Question
To:(redacted)
Subject:RE: Item 4(c) Question
-----Original Message-----
From:(redacted)
Sent: Tuesday, December 05, 2006 8:52 PM
To: Verne, B. Michael
Subject: Item 4(c) Question
DearMike:
I am seeking any guidance the PNO may have inconnection with analyzing the proper approach to Item 4(c) documents inconnection with the formation of a joint venture (which will be in the form ofan unincorporated entity).
Atpresent, X and Y have agreed to form the joint venture and have agreed to thescope of the business of the joint venture ("Scope"). There are nobinding capital contribution obligations at the present time. The generalintention of X and Y is that X will contribute cash and credit to the JointVenture and that Y will contribute nonexempt assets to the Joint Venture. Noreportable transactions have occurred to date, but the venturers expect to seekHSR clearance as a condition to closing any binding Contribution Agreement thatexceeds the applicable thresholds.
Thequestion relates to compliance with Item 4(c) at such time as there is areportable transaction. For example, assume that X will contribute cash and Ywill contribute a facility in a certain geographic region. Would the Item 4(c)obligation clearly relate only to that specific transaction, i.e., studies,surveys, etc., relating to markets and pricing, etc., that are relevant to thatspecific "acquisition," i.e., the facility in the particulargeographic region? Or would the Item 4(c) obligation arguably be read to extendback to work done and documents prepared earlier (perhaps even years earlier)that relate to the "Scope," i.e., the general plan to enter marketsmuch broader than the one implicated in the present, reportable transaction?
Our question arises, in part, due to the"continuum" theory set forth in Interpretation 171, to the effectthat a post-formation Contribution Agreement may be viewed as a part of thecontinuum of organizing the entity (in this case, one that may contemplate amuch broader joint venture).
Weinquire because certain joint ventures take years of planning and executives(and in certain cases, perhaps their files) might come and go over time. If theobligation is broad and relates back to periods well before the instant,reportable transaction, perhaps the client should adopt procedures to trackpotential Item 4(c) documents. We have not found any definitive guidance onthis in the green book or on the web site and would welcome any guidance youmay have. Please let me know if you need more information. Many thanks andregards.