Settlement Agreement: In the Matter of Richard Theberge

IN THE MATTER OF

THE SECURITIES ACT

R.S.O. 1990 C.s.5, as amended (the "Act")

AND

IN THE MATTER OF

RICHARD THEBERGE

SETTLEMENT AGREEMENT

I. INTRODUCTION

1. By Notice of Hearing dated June 15, 2001, (the "Notice"), the Ontario Securities Commission (the "Commission") announced that it proposed to hold a hearing to consider, pursuant to section 127(1) of the Act, whether it is in the public interest for the Commission to make an order that Richard Theberge (the "Respondent"), be reprimanded and that he cease trading in securities permanently or for such time as the Commission may direct.

II. JOINT SETTLEMENT AGREEMENT

2. Staff of the Commission ("Staff") agree to recommend settlement of the proceeding against the Respondent initiated by the Notice in accordance with the terms and conditions set out below. The Respondent consents to the making of an order against him in the form attached as Appendix A on the basis of the facts set out below.

III. AGREED STATEMENT OF FACTS

3. The Respondent and Staff agree to and acknowledge the following facts.

4. CML Industries Ltd. ("CML") was at all material times a reporting issuer within the meaning of subsection 1(1) of the Act . Its common shares were listed on the Toronto Stock Exchange ("TSE").

5. The Respondent, a resident of Pickering, Ontario, was at all material times employed by CML as a Cost Analyst. The Respondent had worked for CLM for nine years in various positions. His father was Chairman of the Board, Chief Executive Officer and a director of CML. By virtue of his employment, the Respondent was in a special relationship with CML pursuant to section 76(5) (c) of the Act.

6. On March 30, 2000 the Respondent was advised by his father that he was not to trade in shares of CML as there was the likelihood of a deal involving the takeover of CML by Supremex Inc. ("Supremex") at $6.00 a share. Supremex is a wholly owned subsidiary of Mail-Well Inc., a public company listed on the New York Stock Exchange.

7. Notwithstanding the instructions of his father, on May 4, 2000 the Respondent purchased 3,000 shares of CML at $3.30. He purchased another 3,000 shares at $3.25 on May 5, 2000 and on May 10, 2000, a further 500 shares at $4.25. This last purchase occurred at 10:37 am that day. At the time of those trades, the information described in paragraph 6 had not been generally disclosed.

8. At 11:44 am on May 10, 2000 the TSE halted trading in CML in anticipation of a press release announcing that Supremex would be making an offer to purchase all CML common shares for $6 per share. This press release was issued at 1:14pm.

9. On May 23, 2000 the Respondent sold all his shares of CML at $5.50 per share.This included 3,000 shares which had been purchased prior to the conversation of March 30, 2000 with his father. Excluding the 3,000 shares purchased prior to March 30, 2000, the Respondent realized a gross profit of approximately $15,925, before commissions.

10. Sometime during the last two weeks of May, 2000 the Respondent became aware that the Market Surveillance Division of the TSE was conducting a review of the trading of shares of CML.

11. On June 8, 2000 the Respondent voluntarily attended at the offices of the OSC with counsel, and advised Enforcement staff of the particulars of his conduct, and of his desire to accept responsibility for his actions and to cooperate fully with staff.

12. On February 27^th, 2001, the Respondent again voluntarily attended the offices of the OSC and admitted under oath that he had purchased shares of CML with knowledge of a material fact or material change with respect to CML that had not been generally disclosed to members of the public. The Respondent co-operated with Staff's investigation and expressed deep remorse for his conduct. He instructed his counsel at the earliest stage to engage Staff in settlement discussions of this matter.

13. As a result of the takeover of CML by Supremex, the Respondent lost his job at CML and has not worked since January, 2001. He is 28 years old.

IV. ADMISSION

14. By engaging in the conduct described in Part III of this settlement agreement, the Respondent admits that he purchased shares of CML with knowledge of a material fact or material change with respect to CML that had not been generally disclosed to members of the public and in doing so acted in a manner contrary to the public interest.

V. TERMS OF SETTLEMENT

15. The Respondent agrees to the following terms of settlement:

(i) pursuant to paragraph 2 of subsection 127(1) of the Act, the Respondent will cease trading in securities for a period of 120 days effective from the date of the Commission's order;

(ii) pursuant to paragraph 6 of subsection 127(1) of the Act, the Respondent will be reprimanded by the Commission; and

(iii) upon the approval of this settlement, the Respondent will make a payment of $25,000 to the Commission, to be allocated to such third parties as the Commission may determine for purposes that will benefit investors in Ontario.

VI. CONSENT

16. The Respondent hereby consents to an order of the Commission incorporating the provisions of paragraph 15 above in the form annexed hereto as Appendix A.

VII. STAFF COMMITMENT

17. If this settlement is approved by the Commission, Staff will not initiate any complaint to the Commission or request the Commission to hold a hearing or issue any other order in respect of any conduct or alleged conduct of the Respondent in relation to the facts set out in this agreement.

VIII. WAIVER

18. If this settlement is approved by the Commission, the Respondent waives his right to a full hearing of the merits of this matter and waives any rights of judicial review or appeal of the order made by the Commission in accordance with this agreement.

IX. PROCEDURE FOR APPROVAL OF SETTLEMENT

19. Approval of the settlement set out in this agreement shall be sought at a public hearing of the Commission scheduled for June 22, 2001, or such other date as may be agreed to by Staff and the Respondent in accordance with the procedures described in this agreement.

20. Staff and the Respondent agree that if this agreement is approved by the Commission, it will constitute the entirety of the evidence to be submitted to the Commission in this matter.

21. Staff and the Respondent agree that if this settlement is approved by the Commission, no party to this agreement will make any public statement inconsistent with this agreement.

22. If, at the conclusion of the settlement hearing, and for any reason whatsoever, this settlement is not approved by the Commission or an order in the form attached as Schedule 'A' is not made by the Commission:

(a) each of Staff and the Respondent will be entitled to all available proceedings, remedies and challenges, including proceeding to a hearing respecting the facts set out in this agreement, unaffected by this agreement or the settlement negotiations;

(b) the terms of this agreement will not be referred to in any subsequent proceeding, or disclosed to any person, except with the written consent of Staff and the Respondent or as may be required by law; and

(c) the Respondent agrees that he will not, in any proceeding, refer to or rely upon this agreement or the negotiation or process of approval of this agreement as the basis for any attack on the Commission=s jurisdiction, alleged bias, appearance of bias, alleged unfairness or any other remedies or challenges that may otherwise be available.

X. DISCLOSURE OF AGREEMENT

23. Counsel for Staff or for the Respondent may refer to any part or all of this agreement in the course of the hearing convened to consider this agreement. Otherwise, this agreement and its terms will be treated as confidential by all parties to the agreement until approved by the Commission, and forever if, for any reason whatsoever, this settlement is not approved by the Commission, except with the written consent of all parties or as may be required by law.

24. Any obligations of confidentiality shall terminate upon approval of this settlement by the Commission.


XI. EXECUTION OF AGREEMENT

25. This agreement may be signed in one or more counterparts which together shall constitute a binding agreement.

June 21, 2001.

"Richard Theberge"

"Michael Watson"

APPENDIX A

IN THE MATTER OF

THE SECURITIES ACT

R.S.O. 1990 C.s.5, as amended (the "Act")

AND

IN THE MATTER OF

RICHARD THEBERGE

ORDER

(Subsection 127(1))

WHEREAS on June 15, 2001, the Ontario Securities Commission (the "Commission") issued a notice of hearing pursuant to subsection 127(1) of Act in respect of Richard Theberge, (the "Respondent");

AND WHEREAS the Respondent entered into a settlement agreement dated June 22, 2001 (the "Settlement Agreement") in which he agreed to a proposed settlement of the proceeding, subject to the approval of the Commission;

AND UPON reviewing the Settlement Agreement, and upon hearing submissions from counsel for the Respondent and for Staff of the Commission;

AND WHEREAS the Commission is of the opinion that it is in the public interest to make this Order;

IT IS ORDERED THAT:

(1) the Settlement Agreement dated June 22, 2001, attached to this Order, is hereby approved;

(2) pursuant to paragraph 2 of subsection 127(1) of the Act, the Respondent will cease trading in securities for a period of one hundred and twenty days, effective immediately;

(3) pursuant to paragraph 6 of subsection 127(1) of the Act, the Respondent is hereby reprimanded; and

(4) the Respondent shall pay the amount as set out in Part V of the Settlement Agreement.

June 22, 2001.