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Exhibit 10(i) E-SMART TECHNOLOGIES, INC.
2003 LONG TERM INCENTIVE PLAN 1. Purpose.The purposes of the e-Smart Technologies, Inc., Long Term
Incentive Plan (the Plan) are (i) to enable e-Smart Technologies, Inc. and
any of its subsidiary corporations (hereinafter referred to, unless the context
otherwise require, as the Company) to grant to its directors, executive
officers and other selected key employees and agents the means to acquire a
proprietary interest in the Company, in order that such persons will have
financial incentives to contribute to the Companys growth and profitability,
and (ii) to enhance the ability of the Company to attract and retain in its
employ individuals of outstanding ability upon whom the success of the Company
will depend. 2. Administration.The Plan shall be administered by the Compensation
Committee or other similarly designated committee (the Committee) appointed
by the Board of Directors of the Company. Members of the Committee are eligible
to participate in the Plan and may grant to any or all members of the Committee
any award under the Plan. The Committee may adopt such rules and regulations
as it may deem necessary or advisable for the administration of the plan. 3. Grant of Awards.Subject to the terms and provisions of the Plan, the
Committee may grant to any participant an award (the Award) consisting or one
or more of the following: (i) Incentive Stock Options, (ii) Non-Qualified Stock
Options, (iii) Stock Unit, (iii) Restricted Stock, and (iv) Stock Appreciation
Rights, all as more fully described herein. The grant of an Award shall be
evidenced by a written letter (an Award Letter) in such form as shall be
approved by the Committee. Each recipient of an Award shall be required to
acknowledge receipt of the related Award Letter in writing. However, failure
to do so shall not invalidate an Award which has been duly granted by
resolution of the Committee. 4. Share Subject to the Plan.Subject to adjustment as provided herein,
an aggregate of 75,000,000 shares of the Common Stock of the Company, $.001 par
value per share (the Common Stock), shall be available for issuance pursuant
to Awards granted under the Plan. Such shares may be authorized and unissued
shares or shares held in the Companys treasury. All shares subject to Awards
that shall have terminated or shall have been forfeited in whole or in part or
canceled for any reason (other than by surrender for cancellation upon any
exercise or conversion of all or part of such Awards) will be available for
issuance pursuant to Awards granted subsequently under the Plan. 5. Participants.All directors, officers and other key employees and
agents of the Company and its subsidiaries shall be eligible to receive Awards
and thereby become participants in the Plan. As used herein, the term
subsidiaries shall include any present or future corporation which would be a
subsidiary corporation as that term is defined in Section 425 of the Internal
Revenue Code of 1986, as amended, (the Code). For purposes of determining
eligibility of individuals to receive Non-Qualified Stock Options hereunder,
and for such purposes only, the term employee shall include 1




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(without limitation) persons who are employed by the Company as
consultants or persons who are engaged in providing consultative services to
the Company from which services the Company derives proprietary rights. No
employee or participant shall have any claim to be granted any Award under the
Plan. In granting Awards, the Committee may include or exclude previous
participants in the Plan, as the Committee may determine. Receipt of an Award
shall in no way be deemed to constitute a contract or promise of continued
employment by the Company. 6. Stock Options.(a) Stock options granted hereunder may be either
Incentive Stock Options or Non-Qualified Stock Options. As used herein, (i)
Incentive Stock Option means an option that is intended to meet the
requirements of Section 422A of the Code or any successor provision thereto,
and (ii) Non-Qualified Stock Option means an option that is not intended to
be an Incentive Stock Option. Each Award of options granted under the Plan
shall be designated by the Committee at the time of grant as either an
Incentive Stock Option or a Non-Qualified Stock Option. (b) Stock options granted hereunder shall be subject to the following
terms and conditions and to such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall deem
desirable, all of which shall be reflected in the applicable Award Letter: (i) The purchase price per share purchasable upon exercise of an option
(the Exercise Price) shall be not be less than the fair market value of a
share of Common Stock on the date of grant as determined in good faith by the
Committee. Unless otherwise determined, fair market value shall be determined
by and be equal to the closing bid price of the Companys Common Stock in the
over-the-counter market on the date the Incentive Stock Option or Non-Qualified
Stock Option is granted. (ii) Options shall be exercisable at such time or times as determined by
the Committee at the time of grant; provided that no option shall be
exercisable after the expiration of ten (10) years from the date of grant and
no Incentive Stock Option issued to a shareholder owning directly or
constructively 10% of the voting power of the Company, shall be exercisable
after the expiration of five (5) years. No Incentive Stock Option or
Non-Qualified Stock Option shall be exercisable during the one (1) year period
commencing on the date of grant. (iii) If a participant retires during the term of an option, such option
shall be exercisable by such participant only during the three (3) months
following his or her retirement (but in no event after the expiration of the
term of such option) and only as to the number of shares, if any, as to which
it was exercisable immediately prior to such retirement. (iv) If a participant dies during the term of an option, such option shall
be exercisable by his or her executor or administrator or, if not so exercised,
by the legatees or the distributees of his or her estate, only during the six
(6) months following his or her death (but in no event after the expiration of
the term of such option). During such six month period, the option shall be exercisable as to the full
number of shares as to which it had not been previously exercised. 2




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(v) If a participant ceases to be an employee of the Company for any cause
other than retirement or death during the term of an option, such option shall
be exercisable by him or her only during the thirty (30) days following the
cessation of his or her employment (but in no event after the expiration of the
term of such option) and only as for the number of shares, if any, as to which
it was exercisable immediately prior to such cessation of employment. (vi) Subject to the other provisions of the Plan and the applicable Award
Letter, participants may make payment of the Exercise Price by delivery of (A)
cash, (B) a certified or bank cashiers check, (C) shares of Common Stock, (D)
when permitted by law and the Committee, other Awards or (E) any combination
thereof, which has a fair market value equal to the total Exercise Price, as
determined in good faith by the Committee on the date of exercise. (vii) The aggregate fair market value (determined as of the time of grant)
of the shares with respect to which Incentive Stock Options held by any
participant under the Plan (and under any other benefit plans of Telpac
Industries, Inc. or of any parent or subsidiary corporation of Telpac
Industries, Inc.) which are exercisable for the first time by such participant
during any calendar year shall not exceed $100,000 or, if different, the
maximum limitation in effect at the time of grant under Section 422A of the
Code, or any successor provision, and any regulations promulgated thereunder.
The terms of any Incentive Stock Option granted hereunder shall comply in all
respects with the provisions of Section 422A of the Code, or any successor
provision, and any regulations promulgated thereunder. (viii) The Committee may provide, at the time of grant and under advice of
counsel or otherwise, that the shares to be issued upon an options exercise
shall be in the form of Restricted Stock. 7. Stock Units.(a) Stock Units are contractual rights awarded to
participants pursuant to which shares may be issued as hereinafter provided .
Stock Units do not constitute securities of the Company and do not entitle the
participant to whom such Stock Units have been awarded to any right of
ownership with respect to the shares which may be issued pursuant thereto,
including, without limitation, voting rights and the right to receive ordinary
cash dividends. Awards of Stock Units may provide for the issuance of Common
Stock for no consideration other than services rendered. (b) Subject to adjustment as provided herein, each Stock Unit awarded
hereunder shall vest over such period as the Committee shall specify at the
time of grant, and shall become convertible into shares of Common Stock over
such additional period as the Committee shall specify at the time of grant.
Upon such conversion, the participant shall be entitled to receive one share of
Common Stock per Stock Unit, plus a distribution in kind of all other property
(other than cash dividends) which the participant would have been entitled to
receive if the shares received upon the conversion of such Stock Units had been
owned throughout the period beginning on the date of the award of such Stock
Units (the Award Date) and ending on the date of such conversion, less all securities and property which would have been
surrendered or canceled pursuant to such distributions. 3




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(c) In the event of the cessation of the employment of a participant,
however caused, prior to the full vesting of his or her Stock Units, such
participants Stock Units shall automatically either (i) be forfeited in their
entirety, or (ii) be reduced to the number determined by means of the following
formula: the total number of Stock Units originally awarded to the participant
shall be multiplied by a fraction which shall have as its numerator the number
of whole years elapsed between the Award Date and the date of cessation of
employment and as its denominator the length of the specified vesting period of
such Stock Units, provided that, if the resulting product is not a whole
number, it shall be reduced to the next lowest whole number. The Compensation
Committee shall specify, in the related Award Letter, whether forfeiture or
formula reduction shall apply to an Award of Stock Units. All Stock Units
originally issued to the participant in excess of the number determined as set
forth in this paragraph shall be automatically canceled by the Company. 8. Restricted Stock.(a) Restricted Stock Awards may be issued hereunder
to participants, for no consideration other than services rendered, or for such
consideration as may be required by applicable law, either alone or in addition
to other Awards granted under the Plan. As used herein, Restricted Stock
means any share of Common Stock issued subject to the restriction that the
holder thereof may not sell, transfer, pledge, assign or otherwise hypothecate
such share and with such other restrictions as the Committee, in its sole
discretion, may impose (including, without limitation, any restriction on the
right to vote such share and the right to receive cash dividends and other
distributions with respect thereto), which restrictions may lapse separately or
in combination at such time or times, in installments or otherwise, as the
Committee may deem appropriate. The provisions of Restricted Stock Awards need
not be the same with respect to each recipient. (b) Any Restricted Stock issued hereunder may be evidenced in such manner
as the Committee in its sole discretion shall deem appropriate, including,
without limitation, book-entry registration or issuance of a stock certificate
or certificates. In the event any stock certificate is issued in respect of
shares of Restricted Stock awarded under the Plan, such certificate shall be
registered in the name of the participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such shares. (c) The cessation of a participants employment by the Company at any
time during the period of any restrictions due to such participants
retirement, permanent disability or death shall not affect the terms of any
Restricted Stock Award granted to such participant. Except as otherwise
determined by the Committee at the time of grant, upon cessation of employment
for any other reason during the period of any restrictions, all shares of
Restricted Stock still subject to restriction shall be forfeited by the
participant and reacquired by the Company. Notwithstanding the foregoing, in
the event of a participants retirement, permanent disability or death, or in
other cases of special circumstances following the cessation of employment by a
participant, the Committee may, when it finds in its sole discretion that a
waiver would be in the best interests of the Company, waive in whole or in part
any or all remaining restrictions with respect to such participants shares of
Restricted Stock. 4




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9. Stock Appreciation Rights.(a) Stock Appreciation Rights may be
granted hereunder to participants either alone or in addition to other Awards
granted under the Plan and may, but need not, relate to a specific option
granted under Section 6 hereof. As used herein, Stock Appreciation Right
means a right to receive, upon exercise by the participant, the excess of (i)
the fair market value of one share of Common Stock on the date of exercise
over (ii) the grant price of the right as specified by the Committee. Stock
Appreciation Rights shall be granted on such terms under conditions not
inconsistent with the Plan as the Committee may determine, all of which shall
be reflected in the applicable Award Letter. Awards of Stock Appreciation
Rights may provide for the balance of Common Stock for no consideration other
than services rendered. The provisions of Stock Appreciation Rights need not
be the same with respect to each recipient. (b) A Stock Appreciation Right related to a Non-Qualified Stock Option may
be granted at the same time such option is granted or at any time thereafter
before exercise or expiration of such option. Any Stock Appreciation Right
related to an Incentive Stock Option must be granted at the same time such
option is granted. The number of shares subject to Stock Appreciation Rights
shall be reduced to the extent that the related stock option is exercised or
terminated, except that, in the case of any Stock Appreciation Right granted
with respect to less than the full number of shares covered by the related
option, such Stock Appreciation Rights shall not be reduced until the exercise
or termination of the related option exceeds the number of shares not covered
by the Stock Appreciation Right. Any option related to any Stock Appreciation
Right shall no longer be exercisable to the extent the related Stock
Appreciation Right has been exercised. The Committee may, at the time of award
impose such conditions or restrictions on the exercise of any Stock
Appreciation Right as it shall deem appropriate. (c) Stock Appreciation Rights which are related to an option shall be
exercisable only when and to the extent that the related option is exercisable. (d) Stock Appreciation Rights which are not related to an option
(Unrelated Rights) shall be exercisable at such time or times as determined
by the Committee at the time of grant, and shall be subject to the following
terms and conditions: (i) If a participant retires during the term of an Unrelated Right, such
Unrelated Right shall be exercisable by such participant only during the three
(3) months following his or her retirement (but in no event after the
expiration of the term of such Unrelated Right) and only as to the number of
shares, if any, as to which it was exercisable immediately prior to such
retirement. (ii) If a participant dies during the term of an Unrelated Right, such
Unrelated Right shall be exercisable by his or her executor or administrator
or, if not so exercised, by the legatees or the distributees of his or her
estate, only during the six (6) months following his or her death (but in no
event after the expiration of the term of such Unrelated Right). During such
six month period, the Unrelated Right shall be
exercisable as to the full number of shares as to which it had not been
previously exercised. 5




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(iii) If a participant ceases to be an employee of the Company for any
cause other than retirement or death during the term of an Unrelated Right,
such Unrelated Right shall be exercisable by him or her only during the thirty
(30) days following the cessation of his or her employment (but in no event
after the expiration of the term of such Unrelated Right) and only as to the
number of shares, if any, as to which it was exercisable immediately prior to
such cessation of employment. (e) Any payment by the Company in respect of Stock Appreciation Rights may
be made in cash or shares of Common Stock, or a combination thereof, as the
Committee, in its sole discretion, shall determine at the time of exercise. (f) Notwithstanding the foregoing, no Stock Appreciation Right which is
granted to an executive officer or director of the Company or to a participant
who thereafter becomes an executive officer or director of the Company may be
exercised until the expiration of six (6) months from the date of its grant. 10. Non-assignability of Awards.No Award shall be assignable or
transferable by a participant otherwise than by will or by the laws of descent
and distribution. Each Award shall be exercisable, during the lifetime of any
participant, only by such participant, except that, if permissible under
applicable law, Awards other than Incentive Stock options may also be exercised
by the guardian or legal representative of a participant. 11. Term of Awards.The term of each Award shall be for such period of
months or years from the date of its grant as may be determined by the
Committee; provided that in no event shall the term of any Incentive Stock
Option exceed a period of ten (10) years from the date of its grant. 12. Cancellation of Awards.(a) In the event that the Committee shall,
at any time prior to the issuance of shares pursuant to an Award (and
regardless of whether the participant is then in the employ of the Company),
determine that any participant, either before or after any cessation of his or
her employment by the Company, (i) has committed an act of misconduct for which
he or she could have been discharged for cause by the Company; or (ii) has
participated in or engaged in any business activity determined by the Committee
to be in any way harmful or prejudicial to the interests of the Company, all
Awards then outstanding in the name of such participant shall immediately be
canceled. (b) The Plan shall in no event be interpreted as restraining any
participant from competing with the Company after the cessation of his or her
employment by the Company. However, a participant who does compete with the
business of the Company prior to the expiration of the period of one (1) year
commencing with the date of the cessation of his or her employment by the
Company, however caused, shall ipso 6




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facto be deemed to have participated or engaged in a business activity harmful
or prejudicial to the interests of the Company. As used herein, the phrase
compete with the business of the Company shall include, without limitation,
(i) participating, directly or indirectly, whether as proprietor, officer,
employee, agent or otherwise, or (ii) having a material interest, directly or
indirectly, through stock ownership (other than ownership of less than five
percent (5%) of the outstanding stock of a publicly-traded company), investment
of capital, lending of money or property or otherwise, either alone or in
association with others, in the formation, funding or operation of any type of
group, business or enterprise engaged, in whole or in part, in the business
then being conducted by the Company or any of its subsidiaries. (c) Any determination made hereunder by the Committee shall be conclusive
and binding upon both the Company and the participants. Nothing herein shall
be deemed to relieve, release or discharge any participant from any contractual
or fiduciary obligation he or she may otherwise have to the Company. 13. Exercise of Awards.To exercise an Award, the holder shall give
written notice thereof to the Company either by delivery in hand to the
Treasurer or Assistant Treasurer of the Company or by mailing by registered
mail to the Company, marked Attention: Treasurer, at its principal place of
business, specifying the date and type of Award and the number of shares of
Common Stock with respect to which such Award is being exercised. The date
upon which such written notice shall be duly received by the Treasurer or
Assistant Treasurer shall be deemed to be the date of exercise or conversion
for all purposes. 14. Withholding Taxes; Issuance of Stock Certificates.Notwithstanding
anything to the contrary hereinbefore contained, the Company shall not be
required to issue certificates for shares purchased by exercise or conversion
of an Award until (i) the full Exercise Price or other consideration due with
respect thereto, if any, has been paid, and (ii) the participant or the
participants heirs or legal representatives, as the case may be, provide for
payment to (or withholding by) the Company of all amounts required under then
applicable provisions of the Code and state and local tax laws to be withheld
with respect to such shares. Participants shall have none of the rights of a
stockholder with respect to any Award until certificates for the shares
represented thereby have been issued. 15. Conditions to Exercise or Conversion of Awards.Each participant who
accepts delivery of shares issued pursuant to the Plan shall be deemed to have
acquired such shares for his or her own account, for investment, and not with a
view to or in connection with any distribution. As conditions to the exercise
or conversion of any Award and the issuance of shares thereunder, the Committee
may, in its discretion, require (i) that a participant sign an investment
covenant to the foregoing effect confirming that he or she will not effect any
sale, transfer, pledge, assignment or other hypothecation of such shares
(collectively, a Transfer) prior to (A) receipt of an opinion of counsel for
the Company authorizing any proposed Transfer, (B) receipt of a no action
letter from the Securities and Exchange Commission permitting such Transfer,
or (C) registration of the shares under the Securities Act of 1333, as
amended, (the Act) and (ii) that a registration statement under the Act with
respect to the Award and 7




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the shares to be issued on the exercise or conversion thereof shall have
become, and continue to be, effective. The certificates representing shares
issued pursuant to the Plan may bear an appropriate legend to the effect that
the shares have been issued subject to certain restrictions on transfer and may
be transferred only in accordance therewith. 16. Effect of Change in Common Stock.In the event the outstanding
shares of Common Stock are increased or decreased as a result of a stock
dividend, stock split, recapitalization or other means having the same effect,
the number of shares available for issuance under the Plan, the number of
shares issuable pursuant to any outstanding Award and the Exercise Price of any
option outstanding under the Plan shall be adjusted as the Board of Directors
shall deem appropriate, in its sole discretion upon the recommendation of the
Committee, and with the approval of counsel, to preserve unimpaired the rights
of the participants. Notwithstanding the foregoing, in any such event the
Exercise Price of any outstanding option shall, in the case of an increase in
the number of shares, be proportionately reduced, and in the case of a decrease
in the number of shares, be proportionately increased. All determinations made
by the Board hereunder shall be conclusive and binding upon the participants. 17. Effect of Reorganizations.In case of any one or more
reclassifications, changes or exchanges of outstanding shares of Common Stock
or consolidations of the Company with, or mergers of the Company into, other
corporations, or other recapitalizations or reorganizations (other than
consolidations with a subsidiary in which the Company is the continuing
corporation and which do not result in any reclassifications, changes or
exchanges of outstanding shares of Common Stock), or in case of any one or more
sales or conveyances to another corporation of the property of the Company as
an entirety, or substantially as an entirety, any of which are hereinafter in
this Section called Reorganizations, a participant shall have the right, upon
any subsequent exercise or conversion of an Award, to acquire same kind and
amount of securities and property which such participant would then have if
such participant had exercised or converted such Award immediately before the
first of any such Reorganizations and continued to hold all securities and
property which came to such participant as a result of that and subsequent
Reorganizations, less all securities and property surrendered or canceled
pursuant to any of same, the adjustment rights in Section 16 and this Section
being continuing and cumulative, except that, anything to the contrary herein
contained notwithstanding, the Committee shall have the right in connection
with any Reorganizations, upon not less than thirty (30) days written notice to
the participants, to accelerate the vesting provisions of all outstanding
Awards and terminate the term thereof so that, in such event, all outstanding
awards may be exercised or converted in whole or in part, only at a time prior
to or simultaneously with the consummation of such Reorganization. The
provisions and term of Awards held by participants who are no longer employees
of the Company shall not be affected pursuant to the preceding sentence. In
any such event such Awards may be exercised or converted, to the extent
permitted by their terms, prior to or simultaneously with the consummation of
such Reorganization. 8




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18. Effect of Change of Control.If any individual, corporation or other
entity (collectively, a Person) shall become the beneficial owner of 40% or
more of the outstanding shares of Common Stock (other than by reason of a
merger in which the Company is the continuing corporation and which does not
result in any reclassification of outstanding shares of Common Stock of the
Company), then all of the provisions set forth herein with respect to vesting,
cancellation and forfeiture shall ipso facto lapse and be of no further effect
whatsoever as to any and all Awards then outstanding, and, upon the date such
event occurs (the Date of Change of Control), all Awards theretofore granted
hereunder and not fully exercisable or convertible shall, subject to the
provisions of the Plan and any other limitation applicable to such Awards,
become exercisable or convertible in full for a period of thirty (30) days
following the Date of Change of Control; provided, however, that (i) no Award
shall be exercisable or convertible by an executive officer or director of the
Company, or by a person who was an executive officer or director of the Company
at the time the Award was granted, within six (6) months of the date of grant
of such Award, and (ii) Awards of Incentive Stock Options shall become
exercisable hereunder only to the extent possible without violation of the
limitations contained in clauses (ii), (iii), (iv), (v) and (vii) of Section
6(b) hereof. For the purpose of this Section, a Person shall be deemed to be the
beneficial owner of shares of Common Stock which are beneficially owned,
directly or indirectly, by any other Person (i) with which it or its
affiliate or associate (as hereinafter defined) has any agreement,
arrangement or understanding for the purposes of acquiring, holding, voting or
disposing of Common Stock; or (ii) which is its affiliate or associate.
For the purposes of this Section, a Person is an affiliate of another person
if the former directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the latter; and a
person is an associate of (x) any corporation or organization (other than the
Company or any of its subsidiary corporations) of which such person is an
officer or partner or is, directly or indirectly, the beneficial owner of 10%
or more of any class of equity securities, (y) any trust or estate in which
such person has a substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity and (z) any relative or
spouse of such person, or any relative of such spouse, who has the same home as
such person or who is a director or officer of e-Smart Technologies, Inc. or
any of its subsidiary or parent corporations. 19. Term of the Plan.No Award shall be granted pursuant to the Plan
after December 1, 2013, but any Award theretofore granted may extend beyond
that date. 20. Amendment and Termination.The Board of Directors of the Company by
resolution at any time may amend, suspend or terminate the Plan, provided that
(i) no such action shall be taken which impairs the rights of any participant
under any outstanding Award, without such participants consent, and (ii)
except in connection with an adjustment as contemplated hereunder or with the
consent of the stockholders, no such action shall be taken which increases the
total number of shares available for issuance under the Plan. The Committee may
substitute new Awards for Awards previously granted to participants, including, without limitation,
previously granted options having higher Exercise Prices. 9




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21. Interpretation.The interpretation and construction of any provision
of the Plan and the adoption of rules and regulations for administering the
Plan shall be made by the Committee, subject, however, at all times to the
final jurisdiction which shall rest in the Board of Directors of the Company.
Determinations made by the Committee and approved by the Board of Directors
with respect to any matter or provision contained in the Plan shall be final,
conclusive and binding upon the Company and upon all participants, their heirs
and legal representatives. Any rule or regulation adopted by the Committee
whether under the authority of this Section or Section 2 above shall remain in
full force and effect unless and until altered, amended or repealed by the
Board of Directors. 22. Effective Date of Plan.The Plan shall not become effective, and any
Awards granted hereunder shall not be exercisable, unless and until the Plan
shall have been duly approved by the stockholders of the Company in accordance
with applicable law. No Award shall be granted, exercised or converted if such
grant, exercise or conversion, or the issuance of shares pursuant thereto,
would be contrary to law or the regulations of any duly constituted authority
having jurisdiction. Adopted December 1, 2003 10