Thomas Weisel Partners Group, Inc. - MRRS Decision

Headnote

Mutual Reliance System for Exemptive Relief Applications -- relief from registration and prospectus requirements in connection with the first trade of shares distributed to residents of Canada in connection with an acquisition -- issuer not a reporting issuer in any jurisdiction of Canada -- the conditions of the exemption in section 2.14 of National Instrument 45-102 Resale of Securities not fully met as residents of Canada own more than 10% of the total number of securities -- relief granted subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25, 53, 74(1).

National Instrument 45-102 Resale of Securities.

December 20, 2007

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO, ALBERTA AND QUEBEC

(THE "JURISDICTIONS")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

THOMAS WEISEL PARTNERS GROUP, INC.

(THE "APPLICANT")

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Maker") has received an application from the Applicant for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the prospectus requirements contained in the Legislation do not apply to the first trade of the Canadian Securities (as defined below) held by the Canadian Owners (as defined below) (the "Requested Relief").

Under the Mutual Reliance Review System for Exemptive Relief Applications:

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

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 - Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

1. The Applicant was incorporated under the laws of the State of Delaware and was founded in 1998.

2. The principal executive offices of the Applicant are located in San Francisco, California.

3. The Applicant is not a reporting issuer or its equivalent in any jurisdiction of Canada. The Applicant is currently exploring the possibility of becoming a reporting issuer in Canada by listing its common stock on the Toronto Stock Exchange.

4. On February 7, 2006, The Applicant succeeded to the business of Thomas Weisel Partners Group, LLC and completed an initial public offering of its common stock in the United States.

5. The authorized share capital of the Applicant currently consists of 100 million shares of common stock (the "Common Shares"), of which 25,553,672 shares are outstanding.

6. The Applicant is a registrant with the Securities and Exchange Commission (the "SEC") and is subject to the reporting and other requirements of the United States Securities Exchange Act of 1934 (the "1934 Act") and the rules and regulations of The NASDAQ Stock Market ("NASDAQ") where its Common Shares are listed and posted for trading under the symbol "TWPG".

7. Westwind was created by amalgamation on January 1, 2003 and is registered under the Business Corporations Act (Ontario) (the "OBCA").

8. Westwind conducts its operations through three wholly-owned subsidiaries and has its head office in Toronto, Ontario.

9. Westwind is not a reporting issuer under the securities legislation of any jurisdiction of Canada, and its shares are not listed and posted for trading on any stock exchange. Westwind is not an "offering corporation" under the OBCA.

10. There are currently 50 holders of common shares of Westwind, including the Shareholders' Representative (as defined below), who also holds all of the Class A common shares of Westwind. Each of these shareholders has a specific connection with Westwind: four of the shareholders are the founders of Westwind and the others are employees of a wholly-owned subsidiary of Westwind or members of the advisory board of Westwind (except one shareholder that is a holding company owned by four of the other shareholders and owns approximately 20.5% of the outstanding common shares of Westwind).

11. All of the shareholders of Westwind are resident in Ontario, Alberta and Quebec, except for five shareholders who are not residents of Canada and who collectively hold approximately 6.7% of the outstanding common shares of Westwind.

12. The Applicant, a subsidiary of the Applicant ("Canadian Sub"), Westwind and Lionel F. Conacher, as shareholders' representative (the "Shareholders' Representative") have entered into an arrangement agreement dated as of September 30, 2007 (the "Arrangement Agreement") providing for the indirect acquisition by the Applicant of all of the outstanding common shares and Class A common shares of Westwind (the "Transaction"). Upon completion of the Transaction, Westwind will become an indirect subsidiary of the Applicant.

13. Subject to certain negotiated exceptions, as consideration pursuant to the Transaction, Westwind shareholders will receive a combination of i) cash and ii) Common Shares or exchangeable shares of Canadian Sub which shares are exchangeable for Common Shares (the "Exchangeable Shares"). Holders will generally receive approximately 70% of the consideration in the form of Common Shares or Exchangeable Shares and approximately 30% in the form of cash.

14. The aggregate consideration that Westwind shareholders will receive in exchange for their Westwind common shares and Class A common shares consists of US$45,000,000 in cash and 7,009,112 Common Shares (including Common Shares issuable upon the exchange of Exchangeable Shares to be issued under the Transaction).

15. The holders of Exchangeable Shares will receive, through a special voting share of the Applicant to be issued to a trustee in connection with the Transaction, the benefit of the Applicant voting rights, entitling the holder of each Exchangeable Share to one vote on the same basis and in the same circumstances as one corresponding Common Share. In certain events, Canadian Sub will have a right to redeem the Exchangeable Shares in exchange for an equal number of Common Shares and for cash in the amount of any declared and unpaid dividends on such Exchangeable Shares. The Common Shares and Exchangeable Shares issuable in connection with the Transaction, together with the Common Shares issuable upon the exchange of such Exchangeable Shares, are hereinafter referred to as the "Canadian Securities."

16. Upon closing of the Transaction and payment of the aggregate consideration by the Applicant, after giving effect to the issue of the Canadian Securities and assuming the exchange of Exchangeable Shares then outstanding, 43 residents of Canada (the "Canadian Owners") would receive approximately 6,541,800 Common Shares in connection with the Transaction (representing approximately 22.5% of the Common Shares issued and outstanding as of the date hereof on a fully-diluted basis and less than 2.5% of the total number of holders of Common Shares as of the date hereof).

17. Approximately 22% of the Canadian Securities to be issued in connection with the Transaction will be owned by the Shareholders' Representative, who will assume the functions of President of the Applicant upon closing of the Transaction. It is currently anticipated that the Shareholders' Representative will relocate to the United States following a transition period, which will last between six and 24 months following the closing. In addition, four of the shareholders (including the Shareholders' Representative) will collectively, either directly or indirectly, hold approximately 53% of the Canadian Securities. All four of these shareholders are currently Canadian residents.

18. In connection with the Transaction, the Applicant has entered into a shareholders' equity agreement with all of the shareholders of Westwind. The securities subject to the shareholders' equity agreement include all Common Shares and all Exchangeable Shares issuable under the Transaction, including all Canadian Securities.

19. Pursuant to the shareholders' equity agreement, each Westwind shareholder has agreed, among other things, to maintain beneficial ownership of and not to transfer his or her Canadian Securities (representing all of the Canadian Securities) until February 7, 2011, subject to certain exceptions.

20. Each of the Westwind shareholders that will receive Canadian Securities has also entered into a pledge agreement with the Applicant that will secure the liquidated damages provisions in the shareholders' equity agreement and the indemnification obligations under the Arrangement Agreement by a pledge of an amount of Common Shares or Exchangeable Shares equal to 50% of the total value of the consideration to be received by that shareholder in exchange for his or her Westwind common shares and Class A common shares. These pledges will terminate on the earliest to occur of: (i) the death of the relevant shareholder; (ii) the expiration of the applicable non-compete and non-solicit period set forth in the shareholders' equity agreement; (iii) payment in cash or other satisfaction by the shareholder of all liquidated damages; or (iv) February 7, 2011; provided that no shares will be released from the pledge before the first anniversary of the closing of the Transaction.

21. The Transaction was unanimously approved by the board of directors of the Applicant, and the issuance of the Common Shares (including the issuance of Common Shares issuable upon the exchange of Exchangeable Shares) under the Transaction is subject to approval by the stockholders of the Applicant at a meeting currently anticipated to be held in December 2007. The Transaction was also unanimously approved by each of the board of directors and the shareholders of Westwind. In addition, the arrangement has been approved by the Ontario Superior Court of Justice. The closing of the Transaction is subject to customary conditions, including the receipt of certain approvals from regulatory authorities.

22. In the absence of the Requested Relief, the first trade of the Canadian Securities will be deemed a distribution pursuant to National Instrument 45-102 Resale of Securities ("NI 45-102") unless, among other things, the Applicant has been a reporting issuer for four months immediately preceding the trade in one of the jurisdictions set forth in Appendix B to NI 45-102, which include, among others, the Jurisdictions.

23. As neither the Applicant nor Canadian Sub is a reporting issuer or its equivalent in Canada, the Canadian Securities would be subject to an indefinite hold period.

24. Section 2.14 of NI 45-102 cannot be used by the Canadian Owners with respect to the first trade of the Canadian Securities because, as at the date of distribution of the Canadian Securities, residents of Canada owned directly or indirectly more than 10% of the issued and outstanding securities of the Applicant.

25. Except for the requirements set out in subsections 2.14(1)(b) and 2.14(2)(c) of NI 45-102, all applicable conditions to the resale of the Canadian Securities contained in section 2.14 of NI 45-102 are satisfied.

26. As required by the rules of the NASDAQ, holders of Canadian Securities who are residents of Canada will receive copies of all materials provided to all other holders of Common Shares.

27. Any resale of the Canadian Securities is expected to be effected through the facilities of the NASDAQ as there is currently no market for the common shares in Canada.

Decision

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.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted provided that:

(a) the Applicant:

(i) was not a reporting issuer in any jurisdiction of Canada at the distribution date; or

(ii) is not a reporting issuer in any jurisdiction of Canada at the date of the trade of Canadian Securities;

and

(b) the first trade of Canadian Securities is executed through the facilities of NASDAQ or on another exchange or market outside of Canada or to a person or company outside of Canada.