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                                                                   EXHIBIT 10(u)

                              Engagement Agreement

This engagement agreement is made between Power Technology, Inc. (the Company)
and Battery Consultation Services, represented by Dr. Basanta K. Mahato
(Consultant).

Pursuant to Consultant's efforts to assist the Company in achieving its goals
with regard to commercializing its proprietary technology for batteries using
reticulated foam and for good consideration, the Company employs CONSULTANT on
the following terms and conditions:

1.       The Company hereby contracts with the CONSULTANT for certain technical
         assistance in the ongoing development of its batters prototypes being
         produced by BC Research; this agreement with CONSULTANT will begin in
         November 2001 and shall continue for a minimum of three months at which
         time the parties will determine the terms of a more formal agreement.

2.       The Company shall pay CONSULTANT a monthly retainer of $4,000 USD,
         payable in the Company's stock at the offering price at the end of each
         month during the term of this agreement.

3.       the Company agrees to issue80,000 shares of its common stock to the
         CONSULTANT for the purchase of an advanced battery paste formula owned
         by the CONSULTANT that can be integrated with the Company's patented
         technology.

4.       Upon the successful commercialization of this jointly developed
         battery, the Company will issue $110,000 USD payable in shares at the
         closing offer price pursuant to rule 144-investment letter stock to
         CONSULTANT for his participation in the development of the combined
         technologies.

5.       CONSULTANT will devote adequate time, attention and energies to the
         business of the Company during this engagement, CONSULTANT will not
         engage in any competing business activity, regardless of whether such
         activity is pursued for profit, gain or other pecuniary advantage,
         CONSULTANT is not prohibited from making personal investments in any
         other business provided those investments do not compete with the
         Company.

6.       CONSULTANT agrees no to reveal any confidential information or trade
         secrets to any person, firm, corporation, or entity.

7.       CONSULTANT may incur reasonable expenses for furthering the Company's
         business. The Company shall reimburse CONSULTANT for all business
         expenses pursuant to Company policy.

8.       Without cause, the Company may terminate this contract anytime with one
         month written notice.

9.       Any claim or controversy that arises out of or relates to this
         engagement agreement, or breach of the same, shall be settled by
         arbitration in accordance wit the rules of the American Arbitration
         Association.

10.      This instrument is the only agreement and it may only be altered by
         written agreement of the parties.

Signed this 1st day of November, 2001.

s/ Lee Balak                                      s/ Basanta K. Mahato
----------------------------                      -----------------------------
Power Technology, Inc.                            Dr. Basanta K. Mahato
Lee Balak, President                              Battery Consultation Services<PAGE>

                                                                  EXHIBIT 10(v)

                             POWER TECHNOLOGY, INC.
                   2002 STOCK OPTION, SAR AND STOCK BONUS PLAN

                                    ARTICLE 1

                               GENERAL PROVISIONS

1.1 PURPOSE. The purpose of the Power Technology, Inc. 2002 Stock Option, SAR
and Stock Bonus Plan (the "Plan") shall be to attract, retain and motivate key
management employees and independent consultants (the "Participants") of Power
Technology, Inc. (the "Company") and its subsidiaries, if any, by way of
granting (i) non-qualified stock options ("Stock Options"), (ii) non-qualified
stock options with stock appreciation rights attached ("Stock Option SARs"),
(iii) incentive stock options ("ISO Options"), (iv) ISO Options with stock
appreciation rights attached ("ISO Option SARs"), and (v) stock bonuses. For the
purpose of this Plan, Stock Option SARs and ISO Option SARs are sometimes
collectively herein called "SARs;" and Stock Options and ISO Options are
sometimes collectively herein called "Options." The ISO Options to be granted
under the Plan are intended to be qualified pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"); and the Stock Options to
be granted are intended to be "non-qualified stock options" as described in
Sections 83 and 421 of the Code. Furthermore, under the Plan, the terms "parent"
and "subsidiary" shall have the same meaning as set forth in Subsections (e) and
(f) of Section 425 of the Code unless the context herein clearly indicates to
the contrary.

1.2 GENERAL. The terms and provisions of this Article I shall be applicable to
Stock Options, SARs and ISO Options unless the context herein clearly indicates
to the contrary.

1.3 ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Stock Plan
Committee (the "Committee") appointed by the Board of Directors (the "Board") of
the Company and consisting of not less than two members from the Board. The
members of the Committee shall serve at the pleasure of the Board. The Committee
shall have the power where consistent with the general purpose and intent of the
Plan to (i) modify the requirements of the Plan to conform with the law or to
meet special circumstances not anticipated or covered in the Plan, (ii) suspend
or discontinue the Plan, (iii) establish policies and (iv) adopt rules and
regulations and prescribe forms for carrying out the purposes and provisions of
the Plan including the form of any "stock option agreements" ("Stock Option
Agreements"). Unless otherwise provided in the Plan, the Committee shall have
the authority to interpret and construe the Plan, and determine all questions
arising under the Plan and any agreement made pursuant to the Plan. Any
interpretation, decision or determination made by the Committee shall be final,
binding and conclusive. A majority of the Committee shall constitute a quorum,
and an act of the majority of the members present at any meeting at which a
quorum is present shall be the act of the Committee.

1.4 SHARES SUBJECT TO THE PLAN. Shares of stock ("Stock") covered by Stock
Options, SARs, ISO Options and stock bonuses shall consist of 2,300,000 shares
of the Common Stock, $.001 par value, of the Company. Either authorized and
unissued shares or treasury shares may be delivered pursuant to the Plan. If any
Option for shares of Stock, granted to a Participant lapses, or is otherwise
terminated, the Committee may grant Stock Options, SARs, ISO Options and stock
bonuses for such shares of Stock to other Participants. However, neither Stock
Options, SARs nor ISO Options shall be granted again for shares of Stock which
have been subject to SARs which are surrendered in exchange for cash or shares
of Stock issued pursuant to the exercise of SARs as provided in Article II
hereof.

1.5 PARTICIPATION IN THE PLAN. The Committee shall determine from time to time
those Participants who are to be granted Stock Options, SARs, ISO Options and
stock bonuses and the number of shares of Stock covered thereby. Directors who
are not employees of the Company or of a subsidiary shall not be eligible to
participate in the in ISO Options or ISO in Option SARs. During any period that
the Committee is comprised of less than three Directors each of whom is a
Disinterested Director, the maximum number of shares of Stock for which
employee-Directors may be granted options in any calendar year shall not exceed
10 percent (10%) of the aggregate number of shares of Stock with
respect to which Options may be granted under the Plan.

1.6 DETERMINATION OF FAIR MARKET VALUE. As used in the Plan, "fair market value"
shall mean on any particular day (i) if the Stock is listed or admitted for
trading on any national securities exchange or the National Market System

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of the National Association of Securities Dealers, Inc. Automated Quotation
System, the last sale price, or if no sale occurred, the mean between the
closing high bid and low asked quotations, for such day of the Stock on the
principal securities exchange on which shares of Stock are listed, (ii) if Stock
is not traded on any national securities exchange but is quoted on the National
Association of Securities Dealers, Inc., Automated Quotation System, or any
similar system of automated dissemination of quotations or securities prices in
common use, the mean between the closing high bid and low asked quotations for
such day of the Stock on such system, (iii) if neither clause (i) nor (ii) is
applicable, the mean between the high bid and low asked quotations for the Stock
as reported by the National Quotation Bureau, Incorporated if at least two
securities dealers have inserted both bid and asked quotations for shares of the
Stock on at least five (5) of the ten (10) preceding days, (iv) in lieu of the
above, if actual transactions in the shares of Stock are reported on a
consolidated transaction reporting system, the last sale price of the shares of
Stock on such system or, (v) if none of the conditions set forth above is met,
the fair market value of shares of Stock as determined by the Board. Provided,
for purposes of determining "fair market value" of the Common Stock of the
Company, such value shall be determined without regard to any restriction other
than a restriction which will never lapse.

1.7 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate number of shares
of Stock under Stock Options and ISO Options granted under the Plan, the Option
Price and the ISO Price and the total number of shares of Stock which may be
purchased by a Participant on exercise of a Stock Option and an ISO Option shall
be approximately adjusted by the Committee to reflect any recapitalization,
stock split, merger, consolidation, reorganization, combination, liquidation,
stock dividend or similar transaction involving the Company except that a
dissolution or liquidation of the Company or a merger or consolidation in which
the Company is not the surviving or the resulting corporation, shall cause the
Plan and any Stock Option, SAR or ISO Option granted thereunder, to terminate
upon the effective date of such dissolution, liquidation, merger or
consolidation. Provided, that for the purposes of this Section 1.7, if any
merger, consolidation or combination occurs in which the Company is not the
surviving corporation and is the result of a mere change in the identity, form
or place of organization of the Company accomplished in accordance with Section
368(a)(1)(F) of the Code, then, such event will not cause a termination.
Appropriate adjustment may also be made by the Committee in the terms of a SAR
to reflect any of the foregoing changes.

1.8 AMENDMENT AND TERMINATION OF THE PLAN. The Plan shall terminate at midnight,
January 31, 2006, but prior thereto may be altered, changed, modified, amended
or terminated by written amendment approved by the Board. Provided, that no
action of the Board may, without the approval of the shareholders, increase the
aggregate number of shares of Stock which may be purchased under Stock Options,
SARs or ISO Options or stock bonuses granted under the Plan; withdraw the
administration of the Plan from the Committee; amend or alter the Option Price
or ISO Price, as applicable; change the manner of computing the spread upon the
exercise of a SAR or amend the Plan in any manner which would impair the
applicability of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, to the Plan. Except as provided in this Article I, no amendment,
modification or termination of the Plan shall in any manner adversely affect any
Stock Option, SAR or ISO Option theretofore granted under the Plan without the
consent of the affected Participant.

1.9 EFFECTIVE DATE. The Plan shall be effective December 8, 2001, subject to
approval by the holders of a majority of the Common Stock of the Company
present, or represented, and entitled to vote at a meeting called for such
purpose.

1.10 SECURITIES LAW REQUIREMENTS. The Company shall have no liability to issue
any Stock hereunder unless the issuance of such shares would comply with any
applicable federal or state securities laws or any other applicable law or
regulations thereunder.

1.11 SEPARATE CERTIFICATES. Separate certificates representing the Common Stock
of the Company to be delivered to a Participant upon the exercise of any Stock
Option, SAR, or ISO Option will be issued to such Participant.

1.12 PAYMENT FOR STOCK; RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT.

         (a) PAYMENT FOR STOCK. Payment for shares of Stock purchased under this
Plan shall be made in full and in cash or check made payable to the Company.
Provided, payment for shares of Stock purchased under this Plan may also be made
in Common Stock of the Company or a combination of cash and Common Stock of the
Company in the event that the purchase of shares is pursuant to the exercise of
rights under an SAR attached to the Option and which is exercisable on the date
of exercise of the Option. In the event that Common Stock of the Company is
utilized in consideration for the purchase of Stock upon the exercise of a Stock
Option or an ISO Option, then, such Common Stock shall be valued at the "fair
market value" as defined in Section 1.6 of the Plan.

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         (b) RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT. Furthermore, a
Participant may exercise an Option without payment of the Option Price or ISO
Price in the event that the exercise is pursuant to rights under an SAR attached
to the Option and which is exercisable on the date of exercise of the Option. In
the event an Option with an SAR attached is exercised without payment of the
Option Price or ISO Price, the Participant shall be entitled to receive either
(i) a cash payment from the Company equal to the excess of the total fair market
value of the shares of Stock on such date as determined with respect to which
the Option is being exercised over the total cash Option Price or ISO Price of
such shares of Stock as set forth in the Option or (ii) that number of whole
shares of Stock as is determined by dividing (A) an amount equal to the fair
market value per share of Stock on the date of exercise into (B) an amount equal
to the excess of the total fair market value of the shares of Stock on such date
with respect to which the Option is being exercised over the total cash Option
Price or ISO Price of such shares of Stock as set forth in the Option, and
fractional shares will be rounded to the next lowest number and the Participant
will receive cash in lieu thereof.

1.13 INCURRENCE OF DISABILITY AND RETIREMENT. A Participant shall be deemed to
have terminated employment or consulting and incurred a disability
("Disability") if such Participant suffers a physical or mental condition which,
in the judgment of the Committee, totally and permanently prevents a Participant
from engaging in any substantial gainful employment or consulting with the
Company or a subsidiary. A Participant shall be deemed to have terminated
employment as an employee or a consultant due to retirement ("Retirement") if
such Participant ceases to be an employee or a consultant of the Company or its
subsidiary, without cause, after attaining the age of 65.

1.14 STOCK OPTIONS AND ISO OPTIONS GRANTED SEPARATELY. Since the Committee is
authorized to grant Stock Options, SARs and ISO Options to Participants, the
grant thereof and Stock Option Agreements relating thereto will be made
separately and totally independent of each other. Except as it relates to the
total number of shares of Stock which may be issued under the Plan, the grant or
exercise of a Stock Option or SARs shall in no manner affect the grant and
exercise of any ISO Options. Similarly, the grant and exercise of any ISO Option
shall in no manner affect the grant and exercise of any Stock Option or SARs.

1.15 GRANTS OF OPTIONS AND STOCK OPTION AGREEMENT. Each Stock Option, ISO Option
and/or SAR granted under this Plan shall be evidenced by the minutes of a
meeting of the Committee or by the written consent of the Committee and by a
written Stock Option Agreement effective on the date of grant and executed by
the Company and the Participant. Each Option granted hereunder shall contain
such terms, restrictions and conditions as the Committee may determine, which
terms, restrictions and conditions may or may not be the same in each case.

1.16 USE OF PROCEEDS. The proceeds received by the Company from the sale of
Stock pursuant to the exercise of Options granted under the Plan shall be added
to the Company's general funds and used for general corporate purposes.

1.17 NON-TRANSFERABILITY OF OPTIONS. Except as otherwise herein provided, any
Option or SAR granted shall not be transferable otherwise than by will or the
laws of descent and distribution, and the Option may be exercised, during the
lifetime of the Participant, only by him. More particularly (but without
limiting the generality of the foregoing), the Option and/or SAR may not be
assigned, transferred (except as provided above), pledged or hypothecated in any
way, shall not be assignable by operation of law and shall not be subject to
execution, attachment, or similar process. Any attempted assignment, transfer,
pledge, hypothecation, or other disposition of the Option and/or SAR contrary to
the provisions hereof shall be null and void and without effect.

1.18 ADDITIONAL DOCUMENTS ON DEATH OF PARTICIPANT. No transfer of an Option
and/or SAR by the Participant by will or the laws of descent and distribution
shall be effective to bind the Company unless the Company shall have been
furnished with written notice and an unauthenticated copy of the will and/or
such other evidence as the Committee may deem necessary to establish the
validity of the transfer and the acceptance by the successor to the Option
and/or SAR of the terms and conditions of such Option and/or SAR.

1.19 CHANGES IN EMPLOYMENT. So long as the Participant shall continue to be an
employee or consultant of the Company or any one of its subsidiaries, any Option
granted to him shall not be affected by any change of duties or position.
Nothing in the Plan or in any Stock Option Agreement which relates to the Plan
shall confer upon any Participant any right to continue in the employ as an
employee or consultant of the Company or of any of its subsidiaries, or
interfere in any way with the right of the Company or any of its subsidiaries to
terminate his employment or consulting arrangement at any time.

<PAGE>

1.20 SHAREHOLDER RIGHTS. No Participant shall have a right as a shareholder with
respect to any shares of Stock subject to an Option prior to the purchase of
such shares of Stock by exercise of the Option.

1.21 RIGHT TO EXERCISE UPON COMPANY CEASING TO EXIST. Where dissolution or
liquidation of the Company or any merger consolidation or combination in which
the Company is not the surviving corporation occurs, the Participant shall have
the right immediately prior to such dissolution, liquidation, merger,
consolidation or combination, as the case may be, to exercise, in whole or in
part, his then remaining Options whether or not then exercisable, but limited to
that number of shares that can be acquired without causing the Participant to
have an "excess parachute payment" as determined under Section 280G of the Code
determined by taking into account all of Participant's "parachute payments"
determined under Section 280G of the Code. Provided, the foregoing
notwithstanding, after the Participant has been afforded the opportunity to
exercise his then remaining Options as provided in this Section 1.21, and to the
extent such Options are not timely exercised as provided in this Section 1.21,
then, the terms and provisions of this Plan and any Stock Option Agreement will
thereafter continue in effect, and the Participant will be entitled to exercise
any such remaining and unexercised Options in accordance with the terms and
provisions of this Plan and such Stock Option Agreement as such Options
thereafter become exercisable. Provided further, that for the purposes of this
Section 1.21, if any merger, consolidation or combination occurs in which the
Company is not the surviving corporation and is the result of a mere change in
the identity, form, or place of organization of the Company accomplished in
accordance with Section 368(a)(1)(F) of the Code, then, such event shall not
cause an acceleration of the exercisability of any such Options granted
hereunder.

1.22 ASSUMPTION OF OUTSTANDING OPTIONS AND SARS. To the extent permitted by the
then applicable provisions of the Code, any successor to the Company succeeding
to, or assigned the business of, the Company as the result of or in connection
with a corporate merger, consolidation, combination, reorganization or
liquidation transaction shall assume Options and SARs outstanding under the Plan
or issue new Options and/or SARs in place of outstanding Options and/or SARs
under the Plan.

                                   ARTICLE II

                       TERMS OF STOCK OPTIONS AND EXERCISE

2.1 GENERAL TERMS.

         (a) GRANT AND TERMS FOR STOCK OPTIONS. Stock Options shall be granted
by the Committee on the following terms and conditions: No Stock Option shall be
exercisable within six months from the date of grant (except as specifically
provided in Subsection 2.l(c) hereof, with regard to the death or Disability of
a Participant), nor more than five years after the date of grant. Subject to
such limitation, the Committee shall have the discretion to fix the period (the
"Option Period") during which any Stock Option may be exercised. Stock Options
granted shall not be transferable except by will or by the laws of descent and
distribution, Stock Options shall be exercisable only by the Participant while
actively employed as an employee or a consultant by the Company or a subsidiary,
except that (i) any such Stock Option granted and which is otherwise
exercisable, may be exercised by the personal representative of a deceased
Participant within 12 months after the death of such Participant (but not beyond
the Option Period of such Stock Option), (ii) if a Participant terminates his
employment as an employee or a consultant with the Company or a subsidiary on
account of Retirement, such Participant may exercise any Stock Option which is
otherwise exercisable at any time within three months of such date of
termination and (iii) if a Participant terminates his employment as an employee
or a consultant with the Company or a subsidiary on account of incurring a
Disability, such Participant may exercise any Stock Option which is otherwise
exercisable at any time within 12 months of such date of termination. If a
Participant should die during the applicable three-month or 12-month period
following the date of such Participant's Retirement or termination on account of
Disability, the rights of the personal representative of such deceased
Participant as such relate to any Stock Options granted to such deceased
Participant shall be governed in accordance with Subsection 2.1(a)(i) of this
Article II.

         (b) OPTION PRICE. The option price ("Option Price") for shares of Stock
subject to a Stock Option shall be determined by the Committee, but in no event
shall the Option Price of an ISO be less than 100% of the "fair market value" of
the Stock on the date of grant and in no event shall the Option Price of Stock
Options be less than 85% of the "fair market value" of the Stock on the date of
grant.

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         (c) ACCELERATION OF OTHERWISE UNEXERCISABLE STOCK OPTION ON RETIREMENT,
DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Committee, in its sole
discretion, may permit (i) a Participant who terminates employment as an
employee or a consultant due to Retirement, (ii) a Participant who terminates
employment as an employee or a consultant due to a Disability, (iii) the
personal representative of a deceased Participant, or (iv) any other Participant
who terminates employment as an employee or a consultant upon the occurrence of
special circumstances (as determined by the Committee) to exercise and purchase
(within three months of such date of termination of employment or consulting
arrangement, or 12 months in the case of a deceased or disabled Participant; all
or any part of the shares subject to Stock Option on the date of the
Participant's Retirement, Disability, death, or as the Committee otherwise so
determines, notwithstanding that all installments, if any, with respect to such
Stock Option, had not accrued on such date. Provided, such discretionary
authority of the Committee shall not be exercised with respect to any Stock
Option (or portion thereof) if the applicable six-month waiting period for
exercise had not expired except in the event of the death or disability of the
Participant when the personal representative of the deceased Participant or the
disabled Participant may, with the consent of the Committee, exercise such Stock
Option notwithstanding the fact that the applicable six-month waiting period had
not yet expired.

         (d) NUMBER OF STOCK OPTIONS GRANTED. Participants may be granted more
than one Stock Option. In making any such determination, the Committee shall
obtain the advice and recommendation of the officers of the Company or a
subsidiary which have supervisory authority over such Participants. The granting
of a Stock Option under the Plan shall not affect any outstanding Stock Option
previously granted to a Participant under the Plan.

         (e) NOTICE OF EXERCISE STOCK OPTION. Upon exercise of a stock option, a
Participant shall give written notice to the Secretary of the Company, or other
officer designated by the Committee, at the Company's main office in Dallas,
Texas. No Stock shall be issued to any Participant until the Company receives
full payment for the Stock purchased, if applicable, and any required state and
federal withholding taxes.

                                   ARTICLE III

                                      SARS

3.1      GENERAL TERMS.

         (a) GRANT AND TERMS OF SARS. The Committee, when comprised of three or
more Directors all of whom are Disinterested Directors, may grant SARs to
Participants in connection with Stock Options or ISO Options granted under the
Plan. SARs shall not be exercisable (i) at such time that the Committee is
comprised of less than three Disinterested Directors or is not comprised solely
of Disinterested Directors, (ii) earlier than six months from the date of grant
except as specifically provided in Subsection 3.l(b) hereof in the case of the
death or Disability of a Participant, and (iii) shall terminate at such time as
the Committee determines and shall be exercised only upon surrender of the
related Stock Option or ISO Option and only to the extent that the related Stock
Option or ISO Option (or the portion thereof as to which the SAR is exercisable)
is exercised. SARs may be exercised only by the Participant while actively
employed as an employee or a consultant by the Company or a subsidiary except
that (i) any SARs previously granted to a Participant which are otherwise
exercisable may be exercised, with the approval of the Committee, by the
personal representative of a deceased Participant, even if such death should
occur within six months of the date of grant (but not beyond the expiration date
of such SAR), and (ii) if a Participant terminates his employment as an employee
or a consultant with the Company or a subsidiary, as the case may be, on account
of Retirement or incurring a Disability, such Participant may exercise any SARs
which are otherwise exercisable, with the approval of the Committee, anytime
within three months of the date of the termination by Retirement or within 12
months of termination by Disability. If a Participant should die during the
applicable three-month period following the date of such Participant's
Retirement or during the applicable 12 month period following the date of
termination on account of Disability, the rights of the personal representative
of such deceased Participant as such relate to any SARs granted to such deceased
Participant shall be governed in accordance with (i) of the second sentence of
this Subsection 3.l(a) of this Article III. The applicable SAR shall (i)
terminate upon the termination of the underlying Stock Option or ISO Option, as
the case may be, (ii) only be transferable at the same time and under the same
conditions as the underlying Stock Option or ISO Option is transferable, (iii)
only be exercised when the underlying Stock Option or ISO Option is exercised,
and (iv) may be exercised only if there is a positive spread between the Option
Price or ISO Price, as applicable and the "fair market value" of the Stock for
which the SAR is exercised.

<PAGE>

         (b) ACCELERATION OF OTHERWISE UNEXERCISABLE SARS ON RETIREMENT, DEATH,
DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Committee, in its sole
discretion, may permit (i) a Participant who terminates employment as an
employee or a consultant with the Company or a subsidiary due to Retirement,
(ii) a Participant who terminates employment as an employee or a consultant with
the Company or a subsidiary due to a Disability, (iii) the personal
representative of such deceased Participant, or (iv) any other Participant who
terminates employment as an employee or a consultant with the Company or a
subsidiary upon the occurrence of special circumstances (as determined by the
Committee) to exercise (within three months of such date of termination of such
employment or 12 months in the case of a disabled or deceased Participant) all
or any part of any such SARs previously granted to such Participant as of the
date of such Participant's Retirement, Disability, death, or as the Committee
otherwise so determines, notwithstanding that all installments, if any with
respect to such SARs, had not accrued on such date. Provided, such discretionary
authority of the Committee may not be exercised with respect to any SAR (or
portion thereof if the applicable six-month waiting period for exercise had not
expired as of such date, except (i) in the event of the Disability of the
Participant or (ii) the death of the Participant, when such disabled Participant
or the personal representative of such deceased Participant may, with the
consent of the Committee, exercise such SARs notwithstanding the fact that the
applicable six-month waiting period had not yet expired.

         (c) FORM OF PAYMENT OF SARS. The Participant may request the method and
combination of payment upon the exercise of a SAR; however, the Committee has
the final authority to determine whether the value of the SAR shall be paid in
cash or shares of Stock or both. Upon exercise of a SAR, the holder is entitled
to receive the excess amount of the "fair market value" of the Stock (as of the
date of exercise) for which the SAR is exercised over the Option Price or ISO
Price, as applicable, under the related Stock Option or ISO Option, as the case
may be. All applicable federal and state withholding taxes will be paid by the
Participant to the Company upon the exercise of a SAR since the excess amount
described above will be required to be included within taxable income in
accordance with Sections 61 and 83 of the Code.

         (d) DISINTERESTED DIRECTORS. As used in this Article III,
"Disinterested Directors" shall have the same meaning as the term "disinterested
person" set forth in Rule 16b-3(d) under the Securities Exchange Act of 1934, as
amended, and shall mean a Director who is not at the time he exercises
discretion in administering the Plan eligible, and has not at any time within
one year prior thereto been eligible for selection as a person to whom stock may
be allocated or to whom stock options or stock appreciation rights may be
granted pursuant to the Plan or any other plan of the Company or its affiliates
entitling the participants therein to acquire stock, stock options or stock
appreciation rights of the Company or any of its affiliates; provided, however,
that in the event that the definition of "disinterested person" contained in
Rule 16b-3 is amended, the term "Disinterested Person" as it is defined herein
shall automatically be deemed amended so as to the have the same meaning as the
amended term "disinterested person" under Rule 16b-3.

                                   ARTICLE IV

                             GRANTING OF ISO OPTIONS

4.1 GENERAL. With respect to ISO Options granted on or after the effective date
of the Plan the following provisions in this Article IV shall apply to the
exclusion of any inconsistent provision in any other Article in this Plan since
the ISO Options to be granted under the Plan are intended to qualify as
"incentive stock options" as defined in Section 422 of the Code.

4.2 GRANT AND TERMS OF ISO OPTIONS. ISO Options may be granted only to employees
of the Company and any of its subsidiaries. No ISO Options shall be granted to
any person who is not eligible to receive "incentive stock options" as provided
in Section 422 of the Code. No ISO Options shall be granted to any management
employee if, immediately before the grant of an ISO Option, such employee owns
more than 10% of the total combined voting power of all classes of stock of the
Company or its subsidiaries (as determined in accordance with the stock
attribution rules contained in Section 425(d) of the Code). Provided, the
preceding sentence shall not apply if, at the time the ISO Option is granted,
the ISO Price is at least 110% of the "fair market value" of the Stock subject
to the ISO Option, and such ISO Option by its terms is not exercisable after the
expiration of five years from the date such ISO Option is granted.

<PAGE>

         (a) ISO OPTION PRICE. The option price for shares of Stock subject to
an ISO Option ("ISO Price") shall be determined by the Committee, but in no
event shall such ISO Price be less than the fair market value of the Stock on
the date of grant.

         (b) ANNUAL ISO OPTION LIMITATION. The aggregate "fair market value"
(determined as of the time the ISO Option is granted) of the Stock with respect
to which ISO Options are exercisable for the first time by any Participant
during in any calendar year (under all "incentive stock option" plans qualified
under Section 422 of the Code sponsored by the Company and its subsidiary
corporations) shall not exceed $100,000.

         (c) TERMS OF ISO OPTIONS. ISO Options shall be granted on the following
terms and conditions: No ISO Option shall be exercisable within six months from
the date of grant (except as specifically provided in Subsection 4.2(d) hereof
with regard to the Disability or death of a Participant), nor more than 10 years
after the date of grant. The Committee shall have the discretion to fix the
period (the "ISO Period") during which any ISO Option may be exercised. ISO
Options granted shall not be transferable except by will or by the laws of
descent and distribution. ISO Options shall be exercisable only by the
Participant while actively employed by the Company or a subsidiary, except that
(i) any such ISO Option granted and which is otherwise exercisable, may be
exercised by the personal representative of a deceased Participant within 12
months after the death of such Participant (but not beyond the expiration date
of such ISO Option), (ii) if a Participant terminates his employment as an
employee with the Company or a subsidiary on account of Retirement, such
Participant may exercise any ISO Option which is otherwise exercisable at any
time within three months of such date of termination and (iii) if a Participant
terminates his employment with the Company or a subsidiary on account of
incurring a Disability, such Participant may exercise any ISO Option which is
otherwise exercisable at any time within 12 months of such date of termination.
If a Participant should die during the applicable three-month or 12 month period
following the date of such Participant's Retirement or Disability, then in such
event, the rights of the personal representative of such deceased Participant as
such relate to any ISO Options granted to such deceased Participant shall be
governed in accordance with Subsection 4.1(c) of this Article IV.

         (d) ACCELERATION OF OTHERWISE UNEXERCISABLE ISO OPTION ON RETIREMENT,
DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Committee, in its sole
discretion, may permit (i) a Participant who terminates employment as an
employee with the Company or a subsidiary due to Retirement, (ii) a Participant
who terminates employment as an employee with the Company or a subsidiary due to
a Disability, (iii) the personal representative of a deceased Participant, or
(iv) any other Participant who terminates employment as an employee with the
Company or a subsidiary upon the occurrence of special circumstances (as
determined by the Committee) to exercise and purchase (within three months of
such date of termination of employment as an employee or 12 months in the case
of a disabled or deceased Participant) all or any part of the shares of Stock
subject to ISO Option on the date of the Participant's Retirement, Disability,
death, or as the Committee otherwise so determines, notwithstanding that all
installments, if any, had not accrued on such date. Provided, such discretionary
authority of the Committee may not be exercised with respect to any ISO Option
(or portion thereof if the applicable six-month waiting period for exercise had
not expired as of such date except in the event of the Disability of the
Participant or death of the Participant, when the disabled Participant or the
personal representative of such deceased Participant, may, with the consent of
the Committee, exercise such ISO Option notwithstanding the fact that the
applicable six-month waiting period had not yet expired.

         (e) NUMBER OF ISO OPTIONS GRANTED. Subject to the applicable
limitations contained in the Plan with respect to ISO Options, Participants may
be granted more than one ISO Option. In making any such determination, the
Committee shall obtain the advice and recommendation of the officers of the
Company or a subsidiary which have supervisory authority over such Participants.
The granting of an ISO Option under the Plan shall not affect any outstanding
ISO Option previously granted to a Participant under the Plan.

         (f) NOTICE TO EXERCISE ISO OPTION. Upon exercise of an ISO Option, a
Participant shall give written notice to the Secretary of the Company, or other
officer designated by the Committee, at the Company's main office in Las Vegas,
Nevada.

<PAGE>

                                    ARTICLE V

                            OPTIONS NOT QUALIFYING AS
                             INCENTIVE STOCK OPTIONS

5.1 NON-QUALIFYING OPTIONS. With respect to all or any portion of any option
granted under the Plan not qualifying as an "incentive stock option" under
Section 422 of the Code, such option shall be considered as a Stock Option
granted under this Plan for all purposes.

                                          Power Technology, Inc.

                                   By:    s/ Lee A. Balak, President
                                          ------------------------------------
                                          Lee A. Balak, President

                                          Date Plan adopted and approved by the
                                          Board of Directors:
                                          October 5, 2001.

                                          Date Plan adopted and approved by the
                                          Stockholders:
                                                                        , 2002.
                                          -----------------------------

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