Question
From: (redacted)
Sent: Friday, September 05, 2008 2:07 PM
To: Verne, B. Michael
Cc: (redacted)
Subject: RE: Trust
Thank you so muchfor your help. Below is a summary of my understanding of our discussions andconclusions. Please let me know if you agree.
Based on our discussionsthis morning, a sale of two corporations is contemplated for cash in excess ofthe HSR filing threshold amount. A filing under HSR will be made by theacquiring person and an acquired person that holds 50% of the stock of each ofthe two corporations being sold. Our client directly owns 25% of the stock oftwo entities being sold and another 25% of the stock of each such entity isheld in a trust as described below. If the shares held in the trust are deemedto be held by our client, he would hold 50% of the stock of the two entitiesbeing sold and would be required to make a separate filing under HSR. He isprepared to make such a filing if it is required.
The trust wasoriginally formed by our client's parents and was originally revocable. Thetrust became irrevocable at the death of the settlor parents. Our client is thesale trustee of the trust and is the sole beneficiary as to the shares ofstock, although there were other beneficiaries as to other assets of the trust.Our client does not have the right to remove and replace the trustee. If heresigned as trustee, another person specified in the trust would becometrustee. Under the terms of the trust, our client would not have the right toremove and replace her with another trustee.
The trustexpressly states that the trustee (our client) shall distribute the securitiesin the trust to the beneficiary (our client) as soon as practicable followingthe death of both settlors (occurred in 2003), and that was never done. At anytime since that date, our client could have transferred the shares of the twocorporations now being sold into his own name as an individual, but has chosennot to do so. We understand that the shares of stock are the only assetsremaining in the trust. Other assets have been distributed to the variousbeneficiaries.
From ourdiscussions this morning, I understand that as long as the trust still existsunder California law and the stock is still held in the trust (even though bythe terms of the trust it should have been or should be distributed to ourclient), the stock would not be deemed to be held by our client and our clientwould thus not be required to make a separate filing under HSR.
If you agree withthe above, please confirm by a return email.