EXHIBIT 5.1  


RESPONSE BIOMEDICAL CORP.


2005 STOCK OPTION PLAN


Effective Date:  May 3, 2005


Approved by the Board of Directors on May 3, 2005.


Approved by the Shareholders on June 21, 2005.


Amended June 22, 2006


Extended and Amended by the board of Directors on April 3, 2007


Approved by Shareholders on June 14, 2007


 


 













TABLE OF CONTENTS






	
             
 	
            Page 
 








	
            SECTION 1 DEFINITIONS AND INTERPRETATION
 	
            1
 









	
             
 	
            1.1   Definitions
 	
            1 
 









	
             
 	
            1.2   Choice of Law
 	
            5 
 









	
             
 	
            1.3   Headings
 	
            5 
 









	
            SECTION 2 GRANT OF OPTIONS
 	
            5
 









	
             
 	
            2.1   Grant of Options
 	
            5 
 









	
             
 	
            2.2   Record of Option Grants
 	
            5  
 









	
             
 	
            2.3   Effect of Plan
 	
            5 
 









	
            SECTION 3 PURPOSE AND PARTICIPATION 
 	
            5
 









	
             
 	
            3.1   Purpose of Plan
 	
            5 
 









	
             
 	
            3.2   Participation in Plan
 	
            6 
 









	
             
 	
            3.3   Limits on Option Grants - Tier 1 Issuer
 	
            6 
 









	
             
 	
            3.4   Limits on Option Grants - Tier 2 Issuer
 	
            6 
 









	
             
 	
            3.5   Notification of Grant
 	
            6 
 









	
             
 	
            3.6   Copy of Plan
 	
            7 
 









	
             
 	
            3.7   Limitation on Service
 	
            7 
 









	
             
 	
            3.8   No Obligation to Exercise
 	
            7 
 









	
             
 	
            3.9   Agreement
 	
            7 
 









	
             
 	
            3.10  Notice
 	
            7 
 









	
             
 	
            3.11  Representation to TSX-VN
 	
            7 
 









	
            SECTION 4 NUMBER OF SHARES UNDER PLAN 
 	
            7
 









	
             
 	
            4.1   Board to Approve Issuance of Shares
 	
            7 
 









	
             
 	
            4.2   Number of Shares
 	
            8 
 









	
             
 	
            4.3   Fractional Shares
 	
            8 
 









	
            SECTION 5 TERMS AND CONDITIONS OF OPTIONS 
 	
            8
 









	
             
 	
            5.1   Exercise Period of Option
 	
            8 
 









	
             
 	
            5.2   Number of Shares Under Option
 	
            8 
 









	
             
 	
            5.3   Exercise Price of Option
 	
            8 
 









	
             
 	
            5.4   Termination of Option
 	
            9 
 









	
             
 	
            5.5   Vesting of Option and Acceleration
 	
            10 
 









	
             
 	
            5.6   Additional Terms
 	
            10 
 









	
             
 	
            5.7   U.S. Option Holders
 	
            10 
 









	
            SECTION 6 TRANSFERABILITY OF OPTIONS 
 	
            11
 









	
             
 	
            6.1   Non-transferable
 	
            11 
 









	
             
 	
            6.2   Death of Option Holder
 	
            11 
 









	
             
 	
            6.3   Disability of Option Holder
 	
            11 
 









	
             
 	
            6.4   Disability and Death of Option Holder
 	
            11 
 









	
             
 	
            6.5   Vesting
 	
            12 
 









	
             
 	
            6.6   Deemed Non-Interruption of Engagement
 	
            12 
 









	
            SECTION 7 EXERCISE OF OPTION 
 	
            12
 









	
             
 	
            7.1   Exercise of Option
 	
            12 
 









	
             
 	
            7.2   Issue of Share Certificates
 	
            12 
 









	
             
 	
            7.3   No Rights as Shareholder
 	
            12 
 









	
            SECTION 8 ADMINISTRATION 
 	
            12
 









	
             
 	
            8.1   Board or Committee
 	
            12 
 








 


















	
             
 	
            - ii -
 





 





	
             
 	
            8.2   Appointment of Committee
 	
            13 
 









	
             
 	
            8.3   Quorum and Voting
 	
            13 
 









	
             
 	
            8.4   Powers of Committee
 	
            13 
 









	
             
 	
            8.5   Administration by Committee
 	
            14 
 







	
             
 	
            8.6   Interpretation
 	
            14 
 









	
            SECTION 9 APPROVALS AND AMENDMENT 
 	
            14
 









	
             
 	
            9.1   Shareholder Approval of Plan
 	
            14 
 









	
             
 	
            9.2   Amendment of Option or Plan
 	
            14 
 









	
            SECTION 10 CONDITIONS PRECEDENT TO ISSUANCE OF OPTIONS AND SHARES
 	
            14
 









	
             
 	
            10.1  Compliance with Laws
 	
            14 
 









	
             
 	
            10.2  Obligation to Obtain Regulatory Approvals
 	
            15 
 









	
             
 	
            10.3  Inability to Obtain Regulatory Approvals
 	
            15 
 









	
             
 	
            10.4  U.S. Regulatory Approvals
 	
            15 
 









	
            SECTION 11 ADJUSTMENTS AND TERMINATION
 	
            15
 









	
             
 	
            11.1  Termination of Plan
 	
            15 
 









	
             
 	
            11.2  No Grant During Suspension of Plan
 	
            15 
 









	
             
 	
            11.3  Alteration in Capital Structure
 	
            15 
 









	
             
 	
            11.4  Triggering Events
 	
            16 
 









	
             
 	
            11.5  Notice of Termination by Triggering Event
 	
            16 
 









	
             
 	
            11.6  Determinations to be Made By Committee
 	
            16 
 









	
            SECTION 12 CALIFORNIA OPTION GRANTS
 	
            17
 









	
             
 	
            12.1  Application of this Section
 	
            17 
 









	
             
 	
            12.2  Minimum Exercise Price
 	
            17 
 









	
             
 	
            12.3  Minimum Vesting Schedule
 	
            17 
 









	
             
 	
            12.4  Maximum Exercise Period
 	
            17 
 









	
             
 	
            12.5  Minimum Post-Termination Exercise Period
 	
            17 
 









	
             
 	
            12.6  Additional Shareholder Approval
 	
            17 
 



















STOCK OPTION PLAN


SECTION 1 


DEFINITIONS AND INTERPRETATION





	
            1.1
 	
            Definitions
 






As used herein, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the meanings set forth below:





	
             
  	
            (a)
 	
            "Administrator" means such Executive or Employee of the Company as may be designated as Administrator by the Committee from time to time, if any.
 









	
             
  	
            (b)
 	
            "Associate" means, where used to indicate a relationship with any person:
 









	
             
  	
            (i)
 	
            any relative, including the spouse of that person or a relative of that person's spouse, where the relative has the same home as the person;
 









	
             
  	
            (ii)
 	
            any partner, other than a limited partner, of that person;
 









	
             
  	
            (iii)
 	
            any trust or estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar capacity; and
 









	
             
  	
            (iv)
 	
            any corporation of which such person beneficially owns or controls, directly or indirectly, voting securities carrying more than 10% of the voting rights attached to all outstanding voting securities of the corporation.
 









	
             
  	
            (c)
 	
            "Black-Out" means a restriction imposed by the Company on all or any of its directors, officers, employees, insiders or persons in a special relationship whereby they are to refrain from trading in the Company's securities until the restriction has been lifted by the Company.
 









	
             
  	
            (d)
 	
            "Board" means the board of directors of the Company.
 









	
             
  	
            (e)
 	
            "Change of Control" means an occurrence when either:
 









	
             
  	
            (i)
 	
            a Person or Entity, other than the current "control person" of the Company (as that term is defined in the Securities Act), becomes a "control person" of the Company; or
 









	
             
  	
            (ii)
 	
            a majority of the directors elected at any annual or extraordinary general meeting of shareholders of the Company are not individuals nominated by the Company's then-incumbent Board.
 









	
             
  	
            (f)
 	
            "Committee" means a committee of the Board appointed in accordance with this Plan or if no such committee is appointed, the Board itself.
 









	
             
  	
            (g)
 	
            "Company" means Response Biomedical Corp.
 









	
             
  	
            (h)
 	
            "Consultant" means an individual who:
 









	
             
  	
            (i)
 	
            is engaged to provide, on an ongoing bona fide basis, consulting, technical, management or other services to the Company or any Subsidiary other than services provided in relation to a "distribution" (as that term is described in the Securities Act); 
 






 


















	
             
 	
            - 2 -
 





 





	
             
  	
            (ii)
 	
            provides the services under a written contract between the Company or any Subsidiary and the individual or a Consultant Entity (as defined in clause (h)(v) below); 
 









	
             
  	
            (iii)
 	
            in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or any Subsidiary; and
 









	
             
  	
            (iv)
 	
            has a relationship with the Company or any Subsidiary that enables the individual to be knowledgeable about the business and affairs of the Company or is otherwise permitted by applicable Regulatory Rules to be granted Options as a Consultant or as an equivalent thereof,
 






and includes:





	
             
  	
            (v)
 	
            a corporation of which the individual is an employee or shareholder or a partnership of which the individual is an employee or partner (a "Consultant Entity"); or
 









	
             
  	
            (vi)
 	
            an RRSP or RRIF established by or for the individual under which he or she is the beneficiary.
 









	
             
  	
            (i)
 	
            "Disability" means a medically determinable physical or mental impairment expected to result in death or to last for a continuous period of not less than 12 months, and which causes an individual to be unable to engage in any substantial gainful activity, or any other condition of impairment that the Committee, acting reasonably, determines constitutes a disability.
 









	
             
  	
            (j)
 	
            "Employee" means:
 









	
             
  	
            (i)
 	
            an individual who works full-time or part-time for the Company or any Subsidiary and such other individual as may, from time to time, be permitted by applicable Regulatory Rules to be granted Options as an employee or as an equivalent thereto; or
 









	
             
  	
            (ii)
 	
            an individual who works for the Company or any Subsidiary either full-time or on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the Company or any Subsidiary over the details and methods of work as an employee of the Company or any Subsidiary, but for whom income tax deductions are not made at source,
 






and includes:





	
             
  	
            (iii)
 	
            a corporation wholly-owned by such individual; and
 









	
             
  	
            (iv)
 	
            any RRSP or RRIF established by or for such individual under which he or she is the beneficiary.
 









	
             
  	
            (k)
 	
            "Executive" means an individual who is a director or officer of the Company or a Subsidiary, and includes:
 









	
             
  	
            (i)
 	
            a corporation wholly-owned by such individual; and
 









	
             
  	
            (ii)
 	
            any RRSP or RRIF established by or for such individual under which he or she is the beneficiary.
 









	
             
  	
            (l)
 	
            "Exercise Notice" means the written notice of the exercise of an Option, in the form set out as Schedule "B" hereto, duly executed by the Option Holder.
 









	
             
  	
            (m)
 	
            "Exercise Period" means the period during which a particular Option may be exercised and is the period from and including the Grant Date through to and including the Expiry Time on the Expiry Date provided, however, that no Option can be exercised unless and until all necessary Regulatory Approvals have been obtained.
 






 


















	
             
 	
            - 3 -
 





 





	
             
  	
            (n)
 	
            "Exercise Price" means the price at which an Option is exercisable as determined in accordance with section 5.3.
 









	
             
  	
            (o)
 	
            "Expiry Date" means the date the Option expires as set out in the Option Certificate or as otherwise determined in accordance with sections 5.4, 6.2, 6.3, 6.4 or 11.4.
 









	
             
  	
            (p)
 	
            "Expiry Time" means the time the Option expires on the Expiry Date, which is 5:00 p.m. local time in Vancouver, British Columbia on the Expiry Date.
 









	
             
  	
            (q)
 	
            "Grant Date" means the date on which the Committee grants a particular Option, which is the date the Option comes into effect provided however that no Option can be exercised unless and until all necessary Regulatory Approvals have been obtained.
 









	
             
  	
            (r)
 	
            "Insider" means an insider as that term is defined in the Securities Act; 
 









	
             
  	
            (s)
 	
            "Market Value" means the market value of the Shares as determined in accordance with section 5.3.
 









	
             
  	
            (t)
 	
            "Option" means an incentive share purchase option granted pursuant to this Plan entitling the Option Holder to purchase Shares of the Company.
 









	
             
  	
            (u)
 	
            "Option Certificate" means the certificate, in substantially the form set out as Schedule "A" hereto, or in such other form or forms as may be adopted by the Committee from time to time, evidencing the Option.
 









	
             
  	
            (v)
 	
            "Option Holder" means a Person or Entity who holds an unexercised and unexpired Option or, where applicable, the Personal Representative of such person.
 









	
             
  	
            (w)
 	
            "Outstanding Issue" means the number of Shares that are outstanding (on a non-diluted basis) immediately prior to the Share issuance or grant of Option in question.
 









	
             
  	
            (x)
 	
            "Person or Entity" means an individual, natural person, corporation, government or political subdivision or agency of a government, and where two or more persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of an issuer, such partnership, limited partnership, syndicate or group shall be deemed to be a Person or Entity.
 









	
             
  	
            (y)
 	
            "Personal Representative" means:
 









	
             
  	
            (i)
 	
            in the case of a deceased Option Holder, the executor or administrator of the deceased duly appointed by a court or public authority having jurisdiction to do so; and
 









	
             
  	
            (ii)
 	
            in the case of an Option Holder who for any reason is unable to manage his or her affairs, the person entitled by law to act on behalf of such Option Holder.
 









	
             
  	
            (z)
 	
            "Plan" means this stock option plan as from time to time amended.
 









	
             
  	
            (aa)
 	
            "Regulatory Approvals" means any necessary approvals of the Regulatory Authorities as may be required from time to time for the implementation, operation or amendment of this Plan or for the Options granted from time to time hereunder.
 









	
             
  	
            (bb)
 	
            "Regulatory Authorities" means all organized trading facilities on which the Shares are listed, and all securities commissions or similar securities regulatory bodies having jurisdiction over the Company, this Plan or the Options granted from time to time hereunder.
 









	
             
  	
            (cc)
 	
            "Regulatory Rules" means all corporate and securities laws, regulations, rules, policies, notices, instruments and other orders of any kind whatsoever which may, from time to time, apply to the implementation, 
 






 


















	
             
 	
            - 4 -
 





 


operation or amendment of this Plan or the Options granted from time to time hereunder including, without limitation, those of the applicable Regulatory Authorities.





	
             
  	
            (dd)
 	
            "Securities Act" means the Securities Act (British Columbia), RSBC 1996, c.418 as from time to time amended.
 









	
             
  	
            (ee)
 	
            "Share" or "Shares" means, as the case may be, one or more common shares without par value in the capital stock of the Company.
 









	
             
  	
            (ff)
 	
            "Subsidiary" means a wholly-owned or controlled subsidiary corporation of the Company.
 









	
             
  	
            (gg)
 	
            "Triggering Event" means:
 









	
             
  	
            (i)
 	
            the proposed dissolution, liquidation or wind-up of the Company;
 









	
             
  	
            (ii)
 	
            a proposed merger, amalgamation, arrangement or reorganization of the Company with one or more corporations as a result of which, immediately following such event, the shareholders of the Company as a group, as they were immediately prior to such event, are expected to hold less than a majority of the outstanding capital stock of the surviving corporation;
 









	
             
  	
            (iii)
 	
            the proposed acquisition of all or substantially all of the issued and outstanding shares of the Company by one or more Persons or Entities;
 









	
             
  	
            (iv)
 	
            a proposed Change of Control of the Company;
 









	
             
  	
            (v)
 	
            the proposed sale or other disposition of all or substantially all of the assets of the Company; or
 









	
             
  	
            (vi)
 	
            a proposed material alteration of the capital structure of the Company which, in the opinion of the Committee, is of such a nature that it is not practical or feasible to make adjustments to this Plan or to the Options granted hereunder to permit the Plan and Options granted hereunder to stay in effect.
 









	
             
  	
            (hh)
 	
            "TSX-VN" means the TSX Venture Exchange Inc.
 









	
             
  	
            (ii)
 	
            "United States" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia.
 









	
             
  	
            (jj)
 	
            "U.S. Eligible Consultant" means a Consultant that is a natural person that provides bona fide services to the Company, and such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.
 









	
             
  	
            (kk)
 	
            "U.S. Person" means a U.S. person within the meaning of Regulation S adopted pursuant to the U.S. Securities Act, which definition includes, but is not limited to, a natural person resident in the United States, a partnership or corporation organized or incorporated under the laws of the United States, or an estate or trust of which any executor, administrator or trustee is a U.S. person.
 









	
             
  	
            (ll)
 	
            "U.S. Securities Act" means the United States Securities Act of 1933, as amended.
 









	
             
  	
            (mm)
 	
            "Vest" or "Vesting" means that portion of the Option granted to the Option Holder which is available to be exercised by the Option Holder at any time and from time to time.
 























	
             
 	
            - 5 -
 





 





	
            1.2
 	
            Choice of Law
 






The Plan is established under, and the provisions of the Plan shall be subject to and interpreted and construed in accordance with, the laws of the Province of British Columbia.  The Company and each Option Holder hereby attorn to the jurisdiction of the Courts of British Columbia.






	
            1.3
 	
            Headings
 






The headings used herein are for convenience only and are not to affect the interpretation of the Plan.


SECTION 2 


GRANT OF OPTIONS






	
            2.1
 	
            Grant of Options
 






The Committee shall, from time to time in its sole discretion, grant Options to such Persons or Entities and on such terms and conditions as are permitted under this Plan.






	
            2.2
 	
            Record of Option Grants
 






The Committee shall be responsible to maintain a record of all Options granted under this Plan and such record shall contain, in respect of each Option:





	
            (a)
 	
            the name and address of the Option Holder;
 









	
            (b)
 	
            the category (Executive, Employee or Consultant) under which the Option was granted to him, her or it;
 









	
            (c)
 	
            the Grant Date and Expiry Date of the Option;
 









	
            (d)
 	
            the number of Shares which may be acquired on the exercise of the Option and the Exercise Price of the Option;
 









	
            (e)
 	
            the vesting and other additional terms, if any, attached to the Option; and
 









	
            (f)
 	
            the particulars of each and every time the Option is exercised.
 








	
            2.3
 	
            Effect of Plan
 






All Options granted pursuant to the Plan shall be subject to the terms and conditions of the Plan notwithstanding the fact that the Option Certificates issued in respect thereof do not expressly contain such terms and conditions but instead incorporate them by reference to the Plan.  The Option Certificates will be issued for convenience only and in the case of a dispute with regard to any matter in respect thereof, the provisions of the Plan and the records of the Company shall prevail over the terms and conditions in the Option Certificate, save and except as noted below. 


SECTION 3 


PURPOSE AND PARTICIPATION






	
            3.1
 	
            Purpose of Plan
 






The purpose of the Plan is to provide the Company with a share-related mechanism to attract, retain and motivate qualified Executives, Employees and Consultants, to incent such individuals to contribute toward the long term goals of the Company, and to encourage such individuals to acquire Shares of the Company as long term investments.



















	
             
 	
            - 6 -
 





 





	
            3.2
 	
            Participation in Plan
 






The Committee shall, from time to time and in its sole discretion, determine those Executives, Employees and Consultants, if any, to whom Options are to be granted; provided, however, that no Option may be granted to a Consultant that is in the United States or that is a U.S. Person unless such Consultant is a U.S. Eligible Consultant.






	
            3.3
 	
            Limits on Option Grants - Tier 1 Issuer
 






If the Company is listed on TSX-VN as a Tier 1 issuer, the following limitations shall apply to the Plan and all Options thereunder so long as such limitations are required by the TSX-VN:





	
            (a)
 	
            the maximum number of Options which may be granted to any one Option Holder under the Plan within any 12 month period shall be 5% of the Outstanding Issue;
 









	
            (b)
 	
            with respect to section 5.1, the Expiry Date of an Option shall be no later than the tenth anniversary of the Grant Date of such Option;
 









	
            (c)
 	
            the maximum number of Options which may be granted to any one Consultant within any 12 month period must not exceed 2% of the Outstanding Issue; and
 









	
            (d)
 	
            the maximum number of Options which may be granted within any 12 month period to Employees or Consultants engaged in investor relations activities must not exceed 2% of the Outstanding Issue and such options must vest in stages over 12 months with no more than 25% of the Options vesting in any three month period,
 






and such limitation will not be an amendment to this Plan requiring the Option Holders consent under section 9.2 of this Plan.






	
            3.4
 	
            Limits on Option Grants - Tier 2 Issuer
 






If the Company is listed on TSX-VN as a Tier 2 issuer, the following limitations shall apply to the Plan and all Options thereunder so long as such limitations are required by the TSX-VN:





	
            (a)
 	
            the maximum number of Options which may be granted to any one Option Holder under the Plan within any 12 month period shall be 5% of the Outstanding Issue;
 









	
            (b)
 	
            with respect to section 5.1, the Expiry Date of an Option shall be no later than the fifth anniversary of the Grant Date of such Option;
 









	
            (c)
 	
            the maximum number of Options which may be granted to any one Consultant within any 12 month period must not exceed 2% of the Outstanding Issue; and
 









	
            (d)
 	
            the maximum number of Options which may be granted within any 12 month period to Employees or Consultants engaged in investor relations activities must not exceed 2% of the Outstanding Issue and such options must vest in stages over 12 months with no more than 25% of the Options vesting in any three month period,
 






and such limitation will not be an amendment to this Plan requiring the Option Holders consent under section 9.2 of this Plan.






	
            3.5
 	
            Notification of Grant
 






Following the granting of an Option, the Administrator shall, within a reasonable period of time, notify the Option Holder in writing of the grant and shall enclose with such notice the Option Certificate representing the Option so 


 


















	
             
 	
            - 7 -
 





 


granted.  In no case will the Company be required to deliver an Option Certificate to an Option Holder until such time as the Company has obtained all necessary Regulatory Approvals for the grant of the Option.






	
            3.6
 	
            Copy of Plan
 






Each Option Holder, concurrently with the notice of the grant of the Option, shall be provided with a copy of the Plan.  A copy of any amendment to the Plan shall be promptly provided by the Administrator to each Option Holder.






	
            3.7
 	
            Limitation on Service
 






The Plan does not give any Option Holder that is an Executive the right to serve or continue to serve as an Executive of the Company or any Subsidiary, nor does it give any Option Holder that is an Employee or Consultant the right to be or to continue to be employed or engaged by the Company or any Subsidiary.






	
            3.8
 	
            No Obligation to Exercise
 






Option Holders shall be under no obligation to exercise Options granted under this Plan.






	
            3.9
 	
            Agreement
 






The Company and every Option Holder granted an Option hereunder shall be bound by and subject to the terms and conditions of this Plan.  By accepting an Option granted hereunder, the Option Holder has expressly agreed with the Company to be bound by the terms and conditions of this Plan.  In the event that the Option Holder receives his, her or its Options pursuant to an oral or written agreement with the Company or a Subsidiary, whether such agreement is an employment agreement, consulting agreement or any other kind of agreement of any kind whatsoever, the Option Holder acknowledges that in the event of any inconsistency between the terms relating to the grant of such Options in that agreement and the terms attaching to the Options as provided for in this Plan, the terms provided for in this Plan shall prevail and the other agreement shall be deemed to have been amended accordingly.






	
            3.10
 	
            Notice
 






Any notice, delivery or other correspondence of any kind whatsoever to be provided by the Company to an Option Holder will be deemed to have been provided if provided to the last home address, fax number or email address of the Option Holder in the records of the Company and the Company shall be under no obligation to confirm receipt or delivery.






	
            3.11
 	
            Representation to TSX-VN
 






As a condition precedent to the issuance of an Option, the Company must be able to represent to TSX-VN as of the Grant Date that the Option Holder is a bona fide Executive, Employee or Consultant of the Company or any Subsidiary.


SECTION 4 


NUMBER OF SHARES UNDER PLAN






	
            4.1
 	
            Board to Approve Issuance of Shares
 






The Board shall approve by resolution the issuance of all Shares to be issued to Option Holders upon the exercise of Options, such authorization to be deemed effective as of the Grant Date of such Options regardless of when it is actually done.  The Board shall be entitled to approve the issuance of Shares in advance of the Grant Date, retroactively after the Grant Date, or by a general approval of this Plan.



















	
             
 	
            - 8 -
 





 





	
            4.2
 	
            Number of Shares
 






Subject to adjustment as provided for herein, the number of Shares which will be available for purchase pursuant to Options granted pursuant to this Plan will not exceed 17,000,000 Shares, including 2,123,100 Shares as at June 14, 2007 which are currently subject to stock options under the Company’s 1996 Stock Option Plan dated April 19, 1996, as amended on June 21, 1999, June 1, 2000, June 7, 2001, June 17, 2003 and June 21, 2004 (the “1996 Plan”).  If any Option expires or otherwise terminates for any reason without having been exercised in full, or any stock option under the 1996 Plan expires or otherwise terminates for any reason without having been exercised in full, the number of Shares in respect of such expired or terminated Option or stock option shall again be available for the purposes of granting Options pursuant to this Plan.






	
            4.3
 	
            Fractional Shares
 






No fractional shares shall be issued upon the exercise of any Option and, if as a result of any adjustment, an Option Holder would become entitled to a fractional share, such Option Holder shall have the right to purchase only the next lowest whole number of Shares and no payment or other adjustment will be made for the fractional interest.


SECTION 5 


TERMS AND CONDITIONS OF OPTIONS





	
            5.1
 	
            Exercise Period of Option
 






Subject to sections 5.4, 6.2, 6.3, 6.4 and 11.4, the Grant Date and the Expiry Date of an Option shall be the dates fixed by the Committee at the time the Option is granted and shall be set out in the Option Certificate issued in respect of such Option.






	
            5.2
 	
            Number of Shares Under Option
 






The number of Shares which may be purchased pursuant to an Option shall be determined by the Committee and shall be set out in the Option Certificate issued in respect of the Option.






	
            5.3
 	
            Exercise Price of Option
 






The Exercise Price at which an Option Holder may purchase a Share upon the exercise of an Option shall be determined by the Committee and shall be set out in the Option Certificate issued in respect of the Option.  The Exercise Price shall not be less than the Market Value of the Shares as of the Grant Date. The Market Value of the Shares for a particular Grant Date shall be determined as follows:





	
            (a)
 	
            for each organized trading facility on which the Shares are listed, Market Value will be the closing trading price of the Shares on the day immediately preceding the Grant Date, and may be less than this price if it is within the discounts permitted by the applicable Regulatory Authorities;
 









	
            (b)
 	
            if the Company's Shares are listed on more than one organized trading facility, the Market Value shall be the Market Value as determined in accordance with subparagraph (a) above for the primary organized trading facility on which the Shares are listed, as determined by the Committee, subject to any adjustments as may be required to secure all necessary Regulatory Approvals; 
 









	
            (c)
 	
            if the Company's Shares are listed on one or more organized trading facilities but have not traded during the ten trading days immediately preceding the Grant Date, then the Market Value will be, subject to any adjustments as may be required to secure all necessary Regulatory Approvals, such value as is determined by the Committee; and
 









	
            (d)
 	
            if the Company's Shares are not listed on any organized trading facility, then the Market Value will be, subject to any adjustments as may be required to secure all necessary Regulatory Approvals, such value as 
 






 


















	
             
 	
            - 9 -
 





 


is determined by the Committee to be the fair value of the Shares, taking into consideration all factors that the Committee deems appropriate, including, without limitation, recent sale and offer prices of the Shares in private transactions negotiated at arms' length.


Notwithstanding anything else contained herein, in no case will the Market Value be less than the minimum prescribed by each of the organized trading facilities that would apply to the Company on the Grant Date in question.






	
            5.4
 	
            Termination of Option
 






Subject to such other terms or conditions that may be attached to Options granted hereunder, an Option Holder may exercise an Option in whole or in part at any time and from time to time during the Exercise Period.  Any Option or part thereof not exercised within the Exercise Period shall terminate and become null, void and of no effect as of the Expiry Time on the Expiry Date. The Expiry Date of an Option shall be the earlier of the date so fixed by the Committee at the time the Option is granted as set out in the Option Certificate and the date established, if applicable, in paragraphs (a) or (b) below or sections 6.2, 6.3, 6.4, or 11.4 of this Plan:





	
            (a)
 	
            Ceasing to Hold Office - In the event that the Option Holder holds his or her Option as an Executive and such Option Holder ceases to hold such position other than by reason of death or Disability, the Expiry Date of the Option shall be, unless otherwise expressly provided for in the Option Certificate, the 90th day following the date the Option Holder ceases to hold such position unless the Option Holder ceases to hold such position as a result of:
 









	
             
  	
            (i)
 	
            ceasing to meet the qualifications set forth in the corporate legislation applicable to the Company;
 









	
             
  	
            (ii)
 	
            a special resolution having been passed by the shareholders of the Company removing the Option Holder as a director of the Company or any Subsidiary; or
 









	
             
  	
            (iii)
 	
            an order made by any Regulatory Authority having jurisdiction to so order;
 






in which case the Expiry Date shall be the date the Option Holder ceases to hold such position; OR





	
            (b)
 	
            Ceasing to be Employed or Engaged - In the event that the Option Holder holds his or her Option as an Employee or Consultant, other than an Option Holder who is engaged in investor relations activities, and such Option Holder ceases to hold such position other than by reason of death or Disability, the Expiry Date of the Option shall be, unless otherwise expressly provided for in the Option Certificate, the 90th day following the date the Option Holder ceases to hold such position, or, in the case of an Option Holder that is engaged in investor relations activities while the Company is classified as a Tier 2 issuer on the TSX-VN, the 30th day after the date such Option Holder ceases to hold such position, unless the Option Holder ceases to hold such position as a result of:
 









	
             
  	
            (i)
 	
            termination for cause;
 









	
             
  	
            (ii)
 	
            resigning or terminating his or her position; or
 









	
             
  	
            (iii)
 	
            an order made by any Regulatory Authority having jurisdiction to so order;
 






in which case the Expiry Date shall be the date the Option Holder ceases to hold such position.


In the event that the Option Holder ceases to hold the position of Executive, Employee or Consultant for which the Option was originally granted, but comes to hold a different position as an Executive, Employee or Consultant prior to the expiry of the Option, the Committee may, in its sole discretion, choose to permit the Option to stay in place for that Option Holder with such Option then to be treated as being held by that Option Holder in his or her new position and such will not be considered to be an amendment to the Option in question requiring the consent of the Option 


 


















	
             
 	
            - 10 -
 





 


Holder under section 9.2 of this Plan.  Notwithstanding anything else contained herein, in no case will an Option be exercisable later than the Expiry Date of the Option.






	
            5.5
 	
            Vesting of Option and Acceleration
 






The vesting schedule for an Option, if any, shall be determined by the Committee and shall be set out in the Option Certificate issued in respect of the Option.  The Committee may elect, at any time, to accelerate the vesting schedule of one or more Options including, without limitation, on a Triggering Event, and such acceleration will not be considered an amendment to the Option in question requiring the consent of the Option Holder under section 9.2 of this Plan.






	
            5.6
 	
            Additional Terms
 






Subject to all applicable Regulatory Rules and all necessary Regulatory Approvals, the Committee may attach additional terms and conditions to the grant of a particular Option, such terms and conditions to be set out in the Option Certificate.  The Option Certificates will be issued for convenience only, and in the case of a dispute with regard to any matter in respect thereof, the provisions of this Plan and the records of the Company shall prevail over the terms and conditions in the Option Certificate, save and except as noted below.






	
            5.7
 	
            U.S. Option Holders
 






Any Option granted under the Plan to an Option Holder who is a citizen or resident of the United States (a "U.S. Option Holder") within the meaning of the U.S. Internal Revenue Code of 1986, as amended, (the “Code”), will be an incentive stock option (an "ISO") within the meaning of Section 422 of the Code if so designated by the Company in the Option Certificate evidencing such Option.  No provision of this Plan, as it may be applied to a U.S. Option Holder with respect to Options which are designated as ISOs, shall be construed so as to be inconsistent with any provision of Section 422 of the Code.  Grants of Options to U.S. Option Holders which are not designated as an ISO in the Option Certificate evidencing such Option or otherwise do not qualify as ISOs will be treated as nonstatutory stock options for U.S. federal tax purposes.  Notwithstanding anything in this Plan contained to the
contrary, the following provisions shall apply to ISOs granted to each U.S. Option Holder:





	
            (a)
 	
            subject to adjustment as provided for in this Plan, the number of Shares which will be available for granting ISOs will not exceed the number of Shares available for purchase pursuant to Options granted pursuant to the Plan set out in Section 4.2;
 









	
            (b)
 	
            ISOs shall only be granted to individual U.S. Option Holders who are, at the time of grant, “employees” of the Company within the meaning of the Code (or of any “subsidiary” of the Company within the meaning of section 424(f) of the Code);
 









	
            (c)
 	
            the aggregate fair market value (determined as of the time an ISO is granted) of the Shares subject to ISOs exercisable for the first time by a U.S. Option Holder during any calendar year under this Plan (and all other plans of the Company, any “subsidiary” of the Company within the meaning of Section 424(f) of the Code and any “parent” of the Company within the meaning of Section 424(e) of the Code) shall not exceed One Hundred Thousand Dollars in U.S. funds (U.S.$100,000);
 









	
            (d)
 	
            the Exercise Price per Share for each ISO granted to a U.S. Option Holder pursuant to this Plan shall be not less than fair market value of  one Share on the Grant Date, as determined in good faith by the Committee at such time ;
 









	
            (e)
 	
            the Exercise Period of an ISO shall not exceed ten (10) years from the Grant Date;
 









	
            (f)
 	
            if a U.S. Option Holder who has been granted an ISO ceases to be an “employee” of the Company within the meaning of the Code (or of any “subsidiary” of the Company within the meaning of section 424(f) of the Code) for any reason other than the death, Disability or a reason described in clause (i), (ii), or (iii) of 
 






 


















	
             
 	
            - 11 -
 





 


Section 5.4(a) or 5.4(b), such ISO may be exercised (to the extent such ISO was exercisable on the date of termination) by such U.S. Option Holder for a period of three (3) months after the date of termination (but in no event beyond the term of such ISO);





	
            (g)
 	
            if any U.S. Option Holder to whom an ISO is to be granted under the Plan at the time of the grant of such ISO is the owner, directly or constructively, of shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company, then the following special provisions shall be applicable to the ISO granted to such Option Holder:
 









	
             
  	
            (i)
 	
            the Exercise Price per Share with respect to such ISO shall not be less than one hundred ten percent (110%) of the fair market value of one Share on the Grant Date, as determined in good faith by the Committee at such time; and
 









	
             
  	
            (ii)
 	
            the Exercise Period of such ISO shall not exceed five (5) years from the Grant Date;
 









	
            (h)
 	
            no ISO may be granted hereunder to a U.S. Option Holder following the expiration of ten (10) years after the date on which this Plan is adopted by the Board or the date on which the Plan is approved by the shareholders of the Company, whichever is earlier; and
 









	
            (i)
 	
            no ISO granted to a U.S. Option Holder under the Plan shall become exercisable unless and until the Plan shall have been approved by the shareholders of the Company.  In the event that this Plan is not approved by the shareholders of the Company within twelve (12) months before or after the date on which this Plan is adopted by the Board, any ISO will automatically be deemed to be a nonstatutory stock option.
 






SECTION 6 


TRANSFERABILITY OF OPTIONS






	
            6.1
 	
            Non-transferable
 






Except as provided otherwise in this Section 6, Options are non-assignable and non-transferable.






	
            6.2
 	
            Death of Option Holder
 






In the event of the Option Holder's death, any Options held by such Option Holder shall pass to the Personal Representative of the Option Holder and shall be exercisable by the Personal Representative on or before the date which is the earlier of six months following the date of death and the applicable Expiry Date.






	
            6.3
 	
            Disability of Option Holder
 






If the employment or engagement of an Option Holder as an Employee or Consultant or the position of an Option Holder as a director or officer of the Company or a Subsidiary is terminated by the Company by reason of such Option Holder's Disability, any Options held by such Option Holder shall be exercisable by such Option Holder or by the Personal Representative on or before the date which is the earlier of six months following the termination of employment, engagement or appointment as a director or officer and the applicable Expiry Date.






	
            6.4
 	
            Disability and Death of Option Holder
 






If an Option Holder has ceased to be employed, engaged or appointed as a director or officer of the Company or a Subsidiary by reason of such Option Holder's Disability and such Option Holder dies within six months after the termination of such engagement, any Options held by such Option Holder that could have been exercised immediately prior to his or her death shall pass to the Personal Representative of such Option Holder and shall be exercisable by the Personal Representative on or before the date which is the earlier of six months following the death of such Option Holder and the applicable Expiry Date.



















	
             
 	
            - 12 -
 





 





	
            6.5
 	
            Vesting
 






Unless the Committee determines otherwise, Options held by or exercisable by a Personal Representative shall, during the period prior to their termination, continue to vest in accordance with any vesting schedule to which such Options are subject.






	
            6.6
 	
            Deemed Non-Interruption of Engagement
 






Employment or engagement by the Company shall be deemed to continue intact during any military or sick leave or other bona fide leave of absence if the period of such leave does not exceed 90 days or, if longer, for so long as the Option Holder's right to re-employment or re-engagement by the Company is guaranteed either by statute or by contract.  If the period of such leave exceeds 90 days and the Option Holder's re-employment or re-engagement is not so guaranteed, then his or her employment or engagement shall be deemed to have terminated on the ninety-first day of such leave.


SECTION 7 


EXERCISE OF OPTION






	
            7.1
 	
            Exercise of Option
 






An Option may be exercised only by the Option Holder or the Personal Representative of any Option Holder.  An Option Holder or the Personal Representative of any Option Holder may exercise an Option in whole or in part at any time and from time to time during the Exercise Period up to the Expiry Time on the Expiry Date by delivering to the Administrator the required Exercise Notice, the applicable Option Certificate and a certified cheque or bank draft payable to the Company in an amount equal to the aggregate Exercise Price of the Shares then being purchased pursuant to the exercise of the Option.  Notwithstanding anything else contained herein, Options may not be exercised during Black-Out unless the Committee determines otherwise.






	
            7.2
 	
            Issue of Share Certificates
 






As soon as reasonably practicable following the receipt of the Exercise Notice, the Administrator shall cause to be delivered to the Option Holder a certificate for the Shares so purchased.  If the number of Shares so purchased is less than the number of Shares subject to the Option Certificate surrendered, the Administrator shall also provide a new Option Certificate for the balance of Shares available under the Option to the Option Holder concurrent with delivery of the Share Certificate.






	
            7.3
 	
            No Rights as Shareholder
 






Until the date of the issuance of the certificate for the Shares purchased pursuant to the exercise of an Option, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to such Shares, notwithstanding the exercise of the Option, unless the Committee determines otherwise.  In the event of any dispute over the date of the issuance of the certificates, the decision of the Committee shall be final, conclusive and binding.


SECTION 8 


ADMINISTRATION





	
            8.1
 	
            Board or Committee  
 






The Plan shall be administered by the Board, by a Committee of the Board appointed in accordance with section 8.2 below, or by an Administrator appointed in accordance with subsection 8.4(b).



















	
             
 	
            - 13 -
 





 





	
            8.2
 	
            Appointment of Committee
 






The Board may at any time appoint a Committee, consisting of not less than two of its members, to administer the Plan on behalf of the Board in accordance with such terms and conditions as the Board may prescribe, consistent with this Plan. Once appointed, the Committee shall continue to serve until otherwise directed by the Board. From time to time, the Board may increase the size of the Committee and appoint additional members, remove members (with or without cause) and appoint new members in their place, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan.





	
            8.3
 	
            Quorum and Voting
 






A majority of the members of the Committee shall constitute a quorum and, subject to the limitations in this Section 8, all actions of the Committee shall require the affirmative vote of members who constitute a majority of such quorum.  Members of the Committee may vote on any matters affecting the administration of the Plan or the grant of Options pursuant to the Plan, except that no such member shall act upon the granting of an Option to himself or herself (but any such member may be counted in determining the existence of a quorum at any meeting of the Committee during which action is taken with respect to the granting of Options to that member).  The Committee may approve matters by written resolution signed by a majority of the quorum.






	
            8.4
 	
            Powers of Committee
 






The Committee (or the Board if no Committee is in place) shall have the authority to do the following:





	
            (a)
 	
            administer the Plan in accordance with its terms;
 









	
            (b)
 	
            appoint or replace the Administrator from time to time;
 









	
            (c)
 	
            determine all questions arising in connection with the administration, interpretation and application of the Plan, including all questions relating to the Market Value of the Shares;
 









	
            (d)
 	
            correct any defect, supply any information or reconcile any inconsistency in the Plan in such manner and to such extent as shall be deemed necessary or advisable to carry out the purposes of the Plan;
 









	
            (e)
 	
            prescribe, amend, and rescind rules and regulations relating to the administration of the Plan;
 









	
            (f)
 	
            determine the duration and purposes of leaves of absence from employment or engagement by the Company which may be granted to Option Holders without constituting a termination of employment or engagement for purposes of the Plan;
 









	
            (g)
 	
            do the following with respect to the granting of Options:
 









	
             
  	
            (i)
 	
            determine the Executives, Employees or Consultants to whom Options shall be granted, based on the eligibility criteria set out in this Plan;
 









	
             
  	
            (ii)
 	
            determine the terms of the Option to be granted to an Option Holder including, without limitation, the Grant Date, Expiry Date, Exercise Price and vesting schedule (which need not be identical with the terms of any other Option);
 









	
             
  	
            (iii)
 	
            subject to any necessary Regulatory Approvals and section 9.2, amend the terms of any Options;
 









	
             
  	
            (iv)
 	
            determine when Options shall be granted; and
 









	
             
  	
            (v)
 	
            determine the number of Shares subject to each Option;
 






 


















	
             
 	
            - 14 -
 





 





	
            (h)
 	
            accelerate the vesting schedule of any Option previously granted; and
 









	
            (i)
 	
            make all other determinations necessary or advisable, in its sole discretion, for the administration of the Plan.
 









	
            8.5
 	
            Administration by Committee  
 






All determinations made by the Committee in good faith shall be final, conclusive and binding upon all persons.  The Committee shall have all powers necessary or appropriate to accomplish its duties under this Plan. 






	
            8.6
 	
            Interpretation
 






The interpretation by the Committee of any of the provisions of the Plan and any determination by it pursuant thereto shall be final, conclusive and binding and shall not be subject to dispute by any Option Holder.  No member of the Committee or any person acting pursuant to authority delegated by it hereunder shall be personally liable for any action or determination in connection with the Plan made or taken in good faith and each member of the Committee and each such person shall be entitled to indemnification with respect to any such action or determination in the manner provided for by the Company.


SECTION 9 


APPROVALS AND AMENDMENT






	
            9.1
 	
            Shareholder Approval of Plan
 






If required by a Regulatory Authority or by the Committee, this Plan may be made subject to the approval of a majority of the votes cast at a meeting of the shareholders of the Company or by a majority of votes cast by disinterested shareholders at a meeting of shareholders of the Company.  Any Options granted under this Plan prior to such time will not be exercisable or binding on the Company unless and until such shareholder approval is obtained.






	
            9.2
 	
            Amendment of Option or Plan
 






Subject to any required Regulatory Approvals, the Committee may from time to time amend any existing Option or the Plan or the terms and conditions of any Option thereafter to be granted provided that where such amendment relates to an existing Option and it would:





	
            (a)
 	
            materially decrease the rights or benefits accruing to an Option Holder; or
 









	
            (b)
 	
            materially increase the obligations of an Option Holder;
 






then, unless otherwise excepted out by a provision of this Plan, the Committee must also obtain the written consent of the Option Holder in question to such amendment.  If at the time the Exercise Price of an Option is reduced the Option Holder is an Insider of the Company, the Insider must not exercise the option at the reduced Exercise Price until the reduction in Exercise Price has been approved by the disinterested shareholders of the Company.


SECTION 10 


CONDITIONS PRECEDENT TO ISSUANCE OF OPTIONS AND SHARES






	
            10.1
 	
            Compliance with Laws
 






An Option shall not be granted or exercised, and Shares shall not be issued pursuant to the exercise of any Option, unless the grant and exercise of such Option and the issuance and delivery of such Shares comply with all applicable Regulatory Rules, and such Options and Shares will be subject to all applicable trading restrictions in effect pursuant 


 


















	
             
 	
            - 15 -
 





 


to such Regulatory Rules and the Company shall be entitled to legend the Option Certificates and the certificates representing such Shares accordingly.





	
            10.2
 	
            Obligation to Obtain Regulatory Approvals
 






In administering this Plan, the Committee will seek any Regulatory Approvals which may be required.  The Committee will not permit any Options to be granted without first obtaining the necessary Regulatory Approvals unless such Options are granted conditional upon such Regulatory Approvals being obtained.  The Committee will make all filings required with the Regulatory Authorities in respect of the Plan and each grant of Options hereunder.  


No Option granted will be exercisable or binding on the Company unless and until all necessary Regulatory Approvals have been obtained.  The Committee shall be entitled to amend this Plan and the Options granted hereunder in order to secure any necessary Regulatory Approvals and such amendments will not require the consent of the Option Holders under section 9.2 of this Plan.






	
            10.3
 	
            Inability to Obtain Regulatory Approvals
 






The Company's inability to obtain Regulatory Approval from any applicable Regulatory Authority, which Regulatory Approval is deemed by the Committee to be necessary to complete the grant of Options hereunder, the exercise of those Options or the lawful issuance and sale of any Shares pursuant to such Options, shall relieve the Company of any liability with respect to the failure to complete such transaction.






	
            10.4
 	
            U.S. Regulatory Approvals
 






Section 10.2 of this Plan shall not be interpreted to require the Company to register the Shares issuable pursuant to this Plan under the U.S. Securities Act or under the securities laws of any state of the United States; provided, however, that no Options to purchase Shares may be granted in the United States or to or for the benefit of a U.S. Person, and no Options to purchase Shares may be exercised in the United States or by or on behalf of a U.S. Person, unless such Shares have been registered under the U.S. Securities Act and the securities laws of all applicable states of the United States, or exemptions from such registration requirements are available.  The Company may require such additional information, representations, warranties and covenants from an Option Holder, in the Option Certificate, exercise form or otherwise, as the Company deems necessary or appropriate in order to establish
compliance with all applicable provisions of the U.S. Securities Act and the securities laws of any state of the United States.


SECTION 11 


ADJUSTMENTS AND TERMINATION






	
            11.1
 	
            Termination of Plan
 






Subject to any necessary Regulatory Approvals, the Committee may terminate or suspend the Plan.






	
            11.2
 	
            No Grant During Suspension of Plan
 






No Option may be granted during any suspension, or after termination, of the Plan.  Suspension or termination of the Plan shall not, without the consent of the Option Holder, alter or impair any rights or obligations under any Option previously granted.






	
            11.3
 	
            Alteration in Capital Structure
 






If there is a material alteration in the capital structure of the Company and the Shares are consolidated, subdivided, converted, exchanged, reclassified or in any way substituted for, the Committee shall make such adjustments to this Plan and to the Options then outstanding under this Plan as the Committee determines to be appropriate and 


 


















	
             
 	
            - 16 -
 





 


equitable under the circumstances, so that the proportionate interest of each Option Holder shall, to the extent practicable, be maintained as before the occurrence of such event. Such adjustments may include, without limitation:





	
            (a)
 	
            a change in the number or kind of shares of the Company covered by such Options; and
 









	
            (b)
 	
            a change in the Exercise Price payable per Share provided, however, that the aggregate Exercise Price applicable to the unexercised portion of existing Options shall not be altered, it being intended that any adjustments made with respect to such Options shall apply only to the Exercise Price per Share and the number of Shares subject thereto.
 






For purposes of this section 11.3, and without limitation, neither:





	
            (c)
 	
            the issuance of additional securities of the Company in exchange for adequate consideration (including services); nor
 









	
            (d)
 	
            the conversion of outstanding securities of the Company into Shares shall be deemed to be material alterations of the capital structure of the Company.
 






Any adjustment made to any Options pursuant to this section 11.3 shall not be considered an amendment requiring the Option Holder's consent for the purposes of Section 9.2 of this Plan.






	
            11.4
 	
            Triggering Events
 






Subject to the Company complying with section 11.5 and any necessary Regulatory Approvals and notwithstanding any other provisions of this Plan or any Option Certificate, the Committee may, without the consent of the Option Holder or Holders in question:





	
            (a)
 	
            cause all or a portion of any of the Options granted under the Plan to terminate upon the occurrence of a Triggering Event; or
 









	
            (b)
 	
            cause all or a portion of any of the Options granted under the Plan to be exchanged for incentive stock options of another corporation upon the occurrence of a Triggering Event in such ratio and at such exercise price as the Committee deems appropriate, acting reasonably.
 






Such termination or exchange shall not be considered an amendment requiring the Option Holder's consent for the purpose of section 9.2 of the Plan.






	
            11.5
 	
            Notice of Termination by Triggering Event
 






In the event that the Committee wishes to cause all or a portion of any of the Options granted under this Plan to terminate on the occurrence of a Triggering Event, it must give written notice to the Option Holders in question not less than 30 days prior to the consummation of a Triggering Event so as to permit the Option Holder the opportunity to exercise the vested portion of the Options prior to such termination.  Upon the giving of such notice and subject to any necessary Regulatory Approvals, all Options or portions thereof granted under the Plan which the Company proposes to terminate shall become immediately exercisable notwithstanding any contingent vesting provision to which such Options may have otherwise been subject.






	
            11.6
 	
            Determinations to be Made By Committee
 






Adjustments and determinations under this SECTION 11 shall be made by the Committee, whose decisions as to what adjustments or determination shall be made, and the extent thereof, shall be final, binding, and conclusive.


 


















	
             
 	
            - 17 -
 





 


SECTION 12 


CALIFORNIA OPTION GRANTS






	
            12.1
 	
            Application of this Section
 






Notwithstanding any other provision of this Plan, the provisions of sections 12.2 through 12.6 of this Plan shall apply to any Option granted to a resident of the State of California if, on the Grant Date, (i) the Shares are not listed on the New York Stock Exchange or the American Stock Exchange or quoted on the Nasdaq National Market System, and (ii) such Option is not otherwise exempt from the registration requirements of the California securities laws.






	
            12.2
 	
            Minimum Exercise Price
 






If the Option is granted to an Option Holder that owns securities possessing more than 10% of the total combined voting power of all classes of securities of the Company or its parent or subsidiaries possessing voting power, the Exercise Price of the Option shall not be less than 110% of the Market Value of the Shares as of the Grant Date.






	
            12.3
 	
            Minimum Vesting Schedule
 






The Option must become vested and exercisable at a rate of at least 20% of the number of Shares underlying the Option per year, with the first 20% becoming vested not later than one year after the Grant Date.






	
            12.4
 	
            Maximum Exercise Period
 






The Expiry Date of the Option shall not be later than the tenth anniversary of the Grant Date.






	
            12.5
 	
            Minimum Post-Termination Exercise Period
 






If the Option Holder ceases to hold the position of Executive, Employee or Consultant, the Option shall continue to be exercisable until at least the earlier of the Expiry Date originally provided for in the Option, or the applicable date set forth below:





	
            (a)
 	
            if the Option Holder is terminated for cause as defined by applicable law, the date of termination ;
 









	
            (b)
 	
            if the Option Holder’s termination is caused by the Option Holder’s death or Disability, six months from the date of termination; or
 









	
            (c)
 	
            in all other cases, thirty days from the date of termination.
 










	
            12.6
 	
            Additional Shareholder Approval
 






Unless the holders of a majority of the Company’s outstanding securities entitled to vote have approved this Plan within 12 months before or after the date this Plan is adopted, any Option granted to a resident of the State of California that is subject to the provisions of this SECTION 12 shall automatically be rescinded, without any liability to the Company.  No Option granted subject to the provisions of this SECTION 12 shall be exercisable until such shareholder approval has been obtained.


 
















SCHEDULE "A"



Without prior written approval of the TSX Venture Exchange and compliance with
all applicable securities legislation, the securities represented by this
certificate may not be sold, transferred, hypothecated or otherwise traded on or
through the facilities of the TSX Venture Exchange or otherwise in Canada or to
or for the benefit of a Canadian resident until  • [date
four months and one day after Grant Date]. 


RESPONSE BIOMEDICAL CORP


2005 STOCK OPTION PLAN - OPTION CERTIFICATE



This Option Certificate is issued pursuant to the provisions of the Stock Option
Plan (the "Plan") of Response  Biomedical  Corp.  (the  "Company") and evidences
that  • [Name of Option  Holder] is the holder (the  "Option  Holder") of an option
(the  "Option")  to purchase up to  •  common  shares (the  "Shares") in the capital
stock of the  Company  at a  purchase  price of Cdn.$ •  per Share  (the  "Exercise
Price"). This Option may be exercised at any time and from time to time from and
including  the  following  Grant Date  through to and  including up to 5:00 p.m.
local time in Vancouver,  British  Columbia (the "Expiry Time") on the following
Expiry Date:





	
             
 	
            (a)
 	
            
the Grant Date of this Option is  • , 200 • ; and
 









	
             
 	
            (b)
 	
            
subject to sections 5.4, 6.2, 6.3, 6.4 and 11.4 of the Plan, the Expiry Date of this Option is  • , 20 • .
 






This Option will not be exercisable unless and until it has vested and then only to the extent that it has vested.  The Option will vest in accordance with the following: 





	
             
 	
            (a)
 	
             • Shares ( • %) will vest and be exercisable on or after the Grant Date;
 









	
             
 	
            (b)
 	
            
 •  additional  Shares
( •  %) will vest and be
exercisable on or after  • [date];
 









	
             
 	
            (c)
 	
            
 • additional   Shares   ( • %)   will   vest   and  be   exercisable   on  or   after
 • [date];
 









	
             
 	
            (d)
 	
            
 • additional   Shares   ( • %)   will   vest   and  be   exercisable   on  or   after
 • [date];
 






[ • Insert any additional terms here – check to ensure they comply with Exchange policies and applicable securities laws]


To exercise this Option, the Option Holder must deliver to the Administrator of the Plan, prior to the Expiry Time on the Expiry Date, an Exercise Notice, in the form provided in the Plan, which is incorporated by reference herein, together with the original of this Option Certificate and a certified cheque or bank draft payable to the Company in an amount equal to the aggregate of the Exercise Price of the Shares in respect of which this Option is being exercised.


This Option Certificate and the Option evidenced hereby is not assignable, transferable or negotiable and is subject to the detailed terms and conditions contained in the Plan.  This Option Certificate is issued for convenience only and in the case of any dispute with regard to any matter in respect hereof, the provisions of the Plan and the records of the Company shall prevail.


  • [The following MUST be included if is an ISO option] [This Option is an ISO within the meaning of the Code.]



Any share  certificates  issued  pursuant to an  exercise  of the Option  before
 • [date   four   months   and  one  day  after   Grant
Date] will contain the following legend:



"Without prior written  approval of the TSX Venture Exchange and compliance with
all  applicable  securities  legislation,  the  securities  represented  by this
certificate may not be sold, transferred, 


 


















	
             
 	
            - 2 -
 





 



hypothecated or otherwise traded on or through the facilities of the TSX Venture
Exchange or otherwise in Canada or to or for the benefit of a Canadian  resident
until   • [date  four  months  and one day  after  Grant
Date]."



This Option was granted to the Option  Holder in his or her  capacity as a  • [pick
one:  Director,  Officer,  Employee,  Consultant]  of the  Company   • [, and shall
continue in effect  should his or her status  change and he or she continue in a
new  capacity  as  a  Director,   Officer,   Employee  or   Consultant   of  the
Company].


 


RESPONSE BIOMEDICAL CORP.


 


Per:  





	
             
 	
            
              
               


Authorized Signatory 
 





The Option Holder acknowledges receipt of a copy of the Plan and represents to the Company that the Option Holder is familiar with the terms and conditions of the Plan, and hereby accepts this Option subject to all of the terms and conditions of the Plan.  The Option Holder agrees to execute, deliver, file and otherwise assist the Company in filing any report, undertaking or document with respect to the awarding of the Option and exercise of the Option, as may be required by the Regulatory Authorities.  The Option Holder further acknowledges that if the Plan has not been approved by the shareholders of the Company on the Grant Date, this Option is not exercisable until such approval has been obtained.


Signature of Optionee:





	
            
               
              
                   
 	
            Date signed:
                    
                   
  
 





Signature

               
              
                 


 


Print Name
               
              
                 


 


Address
               
              
                 


 














SCHEDULE "B"


RESPONSE BIOMEDICAL CORP.


2005 STOCK OPTION PLAN


NOTICE OF EXERCISE OF OPTION





	
            TO:
 	
            The Administrator, Stock Option Plan
 





Response Biomedical Corporation


100-8900 Glenlyon Parkway


Burnaby, B.C. Canada V5J 5J8





	
             
 	
            (or such other address as the Company may advise)
 





 


The undersigned hereby irrevocably gives notice, pursuant to the Stock Option Plan (the "Plan") of Response Biomedical Corp. (the "Company"), of the exercise of the Option to acquire and hereby subscribes for (cross out inapplicable item):





	
            (a)
 	
            all of the Shares; or
 









	
            (b)
 	
            
               
              
                  of the Shares;
 





which are the subject of the Option Certificate attached hereto (attach your original Option Certificate).


The undersigned tenders herewith a certified cheque or bank draft (circle one) payable to "Response Biomedical Corp." in an amount equal to the aggregate Exercise Price of the aforesaid Shares and directs the Company to issue the certificate evidencing said Shares in the name of the undersigned to be mailed to the undersigned at the following address (provide full complete address):





	
             
 	
            ___________________________________
 









	
             
 	
            ___________________________________
 









	
             
 	
            ___________________________________
 









	
             
 	
            ___________________________________
 





The undersigned acknowledges the Option is not validly exercised unless this Notice is completed in strict compliance with this form and delivered to the required address with the required payment prior to 5:00 p.m. local time in Vancouver, B.C. on the Expiry Date of the Option.




DATED the          day
of                     
                
                , 20    .  


 





	
             
 	
            
               
              
                 
Signature of Option Holder