Aldeavision Inc. - MRRS Decision

Headnote

Mutual Reliance Review System For Exemptive Relief Applications -- National Instrument 51-102 Continuous Disclosure Obligations - Significant Acquisition Through Judicial Sale -- Issuer Does Not Have Access to Historical Accounting Records of Acquired Business and Cannot Produce Audited Financial Statements for Acquired Business -- Issuer Granted Relief from the Requirement to Include Audited Annual Financial Statements and Pro Forma Financial Statements in the Business Acquisition Report -- Business Acquisition Report to Include Unaudited Financial Statements and a Pro Forma Balance Sheet.

National Instruments Cited

National Instrument 51-102 Continuous Disclosure Obligations, Part 8 and s. 13.1.

May 24, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO, QUEBEC, NEW BRUNSWICK, NOVA SCOTIA, AND

NEWFOUNDLAND

(The "Jurisdictions")

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ALDEAVISION INC.

(The "Filer")

AND INVIDEX, INC.

("Invidex").

MRRS DECISION DOCUMENT

WHEREAS The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filer for a decision pursuant to section 13.1 of National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102") made under National Policy 12-201 Mutual Reliance Review System for Exemptive Relief Applications ("NP 12-201") from the financial statements requirements of Part 8 of NI 51-102 required in the business acquisition report (the "BAR") of the Filer to be prepared and file on SEDAR in connection with the recent acquisition by the Filer of substantially all of the assets (the "Assets") of Invidex.

AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Autorité des marchés financiers is the principal regulator for this application;

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

AND WHEREAS the Filer has represented to the Decision Maker that:

1. The Filer is a corporation that was incorporated on June 3, 1992 pursuant to the Canada Business Corporations Act ("CBCA").

2. The head office of the Filer is located in St-Laurent, Quebec.

3. The authorized capital of the Filer consists of an unlimited number of common shares without nominal or par value. As of the date hereof, 62,272,857 common shares are issued and outstanding.

4. The Filer's common shares are listed on the TSX Venture Exchange under the symbol "ALD".

5. The Filer is a "venture issuer" as defined in NI 51-102 and is a reporting issuer in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland.

6. Invidex is a Montreal-based private company that was a broadcast solution provider to the telecommunications industry.

7. In 2005 Invidex started having financial difficulties.

8. On October 21, 2005, the Quebec Superior Court rendered an initial order (the "Initial Order") in favour of Invidex under the Companies' Creditors Arrangement Act ("CCAA"), to, among other things:

a. order that all proceedings against Invidex and its assets be stayed and suspended;

b. appoint Raymond Chabot Inc. as monitor pursuant to section 11.7 of the CCAA; and

c. authorize Invidex to file, at a later date, a compromise or an arrangement under the CCAA.

9. On November 22, 2005 at the request of Invidex, the Quebec Superior Court rendered an amended order extending the CCAA protection period for a period of 65 days, up to and including January 25, 2006.

10. On January 25, 2006 at the request of Invidex, the Quebec Superior Court rendered an order extending the CCAA protection period for an additional period of 7 days, up to and including February 1, 2006.

11. Following February 1, 2006, no further extensions of the Initial Order were sought by Invidex given that the Filer had shown an interest in acquiring substantially all of the assets of Invidex.

12. On February 24, 2006, the Filer made the acquisition of the Assets and issued a press release announcing the acquisition on February 27, 2006.

13. The purchase of the Assets represents for the Filer a Significant Acquisition as such term is defined in section 8.3 of NI 51-102.

14. At the request of two secured creditors of Invidex, namely, Capital Régional et Coopératif Desjardins and Desjardins Capital de Développement Montréal Métropolitain, Ouest et Nord du Québec (collectively, the "Desjardins Creditors"), the sale of the Assets to the Filer was made under a court order issued on February 23, 2006 by the Quebec Superior Court and ordering the judicial sale of the Assets under the provisions of the Civil Code of Quebec.

15. The Filer paid $1,640,000 for the Assets of Invidex.

16. The purchase price was paid by the issuance of three convertible debentures for an aggregate value of $1,515,000 due in January 31, 2008 to the Desjardins Creditors and 9143-8655 Quebec Inc. and through the issuance of 1,250,000 common shares of the Filer to certain employees and officers of Invidex for an aggregate value of $125,000.

17. The purchase price was established based on unaudited annual financial statements of Invidex for the years ended December 31, 2004 and December 31, 2005. Invidex was not required to prepare audited financial statements because of its private company status.

18. The Filer and all of the parties involved in the sale of the Assets were arm's-length parties.

19. As a consequence of the sales of the Assets being made by way of a judicial sale, no compromises or arrangements, as defined under the CCAA, were ever filed or proposed by Invidex.

20. After the sale of its assets to the Filer, Invidex ceased all of its operations and no longer employs any employees.

21. The Filer has made every reasonable effort to obtain access to, or copies of, the historical accounting records necessary to audit the financial statements but such efforts have been unsuccessful because Invidex has ceased its operations and the inability of AldeaVision to locate past employees of Invidex in charge of maintaining such historical accounting records.

22. As a result, the Filer does not have access to Invidex financial historical records (working papers and the supporting documentations) that would be required to audit the unaudited financial statements of Invidex for the years ended on December 31, 2004 and 2005.

23. Apart from the requirement to include audited financial statements related to the acquisition, the Filer is otherwise able to prepare and file the BAR in accordance with NI 51-102. The Filer will include in the BAR additional disclosure requirements as set out under section 8.9(4)(b) of the Companion Policy 51-102CP Continuous Disclosure Obligations.

24. Consequently, the Filer is unable to prepare the financial statements disclosure required under section 8.4 of NI 51-102 for the BAR.

25. The Filer however will file with the BAR the unaudited financial statements of Invidex for the years ended December 31, 2004 and 2005 and a pro forma balance sheet as at December 31, 2005 together with the accompanying compilation report signed by the Filer's auditors.

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 NI 51-102 is that the financial statements requirements of Part 8 of NI 51-102 required in the BAR of the Filer to be prepared and file on SEDAR in connection with the recent acquisition by the Filer of substantially all of the Assets shall not apply, subject to the Filer filing with the BAR the unaudited financial statements of Invidex for the years ended December 31, 2004 and 2005 and a pro forma balance sheet as at December 31, 2005 together with the accompanying compilation report signed by the Filer's auditors.