Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Application - registration and prospectus relief in connection with first trades of common shares acquired pursuant to two private placements and common shares acquired under certain stock plans.

Instrument cited

Multilateral Instrument 45-102 Resale of Securities.

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ENERGY EXPLORATION TECHNOLOGIES INC.

 

MRRS DECISION DOCUMENT

1. WHEREAS the local securities regulatory authority or regulator (the Decision Maker) in each of the provinces of Alberta and Ontario (the Jurisdictions) has received an application from Energy Exploration Technologies Inc. (Energy) for a decision pursuant to the securities legislation of each of the Jurisdictions (the Legislation) that the registration and prospectus requirements contained in the Legislation (the Registration and Prospectus Requirements) shall not apply to the first trades in common shares of Energy (the Placement Shares) acquired by subscribers (the Subscribers) who purchased Placement Shares pursuant to applicable private placement exemptions or of common shares (the Option Shares) that may be acquired by directors and consultants of Energy or its affiliates pursuant to certain stock plans or pursuant to the exercise of options granted pursuant to such stock plans (the Plans);

2. AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the System), the Alberta Securities Commission is the principal regulator for this application;

3. AND WHEREAS Energy has represented to the Decision Makers that:

3.1 Energy is incorporated pursuant to the laws of the Province of Alberta, with its head office located in Calgary, Alberta;

3.2 Energy is an Alberta issuer, as defined in section 1.1 of Alberta Securities Commission Rule 72-501;

3.3 Energy is registered with the Securities and Exchange Commission in the United States of America under the Securities Exchange Act of 1934 (the 1934 Act) and is not exempt from the reporting requirements of the 1934 Act pursuant to Rule 12G 3-2 made thereunder. Energy is not in default of any securities legislation in the United States or any other jurisdiction;

3.4 Energy is not a reporting issuer in any jurisdiction in Canada and has no current intention of becoming a reporting issuer in any jurisdiction in Canada;

3.5 the authorized capital of Energy consists of an unlimited number of common shares and an unlimited number of preferred shares, of which 19,333,184 common shares were issued and outstanding as of February 11, 2004;

3.6 the common shares are publicly traded over-the-counter within the United States on the NASD OTC Bulletin Board and are listed on the Frankfurt Stock Exchange and Berlin Stock Exchange, but are not listed on a Canadian stock exchange;

3.7 as of February 11, 2004, the percentage of total outstanding common shares held by residents of jurisdictions in Canada is as follows: (a) Alberta -- 35%, (b) Ontario - 1.0% and (c) other Canadian jurisdictions - 0.5%;

3.8 one Alberta resident shareholder, George Liszicasz (Liszicasz), is the founder of Energy and holds 5,062,490 common shares, representing 26.2% of the total issued and outstanding common shares as of February 11, 2004;

3.9 on October 14, 2003 and on December 31, 2003, Subscribers acquired 1,875,000 Placement Shares and 101,700 Placement Shares, respectively, in reliance on registration and prospectus exemptions contained in the Legislation. Liszicasz was not a subscriber under either of the private placements and did not acquire any of the Placement Shares;

3.10 any resale of the Placement Shares by Subscribers is expected to be made on the NASD OTC Bulletin Board as there is no market for the common shares in Canada and none is expected to develop;

3.11 in the absence of an order granting exemptive relief, the first trade in Placement Shares by any of the Subscribers will be deemed to be a distribution under the Legislation unless, among other things, Energy has been a reporting issuer for four months immediately preceding the trade in one of the jurisdictions set forth in Schedule B to Multilateral Instrument 45-102 Resale of Securities (the Resale Rule);

3.12 Section 2.14 of the Resale Rule cannot be utilized by the Subscribers with respect to a first trade of Placement Shares on the NASD OTC Bulletin Board because as at the distribution date of the Placement Shares residents of Canada owned directly or indirectly more than 10 percent of the outstanding common shares of Energy;

3.13 the Plans consist of:

3.13.1 2000 Pinnacle Oil International Inc. Directors' Stock Plan (the 2000 Plan); and

3.13.2 Energy Exploration Technologies Year 2003 Special Stock Option and Stock Award Plan (the 2003 Plan);

and have been implemented for the purpose of providing incentives to eligible participants;

3.14 the 2000 Plan is administered by the Board of Directors of Energy or by a committee of the Board. The 2003 Plan is administered by the Board of Directors of Energy or by an administrator of the Board (collectively, the Administrator);

3.15 under the 2000 Plan, the Administrator may award Option Shares or options to purchase Option Shares to directors of Energy or its affiliates (the 2000 Participants);

3.16 under the 2003 Plan, the Administrator may award Option Shares or options to purchase Option Shares to consultants of Energy (the 2003 Participants);

3.17 Option Shares issued upon the exercise of options will be issued by Energy from its authorized but unissued share capital;

3.18 There are approximately 8 consultants and directors of Energy or its affiliates, including 5 consultants and directors resident in the Jurisdictions, eligible to participate in one of the Plans. Liszicasz, the Chairman, Chief Executive Officer and a director of Energy, is an eligible participant under the 2000 Plan, but has not been and will not be issued Option Shares or granted options to purchase Option Shares under the 2000 Plan and is not an eligible participant under the 2003 Plan;

3.19 there are currently 400,000 Option Shares reserved for issuance upon exercise of options currently granted under the 2000 Plan and 100,000 Option Shares reserved for issuance upon exercise of options currently granted under the 2003 Plan;

3.20 participation in the Plans is voluntary and no 2000 Participant or 2003 Participant will be induced to participate by expectation of employment or continued employment. Each 2000 Participant and 2003 Participant will receive the reports, proxy statements, information statements and other information as disseminated to Energy's shareholders pursuant to the information and periodic reporting requirements of the United States Securities Exchange Act of 1934, including annual reports on Form 10-K containing audited financial statements and proxy statements circulated in advance of Energy's annual meeting of shareholders;

3.21 any resale of Option Shares by any of the 2000 Participants or the 2003 Participants is expected to be made on the NASD OTC Bulletin Board as there is no market for the common shares in Canada and none is expected to develop;

3.22 2000 Participants and 2003 Participants will acquire Option Shares through the exercise of options granted pursuant to the Plans in reliance on registration and prospectus exemptions contained in the Legislation, including, for every 2000 Participant and 2003 Participant, an exemption from the Registration and Prospectus Requirements;

3.23 in the absence of an order granting exemptive relief, the first trade in Option Shares by any of the 2000 Participants or the 2003 Participants, including residents of the Jurisdictions, will be deemed to be a distribution under the Legislation unless, among other things, Energy has been a reporting issuer for 12 months immediately preceding the trade in one of the Jurisdictions set forth in Schedule B to the Resale Rule;

3.24 Section 2.14 of the Resale Rule cannot be utilized by the 2000 Participants or the 2003 Participants with respect to first trades on the NASD OTC Bulletin Board of Option Shares acquired through a grant of Option Shares or through the exercise of options granted pursuant to the Plans because as at the distribution date of the outstanding options granted pursuant to the Plans residents of Canada own directly or indirectly more than 10 percent of the outstanding common shares and it is expected that this will continue to be the case with respect to any future grant of Option Shares or options pursuant to the Plans; and

3.25 Because Liszicasz was not a Subscriber or Participant the relief sought does not apply to Liszicasz.

4. AND WHEREAS pursuant to the System this Decision Document confirms the determination of the Decision Makers (the "Decision");

5. AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the Jurisdiction to make the Decision has been met;

6. THE DECISION of the Decision Makers pursuant to the Legislation is that first trades of Placement Shares acquired by Subscribers and of Option Shares acquired by 2000 Participants and 2003 Participants pursuant to the Plans or through the exercise of options granted under the Plans shall not be subject to the Registration and Prospectus Requirements provided that:

6.1 such first trades are executed over-the-counter within the United States on the NASD OTC Bulletin Board or on an exchange or market outside Canada;

6.2 at the time of the trade, Energy is registered with the United States Securities and Exchange Commission under the Securities Exchange Act of 1934 and is not exempt from the reporting requirement by that Act pursuant to Rule 12G 3-2 made under that Act.

April 12, 2004.

"Glenda A. Campbell"
"Stephen R. Murison"