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Solid sets March 5, 2008 for next annual and special meeting of
shareholders
EDMONTON, Dec. 20 /CNW/ - Trading in the common shares of Solid Resources Ltd. ("Solid" or the "Company") was halted on June 14, 2007, pending clarification by the Exchange of the role and involvement of Alvin Harter in the Company's affairs. The Exchange sought this clarification as Alvin Harter executed, on June 11, 2007, a Settlement Agreement with the Alberta Securities Commission (the "ASC").
As part of the Exchange's review of the suitability of Alvin Harter's involvement in the Company's affairs, it identified that certain internal controls and corporate governance procedures were not appropriate or sufficient. The Exchange also noted that the Company was not in compliance with Exchange requirements by failing to 1) disclose the fact that Alvin Harter remained involved in the Company's affairs as a senior mining consultant after it press released his resignation as an officer and director on February 22, 2007, 2) disclose all remuneration and expense reimbursements paid to each of the officers and directors of the Company on a quarterly basis, 3) provide complete disclosure of the terms of its financing completed with Solid Resources No.1 Limited Partnership ("SRLP") in December of 2006, and 4) obtain the required Exchange approval for the potential future issuance of securities to SRLP.
As a result of these contraventions of Exchange requirements, the Company has been placed on notice to comply with all TSX Venture Exchange requirements. Any further violations of Exchange requirements may result in action being initiated by the Exchange against the Company and its management, officers, and/or directors.
As part of its review of the issues raised by the Exchange and the implementation of new corporate governance procedures and policies, the new independent directors of the Company (being R. Derek Frost and Gary F. Kissack who joined the Board of Directors on February 15, 2007 and April 24, 2007, respectively) believe that these contraventions of Exchange requirements were unintentional and were due primarily to failure by management to obtain appropriate and formal advice from its professional advisors and the lack of corporate governance experience of its Board members at the time of these contraventions. The Board of Directors believes that the implementation of its enhanced internal control procedures and formal corporate governance regime described in this news release should address the issues which have been raised during this review.
Prior to trading in the Company's common shares being reinstated, the Exchange has required that the Company issue this press release which:
- describes the restricted nature of the services which Alvin Harter
is permitted to provide to the Company, and the terms and conditions
on which those services will be provided;
- clarifies past public disclosure regarding the terms of the
Company's financing transaction with SRLP in December 2006,
- clarifies past public disclosure regarding the remuneration and
expense reimbursements paid to certain of the Company's officers and
directors; and
- describes the Company's improved Corporate Governance policies and
procedures.
The Company's common shares will be reinstated to trading at the opening of trading on December 20, 2007.
TSX Venture Exchange Matters
1. ASC Settlement Agreement
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Mr. Harter is the former President and CEO of the Company, its founder, and one of its principal shareholders and creditors. The June 11, 2007 Settlement Agreement related to allegations that Pride Resources Ltd. ("Pride"), the Company, Alvin Harter, Daniel Edwin Stewart, Jim Kratchkowski, Tracey Lee Kroeker and Susan Amelia Sanford violated Alberta's securities laws through their involvement in the illegal distribution and unregistered trading of securities of Pride and/or Solid during the period November 2001 to July 2003. Under the Settlement Agreement with the ASC, Alvin Harter agreed to the following:
- to pay to the ASC $45,000 in settlement fees and costs;
- to refrain from trading in or purchasing securities for a period of
5 years, except for trades in or purchases of securities where
Mr. Harter is the principal, and which are effected through his
account held with a registered dealer to whom he has first provided
a copy of the Settlement Agreement;
- to refrain from using any exemptions in the Alberta securities laws
for a period of 5 years, except in respect of trades which
constitute a control distribution (as defined in the Alberta
securities laws) and that are effected through his account held with
a registered dealer to whom he has first provided a copy of the
Settlement Agreement; and
- to resign all positions he holds as a director and officer of any
issuer and refrain from becoming or acting as a director or officer,
or as both a director and officer, of any issuer for a period of 5
years, except for issuers that are wholly owned (directly or
indirectly) by Mr. Harter or by Mr. Harter with another member (or
members) of his immediate family.
Pursuant to the terms of the Settlement Agreement, the Company also agreed to pay the ASC $20,000 in settlement fees and costs.
The circumstances which led to the ASC Hearing and the full text of the Settlement Agreement may be reviewed at www.albertasecurities.com, the web-site of the ASC.
The Exchange has accepted the involvement of Alvin Harter in the Company's affairs under an October 11, 2007 Consulting Services Agreement (the "Harter Agreement") between the Company, Harter Mining Consultants Ltd. (a company wholly owned and operated by Alvin Harter) and Mr. Harter.
Pursuant to the Harter Agreement, Mr. Harter will provide technical advice to the Company with respect to the exploration and commercialization of the Company's mining properties. Alvin Harter will be remunerated at the rate of $500 per day. Mr. Harter is not permitted to have any signing authority with respect to the Company, be involved in strategic decision-making functions, or attend Board of Directors' meetings other than to update the Board with respect to the services he provides under the Harter Agreement. The Harter Agreement may be reviewed at www.sedar.com.
2. Clarification of Past Public Disclosure
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a. Involvement of Alvin Harter
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The Company stated in a February 22, 2007 news release that Alvin Harter had resigned his positions as President, CEO and director, at the Company's February 15, 2007 Annual General Meeting. On February 15, 2007, the Board of Directors approved a verbal arrangement with Alvin Harter whereby he would be retained as a senior mining consultant, as Mr. Harter's experience as the founder and former President and CEO of the Company is a valuable resource to the Company. As a senior mining consultant, Alvin Harter continued to receive his monthly remuneration of $12,000.
Although the role of Mr. Harter as a senior mining consultant to the Company after his resignation in February 2007 was disclosed on the Company's web-site, the Company failed to make any public disclosure of the ongoing role and responsibility held by Alvin Harter. In light of the restrictions imposed against Mr. Harter by the ASC in the June 11, 2007 Settlement Agreement, the Company agreed with the Exchange to voluntarily put Mr. Harter's consulting arrangement in abeyance until completion of the Exchange's review.
Although the Company had removed Mr. Harter as an authorized signatory on behalf of the Company at the time of his resignation, Mr. Harter continued to be an authorized co-signing officer on the Company's bank account from February 15, 2007 until June 21, 2007. The other authorized co-signing officers on the Company's bank account during this period were the Company's sole employees, Garnet Harter and Lucie Doolaege, family members of Alvin Harter.
Mr. Harter was formally removed as a co-signing authority on the Company's bank account on June 21, 2007.
Although Mr. Harter remained a co-signing officer on the Company's bank account during this period, subsequent to his resignation he was not at any time authorized by the Board of Directors to determine whether any cheques could be issued by the Company. This responsibility was held by Garnet Harter. The new independent directors of the Company have reviewed all expenditures made by the Company from February 15, 2007 to June 21, 2007 and no inappropriate payments appear to have been made.
The Company continues to require two signatures on each cheque issued by the Company. The authorized signatories are Garnet Harter, Leonard Trump and Lucie Doolaege.
b. Private Placement with SRLP
---------------------------
On February 22, 2007, the Company issued a press release announcing the closing of a private placement funding arrangement with SRLP. Per the request of the Exchange, the Company wishes to clarify the terms of this transaction:
Under this transaction which was effected pursuant to the terms of a Funding and Revenue Sharing Agreement, completed as of December 31, 2006, SRLP agreed to reimburse the Company for previously incurred expenses, up to a value of $3,500,000 (the "Solid Expenses"), in exchange for which SRLP acquired a 10% share (the "SRLP Revenue Allocation") of the Company's gross revenues for a period of up to a maximum of 10 years.
Under certain conditions, both SRLP and the Company can terminate the SRLP Revenue Allocation, which will require the Company to make a settlement payment to SRLP. This payment can be made, at the option of the Company, by certified cheque or by the issuance of common shares, or a combination of cheque and common shares. The price at which these common shares would be issued will be equal to the market value of the common shares at the time the SRLP Agreement is terminated.
At the present time, the Company has not made any allocations or payments under the SRLP Revenue Allocation, nor has it issued any common shares under this arrangement. The Company has, however, applied to the Exchange for conditional listing approval of the common shares issuable to SRLP in the event the Company elects to make the settlement payment, in whole or in part, in common shares of the Company. The maximum number of common shares that may be issued under the SRLP arrangement is 10% of the number of issued and outstanding common shares of the Company at the time the settlement payment is made.
SRLP reimbursed the Company for the Solid Expenses through the payment of cash proceeds of $874,800 and the assignment to the Company of $2,624,400 in promissory notes. The proceeds represented by the promissory notes are to be paid to Solid commencing in 2011 and ending in 2015. However, as the repayment of the promissory notes is tied to the Company's gross revenues, and the Company is in a pre-revenue phase of operations, the Company's auditors have designated these notes as "impaired" or unlikely to be collected.
SRLP is arm's length to Solid and its directors and officers. RDF Capital Management Inc., a company controlled by R. Derek Frost, received $175,000 (representing 5% of the gross proceeds) from Solid as compensation and reimbursement of expenses for its role in introducing the opportunity to Solid. Mr. Frost is currently a Director of Solid but was not at the time of the transaction.
The net cash proceeds received by the Company from the SRLP transaction totaled $350,000. These proceeds were allocated to general and administrative expenses such as salaries, consulting fees, legal and accounting fees, etc.
c. Compensation of Directors and Officers Since January 1, 2006
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The Company failed to comply with the disclosure requirements set out in Section 16.7(a)(ii) of TSXV Policy 3.1 as it did not disclose the amount of compensation paid to each of the officers and directors of the Company, on a quarterly basis. This disclosure was only presented on an aggregate basis in two categories, personnel costs and consulting fees, in the Company's interim and annual MD&A. Further, in its annual disclosure of executive compensation the Company disclosed only the salary paid, and stock options granted, to Alvin Harter and Imran Ally, the former Controller of the Company who held that position from June 2004 to April 2006.
Per the request of the Exchange, the Company wishes to clarify the remuneration and expense reimbursements paid to its current directors, officers, employees and consultants from January 1, 2006 to September 1, 2007. The following table does not set out stock based compensation, which disclosure is contained in the Company's annual management information circular.
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Remuneration/
Consulting Fees
from Jan. 1,
2006 to Additional
Name and Title Sept. 1, Compensation
or Position 2007 (18 month (Medical Expenses
with the Company period) benefits) Reimbursement Total
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Garnet Harter
(Director, Interim
President/CEO, CFO
and Employee)
(see Note 1) $ 86,138 $ 1,214 $ 351 $ 87,703
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Harry McKinders
(Director and
former Director
of Investor
Relations) and
McKinders Financial
Corp. (see Notes Paid: $ 31,352
1 and 3) Arrears: $ 58,500 Nil $ 3,426 $ 93,278
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Leonard Trump
(Director) (see Paid: $ 22,124
Notes 1 and 2) Arrears: $ 15,000 Nil $ 2,060 $ 39,184
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R. Derek Frost
(Director) Nil Nil $ 318 $ 318
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Gary Kissack
(Director) Nil Nil Nil Nil
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Lucie Doolaege
(Employee)
(see Note 1) $ 71,000 $ 1,151 $ 6,755 $ 78,906
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Alvin Harter
(Consultant and
former Director,
President,
CEO and CFO),
and Harter
Mining
Consultants
(see Note 1) $210,000 $ 1,013 $ 7,504 $ 218,517
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Notes:
(1) The amounts under the "Expenses Reimbursement" column in the table
above are primarily for reimbursement of travel and entertainment
expenses incurred by the individual on the Company's behalf.
(2) The Consulting Agreement with Mr. Trump related to investor
relations services he performed for the Company from May 2006 until
the agreement was terminated in March 2007.
(3) The Consulting Agreement with McKinders Financial Corp. related to
investor relations services Mr. McKinders performed as Director of
Investor Relations of the Company from July 1996. Mr. McKinders
resigned from this position on November 22, 2007 and the agreement
was terminated on that date.
3. Enhanced Corporate Governance Procedures
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The Exchange identified that payments to Related Parties were being
approved without sufficient supporting documentation being in existence.
Further, it was identified that no written procedures were in place to deal
with any conflicts of interest that arose when the persons approving payments
were not at arm's length to the recipients.
At the request of the Exchange, the Company has implemented the following
formal internal control procedures and corporate governance procedures and
policies:
- Compensation and Governance Committee Charter;
- Disclosure, Confidentiality & Trading Policy;
- Whistleblower Policy;
- Code of Business Conduct and Ethics;
- Nominating Committee Charter;
- Mandate of the Board of Directors;
- Position descriptions for the Board Chair; CEO, and CFO of the
Company.
Under the Compensation and Governance Committee Charter, no payments may be completed to Related Parties until the following has been satisfied:
- all Related Party Transactions shall only be conducted pursuant to
written agreements between the Company and the Related Party;
- all such written agreements shall be reviewed and approved by the
Compensation and Governance Committee;
- prior to the Company making any payment to a Related Party in
respect to a Related Party Transaction or for expense
re-imbursement, the Related Party shall submit an invoice to the
Committee which substantiates the services provided or the expense
incurred and provides a detailed calculation of the amount owing for
the services rendered. In addition, such invoice shall contain all
such additional information as is contemplated in the written
agreement between the Related Party and the Company;
- the Company shall not make any payment pursuant to any written
agreement with a Related Party or pursuant to an invoice issued by a
Related Party or reimburse a Related Party for an expense incurred
until the Compensation and Governance Committee is satisfied that
the services rendered were in accordance with the written agreement
with the Related Party (if applicable), furthered the legitimate
business activities of the Company and that the amount payable with
respect to such services or such expense are reasonable in the
circumstances;
- in the event that a request for expense reimbursement is made by a
member of the Compensation and Governance Committee, such member
shall not be entitled to participate in the approval process and the
remaining two members must unanimously agree, in accordance with the
above provisions, that the expense should be reimbursed.
Copies of these policies and procedures may be reviewed at www.sedar.com:
The Audit Committee will continue to comprise R. Derek Frost (Chairman), Leonard Trump and Harry McKinders. The newly formed Compensation and Governance Committee consists of Gary F. Kissack (Chairman), R. Derek Frost and Leonard Trump, and the newly formed Nominating Committee consists of Gary F. Kissack (Chairman), Leonard Trump and Garnet Harter.
Meetings of Shareholders
The Board of Directors has set March 5, 2008 as the date of the next meeting of shareholders of the Company. This will be an annual general and special meeting of shareholders of the Company. The Board of Directors intends to hold the annual general meeting of shareholders in respect of the fiscal year ending December 31, 2007 by no later than June 30, 2008, in order to hold annual meetings of shareholders within more customary timelines for public companies.
"We are pleased that trading of Solid's common shares on the TSXV will resume on December 20th", said Garnet Harter, interim President and CEO of the Company. "Over the last number of months we have brought on new directors and worked diligently with our Board, our counsel and the TSXV to address the issues they raised in order for our stock to resume trading."
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Certain statements contained in this press release, including statements which are related to exploration activity and future prospects and profitability and which may contain words such as "could", "should", "expect", "believe", "will" and similar expressions and statements relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances and/or achievements of Solid to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include fluctuations in the market conditions and prices of tantalum, lithium, tin, silver and other metals and related products and services; competition; political and economic conditions in countries in which Solid does business; changes in laws and regulations, including environmental regulations, to which Solid is subject, and other factors which are described in further detail in Solid's filings with the Canadian Securities Regulators.
The TSX Venture Exchange has not reviewed or approved this press release,
and the Exchange does not accept responsibility for the adequacy or the
accuracy of this release.