Headnote
National Policy 11-203 Process For Exemptive Relief Applications in Multiple Jurisdictions – relief from registration and prospectus requirements in connection with the use of electronic roadshow materials – cross-border offering of securities – compliance with U.S. offering rules leads to non-compliance with Canadian regime – relief required as use of electronic roadshow materials constitutes a distribution requiring compliance with prospectus and registration requirements – relief granted from sections 25 and 53 of the Securities Act (Ontario) in connection with a cross-border offering – decision subject to conditions.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 25, 53.
National Policy 47-201 – Trading Securities Using the Internet and Other Electronic Means, s. 2.7.
DATE: May 25, 2010
IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO
(THE "JURISDICTION")
AND
IN THE MATTER OF THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS IN MULTIPLE JURISDICTIONS AND
IN THE MATTER OF NEXX SYSTEMS, INC.
(THE "FILER")
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") for a decision exempting the Filer from the prospectus requirement to permit the Filer to post certain roadshow materials on the website of one or more commercial services such as www.retailroadshow.com and/or www.netroadshow.com during the "waiting period" and the registration requirement under the Legislation (collectively, the "Exemption Sought").
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application),
(a) the Ontario Securities Commission is the principal regulator for this application; and
(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Prince Edward Island, Nova Scotia and Newfoundland and Labrador.
Interpretation
Defined terms contained in National Instrument 14-101 – Definitions and MI 11-102 have the same meaning in this decision unless they are defined in this decision.
Representations
This decision is based on the following facts and representations made by the Filer:
The Filer was formed as a limited liability company in Delaware in 2001 and converted to a Delaware corporation in 2003 in accordance with the requirements of Delaware General Corporation Law.
The principal office of the Filer is located at 900 Middlesex Turnpike, Building #6 Billerica, Massachusetts 01821.
On February 11, 2010, the Filer filed a registration statement on Form S-1 (the "Form S-1") under the Securities Act of 1933 of the United States of America, as amended (the "1933 Act") with the United States Securities and Exchange Commission (the "SEC") relating to the initial public offering (the "Offering") of its shares of common stock (the "Offered Shares").
On April 7, 2010, the Filer filed a preliminary base PREP prospectus (the "Preliminary Prospectus") relating to the Offering with the securities regulatory authority in each of the provinces (other than Québec) of Canada and contemporaneously filed Amendment No. 1 to the Form S-1 with the SEC. On May 14, 2010, the Filer filed an amended and restated preliminary prospectus (the "Amended and Restated Preliminary Prospectus") in each of the provinces (other than Québec) of Canada and a preliminary base PREP prospectus in Québec (the "French Preliminary Prospectus" and together with the Amended and Restated Preliminary Prospectus, the "May 14, 2010 Prospectus") and contemporaneously filed Amendment No. 2 to the Form S-1 with the SEC. All of the provinces of Canada are collectively referred to as the "Canadian Jurisdictions". The Filer intends to post certain roadshow materials on the website of one or more commercial services, such as www.retailroadshow.com and/or www.netroadshow.com, between the date of issuance of the receipts for the May 14, 2010 Prospectus (being May 14, 2010) and the date of issuance of a receipt for a final base PREP prospectus (such period being known as the "waiting period"), and during such waiting period, the Filer intends to utilize electronic roadshow materials (the "Website Materials") as part of the marketing efforts for the Offering, as is now typical for an initial public offering in the United States.
Because the Filer will not be required to file reports with the SEC pursuant to section 13 or section 15(d) of the U.S. Securities Exchange Act of 1934, as amended until the time the Form S-1 has become effective pursuant to the 1933 Act, Rule 433(d)(8)(ii) under the 1933 Act which came into effect in December 2005, requires the Filer to either file the Website Materials with the SEC or make them "available without restriction by means of graphic communication to any person...". The staff of the SEC have taken the position that the requirement to be "available without restriction" means that there cannot be any restrictions on access or viewing imposed, both with respect to persons in and outside of the United States.
Compliance with applicable U.S. securities laws thus requires the Filer to either make the Website Materials available in a manner that affords unrestricted access to the public, or file the Website Materials on the SEC's EDGAR system, which will have the same effect of affording unrestricted access; however, doing so is contrary to Canadian securities laws, in particular, the prospectus requirement and activities that are permissible during the waiting period which, when applied together, require that access to the Website Materials be controlled by the Filer or the underwriters by such means as password protection and otherwise, as suggested by National Policy 47-201 – Trading Securities Using the Internet and Other Electronic Means.
The Filer wishes to comply with applicable U.S. securities laws by posting the Website Materials on the website of one or more commercial services, such as www.retailroadshow.com or www.netroadshow.com, without any restriction on their accessibility, such as password protection.
All information about the Filer’s securities is contained in the May 14, 2010 Prospectus..
The Website Materials will contain a statement that information conveyed through the Website Materials does not contain all of the information in the May 14, 2010 Prospectus, including any amendments to it, or the final base PREP prospectus including any amendment to it, or the supplemented PREP prospectus including any amendment to it (the "Final Prospectus"), and that prospective purchasers should review all of those prospectuses, in addition to the Website Materials, for complete information regarding the Offered Shares.
The Website Materials will be fair and balanced.
Canadian purchasers will only be able to purchase the Offered Shares through an underwriter that is registered in the respective Canadian Jurisdiction of residence of the Canadian purchaser under the Final Prospectus.
The Filer acknowledges that the Exemption Sought relates only to the posting of the Website Materials on the website of one or more commercial services, such as www.retailroadshow.com and/or www.netroadshow.com, and not in respect of the Final Prospectus.
The Filer is not in default of securities legislation except to the extent that the Filer may be in default for posting the Website Materials before the date of this decision document.
Decision
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that:
The Filer and the Canadian underwriters provide each of the purchasers of the Offered Shares in the Canadian Jurisdictions under the Final Prospectus, including any amendments to it, with a contractual right of action against the Filer and the Canadian underwriters as described in the disclosure required by condition 2.
The Preliminary Prospectus, the May 14, 2010 Prospectus including any amendments to it, and the Final Prospectus, including any amendments to it, state that purchasers of the Offered Shares in each of the Canadian Jurisdictions have a contractual right of action against the Filer and the Canadian underwriters, substantially in the following form:
"We may make available certain materials describing the offering (the "Website Materials") on the website of one or more commercial services such as www.retailroadshow.com and/or www.netroadshow.com under the heading "NEXX Systems, Inc." in accordance with U.S. securities law during the period prior to obtaining a final receipt for the final long form base PREP prospectus relating to this offering (the "Final Prospectus") from the securities regulatory authorities in each of the provinces of Canada other than for Québec (the "Canadian Jurisdictions"). In order to give purchasers in each of the Canadian Jurisdictions the same unrestricted access to the Website Materials as provided to U.S. purchasers, we have applied for and obtained exemptive relief in a decision dated May *, 2010 from the securities regulatory authorities in each of the Canadian Jurisdictions. Pursuant to the terms of that exemptive relief, we and each of the Canadian underwriters signing the certificate contained in the Final Prospectus have agreed that if the Website Materials contained any untrue statement of a material fact or omitted to state a material fact required to be stated or necessary in order to make any statement therein not misleading in the light of the circumstances in which is was made (a "misrepresentation") a purchaser resident in any of the Canadian Jurisdictions who purchases common shares under the Final Prospectus during the period of distribution has, without regard to whether the purchaser relied on the misrepresentation, rights against us and each of the Canadian underwriters for the misrepresentations that are equivalent to the rights under section 130 of the Securities Act (Ontario) or the comparable provision of the securities legislation of each of the other Canadian Jurisdictions, as if that misrepresentation was contained in the Final Prospectus."
The Website Materials will not include comparables unless the comparables are also included in the May 14, 2010 Prospectus or in an amendment to it that is filed prior to the Website Materials being made available.
The Website Materials will also contain a hyperlink to the May 14, 2010 Prospectus, including any amendments to it, and the Final Prospectus, including any amendments to it, as at and after such time as a particular prospectus is filed.
At least one underwriter who signed the Preliminary Prospectus and the May 14, 2010 Prospectus was, and at least one underwriter who signs any amendment to the May 14, 2010, the Final Prospectus, including any amendments to it, will be, registered in each of the Canadian Jurisdictions.
“James D. Carnwath” “Paulette L. Kennedy”