Question
From:(redacted)
Sent:Thursday, January 11, 2007 1:36 PM
To:Verne, B. Michael
Cc:(redacted)
Subject:RE: Confirmation of Conversation Valuation
Dear Mike,
Toconfirm our conversation of earlier today.
Wehave a transaction in which approximately 98% of the stock of the target isnon-voting and the rest is voting. The purchaser is buying the non-voting andthe voting from the same person(s). The voting and non-voting are identical.The voting could in theory vote to amend the corporate documents to deprive thenon-voting of its rights to dividends or other rights.
Thequestion was how to value the voting securities. You said there would benothing wrong with attributing the bulk of the value of the company to thenon-voting stock, as this is where the current value lies. The right of thevoting to eliminate that value was not relevant to the analysis unless suchaction is currently contemplated to occur before closing. When asked if we hadto look at valuation from the perspective of a third-party purchaser buying thenon-voting alone, your response was that no one would do that without some formof agreement or other provisions protecting the value of the non-voting stock,so that is an irrelevant hypothetical. You agreed that the buyer must to comeup with a good faith allocation of fair market value based the current rightsand the deal that is before us.