Clanmor Holdings Inc. /Gestion Clanmor Inc. et al. - MRRS Decision

November 8, 2002

MRRS Decision

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - Employment agreements entered into betweenofferor and key employees of the target who are also sellingsecurityholders of the target - Agreements reflect commerciallyreasonable terms and negotiated at arm's length - Agreementsreflect terms of employment as already exist plus severanceentitlements - Decision made that agreements being entered intofor reasons other than to increase the value of the considerationpaid to the selling securityholders for their shares and thatsuch agreements may be entered into notwithstanding the prohibitionon collateral benefits.

Applicable Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as amended,ss. 97 and 104(2)(a).

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

ONTARIO AND QUEBEC

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

CLANMOR HOLDINGS INC./GESTIONCLANMOR INC.

GESTION IAMVIC INC.

RICHARD DANEAU HOLDINGS INC./GESTIONRICHARD DANEAU INC.

AND

R.P.M. TECH INC.

MRRS DECISION DOCUMENT

WHEREAS the securities regulatory authorityor regulator (the "Decision Maker") in eachof Ontario and Quebec (the "Jurisdictions")has received an application from Clanmor Holdings Inc./GestionClanmor Inc. ("Clanmor"), Gestion Iamvic Inc.("Clanmor") and Richard Daneau Holdings Inc./GestionRichard Daneau Inc. ("Daneau") (collectivelythe "Offeror") for a decision pursuant to thesecurities legislation of the Jurisdictions (the "Legislation")that, in connection with a proposed offer to be made (the "Offer")by the Offeror to acquire a minimum of 51 % and a maximum of55 % (the "Proposed Transaction") of the issuedand outstanding common shares (on a fully diluted basis) (the"RPM Shares") of R.P.M. Tech Inc. ("RMP"),certain retention arrangements that are proposed in a Lock-upAgreement to be entered into between the Offeror and certainofficers and executives of RPM for the purposes of maintainingtheir employment with RPM following the closing of the ProposedTransaction and the subsequent execution of employment agreementsbetween such officers and executives of RPM following the closingof the Proposed Transaction are to be entered into for reasonsother than to increase the value of the consideration paid tosuch officers and executives of RPM for their RPM Shares andmay be entered into despite the provision in the Legislationthat prohibits an offeror who makes or intends to make a take-overbid and any person acting jointly or in concert with the Offerorfrom entering into any collateral agreement, commitment or understandingwith any holder or beneficial owner of securities of the offereeissuer that has the effect of providing to the holder or ownera consideration of greater value than that offered to otherholders of the same class of securities (the "Prohibitionof Collateral Agreements");

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Commission des valeurs mobilières du Québecis the principal regulator for this application;

AND WHEREAS the Offeror has representedto the Decision Makers that:

1. RPM is a reporting issuer in Quebec andin Ontario.

2. The common shares of RPM are listed onthe TSX Exchange ("TSX") under the tickersymbol "RP".

3. Clanmor, a holding company controlled byClaude Moreau, was incorporated under the Canada BusinessCorporations Act ("CBCA") on October 6, 1999.Iamvic, a holding company controlled by Pierre Bernard, wasincorporated under the CBCA on November 23, 1999. Daneau,a holding company controlled by Richard Daneau, was incorporatedunder the CBCA on July 26, 2001.

4. As of the date hereof, to the knowledgeof the Offeror, RPM has four million nine hundred and ninety-fourthousand nine hundred and seventy-four (4,994,974) commonshares outstanding (on a fully diluted basis).

5. Marcel Papillon ("Papillon")and Daniel Piché ("Piché")(collectively the "Executives") are currentlydirectors, officers, shareholders and employees of RPM.

6. Papillon holds 766 800 common shares ofRPM as well as options to purchase an additional 100 000 commonshares of RPM representing, in aggregate, approximately 17.35% of RPM's common shares on a fully diluted basis, Pichéholds 776,500 common shares of RPM as well as options to purchasean additional 100,000 common shares of RPM representing, inaggregate, approximately 17.55 % of RPM's common shares ona fully diluted basis.

7. The closing price of the common sharesof RPM on September 30, 2002 was ninety-six cents ($0.96)per share on the TSX.

8. Papillon is currently the President andChief Executive Officer and a Director of RPM. The Offerorhas been advised by counsel to Papillon that Papillon doesnot have a written employment agreement with RPM, and thatPapillon's current compensation includes a base salary ofone hundred and forty-nine thousand three hundred and fortydollars ($149,340) per annum, the reimbursement of reasonableexpenses incurred as part of his employment, a vehicle providedby RPM, and all the other fringe benefits generally grantedby RPM to its employees.

9. Piché is currently the ManagingDirector of RPM and Director of Operations - Snow Divisionand a Director of RPM. The Offeror has been advised by counselto Piché that Piché does not have a writtenemployment agreement with RPM and that Piché's currentcompensation includes a base salary of one hundred and thirty-sixthousand and eighty dollars ($136,080) per annum, the reimbursementof reasonable expenses incurred as part of his employment,a vehicle provided by RPM, and all the other fringe benefitsgenerally granted by RPM to its employees.

10. The Offeror intends to enter into a Lock-upAgreement with the Executives pursuant to which i) the Offerorwill agree, subject to certain conditions, to enter into theProposed Transaction and ii) the Executives will agree totender the Common shares of RPM held by them to the ProposedTransaction. The obligations of the Executives under the Lock-upAgreement are subject to certain terms and conditions includingthe continuation of the employment of the Executives duringa period of one (1) year following closing of the ProposedTransaction, with the same duties and according to the sameterms of employment as currently exist. It is also providedthat Papillon will act as Chairman of the Board of Directorsin consideration for the usual directors' fees. In addition,the Offeror will agree that in the event of the terminationof the employment of either of the Executives for any reasonwhatsoever (including death) other than as a result of a permanentlayoff or termination for just and reasonable cause, it isprovided that severance pay equal to one (1) year's base annualsalary (as set out in paragraphs 7 and 8) shall be paid tosaid person.

11. The Lock-up Agreement (including the provisionsregarding the continued employment of the Executives) is negotiatedat arm's length and is on terms and conditions that are commerciallyreasonable. The provisions regarding continued employmentof the Executives are on the same terms as those currentlyin existence. The severance provisions which provide for cashpayments to the Executives are commensurate with the entitlementsof similarly situated executives in the industry in whichRPM operates and do not include more rights than what theExecutives would presently otherwise legally be entitled to.

12. The Offeror believes that the Executiveshave been an integral part of the successful development andoperation of RPM and have substantial and valuable experienceand expertise in RPM's business. The Offeror views the retentionof the Executives as critical to carrying out the ProposedTransaction. Moreover, the agreement of the Executives tomaintain their employment with RPM as stated above is a conditionto the Offeror launching its Proposed Transaction.

AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (the "Decision").

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the Jurisdiction to make theDecision has been met; and

THE DECISION of the Decision Makers,under the Legislation, is that the provisions of the Lock-upAgreement regarding the continued employment of the Executives(including the provisions regarding their termination and theirseverance arrangements) and the subsequent execution of employmentagreements with RPM following the closing of the Proposed Transactionare being made for reasons other than to increase the valueof the consideration to be paid to the Executives for theirRPM Shares and that the above provisions of the Lock-up Agreementand the said employment agreements may become effective notwithstandingthe Prohibition of Collateral Benefits contained in the Legislation.

November 8, 2002.

"Guy Lemoine" "ViateurGagnon"