POWER TECHNOLOGY INC/CN, DEF 14A, 2000-08-18

POWER TECHNOLOGY INC/CN
DEF 14A, 2000-08-18
MOTOR VEHICLE PARTS & ACCESSORIES

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12

POWER TECHNOLOGY, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

N/A
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>

Payment of Filing Fee (Check the appropriate box):

<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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</TABLE>
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POWER TECHNOLOGY, INC.
1000 W. BONANZA ROAD
LAS VEGAS, NEVADA 89106

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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 14, 2000

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

To the Shareholders of Power Technology, Inc.:

The Annual Meeting of Shareholders of Power Technology, Inc. (the "Company")
will be held at 1000 W. Bonanza Road, Las Vegas, Nevada on September 14, 2000,
commencing at 3:00 p.m., local time, and thereafter as it may be adjourned from
time to time, for the following purposes:

1. To elect five directors for a term expiring at the next annual meeting
of shareholders, or until their successors are duly elected or qualified;

2. To consider and act upon a proposal to approve the Company's 2000 Stock
Option, SAR and Stock Bonus Plan, a copy of which is attached to the
accompanying Proxy Statement as Exhibit A;

3. To consider and act upon a proposal to amend the Articles of
Incorporation of the Company to increase the number of authorized shares
of Common Stock from 25,000,000 shares to 100,000,000 shares of Common
Stock and to establish and authorize a class of 1,000,000 shares of
Preferred Stock, as provided in Exhibit B to the Proxy Statement;

4. To ratify the selection of G. Brad Beckstead, CPA, as independent
auditor for the Company for the year ending January 31, 2001; and

5. To consider and act upon such other business as may properly come before
the Annual Meeting or any adjournment thereof.

The Company's Proxy Statement is submitted herewith. Holders of record of
the Company's Common Stock at the close of business on August 1, 2000, are
entitled to notice of and to vote at the Annual Meeting of Shareholders or any
adjournment thereof, notwithstanding transfers of any stock on the books of the
Company after such record date.

By Order of the Board of Directors

[SIGNATURE]
William E. McNerney
SECRETARY

Las Vegas, Nevada
August 18, 2000

YOUR VOTE IS IMPORTANT

YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT YOU
PLAN TO ATTEND, YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT
THE PRESENCE OF A QUORUM MAY BE ASSURED. THE GIVING OF SUCH PROXY DOES NOT
AFFECT YOUR RIGHT TO REVOKE IT LATER OR VOTE YOUR SHARES IN PERSON IN THE EVENT
YOU SHOULD ATTEND THE MEETING.
<PAGE>
POWER TECHNOLOGY, INC.
1000 W. BONANZA ROAD
LAS VEGAS, NEVADA 89106

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

PROXY STATEMENT
FOR THE ANNUAL MEETING OF THE SHAREHOLDERS
TO BE HELD ON SEPTEMBER 14, 2000

This Proxy Statement is furnished to shareholders of Power Technology, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the annual meeting of the shareholders to be
held at the time and place for the purposes set forth in the accompanying
notice.

GENERAL

Accompanying this Proxy Statement is a Notice of Annual Meeting of
Shareholders (the "Annual Meeting") of the Company to be held at the 1000 W.
Bonanza Road, Las Vegas, Nevada, at 3:00 p.m., local time, on September 14,
2000, and any adjournment thereof, and a form of proxy for the Annual Meeting
solicited by the Board of Directors. No proposals have been received from any
shareholder to be considered at the Annual Meeting. An Annual Report to
shareholders, including financial statements for the year ended January 31,
2000, this Proxy Statement and the enclosed proxy were first mailed to the
share-holders on August 18, 2000, in connection with this solicitation.

VOTING OF PROXIES

This proxy solicitation is intended to afford shareholders the opportunity
to vote on the election of directors; approval of the Company's 2000 Stock
Option, SAR and Stock Bonus Plan; the amendment of the Articles of Incorporation
to increase the number of authorized shares of Common Stock to 100,000,000 and
to establish a class of 1,000,000 shares of Preferred Stock; the ratification of
the selection of G. Brad Beckstead, CPA, as independent auditor for the Company
for its fiscal year ending January 31, 2001; and regarding such other matters,
if any, that may be properly brought before the Annual Meeting. The proxy
permits shareholders to withhold voting for any or all nominees for election as
directors and to abstain from voting on any other matter if the shareholder so
chooses.

On August 1, 2000, the record date for shareholders entitled to vote at the
Annual Meeting, there were 32 outstanding shares of Common Stock. A majority of
such outstanding shares of Common Stock is necessary to provide a quorum at the
Annual Meeting. Each share is entitled to one vote. Under the Articles of
Incorporation, shareholders do not have the right to cumulate votes for the
election of directors. The affirmative vote of the holders of a majority of the
outstanding Common Stock, present and voting at the Annual Meeting, in person or
by proxy, is required for the election of directors, approval of the Company's
2000 Stock Option, SAR and Stock Bonus Plan, and ratification of the selection
of Brad Beckstead, CPA, as independent auditor for the Company for its fiscal
year ending January 31, 2001.

Shares represented by a proxy in the form enclosed, dated, duly executed and
returned to the Company and not revoked, will be voted at the Annual Meeting in
accordance with the directions given. Any shareholder attending the Annual
Meeting may vote in person whether or not a proxy was previously filed. Any
shareholder returning a proxy may revoke it at any time before it is exercised
by giving written notice of such revocation to the Secretary of the Company.
Unless authority to vote for any individual director or directors, or all
directors, pursuant to Purpose 1 set forth in the Notice of Annual Meeting of
Shareholders is withheld, the filed proxy will be voted FOR the election of
directors as set forth in this Proxy Statement. If no direction is made
regarding the other purposes set forth in the Notice of Annual Meeting of
Shareholders, the proxy will be voted FOR such other actions.
<PAGE>
The cost of soliciting proxies will be borne by the Company which will
reimburse brokerage houses, custodians, nominees and fiduciaries for their
expenses in forwarding proxy material to the beneficial owners of the Company's
Common Stock. Solicitation will be made by mail, but may also be made by
telephone by certain officers and employees of the Company without any
additional compensation to them.

PROPOSAL 1. ELECTION OF DIRECTORS TO THE BOARD OF DIRECTORS OF THE COMPANY

ELECTION OF DIRECTORS

The Board of Directors currently consists of five members. Directors are
elected at the annual meeting of shareholders and hold office until the next
annual meeting of shareholders and until their successors are elected and
qualified. Messrs. Lee A. Balak, William E. McNerney, Alvin A. Snaper, Hugo P.
Pomrehn, and F. Bryson Farrill are currently serving as directors of the
Company.

It is the intention of the persons named in the accompanying form of proxy
to vote proxies for the election of the five above-named nominees. Each nominee
has consented to being named in this Proxy Statement and to serve if elected. In
the event that any of the nominees should for some reason, presently unknown,
become unavailable for election, the persons named in the form of proxy intend
to vote for substitute nominees.

NOMINEES FOR ELECTION AS DIRECTORS

The nominees for election to the Board of Directors are:

Mr. Balak became a director and the President of the Company during February
1996. From January 2000 to the present Mr. Balak has been a director and the
President of Fluidic/Microwave Systems, Inc., a Nevada corporation. From 1993 to
the present, Mr. Balak has been the owner and President of No. 90 Corporate
Ventures, a Canadian corporation located in Vancouver, B.C. From 1983 to 1993,
he was a corporate finance consultant. From 1977 to 1982, he was a registered
representative of Canarim Investment Corporation (currently named Canacord
Investment Corporation). While employed by Canarim Investment Corporation,
Mr. Balak was the subject of an administrative proceeding by the British
Columbia Securities Commission regarding various alleged violations of the
Securities Act, S.B.C. 1985, c.83 of British Columbia (the "Act"); and in
November 1990, he undertook and agreed that certain trading exemptions under the
Act would not apply or be available for a period of three years and that he
would not be a director or officer of any reporting issuer for a period of three
years, which period was subsequently reduced to February, 1992, by a variance
order. In 1991, he was discharged in bankruptcy by the Supreme Court of British
Columbia. Mr. Balak attended the University of Winnipeg.

Mr. Snaper became a director, Vice President-Development, Secretary and
Treasurer of the Company in March 1998; and has been a director and President of
PowerTek Technologies Corporation, Inc., a subsidiary of the Company, since its
incorporation in 1996. From January 2000 to the present, Mr. Snaper has been a
director and Treasurer of Fluidic/Microwave Systems, Inc., a Nevada corporation.
From 1979 to 1983, he was a director of American Methyland Homogenized Fuels
Corporation. From 1980 to the present, he has been the Vice President of
Neo-Dyne Research, Inc., a research and development company. From 1985 to the
present, he has also been the Vice President of Inventrex Corp. Mr. Snapper was
a founder of Advanced Patent Technology, Inc., a public company now known as
Alliance Gaming, and was its Vice President and Director of Research and
Development from 1968 to 1980. From 1952 to 1955, he was the chief Chemist for
McGraw Colorgraph Company, a division of the Carnation Company. From 1949 to
1951, he was employed by the Bakelite Division of Union Carbide, where he
assisted in its development of the pilot plant for plastics manufacture. During
his 30 years of scientific research and development, Mr. Snapper's
interdisciplinary technology activities have resulted in over 600 patents,
products, processes and innovations. He has been awarded the Design News Best
Patent of the year award

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on three separate occasions. Mr. Snaper graduated from McGill University with a
bachelor of science degree in 1950. He is a registered professional engineer in
the State of California.

Mr. McNerney became a director and Executive Vice President of the Company
in March 1998. From January 2000 to the present, Mr. McNerney has been a
director and Secretary of Fluidic/Microwave Systems, Inc., a Nevada corporation.
From 1993 to the present, he has been the owner and Chief Executive Officer of
Revolutionary Technology Industries, Inc. From 1984 to 1993, he was retired.
From 1974 to 1984, Mr. McNerney owned an oil and gas operating company, Golden
Exploration, Inc. From 1954 to 1976, Mr. McNerney was a pilot employed by
Northwest Airlines.

Mr. Farrill became a director of the Company on October 25, 1999. From 1990
to the present, Mr. Farrill has been a financial consultant to high technology
companies and other companies. Mr. Farrill is a director of Future link
Distributing, Inc. From 1968 to 1964, he was the President and Chairman of
McLeod Young Weir International, a brokerage firm until it was acquired by
Scotia Capital Markets. From 1962 to 1979, he was employed by McCleod Young Weir
Ltd in Toronto, and was a director and member of its executive committee from
1964 to 1989. Mr. Farrill received a B.A. decree in political science and
economics from the University of Toronto in 1951.

Dr. Pomrehn became a director of the Company during July 1998. Dr. Pomrehn
is the Chairman of the Board and a director of Stayhealthy Incorporated, a
closely held health products company. From November 1997 to August 1999, he was
currently Executive Vice President of Special Projects of American Technologies
Group, Inc. ("ATG"), a public company engaged in research and development
activities; and has been a consultant to ATG since August 1999 to the present.
Dr. Pomrehn previously served as President, Chief Operating Officer, Vice
Chairman and a director of ATG from April 1995 to November 1997. He was
appointed as Under Secretary of Energy by President George Bush in 1992. He was
employed by Bechtel Corporation from 1967 to 1992, and was a Vice President and
Manager of its Los Angeles regional office from 1990 to 1992. Dr. Pomrehn
graduated from the University of Southern California with a bachelor of science
degree in mechanical engineering in 1960; received a masters degree in
mechanical engineering from George Washington University in 1965; received a
masters degree in industrial engineering from the University of Southern
California in 1969; and received a doctorate in engineering from the University
of Southern California in 1975. Dr. Pomrehn is a member of the American Nuclear
Society and American Society of Mechanical Engineers, and is a registered
professional mechanical and nuclear engineer in the State of California.

COMMITTEES OF THE BOARD OF DIRECTORS

STOCK PLAN COMMITTEE. A Stock Plan Committee of the Board of Directors will
administer the Company's 2000 Stock Option, SAR and Stock Bonus Plan (the
"Plan"). The Plan is submitted as a proposal in this Proxy Statement for
approval by the shareholders. In the event of the election of Messrs. Lee A.
Balak, Alvin A. Snaper, and William E. McNerney as directors, it is expected
that they will be elected by the Board of Directors to serve as members of the
Committee. The Committee has not met and no options, SAR's or stock bonuses have
been granted under the Plan.

OTHER COMMITTEES. The Company does not have an audit committee,
compensation committee, nominating committee, an executive committee of the
Board of Directors, or any other committees. However, the Board of Directors may
establish various committees during the 2001 fiscal year.

COMPENSATION OF DIRECTORS

Each non-employee director will receive $500 for each Board meeting
attended, and for each committee meeting attended on days other than those on
which the Board meets, and will receive reimbursement of travel expenses.
Directors of the Company have not received any compensation in their capacity as
directors as of the date hereof, except reimbursement of travel expenses.

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COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth the total cash compensation, paid or accrued,
by the Company during its fiscal year ended January 31, 2000, to each executive
officer and all executive officers as a group for services in all capacities to
the Company.

<TABLE>
<CAPTION>
CASH COMPENSATION(1) STOCK COMPENSATION
-------------------- ------------------
<S> <C> <C>
Lee A. Balak.............................. $0 $ 92,000(4)
William E. McNerney....................... $0 $ 18,000(5)
Alvin A. Snaper........................... $0 $ 92,000(4)
All executive officers as a group
(3 persons)............................. $0 $202,000(2)(3)
</TABLE>

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(1) Personal benefits received by the Company's executive officers are valued
below the levels which would otherwise require disclosure under the
rules of the U.S. Securities and Exchange Commission. See "Transactions with
Management".

(2) The Company does not currently provide any contingent or deferred forms of
compensation arrangements, annuities, pension or retirement benefits.

(3) The Company has no employment contracts with its executive officers or
employees; however, the Company has a consulting agreement with William E.
McNerney, the Executive Vice President and a director of the Company, and
with Hugo P. Pomrehn, a director of the Company.

(4) Represents a year-end stock bonus of 200,000 shares of Common Stock that was
awarded by the Board of Directors as compensation, in lieu of salary and
bonuses, effective December 31, 1999.

(5) Represents 30,000 shares of Common Stock issued under the terms of the
consulting agreement between Mr. McNerney and the Company.

TRANSACTIONS WITH MANAGEMENT

In June 1998, the Company leased approximately 5,000 square feet of offices
and research facilities on a month-to-month basis for $2,000 per month from
Mr. Alvin A. Snaper, a director, Vice President, Secretary and Treasurer of the
Company and his partner. During the fiscal year ended January 31, 2000, the
Company paid $20,000 in lease payments for these facilities.

Mr. Lee A. Balak, the President and a director of the Company, had
previously loaned and advanced approximately $258,500 to the Company as of
December 22, 1999, for research and development fees. The research and
development fees were paid by the Company to research consultants, and to
Neo-Dyne Research, Inc. ("Neo-Dyne"), a research and development company owned
by Alvin A. Snaper, a director and a Vice President, Secretary and Treasurer of
the Company. Neo-Dyne has conducted substantially all of the research and
development activities regarding the principal products of the Company,
including its batteries, its pipeline connection technology, and its allow
sensor technology, which provided continuity for such services. During the
fiscal year ended January 31, 2000, the Company paid $33,750 in research fees to
Neo-Dyne for its research services. On December 22, 1999, the Company authorized
the issuance of 1,034,000 shares of restricted Common Stock at $.25 per share to
Mr. Balak in exchange for the cancellation of this debt, including accrued
interest.

Effective April 1, 1999, the Company entered into a consulting agreement for
a term of one year with William E. McNerney, a director and Vice President of
the Company for $5,000 per month, payable quarterly in the Common Stock of the
Company, in lieu of cash, valued at 85% of its lowest closing bid price during
the quarter. During the year ended January 31, 2000, the Company issued 30,000
shares of Common Stock to Mr. McNerney under the terms of the consulting
agreement. Mr. McNerney receives no

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salary or other compensation from the Company as a director and officer, except
reimbursement of expenses.

In June 1999, the Company acquired rights to advanced microwave technology
designed to reduce the moisture content of agricultural products, from Alvin A.
Snaper and William E. McNerney, directors and officers of the Company, who each
received 100,000 shares of restricted Common Stock of the Company in exchange
for this technology.

The Company entered into a consulting agreement with Mr. Hugo P. Pomrehn, a
director of the Company, effective September 1, 1998, for research and
development services. The consulting fee is charged at a rate of $150 per hour,
and he is reimbursed for travel and other expenses. During the year ended
January 31, 2000, Mr. Pomrehn did not receive any consulting fees or other
compensation from the Company.

SECURITY OWNERSHIP OF MANAGEMENT

The total number of shares of Common Stock of the Company beneficially owned
by each of the officers and directors, and all of such directors and officers as
a group, and their percentage ownership of the outstanding Common Stock of the
Company as of August 1, 2000, are as follows:

<TABLE>
<CAPTION>
SHARES PERCENT OF
MANAGEMENT BENEFICIALLY COMMON
SHAREHOLDERS(1) OWNED(1) STOCK
--------------- ------------ ----------
<S> <C> <C>
Lee A. Balak............................................ 4,702,000 25.2%
15 Ocean View Road
Lions Bay, B.C. V0N2XE0
Canada

F. Bryson Farrill....................................... 0 0%
77 Verplank Avenue
Stanford, Connecticut 06902

William E. McNerney (2)................................. 724,471 3.9%
953 E. Sahara, #9B
Las Vegas, Nevada 89104

Hugo P. Pomrehn, Ph.D................................... 50,000 0.3%
1017 South Mountain
Monrovia, California 91016

Alvin A. Snaper......................................... 1,004,155 5.4%
2800 Cameo Circle
Las Vegas, Nevada 89107

Ulf J. Lindquister...................................... 16,250 0.001%
9717 Royal Lamb Drive
Las Vegas, Nevada 89145

Directors and officers as a group (6 persons, including
the above).............................................. 6,496,876 34.8%
</TABLE>

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(1) Except as otherwise noted, it is believed by the Company that all persons
have full voting and investment power with respect to the shares indicated.
Under the rules of the Securities and Exchange Commission, a person (or
group of persons) is deemed to be a "beneficial owner" of a security if he
or she, directly or indirectly, has or shares the power to vote or to direct
the voting of such security, or the power to dispose of or to direct the
disposition of such security. Accordingly, more than one

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person may be deemed to be a beneficial owner of the same security. A person
is also deemed to be a beneficial owner of any security which that person
has the right to acquire within 60 days, such as options or warrants to
purchase the Common Stock of the Company.

PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock by each shareholder who beneficially
owns more than five percent (5%) of the Company's Common Stock, the number of
shares beneficially owned by each and the percent of outstanding Common Stock so
owned of record as of August 1, 2000. It is believed by the Company that all
persons listed have sole voting and investment power with respect to their
shares, except as otherwise indicated.

<TABLE>
<CAPTION>
SHARES PERCENT
NAME AND ADDRESS OUTSTANDING BENEFICIALLY
OF BENEFICIAL OWNER TITLE OF CLASS COMMON STOCK OWNED
------------------- -------------- ------------ ------------
<S> <C> <C> <C>
Lee A. Balak........................ Common Stock 4,702,000 25.2%
15 Ocean View Road
Lions Bay, B.C. V0N2XE0
Canada

Cede & Co. (1)...................... Common Stock 11,248,827 60.2%
P.O. Box 222
Bowling Green Station
New York, New York 10274
</TABLE>

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(1) Cede & Co. is a depository that holds securities as nominee for various
broker-dealers and others to facilitate stock transfers.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.

Based on its review of the copies of such forms received by it, the Company
believes that during the year ended January 31, 2000 all such filing
requirements applicable to its officers and directors (the Company not being
aware of any ten percent holder other than Lee A. Balak, the President and a
director of the Company) were complied with except that certain Form 4 reports
due from Messrs. Lee A. Balak, Alvin A. Snaper and William E. McNerney were
filed late.

INDEMNIFICATION

The Articles of Incorporation of the Company provides that no director or
officer of the Company shall be personally liable to the Company or any of its
stockholders for damages for breach of fiduciary duty as a director or officer
involving any act or omission of any such director or officer, provided,
however, that the foregoing provision shall not eliminate or limit the liability
of a director or officer (i) for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (ii) the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes.

Nevada law provides that a corporation has the power to indemnify a
director, officer, employee or agent of the corporation and certain other
persons serving at the request of the corporation in related capacities against
amounts paid and expenses incurred in connection with an action or proceeding to
which

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he is or is threatened to be made a party by reason of such position, if such
person shall have acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interest of the corporation, provided that no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged not to be entitled to indemnification under such law.

The By-Laws of the Company provide that the Company shall indemnify all of
its' officers and directors, past, present and future, against any and all
expenses incurred by them, and each of them including but not limited to legal
fees, judgments and penalties which may be incurred, rendered or levied in any
legal action brought against any or all of them for or on account of any act or
omission alleged to have been committed while acting within the scope of their
duties as officer or directors of the Company.

PROPOSAL 2. APPROVAL OF THE 2000 STOCK OPTION, SAR AND STOCK BONUS PLAN

GENERAL. The Internal Revenue Code of 1986, as amended (the "Code"), among
other things, provides certain tax advantages to persons granted stock options
under a qualifying "incentive stock option plan." In order to take advantage of
the favorable tax attributes associated with such options, it is proposed that
the shareholders approve the 2000 Stock Option, SAR and Stock Bonus Plan (the
"Plan"). On June 26, 2000, the Board of Directors adopted the Plan, subject to
shareholder approval, which will authorize the Company through the Committee
that administers the Plan (the "Committee") to grant non-qualified stock
options, incentive stock options (the "Options"), both with and without
appreciation rights, SAR's and stock bonuses to directors, officers, employees
and consultants of the Company. There are 2,000,000 shares of Common Stock of
the Company available for grant to participants designated by the Committee
under the Plan. A description of the Plan appears below. A copy of the Plan is
attached to this Proxy Statement as Exhibit A and the description contained
herein is qualified in its entirety by reference to the complete text of the
Plan.

DESCRIPTION OF THE PLAN. The Board of Directors has determined that in
order to attract and retain employees and consultants and to provide additional
incentive for directors, officers, employees and consultants, upon whose efforts
and judgment the success of the Company is largely dependent, the Plan should be
adopted to permit the Committee the right to grant either non-qualified stock
options ("Stock Options") with or without stock appreciation rights ("SARs") or
incentive stock options ("ISO Options") with or without SARs under the features
provided for by the Code, and stock bonuses. The Board believes that the best
interest of the Company will be served by the availability of both Stock Option
and ISO Options (both with or without SARs).

THE COMMITTEE. The Plan provides for the granting by the Committee of
Options (with or without SARs) and stock bonuses to directors, officers,
employees and consultants of the Company. The shares subject to the Plan will be
registered at the Company's expense pursuant to the Securities Act of 1933, as
amended (the "Act"), and applicable state securities acts, or will be issued by
the Company pursuant to exemptions from the registration requirements of the Act
and applicable state securities acts. The Plan will be administered by the
Committee composed of three members of the Board of Directors. The Committee
administers and interprets the Plan and has authority to grant Options and stock
bonuses to all eligible persons and determines at the time the Option is granted
the number of shares granted under and the type of each Option or bonus, the
purchase price, the option period and whether SARs granted thereunder or at the
time of exercise of the Option. It is anticipated that Messrs. Lee A. Balak,
Alvin A. Snaper, and William E. McNerney will be appointed as members of the
Committee in the event they are elected as Directors at this Annual Meeting.

STOCK OPTIONS AND ISO OPTIONS. The Plan provides for the issuance of either
Stock Options or ISO Options, both of which may be with or without SARs, to
employees and consultants of the Company, including employees who also serve as
officers or directors of the Company, at any time prior to midnight January 31,
2005, for the purchase of shares of the Company's Common Stock from the
2,000,000 shares which have been set aside for such purpose. Under the
provisions of the Plan, it is intended that the ISO

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Options granted thereunder will qualify as options granted pursuant to Section
422 of the Code, which will provide certain favorable tax consequences to
participants who are granted and elect to exercise such Options. The Committee
may grant either Stock Options or ISO Options (both with or without SARs) for
such number of shares to eligible participants as the Committee from time to
time shall determine and designate. Shares involved in the unexercised portion
of any terminated or expired Option may again be subjected to Options, provided
that to the extent any Option in whole or in part is surrendered as the result
of the exercise of a SAR, the shares subject to the surrendered portion of the
Option will no longer be available for use under the Plan.

The Committee is vested with discretion in determining the terms,
restrictions and conditions of each Option. The option price of the Common Stock
to be issued under the Plan will be determined by the Committee, provided such
price may not be less than the fair market value of the shares on the date of
grant, unless the participant owns greater than 10% of the total combined voting
power of all classes of capital stock of the Company, in which case the exercise
price of ISO Options may not be less than 110% of the fair market value of the
Common Stock on the date of the grant and the ISO Options cannot be exer-cised
five years after the grant. The fair market value of a share of the Company's
Common Stock will initially be determined by averaging the closing high bid and
low asked quotations for such share on the date of grant in the over-the-counter
market (NASD Electronic Bulletin Board).

Options granted under the Plan are exercisable in such amounts, at such
intervals and upon such terms as the Committee shall provide in such Option;
provided, however, that where Options are granted to employee Directors, until
such time the Committee is comprised solely of Directors who are not eligible
(and within one year prior to the date of reference has not been eligible) to
participate in the Plan, the maximum number of shares of Common Stock for which
Directors may be granted an Option in any calendar year may not exceed 10% of
the aggregate number of shares with respect to which Options may be granted
under the Plan. With respect to ISO Options, the aggregate fair market value
(determined as of the date the ISO Option is granted) of the stock with respect
to which any ISO Option is exercisable for the first time by a participant
during any calendar year under the Plan (and under all incentive stock option
plans of the Company and its subsidiaries qualified under the Code) shall not
exceed $100,000. Upon the exercise of a Stock Option or an ISO Option, the
option price must be paid in full, in cash or in Common Stock of the Company or
a combination of cash and Common Stock of the Company.

Stock Options and ISO Options granted under the Plan may not be exercised
until six months after the date of the grant and rights under an SAR may not be
exercised until six months after SARs are attached to an Option if not attached
at the time of the grant, except in the event of death or disability of the
participant. Options are exercisable only by participants while actively
employed as a director, officer, employee or a consultant by the Company or a
subsidiary except in the case of death, retirement or disability. In the case of
retirement or disability and to the extent otherwise exercisable, Options may be
exercised at any time within three months after the occurrence of retirement or
within one year after the occurrence of disability. The personal representative
of a deceased participant shall have one year from the date of death (but not
beyond the expiration date of the Option) to exercise the exercisable portion of
such Option to the extent that it has accrued on the date of death. If a
Participant's employment as an employee or a consultant by the Company or its
subsidiary terminates for any reason other than death, disability or retirement,
any Option granted to such participant shall immediately terminate. However, a
disabled or retired participant or any other participant upon the occurrence of
other special circumstances may, with the consent of the Committee, exercise an
Option if the disability, retirement or other event causing termination of
employment as an employee or a consultant occurred on or after the six-month
period following the date of grant, notwithstanding the fact that all
installments with respect to such Option had not accrued at such date. If a
participant dies or terminates employment as an employee or a consultant with
the Company or its subsidiary by disability within the aforesaid six-month
waiting period, the Committee may permit the personal representative of such
deceased participant or the disabled participant to exercise any portion of an
Option previously granted to such deceased or disabled participant. No

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Option may be exercisable after January 31, 2005. Subject to such conditions,
Options will become exercisable by the participants in such amounts and at such
times as shall be determined by the Committee in each individual grant. Options
are not transferable except by will or by the laws of descent and distribution.

STOCK APPRECIATION RIGHTS. Stock appreciation rights ("SARs") in connection
with either the grant of Stock Options or ISO Options under the Plan may be
granted by the Committee and exercised by a participant only at such times that
the Committee is comprised of not less than three that are not employees of the
Company and have not been participants in any stock benefit plans during the
preceding one year. Except in the case of death or disability, a SAR may not be
exercised until six months after the date of grant but thereafter may be
exercised and will terminate at such time as the Committee determines. SARs are
exercisable only upon surrender of part or all of the related Option to which
they are attached. SARs also terminate upon termination of the related Option.
They may be exercised only by participants while employed as an employee or a
consultant by the Company or its subsidiary, under the same terms and conditions
as the Stock Options and ISO Options, and like such Options, death, disability
or retirement will provide exceptions. See "Stock Options and ISO Options,"
above. A participant who terminates employment as an employee or a consultant by
reason of disability, retirement or death within the six-month period following
the date of grant of a SAR will automatically lose the SAR as well as the
related Stock Option or ISO Option. However, a disabled or retired participant,
or any other participant upon the occurrence of other special circumstances,
may, with the consent of the Committee, exercise a SAR if the disability,
retirement or other event causing termination of employment as an employee or a
consultant occurred on or after the six-month period following the date of grant
notwithstanding the fact that all installments with respect to such SAR had not
accrued as of such date. If a participant dies or becomes disabled which causes
termination of employment as an employee or a consultant within the aforesaid
six-month waiting period, the Committee may permit the personal representative
of such deceased participant of the disabled participant to exercise any portion
of a SAR previously granted to such deceased or disabled participant. Upon the
exercise of a SAR, the holder is entitled (subject to the Committee's approval)
to receive the excess of the fair market value of the shares for which the right
is exercised over the option price under the related Option.

The Committee has the authority to determine whether the value of the SAR is
paid in cash or shares of Common Stock or both and whether or not the SAR may be
exercised by the participant. The Committee may deny the exercise of the SAR, if
in the Committee's opinion, the performance by the participant is unsatisfactory
or the conduct of the participant has been detrimental to the Company or one of
its subsidiaries. The Committee has no authority to deny the exercise of the
underlying Stock Option or ISO Option pursuant to the terms of the grant.

The utilization of SARs will require a charge to the Company's operations
for each year for the appreciation of the rights which are anticipated will be
exercised. The amount of a charge is dependent upon whether and the extent to
which such rights are granted, and the amount, if any, by which the fair market
value of the Company's Common Stock exceeds the option price provided for in the
related Stock Option or ISO Option. A similar charge will be made for Stock
Options without SARs.

PARTICIPANTS. As of the date of this Proxy Statement, there were no
participants in the Plan. It is impossible at this time to determine who in the
future among the eligible employees and consultants may be selected to receive
additional Stock Options and ISO Options and with or without SARs under the Plan
or the number of shares of the Company's Common Stock which may be optioned to
any eligible employee or consultant. It is expected, however, that these
determinations will be made on the basis of the eligible person's
responsibilities and present and potential contributions to the success of the
Company as indicated by the Committee's evaluation of the position such eligible
person occupies.

ADJUSTMENTS. The total number of shares of the Company's Common Stock which
may be purchased through all classes of Options under the Plan and the number of
shares subject to outstanding Options and

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the related option prices will be adjusted in the cases of changes in capital
structure resulting from a stock dividend, recapitalization, stock split,
consolidation, reorganization, combination, liquidation, stock dividend or
similar transaction, except a dissolution or liquidation of the Company or a
merger or consolidation in which the Company is not the surviving or the
resulting corporation (except a reorganization which has the effect of changing
the Company's place of organization) will cause the Plan and any Option or SAR
granted thereunder to terminate upon the effective date of such dissolution,
liquidation, merger or consolidation.

TERMINATION AND AMENDMENT. The Plan terminates as of midnight on January
31, 2005, but prior thereto may be altered, changed, modified, amended or
terminated by written amendment approved by the Board of Directors. Provided,
that no action of the Board of Directors may, without the approval of
shareholders, increase the total amount of Common Stock which may be purchased
under Options granted under the Plan; withdraw the administration of the Plan
from the Committee; amend or alter the option price of Common Stock under the
Plan; change the manner of computing the spread payable by the Company to a
participant upon the exercise of a SAR; or amend the Plan in any other manner
which would impair the applicability of the exemption afforded by Securities
Exchange Act Rule 16b-3 to the Plan. No amendment, modification or termination
of the Plan shall in any manner adversely affect any Option theretofore granted
under the Plan without the consent of the optionee except as described under
"Adjustments" above.

EFFECTIVE DATE. The Plan became effective June 26, 2000, subject to the
approval of the shareholders at this Annual Meeting. The Company expects that
the ISO Options and Stock Options to be granted under the Plan will be afforded
the federal income tax treatment as described under "Federal Income Tax
Consequences," below.

FEDERAL INCOME TAX CONSEQUENCES. A participant receiving a Stock Option
under the Plan will not be in receipt of income under the Code and the
applicable Treasury Regulations thereunder, upon the grant of the Option.
However, he will realize income at the time the Option is exercised in an amount
equal to the excess of the fair market value of the Common Stock acquired on the
date of exercise or six months thereafter with respect to a participant subject
to Section 16(b) of the Securities Exchange Act of 1934, as amended, unless such
participant elects to include such excess in income on the exercise date under
Section 83 of the Code, over the purchase price. The amount of income realized
by a participant will be treated as ordinary income, and the Company will be
entitled to deduct that same amount. The tax basis of any Common Stock received
by a participant will be its fair market value on the exercise date.

The granting of Stock Options with SARs or ISO Options with SARs will not
produce income under the Code and the applicable Treasury Regulations to the
participant or and will not result in a tax deduction to the Company. Upon
exercise of such rights, any cash a participant receives and the fair market
value on the exercise date of any Common Stock received will be taxable to the
participant as ordinary income. The amount of income recognized by a participant
will be deductible by the Company. The tax basis of any Common Stock received by
a participant will be its fair market value on the exercise date.

Upon the granting of ISO Options, no taxable event will occur to a
participant upon such grant or upon the exercise of ISO Options and that the
Company will not be entitled to federal income tax deductions as the result.
When a participant disposes of the shares acquired under an ISO Option, the
difference between the option price and the selling price will be treated as
long-term capital gain (or loss) if the shares are held for the requisite period
of time. Under these constraints, shares may not be disposed of within two years
from the date of the grant, or within one year after the shares are received in
exercise of the Option. The holding periods are not applicable in the event of
death of the shareholder. If shares acquired pursuant to an ISO Option under the
Plan are disposed of prior to the end of these periods, generally the amount
received which exceeds the price paid for the stock will be ordinary income to
the optionee, and there will be a corresponding deduction to the Company for
federal income tax purposes.

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THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE PROPOSAL TO
APPROVE THE 2000 STOCK OPTION, SAR AND STOCK BONUS PLAN. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY WILL BE SO VOTED
UNLESS SHAREHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.

PROPOSAL 3. APPROVAL OF AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION

GENERAL

The Board of Directors has approved and recommends that the shareholders
approve an amendment to the Articles of Incorporation to authorize the Company
to increase the authorized number of shares of Common Stock from 25,000,000
shares to 100,000,000 shares, and to establish a new class of 1,000,000 shares
of Preferred Stock. The text of the amendment to the Articles of Incorporation
is set forth in Exhibit B to this Proxy Statement. If the Amendment to the
Articles of Incorporation is approved by the shareholders, the Board would be
empowered, with no need for further shareholder approval, to issue additional
shares of Common Stock, and/or to issue Preferred Stock in one or more series,
and with such dividend rates and rights, liquidation preferences, voting rights,
conversion rights, rights and terms of redemption and other rights, preferences,
and privileges as determined by the Board.

PURPOSE OF PROPOSAL

The Board of Directors has determined that it would be in the best interest
of the Company to amend the Articles of Incorporation because corporate
financing and other plans of the Company which are intended to foster its growth
and flexibility. To facilitate the increase in capitalization and the proposed
business plans of the Company, the Board of Directors believes that the proposed
amendment to the Articles of Incorporation will assist the Company in achieving
its business objectives.

Authorizing additional shares of Common Stock and a new class of 1,000,000
shares of Preferred Stock will give the Board greater flexibility in connection
with the Company's future financing requirements and other corporate purposes.
The Board believes that the complexity of modern business financing and possible
future transactions require greater flexibility in the Company's capital
structure than currently exists. If approved, this proposal would permit the
Board to issue Common Stock and/or Preferred Stock from time to time for any
proper corporate purpose including acquisitions of other businesses or proper-
ties and the raising of additional capital. Shares of Common Stock and Preferred
Stock could be issued publicly or privately, in one or more series, and each
series of Preferred Stock will rank senior to the Common Stock of the Company
with respect to dividends and liquidation rights. The Company does not presently
have any plans, agreements, understandings or arrangements that will, or could
result in, the issuance of any Preferred Stock approved pursuant to this
proposal.

POSSIBLE EFFECTS OF AMENDMENT REGARDING PREFERRED STOCK

The ability of the Board, without any additional shareholder approval, to
issue shares of Preferred Stock with such rights, preferences, privileges and
restrictions as determined by the Board could be employed as an anti-takeover
device. The amendment is not intended for that purpose and is not proposed in
response to any specific takeover threat known to the Board. Furthermore, this
proposal is not part of any plan by the Board to adopt anti-takeover devises and
the Board currently has no present intention of proposing anti-takeover measures
in the near future.

Even though not intended by the Board, the possible overall effect of the
amendment on the holders of Common Stock (the "Common Stock holders") may
include the dilution of their ownership interests in the Company, the
continuation of the current management of the Company, prevention of mergers
with or business combinations by the Company and the discouragement of possible
tender offers for its shares of Common Stock.

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Upon the conversion into Common Stock of shares of Preferred Stock issued
with conversion rights, if any, the Common Stock holders' voting power and
percentage ownership of the Company would be diluted and such issuances would
have an adverse effect on the market price of the Common Stock. Additionally,
the issuance of shares of Preferred Stock with certain rights, preferences and
privileges senior to those held by the Common Stock could diminish the Common
Stock holders' rights to receive dividends if declared by the Board and to
receive payments upon the liquidation of the Company.

If shares of Preferred Stock are issued, approval by such shares, voting as
a separate class, could be required prior to certain mergers with or business
combinations by the Company. These factors could discourage attempts to purchase
control of the Company even if such change in control may be beneficial to the
Common Stock holders. Moreover, the issuance of voting Preferred Stock to
persons friendly to the Board could make it more difficult to remove incumbent
management and directors from office even if such changes would be favorable to
shareholders generally.

Finally, if shares of Preferred Stock are issued with conversion rights, the
attractiveness of the Company to a potential tender offeror may be diminished.
The purchase of the additional shares of Common Stock necessary to gain control
of the Company may increase the cost to a potential tender offeror and prevent
the tender offer from being made even though such offer may have been desirable
to many of the Common Stock holders.

The Board believes that the financial flexibility offered by the amendment
outweighs any of its disadvantages. To the extent the proposal may have
anti-takeover effects, the proposal may encourage persons seeking to acquire the
Company to negotiate directly with the Board, enabling the Board to consider the
proposed transaction in a nondisruptive atmosphere and to discharge effectively
its obligation to act on the proposed transaction in a manner that best serves
all the shareholders' interests. It is also the Board's view that the existence
of the Preferred Stock should not discourage anyone from proposing a merger or
other transaction at a price reflective of the true value of the Company and
which is in the interests of its shareholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE AMENDMENT
TO THE ARTICLES OF INCORPORATION.

PROPOSAL 4. INDEPENDENT AUDITOR

The Company has engaged G. Brad Beckstead, C.P.A. to provide it with audit
services. Services provided included the examination of annual financial
statements, limited review of unaudited quarterly financial information, review
and consultation regarding filings with the Securities and Exchange Commission,
assistance with management's evaluation of internal accounting controls,
consultation on financial accounting and reporting matters, and other
verification procedures. Mr. Beckstead will be present at the meeting, will have
the opportunity to make a statement if he desires to do so, and will be
available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL OF
G. BRAD BECKSTEAD AS THE INDEPENDENT AUDITOR OF THE COMPANY FOR THE
FISCAL YEAR ENDING JANUARY 31, 2001.

OTHER BUSINESS

The Board of Directors knows of no business which will be presented for
action at the meeting other than that described in the Notice of Annual Meeting
of Shareholders. It is intended, however, that the persons authorized under the
proxies of the Board of Directors may, in the absence of instructions to the
contrary, vote or act in accordance with their judgment with respect to any
other proposal properly presented for action at the Annual Meeting.

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SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING

Any shareholder may present proposals on any matter which is a proper
subject for consideration by the shareholders at the 2001 Annual Meeting of
Shareholders, which the Company currently anticipates will be held on or before
October 1, 2001. In order to be considered for inclusion in the Proxy Statement
and form of proxy (or Disclosure Statement in the event proxies are not
solicited by the Board of Directors of the Company) for the 2001 Annual Meeting
of Shareholders, a proposal must be received by the Secretary of the Company no
later than 120 days prior to October 1, 2001. It is suggested that a shareholder
desiring to submit a proposal do so by sending the proposal certified mail,
return receipt requested, addressed to the Secretary of the Company at its
principal office, 1000 W. Bonanza Road, Las Vegas, Nevada 89106. Detailed
information for submitting proposals will be provided upon written request
addressed to the Secretary of the Company.

ADDITIONAL INFORMATION

The Company's financial statements for the fiscal years ended January 31,
2000, and 1999 and the Statements of Operations, Statements of Stockholders'
Equity and Statements of Cash Flows for the fiscal years then ended are
incorporated herein by reference to the Annual Report to Shareholders.

THE COMPANY WILL PROVIDE A COPY OF ITS MOST RECENT FORM 10-KSB ANNUAL
REPORT AND FORM 10-QSB QUARTERLY REPORT TO ITS STOCKHOLDERS UPON THEIR
WRITTEN REQUEST, INCLUDING THEIR FINANCIAL STATEMENTS AND SCHEDULES, TO
MR. WILLIAM E. MCNERNEY, THE SECRETARY OF THE COMPANY, AT 1000 W.
BONANZA ROAD, LAS VEGAS, NEVADA 89106.

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

It is important that proxies be returned promptly. Therefore, shareholders
who do not expect to attend the Annual Meeting in person are requested to
complete and return the proxy card as soon as possible.

By Order of the Board of Directors

[SIGNATURE]
William E. McNerney
SECRETARY

Las Vegas, Nevada
August 18, 2000

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EXHIBIT A
TO
PROXY STATEMENT

POWER TECHNOLOGY, INC.
2000 STOCK OPTION, SAR AND STOCK BONUS PLAN

ARTICLE 1

GENERAL PROVISIONS

1.1 PURPOSE. The purpose of the Power Technology, Inc. 2000 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 three 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 2,000,000 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.

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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 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 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, 2005, 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

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<PAGE>
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 June 26, 2000, 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, and upon the issuance of a favorable opinion of counsel with respect to
certain tax consequences of the Plan as it affects Stock Options, ISO Options
and SARs.

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.

(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.

16
<PAGE>
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.

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

17
<PAGE>
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
pro-vided in Subsection 2.l(c) hereof, with regard to the death or Disability of
a Participant), nor more than 10 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.

(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
em-ployee 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

18
<PAGE>
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 subsidi-ary
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.

(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

19
<PAGE>
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

20
<PAGE>
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.

(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
em-ployee 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

21
<PAGE>
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.

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
-----------------------------------
Lee A. Balak, President
Date Plan adopted and approved by
the Board of Directors: June 26, 2000.
Date Plan adopted and approved by
the Stockholders: , 2000.

22
<PAGE>
EXHIBIT B
TO
PROXY STATEMENT

FORM OF:
AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
POWER TECHNOLOGY, INC.

TO THE SECRETARY OF STATE OF THE STATE OF NEVADA:

Pursuant to the provisions of the Nevada Business Corporation Act, Power
Technology, Inc., a Nevada corporation, adopts the following Amendment to its
Articles of Incorporation by the repeal of the Fourth article thereof in its
entirety, and by the substitution therefor of a new Fourth article, as follows:

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

"FOURTH. The total number of shares of all classes of capital stock
which the Corporation is authorized to issue is 101,000,000 shares, of
which 100,000,000 shares shall be non-assessable shares of common stock,
each share having a par value of $.001 (the "Common Stock"), and
1,000,000 shares shall be preferred stock, each share having a par value
of $.01 (the "Preferred Stock").

The Preferred Stock may be divided into and issued in series. The
Board of Directors of the Corporation is authorized to divide the
authorized shares of Preferred Stock into one or more series, each of
which shall be so designated as to distinguish the shares thereof from
the shares of all other series and classes. The Board of Directors of
the corporation is authorized, within any limitations prescribed by law
and this Article, to fix and determine the designations, rights,
qualifications, preferences, limitations and terms of the shares of any
series of Preferred Stock including but not limited to the following.

(a) The rate of dividend, the time of payment of dividends,
whether dividends are cumulative, and the date from which any
dividends shall accrue;

(b) Whether shares may be redeemed, and, if so, the
redemption price and the terms and conditions of redemption;

(d) Sinking fund or other provisions, if any, for the
redemption or purchase of shares;

(e) The terms and conditions on which shares may be
converted, if the shares of any series are issued with the
privilege of conversion;

(f) Voting powers, if any (notwithstanding the ELEVENTH
Article hereof, the Board of Directors may authorize shares of
non-voting Preferred Stock), provided that if any of the Preferred
Stock or series thereof shall have voting rights, such Preferred
Stock or series shall vote only on a share for share basis with
the Common Stock on any matter, including but not limited to the
election of directors, for which such Preferred Stock or series
has such rights; and

23
<PAGE>
(g) Subject to the foregoing, such other terms,
qualifications, privileges, limitations, options, restrictions,
and special or relative rights and preferences, if any, of shares
or such series as the Board of Directors of the Corporation may,
at the time so acting, lawfully fix and determine under the laws
of the State of Nevada.

The Corporation shall not declare, pay or set apart for payment any
dividend or other distribution (unless payable solely in shares of
Common Stock or other class of stock junior to the Preferred Stock as to
dividends or upon liquidation) in respect of Common Stock, or other
class of stock junior to the Preferred Stock, nor shall it redeem,
purchase or otherwise acquire for consideration shares of any of the
foregoing, unless dividends, if any, payable to holders of Preferred
Stock for the current period (and in the case of cu-mulative dividends,
if any, payable to holders of Preferred Stock for the current period
(and in the case of cumulative dividends, if any, for all past periods)
have been paid, are being paid or have been set aside for payment, in
accordance with the terms of the Preferred Stock, as fixed by the Board
of Directors.

In the even of the liquidation of the Corporation, holders of
Preferred Stock shall be entitled to receive, before any payment or
distribution on the Common Stock or any other class of stock junior to
the Preferred Stock upon liquidation, a distribution per share in the
amount of the liquidation preference, if any, fixed or determined in
accordance with the terms of such Preferred Stock plus, if so provided
in such terms, an amount per share equal to accumulated and unpaid
dividends in respect of such Preferred Stock (whether or not earned or
declared) to the date of such distribution. Neither the sale, lease or
exchange of all or substantially all of the property and assets of the
Corporation, nor any consolidation or merger of the Corporation, shall
be deemed to be a liquidation for the purposes of this Article."

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

This Amendment to the Articles of Incorporation was approved by the
shareholders of the corporation on September 14, 2000, and the number of shares
of common stock of the Corporation voting for the Amendment were sufficient for
approval.

Power Technology, Inc.
By: /s/ LEE A. BALAK
-----------------------------------
[SEAL] Lee A. Balak, President
ATTEST:

[SIGNATURE]
-----------------------------------------
William E. McNerney, Secretary

24
<PAGE>
PROXY POWER TECHNOLOGY, INC. PROXY
1000 W. BONANZA ROAD
LAS VEGAS, NEVADA 89106

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF POWER TECHNOLOGY,
INC.

The undersigned hereby appoints Lee A. Balak and William E. McNerney as
Proxies, each with the power to appoint their substitute, and hereby appoints
and authorizes either of them to represent and vote as designated below, all the
shares of Common Stock, $.001 par value, of Power Technology, Inc. (the
"Company") held of record by the undersigned on August 1, 2000, at the annual
meeting of shareholders to be held on Thursday, September 14, 2000, or any
adjournment thereof.
1. To elect five directors to the Board of Directors of the Company.
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(to vote for all nominees below)
(except as marked to the contrary below)
Lee A. Balak, William E. McNerney, Alvin A. Snaper, Hugo P. Pomrehn, and F.
Bryson Farrill.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below).

----------------------------------------------------------------------------
2. To consider and act upon a proposal to ratify and approve the Company's 2000
Stock Option, SAR and Stock Bonus Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. To consider and act upon a proposal to approve the Amendment of the Articles
of Incorporation of the Company.
/ / FOR / / AGAINST / / ABSTAIN
4. To ratify the selection of G. Brad Beckstead, C.P.A., as independent auditor
for the Company for the year ending January 31, 2001.
/ / FOR / / AGAINST / / ABSTAIN
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.

(continued and to be signed on other side)
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2, 3, 4 AND 5.

<TABLE>
<S> <C>
Number of Shares: Please sign exactly as name appears below.
------------------------ When shares are held by joint tenants, both
should
sign. When signing as attorney, as executor,
administrator, trustee or guardian, please
give full title as such. If a corporation,
please sign in full corporate name by
president or other authorized officer. If a
partnership, please sign in partnership name
by authorized person.

Please Print Name: Date: , 2000
------------------------------------------------------

------------------------------------------------------ ---------------------------------------------
Signature
---------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>