Proceedings

IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, c. S.5, AS AMENDED

- and -

IN THE MATTER OF
CHAPTERS INC. AND TRILOGY RETAIL ENTERPRISES L.P.

ORDER
Section 104

WHEREAS on December 29, 2000 Chapters Inc. ("Chapters") submitted an application to the Ontario Securities Commission (the "Commission") requesting the following relief:

1.pursuant to clause 104(1)(a) of the Securities Act, R.S.O. 1990, c. S.5, as amended (the "Act"), an order restraining the distribution of the take-over bid circular and any advertisement in connection with the unsolicited partial take-over bid (the "Offer") by Trilogy Enterprises L.P. ("Trilogy") for 4,888,000 common shares of Chapters;

2.pursuant to clause 104(1)(b) of the Act, an order requiring that Trilogy amend, correct or vary the take-over bid circular and Offer (together the "Circular") and distribute such amended, corrected or varied documents to all persons whom the Circular was required to be sent;

3.pursuant to clause 104(2)(b) of the Act, the variation of all time periods set out in Part XX of the Act and the respective regulations relating thereto such that such time periods shall run anew from the date that Trilogy sends the revised documents described in paragraph 2 above to all persons to whom the Circular was required to be sent; and

4.pursuant to clause 104(1)(c) of the Act, an order directing Trilogy to comply with Part XX of the Act, and the respective regulations relating thereto or restraining Trilogy form contravening Part XX of the Act, and the respective regulations relating thereto, and a direction to Trilogy to comply with, or to cease contravening, Part XX of the Act or the related regulations.

AND WHEREAS on January 8, 2001 Chapters amended its request for relief to the following:

1.Indigo Books & Music Inc. ("Indigo")’s historic financial statements;

2.Indigo’s current year pro forma financial statements;

3.pro forma financial statements relating to the merger of Chapters and Indigo, including qualification of any merger synergies;

4.details of the merger process, including identification of the directors and management of Chapters and Indigo; and

5details of the proposed business strategy for the merged entity;

AND WHEREAS on January 9, 2001 Trilogy submitted the Rider for Trilogy Circular as an addendum to the Circular;

AND WHEREAS on January 10, 2001 a hearing was held to consider the application;

AND WHEREAS at the commencement of the hearing Chapters further amended its request for relief to the disclosure of:

1.historical financial statements; and

2.current year pro-forma financial statements of Indigo;

IT IS ORDERED THAT the application pursuant to s.104 of the Act is dismissed.


DATED at Toronto this 11th day of January, 2001.