Mutual Reliance Review System for Exemptive Relief Applications -- Issuer of asset-backed securities previously granted an exemption from the requirements to file financial statements and other continuous disclosure documents -- Issuer granted an exemption from the requirement under Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings to file interim certificates for the 2004 financial year.
Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings.
National Instrument 51-102 Continuous Disclosure Obligations.
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ALBERTA, SASKATCHEWAN, MANITOBA,
ONTARIO, NOVA SCOTIA AND NEWFOUNDLAND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
FALCON TRUST/FIDUCIE FALCON
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (each, a "Decision Maker") in each of Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia and Newfoundland and Labrador (the "Jurisdictions") has received an application from Falcon Trust/Fiducie Falcon (the "Issuer") for a decision pursuant to the securities legislation of the Jurisdictions (the "Legislation") that the provisions of Multilateral Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings ("MI 52-109") concerning the filing of interim certificates ("Interim Certificates") shall not apply to the Issuer in respect of the Issuer's financial year beginning on January 1, 2004;
AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS pursuant to an MRRS decision document dated November 14, 2002 (the "Exemption Decision") the Issuer is exempted, on certain terms and conditions, from the requirements of the securities legislation in the Jurisdictions and the Provinces of British Columbia and Québec (the local securities regulatory authority or regulator in each such jurisdiction collectively, the "Previous Decision Makers") concerning, inter alia, the preparation, filing and delivery of interim and annual financial statements ("Financial Statements");
AND WHEREAS, unless otherwise defined, the terms herein have the meaning set out in National Instrument 14-101 Definitions;
AND WHEREAS the Issuer has represented to the Decision Makers that:
1. The Issuer is a special purpose vehicle created pursuant to a declaration of trust made as of July 10, 2002 under the laws of the Province of Ontario, the beneficiary of which is a charity registered under the Income Tax Act (Canada). The only security holders of the Issuer are and will be the holders (the "Certificateholders") of its asset-backed securities (the "Certificates").
2. The head office of the Issuer is located in Toronto, Ontario. The issuer trustee (the "Issuer Trustee") is CIBC Mellon Trust Company, whose registered and principal office is located in Toronto, Ontario. The head office of Scotia Capital Inc., the administrative agent of the Issuer, is also located in Toronto, Ontario.
3. The financial year-end of the Issuer is December 31.
4. The Issuer filed short form prospectuses (together, the "Prospectuses") dated October 4, 2002 and January 12, 2004 with each of the Canadian provincial securities regulatory authorities for the issuance of approximately $147,000,000 and $172,645,950, respectively, aggregate principal amount of Commercial Mortgage Pass-Through Certificates, Series 2002-SMU and Series 2003-SMU, respectively (collectively, the "Issued Certificates") and received receipts for the Prospectuses from each of the Canadian provincial securities regulatory authorities.
5. The Issuer is a reporting issuer, or the equivalent, in each of the provinces of Canada that provides for a reporting issuer regime, and, to its knowledge, is currently not in default of any applicable requirements under the securities legislation thereunder.
6. As a special purpose vehicle, the Issuer does not carry on any activities except in connection with the issuance of Certificates, the origination of commercial mortgages and the purchase and acquisition of assets in connection with such mortgages (the "Securitized Assets").
7. The Issuer has no directors and no officers and has no material assets or liabilities other than its rights and obligations arising from originating commercial mortgages and acquiring Securitized Assets in respect of the Issued Certificates.
8. Pursuant to Section 13.2(2) of National Instrument 51-102 Continuous Disclosure Obligations, the Issuer has filed a notice dated May 28, 2004 with the Previous Decision Makers stating that it intends to rely on the Exemption Decision to the same extent and on the same terms as contained therein.
9. For each offering of Certificates, the discrete pool of Securitized Assets will be deposited with a custodian pursuant to a servicing agreement or other custodial arrangement (each a "Servicing Agreement") that the Issuer will enter into which will govern the rights of Certificateholders and their respective entitlement to the Securitized Assets.
10. Each Servicing Agreement will also provide for the fulfilment of certain administrative functions relating to the Certificates, such as the maintenance of a register of holders of Certificates and the preparation of periodic reports (the "Reports") to Certificateholders containing financial and other information in respect of the applicable pool of Securitized Assets and Certificates, by the master servicer (the "Master Servicer"), the special servicer and the reporting agent for such pool of Securitized Assets.
11. Pursuant to the Servicing Agreement in respect of the Issued Certificates and as contemplated in the Exemption Decision:
(a) the Master Servicer shall deliver annually a statement of compliance (the "Compliance Certificate") signed by a senior officer of each applicable Master Servicer or other party acting in a similar capacity on behalf of the Issuer for the applicable pool of Securitized Assets, certifying that the Master Servicer or such other party acting in a similar capacity has fulfilled all of its obligations under the related Servicing Agreement during the year or, if there has been a default in the fulfilment of any such obligation, specifying each such default and the status thereof; and
(b) the Master Servicer shall obtain annually an accountants' report (the "Accountants' Report") in form and content acceptable to the Previous Decision Makers prepared by a firm of independent public or chartered accountants acceptable to the Previous Decision Makers respecting compliance by the Master Servicer or such other party acting in a similar capacity on behalf of the Issuer with minimum servicing standards identified in the Uniform Single Attestation Program (USAP) or such other servicing standard acceptable to the Previous Decision Makers (in all material respects, except for such material exceptions or errors in records that, in the opinion of such firm, are required to be reported).
12. Sections 3.1 and 5.2 of MI 52-109 require the Issuer to file, in respect of the interim periods of its 2004 financial year, the Interim Certificates in Form 52-109FT2 or Form 52-109F2.
13. Form 52-109FT2 requires the certifying officer to certify that:
(a) he or she has reviewed the interim filings (as defined in MI 52-109) of the Issuer for the applicable interim period;
(b) based on his or her knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings; and
(c) based on his or her knowledge, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer, as of the date and for the periods presented in the interim filings.
14. Since the Issuer has the benefit of the Exemption Decision and does not file annual or interim financial statements, and given that neither the Issuer nor the applicable individuals acting in the capacity of officers of the Issuer participate in any way in the preparation of the Reports, the applicable individuals acting in the capacity of officers of the Issuer are unable to certify in respect of the Reports nor sign the Interim Certificates in the form required by MI 52-109.
15. The quality or reliability of the Issuer's continuous disclosure will not be affected by the issuance of this Decision (as such term is defined below) as the Compliance Certificate and Accountants' Report provide assurance to Certificateholders in respect of the accuracy of the Reports.
AND WHEREAS pursuant to 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 pursuant to the Legislation is that the Issuer is exempted from the requirements of MI 52-109 concerning the filing of Interim Certificates in respect of the 2004 financial year of the Issuer, provided that the Issuer is not required to prepare, file and deliver Financial Statements under the securities legislation of the Jurisdictions, whether pursuant to exemptive relief or otherwise.
August 25, 2004.