Exemption Orders (Discretionary)
PFIZER, INC.
2001 BCSECCOM 22
Headnote
Mutual Reliance Review System for Exemptive Relief Applications – relief granted from the registration and prospectus requirements for trades of options, and shares acquired on the exercise of options, under employee stock option plans involving an administrator that is a registrant in the United States – relief also granted from the registration and, subject to certain conditions, the prospectus requirements for any resale of shares acquired under the plans – revocation of original order.
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 34 (1)(a), 48, 61, 76 and 171
IN THE MATTER OF the Securities Legislation of 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 Pfizer, Inc.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator (the “Decision Maker”, and collectively, the “Decision Makers”) in each of British Columbia, Alberta, and Nova Scotia (the “Jurisdictions”) has received an application (the “Application”) from Pfizer, Inc. (“Pfizer”) for a decision under the securities legislation of the Jurisdictions (the “Legislation”):
(a) revoking the MRRS Decision Document dated February 11, 2000 (the “Original Order”) that was issued by, among others, the Decision Makers to the Warner-Lambert Company (“Warner-Lambert”) in connection with the Warner-Lambert 1996 Stock Option Plan, as amended (the “1996 Plan”); and
(b) that 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”) (collectively, the “Registration and Prospectus Requirements”) shall not apply to certain trades in securities of Pfizer made in connection with the Warner-Lambert 1992 Stock Option Plan, as amended (the “1992 Plan”) or the 1996 Plan (the 1996 Plan and the 1992 Plan are collectively, the “Plans”);
AND WHEREAS under the Mutual Reliance Review System for Exemptive Relief Applications (the “System”), the Nova Scotia Securities Commission is the principal regulator for this application;
AND WHEREAS Pfizer has represented to the Decision Makers that:
1. Warner-Lambert, Pfizer and Seminole Acquisition Sub Corp., a wholly owned subsidiary of Pfizer (“Merger Sub”), entered into an Agreement and Plan of Merger dated February 6, 2000 (the “Pfizer Merger Agreement”), pursuant to which and subject to the terms and conditions set forth therein, effective June 19, 2000, Merger Sub was merged with and into Warner-Lambert, with Warner-Lambert being the surviving corporation of such merger (the “Merger”). Warner-Lambert is an affiliate of Pfizer;
2. Pfizer is a corporation incorporated under the laws of the State of Delaware in the United States;
3. Pfizer is not, and has no present intention of becoming, a reporting issuer or the equivalent under the legislation of any jurisdiction in Canada, but is subject to the reporting requirements of the United States Securities Exchange Act of 1934 (the “1934 Act”);
4. the authorized share capital of Pfizer consists of 9,000,000,000 shares of common stock (“Common Shares”) and 12,000,000 shares of preferred stock of which, as of September 30, 2000 there were 6,301,614,733CommonShares and no shares of preferred stock issued and outstanding;
5. the Common Shares are traded in the United States on the New York Stock Exchange (the “NYSE”) and in Europe on the London, Paris, Brussels and Swiss stock exchanges;
6. effective as of February 6, 2000, Pfizer amended the Plans in order to address various issues arising out of the Merger. Pfizer adopted the amended Plans on April 22, 2000. Upon adoption of the Plans by Pfizer and pursuant to the terms of the Plans and the Pfizer Merger Agreement,outstanding options on shares of Warner-Lambert common stock granted prior to the effective date of the Merger (“Warner-Lambert Options”) were subject to, among others, the following adjustments: (a) each Warner-Lambert Option accelerated and became exercisable in respect of all of the shares underlying such Warner-Lambert Option, and (b) each Warner-Lambert Option became exercisable for Common Shares based on the exchange ratio set out in the Pfizer Merger Agreement;
7. the Warner-Lambert Options that accelerated and became exercisable for Common Shares (“Pfizer Converted Options”) were adjusted pursuant to the terms of the Pfizer Merger Agreement so as to preserve their economic value and otherwise maintain all of the terms and conditions set out in the Plans and the original Warner-Lambert Option agreement;
8. no new grants of options over Pfizer Shares will be made under the 1992 Plan, however, new grants of options over Pfizer Shares (“Pfizer Options”) may be made by Pfizer to its employees or employees of its affiliates (“Employees”) under the 1996 Plan.
9. as of November 27, 2000, there was one Employee resident in each of the Jurisdictions holding outstanding Pfizer Converted Options;
10. options granted under the Plans are non-transferable, other than by will or the laws of descent or distribution;
11. participation in the Plans is voluntary and Employees are not induced to participate in the Plans or to exercise their options by expectation of employment or continued employment;
12. Pfizer proposes to use the services of agent(s) (each an "Agent") in connection with the Plans. Initially, Pfizer has selected Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) to act as the Agent. Merrill Lynch is, and, if replaced the Agent will be, a corporation registered under applicable U.S. securities or banking legislation to trade in securities. Merrill Lynch is not a registrant in any of the Jurisdictions and, if replaced, the Agent is not expected to be a registrant in any of the Jurisdictions;
13. the Agent’s role in the Plans will involve various administrative functions and may include (i) assisting optionees with option exercises (including cashless exercises); (ii) maintaining accounts on behalf of Employees and holding Common Shares on behalf of Employees in such accounts; and (iii) assisting Employees with the resale of Common Shares acquired under the Plans outside of Canada;
14. each Pfizer Option is granted under the 1996 Plan with an exercise price which is determined by the committee administering the 1996 Plan, but shall generally be equal to the fair market value of a Common Share on the date of grant;
15. under the Plans, an optionee may exercise his or her Pfizer Options or Pfizer Converted Options by following the procedures established from time to time by the committee responsible for administering the Plans. Generally, Pfizer Options and Pfizer Converted Options may be exercised by paying the exercise price in cash or by way of a cashless exercise through the Agent;
16. all sales of Common Shares made on behalf of Employees under the Plans will be made through the facilities of, and in accordance with the rules of, the NYSE or such other stock exchange or market outside of Canada upon which the Common Shares may be listed or quoted for trading and through the Agent;
17. Pfizer will concurrently distribute to all participants in the Plans resident in the Jurisdictions: (i) the same disclosure material relating to the Plans and to Pfizer as is forwarded to participants in the Plans resident in the United States or, with respect to the Plans, Canadianized versions of these documents; and (ii) a copy of this Decision Document;
18. a copy of a prospectus relating to the 1996 Plan which includes a summary of the 1996 Plan will be distributed to all participants who receive new grants of Pfizer Options under the 1996 Plan;
19. at the time of any issuance by Pfizer of securities under the Plans, holders of Common Shares whose last address as shown on the books of Pfizer was in Canada will not hold more than 10% of the outstanding Common Shares and will not represent in number more than 10% of the total number of holders of Common Shares;
20. there is no market in the jurisdictions for the Common Shares and none is expected to develop;
21. in that the Original Order was granted to Warner-Lambert, Pfizer and the Agent may not rely on the Original Order in connection with trades made pursuant to the 1996 Plan;
22. the Legislation of certain of the Jurisdictions does not contain exemptions from the Prospectus Requirements and/or Registration Requirements for trades in Pfizer Options, Pfizer Converted Options or Common Shares under the Plans;
23. where the Agent sells Common Shares on behalf of a participant, neither the participant nor the Agent is able to rely on the exemption from the Registration Requirements contained in the Legislation for trades made by a person acting solely through a registered dealer under the Legislation; and
24. the Legislation of certain of the Jurisdictions deems any trade in Common Shares acquired under the Plans to be a distribution unless, among other things, Pfizer is a reporting issuer and has been a reporting issuer for the 12 months immediately preceding the trade;
AND WHEREAS under the System this Decision Document evidences the decision of each Decision Maker (collectively, the “Decision”);
AND WHEREAS each Decision Maker 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 and Prospectus Requirements shall not apply to any trade or distribution of Pfizer Converted Options, Pfizer Options or Common Shares made in connection with the Plans, including trades and distributions involving the Agent;
(b) the Registration Requirements shall not apply to affiliates of Pfizer or the Agent in connection with trades in Pfizer Options, Pfizer Converted Options or Common Shares made in connection with the Plans or to first trades in Common Shares acquired under the Plans made through the Agent; and
(c) the first trade in any of the Common Shares acquired pursuant to this Decision shall be deemed to be a distribution under the Legislation unless such first trade is executed through the facilities of, and in accordance with the rules and laws applicable to, a stock exchange outside of Canada on which the Common Shares may be listed or quoted for trading or on the Nasdaq Stock Market.
AND IT IS THE FURTHER DECISION of the Decision Makers pursuant to the Legislation that the Original Order made under the Legislation in respect of the 1996 Plan is revoked.
DATED at Halifax, Nova Scotia this 22nd day of December, 2000
Robert B. MacLellan H. Leslie O’Brien