Exemption Orders (Discretionary)

TRINITY CONTROL LTD.


2001 BCSECCOM 1070






Headnote

Mutual Reliance Review System for Exemptive Relief Applications – Relief granted from prospectus requirement to allow trades in securities previously acquired from an issuer under statutory exemptions - management information circular used in conjunction with a reverse take-over and concurrent private placement permitted to be used as a current AIF, so that the issuer would be eligible to participate in the SHAIF System, so as to reduce the hold period on securities issued under the private placement from 12 months to 4 months.

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c. 418, s. 76
BCI 45-506

IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA AND ALBERTA

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF TRINITY CONTROL LTD.

MRRS DECISION DOCUMENT

[para 1]
WHEREAS the local securities regulatory authority or regulator (the "Decision Makers") in each of British Columbia and Alberta (collectively, the "Jurisdictions") has received an application from Trinity Control Ltd. (“Trinity”) for a decision under the securities legislation of each of the Jurisdictions (the "Legislation") that certain intended trades of the securities of Trinity are exempt from the prospectus requirement (the “Prospectus Requirement”) of the Legislation;

[para 2]
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Executive Director of the British Columbia Securities Commission is the principal regulator for this application;

[para 3]
AND WHEREAS Trinity has represented to the Decision Makers that:

1. Trinity is a company incorporated under the Company Act (British Columbia), is a reporting issuer in the Jurisdictions, and is not in default of any requirement under the Legislation;

2. the authorized share capital of Trinity consists of 99,437,500 common shares without par value (the “Common Shares”), of which 4,202,101 Common Shares were issued and outstanding as at September 30, 2001;

3. the Common Shares of Trinity are listed and posted for trading on the Canadian Venture Exchange (the “CDNX”) under the symbol “TTT”;

4. Autogas Propane Inc. (“Autogas”) is a company incorporated under the Company Act (British Columbia);

5. the authorized share capital of Autogas consists of 10,000 Class A Voting common shares without par value and 10,000 Class B Non-Voting common shares without par value. As at September 30, 2001, there were 10 Class A Voting common shares and 191 Class B Non-Voting common shares of Autogas issued and outstanding, all of which are held by A-1 Industrial Holdings Ltd. (“A-1 Holdings”);

6. Trinity entered into a letter agreement dated March 23, 2001, as amended September 19, 2001 (the "Share Exchange Agreement") with Autogas, A-1 Holdings and Robert J. Good. Robert J. Good and his sons, James and William Good, are the sole shareholders of A-1 Holdings, and each are resident in British Columbia;

7. pursuant to the Share Exchange Agreement, Trinity has agreed to acquire (the “Acquisition”), inter alia, all of the issued and outstanding Autogas Shares in exchange for the issuance to A-1 Holdings of a total of 16,000,000 Trinity Common Shares (the "Acquisition Shares");

8. a condition to closing the Acquisition is that Trinity shall have completed an equity financing to raise gross proceeds of a minimum of $3.0 million or such lesser amount as may be subsequently agreed to by the parties (the "Financing Condition");

9. the Acquisition constitutes a "Reverse Take-Over" (“RTO”) under CDNX policies;

10. Trinity is relying on registration and prospectus exemptions under the Legislation to issue the Acquisition Shares to A-1 Holdings;

11. a majority of the shareholders of Trinity passed an ordinary resolution approving the Acquisition at the extraordinary general meeting held on October 22, 2001 (the "Extraordinary General Meeting"), and the CDNX has given its conditional approval to the Acquisition with the final approval to be provided concurrent with the closing date of the Acquisition;

12. in connection with the Acquisition and the Extraordinary General Meeting, Trinity prepared an information circular (the "Circular") that was filed with the CDNX and accepted under its policies relating to RTOs which included unaudited financial statements of Trinity for the nine month period ended May 31, 2001; audited financial statements of Trinity for the fiscal years ended August 31, 2000, 1999 and 1998; unaudited financial statements of Autogas for the six month period ended June 30, 2001, which are subject to a review engagement report (the "Autogas Interim Financial Statements"); audited financial statements for Autogas for the fiscal years ended December 31, 2000, 1999 and 1998; and unaudited pro forma consolidated financial statements of Trinity as at June 30, 2001 and December 31, 2000 (the “Pro forma Statements”); and a compilation report expressing an opinion that the Pro Forma Statements have been properly compiled to give effect to, among other things, the Acquisition and the private placement described below (the “Private Placement”);

13. to satisfy the Financing Condition, Trinity is undertaking the Private Placement;

14. pursuant to an engagement agreement dated April 24, 2001 between Trinity and Canaccord Capital Corporation, which is to be superseded by an agency agreement, Trinity has agreed to appoint Canaccord Capital Corporation as its agent (the “Agent”) to offer up to 5,000,000 units of Trinity (the "Units") for sale on an agency basis at $0.60 per Unit to certain subscribers ("Private Placement Subscribers"). Each Unit is comprised of one Trinity common share (a "Unit Share") and one-half of one share purchase warrant (a "Warrant"). Each whole Warrant entitles the holder thereof to purchase an additional Trinity common share (a "Warrant Share") at a price of $1.00 for a period of two years;

15. as part of the consideration for services performed by the Agent, Trinity has agreed to:

(a) issue to the Agent such number of share purchase warrants (“Agent’s Warrants”) as is equal to 5% of the number of Units sold by the Agent, subject to a maximum of 250,000 Agent's Warrants being issuable to the Agent. Each Agent's Warrant is exercisable for a period of one year from closing of the Private Placement to acquire one additional common share of Trinity (an "Agent's Warrant Share") at $0.60 per Agent's Warrant Share; and

(b) issue to the Agent 85,000 common shares of Trinity ("Agent's Series "B" Shares") (collectively, the Unit Shares, Warrants, Warrant Shares, Agent's Warrants, Agent's Warrant Shares and Agent's Series "B" Shares are defined as the "Securities");

16. the Securities will be subject to restrictions on resale for a period of twelve months from the earlier of the date of the closing of the Private Placement and the date a written agreement committing the Private Placement Subscribers or the Agent, as the case may be, to acquire the Units, Agent’s Warrants and Agent’s Series “B” Shares, as the case may be, subject only to any required regulatory approval, has been executed by all parties to the agreement and, in the case of Units, the Private Placement Subscribers have irrevocably committed the funds to acquire the Units;

17. the Private Placement will be completed relying on exemptions under the Legislation from the Prospectus Requirement;

18. under the Legislation, first trades in securities previously acquired under an exemption from the Prospectus Requirement are deemed to be distributions unless, among other things, a 12 month hold period (the “Hold Period”) has elapsed from the relevant dates referred to in the Legislation;

19. under the Legislation, the Hold Period can be reduced from 12 months to four months if the issuer distributing the securities is, among other things, a “qualifying issuer” under the Legislation, has filed a current Annual Information Form (“AIF”) or an acceptable alternative form of AIF as prescribed by the Legislation, and complies with the applicable resale rules in the Jurisdictions;

20. but for the fact that the Acquisition constitutes an RTO under applicable CDNX policies (the “CDNX RTO Policy”) rather than a “Qualifying Transaction” for a Capital Pool Company (“CPC-QT”) under applicable CDNX policies, Trinity:

(a) would be able to file the Circular under the Legislation as an alternative form of AIF;

(b) would meet the requirements of the definition of "qualifying issuer" under the Legislation; and

(c) would be able to issue the Securities with a four month Hold Period in the Jurisdictions rather than a 12 month Hold Period;

22. Robert Kang, CDNX Manager, New Listings, Corporate Finance, by letter dated November 5, 2001, has confirmed the following:

(a) under the CDNX RTO Policy an issuer undergoing an RTO must prepare a draft information circular or a filing statement disclosing all material facts related to the RTO. The CDNX RTO Policy specifically states that any information circular or filing statement prepared for an RTO must contain prospectus level disclosure and include the information required by the CDNX Exchange Information Circular (Form 3A);

(b) the information circular or filing statement must include a certificate page signed by four directors of the issuer, including the CEO and CFO, which certifies that the disclosure constitutes full, true and plain disclosure of all material facts relating to the securities of the issuer, assuming the completion of the RTO. If the RTO involves the acquisition of another issuer (the “Target Issuer”), the information circular or filing statement must also include a certificate page signed by the CEO, CFO, and two other directors of the Target Issuer certifying that the disclosure, as it relates to the Target Issuer, constitutes full, true and plain disclosure of all material facts relating to the securities/assets of the Target Issuer;

(c) Form 3A is the same form of information circular for an RTO and for a CPC-QT, and is intended to incorporate the form requirements of both an information circular and a prospectus;

(d) the CDNX vets RTO management information circulars to the same standard as it does when vetting an information circular for a CPC-QT, or a prospectus pursuant to the CDNX’s Operating Agreement with the British Columbia Securities Commission and as such, the CDNX reviews for full, true and plain disclosure and prospectus level disclosure; and

(e) the CDNX has vetted Trinity’s information circular to the same standard.

23. Form 3A contains all of the information required under the forms prescribed by the Legislation in the Jurisdictions pertaining to information circulars;

[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 the intended trades in the Securities are exempt from the Prospectus Requirement provided that:

(a) at the time of the intended trades, Trinity:

(i) is a reporting issuer under the Legislation; and

(ii) has equity securities listed on the CDNX;

(b) on or before each of the date of the Private Placement and the distribution of the Agent’s Warrants and Agent’s Series B Shares (the “Distribution Dates”), Trinity has filed, in electronic format through SEDAR, the Circular as an alternative form of AIF with the Decision Makers;

(c) on each of the Distribution Dates, Trinity:

(i) signs the certificates required under the Legislation, except as regards the certification that Trinity is a qualifying issuer and has filed a current AIF, and

(ii) is otherwise in compliance with British Columbia Local Policy Statement LPS 3-27, British Columbia Instrument 45-506, and Alberta Securities Commission Rule 45-501;

(d) no unusual effort is made to prepare the market or create a demand for the Securities;

(e) no extraordinary commission or other consideration is paid in respect of the intended trades;

(f) the intended trades are not a distribution from the holdings of a control person;

(g) if the seller is an insider of Trinity, other than a director or senior officer, the seller has filed all records required to be filed under the Legislation;

(h) if the seller is a director or senior officer of Trinity, the seller has filed all records required to be filed under the Legislation;

(i) each of the the Distribution Dates occurs not more than 140 days after Trinity’s most recently completed financial year;

(j) a period of at least four months has elapsed from each of the the Distribution Dates; and

(k) Trinity endorses the certificates representing the Securities with a legend stating that unless permitted under the Legislation, the holder of the Securities shall not trade the Securities until four months and one day after the relevant Distribution Date.

[para 7]
DATED November 13, 2001.




Brenda Leong
Director
©2024 British Columbia Securities Commission