Request for partial revocation of cease tradeorder. Cease trade order originally issued against MTW SolutionsOnline Inc. (MTW) for its failure to file interim financialstatements for quarter ended September 30, 2001. Request grantedfor limited purpose of permitting Applicants to transfer commonshares of MTW to fulfil the terms of a court-sanctioned settlementagreement. All remaining common shares of MTW remain subjectto cease trade order.
Securities Act, R.S.O. 1990, c. S.5, as am.,section 144.
Ontario Securities Commission 5.9 Escrow Guidelines-- Industrial Issuers.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5,AS AMENDED (the "Act")
IN THE MATTER OF
MTW SOLUTIONS ONLINE INC.
WHEREAS by an assignment made pursuantto section 6 of the Act and dated March 10, 1995, as amendedon November 9, 1995 (the "Assignment"), the OntarioSecurities Commission (the "Commission") assignedto each Director (as defined in the Act) certain powers andduties of the Commission under section 144 of the Act to revokeor vary any decision made by a Director;
WHEREAS a temporary cease trade orderwas issued against MTW Solutions Online Inc. (the "Company")on December 7, 2001, which order was extended by the Directoron December 19, 2001 (the "Cease Trade Order");
AND WHEREAS the Cease Trade Order wasimposed on the basis that the Company was in default of certainfiling requirements and the Company remains in default of suchfiling requirements;
AND WHEREAS James L. Tuff and JonathanM. Mah (the "Applicants") are holders of common shares(the "Shares") in the capital of the Company;
AND WHEREAS the Applicants have madean application to the Commission for an order of partial revocationof the Cease Trade Order pursuant to section 144 of the Actin order to fulfil the terms of a court-sanctioned settlementagreement, as amended, pursuant to which the Applicants (throughtwo Ontario corporations wholly owned by the Applicants) haveagreed to transfer their Shares to 627324 Ontario Ltd. and RussmirCapital Ltd.;
AND UPON considering the applicationand the recommendation of the staff of the Commission;
AND UPON the Applicants having representedto the Commission as follows:
1. The Company is engaged in the development,marketing, distribution and integration of database software,including payroll and other accounting applications. The Companywas incorporated under the laws of the Province of Ontarioon April 16, 1996.
2. The authorized capital of the Company consistsof an unlimited number of Shares, of which 12,543,001 Shareswere issued and outstanding as of January 6, 2003. As of thesame date, there were 2,033,000 options to acquire 2,033,000Shares outstanding.
3. The Company had three shareholders at thetime of its incorporation: the Applicants and Willy Wong (the"Founders" and each, a "Founder"), eachholding an equal share of 2,250,000 Shares in the capitalof the Company. In March 1998, the Company offered up to 2,000,000common shares at a price of $0.75 per share in an initialpublic offering (the "IPO").
4. In order to comply with the requirementsof Commission Policy 5.9 Escrow Guidelines -- IndustrialIssuers, the Applicants entered into an escrow agreement(the "Escrow Agreement") at the time of the IPOand deposited into escrow the 2,250,000 Shares owned by eachof them.
5. As a result of the IPO, the amount of equityin the Company held by each Founder was reduced from one-thirdto 18.2%. At that time, the Founders (who were all directorsof the Company) were joined by three new directors: GrantEckberg, Gregory Bailey and Ricardo Ferreira.
6. The Shares are listed on the TSX VentureExchange under the stock symbol YMW. On the last trading dayprior to the imposition of the Cease Trade Order, the tradingprice of the Shares was $0.01 per Share.
7. James L. Tuff ("Tuff") was adirector and president of the Company from the date of itsincorporation and chief executive officer since December 1997.Tuff left his position as officer on October 24, 2000 andas director on June 5, 2001. Jonathan M. Mah ("Mah")was a director and vice-president, operations and secretaryof the Company from the date of its incorporation until hisdeparture on October 24, 2000.
8. Pursuant to the terms of the Escrow Agreement,the Shares held in escrow were to be released on a prorata basis on certain release dates. As of the date hereof,the Applicants have no remaining Shares in escrow. The remainingescrowed shares were released under the terms of the EscrowAgreement on December 6, 2002.
9. Other parties (either direct or indirect)to the Escrow Agreement included Willy Wong, Director of theCompany; Grant Eckberg, Director, President, Chief ExecutiveOfficer and Secretary of the Company; Deborah Fedorak, spouseof Grant Eckberg; and 560071 B.C. Inc., a company owned equallyby each of Grant Eckberg and Deborah Fedorak.
10. On December 12, 2000, the Applicants beganlitigation by way of Statement of Claim filed against theCompany, Willy Wong, Grant Eckberg, Gregory Bailey and RicardoFerreira (collectively, the "Defendants"). The Statementof Claim alleges, inter alia, that the Applicants werewrongfully terminated from their managerial positions at theCompany.
11. A court-sanctioned settlement agreementwas entered into between the Applicants and the Defendants,evidenced by Minutes of Settlement (Ontario Superior Courtof Justice Court File No. CV-202273), as amended (the "SettlementAgreement"). In accordance with the terms of the SettlementAgreement, Russmir Capital Inc. and 627324 Ontario Ltd. (the"Purchasers") will purchase 2,281,500 common sharesin the Company from each of the Applicants, including the675,000 Shares held in escrow by each of the Applicants.
12. The Applicants' relationship with managementand the board of directors of the Company has deterioratedand as a result, a continuing relationship between the Applicantsand the Company is no longer feasible. The Applicants havetherefore been unable to convince the Company to remedy itsfiling default.
13. Russmir Capital Inc. ("Russmir")is wholly owned by Vivienne Bailey ("Ms. Bailey"),who is also the sole officer of Russmir. Ms. Bailey is a directorof the Company and is therefore an "insider" ofthe Company (as such term is defined under the Act).
14. 627324 Ontario Ltd. ("OnCorp")is wholly owned by Gregory Bailey ("Mr. Bailey"),who is also the sole officer of OnCorp. Mr. Bailey is Ms.Bailey's son.
15. Each of Mr. and Ms. Bailey fits withinthe definition of "accredited investor" containedin section 1.1 of OSC Rule 45-501 Exempt Distributions.
16. The Applicants understand that the CeaseTrade Order will remain in effect once the Applicants havetransferred their 4,563,000 Shares total (2,281,500 Shareseach) to Russmir and OnCorp and that all other Shares willremain subject to the Cease Trade Order.
17. The Applicants understand that if andwhen an application is made to the Commission to fully revokethe Cease Trade Order, the Commission may require, as a conditionof fully revoking the Cease Trade Order, that, inter alia,the Company remedy its filing default(s) and ensure that itspublic disclosure record is updated.
UPON considering the application andthe recommendation of the Staff of the Commission;
AND UPON the Director being satisfiedthat to do so would not be prejudicial to the public interest;
IT IS ORDERED, pursuant to section 144of the Act, that the Cease Trade Order is hereby partially revokedon the following conditions:
(a) only the 675,000 Shares currently heldby each of the Applicants may be traded as described in paragraph(b) below;
(b) the Applicants may each only transfer2,281,500 Shares (4,563,000 Shares total) to 627324 OntarioLtd. and Russmir Capital Ltd. on or prior to June 9, 2003in accordance with the terms of the Settlement Agreement;and
(c) once the Applicants have transferred their4,563,000 Shares total (2,281,500 Shares each) to 627324 OntarioLtd. and Russmir Capital Ltd., the Cease Trade Order willremain in effect and all other Shares will remain subjectto the Cease Trade Order.
June 6, 2003.