Mutual Reliance Review System for Exemptive Relief Applications - the first trade byformer employees and trades by the plan broker on behalf of former employees or thelegal representatives of employees in shares acquired upon the exercise of optionsgranted under an employee option plan shall not be subject to section 25 of the Act,subject to certain conditions.
Applicable Ontario Statutes
Securities Act, R.S.O. 1990, c.S.5., as am., ss. 25, 74(1)
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
MRRS DECISION DOCUMENT
WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebecand Nova Scotia (the "Jurisdictions") has received an application from Motorola, Inc.("Motorola") for a decision pursuant to the securities legislation of the Jurisdictions (the"Legislation") that certain trades in shares of Common Stock of Motorola (the "Shares")made in connection with the Motorola Incentive Plan of 1998, as such plan may beamended, supplemented, superseded or re-enacted from time to time (the "Plan"),including Shares to be acquired upon the automatic reinvestment of dividends payable byMotorola (the "Dividend Reinvestments"):
(i) shall not be subject to the requirements contained in the Legislation to beregistered to trade in a security (the "Registration Requirements") and to file andobtain a receipt for a preliminary prospectus and a prospectus (the "ProspectusRequirements") (collectively, the "Registration and Prospectus Requirements");and
(ii) shall not be subject to the requirements contained in the Legislation pertaining tobids to acquire or redeem securities of an issuer made by an issuer (the "Issuer BidRequirements");
AND WHEREAS pursuant to the Mutual Reliance System for Exemptive ReliefApplications (the "System"), the Ontario Securities Commission is the principal regulatorfor this application;
AND WHEREAS Motorola has represented to the Decision Makers as follows:
1. Motorola is a corporation incorporated under the laws of the state of Delaware, isnot a reporting issuer under the Legislation and has no present intention ofbecoming a reporting issuer under the Legislation.
2. The share capital of Motorola as at October 26, 1999 consisted of 1,400,000,000Shares and 500,000 shares of Preferred Stock, of which 609,411,105 Shares andno shares of Preferred Stock were issued and outstanding on such date.3.
3. Motorola is subject to the requirements of the Securities Exchange Act of 1934, asamended, of the United States, and the Shares are listed and posted for trading onThe New York Stock Exchange, Chicago Stock Exchange, Tokyo Stock Exchange,and the London Stock Exchange Limited.
4. The purpose of the Plan is to promote the interests of Motorola and its stockholdersby providing employees (the "Employees") of Motorola and its Subsidiaries (asdefined under the Plan) with the opportunity, through stock ownership, to increasetheir proprietary interest in Motorola and their personal interest in its continuedsuccess and progress.
5. Under the Plan, eligible Employees are granted options ("Options") to acquireShares, which Options, except in limited circumstances, are non-transferable, otherthan by will (or other death beneficiary designation) or the law of descent anddistribution.
6. Motorola proposes to use the services of an agent (the "Plan Broker") in connectionwith the Plan and the Dividend Reinvestments, currently Salomon Smith BarneyInc., which is registered as a broker under applicable legislation in the UnitedStates.
7. The Plan Broker will administer the operation of the Plan, including the exercise ofOptions by Employees, former Employees or the legal representatives ofEmployees or former Employees, as the case may be (collectively, the"Participants"), and the sale by Participants of any Shares acquired under the Plan,including Shares acquired upon the Dividend Reinvestments.
8. Shares issued to the Plan Broker on behalf of Participants upon the exercise ofOptions granted under the Plan will be authorized but unissued Shares or issuedShares reacquired by Motorola.
9. Shares purchased by the Plan Broker on behalf of Participants pursuant to theDividend Reinvestments will be limited to Shares purchased in the open marketthrough the facilities of a stock exchange outside of Canada.
10. Payment for Shares purchased upon the exercise of Options granted under thePlan may be made in cash, by the transfer to Motorola of Shares owned by theoptionee (a "Share Payment") or a combination of these payment methods.
11. As at November 7, 1999, there were approximately 90,000 Employees eligible toparticipate in the Plan, of which there were 217 Employees in British Columbia, 30Employees in Alberta, 1 Employee in Manitoba, 1 Employee in Saskatchewan, 624Employees in Ontario, 92 Employees in Quebec and 12 Employees in Nova Scotia.
12. As at October 26, 1999, the aggregate number of Shares held by holders of recordwith addresses in any of the Jurisdictions represented less than 1% of the totalnumber of outstanding Shares, and the aggregate number of holders of record withaddresses in any of the Jurisdictions was less than 1% of the total number ofholders of record.
13. Employees will not be induced to participate in the Plan by expectation ofemployment or continued employment.
14. All disclosure material relating to Motorola that Motorola is required to file with theSecurities and Exchange Commission in the United States will be provided or madeavailable upon request to the Canadian Participants who acquire Shares upon theexercise of Options granted under the Plan, at the same time, and in the samemanner, as such materials are provided or made available upon request to holdersof Shares who are resident in the United States.
15. An exemption from the Registration and Prospectus Requirements is not availablein all of the Jurisdictions for the issuance of Shares to the Plan Broker on behalf ofCanadian Participants upon the exercise of Options granted under the Plan, andan exemption from the Registration Requirements is not available in all of theJurisdictions for the purchase of Shares by the Plan Broker on behalf of CanadianParticipants pursuant to the Dividend Reinvestments.
16. An exemption from the Prospectus Requirements is not available in all of theJurisdictions for trades by Canadian Participants in Shares acquired upon theexercise of Options granted under the Plan, and an exemption from the RegistrationRequirements is not available in all of the Jurisdictions for trades by CanadianParticipants in Shares acquired upon the exercise of Options granted under thePlan or pursuant to the Dividend Reinvestments through the Plan Broker.
17. The purchase of Shares from a Canadian Participant by Motorola in connection witha Share Payment will constitute an "issuer bid" as defined under the Legislation ofeach of the Jurisdictions. Exemptions from the issuer bid provisions of theLegislation may not be available for such purchases, since the formula under thePlan for establishing market value will not necessarily establish a price that is equalto or less than market value as prescribed under the Legislation. Furthermore,such exemptions are not available for purchases from legal representatives ofCanadian Employees or former Canadian Employees.
18. Because there is no market for the Shares in Canada and none is expected todevelop, any resale of the Shares acquired under the Plan will be effected throughthe facilities of, and in accordance with the rules applicable to, a stock exchangeor market outside of Canada on which the Shares may be listed or quoted fortrading.
AND WHEREAS pursuant to the System, this MRRS Decision Document evidencesthe decision of each Decision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;
THE DECISION of the Decision Makers pursuant to the Legislation is that:
1. the Registration and Prospectus Requirements shall not apply to:
(i) the issuance by Motorola of Shares to the Plan Broker on behalf of CanadianParticipants upon the exercise of Options granted under the Plan,
(ii) the purchase of Shares through the facilities of a stock exchange outside ofCanada by the Plan Broker on behalf of Canadian Participants pursuant tothe Dividend Reinvestments, or
(iii) the activities of the Plan Broker in connection with the foregoing,
provided that the first trade in the Shares acquired in the manner described inparagraph 1(i), above, shall be subject to the Prospectus Requirements;
2. the first trade in Shares acquired by a Canadian Participant upon the exercise ofOptions granted under the Plan shall not be subject to the ProspectusRequirements, and the Registration Requirements shall not apply to the first tradein Shares acquired upon the exercise of Options granted under the Plan orpursuant to the Dividend Reinvestments where the first trade is made by aCanadian Participant through the Plan Broker, provided that:
(i) at the time of the trade, Motorola is not a reporting issuer in any of theJurisdictions;
(ii) such first trade is effected through the facilities of, and in accordance withthe rules applicable to, a stock exchange outside of Canada on which theShares may be listed or quoted for trading, the Nasdaq National Market orThe Stock Exchange Automated Quotation System of the London StockExchange Limited; and
3. the Issuer Bid Requirements of the Legislation shall not apply to the purchase ofShares from a Canadian Participant by Motorola in connection with a SharePayment.
March 20th, 2000.
"Howard I. Wetston" "Theresa McLeod"