1107009 Informal Interpretation

Michael Verne

– Agree  Exclude Both


From: (Redacted)
Sent: Tuesday, July 05, 2011 1 :52PM
To: Verne,B. Michael
Cc: (Redacted)
Subject: Transaction Structure/Exclusion of Employee Bonus Payments

Mike. We have aproposed transaction that involves bonus and retention-type payments toemployees, and we wanted to confirm with you whether it is appropriate toexclude the value of these payments in determining whether the size-oftransaction test is met.

The transaction structureis described below.

Buyer and Seller areentering into an Asset Purchase Agreement for the purchase of certain assets(the "Agreement").

Total payments being madeby Seller are in excess of $66M. However, that figure includes fundsthat will be used by Seller to make two types of payments to existingemployees.

First, the Agreementprovides that $16 million will be used to fund "Transaction BonusPayments" being made to certain employees that are important to thebusiness being sold, specifically certain "required" and"key" employees. These employees will be entering employmentagreements with Buyer to be effective post closing. The payments will bemade by Seller pursuant to Transaction Bonus Agreements between Seller and eachindividual employee.

Second, as reflected inthe Agreement, the Seller will make payments of $4 million to other employeesnot included within the "required" or "key" employees ofthe business being sold. These payments will be allocated at Seller'sdiscretion. Note that post-closing these employees will remain as employees ofSeller and not the business being sold.

If the total value ofboth payments together are excluded, the value of transactions would bebelow the $66M size-of-transaction threshold.

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