Document:

SECURITY AGREEMENT

From:    Connectria Corporation, a Missouri corporation ("Debtor"), whose chief
         executive office is located at 10845 Olive Boulevard, Suite 300, Creve
         Coeur, Missouri, 63141.

To:      MDSI Mobile Data Solutions Inc., a Canadian corporation (the "Secured
         Party").

(A)  Grant of Security Interest.

     In consideration  of financial  accommodations  given or continued,  Debtor
grants to the Secured Party a security  interest in the properties,  tangible or
intangible, described in the Property Schedule attached hereto as Exhibit A (the
"Collateral")  to secure payment and performance of all Debtor's  obligations to
the Secured Party,  whether currently existing or arising after the date hereof,
including, without limitation, the Debtor's obligations pursuant to the $250,000
Promissory  Note dated  June __,  2002,  made by Debtor in favor of the  Secured
Party (collectively, the "Indebtedness"). Unless otherwise defined herein, words
used in this  agreement  shall  have  the  meanings  given  them in the  Uniform
Commercial Code. An "Obligor" shall mean any person other than or in addition to
Debtor  who  now or  hereafter  is  indebted  or  obligated  on  sums  or  other
obligations secured hereby, including, without limitation, any guarantor.

(B)  Debtor's  Representations and Agreements.  Debtor warrants,  represents and
agrees:

     1.  Debtor  will  immediately  pay:  (a) any  Indebtedness  when due,  with
interest at the rate or rates provided for by any instrument or document  ("Loan
Document") evidencing the Indebtedness or from which the Indebtedness arises and
(b) the Secured  Party's  reasonable  costs of collecting the  Indebtedness  and
realizing on Collateral,  including  attorneys fees and expenses (whether or not
proceedings  are  instituted,  and  including  costs  relating to  bankruptcy or
insolvency  proceedings),  with interest from date of demand at the maximum rate
provided for by any Loan Document to which the Secured Party is a party.

     2. Debtor owns all Collateral  absolutely and no other person has or claims
any interest in any Collateral,  except for such interests of other persons that
exist as of the date of this  agreement or that arise in the ordinary  course of
business.  Debtor will defend any proceeding that may affect the Secured Party's
security  interest in any  Collateral,  and will indemnify the Secured Party for
all costs and  expenses  of the Secured  Party's  defense.  Notwithstanding  the
foregoing,  in connection with any financing  arrangement  entered into (and any
indebtedness  incurred by Debtor  thereunder,  including  future  advances made)
after the date  hereof with a  financial  institution,  Debtor may grant to such
financial  institution  a  security  interest  or  other  lien  on any or all of
Debtor's assets to secure such financing arrangement.

     3. Debtor will give the Secured Party 30 days' prior written  notice of any
change in Debtor's name, the location of any tangible Collateral or the Debtor's
jurisdiction of organization.

     4.  Debtor  will pay when due all  existing  or  future  charges,  liens or
encumbrances on and all taxes and assessments now or hereafter levied or imposed
on or affecting the Collateral.

     5. Debtor agrees that from time to time,  at the expense of Debtor,  Debtor
shall promptly  execute and deliver all further  instruments and documents,  and
take all further action,  that may be necessary or desirable in order to perfect
and protect any security  interest granted hereby or to enable the Secured Party
to exercise and enforce their rights and remedies  hereunder with respect to any
Collateral.  Debtor  hereby  authorizes  the  Secured  Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the  Collateral  without the signature of Debtor where  permitted by
law. A carbon,  photographic  or other  reproduction  of this  agreement  or any
financing  statement  covering  the  Collateral  or any  part  thereof  shall be
sufficient as a financing  statement where permitted by law. Debtor will provide
the Secured Party such information regarding the nature,  extent,  condition and
location of the Collateral as the Secured Party may request from time to time.

     6. The Secured Party is irrevocably appointed Debtor's  attorney-in-fact to
do any act which  Debtor is  obligated  hereby to do and fails to do within  ten
(10) days after demand  therefor,  and to execute and file in Debtor's  name any
financing  statements  and  amendments or other  filings,  notices and documents
thereto  required to protect

                                     - 1 -
<PAGE>

or perfect the Secured Party's security interest  hereunder,  all to protect and
preserve the Collateral and the Secured Party's rights hereunder. While an Event
of Default has occurred and is  continuing,  the Secured Party may: (a) endorse,
collect  and  receive   delivery  or  payment  of   instruments   and  documents
constituting  Collateral;  (b) make  extension  agreements  with  respect  to or
affecting Collateral,  exchange it for other Collateral,  release persons liable
thereon or take security for the payment  thereof,  and  compromise  disputes in
connection  therewith;  (c)  use  or  operate  Collateral  for  the  purpose  of
preserving Collateral or its value and for preserving or liquidating Collateral;
(d)  demand,  sue for,  collect,  receive and give  acquittance  for any and all
monies  due or to become  due  thereon  or by virtue  thereof;  and (e)  settle,
compromise,  compound,  prosecute or defend an action or proceeding with respect
thereto.

     7. The Debtor  waives (a) any right to require the Secured Party to proceed
against  any  Obligor  before the  Debtor,  or to pursue any other  remedy;  (b)
presentment,  protest  and  notice  of  protest;  (c) any  right to  direct  the
application  proceeds of the Secured  Party's  realization  on any Collateral to
particular  Indebtedness;  and (d) any right of subrogation to the Secured Party
until Indebtedness shall have been paid or performed in full.

(C)  Defaults and Remedies; Non-waiver.

     1. Each of the  following  shall  constitute  an "Event  of  Default:"  (a)
Debtor's failure to pay any sum secured hereby when the same is due; (b) failure
to  perform  or  comply  with any  agreement,  condition  or  provision  in this
agreement  or any Loan  Document  within 30 days after  written  notice from the
Secured Party  indicating that a failure to perform will constitute an "Event of
Default" hereunder;  (c) any warranty contained in this agreement shall prove to
have been  materially  inaccurate  when made;  or (d) the filing of any petition
under  bankruptcy or similar  debtors' relief laws by the Debtor or any Obligor,
the passage of 60 days after the filing of any such petition by another  against
the Debtor or any Obligor without the relevant  proceeding  being  discharged or
stayed,  or any  assignment  for the benefit of  creditors or  appointment  of a
receiver involving substantially all of the Debtor's assets.

     2. During the continuance of an Event of Default, the Secured Party may, by
notice to the  Debtor,  declare  that  they are  realizing  upon the  Collateral
hereunder.  Upon such notice, so long as an Event of Default is continuing:  (a)
the Secured  Party may declare all or any part of the  Indebtedness  owed to the
Secured  Party to be  immediately  due and (b) the Secured  Party shall have all
rights  provided by this  agreement  or provided by law,  including  the Uniform
Commercial  Code, and may sell Collateral in one or more sales,  and such rights
shall be exercised as determined by the Secured Party.  (The preceding  sentence
shall not limit the rights and  remedies  of the Secured  Party  pursuant to the
Loan Documents with respect to its Indebtedness.) Upon the occurrence and during
the  continuance  of an Event of Default,  the proceeds of any sale of, or other
realization  upon,  all or any part of the Collateral and any cash held shall be
applied by the Secured Party in the following order of priorities: (i) first, to
payment of the expenses of such sale or other realization,  including reasonable
compensation  to agents and  counsel for the Secured  Party,  and all  expenses,
liabilities  and advances  incurred or made by the Secured  Party in  connection
therewith;  (ii) second, to the payment of all indebtedness of any other secured
parties with respect to security  interests  (A) granted  prior to the effective
date of this Security Agreement for indebtedness incurred prior to the effective
date of this Security Agreement, or (B) granted pursuant to Section (B)2 of this
Security  Agreement,  until all such indebtedness of such parties have been paid
in full; (iii) third, to the payment of all Indebtedness to the Secured Party or
its respective  successors and assigns,  until all  Indebtedness  of the Secured
Party  shall  have been paid in full;  (v)  fourth,  to the  payment  of amounts
required by law; and (iv) finally, to payment to the Debtor or its successors or
assigns, or as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.  At the Secured Party's option,  any such sale may
be conducted in any locality where the Secured Party has an office.  The Secured
Party may  purchase  at such  sale.  The  Secured  Party may  require  Debtor to
assemble the  Collateral  and make it available to the Secured  Party at a place
designated by the Secured  Party that is reasonably  convenient to both parties.
The Secured Party's  acceptance of partial or delinquent  payments or failure of
the Secured  Party to  exercise  any right or remedy at any time shall not waive
any  obligation of any Debtor or Obligor,  or any right or remedy of the Secured
Party, or modify this agreement, or waive any other similar default.

                                     - 2 -
<PAGE>

(D)  Expenses.

     In the event that the Debtor  fails to comply  with the  provisions  of the
Loan Documents or this Security Agreement, such that the validity, perfection or
rank of any security interest is thereby  diminished or put at risk, the Secured
Party (i) may  deliver  written  notice  of such  non-compliance  to the  Debtor
requesting  that it cure such  non-compliance,  and (ii) if within ten  business
days  after  delivery  of such  notice  the  Debtor  has  failed  to  cure  such
non-compliance, the Secured Party may, but shall not be required to, effect such
compliance on behalf of the Debtor,  and the Debtor shall  reimburse the Secured
Party for the reasonable costs thereof on demand. All insurance expenses and all
expenses of protecting,  storing, warehousing,  appraising,  insuring, handling,
maintaining and shipping the Collateral,  any and all excise,  property,  sales,
and use taxes imposed by any state,  federal,  or local  authority on any of the
Collateral,  or in  respect  of  periodic  appraisals  and  inspections  of  the
Collateral  to the extent the same may  reasonably  be  requested by the Secured
Party from time to time, or in respect of the sale or other disposition thereof,
shall be borne and paid by the Debtor;  and if the Debtor  fails to promptly pay
any portion thereof when due, the Secured Party may, at their option,  but shall
not be required to, pay the same and charge the Debtor's account  therefor,  and
the Debtor  agrees to  reimburse  the  Secured  Party  therefor  on demand.  All
reasonable  sums  so  paid  or  incurred  by the  Secured  Party  for any of the
foregoing  and any and all other sums for which the  Debtor  may  become  liable
hereunder and all costs and expenses (including  attorneys' fees, legal expenses
and court  costs)  reasonably  incurred by the  Secured  Party in  enforcing  or
protecting the security  interests or any of their rights or remedies under this
Security Agreement,  shall, together with interest thereon for each day from the
date demanded until paid at the rate of 8% per annum, be obligations  secured by
this Security Agreement.

(E)  Subordination.

     Secured Party hereby agrees that in connection with Debtor's  entering into
any credit  facility or finance  arrangement  with a financial  institution  for
purposes of obtaining  working  capital and other general  corporate  financing,
Secured  Party  shall  execute  and  deliver  to such  financial  institution  a
subordination agreement subordinating in favor of such financial institution its
rights to payment of any  indebtedness  owed by Debtor to Secured  Party and all
security interests which Debtor has then granted to Secured Party. Secured Party
further agrees to execute and deliver to such financial  institution  such other
documents  as such  financial  institution  may  reasonably  request in order to
implement such subordination agreement.

(F)  General Provisions.

     1. On transfer of all or any part of the Indebtedness,  as permitted by the
Loan  Document,  Secured  Party  may  transfer  all or any part of the  Security
Interest securing such Indebtedness. This agreement benefits the Secured Party's
successors and assigns and binds Debtor's successors and assigns. Time is of the
essence.  This agreement and  supplementary  schedules hereto contain the entire
security agreement between the Secured Party and Debtor. Debtor will execute any
additional  agreements,   assignments  or  documents  which  the  Secured  Party
reasonably  may reasonably  request to effectuate  this agreement or perfect any
rights or interests of Secured Party hereunder. This agreement shall be governed
by, and construed in accordance with, the laws of the State of Washington.

     2. Beyond the  exercise of  reasonable  care in the  custody  thereof,  the
Secured  Party  shall have no duty as to any  Collateral  in its  possession  or
control  or in the  possession  or  control of any agent or bailee or any income
thereon or as to the  preservation  of rights against prior parties or any other
rights pertaining  thereto.  The Secured Party shall be deemed to have exercised
reasonable  care in the  custody  of the  Collateral  in its  possession  if the
Collateral is accorded  treatment  substantially  equal to that which it accords
its own property,  and shall not be liable or responsible for any loss or damage
to any of the Collateral,  or for any diminution in the value thereof, by reason
of the  act  or  omission  of  any  warehouseman,  carrier,  forwarding  agency,
consignee or other agent or bailee  selected by the Secured Party in good faith;
provided,  however,  nothing in this Section  shall be deemed to  prejudice  any
rights of the Debtor  against such  warehouseman,  carrier,  forwarding  agency,
consignee or other agent or bailee.

     3. Neither this Security Agreement nor any provision hereof may be changed,
waived,  discharged  or  terminated  orally,  but only in writing  signed by the
Debtor and the Secured Party.

                                     - 3 -
<PAGE>

     4. All notices, approvals, requests, demands and other communications shall
be given in accordance with the Loan Documents.

     5. Upon the repayment in full of the Indebtedness,  this Security Agreement
shall terminate and all rights to the Collateral shall revert to the Debtor.

     6. Captions, titles and section and paragraph divisions and arrangements in
this agreement and in any instruments and documents heretofore or hereafter made
or executed are for convenience and for reference only, and shall not affect the
meaning,  interpretation  or  construction  thereof.  Whenever  the  context  so
requires,  any gender shall include all other genders,  and the singular  number
shall include the plural.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,  EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

Dated this 30th day of June, 2002

                                    CONNECTRIA CORPORATION

                                    By:     /s/ Richard S. Waidmann
                                            -----------------------------------
                                    Name:   Richard S. Waidmann
                                            -----------------------------------
                                    Its:    President
                                            -----------------------------------

                                     - 4 -
<PAGE>

                                    EXHIBIT A

                                PROPERTY SCHEDULE

Description of Collateral:

     All Debtor's right, title and interest in and to the following:

     (a) All  inventory  now owned or hereafter  at any time  acquired by Debtor
which  is held for sale or  lease,  or is  furnished  or to be  furnished  under
contracts of service, or is held as raw materials, work in process, or materials
used or  consumed  or to be used  or  consumed  in  Debtor's  business,  and all
manufacturing  and  processing  rights,   patents,   patent  rights,   licenses,
trademarks,  trade names,  domain names,  royalties and copyrights in connection
therewith  to the extent that such  rights may be assigned to the Secured  Party
including  without  limiting the generality of the  foregoing,  all documents of
title now  existing or  hereafter  at any time  acquired by Debtor and  covering
goods of any type or kind hereinabove described;

     (b) All accounts  (rights to payment for property that has been or is to be
sold, leased, licensed, assigned or otherwise disposed of sold or leased, or for
services rendered or for services rendered or to be rendered, or for a secondary
obligation  incurred or to be  incurred)  of Debtor now existing or hereafter at
any time acquired;

     (c)  All  general   intangibles,   including  without   limitation  payment
intangibles  and other  rights of Debtor to the  payment  of money no matter how
evidenced,  rights to tax refunds,  and all chattel paper,  investment property,
documents,  letters of credit and letter of credit rights, instruments and other
writings  evidencing  such right now existing or hereafter at any time,  and all
commercial  tort claims,  and all contracts  (rights to payment under a contract
for the sale or lease of goods or the furnishing of services,  which rights have
not been earned by  performance)  and contract  rights of Debtor now existing or
hereafter at any time arising;

     (d) All equipment, and all accessions thereto;

     (e) All now existing and hereafter  acquired books and records  relating to
the foregoing  collateral and all equipment  containing  such books and records;
and

     (f) All proceeds of the foregoing collateral (including, without limitation
proceeds which constitute property of the types described in clauses (a) through
(e) above),  and  including  proceeds  of  insurance,  products  thereof and any
property  which  Debtor may  receive on account  thereof .  "Proceeds"  includes
whatever  is  acquired  upon  the  sale,  lease,  licenses,  exchange  or  other
disposition of collateral or proceeds,  whether such disposition is voluntary or
involuntary, whatever is collected on, or distributed on account of, collateral,
rights arising out of collateral,  claims arising out of the loss, nonconformity
or  interference  with the use of,  defects  or  infringements  of rights in, or
damage to, collateral and insurance payable (whether or not the Secured Party is
the loss payee  thereof) by reason of the loss or  nonconformity  of, defects or
infringement  of rights in, or damage  to,  the  collateral  or  otherwise  with
respect to any of the foregoing.

                                     - 5 -MDSI MOBILE DATA SOLUTIONS INC.

                            2002 Stock Purchase Plan

Part A - Introduction

1.   Purpose

The  purpose of the Plan is to  provide an  incentive  to  employees  and senior
officers  from  time to time to  acquire  a  proprietary  interest  in MDSI,  to
encourage  their long term  commitment  and continued  employment or involvement
with MDSI,  and to increase their  individual and combined  efforts on behalf of
MDSI.

The Plan consists of the following two separate components as described below:

(a)  the MDSI Purchase Plan; and
(b)  the Employee Share Ownership Program.

2.   Definitions

In this Plan, the following words have the following meanings:

(a)  "Board" means the Board of Directors of MDSI;

(b)  "Committee" means the Compensation Committee of MDSI;

(c)  "Employee"  means any full or part-time  employee or Senior Officer of MDSI
     who works on average  at least 20 hours per week,  has  completed  at least
     three months of their probationary  period and qualifies to purchase Shares
     under the Plan, and such other persons as may be considered to be employees
     or the equivalent thereof by the applicable regulatory  authorities for the
     purposes of this Plan;

(d)  "Effective Date" means February 28, 2002;

(e)  "ESOP" or "Employee Share Ownership Program" means the program administered
     by the  Province of British  Columbia  under the  Employee  Investment  Act
     (British  Columbia) to provide  employees  with  provincial  tax credits to
     invest in their employers.

(f)  "MDSI" means MDSI Mobile Data Solutions Inc. and its subsidiaries.

(g)  "Plan" means this Stock Purchase Plan;

(h)  "President" means the president of MDSI;

<PAGE>

                                       2

(i)  "Rules"  means  the  rules  adopted  by MDSI  from  time  to  time  for the
     administration  of the Plan in accordance with the Employee  Investment Act
     of British Columbia;

(j)  "Senior Officer" means the President, a vice-president,  the secretary, and
     any such other person as is designated as an officer by the Board, provided
     such person is an employee of MDSI;

(k)  "Shares" means common shares without par value in the capital of MDSI to be
     issued from treasury which  Employees are entitled to purchase  pursuant to
     this Plan;

(l)  "Subscription  Price" means the greater of: (i) the TSE weighted average of
     MDSI shares for the first five (5) business  days in the third month of the
     most recently  completed  fiscal quarter of MDSI prior to the  commencement
     date of the quarterly  subscription  period, less fifteen percent (15%), or
     (ii) the average of the highest and lowest  quoted  selling  prices of MDSI
     shares on the TSE on the fifth  business day in the third month of the most
     recently completed fiscal quarter of MDSI prior to the commencement date of
     the quarterly subscription period, less fifteen percent (15%); and

(m)  "TSE" means the Toronto Stock Exchange.

3.   Administration

The Plan shall be effective as of the Effective Date and shall  terminate on the
earlier of (a) the date which is ten years from the Effective Date; and (b) such
other date as the Board may  determine.  The Plan shall be  administered  by the
Committee  which shall be  appointed by the Board from among its own members and
shall consist of not less than three (3) members. All decisions of the Committee
shall be approved  by its members on a majority  vote basis and shall be binding
and conclusive for all purposes and upon all persons.

Subject to any express  direction by resolution of the Board and to the rules of
the TSE from time to time, the Committee shall have full authority to:

(a)  determine and designate from time to time Employees,  as defined above, who
     are eligible to participate under the Plan;

(b)  determine  the time or times when,  and the manner in which,  Shares may be
     purchased under the Plan;

(c)  determine from time to time the  Subscription  Price,  as defined above, of
     the Shares; and

<PAGE>

                                       3

(d)  interpret  the Plan and to make such rules and  regulations  and  establish
     such procedures as it deems appropriate for the administration of the Plan.

Part B - MDSI Purchase Plan

4.   Contributions

(a)  Employees  who are  eligible to purchase  Shares may do so through  payroll
     deduction and are  permitted to  contribute up to CDN$10,000  annually at a
     maximum rate of CDN$2,500  per quarter.  Payroll  deduction  authorizations
     will continue indefinitely at the rate selected (the "Contribution") unless
     the Employee  changes or suspends the  designated  deduction or  terminates
     participation in the Plan.

(b)  An Employee may change the designated payroll deduction quarterly by giving
     MDSI thirty (30) days advance notice of such change on the appropriate form
     provided by MDSI.  If the Employee  changes the  designated  percentage  of
     payroll  deduction no further change shall be permitted  until the start of
     the next quarter following the effective date of such change.

(c)  An Employee may suspend  payroll  deductions at any time by completing  and
     submitting the appropriate form provided by MDSI. If the Employee  suspends
     Contributions,  further  Contributions  shall not be  permitted to the Plan
     until the start of the next quarter  following the  effective  date of such
     suspension.

(d)  The MDSI  Purchase  Plan is  intended  to  qualify  as an  "employee  stock
     purchase  plan"  within the  meaning of  Section  423 of the United  States
     Internal  Revenue  Code of 1986,  as  amended  (the  "Code"),  and shall be
     interpreted and administered in accordance with that intent.

5.   Method of Operation

In accordance with section 2(l) hereof, a Subscription  Price for Shares will be
established  by MDSI. An Employee  wishing to participate in the Plan must enter
into a  subscription  agreement  for Shares  with MDSI prior to the start of the
year or the quarter, as the case may be. Employees may also enter into an annual
or balance  of year  subscription  agreement  with MDSI at the start of the MDSI
fiscal year or any quarter,  provided that the subscription price for the Shares
subscribed will be determined at the start of each quarter.

Notwithstanding  any other  provision  to the  contrary,  no  Employee  shall be
permitted  to  subscribe  for any shares  under the MDSI  Purchase  Plan if such
Employee,  immediately  after such  subscription,  owns shares that  account for
(including  all Shares that may be  purchased  under  outstanding  subscriptions
under the MDSI Purchase Plan and any other

<PAGE>

                                       4

outstanding  options to purchase  shares) five percent (5%) or more of the total
combined  voting  power  or  value  of all  classes  of  shares  of  MDSI or its
subsidiaries,  taking into  account the stock  ownership  rules in Code  Section
424(d).

A  plan  account  will  be  established  in  the  name  of  each  Employee.  All
Contributions  to the MDSI  Purchase  Plan shall be held in trust by MDSI.  MDSI
will not be required to segregate the Contributions  under the Plan from its own
corporate funds or to pay interest thereon.

At the end of each MDSI fiscal  quarter in which an Employee has  subscribed for
Shares,  the  Employee  will have the  following  options  with  respect  to his
Contributions:

(a)  Authorize  MDSI  to  convert  the  total  Contribution  to  Shares  at  the
     previously established  Subscription Price for that quarter, and issue such
     Shares to the Employee;

(b)  Authorize MDSI to continue to hold the total Contribution in trust for that
     Employee  to  be  applied  against  future   purchases  of  Shares  at  the
     Subscription  Price to be established  for the MDSI fiscal quarter in which
     the Employee  elects to purchase the Shares,  as instructed by the Employee
     from time to time.

In addition to the foregoing, each Employee's total Contribution may be refunded
to such Employee in any of the following circumstances:

(c)  on  the  death  of  an  Employee,  in  which  case  such  Employee's  total
     Contribution may be refunded to such Employee's lawful heirs,  executors or
     administrators at their option;

(d)  if the  employment of an Employee is  terminated  for any reason other than
     death, in which case such Employee's total  Contribution may be refunded to
     the Employee, at the Employee's option; or

(e)  in the event of any statutory  merger,  plan of arrangement,  amalgamation,
     consolidation,  sale of all or substantially  all of the assets of MDSI, or
     sale, pursuant to an agreement with MDSI, of securities of MDSI pursuant to
     which MDSI is or becomes a wholly-owned  subsidiary of another  corporation
     after  the  effective  date  of such  transaction,  such  Employee's  total
     Contribution may be refunded to the Employee, at the Employee's option.

During an Employee's lifetime,  an Employee's right to purchase Shares under the
MDSI Purchase Plan is exercisable only by the Employee, and an Employee's rights
under  the  MDSI  Purchase  Plan,   including  rights  to  accumulated   payroll
deductions,  may not be pledged,  assigned,  encumbered or otherwise transferred
for any reason other than by will or the laws of descent and distribution.

<PAGE>

                                       5

6.   Issue of Shares

Thirty (30) days after the end of each of MDSI fiscal quarter, unless instructed
otherwise  by the  Employee in writing,  MDSI will issue from its  treasury  and
deliver to each Employee,  Shares equal in the value to the Contribution held in
trust on such date by MDSI for such Employee converted at the Subscription Price
for such quarter.  If such conversion  would otherwise result in the issue to an
Employee of a fraction of a share, MDSI will issue only such whole shares as are
issuable. MDSI shall hold any unused balance of the Contribution in trust for an
Employee until used in accordance with the MDSI Purchase Plan.

7.   Hold Period

All Shares issued to Employees under the MDSI Purchase Plan will be subject to a
180 day hold period.

8.   RSP Option

An  Employee  may make an  agreement  with a trustee  selected by him or her, on
terms  complying  with the Income Tax Act (Canada),  to  contribute  Shares to a
retirement  savings plan (RSP), but such  contribution may only occur subsequent
to the Shares being  purchased  and issued under the MDSI  Purchase  Plan. If an
Employee  intends to contribute  Shares to a RSP purchased  under Part C of this
Plan, such contribution  requires the prior approval of both the Company and the
Government of British  Columbia.  Each Employee should  ascertain the advantages
and disadvantages or a RSP for himself or herself. Information is available from
a number of sources including the Canada Customs and Revenue Agency.

Part C - Employee Share Ownership Program

9.   Method of Operation

Unless expressly stated otherwise, all provisions contained in the MDSI Purchase
Plan with respect to Contributions from Employees will apply to this Part C.

10.  Provincial Tax Incentives

The  Government of British  Columbia will provide tax  incentives  under certain
conditions to Employees who invest in MDSI through the Employee  Investment  Act
and the Rules. The provincial tax credit is equal to 20% of the amount invested,
subject to a maximum of CDN  $2,000  per year and a  lifetime  exemption  of CDN
$10,000. Shares fully paid for in the first sixty (60) days of the year can have
the tax credit applied against income for

<PAGE>

                                       6

that year or the previous year. The provincial tax credits do not have any carry
forward or carry back provisions.

11.  Maximum Individual Contributions

The maximum value of Shares that an Employee may purchase and receive provincial
tax  credits on is CDN $10,000  annually  and CDN $50,000  lifetime.  (i.e.  20%
credit of CDN$10,000 = $2,000 tax credit  annually) The maximum  aggregate value
of Shares that an Employee can  purchase  under the MDSI  Purchase  Plan and the
ESOP is CDN$10,000  per year at a maximum rate of CDN$2,500  per quarter.  These
Shares may also be put into an RSP for an additional federal tax deduction.

12.  Hold Period

All Shares  issued to Employees  and used for  provincial  tax credits under the
ESOP are subject to a three year hold period  with an escrow  agent,  subject to
exceptions for the sale of the Shares in situations of hardship.

13.  Purchase Method

Shares must be purchased by Employees  either through payroll  deduction or lump
sum to be eligible for tax credits under this Part C of the Plan.

14.  Residency Requirement

An  Employee  must be a  resident  of the  Province  of British  Columbia  to be
eligible to participate in the ESOP.

Part D - General

15.  Payment

At the discretion of the Committee and with sufficient  advance notice, the full
purchase  price  for  each  of the  Shares  may be  paid  by all or  none of the
Employees in cash or by  certified  cheque.  An Employee  shall have none of the
rights of a shareholder  in respect of the Shares until the shares are issued to
such Employee.

16.  Employment/Appointment

Nothing  contained  in the Plan shall  confer upon any  Employee  any right with
respect to employment or to continue in the service of MDSI, or interfere in any
way with  the  right  of MDSI or its  directors  to  terminate  such  Employee's
employment  or  service  at any time.  Participation  in any part of the Plan is
voluntary.

<PAGE>

                                       7

17.  Termination of Employment or Service

If an Employee shall cease to be employed by or provide  services to MDSI or any
of its  subsidiaries  for any reason or shall  receive  notice  from MDSI of the
termination of his employment or involvement, the Employee shall be deemed to be
no longer eligible to participate under the Plan. All applicable hold periods on
the Shares will remain after the cessation of employment  with MDSI or provision
of services to it. Upon  termination of employment or involvement  with MDSI, an
Employee who has fully completed  his/her  probationary  period or any extension
thereof  may  only  elect  to deal  with  his/her  unconverted  Contribution  in
accordance  with  section  5(a) or (d) hereof.  Any  Employee who does not fully
complete his/her  probationary period or any extension thereof may only elect to
deal with  his/her  unconverted  Contribution  in  accordance  with section 5(d)
hereof.

18.  Adjustments to Capital Structure

In the event of any increase or decrease in the number of issued  Shares of MDSI
resulting from a stock split, reverse stock split, stock dividend,  combination,
recapitalization  or  reclassification  of the Shares,  or any other increase or
decrease  in  the  number  of  issued  Shares   effected   without   receipt  of
consideration by MDSI (an "Extraordinary  Stock Event"),  the Subscription Price
shall be adjusted as follows:

(a) If the  Extraordinary  Share Event  occurs  during the five (5) business day
period during which the Subscription Price may be calculated pursuant to section
2(l)(i),  the TSE  weighted  average for  purposes of section  2(l)(i)  shall be
appropriately adjusted to account for such Extraordinary Share Event;

(b) If the Extraordinary Share Event occurs during the fifth business day in the
third month of the fiscal  quarter  during which the  Subscription  Price may be
calculated  pursuant to section 2(l)(ii),  the average of the highest and lowest
quoted selling  prices of MDSI shares for purposes of section  2(l)(ii) shall be
appropriately adjusted to account for such Extraordinary Share Event; and

(c) If the  Extraordinary  Share Event occurs after the  Subscription  Price has
been  initially   determined  and  prior  to  the  issuance  of  Shares  at  the
Subscription  Price, the Subscription  Price shall be appropriately  adjusted to
account for such Extraordinary Share Event.

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 MDSI of shares of stock of any  class,  or  securities
convertible into shares of stock of any class,  shall affect,  and no adjustment
by reason  thereof shall be made with respect to, the  Subscription  Price.  The
term "Extraordinary Stock Event", as used herein, shall not be deemed to include
the conversion of any convertible securities of MDSI.

<PAGE>

                                       8

19.  Tax Matters

All Employees  participating  under the Plan are  encouraged to seek advice from
their professional advisors with respect to the tax implications of the Plan.

20.  Record Keeping

MDSI shall maintain a register in which shall be recorded:

(a)  the name and address of each Employee participating under the Plan;

(b)  the parts of the Plan in which he or she participates;

(c)  any Contributions made by such persons;

(d)  the number of Shares issued and the number of Shares outstanding.

21.  Effective Date and Term

Subject  to any  longer  period of time which may be  authorized  by  regulatory
approval,  the Plan  shall  be  effective  as of the  Effective  Date and  shall
terminate on the earlier of:

(a)  the date which is ten years from the Effective Date; and

(b)  such other date as the Board may determine.

22.  Plan Subject to Regulatory & Shareholder Approval

Any rights granted by MDSI prior to the date of the first annual general meeting
of the shareholders of MDSI duly convened following the introduction of the Plan
will be  subject  to the  approval  of the  TSE,  the  Employee  Investment  Act
administrator and shareholders of MDSI. If such approvals are not obtained, each
and every right  granted  under the Plan shall be null and void and shall convey
no rights to the Employee and all funds held in trust will be returned.

23.  Risk

The Plan offers no guarantee against loss due to market declines.  Each Employee
participating  in the Plan must accept the risks of market  fluctuations as well
as the benefits of share ownership.

<PAGE>

                                       9

24.  Expenses of Plan

MDSI will pay all the direct  administrative  costs of the Plan,  excluding  any
service or handling  charges,  fees,  commissions,  or  individual  trustee fees
charged to Employees by any third parties.

25.  Maximum Number of Shares

Without  further  approval by the  shareholders  of MDSI,  the maximum number of
Shares to be reserved for issuance by MDSI under the MDSI  Purchase Plan and the
Employee  Share  Ownership  Program  will  not  exceed  100,000  shares  in  the
aggregate.

Notwithstanding  any other  provision of this Plan, in any MDSI fiscal year, the
maximum  aggregate  amount that an Employee  may  contribute  under this Plan is
CDN$10,000 per annum at a maximum rate of CDN$2,500 per quarter.

26.  Securities Law Requirements

MDSI shall use all  reasonable  efforts but shall not be  obligated to issue any
Shares  pursuant to the Plan, if such issuance  would, in the opinion of counsel
for  MDSI,  violate  the  Securities  Act of  British  Columbia  (or  any  other
applicable  statute),  as it may be in effect at that time.  Each Share shall be
subject to the further requirement that if at any time the Committee  determines
that the listing or qualification of the Share under any securities  legislation
or other applicable law, or the consent or approval of any governmental or other
regulatory body  (including any applicable  stock  exchange),  is necessary as a
condition  of, or in connection  with,  the issue of the Share  hereunder,  such
Share  shall  not be issued  unless  such  listing,  qualification,  consent  or
approval has been effected or obtained free of any  conditions not acceptable to
the Committee.

27.  Amendment of the Plan

(a)  The  Board  may  subject  to  regulatory  approval,  amend the Plan if such
     amendment  is in  compliance  with the rules of the TSE and the  ESOP.  The
     Committee  may correct any defect or supply any omission or  reconcile  any
     inconsistency  in the  Plan  in the  manner  and to  the  extent  it  deems
     desirable to carry the Plan into effect  without  action on the part of the
     shareholders  of MDSI;  provided,  however,  that  except as  provided  for
     adjustment in this Section 27, unless the  shareholders  of MDSI shall have
     first approved thereof the total number of Shares to be issued shall not be
     increased beyond those contemplated in the Plan.

(b)  The Board shall have the power, in the event of:

     (i)  any  disposition  of   substantially   all  of  the  assets  of  MDSI,
          dissolution or any merger, amalgamation or consolidation of MDSI, with
          or into any

<PAGE>

                                       10

          other corporation, or the merger, amalgamation or consolidation of any
          other corporation with or into MDSI; or

     (ii) any acquisition pursuant to a public tender offer of a majority of the
          then issued and outstanding common shares without par value of MDSI;

     to, subject to compliance with the rules of the Employee Investment Act and
     the TSE, amend all outstanding  subscription  agreements with its Employees
     to permit the issuance of all such Shares  subscribed  and paid for in full
     prior to the effectiveness of any such  transaction,  and to terminate such
     subscription   agreements  as  of  such   effectiveness   in  the  case  of
     transactions   referred  to  in  subsection  (i)  above,   and  as  of  the
     effectiveness  of such  tender  offer or such  later  date as the Board may
     determine  in the case of any  transaction  described  in  subsection  (ii)
     above.  If the  Board  exercises  such  power,  all  Employee  subscription
     agreements  then  outstanding  and  subject to such  requirements  shall be
     deemed to have been amended to permit the issuance of the exercise  thereof
     in whole  or in part by the  Employee  at any time or from  time to time as
     determined by the Board prior to the effectiveness of such transaction, and
     such  subscription  agreements  shall also be deemed to have  terminated as
     provided above.

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