Mutual Reliance Review System for Exemptive Relief Applications - clause 104(2)(c) -- take-over bid -- offer by holder of all the common shares for all outstanding preferred securities -- securities have never traded on an organized market -- 16 of the 18 holders previously waived right under the preferred securities to convert into common shares -- each holder either an accredited investor or employee of offeree - each of the 18 holders voluntarily agreed that receipt of take--over bid materials would be of no assistance in assessing proposed transaction and waived their rights in writing to receive take--over bid materials -- Offeror exempted from formal take--over bid requirements.
Securities Act, R.S.O. 1990, c. S.5, as amended, ss. 93(1)(d), 95-100, 104(2)(c)
February 23, 2005
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO AND QUÉBEC
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
SYNNEX CANADA LIMITED
MRRS DECISION DOCUMENT
The local securities regulatory authority or regulator (the "Decision Maker") in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") that an offer (the "Offer") by the Filer, or an affiliate, to purchase all of the outstanding First Preference Shares Series A (the "Series A Shares") of EMJ Data Systems Ltd. ("EMJ"), and any successor, be exempt from the take-over bid requirements under the Legislation (the "Requested Relief").
Under the Mutual Reliance Review System for Exemptive Relief Applications:
(a) the Ontario Securities Commission is the principal regulator for the Application; and
(b) this MRRS decision document evidences the decision of each Decision Maker.
Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.
This decision is based on the following facts represented by the Filer:
1. The Filer is a corporation existing under the laws of the Province of Ontario.
2. EMJ is a corporation existing under the laws of the Province of Ontario pursuant to the amalgamation (the "Amalgamation") on December 1, 2004 of a predecessor corporation, also named EMJ Data Systems Ltd. (the "Predecessor"), and Synnex Canada Acquisition Limited, a wholly-owned subsidiary of the Filer.
3. EMJ is a reporting issuer in all provinces and territories of Canada where such status exists and, to the knowledge of the Filer, it is not in default of any of the requirements of the securities legislation of such jurisdictions.
4. As of February 8, 2005, the authorized share capital of EMJ consisted of an unlimited number of common shares (the "EMJ Shares"), an unlimited number of first preference shares, an unlimited number of second preference shares and an unlimited number of class A redeemable preference shares; and as of the close of business on February 8, 2005 there were issued and outstanding 8,801,547 EMJ Shares, 1,056,500 Series A Shares, $11,148,000 aggregate principal amount of convertible unsecured subordinated debentures of EMJ (the "Convertible Debentures"), and 109,500 warrants of EMJ exercisable to acquire Series A Shares and/or Convertible Debentures.
5. The Filer owns all of the outstanding EMJ Shares.
6. Under the Amalgamation, holders of the First Preference Shares Series A of the Predecessor (the "Predecessor Series A Shares") received one Series A Share for each Predecessor Series A Share held. The terms and conditions of the Series A Shares are identical to those of the Predecessor Series A Shares, including the provision that each Series A Share is convertible into one EMJ Share (in lieu of being convertible into one common share of the Predecessor).
7. The initial holders of the Predecessor Series A Shares acquired their securities pursuant to a private placement in September 2003.
8. Under the Articles of EMJ, the Series A Shares carry the right to vote at all meetings of the shareholders of EMJ except for meetings at which only holders of another specified class or series of shares of EMJ are entitled to vote separately as a class or series. Also, each Series A Share is convertible into one EMJ Share.
9. The Predecessor Series A Shares were issued at a price of $8.00 per share, and were each originally convertible into one Predecessor Share.
10. Neither the Predecessor Series A Shares nor the Series A Shares have traded, or are currently trading, on any organized market.
11. Holders of 1,025,250 Series A Shares (16 holders) have agreed with EMJ to waive their conversion rights, leaving 31,250 Series A Shares (two holders) with conversion rights.
12. In consideration for their waiver of conversion rights, all holders of Series A Shares were paid the same amount per underlying share.
13. Of the 18 registered holders of Series A Shares, there is one registered holder in Quebec holding an aggregate of 250 Series A Shares, and one registered holder in British Columbia holding 12,500 Series A Shares. The remaining Series A Shares are held by registered holders in Ontario.
14. It is proposed that under the Offer, the Filer, or an affiliate of the Filer, will purchase for cash all of the issued and outstanding Series A Shares.
15. There was no agreement or understanding between the Filer, EMJ or any of their respective affiliates, on the one hand, and holders of Series A Shares, on the other hand, in respect of the purchase of the Series A Shares in connection with the negotiation and completion of the waiver by such holders of their conversion rights.
16. It is proposed that under the Offer each holder of issued and outstanding Series A Shares will receive the same consideration as the other holders, on the basis that if a holder received consideration for waiving conversion rights, a holder who did not waive the conversion rights will receive an additional amount under the Offer so that the total consideration payable in connection with the waiver of conversion rights and the Offer will be equal for all holders of Series A Shares.
17. The Offer will be a non-exempt take-over bid under the Legislation and must therefore comply with the take-over bid requirements under the Legislation.
18. Each holder of Series A Shares has advised the Filer that (a) the holder is either (i) an "accredited investor" under either (x) Ontario Securities Commission Rule 45-501 (if the holder is resident in the Province of Ontario) or (y) Multilateral Instrument 45-103 (if the holder is resident in any other jurisdiction) or (ii) an employee of EMJ; and (b) in light of the holder being a sophisticated investor and/or knowledgeable about the affairs of EMJ, the holder does not require a take-over bid circular or the other protections relating to take-over bids under the Legislation in connection with the Offer and has consented to the Offer being made without such a circular or protections.
19. EMJ has complied with its continuous disclosure requirements under the Legislation such that current information about the business and affairs of EMJ is in the public domain.
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 under the Legislation is that the Requested Relief is granted.