Document:

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                                                                    EXHIBIT 10.2

                                 August 29, 2000

Shaffer Asset Management, Inc.
70 West Red Oak Lane
White Plains, NY  10604

         Re:      Commodity Trading Authorization

Gentlemen:

         Shaffer Diversified Fund, LP, a Delaware limited partnership, does
hereby make, constitute and appoint you as its attorney-in-fact to purchase and
sell commodity interests, including commodity futures contracts, through ADM
Investor Services, Inc., as commodity broker, in accordance with the advisory
agreement between us dated as of the above date.

                                Very truly yours,

                                SHAFFER DIVERSIFIED FUND, LP

                                By:      Shaffer Asset Management, Inc.
                                         General Partner

                                         By:      /s/ Daniel S. Shaffer
                                                  Daniel S. Shaffer
                                                  President<PAGE>   1
                                                                    EXHIBIT 10.3

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                             HYDROGENICS CORPORATION

                                STOCK OPTION PLAN

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                             HYDROGENICS CORPORATION

                                STOCK OPTION PLAN

                                    ARTICLE 1
                                     PURPOSE

1.1      PURPOSE

The purpose of this Plan is to assist Hydrogenics Corporation and its affiliates
in attracting, retaining and motivating key employees, directors and consultants
by granting to them options to purchase common shares in its capital.

                                    ARTICLE 2
                                 INTERPRETATION

2.1      DEFINITIONS

When used herein, unless the context otherwise requires, the following terms
have the following meanings, respectively:

         "ACCELERATION EVENT" means any of the following events:

         (a)      a reorganization, merger, amalgamation, consolidation, sale of
                  securities or other transaction involving the Company or its
                  securities, which, upon completion, results in the Company
                  ceasing to maintain its separate legal existence, or which
                  results in a Person, or a group of Persons acting jointly and
                  in concert, other than the Founders, acquiring the ability to
                  effectively control and direct the affairs of the Company;

         (b)      the dissolution or liquidation of the Company (other than in
                  connection with the distribution of the assets of the Company
                  to one or more Persons which were affiliates immediately prior
                  to the completion of such transfer); or

         (c)      the sale of all or substantially all of the Company's assets
                  to a Person (other than a sale to a Person that was an
                  affiliate of the Company immediately prior to the completion
                  of such sale).

         "AFFILIATE", "ASSOCIATE" and "JOINTLY AND IN CONCERT" have the
         respective meanings set forth in the Securities Act (Ontario), as
         amended from time;

         "BOARD" means the board of directors of the Company as constituted from
         time to time;

         "COMMITTEE" has the meaning specified in Section 3.2 hereof;

         "COMPANY" means Hydrogenics Corporation;

         "CONSULTANT" has the meaning ascribed to it in Rule 45-503 made under
         the Securities Act (Ontario), as the same may be amended from time to
         time;
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         "DATE OF GRANT" means, for any Option, the date upon which the Option
         is granted;

         "DISABLED" means:

         (a)      with respect to an Employee, a natural Person who,

                  (i)      for any consecutive twelve month period; or

                  (ii)     for any twelve months in any consecutive fifteen
                           month period,

                  is unable by reason of illness to devote substantially all his
                  or her working time to the business or affairs of the Company
                  or of an affiliate of the Company;

         (b)      with respect to an Employee, Director or Consultant, a natural
                  Person who is declared mentally incompetent or incapable of
                  managing his or her affairs by a court of competent
                  jurisdiction in Canada or, if no application is brought for
                  such a declaration, who is certified by statutory declaration
                  of two duly qualified medical practitioners to be mentally
                  incompetent; or

         (c)      with respect to an Employee, Director or Consultant, a natural
                  Person who is otherwise determined in the discretion of the
                  Board to be permanently and totally disabled.

         "DIRECTOR" means a member of the Board or a member of the board of
         directors of an affiliate of the Company;

         "EMPLOYEE" means a natural Person who:

         (a)      is considered a full-time or part-time employee of the Company
                  or of an affiliate of the Company; or

         (b)      who is a full-time or a part-time dependent contractor of the
                  Company or of an affiliate of the Company providing services
                  normally provided by an employee thereof and is subject to the
                  same control and direction by the Company or by an affiliate
                  of the Company over the detail and methods of work as an
                  employee thereof;

         "EXERCISE PERIOD" means the period of time during which an Option
         granted under this Plan may be exercised (provided, that the Exercise
         Period may not exceed 10 years from the relevant Date of Grant);

         "EXERCISE NOTICE" means a notice in writing substantially in the form
         set out in Schedule "A" hereto signed by an Optionee and stating the
         Optionee's intention to exercise a particular Option;

         "EXERCISE PRICE" has the meaning specified in Section 4.2 hereof;
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         "FAIR MARKET VALUE OF A SHARE" means the fair market value per Share as
         determined by reference to the closing price of the Shares on The
         Toronto Stock Exchange on the last trading day preceding the Date of
         Grant;

         "FOUNDER" means Pierre Rivard, Joe Cargnelli and Boyd Taylor and their
         respective affiliates;

         "INSIDER" means a Person who is:

         (a)      an insider of the Company for the purpose of the Securities
                  Act (Ontario) as amended from time to time, other than a
                  Person who falls within that definition solely by virtue of
                  being a director or senior officer of a subsidiary of the
                  Company; and

         (b)      an associate of any Person who is an insider of the Company by
                  virtue of clause (a) of this definition;

         "OFFICER" means an officer of the Company or of an affiliate of the
         Company;

         "OPTION" means a right granted under this Plan to purchase Shares;

         "OPTIONEE" means a Person who has been granted one or more Options;

         "OPTION AGREEMENT" means a signed, written agreement between an
         Optionee and the Company, substantially in the form attached as
         Schedule "B" hereto, subject to any amendments or additions thereto as
         may, in the discretion of the Board, be necessary or advisable,
         evidencing the terms and conditions on which an Option has been granted
         under this Plan;

         "OTHER COMPENSATION ARRANGEMENT" has the meaning specified in Section
         3.4 hereof;

         "OUTSTANDING ISSUE" has the meaning specified in Section 3.4 hereof;

         "PERSON" means any individual, sole proprietorship, partnership,
         unincorporated association, unincorporated syndicate, unincorporated
         organization, trust, body corporate, and a natural person in such
         person's capacity as trustee, executor, administrator or other legal
         representative;

         "PLAN" means this Hydrogenics Corporation Stock Option Plan;

         "RETIREMENT" means:

         (a)      with respect to an Employee, retirement from active employment
                  with the Company or with an affiliate of the Company in
                  accordance with the Company's retirement policies or, for
                  purposes of this Plan, with the consent of the Board, on such
                  terms as the Board may specify; and

         (b)      with respect to a Director or Consultant, a Person who the
                  Board determines in its discredtion has retired from such
                  office or position;
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         "SHAREHOLDERS AGREEMENT" means the amended and restated unanimous
         shareholders' agreement dated January 24, 2000, among the Company and
         all of its shareholders, as such agreement may be amended,
         supplemented, restated or replaced;

         "SHARES" means the common shares of the Company; and

         "TERMINATION DATE" means the later of:

         (a)      the date that is the last day of any statutory notice period
                  applicable to the Optionee pursuant to applicable employment
                  standards legislation, and

         (b)      the date that is designated by the Company or by an affiliate
                  of the Company, as the case may be, as the last day of the
                  Optionee's employment or term as a Director or Consultant with
                  the Company or with an affiliate of the Company, as the case
                  may be.

         For greater certainty "Termination Date" does not mean the date on
         which any period of reasonable notice required by law to be provided to
         the Optionee, would expire.

2.2      INTERPRETATION

         (a)      Whenever the Board is to exercise discretion in the
                  administration of the terms and conditions of this Plan or any
                  Option, the term "discretion" means the "sole and absolute
                  discretion" of the Board.

         (b)      As used herein, the terms "Article", "Section" and
                  "Subsection" mean and refer to the specified Article, Section
                  and Subsection of this Plan, respectively.

         (c)      Words importing the singular include the plural and vice versa
                  and words importing any gender include any other gender.

         (d)      Titles and headings of articles and sections of this Plan are
                  for convenience of reference only and shall not affect the
                  construction of any provision of this Plan.

         (e)      Where the words "including" or "includes" appear in this Plan,
                  they mean "including (or includes) without limitation".

                                    ARTICLE 3
                                 ADMINISTRATION

3.1      ADMINISTRATION AND INTERPRETATION

This Plan will be administered by the Board and the Board has sole and complete
authority, in its discretion, to interpret the provisions of this Plan. In
administering and interpreting the Plan, the Board may adopt, amend and rescind
administrative guidelines and other rules and regulations relating to this Plan
and make all other determinations and take all other actions necessary or
advisable for the implementation and administration of this Plan which the Board
determines, in its discretion, are necessary or advisable. The Board's
determinations and actions within its authority under this Plan are final,
conclusive and binding on the Company, its affiliates and all other Persons.
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3.2      DELEGATION TO COMMITTEE AND DAY TO DAY ADMINISTRATION

To the extent permitted by applicable law,

         (a)      the Board may, from time to time, delegate to a committee of
                  the Board (the "Committee") all or any of the powers conferred
                  on the Board under the Plan. In such event, the Committee will
                  exercise the powers delegated to it by the Board in the manner
                  and on the terms authorized by the Board. Any decisions made
                  or actions taken by the Committee arising out of or in
                  connection with the administration or interpretation of this
                  Plan within its authority under this Plan, are final,
                  conclusive and binding on the Company, its affiliates and all
                  other Persons.

         (b)      the day-to-day administration of this Plan may be delegated to
                  such officers and employees of the Company as the Board
                  determines.

3.3      ELIGIBILITY

         (a)      Participation in the Plan shall be entirely voluntary.

         (b)      All Employees and Directors are eligible to participate in
                  this Plan, subject to Sections 6.1 and 6.2. In addition, and
                  subject to applicable laws (including securities laws), the
                  Board shall determine in its discretion which Consultants may
                  be eligible to participate in this Plan. Further, the
                  eligibility of those Consultants invited by the Board to
                  participate in Plan shall be subject to Sections 6.1 and 6.2.

         (c)      Eligibility to participate in the Plan does not confer upon
                  any Person any right to be granted Options pursuant to this
                  Plan. In addition, no Optionee has any claim or right to be
                  granted an Option (including, without limitation, an Option
                  granted in substitution for any Option that has expired
                  pursuant to the terms of this Plan).

3.4      TOTAL SHARES SUBJECT TO OPTIONS

The grant of Options under the Plan is subject to the following limitations:

         (a)      The number of Shares reserved for issuance under the Plan,
                  together with Shares issuable under all other established or
                  proposed share compensation arrangements of the Company
                  ("Other Compensation Arrangement"), may not exceed 4,641,000
                  Shares.

         (b)      No more than 10% of the Shares outstanding immediately prior
                  to the issuance in question, less Shares issued pursuant to
                  the exercise of Options under the Plan or under any Other
                  Compensation Arrangements during the preceding year (the
                  number of Shares outstanding immediately prior to the issuance
                  in question less Shares issued pursuant to Other Compensation
                  Arrangements in the previous year is referred to as the
                  "Outstanding Issue") may be issued under the Plan or pursuant
                  to Other Compensation Arrangements in any one (1) year period.
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         (c)      The number of Shares reserved for issuance to any one Person
                  pursuant to options to purchase Shares granted by the Company
                  pursuant to the Plan or pursuant to Other Compensation
                  Arrangements cannot exceed 5% of the outstanding Shares.

         (d)      The aggregate number of Shares reserved for issuance pursuant
                  to options granted to Insiders under the Plan or under Other
                  Compensation Arrangements shall not exceed 10% of the
                  Outstanding Issue.

         (e)      Insiders shall not in the aggregate be issued, within any one
                  year period, a number of Shares which exceeds 10% of the
                  Outstanding Issue.

         (f)      No Insider (together with such Insider's Associates) shall be
                  issued, within any one year period, a number of Shares which
                  exceeds 5% of the Outstanding Issue.

An Option shall not be granted if it would have the effect of causing any of the
limitations set forth in this Section 3.4 to be breached. However, if, for any
reason, any Shares subject to issuance on the exercise of Options granted under
this Plan are not issued, or are re-acquired by the Company, for reasons
including, but not limited to, a termination, expiration or cancellation (with
the consent of the Optionee) of an Option, such Shares will again become
available for grant under this Plan.

3.5      OPTION AGREEMENTS

All grants of Options under this Plan will be evidenced by Option Agreements.
Any one of the President or Treasurer of the Company is authorized and empowered
to execute on behalf of the Company and deliver an Option Agreement to an
Optionee.

3.6      NON-TRANSFERABILITY

Except as expressly authorized under the Plan:

         (a)      any Options granted under this Plan may only be exercised
                  during the lifetime of the Optionee by such Optionee
                  personally; and

         (b)      no assignment or transfer of Options, whether voluntary,
                  involuntary, by operation of law or otherwise, vests any
                  interest or right in such Options whatsoever in any assignee
                  or transferee and, immediately upon any assignment or transfer
                  or attempt to assign or transfer, such Options will terminate
                  and be of no further force or effect.

                                   ARTICLE 4
                                GRANT OF OPTIONS

4.1      GRANT OF OPTIONS

The Board may, from time to time, subject to the provisions of this Plan and
such other terms and conditions as the Board may prescribe, grant Options to any
Employee or Director. Subject to ensuring compliance with applicable laws, the
provisions of this Plan and such other terms and conditions as the Board may
prescribe, the Board may also, from time to time, grant Options to Consultants,
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4.2      EXERCISE PRICE

The purchase price per Share of Shares purchasable under any Option (the
"EXERCISE PRICE") will be as determined by the Board; however, in no event shall
the Exercise Price shall be less than the Fair Market Value of the Shares.

4.3      TERM OF OPTIONS

Subject to any accelerated termination as set forth in this Plan, each Option,
expires on the tenth anniversary of its Date of Grant unless an earlier date is
specified by the Board.

4.4      VESTING

Unless otherwise specified in the Optionee's Option Agreement and subject to
Articles 6 and 7, Options will vest as to one third of the Option on each of the
first, second and third anniversaries of the Date of Grant.

4.5      PAYMENT OF EXERCISE PRICE

Subject to the provisions of this Plan and any Option Agreement, Options may be
exercised by delivery of a fully completed Exercise Notice to the Treasurer of
the Company accompanied by payment in full of the applicable Exercise Price. The
Exercise Price may be paid by certified cheque, bank draft or money order
payable to the Company.

4.6      ISSUE OF SHARES

No Shares will be issued or transferred until full payment of the Exercise Price
therefor has been received by the Company and all conditions to the issue of the
Shares have been met. As soon as practicable after receipt of any Exercise
Notice and full payment of the Exercise Price and the satisfaction of all
conditions to the issue of the Shares, the Company will deliver to the Optionee
a certificate or certificates representing the acquired Shares.

                                   ARTICLE 5
                   CONDITIONS TO GRANT AND EXERCISE OF OPTIONS

5.1      CONDITIONS TO GRANT OF OPTIONS

This Plan and the grant of any Option hereunder to any Person is subject to
compliance with all applicable laws.

5.2      CONDITIONS TO DELIVERY OF SHARES

The Company's obligation to issue and deliver Shares upon the due exercise of
any Option is subject to:

         (a)      the satisfaction of all requirements under applicable laws in
                  respect thereof and obtaining all approvals as the Company
                  shall determine to be necessary or advisable in connection
                  with the authorization, issuance or sale thereof, including
                  shareholder approval, if required;
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         (b)      the listing of such Shares on any stock exchange or quotation
                  market in Canada or the United States on which Shares may then
                  be listed or quoted, and compliance with the requirements of
                  such stock exchanges or quotation markets; and

         (c)      the registration or qualification of such Shares for
                  distribution to the public in accordance with applicable
                  securities laws, on terms and conditions acceptable to the
                  Company as the Company may deem necessary or desirable.

5.3      SHAREHOLDERS AGREEMENT

For so long as the Shareholders Agreement remains in effect, each Optionee must,
at the time of exercising an Option, sign and deliver a counterpart and
acknowledgement to the Shareholders Agreement (if such Optionee is not already a
party thereto) in the form attached as Schedule C hereto. Each Optionee
acknowledges that until the Shareholders Agreement is terminated in accordance
with its terms, the Shares issuable upon the exercise of an Option will be
subject to the terms of the Shareholders Agreement, including the restrictions
on transfers of Shares contained therein.

5.4      TAXES AND WITHHOLDINGS

If at any time the Company determines in its discretion that the satisfaction of
taxes, including withholding tax, or other withholding liabilities is necessary
or desirable in respect of the exercise of any Option, such exercise is not
effective unless such taxes have been paid or withholdings made to the
satisfaction of the Company. In such circumstances, the Company may require an
Optionee to pay to the Company, in addition to and in the same manner as the
Exercise Price for the Shares, such amount as the Company is obliged to remit to
the relevant taxing authority in respect of the exercise of the Option. Any such
additional payment is due no later than the date as of which any amount with
respect to the Option exercised first becomes includable in the gross income of
the Optionee for tax purposes.

5.5      EXECUTION OF DOCUMENTS BY OPTIONEE

In connection with any grant or exercise of Options, the Optionee will, when
requested to do so by the Company, sign and deliver all such documents relating
to the granting or exercise of Options deemed necessary or desirable by the
Company.

                                   ARTICLE 6
                            TERMINATION OF EMPLOYMENT

6.1      TERMINATION OF EMPLOYMENT OR SERVICES

         (a)      Where an Optionee's employment or term as a Director or
                  Consultant ceases by reason of the Optionee's death or
                  Retirement or because the Optionee is determined to be
                  Disabled, then the provisions of Section 6.2 will apply.

         (b)      Where an Optionee's employment or term as a Director or
                  Consultant is terminated:
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                  (i)      without cause (whether such termination occurs with
                           or without any or adequate reasonable notice, or with
                           or without any or adequate compensation in lieu of
                           such reasonable notice); or

                  (ii)     by the voluntarily resignation by the Optionee,

                  then any Options held by the Optionee that are exercisable at
                  the Termination Date continue to be exercisable by the
                  Optionee until the earlier of:

                           (A)      the date that is 90 days from the
                                    Termination Date; and

                           (B)      the date on which the Exercise Period of the
                                    particular Option expires.

                  Any Options held by the Optionee that are not exercisable at
                  the Termination Date immediately expire and are cancelled on
                  the Termination Date.

         (c)      Where an Optionee's employment or term as a Director or
                  Consultant is terminated for cause, then any Options held by
                  the Optionee, whether or not such Options are exercisable at
                  the Termination Date, immediately expire and are cancelled on
                  the Termination Date.

         (d)      Notwithstanding the foregoing, Options will not be affected by
                  a termination of an Optionee's employment or term as a
                  Director or Consultant with the Company or with an affiliate
                  so long as the Optionee continues to be an Employee, Director
                  or Consultant.

6.2      RETIREMENT, DEATH OR DISABILITY OF OPTIONEE

If any Optionee dies or becomes Disabled while an Employee, Director or
Consultant, or if the Optionee's employment or term as a Director or Consultant
terminates due to Retirement, the executor or administrator of the Optionee's
estate or the Optionee, as the case may be, may exercise any Options of the
Optionee to the extent that the Options were exercisable at the date of the
Optionee's death or Retirement, or the day on which it is determined that the
Optionee is Disabled, and the right to exercise the Options terminates on the
earlier of:

         (a)      the date that is 180 days from such date; and

         (b)      the date on which the Exercise Period of the particular Option
                  expires.

Any Options held by the Optionee that were not exercisable at the date of the
Optionee's death or Retirement or the day on which it is determined that the
Optionee is Disabled, immediately expire and are cancelled on such date.

6.3      DISCRETION TO PERMIT EXERCISE

Notwithstanding the provisions of Sections 6.1 and 6.2, but subject to
applicable securities laws, the Board may, in its discretion, at any time prior
to or following the events contemplated in such sections, permit the exercise of
any or all Options held by the Optionee or by the Optionee's estate, as the case
may be, in the manner and on the terms authorized by the Board in its
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discretion, provided that the Board will not, in any case, authorize the
exercise of an Option pursuant to this Section beyond the expiration of the
Exercise Period of the particular Option.

                                    ARTICLE 7
                                   ADJUSTMENTS

7.1      GENERAL

The provisions contained in this Plan and any Option Agreement and the existence
of any Options shall not affect in any way the right or power of the Company or
its shareholders or affiliates to take, make, authorize, determine or cause to
be taken, made, authorized or determined any corporate action or proceeding,
including any adjustment, recapitalization, reorganization or any other change
in the Company's capital structure or its business, or any acquisition,
disposition, amalgamation, combination, merger or consolidation, or the creation
or issuance of any bonds, debentures, Shares or other securities of the Company
or of an affiliate thereof or the determination of the rights and conditions
attaching thereto, or the dissolution or liquidation of the Company or of any of
its affiliates or any sale or transfer of all or any part of their respective
assets or businesses, whether or not any such corporate action or proceeding
would have an adverse effect on this Plan or any Option granted hereunder.

7.2      REORGANIZATION OF COMPANY'S CAPITAL

Should the Company effect a subdivision or consolidation of Shares or any
similar capital reorganization or a payment of a stock dividend (other than a
stock dividend that is in lieu of a cash dividend), or should any other change
be made in the capitalization of the Company that, in the opinion of the Board,
would warrant the replacement of any existing Options in order to adjust:

         (a)      the number of Shares that may be acquired on the exercise of
                  any outstanding Options; or

         (b)      the Exercise Price of any outstanding Options,

in order to preserve proportionately the rights and obligations of the
Optionees, the Board will authorize such steps to be taken as may be equitable
and appropriate to that end.

7.3      OTHER EVENTS AFFECTING THE COMPANY

In the event of an amalgamation, combination, or other reorganization involving
the Company, by exchange of Shares, by sale or lease of assets, or otherwise,
that, in the opinion of the Board, warrants the replacement of any existing
Options in order to adjust:

         (a)      the number of Shares that may be acquired on the exercise of
                  any outstanding Options; or

         (b)      the Exercise Price of any outstanding Options,

in order to preserve proportionately the rights and obligations of the
Optionees, the Board will authorize such steps to be taken as may be equitable
and appropriate to that end.
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7.4      IMMEDIATE EXERCISE OF AWARDS

Where the Board determines that the steps provided in Sections 7.2 and 7.3 would
not preserve proportionately the rights and obligations of the Optionees in the
circumstances or the Board otherwise determines that it is appropriate, the
Board may permit the vesting and exercise, effective no later than the Business
Day immediately prior to the date on which the event referenced in Section 7.2
or Section 7.3, as applicable, is consummated, of any outstanding Options that
are not then otherwise exercisable.

7.5      ACCELERATED EXPIRY

In the case of an Acceleration Event, the Board may accelerate the expiry of
Options granted under this Plan to the Business Day immediately following the
date on which such Acceleration Event is consummated provided that:

         (a)      the Board accelerates the vesting of the Options effective not
                  earlier than one Business Day immediately prior to the date on
                  which the Acceleration Event is consummated; and

         (b)      the Company gives notice of such accelerated vesting and
                  expiry to all Optionees not later than ten Business Days prior
                  to the date of consummation of the Acceleration Event.

7.6      ISSUE BY COMPANY OF ADDITIONAL SHARES

Except as expressly provided in this Article 7, neither the issue by the Company
of shares of any class or securities convertible into or exchangeable for shares
of any class, nor the conversion or exchange of such shares or securities,
affects, and no adjustment by reason thereof is to be made with respect to: (a)
the number of Shares that may be acquired on the exercise of any outstanding
Options; or (b) the Exercise Price of any outstanding Options.

7.7      FRACTIONS

No fractional Shares will be issued on the exercise of an Option. Accordingly,
if as a result of any adjustment to either the Exercise Price or the number of
Shares issuable on exercise is made pursuant to Sections 7.2 or 7.3 an Optionee
would become entitled to receive a fractional Share on exercise of an Option,
the Optionee has the right to acquire only the adjusted number of full Shares
and no payment or other adjustment will be made with respect to the fractional
Shares so disregarded.

                                    ARTICLE 8
                               PURCHASE OF OPTIONS

8.1      PURCHASE OF OPTIONS BY COMPANY

The parties agree that at any time (and from time to time) prior to the
completion of any transaction which results in the Company becoming a "reporting
issuer", or its equivalent, under Canadian or US securities laws, the terms of
the Options provide the Company (or its designee) with an irrevocable right and
option to purchase from the Optionee all or any portion of the Options held by
the Optionee (or the Optionee's legal representative) under this Plan for a
<PAGE>   13
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purchase price equal to the fair value of such Options as determined by the
Board. The Company (or its designee) may exercise such right by delivering to
the Optionee a notice specifying the date for closing of such purchase and the
fair value of a Share as determined by the Board. The price payable by the
Company (or its designee) for Options acquired pursuant to this Section 8.1
shall be the amount, if any, by which the fair value of a Share, as determined
by the Board, exceeds the Exercise Price per Share of such Option, multiplied by
the number of Shares issuable upon exercise. The Company may without the consent
of the Optionee assign its right to purchase an Optionee's Options.

8.2      PROCEDURES FOR PURCHASES BY THE COMPANY

         (a)      The Company may pay for any Options acquired in accordance
                  with the procedures set out under this Article 8 in equal
                  monthly instalments over a period to be determined by the
                  Board provided that any such period shall not exceed three
                  years.

         (b)      The purchase shall be completed at the Company's registered
                  office on the date specified for closing. At such time the
                  Optionee shall transfer to the Company good title to the
                  Options being transferred free and clear of all liens, charges
                  and encumbrances together with all documents evidencing such
                  Options. The Company shall deliver to the Optionee certified
                  cheques in full payment of the purchase price payable for the
                  Options being purchased.

         (c)      If, at the time of closing, a Optionee fails to complete a
                  purchase and sale undertaken in accordance with this Article
                  8, the Company shall have the right, without prejudice to any
                  other rights which it may have, upon payment of that part of
                  the purchase price payable to the Optionee at the time of
                  closing to the credit of the Optionee in the main branch of
                  the Company's bank, to execute and deliver, on behalf of and
                  in the name of the Optionee, such deeds, transfers, share
                  certificates, agreements or other documents that may be
                  necessary to complete the subject transaction, and the
                  Optionee, through execution of the Option Agreement,
                  irrevocably appoints any Director or Officer as its
                  attorney-in-fact to complete, on its behalf, any sale pursuant
                  to this Article 8. Such appointment and power of attorney,
                  being coupled with an interest, shall not be revoked by the
                  insolvency or bankruptcy of the Optionee and the Optionee
                  hereby ratifies and confirms and shall ratify and confirm all
                  that may be done by virtue of such appointment and power.

                                    ARTICLE 9
                            MISCELLANEOUS PROVISIONS

9.1      LEGAL REQUIREMENT

The Company is not obligated to grant any Options, issue any Shares or other
securities, make any payments or take any other action if, in the opinion of the
Board, in its discretion, such action would constitute a violation by an
Optionee or the Company of any provision of any applicable statutory or
regulatory requirement of any government or governmental authority.
<PAGE>   14
                                     - 13 -

9.2      OPTIONEE'S ENTITLEMENT

Except as otherwise provided in this Plan, Options previously granted under this
Plan, whether or not then exercisable, are not affected by any change in the
relationship between or ownership of the Company and an affiliate. For greater
certainty, all Options remain valid and exercisable in accordance with the terms
and conditions of this Plan and are not affected by reason only that, at any
time following the Date of Grant, an affiliate of the Company ceases to be an
affiliate.

9.3      RIGHTS OF OPTIONEE

The granting of any Option is not to be construed as giving an Optionee a right
to remain in the employ of the Company or of an affiliate of the Company nor to
continue to serve as a Director or Consultant. No Optionee has any rights as a
shareholder of the Company in respect of Shares issuable on the exercise of
rights to acquire Shares under any Option until the allotment and issuance to
the Optionee of certificates representing such Shares in accordance with this
Plan.

9.4      AMENDMENT OR DISCONTINUANCE

Subject to applicable laws and the requirements of any stock exchange or
quotation system on which equity securities of the Company are listed or quoted:

         (a)      The Board may, without notice, at any time or from time to
                  time, prospectively and/or retroactively, amend, suspend or
                  terminate this Plan, any provisions hereof or any Option in
                  such respects as it, in its discretion, may determine
                  appropriate. No such amendment, suspension or termination of
                  this Plan or any Option which alters or impairs any rights or
                  obligations arising from any Option previously granted to an
                  Optionee under this Plan may be made without the consent of
                  the Optionee or the representatives of his or her estate, as
                  applicable.

         (b)      With the consent of the Optionee, the Board may at any time
                  cancel an existing Option in whole or in part and grant to the
                  Optionee another Option for such number of Shares as the Board
                  specifies.

Notwithstanding Subsection (a), the Board may at any time, prospectively and/or
retroactively, amend this Plan or any Option for the purpose of satisfying any
changes in applicable laws or regulations (including tax laws and securities
laws) or for the purpose of complying with the requirements of any stock
exchange or quotation market on which the Shares or other equity securities of
the Company are then listed or quoted or proposed to be listed or quoted.

9.5      INDEMNIFICATION

The members of the Board will at all times be indemnified and saved harmless by
the Company from and against all costs, charges and expenses whatsoever,
including any income tax liability arising from any such indemnification, that
such Persons may sustain or incur by reason of any action, suit or proceeding
taken or threatened against them, otherwise than by the Company, for or in
respect of any act done or omitted by the Board in respect of this Plan, such
costs, charges and expenses to include any amount paid to settle such action,
suit or proceeding or in satisfaction of any judgement rendered therein.
<PAGE>   15
                                     - 14 -

9.6      SEVERABILITY

If any provision of this Plan or any Option Agreement shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.

9.7      EFFECTIVE DATE

This Plan becomes effective on a date to be determined by the Board.

9.8      GOVERNING LAW

This Plan is created under and is to be governed, construed and administered in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.

                 [END OF PLAN TEXT - NEXT PAGE IS SCHEDULE "A"]
<PAGE>   16
                                  SCHEDULE "A"
                              OPTION EXERCISE FORM

I, -, hereby exercise the option to purchase - Shares of Hydrogenics Corporation
(the "Company") at a purchase price of $- per Share. This Exercise Notice is
delivered in respect of the option to purchase - Shares of the Company that was
granted to me on - pursuant to the Option Agreement entered into between the
Company and me. In connection with the foregoing, I enclose a certified cheque,
bank draft or money order payable to the Company in the amount of $- in full
payment for the Shares to be received upon exercise of the Option.

                                              __________________________________
Date: ______________________                  Optionee's Signature

<PAGE>   17
                                  SCHEDULE "B"

                             HYDROGENICS CORPORATION

                                OPTION AGREEMENT

HYDROGENICS CORPORATION (the "COMPANY"), hereby grants to the Optionee named
below (the "OPTIONEE"), an option (the "OPTION") to purchase, in accordance with
and subject to the terms, conditions and restrictions of this Agreement together
with the provisions of the Stock Option Plan (the "PLAN") of the Company, the
number and class of shares of the Company at the price per share set forth
below:

Name of Optionee: ______________________________________________________________

Date of Grant: _________________________________________________________________

Class and Number of Shares subject to Option (the "Shares"): ___________________

Exercise Price: ________________________________________________________________

1.       The terms and conditions of the Plan are hereby incorporated herein by
         reference as terms and conditions of this Agreement and all capitalized
         terms used herein shall, unless expressly defined herein in a different
         manner, have the meanings ascribed thereto in the Plan. The Optionee
         acknowledges that the Optionee has received, read and understands the
         Plan.

2.       Subject to section 4.4 of the Plan, and unless otherwise determined by
         the Board at the time of granting an Option, each Option shall be
         exercisable in the instalments set forth in section 4.4 of the Plan.

3.       In no event shall the Option granted hereunder be exercisable after the
         expiration of the relevant Exercise Period.

4.       Each notice relating to the Option, including the exercise thereof,
         shall be in writing. All notices to the Company shall be delivered
         personally or by prepaid registered mail and shall be addressed to:
         Hydrogenics Corporation, 5985 McLaughlin Road, Mississauga, Ontario L5Y
         1B8, Attention: Treasurer. All notices to the Optionee shall be
         addressed to the principal address of the Optionee on file with the
         Company. Either the Company or the Optionee may designate a different
         address by written notice to the other. Such notices shall be deemed to
         be received, if delivered personally, on the date of delivery, and if
         sent by prepaid, registered mail, on the fifth (5th) business day
         following the date of mailing. Any notice given by either the Optionee
         or the Company shall not be binding on the recipient thereof until
         received.

5.       When the issuance of Shares on the exercise of the Option may, in the
         opinion of the Company, conflict or be inconsistent with any applicable
         law or regulation of any governmental agency having jurisdiction, the
         Company reserves the right to refuse to issue such Shares for so long
         as such conflict or inconsistency remains outstanding.
<PAGE>   18
                                     - 2 -

6.       Except as expressly provided in the Plan, during the lifetime of the
         Optionee, the Option granted pursuant to this Agreement may only be
         exercised by the Optionee personally and no assignment or transfer of
         the Option, whether voluntary, involuntary, by operation of law or
         otherwise, shall vest any interest or right in such Option whatsoever
         in any assignee or transferee, and immediately upon any assignment or
         transfer or any attempt to make the same, the Option granted hereunder
         shall terminate and be of no further force or effect.

7.       The Optionee hereby acknowledges and agrees that:

         (a)      any rule, regulation or determination, including the
                  interpretation by the Board of the Plan, the Option granted
                  hereunder and the exercise thereof, shall be final and
                  conclusive for all purposes and binding on all Persons
                  including the Company and the Optionee;

         (b)      the grant of the Option shall not affect in any way the right
                  of the Company or any affiliate of the Company to terminate
                  the employment of the Optionee or the Optionee's term as a
                  Director or Consultant; and

         (c)      the Optionee has been advised to seek independent legal advice
                  in connection with his or her participation in the Plan and
                  the entering into of this Agreement and has been given every
                  opportunity to do so.

8.       This Agreement has been made in and shall be construed under and in
         accordance with the laws of the Province of Ontario and the federal
         laws of Canada applicable therein.

                                                    HYDROGENICS CORPORATION

                                                    Per:
                                                    ____________________________
                                                    Name:
                                                    Title:

SIGNED, SEALED AND DELIVERED
In the presence of:

____________________________                        ___________________________
       Witness                                            Name of Optionee

<PAGE>   19
\

                                   SCHEDULE C

                             HYDROGENICS CORPORATION
            COUNTERPART AND ACKNOWLEDGEMENT TO SHAREHOLDERS AGREEMENT

            TO       HYDROGENICS CORPORATION
                     and each Shareholder
            RE:      The Shareholders Agreement dated January 24, 2000, as
                     amended, (the "Shareholders Agreement") among each of the
                     companies or individuals which has signed a counterpart and
                     acknowledgement or which otherwise agrees to be bound by
                     the terms of the agreement as a shareholder (the
                     "Shareholders") and Hydrogenics Corporation (the "Company")

            The undersigned hereby:

            1.       acknowledges that the undersigned has received and reviewed
                     a copy of the Shareholders Agreement and understands its
                     contents; and

            2.       agrees to be bound by the terms of the Shareholders
                     Agreement as a party to the Shareholders Agreement and as a
                     shareholder of the Company, and shall be entitled to all
                     benefits and obligations of a Shareholder pursuant to the
                     Shareholders Agreement, as fully and effectively as though
                     the undersigned had executed an original copy of the
                     Shareholders Agreement together with the other parties to
                     the Shareholders Agreement.

            Dated this ________________ day of _________, ________________.

SIGNED, SEALED AND DELIVERED
In the presence of:

___________________________                          ___________________________
         Witness                                                Name

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