Clearcross Inc. et al. - ss. 74(1)

UPON the application (the "Application") of ClearCross Inc. ("ClearCross"), ClearCross Canada Inc. ("Exchangeco") and Clearcross Canada Holding ULC ("CallCo") to the Ontario Securities Commission (the "Commission") for a ruling, pursuant to subsection 74(1) of the Act, that certain trades in securities made in connection with the indirect acquisition (the "Transaction") by ClearCross of Atrion International Inc. pursuant to a securities exchange take-over bid (which take-over bid will be exempt from the requirements of Part XX of the Act by virtue of clause 93(1)(d) of the Act), shall not be subject to sections 25 or 53 of the Act;

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

AND UPON ClearCross, CallCo and ExchangeCo having represented to the Commission that:

1. ClearCross was incorporated on January 10, 1984 under the laws of New York and on April 16, 1988 was re-incorporated under the laws of Delaware. Its corporate headquarters are located at 505 Eighth Avenue, New York, New York 10018.

2. ClearCross is not subject to the reporting requirements of the United States Securities Exchange Act of 1934, as amended, and is not a reporting issuer under the Act or under the securities legislation of any province of Canada. It is anticipated that ClearCross will become a reporting issuer in Québec under the Québec Securities Act (the "Québec Act") upon the closing of the Transaction.

3. The authorized capital of ClearCross consists of 25,000,000 Common Shares, of which 2,250,301 shares are outstanding as at February 23, 2001, 15,000,000 Preferred Shares, consisting of 2,000,000 Series A Preferred Shares of which 1,561,789 shares are outstanding as at February 23, 2001, 1,400,000 Series B Preferred Shares of which 1,195,411 shares are outstanding as at February 23, 2001, 5,100,000 Series C Preferred Shares of which 4,932,433 shares are outstanding as at February 23, 2001 and 5,600,000 Series D Preferred Shares of which 5,587,000 shares are outstanding as at February 23, 2001 (collectively the "ClearCross Shares"). As at February 23, 2001, 2,521,429 Common Shares are issuable upon the exercise of outstanding ClearCross Rights (defined below).

4. None of the shares of ClearCross are listed on any exchange or quoted on any automated quotation system.

5. CallCo is an unlimited liability company which was incorporated under the Companies Act (Nova Scotia) for the sole purpose of participating in the Transaction.

6. CallCo is a private company within the meaning of the Act and is not a reporting issuer under the Act or under the securities legislation of any province of Canada.

7. The authorized capital of CallCo consists of 1,000,000 common shares, of which 1 common share is issued and outstanding as of the close of business on the date hereof. The one outstanding common share of CallCo is held by ClearCross.

8. ExchangeCo is an indirect subsidiary of ClearCross and was incorporated under the Companies Act (Nova Scotia) for the sole purpose of participating in the Transaction.

9. ExchangeCo is not a reporting issuer under the Act or under the securities legislation of any province of Canada.

10. The authorized share capital of ExchangeCo consists of 1,000,000 common shares, of which 1 common share is issued and outstanding as of the close of business on the date hereof. Prior to the closing of the Transaction, ExchangeCo shall file articles of amendment to create an unlimited number of exchangeable shares (the "Exchangeable Shares"). Upon completion of the Transaction, all of the issued and outstanding Exchangeable Shares will be held by former shareholders of Atrion who will receive such Exchangeable Shares in exchange for such holders' Atrion shares.

11. Atrion was incorporated on June 4, 1997 under Part IA of the Companies Act (Québec). The registered office of Atrion is 4777 Levy Street, Saint Laurent, Québec, H4R 2P9. Atrion is not a reporting issuer under the Act. However, Atrion has been a reporting issuer under the Québec Act since September 30, 1997. ClearCross has been advised by Atrion that Atrion became a reporting issuer in Québec due solely to the presence of SPEQ Atrion Inc. (the "SPEQ") as a shareholder of Atrion.

12. The SPEQ is a single purpose entity incorporated under Part 1A of the Companies Act (Québec) solely to facilitate investment in Atrion by Québec residents pursuant to the Loi sur les sociétés de placements dans l'entreprise québécoise.

13. The authorized capital of Atrion consists of an unlimited number of Catégorie A, Catégorie B and Catégorie C Atrion Shares, of which 5,100,000 Catégorie A, 27,423,513 Catégorie B and 8,756,062 Catégorie C Atrion Shares are outstanding as at February 23, 2001. Furthermore, as at February 23, 2001, 26,648,523 Atrion Shares are issuable upon the exercise or conversion of Atrion Rights.

14. Atrion has a total of 67 shareholders. The SPEQ is the only holder of Catégorie A Atrion Shares; Sofinov Société Financière Inc. is the only holder of Catégorie C Atrion Shares; and the Catégorie B Atrion Shares are held by a total of 65 shareholders, 51 of whom are employees of Atrion.

15. Only 7 Atrion Shareholders, 5 of whom are employees, are residents of Ontario.

16. As of December 6, 2000, Atrion and ClearCross entered into a Merger Agreement (the "Merger Agreement") which contemplates, amongst other things, the transfer by the Atrion Shareholders of all of their shares in the capital of Atrion ("Atrion Shares") for shares in the capital of, at their option, either ExchangeCo or ClearCross, so as to ensure the most beneficial tax treatment for each Atrion Shareholder.

17. Upon completion of the Transaction, Atrion Shares will be exchanged for either Exchangeable Shares or ClearCross Shares on a 4.314 to 1 basis subject to adjustment post-closing in accordance with the terms of the merger Agreement and any amendments thereto. In addition, each outstanding option, warrant or other right to purchase Atrion Shares (the "Atrion Rights") issued by Atrion will be converted into options, warrants or other rights to purchase ClearCross Shares (the "ClearCross Rights").

18. The Exchangeable Shares will provide the former shareholders of Atrion with the ability to hold securities of a Canadian issuer (Exchangeco) having economic and voting rights which are, as nearly as practicable, equivalent to those of ClearCross Shares and will be exchangeable at any time by the holder thereof for ClearCross Shares on a one-for-one basis.

19. The Exchangeable Shares will be entitled to a preference over the common shares of ExchangeCo and any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends and the distribution of assets in the event of a liquidation, dissolution or winding-up of ExchangeCo.

20. Dividends will be payable on the Exchangeable Shares from ExchangeCo at the same time as, and equivalent to, dividends payable by ClearCross on the ClearCross Shares.

21. The Atrion Shareholders who elect to receive Exchangeable Shares will also subscribe for special voting shares ("Special Voting Shares") in the capital of ClearCross which shares will carry voting rights equivalent to the voting rights attributable to the ClearCross Shares into which their Exchangeable Shares are exchangeable.

22. Subject to the overriding Retraction Call Right of CallCo referred to below in this paragraph, upon retraction, the holder will be entitled to receive from ExchangeCo for each Exchangeable Share retracted an amount equal to the Current Market Price (as defined in the Share Provisions (defined below)) of a ClearCross Share (the "Retraction Price"), to be satisfied by the delivery on behalf of ExchangeCo of one ClearCross Share, plus an additional amount equivalent to the full amount of all declared and unpaid dividends on each such Exchangeable Share retracted and an amount equal to the full amount of all dividends declared on ClearCross Shares which should have been declared on the Exchangeable Shares pursuant to the share provisions of the Exchangeable Shares (the "Share Provisions") or the Support Agreement (defined below), but which have not in fact been so declared on the Exchangeable Shares. Upon being notified by ExchangeCo of a proposed retraction by a holder of Exchangeable Shares, CallCo will have an overriding call right (the "Retraction Call Right") to purchase all, but not less than all, of the Exchangeable Shares that are the subject of the retraction notice for a price per share equal to the Retraction Price plus any declared and unpaid dividends and any dividends that ought to have been declared on the Exchangeable Shares pursuant to the Share Provisions or the Support Agreement (defined below). The holders of the Exchangeable Shares will have a put right exerciseable against ClearCross in the event that CallCo does not exercise its Retraction Call Right.

23. Subject to the overriding Redemption Call Right of CallCo referred to below in this paragraph, ExchangeCo will be entitled to redeem all, but not less than all, of the Exchangeable Shares then outstanding, commencing on the fifteenth anniversary of the date of the completion of the Transaction (the "Automatic Redemption Date"). Upon redemption by ExchangeCo, each holder of Exchangeable Shares will be entitled to receive from ExchangeCo for each Exchangeable Share redeemed, an amount equal to the Current Market Price (as defined in the Share Provisions) of a ClearCross Share (the "Redemption Price"), to be satisfied by the delivery of one ClearCross Share, plus an amount equal to all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Automatic Redemption Date and an amount equal to the full amount of all dividends declared on ClearCross Shares which should have been declared on the Exchangeable Shares pursuant to the Share Provisions or the Support Agreement (defined below) but which have not in fact been so declared on the Exchangeable Shares. Upon being notified by ExchangeCo of a proposed redemption of Exchangeable Shares, CallCo will have an overriding call right (the "Redemption Call Right") to purchase all, but not less than all, of such shares for a price per share equal to the Redemption Price, plus any declared and unpaid dividends and any dividends that ought to have been declared on the Exchangeable Shares pursuant to the Share Provisions or the Support Agreement (defined below). The holders of the Exchangeable Shares shall have a put right exerciseable against ClearCross in the event that CallCo does not exercise its Redemption Call Right.

24. ExchangeCo may accelerate the Automatic Redemption Date when, inter alia:

(a) there remains outstanding less than 20% of the total Exchangeable Shares originally issued (other than Exchangeable Shares held by ClearCross or its affiliates);

(b) a change in control of ClearCross occurs;

(c) an event occurs in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of ExchangeCo (the "Exchangeable Share Voting Event"), other than where the approval of the holders of the Exchangeable Shares is required to maintain the equivalence of the Exchangeable Shares and the ClearCross Shares (the "Exempt Exchangeable Share Voting Event"), and provided that such Exchangeable Share Voting Event does not result in an adverse effect on the share attributes of the Exchangeable Shares;

(d) an Exempt Exchangeable Share Voting Event occurs and the holders of the Exchangeable Shares fail to take the necessary action to approve or disapprove, as applicable, the Exempt Exchangeable Share Voting Event; or

(e) the Income Tax Act (Canada) is amended to permit holders of Exchangeable Shares to exchange their Exchangeable Shares for ClearCross Shares on a tax deferred basis; provided however, that if the Automatic Redemption Date occurs as a result of matters identified in subsections (a) or (b) above, the Automatic Redemption Date shall be extended to the date on which the ClearCross Shares issuable upon exchange of the Exchangeable Shares are fully and freely tradeable.

25. Subject to the overriding Liquidation Call Right of CallCo referred to below in this paragraph, on liquidation, dissolution or winding-up of ExchangeCo, a holder of Exchangeable Shares will be entitled to receive from ExchangeCo for each Exchangeable Share an amount equal to the Current Market Price (as defined in the Share Provisions) of a ClearCross Share on the last business day prior to the liquidation date (the "Liquidation Amount"), to be satisfied by the delivery of one ClearCross Share, plus an amount equal to all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the Liquidation Date and any declared and unpaid dividends that should have been declared on the Exchangeable Shares pursuant to the Share Provisions or the Support Agreement (defined below) but which were not in fact so declared on the Exchangeable Shares. Upon a proposed liquidation, dissolution or winding-up of ExchangeCo, CallCo will have an overriding call right (the "Liquidation Call Right") to purchase all of the outstanding Exchangeable Shares from the holders thereof for a price equal to the Liquidation Price plus any declared and unpaid dividends and any dividends that ought to have been declared on the Exchangeable Shares pursuant to the Share Provisions or the Support Agreement (defined below). The holders of the Exchangeable Shares shall have a put right exerciseable against ClearCross in the event that CallCo does not exercise its Redemption Call Right.

26. Contemporaneously with the closing of the Transaction, ClearCross, CallCo, ExchangeCo and the holders of the Exchangeable Shares will enter into an agreement (the "Exchange Rights and Voting Agreement") pursuant to which a holder of an Exchangeable Share will have the right (the "Exchange Right") upon the insolvency of ExchangeCo to require ClearCross or CallCo to purchase from the holder all or any part of the Exchangeable Shares held by such holder at a price equal to the then Current Market Price (as defined in the Share Provisions) of a ClearCross Share, to be satisfied by ClearCross issuing or CallCo causing to be issued to such holder one ClearCross Share, plus an additional amount equal to all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the purchase of such Exchangeable Shares by ClearCross or CallCo (as the case may be) and an amount equal to the full amount of all dividends declared on the ClearCross Shares which should have been declared on the Exchangeable Shares pursuant to Share Provisions or the Support Agreement (defined below) but which have not in fact been so declared on the Exchangeable Shares.

27. Upon the liquidation, dissolution or winding-up of ClearCross, pursuant to the Exchange Rights and Voting Agreement, the Exchangeable Shares will be automatically exchanged for ClearCross Shares in order that holders of the Exchangeable Shares may participate in the dissolution of ClearCross on a pro rata basis with the holders of ClearCross Shares (the "Automatic Exchange Right").

28. Holders of Exchangeable Shares will also be issued Special Voting Shares of ClearCross which will entitle such holders to vote at any meeting at which ClearCross Shareholders are entitled to vote. Each Special Voting Share will carry a number of votes equal to that number of votes which would attach to the ClearCross Shares for which the Exchangeable Shares of the class corresponding to such Special Voting Shares outstanding at such time are exchangeable, and will vote with ClearCross Shareholders as a single class on all matters, except as may be required by law. The Special Voting Shares will not be entitled to dividends and will not participate on dissolution. Upon any sale, transfer or other disposition of Exchangeable Shares, the corresponding number of Special Voting Shares shall also be sold, transferred or disposed of (as the case may be). Special Voting Shares shall not be transferable independently of the Exchangeable Shares.

29. Contemporaneously with the closing of the Transaction, ClearCross, CallCo, ExchangeCo and the holders of Exchangeable Shares will also enter into an exchangeable share support agreement (the "Support Agreement") which will provide that ClearCross, among other things, will (i) not declare or pay dividends on the ClearCross Shares unless ExchangeCo is able to and simultaneously declares and pays an equivalent dividend on the Exchangeable Shares; and (ii) ensure that ExchangeCo and CallCo will be able to honour the retraction and redemption rights and dissolution entitlements that are attributes of the Exchangeable Shares and the related Retraction Call Right, the Redemption Call Right and the Liquidation Call Right of CallCo described above.

30. The Support Agreement will also provide that, without the prior approval of the holders of the Exchangeable Shares, actions such as distributions of stock dividends, options, rights and warrants for the purchase of securities or other assets, reclassifications, reorganizations and other changes cannot be taken in respect of the ClearCross Shares without the same or an economically equivalent action being taken in respect of the Exchangeable
Shares.

31. In order to enable ClearCross, ExchangeCo or CallCo, as the case may be, to deliver ClearCross Shares to a holder of Exchangeable Shares upon the exercise of the various exchange and call rights created under the Share Provisions, the Exchange Rights and Voting Agreement and the Support Agreement, ClearCross may issue or transfer, or cause to be issued or transferred, ClearCross Shares to or by its affiliates.

32. If all the holders of the Exchangeable Shares resident in Ontario were to acquire the maximum number of ClearCross Common Shares and the maximum number of ClearCross Preferred Shares to which they are entitled under the Share Provisions, the Exchange Rights and Voting Agreement and the Support Agreement, based on the number of ClearCross Common Shares and the number of ClearCross Preferred Shares outstanding as of December 21, 2000 and those issued pursuant to the Transaction, such shareholders would beneficially hold approximately 0.3793% of the issued and outstanding ClearCross Common Shares and approximately 0.8431% of the issued and outstanding ClearCross Preferred Shares and would constitute 4.5751% of the total number of holders of ClearCross Common Shares and 2.3809% of the total number of holders of ClearCross Preferred Shares.

33. Certain trades or potential trades in Exchangeable Shares and/or ClearCross Shares will or may take place in connection with the intra-group transfers by and between ClearCross and its affiliates and the various exchange and call rights created under the Share Provisions, the Exchange Rights and Voting Agreement and the Support Agreement. To the extent that there are no exemptions from sections 25 and 53 of the Act available for such trades (the "Non-Exempt Trades"), exemptive relief is required.

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

IT IS RULED, pursuant to subsection 74(1) of the Act, that the Non-Exempt Trades are not subject to sections 25 or 53 of the Act, provided that the first trades in the Exchangeable Shares or in the ClearCross Shares acquired in connection with the Transaction shall be a distribution unless:

(a) such first trade is executed in accordance with the provisions of Commission Rule 72-501 Prospectus Exemption for First Trade Over a Market Outside of Ontario as if the security was a restricted security (as defined in Commission Rule 72-501); or

(b) such first trade is made in accordance with the provisions of subsection 72(5) of the Act and subsection 2.18(3) of Commission Rule 45-501 Exempt Distributions as if the security had been issued pursuant to one of the exemptions referenced in subsection 72(5) of the Act.

February 27, 2001.

John A. Geller, R. Stephen Paddon