1. Canada ● United States LAW INSTITUTE Capitalizing on the Success of Entrepreneurship: Private Sales & IPOs; Tax Aspects; Residual interest of entrepreneurs after Private Sale or IPO J. Anthony Penhale Stikeman Elliott LLP Saturday, April 14, 2007

2. Introduction – Life Cycle of a Business  A word on succession planning

3. Private Sales in Canada  Definitions  Strategic buyers  Financial buyers  Sale of shares or sale of assets of the business  Canadian Market Data

4.  Process  Direct negotiations with potential buyers  Controlled auction or formal auction  Club or consortium deals  Stapled financing Private Sales in Canada (Cont’d)

5.  Legal & Tax Considerations  Duties of directors / special committee  Investment Canada Act and Competition Act (Canada)  Tax efficient structuring  Asset vs. sale  Holding company structure  Leveraged equity  Thin capitalization rules  Interest deductibility  Tax step-up Private Sales in Canada (Cont’d)

6.  Definitions  No national securities regulator  Canadian Market Data  TSX vs. TSX Venture Exchange  Income Trusts  London's AIM Market Initial Public Offerings (IPOs) in Canada

7.  Process  Advantages & disadvantages  Prospectus clearance  Legal Implications  Prospectus liability  Statutory liability for secondary market disclosure  Canada’s version of Sarbanes-Oxley IPOs in Canada (Cont’d)

8.  Tax Implications  Federal and provincial tax rates  Stock options  R&D tax credits IPOs in Canada (Cont’d)

9. Questions J. Anthony Penhale, Partner Stikeman Elliott LLP, Montreal, QC (514) 397-2403 / apenhale@stikeman.com