Part 1
Definitions

Definitions

1.1         In this Rule

"connected security" means, in respect of an offered security,

1. 1. a security into which the offered security is immediately convertible, exchangeable or exercisable unless the security is a listed security or quoted security and the price at which the offered security is convertible, exchangeable or exercisable is greater than 110% of the best ask price of the security at the commencement of the restricted period,
   2. a security of the issuer of the offered security or another issuer that, according to the terms of the offered security, may significantly determine the value of the offered security,
   3. if the offered security is a special warrant, the security which would be issued on the exercise of the special warrant, and
   4. if the offered security is an equity security, any other equity security of the issuer,

where the security trades on a marketplace or a market where there is mandated transparency of orders or trade information;

"dealer-restricted period" means, for a dealer-restricted person, the period,

1. 1. in connection with a prospectus distribution or a restricted private placement of an offered security, commencing on the later of
      1. the date two trading days prior to the day the offering price of the offered security is determined, and
      2. the date on which a dealer enters into an agreement or reaches an understanding to participate in the prospectus distribution or restricted private placement of securities, whether or not the terms and conditions of such participation have been agreed upon, and

ending on the date the selling process ends and all stabilization arrangements relating to the offered security are terminated,

1. 2. in connection with a securities exchange take-over bid or issuer bid, commencing on the date of dissemination of the take-over bid circular, issuer bid circular or similar document and ending with the termination of the period during which securities may be deposited under such bid, including any extension thereof, or the withdrawal of the bid, and
   3. in connection with an amalgamation, arrangement, capital reorganization or similar transaction, commencing on the date of dissemination of the information circular for such transaction and ending on the date of approval of the transaction by the security holders that will receive the offered security or the termination of the transaction by the issuer or issuers;

"dealer-restricted person" means, in respect of a particular offered security,

1. 1. a dealer that
      1. is an underwriter, as defined in the Act, in a prospectus distribution or a restricted private placement,
      2. is participating, as agent but not as an underwriter, in a restricted private placement, and
         1. the number of securities to be issued under the restricted private placement would constitute more than 10% of the issued and outstanding offered securities, and
         2. the dealer has been allotted or is otherwise entitled to sell more than 25% of the securities to be issued under the restricted private placement,
      3. has been appointed by an offeror to be the dealer-manager, manager, soliciting dealer or adviser in respect of a securities exchange take-over bid or issuer bid, or
      4. has been appointed by an issuer to be the soliciting dealer or adviser in respect of obtaining security holder approval for an amalgamation, arrangement, capital reorganization or similar transaction that would result in the issuance of securities that would be a distribution exempt from prospectus requirements in accordance with applicable securities law, where, in each case, adviser means an adviser whose compensation depends on the outcome of the transaction,
   2. a related entity of the dealer referred to in clause (a) but does not include such related entity, or any separate and distinct department or division of a dealer referred to in clause (a) where,
      1. the dealer
         1. maintains and enforces written policies and procedures reasonably designed to prevent the flow of information regarding any prospectus distribution, private placement or transaction referred to in clause (a) to or from the related entity, department or division, and
         2. obtains an annual assessment of the operation of such policies and procedures,
      2. the dealer has no officers or employees that solicit orders or recommend transactions in securities in common with the related entity, department or division, and
      3. the related entity, department or division does not during the dealer-restricted period, in connection with the restricted security,
         1. act as a market maker (other than to meet its obligations under the rules of a recognized exchange),
         2. solicit orders from clients, or
         3. engage in proprietary trading,
   3. a partner, director, officer, employee or a person holding a similar position or acting in a similar capacity for the dealer referred to in clause (a) or for a related entity of the dealer referred to in clause (b), or
   4. any person or company acting jointly or in concert with a person or company described in clause (a), (b) or (c) for a particular transaction;

"exchange-traded fund" means a mutual fund, the units of which are

1. 1. listed securities or quoted securities, and
   2. in continuous distribution in accordance with applicable securities legislation;

"highly-liquid security" means a listed security or quoted security that,

1. 1. has traded, in total, on one or more marketplaces as reported on a consolidated market display during a 60-day period ending not earlier than 10 days prior to the commencement of the restricted period,
      1. an average of at least 100 times per trading day, and
      2. with an average trading value of at least $1,000,000 per trading day, or
   2. is subject to Regulation M under the 1934 Act and is considered to be an "actively-traded security" thereunder;

"issuer-restricted period" means, for an issuer-restricted person, the period,

1. 1. in connection with a prospectus distribution or a restricted private placement of an offered security, commencing on the date two trading days prior to the day the offering price of the offered security is determined, and ending on the date the selling process ends and all stabilization arrangements relating to the offered security are terminated,
   2. in connection with a securities exchange take-over bid or issuer bid, commencing on the date of the dissemination of the take-over bid circular, issuer bid circular or similar document and ending with the termination of the period during which securities may be deposited under such bid, including any extension thereof, or the withdrawal of the bid, and
   3. in connection with an amalgamation, arrangement, capital reorganization or other similar transaction, commencing on the date of dissemination of the information circular for such transaction and ending on the date of approval of the transaction by the security holders that will receive the offered security or the termination of the transaction by the issuer or issuers;

"issuer-restricted person" means, in respect of a particular offered security,

1. 1. the issuer of the offered security,
   2. a selling security holder of the offered security in connection with a prospectus distribution or restricted private placement,
   3. an affiliated entity, associated entity or insider of the issuer of the offered security or a selling security holder but does not include a person who is an insider by virtue of clause (c) of the definition of "insider" under the Act so long as that person:
      1. does not have, and has had not in the previous 12 months, any board or management representation in respect of the issuer or selling security holder; and
      2. does not have knowledge of any material information concerning the issuer or its securities that has not been generally disclosed; or
   4. any person or company acting jointly or in concert with the person or company described in clause (a), (b) or (c) for a particular transaction;

"last independent sale price" means the last sale price of a trade on a market, other than a trade that a dealer-restricted person knows or ought reasonably to know was made by or on behalf of a person or company that is a dealer-restricted person or an issuer-restricted person;

"offered security" means all securities, that trade on a marketplace or a market where there is mandated transparency of orders or trade information, of the class of security that

1. 1. is offered pursuant to a prospectus distribution or a restricted private placement,
   2. is offered by an offeror in a securities exchange take-over bid in respect of which a take-over bid circular or similar document is required to be filed under securities legislation,
   3. is offered by an issuer in an issuer bid in respect of which an issuer bid circular or similar document is required to be filed under securities legislation, or
   4. would be issuable to a security holder pursuant to an amalgamation, arrangement, capital reorganization or similar transaction in relation to which proxies are being solicited from security holders that will receive the offered security in such circumstances that the issuance would be a distribution exempt from prospectus requirements in accordance with applicable securities legislation,

provided that, if the security referred to in clauses (a) to (d) is a unit comprised of more than one type or class, each security comprising the unit shall be considered an offered security;

"restricted private placement" means a distribution of offered securities made pursuant to sections 2.3 or 2.30 of National Instrument 45-106 Prospectus and Registration Exemptions; and

"restricted security" means the offered security or any connected security.

Interpretation

1.2 (1)    Affiliated Entity - The term "affiliated entity" has the meaning ascribed to that term in section 1.3 of National Instrument 21-101 – Marketplace Operation.

(2)          Associated Entity - Where used to indicate a relationship with an entity, associated entity has the meaning ascribed to the term "associate" in subsection 1(1) of the Act and also includes any person or company of which the entity beneficially owns voting securities carrying more than 10 per cent of the voting rights attached to all outstanding voting securities of the person or company.

(3)          Equity Security - An equity security is any security of an issuer that carries a residual right to participate in the earnings of the issuer and, upon liquidation or winding up of the issuer, in its assets.

(4)          Related Entity - In respect of a dealer, a related entity is an affiliated entity of the dealer that carries on business in Canada and is registered as a dealer or adviser in accordance with applicable securities legislation.

(5)          For the purposes of the definitions of "dealer-restricted period" and "issuer-restricted period":

1. 1. the selling process shall be considered to end,
      1. in the case of a prospectus distribution, if a receipt has been issued for the final prospectus, the dealer has allocated all of its portion of the securities to be distributed under the prospectus and all selling efforts have ceased, and
      2. in the case of a restricted private placement, the dealer has allocated all of its portion of the securities to be distributed under the offering; and
   2. stabilization arrangements shall be considered to have terminated in the case of a syndicate of underwriters or agents when, in accordance with the syndication agreement, the lead underwriter or agent determines that the syndication agreement has been terminated such that any purchase or sale of a restricted security by a dealer after the time of termination is not subject to the stabilization arrangements or otherwise made jointly for the dealers that were party to the stabilization arrangements.

Part 2
Restrictions

Dealer-restricted Person

2.1         Except as permitted under sections 3.1, 4.1 and 4.2, a dealer-restricted person shall not at any time during the dealer restricted period,

1. 1. bid for or purchase a restricted security for an account of a dealer-restricted person, an account over which the dealer-restricted person exercises direction or control, or, except in accordance with section 3.2, an account which the dealer-restricted person knows or reasonably ought to know, is an account of an issuer restricted person; or
   2. attempt to induce or cause any person or company to purchase any restricted security.

Issuer-restricted Person

2.2         Except as permitted under section 3.2, an issuer-restricted person shall not at any time during the issuer-restricted period,

1. 1. bid for or purchase a restricted security for an account of an issuer-restricted person or an account over which the issuer-restricted person exercises direction or control; or
   2. attempt to induce or cause any person or company to purchase any restricted security.

Deemed Re-commencement of a Restricted Period

2.3         If a dealer appointed to be an underwriter in a prospectus distribution or a restricted private placement receives a notice or notices of the exercise of statutory rights of withdrawal or rights of rescission from purchasers of, in the aggregate, not less than 5% of the offered securities allotted to or acquired by the dealer in connection with the prospectus distribution or the restricted private placement then a dealer-restricted period and issuer-restricted period shall be deemed to have re-commenced upon receipt of such notice or notices and shall be deemed to have ended at the time the dealer has distributed its participation, including the securities that were the subject of the notice or notices of the exercise of statutory rights of withdrawal or rights of rescission.

Part 3
Permitted Activities and Exemptions

Exemptions - Dealer-restricted Persons

3.1 (1)    Section 2.1 does not apply to a dealer-restricted person in connection with,

1. 1. market stabilization or market balancing activities on a marketplace where the bid for or purchase of a restricted security is for the purpose of maintaining a fair and orderly market in the offered security by reducing the price volatility of or addressing imbalances in buying and selling interests for the restricted security, provided that the bid or purchase is at a price which does not exceed the lesser of
      1. in the case of an offered security
         1. the price at which the offered security will be issued in a prospectus distribution or restricted private placement, if that price has been determined, and
         2. the last independent sale price at the time of the entry of the bid or order to purchase, or
      2. in the case of a connected security
         1. the last independent sale price at the commencement of the dealer-restricted period, and
         2. the last independent sale price at the time of the entry of the bid or order to purchase,

provided that if the restricted security has not previously traded on a marketplace, the price also does not exceed the price of the last trade of the security executed on an exchange or organized regulated market outside of Canada that publicly disseminates details of trades executed on that market other than a trade that the dealer-restricted person knows or ought reasonably to know has been entered by or on behalf of a person or company that is a dealer-restricted person or an issuer-restricted person;

1. 2. a restricted security that is
      1. a highly-liquid security,
      2. a unit or share of an exchange-traded fund, other than an exchange-traded fund that the Investment Industry Regulatory Organization of Canada has designated as subject to section 7.7 of the Universal Market Integrity Rules, or
      3. a connected security of a security referred to in subclause (i) or (ii);
   3. a bid or purchase by a dealer-restricted person on behalf of a client, other than a client that the dealer-restricted person knows or ought reasonably to know is a person or company that is an issuer-restricted person, provided that
      1. the client's order was not solicited by the dealer-restricted person, or
      2. if the client's order was solicited, the solicitation occurred before the commencement of the dealer-restricted period;
   4. the exercise of an option, right, warrant or a similar contractual arrangement held or entered into by the dealer-restricted person prior to the commencement of the dealer-restricted period;
   5. a bid for or purchase of a restricted security pursuant to a Small Securityholder Selling and Purchase Arrangement made in accordance with National Instrument 32-101 or similar rules applicable to any marketplace on which the bid or purchase is entered or executed;
   6. the solicitation of the tender of securities to a securities exchange take-over bid or issuer bid;
   7. a subscription for or purchase of an offered security pursuant to a prospectus distribution or restricted private placement;
   8. a bid for or purchase of a restricted security to cover a short position entered into prior to the commencement of the dealer-restricted period; or
   1. a bid for or purchase of a restricted security if the bid or purchase is made through the facilities of a marketplace in accordance with applicable marketplace rules.

(2)          Where a dealer-restricted person is also an issuer-restricted person the exemptions in subsection (1) and sections 4.1 and 4.2 continue to be available to the dealer-restricted person.

Exemptions - Issuer-restricted Persons

3.2         Section 2.2 does not apply to an issuer-restricted person in connection with,

1. 1. the exercise of an option, right, warrant, or a similar contractual arrangement held or entered into by the issuer restricted person prior to the commencement of the issuer-restricted period;
   2. a bid or purchase of a restricted security pursuant to a Small Securityholder Selling and Purchase Arrangement made in accordance with National Instrument 32-101 or similar rules applicable to any marketplace on which the bid or purchase is entered or executed;
   3. an issuer bid described in sections 4.6 and 4.7 of National Instrument 62-104 Take-Over Bids and Issuer Bids if the issuer did not solicit the sale of the securities sold under those clauses;
   4. the solicitation of the tender of securities to a securities exchange take-over bid or issuer bid; or
   5. a subscription for or purchase of an offered security pursuant to a prospectus distribution or restricted private placement.

Part 4
Research Reports

Compilations and Industry Research

4.1         Despite section 53 of the Act and section 2.1, a dealer-restricted person may publish or disseminate any information, opinion, or recommendation relating to the issuer of a restricted security provided that such information, opinion or recommendation,

1. 1. is contained in a publication which:
      1. is disseminated with reasonable regularity in the normal course of business of the dealer-restricted person, and
      2. includes similar coverage in the form of information, opinions or recommendations with respect to a substantial number of companies in the issuer's industry or contains a comprehensive list of securities currently recommended by the dealer-restricted person; and
   2. is given no materially greater space or prominence in such publication than that given to other securities or issuers.

Issuers of Highly-liquid Securities

4.2         Despite section 53 of the Act and section 2.1, a dealer-restricted person may publish or disseminate any information, opinion, or recommendation relating to the issuer of a restricted security that is a highly-liquid security provided that such information, opinion, or recommendation is contained in a publication which is disseminated with reasonable regularity in the normal course of the business of the dealer-restricted person.

Part 5
Exemption

Exemption

5.1         The Director may grant an exemption to this Rule, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.

Part 6
Effective Date

Effective Date

6.1         This Rule shall come into force on May 9, 2005.