Altera Toronto Co. et al. - ss. 74(1)

April 17, 2001

Ruling

IN THE MATTER OF

THE SECURITIES ACT,

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

AND

IN THE MATTER OF

ALTERA TORONTO CO., ALTERA EXCHANGE CO.
AND ALTERA CORPORATION

RULING

(Subsection 74(l))

UPON application (the "Application") by Altera Toronto Co. (the "Company"), Altera Exchange Co. ("Exchangeco") and Altera Corporation ("Altera") to the Ontario Securities Commission (the "Commission") for a ruling pursuant to subsection 74(1) of the Act exempting certain trades in connection with the exercise of various exchange and retraction rights of the holders (the "Exchangeable Shareholders") of non-voting exchangeable shares (the "Exchangeable Shares") and redemption and call rights in respect of the Exchangeable Shares from the requirements of section 25 and 53 of the Act;

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

AND UPON the Company having represented to the Commission that:

1. Right Track CAD Inc. ("Right Track") was a corporation incorporated under the laws of Ontario on October 29, 1998 and continued as a Nova Scotia limited liability company under the Nova Scotia Companies Act on April 26, 2000. Right Track was a "private company" as defined in the Act, and was not a "reporting issuer" or the equivalent under the Act or under the securities legislation of any other jurisdiction.

2. Immediately prior to the Acquisition (defined below), Right Track's authorized capital consisted of 1,000,000,000 common shares and 1,175,000 Class A shares, of which 1,062,100 common shares were issued and outstanding (collectively, the "Right Track Shares").

3. Immediately prior to the Acquisition, all the outstanding Right Track Shares were owned by Jonathan Rose, Vaughn Betz, David Galloway and Jordan Swartz (collectively, the "Founding Shareholders") and David Lewis and Kurt Keutzer (collectively with the Founding Shareholders, the "Selling Shareholders"). Each of the Founding Shareholders and David Lewis is resident in Ontario while Kurt Keutzer is a resident of California.

4. Altera is a corporation incorporated under the laws of the State of Delaware in June 1983, and is not a "reporting issuer" or the equivalent under the Act or under any other Canadian securities legislation.

5. The authorized capital of Altera consists of 400,000,000 shares of common stock in the capital of Altera (the "Altera Common Stock"). As of April 14, 2000, there were 199,417,175 shares of Altera Common Stock outstanding.

6. Altera is subject to the requirements of the United States Securities Exchange Act of 1934, as amended.

7. The shares of Altera Common Stock are quoted on the Nasdaq Stock Market (the "NASDAQ").

8. Right Track Acquisition Co. (the "Purchaser") was a corporation incorporated on April 25, 2000 under the laws of the Province of Nova Scotia solely to effect the Acquisition. The Purchaser was a wholly-owned subsidiary of Exchangeco, which is an indirect, wholly-owned subsidiary of Altera.

9. Altera, the Purchaser, Exchangeco, Right Track and the Selling Shareholders entered into a share purchase agreement (the "Purchase Agreement") pursuant to which Altera and the Purchaser agreed to purchase from the Selling Shareholders all the outstanding Right Track Shares in consideration for cash and Exchangeable Shares to be issued by the Purchaser (the "Acquisition"). The Acquisition closed on May 1, 2000.

10. As a term of the Acquisition, all of the Exchangeable Shares issued to the Founding Shareholders are being held in escrow and will be released on the first, second and at monthly intervals thereafter to the fourth, or for certain of the Founding Shareholders, the fifth anniversaries of the closing date of the Acquisition, subject to certain conditions (the "Escrow Shares"). References herein to shares of "Altera Common Stock" and "Exchangeable Shares" issued to the Founding Shareholders shall include, as applicable, the Escrow Shares.

11. The authorized capital of the Purchaser consisted of 100,000,000 Common Shares and 100,000,000 Exchangeable Shares. Upon the closing of the Acquisition, all the issued Common Shares of the Purchaser were owned by Exchangeco and all the issued Exchangeable Shares were held by the Founding Shareholders.

12. Immediately following the Acquisition, the Purchaser and Right Track amalgamated to form the Company, which successor unlimited liability company has substantially the same share capital structure and other corporate attributes as the Purchaser. Accordingly, the term "Purchaser", as used in connection with the provisions of the Exchangeable Shares as described below, and the future trades in connection with or pursuant to the Acquisition described in paragraph 19 below, includes the Company; and the term "Exchangeable Shares" includes the exchangeable shares of the Company issued upon the amalgamation in exchange for the exchangeable shares of the Purchaser.

13. The Exchangeable Shares provide the Exchangeable Shareholders with a security of a Canadian issuer having economic attributes which are, as nearly as practicable, equivalent to those of shares of Altera Common Stock.

14. Each Exchangeable Share is retractable at any time by, and at the option of, the holder thereof for one share of Altera Common Stock. The share provisions governing the Exchangeable Shares contain anti-dilution provisions to ensure that the Exchangeable Shareholders' economic interests in Altera will not be adversely affected by the occurrence of events such as a subdivision, consolidation or other change in the capital of Altera affecting the shares of Altera Common Stock, a distribution of shares of Altera Common Stock to holders thereof by way of stock dividend, option, right or warrant, or any other distribution of securities, assets or indebtedness of Altera or its subsidiaries to holders of shares of Altera Common Stock.

15. The provisions of the Exchangeable Shares (the "Exchangeable Share Provisions") provide, inter alia:

(a) except as required by applicable law, holders of Exchangeable Shares shall not be entitled to receive notice of or vote at meetings of the shareholders of the Purchaser;

(b) the Exchangeable Shares shall rank prior to the Common Shares and all shares of any other class ranking subordinate to the Exchangeable Shares with respect to the distribution of assets in the event of a liquidation, dissolution or winding-up of the Purchaser;

(c) each Exchangeable Share shall entitle the holder thereof to receive dividends from the Purchaser at the same time as, and in an amount equivalent to, dividends paid by Altera on each share of Altera Common Stock on the declaration date;

(d) subject to compliance with applicable law, the Exchangeable Share shall entitle the holder thereof to retract such Exchangeable Share and to receive an amount equal to the market price of one share of Altera Common Stock on the retraction date, which shall be satisfied by the Purchaser delivering one share of Altera Common Stock, together with an additional amount equal to the full amount of all declared and unpaid dividends on each retracted Exchangeable Share (collectively, the "Retraction Price"). Notwithstanding the foregoing, upon being notified by the Purchaser of a proposed retraction by an Exchangeable Shareholder, Exchangeco will have an overriding call right (the "Retraction Call Right") to purchase from such Exchangeable Shareholder each Exchangeable Share proposed to be retracted at the Retraction Price;

(e) subject to the overriding call right of Exchangeco referred to below, the Purchaser may redeem the outstanding Exchangeable Shares on or after May 3, 2010 or earlier in the event of a takeover offer for Altera, an extraordinary transaction involving Altera or the Purchaser, or upon a specified minimum number of Exchangeable Shares no longer being held by the Founding Shareholders (the "Redemption Date"). Upon a redemption by the Purchaser on the Redemption Date, each Exchangeable Share shall entitle the holder thereof to receive from the Purchaser for each Exchangeable Share redeemed an amount equal to the market price of one share of Altera Common Stock on the Redemption Date, which amount will be satisfied by the Purchaser delivering to such Exchangeable Shareholder one share of Altera Common Stock, together with an additional amount equal to the full amount of all declared and unpaid dividends on each Exchangeable Share up to the Redemption Date (collectively, the "Redemption Price"). Notwithstanding the foregoing, Exchangeco will have an overriding call right (the "Redemption Call Right") to purchase on the Redemption Date for the Redemption Price each Exchangeable Share proposed to be redeemed from such Exchangeable Shareholder; and

(f) upon the liquidation, dissolution or winding-up of the Purchaser, each Exchangeable Share shall entitle the holder thereof to receive an amount equal to the market price of one share of Altera Common Stock on the liquidation date, which will be satisfied by the Purchaser delivering to such Exchangeable Shareholder one share of Altera Common Stock, together with an additional amount equal to the full amount of all declared and unpaid dividends on each Exchangeable Share (collectively, the "Liquidation Price"). Notwithstanding the foregoing, upon any proposed liquidation, dissolution or winding-up of the Purchaser, Exchangeco will have an overriding call right (the "Liquidation Call Right") to purchase for the Liquidation Price each Exchangeable Share to be redeemed from the Exchangeable Shareholders.

16. At the closing of the Acquisition, the Purchaser, Exchangeco, Altera and the Exchangeable Shareholders entered into a support agreement pursuant to which, inter alia, Altera will:

(a) ensure that the Purchaser (i) has sufficient assets available to pay simultaneous and equivalent dividends on the Exchangeable Shares, and (ii) simultaneously declares and pays such simultaneous and equivalent dividends on the Exchangeable Shares as are paid by Altera on the shares of Altera Common Stock;

(b) ensure that the Purchaser is able to fulfil its obligations in respect of the redemption and retraction rights and the dissolution entitlements upon liquidation that are attributes of the Exchangeable Shares; and

17. In addition, at the closing of the Acquisition, Altera, Exchangeco, the Purchaser and the Exchangeable Shareholders entered into an exchange agreement (the "Exchange Right Agreement") pursuant to which Altera granted to the Exchangeable Shareholders an optional exchange right (the "Optional Exchange Right"), that may be exercised upon the insolvency of the Purchaser or upon the failure of the Purchaser to perform any of its obligations under the Exchange Share Provisions. The Optional Exchange Right, when exercised, will require Altera to purchase from an Exchangeable Shareholder all or any part of the Exchangeable Shares held by such Exchangeable Shareholder. The purchase price for each Exchangeable Share purchased by Altera under the Optional Exchange Right will be an amount equal to the market price of one share of Altera Common Stock on the trading day prior to the closing date of the purchase under the Optional Exchange Right. This purchase price will be satisfied by Altera delivering to an Exchangeable Shareholder one share of Altera Common Stock for each Exchangeable Share held, together with an additional amount equal to the full amount of all declared and unpaid dividends on each Exchangeable Share exchanged for Altera Common Stock. Notwithstanding the foregoing, Exchangeco has an overriding call right (the "Exchangeable Right Call Right") to purchase the Exchangeable Shares from the Exchangeable Shareholders upon the exercise of the Optional Exchange Right for the purchase price described above.

18. Under the Exchange Right Agreement, the Exchangeable Shares will be automatically exchanged (the "Automatic Exchange Right") by Altera for shares of Altera Common Stock in the event of a voluntary or involuntary liquidation, dissolution or winding-up of Altera (an "Automatic Exchange Event"). In the event of an Automatic Exchange Event, each outstanding Exchangeable Share (except for those held by Altera or any of its affiliates) will be automatically exchanged for shares of Altera Common Stock prior to the effective date of the Automatic Exchange Event. The purchase price for each Exchangeable Share purchased by Altera pursuant to the Automatic Exchange Right will be an amount equal to the market price of one share of Altera Common Stock on the trading day prior to the closing date of the purchase under the Automatic Exchange Right. This purchase price will be satisfied by Altera delivering to an Exchangeable Shareholder one share of Altera Common Stock for each Exchangeable Share held, together with an additional amount equal to the full amount of all declared and unpaid dividends on each Exchangeable Share.

19. Trades of the Exchangeable Shares by the Purchaser to the Exchangeable Shareholders, the sale by the Exchangeable Shareholders of Right Track Shares to the Purchaser in consideration for Exchangeable Shares or cash and the granting of the Retraction Call Right, the Redemption Call Right, the Liquidation Call Right, the Exchange Right Call Right, the Optional Exchange Right and the Automatic Exchange Right pursuant to the Exchange Right Agreement and certain other trades made in connection with or pursuant to the Acquisition are exempt from ss.25 and 53 of the Act.

20. Listed below are future trades in connection with or pursuant to the Acquisition that would be subject to the registration and prospectus requirements of the Act unless the ruling sought is granted:

(a) the transfer of shares of Altera Common Stock to the Exchangeable Shareholders by the Purchaser upon the retraction of the Exchangeable Shares by an Exchangeable Shareholder;

(b) the issuance by Altera pursuant to the Support Agreement of shares of Altera Common Stock from time to time to the Purchaser (and the contemporaneous issuance of securities by the Purchaser to Altera for such Altera Common Stock) to enable to the Purchaser to fulfil its obligations under the Exchangeable Share Provisions, including among others, upon the retraction or redemption of the Exchangeable Shares;

(c) the issuance by Altera pursuant to the Support Agreement of Altera Common Stock to Exchangeco from time to time (and the contemporaneous issuance of securities by Exchangeco to Altera as consideration for such Altera Common Stock) to enable Exchangeco to deliver Altera Common Stock to Exchangeable Shareholders in connection with the exercise by Exchangeco of the Exchange Right Call Right, Retraction Call Right, Redemption Call Right and Liquidation Call Right;

(d) the trade by Exchangeco of shares of Altera Common Stock to the Exchangeable Shareholders upon Exchangeco exercising the Retraction Call Right (instead of the retraction of Exchangeable Shares);

(e) the transfer of shares of Altera Common Stock to the Exchangeable Shareholders by the Purchaser upon the redemption of Exchangeable Shares by the Purchaser on the Redemption Date;

(f) the trade of shares of Altera Common Stock to the Exchangeable Shareholders by Exchangeco on the Redemption Date upon Exchangeco exercising the Redemption Call Right (instead of the redemption of the Exchangeable Shares on the Redemption Date);

(g) the trade of shares of Altera Common Stock to the Exchangeable Shareholders by Exchangeco upon Exchangeco exercising the Liquidation Call Right in connection with the winding-up of the Purchaser;

(h) the trades of shares of Altera Common Stock to the Exchangeable Shareholders by Exchangeco upon Exchangeco exercising the Exchange Right Call Right in connection with the winding up of the Purchaser;

(i) the transfer of Exchangeable Shares to Exchangeco by the Exchangeable Shareholders upon the exercise by Exchangeco of the Retraction Call Right;

(j) the transfer of Exchangeable Shares to Exchangeco by the Exchangeable Shareholders upon Exchangeco exercising the Redemption Call Right;

(k) the transfer of Exchangeable Shares to Exchangeco by the Exchangeable Shareholders upon Exchangeco exercising the Liquidation Call Right;

(l) the transfer of Exchangeable Shares to Altera by the Exchangeable Shareholders upon the exercise of the Optional Exchange Right;

(m) the transfer of Exchangeable Shares to Exchangeco by the Exchangeable Shareholders upon Exchangeco exercising the Exchange Right Call Right; and

(n) the transfer of Exchangeable Shares to Altera by the Exchangeable Shareholders pursuant to the Automatic Exchange Right.

21. Assuming that the Founding Shareholders acquire the maximum number of shares of Altera Common Stock to which they are entitled under the Purchase Agreement and pursuant to the provisions of the Exchangeable Shares or the Exchange Right Agreement, persons or companies who were in Ontario would, as of January 5, 2001, constitute less than 10% of the total number of beneficial holders of outstanding shares of Altera Common Stock, and would hold less than 10% of the total outstanding shares of Altera Common Stock.

22. There is no market for the shares of Altera Common Stock in Ontario and none is expected to develop.

23. None of the Purchaser, Exchangeco or Altera are reporting issuers under the Act.

24. All disclosure material furnished to holders of shares of Altera Common Stock in the United States will be provided to Exchangeable Shareholders and the holders of shares of Altera Common Stock resident in Ontario.

25. So long as any outstanding Exchangeable Shares are held by any person other than Altera or its affiliates, Altera will remain the direct or indirect beneficial owner of all the outstanding voting shares of the Purchaser and Exchangeco.

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

IT IS RULED pursuant to subsection 74(l) of the Act that the trades of securities referred to in paragraph 19 above are not subject to sections 25 and 53 of the Act, provided that the first trade of shares of Altera Common Stock acquired or received by the Exchangeable Shareholders in connection with the Exchangeable Share Provisions and the provisions of the Exchange Right Agreement shall be a distribution unless:

(a) such trade is made in compliance with section 72(5) of the Act and section 2.18(3) of Ontario Securities Commission Rule 45-501 - Exempt Distributions as if the Altera Common Stock had been acquired pursuant to an exemption referred to in section 72(5) of the Act; or

(b) such trade is executed through the facilities of a stock exchange outside of Ontario or on the NASDAQ.

April 17, 2001.

Paul Moore, Stephen N. Adams