Exemption Orders (Discretionary)
UNITED PARCEL SERVICE, INC.
2001 BCSECCOM 907
Headnote
Mutual Reliance Review System for Exemptive Relief Applications - relief from registration and prospectus requirements granted in respect of certain trades in shares and awards of a US issuer to permitted transferees and by permitted transferees and former employees in connection with certain incentive and stock purchase plans.
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 34(1)(a), 48, 61 and 76
IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN AND ONTARIO
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF UNITED PARCEL SERVICE, INC.
MRRS DECISION DOCUMENT
WHEREAS the Canadian securities regulatory authority or regulator (the “Decision Maker”) in each of British Columbia, Alberta, Saskatchewan and Ontario (the “Jurisdictions”) received an application from United Parcel Service, Inc. (“UPS”) for a decision pursuant to the securities legislation of the Jurisdictions (the “Legislation”) that the requirements contained in the Legislation to be registered to trade in a security (the “Registration Requirement”) and to file and obtain a receipt for a preliminary prospectus and a prospectus (the “Prospectus Requirement”) (collectively, the “Registration and Prospectus Requirements”) shall not apply to certain trades of options and shares of UPS in connection with the proposed UPS Discounted Employee Stock Purchase Plan (the “Stock Purchase Plan”);
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 it has been represented by UPS to the Decision Makers that:
1. UPS is a corporation incorporated under the laws of the State of Delaware.
2. UPS is not and has no present intention of becoming a reporting issuer under the Act or the securities legislation of any province or territory of Canada.
3. UPS is subject to the requirements of the Securities Exchange Act of 1934 and is not exempt from the reporting requirements of the 1934 Act under any rule.
4. The authorized capital of UPS consists of: (a) 1,533,333,333 Class A-1 common stock (the “Class A-1 Shares”), par value $0.01 per share; (b) 1,533,333,333 Class A-2 common stock (the “Class A-2 Shares”), par value $0.01 per share; (c) 1,533,333,334 Class A-3 common stock (the “Class A-3 Shares”), par value $0.01 per share (the Class A-1 Shares, Class A-2 Shares and Class A-3 Shares are collectively referred to herein as the “Class A Shares”); (d) 5,600,000,000 Class B common stock, par value $0.01 per share (the “Class B Shares”); and (e) 200,000,000 preferred stock.
5. As at May 9, 2001, there were approximately 876,834,085 Class A Shares and 247,367,532 Class B Shares issued and outstanding. No shares of preferred stock are issued and outstanding.
6. The Class A Shares are not listed on any stock exchange or quoted on an organized over-the-counter market. The Class B Shares are listed on the New York Stock Exchange (the “NYSE”).
7. Class A Shares may be converted into Class B Shares at the holder’s option, and will be converted into Class B Shares upon transfer to any person other than a “Permitted Transferee” (as set out in Schedule A attached hereto).
8. The Stock Purchase Plan is being established to encourage stock ownership by certain eligible employees (an “Eligible Employee”) of UPS and certain UPS subsidiaries (the “UPS Companies”) to increase employee interest in UPS and to promote employee retention.
9. At the present time, 20,000,000 Class A Shares will be available for purchase under the Stock Purchase Plan.
10. Participation in the Stock Purchase Plan is voluntary. Eligible Employees will not be induced to participate in the Stock Purchase Plan or to acquire securities under the Stock Purchase Plan by expectation of employment or continued employment with a UPS Company.
11. All Eligible Employees, regardless of residency, will receive substantially the same disclosure in respect of the Stock Purchase Plan.
12. As at June 30, 2001, less than 1% of all Eligible Employees were resident in each Jurisdiction (collectively referred to herein as the “Canadian Participants”).
13. As at June 30, 2001, residents in the Jurisdictions held less than 10% of each of the Class A Shares and Class B Shares issued and outstanding at that time.
14. Generally, each Eligible Employee may elect to make contributions under the Stock Purchase Plan by payroll deductions of any amount, up to, but not exceeding US$10,000 for a calendar year.
15. Under the Stock Purchase Plan, each Eligible Employee participating in the plan will elect by way of subscription (a “Subscription”) to make contributions under the Stock Purchase Plan during a calendar quarter (a “Purchase Period”).
16. Each Eligible Employee who has a Subscription in effect for a Purchase Period will be granted an option (an “Option”) on the first day of such Purchase Period to purchase a number of Class A Shares (the “Share Limit”) equal to US$6,250 divided by the closing price of a Class B Share on the NYSE (such closing price referred to as the “Stock Sales Price”) on the first day of such Purchase Period.
17. An Eligible Employee’s Option will be exercised automatically on the last day of the Purchase Period (the “Purchase Date”) for the purchase of Class A Shares up to the Share Limit at an exercise price for each Class A Share of the lesser of (i) 90% of the Stock Sales Price on the first day of the Purchase Period or (ii) 90% of the Stock Sales Price on the Purchase Date.
18. An Eligible Employee’s participation in the Stock Purchase Plan will be terminated upon the Eligible Employee’s termination of employment. However, where an Eligible Employee ceases employment with a UPS Company on or before a Purchase Date for which such Eligible Employee has completed a Subscription and received Options in respect thereof, the Options will be exercised in accordance with the terms of the Stock Purchase Plan.
19. An Eligible Employee will have the right once during any Purchase Period to increase, reduce or cease payroll deductions previously authorized by providing an amended Subscription to the plan administrator.
20. UPS will send concurrently to its securityholders in the Jurisdictions copies of all continuous disclosure material sent by UPS to its securityholders in the United States.
AND WHEREAS pursuant to the System this MRRS Decision Document evidences the decision of each Decision Maker;
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 this Decision has been met:
THE DECISION of the Decision Makers under the Legislation is that:
(a) first trades by Canadian Participants and Permitted Transferees in Class A Shares issued pursuant to the Stock Purchase Plan are not subject to the Registration and Prospectus Requirements provided that: (i) such trades are made to Permitted Transferees; and (ii) first trades by Permitted Transferees in Class A Shares to a person or entity that is not a Permitted Transferee shall be a distribution; and
(B) first trades in a Jurisdiction by Canadian Participants and Permitted Transferees in Class B Shares issued on the conversion of Class A Shares previously issued pursuant to the Stock Purchase Plan are not subject to the Prospectus and Registration Requirements, provided that:
(i) at the time of the acquisition of the Class A Shares;
(A) persons or companies whose last address as shown on the books of UPS in that Jurisdiction did not hold more than 10% of the outstanding Class B Shares and did not represent in number more than 10% of the total number of holders of Class B Shares, or
(B) persons or companies who were resident in that Jurisdiction and who beneficially owned Class B Shares did not beneficially own more than 10% of the outstanding Class B Shares and did not represent in number more than 10% of the total number of holders of Class B Shares;
(ii) at the time of the trade of any Class B Shares, UPS is not a reporting issuer under any of the Legislation; and
(iii) such first trade is executed:
(A) through the facilities of a stock exchange outside of Canada; or
(B) on the NASDAQ Stock Market,
in accordance with the rules of such exchange or market and all applicable laws.
DATED September 5th, 2001.
Paul M. Moore R. Stephen Paddon
SCHEDULE “A”
A “Permitted Transferee” means:
the transferor’s spouse or child if:
- the transferor is an employee of UPS or one of its subsidiaries
a trust for the sole benefit of the transferor or the transferor’s spouse or child, if
- the transferor is an employee of UPS or one of its subsidiaries
the beneficial owner of an individual retirement account if the transferor is the individual retirement account
the estate of a deceased holder of shares, if
- the deceased holder was an employee of UPS or one of its subsidiaries on the date of death,
- and the transfer was made pursuant to the deceased holder’s will or the laws of distribution
the beneficiary of an estate referred to in the preceding item, if that beneficiary is the spouse or child of the deceased holder or a trust for the sole benefit of the spouse or child of the deceased holder
an employee benefit plan sponsored by UPS or any of its subsidiaries
a lending institution in connection with a pledge of shares by a person who was an employee of UPS or one of its subsidiaries on the date of the pledge of such shares and such shares are pledged as bona fide collateral for a loan to such person provided such lending institution agrees in writing to immediately offer to sell such shares to UPS in the event such lending institution forecloses on such shares
a charitable organization that agrees in writing to sell the shares to UPS immediately following the transfer
UPS or any of its subsidiaries