HSR Items 4(c) and 4(d): Presentation Materials [DATE] Presenter Notes: These hypotheticals assume that: Alpha and Beta are competitors and both manufacture glass bottles. Alpha has signed an agreement to acquire Beta. [NAME OF PRESENTER] [TITLE OF PRESENTER]

HSR Filings HSR filings are premerger notification filings submitted to both the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Merging parties must report transactions meeting certain thresholds if no exemption applies. HSR filings allow the FTC and the DOJ to analyze the likely competitive effects of large transactions before they close. Where reportable, the agencies generally have 30 calendar days to review the proposed transaction.

HSR Filings Both parties submit an HSR form to the FTC and the DOJ in a reportable transaction. The HSR form requires the parties to provide: Basic information about their businesses, including identification of subsidiaries, shareholders, and minority investments. Financial statements. Revenue information by industry sector. Overlaps between the parties' and their associates' NAICS codes. Item 4(c) and Item 4(d) documents.

HSR Form Item 4(c) Item 4(c) of the HSR Form requires the submission of all documents that were prepared both: By or for officers or directors of the merging parties, the parties' ultimate parent entities (UPEs), and any other entities controlled by those UPEs. For the purpose of evaluating or analyzing the transaction with respect to: markets; market shares; competition; competitors; or potential for sales growth or expansion into product or geographic markets.

HSR Definition of Officer Under the HSR rules, officers include only those with a title of officer: Holding positions that are provided for in the bylaws or articles of incorporation of the UPE or any of its controlled entities. Appointed by the board of the UPE or any of its controlled entities. This definition applies to both Item 4(c) and Item 4(d).

Item 4(c): Officer Hypothetical Assume that: George Jenkins is the Vice President of Sales for Alpha's subsidiary, Zeta. George's name is on Alpha's list of officers provided to counsel, but he was not appointed to this position by the board. Zeta's articles of incorporation and bylaws specify six positions that are considered officers within Zeta, but do not include Vice President of Sales. Question: Is George an officer for HSR purposes? Answer: No. George's position was not provided for in Zeta's bylaws or articles of incorporation and he was not appointed to this position by the board.

Item 4(c): Documents Posing Frequent Questions Certain types of potential Item 4(c) documents frequently raise questions or pose challenges for counsel, such as: Ordinary course of business documents. Non-US market studies. Public announcements of the deal. Drafts of documents.

Item 4(c): Ordinary Course of Business Documents Documents created in the ordinary course of business are often overlooked by counsel gathering 4(c) documents. Counsel may not consider these to have been prepared for the purpose of evaluating or analyzing the acquisition. However, the following types of documents created in the ordinary course of business by one of the merging parties can be responsive to Item 4(c): An ordinary course document that becomes part of an Item 4(c) document. Board of directors meeting minutes. An ordinary course of business document that an officer or director of the buyer removes or downloads from the seller's dataroom that is otherwise responsive to Item 4(c).

Assumptions For Hypotheticals For the following hypotheticals, assume that: Alpha and Beta are competitors. Both manufacture glass bottles. Alpha has signed an agreement to acquire Beta.

Item 4(c): Ordinary Course of Business Hypotheticals Assume: Alpha prepares strategic plans in the ordinary course of business. Each strategic plan discusses competition in the glass bottle market. Alpha's CEO prepares a memorandum analyzing Alpha's acquisition of Beta. The memorandum attaches Alpha's most recent annual strategic plan from last year. The CEO circulates the memorandum and the strategic plan to Alpha's officers. Question: Is this document responsive to Item 4(c)? Answer: The annual strategic review is part of a responsive 4(c) document.

Item 4(c): Ordinary Course of Business Hypotheticals Assume: Alpha presents its analysis of the potential acquisition to the board of directors at its quarterly meeting, including a slide that discusses the effect of the potential combination on competition in the market for glass bottles. Alpha's board meeting minutes record the discussion of competition as it relates to the acquisition of Beta. Question: Is this document responsive to Item 4(c)? Answer: The board meeting minutes that relate to the discussion of competition are responsive to Item 4(c). However, counsel can redact information from the minutes that does not relate to the transaction. Alpha's presentation to the board is also responsive to Item 4(c).

Item 4(c): Ordinary Course of Business Hypotheticals Assume: Alpha presents its analysis of the potential acquisition to the board of directors at its quarterly meeting, including a slide that discusses the effect of the potential combination on competition in the market for glass bottles. Alpha's board meeting minutes record that the presentation was made, but do not discuss the details of the presentation as it relates to an Item 4(c) topic. Question: Is this document responsive to Item 4(c)? Answer: The board meeting minutes that merely mention that the presentation was made are not responsive to Item 4(c) because they do not discuss an Item 4(c) topic, such as competition or competitors. However, Alpha's presentation to the board is responsive to Item 4(c).

Item 4(c): Ordinary Course of Business Hypotheticals Assume: Beta places its annual strategic plans, created in the ordinary course of its business, in the virtual dataroom. The strategic plans contain slides that discuss the effect of the potential combination on competition in the market for glass bottles. One of Alpha's officers prints out the strategic plan from the dataroom. Question: Is this document responsive to Item 4(c)? Answer: Because one of Alpha's officers removed Beta's ordinary course of business document from the electronic dataroom that was otherwise responsive to Item 4(c), the document becomes a 4(c) document for Alpha. The document is not responsive to Item 4(c) for Beta. The result would be the same if Alpha's officer had: Removed the document from a hard-copy dataroom. Downloaded the document from the virtual dataroom, and not printed it.

Item 4(c): Non-US Market Studies More and more frequently, companies are engaging in cross-border transactions that require premerger notification outside of the US. Counsel often have questions about whether documents that discuss non-US markets are responsive to Item 4(c). Documents that discuss only non-US markets may be responsive to Item 4(c), unless the document relates only to an exempt portion of an acquisition.

Item 4(c): Non-US Market Studies Hypothetical Assume that: Alpha and Beta manufacture glass bottles in the US and four other countries. One of Beta's officers has prepared a document that analyzes the effect of the transaction in the four non-US countries. The document provides market share information in those countries for Alpha, Beta, and their competitors. It does not discuss the US market for glass bottles. No portion of the transaction is exempt under the HSR Act. Question: Is this document responsive to Item 4(c)? Answer: This document is responsive to Item 4(c).

Item 4(c): US Market Hypothetical Assume that: Alpha and Beta manufacture glass bottles in the US. One of Alpha's officers has prepared an email that mentions that one of his employees is preparing a study on the US market for glass bottles and that Alpha is a meaningful player in the Midwest market for glass bottles. Question: Is this document responsive to Item 4(c)? Answer: This document is not responsive to Item 4(c). A document must contain more than just a mention of the word market to be responsive to Item 4(c). The document must contain some analysis of the Item 4(c) topic to be responsive. However, the study that the employee is preparing on the US market for glass bottles likely is responsive to Item 4(c), assuming the other criteria are met.

Item 4(c): Public Announcement of the Transaction In transactions where one of the parties is a public company, a series of materials are generally prepared to announce the transaction to the public and to customers, suppliers, and competitors of the parties. The FTC Premerger Notification Office (PNO) views these types of announcements as non-responsive to Item 4(c) because they were not prepared for the purpose of evaluating or analyzing the transaction.

Item 4(c): Public Announcement of the Transaction Hypothetical Assume that Alpha is a public company and is issuing a communications package announcing the transaction that includes: A press release. An investor presentation that discusses competition between Alpha and Beta. A transcript of the investor conference call and a conference call script that discuss competition between Alpha and Beta. Scripts and Q&As to announce the transaction to customers, suppliers, and competitors. Question: Are these documents responsive to Item 4(c)? Answer: These materials are not responsive to Item 4(c). The FTC PNO views them as not having been prepared for the purpose of evaluating or analyzing the acquisition and therefore not responsive to Item 4(c).

Item 4(c): Drafts If there is no final version of a document that is responsive to Item 4(c), the most recent draft should be submitted. If there is a final version, only the drafts that went to the board of directors must be submitted.

Item 4(c): Drafts Hypothetical Assume: Alpha's officer prepares a report evaluating the acquisition regarding competition. Alpha's officer submits a copy of the report to the board of directors. After the report was submitted, the officer revises the report and submits the final version to another officer of Alpha, his direct superior. Question: Is this document responsive to Item 4(c)? Answer: Both the final version of the report and the draft that went to the board of directors must be submitted as responsive to Item 4(c).

HSR Form Item 4(d) Item 4(d) of the HSR Form requires the merging parties to submit: Confidential information memoranda (CIMs). Bankers' books. Third-party consultants' materials. Synergies documents.

Item 4(d)(i): CIMs or Management Presentations Merging parties must submit CIMs that are: Specifically related to the sale of the target company. Prepared by or for an officer or director of: a filing party's UPE; the target company; or the company making the acquisition (known as the acquiring entity). Prepared within the year before the filing date.

Item 4(d)(i): Identifying CIMs A CIM that was created solely for the purpose of discussing financing is not responsive to Item 4(d)(i). If there is no CIM, the buyer should submit any one document provided by the seller that was specifically intended to serve the purpose of a CIM.

Item 4(d)(i): One-Year Rule If a CIM is created for a deal and the parties stopped negotiations for a time, but resumed them within a year of filing, submit the CIM.  Assume the merging parties negotiated from December 1, 2011 until January 1, 2012 and then stopped negotiations. During that time they had prepared a CIM. If negotiations restarted on March 10, 2012 and the filing was submitted on April 10, 2012, the CIM from the earlier negotiations is then responsive to Item 4(d)(i) because negotiations were resumed within a year of filing. If negotiations restarted on January 1, 2013 and the filing was not submitted until March 1, 2014, the CIM from the earlier negotiations is then not responsive to Item 4(d)(i) because negotiations did not resume within a year of filing. However, the parties may consider submitting the CIM from the earlier negotiations voluntarily.

Item 4(d)(i): Multiple Versions of CIMs or Management Presentations Where a seller prepares multiple versions of CIMs or management presentations for different potential buyers, counsel should submit only the CIM and management presentation that was created for the actual buyer. If the seller never gave the CIM or management presentation relating to the ultimate buyer to that buyer, the seller still needs to submit that CIM or management presentation.

Item 4(d)(i): Multiple Versions of CIMs or Management Presentations Hypothetical Assume that: Beta prepared: a CIM for Alpha, which it shared with Alpha; CIMs for several other bidders, which it did not share with Alpha; a management presentation evaluating the acquisition by Alpha; and two management presentations evaluating the acquisition of Beta by other potential buyers. Each of the CIMs and management presentations evaluates competition in relation to the potential acquisition and was received by an officer of Beta. Question: Are these documents responsive to Item 4(d)(i)? Answer: The merging parties must submit only that version of the CIM and management presentation that were created for the actual buyer, Alpha, in response to Item 4(d). Beta must submit both the CIM and management presentation relating to Alpha in response to Item 4(d) even if Beta had not shared those documents with Alpha.

Item 4(d)(i): One Year Time Period Hypothetical Assume that: In January of 2014, Beta considered putting itself up for sale. At the time, Beta's executives prepared a CIM for potential buyers, including Alpha. The CIM was presented to Alpha. After negotiating for a few months the parties stopped communicating in March of 2014. In February of 2015, the parties resumed communications and Beta prepared a new CIM to provide to Alpha. In November of 2015, the parties submitted HSR filings in the transaction. Question: Are these documents responsive to Item 4(d)(i)? Answer: The merging parties must submit both the original CIM Beta prepared for Alpha and the second CIM prepared for Alpha. Although Alpha and Beta stopped negotiations for several months, they resumed them within a year of filing.

Item 4(d)(ii): Bankers' Books and Third-Party Consultant Materials The filing parties must produce all documents related to the sale of the target company prepared: By third-party consultants and advisors (such as investment bankers or attorneys) not protected by the attorney-client privilege and either: during an engagement (that is, those already involved in a transaction); or for the purpose of seeking an engagement (that is, suggesting a transaction and attempting to participate in that transaction). For any officer or director of: the filing parties' UPEs; the target company; or the acquiring entity. For the purpose of evaluating or analyzing an Item 4(c) topic, including markets, market shares, competition, competitors, or the potential for sales growth or expansion into product or geographic markets. Within the year before the date of filing.

Item 4(d)(ii): Bankers' Books and Third-Party Consultant Materials Item 4(d)(ii) covers pitch books (or bankers' books or similar documents) which are usually developed by investment bankers for the purpose of seeking an engagement. Pitch books generally set out alternative courses of action for the company, including whether to purchase or sell a business. All pitch books must be produced, whether or not the book author was hired. A pitch book or other third-party competitive analysis is responsive even if the parties stopped negotiations for a time but resumed discussions, if the analysis was prepared within the one-year period reflected in 4(d)(ii).

Item 4(d)(ii): Bankers' Books and Third-Party Consultant Materials - Who to Search? Item 4(d)(ii) does not require a separate search of all third parties involved in a given transaction such as investment bankers or law firms. Only those individuals whose files are searched in response to Item 4(c) must be searched.

Item 4(d)(ii): Bankers' Books and Third-Party Consultant Materials – Not Responsive Item 4(d)(ii) does not require the production of the following documents: Corporate subscriptions to market studies, information, or periodicals. Industry reference materials and databases. Routine market research. Information related solely to the financing of the transaction. Unsolicited financial and market analyses from the investment bankers and consultants unless they: specifically relate to the sale of the target company; and were prepared for the purpose of seeking an engagement. Reports prepared in connection with antitrust or other litigation. Third-party created management presentations and other related analyses created for bidders other than the actual bidder.

Item 4(d)(ii): Bankers' Books and Third-Party Consultant Materials Hypotheticals Assume Beta hires an investment banker to consider several proposed options for the company, including going public, an auction process, or spinning off a particular failing division. The investment banker prepares a document discussing all three scenarios. Question: Is this document responsive to Item 4(d)(ii)? Answer: This document is responsive to Item 4(d)(ii) if it meets the other requirements of Item 4(d)(ii). Documents can be responsive to Item 4(d) if they are created when a transaction is being planned but no firm acquisition has taken shape, meaning the specific form of the acquisition has not been determined.

Item 4(d)(iii): Synergies Documents Item 4(d)(iii) requires the filing parties to produce documents that were prepared both: By or for any officer or director of the merging parties, their UPEs, and any other entities controlled by the UPEs. For the purpose of evaluating or analyzing the transaction's potential: synergies (how the companies will perform better together than apart); efficiencies (cost savings); or synergies and efficiencies.

Item 4(d)(iii): Synergies Documents In its guidance on 4(d)(iii), the PNO offers examples of documents that are not responsive to Item 4(d)(iii), including: Documents solely referencing tax synergies (and not discussing merger-specific synergies). Financial models without both: stated assumptions, such as "three times EBITDA"; and a narrative explaining the reason for the stated assumptions. Documents that generally state the deal will result in synergies with no quantified dollar amount (such as "the merger will result in synergies"). Emails discussing input into the final version of a substantive synergies document, if the underlying synergies document is submitted in response to Item 4(d)(iii).

Item 4(d)(iii): Synergies, No Quantified Dollar Amount Hypothetical Assume that George Smith, an officer of Alpha, writes an email to Jim Jones, an officer at Beta, stating that he is "excited that the parties have signed the transaction because it will result in synergies." Question: Is this document responsive to Item 4(d)(iii)? Answer: This email is not responsive to Item 4(d)(iii) because it merely generally states the deal will result in synergies with no quantified dollar amount. However, if the email instead said that George Smith was excited because the deal would result in synergies of $40 million, it may be responsive to Item 4(d)(iii).

Item 4(d)(iii): Submission of Underlying Document Hypothetical Assume that Sally Jones, an officer of Alpha, writes an email to Ralph Bart, an employee of Alpha, stating that she is extremely excited about the transaction because it is likely to result in synergies of $20 million. Sally got the dollar-figure synergy estimate from a memorandum that was submitted to Alpha's board of directors. The memorandum is being submitted in response to Item 4(d)(iii). Question: Is this email responsive to Item 4(d)(iii)? Answer: Because counsel is submitting in response to Item 4(d)(iii) the memorandum from which the information in the email is being derived, there is no need for counsel to submit the email from Sally Jones to Ralph Bart. However, if there is no such memorandum then counsel must submit Sally's email in response to Item 4(d)(iii). If counsel cannot confirm whether Sally got the information from the memorandum, counsel should submit both documents.

Item 4(d)(iii): Financial Models Hypothetical Assume that counsel receives three versions of financial models in spreadsheet format from the files of an officer of Alpha. The first page of each spreadsheet contains a list of assumptions, including "three times EBITDA." However, the models do not contain a narrative explaining the reasons for the stated assumptions. Question: Is this document responsive to Item 4(d)(iii)? Answer: Because the financials models include stated assumptions but not a narrative explaining the reasons for those assumptions, the models are not responsive to Item 4(d)(iii).

Failure to Comply The antitrust enforcement agencies have brought enforcement actions for failure to comply with Item 4(c) resulting in: Civil penalties of up to $16,000 per day for each day of non-compliance. Refiling of the HSR form and restarting the HSR waiting period. The same type of enforcement actions may result from a failure to comply with Item 4(d). The civil penalty for failure to comply with the HSR Act has been increased to up to $40,000 per day for each day of non-compliance.

Questions

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