Exemption Orders (Discretionary)

FIRST DATA CORPORATION


2001 BCSECCOM 1034


Headnote

Mutual Reliance Review System for Exemptive Relief Applications – Relief granted from the registration requirements regarding first trades of securities through a US broker, subject to certain conditions. Relief also granted from the issuer bid requirements for the acquisition of shares by the issuer from employees and former employees at a price determined under the plan.

Applicable British Columbia Provisions

Securities Act, R.S.B.C. 1996, c. 418, s. 34(1)(a), 45(2)(10), 48, 61, 74(2)(9), 105-108, 110, 114(2)c

BCI 45-507 Trades to Employees, Executives and Consultants and BCI 72-501 Prospectus Exemption for Trades in Securities of a Non-Reporting Issuer Over a Market Outside Canada

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO, BRITISH COLUMBIA, ALBERTA, AND NOVA SCOTIA

AND

IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF FIRST DATA CORPORATION

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatory authority or regulator (the "Decision Maker") in each of Ontario, British Columbia, Alberta, and Nova Scotia (the “Jurisdictions”) has received an application from First Data Corporation ("First Data" or the “Company”) for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that (i) 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 a preliminary prospectus and a prospectus (the “Prospectus Requirements”) shall not apply to certain trades in Awards or Shares (both as defined below) of First Data made in connection with the First Data Corporation 1992 Long-Term Incentive Plan (the “Plan”); (ii) the Registration Requirements shall not apply to first trades of Shares executed on an exchange or market outside of Canada; and (iii) the requirements contained in the Legislation relating to the delivery of an offer and issuer bid circular and any notices of change or variation thereto, minimum deposit periods and withdrawal rights, take-up and payment for securities tendered to an issuer bid, disclosure, restrictions upon purchases of securities, financing, identical consideration, collateral benefits, and form filing (the “Issuer Bid Requirements”) shall not apply to certain acquisitions by the Company of Shares or Awards pursuant to the Plan in each of the Jurisdictions.

AND WHEREAS pursuant to the Mutual Reliance Review System for Exemptive Relief Applications (the "System"), the Ontario Securities Commission is the principal regulator for this application;

AND WHEREAS First Data has represented to the Decision Makers as follows:

1. First Data is a corporation incorporated under the laws of the State of Delaware, is not a reporting issuer under the Legislation and has no present intention of becoming a reporting issuer under the Legislation;

2. The authorized share capital of First Data consists of 600,000,000 shares of common stock (“Shares”) and 10,000,000 shares of Preferred Stock (“Preferred Stock”), of which, as of September 30, 2001 there were 381,080,674 Shares (excluding treasury Shares) and no Preferred Stock issued and outstanding;

3. First Data is subject to the requirements of the Securities Exchange Act of 1934, as amended, of the United States, including the reporting requirements thereof;

4. A maximum of 69,580,000 Shares have been reserved for issuance pursuant to the Plan, subject to adjustment as provided in the Plan;

5. The purpose of the Plan is to advance the interests of First Data and its stockholders by providing incentives to certain key employees of the Company and its affiliates and to certain other key individuals who perform services for these entities, including those who contribute significantly to the strategic and long-term performance objectives and growth of the Company and its affiliates (the “First Data Companies”);

6. The Shares offered under the Plan are registered with the U.S. Securities and Exchange Commission (the "SEC") under the Securities Act of 1933;

7. The Shares are listed for trading on the New York Stock Exchange ("NYSE");

8. Under the Plan, options exercisable for Shares (“Options”), stock appreciation rights (“SARs”), restricted shares ("Restricted Stock") and performance grants ("Performance Awards") (all of the foregoing collectively, "Awards") may be granted to employees, including employee directors, of First Data Companies (“Employees”);

9. First Data or the First Data Companies will identify Employees to be granted Awards under the Plan, including Employees resident in the Jurisdictions (“Canadian Employees”). There are currently nine (9) Canadian Employees eligible to participate in the Plan.

10. First Data intends to engage the services of agent(s) (the "Agent") in connection with the Plan. The current Agent under the Plan is Salomon Smith Barney, Inc. (“SSB”).

11. The current Agent is, and, if replaced, the replacement Agent will be, a corporation registered under applicable U.S. securities or banking legislation; SSB has been and any replacement Agent will be, authorized by First Data to provide services under the Plan.

12. SSB is not a registrant in any of the Jurisdictions (except as an International Dealer in Ontario) and, if replaced, the replacement Agent is not expected to be a registrant in any of the Jurisdictions;

13. The Agent’s role in the Plan will involve various administrative and brokerage functions and may include: (i) facilitating the exercise of Awards (including cashless exercises, stock-swap exercises and Award-swap exercises) under the Plan; (ii) maintaining accounts and holding Shares on behalf of participants under the Plan; and (iii) facilitating the resale of Shares acquired under the Plan through the NYSE;

14. Participation in the Plan by Canadian Employees is voluntary and such Employees are not induced to participate in the Plan or to exercise their exercisable Awards by expectation of employment or continued employment with First Data Companies;

15. Awards are not transferable otherwise than by will or the laws of intestacy;

16. The committee appointed by the Compensation and Benefits Committee of the Board of Directors of First Data (the “Committee”) shall establish procedures governing the exercise of Options (and other Awards that are capable of being exercised); generally, in order to exercise an Option or other exercisable Award, the Award holder, must submit to the Agent a written notice of exercise identifying the Award and the number of Shares being exercised, together with full payment of the exercise price; the exercise price of an Award may be paid in cash or where permitted by the Committee, by way of a cashless exercise, promissory note, stock-swap exercise, Award-swap exercise, or such other method permitted by the Committee;

17. Following the termination of a Canadian Employee’s relationship with the First Data Companies, a former Canadian Employee, or in some cases the legal representative of a Canadian Employee or of a former Canadian Employee, or the beneficiary of an Award by will or the laws of intestacy (collectively, “Non-Employee Participants”) may continue to have rights in respect of such Awards and Shares (“Post-Termination Rights”); Post-Termination Rights may include, among other things, the right of a Non-Employee Participant to exercise an Award for a specified period and the right to sell Shares issued under the Plan through the Agent;

18. A copy of the U.S. Prospectus relating to the Plan will be delivered to each Canadian Employee who is granted an Award under the Plan; the annual reports, proxy materials and other materials First Data is required to file with the SEC, will be provided to persons who acquire Shares under the Plan and become shareholders at the same time and in the same manner as the documents are provided to U.S. shareholders;

19. Canadian Employees and Non-Employee Participants who wish to sell Shares acquired under the Plan, may do so through the Agent;

20. At the time of any grant of an Award to a Canadian Employee under the Plan, holders of Shares whose last address as shown on the books of First Data was in Canada will not hold more than 10% of the outstanding Shares and will not represent in number more than 10% of the total number of holders of Shares;

21. Because there is no market for the Shares in Canada and none is expected to develop, any resale of the Shares acquired under the Plan will be effected through the facilities of, and in accordance with the rules and laws applicable to, a stock exchange or organized market outside of Canada on which the Shares may be listed or quoted for trading;

22. The Legislation of certain Jurisdictions does not contain exemptions from the Registration Requirements and the Prospectus Requirements for Award exercises by Canadian Employees and Non-Employee Participants through the Agent where the Agent is not a registrant;

23. Where the Agent sells Shares on behalf of Canadian Employees or Non-Employee Participants, none of the Canadian Employees, Non-Employee Participants or the Agent is able to rely on any exemption from the Registration Requirements contained in the Legislation of certain Jurisdictions to effect such sales;

24. The Legislation of certain Jurisdictions deems any trade in Shares acquired under the Plan to be a distribution or primary distribution to the public unless, among other things, First Data is a reporting issuer and has been a reporting issuer for a prescribed period of time preceding the trade; and

25. The exemptions in the Legislation from the Issuer Bid Requirements are not available for certain acquisitions by the Company of its Shares from Canadian Employees or Non-Employee Participants in accordance with the terms of the Plan, since acquisitions relating to stock-swap exercises may occur at a price that is not calculated in accordance with the “market price,” as that term is defined in the Legislation; under the Plan, the Company will acquire such tendered Shares at their fair market value, as determined in accordance with the Plan.

AND WHEREAS pursuant to the System, this Decision Document evidences the decision of each Decision Maker (collectively, the "Decision").

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

THE DECISION of the Decision Makers pursuant to the Legislation is that:

A. the Registration Requirements and the Prospectus Requirements shall not apply to any trade or distribution of Awards or Shares, made in connection with the Plan, including trades and distributions involving First Data and its Canadian affiliates, the Agent, Canadian Employees or Non-Employee Participants, provided that the first trade in Shares acquired through the Plan pursuant to this Decision shall be deemed a distribution or primary distribution to the public under the Legislation unless such first trade is executed on a stock exchange or market outside of Canada;

B. the first trade by Canadian Employees or Non-Employee Participants in Shares acquired pursuant to this Decision, including first trades effected through the Agent, shall not be subject to the Registration Requirements, provided such first trade is executed through a stock exchange or market outside of Canada; and

C. the Issuer Bid Requirements of the Legislation shall not apply to the acquisition by First Data of Shares or Awards from Canadian Employees or Non-Employee Participants in connection with stock-swap exercises, made in connection with the provisions of the Plan.

DATED 23rd day of October, 2001.

R. Stephen Paddon H. Lorne Morphy
©2024 British Columbia Securities Commission