NTG Clarity Networks Inc. - ss. 83.1(1)
Headnote
Subsection83.1(1) - issuer deemed to be a reporting issuer in Ontario -issuer has been a reporting issuer in Alberta since August 2000and in British Columbia since October 2000 - issuer listed andposted for trading on the Canadian Venture Exchange - continuousdisclosure requirements of British Columbia and Alberta substantiallyidentical to those of Ontario.StatutesCited
SecuritiesAct, R.S.O. 1990, c.S.5, as am., ss. 83.1(1).INTHE MATTER OF
THESECURITIES ACT
R.S.O.1990, CHAPTER S. 5, AS AMENDED (the "Act")
AND
INTHE MATTER OF
NTGCLARITY NETWORKS INC.
ORDER
(Subsection83.1(1))
UPONthe application of NTG Clarity Networks Inc. ("NTG")for an order pursuant to subsection 83.1(1) of the Act deemingNTG to be a reporting issuer for the purposes of Ontario securitieslaw; ANDUPON considering the application and the recommendationof the staff of the Commission; ANDUPON NTG representing to the Commission as follows: 1.NTG was incorporated on June 19, 2000 pursuant to the provisionsof the Business Corporations Act (Alberta). 2.NTG's head office is located in Calgary, Alberta. 3.NTG has been a reporting issuer under the Securities Act (Alberta)(the "Alberta Act") since August 28, 2000 following the receiptfrom the Alberta Securities Commission (the "ASC") of NTG's initialpublic offering prospectus pursuant to the Alberta SecuritiesCommission's Rule 46-501, Junior Capital Pool Offerings. NTG'scommon shares ("Common Shares") were listed and posted for tradingon the Canadian Venture Exchange Inc. ("CDNX") on October 11,2000, upon which date NTG became a reporting issuer under theSecurities Act (British Columbia) (the "BC Act"). 4.On March 7, 2001, NTG acquired all of the issued and outstandingcommon shares and options to acquire common shares of NTG InternationalInc. ("Privateco") following its shareholders' approval of suchacquisition at its annual and special meeting of shareholdersheld on March 6, 2001 (the "Acquisition"). In connection withthe Acquisition, a total of 16,309,811 NTG Common Shares wereissued including 8,150,980 NTG Common Shares which were issuedto 64 Ontario residents. Each of the Ontario residents receivingCommon Shares and options to purchase Common Shares of NTG inconnection with the Acquisition were provided with a take-overbid circular (the "Take-over Bid Circular") of NTG, which hadappended thereto the Information Circular (as defined in paragraph5), and a directors' circular of Privateco prepared in connectionwith the Acquisition. 5.In connection with the Acquisition, NTG prepared and sent to itsshareholders, and filed with the appropriate securities regulatoryauthorities, an information circular dated February 2, 2001 (the"Information Circular") containing prospectus-level disclosurewith respect to the business and affairs of NTG, Privateco andthe Acquisition. 6NTG has maintained its continuous disclosure obligations underthe Alberta Act and the BC Act since August 28, 2000 and October11, 2000, respectively, which obligations are substantially similarto those under the Act. The Information Circular, the Take-overBid Circular and the continuous disclosure materials filed byNTG since August 28, 2000 are available on the System for ElectronicDocument Analysis and Retrieval. 7.Other than Alberta and British Columbia, NTG is not a reportingissuer or public company under the securities legislation of anyother jurisdiction in Canada. 8.The authorized share capital of NTG consists of an unlimited numberof Common Shares and an unlimited number of First Preferred Sharesand Second Preferred Shares. There are currently 18,409,811 CommonShares issued and outstanding and no First Preferred Shares orSecond Preferred Shares issued and outstanding. 9.The Common Shares are listed and posted for trading on CDNX. NTGis not a Junior Capital Pool issuer. 10.NTG is not in default of any requirements of the securities legislationin Alberta or British Columbia or of any requirements of the CDNX. 11.There have been no penalties or sanctions imposed against NTGby a court relating to Canadian securities legislation or by aCanadian securities regulatory authority, and NTG has not enteredinto any settlement agreement with any Canadian securities regulatoryauthority. 12.Other than as described herein, neither NTG nor any of its directors,officers nor, to the knowledge of NTG, its directors and officers,or any of its controlling shareholders, has: (i) been the subjectof any penalties or sanctions imposed by a court relating to Canadiansecurities legislation or by a Canadian securities regulatoryauthority, (ii) entered into a settlement agreement with a Canadiansecurities regulatory authority, or (iii) been subject to anyother penalties or sanctions imposed by a court or regulatorybody that would be likely to be considered important to a reasonableinvestor making an investment decision. 13.Other than as described herein, neither NTG nor any of its directors,officers nor, to the knowledge of NTG, its directors and officers,or any of its controlling shareholders, is or has been subjectto: (i) any known ongoing or concluded investigations by: (a)a Canadian securities regulatory authority, or (b) a court ofregulatory body, other than a Canadian securities regulatory authority,that would be likely to be considered important to a reasonableinvestor making an investment decision; or (ii) any bankruptcyor insolvency proceedings, or other proceedings, arrangementsor compromises with creditors, or the appointment of a receiver,receiver-manager or trustee, within the preceding 10 years. 14.Other than as described herein, none of the directors or officersof the issuer, nor to the knowledge of the Issuer, its directorsand officers, or any of its controlling shareholders, is or hasbeen at the time of such event a director or officer of any otherissuer which is or has been subject to: (i) any cease trade orsimilar orders, or orders that denied access to any exemptionsunder Ontario securities law, for a period of more than 30 consecutivedays, within the preceding 10 years; or (ii) any bankruptcy orinsolvency proceedings, or other proceedings, arrangements orcompromises with creditors, or the appointment of a receiver,receiver-manager or trustee, within the preceding 10 years. 15.Dr. Hatim Zaghloul, a director of NTG, is the Chairman, President,Chief Executive Officer and a director of Wi-LAN Inc. ("Wi-LAN").In 1997, Dr. Hatim Zaghloul was the President and a director ofWi-LAN which during the course of preparation of its preliminaryprospectus for its initial public offering was advised by itslegal counsel that certain of its prior share issuances may havebeen in contravention of the Alberta Act. The management and directorsof Wi-LAN had, at the time of such transactions, believed suchtransactions to be in compliance with the Alberta Act. The Boardof Directors of Wi-LAN instructed its counsel to inform the staffof the Alberta Securities Commission (the "ASC") of the relevantcircumstances prior to the filing of the preliminary prospectus.As a result, the Executive Director of the ASC, Wi-LAN and certainof its directors at the time, including, Dr. Hatim Zaghloul (the"Individual Respondents") entered into a Settlement Agreementand Undertaking (the "Agreement") to resolve any such breachesarising in such matter. Pursuant to the Agreement, Wi-LAN (i)acknowledged that certain shares issued pursuant to certain ofthe transactions were subject to resale restrictions and agreedto legend the appropriate share certificates accordingly, (ii)undertook that before it availed itself of any of the exemptionscontained in the Alberta Act for a period of one year from thedate of the Agreement, it would seek in writing the written permissionof the Executive Director, (iii) agreed to notify the securitiescommissions of any other Canadian jurisdictions in which violationsof applicable securities legislation occurred, and (iv) agreedto pay the costs of the investigation. The Individual Respondents(i) undertook that they would make themselves aware of the requirementsof the Alberta Act and would comply with the Alberta Act in thefuture, and (ii) undertook to the Executive Director not to sellthe securities of Wi-LAN for a period of 18 months from the dateof the Agreement. 16.Dr. Hatim Zaghloul was also a director of Cell-Loc Inc. ("Cell-Loc")in 1997. Prior to its initial public offering in 1997, Cell-Locfailed to file reports within the required time period in connectionwith seven exempt issuances of securities completed in relianceon the exemptions contained in subsections 107(1)(l) and (z) ofthe Alberta Act. In addition, Cell-Loc issued common shares anda one-time option to purchase additional common shares to a companyin consideration for technology without proper exemptions fromthe registration and prospectus requirements of the Alberta Act.As a result of the foregoing, Cell-Loc, Dr. Hatim Zaghloul andan officer of Cell-Loc entered into a Settlement Agreement andUndertaking with the ASC pursuant to which Dr. Hatim Zaghlouland the officer of Cell-Loc (i) undertook to make themselves awareof, and comply with, the requirements of the Alberta Act in thefuture; (ii) agreed to obtain legal advice from an active memberof the Law Society of Alberta practicing in the area of securitieslaw regarding the use of statutory exemptions contained in theAlberta Act prior to causing Cell-Loc to issue securities in relianceon such exemptions; and (iii) paid $1,000 to the ASC towards thecosts of the investigation. 17.NTG has a significant connection to Ontario for the purposes ofCDNX Policy 3.1 by virtue of the fact that NTG has registeredand beneficial shareholders resident in Ontario who own more than20% of the issued and outstanding Common Shares of NTG. ANDUPON the Commission being satisfied that to do so wouldnot be prejudicial to the public interest; ITIS HEREBY ORDERED pursuant to subsection 83.1(1) of theAct that NTG be deemed a reporting issuer for the purpose of theAct. February21, 2002. "IvaVranic"