MRRS - Mutual Reliance Review System for Exemptive Relief Applications - Issuer is a"connected issuer" but not a "related issuer" of registrants that are to act asunderwriters in a proposed distribution of securities of the Issuer - Issuer is not a"specified party" as defined in Draft Multi-Jurisdictional Instrument 33-105 UnderwriterConflicts - Registrants underwriters exempted from independent-underwriterrequirements, provided that, at the time of the distribution, the issuer is not a "specifiedparty" as defined in the Instrument, and, in the case of each registrant, is not a relatedissuer.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c.S.5, as am.,
Applicable Ontario Regulations
Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., 219(1),224(1)(b), 233.
Applicable Ontario Rules
In the Matter of the Limitations on a Registrant Underwriting Securities of Related Issueror Connected Issuer of the Registrant, (1997) 20 OSCB 1217, as varied by (1999) 22OSCB 6295.
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
IN THE MATTER OF
HSBC SECURITIES (CANADA) INC., BMO NESBITT BURNS INC. AND TD SECURITIES INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Newfoundland, Ontario and Québec (the"Jurisdictions") has received an application from HSBC Securities (Canada) Inc. ("HSBCSecurities"), BMO Nesbitt Burns Inc. and TD Securities Inc., (collectively the "Underwriters"or the "Filer") for a decision pursuant to the securities legislation of said Jurisdictions (the"Legislation") that the restrictions (the "Independent Underwriter Restrictions") againstacting as an underwriter in connection with a distribution of the securities of an issuerwhich is a "related" or "connected" issuer contained in the Legislation shall not apply to theFiler in connection with a proposed public offering (the "Offering") of common shares (the"Common Shares") in the capital of Quicklaw Inc. (the "Company") to be made by meansof a prospectus;
AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for this application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. The Company will be making the Offering, consisting of the Common Shares andin connection therewith filed an amended preliminary prospectus (the "PreliminaryProspectus") in each province in Canada on September 11, 2000 and expects tofile a final prospectus (the "Final Prospectus") on or about September 27, 2000;
2. Pursuant to an underwriting agreement between the Company and theUnderwriters, the Underwriters will purchase all but not less than all of the CommonShares;
3. The proportionate share of the Offering to be sold by each of the Underwriters isexpected to be as follows:
HSBC Securities - 50%
BMO Nesbitt Burns Inc. - 30%
TD Securities Inc. - 20%
4. HSBC Securities, being one of the Underwriters, is a wholly-owned subsidiary of aCanadian chartered bank (the "Bank"). On January 31, 2000, the Bank signed acommitment letter with the Company in connection with a $3,500,000 secured,demand non-revolving term loan (the "Term Loan") and a $2,000,000 secured,demand revolving operating loan (the "Operating Loan");
5. The Term Loan, if not repaid in full by September 30, 2000, is repayable in monthlyprincipal payments of $106,062 plus interest commencing January 2001. AfterSeptember 30, 2000, a $5,000 monthly administration fee will be payable to theBank in respect of the Term Loan for 12 months or until it is repaid, whicheveroccurs first. The Company's indebtedness to the Bank is secured by a secondranking demand collateral mortgage on the Company's premises in Kingston, ageneral security agreement on capital assets, trust agreements on databases andcertain personal guarantees, including guarantees by Quicklaw America Inc. andIrwin Law Inc., wholly-owned subsidiaries of the Company.
6. Approximately $3,500,000 of the net proceeds of the Offering will be used to repaythe Term Loan and may be used to reduce the amount outstanding under theOperating Loan;
7. Accordingly, the Company may be considered a "connected issuer" (or itsequivalent) of HSBC Securities, as such term is described in the Legislation. TheCompany is not a "related issuer" as such term is described in the Legislation, ofany of the Underwriters;
8. The decision to distribute the Common Shares and determination of the terms of thedistribution were made through negotiation between the Company and theUnderwriters. The Bank did not have any involvement in such decision ordetermination;
9. The proportionate share of the Offering to be sold by each of the Underwriters doesnot comply with the requirements of the Legislation, as the portion of the distributionunderwritten by at least one other registrant in respect of which the Company is nota related issuer or connected issuer is less that the portion of the distributionunderwritten by HSBC Securities, a registrant in respect of which the Company isa connected issuer;
10. The proportionate share of the Offering to be underwritten by each of theUnderwriters complies with the requirements of proposed Multi-JurisdictionalInstrument 33-105 "Underwriting Conflicts" ("Proposed Instrument 33-105") in thatat least twenty (20) per cent of the dollar value of the distribution is beingunderwritten by an independent underwriter;
11. The Request for Comments accompanying Proposed Instrument 33-105 indicatedthat the Quebec Securities Commission would require independent underwriters tounderwrite at least 50% of the Offering. This test is met in the circumstances of theOffering;
12. The Company is in good financial condition and is not a "specified party" as definedin Proposed Instrument 33-105;
13. The Final Prospectus will contain the information specified in Appendix "C" ofProposed Instrument 33-105 on the basis that the Company is a "connected issuer"of HSBC Securities (as such term is defined in Proposed Instrument 33-105); and
14. The certificate in the Preliminary Prospectus has been and in the Final Prospectuswill be signed by each of the Underwriters;
AND WHEREAS under the System this MRRS Decision Document evidences thedecision of each Decision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;
THE DECISION of the Decision Makers, pursuant to the Legislation, is that, inconnection with the Offering, the Independent Underwriter Restrictions shall not apply toany of the Underwriters provided that, at the time of the Offering, and in the case of eachUnderwriter:
(i) the Company is not a "related issuer" of the Underwriter, for the purposes ofthe Legislation; and
(ii) the Company is not a "specified party", as such term is defined in DraftInstrument 33-105.
September 26th, 2000.
"J. A. Geller" "Robert W. Davis"