Mutual Reliance Review System for ExemptiveRelief Applications -- exemption from registration and prospectusrequirements for trades in connection with acquisition of Canadianprivate target company by U.S. public company using exchangeableshares provided first trade in U.S. company's shares a distributionunless it satisfies conditions in section 2.14 of MultilateralInstrument 45-102.
Applicable Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 25, 35(1) 16, 72(1)(j), 53, and 74(1).
Multilateral Instrument 45-102 Resale of Securities,s. 2.14.
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
ONTARIO AND NOVA SCOTIA
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
TRIMBLE NAVIGATION LIMITEDAND APPLANIX CORPORATION
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Makers") inOntario and Nova Scotia (collectively, the "Jurisdictions")has received an application from Trimble Navigation Limited("Trimble") and Applanix Corporation ("Applanix"and together with Trimble, the "Filers") for a decisionunder the securities legislation of the Jurisdictions (the "Legislation")that the requirements contained in the Legislation to be registeredto trade in a security (the "Registration Requirement")and to file a preliminary prospectus and a prospectus, and toreceive receipts therefor (the "Prospectus Requirement"),shall not apply to certain trades of securities to be made inconnection with Trimble's acquisition of Applanix (the "Acquisition")under a purchase agreement (the "Purchase Agreement")between Trimble, Applanix, Trimble Holdings Company ("TrimbleHoldings"), Trimble Exchangeco Limited ("Trimble Exchangeco")and the shareholders of Applanix (the "Vendors").
AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;
AND WHEREAS the Filers have representedto the Decision Makers that:
1. The Acquisition has been effected by Trimble'sdirect wholly-owned Nova Scotia subsidiary, Trimble Holdings,and Trimble's indirect wholly-owned Ontario subsidiary, TrimbleExchangeco, that acquired the Applanix common shares (the"Applanix Shares") and the Applanix subordinateddebenture (the "Debenture") in consideration forcommon shares of Trimble ("Trimble Common Shares")or exchangeable shares of Trimble Exchangeco ("ExchangeableShares"), which are exchangeable by the holders thereof(the "Exchangeable Shareholders") from time to timeinto Trimble Common Shares, at no cost, on a one-for-one basis,all pursuant to, and as contemplated by, the terms of thePurchase Agreement. The Acquisition closed on July 7, 2003.
2. In accordance with the rights, privileges,restrictions and conditions attaching to the ExchangeableShares (the "Exchangeable Share Provisions"), subjectto certain anti-dilution adjustments and overriding call rightsof Trimble and its affiliates, each Exchangeable Share willbe exchangeable at any time by, and at the option of, theholder thereof for one Trimble Common Share upon: (i) exercisingthe retraction right granted to it by Trimble Exchangeco;or (ii) the liquidation, dissolution or winding-up of TrimbleExchangeco.
3. At the closing of the Acquisition, Trimble,Trimble Holdings and Trimble Exchangeco entered into a supportagreement (the "Support Agreement") pursuant towhich (i) Trimble covenanted to ensure that Trimble Exchangecowill be able to fulfil its obligations in respect of the dividendand retraction rights, the dissolution entitlements and theother attributes of the Exchangeable Shares and (ii) Trimblecovenanted to ensure that Trimble and its affiliates willbe able to fulfil their obligations under the various callrights related to the Exchangeable Shares. At the closingof the Acquisition, Trimble, Trimble Holdings, Trimble Exchangecoand the Exchangeable Shareholders entered into an exchangeright agreement (the "Exchange Right Agreement")pursuant to which Trimble granted to the Exchangeable Shareholdersthe right to exchange their Exchangeable Shares for an equalnumber of Trimble Common Shares in certain circumstances,including the insolvency of Trimble Exchangeco or the failureof Trimble Exchangeco to complete the purchase of ExchangeableShares upon the exercise by an Exchangeable Shareholder ofits retraction right.
4. Applanix was amalgamated under the lawsof the Province of Ontario on August 1, 2000. Applanix isa "private company" as defined in the Act, and isnot a "reporting issuer" under the Act or underthe securities legislation in any other jurisdiction in Canada.
5. Applanix is in the business of designing,developing, manufacturing, selling and supporting productsthat measure the position and orientation of vehicles or pointsfor purposes of surveying in dynamic environments.
6. The registered head office of Applanixis located at 85 Leek Crescent, Richmond Hill, Ontario.
7. Applanix's authorized capital consistsof an unlimited number of Applanix Shares, of which 47,661Applanix Shares are issued and outstanding.
8. Prior to the closing of the Acquisition,all the outstanding Applanix Shares were owned by the Vendors.Each of the Vendors is resident in Ontario.
9. Trimble was incorporated under the lawsof California on January 1, 1981. Trimble is a "registrant"under, and is subject to, the requirements of the United StatesSecurities Exchange Act of 1934, as amended. Trimbleis not a "reporting issuer" under the Legislationor under any other securities legislation in Canada and willnot become a reporting issuer under the Legislation followingcompletion of the Acquisition. The Trimble Common Shares arequoted on The NASDAQ National Market under the symbol "TRMB".
10. Trimble is in the business of providingadvanced positioning products and solutions to industrial,commercial, governmental entities, and professional customersin a number of markets including surveying, construction,agriculture, urban and resource management, military, transportation,and telecommunications.
11. The executive offices of Trimble are locatedin Sunnyvale, California.
12. The authorized capital of Trimble consistsof 40,000,000 Trimble Common Shares and 3,000,000 preferredshares. As at May 20, 2003, 31,718,703 Trimble Common Sharesand no preferred shares were issued and outstanding.
13. Trimble Holdings is a direct wholly-ownedsubsidiary of Trimble. Trimble Holdings was incorporated underthe laws of the Province of Nova Scotia on June 12, 2003 solelyto hold all of the common shares of Trimble Exchangeco, andto hold, along with Trimble and its affiliates, the variouscall rights related to the Exchangeable Shares.
14. Trimble Holdings has no assets and doesnot carry on any business. Aside from holding all of the commonshares of Trimble Exchangeco and certain call rights relatedto the Exchangeable Shares, Trimble Holdings will have noother business.
15. The registered office of Trimble Holdingsis located at 1601 Lower Water Street, Halifax, Nova Scotia.
16. The authorized capital of Trimble Holdingsconsists of 100 billion common shares, 100 billion first preferredshares, issuable in series and 100 billion second preferredshares, issuable in series. As at the date hereof, all ofthe common shares issued by Trimble Holdings are held directlyby Trimble and there are no preferred shares issued and outstanding.The Support Agreement requires Trimble to hold, directly orindirectly, all of the issued and outstanding voting sharesin the capital of Trimble Holdings so long as any ExchangeableShare is held by any person, other than Trimble or an affiliateof Trimble.
17. Trimble Exchangeco is a direct wholly-ownedsubsidiary of Trimble Holdings. Trimble Exchangeco was incorporatedunder the laws of the Province of Ontario on June 12, 2003solely for purposes of the Acquisition.
18. Trimble Exchangeco has no assets and doesnot carry on any business.
19. The registered head office of TrimbleExchangeco is located at 199 Bay Street, Suite 2800, Toronto,Ontario.
20. The authorized capital of Trimble Exchangecoconsists of an unlimited number of common shares (the "CommonShares"), an unlimited number of Exchangeable Shares,an unlimited number of preferred shares designated as firstpreferred shares, issuable in series (the "First PreferredShares") and an unlimited number of preferred sharesdesignated as second preferred shares, issuable in series(the "Second Preferred Shares"). As at the datehereof, all of the Common Shares issued by Trimble Exchangecoare held directly by Trimble Holdings and all of the ExchangeableShares issued by Trimble Exchangeco are held by the ExchangeableShareholders. As at the date hereof, no First Preferred Sharesor Second Preferred Shares are issued and outstanding. TheSupport Agreement requires Trimble to hold, directly or indirectly,all of the issued and outstanding voting shares in the capitalof Trimble Exchangeco so long as any Exchangeable Share isheld by any person, other than Trimble or an affiliate ofTrimble.
21. The Exchangeable Shares are securitiesof Trimble Exchangeco, each having economic attributes, includingdividend rights and liquidation entitlements, which are, asnearly as practicable, equivalent to those of a Trimble CommonShare. The Exchangeable Share Provisions are set out in theconstating documents of Trimble Exchangeco. This economicequivalency enabled the Vendors to complete the Acquisitionwithout triggering an immediate tax liability that would otherwisearise if the Vendors received as consideration Trimble CommonShares.
22. Subject to the overriding call right ofTrimble and its affiliates, Trimble Exchangeco may redeemthe outstanding Exchangeable Shares on or after June 30, 2008or on an earlier date in certain circumstances as set forthin the Exchangeable Share Provisions.
23. The Exchangeable Share Provisions containanti-dilution provisions to ensure that the Exchangeable Shareholders'economic interests in Trimble will not be adversely affectedby the occurrence of events such as a subdivision, consolidationor other change in the capital of Trimble affecting the TrimbleCommon Shares, a distribution of Trimble Common Shares toholders thereof by way of stock dividend, option, right orwarrant, or any other distribution of securities, assets orindebtedness of Trimble or its subsidiaries to holders ofTrimble Common Shares.
24. Except as required by applicable law andthe Exchangeable Share Provisions, Exchangeable Shareholdersare not entitled to receive notice of or to attend any meetingof the shareholders of Trimble Exchangeco or to vote at anysuch meeting.
25. Under the Exchange Right Agreement, Trimblegranted to the Exchangeable Shareholders an exchange right(the "Insolvency Exchange Right") that may be exercisedby the Exchangeable Shareholders upon the insolvency of TrimbleExchangeco. Subject to the overriding call right of Trimbleand its affiliates, the Insolvency Exchange Right, when exercised,will require Trimble to purchase from an Exchangeable Shareholderall or any part of the Exchangeable Shares held by the ExchangeableShareholder.
26. Under the Exchange Right Agreement, theExchangeable Shares will be automatically exchanged (the "AutomaticExchange Right") by Trimble for Trimble Common Sharesin the event of a voluntary or involuntary liquidation, dissolutionor winding-up of Trimble (an "Automatic Exchange Event").In the event of an Automatic Exchange Event, each outstandingExchangeable Share (except for those held by Trimble or itsaffiliates) will be automatically exchanged for Trimble CommonShares prior to the effective date of the Automatic ExchangeEvent.
27. Trimble, Trimble Holdings and TrimbleExchangeco have entered into a Support Agreement pursuantto which, among other things Trimble has agreed to ensurethat:
(a) Trimble Exchangeco (i) has sufficientassets available to pay simultaneous and equivalent dividendson the Exchangeable Shares as are paid by Trimble on theTrimble Common Shares, and (ii) simultaneously declaresand pays such simultaneous and equivalent dividends on theExchangeable Shares;
(b) Trimble Exchangeco fulfils its obligationsin respect of the redemption and retraction rights and dissolutionentitlements that are attributes of the Exchangeable Shares;and
(c) Trimble and its affiliates fulfil theirobligations in respect of the various call rights relatedto the Exchangeable Shares.
28. The Support Agreement also provides thatif a tender offer, share exchange offer, issuer bid, take-overbid or similar transaction with respect to the Trimble CommonShares (collectively, an "Offer") is effected withthe consent or approval of the board of directors of Trimble,and the Exchangeable Shares are not redeemed by Trimble Exchangecoor purchased by Trimble or any of its affiliates pursuantto the Redemption Call Right, Trimble will in good faith attemptto enable the Exchangeable Shareholders (other than Trimbleand its affiliates) to participate in such Offer on a basiseconomically equivalent to the holders of Trimble Common Shares.
29. The Support Agreement also provides that,without the prior approval of the holders of the ExchangeableShares, actions such as distributions of stock dividends,options, rights and warrants for the purchase of securitiesor other assets, subdivisions, reclassifications, reorganizationsand other changes cannot be taken in respect of the TrimbleCommon Shares without the same or an economically equivalentaction being taken in respect of the Exchangeable Shares.
30. In addition, for so long as any outstandingExchangeable Shares are held by persons other than Trimbleor its affiliates, Trimble covenants to remain the director indirect beneficial owner of all of the issued and outstandingvoting shares in the capital of Trimble Holdings and TrimbleExchangeco.
31. The Exchange Right Agreement, the ExchangeableShare Provisions, and the Support Agreement contemplate tradesin (i) the Exchangeable Shares, (ii) the Trimble Common Shares,and (iii) various rights to acquire the Exchangeable Sharesand Trimble Common Shares (collectively, the "Trades").There may be no registration or prospectus exemptions availableunder the Legislation for certain of the Trades that are subjectto the Registration Requirement and the Prospectus Requirement.
32. Canadian residents would, as at the datehereof, constitute less than 10% of the total number of beneficialholders of Trimble Common Shares holding less than 10% ofthe total issued and outstanding Trimble Common Shares ifall of the Exchangeable Shares were exchanged for TrimbleCommon Shares.
AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;
THE DECISION of the Decision Makers underthe Legislation is that the Registration Requirement and theProspectus Requirement shall not apply to the Trades, providedthat the first trade in Trimble Common Shares acquired underthis Decision shall be a distribution unless such first tradecomplies with section 2.14 of Multilateral Instrument 45-102.
August 6, 2003.
"Harold P. Hands"
"Wendell S. Wigle"