0512009 Informal Interpretation

From: (redacted)
Sent: Wednesday, December 07, 2005 4:16 PM
To: Verne,B. Michael
Subject: Effect of Cash onHand of the Acquired Entity in a Voting Securities Transaction

Mr. Verne:

Thank you for your time today. This e-mail confirms our telephone conversationof earlier today during which we discussed two alternative structures of anacquisition of all of the voting securities of a public company.

Underlying facts. Target Inc. ("Target"), a publicly heldcorporation, has cash on hand in the amount of $35,000,000. A Corp.("A") has entered into an agreement to purchase 100% of theoutstanding stock of Target. The closing will occur more than 45 days from theagreement date.

Alternative 1. Pursuant to the Merger Agreement, A will pay to Target'sshareholders $25,000,000 for their shares of Target. As part of thetransaction, Target's cash on hand (totaling $35,000,000) will also betransferred to Target's shareholders.

Alternative 2. Pursuant to the Merger Agreement, A will pay to Target'sshareholders $60,000,000 for their shares of Target. The $35,000,000 in cash onhand of Target remains in the company and A may transfer the cash to itself asit pleases.

You agreed the parties would not have a duty to file under Alternative 1. Youalso agreed (assuming that Rule 802.4 did not apply) that the parties wouldhave an obligation to file under Alternative 2, despite the fact that theeconomic outcome of the two alternatives is the same (i.e. Target'sshareholders receive a total of $60,000,000 and A pays a net amount of$25,000,000).

If this e-mail does not accurately reflect our discussion, please let me knowas soon as possible.