Denbridge Capital Corporation - MRRS Decision

April 24, 2001

MRRS Decision

IN THE MATTER OF

THE SECURITIES LEGISLATION

OF THE PROVINCES OF QUEBEC, ONTARIO AND BRITISH COLUMBIA

AND

IN THE MATTER OF

DENBRIDGE CAPITAL CORPORATION

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of the provincesof Quebec, Ontario and British Columbia (the "Jurisdictions") has received an application from Denbridge CapitalCorporation (the "Filer") under the securities legislation of the Jurisdictions (the "Legislation") for an exemption from theregistration requirements and prospectus requirements (the "Registration Requirements" and "ProspectusRequirements", respectively), each as defined in National Instrument 14-101 - Definitions, in respect of certain securitiesto be issued by the Filer in satisfaction of certain debt;

AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulator for this application;

AND WHEREAS the Filer has represented to the Decisions Makers that:

1. The Filer's head office is located at 130 Adelaide Avenue West, Suite 2320,Toronto, Ontario, M5H 3P5.

2. The Filer has been a reporting issuer in each of Quebec and Ontario for more than 12 months.

3. The common shares in the capital stock of the Filer (the "Common Shares") are listed and posted for tradingon The Toronto Stock Exchange Inc. (the "TSE").

4. The Filer is an investment company whose objective is to invest in various companies during the start-up andgrowth phases of their economic development.

5. Currently, the Filer's sole investment is in Denbridge Digital Limited ("DDL"), in which it holds approximately an86% equity interest. DDL's products include radar displays for fixed, mobile and portable marine and ATC (airtraffic control) applications; radar tracking and vessel traffic management information systems; offshore platformprotection systems, raw radar video compression, decompression and transmission systems; and wirelessproducts that allow for remote data gathering of environmental data, traffic analysis, telecommunication capacityand compressed video/data transmission utilizing cellular technologies.

6. DDL requires an additional infusion of cash, and in order to be in a position to be able to raise such additionalfunds on behalf of DDL, the Filer plans to convert approximately $21 million of debt into equity (the "DebtConversion") and thereby render itself free of all debt other than trade payables. Thereafter, the Filer plans toconduct a private placement of approximately $3 million (the "Private Placement") to finance the ongoingoperations of DDL.

7. The Debt Conversion and the Private Placement shall have identical terms. Specifically, units will be issuedon the basis of one unit (a "Unit") for each $0.075 converted or invested, as the case may be. Each Unit shallbe comprised of one Common Share and one-half of a Common Share purchase warrant (a "PurchaseWarrant"). Each whole Purchase Warrant shall entitle its holder to receive one Common Share at an exerciseprice of $0.09 at any time during the five-year period following its issuance.

8. Upon completion of the Debt Conversion and the Private Placement, the Common Shares issued in connectionwith the Debt Conversion will represent approximately 83% of the issued and outstanding Common Shares ofthe Filer.

9. Both the Debt Conversion and the Private Placement received the conditional approval of the TSE onNovember 3, 2000. As per the requirements of the TSE, the shareholders of the Filer approved the DebtConversion and the Private Placement at a special meeting of shareholders held in Toronto on December 18,2000 by a 99.60% and 99.89% majority, respectively.

10. The claims of the creditors (the "Creditors") to whom the Units are proposed to be issued in full settlementthereof arise from various different sources and have been incurred for value on commercially reasonableterms. None of the claims of the Creditors has been outstanding for less than 12 months. Six Creditors havingclaims in the aggregate amount of $4,835,831 do not act at arm's length with the Filer.

11. The following table sets out the number of Creditors residing in each of the Jurisdictions, the value of theirclaims and the proportion that each Jurisdiction represents of the total value of outstanding debt beingconverted:

Percentage (%) of

Number of Creditors Value of Claims ($) Total Debt

Quebec 39 10,350,769 50.77

Ontario 7 2,777,383 13.62

British Columbia 3 649,542 3.19

Outside Canada 11 6,609,709 32.42

Total 60 20,387,403 100.00

12. The Filer is in financial difficulty and does not have sufficient capital available to satisfy the outstanding claimsof the Creditors. The claims of the Creditors were incurred with the expectation that they would be satisfied incash and not with Common Shares.

13. The Filer is currently in the process of meeting with each of the Creditors on an individual basis and has beenadvised by them that an important factor in having them agree to the Debt Conversion is that the Units, meaningthe Common Shares, and the Common Shares issuable upon the exercise of the Purchase Warrants (the"Warrant Shares"), be freely tradeable following their issuance and not subject to any statutory hold period.

14. The Filer has not received the type of relief set out in this MRRS Decision Document from any of theJurisdictions in the past 12 months.

AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers under the Legislation is that the Registration Requirements and theProspectus Requirements of the Legislation shall not apply to trades, by or on behalf of the Filer, of Common Shares,Purchase Warrants and Warrant Shares to the Creditors in connection with the Debt Conversion provided that:

(i) the first trade in a Jurisdiction of Purchase Warrants distributed in reliance on this Decision shall bedeemed a distribution to the public under the Legislation of such Jurisdiction; and

(ii) the first trade in a Jurisdiction of Common Shares distributed in reliance on this Decision and WarrantShares acquired upon the exercise of Purchase Warrants distributed in reliance on this Decision shallbe deemed to be a distribution to the public under the Legislation of such Jurisdiction (the "ApplicableLegislation") unless:

(a) at the time of the first trade, the Filer is and has been a reporting issuer under the ApplicableLegislation for the 12 months immediately preceding the trade or, if the Filer is not a reportingissuer under the Applicable Legislation, the Filer has filed all continuous disclosuredocuments filed by it in the Jurisdictions in which it is a reporting issuer, for a period of atleast 12 months immediately preceding the date of the trade, with the Decision Maker of theJurisdiction;

(b) no unusual effort is made to prepare the market or create a demand for the Common Shares;

(d) if the seller of the securities is an insider or officer of the Filer, the seller has no reasonablegrounds for believing that the Filer is in default of any requirement of the ApplicableLegislation; and

(e) except in Quebec, the trade is not a trade from the holdings of any person, company orcombination of persons or companies that holds a sufficient number of securities of the Filerso as to affect materially the control of the Filer or more than twenty percent of theoutstanding voting securities of the Filer, except where there is evidence showing that theholding of those securities does not affect materially the control of the Filer.

April 24, 2001.

"Paul M. Moore" "Stephen N. Adams"