Securities Law & Instruments

Headnote

Subsection 83.1(1) - issuer deemed to be a reportingissuer in Ontario - issuer has been a reporting issuer in BritishColumbia since December 27, 2000 and in Alberta since November28, 2000 - issuer listed and posted for trading on the TSX VentureExchange - continuous disclosure requirements of British Columbiaand Alberta substantially identical to those of Ontario.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am.,subsection 83.1(1).

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED,(the "Act")

AND

IN THE MATTER OF

PASSION MEDIA INC.

 

ORDER

(Subsection 83.1(1))

UPON the application (the "Application")of Passion Media Inc. (the "Corporation") to the OntarioSecurities Commission (the "Commission") for an orderpursuant to subsection 83.1(1) of the Act deeming the Corporationto be a reporting issuer for the purposes of Ontario securitieslaw;

AND UPON considering the Applicationand the recommendation of the staff of the Commission;

AND UPON the Corporation having representedto the Commission as follows:

1. The Corporation was formed by the amalgamationof Silicon Acquisition Inc. ("Silicon") and PassionMedia Inc. ("Passion Media") on July 4, 2002 (the"Amalgamation"), pursuant to the Business CorporationsAct (Ontario);

2. The head office of the Corporation is locatedat 35 Elmer Avenue, Toronto, Ontario;

3. The Corporation is a multimedia organizationdedicated to mainstream adult sexuality. It is currently developingan integrated group of media platforms comprised of an internetcommunity, syndicated radio programs, two digital specialtytelevision networks, and various publishing initiatives tobe implemented through royalty arrangements with establishedpublishers;

4. The authorized capital of the Corporationconsists of an unlimited number of Class A shares ("ClassA Shares") and an unlimited number of Class B shares("Class B Shares"), of which 16,158,935 Class AShares and no Class B Shares are outstanding as at July 17,2002. An aggregate of 1,802,666 Class A Shares are reservedfor issuance on the exercise of 1,536,000 options grantedby the Corporation immediately following the completion ofthe Amalgamation and 266,666 options granted by the Corporationin replacement of options granted by Silicon. A further aggregateof 4,464,004 Class A Shares are also reserved for issuanceon the exercise of compensation options, warrants, supplierwarrants, replacement agent's options and diamond warrantsof the Corporation issued pursuant to the Amalgamation inreplacement of compensation options, warrants, supplier warrants,replacement agent's options and diamond warrants granted byPassion Media;

5. Silicon has been a reporting issuer underthe Securities Act (Alberta) (the "Alberta Act")since November 28, 2000, after the issuance of a receipt forits initial public offering prospectus. Silicon has been areporting issuer under the Securities Act (BritishColumbia) (the "BC Act") since December 27, 2000,as a result of Silicon's securities being listed for tradingon the Canadian Venture Exchange Inc. (the "CDNX")(on April 5, 2002, the CDNX was renamed the TSX Venture Exchange(the "TSX Venture"));

6. The Corporation is a reporting issuer underthe Alberta Act and the BC Act by virtue of the Amalgamation.The Corporation is not in default of any requirements of theBC Act or the Alberta Act;

7. The Corporation is not a reporting issueror its equivalent under the securities legislation of anyjurisdiction in Canada, other than British Columbia and Alberta;

8. Silicon's common shares were listed onthe CDNX from December 27, 2000 until the Amalgamation. TheCorporation's Class A Shares are listed on the TSX Venture.The Corporation is in compliance with all of the requirementsof the TSX Venture;

9. The Corporation has a significant connectionto Ontario for the reasons that greater than 10 per cent ofthe beneficial and registered shareholders of the Corporationhad, as at August 2, 2002, residence in Ontario, and the mindand management of the Corporation are located in Ontario.

10. The continuous disclosure requirementsof the Alberta Act and the BC Act are substantially the sameas the requirements under the Act;

11. The materials filed by Silicon as reportingissuer in the provinces of Alberta and British Columbia areavailable on the System for Electronic Document Analysis andRetrieval;

12. There have been no penalties or sanctionsimposed against Silicon or Passion Media by a court relatingto Canadian securities legislation or by a Canadian securitiesregulatory authority, and neither Silicon nor Passion Mediahas entered into any settlement agreement with any Canadiansecurities regulatory authority;

13. Neither Silicon nor any of its officers,directors or any of its controlling shareholders has:

a. been the subject of any penalties orsanctions imposed by a court relating to Canadian securitieslegislation or by a Canadian securities regulatory authority;

b. entered into a settlement agreement witha Canadian securities regulatory authority; or

c. been subject to any other penalties orsanctions imposed by a court or regulatory body that wouldlikely to be considered important to a reasonable investormaking an investment decision;

14. Neither Passion Media nor any of its officers,directors or any of its controlling shareholders has:

a. been the subject of any penalties orsanctions imposed by a court relating to Canadian securitieslegislation or by a Canadian securities regulatory authority;

b. entered into a settlement agreement witha Canadian securities regulatory authority; or

c. been subject to any other penalties orsanctions imposed by a court or regulatory body that wouldlikely to be considered important to a reasonable investormaking an investment decision;

15. To the knowledge of Silicon or any ofits respective directors or officers or any of its controllingshareholders, neither Silicon nor any of its respective directors,officers or controlling shareholders is or has been subjectto: (i) any known ongoing or concluded investigations by:(a) a Canadian securities regulatory authority, or (b) a courtor regulatory body, other than a Canadian securities regulatoryauthority, that would be likely to be considered importantto a reasonable investor making an investment decision; or(ii) any bankruptcy or insolvency proceedings, or other proceedings,arrangements or compromises with creditors, or the appointmentof a receiver, receiver-manager or trustee, within the preceding10 years;

16. To the knowledge of Passion Media or anyof its respective directors or officers or any of its controllingshareholders, neither Passion Media nor any of its respectivedirectors, officers or controlling shareholders is or hasbeen subject to: (i) any known ongoing or concluded investigationsby: (a) a Canadian securities regulatory authority, or (b)a court or regulatory body, other than a Canadian securitiesregulatory authority, that would be likely to be consideredimportant to a reasonable investor making an investment decision;or (ii) any bankruptcy or insolvency proceedings, or otherproceedings, arrangements or compromises with creditors, orthe appointment of a receiver, receiver-manager or trustee,within the preceding 10 years;

AND UPON the Commission being satisfiedthat to do so would not be prejudicial to the public interest;

IT IS HEREBY ORDERED pursuant to subsection83.1(1) of the Act that the Corporation be deemed to be a reportingissuer for the purposes of the Act.

August 8, 2002.

"Iva Vranic"