Question
July 24, 2007
Michael B. Verne
Premerger Notification Office
Federal Trade Commission
6th Street and Pennsylvania, N.W.
Washington, D.C. 20580
Re: VotingSecurities to be held by a Trustee pursuant to the terms of a Trust Agreement
Dear Mr. Verne:
We are writing this letter to seekconfirmation of our view that under the arrangement as described below, the"Sellers" would not "hold" as that term is defined in Rule801.1(c), certain "Trust Shares" and therefore would not be requiredto consummate a filing under the Hart-Scott-Rodino Antitrust Improvements Actof 1976, as amended (the "HSR Act"). For purposes of this letter,please assume that all applicable size of party and size of the transactionthresholds are satisfied.
Our client, two individuals (the"Sellers" and each individually a "Seller") who are holdersof voting securities representing, directly or indirectly, interests in anumber of companies (the "acquired companies") and will be sellingtheir shares of the acquired companies to an entity whose ultimate parententity currently holds 50% or more of the voting securities of the acquiredcompanies. As consideration for the sale of voting securities of the acquiredcompanies, voting securities of a company (the "Company") whoseshares are traded on the New York Stock Exchange (the "Trust Shares")will be transferred to a Trustee at the closing of the transaction who willhold the Trust Shares pursuant to the terms of a Trust Agreement. The TrustShares will be subject to certain "lock-up" arrangements pursuant towhich the Trust Shares may not be sold for a period of three years, with athird of such shares becoming eligible for sale after year one, a thirdbecoming eligible for sale after year two and the balance after year three. Theexpiration of these sale restrictions may be accelerated under certain circumstances.
It is contemplated that the Trusteewill be a national bank or an affiliate thereof. The Trustee will issue to eachSeller Trust Certificates evidencing a right to receive the net cash proceedsfrom the sale of a specified number of Trust Shares. The number of shares ofthe Company attributable to each Seller will be equal to such Seller'sproportionate share of all Trust Shares. The Trustee will from time to timesell Trust Shares upon after receiving written instructions from a Sellerand/or the Company and remit the net cash proceeds relating to that sale to aSeller. The Trustee will be required, among other things, to comply withapplicable Federal securities law when consummating a sale of Trust Shares.
The Trustee shall exercise allrights and powers to vote the Trust Shares and shall be required to vote theTrust Shares in conformance with the vote of the majority of the outstandingvoting securities (excluding the Trust Shares) of the Company. The Sellers willhave no right to direct, control or influence the Trustee in connection withany decision to vote the Trust Shares.
The Trustee may resign by furnishingwritten notice of its resignation. Upon disbursement of all of the TrustShares, the Trust Agreement will terminate.
The above described Trustarrangements have been created in order to comply with certain New York StockExchange ("NYSE") rules. The NYSE has approved the structure of thetransaction as it relates to the issuance of the Trust Shares pursuant to theterms of the Trust Agreement. One of the Sellers is a member of the Board ofDirectors of the Company.
The actual Trust Shares may only bedistributed to the Sellers if either (i) one of the Sellers has ceased to be amember of the Board of Directors of the Company, (ii) a majority of theStockholders of the Company approves the transfer of the Trust Shares to theSellers (so as to comply with NYSE rules), (iii) the NYSE provides a writtenopinion to applicable parties that their rules do not apply to the transfer ofTrust Shares from the Trustee to the Sellers or (iv) the NYSE repeals itscurrently applicable rules requiring shareholder approval of the transfer ofTrust Shares by the Trustee to the Sellers. However, in all instances, prior toa transfer of the Trust Shares by the Trustee to the Sellers, both the Companyand Sellers will be required to comply with all applicable provisions of theHSR Act.
We would very much desire to speakwith you to see if you concur with our view that the Sellers will not"hold" the Trust Shares.