Exemption Orders (Discretionary)
GOLD SUMMIT MINES LTD.
2001 BCSECCOM 682
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - Offeror's appointment of key executives of offeree as directors or officers and retaining key executive as consultant done for reasons other than to increase the value of the consideration paid to the key executives under the take over bid and may be entered into despite the prohibition on collateral agreements in the Legislation
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 107(2) and 114(2)(a)
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA AND ONTARIO
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF GOLD SUMMIT MINES LTD.
MRRS DECISION DOCUMENT
[para 1]
WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of British Columbia and Ontario (the "Jurisdictions") has received an application (the "Application") from Gold Summit Mines Ltd. (the "Filer") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that, in connection with the offer (the "Offer") made by the Filer to acquire all of the issued and outstanding shares (the “Voyager Shares”) of Voyager Explorations Limited ("Voyager"), the subsequent appointments of John H. Paterson (“Paterson”), Edward G. Thompson (“Thompson”) and James Pirie (“Pirie” and, with Paterson and Thompson, the “Key Executives”) as directors and/or officers of the Filer (the "Appointments") are being made for reasons other than to increase the value of the consideration paid to such persons for the Voyager Shares, and that the Appointments may be made despite the prohibition in the Legislation that prohibits an offeror who makes or intends to make a take-over bid and any person acting jointly or in concert with the offeror from entering into any agreement, commitment or understanding with any holder or beneficial owner of securities of the offeree issuer that has the effect of providing to the holder or owner a consideration of greater value than that offered to the other holders of the same class of securities (the "Prohibition on Collateral Benefits");
[para 2]
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the British Columbia Securities Commission is the principal regulator for this application;
[para 3]
AND WHEREAS the Filer has represented to the Decision Makers that:
1. the Filer was incorporated under the Company Act (British Columbia) and has its head office in Vancouver, British Columbia;
2. the authorized capital of the Filer consists of 20,000,000 common shares (the “Gold Summit Shares”) of which 8,703,571 Gold Summit Shares are currently issued and outstanding;
3. the Filer is a reporting issuer in British Columbia, Alberta and Ontario and is not in default of any requirements of the Legislation; the Gold Summit Shares are listed and posted for trading on the Canadian Venture Exchange Inc. (the “CDNX”);
4. Voyager is incorporated under the laws of Ontario and is a reporting issuer in Ontario;
5. Voyager’s principal business is the acquisition, exploration and development of natural resource properties;
6. the authorized capital of Voyager consists of an unlimited number of Voyager Shares of which 8,295,034 Voyager Shares were issued and outstanding as at February 28, 2001; there is no market for the Voyager Shares;
7. the Filer has made the Offer for all of the outstanding Voyager Shares on the basis of 0.37 of a Gold Summit Share for every one Voyager Share, subject to customary conditions including that more than 50% of the total issued Voyager Shares be tendered under the Offer;
8. the Key Executives, all of whom are directors and/or senior officers of Voyager, beneficially own, directly and indirectly, a total of 2,126,400 Voyager Shares, representing approximately 25.6% of the total issued and outstanding Voyager Shares, and options to acquire an additional 300,000 Voyager Shares;
9. the Filer and the Key Executives, as well as one other significant shareholder of Voyager, have entered into a letter agreement dated February 27, 2001 pursuant to which the Key Executives have agreed, among other things, to tender their Voyager Shares to the Filer under the Offer;
10. following the completion of the Offer and the appointment of the Key Executives by the Filer, the Key Executives will be entitled to participate in any stock option plan or stock option grants provided by the Filer to its directors, officers and employees in accordance with the policies of the CDNX and all applicable laws and regulations;
11. Pirie may be retained by the Filer to provide geological consulting services to the Filer at rates comparable to the market rate charged by independent geologists for similar work;
12. the Filer believes the Key Executives have been an integral part of the successful development and operation of Voyager and have substantial and valuable experience and expertise in natural resource exploration and development which will be of significant value to the Filer;
13. the Filer views the continued participation of the Key Executives as critical to the Offer and the Appointments will be made primarily for the purpose of ensuring the Key Executives’ participation in the successful management and development of the Filer’s operations following the closing of the Offer;
14. the Appointments were negotiated between the Filer and the Key Executives on an arm’s length basis and reflect commercially reasonable terms;
15. the benefits to be received by the Key Executives are reasonable in light of the services to be rendered by the Key Executives to the Filer following the closing of the Offer and are commensurate with similarly situated directors and consultants of the Filer;
16. the Appointments are being made for valid business reasons unrelated to the Key Executives’ holdings of Voyager Shares and not for the purpose of conferring an economic or collateral benefit on the Key Executives that other shareholders of Voyager do not enjoy, and are being made for reasons other than to increase the value of the consideration to be paid to the Key Executives under the Offer; and
17. there are no written compensation or non-competition agreements, arrangements or understandings between the Filer and any of the Key Executives;
[para 4]
AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the "Decision");
[para 5]
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;
[para 6]
THE DECISION of the Decision Makers under the Legislation is that, in connection with the Offer, the Appointments are being made for reasons other than to increase the value of the consideration paid to the Key Executives in respect of their Voyager Shares, and may be made despite the Prohibition on Collateral Benefits.
[para 7]
DATED June 22, 2001.
Derek E. Patterson
Acting Director