Exemption Orders (Discretionary)

EX FUND CAPITAL INC.


2001 BCSECCOM 1165




Headnote

Mutual Reliance Review System for Exemptive Relief Applications – Relief granted from the registration requirements for trades of public company shares and from the registration and prospectus requirements for trades of promissory notes, all by the issuer under an issuer bid – relief also granted from the valuation requirements and certain disclosure requirements in the circular in connection with the issuer bid

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c. 418, ss. 34(1)(a), 48, 61, 76 and 114(2)(c)
Securities Rules, R.B.C. Reg. 194/97, ss. 162(2) and 162(3)
Form 62-903F, Item 22

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA AND ONTARIO

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF EX FUND CAPITAL INC.

MRRS DECISION DOCUMENT

[para 1]
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Alberta and Ontario (the “Jurisdictions”) has received an application from Ex Fund Capital Inc. (the “Filer”) for a decision under the securities legislation of the Jurisdictions (the “Legislation”) that, in connection with the proposed purchase by the Filer of its outstanding common shares (the “Shares”) under an issuer bid (the “Offer”), the Filer be exempt from the requirements in the Legislation:

(a) to be registered to trade in a security (the “Registration Requirements”) for trades by the Filer of common shares of Cardiocomm Solutions Inc. (“Cardiocomm”), Photochannel Networks Inc. (“Photochannel”) and Cryopak Industries Inc. (“Cryopak”) or of Notes (as defined below) under the Offer;

(b) to file and obtain a receipt for a preliminary prospectus and a prospectus (the “Prospectus Requirements”) for trades by the Filer of Notes under the Offer;

(c) to obtain a formal valuation of the Shares and provide disclosure in the issuer bid circular (the “Circular”) of such valuation or a summary thereof (the “Valuation Requirements”);

(d) that the Circular include, with respect to Cardiocomm, Photochannel and Cryopak, the information prescribed in the form of prospectus appropriate for those companies (the “Public Company Disclosure Requirements”); and

(e) that the Circular include, with respect to the Filer, the information prescribed in the form of prospectus appropriate for the Filer (the “Ex Fund Disclosure Requirements”);

[para 2]
AND WHEREAS under the Mutual Reliance System for Exemptive Relief Applications (the “System”), the British Columbia Securities Commission is the principal regulator for this application;

[para 3]
AND WHEREAS the Filer has represented to the Decision Makers that:

1. the Filer was incorporated under the Company Act (British Columbia) on February 5, 1996;

2. the Filer is a reporting issuer in British Columbia and is not a reporting issuer in any other of the Jurisdictions;

3. the Filer is not in default of any requirement under the Legislation;

4. the Filer is a venture capital fund company that, by itself and with its two wholly-owned subsidiaries, holds equity securities of:

(a) three private companies, including common shares (the “Brookdale Shares”) of Brookdale International Systems Inc. (“Brookdale”), and

(b) four public companies, Cardiocomm, Photochannel and Cryopak, all of which are listed on the Canadian Venture Exchange, and Unity Wireless Corp. (“Unity”), which is quoted on the over-the-counter bulletin board in the United States (the “OTC BB”);

5. the Filer’s authorized share capital is 100,000,000 Shares and 20,000,000 Class A Preference shares without par value; as at November 27, 2001, 21,130,423 Shares and no Class A Preference shares were outstanding;

6. none of the Filer’s securities are listed on any stock exchange or quotation system;

7. the Filer has received final forgiveness orders under the Small Business Venture Capital Act permitting it to distribute its assets, including the equity securities, to its shareholders; the Filer proposes to carry out this distribution through the Offer;

8. under the Offer, the Filer proposes to acquire all of its outstanding Shares in exchange for:

(a) approximately $0.0875 in cash (the “Cash Amount”),

(b) 0.1544 common shares of Cardiocomm,

(c) 0.0237 common shares of Photochannel,

(d) 0.0205 common shares of Cryopak, and

(e) one promissory note to be issued by the Filer (the “Note”),

for each Share tendered and not withdrawn under the Offer;

9. the Cash Amount will be based on a pro rata portion of the Filer’s cash on hand on the day immediately before the date the Offer is made, less estimated expenses the Filer may incur before paying for the Shares tendered under the Offer, plus the estimated value on the day immediately before the date the Offer is made of the shares of the three private companies owned by the Filer, and the average trading price of the shares of Unity on the OTC BB on the 20 trading days prior to the day the Offer is made;

10. each Note will entitle the holder to receive from the Filer, from time to time, an amount equal to the cash portion of any consideration received by the Filer from a disposition of any of the Brookdale Shares or as a result of a corporate change in Brookdale (once the aggregate amount of money received by the Filer from such dispositions and corporate changes equals $88,750), less any taxes and expenses incurred by the Filer in connection with the disposition or as a result of the corporate change, divided by 21,130,423;

11. the Filer does not propose to distribute the private company shares under the Offer because of restrictions on transfer in the private companies’ articles; the Filer does not propose to distribute the shares of Unity under the Offer because OTC BB traded shares are not eligible for registered retirement savings plans;

12. the Filer has approximately 100 shareholders;

13. Discovery Capital Corporation (“DCC”), a British Columbia company, owns 432,736, or 2.0%, of the outstanding Shares and Ex Fund Technologies Corp. (“ETC”), a British Columbia company and a wholly-owned subsidiary of DCC, owns 17,529,041, or 83.0%, of the outstanding Shares;

14. as at November 29, 2001, other than DCC and ETC, the Filer had:

(a) 81 registered shareholders in British Columbia holding 2,633,116, or 12.5%, of the outstanding Shares,

(b) there are no beneficial shareholders in Ontario and 12 registered shareholders in Ontario holding 299,149, or 1.4%, of outstanding Shares, each of whom was a trustee under a British Columbia resident’s registered retirement savings plan, and

(c) one registered shareholder in Alberta holding 40,000, or 0.2%, of the outstanding Shares;

15. DCC and ETC have advised the Filer that, as at November 29, 2001, neither of them intend to tender their Shares to the Offer;

16. there are no exemptions from the Registration Requirements in some of the Jurisdictions for trades of common shares of Cardiocomm, Photochannel and Cryopak by the Filer under the Offer;

17. there are no exemptions from the Registration Requirements or the Prospectus Requirements in some of the Jurisdictions for trades of Notes by the Filer under the Offer;

18. the Circular will include:

(a) an opinion as to the fairness, from a financial point of view, of the Offer to the Filer’s shareholders,

(b) information as to where publicly available information regarding Cardiocomm, Photochannel and Cryopak may be obtained, and

(c) except to the extent exemptive relief is granted by this decision, the disclosure prescribed by the Legislation for issuer bids;

[para 4]
AND WHEREAS under the System, the MRRS Decision Document evidences the decision of each Decision Maker (collectively the “Decision”);

[para 5]
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;

[para 6]
THE DECISION of the Decision Makers under the Legislation is that:

1. the Registration Requirements shall not apply to trades by the Filer of common shares of Cardiocomm, Photochannel and Cryopak under the Offer;

2. the Registration Requirements and the Prospectus Requirements shall not apply to trades by the Filer of Notes under the Offer provided that the first trade in Notes acquired under the Offer is deemed to be a distribution under the Legislation;

3. the Filer is exempt from the Valuation Requirements, the Public Company Disclosure Requirements and the Ex Fund Disclosure Requirements in connection with the Offer.

[para 7]
DATED December 14, 2001.




Brenda Leong
Director