Electronics Manufacturing Group Inc. - MRRS Decision

MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - Relief from issuer bid requirements granted inconnection with the exercise by an issuer of a previously-granted option to acquire certain of its common shares -Exercise price of option is below current market price of underlying shares, and exercise of option will not adversely affectthe issuer or its security holders.

Applicable Ontario Statute

Securities Act, R.S.O. 1990, c.S.5, as amended, ss. 95-98, 100 and 104(2)(c).

IN THE MATTER OF

THE SECURITIES LEGISLATION

OF ALBERTA, ONTARIO AND QUÉBEC

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ELECTRONICS MANUFACTURING GROUP INC.

MRRS DECISION DOCUMENT

1. WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of Alberta,Ontario and Québec (the "Jurisdictions") has received an application from Electronics Manufacturing Group Inc.("EMG") for a decision under the securities legislation of the Jurisdictions (the "Legislation") exempting theexercise by EMG of an option to acquire common shares from one of its shareholders from the requirementsconcerning issuer bids under the Legislation (the "Issuer Bid Requirements");

2. AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the "System"),the Alberta Securities Commission is the principal regulator for this application;

3. AND WHEREAS EMG has represented to the Decision Makers that:

3.1 EMG is a corporation amalgamated under the Business Corporations Act (Alberta);

3.2 EMG is a reporting issuer or the equivalent in each of the Jurisdictions;

3.3 the authorized capital of EMG includes an unlimited number of common shares ("Common Shares");

3.4 20,387,950 Common Shares are currently issued and outstanding;

3.5 the Common Shares are listed and posted for trading on the Canadian Venture Exchange ("CDNX");

3.6 EMG has applied to have the Common Shares listed on The Toronto Stock Exchange (the "TSE");

3.7 the TSE has granted EMG conditional approval for the listing of the Common Shares;

3.8 on December 10, 1998, Wray Hodgson (the "Grantor") granted a predecessor of EMG an option topurchase certain common shares of that predecessor held by him (the "Option");

3.9 the Grantor is a former employee of a predecessor of EMG;

3.10 the Grantor is not employed by EMG and is at arm's length to EMG and its officers and directors;

3.11 the Grantor is resident in Ontario;

3.12 the Option is currently exercisable by EMG to acquire 1,100,000 Common Shares (the "SubjectShares") from the Grantor at a price of $1.00 per share;

3.13 EMG now wishes to exercise the Option;

3.14 the trading history of the Common Shares on CDNX for the 2000 calendar year is as follows:

Month High($) Low($) Close($) Volume
January 5.00 3.50 4.80 799,488
February 8.95 4.85 7.30 1,937,061
March 7.60 6.00 7.00 1,054,652
April 8.00 5.50 5.90 1,099,840
May 6.00 4.16 4.95 892,733
June 5.90 4.76 5.10 769,215
July 5.30 4.61 4.80 202,457
August 5.50 4.35 5.40 420,095
September 6.75 5.50 5.70 906,967
October 6.00 4.90 5.05 328,478
November 5.75 4.60 4.98 909,913
December 5.00 4.00 4.60 400,801

3.15 the closing price of the Common Shares on CDNX on January 26, 2001 was $4.76;

3.16 the existence of the Option has previously been disclosed in prospectuses filed by EMG with theDecision Makers on March 23, 2000 and November 6, 2000 and in various other publicly availabledisclosure documents;

3.17 the exercise of the Option by EMG will not materially affect the control of EMG;

3.18 no undisclosed material changes concerning EMG exist;

3.19 EMG has no reason to believe that the exercise of the Option will adversely affect EMG or its securityholders;

3.20 the exercise of the Option by EMG to acquire the Subject Shares from the Grantor will be an issuerbid under the Legislation;

3.21 no exemption from the Issuer Bid Requirements exists under the Legislation to permit the exercise ofthe Option by EMG to acquire the Subject Shares from the Grantor;

4. AND WHEREAS under the System, this MRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

5. AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that providesthe Decision Maker with the jurisdiction to make the Decision has been met;

6. THE DECISION of the Decision Makers under the Legislation is that the exercise by EMG of the Option toacquire the Subject Shares from the Grantor shall be exempt from the Issuer Bid Requirements.

February 8, 2001.

"Glenda A. Campbell"       "James E. Allard"