Document:

ASSIGNMENT  

        THIS
ASSIGNMENT (the “Assignment”) is made this the 7th day of April, 2004,
by and between Stroock & Stroock & Lavan, LLP(“Assignor”),
as assignor, and Alliance Pharmaceutical Corp., a New York corporation (“Assignee”),
as assignee, with reference to the following recitals:  

RECITALS 

        A.                 In
June of 2003, Assignor and Assignee entered that certain Participation
          Agreement (“Participation Agreement”) which, among other
          things, granted Assignor an ownership interest in the Oxygent Business (as
          defined in the Participation Agreement). .  

        B.                 Assignee
has agreed to issue Assignor a warrant, in the form attached hereto as Exhibit A,
to purchase 675,000 shares of Assignee’s common stock           (the “Warrant”).  

        C.                 In
exchange for the issuance of the Warrant, Assignor has agreed to assign all           of
its rights under the Participation Agreement to Assignee.  

        NOW,
THEREFORE, in consideration of the delivery by Assignee of the Warrant, and other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
Assignor hereby sells, assigns, transfers and conveys to Alliance all of Assignee’s
rights under the Participation Agreement.  

        Assignee
agrees to include the shares of common stock issuable upon exercise of the Warrant in a
resale registration statement to be filed under the Securities Act of 1933, as amended,
on or before August 31, 2004.  

        This
Assignment shall be governed by and construed in accordance with the laws of the State of
New York applicable to an instrument of assignment delivered, and a contract to be
performed wholly in such state, without regard to principles of conflicts of law that may
provide for the application hereto of the laws of some other state.  

        This
Assignment constitutes the entire agreement between the parties regarding the subject
matter set forth herein. This Assignment may be executed in one or more counterparts,
each of which shall be deemed an original, and may be signed and transmitted via
facsimile with the same validity as if it were an ink-signed document. The parties agree
to execute such further documents and instruments and to take such further actions as may
be reasonably necessary to carry out the purposes and intent of this Assignment.  

        IN
WITNESS WHEREOF, the undersigned have executed the Assignment as of the date first above
written.  

		STROOCK & STROOCK & LAVAN, LLP

		By:	  /s/ Mel Epstein

		Print Name:  Mel Epstein

		Title:  Partner

	ACCEPTED:

ALLIANCE PHARMACEUTICAL CORP.

	
	By:	   /s/  Duane J. Roth 
	
	Print Name:  Duane J. Roth
	
	Title:  Chairman and Chief Executive Officer
	

2 

EXHIBIT A  

THIS WARRANT HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE FOREGOING LAWS. 

SUBJECT TO THE PROVISIONS OF SECTION
10 HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON DECEMBER 31, 2006
(the “EXPIRATION DATE”). 

No. PAR. — 1  

ALLIANCE
PHARMACEUTICAL CORP. 

WARRANT TO PURCHASE
675,000 SHARES OF
COMMON STOCK, $.01 PAR
VALUE PER SHARE 

        For
VALUE RECEIVED, Stroock & Stroock & Lavan, LLP. (“Warrantholder”), is
entitled to purchase, subject to the provisions of this Warrant, from Alliance
Pharmaceutical Corp., a New York corporation (“Company”), at any time not later
than 5:00 P.M., Eastern time, on the Expiration Date, at an exercise price per share
equal to $0.35 (the exercise price in effect being herein called the “Warrant Price”),
675,000 shares (“Warrant Shares”) of the Company’s Common Stock, par value
$.01 per share (“Common Stock”). The number of Warrant Shares purchasable upon
exercise of this Warrant and the Warrant Price shall be subject to adjustment from time
to time as described herein.  

        Section
1.    Registration.    The Company shall maintain books for the transfer and
registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall
issue and register the Warrant in the name of the Warrantholder.  

        Section
2.    Transfers.    As provided herein, this Warrant may be transferred only pursuant to
a registration statement filed under the Securities Act of 1933, as amended (“Securities
Act”), or an exemption from such registration. Subject to such restrictions, the
Company shall transfer this Warrant from time to time upon the books to be maintained by
the Company for that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer and such other documents as may be
reasonably required by the Company, including, if required by the Company, an opinion of
its counsel to the effect that such transfer is exempt from the registration requirements
of the Securities Act of 1933, to establish that such transfer is being made in
accordance with the terms hereof, and a new Warrant shall be issued to the transferee and
the surrendered Warrant shall be canceled by the Company.  

1 

        Section
3.    Exercise of Warrant.    Subject to the provisions hereof, the Warrantholder may
exercise this Warrant in whole or in part at any time upon surrender of the Warrant,
together with delivery of the duly executed Warrant exercise form attached hereto as
Appendix A (the “Exercise Agreement”) and payment by cash, certified check or
wire transfer of funds for the aggregate Warrant Price for that number of Warrant Shares
then being purchased, to the Company during normal business hours on any business day at
the Company’s principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof). The Warrant Shares so
purchased shall be deemed to be issued to the holder hereof or such holder’s
designee, as the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered (or evidence of loss, theft or destruction
thereof and security or indemnity satisfactory to the Company), the Warrant Price shall
have been paid and the completed Exercise Agreement or Net Issue Election Notice, as the
case may be, shall have been delivered. Certificates for the Warrant Shares so purchased,
representing the aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding three (3) business
days, after this Warrant shall have been so exercised. The certificates so delivered
shall be in such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated by such
holder. If this Warrant shall have been exercised only in part, then, unless this Warrant
has expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the holder a new Warrant representing the number of shares with
respect to which this Warrant shall not then have been exercised. As used herein, “business
day” means a day, other than a Saturday or Sunday, on which banks in New York City
are open for the general transaction of business.  

        Section
4.    Compliance with the Securities Act of 1933.    The Company may cause the legend
set forth on the first page of this Warrant to be set forth on each Warrant or similar
legend on any security issued or issuable upon exercise of this Warrant, unless counsel
for the Company is of the opinion as to any such security that such legend is unnecessary
or, with respect to any security issued or issuable upon exercise of this Warrant, such
security is subject to an effective registration statement filed with the Securities and
Exchange Commission (“SEC”).  

        Section
5.    Payment of Taxes.    The Company will pay any documentary stamp taxes attributable
to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issuance or delivery of any
certificates for Warrant Shares in a name other than that of the registered holder of
this Warrant in respect of which such shares are issued, and in such case, the Company
shall not be required to issue or deliver any certificate for Warrant Shares or any
Warrant until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company’s reasonable satisfaction that such tax has
been paid. The holder shall be responsible for income and gift taxes due under federal,
state or other law, if any such tax is due.  

        Section
6.    Mutilated or Missing Warrants.    In case this Warrant shall be mutilated, lost,
stolen, or destroyed, the Company shall issue in exchange and substitution of and upon
cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant
lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like
number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to
the Company of such loss, theft or destruction of the Warrant, and with respect to a
lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.  

2 

        Section
7.    Reservation of Common Stock.    The Company hereby represents and warrants that
there have been reserved, and the Company shall at all applicable times keep reserved
until issued (if necessary) as contemplated by this Section 7, out of the authorized and
unissued Common Stock, sufficient shares to provide for the exercise of the rights of
purchase represented by this Warrant. The Company agrees that all Warrant Shares issued
upon exercise of the Warrant shall be, at the time of delivery of the certificates for
such Warrant Shares upon the due exercise of this Warrant, duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the Company.  

        Section
8.    Adjustments.    Subject and pursuant to the provisions of this Section 8, the
Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to
adjustment from time to time as set forth hereinafter.  

	 	        (a)    (i)    If
the Company shall, at any time or from time to time while this Warrant is
               outstanding, pay a dividend or make a distribution on its Common Stock in
shares                of Common Stock, subdivide its outstanding shares of Common Stock
into a greater                number of shares or combine its outstanding shares of
Common Stock into a                smaller number of shares or issue by reclassification
of its outstanding shares                of Common Stock any shares of its capital stock
(including any such                reclassification in connection with a consolidation or
merger in which the                Company is the continuing corporation), then the
number of Warrant Shares                purchasable upon exercise of the Warrant and the
Warrant Price in effect                immediately prior to the date upon which such
change shall become effective,                shall be adjusted by the Company so that
the Warrantholder thereafter exercising                the Warrant shall be entitled to
receive the number of shares of Common Stock or                other capital stock which
the Warrantholder would have received if the Warrant                had been exercised
immediately prior to such event with an inversely                proportional adjustment
in the Warrant Price. Such adjustments shall be made                successively whenever
any event listed above shall occur.  

	 	                (ii)   If the Company shall, at any time or from time
to time while this Warrant is                     outstanding, issue by reclassification
of its outstanding shares of Common Stock                     any shares of its capital
stock (including any such reclassification in                     connection with a
consolidation or merger in which the Company is the continuing
                    corporation), then, as a condition of such reclassification, lawful
and adequate                     provision shall be made whereby each Warrantholder shall
thereafter have the                     right to purchase and receive upon the basis and
upon the terms and conditions                     herein specified and in lieu of the
Warrant Shares immediately theretofore                     issuable upon exercise of the
Warrant, such shares of stock, securities or                     assets as would have
been issuable or payable with respect to or in exchange for                     a number
of Warrant Shares equal to the number of Warrant Shares immediately
                    theretofore issuable upon exercise of the Warrant, had such
reclassification not                     taken place, and in any such case appropriate
provision shall be made with                     respect to the rights and interests of
each Warrantholder to the end that the                     provisions hereof (including,
without limitation, provision for adjustment of                     the Warrant Price)
shall thereafter be applicable, as nearly equivalent as may                     be
practicable in relation to any shares of stock, securities or properties
                    thereafter deliverable upon the exercise thereof. The provisions of
this                     sub-paragraph (ii) shall similarly apply to successive
reclassifications.  

3 

	 	        (b)    
If any capital reorganization, reclassification of the
capital stock of the           Company, consolidation or merger of the Company with
another corporation in           which the Company is not the survivor, or sale, transfer
or other disposition of           all or substantially all of the Company’s assets
to another corporation           shall be effected, then, as a condition of such
reorganization,           reclassification, consolidation, merger, sale, transfer or
other disposition,           lawful and adequate provision shall be made whereby each
Warrantholder shall           thereafter have the right to purchase and receive upon the
basis and upon the           terms and conditions herein specified and in lieu of the
Warrant Shares           immediately theretofore issuable upon exercise of the Warrant,
such shares of           stock, securities or assets as would have been issuable or
payable with respect           to or in exchange for a number of Warrant Shares equal to
the number of Warrant           Shares immediately theretofore issuable upon exercise of
the Warrant, had such           reorganization, reclassification, consolidation, merger,
sale, transfer or other           disposition not taken place, and in any such case
appropriate provision shall be           made with respect to the rights and interests of
each Warrantholder to the end           that the provisions hereof (including, without
limitation, provision for           adjustment of the Warrant Price) shall thereafter be
applicable, as nearly           equivalent as may be practicable in relation to any
shares of stock, securities           or properties thereafter deliverable upon the
exercise thereof. The Company           shall not effect any such consolidation, merger,
sale, transfer or other           disposition unless prior to or simultaneously with the
consummation thereof the           successor corporation (if other than the Company)
resulting from such           consolidation or merger, or the corporation purchasing or
otherwise acquiring           such assets or other appropriate corporation or entity
shall assume the           obligation to deliver to the holder of the Warrant such shares
of stock,           securities or assets as, in accordance with the foregoing provisions,
such           holder may be entitled to purchase, and the other obligations under this
          Warrant. The provisions of this paragraph (b) shall similarly apply to
          successive reorganizations, reclassifications, consolidations, mergers, sales,
          transfers or other dispositions.  

	 	        (c)
              In case the Company shall fix a payment date for the
making of a distribution to           all holders of Common Stock (including any such
distribution made in connection           with a consolidation or merger in which the
Company is the continuing           corporation) of evidences of indebtedness or assets
(other than dividends or           distributions referred to in Section 8(a)), or
subscription rights or warrants,           the Warrant Price to be in effect after such
payment date shall be determined by           multiplying the Warrant Price in effect
immediately prior to such payment date           by a fraction, the numerator of which
shall be the total number of shares of           Common Stock outstanding multiplied by
the Market Price per share of Common           Stock immediately prior to such payment
date, less the fair market value (as           determined by the Company’s Board of
Directors in good faith) of said           assets or evidences of indebtedness so
distributed, or of such subscription           rights or warrants, and the denominator of
which shall be the total number of           shares of Common Stock outstanding
multiplied by such Market Price per share of           Common Stock immediately prior to
such payment date. “Market Price” as           of a particular date (the “Valuation
Date”) shall mean the following:           (a) if the Common Stock is then
listed on a national stock exchange, the           closing sale price of one share of
Common Stock on such exchange on the last           trading day prior to the Valuation
Date; (b) if the Common Stock is then           quoted on the NASDAQ Stock Market,
Inc. National Market System           (“Nasdaq”), the closing sale price of one
share of Common Stock on           Nasdaq on the last trading day prior to the Valuation
Date or, if no such           closing sale price is available, the average of the high
bid and the low asked           price quoted on Nasdaq on the last trading day prior to
the Valuation Date; or           (c) if the Common Stock is not then listed on a
national stock exchange or           quoted on Nasdaq, the Fair Market Price of one share
of Common Stock as of the           Valuation Date, shall be determined in good faith by
the Board of Directors of           the Company and the Warrantholder. The Board of
Directors of the Company shall           respond promptly, in writing, to an inquiry by
the Warrantholder prior to the           exercise hereunder as to the Market Price of a
share of Common Stock as           determined by the Board of Directors of the Company.
In the event that the Board           of Directors of the Company and the Warrantholder
are unable to agree upon the           Market Price in respect of subpart (c) hereof, the
Company and the Warrantholder           shall jointly select an appraiser, who is
experienced in such matters. The           decision of such appraiser shall be final and
conclusive, and the cost of such           appraiser shall be borne by the Company. Such
adjustment shall be made           successively whenever such a payment date is fixed.  

4 

	 	        (d)
              An adjustment to the Warrant Price shall become
effective immediately after the           payment date in the case of each dividend or
distribution and immediately after           the effective date of each other event which
requires an adjustment.  

	 	        (e)
              In the event that, as a result of an adjustment made
pursuant to this Section 8,           the holder of this Warrant shall become entitled to
receive any shares of           capital stock of the Company other than shares of Common
Stock, the number of           such other shares so receivable upon exercise of this
Warrant shall be subject           thereafter to adjustment from time to time in a manner
and on terms as nearly           equivalent as practicable to the provisions with respect
to the Warrant Shares           contained in this Warrant.  

        Section
9.    Fractional Interest.    The Company shall not be required to issue fractions of
Warrant Shares upon the exercise of the Warrant. If any fractional share of Common Stock
would, except for the provisions of the first sentence of this Section 9, be delivered
upon such exercise, the Company, in lieu of delivering such fractional share, shall pay
to the exercising holder of this Warrant an amount in cash equal to the Fair Market Value
of such fractional share of Common Stock on the date of exercise. As used in this
Warrant, “Fair Market Value” of a share of Common Stock as of a Valuation Date
shall mean the following: (a) if the Common Stock is then listed on a national stock
exchange, the closing sale price of one share of Common Stock on such exchange on the
last trading day prior to the Valuation Date; (b) if the Common Stock is then quoted
on Nasdaq, the closing sale price of one share of Common Stock on Nasdaq on the last
trading day prior to the Valuation Date or, if no such closing sale price is available,
the average of the high bid and the low sales price quoted on Nasdaq on the last trading
day prior to the Valuation Date; or (c) if the Common Stock is not then listed on a
national stock exchange or quoted on Nasdaq, the Fair Market Value of one share of Common
Stock as of the Valuation Date, shall be determined in good faith by the Board of
Directors of the Company.  

5 

        Section
10.    No Ten Percent Holders.    In no event shall a Warrantholder of this Warrant be
entitled to receive shares of Common Stock upon exercise of this Warrant to the extent
that the sum of (a) the number of shares of Common Stock beneficially owned by the
Warrantholder and its affiliates (exclusive of shares of Common Stock issuable upon
exercise of the unexercised portion of the Warrant or the unexercised or unconverted
portion of any other securities of the Company subject to a limitation on conversion or
exercise analogous to the limitations contained herein) and (b) the number of shares
of Common Stock issuable upon the exercise of this Warrant, would result in beneficial
ownership by the Warrantholder and its affiliates of more than 9.99% of the outstanding
shares of Common Stock. For purposes of this subparagraph, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13 D-G thereunder, except as otherwise provided in clause (a)
above. The Warrantholder may waive the limitations set forth in this Section 10 upon
sixty-one (61) days’ written notice to the Company.  

        Section
11.    Extension of Expiration Date; Registration Rights; Late Registration
Penalties; Other Registration Issues.  

	 	        (a)
              The Company shall use its best efforts to have a
registration statement covering           the Warrant Shares be declared effective as
soon as practicable, but in any           event on or before August 31, 2004 (the “Effective
Date”). The Company           acknowledges and agrees that the provisions set forth
in Sections 3 and 4 of           that certain Registration Rights Agreement, dated as of
August 22, 2000 (the           “Existing Registration Rights Agreement”), by
and among the Company,           the Warrantholder and the other parties thereto are
hereby incorporated by           reference herein, and the obligations of the Company set
forth in Sections 3 and           4 of the Existing Registration Rights Agreement shall
apply to the registration           of the Warrant Shares by the Company and be binding
upon the Company.  

	 	        (b)
              If the Company fails to cause a registration statement
covering the Warrant           Shares to be declared effective on or before the Effective
Date, then the           Expiration Date of this Warrant shall be extended one (1) day
for each day that           elapses between the Effective Date and the date on which a
Registration           Statement covering the Warrant Shares is declared effective.  

	 	        (c)
              The Company and, by accepting this Warrant, the
Warrantholder hereby acknowledge           and agree that the indemnification and
contribution provisions set forth in           Section 5 of the Existing
Registration Rights Agreement are hereby           incorporated by reference herein and
shall apply to the registration of the           Warrant Shares by the Company and the
sale by the Warrantholder of the Warrant           Shares pursuant to the registration
statement.  

        Section
12.    Benefits.    Nothing in this Warrant shall be construed to give any person, firm
or corporation (other than the Company and the Warrantholder) any legal or equitable
right, remedy or claim, it being agreed that this Warrant shall be for the sole and
exclusive benefit of the Company and the Warrantholder.  

6 

        Section
13.    Notices to Warrantholder.    Upon the happening of any event requiring an
adjustment of the Warrant Price, the Company shall promptly give written notice thereof
to the Warrantholder at the address appearing in the records of the Company, stating the
adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such
event and setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. Failure to give such notice to the Warrantholder or any
defect therein shall not affect the legality or validity of the subject adjustment.  

        Section
14.    Identity of Transfer Agent.    The Transfer Agent for the Common Stock is
American Stock Transfer and Trust Company. Upon the appointment of any subsequent
transfer agent for the Common Stock or other shares of the Company’s capital stock
issuable upon the exercise of the rights of purchase represented by the Warrant, the
Company will mail to the Warrantholder a statement setting forth the name and address of
such transfer agent.  

        Section
15.    Notices.    Unless otherwise provided, any notice required or permitted under
this Warrant shall be given in writing and shall be deemed effectively given as
hereinafter described (i) if given by personal delivery, then such notice shall be deemed
given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be
deemed given upon receipt of confirmation of complete transmittal, (iii) if given by
mail, then such notice shall be deemed given upon the earlier of (A) receipt of such
notice by the recipient or (B) three days after such notice is deposited in first class
mail, postage prepaid, and (iv) if given by an internationally recognized overnight air
courier, then such notice shall be deemed given one day after delivery to such carrier.
All notices shall be addressed as follows: (i) if to the Warrantholder, at its address as
set forth in the Company’s books and records and, if to the Company, at the address
as follows, or at such other address as the Warrantholder or the Company may designate by
ten days’ advance written notice to the other:  

	 	
If
to the Company: 

	 	
Alliance
Pharmaceutical Corp.
6175 Lusk Boulevard
San Diego, California 92121
Attention:
President
Fax:(858) 410-5306

	 	
With
a copy to:  

	 	
Foley
& Larder LLP
402 W. Broadway, 23rd Floor
San Diego, California
92101
Attention: Kenneth D. Polin
Fax: (619) 234-3510

7 

        Section
16.    Successors.    All the covenants and provisions hereof by or for the benefit of
the Warrantholder shall bind and inure to the benefit of its respective successors and
assigns hereunder.  

        Section
17.    Governing Law.    This Warrant shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without reference to the
choice of law provisions thereof.  

        Section
18.    No Rights as Stockholder.    Prior to the exercise of this Warrant, the
Warrantholder shall not have or exercise any rights as a stockholder of the Company by
virtue of its ownership of this Warrant.  

        Section
19.    Amendment; Waiver.    This Warrant is one of a series of Warrants of like tenor
issued by the Company pursuant to Assignments, dated as of the date hereof, among the
Company and the original holders of Warrants, and initially covering an aggregate of
5,715,000 shares of Common Stock (collectively, the “Company Warrants”). Any
term of this Warrant may be amended or waived (including the adjustment provisions
included in Section 8 of this Warrant) upon the written consent of the Company and the
holders of Company Warrants representing at least 50% of the number of shares of Common
Stock then subject to outstanding Company Warrants (the “Majority Holders”);
provided, that (x) any such amendment or waiver must apply to all Company Warrants; and
(y) the number of Warrant Shares subject to this Warrant, the Warrant Price and the
expiration date of this Warrant may not be amended, and the right to exercise this
Warrant may not be altered or waived, without the written consent of the Warrantholder.  

        Section
20.    Section Headings.    The section heading in this Warrant are for the convenience
of the Company and the Warrantholder and in no way alter, modify, amend, limit or
restrict the provisions hereof.  

        IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the 7th
day of April, 2004.  

		ALLIANCE PHARMACEUTICAL CORP.

		By:   	/s/  Duane J. Roth 

			Duane J. Roth

Chairman and Chief Executive Officer

8 

APPENDIX A
ALLIANCE PHARMACEUTICAL CORP.
WARRANT EXERCISE FORM 

To:   Alliance Pharmaceutical Corp. 

        The
undersigned hereby  irrevocably  elects to exercise the right of purchase  represented by
the within  Warrant  ("Warrant")  for, and to purchase  thereunder by the payment of the
Warrant Price and surrender of the Warrant,  _______________  shares of Common Stock
("Warrant  Shares")  provided for therein,  and requests that certificates for the
Warrant Shares be issued as follows:  

	
	 

	Name
	 

	Address
	 

	 

	Federal Tax ID or Social Security No.

	 	         and delivered by	�   certified mail to the above address, or

�   electronically (provide DWAC Instructions:_______________), or

�   other (specify: ______________________________________).  

and,  if the  number of Warrant
 Shares  shall not be all the  Warrant  Shares  purchasable  upon  exercise  of the
Warrant,  that a new Warrant for the balance of the Warrant  Shares  purchasable  upon
 exercise of this Warrant be registered  in the name of the  undersigned  Warrantholder
 or the  undersigned's  Assignee as below  indicated and delivered to the address stated
below. 

Dated: ___________________, ____  

	 	 	
	Note:  The signature must  correspond  with the name of the
registered  holder  as  written  on the  first  page of the
Warrant  in  every   particular,   without   alteration  or
enlargement or any change whatever,  unless the Warrant has
been assigned.
 	 	Signature:

	 	 	
	 	 	

	 	 	Name (please print)

	 	 	 

	 	 	 

	 	 	Address
	 	 	 

	 	 	Federal Tax ID or Social Security No.
	 	 	
Assignee:

	 	 	 

	 	 	 

	 	 	 

Appendix A - Page 1Exhibit 10.9

EMPLOYMENT AGREEMENT

                This Employment Agreement (the "Agreement") is made and entered into as of
the 3rd day of November, 2003 (the "Effective Date") by and between
Magic Lantern Group, Inc., of Oakville, Ontario, Canada (the "Company"), and
Robert A. Goddard of Wakefield, Massachusetts (the "Executive").

                WHEREAS, the Executive is presently retained by the Company as a
consultant fulfilling the role of its interim Chief Executive Officer and acting
Chief Financial Officer pursuant to the terms of a Consulting Agreement executed
on July 3, 2003;

                WHEREAS, the Company wishes to employ the Executive as its President and
Chief Executive Officer ("CEO") and the Executive wishes to accept such
employment, subject to the terms and conditions hereinafter set forth;

                NOW THEREFORE, in consideration of the foregoing premises and the mutual
promises, terms, provisions and conditions set forth in this Agreement, the
parties hereby agree:

    	1.	
    
    
    CAPACITY AND PERFORMANCE

        
	 	 
	1.1	
    During the term hereof, the Executive shall serve the Company
    as its President & CEO on a full-time basis and shall, at all times subject
    to the directions and instructions of the Board of Directors of the Company
    (the "Board"), have such authority as is ordinarily consistent with the
    position of President & CEO of the Company, with full power and authority to
    supervise and manage the business and affairs of the Company and its
    affiliates and such other matters as the Board of Directors may authorize.

        
	 	 
	1.2	
    The Company's primary offices and operations are, as of the
    date of execution of this Agreement, located in Oakville, Ontario, Canada
    and both parties anticipate and acknowledge that the Executive, in order to
    carry out his duties hereunder, will spend no more than 179 days per year
    working in the Company's Oakville office, notwithstanding that the Executive
    resides in the State of Massachusetts. The Company acknowledges that, if it
    does not derogate from or conflict with the Executive's duties then, subject
    always to the directions of the Board, the Executive may spend the remainder
    of his time carrying on his duties from his home office in Massachusetts or
    when traveling outside of Canada for business purposes.

        

-2-

	 	 
	1.3	
    The Executive shall serve the Company faithfully and to the
    best of his ability and throughout the term of the Executive's employment
    with the Company, the executive shall devote his full working time and
    attention to the business and affairs of the Company. Further, the Executive
    shall not during the term of this Agreement, either as a principal or agent,
    partner, shareholder, or as a director, officer, manager or employee of a
    corporation or otherwise, carry on or be engaged or concerned or interested
    in any business which is in competition to any business conducted by the
    company or any affiliated or subsidiary company of the Company. The
    Executive shall obey and carry out all lawful orders and directions to the
    Executive by the Company as conveyed through the Board.

    
	 	 
	1.4	
    The Executive shall not engage in any other business activity
    for compensation, benefit, reward or future gain during the term of this
    Agreement, but may participate in industry, trade, professional, charitable
    and community activities as long as the Board is reasonably informed of same
    and on the understanding and condition that such activities will not
    conflict with the interest of the Company or its affiliates, the discharge
    of the Executive's duties and responsibilities to the Company or the orders
    and directions of the Company through the Board.

    
	 	 
	1.5	
    The Company acknowledges that is has reviewed the
    qualifications and experience of the Executive and had formed the opinion
    that the Executive is capable of carrying out the duties set forth herein.

    
	 	 
	2.	
    TERM

	 	 
	2.1	
    The term of this Agreement shall commence on the Effective
    Date and shall expire three (3) years from the Effective Date, unless
    terminated earlier in accordance with the provisions hereof.

    

-3-

	2.2	
    The term of this Agreement shall renew automatically for a
    period of one (1) year from the date of the end of the first term as set
    forth in Section 2.1 unless the Company shall give written notice to the
    Executive. In the event of the renewal of this Agreement and the extension
    of the term of the employment as hereinbefore provided, all of the other
    terms of this Agreement shall remain in full force and effect, except as may
    be specifically modified by the mutual written agreement of the parties.
    Should the Company not wish to renew, the Company shall provide notice in
    writing of its intention to let this Agreement lapse so that the Executive
    receives it no later than the last day of the sixth (6th) month
    of the last year of the term of the Agreement then in force.

    
	 	 
	3.	
    COMPENSATION AND BENEFITS

	 	 
	3.1	
    No Overtime - The Executive acknowledges that as his
    position is an executive one, he may often be required to work more hours
    than the standard work hours of the office and, given his position, the
    Executive will not be entitled to any overtime.

    
	 	 
	3.2	
    Base Salary - The Company shall pay the Executive a
    base salary of $150,000 USD paid by way of twenty-four bi-monthly payments
    annually in accordance with the Company's regular payroll system. The
    Company and Executive agree that the amount of base salary may be amended
    from time to time upon the consent and with the written agreement of both
    arties. If the base salary is amended, this will in no way alter or affect
    the other terms and conditions of this Agreement except as required to give
    effect to the changes in base salary, including but not limited to increases
    in employee benefits and the bonus objectives set forth herein.

    
	 	 
	3.3	
    Incentive Compensation - The Executive
    will be eligible to receive an annual bonus up to a maximum amount of 100%
    the Executive's then annual base salary. The bonus shall be based on the
    unequivocal achievement of certain business milestones described in Schedule
    "A" to this Agreement. For subsequent periods of time during the term of
    this employment not governed by Schedule "A", the Company, in consultation
    with the Executive, shall establish milestones within a reasonable period of
    time (not to exceed 

    

-4-

	 	thirty (30) days) following the
    expiry of the period of time over which the previous bonus was calculated
    and shall provide those milestones the Executive in written form.
	 	 
	3.4	
    Stock Options - Effective upon the Effective Date, the
    Company agrees to grant the Executive options to acquire up to 500,000
    shares of the common stock of the Company at an exercise price equal to the
    fair market value of such shares on the Effective Date (USD $0.75 per
    share), subject to any required regulatory approvals and conditions, and an
    additional 500,000 shares considered part of the Secondary Pool as set forth
    in Schedule "B" to this Agreement. The first pool of options will vest on
    the following dates:

        
	 	 
	 	(a)	
        125,000 options, on the Effective Date;

        
	 	 	 	 
	 	(b)	
        125,000 options, on the first anniversary (12 months)
        following the Effective Date;

        
	 	 	 	 
	 	(c)	
        125,000 options, on the second anniversary (24 months)
        following the Effective date;

        
	 	 	 	 
	 	(d)	
        125,000 options, 30 months following the Effective Date.

    
	 	 
	 	
    In the event that this Agreement is terminated in circumstances that
    would entitle the executive to receive the Severance Payment provided for in
    Article 6.1 herein, then any options that would have vested during the
    twelve (12) month period over which the Severance Payment is calculated
    shall vest as at the date of termination. Accelerated vesting may also occur
    in the event of a change of control, as provided for in Article 7.3.
    Otherwise, the vesting dates provided in this Article shall not be
    accelerated for any other purpose.

    
	 	 
	3.5	
    Benefits - During the term hereof, the
    Executive shall be entitled to participate in any and all benefit plans and
    programs from time to time in effect for executives of the Company
    generally. Such participation shall be subject to the terms of the
    applicable plans and programs, including but not limited to policies of
    insurance, and generally applicable. 

        

-5-

	 	The Company may alter, modify, add
    or delete its employee benefit plans and programs at any time as it, in its
    sole judgment, determines to be appropriate. In addition, the Company shall
    purchase for the Executive the following additional insurance:
	 	 	 
	 	(a)	
        Term life insurance in the amount of USD
        $1,000,000; 50% payable to such beneficiaries as the Executive chooses;
        50% payable to the Company; and provided the premium does not exceed US
        $2,000 per annum.

        
	 	 	 	 
	 	(b)	
        To the extent that the Executive and his family are not
        covered by the Canadian federal health care system, comprehensive
        medical and dental insurance for the Executive and the members of his
        immediate family (through the continued payment of Executive's COBRA
        premiums and the subsequent purchase of a separate health plan) subject
        to the premiums not to be in excess of US$900 per month, any overage
        will be paid by the employee.

        
				
	 	(c)	
        The Company shall provide to the Executive short- and
        long-term disability insurance coverage, subject to the premium not to
        be in excess of US$5,000 per annum, any overage to be paid by the
        employee.

    
	 	 
	3.6	
    Vacation - The Executive shall be entitled to an annual
    vacation of four (4) weeks (based on the anniversary date of this Agreement)
    to be taken at such times and intervals as shall be determined by the
    Executive subject to the reasonable direction of the Company and on
    reasonable advance notice to the Company. The Executive acknowledges that
    the said annual vacation must be taken annually and that any unused vacation
    shall not be carried over, year to year and shall be deemed to have expired
    or forfeited without additional compensation unless provided otherwise in
    writing by the Company in its full and absolute discretion.

    
	 	 
	3.7	
    Business Expenses - The Company shall
    pay or reimburse the Executive for all reasonable and necessary business
    expenses incurred or paid by the Executive in the performance of his duties
    and responsibilities hereunder, upon the Executive providing such reasonable
    substantiation, invoices or documentation as may be specified by the 

    

-6-

	 	Company from time to time. Reimbursement shall
    include but not be limited to reasonable expenses of travel between
    Wakefield, Massachusetts and Hamilton, Ontario as necessary at the
    Executive's discretion, and a U.S. home office expense reimbursement of USD $250.00 per month.
	 	 
	4.	
    EXTRAORDINARY COMPENSATION

	 	 
	4.1	
    The Company will pay for or reimburse the Executive for
    reasonable and suitable housing or accommodation near the Company's offices
    in Oakville, Ontario, specifically the Holiday Inn at Bronte Ave/Oakville,
    where the Executive is currently housed, including meals, telephone, and dry
    cleaning expenses. Excluded from any coverage under this paragraph are any
    entertainment related charges wherein the Executive is not conducting
    business on behalf of the Company.

    
	 	 
	4.2	
    The Company agrees to pay for or reimburse the Executive for
    business travel via Executive/Business class airfare during any period
    designated by the Executive's physician as medically necessary.

    
	 	 
	4.3	
    The Company will pay for or reimburse the Executive for any
    necessary expenses associated with the rental or lease of a full-sized
    automobile during periods in which the Executive carries out his duties in
    Canada, to a maximum amount of $600 (Cdn) per month, plus applicable
    gasoline, insurance, and maintenance expenses.

    
	 	 
	5.	
    TERMINATION BY COMPANY FOR JUST CAUSE AND
    WITHOUT NOTICE

	 	 
	 	
    Notwithstanding anything contained in this Agreement, the employment of
    the Executive under this Agreement may be terminated for just cause without
    notice or compensation on any of the following grounds:

    
	 	 
	5.1	
    The Executive's death while employed under this Agreement;

    
	 	 
	5.2	
    A determination by the Company that the
    Executive is disabled, defined as a failure by or inability of the Executive
    to adequately perform his employment duties hereunder on a full-time basis
    (which is agreed by both parties to be an occupational requirement) for a 

    

-7-

	 	consecutive period of two (2)
    months, or that the Executive has failed to perform his duties hereunder for
    more than three (3) months in any twelve (12) month period in the current
    term, or in any negotiated extension thereof, by reason of illness or other
    physical or mental incapacity. The Executive agrees to attend such medical
    examinations as the Company may reasonably require for the purposes of this
    provision provided the Company agrees to pay all costs associated therewith.
    Both parties acknowledge that the Executive has an existing medical
    condition which, while not expected to inhibit the performance of his
    duties, may do so, in which case the Company is entitled to act as
    reasonably necessary in order to ensure its operations are suitably
    organized and carried out;
	 	 
	5.3	
    The Executive's default or misconduct in the proper discharge
    of the Executive's duties or any breach or non-observance by the Executive
    of any provision of this Agreement;

    
	 	 
	5.4	
    The Executive engaging in any criminal act or act of
    dishonesty respecting the property or reputation of the Company;

    
	 	 
	5.5	
    Addiction to or excessive use of alcohol or illegal drugs on
    the part of the Executive;

    
	 	 
	5.6	
    The Executive having absented himself from his duties of
    employment without leave of the Company.

    
	 	 
	6.	
    TERMINATION BY COMPANY WITHOUT CAUSE

	 	 
	6.1	
    The Company may at its discretion terminate the employment of
    the Executive at any time without cause, in which event the Executive shall
    be entitled to receive the following:

        
	 	 
	 	(a)	
        A lump sum Severance Payment equivalent to the Executive's
        base salary and the value of all benefits and bonuses that the Executive
        would otherwise have received over a period of time that is the lesser
        of:

            
	 	 
	 	 	(i)	
            the period of time then remaining to
            the expiry of the then term of this Agreement; or

            

-8-

	 	 	(ii)	
            A period of twelve (12) months from the
            date of termination.

        
	 	 	 	 
	 	(b)	
        Any options that would have vested during the twelve (12)
        month period over which the Severance Payment s calculated shall vest as
        at the date of termination. All unvested stock options granted herein
        shall immediately vest and become exercisable for the remaining term of
        such options, except for those options that may not have been earned
        noted herein as the secondary option pool.

    
	 	 
	6.2	
    For the purpose of Article 6.1(a), the bonus element of the
    Severance Payment shall be calculated on a pro rata basis and based on the
    bonus payments paid to the Executive during the twelve (12) months prior to
    the date he is provided with notice of termination.

    
	 	 
	7.	
    TERMINATION BY EXECUTIVE

	 	 
	7.1	
    
     Written Notice - The Executive may terminate this
    Agreement for any reason other than valid cause (as set forth below) at any
    time upon the provision of ninety (90) days advance written notice to the
    Company. In this event the Executive shall not be entitled to any
    termination pay or compensation, including the Severance Payment, but will
    be entitled to continue receiving his base salary and benefit entitlements
    to the date of such termination. If the Executive terminates this Agreement
    pursuant to this Article 7.1, then the Company shall have the option of
    terminating the Executive's employment at any time within the said ninety
    (90) notice period, in which case its sole obligation will be to forthwith
    pay an amount equivalent to the base salary that the Executive would have
    received through to the end of the said ninety (90) day notice period.

    
	 	 
	7.2	
    Valid Cause - The Executive may terminate this
    Agreement for valid cause, upon reasonable advance written notice to the
    Company setting forth in reasonable detail the nature of such valid cause.
    The following shall constitute valid cause for termination by the Executive:
    (i) material diminution in the nature or scope of the Executive's
    responsibilities, duties or authority; provided, however, that any
    diminution of the business of the Company, shall not constitute valid cause;
    (ii) material failure of the Company to provide the Executive the
    compensation and benefits in accordance with the terms of this Agreement;
    (iii) the Company requires the Executive to relocate his primary 

    

-9-

	 	residence to Canada. If the
    Executive is entitled to and does terminate this Agreement pursuant to this
    provisions, then the Executive shall be entitled to be paid the Severance
    Payment described in Article 6.1 herein forthwith upon termination.
	 	 
	7.3	
    Change of Control - In the event that the Executive's
    employment with the Company terminates following a Change of Control (as
    defined below), the Executive shall, within a period of thirty (30) days
    following the Change of Control, be entitled to terminate this Agreement
    upon thirty (30) days advance written notice and at the expiry of that
    notice shall be entitled to receive the Severance Payment provided for in
    Article 6.1 herein. For the purposes of this Article 7.3, a Change of
    Control shall be defined as follows:

        
	 	 
	 	(a)	
        the sale or disposition by each of Zi Corporation and
        Lancer Group of 75% or more of their respective existing share ownership
        positions in the Company, which, presently, are that Zi Corporation owns
        45% and Lancer Group owns or controls 45% of the issued shares of the
        Company; or

        
	 	 	 	 
	 	(b)	
        the sale of all or substantially all of the assets or
        capital stock of the Company, the merger or consolidation of the Company
        in which less than a majority of the voting power of the then
        outstanding securities immediately after the merger is held by persons
        who were stockholders of the Company immediately prior to the merger, or
        another event or transaction having substantially the same economic
        effect; or

    
	 	 
	8.	
    NO CONFLICT

	 	 
	8.1	
    Executive represents and warrants that his employment by the
    Company will not conflict with and will not be constrained by any prior or
    current employment, consulting agreement or relationship, whether oral or
    written. Executive represents and warrants that he does not possess
    confidential information arising out of any such employment, consulting
    agreement or relationship which, in his best judgment, would be utilized in
    connection with his employment by the Company.

    

-10-

	9.	
    NON-COMPETITION

	 	 
	9.1	
    During the course of this Agreement and for a period of one
    (1) year from the termination of this Agreement, howsoever effected
    (including but not limited to termination by the Executive or without cause
    termination by the Company or the natural expiry of the term):

        
	 	 
	 	

        
        (a) 	
        The Executive shall not, directly or indirectly, engage or
        invest in, own, manage, operate, finance, control, or participate in the
        ownership, management, operation, financing, or control of, be employed
        by, associated with, or in any manner connected with, lend his name or
        any similar name to, lend his credit to, or render services or advice
        to, any business whose services or activities compete in whole or in
        part with the activities of the Company anywhere within Canada or the
        United States or elsewhere throughout the world where, as of the date of
        termination, the Company provides or sells its services or conducts its
        business activities, has sold such services or has conducted such
        business activities, or intends to sell such services or conduct such
        business activities; provided, however, the Executive may purchase or
        otherwise acquire up to (but not more than) two percent of any class of
        securities of any enterprise (but without otherwise participating in the
        activities of such enterprise) if such securities are listed on any
        national or regional securities exchange. The Executive agrees that this
        covenant is reasonable with respect to its duration, geographical area,
        and scope.

        
	 	 	 	 
	 	
        
        
        (b) 

            	The Executive shall not, directly or indirectly, for
        himself or any other person or company,
	 	 	 	 
	 	
             

            	

            
            (i) 	induce or attempt to induce any employee of the
            Company to leave the employ of the Company,
	 	 	 	 
	 	
             

            	
            
            (ii)	
            
             in any way interfere with the relationship between
            the Company and any employee thereof,

-11-

	 	 	 	 
	 	
            
            
             

            	
            
            (iii)	employ, or otherwise engage as an employee,
            independent contractor, or otherwise, any employee of the Company,
            or
	 	 	 	 
	 	
            
            
             .

        	
            
            (iv)	induce or attempt to induce any customer,
    supplier, licensee, or business relation of the Company to cease doing
    business with the Company, or in any way interfere with the relationship
    between any customer, supplier, licensee, or business relation of the
    Company
	 	 	 	 
	 	
        

        
        (c) 

        	The Executive shall not, directly or indirectly, for
        himself or any other person or company, solicit the business of any
        person or company known to the Executive to be a customer or potential
        customer of the Company, whether or not the Executive had personal
        contact with such person or company, with respect to services or other
        business activities which compete in whole or in part with the services
        or other business activities of the Company; and
	 	 	 	 
	 	
        
        
        (d) 

    	Neither the Company nor the Executive shall, at any time
        during or after the term of this Agreement, disparage the Executive or
        the Company, its directors, affiliates, officers, employees, or agents.
	 	 
	10.	
    CONFIDENTIALITY

	 	 
	10.1	
    During the term of this Agreement and at all
    times thereafter, Executive will keep confidential and will not at any time
    use, for his own or another's advantage or disclose to any person or company
    any trade secrets, business methods or confidential information concerning
    the business, proprietary information, financial status or affairs of the
    Company, including but not limited to the Company's products, processes and
    services, including research and development, compilations or information,
    records and specifications, management information systems, techniques,
    computer programs and methods of designing such programs, documentation of
    computer programs and methods, manuals, technical data including software
    source codes, customer and prospect lists, supplier lists, license terms,
    pricing information, cost data, new products, sale strategies, policies,
    scripts, literature, audiovisual materials or business plans, in any media
    or dorm 

        

-12-

	 	whatsoever which may have come to
    Executive's knowledge during the fulfillment of his obligations hereunder;
    provided however, this restriction shall not prevent:
	 	

        
        (a) 	any disclosure or use authorized by the Board or other
        Officer of the Company, required by law, or made to enable the Executive
        to perform his duties hereunder;
	 	 
	 	
        
        (b)	the use of the Executive's personal skills in any business
        in which he may be lawfully engaged after termination of this Agreement;
        or
	 	 
	 	
        
        (c)	the use of Confidential Information that is in or comes
        into the public domain in any way without Executive's breach of this
        Agreement.
	 	 
	10.2	
    In the event the Executive's employment with the Company
    terminates for any reason whatsoever, the Executive agrees to promptly
    surrender and deliver or the Company all records, materials, equipment,
    drawings, computer disks, documents and data which he may obtain or produce
    during the course of his employment, and he will not take with him any
    description containing or pertaining to any confidential information,
    knowledge or data of the Company which the Executive may produce or obtain
    during the course of his employment. However, the Company agrees that the
    Executive may retain the use and title of his existing computer, printer,
    accessories, and cell phone reassignment.

    
	 	 
	11.	
    INTERPRETATION

	 	 
	11.1	
    It is the intent of the parties that in case
    any one or more of the provisions contained in this Agreement shall, for any
    reason, be held to be invalid, illegal or unenforceable in any respect, such
    invalidity, illegality or unenforceability shall not affect the other
    provisions of this Agreement, and this Agreement shall be construed as if
    such invalid, illegal or unenforceable provision had never been contained
    herein. Moreover, it is the intent of the parties that if any one or more of
    the provisions contained in this Agreement is or becomes or is deemed
    invalid, illegal or unenforceable or in case any shall for any reason be
    held to be excessively broad as to durations, geographical scope, activity
    or subject, such provisions shall be construed by amending, limited and/or
    reducing it to conform to applicable laws so as to be valid and enforceable
    or, if it cannot be so amended without 

    

-13-

	 	materially altering the intention of
    the parties, it shall be stricken and the remainder of this Agreement shall
    remain in full force and effect.
	 	 
	12.	
    COMPLETE AGREEMENT; AMENDMENTS

	 	 
	12.1	
    The foregoing is the entire agreement of the parties with
    respect to the subject matter thereof, superseding any previous oral or
    written communications, representations, understandings or agreements with
    the Company or any officer or representative thereof, including any matters
    arising from the Executive's existing consultant position with the Company.
    This Agreement may be amended or modified only by a written instrument
    signed by the parties hereto.

    
	 	 
	13.	
    ARBITRATION; GOVERNING LAW

	 	 
	13.1	
    The parties agree that this Agreement shall be interpreted in
    accordance with and governed by the Laws of the Province of Ontario. The
    parties further agree that any dispute arising out of this Agreement may be
    decided by binding arbitration should the parties mutually agree, upon such
    terms and parameters in respect of which the parties mutually agree.
    Otherwise, the parties hereby irrevocably and exclusively attom to the
    jurisdiction of the courts of the Province of Ontario with respect to the
    enforcement of any provisions of this Agreement and irrevocably agree that
    the venue for any action pursuant to the Agreement shall be exclusively the
    courts of Ontario.

    
	 	 
	13.2	
    To the extent permitted by applicable law, each party hereby
    waives and agrees not to assert, by way of motion, as a defence or otherwise
    in any such action, any claim:

        
	 	 
	 	(a)	that it is not subject to the jurisdiction of the
        above-named courts;
	 	 	 
	 	 
	 	(b)	that the action is brought in an inconvenient forum;
	 	 
	 	(c)	that it is immune from any legal process with respect to
        itself or its property;
	 	 
	 	(d)	the venue of the suit, action or proceeding is improper;
        or

-14-

	 	(e)	that this Agreement or the subject matter hereof matter
        may not be enforced in or by such courts.
	 	 
	14.	
    REMEDIES

	 	 
	14.1	
    If the Executive breaches the covenants set forth in Article
    8, 9, or 10 of this Agreement, then the Company shall be entitled to the
    following remedies:

        
	 	 
	 	(a)	Damages from the Executive;
	 	 
	 	(b)	To set off against any and all amounts owing to the
        Executive under this Agreement;
	 	 
	 	(c)	
        
         In addition to its right to damages and any other rights
        it may have, to obtain injunctive or other equitable relief (including
        preliminary, interim, and permanent injunctive relief) to restrain any
        breach or threatened breach or otherwise to specifically enforce the
        provisions of Articles 8, 9 or 10 of this Agreement, it being agreed
        that money damages alone would be inadequate to compensate the Company
        and would be an inadequate remedy for such breach; and
	 	 
	 	(d)	The rights and remedies of the parties to this Agreement
        are cumulative and not alternative.
	 	 
	14.2	
    If the Company breaches any of the covenants contained
    herein, and the Executive ultimately prevails in arbitration in whole or in
    part, then the Company agrees that it will pay the Executive's reasonable
    attorneys' fees incurred in enforcing the Agreement.

    
	 	 
	15.	
    NOTICES

	 	 
	15.1	
    Any notice required or permitted to be given under this
    Agreement shall be sufficient if in writing and either delivered personally
    or sent to by registered mail to the Executive's residence in the case of
    the Executive or to the Chairman of the Board at the current address of the
    Company in the case of the Company. For greater certainty the current
    address of the Executive is:

        

-15-

	 	 
	 	

        18 Heritage Lane

        Wakefield, Massachusetts 01880

        U.S.A.

    
	 	 
	15.2	
    In the event that the Executive changes his residence
    address, he shall so notify the Company in writing.

    

	 	 	 
	ROBERT GOODARD	 	WITNESS
	 	 	 
	 	 	 
	 	 	MAGIC LANTERN GROUP INC.
	 	 	 
	 	 	Per:	 

SCHEDULE "A"

For the period November 3, 2003 - October 31, 2004, the bonus for which the
Executive is eligible shall be based upon the achievement by the Company of 
both revenue and profit milestones, in each case calculated employing
Generally Accepted Accounting Principles as determined by the auditors of the
Company and as approved by the Board of Directors of the Company:

	
    Revenue
	
    Profit
	
    Bonus

    (Percentage of Base Salary)

    
	
    $7.5 million (Cdn)
	
    5.0%
	
    25%

	
    $10.0 million (Cdn)
	
    5.0%
	
    50%

	
    $15.0 million (Cdn)
	
    5.0%
	
    75%

	
    $20.0 million (Cdn)
	
    5.0%
	
    100%

SCHEDULE "B"

Secondary Option Pool

The Company agrees to grant the Executive options to acquire an additional
500,000 shares of the common stock of the Company at an exercise price equal to
the fair market value of such shares on the Effective Date (USD $0.75 per
share), subject to any required regulatory approvals and conditions. This
Secondary Pool of options will vest immediately after the occurrence of all of
the following:

        
                1.     When the Company's annual revenues equal or exceed (Cdn)
        $30,000,000.00;

        
                2.     When the Company's EBITDA equals 15%; and

        
                3.     When the Company's market capitalization equals or exceeds
        (Cdn) $200,000,000.00.

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