Securities Law & Instruments

Headnote

Subsection 74(1) - registration and prospectusrelief granted regarding trades in shares of non-reporting issuersin connection with corporate reorganization utilizing exchangeableshare structure - first trade relief granted in respect of tradesin shares of U.S. non-reporting issuer provided a de minimusCanadian market at time of first trade and certain other conditionsare met.

Statutes Cited

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

Rules Cited

Ontario Securities Commission Rule 45-501 -Exempt Distributions.

IN THE MATTER OF

THE SECURITIES ACT

(R.S.O. 1990, Chapter S. 5,as amended (the "Act"))

AND

IN THE MATTER OF

REV D NETWORKS INC.

AND

REV D NETWORKS (US) INC.

 

RULING

(Subsection 74(1))

UPON the application of Rev D NetworksInc. ("Rev D Canada") and Rev D Networks (US) Inc.("Rev D") to the Ontario Securities Commission (the"Commission") for a ruling, pursuant to subsection74(1) of the Act, that certain trades in securities relatingto a reorganization and subsequent financing of Rev D Canadaand Rev D shall not be subject to section 25 or 53 of the Act.

AND UPON considering the applicationand the recommendation of staff of the Commission;

AND UPON Rev D Canada and Rev D havingrepresented to the Commission as follows:

1. In contemplation of a proposed financingby certain investors, Rev D Canada determined that a reorganizationof its shareholdings (the "Reorganization") wasin the best interests of its shareholders. The Reorganizationwas completed on December 20, 2002.

2. As part of the Reorganization, Rev D wascaused to be incorporated. Rev D is a corporation incorporatedunder the laws of the State of Delaware.

3. None of the shares of Rev D are listedor posted for trading on any exchange. Rev D is not a reportingissuer in Ontario.

4. The authorized capital of Rev D consistsof common stock and preferred stock. Rev D is authorized toissue 24,826,923 shares of common stock, par value $0.000001per share, and 32,884,615 shares of preferred stock, par value$0.000001 per share. The preferred stock is divided into series.The first series consists of 16,750,000 shares and is designatedSeries A Preferred Stock ("Series A Preferred Stock").Shares of Series A Preferred Stock are convertible into sharesof common stock of Rev D and carry voting rights equivalentto the voting rights of shares of common stock of Rev D (aswell as certain other rights). The second series of PreferredStock consists of 11,750,000 shares is designated Series ASpecial Voting Stock ("Series A Special Voting Stock").Shares of Series A Special Voting Stock are held by holdersof Series A Exchangeable Preferred Shares of Rev D Canada(described below) and carry voting rights equivalent to thevoting rights of shares of Series A Preferred Stock. The thirdseries consists of 4,384,615 shares is designated ExchangeableCommon Share Special Voting Stock ("Exchangeable CommonShare Special Voting Stock"). Shares of ExchangeableCommon Share Special Voting Stock are held by holders of ExchangeableCommon Shares of Rev D Canada (described below) and carryvoting rights equivalent to the voting rights of shares ofcommon stock of Rev D.

5. Rev D Canada is a company incorporatedunder the Canada Business Corporations Act (the "CBCA").

6. None of the shares of Rev D Canada arelisted or posted for trading on any exchange. Rev D Canadais not a reporting issuer in Ontario.

7. The authorized capital of Rev D Canadaconsists of an unlimited number of common shares ("RevD Canada Common Shares") and an unlimited number of preferredshares issuable in series. Immediately prior to the completionof the Reorganization, there were issued and outstanding 1,407,692Rev D Canada Common Shares. Further, Rev D Canada had 17 shareholders(the "Rev D Canada Shareholders"), all of whichwere directors, officers or employees of Rev D Canada, exceptfor a trustee (the "Trustee") who held certain RevD Canada Common Shares in trust for anticipated future employees(the "Transferred Employees"). No preferred sharesof Rev D Canada were issued and outstanding.

8. As required under the CBCA, the Rev D CanadaShareholders approved articles of amendment on December 20,2002 as follows: (1) the Rev D Canada Shareholders approvedthe creation of a new class of non-voting exchangeable shares(the "Exchangeable Common Shares") and a new classof special voting shares (the "Rev D Canada Special VotingShares"); (2) the Rev D Canada Shareholders approvedthe exchange of each issued and outstanding Rev D Canada CommonShare held by the Rev D Canada Shareholders for one ExchangeableCommon Share and one Rev D Canada Special Voting Share; and(3) the Rev D Canada Shareholders approved the creation ofa new class of non-voting exchangeable preferred shares (the"Series A Exchangeable Preferred Shares").

9. Pursuant to the Reorganization, Rev D CanadaShareholders obtained in exchange for each Rev D Canada CommonShare, one Exchangeable Common Share and one Rev D CanadaSpecial Voting Share and were further required to purchasefrom Rev D, for nominal consideration, one share of ExchangeableCommon Share Special Voting Stock for each Exchangeable CommonShare received pursuant to the exchange.

10. Immediately following the completion ofthe Reorganization, the Transferred Employees (nine in total)each received an allotted number of Rev D Canada Common Sharesand an equal number of Rev D Canada Special Voting Sharesand shares of Exchangeable Common Share Special Voting Stock,which were previously issued to the Trustee and held in trustpending the completion of the Reorganization. The Rev D CanadaShareholders and the Transferred Employees are referred tocollectively hereinafter as the "Rev D Founders".

11. The Rev D Founders each received ExchangeableCommon Shares, Rev D Canada Special Voting Shares and sharesof Exchangeable Common Share Special Voting Stock under existingstatutory prospectus and registration exemptions.

12. Certain significant investors providingfinancing to Rev D Canada (the "Group A Investors")had the choice of receiving either Series A Exchangeable PreferredShares and an equal number of Rev D Canada Special VotingShares, or shares of Series A Preferred Stock, as considerationfor their investment. All of the Group A Investors were either"accredited investors" within the meaning of OntarioSecurities Commission Rule 45-501 ("OSC Rule 45-501")or otherwise exempt under the securities legislation of thejurisdiction in which they are resident. A Group A Investorwho elected to receive Series A Exchangeable Preferred Shareswas also required to purchase from Rev D, for nominal consideration,one share of Series A Special Voting Stock for each SeriesA Exchangeable Preferred Share received. A Group A Investorwho elected to receive shares of Series A Preferred Stockwas also required to purchase from Rev D Canada, for nominalconsideration, one Rev D Canada Special Voting Share for eachSeries A Exchangeable Preferred Share received.

13. Certain other significant investors inRev D Canada (the "Group B Investors") receivedExchangeable Common Shares and an equal number of Rev D CanadaSpecial Voting Shares, and/or Series A Exchangeable PreferredShares and an equal number of Rev D Canada Special VotingShares, in satisfaction, or partial satisfaction, of debtsowed to such Group B Investors for property transferred toRev D Canada. Group B Investors were required to purchasefrom Rev D for nominal consideration, one share of ExchangeableCommon Share Special Voting Stock for each Exchangeable CommonShare received or one share of Series A Special Voting Stockfor each Series A Exchangeable Preferred Share received (asapplicable). All investors comprising the Group B Investorswere "accredited investors" within the meaning ofOSC Rule 45-501.

14. As part of the Reorganization, Rev D subscribedfor one Rev D Canada Common Share. Immediately following thecompletion of the Reorganisation, Rev D owned all of the issuedand outstanding Rev D Canada Common Shares.

15. The holders of Exchangeable Common Shareshave economic rights which are, as nearly as practicable,equivalent to the holders of shares of common stock of RevD. This result is achieved by means of a support agreement(the "Support Agreement") entered into between RevD and Rev D Canada and an exchange agreement (the "ExchangeAgreement") entered into between Rev D, Rev D Canadaand the holders of Exchangeable Common Shares.

16. Subject to prior rights of the SeriesA Exchangeable Preferred Shares, the Exchangeable Common Sharesrank prior to the Rev D Canada Special Voting Shares and theRev D Canada Common Shares with respect to the payment ofdividends and the distribution of assets in the event of aliquidation, dissolution or winding-up of Rev D Canada.

17. The rights, privileges, restrictions andconditions attaching to the Exchangeable Common Shares (the"Exchangeable Common Share Provisions") providethat each holder is entitled to receive dividends from RevD Canada payable at the same time as, and equivalent to, eachdividend paid by Rev D on the shares of common stock of RevD. Subject to the overriding call right of Rev D or a Canadiansubsidiary of Rev D other than Rev D Canada (a "PermittedSubsidiary") described below, on the liquidation, dissolutionor winding-up of Rev D Canada, a holder of Exchangeable CommonShares is entitled to receive from Rev D Canada for each ExchangeableCommon Share held an amount equal to the current market priceof a share of common stock of Rev D, to be satisfied by thedelivery of one share of common stock of Rev D, together withall declared and unpaid dividends on each such ExchangeableCommon Share held by the holder on any dividend record dateprior to the date of liquidation, dissolution or winding-up(such aggregate amount, the "Liquidation Consideration").Upon a proposed liquidation, dissolution or winding-up ofRev D Canada, Rev D (or Permitted Subsidiary) has an overridingcall right (the "Liquidation Call Right") to purchaseall of the outstanding Exchangeable Common Shares from theholders thereof (other than Rev D or its affiliates) for aprice per share equal to the Liquidation Consideration.

18. The Exchangeable Common Shares are non-voting(except as required by the Exchangeable Common Share Provisionsor by applicable law) and are retractable at the option ofthe holder at any time. Subject to the overriding call rightof Rev D (or Permitted Subsidiary) described below, upon retraction,the holder is entitled to receive from Rev D Canada for eachExchangeable Common Share retracted an amount equal to thecurrent market price of a share of common stock of Rev D,to be satisfied by the delivery of one share of common stockof Rev D, together with all declared and unpaid dividendson each such retracted Exchangeable Common Share held by theholder on any dividend record date prior to the date of retraction(such aggregate amount, the "Retraction Consideration").Upon being notified by Rev D Canada of a proposed retractionof Exchangeable Common Shares, Rev D (or Permitted Subsidiary)has an overriding call right (the "Retraction Call Right")to purchase from the holder all of the Exchangeable CommonShares that are the subject of the retraction notice for aprice per share equal to the Retraction Consideration.

19. Subject to the overriding call right ofRev D (or Permitted Subsidiary) described below, Rev D Canadamay redeem all the Exchangeable Common Shares then outstandingat any time upon the occurrence of particular events specifiedin the Exchangeable Common Share Provisions (the "RedemptionDate"). The board of directors of Rev D Canada may acceleratethe Redemption Date in certain circumstances which are alsoset out in the Exchangeable Common Share Provisions. Uponsuch redemption, a holder is entitled to receive from RevD Canada for each Exchangeable Common Share redeemed an amountequal to the current market price of a share of common stockof Rev D, to be satisfied by the delivery of one share ofcommon stock of Rev D, together with all declared and unpaiddividends on each such redeemed Exchangeable Common Shareheld by the holder on any dividend record date prior to thedate of redemption (such aggregate amount, the "RedemptionConsideration"). Upon being notified by Rev D Canadaof a proposed redemption of Exchangeable Common Shares, RevD (or Permitted Subsidiary) has an overriding call right (the"Redemption Call Right") to purchase from the holdersall of the outstanding Exchangeable Common Shares (other thanRev D or its affiliates) for a price per share equal to theRedemption Consideration.

20. Under the Exchange Agreement, the holdersof Exchangeable Common Shares are provided a holder exchangeright (the "Optional Exchange Right"), exercisableupon the insolvency of Rev D Canada, to require Rev D to purchasefrom the holder all or any part of his or her ExchangeableCommon Shares. The purchase price for each Exchangeable CommonShare purchased by Rev D is an amount equal to the currentmarket price of a share of common stock of Rev D, to be satisfiedby the delivery of one share of common stock of Rev D to theholder, together with an additional amount equivalent to alldeclared and unpaid dividends on each such Exchangeable CommonShare held by such holder on any dividend record date priorto the closing of the purchase and sale.

21. Further, under the Exchange Agreement,upon the liquidation, dissolution or winding-up of Rev D,Rev D is required to purchase all outstanding ExchangeableCommon Shares, and each holder of Exchangeable Common Sharesis required to sell all of his or her Exchangeable CommonShares (such purchase and sale obligations are hereafter referredto as the "Automatic Exchange Right"), for a purchaseprice per share equal to the current market price of a shareof common stock of Rev D, to be satisfied by the deliveryof one share of common stock of Rev D to the holder for eachExchangeable Common Share, together with an additional amountequivalent to all declared and unpaid dividends on each suchExchangeable Common Share held by such holder on any dividendrecord date prior to the closing of the purchase and sale.

22. The Support Agreement provides that RevD will not declare or pay any dividend on the shares of commonstock of Rev D unless Rev D Canada simultaneously declaresand pays an equivalent dividend on the Exchangeable CommonShares, and that Rev D will ensure that Rev D Canada willbe able to honour the redemption and retraction rights anddissolution entitlements that are attributes of the ExchangeableCommon Shares under the Exchangeable Common Share Provisionsand the related redemption, retraction and liquidation callrights described above.

23. The Support Agreement further providesthat, without the prior approval of the holders of the ExchangeableCommon Shares, actions such as distributions of stock dividends,options, rights and warrants for the purchase of securitiesor other assets, subdivisions, reclassifications, reorganizationsand other changes cannot be taken in respect of the sharesof common stock of Rev D without the same or an economicallyequivalent action being taken in respect of the ExchangeableCommon Shares.

24. Possible future trades in securities relatingto the Exchangeable Common Shares and securities receivedpursuant to the exchange rights attaching to the ExchangeableCommon Shares include the following:

(a) the issuance of shares of common stockof Rev D by Rev D (or Permitted Subsidiary, and such tradesor transfers between Rev D and Permitted Subsidiary as maybe required to carryout the call right obligations describedherein) from time to time to enable shares of common stockof Rev D to be delivered to a holder of Exchangeable CommonShares, and the subsequent delivery thereof to such holder,upon: (i) a holder's retraction of Exchangeable Common Shares;(ii) the exercise of the Retraction Call Right; (iii) theredemption of Exchangeable Common Shares by Rev D Canada;(iv) the exercise of the Redemption Call Right; (v) theliquidation, dissolution or winding-up of Rev D Canada;and (vi) the exercise of the Liquidation Call Right;

(b) the transfer of Exchangeable CommonShares by the holder to Rev D Canada upon: (i) the holder'sretraction of Exchangeable Common Shares; (ii) the redemptionof Exchangeable Common Shares by Rev D Canada; and (iii)the liquidation, dissolution or winding-up of Rev D Canada.

(c) the transfer of Exchangeable CommonShares by the holder to Rev D (or Permitted Subsidiary)upon: (i) the exercise of the Retraction Call Right, (ii)the exercise of the Redemption Call Right; and (iii) theexercise of the Liquidation Call Right;

(d) the transfer of Exchangeable CommonShares by the holder to Rev D upon exercise of the OptionalExchange Right or the occurrence of the Automatic ExchangeRight;

(e) the issuance and delivery of sharesof common stock of Rev D by Rev D to a holder of ExchangeableCommon Shares upon the exercise of the Optional ExchangeRight or the Automatic Exchange Right; and

(f) the redemption of Rev D Canada SpecialVoting Shares by Rev D Canada, and the redemption of sharesof Exchangeable Common Share Special Voting Stock by RevD (collectively, the "Exchangeable Common Share Trades").

25. The holders of Series A Exchangeable PreferredShares have economic rights which are, as nearly as practicable,equivalent to the holders of shares of Series A PreferredStock. This result is achieved by means of a support agreement(the "Preferred Share Support Agreement") enteredinto between Rev D and Rev D Canada and an exchange agreement(the "Preferred Share Exchange Agreement") enteredinto between Rev D, Rev D Canada and the holders of SeriesA Exchangeable Preferred Shares.

26. The Series A Exchangeable Preferred Shares,rank prior to the Exchangeable Common Shares, the Rev D CanadaSpecial Voting Shares and the Rev D Canada Common Shares withrespect to the payment of dividends and the distribution ofassets in the event of a liquidation, dissolution or winding-upof Rev D Canada.

27. The rights, privileges, restrictions andconditions attaching to the Series A Exchangeable PreferredShares (the "Series A Exchangeable Preferred Share Provisions")provide that each holder is entitled to receive dividendsfrom Rev D Canada payable at the same time as, and equivalentto, each dividend paid by Rev D on the shares of Series APreferred Stock. Subject to the overriding call right of RevD (or Permitted Subsidiary) described below, on the liquidation,dissolution or winding-up of Rev D Canada, a holder of SeriesA Exchangeable Preferred Shares is entitled to receive fromRev D Canada for each Series A Exchangeable Preferred Shareheld an amount equal to the current market price of a shareof Series A Preferred Stock, to be satisfied by the deliveryof one share of Series A Preferred Stock, together with alldeclared and unpaid dividends on each such Series A ExchangeablePreferred Share held by the holder on any dividend recorddate prior to the date of liquidation, dissolution or winding-up(such aggregate amount, the "Preferred Liquidation Consideration").Upon a proposed liquidation, dissolution or winding-up ofRev D Canada, Rev D (or Permitted Subsidiary) has an overridingcall right (the "Preferred Liquidation Call Right")to purchase all of the outstanding Series A Exchangeable PreferredShares from the holders thereof (other than Rev D or its affiliates)for a price per share equal to the Preferred Liquidation Consideration.

28. The Series A Exchangeable Preferred Sharesare non-voting (except as required by the Series A ExchangeablePreferred Share Provisions or by applicable law) and are retractableat the option of the holder at any time. Subject to the overridingcall right of Rev D (or Permitted Subsidiary) described below,upon retraction the holder is entitled to receive from RevD Canada for each Series A Exchangeable Preferred Share retractedan amount equal to the current market price of a share ofSeries A Preferred Stock, to be satisfied by the deliveryof one share of Series A Preferred Stock, together with alldeclared and unpaid dividends on each such retracted SeriesA Exchangeable Preferred Share held by the holder on any dividendrecord date prior to the date of retraction (such aggregateamount, the "Preferred Retraction Consideration").Upon being notified by Rev D Canada of a proposed retractionof Series A Exchangeable Preferred Shares, Rev D (or PermittedSubsidiary) will have an overriding call right (the "PreferredRetraction Call Right") to purchase from the holdersall of the Series A Exchangeable Preferred Shares that arethe subject of the retraction notice for a price per shareequal to the Preferred Retraction Consideration.

29. Subject to the overriding call right ofRev D (or Permitted Subsidiary) described below, Rev D Canadamay redeem all the Series A Exchangeable Preferred Sharesthen outstanding at any time upon the occurrence of particularevents specified in the Series A Exchangeable Preferred ShareProvisions (the "Preferred Redemption Date"). Theboard of directors of Rev D Canada may accelerate the PreferredRedemption Date in certain circumstances which are also setout in the Series A Exchangeable Preferred Share Provisions.Upon such redemption, a holder is entitled to receive fromRev D Canada for each Series A Exchangeable Preferred Shareredeemed an amount equal to the current market price of ashare of Series A Preferred Stock, to be satisfied by thedelivery of one share of Series A Preferred Stock, togetherwith all declared and unpaid dividends on each such redeemedSeries A Exchangeable Preferred Share held by the holder onany dividend record date prior to the date of redemption (suchaggregate amount, the "Preferred Redemption Consideration").Upon being notified by Rev D Canada of a proposed redemptionof Series A Exchangeable Preferred Shares, Rev D (or PermittedSubsidiary) will have an overriding call right (the "PreferredRedemption Call Right") to purchase from the holdersof Series A Exchangeable Preferred Shares all of the outstandingSeries A Exchangeable Preferred Shares (other than Rev D orits affiliates) for a price per share equal to the PreferredRedemption Consideration.

30. Under the Preferred Share Exchange Agreement,the holders of Series A Exchangeable Preferred Shares areprovided a holder exchange right (the "Preferred ShareOptional Exchange Right"), exercisable upon the insolvencyof Rev D Canada, to require Rev D to purchase from the holderall or any part of his or her Series A Exchangeable PreferredShares. The purchase price for each Series A ExchangeablePreferred Share purchased by Rev D will be an amount equalto the current market price of a share of Series A PreferredStock, to be satisfied by the delivery of one share of SeriesA Preferred Stock to the holder, together with an additionalamount equivalent to all declared and unpaid dividends oneach such Series A Exchangeable Preferred Share held by suchholder on any dividend record date prior to the closing ofthe purchase and sale.

31. Further, under the Preferred Share ExchangeAgreement, upon the liquidation, dissolution or winding-upof Rev D, Rev D is required to purchase each outstanding SeriesA Exchangeable Preferred Share, and each holder is requiredto sell all of his or her Series A Exchangeable PreferredShares (such purchase and sale obligations are hereafter referredto as the "Preferred Share Automatic Exchange Right"),for a purchase price per share equal to the current marketprice of a Series A Exchangeable Preferred Share, to be satisfiedby the delivery of one share of Series A Preferred Stock tothe holder for each Series A Exchangeable Preferred Share,together with an additional amount equivalent to the fullamount of all declared and unpaid dividends on each such SeriesA Exchangeable Preferred Share held by such holder on anydividend record date prior to the closing of the purchaseand sale.

32. The Preferred Share Support Agreementprovides that Rev D will not declare or pay any dividend onthe shares of Series A Preferred Stock unless Rev D Canadasimultaneously declares and pays an equivalent dividend onthe Series A Exchangeable Preferred Shares, and that Rev Dwill ensure that Rev D Canada will be able to honour the redemptionand retraction rights and dissolution entitlements that areattributes of the Series A Exchangeable Preferred Shares underthe Series A Exchangeable Preferred Share Provisions and therelated redemption, retraction and liquidation call rightsdescribed above.

33. The Preferred Share Support Agreementfurther provides that, without the prior approval of the holdersof the Series A Exchangeable Preferred Shares, actions suchas distributions of stock dividends, options, rights and warrantsfor the purchase of securities or other assets, subdivisions,reclassifications, reorganizations and other changes cannotbe taken in respect of the shares of Series A Preferred Stockwithout the same or an economically equivalent action beingtaken in respect of the Series A Exchangeable Preferred Shares.

34. Possible future trades in securities relatingto the Series A Exchangeable Preferred Shares and securitiesreceived pursuant to the exchange rights attaching to theSeries A Exchangeable Preferred Shares include the following:

(a) the issuance of shares of Series A PreferredStock by Rev D (or Permitted Subsidiary, and such any tradesor transfers between Rev D and Permitted Subsidiary as maybe required to carryout the call right obligations describedherein) from time to time to enable shares of Series A PreferredStock to be delivered to a holder of Series A ExchangeablePreferred Shares, and the subsequent delivery thereof tosuch holder, upon: (i) a holder's retraction of Series AExchangeable Preferred Shares; (ii) the exercise of thePreferred Retraction Call Right; (iii) the redemption ofSeries A Exchangeable Preferred Shares by Rev D Canada;(iv) the exercise of the Preferred Redemption Call Right;(v) the liquidation, dissolution or winding-up of Rev DCanada; and (vi) the exercise of the Preferred LiquidationCall Right;

(b) the transfer of Series A ExchangeablePreferred Shares by the holder to Rev D Canada upon: (i)the holder's retraction of Series A Exchangeable PreferredShares; (ii) the redemption of the Series A ExchangeablePreferred Shares by Rev D Canada; and (iii) the liquidation,dissolution or winding-up of Rev D Canada;

(c) the transfer of Series A ExchangeablePreferred Shares by the holder to Rev D (or Permitted Subsidiary)upon: (i) the exercise of the Preferred Retraction CallRight; (ii) the exercise of the Preferred Redemption CallRight; and (iii) the exercise of the Preferred LiquidationCall Right;

(d) the transfer of Series A ExchangeablePreferred Shares by a holder to Rev D upon exercise of thePreferred Share Optional Exchange Right or the occurrenceof the Preferred Share Automatic Exchange Right;

(e) the issuance and delivery of sharesof Series A Preferred Stock by Rev D to a holder of SeriesA Exchangeable Preferred Shares upon the exercise of thePreferred Share Optional Exchange Right or the PreferredShare Automatic Exchange Right;

(f) the redemption of Rev D Canada SpecialVoting Shares by Rev D Canada, and the redemption of sharesof Series A Special Voting Stock by Rev D; and

(g) the issuance and delivery of sharesof common stock of Rev D by Rev D to a holder of sharesof Series A Preferred Stock upon the exercise of conversionright of shares of Series A Preferred Stock (collectively,the "Exchangeable Preferred Share Trades").

35. As a result of the use of an exchangeableshare structure, discretionary relief may be necessary forthe Exchangeable Common Share Trades and Exchangeable PreferredShare Trades.

AND WHEREAS the Commission is satisfiedthat to do so would not be prejudicial to the public interest;

IT IS RULED, pursuant to subsection 74(1)of the Act, that sections 25 and 53 of the Act shall not applyto the Exchangeable Common Share Trades and Exchangeable PreferredShare Trades, provided that the first trade of a security acquiredpursuant to this Ruling shall be a distribution unless:

(a) such first trade if made by a Rev DFounder, complies with section 2.6 of Multilateral Instrument45-102 ("MI 45-102");

(b) such first trade, in any other case,complies with section 2.5 of MI 45-102; or

(c) if at the time of each first trade RevD is not a reporting issuer in any jurisdiction in Canada,the first trade is made through an exchange or a marketoutside Canada, or to a person or company outside of Canada,provided that at the time of such trade, holders of sharesof common stock of Rev D (together with holders of ExchangeableCommon Shares, Series A Exchangeable Preferred Shares andshares of Series A Preferred Stock considered to be holdersof shares of common stock of Rev D) who are residents ofCanada, do not own, directly or indirectly, more than 10%of the shares of common stock of Rev D and represent innumber, not more than 10% of the total number of owners,directly or indirectly, of common shares of Rev D.

February 28, 2003.

"Paul M. Moore"                   "HowardI. Wetston"