IN THE
MATTER OF THE SECURITIES LEGISLATION OF
ONTARIO, ALBERTA, BRITISH COLUMBIA, MANITOBA,
NEW BRUNSWICK, NEWFOUNDLAND, NOVA SCOTIA,
PRINCE EDWARD ISLAND, QUEBEC AND SASKATCHEWAN
AND
IN THE
MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR
EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE
MATTER OF
CANADIAN IMPERIAL BANK OF COMMERCE AND
CIBC EMPLOYEE PRIVATE EQUITY FUND (CANADA) II, L.P.
MRRS DECISION DOCUMENT
WHEREAS the
local securities
regulatory authority or regulator (the "Decision Maker") in each of Ontario,
Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland, Nova Scotia, Prince
Edward Island, Qu�bec and Saskatchewan (the "Jurisdictions") has received an
application from Canadian Imperial Bank of Commerce ("CIBC") for a decision
under the securities legislation of the Jurisdictions (the "Legislation") that
the requirements contained in the Legislation to be registered to trade in a security (the
"Registration Requirement") and to file a preliminary prospectus and a
prospectus (the "Prospectus Requirement") shall not apply to the proposed
offering (the "Offering") of limited partnership interests (the
"Interests") by CIBC Employee Private Equity Fund (Canada) II, L.P. (the
"Fund"), the general partner (the "General Partner") of which will not
be an affiliate of CIBC, to eligible employees of CIBC and its affiliates (the "CIBC
Group");
AND WHEREAS under
the Mutual Reliance Review System for Exemptive Relief Applications (the "System"),
the Ontario Securities Commission is the principal regulator for this
application;
AND WHEREAS
CIBC has represented to the Decision Makers that:
1. CIBC is a Canadian
chartered bank under Schedule I of the Bank Act (Canada).
2. The General Partner will
be either a company existing or to be incorporated under the Companies Act (Nova
Scotia). The shareholders of the General Partner will be three individuals who
are not
associated with or employed by CIBC Group. The registered office
of the
General Partner will be in Halifax, Nova Scotia.
3. The General Partner is
being organized outside of the CIBC Group in order to deal with certain technical
requirements and to mirror the fund structure that the CIBC Group will adopt
in the United
States.
4. The purpose of the Fund is
to permit certain employees of CIBC Group to invest their own funds on a parallel
basis with investments made by CIBC Group. Employee co-investment funds of this
nature are
widespread in the banking and investment banking industries in North America
and Europe, and CIBC has determined that it needs to provide comparable arrangements
in order to
remain competitive in the banking and investment banking business in attracting
and
retaining key employees.
5. The Fund will be
established as a limited partnership under the Limited Partnerships Act (Ontario)
pursuant to a limited partnership agreement (the "Partnership Agreement").
The Fund will not be and has no present intention of becoming a reporting issuer
in any
province under the Legislation. The principal place of business of the Fund will
be in Toronto, Ontario. The Fund will be authorized to issue Interests, which
will be
non-redeemable and subject to restrictions on transfer contained in the Partnership
Agreement. Interests will represent an equal, undivided interest in the net assets
of the
Fund.
6. The Fund will be an "in-house" investment vehicle, sponsored and
established by CIBC Group. The Fund will invest in three types of investments:
(i) investments made by the Trimaran Fund II,
L.P. ("Trimaran II") in equity securities and debt or other securities
providing an equity-like return of a diverse portfolio of companies across various
industries (the
"Trimaran Investments"); (ii) investments in private equity funds managed
by
sponsors not affiliated with CIBC Group ("Fund of Funds Investments");
and (iii) investments in certain types of merchant banking and venture capital
investments to be
made by CIBC Group on a global basis (the "Merchant Banking Investments",
and together with the Trimaran Investments and the Fund of Funds Investments,
the
"Investments"). It is anticipated that the Fund will invest on a side-by-side
basis with CIBC Group in the Investments. Participants will have the ability
to allocate their contribution amongst the three categories of Investments by
electing an allocation
percentage chosen from a number of (probably four to six) available allocation
percentages.
7. Employees of CIBC Group
(including, specifically, CIBC World Markets Inc.) who are Vice-Presidents, Directors,
Senior Vice-Presidents, Executive Vice-Presidents, Senior Executive Vice-Presidents,
Executive Directors and Managing Directors, as well as select retail brokers
employed by CIBC World Markets Inc. and registered under the appropriate category
of registration in
the Legislation, (collectively, the "Eligible Employees") will be invited
to
participate in the Fund, subject to meeting certain internal CIBC Group performance
criteria.
8. Participation in the Fund
is entirely voluntary and a decision by an Eligible Employee whether or not to
invest in the Fund will in no way affect the employment relationship between
the Eligible Employee
and CIBC Group.
9. It is expected that
approximately 480 employees in Canada will be offered the opportunity to participate
in the Offering, of which approximately 70% reside in the Province of Ontario
and no more
than approximately 9% are resident in any other single province.
10. An Eligible Employee who
is invited and agrees to participate in the Fund will be subject to certain minimum
and maximum participation amounts, subject to the discretion of management of
CIBC. Amounts
greater than the prescribed maximum amount (as finally determined) must be approved
by
management of CIBC and may be adjusted to appropriate levels.
11. The Interests will be
offered under a confidential offering memorandum which will provide Eligible
Employees with statutory and/or contractual rights of rescission or rights to
damages (or both).
12. Unless varied, the
termination date for the Fund will be 10 years after the closing of the Fund,
subject to extension if necessary to satisfy the Fund's obligations with respect
to Investments.
13. In the event of an
Eligible Employee's termination of employment with CIBC Group, and as may be
otherwise permitted by the General Partner, an entity within CIBC Group or other
Eligible Employees
may purchase or otherwise assume the Interests of an Eligible Employee in accordance
with the applicable provisions of the Fund's Partnership Agreement (which will
set out at a
mechanism for the purchase and sale of Interests).
14. Interests will not be
transferable except with the express consent of the General Partner and then
only to or
amongst permitted transferees as follows (each, a "Permitted Transferee"):
(i) other Eligible Employees,
(ii) an entity within CIBC Group,
(iii) the spouse, child, child's spouse, parents, siblings or grandchild of an Eligible Employee (the "Family Members"); or
(iv) a trust, partnership, limited liability company or other entity (the "Eligible Employee's Entity") formed for investment by or for the benefit of a Family Member or such Eligible Employee.
AND WHEREAS under
the System, this MRRS Decision Document evidences the decision of each Decision
Maker
(collectively, the "Decision");
AND WHEREAS
each of the Decision Makers is satisfied that the test contained in the Legislation that
provides the Decision Maker with the jurisdiction to make the Decision has been met;
THE DECISION
of the Decision Makers pursuant to the Legislation is that the Registration and Prospectus
Requirements shall not apply to trades in Interests by the Fund to Eligible Employees
provided that:
(i) Eligible Employees are not induced to purchase Interests by expectation of employment or continued employment and each Eligible Employee's participation in the Fund is voluntary;
(ii) a copy of the offering memorandum is provided to each Eligible Employee prior to making a decision to invest in the Fund, and is delivered to the Decision Makers in each of the Jurisdictions; and
(iii) the first trade in Interests to a person or entity that is not a Permitted Transferee shall be deemed to be a distribution or a primary distribution to the public.
July 6, 2001.
"Paul M. Moore" | "J. A. Geller" |
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - trade in units of limited partnership formed by investment dealer to certain qualified employees, officers and directors who meet certain suitability standards not subject to dealer registration and prospectus requirements of the Legislation, subject to certain conditions including the delivery of an offering memorandum.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 53, 74(1).