1111005 Informal Interpretation

Date:
Rule:
801.1(b)
Staff:
Michael Verne
Response/Comments:

  – Agree.

Question

From:

(Redacted)

Sent:

Friday, November 04, 2011 10:27 AM

To:

Verne, B. Michael

Cc:

(Redacted)

Subject:

HSR Question

Michael,

We are working on atransaction that involves the sale of 100% of the membership interests of alimited liability company (the "Target LLC"). The membershipinterests in the Target LLC are currently owned 50% by two individuals, memberA and member B. However, there are also options outstanding currently thatentitle the option holders to own an aggregate of 10% of the membershipinterests in the Target LLC once exercised.

Concurrently with theexecution of the purchase agreement for the membership interests, each optionholder is giving notice of exercise of his option with an effective dateimmediately prior to the closing. Each option holder will also sign a joinderagreement agreeing to become a seller for all purposes under the purchaseagreement.

As a result, immediatelyprior to the closing, the Target LLC will be owned 46% by member A, 44% bymember Band 10%, collectively, by the option holders. Upon the effectiveness ofthe exercise of the options (i.e., immediately prior to closing) each of themembers (including the former option holders) will have the right to shareproportionately, in accordance with their ownership percentages, in the profitsof the Target LLC and in the assets of the Target LLC upon dissolution (or, inthis case, to their proportionate share of the sale proceeds).

All of the relevant testsare met, such that an HSR filing will be required. However, we are seekingconfirmation from you that it is appropriate for the Target LLC (rather thaneach of member A and member B) to file as the acquired person because, at thetime of the closing, no person will control the Target LLC and, as such, itwill be the ultimate parent entity and the appropriate person to make thefiling.

Thank you in advance foryour consideration of this question. Please feel free to call or send me anemail if you have any questions or need any additional information.

About Informal Interpretations

Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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