MDI TECHNOLOGIES, INC.

                   2003 STOCK OPTION PLAN

                   As Amended June 9, 2004



Amendments approved by the Board
on May 13, 2004.

Plan as Amended Approved by the shareholders
on June 9, 2004.

Plan as Amended Approved by the TSX Venture
Exchange on _________, 2004.


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                      TABLE OF CONTENTS

                                                  Page

ARTICLE 1  DEFINITIONS AND INTERPRETATION           1
   1.1  Definitions                                 1
   1.2  Choice of Law                               5
   1.3  Headings                                    5

ARTICLE 2 PURPOSE AND PARTICIPATION                 5
   2.1  Purpose                                     5
   2.2  Participation                               5
   2.3  Notification of Award                       6
   2.4  Copy of Plan                                6
   2.5  Limitation                                  6
   2.6  Consultant Companies                        6

ARTICLE 3 TERMS AND CONDITIONS OF OPTIONS           7
   3.1  Board to Issue Common Shares                7
   3.2  Number of Common Shares; Options Under
        Predecessor Plan                            7
   3.3  Term of Option                              7
   3.4  Termination                                 7
   3.5  Exercise Price                              9
   3.6  Additional Terms                            10
   3.7  Assignment of Options                       10
   3.8  Adjustments                                 10
   3.9  Vesting                                     11
   3.10 Hold Period                                 11
   3.11 Personal Information Form and Monitoring
        of Trading                                  11
   3.12 Designation of Award                        11
   3.13 Legend                                      12
   3.14 Grant of ISOs                               12

ARTICLE 4 EXERCISE OF OPTION                        12
   4.1  Exercise of Option                          12
   4.2  Issue of Share Certificates                 12
   4.3  Condition of Issue                          13
   4.4  Taxes                                       13
   4.5  Financing                                   13

ARTICLE 5 ADMINISTRATION                            13
   5.1  Administration                              13
   5.2  Interpretation                              14
   5.3  Special Rules Applicable to
        Administration                              14


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ARTICLE 6 AMENDMENT, TERMINATION AND NOTICE         14
   6.1  Prospective Amendment                       14
   6.2  Retrospective Amendment                     14
   6.3  Amendment to Option                         15
   6.4  Approvals                                   15
   6.5  Termination                                 15
   6.6  Agreement                                   15
   6.7  Notice                                      15


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                  2003 STOCK OPTION PLAN

                         ARTICLE 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, initially, the Secretary of
the Company and thereafter shall mean such director or other
senior officer or employee of the Company as may be
designated as Administrator by the Board from time to time.

       (b) "Award Date" means the date specified by the Board
as the award date of a particular Option, which shall not be
earlier than the date on which the Board takes action with
respect thereto.

       (c) "Board" means the board of directors of the
Company, or any committee thereof to which the board of
directors of the Company has delegated the power to
administer and award Options under the Plan, subject to
paragraph 5.3.

       (d) "Cause" means:

            (i)  in the case of an Employee (1) cause as such
term is defined in the written employment agreement with the
Employee or if there is no written employment agreement or
cause is not defined therein, the usual meaning of just cause
under the common law or the laws of the jurisdiction in which
the employee is employed; or (2) the termination of
employment as a result of an order made by any Regulatory
Authority having jurisdiction to so order;

            (ii)  in the case of a Consultant (1) the
occurrence of any event which, under the written consulting
contract with the Consultant or the common law or the laws of
the jurisdiction in which the consultant provides services,
gives the Company or any of its affiliates the right to
immediately terminate the consulting contract; or (2) the
termination of the consulting contract as a result of an
order made by any Regulatory Authority having jurisdiction to
so order;

            (iii)  in the case of a Director, ceasing to be a
Director as a result of (1) ceasing to meet the
qualifications set out in subsection 141(b) of the Delaware
General Corporation Law or the certificate of amalgamation or
bylaws of the Company; (2) a resolution having been passed by
the shareholders under subsection 141(k) of the Delaware
General Corporation Law; or (3) an order made by any
Regulatory Authority having jurisdiction to so order; or

            (iv)  in the case of an Officer, ceasing to be an
Officer as a result of an order made by any Regulatory
Authority having jurisdiction to so order.


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       (e)  "Change of Control" means and shall be deemed to
have occurred if one of the following events takes place:

            (i)  the acquisition, directly or indirectly by
any person or group (within the meaning of sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended)
other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of securities possessing
more than 30% of the total combined voting power of the
Company's outstanding securities;

            (ii)  a change in the composition of the board of
directors of the Company over a period of 18 consecutive
months or less such that 50% or more of the board members
have neither (A) been directors continuously since the
beginning of the period; nor (B) been unanimously elected or
nominated by the board for election as directors during such
period;

            (iii)  a shareholder-approved merger or
consolidation to which the Company is a party and in which
(A) the Company is not the surviving entity; or (B)
securities possessing more than 30% of the total combined
voting power of the Company's outstanding securities are
transferred to a person or persons different from the persons
holding those securities immediately prior to such
transaction; or

            (iv)  the sale, transfer or other disposition of
all or substantially all of the Company's assets in complete
liquidation or dissolution of the Company.

       (f)  "Common Share" or "Common Shares" means, as the
case may be, one or more common shares with a par value of
$.0001 in the capital of the Company.

       (g)  "Company" means MDI Technologies, Inc., a company
amalgamated under the laws of the State of Delaware.

       (h)  "Consultant" has the meaning given to that term
in BC Instrument 45-507, and for the purposes of the Plan
includes consultants of the Company and any of its
affiliates, as well as consultant companies of the Company
and any of its affiliates.

       (i)  "consultant company" means for an individual
consultant, a company of which the individual is an employee
or shareholder.

       (j)  "Director" has the meaning given to that term in
the Securities Act (British Columbia), and for the purposes
of the Plan includes directors of the Company and any of its
affiliates.

       (k)  "Disability" means the Option Holder is
permanently unable to carry out the responsibilities and
duties of the position held by the Option Holder by reason of
any medically determinable physical or mental impairment.  An
Option Holder shall not be considered to have incurred a
Disability unless he or she furnishes proof of such
impairment sufficient to satisfy the Administrator in the
Administrator's sole discretion.


<PAGE>


       (l)  "Discounted Market Price" of the Common Shares
for a particular Award Date means the Market Price of the
Common Shares for a particular Award Date less a discount to
be determined by the Board, which in any event shall not
exceed the amount set forth under Policy 1.1 of the TSX
Venture Exchange Corporate Finance Manual, as amended or
replaced from time to time.

       (m)  "Eligible Persons" means Directors, Officers,
Employees and Consultants.

       (n)  "Employee" has the meaning given to that term in
BC Policy 45-601, and for the purposes of the Plan includes
employees of the Company and any of its affiliates.

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

       (p)  "Exercise Period" means the period during which a
particular Option may be exercised and is the period from and
including the Award Date through to and including the Expiry
Date.

       (q)  "Exercise Price" means the price at which an
Option may be exercised as determined in accordance with
paragraph 3.5.

       (r)  "Expiry Date" means the date determined in
accordance with paragraph 3.4 and after which a particular
Option cannot be exercised.

       (s)  "Fixed Expiry Date" has the meaning given to that
term under paragraph 3.4.

       (t)  "insider" has the meaning given to that term in
the Securities Act (British Columbia).

       (u)  "ISO" means an Option that is an Incentive Stock
Option as that term is defined in Section 422 of the Internal
Revenue Code of 1986, as amended.

       (v)  "ISO Eligible Employees" means employees of the
Company (as such term is defined for ISO qualification
purposes) and employees of a subsidiary of the Company (as
such term is defined under Section 424(f) of the Internal
Revenue Code of 1986, as amended) who are citizens or
residents of the United States of America.

       (w)  "Market Price" of the Common Shares for a
particular Award Date shall be determined as follows:

            (i)  for each organized trading facility on which
the Common Shares are listed, Market Price shall be the
closing trading price of the Common Shares on the last
trading day immediately preceding the Award Date;

            (ii)  if the Common Shares are listed on more
than one organized trading facility, then Market Price shall
be the greater of the Market Prices determined for each
organized trading facility on which those Common Shares are
listed as determined for each organized trading facility in
accordance with section (i) above;


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            (iii)  if the Common Shares are listed on one or
more organized trading facility but have not traded during
the 10 trading day period immediately preceding the Award
Date, then the Market Price shall be, subject to the
necessary approvals of the applicable Regulatory Authorities,
such value as is determined by resolution of the Board; and

            (iv)  if the Common Shares are not listed on any
organized trading facility, then the Market Price shall be,
subject to the necessary approvals of the applicable
Regulatory Authorities, the fair market value of the Common
Shares on the Award Date as determined by the Board in its
discretion.

       (x)  "Non-Employee Director" means a director of the
Company who meets the definition of (i) a "non-employee
director" as such term is defined in Rule 16b-3 of the
Securities Exchange Act of 1933, as amended; and (ii) an
"outside director" as such term is defined in Treasury
Regulation 1.162-27, as amended.

       (y)  "Officer" means a senior officer as such term is
defined in the Securities Act (British Columbia), and for the
purposes of the Plan includes senior officers of the Company
and any of its affiliates.

       (z)  "Option" means an option to acquire Common
Shares, awarded to an Eligible Person pursuant to the Plan.

       (aa)  "Option Certificate" means the certificate, in
the form set out as Schedule "A" hereto, evidencing an
Option.

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

       (cc)  "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.

       (dd)  "Plan" means this 2003 Stock Option Plan.

       (ee)  "Regulatory Authorities" means all stock
exchanges, inter-dealer quotation networks and other
organized trading facilities on which the Company's Shares
are listed and all securities commissions or similar
securities regulatory bodies having jurisdiction over the
Company.

       (ff)  "Securities Laws" means securities legislation,
securities regulations and securities rules, as amended, and
the instruments, forms, notices and policy documents in force
from time to time that are applicable to the Company.


<PAGE>


       (gg)  "Share" or "Shares" means, as the case may be,
one or more shares of any class in the share capital of the
Company from time to time.

       (hh)  "Termination Date" means:

            (i)  in the case of the Option Holder's
resignation from employment or the termination of the Option
Holder's consulting contract by the Option Holder, the date
that the Option Holder provides notice of such resignation or
termination to the Company or any of its affiliates; or

            (ii)  in the case of the termination of the
Option Holder's employment or consulting contract by the
Company or any of its affiliates for any reason (whether such
termination is lawful or unlawful) other than death or
Disability, the date that the Company or any of its
affiliates delivers written notice of such lawful or unlawful
termination of the Option Holder's employment or consulting
contract to the Option Holder; or

            (iii)  in the case of the expiry of a fixed-term
employment agreement or consulting contract that is not
renewed or extended, the last day of the term.

       (ii)  "TSX Venture Exchange" means the Canadian
Venture Exchange Inc., operating as the TSX Venture Exchange.

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.

1.3     Headings

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

                         ARTICLE 2
                 PURPOSE AND PARTICIPATION

2.1     Purpose

The purpose of the Plan is to provide the Company with a
share-related mechanism to attract, retain and motivate
qualified Directors, Officers, Consultants and Employees, to
reward such of those Directors, Officers, Consultants and
Employees as may be awarded Options under the Plan by the
Board from time to time for their contributions toward the
long term goals of the Company and to enable and encourage
such Directors, Officers, Consultants and Employees to
acquire Common Shares as long term investments.

2.2     Participation

The Board shall, from time to time and in its sole
discretion, determine which of the Eligible Persons, if any,
shall be awarded Options.  The Board shall only award an
Option to a Consultant or an Employee if the Consultant or
Employee is a bona fide Consultant or Employee of the Company
or an affiliate of the Company, and the Board shall make such
a representation if required by the Regulatory Authorities.


<PAGE>


The Board may, in its sole discretion, grant the majority of
the Options to insiders of the Company.  However, in no case
shall:

       (a)  the number of options awarded in a one-year
period to any one Consultant exceed 2% of the issued Shares
of the Company (calculated at the time of award);

       (b)  the number of options awarded in a one-year
period to any one individual exceed 5% of the issued Shares
of the Company (calculated at the time of award);

       (c)  the aggregate number of options awarded in a one-
year period to Employees who provide investor relations
services exceed 2% of the issued Shares of the Company
(calculated at the time of award); or

       (d)  the aggregate number of Common Shares reserved
for issuance to any one individual upon the exercise of
Options awarded under the Plan or any previously established
and outstanding stock option plans or grants, exceed 5% of
the issued Shares of the Company (calculated at the time of
award) in a one-year period.

2.3     Notification of Award

Following the award of an Option by the Board, the
Administrator shall notify the Option Holder in writing of
the award and shall enclose with such notice the Option
Certificate representing the Option so awarded.

2.4     Copy of Plan

Each Option Holder, concurrently with the notice of the award
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.

2.5     Limitation

The Plan does not give any Option Holder that is a Director
or Officer the right to serve or continue to serve as a
Director or Officer of the Company or any of its affiliates
nor does it give any Option Holder that is an Employee or
Consultant the right to be or to continue to be employed with
or have a consulting contract with the Company or any of its
affiliates.

2.6     Consultant Companies

If a consultant company is an Option Holder, it must provide
the TSX Venture Exchange with a completed Form 4F -
Certification and Undertaking Required from a Company Granted
an Incentive Stock Option.  The consultant company must agree
not to effect or permit any transfer of ownership or option
of shares of the consultant company nor to issue further
shares of any class in the consultant company to any other
individual or entity as long as the Option remains
outstanding, except with the written consent of the TSX
Venture Exchange.


<PAGE>


                         ARTICLE 3
             TERMS AND CONDITIONS OF OPTIONS

3.1     Board to Issue Common Shares

The Common Shares to be issued to Option Holders upon the
exercise of Options shall be authorized and unissued Common
Shares the issuance of which shall have been authorized by
the Board.

3.2     Number of Common Shares; Options Under Predecessor
Plan

Subject to adjustment as provided for in paragraph 3.8 of the
Plan, the number of Common Shares that shall be available for
Eligible Persons to acquire pursuant to options awarded by
the Board shall not exceed 2,280,000 Common Shares (19.98% of
the issued Shares of the Company as at April 30, 2004).  If
any option expires or otherwise terminates for any reason
without having been exercised in full, the number of Common
Shares in respect of which the option was not exercised shall
be available for the purposes of the Plan.  If any Common
Shares are withheld by the Company upon the exercise of an
Option in satisfaction of withholding taxes incurred in
connection with the exercise, the number of Common Shares
withheld shall be available for the purposes of the Plan. The
number of available Common Shares specified above shall
include all (960,202, as at April 30, 2004) Common Shares
issuable upon exercise of Options granted under the Company's
predecessor stock option plan ("Old Plan Options").  All Old
Plan Options shall be deemed to have been granted under, and
shall be governed by and administered under, this Plan,
except that:

       (a)  no substantive term or condition of any Old Plan
Option shall be amended or modified by such change in
governance and administration unless (in a particular
instance) both the Company and the Option Holder consent
thereto;

       (b)  this Plan, and each Old Plan Option that is an
ISO, shall be interpreted so that the governance of this Plan
over Old Plan ISOs does not result in a modification of any
such ISOs within the meaning of the Internal Revenue Code of
1986, as amended; and

       (c)  substantive terms and conditions of the Company's
predecessor plan that were incorporated into any Old Plan
Options shall continue to apply to such Options to the extent
required by the foregoing.

3.3     Term of Option

Subject to such other terms or conditions that may be
attached to an Option granted hereunder, an Option Holder may
exercise any vested portion or portions of an Option in whole
or in part at any time or 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 5:00 p.m. local time in St.
Louis, Missouri on the Expiry Date.

3.4     Termination

Subject to subparagraphs (a) to (f) below, the Expiry Date of
an Option shall be the date fixed by the Board at the time
the particular Option is awarded (the "Fixed Expiry Date"),
provided that the Expiry Date shall be no later than the
fifth anniversary of the Award Date of such Option:

       (a)  Death


<PAGE>


If the Option Holder dies while his or her Option is
outstanding, then unless otherwise provided for in the Option
Certificate, the following shall apply.  The Expiry Date for
any vested portion or portions of the Option shall be the
earlier of the Fixed Expiry Date and the date that is one
year after the date of the Option Holder's death.  The Expiry
Date for any unvested portion of the Option shall be the date
of the Option Holder's death.  The right to purchase Common
Shares under an Option shall not vest after the date of the
Option Holder's death.

       (b)  Disability

If the Option Holder ceases to be an Eligible Person by
reason of a Disability while his or her Option is
outstanding, then unless otherwise provided for in the Option
Certificate, the following shall apply.  The Expiry Date for
any vested portion or portions of the Option shall be the
earlier of the Fixed Expiry Date and the date that is one
year after the date that the Option Holder ceases to be an
Eligible Person.  The Expiry Date for any unvested portion of
the Option shall be the date that the Option Holder ceases to
be an Eligible Person.  The right to purchase Common Shares
under an Option shall not vest after the date that the Option
Holder ceases to be an Eligible Person.

       (c)  Ceasing to be a Director

If the Option Holder holds an Option as a Director and the
Option Holder ceases to be a Director (other than by reason
of death or Disability), then unless otherwise provided for
in the Option Certificate, the following shall apply.  The
Expiry Date for any vested portion or portions of the Option
shall be the earlier of the Fixed Expiry Date and the 30th
day following the date that the Option Holder ceases to be a
Director unless the Option Holder ceases to be a Director for
Cause, in which case the Expiry Date shall be the date that
the Option Holder ceases to be a Director.  The Expiry Date
for any unvested portion of the Option shall be the date that
the Option Holder ceases to be a Director.  The right to
purchase Common Shares under an Option shall not vest after
the date that the Option Holder ceases to be a Director.

       (d)  Ceasing to be an Employee or Consultant

If the Option Holder holds an Option as an Employee or
Consultant and the Option Holder ceases to be an Employee or
Consultant (other than by reason of death or Disability),
then unless otherwise provided for in the Option Certificate,
the following shall apply.  The Expiry Date for any vested
portion or portions of the Option shall be the earlier of the
Fixed Expiry Date and the 30th day following the Termination
Date unless the Option Holder ceases to be an Employee or
Consultant as a result of Cause, in which case the Expiry
Date shall be the Termination Date.  The Expiry Date for any
unvested portion of the Option shall be the Termination Date.
The right to purchase Common Shares under an Option shall not
vest after the Termination Date.

       (e)  Ceasing to be an Officer

If the Option Holder holds an Option as an Officer and the
Option Holder ceases to be an Officer (other than by reason
of death or Disability), then unless otherwise provided for
in the Option Certificate, the following shall apply.  The
Expiry Date for any vested portion or portions of the Option
shall be the earlier of the Fixed Expiry Date and the


<PAGE>


30th day following the date that the Option Holder ceases to
be an Officer unless the Option Holder ceases to be an
Officer for Cause, in which case the Expiry Date shall be the
date that the Option Holder ceases to be an Officer.  The
Expiry Date for any unvested portion of the Option shall be
the date that the Option Holder ceases to be an Officer.  The
right to purchase Common Shares under an Option shall not
vest after the date that the Option Holder ceases to be an
Officer.

       (f)  Change of Control

In the event of a Change of Control or an impending Change of
Control the Board may, if it reasonably determines that it is
necessary or desirable for the Company to do so in
conjunction with the Change of Control, deal with outstanding
Options in a manner that it deems to be fair and reasonable
in light of the circumstances.  Without limiting the
generality of the foregoing, the Board may, without any
action or consent required on the part of any Option Holder:

            (i)  deliver a notice to the Option Holder
advising the Option Holder that the unvested portion of the
Option held by the Option Holder, if any, shall immediately
vest;

            (ii)  deliver a notice to the Option Holder
advising the Option Holder that the unvested portion of the
Option held by the Option Holder, if any, shall immediately
vest and that the Option shall expire on the Expiry Date set
forth in the notice; or

            (iii)  take such other actions, and combinations
of the foregoing actions, as it deems fair and reasonable
under the circumstances.

The foregoing subparagraphs (c) through (e) shall only apply
once an Option Holder ceases to fall into any of the
categories of Eligible Persons.  The Board and the
Administrator shall look to which of the definitions of
Employee, Director, Officer or Consultant the Option Holder
met immediately prior to the Option Holder ceasing to be an
Eligible Person to determine which of subparagraphs (c)
through (e) shall apply.  If the Option Holder met more than
one definition, then the following shall apply.  If the
Option Holder was an Employee or Consultant, then the Option
Holder shall be deemed to hold his or her Option as an
Employee or Consultant regardless of whether the Option
Holder was also a Director or Officer.  If the Option Holder
was a Director but not an Employee or Consultant, then the
Option Holder shall be deemed to hold his or her Option as a
Director regardless of whether the Option Holder was also an
Officer.

3.5     Exercise Price

The price at which an Option Holder may purchase a Common
Share upon the exercise of an Option shall be as set forth in
the Option Certificate issued in respect of such Option and
in any event shall not be less than the Discounted Market
Price of the Common Shares as of the Award Date, subject to
the following:

            (a)  in no case shall the Exercise Price be less
than the minimum prescribed by the Regulatory Authorities as
would apply to the Award Date in question; and

            (b)  in the case of an Option intended to qualify
as an ISO, the per Common Share Exercise Price of the ISO
shall be not less than 100% of the Market Price of the
Company's


<PAGE>


Common Shares as of the Award Date, or, in the case of an ISO
granted to an Option Holder who, at the time of the grant of
such ISO owns Shares representing more than 10% of the voting
power of all classes of Shares of the Company or any parent
or subsidiary of the Company, not less than 110% of the
Market Price of the Company's Common Shares as of the Award
Date.

3.6  Additional Terms

Subject to all applicable Securities Laws and the rules and
policies of all applicable Regulatory Authorities, the Board
may attach other terms and conditions to the award of a
particular Option, such terms and conditions to be referred
to in a schedule attached to the Option Certificate.  These
terms and conditions may include, but are not necessarily
limited to, the following:

            (a)  providing that an Option or a portion or
portions of an Option expire on a certain date, after certain
periods of time or upon the occurrence of certain events
other than as provided for herein, provided that no Option
shall expire more than five years after the Award Date;

            (b)providing that an Option issued to, held by or
exercised by an Option Holder who is an Employee and a
citizen or resident of the United States of America, and
otherwise meeting the statutory requirements, be treated as
an ISO, subject to the other provisions in the Plan
concerning ISOs;

            (c)  providing that the Option Holder may defer
payment of the Exercise Price pending the sale through a
broker of some or all of the Common Shares subject to the
Option being exercised; and

            (d)  providing that Common Shares issuable upon
the exercise of an Option shall be subject to restrictions
whereby the Company has the right or obligation to repurchase
all or a portion of the Common Shares if the Option Holder
ceases to by an Eligible Person before a specified time, or
if certain other events occur or conditions are not met.

3.7     Assignment of Options

Options may not be assigned or transferred, provided however
that the Personal Representative of an Option Holder may, to
the extent permitted by paragraph 4.1, exercise the Option
within the Exercise Period.

3.8     Adjustments

Subject to any required action by the shareholders of the
Company pursuant to applicable law, including without
limitation, securities laws, the Rules of Regulatory
Authorities, and laws or rules applicable to ISOs, the number
of Common Shares subject to each outstanding Option and the
number of Common Shares that have been authorized for
issuance under the Plan but as to which no Options have yet
been granted or that have again become available for the
purposes of the Plan, the Exercise Price of each outstanding
Option, as well as any other terms that the Board determines
require adjustment shall be proportionately adjusted for (i)
any increase or decrease in the number of issued Common
Shares resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common
Shares, or similar transaction affecting the Common Shares;
and (ii) any other increase or decrease in the number of
issued Common Shares effected without receipt of
consideration by the


<PAGE>


Company, provided, however, that conversion of any
convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration" (in
each case, the "Event").  Such adjustment shall be made by
the Board and its determination shall be final, binding and
conclusive.  Except as the Board determines, no issuance by
the Company of Shares of any class, or securities convertible
into Shares of any class, shall affect, and no adjustment by
reason thereof shall be made with respect to, the number or
Exercise Price of Common Shares subject to an Option.  No
fractional shares shall be issued upon the exercise of an
Option and accordingly, if as a result of the Event, an
Option Holder would become entitled to a fractional Common
Share, such Option Holder shall have the right to purchase
only the next lowest whole number of Common Shares and no
payment or other adjustment shall be made with respect to the
fractional interest so disregarded.

3.9     Vesting

If the Company is listed as a Tier 2 company on the TSX
Venture Exchange, each Option granted under the Plan shall be
subject to a vesting restriction such that the right to take
up one-third of the Common Shares subject to the Option shall
vest on each of the six-month, twelve-month and eighteen-
month anniversaries of the Award Date, such that the entire
Option shall have vested eighteen months from the Award Date.
Subject to the approval of the Regulatory Authorities for any
such change, the Board may remove or vary the foregoing
vesting restriction in its absolute discretion.

3.10     Hold Period

In addition to any resale restrictions under Securities Laws,
any Common Shares issued upon the exercise of an Option shall
be subject to a four-month TSX Venture Exchange hold period
from the Award Date of the Option.  The Option Certificates
and the share certificates, if applicable, shall bear 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, 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]."

3.11     Personal Information Form and Monitoring of Trading

An Option Holder who becomes a new insider of the Company or
who is undertaking investor relations activities must file a
Personal Information Form or such other documents as may be
required by the Regulatory Authorities.  An Option Holder who
performs investor relations activities must comply with all
procedures established by the Board or the Regulatory
Authorities to monitor the Option Holder's trading in the
securities of the Company.

3.12     Designation of Award

Each Option issued to an Employee who is a United States
citizen or resident shall be designated in the Option
Certificate - Schedule either as an ISO or a Non-Qualified
Option.  However, notwithstanding such designation, to the
extent that the aggregate Market Price of Common Shares
subject to Options designated as ISOs that become exercisable
for the first time by an Option Holder during any calendar
year (under all plans of the Company or any affiliate of the
Company) exceeds US$100,000, such excess ISOs, to the extent
of the Common Shares covered thereby in excess of the
foregoing limitation, shall be treated as Non-Qualified
Options.  For this purpose, ISOs shall be taken into account
in the order in


<PAGE>


which they were granted, and the Market Price of the Common
Shares shall be determined as of the Award Date of the
relevant ISO.

3.13     Legend

Any Common Shares that are issued upon the exercise of an
Option shall bear the following legend:

"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), OR ANY APPLICABLE STATE SECURITIES LAW, AND
MAY NOT BE DISTRIBUTED, ASSIGNED, OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT (a) TO THE
COMPANY, (b) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
RULE 904 OF REGULATION S UNDER THE 1933 ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAW, (c) PURSUANT TO THE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE 1933
ACT PROVIDED BY RULE 144 OR 144A THEREUNDER, IF AVAILABLE,
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, OR
(d) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER
THE 1933 ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS
GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER
HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION
OF COUNSEL, OF RECOGNIZED STANDING, OR OTHER EVIDENCE OF
EXEMPTION, REASONABLY SATISFACTORY TO THE COMPANY.  HEDGING
TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT."

3.14     Grant of ISOs

ISO Eligible Employees, and only ISO Eligible Employees,
shall be eligible to receive ISOs under the Plan.  Options
granted to ISO Eligible Employees shall be ISOs unless the
Option Certificate specifically provides that the Options are
not ISOs.


                        ARTICLE 4
                    EXERCISE OF OPTION

4.1     Exercise of Option

An Option may be exercised only by the Option Holder or the
Personal Representative of the Option Holder.  An Option
Holder or the Personal Representative of the Option Holder
may exercise the vested portion or portions of an Option in
whole or in part at any time or from time to time during the
Exercise Period up to 5:00 p.m. local time in St. Louis,
Missouri on the Expiry Date by delivering to the
Administrator an 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 Common Shares to be purchased pursuant to the
exercise of the Option.

4.2     Issue of Share Certificates

As soon as practicable following the receipt of the Exercise
Notice, the Administrator shall cause to be delivered to the
Option Holder a certificate for the Common Shares purchased
by the Option Holder.  If the number of Common Shares in
respect of which the Option was exercised is less than the
number of Common Shares subject to the Option Certificate
surrendered, the Administrator shall forward a new Option
Certificate to the Option Holder concurrently with delivery
of the share certificate for the balance of the Common Shares
available under the Option.


<PAGE>


4.3     Condition of Issue

The Options and the issue of Common Shares by the Company
pursuant to the exercise of Options are subject to the terms
and conditions of the Plan and compliance with the rules and
policies of all applicable Regulatory Authorities with
respect to the granting of such Options and the issuance and
distribution of such Common Shares, and to all applicable
Securities Laws.  The Option Holder agrees to comply with all
such laws, regulations, rules and policies and agrees to
furnish to the Company any information, reports or
undertakings required to comply with, and to fully cooperate
with, the Company in complying with such laws, regulations,
rules and policies.

4.4     Taxes

No Common Shares shall be delivered under the Plan to any
Option Holder or other person until such Option Holder or
other person has made arrangements acceptable to the
Administrator for the satisfaction of any foreign, national,
provincial or local income and employment tax withholding
obligations, including, without limitation, obligations
incident to the receipt of Common Shares or the
"disqualifying disposition" of Common Shares received on
exercise of an ISO.  Upon exercise of an Option the Company
shall withhold or collect from the Option Holder an amount
sufficient to satisfy each such tax obligation.  The Board
may, in its discretion, allow an Option Holder to either:

            (a)  have the Company withhold from the Common
Shares otherwise issuable upon the exercise of an Option, a
portion of those Common Shares with an aggregate Market Price
less than or equal to the amount of taxes due as designated
by such Option Holder; or

            (b)  deliver to the Company, at the time the
Option is exercised, one or more Common Shares previously
acquired by the Option Holder with an aggregate Market Price
less than or equal to the amount of taxes due as designated
by such Option Holder,

in satisfaction of all or part of the taxes incurred by the
Option Holder in connection with the exercise of an Option.
In the case of clause (b), for administrative convenience,
the Board may allow the Option Holder to deliver a fraction
of one whole Common Share in excess of the amount of taxes
due.

4.5     Financing

The Board may, in its sole discretion, authorize the Company
to arrange or guarantee a loan to an Option Holder by a third
party in connection with the exercise of an Option. The
foregoing authority is subject to applicable Securities Laws.

                         ARTICLE 5
                      ADMINISTRATION

5.1     Administration

The Plan shall be administered by the Board.  The Board may
make, amend and repeal at any time and from time to time such
regulations not inconsistent with the Plan as it may deem
necessary or advisable for the proper administration and
operation of the Plan and such regulations shall form part of
the Plan.  The Board may delegate to the Administrator or any
director, officer or employee of the Company such
administrative duties and powers as it may see fit.


<PAGE>


5.2     Interpretation

The interpretation by the Board of any of the provisions of
the Plan and any determination by it pursuant thereto shall
be final and conclusive and shall not be subject to any
dispute by any Option Holder.  No member of the Board or any
person acting pursuant to authority delegated by it hereunder
shall be liable for any action or determination in connection
with the Plan made or taken in good faith and each member of
the Board 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.

5.3     Special Rules Applicable to Administration

To the extent the Company is subject to Section 162(m) of the
Internal Revenue Code of 1986, as amended ("Section 162(m)"),
grants of Options to persons who are, or in the discretion of
the Board may become, the chief executive officer of the
Company or one of the four other highest compensated officers
of the Company for whom total compensation is required to be
reported to stockholders under the United States Securities
Exchange Act of 1934, as amended, as determined for the
purposes of Section 162(m) (collectively, the "Covered
Employees") shall be made by a committee of the Board
consisting of two or more "outside directors" as that term is
defined in the regulations promulgated under Section 162(m).
Notwithstanding the foregoing, the Board retains the full
powers set forth under paragraph 5.1 to the extent the Board
determines that it is not in the best interests of the
Company to comply with the "performance-based compensation"
requirements of Section 162(m).

All Option awards to directors and officers of the Company
shall by made by the board of directors of the Company or a
committee of the board of directors that is composed solely
of two or more Non-Employee Directors.

                          ARTICLE 6
             AMENDMENT, TERMINATION AND NOTICE

6.1     Prospective Amendment

The Board may from time to time amend the Plan and the terms
and conditions of any Option thereafter to be granted and,
without limiting the generality of the foregoing, may make
such amendment for the purpose of meeting any changes in any
relevant law, rule or regulation applicable to the Plan, any
Option or the Common Shares, or for any other purpose which
may be permitted by all relevant laws, regulations, rules and
policies provided always that any such amendment shall not
alter the terms or conditions of any Option or impair any
right of any Option Holder pursuant to any Option awarded
prior to such amendment.  To the extent necessary to comply
with securities laws, the rules of Regulatory Authorities or
laws or rules applicable to ISOs, the Company shall obtain
shareholder approval of any Plan amendment in such a manner
and to such a degree as required.

6.2     Retrospective Amendment

The Board may from time to time retrospectively amend the
Plan and, with the consent of the affected Option Holders,
retrospectively amend the terms and conditions of any Options
that have been previously granted.


<PAGE>


6.3     Amendment to Option

Notwithstanding anything else contained in the Plan and
subject to any necessary approval from the Option Holder, the
Company's shareholders or the Regulatory Authorities, the
Board may in its discretion (a)  extend the Expiry Date of
any Option, provided that in no case shall an Option be
exercisable later than the fifth anniversary of the Award
Date of the Option; (b)  alter or change the vesting terms
applicable to an Option, including accelerating the vesting
schedule to make the Option exercisable immediately, in full;
(c)  reduce the Exercise Price; or (d) amend any other term
of an outstanding Option.   Disinterested shareholder
approval must be obtained for any reduction in the Exercise
Price if the Option Holder is an insider of the Company at
the time of the proposed amendment.

6.4     Approvals

The Plan and any amendments hereto are subject to all
necessary approvals of the applicable Regulatory Authorities
and shareholders.

6.5     Termination

The Board may terminate the Plan at any time provided that
such termination shall not alter the terms or conditions of
any Option or impair any right of any Option Holder pursuant
to any Option awarded prior to the date of such termination
which shall continue to be governed by the provisions of the
Plan.  If not earlier terminated, the Plan shall
automatically terminate 10 years after the earlier of (a) the
date that the Plan is adopted by the Board; and (b) the date
that the Plan is approved by the shareholders of the Company.

6.6     Agreement

The Company and every Option awarded hereunder shall be bound
by and subject to the terms and conditions of the 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 the Plan.

6.7     Notice

Any notice or other communication contemplated under the Plan
to be given by the Company to an Option Holder shall be given
by the Company delivering or faxing the notice to the Option
Holder at the last address for the Option Holder in the
Company's records.  Any such notice shall be deemed to have
been given on the date on which it was delivered, or in the
case of fax, the next business day after transmission.  An
Option Holder may, at any time, advise the Company of a
change in the Option Holder's address or fax number.


<PAGE>

                        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 ___________________.

                  MDI TECHNOLOGIES, INC.
                  2003 STOCK OPTION PLAN

                    OPTION CERTIFICATE

This Certificate is issued pursuant to the provisions of the
MDI Technologies, Inc. (the "Company") 2003 Stock Option Plan
(the "Plan") and evidences that __________ is the holder (the
"Option Holder") of an option (the "Option") to purchase up
to __________  Common shares (the "Common Shares") in the
capital stock of the Company at a purchase price of
US$__________ per Common Share.

Subject to the provisions of the Plan:

(a)  the Award Date of the Option is __________; and
(b)  the Fixed Expiry Date of the Option is __________.

The vested portion or portions of the Option may be exercised
at any time and from time to time from and including the
Award Date through to 5:00 p.m. local time in St. Louis,
Missouri on the Expiry Date by delivering to the
Administrator of the Plan an Exercise Notice, in the form
attached, together with this 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 Common
Shares in respect of which the Option is being exercised.

This 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, the
terms and conditions of which the Option Holder hereby
expressly agrees with the Company to be bound by.  This
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 Option is also subject to the terms and conditions
contained in the schedules, if any, attached hereto.  All
terms not otherwise defined in this Certificate shall have
the meanings given to them under the Plan.


<PAGE>


THE OPTION HOLDER ACKNOWLEDGES AND AGREES THAT NOTHING IN
THIS CERTIFICATE OR THE PLAN SHALL CONFER UPON THE OPTION
HOLDER ANY RIGHT WITH RESPECT TO CONTINUED EMPLOYMENT OR
DIRECTORSHIP OR A CONTINUING CONSULTANT OR SERVICE PROVIDER
CONTRACT, NOR SHALL IT INTERFERE WITH THE OPTION HOLDER'S
RIGHT OR THE COMPANY'S RIGHT TO TERMINATE SUCH EMPLOYMENT,
DIRECTORSHIP OR CONTRACT FOR ANY REASON OR NO REASON.

Dated this __________ day of __________.

MDI Technologies, Inc.

Per:_____________________________________
    Administrator, 2003 Stock Option Plan

Acknowledged by Option Holder


By:______________________________________
   Signature

   ______________________________________
   Print Name


<PAGE>

               OPTION CERTIFICATE - SCHEDULE

The additional terms and conditions attached to the Option
represented by this Option Certificate are as follows:

1.     __________; and

2.     __________.

MDI Technologies, Inc.

Per:_____________________________________
    Administrator, 2003 Stock Option Plan


<PAGE>

     OPTION CERTIFICATE - SCHEDULE FOR UNITED STATES
                       RESIDENTS

The additional terms and conditions attached to the Option
represented by this Certificate are as follows:

1.     Type of Option.  The Company may grant either an ISO
or a Non-Qualified Option to an Option Holder who is an
Employee and a resident of the United States (as defined in
Section 7701 of the Internal Revenue Code of 1986, as
amended).  The Option represented by this Certificate is an:

       - ISO

       - Non-Qualified Option ("NSO")

2.     Tax Consequences.  Set out below is a brief summary as
of the date of this Certificate of some of the United States
federal tax consequences of exercise of this Option and
disposition of the Common Shares.  THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE.  THE OPTION HOLDER SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
COMMON SHARES.

       (a)  Exercise of NSO.  There may be a regular United
States federal income tax liability, at ordinary income tax
rates, upon the exercise of an NSO.  If the Option Holder is
an Employee or a former Employee, the Company shall be
required to withhold from the Option Holder's compensation or
collect from the Option Holder and pay to the applicable
taxing authorities an amount in cash equal to a percentage of
this compensation income at the time of exercise, and may
refuse to honour the exercise and refuse to deliver Common
Shares if such withholding amounts are not delivered at the
time of exercise.

       (b)  Exercise of ISO.  If this Option qualifies as an
ISO, there shall be no regular federal income tax liability
upon the exercise of the Option, although the Option Holder
may be subject to the alternative minimum tax in the year of
exercise.

       (c)  Disposition of Common Shares.  The disposition of
Common Shares is generally a taxable event.  The tax
treatment shall depend on whether the Option is an ISO or an
NSO, and on the length of time that the Option Holder has
held the Common Shares.

       (d)  Notice of Disqualifying Disposition of ISO Common
Shares.  If the Option granted to the Option Holder is an
ISO, and if the Option Holder sells or otherwise disposes of
any of the Common Shares acquired upon exercise of the ISO on
or before the later of (1) the date that is two years after
the Award Date; or (2) the date that is one year after the
date of exercise, the Option Holder shall immediately notify
the Company in writing of such disposition.  The Option
Holder agrees that the Option Holder may be subject to income
tax withholding by the Company on the compensation income
recognized by the Option Holder.

3.  Tax Consequences of Holding Common Shares.  Upon exercise
of this Option, the Option Holder should review the Company's
most recent Form 20-F (if the Company is required to file
one) and consult his or her own tax adviser to determine if
the Option Holder is subject to certain possible


<PAGE>


United States federal income tax consequences generally
applicable to a United States resident who owns Common
Shares.

4.  Shareholder Approval.  Any Option granted to the Option
Holder may not be exercised prior to the Company obtaining
shareholder approval of the Plan, or the issuance of Common
Shares may be subject to rescission in accordance with the
rules and policies of the Regulatory Authorities.

MDI Technologies, Inc.


Per:_____________________________________
    Administrator, 2003 Stock Option Plan


<PAGE>


                      SCHEDULE "B"

                  MDI TECHNOLOGIES, INC.
                  2003 STOCK OPTION PLAN
                     EXERCISE NOTICE

TO:     The Administrator, 2003 Stock Option Plan
        MDI Technologies, Inc. (the "Company")
        940 West Port Plaza, Suite 100
        St. Louis, Missouri  63146

The undersigned hereby irrevocably gives notice, pursuant to
the Company's 2003 Stock Option Plan (the "Plan"), of the
exercise of the Option to acquire and hereby subscribes for
(cross out inapplicable item):

(a)  all of the Common Shares; or

(b)  ___________________ of the Common Shares;

which are the subject of the Option Certificate attached
hereto.

The undersigned tenders herewith a certified cheque or bank
draft (circle one) payable to the Company in an amount equal
to the aggregate Exercise Price of the aforesaid Common
Shares exercised and directs the Company to issue the
certificate evidencing said Common Shares in the name of the
undersigned to be mailed to the undersigned at the following
address:
                            _____________________________

                            _____________________________

                            _____________________________

                            _____________________________

By executing this Exercise Notice, the undersigned hereby
confirms that the undersigned has read the Plan and agrees to
be bound by the provisions of the Plan.  All terms not
otherwise defined in this Exercise Notice shall have the
meanings given to them under the Plan or the attached Option
Certificate.

DATED the ________ day of ____________________, __________.



                            ______________________________
                             Signature of Option Holder

<PAGE>