Securities Law & Instruments

Headnote

Subsection 83.1(1) -- issuer deemed to be a reporting issuer in Ontario -- issuer has been a reporting issuer in Alberta and British Columbia for over 12 months -- issuer's securities listed and posted for trading on the TSX Venture Exchange -- continuous disclosure requirements of British Columbia and Alberta substantially identical to those of Ontario.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 83.1(1).

IN THE MATTER OF

THE SECURITIES ACT

R.S.O. 1990, CHAPTER S.5, AS AMENDED (THE "ACT")

AND

IN THE MATTER OF

HYDRALOGIC SYSTEMS INC.

 

ORDER

(Section 83.1(1))

UPON the application of HydraLogic Systems Inc. (the Company) to the Ontario Securities Commission for an order pursuant to subsection 83.1(1) of the Act deeming the Company to be a reporting issuer for the purposes of Ontario securities law.

AND UPON considering the application and the recommendation of staff of the Ontario Securities Commission (the Commission).

AND UPON the Company having represented to the Commission that:

    1. The Company was continued under the laws of Ontario as a result of the amalgamation of LeChamp Capital Corp. (LeChamp) and HydraLogic Systems Inc. (HLS) on January 16, 2004 (the Amalgamation).

    2. The head office of the Company is located at 210 Saunders Road, Barrie, Ontario L4N 9A2.

    3. The Company has determined that it has a significant connection to Ontario, in that:

      (a) the head office of the Company is located in Ontario;

      (b) all of the four senior officers of the Company, two of whom are also directors of the Company, are residents of Ontario; and

      (c) a majority of beneficial and registered shareholders of the Company, collectively holding more than 85% of the issued and outstanding common shares of the Company, are resident in Ontario.

    4. The common shares and the Class A and Class B Share Purchase Warrants of the Company are currently listed on the TSX Venture Exchange (the Exchange) under the symbols "HLS.WT.A" and "HLS.WT.B", respectively, and the Company is in compliance with the requirements of the Exchange.

    5. The Company is not designated as a capital pool company under the policies of the Exchange.

    6. The authorized capital of the Company consists of an unlimited number of common shares and an unlimited number of preference shares issuable in series, of which 18,366,000 common shares are currently issued and outstanding. The Company also has 3,445,500 Class A Share Purchase Warrants and 3,445,500 Class B Share Purchase Warrants currently outstanding.

    7. A predecessor of the Company, LeChamp, filed a prospectus to qualify the distribution of securities in British Columbia and Alberta on August 12, 2002. As a result of the Amalgamation, the Company became a reporting issuer under the Securities Act (British Columbia) (the BC Act) and the Securities Act (Alberta) (the Alberta Act) on January 16, 2004.

    8. The Company is not in default of any continuous disclosure requirements of the BC Act or the Alberta Act.

    9. The Company is not a reporting issuer in Ontario and is not a reporting issuer, or its equivalent, under the securities legislation of any other jurisdiction in Canada other than British Columbia and Alberta.

    10. The continuous disclosure requirements of the BC Act and the Alberta Act are substantially the same as the requirements under the Act.

    11. The continuous disclosure materials filed by the Company are available on the System for Electronic Document Analysis and Retrieval.

    12. There have been no penalties or sanctions imposed against the Company by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority, and the Company has not entered into any settlement agreement with any Canadian securities regulatory authority.

    13. Neither the Company nor its directors and officers nor, to the knowledge of the Company and directors and officers, any of its controlling shareholders, has: (i) been the subject of any penalties or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities regulatory authority, (ii) entered into a settlement agreement with a Canadian securities regulatory authority, or (iii) been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

    14. Neither the Company nor its directors and officers nor, to the knowledge of the Company and directors and officers, any of its controlling shareholders, is or has been subject to: (i) any known ongoing or concluded investigations by: (a) a Canadian securities regulatory authority, or (b) a court or regulatory body, other than a Canadian securities regulatory authority, that would be likely to be considered important to a reasonable investor making an investment decision; or (ii) any bankruptcy or insolvency proceedings, or other proceedings, arrangements or compromises with creditors, or the appointment of a receiver, receiver-manager or trustee, within the preceding 10 years.

    15. Neither the Company nor its directors and officers nor, to the knowledge of the Company and directors and officers, any of its controlling shareholders, is or has been, at the time of such event, a director or officer of another issuer which is or has been subject to: (i) any cease trade or similar orders, or orders that denied access to any exemptions under Ontario securities law, for a period of more than 30 consecutive days, within the preceding 10 years; or (ii) any bankruptcy or insolvency proceedings, or other proceedings, arrangements or compromises with creditors, or the appointment of a receiver, receiver-manager or trustee, within the preceding 10 years.

AND UPON the Commission being satisfied that it would not be prejudicial to the public interest;

IT IS HEREBY ORDERED pursuant to subsection 83.1(1) of the Act that the Company is deemed to be a reporting issuer for the purposes of Ontario securities law.

June 30, 2004.

"Cameron McInnis"