5 - Ongoing Requirements for Issuers and Insiders

THE MANITOBA SECURITIES COMMISSION MSC RULE 2006-8 (Section 149.1, The Securities Act)

AMENDMENTS TO NATIONAL INSTRUMENT 51-102 CONTINUOUS DISCLOSURE OBLIGATIONS

1. National Instrument 51-102 Continuous Disclosure Obligations is amended by this Instrument.

2. Section 1.1 is amended by, a. renumbering section 1.1 as subsection 1.1(1), b. repealing the definition of "approved rating", c. adding the following after the definition of "date of acquisition": "electronic format" has the same meaning as in National Instrument 13-101 System for Electronic Document Analysis and Retrieval (SEDAR);

"equity investee" means a business that the issuer has invested in and accounted for using the equity method;

d. repealing the definition of "executive officer" and substituting the following: "executive officer" means, for a reporting issuer, an individual who is (a) a chair, vice-chair or president; (b) a vice-president in charge of a principal business unit, division or function including sales, finance or production; or

(c) performing a policy-making function in respect of the issuer; e. in the definition of "interim period", i. adding "a non-standard year or" after "in the case of a year other than" in paragraph (a), ii. striking out "or" at the end of paragraph (a), and iii. adding the following after paragraph (a):

- 2 -(a.1) in the case of a non-standard year, a period commencing on the first day of the financial year and ending within 22 days of the date that is nine, six or three months before the end of the financial year; or

f. adding the following after the definition of "investment fund": "issuer’s GAAP" has the same meaning as in National Instrument 52-107 Acceptable Accounting Principles,Auditing Standards and Reporting Currency;

g. adding the following after the definition of "new financial year": "NI 54-101" means National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer;

"non-standard year" means a financial year, other than a transition year, that does not have 365 days, or 366 days if it includes February 29;

h. repealing the definition of "published market", i. in the definition of "recognized exchange", i. striking out "and" at the end of paragraph (a), and ii. adding the following after paragraph (a): (a.1) in Québec, a person or company authorized by the securities regulatory authority to carry on business as an exchange; and

j. adding the following after the definition of "restricted voting security": "restructuring transaction" means (a) a reverse takeover; (b) an amalgamation, merger, arrangement or reorganization; (c) a transaction or series of transactions involving a reporting issuer acquiring assets and issuing securities that results in

(i) new securityholders owning or controlling more than 50% of the reporting issuer’s outstanding voting securities; and

(ii) a new person or company, a new combination of persons or companies acting together, the vendors of the assets, or new management

(A) being able to materially affect the control of the reporting issuer; or

- 3 -(B) holding more than 20% of the outstanding voting securities of the reporting issuer, unless there is evidence showing that the holding of those securities does not materially affect the control of the reporting issuer; and

(d) any other transaction similar to the transactions listed in paragraphs (a) to (c), but does not include a subdivision, consolidation, or other transaction that does not alter a securityholder’s proportionate interest in the issuer and the issuer’s proportionate interest in its assets;

k. in the definition of "reverse takeover", striking out "by which an enterprise obtains ownership of the securities of another enterprise but, as part of the transaction, issues enough voting securities as consideration that control of the combined enterprise passes to the securityholders of the acquired enterprise" and substituting "that the issuer is required under the issuer’s GAAP to account for as a reverse takeover",

l. in the definition of "reverse takeover acquiree", striking out ", as that term is used in the Handbook,",

m. in the definition of "reverse takeover acquirer", striking out ", as that term is used in the Handbook, whose securityholders control the combined enterprise as a result of" and substituting "in",

n. in the definition of "SEC issuer", striking out "a reporting" and substituting "an", o. in the definition of "solicit", i. at the end of paragraph (e), striking out "or", and ii. adding the following after paragraph (f): (g) sending, by an intermediary as defined in NI 54-101, of the documents referred to in NI 54-101;

(h) soliciting by a person or company in respect of securities of which the person or company is the beneficial owner;

(i) publicly announcing, by a securityholder, how the securityholder intends to vote and the reasons for that decision, if that public announcement is made by

(i) a speech in a public forum; or (ii) a press release, an opinion, a statement or an advertisement provided through a broadcast medium or by a telephonic, electronic or other communication facility, or appearing in a newspaper, a magazine or other publication generally available to the public;

- 4 -(j) communicating for the purposes of obtaining the number of securities required for a securityholder proposal under the laws under which the reporting issuer is incorporated, organized or continued or under the reporting issuer’s constating or establishing documents; or

(k) communicating, other than a solicitation by or on behalf of the management of the reporting issuer, to securityholders in the following circumstances:

(i) by one or more securityholders concerning the business and affairs of the reporting issuer, including its management or proposals contained in a management information circular, and no form of proxy is sent to those securityholders by the securityholder or securityholders making the communication or by a person or company acting on their behalf, unless the communication is made by

(A) a securityholder who is an officer or director of the reporting issuer if the communication is financed directly or indirectly by the reporting issuer;

(B) a securityholder who is a nominee or who proposes a nominee for election as a director, if the communication relates to the election of directors;

(C) a securityholder whose communication is in opposition to an amalgamation, arrangement, consolidation or other transaction recommended or approved by the board of directors of the reporting issuer and who is proposing or intends to propose an alternative transaction to which the securityholder or an affiliate or associate of the securityholder is a party;

(D) a securityholder who, because of a material interest in the subject-matter to be voted on at a securityholder’s meeting, is likely to receive a benefit from its approval or non-approval, which benefit would not be shared pro rata by all other holders of the same class of securities, unless the benefit arises from the securityholder’s employment with the reporting issuer; or

(E) any person or company acting on behalf of a securityholder described in any of clauses (A) to (D);

(ii) by one or more securityholders and concerns the organization of a dissident’s proxy solicitation, and no form of proxy is sent to those securityholders by the securityholder or securityholders making the communication or by a person or company acting on their behalf;

(iii) as clients, by a person or company who gives financial, corporate governance or proxy voting advice in the ordinary course of business and concerns proxy voting advice if

(A) the person or company discloses to the securityholder any significant relationship with the reporting issuer and any of its affiliates or with a

- 5 ­securityholder who has submitted a matter to the reporting issuer that the securityholder intends to raise at the meeting of securityholders and any material interests the person or company has in relation to a matter on which advice is given;

(B) the person or company receives any special commission or remuneration for giving the proxy voting advice only from the securityholder or securityholders receiving the advice; and

(C) the proxy voting advice is not given on behalf of any person or company soliciting proxies or on behalf of a nominee for election as a director; or

(iv) by a person or company who does not seek directly or indirectly the power to act as a proxyholder for a securityholder;

p. in the definition of "transition year", adding "or business" after "issuer", wherever it appears,

q. in the definition of "venture issuer", i. adding "," after "a U.S. marketplace", and ii. adding "other than the Alternative Investment Market of the London Stock Exchange or the market known as OFEX" after "the United States of America", and

r. adding the following after subsection (1): Affiliate 1.2 In this Instrument, an issuer is an affiliate of another issuer if (a) one of them is the subsidiary of the other, or (b) each of them is controlled by the same person. Control 1.3 For the purposes of subsection (2), a person (first person) is considered to control another person (second person) if

(a) the first person, directly or indirectly, beneficially owns or exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation,

(b) the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests of the partnership, or

- 6 -(c) the second person is a limited partnership and the general partner of the limited partnership is the first person.

3. Part 3 is amended by adding the following after section 3.1: Filings translated into French or English 3.2 If a person or company files a document under this Instrument that is a translation of a document prepared in a language other than French or English, the person or company must

(a) attach a certificate as to the accuracy of the translation to the filed document; and (b) make a copy of the document in the original language available to a registered holder or beneficial owner of its securities, on request.

4. Part 4 is amended by, a. in the heading preceding section 4.1, striking out "Auditor’s Report" and substituting "Audit",

b. in subsection 4.1(2), striking out "accompanied by an auditor’s report" and substituting "audited",

c. in the preamble to section 4.2, i. adding "audited" before "annual financial statements", and ii. striking out "and auditor’s report", d. in section 4.3, i. repealing subsection 4.3(1) and substituting the following: (1) Subject to sections 4.7 and 4.10, a reporting issuer must file interim financial statements for interim periods ended after it became a reporting issuer.

ii. in subsection (2), striking out "and 4.8(8)" and substituting ", 4.8(8) and 4.10(3)", and

iii. in subsection (4), adding "that is a reporting issuer" after "If an SEC issuer", e. in section 4.6, i. in subsection (2), striking out "National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer" and substituting "NI 54-101",

- 7 -ii. repealing subsection (3) and substituting the following: (3) If a registered holder or beneficial owner of securities, other than debt instruments, of a reporting issuer requests the issuer’s annual or interim financial statements, the reporting issuer must send a copy of the requested financial statements to the person or company that made the request, without charge, by the later of,

(a) in the case of a reporting issuer other than a venture issuer, 10 calendar days after the filing deadline in subparagraph 4.2(a)(i) or 4.4(a)(i), section 4.7, or subsection 4.10(2), as applicable, for the financial statements requested;

(b) in the case of a venture issuer, 10 calendar days after the filing deadline in paragraph 4.2(b)(i) or 4.4(b)(i), section 4.7, or subsection 4.10(2), as applicable, for the financial statements requested; and

(c) 10 calendar days after the issuer receives the request. , and iii. in subsection (5), striking out "all" and adding ", within 140 days of the issuer’s financial year-end and in accordance with NI 54-101" after "debt instruments".

f. in subsection 4.7(1), adding "of the issuer" before "were included in a document filed"; g. in section 4.8, i. in subsection (1), striking out "This section does not apply to an SEC issuer" and substituting "An SEC issuer satisfies this section", and

ii. in subsection (5), striking out "paragraph 4.3(1)(b)" and substituting "subsection 4.3(1)" and striking out "within" and substituting "not more than",

h. repealing section 4.9 and replacing it with the following: Change in corporate structure 4.9 If an issuer is party to a transaction that resulted in, (a) the issuer becoming a reporting issuer other than by filing a prospectus; or (b) if the issuer was already a reporting issuer, in (i) the issuer ceasing to be a reporting issuer, (ii) a change in the reporting issuer’s financial year end, or (iii) a change in the name of the reporting issuer;

- 8 ­the issuer must, as soon as practicable, and in any event not later than the deadline for the first filing required under this Instrument following the transaction, file a notice stating

(c) the names of the parties to the transaction; (d) a description of the transaction; (e) the effective date of the transaction; (f) the name of each party, if any, that ceased to be a reporting issuer after the transaction and of each continuing entity;

(g) the date of the reporting issuer’s first financial year-end after the transaction if paragraph (a) or subparagraph (b)(ii) applies;

(h) the periods, including the comparative periods, if any, of the interim and annual financial statements required to be filed for the reporting issuer’s first financial year after the transaction, if paragraph (a) or subparagraph (b)(ii) applies; and

(i) what documents were filed under this Instrument that described the transaction and where those documents can be found in electronic format, if paragraph (a) or subparagraph (b)(ii) applies.

i. in section 4.10, i. repealing paragraph (2)(a) and substituting the following: (a) file the following financial statements for the reverse takeover acquirer, unless the financial statements have already been filed:

(i) financial statements for all annual and interim periods ending before the date of the reverse takeover and after the date of the financial statements included in an information circular or similar document, or under Item 5.2 of the Form 51-102F3 Material Change Report, prepared in connection with the transaction; or

(ii) if the reporting issuer did not file a document referred to in subparagraph (i), or the document does not include the financial statements for the reverse takeover acquirer that would be required to be included in a prospectus, the financial statements prescribed by the form of prospectus, other than a short form prospectus under National Instrument 44-101 Short Form Prospectus Distributions, that the reverse takeover acquirer would be eligible to use for a distribution of securities in the jurisdiction;

- 9 -ii. in paragraph (2)(c), 1. striking out "and" at the end of subparagraph (ii), 2. striking out "." and adding "; and" at the end of subparagraph (iii), and 3. adding the following after subparagraph (iii): (iv) the filing deadline in paragraph (b). iii. adding the following after subsection (2): Comparative financial information in interim financial statements after a reverse takeover 4.10(3) A reporting issuer is not required to provide comparative interim financial information for the reverse takeover acquirer for periods that ended before the date of a reverse takeover if

(a) to a reasonable person it is impracticable to present prior-period information on a basis consistent with subsection 4.3(2);

(b) the prior-period information that is available is presented; and (c) the notes to the interim financial statements disclose the fact that the prior-period information has not been prepared on a basis consistent with the most recent interim financial information. , and

j. in section 4.11, i. in subsection (1), repealing the definition of "relevant period" and substituting the following:

"relevant period" means the period (a) commencing at the beginning of the reporting issuer’s two most recently completed financial years and ending on the date of termination or resignation; or

(b) during which the former auditor was the reporting issuer’s auditor, if the former auditor was not the reporting issuer’s auditor throughout the period described in paragraph (a);

ii. in subsection (3), adding "the following three conditions are met:" before subparagraph (3)(a)(i),

iii. in subsection (4), striking out "This section does not apply to an SEC issuer" and substituting "An SEC issuer satisfies this section",

- 10 -iv. in clauses (5)(a)(ii)(B) and (6)(a)(ii)(B), striking out "applicable", and v. in subsection (8), striking out "British Columbia," and "applicable". 5. Part 5 is amended by, a. in section 5.1, i. adding the following after subsection (1): 5.1(1.1) Despite subsection (1), a reporting issuer does not have to file MD&A relating to the annual and interim financial statements required under sections 4.7 and 4.10 for financial years and interim periods that ended before the issuer became a reporting issuer.

ii. in paragraph (2)(a), striking out ", 4.4 and 4.7" and substituting "and 4.4", and iii. in paragraph (2)(b), striking out ", 4.3(1) or 4.7(1)" and substituting "or 4.3(1)", b. in section 5.2, i. repealing subsection (1) and substituting the following: 5.2(1) If an SEC issuer that is a reporting issuer is filing its annual or interim MD&A prepared in accordance with Item 303 of Regulation S-K or Item 303 of Regulation S-B under the 1934 Act, the SEC issuer must file that document on or before the earlier of

(a) the date the SEC issuer would be required to file that document under section 5.1; and

(b) the date the SEC issuer files that document with the SEC. 5.2(1.1) An SEC issuer that is a reporting issuer must file a supplement prepared in accordance with subsection (2) at the same time it files its annual or interim MD&A, if the SEC issuer

(a) has based the discussion in the MD&A on financial statements prepared in accordance with U.S. GAAP; and

(b) is required by subsection 4.1(1) of National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency to provide a reconciliation to Canadian GAAP. , and

- 11 -ii. in subsection (2), striking out "(1)" and substituting "(1.1)", c. in paragraph 5.3(2)(b), adding "year-to-date" after "and the comparative", d. in section 5.6, i. repealing subsection (1) and substituting the following: 5.6(1) If a registered holder or beneficial owner of securities, other than debt instruments, of a reporting issuer requests the reporting issuer’s annual or interim MD&A, the reporting issuer must send a copy of the requested MD&A and any MD&A supplement required under section 5.2 to the person or company that made the request, without charge, by the delivery deadline set out in subsection 4.6(3) for the annual or interim financial statements to which the MD&A relates. , and

ii. in subsection (3), 1. striking out "all", and 2. adding ", within 140 days of the issuer’s financial year-end and in accordance with NI 54-101" after "holders of debt instruments", and

e. adding the following after section 5.6: Additional disclosure for reporting issuers with significant equity investees 5.7(1) A reporting issuer that has a significant equity investee must disclose in its MD&A, or in its MD&A supplement if one is required under section 5.2, for each period referred to in subsection (2),

(a) summarized information as to the assets, liabilities and results of operations of the equity investee; and

(b) the reporting issuer’s proportionate interest in the equity investee and any contingent issuance of securities by the equity investee that might significantly affect the reporting issuer’s share of earnings.

5.7(2) The disclosure in subsection (1) must be provided for the following periods:

(a) in the case of annual MD&A, for the two most recently completed financial years; and

(b) in the case of interim MD&A, for the most recent year-to-date interim period and the comparative year-to-date period presented in the interim financial statements.

- 12 -5.7(3) Subsection (1) does not apply if (a) the information required under that subsection has been disclosed in the financial statements to which the MD&A or MD&A supplement relates; or

(b) the issuer files separate financial statements of the equity investee for the periods referred to in subsection (2).

6. Part 6 is amended by repealing section 6.3. 7. Part 7 is amended by, a. in subsection 7.1(1)(a), striking out "a senior" and substituting "an executive", and b. in subsection 7.1(7) striking out "paragraph 1(a)" and substituting "subsection (1)". 8. Part 8 is amended by, a. in subsection 8.1(1), i. in the definition of "business", adding "to which reserves, as defined in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities, have been specifically attributed" after "oil and gas property", and

ii. repealing subsection (2) and replacing it with the following: 8.1(2) This Part does not apply to a transaction that is a reverse takeover. b. in the heading preceding section 8.2, adding "and Filing Deadline" after "Business Acquisition Report",

c. renumbering section 8.2 as subsection 8.2(1) and adding the following after subsection (1): 8.2(2) Despite subsection (1), if the most recently completed financial year of the acquired business ended 45 days or less before the date of acquisition, a reporting issuer must file a business acquisition report

(a) within 90 days after the date of acquisition, in the case of an issuer other than a venture issuer, or

(b) within 120 days after the date of acquisition, in the case of a venture issuer. d. in section 8.3, i. in subsection (1), adding "and subsections 8.10(1) and 8.10(2)" after "subsection (3)",

- 13 -ii. in subsection (3), adding "and subject to subsections 8.10(1) and 8.10(2)" after "Despite subsection (1)",

iii. in paragraph (4)(a), 1. striking out ", as at the last day of the reporting issuer’s most recently completed interim period,",

2. striking out "as at the last day of the reporting issuer’s" and substituting "calculated using the financial statements of each of the reporting issuer and the business or the related businesses for the", and

3. adding "or financial year of each" after "completed interim period", iv. in paragraph 4(b), adding "or financial year" after "recently completed interim period" and striking out "ended before the date of the acquisition",

v. in paragraph (4)(c), 1. renumbering item 1. and item 2. as subparagraph (i) and subparagraph (ii), respectively,

2. striking out "item 1." and substituting "subparagraph (i)", 3. striking out "item 2." and substituting "subparagraph (ii)", 4. in subparagraph (i) and (ii), striking out "The", and substituting "the", 5. in clauses (i)(A) and (ii)(A), striking out ", or" and substituting "; or", and 6. in clause (i)(B), striking out "." and substituting ";", vi. repealing subsection (5) and substituting the following: 8.3(5) If an acquisition does not meet any of the significance tests under subsection (4), the acquisition is not a significant acquisition.

vii. repealing subsections (8) and (9) and substituting the following: Application of the income test if lower than average income for the most recent year 8.3(8) For the purposes of paragraph (2)(c) and clause (4)(c)(ii)(A), if the reporting issuer’s consolidated income from continuing operations for the most recently completed financial year was lower by 20 percent or more than its average consolidated income from continuing operations for the three most recently completed financial years, the issuer may, subject to subsection (10), substitute the average consolidated

- 14 ­income from continuing operations for the three most recently completed financial years in determining whether the significance test set out in paragraph (2)(c) or (4)(c) is satisfied.

Application of the optional income test if lower than average income for the most recent year 8.3(9) For the purpose of clause (4)(c)(ii)(B) if the reporting issuer’s consolidated income from continuing operations for the most recently completed 12-month period was lower by 20 percent or more than its average consolidated income from continuing operations for the three most recently completed 12-month periods, the issuer may, subject to subsection (10), substitute the average consolidated income for the three most recently completed 12-month periods in determining whether the significance test set out in paragraph (4)(c) is satisfied. ,

viii. in paragraph 11(c), adding "reporting" after "audited annual financial statements of the",

ix. adding the following after subsection (11): Application of the optional income test based on pro forma financial information 8.3(11.1) For the purposes of calculating the optional income test under clause (4)(c)(ii)(A), a reporting issuer may use pro forma consolidated income from continuing operations for its most recently completed financial year that was included in a previously filed document if

(a) the reporting issuer has made a significant acquisition of a business after its most recently completed financial year; and