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Transactions Required

Options are a separate class of securities and you must separately report your holdings and trading activities in options. When an insider is granted stock options or exercises stock options, insider reports about these transactions are required to be filed.

(An insider should generally report grants and exercises of other stock-based compensation instruments, including phantom stock units, deferred share units (DSUs), restricted share awards (RSAs), performance share units (PSUs), stock appreciation rights (SARs) and similar instruments, in a similar manner to grants and exercises of stock options.

A grant of options requires only one transaction (code 50) filed under the options security designation.

An exercise of options requires two transactions: one for the exercise of the options (disposition) and one for the acquisition of the underlying security (both using code 51). If the underlying security was subsequently sold, then a third transaction would be required (code 10 if in the marker or code 11 if carried out privately).

Requirement

You generally need to report the grant of stock options within five calendar days of the date you legally acquire ownership of a specific number of options (until October 31, 2010 you need to report the grant of stock options within 10 calendar days).

If your issuer has filed an "issuer grant report" within five calendar days of the grant (or within 10 calendar days, in the case of a grant prior to October 31, 2010) that discloses the existence and material terms of the grant, it is not necessary to file an insider report within the normal time periods for filing insider reports and you can instead file an annual report by March 31 of the following year.  For more information, please see Part 6 of NI 55-104.

Filing Process for a Grant of Options

A grant of options requires one transaction and is recorded in the same manner as an acquisition of common shares with the following exceptions:

• use Nature Code 50 – Grant of options
• after entering the number or value of securities acquired (left side of screen) you are required directly below that field to enter the equivalent number or value of underlying securities acquired. If the options are exercisable on a 1:1 basis, the same number would be entered in the equivalent number or value of underlying securities acquired field.
• Unit price or exercise price: Not applicable (if insider did not pay anything at time of grant)
• Conversion or Exercise price: Indicate the exercise price of the options
• Date of expiry or maturity: Indicate the date the options expire
• Note: Until the options are exercised, the equivalent number of underlying securities is not added to the actual holdings of the insider in the underlying securities as it does not mean and should not be taken to indicate that the underlying securities have, in fact, been acquired by the insider.

Filing Process for an Exercise of Options

A typical exercise of options requires two transactions:

• one to record the disposition of the options, and
• one to record the acquisition of the underlying security (i.e. common shares, trust units, etc.)
• use Nature Code 51 – Exercise of options for both transactions
• When recording the disposition of options, after entering the number or value of securities disposed of (right side of screen), you are required directly below that field to enter the equivalent number or value of underlying securities disposed of. If the options are exercisable on a 1:1 basis, the same number would be entered in the equivalent number or value of underlying securities disposed of field.
• Unit price or exercise price:  the exercise price used for the disposition of the options is the same price as the unit price reported for the acquisition of the underlying security (e.g. common shares). For example, this price is taken from the conversion or exercise price initially reported in the grant of options.
• Conversion or Exercise price: Not applicable
• Options with different conversion or exercise prices should be reported separately.
• An exercise for cash would require the use of Nature Code 59 – Exercise for cash

Note: If the underlying security was subsequently sold, the insider must file a separate transaction using the appropriate nature code that describes how the sale was executed (e.g. code 10 if in the market or code 11 if carried out privately).

Filing Process for an Expiration of Options

An expiration of options requires one transaction:

·     report the disposition of the options in a manner similar to an exercise of options

·     use Nature Code 52 – Expiration of options

Filing Process for a Cancellation of Options

A cancellation of options requires one transaction:

·     report the disposition of the options in a manner similar to an expiration of options

·     use Nature Code 38 – Redemption, retraction, cancellation, repurchase

Filing Process for a Change of Exercise Price of Options

A change in the exercise price of issuer options, also known as repricing, is treated as a grant of a new option. When options are repriced, report two transactions:

• a disposition for the cancellation of options (code 38)
• an acquisition for the grant of new options with the new exercise price (code 50)
• the General remarks field can be utilized to indicate additional information relating to the repricing of the options.

Filing Process for a Split or Consolidation of Options

A split or consolidation of options may arise as a result of a change that affects all holdings of a class of securities of an issuer in the same manner. You will need to calculate the number of securities that you acquired or disposed of according to the split or consolidation ratio. The ratio is typically disclosed in an issuer event report.

• record an acquisition (split) or a disposition (consolidation) to adjust holdings
• use Nature Code 37 – Stock split or consolidation
• Exercise price: Disclose the new exercise price
• the General remarks field can be utilized to indicate additional information relating to the split or consolidation of the options

Instructions for Filing an Insider Report

See Insider Report for Stock Options