Subsection 83.1(1) - amalgamation of applicant and CDNX shell issuer to take placetwo months after issuance of receipt for final prospectus of applicant - applicant havingbecome reporting issuer upon issuance of receipt - company continuing followingamalgamation will not inherit reporting issuer status of applicant because applicant willhave been a reporting issuer in Ontario for less than twelve months - no materialchange in business of applicant due to amalgamation - business of applicant willbecome business of continuing company - continuing company deemed to be areporting issuer for the purposes of Ontario securities law upon completion ofamalgamation
Subsection 74(1) - first trade in securities of continuing company to be issued onamalgamation in exchange for securities of applicant which were qualified byprospectus exempt from the requirements of section 53 of the Act, subject to certainconditions
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 1(1), 53, 72(1)(i), 72(5), 72(5)(a), 74(1),83.1(1)
Ontario Securities Commission Rule 45-501, Exempt Distributions (1999), 22 O.S.C.B.127 Ontario Securities Commission Rule 14-501, Definitions (1998), 21 O.S.C.B. 7509
R.S.O. 1990, CHAPTER S.5, AS AMENDED (the "Act")
IN THE MATTER OF
ORDER AND RULING
(Subsections 83.1(1) and 74(1))
UPON the application (the "Application") of SamsCD.com Inc. (the "Applicant") tothe Ontario Securities Commission (the "Commission") for:
1. an order pursuant to subsection 83.1(1) of the Act deeming the company ("Amalco")to be formed by the amalgamation (the "Amalgamation") of the Applicant andBerwind Capital Corp. ("Berwind") to be a reporting issuer for the purposes ofOntario securities law; and
2. a ruling pursuant to subsection 74(1) of the Act providing that the first trade incertain securities of Amalco (the "Amalco Securities") to be issued on theAmalgamation in exchange for securities of the Applicant (the "Qualified Securities")which were qualified by a prospectus dated July 12, 2000 (the "Prospectus") shallnot be subject to the requirements of section 53 of the Act;
AND UPON considering the Application and the recommendation of staff of theCommission;
AND UPON the Applicant having represented to the Commission as follows:
1. The Applicant was incorporated under the laws of the Province of Ontario onJanuary 7, 1998 as Isoquest Acquisition GP Limited and subsequently changed itsname to SamsCD.com Inc. by Articles of Amendment dated March 31, 1999. Thehead office of the Applicant is located in Toronto, Ontario.
2. The authorized capital of the Applicant consists of an unlimited number of Class Acommon shares and an unlimited number of special shares, issuable in one or moreseries. As at July 21, 2000, the Applicant had 17,300,000 Class A common sharesissued and outstanding and no special shares outstanding.
3. The Applicant became a reporting issuer following the filing of the Prospectus withthe Commission (as principal regulator), the Alberta Securities Commission (the"ASC") and the British Columbia Securities Commission, and obtaining a receipttherefor on July 14, 2000. The Applicant is not in default of any requirement of theAct or the rules or regulations made thereunder.
4. The Prospectus qualified the distribution of 9,300,000 Class A common shares (the"Qualified Common Shares"), 4,400,000 Class A common share purchase warrants(the "Qualified Warrants") and 440,000 compensation options (the "QualifiedOptions"). The Qualified Common Shares, Qualified Warrants and QualifiedOptions comprise the Qualified Securities.
5. Pursuant to the terms and conditions of an amalgamation agreement (the"Amalgamation Agreement") dated March 3, 2000, between the Applicant andBerwind, the Applicant plans to amalgamate with Berwind to create Amalco. TheAmalgamation is scheduled to take place on or before September 30, 2000 underthe Business Corporations Act (Ontario). The sole purpose of the Amalgamationis to provide the Applicant with a public distribution base upon which it may obtaina listing on the Canadian Venture Exchange (the "CDNX").
6. Berwind was incorporated under the laws of the Province of Alberta on October 1,1997 as 757087 Alberta Ltd. and subsequently changed its name to BerwindCapital Corp. by Certificate of Amendment dated February 9, 1998. The head officeof Berwind is located in Calgary, Alberta.
7. Berwind is a junior capital pool company in accordance with Policy No. 7 of theAlberta Stock Exchange, a predecessor to CDNX, and with ASC Rule 46-501.Berwind has been a reporting issuer in the Province of Alberta since June 8, 1998,and the common shares of Berwind are listed and posted for trading on the JuniorCapital Pool Board of the CDNX. Berwind is also an exchange issuer (as such termis defined under securities legislation in British Columbia) in the Province of BritishColumbia by virtue of being listed on CDNX. Berwind is not in default of thesecurities legislation of Alberta or British Columbia.
8. Berwind is a shell issuer, has no material assets or liabilities and does not carry onany business. Since its listing on CDNX, Berwind's objective has been to identifyproperties or businesses with a view to acquisition or merger.
9. The Amalgamation Agreement has been approved by the board of directors andshareholders of the Applicant, the board of directors of Berwind, and is to beapproved by the shareholders of Berwind at an annual and special meeting (the"Meeting") of the shareholders to be held on or about September 14, 2000.Pursuant to the terms of the Amalgamation Agreement, the Qualified Securities willbe exchanged for equivalent securities of Amalco (the "Amalco Securities").
10. In connection with the Meeting, Berwind has prepared an information circular (the"Information Circular") dated July 31, 2000 containing prospectus-level disclosureon the Applicant, Berwind and the proposed business combination of the Applicantand Berwind. The Information Circular was reviewed by CDNX, mailed to theshareholders of Berwind and filed with the ASC and CDNX.
11. Upon completion of the Amalgamation, because neither the Applicant nor Berwindhas been a reporting issuer in Ontario for twelve months, Amalco will not inherit thereporting issuer status of the Applicant and will not be a reporting issuer in Ontario.In addition, the Amalco Securities will be subject to an indefinite hold period or, ifAmalco becomes a reporting issuer in Ontario, a hold period of twelve months fromthe date Amalco becomes a reporting issuer.
12. The business of Amalco will be the business of the Applicant and will not changein any material respect following the Amalgamation. The Prospectus provided full,true and plain disclosure of all material facts relevant to the business of theApplicant and, following the Amalgamation, the business to be carried on byAmalco. The Amalco Securities are equivalent to the Qualified Securities. Thename of Amalco will be Sams Online Inc. and the articles and by-laws of Amalcowill be the articles and by-laws of the Applicant, subject to conforming adjustments.
AND WHEREAS the Commission is satisfied that to do so would not be prejudicialto the public interest;
IT IS ORDERED pursuant to subsection 83.1(1) of the Act, that Amalco be deemedto be a reporting issuer for the purposes of Ontario securities law upon completion of theAmalgamation; and
IT IS RULED pursuant to subsection 74(1) of the Act, that the first trade in AmalcoSecurities shall not be subject to section 53 of the Act provided that such trade is madein accordance with the provisions of subsection 72(5) of the Act, other than therequirement in clause 72(5)(a) of the Act that Amalco has been a reporting issuer for atleast twelve months, and, for the purposes herein, it shall not be necessary to satisfy therequirement in clause 72(5)(a) of the Act that Amalco not be in default of any requirementof the Act or the regulations if the vendor is not in a special relationship with Amalco, or,if the vendor is in a special relationship with Amalco, the vendor has reasonable groundsto believe that Amalco is not in default under the Act or the rules or regulations madethereunder, where for these purposes "special relationship" shall have the same meaningas in Rule 14-501 Definitions.
September 8th, 2000.
"J. A. Geller" "K. D. Adams"