Question
From: (redacted)
Sent: Friday, June 01, 2007 4:52 PM
To: Verne, B. Michael
Cc: (redacted)
Subject: Ordinary Course of Business Exemption
We seek confirmation that theproposed transaction described below is exempt from the notification andwaiting period requirements of the HSR Act by virtue of Section 7A(c)(1) of theAct and Section 802.1 of the FTC Premerger Notification Rules, which covertransactions in the ordinary course of business (OCB Exemption). Pertinentfacts are as follows:
1.Seller(which includes the ultimate parent entity and its controlled affiliates) is adiversified commercial lender that provides a variety of financing andequipment financing services throughout the United States and elsewhere. Seller's equipment financingsubsidiary (the *Applicable Subsidiary*) proposes to sell substantially all ofthe assets associated with a business unit engaged in originating, marketing,purchasing, selling, and servicing equipment loans, leases, and other financeproducts for the construction industry, including its portfolio of financingcontracts, loans, and equipment leases for that industry.
2.Seller,through the Applicable Subsidiary) provides similar services for customers in avariety of other industries, and will continue to do so following closing ofthe proposed transaction.
However, Seller will discontinuesuch services, at least during the term of a restrictive covenant currentlybeing negotiated as part of the proposed transaction, (the *RestrictionPeriod*) as a primary business for customers in the construction industry. Itis possible that Seller may provide limited equipment loans, leases, and otherfinancial products for the construction industry during the Restricted Period,but the restrictive covenants are anticipated to limit those activities to aminimal degree which would be incidental to Seller*s continuing provision offinancial services primarily focused on other industries. It is anticipatedthat any construction industry-related activities during the Restricted Periodwould represent a de minimus percentage of Seller*s equipment financing assetsand revenues. Any restrictions on Seller would cease at the end of theRestriction Period.
3.Theassets to be sold comprise less than five percent of Seller's total loan/leaseportfolio.
4.Purchaseris a diversified national lender that provides a wide range of commercial andconsumer financial services.
5. Seller'andPurchaser exceed the size of person tests, and the total purchase price for thetransaction, stated as a cash premium over the net book value of the assets tobe acquired, exceeds the minimum size of transaction threshold.
6. Purchaserwill hire substantially all of Seller's staff
(approximately 230 persons) who workin the business unit whose assets will be sold, but Seller will continue toemploy many other staff who perform similar financing, lease financing, andservicing functions for Seller's commercial financing business units focused onother industries.
Based on the abovestatement of facts, the proposed transaction is covered by the OCB Exemptionbecause Seller will continue to provide financing, lease financing, and loanservicing services for customers in a variety of industries following the saleof substantially all of its assets associated with Seller's business unitfocused on the construction industry. We believe this is the case due to thenature of the loan/lease financing services that the Seller and its ApplicableSubsidiary provide, even if in the context of other products or services thebusiness unit in question might be characterized as an *operating unit* as thatterm is used in the OCB Exemption. See, e.g., ABA Section of Antitrust Law,Premerger Notification Practice Manual (4th ed. 2007), Interpretation 8;Informal interpretations 0411006, 0308001, and 0306007, published on FTCwebsite, available at http:11www.ftc.govibc/hsr/informal/index.shtm.
Please respond to all recipients of this email, or advise ifyou wish to discuss this matter and I will contact you by telephone with (redacted)
Best regards,
(redacted)