Policy 4'1 Private Placements

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Policy 4.1 Private Placements

• Procedure
• Step 1 - Pricing
• Market Price still defined as the closing price
  on the day prior to issuance of press release or
  receipt by Exchange of a Form 4A.
• - Minimum Price 0.10
• Press Release versus Form 4A?
• Questions to Ask
• Has a Material Change Occurred?
• Will insiders purchase 25 or more of the
  financing?
• If yes to either question, press release
  required.

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Policy 4.1 Private Placements

• Step 2 File Form (Form 4B)
•  
• Deadline - 30 days from press release or Form 4A
• Non-refundable review fee of 500
• Form 4B must disclose Related Party and Pro Group
  participation if it will exceed 25 of the
  offering. This disclosure caps Related Party and
  Pro Group participation.
• Ensure you have an exemption from Policy 5.9
  and/or OSC Policy 61-501
• Step 3 - TSX Review

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Policy 4.1 - Private Placements -Procedure

• Step 4 - Private Placement closes
• Issuer disseminates press release disclosing
• Terms of the Offering and the amount of the
  closing
• Hold periods to which the securities are subject
• Terms of any finders fees, commissions or
  Agents options
• Closing in trust required if
• Insider/Pro Group subscriptions increased from
  initial Form 4B
• New Insiders or Control Persons created

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Policy 4.1 - Private Placements -Procedure

• Step 5 - Submission of Closing Documents
• Updated Form 4B submitted
• Form 4D still required
• Step 6
• Exchange Bulletin issued indicating final
  acceptance of the Private Placement
• No final acceptance letter issued.

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Policy 4.1 - Private Placements

• Timing for Closing
•  
• Non-Brokered Financings
•  
• The greater of 15 days from the date the Exchange
  issues conditional acceptance or 45 days from the
  date the Form 4A was filed.
•  
• Brokered Financings
•  
• The greater of 30 days from the date the Exchange
  issues conditional acceptance or 60 days from the
  date the Form 4A was filed.

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Policy 4.1 Private Placements

• Benefits to Tier 1 Issuers
• Option to follow the either TSX Venture policies
  or the TSX policies.
• If TSX policy used, TSX Venture Forms still
  required.
• All TSX Venture benefits to Tier 1 issuers
  eliminated.

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Policy 4.1 Private Placements

• Shareholder Approval
• Only required when a new Control Person created
• Control Person Defined
•  
• any Person that holds or is one of a
  combination of Persons that holds a sufficient
  number of any of the securities of an Issuer so
  as to affect materially the control of that
  Issuer, or that holds more than 20 of the
  outstanding Voting Shares of an Issuer except
  where there is evidence showing that the holder
  of those securities does not materially affect
  the control of the Issuer.

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Policy 4.1 Private Placements

• Part and Parcel Pricing
• Used where private placement is used to fund an
  acquisition announced at the same time
• Warrants on a part and parcel transaction must be
  priced premium to the market price

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Policy 4.1 Private Placements

• New Form 4B
•  
• Contents of Form
•  
• Intent to identify risk
•  
• Efficiency of review
•  
• Deletion of Form 4B, 4C and 4F
•  
• Form 4D still required

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Policy 4.1 Private Placements

• Warrant Re-pricing
• Only one re-pricing will be allowed.

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Policy 4.1 Private Placements

• Criteria for Expedited Private Placements
•  
• At least 50 of the Private Placement Shares are
  purchased by arms length parties.
• Issuer is not a CPC, Tier 3, Inactive Issuer, or
  an Issuer put on notice that it will be declared
  Inactive.
• Proceeds will be expended on a business or asset
  in which the Issuer currently has an interest and
  which has been accepted by the Exchange.
• No Convertible Securities (other than Warrants).

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Policy 4.1 Private Placements

• Expedited Private Placements (cont)
• Forms Required
•  
• Form 4F deleted.
•  
• Form 4B must be filed within 45 days after the
  earlier of the date of issuance of the news
  release or the filing of the Form 4A.
• For Tier 1 issuers, no more than 50 of the
  issuers outstanding listed shares can be issued
  under the expedited program in any six-month
  period.
• 25 for Tier 2 Issuers.

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Policy 4.1 Private Placements

• Private Placements at less than 0.10
•  
• Interim Policy which expires December 31, 2002
•  
• Allowable for Issuers that have a discounted
  market price below 0.10
•  
• Minimum Issue Price 0.05
•  
• Issuer must be designated Inactive or demonstrate
  financial hardship

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Policy 4.1 Private Placements

• Restrictions
• Maximum proceeds to be raised is 100,000
•  
• Maximum Related Party subscriptions
• 10,000 individually
• 50,000 in aggregate
• All securities subject to a 12-month hold period
• Warrants priced at 0.10 minimum for maximum term
  of 12 months

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Policy 4.1 Private Placements

• The Exchange reserves the right to consider the
  imposition of
• Escrow should the Issuer enter into an RTO or COB
  within 12
• Months from the date of closing.
• Proceeds must not be allocated to the payment of
  salaries or
• related party debts.

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Policy 2.4 Capital Pool Companies

• Criteria
• Arms Length Qualifying Transaction (QT)
  Announced.
• Maximum of 125,000, regardless of amount raised
  from seed shares and IPO.
• All sections of Policy 4.1 apply.
• Subscriptions by related parties to the CPC and
  the Qualifying Transaction may be subject to
  escrow.

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Policy 2.4 Capital Pool Companies

• Criteria (cont)
• Sponsor retained or sponsorship waived.
• Securities issued pursuant to the placement are
  excluded from voting on the QT or matters
  relating to QT.
• Disclosure regarding use of proceeds made to
  subscribers.

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Policy 4.4 Incentive Stock Options

• Requirements for a Stock Option Plan
• All issuers, except CPCs, must adopt a stock
  option plan.
• Depending on tier classification, issuers have
  the following methods for structuring stock
  option grants, which include both rolling and
  fixed plans

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Policy 4.4 Incentive Stock Options

• Type of Stock Option Plans
• Rolling Plans
• Available for Tier 1 and Tier 2 Issuers.
• Maximum of 10 of the outstanding shares at the
  time of grant.
• No vesting provisions imposed.
• Shareholder approval to plan required at each
  annual meeting.

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Policy 4.4 Incentive Stock Options

• Type of Stock Option Plans (cont)
• Fixed Number Plans
•  
• Available for Tier 1 and Tier 2 Issuers.
• Maximum of 20 of the outstanding shares at the
  date of shareholder approval. This maximum must
  be represented as a finite share number.
• Vesting provisions must be imposed by all Tier 2
  Issuers, if greater than 10 of the outstanding
  shares are issuable under the plan.

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Policy 4.4 Incentive Stock Options

• Required Terms for a Stock Option Plan
• Options are non-assignable and non-transferable
• Maximum option term 5 years for Tier 2 and 10
  years for Tier 1
• Maximum grant to any one consultant is 2 percent
  of the Issuers outstanding shares, at the time of
  grant.
• Maximum grant to all individuals who provide
  Investor Relations services, in any 12 month
  period, is 2 percent of the Issuers outstanding
  shares at the time of grant.

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Policy 4.4 Incentive Stock Options

• Vesting Provisions
• Minimum of 18 months with shares releasable
  equally over the period.
• Investor Relations persons must vest over a
  minimum of 12 months, with the shares releasable
  equally each quarter.
• Hold Periods
• The Exchange 4 month hold period is not imposed
  for Tier 1 issuers who grant options at Market
  Price rather than Discounted Market Price and
  this provision is disclosed in the Tier 1 issuers
  stock option plan.

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Policy 4.4 Incentive Stock Options

• Adoption of the TSX Filing Requirements
•  
• Issuers file a Form 4G at the end of each month
  notifying the Exchange of grants during that
  month.
•  
• Press releases required at the time of grant of
  options to directors, officers, and persons
  performing Investor Relations Activities.
•  
• No filing fees imposed.
• No Exchange review.

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Rolling Plan vs. Fixed Plan
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• Policy 5.3
• Acquisition of
• Non-Cash Assets

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Policy 5.3 Acquisitions and Dispositions of
Non-Cash Assets

• Policy Simplified
• Filing Categories of Minor and Major Transactions
  have been removed
• Transaction categories are Exempt, Expedited,
  Reviewable and Fundamental
• Exempt / Expedited Transactions
• Dollar maximums have been removed and replaced
  with a requirement that the transaction is not a
  Fundamental Acquisition.
• Tier 3 Issuers cannot use the Exempt or Expedited
  Filing systems

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Policy 5.3 Acquisition of Non-Cash Assets

• Shareholder Approvals
• Shareholder Consents are acceptable.
• If a Filing Statement will be required, a copy of
  the Filing Statement will be required to be
  provided to shareholders prior to them providing
  their consent.

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Filing Tips
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Website

• www.tsx.ca
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• Trading history
• Listed company information
• Policy Manual
• Contact directories
• News releases/bulletins
• Current events

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