Rampart Mercantile Inc. et al. - s. 144

Headnote

Section 144 - variation of cease trade ordersolely to permit trade of a debenture.

Applicable Ontario Statutory Provision

Securities Act, R.S.O., c. S.5, as am., ss.127 and 144.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990 CHAPTER S.5 ASAMENDED (the Act)

AND

IN THE MATTER OF

RAMPART MERCANTILE INC.

AND

IN THE MATTER OF

ROBERT SALNA

AND

IN THE MATTER OF

VITO PALMIERI

ORDER

(Section 144)

WHEREAS the securities of Rampart MercantileInc. (the Issuer) are subject to a Temporary Order ofthe Director dated March 22, 2002 made under section 127 ofthe Act and extended by an Order of the Director (as definedin the Act) dated April 3, 2002 (the Cease Trade Order)directing that trading in the securities of the Issuer ceaseuntil the Cease Trade Order is revoked by a further order ofrevocation;

AND WHEREAS the Issuer, Robert Salna(Salna) and Vito Palmieri (Palmieri) have madean application (the Application) to the Ontario SecuritiesCommission for an order to vary the Cease Trade Order pursuantto section 144 of the Act with respect to the purchase of aconvertible debenture (the Debenture);

AND UPON considering the applicationand the recommendation of the staff of the Commission;

AND UPON the Issuer, Salna and Palmierihaving represented to the Commission as follows:

Rampart Mercantile Inc.

1. The Issuer was formed by a Memorandum ofAssociation dated November 18, 1968 in the Province of BritishColumbia under the name Rampart Mines Limited. On May 28,1984,the Issuer changed its name to Rampart Resources Limited.On July 23, 1987 the Issuer changed its name to Trans-RampartIndustries Ltd. On May 3, 1993, the Issuer changed its nameto Rampart Mercantile Inc. On October 6, 1999 the Issuer filedan Amendment to its Memorandum consolidating its outstandingcapital on the basis of one (1) post-consolidated common sharefor each ten (10) pre-consolidated common shares and increasingits outstanding capital to 100,000,000 common shares. On November24, 1999 the Issuer continued out of the Province of BritishColumbia into the Province of Ontario, increased its outstandingcapital to an unlimited number of common shares and an unlimitednumber of First Preferred Shares issuable in series and implementednew by-laws.

2. The authorized capital of the Issuer consistsof an unlimited number of common shares without par valueand an unlimited number of First Preferred Shares issuablein series. Currently, the Issuer has 3,617,545 common sharesand no First Preferred Shares issued and outstanding.

3. The Issuer became a reporting issuer inthe Province of Ontario in October of 1989 by virtue of beinglisted on the Toronto Stock Exchange. The Issuer is also areporting issuer in British Columbia (August 4, 1972), Alberta(February, 2000), Quebec (July, 2000) and Nova Scotia (July,2000). No subsequent prospectus offering was undertaken afterthe initial prospectus offering in August of 1972.

4. The Issuer maintained its reporting issuerstatus from that date until the issuance of the Cease TradeOrder. The Cease Trade Order was issued in Ontario as a resultof the Issuer's failure to file annual financial statementsfor the year ended October 31, 2001 (the 2001 Annual FinancialStatements). Subsequently, the Issuer failed to file its interimfinancial statements for the periods ended January 31, 2002,April 30, 2002, and July 31, 2002 (the Interim Financial Statements),as well as its annual financial statements for the year endedOctober 31, 2002 (the 2002 Annual Financial Statements, togetherwith the 2001 Annual Financial Statements and the InterimFinancial Statements, the Financial Statements).

The Issuer filed the 2001 Annual FinancialStatements and the Interim Financial Statements on March 13,2003. The Issuer filed the 2002 Annual Financial Statementson March 14, 2003. The Issuer mailed the Financial Statementsto its shareholders on March 17, 2003. On June 4, 2003, theIssuer refiled on SEDAR restated 2002 Annual Financial Statementsand restated interim financial statements for the period endedJanuary 31, 2003.

The Financial Statements, the restated 2002Annual Financial Statements and the restated interim financialstatements for the period ended January 31, 2003, are referredto herein as the Restated Financial Statements.

5. Prior to the issuance of the Cease TradeOrder, the common shares of the Issuer were traded on Tier3 of the TSX Venture Exchange.

6. The TSX Venture Exchange suspended tradingof the shares of the Issuer on March 22, 2002. The Issueris subject to cease trade orders issued in the Province ofQuebec (March 25, 2002), the Province of British Columbia(April 3, 2002) and the Province of Alberta (April 12, 2002).No cease trade order has been issued by the Nova Scotia SecuritiesCommission.

The Proposal

7. The Debenture has a principal amount of$2,000,000, bearing interest at the rate of 10% per annum,dated March 30, 2001 and due September 30, 2002 issued toPalmieri and convertible into common shares of the Issuerat the rate of one (1) common share for each $6.00 in principalamount converted.

8. The Debenture is subordinate in interestto a first debenture in the principal amount of $53,594 (originally$200,000 with $146,406 having been repaid), bearing interestat the rate of 8.5% per annum, dated June 15, 1999 and dueon June 15, 2002 issued to Sheri Fuller-Monardo and convertibleinto common shares of the Issuer at the rate of one (1) commonshare for each $6.00 of principal amount converted (the SFMDebenture).

9. The Debenture is equal in interest to adebenture in the principal amount of $150,000, bearing interestat the rate of 10% per annum, dated April 30, 2001 and dueon October 31, 2002 and convertible into common shares ofthe Issuer at the rate of one (1) common share for each $6.00of principal amount converted (the Third Debenture).

10. The remaining directors of the Issuerwish to reactivate the Issuer.

11. A necessary precondition of any potentialreactivation plan is making arrangements with respect to theDebenture. The Debenture is secured against all of the assetsof the Issuer and its subsidiary, Rampart Securities Inc.,and is currently in default. The SFM Debenture has first priorityover the assets of the Issuer with the Debenture having secondpriority along with the Third Debenture.

12. Palmieri is prepared to dispose of theDebenture to Salna on the payment of $100,000 in cash by Salnato Palmieri.

13. Salna is a sophisticated investor andis aware of the limitations he will be subject to once heacquires the Debenture. Salna will comply with any requirementunder Ontario securities law triggered by his acquisitionof the Debenture.

14. The intention of management of the Issueris to reassess the situation once the Debenture has been transferredto determine the next course of action. Management will thendecide whether a further variation order is needed to completeinterim transactions or whether the Issuer will be in a positionto apply to all the relevant commissions for a full revocationof all the outstanding cease trade orders.

General

15. Apart from its failure to file financialstatements that prompted the issuance of the Cease Trade Order,the Issuer is not in default of any requirements of the Act,the rules or the regulations made thereunder.

16. The Issuer and Salna acknowledge thatthe Cease Trade Order will remain in effect following thetransfer of the Debenture and that the Debenture will remainsubject to the Cease Trade Order until the Cease Trade Orderis revoked by a further order of revocation.

17. The Issuer acknowledges that the grantingof this Order may not be relied upon as the basis for an applicationfor a full revocation of the Cease Trade Order.

18. Salna acknowledges that he has reviewedthe Restated Financial Statements of the Issuer for the yearended October 31, 2002, and has received sufficient independentlegal and financial advice in respect of both the acquisitionof the Debenture and this Application necessary for him tomake an informed investment decision.

19. Palmieri acknowledges that he has reviewedthe Restated Financial Statements of the Issuer for the yearended October 31, 2002, and has received sufficient independentlegal and financial advice in respect of both the dispositionof the Debenture and this Application necessary for him tomake an informed investment decision.

20. The beneficial holder of the SFM Debentureconsents to the granting of this Order and the transfer ofthe Debenture from Palmieri to Salna.

21. The beneficial holder of the Third Debentureconsents to the granting of this Order and the transfer ofthe Debenture from Palmieri to Salna.

UPON the Director being satisfied thatto do so would not be contrary to the public interest;

IT IS ORDERED pursuant to section 144of the Act that the Cease Trade Order be varied solely to permitthe transfer of the Debenture from Palmieri to Salna as setout in paragraph 12 of this Order.

July 22, 2003.

"John Hughes"