OC Special Opportunities Fund, LP

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Policy 11-206 Process for Cease to be a Reporting Issuer Applications -- issuer deemed to no longer be a reporting issuer under applicable securities legislation -- issuer has 51 or more securityholders worldwide, but fewer than 15 securityholders in Canada.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 1(10)(a)(ii).

MARCH 6, 2018

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO (the Jurisdiction) AND IN THE MATTER OF THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF OC SPECIAL OPPORTUNITIES FUND, LP (the Filer)

ORDER

Background

The principal regulator in the Jurisdiction has received an application from the Filer for an order under the securities legislation of the Jurisdiction of the principal regulator (the Legislation) that the Filer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer (the Order Sought).

Under the Process for Cease to be a Reporting Issuer Applications (for a passport application):

(a) the Ontario Securities Commission (OSC) is the principal regulator for this application, and

(b) the Filer has provided notice that subsection 4C.5(1)(c) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta and British Columbia.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this order, unless otherwise defined.

Representations

This order is based on the following facts represented by the Filer:

1. The Filer is a limited partnership formed under the laws of the Cayman Islands by its general partner, Orange Capital Ventures GP, LLC (the General Partner), a Delaware limited liability company. The Filer is governed by a First Amended and Restated Limited Partnership Agreement dated November 28, 2017 (the LPA).

2. The Filer's registered agent is Walkers Corporate Limited, whose address is Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.

3. The authorized capital of the Filer consists of an unlimited number of Class A limited partnership units (or fractions thereof) (Class A LP Units) and an unlimited number of Class B limited partnership units (or fractions thereof) (Class B LP Units, and together with the Class A LP Units, the Units), which represent limited partnership interests in the Filer. As at the date hereof, there are approximately 563,478 Class A LP Units outstanding, of which approximately 101,140 are held by securityholders resident in Canada (the Canadian Securityholders), and approximately 5,456,693 Class B LP Units outstanding, none of which are held by Canadian Securityholders. Canadian Securityholders therefore hold approximately 1.68% of the total number of Units.

4. There are 68 beneficial securityholders worldwide for the Class A LP Units and one beneficial securityholder worldwide for the Class B LP Units. There are ten beneficial securityholders of Class A LP Units resident in Canada, one of which is resident in British Columbia, two of which are resident in Quebec, and the remaining seven of which are resident in Ontario. There are no beneficial securityholders of Class B LP Units resident in Canada.

5. Four of the ten beneficial Canadian Securityholders are members of management and/or directors of the board of Gaming Nation Inc. (the Rollover Shareholders), the issued and outstanding securities of which were acquired pursuant to the Arrangement (as defined below).

6. The Filer has issued debt under convertible debentures (the Convertible Debentures) to all holders of Class A LP Units. The Convertible Debentures are convertible into Class A LP Units upon the occurrence of certain events pursuant to the provisions of the Convertible Debentures. For greater certainty, all Convertible Debentures issued and outstanding are held by holders of Class A LP Units.

7. The Filer has not distributed any securities in any of the provinces or territories of Canada other than the Units and Convertible Debentures, which were issued pursuant to available prospectus exemptions under National Instrument 45-106 Prospectus Exemptions or the Securities Act (Ontario) (Prospectus Exemptions). For the avoidance of doubt, all of the Canadian Securityholders were issued securities of the Filer pursuant to available Prospectus Exemptions. Every holder of Units and Convertible Debentures worldwide is a limited partner of the Filer (Limited Partner) and each Limited Partner is either an accredited investor under Canadian or US securities law or is a director/management of Gaming Nation Inc. (Gaming Nation) who acquired the securities under section 2.11 of National Instrument 45-106 Prospectus Exemptions.

8. On August 17, 2017, shareholders (the Shareholders) of Gaming Nation approved by special resolution a plan of arrangement pursuant to section 182 of the OBCA (the Arrangement). Approximately 100% of the votes cast by all Shareholders, and approximately 100% of the votes cast by Shareholders other than the Shareholders whose votes were required to be excluded for the purposes of "minority approval" under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, were voted in favour of the special resolution approving the Arrangement.

9. On August 22, 2017 a final court order of the Superior Court of Justice (Ontario) (Commercial List) was granted approving the Arrangement (Court File No: CV-17-578849-00CL).

10. Pursuant to articles of arrangement dated November 28, 2017, the Arrangement became effective as of 12:01 a.m. on such date (the Effective Time) which, among other things, resulted in the following:

(a) the Filer acquired all of the issued and outstanding shares of Gaming Nation (the Shares) not already owned directly or indirectly by it for consideration equivalent to CAD 0.95 per Share (the Consideration), and as a result, Gaming Nation became a wholly-owned subsidiary of the Filer;

(b) each option to acquire a Share (each a Gaming Option) outstanding immediately prior to the Effective Time was deemed to be assigned and transferred to Gaming Nation in exchange for a cash payment equal to the amount by which the Consideration exceeds the exercise price of such Gaming Option, less applicable withholdings, following which such Gaming Options were cancelled;

(c) each purchase warrant to acquire a Share (each a Gaming Warrant) outstanding immediately prior to the Effective Time was deemed to be assigned and transferred to the Filer in exchange for a cash payment equal to the amount by which the Consideration exceeds the exercise price of such Gaming Warrant, less applicable withholdings, following which such Gaming Warrants were cancelled; and

(d) in exchange (the Rollover Exchange) for the Filer acquiring 2,157,500 of the Shares (the Rollover Shares) held by Rollover Shareholders (being directors and/or members of management of Gaming Nation), the Filer issued to each Rollover Shareholder a combination of Class A LP Units and Convertible Debenture debt equivalent to the Consideration per Rollover Share.

11. As a result of the Rollover Exchange, the Filer was deemed under the applicable securities laws to be a reporting issuer in the Provinces of Ontario, Alberta and British Columbia (where Gaming Nation was a reporting issuer for at least 12 months prior to the date that the Arrangement was completed) and the Filer will continue to be a reporting issuer unless the Filer obtains the Order Sought.

12. The Filer does not meet the requirements in section 19 of National Policy 11-206 Process for Cease to be a Reporting Issuer Applications (NP 11-206) to obtain the Order Sought as its outstanding securities are beneficially owned, directly or indirectly, by 51 or more securityholders worldwide. The Filer does not meet the requirements in section 20(1) or section 20(3) of NP 11-206, as the Filer is not listed on any U.S. exchange or on any other major foreign exchange and does not meet the 2%/2% test in subsection 20(1)(b) of NP 11-206.

13. The Shares were voluntarily delisted from the TSX Venture Exchange effective as at close of trading on November 29, 2017.

14. No securities of the Filer are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.

15. The Filer has never conducted (and has never been required to conduct) a prospectus qualified offering in Canada and the Filer has not established or maintained a listing for any of its securities on any stock exchange or marketplace.

16. The Filer has no intention of distributing its securities in Canada at any time in the future other than pursuant to available Prospectus Exemptions.

17. The Filer is not in default of securities legislation in any jurisdiction.

18. But for the Rollover Exchange effected upon completion of the Arrangement with the Rollover Shareholders, who are all directors and/or members of management of Gaming Nation, the Filer would not be a reporting issuer in any jurisdiction in Canada.

19. The Filer will not be a reporting issuer in any jurisdiction in Canada immediately following the granting of the Order Sought.

20. The rights and obligations of the Limited Partners in respect of the Filer and the securities of the Filer are governed by the LPA.

21. The Filer is not required by the LPA or the Convertible Debentures to maintain its reporting issuer status or the equivalent in any jurisdiction in Canada or elsewhere.

22. The LPA contains provisions regarding the reporting of information concerning the Filer to the Limited Partners. The information that the Filer is required to disclose to the Limited Partners includes the Filer's unaudited interim financial statements and audited annual financial statements. The LPA provides that such financial information is confidential. Unless the Order Sought is granted, the Filer will be required to publicly file such confidential financial information within the timeframe specified under applicable Canadian securities laws following the Filer's financial year-end (currently December 31).

23. No Limited Partner may mortgage, pledge, charge, hypothecate, transfer, sell, offer a participation in, assign or otherwise dispose of, whether voluntary or otherwise transfer all or any part of its Units except (i) with the prior written consent of the General Partner, which consent can be withheld in the General Partner's sole discretion; (ii) by operation of law, or (iii) in the event of the death, permanent disability (which shall be determined by the General Partner in its discretion), bankruptcy, insolvency or dissolution of a Limited Partner, in which case the executor, administrator, trustee, committee or other legal representative of such Limited Partner shall succeed to the rights and obligations of such Limited Partner and may be admitted, in the sole discretion of the General Partner, into the partnership as a Limited Partner in the place and stead of such Limited Partner.

24. The Filer filed a news release on January 31, 2018 disclosing that it had made an application to cease to be a reporting issuer.

Order

The principal regulator is satisfied that the order meets the test set out in the Legislation for the principal regulator to make the order.

The decision of the principal regulator under the Legislation is that the Order Sought is granted.

"Peter W. Currie"

Commissioner

Ontario Securities Commission

 

"Mark J. Sandler"

Commissioner

Ontario Securities Commission