Securities Law & Instruments

Headnote

Section 144 - application for variation of cease trade order - issuer cease traded due to failure to file with the Commission audited annual financial statements and management's discussion and analysis relating thereto - issuer has applied for a variation of the cease trade order to permit certain trades in connection with a reorganization under the Bankruptcy and Insolvency Act (Canada) - Proposal to the Applicant's unsecured creditors approved by the Supreme Court of British Columbia and the Applicant's unsecured creditors - partial revocation granted subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O., c. S.5, as am., ss. 127 and 144.

National Policy 12-202 Revocation of a Compliance-related Cease Trade Order.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5, AS AMENDED

(THE "ACT")

AND

IN THE MATTER OF

CLEARLY CANADIAN BEVERAGE CORPORATION

(THE "APPLICANT")

ORDER

(Section 144)

WHEREAS the securities of the Applicant are currently subject to a cease trade order dated May 25, 2009, made under paragraph 2 and paragraph 2.1 of subsection 127(1) of the Act (the "Cease Trade Order") made by the Director of the Ontario Securities Commission (the "OSC") directing that all trading in and acquisitions of the securities of the Applicant, whether direct or indirect, shall cease until further order by the Director;

AND WHEREAS the Cease Trade Order was made as a result of the Applicant having failed to file its audited annual financial statements for the year ended December 31, 2008 and its management's discussion and analysis relating to the audited annual financial statements for the year ended December 31, 2008;

AND WHEREAS the Applicant has applied (the "Application") for a partial revocation of the Cease Trade Order under section 144 of the Act in connection with a reorganization of the capital of the Applicant under a proposal under the Bankruptcy and Insolvency Act (Canada) (the "BIA");

AND WHEREAS the Applicant has represented to the OSC that:

a. it is a British Columbia company under the Business Corporations Act (British Columbia) and was incorporated on March 18, 1981. It's head office is located in Vaughan, Ontario;

b. it is in the business of selling sparkling flavoured water, packaged dried fruits and nuts, and organic baby food;

c. it is a reporting issuer in British Columbia and Ontario;

d. it has outstanding common shares (called "Limited Voting Shares"), variable multiple voting shares and warrants and options to acquire Limited Voting Shares;

e. its Limited Voting Shares are traded on the Pink Sheets in the United States under the symbol CCBEF.PK;

f. it has taken no action to list on the Pink Sheets or to delist from the Pink Sheets as it is the Applicant's understanding that its Limited Voting Shares are trading on the Pink Sheets based on the initiatives of market makers, over which the Applicant has no control;

g. since the issuance of the Cease Trade Order, the Applicant has not been in a financial position to file, and has not filed, any financial statements, management's discussion and analysis or certificates relating thereto, either on an annual or quarterly basis;

h. on March 17, 2010, while experiencing severe cash flow problems, and with its debts being significantly greater than its assets, it filed a proposal to its creditors under the BIA (the "Proposal");

i. it issued a press release on March 18, 2010, and filed a material change report on March 19, 2010, announcing the filing of the Proposal;

j. on April 1, 2010, the Proposal was accepted by the creditors of the Applicant;

k. the Proposal contemplates, amongst other things: (i) the reorganization of the share capital of the Applicant (the "Reorganization") by (a) creating an unlimited number of new common shares; (b) issuing the new common shares to the Applicant's creditors who, under the Proposal, elected to accept the issuance of such new common shares in full payment of the amount outstanding on their claims against the Applicant; (c) cancelling all the authorized and unissued common shares, being the Limited Voting Shares and the variable multiple voting shares, and preferred shares of the Applicant; (d) cancelling all warrants, options, rights to purchase shares, share subscription rights and conversion rights of the Applicant; and (e) issuing a cash payment, expected to equate to $0.25 on the dollar, to the Applicant's creditors who, under the Proposal, elected to accept such cash payment in full payment of the amount outstanding on their claims against the Applicant; and (ii) the approval of the Supreme Court of British Columbia (the "Court");

l. the Proposal was approved by the Court on April 30, 2010;

m. at the closing of the transactions contemplated by the Proposal (the "Closing"), it is expected that less than 15 persons/companies, being the creditors of the Applicant who elected, under the Proposal, to receive the new common shares of the Applicant, will be the only shareholders of the Applicant;

n. an application to cease to be a reporting issuer in British Columbia and Ontario will be filed by the Applicant promptly following the Closing;

o. the transactions contemplated by the Reorganization (the "Transactions") involve trading of securities and therefore cannot be concluded without obtaining a partial revocation of the Cease Trade Order;

p. the Transactions will be concluded in compliance with all applicable laws;

q. except for the defaults that led to the issuance of the Cease Trade Order, and other continuous disclosure defaults since the issuance of the Cease Trade Order, it has complied with applicable securities legislation, regulations and instruments;

r. the British Columbia Securities Commission has issued an order, dated May 11, 2009, similar to the Cease Trade Order prohibiting trading of the securities of the Applicant. The Applicant has applied for partial revocation of such cease trade order in British Columbia;

s. the Applicant will not be seeking a market for trading in any of its securities; and

t. the Applicant understands that the Cease Trade Order will remain in effect following the completion of the Transactions and that all securities of the Applicant will remain subject to the Cease Trade Order, except as otherwise provided herein.

AND WHEREAS considering the Application and the recommendation of staff of the OSC;

AND WHEREAS the Director is satisfied that this order is not prejudicial to the public interest;

IT IS ORDERED, pursuant to section 144 of the Act, that the Cease Trade Order is hereby partially revoked solely to permit trades in securities of the Applicant in connection with the Transactions, provided that:

a. the Applicant obtains and provides to the OSC signed and dated acknowledgements from all participants in the Transactions, which clearly state that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future; and

b. the Applicant provides a copy of the Cease Trade Order and this partial revocation order to all participants in the Transactions.

DATED at Toronto this 4th day of May, 2010

"Michael Brown"
Assistant Manager, Corporate Finance
Ontario Securities Commission