Question
May 2, 1994
Premerger Notification Office
Room 303
Federal Trade Commission
Washington, DC 20580
ATTN: Nancy Ovuka
Re: Request for Confirmation of Informal Interpretation
Dear Ms. Ovuka:
This letter will confirm the oral advice that you provided me by telephone on May 2, 1994. You advised that in the following situation the ESOP Trustee will be receiving only convertible voting securities and that therefore no Hart-Scott-Rodino Premerger notification filing need be filed.
In connection with a recapitalization of Company A, convertible voting preferred stock (the Preferred Stock) will be issued to the Trustee (the ESOP Trustee) of an ESOP which is not qualified under section 401 of the Internal Revenue Code. The Preferred Stock is convertible into voting common stock of Company A at the time that any beneficiary of the ESOP retires or otherwise leave the employment of Company A. The Preferred Stock is not presently entitled to vote in the election of Directors of Company A; however, the Preferred Stock is entitled to vote on extraordinary matters such as amendments to the certificate of incorporation, mergers, dissolution, entry into new industries and the sale or exchange of a substantial portion of the Companys assets. In addition, the holders of Preferred Stock will acquire the right to vote for the election of certain Directors of the Company when, as a result of employee retirements or attrition, the equity interest held in the ESOP s reduced to 20% or less of the total equity interest in the Company. Current actuarial assumption indicate that this condition will not occur, and the Preferred Stock will not have a right to vote for Directors of the Company, until 2016.
(redacted)
During our conversation you confirmed that the Preferred Stock would constitute a convertible voting security under 16 C.F.R. 801.1(f)(2) because the stock presently does not entitle its owner or holder to vote for Directors of the Company (or any other entity), and the ESOP Trustees acquisition of such Preferred Stock is therefore exempt from he filing requirements under 16 C.F.R. 802.31.
If I have misapprehended the Federal Trade Commissions position on this issue, please so notify me immediately since we wil be relying upon these principals going forward with this transaction.
Sincerely,
(redacted)
(redacted)
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