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Oracle Corporation - MRRS Decision
INTHE MATTER OF
THESECURITIES LEGISLATION OF ONTARIO,
BRITISHCOLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA,
NEWBRUNSWICK AND NOVA SCOTIA
AND
INTHE MATTER OF
THEMUTUAL RELIANCE REVIEW SYSTEM
FOREXEMPTIVE RELIEF APPLICATIONS
AND
INTHE MATTER Of
ORACLECORPORATION
MRRSDECISION DOCUMENT
WHEREASthe local securities regulatory authority or regulator ("DecisionMaker") in each of Ontario, British Columbia, Alberta,Saskatchewan, Manitoba, New Brunswick and Nova Scotia ("Jurisdictions")has received an application from Oracle Corporation ("Oracle"or "Company") for a decision pursuant to thesecurities legislation of the Jurisdictions ("Legislation")that: (i)the requirements contained in the Legislation to be registeredto trade in a security (the "Registration Requirement")and to file and obtain a receipt for a preliminary prospectusand a prospectus (collectively with the Registration Requirement,the "Registration and Prospectus Requirements")shall not apply to certain trades in shares of Oracle common stock("Shares") and Awards, as defined below, madein connection with the Oracle 1991 Long-Term Equity IncentivePlan ("1991 LTIP"), the Oracle 2000 Long-TermEquity Incentive Plan ("2000 LTIP") and the EmployeeStock Purchase Plan (1992) ("ESPP") (collectively,"Plans"); and (ii)the requirements contained in the Legislation relating to thedelivery of an offer and issuer bid circular and any notices ofchange or variation thereto, minimum deposit periods and withdrawalrights, taking up and paying for securities tendered to an issuerbid, disclosure, restrictions upon purchases of securities, bidfinancing, identical consideration and collateral benefits togetherwith the requirement to file a reporting form within 10 days ofan exempt issuer bid and pay a related fee ("Issuer BidRequirements") shall not apply to certain acquisitionsby Oracle of Shares or Awards pursuant to the Plans in the Jurisdictions. ANDWHEREAS pursuant to the Mutual Reliance Review Systemfor Exemptive Relief Applications ("System"),the Nova Scotia Securities Commission is the principal regulatorfor this application; ANDWHEREAS Oracle has represented to the Decision Makersas follows: 1.Oracle is presently a corporation incorporated under the lawsof the State of Delaware. The executive offices of Oracle arelocated in Redwood Shores, California. 2.The Company is registered with the Securities and Exchange Commission("SEC") in the U.S. under the U.S. SecuritiesExchange Act of 1934 ("Exchange Act") and isnot exempt from the reporting requirements of the Exchange Actpursuant to Rule 12g 3-2 made thereunder. 3.Oracle is not, and has no present intention of becoming, a reportingissuer in any jurisdiction in Canada. The majority of the directorsand senior officers of Oracle reside outside of Canada. 4.The authorized share capital of Oracle consists of 11,000,000,000Shares and 1,000,000 shares of preferred stock ("PreferredShares"). As of December 31, 2001, there were 5,497,177,469Shares and no Preferred Shares issued and outstanding. 5.The Shares are quoted on the Nasdaq National Market ("Nasdaq"). 6.Oracle intends to use the services of one or more agents or brokers("Agents") under the Plans. The current Agentsfor the Plans are E*TRADE Canada Securities, Inc., AST Stock Plan,Inc. and Delphi Asset Management Corp. Not all of the currentAgents are registered to conduct retail trades in the Jurisdictionsand, if replaced, or if additional Agents are appointed, are notall expected to be registered in the Jurisdictions. Agents thatare not registered in the Jurisdictions are or will be registeredunder applicable U.S. securities or banking legislation to tradein securities, if required under such legislation, and are orwill be authorized by Oracle to provide services under the Plans.An Agent that is not registered in the Jurisdictions but is registeredto trade in securities in the U.S. is referred to as a "ForeignAgent". 7.The Agents' role in the Plans may include: (a) assisting withthe administration of the Plans, including record-keeping functions;(b) facilitating the exercise of Options (as defined below) grantedunder the Plans (including cashless and stock-swap exercises)to the extent that they are exercisable for Shares; (c) facilitatingthe issuance of Shares pursuant to the ESPP; (d) facilitatingthe cancellation and surrender of Awards (as defined below) aspermitted under the Plans; (e) holding Shares issued under thePlans on behalf of Participants (as defined below), Former Participants(as defined below) and Permitted Transferees (as defined below);(f) facilitating the resale of the Shares issued in connectionwith the Plans; and (g) facilitating the mechanisms as set outin the Plans for the payment of withholding taxes. 8.The Plans are administered by the board of directors of the Company("Board") and/or a committee appointed by theBoard ("Committee"). 9.All necessary securities filings have been made in the U.S. inorder to offer the Plans to Participants of Oracle and its affiliates("Oracle Companies"). The Plans have been approvedby the shareholders of Oracle. 10.A prospectus prepared according to U.S. securities laws describingthe terms and conditions of the Plans will be delivered to eachCanadian Participant who is eligible to participate in the ESPPor who receives an Award under the 2000 LTIP or the 1991 LTIP.The annual reports, proxy materials and other materials Oracleis required to file with the SEC will be provided or made availableto Canadian Participants at the same time and in the same manneras the documents are provided or made available to U.S. Participants. 11.The sale of Shares acquired under the Plans may be made by Participants,Former Participants or Permitted Transferees through the Agents. 12.As there is no market for the Shares in Canada and none is expectedto develop, it is expected that the resale by Participants, FormerParticipants and Permitted Transferees of the Shares acquiredunder the Plans will be effected through Nasdaq. 13.As of August 20, 2001, Canadian shareholders of Oracle did notown, directly or indirectly, more than 10% of the issued and outstandingShares and did not represent in number more than 10% of the shareholdersof the Company. 14.The purposes of the 1991 LTIP and the 2000 LTIP are to providean incentive to eligible employees, independent consultants, advisers,officers and directors of the Oracle Companies whose present andpotential contributions are important to the continued successof the Company; to afford such persons an opportunity to acquirea proprietary interest in the Company; and to enable the Companyto continue to enlist and retain in its employ the best availabletalent for the successful conduct of its business. It is Oracle'sintention to only allow employees of the Oracle Companies ("Participants")in Canada to participate in the 1991 LTIP and 2000 LTIP at thistime. 15.The following awards are offered under the 1991 LTIP and 2000LTIP: (a) stock options exercisable for Shares ("Options");(b) stock purchase rights; (c) stock appreciation rights; and(d) long-term performance awards (collectively, the "Awards").The Awards are non-transferable. It is Oracle's intention to onlyoffer Options to Participants in Canada at this time. 16.The Shares issued under the 1991 LTIP and 2000 LTIP are previouslyauthorized but unissued Shares or reacquired Shares, whether purchasedon the market or otherwise. 17.Participants who participate in the 1991 LTIP and 2000 LTIP willnot be induced to purchase Shares by expectation of employmentor continued employment. 18.The maximum number of Shares that may be issued under the 1991LTIP is 480,950,499 and under the 2000 LTIP is 570,893,278 plusany unused Shares under the 1991 LTIP that may be transferredto the 2000 LTIP. The foregoing maximum amount is subject to adjustmentas provided for in the Plans. 19.The Committee may, in its sole discretion, grant Options to eligibleParticipants. Each Option granted under the 1991 LTIP and 2000LTIP will be evidenced by an Option agreement ("OptionAgreement"). 20.As of December 31, 2001, there were 952 Participants in Canadaeligible to receive Options under the 2000 LTIP: 696 Participantsin Ontario; 53 Participants in British Columbia; 43 Participantsin Alberta; 4 Participants in Saskatchewan; 10 Participantsin Manitoba; 140 Participants in Québec; 4 Participantsin New Brunswick; and 2 Participants inNova Scotia. No more Awards are being made under the 1991 LTIP. 21.Subject to the provisions of the 1991 LTIP and 2000 LTIP, theCommittee has the sole authority to determine the number of Sharescovered by each Option and the conditions and limitations applicableto the exercise of the Option. 22.Options shall be exercisable at such times and subject to suchterms and conditions as the Committee may specify, provided thatno Option shall be exercisable after the expiration of ten yearsfrom the date of grant. 23.The exercise price for Options ("Exercise Price")will be specified in the Option Agreement and will be establishedat the discretion of the Committee. Generally, the Exercise Priceper Share shall be the Fair Market Value (as defined in the 1991LTIP and 2000 LTIP) of a Share on the effective date of grantof the Option. 24.The Committee shall establish procedures governing the exerciseof Options. Generally, in order to exercise an Option, a Participant,Former Participant or Permitted Transferee must submit to Oracleor an Agent a notice of exercise in the form and manner prescribedby the Committee ("Notice of Exercise") identifyingthe Option and number of Shares being purchased, together withfull payment for the Shares. The Notice of Exercise shall specifywhich type of exercise will be used to pay the Exercise Priceand other costs, if any. 25.Following the termination of a Participant's relationship withthe Oracle Companies for reasons of disability, retirement orany other reason ("Former Participant") or wherethe Option has been transferred on the death of a Participantby will or pursuant to the laws of intestacy or where the Optionhas been transferred to family members and trusts and charitableinstitutions as the Committee shall approve at the time of thegrant of such Option ("Permitted Transferees"),the Former Participants and Permitted Transferees will continueto have rights in respect of the Plans ("Post-TerminationRights"). Post-Termination Rights may include, amongother things, the right of a Former Participant or Permitted Transfereeto exercise an Option for a period determined in accordance withthe Plans and the right to sell Shares acquired under the Plansthrough the Agents. Post-Termination Rights are only availableif the right was earned by the Participant while the Participantstill had a relationship with the Oracle Companies. 26.The purpose of the ESPP is to provide Participants an opportunityto purchase Shares through payroll deductions. 27.Subject to adjustments as provided for in the ESPP, an aggregateof 405,000,000 Shares have been reserved for issuance under theESPP. 28.As of December 31, 2001, there were 952 Participants in Canadaeligible to purchase Shares under the ESPP: 696 Participantsin Ontario; 53 Participants in British Columbia; 43 Participantsin Alberta; 4 Participants in Saskatchewan; 10 Participantsin Manitoba; 140 Participants in Quebec; 4 Participantsin New Brunswick; and 2 Participants inNova Scotia. 29.Participants may participate in an offering by delivering a subscriptionagreement to the Company within the time specified in the ESPP,in the prescribed form, thereby authorizing regularpayroll deductions accumulated in a periodic deposit account maintainedon behalf of the Participant in the ESPP. 30.The purchase price of Shares acquired under the ESPP shall notbe less than the lesser of (i) an amount equal to 85% of the fairmarket value of a Share on the Offering Date, as defined in theESPP; or (ii) an amount equal to 85% of the fair market valueof a Share on the Exercise Date, as defined in the ESPP. 31.An ESPP Participant may authorize deductions not exceeding 10%of compensation, up to a maximum of US$21,250 per year. 32.Immediately upon termination for any reason of a Participant'semployment with the Oracle Companies, the accumulated payrolldeductions shall be distributed to the terminated employee, withoutinterest, unless termination occurs within 15 days of the endof the Offering Period, as defined in the ESPP, in which casethe purchase will occur at the end of the Offering Period. A terminatedParticipant shall immediately cease to participate in the ESPP. 33.Pursuant to the 1991 LTIP and the 2000 LTIP, the acquisition ofAwards and Shares by the Company in certain circumstances mayconstitute an "issuer bid". The terms of the Plans permit Optionholders to surrender Shares to the Company on a stock-swap exercise;for the Company to withhold Shares in order to satisfy tax-withholdingobligations (the Shares so withheld will have a Fair Market Value(as defined in the Plans) equal to the amount required to be withheld);for the Company to buy out for a payment in cash or Shares anOption; for the Company to substitute new Options for previouslyissued Options. The exemptions in the Legislation from the IssuerBid Requirements may not be available for such acquisitions bythe Company since such acquisitions may occur at a price thatis not calculated in accordance with the "market price," as thatterm is defined in the Legislation and may be made from personsother than employees or former employees. 34.The Legislation of the Jurisdictions does not contain exemptionsfrom the Registration and Prospectus Requirements for all thetrades in Awards and Shares under the Plans. 35.When a Foreign Agent sells Shares on behalf of Participants, FormerParticipants and Permitted Transferees, the Foreign Agent, Participants,Former Participants and Permitted Transferees may not be ableto rely upon the exemptions from the Registration Requirementcontained in the Legislation. ANDWHEREAS pursuant to the System, this MRRS Decision Documentevidences the decision of each Decision Maker (collectively, "Decision"); ANDWHEREAS each of the Decision Makers is satisfied thatthe test contained in the Legislation that provides the DecisionMaker with the jurisdiction to make the Decision has been met; THEDECISION of the Decision Makers pursuant to the Legislationis that: (i)the Registration and Prospectus Requirements shall not apply toany trade or distribution of Awards or Shares made in connectionwith the Plans, including trades and distributions involving theOracle Companies, the Agents, Participants, Former Participants,and Permitted Transferees, provided that the first trade of Sharesacquired through the Plans pursuant to this Decision shall bedeemed a distribution or primary distribution to the public underthe Legislation unless the conditions in subsection 2.14(1) ofMultilateral Instrument 45-102 Resale of Securities aresatisfied; (ii)the first trade of Shares acquired pursuant to the Plans by Participants,Former Participants and Permitted Transferees effected througha Foreign Agent shall not be subject to the Registration Requirementprovided that the first trade is executed through a stock exchangeor market outside of Canada; and (iii)the Issuer Bid Requirements shall not apply to the acquisitionby Oracle of Shares or Awards from Participants, Former Participantsand Permitted Transferees provided the acquisitions are made inaccordance with the terms of the Plans. March27, 2002. "H.Leslie O'Brien"