Securities Law & Instruments


Rule 56-501 -- Future distributions of restrictedshares by issuer are exempt from the requirements of section3.1 of Rule 56-501. The obligation to obtain minority shareholderapproval for the reorganization creating the restricted sharesor for any future share distributions is not reasonable. Reorganizationwas completed pursuant to CBCA and CCAA. All outstanding equitywas cancelled as part of the plan of arrangement. Restrictedshare terms in Rule 56-501 are not accurate; Director determinedoutstanding shares are restricted shares and appropriate restrictedshare terms pursuant to section 4.1(2) of Rule 56-501.

Ontario Statutes

Securities Act, R.S.O. 1990, c. S.5, as amended.

Ontario Rules

Rule 56-501-Restricted Shares, (1999) 22.O.S.C.B.6803, corrected (1999) 22 O.S.C.B. 7091.



R.S.O. 1990, CHAPTER S.5,AS AMENDED (the "Act")






(Section 4.2 and Section 4.1(2)of Rule 56-501)

UPON the application of AT&T CanadaInc. ("New AT&T Canada", formerly 6067760 CanadaInc.) to the Director for an exemption pursuant to Section 4.2of Ontario Securities Commission Rule 56-501 ("Rule 56-501")from the requirements of Section 3.1 of Rule 56-501;

AND UPON the application of New AT&TCanada to the Director pursuant to Section 4.1(2) of Rule 56-501for a determination that the appropriate restricted share termsto be used to designate the classes of shares of New AT&TCanada be "Class A Voting Shares" and "ClassB Limited Voting Shares" (collectively, the "Shares");

AND UPON New AT&T Canada having representedto the Director that:

1. New AT&T Canada was incorporated underthe laws of Canada. The registered and principal office ofNew AT&T Canada is located at 200 Wellington Street West,Toronto, Ontario, Canada M5V 3G2.

2. New AT&T Canada is Canada's largestcompetitive national broadband business service provider andcompetitive local exchange carrier and a leading providerof Internet and e-business solutions.

3. New AT&T Canada is and has been a reportingissuer (or the equivalent) since April 1, 2003, in each ofthe provinces and territories of Canada that recognizes thereporting issuer concept and is not in default of its obligationsas a reporting issuer thereunder. New AT&T Canada hasa current AIF for the purposes of National Instrument 44-101.New AT&T Canada is the successor issuer to AT&T CanadaLimited (formerly, AT&T Canada Inc.) a company organizedunder the laws of Canada. AT&T Canada Limited was a reportingissuer (or the equivalent) in each of the provinces and territoriesof Canada that recognizes the reporting issuer concept fromDecember 3, 1997 to May 1, 2003. On April 1, 2003, pursuantto the Plan (as defined herein), AT&T Canada Limited becamea wholly-owned subsidiary of New AT&T Canada.

4. New AT&T Canada's authorized capitalconsists of an unlimited number of Class A Voting Shares andan unlimited number of Class B Limited Voting Shares. As ofMay 30, 2003, New AT&T Canada had 1,161,226 Class A VotingShares and 18,838,735 Class B Limited Voting Shares outstanding.As of May 30, 2003, the market capitalization of New AT&TCanada was approximately $795 million based on the May 30,2003 closing price on The Toronto Stock Exchange of $39.67per Class A Voting Share and of $39.75 per Class B LimitedVoting Share.

5. New AT&T Canada was incorporated forthe purpose of, among other things, effecting an exchangeof the claims of Noteholders (as defined herein) and certainother creditors of its affiliates (collectively with the Noteholders,the "Affected Creditors") in accordance with theprovisions of a consolidated plan of arrangement and reorganization(the "Plan") under the Canada Business CorporationsAct (the "CBCA") and the Companies Creditors'Arrangement Act (Canada) (the "CCAA").

6. AT&T Canada Limited and certain ofits operating subsidiaries, namely AT&T Canada Corp.,AT&T Canada Telecom Services Company, AT&T CanadaFibre Company, MetroNet Fiber US Inc., MetroNet Fiber WashingtonInc. and Netcom Canada Inc. (together with AT&T CanadaLimited, the "AT&T Canada Companies"), soughtand, by order (the "Order") of the Ontario SuperiorCourt of Justice (the "Court"), were granted protectionfrom their creditors pursuant to the CCAA. The Plan and aninformation circular (the "Circular") describingthe Plan and the Order were filed with the Court on January22, 2003. The AT&T Canada Companies had consolidated publicdebt in excess of $4.7 billion.

7. Ancillary proceedings were commenced inthe United States under the U.S. Bankruptcy Code. The ancillaryproceedings formally recognized the CCAA proceedings in Canada.

8. A formal meeting (the "Meeting")of the holders (the "Noteholders") of AT&T CanadaLimited's 7.15% Senior Notes due 2004, 7.625% Senior Notesdue 2005, 7.65% Senior Notes due 2006, 10 5/8% Senior Notesdue 2008, 9.95% Senior Discount Notes due 2008, 10¾%Senior Discount Notes due 2008 and 12% Senior Notes due 2007and the other Affected Creditors was held on February 20,2003, for the purpose of considering and voting on a resolutionto approve the Plan. In connection with the Meeting, the Planand the Circular (which contains prospectus-level disclosurewith respect to New AT&T Canada and AT&T Canada Limited)were mailed to the Affected Creditors on or about January22, 2003. Notice of the Meeting was also published in severalnewspapers of national circulation in Canada and one in theUnited States for two business days commencing on December3, 2002.

9. At the Meeting, the Plan was approved by91% of Affected Creditors representing 99% of the value ofthe proven claims of Affected Creditors present and votingin person or by proxy at the Meeting. The Plan was also approved,upon consideration of the fairness and reasonableness of thePlan, by the Court on February 25, 2003.

10. Upon the implementation of the Plan, AT&TCanada Limited became a wholly-owned subsidiary of New AT&TCanada on April 1, 2003 (the "Plan Implementation Date")in accordance with the provisions of the Plan. In addition,the existing equity of AT&T Canada Limited (includingoptions or other rights to acquire the existing shares ofAT&T Canada Limited) was cancelled without payment ofany compensation.

11. On the Plan Implementation Date, the nameof 6067760 Canada Inc. was changed to "AT&T CanadaInc." and the name of AT&T Canada Inc. was changedfrom "AT&T Canada Inc." to "AT&T CanadaLimited".

12. On the Plan Implementation Date, New AT&TCanada acquired the claims of the Affected Creditors in exchangefor a creditors' equity pool (the "Creditors' EquityPool') of Shares and a cash pool of not less than $200 million(the "Cash Pool"). Under the Plan, each AffectedCreditor received a pro rata share from the Cash Pooland a pro rata share of the Shares from the Creditors'Equity Pool based on their respective claims for distribution.In order to comply with the requirements of the TelecommunicationsAct (Canada), non-Canadians may not hold more than 331/3% of the Class A Voting Shares. Accordingly, non-CanadianAffected Creditors received their pro rata share of:(a) 33 1/3% of the total number of outstanding Class A VotingShares; and (b) subject to the qualification outlined immediatelybelow, 100% of the total number of outstanding Class B LimitedVoting Shares. Canadian Affected Creditors received theirpro rata share of the remaining 66 2/3% of the totalnumber of outstanding Class A Voting Shares. Notwithstandingthe foregoing, the Plan provided that no Affected Creditor,together with any person or group of persons with whom itis acting jointly or in concert, was entitled to receive anumber of Class A Voting Shares which would cause it, togetherwith any person or group of persons with whom it is actingjointly or in concert, to hold in excess of 10% of the outstandingClass A Voting Shares on the implementation of the Plan; instead,Class B Limited Voting Shares were substituted for such excessnumber of shares.

13. Following the implementation of the Plan,the Shares were listed on The Toronto Stock Exchange and theNASDAQ National Market System.

14. The Class B Limited Voting Shares areequal to the Class A Voting Shares in all respects, with thesole exception of voting rights. Specifically, the Class BLimited Voting Shares participate equally with the Class AVoting Shares with respect to dividends and all other distributionsof New AT&T Canada, and the rights of the holders of theClass A Voting Shares and the Class B Limited Voting Sharesare equal in all respects in the event of any liquidation,dissolution, winding-up or other distribution of assets ofNew AT&T Canada to its shareholders for the purpose ofwinding-up its affairs.

15. The holders of Class B Limited VotingShares are entitled to receive notice of, to attend and tospeak at all meetings of the shareholders of New AT&TCanada and will be provided with copies of all materials sentby New AT&T Canada to holders of Class A Voting Sharesin connection with any such meeting.

16. The holders of Class B Limited VotingShares are entitled to nominate and elect four of the ninedirectors of New AT&T Canada. The holders of Class A VotingShares are entitled to elect the remaining five directorsof New AT&T Canada. The number of directors elected andnominated to the board of directors by the holders of ClassB Limited Voting Shares will be reduced according to the percentageof the equity of New AT&T Canada held by such holders,commencing upon the holders of Class B Limited Voting Sharesceasing to hold an equity percentage of 50% or more of NewAT&T Canada. If the holders of Class B Limited VotingShares lose the entitlement to nominate and elect director(s),the holders of Class A Voting Shares will correspondinglyacquire such entitlement. As U.S. holders held a large majorityof the equity of New AT&T Canada on the Plan ImplementationDate, and as New AT&T Canada is quoted on the NASDAQ NationalMarket, it is expected that U.S. holders will continue tomaintain a significant equity interest in New AT&T Canada'sClass B Limited Voting Shares for the foreseeable future.

17. At a meeting of the shareholders of NewAT&T Canada, the holders of the Class B Limited VotingShares will be entitled to vote (i) in accordance with theprovisions of the CBCA; (ii) to elect directors as discussedin item 16 above; and (iii) separately as a class in the followingcircumstances:

(a) upon any matter that would affect theequivalence of the Class B Limited Voting Shares and theClass A Voting Shares;

(b) until the earlier of such time as theholders of Class B Limited Voting Shares are entitled tonominate fewer than four directors and December 31, 2004(the "Expiry Date"), upon any amendment to theprovisions of the articles of New AT&T Canada (the "Articles")which require approval of not less than seven of the directorsof New AT&T Canada (the "Super-Majority Approval"),as set forth in the Articles;

(c) until the Expiry Date, upon any amendmentto the Articles or the by-laws (the "By-Laws")of New AT&T Canada that does not receive Super-MajorityApproval;

(d) until holders of Class B Limited VotingShares are entitled to elect fewer than two directors, uponan amalgamation pursuant to Section 181 of the CBCA; and

(e) upon any amendment to the Articles tochange the number of directors of New AT&T Canada.

18. Each Class A Voting Share may be converted,at the option of the holder thereof, into one Class B LimitedVoting Share at any time. Each Class B Limited Voting Sharemay be converted (i) after December 31, 2004, at the optionof the holder thereof, into one Class A Voting Share uponproviding the requisite Canadian residency declaration; (ii)pursuant to coat-tail provisions allowing holders to tenderto a bid made for Class A Voting Shares; (iii) pro ratawith other holders at the discretion of New AT&T Canada'sboard of directors; and (iv) automatically upon the removal,in whole or in part, of the foreign ownership restrictionsin the Telecommunications Act (Canada), but only tothe extent of such removal. A holder of a Class B LimitedVoting Share will also be able to acquire, on or prior toDecember 31, 2004, a Class A Voting Share through the exerciseof an acquisition right (an "Acquisition Right")which trades with the Class B Limited Voting Shares. A holderof a Class B Limited Voting Share may acquire one Class AVoting Share in exchange for one Acquisition Right and oneClass B Limited Voting Share upon providing the requisiteCanadian residency declaration, provided such holder and thoseacting jointly or in concert with such holder would not holdin excess of 10% of the Class A Voting Shares after exercise.

19. In the event that either of the ClassA Voting Shares or the Class B Limited Voting Shares (each,an "Existing Class") is at any time subdivided,consolidated, converted (except for conversions in accordancewith the Articles) or exchanged, appropriate adjustments willcontemporaneously be made in the rights, privileges, restrictionsand conditions attaching to the other Existing Class.

20. Both the Class A Voting Shares and theClass B Limited Voting Shares are "restricted shares"as defined in Rule 56-501 as both classes of shares are equityshares which are not "common shares " as definedin Rule 56-501.

21. In accordance with Part 3 of Rule 56-501,the Director may not issue a receipt for a prospectus fora stock distribution (as defined in Rule 56-501) unless (i)such stock distribution received minority approval (as definedin Rule 56-501, hereinafter "minority approval")or (ii) any reorganization carried out by New AT&T Canadarelated to the restricted shares received minority approval.

22. The exemption in Section 3.1(4) of Rule56-501 is not available to New AT&T Canada as New AT&TCanada is currently a reporting issuer and therefore wouldnot be a private company immediately before the filing ofa preliminary prospectus or prospectus relating to a stockdistribution. Without the requested relief, Section 3.1 ofRule 56-501 would prevent New AT&T Canada from ever distributingShares pursuant to a prospectus.

23. In accordance with Part 4 of Rule 56-501,if the Director determines that the Existing Classes are restrictedshares, the Director may also determine the appropriate restrictedshare term to be used to designate each such class of shares,taking into account the voting attributes attached to eachof the Existing Classes and the term that will best describetheir attributes.

AND UPON the Director being satisfiedthat it would not be prejudicial to the public interest to grantthe exemption requested;

IT IS ORDERED pursuant to section 4.2of Rule 56-501 that New AT&T Canada is exempt from the requirementsof Section 3.1 of Rule 56-501 in connection with any futuredistribution of the Class A Voting Shares and Class B LimitedVoting Shares; and

IT IS ALSO ORDERED pursuant to section4.1 of Rule 56-501 that each of the Existing Classes are restrictedshares for the purposes of Rule 56-501 and that the appropriaterestricted share terms to be used to designate such classesof shares are "Class A Voting Shares" and "ClassB Limited Voting Shares".

June 16, 2003.

"Erez Blumberger"