Document:

Filed by Automated Filing Services Inc. (604) 609-0244 -  Response Biomedical Corp. - Exhibit 4.40

SUBLEASE AGREEMENT 

BETWEEN 

RESPONSE BIOMEDICAL CORP. 

AND 

INEX PHARMACEUTICALS CORPORATION

- ii - 

TABLE OF CONTENTS 

	Article 1 Interpretation 	4 
	         
           1.1 	Definitions 	4 
	             
       1.2 	Currency 	6 
	  	  	  
	Article 2 Predominance of Head Lease 	7 
	         
           2.1 	Sublease Subject to Head Lease 	7 
	             
       2.2 	Sublease Execution and Head Landlord’s Consent 	7 
	         
           2.3 	Sublandlord’s Rights as Head Landlord 	7 
	             
       2.4 	Exercise of Rights 	7 
	  	  	  
	Article 3 Grant of Sublease 	7 
	         
           3.1 	Term of Sublease 	7 
	             
       3.2 	Extension of Sublease Term or Assignment of Head Lease 	8 
	  	  	  
	Article 4 Rent, Costs and Outlays 	8 
	         
           4.1 	Sublease Basic Rent 	8 
	             
       4.2 	Adjustments to Sublease Basic Rent 	8 
	         
           4.3 	Deposit 	9 
	             
       4.4 	Additional Rent 	9 
	         
           4.5 	Gross Rent 	10 
	             
       4.6 	All Rent Free of Deductions or Set-offs 	10 
	         
           4.7 	Head Landlord’s Costs 	11 
	             
       4.8 	Sublandlord’s Own Costs 	11 
	         
           4.9 	Subtenant’s Own Costs 	11 
	             
       4.10 	Costs Associated with Service Agreement 	11 
	  	  	  
	Article 5 Installations and Alterations 	11 
	         
           5.1 	Sublandlord’s Work 	11 
	             
       5.2 	Existing Furniture and Equipment 	12 
	         
           5.3 	Subtenant’s Use of Equipment 	13 
	             
       5.4 	Subtenant’s Work 	13 
	         
           5.5 	Liens 	14 
	  	  	  
	Article 6 Access To and Use of Sublet Premises 	15 
	             
       6.1 	Parking 	15 
	         
           6.2 	Vivarium 	15 
	             
       6.3 	Laboratory 	15 
	         
           6.4 	Cold Room and Freezer Room 	15 
	             
       6.5 	Storage 	15 
	         
           6.6 	Use of Sublet Premises 	16 
	             
       6.7 	Hours of Operation 	16 
	         
           6.8 	Signage 	16 
	  	  	  
	Article 7 Representations, Warranties and Covenants
      	16 
	             
       7.1 	Subtenant’s Representations, Warranties and Covenants
      	16 
	         
           7.2 	Sublandlord’s Representations, Warranties and Covenants
      	17 
	  	  	  
	Article 8 Restrictive Covenants 	17 
	             
       8.1 	Assignment and Sublease 	17 

- iii - 

	         
           8.2 	Confidentiality 	17 
	             
       8.3 	Return of Confidential Information 	18 
	  	  	  
	Article 9 Insurance 	18 
	         
           9.1 	Insurance Coverage 	18 
	             
       9.2 	Use of Proceeds 	18 
	  	  	  
	Article 10 Termination 	18 
	         
           10.1 	Termination for Default 	18 
	             
       10.2 	Termination for Insolvency 	19 
	         
           10.3 	Termination of the Service Agreement 	19 
	             
       10.4 	Other Remedies 	19 
	         
           10.5 	Effect of Termination 	19 
	             
       10.6 	Continuing Obligations 	20 
	  	  	  
	Article 11 General 	20 
	         
           11.1 	Notices 	20 
	             
       11.2 	Agency Disclosures 	21 
	         
           11.3 	Successors and Assigns 	21 
	             
       11.4 	Further Assurances 	21 
	         
           11.5 	Facsimile Transmission 	21 
	             
       11.6 	Entire Agreement 	21 
	         
           11.7 	Severability 	21 
	             
       11.8 	LIMITATION OF LIABILITY 	21 
	         
           11.9 	Waiver 	22 
	             
       11.10 	Governing Law 	22 
	         
           11.11 	Time of the Essence 	22 
	             
       11.12 	Survivorship 	22 

- IV - 

SUBLEASE AGREEMENT 

This Sublease Agreement (the “Sublease”) is entered into
as of August 19, 2005, by and between INEX Pharmaceuticals Corporation
(the “Sublandlord”), a corporation duly organized and existing under the
laws of the Province of British Columbia, Canada, and Response Biomedical
Corp. (the “Subtenant”), a corporation duly organized and existing
under the laws of the Province of British Columbia, Canada. 

Recitals: 

A. The Head Landlord has leased to the Sublandlord, upon and
subject to the terms of the Head Lease, certain lands and premises comprised of
a car park and a Building located at 8900 Glenlyon Parkway, Burnaby, B.C.,
Canada, which building contains a Rentable Area of approximately fifty-one
thousand four hundred ninety-four (51,494) square feet.

B. The Parties have executed an Offer to Lease (the “Offer
to Lease”) and agree to enter into this Sublease to establish the terms and
conditions upon which the Sublandlord will sublet to the Subtenant, the Sublet
Premises comprised of a portion of an undivided share of the parking lot and
Thirty-one Thousand Nine Hundred Twenty (31,920) square feet on both the main
and second floors and a portion of the atrium and an undivided share of the
lunchroom in the building (the “Sublet Premises”), more particularly
described in Schedule B of the Offer to Lease. 

C. The Parties will contemporaneously enter into a Service
Agreement (the “Service Agreement”) to facilitate the contracting by the
Sublandlord to the Subtenant of certain activities relating to the shared use,
maintenance and management of the Lands and Premises. 

NOW, THEREFORE, the Parties hereto, intending to be
legally bound, hereby agree as follows: 

Article 1 Interpretation 

1.1 Definitions 

Unless otherwise defined in this Sublease, capitalized terms
used in this Sublease shall have the meanings defined in Schedule 2 of the Head
Lease. For purposes of this Sublease, the following terms will have the meanings
set forth below: 

	1.1.1 	
      “Additional Rent” will have the meaning set out in
      Section 4.4.

	 	 
	1.1.2 	
      “Building” means the building located at 8900
      Glenlyon Parkway, Burnaby, BC, Canada.

	 	 
	1.1.3 	
      “Clean Room” means the room located on the second
      floor of the Building as indicated by the arrow in Exhibit 1.1.3 attached
      hereto.

	 	 
	1.1.4 	
      “Cold Room” will have the meaning set out in
      Section 6.4 and Exhibit 6.4.

	 	 
	1.1.5 	
      “Commencement Date” means October 1,
  2005.

5 

	1.1.6 	
      “Common Area” means any common area of the
      Building which is not intended for the sole and exclusive use of either
      the Subtenant or the Sublandlord, including without limitation, the
      atrium, shared lunchroom, hallways, passageways, stairways, washrooms,
      elevators, and open- space areas. For avoidance of doubt, the area within
      the Sublet Premises used for shipping and receiving is not part of the
      Common Area.

	 	 	 
	1.1.7 	
      “Confidential Information” means any information
      relating to the subject matter of this Sublease and, to the extent
      possible, this Sublease itself, including all amendments, extensions or
      termination thereof. Information will not be considered "Confidential
      Information" to the extent that when considered as a whole and in the
      context disclosed, the information:

	 	 	 
		(a) 	
      is in the public domain at the time of
  disclosure;

	 	 	 
		(b) 	
      after disclosure, subsequently becomes part of the public
      domain other than as a consequence of a breach of an obligation of
      confidentiality owed to the Disclosing Party by the Receiving
  Party;

	 	 	 
		(c) 	
      can be demonstrated by the Receiving Party by written
      record to have been known or otherwise available to the Receiving Party
      prior to the disclosure by the Disclosing Party;

	 	 	 
		(d) 	
      after disclosure, can be demonstrated by the Receiving
      Party by written record to have been subsequently provided to the
      Receiving Party by a Third Party if the Receiving Party reasonably
      believes such disclosure does not violate any obligations of the Third
      Party to the Disclosing Party; or

	 	 	 
		(e) 	
      is required to be disclosed by law or government
      regulation(s), provided that the Receiving Party gives the Disclosing
      Party prompt notice of the required disclosure in order to allow the
      Disclosing Party to seek protective treatment.

	1.1.8 	
      “Deposit” means a combined sum equivalent to two
      (2) months’ Sublease Basic Rent plus GST.

	 	 
	1.1.9 	
      “Disclosing Party” means the Party disclosing
      Confidential Information.

	 	 
	1.1.10 	
      “Equipment” means those tangible items enumerated
      in Final Exhibits 5.2.1(a) and 5.2.1(b).

	 	 
	1.1.11 	
      “Expiration Date” will have the meaning set out in
      Section 3.1.

	 	 
	1.1.12 	
      “Freezer Room” will have the meaning set out in
      Section 6.4 and Exhibit 6.4.

	 	 
	1.1.13 	
      “Gross Rent” will have the meaning set out in
      Section 4.5.

	 	 
	1.1.14 	
      “GST” means the Goods and Services Tax of
      Canada.

	 	 
	1.1.15 	
      “Head Landlord” means CUE Real Property (2)
      Ltd.

	 	 
	1.1.16 	
      “Head Lease” means the lease entered into between
      the Head Landlord and Sublandlord dated December 15, 1997, a copy of which
      Head Lease is attached as Schedule “C” to the Offer to Lease.

	 	 
	1.1.17 	
      “Laboratory” means the laboratory located on the
      2nd floor of the Sublet Premises as outlined in black in Schedule B-1 of
      the Offer to Lease.

6 

	1.1.18 	
      “Lands and Premises” means the car park and
      Building as shown in Lot 1 of Explanatory Plan LMP31818 attached as
      Schedule “A” to the Offer to Lease.

	 	 	 
	1.1.19 	
      “Normal Business Hours” means between the hours of
      8:00am to 5:00pm, Mondays to Fridays excluding statutory holidays in the
      province of British Columbia.

	 	 	 
	1.1.20 	
      “Offer to Lease” means the Offer to Lease entered
      into on July 27, 2005 between the Parties.

	 	 	 
	1.1.21 	
      “Party” means the Sublandlord or Subtenant and
      “Parties” means the Sublandlord and Subtenant.

	 	 	 
	1.1.22 	
      “Receiving Party” means the Party receiving
      Confidential Information.

	 	 	 
	1.1.23 	
      “Rentable Area” means the rentable area of the
      Building containing approximately fifty-one thousand four hundred
      ninety-four (51,494) square feet, including the rentable area of the
      Sublet Premises.

	 	 	 
	1.1.24 	
      “Service Agreement” means the Service Agreement
      entered into between the Parties.

	 	 	 
	1.1.25 	
      “Sublease” means this Sublease Agreement and all
      Exhibits hereto.

	 	 	 
	1.1.26 	
      “Sublease Basic Rent” will have the meaning set
      out in Section 4.1.

	 	 	 
	1.1.27 	
      “Sublease Term” will have the meaning set out in
      Section 3.1.

	 	 	 
	1.1.28 	
      “Sublet Premises” means that portion of the Lands
      and Premises consisting of:

	 	 	 
		(a) 	
      the Subtenant’s undivided share of the parking lot;
      and

	 	 	 
		(b) 	
      the Subtenant’s portion of the Rentable Area on both the
      main and second floors (excluding the Vivarium and the Waste Storage
      Closet) plus a portion of the atrium and an undivided share of the
      lunchroom containing approximately Thirty-one Thousand Nine Hundred Twenty
      (31,920) square feet of the Building as noted on the floor plan attached
      as Schedule “B” to the Offer to Lease.

	1.1.29 	
      “Subtenant’s Proportionate Share” will have the
      meaning set out in Section 4.4.2.

	 	 
	1.1.30 	
      “Subtenant’s Work” will have the meaning set out
      in Section 5.4.1.

	 	 
	1.1.31 	
      “Third Party” means any person other than a Party
      to this Sublease or an Affiliate of a Party to this Sublease.

	 	 
	1.1.32 	
      “Vivarium” means the animal facilities located on
      the 1st floor of the Building as indicated by the arrow in
      Schedule B of the Offer to Lease.

	 	 
	1.1.33 	
      “Waste Storage Closet” means the storage area
      located on the first floor of the Building as indicated by the arrow in
      Exhibit 1.1.33 attached hereto.

1.2 Currency 

All references to money or “$” in this Sublease will mean the
lawful money of Canada. 

7 

Article 2 Predominance of Head Lease 

2.1 Sublease Subject to Head Lease 

The Parties hereto acknowledge and agree that:

	2.1.1 	
      the Head Landlord has consented to all material terms of
      this Sublease, a copy of which written consent has been delivered to both
      Parties;

	 	 
	2.1.2 	
      this Sublease shall be read subject to the Head Lease and
      any amendments and supplements thereto; and

	 	 
	2.1.3 	
      the Subtenant has no greater interest in the Sublet
      Premises than the Sublandlord under the Head Lease. To the extent that any
      right or benefit conferred by this Sublease contravenes or is incompatible
      with the Head Lease, such right or benefit will be amended or modified so
      as not to contravene or be incompatible with the Head
  Lease.

2.2 Sublease Execution and Head Landlord’s
Consent 

This Sublease and all subsequent amendments thereto are only
binding on the Sublandlord and the Subtenant respectively, if in writing and
executed by authorized signatories for the Sublandlord and the Subtenant and if
executed copies thereof have been delivered to each Party. It is a condition
precedent to this Sublease and all obligations of the Sublandlord and Subtenant
hereunder that the Head Landlord consents to this Sublease. The Parties agree to
use their commercially reasonable best efforts to obtain the consent of the Head
Landlord to this Sublease, and to provide all such information and assurances
(other than Third Party guarantees or covenants or additional security) as the
Head Landlord may reasonably require in this regard. 

2.3 Sublandlord’s Rights as Head Landlord

If the Subtenant fails to perform any of its obligations
herein, the Sublandlord will have all of the remedies against the Subtenant
which the Head Landlord has under the Head Lease for a breach thereof, whether
expressly set out in the Head Lease or arising in law or equity. 

2.4 Exercise of Rights 

The determination of any state of facts, the promulgation of
any rules or regulations, or the taking of any other action or exercise of any
other rights under the Head Lease which is permitted to the Head Landlord will,
upon written notice to the Subtenant of such action or exercise, be binding upon
the Subtenant and the Sublet Premises. 

Article 3 Grant of Sublease 

3.1 Term of Sublease 

Unless sooner terminated in accordance with Article 10, or
amended in accordance with Section 3.2, this Sublease will commence on October
1, 2005 (the “Commencement Date”) and continue in effect for a term (the
“Sublease Term”) until December 14, 2007 (the “Expiration Date”).

8 

	3.2 	
      Extension of Sublease Term or Assignment of Head
      Lease

	 	 	 	 
	3.2.1 	
      In contemplation of Section 14.1 of the Head Lease
      wherein the Sublandlord may give notice of termination to the Head
      Landlord before March 14, 2007 if the Sublandlord does not wish to renew
      the term of the Head Lease for an additional five (5) year period from
      December 15, 2007 to December 14, 2012, the Parties will, no later than
      October 1, 2006:

	 	 	 	 
		(a) 	
      confirm in writing their mutual intent not to renew the
      Sublease so as to vest all rights to the Lands and Premises to the
      Sublandlord under the Head Lease; or

	 	 	 	 
		(b) 	
      negotiate and execute an agreement to extend the Sublease
      Term for a five (5) year period until December 14, 2012 on the same terms
      as contained herein, subject to the provisions of Section 2.1(b) of the
      Head Lease; or

	 	 	 	 
		(c) 	
      seek the Head Landlord’s written consent to an assignment
      of the Head Lease by the Sublandlord to the Subtenant to grant to the
      Subtenant on or before March 13, 2007, all the rights and obligations held
      by the Sublandlord under the Head Lease. If the Parties seek the Head
      Landlord’s consent to such assignment, the Parties will:

	 	 	 	 
			(i) 	
      substantially revise the Sublease to reflect the Parties’
      mutual desire that the Subtenant assume the role of a sublandlord, and the
      Sublandlord assume the role of a subtenant, on terms to be agreed between
      the Parties; or

	 	 	 	 
			(ii) 	
      terminate the Sublease between the Parties to vest all
      rights to the Lands Premises to the Subtenant under the Head
  Lease.

	3.2.2 	
      The Subtenant acknowledges that the options contained in
      Sections 14.2 and 14.3 of the Head Lease will not form a part of this
      Sublease except as otherwise agreed in writing between the Parties with
      the prior written consent of the Head Landlord.

Article 4 Rent, Costs and Outlays 

	4.1 	
      Sublease Basic Rent

	 	 
	4.1.1 	
      The Subtenant covenants to pay as basic rent for the
      duration of the Sublease Term commencing on the Commencement Date the sum
      of Four Hundred Sixty-two Thousand Eight Hundred Forty Dollars ($
      462,840.00) plus applicable GST per annum (together the “Sublease Basic
      Rent”) for Thirty-one Thousand Nine Hundred Twenty (31,920) square
      feet of the rentable area of the Sublet Premises (premised on Sublease
      Basic Rent comprised of Fourteen Dollars and Fifty Cents ($14.50) per
      square foot per annum, plus GST), which is the cost to the Sublandlord of
      the rentable area of the Sublet Premises, and subject to Sections 4.2 and
      4.5 in equal monthly instalments of Thirty-eight Thousand Five Hundred
      Seventy Dollars ($ 38,570.00) plus applicable GST, payable in advance on
      the first day of each and every month commencing October 1,
  2005.

4.2 Adjustments to Sublease Basic Rent

At the Sublandlord’s option and at the Subtenant’s cost, the
rentable area of the Sublet Premises will be surveyed at the Commencement Date
of the Sublease Term in accordance with the Head Lease, whereupon the Sublease
Basic Rent will be adjusted accordingly. The Sublandlord will provide to the
Subtenant a copy of the survey used to determine the rentable area of the Sublet
Premises. 

9 

4.3 Deposit 

The Sublandlord will apply the Deposit equivalent to two (2)
months’ Sublease Basic Rent in the amount of amount of Seventy-seven Thousand
One Hundred Forty Dollars ($ 77,140.00) plus GST released by CB Richard Ellis
Limited to the Sublandlord towards payment of the Sublease Basic Rent for the
first month and last months of the Sublease Term as they become due. The
Sublandlord may use, retain or apply all or part of the Deposit to the extent
required for the payment of any other sums as to which the Subtenant is in
default or as compensation on account for any loss or damage arising from the
breach or default by the Subtenant of any provision of this Sublease. If the
Sublandlord so uses, retains or applies all or part of the Deposit, the
Subtenant will, upon notification by the Sublandlord, pay to the Sublandlord the
amount required to reimburse it for the amounts so applied. 

4.4 Additional Rent 

	4.4.1 	
      The Subtenant covenants to pay as additional rent during
      the Sublease Term the following amounts, inclusive of all applicable
      federal, provincial and municipal taxes (collectively, “Additional
      Rent”):

	 	 	 
		(a) 	
      the Subtenant’s Proportionate Share of “Building Costs”
      as defined by the Head Lease, “Project Costs” as defined by the Head
      Lease, and “Other Charges” as defined by the Head Lease, and payable by
      the Sublandlord under the Head Lease, as amended from time to
  time;

	 	 	 
		(b) 	
      to the extent not already paid pursuant to Section
      4.4.1(a), the Subtenant’s Proportionate Share of “Taxes” as defined by the
      Head Lease and payable by the Sublandlord under the Head Lease, as amended
      from time to time;

	 	 	 
		(c) 	
      to the extent not already paid pursuant to Section
      4.4.1(a), the Subtenant’s Proportionate Share of “Operating Costs” as
      defined by the Head Lease and payable by the Sublandlord under the Head
      Lease, as amended from to time;

	 	 	 
		(d) 	
      to the extent not already paid pursuant to Section
      4.4.1(a) or purchased pursuant to Section 9.1.1, the Subtenant’s
      Proportionate Share of insurance costs payable by the Sublandlord under
      Section 5.2(a) of the Head Lease, as amended from time to time;
  and

	 	 	 
		(e) 	
      the Subtenant’s Proportionate Share of all other
      operating and management costs set forth in the Service Agreement, at the
      Sublandlord’s actual cost to the extent such costs relate to the Sublet
      Premises whether or not such costs are payable by the Sublandlord to the
      Head Landlord.

	4.4.2 	
      In this Sublease, the phrase “Subtenant’s
      Proportionate Share” means a fraction having as its numerator the
      rentable area of the Sublet Premises (excluding the square footage of any
      Common Areas and excluding the square footage of any Sublet Premises
      reserved for the exclusive use of the Sublandlord during the limited time
      of such use) containing approximately Thirty-one Thousand Nine Hundred
      Twenty (31,920) square feet and as its denominator the Rentable Area of
      the Building (excluding the square footage of any Common Areas but
      including the entire square footage of the Sublet Premises) containing
      approximately Forty-nine Thousand Four Hundred ten (49,410) square
      feet.

	 	 
	4.4.3 	
      The Subtenant will pay to the
  Sublandlord:

10 

	 	(a) 	
      in advance, on the first day of each and every month, the
      Subtenant’s Proportionate Share of all costs described in Section 4.4.1
      attributable to the Head Landlord provided that the Subtenant shall be
      entitled to and be responsible for any adjustments payable upon any
      recalculation of such amounts as and when the same are payable or received
      by the Sublandlord as tenant under the Head Lease; and

	 	 	 
	 	(b) 	
      within thirty (30) days of the Subtenant’s receipt of the
      Sublandlord’s invoice, if any, the Subtenant’s Proportionate Share of any
      cost described in Section 4.4.1(e) payable directly by the Sublandlord to
      the Sublandlord’s contractor.

	4.5 	
      Gross Rent

	 	 	 	 
	4.5.1 	
      The Subtenant’s Additional Rent, together with Sublease
      Basic Rent, and any other amounts payable by the Subtenant pursuant to
      this Sublease is hereinafter collectively referred to as “Gross
      Rent”.

	 	 	 	 
	4.5.2 	
      Gross Rent will be considered as accruing from day to day
      hereunder. If it is necessary to calculate Gross Rent for a period of less
      than one (1) year or less than one (1) calendar month, an appropriate
      apportionment and adjustment on a pro rata daily basis will be made. Where
      the calculation of Additional Rent cannot be made until after the
      expiration or earlier termination of this Sublease:

	 	 	 	 
		(a) 	
      the obligation of the Subtenant to pay such Additional
      Rent will survive the expiration or earlier termination hereof, and such
      amounts will be paid by the Subtenant to the Sublandlord forthwith upon
      demand; and

	 	 	 	 
		(b) 	
      the entitlement of the Subtenant to receive from the
      Sublandlord a refund of overpayments, if any, of Additional Rent, will
      survive the expiration or earlier termination hereof, provided the
      Subtenant has made full and complete payment of:

	 	 	 	 
			(i) 	
      all Gross Rent accrued as of the effective date of
      termination or expiration of the Sublease; and

	 	 	 	 
			(ii) 	
      all indebtedness under the Service Agreement accrued as
      of the effective date of termination or expiration of the Service
      Agreement.

If the Sublease Term commences on any day other than
  the first day of the month or expires on any day other than the last day of
  the month, Gross Rent for such fraction of a month will be adjusted, as aforesaid,
  and paid by the Subtenant on the Commencement Date of the Sublease Term. 

4.6 All Rent Free of Deductions or Set-offs

Gross Rent payable under this Sublease will be net and care
free to the Sublandlord, and will be payable without deduction or set-off by the
Subtenant throughout the Sublease Term. All costs incurred by the Sublandlord in
collecting any amounts payable hereunder or enforcing any right or obligation of
the Subtenant under this Sublease will be payable by the Subtenant on demand and
will be deemed to be Gross Rent for all purposes from the date demand therefor
is made. In addition to Gross Rent hereunder, the Subtenant will remit to the
Sublandlord any goods and services tax or other tax or imposition collectible by
the Sublandlord for the use of the Sublet Premises by the Subtenant or goods or
services provided to the Subtenant, and the Sublandlord will be entitled to
exercise all remedies in respect of any 

11 

failure by the Subtenant to pay such amounts as if they were
Gross Rent in arrears. From the date any Gross Rent or other amounts payable
under this Sublease are due until they are actually paid, they will bear
interest at the rate of twenty-four percent (24 %) per annum. 

	4.7 	
      Head Landlord’s Costs

	 	 
	4.7.1 	
      The Sublandlord and the Subtenant shall share on a 50/50
      basis the expenses and outlays incurred by the Head Landlord pursuant to
      Section 8.1(g) of the Head Lease in respect of the making of this Sublease
      and any amendment, extension or termination thereof.

	 	 
	4.7.2 	
      The Sublandlord shall be fully responsible for the
      expenses and outlays incurred by the Head Landlord pursuant to Section
      8.1(g) of the Head Lease in respect of any further subleases negotiated
      and/or entered into between the Sublandlord and any other
  subtenant.

	 	 
	4.7.3 	
      The Subtenant shall be fully responsible for the expenses
      and outlays incurred by the Head Landlord pursuant to Section 8.1(g) of
      the Head Lease in respect of any subleases negotiated and/or entered into
      between the Subtenant and its subtenant.

4.8 Sublandlord’s Own Costs 

The Sublandlord will be responsible for and fund reasonable
security expenses required in respect of programming key cards and/or key
control to restrict access to the Vivarium and areas adjacent to the Vivarium,
the Cold Room, the Freezer Room, Waste Storage Closet and other parts of the
Building to which the Sublandlord has sole and exclusive use, and will bear sole
responsibility for payment of its business taxes, telephone charges and other
charges related to the operation of its occupied spaces. 

4.9 Subtenant’s Own Costs 

The Subtenant will be responsible for and fund reasonable
security expenses required to restrict access to the Sublet Premises and will
bear sole responsibility for payment of its business taxes, telephone charges
and other charges related to the operation of its occupied spaces. 

4.10 Costs Associated with Service Agreement

	4.10.1 	
      As a condition of the Parties entering into this
      Sublease, the Subtenant agrees to provide certain services (“Services”) to
      the Sublandlord in respect of the shared use, management and maintenance
      of the Lands and Premises, and the Sublandlord agrees to compensate the
      Subtenant on the terms and conditions set forth in the Service Agreement
      between the Parties.

	 	 
	4.10.2 	
      As a condition of the Sublandlord providing the Subtenant
      the use of the Sublandlord’s phone system, desk top phones and network
      switches without charge, the Subtenant agrees to provide to the
      Sublandlord, reception services as defined in the Service Agreement,
      during Normal Business Hours and without charge, in accordance with the
      Service Agreement for the duration of this Sublease and any extensions
      thereof.

Article 5 Installations and Alterations 

5.1 Sublandlord’s Work 

The Sublandlord shall provide the Sublet Premises in an “as is”
basis as viewed on the site visit by the Subtenant. 

12 

	5.2 	
      Existing Furniture and Equipment

	 	 	 
	5.2.1 	
      On or before the Commencement Date the Parties will
      execute completed Exhibits 5.2.1(a) and 5.2.1(b) to enumerate all
      furniture, equipment and fixtures to be placed in the Sublet Premises (the
      “Equipment”) which completed Exhibits shall supersede and be
      attached hereto in replacement of Draft Exhibits 5.2.1(a) and
    5.2.1(b).

	 	 	 
	5.2.2 	
      The Subtenant recognizes and agrees that as between the
      Subtenant and the Sublandlord, the Sublandlord is currently the rightful
      owner of:

	 	 	 
		(a) 	
      all furniture, equipment and fixtures as set forth in
      Schedule “E” attached to the Offer to Sublease, a copy of which Schedule
      “E” is attached hereto as Draft Exhibits 5.2.1(a) and 5.2.1(b);
  and

	 	 	 
		(b) 	
      the Equipment to be enumerated in completed
      Exhibits 5.2.1(a) and 5.2.1(b) on or before the Commencement
  Date.

	5.2.3 	 Within two (2) business days of the Commencement
        Date, the Sublandlord will transfer to the Subtenant, an undivided half
        share of the Equipment to be held in common at no additional charge to
        the Subtenant, and the Subtenant shall have use of the Equipment at no
        additional charge throughout the term of the Sublease and any extentions
        thereof; provided however, that sole and exclusive ownership to all Equipment
        will vest in either the Sublandlord or the Subtenant upon the first occurrence
        of any of the triggering events enumerated in Section 5.2.4.

	 	 	 	 
	5.2.4 	 Notwithstanding the transfer of joint ownership
        described in Section 5.2.3:

	 	 	 	 
		(a) 	 sole and exclusive ownership over all Equipment
        will automatically revert to the Sublandlord upon:

	 	 	 	 
			(i) 	 the expiry of the Sublease or any extensions thereof;
        or

	 	 	 	 
			(ii) 	 the Subtenant’s default of any material term or
        condition of the Sublease or Service Agreement; or

	 	 	 	 
			(iii) 	 the Sublandlord’s termination of the Sublease or
        Service Agreement; or

	 	 	 	 
			(iv) 	 the failure of the Subtenant to remove any lien or encumbrance
        lodged against the Lands and Premises as a consequence of the Subtenant’s
        activities under the Sublease and/or the Service Agreement;

	 	 	 	 
		(b) 	 subject to the Head Landlord’s rights
        over leasehold improvements, sole and exclusive ownership over all Equipment
        will automatically vest in the Subtenant upon:

	 	 	 	 
			(i) 	 the Sublandlord’s default of any material term
        of the Head Lease; or

	 	 	 	 
			(ii) 	 the Head Landlord’s termination of the Head Lease
        for reasons solely attributable to the Sublandlord’s acts or omissions.

			 	 

	5.2.5	 Subject to the provisions of Sections 5.2.3 and 5.2.4: 

13 

	 	(a) 	 all Equipment supplied by the Sublandlord and placed
        in the Subtenant’s possession shall at all times remain visibly marked
        as the joint property of the Sublandlord and the Subtenant; and

	 	 	 
	 	(b) 	 neither Party shall remove any markings and/or labels
        applied onto the Equipment by the Sublandlord to mark such Equipment as
        the joint property of the Sublandlord and the Subtenant.

	5.3 	
      Subtenant’s Use of Equipment

	 	 	 
	5.3.1 	
      Until full ownership to the Equipment vests in either the
      Subtenant or the Sublandlord, the Parties covenant and agree that each of
      them will:

	 	 	 
		(a) 	
      keep all Equipment free and clear of all liens and
      encumbrances, pay the other Party all costs associated with securing the
      release of any such liens and encumbrances, and indemnify the other Party
      for all claims incurred by the Party in breach of this Section
  (a);

	 	 	 
		(b) 	
      exercise due care in the use and handling of all
      Equipment and use Equipment only in accordance with any manufacturer’s
      instructions supplied by the Sublandlord; and

	 	 	 
		(c) 	
      not move or send any Equipment to any location outside
      the Building without the prior written consent of the other
  Party.

	5.3.2 	
      Until full ownership to the Equipment vests in the
      Subtenant, the Subtenant will be responsible for and assume all costs
      associated with the regular operation, maintenance, and repair of all
      Equipment, to the same level of care as the Sublandlord’s own
      equipment.

	 	 	 
	5.4 	
      Subtenant’s Work

	 	 	 
	5.4.1 	
      Subject to the Head Landlord’s written consent to this
      Sublease and approval by the Sublandlord and the Head Landlord of the
      plans and specifications for the Subtenant’s Work and to the execution of
      this Sublease by both the Subtenant and the Sublandlord and to the
      Subtenant obtaining all necessary building permits and approvals required
      by the City of Burnaby or otherwise in connection with the Subtenant’s
      Work, the Subtenant will be permitted access to the Sublet Premises prior
      to the Commencement Date for the purpose of allowing the Subtenant to
      perform the Subtenant’s Work; provided however, that Subtenant will make
      best efforts to complete the Subtenant’s leasehold improvements to the
      Clean Room during the month of August to facilitate the Sublandlord’s use
      of the Clean Room as a manufacturing clean room during part of the month
      of September. The Sublandlord will be responsible for and assume the costs
      associated with the cleaning and validation of the Clean Room for the
      Sublandlord’s use.

	 	 	 
	5.4.2 	
      In this Sublease, the phrase “Subtenant’s Work”
      means the following:

	 	 	 
		(a) 	
      the installation of such internal partitions and tenant
      fixtures in the Sublet Premises as may be required by the Subtenant in
      order to carry on its business, including without limitation, any
      modifications to the ceiling, lights, and air-conditioning
  system;

	 	 	 
		(b) 	
      the installation of any special equipment in the Sublet
      Premises as may be required by the Subtenant in order to carry on its
      business, including without limitation voice and data cabling, telephones,
      computers and special communication equipment;
and

14 

	 	(c) 	
      such other work as may reasonably be required by the
      Subtenant in order to make the Sublet Premises suitable for the Subtenant
      to carry on its business;

provided however that the Subtenant
shall, acting reasonably, incorporate the Sublandlord’s colour scheme and
specifications and the Sublandlord’s style of improvements, and provided further
that the Subtenant’s Work shall include installation of the Sublandlord’s carpet
type throughout the Sublet Premises, including without limitation under all
demising and other walls within the Sublet Premises and in all private offices,
meeting rooms and open office areas. 

	5.4.3 	
      Prior to the commencement of the Subtenant’s Work, plans
      and specifications for the Subtenant’s Work, including without limitation
      all electrical, mechanical and engineering plans for the Subtenant’s Work,
      must first be submitted with appropriate working drawings for the prior
      written approval of both the Sublandlord and the Head Landlord as required
      by the Head Lease. Preparation of these plans and drawings and the
      performance of the Subtenant’s Work will be entirely at the expense of the
      Subtenant and must be performed in accordance with the requirements of the
      Head Lease, to the standards prescribed by the Head Lease and the terms of
      any approval by the Sublandlord and the Head Landlord. The Subtenant’s
      Work will be performed in a good and workmanlike manner in compliance with
      all applicable laws, bylaws and regulations, and the Subtenant will obtain
      and comply with all building, electrical and other permits which may be
      required in respect of the Subtenant’s Work and will pay all fees and
      procure all applicable inspections. The Subtenant will cause notices to be
      posted on the Sublet Premises in at least two conspicuous places to the
      effect that the Subtenant’s Work is the sole responsibility of the
      Subtenant and that neither the Head Landlord nor the Sublandlord is
      responsible for any accounts for work or materials provided in association
      therewith.

	 	 
	5.4.4 	
      The Subtenant shall retain Waldron Morton Consulting or
      an equivalently qualified designer to design the Subtenant’s Work, shall
      retain a contractor acceptable to the Sublandlord to carry out the
      Subtenant’s Work (such consent not to be unreasonably withheld by the
      Sublandlord), shall retain the base building electrical and mechanical
      contractors for all electrical and mechanical work, and shall retain such
      building consultants as may be designated by the Head Landlord.

	 	 
	5.4.5 	
      Upon receipt by the Sublandlord of all documentation
      relating to the Sublease reasonably required by the Sublandlord and
      executed by the Subtenant, and subject to the obligation of the Subtenant
      to make application for and obtain a certificate of occupancy as required
      by the City of Burnaby insofar as it applies to the changes to the Sublet
      Premises as a result of the Subtenant’s Work, the Subtenant will be
      entitled to occupy the Sublet Premises prior to the Commencement Date for
      the purpose of performing the Subtenant’s Work and during such time the
      Subtenant will not be responsible for Sublease Basic Rent or Additional
      Rent, but will otherwise perform and observe all other terms and
      conditions of this Sublease, and, if required by the Sublandlord, will be
      responsible for all utilities consumed by the Subtenant.

	 	 
	5.4.6 	
      Upon expiration of the Sublease Term, the Subtenant will
      repair all damage caused to the Lands and Premises by the
  Subtenant.

	 	 
	5.5 	
      Liens

If any lien or encumbrance arising out of the Subtenant’s Work
is filed or attached against the Building or title thereto, the Subtenant will,
within five days after notice thereof, procure its discharge, failing which the
Sublandlord may, at its option and in addition to any other remedies it may have
under this Sublease arising out of defaults by the Subtenant, make any payments
into Court required to procure such 

15 

discharge; and the Subtenant will forthwith reimburse the
Sublandlord for any payment, cost or expense incurred in so doing, whether or
not such lien or encumbrance was without merit or excessive. 

Article 6 Access To and Use of Sublet Premises

6.1 Parking 

Subject to the terms of the Head Lease and the consent of the
Head Landlord, the Sublandlord hereby grants to the Subtenant permission for the
duration of the Sublease Term and any extensions thereof, to use a minimum of
three (3) stalls per one thousand (1,000) square feet of Rentable Area of the
Sublet Premises occupied by the Subtenant or approximately one hundred and two
(102) unreserved parking stalls at the perimeter of the Building at no
additional cost, as made available to the Sublandlord under the Head Lease on
the terms and conditions pertaining to the use of such spaces from time to time
under the Head Lease. The Subtenant will be solely responsible for the use of
such parking spaces and indemnifies the Sublandlord from any damages, losses, or
claims arising from the use of such spaces, howsoever arising. 

6.2 Vivarium 

The Vivarium is excluded from the Sublet Premises and the
Sublandlord shall have sole and exclusive use of and access to the Vivarium on a
24-hour, 7 day a week basis. The Sublandlord shall provide the Subtenant at
least one (1) month prior written notice of the Sublandlord’s intent to sublet
any part or whole of the Vivarium, shall be responsible for ensuring that any
use of the Vivarium will not cause loss or damage to the Subtenant, and shall
indemnify the Subtenant for any loss or damage caused by the Sublandlord or its
subtenant’s use of the Vivarium. 

6.3 Laboratory 

From the Commencement Date until October 31, 2005 the
Sublandlord shall have access to the Laboratory on a 24-hour, 7 day a week basis
at no additional cost to the Sublandlord. 

6.4 Cold Room and Freezer Room 

From the Commencement Date until December 31, 2005 during
Normal Business Hours, the Sublandlord shall have exclusive access to one (1) of
two (2) Cold Rooms (the “Cold Room”) and half the Freezer Room
(“Freezer Room”) on the 2nd floor of the Sublet Premises as
outlined in black in Schedule B-1 of the Offer to Sublease, a copy of which
Schedule is attached hereto as Exhibit 6.4. The Sublandlord will pay fees
associated with the Sublandlord’s use of the Cold Room and half the Freezer Room
in accordance with the terms of the Service Agreement.

6.5 Storage 

	6.5.1 	
      The waste storage closet (“Waste Storage Closet”)
      is excluded from the Sublet Premises and the Sublandlord shall have sole
      and exclusive use of and access to the Waste Storage Closet during Normal
      Business Hours.

	 	 
	6.5.2 	
      The Subtenant will store on the Sublet Premises such INEX
      owned equipment and substances as the parties may mutually agree, pursuant
      to the terms of the Service Agreement between the
  Parties.

16 

6.6 Use of Sublet Premises 

The Subtenant will use the Sublet Premises for biomedical
product development and manufacturing with related business offices, and for no
other purpose.

6.7 Hours of Operation 

The Subtenant shall have the right to access the Building and
operate the HVAC and building systems for the Sublet Premises on a 24-hour, 7
day a week basis. 

6.8 Signage 

The Subtenant shall have both prominent exterior building
signage and atrium directory signage, subject to the approval of the City of
Burnaby, the Sublandlord and the Head Landlord, such approval of the Sublandlord
not to be unreasonably withheld. At the Subtenant’s sole cost, all such signage
shall be installed and maintained to a first class standard and the Subtenant
shall remove and make good such signage upon the termination of the Sublease or
any renewal term thereof, if the Sublandlord or Head Landlord so request. 

Article 7 Representations, Warranties and
Covenants 

	7.1 	
      Subtenant’s Representations, Warranties and
      Covenants

	 	 
	7.1.1 	
      The Subtenant hereby represents, warrants and covenants
      to the Sublandlord as follows: to abide by any rules and regulations
      governing the use of the Sublet Premises and the Building as governed by
      this Sublease and the Head Lease, as each may be amended from time to
      time;

	 	 
	7.1.2 	
      to pay Gross Rent and perform all of the obligations of
      the Subtenant under this Sublease;

	 	 
	7.1.3 	
      not to do or omit to do any act in or around the Lands
      and Premises which would cause a breach of the Sublandlord’s obligations
      as Subtenant under the Head Lease;

	 	 
	7.1.4 	
      to maintain, at its cost, all telephones, computers and
      special communications equipment used in the Sublet Premises and to pay
      for all telephone and utility services used by the Subtenant;

	 	 
	7.1.5 	
      to promptly pay when due to the authorities having
      jurisdiction the Subtenant’s Proportionate Share of Taxes as defined by
      the Head Lease (whether imposed upon the Subtenant or otherwise)
      attributable to the personal property, trade fixtures, business, income,
      or occupancy of the Subtenant or any other occupant of the Sublet Premises
      and to any leasehold improvements or fixtures within the Sublet Premises,
      and to the use by the Subtenant or its officers, employees, and invitees
      of any of the Common Areas as defined by the Head Lease;

	 	 
	7.1.6 	
      to indemnify and save harmless the Sublandlord against
      and from any and all expenses, costs, damages, suits, actions, or
      liabilities resulting from or arising out of the failure of the Subtenant
      to perform any of its obligations hereunder and from all claims and
      demands of every kind and nature made by any person or persons to or
      against the Sublandlord for all and every manner of costs, damages, or
      expenses incurred by or injury or damage to such person or persons or his,
      her, or their property, to the extent that such claims or demands arise
      out of the use and occupation of the Sublet Premises or unauthorized use
      or misuse of the Lands and Premises by the Subtenant or its officers,
      employees, or any other person authorized or permitted by the Subtenant to
      be on the Sublet Premises or in or about the Lands and Premises, and from
      all costs, counsel fees, expenses,

17 

		
      and liabilities incurred by reason of any such claim or
      any action or proceeding brought thereon; and

	 	 
	7.1.7 	
      to use and store any hazardous materials in accordance
      with industry standards and regulatory requirements and to return the
      Sublet Premises at the end of Sublease Term or any early termination or
      extensions thereof in an environmentally clean and decontaminated state,
      and

	 	 
	7.1.8 	
      to return the Sublet Premises at the end of Sublease Term
      or any early termination or extensions thereof in a state consistent with
      conditions of the Lands and Premises as of October 1, 2005, save normal
      wear and tear.

	 	 
	7.2 	
      Sublandlord’s Representations, Warranties and
      Covenants

Subject to the Head Landlord first consenting to this Sublease
and the due performance by the Subtenant of its obligations herein, the
Sublandlord hereby represents, warrants and covenants to the Subtenant as
follows: 

	7.2.1 	
      to provide the Sublet Premises vacant and in a clean
      condition by October 1, 2005, with the exception of the Laboratory, which
      the Sublandlord shall provide vacant and in a clean condition by November
      1, 2005;

	 	 
	7.2.2 	
      to allow the Subtenant to have quiet enjoyment of the
      Sublet Premises subject to the Sublandlord’s right of access to the
      Laboratory, Vivarium, Waste Storage Closet, Cold Room, and half the
      Freezer Room;

	 	 
	7.2.3 	
      to perform all of the obligations of the Sublandlord
      under this Sublease;

	 	 
	7.2.4 	
      to perform all of the obligations of the Tenant under the
      Head Lease which materially affect the Sublet Premises, including without
      limitation the payment of Rent pursuant to the Head Lease; and

	 	 
	7.2.5 	
      to indemnify and save harmless the Subtenant against and
      from any and all expenses, costs, damages, suits, actions or liabilities
      arising or growing out of the failure of the Sublandlord to perform any of
      its obligations under the Head Lease (provided such failure does not
      result from a failure of the Subtenant to perform any of its obligations
      under this Sublease), and for all claims, demands of every kind and nature
      made by any person or persons to or against the Subtenant in connection
      therewith, and all counsel fees, expenses and liabilities incurred by
      reason of any such claim or any action or proceeding brought
    thereof.

Article 8 Restrictive Covenants 

8.1 Assignment and Sublease 

The Subtenant shall not assign this Sublease or sublet all or
part of the Sublet Premises without the prior written consent of the
Sublandlord, not to be unreasonably withheld. 

8.2 Confidentiality 

At the time of disclosure, each Disclosing Party will clearly
identify, either orally or in writing, as applicable, all Confidential
Information as sensitive, confidential and proprietary in nature. The Receiving
Party will at all times during the term of this Sublease, any extensions
thereof, and for a period of ten (10) 

18 

years thereafter, not, without the prior written consent of the
Disclosing Party, disclose, use, reproduce, deal with, or otherwise exploit the
Confidential Information of the Disclosing Party or permit the same to be
disclosed, used, reproduced, dealt with, or otherwise exploited, except to the
extent necessary for the purposes of this Sublease. 

8.3 Return of Confidential Information

Within thirty (30) days of the termination of this Sublease or
of the receipt of a written request from the Disclosing Party, the Receiving
Party will return to the Disclosing Party or destroy, at the Disclosing Party’s
sole discretion, all Confidential Information of the Disclosing Party, including
all such information that is electronically stored by the Receiving Party, all
reproductions thereof and all samples of materials in the form provided by the
Disclosing Party to the Receiving Party, in the Receiving Party’s possession or
control and confirm such destruction or delivery to the Disclosing Party in
writing, as applicable. 

Article 9 Insurance 

	9.1 	
      Insurance Coverage

	 	 
	9.1.1 	
      The Subtenant will obtain and maintain, from the
      Commencement Date throughout the Sublease Term, any extensions thereof and
      for a three (3) year period thereafter in respect of general public
      liability insurance, insurance with respect to the Sublet Premises
      providing for the coverages and upon the terms required in Article 5 of
      the Head Lease to be maintained by the Sublandlord, and the Head Landlord
      and Sublandlord will be shown as additional insureds on all liability
      policies, with a cross liability and severability of interest endorsement.
      The Subtenant releases the Sublandlord from any claim the Subtenant may
      have which is or would be insured against by the insurance policies which
      the Subtenant is required to maintain by this Sublease.

	 	 
	9.1.2 	
      Within five (5) days of the Commencement Date and upon
      the Sublandlord’s annual request during the Sublease Term and any
      extensions thereof the Subtenant will provide to the Sublandlord within
      five (5) days of such request, a copy of each certificate of insurance in
      respect of the insurance policies required to be effected herein, and the
      Sublandlord will reimburse the Subtenant’s reasonable costs of providing
      copies of such certificates of insurance. Subtenant agrees to provide
      Sublandlord thirty (30) days notice of any material change in its
      insurance coverage during the Sublease Term.

9.2 Use of Proceeds 

The Subtenant agrees that in the event of damage or destruction
to the Sublet Premises covered by insurance required to be maintained pursuant
to Section 9.1, the Subtenant will use the proceeds of such insurance for the
purpose of repairing or restoring such damage or destruction. In the event of
damage to or destruction of the Sublet Premises or Building entitling the Head
Landlord to terminate the Head Lease, the Subtenant will pay directly to the
Head Landlord, all of the Subtenant’s insurance proceeds in accordance with
Section 5.3 of the Head Lease. 

Article 10 Termination 

10.1 Termination for Default 

Each Party has the right to terminate this Sublease for default
upon the other Party’s failure to comply in any material respect with the terms
and conditions of this Sublease or the Head Lease. Prior to any such 

19 

termination for default, the Party seeking to so terminate will
give the other written notice of its intention to terminate this Sublease in
accordance with the provisions of this Section 10.1, which notice will set forth
the default(s) which form the basis for such termination. If the defaulting
Party fails to correct such default(s) within ninety (90) days after receipt of
the notification, then the non-defaulting Party may immediately terminate this
Sublease by notice in writing to the defaulting Party. 

10.2 Termination for Insolvency 

	10.2.1 	
      If the Subtenant:

	 	 	 
		(a) 	
      makes a general assignment for the benefit of creditors
      or becomes insolvent;

	 	 	 
		(b) 	
      files an insolvency petition in bankruptcy;

	 	 	 
		(c) 	
      petitions for or acquiesces in the appointment of any
      receiver, trustee or similar officer to liquidate or conserve its business
      or any substantial part of its assets;

	 	 	 
		(d) 	
      commences under the laws of any jurisdiction any
      proceeding involving its insolvency, bankruptcy, reorganization,
      adjustment of debt, dissolution, liquidation or any other similar
      proceeding for the release of financially distressed debtors;

	 	 	 
		(e) 	
      proposes a written agreement of composition or extension
      of its debts other than the Subtenant’s current outstanding line of credit
      from TD Line of Credit Facility, or

	 	 	 
		(f) 	
      becomes a Party to any proceeding or action of the type
      described above in Sections 10.2.1(b), 10.2.1(c) or
  10.2.1(d);

and such proceeding or action remains
undismissed or unstayed for a period of more than sixty (60) days, then the
Sublandlord may upon thirty (30) days written notice terminate this Sublease in
its entirety without further notice or cure time available to the Subtenant.

	10.3 	
      Termination of the Service Agreement

	 	 
	10.3.1 	
      A termination of this Sublease by either Party for any
      reason will result in a termination of the Service Agreement, as of the
      effective date of the termination of the Sublease, subject to any
      continuing or surviving obligations as set forth in this
  Sublease.

	 	 
	10.3.2 	
      A termination of the Service Agreement by the Subtenant
      without cause will entitle the Sublandlord to terminate this Sublease as
      of the effective date of the termination of the Service Agreement, subject
      to any continuing or surviving obligations as set forth in this
      Sublease.

10.4 Other Remedies 

These Sections 10.1, 10.2, and 10.3 will not be exclusive and
will not be in lieu of any other remedies available to a Party hereto for any
default hereunder on the part of the other Party. 

10.5 Effect of Termination 

	10.5.1 	
      The termination of this Sublease will be without
      prejudice to the Sublandlord’s right to receive from the
  Subtenant:

20 

	 	(a) 	
      all payment of Gross Rents, costs and outlays accrued
      prior to the effective date of such termination; and

	 	 	 	 
	 	(b) 	
      whether incurred prior to or following the effective date
      of termination:

	 	 	 	 
	 		(i) 	
      fifty percent (50%) of the expenses and outlays incurred
      by the Sublandlord pursuant to Section 8.1(g) of the Head Lease if the
      Subtenant requests an assignment of the Head Lease; and

	 	 	 	 
	 		(ii) 	
      all expenses and outlays, if any, incurred by the
      Sublandlord pursuant to Section 8.1(g) of the Head Lease if the Subtenant
      requests a sublease of the Sublet Premises.

	10.5.2 	
      Notwithstanding any provisions to the contrary, the
      Sublandlord shall be entitled to apply the Deposit, plus interest if any,
      against any payment due to the Sublandlord under Section
  10.5.1.

10.6 Continuing Obligations 

Termination of this Sublease for any reason will not relieve
the Parties of any obligation accruing prior thereto and any ongoing obligations
hereunder and will be without prejudice to the rights and remedies of either
Party with respect to any antecedent breach of the provisions of this Sublease.

Article 11 General 

11.1 Notices 

All payments, reports, notices, consents, and approvals
permitted or required to be given hereunder will be in writing and will be
delivered to the Sublandlord or the Subtenant, as the case may be, as follows:

To the Sublandlord: 

	 	Inex Pharmaceuticals Corporation 
	 	200-8900 Glenlyon Parkway 
	 	Burnaby, BC, Canada 
	 	V5J 5J8 	  
	 	Attention: 	Ian Mortimer, VP Finance and CFO

To the Subtenant: 

	 	Response Biomedical Corporation 
	 	100-8900 Glenlyon Parkway 
	 	Burnaby, BC, Canada 
	 	V5J 5J8 	  
	 	Attention: 	Rob Pilz, VP Finance and CFO

Any notice so made will be deemed to have been given and
received at 10:00 a.m. on the first business day after the date of delivery of
such notice. 

21 

11.2 Agency Disclosures 

The Sublandlord has an agency relationship with CB Richard
Ellis Limited (Agent) and Blair Quinn (Salesperson). The Subtenant has an agency
relationship with CB Richard Ellis Limited (Agent) and Kevin Nelson
(Salesperson). 

11.3 Successors and Assigns 

Subject to Section 8.1, all of the rights and obligations of a
Party enure to the benefit of and are binding upon the successors and assigns of
that Party. 

11.4 Further Assurances 

Each Party agrees to execute such further assurances as may be
reasonably required from time to time by any other Party to more fully effect
the true intent of this Sublease. 

11.5 Facsimile Transmission 

A Party hereto may signify its agreement to the terms hereof by
facsimile transmission. A telecopy facsimile of this Sublease received by a
Party hereto which shows the signature(s) of the authorized signatory (ies) of
the other Party will be sufficient proof of execution by that other Party. 

11.6 Entire Agreement 

This Sublease merges and supersedes all prior negotiations,
representations, and agreements between the Parties relating in any way to the
Sublet Premises. The Parties agree that there are no representations, covenants,
agreements, warranties, or conditions in any way relating to the subject matter
of this Sublease or the occupation or use of the Sublet Premises, whether
express or implied or otherwise, except as set forth in this Sublease. In
particular, and without limiting the generality of the foregoing, the Subtenant
acknowledges having inspected the Sublet Premises, and, subject as provided
herein, sublets the Sublet Premises on an “as is” basis. The Sublandlord will
not be responsible for any alteration or improvement required or desired by the
Subtenant to the Sublet Premises. The Subtenant acknowledges that the
Sublandlord has made no representations as to the condition of the Sublet
Premises or the fitness of the Sublet Premises for any purpose not expressly set
out in this Sublease. 

11.7 Severability 

In the event that any part, section, clause, paragraph or
subparagraph of this Sublease will be held to be indefinite, invalid, illegal or
otherwise voidable or unenforceable, the entire Sublease will not fail on
account thereof, and the balance of this Sublease will continue in full force
and effect. 

11.8 LIMITATION OF LIABILITY 

SUBJECT TO THE SUBLANDLORD’S OBLIGATION TO ENSURE THAT ANY USE
OF THE VIVARIUM WILL NOT CAUSE LOSS OR DAMAGE TO THE SUBTENANT, IN NO EVENT WILL
EITHER PARTY BE LIABLE FOR INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES OF THE OTHER PARTY, HOWEVER CAUSED AND ON ANY THEORY OF
LIABILITY, ARISING OUT OF THE PERFORMANCE OF, OR THE FAILURE TO PERFORM, ANY
OBLIGATION(S) SET FORTH HEREIN. 

22 

11.9 Waiver 

No waiver by the Sublandlord of a condition or the performance
of an obligation of the Subtenant hereunder binds the Sublandlord unless in
writing and executed by it, and no waiver given by the Sublandlord will
constitute a waiver of any other condition or performance by the Subtenant of
its obligations hereunder in any other case. 

11.10 Governing Law 

This Sublease will be governed in accordance with laws
applicable in the province of British Columbia, and the Parties irrevocably
attorn to the non-exclusive jurisdiction of the courts of British Columbia. 

11.11 Time of the Essence 

Time shall be of the essence in this Sublease and any
amendments and extensions thereof. 

11.12 Survivorship 

The provisions of Article 1, Sections 2.1, 2.3, 2.4, 4.3, 4.4,
4.5, 4.6, 4.7, 4.8, 4.9, 5.2.1, 5.2.3, 5.2.4, 5.2.5, 5.3.1(a), 5.3.1(c), 5.4.6,
5.5, 6.8, Article 7, Sections 8.2, 8.3, Article 9, Sections 10.4, 10.5, 10.6,
and Article 11 will survive any expiration or termination of this Sublease. 

IN WITNESS WHEREOF, the Parties hereto have executed
this Sublease as of the date first above written. 

	Inex Pharmaceuticals
      Corporation 	Response Biomedical Corp.
  
	 	 
	By: 	/s/ Ian Mortimer 	By: 	/s/ Brian Richards 
	 	 	 	 
	Name: 	Ian Mortimer 	Name: 	Brian Richards 
	 	 	 	 
	Title: 	CFO 	Title: 	COO 
	 	 	 	 
	Date: 	August 22, 2005 	Date: August 22, 2005 
	 	 	 
	Witness: /s/ Sylvia Messer 	Witness: /s/ Robert Pilz
  

II 

Exhibit 1.1.3: Location of Clean Room 

2nd Floor Premises

   

III 

Exhibit 1.1.33: Location of Waste Storage Closet 

Waste Storage Closet 

   

IV 

Draft Exhibit 5.2.1(a) 

SCHEDULE “E” 

List of Furniture, Equipment and Fixtures 

Included in the Sublease At No Additional Cost 

	Equipment 
No. 	Equipment Type /
      Description 	Model 	Serial No. 	Manufacturer 	Approximate 
Value 
	EQ0425 	Refrigerator: Supply Chain
      Refrigerator 	LS54GD 	B946167 	Powers Scientific Inc. 	$ 10K 
	EQ0426 	Refrigerator: Cold Storage
      Chamber (2-8°C), Deli fridge 	LS54GD 	B946172 	Powers Scientific Inc. 	$ 10K 
	EQ0524 	Glassware Washer: Thermal
      Disinfector Glassware Washer; Manu. No. 3885813 	G7783 	16/18349812 	Miele 	$ 11K 
	EQ0701 	Monitoring System: Rees
      Environmental Monitoring System 	Series II-PC 	n/a 	Rees Scientific 	$ 10K 
	EQ0701A 	Monitoring System: Rees Node
      Panel 	Series II-PC 	S2P01716 	Rees Scientific 	$ 10K 
	EQ0701B 	Monitoring System: Rees Remote
      Panel #1 	MPXREM02 	MX2-3092 	Rees Scientific 	$ 10K 
	EQ0701C 	Monitoring System: Rees Remote
      Panel #2 	MPXREM02 	MX2-3097 	Rees Scientifc 	$ 10K 
	EQ0701D 	Monitoring System: Rees Remote
      Panel #3 	MPREM03 	MX2-4500 	Rees Scientifc 	$ 10K 
	EQ0787 	Cold Room: 7' x 8'11" x 8'2" high
      walk-in cooler; 
Zero-loc Insulated panel and door systems 	ADT065AJ 	D00G05244 	Zero-Loc 	$ 20K 
	EQ0788 	Temperature Control Chamber: Cold
      Room 	n/a 	n/a 	Fairchild 	$ 20K 
	EQ0789 	Temperature Control Chamber: Cold
      Room 	n/a 	n/a 	Fairchild 	$ 20K 
	EQ0872 	Biological Containment Hood: Bio
      Klone 2, Type A/B3, Class 2, 76.5" width. Biological Containment Hood 	BK-2-6 	802-7892 	Microzone Corp. 	$ 12K 
	EQ0967 	Fume Hood: Mfg. date: Oct. 1997,
      Ventilated Hood 	AIFH-70 	n/a 	H.H. Hawkins Ltd. 	$ 10K 
	EQ1012 	Fume Hood: Mfg. date: Sept. 1997,
      Ventilated Hood 	APFH-70 	n/a 	H.H. Hawkins Ltd. 	$ 10K 
	EQ1082 	Fume Hood: Mfg. Date Sept/97
      Model 115/230 Vac 15A; "Fume Hood A" 	AIFH-70 	n/a 	H.H. Hawkins Ltd. 	$ 10K 
	EQ1084 	Fume Hood: Mfg. Date Dec/97 Model
      115/230 Vac 15A; "Fume Hood B" 	AIFH-47 	n/a 	H.H. Hawkins Ltd. 	$ 10K 

V 

	EQ1085 	Fume Hood: Mfg. Date Sept/97
      Model 115/230 Vac 15A; "Fume Hood C" 	ATFH-70 	n/a 	H.H. Hawkins 	$ 10K 
	EQ1118 	Fume Hood 	n/a 	n/a 	H.H. Hawkins 	$ 10K 
	EQ1119 	Fume Hood 	ATFH-70 	n/a 	H.H. Hawkins 	$ 10K 
	EQ1123 	Fume Hood 	AIFH-70 	n/a 	H.H. Hawkins 	$ 10K 
	EQ1161 	Fume Hood 	AIFH-70 	n/a 	H.H. Hawkins 	$ 10K 
	EQ1166 	Fume Hood 	AIFH-70 	n/a 	H.H. Hawkins 	$ 10K 
	EQ1185 	Fume Hood: Ventilated Hood 	AIFH-70 	n/a 	H.H. Hawkins Ltd. 	$ 10K 
	EQ1219 	Fume Hood: Mfg. Date: Sept. 1997,
      Ventilated Hood 	AIFH-70 	1129 	H.H. Hawkins 	$ 10K 
	EQ1294 	Water System: Millipore Water
      System 	n/a 	n/a 	Millipore 	$ 9K 
	EQ1294A 	Water System: Millipore-Milli RO
      Plus 30 	R030 	F6JM11792D 	Millipore 	$ 9K 
	EQ1294B 	Water System: Milli Q Biocell 	Biocell 	F7MM35532I 	Millipore 	$ 9K 
	EQ1364 	Water System: Millipore Water
      System 	n/a 	n/a 	Millipore 	$ 9K 
	EQ1364A 	Water System: Millipore-Milli RO
      Plus 90 	R090 	F6NM12721E 	Millipore 	$ 9K 
	EQ1364B 	Water System: Milli Q Biocell 	Biocell 	F7HM29741I 	Millipore 	$ 9K 
	EQ1365 	Ice Machine: Undercounter Flaker.
      Condenser Type: Water 	AFE4000W-1A 	179152-08P 	Scotsman 	$ 1K 
	EQ1432 	Autoclave: Steam autoclave for
      non-GMP use only 	SR-24C-MCV 	120797 	Consolidated 	$ 23K 
	EQ1433 	Autoclave: Mfg. 5/94. Electrical
      Sterilmatic autoclave 	STM-EL 	184012 	Market Forge 	$ 5K 
	EQ1441 	Dishwasher: Lavabor Dishwasher
      heats up to 70°C 	G7704 	n/a 	Miele 	$ 11K 
	EQ1458 	Microscope: Inverted Light
      Microscope 	TMS 	215241 	Nikon 	$ 3K 
	EQ1464 	Biological Safety Cabinet: Bio
      Klone 2 Biological Containment Hood, Class 2, Type A, 6ft 	BK-2-6 	802-9741 	Microzone Corp. 	$ 12K 
	EQ1472 	Biological Safety Cabinet: Bio
      Klone 2 Biological Containment Hood, 6ft, Class 2, Type A 	BK-2-6 	802-0715 	Microzone Corp. 	$ 12K 
	EQ1612 	Biological Safety Cabinet:
      Purifier Delta Series Class II, Type B2 Biosafety Cabinet. Cat. No.
      3621404 	36214 	030401941 	Labconco Corp. 	$ 12K 
	EQ1708 	Biological Safety Cabinet 	Nu-435-600 	56559AAZ 	Nuaire 	$ 16K 
	EQ1721 	Boiler: Fulton Boiler 	PHP700 	U18808 	Fulton 	$ 50K 

VI 

	EQ1722 	Generator: 25 KW Katolight
      Emergency Generator 	N25FPG4 	LM307928S- 45414 	Katolight Co. 	$ 35K 
	EQ1763 	Humidifier: Neptronic SK300 Steam
      Humidifier 	SK310M 	02268604 	National 
Environmental 
Products Ltd.
      V= 
IMEC 	$ 16K 
		Printers 	2 units x 
HP4100 		HP Laser Jet 	$ 650.00/unit = 
$ 1,300 
		LCD Projector 	TBD 		Sony 	$ 400.00 
		
      Phone System: 

      Nortel Option 11C 
Meridian Mail 

      1 x Console 

      M3902 Single line (100 + avail) 

      M3903 Multi line (50 + avail) 
				$ 140K 
excluding 
installation
      
charge and desk 
top phones 
		Desk Top Phones 	90 units x 
Nortel M3902
      30 units x 
Nortel M3903 
			$60.00 /unit= $ 
5,400.00
      $90.00 /unit= $ 
2,700.00 

		Network Switches 	Model 3548
      (5 units available) 
		Cisco 	$600.00 / unit =

        $ 3,000.00 
		Draft Inventory List of Office
      Furniture 				$ 100K 
	TOTAL VALUE OF FURNITURE &
      EQUIPMENT SUPPLIED AT NO ADDITIONAL COST:	$775,800.00
  

VII 

Draft Exhibit 5.2.1(b) 

Draft
Inventory List of Office Furniture 

	Room 	Quantity 	               
                           Description
      	Comments 
	1163 	1 	Meeting table (maple / storm, grey) 	  
	  	7 	High back chairs 	  
	  	1 	Credenza (maple /storm, grey) 	  
	  	1 	8 foot white board 	  
	  	1 	Projector screen 	  
	  	1 	Wall clock 	  
	  	1 	Flip chart 	  
	  	  	  	  
	1136 	  	  	Empty 
	  	  	  	  
	1160 	3 	Single cubes at 5' x 6' with BB (2) 	  
	  	1 	Double 1bb / 1 shelf 	  
	  	5 	Chair 	* 
	  	  	  	  
	1135 	1 	U shaped ws with hutch 	  
	  	2 	BC (s) maple 	  
	  	1-3 	File 	* 
	  	1 	Chair ergo black 	  
	  	1 	Sled base chair (meeting / quest) 	  
	  	  	  	  
	1134 	1 	U shaped ws with hutch (maple g) 	  
	  	1 	Chair ergo black 	  
	  	1 	sled base chair 	  
	  	1 	8 foot white board 	  
	  	1 	L shaped ws with hutch 	* 
	  	2 	File 	* 
	  	  	  	  
	1133 	1 	U shaped ws with hutch (maple g) 	  
	  	1 	Chair ergo black 	  

VIII 

	  	1 	Sled base chair 	  
	  	1 	Table (maple) 	
* 

	  	  	  	
      

	1132 	1 	U shaped ws with hutch (maple g) 	
      

	  	1 	Round table (maple) 	
* 

	  	1 	Chair ergo black 	
      

	  	1 	Sled base chair 	
      

	  	1 	8 foot white board 	
      

	  	1 	Credenza (maple s.g.) 	
* 

	  	  	  	
      

	1131 	1 	L shaped ws with hutch (maple g) 	
      

	  	1 	File 	
* 

	  	1 	Chair ergo black 	
      

	  	1 	Sled base chair 	
      

	  	  	  	
      

	1167 	  	  	
* 

	  	  	  	
      

	1165 	4 	Cubes 	
      

	  	6 	Long shelves 	
* 

	  	1 	Table 	
* 

	  	1 	File (5) hi 	
* 

	  	4 	Boards (smol 	
      

	  	  	  	
      

	1166 	  	  	
* 

	  	  	  	
      

	1174 	2 	Boards (smol) white 	
* 

	  	1 	Board 	
* 

	  	  	  	
      

	1173 	  	  	
* 

	  	  	  	
      

	1172 	1 	Board white 	
* 

	  	1 	File 	
* 

	  	  	  	  
	1100 	1 	Meeting table (maple s/g) 	  
	(Board Room) 	12 	High back chairs 	  

IX 

	  	1 	Credenza (maple s/g) 	  
	  	1 	8 foot white board 	  
	  	1 	Projector screen 	  
	  	2 	Flip char 	  
	  	1 	Table 	  
	  	1 	Chair ergo black 	  
	  	1 	Sled base chair 	  
	  	4 	Blue chairs 	* 
	  	2 	Pictures 	  
	  	  	  	  
	1002 	  	  	* 
	  	  	  	  
	1003 	1 	Meeting table 	* 
	  	10 	Grey chairs sled base 	  
	  	2 	Black sled chairs 	  
	  	1 	Wall clock 	  
	  	1 	Flip chart 	  
	  	1 	(Polka Dot) chair 	  
	  	1 	8 foot white board 	  
	  	  	  	  
	1104 	  	Furniture? 	* 
	  	  	  	  
	1171 	  	  	Empty? 
	  	  	  	  
	1106 	  	Furniture? 	* 
	  	  	  	  
	1107 	1 	U shaped ws with hutch (maple s/g) 	  
	  	1 	Sled base chair 	  
	  	1 	White board 	  
	  	1 	Table 	  
	  	2 	Boards 	  
	  	  	  	  
	1108 	  	  	* 
	  	  	  	  
	1118 	1 	L shaped ws with hutch (maple g) 	  

X 

	  	1 	File (hi) 	  
	  	1 	White board 	  
	  	1 	Chair ergo black 	  
	  	1 	Sled base chair (m.g.) 	  
	  	  	  	  
	1109 	  	Furniture ? 	* 
	  	  	  	  
	1115 	  	Furniture? 	* 
	  	  	  	  
	1116 	  	Furniture? 	* 
	  	  	  	  
	1117 	  	Furniture? 	* 
	  	  	  	  
	1123 	  	Empty? Boxes 	* 
	  	  	  	  
	1122 	1 	U shaped ws with hutch (maple g) 	  
	  	2 	Files 	  
	  	1 	Table round (maple) 	  
	  	2 	Tables smole (maple) 	  
	  	1 	White board 	  
	  	1 	Chair ergo black 	  
	  	1 	Sled base chair 	  
	  	1 	Sled base chair grey 	* 
	  	  	  	  
	1121 	1 	L cube with bb (2) 	  
	  	1 	File 	* 
	  	1 	Chair ergo black 	  
	  	1 	Sled base chair 	  
	  	1 	White board 	  
	  	1 	Board 	  
	  	  	  	  
	1120 	1 	L cube with bb (2) 	  
	  	1 	File 	* 
	  	1 	White board 	  
	  	1 	Board 	  

XI 

	  	1 	Sled base chair (maple g) 	  
	  	1 	Chair ergo black 	  
	  	  	  	  
	1119 	1 	L shaped ws with hutch (maple) 	  
	  	1 	File 	* 
	  	1 	White board 	  
	  	1 	Sled base chair (m/g) 	  
	  	1 	Chair ergo black 	  
	  	  	  	  
	1169 	1 	Double cubes x longe w BB 	  
	(Workstation) 	2 	Sled ergo chairs 	* 
	  	  	  	  
	1168 	2 	Tables (cube) with 1 shelf 	  
	  	10 	L single cubes with BB (2) 	  
	  	2 	Cubes tables (2) with 1 shelf 	  
	  	1 	File 	  
	  	8 	Chair ergo black chair 	* 
	  	  	  	  
	1107 	2 	Single cubes with BB (2) 	  
	(opposite) 	2 	Files 	  
	  	1 	Sled base chair 	  
	  	  	  	  
	1108 	4 	Single cubes with BB (2) 	  
	(opposite) 	2 	Sled base chair 	  
	  	1 	Sled base chair blue 	* 
	  	1 	Sled base chair grey 	* 
	  	4 	Files (smol) 	  
	  	  	  	  
	1198 	1 	Table 	  
	(corridor) 	1 	Sled base chair 	  
	  	  	  	  
	1109 	1 	Single cubes with B/B2 	  
	(opposite) 	2 	File 	  
	  	1 	Sled base chair 	  
	  	1 	Chair ergo (grey) 	* 

XII 

	1116 	2 	Cube tables with BB 	  
	(opposite) 	1 	Chair ergo (grey) 	* 
	  	1 	File 	  
	  	  	  	  
	Korner 	5 	Single cubes with BB 	  
	(Irina) 	1 	Double cubes with BB 	  
	  	  	  	  
	Reception 	  	  	  
	  	  	  	  
	2221 	1 	U shaped ws with hutch (maple, grey) 	  
	  	2 	Shelves (maple) 	* 
	  	1 	Table (maple) 	* 
	  	1 	White board 	  
	  	1 	Board 	  
	  	1 	Sled base chair (m/g) 	  
	  	1 	Chair ergo black 	  
	  	  	  	  
	2219 	1 	L shaped ws with hutch (? Dark) 	* 
	  	1 	Table (Dark?) 	* 
	  	1 	Chair ergo black 	  
	  	1 	Sled base chair 	  
	  	1 	8 foot white board 	  
	  	  	  	  
	2218 	1 	L shaped ws with hutch (maple, grey) 	  
	  	1 	Chair ergo black 	  
	  	1 	Sled base chair 	  
	  	  	  	  
	2216 	2 	L shaped ws with hutch (maple, grey) 	  
	  	1 	Book shelf (maple) 	* 
	  	3 	Files 	  
	  	2 	Chair ergo black 	  
	  	2 	Chair sled base 	  
	  	  	  	  
	2215 	1 	U shaped ws with hutch (maple, grey) 	  

XIII 

	  	2 	Files 	* 
	  	1 	Shelf 	* 
	  	1 	Sled base chair 	  
	  	1 	Chair ergo black 	  
	  	1 	White board 	  
	  	  	  	  
	2213 	1 	L single cube tb 	  
	  	2 	Shelves 	* 
	  	1 	File 	* 
	  	1 	Chair ergo black 	  
	  	1 	Sled base chair 	  
	  	1 	White board 	  
	  	1 	Board 	  
	  	  	  	  
	2212 	1 	L single cube tb 	  
	  	2 	Shelves 	* 
	  	1 	Round table (black) 	* 
	  	1 	White board 	  
	  	? 	Chair 	* 
	  	  	  	  
	2211 	1 	L shaped ws with hutch (maple, grey) 	  
	  	2 	Files 	* 
	  	1 	White board 	  
	  	1 	Board 	  
	  	? 	Chair 	* 
	  	  	  	  
	2210 	1 	L single cube tb 	  
	  	* 	? 	* 
	  	  	  	  
	2209 	1 	L single cube tb 	  
	  	1 	Book shelf 	  
	  	1 	File 	  
	  	1 	Sled base chair 	  
	  	1 	Chair ergo black 	  
	  	1 	White board 	  

XIV 

	  	1 	Board 	  
	  	  	  	  
	2206 	1 	L shaped ws with hutch (maple, grey) 	  
	  	1 	Round table (maple) 	  
	  	1 	Sled base chair 	  
	  	1 	Chair ergo black 	  
	  	  	  	  
	2205 	2 	Big tables 	  
	  	  	Empty? 	* 
	  	  	  	  
	2202 	1 	L shaped table (maple, grey) 	  
	  	1 	Sled base chair 	  
	  	1 	Chair ergo black 	  
	  	1 	6 foot white board 	  
	  	  	  	  
	2201 	1 	U single cube tb 	  
	  	4 	Shelves 	* 
	  	1 	Chair ergo black 	  
	  	1 	White board 	  
	  	1 	Round table 	  
	  	2 	Shelves 	* 
	  	1 	Sled base chair 	  
	  	1 	Board 	  
	  	  	  	  
	2200 	1 	Meeting table 	* 
	(Conference Room) 	1 	Credenza 	* 
	  	4 	Sled base chair 	  
	  	6 	Chair? 	* 
	  	1 	Projector screen 	  
	  	1 	8 foot white board 	  
	  	1 	Flip chart 	  
	  	1 	Wall clock 	  

* = to be moved to other rooms within the Sublet Premises ?

XV 

Exhibit 6.4: Location of Cold Room and Freezer RoomFiled by Automated Filing Services Inc. (604) 609-0244 - Clearly Canadian Beverage Corporation - Exhibit 4.2

THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT RELATES TO AN
OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S.
PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT
SUBSCRIPTION AGREEMENT (THE “SUBSCRIPTION AGREEMENT”) RELATES HAVE BEEN
REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO
REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED
STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT. 

"UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER
OF THE SECURITIES SHALL NOT TRADE THE SECURITIES IN CANADA BEFORE APRIL 28,
2006" 

CONFIDENTIAL 
PRIVATE PLACEMENT SUBSCRIPTION
AGREEMENT 

THIS SUBSCRIPTION AGREEMENT (“Agreement”) is made this 28th day
of December, 2005, by and between CLEARLY CANADIAN BEVERAGE CORPORATION
(the "Company"), a British Columbia corporation with an address at 2489
Bellevue Avenue West, Vancouver, British Columbia, Canada V7V 1E1, and BG
CAPITAL GROUP LTD. (the “Subscriber”), a Bahamian corporation with an
address at Slot #2000 A.P. 59223, Nassau, The Bahamas. 

1.                              
  Subscription

1.1                            
On the basis of the representations and warranties and subject to the terms and
conditions set forth herein, the Subscriber hereby irrevocably subscribes for
and agrees to purchase one unit (the “Unit”) from the Company, and the
Company agrees to sell the Unit to the Subscriber, with the Unit to consist of
the following: 

	 	(a) 	
      680,000 shares of common stock in the capital of the
      Company (each a "Share" and collectively the
    “Shares”);

	 	 	 
	 	(b) 	
      4,250,000 non-transferable Series “A” share purchase
      warrants (the “Series A Warrants”);

	 	 	 
	 	(c) 	
      4,250,000 non-transferable Series “B” share purchase
      warrants (the “Series B Warrants”);

	 	 	 
	 	(d) 	
      4,250,000 non-transferable Series “C” share purchase
      warrants (the “Series C Warrants”); and

	 	 	 
	 	(e) 	
      4,250,000 non-transferable Series “D” share purchase
      warrants (the “Series D Warrants”),

for an aggregate purchase price for the Unit (such subscription
and agreement to purchase being the “Subscription”) of $850,000 (the
“Subscription Proceeds”). 

1.2                            
Each Series A Warrant will entitle the Subscriber to purchase one share of the
Company’s common stock at a purchase price of $1.25 per share during the period
(the “Series A Exercise Period”) beginning on the Closing Date and ending
on December 31, 2006. 

1.3                            
Upon vesting, each Series B Warrant will entitle the Subscriber to purchase one
share of the Company’s common stock at a purchase price of $1.50 per share
during the period (the “Series B Exercise Period”) beginning on the date
they vest (the “Series B Vesting Date”) and expiring on the first
anniversary of the 

- 2 - 

Series B Vesting Date (the “Series B Expiration Date”).
The Series B Vesting Date shall be the date upon which the last of the 5,000,000
Series A Warrants issued, in the aggregate, to the group of investors comprised
of the Subscriber, Brent Lokash, Douglas L. Mason and Gladys Jenks
(collectively, the “Investor Group”) is exercised; provided, however,
that if the Investor Group does not exercise all 5,000,000 of the Series A
Warrants issued to them prior to the expiration of the Series A Exercise Period,
none of the Series B Warrants, the Series C Warrants or the Series D Warrants
shall vest and all of them shall become void and be of no further force or
effect from and after December 31, 2006 at 5:00 p.m., Pacific Standard Time.
From and after the date upon which the Subscriber shall have sold an aggregate
of 3,657,506 shares of the Company’s common stock (measured from the date of
this Subscription Agreement forward), the Subscriber shall: 

	 	(a) 	
      exercise one Series A Warrant for each two shares of the
      Company’s common stock sold by the Subscriber until all of the Series A
      Warrants have been exercised; and

	 	 	 
	 	(b) 	
      beginning on the Series B Vesting Date and ending on the
      earlier of (i) the Series B Expiration Date or (ii) the date upon which
      the last of the Series B Warrants are exercised, exercise one Series B
      Warrant for each two shares of the Company’s common stock sold by the
      Subscriber during that period.

1.4                            
Upon vesting, each Series C Warrant will entitle the Subscriber to purchase one
share of the Company’s common stock at a purchase price of $2.00 per share
during the period (the “Series C Exercise Period”) beginning on the date
they vest (the “Series C Vesting Date”) and expiring on the first
anniversary of the Series C Vesting Date (the “Series C Expiration
Date”). The Series C Vesting Date shall be the date upon which the Investor
Group exercises the last of the 5,000,000 Series B Warrants issued to them in
the aggregate; provided, however, that if the Investor Group does not exercise
all 5,000,000 of the Series B Warrants issued to them prior to the expiration of
the Series B Exercise Period, none of the Series C Warrants or the Series D
Warrants shall vest and all of them shall become void and be of no further force
or effect from and after the Series B Expiration Date. 

1.5                            
Upon vesting, each Series D Warrant will entitle the Subscriber to purchase one
share of the Company’s common stock at a purchase price of $4.50 per share
during the period (the “Series D Exercise Period”) beginning on the date
they vest (the “Series D Vesting Date”) and expiring on the first
anniversary of the Series D Vesting Date. The Series D Vesting Date shall be the
date upon which the Investor Group exercises the last of the 5,000,000 Series C
Warrants issued to them in the aggregate; provided, however, that if the
Subscriber does not exercise all 5,000,000 of the Series C Warrants issued to
them prior to the expiration of the Series C Exercise Period, none of the Series
D Warrants shall vest and all of them shall become void and be of no further
force or effect from and after the Series C Expiration Date. 

1.6                            
The Series A Warrants, the Series B Warrants, the Series C Warrants and the
Series D Warrants (collectively, the “Warrants”) shall be evidenced by,
and shall be subject to the terms of, a warrant certificate in the form attached
hereto as Exhibit B-1, B-2, B-3 and B-4, respectively. 

1.7                            
The Subscriber shall provide a written report to the Company every 10 calendar
days detailing all sales of shares of the Company’s common stock sold by the
Subscriber until all of the Series A Warrants and, if they vest, all of the
Series B Warrants, have been exercised or until the Series B Expiration Date,
whichever first occurs. The form of this report shall be as agreed by the
parties; provided however that the Company acknowledges that a report provided
in the form of the insider trading reports filed or to be filed by the
Subscriber (or any affiliate of the Subscriber) from time-to-time with the
Canadian regulatory authorities shall meet the requirements as to form of this
subsection 1.7. 

1.8                            
The Shares, the Warrants and the common shares of the Company that may be issued
upon the exercise of any of the Warrants (collectively, the “Warrant
Shares”), may collectively be hereinafter referred to as the
"Securities". 

- 3 - 

2.                              
Payment 

2.1                            
The Subscription Proceeds shall be paid at the Closing (as hereinafter defined)
by application of the proceeds of a wire transfer heretofore sent to the
Company, receipt of which is hereby acknowledged by the Company. 

3.                             
 Miscellaneous Covenants 

3.1                            
The Subscriber shall complete, sign and return to the Company, at or prior to
Closing, a Canadian Investor Certificate in the form attached hereto as Exhibit
A. 

3.2                            
The Subscriber shall complete, sign and return to the Company as soon as
possible, on request by the Company, any documents, questionnaires, notices and
undertakings as may be required by any regulatory authorities and applicable
law. 

3.3                            
At a meeting (the “Meeting”) of the stockholders of the Company following
the Closing (as hereinafter defined), the Company shall ask the shareholders to
consider and vote upon (on a majority of the minority basis) an amendment to the
Company’s Articles to designate rights and restrictions for a new class of
variable multiple voting shares of the Company (the “Variable Voting
Shares”) that would give to the holder a variable multiple voting right and
effect the intent described in this Section 3.2, below. If this resolution is
approved by the shareholders of the Company, then the Subscriber shall, on the
day following the Meeting (the “Conversion Date”), convert all of the
Class B Preferred Shares of the Company now owned by it (the “Class B
Shares”) into such number of common shares of the Company (the
“Conversion Shares”) as the Subscriber is then entitled to receive
pursuant to the rights and restrictions attached to the Class B Shares;
provided, however, that (a) such number of Conversion Shares shall be calculated
without adjustment for any of the Shares or Warrants issued pursuant to this
Subscription Agreement or to the additional aggregate total of 160,000 common
shares and 4,000,000 warrants issued or to be issued by the Company to the
members of the Investor Group, and (b) the number of the Conversion Shares shall
not, in any event, exceed 8,000,000. Upon conversion of the Class B Shares, the
Company shall issue, in addition to the Conversion Shares, such number of
Variable Voting Shares as shall, at the Conversion Date, give to the Subscriber
a number of votes equal to 50% of the then issued and outstanding number of
shares of common stock of the Company (as adjusted to account for the Conversion
Shares). 

3.4                            
Adjustments 

                                
The number of Common Shares comprising the Conversion Shares will be subject to
adjustment: 

	 	(a) 	
      if and when, prior to the Conversion Date, the Common
      Shares at any time outstanding are subdivided into a greater or
      consolidated into a lesser number of Common Shares the number of Common
      Shares deliverable upon the Conversion will be increased or decreased
      proportionately as the case may be; or

	 	 	 
	 	(b) 	
      (i) in case of any capital reorganization or of any
      reclassification of the capital of the Company or in the case of the
      consolidation, merger or amalgamation of the Company with or into any
      other company (hereinafter collectively referred to as a
      “Reorganization”), the Conversion Shares will after such Reorganization
      confer the right to acquire the number of shares or other securities of
      the Company (or of the company resulting from such Reorganization) which
      the Subscriber would have been entitled to upon Reorganization if the
      Subscriber had been a shareholder at the time of such
    Reorganization.

3.5                            
The adjustments provided for in Section 3.4, above, are cumulative and will
become effective immediately after the record date for or, if no record date is
fixed, the effective date of the event which results in such adjustments. 

- 4 - 

4.                              
Closing 

4.1                            
Closing of the offering of the Securities (the “Closing”) shall occur on
December 28, 2005, or on such other date as may be determined by the parties
(the “Closing Date”). 

5.                              
Acknowledgements of Subscriber 

5.1                            
The Subscriber acknowledges and agrees that: 

	 	(a) 	
      none of the Securities have been registered under the
      1933 Act, or under any state securities or “blue sky” laws of any state of
      the United States, and, unless so registered, may not be offered or sold
      in the United States or, directly or indirectly, to U.S. Persons, as that
      term is defined in Regulation S under the 1933 Act (“Regulation
      S”), except in accordance with the provisions of Regulation S,
      pursuant to an effective registration statement under the 1933 Act, or
      pursuant to an exemption from, or in a transaction not subject to, the
      registration requirements of the 1933 Act;

	 	 	 
	 	(b) 	
      the Subscriber acknowledges that, except as specifically
      provided in this Agreement, the Company has not undertaken, and will have
      no obligation, to register any of the Securities under the 1933
  Act;

	 	 	 
	 	(c) 	
      the decision to execute this Agreement and acquire the
      Securities hereunder has not been based upon any oral or written
      representation as to fact or otherwise made by or on behalf of the
      Company;

	 	 	 
	 	(d) 	
      the decision to execute this Agreement and acquire the
      Unit agreed to be purchased hereunder has not been based upon any oral or
      written representation as to fact or otherwise made by or on behalf of the
      Company except as set forth in this Agreement, and such decision is based
      entirely upon the terms of this Agreement and a review of any public
      information which has been filed by the Company on EDGAR, the internet
      database maintained by the Securities and Exchange Commission (the
      "SEC") or on SEDAR, the internet data base maintained by the
      Canadian Securities Administrators, in compliance, or intended compliance,
      with applicable securities legislation;

	 	 	 
	 	(e) 	
      the Subscriber has not acquired the Securities as a
      result of, and will not itself engage in, any “directed selling efforts”
      (as defined in Regulation S under the 1933 Act) in the United States in
      respect of any of the Securities which would include any activities
      undertaken for the purpose of, or that could reasonably be expected to
      have the effect of, conditioning the market in the United States for the
      resale of any of the Shares or the Warrant Shares (collectively, the
      "Offering Shares"); provided, however, that the Subscriber may sell
      or otherwise dispose of any of the Offering Shares pursuant to
      registration thereof under the 1933 Act and any applicable state
      securities laws or under an exemption from such registration
      requirements;

	 	 	 
	 	(f) 	
      the Subscriber and the Subscriber’s advisor(s) have had a
      reasonable opportunity to ask questions of and receive answers from the
      Company in connection with the distribution of the Securities hereunder,
      and to obtain additional information, to the extent possessed or
      obtainable without unreasonable effort or expense, necessary to verify the
      accuracy of the information about the Company;

	 	 	 
	 	(g) 	
      the books and records of the Company were available upon
      reasonable notice for inspection, subject to certain confidentiality
      restrictions, by the Subscriber during reasonable business hours at its
      principal place of business, and all documents, records and books in
      connection with the distribution of the Securities hereunder have been
      made available for inspection by the Subscriber, the Subscriber’s lawyer
      and/or advisor(s);

	 	 	 
	 	(h) 	
      the Company is entitled to rely on the representations
      and warranties of the Subscriber contained in this Agreement and the
      Subscriber will hold harmless the Company and, where applicable,
  its

- 5 - 

	 		
      directors, officers, employees, agents, advisors and
      shareholders, from any loss or damage it or they may suffer as a result of
      the Subscriber's failure to correctly complete this Subscription
      Agreement;

	 	 	 	 
	 	(i) 	
      the Subscriber will indemnify and hold harmless the
      Company and, where applicable, its directors, officers, employees, agents,
      advisors and shareholders, from and against any and all loss, liability,
      claim, damage and expense whatsoever (including, but not limited to, any
      and all fees, costs and expenses whatsoever reasonably incurred in
      investigating, preparing or defending against any claim, lawsuit,
      administrative proceeding or investigation whether commenced or
      threatened) arising out of or based upon any representation or warranty of
      the Subscriber contained herein or in any document furnished by the
      Subscriber to the Company in connection herewith being untrue in any
      material respect or any breach or failure by the Subscriber to comply with
      any covenant or agreement made by the Subscriber to the Company in
      connection therewith;

	 	 	 	 
	 	(j) 	
      none of the Securities are listed on any stock exchange
      or automated dealer quotation system and no representation has been made
      to the Subscriber that any of the Securities will become listed on any
      stock exchange or automated dealer quotation system; except that currently
      the common shares of the Company are quoted for trading on the National
      Association of Securities Dealers Inc.'s OTC Bulletin Board (the
      "OTCBB");

	 	 	 	 
	 	(k) 	
      the Company will refuse to register any transfer of the
      Offering Shares not made in accordance with the provisions of Regulation
      S, pursuant to an effective registration statement under the 1933 Act or
      pursuant to an available exemption from the registration requirements of
      the 1933 Act and in accordance with any other applicable securities
      laws;

	 	 	 	 
	 	(l) 	
      the statutory and regulatory basis for the exemption
      claimed for the offer and sale of the Securities, although in technical
      compliance with Regulation S, would not be available if the offering is
      part of a plan or scheme to evade the registration provisions of the 1933
      Act;

	 	 	 	 
	 	(m) 	
      the Subscriber has been advised to consult the
      Subscriber’s own legal, tax and other advisors with respect to the merits
      and risks of an investment in the Securities and with respect to
      applicable resale restrictions, and it is solely responsible (and the
      Company is not in any way responsible) for compliance with:

	 	 	 	 
	 		(i) 	
      any applicable laws of the jurisdiction in which the
      Subscriber is resident in connection with the distribution of the
      Securities hereunder, and

	 	 	 	 
	 		(ii) 	
      applicable resale restrictions; and

	 	 	 	 
	 	(n) 	
      in addition to resale restrictions imposed under U.S.
      securities laws, there are additional restrictions on the Subscriber's
      ability to resell any of the Shares or Warrant Shares under the
      Securities Act (British Columbia) (the "B.C. Act"), the
      Securities Act (Ontario) (the “Ontario Act”) and National
      Instrument 45-102 adopted by the British Columbia Securities Commission
      (the "BCSC") and the Ontario Securities Commission (the
      “OSC”);

	 	 	 	 
	 	(o) 	
      the Company has advised the Subscriber that the Company
      is relying on one of the exemptions identified in the Canadian National
      Instrument 45-106, entitled "Prospectus and Registration Exemptions"
      ("NI 45-106"), promulgated under both the B.C. Act and the Ontario
      Act, and is therefore not required to provide the Subscriber with a
      prospectus to issue the Shares and Warrants and, as a consequence of
      acquiring the Shares and Warrants pursuant to such exemption certain
      protections, rights and remedies provided by the applicable securities
      legislation of British Columbia and Ontario, including statutory rights of
      rescission or damages, will not be available to the Subscriber;

	 	 	 	 
	 	(p) 	
      neither the SEC nor any other securities commission or
      similar regulatory authority has reviewed or passed on the merits of any
      of the Securities;

- 6 - 

	 	(q) 	
      no documents in connection with the sale of the Unit
      hereunder have been reviewed by the SEC or any state securities
      administrators;

	 	 	 
	 	(r) 	
      there is no government or other insurance covering any of
      the Securities;

	 	 	 
	 	(s) 	
      this Subscription Agreement is not enforceable by the
      Subscriber unless it has been accepted by the
Company.

6.                              
Representations, Warranties and Covenants of the Subscriber

6.1                            
The Subscriber hereby represents and warrants to and covenants with the Company
(which representations, warranties and covenants shall survive the Closing)
that: 

	 	(a) 	
      the Subscriber has the legal capacity and competence to
      enter into and execute this Subscription Agreement and to take all actions
      required pursuant hereto and, if the Subscriber is a corporation, it is
      duly incorporated and validly subsisting under the laws of its
      jurisdiction of incorporation and all necessary approvals by its
      directors, shareholders and others have been obtained to authorize
      execution and performance of this Subscription Agreement on behalf of the
      Subscriber;

	 	 	 
	 	(b) 	
      the entering into of this Subscription Agreement and the
      transactions contemplated hereby do not result in the violation of any of
      the terms and provisions of any law applicable to, or the constating
      documents of, the Subscriber or of any agreement, written or oral, to
      which the Subscriber may be a party or by which the Subscriber is or may
      be bound;

	 	 	 
	 	(c) 	
      the Subscriber has duly executed and delivered this
      Subscription Agreement and it constitutes a valid and binding agreement of
      the Subscriber enforceable against the Subscriber;

	 	 	 
	 	(d) 	
      the Subscriber is not a U.S. Person;

	 	 	 
	 	(e) 	
      the Subscriber is not acquiring the Securities for the
      account or benefit of, directly or indirectly, any U.S. Person;

	 	 	 
	 	(f) 	
      the Subscriber is resident in the jurisdiction set out
      under the heading “Name and Address of Subscriber” on the signature page
      of this Subscription Agreement;

	 	 	 
	 	(g) 	
      the sale of the Securities to the Subscriber as
      contemplated in this Subscription Agreement complies with or is exempt
      from the applicable securities legislation of the jurisdiction of
      residence of the Subscriber;

	 	 	 
	 	(h) 	
      the Subscriber is an “accredited investor”, as that term
      is defined in Section 1.1 of the Canadian National Instrument 45-106 and
      will complete, execute and submit to the Company, prior to the Closing, a
      Canadian Investor Certificate in the form attached to this Agreement as
      Exhibit A, evidencing this status;

	 	 	 
	 	(i) 	
      the Subscriber was outside the United States when the
      offer to purchase the Securities was made, has been outside the United
      States during the process of negotiating the terms of this Subscription
      Agreement and is outside of the United States when receiving and executing
      this Subscription Agreement;

	 	 	 
	 	(j) 	
      the Subscriber is aware that an investment in the Company
      is speculative and involves certain risks, including the possible loss of
      the entire investment;

	 	 	 
	 	(k) 	
      the Subscriber has made an independent examination and
      investigation of an investment in the Securities and the Company and has
      depended on the advice of its legal and financial advisors and agrees that
      the Company will not be responsible in any way whatsoever for the
      Subscriber's decision to invest in the Securities and the
  Company;

- 7 - 

	 	(l) 	
      the Subscriber (i) has adequate net worth and means of
      providing for its current financial needs and possible personal
      contingencies, (ii) has no need for liquidity in this investment, and
      (iii) is able to bear the economic risks of an investment in the
      Securities for an indefinite period of time;

	 	 	 
	 	(m) 	
      the Subscriber understands and agrees that the Company
      and others will rely upon the truth and accuracy of the acknowledgements,
      representations and agreements contained in this Agreement and agrees that
      if any of such acknowledgements, representations and agreements are no
      longer accurate or have been breached, the Subscriber shall promptly
      notify the Company;

	 	 	 
	 	(n) 	
      the Subscriber (i) is able to fend for itself in the
      Subscription; (ii) has such knowledge and experience in business matters
      as to be capable of evaluating the merits and risks of its prospective
      investment in the Securities; and (iii) has the ability to bear the
      economic risks of its prospective investment and can afford the complete
      loss of such investment;

	 	 	 
	 	(o) 	
      the Subscriber understands and agrees that none of the
      Securities have been registered under the 1933 Act, or under any state
      securities or "blue sky" laws of any state of the United States, and,
      unless so registered, may not be offered or sold in the United States or,
      directly or indirectly, to U.S. Persons except in accordance with the
      provisions of Regulation S, pursuant to an effective registration
      statement under the 1933 Act, or pursuant to an exemption from, or in a
      transaction not subject to, the registration requirements of the 1933 Act
      and in each case only in accordance with applicable state and provincial
      securities laws;

	 	 	 
	 	(p) 	
      the Subscriber is not an underwriter of, or dealer in,
      the common shares of the Company, nor is the Subscriber participating,
      pursuant to a contractual agreement or otherwise, in the distribution of
      the Securities;

	 	 	 
	 	(q) 	
      the Subscriber is acquiring the Securities as principal
      for investment only and not with a view to distribution and, in
      particular, it has no intention to distribute either directly or
      indirectly any of the Securities in the United States or to U.S. Persons
      absent registration;

	 	 	 
	 	(r) 	
      the Subscriber acknowledges that the Subscriber has not
      acquired the Securities as a result of, and will not itself engage in, any
      “directed selling efforts” (as defined in Regulation S under the 1933 Act)
      in the United States in respect of any of the Securities which would
      include any activities undertaken for the purpose of, or that could
      reasonably be expected to have the effect of, conditioning the market in
      the United States for the resale of any of the Securities; provided,
      however, that the Subscriber may sell or otherwise dispose of any of the
      Shares or the Warrant Shares pursuant to registration of any of the Shares
      or the Warrant Shares pursuant to the 1933 Act and any applicable state
      and provincial securities laws or under an exemption from such
      registration requirements and as otherwise provided herein;

	 	 	 
	 	(s) 	
      the Subscriber understands and agrees that offers and
      sales of any of the Shares or the Warrant Shares prior to the expiration
      of a period of forty days after the date of original issuance of the
      Shares or the Warrant Shares (the forty day period being hereinafter
      referred to as the "Distribution Compliance Period") shall only be
      made in compliance with the safe harbor provisions set forth in Regulation
      S, pursuant to the registration provisions of the 1933 Act or an exemption
      therefrom, and that all offers and sales after the Distribution Compliance
      Period shall be made only in compliance with the registration provisions
      of the 1933 Act or an exemption therefrom and in each case only in
      accordance with applicable state and provincial securities laws;

	 	 	 
	 	(t) 	
      the Subscriber understands and agrees not to engage in
      any hedging transactions involving any of the Securities unless such
      transactions are in compliance with the provisions of the 1933 Act and in
      each case only in accordance with any applicable securities
laws;

	 	 	 
	 	(u) 	
      the Subscriber understands and agrees that the Company
      will refuse to register any transfer of the Shares or the Warrant Shares
      not made in accordance with the provisions of Regulation
  S,

- 8 - 

	 		
      pursuant to an effective registration statement under the
      1933 Act or pursuant to an available exemption from the registration
      requirements of the 1933 Act;

	 	 	 	 
	 	(v) 	
      the Subscriber is not aware of any advertisement of any
      of the Securities and is not acquiring the Securities as a result of any
      form of general solicitation or general advertising including
      advertisements, articles, notices or other communications published in any
      newspaper, magazine or similar media or broadcast over radio or
      television, or any seminar or meeting whose attendees have been invited by
      general solicitation or general advertising; and

	 	 	 	 
	 	(w) 	
      no person has made to the Subscriber any written or oral
      representations:

	 	 	 	 
	 		(i) 	
      that any person will resell or repurchase any of the
      Securities;

	 	 	 	 
	 		(ii) 	
      that any person will refund the purchase price of any of
      the Securities;

	 	 	 	 
	 		(iii) 	
      as to the future price or value of any of the Securities;
      or

	 	 	 	 
	 		(iv) 	
      that any of the Securities will be listed and posted for
      trading on any stock exchange or automated dealer quotation system or that
      application has been made to list and post any of the Securities of the
      Company on any stock exchange or automated dealer quotation system, except
      that currently certain market makers make market in the common shares of
      the Company on the OTCBB.

6.2                            
In this Agreement, the term "U.S. Person" shall have the meaning ascribed
thereto in Regulation S. 

7.                              
Representations and Warranties of the Company 

7.1                            
The Company acknowledges and agrees that the Subscriber is entitled to rely upon
the representations and warranties of the Company contained in this Agreement
and further acknowledges that the Subscriber will be relying upon such
representations and warranties in purchasing the Securities. 

	 	(a) 	
      The Company is duly incorporated, validly existing and in
      good standing with respect to the filing of annual reports under the laws
      of the Province of British Columbia.

	 	 	 
	 	(b) 	
      The Company has the requisite power and authority to own
      and use its properties and assets and to carry on its business as
      currently conducted.

	 	 	 
	 	(c) 	
      The Company is not in violation or default of any of the
      provisions of its notice of articles or articles. The Company is in good
      standing and is duly qualified to conduct its business in each
      jurisdiction in which the nature of the business conducted or property
      owned by it makes such qualification necessary, except where the failure
      to be so qualified or in good standing, as the case may be, could not
      reasonably be expected to result in (i) a material adverse effect on the
      legality, validity or enforceability of this Subscription Agreement, (ii)
      a material adverse effect on the results of operations, assets, business
      or financial condition of the Company, taken as a whole, or (iii) a
      material adverse effect on the Company’s ability to perform in any
      material respect on a timely basis its obligations under this Subscription
      Agreement (any of (i), (ii) or (iii) being hereafter referred to as a
      “Material Adverse Effect”), and no proceeding has been instituted
      in any such jurisdiction revoking, limiting or curtailing or seeking to
      revoke, limit or curtail such power and authority or
  qualification.

	 	 	 
	 	(d) 	
      The Company has the requisite corporate power and
      authority to enter into and to consummate the transactions contemplated by
      this Subscription Agreement and to carry out its obligations hereunder.
      The execution and delivery of this Subscription Agreement by the Company
      and the consummation by it of the transactions contemplated hereby have
      been duly authorized by all

- 9 - 

	 		
      necessary action on the part of the Company and no
      further corporate authorization is required by the Company in connection
      therewith.

	 	 	 
	 	(e) 	
      Upon delivery, this Subscription Agreement will have been
      duly executed by the Company and will constitute the valid and binding
      obligation of the Company enforceable against the Company in accordance
      with its terms except (i) as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally and (ii) as limited by laws
      relating to the availability of specific performance, injunctive relief or
      other equitable remedies.

	 	 	 
	 	(f) 	
      The execution and delivery of this Subscription Agreement
      and the performance by the Company of the obligations imposed on it in
      this Subscription Agreement, including the issuance and sale of the
      Securities, do not and will not (i) conflict with or violate any provision
      of the Company’s notice of articles or articles or other organizational or
      charter documents, or (ii) conflict with, or constitute a default (or an
      event that with notice or lapse of time or both would become a default)
      under, or give to others any rights of termination, amendment,
      acceleration or cancellation (with or without notice, lapse of time or
      both) of, any material agreement, credit facility, debt or other
      instrument (evidencing a Company debt or otherwise) or other agreement to
      which the Company is a party or by which any material property or material
      asset of the Company, or (iii) conflict with or result in a violation of
      any law, rule, regulation, order, judgment, injunction, decree or other
      restriction of any court or governmental authority to which the Company is
      subject, or by which any material property or material asset of the
      Company is bound, except, in each case, as could not reasonably be
      expected to result in a Material Adverse Effect.

	 	 	 
	 	(g) 	
      The Company is not required to obtain any consent,
      waiver, authorization or order of, give any notice to, or make any filing
      or registration with, any court or other federal, state, local or other
      governmental authority or other person in connection with the execution,
      delivery and performance by the Company of this Subscription Agreement,
      other than (i) filing with the SEC a Form D within 15 days after the date
      of this Agreement, (ii) filing with the BCSC and the OSC any report of
      exempt distribution on Form 45-106F1 as may required with respect to the
      Subscription, (iii) filing the Registration Statement (as hereinafter
      defined) and any documents related thereto on or before the Filing Date
      (as hereinafter defined), and (ii) promptly responding to any comments
      that the SEC might have with respect to the Registration
  Statement.

	 	 	 
	 	(h) 	
      The Shares and Warrants are duly authorized and, when
      issued and paid for in accordance with this Subscription Agreement, will
      be validly issued as fully paid and nonassessable, free and clear of all
      liens and encumbrances other than restrictions provided for in this
      Subscription Agreement and applicable law. The Warrant Shares, when issued
      in accordance with the terms of the Warrants, will be validly issued as
      fully paid and nonassessable, free and clear of all liens and other
      encumbrances other than restrictions provided for in this Subscription
      Agreement and applicable laws. The Company has reserved from its duly
      authorized capital stock the maximum number of shares of Common Stock
      issuable pursuant to this Agreement and the Warrants.

	 	 	 
	 	(i) 	
      The Company is authorized to issue an unlimited number of
      shares of common stock, each without any par value, 2,000,000 shares of
      Class A preferred stock and 2,000,000 shares of Class B preferred stock,
      both without par value. As at the date of this Subscription Agreement, and
      without adjustment for issuance of any of the Shares or Warrants, there
      are 5,803,827 common shares of the Company issued and outstanding and
      2,000,000 shares of the Class B preferred stock issued and outstanding. No
      Class A common stock is currently issued or
outstanding.

8.                              
Representations and Warranties will be Relied Upon by the Company

8.1                            
The Subscriber acknowledges that the representations and warranties contained
herein are made by it with the intention that such representations and
warranties may be relied upon by the Company and its legal counsel in
determining the Subscriber's eligibility to purchase the Securities under
applicable securities legislation, or (if applicable) the eligibility of others
on whose behalf it is contracting hereunder to purchase the Securities under

- 10 - 

applicable securities legislation. The Subscriber further
agrees that by accepting delivery of the certificates representing the
Securities on the Closing Date, it will be representing and warranting that the
representations and warranties contained herein are true and correct as at the
Closing Date with the same force and effect as if they had been made by the
Subscriber on the Closing Date and that they will survive the purchase by the
Subscriber of Securities and will continue in full force and effect
notwithstanding any subsequent disposition by the Subscriber of such Securities.

9.                              
U.S. and Local Resale Restrictions 

9.1                            
The Subscriber acknowledges that any resale of the Securities will be subject to
resale restrictions contained in the securities legislation applicable to the
Subscriber or proposed transferee. The Subscriber acknowledges that none of the
Securities have been registered under the 1933 Act or the securities laws of any
state of the United States, although the Company has agreed to file a
registration statement with the SEC pursuant to Section 12, below. None of the
Securities may be offered or sold in the United States unless registered in
accordance with United States federal securities laws and all applicable state
and provincial securities laws or exemptions from such registration requirements
are available. 

9.2                            
The Subscriber acknowledges that restrictions on the transfer, sale or other
subsequent disposition of the Securities by the Subscriber may be imposed by
securities laws in addition to any restrictions referred to in Section 9.1
above, and, in particular, the Subscriber acknowledges and agrees that none of
the Securities may be offered or sold to a U.S. Person or for the account or
benefit of a U.S. Person (other than a distributor) prior to the end of the
Distribution Compliance Period. 

10.                            
Canadian Resale Restriction 

10.1                           The
Subscriber acknowledges that the Shares and the Warrant Shares are subject to
resale restrictions in British Columbia and Ontario and may not be traded in
British Columbia or Ontario except as permitted by the B.C. Act, the Ontario Act
and the rules made thereunder in British Columbia and Ontario, respectively, and
the National Instruments and other policy statements of the Canadian Securities
Administrators (collectively, the “Canadian Securities Laws”). 

10.2                           The
Subscriber acknowledges that pursuant to National Instrument 45-102, as adopted
by the BCSC and the OSC, a subsequent trade in the Shares will be a distribution
subject to the prospectus and registration requirements of the Canadian
Securities Laws unless certain conditions are met, including the following: 

	 	(a) 	
      at least four months (the "Canadian Hold Period")
      shall have elapsed from the date on which the Shares and the Warrants were
      issued to the Subscriber;

	 	 	 
	 	(b) 	
      during the currency of the Canadian Hold Period, any
      certificate representing the any of the Securities is imprinted with a
      legend (the "Canadian Legend") stating:

"UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THE SECURITIES SHALL NOT TRADE THE SECURITIES IN
CANADA BEFORE APRIL 28, 2006" 

(iii)     
the trade is not a control distribution (as defined in National Instrument
45-102); 

(iv)      no unusual effort is made
to prepare the market or to create a demand for the Shares or the Warrant Shares
that are the subject of the trade; 

(v)       no extraordinary
commission or consideration is paid to a person or company in respect of the
trade; and 

- 11 - 

(iv)      if
the selling security holder is an insider or officer of the Company, the selling
security holder has no reasonable grounds to believe that the Company is in
default of securities legislation. 

10.3                           The
Subscriber acknowledges that any certificate representing any of the Shares and
the Warrants will have a Canadian Legend imprinted thereon. 

11.                            
Acknowledgement and Waiver 

11.1                           The
Subscriber has acknowledged that the decision to acquire the Securities was
solely made on the basis of publicly available information. The Subscriber
hereby waives, to the fullest extent permitted by law, any rights of withdrawal,
rescission or compensation for damages to which the Subscriber might be entitled
in connection with the distribution of any of the Securities. 

12.                            
Legending and Registration of Subject Securities 

12.1                          
The Subscriber hereby acknowledges that a legend may be placed on the
certificates representing any of the Securities to the effect that the
Securities represented by such certificates are subject to a hold period and may
not be traded until the expiry of such hold period except as permitted by
applicable securities legislation. 

12.2                           The
Subscriber hereby acknowledges and agrees to the Company making a notation on
its records or giving instructions to the registrar and transfer agent of the
Company in order to implement the restrictions on transfer set forth and
described in this Subscription Agreement. 

13.                            
Resale Registration. 

                                 
On or prior to the date (the “Filing Date”) that is 60 days after the
Closing Date, the Company shall prepare and file with the SEC a "resale"
Registration Statement providing for the resale of the Shares and the Warrant
Shares (collectively, the “Registrable Securities”) for an offering to be
made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form F-3 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form F-3, in which case such registration
shall be on another appropriate form in accordance with the Securities Act and
the rules promulgated thereunder). The Company shall use its reasonable best
efforts to cause the Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event prior to the date (the “Effectiveness Date”) that is 120 days after the
earlier of (i) the date of filing of the Registration Statement, and (ii) the
Filing Date, and to keep such Registration Statement continuously effective
under the Securities Act until such date as is the earlier of (x) the date when
all Registrable Securities covered by such Registration Statement have been sold
or (y) the date on which the Registrable Securities may be sold without any
restriction pursuant to Rule 144(k) as determined by the counsel to the Company
pursuant to a written opinion letter, addressed to the Company's transfer agent
to such effect (the "Effectiveness Period"). 

14.                            
Registration Procedures. 

14.1                           In
connection with the Company's registration obligations hereunder, the Company
shall: 

	 	(a) 	
      (i) Prepare and file with the SEC such amendments,
      including post-effective amendments, to the Registration Statement as may
      be necessary to keep the Registration Statement continuously effective as
      to the applicable Registrable Securities for the Effectiveness Period and
      prepare and file with the Commission such additional Registration
      Statements as necessary in order to register for resale under the 1933 Act
      all of the Registrable Securities; (ii) cause the related prospectus to be
      amended or supplemented by any required prospectus supplement, and as so
      supplemented or amended to be filed pursuant to Rule 424 (or any similar
      provisions then in force) promulgated under the 1933 Act; (iii) respond as
      promptly as possible to any comments received from the SEC with respect to
      the Registration Statement or any amendment thereto; and (iv) comply in
      all material respects with the provisions of the 1933 Act and the
      Securities Exchange Act of 1934 (the “Exchange Act”) with respect
      to the disposition of all Registrable Securities covered by
  the

- 12 - 

	 		
      Registration Statement during the applicable period in
      accordance with the intended methods of disposition by the Subscriber
      thereof set forth in the Registration Statement as so amended or in such
      prospectus as so supplemented.

	 	 	 
	 	(b) 	
      Notify the Subscriber as promptly as possible (i)(A) when
      a prospectus or any prospectus supplement or post-effective amendment to
      the Registration Statement is filed; (B) when the SEC notifies the Company
      whether there will be a "review" of such Registration Statement and
      whenever the SEC comments in writing on such Registration Statement and
      (C) with respect to the Registration Statement or any post-effective
      amendment, when the same has become effective; (ii) of any request by the
      SEC or any other Federal or state governmental authority for amendments or
      supplements to the Registration Statement or prospectus or for additional
      information; (iii) of the issuance by the SEC of any stop order suspending
      the effectiveness of the Registration Statement covering any or all of the
      Registrable Securities or the initiation of any proceedings for that
      purpose; (iv) if at any time any of the representations and warranties of
      the Company contained in any agreement contemplated hereby ceases to be
      true and correct in all material respects; (v) of the receipt by the
      Company of any notification with respect to the suspension of the
      qualification or exemption from qualification of any of the Registrable
      Securities for sale in any jurisdiction, or the initiation or threatening
      of any proceeding for such purpose; and (vi) of the occurrence of any
      event that makes any statement made in the Registration Statement or
      prospectus or any document incorporated or deemed to be incorporated
      therein by reference untrue in any material respect or that requires any
      revisions to the Registration Statement, prospectus or other documents so
      that, in the case of the Registration Statement or the prospectus, as the
      case may be, it will not contain any untrue statement of a material fact
      or omit to state any material fact required to be stated therein or
      necessary to make the statements therein, in the light of the
      circumstances under which they were made, not misleading.

	 	 	 
	 	(c) 	
      Use its reasonable best efforts to avoid the issuance of,
      or, if issued, obtain the withdrawal of, (i) any order suspending the
      effectiveness of the Registration Statement or (ii) any suspension of the
      qualification (or exemption from qualification) of any of the Registrable
      Securities for sale in any jurisdiction, at the earliest practicable
      moment.

	 	 	 
	 	(d) 	
      If requested by the Subscriber, (i) promptly incorporate
      in a prospectus supplement or post- effective amendment to the
      Registration Statement such information as the Company reasonably agrees
      should be included therein and (ii) make all required filings of such
      prospectus supplement or such post-effective amendment as soon as
      practicable after the Company has received notification of the matters to
      be incorporated in such prospectus supplement or post-effective
      amendment.

	 	 	 
	 	(e) 	
      Furnish to the Subscriber, without charge, at least one
      conformed copy of each Registration Statement and each amendment thereto,
      including financial statements and schedules, all documents incorporated
      or deemed to be incorporated therein by reference, and all exhibits to the
      extent requested by the Subscriber (except for those previously furnished
      or incorporated by reference) promptly after the filing of such documents
      with the SEC.

	 	 	 
	 	(f) 	
      Promptly deliver to the Subscriber, without charge, as
      many copies of the prospectus or prospectuses (including each form of
      prospectus) and each amendment or supplement thereto as the Subscriber may
      reasonably request; and the Company hereby consents to the use of such
      prospectus and each amendment or supplement thereto by the Subscriber in
      connection with the offering and sale of the Registrable Securities
      covered by such prospectus and any amendment or supplement
  thereto.

	 	 	 
	 	(g) 	
      Prior to any public offering of the Registrable
      Securities, use its reasonable best efforts to register or qualify or
      cooperate with the Subscriber in connection with the registration or
      qualification (or exemption from such registration or qualification) of
      such Registrable Securities for offer and sale under the securities or
      Blue Sky laws of such jurisdictions within the United States as the
      Subscriber requests in writing, to keep each such registration or
      qualification (or exemption

- 13 - 

	 		
      therefrom) effective during the Effectiveness Period and
      to use commercially reasonable efforts to enable the disposition in such
      jurisdictions of the Registrable Securities covered by the Registration
      Statement; provided, however, that the Company shall not be
      required to qualify generally to do business in any jurisdiction where it
      is not then so qualified or to take any action that would subject it to
      general service of process in any such jurisdiction where it is not then
      so subject or subject the Company to any material tax in any such
      jurisdiction where it is not then so subject.

	 	 	 
	 	(h) 	
      Cooperate with the Subscriber to facilitate the timely
      preparation and delivery of certificates representing Registrable
      Securities to be sold pursuant to a Registration Statement, which
      certificates shall be free of all restrictive legends (provided that the
      issuance of such unlegended certificates is in compliance with applicable
      securities laws), and to enable such Registrable Securities to be in such
      denominations and registered in such names as the Subscriber may request
      in writing at least two (2) business days prior to any sale of Registrable
      Securities.

	 	 	 
	 	(i) 	
      Upon the occurrence of any event contemplated by Section
      14.1(b)(vi), as promptly as possible, prepare a supplement or amendment,
      including a post-effective amendment, to the Registration Statement or a
      supplement to the related prospectus or any document incorporated or
      deemed to be incorporated therein by reference, and file any other
      required document so that, as thereafter delivered, neither the
      Registration Statement nor such prospectus will contain an untrue
      statement of a material fact or omit to state a material fact required to
      be stated therein or necessary to make the statements therein, in the
      light of the circumstances under which they were made, not
    misleading.

	 	 	 
	 	(j) 	
      Use its reasonable best efforts to cause all Registrable
      Securities relating to the Registration Statement to continue to be
      eligible for quotation or listing on the OTC Bulletin Board or any other
      securities exchange, quotation system or market, if any, on which similar
      securities issued by the Company are then listed or traded.

	 	 	 
	 	(k) 	
      Comply in all material respects with all applicable rules
      and regulations of the SEC;

	 	 	 
	 	(l) 	
      The Company may require the Subscriber to furnish to the
      Company information regarding itself and the distribution of such
      Registrable Securities as is required by law to be disclosed in the
      Registration Statement, and the Company may exclude from such registration
      the Registrable Securities of the Subscriber if it fails to furnish such
      information within a reasonable time after receiving such
  request.

	 	 	 
	 	(m) 	
      If the Registration Statement refers to the Subscriber by
      name or otherwise as the holder of any securities of the Company, then the
      Subscriber shall have the right to require (if such reference to the
      Subscriber by name or otherwise is not required by the 1933 Act or any
      similar federal statute then in force) the deletion of the reference to it
      in any amendment or supplement to the Registration Statement filed or
      prepared subsequent to the time that such reference ceases to be
      required.

	 	 	 
	 	(n) 	
      The Subscriber covenants and agrees that (i) it will not
      sell any Registrable Securities under the Registration Statement until it
      has received copies of the prospectus as then amended or supplemented as
      contemplated in Section 14.1(f) and notice from the Company that such
      Registration Statement and any post-effective amendments thereto have
      become effective as contemplated by Section 14.1(b) and (ii) it and its
      officers, directors or Affiliates, if any, will comply with the prospectus
      delivery requirements of the 1933 Act as applicable to them in connection
      with sales of Registrable Securities pursuant to the Registration
      Statement.

	 	 	 
	 	(o) 	
      The Subscriber agrees by its acquisition of such
      Registrable Securities that, upon receipt of a notice from the Company of
      the occurrence of any event of the kind described in Section 14.1(b)(ii),
      14.1(b)(iii), 14.1(b)(iv), 14.1(b)(v), 14.1(b)(vi) or 14.1(p), the
      Subscriber will forthwith discontinue disposition of such Registrable
      Securities under the Registration Statement

- 14 - 

	 		
      until the Subscriber's receipt of the copies of the
      supplemented prospectus and/or amended Registration Statement contemplated
      by Section 14.1(i), or until it is advised in writing by the Company that
      the use of the applicable prospectus may be resumed, and, in either case,
      has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such prospectus
      or Registration Statement.

	 	 	 
	 	(p) 	
      If (i) there is material non-public information regarding
      the Company which the Company's Board of Directors (the "Board")
      reasonably determines not to be in the Company's best interest to disclose
      and which the Company is not otherwise required to disclose, or (ii) there
      is a significant business opportunity (including, but not limited to, the
      acquisition or disposition of assets (other than in the ordinary course of
      business) or any merger, consolidation, tender offer or other similar
      transaction) available to the Company which the Board reasonably
      determines not to be in the Company's best interest to disclose, then the
      Company may (x) postpone or suspend filing of a registration statement for
      a period not to exceed 30 consecutive days or (y) postpone or suspend
      effectiveness of a registration statement for a period not to exceed 20
      consecutive days; provided that the Company may not postpone or suspend
      effectiveness of a registration statement under this Section 14.1(p) for
      more than 45 days in the aggregate during any 360 day period; provided,
      however, that no such postponement or suspension shall be permitted for
      consecutive 20 day periods arising out of the same set of facts,
      circumstances or transactions.

14.2                           Registration
Expenses. 

                                 
All fees and expenses incident to the performance of or compliance with this
Agreement by the Company, except as and to the extent specified in this Section
14.2, shall be borne by the Company whether or not the Registration Statement is
filed or becomes effective and whether or not any Registrable Securities are
sold pursuant to the Registration Statement. The fees and expenses referred to
in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with any securities exchange or
market on which Registrable Securities are required hereunder to be listed, (B)
with respect to filing fees required to be paid to the National Association of
Securities Dealers, Inc. and the NASD Regulation, Inc. and (C) in compliance
with state securities or Blue Sky laws, (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by the
Subscriber), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) 1933 Act liability insurance, if
the Company so desires such insurance, and (vi) fees and expenses of all other
persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement, including, without limitation, the
Company's independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. 

15.                           
 Indemnification. 

15.1                          
Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless the Subscriber, the
officers, directors, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees
of the Subscriber, each person who controls the Subscriber (within the meaning
of Section 15 of the 1933 Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
costs of preparation and attorneys' fees) and expenses (collectively,
"Losses"), as incurred, arising out of or relating to any untrue or
alleged untrue statement of a material fact contained in the Registration
Statement, any prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the 

- 15 - 

statements therein (in the case of any prospectus or form of
prospectus or supplement thereto, in the light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding the Subscriber furnished in writing to the Company by or on behalf of
the Subscriber expressly for use therein, and (ii) that the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to any untrue
statement, allegedly untrue statement, omission or alleged omission made in any
preliminary prospectus but eliminated or remedied in the final prospectus (filed
pursuant to Rule 424 of the 1933 Act), such indemnity agreement shall not inure
to the benefit of the Subscriber or any underwriter, broker or other person
acting on behalf of holders of the Registrable Securities, from whom the person
asserting any loss, claim, damage, liability or expense purchased the
Registrable Securities which are the subject thereof, if a copy of such final
prospectus had been made available to such person and the Subscriber or such
underwriter, broker or other person acting on behalf of the Subscriber and such
final prospectus was not delivered to such person with or prior to the written
confirmation of the sale of such Registrable Securities to such person. The
Company shall notify the Subscriber promptly of the claim, threat or assertion
of any proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement. 

15.2                          
Indemnification by Subscriber. The Subscriber shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each person who controls the Company (within the meaning
of Section 15 of the 1933 Act and Section 20 of the Exchange Act), and the
directors, officers, agents and employees of such controlling persons, to the
fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review), as incurred, arising solely out of or based solely upon
any untrue statement of a material fact contained in the Registration Statement,
any prospectus, or any form of prospectus, or arising solely out of or based
solely upon any omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by the Subscriber to the Company specifically for inclusion
in the Registration Statement or such prospectus. 

15.3                          
Contribution. If a claim for indemnification under Section 15.1 or 15.2
is unavailable to an indemnified party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (by reason of public policy or otherwise), then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other from
the offering of the Registrable Securities. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault, as applicable, of the indemnifying party and
indemnified party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such indemnifying party or indemnified party, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The amount
paid or payable by a party as a result of any Losses shall be deemed to include
any reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with (i) any proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party in accordance with its terms or (ii)
enforcing any rights under this Section 15. 

                               
  The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 15.3 were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. 

                              
   The indemnity and contribution agreements contained in this
Section are in addition to any liability that the indemnifying parties may have
to the indemnified parties. Notwithstanding anything to the contrary contained

- 16 - 

herein, the Subscriber shall be liable under this Section 15.3
for only that amount as does not exceed the net proceeds to the Subscriber as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. 

16.                            
Rule 144. 

                               
  As long as the Subscriber owns any Registrable Securities, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act and to promptly furnish the Subscriber with true and complete copies of all
such filings. As long as the Subscriber owns any Registrable Securities, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Subscriber and make
publicly available in accordance with Rule 144(c) promulgated under the 1933 Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as the Subscriber may reasonably
request in writing, all to the extent required from time to time to enable the
Subscriber to sell the Registrable Securities without registration under the
1933 Act within the limitation of the exemptions provided by Rule 144
promulgated under the 1933 Act, including providing any legal opinions relating
to such sale pursuant to Rule 144. 

17.                            
Costs 

17.1                           The
Subscriber acknowledges and agrees that all costs and expenses incurred by the
Subscriber (including any fees and disbursements of any special counsel retained
by the Subscriber) relating to the purchase of the Unit shall be borne by the
Subscriber. 

18.                            
Governing Law 

18.1                           This
Subscription Agreement is governed by the laws of the Province of British
Columbia. 

19.                            
Currency 

19.1                           Any
reference to currency is to the currency of the United States of America unless
otherwise indicated. 

20.                            
Survival 

20.1                           This
Subscription Agreement, including without limitation the representations,
warranties and covenants contained herein, shall survive and continue in full
force and effect and be binding upon the parties hereto notwithstanding the
completion of the purchase of the Unit by the Subscriber pursuant hereto. 

21.                            
Assignment 

21.1                           This
Subscription Agreement is not transferable or assignable. 

22.                            
Severability 

22.1                           The
invalidity or unenforceability of any particular provision of this Subscription
Agreement shall not affect or limit the validity or enforceability of the
remaining provisions of this Subscription Agreement. 

23.                            
Entire Agreement 

23.1                          
Except as expressly provided in this Subscription Agreement and in the
agreements, instruments and other documents contemplated or provided for herein,
this Subscription Agreement contains the entire agreement between the parties
with respect to the sale of the Unit and there are no other terms, conditions,

- 17 - 

representations or warranties, whether expressed, implied, oral
or written, by statute or common law, by the Company or by anyone else. 

24.                            
Notices 

24.1                           All
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Subscriber shall be directed to the address on
the signature page of this Subscription Agreement and notices to the Company
shall be directed to it at 2267 West 10th Avenue, Vancouver, British Columbia
Canada V6K 2J1. 

- 18 - 

25.                            
Counterparts and Electronic Means 

25.1                          
This Subscription Agreement may be executed in any number of counterparts, each
of which, when so executed and delivered, shall constitute an original and all
of which together shall constitute one instrument. Delivery of an executed copy
of this Agreement by electronic facsimile transmission or other means of
electronic communication capable of producing a printed copy will be deemed to
be execution and delivery of this Agreement as of the date hereinafter set
forth. 

IN WITNESS WHEREOF the Subscriber and the Company have
duly executed this Subscription Agreement as of the date of acceptance by the
Company. 

	 	BG CAPITAL GROUP LTD., 
	 	 	 
	 	 	  
	 	By: 	  
	 	 	Authorized Signatory 
	 	 	 
	 	 	 
	 	 	Print Name and Office 
	 	 	 
	 	 	Address: 
	 	 	
	 	 	Slot #2000 A.P. 59223 
	 	 	Nassau, Bahamas 
	 	 	 
	 	 	  
	 	CLEARLY CANADIAN BEVERAGE CORPORATION
    
	 	 	 
	 	 	 
	 	Per: 	  
	 	 	Brent Lokash, President 

- 19 - 

EXHIBIT A 

CANADIAN INVESTOR CERTIFICATE 

TO:      CLEARLY CANADIAN BEVERAGE
CORPORATION 

Certificate

In connection with the purchase by the undersigned (the
“Purchaser”) of securities (the “Securities”) of Clearly Canadian
Corporation (the “Company”), the undersigned hereby represents, warrants,
covenants to and with you and certifies to you that: 

	1. 	
      the Purchaser is purchasing the Securities as principal
      for its own account;

	 	 	 	 	 
	2. 	
      the Purchaser is an “accredited investor” within
      the meaning of National Instrument 45-106 of the Canadian Securities
      Administrators by virtue of satisfying the indicated criterion as set out
      in Schedule 1 to this Certificate (YOU MUST ALSO INITIAL SCHEDULE 1 TO
      THIS CERTIFICATE);

	 	 	 	 	 
	3. 	
      if the Purchaser is resident in the Province of Ontario
      or is otherwise subject to the laws of the Province of Ontario, the
      Purchaser:

	 	 	 	 	 
		(a) 	
      is hereby notified by the Company

	 	 	 	 	 
			(i) 	
      of the delivery to the Ontario Securities Commission of
      the following information pertaining to the Purchaser (the
      “Information”):

	 	 	 	 	 
				(A) 	
      the full name, residential address and telephone number
      of the Purchaser;

	 	 	 	 	 
				(B) 	
      the number and type of securities purchased by the
      Purchaser;

	 	 	 	 	 
				(C) 	
      the total purchase price paid by the Purchaser,

	 	 	 	 	 
				(D) 	
      the Company’s reliance on the “Accredited Investor”
      exemption under National Instrument 45-106, and

	 	 	 	 	 
				(E) 	
      the date of distribution of the Securities;

	 	 	 	 	 
			(ii) 	
      that the Information is being collected indirectly by the
      Ontario Securities Commission under the authority granted to it in
      securities legislation,

	 	 	 	 	 
			(iii) 	
      that the Information is being collected for the purposes
      of the administration and enforcement of the securities legislation of
      Ontario, and

	 	 	 	 	 
			(iv) 	
      of the title, business address and business telephone
      number of the public official in Ontario, who can answer questions about
      the Ontario Securities Commission’s indirect collection of the
      Information, which are set out below:

Ontario Securities Commission

Suite 1903, Box 5520 Queen Street West 
Toronto, Ontario M5H 3S8

Telephone: (416) 593-3682 
Facsimile: (416) 593-8252 
Public official
contact regarding indirect collection of information: 
Administrative
Assistant to the Director of Corporate Finance 
Telephone (416) 593-8086,
and

- 20 - 

	 	(b) 	
      has authorized the indirect collection of the Information
      by the Ontario Securities Commission.

	4. 	
      if the Purchaser is resident in the Province of British
      Columbia or is otherwise subject to the laws of the Province of British
      Columbia, the Purchaser:

	 	 	 	 
		(a) 	
      is hereby notified by the Company

	 	 	 	 
			(i) 	
      of the delivery to the British Columbia Securities
      Commission of the Information (as defined in section 3(a)(i)
    hereof);

	 	 	 	 
			(ii) 	
      that the Information is being collected indirectly by the
      British Columbia Securities Commission under the authority granted to it
      in securities legislation,

	 	 	 	 
			(iii) 	
      that the Information is being collected for the purposes
      of the administration and enforcement of the securities legislation of
      British Columbia, and

	 	 	 	 
			(iv) 	
      that the Purchaser may contact the British Columbia
      Securities Commission for further information about the collection and use
      of the Information at the following address and telephone and facsimile
      numbers:

British Columbia Securities
Commission 
P.O. Box 10142, Pacific Centre 
701 West Georgia Street

Vancouver, British Columbia V7Y 1L2 
Telephone: (604) 899-6500
Toll
free in British Columbia and Alberta 1-800-373-6393 

  Facsimile: (604) 899-6506

	5. 	
      the above representations, warranties and covenants will
      be true and correct both as of the execution of this certificate and as of
      the closing time of the purchase and sale of the Securities and will
      survive the completion of the issue of the Securities; and

	 	 
	6. 	
      the foregoing representations, warranties and covenants
      are made by the undersigned with the intent that they be relied upon in
      determining the suitability of the undersigned as a Purchaser of the
      Securities and the undersigned undertakes to immediately notify the
      Company of any change in any statement or other information relating to
      the Purchaser set forth herein which takes place prior to the closing
      time.

DATED: _________________________, 2005. 

	 	 	 
	 	 	Print Name 
	 	 	  
	 	By: 	
	 	 	Signature 
	 	 	  
	 	 	 
    
	 	 	Title 
	 	 	  
	 	 	 
    
	 	 	(please print name of individual whose
      signature 
	 	 	appears above, if different from name of 
	 	 	purchaser printed above)

- 21 - 

SCHEDULE 1 to EXHIBIT A 
ACCREDITED INVESTOR

Accredited Investor (as defined in section 1.1 of
National Instrument 45-106) means:

[Note: Please initial the category of accredited investor
that applies to you.] 

	[________] 	(a) 	
      a Canadian financial institution, or a Schedule III bank,
      

	  	  	
       

	[________] 	(b) 	
      the Business Development Bank of Canada incorporated
      under the Business Development Bank of Canada Act (Canada),
      

	  	  	
       

	[________] 	(c) 	
      a subsidiary of any person referred to in paragraphs (a)
      or (b), if the person owns all of the voting securities of the subsidiary,
      except the voting securities required by law to be owned by directors of
      that subsidiary, 

	  	  	
       

	[________] 	(d) 	
      a person registered under the securities legislation of a
      jurisdiction of Canada as an adviser or dealer, other than a person
      registered solely as a limited market dealer under one or both of the
      Securities Act (Ontario) or the Securities Act (Newfoundland
      and Labrador), 

	  	  	
       

	[________] 	(e) 	
      an individual registered or formerly registered under the
      securities legislation of a jurisdiction of Canada as a representative of
      a person referred to in paragraph (d), 

	  	  	
       

	[________] 	(f) 	
      the Government of Canada or a jurisdiction of Canada, or
      any crown corporation, agency or wholly owned entity of the Government of
      Canada or a jurisdiction of Canada, 

	  	  	
       

	[________] 	(g) 	
      a municipality, public board or commission in Canada and
      a metropolitan community, school board, the Comité de gestion de la taxe
      scolaire de l’île de Montréal or an inter- municipal management board in
      Québec; 

	  	  	
       

	[________] 	(h) 	
      any national, federal, state, provincial, territorial or
      municipal government of or in any foreign jurisdiction, or any agency of
      that government, 

	  	  	
       

	[________] 	(i) 	
      a pension fund that is regulated by either the Office of
      the Superintendent of Financial Institutions (Canada) or a pension
      commission or similar regulatory authority of a jurisdiction of Canada,
      

	  	  	
       

	[________] 	(j) 	
      an individual who, either alone or with a spouse,
      beneficially owns, directly or indirectly, financial assets having an
      aggregate realizable value that before taxes, but net of any related
      liabilities, exceeds CDN$1,000,000, 

	  	  	
       

	[________] 	(k) 	
      an individual whose net income before taxes exceeded
      CDN$200,000 in each of the 2 most recent calendar years or whose net
      income before taxes combined with that of a spouse exceeded CDN$300,000 in
      each of the 2 most recent calendar years and who, in either case,
      reasonably expects to exceed that net income level in the current calendar
      year, 

	  	  	
       

	[________] 	(l) 	
      an individual who, either alone or with a spouse, has net
      assets of at least CDN$5,000,000, 

	  	  	
       

	[________] 	(m) 	
      a person, other than an individual or investment fund,
      that has net assets of at least CDN$5,000,000 as shown on its most
      recently prepared financial statements, 

- 22 - 

	[________] 	(n) 	an investment fund that distributes or has
      distributed its securities only to 

	 	(i) 	
      a person that is or was an accredited investor at the
      time of the distribution,

	 	(ii) 	
      a person that acquires or acquired securities in the
      circumstances referred to in sections 2.10 [Minimum amount
      investment], and 2.19 [Additional investment in investment
      funds] of National Instrument 45-106, or

	 	(iii) 	
      a person described in paragraph (i) or (ii) that acquires
      or acquired securities under section 2.18 [Investment fund
      reinvestment] of National Instrument 45-
106,

	[________] 	(o) 	
      an investment fund that distributes or has distributed
      securities under a prospectus in a jurisdiction of Canada for which the
      regulator or, in Québec, the securities regulatory authority, has issued a
      receipt, 

	  	  	
      

	[________] 	(p) 	
      a trust company or trust corporation registered or
      authorized to carry on business under the Trust and Loan Companies Act
      (Canada) or under comparable legislation in a jurisdiction of Canada
      or a foreign jurisdiction, acting on behalf of a fully managed account
      managed by the trust company or trust corporation, as the case may be,
    

	  	  	
      

	[________] 	(q) 	
      a person acting on behalf of a fully managed account
      managed by that person, if that person 

	 	(i) 	
      is registered or authorized to carry on business as an
      adviser or the equivalent under the securities legislation of a
      jurisdiction of Canada or a foreign jurisdiction, and

	 	(ii) 	
      in Ontario, is purchasing a security that is not a
      security of an investment fund;

	[________] 	(r) 	
      a registered charity under the Income Tax Act
      (Canada) that, in regard to the trade, has obtained advice from an
      eligibility adviser or an adviser registered under the securities
      legislation of the jurisdiction of the registered charity to give advice
      on the securities being traded, 

	  	  	
       

	[________] 	(s) 	
      an entity organized in a foreign jurisdiction that is
      analogous to any of the entities referred to in paragraphs (a) to (d) or
      paragraph (i) in form and function, 

	  	  	
       

	[________] 	(t) 	
      a person in respect of which all of the owners of
      interests, direct, indirect or beneficial, except the voting securities
      required by law to be owned by directors, are persons that are accredited
      investors, 

	  	  	
       

	[________] 	(u) 	
      an investment fund that is advised by a person registered
      as an adviser or a person that is exempt from registration as an adviser,
      or 

	  	  	
       

	[________] 	(v) 	
      a person that is recognized or designated by the
      securities regulatory authority or, except in Ontario and Québec, the
      regulator as 

	 	(i) 	
      an accredited investor, or

	 	(ii) 	
      an exempt purchaser in Alberta or British Columbia after
      National Instrument 45-106 comes into force.

For purposes hereof (as defined in National Instrument
45-106): 

“financial assets” means 

(a) cash, 

(b) securities, or 

(c) a contract of insurance, a deposit
or an evidence of a deposit that is not a security for the purposes of
securities legislation; 

- 23 - 

“fully managed account” means an account of a client for
which a person makes the investment decisions if that person has full discretion
to trade in securities for the account without requiring the client’s express
consent to a transaction; 

“investment fund” has the same meaning as in National
Instrument 81-106 Investment Fund Continuous Disclosure; 

“related liabilities” means 

(a) liabilities incurred or assumed for
the purpose of financing the acquisition or ownership of financial assets, or

(b) liabilities that are secured by
financial assets; 

“subsidiary” means an issuer that is controlled directly
or indirectly by another issuer and includes a subsidiary of that subsidiary.

Affiliate 

For the purpose of National Instrument 45-106, an issuer is an
affiliate of another issuer if 

(a) one of them is the subsidiary of
the other, or 

(b) each of them is controlled by the
same person. 

Control 

Except in Part 2, Division 4 of National Instrument 45-106, and
for the purpose of this Instrument, a person (first person) is considered to
control another person (second person) if 

(a) the first person, directly or
indirectly, beneficially owns or exercises control or direction over securities
of the second person carrying votes which, if exercised, would entitle the first
person to elect a majority of the directors of the second person, unless that
first person holds the voting securities only to secure an obligation, 

(b) the second person is a partnership,
other than a limited partnership, and the first person holds more than 50% of
the interests of the partnership, or 

(c) the second person is a limited
partnership and the general partner of the limited partnership is the first
person. 

- 24 - 

EXHIBIT B-1 

SERIES A WARRANT CERTIFICATE 

- 25 - 

EXHIBIT B-2 

SERIES B WARRANT CERTIFICATE 

- 26 - 

EXHIBIT B-3 

SERIES C WARRANT CERTIFICATE 

- 27 - 

EXHIBIT B-4 

SERIES D WARRANT CERTIFICATE

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}]]