Outlook Resources Inc. -- s. 144

Order

Headnote

Section 144 -- application for variation of cease trade order -- issuer cease traded due to failure to file with the Commission annual financial statements -- issuer has applied for a variation of the cease trade order to permit the issuer to proceed with a Plan of Arrangement under the Companies' Creditors Arrangement Act -- partial revocation granted subject to conditions.

Applicable Legislative Provisions

Securities Act, R.S.O., c. S.5, as am., ss. 127, 144.

IN THE MATTER OF

THE SECURITIES ACT,

R.S.O. 1990, c. S.5 AS AMENDED

(the "Act")

AND

IN THE MATTER OF

OUTLOOK RESOURCES INC.

ORDER

(Section 144)

WHEREAS the securities of Outlook Resources Inc. (the "Applicant") are subject to a temporary cease trade order made by the Director dated April 4, 2011 under paragraph 2 of subsection 127(1) and subsection 127(5) of the Act and a further cease trade order issued by the Director dated April 15, 2011 pursuant to subsection 127(1) of the Act (together, the "Cease Trade Order") directing that all trading in securities of the Applicant, whether direct or indirect, cease until the Cease Trade Order is revoked;

AND WHEREAS the Applicant has applied to the Ontario Securities Commission (the "Commission") pursuant to section 144 of the Act (the "Application") for a partial revocation of the Cease Trade Order;

AND WHEREAS the Applicant has represented to the Commission that:

1. The Applicant was incorporated pursuant to the Business Corporations Act (Ontario) on December 18, 1984 under the name Hyball Explorations Inc. Articles of Amendment, changing the name to Findore Minerals Inc., were filed on April 22, 1986. Articles of Amendment, changing the name to Cantex Energy Inc. and the minimum and maximum number of directors, were filed on December 17, 1997. Articles of Amendment, changing the name to Outlook Resources Inc. and the authorized capital, were filed on December 6, 2000.

2. The Applicant's registered and head office is located at 40 King Street West, Suite 3100, Toronto, Ontario, M5H 3Y2.

3. The Applicant is a reporting issuer in Ontario, Alberta and British Columbia.

4. As of the date hereof, the authorized capital of the Applicant consists of an unlimited number of common shares (the "Common Shares") of which 207,481,977 are issued and outstanding. There are also 57,915,000 outstanding warrants, broker warrants and compensation options, 17,290,000 of which entitle the holder to purchase a Common Share at $0.10 until October 30, 2011, 4,625,000 of which entitle the holder to purchase a Common Share at $0.10 until November 2, 2011, and 36,000,000 of which entitle the holder to purchase a Common Share at $0.10 until December 15, 2012.

5. The Applicant does not have any securities listed or quoted on any exchange or market in Canada or elsewhere, other than the Common Shares which are suspended from trading on the NEX board of the TSX Venture Exchange ("TSXV") under the symbol "OLR.H".

6. The Cease Trade Order was issued by the Commission as a result of the Applicant's failure to file its audited annual financial statements, management's discussion and analysis, and certification of annual filings for the fiscal year ended November 30, 2010 within the time prescribed by securities legislation (collectively, the "2010 Annual Filings").

7. The failure to file the 2010 Annual Filings arose as a consequence of financial hardship following which the Applicant was unable to pay the fees of various service providers, including its auditors.

8. In addition to the 2010 Annual Filings, the Applicant has subsequently failed to file its interim unaudited financial statements, interim management's discussion and analysis, and certification of interim filings, for the interim period ended February 28, 2011 and the interim period ended May 31, 2011 (together with the 2010 Annual Filings, the "Financial Disclosures").

9. The Applicant is also subject to a cease trade order issued by the British Columbia Securities Commission ("BCSC") dated April 7, 2011 and a cease trade order by the Alberta Securities Commission ("ASC") dated July 14, 2011. The Applicant is concurrently applying to the BCSC for a partial revocation of the cease trade order issued in that jurisdiction.

10. The Applicant is seeking to effect a private placement of convertible securities (the "Financing") to raise up to $1 million to enable the Applicant to bring itself into compliance with its continuous disclosure obligations and to fund expenses as more particularly outlined below. The Financing will be conducted on a prospectus exempt basis with subscribers who are accredited investors (as such term is defined in National Instrument 45-106 Prospectus and Registration Exemptions) resident in Canada (each a "Potential Investor"). The Financing will entail a private placement of convertible debentures (the "Securities") for aggregate proceeds of up to $1 million on terms that will be negotiated with the subscribers who are interested in participating in the Financing.

11. If a related party participates in the Financing, the Financing would constitute a related party transaction within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") and the Applicant intends to rely on the financial hardship exemption under MI 61-101.

12. The Applicant has been in negotiations with Climate Change Infrastructure Corporation ("CCIC"), a private holding company and a financial solution provider focused on the low-carbon, water constrained, alternative energy and efficiency marketplace, for over six (6) months to work out a deal involving the merger of the Applicant with CCIC on some business terms. It is anticipated that through a merger on some basis, CCIC will effect a reverse takeover of the Applicant (the "CCIC Transaction"). The CCIC Transaction will be dependent upon the Applicant raising the Financing and the companies developing their businesses and preparing the appropriate disclosure documentation for delivery to the shareholders of the Applicant for approval of the CCIC Transaction.

13. The following is a breakdown of the use of proceeds of the Financing based upon raising up to $500,000 and up to $1,000,000 as follows:

Explanation

$500,000

$1,000,000

 

Fees and penalties for late filing of financial disclosures and costs associated with finalizing the Financial Disclosures and the lifting of the Cease Trade Order

$50,000

$50,000

 

Fees and expenses associated with the Financing and the CCIC Transaction

$140,000

$200,000

 

Corporate expenses relating to the Applicant for completion of CCIC Transaction

$50,000

$100,000

 

Corporate expenses of CCIC pending completion of CCIC Transaction

$50,000

$100,000

 

Advancement of Fertilizer Business, Fish Farm Business and CCIC projects and working capital

$210,000

$550,000

14. The Applicant reasonably believes that the proceeds of the Financing will be sufficient to bring its continuous disclosure obligations up to date and pay all related outstanding fees and provide it with sufficient funds to complete the CCIC Transaction.

15. As the Financing would involve a trade of securities and acts in furtherance of trades, the Financing could not be completed without a partial revocation of the Cease Trade Order. As the CCIC Transaction would involve a trade of securities and acts in furtherance of trades, the CCIC Transaction could not be completed without a partial revocation of the Cease Trade Order.

16. The Financing will be completed in accordance with all applicable laws.

17. Prior to the completion of the Financing and the CCIC Transaction, each Potential Investor resident in Canada and CCIC and its security holders will:

(a) receive:

i. a copy of the Cease Trade Order; and

ii. a copy of the partial revocation order for which this application has been made; and

(b) provide signed and dated acknowledgements which clearly state that all of the Applicant's securities, including the Securities issued in connection with the Financing and the CCIC Transaction, will remain subject to the Cease Trader Order, and that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future.

18. The Applicant is not in default of any requirements of the Cease Trade Order or the Act or the rules and regulations made pursuant thereto, subject to the deficiencies outlined above.

19. Upon issuance of the partial revocation order, the Applicant will issue a press release announcing the partial revocation order, the intention to complete the Financing and the intention to sign a letter of intent or memorandum of understanding with in respect to the CCIC Transaction. Upon negotiation of the terms of the Financing and completion of the first closing of the Financing, the Applicant will issue a press release and file a material change report. If the terms of the CCIC Transaction can be negotiated, upon execution of a letter of intent or memorandum of understanding, the Applicant will issue a press release and file a material change report.

20. The Applicant intends to file the Financial Disclosures on SEDAR within a reasonable time following the closing of the first tranche of the Financing to bring its continuous disclosure record up to date.

21. Following the filing of the Financial Disclosures, the Applicant intends to apply to the Commission and to the BCSC and the ASC for a full revocation of, respectively, the Cease Trade Order and the cease trade orders detailed above.

22. The Applicant undertakes that it will hold its annual general meeting of shareholders within three (3) months of the date that the Cease Trade Order is revoked in full.

23. The Applicant has undertaken to the Commission that, in the event it convenes a meeting of shareholders within twelve (12) months of the date of this partial revocation order to consider and approve the CCIC Transaction or any transaction involving a reverse takeover, merger, amalgamation or other form of combination of transaction similar to any of the foregoing, the Applicant will deliver to the Commission a copy of the information circular relating to such meeting not less than twenty (20) days prior to the date such information circular is delivered to the shareholders.

AND UPON considering the Application and the recommendation of staff of the Commission;

AND UPON the Director being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED pursuant to section 144 of the Act that the Cease Trade Order be and is hereby partially revoked solely to permit trades and acts in furtherance of trades in securities of the Applicant that are necessary for and in connection with the Financing and the CCIC Transaction, provided that:

(a) prior to the completion of the Financing and the CCIC Transaction, each Potential Investor resident in Canada and CCIC and its security holders will:

i. receive a copy of the Cease Trade Order;

ii. receive a copy of this partial revocation order; and

iii. provide signed and dated acknowledgements which clearly state that all of the Applicant's securities, including the Securities issued in connection with the Financing and the CCIC Transaction, will remain subject to the Cease Trader Order, and that the issuance of a partial revocation order does not guarantee the issuance of a full revocation order in the future.

(b) The Applicant undertakes to make available copies of the written acknowledgements referred to in paragraph (a)iii. to staff of the Commission on request; and

(c) this Order will terminate on the earlier of the closing of the Financing and the CCIC Transaction and 120 days from the date hereof.

DATED at Toronto, Ontario on this 15th day of September, 2011.

"Michael Brown"
Assistant Manager, Corporate Finance
Ontario Securities Commission