McCoy Bros. Inc. - s. 9.1 of Rule 61-501

Headnote

Rule 61-501 - Related party transactions - Relieffrom minority approval requirement granted in connection witha proposed transaction consisting of the sale and leasebackof certain properties between a TSX issuer and, among others,a company wholly-owned by a senior officer and director of theissuer. A majority of the minority shareholders will expresssupport for the transaction and will consent to the transactionin writing.

Rule Cited

Rule 61-501 - Insider Bids, Issuer Bids, GoingPrivate Transactions and Related Party Transactions, ss. 5.7and 9.1.

IN THE MATTER OF

ONTARIO SECURITIES COMMISSION

RULE 61-501 ("Rule 61-501")

AND

IN THE MATTER OF

McCOY BROS. INC.

DECISION

(Section 9.1 of Rule 61-501)

UPON the application of McCoy Bros. Inc.("McCoy") to the Director of the Ontario SecuritiesCommission pursuant to section 9.1 of Rule 61-501 for a decisionexempting McCoy from the minority approval requirement set forthin section 5.7 of Rule 61-501 in connection with a proposedrelated party transaction with C. M. W. Management Inc. ("CMW")and Technology Investment Fund Ltd. ("TIF");

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

AND UPON McCoy having represented tothe Director as follows:

1. McCoy is a corporation existing under thelaws of the province of Alberta and is a reporting issuerunder the applicable securities legislation of each of theprovinces of Alberta, British Columbia, Ontario and Saskatchewan.

2. The authorized capital of McCoy consistsof an unlimited number of common shares (the "Shares")and an unlimited number of preferred shares, of which thereare currently 17,533,807 Shares and no preferred shares outstanding.The Shares are listed on The Toronto Stock Exchange (the "TSX").

3. McCoy has reached an agreement with CMWand TIF with respect to sale (the "Sale") by McCoyto CMW and TIF and the subsequent leaseback (the "Leaseback")by McCoy from CMW and TIF of the following real estate:

(a) the facility (office/warehouse/manufacturing)owned by McCoy that is municipally located at 14755 - 121AAvenue, Edmonton, Alberta (the "121A Avenue Property");and

(b) the two building complex (office/warehouse/truckservice and repair shop) owned by McCoy that is municipallylocated at 3904 - 78 Avenue, Edmonton, Alberta (the "78Avenue Property").

4. The Sale and the Leaseback (collectivelyreferred to as the "Transaction") are subject toa number of conditions including, without limitation, theapproval of all applicable regulatory authorities.

5. Upon final approval of the board of directorsof McCoy, McCoy will disclose the details of the Transactionin a press release and in a material change report.

6. CMW is a "related party" of McCoyin accordance with the definition contained in Rule 61-501because CMW is wholly-owned by Mr. Kerry Brown, who is theChairman and a director of McCoy.

7. Mr. Brown owns 16,900 Shares representingless than 1% of the outstanding Shares.

8. Mr. Brown also owns approximately 15.3%of the outstanding common shares of Foundation Equity Corporation("Foundation") which holds:

a) 13,102,727 Shares representing approximately75% of the issued and outstanding Shares;

b) a convertible promissory note (the "Note")due April 15, 2004 of McCoy, with $1,559,117.65 of principaland accrued interest owing thereunder as at June 28, 2002(the total number of Shares that may be issued pursuantto one or more conversions under the Note may not exceed10,261,080 without the prior consent of the TSX); and

c) 200,000 Share purchase warrants whichare exercisable into Shares at a price of $2.00 per shareon or before June 25, 2006.

9. By virtue of CMW being a related partyof McCoy, the Transaction is a related party transaction underRule 61-501. McCoy is therefore required, absent exemptionor discretionary relief, to comply with the valuation andminority shareholder approval requirements of Rule 61-501applicable to related party transactions in order to completethe Transaction.

10. Shaske & Zeiner Appraisal ConsultantsLtd. ("SZAC") of Edmonton, Alberta has preparedindependent appraisals (the "Prior Valuations")in respect of the market value each of the 121A Avenue Propertyand the 78 Avenue Property (collectively referred to as the"Properties") as at April 12, 2002.

11. The purchase price to be paid by CMW andTIF for the Properties is greater than the market value setforth in the Prior Valuations.

12. McCoy has retained SZAC to prepare independentappraisals (the "Valuation Reports") in respectof the Properties as at January 13, 2003.

13. It is expected that the board of directorsof McCoy will approve the Transaction (with Mr. Brown abstainingfrom all deliberations of the board relating to the Transactionafter having declared his interest in the Transaction).

14. It is expected that the purchase priceto be paid by CMW and TIF to McCoy for the Property will benot less than market value of the Property as set forth inthe Valuation Reports.

15. The terms of the Leaseback will be generallydisclosed and are not less advantageous to McCoy than if theLeaseback was with a party dealing at arm's length with McCoy.Accordingly:

(a) the Leaseback is exempt from the valuationrequirement contained in section 5.5 of Rule 61-501 pursuantto section 5.6(4)(b) of Rule 61-501; and

(b) the Leaseback is exempt from the minorityshareholder requirement contained in section 5.7 of Rule61-501 pursuant to section 5.8(3) of Rule 61-501.

16. It is expected that shareholders beneficiallyowning a majority of the Shares held by persons who deal atarm's length with CMW (the "Outside Shareholders")will provide their written consent to the Sale. None of theOutside Shareholders are participating in the Transaction.Since the Outside Shareholders own more than 50% of the Sharesheld by all minority shareholders, minority approval of theSale will be received and, accordingly, approval of the Saleby a majority of the minority shareholders at a meeting wouldbe a foregone conclusion.

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

IT IS DECIDED by the Director pursuantto section 9.1 of Rule 61-501 that McCoy shall not be subjectto the minority approval requirement in section 5.7 of Rule61-501 in connection with the Sale, provided that:

a. the Outside Shareholders consent in writingto the Sale, the consent contains an acknowledgement thatthey are aware of the terms of the Sale, and the acknowledgementis filed with the Director; and

b. McCoy complies with the other applicableprovisions of Rule 61-501.

January 31, 2003.

"Ralph Shay"