ADB Systems International Inc. and ADB Systems International Ltd. - MRRS Decision

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - issuer involved in plan of arrangementwhereby issuer became wholly-owned subsidiary of new issuer("Newco") - Newco to carry on the business of theissuer - prior to arrangement, issuer was "qualifying issuer"within meaning of Multilateral Instrument 45-102 - Newco doesnot have a current AIF filed on SEDAR for the purpose of MultilateralInstrument 45-102 - Newco exempt from current AIF requirement,subject to conditions - in Ontario, Newco exempt from paymentof fees in connection with arrangement.

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., s. 59(1) of Schedule 1.

Applicable Ontario Rules

Multilateral Instrument 45-102 Resale of Securities(2001) 24 OSCB 7029, sections. 1.1, 4.1.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ONTARIO, BRITISH COLUMBIA,ALBERTA, SASKATCHEWAN,

MANITOBA, NOVA SCOTIA, NEWBRUNSWICK,

PRINCE EDWARD ISLAND, NEWFOUNLANDAND LABRADOR,

YUKON TERRITORY, NORTHWESTTERRITORIES AND NUNAVUT

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ADB SYSTEMS INTERNATIONALINC. AND

ADB SYSTEMS INTERNATIONALLTD.

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Makers") ineach of Ontario, British Columbia, Alberta, Saskatchewan, Manitoba,Nova Scotia, New Brunswick, Prince Edward Island, Newfoundlandand Labrador, Yukon Territory, Northwest Territories and Nunavut(the "Jurisdictions") has received an applicationfrom ADB Systems International Inc. ("ADB") and ADBSystems International Ltd. ("New ADB") (collectively,the "Filers") for a decision under Multilateral Instrument45-102 Resale of Securities ("MI 45-102) that therequirement to have a "current AIF" filed on SEDAR(as hereinafter defined) for purposes of the definition of "qualifyingissuer" in MI 45-102 shall not apply to New ADB, subjectto certain conditions;

AND WHEREAS the Ontario Securities Commission(the "OSC") has received an application from New ADBfor a decision under subsection 59(2) of Schedule 1 ("Schedule1") of the regulation to the Securities Act (Ontario)that New ADB is exempt from the requirement to pay the fee otherwisepayable under section 7.7 of OSC Rule 45-501 Exempt Distributions("OSC Rule 45-501") and subsection 23(1) of Schedule1;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System")the OSC is the principal regulator for this application;

AND WHEREAS the Filers has representedto the Decision Makers that:

1. ADB is a corporation amalgamated underthe laws of Ontario on January 9, 1997. The principal businessoffices of ADB are located at 6725 Airport Road, Suite 201,Mississauga, Ontario L4V 1V2.

2. New ADB is a corporation incorporated underthe laws of Ontario on August 20, 2002 for the sole purposeof participating in an inter-company reorganization with ADB.New ADB will in all material respects carry on the businessof ADB.

3. Effective October 31, 2002 (the "EffectiveDate"), ADB and New ADB reorganized by way of a planof arrangement pursuant to an agreement dated as of August23, 2002, among ADB and New ADB. As a result, ADB became awholly-owned subsidiary of New ADB (the "Arrangement"),holding the assets used in the on-line business-to-consumerretail operations (the "Bid.Com Assets") and liabilitiesassociated with the on-line business-to-consumer retail operations(the "Bid.Com Liabilities"), and New ADB becamethe owner of all of the issued and outstanding shares of ADB,holding, directly or indirectly, the same assets (other thanthose attributable to the Bid.Com Assets) and being subjectto the same liabilities as ADB prior to the Arrangement (otherthan those attributable to the Bid.Com Liabilities).

4. An information circular dated September20, 2002, containing the disclosure that would be requiredin a prospectus if the information circular were a prospectusof ADB and New ADB, with necessary modifications, was sentto the holders of the shares of ADB in connection with themeeting held on October 22, 2002 to approve the Arrangement.The Arrangement was approved by a special resolution of shareholdersat that meeting.

5. On October 24, 2002, ADB obtained the FinalOrder of the Ontario Superior Court of Justice approving theArrangement.

6. On the Effective Date of the Arrangement,certain actions occurred and were deemed to have occurredby operation of law, including the following in the orderset forth below:

(a) each share of ADB (other than sharesheld by dissenting shareholders) was deemed to be exchangedwith New ADB for the sole consideration of a share of NewADB on a one for one basis;

(b) each issued convertible security ofADB, whether vested or not vested, outstanding on the EffectiveDate of the Arrangement was exchanged for a security ofNew ADB that is convertible into, or carries the right ofthe holder to purchase, or of the issuer to cause the purchaseof, a security of New ADB, having the same terms and conditions,and the obligations of ADB thereafter terminated; and

(c) ADB transferred all of its assets, otherthan the Bid.Com Assets, to New ADB as a return of capitaland New ADB assumed and will fulfil and perform all of theliabilities of ADB, other than the Bid.Com Liabilities.

7. The Arrangement was an inter-company reorganizationthat did not result in a change in the beneficial ownershipof the securities of ADB, since the beneficial owners of thesecurities of ADB immediately prior to the Arrangement werethe same beneficial owners of the securities of New ADB whenthe Arrangement became effective.

8. Neither ADB nor New ADB has received anyproceeds from the trades or distribution of securities inconnection with the Arrangement.

9. The shares of ADB were listed and postedfor trading on the Toronto Stock Exchange ("TSX").The shares of New ADB have now been listed and posted fortrading on the TSX in substitution for the shares of ADB.New ADB has not been notified by the TSX that it does notmeet the requirements to maintain that listing and is notdesignated inactive, suspended or the equivalent.

10. ADB is a "reporting issuer"under the Legislation of Ontario, British Columbia and Albertaand is not in default of any of the requirements of such Legislation.On the Effective Date, New ADB became a "reporting issuer"under the Legislation of Ontario, British Columbia and Albertaby operation of such Legislation. ADB intends to cease tobe a "reporting issuer" under such Legislation.

11. ADB and New ADB are electronic filersunder National Instrument 13-101 System for ElectronicDocument Analysis and Retrieval.

12. The continuous disclosure documents thatADB was required or permitted to file with, or deliver to,the securities regulatory authorities in Ontario, BritishColumbia and Alberta under the Legislation of such provincessince September 1997 are available for review on the Systemfor Electronic Document Analysis and Retrieval ("SEDAR").

13. ADB has (i) an annual information form(an "AIF") in the form of a current annual reporton Form 20-F under the Securities Exchange Act of 1934of the United States of America (the "1934 Act")for its most recently completed financial year (the "ADBAIF") filed on SEDAR in the provinces of Ontario, BritishColumbia and Alberta, and (ii) securities registered undersection 12 of the 1934 Act. As a result, the ADB AIF constitutesa current AIF within the meaning of MI 45-102 (a "currentAIF"). ADB has not received a notice from any regulatorthat the ADB AIF is unacceptable. Accordingly, immediatelyprior to the Effective Date of the Arrangement, ADB was aqualifying issuer as defined under MI 45-102 (a "QualifyingIssuer"). However, New ADB is not a Qualifying Issuersince it does not have a current AIF for purposes of MI 45-102.

14. The trades in Ontario of the securitiesdescribed in subparagraphs 6(a) and (b) above in connectionwith the Arrangement were made under the exemption containedin section 2.8 of OSC Rule 45-501. As a result, ADB is requiredto pay the fees prescribed by section 23 of Schedule 1. Thefee payable by New ADB to the OSC in respect of the Arrangementis required to be calculated on the basis of 0.02% of theaggregate value of the securities distributed in Ontario inreliance upon that exemption, less 20%. The value of the sharesof New ADB and the "convertible securities" of NewADB at the time the Arrangement became effective was approximately$6,780,951 and will result in a fee of approximately $1,084.95.

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 requirement in the Legislation tohave a current AIF filed on SEDAR in order to be a QualifyingIssuer under MI 45-102 shall not apply to New ADB provided that:

(a) New ADB files a Form 45-102F2 on orbefore the tenth day after the distribution date of anysecurities certifying that it was a Qualifying Issuer onsuch distribution date except that the requirement to havea current AIF does not apply to New ADB; and

(b) this Decision expires upon the earlierof

(i) the date that New ADB files a currentAIF on SEDAR; and

(ii) May 20, 2003.

AND THE FURTHER DECISION of the DecisionMaker in Ontario is that New ADB is exempt from the paymentof the fees otherwise payable under section 7.7 of OSC Rule45-501 and subsection 23(1) of Schedule 1 in respect of thetrades described in subparagraphs 6(a) and (b) above in connectionwith the Arrangement.

December 13, 2002.

"Margo Paul"