Algorithmics Incorporated et al. - MRRS Decision

MRRS Decision

IN THE MATTER OF

THE SECURITIES LEGISLATION OF
ALBERTA, BRITISH COLUMBIA, NEWFOUNDLAND,
ONTARIO AND QUÉBEC

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW

SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CIBC WORLD MARKETS INC.,

RBC DOMINION SECURITIES INC. AND

ALGORITHMICS INCORPORATED

MRRS DECISION DOCUMENT

WHEREAS the securities regulatory authority or regulator (the "Decision Maker") in each of Alberta, BritishColumbia, Newfoundland, Ontario and Québec (the "Jurisdictions") has received an application from CIBC WorldMarkets Inc. and RBC Dominion Securities Inc. (the "Filers"), for a decision under the securities legislation of theJurisdictions (the "Legislation"), that the requirement (the "Independent Underwriter Requirement") contained in theLegislation which restricts a registrant from acting as an underwriter in connection with a distribution of securities of anissuer made by means of a prospectus, where the issuer is a connected issuer (or the equivalent) of the registrant unlessa portion of the distribution at least equal to that portion underwritten by non-independent underwriters is underwrittenby an independent underwriter, shall not apply to the Filers in connection with a proposed initial public (and secondary)offering (the "IPO") of common shares ("Common Shares") of Algorithmics Incorporated ("Algorithmics") by meansof a long form prospectus (the "Prospectus");

AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulator for this application;

AND WHEREAS the Filers have represented to the Decision Makers that:

1. Algorithmics is a private company incorporated under the laws of the Province of Ontario, and is not presentlya reporting issuer in any province or territory of Canada or any other jurisdiction.

2. Algorithmics and certain selling securityholders are proposing to offer common shares of Algorithmics inCanada by way of a long form prospectus in accordance with applicable securities laws, and in the UnitedStates, under available exemptions from the prospectus requirements of that jurisdiction.

3. It is anticipated that the common shares will be offered by an underwriting syndicate comprised of the Filersand other dealers including J.P. Morgan Securities Canada Inc. ("JPM") and TD Securities Inc. ("TDSI")(collectively, the "Underwriters").

4. The Underwriters and Algorithmics will enter into an underwriting agreement in connection with the IPO toconduct the IPO on a firm commitment basis.

5. Forty percent (40%) of the IPO will be underwritten by CIBC World Markets Inc., thirty percent (30%) by RBCDominion Securities Inc., twenty percent (20%) by JPM, and ten percent (10%) by TDSI.

6. In September 2000, CIBC Capital Partners, a division of the Canadian Imperial Bank of Commerce ("CIBC")and Royal Bank of Canada ("RBC") completed a transaction with Algorithmics whereby theses two entities eachacquired US$15,000,000 in principal amount of a debt security known as "Series 1 Convertible Notes",convertible into Series B Shares of Algorithmics which are, in turn, convertible into common shares ofAlgorithmics, and in some cases, convertible directly into common shares. In addition, RBC has provided acredit facility to Algorithmics and each of CIBC, RBC or their respective affiliates (which include the Filers) arecustomers of Algorithmics.

7. Each Filer is a wholly-owned subsidiary of either CIBC or RBC. The head office of each Filer is located inOntario.

8. Each Filer is a registrant in good standing under the securities legislation of each province and territory ofCanada.

9. By virtue of their relationships with CIBC and RBC, and by virtue of the convertible debt of Algorithmics heldby CIBC and RBC, Algorithmics may be considered a "connected issuer", or equivalent, of the Filers under theLegislation and proposed Multi-Jurisdictional Instrument 33-105 ("MI 33-105"), but not a "related issuer" orequivalent.

10. Algorithmics is not a "related issuer", or equivalent, or a "connected issuer", or equivalent, to any of the otherUnderwriters for the purposes of the Legislation or MI 33-105.

11. None of the selling securityholders is a "related issuer" or "connected issuer" to any of the Underwriters forpurposes of the Legislation or MI 33-105.

12. The Underwriters will receive no benefit pursuant to the IPO, other than payment of their fees in connectiontherewith.

13. The determination to proceed with the IPO, including the determination of the terms of the IPO, will be madethrough negotiation between Algorithmics and the Underwriters, and neither CIBC nor RBC has had, or willhave, any involvement in such decision or determination.

14. Algorithmics is in good financial condition, is not a "specified party" as defined in MI 33-105, and is not underany financial pressure to undertake the IPO.

15. All the Underwriters have signed or will sign the underwriter's certificate in the preliminary prospectus and willsign the underwriter's certificate in the final prospectus.

16. The preliminary prospectus and the prospectus will, to the extent applicable, contain the disclosure set forthin Appendix "C" to MI 33-105 and will describe the relationships between Algorithmics and the Filers.

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

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers under the Legislation is that, the Independent Underwriter Requirementshall not apply to the Filers in connection with the IPO provided Algorithmics is not a related issuer, as defined in MI 33-105, to the Filers at the time of the IPO and is not a specified party as defined in the MI-33-105 at the time of the IPO.

April 3, 2001.

"J. A. Geller" "R. Stephen Paddon"