Exemption Orders (Discretionary)
HEWLETT-PACKARD COMPANY
2001 BCSECCOM 149
Headnote
Mutual Reliance Review System for Exemptive Relief Applications – relief granted from the registration and prospectus requirements of the legislation for distribution and first trades of securities acquired in connection with employee stock purchase plans, provided the issuer is not a reporting issuer, there is a de minimis connection to British Columbia and the trades are executed on an exchange outside British Columbia.
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 34(1)(a), 48, 61, 76
IN THE MATTER OF THE CANADIAN SECURITIES LEGISLATION OF ALBERTA, BRITISH COLUMBIA, NEWFOUNDLAND, NOVA SCOTIA, ONTARIO AND SASKATCHEWAN
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF HEWLETT-PACKARD COMPANY
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the "Decision Maker", and collectively, the "Decision Makers") in each of Alberta, British Columbia, Newfoundland, Nova Scotia, Ontario and Saskatchewan (the "Jurisdictions") has received an application (the "Application") from Hewlett-Packard Company ("HP" or the "Filer") for a decision under the securities legislation of the Jurisdictions (the "Legislation") that the requirements contained in the Legislation to be registered to trade in a security (the "Registration Requirements") and to file and obtain a receipt for the preliminary prospectus and a prospectus (the "Prospectus Requirements") (collectively, the "Registration and Prospectus Requirements") shall not apply to certain trades in common shares (the "Common Shares") in the capital of the Filer and in options for Common Shares made in connection with the HP 2000 Employee Stock Purchase Plan and the HP 2000 Stock Plan;
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), Ontario is the principal jurisdiction for this application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. The Filer is a corporation incorporated under the laws of Delaware, is not a reporting issuer in Canada under the Legislation of any of the Jurisdictions and has no present intention of becoming a reporting issuer in any of the Jurisdictions.
2. The Filer is subject to the requirements of the United States Securities Exchange Act of 1934, as amended (the "1934 Act") and it is not exempt from the reporting requirements of the 1934 Act under any rule.
3. The authorized share capital of the Filer is 4,800,000,000 Common Shares with a par value of $0.01 each and 300,000,000 shares of preferred stock with a par value of $0.01 each. As at July 31, 2000, there were 988,695,125 Common Shares issued and outstanding.
4. The Common Shares are listed and posted for trading on the New York Stock Exchange, Inc. (the "NYSE") and the Pacific Stock Exchange.
5. Hewlett-Packard (Canada) Ltd. ("HP Canada") is a corporation incorporated under the federal laws of Canada.
6. HP Canada is not a reporting issuer under the Legislation of any of the Jurisdictions and does not have the present intention of becoming a reporting issuer in any of the Jurisdictions.
7. All of the persons who are eligible to purchase Common Shares under the HP 2000 Employee Stock Purchase Plan ("Stock Eligible Employees") or to whom options may be granted under the HP 2000 Stock Plan ("Option Eligible Employees"), in the Jurisdictions, are employed by HP Canada, which is an indirect wholly-owned subsidiary, and therefore an affiliate, of the Filer.
8. HP has established the HP 2000 Employee Stock Purchase Plan, to be effective as of November 1, 2000 (the "Stock Purchase Plan"), whereby it will allow Stock Eligible Employees to acquire the Common Shares. All regular full-time and regular part-time employees (those employees who work 20 hours or more per week on a regular schedule) of HP Canada are Stock Eligible Employees. Any Stock Eligible Employee’s participation in the Stock Purchase Plan shall be effective after he or she has initiated his or her enrollment. The purpose of the Stock Purchase Plan is to provide an opportunity for Stock Eligible Employees to purchase Common Shares and to have additional incentive to contribute to the prosperity of the Filer.
9. As at September 6, 2000, there were approximately 80 Stock Eligible Employees resident in Alberta, 88 Stock Eligible Employees resident in British Columbia, 1 Stock Eligible Employee resident in Newfoundland, 14 Stock Eligible Employees resident in Nova Scotia, 988 Stock Eligible Employees resident in Ontario and 3 Stock Eligible Employees resident in Saskatchewan.
10. Participation in the Stock Purchase Plan by Stock Eligible Employees is voluntary and the Stock Eligible Employees have not been and will not be induced to participate in the Stock Purchase Plan by expectation of employment or continued employment with the Filer, HP Canada or any other affiliated entity of the Filer.
11. Generally, each Stock Eligible Employee may elect to make contributions under the Stock Purchase Plan by payroll deduction of any amount up to, but not exceeding, 10% of his or her base earnings.
12. The Stock Purchase Plan is implemented by offering periods lasting for two years (an "Offering Period"). The first two-year Offering Period will commence on November 1, 2000. Common Shares are purchased under the Stock Purchase Plan every six months (a "Purchase Period"), unless the participant withdraws or terminates employment earlier. A Purchase Period commences after one purchase date and ends on the next purchase date. The entry date is the first trading day of the Offering Period or, for new participants, the first trading day of the Purchase Period after the Stock Eligible Employee becomes eligible (the "Entry Date").
13. Each Stock Eligible Employee who participates in the Stock Purchase Plan is automatically granted an option to purchase Common Shares on his or her Entry Date. The option expires at the end of the Offering Period or on termination of employment, whichever is earlier. The option is automatically exercised at the end of each Purchase Period to the extent of the payroll deductions accumulated during the Purchase Period. Stock Eligible Employees may not purchase more than 5,000 Common Shares during a Purchase Period, or U.S. $25,000 in a calendar year (by reference to the market value at the Stock Eligible Employee’s Entry Date).
14. The purchase price of the Common Shares under the Stock Purchase Plan ("the Purchase Price") will be the lower of the price that is not less than 85% of the closing price of the Common Shares on the NYSE, on:
(i) the Entry Date; or
(ii) the last trading day of the Purchase Period.
15. Generally a Stock Eligible Employee may withdraw from the Stock Purchase Plan during a Purchase Period prior to the applicable enrolment deadline. The committee(s) of the Board of Directors of HP may establish rules limiting the frequency with which participants may withdraw and re-enrol in the Stock Purchase Plan and may establish a waiting period for re-enrollment.
16. Termination for any reason (including death) immediately cancels a Stock Eligible Employee’s option and participation in the Stock Purchase Plan. In such event the payroll deductions credited to the Stock Eligible Employee’s account will be returned without interest to him or her, or in the case of death to his or her heirs or estate.
17. The Stock Eligible Employees who purchase Common Shares will be provided with all the disclosure documentation that holders of Common Shares resident in the United States and employees of HP resident in the United States who purchase Common Shares under the Stock Purchase Plan are entitled to receive.
18. An exemption from the Registration Requirements and Prospectus Requirements is not available in all of the Jurisdictions for trades in Common Shares acquired under the Stock Purchase Plan by Stock Eligible Employees, former Stock Eligible Employees or the legal representatives of such present or former Stock Eligible Employees.
19. Because there is no market for the Common Shares in Canada and none is expected to develop, any trades of the Common Shares by Stock Eligible Employees will be effected through the facilities of and in accordance with the rules of a stock exchange or recognized market outside of Canada on which the Common Shares are traded and in accordance with all laws applicable to such trading.
20. HP has established the HP 2000 Stock Plan (the "Stock Option Plan") whereby it will issue to Option Eligible Employees certain options to acquire the Common Shares (the "Options"). It is anticipated that Options will be awarded to various Option Eligible Employees on certain dates (the "Grant Date"). In addition, stock awards and cash awards may be granted under the Stock Option Plan. The Stock Option Plan shall continue for a term of ten years unless terminated as permitted pursuant to its terms. Each Option shall be designated in the agreement between HP and the Option Eligible Employee (the "Award Agreement") as a non-statutory stock option. HP may grant additional options in the future to Option Eligible Employees pursuant to the Stock Option Plan. The purpose of the Stock Option Plan is to encourage ownership in HP by employees whose long-term employment is important to HP.
21. As at September 6, 2000, there were approximately 80 Option Eligible Employees resident in Alberta, 88 Option Eligible Employees resident in British Columbia, 1 Option Eligible Employee resident in Newfoundland, 14 Option Eligible Employees resident in Nova Scotia, 988 Option Eligible Employees resident in Ontario and 3 Option Eligible Employees resident in Saskatchewan.
22. Participation in the Stock Option Plan is voluntary and the Option Eligible Employees will not be induced to exercise Options by expectation of employment or continued employment with the Filer, HP Canada or any other affiliated entity of the Filer.
23. All Options granted under the Stock Option Plan to the Option Eligible Employees shall be determined by the relevant committee(s) of the Board of Directors of HP (the "Stock Option Plan Administrator") and stated in the Award Agreements. The Stock Option Plan Administrator administers the Stock Option Plan.
24. At the time an Option is granted, the Stock Option Plan Administrator shall fix the period within which the Option may be exercised and shall determine the terms of the Option and any conditions that must be satisfied before the Option may be exercised. Generally, the term of the Options shall not exceed 10 years from the Grant Date.
25. The Options are non-transferable during an Option Eligible Employee’s life and except as described below or otherwise provided in the Award Agreement, an Option Eligible Employee’s Options will terminate immediately upon the termination of employment. Upon death, an Option Eligible Employee’s personal representative may exercise his or her Options in full for one (1) year following his or her death.
26. Generally, if an Option Eligible Employee’s employment terminates because of his or her permanent disability or retirement due to age, then he or she may exercise his or her Option in full within the earlier of three (3) years of the date of such disability or retirement or the expiration of the term of such Option.
27. If an Option Eligible Employee ceases to be an employee of HP Canada as a result of participation in HP Canada’s voluntary severance incentive program, all Options shall be exercisable in full within the earlier of three (3) months following the Option Eligible Employee’s termination or the expiration of the term of such Option.
28. If an Option Eligible Employee ceases to be a participant because of a divestiture of HP Canada, the Stock Option Plan Administrator may make such employee’s Options exercisable in full for a period of time to be determined by the Stock Option Plan Administrator.
29. At any time, the Stock Option Plan Administrator may buy out for a payment in cash or Common Shares an Option previously granted based on such terms and conditions as the Stock Option Plan Administrator shall establish.
30. Option Eligible Employees who are issued Options under the Stock Option Plan will be provided with all the disclosure documentation that holders of Common Shares resident in the United States and employees of HP who are resident in the United States who receive Options under the Stock Option Plan are entitled to receive.
31. An exemption from the Registration Requirements and Prospectus Requirements is not available in all of the Jurisdictions for trades in Common Shares acquired under the Stock Option Plan by the Option Eligible Employees, former Option Eligible Employees or the legal representatives of such present or former Option Eligible Employees.
32. Because there is no market for the Common Shares in Canada and none is expected to develop, any trades of the Common Shares by Option Eligible Employees will be effected through the facilities of and in accordance with the rules of a stock exchange or recognized market outside of Canada on which the Common Shares are traded and in accordance with all laws applicable to such trading.
AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of the Decision Makers (collectively, the "Decision");
THE DECISION of the Decision Makers under the Legislation is that:
1. the Registration and Prospectus Requirements shall not apply to:
(a) the distribution of options by the Filer to Stock Eligible Employees, the exercise of such options and the distribution of Common Shares pursuant to such exercise in connection with the Stock Purchase Plan; or
(b) the distribution of Options and stock awards by the Filer to Option Eligible Employees, the exercise of such Options and the distribution of Common Shares pursuant to such exercise in connection with the Stock Option Plan;
provided that the first trade in the Common Shares acquired pursuant to this paragraph 1 is a distribution subject to the Prospectus Requirements; and
2. the first trade in any Common Shares acquired under the Stock Purchase Plan or the Stock Option Plan is not subject to the Registration and Prospectus Requirements where the first trade is made by a Stock Eligible Employee, Option Eligible Employee, former Stock Eligible Employee, former Option Eligible Employee or the legal representatives of such present or former Stock Eligible Employee or Option Eligible Employee, provided that:
(a) at the time of the acquisition of the Common Shares or the Options, persons or companies whose last address as shown on the books of the Filer in any one of the Jurisdictions did not hold, in the aggregate, more than 10% of the outstanding Common Shares and did not represent in number more than 10% of the total number of holders of Common Shares;
(b) at the time of the acquisition of the Common Shares or the Options, persons or companies who were resident in any one of the Jurisdictions and who beneficially owned Common Shares did not beneficially own more than 10% of the outstanding Common Shares and did not represent in number more than 10% of the total number of holders of Common Shares;
(c) at the time of the trade of any Common Shares, the Filer is not a reporting issuer under any of the Legislation; and
(d) such first trade is executed:
(i) through the facilities of a stock exchange outside of Canada;
(ii) on the NASDAQ Stock Market; or
(iii) on the Stock Exchange Automated Quotation System of the London Stock Exchange Limited;
in accordance with the rules of such exchange or market and all applicable laws and through an agent qualified to trade in securities in the jurisdiction where such exchange or market is located.
DATED this 24th day of October, 2000.
J.A. Geller Robert W. Davis