Subsection 74(1) of the Act - first trade in securities acquired pursuant to a securitiesexchange take-over bid exempt from section 53 of the Act, subject to certain conditions.
Securities Act, R.S.O. 1990, c.S.5, as am., 53, 72(1)(j), 72(5) and 74(1).
R.S.O 1990, CHAPTER S.5, AS AMENDED (the "Act")
IN THE MATTER OF
SPORTS TECHNOLOGIES GROUP INC.
UPON the application of Sports Technologies Group Inc. (the "Issuer" or "STGI")to the Ontario Securities Commission (the "Commission" or "OSC") for an order pursuantto subsection 74(1) of the Act that the first trade by Offeree Shareholders (as definedherein) in certain preferred shares, common shares, warrants and broker warrants of theIssuer to be acquired in connection with a securities exchange take-over bid made by theIssuer in respect of certain securities of Exclamation Inc. ("Exclamation") shall not besubject to section 53 of the Act;
AND UPON considering the application and the recommendation of the staff of theCommission;
AND UPON the Issuer having represented to the Commission that:
1. The Issuer was incorporated on January 5, 1999 by articles of incorporation underthe Business Corporations Act (Alberta).
2. The common shares of the Issuer are listed on the Canadian Venture Exchangeunder the symbol "XI". The Issuer has been a "reporting issuer" in Alberta sinceMay 3, 1999 as a result of receiving a receipt for a prospectus dated May 3, 1999.The Issuer became a "reporting issuer" in Ontario under the Act on January 24,2000 as a result of filing a non-offering prospectus dated January 24, 2000 (the"Ontario Prospectus") and receiving a receipt therefor.
3. Exclamation was incorporated under the laws of the Province of Ontario onNovember 26, 1997 but is not a reporting issuer in any jurisdiction.
4. The Issuer has commenced a securities exchange take-over bid (the "Bid") topurchase the outstanding common shares and preferred shares of Exclamation onthe basis of one preferred share of the Issuer (individually, a "STGI PreferredShare") for every preferred share of Exclamation and 1.25 common shares of theIssuer (the "STGI Common Shares") for every common share of Exclamation.
5. Each STGI Preferred Share is convertible into 1 STGI Common Share and one-halfof a common share purchase warrant of STGI (one whole warrant being called a"STGI Warrant"). Each STGI Warrant is exercisable for 1 STGI Common Share ata price of $0.75 per share on or before August 21, 2001.
6. Exclamation completed a private placement (the "Placement") of preferred sharesat a price of $0.50 per share pursuant to an offering memorandum dated July 30,1999 which contained prospectus level disclosure as required by clause 72(1)(p)of the Act.
7. The agent for the Placement was issued a broker's warrant (the "Broker's Warrant")enabling it to purchase at any time between March 15, 2000 and August 20, 2001,254,350 preferred shares of Exclamation at an exercise price of $0.50 per share.
8. The Issuer has received a receipt for a (final) prospectus from the Alberta SecuritiesCommission (the "Prospectus") offering STGI Common Shares at a price of $0.50per share.
9. In the absence of the requested relief, holders of preferred shares of Exclamationresident in Ontario ("Offeree Shareholders") who received STGI Preferred Sharespursuant to the Bid or who will receive STGI Common Shares pursuant to theconversion of the STGI Preferred Shares, exercise of STGI Warrants and exerciseof the Broker's Warrant would have an effective hold period of one year from thedate the receipt was received from the Commission for the Ontario Prospectus.
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 the first trade by anOfferee Shareholder of: (i) the STGI Preferred Shares received pursuant to the Bid; and(ii) STGI Common Shares received upon: (a) conversion of the STGI Preferred Shares,(b) exercise of STGI Warrants, and (c) exercise of the Broker's Warrant, shall not besubject to section 53 of the Act if such trade is made in accordance with the provisions ofsubsection 72(5) of the Act, except that, for these purposes: (i) it shall not be necessaryto satisfy the requirement in clause 72(5)(a) that the Issuer has been a reporting issuer forat least 12 months; and (ii) it shall not be necessary to satisfy the requirements in clause72(5)(a) that the Issuer not be in default of any provision of the Act or Regulation if theOfferee Shareholder is not in a special relationship with the Issuer or, if the OffereeShareholder is in a special relationship with the Issuer, the Offeree Shareholder hasreasonable grounds to believe that the Issuer is not in default of the Act or the Regulation,where, for these purposes, "special relationship" shall have the same meaning as inOntario Securities Commission Rule 14-501-Definitions.
January 24th, 2000.
"Howard I. Wetston" "R. Stephen Paddon"