Question
January 22, 1996
VIA TELECOPIER
Re: Group, LLC
Dear Mr. Smith:
The purpose of this letter is to provide you with certain additional information relating to Group, L.L.C ( Group") requested by you during our telephone conversation on January 19, 1996.
It is currently expected that Group will be formed prior to February 14, 1996. At formation it is expected that Group will have approximately eleven Executive Sponsors and approximately four participating Sponsors. Each Executive Sponsor and Participating Sponsor will have an equivalent membership interest in Group; however, each of the Executive sponsors will be entitled to one representative on the Oversight Board while the four Participating Sponsors collectively will be entitled to representation by a single member of the Oversight Board. Each Executive Sponsor and Participating Sponsor will contribute $1.00 in cash to Group. Accordingly, no Executive Sponsor or Participating Sponsor will acquire a membership interest representing 15% of the equity of Group or having a value of $15,000,000 nor will Group have total assets or annual net sales in an amount equal to $10 million.
The timing of the acquisitions of by Group has not been determined but neither is expected to occur until at least two weeks subsequent to the formation of Group. had total assets of approximately $20 million at its most recent balance sheet date and annual net sales of approximately $42 million in fiscal 1995. had total assets of approximately $11 million at its most recent balance sheet date and annual net sales of approximately $15 million in fiscal 1995. Accordingly, regardless of which acquisition occurs first, no party to either acquisition transaction will have $100 million in total assets or annual net sales.
Based on these facts, I believe that the initial formation of Group and the subsequent acquisition of are exempt from the notification and reporting requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
I would appreciate if you would either call me at to confirm your Agreement with our analysis, based on these facts.
I very much appreciate your attention to this matter. I would be happy to provide to you any additional information that you may need in order to complete your analysis.
Best regards.
STRUCTURE
Associate Sponsors Executive Sponsors Allied Sponsors
(3) (8) (5)
[redacted]
Members
Notes:
Each Executive Sponsor appoints a member of the Board of Directors. Only Executive Sponsor Directors have the right to vote on corporate governance matters (e.g., charter and by- law amendments).
1. Allied Sponsors voting as a class nominate one member of the Board for each five Allied Sponsors (for election by Executive Sponsor Directors); currently, there are five Allied sponsors and one Allied Sponsor Director.
2. Associate Sponsors voting as a class nominate one member of the Board (for election by Executive Sponsor Directors), but are not entitled to do so if there are fewer than five Associate Sponsors (which is currently the case).
3. Members have no voting rights, except that members elect Advisory Committees which, in turn, nominate At-Large members of the Board (for election by Executive Sponsor Directors) representing interests of specified communities (e.g., independent etc.). Currently, one At-Large representing community is serving on th Board.
4. The President an ex officio member of the Board.
[redacted]
STRUCTURE
Shareholders (11/12)
Notes:
1. Each Shareholder appoints a member of Board of Directors.
2. Also serving on Board of Directors are two Directors representing the community and one Director representing the community.
GROUP STRUCTURE
Executive Sponsors (11/12)
Participating Sponsors (3/4)
Sole General
Voting Sponsor
Sole Shareholder
Special Voting Sponsors
[redacted]
Members
Notes:
1. Group is to be a newly formed limited liability company.
2. All of the initial members of Group (classified into "Executive Sponsors" and "Participating Sponsors") will be current Sponsors or shareholders.
3. Group will be governed by its Oversight Board, composed of one representative of each Executive Sponsor, one representative for all Participating Sponsors, and representatives of the various communities (who, at least initially, will be the current and the current At-Large Director of .
4. Group will become the sole member of with general voting powers; all other sponsor will resign, except four current Executive Sponsors who will remain as Special Voting Sponsors with voting powers limited to certain very restricted matters, for historic reasons. Members of that are not sponsors will remain as such, but will no longer have the right to nominate At-Large Directors .
5. Group will become the sole shareholder and, as such, elect all members of board of Directors.