US Financial 15 Split Corp. and Quadravest Capital Management Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Mutual fund corporation and its investment fund manager exempted from the dealer registration requirement for certain limited trading activities to be carried out by these parties in connection with rights offering by the mutual fund corporation -- The limited trading activities involve: i) the forwarding of a rights offering circular, and the distribution of rights to acquire securities of the mutual fund corporation, to existing holders of securities of the mutual fund corporation, and ii) the subsequent distribution of securities to holders of these rights, upon the holders' exercise of the rights, through an appropriately registered dealer.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25(1), 74(1).

Multilateral Instrument 11-102 Passport System, s. 4.7(1).

National Instrument 45-106 Prospectus and Registration Exemptions, ss. 3.1, 3.42, 8.5.

National Instrument 31-103, Registration Requirements and Exemptions, s. 8.5.

April 11, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the Jurisdiction)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

US FINANCIAL 15 SPLIT CORP.

(Split Corp) AND

QUADRAVEST CAPITAL MANAGEMENT INC.

(the Manager, and together with Split Corp, the Filers)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of the Jurisdiction (the Legislation) exempting the Filers from the dealer registration requirement in the Legislation in respect of certain trades ( the Offering Activities) to be carried out by the Manager, on behalf of Split Corp, in connection with a proposed reorganization of the Split Corp (the Reorganization) that includes distribution (the Offerings) of 2012 preferred shares (the 2012 Preferred Shares) and two series of warrants (the 2013 Warrants and the 2014 Warrants, and together the Warrants), each of which entitles the warrantholder to acquire one Class A Share (as defined below) of Split Corp and one 2012 Preferred Share of Split Corp (together a Unit), to be made in Ontario and each of the Passport Jurisdictions (as defined below) pursuant to a management information circular (the Circular) (such exemption from the dealer registration requirement, the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

1. the Ontario Securities Commission is the principal regulator for this application; and

2. each Filer has provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon by the Filers in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (collectively, the Passport Jurisdictions).

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filers:

1. Split Corp is a mutual fund corporation incorporated under the laws of the Jurisdiction by articles of incorporation dated December 17, 2004, as amended January 27, 2005. Split Corp is a reporting issuer in the Jurisdiction and in each of the Passport Jurisdictions.

2. The Manager is incorporated under the laws of the Jurisdiction by articles of incorporation dated October 20, 1971, as most recently amended effective November 27, 1997. At the time of the most recent amendment, the Manager came under new control and changed its name to its current name, Quadravest Capital Management Inc.

3. The Manager acts as the investment fund manager for Split Corp. The Manager is registered as an investment fund manager, portfolio manager and exempt market dealer under the Legislation.

4. The head office of each of the Filers is located in Toronto, Ontario.

5. The authorized capital of Split Corp consists of an unlimited number of preferred shares (the Preferred Shares) and class A shares (the Class A Shares) and 1,000 class B shares. The Preferred Shares and Class A Shares are currently listed for trading on the Toronto Stock Exchange (the TSX) under the symbols "FTU.PR.A." and "FTU", respectively.

6. Split Corp is subject to certain investment restrictions that, among other things, limit the equity securities and other securities that may be acquired for its investment portfolio.

7. The investment objectives of Split Corp are: (i) to provide holders of the Preferred Shares with fixed cumulative preferential monthly cash dividends in the amount of $0.04375 per Preferred Share; (ii) to provide holders of Class A Shares with regular monthly cash distributions targeted to be $0.10 per Class A Share; and (iii) to return the original issue price of $10.00 and $15.00 to holders of Preferred Shares and Class A Shares, respectively, at the time of the redemption of such shares on December 1, 2012 or such other date as Split Corp may terminate.

8. On February 15, 2005 and March 8, 2005, Split Corp completed its initial public offering of Preferred Shares and Class A Shares pursuant to a prospectus dated January 27, 2005. Preferred Shares and Class A Shares are issued only on the basis that an equal number of Preferred Shares and Class A Shares will be issued and outstanding at all times.

9. Split Corp does not engage in a continuous distribution of its securities.

10. Under the Reorganization, each holder of the Preferred Share, as at a specified record date, will be entitled to receive one 2012 Preferred Share, one 2013 Warrant and one 2014 Warrant in exchange for every Preferred Share. The 2012 Preferred Shares will entitle the holders thereof to receive cumulative preferential monthly dividends to yield 5.25% per annum of the net asset value per Unit calculated as at the end of the preceding month, payable to holders of 2012 Preferred Shares of record on the last business day of such month, provided that the policy of the Board of Directors would be to not pay any dividends or other distributions on the 2012 Preferred Shares in any month so long as the net asset value per Unit is equal to or less than $10.00. Each Warrant will entitle the holders thereof to acquire one Unit, upon the payment of a subscription price. Holders of Warrants are permitted to sell or transfer their Warrants instead of exercising their Warrants to subscribe for further Units.

11. Split Corp has applied to list on the TSX the 2012 Preferred Shares and the Warrants to be distributed under the Circular, and the 2012 Preferred Shares and Class A Shares issuable upon exercise of the Warrants.

12. The Offering Activities will consist of:

(a) the distribution of the Circular, and the issuance of 2012 Preferred Shares and Warrants to holders of Preferred Shares (as at the record date specified in the Circular), after the matters set out in the Circular are approved by the shareholders at a special shareholders meeting to be held on April 16, 2012; and

(b) the distribution of Class A Shares and Preferred Shares to holders of the Warrants, upon the exercise of the Warrants by the holders, through a registered dealer that is registered in a category that permits the registered dealer to make such a distribution.

13. Because each of the Filers is in the business of trading, the Offerings Activities would require each of the Filers to register as a dealer in appropriate category in the absence of this decision (or another available exemption from the dealer registration requirement).

14. Section 8.5 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106), provides that, after March 26, 2010, the exemptions from the dealer registration requirements set out in section 3.11 business combination and reorganization and section 3.42 conversion, exchange, or exercise of NI 45-106 no longer apply.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.