Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- Issuer deemed to have ceased to be reporting issuer under the Act.

Applicable Ontario Statutory Provisions

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

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, ONTARIO, QUEBEC AND SASKATCHEWAN

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

HY & ZEL'S INC.

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of Alberta, Ontario, Quebec and Saskatchewan (the "Jurisdictions") has received an application from Hy & Zel's Inc. (the "Applicant") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the Applicant be deemed to have ceased to be a reporting issuer or the equivalent thereof in the Jurisdictions.

AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System") Ontario is the principal regulator for this application;

AND WHEREAS, unless otherwise defined, the terms herein have the meaning set out in National Instrument 14-101 Definitions or in Quebec Commission Notice 14-101;

AND WHEREAS, the Applicant has represented to the Decision Makers that:

1. Hy & Zel's Inc. was incorporated by Letters Patent issued April 1, 1963 pursuant to The Corporations Act (Ontario), and is governed by the provisions of the Business Corporations Act (Ontario) ("OBCA"). By Articles of Amendment dated August 25, 1986, Hy & Zel's Inc. amended its share capital to its present authorized and issued share capital and changed its name to its present name. Effective December 17, 2003, Hy & Zel's Inc. amalgamated with 2012413 Ontario Inc., a private corporation controlled by Mr. Zelick Goldstein, who prior to the amalgamation, was the principal shareholder of Hy & Zel's Inc. (the "Principal Shareholder"). The amalgamated corporation retained the name "Hy & Zel's Inc." Unless otherwise specifically stated, all references to "Hy & Zel's Inc." or the "Applicant" in this Decision Document (including the preamble) refer to the post-amalgamation corporation.

2. The Applicant operates a chain of 17 drug stores in Southern Ontario, which offer a wide selection of drug store products, and a full range of grocery and general merchandise.

3. The head office of the Applicant is located at 7171 Yonge Street, Thornhill, Ontario.

4. Prior to the amalgamation, the issued and outstanding capital of Hy & Zel's Inc. consisted of 2,900,100 common shares.

5. As a result of the amalgamation, the Applicant is a reporting issuer or the equivalent thereof in each of the Jurisdictions.

6. On the effective date of the amalgamation, each shareholder of the pre-amalgamation Hy & Zel's Inc. (other than the dissenting shareholders and Mr. Zelick Goldstein) received one Class A Redeemable Preference Share in the capital of the post-amalgamation Hy & Zel's Inc. for each common share of the pre-amalgamation Hy & Zel's Inc. The 1,054,200 common shares of the pre-amalgamation Hy & Zel's Inc. held by Mr. Zelick Goldstein were cancelled. Dissenting shareholders were entitled to be paid fair value (within the meaning of that term under Section 185 of the OBCA) for the Common Shares in respect of which such right of dissent was exercised.

7. In accordance with the articles of amalgamation, on the effective date of the amalgamation, sufficient funds were deposited with Computershare Trust Company of Canada, the depository, to allow it to pay the aggregate redemption consideration to the shareholders of Class A Redeemable Preference Shares. The shareholders of Class A Redeemable Preference Shares are not entitled to exercise any rights as shareholders in respect thereof, other than to receive the redemption consideration. The Principal Shareholder is the only beneficial holder of common shares in the capital of Hy & Zel's Inc.

8. Any Shareholder who held Class A Redeemable Preference Shares directly or indirectly through one or more recently incorporated Ontario holding companies (each such company, a "Holding Company") had the option to sell all of the issued and outstanding shares of that Holding Company prior to December 24, 2003 to the Principal Shareholder or a company controlled by the Principal Shareholder in exchange for consideration identical to the redemption consideration such Shareholder would have otherwise been entitled to receive (the "Holding Company Alternative"). Mr. Hyman Himmel who beneficially held 1,000,000 Class A Redeemable Preference Shares through one or more Holding Companies elected to proceed with the Holding Company Alternative.

9. As at April 5, 2004, 766,440 Class A Redeemable Preference Shares have been redeemed and 79,460 Class A Redeemable Preference Shares remain issued and outstanding and are held by 81 beneficial shareholders, including 11 beneficial shareholders resident in Quebec which hold at total of 43,616 Class A Redeemable Preference Shares.

10. Aside from the securities listed above, the Applicant has no securities, including debt securities, outstanding.

11. Hy & Zel's Inc. is seeking a decision from the Decision Makers that it cease to be a reporting issuer or the equivalent thereof in each of the Jurisdictions.

12. No securities of Hy & Zel's Inc. are traded on a marketplace as defined in National Instrument 21-101 - Marketplace Operation. Hy & Zel's Inc. was delisted from the Toronto Stock Exchange effective December 19, 2003.

13. Hy & Zel's Inc. has concurrently herewith filed a Notice For Voluntary Surrender of Reporting Issuer Status pursuant to BC Instrument 11-502 with the British Columbia Securities Commission.

14. Hy & Zel's Inc. will not be a reporting issuer, or the equivalent thereof, in any jurisdiction in Canada following the granting of the relief pursuant to this Decision.

15. Hy & Zel's Inc. does not intend to seek financing by way of a public offering in any jurisdiction in Canada.

16. Hy & Zel's Inc. is not in default of any of its obligations under the Legislation as a reporting issuer.

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

AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;

THE DECISION of the Decision Makers under the Legislation is that Hy & Zel's Inc. is deemed to have ceased to be a reporting issuer or the equivalent thereof in each of the Jurisdictions.

June 8, 2004.

"Paul M. Moore"
"Suresh Thakrar"