Kelly Management Group Inc. et al. - ss. 74(1)

Rule 72-501 - Prospectus Exemption For First Trade Over A Market Outside of Ontario

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, Chapter S.5, as amended (the "Act")

AND

IN THE MATTER OF

KELLY MANAGEMENT GROUP INC., OCTAGON WORLDWIDE INC.,

OCTAGON CANADA INC. AND INTERPUBLIC GROUP OF COMPANIES, INC.

RULING

(Subsection 74(1))

UPON the application of Octagon Canada Inc. (the "Purchaser"), Octagon Worldwide Inc. ("Octagon"), andInterpublic Group of Companies, Inc. ("IPG"), on their own behalf and on behalf of Royal Bank of Canada Trustees(Guernsey) Limited (the "Trustee"), Kelly Management Group Inc. ("Kelly") and the selling shareholders of Kelly,Lawrence P. Kelly and Lawrence P. Kelly, as trustee for the Lawrence P. Kelly Family Trust (the "Selling Shareholders"),to the Ontario Securities Commission (the "Commission") for a ruling pursuant to subsection 74(1) of the Act that certaintrades in securities made in connection with the acquisition (the "Acquisition") of Kelly by the Purchaser pursuant to astock purchase agreement (the "Purchase Agreement") dated September 21, 2000 among Octagon, the Purchaser, Kellyand the Selling Shareholders (each of which shareholder is a resident of the Province of Ontario) shall be exempt fromsections 25 and 53 of the Act;

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

AND UPON it having been represented to the Commission that:

1. Kelly was incorporated under the laws of the Province of Ontario on October 11, 1989. Kelly is a "privatecompany" as defined in the Act, and is not a "reporting issuer" under the Act or under the securities legislationin any other jurisdiction.
2. Kelly is in the business of sports marketing and athlete representation. The registered and head office of Kellyis located at 66 Slater Street, 23^rd Floor, Ottawa, Ontario.
3. Kelly's authorized capital consists of an unlimited number of Class A Shares, an unlimited number of Class Bshares and an unlimited number of non-voting exchangeable shares ("Exchangeable Shares") of which nil ClassA Shares, 60 Class B Shares and 63,499 Exchangeable Shares are currently issued and outstanding.
4. All the outstanding Exchangeable Shares are owned by the Selling Shareholders. Each of the SellingShareholders is a resident of the Province of Ontario.
5. IPG was incorporated under the laws of Delaware in September, 1930. IPG is a "registrant" under, and issubject to, the requirements of the United States Securities Exchange Act of 1934, as amended. IPG is not a"reporting issuer" under the Act or under any other securities legislation in Canada and will not become areporting issuer under the Act as a result of the Acquisition.
6. IPG is in the business of owning advertising agencies and related companies. The executive offices of IPG arelocated at 1271 Avenue of the Americas, New York, NY 10020.
7. The authorized capital of IPG consists of 550,000,000 shares of common stock ("IPG Common Stock") and20,000,000 shares of preferred stock. As at July 31, 2000, there were 307,768,471 shares of IPG CommonStock outstanding, and nil shares of preferred stock outstanding. The shares of IPG Common Stock are fullyparticipating, voting shares and are quoted on The New York Stock Exchange ("NYSE").
8. Octagon is a wholly-owned subsidiary of IPG. Octagon was incorporated under the laws of Delaware onOctober 2, 1997. Octagon is not a "registrant" under the United States Securities Exchange Act of 1934, asamended. Octagon is not a "reporting issuer" under the Act or under any other securities legislation in Canadaand will not become a reporting issuer under the Act as a result of the Acquisition.
9. Octagon is in the business of sports marketing and athlete representation. The corporate office of Octagon islocated at 1114 Avenue of the Americas, New York, NY 10036. Octagon's authorized capital consists of100,000 common shares. All of the shares of common stock issued by Octagon are held directly by IPG.
10. The Purchaser is a direct wholly-owned subsidiary of Octagon (and an indirect wholly-owned subsidiary of IPG).The Purchaser was incorporated under the laws of the Province of Ontario on September 18, 2000 solely toeffect the Acquisition. Prior to the closing of the Acquisition, the Purchaser had no assets and did not carry onany business. After the closing, the Purchaser's sole asset consisted of sixty (60) Class B Shares of Kelly.Aside from holding these shares, the Purchaser has no other business.
11. The registered and head office of the Purchaser is located at c/o Blake, Cassels & Graydon LLP, 45 O'ConnorStreet, 20^th Floor, Ottawa, Ontario, K1P 1A4. The Purchaser's authorized capital consists of an unlimitednumber of common shares. All of the common shares issued by the Purchaser are held directly by Octagon.
12. In accordance with the terms of the Purchase Agreement, the Purchaser and Octagon agreed to purchase allthe outstanding shares of Kelly in exchange for a combination of cash and Exchangeable Shares. Asconsideration for the Acquisition, the Purchase Agreement provides that the Selling Shareholders shall beentitled to future payments (the "Additional Payment") pursuant to a formula based on the revenue of Kelly fromclosing to June 30, 2005. The Additional Payment shall be payable by the Purchaser to the SellingShareholders on an annual basis from the closing date of the Acquisition until June 30, 2005 by means of 50%cash and 50% shares. The shares shall be, at the option of the Selling Shareholders, either IPG CommonStock or Exchangeable Shares.
13. The Exchangeable Shares are securities of Kelly, each having economic attributes, including dividend rightsand liquidation entitlements, which are, as nearly as practicable, equivalent to those of a share of IPG CommonStock, except for the fact that, whereas shares of IPG Common Stock are voting shares, the holders ofExchangeable Shares have no right to vote at any meeting of shareholders of IPG.
14. The provisions of the Exchangeable Shares (the "Exchangeable Share Provisions") provide that theExchangeable Shares rank in priority to the Class A Shares and the Class B Shares of Kelly and any otherclass of shares of Kelly ranking junior to the Exchangeable Shares with respect to priority in payment ofdividends and the distribution of assets in the event of a liquidation, dissolution or winding-up of Kelly. EachExchangeable Share entitles the holder thereof on the declaration date to dividends payable by Kelly at thesame time as, and in an amount equivalent to, the dividends paid by IPG on each share of IPG Common Stock.Subject to the overriding call right of IPG and Octagon referred to below, in the event of the liquidation,dissolution or winding-up of Kelly, each Exchangeable Share entitles the holder thereof on the liquidation dateto receive an amount equal to the market price of one share of IPG Common Stock, which shall be satisfiedby Kelly delivering or causing to be delivered to the holder of such Exchangeable Shares one share of IPGCommon Stock, together with an additional amount equivalent to the full amount of all declared and unpaiddividends on each Exchangeable Share (collectively, the "Liquidation Price"). Notwithstanding the foregoing,in the event of the liquidation, dissolution or winding-up of Kelly, IPG and Octagon will have an overriding callright (the "Liquidation Call Right") to purchase the Exchangeable Shares from the holders of ExchangeableShares for the Liquidation Price.
15. The Exchangeable Shares are non-voting, and are retractable at the option of the holders of ExchangeableShares at any time subject to compliance with applicable law. Subject to the overriding call right of IPG andOctagon referred to below, upon retraction, each Exchangeable Share entitles the holder thereof on theretraction date to receive from Kelly an amount equal to the market price of one share of IPG Common Stock,which shall be satisfied by Kelly delivering or causing to be delivered to the holder of such ExchangeableShares one share of IPG Common Stock, together with an additional amount equivalent to the full amount ofall declared and unpaid dividends on each Exchangeable Share (collectively, the "Retraction Price").Notwithstanding the foregoing, upon being notified by Kelly of a proposed retraction by the holder of anExchangeable Share, IPG and Octagon will have an overriding call right (the "Retraction Call Right") topurchase from the holder of such Exchangeable Share each Exchangeable Share to be retracted at theRetraction Price.
16. Subject to the overriding call right of IPG and Octagon referred to below, the outstanding Exchangeable Sharesmust be redeemed by Kelly on the date (the "Redemption Date") which is the earlier of (i) the later of June 30,2005 and the date which is one year following the issuance of any Exchangeable Shares; (ii) the date whichis 150 days after a determination by Kelly that fewer than 1,000 Exchangeable Shares remain outstanding andregistered in the share register of Kelly in a name other than IPG or its subsidiaries; (iii) thirty days followingnotice that a merger, amalgamation, tender offer or similar transaction with respect to IPG has been approvedby its board of directors, and the redemption by IPG of Exchangeable Shares is determined by the Board ofDirectors in good faith to be necessary for the completion of such transaction; and (iv) thirty days followingnotice that a merger, amalgamation, sale or similar transaction with respect to Octagon or Kelly has beenapproved by its respective board of directors, and the redemption by Kelly of the Exchangeable Shares isdetermined by the Board of Directors in good faith to be necessary for the completion of such transaction,provided that in no event shall the Redemption Date pursuant to this clause (iv) be prior to January 1, 2003.Upon a redemption by Kelly on the Redemption Date, each Exchangeable Share shall entitle the holder thereofon the Redemption Date to receive from Kelly an amount equal to the market price of one share of IPGCommon Stock, which will be satisfied by Kelly delivering or causing to be delivered to such ExchangeableShareholder one share of IPG Common Stock, together with an additional amount equivalent to the full amountof all declared and unpaid dividends on each Exchangeable Share (collectively, the "Redemption Price").Notwithstanding the foregoing, IPG and Octagon will have an overriding call right (the "Redemption Call Right")to purchase the Exchangeable Shares from the holders of the Exchangeable Shares on the Redemption Datefor the Redemption Price.

1. In accordance with the provisions of the Exchangeable Shares, the Exchangeable Shares shall be automaticallyadjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend ordistribution of securities convertible into IPG Common Stock), reorganization, recapitalization or other likechange with respect to IPG Common Stock occurring after September 21, 2000.
2. Except as required by applicable law, holders of Exchangeable Shares are not entitled to receive notice of orto attend any meeting of the shareholders of Kelly or to vote at any such meeting.

1. Contemporaneously with the closing of the Acquisition, Octagon, IPG, Kelly and the Trustee entered into anexchange trust agreement (the "Exchange Trust Agreement"). Under the Exchange Trust Agreement, IPGissued to and deposited with the Trustee that amount (the "Deposited Shares") of IPG Common Stock equalto the amount of Exchangeable Shares outstanding. IPG also granted to the Trustee on behalf of the holdersof Exchangeable Shares the right (the "Exchange Right") exercisable by the holders of Exchangeable Sharesupon the insolvency, bankruptcy, winding up or dissolution of Kelly to require Octagon to purchase from eachholder of Exchangeable Shares all or any part of the Exchangeable Shares held by the holder of ExchangeableShares. The purchase price for each Exchangeable Share purchased by Octagon under the Exchange Rightwill be an amount equal to the market price of one share of IPG Common Stock on the trading day prior to theclosing date of the purchase under the Exchange Right. This purchase price will be satisfied by Octagondelivering or causing to be delivered to holders of Exchangeable Shares one share of IPG Common Stock foreach Exchangeable Share held, together with an additional amount equivalent to the full amount of all declaredand unpaid dividends on each Exchangeable Share exchanged for IPG Common Stock. The Exchange TrustAgreement provides for the Trustee to deliver to IPG for delivery to the holders of the Exchangeable Sharesone Deposited Share for each Exchangeable Share held, together with an additional amount equivalent to thefull amount of all declared and unpaid dividends, in payment of such purchase price.
2. Under the Exchange Trust Agreement, the Exchangeable Shares are automatically exchanged (the "LiquidationAutomatic Exchange Right") for shares of IPG Common Stock in the event of a voluntary or involuntaryliquidation, dissolution or winding-up of IPG (a "Liquidation Automatic Exchange Event"). In the event of aLiquidation Automatic Exchange Event, each outstanding Exchangeable Share (except for those held by IPGor its affiliates) will be automatically exchanged for shares of IPG Common Stock. The purchase price for eachExchangeable Share deemed to have been purchased by Octagon pursuant to the Liquidation AutomaticExchange Right will be an amount equal to the market price of one share of IPG Common Stock on the tradingday prior to the closing date of the purchase under the Liquidation Automatic Exchange Right. This purchaseprice will be satisfied by the Trustee delivering to IPG for delivery to the holders of Exchangeable Shares oneDeposited Share of IPG Common Stock for each Exchangeable Share held, together with an additional amountequivalent to the full amount of all declared and unpaid dividends on each Exchangeable Share.

1. The Exchange Trust Agreement provides for a further automatic exchange of Exchangeable Shares (the"Termination Automatic Exchange Right") for shares of IPG Common Stock in the event that the trust isterminated because a ruling of the Commission in respect of certain of the trades made in connection with theAcquisition has not been obtained by IPG on or before June 30, 2001. In the event the Termination AutomaticExchange Right is triggered, the Trustee will deliver to IPG for delivery to the holder of Exchangeable Sharesone Deposited Share of IPG Common Stock for each Exchangeable Share held.
2. On closing of the Acquisition, Kelly, IPG and Octagon entered into a support agreement (the "SupportAgreement") pursuant to which, among other things, Octagon will:

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

(b) enable Kelly to fulfil its obligations in respect of the redemption and retraction rights and dissolutionentitlements that are attributes of the Exchangeable Shares.

The Support Agreement contains detailed provisions setting out the manner in which IPG and Octagon areentitled to exercise the Liquidation Call Right and the Redemption Call Right. The Support Agreement alsoprovides that if a tender offer, share exchange offer, issuer bid, take-over bid or similar transaction with respectto the shares of IPG Common Stock (collectively, an "Offer") is effected with the consent or approval of theboard of directors of IPG, IPG will in good faith attempt to enable the holders of the Exchangeable Shares toparticipate in such Offer on an equivalent basis as the holders of shares of IPG Common Stock.

1. Listed below are trades in connection with or pursuant to the Acquisition that may be effected subsequent tothe date of this Ruling and which would be subject to the registration and prospectus requirements of the Actunless the ruling sought is granted (the "Non-Exempt Trades"):

(a) the issuance by IPG, if necessary, of IPG Common Stock to the Trustee on behalf of the SellingShareholders as a portion of the Additional Payment pursuant to the Purchase Agreement;

(b) the trade of shares of IPG Common Stock by the Trustee to IPG and then by IPG (i) to the holders ofExchangeable Shares, (ii) to Octagon and then by Octagon to the holders of Exchangeable Shares,or (iii) to Kelly, upon the exercise by such holders of the Exchange Right;

(c) the trade of shares of IPG Common Stock by the Trustee to IPG and then by IPG (i) to the holders ofExchangeable Shares or (ii) to Octagon and then by Octagon to the holders of Exchangeable Shares,pursuant to the Liquidation Automatic Exchange Right;

(d) the trade of shares of IPG Common Stock by the Trustee to IPG and then by IPG to the holders ofExchangeable Shares pursuant to the Termination Automatic Exchange Right;

(e) the trade of shares of IPG Common Stock from time to time, directly or indirectly, by any one or moreof the Trustee, IPG, Octagon and Kelly, to the holders of Exchangeable Shares, upon the retractionof the Exchangeable Shares;

(f) the trade of shares of IPG Common Stock from time to time, directly or indirectly, by any one or moreof the Trustee, IPG, Octagon and Kelly, to the holders of Exchangeable Shares, upon the redemptionof the Exchangeable Shares;

(g) the trade of shares of IPG Common Stock by the Trustee to IPG and then by IPG (i) to the holders ofExchangeable Shares or (ii) to Octagon and then by Octagon to the holders of Exchangeable Sharesin connection with the exercise by IPG or Octagon of the Retraction Call Right, Redemption Call Rightor Liquidation Call Right; and

(h) the exchange of the Exchangeable Shares in accordance with the terms of the Exchangeable ShareProvisions or the Exchange Trust Agreement.

1. There is no market for the IPG Common Shares in Ontario and none is expected to develop.
2. Assuming the Selling Shareholders acquire the maximum number of shares of IPG Common Stock to whichthey are entitled under the provisions of the Purchase Agreement and pursuant to the Exchangeable ShareProvisions or the Exchange Trust Agreement, their aggregate holdings would, as at December 6, 2000,constitute less than 1% of the total issued and outstanding shares of IPG Common Stock, including any sharesissued in payment of the Additional Payment (estimated on a reasonable basis based on anticipated revenueprojections).
3. If all of the Exchangeable Shares had been exchanged for shares of IPG Common Stock immediately after thecompletion of the Acquisition, persons or companies resident in Ontario would not in the aggregate hold ofrecord more than 10% of the issued and outstanding shares of IPG Common Stock nor represent more than10% of the total number of holders of shares of IPG Common Stock.
4. All disclosure material furnished to holders of shares of IPG Common Stock in the United States willcontemporaneously be provided to the Selling Shareholders and to the holders of shares of IPG Common Stockresident in Ontario.

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(1) of the Act that sections 25 and 53 of the Act shall not apply to theNon-Exempt Trades provided that:

a) the first trade of the Exchangeable Shares, other than the exchange thereof for shares of IPGCommon Stock in accordance with the terms of the Exchangeable Share Provisions or the ExchangeTrust Agreement, shall be deemed to be a distribution; and

b) the first trade of shares of IPG Common Stock issued pursuant to this Ruling shall be deemed to bea distribution unless such trade is executed through the facilities of a stock exchange outside Ontario.

May 4, 2001.

"Paul Moore" "Robert Davis"