<PAGE>

                                                                    EXHIBIT 10.5

                                                                  EXECUTION COPY

                            STOCK PURCHASE AGREEMENT

                                 BY AND BETWEEN

                            INTELLIPHARMACEUTICS LTD.

                                       AND

                            PAR PHARMACEUTICAL, INC.

                                 AUGUST 1, 2007

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                                TABLE OF CONTENTS

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1.   THE STOCK...........................................................     1
     1.1  Purchase and Sale..............................................     1
     1.2  Closing; Delivery..............................................     1
     1.3  Defined Terms Used in this Agreement...........................     1
2.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................     2
     2.1  Organization, Good Standing and Qualification..................     2
     2.2  Capitalization of the Company..................................     3
     2.3  Subsidiaries and Investments in Other Entities.................     4
     2.4  Authorization..................................................     4
     2.5  Valid Issuance of Shares.......................................     4
     2.6  Governmental Consents..........................................     4
     2.7  Litigation.....................................................     5
     2.8  Intellectual Property..........................................     5
     2.9  Agreements; Actions............................................     5
     2.10 Disclosure.....................................................     6
     2.11 No Conflict of Interest........................................     7
     2.12 Rights of Registration and Voting Rights.......................     7
     2.13 Title to Property and Assets...................................     7
     2.14 Financial Statements...........................................     7
     2.15 Changes........................................................     8
     2.16 Employee Benefit Plans.........................................     9
     2.17 Tax Returns and Payments.......................................     9
     2.18 Insurance......................................................     9
     2.19 Labor Agreements and Actions...................................    10
     2.20 Confidential Information and Invention Assignment Agreements...    10
     2.21 Permits........................................................    10
     2.22 Investment Company Act.........................................    10
     2.23 Environmental and Safety Laws..................................    10
     2.24 Corporate Documents............................................    10
3.   REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.....................    11
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                                TABLE OF CONTENTS
                                   (continued)

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     3.1  Authorization..................................................    11
     3.2  Purchase Entirely for Own Account..............................    11
     3.3  Disclosure of Information......................................    11
     3.4  No Public Market...............................................    11
     3.5  Legends........................................................    11
     3.6  Accredited Investor............................................    12
     3.7  No General Solicitation........................................    12
     3.8  Purchaser Can Protect Its Interest.............................    12
4.   CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING................    12
     4.1  Representations and Warranties.................................    12
     4.2  Performance....................................................    12
     4.3  Compliance Certificate.........................................    12
     4.4  Qualifications.................................................    12
     4.5  Opinion of Company Counsel.....................................    13
     4.6  Investor Rights Agreement......................................    13
     4.8  Employment Issues..............................................    13
     4.9  Secretary's Certificate........................................    13
     4.10 Proceedings and Documents......................................    13
5.   CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING..................    13
     5.1  Representations and Warranties.................................    13
     5.2  Performance....................................................    13
     5.3  Qualifications.................................................    13
6.   COVENANTS...........................................................    14
7.   MISCELLANEOUS.......................................................    14
     7.1  Survival of Warranties.........................................    14
     7.2  Transfer; Successors and Assigns...............................    14
     7.3  Governing Law..................................................    14
     7.4  Counterparts...................................................    14
     7.5  Titles and Subtitles...........................................    14
     7.6  Notices........................................................    15
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                                       ii

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                                TABLE OF CONTENTS
                                   (continued)

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     7.7  No Finder's Fee................................................    15
     7.8  Attorney's Fees................................................    15
     7.9  Amendments.....................................................    15
     7.10 Severability...................................................    15
     7.11 Waivers; Delays or Omissions; Remedies.........................    15
     7.12 Entire Agreement...............................................    16
</TABLE>

EXHIBIT A   CO-SALE AGREEMENT
EXHIBIT B   INVESTOR RIGHTS AGREEMENT
EXHIBIT C   DISCLOSURE SCHEDULES
EXHIBIT D   COMPANY'S COUNSEL'S OPINION
EXHIBIT E   EMPLOYMENT AGREEMENT AMENDMENTS


                                       iii
<PAGE>

                            STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is dated as of AUGUST 1, 2007,
by and between IntelliPharmaCeutics Ltd., a Delaware corporation (the
"COMPANY"), and Par Pharmaceutical, Inc., a Delaware corporation (the
"PURCHASER").

The parties hereby agree as follows:

1. THE STOCK.

1.1 PURCHASE AND SALE.

     (a)  Subject to the terms and conditions of this Agreement, at the Closing
          (as defined in Section 1.2 hereof) the Purchaser agrees to purchase
          and the Company agrees to sell and issue to the Purchaser 714,285
          shares (the "SHARES") of Company's common stock, par value $.001 per
          share (the "COMMON STOCK").

     (b)  The aggregate purchase price for the Shares shall be US $4,999,995,
          payable by the Purchaser at the Closing in immediately available funds
          wired to the account of the Company at Canadian Imperial Bank of
          Commerce, 9275 Highway 48 North, Markham, Ontario, Canada (institution
          number: 010; transit number: 02432; account number: 02-16615; SWIFT
          code: CIBCCATT).

     (c)  Promptly following the Closing (as defined in Section 1.2 hereof), the
          Company will contribute the proceeds from the purchase and sale of the
          Shares to Opco (as defined in Section 1.3 hereof) and will cause Opco
          to use such proceeds for general corporate and working capital
          purposes.

1.2 CLOSING; DELIVERY.

     (a)  The purchase and sale of the Shares shall take place at the offices of
          Gowling Lafleur Henderson LLP, Suite 1600, 1 First Canadian Place, 100
          King Street West, Toronto, Ontario, M5X 1G5, at 11:00 a.m., on August
          1, 2007, or at such other time and place as the Company and the
          Purchaser mutually agree (the "CLOSING").

     (b)  At the Closing, the Company shall deliver to the Purchaser a stock
          certificate representing the Shares being purchased pursuant to this
          Agreement.

1.3 DEFINED TERMS USED IN THIS AGREEMENT. In addition to the terms defined
above, the following terms used in this Agreement shall have the meanings set
forth or referenced below.

"CO-SALE AGREEMENT" means the agreement between the Company, Intelli, Inc. and
the Purchaser, dated as of the date of the Closing, in the form of Exhibit A
attached hereto.

"COMPANY'S KNOWLEDGE" means the actual knowledge of, and the knowledge that
would be obtained if reasonable inquiry into the matter in question were made
by, Isa Odidi or Amina Odidi.

<PAGE>

"DELAWARE SECRETARY OF STATE" has the meaning set forth in Section 2.2(c) below.

"FINANCIAL STATEMENTS" has the meaning set forth in Section 2.14 below.

"HAZARDOUS MATERIALS" has the meaning set forth in Section 2.23 below.

"INTELLI INC." has the meaning set forth in Section 2.2(a) below.

"INVESTOR RIGHTS AGREEMENT" means the agreement between the Company and the
Purchaser, dated as of the date of the Closing, in the form of Exhibit B
attached hereto.

"LAW" means any applicable law, statute or regulation of (i) the United States
of America, including any state, municipality or other jurisdictional
subdivision thereof, and (ii) Canada, including any province, territory or other
jurisdiction subdivision thereof.

"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section 2.1(a) below.

"OPCO" has the meaning set forth in Section 2.3 below.

"PREFERRED STOCK" has the meaning set forth in Section 2.2(a) below.

"PROMISSORY NOTE" has the meaning set forth in Section 2.14 below.

"RESTATED CHARTER" has the meaning set forth in Section 2.2(c) below.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"TRANSACTION AGREEMENTS" means this Agreement and the Investor Rights Agreement.

"UNITED STATES" means the United States of America.

2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents
and warrants to the Purchaser that, except as set forth on the Disclosure
Schedules attached hereto as Exhibit C, which exceptions shall be deemed to be
representations and warranties as if made hereunder, the following
representations are true and complete as of the date of the Closing, except as
otherwise indicated.

2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.

     (a)  The Company is a corporation duly organized, validly existing and in
          good standing under the laws of the State of Delaware and has all
          requisite corporate power and authority to carry on its business as
          presently conducted or proposed to be conducted. The Company is duly
          qualified to transact business and is in good standing in each
          jurisdiction in which the failure to so qualify would have a material
          adverse effect on its business, financial condition or properties of
          either the Company or Opco (a "MATERIAL ADVERSE EFFECT").

     (b)  Opco is a corporation duly organized, validly existing and in good
          standing under the laws of Nova Scotia and has all requisite corporate
          power and authority to


                                        2

<PAGE>

          carry on its business as presently conducted or proposed to be
          conducted. Opco is duly qualified to transact business and is in good
          standing in each jurisdiction in which the failure to so qualify would
          create a Material Adverse Effect.

2.2 CAPITALIZATION OF THE COMPANY.

     (a)  The authorized capital of the Company consists, or will consist,
          immediately prior to the Closing, of: (i) 60,000,000 shares of capital
          stock, consisting of 40,000,000 shares of Common Stock and 20,000,000
          shares of preferred stock, par value $0.001 per share ("PREFERRED
          STOCK"), of which 10,850,000 shares of Preferred Stock have been
          designated as "SPECIAL VOTING STOCK." Immediately prior to closing,
          there will be (i) 5,309,659 shares of Common Stock issued and
          outstanding, which are held by 137 stockholders, (ii) 10,850,000
          shares of Special Voting Stock issued and outstanding, all of which
          are held by IntelliPharmaCeutics Inc., an Ontario corporation
          ("INTELLI INC."), and there will be no other shares of Preferred Stock
          issued and outstanding other than the Special Voting Stock and (iii)
          no warrants or option for the purchase of shares of Common Stock shall
          have been reserved for issuance or granted other than as described in
          Schedule 2.2 attached hereto.

     (b)  The authorized capital of Opco consists, or will consist, immediately
          prior to the Closing, of 10,021,700,000 shares of capital stock,
          consisting of (i) 10,000,000,000 shares of common stock, 15,463,333 of
          which are held by the Company and the only such shares outstanding,
          and (ii) 21,700,000 shares of preferred stock, of which (A) 10,850,000
          shares have been designated as "CONVERTIBLE VOTING SHARES," all of
          which are outstanding and held by Intelli Inc. and (B) 10,850,000
          shares have been designated as "EXCHANGEABLE Shares," none of which
          are outstanding.

     (c)  The rights, privileges and preferences of Common Stock and Preferred
          Stock are as stated in the Company's Amended and Restated Certificate
          of Incorporation recorded in a Certificate of the Secretary of State
          for the State of Delaware (the "DELAWARE SECRETARY OF STATE") dated
          August 18, 2004 (the "RESTATED CHARTER") and in Certificates of the
          Delaware Secretary of State dated August 18, 2004 and August 19, 2004
          respectively, with regard to the Special Voting Stock.

     (d)  Except as set forth in this Section 2.2 and Schedule 2.2, as of the
          Closing neither the Company nor Opco shall (i) have outstanding any
          capital stock or other securities convertible into or exchangeable for
          any shares of its capital stock and no person or entity will have any
          right to subscribe for or to purchase (including conversion and
          preemptive rights), or any options for the purchase of, or any
          agreements providing for the issuance (contingent or otherwise) of, or
          any calls, commitments or other claims of any character relating to,
          any capital stock or any stock or securities convertible into or
          exchangeable for any capital stock of the Company or Opco; (ii) have
          any capital stock, equity interests or other securities reserved for
          issuance for any purpose (other than shares of Common Stock reserved
          for issuance upon exercise of options, warrants and other rights set
          forth


                                        3

<PAGE>

          in this Section 2.2); or (iii) be subject to any obligation
          (contingent or otherwise) to repurchase, redeem or otherwise acquire
          or retire any equity securities, rights or options of the type
          described in the immediately preceding clause (ii). All of the issued
          and outstanding shares of Common Stock and Preferred Stock have been
          duly authorized and validly issued, are fully paid and nonassessable,
          were issued in compliance with all applicable federal and state
          securities laws and have been (or will have been) issued and sold in
          compliance with all applicable preemptive or similar rights of all
          persons. No person has any valid right to rescind any purchase of any
          shares of capital stock or other securities of the Company.

2.3 SUBSIDIARIES AND INVESTMENTS IN OTHER ENTITIES. The Company does not
currently own or control, directly or indirectly, any interest in any other
corporation, partnership, trust, joint venture, limited liability company,
association or other business entity, except solely for its interest in
IntelliPharmaCeutics Corp., a corporation amalgamated under the laws of Nova
Scotia ("OPCO") described in Section 2.2(b) hereof. Except as set forth on
Schedule 2.3, the Company is not a participant in any joint venture, partnership
or similar arrangement. Opco does not currently own or control, directly or
indirectly, any interest in any other corporation, partnership, trust, joint
venture, limited liability company, association or other business entity.

2.4 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and holders of capital stock necessary for the
authorization, execution and delivery of the Transaction Agreements, the
performance of all obligations of the Company thereunder and the authorization,
issuance and delivery of the Shares has been taken or will be taken prior to the
Closing, and, if applicable, the Transaction Agreements, when executed and
delivered by the Company, shall constitute valid and legally binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, or (iii) to the
extent the indemnification provisions contained in the Investor Rights Agreement
may be limited by Law.

2.5 VALID ISSUANCE OF SHARES. The Shares, when issued, sold and delivered by the
Company in accordance with the terms hereof for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable and free
of restrictions on transfer other than restrictions on transfer under this
Agreement, the Investor Rights Agreement, applicable United States federal and
state securities laws, and liens or encumbrances created by or imposed by the
Purchaser. Based in part upon the representations of the Purchaser in Section 3
of this Agreement and subject to the provisions of Section 2.6 below, the Shares
will be issued in compliance with all applicable Laws.

2.6 GOVERNMENTAL CONSENTS. Assuming the accuracy of the representations made by
the Purchaser in Section 3 of this Agreement, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with any United States federal, state, local or other governmental
authority, or Canadian federal, provincial, territorial or other governmental
authority is required on the part of the Company in connection with the


                                        4

<PAGE>

consummation of the transactions contemplated by this Agreement, except for
filings pursuant to applicable United States state securities laws and
Regulation D of the Securities Act.

2.7 LITIGATION. There is no action, suit, proceeding or investigation pending
or, to the Company's Knowledge, currently threatened against the Company or Opco
that (i) questions the validity of the Transaction Agreements or the right of
the Company to enter into them, or to consummate the transactions contemplated
hereby or thereby, or (ii) would reasonably be expected to result (A)
individually or in the aggregate, in a Material Adverse Effect, or (B) in any
change in the current equity ownership of the Company or Opco, nor to the
Company's Knowledge, is there is any basis for the foregoing other than the
letters from Harold Paul attached hereto as Schedule 2.7. Neither the Company
nor Opco is a party or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or any government agency or instrumentality,
including, without limitation, the agencies and instrumentalities of Canada and
the United States. Neither any stockholders of the Company, nor any person
purporting to be a stockholder of the Company, has ever brought any action,
compliant or suit against the Company or, to the Company's Knowledge, against
any other stockholder of the Company, related to the capital stock of the
Company.

2.8 INTELLECTUAL PROPERTY. To the Company's Knowledge, each of the Company and
Opco owns or possesses sufficient legal rights to all patents, trademarks,
service marks, tradenames, copyrights, trade secrets, licenses, information and
proprietary rights and processes necessary for its and Opco's business without
any conflict with, or infringement of, the rights of others. Except for licenses
by Opco to manufacture drugs developed by Opco pursuant to the drug development
agreements listed in Schedule 2.8, there are no outstanding options, licenses or
agreements of any kind relating to the foregoing proprietary rights, nor is
either of the Company or Opco bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes of any other person or entity other than such
licenses or agreements arising from the purchase of "off the shelf" or standard
products. To the Company's Knowledge, there has been no allegation that the
Company or Opco has violated or, by conducting its respective business, would
violate any of the patents, trademarks, service marks, tradenames, copyrights,
trade secrets or other proprietary rights or processes of any other person or
entity, nor is there any basis therefor. To the Company's Knowledge, neither any
of the Company's nor any of Opco's employees are obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would restrict the employee's efforts to promote the interests of
the Company or Opco, as applicable, or that would conflict with the Company's or
Opco's respective business as proposed to be conducted.

2.9 AGREEMENTS; ACTIONS.

     (a)  Except as set forth on Schedule 2.9(a), there are no agreements,
          understandings or proposed transactions between the Company and Opco
          or any of their respective officers, directors, affiliates, or any
          affiliate thereof, other than standard director and officer
          indemnification agreements.


                                        5

<PAGE>

     (b)  Set forth on the Schedule 2.9(b) is a list of all agreements,
          understandings, instruments, contracts or proposed transactions to
          which the Company or Opco is a party or by which the Company or Opco
          is bound that involve (i) obligations, contingent or otherwise, of or
          payments to the Company or Opco to a person, corporation or entity in
          excess of US $100,000, (ii) the license of any patent, copyright,
          trade secret or other proprietary right to or from the Company or
          Opco, or (iii) the grant of rights to manufacture, produce, assemble,
          license, market, or sell its products to any other person or affect
          the Company's or Opco's exclusive right to develop, manufacture,
          assemble, distribute, market or sell the Company's or Opco's
          respective products.

     (c)  All of the contracts listed on Schedule 2.9(b) are in full force and
          effect and constitute legal, valid and binding obligations of, and are
          enforceable in accordance with their terms against, the Company or
          Opco, as applicable, and, to the Company's Knowledge, the respective
          other parties thereto. The Company and, to the Company's Knowledge,
          each other party to such contracts have performed in all materials
          respects all obligations required to be performed by them thereunder
          and are not in breach of any such agreements. The Company has
          delivered or made available to the Purchaser correct and complete
          copies of each contract set forth on Schedule 2.9(b).

     (d)  Except as set forth on Schedule 2.9(d), neither the Company nor Opco
          has (i) declared or paid any dividends, or authorized or made any
          distribution upon or with respect to any class or series of its
          capital stock, (ii) has outstanding any indebtedness for money
          borrowed or incurred any other liabilities in excess of US $50,000
          individually or in excess of US $100,000 in the aggregate, other than
          payroll obligations for Opco's approximately 30 employees consistent
          with prior periods, obligations for supplies and rent consistent with
          prior periods all satisfied in the ordinary course (iii) has
          outstanding any loans or advances to any person, other than ordinary
          advances for travel expenses, or (iv) sold, exchanged or otherwise
          disposed of any of its assets or rights, other than in the ordinary
          course of business.

     (e)  For the purposes of Sections 2.9(b) and (d) above, all indebtedness,
          liabilities, agreements, understandings, instruments, contracts and
          proposed transactions involving the same person or entity (including
          persons or entities the Company has reason to believe are affiliated
          with that person or entity) shall be aggregated for the purposes of
          meeting the individual minimum dollar amounts of each such subsection.

2.10 DISCLOSURE. No representation or warranty of the Company contained in this
Agreement, including the exhibits attached hereto, any certificate furnished or
to be furnished to Purchaser at the Closing, and no statement made in the
Company's Form SB-2 dated and filed with the United States Securities and
Exchange Commission on July 6, 2007 (the "SB-2"), contains any untrue statement
of a material fact and taken in aggregate the SB-2 and the information contained
in this Agreement respecting the Company and Opco do not omit to state a
material


                                        6

<PAGE>

fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.

2.11 NO CONFLICT OF INTEREST. Except as set forth Schedule 2.11, neither the
Company nor Opco is indebted, directly or indirectly, to any of its officers or
directors or to their respective spouses or children, in any amount whatsoever
other than in connection with expenses or advances of expenses incurred in the
ordinary course of business. None of the Company's or Opco's officers or
directors, or any members of their immediate families, are, directly or
indirectly, indebted to the Company or Opco or, to the Company's Knowledge, have
any direct or indirect ownership interest in any firm or corporation with which
the Company is affiliated, other than Opco and Intelli Inc., or with which the
Company or Opco has a business relationship, or any firm or corporation that
competes with the Company or Opco; provided, however, that officers, directors
and/or holders of capital stock of the Company or Opco may own stock in (but not
exceeding five percent of the outstanding capital stock of) any publicly traded
company that may compete with the Company or Opco. None of the Company's or
Opco's respective officers or directors or any members of their immediate
families are, directly or indirectly, interested in any material contract with
the Company or Opco. Neither the Company nor Opco is a guarantor or indemnitor
of any indebtedness of any other person, firm or corporation.

2.12 RIGHTS OF REGISTRATION AND VOTING RIGHTS. The Company is obliged to use
reasonable efforts to register under the Securities Act all its presently
outstanding Common Stock. Except as set forth on Schedule 2.12, to the Company's
Knowledge, no holder of capital stock of the Company has entered into any
agreements with respect to the voting of shares of the Company.

2.13 TITLE TO PROPERTY AND ASSETS. Except as set forth on Schedule 2.13, each of
the Company and Opco owns its property and assets, if any, free and clear of all
mortgages, deeds of trust, liens, loans and encumbrances, except for statutory
liens for the payment of current taxes that are not yet delinquent and
encumbrances and liens that arise in the ordinary course of business and do not
materially impair the Company's or Opco's ownership or use of such property or
assets. With respect to the property and assets it leases, each of the Company
and Opco is in compliance with such leases and, to the Company's Knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances other
than to the lessors of such property or assets.

2.14 FINANCIAL STATEMENTS. The Company has made available to the Purchaser each
of the audited financial statements for the Company and Opco (including balance
sheet, income statement and statement of cash flows) as of and for the fiscal
years ended December 31, 2004 and December 31, 2005 and December 31, 2006
(collectively, the "FINANCIAL STATEMENTS"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods indicated. The Financial Statements
fairly present in all material respects the financial condition and operating
results of the Company and Opco as of the dates, and for the periods, indicated
therein, subject to normal year-end audit adjustments. All accounts and notes
receivable, if any, reflected on the Financial Statements have arisen from bona
fide transactions in the ordinary course of business. Except as set forth in the
Financial Statements, neither the Company nor Opco has any material liabilities
or obligations, contingent or otherwise, other than (i) liabilities incurred in
the ordinary course of business subsequent to December 31, 2006 and (ii)
obligations under contracts and commitments


                                        7

<PAGE>

incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in the Financial Statements,
which liabilities and obligations, individually or in the aggregate, are not
material to the respective financial condition or operating results of the
Company or Opco. Except for indebtedness incurred by Opco pursuant to the
promissory note described in Schedule 2.9(d) (the "PROMISSORY NOTE"), neither
the Company nor Opco has any outstanding long-term indebtedness. The aggregate
remaining outstanding balance owed pursuant to the such Promissory Note equals,
as of the date hereof approximately US $2,100,000.

2.15 CHANGES. Except as set forth on the Schedules to this Agreement, since
December 31, 2006, there has not been with respect to the Company or Opco:

     (a)  any change in the assets, liabilities, financial condition or taken as
          a whole operating results of the Company and Opco taken as a whole,
          from those which are reflected in the Financial Statements, except
          changes in the ordinary course of business that have not had, in the
          aggregate, a Material Adverse Effect;

     (b)  any damage, destruction or loss, whether or not covered by insurance,
          materially and adversely affecting the business, properties or
          financial condition of the Company and Opco;

     (c)  any waiver or compromise by either the Company or Opco of a valuable
          right or of a material debt owed to it;

     (d)  any satisfaction or discharge of any lien, claim, or encumbrance or
          payment of any obligation by either the Company or Opco, except in the
          ordinary course of business and the satisfaction or discharge of which
          would not have a Material Adverse Effect;

     (e)  any material change to a material contract or agreement by which the
          Company or Opco, or any of their respective assets, is bound or
          subject;

     (f)  any material change in any compensation arrangement or agreement with
          any employee, officer, director or holder of capital stock of either
          the Company or Opco;

     (g)  any sale, assignment or transfer of any patents, trademarks,
          copyrights, trade secrets or other intangible assets of the Company or
          Opco;

     (h)  any resignation or termination of employment of any officer or key
          employee of the Company or Opco; and neither the Company nor Opco is
          aware of any impending resignation or termination of employment of any
          of its officers or key employees;

     (i)  any mortgage, pledge, transfer of a security interest in, or lien
          created by either the Company or Opco with respect to, any of its
          material properties or assets, except liens for taxes not yet due or
          payable and liens that arise in the ordinary


                                        8

<PAGE>

          course of business and do not materially impair the Company's or
          Opco's respective ownership or use of such property or assets;

     (j)  any loans or guarantees made by either the Company or Opco to or for
          the benefit of its respective employees, officers or directors, or any
          members of their immediate families, other than travel advances and
          other advances made in the ordinary course of its business;

     (k)  any declaration, setting aside or payment, or other distribution with
          respect to any of the Company's or Opco's capital stock, or any direct
          or indirect redemption, purchase, or other acquisition of any of such
          stock by either the Company or Opco;

     (l)  to the Company's Knowledge, any other event or condition of any
          character, other than events affecting the economy or either the
          Company's or Opco's industry generally, that could reasonably be
          expected to result in a Material Adverse Effect; or

     (m)  any arrangement or commitment by either the Company or Opco to do any
          of the things described in this Section 2.15.

2.16 EMPLOYEE BENEFIT PLANS. Schedule 2.16 sets forth all material employee
benefit plans maintained, established or sponsored by the Company or Opco, or in
or to which the Company or Opco participates or contributes. The Company or, as
applicable, Opco has made all required contributions and has no liability to any
such employee benefit plans, other than liability for health plan continuation
coverage described in Part 6 of Title I(B) of the Employee Retirement Income
Security Act of 1974, as amended (or Canadian Law), and each of the Company and
Opco has complied with all applicable Laws in respect of any such employee
benefit plan.

2.17 TAX RETURNS AND PAYMENTS. Each of the Company and Opco has (i) filed all of
their respective tax returns and reports as required by Law, which returns and
reports are true and correct in all material respects; (ii) paid all respective
taxes and other assessments due; and (iii) established and are maintaining
current accruals that are adequate for the payment of any taxes incurred but not
yet due and payable with respect to their respective property and operations
through the date hereof. No waivers or extensions of any applicable statute of
limitations for the assessment or collection of taxes with respect to any tax
returns of the Company or Opco are currently in effect or proposed. There is no
unresolved claim by a taxing authority in any jurisdiction where the Company or
Opco does not anticipate to file tax returns that either the Company or Opco
could reasonably be expected to be subject to taxation by such jurisdiction.
There are no liens for taxes (other than for taxes not yet due and payable) upon
the assets or property of the Company or Opco respectively. Opco is a "Canadian
Controlled Private Corporation" for purposes of the Income Tax Act (Canada) and
the Canadian scientific research and experimental development tax incentive
program.

2.18 INSURANCE. The Company and Opco respectively have in full force and effect
fire and casualty insurance policies, with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow it to replace any of their
properties that might be damaged or destroyed.


                                        9

<PAGE>

2.19 LABOR AGREEMENTS AND ACTIONS. Neither the Company nor Opco is bound by or
subject to (and none of their assets or properties are bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the Company's
Knowledge, has sought to represent any of the employees, representatives or
agents of the Company or Opco. There is no strike or other labor dispute
involving either the Company or Opco pending or, to the Company's Knowledge,
threatened, which could have a Material Adverse Effect, nor is the Company aware
of any labor organization activity involving its or Opco's employees. The
employment of each officer and employee of the Company and Opco is terminable
without any contractual obligations of the Company or Opco other than general
obligations at law. To the Company's Knowledge, it and Opco have complied in all
material respects with Laws relating to equal employment opportunity and
employment. Neither the Company nor Opco is party to any material consulting
agreement or similar arrangement.

2.20 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS. Each employee
and officer of the Company and Opco has executed an agreement with his or her
respective employer regarding confidentiality and proprietary information
substantially in the form or forms delivered to the Purchaser. To the Company's
Knowledge, neither the Company's employees nor the employees of Opco are in
violation of such agreements.

2.21 PERMITS. Each of the Company and Opco has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business, except
where the failure to do so would not have a Material Adverse Effect. Neither the
Company nor Opco is in default in any material respect under any of such
franchises, permits, licenses or other similar authority.

2.22 INVESTMENT COMPANY ACT. Neither the Company nor Opco is, and as a result of
and immediately upon Closing neither will be, an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.

2.23 ENVIRONMENTAL AND SAFETY LAWS. To the Company's Knowledge, neither the
Company nor Opco is in violation of any Law relating to the environment or
occupational health and safety, and no material expenditures are or will be
required in order to comply with any such existing statute, law or regulation.
No Hazardous Materials (as defined below) are used or have been used, stored, or
disposed of by the Company or Opco, or, to the Company's Knowledge, by any other
person or entity on any property owned, leased or used by the Company or Opco
other than common solvents and the like in reasonable quantities. For the
purposes of the preceding sentence, "Hazardous Materials" shall mean (a)
materials which are listed or otherwise defined as "hazardous" or "toxic" under
any Law or any foreign laws and regulations that govern the existence or remedy
of contamination on property, the protection of the environment from
contamination, the control of hazardous wastes, or other activities involving
hazardous substances, including building materials or (b) any petroleum products
or nuclear materials.

2.24 CORPORATE DOCUMENTS. The current Charter Documents and Bylaws of the
Company are attached as Schedule 2.24(a) and the current Charter Documents and
Articles of Association of Opco and its share conditions are attached as
Schedule 2.24(b). The Company minute book and Opco minute book made available to
the Purchaser contained minutes of all meetings of


                                       10

<PAGE>

directors and holders of voting stock, and all actions by written consent
without a meeting by the directors and holders of voting stock, since the
respective date of incorporation, and accurately reflect in all materials
respects all actions by the directors (and any committee of directors) and
holders of voting stock with respect to all transactions referred to in such
minutes.

3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser hereby represents
and warrants to the Company that:

3.1 AUTHORIZATION. Purchaser has full power and authority to enter into the
Transaction Agreements. The Transaction Agreements, when executed and delivered
by the Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, other laws of general application relating to or affecting the
enforcement of creditors' rights generally, (b) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, or (c) to the extent the indemnification provisions contained in the
Investor Rights Agreement may be limited by Law.

3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is entered into with the
Purchaser in reliance upon the Purchaser's representation to the Company, which
by the Purchaser's execution of this Agreement the Purchaser hereby confirms,
that the Shares to be acquired by the Purchaser will be acquired for investment
for the Purchaser's own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and that the Purchaser has no
present intention of selling, granting any participation in, or otherwise
distributing the Shares. By entering into this Agreement, the Purchaser further
represents that the Purchaser does not presently have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Shares. The Purchaser has not been formed for the specific purpose of acquiring
the Shares.

3.3 DISCLOSURE OF INFORMATION. The Purchaser has had an opportunity to discuss
the business, management, financial affairs of the Company and Opco and the
terms and conditions of the offering of the Shares with management for the
Company and Opco. The Purchaser understands that such discussions and any other
written information delivered by the Company and Opco to the Purchaser were
intended to describe the aspects of the business of the Company and Opco that
the Company believes to be material. The foregoing, however, does not limit or
modify the representations or warranties of the Company in Section 2 above or
the right of Purchaser to rely thereon. In making its decision to purchase the
Shares, the Purchaser has relied solely on the representations and warranties of
the Company in Section 2 hereof.

3.4 NO PUBLIC MARKET. The Purchaser understands that no public market now exists
for any of the securities issued by the Company, and that the Company has made
no assurances that a public market will ever exist for the Shares.

3.5 LEGENDS. The Purchaser understands that the Shares may bear one or all of
the following legends:


                                       11

<PAGE>

     (a)  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
          INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
          DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED
          WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
          OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
          REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933."

     (b)  Any legend set forth in or required by the other Transaction
          Agreements.

     (c)  Any legend required by the "Blue Sky" laws of any state of the United
          States to the extent such laws are applicable to the shares
          represented by the certificate so legended.

3.6 ACCREDITED INVESTOR. The Purchaser is an accredited investor as defined in
Rule 501(a) of Regulation D promulgated under the Securities Act.

3.7 NO GENERAL SOLICITATION. Neither the Purchaser nor any of its officers,
directors, employees, agents, holders of capital stock or partners has (a)
engaged in any general solicitation, or (b) published any advertisement in
connection with the offer and sale of the Shares.

3.8 PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents that by reason of
its or its management's business or financial experience, Purchaser has the
capacity to protect its own interests in connection with the transactions
contemplated in this Agreement.

4. CONDITIONS OF THE PURCHASER'S OBLIGATIONS AT CLOSING. The obligations of the
Purchaser to the Company under this Agreement are subject to the fulfillment, on
or before the Closing, of each of the following conditions, unless waived:

4.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of the
Company contained in Section 2 above shall be true and correct in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.

4.2 PERFORMANCE. The Company shall have performed and complied with all
covenants, agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or before the
Closing.

4.3 COMPLIANCE CERTIFICATE. The Chief Executive Officer or President of the
Company shall deliver to the Purchaser at the Closing a certificate certifying
that the conditions specified in Sections 4.1 and 4.2 above have been fulfilled.

4.4 QUALIFICATIONS. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or Canada,
including, if applicable, state, territorial and other governmental bodies
within each country, that are required in connection


                                       12

<PAGE>

with the lawful issuance and sale of the Shares pursuant to this Agreement shall
be obtained and effective as of the Closing.

4.5 OPINION OF COMPANY COUNSEL. The Purchaser shall have received from Shearman
& Sterling LLP, counsel for the Company, an opinion, dated as of the Closing, in
substantially the form of Exhibit D.

4.6 INVESTOR RIGHTS AGREEMENT. The Company shall have executed and delivered the
Investor Rights Agreement.

4.7 CO-SALE AGREEMENT. Intelli, Inc. and the Company shall have executed and
delivered the Co-Sale Agreement.

4.8 EMPLOYMENT ISSUES. Isa Odidi and Amina Odidi shall have entered into
amendments to their employment agreements with intellectual property assignment
and non-competition agreements in the form attached hereto as Exhibit E.

4.9 SECRETARY'S CERTIFICATE. The Secretary of the Company shall deliver to the
Purchaser at the Closing a certificate certifying (i) the Restated Charter, (ii)
the Bylaws of the Company, and (iii) resolutions of the Board of Directors of
the Company approving the Transaction Agreements and the transactions
contemplated hereby and thereby.

4.10 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Purchaser, and Purchaser shall have received all such counterpart original and
certified or other copies of such documents as reasonably requested. Such
documents may include good standing certificates.

5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations of the
Company to each Purchaser under this Agreement are subject to the fulfillment,
on or before the Closing, of each of the following conditions, unless waived:

5.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of the
Purchaser contained in Section 3 above shall be true and correct in all material
respects on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.

5.2 PERFORMANCE. All covenants, agreements and conditions contained in this
Agreement to be performed by the Purchaser on or prior to the Closing shall have
been performed or complied with in all material respects.

5.3 QUALIFICATIONS. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or Canada,
including, if applicable, state, territorial and other governmental bodies
within each country, that are required in connection with the lawful issuance
and sale of the Shares pursuant to this Agreement shall be obtained and
effective as of the Closing.


                                       13

<PAGE>

6. COVENANTS. Opco hereby covenants that, without the consent of the Purchaser,
it shall not (i) alter or change the rights, preferences, or privileges of its
outstanding equity securities or authorize or issue shares of any class of stock
having any preference or priority as to dividends or assets superior to, or on a
parity with, the equity held by the Company, except for the issuance of
additional common shares to the Company in exchange for the contribution of
capital at the fair market value of such common shares, (ii) pay any dividend on
any share of either its Convertible Voting Shares or its Exchangeable Shares
without taking such actions as are necessary to ensure that the outstanding
shares of Common Stock receive an equal dividend on a per-share basis, (iii)
create, incur, assume or suffer to exist any contract, agreement or
understanding (other than as provided in this Section 6) that in any way
prohibits or restricts Opco from paying dividends or making distributions to the
Company or that requires the consent of or notice to any other person in
connection therewith, (iv) utilize more than US $500,000 of the funds
contributed to purchase the Shares hereunder (and contributed to Opco) to pay
down the outstanding indebtedness of the Promissory Note before December 31
2007, or (v) engage in any transactions with any of its Affiliates, officers,
directors, or key employees, or any member of any such person's immediate
family, other than arm's-length transactions on terms no less favorable than the
Company would obtain in a transaction with an unrelated party. Additionally, the
Company and Opco shall take all commercially reasonable actions to fully
maintain, enforce and protect all of the Company's and Opco's intellectual
property rights and shall use their commercially best efforts to ensure that all
of the employees of the Company and Opco execute a reasonable intellectual
property and invention assignment agreement.

7. MISCELLANEOUS.

7.1 SURVIVAL OF WARRANTIES. The warranties, representations and covenants of the
Company and the Purchaser contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement for a period of two (2)
years from the date of this Agreement.

7.2 TRANSFER; SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

7.3 GOVERNING LAW. This Agreement and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of New York,
without giving effect to principles of conflicts of law.

7.4 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one instrument.

7.5 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.


                                       14

<PAGE>

7.6 NOTICES. Any notice required or permitted by this Agreement shall be in
writing and shall be deemed sufficient upon delivery when delivered personally
or by overnight courier, or four (4) business days after being deposited in the
U.S. or Canadian mail as certified or registered mail with postage prepaid, and
addressed, if to the Company, to the attention of the party to be notified, or
if to the Purchaser, to the attention of the General Counsel's office, at the
respective party's address as set forth on the signature page below, or as
subsequently modified by written notice, and (a) if to the Company, with a copy
to Gowling Lafleur Henderson LLP, Suite 1600, 100 King Street West, Toronto,
Ontario M5X 1G5, or (b) if to the Purchaser, to the attention of the General
Counsel's office, with a copy to R. King Milling, Jr., Esq., Orrick, Herrington
& Sutcliffe LLP, 666 Fifth Avenue, New York, NY 10103-0001.

7.7 NO FINDER'S FEE. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. The Purchaser agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee arising out of this transaction, and the costs and expenses of
defending against such liability or asserted liability, for which the Purchaser
or any of its officers, employees, or representatives is responsible. The
Company agrees to indemnify and hold harmless each Purchaser from any liability
for any commission or compensation in the nature of a finder's or broker's fee
arising out of this transaction, and the costs and expenses of defending against
such liability or asserted liability, for which the Company or any of its
officers, employees or representatives is responsible.

7.8 ATTORNEY'S FEES. If any action at law or in equity, including arbitration,
is brought before a court or arbitral tribunal of competent jurisdiction for the
purpose of enforcing or interpreting the terms of any of the Transaction
Agreements, said court or arbitral tribunal shall, in addition to any other
relief to which a party may be entitled, allocate among the parties reasonable
attorneys' fees, costs and necessary disbursements based on their respective
fault.

7.9 AMENDMENTS. This Agreement may be amended only expressly and by a writing
signed by the parties.

7.10 SEVERABILITY. If any provision in this Agreement is determined by a court
or arbitral tribunal of competent jurisdiction to be invalid, void or
unenforceable, such determination shall not invalidate, void, or make
unenforceable any other provision, agreement or covenant of this Agreement and
the parties shall modify this Agreement to the extent needed to give effect to
the original intention of the parties.

7.11 WAIVERS; DELAYS OR OMISSIONS; REMEDIES.

     (a)  Any waiver, permit, consent or approval of any kind or character on
          the part of any party of any breach or default under this Agreement,
          or any waiver on the part of any party of any provisions or conditions
          of this Agreement, must be in a writing signed by the party against
          whom the waiver, permit, consent or approval is sought to be enforced
          against and shall be effective only to the extent specifically set
          forth in such writing.


                                       15

<PAGE>

     (b)  No delay or omission to exercise any right, power or remedy accruing
          to any party under this Agreement upon any breach or default of the
          other party under this Agreement shall impair any such right, power or
          remedy of such non-breaching or non-defaulting party, nor shall it be
          construed to be a waiver of any such breach or default, or an
          acquiescence therein, or of or in any similar breach or default
          thereafter occurring; nor shall any waiver of any single breach or
          default be deemed a waiver of any other breach or default theretofore
          or thereafter occurring.

     (c)  All remedies, either under this Agreement or by law or otherwise
          afforded to any party, shall be cumulative and not alternative or
          exclusive.

7.12 ENTIRE AGREEMENT. This Agreement, and the documents referred to herein
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof, and any and all other written or oral agreements relating
to the subject matter hereof existing between the parties hereto are expressly
cancelled.

                            [Signature Page Follows]


                                       16

<PAGE>

WITNESS WHEREOF, this Stock Purchase Agreement has been duly executed by each of
the parties hereto as of the date first written above.

                                        INTELLIPHARMACEUTICS LTD.


                                        By: /s/ Isa Odidi
                                            ------------------------------------
                                        Name: Isa Odidi
                                        Title: CEO

                                        Address:
                                        30 Worcester Road
                                        Toronto, Ontario
                                        Canada M9W 5X2


                                        INTELLIPHARMACEUTICS INC.
                                        (solely with respect to Section 6
                                        hereof)


                                        By: /s/ Isa Odidi
                                            ------------------------------------
                                        Name: Isa Odidi
                                        Title: CEO

                                        Address:
                                        30 Worcester Road
                                        Toronto, Ontario
                                        Canada M9W 5X2


                                        PAR PHARMACEUTICAL, INC.


                                        By: /s/ Paul Campanelli
                                            ------------------------------------
                                        Name: Paul Campanelli
                                        Title: President

                                        Address:
                                        300 Tice Boulevard
                                        Woodcliff Lake, NJ 07677
                                        USA