March 11, IN THE MATTER OF THE UNIVERSAL MARKET INTEGRITY RULES AND IN THE MATTER OF RHONDA HYMERS OFFER OF SETTLEMENT

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1 Settlement Agreement March 11, IN THE MATTER OF THE UNIVERSAL MARKET INTEGRITY RULES AND IN THE MATTER OF RHONDA HYMERS OFFER OF SETTLEMENT A. INTRODUCTION 1. Market Regulation Services Inc. ( RS ) has conducted an investigation (the Investigation ) into the conduct of Rhonda ( ). 2. As regulation services provider ( RSP ) for the Toronto Stock Exchange (the Exchange ), RS has jurisdiction to investigate and commence disciplinary proceedings in connection with any breach of or failure to comply with any by-law, rule, policy or other requirement (together, the Requirements ) of the Exchange as if the breach or failure to comply had been a breach of or failure to comply with a marketplace rule after the date the marketplace retained RS to be its RSP. 3. The Investigation has disclosed matters for which RS seeks certain sanctions against pursuant to Rule 10.5 of the Universal Market Integrity Rules ( UMIR ). 4. If this Offer of Settlement is accepted by, the resulting settlement agreement (the Settlement Agreement ), which has been negotiated in accordance with Part 3 of UMIR Policy 10.8, is conditional upon the approval by a hearing panel (the Hearing Panel ) of the Hearing Committee appointed under Part 10 of UMIR Policy 10.8.

2 agrees to waive all rights under UMIR and the Requirements to a hearing or to an appeal or review if the Settlement Agreement is approved by the Hearing Panel. 6. RS and jointly recommend that the Hearing Panel accept this Settlement Agreement. B. AGREEMENT AS TO REQUIREMENTS CONTRAVENED 7. agrees that the following Requirements have been contravened: (a) (b) Between November 1999 and March 2000, engaged in conduct contrary to Section of the General By-law of the Toronto Stock Exchange (the Exchange ) and Section 9 of Part XXVIII of the Policies of the Exchange in relation to normal course issuer bids in the shares of Dia Met Minerals Ltd. and Sun-Rype Products Ltd. Between April 2000 and October 2000, engaged in conduct contrary to Rule and Policy 6-501(9) of the Rules and Policies of the Exchange in relation to normal course issuer bids in the shares of Dia Met Minerals Ltd. and Sun-Rype Products Ltd. C. ADMITTED FACTS 8. RS relies upon the facts which are admitted for the purpose of this Settlement Agreement only which are set out in the Statement of Allegations attached as Appendix A to this Settlement Agreement. D. DISPOSITION AGREED UPON 9. For the contraventions in paragraph 7 above, and RS have agreed upon disposition as follows: (a) (b) A fine of $12,500 payable by to RS; Costs of $2,000 payable by to RS. 10. If this Settlement Agreement is accepted by a Hearing Panel, agrees to pay the amounts referred to in paragraph 9 within 30 days of such acceptance. 2

3 - 3 - E. PROCEDURES FOR ACCEPTANCE OF OFFER OF SETTLEMENT AND APPROVAL OF SETTLEMENT AGREEMENT 11. This Settlement Agreement shall be presented to a Hearing Panel at a public hearing (the Approval Hearing ) held for the purpose of approving the Settlement Agreement, in accordance with the procedures described in UMIR Policy 10.8 in addition to any other procedures as may be agreed upon between the parties. acknowledges that RS shall notify the public and media of the Approval Hearing in such manner and by such media as RS sees fit. 12. Pursuant to Part 3.4 of UMIR Policy 10.8, the Hearing Panel may accept or reject this Settlement Agreement. 13. In the event the Settlement Agreement is accepted by a Hearing Panel, the matter becomes final, there can be no appeal or review of the matter, the disposition of the matter agreed upon in this Settlement Agreement will be included in the permanent record of RS in respect of, and RS will publish a summary of the Requirements contravened, the facts, and the disposition agreed upon in the Settlement Agreement. 14. In the event the Hearing Panel rejects the Settlement Agreement, RS may proceed with a hearing of the matter before a differently constituted Hearing Panel pursuant to Part 3.7 of UMIR Policy 10.8 and this Settlement Agreement may not be referred to without the consent of both parties. F. OTHER MATTERS 15. agrees that, in the event she fails to comply with any of the terms of the Settlement Agreement, RS may enforce this settlement in any manner it deems appropriate and may, without limiting the generality of the foregoing, suspend s access to the Exchange and other marketplaces regulated by RS without a hearing until RS, in its sole discretion, determines that is in full compliance with all terms of the Settlement Agreement. 16. agrees that neither she, nor anyone on her behalf, will make a public statement inconsistent with this Settlement Agreement. 3

4 - 4 - IN WITNESS WHEREOF the parties have signed this Settlement Agreement as of the dates noted below. DATED at Toronto, Ontario on the 18th day of February, Paula DaCosta Witness Signature Rhonda Rhonda Paula DaCosta Name of Witness 4

5 - 5 - Address of Witness DATED at Toronto, Ontario on the 13th day of February, Per: Maureen Jensen Maureen Jensen Vice President Market Regulation, Eastern Region Market Regulation Services Inc. This foregoing Settlement Agreement is hereby accepted this 11th day of March, 2004, by the following hearing panel constituted to review the terms thereof: Per: Robert Reid Panel Chair Per: Steven Hamel Per: Leo Ciccone Panel Member Panel Member 5

6 - 6 - APPENDIX A IN THE MATTER OF THE UNIVERSAL MARKET INTEGRITY RULES AND IN THE MATTER OF RHONDA HYMERS STATEMENT OF ALLEGATIONS I. REQUIREMENTS CONTRAVENED 1. Market Regulation Services Inc. ( RS ) is of the opinion that section of the General By-law of the Toronto Stock Exchange (the Exchange ), Section 9 of Part XXVIII of the Policies of the Exchange, and Rule and Policy 6-501(9) of the Rules and Policies of the Exchange have been contravened. 2. The text of the relevant Requirements is found at Schedule A. 6

7 - 7 - II. THE FACTS RELIED UPON A. Background 3. Rhonda ( ) has been employed at the RBC Dominion Securities Inc. ( RBC ) branch in Kelowna, British Columbia since Initially she was a branch assistant working as a floater. She became an investment representative in 1996 and began to assist Horner in 1997 on a part time basis. In November 1999, she became an assistant to Horner full time. Her classification at RBC allowed her to accept only unsolicited orders directly from clients. She could not provide clients with advice. 4. Horner was employed with RBC from 1989 to September 2002 in the Kelowna, British Columbia branch of RBC. In the period 1989 to 1996, he acted as a branch manager and registered representative. From 1996 until he retired in September 2002, Horner remained employed as a registered representative. 5. entered both unsolicited and solicited orders taken by Horner from clients and passed on by him for order execution. 6. Horner directly supervised from B. Conduct In Question 7. Between November, 1999 to October, 2000 (the Material Time ), violated normal course issuer bid rules and policies: (a) Dia Met Minerals Ltd. ( Dia Met ) 8. Two normal course issuer bids ( NCIBs ) covering both Class A and Class B shares of Dia Met were approved by the Exchange with effective dates of September 16, 1998 to September 15, 1999 and October 15, 1999 to October 14, Horner was the responsible broker for both NCIBs. 10. Dia Met specifically asked that Horner and not RBC s institutional desk handle the NCIBs. 7

8 Mr. X ( Mr. X ) was the President and Chief Executive Officer of Dia Met. 12. Mr. X provided the instructions for the orders entered by in respect of the s to Horner, who then passed them onto. 13. An account in the name of Dia Met was opened on October 19, Horner was the registered representative for the account. The account was opened to facilitate NCIB purchases. (b) Sun-Rype Products Ltd. ( Sun-Rype ) 14. Two Sun-Rype NCIBs were approved by the Exchange with effective dates of January 25, 1999 to January 24, 2000 and January 27, 2000 to January 26, Horner was appointed as the responsible broker for the initial Sun-Rype NCIB on August 24, He was responsible for the second Sun-Rype NCIB throughout the entire approval process. 16. Mr. X was a Director of Sun-Rype. 17. Mr. X provided the instructions for the orders in respect of the Sun-Rype NCIBs to Horner, who passed a number of them onto. 18. An account was opened in the name of Sun-Rype on September 14, It was opened to facilitate the NCIB purchases and only Sun-Rype shares were traded in the account. Horner was the registered representative for the account. (c) Account of Mr. X 19. An account in the name of Mr. X was opened sometime before November Horner was the registered representative for the account. 8

9 Horner and Mr. X were in close contact each day speaking about three times on average. 21. Mr. X had a quote system available to him in his office. (d) Available Information Concerning Normal Course Issuer Bid Rules 22. acknowledges that she had an obligation to be aware of and to abide by the rules and policies pertaining to NCIBs. 23. In addition, after June 2000 had available in the Kelowna office an Investment Advisor Compliance Manual which stated that the Exchange s Policy on NCIBs could be obtained from the trading desk of RBC. In addition, it specifically noted that in respect of trading pursuant to an NCIB, purchases shall be made at a price which is not higher than the last independent trade of a board lot. In other words, no uptick. It also pointed out that pre-arranged trades were prohibited. (e) Violations Of the Normal Course Issuer Bid Rules 24. In the Material Time, 56 buy orders were entered by in the Dia Met and Sun-Rype accounts in violation of applicable NCIB rules and policies set out in paragraphs 1 and 2 herein. The particulars of these violations are set out at Schedule B. 25. The NCIB trades for Dia Met at numbers 16, 43, 44, 45, 47 and 52 of Schedule B violate the applicable rules and policies because they were each a purchase pursuant to the NCIB at a price higher than the last independent trade of a board lot of Dia Met. 9

10 The balance of the NICB trades at Schedule B involved a two-step process. First, Mr. X conducted a set up trade or trades by making a purchase or purchases of the shares in question for his personal account at a price higher than the price set by the last independent trade. There were 52 such set up trades. They were usually for 100 shares. Mr. X then made purchases pursuant to the NCIB s in issue at the upticked purchase prices made for his own account. 27. On 34 occasions, conducted both the set up trade(s) and the NCIB trade. 28. Such trading constitutes a breach of the applicable NCIB rules and policies because the purchases by Mr. X for his own account were not independent trades. As a result, the NCIB purchases were all made at a price higher than the last independent trade of a board lot of the shares in issue. (f) Internal Discipline at RBC 29. In early 2001, RBC conducted an internal investigation of trading and found that was involved in approximately 37 violations of the TSE Rules on NCIBs in respect to the for Class B shares between November, 1999 and October, As a result of these findings, RBC proposed the following discipline against : A $2,500 fine payable over 3 months. was to rewrite and pass the examination based on the Conduct and Practices Handbook administered by the Canadian Securities Industry. 10

11 complied with the terms of the March 12, 2001 letter. III. CONCLUSION 32. As a investment representative, had the responsibility to ensure all trades made in relation to the NCIBs were in accordance with applicable rules and policies. 33. In failing to do so, contravened Section of the General By-Law of the Exchange, Section 9 of Part XXVIII of the Policies of the Exchange and Rule and Policy 6-501(9) of the Exchange. 11

12 Schedule A Excerpts from the General By-law of the Toronto Stock Exchange Sec Normal Course Issuer Bids A Normal Course Issuer Bid shall be made in accordance with the Exchange s Policy Statement on Normal Course Issuer Bids. Part XXIII Policy Statement on Normal Course Issuer Bids (9) Prohibited Purchases The Exchange has set the following rules for issuers and members acting on their own behalf: (1) Price Limitations It is inappropriate for an issuer making a normal course issuer bid to abnormally influence the market price of its shares. Therefore, purchases made by issuers pursuant to a normal course issuer bid shall be made at a price which is not higher than the last independent trade of a board lot of the class of shares which is the subject of the normal course issuer bid. In particular, the following are not independent trades : (i) trades directly or indirectly for the account of (or an account under the direction of) an insider of the issuer, or any associate or affiliate of either the issuer or an insider of the issuer; Excerpts from the Rules and Policies of the Toronto Stock Exchange Rule Normal Course Issuer Bids A Normal Course Issuer Bid shall be made in accordance with the prescribed terms and procedures. Policy Normal Course Issuer Bids (9) Prohibited Purchases 1. Price Limitations It is inappropriate for an issuer making a normal course issuer bid to abnormally influence the market price of its shares. Therefore, purchases made by issuers pursuant to a normal course issuer bid shall be made at a price which is not higher than the last independent trade of a board lot of the class of shares which is the subject of the normal course issuer bid. In particular, the following are not independent trades : (a) trades directly or indirectly for the account of (or an account under the direction of) an insider of the issuer, or any associate or affiliate of either the issuer or an insider of the issuer; 12

13 Schedule B Issue Trade date Prev indep. trade price Prev indep. Trade time Volume Price trade time $ tick increase Buying account NCIB violation identified by RBC DS Order entered by: yes no $20.75 Mr. X 1 DMM.B 09-Dec-99 $ ,000 $20.75 $ $ DMM.B DMM.B 17-Dec Dec-99 $22.25 $ $23.05 Mr. X $ $ $22.75 Mr. X $ $ DMM.B 31-Dec-99 $ Dec $23.00 $ $22.20 Mr. X 5 DMM.B 07-Jan-00 $ ,800 $22.20 $ $ DMM.B 07-Jan-00 $ ,800 $ $22.20 $ $20.00 Mr. X 7 DMM.B 20-Jan-00 $ ,500 $ DMM.B 27-Jan-00 $ $21.50 Mr. X $ $ $21.00 Mr. X 9 DMM.B 04-Feb-00 $ $21.00 $ $ $21.00 Mr. X 10 DMM.B 08-Feb-00 $ $21.00 $ $ $21.00 Mr. X 11 DMM.B 09-Feb-00 $ $ $ DMM.B 10-Feb-00 $ $20.30 Mr. X $ $ $20.75 Mr. X 13 DMM.B 11-Feb-00 $ $ $20.75 $ $20.75 $0.75 Mr. X 14 DMM.B 14-Feb-00 $ $20.65 $ $19.50 Mr. X 15 DMM.B 15-Feb-00 $ $ $ DMM.B 22-Feb-00 $ $19.35 $ DMM.B 23-Feb-00 $ $19.55 Mr. X $ $ $19.80 Mr. X DMM.B 24-Feb-00 $ $ $ $18.95 $0.35 Mr. X $ DMM.B 09-Mar-00 $ $ $ DMM.B 09-Mar-00 $ $19.00 $ DMM.B 09-Mar-00 $ ,000 $19.00 $ DMM.A DMM.B 24-Mar Mar-00 $17.75 $ $19.00 Mr. X $ $ $19.80 Mr. X $ $ DMM.B 10-Apr-00 7Apr00 7Apr00 1, $ $19.65 $ DMM.A 11-Apr $17.75 Mr. X 10Apr00 10Apr00 1,000 $0.50 $ $ $19.30 Mr. X 26 DMM.B 12-Apr-00 $ $ $

14 Schedule B Issue Trade date Prev indep. trade price Prev indep. Trade time Volume Price trade time $ tick increase Buying account NCIB violation identified by RBC DS Order entered by: yes no $ $ $16.75 $0.00 Mr. X 27 DMM.A 19-Apr $17.00 Mr. X $ $17.00 $ $ $17.00 Mr. X 28 DMM.A 19-Apr-00 $ $17.00 $ $ DMM.B 19-Apr-00 $ $18.90 Mr. X $ $ $19.00 Mr. X 30 DMM.B 19-Apr-00 $ $19.00 $ $ $18.95 Mr. X 31 DMM.B 20-Apr-00 $ $ ,000 $ $20.75 Mr. X 32 DMM.B 12-May-00 $ $0.25 $ $19.25 Mr. X 33 DMM.A 16-May-00 $ $ $ DMM.B 16-May-00 $ $20.90 Mr. X $ $ $19.25 Mr. X 35 DMM.A 17-May-00 $ ,900 $0.25 $ $19.00 Mr. X 36 DMM.A 24-May-00 $ ,000 $0.75 2,000 $ DMM.A 25-May-00 24May00 $ May $18.75 $ SRF 30-May-00 $3.60 SRF 31-May-00 $ DMM.A 01-Jun-00 31May00 $ $3.90 Mr. X ,000 $0.30 Sun-Rype Products $ ,000 NCIB Mr. X $3.90 $0.05 Sun-Rype Products NCIB $18.50 $ May00 41 DMM.A 01-Jun $18.50 $0.50 $ May , DMM.A 02-Jun $18.50 $0.50 $ DMM.A 07-Jun-00 6Jun00 $ DMM.A 12-Jun-00 $ Hoyle 9Jun00 $ $18.50 $ $18.40 $ DMM.A 12-Jun-00 $ Jun00 $ $18.40 $ $20.00 Mr. X 46 DMM.B 19-Jun-00 $ $20.00 $ $ DMM.B 22-Jun-00 $ $19.40 $ DMM.A 27-Jul-00 $ $15.90 Mr. X $ ,200 $ SRF 12-Sep-00 $ ,000 $3.40 $0.05 Sun-Rype Products NCIB 2

15 Schedule B Issue Trade date Prev indep. trade price Prev indep. Trade time Volume Price trade time $ tick increase Buying account NCIB violation identified by RBC DS Order entered by: yes no 50 SRF 13-Sep ,000 $3.40 $0.05 Sun-Rype Products NCIB $19.40 Mr. X 51 DMM.B 03-Oct-00 $ $ $ $19.00 Mr. X 52 DMM.B 04-Oct-00 $ ,300 $ $ DMM.B 12-Oct-00 $ $18.50 $0.70 Mr. X $18.20 $ $ $18.25 Mr. X $ $ DMM.B 13-Oct-00 $ $18.25 $ $ $18.25 $0.75 Totals