ex101.htm


                                                                  


       

      
        	
                 

              	
                
                  100 Wellington
      Street West Suite 2201

                  Toronto,
      Ontario, Canada

                  M5K
      1K2

                  Phone:
      416-594-2228

                  Fax:
      416-352-5864

                

              


      

       

       

    

    December 3,
2008

     

    Mantra
Venture Group Ltd.

    Dominion
Building

    Suite 1205, 207
West Hastings Street

    Vancouver,
BC

    V6B
1H7

    


     

    


    Attention:                      Mr.
Larry Kristof – President and CEO

    


    


     

    Re:           Sponsorship
to TSX Venture Exchange (TSXV) and Proposed Equity Capital Raise (the
“Agreement”)

     

    


     

    Dear
Sirs,

     

        M Partners Inc. (the
“Agent” or “M Partners”) understands that Mantra Venture Group Ltd. (“the
Company”) proposes to become listed on the TSX Venture Exchange (the “TSXV”) and
requires a TSX Sponsorship formal due diligence study (the “Sponsorship”)
ensuring the Company meets all TSXV listing requirements. In addition, the
Company proposes to make an offering of securities concurrently to raise capital
under a non-brokered private placement, an offering up to CDN$1,500,000 by way
of an Equity Capital Raise (the “Offering”) and submit an application to qualify
a portion of the Offering for a tax credit under the Small Business Venture
Capital Act.

     

    Sponsorship

     

        The Agent agrees to
act as Sponsor to the Company and provide to the TSXV with a sponsorship report
subject to the terms and conditions set forth below:

     

    
      	
              1)  

            	
              The services
      offered pursuant to this Agreement shall include the submission by M
      Partners of a Sponsorship Report, as required by the TSXV under TSXV
      Policy 2.2, including a Sponsorship Acknowledgement, a preliminary
      Sponsorship Report and final Sponsor Report, subject to satisfactory
      results from Agent’s due diligence
reviews.

            


    

     

    
      	
              2)  

            	
              The Company
      will pay a non-refundable retainer fee of CDN$10,000 to Agent, upon
      execution of this Agreement.

            


    

     

    
      	
              3)  

            	
              The total
      Sponsorship fees payable, of CDN$45,000, plus G.S.T., less the retainer
      fee, shall be payable on the delivery of the final Sponsorship
      Report.   The Agent will not deliver the final Sponsorship
      Report unless sufficient money has been raised by the Company (in either
      the Offering or through non-brokered interim offerings) to meet the
      minimum asset and working capital listing requirements of the
      TSXV.

            


    

     

    
      	
              4)  

            	
              The Agent
      will commence the due diligence process for sponsorship following the
      execution of an engagement letter between the Company and the Agent and
      such due diligence shall be completed expeditiously. M Partners will
      appoint Kelly Klatik as the key contact person on this Sponsorship and
      will be required to notify the Company immediately of any changes to
      this.

            


    

     

    
      	
              5)  

            	
              The Company,
      will be responsible for the expenses of the Agent relating to this
      Agreement including, without limitation, legal fees, printing costs,
      mailing costs, all advertising charges approved by the Company and the
      Agent’s reasonable out-of-pocket expenses including all charges by
      ‘experts’ (consultants, under contracts approved by both the Company and
      Agent, providing assessments or technical reports required for the
      preparation of the Sponsor Report) and travelling expenses which will be
      budgeted by mutual agreement; provided that Agent will not incur aggregate
      expenditures (exclusive of fees, and disbursements of its counsel), in
      excess of CDN$10,000 during the term of this Agreement, without the prior
      approval of the Company. An expense retainer of CDN$10,000 will be
      required once the Agent has incurred CDN$5,000 in
  expenses.

            


    

     

    
      	
              6)  

            	
              The Company
      will be responsible for any non-brokered interim offerings and closings of
      funds prior to the completion of the Sponsorship report and TSXV listing.
      The Company will be required to provide continuous disclosure and updates
      to the Agent of any terms and conditions of these interim capital raises.
      The Agent has the option to participate in the non-brokered offering as a
      finder and will earn a commission (the “Finder’s Commission”) equal to
      eight percent (8.0%) of the aggregate gross proceeds received by the
      Company from investors referred by the Agent under the non-brokered
      placement, which will be payable to the Agent at the time of closing of
      the Offering. The Company will refer any institutional clients resident in
      Canada to the Agent on the non-brokered offering. The maximum raised under
      the non-brokered offering from Canadian residents will be CDN$350,000 and
      this limit will apply for the earlier of the conclusion of the Sponsorship
      and 60 days from the date of this Agreement (“Non-Brokered Offering
      Period”). The maximum raised may be increased by mutual consent of the
      Company and the Agent.  After the Non-Brokered Offering Period,
      if the Sponsorship has not been completed and is ongoing, the Company may
      raise an additional CDN$350,000 through additional non-brokered offerings
      from Canadian resident investors every 60 days as agreed by Agent acting
      reasonably.

            


    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

    
      	
              7)  

            	
              The Company
      may also complete one or more interim non-brokered offerings from
      investors (institutional or non-institutional) not resident in Canada
      (“International Offerings”).  If the Company completes
      International Offerings prior to a TSXV listing, the Company will pay the
      Agent a commission on the aggregate gross proceeds received by the Company
      pursuant to the International Offerings equal
  to:

            


    

     

    
      	
              a.  

            	
              four percent
      (4%) for non institutional investors for any financing received by the
      Company in excess of  the Exempt International Offering Amount
      as described below; and

            


    

     

    
      	
              b.  

            	
              eight percent
      (8%) for institutional investors.

            


    

     

    The Exempt
International Offering Amount shall be equal to CDN$350,000 every 60 days, less
the amount of any financing received by the Company from Canadian residents
during that 60 day period.

     

    The Company will be
required to provide continuous disclosure and updates to the Agent of any terms
and conditions of the International Offerings.

     

    
      	
              8)  

            	
              Any capital
      raised through any non-brokered interim offerings will not be subject to
      the requirement that the funds be held in escrow by the Agent until
      completion of the TSXV listing, subject to regulatory
    rules.

            


    

     

    Equity Capital Raise
Offering

     

        In addition and
exclusive to the sponsorship, the Agent wishes to arrange, on a commercially
reasonable best efforts basis, the offer and sale of the Offered Securities
(defined below).  The Offering is proposed to be units comprised of
Common Shares of the Company (the “Common Shares”) and Common Share Purchase
Warrants (the “Warrants”) issued from treasury of the Company (the “Offered
Securities”) in accordance with the terms below. This offering may be concurrent
to the Sponsorship; however, will not close until the completion of the
Sponsorship report and listing of the Company on the TSXV. In addition, the
Agent will assist with an application to qualify a portion of the Company’s
Offered Securities for a tax credit under the Small Business Venture Capital
Act.

     

        Subject to the terms
and conditions hereof, the Company hereby appoints the Agent and the Agent
hereby agrees to act as the Company’s exclusive lead agent, on a commercially
reasonable best efforts basis and upon the terms and subject to the conditions
hereinafter set forth to offer and sell the Offered Securities to accredited
investors.  The Agent, under guidance from the Company, may appoint in
respect of the Offering, a syndicate or selling group consisting of other agents
or sub-agents who are registered dealers, subject to the approval of the
Company.  The obligations of the Company hereunder shall be
conditional upon receiving all consents, approvals and/or waivers from the TSXV.
The proposed terms and conditions of the Offering are as follows:

     

    Summary of
Terms

     

    
      	
               Issuer:

            	
              Mantra
      Venture Group Ltd. (the “Company”)

            
	
              Offered
      Securities:

            	
              Units of the
      Company (the “Units”). Each Unit consisting of one common share of the
      Company (a “Common Share”) and one half Common Share purchase warrant,
      with each whole Common Share purchase warrant (a “Warrant) entitling the
      holder to purchase a Common Share (a “Warrant Share’) for 2 years at a
      price equal to a to be determined % premium to the Issue Price during the
      first year following the date of the closing of the Offering and a to be
      determined % premium to the Issue Price during the second year following
      the date of the closing of the Offering. The premiums, if any, will be
      determined in context with market conditions.

            
	
              Price:

            	
               The
      Issue Price will be determined in context with market conditions (the
      “Issue Price”).

            
	
              Offering
      Amount:

            	
              Up to CDN
      $1,500,000

               

            
	
              Over-Allotment
      Option:

            	
              Over-Allotment
      Option to acquire additional Units, representing 20% of the number of
      Units, to cover over-allotments, if any, and for market stabilization
      purposes. The Over-Allotment Option may be exercised at the Issue Price
      for a period of 30 days from the date of closing of this
      Offering.

               

            
	
              Selling
      Jurisdictions:

            	
              Provinces of
      Ontario, Alberta, British Columbia and such other Provinces and/or
      jurisdictions outside of Canada as may be agreed to between the Company
      and the Agent.

               

            
	
              Use of
      Proceeds:

            	
              The net
      proceeds will be used to provide capital to meet working capital
      requirements for the TSX Venture Exchange (the “TSXV”) listing and for
      working capital purposes, as per schedule “A” attached.

               

            
	
              Closing
      Date:

            	
              As may be
      agreed to between the Company and the Agent

               

            
	
              Conditions:

            	
              Funds will be
      held in escrow and the Offering will not be completed until approval of
      regulatory bodies for listing on the TSXV is received.

            
	
              Agent’s
      Compensation:

            	
              A cash
      commission (the “Agent’s Commission”) equal to eight percent (8.0%) of the
      aggregate gross proceeds received by the Company under the Offering will
      be payable to the Agent at the time of completion of the Offering. The
      Agents Commission will be reduced to four percent (4.0%) on gross proceeds
      from investors (non-institutional) referred by the Company, excluding
      other intermediaries. The Company or Agent may introduce other sub-agents
      to the Offering and the sub-agents may participate in a portion of the
      cash commission, as agreed by Agent.

               

               

              The Company
      shall create and issue to the Agent non-transferable warrants (“Broker’s
      Warrants”) entitling the Agent to acquire 8% of the number of Units sold
      under the Offering exercisable at a 15% premium to the Issue Price of the
      Units for a period of 18 months from closing.

               

            
	
              Expenses:

            	
              The Company
      shall be responsible for all reasonable costs and expenses of the
      Offering, including due diligence costs, and shall reimburse the Agent for
      its reasonable out-of-pocket expenses and pay the fees of the Agent’s
      legal counsel as per guidelines under Sponsorship heading item
      (5)

               

            
	 
    	 
    


    

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Prospectus Exempt
Offering

     

        The offer and sale of
the Offered Securities is to be made in a manner exempt from the prospectus
requirements of the securities legislation of the Provinces of British Columbia,
Alberta and Ontario (and such other Provinces of Canada in which the Offered
Securities may be sold) (the “Offering Jurisdictions”) without the necessity of
obtaining any orders of relevant securities commissions or other appropriate
regulatory bodies.

     

        The Offered
Securities are being offered by the Company in Canada pursuant to exemptions
from the prospectus requirements of applicable securities laws set out in NI
45-106 Prospectus and Registration Exemptions (“NI 45-106”) which exempts trades
in a security if the purchaser is an accredited investor as defined in NI 45-106
or purchasing securities with a cost of not less than CDN$150,000 paid in
cash.  Subscriptions will only be accepted by the Company from persons
resident in the Offering Jurisdictions either who are and certify they are
accredited investors or purchase Units with a cost of not less than
CDN$150,000.  The Agent agrees that it will conduct its activities in
connection with the distribution of the Offered Securities on the foregoing
basis in compliance with all relevant laws and regulatory
requirements.

     

    Other
Jurisdictions

     

        The Offering may be
made in such other jurisdictions outside of Canada as the Agent and the Company
may agree, subject to the purchaser of Offering Securities and the Company
demonstrating to the satisfaction of the Agent that the Offered Securities may
be offered and sold in such other jurisdiction.

     

        The Company and the
Agent undertake to file or cause to be filed all forms and undertakings required
to be filed by the Company and the purchasers, respectively, in connection with
this Offering so that the offer and sale of the Offered Securities may lawfully
occur without the necessity of filing a prospectus.

     

     

    Subscription
Agreement

     

        Each purchaser of
Offered Securities shall execute a subscription agreement in a form satisfactory
to the Company and the Agent acting reasonably.

     

     

    Commercially Reasonable Best
Efforts Offering

        

        It is understood that
this letter agreement does not represent a firm commitment of the Agent to
purchase any offered Units.  The Agent shall act as the Company's
exclusive lead-agent in connection with the Offering, and shall use its
commercially reasonable best efforts to solicit purchases of the Offered
Securities, but the Agent shall have no obligation to purchase any
Units.  The Agent’s ability to successfully market the issue will be
contingent upon market conditions at the time of the Offering and the completion
of satisfactory due diligence by the Agent or its representatives.

     

        The Company agrees
not to deal with any other underwriter or agent in respect of the subject
financing nor will the Company seek financing in a form the same as, or similar
to, the subject financing before the end of the term of this agreement, without
prior written consent of the Agent, such consent not to be unreasonably
withheld.

     

        During the term of
this agreement, the Company may introduce other sub-agents to the Offering and
the sub-agents may participate in a portion of the cash commission, as agreed by
Agent.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Due
Diligence

     

        The Agent will
commence the due diligence process immediately following a fully executed
agreement between the Company and the Agent and such due diligence shall be
completed expeditiously. The Company will make available to the Agent all
financial information, documentation and records of the Company and its
subsidiaries and shall further make available to the Agent the senior management
of the Company and subsidiaries in order to enable the Agent to conduct such due
diligence investigations and review as the Agent determines necessary and to
assist the Agent in completion of the sponsorship documents and to market the
Offering.

        

        The Company agrees
that during the term of this engagement, the Agent will be kept informed of all
material business and financial developments affecting the Company and its
business, whether or not requested by the Agent or its legal counsel.


     

     

    Indemnity

     

        The Company covenants
and agrees to protect and indemnify the Agent for and on behalf of itself and
for and on behalf of and in trust for its officers, employees and agents (an
“Indemnified Party”) against any and all losses (other than loss of profits),
claims, damages, liabilities, costs or expenses caused or incurred by reason of
or arising out of the Offering or the subject matter of this agreement including
without limitation:

     

     

    
      	
              (a)  

            	
              Any statement
      which at the time and in the light of the circumstances under which it was
      made may contain a misrepresentation (as defined in the Securities Act
      (Ontario)) (other than information relating to or provided by the Agent);
      or

            


    

     

    
      	
              (b)  

            	
              The omission
      or alleged omission to state any material fact required to be stated
      therein or necessary to make any statement therein not misleading in the
      light of the circumstances under which it was made (other than information
      relating to or provided by the
Agent).

            


    

     

        If any action or
claim shall be asserted against an Indemnified Party in respect of which
indemnity may be sought from the Company pursuant to the provisions hereof, or
if any potential claim contemplated hereby shall come to the knowledge of an
Indemnified Party, the Indemnified Party shall promptly notify the Company in
writing of the nature of such action or claim (provided that any failure to so
notify shall not affect the Company's liability under this paragraph unless such
delay has prejudiced the defense to such claim).  The Company shall
assume the defense thereof at its expense, provided, however that the defense
shall be through legal counsel acceptable to the Indemnified Party, acting
reasonably.  In addition, the Indemnified Party shall also have the
right to employ separate counsel in any such action and participate in the
defense thereof, and the fees and expense of such counsel shall be borne by the
Company if:

     

    
      	
              (a)  

            	
              The
      Indemnified Party has been advised by counsel, acting reasonably, that
      representation of the Company and the Indemnified Party by the same
      counsel would be inappropriate due to actual or potential differing
      interests between them; or

            


    

     

     

    
      	
              (b)  

            	
              The Company
      has failed within a reasonable time after receipt of such written notice
      to assume the defense of such action or
claim.

            


    

     

     

        It is understood and
agreed that neither party shall effect any settlement of any action or claim or
make any admission of liability without the written consent of the other party,
such consent not to be unreasonably withheld or delayed.

     

        In the event that,
for any reason, the indemnity provided for herein is unavailable, the Agent and
the Company shall contribute to the aggregate of all losses, claims, damages,
liabilities, costs or expenses such that the Agent shall be responsible for that
portion represented by the percentage that the Agent's Commission bears to the
gross proceeds from the Offering and the Company shall be responsible for the
balance.  Notwithstanding the foregoing, a person guilty of fraudulent
misrepresentation shall not be entitled to contribution from any other
party.  Any party entitled to contribution will, promptly after
receiving notice of commencement of any claim, action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this section, notify such party or
parties from whom contribution may be sought.  In no case shall such
party from whom contribution may be sought be liable under this contribution
agreement unless such notice shall have been provided, but the omission to so
notify such party shall not relieve the party from whom contribution may be
sought from any other obligation it may have otherwise than under this
section.  The right to contribution provided in this section shall be
in addition to, and not in derogation of, any other right to contribution which
the Agent may have by statute or otherwise by law.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    


    Conditions

     

        The following are
conditions of the obligations of the Agent and purchasers of the Offered
Securities to close the transaction contemplated hereby which conditions the
Company covenants to exercise its reasonable efforts to have fulfilled at or
prior to closing, which conditions may be waived in writing in whole or in part
by the Agent on behalf of the purchasers:

     

    
      	
              (a)  

            	
              The Company
      will make reasonable efforts to provide the Agent with such financial and
      other information as Agent may reasonably request and which is reasonably
      available to the Company and is not subject to agreements prohibiting
      disclosure thereof in order to perform the services contemplated by this
      Agreement.  The Company will make reasonable efforts to make
      available to Agent all information pertaining to the Company or which is
      available to the Company determined in the opinion of Agent to be material
      to the Sponsorship Report.

            


    

     

    
      	
              (b)  

            	
              The Company
      agrees that the Sponsorship Report (including Sponsorship Acknowledgement,
      preliminary Sponsorship Report and final Sponsorship Report) shall not be
      released to any party, other than the TSXV, without the express written
      consent of Agent.  The Company hereby further agrees that the
      contents of Agent’s due diligence reviews and documentation included
      therein, including, without limitation, all opinions and reports of
      Agent’s professionals and experts (the “Review Materials”), are
      confidential to Agent;  Agent is under no obligation to disclose
      the Review Materials to the Company.  The Company confirms,
      acknowledges and agrees that in carrying out its due diligence obligations
      to the TSXV Agent is obligated to research and confirm both the academic
      credentials and work experience of the Company’s officers and directors in
      certain circumstances and accordingly Agent will need to contact relevant
      companies and academic
institutions.

            


    

     

    
      	
              (c)  

            	
              The Company
      shall comply with corporate governance recommendations and requirements of
      applicable securities laws and the TSXV and shall in any event make
      efforts towards inclusion of at least one independent director on the
      board and at least on director with relevant industry
      experience;

            


    

     

    
      	
              (d)  

            	
              There has
      been no significant or material information that arises out of the due
      diligence process, which may impact the Agents ability to raise
      capital;

            


    

     

    
      	
              (e)  

            	
              There is no
      material change in the management of the Company between the date hereof
      and the closing anticipated herein (except with the permission of the
      Agent);

            


    

     

    
      	
              (f)  

            	
              The Company
      and the Agent shall have entered into a definitive Agency Agreement
      providing for the Offering;

            


    

     

    
      	
              (g)  

            	
              The Company
      shall have created and the Company and each purchaser shall have entered
      into a form of subscription agreement satisfactory to the
      Agent;

            


    

     

    
      	
              (h)  

            	
              The Company’s
      Board of Directors shall have authorized and approved this engagement
      letter, the Agency Agreement and the forms of subscription agreements and
      warrant certificate and the issuance of the Common Shares, creation of the
      Warrants and Broker’s Warrants and the issuance of Common Shares on the
      exercise of Warrants and Broker’s
Warrants;

            


    

     

    
      	
              (i)  

            	
              The Agent and
      each Purchaser shall have received a certificate of the Company signed by
      a senior officer of the Company on behalf of the Company certifying that
      the Company has complied with the terms of this agreement, that there has
      been no material adverse change in the assets, liabilities, financial
      position, business or operations of the Company not otherwise publicly
      disclosed and filed by the Company and/or it subsidiaries on SEDAR and
      such other customary factual matters as the Agent may reasonably
      request;

            


    

     

    
      	
              (j)  

            	
              The Agent and
      the purchasers of Common Shares shall have received an appropriate legal
      opinion from the Company’s legal counsel, respecting the corporate status
      of the Company, the issuance of the Common Shares and Warrants and the exemption
      of the Offering from the prospectus requirements of applicable securities
      law and such other customary matters as the Agent may reasonably
      require;

            


    

     

    
      	
              (k)  

            	
              The Company
      shall have obtained all necessary approvals for the Offering, and the
      listing of the corporation on the TSXV, including conditional acceptance
      of the TSXV and shareholder approval satisfactory to TSXV, if
      required;

            


    

     

    
      	
              (l)  

            	
              The funds
      received pursuant to this Offering shall be held in escrow by Agent’s
      legal counsel and shall not be released to the Company until such time as
      the conditions described in (l) above have been met;
  and

            


    

     

    
      	
              (m)  

            	
              Such other
      terms and conditions as the Agent may reasonably establish and
      request.

            


    

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Agent’s
Covenant

     

        Agent agrees that any
confidential information obtained by it, which is not otherwise in the public
domain, in performing the services contemplated by this Agreement, will not be
disclosed or used in any manner except in conjunction with providing the
services to the Company hereunder.  Agent agrees that it will not use
any confidential information, analysis, documents or reports prepared by Agent
or opinions received from the Company with respect to the Company or the value
of its assets for any purpose other than advising the Company.  Agent
shall not under any circumstances provide to any third party any information
relating to the Company that is not in the public domain.  If Agent
has any doubt as to whether any such information is in the public domain, Agent
shall consult with the Company and the Company’s classification of such
information as being either public or confidential shall be final and binding.
This covenant will expire in 18 months.

     

     

    Agency
Agreement

     

        The definitive terms
of our agreement will be governed by a formal agency agreement (the “Agency
Agreement”) in respect to the Offering to be settled as soon and entered into as
is reasonably practicable. The Agency Agreement will be negotiated in good faith
among the Company and the Agent and will contain representations, warranties,
covenants, conditions, including, without limitation, any conditions referred to
in this letter agreement, the delivery of legal opinions from counsel to the
Company with respect to the Offering and other relevant corporate and securities
matters as well as the due authorization and enforceability (subject to the
usual exceptions) of material contracts acceptable to the Agent and its counsel
and indemnities and termination provisions (including, without limitation, a
broad “market out”, “disaster-out”, “material adverse change-out”,
“litigation-out”, “due diligence-out” and “regulatory-out” rights) standard in
agreements of this type and will be consistent in all material respects with
this letter.

     

     

    Documentation

     

        The Company shall be
responsible for preparation of all marketing documentation to be used by the
Agent notwithstanding that Agent may assist the Company in preparation of such
documentation.

     

     

    Closing

     

        The purchase of the
Offered Securities will be completed at the offices of legal counsel to the
Company in Vancouver, British Columbia at (i) 10:00 am on the date as may be
mutually agreed by the Company and the Agent.  At the respective
closings, the Company shall deliver to the Agent on behalf of the
purchasers:

     

    
      	
              (i)

            	
              Share
      certificates and warrant certificates duly registered as the Agent on
      behalf of the purchasers representing the Offered Securities shall
      direct;

            


    

     

    
      	
              (ii)

            	
              The officers’
      certificate and the legal opinion as contemplated above;
    and

            


    

     

    
      	
              (iii)

            	
              Such further
      documentation as the Agent may reasonably
  require;

            


    

     

    against
payment of the purchase price for the Offered Securities being purchased by
certified cheque or bank draft.  At closing the Company will make
payment of the Agent’s fees and reimbursement of the Agent’s legal fees and
expenses by certified cheque payable or to the direction of the
Agent.  The Agent and the Company may discharge their respective
payment obligations by way of direction and delivery by the Agent of a net
proceeds cheque to the Company.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    Alternative
Transaction

     

        Subject to Subsection
6 of the heading “Sponsorship” in this Agreement, until the earlier of the
completion of the Offering or termination of this letter of agreement, the
Company agrees not to sell or negotiate or enter into an arrangement to sell all
or substantially all of the assets of the Company or enter into a merger,
amalgamation, arrangement, reorganization, takeover-bid or other business
combination with a third party or other similar transaction, which transaction
does not provide for the completion of the Offering (an “Alternative
Transaction”) without the prior written consent of the Agent, such consent not
to be unreasonably withheld. In the event that the Company enters into an
agreement or makes a public announcement with respect to an Alternative
Transaction prior to completion of the Offering, the Company agrees to pay the
Agent its expenses of the Offering and the legal expenses of the Agents’ legal
counsel(s) incurred in connection with the Offering, plus a fee equal to the
Agent’s Commission assuming an offering of CDN$750,000, in full satisfaction of
all claims against the Company in this regard.

     

     

    Right of First Refusal


     

        The Company hereby
grants to the Agent a right to first refusal (“ROFR”) to act as its lead agent,
underwriter, or advisor on any subsequent financing undertaken by the Company or
its subsidiaries (whether or not such financing is undertaken through a broker,
underwriter, agent or otherwise) and a right of first offer to act as its
financial advisor on any strategic transaction, including a merger, an
acquisition, or a divestiture of any kind. The rights shall be in effect during
the 12 month period immediately following the closing of the private placement.
The ROFR shall apply irrespective of the nature of the financing transaction
which the Company plans to undertake including, without limitation, a public
offering or private placement, equity, convertible securities or secured,
unsecured, mezzanine or subordinated debt financing or otherwise. Following a
written notice by the Company to the Agent of the required assignment, the Agent
will have 10 business days to issue a term sheet to the Company that is in
context to Company’s financial position and the current market
conditions.

     

     

    Limits on Issuing Securities
and Trading

     

        The Company agrees
not to authorize, sell or issue or announce its intention to authorize, sell or
issue or negotiate or enter into an agreement to sell or issue any Common Shares
(including those that are convertible or exchangeable into Common Shares) other
than (i) pursuant to the Offering, (ii) upon the exercise of convertible
securities, options or warrants of the Company outstanding at the date hereof,
or (iii) pursuant to the Company’s stock option plan or share compensation plan,
for a period determined by the TSXV Escrow requirements

        

        Provided that the
Offering is completed, all of the officers and directors of the Company
immediately prior to the completion of the Offering shall execute and deliver
written undertakings in favour of the Agent agreeing not to sell, contract to
sell, grant an option to purchase, make any short sale, transfer, assign, pledge
or otherwise dispose of, or announce any intention to do so, any securities of
the Company owned, directly or indirectly, by them for a period determined by
the TSXV Escrow requirements.

    


     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Termination

     

        The Agent may
terminate this Agreement, with no further consequences to the Company, by giving
notice in writing to the Company at any time if:

     

    
      	
              (a)

            	
              The Agent is
      not satisfied in its sole discretion with its due diligence review and
      investigation of the Company and consequently the Agent is unwilling or
      unable to market the Offering due to reasons consequent to its due
      diligence investigations; or

            


    

     

    
      	
              (b)

            	
               There is, in
      the opinion of the Agent, a material change in management occurs or a
      change in any material fact or a new material fact shall arise which would
      be expected to have an adverse change or effect on the business, affairs,
      prospects or financial condition of the Company or on the market price or
      the value of the securities of the Company;
or

            


    

     

    
      	
              (c)

            	
               The state of
      the financial markets becomes such that in the sole opinion of the Agent
      it would be impracticable or unprofitable to offer or continue to offer
      the proposed securities for sale;
or

            


    

     

    
      	
              (d)

            	
               There should
      develop, occur or come into effect any event of any nature, including
      without limitation, accident, act of terrorism, public protest,
      governmental law or regulation which in the sole opinion of the Agent
      adversely affects or may adversely affect the financial markets or the
      business, affairs, prospects or financial condition of the Company or the
      market price or value or marketability of the securities of the Company;
      or

            


    

     

    
      	
              (e)

            	
               There is an
      enquiry or investigation (whether formal or informal) by any securities
      regulatory authority in relation to the Company or any one of its officers
      or directors, or any of its principal shareholders;
  or

            


    

     

    
      	
              (f)

            	
               The Company
      is in breach of a material term, condition or covenant of this agreement
      or the Agency Agreement, or any representation or warranty given by it in
      this agreement becomes or is false;
or

            


    

     

    
      	
              (g)

            	
               The Agent has
      not completed the Offering within 6 months of the execution of this
      Agreement; the Agent may terminate this Agreement with 10 days written
      notice to the Company and with no further
  consequences.

            


    

    


    The Company may
terminate this Agreement with no further consequences if the Agent has not
completed the Offering within 6 months of the execution of this Agreement by
providing 10 days written notice to the Agent.

    


     

        The Company may
terminate this Agreement before the completion of the Offering, and before 6
months have elapsed since the execution of this Agreement, for any
reason.  If the Company chooses to terminate this Agreement before the
completion of the Offering, and before 6 months have elapsed since the execution
of this Agreement, the Company shall pay the Agent the Agent’s expenses of the
Offering and the legal expenses of the Agents’ legal counsel(s) incurred in
connection with the Offering, plus a fee equal to the Agent’s Commission
assuming an offering of CDN$750,000, in full satisfaction of all claims against
the Company in this regard.

     

        If the Company
terminates this Agreement and completes a non-brokered financing from any person
referred by the Agent within a period of 180 days after termination of this
Agreement, the Company shall pay the Agent a commission of 8% of the gross
proceeds, which shall be due and payable upon closing of any such
financing.

     

        If the Company
terminates this Agreement, and within a period of 120 days it enters into a
sponsorship agreement with a different agent, it shall be obligated to pay to M
Partners the sponsorship fee of CDN$45,000 (less the CDN$10,000
deposit).  This fee shall be payable to M Partners upon completion of
the Company’s listing on the TSXV.

     

    
      (REMAINDER OF PAGE
LEFT INTENTIONALLY BLANK)

    

     

     

    
 

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    


    General

     

        This agreement shall
be governed by and construed in accordance with the laws of the Province of
British Columbia and time shall be of the essence hereunder. The parties agree
to attorn to the jurisdiction of the Province of British Columbia regarding any
legal dispute between the parties.

     

        If the foregoing is
in accordance with your understanding and is agreed to, please evidence our
agreement by execution and delivering to the Agent two copies of this
letter.

     

        Unless otherwise
extended by the Agent in writing, this offer is open for acceptance by the
Company’s acceptance by facsimile at 416-352-5864 - Attention: Kelly Klatik
until 5:00 p.m. (Vancouver time) on December 4, 2008.

     

        Yours very
truly,

     

        M Partners
Inc.

     

        By: /s/
Kelly Klatik

        Kelly
Klatik

        Vice
President

     

        By: /s/
Thomas S. Kofman

        Thomas S.
Kofman

        Chairman

     

     

        The foregoing
accurately reflects our understanding and is agreed to on the terms set forth
above.

     

     

        AGREED AND
ACCEPTED this 4th day of
December, 2008.

     

        By: /s/
Larry Kristof

        Mantra
Venture Group Ltd.

        Larry Kristof
– President and CEO