Megawheels Technologies Inc. - s. 104(2)(c)

Headnote

Relief from issuer bid requirements -- In settlement of claims or potential claims by the Applicant against a shareholder, the shareholder agreed to transfer 4,000,000 common shares to the Applicant for cancellation -- no consideration is being paid for the common shares other than a release -- shareholder and Applicant not related parties and settlement negotiated at arm's length.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 93(3), 95-98, 100, 104(2)(c).

January 17, 2006

IN THE MATTER OF

THE SECURITIES ACT

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

AND

IN THE MATTER OF

MEGAWHEELS TECHNOLOGIES INC.

ORDER

(Clause 104(2)(c))

UPON the application (the "Application") of Megawheels Technologies Inc. (the "Applicant") to the Ontario Securities Commission (the "Commission") for an order pursuant to clause 104(2)(c) of the Act exempting the Applicant from the requirements of sections 95 through 98 and 100 of the Act (the "Issuer Bid Requirements") in connection with the acquisition (the "Acquisition") by the Applicant of securities of its own issue in settlement of certain claims it has against Bell Globemedia Publishing Inc. ("Globe").

AND UPON the Commission considering the Application and the recommendation of the staff of the Commission.

AND UPON the Applicant having represented to the Commission that:

1. The Applicant is incorporated under the laws of Canada and has a head office located in Calgary, Alberta.

2. The Applicant is a reporting issuer in the jurisdictions of British Columbia, Alberta and Ontario and is not in default of any requirement of the legislation of the Act.

3. The Applicant's issued and outstanding capital consists of 27,826,761 common shares (the "Common Shares"), 13,444,547 Series B preferred shares (the "Series B Shares") and 33,291,647 Series C preferred shares (the "Series C Shares"). Each Series B Share carries the right to one half of a vote at a meeting of the shareholders. Each Series C Share and Common Share carry the right to one vote at a meeting of the shareholders. Each Series B Share is convertible at the option of the holder into one half of a Common Share. Each Series C Share is convertible at the option of the holder into one Common Share.

4. The Common Shares are listed on the TSX Venture Exchange (the "Venture Exchange") under the stock symbol "MWT". The last closing price of the Common Shares on the Venture Exchange on November 23, 2005 and on January 12, 2006 was $0.035.

5. The Applicant is in the business of providing classified advertising technology with a focus on the automotive and real estate sectors.

6. Globe is the beneficial owner of 4 million Common Shares (the "Settlement Shares"). Globe acquired the Settlement Shares on conversion of a convertible debenture with a principal amount of $1,000,000.

7. Globe is a company incorporated under the laws of Ontario and has a head office in Scarborough, Ontario.

8. Since 2004, the Applicant and Globe have been embroiled in a dispute with respect to, among other things, certain claims by the Applicant against Globe (the "Claims") arising from certain agreements between the Applicant and Globe related to the creation and publication of online print automotive sections and products and other related matters. On November 23, 2005 the Applicant and Globe agreed to a settlement arrangement under which Globe will transfer all of the Settlement Shares to the Applicant in consideration for the entering into by the Applicant of a full and final release of the Claims (the "Settlement Arrangement"). No consideration will be paid for the Settlement Shares by the Applicant other than the execution of a full and final release by the Applicant with respect to the Claims. Upon being acquired by the Applicant, the Settlement Shares will immediately be cancelled.

9. The Applicant and Globe were arms-length parties at time the Settlement Arrangement was agreed and were not related parties as such term is defined in Ontario Securities Commission Rule 61-501.

10. The Settlement Arrangement does not provide greater value to Globe for the Settlement Shares than the value Globe paid to acquire the Settlement Shares.

11. In approving the Settlement Arrangement, the board of directors of the Applicant (the "Board"), acting in good faith, concluded that the value of the Claims did not exceed the market value of the Settlement Shares on November 23, 2005. In reaching this conclusion, the Board considered the merits of the Claims and the likelihood of success, the cost of pursuing the Claims, including both management time and the monetary costs of engaging external advisors, and the ability to collect on any judgment.

12. There has been no material change in the market price of the Common Shares since the date of the Settlement Arrangement and the date of the Application.

13. The acquisition of the Settlement Shares pursuant to the Settlement Arrangement is an issuer bid as defined in subsection 89(1) of the Act and is not an exempt issuer bid under subsection 93(3) of the Act.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest.

IT IS ORDERED pursuant to clause 104(2)(c) of the Act that the Applicant is exempt from the Issuer Bid Requirements in connection with the Acquisition.