0607021 Informal Interpretation

From: (redacted)

Sent: Friday, July 28, 2006 9:12 AM

To: Verne, B. Michael

Subject: RE: HSR Reportability

Hi Mike-

I wanted to follow up on previous advice you gave meregarding the transaction below in my June 9th email. We agreed that it isreportable to Company C. My follow-up question refers to the timing of thereportability of the transaction and when the acquisition of C's interestbecomes reportable. The parties intend to enter into a settlement agreement,based on the transaction below, but it now has this "optionality"aspect to it.

They will enter into a settlement agreement to effectuatethe below transaction, but no transfer of ownership occurs unless and untileither Company C triggers an option to effectuate a Sec. 351 exchange under theInternal Revenue Code, whereunder it will get the 14% interest in Holdco, or,when this option to exercise the Sec. 351 exchange automatically expires onDecember 31, 2007 and it becomes a binding commitment upon C to do the 351exchange and get the 14% interest.

I looked at Interpretation 31, which states that the view ofthe FTC is that the granting of an option to purchase voting securities at somefuture time is, by itself, generally not reportable, although the exercise ofthe option may give rise to reporting obligations. If the grant of an option topurchase voting securities is however, coupled with an irrevocable proxy tovote the securities, it constitutes a transfer and may be reportable.

To me, this seems analogous to the "option" likescenario. Even if it is not exercised, and it subsequently becomes a bindingcommitment, my thought is that reportability hinges on when the transfer of the14% ownership interest actually occurs--whether that is upon the exercise ofthe option or automatically upon the termination of the option on December 31, 2007.

I very much appreciate your time and consideration. I'm outof the country on business travel so, if it is not too much trouble, could youplease send your assessment via reply email. Please don't hesitate to emailwith any follow up questions.