Securities Law & Instruments


Clause 104(2)(c) - offer by issuer to acquireall warrants of the issuer where the warrant holders are sophisticatedand consent to the filing of the application for relief arenot subject to formal issuer bid requirements.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as 95, 96, 97, 98, 100 and 104(2)(c).

Regulations Cited

Regulation under the Securities Act, R.R.O.1990, Reg. 1015 as am. s. 203.1.

Rule Cited

Ontario Securities Commission Rule 61-501.



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






(Section 104(2)(c))

UPON the application of Envoy CommunicationsGroup Inc. ("the Applicant") to the Ontario SecuritiesCommission (the "Commission") for an order pursuantto section 104(2)(c) of the Act that sections 95, 96, 97, 98and 100 of the Act and section 203.1 of the regulation underthe Act, R.R.O. 1990, Reg. 1015, as amended, (collectively,the "Issuer Bid Requirements") shall not apply tothe Applicant in consummating its proposed offer to amend certainconvertible debentures (the "Proposed Amendment")by terminating the rights of the holders thereof to acquirecertain common shares purchase warrants of the Applicant (the"Underlying Warrants");

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

AND UPON the Applicant having representedto the Commission as follows:

1. The Applicant was incorporated under thelaws of the Province of British Columbia, Canada as "PotentialMines Ltd." in December 1973 and was continued underthe laws of the Province of Ontario, Canada in December 1997.Its head office and registered address is 26 Duncan Street,Toronto, Ontario, M5V 2B9.

2. The Applicant is an international design,marketing and technology company with offices in North Americaand Europe.

3. The Applicant is a reporting issuer orits equivalent in all provinces of Canada and its common sharesare listed and posted for trading on the facilities of theToronto Stock Exchange. The Applicant is not on the list ofreporting issuers in default maintained by the Commission.

4. On April 29, 2002, the Applicant issued$1,800,000 in principal value of 10% Convertible Secured Debenturesdue April 29, 2007 (the "Convertible Debentures"),which are convertible into a total of 2,500,000 common sharesof the Applicant and 2,500,000 Underlying Warrants. Upon issuance,each Underlying Warrant will be exercisable into one commonshare of the Applicant at a price of $0.90 per share for aperiod ending on the earlier of (i) the first anniversaryof the issuance of the warrant and (ii) April 29, 2007.

5. The holders of the Convertible Debentures(the "Warrantholders") are three financial or investmentinstitutions resident in Switzerland. In subscribing for theConvertible Debentures, each of the Warrantholders representedto the Applicant that it was an "accredited investor"for the purposes of Ontario Securities Commission Rule 45-501("Rule 45-501") and, accordingly, the trades ofthe Convertible Debentures to the Warrantholders were exemptfrom prospectus and registration requirements of the Act undersection 2.3 of Rule 45-501.

6. Subject to compliance with Ontario securitieslaws, the Applicant has solicited expressions of intereston the part of the Warrantholders to amend the terms of theConvertible Debentures such that the rights to the UnderlyingWarrants are terminated in exchange for a nominal paymentby the Applicant to each of the Warrantholders.

7. Management of the Applicant has determinedthat it would be in the best interests of the Applicant toeffect the Proposed Amendment.

8. The consummation of the Proposed Amendmentcould be construed to be an "issuer bid" for thepurposes of Part XX of the Act. Absent the relief grantedhereunder, the Applicant would be required to comply withthe Issuer Bid Requirements and Ontario Securities CommissionRule 61-501 ("Rule 61-501") in effecting the ProposedAmendment.

9. Each of the three Warrantholders is a sophisticatedinvestor that is knowledgeable about the affairs of the Applicant.Each Warrantholder has consented to this application and theconsummation of the Proposed Amendment without the benefitof an issuer bid circular and the other protections affordedby the Act and Rule 61-501.

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

IT IS ORDERED pursuant to section 104(2)(c)of the Act that the Issuer Bid Requirements shall not applyto the consummation of the Proposed Amendment.

October 8, 2002.

"Howard I. Wetston"                    "KerryD. Adams"