)

) ,

GENERAL RULING ORDER 18 ­

SASKATCHEWAN SMALL BUSINESSSECURITY ISSUERS

)

)

II SaskatchewanSecuritiesCommission

Saskatchewan850 - 1914 Hamilton StreetRegina, CanadaS4P 3V7

(306) 787-5645(306) 787-5899 Telefax

§Acid·free Paper

GENERAL RULING/ORDER 18(THE SASKATCHEWAN SMALL BUSINESS SECURITY ISSUERS ORDER, 1990)

IN THE MATTER OFTHE SECURITIES AC1; 1988, S.S. 1988, c. S-42.2

AND

IN THE MATTER OFSASKATCHEWAN SMALL BUSINESS SECURITY ISSUERS

RULINGSection 83

WHEREAS a security issuer is defined in The Securities Act, 1988, S.S. 1988, c. S-42.2(the "Act") and The Securities Regulations, R.R.S., c. S-42.2 Reg. 1 (the "Regulations") asa person or company registered pursuant to the Act as a dealer authorized to trade insecurities of its own issue exclusively for its own account;

AND WHEREAS an application has been received by the Saskatchewan SecuritiesCommission (the "Commission") from the staff of the Commission for a ruling pursuantto clause 83(1)(a) of the Act that:

1. Certain of the requirements for registration pursuant to the Act as a securityissuer or as a partner, officer or salesperson of a security issuer; and

2. Certain of the ongoing requirements contained in the Act for a person orcompany registered pursuant to the Act as a security issuer or as a partner, officeror salesperson of a security issuer;

be waived with respect to a person or a company applying for registration as or who isregistered as a security issuer or a partner, officer or salesperson of a security issuerpursuant to the Act and this Ruling, as the case may be, where the person or companyapplying for registration or so registered is a person or company:

Protecting Saskatchewan Investors

2

1. That is incorporated, continued, organized or established pursuant to the laws ofthe Province of Saskatchewan;

2. That has its registered office and head office located in the Province ofSaskatchewan;

3. That carries on or will carry on a substantial part of its business in the Province ofSaskatchewan in that 75% of its business assets are or will be located in theProvince of Saskatchewan and 75% of its expenses are or will be incurred in theProvince of Saskatchewan;

4. That is controlled by residents of the Province of Saskatchewan in that 75% of itsvoting securities are or will be held by residents of the Province of Saskatchewan;and

5. Two-thirds of whose promoters and directors are residents of the Province ofSaskatchewan;

(hereafter referred to as a "Saskatchewan Small Business") or is a person that is apartner, officer or salesperson of a Saskatchewan Small Business;

AND WHEREAS the Commission is of the opinion that:

1. The requirements of:

a. Subsection 20(5) of the Regulations with respect to surety bonds;

b. Subsection 20(7) of the Regulations to file with the Commission aresolution or statutory declaration with respect to bonding and insurancecoverage;

c. Subsections 34(1) and (2) of the Regulations with respect to the sending ofmonthly statements of account;

d. Subsection 37(1) of the Regulations with respect to salespersons of asecurity issuer having successfully completed the Canadian SecuritiesCourse;

e. Section 40 of the Regulations with respect to the dual occupation ofsalespersons registered pursuant to the Act; and

)/

3

f. Clauses 1(2)(b) and (d) of Table 1 of Appendix A of the Regulations withrespect to the payment of the application filing fee for registration as asecurity issuer or a partner, officer or salesperson·of a security issuer;

are not applicable or appropriate with respect to a Saskatchewan Small Businessor its partners, officers or salespersons applying for registration or registered asabove-mentioned;

2. The registration of a Saskatchewan Small Business and its partners, officers andsalespersons as a security issuer or as a partner, officer and salesperson of asecurity issuer should be limited to the duration of the offering period of thedistribution of securities of the Saskatchewan Small Business for which theregistration is sought; and

3. Partners or officers of a Saskatchewan Small Business should meet certaincompetency requirements before such persons are granted registration as apartner or officer of a security issuer;

AND WHEREAS the Commission is aware that:

1. A Saskatchewan Small Business may have difficulty becoming registered as a"small business incentive corporation" within the meaning of The SmaIl BusinessInvestment Incentives Act (the "SBll Act") due to budgetary constraints on thatprogram and therefore may not be able to avail itself of the provisions of GeneralRuling/Order 14 of the Commission - The Small Business Investment IncentivesProgram Order, 1990 ("GRO 14");

2. Without the availability of the provisions of GRO 14 relaxing the registrationrequirements of the Act for registration as a security issuer or as a partner, officeror salesperson of the security issuer a Saskatchewan Small Business will havedifficulty carrying out a distribution of its securities; and

3. A Saskatchewan Small Business often has difficulty attracting a registered dealerto assist it in a distribution of its securities and must carry out such distributionitself;

AND WHEREAS this Ruling largely encompasses the terms of GRO 14 except for therequirement that a Saskatchewan Small Business be registered as a "small businessincentives corporation" within the meaning of the SBll Act;

4

AND WHEREAS the Commission is of the opinion that:

1. It is not necessary for a Saskatchewan Small Business to be registered as a "smallbusiness incentives corporation" within the meaning of the SBrr Act before it isregistered as a security issuer pursuant to the Act for the public protectionmandate of the Commission to be fulfilled;

2. The public protection mandate of the Commission can be preserved andenhanced by the granting of this Ruling while at the same time promoting thefunctioning of the Saskatchewan capital market and the growth of Saskatchewanbusinesses; and

3. That it would not be prejudicial to the public interest to make the Ruling;

IT IS HEREBY RULED pursuant to clause 83(1)(a) of the Act that the provisions ofsubsection 36(1) of the Act, subsections 20(5), 20(7), 34(1), 34(2) and 37(1), section 40and clauses 1(2)(b) and 1(2)(d) of Table 1 of Appendix A of the Regulations shall notapply to a person or company applying for registration as or who is registered as asecurity issuer or as a partner, officer or salesperson of a security issuer pursuant to theAct and this Ruling, as the case may be, provided that:

1. The person or company applying for registration or so registered is aSaskatchewan Small Business or a partner, officer or salesperson of aSaskatchewan Small Business;

2. Trading pursuant to the registration is restricted to only residents of the Provinceof Saskatchewan;

3. The registration is valid only for one distribution of securities of the SaskatchewanSmall Business and only for the offering period of such distribution;

4. The funds to be raised with respect to the distribution of securities of theSaskatchewan Small Business involved cannot exceed $10,000,000.00 and are to besubstantially used in the Province of Saskatchewan;

5. The prospectus with respect to the distribution of securities of the SaskatchewanSmall Business grants to each purchaser a contractual right to withdraw from theagreement of purchase and sale of the securities issued pursuant to the prospectusif the person or company from whom the purchaser purchased the securityreceives notice in writing indicating the intention of the purchaser not to bebound by the agreement of purchase or sale at any time up to five business days

5

after receipt by the purchaser of the prospectus or any amendments to theprospectus, as the case may be, that the purchaser is entitled to receive under theAct;

6. That each purchaser signs a certificate acknowledging receipt of the prospectuswith respect to the distribution and any amendments thereto in the followingform:

Date of Receipt of Prospectus

Name of Saskatchewan Small Business

Purchaser

Salesperson _

and the security issuer maintains such certificates on its files for a period of atleast six years;

)

7. All advertising, promotional material and sales literature as defined inSaskatchewan Local Policy Statement 1.3 of the Commission - Advertising andSales literature to be used in connection with the distribution of securities of theSaskatchewan Small Business is submitted to the staff of the Commission forreview prior to being used;

8. No person or company shall be registered pursuant to this Ruling more than threetimes;

9. No person applying for registration as a partner, officer or salesperson of asecurity issuer under this Ruling shall be registered without first havingsuccessfully completed the Saskatchewan Small Business Security Issuers Courseadministered by the staff of the Commission, the fee for which shall be $25.00 perperson;

10. No registration shall be granted under this Ruling until the receipt for the finalprospectus with respect to the distribution of the securities of the SaskatchewanSmall Business involved has been issued by the Commission; and

11. Each person or company applying for registration as a security issuer pursuant tothis Ruling shall pay an application filing fee of $250.00 per person or companyand each person applying for registration pursuant to this Ruling as a partner,officer or salesperson of a security issuer shall pay an application filing fee of

6

$100.00 per person;

TInS RULING may be referred to as General Ruling/Order 18 The SaskatchewanSmall Business Security Issuers Order, 1990.

DATED at the City of Regina, in the Province of Saskatchewan, this 21st day ofNovember, 1990.

.~---.:.---Marcel de la Gorgendiere, Q.C.Chairman

)

LOCAL POLICY 3.11­

NON-RESIDENT DEALERS

,\ ')

)

"Non-resident Dealer" means a dealer that:

850 - 1914 Hamilton Street, Regina, Saskatchewan, S4P 3V7 Phone: (306) 787-5645 Fax: (306) 787-5899

•

ProtectingSaskatchewan

Investors

SECURITIES

COMMISSION

SASKATCHEWAN

Definitions

SaskatchewanSecuritiesCommission

Non-resident Dealers

Part 1

Saskatchewan Local Policy Statement 3.11

(a) has a place ofbusiness in Canada with at least one partner orofficer resident in Canada;

"Act" means The Securities Act, 1988, S.S. 1988, c. S-42.2;

(b) does not have a business office in Saskatchewan or any partners,officers or directors who reside in Saskatchewan; and

"Director" means the Director ofthe Saskatchewan Securities Commission;

"Commission" means the Saskatchewan Securities Commission;

"Home Jurisdiction" means the jurisdiction in Canada where the Non-residentDealer's principal place ofbusiness is located;

"Business Records Requirement" means the requirement pursuant tosubsection 25(6) of the Regulations that a registrant mustmaintain inSaskatchewan those books and records necessaty to properly record its businesstransactions and financial affairs in Saskatchewan;

In this policy:

"Office Requirements" means the requirement pursuant to section 18 oftheRegulations that a registrant establish and maintain a business office inSaskatchewan, and the requirement pursuant to section 36 ofthe Regulations thatthe registrant must appoint a resident manager to be in charge of its businessoffice;

2

(c) seeks registration in Saskatchewan as a dealer in the category ofbroker or investment dealer.

"Regulations" means The Securities Regulations, R.R.S., c. S-42.2 Reg 1;

"Residency Requirement" means the provision in section 35 of the Act thatpermits the Director to require that a dealer applying for registration under theAct must have at least one officer or director who is resident in Saskatchewan;and

"Self Regulatory Organization" means any ofthe following:

1. the Alberta Stock Exchange;

2. the Investment Dealers Association ofCanada;

3. The Toronto Stock Exchange;

4. the Montreal Exchange; or

5. the Vancouver Stock Exchange.

"dealer", "investment dealer" and "broker" have the meaning assigned tothose terms in the Act and the Regulations;

Part 2 Purpose

2.1 The purpose of this policy is to set out the conditions a Non-residentDealer must meet to be registered as a dealer in Saskatchewan. Thispolicy also sets out the conditions upon which the Commission willregister salespersons, partners, officers and directors of such Non-residentDealers.

Part 3 Application

3.1 This policy applies to Non-resident Dealers. This policy also applies tosalespersons, partners, officers and directors of such Non-residentDealers.

3

Part 4 Conditions of Registration

4.1 Preconditions to registration - The Director will grant registration to aNon-resident Dealer which meets the following requirements. It must:

a. be registered as a dealer in the category of investment dealer orbroker, or in an equivalent category, in its Home Jurisdiction;

b. be a member ofa SelfRegulatory Organization;

c. have at least one partner, officer or director resident in Canada andregistered in Saskatchewan as a partner, officer or director of theNon-resident Dealer; and

d. be registered to carty on business in Saskatchewan under TheBusiness Corporations Act (Saskatchewan), or other applicableSaskatchewan legislation.

4.2 Ongoing conditions ofregistration - A Non-resident Dealer registered asan investment dealer or broker pursuant to this policy shall be subject tothe following conditions of registration. The Non-resident Dealer must:

a. meet all the conditions ofregistration contained in the Act and theRegulations that apply to an investment dealer or broker exceptsection 35 of the Act, and section 18, subsection 25(6) and section34 of the Regulations;

b. maintain registration as a dealer in the category of investmentdealer or broker, or in an equivalent category, in its HomeJurisdiction;

c. maintain membership in a Self Regulatory Organization;

d. maintain registration under The Business Corporations Act(Saskatchewan), or other applicable Saskatchewan legislation;

e. inform the Director as soon as it becomes aware that:

1.

4

its registration or the registration of any of its salespersons,partners, officers or directors in any other province orterritory is revoked by the securities regulatory authority inthat province or territory or is suspended for cause otherthan lapse, transfer or resignation; or

ll. an investigation order or notice ofhearing has been issuedby any securities regulatory authority in Canada with respectto it or any of its salespersons, partners, officers or directors;

f. maintain in its Home Jurisdiction in accordance with therequirements of section 25 of the Regulations those books andrecords necessary to properly record its business transactions inSaskatchewan;

g. provide to the Commission, upon demand and at the Non-residentDealer's expense, complete copies of any and all books and recordsrelating to its business in Saskatchewan;

h. permit the Commission, the staff of the Commission or an agent ofthe Commission to inspect and examine, from time to time, theNon-resident Dealer's books and records in its Home Jurisdiction;

1. reimburse the Commission for all costs and expenses incurred inconducting the inspection and examination referred to clause h.above which the Commission would not have incurred had thebooks and records been maintained in Regina, Saskatchewan;

J. file as part of its application for registration a duly executedSubmission to Jurisdiction and Appointment ofAgent for Servicein the fonn set out in Appendix A;

k. provide a disclosure statement to each new client substantiallysimilar to that set out in Appendix B;

1. ensure that all its salespersons, partners, directors and officers whoare registered in Saskatchewan or who are required to be registeredin Saskatchewan, maintain equivalent registrations in the HomeJurisdiction of the Non-resident Dealer to those which they hold orseek to hold in Saskatchewan.

Part 5

5

. Registration of Individuals

5.1 The Director will register salespersons, partners, officers and directorswho are not resident in Saskatchewan but who work for a Non-residentDealer which meets the provisions of this policy, providing they complywith the following conditions:

Part 6

a.

b.

they must maintain an equivalent registration with the securitiesregulatory authority in the province or territory where they reside;and

they must file as part of their application for registration a dulyexecuted Submission to Jurisdiction and Appointment ofAgent forService in the fOIm set out in Appendix C.

Implementation

6.1 General/Ruling Order No. 36 waives the Office Requirements, theResidency Requirement and the Business Records Requirement for Non­resident Dealers who are registered as dealers pursuant to the provisionsof this policy.

Adopted by the Commission on January 19,1995.Amended on January 25, 1996

6

Appendix A to Saskatchewan Local Policy Statement 3.11- Non-residentDealers

Form of submission to jurisdiction and appointment of agent for service ofprocess by Non-resident Dealer

1. Name of applicant or registrant (the "Registrant"):

2 Jurisdiction of incorporation of Registrant:

3. Name of agent for service ofprocess (the "Agent"):

4. Address for service ofprocess of Agent in Saskatchewan:

5. The Registrant designates and appoints the Agent at the address of theAgent stated above as its agent upon whom may be served any notice,pleading, subpoena, summons or other process in any action, investigationor administrative, criminal, quasi-criminal or other proceeding (the"Proceeding") arising out of or relating to or concerning its registrationunder The Securities Act, 1988 (Saskatchewan) (the "Act") or its activitiesin Saskatchewan as a registrant, and irrevocably waives any right to raiseas a defense in any such Proceeding any alleged lack ofjurisdiction tobring such Proceeding.

6. The registrant irrevocably and unconditionally submits to the non­exclusive jurisdiction of the judicial, quasi-judicial and administrativetribunals of Saskatchewan and any administrative proceeding inSaskatchewan, in any Proceeding arising out of or related to or concerningits registration under the Act or its activities in Saskatchewan as aregistrant.

7. Until six years after the termination of its registration under the Act, theRegistrant shall file:

a. A new Submission to Jurisdiction and Appointment of Agent forService ofProcess in the form hereof at least 30 days prior totermination of this Submission to Jurisdiction and Appointment ofAgent for Service of Process for any reason whatsoever; and

b. An amended Submission to Jurisdiction and Appointment of Agentfor Service of Process at least 30 days prior to any change in the

8.

7

name or above address of the Agent.

This Submission to Jurisdiction and Appointment ofAgent for Service ofProcess shall be governed by and construed in accordance with the laws ofSaskatchewan.

Dated: _(Signature ofRegistrant's authorizedsignatory)

(Name and title ofauthorized signatory)

Acceptance

The undersigned accepts the appointment as agent for service of process of__________________. (Insert name of

Registrant) pursuant to the terms and conditions of the foregoing Submission toJurisdiction and Appointment ofAgent for Service ofProcess.

Dated: _(Signature ofAgent or authorized signatory)

(Name and title ofauthorized signatory)

8

Appendix B to Saskatchewan Local Policy Statement 3.11 - Non-residentDealers

Form of Disclosure Statement to New Clients

[on the letterhead ofthe dealer]

To all new clients:

You have recently opened an account with our firm. We agree that the laws ofthe province of Saskatchewan apply to any matter that may arise between us. Wealso agree to submit and attorn to the jurisdiction of the courts of the Province ofSaskatchewan with respect to that matter.

Our address for service oflega! proceedings is: [state name and address ofagentforservice ofprocess].

You should be aware that, because we do not have a place ofbusiness in Saskatchewan,you may have difficulty in enforcing any legal rights you have against us .

(Signature ofRegistrant's authorizedsignatory)

(Name and title ofauthorized signatory)

)

9

Appendix C to Saskatchewan Local Policy Statement 3.11 - Non-residentDealers

Form of submission to jurisdiction and appointment of agent for service ofprocess by salesperson, partner, officer or director of Non-resident Dealer

1. Name of applicant or registrant (the "Registrant"):

2. Jurisdiction of incorporation of Registrant:

3. Name(s) and addressees) ofperson(s) filing this fonn (the "FilingPersons"):

4. Name of agent for service of process (the "Agent"):

5. Address for service ofprocess ofAgent in Saskatchewan:

6. Each Filing Person designates and appoints the Agent at the address of theAgent stated above as its agent upon whom may be served any notice,pleading, subpoena, summons or other process in any action, investigationor administrative, criminal, quasi-criminal or other proceeding (the"Proceeding") arising out of or relating to or concerning the Registrant'sregistration under The Securities Act, 1988 (Saskatchewan) (the "Act") orthe Registrant's activities in Saskatchewan as a registrant, and irrevocablywaives any right to raise as a defense in any such proceeding any allegedlack ofjurisdiction to bring such Proceeding.

7. Each Filing Person irrevocably and unconditionally submits to the non­exclusive jurisdiction of the judicial, quasi-judicial and administrativetribunals of Saskatchewan and any administrative proceeding inSaskatchewan, in any Proceeding arising out of or related to or concerningthe Registrant's registration under the Act or the Registrant's activities inSaskatchewan as a registrant.

8. Until the earlier of (i) the tennination of a Filing Person's position as anofficer and/or director of the Registrant and (ii) six years after thetennination of the Registrant's registration under the Act, such FilingPerson shall:

a. File a new submission to Jurisdiction and Appointment ofAgent

10

for Service ofProcess in the form hereof at least 30 days prior to ')termination of this Submission to Jurisdiction and Appointment ofAgent for Service ofProcess for any reason whatsoever; and

b. An amended Submission to Jurisdiction and Appointment ofAgentfor Service ofProcess at least 30 days prior to any change in thename or above address of the Agent.

9. This Submission to Jurisdiction and Appointment ofAgent for Service ofProcess shall be governed by and construed in accordance with the laws ofSaskatchewan.

Dated: _(Signature ofFiling Person)

Dated: _(Signature ofFiling Person)

Dated: _(Signature ofFiling Person)

Dated: _(Signature ofFiling Person)

AcceptanceThe undersigned accepts the appointment as agent for service ofprocess of(Insert name(s) ofFiling Person(s)) pursuant to the terms and conditions of theforegoing Submission to Jurisdiction and Appointment of Agent for Service ofProcess.

Dated: _(Signature ofAgent or authorizedsignatory)

(Name and title ofauthorized signatory)

)

LOCAL POLICY 4.6 ...

FUTURE ORIENTED FINANCIAL INFORMATION

(

"Local Issuer" means an issuer which:

850 - 1914 Hamilton Street, Regina, SaskatcheWan, S4P 3V7 Phone: (306) 787-5645 Fax: (306) 787-5899

Future-Oriented Financial Information· Saskatchewan Requirements

ProtectingSaskatchewan

Investors

•SECURITIES

COMMISSION

SASKATCHEWAN

Definitions

has its head office in Saskatchewan;

has more than 50% of its total assets on a consolidated basissituated in Saskatchewan; or

earns more than 50% of its total revenue on a consolidated basisfrom activities carried out in Saskatchewan;

Purpose and Background

SaskatchewanSecuritiesCommission

b.

a.

c.

II

Part 1

Saskatchewan Local Policy Statement 4.6

Part 2

''National Policy 48" means National Policy Statement No. 48 - ''Future-OrientedFinancial Information"; and

The Saskatchewan Securities Commission adopted Saskatchewan LP 4.6 effectiveOctober 1, 1991. The Canadian Securities Administrators adopted NationalPolicy 48 effective January 1, 1993. National Policy 48 applies in Saskatchewan.

"Saskatchewan LP 4.6" means Saskatchewan Local Policy 4.6 - ''Future-OrientedFinancial Information".

The terms "FOFI", "forecast", "projection" and "general purpose document"referred to in this policy have the same meaning as in National Policy 48.

In this policy:

2

The provisions of National Policy 48 are substantially the same as Saskatchewan ""-"jLP 4.6. However, National Policy 48 does not contain requirements equivalentto paragraph D.3 or the pre-filing requirements in Part G of Saskatchewan LP4.6. The Saskatchewan Securities Commission wishes to retain theserequirements for Local Issuers only.

The purpose of this policy is to repeal Saskatchewan LP 4.6 and replace it withthis policy which supplements National Policy 48.

Part 3 Saskatchewan Requirements for FOFI

Saskatchewan LP 4.6 is repealed and replaced with this policy. Therequirements in this policy are in addition to the requirements of National Policy48.

3.1 Pre-clearance

3.1.1 A Local Issuer shall pre-file FOFI and obtain the approval of theDirector of the Saskatchewan Securities Commission before the LocalIssuer files a preliminary prospectus containing FOFI.

The staff of the Commission will consider the following factors indetermining the acceptability of pre-filed FOFI:

a. the financial history of the Local Issuer;

b. how FOFI previously published by the Local Issuer compares toactual results;

c. the past record of the promoter, developer and underwriter onFOFI in documents previously filed compared to actual results;and

d. the reasons for the variations in (b) and (c).

3.1.2 Pre-clearance of FOFI included in other general purpose documents isnot required. However, where complex issues are involved, pre-filingdiscussions with staff may be beneficial.

,,' ' ....,

)

3

3.2 Minimum and maximum offering amounts

3.2.1 FOFI may be presented in the form of a forecast or projection. WhereFOFI is presented in the form of a forecast, the forecast should be basedon the most probable amount of money to be raised in an offering.Where an offering is for a minimum offering amount and maximumoffering amount, and the forecast is based on an amount greater than theminimum offering amount, staff may require the Local Issuer to providejustification for the offering amount used in the forecast. Staff experiencewith offerings by Local Issuers is that Local Issuers usually raise only theminimum amount.

3.3 Waiver

3.3.1 The Director may waive the provisions of this policy where a Local Issuerestablishes that such a waiver would not be prejudicial to the publicinterest.

Adopted by the Commissioneffective February 17, 1993.

Marcel de la Gorgendiere, Q.C.Chairman

--./'

\'-' POLICY STATEMENTS

-~

NATIONAL POLICY NO. 48

DirectorRegistrar of Securities

Director, Corporate FinanceRegistrar of Securities

Part 1 Purpose

The purpose of Ihis policy statement is to specify the manner in which FOFI in GeneralPurpose Documents shall he prepared, disclosed, dated, subsequently compared withactual results and updated where applicahle, and to spedfy the involvement of indepen.dent puhlic account:lllts. referred to as auditors in this policy statement, with all suchdocuments.

The dccision whe.h(·r 10 pllhlish !'Ol'I and Ihc rcsponsihility fi,,- (lllhiished f'(WI reslswith the issuer. Issuers who choose to publish FOFI shall comply with this policy state­ment.Factors to be considered in making their decision include the issuer's history of~perations and experience in preparing such information, including the degree of vari­ance between previously prepared FOFI and the actual results that were attained beforethe forecasted periods. However, the securities regulatory authorities recognize that suchhistory and experience may not always be available. Section 4. I sets out the requirementsthat apply in such a circumstance.

Part 2 Definitions

"CICA Handbook" means the Handbook of the Canadian Institute of Chartered Ac­countants;

I "FOFI" means future-oriented financial information which is information about pro­:: &pective results of operations, financial position or changes in financial position, based on. assumptions about future economic conditions and courses of action. Future-oriented, financial information is presented as either a forecast or a projection;

- "Forecast" means FOFI prepared using assumptions all of which reflect the entity's. planned courses of action for the period covered given management's judgement as to the-most pmhahle sct of cconmn ic condit ions:

"Oenetlll "III (lose ')O('1I111l~1I1 s" IIH'allS pI osp('d IIS('S, pI dimilia, y prosp('_clllSCS. ('('Ilailloffering memoranda as set out in Appendix A, rights offering circulars, documentsdelivered or filed with the securities regulatory authorities under or with the continuous

,disclosure, proxy and proxy solicitation, take-over bid and issuer bid requirements ofI Securities Legislation and Securities Requirements and documents incorporated by ref­erence into, or that amend the foregoing:

"Hypotheses" means assumptions that assume a set of economic conditions or coursesof action that are consistent with the issuer's intended course of action and representplausible circumstances;

"Projection" means FOFI prepared using assumptions that renect the entity's planned_ ~urses of action for the period covered given management's judgement as to the most,

probable set of economic conditions, together with one or more Hypotheses;

"Securities Legislation" means the statutes concerning the regulation of securitiesmarkets and trading in securities, and the regulations in respect of these statules; and

"Securities Requirements" means the blanket rulings and orders made under the Securi-

915

915

915

11 Effective Date ..

II.I Effective Date .

Appendix A ..

TilhIe of COllI elll sI Purpose ·········································· 909

2 Definitions · · ··· .. ·· · .. · .. ··· .. ······ .. · 9093 Application ·.. ······· .. · .. ··· .. · ···· .. ·········· .. · .. 910

3.1 Scope 9103.2 Preparation 9103.3 Materiality 910

4 Requirements of General Application 9114.1 Forecasts and Projections 911 -4.2 Period to be Covered by FOFI 9114.3 Restrictions 91l

4.4 Distribution and Delivery 912

5 Additional Requirements Applicable to Projections 912

5.1 Disclosure 9125.2 Hypotheses 912

6 Comparison wilh Actual Results 913

Cd Revicw and ('Olllpllrison 9136.2 Disclosure , 913

7 Updating FOFI 9i37.1 Reporting 913

7.2 When to Update 913

7.3 Disclosure 914

8 Withdrawal of FOFI 914

8.1 Approval 914

8.2 Disclosure 914

9 Auditors' Involvement 914

9.1 Auditors' Report 914

9.2 Engagement Slandards 914

9.3 Comfort and Consent Letters 914

10 Take-over Bid 91S

National Policy No. 48

.'uture-Oricnted I?inancial Information

OntarioPrince Edward IslandQutbec46

Saskatchewan47

Yukon Territory

(Notl': Amended NP47 repeals and replaces OSCP 5.6·1

908

POLICY SfATEMENTS

ties Legislation and the policy statements and written interpretations issued by the secu­

rities regulatory authorities.

Part 3 Application

3.1 Scope(I) Inclusion of 170171 for offerings where the proceeds are to he used to acquire as yet

undetermined or unidentified assets is not permitted.

(2) This policy statement does not apply to discounted future cash now data providedby resource issuers to the extent such data complies with the requirements ofNational Policy Statemcnts No. 2-A and No. 2-B whcre th(' data is rxlracled froman engineering or geologist's report :lIId specilic rerel ence is made to such report.This policy statement also does not apply to financial information pertaining to thefuture provided in management's discussion and analysis disclosure that is requiredunder the Securities Legislation and Securities Requirements - that informationdoes not take the form of a Forecast or Projection as those terms are used in this

policy statement.

(3) Offerings for which the minimum acquisition cost as defined in the SecuritiesLegislation and Securities Requirements is at least $500,000 are exempt from the

requirements of this policy statement.

3.2 Preparation

(I) FOFI shall be prepared in accordance with the recommendations of the CICAHandbook and the additional requirements of this policy statement.

(2) When FOFI is included for an issuer that is proposed to be acquired, it shall be

prepared by the issuer to be acquired.

(3) In the case of real estate or oil and gas filings, it may he appropriate to include cashlIow informatilln in 170171 in addition 10 the mini",,"" discillsures ollH'rwise required

hy Ih(' ('ICA 1I111Hlhook I••r ...0 .....

3.3 Materiality

For purposes of the application of this policy statement, materiality should bedetermined in the context of the overall financial position of the issuer taking into ac­count both quantitative and qualitative factors. Materiality is a matter of judgement inthe particular circumstances and should generally be determined in relation to the sig­nificance of an item to investors, analysts and other users of financial information. Anitem is considered material to an issuer if it is probable that its omission from thefinancial information would influence or change a decision. Measures of materialitywould generally include gross revenues, expenses, net income, shareholders' equity andtotal assets. While this concept of materiality is broader than the definition of "materialchange" contained in the Securities Legislation and Securities Requirements, it is con­sistent with the financial reporting notion of materiality contained in the CICA

Hand'-" "

9tO

NATIONAL POLICY NO. 48

Part 4 Requirements of General Application'"

1,1 Forecasts and Projections

(I) FOFI included in General Purpose Documents shall be in the form of a Forecast,subject to subsection (2).

(2) Notwithstanding subsection (I), Projections may be included in General PurposeDocuments for issuers engaged in a business with less than 24 months of relevantoperating history. In certain limited circumstances, issuers engaged in a husinesswith more than two years of operating history may he permitted to provide FOFIin the form of a Projection.

For example, the issuer and its auditors may not have access to the prior operatinghistory hecallse Ihe pmperty to he anluin'd is privalely owned prior 10 aClJuisiliouand the It'cords arc not availahl(~ 10 the IIew owners. III such l'i,culllslallces, it is ac­ceptable to the securities regulatory authorities to treat a business as start up al­though it may have an operating history of more than two years. Another exampleis where there is a substantial change in the use of the property such as an upgradefrom an economy hotel to a luxury hotel. In such cases the operating history maynot be relevant to the new usage.

(3) A Forecast or Projection may be included but not both.

~J Period to be Covered by FOFI

The period covered by FOFI shall not extend beyond the point in time for which suchhlCormation can be reasonably estimated (normally the end of the next financial year i.e.,.~ maximum of 24 months). In certain circumstances the period covered hy FOFI mayextend beyond the following financial year when there is reasonahle assurance as to theoperations in the FOFI period. The guidelines in this policy statement for determiningIn extended FOFI period apply equally to Forecasts and Projections.

Examples of issuers in a position to prepare extended FOFI include existing real estateprojects for which FOFI could be prepared up to the date of the mortgage renewal andissuers eng:Igcd in long te.fln contracts for which FOFI could he fJlTP:u·('(t ul' 10 lheexpiry lI:lle 01 such l"flllltads, I'rovi.Il'.llhal all I('V"IIl"'~ :n,,1 (·XIl('II.~'·~ ('all h.· I(·a.~or",hly

estimnled ,111I iUI~ Ihe ('xlerllkd H WI pel indo

.4.3 RestrictiollsI

(I) FOFI is information about future operating results of the enterprise. As such it isnot expected that FOFI can be provided with respect to capital appreciation or saleof a real estate property in the future. However, information can he included whichshows the potential impact of capital appreciation or sale of a real estate property inthe future provided that it is presented in the format of a sensitivity analysis whichreflects the effects of an equal range of capital appreciation and depreciation percent­ages, For example. in the case of a real estate property, a range of projected Jlercent­ages from an appreciation of 6% to a depreciation of 6% could be provided.

• Issuers are advised to review the Securities Legislation and Securities Requirements in each ju­,risdiction in order to determine the requirements for pre-filing of FOFJ. For exam pIe, Quebec, uquires pre-filing for non-reporting issuers and reporting issuers distributing secu '1Y prospec­

tus for the first time.

~~-- POLICY STATEMENTS NATIONAL POLICY NO. 48

However, due to the significant uncertainties involved, the maximum projectedincrease presented should be no greater than the historically experienced apprecia·tion rate for a period of time comparable to the length of time of the sensitivityanalysis. The maximum increase presented should be lower if the historic rateshowed significant volatility or if there is reason to believe the historic rate may notbe sustainable in the future.

(2) The effective date of the underlying assumptions shall not precede by more than 120days the date of liIing or delivery of the document in which 1'01'1 is included. Inthe case of prospectuses, this requirement applies to both the preliminary and thelinal documcnts.

(:1) Wlu'n' FOFI ill("hul('s lIe1l1:tt n'slIlIs nr the iSSllt'r r",· Plll't or 'ht' 1'01'1 Iwrinll, th('~e

results should be separately disclosed.

4.4 Distribution a1ld Delivery

(I) Issuers and distributing firms are reminded that during the course of a distributionof securities to which this policy statement applies, any FOFI disseminated mustonly be that which is set out in the prospectus or offering memoranda set out inAppendix A. In those rare circumstances where an extract of FOFI is disseminated,the extract or summary must be reasonable and balanced and shall have a caution·ary note in bold face stating that the FOFI presented is not complete and thatcomplete FOFI is included in the General Purpose Document.

(2) Where FOFI is incorporated by reference in General Purpose Documents, a copy ofFOFI shall be provided with the General Purpose Document. This requirement also

applies to updated FOFI,

Part 5 Additional Requirements Applicable to Projections

5./ Disclosure

(I) Tht' I""pnsc nr tlw I'rnjt,t"ioll is tn ht~ tlisdtls("tl.

(2) A cautionary note shall appear in bold face in the lead paragraph under Projectionsstating that the Projection is based on Hypotheses and that there is a significant riskthat actual results will vary, perhaps materially, from the results projected.

5.2 Hypotheses

(I) Hypotheses used in preparing Projections shall be consistent with the purpose of theProjection. When many Hypotheses are used a Projection becomes less reliable andtherefore is more likely to be challenged by the securities regulatory authorities.However, the use of multiple Projections (i.e., using different assumptions) is permit.ted provided that it results in an unbiased presentation and provided that no oneProjection is significantly more likely to occur than any other.

(2) The notes accompanying the Projections must disclose that the Hypotheses assumea set of economic conditions or courses of action that are consistent with the issuer'sintended course of action and represent plausible circumstances. These requirementsapply to each set of Hypotheses used in preparing multiple Projections.

9t2

Part 6 Comparison with Actual Results

6./ Review and Comparison

(I) FOFI and updated FOFI included in a General Purpose Document shall bereviewed each time the issuer is required to file historical financial statements withthe securities regulatory authorities under the continuous disclosure requirements ofthe Securities Legislation and Securities Requirements to identify material changesresulting from evellts that have occurred sincc it was issued. 1'01'1 ctlvering an all­nual perind shall he compared with actual annual audited results IiII' the same pe­riod :md 1'01'1 ctlVt'ring :m interim period shall he comllan'd with ac.ual in.erimresulls ti,l' th(" SlIlIIC I'CriOl1. FOFI indlllkd in orrcrin,~ nlt'lIIl1ntlHllI S("' Oil' in AI"Jll'lulix A is IIl1' It'quill'd to he I ('vil'wl',1 and ClllII 1':1 I ell with al"lu:11 It'sulls, hOW('\'('I,issuers arc encouraged to do so.*

(2) The comparison shall address each material individual item, including assumptions,which were included in the FOFI or updated FOFI. If the results of the comparisonidentify material difference between actual results and FOFI or updated FOFI, suchmaterial differences shall be disclosed. For example, where the actual dollar amountof sales approximates the amount forecasted but the sales mix or sales volume dif­fers from what was expected, it is necessary to explain thi~ fact. If there are no ma­terial differences, issuers shall disclose that a comparison has been made and no ma­terial differences were identified.

6.2 Disclosure

The results of the comparison in section 6.\ shall accompany the annual or interimfinancial statements required to be filed under the continuous disclosure requirements ofthe Securities Legislation and Securities Requirements immediately following the end ofthe FOFI period and does not necessarily form part of the financial statements. Forpurposes of this policy statement, FOFl period means each financial year or part thereoffor which FOI'l is prepared.

Pl1rl 7 "1't111tllt~ "0 I'J

7./ Rcport;,,!:

(I) When a change occurs in the events or in the assumptions used to prepare FOFI thathas a material effect on such FOFI, such a change shall be reported in a manneridentical to that followed when a material change occurs as defined under the Secu­rities Legislation and Securities Requirements.

(2) If there are no changes in the events or in the assumptions used to prepare FOPIthat have a material effect on FOFI, this fact shall be disclosed in documents ac­companying the issuer's annual or interim financial statements required to be tiledunder the continuous disclosure requirements of the Securities Legislation and Se­curities Requirements immediately following the end of the FOFI period.

7.2 Wire" to Update

FOFI shall be updated when a change occurs in the events or in the assumptions used

• Issuers should note that the securities regulatory authorities in Qutbec require that FOFIincluded in an offering memorandum be compared with actual results.

9D

POLICY STATEMENTS

to prepare FOFI that has a material effect on such FOFI. When FOFI is required to beupdated, previously issued FOFI shall be withdrawn.

7.3 Disclosure(I) If updated FOFI is required to be provided, it shall be accompanied by explanations

of changes, disclosure of the dates of FOFI and of updated FOFI, and disclosure ofthe fact that changes have occurred which require FOFI to be updated.

(2) Updated Fort shall accoml':lI1Y the issuer's :IIII11Jal or interim financial statementsn'lluired to Iw filed IInder the ('ontinlllHls disl"!osure n'll"irenwnts of thl' SecuritiesI,I'p,lsllllioll m,,1 Sn'lIrifirs l{r'l"iI ,'lIIl'lIls illllul"Cli"t"ly l'ollowillp, II,,' 0('('1111 ('JUT ..f Ihe

change in the events or assumptions used to prepare FOI'l Ihat has a material effecton FOFI, and does not necessarily form part of the financial statements.

Part 8 Withdrawal of FOFI

8.1 ApprovalThe securities regulatory authorities must approve withdrawals of FOFI when thewithdrawn FOFI is not replaced by updated FOFI. Approval will only be granted inthose situations where the occurrence of an event makes it impossible for the issuer to

prepare reliable updated FOFI.

NATIONAL POLICY NO. 48

appropriate in the circumstances and acceptable to the securities regulatory authori­ties.

(2) Auditors' consent letters shall also contain specific reference to FOFI included in thefinal prospectus. This may be done by adding a statement to the effect that the audi-tors also consent to the inclusion of their audit report dated .on the (Forecast) (Projection) of (issuer), dated consisting of(brieny describe FOFI being presented). No other amendmentto the usual form of consent is relluired.

I'.," III 'l'1I1(("0 VI'" lUll

Where in the context of a take-over bid it is not practicable to provide an auditors' reporton FOFI, the securities regulatory authorities will consent instead to the inclusion of astatement signed by the chief financial officer of the company to which it relates thatFOFI was prepared in accordance with the recommendations of the CICA Handbookand the requirements of this policy statement.

Part 11 Effective Date

11.1 Effective Date

This policy statement is effective for FOFI filed or delivered on or after January I, 199J.

Offering memoranda subject to this policy statement are those provided in connectionwith a distribution of a security under the legislative provisions noted below:

APPENDIX AOFFERING MEMORANDA SUBJECf TO FOFI

8.2 DisclosureWhen FOFI is withdrawn, the reasons for the withdrawal shall be clearly disclosed inthe manner set out in subsection 7.1(1).

Part 9 Auditors' Involvement

9./ Auditors' ReportFOPI included in II preliminary pfllsl'ectus. pwsl'eclus. rights oR'cring cil('lIh.... offeringmemorandum set out in Appendix A, information memorandum, takeover bid circular,directors' circular or issuer bid circular or other materials disseminated in connectionwith a take-over bid or an issuer bid shall be accompanied by the auditors' reportthereon, which shall not contain any reservations of opinion. The update required underPart 7 needs not be accompanied by the auditors' report thereon, however, issuers areencouraged to obtain auditors' reports that shall accompany such a document.

9.2 Engagement StandardsThe standards for such an engagement are found in the CICA Auditing Guidelineentitled "Examination of a Financial Forecast or Projection Included in a Prospectus or

Other Public Offering Document".

9,3 Comfort and COllsent Letters

(J) Where the auditors' report on FOFI included in a preliminary prospectus is notsigned there shall be filed, at the time the preliminary prospectus is filed, a letter ad­dressed to the securities regulatory authorities and signed by the auditors in whiehsue' 'tement shall be made with respect to the examination of FOFI as may t

914

JURISDICTION

ALIJP.lHA

BRITISH COl.lJMmA

MANITOBA

NEWFOUNDLAND

NOVA SCOTIA

ONTARIO

QUEBEC

SECUR11'lES LEGISLATION REFERENCE

Snhcl:l\Ises 107(1 )(d), 11l7(1 )(p) IIr 107(1)(1/) of the AI­berl:l S('CIIrili('.f Act. S.A. 19R I, c. ~6. I, as amended.Section 55(2)(4) of the Srcu,;tirs Ad. s.n.c. 19R5. c.83, as amended (where a person advises in conneclionwith the distribution). or sections 117(a}, I 17(b) orII7(i) of the securities Regulation. B.C. Reg 270/86.Clause 91(b) of the Securities Regulation, M.R.491/88r.Subclause 73(1)(d), 73(I)(p) or 54(3)(p)1'Ire SecuritiesAct, S. Nnd. 1990, c. 48.Subclauses 17(I)(d), 17(1)(p), 17(I)(w) or 17(1)(ag) ofthe Securities Act. R.S.N.S. 1989, c. 418, as amended.or clause 127(p) of the Securities RegUlations.Subclauses 72(1)(d) or 72(1)(p) of the SeCllrities Act,R.S.O. 1990, c. S-5 (the "Act") or clause 14(g) of theRegulation made under the Act, IR.R.O, 1990. Reg.1015J. as amended.Sections 47, 48 or 52 of the Quebec Secu' ' "Act,R,S.Q., c. V· 1.1. as amended.

915

)

)

)

PRECEDENT PROSPECTUS

)

~Lf2-11

This prospectus constitutes a public offering of these securities only in Saslwtchewan and only bypersons permitted to sell such securities. No Securities Commission or similar authority in Canadahas in any way passed upon the merits of the securities offered hereunder and any representation tothe contrary is an offence.

)Initial Public Offering November 14, 1994

SOUTH WEST TERMINAL Lr.;:T=-:D::::.:-=-::~ _. . Offe:ing of Class B shares ~tljD1Ejg;U,Wr;!w

Mimmum Purchase: 2;, Class B shares at $100 per sha ~rJ?!l!: ~ JF-l mfl$1,200,000 (Minimum) (12,000 Class B shar ~~$3,000,000 (Maximum) (30,000 Class B sha s) NOV 15 1991J

Price: $100 per share SASKAT'''h';IN'1\1. v, .. V~.I0\.~

SECURITIES CO~JiMISSIDN

Footnotes:

MINIMUM OFFERING

MAXIMUM OFFERING

MINIMUMSUBSCRIPTION AMOUNT

DISTRIBUTION SPREAD

OFFERING PRICE COMMISSIONS1

S1.2OO,000 $72,000

S3.000.000 $180,000

52.500 $150

. NET PROCEEDS2

$1,128,000

$2,820,000

$2,350

(111)

) (#2)

A 6 percent commission is payable in cash as reimbursemenl for out-of-pocket expenses and services rendered in selling the offering. Oass B shareswill also be issued as commissions if more than $2,500.000 is raised under this offering (see 'Plan of Distribution"). No commissions will be paidout of the proceeds of this offering unless the minimum offering has been achieved and all conditions precedent for the closing have been satisfied.Expenses relating to this offering, excluding selling commissions, are estimated to be $80.000 and will be borne by swr from the proceeds of thisoffering.

These securities are highly speculative and involn a high degree of risk. South West Terminal Ltd. ("SWT") is anew company without any previous operating history or proven management abilities and investors must relysubstantially on the ability, expertise, judgment, integrity and good faith of SWT's management. There is no marketthrough which these securities may be sold nor is a market expected to denlop. Purchasers may not be able to resellsecurities purchased pursuant to this prospectus. The price paid to SWT was established arbitrarily by SWT.Purchase of these securities is not suitable for investors who may have to liquidate their holdings on a timely basisand should be considered only by investors able to make long-term commitments. Investors who require regularreturns from their imoestments should not purchase the securities offered. Significant additional risk factors areinherent in an investment of this nature and are described under "Risk Factors". Investors should read thisprospectus in its entirety and consult their own professional advisors regarding income tax, legal and other aspectsof an investment in these securities.

The Class B shares ("Shares") offered have the rights, privileges and restrictions typically associated with "common shares".This offering is open until March 1, 1995, until the ma,'"imum offering is achieved, or swr, at its discretion, closes theoffering, whichever fust occurs. If the minimum offering amount has not been raised by March 1, 1995, or upon achievingthe minimum offering of $1,200,000 if swr is unable to satisfy all of the conditions precedent to achieve the closing byApril 15, 1995, MacPherson Leslie & Tyerman, Barristers & Solicitors, will refund all subscription funds promptly toSubscribers without interest or penalty (see "Conditions Precedent to Closing of the Offering"). Assuming that the minimumoffering under this prospectus is sold and all conditions precedent for the closing have been met, swr will construct andoperate an inland grain terminal near Antelope, Saskatchewan. The size and configuration of the Terminal wi11 dependupon, among other things, the number of Shares sold under this prospectus and the amount of private storage space soldby swr (see "The Project - Use of Proceeds: Terminal Design and Financing").

Subscriptions will be received subject to rejection or allotment in whole or in part at the sole discretion of swr.)Subscription monies are to be made payable to MacPherson Leslie & Tyerman, Barristers and Solicitors, and are to be

.' delivered together with a completed subscription form to swr. swr will allocate Shares to eligible investors on a firstcome, first serve basis based on the date of receipt by swr of subscription forms and accompanying payment.Confumation of acceptance of a subscription will be forwarded promptly after such acceptance and share certificates willbe issued as soon as is practical after the closing of the offering.

2

TABLE OF CONTENTS

SUMMARy 4

GLOSSARy .............................•................................. 5

TIIE OFFERING .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5

TIIE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5Background 5Concept. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7Industry Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9Private Grain Storage 9Marketing Partner : . . . . . . . . . . .. 10Investment by Partner 10Canada - Saskatchewan Partnership Agreement on Rural Development 10Use of Proceeds: Terminal Design and Financing 11

FINANCIAL PROJECTION 13

NOTES TO FINANCIAL PROJECTION 18

RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 22

PROMOTERS 22

SOUTH VVESTTERMINAL LTD 23Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 23Business of swr 23Property of swr 23Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 23Share and Loan Capital Structure 23Prior Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 25Sales Otherwise than for Cash 25Principal Holders of Securities 26Dividend Record and Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 26Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 26

EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 28

INTEREST OF MANAGEMENT AND OTIIERS IN MATERIAL TRANSACI'IONS 29

DILUTION 29

PENDING LEGAL PROCEEDINGS 29

INCOME TAX CONSIDERATIONS 29Interest Expense on Money Borrowed to Acquire Shares 30Dividends to Shareholders 30Disposition of Shares 30Transfer to a Self-Directed Registered Retirement Savings Plan 31Minimum Tax 32

3

AUDITORS, TRANSFER AGENT AND REGISTRAR 32

PLAN OF DISTRIBlTTION 32

CONDmONS PRECEDENT TO CLOSING OF THE OFFERING 33

SUBSCRIPTION PROCEDURE 34

PURCHASERS' RIGHTS OF WITHDRAWAL 35

PURCHASERS' RIGHTS OF ACTION 35

FINANCIAL STATEMENTS 35

CERTIFICATE 42

SCFIEDULE A i

4

SUMMARY

Following is a summary only and is qualified by the more detailed information contained elsewhere in thisprospectus.

ISSUER

PROJECT - USE OFPROCEEDS

OFFERING

PRICE

SHARES

ELIGIBLEPURCHASERS

TRANSFER­ABILITY

RISKFACTORS

DILUTION

South West Terminal Ltd. is a Saskatchewan business corporation formed for thepurpose of constructing and operating an inland grain terminal near Antelope,Saskatchewan (the "Terminal").

SWT plans to construct a 550,000 bushel capacity terminal together with high capacitygrain cleaning equipment and 1,500,000 bushels of private grain storage space. Thesize and capabilities of the Terminal will vary depending upon the fmal size of theoffering (see "The Project - Use of Proceeds: Terminal Design and Financing"). Inorder for this project to be viable, the proceeds of this offering will need to becombined with other sources of financing (see 'The Project - Use of Proceeds:Terminal Design and Financing"). There are a number of conditions precedent thatmust be satisfied before the closing will occur (see "Conditions Precedent to Closingof the Offering").

SWT is offering a minimum of 1:2,000 Shares and a maximum of 30,000 Shares. Theminimum subscription by a Subscriber is 25 Shares. Shares will be allocated by SWTto Subscribers on a first come, first serve basis based on date of receipt by SWT of aproperly completed Subscription Form and full payment.

$100 per Share.

The Shares have the rights, privileges and restrictions typically associated with"common shares". The Shares are voting and fully participating in dividends and onthe winding-up or liquidation of SWT, subject to the prior rights of the Class A sharesof SWT (see "South West Terminal Ltd. - Share and Loan Capital Structure").

Saskatchewan residents, including corporations, may purchase Shares (see "ScheduleA").

The Shares are fully transferable subject to compliance with applicable securities laws.No market exists for the Shares nor is a market expected to develop.

The purchase of Shares is subject to the significant risks more particularlydescribed under "Risk Factors". Potential purchasers should be aware of andunderstand the risks associated with this type of investment, mim: to subscribingfor Shares.

The offering price exceeds the net tangible book value per Class B share as atSeptember 30, 1994 by $30 after giving effect to the minimum offering and by $17after giving effect to the maximum offering. This represents a dilution of 30 percentin the case of a minimum offering and 17 percent in the case of the maximum offering(see "Dilution").

5

GLOSSARY

The following terms appear throughout this prospectus. Care should be taken to read each term in the contextof the particular provisions of the prospectus in which such term is used.

"Board"

"Board Grains"

"Private Grain Storage"

"SWT"

"Share"

"Shareholder"

"Subscriber"

"Terminal"

"Trustee"

Board of Directors of swrThose grains marketed exclusively by or for the account of the CanadianWheat Board.

Grain storage privately owned by producers which is either part of or linkedwith the Terminal.

South West Terminal Ltd., a corporation incorporated under The BusinessCorporations Act of Saskatchewan.

A Class B share in the capital of swr. "Shares" is the plural of Share.

A Subscriber who becomes a Shareholder of swr following the closing ofthis offering.

A potential investor in the securities offered under this prospectus whocompletes the subscription procedure described under "Subscription Pro­cedure".

The inland grain terminal to be constructed and operated by swr nearAntelope, Saskatchewan with the proceeds from the closing of this offering.

MacPherson Leslie & Tyerman, Barristers and Solicitors.

Other capitalized terms are used throughout this prospectus and may be defined in other sections.

THE OFFERING

swr is offering for sale to the public a minimum of 12,000 and a maximum of 30,000 Shares at a price of$100 per Share for total proceeds of $1,200,000 if the minimum offering is sold and $3,000,000 if themaximum offering 'is sold. The minimum purchase by an investor is 25 Shares ($2,500). The Shares will onlybe issued if the closing under this offering occurs (see "Conditions Precedent to Closing of the Offering"). Theprospectus also qualifies the Class B shares that may be issued to directors and officers of swr inconsideration of services (see "Executive Compensation" and "Plan of Distribution") and the sales co-ordinatoras commissions (see "Plan of Distribution").

THE PROJECf

Background

The Terminal is an initiative of a group of grain producers from the southwestern area of Saskatchewan. Thisgroup is concerned with the efficiency of the current grain handling system in this area of Saskatchewan. Itis hoped that an inland terminal near Antelope will streamline the handling system, lowering costs andincreasing returns to producers, while at the same time providing a return to shareholders of SWT. With thecontinued risk that changes will be made in the method of payment of the "Crow Benefit" and that there maybe an overa]] reduction in the amount of transportation subsidies paid to western producers, it is felt that theTerminal would be we]] positioned in the event of such changes to attract customers and significant volumesof grain due to the increased efficiency with which the Terminal can handle grain and the competitiveadvantages that such efficiency would provide.

6

In early 1994 the group set out to determine the economic viability of the Tenninal with an overall plan toestablish a widely held public company to construct the Terminal. To fund a feasibility study into the viabilityof an inland terminal, an offering of Class A shares of swr was made in 1994 in reliance upon a ruling issuedby the Saskatchewan Securities Commission pursuant to The Securities Act, 1988. Under that offering andother prospectus and registration exemptions investors contributed $153,000 by purchasing Class A shares ofswr. swr engaged Ernst & Young Management Consultants ("Ernst & Young") to study the feasibility ofoperating an inland terminal in southwestern Saskatchewan. The overall objective was to determine if sucha facility is economically viable.

The study considered the underlying factors which affect the revenues and expenses of an inland terminal,including:

(a) the volume of grain produced in a defined area;

(b) the percentage of such grain which could be attracted to a terminal;

(c) the revenues associated with the volumes processed; and

(d) the costs of constructing and operating a terminal.

Ernst & Young's research indicated there has been significant change in the industry in the past forty years.Today there are about 1,400 country elevators in the grain handling system. This is down from 5,400 in 1956.This consolidation has coincided with the increasing size of farms and the resulting reduction in the numberof farms. In Saskatchewan today there are more than 60,000 active farms with an average of 1,091 acres perfarm. In 1956, there were 103,391 farms with an average of 607 acres per farm.

At the same time, grain production on the prairies has risen because of less summerfallow, higher yieldingvarieties, and an increase in the amount of land under cultivation. In 1956, Saskatchewan produced 14.64million tonnes of grain (excluding specialty crops). In 1992, the production was 21.54 million tonnes(excluding specialty crops). Despite some increases in value-added processing and growth in other areas whichuse Western Canadian grains, such as livestock production, the amount of grain handled by the grain handlingand transportation system has also continued to rise. Saskatchewan's deliveries in 1992 totalled 17.27 milliontonnes. This was down from 1991 when 18.55 million tonnes of grain was handled which is, in turn, downfrom 1990 when 18.73 million tonnes was handled. These deliveries are, however, up dramatically from thedelivery figures of previous years.

In southwestern Saskatchewan (as dermed approximately by South Saskatchewan River to the North, theAlberta border to the West, the U.S. border to the South and the No. 19 Highway to the East) appr.oximately1.85 million tonnes of grain have been produced per year on average in the last five years. Of this amount,about 80 percent or 1.48 million tonnes have been delivered to elevators in the region. As of 1993, there were80 elevators in the region which offer a total capacity of 350,000 tonnes which meant that the system in theregion "turned over" 4.2 times. This makes the elevators in the region slightly less efficient than the elevatorsin the Province of Saskatchewan as a whole which turned over their total capacity 5.06 times in 1993.

In southwestern Saskatchewan, 52 percent of the grain handled is wheat, 45 percent is durum, 2 percent isbarley and 1 percent is comprised of the remaining crops including canola, oalS, flax, rye, etc. Because of thehigh proportion of the two Board Grains and the consistent weather and soil patterns, the grades within eachof these crops is distributed quite narrowly. Again, using the five year average, 73 percent of wheat and 64percent of thedurum was delivered in only two grades. As a result, the opportunity for blending grades ofgrain to achieve a high overall value of the inventory is only moderate in this region, as compared to a regionwhere the grade distribution is much wider. Also, because of the nature of the climate in this region, graindrying is not typically needed.

7

The feasibility study was premised on the construction of a 550,000 bushel terminal. Following completionof the feasibility study, swr and Ernst & Young continued to research construction and operating costs as wellas business strategy options. This research included meeting with building contractors, grain companies, railcompanies and having Ernst & Young compile additional analysis as to the viability of an inland terminal of550,000 bushels with 1,500,000 bushels of Private Grain Storage. The Board has decided to proceed with aninland grain terminal of 550,000 bushels together with 1,500,000 bushels of Private Grain Storage (see "Useof Proceeds - Terminal Design and Financing"). Based on the experience of other independent terminals andon the experience of facilities with private grain storage, swr expects to achieve on a market share of 12.5percent in 1996 and 13.5 percent in 1997 (see notes under "Financial Projection").

Concept

An inland grain terminal is similar to a country elevator but has added features and a larger capacity. Theprimary business of an inland grain terminal is the receiving, cleaning, blending, lo~ding and shipping grainfor export. A terminal may also use its equipment and capacity to custom blend or custom clean grains forsale to other processors or for feed purposes. For such a terminal to succeed, these processes must be managedeffectively and a large volume of grain must flow through the terminal.

The benefits of an inland grain terminal include the following:

1. Due to its increased storage capacity (compared to a traditional country elevator) the operatingcosts of an inland terminal on a per bushel basis can be reduced, thereby increasing the inlandterminal's competitiveness and profitability. .

2. The ability to clean grains and oilseeds to domestic standards will:

a) generate revenue for the inland terminal from producers who would otherwise haveto pay cleaning charges to a port terminal to clean to domestic standards;

b) permit the inland terminal to sell the dockage or screenings resulting from thecleaning process as high quality feed thereby generating additional revenue; and

c) enable the inland terminal to increase the tonnage of cleaned grain shipped per railcar because the dockage or screenings are removed, thereby increasing the efficiencywith which the inland terminal can receive and process grain and oilseeds fromproducers.

3. Due to its increased storage capacity, the inland terminal can maximize freight rate incentivesoffered by the railways for shipping larger volumes of grains, thereby reducing the operatingcosts of the terminal.

4. Due to its large storage capacity, the inland terminal should be able to negotiate a favourablearrangement with a grain company operating a port terminal which would provide for thepayment of a "diversion premium" for each bushel of grain consigned by the inland terminalto the grain company's port terminal.

5. The ability to blend grains and oilseeds of one grade with those of a higher grade, therebygenerating additional revenue.

A recent development in the Canadian grain handling industry is the private ownership by producers of storagespace adjacent to or incorporated into licensed elevators. Ownership of storage space in this fashion permitsa producer to deliver Board Grains to the elevator for storage off-quota to the extent of the storage capacity

8

which he or she owns. Ownership of the storage space is typically presented as a condominium certificate oftitle or as a long term grain storage agreement. In either of these scenarios, ownership of the storage spaceis fully transferable. Typically the owners of the storage space enter into a management agreement with theoperator/owner of the licensed elevator for the provision of services relating to the receiving, handling andstorage of grain for the account of those owning such storage space.

The primary objectives of swr are:

1. To operate a "full service" grain terminal facility. As it pertains to swr, full service includesthe following activities:

(a) receive grains and oilseeds by truck and, possibly, by rail car;

(b) ship grains and oilseeds by truck and rail car; and

(c) clean and store grains.

2. To maximize the return to shareholders.

3. To incorporate current technology, equipment and management practices to provide fullservice in an efficient and effective manner.

4. To work towards continually improving the grain handling and distribution system.

Benefits to Shareholders may accrue in a number of ways:

1. Possible dividends on and possible capital appreciation of the Shares. There can be noassurance, however, that Shareholders will receive any such dividends or enjoy any suchcapital appreciation.

2. Marketing programs that may be offered to producers (such as paying for dockage andtrucking premiums) so as to attract customers will be designed to maximize the volume ofgrain handled by the Terminal and thereby increasing the revenue and profitability of theTerminal.

3. If the Shareholder is a member of the "local" community, benefits may accrue in the "spinoff'effects that the Terminal creates as an additional business in the local economic base.

It is the Board's present policy to pay a trucking premium to producers who deliver grain to the Terminal ata rate of 7.5 cents per tonne per mile. The policy of the Board may change at any time and there is noguarantee that the rate will not decrease, increase nor be eliminated in its entirety at a later date.

Readers are reminded of the risks inherent in an investment in swr (see "Risk Factors").

It is believed that producers, including those who are shareholders of swr, would seli grain. to the Terminalfor one or both of two basic reasons:

1. real or perceived economic benefits to the producer or the community; and

2. the belief that supporting an alternative grain handling facility will assist in bringing aboutconstructive changes in the industry, increasing efficiency and improving the Canadian grainindustry's competitiveness.

9

Industry Regulation

The Canadian grain handling industry is heavily regulated. Such items as rail cars, grain sales, port terminalspace and measurement systems of grain or "grades" are regulated by the industry and the federal government.The private grain handling industry does not market all of the grains which are collected in a facility. Thegrains marketed by grain companies are referred to as "non-Board" grains. These include feed grains, oats,canola, and specialty crops. The Canadian Wheat Board handles the marketing of all Board Grains whichincludes non-feed wheat, barley and durum. As a result of these two parallel marketing systems, historicallythe allocation of "space" in the system has been regulated.

Due to regulation, the grain industry has never been able to compete on the basis of the true demand of farmersto purchase the handling service from a certain company. Since rail cars, grain sales, port terminal access andmeasurement system of grain or "grades" are regulated, the ability of a facility to handle a given volume ofgrain is constrained, firstly, by the regulations, secondly, by the farmer demand and, thirdly, by the physicalstructure of the terminal. For example, the physical capabilities of a high throughput elevator may allow it tohandle as much as three or four times more grain than may be possible on the basis of the regulations whichallocate the rail cars, grain sales and terminal space.

Pri,'ate Grain Storage

Subject to the approval of the Canadian Wheat Board, swr plans to grant long term grain storage agreementsto producers and others who wish to acquire Private Grain Storage units. The term of the grain storageagreement will be 15 years or such longer or shorter period as swr determines. Producers wishing topurchase Private Grain Storage units will have to purchase at least 25 Shares under this offering. At this time,the Board expects to require each producer who purchases Private Grain Storage to "turn" the Private GrainStorage twice a year. swr will sell the Private Grain Storage for a minimum of $1 per bushel. The PrivateGrain Storage units will be fully transferable with the consent of the Board and such consent will not begranted where the unit is to be transferred to a competitor of swr in the grain handling business. No otherregulatory approval is required for any transfers.

The Private Grain Storage space constructed may be a stand alone structure which is linked to the Terminalor, alternatively, it may be an integrated part of the Terminal. The exact amount and configuration of PrivateGrain Storage to be constructed will depend upon the amount of Private Grain Storage. After closing thisoffering, the Board will determine the appropriate size and configuration of the Private Grain Storage. It isa condition precedent for the closing of this offering that swr sell a minimum of 1,500,000 bushels of PrivateGrain Storage for a minimum aggregate purchase price of $1,500,000 and any additional Private Grain Storagemust have been sold for at least $1 per bushel. It is a further condition precedent for the closing of thisoffering that the Canadian Wheat Board have granted its approval for the Private Grain Storage arrangementsproposed by swr (see "Conditions Precedent to Closing of the Offering").

Purchasers of Private Grain Storage units will pay a deposit, equal to 25 percent of the purchase price, at thetime they enter into a sale agreement with SWT. The balance will be paid in accordance with the saleagreement which shall be no later than upon completion of construction and the storage unit being availablefor use. Interim fmancing equal to the unpaid portion of the total cost of construction of the Private GrainStorage will be required until the Private Grain Storage is fully paid for. The Private Grain Storage units willbe offered for sale by the individuals authorized to sell Shares on behalf of SWT (see "Plan of Distribution").The Private Grain Storage units are not being offered for sale under this offering. The commissions payableon the sale of the Private Grain Storage is 6 percent (see "Plan of Distribution"). If more than 2,000,000bushels of Private Grain Storage is sold the sales co-ordinator will receive an additional 0.5 percentcommission for the Private Grain Storage sold in excess of 2,000,000 bushels.

10

Marketing Partner

In order for the Terminal operation to be successful, the Board recognized the importance of securing anexperienced grain company as a marketing partner. The Board held discussions with a number of graincompanies and has selected Cargill Limited ("Cargill") as its marketing partner.

swr and Cargill have now reached an agreement in principle with respect to a proposed Marketing Agreement(the "Marketing Agreement") which will have an initial term of 25 years from the date swr commencesbusiness operations. Under the Marketing Agreement swr will consign to Cargill all shipments of graindestined to Thunder Bay, Ontario or Vancouver, British Columbia. By consigning shipments of grain toCargill in this fashion, Cargill can then designate that the consigned grain will be shipped to Cargill's portterminal in Thunder Bay and to the port terminal of its choice in Vancouver thereby enabling Cargill to eamrevenue via the customary port terminal tariffs for handling and receiving the grain. In consideration forconsigning grain to Cargill in this fashion, Cargill will pay to swr a flat rate per bushel of grain consignedto Cargill. The exact per bushel rate and the basis upon which it is to be negotiated is confidential byagreement between swr and Cargill.

The proposed Marketing Agreement also provides Cargill with a right of first refusal to purchase all swr non­Board Grains, oilseeds and specialty crops. Under the right of first refusal, swr will purchase non-BoardGrains from producers for its own account and Cargill will then have the right to purchase the non-BoardGrains from swr on the same or better terms which swr is able to obtain from third parties. In practice,Cargill will provide swr with its bid price to purchase non-Board Grains from swr which will be derivedfrom the futures price of the non-Board Grains traded on the Winnipeg Commodity Exchange. swr wouldbe free to explore whether any other grain company would be prepared to bid a price higher than Cargill'sinitial bid price, in which case swr would be required to give Cargill the opportunity to match any higherprice.

swr will be responsible for the management and operation of the Terminal including support services,computer services, account services, and other operating requirements. As the request of swr, Cargill willprovide advice on the management and operation of the Terminal.

Investment by Partner

Cargill has also agreed in principle to invest in swr by purchasing 10,000 Class C shares in the capital ofswr at $100 per share ($1,000,000) or 40% of the total paid up equity of swr, whichever is greater. TheClass C shares will have the attributes described under "South West Terminal Ltd. - Share and Loan CapitalStructure". The subscription by Cargill for at least 10,000 Class C shares is a condition precedent to theclosing of this offering (see "Conditions Precedent to Closing of the Offering").

Canada - Saskatchewan Partnership Agreement on Rural Development

On September 29, 1994, swr entered into a repayable contribution agreement (the "PARD Agreement")whereby the Government of Saskatchewan and the Government of Canada (collectively, the "Government")agreed to provide funding up to $39,000 for a feasibility study, offering memorandum, business plan and aprospectus. The funding will be provided under the Canada - Saskatchewan Partnership Agreement on RuralDevelopment program. The term of the PARD Agreement is from September 12, 1994 to March 31, 1995.During that time the Government will provide a 50 percent contribution for eligible expenses to a maximumof $39,000. If the Terminal is constructed within two years, the contribution over $20,000 shall be repayablein five equal annual instalments commencing April 1, 1997. As of September 30, 1994 no funds were receivedby swr under the PARD Agreement. The fust $20,000 advanced is not required to be repaid.

)11

Use of Proceeds: Terminal Design and Financing

swr will use the proceeds of this offering ($1,200,000 if the minimum offering is raised and $3,000,000 ifthe maximum offering is raised) in the following order of priority:

1. Payment of the costs of the offering, including legal and other professional costs, and anycommissions due for sale of the Shares (see "Distribution Spread").

2. Payment of the costs related to the design and construction of the Terminal.

3. Balance, if any, for working capital.

swr intends to construct a full service, state of the art, high capacity grain handling facility. A Terminal withthe folJowing specifications is planned:

1. The Terminal will be of concrete construction or steel or a combination of both with a storagecapacity of 2,050,000 bushels, being a Terminal with 550,000 bushels together with 1,500,000bushels of Private Grain Storage.

2. It is intended that the Terminal will have the ability to clean grains to domestic standardsemploying high throughput cleaning equipment.

3. Through the use of numerous storage bins and conveyors, swr will have the ability to blenddifferent grades of grain in order to maximize the revenue from sales.

4. A high capacity loading system (up to 20,000 bushels per 'hour) and the ability to load unittrains of 50 cars in 8 hours.

5. The ability to receive two types of grain simultaneously.

6. The Terminal will be designed so as to permit future expansion in both terminal storage andhandling capacities and in its cleaning facilities.

If the maximum offering of $3,000,000 is raised under this offering and the required additional fmancing isavailable, swr may either increase the capacity of the Terminal and enhance the associated facilities as maybe permitted by the amount raised or reduce the amount of other sources of fmancing required to complete theproject, or a combination of both.

swr has obtained options to acquire lands suitable for the construction of the Terminal and is negotiating toacquire the required rail access. It is a condition precedent for the closing of this offering that swr will havesecured the required rail spur track and rail siding within the budgeted amount (see "Conditions Precedent toClosing of the Offering").

The area in which swr proposes to construct the Terminal is serviced by a Canadian Pacific Railway mainline. swr will negotiate with Canadian Pacific Railway with a view to concluding a rail service agreementwhich will include a capital contribution from Canadian Pacific Railway towards the overall capital cost ofconstructing the Terminal, including the required rail siding. The amount of any such contribution wouldreduce the amount of loans or other contributions described in the table, "Source of Funds". It is a conditionprecedent for the fmal closing of the offering to have secured a rail service agreement with Canadian PacificRailway (see "Conditions Precedent to Closing of the Offering").

12

The Board has investigated the costs of constructing the Terminal with an experienced building contractor andits consultants and believes its construction budget, set out under "Use of Proceeds", is reasonable. It is acondition precedent for the closing of this offering to have secured a stipulated price construction contract withan experienced building contractor for the construction of the Terminal and the Private Grain Storage withinthe budgeted amount, together with a 50 percent performance bond from a recognized surety company (see"Conditions Precedent to Closing of the Offering"). The performance bond will provide protection, up to theamount of the bond, in the event that the building contractor is unable to complete the project and swr mustsecure another building contractor to complete the project.

The table, "Use of Proceeds", sets out SWT's estimate of the construction and offering costs for a 550,000bushel Terminal and 1,500,000 bushels of Private Grain Storage. The sources of funds required to constructthe Terminal are outlined in the table "Sources of Funds".

USE OF PROCEEDS

Terminal building and land

Grain cleaners and related equipment

Rail siding

Office facilities, equipment and furnishings

Private Grain Storage

Selling Commissions (Shares)1

Selling Commissions (private Grain Storage)7

Offering Costs

Development Costs3

Working Capital

Total:

Footnotes:

$3,100,000

$650,000

$625,000

$150,000

$2,250,000

$72,000

$90,000

$80,000

$145,000

$300.000

$746" 000

(#1) Based on a minimum offering of Sl,200,ooO (see "Disuibution Spread"). In the case of a maximum offering, the sellingcommissions would be S18O,OOO and the total budget would be $7,570,000.

(#2) Based on 1,500,000 bushels of Private Grain Storage.(#3) This figure includes expenses incurred since incorporation other than Offering Costs.

SOURCES OF FUNDS

Footnotes:

Class A Equity1

Class B Equityl

Class C EquityS

Sale of Private Grain Storage2

Loans and Other Contributions3l4

Total

MinimumOffering

$153,000

$1,200,100

$1,000,000

$1,500,000

$3,608,900

$7462000

MaximumOffering

$153,000

$3,000,100

$1,000,000

$1,500,000

$1.916,900

$7570000

(#1) See "South West Terminal Ltd. - Share and Loan Capital Structure".(#2) Since the entire proceeds from the sale of Private Grain Storage will not be immediately available, swr will need to

arrange for interim financing equal to the unpaid portion of the construction cost of the total Private Grain Storage (see"Conditions Precedent to the Oasing of the Offering").

\! (#3)

(#4)

(#5)

13

The Board will seek a capital conttibution from Canadian Pacific Railway (see "The Project - Use of Proceeds:Terminal Design and Financing") and the balance will be debt financed.If more than 1,500,000 bushels of Private Grain Storage are sold, additional financing will be required to cover thedifference between the construction cost and the proceeds from the sale of the Private Grain Storage.Cargill I1mited has agreed to conttibute a minimum of Sl,OOO,OOO in equity. The actual amount to be conttibuted maybe more than 51,000,000 (see "The Project - Investment by Panner").

The actual cost of any component of the project may vary from the estimates given above (see "Risk Factors").

FINANCIAL PROJECTION

Some assumptions used in the preparation of the projection, although considered reasonable by SWTat the time of the projection, may prove to be incorrect. The projection is based on hypotheses and thereis a significant risk that actual results will vary, perhaps materially, from the results projected. Thereis no representation by SWT that actual results achieved during the projection period will be same inwhole or in part as those projected. .

The preparation of the following financial projection was approved by the Board on September 30, 1994. Theprojection has been prepared in accordance with the standards established by the Canadian Institute ofChartered Accountants relating to the presentation and disclosure of financial projections.

)i

FINANCIAL PROJECTION

SOUTH WEST TERMINAL LTD.

For Each Of The Years Ending December 31,1994, 1995, 1996 and 1997

)

15

AUDITORS' REPORT ON FINANCIAL PROJECTION

To the Directors of South West Terminal Ltd.

The accompanying fmancial projection of South West Terminal Ltd., consisting of aBalance Sheet, Statement of Income and Statement of Cash Flow for each of the years inthe four year period ending December 31, 1994, 1995, 1996 and 1997 has been preparedby management using assumptions, including the hypotheses set out in Note 3, with aneffective date of September 29,1994.

Since an hypothesis need not be supported, our procedures with respect to them werelimited to evaluating whether they were consistent with the purpose of this projectiondescribed in Note 1. We have also examined the support provided by management for theother assumptions, and the preparation and presentation of the projection. Our examinationwas made in accordance with the applicable Auditing Guideline issued by The CanadianInstitute of Chartered Accountants. We have no responsibility to update this report forevents and circumstances occurring after the date of our report.

In our opinion:

• The hypotheses are consistent with the pmpose of this projection;

• As at the date of this report, the other assumptions developed by management aresuitably supported and consistent with the plans of the Corporation, and provide areasonable basis for the projection, given the hypotheses;

• This projection reflects the hypotheses and the other assumptions; and

• This financial projection complies with the presentation and disclosure standards forprojections established by The Canadian Institute of Chartered Accountants.

Since this projection is based on assumptions regarding future events, actual results willvary from the information presented even if the hypotheses occur, and the variations maybe material. Accordingly, we express no opinion as to whether this projection will beachieved. .

Saskatoon, CanadaSeptember 29, 1994 Chartered Accountants

16

South West Terminal Ltd.

PROJECTED BALANCE SHEET

As at December 31

1994 1995 1996 1997S S S S

ASSETSCash 21,539 300,100Accounts receivable 51,596 53,584Inventories 1.266,330 1.363.803Total current assets 21,539 300.100 1,317.926 1A17.387Fixed assets 6,775,CXYJ 6,449,167 6,123.333Other assets 173.834 125.CXYJ 104.500 84.000

195373 7.200.100 7.871.593 7.624.720

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilitiesOperating loan 429,405 14.063Accounts payable 41,273 80,346 86,075Income taxes payable 132.265 189.474Total current liabilities 41,273 642,016 289.612Mortgage payable 3,570,CXYJ 3,503,144 3,430,017P.A.R.D. 1,000 19,CXYJ 19,000 19,000Service agreement lA10,CXYJ 1,316.000 1.222.000Total liabilities 42.273 4,999.CXYJ 5A80.160 4,960.629Capital 153,100 2.201,100 2,201,100 2,201.100Retained earnings 190.333 462.991Total shareholders' eguitv 153.100 2,201.100 2,391A33 2.664.091

195373 7.200.100 7.871.593 7.624.720

See accompanying notes

17

South West Terminal Ltd.

PROJECTED STATEMENT OF INCOME

For the period ended December 31

1994 1995 1996 1997S S S S

REVENUEHandling 1.934.702 2,125.091Other terminal 1.106.443 1.200,196Service agreement 94,000 94.000

3,135,145 3.419.287

EXPENSESSalaries and benefits 815.551 835,939Operating and administtation 850.750 961,322Depreciation 325.833 325.833Amortization 20,500 20.500Marketing programs 449,469 487.694

2,462.103 2,631.288

Income before interest and income taxes 673,042 787.999

INTERESTOperating loan 31.857 13,551Mortgage 318,587 312.315

350.444 325,866Income before income taxes 322,598 462,133Income taxes 132.265 189.475Net income 190.333 272.658

See accompanying notes

18

South West Terminal Ltd. )

PROJECTED STATEMENT OF CASH FLOWS

For the period ended December 31

1994 1995 1996 1997$ $ $ $

OPERATING ACTIVITIESNet income 190,333 272,658Add charge (deduct credits) to operations not

requiring a current cash paymentOqx'eciaIion 325,833 325,833Amortization 200500 20,500Decrease in service agreement (94,000) (94,000)Inaeaseinaccounts receivable (51,596) (1,988)

Increase in inventory (1.266,330) (97,473)Increase (decrease) in accounts

payable 41,273 (41,273) 80,346 5,730Increase in income taxes payable 132.765 57.209

Cash provided by (used in)operating activities 41,273 (41,273) (662.649) 488.469

INVESTING ACTIVITIESPurchase of fIXed assets (6,775,000)Increase (decrease) in other assets (173.834) 48,834Cash used in investing

activities (173.834) (6.726.166)

FINANCING ACTIVITIESIssue of share capital 153.100 2,048,000Proceeds from mongage payable 3,570,000Increase in P.A.R.D. 1,000 18,000Repayment of mongage payable (66,856) (73,127)Increase in service agreement 1.410.000Cash provided by (used in)

financing activities 154.100 7,046,000 (66,856) (73.127)

Net increase (decrease) in cash 21,539 278,561 (729.505) 415,342Cash position. beginning of year 21.539 300,100 (429,405)"Cash position. end or year 21.539 300,100 (429,405) (14,063)

See accompanying notes

19

South West Terminal Ltd.

Notes To Financial ProjectionFor Each Of The Years Ending December 31, 1994, 1995, 1996 and 1997.

1 • Purpose of Projection

This fmancial projection has been prepared for inclusion in the prospectus datedNovember 14, 1994 for the information of prospective investors, and may not beappropriate for other uses. The projection is based on hypotheses andthere is significant risk that actual results will vary, perhapsmaterially, from the results projected.

The Company does not intend to update this projection.

2 • Description of the Business

South West Terminal Ltd. is a limited corporation under the laws of the Province ofSaskatchewan. The corporation was established in the spring of 1994 to issue theClass A shares, to conduct the feasibility study and to develop the prospectus. Thecorporation plans to undenake the construction and operation of a grain terminal.During 1994, South West Terminal Ltd. sold Qass A shares totaling $153,000 toshareholders in South West Saskatchewan under prospectus and registrationexemptions of The Securities Act. 1988 (Saskatchewan) and local policy statement5.1- "Community Ventures - Section 83 Rulings".

The planned business of South West Terminal Ltd. is to receive, store, clean, blendand ship grains for farmers in South West Saskatchewan (as hereinafter defined).The projection is based on a certain facility size and the number of "turns" orvolume of grain to be handled by the facility in a given crop year. This is known asthe "handle". The handle for the terminal is based on the experience of similarindependent terminals and the experience of high throughput elevators owned bythe major grain companies in Western Canada. A key attribute of this terminal isthe grain storage service agreements which South West Terminal Ltd. is makingavailable to local farmers. These are commonly known as "grain condos". Thecondos allow the facility to handle more grain than would be expected without theregulatory system which rewards track-side capacity in allocating rail cars forshipping grain and the efficiencies which come from having a large amount ofcapacity.

The projection has been prepared using assumptions that reflect the corporation'splanned course of action for the period covered given management's judgment as tothe most probable set of economic conditions, together with one or morehypotheses that are assumptions which are consistent with the purpose of theinfoxmation but are not necessarily the most probable in management's judgment.

These assumptions reflect management's planned courses of action for a four yearperiod based on the known facts available and based on management's knowledgegained from the grain industry, consultants and legal counsel. This projection doesnot reflect actual results. However, the 1994 figures include actual results toAugust 31, 1994. The projection is contingent on completion of construction byDecember 31, 1995 and commencement of operations on January 1, 1996. Ifconstruction is delayed there may be a material effect to this projection.

The financial projection is made for a four year period which allows the terminalfacility to be built and then operate for two full years.

20

3. Hypotheses

This projection is based on hypotheses with an effective date of September 29,1994 as follows:

a) CapjrnU7l!tionAs at September 29, 1994 the company had capital stock issued of$153,100. The company intends- to sell 12,000 Class B Shares at $100 pershare (the minimum amount of the offering), less selling commissions of$72,000 and issue expenses of $80,000 for net proceeds of $1,048,000.Other sources of fmancing are assumed to be received from the CanadianPacific Railway, and a grain company parmer for a minimum of $1,000,000after share issue costs. Total capital at December 31, 1994 is assumed to bea minimum of $2,201,100.

b) ServiceA~entThe company will sell 1,500,000 bushels of grain storage under serviceagreements at $1 per bushel, less selling costs of $90,000 for net proceedsof $1,410,000.

c) Market ShareThe company will achieve a market share of 12.5% in 1996 and 13.5% in1997 in the South West Crop districts of Saskatchewan described as 3B-N,3B-S, 4A and 4B. Management has projected the company will achieve themarket share based on market share information obtained from otherterminals in Saskatchewan and market share information on condominiumstorage facilities in Western Canada.

4. Assumptions

These projections are based·on the assumptions with an effective date of September29, 1994 as follows:

a) Oosin~ of the offerin~

The following conditions are precedent to the closing of the offering:

i) The company will conclude a rail service agreement which will include asubstantial capital contribution from Canadian Pacific Railway toward theoverall cost of the terminal;

ii) The company will enter into an operating and marketing agreement with agrain company partner which will include a capital contribution;

iii) The company will receive adequate operating loan financing. The projectionhas assumed an operating loan of $429,405 at December 31, 1996 withinterest at 6%. Inventory will be pledged as collateral on this loan.

iv) The company will receive adequate mongage financing. The projection hasassumed that a long-tenn mongage of $3,570,000 will be received againstwhich the land and buildings will be pledged as collateral.

The interest rate has been assumed to be 9% with the mongage payable overa 20 year amortization period.

21

b. MarketThe market area for a large, terminal style grain handling facility is typicallyassumed to be a 100 kilometer radius of the terminal. Because of thegeography, highway and rail lines in South West Saskatchewan, the typical100 kilometer radius has been modified to include an area as definedapproximately by the South Saskatchewan River to the North, the Albertaborder to the West, the U.S. border to the South, and the No. 19 highwayto the East The five year grain delivery in the South West region ofSaskatchewan is 1,477,245 tonnes. (Source: Canadian GrainCommission's annual publication Grain Deliyeries at Prairie Points for theperiod 1988-89 to 1992-93.)

c. CurrencyAll currency amounts are stated in Canadian dollars.

d. InflationThis projection has been prepared including an increase of 1.6% to 2.5%annually for handling, storage, diversion premiums and freight incentivesrevenue. Other revenue remains in constant dollars. Salaries and benefits,operating and administration and marketing programs expenses include anincrease of 2.5% annually.

e. Income TaxThis projection is prepared on the basis that grain storage revenues will beincluded in taxable income as they are earned, on a straight-line basis, over15 years.

5 • Significant Accounting Policies

These financial projections have been prepared in accordance with generallyaccepted accounting principles and reflect the following policies:

a. InyentrnyInventory is valued at the lower of cost and net realizable value, with costdetennined using the average cost method.

b. Fixed AssetsFixed assets are recorded at cost and include the cost of engineering andutility costs during construction. Buildings, equipment, furniture andfixtures are depreciated using the straight-line method over the assets' usefullife estimated at 40 years for buildings, and 5 to 10 years for equipment andfurniture.

c. Other AssetsOther assets include costs relating to professional fees, managementsalaries, travel costs and promotion are capitalized and amortized over a sixyear period.

22

d. Service AmementThis projection assumes the company will sell 1,500,000 bushels of GrainStorage Service Agreements at the value of $1.00 per bushel.

This prepayment will be included in income over the 15 year term of theagreement

6. Capital

Commissions and other share issue expenses on the issue of shares are nettedagainst funds received for capital stock.

7. Revenue

a) Handlin~ ReyenueHandling revenue is projected to be earned by charging the producer forelevation and cleaning of delivered grain. The rates used in calculatingrevenue for handling are based on Canadian Wheat Board posted existingtariffs as charged by other terminal facilities, including an increase forgrowth of 8% in 1996.

b) Other ReYenueOther revenue is projected to consist of revenue on related grain handlingactivities and includes storage, interest, dockage, blending, diversionpremiums and freight incentives. These amounts have been projected basedon the experience of similar terminals operating in Western Canada,discussions with producers in South Western Saskatchewan, and variousother sources of publicly documented information.

S . Income Taxes

Income taxes have been projected based on rates applicable under the Income TaxAct of Canada.

9. P.A.R.D.

South West Terminal Ltd. has obtained approval for a grant and loan pursuant tothe Partnership Agreement on Rural Development in the amount of $39,000. Theloan portion of $19,000 is repayable after 5 years. The grant of $20,000 has beenapplied against projected organizational costs including other assets.

23

RISK FACTORS

Investment in the Shares will be subject to certain risks, including the following:

1. swr has no operating history or proven management abilities and the success of its operations cannotbe assured. Subscribers must rely upon the ability, expertise, judgment, integrity and good faith ofthe management of swr.

2. The investment described in this prospectus is subject to the usual commercial risks associated withthe construction, ownership and operation of an inland grain terminal. The actual cost of anycomponent of the project may vary from the estimates given (see "Use of Proceeds - Terminal Designand Financing").

3. The price of the Shares may not be representative of the actual value of those securities. The pricepaid to swr was established arbitrarily by swr.

4. There can be no assurance that the operation of the Terminal by swr will result in a level ofprofitability which would permit distributions to be made to Shareholders. Investors who requireregular returns from their investments should not purchase the securities offered by this offering.

5. There is no public market for the Shares nor is a market expected to develop. The Shares will not belisted for trading on any stock exchange and marketability will depend upon demand. As a result,Shareholders may not be able to liquidate their investment readily or in a timely manner.

6. There is no guarantee that the Shares will qualify as an eligible investment for a self-directed RRSP.In the event that the Shares qualify as an eligible investment for a self-directed RRSP in the future,there is no guarantee that they will continue to qualify as tax laws and assessment policies frequentlychange.

7. An investor intending to contribute his or her Shares to an RRSP should not rely on the Shares togenerate any return. As there is no public market for the Shares offered. Shareholders may experiencedifficulty liquidating any Shares held in an RRSP.

8. Tax laws are frequently amended and assessment policies change from time to time. There can be noguarantee that the rules which have application to the project described in this prospectus at the dateof this prospectus will remain in force.

9. The grain handling and transportation industry is heavily regulated by the federal government. Therecan be no guarantee that the rules and regulations which would presently apply to the project describedin this prospectus will remain in force.

10. There will be an immediate dilution in the value of a Subscriber's investment due to the costs of theissue, commissions payable, the issue of Shares to directors and officers for services to swr andexisting outstanding Class A shares and Class B shares in swr (see "Dilution").

PROMOTERS

The individuals primarily responsible for the concept and incorporation of S'WT are its directors and officerswho can be considered its promoters (see "South West Terminal Ltd. - Directors and Officers"). Directors andofficers of S'WT will:

1. be reimbursed for their out-of-pocket expenses while performing services for SWT;

24

2. be entitled to claim the equivalent of $15 per hour or $120 for each 8 hour day spentproviding services to swr since May 10, 1994;

3. assuming they are registered with the Saskatchewan Securities Commission as salespeople,receive a 4.5 percent commission on the Shares which they sell payable in cash; and

4. receive a 4.5 percent commission on the Private Grain Storage which they sell payable incash.

(see "Executive Compensation")

SOUTH WEST TERMINAL LTD.

Corporate Status

swr was incorporated by Articles of Incorporation on April 4, 1994 pursuant to The Business CorporationsAct. The mailing address of swr is P.O. Box 719, Gull Lake, Saskatchewan, SON lAO and its registeredoffice is clo MacPherson Leslie & Tyerman, 1500-1874 Scarth Street, Regina, Saskatchewan, S4P 4E9.

Business of SWT

swr was incorporated for the purpose of developing, constructing and operating an inland grain terminal insouthwestern Saskatchewan (see "The Project"). To date, SWT's business has consisted of procuring afeasibility study, developing its business plan and planning the Terminal and this offering.

Property of SWT

swr currently owns no real property or other assets, however, it has obtained options to acquire variousparcels of land (see "The Project - Use of Proceeds: Terminal Design and Financing").

Acquisitions

swr has made no material acquisitions since incorporation.

Share and Loan Capital Structure

The Share structure of swr is currently comprised of two classes of shares:

1. An unlimited number of Class A shares may be issued by swr. The holders of Class A shares areentitled to one vote per Class A share at any meeting of the shareholders of swr (other than separatemeetings of the holders of other classes of shares required by law or regulatory requirements). Theholders of Class A shares are entitled, in preference and priority to the holders of the Class B shares,to receive 100 percent of the amount paid up on the Class A shares, together with declared but unpaidand unextinguished preferential non-cumulative dividends, in the event swr liquidates, dissolves orwinds-up but are not entitled to any further distributions.

The holders of Class A shares are entitled, in preference and priority to the Class B shares, to a 10percent non-cumulative dividend whenever, in the discretion of the directors, dividends are declared.The holders of Class A shares are not entitled to any further dividends.

25

Each Class A share may be converted at the option of the holder at any time into 2 Class B shares,subject to the conditions and adjustments set forth in the articles of swr. As of September 30, 1994,no Class A shares have been converted to Class B shares.

One thousand five hundred thirty Class A shares are issued and outstanding and no single shareholderowns more than 10 percent of the outstanding Class A shares. These shares were issued to subscriberspursuant to prospectus and registration exemptions under 17,e Securiries Act, 1988, and pursuant to theoffering of Class A shares of swr conducted earlier in 1994 to raise money to fund the feasibilitystudy and offering costs.

2. An unlimited number of Class B shares may be issued by swr. The holders of Class B shares areentitled to one vote per Class B share at any meeting of the shareholders of SWT (other than separatemeetings of the holders of other classes of shares required by law or regulatory requirements). Theholders of Class B shares are entitled to receive, subject to the rights of the holders of the Class Ashares, any dividends declared by swr. In the event swr liquidates, dissolves or winds-up, theholders of Class B shares are entitled to receive, subject to the rights of the holders of the Class Ashares, any remaining property of swr. The rights, privileges and restrictions attaching to the ClassB shares are those typically associated with "common shares".

One Class B share has been issued to date. Class B shares may be issued to directors and officers ofSWT in consideration for the provision of services to swr if this offering closes (see "ExecutiveCompensation").

In addition to the two classes of shares currently authorized by the articles of SWT, it will be necessary toamend the articles of swr to create a third class of shares in order to accommodate the equity investment byCargill. This class of shares will be designated as Class C shares and the articles will provide for an unlimitednumber of Class C shares entitling the holders, subject to the priority rights of the Class A shares, to share ona pro-rata basis with the Class B shares in dividends and on the liquidation, winding-up or dissolution ofswr, or the distribution of assets of SWT among its shareholders for the purpose of winding-up its affairsor upon a reduction of capital. Subject to the provisions of 17,e Business Corporations Act, the Class C sharesv.i1l be non-voting except to entitle the holders to elect a proportionate number of directors to the Board basedon the amount paid up on the Class C shares relative to the amount paid up on all of the issued andoutstanding shares in the capital of $WT.

Copies of SWT's articles may be obtained from the Corporations Branch, Department of Justice, Regina,Saskatchewan and may be viewed during normal business hours at SWfs office in Gull Lake, Saskatchewan.

As of September 30, 1994, swr had no loans or other debts, other than accounts payable incurred in planningthe Terminal and this offering.

The following table outlines the share and loan capital structure of swr under the minimum and maximumoffering:

26

Share and Loan Capital

Designation of AmountSecurity!Debt Authorized

Class Al Unlimited

Class BI Unlimited

Class CS Unlimited

Loans andOtherContributions3

Amount Outstanding Amount Outstanding . Amount Outstanding Amount Outstanding ifas of Aug. 31, 1994 as of Sept. 30, 1994 'if Minimum Maximum

Offering Sold214 Offering Sold214

$122,700 $153,000 $153,000 $153,000(1,227 shares) (1,530 shares) (1,530 shares) (1,530 shares)

$100 $100 $1,200,100 $3,000,100(1 share) (1 share) (12,001 shares) (30,001 shares)

nil nil $1,000,000 $1,000,000(10,000 shares) (10,000 shares)

nil nil $3,608,900 $1,916,900

TotalCapitalization

Footnotes:

$122,800 $153,100 $5,962,000 $6,070,000

(#1) Each Cass A share is convenible at the option of the holder into 2 Cass B shares. The conversion of any Cass A sharewill affect the above table.

(#2) ,After the closing of this offering, up to 750 shares may be issued to directors and officers of swr in consideration ofservices to swr (see "Executive Compensation"). These shares are not included in the table.

(#3) The Board will seek a capital contribution from Canadian Pacific Railway (see "The Project - Use of Proceeds:Terminal Design and Fmancing") and the balance will be debt financed.

(#4) Cass B shares may be issued to the sales co-ordinator under this offering (see "Plan of Distribution"). These sharesare not included in the above table.

(#5) The panner has agreed to contribute a minimum of $1,000,000 in equity. The actual amount to be contributed maybe more than $1,000,000 (see "The Project - Investment by Panner").

swr will also arrange an operating line of credit with a chartered bank or credit union to finance the purchaseof grains and oilseeds from producers and to finance usual operating expenses. Lenders will typically providea line of credit equal to 100 percent of all Board Grains on store and 90 percent of all non-Board Grains onstore. The precise amount of the line of credit required is primarily a function of the size of the Terminal, thesplit between the Board Grains and non-Board Grains anticipated to be received by swr and the currentmarket price for each commodity (see "Conditions Precedent to Closing of the Offering).

Prior Sales

Since incorporation of swr on April 4, 1994, 1 Class B share was issued to Ernie Sommer at a price of $100.One thousand five hundred thirty Class A shares were issued between April 4, 1994 and September 30, 1994at a price of $100 per share. The monies raised were used to fund the feasibility study described under "TheProject - Background".

Sales Otherwise than for Cash

No Shares in the capital of swr issued pursuant to this offering will be issued otherwise than for cash,however, Class B shares may be issued to directors and officers as reimbursement for services rendered to swr(see "Executive Compensation"). In addition, the sales co-ordinator may be issued Class B shares ascommissions (see "Plan of Distribution").

27

Principal Holders of Securities

To the knowledge of the directors and officers of swr, as at September 30, 1994, the following sets out theonly persons, rums or corporations beneficially owning, directly or indirectly, securities carrying more than10 percent of the voting rights attached to any class of voting securities of swr:

Name and Address Designation Type of Number of Percentage Percentage of Classof Class Ownership Securities of Class After Giving Effect to

this Offeringlll

Minimum MaximumOffering Offering

Ernie Sommer Class B Direct and 1 100 percent .008 .003Gull Lake, Sask. Beneficial percent percent

Footnotes:

(#1) A maximum of 750 Qass B shares may be issued to directors and officers of swr for services rendered. These sharesare not included in the above table (see "Executive Compensation").

(#2) Qass B shares may be issued to the sales co-ordinator as commissions. These shares are not included in the abovetable (see "Plan of Distribution").

As at September 30, 1994, the following sets out the percentage of securities of each class of voting securitiesof the swr, beneficially, owned, directly or indirectly, by all directors and officers of swr as a group:

Designation of Qass

Class Al

Class BI

Footnote:

Percentage of Shares

9.87 percent

100 percent

(#1) Each Class A share is convertible at the option of the holder into 2 Class B shares. The conversion of any ClassA share will affect the above table.

Dividend Record and Policy

No dividends have been declared by swr to date. The dividend policy of swr will be determined by theBoard from time to time if and when funds are available for the distribution of dividends. Holders of the ClassA shares of swr will be entitled to an annual non-cumulative preferential dividend of 10 percent of theamount paid up on the Class A shares (equal to a maximum annual dividend of $15,300) when dividends aredeclared and will not be entitled to any other dividends.

There can be no assurance that the proposed operations of SWT will result in any profitability whichwould pennit distributions to Shareholders. Investors who must obtain regular returns from theirinvestments should not purchase the Shares offered by this prospectus.

Directors and Officers

The articles of swr stipulate that swr must have at least five and Dlay have as many as twenty-one directors.

28\

The directors and officers of swr are:

Name Address Occupation Position with SWT

Ernie Sommer Gull Lake, Sask. Farmer Director and President

Gratton Murray Shaunavon, Sask. Farmer Director and Vice-Presi-dent

Rhett Allison Gull Lake, Sask. Farmer Director and Secretary

Ken Logan Gull Lake, Sask. Farmer Director and Treasurer

George Fletcher Eastend, Sask. Farmer Director

Laverne Nobbs Lancer, Sask. Farmer Director

Allan Evesque Cadillac, Sask. Farmer Director

Gerald Girodat Shaunavon, Sask. Farmer Director

Vernon Hom Shaunavon, Sask. Farmer Director

Ronald Taylor Gull Lake, Sask. Farmer Director

Conrad Johnson Bracken, Sask. Farmer Director

Ronald Caswell Bracken, Sask. Farmer Director

Arland Nelson Frontier, Sask. Farmer Director

Allan Haukeness Hazlet, Sask. Farmer Director

Murray Smith Swift Current, Sask. Farmer Director

Brian Wolfater Tompkins, Sask. Farmer Director

Gerald Egland Eastend, Sask. Farmer Director

A brief description of each director follows.

Ernie Sommer

Gratton Murray

Rhett Allison

Ken Logan

George Fletcher

Laverne Nobbs

Allan Evesque

Mr. Sommer has been a farmer in the Gull Lake area for 21 years.

Mr. Murray is the President of Murray Farms Ltd. He has farmed in theShaunavon area for 35 years.

Mr. Allison has been a farmer during the last 15 years.

Mr. Logan is the President of Ken Logan Holdings Ltd., a farming company,and has been engaged in farming in the Gull Lake area for over 30 years.

Mr. Fletcher has farmed in the Eastend area during the last 35 years.

Mr. Nobbs has been a farmer in the Lancer area for 40 years, employed in thereal estate market for 10 years and a representative of the Farm Land SecurityBoard for 3 years. Mr. Nobbs is President of Spring Valley Farms Ltd. and ofWYS Aircraft Ltd.

Mr. Evesque has been a farmer in the CadilJac area during the last 20 years.

Gerald Girodat

Vernon Horn

Ronald Taylor

Conrad Johnson

Ronald Caswell

Arland Nelson

Allan Haukeness

Murray Smith

Brian Wolfater

Gerald Egland

29

Mr. Girodat has farmed in the Shaunavon area for 22 years.

Mr. Horn has farmed in the Shaunavon area for 40 years. Mr. Horn isPresident of Horn Farms Ltd.

Mr. Taylor has farmed in the Gull Lake area for ::.3 years. Mr. Taylor isPresident of Clairbank Farms Ltd.

Mr. Johnson has farmed in the Bracken area for 17 years.

Mr. Caswell has farmed in the Bracken area for 32 years.

Mr. Nelson has farmed in the Frontier area for 30 years.

Mr. Haukeness has farmed in the Hazlet area for 20 years.

Mr. Smith has farmed in the Swift Current area for 40 years and been theVice-President of Jay Dee Equipment Ltd. for 17 years. He is also a directorof Sambo Holdings Ltd.

Mr. Wolfater has farmed in the Tompkins area for 20 years.

Mr. Egland has farmed in the Eastend area for 33 years and been President ofRod.)' Acres Ltd. for 18 years.

EXECUTIVE COMPENSATION

SWT has no executive officer who provides service to SWT on a full time basis. SWT has four officers: apresident, vice-president, secretary and treasurer. No officer has been paid any compensation of any kind bySWT except reimbursement for out-of-pocket expenses described below. Upon the closing of this offering,the four officers will be compensated in the same fashion as other directors for services rendered as describedbelow.

Directors and officers selling the Shares will receive commissions payable in cash for their out-of-pocketexpenses incurred in selling this offering and for services rendered in selling (see "Plan of Distribution").

Directors and officers selling the Private Grain Storage will receive commissions payable in cash for their out­of-pocket expenses incurred and for services rendered in selling the Private Grain Storage (see "Plan ofDistribution").

Directors and officers of SWT have and will continue to perform services for SWT not relating to the sellingof Shares. They will be reimbursed in cash for their own out-of-pocket COSls while performing these duties.

Directors and officers of SWT will be entitled to claim the equivalent of $15 per hour or $120 for each 8 hourday spent providing services to SWT since May 10, 1994 prior to SWT commencing business operations. Suchservices might include assisting in preparing and planning this offering or supervising construction of theTerminal. Such compensation will be paid by issuance of Class B shares at a price of $100 per Class B shareand will only be paid if the closing under this offering occurs. The directors and officers are entitled to claim,in aggregate, the equivalent of $15,000 (150 Class B shares) for services provided to SWT as of August 31,1994. It is estimated that directors and officers will provide additional services prior to the closing of thisoffering which will entitle the directors and officers to claim, in aggregate, the equivalent of a further $60,000(600 Class B shares).

30

No other remuneration will be made to directors or officers prior to the closing of this offering. The Boardhas not yet established a policy for compensation for directors and officers which would be applicable afterthe closing of this offering.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Directors and officers of swr may receive Class B shares in consideration of services rendered to swr asdescribed in "Executive Compensation".

DILUTION

The offering price of the Shares will exceed the net tangible book value at September 30, 1994, after givingeffect to this offering, by $30, representing a dilution factor of 30 percent in the case of the minimum offering,and by $17 representing a dilution factor of 17 percent in the case of the maximu~ offering, as set forth inthe following table:

MinimumOffering1/Z/3

Offering price per Class B share S100

Net tangible book value per Class B share as at Septem- $0ber 30, 1994

Increase in net tangible book value per Class B share $70attributable to this offering .

Net tangible book value per Class B share at September $7030, 1994 after giving effect to this offering

Percentage of dilution in relation to the offering price 30 percent

Footnotes:

MaximumOfferingl1213

S100

SO

S83

$83

17 percent

(#1) The net tangible book value is calculated assuming each Qass A share has been convened into two Oass B shares.(#2) The Qass B shares to be issued to dircctors, officers and the sales co-ordinator have not been taken into account in

the above table (see "E.'Cecutive Compensation" and "Plan of Distribution").(#3) The equity contribution from, and the Qass C shares to be issued to, the panner are not included in the above table

(see "The Project - Investment by Panner").

PENDING LEGAL PROCEEDINGS

swr is not aware of any legal proceedings involving it in progress or contemplated.

INCOME TAX CONSIDERAnONS

The following commentary provided by MacPherson Leslie & Tyerman, Barristers and Solicitors, summarizesas of the date of this prospectus, certain Canadian federal income tax considerations generally applicable toprospective purchasers resident in Canada who will hold the Shares as capital property and who deal at arm'slength with swr. This summary is based on the current provisions of the Income Tax Act (Canada) (the"Act") and 17,e Income Tax Act (Saskatchewan), the regulations enacted pursuant thereto, all specific proposalsto amend the Act and the regulations publicly announced by the Minister of Finance (Canada) prior to the datehereof, including the amendments proposed in the Notice and Ways and Means Motion (the "Motion") tabledby the Minister of Finance on February 22, 1994 and counsel's understanding of the current administrativepractices of Revenue Canada, Taxation. However, there is no certainty as to whether such amendments wi11

31

be enacted. This summary does not otherwise take into account any changes in the law whether by legislative,governmental or judicial decision nor does it take into account any territorial or foreign income taxconsiderations.

This summary is of a general nature only and is not intended to be, nor should it be construed to be,legal or tax ad"ice to any particular investor. Accordingly, each Shareholder should obtain independentadvice regarding the income tax consequences of an investment in the Shares with respect to his or herparticular circumstances.

Interest Expense on Money Borrowed to Acquire Shares

Interest expense incurred by an investor on funds borrowed for the purpose of acquiring Shares will generallybe deductible in the year that it is paid or payable depending upon the method the investor regularly follows,provided that the investor continues to own, throughout the period during which the interest accrues, all theShares so acquired with borrowed funds. Certain proposals to amend the Act would 'extend the deductibilityof interest in certain circumstances where property has been disposed or the property has diminished in value.Interest expense claims may restrict use of the capital gains exemption in some instances. Any transfer ofShares to an RRSP, whether by contribution or a sale, will result in any interest expense incurred by aninvestor on a loan obtained for the purpose of the Shares, after the date of transfer, to no longer be deductibleby the investor.

Dividends to Shareholders

Taxable dividends paid by swr to Shareholders on the Shares will be treated as dividends from a taxableCanadian corporation. An individual Shareholder must gross-up dividends by 25 percent of the actual dividendreceived and will be entitled to a dividend tax credit of 16.66 percent of the cash amount of the dividend. Thedividend tax credit reduces the basic federal tax payable and consequently the provincial tax payable, whichis calculated as a percentage of the basic federal tax.

Dividends on Shares received in a taxation year by a Shareholder which is a corporation must be included incomputing its income for the taxation year and, under the provisions of the Act, normally may be deductedin computing its taxable income for the year.

A Shareholder that is a "private corporation" within the meaning of the Act or a corporation that is controlledor deemed to be controlled directly or indirectly in any manner whatever by or for the benefit of an individualor a related group of individuals, will normally be required to pay a refundable tax under Part IV of the Actequal to 25 percent of the actual amount of the dividends received in a taxation year in respect of the Shares.The Motion proposes to increase the refundable Part IV tax to 331f.l percent for dividends received after 1994.

Disposition of Shares

Shares will generally be treated as capital property to the Shareholder unless the Shareholder is considered tobe a trader or a dealer in such securities or has acquired the Shares as an adventure in the nature of trade andis unable to make or has not made a subsection 39(4) election under the Act to deem the Shares to be capitalproperty.

Three-quarters of any capital gain realized by a Shareholder upon the disposition or deemed disposition of aShare will be required to be included in computing income as a capital gain.

An individual investor resident or deemed to be resident in Canada throughout the year has a lifetime capitalgains exemption available for gains on capital property realized after 1984. Generally, an investor hasdiscretion to deduct an amount up to the capital gains for the year from all sales of capital property subject

32

to a cumulative limit of $100,000 of capital gains, or $75,000 of taxable capital gains. In addition, aShareholder who disposes of qualified small business corporation ("QSBC") shares may deduct an additionalamount up to the capital gains for the year from all sales of QSBC shares subject to a cumulative limit of$400,000 of capital gains or $300,000 of taxable capital gains. Whether Shares will be QSBC shares at thetime of disposition depends on a number of factors that must be reviewed at the time of disposition including,without limitation, the holding period for the Shares and the type of assets owned and utilized by swr at thetime of disposition and for the 2 years immediately preceding disposition. Investors should consult with thedirectors and officers of swr and their own legal and tax advisors to determine if their Shares qualify asQSBC shares.

To the extent the Shareholder realizes a gain on the sale of a Share and such gain is a capital gain for thepurpose of the Act, the $100,000 capital gains exemption and possibly the enhanced $400,000 capital gainsexemption may be available with respect to that capital gain. In addition to the foregoing, the availability ofcapital gains exemption to a Shareholder will depend on the Shareholder's own circumstances, including, amongother things, the Shareholder's cumulative net investment loss balance and any allowable business investmentlosses claimed by the Shareholder in the year or preceding years. Saskatchewan flat tax and surtaxes of upto 2% percent may be applicable in any event on the taxable portion of the capital gain. Shareholders shouldconsult their own personal advisors on the availability of the capital gains exemption on dispositions of Shares.

The proposals included in the Motion will eliminate the $100,000 lifetime capital gains ($75,000 taxable capitalgains) exemption described above for the purchase of capital property after February 22, 1994. Dispositionsof QSBC shares will continue to be eligible for a cumulative capital gains exemption of $500,000 ($375,000of taxable capital gains).

Three-quarters of any capital loss realized by a Shareholder from a disposition or deemed disposition maynormally be deducted against taxable capital gains for the year, any of the three preceding years, or anysubsequent year, subject to the detailed provisions of the Act in that regard.

Provided that SWT qualifies as a "small business corporation" as defined in the Act and the Shareholderrealizes a loss on a disposition to an arm's length person, such loss could be considered to be a "businessinvestment loss" as defmed in the Act, three-quarters of which would be deductible from any other incomeexcept to the extent the investor has claimed the capital gains deduction for previous taxation years.

If swr becomes a public corporation, a Shareholder will not be eligible for a "business investment loss" andthe Shares would not be considered shares of a QSBC for purposes of the capital gains provisions. Whetheror not swr becomes a public corporation will depend, for the most part, on the number of its shareholdersand whether it elects or is designated by the minister responsible for the Act to be a public corporation.

Transfer to a Self-Directed Registered Retirement Savings Plan

Any particular RRSP plan is entitled to hold up to 100 percent of the fair market value of the assets of theRRSP in qualified investments. Pursuant to the Act, the Shares will be a qualified investment for RRSPpurposes provided that swr uses all or substantially all of its property in a qualifying active business and theannuitant of the plan is not a "designated shareholder" or a "connected shareholder" of swr. Prior to atransfer to a RRSP, potential investors should review the status of SWT's property with the officers or directorsof swr and their own legal and tax advisors to determine if the Shares will be a qualified investment forRRSP purposes. There is no guarantee that the Shares will qualify as an eligible investment for a self-directedRRSP or, once eligible, will continue to be eligible.

Generally, a "designated shareholder" or a "connected shareholder" is someone who owns or is deemed to own10 percent or more of the issued shares of any class of swr or is related to someone who owns or is deemedto own 10 percent or more of such shares. An investor is deemed to own the shares of a company that are

,;

33

owned by a person within whom he or she does not deal at arm's length and. in some circumstances, shareswhich he or she has a right to acquire. Potential investors should review their status with their tax advisorsprior to a transfer to an RRSP.

A self-directed RRSP may acquire the Shares in one of two manners. Firstly, the Shareholder can transfer theShares to an RRSP as a contribution in kind rather than making cash contributions. The Shareholder will,subject to the normal contribution limits, be able to obtain a deduction in computing net income equal to thefair value of the Shares transferred. Alternatively, the Shareholder may sell the Shares for their fair value tohis or her RRSP in exchange for cash or other assets of equal value from his or her RRSP. Any transfer ofthe Shares to an RRSP, whether by contribution or by sale, may result in a capital gain, however, no capitalloss can be claimed. See "Disposition of Shares" above.

For a Shareholder who is not a member of a registered pension plan or a deferred profit sharing plan and hadsufficient earned income in 1993, the maximum RRSP contribution limit (in respect of the 1994 calendar year)is $13,500, assuming it is not otherwise limited. The maximum RRSP contribution" limit (in respect of the1995 calendar year) is $14.500 assuming this is not limited.

Minimum Tax

Under the Act, an alternative minimum tax is payable by an individual, other than certain trusts, equal to theamount by which the alternative minimum tax exceeds the income ta:'I:: otherwise payable. In calculating thealternative minimum tax, certain deductions and. credits otherwise available are disallowed and certain amountsDot otherwise taxable are included in income, such as one-quarter of net capital gains. In computing adjustedtaxable income for minimum tax purposes, a $40,000 exemption is provided. The federal rate' of minimumtax is a flat 17 percent. Whether and to what extent the tax liability of a particular Shareholder will beincreased by the minimum tax will depend upon the amount of his or her income, the sources from which itis derived and the nature and amounts of any deductions that he or she claims. Any additional tax payablefor a year from the application of the minimum tax provisions is recoverable to the extent that tax otherwisedetermined exceeds the minimum tax for any of the following seven taxation years.

AUDITORS, TRANSFER AGENT AND REGISTRAR

The Auditors of swr are Ernst & Young, 1400 Saskatoon Square, 410-22nd Street, Saskatoon, Saskatchewan,S7K 5T6.

swr will act as its ovm transfer agent and registrar. SWT's mailing address is Box 719, Gull Lake,Saskatchewan, SON lAO.

PLAN OF DISTRIBUTION

swr is registered with the Saskatchewan Securities Commission as a Saskatchewan Small Business. TheShares are not being underwritten, but are being offered for sale on a best-efforts basis by those persons whoare registered with the Saskatchewan Securities Commission to sell the Shares including directors and officersof swr.

The issuance of up to 750 Class B shares to directors and officers of swr for services rendered are qualifiedby this prospectus (see "Executive Compensation").

swr has engaged a sales co-ordinator who is not a director or officer of swr and will receive a 1.5 percentcommission on all Shares payable in cash for out-of-pocket expenses incurred in co-ordinating thesalespersons and sales meetings. Each salesperson, including directors and officers of swr, will receive a 4.5percent commission payable in cash for their out-of-pocket expenses incurred in selling this offering and for

34

services rendered in selling this offering. No commissions will be paid out of the proceeds of this offeringunless all conditions precedent for the closing have been satisfied and a closing occurs. If more than$2,500,000 is raised under this offering the sales co-ordinator will receive an additional .5 percent commission,payable in Class B shares at a price of $100 per share, for each Share sold in excess of 25,000 Shares, whichwill entitle the sales co-ordinator to 25 Class B shares if the maximum offering is raised. Cash will be paidin lieu of fractional Class B shares. The issuance of such Class B shares to the sales co-ordinator for servicesrendered are qualified by this prospectus.

The sales co-ordinator will receive a 1.5 percent commission on all Private Grain Storage sold payable in cashfor out-of-pocket expenses incurred in co-ordinating the salespersons and sales meetings. Each salesperson,including directors and officers of swr, will receive a 4.5 percent commission payable in cash for their out­of-pocket expenses incurred and for services rendered in selling the Private Grain Storage. No commissionswill be paid out of the proceeds of this offering unless all conditions precedent for the closing have beensatisfied and a closing occurs. If more than 2,000,000 bushels of Private Grain Storage is sold the sales co­ordinator will receive an additional 0.5 percent commission for the Private Grain Storage sold in excess of2,000,000 bushels.

swr will have until March 1, 1995 to sell the Shares.

CONDITIONS PRECEDENT TO CLOSING OF THE OFFERING

A Subscriber will become a Shareholder upon: (a) execution of a Subscription Form as set forth in ScheduleA to this prospectus; (b) delivery of the Subscription Form and subscription price to swr; (c) acceptance ofthe subscription by swr; and (d) satisfaction of all conditions precedent and the completion of the closingunder this offering.

The minimum offering under this prospectus must be achieved by March 1, 1995. Should the minimumoffering not be achieved by that date, the Trustee will refund all subscription funds to Subscribers withoutinterest or penalty.

swr will deliver the subscription price to the Trustee and the Trustee will not release the proceeds raised byswr pursuant to this offering and a closing will not occur unless the following conditions precedent for aclosing are satisfied:

1. A minimum of $1,200,000 has been raised by this offering on or before March 1, 1995.

2. One million five hundred thousand bushels of Private Grain Storage must have been sold fora minimum aggregate purchase price of $1,500,000 or $1 per bushel and any additionalPrivate Grain Storage must have been sold for at least $1 per bushel. Interim financingacceptable to swr equal to the unpaid portion of the construction cost of the total PrivateGrain Storage sold must also have been arranged.

3. Offers of Credit or other arrangements, acceptable to SWT, have been secured for a minimumof $3,608,900 in debt financing and other contributions from third parties have been securedif the minimum offering is raised and for a minimum of $1,916,900 if the maximum offeringis raised. All such funds must be unconditionally available to swr upon the closing of thisoffering.

4. An Offer of Credit acceptable to swr has been secured for an operating line of credit for$3,000,000 or such greater amount as the Board may deem advisable if a larger Terminal isconstructed.

)

35

5. A stipulated price construction contract, acceptable to swr, has been entered into with anexperienced building contractor for the construction of the Terminal and Private Grain Storagetogether with a 50 percent performance bond from a recognized surety company (see "TheProject - Use of Proceeds: Terminal Design and Financing").

6. The required rail spur track and rail siding within the budgeted amount acceptable to swrhas been secured.

7. A formal agreement with Cargill Limited acceptable to the Board has been entered into forthe provision of marketing services which is satisfactory to the Board. The minimuminvestment by Cargill Limited must be 10,000 Class C shares at $100 per share ($1,000,000)(see "The Project - Marketing Partner").

8. A rail service agreement, acceptable to swr, has been secured with Canadian PacificRailway.

9. Completion of all legal matters relevant to closing to the satisfaction of legal counsel to Swf.

The satisfaction of all conditions precedent to the completion of the closing under this offering must beachieved on or prior to April 15, 1995. Should the conditions precedent to the completion of the offering notbe satisfied by that date, the Trustee will refund all monies to Subscribers without interest or deduction. Uponthe satisfaction of all conditions precedent to a closing, the Trustee will release the subscription funds paid byeach Subscriber to Swf and swr will issue to each Subscriber, as soon as is-practical after the closing, sharecertificates for each Subscriber's respective Shares.

SUBSCRIPTION PROCEDURE

An investor wishing to subscribe for Shares must:

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

(b) deliver the Subscription Form to swr together with a cheque, bank draft or money orderpayable to MacPherson Leslie & Tyerman in the amount of $100 for each Share subscribedfor (minimum purchase is 25 Shares ($2,500)).

Subscription funds will be deposited with the Trustee and held by it in trust until aU the conditions precedentfor a closing have been satisfied (see "Conditions Precedent to Closing of the Offering"). If such conditionsprecedent are not satisfied by April 15, 1995, the Trustee will promptly return all Subscription Forms andsubscription funds to Subscribers without interest or deduction. If such conditions precedent are satisfied onor before April 15, 1995, the Trustee will promptly release all subscription funds to swr.

If swr rejects a subscription, swr will return promptly to the Subscriber the Subscription Form and allsubscription funds without interest or deduction. Upon acceptance of a subscription for Shares, the same shallconstitute a binding agreement of purchase and sale of Shares in accordance with the terms and conditionscontained in this prospectus.

A Subscriber is entitled to certain contractual rights of withdrawal and has certain statutory rights of action andrescission (see "Purchasers' Rights of Withdrawal" and "Purchasers' Rights of Action").

36

PURCHASERS' RIGHTS OF WITHDRAWAL

A Subscriber who purchases Shares offered during the period of distribution is granted a contractual right notto be bound by the contract for the purchase of such Shares if written notice of his or her intention not to bebound is received by swr or the person from whom the Subscriber purchased the Shares not later thanmidnight on the fifth business day after this prospectus and any amendment to this prospectus is received bythe Subscriber.

PURCHASERS' RIGHTS OF ACTION

In addition to Subscriber's contractual rights of withdrawal detailed above, securities legislation inSaskatchewan further provides a Subscriber with remedies for recision or damages where the prospectus andany amendment contains a misrepresentation or is not delivered to the Subscriber but such remedies must beexercised by the Subscriber within the time limit prescribed by the securities legislation. Subscribers shouldrefer to any applicable provisions of the securities legislation for the particulars of these rights or consult witha legal advisor.

FINANCIAL STATEMENTS

The following pages contain unaudited financial statements of swr.

)

FINANCIAL STATEMENTS

SOUTH WEST TERMINAL LTD.

September 30, 1994

38

AUDITORS' REPORT

To the Directors ofSouth West Terminal Ltd.

We have audited the balance sheet of South West Terminal Ltd. as at September 3D,1994 and the statement of cash flows for the period then ended. These financial statementsare the responsibility of the company's management. Our responsibility is to express anopinion on these financial statements based on our audit. .

We conducted our audit in accordance with generally accepted auditing standards. Thosestandards require that we plan and perform an audit to obtain reasonable assurance whetherthe fmancial statements are free of material misstatement. An audit includes examining, ona test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimatesmade by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, thefinancial position of the company as at September 3D, 1994 and the changes in its financialposition for the period then ended in accordance with generally accepted accountingprinciples.

Saskatoon, CanadaNovember 14, 1994 Chanered Accountants

39

South West Terminal Ltd.(Incorporated under the laws of Saskatchewan)

BALANCE SHEET

As at September 30

ASSETSCurrentCashAccounts receivablePARD grant receivable fnote41Total current assets

Non-current assetsLand optionsDeferred cl1ar£es

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilitiesAccounts pavableTotal current liabilities

PARD grant reoavable {note 41Total liabilities

Shareholders' equityCapital stockAuthorized

Unlimited number of Oass A 10% non-cumulative, non-participating,voting preferred shares convertible to aass BUnlimited number of Class B participating voting common shares

lmJed1.530 Class A shares1 Class B share

Less share issue costsTotal shareholders' eguitv

See accompan)lng notes

On behalf of the Board:

1994S

107,4153,304

20,463131,182

3,50178,18781,688

212.870

82,24382.243

46382,706

153,000100

153,100(22.936)130,164212.870

(signed) Ernie Sommer,Director

(signed) Ken Logan,Director

40

South West Terminal Ltd.

STATEMENT OF CASH FLOWS

Six months ended September 30

INVESTING ACTIVITIESIncrease in ddemd chargesIncrease in accoums receivableIncrease in PARD grant receivableIncrease in accounts payablePurchase of land optionsCash used in investing activities

FINANCING ACTIVITIESProceeds from PARD grantIssue ofpreferred sharesIssue of common sharesShare issue costsCash provided bv financing activities

Increase in cash and cash. end of period

See accompanying notes

1994$

(89,141)(3,304)

(20,463)82,243(3,501)

(34.166)

20,463153,000

100(31,982)141.581

107.415

41

South West Terminal Ltd.

NOTES TO FINANCIAL STATEMENTS

September 30,1994

1. BASIS OF PRESENTATION

South West Tenninal Ltd. (the "Company") was incorporated on April 4, 1994 under the laws ofSaskatchewan. The Company was formed to develop, consuuct and operate a grain handlingfacility. The Company's ability to realize on its assets and discharge its liabilities is ~pendent onthe ability to raise the necessary fmancing to construct a grain handling facility. These financialstatements do not reflect any adjustments that would be necessary should the company be unable toraise the necessary financing for the consauction of the facility.

2. ACCOUNTING POLICmS

These financial statements have been prepared in accordance with genemlly accepted accountingprinciples. The significant accounting policies are summarized as follows:

Deferred Charges

The pre-operating deferred charges are capitalized and will be amortized over five years on astraight-line basis once the Company commences operations.

The Company is in the pre-operating stages of its development and consequendy, no revenue fromoperations has been realized. In order to match expenses incurred in this pre-operating period withfuture revenue, costs incurred from incorporation have been capitalized and appear as a deferredcharge on the balance sheet of the Company. Similarly, the incidental revenues received have beendeferred on the balance sheet

3. PARD GRANT REPAYABLE

The Company received approval for a Canada-Saskatchewan Partnership Agreement on RuralDevelopment (pARD) grant reimbursing 50% ofspecific expenditures incurred after September 12,1994 to a maximum reimbursement of 539,000. If the Company proceeds with thecommercialization within two years of completion of the business plan project, the conuibutionover 520,000 becomes repayable. The Company is entided to receive 520,463 based onexpenditures incurred to September 30, 1994 of which $463 is repayable.

42

South West Terminal Ltd.

NOTES TO FINANCIAL STATEMENTS

September 30, 1994

4. SUBSEQUENT EVENTS

Pursuant to a prospectuS dated November 14,1994 the Company proposes to issue and sell aminimum of 12,000 and a maximum of 30,000 Class B shares at $100 per share. The minimumsubscription by a subscriber is 2S shares for a minimum price of $2,500.

The Company has emcred into an Agreement in Principle with Cargill Limited whereby CargillLimited, subject to the approval of its Board of Directors, has committed a minimum of$1,000,000 for the purchase of a minimum of 40% of the shares of the Company.

43

CERTIFICATE

Dated November 14, 1994

The foregoing constitutes full, true, and plain disclosure of all material facts relating to the securities offeredby this prospectus as required by Part XI of 17,e Securities Act, 1988 and the regulations thereunder. Thisprospectus is executed by swr on its own behalf, as a promoter of this project and in its capacity as thesecurities issuer.

SOUTH WEST TERMINAL LTD.

(Signed) Ernie Sommer, President(Chief E.xecutive Officer)

(Signed) Ken Logan, Treasurer(Chief Financial Officer)

On behalf of the Board of Directors

(Signed) Rhett Allison (Signed) Gratton Murray

ii

19__.

If subscriber is an individual please complete the following:

Witness

Please supply .dLL. information.Failure to supply .dLL. informationwill result in the rejection ofyour subscription.code

If subscriber is an BBSE. please complete the following:

Please supply .dLL. infonnationfailure to supply .dLL. informationwill result in the rejection ofyour subscription.code

Signature of Subscriber

Name in full (please print)

Residential address in full, including postal

Residential telephone number

Authorized Signature of Trustee

Name of Trustee (please print)

Address in full of Trustee, including postal

Name of Registered Owner of RRSP and RRSPAccount No.

Residential address in full of Registered Owner,including postal code

If subscriber is a corporation please complete the following:

Name of Corporation (please print)

Signature of signing officer

Name of signing officer (please print)

Please supply ALL infonnation.Failure to supply .dLL. infonnationwill result in the rejection ofyour subscription.

Title of signing officer (please print)

Address of Corporation in full, including postalcode

iii

L1JJ. subscribers must complete the following:

CERTIFICATE OF RECEIPTOF PROSPECTUS

Date of Receipt of Prospectus, • 19__

Purchaser (Signature) _

Salesperson _

==============================================================For Office Use Only

Subscription accepted bySouth West Terminal Ltd. this day of , 19_.

South West Terminal Ltd.

Per:, _

)