McKesson Corporation - MRRS Decision
Headnote
MRRS for Exemptive Relief Applications- U.S. company adopts stock incentive plan - relief from theregistration requirements provided to permit former Ontarioemployees to resell securities in accordance with the stockincentive plan - relief from issuer bid requirements to permitacquisition of securities in satisfaction of withholding taxesin accordance with stock incentive plan.
Applicable Ontario Statutes
AND
AND
MRRS DECISION DOCUMENT
1. WHEREAS the localsecurities regulatory authority or regulator (the "DecisionMaker") in British Columbia, Alberta, Manitoba, Ontario,Québec, and New Brunswick (the "Jurisdictions")has received an application from McKesson Corporation ("McKesson")for a decision under the securities legislation of the Jurisdictions(the "Legislation") that (i) the requirements containedin the Legislation to be registered to trade in a security(the "Registration Requirements") and to file andobtain a receipt for a preliminary prospectus and a prospectus(the "Prospectus Requirements") (collectively, the"Registration and Prospectus Requirements") willnot apply to certain trades in shares of McKesson's commonstock made in connection with the McKesson Corporation 2000Employee Stock Purchase Plan (the "Plan"); (ii)the Registration and Prospectus Requirements will not applyto first trades of Shares acquired under the Plan executedon an exchange or market outside of Canada; and (iii) therequirements contained in the Legislation relating to thedelivery of an offer and issuer bid circular and any noticesof change or variation thereto, minimum deposit periods andwithdrawal rights, take-up and payment for securities tenderedto an issuer bid, disclosure, restrictions upon purchasesof securities, financing, identical consideration, collateralbenefits, and the requirement to file a reporting form within10 days of an exempt issuer bid and pay a related fee (the"Issuer Bid Requirements") will not apply to certainacquisitions by McKesson of Shares under the Plan in eachof the Jurisdictions that regulates issuer bids;
2. AND WHEREAS underthe Mutual Reliance Review System for Exemptive Relief Applications(the "System") the Alberta Securities Commissionis the principal regulator for this application;
3. AND WHEREAS McKessonhas represented to the Decision Makers that:
3.1 McKesson is a corporationincorporated under the laws of the State of Delaware;
3.2 McKesson's head officeis located in San Francisco, California;
3.3 McKesson is registeredwith the Securities and Exchange Commission (the "SEC")in the United States of America (the "U.S.") underthe U.S. Securities Exchange Act of 1934, as amended (the"Exchange Act") and is not exempt from the reportingrequirements of the Exchange Act;
3.4 the authorized sharecapital of McKesson consists of 400 million shares of commonstock (the "Shares") of which as of February 8,2002, there were 287,453,771 Shares outstanding;
3.5 the Shares are listedon the New York Stock Exchange (the "NYSE") underthe symbol MCK and the Pacific Stock Exchange;
3.6 McKesson is not a reportingissuer or the equivalent in any Jurisdiction and has nopresent intention of becoming a reporting issuer in anyof the Jurisdictions;
3.7 under the Plan, employeesof McKesson or its affiliates (the "Employees")are permitted to purchase Shares at a discount to the marketprice of the Shares;
3.8 the purpose of the Planis to encourage employees to acquire a proprietary interest,or to increase their existing proprietary interest, in McKesson;
3.9 subject to adjustmentas provided in the Plan, the maximum number of Shares whichmay be issued under the Plan is 6,100,000;
3.10 Shares offered underthe Plan have been registered with the SEC under the SecuritiesAct of 1933, as amended, of the U.S. and all necessary securitiesfilings have been made in the U.S. in order to offer thePlan to Employees resident in the U.S.;
3.11 only Employees areeligible to participate in the Plan, except Employees whosecustomary employment is (a) less than 20 hours per week,and (b) for not more than five months in any calendar year;
3.12 as of March 13, 2002,there were approximately 31, 8, 3, 77, 16, and 19 Employeeseligible to participate in the Plan resident in BritishColumbia, Alberta, Manitoba, Ontario, Québec, andNew Brunswick, respectively;
3.13 Employees who enrollin the Plan (and in limited cases former Employees and Beneficiaries(defined below)) may purchase Shares from McKesson at adiscount to the market price;
3.14 purchases under thePlan are made solely with funds contributed through payrolldeductions, with an Employee electing to contribute between1 and 15% of the Employee's salary;
3.15 McKesson intends touse the services of one or more agents in connection withthe Plan, (each, an "Agent");
3.16 the role of the Agentmay include (a) assisting with the administration of andgeneral record keeping for the Plan; (b) maintaining recordkeeping and limited purpose brokerage accounts on behalfof participants in the Plan; (c) holding Shares on behalfof participants in limited purpose brokerage accounts; (d)facilitating the payment of withholding taxes, if any, and(e) facilitating the resale of Shares acquired under thePlan through the NYSE;
3.17 E*Trade Securities,Inc. ("E*Trade") and E*Trade Canada SecuritiesCorporation ("E*Trade Canada") have initiallybeen appointed by McKesson to act as Agents for the Plan.E*Trade is a corporation registered under applicable U.S.securities legislation and E*Trade Canada is registeredas a broker/dealer in each of the Jurisdictions. McKessonmay at any time appoint additional or replacement Agentsunder the Plan. Any Agent appointed in replacement of orin addition to E*Trade and E*Trade Canada is not expectedto be a registrant in the Jurisdictions and if not a registrantin the Jurisdictions, will be registered under applicableU.S. securities or banking legislation;
3.18 Participation in thePlans by Canadian Employees is voluntary and such personsare not induced to participate in the Plan by expectationof employment or continued employment with McKesson or itsaffiliates;
3.19 neither payroll deductionscredited to an Employee's account nor any rights under thePlan may be assigned, transferred, pledged or otherwisedisposed of in any way by an Employee (other than by willor the laws of intestacy or to a Beneficiary in accordancewith the terms of the Plan). In general, rights under thePlan are exercisable during the lifetime of an Employeeonly by the Employee (or in the case of incapacity, by hisor her legal representative);
3.20 in the event of thetermination of the employment of an Employee for any reasonother than death, disability or retirement, the Employee'sparticipation in the Plan will immediately terminate andthe balance of the former Employee's cash account will bereturned to the former Employee;
3.21 if an Employee terminatesemployment with the McKesson Companies during a PurchasePeriod (as defined in the Plan) due to death, then, at theelection of the Employee's beneficiary under the terms ofthe Plan or under a will or the laws of intestacy (a "Beneficiary"),the balance of the former Employee's cash account will be(i) delivered to the Beneficiary, or (ii) held in the cashaccount until the end of the relevant Purchase Period andapplied to the purchase of Shares on the purchase date;
3.22 Employees, former Employeesand Beneficiaries may sell Shares acquired under the Planthrough the Agent;
3.23 a prospectus preparedaccording to U.S. securities laws describing the terms andconditions of the Plan will be delivered to each Employeewho is eligible to participate in the Plan. The annual reports,proxy materials and other materials McKesson provides toits U.S. shareholders will be provided to Employees residentin the Jurisdictions who acquire and retain Shares underthe Plan at the same time and in the same manner as suchdocuments would be provided to U.S. shareholders;
3.24 Canadian resident shareholdersof McKesson do not own, directly or indirectly, more than10% of the issued and outstanding Shares and do not representin number more than 10% of the total number of shareholdersof McKesson;
3.25 if at any time duringthe currency of the Plan Canadian resident shareholdersof McKesson hold, in aggregate, greater than 10% of thetotal number of issued and outstanding Shares or if suchshareholders constitute more than 10% of all shareholdersof McKesson, McKesson will apply to the relevant Jurisdictionfor an order with respect to further trades to and by theCanadian resident shareholders in that Jurisdiction in respectof Shares acquired under the Plan;
3.26 because there is nomarket for the Shares in Canada and none is expected todevelop, any resale of the Shares acquired under the Planwill be effected through the facilities of, and in accordancewith the rules and laws applicable to, a stock exchangeor organized market outside of Canada on which the Sharesmay be listed or quoted for trading;
3.27 the Legislation ofcertain of the Jurisdictions does not contain exemptionsfrom the Registration and Prospectus Requirements for tradesof Shares to Employees, former Employees or Beneficiaries;
3.28 where the Agent holdsor sells Shares on behalf of Employees, former Employeesor Beneficiaries, none of the Employees, former Employees,Beneficiaries or the Agent is able to rely on the exemptionfrom the Registration Requirements contained in the Legislationof certain Jurisdictions to effect such sales;
3.29 under the Plan, McKessonmay acquire Shares from Employees, former Employees or Beneficiariesdirectly or through the Agent in connection with the satisfactionof withholding taxes ("Withholding Acquisitions");
3.30 the exemptions in theLegislation from the Issuer Bid Requirements are not availablefor certain acquisitions by McKesson of its Shares fromEmployees, former Employees or Beneficiaries in accordancewith the terms of the Plan, since acquisitions relatingto Withholding Acquisitions may occur at a price that isnot calculated in accordance with the "market price,"as that term is defined in the Legislation; under the Plan,McKesson will acquire such Shares at their fair market value,as determined in accordance with the Plan;
4. AND WHEREAS underthe System, this MRRS Decision Document evidences the decisionof each Decision Maker (collectively, the "Decision");
5. AND WHEREAS eachof the Decision Makers is satisfied that the test containedin the Legislation that provides the Decision Maker with thejurisdiction to make the Decision has been met;
6. AND WHEREAS theDecision of the Decision Makers under the Legislation is that:
6.1 the Registration andProspectus Requirements will not apply to any trade or distributionof Shares made in connection with the Plan, including tradesor distributions involving McKesson or its affiliates, theAgent, Employees, former Employees or Beneficiaries, providedthat, except in Québec, the first trade in Sharesacquired under the Plan under this Decision will be deemeda distribution or a primary distribution to the public underthe Legislation unless the conditions in subsection 2.14(1)of Multilateral Instrument 45-102 Resale of Securities("MI 45-102") are satisfied and provided that,in Québec, the first trade in Shares acquired throughthe Plan under this Decision will be deemed a distributionunless the alienation (resale) is made outside Québec;
6.2 the first trade by Employees,former Employees or Beneficiaries in Shares acquired underthis Decision will not be subject to the Registration Requirementprovided that, except in Québec, the conditions insubsection 2.14(1) of MI 45-102 are satisfied and, in Québec,the first trade is executed through a stock exchange ormarket outside of Canada; and
6.3 the Issuer Bid Requirementswill not apply to the acquisition by McKesson of Sharesfrom Employees, former Employees and Beneficiaries in connectionwith Withholding Acquisitions, made in accordance with theprovisions of the Plan.
May 29, 2002.
"Glenda A. Campbell" "DavidW. Betts"