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Date
Rule
802.30
Staff
Michael Verne
Response/Comments
event because there is no acquiring person in the A-H transaction. However, I'm having difficulty fitting one piece of this into the intra person exemption. Let's walk through the steps: 1) A becomes the sale member of H in place of S (non-reportable as stated above). - At this point S has no interest in H because A can designate all of its directors as sale member, so the structure is now: H is its own UPE and S is its own UPE and the sale member of F 2) H becomes the sale member of S. - This is the step I'm having trouble with. In this transaction H is the acquiring person and S is the acquired person (each its own UPE), so the acquiring and acquired persons are not the same person by reason of 801.1 (b )(2). I don't see how 802.30 can exempt this step. So now the structure looks like this: H is its own UPE and the sale member of S, which is the sale member of F 3) H becomes the sale member of F. - This would be exempt under 802.30 because H is both the acquiring and acquired person (i.e., it controls F both before and after this step).

Question

From:

(Redacted)

Sent:

Wednesday, November 04, 2009 9:53 AM

To:

Verne, B. Michael

Subject: CoverageQuestion

Michael,

I have been askedto confirm with the PNO that the following transaction would be considered anintraperson transaction (if not otherwise exempt) and therefore not reportable.

H is a nonprofithospital, the sole member of which is S. S is also a nonprofit corporation, butwithout members. S is also the sole corporate member of F, a charitablefoundation.

In the proposedtransaction, H will amend its governing documents to name A, as its sole memberin place of S. For purposes of this inquiry, you may assume that A is an agencyof state government and that, this portion of the transaction would bedefinitionally exempt under Section 801.1.

Also in theproposed transaction, S and F will amend their governing documents to name H(now controlled by A) as their respective sole members. We would like toconfirm that the "flip" of the relationship between S and H, and thesubstitution of H for S as the member of F, (to the extent not also exemptunder 801.1) would be considered an intraperson transaction exempt underSection 802.30 of the Rules, notwithstanding the change of control of H.

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