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Tommy Hilfiger Corporation - MRRS Decision
Headnote
MutualReliance Review System for Exemptive Relief Applications - relieffrom registration and prospectus requirements for trades involvingemployees and former employees pursuant to an employee stock optionplan.ApplicableOntario Statutory Provisions
SecuritiesAct, R.S.O. 1990, c. S. 5., as am. ss. 25, 53 and 74 (1).ApplicableOntario Rules
Rule45-503 - Trades to Employees, Executives and Consultants (1998),21 OSCB 117 MultilateralInstrument 45-102 - Resale of Securities (2001), 24 O.S.C.B. 7030.INTHE MATTER OF
THESECURITIES LEGISLATION OF
ONTARIO,ALBERTA AND BRITISH COLUMBIA
AND
INTHE MATTER OF
THEMUTUAL RELIANCE REVIEW SYSTEM
FOREXEMPTIVE RELIEF APPLICATIONS
AND
INTHE MATTER OF
TOMMYHILFIGER CORPORATION
MRRSDECISION DOCUMENT
WHEREASthe local securities regulatory authority or regulator (the"Decision Maker") in each of Ontario, Alberta, and British Columbia(the "Jurisdictions") has received an application from TommyHilfiger Corporation ("THC" or the "Company") for a decisionpursuant to the securities legislation of the Jurisdictions(the "Legislation") that (i) the requirements contained in theLegislation to be registered to trade in a security (the "RegistrationRequirements") and to file and obtain a receipt for a preliminaryprospectus and a prospectus (the "Prospectus Requirements")(collectively, the "Registration and Prospectus Requirements")will not apply to certain trades in securities of THC made inconnection with the THC 2001 Stock Plan (the "Plan"); (ii) theRegistration Requirements will not apply to first trades ofshares acquired under the Plan executed on an exchange or marketoutside of Canada; and (iii) the requirements contained in theLegislation relating to the delivery of an offer and issuerbid circular and any notices of change or variation thereto,minimum deposit periods and withdrawal rights, take-up and paymentfor securities tendered to an issuer bid, disclosure, restrictionsupon purchases of securities, financing, identical consideration,collateral benefits, and form filing (the "Issuer Bid Requirements")will not apply to certain acquisitions by the Company of sharespursuant to the Plan in each of the Jurisdictions; ANDWHEREAS pursuant to the Mutual Reliance Review Systemfor Exemptive Relief Applications (the "System"), the OntarioSecurities Commission is the principal regulator for this application; ANDWHEREAS THC has represented to the Decision Makersas follows: 1.THC is a corporation organized under the laws of the BritishVirgin Islands, is not a reporting issuer or the equivalentunder the Legislation and has no present intention of becominga reporting issuer or the equivalent under the Legislation; 2.The authorized share capital of THC consists of 150,000,000shares with a par value of $0.01 per share (the "Shares") ofwhich 89,492,507 are issued and outstanding and 5,000,000 preferenceshares with a par value of $0.01 per preference share of whichnone are issued and outstanding; 3.THC is subject to the requirements of the Securities ExchangeAct of 1934, as amended, of the United States ("U.S."), includingthe reporting requirements thereof; 4.Subject to adjustment as described in the Plan, the total numberof Shares that may be delivered pursuant to awards under thePlan will not exceed 3,500,000; 5.The purpose of the Plan is to aid the Company and its affiliates(collectively, the "THC Companies") in securing and retainingemployees ("Employees") of outstanding ability and to motivatesuch Employees to exert their best efforts on behalf of theTHC Companies by providing incentives through the granting ofstock options ("Options"), stock appreciation rights ("SAR"s),restricted shares, unrestricted shares, awards (valued in referenceto or based upon Shares or factors that influence the valueof Shares) and dividend equivalents (collectively, the "Awards"); 6.Shares offered under the Plan are registered with the Securitiesand Exchange Commission (the "SEC") under the Securities Actof 1933, as amended, of the United States; 7.The Shares are listed for trading on the New York Stock Exchange("NYSE") under the symbol "TOM"; 8.Under the Plan, THC may grant Awards to any Employee or member(each a "Director") of the board of directors of THC (the "Board")or of any THC Company;
9.Awards are not transferable otherwise than by will or the lawsof intestacy or by an optionee to a member of the optionee'simmediate family which is defined in the Plan as a child, stepchild,grandchild, parent, stepparent, grandparent, spouse, formerspouse, sibling, niece, nephew, or in-law (the "Immediate Family"); 10.THC or the THC Companies will identify Employees or Directorsto be granted Awards under the Plan, including such personsresident in the Jurisdictions (the "Canadian Service Providers").As of January 11, 2001, there are approximately 6, 8 and 131Canadian Service Providers resident in Alberta, British Columbiaand Ontario, respectively, eligible to participate in the Plan;
11.THC intends to engage the services of an agent(s) (the "Agent")in connection with the administration and operation of the Plan.The current Agent under the Plan is Salomon Smith Barney Inc.("SSB"); 12.The current Agent is, and any additional or replacement Agentwill be, either a corporation registered under applicable UnitedStates securities or banking legislation or a registrant in theJurisdictions; 13.SSB is not a registrant in any of the Jurisdictions (except asan International Dealer in Ontario) and, if replaced, the replacementAgent is not expected to be a registrant in any of the Jurisdictions; 14.The Agent's role in the Plan will involve various administrativefunctions and may include: (i) holding Shares on behalf of participants;(ii) facilitating Award exercises (including cashless exercisesand stock swap exercises) under the Plan; (iii) maintaining accountson behalf of participants under the Plan; and (iv) facilitatingthe resale of Shares acquired under the Plan through the NYSE; 15.Participation in the Plan by Canadian Service Providers is voluntaryand such persons are not induced to participate in the Plan orto exercise their Awards by expectation of employment or continuedemployment with the THC Companies; 16.A committee appointed by the Board of THC (the "Committee") willestablish procedures governing the exercise of Options and otherAwards that are capable of being exercised. Generally, in orderto exercise an Option (or other Award), the option holder mustsubmit to the Agent a written notice of exercise identifying theOption (or other Award) and the number of Shares being exercised,and deliver full payment for the Shares underlying the Options(or other Award) to THC. The Award exercise price may be paidin cash or where permitted by the Committee by way of a stockswap exercise or cashless exercise or by such other method permittedby the Committee from time to time; 17.Following the termination of a Canadian Service Provider's relationshipwith the THC Companies, a former Canadian Service Provider, abeneficiary of an Award or Shares by will or the laws of intestacyand their legal representatives, or an Immediate Family member(where the Award has been transferred by a Canadian Service Providerto an Immediate Family member) (collectively, "Non-Employee Participants")may continue to have rights in respect of such Shares and Awards("Post-Termination Rights"). Post-Termination Rights may include,among other things, the right of a Non-Employee Participant toexercise an Award for a specified period and the right to sellShares acquired under the Plan through the Agent; 18.A copy of the U.S. prospectus relating to the Plan will be deliveredto each Canadian Service Provider who is granted an Award underthe Plan. The annual reports, proxy materials and other materialsTHC is required to file with the SEC, will be provided to personswho acquire Shares under the Plan in the same manner as the documentsare provided to U.S. shareholders; 19.Canadian Service Providers and Non-Employee Participants who wishto sell Shares acquired under the Plan, may do so through theAgent; 20.At the time of any grant of Awards under the Plan, holders ofShares whose last address as shown on the books of THC was inCanada will not hold more than 10% of the outstanding Shares andwill not represent in number more than 10% of the total numberof holders of Shares; 21.Because there is no market for the Shares in Canada and none isexpected to develop, any resale of the Shares acquired under thePlan will be effected through the facilities of, and in accordancewith the rules and laws applicable to, a stock exchange or organizedmarket outside of Canada on which the Shares may be listed orquoted for trading; 22.The Legislation of certain Jurisdictions does not contain exemptionsfrom the Registration and Prospectus Requirements for Award exercisesby Canadian Service Providers and Non-Employee Participants throughthe Agent where the Agent is not a registrant; 23.Where the Agent sells Shares on behalf of Canadian Service Providers,or Non-Employee Participants, none of the Canadian Service Providers,Non-Employee Participants or the Agent is able to rely on theexemption from the Registration Requirements contained in theLegislation of certain Jurisdictions to effect such sales; 24.The Legislation of certain Jurisdictions deems any trade in Sharesacquired under the Plan to be a distribution unless, among otherthings, THC is a reporting issuer and has been a reporting issuerfor a prescribed period of time preceding the trade; 25.The exemptions in the Legislation from the Issuer Bid Requirementsare not available for certain acquisitions by the Company of itsShares from Canadian Service Providers or Non-Employee Participantsin accordance with the terms of the Plan, since acquisitions relatingto stock-swap exercises may occur at a price that is not calculatedin accordance with the "market price", as that term is definedin the Legislation; under the Plan, the Company will acquire suchtendered Shares at their fair market value, as determined in accordancewith the Plan; ANDWHEREAS pursuant to the System, this Decision Documentevidences the decision of each Decision Maker (collectively, the"Decision"); ANDWHEREAS each of the Decision-Makers is satisfied thatthe test contained in the Legislation that provides the Decision-Makerwith the jurisdiction to make the Decision has been met; THEDECISION of the Decision Makers pursuant to the Legislationis that: (a)the Registration Requirements and Prospectus Requirements willnot apply to any trade or distribution of Awards or Shares madein connection with the Plan, including trades or distributionsinvolving THC, the THC Companies, the Agent, Canadian ServiceProviders or Non-Employee Participants, provided that the firsttrade in Shares acquired under the Plan pursuant to this Decisionwill be deemed to be a distribution under the Legislation unlessthe conditions in subsection 2.14(1) of Multilateral Instrument45-102 Resale of Securities are satisfied; (b)the first trade by Canadian Service Providers or Non-EmployeeParticipants in Shares acquired pursuant to this Decision, includingfirst trades effected through the Agent, will not be subject tothe Registration Requirements, provided such first trade is executedthrough a stock exchange or market outside of Canada; and (c)the Issuer Bid Requirements of the Legislation will not applyto the acquisition by THC of Shares or Awards from Canadian ServiceProviders or Non-Employee Participants in connection with stock-swapexercises, made in connection with the provisions of the Plan. April15, 2002. "M.T.McLeod" "H. Lorne Morphy"