Document:

Exhibit 10.24

Consulting Engagement Agreement

This Consulting
Engagement Agreement (the “Agreement”) is made effective as of August 12, 2002,
(the “Commencement Date”) between The Brenner Group, Inc., a Delaware
corporation, with its principal place of business located at 19200 Stevens
Creek Blvd., Suite 200, Cupertino, CA 95014-2530 (“Consultant”) and HPL
Technologies, Inc.,  a Delaware
corporation, with its principal place of business located at 2033 Gateway
Place, Suite 400, San Jose, CA  95110
(“Client”).

RECITALS

A.           Consultant is in the business of providing management
services to client companies in all areas of business operations.

B.             Client is in need of assistance in the
form provided by Consultant.

C.             Consultant and Client desire to enter
into a consulting arrangement upon the terms and conditions set forth herein.

NOW, THEREFORE, the parties hereto agree as follows:

1.               ENGAGEMENT: 
Client agrees to engage Consultant under the terms of this Agreement,
and Consultant agrees to accept such engagement.  Consultant, or its representative shall be available to Client
according to the time or the projects specified in Exhibit A, attached
hereto and made a part of this Agreement by reference herein.

2.               TERM AND TERMINATION: 
Consultant’s engagement pursuant to this Agreement shall commence on August
12, 2002 and continue until October 31, 2002, unless terminated earlier, as
provided herein (the “Term”).  At the
end of the Term, this Agreement shall automatically be extended for periods of one
(1) month each, unless one party gives the other party two (2) weeks notice of
their intent to not extend the Agreement. 
Other than for the reasons described in Section 4, below, either party
may terminate this Agreement during the Term, or any extensions thereof, by giving
the other party two (2) weeks written notice of their intent to so terminate.

3.               COMPENSATION: 
As compensation for services rendered by Consultant pursuant to this
Agreement, Client shall pay Consultant the sum(s) as shown in the attached
Exhibits, plus reimbursement for any expenses incurred on Client’s behalf.  If Consultant uses his automobile on
Client’s behalf, Client shall reimburse Consultant for actual miles traveled at
the rate of $0.33 per mile.  Client
agrees that Consultant’s rates in the attached Exhibits may be modified from
time to time with 30 days’ notice to Client.

 

Page 1
of 6 

 

4.               PERSONNEL:  Client and
Consultant agree that Consultant is not in the business of providing a recruiting
or placement service for permanent positions. 
However, if Client wishes to offer employment to any of Consultant’s
representatives, and if the representative wishes to accept such employment,
Consultant has the right to invoice Client, and Client will promptly pay, a fee
as shown in the following table:

	
   

  	
  Period
  after the Effective Date of the Agreement

  	
   

  	
  % of
  estimated first

  year’s compensation**

  	
   

  
	
   

  	
  Within the first six (6) months

  	
   

  	
  100%

  	
   

  
	
   

  	
  Between seven (7) months and nine (9) months

  	
   

  	
  85%

  	
   

  
	
   

  	
  After the commencement of the tenth (10th) month

  	
   

  	
  70%

  	
   

  

** For purposes of this
Agreement, “estimated first year’s compensation” shall be defined to include
first year’s annualized salary, first year’s estimated annualized bonus, and
number of shares of Client’s stock to be vested to Consultant’s representative
by the first anniversary of representative’s employment by Client.  In the case of equity, a warrant shall be
issued to Consultant for the percentage of representative’s shares, at the same
price as those as the representative. 
Equity considered “vested” shall be determined as a function of the
passage of time (i.e. disregarding cliffs and other vesting deferral mechanisms
built into the representative’s option plan).

Client and Consultant
also agree that the Client shall not offer any of Consultant’s Representative
(including all Exhibits, and whether or not Consultant’s Representative remains
an employee of Consultant) a consulting or other non-permanent form of
employment or engagement within twenty-four (24) months of termination of
Client’s engagement with Consultant, without obtaining the express and written
consent of Consultant.  In the absence
of this approval, Consultant has the right to invoice Client, and Client will
promptly pay, a fee equal to 100% of the total amount paid by Client to the
Consultant’s former Representative for the greater of the duration of the
project or until the time which is twenty-four (24) months after the
termination of the Agreement.

5.               INVOICING AND PAYMENT: 
Consultant shall invoice Client as of the fifteenth and last day of each
month for services performed pursuant to this Agreement.  Client shall pay Consultant’s invoice, in
full, within five (5) business days of the date of Consultant’s invoice.  If Client does not pay Consultant pursuant
to these terms, Consultant shall have the right to receive a retainer, as
described in Paragraph 6, below.

 

Page 2
of 6 

 

6.               RETAINER:  If Consultant has the right, pursuant to Paragraph 5, above, to
receive a retainer from Client, and further, if Consultant requests such
retainer, Client shall pay Consultant a retainer (the “Retainer”) upon written
demand from Consultant.  Such retainer
shall approximate Consultant’s best estimate of one half month’s worth of
Consultant’s charges working on Client’s matters.  Client agrees that such retainer shall be replenished to an
amount equal to the following one half month’s projected amount due for
projected services during such period. 
Any retainer remaining shall be applied against the final invoice
pursuant to this Agreement.

7.               STATUS:  Consultant is
engaged by Client as an independent contractor, and not as an employee.  As such, Consultant is solely responsible
for and will make proper and timely payment of any and all taxes on amounts
paid to him by Client, including, if applicable, estimated state and federal
income taxes, self employment taxes, state disability insurance taxes and the
like.  Consultant will not receive or
participate in any of Client’s employee health insurance or any other employee
fringe benefit programs, and Consultant will not be covered by Client’s
workers’ compensation and other insurance policies.

8.               PROPRIETARY INFORMATION AND INVENTIONS: 
Consultant understands that certain proprietary information of Client’s
may be disclosed to him during the term of this Agreement.  Unless such information was known to him
prior to such disclosure, or becomes part of the public domain, Consultant
agrees not to disclose such information to third parties for a period of twenty
four months, without prior written consent of the Client.  Consultant acknowledges that, if requested
by Client, he will sign an additional and separate Non-Disclosure Agreement
with Client.

9.               NO AUTHORITY: 
Consultant does not have, and is not granted by this Agreement, any
express or implied right or authority to assume or create any obligations on
behalf of, or in the name of, Client; or to bind Client to, or enter into,
directly or indirectly, any contract, agreement or undertaking with any third
party.  If Client wishes to grant such
authority to Consultant, Client shall issue such authority to Consultant in
writing prior to Consultant taking any such action.

10.         INDEMNITY:  Client shall
offer the same level of indemnification to Consultant as Client would normally
provide to its officers and directors, including such resolutions by its Board
of Directors as are customary regarding officer and director indemnification.

 

 

Page 3
of 6 

 

11.         MISCELLANEOUS:

A.           ASSIGNMENT: 
This Agreement may not be assigned by either party hereto without the
prior written consent of the other.

B.             ADDITIONAL PERSONNEL: 
Consultant may use additional personnel to support the requirements of
Client under this Agreement.  The
additional personnel will only be used after Client has agreed in writing to:
(a) such addition; (b) the compensation for such addition;  (c) the term of such addition, and
(d) such addition is made a part of this Agreement by an amendment to
Exhibit A and executed by both parties.

C.             GOVERNING LAW: This Agreement shall be governed by and
construed in accordance with the laws of the State of California.

D.            NOTICES:  All notices
hereunder shall be in writing, and shall be deemed given upon personal delivery
or upon placing in the United States postal service First Class delivery
system, to the addresses set forth below:

	
   

  	
  If to Consultant:

  	
  If to Client:

  	
   

  
	
   

  	
   

  	
  Richard M. Brenner

  	
   

  	
  Elie Antoun

  	
   

  
	
   

  	
   

  	
  Chief Executive Officer

  	
   

  	
  Chairman of the Board

  	
   

  
	
   

  	
   

  	
  The Brenner Group, Inc.

  	
   

  	
  HPL Technologies, Inc.

  	
   

  
	
   

  	
   

  	
  19200 Stevens Creek
  Blvd., St. 200

  	
   

  	
  2033 Gateway Place,
  Suite 400

  	
   

  
	
   

  	
   

  	
  Cupertino, CA  95014-2530

  	
   

  	
  San Jose, CA  95110

  	
   

  

 

Either party may
change its notice address by written notice to the other in accordance
herewith.

E.              AMENDMENT; ENTIRE AGREEMENT: 
This Agreement may be amended only in writing, and signed by both
parties.  This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof, and
expressly terminates and supersedes any and all oral and or written
understandings and agreements with regard to such subject matter.

F.              ATTORNEYS’ FEES: 
If any action is brought hereunder, the prevailing party shall be
entitled to reasonable attorneys’ fees to be fixed by the court in such action.

 

Page 4
of 6 

 

G.             PARTIAL INVALIDITY: 
If any provision of this Agreement is found to be invalid by any court
or other authority, the invalidity of such provision shall not affect the
validity of the remaining provisions hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement this ____
day of August, 2002, to be effective as of the twelfth of August, 2002.

	
  Consultant:

  	
   

  	
  Client:

  	
   

  	
   

  
	
  The
  Brenner Group, Inc.

  	
   

  	
  HPL
  Technologies, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
  SIGNATURE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Richard M. Brenner

  	
   

  	
  Elie Antoun

  	
   

  	
   

  
	
  NAME

  	
   

  	
  NAME

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chief Executive Officer

  	
   

  	
  Chairman of the Board

  	
   

  	
   

  
	
  TITLE

  	
   

  	
  TITLE

  	
   

  	
   

  

 

 

 

 

 

Page 5
of 6 

 

Exhibit A

Scope of the Assignment:

 

HPL has requested TBG’s
assistance in providing interim Chief Executive Officer (“CEO”) services to
HPL.  Under this arrangement, TBG would
provide the following:

•                  Consultant
(Thomas Tomasetti) would assist HPL by taking over HPL’s CEO
responsibilities.  In light of the
company’s recently announced financial and accounting irregularities, it is
unclear whether the Company’s goals will be achievable within the current
operating plan timeframe.  Consultant will
endeavor to work with HPL management team to insure the company moves forward,
as best it in the current environment, towards achieving its goals.

•                  Consultant will
work to develop a strong line of communications to the Company’s Board of
Directors (“BOD”), and will advise the BOD of necessary realignment of stated
goals.

•                  Consultant
would work with third party audit and legal firms to complete the internal
investigation regarding the financial and accounting irregularities and do what
is possible and necessary to re-establish company credibility.

•                  Consultant
would determine, with the help of the BOD and management team, the level of
expense reductions necessary to conserve cash to allow time for the company to
recover (if possible) from its past and present issues.

 

Consultant’s rates for such services:

 

	
   

  	
   

  	
  Consultant’s
  Representative

  	
   

  	
  Rate

  	
   

  	
   

  
	
   

  	
  1.

  	
  Thomas Tomasetti, or equivalent

  	
   

  	
  $2,000 per day

  	
   

  	
   

  

 

IN WITNESS WHEREOF, the parties have executed this Agreement
this 8 day of August, 2002, to be effective as of the twelfth of August, 2002.

 

	
  The
  Brenner Group, Inc.

  	
   

  	
  HPL
  Technologies, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
  SIGNATURE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Richard M. Brenner

  	
   

  	
  Elie Antoun

  	
   

  	
   

  
	
  NAME

  	
   

  	
  NAME

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chief Executive Officer

  	
   

  	
  Chairman of the Board

  	
   

  	
   

  
	
  TITLE

  	
   

  	
  TITLE

  	
   

  	
   

  

 

 

 

 

Page 6
of 6Exhibit 4.1 (1998 Stock Option Plan)

EXHIBIT 4.1  

iQ POWER TECHNOLOGY
INC. 

1998 STOCK
OPTION PLAN as amended and restated 

        This
1998 Stock Option Plan (the “Plan”) provides for the grant of options to acquire
shares of common stock (the “Common Stock”) of iQ Power Technology Inc., a
Canadian corporation (the “Corporation”). The purposes of this Plan are to
retain the services of valued key employees and consultants of the Corporation and such
other persons as the Plan Administrator may select in accordance with Section 2
below, to encourage such persons to acquire a greater proprietary interest in the
Corporation, thereby strengthening their incentive to achieve the objectives of the
shareholders of the Corporation, and to serve as an aid and inducement in the hiring of
new employees and to provide an equity incentive to consultants and other persons selected
by the Plan Administrator. 

1.  ADMINISTRATION. 

        This
Plan will be administered initially by the Board of Directors of the Corporation (the
“Board”), except that the Board may, in its discretion, establish a committee
composed of two (2) or more members of the Board or two (2) or more other persons to
administer the Plan, which committee (the “Committee”) may be an executive,
compensation or other committee, including a separate committee especially created for
this purpose. The Committee will have the powers and authority vested in the Board
hereunder (including the power and authority to interpret any provision of the Plan or of
any Option). The members of any such Committee will serve at the pleasure of the Board. A
majority of the members of the Committee will constitute a quorum, and all actions of the
Committee will be taken by a majority of the members present. Any action may be taken by a
written instrument signed by all of the members of the Committee and any action so taken
will be fully effective as if it had been taken at a meeting. The Board or, if applicable,
the Committee is referred to in this Plan as the “Plan Administrator.” 

        If
and when the Corporation becomes subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), the Plan Administrator
will be either the full Board of Directors or a committee composed of two (2) or more
members of the Board who are “Non-Employee Directors” as defined under Rule
16b-3 (as amended from time to time) promulgated under the Exchange Act or any successor
rule or regulatory requirement. 

        Subject
to the provisions of this Plan, and with a view to effecting its purpose, the Plan
Administrator has sole authority, in its absolute discretion, to (i) construe and
interpret this Plan; (ii) define the terms used in the Plan; (iii) prescribe,
amend and rescind the rules and regulations relating to this Plan; (iv) correct any
defect, supply any omission or reconcile any inconsistency in this Plan; (v) grant
Options under this Plan; (vi) determine the individuals to whom Options will be
granted under this Plan; (vii) determine the time or times at which Options are
granted under this Plan; (viii) determine the number of shares of Common Stock
subject to each Option, the exercise price of each Option, the duration of each Option and
the times at which each Option will become exercisable; (ix) determine all other
terms and conditions of the Options; and (x) make all other determinations and
interpretations necessary and advisable for the administration of the Plan. All decisions,
determinations and interpretations made by the Plan Administrator will be binding and
conclusive on all participants in the Plan and on their legal representatives, heirs and
beneficiaries. 

        The
Board or, if applicable, the Committee may delegate to one or more executive officers of
the Corporation the authority to grant Options under this Plan to employees of the
Corporation who, on the Date of Grant, are not subject to Section 16 of the Exchange
Act with respect to the Common Stock (“Insiders”), and in connection therewith
the authority to determine: (i) the number of shares of Common Stock subject to such
Options; (ii) the duration of the Option; (iii) the vesting schedule for
determining the times at which such Option will become exercisable; and (iv) all
other terms and conditions of such Options. The exercise price for any Option granted by
action of an executive officer or officers pursuant to such delegation of authority will
not be less than the fair market 

-1- 

value per share of the Common Stock
on the Date of Grant. Unless expressly approved in advance by the Board or the Committee,
such delegation of authority will not include the authority to accelerate vesting, extend
the period for exercise or otherwise alter the terms of outstanding Options. The term
“Plan Administrator” when used in any provision of this Plan other than
Sections 1, 4(f), 4(m), and 10 refers to the Board or the Committee, as the case may
be, and an executive officer who has been authorized to grant Options pursuant thereto,
insofar as such provisions may be applied to persons that are not Insiders and Options
granted to such persons. 

2.  ELIGIBILITY. 

        Options
may be granted to officers, directors, employees of the Corporation or its subsidiaries
(“Employees”) and to such other persons, including consultants, as the Plan
Administrator may select. Options may be granted in substitution for outstanding Options
of another corporation in connection with the merger, consolidation, acquisition of
property or stock or other reorganization between such other corporation and the
Corporation or any subsidiary of the Corporation. Options also may be granted in exchange
for outstanding Options. Any person to whom an Option is granted under this Plan is
referred to as an “Optionee.” Any person who is the owner of an Option is
referred to as a “Holder.” 

3.  STOCK. 

        The
Plan Administrator is authorized to grant Options to acquire up to a total of 4,714,000
(post-2000 consolidation) common shares of the Corporation’s authorized but unissued,
or reacquired, Common Stock. The number of shares with respect to which Options may be
granted hereunder is subject to adjustment as set forth in Section 5(m) hereof. If
any outstanding Option expires or is terminated for any reason, the shares of Common Stock
allocable to the unexercised portion of such Option may again be subject to an Option
granted to the same Optionee or to a different person eligible under Section 2 of
this Plan. 

4.  TERMS AND
CONDITIONS OF OPTIONS. 

        Each
Option granted under this Plan will be evidenced by a written agreement approved by the
Plan Administrator (the “Agreement”). Agreements may contain such provisions,
not inconsistent with this Plan, as the Plan Administrator in its discretion may deem
advisable. All Options must also comply with the following requirements: 

	(a)   	
    
Number of Shares and Type of Option. 

        
          Each
Agreement must state the number of shares of Common Stock to which it pertains.  

	(b)  	

    Date of Grant.  

       
          Each
Agreement must state the date the Plan Administrator has deemed to be the effective date
of the Option for purposes of this Plan (the “Date of Grant”).  

	(c)  	
    Option Price.  

       
          Each
Agreement must state the price per share of Common Stock at which it is exercisable. The
Plan Administrator may fix the exercise price in its sole discretion; provided that
Options granted in substitution for outstanding options of another corporation in
connection with the merger, consolidation, acquisition of property or stock or other
reorganization involving such other corporation and the Corporation or any subsidiary of
the Corporation may be granted with an exercise price equal to the exercise price for the
substituted option of the other corporation, subject to any adjustment consistent with
the terms of the transaction pursuant to which the substitution is to occur.  

-2- 

	(d)  	
    
Duration of Options 

       
          At
the time of the grant of the Option, the Plan Administrator will designate, subject to
paragraph 4(g) below, the expiration date of the Option. In the absence of action to the
contrary by the Plan Administrator in connection with the grant of a particular Option,
all Options granted under this Section 4 will expire ten (10) years from the Date of
Grant.  

	(e)  	
       
Vesting Schedule.  

        
          No
Option will be exercisable until it has vested. The Plan Administrator will specify the
vesting schedule for each Option at the time of grant of the Option prior to the
provision of services with respect to which such Option is granted; provided, that
if no vesting schedule is specified at the time of grant, the Option will vest according
to the following schedule:  

	Number of Years

Following Date of Grant	 	Percentage of Total

Options Vested	 
		
	One	 	25%	 
	Two	 	50%	 
	Three	 	75%	 
	Four	 	100%	 

        
          The Plan Administrator
may specify a vesting schedule for all or any portion of an Option based on the
achievement of performance objectives established in advance of the commencement by the
Optionee of services related to the achievement of the performance objectives. Performance
objectives will be expressed in terms of one or more of the following: return on equity,
return on assets, share price, market share, sales, earnings per share, costs, net
earnings, net worth, inventories, cash and cash equivalents, gross margin or the
Corporation’s performance relative to its internal business plan. Performance
objectives may be in respect of the performance of the Corporation as a whole (whether on
a consolidated or unconsolidated basis), or a subdivision, operating unit, product or
product line of either of the foregoing. Performance objectives may be absolute or
relative and may be expressed in terms of a progression or a range. An Option that is
exercisable (in full or in part) upon the achievement of one or more performance
objectives may be exercised only following written notice to the Optionee and the
Corporation by the Plan Administrator that the performance objective has been achieved.  

	(f)  	       
Acceleration of Vesting.  

        
          The vesting of one or
more outstanding Options may be accelerated by the Plan Administrator at such times and in
such amounts as it determines in its sole discretion.  

	(g)  	       
Term of Option.  

        
          Vested Options will
terminate, to the extent not previously exercised, upon the occurrence of the first of the
following events: (i) the expiration of the Option, as designated by the Plan
Administrator in accordance with Section 4(d) above; (ii) the date of an
Optionee’s termination of employment or contractual relationship with the Corporation
or any subsidiary for cause (as determined in the sole discretion of the Plan
Administrator); (iii) the expiration of ninety (90) days from the date of an
Optionee’s termination of employment or contractual relationship with the Corporation
or any subsidiary for any reason whatsoever other than cause, death or Disability (as
defined below) unless the exercise period is extended by the Plan Administrator until a
date not later than the expiration date of the Option; or (iv) the expiration of one
year from termination of an Optionee’s employment or contractual relationship by
reason of death or Disability (as defined below) unless the exercise period is extended by
the Plan Administrator until a date not later than the expiration date of the Option. Upon
the death of an Optionee, any vested  

-3- 

Options held by the Optionee will be
exercisable only by the person or persons to whom such Optionee’s rights under such
Option will pass by the Optionee’s will or by the laws of descent and distribution of
the state or county of the Optionee’s domicile at the time of death and only until
such Options terminate as provided above. For purposes of the Plan, unless otherwise
defined in the Agreement, “Disability” means medically determinable physical or
mental impairment which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months or that can be expected to result in death. The Plan
Administrator will determine whether an Optionee has incurred a Disability on the basis of
medical evidence acceptable to the Plan Administrator. Upon making a determination of
Disability, the Plan Administrator will, for purposes of the Plan, determine the date of
an Optionee’s termination of employment or contractual relationship. 

        
          
Unless accelerated in accordance with Section 4(f) above, unvested Options will terminate immediately upon
termination of employment of the Optionee by the Corporation for any reason whatsoever,
including death or Disability. For purposes of this Plan, transfer of employment between
or among the Corporation and/or any subsidiary will not be deemed to constitute a
termination of employment with the Corporation or any subsidiary. For purposes of this
subsection, employment will be deemed to continue while the Optionee is on military leave,
sick leave or other bona fide leave of absence (as determined by the Plan Administrator).
The foregoing notwithstanding, employment will not be deemed to continue beyond the first
ninety (90) days of such leave, unless the Optionee’s re-employment rights are
guaranteed by statute or by contract.  

	(h)  	       
Exercise of Options.  

        
          Options will be
exercisable, in full or in part, at any time after vesting, until termination. If less
than all of the shares included in the vested portion of any Option are purchased, the
remainder may be purchased at any subsequent time prior to the expiration of the Option
term. No portion of any Option for less than fifty (50) shares (as adjusted pursuant to
Section 4(m) below) may be exercised; provided, that if the vested portion of
any Option is less than fifty (50) shares, it may be exercised with respect to all shares
for which it is vested. Only whole shares may be issued pursuant to an Option, and to the
extent that an Option covers less than one (1) share, it is unexercisable.  

        
          Options or portions
thereof may be exercised by giving written notice to the Corporation, which notice will
specify the number of shares to be purchased, and be accompanied by payment in the amount
of the aggregate exercise price for the Common Stock so purchased, which payment must be
in the form specified in Section 4(i) below. The Corporation will not be obligated to
issue, transfer or deliver a certificate of Common Stock to the Holder of any Option,
until provision has been made by the Holder, to the satisfaction of the Corporation, for
the payment of the aggregate exercise price for all shares for which the Option has been
exercised and for satisfaction of any tax withholding obligations associated with such
exercise. During the lifetime of an Optionee, Options are exercisable only by the Optionee
or any transferee who takes title to such Option in the manner permitted by
subsection 4(k) hereof.  

	(i)  	      
    Payment upon Exercise of Option. 

      
                
(1)    Upon the exercise of any Option, the aggregate
exercise price will be paid to the Corporation in cash or by certified
or cashier’s check.  

	(j)  	      
    Rights as a Shareholder. 

         
          A Holder will have no
rights as a shareholder with respect to any shares covered by an Option until such Holder
becomes a record holder of such shares, irrespective of whether such Holder has given
notice of exercise. Subject to the provisions of Section 5(m) hereof, no rights will
accrue to a Holder and no adjustments will be made on account of dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions or other
rights declared on, or created in, the Common Stock for which the record date is prior to
the date the Holder becomes a record holder of the shares of Common Stock covered by the
Option, irrespective of whether such Holder has given notice of exercise.  

-4- 

	(k) 	      
 Transfer of Option. 

        
          Options granted under
this Plan and the rights and privileges conferred by this Plan may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will, by applicable laws of descent and distribution or pursuant to a
qualified domestic relations order, and will not be subject to execution, attachment or
similar process; provided however, that any Agreement may provide or be amended to
provide that an Option to which it relates is transferable without payment of
consideration to immediate family members of the Optionee or to trusts or partnerships or
limited liability companies established exclusively for the benefit of the Optionee and
the Optionee’s immediate family members. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of any Option or of any right or privilege
conferred by this Plan contrary to the provisions hereof, or upon the sale, levy or any
attachment or similar process upon the rights and privileges conferred by this Plan, such
Option will thereupon terminate and become null and void.  

	(l)  	       
Securities Regulation and Tax Withholding.  

      
                
(1)    Shares will not be issued with respect to an Option unless
the exercise of such Option and the issuance and delivery of such shares must comply with all
relevant provisions of law, any applicable state securities laws, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations thereunder
and the requirements of any stock exchange or automated inter-dealer quotation
system of a registered national securities association upon which such shares
may then be listed, and such issuance will be further subject to the approval
of counsel for the Corporation with respect to such compliance, including the
availability of an exemption from registration for the issuance and sale of
such shares. The inability of the Corporation to obtain from any regulatory
body the  authority deemed by the Corporation to be necessary for the lawful
issuance and  sale of any shares under this Plan, or the unavailability of an
exemption from registration for the issuance and sale of any shares under this
Plan, will relieve the Corporation of any liability with respect to the
non-issuance or sale of such shares.  

         
          As a condition to the
exercise of an Option, the Plan Administrator may require the Holder to represent and
warrant in writing at the time of such exercise that the shares are being purchased only
for investment and without any then-present intention to sell or distribute such shares.
At the option of the Plan Administrator, a stop-transfer order against such shares may be
placed on the stock books and records of the Corporation, and a legend indicating that the
stock may not be pledged, sold or otherwise transferred unless an opinion of counsel is
provided stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on the certificates representing such shares in order to assure
an exemption from registration. The Plan Administrator also may require such other
documentation as may from time to time be necessary to comply with federal and state
securities laws. THE CORPORATION HAS NO OBLIGATION TO REGISTER THE OPTIONS OR THE SHARES
OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.  

      
                
(2)    
          The Holder must pay to the Corporation by certified or cashier’s check,
          promptly upon exercise of an Option or, if later, the date that the amount of
          such obligations becomes determinable, all applicable federal, state, local and
          foreign withholding taxes that the Plan Administrator, in its discretion,
          determines to result upon exercise of an Option or from a transfer or other
          disposition of shares of Common Stock acquired upon exercise of an Option or
          otherwise related to an Option or shares of Common Stock acquired in connection
          with an Option. Upon approval of the Plan Administrator, a Holder may satisfy
          such obligation by complying with one or more of the following alternatives
          selected by the Plan Administrator:  

		
         (A)        by
delivering to the Corporation shares of Common Stock previously held by such
          Holder or by the Corporation withholding shares of Common Stock otherwise
          deliverable pursuant to the exercise of the Option, which shares of Common
Stock           received or withheld must have a fair market value at the date of
exercise (as           determined by the Plan Administrator) equal to any withholding tax
obligations           arising as a result of such exercise, transfer or other
disposition;  

		
         (B)        by
executing appropriate loan documents approved by the Plan Administrator by
          which the Holder borrows funds from the Corporation to pay any withholding
taxes           due under this Paragraph 2, with such repayment terms as the Plan
Administrator           may select; or  

-5- 

	 
	  
       (C)        by complying
with any other payment mechanism approved by the Plan Administrator from time to time.  

      
                
(3)    The
issuance, transfer or delivery of certificates of Common Stock pursuant to           the
exercise of Options may be delayed, at the discretion of the Plan
          Administrator, until the Plan Administrator is satisfied that the applicable
          requirements of the federal and state securities laws and the withholding
          provisions of the Code have been met and that the Holder has paid or otherwise
          satisfied any withholding tax obligation as described in (2) above.  

	(m)  	       
  Stock Dividend or Reorganization.   

      
                
(1)              If
(i) the Corporation is at any time involved in a corporate merger,
          consolidation, acquisition of property or shares, separation, reorganization or
          liquidation to which the Corporation or a parent or subsidiary corporation of
          the Corporation is a party, (ii) the Corporation declares a dividend
          payable in, or subdivides or combines, its Common Stock or (iii) any other
          event with substantially the same effect occurs, the Plan Administrator will,
          subject to applicable law, with respect to each outstanding Option,
          proportionately adjust the number of shares of Common Stock subject to such
          Option and/or the exercise price per share so as to preserve the rights of the
          Holder substantially proportionate to the rights of the Holder prior to such
          event, and to the extent that such action includes an increase or decrease in
          the number of shares of Common Stock subject to outstanding Options, the number
          of shares available under Section 4 of this Plan will automatically be
          increased or decreased, as the case may be, proportionately, without further
          action on the part of the Plan Administrator, the Corporation, the
          Corporation’s shareholders, or any Holder.  

      
                
(2)    If
the presently authorized capital stock of the Corporation is changed into the
          same number of shares with a different par value, or without par value, the
          stock resulting from any such change will be deemed to be Common Stock within
          the meaning of the Plan, and each Option will apply to the same number of
shares           of such new stock as it applied to old shares immediately prior to such
change.  

      
                
(3)    If
the Corporation at any time declares an extraordinary dividend with respect           to
the Common Stock, whether payable in cash or other property, the Plan
          Administrator may, subject to applicable law, in the exercise of its sole
          discretion and with respect to each outstanding Option, proportionately adjust
          the number of shares of Common Stock subject to such Option and/or adjust the
          exercise price per share so as to preserve the rights of the Holder
          substantially proportionate to the rights of the Holder prior to such event,
and           to the extent that such action includes an increase or decrease in the
number of           shares of Common Stock subject to outstanding Options, the number of
shares           available under Section 4 of this Plan will automatically be
increased or           decreased, as the case may be, proportionately, without further
action on the           part of the Plan Administrator, the Corporation, the Corporation’s
          shareholders, or any Holder.  

      
                
(4)              The
foregoing adjustments in the shares subject to Options will be made by the           Plan
Administrator, or by any successor administrator of this Plan, or by the
          applicable terms of any assumption or substitution document.  

      
                
(5)    The
grant of an Option will not affect in any way the right or power of the
          Corporation to make adjustments, reclassifications, reorganizations or changes
          of its capital or business structure, to merge, consolidate or dissolve, to
          liquidate or to sell or transfer all or any part of its business or assets.  

5.    EFFECTIVE
DATE; TERM.  

        Options
may be granted by the Plan Administrator from time to time on or after the date on which
this Plan is adopted (the “Effective Date”) through the day immediately
preceding the tenth anniversary of the Effective Date. Termination of this Plan will not
terminate any Option granted prior to such termination. 

-6- 

6.    NO OBLIGATIONS TO
EXERCISE OPTION. 

        The
grant of an Option will impose no obligation upon the Optionee to exercise such Option. 

7.    
NO RIGHT TO OPTIONS OR TO EMPLOYMENT. 

        The
Plan Administrator will determine whether or not any Options are to be granted under this
Plan in its sole discretion, and nothing contained in this Plan will be construed as
giving any person any right to participate under this Plan. The grant of an Option will in
no way constitute any form of agreement or understanding binding on the Corporation or any
subsidiary, express or implied, that the Corporation or any subsidiary will employ or
contract with an Optionee for any length of time, nor will it interfere in any way with
the Corporation’s or, where applicable, a subsidiary’s right to terminate
Optionee’s employment at any time, which right is hereby reserved. 

8.    
APPLICATION OF FUNDS. 

        The
proceeds received by the Corporation from the sale of Common Stock issued upon the
exercise of Options will be used for general corporate purposes, unless otherwise directed
by the Board. 

9.    
INDEMNIFICATION OF PLAN ADMINISTRATOR. 

        In
addition to all other rights of indemnification they may have as members of the Board,
members of the Plan Administrator will be indemnified by the Corporation for all
reasonable expenses and liabilities of any type or nature, including attorneys’ fees,
incurred in connection with any action, suit or proceeding to which they or any of them
are a party by reason of, or in connection with, this Plan or any Option granted under
this Plan, and against all amounts paid by them in settlement thereof (provided that such
settlement is approved by independent legal counsel selected by the Corporation), except
to the extent that such expenses relate to matters for which it is adjudged that such Plan
Administrator member is liable for willful misconduct; provided, that within fifteen (15)
days after the institution of any such action, suit or proceeding, the Plan Administrator
member involved therein will, in writing, notify the Corporation of such action, suit or
proceeding, so that the Corporation may have the opportunity to make appropriate
arrangements to prosecute or defend the same. 

10.  
AMENDMENT OF PLAN.  

        The
Plan Administrator may, at any time, modify, amend or terminate this Plan or modify or
amend Options granted under this Plan, including, without limitation, such modifications
or amendments as are necessary to maintain compliance with applicable statutes, rules or
regulations; provided, however, no amendment with respect to an outstanding Option
which has the effect of reducing the benefits afforded to the Holder thereof will be made
over the objection of such Holder; further provided, that the events triggering
acceleration of vesting of outstanding Options may be modified, expanded or eliminated
without the consent of Holders. The Plan Administrator may condition the effectiveness of
any such amendment on the receipt of shareholder approval at such time and in such manner
as the Plan Administrator may consider necessary for the Corporation to comply with or to
avail the Corporation and/or the Optionees of the benefits of any securities, tax, market
listing or other administrative or regulatory requirement. Without limiting the generality
of the foregoing, the Plan Administrator may modify grants to persons who are eligible to
receive Options under this Plan who are foreign nationals or employed outside of Canada to
recognize differences in local law, tax policy or custom. 

-7- 

This Plan was approved and adopted by
the shareholders of the Corporation on June 30, 1998, June 30, 1999, June 30, 2000, June
28, 2001, and June 28, 2002, and by the directors of the Corporation on June 30, 1998,
June 6, 1999, June 4, 1999, June 4, 2001, and June 3, 2002. 

/s/ Gregory Sasges
            
          

SECRETARY  

Effective Date:  June 28, 2002.  

-8-

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