HeadnoteMRRS- Relief from registration and prospectus requirements for tradesinvolving employees, former employees and designated beneficiariespursuant to equity investment plan - Relief from issuer bid requirementsfor acquisition by issuer of securities in connection with exercisemechanisms under equity investment plan - Issuer with de minimisCanadian presence.
ApplicableOntario Statutory ProvisionsSecuritiesAct, R.S.O. 1990, c.S.5, as am. ss. 25, 53, 35(1)(12)(iii), 72(1)(f)(iii),74(1) and 144
PoliciesCitedRule45-503 - Trades to Employees, Executives and Consultants
INTHE MATTER OF
OFALBERTA, BRITISH COLUMBIA, MANITOBA, NEW BRUNSWICK,
NEWFOUNDLANDAND LABRADOR, NOVA SCOTIA, ONTARIO,
INTHE MATTER OF
THEMUTUAL RELIANCE REVIEW SYSTEM FOR
INTHE MATTER OF
WHEREASthe local securities regulatory authority or regulator (the"Decision Maker", and collectively, the "Decision Makers") ineach of Alberta, British Columbia, Manitoba, New Brunswick,Newfoundland and Labrador, Nova Scotia, Ontario, Quebec andSaskatchewan (the "Jurisdictions") has received an application(the "Application") from Hewlett-Packard Company ("HP" or the"Filer") for a decision under the securities legislation ofthe Jurisdictions (the "Legislation") that:
(a)the requirements contained in the Legislation to be registeredto trade in a security (the "Registration Requirements") andto file and obtain a receipt for a preliminary prospectus anda prospectus (the "Prospectus Requirements") (collectively,the "Registration and Prospectus Requirements") shall not applyto distributions and/or certain trades in common shares (the"Common Shares") in the capital of the Filer and in optionsfor Common Shares made in connection with the HP 2000 EmployeeStock Purchase Plan ("HP SOP"), the HP 2000 Stock Plan ("HP2000 SP") and certain other plans; and
(b)the requirements contained in the Legislation pertaining tobids to acquire or redeem securities of an issuer made by anissuer, including requirements relating to the filing of forms(the "Issuer Bid Requirements"), shall not apply to certainacquisitions by the Filer of Common Shares pursuant to the HPSOP, the HP 2000 SP and certain other plans;
ANDWHEREAS the Filer was previously granted a decisiondocument dated October 24, 2000 (the "Previous MRRS Decision")under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), decisions of the Commission desvaleurs mobilières du Quebéc (the "CVMQ") datedSeptember 29, 2000 and a decision dated May 31, 2000 by theDecision Maker in New Brunswick, that provided relief from theRegistration and Prospectus Requirements in respect of certaindistributions and/or trades in securities of the Filer arisingfrom the HP SOP and the HP 2000 SP;
ANDWHEREAS the Filer is also requesting a decision underthe Legislation that revokes the Previous MRRS Decision;
ANDWHEREAS under the System, Ontario is the principalregulator for this application;
ANDWHEREAS the Filer has represented to the Decision Makersthat:
1.HP is a corporation incorporated under the laws of Delawareand is not a reporting issuer in Canada under the Legislation.HP is subject to the reporting requirements of the U.S. SecuritiesExchange Act of 1933, as amended (the "1933 Act"), and the U.S.Securities Exchange Act of 1934, as amended (the "1934 Act").The Common Shares are listed and posted for trading on the NewYork Stock Exchange, Inc. (the "NYSE") and the Pacific Exchange.
2.The authorized share capital of HP consists of 9,600,000,000Common Shares with a par value of US$0.01 each and 300,000,000shares of preferred stock with a par value of US$0.01 each.As at January 28, 2002, there were 1,941,391,000 Common Sharesand no preferred stock of HP issued and outstanding.
3.Hewlett-Packard (Canada) Ltd. ("HP Canada"), currently a wholly-ownedsubsidiary of HP, is a corporation incorporated under the federallaws of Canada. HP Canada is not a reporting issuer or its equivalentunder the Legislation and has no present intention of becominga reporting issuer or its equivalent in any of the Jurisdictions.
4.HP and Compaq Computer Corporation ("Compaq") have agreed that,subject to certain conditions, HP will acquire Compaq pursuantto an Agreement and Plan of Reorganization, dated as of September4, 2001 (the "Merger").
5.HP and Indigo N.V. ("Indigo") have agreed that, subject to certainconditions, HP will acquire Indigo pursuant to an Offer Agreement,dated as of September 6, 2001 (the "Indigo Acquisition").
6.Compaq is a corporation incorporated under the laws of the stateof Delaware and is not a reporting issuer or its equivalentunder the Legislation except under the Securities Act (Quebec)(the "QSA"). The CVMQ granted exemptive relief to Compaq onJanuary 14, 2000 from the continuous disclosure obligationsunder the QSA (decision no. 2000-C-0029). Compaq is subjectto the reporting requirements of the 1933 Act and the 1934 Act.An effect of the Merger is that HP will be a reporting issuerunder the QSA. HP intends to apply for exemptive relief fromthe continuous disclosure obligations under the QSA similarto the above relief provided to Compaq by the CVMQ.
7.The authorized share capital of Compaq consists of 3,000,000,000common shares with a par value of US$0.01 per share and 10,000,000shares of preferred stock with a par value of US$0.01. As ofJanuary 28, 2002, there were 1,704,636,432 common shares andno preferred stock of Compaq issued and outstanding.
8.Compaq Canada Corp. ("Compaq Canada") and Compaq Financial ServicesCanada Corporation ("Compaq Financial Canada"), both wholly-ownedsubsidiaries of Compaq, are corporations incorporated underthe laws of Nova Scotia. Neither corporation is a reportingissuer or its equivalent under the Legislation and neither hasany present intention of becoming a reporting issuer or itsequivalent in any of the Jurisdictions.
9.Indigo is a corporation incorporated under the laws of The Netherlandsand is not a reporting issuer or its equivalent under the Legislationand has no present intention of becoming a reporting issueror its equivalent in any of the Jurisdictions.
10.The authorized share capital of Indigo consists of 240,000,000common shares with a par value of NLG 0.04 per share. As ofSeptember 5, 2001, there were 113,676,895 issued and outstandingcommon shares. Indigo is subject to the reporting requirementsof the 1933 Act and the 1934 Act.
11.Indigo Canada, Inc., currently a wholly-owned subsidiary ofIndigo, is a corporation incorporated under the laws of Ontario.Indigo Canada, Inc. is not a reporting issuer or its equivalentunder the Legislation and has no present intention of becominga reporting issuer or its equivalent in any of the Jurisdictions.
12.After the Merger, it is expected that current Compaq employeesin Canada will initially continue to be employed by Compaq Canadaor Compaq Financial Canada, which will become indirect, wholly-ownedsubsidiaries of HP. Such employees may subsequently be transferredto and become employed by a newly incorporated Canadian entity,which will also be an indirect, wholly-owned subsidiary of HP("New HP Canada").
13.After the Indigo Acquisition, it is expected that current Indigoemployees in Canada will be initially employed by HP Canadabut they may also subsequently be transferred to and becomeemployed by New HP Canada. In addition, current HP Canada employeesmay also be subsequently transferred to New HP Canada.
14.HP will assume (a) the Compaq options ("Compaq Options") previouslyprovided by Compaq to eligible employees resident in Canada("Compaq Option Holders") pursuant to Compaq's 1985 Stock OptionPlan, 1989 Equity Incentive Plan, 1995 Equity Incentive Plan,1998 Stock Option Plan and/or 2001 Stock Option Plan (collectively,the "Compaq Option Plans"), and (b) the Indigo options ("IndigoOptions") previously provided by Indigo to eligible employeesresident in Canada ("Indigo Option Holders") pursuant to Indigo's1996 United States Stock Option Plan (the "Indigo SOP").
15.On the effective date of the Merger, all then outstanding CompaqOptions will be assumed by HP ("Assumed Options") and the termsof such options will be amended to provide for the issuanceof Common Shares upon their exercise instead of Compaq commonshares. The number of Common Shares to be subject to each suchAssumed Option and the exercise price per share under each suchAssumed Option will be adjusted according to a predeterminedformula. The duration and other material terms of such AssumedOptions will remain unamended.
16.On the effective date of the Indigo Acquisition, all then outstandingIndigo Options will be assumed by HP as Assumed Options andthe terms of such options will be amended to provide for theissuance of Common Shares upon their exercise instead of Indigocommon shares. The number of Common Shares to be subject toeach such Assumed Option and the exercise price per share undereach such Assumed Option will be adjusted according to a predeterminedformula. The duration and other material terms of such AssumedOptions will remain unamended.
17.Compaq Option Holders and Indigo Option Holders will be providedwith all the disclosure documentation that HP employees residentin the United States who receive HP Options are entitled toreceive.
18.Participation in the Compaq Option Plans and the Indigo SOPis voluntary and the option holders under such plans are notinduced to participate or acquire Common Shares under such plansby expectation of employment or continued employment.
19.Employees of Compaq Canada, Compaq Financial Canada or IndigoCanada, Inc. who become employees of HP Canada, New HP Canadaor another Canadian incorporated HP affiliate as a result ofthe Merger or the Indigo Acquisition ("New HP Group Employees")will be respectively invited to participate in the HP SOP andthe HP 2000 SP shortly after the effective date of the Mergerand the effective date of the Indigo Acquisition.
20.The HP SOP was made effective as of November 1, 2000. The HPSOP allows eligible employees ("Stock Eligible Employees") toacquire Common Shares. All regular full-time and regular part-timeemployees of HP Canada or of any other Canadian incorporatedaffiliate of HP are Stock Eligible Employees.
21.Participation in the HP SOP by Stock Eligible Employees is voluntaryand the Stock Eligible Employees have not been and will notbe induced to participate in the HP SOP by expectation of employmentor continued employment with HP, HP Canada or any other affiliatedentity of HP.
22.Termination for any reason immediately cancels a Stock EligibleEmployee's option and participation in the HP SOP. In such eventthe payroll deductions credited to the Stock Eligible Employee'saccount will be returned without interest to him or her, orin the case of death to his or her heirs or estate.
23.Stock Eligible Employees who purchase Common Shares under theHP SOP will be provided with all the disclosure documentationthat HP employees resident in the United States who purchaseCommon Shares under the HP SOP are entitled to receive.
24.Options to acquire Common Shares ("HP Options") are awardedpursuant to the HP 2000 SP to various employees of HP Canadaor of any other Canadian incorporated affiliate of HP eligibleto participate ("Option Eligible Employees"). In addition, stockawards and cash awards may be granted under the HP 2000 SP.All HP Options granted are determined by the Compensation Committeeof the Board of HP and its delegates.
25.Participation in the HP 2000 SP is voluntary and the OptionEligible Employees have not been and will not be induced toexercise HP Options by expectation of employment or continuedemployment with HP, HP Canada or any other affiliated entityof HP.
26.The HP Options are non-transferable during an Option EligibleEmployee's life. An Option Eligible Employee's legal representativemay exercise his or her HP Options in full within one (1) yearfollowing his or her death.
27.Option Eligible Employees who are issued HP Options under theHP 2000 SP will be provided with all the disclosure documentationthat HP employees resident in the United States who receiveHP Options are entitled to receive.
28.HP uses the services of agents (each as listed or as replaced,an "Agent", and collectively, the "Agents") in connection withthe HP 2000 SP and the HP SOP and may use the services of Agentsin connection with the Compaq Option Plans and the Indigo SOP.The current Agents under the HP 2000 SP are UBS Paine Webber,Salomon Smith Barney, Inc., Morgan Stanley and First Bank andTrust. The current Agent under the HP SOP is Mellon InvestorServices. The current Agent in connection with the Compaq OptionPlans is Salomon Smith Barney, Inc. The Agents are, and, ifreplaced will be, corporations registered under applicable U.S.securities legislation to trade in securities and have beenor will be authorized to provide services under the above plans.
29.Subject to the discretion of the applicable Agent to permittransfers to permitted transferees neither Compaq Options norIndigo Options are transferable otherwise than by will or thelaws of descent and distribution.
30.Because there is no market for the Common Shares in Canada andnone is expected to develop, any trades of the Common Sharesby Stock Eligible Employees, Option Eligible Employees or NewHP Group Employees will be effected through the facilities ofand in accordance with the rules of a stock exchange or recognizedmarket outside of Canada on which the Common Shares are tradedand in accordance with all laws applicable to such trading.
31.As at January 28, 2002, residents of Canada did not own, directlyor indirectly, more than 10 percent of the outstanding CommonShares and did not represent in number more than 10 percentof the total number of owners, directly or indirectly, of CommonShares.
32.An exemption from the Registration and Prospectus Requirementsis not available in all of the Jurisdictions for all of theabove distributions and/or trades in Common Shares acquiredunder the HP 2000 SP, the HP SOP, the Compaq Option Plans andthe Indigo SOP.
33.In connection with options granted under the HP 2000 SP, theCompaq Option Plans and the Indigo SOP, HP may make acquisitionsof Common Shares in connection with the surrender of CommonShares pursuant to the exercise by an option holder of an optiongranted under such plans. The exemptions in the Legislationfrom the Issuer Bid Requirements may not be available for suchacquisitions by HP since such acquisitions may occur at a pricethat is not calculated in accordance with the "market price",as that term is defined in the Legislation, as the market valueof the Common Shares acquired may be calculated on less thana 20 day trailing period, and acquisitions may be made frompersons other than employees or former employees.
ANDWHEREAS pursuant to the System this MRRS Decision Documentevidences the decision of the Decision Makers (collectively,the "Decision");
THEDECISION of the Decision Makers pursuant to the Legislationis that:
1.the Registration and Prospectus Requirements shall not applyto:
(i)the granting of options, the exercising of such options, thedistribution of Common Shares and any other trade or distributionmade in connection with the HP SOP, except in Quebec;
(ii)the granting of options and the distribution of stock awards,the exercising of such options, the distribution of Common Sharesand any other trade or distribution made in connection withthe HP 2000 SP, except in Quebec;
(iii)the assumption and exercising of Assumed Options, the distributionof Common Shares pursuant to such exercise and any other tradeor distribution made in connection therewith; or
(iv)the activities of Agents in connection with the foregoing which,for Quebec, will include the activities in connection with subparagraphs(i) and (ii);
providedthat the first trade in Common Shares acquired pursuant to thisDecision in a Jurisdiction shall be deemed a distribution ora primary distribution to the public;
2.except in Quebec, the first trade by Stock Eligible Employees,Option Eligible Employees, New HP Group Employees, former StockEligible Employees, former Option Eligible Employees, formerNew HP Group Employees, Compaq Option Holders, Indigo OptionHolders, former Compaq Option Holders, former Indigo OptionHolders or the legal representatives or permitted transfereesof any of the foregoing in Common Shares acquired pursuant tothis Decision, including first trades effected through the Agents,shall not be subject to the Registration and Prospectus Requirements,provided that:
(i)at the time of the trade, HP is not a reporting issuer in anyof the Jurisdictions except in Quebec;
(ii)at the time of the acquisition of the Common Shares, residentsof Canada (a) did not own, directly or indirectly, more than10 percent of the outstanding Common Shares and (b) did notrepresent in number more than 10 percent of the total numberof owners, directly or indirectly, of Common Shares;
(iii)such first trade is effected through the facilities of, andin accordance with the rules applicable to, a stock exchangeor quotation system outside of Canada on which the Common Sharesmay be listed or quoted for trading;
3.in Quebec, the first trade by Stock Eligible Employees, OptionEligible Employees, New HP Group Employees, former Stock EligibleEmployees, former Option Eligible Employees, former New HP GroupEmployees, Compaq Option Holders, Indigo Option Holders, formerCompaq Option Holders, former Indigo Option Holders or the legalrepresentatives or permitted transferees of any of the foregoing(collectively, the "Quebec Holders") in Common Shares acquiredpursuant to this Decision, including first trades effected throughthe Agents after the date of the Decision, shall not be subjectto the Registration and Prospectus Requirements, provided that:
(i)the first trade is effected outside Canada, through the facilitiesof, and in accordance with the rules applicable to, a stockexchange or quotation system on which the Common Shares maybe listed or quoted for trading; or
(ii)the first trade is effected among the Quebec Holders, or amongthe Quebec Holders and persons to whom the Quebec Holders arerelated; and
4.the Issuer Bid Requirements of the Legislation shall not applyto the acquisition by HP of Common Shares from the applicableparticipants in connection with the exercising of options grantedpursuant to the HP 2000 SP, the Compaq Option Plans and theIndigo SOP.
THEFURTHER DECISION of the Decision Makers is that thePrevious MRRS Decision be revoked.
"PaulM. Moore" "H. Lorne Morphy"