INFOWAVE SOFTWARE INC
AGENCY AGREEMENT DATED JULY 27, 2001
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>5
<FILENAME>ex-10_1.txt
<DESCRIPTION>AGENCY AGREEMENT DATED JULY 27, 2001
<TEXT>
                                                                    EXHIBIT 10.1


                             INFOWAVE SOFTWARE, INC.

                                AGENCY AGREEMENT

Infowave Software, Inc.
4664 Lougheed Highway, Suite 200
Burnaby, British Columbia
V5C 5T5 Canada

                                                     July 27, 2001

Gentlemen:

          Infowave  Software,  Inc., a corporation  organized  under the laws of
British  Columbia  (the  "Company"),  proposes to offer for sale to  "accredited
investors," in a private placement in the United States, Europe and the Canadian
provinces of British  Columbia and Ontario  (the  "Placement"),  a minimum of 50
(the "Minimum  Offering") and a maximum of 100 (the "Maximum  Offering") special
warrants (the "Special Warrants") at $100,000 per Special Warrant (the "Purchase
Price"). The Maximum Offering may be increased by up to 50 Special Warrants,  if
required,  to cover  over-subscriptions.  The Special  Warrants,  which shall be
governed  by a  special  warrant  indenture  in the form to be  agreed to by the
Company and the Placement Agent (the "Special Warrant Indenture"),  are, subject
to the limitations  therein,  exchangeable for no additional  consideration on a
one-for-one  basis for units (the  "Units"),  each Unit  consisting  of: (i) the
number of the Company's common shares  determined by dividing the Purchase Price
by the Closing  Price (as defined  below) (the  "Shares")  and (ii)  warrants to
purchase the additional  number of common shares equal to one-half the number of
Shares  comprising  a Unit at a per share  exercise  price  equal to 130% of the
Closing  Price (the  "Warrants").  The Warrants  shall  contain  provisions  for
cashless exercise and shall expire on the date which is the earlier of (a) three
years after the initial closing of the Placement (the "Initial Closing") and (b)
30 days after  written  notice by the  Company  that the  closing  price for the
Company's  common  shares has equaled or exceeded  CDN$9.00  for 20  consecutive
trading  days ending  within five days of the mailing of the notice.  Expiration
pursuant to clause (b) requires that the Company's  common shares then be listed
on the Toronto Stock  Exchange  (the "TSE"),  the New York Stock  Exchange,  the
American  Stock  Exchange,  the Nasdaq  SmallCap  Market or the Nasdaq  National
Market  and  that  the  shares  issuable  upon  exercise  of the  Warrants  (the
"Underlying  Shares")  not be subject to any lock-up  provisions  imposed by the
Company or the Placement Agent (as defined below).  The "Closing Price" shall be
equal to 85% of the  weighted  average of the  trading  prices of the  Company's
common  shares on the TSE for the five  trading  days ending on the business day
preceding the date of the Initial  Closing.  The Warrants shall be governed by a
warrant  indenture  in the form to be agreed to by the  Placement  Agent and the
Company (the "Warrant Indenture"). The Special Warrants will be exchangeable for
Units at the holder's  option on the earlier of (i) six months after the Initial
Closing  and  (ii)  the  date  the  Company  enters  into  any  sale  or  merger
transaction, and will be automatically exchanged for Units without any action on
the part of the holder on the earlier of (i) the third  business  day  following
the date receipts are received from the British Columbia and Ontario  Securities
Commissions for the final,  long-form Canadian  Prospectus  qualifying the Units
for distribution or (ii) 12 months after the Initial Closing.  All references to
"$" or dollars in this Agreement are to United States  dollars unless  otherwise
indicated. The term Units shall be deemed to refer to or


<PAGE>

include the Special  Warrants,  where such reference or inclusion is required by
the context in which it is used.

          The Special  Warrants  and the Units are being  offered in  accordance
with Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act") and
Regulation D  promulgated  thereunder.  The Minimum  Offering  will be made on a
"best  efforts - all or none"  basis and the  balance of the  Placement  will be
offered on a best efforts basis.

          Commonwealth  Associates,  L.P.  will  serve as  placement  agent (the
"Placement Agent") in connection with the Placement.

          The form of proposed  subscription  agreement  between the Company and
each  subscriber  for the  Placement is referred to herein as the  "Subscription
Agreement." The Company will prepare a confidential private placement memorandum
reasonably  acceptable  to the Placement  Agent for use in  connection  with the
Placement (the  "Memorandum").  It is expressly  agreed that the Memorandum will
not be delivered to prospective  investors in Canada . Accordingly,  the Company
will prepare a term sheet in a form reasonably acceptable to the Placement Agent
for delivery to prospective investors in British Columbia and Ontario which will
be in compliance with Canadian  securities  laws. The  Memorandum,  as it may be
amended or supplemented  from time to time, the  Subscription  Agreement and all
exhibits  that are part of the  Memorandum  or the  Subscription  Agreement  are
collectively  referred to herein as the "Offering  Documents."  The Company will
prepare  and  deliver  to you a  reasonable  number of  copies  of the  Offering
Documents in form and substance reasonably satisfactory to you and your counsel.

          Each prospective  investor subscribing to purchase Special Warrants in
the Placement  (each a  "Subscriber")  will be required to deliver,  among other
things, the Subscription Agreement and a confidential purchaser questionnaire in
the form to be provided to prospective investors. Capitalized terms used herein,
unless otherwise defined or unless the context otherwise  indicates,  shall have
the same meanings provided in the Offering Documents.

     1.   Appointment of Placement Agent.

          (a) You are hereby appointed  exclusive Placement Agent of the Company
(subject to  subsection  (f) below and your right,  with the  Company's  consent
(which consent shall not be  unreasonably  withheld),  to have selected  dealers
("Selected  Dealers")  which are either (i) in good  standing  with the National
Association  of  Securities  Dealers  ("NASD") or (ii) foreign  banks,  brokers,
dealers  or  other  institutions  not  eligible  for  membership  in  the  NASD,
participate  in the  Placement)  for the  purposes of  assisting  the Company in
finding  qualified  Subscribers for the Placement.  The Company agrees that CIBC
World Markets Inc. ("CIBC") and Canaccord Capital Corporation ("Canaccord"),  or
their respective affiliates,  may act as Selected Dealers in connection with the
Placement.  The offering period for the Placement (the "Offering  Period") shall
commence on the date the  Memorandum  is  delivered to the  Placement  Agent and
shall  continue  until five  business  days  following  the date of the  Special
Meeting  (as defined in Section  4(k)  hereof)  (the  "Termination  Date").

          (b)  Subject  to  the  performance  by  the  Company  of  all  of  its
obligations  to be performed  under this Agreement and to the  completeness  and
accuracy of all  representations and warranties of the Company contained in this
Agreement,  the Placement Agent hereby accepts such agency and agrees to use its
best efforts to assist the Company in finding qualified



                                       2
<PAGE>

Subscribers for the Placement.  Except for the foregoing,  it is understood that
the Placement Agent has no commitment to sell the Special Warrants or the Units.

          (c) Your agency  hereunder is not  terminable  by the Company prior to
the  Termination  Date except upon the earlier of (i) expiration of the Offering
Period or (ii) the decision of the Company or the Placement Agent not to proceed
with the Placement in accordance with Section 4(b)(iii) of this Agreement.

          (d)  Subscriptions  for Special  Warrants  shall be  evidenced  by the
execution  by  Subscribers  of  the  Subscription   Agreement.  No  Subscription
Agreement shall be effective  unless and until it is accepted by the Company and
the Company shall have control over, and the right to reject any, subscriptions,
subject to the provisions of subsection (g) below. The Placement Agent shall not
have any obligation to independently  verify the accuracy or completeness of any
information  contained  in  any  Subscription  Agreement  or  the  authenticity,
sufficiency,  or validity of any check delivered by any prospective  investor in
payment for Special Warrants.

          (e) The Placement  Agent and/or its affiliates may be investors in the
Placement.

          (f) The Company may enter into agreements with CIBC and Canaccord,  or
their  respective  affiliates,   to  either  serve  as  co-placement  agents  in
connection  with the  Placement or to raise up to  $5,000,000  on terms not more
favorable than those of the Placement.

          (g) The Company agrees to either (i) accept proper  subscriptions from
investors  introduced to the Company by the Placement  Agent (the  "Commonwealth
Investors")  representing no less than the greater of (x) 60 Special Warrants or
(y) 60% of the total number of Special  Warrants  sold in the  Placement or (ii)
provided proper  subscriptions  from Commonwealth  Investors have been received,
pay to the Placement Agent the full compensation provided for in Section 3(d) as
if the Company had accepted such subscriptions  (including  reimbursement of the
Placement Agent Expenses (as defined herein)).


     2.  Representations  and Warranties of the Company.  The Company represents
and  warrants  to the  Placement  Agent and each  Selected  Dealer,  if any,  as
follows:

          (a) Securities Law Compliance.  The offer, offer for sale, and sale of
the Special  Warrants and Units have not been registered under the 1933 Act. The
Special  Warrants  and Units  are to be  offered,  offered  for sale and sold in
reliance upon the exemptions from the registration  requirements of Section 5 of
the 1933 Act. The Company will use its best efforts to conduct the  Placement in
compliance  with the  requirements  of  Regulation  D of the  General  Rules and
Regulations  under  the 1933 Act,  and the  Company  will  file all  appropriate
notices of offering with the United States  Securities  and Exchange  Commission
(the  "SEC").  The Company has prepared  the  Offering  Documents.  The Offering
Documents  will not contain any untrue  statement of a material  fact or omit to
state any material fact  necessary in order to make the statements  therein,  in
light of the  circumstances  in which they were made, not misleading.  If at any
time prior to the  completion  of the  Placement  or other  termination  of this
Agreement  any event shall occur as a result of which it might become  necessary
to amend or  supplement  the Offering  Documents so that they do not include any
untrue  statement  of any  material  fact or omit to  state  any  material  fact
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances  then existing,  not misleading,  the Company will promptly notify
you and will



                                       3
<PAGE>

supply you with amendments or supplements correcting such statement or omission.
The  Company  will also  provide  to the  Placement  Agent for  delivery  to all
offerees and  purchasers  and their  representatives,  if any, any  information,
documents and instruments  which the Placement Agent deems reasonably  necessary
to comply with applicable state and federal law.

          (b) Organization. The Company is a corporation duly organized, validly
existing  and in good  standing  under the laws of British  Columbia and has all
requisite  corporate  power and  authority to own and lease its  properties,  to
carry on its  business as currently  conducted  and as described in the Offering
Documents,  to  execute  and  deliver  this  Agreement  and  to  carry  out  the
transactions  contemplated  by  this  Agreement,  as  appropriate,  and is  duly
licensed  or  qualified  to  do  business  as  a  foreign  corporation  in  each
jurisdiction in which the conduct of its business or ownership or leasing of its
properties  requires it to be so  qualified,  except  where the failure to be so
licensed or  qualified  would not,  in the  aggregate,  have a material  adverse
effect on the Company or its business or financial  conditions  or operations (a
"Material  Adverse  Effect").  Set forth in Schedule 2(b) to this Agreement is a
list of all  jurisdictions  in  which  the  Company  conducts  operations  and a
description of such operations.

          (c)  Capitalization.  The authorized,  issued and outstanding  capital
stock of the Company prior to the consummation of the transactions  contemplated
hereby  is as set forth in  Schedule  2(c) to this  Agreement.  All  issued  and
outstanding   shares  of  the  Company  are  validly  issued,   fully  paid  and
nonassessable  and  such  shares  have  not  been  issued  in  violation  of the
preemptive  rights of any stockholder of the Company.  Except as provided by law
due to the  failure of any of the  Company's  prior  agents or  underwriters  to
deliver a prospectus, to the knowledge of the Company, no security holder of the
Company  has any  rescission  rights.  The  Company  is not  aware  of any  such
prospectus delivery failure.

          (d)  Warrants,  Preemptive  Rights,  Etc.  Except  as set  forth in or
contemplated by Schedule 2(d) to this  Agreement,  there are not, nor will there
be as at  the  Closing  (as  hereinafter  defined),  any  outstanding  warrants,
options, agreements,  convertible securities, preemptive rights to subscribe for
or other commitments pursuant to which the Company is, or may become,  obligated
to issue any shares of its capital stock or other securities of the Company, and
the Placement will not cause any anti-dilution adjustments to such securities or
commitments except as set forth in Schedule 2(d) to this Agreement.

          (e) Subsidiaries and Investments.  Other than as set forth in Schedule
2(e) to this Agreement,  the Company has no  subsidiaries,  and the Company does
not own, directly or indirectly,  any capital stock or other equity ownership or
proprietary interests in any other corporation, association, trust, partnership,
joint venture or other entity.

          (f) Financial  Statements.  The financial  statements  attached to the
Offering  Documents are  hereinafter  referred to collectively as the "Financial
Statements."  The Financial  Statements  have been  prepared in conformity  with
Canadian generally accepted accounting  principles ("GAAP") consistently applied
and show all  material  liabilities,  absolute  or  contingent,  of the  Company
required to be recorded  thereon and present  fairly the financial  position and
results  of  operations  of the  Company  as of the  dates  and for the  periods
indicated.  (g) Absence of Changes.  Since the date of the Financial Statements,
except with  respect to matters of which the Company has notified you in writing
or  publicly  disclosed  and other  than as set forth in  Schedule  2(g) to this
Agreement, the Company has not incurred any material liabilities or obligations,
direct or contingent, not in the ordinary course of business, or



                                       4
<PAGE>

entered into any transaction  not in the ordinary  course of business,  which is
material to the  business of the  Company,  and there has not been any change in
the capital stock of, or any  incurrence of long-term  debt by, the Company,  or
any issuance of options,  warrants or other rights to purchase the capital stock
of the  Company  (except  for the  issuance  of  options  and  shares  under the
Company's  stock  option plan or pursuant to the exercise of  previously  issued
warrants),  or any adverse change or any  development  involving,  so far as the
Company  can  now  reasonably  foresee,  a  prospective  adverse  change  in the
condition (financial or otherwise), net worth, results of operations,  business,
key personnel or properties  that would be material to the business or financial
condition  of  the  Company.  The  proposed  repricing  of  outstanding  options
contemplated  in  Schedule  2(g) will not result in a charge to  earnings  under
either Canadian or U.S. GAAP.

          (h) Title. Except as set forth on Schedule 2(h) to this Agreement, the
Company has good and marketable  title to all properties and assets owned by it,
free and clear of all liens, charges, encumbrances or restrictions,  except such
as are not significant or important in relation to the Company's  business;  all
of the material  leases and  subleases  under which the Company is the lessor or
sublessor of properties or assets or under which the Company holds properties or
assets as lessee or sublessee  are in full force and effect,  and the Company is
not in  default  in any  material  respect  with  respect to any of the terms or
provisions  of any of such leases or subleases,  and no material  claim has been
asserted by anyone adverse to rights of the Company as lessor, sublessor, lessee
or sublessee under any of the leases or subleases  mentioned above, or affecting
or questioning the right of the Company to continued possession of the leased or
subleased premises or assets under any such lease or sublease.  The Company owns
or leases all such properties as are necessary to its operations as described in
the Offering Documents.

          (i) Proprietary  Rights.  The Company owns, or is duly licensed to use
or possess,  or possesses  exclusive and enforceable  rights to use all patents,
patent  applications,  trademarks,  service  marks,  copyrights,  trade secrets,
processes,  formulations,  technology  or  know-how  used in the  conduct of its
business  (the  "Proprietary  Rights").  Except as set forth on Schedule 2(i) to
this Agreement,  the Company has not received any notice of any claims, nor does
it have any  knowledge  of any  threatened  claims,  and knows of no facts which
would form the basis of any claim, asserted by any person to the effect that the
sale or use of any  product  or process  now used or  offered by the  Company or
proposed  to be used or  offered  by the  Company  infringes  on any  patents or
infringes upon the use of any such Proprietary  Rights of another person and, to
the best of the  Company's  knowledge,  no others have  infringed  the Company's
Proprietary Rights.

          (j)  Litigation.  There is no material  action,  suit,  investigation,
customer  complaint,  claim or  proceeding  at law or in equity by or before any
arbitrator,  governmental instrumentality or other agency now pending or, to the
knowledge  of the  Company,  threatened  against the Company (or basis  therefor
known to the  Company),  the  adverse  outcome  of which  would  have a Material
Adverse  Effect.  The  Company is not  subject  to any  judgment,  order,  writ,
injunction  or decree of any Federal,  state,  municipal  or other  governmental
department,  commission,  board, bureau, agency or instrumentality,  domestic or
foreign   that   have   a   Material   Adverse   Effect.    (k)    Non-Defaults;
Non-Contravention. The Company is not in violation of or default under, nor will
the execution and delivery of this Agreement, any of the Offering Documents, the
finder's  agreement between the Company and the Placement Agent in substantially
the form attached as Exhibit A hereto (the "Finder's Agreement"), and the



                                       5
<PAGE>

subscription  fund escrow  agreement  between the  Company  and  American  Stock
Transfer & Trust Company in substantially  the form attached as Exhibit B hereto
(the "Escrow Agreement") or consummation of the transactions contemplated herein
or therein  result in a violation of or constitute a default in the  performance
or observance of any  obligation  under:  (i) its  Memorandum of  Association or
Articles, as amended to date; (ii) any indenture,  mortgage,  contract, material
purchase order or other  agreement or instrument to which the Company is a party
or by which it or its property is bound; or (iii) any order, writ, injunction or
decree of any  court of any  federal,  state,  municipal  or other  governmental
department,  commission,  board, bureau, agency or instrumentality,  domestic or
foreign;  in any case where  such  violation  or  default  would have a Material
Adverse Effect,  and there exists no condition,  event or act that  constitutes,
nor that after  notice,  the lapse of time or both,  could  constitute a default
under any of the foregoing.

          (l) Taxes.  The Company has filed all tax returns that are required to
be filed by it or  otherwise  met its  disclosure  obligations  to the  relevant
agencies  and all such  returns  are true and  correct.  The Company has paid or
adequately  provided for all tax liabilities of the Company as reflected on such
returns or pursuant to any assessments received by it or that it is obligated to
withhold  from  amounts  owing to any  employee,  creditor or third  party.  The
Company has properly  accrued all taxes  required to be accrued by Canadian GAAP
consistently  applied.  The income tax  returns of the  Company  have never been
audited by any government or regulatory authorities.  The Company has not waived
any statute of  limitations  with respect to taxes or agreed to any extension of
time with respect to any tax assessment or deficiency.

          (m) Compliance With Laws; Licenses,  Etc. The Company has not received
notice  of  any  violation  of  or  noncompliance  with  any  laws,  ordinances,
regulations  and orders  applicable  to its business  that would have a Material
Adverse  Effect  and that has not  been  cured.  The  Company  has all  material
licenses and permits and other  governmental  certificates,  authorizations  and
permits and approvals (collectively, "Licenses") required by every government or
regulatory body for the operation of its business as currently conducted and the
use of its  properties.  The  Licenses  are in full  force and effect and to the
Company's knowledge no violations  currently exist in respect of any License and
no proceeding is pending or threatened to revoke or limit any thereof.

          (n) Authorization of Agreement,  Etc. This Agreement has been duly and
validly  authorized,  executed and  delivered by the Company and the  execution,
delivery and  performance  by the Company of this  Agreement,  the  Subscription
Agreement,  the Special Warrant Indenture,  the Warrant Indenture,  the Finder's
Agreement and the Escrow  Agreement  have been duly  authorized by all requisite
corporate  action  by  the  Company  and  when  delivered,  constitute  or  will
constitute the legal, valid and binding obligations of the Company,  enforceable
in accordance with their respective terms,  subject to applicable laws regarding
insolvency and to principles of equity.

          (o)  Authorization  of Shares,  Warrants Etc. The  issuance,  sale and
delivery of the Special  Warrants,  the Shares,  the  Warrants,  and the Agent's
Warrants (as defined herein) shall, prior to the Initial Closing, have been duly
authorized by all  requisite  corporate  action of the Company.  When so issued,
sold  and  delivered  in  accordance   with  the  Offering   Documents  for  the
consideration set forth therein, the Special Warrants, the Shares, the Warrants,
and the Agent's  Warrants will be duly  executed,  issued and delivered and will
constitute valid and legal obligations of the Company  enforceable in accordance
with their respective terms and, in each



                                       6
<PAGE>

case,  will not be  subject to  preemptive  or any other  similar  rights of the
stockholders  of the Company or others  which  rights shall not have been waived
prior to the Initial Closing.

          (p) Authorization of Reserved Shares. The issuance,  sale and delivery
by the  Company of the common  shares  issuable  upon  exercise  of the  Special
Warrants,  the Warrants, and the Agent's Warrants (the "Reserved Shares") shall,
prior to the  Initial  Closing,  have  been  duly  authorized  by all  requisite
corporate  action of the Company,  and the Reserved  Shares shall (to the extent
permissible out of the authorized capital of the Company),  prior to the Initial
Closing, have been duly reserved for issuance upon exercise of all or any of the
Special Warrants,  Warrants, and Agent's Warrants and when so issued, sold, paid
for and delivered for the consideration set forth in the Offering Documents, the
Reserved  Shares  will  be  validly  issued  and  outstanding,  fully  paid  and
nonassessable,  and not subject to preemptive or any other similar rights of the
stockholders  of the Company or others  which  rights shall not have been waived
prior to the Initial Closing.

          (q)  Exemption  from  Registration.  Assuming  (i) the accuracy of the
information provided by the respective Subscribers in the Subscription Documents
and (ii) that the Placement Agent has complied in all material respects with the
provisions of Regulation D promulgated under the 1933 Act, the offer and sale of
the Special  Warrants and the Units  pursuant to the terms of this Agreement are
exempt  from the  registration  requirements  of the 1933 Act and the  rules and
regulations  promulgated  thereunder.  The Company is not disqualified  from the
exemption  under  Regulation D by virtue of the  disqualifications  contained in
Rule 505(b)(2)(iii) or Rule 507 promulgated thereunder.

          (r) Registration  Rights. No person has any right to cause the Company
to effect registration under the 1933 Act of any securities of the Company.

          (s) Brokers.  Neither the Company nor any of its officers,  directors,
employees or  stockholders  has employed any broker or finder in connection with
the transactions  contemplated by this Agreement other than the Placement Agent,
CIBC or Canaccord.

          (t) Title to Securities.  When  certificates  representing the Special
Warrants, the Shares and the Warrants have been duly delivered to the purchasers
participating  in the Placement and payment shall have been made  therefor,  the
several  purchasers  shall receive from the Company good and marketable title to
such securities free and clear of all liens,  encumbrances and claims whatsoever
(with the  exception  of claims  arising  through the acts or  omissions  of the
purchasers and except as arising from  applicable  federal and state  securities
laws),  and the  Company  shall have paid all taxes,  if any,  in respect of the
original issuance thereof.

          (u) Compliance with Reporting Requirements.  The Company is subject to
the reporting  requirements of the Securities Acts of British Columbia,  Alberta
and Ontario and the TSE. The Company is in compliance  with the  requirements of
the Securities  Acts of British  Columbia,  Alberta and Ontario and the TSE, and
has timely  filed all reports  required to be filed  pursuant  thereto.  No such
filing  contained any untrue  statement of a material fact required to be stated
therein or omitted to state any material fact  required to be stated  therein or
necessary  to make the  statements  therein not  misleading  at the time of such
filing.

          (v) Right of First  Refusal.  Other than as set forth on Schedule 2(v)
to this  Agreement,  no person,  firm or other business entity is a party to any
agreement, contract or



                                       7
<PAGE>

understanding,  written or oral entitling such party to a right of first refusal
with respect to sale of securities by the Company.

          (w)  Regulations  S, D and M, etc.  The Company is a "foreign  issuer"
within the meaning of  Regulation S under the 1933 Act and  reasonably  believes
that there is no substantial  U.S.  market interest (as defined in Regulation S)
in the Special  Warrants,  the Units,  the Shares,  the Warrants or the Reserved
Shares (collectively,  the "Securities"), and neither the Company nor any of its
affiliates  or any  person  acting on its or their  behalf  has  engaged or will
engage in any activity  undertaken for the purpose of, or that could  reasonably
be expected to have the effect of,  conditioning the market in the United States
for the Securities and shall include,  without limitation,  the placement of any
advertisement in a publication  with a general  circulation in the United States
that refers to the Placement  ("Directed  Selling Efforts" within the meaning of
Regulation  S). The  Company is not,  and agrees to use its best  efforts not to
become at any time prior to the  expiration  of three years after the  Placement
Closing Date, an "investment company" as defined in the United States Investment
Company Act of 1940, as amended.  Neither the Company nor any of its  affiliates
has taken or will take any action which would cause the  exemptions  afforded by
Regulation  S, or Rule 506 of Regulation D to be  unavailable  for the offer and
sale of the Securities  pursuant to this  Agreement or which would  constitute a
violation of Regulation M of the SEC under the United States Securities Exchange
Act of 1934, as amended (the "1934 Act").  Neither the Company,  its  affiliates
nor any person  acting on its behalf has (i) within the last six months  offered
or sold any common shares of the Company or any securities  convertible  into or
exchangeable  for common  shares of the  Company by means of any form of general
solicitation or general  advertising within the meaning of Rule 502(c) under the
1933 Act or in a transaction which violated the registration requirements of the
1933 Act or (ii)  offered or will offer to sell the  Securities  by means of any
form of general  solicitation or general advertising (as those terms are used in
Regulation  D under the 1933 Act) or in any manner  involving a public  offering
within the meaning of the 1933 Act.

     3.   Closing; Placement and Fees.

          (a) Closing of the Placement. Provided the Minimum Offering shall have
been subscribed for and funds  representing the sale thereof shall have cleared,
the  Initial  Closing of the  Placement  shall take place at the  offices of the
Placement  Agent,  830 Third  Avenue,  New York,  New York no later  than  three
business  days  following  the  Termination  Date,  which  closing  date  may be
accelerated  or  adjourned by  agreement  between the Company and the  Placement
Agent (the "Closing Date").  In addition,  subsequent  closings of the Placement
(if  applicable) may be scheduled at the discretion of the Company and Placement
Agent,  each of which shall be deemed a "Closing"  hereunder.  At each  Closing,
payment for the Special  Warrants  issued and sold by the Company  shall be made
against delivery of the Special Warrants. The Shares and Warrants comprising the
Units  issuable upon exchange of the Special  Warrants shall be delivered to the
Placement Agent, on behalf of the investors,  on the later of (i) three business
days  following an investor's  request for exchange of such  investor's  Special
Warrants and (ii) three business days following the effective date of the final,
long-form Canadian Prospectus qualifying the Units for distribution.

          (b) Conditions to Placement  Agent's  Obligations.  The obligations of
the Placement  Agent  hereunder with respect to the Placement will be subject to
the  accuracy  of the  representations  and  warranties  of the  Company  herein
contained as of the date hereof and as of each Closing,  to the  performance  by
the  Company  of its  obligations  hereunder  and to  the  following  additional
conditions:



                                       8
<PAGE>


               (i) Due Qualification or Exemption. (A) The Placement will become
qualified  or be exempt  from  qualification  under the  securities  laws of the
several states pursuant to paragraph 4(d) below not later than the Closing Date,
and (B) at the  Closing  Date no stop order  suspending  the sale of the Special
Warrants or the Units shall have been issued, and no proceeding for that purpose
shall have been initiated or threatened;

               (ii)  No   Material   Misstatements.   Neither   the   Blue   Sky
qualification materials nor the Offering Documents,  nor any supplement thereto,
will  contain  any  untrue  statement  of a fact  which  in the  opinion  of the
Placement  Agent is material,  or omits to state a fact which is material and is
required to be stated therein,  or is necessary to make the statements  therein,
in light of the circumstances under which they were made, not misleading;

               (iii) Compliance with Agreements.  The Company will have complied
with all  agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to each Closing;

               (iv) Corporate Action.  The Company will have taken all necessary
corporate action, including,  without limitation,  obtaining the approval of the
Company's  board of directors (the  "Board"),  for the execution and delivery of
this Agreement and the other Offering  Documents  required to be entered into at
or prior to such  Closing,  the  performance  by the Company of its  obligations
hereunder and thereunder and the Placement;

               (v)  Opinion of  Canadian  Counsel.  The  Placement  Agent  shall
receive the opinion of Blake,  Cassels & Graydon  LLP,  Canadian  counsel to the
Company,  dated the Closing(s),  with respect to matters of British Columbia and
Ontario law and the federal laws of Canada applicable thereto,  substantially to
the effect that:

                    (A) the  Company is validly  existing  and in good  standing
     under the laws of British  Columbia and has all requisite  corporate  power
     and  authority  necessary  to own or hold  its  respective  properties  and
     conduct its business;

                    (B) each of this Agreement,  the Subscription Agreement, the
     Finder's  Agreement,  the Escrow Agreement,  the Special Warrant Indenture,
     the Warrant Indenture,  the Special Warrants, the Warrants, and the Agent's
     Warrants has been duly and validly  authorized,  executed and  delivered by
     the Company;

                    (C) neither the  execution  and delivery of this  Agreement,
     the Subscription  Agreement,  the Finder's  Agreement,  the Special Warrant
     Indenture, the Warrant Indenture, the Escrow Agreement, nor compliance with
     the terms  hereof or  thereof,  nor the  consummation  of the  transactions
     herein or therein  contemplated,  nor the issuance of the Special Warrants,
     the Shares, the Warrants,  or the Agent's Warrants has, nor will,  conflict
     with,  result in a breach of, or constitute a default under the  Memorandum
     of  Association  or  Articles of the  Company,  or any  material  contract,
     instrument  or document  actually  known to such counsel and  identified to
     such counsel by the Company as material to which the Company is a party, or
     by which it or any of its  properties  is bound or violate  any  applicable
     law, rule,  regulation,  judgment,  order or decree  actually known to such
     counsel of any governmental  agency or court having  jurisdiction  over the
     Company or any of its properties or business; and



                                       9
<PAGE>

                    (D) to such counsel's actual knowledge, there are no claims,
     actions, suits,  investigations or proceedings before or by any arbitrator,
     court,  governmental  authority  or  instrumentality  pending  or,  to such
     counsel's actual knowledge,  threatened against or affecting the Company or
     involving the properties of the Company that might materially and adversely
     affect the Company or its  business,  operations,  properties  or financial
     condition,  or that might  materially  adversely affect the transactions or
     other acts contemplated by this Agreement.

                    (E) such counsel has reviewed the Memorandum and nothing has
     come to the  attention  of such  counsel  to cause  them to have  reason to
     believe that the Memorandum, as of the date prepared,  contained any untrue
     statement  of a material  fact (as defined in the  Securities  Act (British
     Columbia))  or omitted to state any  material  fact  necessary  to make the
     statements  therein not  misleading  (except for the financial  statements,
     notes  thereto  and  other  financial   information  and  statistical  data
     contained therein, as to which such counsel need express no opinion).

     With respect to matters of a factual nature, such counsel shall be entitled
to rely upon a certificates of an appropriate officer of the Company.

               (vi) Opinion of U.S.  Counsel.  The Placement Agent shall receive
the opinion of Dorsey & Whitney  LLP,  U.S.  counsel to the  Company,  dated the
Closing(s)  substantially to the effect that:

                    (A) each of this Agreement,  the Subscription Agreement, the
     Finder's  Agreement,  the Escrow Agreement,  the Special Warrant Indenture,
     the Warrant  Indenture  and the  Agent's  Warrants is the valid and binding
     obligation of the Company,  enforceable  against it in accordance  with its
     terms,  subject  to any  applicable  bankruptcy,  insolvency  or other laws
     affecting  the  rights of  creditors  generally  and to  general  equitable
     principles; and

                    (B) assuming that the Placement  Agent has complied with the
     requirements  of  section  4(2)  of the  1933  Act and  the  provisions  of
     Regulation D promulgated  thereunder (as evidenced by the Placement Agent's
     execution of a certificate  in the form attached  hereto as Exhibit C , the
     representations  contained therein being  incorporated by reference in this
     Agreement),  the  issuance  and sale of the Special  Warrants in the manner
     contemplated  by the  Offering  Documents  is exempt from the  registration
     requirements  set forth in  Section 5 of the 1933  Act.  Assuming  that the
     Shares and  Warrants  are issued by the  Company to  purchasers  of Special
     Warrants in the Placement and that the Underlying  Shares are issued by the
     Company to  holders  of the  Warrants  in the  manner  contemplated  by the
     Offering Documents, upon the exercise of such Special Warrants or Warrants,
     as the  case may be,  and  assuming  further  that no  commission  or other
     remuneration  is paid or given directly or indirectly  for soliciting  such
     exercise,  the  issuance  and  sale of the  Shares  and  Warrants  upon the
     exercise of the Special Warrants and the Underlying Shares upon exercise of
     the Warrants will be exempt from the registration requirements set forth in
     Section 5 of the 1933 Act.

               (vii) Officers' Certificate.  The Placement Agent shall receive a
certificate  of the  Company,  signed by the Chief  Executive  Officer and Chief
Financial Officer thereof, that (A) the representations and warranties contained
in Section 2 hereof  are true and  accurate  in all  material  respects  at such
closing with the same effect as though expressly made at



                                       10
<PAGE>

such closing,  (B) the Company has  outstanding no more than 34.1 million common
shares   outstanding  on  a   fully-diluted   basis   (currently   comprised  of
approximately 23.4 million common shares and options and warrants to purchase an
additional 10.7 million common  shares),  and (C) the Company has no outstanding
indebtedness  other than  accounts  payable,  accounts  receivable  financing or
factoring arrangements, capital lease obligations, a $5,000,000 credit line with
Thomas  Koll and  letters  of  credit  entered  into in the  ordinary  course of
business.

               (viii) Due  Diligence.  The Placement  Agent shall have completed
and been  satisfied with the results of its due diligence  investigation  of the
Company,  including,  without limitation,  the Company's  financial  statements,
expense  budgets,   business   prospects,   capital  structure  and  contractual
arrangements.

               (ix) Shareholder  Approvals.  The Company shall have received, in
accordance  with  the  requirements  of the  TSE and the  Company  Act  (British
Columbia),  as applicable,  the approval of it shareholders of (i) the Placement
and (ii) the amendments to the Company's  Memorandum and Articles of Association
described in Section 4(k) herein (the  "Approvals").  In the event the Approvals
have not been obtained and the Minimum Offering has been subscribed for, the net
proceeds  of the  Placement,  after  deduction  of the fees and  expenses of the
Placement Agent,  shall at the Closing be deposited and held in a special escrow
account to be  established  for such purpose with the  Company's  warrant  agent
under the Special Warrant  Indenture  pending  receipt of the Approvals.  If the
Approvals  are not  obtained on or prior to October 1, 2001,  the Company  shall
repurchase the Special  Warrants for the Purchase  Price,  together with accrued
interest at the rate of 8% per annum.

               (x) Additional  Placement  Agreements.  The Placement Agent shall
have received duly executed  copies of the Special  Warrant  Indenture,  Warrant
Indenture, the Finder's Agreement and the Escrow Agreement.

               (xi) Opinion of Patent Counsel. The Placement Agent shall receive
the opinion of intellectual  property counsel and patent counsel to the Company,
dated the  Closing(s),  in form and  substance  reasonable  satisfactory  to the
Placement Agent and agreed to by the Company.

          (c) Blue Sky. Counsel to the Placement Agent will prepare and file the
necessary  documents so that offers and sales of the securities to be offered in
the Placement may be made in certain  jurisdictions.  It is understood that such
filings may be based on or rely upon: (i) the representations of each Subscriber
set forth in the Subscription  Agreement delivered by such Subscriber;  (ii) the
representations, warranties and agreements of the Company set forth in Section 2
of this Agreement; and (iii) the representations of the Company set forth in the
certificate  to be  delivered at each  closing  pursuant to  paragraph  (vii) of
Section  3(b).  Counsel to the  Placement  Agent shall  advise the Company as to
which jurisdictions offers and sales of the Securities have been made.

          (d) Placement Fee and Expenses.

               (i)  Placement.  Simultaneously  with payment for and delivery of
the Special Warrants at the closing of the Placement, the Company shall: (A) pay
to the Placement  Agent a placement  agent fee equal to 7% of the gross proceeds
of Special Warrants purchased by Commonwealth Investors; (B) upon the request of
the Placement  Agent,  issue to the Placement Agent or its designees  three-year
warrants (from the Initial Closing) in the form to be agreed to



                                       11
<PAGE>

by the  Company  and the  Placement  Agent to  purchase  that number of units as
equals 7.5% of the Units issuable to Commonwealth  Investors in the Placement at
a price  per Unit  equal to the  Purchase  Price  divided  by .85 (the  "Agent's
Warrants") and (C) reimburse the Placement Agent for its reasonable  accountable
expenses,  including  legal  fees.  The Company  shall also pay all  expenses in
connection with the  qualification  of the Special  Warrants and Units under the
securities  or Blue Sky laws of the  states  which  the  Placement  Agent  shall
designate, including legal fees and filing fees.

               (ii) Interest. In the event that for any reason the Company shall
fail to pay to the  Placement  Agent  all or any  portion  of the  fees  payable
hereunder  when due,  interest  shall  accrue and be payable on the unpaid  cash
balance due  hereunder  from the date when first due through and  including  the
date when  actually  collected by the Placement  Agent,  at a rate equal to four
percent above the prime rate of Citibank,  N.A., in New York, New York, computed
on a daily basis and adjusted as announced from time to time.

          (e) Bring-Down  Opinions and  Certificates.  If there is more than one
Closing,  then at each such Closing  there shall be  delivered to the  Placement
Agent updated  opinions and  certificates as described in (v), (vi) and (vii) of
Section 3(b) above, respectively.

          (f) No Adverse  Changes.  There shall not have  occurred,  at any time
prior to the applicable Closing (i) any domestic or international  event, act or
occurrence has materially disrupted, or in the Placement Agent's opinion will in
the immediate future materially disrupt, the securities markets;  (ii) a general
suspension of, or a general  limitation on prices for,  trading in securities on
the New York Stock Exchange,  the Nasdaq - Amex Stock Exchange or the TSE; (iii)
any outbreak of major  hostilities or other national or international  calamity;
(iv) any banking moratorium  declared by a state or federal  authority;  (v) any
moratorium  declared in foreign exchange trading by major international banks or
other persons; (vi) any material interruption in the mail service or other means
of communication  within the United States; (vii) any material adverse change in
the business,  properties, assets, results of operations, or financial condition
of the Company;  or (viii) any change in the market for securities in general or
in political,  financial, or economic conditions which, in the Placement Agent's
reasonable judgment, makes it inadvisable to proceed with the Placement.

          (g) Prospectus  Certificate  Agreement.  It is acknowledged and agreed
that an underwriter  registered under the Securities Act (British  Columbia) and
the Securities Act (Ontario) is required to execute the certificate  page of the
Canadian long-form prospectus to qualify for distribution the Units to be issued
upon the  exercise  or deemed  exercise  of the  Special  Warrants.  Each of the
Placement Agent and the Company will use reasonable best efforts to negotiate in
good faith and shall have entered into an agreement with a Canadian  underwriter
for the purposes of executing such certificate page.

          (h)  Regulatory  Approval.  The  obligations of the Company under this
Agreement  are subject to receipt of all  required  regulatory  approval  for or
acceptance of the Placement and the transactions contemplated thereby.

     4.   Covenants of the Company.

          (a) Use of Proceeds.  The net proceeds of the  Placement  will be used
for general working capital  purposes.  Other than as set forth on Schedule 4(a)
to this  Agreement,  the  Company  shall  not use any of the  proceeds  from the
Placement to repay any indebtedness of



                                       12
<PAGE>

the Company  (other than trade payables in the ordinary  course),  including but
not limited to  indebtedness  to any current  executive  officers,  directors or
principal stockholders of the Company.

          (b) Expenses of Offering.

               (i) The  Company  shall be  responsible  for,  and shall bear all
expenses directly incurred in connection with, the Placement, including, but not
limited  to, (A) legal fees of the  Company's  counsel  relating to the costs of
preparing the Offering  Documents and all  amendments,  supplements and exhibits
thereto and preparing and delivering all Placement Agent and selling  documents,
Special Warrant,  Share and Warrant certificates;  and (B) blue sky fees, filing
fees and the fees and  disbursements of Placement  Agent's counsel in connection
with blue sky  matters  (the  "Company  Expenses").  The  Company  shall also be
responsible  for its own expenses  incurred in  connection  with the  Placement,
including,  without limitation, legal and accounting fees and travel and lodging
expenses in connection  with the roadshow or other investor  presentations,  and
shall  also  be  responsible  for all  printing  expenses  for  the  Memorandum,
executive  overview and other  supporting  documents.  In addition,  the Company
shall  reimburse the  Placement  Agent for all of its  reasonable  out-of-pocket
expenses  incurred  in  connection  with  the  Placement,   including,   without
limitation the Placement Agent's mailing, printing, copying, telephone,  travel,
background searches, due diligence investigations,  legal and consulting fees or
other similar expenses (the "Placement Agent Expenses").

               (ii) If the Company decides not to proceed with the Placement for
any reason  (other than the  inability to obtain any required  approval from any
regulatory or governmental  authority after diligent  efforts to obtain same) or
if the Placement  Agent  decides not to proceed with the Placement  because of a
material intentional breach by the Company of its  representations,  warranties,
or  covenants in this  Agreement  and,  prior to January 24,  2002,  the Company
completes, in one or more transactions,  any debt or equity financing (including
draw downs under lines of credit in  existence  on the date  hereof),  or merges
with  or  otherwise  acquires  another  company,  in  circumstances  where  such
financing(s)  or the value of such  company(ies)  exceeds an  aggregate  of US$5
million  then  the  Company  will  be  obligated  to pay the  Placement  Agent a
financial  advisory and structuring fee of $250,000  thereafter and to reimburse
the Placement  Agent for the Placement  Agent Expenses as set forth above.  This
fee shall be payable, at the Placement Agent's option, in either (A) cash or (B)
subject to the receipt of regulatory approval, common shares of the Company at a
price equal to the closing  price of the  Company's  common shares on the TSE on
the date the  Company or the  Placement  Agent  elects  not to proceed  with the
Placement.  The  Placement  Agent shall have no liability to the Company for any
reason should the Placement  Agent  terminate this Agreement in accordance  with
its terms.

          (c)  Notification.  The  Company  shall  notify  the  Placement  Agent
immediately,  and in writing,  (i) when any event shall have occurred during the
period commencing on the date hereof and ending on the later of the last Closing
or the  Termination  Date as a result  of which  the  Offering  Documents  would
include any untrue  statement  of a material  fact or omit to state any material
fact required to be stated therein or necessary to make the  statements  therein
not misleading,  and (ii) of the receipt of any notification with respect to the
modification,  rescission,  withdrawal  or suspension  of the  qualification  or
registration  of the  Units,  or of any  exemption  from  such  registration  or
qualification, in any jurisdiction, as applicable. The Company will use its best
efforts to prevent the issuance of any such modification, rescission, withdrawal
or suspension and, if any such modification, rescission,



                                       13
<PAGE>

withdrawal  or  suspension  is issued and you so request,  to obtain the lifting
thereof as promptly as possible.

          (d) Blue Sky.  The  Company  will use its best  efforts  to assist the
Placement  Agent to qualify or register  the  Securities  for  offering and sale
under, or establish an exemption from such qualification or registration  under,
the  securities or "blue sky" laws of such  jurisdictions  as you may reasonably
request;  provided however, that the Company will not be obligated to qualify as
a dealer in securities in any jurisdiction in which it is not so qualified.  The
Company will not consummate any sale of Securities in any  jurisdiction in which
it is not so  qualified  or in any manner in which such sale may not be lawfully
made.

          (e) Form D Filing.  The Company  shall file five copies of a Notice of
Sales of Securities on Form D with the SEC no later than 15 days after the first
issuance  of  the  Special  Warrants.  The  Company  shall  file  promptly  such
amendments  to such Notices on Form D as shall become  necessary  and shall also
comply  with  any  filing  requirement  imposed  by the  laws  of any  state  or
jurisdiction  in which offers and sales are made.  The Company shall furnish the
Placement Agent with copies of all such filings.

          (f) Press  Releases,  Etc.  The Company  shall not,  during the period
commencing  on the date  hereof and  ending on the later of the last  Closing or
Termination  Date, issue any press release or other  communication,  or hold any
press conference with respect to the Company, its financial  condition,  results
of operations,  business, properties, assets, or liabilities,  without the prior
consent  of the  Placement  Agent,  which  consent  shall  not  be  unreasonably
withheld,  provided,  however,  the Company may issue any such releases which in
the  reasonable  opinion of counsel to the Company are required for  compliance.
Furthermore,  the Company shall not at any time include information with respect
to the  Placement  or use  the  Placement  Agent's  name in any  press  release,
advertisement  or on any website  maintained  by the  Company  without the prior
written  consent  of  the  Placement  Agent,  which  consent,  with  respect  to
information  regarding the Placement only,  shall not be unreasonably  withheld.
The Company  agrees that any press release  relating to the  Placement  shall be
drafted in accordance  with the  requirements  suggested by U.S.  counsel to the
Company for the purpose of ensuring compliance with Rule 135 under the 1933 Act.

          (g)  Executive   Compensation.   The  compensation  of  the  Company's
executive officers shall not increase during the three-year period following the
Initial Closing without the approval of a majority of the independent members of
the Company's Board.

          (h) Board  Composition  and Meetings.  Until such time as Commonwealth
and the  Commonwealth  Investors cease to  beneficially  own at least 10% of the
Company's  common  shares  issued and  outstanding  from time to time  (assuming
exercise of the Special Warrants but not exercise of the Warrants),  the Company
shall nominate and use  reasonable  efforts to cause to be elected one member of
the Board  designated by the Placement  Agent. If less than 80 Special  Warrants
are sold to  Commonwealth  Investors in the  Placement,  such  nominee  shall be
required  to meet the  Canadian  residency  requirements  under the  Company Act
(British  Columbia).  In addition,  the Placement Agent shall be entitled during
such period to have one  observer  receive  notice of and attend all meetings of
the Board. Board meetings shall be held on not less than a quarterly basis.

          (i) TSE Listing.  The Company shall,  within 60 days after the Initial
Closing,  apply for the  listing  of the Shares  and the  Underlying  Shares for
trading on the TSE and shall use



                                       14
<PAGE>

its best  efforts to obtain  conditional  approval of such  listing from the TSE
(subject only to the filing of usual post-closing  documentation) within 90 days
after the Initial Closing.

          (j) Final Prospectus.  The Company shall use its reasonable commercial
efforts  to file  and  receive  a  receipt  for the  final,  long-form  Canadian
Prospectus  qualifying  the  Shares  and the  Underlying  Shares  (to the extent
permissible) for distribution and trading in Ontario and British Columbia within
90 days after the Initial Closing, and shall have delivered commercial copies of
such Prospectus to the Placement Agent.

          (k) Amendment to Articles. The Company shall call a special meeting of
shareholders  (the  "Special  Meeting") to be held no later than October 1, 2001
for the purpose of amending the Company's Memorandum and Articles of Association
to (i) provide that for purposes of any shareholder's meeting, a quorum shall be
deemed  present if holders of at least 25% of the Company's  outstanding  common
shares  attend in  person or are  represented  by proxy  and (ii)  increase  the
Company's authorized common shares to 200,000,000.

          (l) Shareholder  Approvals.  The Company shall use its best efforts to
obtain the Approvals at the Special Meeting.

     5. Indemnification.

          (a) The Company  agrees to indemnify  and hold  harmless the Placement
Agent and each  Selected  Dealer,  if any,  and their  respective  shareholders,
directors,  officers,  agents and controlling  persons (an "Indemnified  Party")
against any and all loss,  liability,  claim, damage and expense whatsoever (and
all  actions in respect  thereof),  and to  reimburse  the  Placement  Agent for
reasonable  legal fees and  related  expenses as  incurred  (including,  but not
limited to the costs of investigating, preparing or defending any such action or
claim whether or not in connection  with litigation in which the Placement Agent
is a party and the costs of giving testimony or furnishing documents in response
to a subpoena  or  otherwise),  arising out of any untrue  statement  or alleged
untrue  statement of a material fact contained in the Offering  Documents or the
omission or alleged omission  therefrom of a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, provided, however, that the Company shall not be liable in
any such case to the extent  that any such  loss,  liability,  claim,  damage or
expense  arises out of or is based upon any untrue  statement of a material fact
or alleged untrue  statement or a material fact provided by the Placement  Agent
in writing to the Company  specifically  for use in the Offering  Documents,  or
arises out of or is based upon the gross negligence or willful  misconduct of or
breach of this  Agreement  by the  Placement  Agent or any of its  shareholders,
directors, officers, employees or controlling persons;

          (b) The Company  agrees to indemnify and hold harmless an  Indemnified
Party to the same extent as the foregoing  indemnity,  against any and all loss,
liability,  claim,  damage and expense  whatsoever  directly  arising out of the
exercise by any person of any right under the 1933 Act or the securities or Blue
Sky  laws  of any  state  on  account  of  violations  of  the  representations,
warranties or agreements set forth in Section 2 hereof.

          (c) Promptly after receipt by an Indemnified  Party under this Section
of notice of the  commencement of any action,  the Indemnified  Party will, if a
claim in respect  thereof is to be made against the Company  under this Section,
notify in writing the Company of the commencement  thereof;  but the omission so
to notify the Company will not relieve it from any



                                       15
<PAGE>

liability which it may have to the  Indemnified  Party otherwise than under this
Section except to the extent the defense of the claim is prejudiced. In case any
such action is brought against an Indemnified Party, and it notifies the Company
of the  commencement  thereof,  the Company will be entitled to participate  in,
and, to the extent that it may wish,  jointly with any other  indemnifying party
similarly  notified,  to assume the defense  thereof,  subject to the provisions
herein stated,  with counsel  reasonably  satisfactory to the Indemnified Party,
and after notice from the Company to the Indemnified Party of its election so to
assume the defense  thereof,  the Company will not be liable to the  Indemnified
Party under this Section for any legal or other expenses  subsequently  incurred
by the  Indemnified  Party in  connection  with the defense  thereof  other than
reasonable  costs of  investigation  (provided  the Company has been  advised in
writing that such  investigation  is being  undertaken).  The Indemnified  Party
shall  have the right to  employ  separate  counsel  in any such  action  and to
participate  in the defense  thereof,  but the fees and expenses of such counsel
shall not be at the  expense  of the  Company if the  Company  has  assumed  the
defense of the action with counsel  reasonably  satisfactory  to the Indemnified
Party;  provided  that the fees and  expenses  of such  counsel  shall be at the
expense  of the  Company  if  (i)  the  employment  of  such  counsel  has  been
specifically  authorized  in writing by the Company or (ii) the named parties to
any such action  (including any impleaded  parties) include both the Indemnified
Party or Parties and the Company and, in the reasonable  judgment of counsel for
the Indemnified  Party as expressed in writing to the Indemnified  Party and the
Company,  it is advisable for the Indemnified Party or Parties to be represented
by  separate  counsel due to an actual  conflict of interest  (in which case the
Company  shall not have the right to assume the defense of such action on behalf
of an Indemnified  Party or Parties),  it being  understood,  however,  that the
Company  shall not,  in  connection  with any one such  action or  separate  but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys for all the Indemnified
Parties.  No settlement of any action against an Indemnified Party shall be made
unless such an Indemnified Party is fully and completely  released in connection
therewith.

     6.   Contribution.

          To provide for just and equitable contribution,  if (i) an Indemnified
Party makes a claim for indemnification pursuant to Section 5 but it is found in
a final  judicial  determination,  not  subject  to  further  appeal,  that such
indemnification  may not be  enforced in such case,  even though this  Agreement
expressly provides for  indemnification in such case, or (ii) any indemnified or
indemnifying  party  seeks  contribution  under the 1933 Act,  the 1934 Act,  or
otherwise, then the Company (including for this purpose any contribution made by
or on behalf of any officer, director, employee or agent for the Company, or any
controlling person of the Company), on the one hand, and the Placement Agent and
any  Selected  Dealers  (including  for this purpose any  contribution  by or on
behalf of an  indemnified  party),  on the other hand,  shall  contribute to the
losses,  liabilities,  claims,  damages, and expenses whatsoever to which any of
them may be  subject,  in such  proportions  as are  appropriate  to reflect the
relative  benefits  received by the Company,  on the one hand, and the Placement
Agent and the Selected Dealers, on the other hand;  provided,  however,  that if
applicable law does not permit such  allocation,  then other relevant  equitable
considerations such as the relative fault of the Company and the Placement Agent
and the Selected  Dealers in  connection  with the facts which  resulted in such
losses, liabilities,  claims, damages, and expenses shall also be considered. In
no case shall the  Placement  Agent or a Selected  Dealer be  responsible  for a
portion of the contribution obligation in excess of the compensation received by
it pursuant to Section 3 hereof or the Selected Dealer



                                       16
<PAGE>

Agreement,   as  the  case  may  be.   No   person   guilty   of  a   fraudulent
misrepresentation  shall be entitled to contribution  from any person who is not
guilty of such  fraudulent  misrepresentation.  For  purposes of this Section 6,
each  person,  if any, who controls  the  Placement  Agent or a Selected  Dealer
within the  meaning  of Section 15 of the 1933 Act or Section  20(a) of the 1934
Act and each officer, director, stockholder, employee and agent of the Placement
Agent or a Selected  Dealer,  shall have the same rights to  contribution as the
Placement Agent or the Selected Dealer, and each person, if any who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20(a) of the
1934 Act and each officer,  director,  employee and agent of the Company,  shall
have the same rights to contribution as the Company, subject in each case to the
provisions  of this  Section  6.  Anything  in this  Section  6 to the  contrary
notwithstanding,  no party shall be liable for contribution  with respect to the
settlement of any claim or action  effected  without its written  consent.  This
Section 6 is intended to supersede any right to contribution under the 1933 Act,
the 1934 Act, or otherwise.

     7.   Miscellaneous.

          (a) Survival.  Any termination of the Placement in accordance with the
terms of this Agreement without consummation thereof shall be without obligation
on the part of any party except that the  indemnification  provided in Section 5
hereof and the  contribution  provided  in Section 6 hereof  shall  survive  any
termination and shall survive the later of the final Closing of the Placement or
the Termination Date for a period of five years.

          (b) Representations, Warranties and Covenants to Survive Delivery. The
respective representations,  warranties, indemnities,  agreements, covenants and
other statements as of the date hereof shall survive execution of this Agreement
and delivery of the Special  Warrants and the Units and the  termination of this
Agreement for a period of two years after such respective event.

          (c) No Other  Beneficiaries.  This  Agreement is intended for the sole
and exclusive benefit of the parties hereto and their respective  successors and
controlling  persons,  and no other person,  firm or corporation  shall have any
third-party beneficiary or other rights hereunder.

          (d) Governing Law;  Resolution of Disputes.  This  Agreement  shall be
governed by and  construed in  accordance  with the law of the State of New York
without  regard to  conflict  of law  provisions.  The  Placement  Agent and the
Company  will  attempt to settle any claim or  controversy  arising  out of this
Agreement  through  consultation  and  negotiation in good faith and a spirit of
mutual cooperation. Should such attempts fail, then the dispute will be mediated
by a mutually  acceptable  mediator to be chosen by the Placement  Agent and the
Company  within  15 days  after  written  notice  from  either  party  demanding
mediation. Neither party may unreasonably withhold consent to the selection of a
mediator,  and the parties will share the costs of the  mediation  equally.  Any
dispute which the parties cannot resolve through negotiation or mediation within
six months of the date of the  initial  demand for it by one of the  parties may
then be submitted to the courts for resolution. The use of mediation will not be
construed under the doctrine of latches,  waiver or estoppel to affect adversely
the rights of either party.  Nothing in this paragraph will prevent either party
from resorting to judicial  proceedings if (a) good faith efforts to resolve the
dispute under these procedures have been unsuccessful or (b) interim relief from
a court is necessary to prevent serious and irreparable injury.



                                       17
<PAGE>

          (e)  Counterparts.  This Agreement may be signed in counterparts  with
the same effect as if both parties had signed one and the same instrument.

          (f) Notices. Any communications  specifically required hereunder to be
in writing,  if sent to the Placement Agent,  will be sent by overnight  courier
providing a receipt of  delivery or by  certified  or  registered  mail to it at
Commonwealth  Associates,  830 Third Avenue, New York, New York 10022, Att: Carl
Kleidman,  with a copy to Loeb & Loeb LLP, 345 Park Avenue,  New York,  New York
10154,  Att: Fran Stoller and if sent to the Company,  will be sent by overnight
courier providing a receipt of delivery or by certified or registered mail to it
at 4664 Lougheed Highway, Suite 200, Burnaby,  British Columbia, V5C 5T5 Canada,
Att:  Todd Carter,  with a copy to Blake,  Cassels & Graydon LLP,  Three Bentall
Center,  No.  2060,  595 Burrard  Street,  P.O.  Box 49314,  Vancouver,  British
Columbia V7X 1L3 Canada, Att: Geoffrey Belsher.

          (g) Entire Agreement.  This Agreement constitutes the entire agreement
of the parties with respect to the matters  herein  referred and  supersedes all
prior agreements and understandings,  written and oral, between the parties with
respect to the subject matter hereof. Neither this Agreement nor any term hereof
may be changed,  waived or terminated orally, except by an instrument in writing
signed  by the  party  against  which  enforcement  of  the  change,  waiver  or
termination is sought.

          If you find the  foregoing is in  accordance  with our  understanding,
kindly sign and return to us a counterpart  hereof,  whereupon  this  instrument
along with all counterparts will become a binding agreement between us.

                                    Very truly yours,

                                    INFOWAVE SOFTWARE, INC.

                                    By: ---------------------------------------
                                        Name: Todd Carter
                                        Title: Chief Financial Officer



Agreed:  COMMONWEALTH ASSOCIATES, L.P.

By:      Commonwealth Associates Management Company, Inc.

By:
         --------------------------------------------
         Name: Joseph Wynne
         Title: Chief Financial Officer







                                       18
<PAGE>

Exhibit A- Form of Finder's Agreement

















                                       19
<PAGE>

Exhibit B- Form of Escrow Agreement















                                       20
<PAGE>

Exhibit C- Form of Placement Agent Certificate

         Commonwealth Associates, L.P. (the "Placement Agent") hereby represents
and warrants to Infowave Software, Inc. (the "Company") that in connection with
the private placement of the Company's securities pursuant to the Agency
Agreement dated July __, 2001 between the Placement Agent and the Company (the
"Agreement") as follows (all capitalized terms not otherwise defined herein
having the meanings set forth in the Agreement):

     1. The  Placement  Agent  acknowledges  that the Special  Warrants,  Units,
Warrants and all of the underlying  common shares issuable upon exercise of such
securities (the  "Securities") have not been and will not be registered with the
SEC under the 1933 Act and that the Units are being offered and sold pursuant to
a prospectus  exemption  under Canadian  securities laws and in reliance upon an
exemption from  registration  provided by Regulation S in the case of offers and
sales  outside  the  United  States,  and in the case of offers and sales by the
Placement  Agent or by Selected  Dealers in the United States,  by the exemption
from registration provided by Rule 506 of Regulation D;

     2. Neither the Placement Agent,  nor any Selected Dealer,  nor any of their
respective  affiliates  (A) have engaged or will engage in any Directed  Selling
Efforts with respect to the  Securities , (B) except to the extent  permitted by
paragraph 5 of this Certificate, have made or will make (x) any offer to sell or
solicitation  of an offer to buy any of the  Securities to any person or (y) any
sale of the  Securities  to any  person  unless (1) the offer is not made to any
person in the United  States,  (2) the seller of such  Securities and any person
acting on its behalf reasonably believes that at the time such person placed the
order to purchase  Securities  such person was outside the United States and (3)
such  sale is  otherwise  in  compliance  with the  applicable  requirements  of
Regulation  S, (C) have taken or will take any action  which would  constitute a
violation of Regulation M of the SEC under the United States Securities Exchange
Act of 1934, as amended,  or (D) have  solicited or will solicit  offers for, or
have made or will make offers to sell,  the  Securities  by means of any form of
general  solicitation  or  general  advertising  (as  those  terms  are  used in
Regulation  D under the 1933 Act) or in any manner  involving a public  offering
within the meaning of the 1933 Act;

     3. All offers and sales of the  Securities  in the United  States have been
and will be made in compliance  with all  applicable  United States  federal and
state laws with respect to the  registration  and conduct of securities  brokers
and dealers;

     4. The  Placement  Agent has caused or will  promptly  cause each  Selected
Dealer to  acknowledge  in writing its awareness of and agreement to be bound by
and shall use their best efforts to ensure that each  Selected  Dealer  complies
with  the  representations  and  warranties  contained  in this  Certificate  in
connection with all offers and sale of the Securities;

     5. The Securities  have been and shall be offered and sold by the Placement
Agent and  Selected  Dealers in the United  States only in  compliance  with all
applicable  state  securities  ("blue  sky") laws of the United  States and in a
transaction exempt from the registration  requirements of the 1933 Act, pursuant
to Rule 506 of Regulation D, to persons that are "accredited  investors"  within
the meaning of Rule 501(a) of Regulation D;

     6. The  Placement  Agent  has not  entered,  and will not  enter,  into any
contractual  arrangement  without the prior written  consent of the Company with
respect to the distribution of



                                       21
<PAGE>



the Securities,  except (i) with their  affiliates or (ii) with Selected Dealers
in accordance with this Certificate.





















                                       22



</TEXT>
</DOCUMENT>
