AGENCY AGREEMENT

Exhibit 10.1

AGENCY AGREEMENT

March 27, 2008

IntelGenx Technologies Corp.
6425 Abrams
Ville St-Laurent, Quebec
H4S 1X9

Attention:

Horst G. Zerbe, President and Chief Executive Officer

Dear Sirs:

The undersigned, Paradigm Capital Inc. (the “ Agent ”), understands that IntelGenx Technologies Corp. (the “ Company ”) proposes to issue and sell 4,001,000 units (individually a “ Unit ” and, collectively, the “ Units ”) having the terms described herein, at a price of US$0.70 per Unit (the “ Issue Price ”) for aggregate gross proceeds to the Company of US$2,800,700. The offering of Units is hereinafter referred to as the “ Offering ”. Each Unit shall be comprised of one share of common stock, par value US$0.00001 of the Company (a “ Unit Share ”) and one share purchase warrant (each whole share purchase warrant being a “ Warrant ”). Each Warrant will entitle the holder thereof to purchase one share of common stock, par value US$0.00001, of the Company (a “ Warrant Share ”) for a period of twenty-four (24) months following the Closing Date (as defined below) at a price of US$1.02. In the event that the Liquidity Conditions (as herein defined) are not met on or before the Penalty Date (as hereinafter defined), each Warrant shall entitle the holder thereof to purchase a Warrant Share on the same terms but at a price of US$0.93 (in lieu of US$1.02) per Warrant Share.  In addition, if the Common Shares, Warrant Shares, Broker Shares (as herein defined) and Broker Warrant Shares (as herein defined) are not listed and posted for trading on the TSX Venture Exchange (the “ Listing Condition ”) on or before that date that is 60 days (the “ Listing Deadline ”) following the Closing Date (as herein defined), the Company shall pay to each Purchaser (as herein defined) by way of certified cheque in funds immediately available in Toronto, Ontario that amount which is equal to 5% of the Issue Price paid by such Purchaser pursuant to the terms of the Subscription Agreement (as herein defined) within 30 days of the Listing Deadline and that amount equal to 1% of the Issue Price paid by such Purchaser pursuant to the terms of the Subscription Agreement if the Listing Condition is not satisfied each calendar month thereafter, to a maximum of 3 months, which shall be payable within 30 days of the Company’s subsequent interim 3 month financial period.

Upon and subject to the terms and conditions set forth herein, the Agent hereby agrees to act, and upon acceptance hereof the Company hereby appoints the Agent, as the Company's exclusive agent to offer for sale the Units on a “best efforts” agency basis, without underwriter liability, at the Issue Price, and agrees to arrange for purchasers for the resident in the Selling Jurisdictions (as hereinafter defined).

The Purchasers (as hereinafter defined), Agent and other holders (including subsequent transferees) of the Units (and any holders of Registrable Securities (as hereinafter defined) will be entitled to the benefits of the registration rights agreement, to be dated as of the Closing Date (the “ Registration Rights Agreement ”), among the Company and the Agent, in the Form attached hereto as Exhibit A.

2

In consideration of the services to be rendered by the Agent in connection with the Offering, the Company shall pay to the Agent the Commission (as hereinafter defined) and issue to the Agent the Compensation Option as set out in section 15 hereto.

DEFINITIONS

In this Agreement, in addition to the terms defined above, the following terms shall have the following meanings:

“ Act ” means the Securities Act (Ontario);

“ Accredited Investor ” means an investor that is an “accredited investor” within the meaning of Rule 501 of the U.S. Securities Act;

“ Affiliates ” means the affiliates of the Agent, as such term is defined in the Act;

“ Agent ” shall have the meaning ascribed to such term on the face page of the Agreement;

“ Agreement ” means the agreement resulting from the acceptance by the Company of the offer made by the Agent hereby;

“ Broker Shares ” means the Common Shares issuable upon exercise of the Broker Warrants;

“ Broker Warrant Certificate ” means the certificate representing the Broker Warrants and containing the terms thereof;

“ Broker Warrant Shares ” means the Common Shares issuable upon due exercise of the Broker Warrants;

“ Broker Warrants ” means the Warrants issuable upon due exercise of the Compensation Option;

“ Business Day ” means a day which is not a Saturday, Sunday or statutory or civic holiday in the City of Toronto, Ontario;

“ Canadian Accredited Investor ” shall be defined in accordance with the definition of “accredited investor” at s.1.1. of National Instrument 45-106 – Prospectus and Registration Exemptions ;

“ Closing ” means the closing on the Closing Date of the transaction of purchase and sale in respect of the Units as contemplated by this Agreement and the Subscription Agreements;

“ Closing Date ” means March 27, 2008 or such other date as the Agent and the Company may agree;

3

“ Closing Time ” means 10:00 a.m. (Toronto time) on the Closing Date or such other time on the Closing Date as the Company and the Agent may agree;

“ Commission ” shall have the meaning ascribed to such term in section 15 hereto;

“ Common Shares ” means the shares of common stock with a par value of US$0.00001 in the capital of the Company;

“ Company ” means IntelGenx Technologies Corp. which, for the purposes of this Agreement, shall be deemed as having commenced its existence on the Reverse Merger Date, and includes any successor corporation to or of the Company;

“ Company's Auditors ” means RMS Richter LLP, or such other firm of chartered accountants as the Company may have appointed or may from time to time appoint as auditors of the Company;

“ Compensation Option ” shall have the meaning ascribed to such term in section 15 hereto;

“ Compensation Option Certificate ” means the certificate evidencing the Compensation Option and containing the terms thereof;

“ Debt Instrument ” means any loan, bond, debenture, promissory note or other instrument evidencing indebtedness (demand or otherwise) for borrowed money or other liability;

“ Disclosure Documents ” means collectively, the following filings with the SEC and all exhibits thereto: the Corporation's annual report on Form 10-KSB for the year ended December 31, 2006, and all subsequent documents filed by the Company with the SEC pursuant to Section 13(a), 13(c), 14(a) or 15(d) of the Exchange Act prior to the Closing Date, including the quarterly reports filed on Form 10-QSB for the quarter ended September 30, 2007, the current reports filed on Form 8-K since January 1, 2007 and the proxy statement dated July 25, 2007;

“ Environmental Laws ” has the meaning ascribed in section 5(a)(xxxv);

“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended;

“ Financial Statements ” has the meaning ascribed in section 5(a)(vi);

“ including ” means including without limitation;

“ Intellectual Property ” means, collectively, all intellectual property rights which pertain to the business of the Company or the Material Subsidiaries of whatsoever nature, kind or description including:

(a)

all trade-marks, service marks, trade-mark and service mark registrations, trade mark and service mark applications, rights under registered user agreements, trade names and other trade-mark and service mark rights;

(b)

all copyrights and applications therefor, including all computer software and rights related thereto;

4

(c)

all patent rights;

(d)

all trade secrets and proprietary and confidential information;

(e)

all industrial designs and registrations thereof and applications therefor;

(f)

all renewals, modifications, developments and extensions of any of the items listed in clauses (a) through (e) above; and

(g)

all patterns, plans, designs, research date, other proprietary know-how, processes, drawings, technology, inventions, formulae, specifications, performance data, quality control information, unpatented blue prints, flow sheets, equipment and parts lists, instructions, manuals, records and procedures, and all licenses, agreements and other contracts and commitments relating to any of the foregoing;

“ Institutional Accredited Investor ” means an institution that is an “accredited investor” within the meaning of Rule 501(a)(l), (2), (3) and (7) of the U.S. Securities Act;

“ Investment Company Act ” means the United States Investment Company Act of 1940, as amended;

“ Issue Price ” shall have the meaning ascribed to such term on the face page of the Agreement;

“ Leased Premises ” means all premises which are material to the Company and which the Company or a Material Subsidiary occupies as tenant;

“ Liquidity Conditions ” means the conditions to be satisfied on or prior to the Penalty Date which shall be satisfied upon the latest to occur of the following: (i) the Common Shares, Unit Shares, the Warrant Shares and the Broker Shares being listed for trading on the Toronto Stock Exchange; or the TSX Venture Exchange; and (ii) the declaration by the SEC of the effectiveness of the Registration Statement;

“ Material Agreement ” means any material note, indenture, mortgage or other form of indebtedness and any contract, commitment, agreement (written or oral), instrument, lease or other document, including licence agreements and agreements relating to intellectual property, to which the Company is a party and which is material to the Company;

“ Material Subsidiaries ” shall have the meaning ascribed thereto in section 5(a)(iii);

“ May 8-K ” means the Form 8-K of the Company filed with the SEC on May 23, 2007;

“ misrepresentation ”, “ material fact ”, “ material change ”, “ subsidiary ”, “ affiliate ”, “ associate ”, and “ distribution ” have the respective meanings ascribed thereto in the Act or the U.S. Securities Act, as applicable;

“ Offering ” shall have the meaning ascribed to such term on the face page of the Agreement;

5

“ Penalty Date ” means, in connection with the Liquidity Conditions, that date which is four months following the Closing Date;

“ person ” means any individual (whether acting as an executor, trustee, administrator, legal representative or otherwise), corporation, firm, partnership, sole proprietorship, syndicate, joint venture, trustee, trust, unincorporated organization or association, and pronouns have a similar extended meaning;

“ Personnel ” has the meaning ascribed in section 13 hereto;

“ Purchasers ” means the persons who, as purchasers, acquire Units by duly completing, executing and delivering Subscription Agreements and any other required documentation and permitted assignees or transferees of such persons from time to time;

“ Qualifying Province ” means the province of Ontario;

“ Registration Rights Agreement ” shall have the meaning ascribed to such term on the face page of the Agreement;

“ Registration Statement ” means the registration statement of the Company to be filed with the SEC in order, to register, or register the resale of, the Registrable Securities, as applicable, as such Registration Statement is amended from time to time;

“ Registrable Securities ” means the Unit Shares, the Warrants, the Warrant Shares, the Broker Shares and the Broker Warrant Shares;

“ Regulation D ” means Regulation D under the U.S. Securities Act;

“ Regulation S ” means Regulation S under the U.S. Securities Act;

“ Reverse Merger Date ” means April 28, 2006, being the effective date of the reverse merger transaction pursuant to a share exchange agreement among Big Flash Corporation, 6544631 Canada Inc. and IntelGenx Corp.;

“ Rule 144 ” means Rule 144 under the U.S. Securities Act;

“ Rule 144A ” means Rule 144A under the U.S. Securities Act;

“ SEC ” means the United States Securities and Exchange Commission;

“ Securities Laws ” means, as applicable, the securities laws, regulations, rules, rulings and orders in the Selling Jurisdictions, the applicable policy statements issued by the securities regulators in the Selling Jurisdictions, the securities laws of the United States, any applicable States and any jurisdictions outside of Canada and the United States, the regulations and rules thereunder and the forms prescribed thereby and the rules of any applicable stock exchange;

6

“ Securities Regulators ” means the securities commissions or other securities regulatory authorities of the Selling Jurisdictions, including the SEC, or, as the context may require, any one or more of Selling Jurisdictions and the SEC;

“ Selling Jurisdictions ” means the province of Ontario and such other jurisdictions outside of Canada (including the United States) as may be agreed to by the Agent and the Company as evidenced by the Company's acceptance of a Subscription Agreements with respect thereto;

“ Subscription Agreements ” means the subscription agreements in the form agreed upon by the Agent and the Company pursuant to which Purchasers agree to subscribe for and purchase the Units herein contemplated and shall include, for greater certainty, all schedules thereto;

“ Taxes ” shall have the meaning ascribed thereto in section 5(a)(ix);

“ Transaction Documents ” means, collectively, this Agreement, the Subscription Agreements, the Registration Rights Agreement, the Warrant Certificates and the Compensation Option Certificate;

“ Transfer Agent ” means StockTrans, Inc., 44 West Lancaster Ave, Ardmore, PA 19003, Tel:610-649-7300;

“ Unit ” shall have the meaning ascribed to such term on the face page of this Agreement;

“ Unit Shares ” shall have the meaning ascribed to such term on the face page of this Agreement;

“ United States ” means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia;

“ U.S. Securities Act ” means the United States Securities Act of 1933, as amended;

“ Warrant Certificates ” mean the certificates evidencing the Warrant and containing the terms thereof;

“ Warrant Shares ” shall have the meaning ascribed to such term on the face page of the Agreement; and

“ Warrants ” shall have the meaning ascribed to such term on the face page of the Agreement;

“ $ ” as used herein means dollars of the United States.

TERMS AND CONDITIONS

1.

(a)

Sale on Exempt Basis.    The Agent will offer for sale and sell the Units in the Selling Jurisdictions on a “private placement” basis in those jurisdictions where they may lawfully be offered for sale or sold and only at the Issue Price. The Agent will offer the Units to persons who it reasonably believes, after customary inquiry, are Accredited Investors, or Canadian Accredited Investors, in transactions which comply with the exemptions from registration, including but not limited to Regulation S, or do not require the filing of a prospectus or offering memorandum with respect to those Units under the laws of any Selling Jurisdiction.

7

(b)

Filings. The Company undertakes to file or cause to be filed all forms or undertakings required to be filed by the Company in the Selling Jurisdictions in connection with the purchase and sale of the Units so that the distribution of the Units and the issuance of the Units may lawfully occur without the necessity of filing a prospectus, a registration statement (other than the Registration Statement) or an offering memorandum in Canada or the United States (but on terms that will permit the Units and the Units acquired by the Purchasers in the Selling Jurisdictions to be sold by such Purchasers at any time in the Selling Jurisdictions subject to the terms of this Agreement and applicable securities laws, including, but not limited to, compliance with applicable hold periods), and the Agent undertakes to cause Purchasers of Units to complete any forms required by the Securities Laws. All fees payable in connection with such filings shall be at the expense of the Company.

(c)

No Offering Memorandum.   Neither the Company nor the Agent shall (i) provide to prospective purchasers of the Units any document or other material that would constitute an offering memorandum or future oriented financial information within the meaning of Securities Laws in Canada or in the United States or any state or territory thereof; or (ii) engage in any form of general solicitation or general advertising in connection with the offer and sale of the Units, including but not limited to, causing the sale of the Units to be advertised in any newspaper, magazine, printed public media, printed media or similar medium of general and regular paid circulation, broadcast over radio, television or telecommunications, including electronic display, or conduct any seminar or meeting relating to the offer and sale of the Units whose attendees have been invited by general solicitation or advertising.

2 .

Description of the Units.

(a)

Each Unit is comprised of one Unit Share and one Warrant. Each Warrant entitles the holder thereof to purchase one Warrant Share for a period of twenty-four months following the Closing Date at a price of US$1.02.

(b)

If any of the Liquidity Conditions have not been satisfied on or prior to 5:00 p.m. (Toronto time) on Penalty Date each Warrant shall thereafter be convertible into one (1) Warrant Share at a price of US$0.93 (in lieu of US$1.02 per Warrant Share).

3 .

(a)

Covenants.    The Company hereby covenants to the Agent and to the Purchasers and their permitted assigns, and acknowledges that each of them is relying on such covenants, that the Company shall:

(i)

promptly from time to time take such action requested by the Agent to qualify the Units, Unit Shares, Warrants and Warrant Shares for offering and sale under the securities laws of such jurisdictions, by way of exceptions or exemptions from the prospectus and registration requirements, as the Agent and the Company may agree and to comply with such laws as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Units, provided that in connection therewith the Company shall not be required, except as otherwise provided herein, to file a prospectus or registration statement, to qualify as a foreign corporation or to file a general consent to service in jurisdiction;

(ii)

allow the Agent and their representatives the opportunity to conduct all due diligence which the Agent may require to be conducted prior to (i) the Closing Time, and (ii) the date of the Registration Statement in order to fulfil their obligations as Agent under Securities Laws;

8

(iii)

duly execute and deliver the Transaction Documents at the Closing Time, and comply with and satisfy all terms, conditions and covenants therein contained to be complied with or satisfied by the Company;

(iv)

use its best efforts to fulfil or cause to be fulfilled, at or prior to the Closing Date, each of the conditions set out in section 9;

(v)

ensure that the Unit Shares and Warrants shall be duly and validly created, authorized and issued and shall have the respective attributes corresponding in all material respects to the description thereof set forth in this Agreement and the Subscription Agreements;

(vi)

ensure that at all times prior to the expiry of the Warrants, a sufficient number of Warrant Shares are allotted and reserved for issuance and upon the exercise of the Warrants, shall be duly and validly issued as fully paid and non-assessable securities of the Company;

(vii)

ensure that the Unit Shares shall be duly issued as fully paid and non-assessable securities in the capital of the Company, free of any pre-emptive rights upon the payment therefor;

(viii)

ensure that the Compensation Option shall be duly and validly created, authorized and issued;

(ix)

ensure that the Broker Shares and Broker Warrants shall be duly and validly created, authorized and issued upon the exercise or deemed exercise of the Compensation Option and shall have the attributes corresponding in all material respects to the description thereof in this Agreement and the Compensation Option Certificate;

(x)

ensure that at all times prior to the expiry of the Compensation Option, a sufficient number of Broker Shares and Broker Warrants are allotted, created and reserved for issuance upon the due exercise of the Compensation Option, as the case may be and upon such due exercise, such securities shall be duly issued as fully paid and non-assessable securities in the capital of the Company;

(xi)

ensure that at all times prior to the expiry of the Broker Warrants, a sufficient number of Broker Warrant Shares, are allotted and reserved for issuance, and upon exercise of the Broker Warrants, shall be duly issued as fully paid and non-assessable securities in the capital of the Company;

9

(xii)

use its best efforts to satisfy the Liquidity Conditions promptly following closing and in any event prior to the Penalty Date;

(xiii)

not to issue, offer, sell, contract to sell, announce the intention or otherwise dispose of any additional securities until 120 days following the Closing Date, without the prior written consent of the Agent, such consent not to be unreasonably withheld, except in conjunction with: (A) securities issued pursuant to the Offering, the exercise of the Warrants, the Compensation Option and the Broker Warrants; (B) the grant or exercise of stock options and other similar issuances pursuant to the existing share incentive plan of the Company and other existing share compensation arrangements; (C) outstanding convertible securities at the Closing Date; (D) the acquisition by the Company of any intellectual property rights or licenses, interests or other assets; (E) a business combination by the Company with another company or entity; and (F) any obligations to issue securities existing at the date hereof, which have been disclosed to the Agent;

(xiv)

execute and file with the Securities Regulators all forms, notices and certificates required to be filed pursuant to the Securities Laws in the time required by the applicable Securities Laws, including, not later than 15 days after the Closing Date, file five copies of a notice on Form D under the U.S. Securities Act (one of which will be manually signed by a person duly authorized by the Company); to otherwise comply with the requirements of Rule 503 under the U.S. Securities Act; and to furnish promptly to the Agent evidence of each such required timely filing (including a copy thereof);

(xv)

not, for a period of two years from the Closing Date affect or become a party to any “inversion” transaction or any other transaction that would have the effect of, or result in: (i) the Company or any successor or resulting entity of the Company continuing into, or becoming organized under, the laws of Canada or any Canadian province or territory, or (ii) the Company becoming a subsidiary owned, either directly or indirectly, by any entity incorporated or otherwise existing pursuant to the laws of Canada or any Canadian province or territory, without the written consent of Paradigm Capital Inc.;

(xvi)

not to be or become, at any time prior to the expiration of two years after the Closing Time, an open-end investment company, unit investment trust, closed-end investment company or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act ;

(xvii)

the Company will comply with the U.S. Securities Act so as to permit the completion of the distribution of the Unit Shares and Warrants contemplated hereby and in the Transaction Documents.;

10

(xviii)

to furnish to the holders of the Unit Shares and Warrants, as soon as practicable after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders' equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants), which requirement will be satisfied by the filing of the Company's Annual Report on Form 10-KSB (or any applicable successor thereto under the Exchange Act), with the SEC on Edgar and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending March 31, 2008), consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail, which requirement will be satisfied by the filing of the Company's Quarterly Report on Form 10-QSB (or any applicable successor thereto under the Exchange Act) with the SEC on Edgar;

(xix)

the Company will use its best efforts to cause all directors, senior officers and principal shareholders holding more than 10% of the issued and outstanding voting securities of the Company and their associates and affiliates to execute and deliver "lock-up" agreements in favour of the Agent agreeing not to sell, transfer, loan, pledge or assign any securities of the Company owned, directly or indirectly, for a period of four months and one day following Closing Date, without the prior written consent of the Agent, such consent not to be unreasonably withheld;

(xx)

use its best efforts to effect the listing of the Common Shares, Unit Shares, Warrant Shares, Broker Shares and the Broker Warrant Shares on the Toronto Stock Exchange or the TSX Venture Exchange prior to the Listing Deadline; and

(xxi)

the Company covenants that it will not register any transfer of the securities issued pursuant to the terms of this Agreement unless such transfer is made (i) in accordance with the provisions of Regulation S under the U.S. Securities Act, (ii) pursuant to registration under the U.S. Securities Act, or (iii) pursuant to an available exemption from the registration requirements of the U.S. Securities Act.

(b)

The Agent hereby covenants and agrees to conduct its activities in connection with the sale of the Units in compliance with all applicable laws, including but not limited to Regulation S and to obtain from each Purchaser a completed and executed Subscription Agreement (including all certifications, forms and other documentation contemplated thereby or as may be required by applicable Securities Regulators) in a form acceptable to the Company and the Agent relating to the Offering.

4 .

Material Changes During Offering. The Company will promptly notify the Agent in writing until the satisfaction of the Liquidity Conditions:

(a)

if the Company becomes aware of any material fact not previously disclosed, any material change or change in a material fact (in either case, whether actual, anticipated, contemplated or threatened and other than a change of fact relating solely to the Agent) or any event or development involving a prospective material change or change in a material fact in any or all of the business of the Company and its subsidiaries, taken as a whole, or any other change which is of such a nature as to result in, or could result in, the Disclosure Documents, or the Registration Statement (and any amendment or supplement thereto) containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or which could render any of the foregoing not in compliance with any Securities Laws;

11

(b)

with full particulars of any such actual, anticipated, contemplated, threatened or prospective change of which it becomes aware referred to in the first preceding paragraph and the Company will, to the reasonable satisfaction of the Agent, issue or file, as applicable, promptly and, in any event, within all applicable time limitation periods with the Securities Regulators, in the case of a material change, a new or amended Registration Statement, as the case may be, or press release, material change report or Current Report on Form 8-K as may be required under Securities Laws and shall comply with all other applicable filing and other requirements under the Securities Laws including, without limitation, any requirements necessary to register with the SEC or qualify the issuance and distribution of the Unit Shares, Warrants, Warrant Shares, Broker Shares and Broker Warrant Shares, as the case may be;

(c)

will in good faith discuss with the Agent as promptly as possible any circumstance or event which is of such a nature that there is or ought to be consideration given as to whether there may be a material change or change in a material fact described in paragraphs (a) and (b) above;

(d)

if during the period of distribution of the Unit Shares and Warrants comprising the Units or during the time that the Registration Statement is outstanding, there shall be any change in Securities Laws or other applicable securities laws which in the opinion of counsel to the Company or counsel to the Agent requires the filing of an amendment to the Registration Statement.

5 .

(a)

Representations and Warranties of the Company. The Company represents and warrants to the Agent and to the Purchasers, and acknowledges that each of them is relying upon such representations and warranties, that:

(i)

the Company and the Material Subsidiaries (as hereinafter defined) have been duly incorporated and are in good standing under the laws of their respective jurisdictions, and are current and up-to-date with all filings required to be made by them in such jurisdiction, have all requisite corporate power and authority and are duly qualified and possess all certificates, authorizations, permits and licences issued by the appropriate provincial, municipal, federal regulatory agencies or bodies necessary (and has not received or is aware of any modification or revocation to such licences, authorizations, certificates or permits) to carry on its business as now conducted and to own its properties and assets and the Company and the Material Subsidiaries (as defined below) have all requisite corporate power and authority to carry out their respective obligations under the Transaction Documents, as applicable;

12

(ii)

other than as set out in the May 8-K, the Company has no subsidiaries other than as listed below (the “ Material Subsidiaries ”) and the Company beneficially owns, directly or indirectly, the percentage indicated below of the issued and outstanding shares in the capital of the Material Subsidiaries free and clear of all mortgages, liens, charges, pledges, security interests, encumbrances, claims or demands of any kind whatsoever, all of such shares have been duly authorized and validly issued and are outstanding as fully paid and non-assessable shares and no person has any right, agreement or option, present or future, contingent or absolute, or any right capable of becoming a right, agreement or option, for the purchase from the Company of any interest in any of such shares or for the issue or allotment of any unissued shares in the capital of the Material Subsidiaries or any other security convertible into or exchangeable for any such shares:

Note:

(1)

Provided an aggregate 10,991,000 special shares of 6544631 Canada Inc., which are exchangeable for common shares of the Company are held by Horst Zerbe, Ingrid Zerbe and Joel Cohen.

(iii)

all consents, approvals, permits, authorizations or filings as may be required for the execution and delivery of the Transaction Documents, the issuance and sale of the Unit Shares and Warrants upon the issue and sale of the Warrant Shares upon the exercise of the Warrants, the issuance of the Compensation Option, the issuance of the Broker Shares and Broker Warrants upon exercise or deemed exercise of the Compensation Option, the issue and sale of the Broker Warrant Shares upon the exercise of the Broker Warrants, all in conformance with this Agreement, and the consummation of the transactions contemplated in this Agreement, have been made or obtained, as applicable, except for the filing of the notification on Form D with the SEC required to be made within 15 days of closing;

(iv)

each of the execution and delivery of the Transaction Documents, the performance by the Company of its obligations hereunder or thereunder, the issuance and sale of the Unit Shares and Warrants the issue and sale of the Warrant Shares upon the exercise of the Warrants, the issuance of the Compensation Option, the issuance of the Broker Shares and Broker Warrants upon exercise or deemed exercise of the Compensation Option, the issue and sale of the Broker Warrant Shares upon the exercise of the Broker Warrants, and the consummation of the transactions contemplated in this Agreement, do not and will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (whether after notice or lapse of time or both), (A) any statute, rule or regulation applicable to the Company including, without limitation, Securities Laws or other applicable securities laws; (B) the constating documents, articles or resolutions of the Company which are in effect at the date hereof; (C) any Debt Instruments, Material Agreement, mortgage, note, indenture, contract, agreement, instrument, lease or other document to which the Company is a party or by which it is bound; or (D) any judgment, decree order, statute, rule, law or regulation binding the Company or the property or assets of the Company;

13

(v)

the Disclosure Documents, when they were or are filed with the SEC, conformed or will conform in all material respects to the applicable requirements of the Exchange Act and the applicable rules and regulations of the SEC thereunder and when read together did not and will not 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 not misleading;

(vi)

the audited financial statements of the Company as at and for the year ended December 31, 2006 and unaudited interim financial statements as at and for the nine month period ended September 30, 2007 (collectively, the “ Financial Statements ”) have been prepared in accordance with generally accepted accounting principles in the United States, as applicable, and present fairly, in all material respects, the financial position (including the assets and liabilities, whether absolute, contingent or otherwise) of the Company as at such dates and results of operations of the Company for the periods then ended and there has been no material change in accounting policies or practices of the Company or the Material Subsidiaries since December 31, 2006. All disclosures in the Disclosure Documents regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the SEC) comply in all material respects to U.S. securities laws, to the extent applicable;

(vii)

there has been no adverse material change to the Company or the Material Subsidiaries (actual, proposed or prospective, whether financial or otherwise) in the business, affairs, operations, assets, liabilities (contingent or otherwise) or shareholders' equity of the Company or the Material Subsidiaries since December 31, 2006, which has not been generally disclosed to the public and, in all material respects, the business of the Company and the Material Subsidiaries have been carried on in the usual and ordinary course consistent with past practice since December 31, 2006;

(viii)

there are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations) or other relationships of the Company or its Material Subsidiaries with unconsolidated entities or other persons;

14

(ix)

all taxes (including income tax, capital tax, payroll taxes, employer health tax, workers' compensation payments, property taxes, custom and land transfer taxes), duties, royalties, levies, imposts, assessments, deductions, charges or withholdings and all liabilities with respect thereto including any penalty and interest payable with respect thereto (collectively, “ Taxes ”) due and payable or required to be collected or withheld and remitted, by the Company and the Material Subsidiaries have been paid, collected or withheld and remitted, as applicable. All tax returns, declarations, remittances and filings required to be filed by the Company and the Material Subsidiaries have been filed with all appropriate governmental authorities and all such returns, declarations, remittances and filings are complete and accurate and no material fact or facts have been omitted therefrom which would make any of them misleading. To the knowledge of the Company, no examination of any tax return of the Company or the Material Subsidiaries is currently in progress and there are no issues or disputes outstanding with any governmental authority respecting any taxes that have been paid, or may be payable, by the Company and the Material Subsidiaries. There are no agreements, waivers or other arrangements with any taxation authority providing for an extension of time for any assessment or reassessment of taxes with respect to the Company and the Material Subsidiaries;

(x)

the auditors who audited the Financial Statements of the Company and the Material Subsidiaries for the year ended December 31, 2006 and the year ended December 31, 2005 and who provided their audit report thereon are independent public accountants as required under applicable securities laws in Canada, the U.S. Securities Act and the Exchange Act;

(xi)

there has never been a “reportable event” (within the meaning of National Instrument 51-102) with the present or former auditors of the Company;

(xii)

except as disclosed in the Disclosure Documents, no holder of outstanding securities of the Company will be entitled to any pre-emptive or any similar rights to subscribe for any of the Common Shares or other securities of the Company and no rights, warrants or options to acquire, or instruments convertible into or exchangeable for, any shares in the capital of the Company are outstanding. Other than the holders of the Units there are no persons with registration rights or other similar rights to have any securities registered pursuant to the Registration Statement or otherwise registered by the Company under the