Securities Law & Instruments


Relief from issuer bid requirements -- Applicant issued 2,000,000 common shares to the shareholders of a private company as part consideration for all of the shares of the private company pursuant to the terms of a share purchase agreement -- in settlement of claims or potential claims by the Applicant against the shareholders, the shareholders and a transferee agreed to return an aggregate of 1,641,666 common shares to the Applicant for cancellation -- no consideration is being paid for the common shares other than releases.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 93(3), 95-98, 100, 104(2)(c).

June 7, 2005



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






(Clause 104(2)(c))

UPON the application of CrossOff Incorporated ("CrossOff") to the Ontario Securities Commission (the "Commission") for an order pursuant to clause 104(2)(c) of the Act exempting CrossOff from the requirements of sections 95 through 98 and 100 of the Act (the "Issuer Bid Requirements") in connection with the proposed acquisition by CrossOff of securities of its own issue from arm's length third parties in settlement of claims arising out of a share purchase agreement;

AND UPON the Commission considering the application and the recommendation of the staff of the Commission;

AND UPON CrossOff having represented to the Commission that:

1. CrossOff is a company incorporated on December 31, 1963 under the Companies Act of New Brunswick by letters patent and subsequently continued under the Companies Act (Nova Scotia).

2. CrossOff's head office is located in Sydney, Nova Scotia.

3. CrossOff is a reporting issuer in each of the Provinces of Canada and is not in default of any requirement of the securities legislation of such jurisdictions, including the Act.

4. The authorized capital of CrossOff consists of 500,000,000 common shares without nominal or par value (the "Common Shares"), of which 24,928,863 Common Shares were issued and outstanding as of May 31, 2005.

5. The Common Shares are listed on the Toronto Stock Exchange (the "TSX"). The closing price of the Common Shares of the TSX on May 31, 2005 was $0.33.

6. CrossOff is in the business of providing anti-counterfeiting and brand protection services and technology training and consulting services.

7. CrossOff entered into a share purchase agreement (the "Share Purchase Agreement"), dated May 1, 2002 with Orville F. Osborne, Susan A. Osborne and Christopher J. Mace (collectively, the "Vendors"), each at arm's length to CrossOff. The Share Purchase Agreement provided that CrossOff would acquire from the Vendors all of the outstanding shares of Remcorp Inc. ("Remcorp") in exchange for the issuance of 2,000,000 Common Shares (the "Subject Shares") and warrants entitling the holder to acquire 200,000 Common Shares at a price of $0.55 per share and the payment of promissory notes in the aggregate amount of $500,000 (the "Notes") and $1,000,000 cash.

8. Further to a direction to pay from Orville F. Osborne and Susan A. Osborne to CrossOff, 500,000 of the Subject Shares and $270,000 principal amount of Notes (the "Transferee Payment") were paid on closing to a third party (the "Transferee"). The Transferee had paid money to Remcorp in connection with a subscription for Remcorp shares, but had never been issued shares. It was a condition of the Share Purchase Agreement that the Vendors settle any dispute with the Transferee. This condition was satisfied by the Transferee Payment. The Transferee Payment effectively put the Transferee in the same position as if he had been a shareholder of Remcorp.

9. The Transferee has at all times been arm's length to CrossOff.

10. The Share Purchase Agreement included an indemnity by the Vendors with respect to any liabilities which CrossOff may incur by the non-performance or non-fulfillment of any covenant or agreement contained in the Share Purchase Agreement, or any misrepresentation or warranty made by the Vendors contained in the Share Purchase Agreement.

11. In settlement of claims or potential claims by CrossOff under the Share Purchase Agreement, CrossOff entered into a settlement agreement dated November 13, 2003 with Orville F. Osborne, Susan A. Osborne and Remcorp (the "Osborne Settlement") wherein the following was agreed:

(a) Mr. Osborne will return 875,000 of the Subject Shares ("Orville's Shares") to CrossOff for cancellation; and

(b) Ms. Osborne will return 600,000 of the Subject Shares ("Susan's Shares") to CrossOff for cancellation.

12. On the basis that the Transferee was effectively treated by the parties to the Share Purchase Agreement as a "Vendor" thereunder, CrossOff entered into a settlement agreement with the Transferee on March 31, 2005 dated as of January 31, 2005 (the "Transferee Settlement" and, together with the Osborne Settlement, the "Settlement Agreements").

13. Under the Transferee Settlement, the Transferee agreed to return 166,666 of the Subject Shares (collectively with Orville's Shares and Susan's Shares, the "Settlement Shares") to CrossOff for cancellation upon payment in full by CrossOff of the promissory note held by the Transferee.

14. Each of Orville F. Osborne, Susan A. Osborne and the Transferee are resident in Ontario, and has obtained independent legal advice prior to entering into the Settlement Agreements.

15. No consideration is being paid for the Settlement Shares other than releases which will be provided as part of the Settlement Agreements. The Settlement Shares will immediately be cancelled upon being acquired by CrossOff.

16. In approving the Settlement Agreements, the Board of Directors of CrossOff concluded that the value to CrossOff of any potential claims under the indemnity provisions of the Share Purchase Agreement or otherwise did not exceed the market value of the Settlement Shares at the time of the Settlement Agreements, and that it is in the best interest of CrossOff and its shareholders to acquire the Settlement Shares pursuant to the Settlement Agreements. In reaching this conclusion, the Board of Directors of CrossOff considered:

(a) the merits of any such claim;

(b) the cost of pursuing any such claim, including both management time and external advisors; and

(c) the ability to collect on any judgement.

17. The acquisition of the Settlement Shares pursuant to the Settlement Agreements is an issuer bid as defined in subsection 89(1) of the Act and is not an exempt issuer bid under subsection 93(3) of the Act.

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

IT IS ORDERED pursuant to clause 104(2)(c) of the Act that CrossOff is exempt from the Issuer Bid Requirements of the Act in connection with the acquisition by CrossOff of the Settlement Shares pursuant to the Settlement Agreements.

"Paul M. Moore"
"Carol S. Perry"