IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, ONTARIO, NEW BRUNSWICK AND NOVA SCOTIA
AND
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF
SOLECTRON CORPORATION
MRRS DECISION DOCUMENT
WHEREAS the local securities
regulatory authority or regulator (the "Decision Maker") in each of British
Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick and Nova Scotia (the
"Jurisdictions") has received an application from Solectron Corporation
("Solectron") for a decision pursuant to the securities legislation of the
Jurisdictions (the "Legislation") that:
(i) the requirement contained in the Legislation to be registered to trade in
a security
(the "Registration Requirement") and the requirement to file a prospectus and
obtain a receipt therefor (the "Prospectus Requirement") (the Registration
Requirement and the Prospectus Requirement are, collectively, the "Registration and
Prospectus Requirements") will not apply to certain trades in securities of Solectron
made in connection with Solectron's 2002 Stock Plan (the "SOP") and Employee
Stock Purchase Plan for Non-U.S. Employees (the "ESPP") (the SOP and the ESPP
are, collectively, the "Plans");
(ii) the Registration and Prospectus Requirements will not apply to first trades of Shares
(as defined below) acquired under the Plans provided that the conditions in subsection
2.14(1) of Multilateral Instrument 45-102 - Resale of Securities, other than the
requirements of paragraph 2.14(1)(a), are satisfied; and
(iii) the requirements contained in the Legislation relating to the delivery
of an offer and issuer bid circular and any notices of change or variation thereto,
minimum deposit
periods and withdrawal rights, take-up and payment for securities tendered to
an issuer bid, disclosure, restrictions upon purchases of securities, financing,
identical
consideration, collateral benefits, together with the requirement to file a reporting
form
within ten (10) days of an exempt issuer bid and pay a related fee (the "Issuer Bid
Requirements") will not apply to certain acquisitions by Solectron of Shares
pursuant
to the Plans in each of the Jurisdictions;
AND WHEREAS pursuant
to the Mutual
Reliance Review System for Exemptive Relief Applications (the "System"),
the
Ontario Securities Commission is the principal regulator for this application;
AND WHEREAS, unless otherwise defined, the terms
herein have the meaning set out in National Instrument 14-101 Definitions, or
in Qu�bec, Commission Notice 14-101;
AND WHEREAS Solectron has represented to the Decision
Makers as follows:
1. Solectron is a corporation in good standing incorporated under the laws of the State of
Delaware;
2. Solectron and affiliates of Solectron (the "Solectron Affiliates") (Solectron
and the Solectron Affiliates are, collectively, the "Solectron Companies")
are
providers of electronics manufacturing and supply-chain management services;
3. Solectron is registered with the SEC in the U.S. under the U.S. Securities
Exchange Act
of 1934 (the "Exchange Act") and is not exempt from the reporting requirements
of the Exchange Act;
4. Solectron, C-MAC Industries Inc. ("C-MAC") and 3924548 Canada Inc.
entered into a combination agreement dated August 8, 2001, as amended on September
7, 2001, among
Solectron, 3942163 Canada Inc., 3924548 Canada Inc. and C-MAC providing for the
combination of Solectron and C-MAC to be effected by way of an arrangement under
section
192 of the Canada Business Corporations Act (the "C-MAC Transaction").
The completion of the C-MAC Transaction was announced on December 3, 2001;
5. As a result of the C-MAC Transaction, Solectron became a reporting issuer in British
Columbia, Saskatchewan and Quebec on December 3, 2001 and has remained a reporting issuer
in British Columbia, Saskatchewan and Quebec since that date. Solectron is not a reporting
issuer in any of the other Jurisdictions and has no present intention of becoming a
reporting issuer in any of the other Jurisdictions;
6. The authorized share capital of Solectron consists of 1,600,000,000 shares
of common
stock ("Shares"), and 1,200,000 shares of preferred stock ("Preferred
Shares"). As of July 16, 2002, there were 823,868,744 Shares and 1 Preferred
Share
issued and outstanding;
7. The Shares are listed for trading on the New York Stock Exchange (the "NYSE")
under the ticker symbol 'SLR';
8. Under the SOP, options on Shares ("Options") (Shares and Options are,
collectively, "Awards") may be issued to employees ("Employees"),
non-employee directors ("Directors") and consultants ("Consultants")
(Employees, Directors and Consultants are, collectively, "Participants")
of the
Solectron Companies;
9. Under the ESPP, Employees are offered an opportunity to purchase Shares by means of
applying accumulated payroll deductions at a discounted price determined in accordance
with the terms of the ESPP;
10. The purpose of the SOP is to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to service
providers, and to promote the success of Solectron's business;
11. The purpose of the ESPP is to provide Employees of the Solectron Companies outside the
United States with an opportunity to purchase Shares through accumulated payroll
deductions;
12. Solectron uses the services of agents/brokers (the "Agent(s)") in connection
with the operation of the Plans. Salomon Smith Barney Inc. ("SSB")
has been appointed as an Agent under the Plans. SSB is not registered to conduct
retail trades in
securities in any of the Jurisdictions. SSB is registered to conduct retail trades
under applicable U.S. securities or banking legislation. Any other Agent appointed
in addition
to, or in replacement of, SSB will be registered to conduct retail trades in
the Jurisdictions or a corporation registered to conduct retail trades under
applicable U.S.
securities or banking legislation and will be authorized by Solectron to provide
services
as an Agent under the Plans;
13. The role of the Agent may include (a) disseminating information and materials to
Participants in connection with the Plans; (b) assisting with the administration of and
general record keeping for the Plans; (c) holding Shares on behalf of Participants, Former
Participants (as defined below) and Permitted Transferees (as defined below) in limited
purpose brokerage accounts; (d) facilitating Option exercises (including cashless
exercises or Stock Swap Exercises (as defined below)) under the Plans; (e) facilitating
the payment of withholding taxes, if any, by cash or the tendering or withholding of
Shares; (f) facilitating the reacquisition of Awards under the terms of the Plans; and (g)
facilitating the resale of Shares issued in connection with the Plans;
14. Subject to adjustments as provided for in the ESPP and an increase made in accordance
with U.S. law, the maximum number of Shares which shall be made available for sale under
the ESPP is 19,200,000 Shares, less the number of Shares issued under Solectron's Employee
Stock Purchase Plan for U.S. Employees;
15. Subject to adjustments as provided for in the SOP, and an increase made in
accordance with U.S. law, the maximum number of Shares which shall be made available
for sale under
the SOP is 35,000,000 Shares plus (a) any Shares which have been reserved but
not issued
under the Solectron's 1992 Stock Option Plan (the "1992 Plan") as of
the date of shareholder approval of the SOP and (b) any Shares returned to the
1992 Plan as a result
of termination of Options or repurchase of Shares issued under the 1992 Plan;
16. All necessary securities filings have been made in the U.S. in order to offer the
Plans to Participants resident in the U.S;
17. As of May 31, 2002, there were 586 persons in Canada eligible to be granted Options
under the SOP: 16 persons resident in British Colombia, 101 persons resident in Alberta,
373 persons resident in Ontario, 24 persons resident in Manitoba, 1 person resident in
Saskatchewan, 10 persons resident in Nova Scotia and 61 persons resident in Quebec. There
were 5333 persons in Canada eligible to participate in the ESPP: 1011 persons resident in
British Columbia, 347 persons resident in Alberta, 2904 persons resident in Ontario, 160
persons resident in Manitoba, 1 person resident in Saskatchewan, 871 persons resident in
Nova Scotia, 1 person resident in New Brunswick and 61 persons resident in Quebec;
18. Employees who participate in the Plans will not be induced to purchase Shares or to
exercise Options by expectation of employment or continued employment;
19. Officers of the Solectron Companies who participate in the Plans will not be induced
to purchase Shares or to exercise Options by expectation of appointment or employment or
continued appointment or employment as an officer;
20. Consultants who participate in the SOP will not be induced to purchase shares or to
exercise Options by expectation of the individual Consultant, the Consultant's company or
the Consultant's partnership being engaged or continuing to be engaged as a Consultant;
21. The Plans are administered by a committee (the "Committee") appointed by the
board of directors of Solectron (the "Board");
22. It is anticipated that Consultants (as used herein, "consultant" includes a
"consultant company" as defined in the OSC Rule 45-503 - Trades to Employees,
Executives and Consultants) who will be granted Options under the SOP, to the extent
permitted, will: (a) provide on a bona fide basis technical, business, management
or other services to the Solectron Companies (other than services relating to the sale of
securities or promotional/investor relations services); (b) provide consulting services to
the Solectron Companies under a written contract; (c) have a relationship with the
Solectron Companies that will permit them to be knowledgeable about the business affairs
of the Solectron Companies; and (d) will spend a significant amount of time and attention
on the affairs and business of one or more of the Solectron Companies;
23. Share purchase rights issued under the ESPP are not transferable;
24. Unless determined otherwise by the Committee an Option granted under the SOP may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of intestacy and may be exercised, during the lifetime of the
optionee, only by the optionee. If the Committee makes an Option transferable, such Option
shall contain such additional terms and conditions as the Committee deems appropriate;
25. Following the termination of a Participant's relationship with the Solectron
Companies for reasons of disability, retirement, termination, change of control
or any other reason
(such Participants are "Former Participants"), and where Awards have been
transferred by will or pursuant to a beneficiary designation or the laws of intestacy or
otherwise on the death of a Participant (beneficiaries of such Awards are "Permitted
Transferees"), the Former Participants and Permitted Transferees will continue to
have rights in respect of the Plans ("Post-Termination Rights");
26. Post-Termination Rights may include, among other things, (a) the right to exercise
Options for a period determined in accordance with the SOP; (b) the right to receive
payment of accumulated payroll deductions in his or her account, without interest under
the ESPP; and (c) the right to sell Shares acquired under the Plans through the Agent;
27. Post-Termination Rights will only be available if the Awards or rights to which they
relate were granted to the Participant while the Participant was a Participant and no new
Awards or rights will be granted to Former Participants under the Plans;
28. Among other payment methods, the SOP provides that payment for Shares acquired
pursuant to the SOP may be made: (a) in cash; (b) by the surrender of Shares
owned by the
Participant to the Solectron for cancellation ("Stock-Swap Exercises")
or to the Agent for resale; (c) by the retention of a number of Shares by Solectron
from the total
number of Shares into which the Option is exercised; or (d) by a combination
of the
foregoing;
29. Options may be forfeited by SOP Participants to the extent such Options are
not exercised within the time period prescribed under the SOP or where the Participant's
relationship with Solectron is terminated or where Options are cancelled on a
merger or
sale of assets or on the dissolution or liquidation of Solectron ("Option
Cancellations");
30. Solectron shall have the right to deduct applicable taxes from any payment
under the Plans by withholding, at the time of delivery or vesting of cash or
Shares under the
Plans, an appropriate amount of cash or Shares ("Share Withholding Exercises")
(collectively, Share Withholding Exercises, Stock Swap Exercises and Option Cancellations
are "Award Acquisitions") or a combination thereof for a payment of
taxes required by law or to take such other action as may be necessary in the
opinion of
Solectron or the Committee to satisfy all obligations for the withholding of
such taxes;
31. The annual reports, proxy materials and other materials Solectron is required to file
with the SEC will be provided to Participants resident in Canada at the same time and in
the same manner as the documents are provided or made available to U.S. Participants;
32. Shareholders resident in Canada do not own, directly or indirectly, more than 10% of
the issued and outstanding Shares and do not represent in number more than 10% of the
shareholders of Solectron.
33. If at any time during the currency of the Plans shareholders resident in Canada hold,
in aggregate, greater than 10% of the total number of issued and outstanding Shares or if
such shareholders constitute more than 10% of all shareholders of Solectron, Solectron
will apply to the relevant Jurisdiction for an order with respect to further trades to and
by Participants, Former Participants and Permitted Transferees in that Jurisdiction in
respect of Shares acquired under the Plans;
34. Participants, Former Participants or Permitted Transferees may exercise Options and
sell Shares acquired under the Plans through an Agent;
35. Because there is no market for the Shares in Canada and none is expected to develop,
any resale of the Shares acquired under the Plans will be effected through the facilities
of, and in accordance with the rules and laws applicable to, a stock exchange or organized
market outside of Canada on which the Shares may be listed or quoted for trading;
36. The Legislation of certain of the Jurisdictions does not contain exemptions from the
Prospectus and Registration Requirements for Award exercises by Participants, Former
Participants or Permitted Transferees through the Agent where the Agent is not a
registrant;
37. Where the Agent sells Shares acquired under the Plans on behalf of Participants,
Former Participants or Permitted Transferees, the Participants, Former Participants,
Permitted Transferees or the Agent may not be able to rely on the exemptions from the
Prospectus and Registration Requirements contained in the Legislation;
38. The acquisition by Solectron of Shares pursuant to the Award Acquisitions
may be an issuer bid as defined in the Legislation. The exemptions in the Legislation
from the
Issuer Bid Requirements may not be available for these acquisitions by Solectron
of its Shares from Participants, Former Participants or Permitted Transferees
in accordance with
the terms of the Plans, since these acquisitions may occur at a price that is
not
calculated in accordance with the "market price," as that term is defined
in the Legislation and may be made from persons other than Participants or former
Participants;
AND WHEREAS pursuant to the System, this 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:
(a) the Registration and Prospectus Requirements will not apply to certain trades or
distributions of Awards made in connection with the Plans, including trades or
distributions involving the Solectron Companies, the Agents, Participants, Former
Participants, and Permitted Transferees, provided that the first trade in any securities
acquired through the Plans pursuant to this Decision will be deemed a distribution, or a
primary distribution to the public under the Legislation;
(b) the first trade by Participants, Former Participants or Permitted Transferees in
Shares acquired pursuant to this Decision, including first trades effected through the
Agent, shall not be subject to the Registration and Prospectus Requirements, provided that
the conditions in subsection 2.14(1) of Multilateral Instrument 45-102 - Resale of
Securities, other than the requirements of paragraph 2.14(1)(a), are satisfied; and
(c) the Issuer Bid Requirements shall not apply to the acquisition by Solectron of Shares
from Participants, Former Participants or Permitted Transferees in connection with the
Plans provided such acquisitions are made in accordance with the provisions of the Plans.
DATED November 8th, 2002.
Paul M. Moore | Harold P. Hands |
Headnote
MRRS registration relief for trades by Participants, Former Participants and
Permitted Transferees of securities acquired under employee incentive plans issuer
bid relief for foreign issuer in connect with acquisition of shares under employee
incentive plans.
Applicable Ontario Stautory Provisions
Securities Act, R.S.O. 1990, c.S.5. as am.
Applicable Ontario Rule
OSC Rule 45-503 Trades to Employees, Executives and Consultants
Applicable Instrument
Multilateral Instrument 45-102 Resale of Securities