EXHIBIT 10.40

                          NORTH AMERICAN VACCINE, INC.
                         1999 NON-EMPLOYEE DIRECTOR AND
                       SENIOR EXECUTIVE STOCK OPTION PLAN

      This 1999  Non-Employee  Director and Senior  Executive  Stock Option Plan
(the  "Plan") of North  American  Vaccine,  Inc.,  a Canadian  corporation  (the
Corporation"),  is effective as of January 25, 1999.  The purpose of the Plan is
to help attract, keep and motivate the Corporation's  Non-Employee Directors and
Senior Executives, as those terms are defined in the Plan.

                                   ARTICLE I
                            STOCK SUBJECT TO OPTION
                            -----------------------

      The total  number  of shares  which  may be  issued  under  stock  options
("options")  granted pursuant to the Plan is 650,000 shares of the Corporation's
Common Stock, no par value per share ("Common  Stock").  The shares issued under
options shall be newly issued or treasury  shares of Common Stock.  The grant of
an option pursuant to the Plan shall reduce the number of shares of Common Stock
that  thereafter  may be available for future  grants under the Plan;  provided,
however,  that  if an  option  should  expire,  terminate  or  otherwise  become
unexercisable  for any  reason  without  having  been  exercised  in  full,  the
unpurchased  shares that were subject thereto shall,  unless the Plan shall have
been terminated,  become available for further grant under the Plan. Exercise of
an option in any manner  shall  result in a decrease  in the number of shares of
Common Stock that  thereafter  may be available for purchase under the option by
the number of shares of Common Stock as to which the option is exercised.

                                  ARTICLE II
                            ADMINISTRATION OF PLAN
                            ----------------------

      SECTION  2.1 The Plan shall be  administered  at all times by a  committee
appointed  by the  Corporation's  Board  of  Directors  (the  "Committee").  The
Committee  shall consist of not less than two members of the Board of Directors,
each of whom is a "non-employee  director" as defined in Rule 16b-3  promulgated
under the Securities  Exchange Act of 1934, as amended (the "1934 Act"),  and an
"outside  director"  as defined for  purposes of Section  162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").

      SECTION  2.2  Subject to the  provisions  of the Plan,  the  Committee  is
authorized to interpret the Plan,  to  prescribe,  amend,  and rescind rules and
regulations relating to the Plan, and to make all other determinations necessary
or advisable for the administration of the Plan, including,  without limitation,
(i) to accelerate the vesting of any option already  granted,  (ii) to determine
whether  the  exercise  price of or taxes  relating  to an option may be paid in
already  owned  shares of Common  Stock  and/or  shares then  issuable  upon the
exercise of the option,  (iii) to  determine  the terms and  provisions  of each
option  granted under the Plan (which need not be  identical),  (iv) to waive or

<PAGE>

amend any and all restrictions and conditions of any options, including, without
limitation, extending the term of any option, and (v) to authorize any person to
execute on behalf of the Corporation  any instrument  required to effectuate the
grant of an option previously  granted by the Committee.  The Board of Directors
may in its  discretion at any time and from time to time alter the membership of
the Committee consistent with the requirements set forth in Section 2.1.

      SECTION 2.3 Any  interpretation  issued by the  Committee  shall be final,
conclusive and binding on each optionee.  No member of the Board of Directors or
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option agreement.

                                  ARTICLE III
             AUTOMATIC GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS
             ----------------------------------------------------

      SECTION 3.1 Each member of the Board of Directors of the  Corporation  who
is  not  an  employee  of  the  Corporation  or  any  of  its   subsidiaries  (a
"Non-Employee  Director") shall automatically receive options in accordance with
the provisions of Section 3.2 below, without any further action or authorization
required by the Board of Directors or the Committee.

      SECTION 3.2 (a) On each  January 1,  commencing  on January 1, 2000,  each
Non-Employee  Director  who holds  office as of the  relevant  January  1, shall
automatically receive an option to acquire:

                  (i) 20,000  shares of the  Corporation's  Common  Stock if the
Non-Employee  Director  is the  Chairman  of the Board or  Vice-Chairman  of the
Board; or

                  (ii) 5,000  shares of the  Corporation's  Common Stock for all
other Non-Employee Directors.

            (b)  On  each  January  1,  commencing  on  January  1,  2000,  each
Non-Employee  Director  (other than the Chairman and Vice Chairman of the Board)
of the Corporation who holds office as of the relevant  January 1 and who serves
on a committee of the Board of  Directors  as of the  relevant  January 1, shall
automatically  receive  an  option,  in  addition  to the  grant of the  options
prescribed  in  Section  3.2(a)(ii),  above,  to  acquire  5,000  shares  of the
Corporation's Common Stock for each committee of the Board of Directors on which
he or she serves.

      SECTION 3.3 Each option automatically granted under this Article III shall
be exercisable in accordance with the following schedule:

            (a) each option shall first become exercisable to purchase one-third
of the shares  under such option on the first  January 1  following  the date of
grant of the option;


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<PAGE>

            (b) each  option  shall  first  become  exercisable  to  purchase an
additional  one-third  of the shares  under such option on the second  January 1
following the date of grant of the option; and

            (c) each  option  shall first  become  exercisable  to purchase  the
remaining  one-third  of the  shares  under such  option on the third  January 1
following the date of grant of the option.


                                  ARTICLE IV
                     GRANT OF OPTIONS TO SENIOR EXECUTIVES
                     -------------------------------------

      SECTION  4.1  Subject to the  provisions  of,  and  within the  parameters
established in, the Plan, the Committee shall have the exclusive power to select
the Senior Executives, as defined in Section 4.2, of the Corporation who will be
granted options, the time or times at which an option may be granted, the number
of shares for which an option is granted,  the vesting schedule for the options,
the term of the option,  and the  exercise  price per share of the options to be
granted;  provided,  however, that subject to the provisions of Article X of the
Plan, the maximum number of shares of Common Stock with respect to which options
may be granted  under the Plan to any Senior  Executive in any calendar  year is
one percent (1%) of the shares of Common Stock issued and  outstanding as of the
first day of such calendar year.

      SECTION 4.2 All Senior  Executives of the Corporation who are residents of
Canada  shall be eligible to receive  options to purchase  stock under the Plan.
The term  "Senior  Executive"  for  purposes  of the Plan  shall mean any person
exercising  the function of  president,  vice-president,  secretary,  treasurer,
controller or general  manager,  or similar  functions but shall not include any
person who is a director of the  Corporation,  whether or not such person  would
otherwise qualify as a Senior Executive. Senior Executives who are not residents
of Canada are not eligible to receive options to purchase Common Stock under the
Plan.

                                   ARTICLE V
                                 OPTION PRICE
                                 ------------

      For options  granted to Non-Employee  Directors,  the option price for the
purchase of any Common Stock  pursuant to any option  granted  under Article III
shall  be 100% of the fair  market  value  of the  Common  Stock at the time the
option is granted. For options granted to Senior Executives,  the minimum option
price for the purchase of any Common Stock  pursuant to any option granted under
Article IV shall be 100% of the fair  market  value of the  Common  Stock at the
time the option is granted. The fair market value thereof shall be determined by
the Committee;  provided,  however,  that where there is a public market for the
Common Stock, the fair market value per share shall be the closing sale price of
the Common Stock on the principal securities exchange (or Nasdaq, if applicable)
on which the Common  Stock is trading on the date of grant,  or if there were no
sales reported as of such date,  then the last date preceding such date on which
a sale was reported,  or if any such  exchange or quotation  system is closed on
that date, then on the last preceding date on which the securities  exchange (or
Nasdaq, if applicable) was open for trading.



                                      -3-
<PAGE>

                                  ARTICLE VI
                       TERM OF PLAN; VESTING OF OPTIONS
                       --------------------------------

      SECTION 6.1 The Plan shall be effective as of the date first above written
and shall expire on, and all options  authorized  under the Plan must be granted
on or before, January 25, 2009.

      SECTION  6.2 Each  option  granted  under  Article  III of the Plan  shall
provide that it is to be  exercised  within a period of ten (10) years after the
date the option is  granted  and shall be  exercisable  in  accordance  with the
vesting  schedule set forth in Section 3.3. Each option granted under Article IV
of the Plan shall  provide  that it is to be  exercisable  within a period to be
determined by the Compensation Committee,  which shall not exceed ten (10) years
after the date the option is granted,  and shall be  exercisable by the optionee
at such  time or times  as  shall be  prescribed  and  specified  in the  option
agreement  with  each  such  optionee.  Options  granted  under  the Plan may be
exercised  by the optionee in whole or in part or in  installments.  Options may
not be exercised for a fraction of a share.

      SECTION 6.3 (a) The  exercisability  of each option  granted under Article
III of the Plan  shall be  automatically  accelerated  so that each such  option
outstanding shall,  immediately prior to the specified  effective date of any of
the following events,  become fully exercisable with respect to the total number
of shares subject to such option and may be  exercisable  for all or any portion
of such shares, in the event that:

                        (i)  any  person  (as  defined  for  purposes of Section
13(d) and 14(d) of the 1934 Act, but  excluding the  Corporation  and any of its
wholly-owned  subsidiaries)  acquires  direct  or  indirect  ownership  of fifty
percent  (50%) or more of the  combined  voting  power  of the then  outstanding
voting  securities of the Corporation as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases or otherwise;

                        (ii)  any  election has occurred of persons to the Board
of Directors of the  Corporation  that causes  two-thirds  of the  Corporation's
Board of Directors to consist of persons other than (A) persons who were members
of the  Corporation's  Board of Directors on January 1, 1999 and (B) persons who
were nominated by the  Corporation's  Board of Directors for election as members
of the  Corporation's  Board  of  Directors  at a time  when  two-thirds  of the
Corporation's  Board of  Directors  consisted of persons who were members of the
Corporation's Board of Directors on January 1, 1999; provided, however, that any
person  nominated for election by the Board of Directors of the  Corporation  at
least two-thirds of whom constituted persons described in clauses (A) and/or (B)
above or by persons who were themselves  nominated by such Board shall, for this
purpose,  be  deemed to have  been  nominated  by a Board  composed  of  persons
described in clause (A) above; or

                        (iii) the  shareholders of the  Corporation  approve (A)
any statutory consolidation,  merger or amalgamation of the Corporation in which
the  Corporation  is not the  surviving  corporation  (other  than a  merger  or
amalgamation of the Corporation in which the holders of Common Stock immediately
prior to the merger or amalgamation have the same proportionate ownership of the

                                      -4-
<PAGE>

surviving corporation immediately after the merger or amalgamation),  or (B) any
sale,  lease,  exchange or other  transfer  (in one  transaction  or a series of
related  transactions)  of all,  or  substantially  all,  of the  assets  of the
Corporation  to  an  entity  that  is  not  a  wholly-owned  subsidiary  of  the
Corporation.


      (b) If one of the events  cited in Section  6.3(a)  occurs,  any  optionee
granted  an option  pursuant  to Article  III of the Plan has the  right,  for a
period of sixty (60) days  following  the later of (i) the date of such event or
(ii) the  expiration of six (6) months from the date of grant of an option under
the Plan,  to elect to surrender for  cancellation  any option to the extent not
exercised and the optionee will be entitled to receive,  in the sole  discretion
of the Committee,  either a cash payment,  or Common Shares having a fair market
value,  equal to (A) the aggregate fair market value of the  unexercised  shares
remaining under the option surrendered for cancellation,  less (B) the aggregate
exercise price for such optioned shares;  provided,  however, if, in the opinion
of the Corporation's  counsel,  such discretion by the Committee would cause the
members of the Committee to cease to be  "non-employee  directors" as defined in
Rule 16b-3 of the 1934 Act or "outside  directors"  as defined  for  purposes of
Section  162(m) of the Code,  then such optionee shall receive only Common Stock
upon the surrender for cancellation of such option. For purposes of this Section
6.3(b),  fair market value shall be  determined  pursuant to Article V as of the
date on which an event  cited in  Section  6.3(a)  occurs.  Notwithstanding  the
foregoing,  an optionee  shall not be entitled to the  benefits of this  Section
6.3(b) where such event is solely attributable to the event described in Section
6.3(a)(i)  and the  optionee  is the  person  (or is a member  of a group  which
comprises the person) who acquires  beneficial  ownership of fifty percent (50%)
or more of the combined voting power of the then  outstanding  securities of the
Corporation.

                                  ARTICLE VII
                           TERMINATION OF EMPLOYMENT
                           -------------------------

      SECTION 7.1 (a) Except as noted in Section 7.2, upon a Senior  Executive's
resignation  from or  termination  of employment  with the  Corporation  for any
reason whatsoever  (including,  without  limitation,  death), any option held by
such person  shall be  exercisable  within  twelve (12) months after the date of
such  resignation  or  termination  (or such  shorter  or  longer  period as the
Committee  shall  determine)  to the extent such person was entitled to exercise
such option as of the date of such resignation or termination.

            (b) Except as noted in Section 7.2, upon a  Non-Employee  Director's
resignation or  termination  from the  Corporation's  Board of Directors for any
reason whatsoever  (including,  without  limitation,  death), any option held by
such person  shall be  exercisable,  to the extent  such person was  entitled to
exercise such option as of the date of such  resignation or termination,  at any
time prior to the expiration date of the option.

      SECTION 7.2  Notwithstanding  the provisions of Section 7.1, if any Senior
Executive or  Non-Employee  Director is terminated or removed by the Corporation
for  willful  or gross  misconduct,  including,  without  limitation,  breach of
fiduciary  duty (the  Committee's  determination  in this regard shall be final,
binding and conclusive), any and all options held by such person shall terminate
immediately and automatically at the time of his or her termination,  unless the
Committee  provides  for an earlier or later  time for the  termination  of such


                                      -5-
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option(s),  and  such  option(s)  will not be  exercisable  after  such  time of
termination unless otherwise determined by the Committee.

      SECTION 7.3 Subject to the  provisions of the Plan,  any option held by an
optionee at the time of his or her death may be  exercised  subsequently  by the
legal  representative of such optionee's estate during the remaining term of the
option,  but only to the extent such  optionee  was  entitled  to exercise  such
option  as of the  date  of his or her  death,  unless  the  Committee  provides
otherwise.  In the event of the death of an optionee  during the final three (3)
months of the time  period  specified  in  Section  7.1(a),  the  option  may be
exercised,  at any time within three (3) months following the date of his or her
death, by the optionee's estate or by a person or persons who acquired the right
to  exercise  the option by bequest or  inheritance,  but only to the extent the
optionee  was  entitled  to  exercise  such  option as of the date of his or her
death, unless the Committee provides for a longer or shorter period.

      SECTION 7.4 None of the events  described in this Article VII shall extend
the period of  exercisability  of an option beyond the  expiration  date thereof
prescribed  under  Section  6.2 above,  notwithstanding  the  intervention  of a
succeeding  vesting date or an event described in Section 6.3(a).  To the extent
that an  optionee  was not  entitled to exercise an option on the date of his or
her resignation or termination of employment with the Corporation for any reason
whatsoever  (including,  without  limitation,  death),  or if the  option is not
exercised within the time period specified in this Article VII, the option shall
terminate and become null and void, unless the Committee determines otherwise at
the time of or after the grant of the option.  Notwithstanding the provisions of
Sections 7.1 and 7.3 hereof,  no options shall be exercisable  after an optionee
resigns or terminates  his or her employment  with the  Corporation in the event
the optionee shall have,  during the time period in which his or her options are
exercisable,  engaged in deliberate action which, as determined by the Committee
in its  sole  discretion  (whose  determination  shall  be  final,  binding  and
conclusive),  causes  substantial  harm to the interests of the  Corporation  or
constitutes a breach of any  obligation of the optionee to the  Corporation.  In
such event,  the optionee shall forfeit all rights to any unexercised  option as
of the date of such  deliberate  action and all such  unexercised  options shall
terminate immediately and automatically at the time of such deliberate action.

      SECTION 7.5 The granting of an option to an optionee does not alter in any
way the Corporation's  existing rights to terminate such person's  employment or
position  with the  Corporation  at any time for any reason,  nor does it confer
upon such person any rights or privileges except as specifically provided for in
the Plan.



                                      -6-
<PAGE>

                                 ARTICLE VIII
                              NONTRANSFERABILITY
                              ------------------

      Options  granted under the Plan may not be sold,  assigned or transferred,
other than by will or by the laws of descent and  distribution  or pursuant to a
qualified  domestic  relations  order as  defined  in the Code or Title I of the
Employee  Retirement Income Security Act of 1974, as amended  ("ERISA"),  or the
rules  thereunder,  and, except with respect to a qualified  domestic  relations
order as aforesaid,  may be exercised  during the lifetime of the optionee, only
by such optionee or his or her legal representative.

                                  ARTICLE IX
                              METHOD OF EXERCISE
                              ------------------

      SECTION  9.1 During the period when an option is  exercisable,  the option
may be exercised,  in whole or in part, by giving  written notice of exercise to
the Corporation (in form acceptable to the Corporation) specifying the number of
shares of Common  Stock to be  purchased.  Such notice shall be  accompanied  by
payment in full of the aggregate exercise price of the shares to be purchased in
cash,  check  (including,  without  limitation,  payment  in  accordance  with a
cashless exercise program under which, if so instructed by the optionee,  Common
Stock may be issued directly to the optionee's  broker or dealer upon receipt of
the purchase  price in cash from the broker or dealer) or such other form and in
such other manner as the Committee may accept.  If and to the extent  determined
by the Committee in its sole discretion at or after grant, payment in full or in
part may also be made in the form of Common  Stock  duly  owned by the  optionee
(and for  which the  optionee  has good  title,  free and clear of any liens and
encumbrances)  or by reduction in the number of shares of Common Stock  issuable
upon such exercise  based,  in each case, on the fair market value of the Common
Stock on the date the option is exercised. In the event the purchase price of an
option  is paid in whole or in part  through  the  delivery  of shares of Common
Stock issuable in connection  with the exercise of the option,  an optionee will
be determined to have exercised the option with respect to those shares.  In the
event shares of Common Stock are surrendered to the  Corporation,  they shall be
canceled by the  Corporation.  Fair market  value of such Common  Stock shall be
determined as provided in Article V herein.

      SECTION 9.2 An option shall be deemed to be exercised  when written notice
of such exercise has been given to the  Corporation in accordance with the terms
of the option by the person entitled to exercise the option and full payment for
the shares with  respect to which the option is exercised  has been  received by
the  Corporation.  Until the issuance (as evidenced by the appropriate  entry on
the  books of the  Corporation  or of a duly  authorized  transfer  agent of the
Corporation)  of the share  certificate  evidencing the shares to be issued,  no
right to vote or receive  dividends or any other rights as a  shareholder  shall
exist with respect to the optioned shares,  notwithstanding  the exercise of the
option.  No adjustment  will be made for a dividend or other right for which the
record  date is prior to the date the share  certificate  is  issued,  except as
provided in the Plan.

      SECTION  9.3 As a condition  to the  exercise of any portion of an option,
the Corporation  may require the person  exercising such option to make whatever
provision is required,  in the reasonable opinion of the Corporation,  to ensure


                                      -7-
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that any  withholding or tax  obligations  required by United States or Canadian
federal, state/provincial,  or local law as a result of the granting or exercise
of such option are  withheld or paid in  accordance  with such  applicable  law.
Provisions  for addressing the  withholding or tax  obligations  pursuant to the
preceding sentence may include, but shall not be limited to, (i) full payment of
the  withholding  or  tax  obligations  by the  person  exercising  such  option
simultaneously with exercise of the option, (ii) the payment in shares of Common
Stock already owned by optionee,  based on the fair market value (as  determined
pursuant  to Article V) of such shares on the date that the  withholding  or tax
obligation is to be determined, to satisfy such withholding or tax requirements,
(iii) the withholding from the option,  at the appropriate  time, of a number of
shares  of  Common  Stock  sufficient,  based  upon the fair  market  value  (as
determined  pursuant  to  Article  V) of  such  shares  on  the  date  that  the
withholding or tax obligation is to be determined,  to satisfy such  withholding
or tax requirements,  and (iv) an agreement by the person exercising such option
that  such  withholding  or tax  obligations  may be  withheld  in full from any
compensation payable to such person.

      SECTION 9.4 (a) Shares shall not be issued  pursuant to the exercise of an
option  granted  under the Plan  unless  the  exercise  of such  option  and the
issuance  and  delivery of the shares  pursuant  thereto  shall  comply with all
relevant  provisions  of Canadian  and Unites  States laws,  including,  without
limitation,  Canada Business Corporations Act, the Securities Act (Quebec),  the
Securities  Act of 1933,  as amended,  the 1934 Act,  the rules and  regulations
promulgated  thereunder,  and the  requirements of any securities  exchange upon
which the shares may then be listed or Nasdaq,  and shall be further  subject to
the approval of counsel for the Corporation with respect to such compliance.  As
a condition to the exercise of an option, the Corporation may require the person
exercising such option to complete a  questionnaire  in a form acceptable to the
Corporation  and to make  certain  representations  and  warranties  required or
desirable (in the opinion of the Corporation or its counsel), including, without
limitation,  any  representations and warranties required by law, in the opinion
of counsel,  regarding  investment intent. If, in the opinion of counsel for the
Corporation,  such a  representation  is required  by any of the  aforementioned
relevant  provisions  of laws,  certificates  representing  shares  issued  upon
exercise of the option shall bear a legend  prohibiting  transfer of such shares
unless,  in the opinion of such counsel,  such transfer is not inconsistent with
any of the requirements of any applicable  Canadian and United States securities
laws.

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

            (c) In the event  that any  option is  exercised  by the  executors,
administrators,  legatees or distributees of the estate of a deceased  optionee,
the Corporation  shall be under no obligation to issue stock  thereunder  unless
and until the Corporation is satisfied that the person or persons exercising the
option are the duly appointed legal  representatives of the deceased  optionee's
estate or the proper legatees or distributees thereof.



                                      -8-
<PAGE>

                                   ARTICLE X
               ADJUSTMENT OF NUMBER OF SHARES IN CERTAIN EVENTS
               ------------------------------------------------

      SECTION  10.1 Subject to any required  action by the  shareholders  of the
Corporation,  each of (i) the number of shares of Common  Stock  covered by each
outstanding  option,  (ii) the  number of shares of Common  Stock that have been
authorized  for issuance under the Plan but as to which no options have yet been
granted or that have been returned to the Plan upon cancellation, termination or
expiration of an option, (iii) the exercise price per share covered by each such
outstanding  option,  (iv) the  number of  shares  of Common  Stock set forth in
Section 3.2 and (v) the maximum  number of shares with respect to which  options
may  be  granted  to any  Senior  Executive  in  any  calendar  year,  shall  be
proportionately  adjusted  for any  increase or decrease in the number of issued
shares of Common  Stock  resulting  from a stock split or the payment of a stock
dividend  with respect to the Common Stock or any other  increase or decrease in
the  number  of issued  shares  of Common  Stock  effected  without  receipt  of
consideration  by the  Corporation;  provided,  however,  that conversion of any
convertible  securities  of the  Corporation  shall  not be  deemed to have been
"effected  without receipt of  consideration."  Such adjustment shall be made by
the Committee,  whose determination in that respect shall be final,  binding and
conclusive.  Except as expressly provided herein, no issuance by the Corporation
of shares of any class,  or  securities  convertible  into  shares of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or exercise price of shares of Common Stock subject to an option.

      SECTION  10.2  In  the  event  of a  dissolution  or  liquidation  of  the
Corporation,  all  outstanding  options will terminate upon the  consummation of
such action, unless otherwise provided by the Committee.

      SECTION  10.3 In the  event  of a  merger,  amalgamation,  reorganization,
consolidation,  share exchange,  transfer of assets or other transaction  having
similar effect  involving the  Corporation  in which the  Corporation is not the
surviving  corporation or pursuant to which a majority of the shares that are of
the same class as the shares that are  subject to  outstanding  options  granted
under the Plan are  exchanged  for,  or  converted  into,  or  otherwise  become
securities  of  another  corporation  or  entity,  or other  consideration,  the
Committee  shall have the sole  discretion to determine  that (i) the surviving,
continuing, successor or purchasing corporation or other entity, as the case may
be (the "Acquiror"), will either assume the Corporation's rights and obligations
under  outstanding  options  granted  under the Plan or  substitute  options  in
respect of the Acquiror's  securities for outstanding  options granted under the
Plan or (ii) the  outstanding  options  shall be canceled  in exchange  for such
consideration  as  the  Committee  shall  approve  (based  on the  value  of the
consideration received in the transaction by holders of the same class of shares
that are subject to outstanding options).

      SECTION 10.4 Adjustments and determinations  under this Article X shall be
made by the  Committee,  upon the advice of counsel,  whose  decisions  shall be
final, binding and conclusive.


                                      -9-
<PAGE>

                                  ARTICLE XI
                         AMENDMENT OF PLAN AND OPTIONS
                         -----------------------------

      SECTION 11.1 Subject to the provisions of Sections 11.3 and 11.4, the Plan
may be amended,  altered,  suspended,  discontinued or terminated at any time by
the Committee  without the approval of the  Corporation's  shareholders  in such
respects as the Committee may deem advisable so that the Plan and/or the options
granted  hereunder may conform to any changes in the law or in any other respect
which the  Committee  may deem to be in the best  interests of the  Corporation,
other than any  amendments  required to be approved  by  shareholders  under the
Canada Business  Corporation Act, the Securities Act (Quebec),  the rules of the
securities  exchange or Nasdaq on which the Common Stock is listed,  or in order
to  comply  with  Section  162(m)  of the  Code,  or any  other  requirement  of
applicable law or regulation.  No option may be granted during any suspension or
discontinuation  of the Plan or after its  termination.  Amendments  to the Plan
also  shall be  subject  to any  approvals  required  under  applicable  laws or
regulations  or under the  applicable  rules of any stock  exchange or Nasdaq on
which the Common Stock is listed.

      SECTION  11.2 Subject to the  provisions  of Sections  11.3 and 11.4,  the
Committee may waive any conditions or rights under,  or amend,  alter,  suspend,
discontinue  or terminate,  any option granted to a Senior  Executive  under the
Plan and/or any  corresponding  option  agreement;  provided,  however  that the
Committee  may amend any  option  and/or the terms of any  corresponding  option
agreement  only to the extent that the option and/or such option  agreement,  as
either may be amended,  could have been  granted  pursuant to the Plan with such
amended  terms.  No  amendment of an option shall be deemed to be the grant of a
new option for purposes of the Plan.

      SECTION 11.3 No amendment,  suspension,  discontinuation or termination of
the Plan or any option granted hereunder shall,  without an optionee's  consent,
impair any of the rights of the optionee under any option theretofore granted to
such  optionee  under the Plan.  The foregoing  shall not limit the  Committee's
rights to make determinations under Sections 7.2, 7.4 and 10.3 hereof.

      SECTION  11.4  Notwithstanding  the  provisions  of Section 11.1 and 11.2,
Section  6.3 shall not be  amended  or  terminated  at any  time.  Further,  any
amendment or termination of the Plan prior to a transaction described in Section
6.3  which:  (a) was at the  request  of a third  party  who  has  indicated  an
intention or taken steps reasonably  calculated to effect such  transaction;  or
(b) otherwise arose in connection  with or in anticipation of such  transaction,
shall be null and void and shall have no effect whatsoever.


                                  ARTICLE XII
                      RESERVATION AND ISSUANCE OF SHARES
                      ----------------------------------

      The  Corporation,  during the term of the Plan,  will at all times reserve
and keep  available  such number of shares as shall be sufficient to satisfy the
requirements  of the Plan and the options  granted  hereunder.  The  issuance of
shares  of Common  Stock  upon the  exercise  (in  accordance  with the Plan) of


                                      -10-
<PAGE>

options  granted  hereunder  as fully paid and  non-assessable  shares is hereby
authorized.

                                 ARTICLE XIII
                               OPTION AGREEMENT
                               ----------------

      Options  shall be evidenced by written  option  agreements  in the form or
forms approved by the Committee.

                                  ARTICLE XIV
                             SHAREHOLDER APPROVAL
                             --------------------

      The  effectiveness  of the  Plan  shall  be  subject  to  approval  by the
shareholders of the Corporation,  in a separate vote,  within twelve (12) months
after the date the Plan is adopted. Such shareholder approval shall be obtained,
at a duly held shareholders'  meeting,  by the affirmative vote of a majority of
the votes  actually  cast, in person or by proxy,  at such meeting on a separate
proposal to approve the Plan. All options granted prior to shareholder  approval
are granted conditional upon shareholder approval of the Plan.

                                  ARTICLE XV
                           MISCELLANEOUS PROVISIONS
                           ------------------------

      SECTION 15.1 NO RIGHTS AS A SHAREHOLDER.  An optionee shall have no rights
as a shareholder  with respect to any shares  covered by his or her option until
the date of the issuance of a share certificate to him or her for such shares.

      SECTION 15.2 NO RIGHT TO OPTION;  NO RIGHT TO  EMPLOYMENT.  No employee or
other person shall have any claim or right to be granted an option.  Neither the
Plan nor any action  taken  hereunder  shall be  construed  as giving any Senior
Executive  any right to be retained in the employ of the  Corporation  or any of
its subsidiaries.

      SECTION  15.3  INDEMNIFICATION.  In  addition  to  such  other  rights  of
indemnification  as they  may  have as  members  of the  Corporation's  Board of
Directors,  the members of the  Committee  shall be  indemnified,  to the extent
permitted by applicable  law, by the  Corporation  against,  and the Corporation
shall advance, the reasonable  expenses,  including attorneys' fees actually and
necessarily  incurred in  connection  with the  defense of any  action,  suit or
proceeding,  or in connection with any appeal  therein,  to which they or any of
them may be a party by reason of any action  taken or failure to act under or in
connection  with the Plan or any option  granted  thereunder,  and  against  all
amounts paid by them in settlement thereof (provided such settlement is approved
to the  extent  required  by  and in the  manner  provided  by the  Articles  of
Incorporation and By-laws of the  Corporation),  or paid by them in satisfaction
for a judgment in any such  action,  suit or  proceeding,  except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding that
such Committee  member did not act honestly and in good faith with a view to the
best interests of the Corporation.  Within sixty (60) days after  institution of


                                      -11-
<PAGE>

any such  action,  suit or  proceeding,  a  Committee  member  shall  notify the
Corporation  of the  institution  of the suit and  grant to the  Corporation  in
writing  the  opportunity,  at its own  expense,  to handle and defend the same.
Failure  to  provide  such  notice  and  grant  shall,  at  the  option  of  the
Corporation,  relieve the  Corporation of the  indemnification  obligations  set
forth in this Section 15.3.

      SECTION  15.4  APPLICATION  OF  FUNDS.   The  proceeds   received  by  the
Corporation  from the sale of Common Stock  pursuant to options will be used for
general corporate purposes.

      SECTION 15.5 NO OBLIGATION TO EXERCISE  OPTION.  The granting of an option
shall impose no obligation upon the optionee to exercise such option.

      SECTION 15.6 OTHER COMPENSATION  PLANS. The adoption of the Plan shall not
affect any other share option or incentive or other compensation plans in effect
for the Corporation or any parent or subsidiary, nor shall the Plan preclude the
Corporation  or any parent or subsidiary  from  establishing  any other forms of
incentive or other  compensation  for employees and directors of the Corporation
or any parent or subsidiary.

      SECTION  15.7  OPTIONS  NOT  INCLUDABLE  FOR  BENEFIT   PURPOSES.   Income
recognized  by an optionee  pursuant to the  provisions of the Plan shall not be
included in the  determination  of benefits under any employee  pension  benefit
plan (as such term is defined in Section 3(2) of ERISA or the rules  thereunder)
or group  insurance or other benefit  plans  applicable to the optionee that are
maintained  by the  Corporation  or any of its  subsidiaries,  except  as may be
provided  under the  terms of such  plans or  determined  by  resolution  of the
Corporation's Board of Directors.

      SECTION 15.8 SINGULAR,  PLURAL, GENDER. Whenever used herein, nouns in the
singular shall include the plural,  and the masculine  pronoun shall include the
feminine gender.

      SECTION 15.9  HEADINGS,  ETC.,  NO PART OF PLAN.  Headings of Articles and
Sections hereof are inserted for  convenience and reference;  they constitute no
part of the Plan.

      SECTION 15.10 UNFUNDED PLAN. The Plan shall be unfunded.  The  Corporation
shall not be required to establish  any special or separate  fund or to make any
other  segregation  of assets to assure the issuance of shares or the payment of
monies  under the Plan and the  issuance  of shares and the payment of monies to
optionees under the Plan shall be subordinate to the claims of the Corporation's
general creditors.

      SECTION 15.11 ACCEPTANCE OF PLAN. By accepting any option or other benefit
under  the Plan,  each  optionee,  for  himself  and for his or her  successors,
assigns, heirs,  beneficiaries and personal and legal representatives,  shall be
conclusively deemed to have indicated his or her acceptance and ratification of,
and  consent  to,  any  action  taken  under  the Plan by the  Corporation,  the
Committee and the Corporation's Board of Directors.







                                      -12-
<PAGE>
      SECTION  15.12  GOVERNING  LAW. The Plan and all  determinations  made and
actions taken pursuant to the Plan shall be governed by the laws of the State of
Delaware,  except  that the  issuance  of  Shares  by the  Corporation  upon the
exercise of options shall be governed by the Canada Business Corporations Act.

      SECTION 15.13 NO STRICT CONSTRUCTION. No rule of strict construction shall
be implied against the  Corporation,  the Committee,  or any other person in the
interpretation  of any of the terms of the Plan,  any option  granted  under the
Plan or any rule or procedure established by the Committee.

      SECTION 15.14 SEVERABILITY.  Whenever possible, each provision in the Plan
and every option at any time granted under the Plan shall be interpreted in such
manner as to be effective and valid under  applicable  law, but if any provision
of the Plan or any option at any time granted under the Plan shall be held to be
prohibited by or invalid under  applicable law, then (a) such provision shall be
deemed  amended to  accomplish  the  objectives  of the  provision as originally
written to the fullest extent  permitted by law and (b) all other  provisions of
the Plan and every other option at any time granted  under the Plan shall remain
in full force and effect.


                                      -13-