Proposed Multi-Jurisdictional Instrument: NI - 33-105 - Underwriting Conflicts

Multilateral Instrument Request for Comment

le 6 février 1998

MULTI-JURISDICTIONAL INSTRUMENT 33-105

UNDERWRITING CONFLICTS

TABLE OF CONTENTS

PARTTITLE

PART 1 DEFINITIONS, INTERPRETATION AND APPLICATION
1.1 Definitions
1.2 InterpretatioN
1.3 Application of Instrument
PART 2 RESTRICTION ON UNDERWRITING
2.1 Restriction on Underwriting
PART 3 NON-DISCRETIONARY EXEMPTIONS
3.1 Exemption from Disclosure Requirement
3.2 Exemption from Independent Underwriter Requirement
PART 4 EXEMPTION
4.1 Exemption
4.2 Evidence of Exemption
APPENDIX A - EXEMPT SECURITIES
APPENDIX B - PROVISIONS REFERRED TO IN PARAGRAPH 3.1(b)
APPENDIX C - REQUIRED INFORMATION

MULTI-JURISDICTIONAL INSTRUMENT 33-105

UNDERWRITING CONFLICTS⁽¹⁾

PART 1 DEFINITIONS, INTERPRETATION AND APPLICATION⁽²⁾

1.1 Definitions - In this Instrument

"affiliate dividend or distribution" means a dividend paid, or distribution made, on a class, or series of a class, of securities of which more than 50 percent areheld by one or more affiliates of the issuer of the securities;⁽³⁾

"approved rating" means a rating from an approved rating organization that falls within one of the following generic rating categories of the approved ratingorganization or a rating category that replaces a category listed below:

Approved Rating Organization	Long Term Debt	Short Term Debt	Preferred Shares

CBRS Inc.	A++, A+, A or B++	A-1+, A-1, A-1 (Low) or A-2	P-1+, P-1, P-2 or P-3

Dominion Bond Rating Service Limited	AAA, AA, A or BBB	R-1 or R-2	Pfd-1, Pfd-2, or Pfd-3
Moody's Investors Service, Inc.	Aaa, Aa, A or Baa	Prime-1, Prime-2, or Prime-3	"aaa", "aa", "a", or "baa"

Standard & Poor's Corporation	AAA, AA, A or	A-1+, A-1, A-2	AAA, AA, A or BBB

"approved rating organization" means each of CBRS Inc., Dominion Bond Rating Service Limited, Moody's Investors Service, Inc. and Standard & Poor'sCorporation;

"associated party" means, if used to indicate a relationship with a person or company

(a) a trust or estate in which

(i) that person or company has a substantial beneficial interest, unless that trust or estate is managed under discretionary authority by a person or company that isnot a member of the professional group, or

(ii) that person or company serves as trustee or in a similar capacity,

(b) an issuer in respect of which that person or company beneficially owns or controls, directly or indirectly, voting securities carrying more than 10 percent ofthe voting rights attached to all outstanding voting securities of the issuer, or

(i) the relative has the same home as that person, and

(ii) the person has discretionary authority over the securities held by the relative;⁽⁴⁾

"connected issuer" means, for a registrant

(a) a related issuer of the registrant,

(b) an issuer distributing securities, if the issuer or a related issuer of the issuer has a relationship⁽⁵⁾ with any of the following persons or companies that may leada reasonable prospective purchaser of the securities to question if the registrant and the issuer are independent of each other for the distribution:

1. the registrant,

2. a related issuer of the registrant,

3. a director, officer or partner of the registrant,

4. a director, officer or partner of a related issuer of the registrant, or

(c) a selling securityholder distributing securities, if the selling securityholder or a related issuer of the selling securityholder has a relationship with any of thefollowing persons or companies that may lead a reasonable prospective purchaser of the securities to question if the registrant and the selling securityholder areindependent of each other for the distribution:

1. the registrant,

2. a related issuer of the registrant,

3. a director, officer of partner of the registrant,

4. a director, officer or partner of a related issuer of the registrant;⁽⁶⁾

"direct underwriter" means, for a distribution

(a) an underwriter that is in a contractual relationship with the issuer or selling securityholder to distribute the securities that are being offered in the distribution,or

(b) a dealer manager, if the distribution is a rights offering;

"equity" means the amount shown as equity in financial statements prepared in accordance with Canadian GAAP;⁽⁷⁾

"equity security" means any security of an issuer that carries a residual right to participate in the earnings of the issuer and, upon the liquidation or winding up ofthe issuer, in its assets;⁽⁸⁾

"financial covenant" means, in relation to a person or company, a covenant that

(a) requires the maintenance by the person or company of a stipulated financial ratio or financial test, and

(b) is contained in

(i) an agreement, indenture or instrument under which obligations for borrowed money were issued or secured, or that represents obligations for borrowedmoney, or

(ii) a material capital lease of the person or company;

"independent underwriter" means, for a distribution, a direct underwriter that is not the issuer or the selling securityholder in the distribution and in respect ofwhich neither the issuer nor the selling securityholder is a connected issuer;

"influential securityholder"⁽⁹⁾ means, in relation to an issuer

(a) a person or company or professional group that holds, has the power to direct the voting of, or has direct or indirect beneficial ownership of

(i) voting securities entitling the person or company or professional group to cast more than 20 percent of the votes for the election or removal of directors ofthe issuer, or

(ii) equity securities entitling the person or company or professional group to receive more than 20 percent of the dividends or distributions to the holders of theequity securities of the issuer, or more than 20 percent of the amount to be distributed to the holders of equity securities of the issuer on the liquidation orwinding up of the issuer,

(b) a person or company or professional group

(i) that holds, has the power to direct the voting of, or has direct or indirect beneficial ownership of

(A) voting securities entitling the person or company or professional group to cast more than 10 percent of the votes for the election or removal of directors ofthe issuer, or

(B) equity securities entitling the person or company or professional group to receive more than 10 percent of the dividends or distributions to the holders of theequity securities of the issuer, or more than 10 percent of the amount to be distributed to the holders of equity securities of the issuer on the liquidation orwinding up of the issuer, and

(ii) either

(A) that, together with its related issuers

(I) is entitled to nominate at least 20 percent of the directors of the issuer or of a related issuer of the issuer, or

(II) has officers, directors or employees who are also directors of the issuer or a related issuer of the issuer, constituting at least 20 percent of the directors of theissuer or of the related issuer, or

(B) in the case of a person or company, of which the issuer, together with its related issuers

(I) is entitled to nominate at least 20 percent of the directors of the person or company or at least 20 percent of the directors of a related issuer of the person orcompany, or

(II) has officers, directors or employees who are also directors of the person or company or a related issuer of the person or company, constituting at least 20percent of the directors of the person or company or of the related issuer of the person or company, or

(i) of which the issuer holds, has the power to direct the voting of, or has direct or indirect beneficial ownership of

(A) voting securities entitling the issuer to cast more than 10 percent of the votes for the election or removal of directors of the person or company, or

(B) equity securities entitling the issuer to receive more than 10 percent of the dividends or distributions to the holders of the equity securities of the person orcompany, or more than 10 percent of the amount to be distributed to the holders of equity securities of the person or company on the liquidation or winding upof the person or company, and

(ii) either

(A) that, together with its related issuers

(I) is entitled to nominate at least 20 percent of the directors of the issuer or of a related issuer of the issuer, or

(B) of which the issuer, together with its related issuers

(I) is entitled to nominate at least 20 percent of the directors of the person or company or at least 20 percent of the directors of a related issuer of the person orcompany, or

(d) if a professional group is within paragraph (a) or (b), the registrant of that professional group;

"liabilities" means the amount shown as liabilities in financial statements that are prepared in accordance with Canadian GAAP;

"minor debt relationship" means a relationship between a registrant and an issuer or selling securityholder in which, based on the most recent financial statementsof the issuer or selling securityholder, the aggregate of

(a) the liabilities of the issuer or selling securityholder and their related issuers owing to the registrant and all related issuers of the registrant, and

(b) the book value of all shares other than equity securities of the issuer or selling securityholder and their related issuers held by the registrant and all relatedissuers of the registrant,

is less than 10 percent of the issuer's or selling securityholder's equity, as the case may be;

"professional group" means a group comprised of a registrant and any or all of the following persons or companies:

1. any person or company registered or required to be registered under securities legislation to trade on behalf of the registrant,⁽¹⁰⁾

2. any person or company performing corporate finance services on behalf of the registrant,

3. partners of the registrant,

4. employee securityholders of the registrant,

5. associated parties of any person or company described in paragraph 1 through 4 or of the registrant;

"registrant" means a person or company registered or required to be registered under securities legislation, other than as a director, officer, partner orsalesperson;

"related issuer" means a party specified in subsection 1.2(2) of this Instrument;

"specified party" means, for a distribution, a person or company

(a) the most recent financial statements of which disclose a material adverse financial condition,

(b) that has an affiliate that would be a specified party if it were issuing the securities in the distribution, and

(i) has at any time during the 12 months preceding the distribution

(A) directly or indirectly provided cash or other assets to the affiliate by way of loan, the purchase of securities or an affiliate dividend or distribution,⁽¹¹⁾ or

(B) guaranteed the obligations of, or provided security to any other person or company in connection with the activities of, the affiliate, or

(ii) it could reasonably be expected that the person or company will undertake any of the activities referred to in clauses (b)(i)(A) or (B) within 12 monthsfollowing the end of the distribution,

(i) principal or interest due on obligations for borrowed money, or

(ii) rental due under a material capital lease,

(d) that has committed a breach or default under a financial covenant and the breach or default has not been cured,

(e) that could reasonably be expected to commit a breach or default under a financial covenant if the distribution is not completed within six months of the filingof the preliminary prospectus that relates to the distribution,

(f) that has, within the 12 months preceding the distribution, had its approved rating of debt or preferred shares withdrawn or downgraded to a rating that is notan approved rating,

(g) that has, within the 12 months preceding the distribution, failed to pay a regularly scheduled dividend on a class or series of its outstanding preferred shares,

(h) the financial statements of which have, within the 12 months preceding the distribution, included a going concern note or been accompanied by an auditor'sreport that included a qualification for failure to include a going concern note, or

(i) that has, within the 30 months preceding the distribution

(i) been bankrupt,

(ii) had a receiver or a receiver manager appointed over any of its assets, or

(iii) been the subject of a proceeding under the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada) or theWinding-Up and Restructuring Act (Canada).

1.2 Interpretation

(1) For the purposes of determining whether a person or company or professional group is within the definition of "influential securityholder"

(a) the determination shall be made

(i) first, by including in the calculation only voting securities or equity securities that are outstanding, and

(ii) second, if the person or company is not an influential securityholder by reason of a calculation under subparagraph (i), by including all voting securities orequity securities that would be outstanding if all outstanding securities that are convertible or exchangeable into voting securities or equity securities, and alloutstanding rights to acquire securities that are convertible into, exchangeable for, or carry the right to acquire, voting securities or equity securities, areconsidered to have been converted, exchanged or exercised, as the case may be, and

(b) securities held by a registrant in its capacity as an underwriter in the course of a distribution are considered not to be securities that the registrant holds, hasthe power to direct the voting of, or has direct or indirect beneficial ownership of.

(2) A person or company is a "related issuer" of another person or company if

(a) the person or company is an influential securityholder of the other person or company,

(b) the other person or company is an influential securityholder of it, or

(3) Calculations of time required to be made in this Instrument in relation to a "distribution" shall be made in relation to the date on which the underwriting oragency agreement for the distribution is signed.⁽¹²⁾

1.3 Application of Instrument - This Instrument does not apply to a distribution of

(a) securities described in the provisions of securities legislation listed in Appendix A; or

(b) mutual fund securities.

PART 2 RESTRICTION ON UNDERWRITING

2.1 Restriction on Underwriting - No registrant shall act as an underwriter in a distribution of securities in which it is the issuer or selling securityholder, or asa direct underwriter in a distribution of securities of or by a connected issuer, unless

(a) the distribution is made under a prospectus or another document that, in either case, contains the information specified in Appendix C; and

(b) in a distribution made under a prospectus

(i) in which at least one registrant acting as direct underwriter acts as principal, an independent underwriter underwrites not less than the lesser of

(A) 20 percent of the dollar value of the distribution, and

(B) the largest portion of the distribution underwritten by a registrant that is not an independent underwriter, or

(ii) in which each registrant acting as direct underwriter acts as agent and is not obligated to act as principal, an independent underwriter receives a portion of thetotal management fees equal to an amount not less than the lesser of

(A) 20 percent of the total management fees for the distribution, and

(B) the largest portion of the management fees paid or payable to a registrant that is not an independent underwriter; and

(c) in a distribution made under a prospectus, the prospectus identifies the independent underwriter and discloses the role of the independent underwriter in thestructuring and pricing of the distribution and in the due diligence activities performed by the underwriters for the distribution.

PART 3 NON-DISCRETIONARY EXEMPTIONS

3.1 Exemption from Disclosure Requirement - Paragraph 2.1(a) does not apply to a distribution that

(a) is made under a document other than a prospectus if each of the purchasers of the securities

(i) is a related issuer of the registrant,

(ii) purchases as principal, and

(iii) does not purchase as underwriter; or

(b) is made under a provision of securities legislation listed in Appendix B.

3.2 Exemption from Independent Underwriter Requirement - Paragraph 2.1(b) does not apply to a distribution of securities of an issuer if

(a) neither the issuer of the securities nor the selling securityholder is the registrant or a related issuer of the registrant; and

(b) either

(i) the issuer is a connected issuer of the registrant and

(A) the issuer is not a specified party, or

(B) if the issuer is a connected issuer of the registrant only because of indebtedness, the issuer's relationship with the registrant immediately before thedistribution was a minor debt relationship, or

(ii) the selling securityholder is a connected issuer of the registrant and

(A) the selling securityholder is not a specified party, or

(B) if the selling securityholder is a connected issuer of the registrant only because of indebtedness, the selling securityholder's relationship with the registrantimmediately before the distribution was a minor debt relationship.

PART 4 EXEMPTION

4.1 Exemption

(1) The regulator⁽¹³⁾ or securities regulatory authority⁽¹⁴⁾ may grant an exemption to this Instrument, in whole or in part, subject to such conditions or restrictionsas may be imposed in the exemption.

(2) Despite subsection (1), in Ontario, only the regulator may grant such an exemption.

4.2 Evidence of Exemption - Without limiting the manner in which an exemption under section 4.1 may be evidenced, the issuance by the regulator of a receiptfor a prospectus or an amendment to a prospectus is evidence of the granting of the exemption if

(a) the person or company that sought the exemption has delivered to the regulator, on or before the date that the preliminary prospectus or an amendment to thepreliminary prospectus was filed, a letter or memorandum describing the matters relating to the exemption and indicating why consideration should be given tothe granting of the exemption; and

(b) the regulator has not sent written notice to the contrary to the person or company that sought the exemption before, or concurrent with, the issuance of thereceipt.

MULTI-JURISDICTIONAL INSTRUMENT 33-105

APPENDIX A

EXEMPT SECURITIES

	JURISDICTION	SECURITIES LEGISLATION REFERENCE
	ALBERTA	Section 66 of the Securities Act (Alberta)
	BRITISH COLUMBIA	Section 46 of the Securities Act (British Columbia)
	MANITOBA	Subsection 19(2) of the Securities Act (Manitoba)
	NEWFOUNDLAND	Section 36(2) of the Securities Act (Newfoundland)
	NEW BRUNSWICK	Section 7 of the Security Frauds Prevention Act(New Brunswick) and Section 4 of the Regulation tothe Security Frauds Prevention Act (NewBrunswick)
	NOVA SCOTIA	Subsection 41(2) of the Securities Act (Nova Scotia)
	ONTARIO	Subsection 35(2) of the Securities Act (Ontario)
	PRINCE EDWARD ISLAND	Subsection 2(4) of the Securities Act (Prince EdwardIsland)
	SASKATCHEWAN	Subsection 39(2) of the Securities Act(Saskatchewan)

MULTI-JURISDICTIONAL INSTRUMENT 33-105

APPENDIX B

PROVISIONS REFERRED TO IN PARAGRAPH 3.1(b)

	JURISDICTION	SECURITIES LEGISLATION REFERENCE
	ALBERTA	Subsections 112(1) and 112(3) of the Securities Act(Alberta)
	BRITISH COLUMBIA	Section 128(d) of the Securities Rules
	NEWFOUNDLAND	Subsection 73(7)(b) of the Securities Act(Newfoundland)
	NOVA SCOTIA	Subsection 77(11)(b) of the Securities Act (NovaScotia)
	ONTARIO	Clause 72(7)(b) of the Securities Act (Ontario)
	SASKATCHEWAN	Subparagraph 81(10)(b)(i) and clauses 81(10)(b)(v)(A)and (B) of the Securities Act (Saskatchewan)

MULTI-JURISDICTIONAL INSTRUMENT 33-105

APPENDIX C

REQUIRED INFORMATION

REQUIRED INFORMATION FOR THE FRONT PAGE OF THE PROSPECTUS OR OTHER DOCUMENT

1. A statement, naming the relevant registrant or registrants, in bold type that the issuer or the selling securityholder is a connected issuer of a registrant orregistrants in connection with the distribution.

2. A summary, naming the relevant registrant or registrants, of the basis on which the issuer or selling securityholder is a connected issuer of the registrant orregistrants.

3. A cross-reference to the applicable section in the body of the prospectus or other document where further information concerning the relationship between theissuer or selling securityholder and registrant or registrants is provided.

REQUIRED INFORMATION FOR THE BODY OF THE PROSPECTUS OR OTHER DOCUMENT

4. A statement, naming the relevant registrant or registrants, that the issuer or the selling securityholder is a connected issuer of a registrant or registrants for thedistribution.

5. The basis on which the issuer or selling securityholder is a connected issuer for each registrant referred to in paragraph 4, including

(a) if the issuer or selling securityholder is a connected issuer of the registrant because it is a related issuer of the registrant, the details of the holding, power todirect voting, or direct or indirect beneficial ownership of, securities that cause the issuer or selling securityholder to be a related issuer;

(b) if the issuer or selling securityholder is a connected issuer of the registrant because of indebtedness, the disclosure required by paragraph 6 of this Appendix;and

(c) if the issuer or selling securityholder is a connected issuer of the registrant because of a relationship other than indebtedness, the details of that relationship.

6. If the issuer or selling securityholder is a connected issuer of the registrant because of indebtedness,

(a) the amount of the indebtedness;

(b) the extent to which the issuer or selling securityholder is in compliance with the terms of an agreement governing the indebtedness,

(d) the nature of any security for the indebtedness; and

(e) the extent to which the financial position of the issuer or selling securityholder or the value of the security has changed since the indebtedness was incurred.

7. The involvement of each registrant referred to in paragraph 4 and of a related issuer of the registrant in the decision to distribute the securities being offeredand the determination of the terms of the distribution, including disclosure concerning whether the issue was required, suggested or consented to by theregistrant or a related issuer of the registrant and, if so, on what basis.

8. The effect of the issue on each registrant referred to in paragraph 4 and each related issuer of each registrant, including

(a) information about the extent to which the proceeds of the issue will be applied, directly or indirectly, for the benefit of the registrant or a related issuer of theregistrant, or

(b) if the proceeds will not be applied for the benefit of the registrant or a connected issuer of the registrant, a statement to that effect.

9. If a portion of the proceeds of the distribution is to be directly or indirectly applied to or towards

(a) the payment of indebtedness or interest owed by the issuer, an associate or related issuer of the issuer, a person or company of which the issuer is anassociate, the selling securityholder, an associate or related issuer of the selling securityholder, a person or company of which the selling securityholder is anassociate, to the registrant or a related issuer of the registrant, or

(b) the redemption, purchase for cancellation or for treasury, or other retirement of shares other than equity securities of the issuer, an associate or related issuerof the issuer, a person or company of which the issuer is an associate, the selling securityholder, an associate or related issuer of the selling securityholder, or of aperson or company of which the selling securityholder is an associate, held by the registrant or a related issuer of the registrant

particulars of the indebtedness or shares in respect of which the payment is to be made and of the payment proposed to be made.

10. Any other material facts with respect to the relationship or connection between each registrant referred to in paragraph 4, a related issuer of each registrantand the issuer that are not required to be described by the foregoing.

REGISTRANT AS ISSUER OR SELLING SECURITYHOLDER

11. If the registrant is the issuer or selling securityholder in the distribution, then the information required by this Appendix shall be provided to the extentapplicable.

VALUATION DISCLOSURE

12. If

(a) the issuer in the distribution

(i) is not a reporting issuer,

(ii) is a registered dealer or an issuer all or substantially all of whose assets are securities of a registered dealer,

(iii) is issuing voting securities or equity securities, and

(iv) is effecting the distribution other than under a prospectus, and

(b) there is no portion of the distribution being underwritten by at least one registrant in respect of which the issuer is not a related issuer in the amount specifiedin paragraph 2.1(b) of the Instrument

then each purchaser of securities offered in the distribution shall be given a disclosure document or other document containing a summary of a valuation of theissuer by chartered accountants or by a registered dealer of which the issuer is not a related issuer, and describing a reasonable time and place at which thevaluation may be inspected during the distribution.

Footnotes

1. This proposed Multi-Jurisdictional Instrument is expected to be adopted as a rule in British Columbia, Alberta, Ontario and Nova Scotia, as a Commissionregulation in Saskatchewan and as a policy in all other jurisdictions represented by the Canadian Securities Administrators, other than Quebec. In Ontario, thisproposed Multi-Jurisdictional Instrument will replace parts of section 219 and all of section 224 of the Regulation to the Securities Act (Ontario). The proposedMulti-Jurisdictional Instrument and Companion Policy are not being proposed for adoption at this time by the Commission des valeurs mobilières du Québec.

2. A national definition instrument has been adopted as National Instrument 14-101 Definitions. It contains definitions of certain terms used in more than onenational instrument. National Instrument 14-101 also provides that a term used in a national instrument and defined in the statute relating to securities of theapplicable jurisdiction, the definition of which is not restricted to a specific portion of the statute, will have the meaning given to it in that statute, unless thecontext otherwise requires. National Instrument 14-101 also provides that a provision or a reference within a provision of a national instrument that specificallyrefers by name to a jurisdiction, other than the local jurisdiction, shall not have any effect in the local jurisdiction, unless otherwise stated in the provision.National Instrument 14-101 will be amended to include both national instruments and multi-jurisdictional instruments.

3. This definition is used in paragraph (b) of the definition of "specified party". See footnote to paragraph (b) of that paragraph.

4. This definition is used in the definition of "professional group" and is based on the recommendations of the Report of the Joint Securities IndustryCommittee on Conflicts of Interest (the "Joint Industry Report") dated September 1997. This definition is substantially the same as the proposed definition of"associates" contained on page 20 of the Joint Industry Report, except that paragraph (c)(ii) of this definition has narrowed the scope of "relatives" from thatrecommended in the Joint Industry Report by amending the suggested language pertaining to discretionary authority.

5. The reference to "indebtedness" contained in the securities legislation of some jurisdictions has been deleted here and in paragraph (c) of this definition, asindebtedness is merely one type of relationship that can give rise to a connected issuer relationship, and need not be specifically mentioned.

6. It is proposed that, in Ontario, the definitions of "connected issuer", "related issuer" and "registrant" contained in this Instrument will be incorporated intothe definitions section of Part XIII of the Regulation to the Securities Act (Ontario).

7. The term "Canadian GAAP" is defined in National Instrument 14-101 Definitions as "generally accepted accounting principles determined with reference tothe Handbook". The term "Handbook" is defined in National Instrument 14-101 Definitions as "the Handbook of the Canadian Institute of CharteredAccountants, as amended from time to time".

8. This definition is used in several national instruments and may be moved to National Instrument 14-101 Definitions.

9. This definition includes "professional groups", reflecting the recommendations of the Joint Industry Report. It is noted that this definition is broader than thedefinition contained in the Joint Industry Report, which recommended a threshold of 20 percent share ownership in this context (p.28).

10. The term "securities legislation" is defined in National Instrument 14-101 Definitions as meaning the particular statute and legislative instruments of thelocal jurisdiction set out in an appendix to that instrument and will generally include the statute, regulations and, in some cases, the rules, forms, rulings andorders relating to securities in the local jurisdiction. The term "local jurisdiction" is defined in National Instrument 14-101 Definitions. The definition is "in anational instrument adopted or made by a Canadian securities regulatory authority, the jurisdiction in which the Canadian securities regulatory is situate". Theterm "Canadian securities regulatory authorities" is defined in National Instrument 14-101 Definitions as meaning the securities commissions or similar regulatoryauthorities set out in an appendix to that instrument. The term "jurisdiction" is defined in National Instrument 14-101 Definitions as meaning "a province orterritory of Canada, except when used in the term foreign jurisdiction".

11. An "affiliate dividend or distribution" is one paid or made on a class, or series of a class, of securities of which more than 50 percent are held by one ormore affiliates of the issuer of the securities. The concept is used in the definition of "specified party" to identify dividends or distributions that are made by anissuer for the primary purpose of supporting affiliates that are in financial difficulty. It is less likely that a dividend or distribution is paid for the purpose ofsupporting an affiliate if the dividend or distribution is paid on a class or series of securities of which there are greater than 50 percent non-affiliated shareholders.

12. This provision is designed to remove ambiguity concerning the interpretation of provisions in this Instrument that describe time periods in relation to adistribution; for example, "12 months preceding a distribution" in the definition of "specified party".

13. The term "regulator" is defined in National Instrument 14-101 Definitions as meaning, in a local jurisdiction, the person set out in an appendix to thatinstrument opposite the name of the local jurisdiction.

14. The term "securities regulatory authority" is defined in National Instrument 14-101 Definitions as meaning, for a local jurisdiction, the securitiescommission or similar regulatory authority set out in an appendix to that instrument opposite the name of the local jurisdiction.