause), and appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan; provided, however, that at no time shall a Committee of
less than three (3) members administer the Plan.

         b. Powers of the Board. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive Stock
Options, in accordance with Section 422 of the Internal Revenue Code of 1986, as
amended or to grant Nonqualified Stock Options; (ii) to determine, upon review
of relevant information and in accordance with Section 8(b) of the Plan, the
fair market value of the Company's Common Stock; (iii) to determine the exercise
price per share of Options to be granted, which exercise price shall be
determined in accordance with Section 8 of the Plan; (iv) to determine the
Employees and other persons to whom, and the time or times at which, Options
shall be granted and the number of shares to be represented by each Option; (v)
to interpret the Plan; (vi) to prescribe, amend and rescind rules and
regulations relating to the Plan; (vii) to determine the terms and provisions of
each Option granted (which need not be identical) and, with the consent of the
holder thereof, modify or amend each Option; (viii) to accelerate or defer (with
the consent of the Optionee) the exercise date of any Option; (ix) to authorize
any person to execute on behalf of the Company any instrument required to
effectuate the grant of an Option previously granted by the Board; and (x) to
make all other determinations deemed necessary or advisable for the
administration of the Plan.
<PAGE>

         c. Effect of the Board's Decision. All decisions, determinations and
interpretations of the Board or any Committee shall be final and binding on all
Optionees and any other holders of any Options granted under the Plan.

5. Eligibility. Incentive Stock Options may be granted only to Employees.
Nonqualified Stock Options may be granted to employees as well as non-employee
directors and consultants to the Company (subject to the limitations set forth
in Section 4) as determined by the Board or any Committee. Any person who has
been granted an Option may, if he is otherwise eligible, be granted an
additional Option or Options.

         No such Incentive Stock Option may be granted to an Employee if, as the
result of such grant, the aggregate fair market value (determined at the time
each option was granted) of the Shares with respect to which such Incentive
Stock Options are exercisable for the first time by such Employee during any
calendar year (under all such plans of the Company and any Parent and
Subsidiary) shall exceed One Hundred Thousand Dollars ($100,000).

         The Plan shall not confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it interfere in any way
with his right or the Company's right to terminate his employment at any time.

6. Term of Plan. The Plan shall become effective upon the earlier to occur of
(i) its adoption by the Board of Directors, or (ii) its approval by vote of the
holders of a majority of the outstanding shares of the Company entitled to vote
on the adoption of the Plan. It shall continue in effect for a term of ten (10)
years from its effective date unless sooner terminated under Section 14 of the
Plan.

7. Term of Option. The term of each Option shall be ten (10) years from the date
of grant thereof or such shorter term as may be provided in the Stock Option
Agreement. However, in the case of an Incentive Stock Option granted to an
Employee who, immediately before the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant thereof or
such shorter time as may be provided in the Stock Option Agreement.

8. Exercise Price and Consideration.

         a. The per Share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:

                  i. In the case of an Incentive Stock Option

                           1. granted to an Employee who, immediately before the
                  grant of such Incentive Stock Option, owns stock representing
                  more than ten percent (10%) of the voting power of all classes
                  of stock of the Company or any Parent or Subsidiary, the per
                  Share exercise price shall be no less than 110% of the fair
                  market value per Share on the date of grant.
<PAGE>

                           2. granted to any Employee, the per share exercise
                  price shall be no less than 100% of the fair market value per
                  Share on the date of grant.

                  ii. In the case of a Non-qualified Stock Option, the per-Share
         exercise price shall be determined by the Board of Directors or the
         Committee on the date of grant.

         b. In the case of Incentive Stock Options the fair market value shall
be determined by the Board in its discretion; provided, however, that where
there is a public market for the Common Stock, the fair market value per Share
shall be the closing bid price of the Common Stock on the date of grant, as
reported in the Wall Street Journal (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
[NASDAQ] System) or, in the event the Common Stock is listed on a stock
exchange, the fair market value per Share shall be the closing price on such
exchange on the date of grant of the Option, as reported in the Wall Street
Journal.

         c. The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Board and may consist entirely of cash, check, promissory note, other Shares
of Common Stock having a fair market value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said option shall be
exercised, the surrender for cancellation of Options having an in the money
value on the date of surrender equal to the aggregate exercise price of other
Options being exercised, or any combination of such methods of payment, or such
other consideration and method of payment for the issuance of Shares to the
extent permitted under Delaware Law.

9. Exercise of Option.

         a. Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable at such times and under such conditions as
determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.

         An Option may not be exercised for a fraction of a Share.

         An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance, which in no event will be delayed more than thirty (30) days
from the date of the exercise of the Option, (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in the Plan.
<PAGE>

         Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

         b. Termination of Status as an Employee with Respect to Nonqualified
Stock Options. Nonqualified Stock Options granted pursuant to the Plan may be
exercised notwithstanding the termination of the Optionee's status as an
Employee, director or consultant, except as provided in the Plan or as provided
by the terms of the Stock Option Agreement.

         c. Termination of Status as an Employee with Respect to Incentive Stock
Options. In the case of an Incentive Stock Option, if an Employee ceases to
serve as an Employee, he may, but only within thirty (30) days (or such other
period of time not exceeding three (3) months as is determined by the Board)
after the date he ceases to be an Employee of the Company, exercise his Option
to the extent that he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of such termination, or if he does not exercise such Option (which he
was entitled to exercise) within the time specified herein, the Option shall
terminate.

         d. Disability. Notwithstanding the provisions of Section 9(c) above, in
the event an Employee is unable to continue his employment with the Company as a
result of his total and permanent disability (as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986), he may, but only within three (3) months (or
such other period of time not exceeding twelve (12) months as is determined by
the Board) from the date of disability, exercise his Incentive Stock Option to
the extent he was entitled to exercise it at the date of such disability. To the
extent that he was not entitled to exercise the Incentive Stock Option at the
date of disability, or if he does not exercise such Incentive Stock Option
(which he was entitled to exercise) within the time specified herein, the
Incentive Stock Option shall terminate.

         e. Death of Optionee. In the event of the death of an Optionee under an
Incentive Stock Option:

                  i. during the term of the Option who is at the time of his
         death an Employee of the Company and who shall have been in Continuous
         Status as an Employee since the date of grant of the Option, the Option
         may be exercised, at any time within twelve (12) months following the
         date of death, by the Optionee's estate or by a person who acquired the
         right to exercise the Option by bequest or inheritance, but only to the
         extent of the right to exercise that would have accrued had the
         Optionee continued living one (1) month after the date of death; or

                  ii. within thirty (30) days (or such other period of time not
         exceeding three (3) months as is determined by the Board) after the
         termination of Continuous Status as an Employee, the Option may be
         exercised, at any time within three (3) months following the date of
         death, by the Optionee's estate or by a person who acquired the right
         to exercise the Option by bequest or inheritance, but only to the
         extent of the right to exercise that had accrued at the date of
         termination.

10. Non-Transferability of Incentive Stock Options. An Incentive Stock Option
may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in
any manner other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Optionee, only by the Optionee.
<PAGE>

11. Transferability of Nonqualified Stock Options. All Nonqualified Options
granted pursuant to the Plan are transferable subject to compliance with the
Securities Act of 1933, as amended (the "Act"), and any applicable state
securities or Blue Sky laws. Upon surrender of a Nonqualified Option to the
Company or at the office of its stock transfer agent, if any, with the funds
sufficient to pay any transfer tax, the Company shall, without charge, execute
and deliver a new Nonqualified Option in the name of the assignee named in such
instrument of assignment and the Nonqualified Option shall promptly be
cancelled. The Nonqualified Option may be divided or combined with other
Nonqualified Options which carry the same rights upon presentation thereof at
the office of the Company or at the office of its stock transfer agent, if any,
together with a written notice specifying the names and denominations in which
new Nonqualified Options are to be issued and signed by the Optionee thereof.
The term "Option" as used herein includes any Nonqualified Options into which a
Nonqualified Option may be divided or exchanged.

12. Adjustments upon Changes in Capitalization or Merger. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or the payment of a stock dividend with
respect to the Common Stock or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Furthermore, any
distribution of assets by the Company except for cash dividends paid, shall be
considered the payment of a stock dividend for purposes of this Section 12.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

            In the event of the proposed dissolution or liquidation of the
Company, or in the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the Option will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Board and give each Optionee the right
to exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable.

13. Time for Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each Employee to whom an
Option is so granted within a reasonable time after the date of such grant.

14. Amendment and Termination of the Plan. (a) The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the holders of a majority of the outstanding shares of the Company entitled to
vote:
<PAGE>

                  i. any increase in the number of Shares subject to the Plan,
         other than in connection with an adjustment under Section 12 of the
         Plan;

                  ii. any change in the designation of the class of persons
         eligible to be granted Options; or

                  iii. any material increase in the benefits accruing to
         participants under the Plan.

         b. Shareholder Approval. If any amendment requiring shareholder
approval under Section 14(a) of the Plan is made such shareholder approval shall
be solicited as described in Section 18(a) of the Plan.

         c. Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

15. Conditions upon Issuance of Shares. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

         As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

16. Reservation of Shares. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

         Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.

17. Option Agreement. Options shall be evidenced by written option agreements in
such form as the Board shall approve.
<PAGE>

18. Shareholder Approval. Continuance of the Plan shall be subject to approval
by the shareholders of the Company within twelve months before or after the date
the Plan is adopted. If such shareholder approval is obtained at a duly held
shareholders' meeting, it may be obtained by the affirmative vote of the holders
of a majority of the outstanding shares of the Company present or represented
and entitled to vote thereon. If at the time of such meeting the Company has a
class of securities registered pursuant to Section 12 of the Exchange Act, the
approval of such shareholders of the Company shall be; (1) solicited
substantially in accordance with Section 14(a) of the Exchange Act and the rules
and regulations promulgated thereunder, or (2) solicited after the Company has
furnished in writing to the holders entitled to vote substantially the same
information concerning the Plan as that which would be required by the rules and
regulations in effect under Section 14(a) of the Exchange Act at the time such
information is furnished.

         If such shareholder approval is obtained by written consent in the
absence of a Shareholders' Meeting, it must be obtained by the written consent
of all shareholders of the Company who would have been entitled to cast the
minimum number of votes which would be necessary to authorize such action at a
meeting at which all Shareholders entitled to vote thereon were present and
voting.

19. Miscellaneous Provisions. An Optionee shall have no rights as a shareholder
with respect to any Shares covered by his Option until the date of the issuance
of a stock certificate to him for such shares.

20. Other Provisions. The Stock Option Agreement authorized under the Plan shall
contain such other provisions, including, without limitation, restrictions upon
the exercise of the Option, as the Board of Directors of the Company shall deem
advisable. Any such Stock Option Agreement shall contain such limitations and
restrictions upon the exercise of the Option as shall be necessary in order that
such option will be an Incentive Stock Option as defined in Section 422 of the
Internal Revenue Code of 1986, as amended, if an Incentive Stock Option is
intended to be granted.

21. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such Board
member is liable for negligence or misconduct in the performance of his duties;
provided that within 60 days after institution of any such action, suit or
proceeding a Board member shall in writing offer the Company the opportunity, at
its own expense, to handle and defend the same.

22. Application of Funds. The proceeds received by the Company from the sale of
Common Stock pursuant to Options will be used for general corporate purposes.

23. No Obligation to Exercise Option. The granting of an Option shall impose no
obligation upon the Optionee to exercise such Option.

24. Other Compensation Plans. The adoption of the Plan shall not affect any
other stock option or incentive or other compensation plans in effect for the
Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees
and directors of the Company or any Subsidiary.
<PAGE>

25. Singular, Plural; Gender. Whenever used herein, nouns in the singular shall
include the plural, and the masculine pronoun shall include the feminine gender.

26. Headings, etc., No Part of Plan. Headings of Articles and Sections hereof
are inserted for convenience and reference; they constitute no part of the Plan.

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