Common use of Capitalization of Pubco Clause in Contracts

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco consists of 1,081,100,000 shares of common stock with a par value of $0.001 (the “Pubco Common Stock”) and 100,000,000 shares of preferred stock (the “Pubco Preferred Stock”) with a par value of $0.001. As of the date of this Agreement, there are 94,866,525 shares of Pubco Common Stock issued and outstanding, (which shares include the 64,866,000 outstanding common shares slated for cancellation concurrently with the Closing hereof and exclude the shares hereby issuable to the Selling Shareholders and those issuable pursuant to the private placement agreement referenced in below subsection 6.13), and no outstanding shares of Pubco Preferred Stock. All of the issued and outstanding shares of Pubco Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco to issue any additional shares of Pubco Common Stock or Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock or Pubco Preferred Stock as of the date of this Agreement, notwithstanding the private placement agreement referenced in below subsection 6.13. There are no agreements purporting to restrict the transfer of the Pubco Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pubco Common Stock.

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco consists of 1,081,100,000 100,000,000 shares of common stock with a stock, $.001 par value of $0.001 per share (the “Pubco Common Stock”) ), and 100,000,000 50,000,000 shares of preferred stock stock, $.001 par value per share (the “Pubco Preferred Stock”) with a par value ), 10,000,000 of $0.001which shares of Preferred Stock have been designated as Series A Preferred Stock (“Series A Preferred Stock”). As of the date of this Agreement, there are 94,866,525 (a) 9,451,889 shares of Pubco Common Stock issued and outstanding, (which b) no shares include the 64,866,000 of Preferred Stock issued and outstanding common shares slated for cancellation concurrently with the Closing hereof and exclude the shares hereby issuable (c) warrants to the Selling Shareholders and those issuable pursuant to the private placement agreement referenced in below subsection 6.13), and no outstanding purchase 4,169,951 shares of Pubco Common Stock issued and outstanding. At closing (after taking into account the issuance of the Pubco Shares pursuant to this Agreement and the shares of Series A Preferred StockStock and warrants to be issued in the Financing), there will be no more than (i) 50,966,068 shares of Pubco Common Stock issued and outstanding, (ii) 8,339,902 shares of Series A Preferred Stock issued and outstanding and (iii) warrants to purchase 8,339,902 shares of Pubco Common Stock issued and outstanding. All of the issued and outstanding shares of Pubco Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There Except as contemplated by this Agreement, there are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco to issue any additional shares of Pubco Common Stock or Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock or Pubco Preferred Stock as of the date of this Agreement, notwithstanding the private placement agreement referenced in below subsection 6.13. There are no agreements purporting to restrict the transfer of the Pubco Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pubco Common Stock.

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco consists consist of 1,081,100,000 4,500,000,000 shares of common stock with a par value of $0.001 (the “Pubco Common Stock”) and 100,000,000 shares of preferred stock (the “Pubco Preferred Stock”) with a par value of $0.001). As of the date of this Agreement, there are 94,866,525 102,342,500 shares of Pubco Common Stock issued and outstanding, (which shares include the 64,866,000 outstanding common shares slated for cancellation concurrently with . On the Closing hereof Date, Pubco will have issued and exclude the shares hereby issuable to the Selling Shareholders and those issuable pursuant to the private placement agreement referenced in below subsection 6.13), and outstanding no outstanding more than 38,845,827 shares of Pubco Preferred StockCommon Stock immediately prior to the issuance of the Pubco Shares as contemplated by this Agreement. All of the issued and outstanding shares of Pubco Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There Other than the 2,000,000 warrants exercisable at $1.25 per share until May 11, 2008, the 2,000,000 warrants exercisable at $1.50 per share until May 11, 2008, the 4,003,327 warrants exercisable at $2.25 per share until July 5, 2008 and those warrants issuable to the finders in Pubco’s June 2006 private placement (but in no case shall the number of warrants issuable to the finders in Pubco’s June 2006 private placement exceed 650,000 unless mutually agreed by Pubco and Priveco), there are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco to issue any additional shares of Pubco Common Stock or Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock or Pubco Preferred Stock as of the date of this Agreement, notwithstanding the private placement agreement referenced in below subsection 6.13. There are no agreements purporting to restrict the transfer of the Pubco Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pubco Common StockStock other than those shares held by affiliates of Pubco.

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco consists of 1,081,100,000 50,000,000 shares of common stock with a par value of $0.001 (the “Pubco Common Stock”) and 100,000,000 10,000,000 shares of preferred stock (the “Pubco Preferred Stock”) with a par value of $0.0010.001 (the “Preferred Stock”). As of the date of this Agreement, there are 94,866,525 5,119,885 shares of Pubco Common Stock and no shares of Preferred Stock issued and outstanding. At closing, (which shares include the 64,866,000 outstanding common shares slated for cancellation concurrently with the Closing hereof and exclude the shares hereby issuable to the Selling Shareholders and those issuable pursuant to the private placement agreement referenced in below subsection 6.13), and there will be no outstanding more than 2,700,000 shares of Pubco Common Stock and no shares of Preferred StockStock issued and outstanding. All of the issued and outstanding shares of Pubco Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There Except as contemplated by this Agreement, there are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco to issue any additional shares of Pubco Common Stock or Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock or Pubco Preferred Stock as of the date of this Agreement, notwithstanding the private placement agreement referenced in below subsection 6.13. There are no agreements purporting to restrict the transfer of the Pubco Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pubco Common Stock.

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco consists of 1,081,100,000 750,000,000 shares of common stock with a par value of $0.001 (the “Pubco Common Stock”) and 100,000,000 shares of preferred stock (the “Pubco Preferred Stock”) with a par value of $0.001). As of the date of this Agreement, there are 94,866,525 26,300,000 shares of Pubco Common Stock issued and outstanding. On the Closing Date, Pubco will have no more than 20,300,000 shares of Pubco Common Stock issued and outstanding, (which excluding any shares include the 64,866,000 outstanding common shares slated for cancellation concurrently with the Closing hereof and exclude the shares hereby issuable to the Selling Shareholders and those issuable issued pursuant to the private placement agreement referenced in below subsection 6.13)Consultant Agreement, and no outstanding shares immediately prior to the issuance of the Pubco Preferred StockShares and any Conversion Shares as contemplated by this Agreement. All of the issued and outstanding shares of Pubco Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There Except as contemplated by the Convertible Debenture and the Consultant Agreement, there are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco to issue any additional shares of Pubco Common Stock or Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock or Pubco Preferred Stock as of the date of this Agreement, notwithstanding the private placement agreement referenced in below subsection 6.13. There are no agreements purporting to restrict the transfer of the Pubco Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pubco Common StockStock other than those shares held by affiliates of Pubco.

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco consists of 1,081,100,000 of: (i) 415,384,500 shares of common stock with a par value of $0.001 (the “Pubco Common Stock”); (ii) and 100,000,000 shares of preferred stock with a par value of $0.001 (the “Pubco Preferred Stock”); (iii) with a par value options to purchase 19,000,000 shares of $0.001Pubco Common Stock; and (iv) warrants to purchase 5,000,000 shares of Pubco Common Stock (the “Pubco Warrants”). As of the date of this Agreement, there are 94,866,525 are: (i) 95,108,887 shares of Pubco Common Stock issued and outstanding, ; (which shares include the 64,866,000 outstanding common shares slated for cancellation concurrently with the Closing hereof and exclude the shares hereby issuable to the Selling Shareholders and those issuable pursuant to the private placement agreement referenced in below subsection 6.13), and no outstanding shares ii) one share of Pubco Preferred Stock, designated as a Series A Special Voting Share issued and outstanding; (iii) options to purchase 18,248,674 shares of Pubco Common Stock outstanding and unexercised; and (iv) warrants to purchase 5,000,000 shares of Pubco Common Stock outstanding and unexercised. In addition, there are 1,849,180 preferred shares of 6789722 Canada Inc., a subsidiary of Pubco, which are exchangeable into 1,849,180 common shares of Pubco. All of the issued and outstanding shares of Pubco Common Stock and Pubco Preferred Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There Except for the Pubco Common Stock, Pubco Preferred Stock, options to purchase Pubco Common Stock, Pubco Warrants and exchangeable preferred shares of 6789722 Canada Inc. referred to above, there are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco to issue any additional shares of Pubco Common Stock or Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock or Pubco Preferred Stock as of the date of this Agreement, notwithstanding the private placement agreement referenced in below subsection 6.13Stock. There are no agreements purporting to restrict the transfer of any of the Pubco Common Stockissued and outstanding shares of Pubco, no voting agreements, shareholders’ agreements, voting trusts, or other arrangements restricting or affecting the voting of any of the shares of Pubco Common Stockto which Pubco is a party or of which Pubco is aware.

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco consists of 1,081,100,000 75,000,000 shares of common stock with a par value of $0.001 per share. The parties acknowledge that Pubco intends to undergo a stock split of approximately 4 new for one old share (the “Pubco Common StockSplit”) and 100,000,000 shares of preferred stock (prior to the “Pubco Preferred Stock”) with a par value of $0.001Closing. As of the date of this Agreement, there are 94,866,525 are: (i) no more than 11,000,000 post-Split shares of Pubco Common Stock issued and outstanding, (which shares include the 64,866,000 outstanding common shares slated for cancellation concurrently with the Closing hereof and exclude the shares hereby issuable including all stock agreed to the Selling Shareholders and those issuable be issued pursuant to the private placement agreement referenced in below subsection 6.13), and no outstanding shares of Pubco Preferred Stockvarious agreements outstanding. All of the issued and outstanding shares of Pubco Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, agreements or commitments obligating Pubco to issue any additional shares of Pubco Common Stock or Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock or Pubco Preferred Stock as of the date of this AgreementStock, notwithstanding the private placement agreement referenced which together would result in below subsection 6.13more than 11,000,000 post-Split shares outstanding. There are no agreements purporting to restrict the transfer of any of the Pubco Common Stockissued and outstanding shares of Pubco, no voting agreements, shareholders’ agreements, voting trusts, or other arrangements restricting or affecting the voting of any of the shares of Pubco Common Stockto which Pubco is a party or of which Pubco is aware.

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco securitiesof PubCo consists of 1,081,100,000 8,800,000,000 shares of common stock with a par value of $0.001 (the “Pubco PubCo Common Stock”) and 100,000,000 shares of preferred stock (the “Pubco Preferred Stock”) with a par value of $0.001). As of the date of this Agreement, there are 94,866,525 52,213,348 shares of Pubco PubCo Common Stock issued and outstanding, (which shares include the 64,866,000 outstanding common shares slated for cancellation concurrently with the Closing hereof and exclude the shares hereby issuable to the Selling Shareholders and those issuable pursuant to the private placement agreement referenced in below subsection 6.13), and no outstanding shares of Pubco Preferred Stock. All of the issued and outstanding shares of Pubco PubCo Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There Except as set forth in Schedule A and as contemplated by the Private Placement, there are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco PubCo to issue any additional shares of Pubco PubCo Common Stock or Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco PubCo any shares of Pubco PubCo Common Stock or Pubco Preferred Stock as of the date of this Agreement. Additionally, notwithstanding none of the private placement agreement referenced holders of PubCo Common Stock have anti-dilution rights, rights of first refusals, subscription rights or rights to purchase issuances of additional shares of PubCo Common Stock. There are no outstanding contractual commitments (contingent or otherwise) of PubCo to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in below subsection 6.13PubCo as to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other person or entity. There are no agreements purporting to restrict the transfer of the Pubco PubCo Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pubco PubCo Common Stock. At the Closing, PubCo will have sufficient authorized and unissued PubCo Common Stock to consummate the transactions contemplated hereby.

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco PubCo consists of 1,081,100,000 750,000,000 shares of common stock with a par value of $0.001 (the “Pubco PubCo Common Stock”) and 100,000,000 shares of preferred stock (the “Pubco Preferred Stock”) with a par value of $0.001). As of the date of this Agreement, there are 94,866,525 30,000,000 shares of Pubco PubCo Common Stock issued and outstanding, (which shares include the 64,866,000 outstanding common shares slated for cancellation concurrently with the Closing hereof and exclude the shares hereby issuable to the Selling Shareholders and those issuable pursuant to the private placement agreement referenced in below subsection 6.13), and no outstanding shares of Pubco Preferred Stock. All of the issued and outstanding shares of Pubco PubCo Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There Except as disclosed in the PubCo SEC Documents and as contemplated by the Private Placement, there are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco PubCo to issue any additional shares of Pubco PubCo Common Stock or Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco PubCo any shares of Pubco PubCo Common Stock or Pubco Preferred Stock as of the date of this Agreement. There are no outstanding contractual commitments (contingent or otherwise) of PubCo to retire, notwithstanding repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in PubCo as to provide funds to or make any investment (in the private placement agreement referenced form of a loan, capital contribution or otherwise) in below subsection 6.13any other person or entity. There are no agreements purporting to restrict the transfer of the Pubco PubCo Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pubco PubCo Common Stock. At the Closing, PubCo will have sufficient authorized and uninsured PubCo Common Stock to consummate the transactions contemplated hereby.

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco consists of 1,081,100,000 75,000,000 shares of common stock with a par value of $0.001 (the “Pubco Common Stock”) and 100,000,000 shares of preferred stock (the “Pubco Preferred Stock”) with a par value of $0.001). As of the date of this Agreement, there are 94,866,525 30,000,000 shares of Pubco Common Stock issued and outstanding, (which shares include the 64,866,000 outstanding common shares slated for cancellation concurrently with the Closing hereof and exclude the shares hereby issuable prior to the Selling Shareholders Share Split and those issuable pursuant the Private Placement of up to the private placement agreement referenced in below subsection 6.13)3,444,444 shares, and no after giving effect to such transactions there will be up to 22,296,296 issued and outstanding shares of Pubco Preferred Common Stock. , immediately prior to the issuance of the Pubco Shares to represent no less than 65% of which shares shall be beneficially owned by the Priveco Shareholders All of the issued and outstanding shares of Pubco Common Stock have been and the shares of Pubco Common Stock to be issued in the Share Split and the Private Placement will be duly authorized, are validly issued, were not and will not be issued in violation of any pre-emptive rights and are and will be fully paid and non-assessable, are not and will not be subject to pre-emptive rights and were and will be issued in full compliance with all federal, state, provincial and local laws, rules and regulations. There are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco to issue any additional shares of Pubco Common Stock or Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock or Pubco Preferred Stock as of the date of this Agreement, notwithstanding the private placement agreement referenced in below subsection 6.13. There are no agreements purporting to restrict the transfer of the Pubco Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pubco Common Stock.

Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco consists of 1,081,100,000 100,000,000 shares of common stock with a par value of $0.001 0.00001 (the “Pubco Common Stock”) and 100,000,000 shares of preferred stock with a par value of $0.00001 (the “Pubco Preferred Stock”) with a par value of $0.001). As of the date of this Agreement, there are 94,866,525 38,665,200 shares of Pubco Common Stock issued and outstanding, (which shares include the 64,866,000 outstanding common shares slated for cancellation concurrently with the Closing hereof and exclude the shares hereby issuable to the Selling Shareholders and those issuable pursuant to the private placement agreement referenced in below subsection 6.13), and no outstanding nil shares of Pubco Preferred StockStock issued and outstanding. All of the issued and outstanding shares of Pubco Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-non- {WLMLAW W0013824.DOC} assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. There are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco to issue any additional shares of Pubco Common Stock or any shares of Pubco Preferred Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock or any shares of Pubco Preferred Stock as of the date of this Agreement, notwithstanding the private placement agreement referenced in below subsection 6.13. There are no agreements purporting to restrict the transfer of the Pubco Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pubco Common Stock.