Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - as a result of an amalgamation and a planof arrangement, issuer has only one security holder - issuerdeemed to have ceased to be a reporting issuer.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.s. 83.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ONTARIO, ALBERTA AND QUEBEC

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

RAINMAKER ENTERTAINMENT GROUPLTD.

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Ontario, Alberta and Quebec (the "Jurisdictions")has received an application from Rainmaker Entertainment GroupLtd. (the "Filer") for a decision under the securitieslegislation of the Jurisdictions (the "Legislation")that the Filer be deemed to have ceased to be a reporting issuerunder the Legislation;

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;

AND WHEREAS the Filer has representedto the Decision Makers that:

1. Rainmaker Entertainment Group Ltd. ("PredecessorRainmaker"), one of the predecessor companies of theFiler, was incorporated under the laws of British Columbiaon July 22, 1999.

2. Rainmaker Studios Inc., one of the predecessorcompanies of the Filer, was incorporated under the laws ofBritish Columbia on May 11, 1994.

3. 646099 B.C. Ltd. ("Rainmaker Holdings"),one of the predecessor companies of the Filer, was incorporatedunder the laws of British Columbia on April 19, 2002.

4. Predecessor Rainmaker amalgamated withRainmaker Studios Inc. and Rainmaker Holdings under the lawsof British Columbia on May 31, 2002 to form the Filer.

5. The Filer's head office is located at 50West 2nd Avenue, Vancouver, British Columbia, V5Y1B3. The Filer is a reporting issuer in each of the Jurisdictions.

6. The Filer's authorized capital consistsof 200,000,000 common shares ("Common Shares").The issued and outstanding capital of the Filer consists of2,819,372 Common Shares and $33,988,035.94 principal amountof subordinated notes. There are no other securities, includingdebt securities, of the Filer outstanding.

7. Rainmaker Income Fund (the "Fund")is an unincorporated open-ended limited purpose trust establishedunder the laws of British Columbia by Declaration of Trustdated April 22, 2002. As of September 20, 2002, there were10,715,003 units (Fund Units) and 625,683 special voting units("Special Voting Fund Units") of the Fund outstanding.

8. Rainmaker Capital Limited Partnership (the"Partnership") is a limited partnership formed underthe laws of British Columbia on May 21, 2002. As of September20, 2002, the Partnership had 10,715,003 Class A limited partnershipunits (Class A LP Units), 625,683 Class B limited partnershipunits ("Class B LP Units") and one general partnershipunit outstanding.

9. Rainmaker GP Capital Inc. ("RainmakerGP") was incorporated under the laws of British Columbiaon April 19, 2002. Rainmaker GP is the general partner ofthe Partnership. Rainmaker GP's authorized capital consistsof 500,000 common shares and 500,000 preferred shares. Theissued and outstanding capital of Rainmaker GP consists ofone common share.

10. Effective May 31, 2002, all of the issuedand outstanding Common Shares were indirectly acquired byRainmaker Income Fund pursuant to a plan of arrangement datedMay 27, 2002 (the "Plan of Arrangement").

11. Holders of Predecessor Rainmaker commonshares approved the Plan of Arrangement at an extraordinarygeneral meeting of Predecessor Rainmaker held on May 27, 2002.

12. In connection with the Plan of Arrangementeach common share of Predecessor Rainmaker was indirectlyexchanged for either: (a) one Fund Unit; or (b) one ClassB LP Unit and one Special Voting Fund Unit.

13. Under the Plan of Arrangement, the exchangetransaction referred to in the preceding paragraph was completedas follows:

(a) Each common share of Predecessor Rainmakerwas exchanged for either: (i) one common share and $3.17subordinated notes of Predecessor Rainmaker; or (ii) oneClass B LP Unit;

(b) Holders of common shares of PredecessorRainmaker who elected to exchange their Predecessor Rainmakercommon shares for common shares and subordinated notes ofRainmaker Holdings exchanged such Rainmaker Holdings commonshares and subordinated notes for Fund Units (the "FundExchange").

(c) The Fund subsequently transferred thecommon shares and subordinated notes of Rainmaker Holdingsthat the Fund received as a result of the Fund Exchangeto the Partnership in exchange for subordinated notes ofthe Partnership;

(d) Predecessor Rainmaker, Rainmaker Holdingsand Rainmaker Studios amalgamated to form the Filer.

(e) Holders of common shares of PredecessorRainmaker who elected to receive Class B LP Units in exchangefor their Predecessor Rainmaker common shares were issuedone Special Voting Fund Unit for each Class B LP Unit thatthey held.

14. After completion of the Plan of Arrangement:

(a) The Fund Units are owned by former holdersof Predecessor Rainmaker common shares in the same proportionas the number of Predecessor Rainmaker common shares thatwere held by such holders prior to the Plan of Arrangement;

(b) The Class B LP Units and Special VotingFund Units are owned by former holders of Predecessor Rainmakercommon shares in the same proportion as the number of PredecessorRainmaker common shares that were held by such holders priorto the Plan of Arrangement. Each Class B LP Unit and SpecialVoting Fund Unit is exchangeable for no additional considerationinto one Fund Unit. Until exchanged into Fund Units, theClass B LP Units and Special Voting Fund Units togetherprovide the holders thereof with the equivalent voting andeconomic entitlement to the Fund as holders of Fund Units;

(c) The Partnership is the sole holder ofall of the outstanding Common Shares and subordinated notesof the Filer;

(d) The Fund owns all of the Class A LPUnits and subordinated notes of the Partnership;

(e) The Fund is the sole holder of all ofthe outstanding securities of Rainmaker GP, the generalpartner of the Partnership; and

(f) The Fund Units were listed on the TorontoStock Exchange and began trading on June 4, 2002.

15. Other than the Filer's failure to fileand deliver to its security holders an annual report for thefiscal year ended December 31, 2001 (the "Annual Report")and the interim financial statements for the three month periodended March 31, 2002 (the "Interim Financials")and to file an annual information form for the fiscal yearended December 31, 2001 (the "AIF"), the Filer isnot in default of any requirements of the Legislation.

16. In place of the Interim Financials, theFiler has filed interim financial statements for the periodcommencing January 1, 2002 and ending May 30, 2002.

17. Although the Filer did not file and deliverto its securityholders the Annual Report or file the AIF,an information circular dated April 27, 2002 prepared in connectionwith the Plan of Arrangement was delivered to former holdersof Predecessor Rainmaker common shares and contained prospectuslevel disclosure regarding Predecessor Rainmaker, the Fundand the Plan of Arrangement. As required by the Legislation,the Fund will file an annual information form on a going forwardbasis.

18. The financial statements of the Fund willbe prepared on a consolidated basis and will disclose, tothe extent required under Canadian generally accepted principles,the financial results of the Filer. Additional continuousdisclosure documents required to be filed under the Legislationby the Fund that are required to contain disclosure regardingthe Fund's business and operations will include disclosureof the Filer's business and operations.

19. The Common Shares were delisted from theToronto Stock Exchange on June 3, 2002 and no securities ofthe Filer are listed or quoted on any exchange or market.

20. Other than the Common Shares and subordinatednotes held by the Partnership, the Filer has no securities,including debt securities, outstanding.

21. The Filer does not intend to seek publicfinancing by way of an offering of its securities.

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

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that the Filer is deemed to have ceased tobe a reporting issuer under the Legislation.

October 8, 2002.

"John Hughes"