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Date
Rule
801.10
Staff
Michael Verne
Response/Comments
The exercise price is the acquisition price. FMV is not required because the acquisition price is determined.

Question

From: (redacted)

Sent: Wednesday, July 19, 2006 12:06 PM

To: Verne, B.Michael

Subject: WarrantQuestion

Mike,

I have a quick question that requires your expertise.Here are the

facts:

1.X acquires 50%+ of the votingsecurities of Target through the exercise of warrants.

2.The fair market value of thevoting securities X will acquire through the exercise of warrants is above$56.7 million.

3.The warrants allow X to purchasethe voting securities for $1.

4.Target is a non-public company.(801.10(a)(1) does not apply).

5.All size-of-the-personrequirements are met.

Isthe transaction reportable?

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