Mutual Reliance Review System for ExemptiveRelief Applications - arrangement transaction. Warrants of subsidiaryexercisable for shares of parent. Relief from prospectus andregistration requirements for exercises of warrants.
Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25, 53, 74.
Applicable Multilateral Instrument
Multilateral Instrument 45-102 Resale of Securities.
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
SASKATCHEWAN, MANITOBA, ONTARIO,QUÉBEC, NOVA SCOTIA,
NEWFOUNDLAND AND LABRADOR,NEW BRUNSWICK, PRINCE EDWARD ISLAND,
YUKON TERRITORY, THE NORTHWESTTERRITORIES AND NUNAVUT
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
BEMA GOLD CORPORATION
IN THE MATTER OF
EAGC VENTURES CORP.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Saskatchewan, Manitoba, Ontario, Québec, Nova Scotia,Newfoundland and Labrador, New Brunswick, Prince Edward Island,Yukon Territory, the Northwest Territories and Nunavut (the"Jurisdictions") has received an application fromBema Gold Corporation ("Bema") and EAGC Ventures Corp.("EAGC" and, together with Bema, the "Filers")for a decision under the securities legislation of the Jurisdictions(the "Legislation") that the requirements containedin the Legislation to be registered to trade in a security (the"Registration Requirement") and to file and obtaina receipt for a preliminary prospectus and a prospectus (the"Prospectus Requirement") shall not apply to certaintrades in securities in connection with an arrangement amongBema, its wholly-owned subsidiary 1518798 Ontario Inc. ("Subco")and EAGC (the "Arrangement");
AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission (the "OSC") is theprincipal regulator for this application;
AND WHEREAS the Filers have representedto the Decision Makers that:
1. Bema was continued under the CanadaBusiness Corporations Act ("CBCA") in July 2002.Its head office is located in Vancouver, British Columbia.
2. The authorized capital of Bema consistsof an unlimited number of common shares (the "Bema Shares"),of which 242,184,464 Bema Shares were issued and outstandingas at November 8, 2002.
3. Bema is a reporting issuer or the equivalentunder the securities legislation of each province and territoryof Canada and is not in default of the securities legislationof such jurisdictions. The Bema Shares are listed on the TorontoStock Exchange ("TSX") and the American Stock Exchange("AMEX").
1518798 Ontario Inc.
4. Subco was incorporated under the OntarioBusiness Corporations Act (the "OBCA") in March2002.
5. All of the issued and outstanding sharesof Subco are held by Bema.
6. Subco is not a reporting issuer or theequivalent under the securities legislation of any provinceor territory of Canada. It was acquired by Bema for the solepurpose of effecting the Arrangement.
EAGC Ventures Corp.
7. EAGC was amalgamated under the OBCA inMay 1996. Its head office is located in Vancouver, BritishColumbia.
8. The authorized capital of EAGC consistsof an unlimited number of common shares (the "EAGC Shares"),of which 12,755,805 EAGC Shares were issued and outstandingas at November 18, 2002.
9. As at November 18, 2002, 1,840,000 EAGCShares were reserved for issuance under outstanding EAGC Options,3,785,000 EAGC Shares were reserved for issuance under outstandingwarrants of EAGC, 47,723,500 EAGC Shares were reserved forissuance under outstanding special warrants of EAGC ("EAGCSpecial Warrants") and 23,861,750 EAGC Shares were reservedfor issuance pursuant to the exercise of warrants obtainableon the exercise of the outstanding EAGC Special Warrants (suchwarrants, together with the warrants of EAGC currently outstanding,are collectively referred to herein as the "EAGC Warrants").
10. EAGC is a reporting issuer under the securitieslegislation of British Columbia, Alberta, Ontario and Québecand is not in default of the securities legislation of suchjurisdictions. The EAGC Common Shares are listed on the TSXVenture Exchange ("TSX Venture").
Securityholder and Court Approvals
11. On November 14, 2002 an interim order("Interim Order") of the Ontario Superior Courtof Justice (the "Court") was obtained in connectionwith the Arrangement. The Interim Order provides for, amongother things, the calling and holding of a special meeting(the "Meeting") of the shareholders of EAGC andthe holders of EAGC Options, to be held on December 18, 2002.At the Meeting, EAGC will seek the requisite securityholderapproval for the Arrangement.
12. In connection with the Meeting, EAGC deliveredto the relevant EAGC securityholders a management informationcircular (the "Proxy Circular") containing prospectuslevel disclosure of the Arrangement and the business and affairsof Bema.
13. The hearing for the final order of theCourt in respect of the Arrangement is currently scheduledto take place on December 20, 2002. In its final order theCourt will be called upon to approve, among other things,the fairness of the Arrangement.
14. The Arrangement is being effected in orderto merge Bema and EAGC. The Arrangement will be effected pursuantto the OBCA.
15. Prior to the effective date of the Arrangement(the "Effective Date"), all EAGC Special Warrantswill be exercised in accordance with their terms and the EAGCShares and EAGC Warrants issuable upon such exercise willbe issued.
16. The following steps are expected to occuron the Effective Date:
(a) all EAGC Shares held by dissenting shareholdersof EAGC will be transferred to Bema in exchange for a paymentequal to the fair value thereof;
(b) EAGC and Subco will amalgamate to formAmalco;
(c) each EAGC Share held by shareholdersof EAGC other than Bema and its affiliates will be cancelledand the holders thereof will receive, for each EAGC Share,that number of Bema Shares multiplied by the Exchange Ratio;
(d) each EAGC Share held by Bema and itsaffiliates will be cancelled and the holders thereof willreceive, for each EAGC Share, that number of common sharesof Amalco ("Amalco Shares") multiplied by theExchange Ratio;
(e) each issued and outstanding share ofSubco will be cancelled and the holder thereof will receive,for each such Subco share, one Amalco Share;
(f) each EAGC Option will be exchanged fora Bema Replacement Option to purchase that number of BemaShares equal to the number of EAGC Shares issuable undersuch EAGC Option multiplied by the Exchange Ratio, at anexercise price per Bema Share equal to the exercise priceper EAGC Share of such EAGC Option divided by the ExchangeRatio;and
(g) each EAGC Warrant held by Bema and itsaffiliates will be cancelled without payment.
17. In addition, each EAGC Warrant held bypersons other than Bema and its affiliates will, in accordancewith its terms, represent following the Effective Date theright to acquire that number of Bema Shares equal to the numberof EAGC Shares issuable thereunder multiplied by the ExchangeRatio, at an exercise price per Bema Share equal to the exerciseprice per EAGC Share under the EAGC Warrant divided by theExchange Ratio.
18. The EAGC Warrants currently outstandingmay be exercised until various dates in October 2004, whenthey expire. The balance of EAGC Warrants to be issued uponthe deemed exercise of EAGC Special Warrants in connectionwith the Arrangement may be exercised for a period of fiveyears following the date of their issuance, which issuancewill be deemed to take place the day prior to the completionof the Arrangement.
19. Immediately after consummation of theArrangement, Amalco will be a wholly-owned subsidiary of Bema.
20. The TSX has conditionally approved thelisting of the Bema Shares issuable under the terms of theArrangement, subject to Bema fulfilling customary TSX requirements.Bema also intends to apply to have the EAGC Warrants listedon the TSX or TSX Venture.
21. The completion of the Arrangement, includingthe assumption by Bema of the EAGC Warrants in accordancewith their terms on the Effective Date and the trade by Bemaof Bema Shares to holders of EAGC Warrants upon their exercisefollowing the Effective Date, involves or may involve a numberof trades of securities (all such aforementioned trades inconnection with and subsequent to the Arrangement, the "Trades").
22. There are no exemptions from the RegistrationRequirement and the Prospectus Requirement in the Legislationof certain of the Jurisdictions in respect of certain of theTrades.
AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;
THE DECISION of the Decision Makers underthe Legislation is that:
1. the Registration Requirement and the ProspectusRequirement shall not apply to the Trades, provided that thefirst trade in securities acquired pursuant to this Decisionin a Jurisdiction will be a distribution or primary distributionto the public under the Legislation of such Jurisdiction;and
2. the Prospectus Requirement shall not applyto the first trade in securities acquired pursuant to thisDecision if:
(a) except in Québec, the conditionsin subsections (3) or (4) of section 2.6 or subsections(2) or (3) of section 2.8 of Multilateral Instrument 45-102Resale of Securities are satisfied; and
(b) in Québec,
(i) the issuer or one of the parties tothe Arrangement is and has been a reporting issuer inQuébec for the 12 months immediately precedingthe trade,
(ii) no unusual effort is made to preparethe market or to create a demand for the securities thatare the subject of the trade,
(iii) no extraordinary commission or considerationis paid to a person or company in respect of the trade,and
(iv) if the selling shareholder is aninsider or officer of the issuer, the selling shareholderhas no reasonable grounds to believe that the issuer isin default of securities legislation.
December 20, 2002.
"Theresa McLeod" "HaroldP. Hands"