Community Bonds Regulations, C-16.1 Reg 1

1 COMMUNITY BONDS C-16.1 REG 1 The Community Bonds Regulations being Chapter C-16.1 Reg 1 (effective July 6, 1990) as amended by Saskatchewan Regulations 76/91, 27/92, 21/93, 90/93 and 4/96. NOTE: This consolidation is not official. Amendments have been incorporated for convenience of reference and the original statutes and regulations should be consulted for all purposes of interpretation and application of the law. In order to preserve the integrity of the original statutes and regulations, errors that may have appeared are reproduced in this consolidation. 2 C-16.1 REG 1 COMMUNITY BONDS Table of Contents 1 Title 24 Purchase limits by certain person 2 Interpretation 24.1 Limits on pool bond investments 3 Eligible business 24.2 Acquisition of existing securities 4 Voting shares 24.3 Prohibited uses by eligible businesses of invested moneys 5 Incorporation 24.4 Limits on investment in eligible business 6 Register 24.5 Incorporation fee 7 Prohibited activities 24.6 Repealed 8 Annual return information 9 Bond issue FORMS 10 Prescribed amount limits Form A Application for Incorporation (for a Rural Development Corporation) 11 Guarantee Form B Application for Incorporation (other than a Rural 12 Payment on guarantee Development Corporation) 13 Offering memorandum Form C Articles of Incorporation (applicant is a 14 Information to be contained in Finance statements rural development corporation) 14.1 Ineligible purchasers Form D Articles of Incorporation (applicant is not a rural development corporation) 15 Form of bond Form E Notice of Registered Office 16.1 Rights of bond owners Form F Notice of Directors 17 Early redemption Form G Certificate of Incorporation 18 Time limits on investments Form H Guarantee by the Government of Saskatchewan 19 Divesting Form I Multi Project Bond 20 Advertising and promotion Form J Specific Bond 21 Early exchange 22 Manner of holding moneys 23 Approval to invest 3 COMMUNITY BONDS C-16.1 REG 1 CHAPTER C-16.1 REG 1 The Community Bonds Act Title 1 These regulations may be cited as The Community Bonds Regulations. Interpretation 2 In these regulations, “Act” means The Community Bonds Act. 13 Jly 90 cC-16.1 Reg 1 s2. Eligible business 3(1) In this section: (a) “commercial water project” means the commercial operation of facilities in Saskatchewan for: (i) the supply or distribution of industrial or irrigation water; or (ii) the treatment of waste water; (b) “destination tourism” means the operation of a facility or tourist attraction in Saskatchewan that is intended to primarily be used by or attract persons who travel at least 80 kilometres from their normal residence to the facility or attraction and includes the operation of facilities that are incidental or ancillary to those facilities or attractions; (c) “export product or service” means the development and delivery of a product, process or service where: (i) part of the development occurs in Saskatchewan; and (ii) the principal market for the product, process or service is outside Saskatchewan; (d) “manufacturing or processing” means any process or undertaking in Saskatchewan for the production of any goods or any items by skill or labour, using raw materials or material which has been subjected to artificial forces or to which something has been added to change its natural condition, including the production of intellectual property and processes. (2) Subject to subsections (4) and (5), for the purposes of subclause 2(1)(f)(iii) of the Act, an eligible business is required to have as its principal economic activity: (a) for the purpose of the investment of the proceeds of a community bond other than an environmental bond: (i) a commercial water project; 4 C-16.1 REG 1 COMMUNITY BONDS (ii) destination tourism; (iii) export services; or (iv) manufacturing or processing; (b) for the purpose of the investment of the proceeds of an environmental bond: (i) the conservation and recycling of resources; (ii) the prevention or reduction of harmful impacts on the environment; (iii) the restoration or reclamation of the environment; or (iv) the collection, evaluation or reporting of information related to the environment. (3) In order to qualify as an eligible business pursuant to clause (2)(a), the eligible business is to be owned and controlled by persons other than the municipality in which the eligible business is to carry on its operation. (4) Notwithstanding subsection (2), a body corporate is prescribed as not an eligible business when 50% or more of the capital cost of the project for which the investment of the proceeds of the community bond are proposed is for a golf course or facilities directly related to a golf course. (5) A body corporate that has any of the following as its principal economic activity is prescribed as not an eligible business: (a) the operation of grain handling facilities; (b) the operation of a wholesale business; (c) the operation of a retail business. 13 Jly 90 cC-16.1 Reg 1 s3; 26 Mar 93 SR 21/93 s3. Voting shares 4 For the purposes of clause 2(1)(p) of the Act, “voting shares” means shares carrying the right: (a) to vote at all meetings of shareholders; and (b) to fully participate in dividends and distributions of capital on liquidation or winding-up of the corporation. 13 Jly 90 cC-16.1 Reg 1 s4. Incorporation 5(1) For the purposes of clause 3(2)(a) of the Act, an application: (a) by a rural development corporation is required to be in Form A; (b) by an applicant other than a rural development corporation is required to be in Form B. 5 COMMUNITY BONDS C-16.1 REG 1 (2) For the purposes of clause 3(2)(c) of the Act: (a) Form C is prescribed as the form of articles of a community bond corporation where the applicant is a rural development corporation; (b) Form D is prescribed as the form of articles of a community bond corporation where the applicant is other than a rural development corporation. (3) For the purposes of clause 3(2)(e) of the Act, the following information is required to accompany an application for incorporation: (a) if the applicant is a rural development corporation: (i) proof satisfactory to the minister of the age of the proposed director required by subclause 3(3)(b)(iii) of the Act; (ii) in the case of a director required by subclause 3(3)(b)(i) of the Act, a letter from the chairperson of the rural development corporation indicating that the proposed director of the community bond corporation is the person authorized by the rural development corporation; (b) if an applicant is not a rural development corporation: (i) proof satisfactory to the minister of the age of the proposed director required by subclause 3(3)(b)(iii) of the Act; (ii) in the case of a director required by subclause 3(3)(b)(i) of the Act, a copy of the municipal resolution indicating that the proposed director is the person authorized by the municipality; and (c) a notice of registered office of the community bond corporation in Form E. (4) For the purposes of clause 3(2)(d) of the Act, Form F is prescribed as the form of a notice of directors of a community bond corporation. (5) For the purposes of clause 4(2)(b) of the Act, Form G is prescribed as the certificate of incorporation. (6) For the purposes of subclause 4(2)(e)(ii) of the Act, clause 40(b) of The Business Corporations Act does not apply to the payment of net earnings to holders of community bonds by a community bond corporation in accordance with the Act and these regulations to the extent that the payment would otherwise be considered as a reduction of the community bond corporation’s stated capital. 13 Jly 90 cC-16.1 Reg 1 s5; 26 Mar 93 SR 21/93 s4. Register 6 The register required pursuant to section 6 of the Act is to contain, with respect to each community bond corporation: (a) its application for incorporation; (b) its articles of incorporation and any amendments to those articles; (c) its notices of directors, as filed from time to time; 6 C-16.1 REG 1 COMMUNITY BONDS (d) its notices of registered office, as filed from time to time; (e) a copy of its certificate of incorporation; (f) a copy of its offering memorandum, if any, and any amendments to its offering memorandum; (g) in the case of a community bond issued by it that is not a project bond, a list of the eligible businesses and their address in which proceeds from the bond issue have been invested; (h) a copy of its annual financial statements pursuant to subsection 19(2) of the Act; (i) its annual returns filed pursuant to subsection 11(1) of the Act; (j) whether the community bond corporation has been the subject of a court order or an order of the minister pursuant to section 5 of the Act and the nature of that order; (k) whether the corporation has been continued pursuant to The Business Corporations Act in accordance with section 10 of the Act or has been dissolved pursuant to the Act; and (l) a copy of any guarantee agreement entered into between it and the Minister of Finance. 13 Jly 90 cC-16.1 Reg 1 s6; 26 Mar 93 SR 21/93 s5. Prohibited activities 7(1) For the purposes of clause 9(c) of the Act, no community bond corporation, without the prior written consent of the minister, shall: (a) borrow on the credit of the community bond corporation; (b) give a guarantee on behalf of the corporation to secure the performance of an obligation of any person; (c) mortgage, hypothecate, pledge or otherwise create a security interest in any security of the corporation; (d) sell, lease or otherwise dispose of any significant portion of the property and assets of the corporation; (e) exercise any right to exchange or convert any securities issued by an eligible business in which the corporation has invested funds, except where a holder of a community bond has exercised a right of conversion or exchange pursuant to the community bond; (f) pay any amount in excess of the amount required to be paid pursuant to subsection 24(2) of the Act as a distribution of its earnings, except, in the case of a community bond corporation that has issued community bonds other than project bonds, to the extent that the corporation has net earnings; or 7 COMMUNITY BONDS C-16.1 REG 1 (g) use, spend or otherwise dispose of the proceeds received from all issues and distributions of its community bonds, except: (i) for the purpose of investing in an eligible business that is approved by the review committee; (ii) to return the proceeds to bond owners where the community bond corporation is required to do so pursuant to the Act or the regulations. (2) In clause (1)(f), “net earnings” means net earnings as calculated according to generally accepted accounting principles without deducting for losses realized or expected and without including gains realized, with respect to the principal amount invested by the community bond corporation in the eligible business. 13 Jly 90 cC-16.1 Reg 1 s7; 26 Mar 93 SR 21/93 s6. Annual return information 8 Pursuant to subsection 11(1) of the Act, a community bond corporation shall submit the following information to the minister: (a) a list of all of its current directors; (b) a list of its officers; (c) its financial statement for its most recently ended fiscal year; (d) the principal amount of its community bonds issued and distributed; and (e) the number of owners of its community bonds. 13 Jly 90 cC-16.1 Reg 1 s8. Bond issue 9(1) For the purposes of subsections 14(1) and 25(1) of the Act, every community bond corporation shall provide to the minister in its application to issue project bonds: (a) a business plan and a letter of understanding as described in clauses 23(a) and (b); (b) a draft offering memorandum; (c) a proposed plan to market and distribute the community bonds; (d) a certified copy of its bylaws; (e) a copy of its articles, amended in the manner required by the minister; (f) a review and assessment, prepared in accordance with subsections (3) and (4), of the commercial viability of the eligible business and the project in which the proceeds of the community bond are proposed to be invested; and (g) any other information that the minister or the review committee may require to decide whether to approve the issue. 8 C-16.1 REG 1 COMMUNITY BONDS (2) For the purposes of subsections 14(1) and 25(1) of the Act, the community bond corporation shall provide the following information to the minister in its application to issue community bonds other than project bonds: (a) the investment criteria to be used by the community bond corporation, including proposed types of investments the community bond corporation will seek to attract; (b) a draft offering memorandum; (c) a proposed plan to market and distribute the community bonds; (d) a certified copy of its bylaws; (e) a copy of its articles, amended in the manner required by the minister; and (f) any other information that the minister or the committee may require to decide whether to approve the issue. (3) The review and assessment required by clause (1)(f) or 23(c) must be prepared by a person who, in the opinion of the review committee, is qualified and independent of the eligible business in which the proceeds of the community bond are proposed to be invested. (4) The review and assessment required by clause (1)(f) or 23(c) must deal with at least the following: (a) the commercial viability of the eligible business and the project in which the proceeds of the community bond are proposed to be invested; (b) the environmental impact of the project; (c) the capital and debt structure of the eligible business; (d) any other matters that the review committee or the minister may require. 13 Jly 90 cC-16.1 Reg 1 s9; 26 Mar 93 SR 21/93 s7. Prescribed amount limits 10(1) For the purposes of subsection 16(1) of the Act, the prescribed amount for the 1990-91 fiscal year of the Government of Saskatchewan is $20 million. (1.1) For the purposes of subsection 16(1) of the Act, the prescribed amount for the 1991-92 fiscal year of the Government of Saskatchewan is $20 million. (1.2) For the purposes of subsection 16(1) of the Act, the prescribed amount for the 1992-93 fiscal year of the Government of Saskatchewan is $20 million. (1.3) For the purposes of subsection 16(1) of the Act, the prescribed amount for the 1993-94 fiscal year of the Government of Saskatchewan is $7 million. (1.4) For the purposes of subsection 16(1) of the Act, the prescribed amount for the 1995-96 fiscal year of the Government of Saskatchewan is $3 million. (2) For the purposes of subsection 16(2) of the Act, the prescribed amount is $2 million. 13 Jly 90 cC-16.1 Reg 1 s10; 13 Sep 91 SR 76/91 s2; 15 May 92 SR 27/92 s2; 26 Nov 93 SR 90/93 s3; 1 Mar 96 SR 4/96 s3. 9 COMMUNITY BONDS C-16.1 REG 1 Guarantee 11(1) For the purposes of subsection 17(2) of the Act, the guarantee of the Government of Saskatchewan: (a) shall be in the form and contain the terms and conditions set out in Form H; and (b) shall be signed by the Minister of Finance. (2) A copy of the guarantee mentioned in subsection (1) shall be printed or otherwise reproduced on the community bonds with respect to which the guarantee is given. 13 Jly 90 cC-16.1 Reg 1 s11. Payment on guarantee 12(1) For the purposes of section 18 of the Act, where: (a) an owner of a community bond makes a valid demand to the community bond corporation for redemption of the community bond; and (b) the community bond corporation does not fully redeem the bond in accordance with the bond’s terms; the bond owner is deemed to have applied to the Minister of Finance for payment of the guarantee of the Government of Saskatchewan. (2) Where a community bond corporation receives a valid demand for redemption of a community bond, the community bond corporation shall promptly give the Minister of Finance written notice of: (a) the demand; or (b) the amount payable under the demand. (3) Where the Government of Saskatchewan is required to pay on its guarantee in response to a valid demand for redemption of a community bond, the community bond corporation that issued the community bond shall immediately provide the Minister of Finance with: (a) a statement, satisfactory to that minister, of all amounts due and remaining unpaid on the community bonds with respect to which the demand is made; (b) a statement, satisfactory to that minister, of moneys and realizable assets available to the community bond corporation to pay the amounts due on the community bonds; and (c) any other information or documents that the Minister of Finance may request to allow the Government of Saskatchewan to pay on its guarantee. 10 C-16.1 REG 1 COMMUNITY BONDS (4) For the purpose of section 18 of the Act, where an owner of a community bond dies and a person who is entitled to payment of the guarantee of the Government of Saskatchewan wishes to obtain that payment, the person who makes the application: (a) shall apply in writing to the Minister of Finance or a person designated by the Minister of Finance for the purpose; and (b) shall submit with the application evidence satisfactory to the Minister of Finance or the person mentioned in clause (a) of: (i) the death of the bond owner; and (ii) the authority of the applicant to act as the legal representative of the bond owner. (5) Where the Government of Saskatchewan decides to pay on its guarantee on community bonds pursuant to clause 18(4)(b) of the Act, the Government of Saskatchewan shall give prior written notice, in any manner that it considers appropriate, to the holders of those bonds of its intention to pay on the guarantee. 13 Jly 90 cC-16.1 Reg 1 s12. Offering memorandum 13 For the purposes of subsection 19(1) of the Act, an offering memorandum is required to include: (a) the following information on the face page of the offering memorandum: (i) the name of the community bond corporation proposing to issue community bonds; (ii) the aggregate principal amount of community bonds proposed to be issued or the minimum and maximum principal amount of community bonds proposed to be issued, as the case may be; (iii) the maturity date or dates of the community bonds; (iv) in the case of: (A) a project bond, the name of the eligible business in which the community bond corporation proposes to invest the net proceeds of the community bond offering; or (B) a community bond that is not a project bond, a statement to the effect that no eligible business investments have been identified or selected by the community bond corporation as at the date of the offering memorandum and that particulars of investments cannot be provided to prospective purchasers of the community bonds; (v) information respecting the fees or commissions payable to selling agents of the community bonds and the estimated expenses of the issue of community bonds, including a statement of the net proceeds from the proposed issue available to the community bond corporation on completion of the offering; 11 COMMUNITY BONDS C-16.1 REG 1 (vi) a statement to the effect that no securities commission or other government department or authority has in any way passed on the merits of the securities offered under the offering memorandum; (b) details of the offering including: (i) the maturity date or dates of the community bonds; (ii) a description of the guarantee applicable to the community bonds, including a statement of those aspects of the investment which may be made by purchasers of the bonds which are not subject to any guarantee; (iii) in the case of a project bond, the exchange features that the bond contains allowing it to be exchanged for securities of the eligible business; (iv) a description of the intentions of the community bond corporation to pay a return on the principal amount of the bonds; (v) a statement to the effect that community bonds carry all of the features of voting shares and entitle the holders to participate in the affairs of the community bond corporation, including having voting rights, in the same manner as voting shares, and the method of calculating the voting rights by reference to the principal amount of bonds; (vi) a description of the rights and limitations the bond contains respecting transferability; (vii) a description of the circumstances in which the bonds may be redeemed; (c) information respecting the community bond corporation and its intended organization and investment activities, including: (i) the full name of the community bond corporation, the address of its head and principal office and the date of its incorporation under the Act; (ii) the names, municipalities of residence, positions held with the community bond corporation and principal occupations of the officers and directors of the community bond corporation; (iii) a statement that within a limited period of time, not to exceed 90 days, after the closing of the bond offering, a meeting of bondholders will be held to elect directors; (iv) the proposed management arrangements of the community bond corporation, including any contractual arrangements existing or proposed to be entered into between the community bond corporation and government agencies or third parties to provide technical, administrative and consulting services and assistance to the community bond corporation; 12 C-16.1 REG 1 COMMUNITY BONDS (v) the capital structure of the community bond corporation, including reference to the fact that the bonds carry all of the features of voting shares and that the bonds if held to their full term maturity date and not redeemed or exchanged: (A) will become voting shares of the community bond corporation; and (B) will no longer be subject to any guarantee of repayment of principal; (vi) any guarantee agreement between the community bond corporation and the Government of Saskatchewan; (vii) in the case of a community bond corporation that proposes to issue a project bond, a description of the features of the articles of the community bond corporation relating to the exchange of bonds for securities of the eligible business in which the community bond corporation has invested the net proceeds of the offering; (viii) the proposed use of the proceeds from the bond issue and distribution and the investment objectives of the community bond corporation, including, in the case of an offering of project bonds, a description of the rights, privileges, restrictions and conditions applicable to the securities of the eligible business in which the community bond corporation will invest the proceeds of the offering; (d) in the case of an offering of project bonds, a description of the eligible business, including: (i) the full name, address of the head and principal office and the laws under which the eligible business was incorporated; (ii) a summary description of the business, assets, financing from other sources and management capabilities of the eligible business; (iii) a summary description of the industry in which the eligible business carries on its business, including the particular role of the eligible business within the industry; (iv) the share capital and debt structure of the eligible business, including identification of all shareholders owning or controlling 10% or more of the voting shares of the eligible business or having options or warrants to own or control 10% or more of those securities; (v) if the eligible business has been in operation for at least six continuous months, a summary of the financial data of the eligible business including the balance sheet and operating data for at least the preceding year of operation; (vi) the names and municipalities of residence, position held and principal occupations of the officers and directors of the eligible business; (vii) all significant risk factors applicable to the business of the eligible business; 13 COMMUNITY BONDS C-16.1 REG 1 (d.1) in the case of an offering of project bonds, a description of how the eligible business in which proceeds from the offering will be invested will use those moneys; (e) in the case of a community bond that is not a project bond: (i) a statement of the criteria established by the community bond corporation by which it will analyze and select investments in eligible businesses and priority, if any, the community bond corporation has placed on each; (ii) the time within which the community bond corporation intends to effect investments in eligible businesses; (f) a description of relevant income tax considerations applicable to purchasers of community bonds, including a statement to the effect that prospective purchasers should consult with tax advisors with respect to their individual circumstances; (g) a description of the plan of the community bond corporation for marketing of the bonds, including: (i) a description of contracts entered into for the sale of bonds and the amount of fees or commissions payable under those contracts and the selling agents with whom the contracts have been executed; (ii) a statement to the effect that selling agents have no obligation to purchase any community bonds but instead have agreed to use their best efforts, only, to sell the bonds; (iii) a description of the procedure for distributing the offering memorandum; (iv) a description of eligible purchasers; (v) a description of the method by which purchase applications for the bonds may be submitted; (vi) a description of the maximum purchase limits applicable to the offering of the bonds; (vii) a statement of the duration of the selling period; (viii) a statement that a purchaser may cancel a purchase application by providing written notification on or before 12:00 noon on the second business day following the expiration of the selling period; (h) a description of investment considerations and significant risk factors relating to the community bonds, including: (i) a description of the manner in which a return on the principal amount of a community bond may be generated and paid to the bondholder; 14 C-16.1 REG 1 COMMUNITY BONDS (ii) a statement to the effect that the investment that the community bond corporation will make in the securities of an eligible business may be regarded as having a high degree of risk due to the nature of the business and present stage of development of the eligible business; (iii) in the case of a project bond, a description of the significant risks associated with any exchange of bonds for securities of the eligible business; (iv) a statement that community bonds held beyond full term maturity date will no longer be subject to any guarantee of repayment of principal; (i) a listing of contracts that are material to the business of the community bond corporation; (j) a description of the transfer agent and registrar of the community bond corporation; (k) a description of the contractual rights of cancellation and damages which will be available to purchasers of the community bonds; (l) a certificate, signed by two officers of the community bond corporation, that insofar as the offering memorandum relates to the community bonds described in it, the offering memorandum contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made; and (m) any other information, including information respecting compliance with the Act and these regulations, that the minister may require. 13 Jly 90 cC-16.1 Reg 1 s13; 26 May 93 SR 21/93 s8. Information to be contained in Finance statements 14(1) For the purpose of subsection 19(2) of the Act, a community bond corporation shall annually provide to owners of its community bonds and to the minister a set of financial statements prepared in accordance with generally accepted accounting principles. (2) A community bond corporation shall make the financial statements mentioned in subsection (1) available to owners of community bonds through: (a) a direct mailing to bond owners at their registered address: or (b) publishing the financial statements in a newspaper of general circulation in the municipality in which the community bond corporation has its head office. 13 Jly 90 cC-16.1 Reg 1 s14; 26 Mar 93 SR 21/93 s9. 15 COMMUNITY BONDS C-16.1 REG 1 Ineligible purchasers 14.1 For the purposes of clause 21(1)(i) of the Act, immigrant investor funds established pursuant to the Immigration Act (Canada) are designated as persons who are not eligible purchasers of community bonds. 26 Mar 93 SR 21/93 s10. Form of bond 15 For the purposes of clause 23(1)(b) of the Act: (a) a community bond that is not a project bond is required to be substantially in Form I; (b) a project bond is required to be substantially in Form J. 13 Jly 90 cC-16.1 Reg 1 s15; 26 Mar 93 SR 21/93 s11. 16 Repealed. 26 Mar 93 SR 21/93 s12. Rights of bond owners 16.1 For the purposes of clause 23(1)(f) of the Act, community bond owners have the right: (a) to vote at all meetings of community bond owners; and (b) to fully participate in dividends and distributions of capital on liquidation or winding-up of the community bond corporation in proportion to the outstanding principal amount of community bond owned. 26 Mar 93 SR 21/93 s13. Early redemption 17 For the purposes of clause 23(1)(e) of the Act, a person who is entitled to and wishes to obtain early redemption of a community bond shall apply to redeem the bond: (a) by submitting a notice of intention to demand redemption to the community bond corporation not later than 90 days before the early term maturity date; (b) by completing the demand for redemption endorsed on the bond certificate; and (c) by presenting the bond for redemption. 13 Jly 90 cC-16.1 Reg 1 s17. Time limits on investments 18(1) For the purposes of clause 23(1)(g) of the Act, if a community bond corporation does not invest the proceeds of an issue and distribution of community bonds in an eligible business within the times prescribed by subsection (2), the community bond corporation shall repay any uninvested proceeds to the bond owners on a pro rata basis as repayment of principal. 16 C-16.1 REG 1 COMMUNITY BONDS (2) For the purposes of subsection (1), a community bond corporation shall invest the proceeds within: (a) in the case of a community bond corporation that has issued a project bond, six months of the closing date of the issue and distribution; (b) in the case of a community bond corporation that has issued a bond that is not a project bond, 24 months of the closing date of the issue and distribution. (3) Notwithstanding subsection (2), the community bond corporation may apply in writing to the review committee before the time prescribed in that subsection for approval to extend the time within which it is required to invest the proceeds. (4) On receipt of a written application pursuant to subsection (3), if the review committee is satisfied that an extension would not be contrary to the interests of the bond owners and would be in the best interests of the community bond corporation, the review committee may extend the time within which the community bond corporation is required to invest the proceeds by an additional period not to exceed six months. (5) Notwithstanding the principal sum stated on a community bond to be payable under the community bond, the principal sum that the community bond corporation is liable to pay under the community bond shall be reduced by the amount of any repayment of principal made pursuant to this section. (6) Every community bond is deemed to contain and be subject to the provisions of this section. 26 Mar 93 SR 21/93 s14. Divesting 19(1) For the purposes of clause 23(1)(g) of the Act, if a community bond corporation divests itself of all or part of its investment in an eligible business, the community bond corporation, within 90 days of receiving the proceeds of the divestiture, shall pay those proceeds to its bond owners on a pro rata basis in the manner prescribed in this section. (2) When paying proceeds of a divestiture pursuant to subsection (1), the community bond corporation shall apply the proceeds firstly as a repayment of principal and secondly, if there are any proceeds left after the principal has been fully repaid, as a return on the bond owner’s investment in the community bonds. (3) Notwithstanding subsection (1), if, within the 90 day period mentioned in that subsection, a community bond corporation that has issued a community bond that is not a project bond has identified another eligible business in which it proposes to invest the proceeds of the divestiture, the community bond corporation’s obligation to repay the proceeds of the divestiture is limited to those proceeds which have not been invested in the other eligible business within six months of receiving the proceeds of the divestiture. 17 COMMUNITY BONDS C-16.1 REG 1 (4) Notwithstanding the principal sum stated on a community bond to be payable under the community bond, the principal sum that the community bond corporation is liable to pay under the community bond shall be reduced by the amount of any repayment of principal made pursuant to this section. (5) Every community bond is deemed to contain and be subject to the provisions of this section. 26 Mar 93 SR 21/93 s15. Advertising and promotion 20(1) In order to be eligible to sell community bonds during an initial issue and distribution, a selling agent shall enter into an agency agreement with the community bond corporation and: (a) be a selling agent registered to trade securities pursuant to The Securities Act, 1988; or (b) have completed a course approved by the minister before selling bonds and reside in the municipality in which the community bond corporation has its head office or a nearby municipality. (2) During an initial issue and distribution of community bonds, no community bond corporation, no director, officer, employee, agent or representative of the community bond corporation and no selling agent or other person soliciting sales of community bonds shall: (a) distribute any advertising or promotional material that does not comply with the requirements of the Act and these regulations and that has not been approved in writing by the minister; (b) offer, promote, advertise or solicit sales of community bonds except on the basis of the offering memorandum approved by the minister for those community bonds and the information contained in that offering memorandum; or (c) make any representation, claims or statements relating to the community bonds or any business in which the community bond proceeds are proposed to be invested except as contained in the offering memorandum mentioned in clause (b) or advertising or promotional material approved in writing by the minister. (3) No advertising or promotional material shall: (a) include an untrue statement; (b) omit to state a material fact necessary to prevent it from being misleading; (c) include a statement that is misleading when taken out of context of the material; (d) include a statement that conflicts with that contained in the offering memorandum; 18 C-16.1 REG 1 COMMUNITY BONDS (e) include any extravagant claim or statement; (f) contain unduly promotional or excessive language; (g) present an unbalanced view of the proposed investment; (h) make any representation that all or any of the purchase price of the bond will be repurchased or refunded, except in accordance with the Act, these regulations and the offering memorandum; (i) give any undertaking, except as to the guarantee of the principal amount of the bond, relating to the future value or price of the bond or securities of any eligible business; (j) fail to include a reference to the existence or availability of more complete information in an offering memorandum; (k) use charts or graphs to illustrate past performance of the community bond corporation or an eligible business unless drawn on a scale that avoids misleading implications; or (l) contain financial forecasts or projections. (4) No person shall advertise or promote a community bond before formal notice of approval to issue the bonds is received by the community bond corporation. (5) Promotional meetings may be held to inform potential purchasers of the opportunity to purchase community bonds only if: (a) they are held after the approval by the review committee to issue and distribute the community bonds; (b) any verbal presentations made at a meeting conform to subsection (3); (c) all of the advertising and promotional material used conforms to this section; and (d) copies of the offering memorandum are made available at the meeting and an announcement is made at the meeting that a sale can be made only through the offering memorandum. 13 Jly 90 cC-16.1 Reg 1 s20; 26 Mar 93 SR 21/93 s16. Early exchange 21 For the purposes of clause 23(1)(c) of the Act and subsection 23(2) of the Act, a community bond corporation shall, with its request for an offer of early exchange, submit to the review committee: (a) a copy of the results of a vote of the bond owners of the community at a special bond owners’ meeting approving, by way of an ordinary resolution, an offer for the exchange of all community bonds for securities of the eligible business; (b) relevant financial information respecting the eligible business; 19 COMMUNITY BONDS C-16.1 REG 1 (c) a draft disclosure document proposed to be distributed to bond owners; (d) a communications plan respecting disclosure to bond owners; and (e) any other information the review committee may require to determine whether to approve the exchange. 13 Jly 90 cC-16.1 Reg 1 s21. Manner of holding moneys 22 For the purposes of subsection 24(1) of the Act, a community bond corporation shall hold all its moneys, other than moneys invested in eligible businesses, by depositing those moneys: (a) with a Schedule A bank as defined in the Bank Act (Canada), as amended from time to time, or a credit union incorporated or continued pursuant to The Credit Union Act, 1985; (b) in an account that is insured under the Canada Deposit Insurance Corporation Act, as amended from time to time, and that does not exceed the limits of that insurance; or (c) in securities of or guaranteed by the Government of Canada, the Government of Saskatchewan, the government of any other province or territory of Canada, or any municipal corporation of Saskatchewan. 13 Jly 90 cC-16.1 Reg 1 s22; 26 Mar 93 SR 21/93 s17. Approval to invest 23 For the purposes of subsection 24(3) of the Act, the community bond corporation shall provide the following information to the minister and the review committee in its application to invest in an eligible business: (a) a business plan respecting the eligible business that is satisfactory to the review committee; (b) a letter of understanding between the community bond corporation and the eligible business that sets out the terms of the proposed investment in the eligible business and that includes: (i) the size and terms of the investment; (ii) a description of the securities the eligible business will issue to the community bond corporation in exchange for the investment; and (iii) the redemption and exchange provisions relating to the securities; (c) a review and assessment, prepared in accordance with subsections 9(3) and (4), of the commercial viability of the eligible business and the project in which proceeds of the community bond are proposed to be invested. 13 Jly 90 cC-16.1 Reg 1 s23; 26 Mar 93 SR 21/93 s18. 20 C-16.1 REG 1 COMMUNITY BONDS Purchase limits by certain person 24 For the purposes of subclause 24(5)(b)(ii) of the Act, persons having controlling interest, as defined by The Business Corporations Act, in the eligible business may not purchase more than 40% of the principal amount of the community bond issue in aggregate. 13 Jly 90 cC-16.1 Reg 1 s24. Limits on pool bond investments 24.1 No community bond corporation that has issued a community bond that is not a project bond shall invest more than 50% of the proceeds of the issue of that community bond in one eligible business. 26 Mar 93 SR 21/93 s19. Acquisition of existing securities 24.2 A community bond corporation may invest in an eligible business by acquiring existing issued securities of the eligible business only if: (a) the eligible business has relocated to and commenced carrying on business in Saskatchewan within the 12 months preceding the date of the proposed investment; and (b) the existing securities to be acquired by the community bond corporation were issued by the eligible business to the person from whom the community bond corporation proposes to acquire them as an interim measure until the community bond corporation is able to raise proceeds from the sale of community bonds to invest in the eligible business by acquiring those securities. 26 Mar 93 SR 21/93 s19. Prohibited uses by eligible businesses of invested moneys 24.3 No eligible business shall use any moneys invested in the eligible business by a community bond corporation for any of the following purposes: (a) lending; (b) financing or refinancing the debt of the eligible business; (c) investing in or purchasing real property, except for real property that is incidental or ancillary to the principal economic activity of the eligible business; (d) acquiring any securities, except where authorized by the Act or these regulations; (e) paying dividends; (f) repaying any loans made to the eligible business by: (i) a shareholder in the eligible business; 21 COMMUNITY BONDS C-16.1 REG 1 (ii) a person who was a shareholder in the eligible business at any time within the two years prior to the investment by the community bond corporation; or (iii) a person who is not at arm’s length from the eligible business or a person mentioned in clause (i) or (ii); (g) relocating any of its offices or places of carrying on business within Saskatchewan; (h) purchasing goods or services provided to the eligible business by a shareholder in the eligible business or a person who is not at arm’s length from the eligible business or a shareholder in the eligible business, unless the goods or services are provided in the ordinary course of business for fair consideration by a person who is ordinarily engaged in the business of providing those goods or services. 26 Mar 93 SR 21/93 s19. Limits on investment in eligible business 24.4 No community bond corporation shall invest in an eligible business if the investment by the community bond corporation would, in the opinion of the review committee, result in: (a) more than 50% of the capital cost of the project for which investment by the community bond corporation is proposed being provided by or resulting from: (i) investments by community bond corporations; (ii) grants or other financial assistance provided by the Government of Saskatchewan; and (iii) loans, the repayment of which is guaranteed by the Government of Saskatchewan; or (b) less than 25% of the equity in the eligible business being provided by shareholders of the eligible business, other than the community bond corporation or the Government of Saskatchewan. 26 Mar 93 SR 21/93 s19. Incorporation fee 24.5(1) The applicants to incorporate a community bond corporation shall pay to the minister an incorporation fee of $350. (2) The applicants to incorporate a community bond corporation shall pay the fee prescribed in subsection (1) when they submit their application, but the fee shall be returned to the applicants, without interest, if the application to incorporate is not approved. 26 Mar 93 SR 21/93 s19. 24.6 Repealed. 1 Mar 96 SR 4/96 s4. 22 C-16.1 REG 1 COMMUNITY BONDS FORM A Application for Incorporation under The Community Bonds Act [Clause 5(1)(a)] (by a Rural Development Corporation) Please see reverse for instructions. 1. Name of Rural Development Corporation: 2. Proposed name of Community Bond Corporation: 3. Telephone number and mailing address of the Rural Development Corporation: 4. Attach the following: a. Proposed articles of incorporation; b. Notice of Directors; c. Notice of registered office; d. Evidence of age eligibility of youth director; e. A letter from the applying Rural Development Corporation designating the member of the corporation who shall be its representative on the board of directors; and f. Incorporation fee of $350 payable to the Minister of Finance pursuant to section 24.5 of The Community Bonds Regulations. 5. ______________________________________ _________________________________ Name (Print) Date ______________________________________ Authorized Signature ______________________________________ Office Held 26 Nov 93 SR 90/93 s4. 23 COMMUNITY BONDS C-16.1 REG 1 FORM B Application for Incorporation under The Community Bonds Act [Clause 5(1)(b)] (by other than a Rural Development Corporation) Please see reverse for instructions. 1. Proposed name of Community Bond Corporation: 2. Telephone number and mailing address of applicant: 3. Names of applicants (at least six individuals): 4. Attach the following: a. Proposed articles of incorporation; b. Notice of Directors; c. Notice of registered office; d. Evidence of age eligibility of youth director; e. Supporting resolution from the Municipal Council; f. A letter from the Municipal Council designating the member of Council who shall be its representative on the board of directors; and g. Incorporation fee of $350 payable to the Minister of Finance pursuant to section 24.5 of The Community Bonds Regulations. 5. _______________________________________ _________________________________ Name (Print) Date _______________________________________ Signature 26 Nov 93 SR 90/93 s4. 24 C-16.1 REG 1 COMMUNITY BONDS FORM C Articles of Incorporation The Community Bonds Act [Clause 5(2)(a)] (Where applicant is a rural development corporation) 1. Name of corporation: * COMMUNITY BOND CORPORATION 2. The municipality in which the registered office is to be situated: * __________________ , Saskatchewan 3. The classes and any maximum number of securities that the corporation is authorized to issue: i) The corporation is authorized, subject to the provisions of The Community Bonds Act, to issue community bonds having the attributes described in The Community Bonds Act . ii) Community bonds shall carry the right to one (1) vote for every $1.00 principal amount thereof at all meetings of bonds and shall be fully participating as to dividends and distributions of capital upon liquidation or winding-up of the corporation. 4. Restrictions, if any, on bond transfers: No bond owner shall be entitled to transfer a bond except on the register maintained for that purpose. 5. Minimum and maximum number of directors: Not less than six (6) nor more than ______________directors, as determined by the directors from time to time. 6. So long as the corporation is a community bond corporation pursuant to The Community Bonds Act, the business of the corporation is restricted to: i) Issuing community bonds; ii) Investing its funds in eligible businesses, in accordance with The Community Bonds Act; and iii) Doing any other thing that is necessary or incidental to carrying out its business, fulfilling its obligations and enforcing its rights under The Community Bonds Act. 7. Other provisions if any. i) So long as the corporation is a community bond corporation under The Community Bonds Act: a) One director of the corporation is to be the chairperson of the rural development corporation or the nominee of the board of directors of the rural development corporation; b) The director mentioned in clause (a) shall be a signing officer of the corporation; 25 COMMUNITY BONDS C-16.1 REG 1 c) At least one director shall be not less than sixteen (16) years of age and not more than twenty-five (25) years of age;

d) All directors shall be residents of Saskatchewan and e) No person who owns or controls directly or indirectly more than 10% of the voting shares of an eligible business, as defined in The Community Bonds Act, in which moneys from a community bond issued and distributed by the corporation were invested, shall be a director or officer of the corporation. ii) The corporation and these Articles are subject to The Community Bonds Act and regulations under that Act. 8. Incorporator: _________________________________________ Name of Rural Development Corporation _________________________________________ Address of registered office _________________________________________ ___________________________________ Authorized signature Position held 13 Jly 90 cC-16.1 Reg 1 Form C. FORM D Articles of Incorporation The Community Bonds Act [Clause 5(2)(b)] (Where applicant is not a rural development corporation) 1. Name of corporation: * COMMUNITY BOND CORPORATION 2. The municipality in which the registered office is to be situated: * __________________ , Saskatchewan 3. The classes and any maximum number of securities that the corporation is authorized to issue: i) The corporation is authorized, subject to the provisions of The Community Bonds Act, to issue community bonds having the attributes described in The Community Bonds Act. ii) Community bonds shall carry the right to one (1) vote for every $1.00 principal amount thereof at all meetings of bonds and shall be fully participating as to dividends and distributions of capital on liquidation or winding-up of the corporation. 4. Restrictions, if any, on bond transfers: No bond owner shall be entitled to transfer a bond except on the register maintained for that purpose. 5. Minimum and maximum number of directors: Not less than six (6) nor more than ______________directors, as determined by the directors from time to time. 26 C-16.1 REG 1 COMMUNITY BONDS 6. So long as the corporation is a community bond corporation pursuant to The Community Bonds Act, the business of the corporation is restricted to: i) Issuing community bonds; ii) Investing its funds in eligible businesses, in accordance with The Community Bonds Act; and iii) Doing any other thing that is necessary or incidental to carrying out its business, fulfilling its obligations and enforcing its rights under The Community Bonds Act. 7. Other provisions if any: i) So long as the corporation is a community bond corporation under The Community Bonds Act; a) One director of the corporation is to be the mayor, reeve or nominee of the council of the municipality in which the head office of the corporation is located; b) The director mentioned in clause 7(a) shall be a signing officer of the corporation; c) At least one director shall be not less than sixteen (16) years of age and not more than twenty-five (25) years of age; d) All directors shall be residents of Saskatchewan; and e) No person who owns or controls directly or indirectly more than 10% of the voting shares of an eligible business, as defined in The Community Bonds Act, in which moneys from a community bond issued and distributed by the corporation were invested, shall be a director or officer of the corporation. ii) The corporation and these Articles are subject to The Community Bonds Act and regulations under that Act. 8. Incorporator: Name in Full Residential or business address giving street and number, or R.R. number and post office (and postal code) Signature 1. _____________________________________________________________________________ 2. _____________________________________________________________________________ 3. _____________________________________________________________________________ 4. _____________________________________________________________________________ 5. _____________________________________________________________________________ 6. _____________________________________________________________________________ 7. _____________________________________________________________________________ 8. _____________________________________________________________________________ 9. _____________________________________________________________________________ 10. ____________________________________________________________________________ 13 Jly 90 cC-16.1 Reg 1 Form D. 27 COMMUNITY BONDS C-16.1 REG 1 FORM E Notice of Registered Office [Clause 5(3)(c)] The Community Bonds Act 1. Name of corporation: ___________________________ Corporation No. __________ * COMMUNITY BOND CORPORATION 2. Location of registered office: 3. Mailing address of registered office including postal code: 4. Effective date: __________________________________ Date Name Office Held Signature 13 Jly 90 cC-16.1 Reg 1 Form E; 26 Nov 93 SR 90/93 s5. FORM F Notice of Directors [Subsection 5(4)] The Community Bonds Act 1. Name of corporation: ___________________________ Corporation No. __________ *COMMUNITY BONDS CORPORATION 2. As of the ______ day of _____________ , 19 __, the directors of the corporation are: Full Name Address Occupation Citizenship Date Name Office Held Signature 13 Jly 90 cC-16.1 Reg 1 Form F; 26 Nov 93 SR 90/93 s6. 28 C-16.1 REG 1 COMMUNITY BONDS FORM G [Subsection 5(5)] Saskatchewan Economic Development Corporation Number Community Bonds Office Certificate of Incorporation The Community Bonds Act I hereby certify that is this day incorporated under The Community Bonds Act. Given under my hand and seal this __________________________ day of ______________________ , 19 ___. __________________________________________ Minister 13 Jly 90 cC-16.1 Reg 1 Form G; 26 Nov 93 SR 90/93 s7. 29 COMMUNITY BONDS C-16.1 REG 1 FORM H Guarantee by the Government of Saskatchewan [Clause 11(1)(a)] The Community Bonds Act Pursuant to and in accordance with The Community Bonds Act, the Government of Saskatchewan hereby guarantees to the registered holders for the time being of each Community Bond issued by *__________Community Bond Corporation comprising part of its Community Bonds due *___________, 199*___ and extendable to *__________, 200*___ payment of the principal of the Community Bonds according to the actual wording of the Bonds. 26 Mar 93 SR 21/93 s20. FORM I Multi Project Bond [Clause 15(a)] [FACE OF BOND] * COMMUNITY BOND CORPORATION COMMUNITY BOND DUE *__________, 199*___ EXTENDABLE TO *__________, 200*___ ISSUED UNDER THE AUTHORITY OF THE COMMUNITY BONDS ACT (THE “ACT”) (A reference in this Bond to “Act” is deemed to include a reference to regulations made under the Act) THIS BOND IS UNCONDITIONALLY GUARANTEED BY THE GOVERNMENT OF SASKATCHEWAN AS TO THE PRINCIPAL AMOUNT OF THE BOND AND NOT AS TO ANY INTEREST OR OTHER AMOUNTS OWING ON THE BOND. THE GUARANTEE OF THE GOVERNMENT OF SASKATCHEWAN MAY BE REALIZED BY THE BONDHOLDER ONLY ON OR AFTER MATURITY DATE OF THE BOND UNLESS OTHERWISE AUTHORIZED BY THE ACT. No.__________ * COMMUNITY BOND CORPORATION (herein referred to as the “Corporation”) for value received promises to pay: (a) to _______________________________(herein referred to as “the registered holder”) at the holder’s option, on the *_____ day of *____, 199*__ (herein referred to as the “early term maturity date”) as described in Condition 5 on the reverse of this Bond; (b) if the term of the Bond is extended, to the registered holder on the * _____day of *_____, 200*__ (herein referred to as the “full term maturity date”) as described in Condition 5 on the reverse of this Bond; 30 C-16.1 REG 1 COMMUNITY BONDS (c) to the personal representative of a deceased registered holder in the circumstances described in Condition 6 on the reverse of this Bond; the principal sum of* __________________DOLLARS in lawful money of Canada (subject to the following paragraph, herein referred to as the “Principal Amount”) on presentation and surrender of this Bond to the Registrar and to pay a return on this Bond, if any, in the amount and manner as determined in accordance with the Act and with Condition 7 on the reverse of this Bond. The Principal Amount payable under this Bond may be less than the principal sum stated on this Bond if there has been a repayment of part of the principal sum. The outstanding Principal Amount may be determined by contacting the Registrar. This Bond cannot be transferred by the original owner for at least two years from the date of issue of the Bond unless otherwise permitted pursuant to the Act. See Condition 3 on the reverse of this Bond. This Bond is issued pursuant to the Act and the articles of the Corporation. This Bond is subject to and has the benefit of the Act, the articles and the Conditions endorsed on this Bond. Guarantee Fee If the term of this Bond is extended to the full term maturity date, the registered holder agrees to pay to The Corporation, on the early term maturity date, the amount required to reimburse the Corporation for the fee payable to the minister for the guarantee of the Government of Saskatchewan on the extension of the term to the full term maturity date. Participation and Voting Rights In addition to the guarantee of principal and other special features of the Bonds described in this Bond, in the Act and the articles of the Corporation, the Bonds carry features which entitle the holders to participate in the affairs of the Corporation, including having voting rights, in a manner similar to owners of common shares. If the Bonds are held to the full term maturity date and are not redeemed at that time, the Bonds will automatically convert into common shares of the Corporation and will no longer be subject to any guarantee of repayment of principal. IN WITNESS WHEREOF this Bond has been executed on behalf of *_________Community Bond Corporation as of the *____day of *_______________, 199*_____. *Community Bond Corporation Countersigned by the Registrar _________________________________________________ Per: ________________________________ Secretary ___________________________________ Authorized Signing Officer COPY OF GUARANTEE BY THE GOVERNMENT OF SASKATCHEWAN Pursuant to and in accordance with The Community Bonds Act, the Government of Saskatchewan hereby guarantees to the registered holders for the time being of each Bond issued by *__________Community Bond Corporation comprising part of its Community Bonds due *__________, 199*___ and extendable to *________, 200*___ payment of the principal of the Bonds according to the actual wording of the Bonds. Minister of Finance 31 COMMUNITY BONDS C-16.1 REG 1 [BACK OF BOND] THE CONDITIONS REFERRED TO WITHIN 1. DENOMINATIONS The Bonds are issuable only as fully registered bonds without coupons in any denomination in an integral multiple of $100. 2. REGISTRATION The Corporation will keep in *_________, Saskatchewan by any Registrar that may be appointed by the Corporation for the purpose, a register in which shall be entered the names and addresses of the holders of the Bonds and particulars of the Bonds. The Registrar shall be *_____________, *__________, Saskatchewan, unless and until the Corporation appoints a different Registrar. In the event of any such change, the Corporation shall give notice of such change to the registered holders of the Bonds. 3. TRANSFERABILITY Prior to *_______________, 199*___, the Bonds will be transferable only to the spouse, children or parents of the registered holder, by disposition on death of the registered holder or to a creditor of the registered holder where the Bonds were used as collateral by the holder. After *____________, 199*___, the Bonds will be transferable to eligible purchasers as defined in the Act. All transfers are to be effected through the Registrar by written request and are subject to the requirements of the Registrar respecting reasonable documentation. 4. ELIGIBLE PURCHASERS The Bonds may be acquired only by individuals resident in Saskatchewan; estates or trusts where the executor, trustee or beneficiaries is or are Saskatchewan residents; corporations, including cooperatives and non-profit corporations, having their head office in Saskatchewan and Saskatchewan municipalities. Eligible purchasers do not include labour-sponsored venture capital corporations, venture capital corporations, small business incentive corporations or any other person designated by regulations under the Act. A person who acquires Bonds and who is not an eligible purchaser is not entitled to payment of the Province’s guarantee of the Bonds or to exercise any voting rights attached to the Bonds. 5. REDEMPTION ON EARLY OR FULL TERM MATURITY DATES The Bonds are, subject to notice given at least 90 days prior to the maturity date, redeemable for the Principal Amount at the early term maturity date and, if the term is extended, at the full term maturity date. In either case, to redeem this Bond the registered holder or the agent or attorney of the registered holder must complete the Demand for Redemption form endorsed hereon and present this Bond to the Registrar. The Government of Saskatchewan unconditionally guarantees payment of the Principal Amount of this Bond in the circumstances described in this Condition 5. 6. REDEMPTION ON DEATH OF HOLDER This Bond may be redeemed prior to any date of maturity on the death of the registered holder. To redeem this Bond in those circumstances, the personal representative of the deceased holder must complete the Demand for Redemption form endorsed on this Bond and present this Bond to the Registrar. The Government of Saskatchewan unconditionally guarantees payment of the Principal Amount of this Bond in the circumstances described in Condition 6. 32 C-16.1 REG 1 COMMUNITY BONDS 7. RETURN For each fiscal year, the Corporation shall pay to holders of the Bonds a return in an amount equal to its net earnings for the fiscal year, as determined under the Act, unless it elects, with the approval of and in accordance with any directions made by the minister, to retain all or some of its net earnings. Subject to the provisions of the Act, the Corporation may also be permitted to pay other amounts to the holders of the Bonds. No interest or other rate of return is guaranteed by the Corporation or the Government of Saskatchewan. 8. TERM The Bonds mature on *___________, 199*___ but are extendable to *__________, 200*___. Holders of the Bonds who have not elected at least 90 days prior to the early term maturity date on *__________, 199*____, to redeem their Bonds will be deemed to have elected to extend the term of the Bonds to *__________, 200*___. Bonds held to the full term maturity date and which are not redeemed at that time will be deemed to be converted into common shares of the Corporation and will no longer be subject to any guarantee of repayment of principal. DEMAND FOR REDEMPTION Redemption of this Bond is hereby demanded. Dated: (Except in the case of death, must be dated at least 90 days before early or full term maturity date) ____________________________________________________________ Effective Date of Redemption: ___________________________________________________ Signature of Registered Holder or personal representative: ________________________ Signature guaranteed by: _______________________________________________________ Stamp of Redemption Agent: ____________________________________________________ TRANSFER FOR VALUE RECEIVED _______________________________________________________ hereby sells, assigns and transfers to _______________________________________________________________________________ (Name) _______________________________________________________________________________ (Address) _______________________________________________________________________________ the Principal Amount of the within Bond and hereby irrevocably constitutes and appoints the Registrar as attorney to transfer this Bond on the register kept by the Registrar for such purposes, with full power of substitution in the premises. Dated: _______________________________ _________________________________ (Signature of Registered Holder) Signature guaranteed by: _______________________________________________________ The transferee represents and warrants that the transferee is an eligible purchaser as described in Condition 4 of the Conditions of the within Bond. Dated: _______________________________ _________________________________ (Signature of transferee) Signature guaranteed by: _______________________________________________________ 26 Mar 93 SR 21/93 s20; 26 Nov 93 SR 90/93 s8; 1 Mar 96 SR 4/96 s5. 33 COMMUNITY BONDS C-16.1 REG 1 FORM J Specific Bond [Clause 20(a)] [FACE OF BOND] * COMMUNITY BOND CORPORATION COMMUNITY BOND DUE *__________, 199*_____ EXTENDABLE TO *__________, 200*_____ ISSUED UNDER THE AUTHORITY OF THE COMMUNITY BONDS ACT (THE “ACT”) (All references in this Bond to “Act” include references to the regulations under the Act) THIS BOND IS UNCONDITIONALLY GUARANTEED BY THE GOVERNMENT OF SASKATCHEWAN AS TO THE PRINCIPAL AMOUNT OF THE BOND AND NOT AS TO ANY INTEREST OR OTHER AMOUNTS OWING ON THE BOND. THE GUARANTEE OF THE GOVERNMENT OF SASKATCHEWAN MAY BE REALIZED BY THE BONDHOLDER ONLY ON OR AFTER MATURITY DATE OF THE BOND UNLESS OTHERWISE AUTHORIZED BY THE ACT OR REGULATIONS UNDER THAT ACT. No.________ * COMMUNITY BOND CORPORATION (herein referred to as the “Corporation”) for value received promises to pay: (a) to _______________________________(herein referred to as “the registered holder”) at the holder’s option, on the *___day of *______, 199*__ (herein referred to as the “early term maturity date”) as described in Condition 5 on the reverse of this Bond; (b) if the term of the Bond is extended, to the registered holder on the *___day of *_____, 200*__ (herein referred to as the “full term maturity date”) as described in Condition 5 on the reverse of this Bond; (c) to the personal representative of a deceased registered holder in the circumstances described in Condition 6 on the reverse of this Bond; the principal sum of * __________________ DOLLARS in lawful money of Canada (subject to the following paragraph, herein referred to as the “Principal Amount”) on presentation and surrender of this Bond to the Registrar and to pay a return on this Bond, if any, in the amount and manner as determined in accordance with the Act and with Condition 7 on the reverse of this Bond. The Principal Amount payable under this Bond may be less than the principal sum stated on this Bond if there has been a repayment of part of the principal sum. The outstanding Principal Amount may be determined by contacting the Registrar. This Bond cannot be transferred by the original owner for at least two years from the date of issue of the Bond unless otherwise permitted pursuant to the Act. See Condition 3 on the reverse of this Bond. This Bond is issued pursuant to the Act and the articles of the Corporation. This Bond is subject to and has the benefit of the Act, the articles and the Conditions endorsed on this Bond. 34 C-16.1 REG 1 COMMUNITY BONDS Exchange Right This Bond is exchangeable at the option of the holder for common shares of *______________Corporation (the “Eligible Business”). The exchange may take place effective on the early term maturity date or the full term maturity date of the Bond or, on election by the holders of a majority in dollar amount of the Bonds and on approval of the review committee under the Act, at any time after two years from the date of issuance of the Bonds. Bonds exchanged at any time after the date which is two years from the date of issuance and on or before the early term maturity date will be exchangeable for *______common shares of the Eligible Business per $100 principal amount of Bonds, and Bonds exchanged at any time thereafter will be exchangeable for *______common shares of the Eligible Business per $100 principal amount of Bonds, in both cases subject to adjustment in certain circumstances. Guarantee Fee If the term of this Bond is extended to the full term maturity date, the registered holder agrees to pay to The Corporation, on the early term maturity date, the amount required to reimburse the Corporation for the fee payable to the minister for the guarantee of the Government of Saskatchewan on the extension of the term to the full term maturity date. Participation and Voting Rights In addition to the guarantee of principal and other special features of the Bonds described in this Bond, in the Act and the articles of the Corporation, the Bonds carry features which entitle the holders to participate in the affairs of the Corporation, including having voting rights, in a manner similar to owners of common shares. If the Bonds are held to the full term maturity date and are not redeemed or exchanged for common shares of the Eligible Business at that time, the Bonds will automatically convert into common shares of the Corporation and will no longer be subject to any guarantee of repayment of principal. IN WITNESS WHEREOF this Bond has been executed on behalf of *________Community Bond Corporation as of the *___day of *_________, 199*__. * Community Bond Corporation Countersigned by the Registrar Per: _________________________________ Secretary _________________________________________ Authorized Signing Officer COPY OF GUARANTEE BY THE GOVERNMENT OF SASKATCHEWAN Pursuant to and in accordance with The Community Bonds Act, the Government of Saskatchewan hereby guarantees to the registered holders for the time being of each Bond issued by *_________Community Bond Corporation comprising part of its Community Bonds due *__________, 199*___ and extendable to *________, 200*___ payment of the principal of the Bonds according to the actual wording of the Bonds. Minister of Finance 35 COMMUNITY BONDS C-16.1 REG 1 [BACK OF BOND] THE CONDITIONS REFERRED TO WITHIN 1. DENOMINATIONS The Bonds are issuable only as fully registered bonds without coupons in any denomination in an integral multiple of $100. 2. REGISTRATION The Corporation will keep in *_________, Saskatchewan by any Registrar that may be appointed by the Corporation for the purpose, a register in which shall be entered the names and addresses of the holders of the Bonds and particulars of the Bonds. The Registrar shall be *________, *__________, Saskatchewan, unless and until the Corporation appoints a different Registrar. In the event of any such change, the Corporation shall give notice of the change to the registered holders of the Bonds. 3. TRANSFERABILITY Prior to *__________, 199*___, the Bonds will be transferable only to the spouse, children or parents of the registered holder, by disposition on death of the registered holder or to a creditor of the registered holder where the Bonds were used as collateral by the holder. After *__________, 199*___, the Bonds will be transferable to eligible purchasers as defined in the Act. All transfers are to be effected through the Registrar by written request and are subject to the requirements of the Registrar respecting reasonable documentation. 4. ELIGIBLE PURCHASERS The Bonds may be acquired only by individuals resident in Saskatchewan; estates or trusts where the executor, trustee or beneficiaries is or are Saskatchewan residents; corporations, including cooperatives and non-profit corporations, having their head office in Saskatchewan and Saskatchewan municipalities. Eligible purchasers do not include labour-sponsored venture capital corporations, venture capital corporations, small business incentive corporations or any other person designated by regulations under the Act. A person who acquires Bonds and who is not an eligible purchaser is not entitled to payment of the Province’s guarantee of the Bonds or to exercise any voting rights attached to the Bonds. 5. REDEMPTION ON EARLY OR FULL TERM MATURITY DATES The Bonds are, subject to notice given at least 90 days prior to the maturity date, redeemable for the Principal Amount at the early term maturity date and, if the term is extended, at the full term maturity date. In either case, to redeem this Bond the registered holder or the agent or attorney of the registered holder must complete the Demand for Redemption form endorsed hereon and present this Bond to the Registrar. The Government of Saskatchewan unconditionally guarantees payment of the Principal Amount of this Bond in the circumstances described in this Condition 5. 6. REDEMPTION ON DEATH OF HOLDER This Bond may be redeemed prior to any date of maturity on the death of the registered holder. To redeem this Bond in those circumstances, the personal representative of the deceased holder must complete the Demand for Redemption form endorsed on this Bond and present the Bond to the Registrar. The Government of Saskatchewan unconditionally guarantees payment of the Principal Amount of this Bond in the circumstances described in this Condition 6. 36 C-16.1 REG 1 COMMUNITY BONDS 7. RETURN For each fiscal year, the Corporation shall pay to holders of the Bonds a return in an amount equal to its net earnings for the fiscal year, as determined under the Act, unless it elects, with the approval of and in accordance with any directions made by the minister, to retain all or some of its net earnings. Subject to the provisions of the Act, the Corporation may also be permitted to pay other amounts to the holders of the Bonds. No interest or other rate of return is guaranteed by the Corporation or the Government of Saskatchewan. 8. TERM The Bonds mature on *__________, 199*___ but are extendable to *________, 200*___. Holders of the Bonds who have not elected at least 90 days prior to the early term maturity date on *________, 199*___, either to redeem their Bonds or exchange them for common shares of the Eligible Business will be deemed to have elected to extend the term of the Bonds to *__________, 200*___. Bonds held to the full term maturity date and which are not redeemed or exchanged for common shares of the Eligible Business at that time will be deemed to be converted into common shares of the Corporation and will no longer be subject to any guarantee of repayment of principal. NOTICE OF EXCHANGE OF BONDS FOR COMMON SHARES OF THE ELIGIBLE BUSINESS The holder of this Bond hereby irrevocably exercises the right to exchange this Bond for common shares of the Eligible Business. Dated: _______________________________ _________________________________ (Signature of Registered Holder) Signature guaranteed by: _______________________________________________________ DEMAND FOR REDEMPTION Redemption of this Bond is hereby demanded. Dated: (Except in the case of death, must be dated at least 90 days before early or full term maturity date) ____________________________________________________________ Effective Date of Redemption: ___________________________________________________ Signature of Registered Holder or personal representative: ________________________ Signature guaranteed by: _______________________________________________________ Stamp of Redemption Agent: ____________________________________________________ 37 COMMUNITY BONDS C-16.1 REG 1 TRANSFER FOR VALUE RECEIVED _______________________________________________________ hereby sells, assigns and transfers to _______________________________________________________________________________ (Name) _______________________________________________________________________________ (Address) __________________________________________________________________ the Principal Amount of the within Bond and hereby irrevocably constitutes and appoints the Registrar as attorney to transfer this Bond on the register kept by the Registrar for such purposes, with full power of substitution in the premises. Dated: _______________________________ _________________________________ (Signature of Registered Holder) Signature guaranteed by: _______________________________________________________ The transferee represents and warrants that the transferee is an eligible purchaser as described in Condition 4 of the Conditions of this Bond. Dated: _______________________________ _________________________________ (Signature of transferee) Signature guaranteed by: _______________________________________________________ 26 Mar 93 SR 21/93 s4. 38 C-16.1 REG 1 COMMUNITY BONDS REGINA, SASKATCHEWAN Printed by the authority of THE QUEEN’S PRINTER Copyright©1996