AND QUALIFICATION.
THE COMPANY IS A
COMPANY VALIDLY EXISTING AND IN GOOD STANDING UNDER THE BUSINESS CORPORATIONS
ACT (BRITISH COLUMBIA) AND HAS ALL REQUISITE POWER AND AUTHORITY TO CARRY ON ITS
BUSINESS AS NOW CONDUCTED AND TO OWN ITS PROPERTIES.
EACH SUBSIDIARY IS AN
ENTITY DULY INCORPORATED OR OTHERWISE ORGANIZED, VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS INCORPORATION OR ORGANIZATION
(AS APPLICABLE), WITH THE REQUISITE POWER AND AUTHORITY TO OWN AND USE ITS
PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS AS CURRENTLY CONDUCTED. THE
COMPANY AND EACH SUBSIDIARY IS DULY QUALIFIED TO DO BUSINESS AND IS IN GOOD
STANDING IN EACH JURISDICTION IN WHICH THE CONDUCT OF ITS BUSINESS OR ITS
OWNERSHIP OR ITS LEASING OF PROPERTY MAKES SUCH QUALIFICATION NECESSARY, UNLESS
THE FAILURE TO SO QUALIFY WOULD HAVE A MATERIAL ADVERSE EFFECT.
THE COMPANY IS
PRESENTLY A REPORTING ISSUER IN THE CANADIAN PROVINCES OF BRITISH COLUMBIA,
ALBERTA AND ONTARIO AND IS NOT IN DEFAULT OF THE APPLICABLE SECURITIES
LEGISLATION OF SUCH PROVINCES.
5.2.
AUTHORIZATION.
THE COMPANY HAS FULL POWER AND AUTHORITY AND HAS
TAKEN ALL REQUISITE ACTION ON THE PART OF THE COMPANY, ITS OFFICERS, DIRECTORS
AND SHAREHOLDERS NECESSARY FOR (I) THE AUTHORIZATION, EXECUTION AND DELIVERY OF
THE NOTE DOCUMENTS; (II) AUTHORIZATION OF THE PERFORMANCE OF ALL OBLIGATIONS OF
THE COMPANY HEREUNDER OR THEREUNDER; AND (III) THE AUTHORIZATION, ISSUANCE AND
DELIVERY OF THE NOTES AND THE COMMON SHARES UPON CONVERSION OF THE NOTES IN
ACCORDANCE WITH THE TERMS THEREOF
THE NOTE DOCUMENTS CONSTITUTE THE LEGAL,
VALID AND BINDING OBLIGATIONS OF THE COMPANY, ENFORCEABLE AGAINST THE COMPANY IN
ACCORDANCE WITH THEIR RESPECTIVE TERMS, SUBJECT TO BANKRUPTCY, INSOLVENCY,
FRAUDULENT TRANSFER, REORGANIZATION, MORATORIUM AND SIMILAR LAWS OF GENERAL
APPLICABILITY, RELATING TO OR AFFECTING CREDITORS' RIGHTS GENERALLY.
5.3.
CAPITALIZATION.
(A)
SCHEDULE 5.3 SETS FORTH (I) THE AUTHORIZED CAPITAL SHARES OF THE
COMPANY ON THE DATE HEREOF, (II) THE NUMBER OF CAPITAL SHARES ISSUED AND
OUTSTANDING AS OF DECEMBER 31, 2006, (III) THE NUMBER OF CAPITAL SHARES ISSUABLE
PURSUANT TO THE COMPANY'S SHARE PLANS AS OF DECEMBER 31, 2006, AND (IV) THE
NUMBER OF CAPITAL SHARES ISSUABLE AND RESERVED FOR ISSUANCE PURSUANT TO
SECURITIES EXERCISABLE FOR, OR CONVERTIBLE INTO OR EXCHANGEABLE FOR ANY CAPITAL
SHARES OF THE COMPANY AS OF DECEMBER 31, 2006.
ALL OF THE ISSUED AND
OUTSTANDING COMPANY CAPITAL SHARES HAVE BEEN DULY AUTHORIZED AND VALIDLY ISSUED
AND ARE FULLY PAID, NONASSESSABLE AND FREE OF PRE-EMPTIVE RIGHTS.
OTHER THAN
THE PURCHASERS UPON CLOSING, NO PERSON IS ENTITLED TO PRE-EMPTIVE OR SIMILAR
STATUTORY OR CONTRACTUAL RIGHTS WITH RESPECT TO ANY SECURITIES OF THE COMPANY.
EXCEPT AS DESCRIBED ON SCHEDULE 5.3 OR PURSUANT TO THIS AGREEMENT, (I) THERE ARE
NO OUTSTANDING WARRANTS, OPTIONS, CONVERTIBLE SECURITIES OR OTHER RIGHTS,
AGREEMENTS OR ARRANGEMENTS OF ANY CHARACTER UNDER WHICH THE COMPANY IS OR MAY BE
OBLIGATED TO ISSUE ANY EQUITY SECURITIES OF ANY KIND AND, EXCEPT AS CONTEMPLATED
BY THIS AGREEMENT, (II) THERE ARE NO OUTSTANDING DEBT SECURITIES, NOTES,
INDENTURES, CREDIT AGREEMENTS, OR CREDIT FACILITIES OF THE COMPANY