Securities Law & Instruments


Subsection 74(1) - issuance of shares to certain Ontario residents by non-reportingissuer pursuant to a directed share program in connection with its U.S. initial publicoffering exempt from section 53 of Act - first trade is a distribution unless made inaccordance with subsection 72(4) or made through the facilities of a stock exchangeor market outside of Ontario, subject to certain conditions.

Statutes Cited

Securities Act, R.S.O. 1990, c.S.5, as am., ss. 53, 72(4) and 74(1).

Rules Cited

Rule 14-501 - Definitions ((1997), 20 OSCB 4054, as amended, (1999), 22 OSCB1173.

Rule 45-501 - Exempt Distributions (1998), 21 OSCB 6548.

Rule 72-501 - Prospectus Exemption for First Trade Over A Market Outside Ontario(1998) 21 OSCB 3873.

R.S.O. 1990, CHAPTER S.5, AS AMENDED (the "Act")



(Subsection 74(1))

UPON the application (the "Application") of Virage Logic Corporation ("Virage")to the Ontario Securities Commission (the "Commission") for a ruling pursuant tosubsection 74(1) of the Act that certain trades in the Shares of Common Stock ofVirage (the "Shares") to be made pursuant to a proposed Directed Share Program (the"Program") to two senior employees of a customer of Virage residing in the Provinceof Ontario, shall not be subject to section 53 of the Act;

AND UPON considering the Application and recommendation of the staff of theCommission;

AND UPON Virage having represented to the Commission as follows:

1. Virage is a corporation incorporated under the laws of California and is not areporting issuer under the Act and has no present intention of becoming areporting issuer under the Act.

2. Virage is currently in the process of completing an initial public offering (the"IPO") in the United States and in connection therewith has filed a registrationstatement on Form S-1, as amended.

3. Virage proposes to offer 3,750,000 Shares under the IPO.

4. Upon completion of the IPO, the Shares will be quoted on the Nasdaq NationalMarket ("NASDAQ").

5. The Program is being made available to directors, officers and employees ofVirage, as well as to some of its customers and suppliers and other personsassociated with Virage, including the Ontario Program Participants, inconnection with the IPO, all on the same terms and conditions.

6. Participation in the Program is voluntary and the preliminary and finalprospectus prepared in accordance with U.S. Securities laws will be forwardedto each Ontario Program Participant who chooses to participate in the Program.

7. The Shares will be offered at a price equal to the price the Shares are beingoffered under the IPO.

8. The Ontario Program Participants are two (2) senior employees of a customerof the Applicant.

9. After giving effect to the IPO, the aggregate number of Shares that will bebeneficially held by Ontario Program Participants residing in the Province ofOntario will be less than 1% of the issued and outstanding Shares and Ontarioresidents will in the aggregate hold, either legally or beneficially, less that 1%of the issued and outstanding Shares and represent less than 1% of theshareholders of Virage.

10. There is not expected to be a market for the Shares in Ontario and it is intendedthat any resale of Shares acquired under the Program will be effected throughthe facilities of the NASDAQ in accordance with its rules and regulations.

11. As a result of the relationship between Virage and the Ontario ProgramParticipants, each of the Ontario Program Participants possess knowledge ofthe business and affairs of Virage.

12. Ontario Program Participants will be provided with a notice advising that OntarioProgram Participants will not be entitled to the remedial rights provided underthe Act in connection the distribution of securities under a prospectus filed underthe Act and therefore must rely on other remedies that may be available whichcould include common law rights of action for damages or recission or rights ofaction under the civil liability provisions of U.S. federal securities law. The noticewill also provide that the commencement and prosecution of any action broughtby Ontario Plan Participants, and the enforcement of any judgement, may bedifficult or not possible as the issuer and some or all of the issuer's officers,directors and assets may be located outside of Canada.

13. The annual reports, proxy materials and other materials generally distributed toshareholders resident in the United States will be provided to Ontario ProgramParticipants at the same time and in the same manner as the documents wouldbe provided to United States resident shareholders.

AND UPON the Commission being satisfied that to do so would not beprejudicial to the public interest.

IT IS RULED, pursuant to subsection 74(1) of the Act, that trades in Sharespursuant to the Program to Ontario Program Participants shall not be subject to section53 of the Act, provided that the first trade in any of the Shares acquired by an OntarioProgram Participant pursuant to this ruling shall be a distribution unless:

A. such trade is executed in accordance with the provisions of subsection 72(4) ofthe Act as modified by section 3.10 of Rule 45-501 Prospectus ExemptDistributions, as if the Shares has been acquired pursuant to an exemptionreferred to in subsection 72(4) of the Act, except that the requirement in clause72(4)(a) which provides that the issuer not be in default of any requirement ofthe Act or the regulations does not have to be satisfied if the seller is not in aspecial relationship with the issuer, or if the seller is in a special relationshipwith the issuer, the seller must have reasonable grounds to believe that theissuer is not in default under the Act or the regulations, where, for thesepurposes, "special relationship" shall have the same meaning as in Rule 14-501Definitions; or

B. such trade is made in accordance with the provisions of subsection 2.1 of Rule72-501 Prospectus Exemption For First Trade Over a Market Outside Ontario.

August 15th, 2000.

"J. A. Geller"       "Stephen N. Adams"