1310007 Informal Interpretation

From: (Redacted)
Sent: Wednesday, October 30, 2013 3:21PM
To: Verne, B. Michael
Subject: reportability question

Dear Mike:

I am writing to hopefully confirm our analysis regarding the non-reportability of a proposed transaction.

The proposed transaction involves the acquisition of all of the voting securities of Company T by Company A (accomplished through a reverse triangular merger of T into a newly formed subsidiary of A).

The total consideration to be paid by A will be approximately $90 million (there could be certain post-closing adjustments that will not exceed $5 million), to be paid as follows:

1. $14.5 million to Bank to pay off existing debt of T.

2. $29 million to Bank as Paying Agent for the benefit of the holders of Subordinated Notes of Company T. Most of the Subordinated Notes are held by shareholders of T who also own T's voting common stock. The Subordinated Notes are bona fide debt of T to the holders of the notes and do not have voting rights. The Notes are secured by a pledge of the common stock of Company X, a wholly-owned subsidiary of T, with Bank acting as collateral agent.

3. $1 million to the holders of non-voting preferred stock of T (who are also holders of common stock of T}.

4. Remainder (approximately $49.5 million} to the holders of the voting common stock of T.

We believe that all of the amounts paid pursuant to paragraphs 1through 3 above should be excluded from the total consideration paid in determining the value of the voting securities of Company T to be acquired by Company A. As such, the value is below the current reportability threshold, and the transaction is thus not reportable.