Exemption Orders (Discretionary)
VAST CAPITAL POOL LTD.
2001 BCSECCOM 19
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF VAST CAPITAL POOL LTD.
Exemption Order Under Section 76
[para 1]
WHEREAS Vast Capital Pool Ltd. has applied to the Executive Director for an order under section 76 of the Securities Act, R.S.B.C. 1996, c. 418 that certain intended trades of securities of Vast are exempt from the requirements of Section 61 of the Act;
[para 2]
AND WHEREAS Vast has represented to the Executive Director that:
1. Vast is a company incorporated under the Company Act (British Columbia), is a reporting issuer under the Act and is not in default of any requirement under the Act or the Securities Rules, B.C. Reg. 194/97;
2. the authorized share capital of Vast consists of 1,000,000,000 common shares (the “Common Shares”) of which 3,500,000 are issued and outstanding;
3. as a result of the merger of the Vancouver Stock Exchange and the Alberta Stock Exchange, the Common Shares are listed and posted for trading on the Canadian Venture Exchange (the “CDNX”) under the symbol VST and is a Capital Pool Company (“CPC”) within the meaning of CDNX policies;
4. User Friendly Media Inc (“User Friendly Media”) is a company incorporated under the Company Act (British Columbia) and is a private issuer under the Act;
5. the authorized share capital of User Friendly Media consists of 2,000,000,000 common shares without par value and 200,000,000 Class A Preferred Shares without par value. As at December 11, 2000, there were 6,059,580 common shares of User Friendly Media issued and outstanding (the “User Friendly Media Common Shares”);
6. Vast entered into a share purchase agreement dated October 27, 2000, as amended, (the “Share Purchase Agreement”) with User Friendly Media and Barry M. Carlson, J.D. Frazer, Michael Abbott, Moira Carlson, David G. Barton, Mark Dowding, Toni Birtwistle, Ken Larsen, Toomas Losin, Heidi Lynn, Jay Thorne, Martina K. Varva, Robert Klein, Tom Klok, Steven MacDonald, C3 Capital Corp., David Rowat, Tom O’Flaherty and ParaSun Technologies Inc (collectively the “User Friendly Shareholders”), all of whom are resident in British Columbia;
7. pursuant to the terms of the Share Purchase Agreement, Vast has agreed to acquire all of the issued and outstanding User Friendly Media Common Shares for the price of $0.76 per User Friendly Media Common Share (the “Purchase Price”) for an aggregate price of $4,605,281 (the
8. “Acquisition”), to be satisfied by the issuance to each of the User Friendly Shareholders that number of Common Shares, valued at $0.44 per Common Share, in proportion to each User Friendly Shareholder’s proportionate interest in User Friendly Media. The total number of Common Shares to be issued to the User Friendly Media Shareholders in satisfaction of the Purchase Price is 10,466,547 (the “Acquisition Shares”);
9. pursuant to the Share Purchase Agreement, the Acquisition Shares will not be issued to the User Friendly Media Shareholders until the second business day following the date that all approvals of governmental authorities required to effect the Acquisition are granted (the “Closing Date”);
10. the Acquisition constitutes a “Qualifying Transaction” under CDNX policies;
11. Vast is relying upon the registration and prospectus exemptions set out in sections 45(2)(28) and 74(2)(25) of the Act to issue the Acquisition Shares to the User Friendly Media Shareholders;
12. the shareholders of Vast approved the Acquisition at an extraordinary general meeting held on November 21, 2000 (the “Extraordinary General Meeting”), and the CDNX has given its conditional approval to the Acquisition as Vast’s Qualifying Transaction within the meaning of CDNX policies with the final approval to be provided following the Closing Date;
13. in connection with the Acquisition and the Extraordinary General Meeting, Vast prepared an information circular (the “Information Circular”) that was filed with the CDNX and accepted under its policies relating to CPCs which included unaudited financial statements of Vast as at July 31, 2000, audited financial statements of Vast as at August 31, 1999, unaudited pro forma consolidated statements of Vast as at July 31, 2000 together with a compilation report that expressed an opinion that the pro forma financial statements have been properly compiled to give effect to the Qualifying Transaction, and audited financial statements of User Friendly Media as at July 31, 2000;
14. Vast has filed the Information Circular as an alternate form of Annual Information Form pursuant to Local Policy Statement 3-27, is in compliance with the requirements of Local Policy Statement 3-27 and, following the Acquisition, will be a qualifying issuer as defined in Blanket Order and Ruling #98/7 (the “BOR”);
15. the Acquisition Shares will be subject to restrictions on resale for a period of 12 months from the earlier of the date of issuance of the Acquisition Shares, or the date a written agreement committing the User Friendly Shareholders to acquire the Acquisition Shares, subject only to any required regulatory approval, has been executed by all parties to the agreement;
16. but for the fact that Vast will not meet the expenditure requirements set out in the BOR in order to be a qualifying issuer until after the closing of the Acquisition, the Acquisition Shares would be subject to a four month hold period in British Columbia under the BOR.
[para 3]
AND WHEREAS the Executive Director considers that to do so would not be prejudicial to the public interest;
[para 4]
IT IS ORDERED under section 76 of the Act, that the intended trades of the Acquisition Shares are exempt from the requirements of Section 61 of the Act, provided that:
(a) a period of four months has elapsed from the date of distribution of the Acquisition Shares by Vast;
(b) at the date of distribution of the Acquisition Shares to the User Friendly Shareholders, Vast:
(i) signs the certificate contemplated in section 1(a) of the BOR, but omitting the certification contained in section 1(a)(ii); and
(ii) is otherwise in compliance with Local Policy Statement 3-27;
(c) if the seller is an insider of Vast, other than a director or senior officer of Vast, the seller has filed all records required to be filed under sections 87 and 90 of the Act;
(d) if the seller is a director or senior officer of Vast, the seller has filed all records required to be filed under sections 87 and 90 of the Act and Vast has filed all records required to be filed under Part 12 of the Act and under the Rules;
(e) the trade is not a distribution from the holdings of a control person;
(f) no unusual effort is made to prepare the market or create a demand for the Acquisition Shares;
(g) no extraordinary commission or other consideration is paid in respect of the trade; and
(h) Vast endorses the certificates representing the Acquisition Shares with a legend stating that the Acquisition Shares are subject to a four month hold period and may not be traded in British Columbia until the expiry of the hold period, except as permitted by the Act and the Rules and that specifies the date the hold period expires.
[para 5]
DATED January 8, 2001
Brenda Leong
Director