Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications -- cash take-over bid made in accordancewith the laws of the United States - de minimis exemptionunavailable - more than 50 shareholders in Ontario - bid exemptedfrom the take-over bid requirements of Part XX, subject to certainconditions, including provision of U.S. tender offer documentsto Ontario shareholders.

Applicable Ontario Statute

Securities Act, R.S.O. 1990, c. S.5, as amended,ss. 93(1)(e), 95 to100, and 104(2)(c).

(Translation)

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

THE PROVINCES OF

QUEBEC, ONTARIO AND BRITISHCOLUMBIA

AND

IN THE MATTER OF

THE MUTUAL RELIANCE SYSTEMFOR

EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

SAULE HOLDINGS INC.

AND

AXCAN PHARMA INC.

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof the Provinces of Quebec, Ontario and British Columbia (the"Jurisdictions") has received an application fromAxcan Pharma Inc. and Saule Holdings Inc. (together, the "Filer")for a decision under the securities legislation of the Jurisdictions(the "Legislation") exempting the cash tender offer(the "Tender Offer") of the Filer from the take-overbid rules contained in the Legislation;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Commission des valeurs mobilières du Québecis the principal regulator for this application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 - Definitions or in Quebec Securities CommissionNotice 14-101;

AND WHEREAS the Filer has representedto the Decisions Makers that:

a) the head office of Axcan Pharma Inc. andof Saule Holdings inc. are located in St. Hilaire, Quebecand Birmingham, Alabama, respectively;

b) Saule Holdings Inc. is a wholly-owned Delawaresubsidiary of Axcan Pharma Inc. ("Axcan");

c) the common shares of Axcan are listed onThe Toronto Stock Exchange and the NASDAQ National Market;

d) the Filer has commenced on April 10, 2003an unsolicited Tender Offer to purchase all the outstandingcommon shares of Salix Pharmaceuticals, Ltd. ("Salix"),a company incorporated under the laws of the British VirginIslands and continued under the laws of Delaware, whose headoffice is located in Raleigh, North Carolina;

e) Salix's common shares trade through thefacilities of the NASDAQ National Market under the tickersymbol "SLXP" and Salix is a reporting issuer inall 10 Canadian provinces but its shares are not traded throughany Canadian stock exchange;

f) as of April 18, 2003, there are 21,402,963common shares of Salix outstanding;

g) the Tender Offer is currently scheduledto expire on June 27, 2003;

h) of the Canadian shareholders, 86 (holdingapproximately 0.334% of Salix outstanding common shares) areresident in the Province of Quebec, 162 (holding approximately0.709% of Salix outstanding common shares) are resident inthe Province of Ontario and 61 (holding approximately 0.015%of Salix outstanding common shares) are resident in the Provinceof British Columbia;

i) the Tender Offer is made in compliancewith the federal laws of the United States of America, includingSection 14(d) of the Securities Exchange Act of 1934;

j) following successful completion of theTender Offer, Axcan intends to consummate a second step mergerin which remaining Salix shareholders will receive the samecash price paid in the Tender Offer, without interest; and

k) the Tender Offer is a take-over bid underthe Legislation for which an exemption is not available.

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

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that the requirement contained in the Legislationto comply with the take-over bid rules set forth therein shallnot apply to the Filer in connection with the Tender Offer.

THE DECISION is conditional on satisfactionof the following conditions:

a) the Tender Offer and all amendments theretoare made in compliance with the laws of the United States,including Section 14(d) of the Securities Exchange Act of1934;

b) all material relating to the Tender Offerthat has been sent by the Filer to shareholders of Salix besent as soon as reasonably possible after the date hereofto all holders of Salix common shares whose last address asshown on the books of Salix is in one of the Jurisdictionsand be filed with the Decision Makers;

c) any other material relating to the TenderOffer which is sent by the Filer to shareholders of Salixbe sent concurrently to all holders of Salix common shareswhose last address as shown on the books of Salix is in oneof the Jurisdictions and be filed with the Decision Makers;

d) in the case of shareholders of Salix whoselast address as shown on the books of Salix is in Quebec,a summary in French of the terms of the Offer to Purchaseunder which the Tender Offer is made be sent to such shareholdersas well as a summary in French of any supplement or amendmentto the Offer to Purchase distributed to other shareholdersin accordance with the laws of the United States be sent tosuch shareholders at the same time as such material is distributedto such other shareholders.

June 12, 2003.

"Jean Meloche"
"Jean-Marie Gagnon"