Resverlogix Corp. et al.

Decision

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Issuer to enter into equity distribution agreement with Canadian agent (which is registered as an investment dealer in Canada) to sell common shares by way of at-the-market distributions through the facilities of the TSX (or other Canadian marketplaces) using the shelf procedures in Part 9 of National Instrument 44-102 Shelf Distributions -- Issuer granted exemption from the prospectus delivery requirement and prospectus form requirements, subject to conditions -- Decision document contains clause providing for post-decision confidentiality not to exceed 90 days.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 71(1), 71(2), 147.

National Instrument 44-101 Short Form Prospectus Distributions, Part 8.

Form 44-101F1 Short Form Prospectus, Item 20.

National Instrument 44-102 Shelf Distributions, Part 9, Part 11 and section 2.1 of Appendix A.

Citation: Resverlogix Corp., Re, 2011 ABASC 479

September 14, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

RESVERLOGIX CORP.

(THE ISSUER)

AND

JONESTRADING CANADA INC.

(THE AGENT)

AND

JONESTRADING INSTITUTIONAL SERVICES LLC

(JT US)

AND

MCNICOLL, LEWIS & VLAK LLC (MLV) and, together with

JT US, (the US Agents and, together with the Issuer

and the Agent, the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Makers) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) for the following relief (the Exemption Sought):

(a) that the requirement that a dealer, not acting as agent of the purchaser, who receives an order or subscription for a security offered in a distribution to which the prospectus requirement applies, send or deliver to the purchaser or its agent the latest prospectus (including the applicable prospectus supplement(s) in the case of a base shelf prospectus) and any amendment to the prospectus (the Delivery Requirement) does not apply to the Agent or any other Toronto Stock Exchange (TSX) participating organization or other registered investment dealer marketplace participant acting as selling agent for the Agent (each such other organization or marketplace participant, a Selling Agent) in connection with any at the market distributions (ATM Distributions) within the meaning of National Instrument 44-102 Shelf Distributions (NI 44-102) made by the Issuer pursuant to the equity distribution agreement (the Equity Distribution Agreement) between the Issuer, the US Agents and the Agent; and

(b) that the requirements (collectively, the Form Requirements) to include in a prospectus supplement:

(i) a certificate of the Issuer in the form specified in section 2.1 of Appendix A to NI 44-102; and

(ii) a statement respecting purchasers' statutory rights of withdrawal and remedies for rescission or damages in substantially the form prescribed in Item 20 of Form 44-101F1 Short Form Prospectus (the Statement of Purchasers' Rights);

do not apply to a prospectus supplement of the Issuer to be filed in respect of the sale of common shares (ATM Shares) of the Issuer pursuant to ATM Distributions under the Equity Distribution Agreement (the Prospectus Supplement) provided that the alternative form of certificate and disclosure regarding a purchaser's statutory rights described below are included in the Prospectus Supplement.

The Decision Makers have also received a request from the Filers for a decision that the application and this decision be kept confidential and not made public until the earliest of (i) the date on which the Issuer, the US Agents and the Agent enter into the Equity Distribution Agreement, (ii) the date on which the Filers advise the Decision Makers that there is no longer any need for the Application and this decision to remain confidential, (iii) the date on which a Filer publicly announces the proposed transaction and (iv) the date that is 90 days after the date of this decision (the Confidentiality Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application;

(b) the Filers have provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador; and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

This decision is based on the following facts represented by the Filers:

Resverlogix Corp.

1. The Issuer is incorporated under the Business Corporations Act (Alberta). The head office of the Issuer is located in Calgary, Alberta.

2. The Issuer is a reporting issuer under the securities legislation of British Columbia, Alberta, Ontario and Québec and is not in default of securities legislation in any jurisdiction.

3. As at 14 June 2011 there were 59,277,907 common shares of the Issuer (Common Shares) outstanding and listed and posted for trading on the TSX.

JonesTrading Canada Inc.

4. The Agent, a wholly-owned subsidiary of JT US, is a corporation incorporated under the laws of British Columbia with its head office in Toronto, Ontario.

5. The Agent is registered as an investment dealer under the securities legislation of each of the provinces of Canada, a member of the Investment Industry Regulatory Organization of Canada and a participating organization of the TSX. The Agent is not in default of securities legislation in any jurisdiction.

JonesTrading Institutional Services LLC

6. JT US is a limited liability company incorporated under the laws of Delaware with its head office in Westlake Village, California.

McNicoll, Lewis & Vlak LLC

7. MLV is a limited liability company incorporated under the laws of Delaware with its head office in New York City, New York.

8. Each US Agent is a broker-dealer licensed under the US Securities Exchange Act of 1934, as amended, and a member of the Financial Industry Regulatory Authority, Inc. Neither US Agent is a registered dealer in any jurisdiction nor is in default of securities legislation in any jurisdiction. Neither US Agent will sell any Common Shares to purchasers in Canada.

Proposed ATM Distribution and US Private Placements

9. The Issuer proposes to enter into the Equity Distribution Agreement with the Agent and the US Agents providing for: (i) the sale from time to time by the Issuer through the Agent, as agent, of ATM Shares pursuant to ATM Distributions under the shelf procedures prescribed by Part 9 of NI 44-102; and (ii) the solicitation by the US Agents, as agents, of offers to purchase Common Shares on a private placement basis at a fixed price to purchasers in the United States (the US Private Placements) pursuant to an exemption from registration under the US Securities Act of 1933, as amended. Under the terms of the Equity Distribution Agreement the Issuer will be required to obtain representations from each purchaser in a US Private Placement that it is not a resident of Canada and that it is purchasing the Common Shares for investment purposes and not with a view to distribution to residents of Canada.

10. Prior to making any ATM Distributions, the Issuer will have filed a shelf prospectus (Shelf Prospectus) and a Prospectus Supplement in each of the provinces of Canada to qualify the sale of ATM Shares under the Equity Distribution Agreement. The Prospectus Supplement will describe the Equity Distribution Agreement and otherwise supplement the disclosure in the Shelf Prospectus.

11. The Issuer will file prospectus supplement(s) to the Shelf Prospectus in each of the provinces of Canada describing the terms of the US Private Placements. Purchasers of Common Shares under the US Private Placements will receive a US offering memorandum consisting of the Shelf Prospectus and a prospectus supplement describing the terms of the US Private Placement including that resale of Common Shares is subject to restrictions under US federal securities law.

12. If the Equity Distribution Agreement is entered into, the Issuer will terminate its current standby equity distribution agreement dated 26 March 2010. In addition, the Issuer will issue a news release to announce the Equity Distribution Agreement and will file a copy of the agreement on SEDAR. The news release will state that the Shelf Prospectus and the Prospectus Supplement have been filed on SEDAR, and specify where and how purchasers may obtain copies. A copy of the news release will also be posted on the Issuer's website. The news release will serve as the news release contemplated by section 3.2 of NI 44-102 for an expected distribution of equity securities under an unallocated shelf in connection with the distribution of ATM Shares.

13. The Equity Distribution Agreement will limit the number of ATM Shares that the Issuer may issue and sell pursuant to any ATM Distribution thereunder to an amount not to exceed 10% of the aggregate market value of the then outstanding Common Shares calculated in accordance with section 9.2 of NI 44-102.

14. The Issuer will sell ATM Shares in Canada through methods constituting ATM Distributions, including sales made on the TSX or any other Canadian "marketplace" (within the meaning of National Instrument 21-101 Marketplace Operation) on which the ATM Shares are listed or quoted or otherwise traded (a Marketplace), through the Agent (as agent) directly or through a Selling Agent.

15. The Agent will act as the sole underwriter on behalf of the Issuer in connection with the sale of ATM Shares on a Marketplace pursuant to the Equity Distribution Agreement, and will be the only person or company paid an underwriting fee or commission by the Issuer in connection with such sales. The Agent will sign an underwriter's certificate in the Prospectus Supplement.

16. The Agent will effect ATM Distributions on a Marketplace, either itself or through a Selling Agent. If sales are effected through a Selling Agent, the Selling Agent will be paid a customary seller's commission for effecting the trades. A purchaser's rights and remedies under the Legislation against the Agent, as underwriter of an ATM Distribution through a Marketplace, will not be affected by a decision to effect the sale directly or through a Selling Agent.

17. The number of ATM Shares sold on Marketplaces pursuant to an ATM Distribution on any trading day will not exceed 25% of the trading volume of the Common Shares on Marketplaces on that day.

18. The Equity Distribution Agreement will provide that, at the time of each sale of ATM Shares pursuant to an ATM Distribution, the Issuer will represent to the Agent that the Shelf Prospectus, as supplemented by the Prospectus Supplement and any applicable amendment or supplement to the Shelf Prospectus or the Prospectus Supplement (together, the Prospectus), contains full, true and plain disclosure of all material facts relating to the Issuer and the ATM Shares being distributed. The Issuer will therefore be unable to proceed with sales pursuant to an ATM Distribution when it is in possession of undisclosed information that would constitute a material fact or a material change in respect of the ATM Shares.

19. If after the Issuer delivers a notice to the Agent directing the Agent to sell ATM Shares on the Issuer's behalf pursuant to the Equity Distribution Agreement (a Sell Notice), the sale of the ATM Shares specified in the Sell Notice, taking into consideration prior sales, would constitute a material fact or material change, the Issuer would be required to suspend sales under the Equity Distribution Agreement until either (i) it had filed a material change report or amended the Prospectus, or (ii) circumstances had changed so that the sales would no longer constitute a material fact or material change.

20. In determining whether the sale of the number of ATM Shares specified in a Sell Notice would constitute a material fact or material change, the Issuer will take into account a number of factors including, without limitation: (i) the parameters of the Sell Notice, including the number of ATM Shares proposed to be sold and any price or timing restrictions that the Issuer may impose with respect to the particular ATM Distribution, (ii) the percentage of outstanding ATM Shares represented by the number of ATM Shares proposed to be sold pursuant to the Sell Notice, (iii) trading volume and volatility of the ATM Shares, (iv) recent developments in the business, affairs and capital structure of the Issuer, and (v) prevailing market conditions generally.

21. The Agent will monitor closely the market's reaction to trades made on Marketplaces pursuant to an ATM Distribution in order to evaluate the likely market impact of future trades. The Agent has experience and expertise in managing sell orders to limit downward pressure on trading prices. If the Agent has concerns as to whether a particular sell order placed by the Issuer may have a significant effect on the market price of the ATM Shares, the Agent will recommend against effecting the trade at that time. It is in the interest of both the Issuer and the Agent to minimize the market impact of sales under an ATM Distribution.

22. The underwriter's certificate to be signed by the Agent and included in the Prospectus Supplement will be in the form specified in section 2.2 of Appendix B to NI 44-102.

Disclosure of Shares Sold

23. For each month during which ATM Shares are distributed on Marketplaces by the Issuer pursuant to ATM Distributions under the Prospectus, the Issuer will file on SEDAR, within seven calendar days after the end of such month, a report disclosing the number and average price of ATM Shares so distributed during that month, as well as total gross proceeds, commission and net proceeds.

24. The Issuer will also disclose the number and average price of ATM Shares sold pursuant to ATM Distributions under the Prospectus, as well as total gross proceeds, commission and net proceeds, in the ordinary course in its annual and interim financial statements and management's discussion and analysis filed on SEDAR.

Prospectus Delivery Requirement

25. Pursuant to the Delivery Requirement, a dealer effecting a trade of ATM Shares on behalf of the Issuer as part of an ATM Distribution is required to deliver a copy of the prospectus (including the applicable prospectus supplement(s) in the case of a base shelf prospectus) to the purchaser within prescribed time limits.

26. The delivery of a prospectus is not practicable in the circumstances of an ATM Distribution because the Agent or Selling Agent, as applicable, effecting the trade will not know the purchaser's identity.

27. Although purchasers under an ATM Distribution would not physically receive a printed prospectus, the Shelf Prospectus and the Prospectus Supplement (together with all documents incorporated by reference) will be filed and readily available to all purchasers electronically via SEDAR. Moreover, the Issuer will issue a news release that specifies where and how copies of the Shelf Prospectus and the Prospectus Supplement can be obtained.

28. The liability of an issuer or an underwriter (and others) for misrepresentation in a prospectus pursuant to the civil liability provisions of the Legislation will not be affected by the grant of an exemption from the Delivery Requirement, because a purchaser of the securities offered by a prospectus during the period of distribution has a right of action for damages or rescission without regard as to whether the purchaser relied on the misrepresentation or in fact received a copy of the prospectus.

Withdrawal Right

29. Pursuant to the Legislation, an agreement to purchase securities is not binding on the purchaser if a dealer receives, not later than midnight on the second day exclusive of Saturdays, Sundays and holidays, after receipt by the purchaser of the latest prospectus or any amendment to the prospectus, a notice in writing that the purchaser does not intend to be bound by the agreement of purchase (the Withdrawal Right).

30. The Withdrawal Right is not workable in the context of an ATM Distribution because a prospectus will not be delivered to purchasers.

Right of Action for Non-Delivery

31. Pursuant to the Legislation, a purchaser of a security to whom a prospectus was required to be sent or delivered in compliance with the Delivery Requirement, but was not so sent or delivered, has a right of action for rescission or damages against the dealer who did not comply with the Delivery Requirement (the Right of Action for Non-Delivery).

32. The Right of Action for Non-Delivery is not workable in the context of an ATM Distribution because a prospectus will not be delivered to purchasers.

Prospectus Form Requirements

33. Exemptive relief from the Form Requirements is required with respect to the Issuer's forward-looking certificate in the Prospectus Supplement to reflect that no pricing supplement will be filed subsequent to the Prospectus Supplement. Accordingly, the Issuer will file the Prospectus Supplement with the following forward-looking issuer certificate which will supersede and replace, solely in regard to ATM Distributions contemplated by the Prospectus Supplement, the forward-looking issuer certificate contained in the Shelf Prospectus:

This short form prospectus, as supplemented by the foregoing, together with the documents incorporated in this prospectus by reference as of the date of a particular distribution of securities offered by this prospectus, will, as of that date, constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus, as required by the securities legislation of each of the provinces of Canada.

34. Exemptive relief from the Form Requirements is required to reflect the relief from the Delivery Requirement. Accordingly, the Issuer will include the following statement in the Prospectus Supplement in place of the statement prescribed by the Form Requirements:

Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdraw from an agreement to purchase securities and with remedies for rescission or, in some jurisdictions, revision of the price, or damages if the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment are not delivered to the purchaser, provided that the remedies are exercised by the purchaser within the time limit prescribed by securities legislation. However, purchasers of ATM Shares under an at-the-market distribution by the Issuer will not have the right to withdraw from an agreement to purchase the ATM Shares and will not have remedies for rescission or, in some jurisdictions, revision of the price, or damages for non-delivery, because the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment will not be delivered as permitted under a decision dated •, 2011 and granted pursuant to National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions.

Securities legislation in certain of the provinces of Canada also provides purchasers with remedies for rescission or, in some jurisdictions, revision of the price, or damages, if the prospectus, prospectus supplements relating to securities purchased by a purchaser and any amendment contain a misrepresentation, provided that the remedies are exercised by the purchaser within the time limit prescribed by securities legislation. Any remedies under securities legislation that a purchaser of ATM Shares under an at-the-market distribution by the Issuer may have against the Issuer or the Agent for rescission or, in some jurisdictions, revision of the price, or damages if the prospectus, prospectus supplements relating to the ATM Shares purchased by a purchaser and any amendment contain a misrepresentation remain unaffected by the non-delivery and the decision referred to above.

Purchasers should refer to the applicable provisions of the securities legislation and the decision referred to above for the particulars of their rights or consult with a legal advisor.

35. The modified disclosure of purchasers' rights set forth in paragraph 34 above will be explicitly presented in the Prospectus Supplement and, solely in regard to ATM Distributions contemplated by the Prospectus Supplement, supersede and replace the statement of purchasers' rights contained in the Shelf Prospectus.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted, provided that:

(a) as it relates to the Delivery Requirements, the representations made in paragraphs 12, 14, 15, 16, 17, 18, 19 and 21 are complied with;

(b) as it relates to the Form Requirements, the disclosure described in paragraphs 23, 33, 34 and 35 is made; and

(c) this decision will terminate 25 months after the issuance of a receipt for filing the Shelf Prospectus under the Legislation.

The further decision of the principal regulator and the securities regulatory authority or regulator in Ontario is that the Confidentiality Sought is granted.

For the Commission:

"Glenda Campbell, QC"
Vice-Chair
 
"Stephen Murison"
Vice-Chair