EARLY WARNING NEWS RELEASE PURSUANT TO NATIONAL INSTRUMENTS 62-103 AND 62-104
TORONTO, Nov. 30, 2020 /CNW/ – Greg Chamandy (“Chamandy“) has today filed an early warning report (the “Early Warning Report“) advising of his holdings in common shares (“Common Shares“) of Cornerstone Capital Resources Inc. (“Cornerstone“). The Early Warning Report amends information disclosed in an earlier report filed by Chamandy dated July 13, 2017 (the “Prior Report“).
On November 9, 2020, Chamandy and Marie Chantal Condoroussis (referred to previously in the Prior Report as Chantal Chamandy and, together with Chamandy, the “Chamandy Vendors“) for estate planning purposes entered into a sale and purchase agreement (the “Purchase Agreement“) with Reliance Trust Company SA (“Reliance Trust“), in its capacity as trustee of The Life Partners Trust (the “Trust“), pursuant to which the Chamandy Vendors sold (the “Estate Planning Transaction“) to Reliance Trust 3,500,000 Common Shares (the “Subject Shares“). The Chamandy Vendors are the settlors of the Trust, which was established pursuant to a deed of settlement dated November 9, 2020, as supplemented on November 30, 2020 (the “Deed of Settlement“).
After giving effect to the Estate Planning Transaction, Reliance Trust will legally own and, subject to the Control Right (as defined below), exercise control and direction over the Subject Shares in its capacity as trustee for the Trust, the beneficiaries of which are the Chamandy Vendors, their children and any other persons designated in accordance with the terms of the Deed of Settlement. In accordance with the terms of the Deed of Settlement, the trustees of the Trust shall not, without Chamandy’s consent: (i) transfer or encumber any interest in the Subject Shares; (ii) enter into any transaction or agreement in relation to the Subject Shares; or (iii) exercise any rights attached to the Subject Shares, including any voting rights (the “Control Right“). The Control Right shall terminate upon its revocation by the trustees, with Chamandy’s consent, or upon Chamandy’s death or incapacity.
Under the terms of the Settlement, the following persons, in order of priority, shall have the power to appoint a protector of the Trust (a “Protector“): (i) the Chamandy Vendors acting jointly, or the survivor of them if one of the Chamandy Vendors dies or becomes incapable of acting; (ii) the Protector; and (iii) the trustee of the Trust. The Protector may at any time remove all or any of the trustees of the Trust in accordance with the terms of the Deed of Settlement. Where a Protector has been appointed, the power to appoint new or additional trustees shall be vested in the Protector. The trustee may, only with the consent of the Protector, add to or exclude beneficiaries from the Trust.
As disclosed in the Prior Report, Chamandy’s ownership of Common Shares was both direct and indirect through those joint actors disclosed in the Prior Report, being Ms. Condoroussis, Life Partners Capital Inc. and Oxbridge Group Inc. Prior to the Estate Planning Transaction, Chamandy’s ownership of the Subject Shares was, for estate planning purposes, re-organized so that the Subject Shares were held jointly by the Chamandy Vendors (the “Re-Organization“).
Pursuant to applicable Canadian securities laws, Chamandy is considered to be acting jointly or in concert with Ms. Condoroussis and with Reliance Trust in its capacity as trustee of the Trust (collectively, the “Joint Actors“).
Prior to the Estate Planning Transaction, Chamandy, together with Ms. Condoroussis, owned the Subject Shares and, in addition, Chamandy owned 450,000 options to purchase Common Shares, of which 425,000 options (the “Exercisable Options“) were exercisable to purchase Common Shares as of, or within 60 days of, the Estate Planning Transaction. Accordingly, prior to the Estate Planning Transaction, Chamandy, together with Ms. Condoroussis, beneficially owned 3,925,000 Common Shares, consisting of the Subject Shares and the Exercisable Options, representing beneficial ownership of 11.92% of the outstanding Common Shares (based on, to Chamandy’s knowledge as confirmed by Cornerstone, 32,505,661 issued and outstanding Common Shares, and calculated on a partially-diluted basis after giving effect to the exercise of the Exercisable Options).
On November 9, 2020, the Chamandy Vendors entered into the Estate Planning Transaction. As a result of the Estate Planning Transaction, Reliance Trust is considered to legally own and, subject to the Control Right, exercise control and direction over, the Subject Shares, representing 10.77% of the outstanding Common Shares (based on, to Chamandy’s knowledge as confirmed by Cornerstone, 32,505,661 issued and outstanding Common Shares, and calculated on a non-diluted basis). For purposes of applicable Canadian securities laws, the Chamandy Vendors are also considered to beneficially own and control the Subject Shares. Accordingly, as a result of the Estate Planning Transaction, the Chamandy Vendors, together with Reliance Trust, beneficially own 3,925,000 Common Shares, consisting of the Subject Shares and the Exercisable Options, representing 11.92% of the outstanding Common Shares (based on, to Chamandy’s knowledge as confirmed by Cornerstone, 32,505,661 issued and outstanding Common Shares, and calculated on a partially-diluted basis after giving effect to the exercise of the Exercisable Options).
The Chamandy Vendors sold the Subject Shares to Reliance Trust at a price of CAD$5.89 per share for aggregate consideration of CAD$20,615,000.00 (the “Aggregate Consideration Amount“). As part of the Estate Planning Transaction, the Aggregate Consideration Amount payable to the Chamandy Vendors shall be left outstanding as a debt from Reliance Trust to the Chamandy Vendors, payable on demand in accordance with the terms and conditions of the Purchase Agreement.
The Estate Planning Transaction was effected for estate planning and investment purposes. Depending on various factors, including, without limitation, market conditions, general economic and industry conditions, Cornerstone’s business and financial condition and/or any other factors that Chamandy, together with Ms. Condoroussis and Reliance Trust, may deem relevant, Chamandy may take such actions with respect to such investment in Cornerstone as he, together with Ms. Condoroussis and Reliance Trust, deems appropriate including, without limitation, (i) acquiring, exercising, converting, exchanging, selling or otherwise disposing of securities of Cornerstone or securities exercisable for, or convertible or exchangeable into, securities of Cornerstone and/or (ii) developing plans or intentions or taking actions which relate to or would result in one or more of the transactions or matters referred to in paragraphs (a) through (k) of Item 5 of the Early Warning Report filed on www.sedar.com.
Pursuant to a share transfer restriction agreement dated November 30, 2020 (the “Transfer Restriction Agreement“) between Cornerstone, the Chamandy Vendors and Reliance Trust, in its capacity as trustee of the Trust, each of the Joint Actors agreed to not, either individually or jointly, without the consent of Cornerstone, (i) transfer, in one transaction or a series of transactions, in aggregate 2.5% or more of the issued and outstanding Common Shares to any one transferee or group of transferees, other than sales of Common Shares on the open market that are not pre-arranged or certain permitted transfers to affiliates; or (ii) enter into, with respect to in aggregate 2.5% or more of the issued and outstanding Common Shares, any agreement, commitment or understanding to deposit or tender such Common Shares to a take-over bid, tender offer or exchange offer or to vote such Common Shares in favour of any resolution or transaction (collectively, the “Transfer Restrictions“). Pursuant to the Transfer Restriction Agreement, Chamandy has agreed to not, without the consent of Cornerstone, amend or revoke the Control Right. As well, Chamandy and Reliance Trust have agreed to subject any future securities of Cornerstone that are contributed to the Trust to control provisions substantially similar to those provided by the Control Right. The Transfer Restrictions replace the restrictions on dispositions of Common Shares described in Item 6 of the Prior Report (the “Prior Restrictions“). In accordance with the Prior Restrictions, Cornerstone has consented to the Re-Organization and the Estate Planning Transaction.
This news release is being issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues and National Instrument 62-104 – Take-Over Bids and Issuer Bids and relates to: (i) the Common Shares of Cornerstone, whose head office is located at 1730 St. Laurent Blvd., Suite 800, Ottawa, Ontario, K1G 3Y7; and (ii) Chamandy at c/o Cornerstone Capital Resources Inc., 1730 St. Laurent Blvd., Suite 800, Ottawa, Ontario, K1G 3Y7. A copy of the Early Warning Report can be obtained at www.sedar.com under Cornerstone’s company profile or by contacting Greg Chamandy at (343) 689-0714.
SOURCEGreg ChamandyView original content:http://www.newswire.ca/en/releases/archive/November2020/30/c0448.html