Securities Law & Instruments

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Application by a TSX-listed issuer and foreign resident purchaser for exemptive relief in relation to a proposed distribution of securities by the issuer by way of a committed equity facility (often referred to as an "equity line of credit"). A draw down under an equity line may be considered to be an indirect distribution of securities of the issuer to purchasers in the secondary market through the equity line purchaser acting as underwriter. Relief granted to the issuer and purchaser from certain registration and prospectus requirements, subject to terms and conditions, including a 10% restriction on the number of securities that may be distributed under an equity line in any 12-month period, certain restrictions on the permitted activities of the purchaser and certain notification and disclosure requirements.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, ss. 25(1), 25(2), 71(1), 71(2), 74(1), 133 and 147.

National Instrument 44-101 Short Form Prospectus, s. 8.1.

Form 44-101 Short Form Prospectus, item 20.

National Instrument 44-102 Shelf Distributions, ss. 5.5.2, 5.5.3, 11.1.

December 10, 2009

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

ARISE TECHNOLOGIES CORPORATION

(THE ISSUER)

AND

HAVERSTOCK MASTER FUND, LTD.

(THE SUBSCRIBER)

DECISION

BACKGROUND

The principal regulator in the Jurisdiction has received an application from the Issuer and the Subscriber (the Filers) for a decision (the Exemption Sought) under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that:

1. in connection with the distribution or distributions (the Distribution) by the Issuer of the ELOC Shares (as defined below) through the Subscriber, as underwriter, to purchasers (TSX Purchasers) who purchase ELOC Shares directly from the Subscriber on the Toronto Stock Exchange (TSX) during the period (the Distribution Period) that commences on the date of commencement of the Pricing Period (as defined below) under a Draw Down Notice (as defined below) delivered under the Committed Equity Facility (as defined below) and ends on the date that is the earlier of:

(a) the date on which the Subscriber notifies the Issuer that the distribution of the ELOC Shares purchased from the Issuer on the Settlement Date (as defined below) has ended, and

(b) the 40th day after the Settlement Date,

the Issuer be exempted from the requirements in the Legislation to include the following information in a prospectus (collectively, the Prospectus Form Requirements):

(i) the statement respecting statutory rights of withdrawal and rescission or damages in the form prescribed in item 20 of Form 44-101F1 Short Form Prospectus (Form 44-101F1) under National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101),

(ii) the second sentence of the disclosure required by section 5.5.2 of National Instrument 44-102 Shelf Distributions (NI 44-102), and

(iii) the statement in section 5.5.3 of NI 44-102;

2. in connection with the Distribution, the Subscriber and its directors, officers and employees be exempted from the requirements in the Legislation that prohibit a person or company from engaging in or holding himself, herself or itself out as engaging in the business of trading in securities unless the person or company is registered as a dealer or is a representative registered as a dealing representative of a registered dealer and is acting on behalf of the registered dealer (the Dealer Registration Requirements);

3. in connection with the Distribution, the Subscriber and its directors, officers and employees be exempted from the requirements in the Legislation that prohibit a person or company from acting as an underwriter unless the person or company is registered as a dealer and is authorized to act as an underwriter in the circumstances or is a representative registered as a dealing representative of such a registered dealer and is acting on behalf of the registered dealer (the Underwriter Registration Requirements); and

4. in connection with the Distribution, the Subscriber and any dealers through whom the Subscriber distributes the ELOC Shares (each a Selling Agent) be exempted from the requirements in the Legislation that a dealer not acting as agent of the purchaser who receives an order to subscribe for or purchase a security offered in a distribution deliver to the purchaser or its agent the prospectus and any amendment to the prospectus not later than the second working day after the subscription or purchase (the Prospectus Delivery Requirements) so, as a consequence, no rights of withdrawal or rights of rescission or damages for non-delivery of the prospectus arise.

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

(a) the Ontario Securities Commission (the Commission) is the principal regulator for this application; and

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Yukon Territory, Northwest Territories and Nunuvat.

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:

The Issuer

1. The Issuer is a corporation incorporated and validly existing under the Canada Business Corporations Act. The principal office of the Issuer is located in Waterloo, Ontario.

2. The Issuer is a reporting issuer under the legislation of Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland and Labrador, Yukon Territory, Northwest Territories and Nunavut (the Reporting Jurisdictions). The Issuer is not in default of securities legislation in any jurisdiction.

3. The outstanding common shares of the Issuer (the Shares) are listed and posted for trading on the TSX under the symbol APV. The Issuer is authorized to issue an unlimited number of Shares. As of November 24, 2009, there were 133,442,762 Shares issued and outstanding and the aggregate market value of the outstanding Shares was $38.7 million.

4. The Issuer is not currently subject to the reporting requirements of the United States Securities Exchange Act of 1934, as amended (the 1934 Act).

5. The Issuer is eligible to file a short form prospectus under NI 44-101.

6. The Issuer has filed in the Reporting Jurisdictions and received a decision document dated October 2, 2009 for its unallocated short form base shelf prospectus dated September 29, 2009 (the Base Shelf Prospectus).

The Subscriber

7. The Subscriber is a Cayman Islands company, whose principal business office is located at 1044 Northern Boulevard Roslyn, New York.

8. Neither the Subscriber nor any affiliate of the Subscriber is a reporting issuer in any jurisdiction in Canada or a registrant under US securities legislation. Neither the Subscriber nor any affiliate of the Subscriber is registered with any U.S. or Canadian regulator or other securities regulatory authority as a dealer, advisor or in any other capacity under the legislation in any jurisdiction and is not a member of or participant in any other marketplace (as defined National Instrument 21-101 Marketplace Operation) or of any other self-regulatory organization. In particular, the Subscriber is not (a) a dealer-member of the Investment Industry Regulatory Organization of Canada, (b) a participating organization of the TSX, a member of the TSX Venture Exchange, or a member or dealer of the Canadian National Stock Exchange, Pure Trading, Alpha ATS, Chi-X Canada ATS or the Canadian Investor Protection Fund, (c) a broker-dealer registered with the United States Securities Exchange Commission under the 1934 Act, or (d) a member of the National Association of Securities Dealers, Inc. The Subscriber is not in default of securities legislation in any jurisdiction.

9. The Subscriber has been established to purchase and sell, as principal, securities of public companies, including, without limitation, the purchase of equity securities pursuant to equity draw down facilities like the Committed Equity Facility. Neither the Subscriber, nor any affiliate of the Subscriber, currently participates in equity line financings or similar arrangements with US-listed issuers.

10. The investment manager of the Subscriber is Haverstock Offshore Manager, LLC, a Delaware corporation. As of the date hereof, the share capital of Haverstock Offshore Manager, LLC is owned as follows:

(a) 50% by the N.I.R. Group, LLC, a New York limited liability company which is principally owned and managed by Mr. Corey Ribotsky;

(b) 40% by Targum Capital, LLC, a Delaware limited liability company which is owned and managed by Mr. David Ratzker; and

(c) 10% by Eagle Ridge Capital Corporation, an Alberta corporation which is owned and managed by Mr. Cory Gelmon and Mr. Michael Gelmon.

Proposed Distribution of ELOC Shares

11. The Issuer and the Subscriber will enter into an amended and restated committed equity facility agreement (the Committed Equity Facility), whereby the Issuer may, from time to time, require the Subscriber to purchase from treasury Shares (the ELOC Shares) on the following basis (subject always to the Committed Equity Facility becoming effective in accordance with its terms):

(a) During the 36 months after the date of the Committed Equity Facility and subject to certain conditions set forth in the Committed Equity Facility, the Issuer may, in its sole discretion, require the Subscriber to complete one or more subscriptions for up to $500,000 in ELOC Shares (each such issue and sale of ELOC Shares is a Draw Down) by delivering to the Subscriber a Draw Down notice for each Draw Down (each a Draw Down Notice). The Issuer may not deliver another Draw Down Notice until all ELOC Shares issuable pursuant to the prior Draw Down have been delivered to, or to the direction of, the Subscriber. Furthermore, the maximum aggregate subscription amount under the Committed Equity Facility is $10 million.

(b) Pursuant to each Draw Down Notice, the Subscriber will be required to subscribe for and purchase the number of ELOC Shares as is equal to the dollar amount set forth in the Draw Down Notice (the Draw Down Amount), subject to certain adjustments and conditions for the Subscriber's benefit as set out in the Committed Equity Facility.

(c) In each Draw Down Notice, the Issuer is to specify a minimum price for the Subscriber's purchase of ELOC Shares pursuant the applicable Draw Down (the Minimum Price).

(d) The Draw Down Amount for a Draw Down is to be allocated equally over the five consecutive trading days (the Pricing Period) beginning on the commencement date specified in the Draw Down Notice. The number of ELOC Shares that the Subscriber is obligated to purchase for each trading day during the Pricing Period is established by the purchase price for ELOC Shares determined under the Committed Equity Facility.

(e) Under the Committed Equity Facility, the applicable purchase price for the ELOC Shares to be paid by the Subscriber for a trading day during the Pricing Period (Trading Day) is to be the higher of (i) 93.5% of the volume weighted average price of the Shares for the Trading Day (VWAP) or (ii) the Minimum Price (the Trading Day Purchase Price). The number of ELOC Shares to be purchased by the Subscriber for each Trading Day is equal to the Draw Down Amount proportionately allocated to such Trading Day divided by the Trading Day Purchase Price, subject to the Subscriber's right under the Committed Equity Facility to reduce its obligation to subscribe for the Draw Down Amount for such Trading Day, in whole or in part, where the VWAP for the Trading Day is below the Minimum Price (any such reduction of the Subscriber's obligation is a Draw Down Reduction).

(f) In addition to a Draw Down Reduction, the Draw Down Amount for which the Subscriber is obligated in subscribing for ELOC Shares (and, accordingly, the number of ELOC Shares) pursuant to any Draw Down is to be reduced pursuant to the Committed Equity Facility to ensure that the Draw Down Amount does not exceed 5% of the market capitalization of the issued and outstanding Shares as of the applicable closing for the Draw Down (where the market capitalization is determined by multiplying the number of Shares outstanding by the VWAP as at the Settlement Date (as defined below)).

(g) The purchase and sale of ELOC Shares for each Draw Down is to be completed on later of (i) the second TSX trading day after filing of the Pricing Supplement (as defined below) or (ii) the seventh TSX trading day following the Pricing Period (each such closing is a Settlement Date).

12. Forthwith after entering into the Committed Equity Facility, the Issuer will issue a news release and file the agreement on SEDAR. The news release will disclose the material terms and conditions of the Committed Equity Facility, that the agreement and the Base Shelf Prospectus have been filed on SEDAR, when the prospectus supplement and pricing supplements will be filed and how TSX Purchasers may obtain a copy of the Prospectus. A copy of the news release will also be posted on the website of the Issuer.

13. Certain fees are payable by the Issuer to the Subscriber in connection with the Committed Equity Facility. Such fees shall not be satisfied by the issuance of Shares by the Issuer to the Subscriber.

14. Within two business days after entering into the Committed Equity Facility and prior to delivering any Draw Down Notice or completing any distribution of ELOC Shares pursuant to a Draw Down, the Issuer will file in each Reporting Jurisdiction a prospectus supplement to the Base Shelf Prospectus describing the terms of the Committed Equity Facility and relating to the qualification of the distribution of ELOC Shares pursuant to the shelf prospectus procedures prescribed by Parts 8 and 9 of NI 44-102 in connection with the Distribution (the Prospectus Supplement). The Prospectus Supplement will:

(a) qualify the distribution of ELOC Shares to the Subscriber,

(b) qualify the sale of ELOC Shares to TSX Purchasers; and

(c) include the disclosure required by subsection 9.1(3) of NI 44-102 that no underwriter or dealer involved in the Distribution, no affiliate of such an underwriter or dealer and no person or company acting jointly or in concert with such an underwriter or dealer has over-alloted, or will over-allot, securities in connection with the Distribution or effect any other transactions that are intended to stabilize or maintain the market price of the Shares.

15. Within two TSX trading days after the end of the Pricing Period for a particular Draw Down and, in any case, prior to completing any distribution of ELOC Shares pursuant to a Draw Down, the Issuer will file on SEDAR a copy of its pricing supplement to the Base Shelf Prospectus prepared in accordance with the shelf prospectus procedures prescribed by Part 8 and 9 of NI 44-102 and describing the terms and conditions applicable to the distribution of ELOC Shares pursuant to the Draw Down Notice delivered to the Subscriber under the Committed Equity Facility that are not disclosed in the Base Shelf Prospectus, including without limitation, disclosure of the number of ELOC Shares issued and sold pursuant to the Draw Down to the Subscriber and the Subscriber's average purchase price per ELOC Share, all as determined in accordance with the Committed Equity Facility after completion of the Pricing Period (such a pricing supplement to the Base Shelf Prospectus is a Pricing Supplement) (the Base Shelf Prospectus together with the Prospectus Supplement and the applicable Pricing Supplement, as may be amended or restated from time to time, are referred to in this decision as the Prospectus).

16. The Committed Equity Facility will provide that during the term of the Committed Equity Facility neither the Subscriber nor any of its affiliates will sell Shares other than those (a) that the Subscriber reasonably expects to have the obligation to purchase under the terms of the Committed Equity Facility or (b) held in any accounts directly or indirectly managed by the Subscriber.

17. After receipt of a Draw Down Notice, the Subscriber may seek to sell the ELOC Shares purchased under the Draw Down, or engage in hedging strategies, in order to reduce the economic risk associated with the purchase of securities of the Issuer.

18. Under the Committed Equity Facility, the Subscriber, its affiliates, associates, partners and insiders, will agree not to hold a net short position in Shares during the term of the Committed Equity Facility. Accordingly, the Subscriber may sell Shares to hedge their obligation to purchase ELOC Shares under a Draw Down Notice provided that:

(a) The Subscriber complies with applicable TSX regulations and securities legislation;

(b) The Subscriber will not during a Pricing Period, together with any affiliate, associate, subsidiaries, partners or insiders, sell that number of Shares which exceeds that number of ELOC Shares the Subscriber will be required to purchase in connection with the Draw Down Notice.

19. The Subscriber may, but is not obligated to, sell ELOC Shares it has acquired under a Draw Down on a non-fixed price basis during the Distribution Period.

20. The Subscriber may be considered to be acting as an underwriter (as defined in the Legislation) in connection with the Distribution and a Draw Down under the Committed Equity Facility may be considered to be an indirect distribution of the ELOC Shares by the Issuer to TSX Purchasers with the Subscriber acting as the underwriter of the Distribution.

21. A person or company acting as an underwriter is subject to the Underwriter Registration Requirements.

22. The Subscriber and the Selling Agents will affect all sales of ELOC Shares during the Distribution Period, other than those made to a lender of Shares, through the TSX.

23. The Committed Equity Facility will provide that, at the time of each Draw Down Notice and each sale of ELOC Shares, the Issuer will make a representation to the Subscriber that the Prospectus contains full, true and plain disclosure of all material facts relating to the Issuer and the ELOC Shares being distributed. The Issuer would therefore be unable to proceed with sales of ELOC Shares when it is in possession of undisclosed information that would constitute a material fact or a material change in respect of the ELOC Shares.

Disclosure of Distribution of ELOC Shares

24. Upon issuing a Draw Down Notice, the Issuer will disseminate a news release disclosing the issuance of the Draw Down Notice and specifying that the Base Shelf Prospectus and the Prospectus Supplement are filed on SEDAR. In addition, if the Issuer determines that the sale of the number of ELOC Shares specified in the Draw Down Notice constitutes a material fact or material change, the Issuer will simultaneously file a material change report.

25. On or before each Settlement Date, the Issuer is to have disseminated a news release regarding the issue and sale of ELOC Shares for that Draw Down. The news release is to specify the number of ELOC Shares and the Subscriber's average purchase price for each ELOC Share that has been issued and sold under the Draw Down, all as determined in accordance with the Committed Equity Facility after completion of the Pricing Period, indicate that the Pricing Supplement in respect of the Draw Down has been filed on SEDAR, and specify where and how prospective TSX Purchasers may obtain a copy of the Committed Equity Facility, the Base Shelf Prospectus, the Prospectus Supplement applicable to the Committed Equity Facility, and the Pricing Supplement applicable to the Draw Down. The Issuer is to post copies of the Draw Down news releases on its website.

26. In determining whether the sale of the number of ELOC Shares specified in the Draw Down Notice would constitute a material fact or material change, the Issuer will take into account a number of factors, including, without limitation: (a) the parameters of the Draw Down Notice including the number of ELOC Shares proposed to be sold; (b) the percentage of the outstanding Shares that the number of ELOC Shares represents; (c) the difference between the recent market price of the Shares and the Minimum Price specified in the Draw Down Notice (d) trading volume and volatility of Shares; (e) recent developments in the business, affairs and capital structure of the Issuer; and (f) prevailing market conditions generally.

Prospectus Qualification of the Distribution of ELOC Shares

27. The Base Shelf Prospectus, as supplemented by the Prospectus Supplement, as amended, will qualify the Distribution of the ELOC Shares to TSX Purchasers during the Distribution Period.

28. The Base Shelf Prospectus, as supplemented by the Prospectus Supplement, as amended, and the Pricing Supplement will qualify the Distribution of the Shares to the Subscriber as described in the Pricing Supplement.

29. The Prospectus Supplement will contain an underwriter's certificate in the form set out in section 2.2(b) of Appendix B to NI 44-102 signed by the Subscriber.

30. A dealer not acting as agent of the purchaser who sells securities offered in a distribution to which the prospectus requirement applies is subject to the Prospectus Delivery Requirements.

31. The Subscriber is seeking an exemption from the Prospectus Delivery Requirements on behalf of itself and Selling Agents through whom it sells the ELOC Shares because TSX Purchasers will not be readily identifiable as the Selling Agent acting on behalf of the Subscriber may combine the sell orders made under the Prospectus with other sell orders and the dealer acting on behalf of a TSX Purchaser may combine a number of purchase orders.

32. The Issuer will disclose the number and price of ELOC Shares sold to the Subscriber under the Committed Equity Facility in its annual financial statements and MD&A filed on SEDAR.

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 provided that:

1. in connection with a Distribution, the Issuer is exempted from the Prospectus Form Requirements so long as:

(a) the number of Shares distributed by the Issuer under one or more equity lines of credit, including the Committed Equity Facility, during any 12-month period in the term of the Committed Equity Facility does not exceed 10 per cent of the aggregate number of Shares outstanding at the beginning of such 12-month period;

(b) the Issuer issues a news release immediately:

(i) upon entering into the Committed Equity Facility, disclosing certain terms of the Committed Equity Facility including the aggregate maximum issue price of the ELOC Shares that may be distributed under the Committed Equity Facility, and

(ii) upon delivery of a Draw Down Notice to the Subscriber if the maximum dollar value of ELOC Shares the Subscriber may be obligated to purchase exceeds 2 per cent of the aggregate market value of the Shares issued and outstanding at the date of delivery of the Draw Down Notice;

(c) the Issuer files the Prospectus Supplement that (i) qualifies the distribution of the ELOC Shares to the Subscriber and the distribution of the ELOC Shares to the TSX Purchasers during the Distribution Period; and (ii) includes the disclosure required by section 9.1(3) of NI 44-102;

(d) the Issuer files a Pricing Supplement within two business days after the end of the Pricing Period with respect to each Draw Down disclosing the number of ELOC Shares sold pursuant to that Draw Down to the Subscriber and the price per ELOC Share;

(e) the Issuer delivers to the Commission and the TSX, upon request, a copy of each Draw Down notice delivered by the Issuer to the Subscriber under the Committed Equity Facility; and

(f) in lieu of the statement respecting statutory rights of withdrawal and rescission or damages in the form prescribed in item 20 of Form 44-101F1, the Issuer includes in the Prospectus Supplement the following statement:

"Securities legislation in the jurisdictions provides purchasers with the right to withdraw from an agreement to purchase securities and with remedies for rescission or damages if the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment are not delivered to the purchaser, provided that the remedies are exercised by the purchaser within the time limit prescribed by securities legislation.

However, TSX Purchasers of ELOC Shares will not have any right to withdraw from an agreement to purchase the ELOC Shares and will not have remedies of rescission or damages for non-delivery of the Prospectus because the Prospectus relating to ELOC Shares purchased by a TSX Purchaser will not be delivered as permitted under a decision document granting exemptive relief dated •, 2009.

Securities legislation in the jurisdictions also provides purchasers with remedies for rescission or damages if the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment contain a misrepresentation, provided that the remedies are exercised by the purchaser within the time limit prescribed by securities legislation. Any remedies under securities legislation in the jurisdictions that a TSX Purchaser of ELOC Shares may have against the Issuer or the Subscriber for rescission or damages if the prospectus, prospectus supplements relating relating to securities purchased by a purchaser and any amendment contain a misrepresentation remain unaffected by the non-delivery of the Prospectus and the decision document referred to above.

TSX Purchasers should refer to the applicable provisions of the securities legislation and the decision document referred to above for the particulars of their rights or consult with a legal adviser."

2. in connection with a Distribution, the Subscriber and its officers, directors and employees are exempted from the Dealer Registration Requirements and the Underwriter Registration Requirements so long as:

(a) the Subscriber does not solicit offers to purchase the ELOC Shares in any Reporting Jurisdictions and effects all Distributions of ELOC Shares during Distribution Period through the TSX using a dealer unaffiliated with the Subscriber or the Issuer;

(b) no extraordinary commission or consideration is paid by the Subscriber to a person or company in respect of the Distribution of ELOC Shares; and

(c) the Subscriber makes available to the Commission, upon request, full particulars of trading and hedging activities by the Subscriber (and, if relevant, trading and hedging activities by affiliates of the Subscriber) in relation to securities of the Issuer during the term of the Committed Equity Facility;

3. in connection with a Distribution, the Subscriber and any Selling Agents through whom the Subscriber distributes the ELOC Shares are exempted from the Prospectus Delivery Requirements so long as the conditions in the immediately preceding paragraph 2 are met; and

4. this decision will terminate on the date that is 25 months after the date on which the Prospectus Supplement is filed in the Jurisdiction.

As to the Exemption Sought from the Prospectus Form Requirements:

"Michael Brown"
Assistant Manager, Corporate Finance

As to the Exemption Sought from the Dealer Registration Requirements, the Underwriter Registration Requirements and the Prospectus Delivery Requirements:

"David L. Knight"
Commissioner
Ontario Securities Commission
 
"Kevin J. Kelly"
Commissioner
Ontario Securities Commission