News Release

Released: February 19, 1999 Contact: Michael Bernard
899-6500 or
(BC only) 1-800-373-6393 Vancouver -- A British Columbia Securities Commission panel has refused an application by commission staff that three directors of Keywest Resources Ltd. be barred from acting as directors of any reporting issuer for at least one year.

In asking that directors Bruce Carson, John MacKay and Jeff Sutherland be disciplined, commission staff alleged the three men had acted improperly by not enforcing, on behalf of Keywest, an escrow agreement between the company and a former Keywest director, John Walter Scott Roeder.

In a decision released today, the commission panel found that the directors should not be obligated to take steps to legally enforce the escrow agreement without considering the company’s current circumstances and best interests.

Roeder owns 750,000 escrow shares of Keywest. Escrow shares are outstanding shares of a company which, while they may be voted, may not be released or sold unless special approval is obtained from the commission. Escrow shares are issued to a company’s principals as an incentive to achieve success for the company.

Under the terms of the escrow agreement, Roeder is required to surrender his shares for cancellation if the shares of Keywest have been cease-traded for more than two years. Keywest has been subject to a cease-trade order since July 1993 but Roeder has not surrendered his shares.

In an earlier decision, the commission found that Roeder caused Keywest to lose the property that was the primary focus of its business. The commission also found that Roeder had breached his duties as a director to act honestly and in good faith and in the best interests of Keywest and to exercise the care, diligence and skill of a reasonably prudent person. The Commission made orders against Roeder removing his exemptions and prohibiting him from acting as a director or officer of a reporting issuer for 17 years.

"It is clearly in the public interest that the escrow regime associated with initial public offerings be enforced," the panel said. "It goes somewhat too far, however, to suggest that an issuer is obligated to take steps to enforce the obligations of the other parties thereto without due consideration of the circumstances prevailing at the time such steps would have to be taken, including what is then in the best interests of the company.

"The directors have come to the conclusion that the assets of Keywest can be put to better use than the pursuit of litigation against Roeder. They do not believe it to be in the best interests of Keywest and its shareholders to commence legal proceedings to enforce the escrow agreement. There was no evidence to suggest that the directors considered any inappropriate factors in making this decision."

The commission panel concluded that Carson, MacKay and Sutherland had not acted improperly and that accordingly it would not be in the public interest to make orders against them.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts in the province.

Copies of the decision are available on the commission’s web site (www.bcsc.bc.ca) or by contacting Communications Manager Michael Bernard.