Securities Law & Instruments


Headnote

S.s. 74(1) - trades in securities of reporting issuer (which recently ceased to be a privatecompany and became a reporting issuer in Manitoba, Ontario and B.C. in July 1999)exempt from section 53 of the Act provided issuer has been a reporting issuer for 180days. Almost all trades initially made on an exempt basis in British Columbia prior toissuer becoming a reporting issuer. Generally, all shares held by non-Canadianshareholders or acquired by non-Canadian optionholders will become available for resaleinto the public market in the U.S. at the end of January 2000. Similar order previouslygranted by B.C. Securities Commission. Because of the unusual circumstances of thiscase, ruling granted. However, ruling not to be used as a precedent for abridging theseasoning requirements for new reporting issuers under the Act.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as am., ss. 1(1)(c), 53, 74(1).


IN THE MATTER OF THE SECURITIES ACT
R.S.O 1990, CHAPTER S.5, AS AMENDED (the "Act")

AND

IN THE MATTER OF
CREO PRODUCTS INC.

RULING
(Subsection 74 (1) of the Act)


UPON the application (the "Application") of Creo Products Inc. ("Creo") to theOntario Securities Commission (the "Commission") for a ruling pursuant to subsection 74(1) of the Act that certain trades in common shares ("Shares") of Creo are not subject tosection 53 of the Act;

AND UPON considering the Application of Creo and the recommendation of thestaff of the Commission;

AND UPON Creo having represented to the Commission that:

1. Creo is a corporation incorporated under the Canada Business Corporations Actand has its head office and principal place of business in Burnaby, BritishColumbia.

2. The authorized share capital of Creo consists of an unlimited number of Shares andan unlimited number of preferred shares, issuable in series.

3. On July 29, 1999 (the "Receipt Date") Creo became a reporting issuer in theprovinces of Manitoba, British Columbia and Ontario by reason of the issuance ofa receipt for a final prospectus in respect of its initial public offering and aconcurrent secondary distribution (together, the "Offering") of 5,000,000 Shares.

4. Following completion of the Offering, the Shares became listed on The TorontoStock Exchange and quoted on the Nasdaq National Market System.

5. To the best of its knowledge, information and belief, Creo is not in default of itsobligations as a reporting issuer under the Act or regulations made thereunder.

6. On the Receipt Date:

a) the issued capital of Creo consisted of 28,072,182 Shares held by 445registered shareholders; and

b) there were outstanding options to purchase 4,555,748 Shares held by 1,065persons and outstanding warrants to purchase 24,958 Shares.

7. Of the 445 registered shareholders on the Receipt Date, 340 (the "CanadianShareholders") resided in Canada, and between them held an aggregate of14,122,078 Shares, as follows:

a) 326 (the "B.C. Shareholders") resided in British Columbia, and betweenthem held 12,608,840 Shares, or approximately 45% of the Shares thenoutstanding;

b) 11 (the "Ontario Shareholders") resided in Ontario, and between them held1,517,938 Shares, or approximately 5% of the Shares then outstanding; and

c) 3 resided in other provinces of Canada, and between them held 10,734Shares, or less than 0.5% of the Shares then outstanding.

8. The remaining 105 Shareholders (the "Non-Canadian Shareholders") resided invarious jurisdictions outside Canada, and between them held 13,950,104 Shares,or approximately 49.7% of the Shares then outstanding.

9. Of the 1,065 persons who on the Receipt Date held options or warrants to purchaseShares, 806 persons (the "Canadian Optionholders") resided in Canada, andbetween them held an aggregate of 3,619,782 options to purchase Shares, asfollows:

a) 785 (the "BC Optionholders") resided in British Columbia, and between themheld options to purchase an aggregate of 3,574,664 Shares;

b) 12 (the "Ontario Optionholders") resided in Ontario, and between them heldoptions to purchase an aggregate of 29,618 Shares; and

c) 9 resided in other provinces of Canada, and between them held options topurchase an aggregate of 15,500 Shares.

10. The remaining 259 Optionholders (the "Non-Canadian Optionholders") resided invarious jurisdictions outside Canada, and between them held an aggregate of935,966 options, and 24,598 warrants to purchase Shares.

11. Almost all of the Shares held by Non-Canadian Shareholders or acquired by Non-Canadian Optionholders will become available for resale into the public market inthe United States after six months from the Receipt Date.

12. Prior to Creo becoming a reporting issuer in Manitoba, Ontario and BritishColumbia, almost all of the trades in the securities of Creo were initially done inBritish Columbia on a basis exempt from registration and prospectus requirements.

13. On August 17, 1999 the British Columbia Securities Commission (the "BCSC")issued an order effective July 8, 1999 (the "BC Order") pursuant to which trades byB.C. Shareholders in Shares issued before the Receipt Date and by BCOptionholders in Shares issued after the Receipt Date on the exercise of Optionsgranted before the Receipt Date would be exempt from the prospectusrequirements of the Securities Act (British Columbia) provided that, among otherthings, (a) Creo had been a reporting issuer in British Columbia for the 180 daysimmediately preceding the date of the trade, (b) the trade is not a distribution fromthe holdings of a control person, (c) no unusual effort is made to prepare the marketor create a demand for the Shares, and (d) no extraordinary commission or otherconsideration is paid in respect of the trade.

AND UPON the Commission being satisfied that to do so would not be prejudicialto the public interest;

IT IS RULED, pursuant to subsection 74 (1) of the Act, that trades by CanadianShareholders in Shares issued before the Receipt Date, and by Canadian Optionholdersin Shares issued after the Receipt Date on the exercise of Options granted before theReceipt Date are not subject to section 53 of the Act provided that:

a) Creo is a reporting issuer under the Act and has been a reporting issuerunder the Act for at least 180 days;

b) no unusual effort is made to prepare the market or to create a demand forthe Shares and no extraordinary commission or consideration is paid inrespect of the trades; and

c) the trade is not a distribution as defined in clause (c) of the definition of"distribution" in subsection 1(1) of the Act.

January 18th, 2000.

"J. A. Geller"    "R. Stephen Paddon"