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II. Venture Capital

A. Requirements of General Order 1

Venture capital offerings will continue to be governed by

General Order # 1. References to sections of the Act in the

existing order will be revised to reflect The Securities Act

(1988). The offering document referred to under General Order

1 is called an offering memorandum, rather than a prospectus.

In practise, the documents are very similar with only minor

differences required by General Order 1. The major provisions

of General Order 1 are:

1) As with a prospectus, the preliminary and final offering

memorandum is to provide full, true and plain disclosure

of all material facts relating to the securities.

2) Minor revisions are made to the preliminary warning and

the certificate required in the offering memorandum as

compared with that required by a prospectus.

3) A purchaser is provided with extended withdrawal rights

under General Order 1. For a prospectus, the purchaser

has two working days to withdraw after receipt of a final

prospectus. Under General Order 1, the purchaser has

five working days to withdraw from an agreement to

purchase after receiving the final offering memorandum or

any amendment to the final offering memorandum.

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4) Purchasers must sign a certificate acknowledging receipt

of the offering memorandum, copies of which must be filed

with the Commission.

5) The Issuer must file a certificate setting out the name,

address and the number of securities purchased by each

purchaser within 30 days of doing the distribution.

6) All advertising to be used in connection with the offering

is to be submitted to the Commission for review prior to

use.

7) A venture capital security issuer and all sales people

must be registered under the Act.

8) The small business and its insiders must provide

undertakings to the Commission to comply with Parts XI,

XII, XII, and XIII of the Act (Proxy solicitation, Insider

Trading, and Continuous Disclosure).

9) The preliminary offering memorandum and final offering

memorandum shall take the form and content of a

preliminary prospectus and prospectus filed under the

Act.

10) Registered mutual fund dealers are exempted from the

registration requirement of the Act for sale to purchasers

they have known for a period of two years, and who reside

in centres with a population of less than 20,000

residents.

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11. Salespersons licenced under The Saskatchewan Insurance Act

other than "hail only" or "travel only" who have resided

in the communities for two years, such communities with a

population under 20,000 residents, may sell the securities

of venture capital corporations to other residents of the

communities.

1111\\

SaskatchewanSecuritiesCommission

8th Floor, T.D. Bank Building1914 Hamilton StreetReigna, CanadaS4P 3V7

(306) 787-5645Telex 071-2662

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InformationBulletin

Guidelines for Preparing An Offering Memorandumfor Companies Qualifying Under

The Venture Capital Tax Credit Act and Gen~ral Order # 1

To assist the company in the preparation of the offeringmemorandum, it is recommended that the Issuer refer to Form 9(Information Required in Prospectus of Industrial Company) ofthe Regulations to The Securities Act for guidance. Theindividual Item captions of Form 9, which are applicable to theIssuers offering, should be included and discussed in detail inthe offering memorandum.

The specific Item format as required by Form 9 need not befollowed (eg: narrative may replace schedules required by theItems of the Form). Disclosure for each applicable section,however, must be complete.

Please keep in mind that the offering memorandum will cover boththe Venture Capital Corporation and the "small business". Theitems referred to in Form 9 must be covered for eachcorporation.

Copies of offering memorandums that have been cleared by theCommission are available upon request for a copying charge of50~ page. These documents should be used for guidance only, foreach new offering memorandum will reflect the uniquecircumstances of the issuer.

Copies of The Securities Act and Regulations may be orderedfrom:

Saskatchewan Property Management CorporationActs and Publications Activity

3rd Floor, 2045 Broad StreetREGINA, Saskatchewan

S4P 3V7

For pick-up orders, the address is:

Saskatchewan Property Management CorporationActs and Publications Activity

1st Floor, East Wing3475 Albert Street

REGINA, SaskatchewanS4S 6X6

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The current charges for the Act and Regulations are:

The Securities ActThe Regulations to

The Securities Act

$13.20

$13.35

Cheques for payment for The Act and Regulations should be madepayable to the Saskatchewan Property Management Corporation.

Refer also to "Checklist for Filing a Preliminary OfferingMemorandum" for details as to the documents to be filed with theinitial filing and fees required. This checklist is attached.

Future Oriented Financial Statements

The use of Future Oriented Financial Statements is not arequirement of The Securities Act or Regulations. However, whenthey are provided they must be presented as a "forecast".Projections may not be used in an offering memorandum.

A financial forecast is an estimate of the most probable resultsof the operations for one or more future periods. It is basedupon management's judgement of both the most likely set ofconditions and the enterprise's most likely course of action. Aprojection on the other hand, is an estimate of the futurefinancial results of a business based upon assumptions which arenot necessarily the most likely.

Financial forecasts must be prepared and presented in accordancewith the applicable Accounting/Auditing Guidelines issued by theCanadian Institute of Chartered Accountants. Copies of theseguidelines are attached for your information. The forecast mustbe accompanied with the required "Comments on FinancialForecast" as provided in the Auditing Guideline - Auditor Reviewof Financial Forecasts, issued by The Canadian Institute of

. Chartered Accountants. Generally speaking, forecasts shouldnot cover more than a two year period. Forecasts to be used inan offering memorandum must be submitted for staff review priorto their being used in the preliminary offering memorandum.

Escrow of Shares.An escrow of shares is the deposit, under a written agreement,by specified individuals of their shares in a specific companyinto the custody of a trustee, until such time as certainconditions have been fulfilled for their release.

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The escrow policy of the Commission provides guidance as towhich shares will be subject to escrow and the basis for theirrelease, and an example of an escrow agreement. It is arequirement that the "small business" comply with the policy onescrow.

Unconscionable Consideration to Promoters

The Commission has a policy statement dealing with theconsideration paid or to be paid (cash or other benefits) toPromoters as a result of a security issue. Should the staff ofthe Commission determine that the benefits to be derived bypromoters of a security issue are unconscionable, no finalreceipt will be issued for the offering document. PolicyStatement 3-17 provides general principles which will be appliedby the Commission staff in the review of each offeringmemorandum. Should issuers wish to clarify specifics as topromoters benefits and whether they would be consideredunconscionable, a general meeting to discuss this subject matterwith Commission staff is very much encouraged.

Advertising and Sales Literature

The Commission has a policy statement, 3-18 providing guidanceand direction on the content and use of advertising and salesliterature for Saskatchewan issuers. Please note that allsuch promotional material used in Saskatchewan must have theprior approval of the Commission.

Selling Period for an Offering

The selling period for an offering is set at 120 days from thedate of the final receipt for an offering document. Offeringdocument in this case means offering memorandum which has beenfully reviewed by the staff of the Commission. Should theissuer be unable to sell its minimum security issue in this timeframe, or require additional time to sell above its minimumissue, each issuer may make a written request to the staff ofthe Commission for an extension of the selling period. Thisr;nuest must be received well in advance of the expirl'of,the

aay seiling perioa. Should the staff of the Commlssionagree that the extension of the selling period is notdetrimental to the general public and current subscribers,generally, the extension will be granted. This in turn willrequire an issuer to file an amendment to the offeringmemorandum with the staff of the Commission.

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Each issuer contemplating requesting an extension for the 120day selling period is urged to contact the staff of theCommission on a timely basis. The staff of the Commission willthen provide each issuer with additional direction and guidanceon filing of an amendment.

Use of Audited vs. Unaudited Financial Statements• I

Financial statements of the small business and the VentureCapital Corporation must be prepared in accordance with therequirements of Section 50 of The Securities Act. For purposesof filings under the Venture Capital Program the financialstatements required under Section 50 are to be audited, and theymust be accompanied by an auditors report conforming withSection 5400 of the CICA Handbook. (The auditor's report mustbe manually signed in the final offering memorandum).Issuers wishing to use unaudited financial statements musthave prior approval to do so.

Time Required For The Review Process

Issuers should note that the time required for the review,from preliminary to final, averages between six and eight weeksfrom the date the preliminary receipt is issued. The lengthof the process varies with the time of the year, the initialcondition of the offering memorandum, and the speed with whichconcerns raised by Commission staff are addressed. Pleasenote that from September 15 - December 31 is a peak filingperiod. The review time frame may be extended for issuesreceived after September 15. The staff of the Commission willuse their best efforts to provide timely turnaround. TheCommission staff is available for consultation at the request ofissuers and their advisors prior to the first filing to discussthe process and time frames involved. The normal sequence inthe review process is as follows:

a) A first comment letter will be issued by the staffapproximately 10 working days after the preliminaryreceipt has been issued. This letter will detail theconcerns which the staff of both the Commission andVenture Capital Program have with the offering document.The letter is broken down into three sections; MajorConcerns, Other Concerns and Suggestions. Concernsraised in the first two sections must be resolved priorto a final receipt being issued.

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b) After receiving the first comment letter, the issuermust respond to the concerns raised, either through:

i. discussion and clarification with theCommission staff.

ii. clari~ication through revision of the offeringdocument where required.

iii. through supplying additional informationmaterials.

The -revised offering memorandum should be "red-lined toindicate changes made from the original. The red-linedmemorandum and any supporting information must then befiled with the staff of the Commission for review.(Refer to Checklist for Filing a Final OfferingMemorandum attached).

c. The staff of the Commission will review the refiledmaterials detailed in (b). If all concerns have been met,the Deputy Registrar will issue a final receipt for theoffering memorandum. If there are any further concerns, asecond comment letter in the format identical to thatoutlined in (a) will be issued. In many cases, a secondcomment letter is not required.

d. Should a second comment letter be necessary, the issuer thenresponds to the concerns raised in the second commentletter. After making the necessary changes and resolvingall of the concerns which were raised, the Issuer will nowbe in a position to file final materials. (Refer toChecklist for Filing a Final Offering Memorandum attached).

e. Final materials will be reviewed by the staff to ensurecompliance with The Securities Act, Regulations, Commissionpolicies and General Order # 1, and to ensure that allrequired final materials have been received. Assumingcompliance, a final receipt for the offering memorandum willbe issued.

The staff of the Commission regrets that because of the heavyvolu.es at year-end, no assurances can be provided that apreliminary offering memorandum received after September 15 willbe cleared in sufficient time to allow an adequate sellingperiod in the same calender year.

June, 1988

-9- ISaskatchewanSecuritiesCommission •1111\\

_ Office of the ChairmanVENTURE CAPITAL QUALIFICATION SYSTEM

GENERAL ORDER 1(Section 21)

UPON Saskatchewan having enacted The Venture Capital TaxCredit Act as amended:

AND UPON the Saskatchewan Securities Commission (the"Commission") being of the opinion that, considering the pUblicinterest, to take this action will assist small business to raisecapi tal without reducing the benefits of investor protection inThe Securities Act (the "Act") to a degree that would beprejudicial to the public interest:

IT IS ORDERED, pursuant to section 21 of the Act, thatsubsection 42(1) of the Act shall not apply to primarydistributions to the pUblic that are effected in compliance withthis order insofar only as that section concerns the form andcontent of a preliminary prospectus and a prospectus filed undersection 42 of the Act and the application of section 46 andsubsections 59(1), 60(1), 71(2) and 71(9) thereto, sUbject to thefollowing conditions:

1. Persons or companies eligible to use this exemption order arethose which intend to apply to be registered as a venturecapital corporation under The Venture Capital Tax Credit Actas amended from time to time:

2. A preliminary offering memorandum and an offering memorandumproviding full, true and plain disclosure of all materialfacts relating to the security proposed to be issued are filedwith the Commission under section 42 of the Act:

3. The preliminary offering memorandum shallstatement:

contain the

"This is a preliminary offering memorandum relating tothese securities but which has not yet become final for thepurpose of a sale of securities to you. Information in it issubject to completion or amendment. These securities may notbe sold nor may offers to buy be accepted until there is afinal offering memorandum":

4. The preliminary offering memorandum and the offeringmemorandum shall contain a certificate signed by the ChiefExecutive Officer and the Chief Financial Officer of thecorporation and by each person or company who is a promoter ofthe corporation in the following form:

"The foregoing constitutes fUll, true,and plain disclosure of all material factsrelating to the securities offered by thisoffering memorandum:"

_ Saskatchewan Securities Commission 8th Floor, 1914 Hamilton Street. Regina, Canada S4P 3V7 (306) 787·5645 Telex 071·2662

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and where applicable, by the underwriters who are in acontractual relationship with the corporation, prefaced by thewords "to the best of our knowledge and belief";

5. A purchaser may rescind an agreement of purchase and sale fora securi ty in a venture capital corporation offered in thecourse of a primary distribution to the pUblic by deliveringto the person or company from whom the purchaser purchased thesecuri ty, written lOr telegraphic notice evidencing theintention of the purchaser not to be bound by the agreement ofpurchase and sale, not later than five working days afterreceipt by the purchaser of the offering memorandum or amendedoffering memorandum, whichever is last required to bedelivered to the purchaser, and for this purpose subsections71 (1) and 71 (3) through (8) of The Securities Act apply andevery offering memorandum and amended offering memorandumshall contain a statement of the rights given to the purchaserby this order;

6. Each purchaser shall sign a certificate acknowledging receiptof the offering memorandum in the following form:

"Date of Receipt"Name of Venture Capital Corporation"Purchaser"Salesperson

and, each issuer or dealer shall file a copy of each receiptwith the Securities Commission along with a certificatesetting out the name and address of each purchaser, and thenumber of securities purchased by each, within 30 days afterthe closing date of the public distribution;

7. All advertisements to be used in connection with the offeringshall be submitted to the Commission for review prior to theiruse;

8. A venture capital security issuer and all salespeople must beregistered under the Act, except registered dealer sponsoredissues;

9. The small business and its "insiders" shall provide under­takings to the Commission to comply with· Parts XI, XII andXIII of the Act;

10. The primary distribution to the pUblic shall otherwise complywith and be sUbject to the provisions of the Act; and

a preliminary offering memorandum and an offering memorandum filedin accordance with this order shall constitute the form andcontent of a preliminary prospectus and a prospectus filed undersection 42 of the Act.

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AND IT IS ORDERED that registered mutual fund dealersare exempted from the requirements of section 6 of the Act,insofar only as that section applies to additional requirementsfor registration to sell securities in the capital of venturecapital corporations in the case of sales to purchasers residentoutside a city having a population in excess of 20,000 residents,if the purchaser has known the registered selling salesperson fora period of two years.

AND IT IS ORDERED that, in communities having apopulation under 20,000 residents, salespeople licenced under TheSaskatchewan Insurance Act (under classes other than "hail only"or "travel only") and who have been residents in that communityfor two years, may sell the securities of venture capitalcorporations to other residents of the community.

currentlyCommissiondates.

AND IT IS ORDERED that closingin progress under section 21will not be extended beyond

dates for offeringsorders made by the

their current expiry

AND IT IS ORDERED that the sophisticated investorexemption is repealed.

AND IT IS ORDERED that this order shall have effect fromand after 11:00 p.m., July 11th, 1986.

REGINA, SASKATCHEWANJULY lOth, 1986

SASKATCHEWAN SECURITIES COMMISSION

,

Allan Wagar IThe Commission is adopting this order as an interim one

pending development of guidelines for the sale of venture capitalcorporations after receiving the views of interested persons. Youare invited to submit views on this order and appropriateguidelines to assist investors in venture capital corporationsbefore September 12, 1986 to the Saskatchewan Secu"ri tiesCommission, 8th Floor, 1914 Hamilton Street, Regina, Saskatchewan,

'!ffice of the Chairman

-12- ISaskatchewanSecuritiesCommission •1111I\

GUIDELINES FOR REGISTRATIONAS A VENTURE CAPITAL SECURITY ISSUER

1. Form 1 completed.

2. Form 4 completed for each director or officer for whomtrading officer status is requested.

3. Satisfactory evidence of good character of each directoror officer for whom trading officer status is requested,including three letters of reference, at least one ofwhich is from a financial institution

4. Satisfactory completion of a training course conducted bythe Commission or its designate, by each such director orofficer.

5. Saskatchewan residency.

6. Issue of a receipt for a final offering memorandum by theCommission for the public distribution of the securitiesby the Venture Capital Corporation or receipt by theCommission of a satisfactory preliminary offeringmemorandum.

7. Formal designation, in writing, by the Commission of thetrading officers acceptable to the Commission.

8. Payment in the amount of $150.00 to the Minister ofFinance.

9. Registration as a Venture Capital Security issuer isvalid only for the particular issue and only for theperiod of primary distribution to the public.

SALESPERSON

1. Same as 2, 3, 4, 5, 6 and 9 above.

2. Form 4A completed.

3. Payment in the amount of $50.00 to the Minister ofFi nance.

• ••• 2

• Saskatchewan Securities Commission 8th Floor, 1914 Hamilton Street, Regina, Canada S4P 3V7 (306) 787·5645 Telex 071·2662

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Guidelines for RegistrationAs a Venture CapitalSecurity Issuer

NOTES

2.

A) Designation of a corporate director or officer as atrading officer does not permit them to receive acommission. If a commission is to be paid, they mustcomply fully with the requirements prescribed for asalesperson, including the payment of a $50.00 fee, andthe issuance of a certificate of registration as asalesperson.

B) All requirements must be satisfied either by fullcompliance or submission and acceptance of writtenagrument, on an item-by-item basis, in cases wherethe applicant is of the opinion that it cannot ordoes not wish to comply.

C) The corporate registrant, trading officers andregistered salespersons are required to adhere to,and are bound by, the provisions of The SecuritiesAct and the generally accepted industry standardsthat govern members of the Investment DealersAssociation and the recognized Stock Exchangesand by Local Policy Statement 3-11 on conditionsof registration.

ADOPTED BY THE COMMISSIONEFFECTIVE 11:00 p.m.,JULY 11, 1986.

AMENDED SEPTEMBER 22~ 1986.

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Checklist for Filing aPreliminary Offering Memorandum

in SaskatchewanFor Filings Qualifying Under

The Venture Capital Tax Credit Actand

General Order # 1

The material to be filed must include the following:

1. One executed copy and three unexecuted copies of thepreliminary offering memorandum. The preliminary offeringmemorandum must incorporate the following:

a) i.) Warning on the front cover page as required byClause 3 of General Order 1 (copy attached)

ii.) Warning on the front cover page in bold print asfollows:

THE SECURITIES OFFERED HEREBY INVOLVE AHIGH DEGREE OF RISK.-

b) Financial statements of the small business and theVenture Capital Corporation in accordance with therequirements of Section 50 of The Securities Act. Forpurposes of filings under the Venture Capital Programthe financial statements required under Section 50 areto be audited, and they must be accompanied by anauditors report conforming with Section 5400 of the CICAHandbook. (The auditor's report must be manually signedin the final offering memorandum). There arecircumstances where unaudited financial statements maybe accepted. Issuers wishing to use unauditedfinancial statements must have prior approval to doso.

c) Unaudited interim financial statements of the smallbusiness to a date within 90 days of the date of theissuance of a receipt for the preliminary offeringmemorandum, where the fiscal period and statementsreferred to in (b) are not within 120 days of the dateof the preliminary receipt for the offering memorandum.Please note that the interim financial statements arenot required to be presented on a comparative basis.Note that depending on the time required to review theissue, the interim financial statements may requireupdating.

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d) Manual signatures of two directors at the foot of eachbalance sheet included in the offering memorandum.

e) Summary of withdrawal and rescission rights as requiredby Clause 5 of General Order 1 and Section 72 of theSecurities Act.

f) Certificates of the following, as required by Clause 4of General Order 1 (copy attached).

i) The Venture Capital Corporation, manually signedon its behalf by its chief executive officer andchief financial officer;

ii) The "small business" manually signed on its behalfby its chief executive officer and chief financialofficer;

iii) The promoters, manually signed;

iv) The selling agents, if any, manually signed by anauthorized representative.

2. A copy of any engineering reports, valuation reports,feasibility studies, etc. referred to in the offeringmemorandum.

3. A copy of all major contracts mentioned in the offeringmemorandum.

4. A copy of the Articles of Incorporation and any relatedamendments for both the Venture Capital Corporation and thesmall business •.

5. Draft copies of escrow agreements required by theCommission's Escrow Policy.

6. All advertisements and promotional materials to be used inconnection with the offering must comply with theadvertising policy of the Commission. A copy of the policyis attached. All advertisements and promotional materialsto be used must have the prior approval of the staff ofthe Commission.

7. A schedule providing the full names and birthdates of thedirectors and senior officers of the Venture CapitalCorporation and the "small business".

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8. A cheque in the amount of $250.00 for security issues lessthan $500,000.00 and $500.00 for security issues over$500,000.00, being the required filing fee for an offeringmemorandum. Please make payments by cheque payable to theMinister of Finance r

9. A cross reference sheet showing the location in thepreliminary offering memorandum of the information to beincluded therein in response to the items contained in Form9 attached. Reference shall be made in the cross referencesheet to any item that is inapplicable or the answer towhich is in the negative and is omitted from the preliminaryoffering memorandum.

May, 1988

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Checklist for Filing aFinal Offering Memorandum

in SaskatchewanFor Filings Qualifying Under

The Venture Capital Tax Credit Actand General Order # 1

The material to be file~ must include the following:

1. One executed copy and three unexecuted copies of the finaloffering memorandum including:

a) certificate of the Venture Capital Corporation andmanually signed by its interim directors;

b) certificate of the "Small Business" manually signed byits Chief Executive Officer and Chief FinancialOfficer;

c) certificate manually signed by the promoter(s);

d) certificate of the agent/underwriter, if applicable,manually signed by an authorized representative;

e) manually signed auditor's reports (or review engagementreports where permitted) preceeding any financialstatements.

2. One red-lined offering memorandum showing all changes fromthe preliminary. (Normally, this copy is submitted well inadvance of the final filing).

3. Certified copy of the directors resolutions of both theventure capital corporation and the small business (twoseparate resolutions):

a) approving the security issue (providing full detail ofthe issue) and the final offering memorandum, by date;

b) authorizing the directors of the venture capitalcorporation; and the Chief Executive Officer and ChiefFinancial Officer of the "small business" to sign therespective certificates;

c) approving the respective financial statements andforecasts in the offering memorandum;

d) authorizing two directors of the respective corporationsto sign their approval of the financial statements;

e) authorizing the filing of the final offering memorandumwith the Securities Commission.

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4. Manually signed consent letter from the auditors/accountantsfor all financial statements and forecasts included in theoffering memorandum. (to be prepared in accordance withSection 7100 of the CICA Handbook).

5. Manually signed comfort letter from the auditors/accountantsfor all unaudited interim financial statements in theoffering memorandum. (to be prepared in accordance withSection 7100 of the CICA Handbook).

6. Manually signed consent letters from solicitors, engineers,appraisers or anyone else named in the offering memorandumas having prepared or certified any part of the offeringmemorandum or having prepared any report or valuation usedin the offering memorandum.

7. Undertakings by the small business and its insiders to theCommission to comply with Parts XI, XII and XIII of the Act.(Clause 9 of General Order 1). See attached example of theexact undertaking to be used.

8. Final executed copies of escrow agreements required by theCommission's Escrow Policy.

9. Final executed copies of any agreements requested during thereview process.

10. Two commercial copies of the offering memorandum whenavailable from the printers.

Please note the following:

1. All required signatures in the offering memorandum andin related comfort and consent letters must be manualsignatures.

2. Directors' resolutions, comfort letters and consentletters are required for the final offering memorandumand should specifically identify the particular offeringmemorandum being referred to by Issuer Name and date ofthe Final Offering Memorandum.

May, 1988fmc

II

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UNDERTAKINGS

[NAME] (the "Small Business"),undertakes to provide to each of the shareholders of[NAME] (the "Venture Capital Corporation") and to filewith the Saskatchewan Securities Commission:

(i) the proxy materials required to be sent toshareholders and filed with the SaskatchewanSecurities Commission pursuant to theprovisions of Part XI of The Securities Act,R.S.S. 1978, c. S-42 (the IIAct ll

), and

(ii) the financial statements and other financialinformation required to be filed with theSaskatchewan Securities Commission pursuant tothe provisions of Part XIII of the Act;

as if the Small Business were required by theAct to comply with such provisions. 1I

Senior Officer of Small Business

liThe insiders, as defined in Part XII of theAct, of [NAME] (the IIS ma ll Business ll

) undertake tomaintain timely filings with the Saskatchewan SecuritiesCommission of insider trading reports in accordance with theprovisions of Part XII of The Securities Act, R.S.S. 1978, c.S-42 (the "Act ll

) as if the insiders of the Small Business wererequired by the Act to comply with such provisions. 1I

------------))) Insiders

------------) of) Small

-------------) Bus i ne s s

-----------))

------------)

accounting guideline-20-

This Guideline is to be read in conjunction with the Introduc­tion to Accounting and Auditing Guidelines contained in theCICA Handbook.

June 1983

presentation anddisclosure offinancial forecastsThis Accounting Guideline provides guidance on the 1presentation and disclosure of a financial forecast indocuments such as a prospectus, a takeover bid, issuer bid orinformation circular or an interim or annual report. 1 TheAccounting Standards Steering Committee neitherrecommends nor discourages the publication of futureoriented information. It emphasizes, however, that, in viewof the possibility that third parties may attach a higherdegree of certainty to forecasts than is warranted,particular care must be exercised in the preparation anddisclosure of financial forecasts.

The objective of a financial forecast is to provide the users 2of the forecast with information that will enhance theirability to evaluate an enterprise's financial prospects.

Definition

A financial forecast is an estimate of any or all of: 3

(a) the most probable results of operations;

(b) the most probable financial position; and

(c) the most probable changes in financial position,

for one or more future periods or periods not completedwhen the estimate is made. "Most probable," in the contextof this Guideline, means that the forecast is based on

1 Although the Guideline has been developed primarily toprovide guidance to enterprises presenting financialforecasts in documents filed with securities commis­sions, this guidance is also relevant in other situationsin which formal financial forecasts are issued.

Accounting Guideline - June 1983

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2

management's judgment of both the most likely set ofconditions and the enterprise's most likely course of action.

It is important to distinguish between a financial forecast 4and a financial projection. A projection is an estimate offinancial results of an enterprise based on assumptionswhich are not necessarily the most likely. Financialprojections are often developed as a response to suchquestions as "what would happen if •••". In contrast to aforecast, a projection is not necesarily indicative of themost probable results but merely reflects the effects ofspecified assumptions.

Length of forecast period

The period for which management may reasonably prepare a 5financial forecast depends on many factors, including theneeds of the user, the general economic situation, thenature of the industry and the particular circumstances ofthe enterprise. Generally, forecasts would be provided onlyfor the current fisc~lyear 0!:.Lif a significant portion of thecurrent year has elapsed, for the current and the followingfiscal year. Although the degree of uncertainty generallyincreases with the time span, short-term forecasts may notbe meaningful in industries with a lengthy operating cycle orin situations where long-term results are necessary toevaluate the investment consequences involved. The~ore<;~.st period should not be extended beyond the point\Vhere there is a reasonable basis for predicting the mostprobable set of conditions and most probable course ofaction.

Financial data to be included in a forecast

A financial forecast can include financial data relating to 6any or all of results of operations, financial position andchanges in financial position. It is desirable, however, thata financial forecast include information on the results ofoperations and, if it appears probable that there will besignificant changes in financial position, information onthose changes and on the financial position at the end of theforecast period. The minimum financial data that should bedisclosed under each of these three broad' categories is setout below. In each case, the data may be presented in theform of a condensed financial statement.

3 Presentation and Disclosure of Financial Forecasts

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Results of operations

A forecast of an enterprise's results of operations should 7disclose net income and disclose also those revenue andexpense components of net income that would assist users inunderstanding the forecast, e.g., items that are susceptibleto significant variation as a result of changes in factorsabout which assumptions have been made but over which theenterprise has little or no control.

Financial position

A forecast of an enterprise's financial position at a 8particular date should disclose the amount of individualbalance sheet items for which significant changes areexpected.

Changes in financial position

A forecast of an enterprise's changes in financial position 9should disclose:

(a) the amount of expected changes in individual itemsgiving rise to a significant increase or decrease in fundsduring the forecast period; and

(b) the balance of funds on hand at the end of the forecastperiod.

Presentation of forecast data

An item of forecast data can be expressed as a single 10monetary amount, a range, or a single amount supplementedby a range, whichever management believes to be the mostuseful method of presentation.

Accounting policies

A financial forecast should be prepared in accordance with 11the accounting policies expected to be used in the financialstatements covering the forecast period and this fact shouldbe disclosed. The nature and financial impact on theforecast of any significant changes from the accountingpolicies followed in the most recent published financialstatements should be disclosed.

Accounting Guideline - June 1983

Acquisi tion of a business

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4

When the proceeds of an issue of securities offered under a 12prospectus are to be used to finance the acquisition of abusiness and in other takeover situations, management maydecide to present forecast data for its own enterprise andfor the business that has been acquired or is proposed to beacquired. It is preferable that this data be presented in theform of a proforma forecast on a consolidated basis. Theproforma forecast should be prepared on the basis of theaccounting policies expected to be used in the future for thecombined operations.

Disclosure of assumptions

Disclosure of the underlying assumptions in sufficient detail 13t<?yermit the user to assess their reasonableness is essential!o the proper presentation of a financial forecast. Theassumptions used in preparing a financial forecast are manyand varied, both in nature and significance. Assumptionsthat are critical in one enterprise, one economicenvironment, one industry or one forecast period may not besignificant in other circumstances. The identification ofthose assumptions which, at the time of preparation of aforecast, appear to be significant to the financial results ofan enterprise is the responsibility of management.

Assumptions with respect to factors that are subject to 14significant variations over which the enterprise has little orno control or that could result in significant deviations fromthe financial forecast should be disclosed in notes to theforecast which form an integral part of the forecast.

Disclosure of other information

To emphasize the limitations and inherent uncertainties of a 15financial forecast, disclosure of the assumptions should beprefaced by a statement indicating the date on which thefinancial forecast was completed and stating that the actualreSUlts achieved during the forecast period will vary fromthe amounts forecasted and the variations may be material.

A financial forecast should also disclose: 16

(a) the extent to which actual results are incorporated; and

(b) any other information that could have a material effecton the interpretation of the forecast, such as trust deedrestrictions, pending law suits and dividend restrictions.

auditing guideline-24-

This Guideline is to be read in conjunction with the Introduc­tion to Accounting and Auditing Guidelines contained in theCICA Handbook.

June 1983

auditor review offinancial forecastsINTRODUCTION

This Guideline provides guidance for auditors engaged to 1review and comment on financial forecasts prepared inaccordance with the Accounting Guideline "Presentation andDisclosure of Financial Forecasts" for inclusion indocuments filed with securities regulatory authorities.

In the view of the Auditing Standards Steering Committee, 2paragraph 7000.15 of the Handbook does not precludeauditor association with a financial forecast provided that,in his comments, the auditor does not express an opinion asto whether the results for the forecast period willapproximate those forecasted.

It is important to distinguish between a financial forecast 3and a financial projection. This Guideline is written solelyin the context of a financial forecast. A financial forecast~s an estimate of any or all of:

(a) the most probable results of operations;

(b) the most probable financial position; and

(c) the most probable changes in financial position,

for one or more periods that are future periods or areperiods not completed when the estimate is made. "Mostprobable", in the context of this Guideline, means that theforecast is based on management's judgment of both themost likely set of conditions and the enterprise's most likelycourse of action. A financial projection is an estimate offinancial results of an enterprise based on assumptionswhich are not necessarily the most likely. Financialprojections are often developed as a response to suchquestions as "what would happen if ••••". In contrast to afinancial forecast, a financial projection is not necessarilyindicative of the most probable results but merely reflectsthe effects of specified assumptions.

Auditing Guideline - June 1983

-25-

REVIEW OBJECTIVE AND STANDARDS

2

The objective of a review of a financial forecast is to form 4a basis for commenting whether it has been compiled on thebasis m the disclosed accounting policies and assumptionsand is presented in accordance with the AccountingGuideline "Presentation and Disclosure of FinancialForecasts". It does not extend to expressing an opinion onthe forecast as a whole since the responsibility for judgingthe most probable assumptions is that of management.However, the auditor should have no reason to believe thatthe assumptions appear to be unreasonable.

In the view of the Auditing Standards Steering Committee, 5the professional standards set out in paragraph 8200.21 (a)to (d of the Handbook, when interpreted in the light of theforegoing objective, will usually be applicable to a review ofa financial forecast.

TERMS OF ENGAGEMENT

The auditor should have a clear understanding and 6agreement with his client, preferably in writing, regardingthe nature and extent of the engagement. This agreementshould indicate, among other matters:

(a) that management is responsible for the financialforecast including the assumptions and data on which itis based;

(b) that management's financial forecast will be presentedin accordance with the Accounting Guideline"Presentation and Disclosure of Financial Forecasts";

(c) that the auditor will review and comment on thefinancial forecast in accordance with this AuditingGuideline;

(d) the anticipated form of the auditor's comments;

(e) that the auditor has no responsibility to update hisreview for events occurring subsequent to the date ofhis comments.

REVIEW PROCEDURES

The audi tor should obtain an understanding of the 7forecasting procedures used by management and the mannerin which the operations of the enterprise are affected by

3 Auditor Review of Financial Forecasts

-26-

internal and external factors such as intentions ofmanagement, competitive climate, markets, resources andeconomic trends.

Review procedures consisting primarily of enquiry, 8comparison, tests of compilation, and consideration of thesignificant assumptions should be performed to afford areasonable basis to support the content of the auditor'scomments on the financial forecast.

While circumstances wiU differ with each financial forecast 9engagement and therefore different procedures wiH beadopted in each situation, the auditor's procedures wiUnormaUy encompass those set out in paragraphs 10-17below.

Forecast assumptions

~he C!uditor's consid~ration of the significant assumptions 10used in the pr~ar~tion_of.a financial forecast is limited todetermining that. tI-!~~J:!.q~earto be unreasonable andare adequately disclosed in the financial forecast.

Examples of circumstances that may cause the auditor to 11believe that an assumption appears to be unreasonableinclude:

(a) an assumption is not internaUy consistent with otherforecast assumptions;

(b) an assumption is at variance with previous experienceand current knowledge;

(c) the enterprise does not appear to have resourcesavailable to justify an assumption.

The auditor would also consider whether any significant 12assumption had been overl.ooked during the preparation ofthe financial forecast.

Accounting policies

The auditor should review the accounting policies used in 13the financial forecast for consistency with those used by theenterprise in its most recently audited financial statementsand those expected to be used in its annual financialstatements for the forecast period. The auditor shouldconsider whether any significant changes in accountingpolicies are adequately disclosed in the financial forecast.

Auditing Guideline - June 1983

-27-

Tests of computation and compilation

4

The auditor should review the methods used to translate the 14assumptions into forecasted amounts and should performsuch tests of computation and compilation as he considersnecessary to satisfy himself as to the mathematical~ccuracy of the financial forecast.

Representations from management

The auditor should obtain a written letter of representations 15from management as of the date of the auditor's commentsstating that:

(a) management Is responsible for the preparation of thefinancial forecast, has developed it from assumptionsthat are reasonable and appropriate in thecircumstances and has presented it in accordance withthe Accounting Guideline, "Presentation and Disclosureof Financial Forecasts";

(b) the financial forecast represents management's bestestimate of the most probable results of operations and,if appropriate, financial position and changes infinancial position of the enterprise, in accordance withthe accounting policies expected to be used by theenterprise during the forecast period and that anydifferences between these policies and those used in themost recent audited financial statements have beendisclosed; and

(d to the best of management's knowledge and belief, allinformation relevant to the review of the financialforecast has been disclosed to the auditor and iscomplete and accurate.

Overall evaluation

The financial forecast may include financial data relating to 16any or all of the enterprise's forecasted results ofoperations, financial position and changes in financialposition. The auditor should review the inter-relationship ofthe forecasted financial statements in his overall evaluationof the financial forecast. For example, if a forecast ofoperating results is the only statement to be published, theauditor should also review management's forecast of theenterprise's financial position to assess whether theforecasted balance sheet items appear to be reasonable inrelation to the items disclosed in the forecast of operatingresults.

5 Auditor Review of Financial Forecasts

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The auditor should also consider whether the financial 17forecast as a whole appears to be not unreasonable in thelight of his knowledge of the enterprise and the results ofhis procedures.

COMMENTS ON FINANCIAL FORECAST

When the results of the auditor's review are satisfactory, his 18communication accompanying the reviewed financialforecast should:

(a) be entitled "Comments on Financial Forecast";

(b) be addressed to the directors;

e) (c) identify the financial forecast;

(d) briefly outline the scope and nature of his review;

(e) based on his review, provide an opinion that thefinancial forecast is compiled on the basis of theassumptions and accounting policies disclosed in theaccompanying notes and is presented in accordancewith the Accounting Guideline "Presentation andDisclosure of Financial Forecasts" issued by TheCanadian Institute of Chartered Accountants; and

(f) disclaim an opinion as to whether the results for theforecast period will approximate those forecasted.

Appropriate wording for the auditor'sexcept when a modification isparagraphs 20-22), would be:

communication,necessary (see

19

COMMENTS ON FINANCIAL FORECAST

The Directors of X Limited

I have reviewed the accompanying financial forecast ofX Limited dated March 22, 19X1, consisting of abalance sheet as at December 31, 19X1, and statementsof income and retained earnings and changes infinancial position for the year then ending. My reviewwas performed in accordance with the applicableAuditing Guideline issued by The Canadian Institute ofChartered Accountants and accordingly consistedprimarily of such procedures as enquiry, comparison andtests of compilation as I considered necessary in thecircumstances.

Auditing Guideline - June 1983

-29-

6

Based on my review, in my OpinIOn this financialforecast is compiled on the basis of the assumptions andaccounting policies disclosed in the accompanying notesand is presented in accordance with the applicableAccounting Guideline issued by The Canadian Instituteof Chartered Accountants.

I do not express an opinion as to whether the results forthe forecast period will approximate those forecastedbecause this financial forecast is based on assumptionsmade by management regarding future events which, bytheir nature, are not susceptible to substantiation.

(si~J1~cf)•••••••••••••••••••••••••••••••••••

CHARTERED ACCOUNTANT

CityMarch 22, 19X1

Modified comments

Circumstances which would normally cause the auditor to 20modify the form of the comments suggested in paragraph 19are:

(a) limitations in the scope of his review;

(b) departures from the Accounting Guideline"Presentation and Disclosure of Financial Forecasts",for example, when a significant forecast assumption hasnot been properly disclosed, when the forecast is notconsistent with the assumptions, or when the forecastpresentation is incomplete; and

(c) a significant forecast assumption appears to beunreasonable.

The auditor should also consider the impact on the financial 21forecast of any item which led to a reservation in hisopinion on the most recent audited financial statements.

If the auditor concludes that an assumption appears to be 22unreasonable, he should not attempt to quantify the effectof using the assumption in his comments as to do so wouldbe equivalent to preparing his own financial forecast.

7

Dating of comments

Auditor Review of Financial Forecasts

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The date that the auditor completes his review should be 23used as the date of his comments. The auditor wouldconsider all events coming to his attention to the date of hiscomments but would not have responsibility to update hiscomments beyond this date unless specifically engaged bymanagement to do so.

If the auditor is required to consent to the use of his 24comments on a financial forecast to be included in anoffering document, the date of his consent will likely besubsequent to the date of his comments. Before providingthis consent, the auditor should enquire of management asto whether the financial forecast continues to presentmanagement's best estimate of the most probable results forthe forecast period and obtain an updated representation tothat effect.

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. ~O SECURITIESCOMMISSION OR SIMILAR BODY IN CANADA HAS IN ANY WAY PASSED ON THE MERITS OFTHE SECURITIES OFFERED HEREUNDER AND ANY REPRESENTATION TO THE CONTRARY ISAN OFFENCE.

-31­

Initial Public Offering

OFFERING MEMORANDUM dated June 17, 1988

MOON LAKE

VENTURE CAPITAL CORPORATION

$1,635,000

1,635,000 Common Shares priced at $1.00 per shareOffered in Units of 3,000 shares

Minimum Subscription: 1 Unit ($3,000)

Minimum PurchaseMinimum Offering (Note #1)

Maximum Offering

Number Price to Public Net Proceeds to Moonof and Proceeds Commissions Lake Golf & CountryShares to the vee (Note #2) Club Ltd. (Note #3)

------------- --.......--......._-- -----...-..._-- ------ ........._-........

3.000 $ 3,000 $ 150 $ 2,850600,000 600,000 30,000 570.000

1,635.000 1,635.000 81,750 1,553.250

Footnotes:

(111) The offering may oioae if a minimum of 200 Unita rq>rcaenting 600,000 .hara have been aubacribcd for. 1£ the minimum .ub.cription ia nol .chieve<!

within 120 day. from the date of the final Offering Memorandum or auch extende<! date as the Saslcau:hewan Securities Commission (the "Commission")

may allow, the TlUIlCe holding the aubacripUOlll will refund all moni... to inveatDn without inleral or de<!uotion.

(112) The aharca offered under thia Offering Memonndum are not underwritten, but will be offere4 for.•ale 011 a beat-efforu basia. Il is expecte4 thaI the

majority of thia offering will be wid by the Promoter and Foundcn of the Club who will receive. commission from the Club of not more than 5% of the

value of .hara aubacribcd. However, if ""Iuired. the VCC may nesotiate with broker de.den, investment dealen or other authorize<! sellers 10 act as

agents to offer the aha"" of the vee 10 the public. All cosu of the isaue are being paid by the Club from the procee4S of thia offering. No commissions

will be paid if the minimum offering ia not achieved.

(113) Before dedUcting the expenses related to thia offering and administnuve costs until opening which are estimlted It Sl00,OOO Ind which will be paid by

the Club from its proceeds under this offering.

Moon Lake Venture Capital Corporation will invest in Class B shares of Moon Lake Golf andCountry Club Ltd. (the "Club") under the provisions of The Venture Capital Tax Credit Act ofSaskatchewan. Under this Act, taxpayers normally resident in Saskatchewan will receive 30% oftheir investment back in the form of a tax credit from the Province. (See page 17 for details of theAct and pages 6 to 14 for details of the Club).

The Club has been formed for the purpose of developing and operating a professionally designedgolf course starting with 18-holes and the existing clubhouse and expanding in two stages, as thefinancial position of the Club permits, to 36-holes. The Club has agreed to provide to the holder ofeach Unit of Shares a right of first refusal for an annual golf membership at the golf course. (See"Membership Privileges", page 9), The holders will be required to pay the annual dues for the golfmemberships. Memberships will be limited to 525 members for a 27-hole golf course. There willbe no free memberships.

S·,s ~ t. Te HE'NA N

ii.

-32-These securities are speculative.. There is no established market through whichShares of the VCC may be resold. Ownership and transfer of these Shares arerestricted as detailed on Page 26. Purchase of shares in the VCC is not suitablefor investors who may have to liquidate their shares on a timely basis, and shouldbe considered only by investors able to make long-term commitments. It isfundamental that, aside from the income tax benefits, a potential investor considerwhether an investment in the Units has sufficient merit solely as an investment.

Certain additional risk factors are inherent in an investment of this nature and aredescribed on Page 1. Prospective investors should consult their ownprofessional advisors regarding these and possible tax implications. Prospectiveinvestors should read this Offering Memorandum in its entirety and each investormust acknowledge receipt of a copy of this Offering Memorandum (See Schedule" A"). The VCC will suffer an immediate dilution with respect to the purchase ofshares in the Club (refer to "Dilution" on page 9).

Subscriptions will be received subject to rejection or allotment in whole or in pan, and the right isreserved to close the subscription books at any time without notice. ConfIrmation of acceptancewill be forwarded to the Subscriber promptly after acceptance and share certificates will be issuedto investors as soon as is practical after a closing of this offering.

iii.

TABLE OF CONTENTS

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1.0 SUMMARy.................................................................. 1Project........................................................................ 1Issuer , , , .. 1Issue " .. 1Related Funding. ... . . .. . . ... . . . . . .. . . . . . .. . . ... .. . . . . . . . . . . .. . . .. . . .. . ... . .. 1Use of Proceeds ,.... .. .. . .. 1Risk Factors........ 1

2.0 RISK FACTORS..... 1

3.0 GWSSARY 3

4.0 SUBSCRIP110N PROCEDURE......................................... 3

5.0 THE PROJECT.............................................................. 4Background ,... .. .. 4The Site............................ 4Demand......... 4I...and Use Approval............... 5Design and AInenities " ... 5

6.0 PROM01ER AND DEVELOPER........................................ 6

7.0 MOON LAKE GOLF AND COUNTRY CLUB LTD.................. 6Corporate Status................................................... 6Business of Moon Lake Golf and Country Club Ltd. 7Share Capital and Corporate Structure.................................... 7Options to Purchase Securities................................. 8Prior Sales.................................................................... 9Dilution 9Membership Privileges " ,. . . . .. . . .. .. . . 9Dividend Record and Policy 10Use of Proceeds by Moon Lake Golf and Country Club , 10Directors and Senior Officers. .. .. . . .. . . .. .. ... . . .. . . . . . . .. . . .. . . .. .. . .. . .. 12Remuneration of Directors and Senior Officers.......................... 12Principal Holders of Shares...... 13Escrowed Shares............................................................ 13Pending ugal Proceedings 13Interest ofManagement and Others in Material Transactions.......... 13

8.0 MOON LAKE VENTURE CAPITAL CORPORAnON 14Corporate Status............................................................. 14Business of Moon Lake Venture Capital Corporation.................. 14Share Structure 15Prior Sales.................................................................... 15Issuance of Shares '" ,. . . .. . . .. . . . . .. 15Debt Financing............................................................... 15Plan of Distribution......................................................... 15Dilution ., . . .. . .. . ... .. .. . . . . . .. . . . . . ... .. . . . .. . .. .... . . .. . .. . . .. . . .. ... .. .. .. . 16Dividend Record and Policy 16Shares Being Offered , '" .. 16Use of Proceeds by Moon Lake Venture Capital Corporation......... 16Directors and Senior Officers. . . . . . . .. . . .. .. ... .... . . .. . . .. .. .. . ... .... . .. . 17Remuneration of Directors and Senior Officers.......................... 17

TABLE OF CONTENTS· CONTINUED

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9.0 VENTIJRE CAPITAL PROGRAM......................................... 17Venture Capital Tax Credit Act............................................... 18

10.0 TAX CONSIDERATIONS OFTIffi CLUB AND ITS INVESTORS.. 20Venture Capital Program...................................................... 20Venture Capital Tax Credit ,.. , " , , .. 21Taxable Portion of Capital Gains............................................ 21Capital Gains Exemption 21Transfer to Registered Retirement Savings Plan........................... 21Tax Implication of Distributions to Shareholders.. .. . . .. . . . . .. .. . . .. . . . . .. 22Investment Income Deduction........... 22Interest Expense 22

11.0 SUMMARY OF MATERIAL CONTRACTS.............................. 23Stock Purchase Agreement 23Land Purchase Agreements.............. 24Development Agreement. .. . . .. . . .. . . .. . . .. . . .. . . . . . . . . . . .. . . .. . . .. . . . . . . .. . . . 24Management Agreement .... . .. . . .. . . .. . . .. . . . . . . .. . . . . . . .. . . . 25Golf Course Design Agreement.............................................. 25Water Agreement.............................................................. 25Municipal Service Agreement. .... . .. . . .. . . . .. . .. . . . . . . .. . . .. . . . . . . .. . . .. . . . . 25

12.0 LEGAL, AUDITORS, TRANSFER AGENT AND REGISTRAR..... 26

13.0 PURCHASER'S CONTRAcruAL RIGHTS 26

14.0 CWSING OF THE OFFERING 26

15.0 AUDITED FINANCIAL STATEMENTS.................................. 27Moon Lake Golf & Country Club Ltd. Auditors' Repon................. 27

Balance Sheet.. ... . . . . . .. . . .. . . .. . . . . . .. . . .. . . . . . .. . . .. . . .. . . ... . . . . .. . ... . .. 28Statement of Changes in Financial Position " ... . . . . .. .. 29Notes to Financial Statements.............................................. 30

Moon Lake Venture Capital Corporation Auditors' Repon............... 33Balance Sheet.............................. 33Notes to Balance Sheet.. . . . .. . .. . . .. .. . . .. 34

16.0 CERTIFICATES OF THE CLUB, THE VCC AND 1HE PROMOTER 35

SCHEDULE ASCHEDULEBSCHEDULEC

., .

f. -:-

-35-

z

-

-1-

-36-1.0 SUMMARY

TIIE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION RELATING TO THEOFFERING WHICH IS CONTAINED ELSEWHERE IN THIS MEMORANDUM. THISSUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ALLRESPECTS BY TIlE MORE DETAILED INFORMATION FOUND ELSEWHERE HEREIN.PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW THIS DOCUMENT ANDCONSULT THEIR LEGAL AND OTHER PROFESSIONAL ADVISORS HAVINGRELEVANT EXPERTISE.

PROJECT

ISSUER

ISSUE

RELATED FUNDING

USE OF PROCEEDS

RISK FACTORS

The project is the development and operation of a professionallydesigned golf course starting with 18 holes and expanding in twostages to 36 holes as additional financing pennits. No assurancescan be provided that funding will be available in the future to allowfor such expansions. The existing renovated railway station/sectionhouse and attractively landscaped clubhouse grounds will provide asetting for social events and golfing functions in a country clubatmosphere.

MOON LAKE VENTURE CAPITAL CORPORATION (the"VCC") is a new Saskatchewan corporation formed for the purposeof acquiring a minority equity position in MOON LAKE GOLFAND COUNTRY CLUB LTD. (the "Club"). The VCC will beregistered under The Venture Capital Tax Credit Act so thatinvestors can qualify for a Saskatchewan tax credit of 30% of theamount invested.

The offering consists of a maximum of 1,635,000 Common Sharesin the VCC to be sold at $1.00 per share in 545 units of 3,000shares each. The minimum offering is 600,000 Common Shares(200 units) and the minimum subscription is one unit.

The Club has entered into agreements with certain foundingmembers for the transfer of certain lands, improvements andequipment in return for shares in the Club, which transfers involvethe assumption by the Club of existing mortgages or the Clubassuming contingent liability on mortgages to be repaid by thecurrent owner.

The entire proceeds of the offering will be used by the VCC topurchase Class B shares in the Club. These are new shares beingissued from treasury.

This investment is subject to the risks more particularly described inthe immediately following section.

2.0 RISK FACTORS

Investment in the shares of this offering will be subject to certain risks, including the following:

1. There is no public market for the shares offered by this Offering Memorandum nor is oneexpected to develop. As a result, Shareholders may not be able to liquidate their investmentreadily or in a timely manner.

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2. The investment is subject to the usual commercial risks associated with the ownership andoperation of a golf course.

3. Tax laws are frequently amended and assessment policies change from time to time. Therecan be no guarantee that the rules that have application to this project at the time of theOffering Memorandum will remain in force throughout the life of the VCe.

4. AN INVESTOR INTENDING TO CONTRIBUTE HIS SHARES IN TIlE VCC TO ANRRSP SHOULD NOT RELY ON SUCH SHARES TO GENERATE A CONTINUED ANDCONSISTENT RETURN. Since there is no public market for these shares, purchasers mayin future experience difficulty in liquidating shares held in their RRSP.

5. There are risks associated with the Venture Capital Program including ineligibility of aninvestment and recapture provisions (See "The Venture Capital Tax Credit Act", Page 18).

6. There can be no assurance that the operation of the proposed golf course can result in a levelof profitability which would permit distributions to be made to Shareholders. INVESTORSWHO REQUIRE REGULAR RETURNS FROM TIffiIR INVESTMENT SHOULD NOTPURCHASE THE SHARES OFFERED HEREBY.

7. The offering price of the shares of the Club and the VCC may not be representative of theactual value of the securities of the Club and the VCC.

8. The Promoter of this offering has more than one role and accordingly there is a potential forconflict of interest (see "PROMOTER AND DEVELOPER", page 6).

9. There will be no dilution in value for the investor purchasing shares in the VCC since allcosts of issue, including commissions, will be paid by the Club. When the VCC purchasesClass B common shares in the Club at a price of one dollar per share pursuant to the StockPurchase Agreement (see page 23), there will be an immediate dilution in value of the VCC'sinvestment due to the costs of issue, the commissions payable, and due to existing capitalshares in the Oub. This dilution will be to a value of 50 cents per share in the case of aminimum offering and to a value of 64 cents per share in the case of a maximum offering (see"Dilution", page 9).

10. The VCC will always be a minority shareholder in the Club. Therefore, in assessing the risksand rewards of this investment, investors should appreciate that in respect of the business ofoperating a golf course, they will be relying on the expertise, effons and good faith of themajority shareholders of Moon Lake Golf and Country Club Ltd.

11. The death or incapacity or the loss of services of the Promoter may have an adverse effect onthe operation of the project.

12. The Club has no operating history and the success of its operations cannot be assured.Subscribers must rely upon the ability, expenise, judgement, integrity, and good faith of themanagement of the Club.

13. The Club is acquiring cenain lands necessary for the project which are encumbered withexisting mongages. The Club is not assuming those mongages and the vendor of theproperty is contractually obligated to repay these mongages. The Club, as owner of theencumbered land, will have a contingent liability to the extent of the unpaid ponion of themongages (see "Land Purchase Agreements", Material Contracts, page 24)

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14. The Club is acquiring land from DarWall Enterprizes Ltd. (see page 24) which is notcontiguous to the golf course site and which will be used to facilitate the purchase ofadjoining lands for expansion through a land trade or through sale to provide funds for suchpurchase.

15. The Club is issuing Class B shares which are retractable by the holder after 1994. There canbe no assurance that the operations of the Club can result in a level of profitability whichwould permit such retractions.

3.0 GLOSSARY

The following terms appear throughout the Offering Memorandum. Care should be taken to readeach term in the context of the particular provisions of the Offering Memorandum in which suchtenD is used. The following represents the definition only of such terms:

Act The Venture Capital Tax Credit Act of Saskatchewan.

Club Moon Lake Golf and Country Club Ltd., a corporation incorporated under TheBusiness Corporations Act of Saskatchewan.

Founders Those persons holding Class A common shares in the Club who are friends and closebusiness associates of the Promoter and who have acquired their shares pursuant to aSection 66 Order issued by the Saskatchewan Securities Commission.

Promoter Jerome J. White, PEng., President and majority owner of J.J. White & AssociatesLtd., Consulting Electrical Engineers, 1030 Avenue L South, Saskatoon,Saskatchewan S7M 215.

Share a Common Share of the VCe.

Trustee MacPherson, Leslie & Tyerman, Barristers & Solicitors, 200 - 224 Fourth AvenueSouth, Saskatoon, Saskatchewan S7K 5M5.

Unit 3,000 Common Shares of the VCe.

vee Moon Lake Venture Capital Corporation, a corporation incorporated under TheBusiness Corporations Act of Saskatchewan which will make application to beregistered as a venture capital corporation under the Act

4.0 SUBSCRIPTION PROCEDURE

An investor wishing to subscribe for Sh~s in the VCC must:

(a) complete and execute a Subscription Form in the form set out in Schedule A to this OfferingMemorandum; and

(b) deliver the Subscription Form to MacPherson, Leslie & Tyennan, Barristers and Solicitors,200 - 224 Fourth Avenue South, Saskatoon, Saskatchewan S7K 5M5 (the "Trustee"),together with cash or cheque payable to MacPherson Leslie & Tyerman in the amount of$3,000.00 for each Unit subscribed for.

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Subscription funds will be deposited with the Trustee and held by it in trust until all the conditionsprecedent to the closing of the offering have been satisfied. If such conditions are not satisfied, theTrustee will promptly return all subscription funds and Subscription Forms to Subscribers withoutinterest or deduction. If such conditions are satisfied, the Trustee will promptly release allsubscription funds to the VCC.

If the VCC rejects a subscription, it will return fonhwith to the Subscriber the Subscription Fonnand all subscription funds without interest or deduction. Upon acceptance of a subscription forShares, the same shall constitute a binding agreement of purchase and sale of Shares in accordancewith the terms and conditions contained herein.

A Subscriber is entitled to the contractual rights of withdrawal and rescission applicable inSaskatchewan (see Page 26).

5.0 THE PROJECT

Background

Moon Lake Golf and Country Club Ltd. has been incorporated to design, construct and operate agolf and country club at Moon Lake, south of the City of Saskatoon. Mr. Jerome J. White,Promoter and incorporating director of the Club, has worked over the past eighteen years todevelop various aspects of the physical propeny including the Station House, commercial sodgrowing, tree nursery, maintenance buildings, trout pond, paddling pool and other recreationalfacilities. The VCC has been incorporated solely to invest in shares in the Club.

The Site

The site of the future Moon Lake Golf and Country Club comprises all of the south half of Section22, Township 35, Range 6, West of the 3rd Meridian, lying south of Moon Lake. The Lake is aformer channel or "oxbow" of the South Saskatchewan River which flows a mile southeast of thesite. The property lies within the alluvial plain of the River with the edge of the valley located justto the north of Moon Lake. Here the land rises some 10 to 15 metres (35 to 50 feet) in anescarpment fonning a scenic backdrop for the golf course. The property is located within the RuralMunicipality of Connan Park approximately nine miles southwest of Saskatoon. There are twopossible access routes from the City. Firstly, via the Pike Lake Highway (#60 south from #7) andmunicipal roads. Eight of the eleven miles of this route are now paved and the Club has a ServiceAgreement (see Material Contracts page 25) with the Rural Municipality which requires the pavingof the remaining portion by December 31, 1990. A shorter route to the Club is from SpadinaCrescent south and west along the Valley Road. Most of the nine miles of this route has a gravelsurface but the Rural Municipality has announced that it intends to pave this entire route before theend of 1994. See Schedule B for a location map for the routes to the Club and Schedule C and fora layout of the golf course.

Demand

Saskatoon is the largest city in Saskatchewan with a population of approximately 180,000. Thereis a demonstrated excess demand for golfing facilities in the Saskatoon area. The popular presshas carried reports of golfers paying teenagers to wait overnight in lineups to book golf rounds andof golfers traveling to North Battleford (l40km), Prince Albert (l4Ikm), Rosthern (61km) andHumboldt (155km) as a result of a lack of available tee-off times at local courses. Saskatooncurrently has six golf courses: 1 private, 2 semi-private, 2 public, and I public Par 3 course.

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Land Use Approval

The Promoter presented a conceptual development plan for the Moon Lake Golf and Country Clubto the Council of the Rural Municipality of Corman Park, and Bylaw 67/87 authorizing recreationalland use for the propeny was passed by the Council on December 14, 1987.

Design and Amenities

Moon Lake Golf and Country Club is expected to open to the public in late July 1989 and willinitially feature a professionally designed I8-hole golf course to be constructed with funds to beraised under either a minimum or maximum closing of this offering. The layout and design of a27-hole golf course will also be completed under this offering although the construction of the fmal9 holes (to be fmanced from surplus Club revenues and by propeny mongages) is not expected tocommence until 1991. The Club is also negotiating with adjoining landowners to purchase,subject to Municipal approval, sufficient land to construct an additional 9 holes bringing the total to36 holes. The land purchased by the Club from DarWall Enterprizes Ltd., the company controlledby J.W. Hamm (see page 24), will be used to facilitate this purchase through a land trade orthrough the sale of the Hamm quaner to provide funds for the purchase of the additional land.Assuming the completion of a 36-hole course, the Club will provide patrons the opponunity toplay on various combinations of four 9-hole courses.

Other amenities at the Club centre around the renovated station and section foreman's house movedto the propeny from Tessier, Saskatchewan. The two buildings have been joined with an atriumand refinished and carpeted throughout to form the Station House which will, with minormodifications, serve as the clubhouse for Moon Lake Golf and Country Club Ltd. The Cannery isanother building on the property which has been used for years to cater to parties and barbecues inthe gardens of the Station House. The Cannery is situated on elevated ground overlooking a trompond and the sites of the 1st and 10th tees and will be renovated to include a pro shop witha complete line of clubs, balls, clothing, shoes, and other golfing equipment. The Cannery willalso provide a food and beverage service with both indoor seating and a large outdoor observationplatform.

One of the first facilities to be completed will be the driving range and practice fairway, including achipping range and practice bunker, to allow members to develop their pitching and sand trap skillsas well as improving their driving distance. The Club expects to provide rentals of electric golfcars for the use of its patrons.

If the maximum offering is not achieved, the Club will place additional mongages on the propertyand will postpone certain non-critical expenditures such as special sand for bunkers, automaticirrigation controls, and building improvements. A MINIMUM CLOSING OF TIllS OFFERINGWILL ALLOW TIIE CLUB TO CONSTRUCT A REGULAnON 18-HOLE GOLF COURSE OFAPPROXIMATELY 6,825 YARDS IN LENGTH, COMPLETE wrrn PRACfICE FAIRWAY,CHIPPING/PITCHING RANGE, PUTTING GREENS AND A CLUB HOUSE FACll...ITYWITIl PRO SHOP.

Moon Lake Golf and Country Club is being designed by GDS Golf Design Services Ltd. ofCanmore, Albena. GDS is a Canadian golf course design firm formed in 1980 providing design,construction and management services. Its principals have over 35 years of golf course design andconstruction experience on over 30 championship golf courses in countries such as Mexico,England, Ireland, Italy, Brazil, Morocco, Switzerland, Spain, Ponugal, Dominican Republic,Germany, Greece and France, as well as Canada and the United States.

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6.0 PROMOTER AND DEVELOPER

The Promoter of the golf course is Jerome J. White, the primary owner of a family oforganizations that engage in consulting electrical engineering, retail drug store operation and a sodfann and nursery operation. Over the past several years, Mr. White has been actively pursuing thecreation of a golf course and related recreational facilities at Moon Lake.

Under the tenns of a Development Agreement (see Material Contracts page 24), Mr. White'sconsulting engineering company, J.J. White & Associates Ltd., is the Developer of the golfcourse. The Developer will receive payment for actual services rendered at a rate of $300 per dayor portion thereof, to a maximum of $80,000. Payments commenced January 1, 1988.

Under the tenns of a Management Agreement (see Material Contracts page 25), Mr. White'sconsulting engineering company, J.J. White & Associates Ltd., will be the initial Manager of thegolf course. The Manager will be paid a fee of 3% of gross revenues, or approximately $39,000in the first full year of operation, for providing management and supervision for the golf course.

The Promoter is also an Officer and Director of Moon Lake Golf and Country Club Ltd. Nosalaries or fees have been paid or are now payable for these offices, but if the Board of Directorsso determines, some honoraria may accrue to the Promoter in the future from these positions. (see"Remuneration of Directors and Senior Officers" page 17). The Promoter may also receive a 5%commission as a Salesperson for the value of shares sold by him to the public under this offering.

The Promoter will receive Class A common shares and Class C Series I preferred shares of theClub in exchange for transferring certain lands, buildings, equipment and nursery stock to the Club(see Land Purchase Agreements page 24).

The Promoter is the majority owner of J.J. White and Associates Ltd. which has entered into aLand Purchase Agreement (see Material Contracts Page 24) to sell to the Club the SEI/4 22-35-6W3, being approximately 161 acres of land, to the Club in return for 223,500 Class A commonshares and assumption by the Club of outstanding debts on the property amounting to $60,600.

The Promoter will receive 1,033,000 Class A common shares and 1,800 Class C Series I preferredshares in the capital stock of the Club for the appraised value of land and improvements, fornursery stock, and for the estimated market value of existing irrigation, turf and maintenanceequipment. The Class A common shares were issued at a price of $0.40 per share and the Class CSeries I preferred shares were issued at a price of $25.00 per share, the same values as attached tothe shares sold to Founding Members.

The Promoter expects to profit from the sale of land and properties through future appreciation inthe value of the shares. The Promoter's shares in the capital stock of the Club are subject toescrow provisions required by the Saskatchewan Securities Commission. The total value of sharesreceived by the promoter is $458,200.

7.0 MOON LAKE GOLF AND COUNTRY CLUB LTD.

Corporate Status

Moon Lake Golf and Country Club Ltd. was incorporated November 24, 1987 under TheBusiness Corporations Act of Saskatchewan. The mailing address and registered office of theClub is 1030 Avenue L South, Saskatoon, Saskatchewan, S7M 215.

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Business of Moon Lake Golf and Country Club Ltd.

The Club has been formed for the purpose of developing and operating a professionally designedl8-hole golf course. The existing renovated railway station/section house and attractivelylandscaped clubhouse grounds provide a setting for social events and golfing functions in acountry club atmosphere. Reference is also made to a description of the business of the Clubunder the heading "The Project" on page 4.

Share Capital and Corporate Structure

The share structure the Club is made up of three classes of shares:

1. An unlimited number of Class A common shares entitling the holder to one vote per share at allmeetings of shareholders of the Club; to equal participation with Class B shares, subject to thereights of the Class C preferred shares, in all distributions of property and assets of the Club;to parity with Class B shares with respect to any lawful dividend of the Club; and to a pre­emptive right to purchase new issues of securities in proponion to shareholdings.

2. An unlimited number of Class B shares entitling the holder to one vote per share at all meetingsof shareholders of the Club; to equal participation with Class A common shares, subject to therights of the Class C preferred shares, in all distributions of property and assets of the Club; toparity with Class A common shares with respect to any lawful dividend of the Club; and to apre-emptive right, subject to the Class A common shares, to purchase new issues of securitiesin proportion to shareholdings. Subject to the availability of funds and the provisions of TheBusiness Corporations Act of Saskatchewan, a holder of Class B shares may at any time afterDecember 31, 1994, require the Club to redeem all or any part of the Class B shares held bythat holder at one and one-half times the issue price per Class B share.

3. An unlimited number of Class C preferred shares which may be issued in series and whichmay, in the discretion of the directors of the Club, entitle the holder: to a preferential dividend;to redemption at the option of the Club or the holder, and to purchase and/or conversion. Noseries of Class C preferred shares shall have a priority in respect of dividends or distribution ofassets or a return of capital over any other series of Class C preferred shares.

Moon Lake Golf and Country Ltd., by Articles of Amendment, has authorized the issuance of anunlimited number of Class C Series I non-voting preferred shares with an issue price of $25.00 pershare and an annual cumulative preferential dividend of 15% of issue price. The Class C Series Ipreferred shares will be redeemable at the option of Moon Lake Golf and Country Club Ltd. on orafter November 1, 1993 at the greater of: (i) their issue price, or (ii) the 1992 net income of theClub divided by the number of Class C Series I preferred shares, together with accrued and unpaiddividends. As an alternative to the preferred dividend of 15% of issue price, the holder can elect,prior to December 31, 1988, to receive one golf membership at a golf course owned by the Clubfor each 200 Class C Series I preferred shares held. The Membership privilege expires at the endof the Club's 1999 fiscal year.

The Articles funher provide that no shares shall be issued without the approval of the holders of75% of the outstanding voting shares of the Club. The prohibition does not apply to shares issuedpursuant to options, employee stock purchase plans or shares issued as consideration for theacquisition of assets.

Further paniculars with respect to the share structure can be obtained by reviewing the Club'sAnicles which are available from the Corporations Branch, Department of Consumer andCommercial Affairs, or which can be viewed along with the material contracts at the offices of theClub, 1030 Avenue L South, Saskatoon, Saskatchewan

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The corporate structure of the Club under a minimum and maximum offering amount is as follows:

Designation Amount No. of Shares No. of Shares After Closing of After Closing ofof Security Authorized Outstanding Outstanding Minimum Offering Maximum Offering

as at Dec.31/87 or Committed No. of % of No. of % ofas at May 20/88 shares Votes shares Votes

_____ .O~ut~s~tan~di~·~n..g Outstanding

Class Acommonshares unlimited 1 1,706,500 1,706,500 74% 1,706,500 51%

($1) ($682,600) ($682,600) ($682,600)Class Bshares unlimited nil nil 600,000 26% 1,635,000 49%

($600,000) ($1,635,000)

Class CSeries Ipreferredshares unlimited nil 7,000

($175,000)7,000 nil

($175,000)7,000

($175,000)nil

PropertyMortgages

Draw on$250,000Line of Credit

nil

nil

($380,600) nil ($180,600) nil

($206,800) nil ($206,800) nil

Moon Lake Golf and Country Club Ltd. will take over outstanding mortgages on land amountingto a total of $180,600 pursuant to land transfer agreements with J.J. White & Associates Ltd. andwith J.W. Hamm (see "Summary of Material Contracts", page 24). The Club will also negotiate,prior to closing, a line of credit for $250,000 with a chartered bank to meet working capitalrequirements. Lands purchased from Jerome J. White will be subject to mortgages totallingapproximately $140,000. Pursuant to a Land Purchase Agreement (see "Summary of MaterialContracts", page 24), Jerome J. White will be responsible for that debt but, because the mortgageswill remain registered against the land, the Club will have a contingent liability of approximately$140,000.

Options to Purchase Securities

The Articles of the Club, among other matters, provide an option to the holders of shares in theVCC to purchase after December 31, 1994, at an agreed upon market price or, failing agreement, ata price established by arbitration, a number of Class B shares in the Club equivalent to the numberof Common shares of the VCC held by the holder. For each such Class B share sold, the Clubwill cancel an equivalent number of Class B shares held by the VCC. Exercise of this optionrequires the consent and co-operation of the VCC which must agree to the redemption of anequivalent number of the Class B shares it holds in the Club. Further particulars can be obtainedby reviewing the club's Articles which are available from the Corporations Branch, Department ofConsumer and Commercial Affairs, or which can be viewed along with the material contracts at theoffices of the Club, 1030 Avenue L South, Saskatoon, Saskatchewan.

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-44-Prior Sales

Jerome J. White at closing will hold 1,020,500 Class A common shares and 1,600 Class C SeriesI preferred shares issued in return for the appraised value of land, buildings, improvements andequipment (see "Promoter and Developer", page 6). J. Wallace Hamm will hold 75,000 Class Acommon shares issued in return for an agreement to transfer land to the Club (see "MaterialContracts", page 24). Pursuant to an order issued by the Saskatchewan Securities Commission,certain Founders purchased units of Class A common shares and Class C Series I preferred sharesof the Club each unit consisting of 12,500 Class A common shares and 200 Class C Series Ipreferred shares at a price of $10,000.00 per unit and others purchased Class A common shares ata price of $0.40 per share.

Price Number of Shares in Prior Sale Total Consideration

$0.40 1,331,500 Class A common shares $532,600 Land, buildings,equipment, etc.

$25.00 1,800 Class C Series Ipreferred shares $45,000 (As part of previous

transaction)$0.40 375,000 Class A common shares $150,000 Cash

$25.00 5,200 Class C Series Ipreferred shares $130,000 Cash

Dilution

The VCC purchasing Class B shares in the Club will experience a dilution in the net tangiblebook value of its investment This dilution results from the sales commission, the estimated costsof the issue and Class A common shares being issued for a price less than $1.00 per share. Witha Maximum Offering, the dilution factor is 36.08%, reducing the net book value per Class Bshare to $0.64 from the issue price of $1.00. With aMinimum Offering, the dilution factor is49.97%, reducing the net book value per Class B share to $0.50 from the issue price of $1.00

Membership Privileges

The Club intends to provide an opportunity for certain individuals to become members of theClub. Memberships will limited to approximately 525 for the initial 27-hole course with anadditional 175 memberships to be added with the completion of the extra 9-hole course.Membership fees are expected to be $650 for 1990 with no initiation fee. Membership rightsinclude: waiver of all green fees for each member; use of locker/shower facilities as available;storage and cleaning of clubs; use of pull cart; detennination and registration of handicapaccording to governing rules; and, booking privileges as follows:

i) unlimited during week (except for holidays);ii) two out of every three available time slots on weekends and holidays;iii) booking times to be determined by draw during most requested time slots.

The Club intends to offer memberships, to the limit established, firstly to the Promoter, secondlyto Founders and then to holders of Units of Common Shares in the VCC based on theirchronological order of Expression of Interest or Offer to Purchase.

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-45-Dividend Record and Policy

To date no dividends have been declared or paid but the Club will, if funds are available for suchpurpose, be obligated to pay cumulative dividends on the Class C Series I preferred sharesamounting to $26,250 per year and, if payment is not made in a year, the dividends shallaccumulate and shall be paid out before any other dividends are paid. Subject to the availabilityof sufficient earnings and cash reserves to carry on business and subject to the provisions of TheBusiness Corporations Act, the Club intends to establish a policy of paying annual cashdividends for each Gass A common share and Class B share. The Club intends to operate in afashion to allow for the payment of dividends to Class A common shares and Class B shares aswell as to provide for the staged expansion of the course to 36 holes.

TIffiRE CAN BE NO ASSURANCES GIVEN THAT THE PROPOSED OPERAnON OF TIIECLUB CAN RESULT IN ANY PROFITABILITY WHICH WOULD PERMITDISTRIBUTION TO THE SHAREHOLDERS. INVESTORS WHO MUST OBTAINREGULAR RETURN FROM THEIR INVESTMENTS SHOULD NOT PURCHASE THESHARES OFFERED HEREBY.

Use of Proceeds by Moon Lake Golf and Country Club Ltd.

Moon Lake Golf and Country Club Ltd. will use as follows the proceeds raised from:

MAXIMUM CLOSING MINIMUM CLOSINGPROCEEDS

Promoter and Founders:• by asset transfer $ 577,600 577,600• in cash 280.000 280.000

857,600 857,600Property mortgages assumed 180,600 180,600Property mortgages 200,000Draw on line of credit financing 206,800 206,800Investment by the VCC 1.635.000 600.000

TOTAL PROCEEDS $ 2.880.000 2.045.000

The Board of Directors of the Club have investigated a number of sources of capital costestimates for golf course construction including National Golf Federation, SaskatchewanTourism, suppliers, Founders in the construction business, etc. and have received estimates fromGolf Design Services Ltd.

TIlE CLUB CONSIDERS TIlE FOLLOWING ESTIMATES TO BE REASONABLE ANDTHE CLUB BELIEVES THAT THE CONSTRUCTION, INCLUDING CAPITALIZEDADMINISTRATIVE EXPENSES TO THE OPENING OF THE COURSE, CAN BECOMPLETED WITHIN THE FOLLOWING BUOOET ESTIMATES:

The preceeding table shows the budgeted construction costs for the Moon Lake 18-hole golf courseunder the two extremes of a Maximum Closing and a Minimum Closing. Funds raised in excessof the Minimum Closing will be applied to upgrading the quality of the golf course in the followingpriority:

1. Commissions increased by up to $51,750;2. Construction (clearing and earthwork; greens, tees and bunkers; fairways and rough;

related design fees) for $360,000;3. Equipment (maintenance equipment, automatic irrigation controls) for $175,000;4. Building renovations for $140,000; and,5. Contingency increased by $108,250.

The aggregate total incremental expense is $835,000.

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-47-Directors and Senior Officers

The names, addresses, positions held in the Club, and principal occupation of the Directors andOfficers of the Club are as follows:

POsmON NAME ADDRESS PRINCIPAL OCCUPATION

President Jerome J. White, 1030 Avenue L South President ofand Director P.Eng Saskatoon, Sask J.J. White & Associates Ltd.

Secretary Judy White 1030 Avenue L South Manager ofand Director Saskatoon, Sask. White's Phannacy Ltd.

Treasurer J. Michael Barry, 222 Ball Crescent Principal ofand Director B. Comm., M.A. Saskatoon, Sask. Strategic Planning Associates

Golf Course Murray Lee 1606 Hilliard S1. E. Golf Course SuperintendentSuperintendent Saskatoon, Sask. Valley Reg'l Park, Rosthemand Director

Director Norinne Keys, B.LD. 1615 Prince of Wales President ofSaskatoon, Sask. Norinne Keys Int.Design Ltd.

Director Kit M. Sarkar, 524-43rd Street East President ofPhD, P. Eng. Saskatoon, Sask. Devel-Tech Inc.

Director J. Wallace Hamm, PAg 3217 Mountbatton President ofSaskatoon, Sask DarWall Enterprizes Ltd.

Director Loren Paley, P. Eng 118 Sclandens Place Manager ofSaskatoon, Sask. J.J. White & Associates Ltd.

Director J.J. McCartan, P. Eng 122 Rosedale Road President of McCartanSaskatoon, Sask. Gaudet & Associates Ltd.

Director Raymond D. Foret, L.A.T. 302 25th Street West Manager ofSaskatoon, Sask. Moon Lake Gardens Ltd.

Under the tenns of the Stock Purchase Agreement (see page 23), the Club has agreed to providethe VCC two members on the Board of the Club if the VCC holds less than 35% of the total votingshares of the Club and three members if the VCC holds 35% or more of the votes.

The Directors and Officers have each held their present occupations for at least five years exceptfor J.M. Barry who was employed in management positions with SED Systems Inc. ofSaskatoon between 1983 and 1986; and except for M. Lee who was employed in various golfcourse maintenance and greenskeeping roles by the Saskatoon Golf & Country Club between1977 and 1985; and except for Raymond Foret who was employed by the City of Regina, Parks& Recreation Department between 1984 and 1986 and by Butler-Krebes, Landscape Architects,Edmonton between 1978 and 1983.

Remuneration of Directors and Senior Officers

To date no fees have been paid or are payable to the Directors or Officers of the Club. However,services have been rendered to the Club by cenain directors or their associates and the Club hasprovided for the market value of the services as follows:

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(l) J.1. White was reimbursed for $8,000 in miscellaneous printing, administrativeand regulatory costs incurred to December 31, 1987 to prepare presentationmaterial for the application for municipal rezoning. Mr. White's remunerationsince January 1, 1988 is covered under the Development Agreement (see page24).

(2) J.W. Hamm was paid $6,000 for a registered agronomist's report thataccompanied the rezoning application. It is possible that in the future Mr. Hammmay be contracted at standard commercial rates to undertake specializedinvestigations into soil stability, salinity, etc.; and

(3) J.M. Barry was paid as a consultant at the rate of $40 per hour for a total of$29,865 to April 30, 1988 for the preparation of financial forecasts and strategicplans, for preparing this offering memorandum and related documents, and forother administrative and managerial services. Mr. Barry will continue in this roleunder the supervision and at the pleasure of the President and the Board ofDirectors.

Future remuneration of Directors and Senior Officers will be determined by unanimous decision ofthe Board.

Principal Holders of Shares

With a maximum closing under this offering, Jerome J. White will hold, directly or indirectly,1,181,500 or 70% of the Class A common shares and 1,800 or 26% of the Class C Series Ipreferred shares.

Escrowed Shares

As of the date of closing, the following shares in the capital of the Club are escrowed pursuant toParts IT and IV of the Escrow Policy of the Saskatchewan Securities Commission:

Depositary

Jerome 1. WhiteJudy WhiteJ.J. White & Associates Ltd.J. Wallace Hamm

Designation of Class

Class A commonClass A commonClass A commonClass A common

Number ofShares

612,3007,500

89,10045,000

Percentageof Class

35.9 %0.4%5.2%2.6%

Pending Legal Proceedings

The principals of the Club and the VCC are not aware of any legal proceedings already in progressor any contemplated legal proceedings involving those corporations.

Interest of Management and Others in Material Transactions

Jerome J. White is the Promoter and an officer and Director of the Club and has contracted totransfer land, improvements, equipment and nursery stock to Moon Lake Golf and Country ClubLtd. This property is subject to mortgages in the amount of approximately $140,000. Pursuant toa Land Purchase Agreement (see Material Contracts, page 24), Jerome J. White will be responsiblefor fulfilling these mortgages. In addition, Jerome J. White is the major shareholder in J.J. White& Associates Ltd. which has also contracted to transfer land to the Club (see Promoter, page 6).

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Mortgages on the land to be transferred by J.J. White & Associates Ltd. total approximately$60,600 and will be assumed by the Club.

Jerome J White and J.J. White & Associates Ltd. are under contract to the Club to providedevelopment and construction management services. Following completion of construction, J.J.White & Associates Ltd. will manage the golf course and country club (see Summary of MaterialContracts, page 25).

J. Wallace Hamm, through his corporation DarWall Enterprizes Ltd., has entered into anagreement to transfer land to the Club in return for 75,000 Class A common shares of the Club andassumption by the Club of outstanding debts on the property amounting to $120,000 (seeSummary of Material Contracts, page 24). In the future, Mr. Hamm may be contracted at standardcommercial rates to undertake specialized investigations into soil stability, salinity, etc.

J.M. Barry will be paid for consulting work to be done in the future at commercial rates for thepreparation of frnancial forecasts and strategic plans, for preparing this offering memorandum andrelated documents, and for other administrative and managerial services. Mr. Barry will continuein this role under the supervision and at the pleasure of the President and the Board of Directors.

8.0 MOON LAKE VENTURE CAPITAL CORPORATION

Corporate Status

Moon Lake Venture Capital Corporation was incorporated March 4, 1988 under The BusinessCorporations Act of Saskatchewan. The VCC has no operating history or liabilities and has beenincorporated to invest in Moon Lake Golf and Country Club Ltd. All costs of incorporation,administration to date of closing, and of this offering incurred by the VCC have been paid by theClub.

After a successful closing of this offering, the VCC will submit an application for registration as aventure capital corporation. It has been indicated in a preliminary ruling by the Minister ofEconomic Development and Tourism that Moon Lake Golf and Country Club Ltd. will qualify asan eligible investment under the Act. Upon registration, the VCC will use the proceeds raised by itunder this offering to purchase Class B shares of Moon Lake Golf and Country Club Ltd.

The mailing address and registered office of the VCC is 1030 Avenue L South, Saskatoon,Saskatchewan, S7M 2J5.

Business of Moon Lake Venture Capital Corporation

The Articles of Incorporation of the VCC have restricted the business of the VCC to providingcapital through the acquisition and holding of securities of a small business and to providingbusiness and managerial expertise (if desired) to small businesses. The investment objective of theVCC is to provide capital for investment in Moon Lake Golf and Country Club Ltd. and to assistthe Club to carry on the business of designing, developing, constructing and operating the golfcourse.

The VCC has entered into a Stock Purchase Agreement with the Club. Pursuant to the provisionsof this Agreement, the VCC will be able to acquire Class B shares of the Club. The aggregateconsideration to be paid by the VCC for the Class B shares of the Club will be the proceeds raisedby the VCC through this offering. The Club is obligated to issue one Class B share for each $1.00received from the VCC, provided that the VCC's investment is limited to 49% of the outstandingvoting equity shares of the Club (see Summary of Material Contracts on Page 23).

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Immediately upon closing, the VCC will place 30% of the funds received by it under this offeringwith the Trustee for deposit into trust as required by the Act. Upon registration of the VCC as aventure capital corporation under the Act, all funds received as proceeds by the VCC under thisoffering, excluding those funds placed with the Trustee to be held in trust, will be utilized by theVCC to acquire Class B shares of the Club. Having effected such investment, application will bemade to the Minister for the release of the remaining funds. The funds so released will also beinvested in Class B shares of the Club. The Club will provide up to a maximum of $2,500.00 peryear in funds or services for 5 years to the VCC to assist the VCC in covering its administrativecosts including financial, accounting, audit, legal fees, disbursements for fIlings and routine officeadministration expenses.

Share Structure

Moon Lake Venture Capital Corporation is authorized to issue an unlimited number of CommonShares which are fully voting common shares, fully participating in earnings and assets, and areissued without par value. At the conclusion of the within contemplated offering and on theassumption that the offering is fully subscribed, 1,635,000 Common Shares shall be issued andoutstanding in Moon Lake Venture Capital Corporation.

Prior Sales

There is currently one Common Share of Moon Lake Venture Capital Corporation issued to J.Michael Barry for $1.00 for organizational purposes. On a closing of the offering, this CommonShare will be surrendered to the VCC and cancelled.

Issuance of Shares

As of the date of this Offering Memorandum, one Common Share of the VCC is issued andoutstanding. Following a closing of the minimum offering, there will be 600,000 Common Sharesissued to Subscribers; following a closing of the maximum offering, there will be 1,635,000Common Shares issued to Subscribers. Share certificates will be issued as soon as practical aftera closing.

Debt Financing

Moon Lake Venture Capital Corporation has no debt.

Plan of Distribution

The shares which are the subject of this Offering Memorandum are not being underwritten, but arebeing offered for sale to the public in Saskatchewan on a best-effons basis by those persons whoare authorized to sell the shares. It is anticipated that the majority of the shares being offered bythis Offering Memorandum will be sold by the Officers, Directors and Founders of Moon LakeGolf and Country Club Ltd. These persons will receive a commission from the Club of 5% of thevalue of the shares subscribed and paid for through their effons, provided, however, that nocommission shall be paid if the minimum offering is not achieved. If required, the VCC maynegotiate with broker dealers, investment dealers or other authorized sellers to act as agents to offerthe shares of the VCC to the public. Any commissions, however, shall not exceed 5%. Legalcosts, commissions and other costs of this issue will be paid by the Club as a cost of obtainingfinancing and will not be repaid by the VCC. The Club will have 120 days from the date of theoffering memorandum, or such other time period as the Saskatchewan Securities Commission mayallow, to sell the entire issue.

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-51-Dilution

Upon purchasing Class B shares in the Club, the VCC will experience a dilution in the net tangiblebook value of its investment. This dilution results from the sales commission, the estimated costsof the issue and Class A common shares being issued for a price less than $1.00 per share. With aMaximum Offering, the dilution factor is 36.08%, reducing the net book value per Class B share to$0.64 from the issue price of $1.00. With a Minimum Offering, the dilution factor is 49.97%,reducing the net book value per Class B share to $0.50 from the issue price of $1.00.

Dividend Record and Policy

Funds available for distribution from the VCC to the investors will be generated solely fromdistributions paid to the VCC by the Club and any net income which may be earned by the VCCfrom time to time from funds held by the VCC pending distribution to investors. The Board ofDirectors of the vec will meet at least annually to determine whether dividends will be paid andwhat the amount of those dividends will be. The timing of the distributions from the VCC toinvestors will be subject to determination by the Directors of the VCC and will be dependentprimarily upon the timing of the distributions to the VCC from the Club.

THERE CAN BE NO ASSURANCE THAT TIIE EXISTING OR PROPOSED OPERATIONSOF THE CLUB CAN RESULT IN ANY LEVEL OF PROFITABILITY WHICH WOULDPERMIT DISTRIBUTIONS TO BE MADE TO THE SHAREHOLDERS AND HENCEDISTRIBUTIONS TO TIIE SHAREHOLDERS OF MOON LAKE VENTURE CAPITALCORPORATION. INVESTORS WHO MUST OBTAIN REGULAR RETURN FROM TIIEIRINVESTMENTS SHOULD NOT PURCHASE TIIE SHARES OFFERED HEREBY.

Shares Being Offered

The VCC has authorized for sale to the public a maximum of 1,635,000 Common Shares at $1.00per share for total proceeds of $1,635,000.00. The minimum subscription by an investor is oneUnit consisting of 3,000 Common Shares at $1.00 per share. An investor must pay $3,000.00 perUnit by way of cash payment or cheque upon execution of the Subscription Form. On a minimumoffering, the VCC must raise $600,000.00. The VCC will use the proceeds of its offering topurchase Class B shares of the Moon Lake Golf and Country Club Ltd. at $1.00 per share. Thevec will not accept subscriptions that will result in it owning, after investment in the Club, morethan 49% of all the issued and outstanding equity voting shares of the Club.

Use of Proceeds by Moon Lake Venture Capital Corporation

The vec will use the proceeds of this offering to purchase Class B shares in Moon Lake Golf andCountry Club Ltd. With the closing of a maximum offering, the VCC will purchase 1,635,000Oass B shares at a price of $1.00 per Class B share. With the closing of a minimum offering, theVCC will purchase 600,000 Class B shares at a price of $1.00 per Class B share.

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-52-Directors and Senior Officers

At the present time, the names, addresses, positions held in the VCC, and principal occupation ofthe Directors of the Moon Lake Venture Capital Corporation are as follows:

rosmoN

FoundingDirector

Director

Director

NAME

1. Michael Barry

Bruce Berglof

10hn Perkin

ADDRESS

222 Ball CrescentSaskatoon, Sask.

706 9th AvenueSaskatoon, Sask.

130 Shaftsbury RoadSaskatoon, Sask.

PRINCIPAL OCCUPATION

Principal,Strategic Planning Associates

(from 1983 to 1986, Mr. Barrywas employed by SED Systemsof Saskatoon)

Electrical Engineer,1.1. White & Associates Ltd.

Electrician1.1. White & Associates Ltd.

The VCC is permitted a maximum of 20 Directors. The above Directors will serve as interimDirectors of Moon Lake Venture Capital Corporation. The interim Directors will call aShareholders' meeting as soon as practical after the fInal closing of its Offering for the purpose ofelecting a Board of Directors and to select its representatives to sit on the Board of the Club (seeDirectors and Senior Officers page 13). The interim Directors will:

(a) authorize, execute, seal and deliver the Share Purchase Agreement;(b) register the VCC under the Act;(c) accept subscriptions on behalf of the VCC for its shares;(d) issue Share Certificates in respect of the subscriptions; and(e) generally facilitate the completion of the transactions and agreements contemplated by

the VCC offering.

Remuneration of Directors and Senior Officers

As required by the Articles of Incorporation, no fees have been paid or are payable to the Directorsof the vce without the consent of the shareholders. It is expected that compensation for Directorswill be established at the inaugural Shareholders' Meeting of Moon Lake Venture CapitalCorporation, which is anticipated to be at a set rate of remuneration per meeting attended. Theinterim Directors shall not receive any compensation for performance of their duties as interimDirectors.

9.0 VENTURE CAPITAL PROGRAM

In 1984, the Government of Saskatchewan enacted The Venture Capital Tax Credit Act. TheVenture Capital Program created under-the provisions of the Act is intended to stimulate investmentand growth in the small business sector of Saskatchewan and to encourage the development of newbusiness enterprises in Saskatchewan. Under the program, investors can invest capital in acorporation which may then be registered as a venture capital corporation under the Act by agreeingto restrict its activities to investing its capital in eligible small businesses and/or to providing theseeligible small businesses with management services.

Pursuant to the Act, the venture capital corporation, together with its shareholders and anyassociates and affIliated corporations of its shareholders, cannot hold more than 49% of the issuedand outstanding equity shares of any small business it invests in.

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The Venture Capital Program is administered by the Minister of Economic Development andTourism (the "Minister").

Venture Capital Tax Credit Act

The VCC will be registered under the Act as soon as reasonably possible after closing of this offerand will be governed by the provisions of the Act. The following is a summary of some of thesignificant provisions of the Act as it relates to the formation of the vee and the investment by thevec in the Club. The summary does not purpon to be a complete and exhaustive review of theprovisions of the Act and prospective investors are advised to consult their legal and otherprofessional advisors having relevant expertise.

A. Incentive

Eligible investors receive a tax credit equal to 30% of their investment in a venture capitalcorporation. The credit can be deducted from Saskatchewan income tax payable in the year ofthe investment. The unused portion can be carried forward for up to seven years. Where a tax.credit has been allowed and there is an unused balance of the tax credit after the expiry of thelast taxation year in which the tax credit may be deducted or if the individual has died, thetaxpayer or his personal representative may apply for and the Minister may, at his discretion,provide for a grant equal to the amount of the unused balance of the tax credit

Each subscriber must make application to the Minister for the tax credit or grant, as the casemay be. Once issued, the tax credit or grant cannot be recovered from the investor whoreceived the incentive, unless the grant or tax credit was obtained on the basis of infonnationthat was false or misleading. The 30% incentive tax credit or grant, as the case may be, is onlypaid to the original purchasers of the shares offered by this Offering Memorandum.Subsequent purchasers of these securities are not entitled to any such incentive.

B. Capital Investment Required

A venture capital corporation must have paid up capital of at least $100,000.00 and not morethan $5,000,000.00, except where the Articles of Incorporation of the venture capitalcorporation permit investment only in a small business primarily engaged in business at acentre other than a city having a population in excess of 20,000 residents. In the latter case, theaggregate consideration may be not less than $25,000.00 and not more than $5,000,000.00.At least 40% of the paid up capital must be invested in eligible investments as defined by theAct within 18 months of registration and 70% within 30 months of registration. An average of70% of the equity capital must be maintained in eligible invesnnents after the thirtieth month.The Class B shares of the Club qualify as equity shares for the purposes of the Act.

C. Eligible Investments

An investment is an eligible investment if it is made in an eligible small business, defined bythe Act as one having no more than 75 employees (based on the average number of employeesfor the 12 months preceding the investment by the venture capital corporation); if75% or moreof wages and salaries are paid with regard to operations in Saskatchewan; and if the business isprimarily engaged in prescribed manufacturing and processing, tourism, research anddevelopment activities, or any other prescribed business activity or, subject to the approval ofthe Minister, any business activity primarily carried on in a centre other than a city having apopulation in excess of 20,000 residents.

In addition, the investment must, among other things:

(a) be for the purchase of new "equity shares" defined by the Act as most types of votingshares;

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(b) not to be used by the small business for the purposes of re-Iending, investment in landthat is not directly used by the small business in carrying out its operation, for invesnnentin securities of another corporation, or for re-invesnnent outside Canada;

(c) not result in a venture capital corporation, its officers and its shareholders and any of theirassociates and affiliates owning more than 49% of the equity in a small business on afully diluted basis;

(d) not be made in a small business that is more than 25% owned by non-residents or morethan 10% owned by anyone non-resident; and

(e) be in a small business which is at arm's length with the venture capital corporation.

D. Registration Requirements

For the vee to be registered pursuant to the Act, it must, in addition to other requirements,satisfy the Minister that:

(a) it has complied with all the provisions of The Business Corporations Act ofSaskatchewan;

(b) it has never previously carried on business;(c) capital requirements for registration have been met;(d) the business that the vee may carry on is restricted by its Articles of Incorporation to

assisting the development of small business by providing capital for the acquisition andholding of securities and for providing business and managerial expertise to smallbusinesses;

(e) the vee has appointed a trustee acceptable to the Minister to administer the trust fundrequired to be maintained pursuant to the provisions of the Act;

(t) the Articles of Incorporation of the vec prohibit the payment of any fee or remunerationto any Shareholder, Director or Officer of the vee unless the payment has been fIrstapproved by a Resolution of the Shareholders of the vec; and

(g) the vec has complied with The Securities Act of Saskatchewan with respect to themeans by which it has obtained its capital.

It is anticipated that on or shonly after closing, the foregoing and any other conditions requiredto be met for registration will have been met by the vce and its registration will be effected.

E. Trust Account

The vee must set aside 30% of the amount received by it as equity capital to be held in trustjointly for the vee and the Crown in Right of Saskatchewan. Upon making an eligibleinvestment, the vee may apply to the Minister to have an amount equal to 3nths of theinvestment released from the trust account. As a result, the trust fund should be fully releasedwhen the VCC has invested 70% of its equity capital in eligible investments. Interest earned onthe invesunents in the trust account will be paid to the vee. If the registration of the vee isrevoked, the amount remaining in the trust account and any accrued interest is immediatelypayable to the Crown in Right of Saskatchewan.

F. Subsequent Ineligibility of Investments

Where a material change occurs and an investment of a venture capital corporation ceases to bean eligible invesnnent under the Act, it will be deemed to continue to be an eligible investmentfor a funher period of 2 years from the change unless:

(a) ineligibility arises solely due to the fact that the number of employees in the smallbusiness exceeds 150, in which case the investment is deemed to continue to be aneligible investment for a funher period of 5 years; or

(b) the ineligibility arises due to the investment by the venture capital corporation in acorporation where any of the shares of that corporation are held by a major shareholder of

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an affiliated corporation or an associate of a major shareholder of the venture capitalcorporation in which case the venture capital corporation must immediately dispose of theinvestment

G. Disposition of Investments

A venture capital corporation wishing to transfer or sell equity shares (or any option or right toacquire equity shares) of the small business or a corporation that has ceased to be a smallbusiness or eligible investment, must first grant to all other holders of the equity shares of thatsmall business or corporation the right to acquire all or part of the equity shares, option or rightupon the same terms and conditions.

H. Revocation of Registration and Return of Capital

If the VCC proposes to wind-up or dissolve or if its registration is revoked, the VCC will beobliged to pay to the Saskatchewan Minister of Finance an amount equal to 30% of its equitycapital in an amount not to exceed the aggregate of the grants or tax credits allowed in respectof all Common Shares of the VCC issued and outstanding at the time of its winding-up,dissolution or revocation of its registration. Upon the acquisition by the vee of any of itsCommon Shares, the liability of the vee to the Crown is equal to the lesser of 30% of theamount paid upon such acquisition or 30% of the original consideration received by the vec inrespect of the Common Shares so acquired. Provided, however, that if the Minister is satisfiedthat the vee has conducted its business in accordance with the spirit and intent of the Act, theMinister may, on application by the vee made at least 5 years from the date of purchase of theeommon Shares of the vec, order that the vec shall not be obligated to pay the Province ofSaskatchewan any monies otherwise required to be paid under the Act upon dissolution, wind­up, revocation of registration of the vec or upon the vec purchasing or otherwise acquiringany of its Common Shares. Copies of the Act and prescribed regulations are available from theDepcrtrnent of Economic Development and Tourism.

10.0 TAX CONSIDERATIONS OF THE CLUB AND ITSINVESTORS

Venture Capital Program

In the opinion of MacPherson, Leslie· & Tyennan, counsel to Moon Lake Venture CapitalCorporation (the "VeC"), the following commentary presents fairly the principal federal andSaskatchewan income taX considerations relevant to investors that are individuals or corporationsresident in Canada and that hold shares of the vee as capital propeny for the purposes of theIncome Tar. Act (Canada) (the ''Tax Act"). This commentary is based upon:

(a) the current provisions of the Tax Act;(b) the current regulations to the Tax Act;(c) the proposed amendments to the Tax Act described in the Notice of Ways and Means

Motion tabled by the Minister of Finance on December 16, 1987 (the "Notice");(d) the current provisions of The Venture eapital Tax eredit Act and regulations thereto; and(e) the current provisions of The Income Tax Act (Saskatchewan) and the March, 1988

Provincial Budget

This commentary is not exhaustive of all possible federal and Saskatchewan income taxconsiderations. The actual tax consequences will vary according to the circumstances of aparticular investor. Potential investors should seek independent advice from their professionaladvisors having expertise in the taxation area for a detailed analysis of the implications of such aninvestm:nt.

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Venture Capital Tax Credit

Under The Venture Capital Tax Credit Act, an individual or corporation who becomes thebeneficial and registered owner of shares by purchasing them directly from Moon Lake VentureCapital Corporation will be entitled to claim a Saskatchewan venture capital tax credit in the amountof 30% of the amount invested. This credit is available to offset the investor's Saskatchewanincome tax liability in the year the investment is made net of the Saskatchewan income tax liabilityarising on forward averaged income. In the event the credit available is greater than the investor'snet Saskatchewan income tax liability, the unused portion is available to be carried forward for upto seven years. It is not available to be carried back to offset any tax liability of a previous year. Inaddition, where a venture capital tax credit remains after the expiry of the last taxation year inwhich the tax credit may be deducted or where an individual taxpayer to whom the tax credit hasbeen allowed dies, the taxpayer or personal representative thereof is entitled to apply to the Ministerof Economic Development and Tourism for a grant equal to the amount of the unused balance ofthe tax credit. The amount of any venture capital tax credit which is received by an investor inrespect of the acquisition of shares will not reduce the adjusted cost base of his shares or otherwisebe required to be included in his income.

Where an investor disposes of shares or is deemed by the Tax Act to have disposed of shares(whether by gift or by virtue of an investor's death), the investor will generally realize a capitalgain (or a capital loss) to the extent that the proceeds of disposition of the shares, net of any costsof disposition, exceed (or are exceeded by) the adjusted cost base to the investor of the shares.Generally, the adjusted cost base of the shares is the actual cost of the shares to the investor lessadjustments specified in the Tax Act. However, on a disposition where an investor disposes ofshares for proceeds (net of costs of disposition) that are less than the adjusted cost base of theshares, the capital loss will be reduced by the amount of the venture capital tax credit claimed inrespect of those shares.

Taxable Portion of Capital Gains

The Notice proposes that, in the case of an individual taxpayer, the amount of capital gain includedin income will be increased to two-thirds for 1988 and 1989 and three-quarters for 1990 andsubsequent years. The same effective dates and proportions of capital gains that are taxable applyto Canadian-controlled private corporations. However, if a corporation's taxation year straddles aneffective date, the taxable proportions must be prorated.

Capital Gains Exemption

The Notice proposes that the maximum capital gains exemption be frozen at $100,000, except forgains on qualified farm property and on shares of small business corporations. The Notice alsoproposes that net taxable capital gains realized after 1987 will be eligible for the exemption to theextent that they exceed the amount of the individual's cumulative net investment losses claimedafter 1987. An individual's cumulative net investment loss is the amount by which the individual'stotal investment expense for the years after 1987 exceed the individual's investment income forthose years. An investor who is entitled to the capital gains exemption may still be liable forFederal minimum tax and Saskatchewan .flat tax on the capital gain.

Transfer to a Registered Retirement Savings Plan

The Tax Act and regulations allow Registered Retirement Savings Plans (RRSP's) to own sharesof prescribed venture capital corporations. In all cases, the owner of the RRSP must be at arm'slength with the venture capital corporation. As well, the owner of the RRSP cannot directly orindirectly own 10% or more of the issued shares of any class of capital stock of the venture capitalcorporation unless the total cost of his investment in the venture capital corporation and in anyrelated corporation is less than $25,000. Lastly, the RRSP is subject to a penalty if the fair marketvalue, at the time of acquisition, of the venture capital corporation shares (or other small business

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securities) that it owns exceeds 50% of the fair market values, at the time of acquisition, of allproperties held by the RRSP.

An investor who is an individual may personally purchase shares of Moon Lake Venture CapitalCorporation in order to earn the venture capital tax credit. Subject to the above limitations andsubject to the annual contribution limits, he may then transfer the shares to an RRSP and be treatedas having made an RRSP contribution equal to the fair market value of the shares which normallyis reduced by the amount of the venture capital tax credit claimed in respect of those shares.

Alternatively, he may sell shares to an existing RRSP in exchange for cash or other considerationequal to the fair market value of the shares. As a result, a transfer to an RRSP could give rise to acapital gain or capital loss. However, the Tax Act disallows any capital loss on a transfer ofproperty to an RRSP owned by the transferee or his spouse. An investor realizing a capital gainmay be able to claim a capital gains exemption as described above.

Tax Implications of Distributions to Shareholders

The Notice proposes that for 1988 and subsequent taxation years, the taxable amount of dividendsand the dividend tax credit be changed to 125% and 16.63%, respectively, of dividends receivedby an individual. The Notice also proposes that personal federal tax rates be reduced. As a result,the maximum combined effective tax rate on dividends received by an individual resident inSaskatchewan will be reduced to approximately 33.9% in 1988, while the maximum effective taxrate on other sources of income is expected to decrease to approximately 48.4% in 1988.

The tax treatment of dividends received by a corporate investor will depend on whether thecorporate investor is a public or private corporation. Public corporations generally receive suchdividends free of tax, whereas a private corporation will generally incur a liability of 33.33% ofsuch dividends as tax under Part IV of the Act. Any such tax liability is refundable to thecorporate investor when it pays taxable dividends to its shareholders at the rate of 33.33% of thetaxable dividends paid. The Notice proposes that effective January 1, 1988, the rate of Part IV taxbe reduced to 25% and the rate of refund of such tax be likewise reduced to 25% of taxabledividends paid.

An investor may receive a return of paid up capital from the VCC subject to recapture provisions ofthe Venture Capital Tax Credit Act. The tax treatment of such a distribution is not dependent onwhether the investor is an individual or corporation. A return of capital is not taxable directly to theinvestor. However, it does reduce the adjusted cost base of the investor's shares. If suchreduction causes the adjusted cost base of the investor's shares to become negative, the investorwill be deemed to have realized a capital gain in the year equal to the amount of the negativeadjusted cost base.

Investment Income Deduction

The Notice proposes that the $1,000 investment income deduction be eliminated, effective for the1988 and subsequent taxation years.

Interest Expense

An investor who incurs interest expense on money borrowed to acquire the shares will generally beable to deduct the interest in calculating his taxable income for the year in which the interest is paidor payable, depending on the method regularly followed by the investor unless the shares aretransferred to an RRSP. However, in order for the interest to be deductible, the investor mustcontinue to own the shares throughout the period during which the interest was incurred.

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11.0 SUMMARY OF MATERIAL CONTRACTS

The following is a brief summary of all material provisions of material contracts affecting thisoffering. This summary does not purport to be complete and reference should be made to thespecific agreements. Copies of these contracts may be inspected by prospective subscribers duringnormal business hours at the offices of Moon Lake Venture Capital Corporation, 1030 Avenue LSouth, Saskatoon, Saskatchewan.

Stock Purchase Agreement

The Stock Purchase Agreement between Moon Lake Golf and Country Club Ltd. and Moon LakeVenture Capital Corporation provides for the purchase by the VCC of between 600,000 and1,635,000 Class B shares of the Club for an aggregate total consideration of between $600,000and $1,635,000. Upon closing of this offering, the VCC is required to forthwith seek and applyfor registration as a venture capital corporation under the Act. The VCC's obligation to invest inthe Club arises when the minimum offering of $600,000 is achieved. In this event, the VCC shallbe obliged to invest $600,000 in Class B shares of the Club. Upon achieving the maximumoffering amount of $1,635,000, the VCC shall be obliged to invest $1,635,000 in Class B sharesof the Club. In the event of a closing between the minimum offering amount and the maximumamount, the VCC shall be obliged to invest 100% of the funds raised under this offering in Class Bshares of the Club at a price of $1.00 per share.

Moon Lake Golf and Country Club Ltd.has warranted in the Stock Purchase Agreement that it isan eligible investment in accordance with the provisions of The Venture Capital Tax Credit Act andv.i.ll continue to be an eligible investment for three years following the purchase of Class B sharesby Moon Lake Venture Capital Corporation.

. The Club has agreed to provide for three representatives of the VCC to sit on the Club board ofdirectors if the VCC has 35% or more of the voting shares, and two if it has less than 35%. In theStock Purchase Agreement the Club has warranted to use the proceeds of the invesnnent by theVCC only for pennitted uses under the Venture Capital Tax Credit Act and to provide funds orservices to the VCC to a value of $2,500 per year for five years to assist the VCC in coveringadministrative costs including financial, accounting, audit, legal fees, disbursements for filings androutine office administration expenses, etc.

SUMMARY OF PROPERTY VALUATION

JEROME J.1. WHITE SUB- J.W.HAMM TOTALWHITE & ASSOCIATES TOTAL

LandBuildings

Appraised valueIrrigation, turf and misc.

equipmentN ursery stock

Total property valueLess: Mortgages assumed

NET PROPERTYVALUE

$ 254,()()()106.000360,000

59,70'038,500

458,200

$ 458,200

150,000

150,000

150,000(60,600)

89,400

404,000106,000510,000

59,70038,500

608,200(60,600)

547,600

150,000

150,000

150,000(120,000)

30,000

554,000106,000660,000

59,70038,500

758,200(180,600)

577,600

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Land Purchase Agreement - The Club from Jerome J. White

Jerome J. White has entered into an agreement dated as of January 1, 1988 with Moon Lake Golfand Country Club Ltd. to sell the SWI/4 22-35-6 W3, being approximately 127 acres of landtogether with improvements, nursery stock and equipment, to the Club in return for 1,033,000Class A common shares and 1,800 Class C Series I preferred shares of the Club (of which 12,500Class A common shares and 200 Class C Series I preferred shares will be held in the name of JudyWhite). Jerome J. White will continue to hold and be responsible for outstanding mongages onthe property amounting to $140,000. Although Jerome J. White has covenanted to make allrequired payments under the mortgages, the mongages will remain registered against the land andthe land will be subject to enforcement proceedings by the mortgagees in the event Jerome 1. Whitebreaches his obligations under the mongages. The value of this quarter-section, the land owned byJ.J. White & Associates Ltd. mentioned in the following section, and the current improvements tothe land was established by Chyz Appraisals Limited of Saskatoon on November 24, 1987 at$510,000.

Land Purchase Agreement - The Club from J.J. White & Associates Ltd.

J.J. White and Associates Ltd. has entered into an agreement dated as of January 1, 1988 withMoon Lake Golf and Country Club Ltd. to sell, subsequent to its acquisition of clear title under anAgreement For Sale, the SEI/4 22-35-6 W3, being approximately 161 acres of land, to the Club inreturn for 223,500 Class A common shares of the Club and assumption by the Club of outstandingdebts on the property amounting to $60,600. This land was acquired in 1987 from KenwoodEnterprises Ltd. in exchange for $20,000 and the SEI/4 15-35-6 W3, which had been purchasedfrom Donald and Mynle Rayburn by J.1. White & Associates Ltd. in 1987 for $110,600. TheRayburns' interest in land was transferred to the subject property as a matter of convienence. Ofthe 223,500 shares issued for the land, 25,000 shares will be registered in each of the names ofLoren M. Paley, Bruce K. Berglof and John D. Perkin who are shareholders in J.J. White &Associates Ltd. This property was also covered in the November 24, 1987 Chyz AppraisalsLimited repon and has been apportioned $150,000 in value. The agreement calls for the propertytransfer to take place upon closing of this offering and the purchase of shares in the Club by MoonLake Venture Capital Corporation.

Land Purchase Agreement - The Club from DarWall Enterprizes Ltd.

J. Wallace Hamm controls a company, DarWall Enterprizes Ltd., which has entered into anagreement dated as of January 1, 1988 with Moon Lake Golf and Country Club to sell the NWI/425-35-6 W3, being approximately 150 acres of land, to the Club in return for 75,000 Class Acommon shares of the Club and assumption by the Club of outstanding debts on the propertyamounting to $120,000. The value of this propeny was established by the Parties at $150,000,and which value has been confirmed by a qualified appraiser. The agreement calls for the propenytransfer to take place upon closing of this offering and purchase of shares in the Club by MoonLake Venture Capital Corporation. This property will be used to acquire land for the expansion ofthe course to 36 holes either through a land trade or'through a sale to provide financing for thepurchase of adjacent property.

Development Agreement

The terms of the Development Agreement dated as of January 1, 1988 provide for the Club toengage J.J. White & Associates Ltd., Consulting Engineers (the "Developer"), and its President,Jerome J. White, to provide development and construction management services for Moon LakeGolf and Country Club. The duties of the Developer under the Agreement are to obtain all pennits,authorizations and approvals to enable the Club to complete the golf course; to act as project co-

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ordinator for the golf course construction including marshalling such construction forces,equipment, materials and facilities necessary to complete the golf course; to supervise and direct allwork on the golf course with the golf course architect; to arrange for the design and to superviseand direct all work on the related facilities; and to provide all such services necessary to pennit theClub to complete the golf course.

Under the Development Agreement, the Developer may tender or award without tender any partsof the construction to independent contractors. All costs incurred under the DevelopmentAgreement including all construction costs are on the account of the Club. The Developer hasagreed to use its best efforts in having the golf course completed in a timely manner and withinbudget and will utilize standard commercial practice with respect to supervision and bonding toensure performance by subcontractors. The Developer has agreed to cause construction tocommence as soon as practical after the fIrst closing. For its services under the DevelopmentAgreement, the Developer will be paid the sum of $300 per day or portion thereof to a maximum of$80,000. The Developer will receive monthly installments on account of its services whichpayments commenced January 1, 1988.

Management Agreement

Under the terms of the Management Agreement dated as of January 1, 1988 between the Club andJ.J. White and Associates Ltd. (the "Manager"), the Manager agrees to provide executivemanagement services for Moon Lake Golf and Country Club Ltd. for a two year tenn at an annualfee of 3% of the gross revenues of the Club, or about $39,000 in the fIrst full year of operation,which Agreement is renewable annually thereafter upon unanimous consent of the Board ofDirectors of the Club. The two year term will commence two months prior to the opening of thegolf course or any part thereof. The Manager is responsible for providing pre-openingmanagement services and for supervision of day-to day operations, greens keeping, repairs andmaintenance, staffIng, advertising and promotion and implementing the policies and directions ofthe Board of Directors of the Moon Lake Golf and Country Club Ltd. The Manager will hiremanagement and other personnel at the expense of the Club and the Club is responsible for allcosts of operation.

Golf Course Design Agreement

The Club will enter into an agreement with GDS Golf Design Services Ltd. of Canmore, Albertawhich will, among other things, provide for design, construction and management of the physicalconstruction of the golf course for a fee based on actual time and effort expended but not expectedto exceed $50,000.

Water Agreement

The Club will enter into agreements with the Moon Lake Water Users Association, of which Mr.Jerome J. White is a member. The Club will be de-watering from a high water table and does notexpect to substantially increase water usage beyond the current agricultural level. TheAssociation's members encourage the Club's developments, since it will allow them to spread thefixed costs of pumping over a larger utilization base.

Municipal Service Agreement

The Club will enter into a Service Agreement with The Rural Municipality of Connan Park as acondition of the rezoning of the subject property from agricultural to recreational use. The ServiceAgreement requires the Club to upgrade the construction of the Club access road to Primary Grid

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Standards from the subject property to the "Valley Road" by December 31, 1989 and to completeasphaltic surfacing of the Club access road by December 31, 1994. The Service Agreement alsorequires the Club to make a contribution of $76,000 to the R.M. of Corman Park before January 1,1989 toward the reconstruction and paving of the 2 miles of road from the Pike Lake Highway(#60) to the Club access road. The R.M. is required to reconstruct the road prior to December 31,1989 and shall pave the road prior to December 31, 1990.

12.0 LEGAL, AUDITORS, TRANSFER AGENT AND REGISTRAR

Legal counsel for the Club and the vee is the law finn of MacPherson, Leslie & Tyerman, 200­224 Fourth Avenue South, Saskatoon, Saskatchewan S7K 5M5. It is expected that the Directorsof the vec elected at the first meeting of shareholders after closing will, among other things, selectindependent legal advisors. The Auditors of the Club and the VCC are Peat Marwick, CharteredAccountants, 600 - 128 Fourth Avenue South, Saskatoon, Saskatchewan S7K IM8. The Cluband the vee will each act as their own Transfer Agent and Registrar. The address for bothcorporations is, 1030 Avenue L South, Saskatoon, Saskatchewan S7M 2J5.

13.0 PURCHASER'S CONTRACTUAL RIGHTS

The following contractual rights will apply to investors:

(a) a purchaser in Saskatchewan will not be bound by a contract for the purchase of suchsecurity if written or telegraphic notice of his intention not to be bound is received by thevendor or his agent not later than midnight on the fifth business day after the offeringmemorandum or amended offering memorandum offering such security is received or isdeemed to be received by him or his agent;

(b) a purchaser in Saskatchewan has the right to rescind a contract for the purchase of suchsecurity, while still the owner thereof, if the offering memorandum or any amended offeringmemorandum offering such security as of the date of receipt or deemed receipt, contains anuntrue statement of a material fact or omits to state a material fact necessary in order to makeany statement therein not misleading in the light of the circumstances in which it was made,but no action to enforce this right of rescission can be commenced by a purchaser after theexpiration of 90 days from the date of such contract or the date on which such offeringmemorandum or amended offering memorandum is received or is deemed to be received byhim or his agent, whichever is later.

14.0 CLOSING OF THE OFFERING

A Subscriber will become a shareholder of the vee upon: (a) execution of a Subscription Form inthe form detailed in Schedule A; (b) delivery of the Subscription Form and payment of thesubscription price to the Trustee; (c) acceptance of the subscription by the VCC; and (d) a closingof this offering.

The Trustee will not release the cash proceeds raised by the VCC pursuant to this offering and thisoffering will not close unless the following conditions precedent are satisfied: (a) the vce hasraised a minimum of $600,000 and, concurrently with the closing or shortly thereafter, will beregistered as a venture capital corporation under the Act; (b) the Club has confmned to the Trusteethe arrangement of a $250,000 line of credit; and (c) all legal matters relative to closing have beenreviewed to the satisfaction of legal counsel to the Club and the VCe.

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-62-The Minimum Offering of the vce and all conditions precedent to the completion of the offeringmust be achieved within 120 days of the date of the issuance of the receipt for the Final OfferingMemorandum, or such other date as may be authorized by the Saskatchewan SecuritiesCommission. Should a closing by the VCC not be achieved and the conditions precedent to thecompletion of the offering satisfied by that date, the Trustee will refund all monies to investorswithout interest or deduction.

15.0 AUDITED FINANCIAL STATEMENTS

Auditors' Report

To: The Board of Directors of Moon Lake Golf and Country Club Ltd.

We have examined the balance sheet of Moon Lake Golf and Country Club Ltd. as atDecember 31, 1987 and the statement of changes in financial position for the period fromNovember 24, 1987, the date of incorporation, to December 31, 1987. Our examination wasmade in accordance with generally accepted auditing standards, and accordingly includedsuch tests and other procedures as we considered necessary in the circumstances.

In our opinion, these fmancial statements present fairly the financial position of the companyas at December 31, 1987 and the changes in its fmancial position for the period then ended inaccordance with generally accepted accounting principles.

PEAT MARWICK (signed)

Chartered Accountants

Saskatoon, Canada

March 30, 1988, except for note 3(a) which isApril 22, 1988, and note 3(b) which is June 8, 1988

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MOON LAKE GOLF AND COUNTRY CLUB LTD.

Balance Sheet

December 31, 1987

ASSETS

CashZoning and development costs

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:Accounts payableAdvances from J. J. WhiteDue to J. 1. White & Associates Ltd.

Shareholders' equity:Capital stock (notes 2 and 3)Retained earnings

See accompanying notes to financial statements.

On behalf of the Board:

(si~ned)

Jerome J. White, President

$ 25,00162.392

$ 87,393

$ 32,39225,00030,00087,392

I

$ 87,393

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MOON LAKE GOLF AND COUNTRY CLUB LTD.

Statement of Changes in Financial Position

Period from November 24, 1987 to December 31, 1987

Financing activities:Accounts payableAdvances from J. 1. WhiteDue to J. 1. White & Associates Ltd.Issuance of share capital

Cash provided from financing activities

Investing activity:Zoning and development costs

Cash applied to investing activities

Increase in cash

Cash at beginning of period

Cash at end of period

See accompanying notes to financial statements.

$ 32,39225,00030,000

187.393

(62.392)(62.392)

25,001

$ 25,001

·30·

-65-

MOON LAKE GOLF AND COUNTRY CLUB LTD.

Notes to Financial Statements

December 31, 1987

1 . Incorporation of the Company:

Moon Lake Golf and Country Club Ltd. (the "Club") was incorporated on November 24,1987 under the provisions of The Business Corporations Act of Saskatchewan.

2. Capital Stock:

Class A voting common shares.Unlimited authorization, one issued

Class B voting common shares.Unlimited authorization, none issued

Class C non-voting shares, redeemable at the optionof the company or the holder for $25 per share.Unlimited authorization, none issued

$==

$==

$==

3. Subsequent Events:

(a) Agreements

On April 22, 1988 Moon Lake Venture Capital Corporation (the "VCC") issued a preliminaryoffering memorandum for the sale of common shares of the vce, on a best efforts basis, at$1.00 per share in units of 3,000 shares. The minimum offering consists of 200 unitsrepresenting 600,000 common shares and the maximum offering consists of 545 unitsrepresenting 1,635,000 common shares. As outlined in the preliminary offeringmemorandum the Club will enter into the following agreements:

Land Purchase Agreement - The Club from Jerome J. White

Jerome 1. White has entered into an agreement with Moon Lake Golf and Country Club Ltd.to sell the SWl/4 22-35-6 W3, being approximately 127 acres of land together withimprovements, nursery stock and equipment, to the Club in return for 1,033,000 Class Acommon shares and 1,800 Class C Series I preferred shares of the Club. Jerome J. Whitewill continue to hold and be responsible for outstanding mongages on the propertyamounting to $140,000.

-31-

-66-

Land Purchase Agreement - The Club from J. J. White & Associates Ltd.

J.J. White & Associates Ltd. has entered into an agreement with The Moon Lake Golf andCountry Club Ltd. to sell, after acquiring title under an Agreement for Sale, the SE 1/422-35­6 W3, being approximately 161 acres of land, to the Club in return for 223,500 Class Acommon shares of the Club and assumption by the Club of outstanding debts on the propertyamounting to $60,600.

Land Purchase Agreement - The Club from DarWall Enterprizes Ltd.

J.. Wallace Hamm controls a company, DarWall Enterprizes Ltd., which has entered into anagreement with Moon Lake Golf and Country Club Ltd.to sell the NWI/4 25-35-6 W3,being approximately 150 acres of land, to the Club in return for 75,000 Class A commonshares of the Club and assumption by the Club of outstanding debts on the propertyamounting to $120,000.

Development Agreement

The terms of the Development Agreement provide for the Club to engage J.1. White &Associates Ltd., Consulting Engineers, and its President, Jerome J. White, to providedevelopment and construction management services for Moon Lake Golf and Country ClubLtd. The Developer has agreed to use its best efforts in having the golf course completed in atimely manner and within budget. The Developer has agreed to cause construction tocommence as soon as practical after the first closing. For its services under the DevelopmentAgreement, the Developer will be paid the sum of $300 per day or portion thereof to amaximum of $80,000. Payments commenced January 1, 1988.

Management Agreement

Under the terms of the Management Agreement between the Club and J.1. White &Associates Ltd. (the "Manager"), the Manager agrees to provide executive managementservices for Moon Lake Golf and Country Club Ltd. for a two year term at an annual fee of3% of the gross revenues of the Club. This Agreement is renewable annually thereafter uponunanimous consent of the Board of Directors of the Club. The two year term will commencetwo months prior to the opening of the golf course or any part thereof. The Manager isresponsible for providing pre-opening management services and for supervision of day-today operations, greens keeping, repairs and maintenance, staffing, advertising and promotionand implementing the policies and directions of the Board of Directors of Moon Lake Golfand Country Club Ltd. The Manager will hire management and other personnel at theexpense of the Club and the Club is responsible for all costs of operation.

GolfCourse Design Agreement

The Club will enter into an agreement with GDS Golf Design Services Ltd. of Canmore,Alberta which will, among other things, provide for design, construction and management ofthe physical construction of the golf course for a fee based on actual time and effort expendedbut not expected to exceed $50,000.

-32-

-67-Municipa/ Service Agreement

The Dub will enter into a Service Agreement with The Rural Municipality of Corman Park asa condition of the rezoning of the subject property from agricultural to recreational use. TheService Agreement requires the Club to upgrade the construction of the Club access road toPrimary Grid Standards from the subject propeny to the "Valley Road" by December 31,1989 and to complete asphaltic surfacing of the Club access road by December 31, 1994.The Service Agreement also requires the Club to make a contribution of $76,000 to the R.M.of Corman Park before January 1, 1989 toward the reconstruction and paving of the 2 milesof road from the Pike Lake Highway (#60) to the Club access road. The R.M. is required toreconstruct the road prior to December 31, 1989 and shall pave the road prior to December31, 1990.

Issuance ofShares

Upon successful maximum closing of this offering, the Club will issue 1,033,000 Class Acommon shares and 1,800 Class C Series I preferred shares to the Promoter and his wife;223,500 Class A common shares to J.J.White & Associates Ltd. and its shareholders;75,000 Class A common shares to J.Wallace Hamm; 375,000 Class A Common shares and5,200 Class C Series I preferred shares to Founders; and 1,635,000 Class B shares to MoonLake Vennrre Capital Corporation.

(b) Amendment to Capital Structure

On June 8, 1988, the shareholders of the Club authorized changes to its capital structure. Therevised share structure resulting from the amendments is as follows:

• Class A voting common shares.Unlimited authorization.

• Class B voting common shares, redeemable at the option of the holder after December 31,1994 at one and one-halftimes the issue price. Unlimited authorization.

• Class C preferred shares, which may be issued in series.

The Club authorized the issuance of an unlimited number of Class C Series I non-votingpreferred shares entitled to a cumulative dividend of 15% of their issue price of $25 andredeemable at the option of the the Club after November 1, 1993, at the greater of:

(i) their issue price, or(li) the 1992 net income of the Club divided by the number of issued and outstanding

Class C Series I preferred shares,together with accrued and unpaid dividends. As an alternative to the preferred dividend of15% of issue price, the holder can elect to receive one golf membership at a golf courseowned by the Club for each 200 Class C Series I shares held. The membership privilegeexpires at the end of the Club's 1999 fiscal year.

-33-

-68­

Auditors' Report

To: The Board of Directors of Moon Lake Venture Capital Corporation

We have examined the balance sheet of Moon Lake Venture Capital Corporation as at March15, 1988. Our examination was made in accordance with generally accepted auditingstandards, and accordingly included such tests and other procedures as we considerednecessary in the circumstances.

In our opinion, this fmancial statement presents fairly the fmancial position of the companyas at March 15, 1988 in accordance with generally accepted accounting principles.

PEAT MARWICK (signed)

Chartered Accountants

Saskatoon, Canada

March 3D, 1988 except for note 2which is April 22, 1988

MOON LAKE VENTURE CAPITAL CORPORATION

Balance Sheet

March 15, 1988

ASSET

Cash

SHAREHOLDERS' EQUITY

Common voting shares. Unlimited authorization; issued one

See accompanying notes to financial statements.

On behalf of the Board:

J. Michael Barry, Director

$ I=

$ =

-34-

-69-

MOON LAKE VENTURE CAPITAL CORPORATION

Notes to Balance Sheet

March 15, 1988

1 . Incorporation of the Company:

Moon Lake Venture Capital Corporation (the "VCC") was incorporated on March 4, 1988under the provisions of The Business Corporations Act of Saskatchewan. All costs ofincorporation and administration have been paid by Moon Lake Golf and Country Club Ltd.

2 . Subsequent Event:

On April 22, 1988, Moon Lake Venture Capital Corporation issued a preliminary offeringmemorandum for the sale of common shares of the VCC, on a best effons basis, at $1.00 pershare in units of 3,000 shares. The minimum offering consists of 200 units representing600,000 common shares and the maximum offering consists of 545 units representing1,635,000 common shares. As outlined in the preliminary offering memorandum, the VCCwill enter into a stock purchase agreement to purchase between 600,000 and 1,635,000 ClassB shares of Moon Lake Golf and Country Club Ltd for a price of $1.00 per share. All costsof this issue are being paid by Moon Lake Golf and Country Club Ltd.

-35-

-70-

16.0 CERTIFICATES OF THE CLUB, THE VCC AND THE PROMOTER

Dated June 17, 1988

The foregoing constitutes full, true, and plain disclosure of all material facts relating to thesecurities offered by this offering memorandum.

The Club:

MOON LAKE GOLF & COUNTRY CLUB LTD.

By: (signed) Jerome J. WhitePresident

By: (signed) 1. Michael BarryTreasurer

On behalf of the Board of Directors of the Club:

By: (signed) Norinne KeysDirector

By: (signed) Loren M. PaleyDirector

TheVCC:

MOON LAKE VENTURE CAPITAL CORPORATION

By: (signed) 1. Michael BanyFounding Director

On behalf of the Board of Directors of the VCC

By: (signed) 1. Michael Barry .Founding Director

The Promoter:

JEROME J. WHITE

(signed) Jerome J. White

-71-

SCHEDULE "A"

MOON LAKE VENTURE CAPITAL CORPORATION

COMMON SHARE SUBSCRIPTION FORM

TO: MOON LAKE VENWRE CAPITAL CORPORATION (The "VCC")

The undersigned hereby acknowledges receipt of an Offering Memorandum dated June 17, 1988(the "Offering Memorandum") relating to the offering by Moon Lake Venture Capital Corporationof its Common Shares.

Minimum Subscription: One Unit consisting of3000 Common Sharesat $1.00 per share totalling $3,000.

Price per Unit: $3,000 paid in cash or by cheque.

The undersigned hereby subscribes for Units for a total of~-.,._~~_Common Shares of Moon Lake Venture Capital Corporation, as described in the OfferingMemorandum (minimum of one Unit). The total subscription price for the aforesaid Units is$ . Enclosed is the following:

1. $ in cash or cheque payable to MacPherson, Leslie & Tyerman In Trust to beheld in trust by MacPherson, Leslie & Tyerman until the date of closing.

2. The undersigned acknowledges that acquisition of the Common Shares is subject to theacceptance of this subscription by the VCC and certain other conditions set forth in the OfferingMemorandum and herein. The undersigned represents and warrants that:

(i) he is a resident in Canada within the meaning of "The Income Tax Act (Canada)",

(ii) he is not a non-eligible person within the meaning of "The Investment Canada Act",

(iii) if an individual, the undersigned has attained the age of majority and has the legal capacityand competence to execute the Subscription Form and to take all actions required pursuanthereto, and

(iv) if a corporation, partnership, unincorporated association or other entity, it is legallycompetent to execute and be bound by this Subscription Form and it further certifies that allapprovals of directors, shareholders, partners, members or otherwise that may be requiredto be given to execute this agreement have been given.

The undersigned also acknowledges and agrees that the acceptance of this subscriptionis conditional upon certain conditions precedent, as described in the Offering Memorandum,having been satisfied.

If this subscription has not been accepted on or prior to the date of closing, as set outin the Offering Memorandum, this Subscription Form and all monies shall be returned to theundersigned without interest or deduction at his address indicated below.

The undersigned acknowledges and agrees that effective upon acceptance of thissubscription, the undersigned, as a shareholder of the VCC, ratifies and approves thoseagreements entered into by the VCC as set forth in the Offering Memorandum, including any such

-72-THE SASKATCHE\VAN GAZETTE, SEPTEMBER 15, 196i

other fees or payments of a similar nature. It is not necessary to include payments forservice, incidental to the trade such as clerical, printing, legal or accounting services.

In answer to Item number 8 it is not necessary to file documentation, if any, evidencingilwestment intention. unless so required by the Commission. Merely state whether suchdocumentation has been received.

I i space provided in any item is insuf ficient. additional sheets may be used and must becross-reierred to the relevant item and properly identified and signed by the undersigned.

Fonu 9

THE SECURITIES ACT, 1967

IKFORMATION REQUIRED IN PROSPECTUS OF INDUSTRIAL COMPANY

I tern 1. Distributi n a:The tnlormatlon ca or by the following Table shall be given, in substantially the .

tabular form indicated, on the outside front cover of the prospectus as to all securities beinguiiered for cash (estimate amounts, if necessary).

TABLE

Total _

Column 1

Price topublic

ColumnZ

Underwritingdiscounts orcommissions

Column 3

Proceeds toissuer orselling .

security­holder

Instructions:1. Only commissions paid or payable in cash by the issuer or selling security holder or discounts

granted are to be included in the Table. Commissions or other consideration paid or payablein cash or otherwise by other persons or companies and consideration other than discountsgranted and other than cash paid or payable b~' the issuer or selling security holder shallbe set out following the Table with a reference thereto in the second column of the Table.An)' Hnder's fees or similar payments shall be appropriately disclosed.

2. 1f it is impractible to state the price to the public, ~he method by which it is to be determinedshall be explained. In addition, if the securities are to be offered at the market, indicate themarket involved and the market price as of the latest practicable date.

3. If any of the securities offered are to be offered for the account of existing securit)'­holders (secondary distribution), refer on the first page of the prospectus to the informationcalled for b~' Instruction J to Item 19.

4. \Vith the consent of the Commission the information called for by the Table may be givenin narrative form.

Item Z. Plan of Distribution:

(a) If the securities being offered are to be sold through underwriters, give the names ofthe unden\·riters. State briefly the nature of the underwriters' obligation to take up andpay for the securities.

(b) Outline briefly the plan of distribution of any securities being offered that are to beoffered otherwise than through underwriters.

Instruction:All that is r~luired as to the nature of the underwriters' obligation is whether the under­

writers are or will be committed to take up and pay for all of the securities if any are takenup, or whether the underwriting is merely an agenc)' or ''best efforts" arrangement under which

A.?O

-73-THE SASKATCHE'vVAN GAZETTE, SEPTEMBER 15, 1967

the underwriters are required.to take up and pay for only such securities as they may sellto the public. Conditions precedent to the underwriters' taking up the securities, including"market outs", need not be described except to the e:'Ctent that such conditions precedent arenot satisfied prior to the commencement of the sale of the securities to the public.Item 3. Cse of Proceeds to Issuer:---c;) State the estimated net proceeds to be derived by the issuer from the sale of thesecurities to be of fered. the principal purposes for which the net proceeds are intended to be usedand the approximate amount intended to be used for each such purpose.

(b) State the particulars of any provisions or arrangements made for holding any part ofthe net proceeds of the issue in trust or subject to the fulfilment of any conditions.Instructions: .

1. Details of proposed e:'Cpenditures are not to be given except as otherwise required here­under. I f any substantial part of the proceeds has not been allocated for particular purposes, astatement to that ef feet shaH be made together with a statement of the amount of the proceedsnot so allocated.

2. Include a statement regarding the proposed use of the actual proceeds if they shoul':prove insufficient to accomplish the purposes set out, and the order of priority in which theywill be applied However, such statement need not be made if the underwriting arrangementsare such that. jf any securities are sold to the public, it can be reasonably expected that theactual proceeds of the issue will not be substantially less than the estimated aggregate proceedsto the issuer as shown under Item 1.

3. .If any material amounts of other funds are to be used in conjunction with the proceeds,state the amounts and sources of such other funds. I f any material part of the proceeds is to beused to reduce or retire indebtt'dness. this item is to be answered as to the use of the proceedsof the indebtedness if the indebtedness was incurred within the two preceding years; otherwise,it will suffice to state that the proceeds are to be used to reduce or retire the indebtedness.

4. I f any material amount of the proceeds is to be used directly or indirectly to aCQuireassets, otherwise than in the ordinary course of business, briefly describe the assets, and. whereknown, the particulars of the purchase price being paid for or being aHocated to the respectivecategories of assets (including intangible asset!'!) that are being acquired and, where practicableand meaningful, give the name of the person or company from whom the assets are to beacquired. State the cost of such assets to the issuer and the principle followed in determining!'!uch cost. State briefly the nature of the title to or interest in such assets to be acquired by theissuer. I f any part of the consideration for the acquisition of any such assets consists ofsecurities of the issuer, give brief particulars of the designation, number or amount. votingrights (if any) and other appropriate information relating to such class of securities. includingparticulars of any allotment or issuance of any such securities within the two preceding years.Item 4. Sales Otherwise than for Cash;

If any of the securities being offered are to be offered otherwise than for cash. statebriefly the general purposes of the issue, the basis upon which the securities are to be offer~the amount of compensation paid or payable to any person or company and any other expensesof distribution, and hy whom the)' are to be borne. .Instruction:

tf the offer is to be made pursuant to a plan of acquISItion. describe briefly the generaleifect of the plan and state when it became or is to become operative. As to any materialamount of assets to be acquired under the plan, furnish information corresponding to thatrequired b~' Instruction 4 to Item 3.

Item 5. Share and Loan Capital Structure:

Furnish in substantially the tahular form indicated, or where appropriate in notes thereto:

( I) particulars of the share and loan capital of the issuer;

(2) particulars of the loan capital of each subsidiary of the issuer (other than loan capitalowned b,' the issuer or its wholly-owned subsidiaries) whose financial statements are containedin the prospectus on either a consolidated or indh'idual basis;

(3) the aggre~ate amount of the minority interest in the preference shares, if any, and theaggregate amount of the minority interest in the common shares and surplus of all subsidiarieswhose financial statements are contained in the prospectus on a consolidated basis: and

(4) the aggregate amount of the minority interest in the preference shares, if any. and theaggregate amount of the minority interest in the common shares and surplus of all subsidiarieswhose financial statements are contained in the prospectus on an individual basis and notincluded in the consolidated financial statements.

430

-74-THE SASKATCHEWAN GAZETTE, SEPTEMBER 15, 196i

TABLE

ColumnSColumn 4Column 3Column 2Column 1 II

Designation Amount authorized Amount outstanding Amount outstandingI Amount to beof security or to be authorized as of the date of the as of a specific date outstanding if all

most recent balance within 30 days securities beingsheet contained in I issued are sold

the prospectus II

I-

.Instructions:

1. Do not include indebtedness classified as current liabilities unless secured.

Z. Set out in a note to the Table a cross reference to any note in the financial statementscontaining information concerning the extent of oi)ligations arising by virtue of leases on realpropert}·.

3. Individual items of indebtedness which are not in excess of J% of total assets as shownin the balance sheet referred to in Column 3 may be set out in a single aggregate amount underan appropriate caption such as "Sundry Indebtedness".

4. \Vhere practicable, state in general terms the respective priorities of the indebtednessshown in the Table.

S. Give particulars of the amount, general description of and security for any substantialindebtedness proposed to be created or assumed by the issuer or its subsidiaries, other thanindebtedness offered by the prospectus.

6. No information need be given under Column 2 ''''ith respect to the common and preferenceshares of subsidiaries.

7. For the purposes of Column 3, in computing the amount of the minority interest in thesubsidiaries whose financial statements are contained in the prospectus on an individual basisand not included in the consolidated financial statements, such computation may be based on thefinancial statements of each such subsidiary contained in the prospectus.

8. In computing the minority interest in the subsidiaries for the purposes of Column 4, theamount set out in Column 3 may be used provided that appropriate adjustment is made to suchamount to reflect any change in the percentage of ownership in the capital and surplus of anysubsidiary by the minority interest.

9. The thirty-day period referred to in Column 4 is to be calculated within thirty days ofthe date of the preliminary prospectus or the date of the prospectus filed under Section 63 of theAct, as the case may be.

10. The information to be set out in Column 5 may be based upon the information containedin Column 4, adjusted to take into account any amounts set out in Column 4 to be retired outof the proceeds of the issue,Item 6. };ame and Incorporation of Issuer:

State the tun corporate name of ,the issuer and the address of its head office and principaloffice. State the laws under which the issuer was incorporated and whether incorporated by letterspatent or otherwise and the date thereof. 1£ material state whether supplementary letters patent orsimilar authority for amendment or variation of the letters patent or other constating documenthave been issued.

Instructions :1. Particulars of any such documents need be set out only if material to the securities offered

by the prospectus. See Item II.

Z. If the issuer is not a company, give material details of its form of organization andstructure.

~. Description of Business:Briefly desCrIbe Ule busmess carried on and intended to be carried on by the issuer and its

subsidiaries and the general development of such business within the five preceding years. If the

431

THE SASKATCHEWAN GAZETTE, SEPTEMBER 15, 196i

-75-business consists of the production or distribution of different kirrls of products or the renderin~of different kinds of services, imJicate, in so far as practiCCllble, the principal products or services.

Instructions :

1. The description shall not relate to the powers and objects specified in the incorporatinginstruments, but to the actual business carried on and intended to be carned on. Include the busi­ness of subsidiaries of the issuer only in so far as is necessary to understand the character anddevelopment of ,the busine.e;s conducted by the combined enterprise.

2. In describing developments, information shall be given as to matters such as the following:the nature and results of any bankruptcy, receivership or similar proceedings with respect to theissuer or any of its subsidiaries; the nature and results of any other material reorganization ofthe issuer or any of its subsidiaries; the acquisition or disposition of any material amount ofassets otherwise than in the ordinary course of business; any malterial changes in the types ofproducts proouced or services rendered by the issuer and its subsidiaries; and any material changesin the mode of conducting the business of the issuer or its subsidiaries.

3. Where appropriate to a clear understanding by investors of the speculative nature of theenterprise or ,the securities being offered, an introduotory statement shall be made on the outsidefront cover page of the prospectus, summarizing the factors which make the offering a specula­tion and setting forth such matters as a comparison. in percentages of seeurtiies heing offered tothe public for cash am those issued or to be issued to promoters, directors, officers, controllingpersons and tmderwriters for cash, property nnd services. 'With the consent of the Commissionthe infonnation called for by this instruction may be given in the !bOOy of the prospectus if anappropriate reference is made on the outside front cover of the prospectus to the speculative orpromotional nature of the enterprise and a cross reference is made to the body of the prospectuswhere such information is contained.

Item 8. Description of Property:

State briefly the location and general character of the prineital properties. including buildings:un plants, of the issuer and its subsidiaries. If any such property is not freehold property or isheld subject to any major encumbrance, so state and briefly describe the nature of the title or any .~uch encumbrance, as the C:lse may be.

Instructions:\Vh..tt is required is information essential to an investor's appraisal of the securitIes being

offered. Such information should be furnished as will reasonably inform investors as to the suit­ability, adequacy, productive capacity and extent of utilization of the facilities used in the enter­prise. Detailed descriptions of the physical characteristics of individual properties or legal descrip­tions by metes and bounds are not required and should not bP given.

Item 9. Promoters:

1£ any person or comp:.my is or has been a promoter of the issuer or of any ot Its sub­sidiaries within the five yenrs immediately pre-:eding the date of the preliminary prospectus orthe date of the prospectus filed under Section 63 of· the Act, as the case may be, furnish thefollowing information:

(a) State the names of the promoters, the nature and amount of anvthin of value (includingmoney, property, contracts, options Or ng tS ot any· recel or to received bv eachpromoter directly or indirectly from the issuer or from any ot Its sUbSidiaries, and the na·ture andamounf of any assets, ServiCes or other conSideration therefor received or to be received by theissuer or subsidiary;

(b) As to any assets acquired or to be acquired by the issuer or by any of its subsidiariesfrom a promoter, state the amount :lit which acquired or to be acquired and the principle followedor to be followed in determining the amount. Identify the person making the determination andstate his relationship, if any, with the issuer, any subsidiary or any promoter. I f the assets wereacquired by the promoter within two years prior to their transfer to the issuer or subsidiary,state the CO$t thereof to the promoter.

Item 10. Pending Legal Proceedings:

Briefly describe any pending legal proceedings material to the issuer to which the isssl1er orauy of its subsidiaries is a party or of which any of their property is the subject. Include thename of the court or agency in which the proceedings are pending, the date instituted and theprincipal parties thereto. Make a similar statement as to any such proceedings known to becontemplated.

432

-76-

THE SASKATCHE\VAN GAZETTE, SEPTEMBER 15, 196i

[nstruction :

If the business ordinarii)' results in actions for negligence or other claims, no such action or:Iaim need be described unless it departs from the usual type of such action.[tern 11. Issuance of Shares:

(a) Ii shires are being offered. state the description or the designation of the class of shares>£fered and furnish all material attributes and characteristics including, without limiting the~eneralit)' of the foregoing. the following infonnation:

( i) dividend rights;(ii) voting rights;(iii) liquidation or distribution rights;(iv) pre-emptive rights;(v) cooversion rights;(vi) redemption, purchase for cancellation or surrender provisions;(vii) sinking or purchase fund provisions;(viii) liability to further calls or to ~ssessment by the issuer: and(ix) provisions as to modification, amendment or variation of any such . rights or

provisions.(b) 1£ the rights of holders of such shares maybe modified otherwise than in acconiance

with the provisions attaching to such shares or the provisions of the governing Act relatingthereto, so state and explain briefly.

Instructions :

1. This item requires only a brief summary of the provisions that are material from aninvestment. standpoint. Do not set out verbatim the provisions attaching to the shares; only asuccinct resume is required.

2. If the rights attaching to the shares being offered are materially limited or qualified bythe rights of any other class of securities, or if any other class of securities (other than obli­gations covered in Item 12) ranks ahead or pari passu with the shares being offered. includesuch information regarding such other securities as will enable investors to understand the rightsattaching to the shares being offered. 1£ any shares being offered are to be offered in achangefor other securities. an appropriate description of the other securities shall be given. No infonna­tion need be given. however, as to any class of securities that is to be redeemed or otherwiseretired. provided appropriate steps to assure such redemption or retirement have been made orwill be made prior to or contemporaneously with the delivery of the shares being offered.

3. In addition to the summary referred to in instruction 1. the issuer may set out verbatim ina schedule to the prospectus the provisions attaching to the shares being offered.

Item 12. Issuance of Obligations:

If OOligations are being oHer~, give a brief summary of the material attributes and char­acteristics of the indebtedness and the security therefor including, without limiting the generalityof the foregoing:

(a) Provisions with respect to interest rate. maturity, redemptia"n or other retirement, sink-ing fund and conversion rights. .

(b) The nature and priority of an)' security for the obligations, briefly identifying the prin­cipal properties subject to lien or charge.

(c) Provisions pennitting or restricting the issuance of additional securities. the incurring ofadditional indebtedness and other material negative covenants (including restrictions against pay­ment of dividends. restrictions against giving security on the assets of the issuer or its sub­sidiaries and the like) and provisions as to the release or substitution of assets securing theobligations. the modification of the terms of the security and similar provisions.

(d) The name of the trustee under any indenture relating to the obligations and the natureof any material relationship between the trustee and the issuer of any of its affiliates.

Instruction :

Instructions 1. 2 and 3 to item 11 apply to this item mutatis mutandis.

Item 13. Issuance of Other Securities:

1£ securities other than shares or obligations are being offered, outline briefly the rightsevidenced thereby. 1£ subscription warrants or rights are being offered or issued, state the descrip­tion and amoWlt of securities covered thenby, the period during which, and the price at which,the warrants or rights are aercisahle. and the principal terms and conditions by which they maybe e.''Cercised. .

433

Instruction :

THE SASKATCHEWAN GAZETTE, SEPTEMBER 15, 1967

-77-

The instructions to Item 11 apply to this item mutatis mlttandis.

Item 14. Dividend Record:

State the amount of dividends or other distributions, if any, paid by the issuer during its lastfive financial years preceding the date of the preliminary prospectus or the date of the prospectusfiled under Section 63 of the Act, as the case may be.

Instruction :

Dividends paid should be set out on a per share basis, shown separately for each class ofshares in respect of each of the financial years. Appropriate adjustments shall be made to reflectchanges in capitalization during the period.

Item 15. Directors and Officers:

List the names and home addresses in full of all directors and officers of the issuer andindicate all positions and offices with the issuer held by each person named, and the principaloccupations within the five preceding years, of each director and officer.

-I tern 16. RemlU1eration of Directors and Senior Officers:

Furnish the following information, if possible in tabular form:

(a) The amount of the aggregate direct remuneration paid or payable by the issuer and itssubsidiaries, whose financial statements are consolidated with· those of the. issuer, to the directorsand senior officers of the issuer, and as 31 separate amount the aggregate direct remuneration paidor payable to such directors and senior officers by the subsidiaries of the issuer whose financialstatements are not consolidated with those of the issuer, such aggregate amounts to be furnishedfor the last completed financial year of the issuer and as seperateamoonts for the period fromthe last completed financial year to a date within 30 days of the date of the preliminary pro­spectus or the date of the prospectus filed under Section 6J of The Securities Act, 1967, asthe case may be.

(b) The estimated cost to the issuer and its subsidiaries in the last completed financial yearof all pension benefits proposed to be paid in the aggregate under any normal pension plan ir.the event of retirement at normal retirement age, directly and indirectly, by the issuer or any ofits subsidiaries to the persons referred to in paragraph (a) or, in the alternative, the estimatedaggregate amount of all such pension benefits proposed to be paid in the event of retirement atnormal retirement age, directly or indirectl1y, by the issuer or any of its subsidiaries to the personsreferred to in paragraph (a).

(c) The aggregate of all remuneration payments (other than payments of the type requiredto be reported under paragraph (a) or (b) ) made during the year and period referred to inparagraph (a) and, as a separate amount, proposed to be paid in the future, directly or indirectly.by the issuer or any of its subsidiaries pursuant to any existing plan or arrangement to eachperson referred to in paragraph (a).

Instructions:

1. The term "plan" in paragraph (c) includes all plans, contracts, authorizations or arrange­ments, whether or not contained in any formal document or authorized by any resolution of thedirectors of the issuer or its subsidiaries.

2. Information need not be included as to payments to be made for, or benefits to lbe re­ceived from, group life or accident insurance, group hospitalization or similar group payments orbenefits, or the Canada Pension Pian or any government pension plan similar thereto.

3. If it is impracticable to state the amount of renlUneration payments proposed to be made.the aggregate amount set aside or accrued to date in respect of such papnents should be stated,together with an e.'Cplanation of the basis of future pa}ments.

4. The information called for by paragrnphs (a). (b) and (c) of this item may be givenfor the directors and senior officers as a group, without naming them.

5. In giving information as to aggregate remuneration pa~ments under paragraph (c) of t.hi~item include any payments made Or proposed to be made with respect to deferred compensallonbenefits, retirement benefits or other benefits except for such amounts as were paid or would bepaid tinder the normal pension plan of the issuer and its subsidiaries.

434

THE SASKATCHE\VA); GAZETTE. SEPTE~1BER 1.5. 196i

-78­Item Ii. Options to Purchase Securities:

Furnish the information referred to in Instruction 1, if possible in tabular form, as to op­riuns to purchase securities from the issuer or any of its subsidiaries:

( i) held or proposed to be held by all directors and senior officers as a group, withoutnnming them:

( ii) held or proposed to be held by all directors and senior ofiicers of any subsidiaryof the issuer as a group, without naming them;

( iii) held or proposed. to be held by all other employees of the issuer as a group, with­out naming them;

( h') held or proposed to be held by all other emplo)'ees of any subsidiarr of the issueras a group, without naming them;

(v) held or proposed to be held by an)' other person or company, naming each suchperson or company.

which are outstanding as of a specified date within thirty days prior to the date of the pre­liminary prospectus or the date of the prospectus filed under section 63 of The' Seo1rities Act,196i, as the case may be, or which are subsequently given or proposed to be given.Instructions :

1. Describe the options, stating the material provisions including,(i) the designation and number of the securities under opticn;( ii ) the purchase price of the securities under option and the expiration dates of such

options :(iii) if reasonably ascertainable, the market value of the securities under option on the

date of grant; and(i\") if reasonably ascertainable, the market value of the securities under option as of

the aforesaid specified date.

Z. The term "option" as used herein includes all options, share purchase warrants or rightsother than those issued to all s«uriryholders of the same class on a pro rata basis or to allsecurityholders of the same class resident in Canada on a pro rata basis.

3. The e.~tension of options shall be deemed the granting of options within the meaning ofthis item.

4. \\'here the market value of sa:urities is not me.:mingful, it is permissible to state in lieuof such market value the fonnula by which the purcl1ase price of the securities under option willbe detennined.

5. Xo reference need be made to any option disclosed in item 2.

Item 18. Escrowed Shares:

State as of a specified date within thirty days prior to the date of the preliminary prospectusor the date of the prospectus filed under Section 63 of The Securities Act, 1967, as the case maybe. in substantially the tabular fonn indicated, the number of shares of each class of equity sharesof the issuer to the knowledge of the issuer held in escrow, disclosing the name of the depositary,if any, the date of and the conditions, if any, governing the release of such shares from escrow:

TABLE,

Column 1

Designationof class

Column 2

Number ofshares heldin escrow

Column 3

Percentageof class

Item 19. Principal Holders of Securities:

Furnish the following information as of a sp«ified date within thirty days prior to the dateof the preliminary prospectus or the date of the prospectus filed under Section 63 of TheSecurities Act. 196i, as the case may be. in substantially the tabular form indicated:

433

THE SASKATCHEWA~GAZETTE, SEPTE:Y1BER IS, 1967

-79­TABLE

Column.l Column 2 ColumnJ Column 4 Column 3

'Xame and Designation Type of Xumber of Percentageaddress of class ownership shares owned of class

(a) The number of shares of each class of equity shares of the issuer owned of record orbeneficially, directly or indirectly, by each person or company who owns of record. or is knownby the issuer to own beneficially, directly or indirectly, more than 10 per cent of any class ofsuch shares. Show in Column 3 whether the shares are owned both of record and beneficially,of record only, or beneficially only, and show in Columns 4 and 5 the respective. amounts andpercentages known b}' the issuer to be owned in each such manner. .

(b) The percentage of shares of each class of equity shares of the issuer or any of itsparents or its subsidiaries, beneficially owned, directly or indirectly, b}' all directors and seniorofficers of the issuer, as a group, without naming them:

TABLE

Column 1

Designation of class

Column 2

Percentage of class

Instructions:1. For purposes of paragraph (a) of this item shares owned beneficially, directl}· or in­

directl}·, and of record shall be aggregated in determining whether any person or company OW11S

more than 10 per cent of the shares of any class.

2. If equity shares are being offered in connection with, or pursuant to. a plan ofacquisition, amalgamation or reorganization. indicate, as far as practicable, the respective l:<luityshareholdings that will exist after giving effect to the plan.

3. If any of the securties being offered are to be offered for the account of a securityholder, name such securityholder and state the number or amount of the securities owned byhim, the number or amount to be offered for his account, and the number or amount to beowned by him aiter the offering.

4. If, to the knowledge of the issuer or the underwriter of the securities being offen~d.more than 10 per cent of any class of equity shares of the issuer are held or are to be heldsubject to any \'oting trust Or other similar agreement. other than an escrow arrangement referredto in Item 18, state the designation of such shares, the number or amount held or to be held andthe duration of the agreement. Give the names and addresses of the voting trustees and outlinebriefly their voting rights and other powers under the agreement.

5. If, to the knowledge of the issuer or the underwriter of the securities being oHered, anyperson or company named in answer to paragraph (a) is .an associate or affiliate of any otherperson or company named therein, disclose, in so far as known, the material facts of suchrelationship.

Item 20. Prior Sales:

State the prices at which secUrItIes of the class offered by the prospectus have been soldwithin the past twelve months prior' to the date of the preliminary prospectus, or the date of

. the prospectus filed under Section 63 of The Securities Act. 196i, as the case may be. or are tobe sold. by the issuer or selling securityholder if such prices differ from those at which thesecurities are offered hy the prospectus. State the number of securities sold or to be sold at eachprice.

4.36

instruction:

THE SASKATCHE\\'AN GAZETTE, SEPTEMBER 15, 196i

-80-

In the case of sales by :l. selling securityholder, the information required by this item may,with the consent of the Commission, be given in the form oi price ranges for each calendar:11onth,

i tent 21. Interest of ~bnalrel1lent and Others In ~raterial Transactions:

Describe briefly, and where practicable state the approximate amowlt of any materialinterest, direet or indirect, of any ai, the following persons or companies in any transactionwithin the three years prior to the date of the preliminary prospectus, or the date of theI,rospectus filed under Section 6J of The Securities Act, 1967, as the case may be, or in anyproposed transaction which, in either such case, has materiaIl}' affected or will materially affectthe issuer or any of its subsidiaries:

( i) anr director or senior officer of the issuer;(ii) anr shareholder named in answer to paragraph (a) of Item 19; and'(iii) allY associate or affiliate of any of the foregoing persons or companies.

1nstructions :1. Give a brief description of the material transaction. Include the name and address of each

person )r company whose interest in any transaction is described and the nature of the relation­ship by reason of which such interest is required to be described.

2. As to any transaction invoh'ing' the purchase or sale of assets by or to the issuer or any~ui>sidiary, otherwise than in the ordinary course of business. state the cost of the assets to thepurchaser and the cost thereof to !he seller if acquired by the seller within two )'ears prior tothe transaction.

3. This item does not apply to any interest arising from the ownership of securities of thei::suer where the securityholder receives no e.xtra or special benefit or ad...-antage not shared ona pro rata basis by all other holders of the same class of securities or all other holders of the~ame class of securities who are resident in Canada.

4. Information ~hall be included as to any material underwriting discounts or commissions.lpon the sale of securities by the issuer where any of the specified persons or companies was oris to be an underwriter or is an 'associate, affiliate or partner of a person, company or partnershipthat was or is to be an underwr·iter.

5. No infomlation need be given in answer to this item as to any transaction or any interesttherein, where,

(i) the rates or charges involved in the transaction are fixed by law or detennined bycompetith'e bids; .

(ii) the interest of a specified person or company in the transaction is solely that of adirector of another company that is a party to the transaction;

(iii) the transaction i1wolves services as a bank or other depository of funds, transferagent, registrar, trustee under a trust indenture or other similar services.;

(iv) the interest of a specified person or company, including all periodic instalments inthe case of any lease or other agreement providing for periodic payments or instalments, doesnot exceed $10,000; or

(v) the transaction does not, directly or indirectly, in....olve remuneration for ser.... ices,<md,

( A) the interest of the specified person or company arose from the beneficialownership, direct or in~lirect, of less than 10 per cent of an)' class of equit}' shares ofanother company that IS a party to the transaction,

( B) the transaction is in the ordinal'\' course of business of the issuer or its~ubsidiaries, and •

(C) the amount of the tran~action or series of transactions is less than 10 per centui the total sales or purchases. as the case may be, of the issuer a."d its subsidiaries forthe last completed financi:ll year.

6. lnfonllation shall be furnished in answer to this item with respect to tnnsactions note:ocduded above that involve remuneration, directly or indirecth', to am' of the specified personsor companies for ser.... i<'es ill :lny capacity unless the interest· of the "person or company arises~rcly from the beneficial ownership, direct or indirect, of less than 10 per cent of any class of<:flUit)' shares of another company furnishing the ser.... ices to the issuer or its' subsidiaries.

I , .... -This item does not require the disclosure of aO\" interest in aO\" transaction unless sue.;illtc:rl'!lt and transaction are materi:ll. • •

.l"~

THE SASKATCHEWA~GAZETTE, SEPTEMBER 15, 1967

-81­Item 22. Auditors, Transfer Agents and Registrars:

State 'the name and address of the auditor of the issuer State the names of the issuer',transier agents and registrars and the location (by municipaCides) of the registrars of transfer'of each class of shares of the issuer, \\'here securities other than sh:\res are offered, state thtlocation (b}' municipalities) of each register on which transiers of such securities may btrecorded.

Item 23. Material Contracts:

Gh'e particulars of every material contract entered into within the two years prior to thed.·\te of the preliminary prospectus or the date of the prospeetus filed under Section 63 of TheSecurities Act, 1967, as the case may be, by the issuer or any of its subsidiaries and sta.te areasonable time and place at which an)· such contract or a copy thereof may be inspected duringprimary distribution of the securities being offered.

Instructions:

'1. The term "material contract" for this purpose means any contract that can reasonably beregarded as presently material to the proposed investor in the securities being of fered.

2. This item does not require disclosure of contracts entered into in the ordinary course ofbusiness of the issuer or its subsidiaries, as the case may be, or particulars of ,which are givenelsewhere in' the prospectus.

J. Particulars of contracts should include the dates of, parties to and general nature of thecontracts, succinctly described. .

4, Particulars of contracts need not be disclosed. or copies of such contracts made availablefor inspection. if the Commission determines that such disclosure or making-available wouldimpair the value of the cOlltract and would not be necessary for the protection of investors.

Item 24. Other ~1aterial Facts:

Give particulars of any other material facts relating to the securities proposed to be offeredand not disclosed pursuant to the foregoing items.

T HE SECURITIES ACT, 1967

INFOR.:.\1ATION REQl"IRED IN PROSPECTeS OF i~VEST~fENT CO~IPANY

Item 1. Distribution Spread:

The information called for by the follo\\;ng Table shan be given, in substantially the tabularform indicated, on the outside front cover of the prospectus as to aU securities being offered forcash (estimate amounts, if necessar)·).

TABLE

Column 1 Column 2 Column J

Proceeds to

Price to Cnderwriting issuer or

public discounts Or sellingcommissions security-

holder

Per l"nil

Total

Instructions :

1. On1)' conunissions paid or payable in cash by the issuer or selling securityholder or dis­counts gTanted are to be included in the Table. Commissions or other consideration paid or payablein cash or otherwise by other persons or companies <U1d consideration other than discounts grantedand other than cash paid or pasable by the issuer or selling securityholder shall be set out fol-

438