NIN 99/14 - Short Form Offerings for Qualifying Issuers [NIN - Rescinded]

Published Date:	1999-04-30
Effective Date:	1999-04-28

The Vancouver Stock Exchange (the "VSE") will be adopting a new offering vehicle for VSE issuers called the Short Form Offering. Details are set out in Part 6 of VSE Policy 14, a copy of which is attached to this notice.

The Short Form Offering provides purchasers with free trading securities for purchases of up to 2% of the offering (a maximum of $20,000 where the maximum offering of $1 million is undertaken), provided that, among other things:

• the issuer meets the requirements of a "Qualifying Issuer" under BOR#98/7 (the "SHAIF System");

• the issuer incorporates by reference into the short form offering document both a current annual information form and its continuous disclosure documents; and

• the issuer and directors, officers and promoters of the issuer grant to purchasers contractual rights of action in the event of a misrepresentation.

Effective May 3, 1999, the Commission is adopting Blanket Order #99/1 (the "Short Form BOR") to implement the Short Form Offering. This notice provides background on this VSE initiative and a summary of the Short Form BOR.

Background

The Short Form Offering is an initiative of the VSE, intended to be a vehicle to increase the participation of smaller investors in primary offerings and enhance the liquidity of the market. The Short Form Offering was also designed to be flexible enough to permit participation by larger purchasers on terms equivalent to those applicable to a private placement under the SHAIF System.

The Short Form Offering builds upon the SHAIF System, which was adopted by the Commission in November 1997, and represents another step toward an integrated disclosure system. The Canadian Securities Administrators are developing a concept proposal relating to an integrated disclosure system (see NIN#97/47 and NR#99/3).

Short Form BOR

Under the new Short Form Offering, a qualifying issuer may raise up to $1 million in any twelve month period using a short form offering document rather than a long form prospectus. The short form offering document will incorporate by reference disclosure regarding the issuer and its business and affairs contained in its annual information form ("AIF") and its continuous disclosure documents filed subsequent to its AIF.

Purchasers, other than Designated Hold Purchasers, will receive securities without any resale restrictions provided that the amount purchased is not more than the Threshold Amount. A Designated Hold Purchaser is defined in the Short Form BOR as "an insider or promoter of the issuer, the issuer’s underwriter or a member of the professional group of that underwriter". The Threshold Amount is defined in the Short Form BOR as "not more than the greater of $10,000 or 2% of the securities distributed".

Designated Hold Purchasers and Designated Threshold Purchasers (defined in the Short Form BOR to include "sophisticated purchasers"), are permitted to acquire more than the Threshold Amount, but all securities acquired by Designated Hold Purchasers and securities acquired over the Threshold Amount by Designated Threshold Purchasers will be subject to resale restrictions, including a four month hold period.

The Short Form BOR refers to the VSE or any successor entity so that the Short Form Offering may be made available for distributions in British Columbia by qualified issuers who become listed on the proposed new Canadian junior capital market.

Questions and Comments

The Short Form Offering is an initiative of the VSE and therefore interested persons are directed to read applicable VSE policies, particularly Part 6 of VSE Policy 14, and contact the VSE with any questions regarding the Short Form Offering. Questions should be directed to either

Susan Copland Geir Liland
Manager Vice President
Corporate Finance Services Corporate Finance Services
Vancouver Stock Exchange Vancouver Stock Exchange
(604) 643-6531 (604) 643-6565
scopland@vse.ca gliland@vse.ca
609 Granville Street 609 Granville Street
Vancouver, British Columbia Vancouver, British Columbia
V7Y 1H1 V7Y 1H1

The Commission invites comments on the Short Form Offering. Interested persons are encouraged to direct written comments to:

Brenda J. Benham
Director
Policy and Legislation
British Columbia Securities Commission
bbenham@bcsc.bc.ca
200 - 865 Hornby Street
Vancouver, British Columbia V6Z 2H4

Comment letters submitted are placed in a public file and form part of the public record, unless confidentiality is requested. Although comment letters requesting confidentiality will not be placed on the public file, freedom of information legislation may require the Commission to make comment letters available. Persons submitting comment letters should therefore be aware that the press and members of the public may be able to obtain access to any comment letter.

DATED at Vancouver, British Columbia, on April 28, 1999.

Douglas M. Hyndman
Chair

Reference: BOR#98/7
BOR#99/1
NIN#97/47
NR#99/3


New Part 6 of VSE Policy No. 14

14.6 Short Form Offering Document/Small Offering Exemption

Introduction

14.6.1 The Short Form Offering Document (the "Short Form") is an Exchange document which allows certain issuers to undertake a public offering without preparing a Prospectus (the "Offering"), while allowing eligible investors to receive free trading shares. By using the Short Form, an issuer can access the public market on a timely and cost efficient basis, while providing sufficient disclosure to investors to allow them to make an informed investment decision.

14.6.2 The Short Form is not a Prospectus, but a brief disclosure document which supplements the company’s existing continuous disclosure record, which includes: Annual Information Forms, financial statements, quarterly reports and material change reports as well as other documents available in the public domain such as engineering reports, valuations, feasibility studies and market studies previously filed with the Exchange or the Commission. This existing current disclosure is not restated in the Short Form, but is incorporated by reference and must be available to investors on a publicly accessible database such as the SEDAR web site, the issuer’s web site, the BCSC web site or the VSE web site.

** See Appendix 14B for the Short Form Offering Document

14.6.3 The BCSC has issued BOR #99/1, which provides a Prospectus exemption for eligible issuers undertaking a distribution using the Short Form, in most cases without imposing a hold period on the securities.

** See Appendix 14C for BOR #99/1.

14.6.4 A Short Form is an Exchange document and may not be used to distribute securities in other jurisdictions, or qualify previously issued securities for sale in British Columbia or elsewhere.

Definitions

14.6.5 In this Policy:

a) "Designated Hold Purchaser" means a purchaser that is an insider or promoter of the issuer, the issuer’s underwriter or member of the Professional Group of that underwriter;

b) "Designated Threshold Purchaser" means a purchaser who either would be entitled to purchase securities of the issuer pursuant to the Prospectus exemptions contained in sections 74(2)(1) or 74(2)(3) of the Securities Act, or is a "sophisticated purchaser" as defined in the Securities Rules, other than a member of the Professional Group;

c) "Professional Group" means a group of persons as defined in Multi-Jurisdictional Instrument 33-105 Underwriting Conflicts in its most recently published form or in the form adopted by the Commission from time to time;

d) "Subsequently Triggered Report" means a material change report that must be filed no later than 10 days after a material change under section 85(1)(b) of the Securities Act, as a result of a material change that occurs after the date of the certification of the Short Form but before entering into an agreement of purchase and sale with a purchaser; and

e) "Threshold Amount" means the greater of $10,000 and 2% of the value of the securities distributed under an Offering.

Eligibility to Use Short Form

14.6.6 Issuers which are Qualifying Issuers pursuant to Local Policy 3-27 (LPS 3-27) and BOR #98/7 (System for Shorter Hold Periods with an Annual Information Form) which have filed a current AIF pursuant to LPS 3-27, are eligible to use the Short Form under the conditions outlined in section 14.6.7 and in BOR #99/1.

14.6.7 Qualifying Issuers may use the Short Form provided that:

a) the issuer has filed all documents that it is required to file under the continuous disclosure provisions of the Securities Act and the Securities Rules, including annual and interim financial information and annual reports, press releases disclosing material changes and material change reports;

b) the distribution is of a class of securities that are listed for trading on the Exchange;

c) the number of securities distributed by the issuer under the Offering, including shares purchasable upon the exercise of share purchase warrants, and shares distributed pursuant to a greenshoe option, when aggregated with the securities of the issuer distributed under all Short Form Offerings during the twelve month period prior to the date of the Short Form, does not:

i) result in gross aggregate proceeds to the issuer of more than $1,000,000; or
ii) constitute in excess of 100% of the number of issued and outstanding securities of the offered class of securities at the later of:

a) the date the issuer first distributed securities of the same class under the Short Form; and
b) the date which is 12 months prior to the date of the Short Form;

d) the aggregate acquisition cost to a purchaser, other than a Designated Hold Purchaser or Designated Threshold Purchaser, is no more than the Threshold Amount;

e) no purchaser acquires more than 20% of the securities distributed under the Offering;

f) no more than 50% of the securities distributed pursuant to the Offering are subject to the four month hold period imposed pursuant to BOR #99/1, and sections 14.6.7(g) and (h) of this Policy.

g) all securities purchased on the Offering by a purchaser who was, at the time it acquired the security, a Designated Hold Purchaser will be subject to a four month hold period from the date that the purchaser acquired securities under the Offering.

h) Designated Threshold Purchasers who acquired more than the Threshold Amount of securities will be subject to a four month hold period from the date that the purchaser acquired securities under the Offering on the portion of those securities which are in excess of the Threshold Amount.

Use of Proceeds

14.6.8 The Short Form cannot be used to raise funds for property transactions which have not received Exchange acceptance.

14.6.9 Where the offering is financing work on a specific property, the most recent geological report or valuation filed with the Exchange or Commission, relating to that property must be available to the public, either through the SEDAR web site, the VSE web site, the BCSC web site or the issuer’s web site. If no geological report has been filed with the Exchange or Commission in respect of the property, the Exchange may require one to be filed prior to acceptance of the Short Form.

14.6.10 If the proceeds of the offering are to be used for purposes other than working capital, a minimum offering consistent with the stated purpose must be established to ensure adequate funds are raised.

Process

14.6.11 The filing and acceptance process for a Short Form Offering Document involves the following steps:

Step 1: The company and/or its filing solicitor prepare the Short Form, ensuring all continuous disclosure material is up to date, and incorporated by reference.

Step 2: The company’s agent reviews the document and material incorporated by reference, and does sufficient due diligence to sign the certificate page of the Short Form.

Step 3: The company issues a news release announcing the financing by Short Form and disclosing the amount of funds to be raised, the price per share, the use of proceeds and the name of the agent.

Step 4: The company submits the Short Form to the Exchange for review within two days from the date of the news release.

Step 5: The Exchange reviews the Short Form and if there are no significant deficiencies, accepts it within five business days and publishes an Exchange Notice indicating the acceptance of the financing.

Step 6: The agent has 30 days from Exchange acceptance to market and sell the offering. On the offering day, the shares are crossed through VCT.

Required Initial Documentation

14.6.12 The issuer must file the following with the Exchange’s Corporate Finance Services Department:

a) A copy of the Short Form, signed by the issuer’s officers, directors, promoters and agent;

b) A copy of the Agency agreement; and

c) the applicable fee.

Offering Period and Pricing

14.6.13 An Offering shall be priced based on the closing price of the issuer’s listed shares on the trading day before the news release disclosing the Short Form Offering is disseminated, less a discount of up to 10%, subject to a minimum price of $0.15 per share or unit. Share purchase warrants issued pursuant to the Offering must be priced at a 10% premium to the share price.

14.6.14 The Short Form must be filed with the Exchange within 2 business days from the date of the news release in order to ensure the offering price will be accepted. If however, a material change is announced by the company during the offering period and the Exchange deems that the company was likely aware of that pending material change at the time the offering price was set, the Exchange may require that the offering be re-priced to reflect the material change.

14.6.15 Upon Exchange acceptance of the Short Form, the issuer and its agent have an offering period of 30 days from the date of acceptance in which to market and sell the securities offered pursuant to the Short Form. On the offering day, the agent crosses the shares (or units) through VCT from the company’s account to the clients’ accounts at the offering price.

14.6.16 The Exchange must be advised of the offering day by the agent before 11:00 a.m. on the trading day immediately prior to the offering day, whereupon the Exchange will issue an Exchange Notice announcing the offering day.

Greenshoe Requirements

14.6.17 Where the offering has a greenshoe option, the agent must advise the Exchange of the extent of any over-subscription prior to the opening of the market on the offering day, unless trading in the shares of the issuer is halted or suspended, in which case the agent shall advise the Exchange of the extent of any oversubscription within ten business days of the offering day.

** See Rules B.3.33 and B.3.42 for the policies to be applied to the greenshoe option.

Delivery Requirements and Subsequent Material Changes

14.6.18 The Short Form, and any Subsequently Triggered Report filed by the issuer subsequent to the date thereof, must be delivered to a purchaser by the issuer or its agent:

a) before the issuer or its agent enters into the written confirmation of the purchase and sale resulting from an order or subscription for securities being distributed under the Offering; or

b) not later than midnight on the second business day after the agreement of purchase and sale is entered into.

14.6.19 When a material change occurs after the Exchange has accepted the Short Form, and prior to the completion of the distribution, the issuer and the agent are reminded that in order to rely on BOR #99/1 the issuer must have filed all documents that it is required to file under Part 12 of the Securities Rules. As a result, the issuer and the agent must cease distribution until a news release is disseminated and filed with the Exchange and the Commission, and a material change report is filed with the Exchange and Commission.

Contractual Rights of Action

14.6.20 The issuer must grant a contractual right of action to the purchasers in the following form:

"If this Short Form Offering Document, together with any Subsequently Triggered Report, contains a "misrepresentation" as that term is defined in the Securities Act (British Columbia) and it was a misrepresentation on the date of investment, the purchaser will be deemed to have relied on the misrepresentation and will have a right of action, either for damages against the Company and its directors and every person, except the agent, who signed the Offering Document, (the "Company Representatives") or alternatively for rescission of the subscription agreement. In any such action, parties against whom remedies are sought shall have the same defenses as are available in section 131 of the Securities Act, as if the Short Form Offering Document were a prospectus.

A purchaser is not entitled to commence an action to enforce this right after:

(1) in the case of an action for rescission, 180 days after the date of purchase; or

(2) in the case of an action for damages, the earlier of 180 days following the date the investor first had knowledge of the misrepresentation or three years following the date of purchase.

The contractual rights provided herein are in addition to and without derogation from any other right the purchaser may have at law."

Contractual Rights of Withdrawal

14.6.21 The issuer must grant a contractual right of withdrawal to the purchasers, in the following form

"A subscription agreement for the securities offered under this Short Form Offering Document is not binding on a purchaser if the dealer from whom the purchaser purchased the security (or the issuer if the purchaser did not purchase the security from a dealer), receives, not later than two business days after the receipt by the purchaser of the Short Form Offering Document and any Subsequently Triggered Report, written notice sent by the purchaser evidencing the intention of the purchaser not to be bound by the agreement."

Agent Requirements and Compensation

14.6.22 An agent signing the Short Form agent certificate must be an Exchange Member Firm which is registered in B.C. as an underwriter.

14.6.23 An agent signing the Short Form must comply with sections 4, Requirement for Due Diligence Report and sections 5.1, 5.3 and 5.4 Content of Due Diligence Report of Local Policy Statement 3-17 in relation to the Short Form. All references to the Superintendent in these sections shall be read as the Exchange in relation to a Short Form Offering.

14.6.24 An agent is free to negotiate its selling commission with the company.

14.6.25 Agent’s warrants may be issued up to a maximum of 25% of the total number of shares in the Offering. Agent’s warrants are not included in the calculation of the yearly limit in 14.6.6(c).The exercise price of the agent’s warrant shall not be less than the price of the shares to be offered, and where the warrant term exceeds one year, the exercise price shall be increased annually by not less than 15% of the exercise price. The maximum term for an agent’s warrant is two years.

Final Filing Requirements

14.6.26 After the Offering has been completed, the agent must file the list of purchasers with the Exchange, indicating which purchasers have taken securities subject to a hold period pursuant to section 14.6.6(h), and how many securities each purchaser has purchased.

Audit

14.6.27 Although the Exchange review of the Short Form will not comprise a full vetting of the document and material incorporated by reference for disclosure and policy compliance, an audit will be undertaken to review certain Short Forms after the distributions are completed. If the audit results in the discovery of significant problems with the filing, the Exchange may withdraw the company’s ability to use the Short Form in the future.

OFFERING:

Agent/Underwriter:
The Vancouver Stock Exchange has in no way passed upon the merits of the securities offered hereunder.


General Instructions:

1. The answers to the following items should be presented in narrative form, except where a tabular form is specifically required.
2. "Issuer" shall include any subsidiary of the issuer.
3. "Year", except where the context otherwise requires, means a period of twelve months preceding the date of the certificate of the directors and promoters of the issuer.
4. When the answer to any item refers to an issuer other than the issuer whose securities are the subject of the distribution, disclose the name of any individual who is an insider or promoter of both issuers.

Documents Incorporated by Reference

1. Annual Information Forms (including documents filed as alternatives to Annual Information Forms), financial statements including quarterly reports, and material change reports, as well as other documents available in the public domain such as engineering reports, valuations, feasibility studies, and market studies previously filed with the Exchange or Commission, shall be incorporated by reference in the offering document. The referenced document must be clearly identified and where applicable, the information incorporated by reference shall be identified by page, caption, paragraph or otherwise. The location of the document in SEDAR or any other publicly accessible database (eg. issuer’s web site, VSE web site) must be provided. This information must precede the certificate of the directors and promoters of the issuer.

Cover Page:

1. Set out in tabular form, on the front cover of the offering document: the description, designation and number of securities being offered by the issuer; the price per security; the agent’s compensation ; and the net proceeds to the issuer on both a per security and an aggregate basis.

2. Where the securities offered are speculative in nature, the following statement shall be included on the front cover of the offering document:

"The securities offered hereunder are speculative in nature. Information concerning the risks involved may be obtained by reference to this document; further clarification, if required, may be sought from the agent or an adviser registered under the Securities Act."

3. The following statement and information shall be included on the front cover of the offering document:

"The information provided in this offering document is supplemented by disclosure contained in the documents listed below which are incorporated by reference into this offering document. These documents must be read together with the offering document in order to provide full, true and plain disclosure of all material facts relating to the securities offered by this offering document. The documents listed below are not contained within, or attached to the offering document, and will be provided by the issuer, at no charge, upon request. Alternatively, the documents may be accessed by the reader of the offering document at the following locations:

Type of Document (eg. AIF, Material Change Report, Valuation)

Date of Document

Location at which document may be accessed (eg. SEDAR web site, issuer web site, VSE web site BCSC web site) (Provide specific web site addresses where applicable)

Any material change report or other continuous disclosure document filed with the Exchange or the Commission subsequent to the acceptance of the offering document by the Exchange and prior to the distribution of securities under this offering document will be deemed to be incorporated by reference into this offering document."

1. Plan of Distribution

a) State the manner in which the securities being offered are to be distributed, including the material details of any agency agreements and sub-agency agreements outstanding or proposed to be made, the particulars of any assignments or proposed assignments of any such agreements and any rights of first refusal on future offerings.

b) Give details of any payments in cash or securities or any other consideration made or to be made to a promoter, finder or any other person in connection with the offering.

c) State the number of securities of the issuer beneficially owned, directly or indirectly, by the Professional Group.

2. Use of Proceeds:

Funds Available

Provide a breakdown of Funds Available as follows:

a) The net proceeds to be derived by the issuer from the sale of securities offered under the Offering Document;

b) The estimated working capital available to the issuer as of the latest month end prior to the date of the Short Form, or where the date of the Short Form is within ten days of the end of the latest month, the month end prior to the end of that month.

c) the amounts and sources of other funds that will be available to the issuer prior to or concurrently with the completion of the offering.

Principal Purposes

d) Provide, in tabular form, a description of each of the principal purposes, with amounts, for which the Funds Available will be used. Where the closing of the distribution under the prospectus is subject to a minimum subscription, provide separate columns disclosing the use of the proceeds for the minimum and maximum subscriptions.

e) Where the proceeds are to be spent on the exploration and development of a natural resource property for which the issuer has received Exchange acceptance, disclose the nature and extent of the proposed exploration and development program that is to be carried out. Additionally, provide:

i) an estimated timetable for the program, describing each significant component of the program and identifying the planned commencement and completion dates of each component,

ii) factors which may delay or impede the timetable described above, and

iii) a breakdown of costs for the proposed program.

f) In the case of a best efforts offering, include a statement regarding priority usage of the actual proceeds where the entire offering is not sold.

g) State the particulars of any provisions or arrangements made for holding any part of the net proceeds in trust or subject to the fulfillment of any conditions howsoever imposed.

h) Give particulars of any the proceeds of the offering which are to be paid to related parties.

3. Business of the Issue

Describe the business carried on and intended to be carried on by the issuer. If the issuer is a non resource company, include the products that the issuer is or will be developing or producing and the stage of development of each of the products. If the issuer is a resource company, state whether the issuer’s properties are primarily in the exploration or in the development or production stage.

4. Risk Factors:

List the risks that could be considered to be material to an investor as follows:

a) risks relating to the nature of the business of the issuer,

b) risks relating to the nature of the offering, and

c) any other risks.

5. Acquisitions

If the issuer proposes to make a material acquisition of an asset, property or existing business, using the proceeds from this offering, provide the following information:

a) the nature of the assets to be acquired. If the asset is a resource property:

i) the name, location, size, and the number of claims and concessions comprising the property,

ii) the nature (claim, title, lease, option, or other interest) extent and status (patented, unpatented etc.) of the interest under which the issuer has or will have the rights to hold or operate the property, and the expiry date, if applicable.

b) the actual or proposed date of each acquisition,

c) the name of the vendor and whether the transaction will be at arm’s length,

d) for an acquisition not at arm’s length, the vendor’s out of pocket costs as described in Policy 19 of the VSE Corporate Finance Policy and Procedures Manual,

e) the consideration, both monetary and non monetary, to be paid by the issuer,

f) any material obligations that must be complied with in order to keep any acquisition agreement or property interest in good standing,

g) how the consideration was determined, (eg. out of pocket costs, valuation report or arm’s length negotiations), and

h) the location (on SEDAR, the issuer’s web site, or any other publicly accessible location) of any valuation opinion or technical report required by a policy of the Exchange or other regulatory authority for the acquisition.

6. Corporate Information

a) State the authorized and issued share capital of the issuer and outline briefly any material rights and restrictions attaching to the share capital, such as voting, preference, conversion or redemption rights.

7. Directors, Officers, Promoters and Principal Holders of Voting Securities

a) List the names and municipality of residence for all directors, officers and promoters of the issuer, and for each person, disclose:

i) the current positions and offices with the issuer,

ii) the principal occupations during the five years prior to the date of the offering document, and where the principal occupation is that of an officer of a company other than the issuer, state the name of the company and the principal business in which it was engaged,

iii) as of the conclusion of the offering, the number and percentage of voting shares of the issuer beneficially owned, directly or indirectly, separated by class into (a) escrowed, (b) pooled and (c) all other shares, and

iv) where a director officer or promoter is an associate of another director, officer or promoter, disclose the relationship.

b) Where any director, officer or promoter of the issuer is, or within five years prior to the date of the offering document has been, a director officer or promoter of any other issuer that while that person was acting in that capacity:

i) was the subject of a cease trade or similar order or an order that denied the issuer access to any statutory exemptions for a period of more than 30 consecutive days, state the fact and describe the reasons and whether the order is still in effect, or

ii) was declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or has been subject to or instituted any proceedings, arrangement or compromise with the creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person, state the fact.

c) Where any director, officer or promoter of the issuer has, within ten years prior to the date of the offering document, been subject to any penalties, or sanctions imposed by a court or securities regulatory authority relating to trading in securities, promotion or management of a publicly traded issuer, or theft or fraud, describe the penalties or sanctions imposed.

d) Give the full name, and number of voting shares, separated by class into (a) escrowed, (b) pooled and (c) all other voting shares, beneficially owned by each person who is known by the signatories hereto to own beneficially, directly or indirectly, more than 10% of the voting shares of the issuer, other than those persons disclosed in Item 7(a). Where the beneficial owner is a privately held corporation, provide the names of the beneficial owners of the corporation.

8. Options to Purchase Securities of the Issuer:

a) Disclose on an individual basis, the exercise price and expiry date of all options, share purchase warrants or other rights to acquire securities granted to insiders or promoters of the issuer.

b) Disclose the exercise price and expiry date of all options granted to employees. This disclosure may be shown in the aggregate, without specific identification of the holders of the options.

c) Disclose the exercise price and expiry date of all remaining options, share purchase warrants or rights not disclosed pursuant to a) or b). This disclosure may be shown in the aggregate without specific identification of the security holders.

9. Securities of the Issuer Held in Escrow:

Where the issuer has performance shares or escrowed securities state:

a) the number of performance shares and escrowed securities divided into each category,

b) the estimated percentage that the performance and escrowed securities will represent of the total issued and outstanding voting securities of the issuer upon completion of the offering,

c) the names of the beneficial owners of the performance shares and escrowed securities and the number of such shares owned by each beneficial owner, and

d) the date of the escrow agreement and the conditions governing the release and cancellation of the performance and escrowed shares.

10. Particulars of any Other Material Facts

a) Briefly describe any actual or pending material legal proceedings to which the issuer is or is likely to be a party or of which any of its business or property is or is likely to be the subject. Where applicable, include the name of the court or agency, the date the proceedings were instituted, the principal parties to the proceedings, the nature of the proceedings, the amount claimed, if any, whether the proceedings are being contested, the present status of the proceedings, and, if a legal opinion is referred to in this offering document, the name of the counsel providing that opinion.

b) Specify any properties proposed to be acquired for which regulatory approval is not presently being sought.

c) If liabilities (including bonds, debentures, notes or other debt obligations) have significantly increased or altered subsequent to the date of the most recent financial statements filed with the British Columbia Securities Commission, disclose particulars of such increase or alteration.

d) Briefly state any other material facts not previously disclosed herein.

11. Contractual Rights of Action:

This Offering Document must include the following description of the contractual rights of action against the Company, its directors and every person except the agent, who signed the offering document.

CONTRACTUAL RIGHTS OF ACTIO

"If this Short Form Offering Document, together with any Subsequently Triggered Report contains a "misrepresentation" as that term is defined in the Securities Act (British Columbia) and it was a misrepresentation on the date of investment, the purchaser will be deemed to have relied on the misrepresentation and will have a right of action, either for damages against the Company and its directors, and every person, except the agent, who signed the Offering Document, (the "Company Representatives") or alternatively for rescission of the subscription agreement. In any such action, parties against whom remedies are sought shall have the same defenses as are available in section 131 of the Securities Act, as if the Short Form Offering Document were a prospectus.
A purchaser is not entitled to commence an action to enforce this right after:

(1) in the case of an action for rescission, 180 days after the date of purchase; or

(2) in the case of an action for damages, the earlier of 180 days following the date the investor first had knowledge of the misrepresentation and three years following the date of purchase.

The contractual rights provided herein are in addition to and without derogation from any other right the purchaser may have at law."

12. Contractual Rights of Withdrawa

This Offering Document must include the following description of rights of withdrawal available to the purchasers under the Offering Document:

CONTRACTUAL RIGHT OF WITHDRAWAL

"A subscription agreement for the securities offered under this Short Form Offering Document is not binding on a purchaser if the dealer from whom the purchaser purchased the security (or the issuer if the purchaser did not purchase the security from a dealer), receives, not later than two business days after the receipt by the purchaser of the Short Form Offering Document and any Subsequently Triggered Report, written notice sent by the purchaser evidencing the intention of the purchaser not to be bound by the agreement.

The foregoing right of withdrawal does not apply if the purchaser is a member of a "professional group" as defined under Blanket Order • of the British Columbia Securities Commission, or if the purchaser disposes of the beneficial ownership of the security (otherwise than to secure indebtedness) before the end of the withdrawal period.

The onus of proving that the time for giving notice of withdrawal has ended is on the dealer from whom the purchaser has agreed to purchase the security, or if the purchaser did not purchase from a dealer, such onus is on the Company."

12. Include the Following Certificates:

a) Certificate of the directors and promoters of the issuer:

"The foregoing, including the documents incorporated by reference constitute full, true and plain disclosure of all material facts relating to the securities offered by this Offering Document. The standard for full, true and plain disclosure is the same as that required for prospectuses by the Securities Act and the regulations thereunder."

________________________

Date

(i) This certificate must be signed in accordance with the requirements in Section 68(2)-(5) of the Act, as if the Offering Document was a prospectus.

(ii) Identify each signatory and the signing capacity of the signatory.

b) Certificate of the Agent(s):

The following certificate shall be signed by the agent.

"We have reviewed this Offering Document and the information it incorporates by reference. Our review consisted primarily of enquiry, analysis and discussion related to the information supplied to us by the issuer and information about the issuer in the public domain.

We have not carried out a review of the type that would be carried out for a prospectus filed under the Securities Act (British Columbia). Therefore, we cannot certify that this document and the information it incorporates by reference constitutes full, true and plain disclosure of all material facts relating to the issuer and the securities offered by it.

Based on our review, nothing has come to our attention that causes us to believe that this Offering Document and the information that it incorporates by reference: (1) contains an untrue statement of a material fact; or (2) omits to state a material fact necessary to prevent a false statement or misleading interpretation of any other statement.

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