POLYMER SOLUTIONS INC
EX-10.2
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>o07501exv10w2.htm
<DESCRIPTION>EX-10.2
<TEXT>
<HTML>
<HEAD>
<TITLE>1998 Stock Option Plan</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="right"><FONT size="2"><B>EXHIBIT 10.2</B>
</FONT>

<P align="center"><FONT size="2"><B>POLYMER SOLUTIONS, INC.</B>
</FONT>

<P align="center"><FONT size="2"><B>Directors, Consultants and Employees 1998 Stock Option Plan</B>
</FONT>

<P align="center"><FONT size="2"><B>INTRODUCTION</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Polymer Solutions, Inc. (the &#147;Company&#148;) is adopting the Polymer Solutions,
Inc. Directors, Consultants and Employees 1998 Stock Option Plan (the &#147;Stock
Option Plan&#148; or the &#147;Plan&#148;) to provide Directors, Consultants and Employees
with non-qualified stock options (the &#147;Stock Options&#148;). In association with
the Company&#146;s Stock Option Program, the Company has initiated the use of an
Economic Value Added calculation method (the &#147;EVA Plan&#148;) as a mechanism by
which to determine the number of stock options to be allocated to individual
participants in the Company&#146;s Stock Option Plan.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EVA is based on the performance measure of the creation of economic value.
EVA reflects the benefits and costs of capital employment. Managers create
value when they employ capital in an endeavor that generates a return that
exceeds the cost of the capital employed. EVA is the operating profit
remaining after taxes have been paid and a minimum return has been earned on
the capital employed. The EVA Plan will reward achievement based on increases
in economic value and penalize on any decreases in economic value, and will
operate over a long-term horizon. The EVA Plan is designed to operate in such
a manner as to encourage consistent improvement in EVA over the long term.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Compensation Committee has determined that Polymer Solutions will
grant Stock Options as an award for improved EVA. Stock Options will be
granted in accordance with this Stock Option Plan described in detail
throughout this document. Once the Stock Options are granted and upon
regulatory approval, a Stock Option Agreement will then be entered into between
the Company and the individual Director, Consultant or Employee.
</FONT>

<P align="center"><FONT size="2"><B>SECTION 1 DEFINITIONS</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Wherever used herein, the masculine pronoun shall be deemed to include the
feminine, and the singular to include the plural, unless the context clearly
indicates otherwise, and the following words and phrases shall, when used
herein, have the meanings set forth below:
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Act&#148; means the Securities Exchange Act of 1934 and the
British Columbia Securities Act and Regulations.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Agreement&#148; means a stock option agreement, which is an
agreement subject to the terms of the Plan.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Board of Directors&#148; means the Board of Directors of the
Company.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.4</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;CDNX&#148; means the Canadian Venture Exchange.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.5</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Code&#148; means the Internal Revenue Code of 1986, as amended
and the Canadian Income Tax Act.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.6</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Committee&#148; means the Compensation Committee appointed by the
Board of Directors to administer the Stock Option Plan.<BR></FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.7</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Company&#148; means Polymer Solutions, Inc.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">1</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.8</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Consultant&#148; means a consultant retained to provide ongoing
technical, business or management services to the Company or a
Subsidiary, under a written contract. Excluded are services
provided in connection with the sales of securities and promotional,
investor relations, or fiscal agency.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.9</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Director&#148; means a director of the Company or a Subsidiary.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.10</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Disability&#148; means a condition described in Code Section
22(e)(3), as amended from time to time. In the event of a dispute,
the determination of Disability will be made by the Committee and
must be supported by advice of a physician competent in the area to
which such Disability relates.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.11</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Disinterested Security Holder Approval&#148; means the majority
of the votes cast at a security holders meeting of the issuer of the
option, other than votes attaching to securities beneficially owned
by related persons.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.12</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Employee&#148; means any person who is employed by the Company or
a Subsidiary for purposes of the Federal Insurance Contributions Act
and as described in the Canadian Income Tax Act.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.13</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;EVA&#148; means Economic Value Added Incentive Compensation,
which determines the basis in quantifying the number of stock
options to grant to each participant.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.14</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Fiscal Year&#148; means the fiscal year of the Company, which
runs from April 1 through March&nbsp;31.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.15</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Option&#148; means a non-qualified Stock Option to purchase
Shares of the Company granted pursuant to and in accordance with the
provisions of the Stock Option Plan.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.16</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Optionee&#148; means a Director, Consultant or Employee who is
granted a Stock Option pursuant to and in accordance with the
provisions of the Stock Option Plan.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.17</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Option Shares&#148; means Shares subject to and issued pursuant
to an exercise of an Option granted under the Stock Option Plan.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.18</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Participant&#148; means any Employee, Director or Consultant
designated as a participant by the Chairman and CEO &#038; President and
approved by the Compensation Committee, in its sole discretion,
provided that, with respect to individuals who may be deemed to be
insiders under Section&nbsp;16(b) of the Securities Exchange Act of 1934
and the rules promulgated thereunder, the Committee will have the
sole right to designate such individuals as participants.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.19</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Plan&#148; means the Polymer Solutions, Inc.&#146;s 1998 Directors,
Consultants and Employees Stock Option Plan.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">2</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.20</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Share&#148; means a share of Common Stock of the Company and/or
any share or shares of stock of another corporation or corporations
issued in exchange for a share of Common Stock of the Company as a
result of a merger, consolidation or other adjustment to the capital
structure of the Company.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.21</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Stock Option Plan&#148; means Polymer Solutions, Inc.&#146;s 1998
Directors, Consultants and Employees Stock Option Plan as approved
by relevant regulatory authorities and the shareholders.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">1.22</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
&#147;Subsidiary&#148; means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if
at the time of the granting of the Option, each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2"><B>SECTION 2 ADMINISTRATION</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">2.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
<U>Delegation to Committee.</U> The Stock Option Plan shall be
administered by the Committee. The members of the Committee shall
be appointed by the Board of Directors. The Committee shall consist
of at least one or more members of the Board of Directors.
Committee members are granted predetermined allotments of options
each year as determined by the Shareholders and are not eligible to
receive any further grants of Stock Options under the Plan. The
Board of Directors may from time to time remove members from or add
members to the Committee. Vacancies on the Committee shall be
filled by the Board of Directors.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">2.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
<U>Committee Actions.</U> The Committee shall select one of its
members as chairman, and shall hold meetings at such times and
places as it may determine. The Committee, as appropriate, shall
work with the Chairman and CEO &#038; President of the Company in all
aspects of the administration of the Stock Option Plan. Acts
approved by the majority of the Committee in a meeting at which a
quorum is present or acts reduced to or approved in writing by a
majority of the members of the Committee shall be the valid acts of
the Committee. A quorum shall be present at any meeting of the
Committee, which a majority of the Committee members attend.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">2.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
<U>Finality.</U> The Committee shall have the authority in its sole
discretion to interpret the Stock Option Plan, to grant Stock
Options under and in accordance with the Plan; to prescribe, amend
and rescind rules and regulations relating to the Plan; to determine
the terms and provisions of the respective Stock Option agreements
and to make all other determinations and to take all other actions
it deems necessary or advisable for the implementation and
administration of the Stock Option Plan or Agreements thereunder,
except to the extent such powers are herein reserved by the Board of
Directors. All actions of the Board of Directors and the Committee
shall be final, conclusive, and binding upon the Optionees. No
member of the Board of Directors or the Committee shall be liable
for any action taken or decision made in good faith relating to the
Plans or any grant of an Option thereunder.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">3</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center"><FONT size="2"><B>SECTION 3 ELIGIBILITY</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">3.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Stock Options may be granted only to Officers, Employees and
Consultants of the Company, or any subsidiary or affiliate of the
Company.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">3.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Directors who are not Employees shall be eligible to receive
Options under the Plan as determined by the Committee and on the
terms and subject to the restrictions hereinafter set forth.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">3.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Directors who are not Employees and are members of the
Committee shall be eligible to receive options, but subject to a
predetermined allotment each year, which the shareholders have
ratified.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"><B>SECTION 4 SHARES SUBJECT TO PLAN</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">4.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
The aggregate number of Option Shares that may be issued
under the Plan shall at no time exceed 1,650,000 (the &#147;Maximum Plan
Shares&#148;). The limitations established by this Section shall be
subject to adjustment in accordance with the provisions of the Plan.
The Shares are hereby reserved exclusively for issuance pursuant to
Stock Options. At no time may the Company have outstanding under the
Plan, Stock Options subject to Section&nbsp;16 of the Exchange Act and
shares of Stock issued in respect of Stock Options under the Plan in
excess of the Maximum Plan Shares and subject to the limits on
Options and Stock Appreciation Rights under Section&nbsp;162(m) of the
Code and the regulations thereunder for compensation to be treated
as qualified performance based compensation.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">4.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
In the event that an Option expires or is terminated for any
reason, the Option Shares allocable to the unexercised portion of
such Option may again be subjected to an Option under the Plan.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">4.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
In the event that an Optionee delivers Shares as payment of
the exercise price for an Option, such Shares may be subjected to
Options under this Plan.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"><B>SECTION 5 STOCK OPTIONS TERMS AND CONDITIONS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Each member of the Compensation Committee or non-employee
Director who elects to not participate in the EVA Plan, shall be
granted an annual Option in accordance with the Stock Option Plan.
Each Committee Member is allowed to purchase a fixed number of
Shares of the Company in consideration of their membership on the
Board or as a member of the Committee. Each grant shall be made
January&nbsp;21 of each year commencing on January&nbsp;21, 1999, and
exercisable for a term of three years.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
At the Annual General Meeting on August&nbsp;17, 1999, the
Shareholders of the Company ratified the automatic grant of 20,000
stock options per year to each Committee Member or non-employee
Director, for four years commencing January&nbsp;21, 1999, after which, a
further proposal will be presented and voted upon by the
shareholders. The Shareholders also approved each member of the
Committee or non-employee Director shall have a cumulative maximum
amount of 60,000 options outstanding at any one time, inclusive of
options granted previously.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">4</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
The aggregate number of shares that may be reserved for
issuance under the option plan to any one Director must not exceed
five (5)&nbsp;percent of the issued and outstanding securities of the
Company, as of the date of the grant of the option to the Director.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.4</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
The aggregate number of shares that may be reserved for
issuance under option to any one Consultant must not exceed two (2)
percent of the issued and outstanding securities of the Company, as
of the date of the grant of the option to the Consultant.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.5</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Where the options are granted to a Consultant who is a
related person, the securities may not be issued upon the exercise
of the option, unless the Company has received disinterested
security holder approval.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.6</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
The effective date of a Stock Option will be the date on
which the Committee has approved the terms and conditions of the
Stock Option and has determined the recipient of the Stock Option
and the number of shares covered by the Stock Option, and has taken
all such other actions necessary to complete the grant of the Stock
Option.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.7</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Each Option granted under the Plan must be evidenced by a
Stock Option Agreement. At the time any Option is granted, the
Committee will determine whether the Option is to be an incentive
stock option described in Code Section&nbsp;422 or a non-qualified stock
option, and the Option must be clearly identified as to its status
as an incentive stock option or a non-qualified stock option.
Incentive stock options may only be granted to Directors,
Consultants or Employees of the Company or any Subsidiary. At the
time any incentive stock option granted under the Plan is exercised,
the Company will be entitled to legend the certificates representing
the shares of Stock purchased pursuant to the Option to clearly
identify them as representing the shares purchased upon the exercise
of an incentive stock option. An incentive stock option may only be
granted within ten (10)&nbsp;years from the earlier of the date the Plan
is adopted by the Board of Directors of the Company or approved by
the Company&#146;s stockholders.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.8</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
The Term of each option agreement, with the exception of
automatic grant to a Committee Member or non-employee Director, must
not exceed five (5)&nbsp;years from the date of the grant of the option.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.9</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Each Option granted will be exercisable as provided in the
terms of the Agreement to the extent vested, as determined by the
Committee. In conjunction with the EVA Plan, no more than one-third
of any total EVA Award attributable to a participant will be
allocated in the form of options in any one-year. This staged
allocation format is intended to eliminate the need for a vesting
function within the option agreement.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.10</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">Each Option granted shall be exercisable over the Director&#146;s
period of continued service as a member of the Board of Directors or
as a Consultant according to the schedule set forth as Schedule&nbsp;A on
the option agreement.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">5.11</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">In the case of incentive stock options, the aggregate Fair
Market Value (determined as at the date an incentive stock option is
granted) of stock with respect to which stock options intended to
meet the requirements of Code Section&nbsp;422 become exercisable for the
first time by an individual during any calendar year under all plans
of the Company and its Subsidiaries may not exceed $100,000;
provided further, that if the limitation is exceeded, the incentive stock option(s) which cause the limitation
to be exceeded will be treated as non-qualified stock&nbsp;option(s).</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">5</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="top">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="91%">&nbsp;</TD>
</TR>


<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">5.12</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" valign="top"><FONT size="2">The Minimum exercise price of each share granted pursuant to
an Option shall be the Fair Market Value of a Share on the day the
Option is granted. &#147;Fair Market Value&#148; with regard to a date means:</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(a)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
the last closing bid price at which Shares have
been quoted on that date or the last trading date prior to
that date as reported by the Nasdaq Stock Market or if the
shares of Stock are actively trading on the Canadian Venture
Exchange (&#147;CDNX&#148;) or the Toronto Stock Exchange (&#147;TSE&#148;), the
average closing price for the ten trading days or the last
trade to occur, immediately preceding the day Notice is
received by the exchange, to minimum price of $0.15 per share,
or</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(b)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
if Shares are not traded on a securities
exchange, but are reported by the Nasdaq Stock Market and
market information is published on a regular basis in The Wall
Street Journal, the average of the published high and low
sales prices for that date or the last business day prior to
that date as published in <U>The Wall Street Journal</U>, or</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(c)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
if such market information is not published on a
regular basis, the bid prices of Shares in the
over-the-counter market on that date or the last business day
prior to that date, as reported by the Nasdaq Stock Market,
or, if not so reported, by a generally accepted reporting
service, or</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(d)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
if Shares are not publicly traded, as determined
in good faith by the Committee with due consideration being
given to (i)&nbsp;the most recent independent appraisal of the
Company, if such appraisal is not more than twelve months old
and (ii)&nbsp;the valuation methodology used in any such appraisal
provided that, for purposes of granting awards other than
incentive stock options, Fair Market Value of the Shares may
be determined by the Committee by reference to the average
market value determined over a period certain or as of
specified dates, to a tender offer price for the Shares (if
settlement of an award is triggered by such an event) or to
any other reasonable measure of fair market value.</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">5.13</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" valign="top"><FONT size="2">Each Option granted pursuant to this Plan shall be authorized
by the Committee, shall be evidenced by a Stock Option Agreement and
shall be subject to such additional term, conditions and
restrictions as the Committee may determine to be appropriate. Each
Stock Option Agreement or Stock Option Program is subject to the
terms of the Plans and any provisions contained in the Stock Option
Agreement or Stock Option Program that are inconsistent with the
Plan are null and void.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2"><B>SECTION 6 TERMINATIONS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="top">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">6.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Death. If a Participant dies at any time when he is entitled
to exercise, the Participants option shall terminate twelve (12)
months after termination due to death or prior, if the option is
terminated by its terms. The option may be exercised by the
executor or administrator or the person or persons to whom the
option is transferred by will or applicable laws of descent and
distribution but only to the extent the options were exercisable on
the date the Participant ceased to be employed by the Company due to
his death.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">6</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="89%">&nbsp;</TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">6.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Disability. A Participant who suffers a &#147;permanent
incapacitating disability&#148; while in the employ of the Company such
Participant options, or any unexercised portion, by reason of
disability shall terminate twelve (12)&nbsp;months after the effective
date of Disability death or prior, if the option is terminated by
its terms. A Participant shall be deemed to suffer a &#147;permanent
incapacitating disability&#148; if, because of physical or mental
condition, the Participant is unable for a period of at least one
year to perform the principal duties of his occupation as determined
by a physician.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">6.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Retirement. A Participant who retires with the consent of
the Company, prior to the expiration date of the option, such
Participant&#146;s option, or any unexercised portion may be exercised
within three (3)&nbsp;months of retirement. During the three (3)&nbsp;month
period, the Participant may exercise any unexercised option granted,
but only to the extent such options were exercisable.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">6.4</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Termination of Employment</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">(a)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">Involuntary Termination for Cause and Voluntary
Termination without Good Reason:<BR>
If a Participant whose employment with the Company is
involuntarily terminated for Cause, or who voluntarily
terminates employment with the Company without Good Reason
(other than, as provided in Sections&nbsp;10.2 and 10.3), such
Participant&#146;s option shall terminate immediately upon the date
of termination of employment.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">(b)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">Involuntary Termination without Cause and
Voluntary Termination for Good Reason:<BR>
If a Participant&#146;s employment with the Company is involuntarily
terminated without Cause, or voluntarily terminated for Good
Reason (other than as provided in Sections&nbsp;10.2 and 10.3), such
Participant&#146;s option, or any unexercised portion, shall
terminate thirty (30)&nbsp;days after the date of termination of
employment. During the thirty (30)&nbsp;day period, the Director or
Consultant may exercise any unexercised option granted, but only
to the extent such options were exercisable.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="5" valign="top"><FONT size="2">Additional Definitions, as used herein;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
       <TD><FONT size="2">&nbsp;</FONT></TD>
       <TD><FONT size="2">&nbsp;</FONT></TD>
       <TD colspan="4" valign="top"><FONT size="2">&#145;Cause&#146; shall mean:</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(i)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
any act or acts of the Participant constituting a felony (or
its equivalent) under the laws of the United States, any state
thereof of any foreign jurisdiction;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(ii)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">any material breach by the Participant of any employment
agreement with the Company or the policies of the Company or the
willful and persistent (after written notice to the Participant)
failure or refusal of the Participant to comply with any lawful
directive of the Board or of the Board of Directors of the
subsidiary of the Company which employs such Participant;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(iii)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">a course of conduct amounting to gross neglect, willful
misconduct or dishonesty; or</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(iv)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">any misappropriation of material property of the Company by
the Participant or any misappropriation of a corporate or business
opportunity of the Company by the Participant.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">7</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="89%">&nbsp;</TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="4" align="left" valign="top"><FONT size="2">
&#145;Good Reason&#146; shall mean:</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(i)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
any material reduction by the Company of such Participant&#146;s
duties, responsibilities or titles; or</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(ii)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">any involuntary removal of such Participant from any position
previously held (except in connection with a promotion or a
termination for Cause, death or disability, or the voluntary
termination by the Participant other than for Good Reason);</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(iii)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">such other reasons (including non-employment related
reasons) as may be approved by the Committee, in its sole
discretion, from time to time.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">6.5</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Breach of Agreement. Notwithstanding any other provision of
the Plan or any other agreement, in the event that a Participant
shall breach any non-competition agreement with the Company or
breach any agreement with respect to the post-employment conduct of
such Participant, the options shall terminate immediately.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">6.6</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Tender Offer. Notwithstanding any other provision of the
Plan to the contrary, upon the occurrence of a successful tender
offer for, or the purchase by a person, or by a group as defined in
Section&nbsp;14(d) (2)&nbsp;of the Securities Exchange Act of 1934, of 45% or
more of the voting stock of the Company, all Participants shall have
a vested right to exercise their options.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"><B>SECTION 7 GENERAL PROVISIONS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="89%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">7.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Withholding of Taxes. Whenever the Company proposes or is
required to issue Shares to an Optionee who is or was an employee of
the Company or a Subsidiary, or to his legatee or legal
representative under this Plan, pursuant to the exercise of an
Option granted under this Plan, the Company shall have the right to
require the recipient to remit to the Company an amount sufficient
to satisfy any federal, state and local withholding tax requirement,
if any, prior to the delivery of any certificate or certificates for
such Shares. An Optionee must pay the withholding tax in cash or by
certified check or by the Company deducting a sufficient number of
Shares from the Option Shares issued to satisfy withholding taxes,
in accordance with the Agreement.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">7.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Expenses. All expenses and costs in connection with the
adoption and administration of the Plan shall be borne by the
Company.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">7.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
No Prior Right or Offer. Except and until expressly granted
pursuant to the Plan, nothing in the Plan shall be deemed to give
any employee any contractual or other right to participate in the
benefits of the Plan.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">7.4</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Rights Personal to Employee. Any rights to an employee under
the Plan shall be personal to such employee, shall not be
transferable (except by will or pursuant to the laws of descent or
distribution), and shall be exercisable, during his lifetime, only
by such employee.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">7.5</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Right as a Stockholder. An Optionee or a transferee of an
Optionee shall have no rights as a stockholder with respect to any
Option or Option Shares until the date of the issuance</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">8</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="89%">&nbsp;</TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
of a stock certificate to him for the Option Shares. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other
rights for which the record date is prior to the date the stock
certificate is issued, except as otherwise provided in the Plan.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">7.6</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
No obligation to exercise option. The granting of an Option
shall impose no obligation upon the Optionee to exercise the Option.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">7.7</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Action Taken in Good Faith; Indemnification. The Committee
may employ attorneys, consultants, accountants or other persons and
the Company&#146;s directors and officers shall be entitled to rely upon
the advice, opinions or valuations of any such persons. All actions
taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all
employees who have received options, as well as the Company and all
other interested parties. No member of the Committee, nor any
officer, director, employee or representative of the Company, or any
of its affiliates acting on behalf of or in conjunction with the
Committee, shall be personally liable for any action, determination,
or interpretation, whether of commission or omission, taken or made
with respect to the Plan, except in circumstances involving actual
bad faith or willful misconduct. In addition to such other rights of
indemnification as they may have as members of the Board, as members
of the Committee or as officers or employees of the Company, all
members of the Committee and each and any officer, employee or
representative of the Company or any of its subsidiaries acting on
their behalf shall be fully indemnified and protected by the Company
with respect to any such action, determination or interpretation
against the reasonable expenses, including attorneys&#146; fees actually
and necessarily incurred, in connection with the defense of any
civil or criminal action, suit or proceeding, or in connection with
any appeal therein, to which they or any of them may be a party by
reason of any action taken or failure to act under or in connection
with the Plan or an award granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by Company) or
paid by them in satisfaction of a judgment in any action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person
claiming indemnification shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
Expenses (including attorneys&#146; fees) incurred in defending a civil
or criminal action, suit or proceeding shall be paid by the Company
in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by any person claiming
indemnification to repay such amount unless it shall ultimately be
determined that such member is entitled to be indemnified as
provided in this Section.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">7.8</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Changes in Capitalization; Merger; Reorganization.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(a)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
The number of Option Shares and the Exercise
Price shall be proportionately adjusted for any increase or
decrease in the number of shares of Common Stock resulting
from a subdivision or combination of shares or the payment of
a stock dividend in shares of Common Stock to holders of
outstanding shares of Common Stock or any other increase or
decrease in the number of shares of Common Stock outstanding
effected without receipt of consideration by the Company.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">9</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="89%">&nbsp;</TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(b)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
In the event of a merger, consolidation or other
reorganization involving the Company or a tender offer for
shares of Common Stock, the Committee may, in its sole
discretion, adjust the number and class of securities subject
to the Option, with a corresponding adjustment made in the
Exercise Price; substitute a new option to replace the Option;
or accelerate the termination of the Option Period to a date
prior to the occurrence of any event specified in Section&nbsp;6
above; or terminate the Option in consideration of payment to
Optionee of the excess of the then Fair Market Value (as
defined in the Plan) of the vested Option Shares over the
Exercise Price of the vested Option Shares.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">(c)</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
The existence of the Plan and any options shall
not affect in any way the right or power of the Company to
make or authorize any adjustment, reclassification,
reorganization or other change in its capital or business
structure, any merger or consolidation of the Company, any
issue of debt or equity securities having preferences or
priorities as to the Common Stock or the rights thereof, the
dissolution or liquidation of the Company, any sale or
transfer of all or any part of its business or assets, or any
other corporate act or proceeding.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">7.9</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Discretion of the Committee. All actions, calculations and
decisions to be made regarding this Plan will be made in the sole
discretion of the Committee, unless otherwise explicitly stated.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"><B>SECTION 8 LIMITATIONS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="89%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">8.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
No Continued Employment. Nothing contained in the Plan or
any Stock Option confers upon any Participant the right to continued
employment or services or in any way abridge the rights of the
Company and its Participants to determine the terms and conditions
of employment and whether to terminate employment of any Employee,
Director or Consultant.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">8.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
No Vested Rights. Except as otherwise provided herein, no
Director, Consultant, Employee or other person shall have any claim
of right (legal, equitable, or otherwise) to any award, allocation,
or distribution or any right, title or vested interest in any Stock
Option, other than specifically provided with regard to the death of
a Participant, and no Director, Consultant, Officer or Employee of
the Company or any Participant or any other person shall have any
authority to make representations or agreements to the contrary. No
interest conferred herein to a Participant shall be assignable or
subject to claim by a Participant&#146;s creditors.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">8.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
No Part of Other Benefits. The benefits provided in this
Plan shall not be deemed a part of any other benefit provided by the
Company to its employees. The Company assumes no obligation to Plan
Participants except as specified herein. This is a complete
statement, along with the Schedules and Appendices attached hereto
and the terms and conditions of the Stock Option Agreement.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">8.4</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" align="left" valign="top"><FONT size="2">
Other Plans. Nothing contained herein shall limit the
Company or the Committee&#146;s power to grant bonuses or other
compensation to Directors, Consultants or Employees of the Company,
whether or not the Participants are eligible under the Plan.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">10</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center"><FONT size="2"><B>SECTION 9 RESTRICTIONS ON DELIVERY AND SALE OF SHARES; LEGENDS</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">9.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Each Stock Option is subject to the condition that if at any
time the Committee, in its discretion, shall determine that the
listing, registration or qualification of the shares covered by such
Stock Option upon any securities exchange or under any provincial,
state or federal law is necessary or desirable as a condition of or
in connection with the granting of such Stock Option or the purchase
or delivery of shares thereunder, the delivery of any or all shares
pursuant to such Stock Option may be withheld unless and until such
listing, registration or qualification shall have been effected. If
a registration statement is not in effect under the Securities Act
of 1933 or any applicable state securities laws with respect to the
shares of Stock purchasable or otherwise deliverable under Stock
Options then outstanding, the Committee may require, as a condition
of exercise of any Option or as a condition to any other delivery of
Stock pursuant to a Stock Option, that the Participant or other
recipient of a Stock Option represent, in writing, that the shares
received pursuant to the Stock Option are being acquired for
investment and not with a view to distribution and agree that the
shares will not be disposed of except pursuant to an effective
registration statement, unless the Company shall have received an
opinion of counsel that such disposition is exempt from such
requirement under the Securities Act of 1933 and any applicable
state securities laws. The Company may include on certificates
representing shares delivered pursuant to a Stock Option such
legends referring to the foregoing representations or restrictions
or any other applicable restrictions on resale as the Company, in
its discretion, shall deem appropriate.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">9.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Listing and Legal Compliance. The Committee may suspend the
exercise or payment of any Stock Option so long as it determines
that securities exchange listing or registration or qualification
under any securities laws is required in connection therewith and
has not been completed on terms acceptable to the Committee.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2"><B>SECTION 10 AMENDMENT AND TERMINATION OF THE PLAN</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="93%"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">10.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">This Plan may be amended, suspended or terminated at any time
by the Board upon the recommendation of the Committee without
shareholder approval; provided, however, that the Board of Directors
may condition any amendment on the approval of the shareholders of
the Company, if such approval is necessary or advisable with respect
to tax, securities or other applicable laws to which the Company,
this Plan, optionees or eligible Directors, Consultants and
Employees are subject. Notice of any such amendment, suspension or
termination shall be given promptly to each Participant. No such
amendment or termination without the consent of the holder of a
Stock Option may adversely affect their rights of the Participant
under such Stock Option.</FONT></TD>
</TR>

<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">10.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">Notice. Any notice to be given pursuant to the provisions of
the Plan shall be in writing and directed to the appropriate
recipient thereof at his business address or office location.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2"><B>SECTION 11 GOVERNING LAW</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>

<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">11.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">This Plan shall be construed in accordance with the
provisions of the laws of the State of Nevada.</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">11</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center"><FONT size="2"><B>SECTION 12 EFFECTIVE DATE</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="3%">&nbsp;</TD>
        <TD width="1%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="93%">&nbsp;</TD>
</TR>
<TR valign="top">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">12.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">The Plan shall be effective as of August&nbsp;6, 1998 and shall
continue to be effective until ten (10)&nbsp;years following the
effective date of the Plan being the date the stockholders approved
the Plan, unless sooner terminated by the Board of Directors
pursuant to Section&nbsp;10 hereof. Additionally, this Plan requires the
approval of the Canadian Venture Exchange and the Securities and
Exchange Commission and such other regulatory authorities as is
required. Stock Options granted hereunder prior to such approvals
shall be conditioned upon such approval.</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Company has caused the Plan to be executed as of
the day and year first above written.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="50%">&nbsp;</TD>
        <TD width="40%">&nbsp;</TD>
        <TD width="10%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">POLYMER SOLUTIONS, INC</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR><TD colspan="3"><FONT size="2">&nbsp;</FONT></TD></TR>
<TR valign="bottom">
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD valign="top"><FONT size="2">By: /s/ Gordon Ellis<BR>
</FONT><HR size="1" noshade><FONT size="2">
Gordon L. Ellis, Chairman</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">12</FONT>
</BODY>
</HTML>

</TEXT>
</DOCUMENT>
