0903001 Informal Interpretation

From: (redacted)
Sent: Tuesday, March 03, 2009 10:13 AM
To: Verne, B. Michael

Cc: (redacted)

Subject: Questionon 802.9 Exemption

Mike,

I am writing toask your guidance about whether a transaction qualifies for the"investment only" exemption under Rule 802.9 despite some possibleminor competition between the parties.

In thistransaction, Company X is selling a business unit to Company Y in a clearlyreportable transaction. As part of the consideration for that transaction,Company X will receive voting securities in Company Y, which are valued at morethan $65.2 million but which constitute less than 10% of Company Y'soutstanding securities. The question is whether Company X is exempt from filingas an acquiring person (Company X will file as an acquired person in anyevent).

Company X intendsto hold the securities for only a short period and a shareholders agreementbetween the parties will prohibit Company X from nominating board candidates,proposing corporate action, or soliciting proxies. There also will be no commonofficers or directors.

The only one ofthe relevant "indicia" listed in the Statement of Basis and Purpose(and in Informal Interpretation No.16) at issue is that there might be someminor competition between Company X and Company Y in businesses unrelated tothe transaction. (We are still learning about the nature of this competition).

In this situation,is the extent of the competition between the parties the determining factor inassessing whether the Rule 802.9 exemption applies? If so, can you provide anyguidance on how to assess the extent of the competition? Does the existence ofthe shareholders agreement in this case (which essentially prohibits anything otherthan passive investment) mitigate the existence of any minor competitionbetween the parties?

Any guidance youcan provide would be greatly appreciated,