30.14—Q-14: How does section 111 of EESA operate in connection with an acquisition, merger, or reorganization?
(a)
Special rules for acquisitions,
mergers, or reorganizations. In the event that
a TARP recipient (target) is acquired by an entity
that is not an affiliate of the target (acquirer)
in an acquisition of any form, including a
purchase of substantially all of the assets of the
target, such that the acquirer after the
transaction would have been treated as a TARP
recipient if the target had received the TARP
funds immediately after the transaction, acquirer
will not become subject to section 111 of EESA
merely as a result of the acquisition. If the
acquirer is not subject to section 111 of EESA
immediately after the transaction, then any
employees of the acquirer immediately after the
transaction (including target employees who were
SEOs or most highly compensated employees
immediately prior to the transaction and became
acquirer employees as a result of the transaction)
will not be subject to section 111 of EESA.
(b) Anti-abuse rule.
Notwithstanding the provisions of paragraph (a) of
this section, if the primary purpose of a
transaction involving the acquisition, in any
form, of a TARP recipient is to avoid or evade the
application of any of the requirements of section
111 of EESA, the acquirer will be treated as a
TARP recipient immediately upon such acquisition.
In such a case, the SEOs and the most highly
compensated employees to whom any of the
requirements of section 111 of EESA and this
Interim Final Rule apply shall be redetermined as
of the date of the acquisition. The redetermined
SEOs and most highly compensated employees of the
post-acquisition acquirer shall consist of the PEO
and PFO of the post-acquisition acquirer, plus the
applicable number of next most
highly compensated employees determined by
aggregating the post-acquisition employees of the
acquirer (to include the pre-acquisition employees
of the target employed by the acquirer, or
anticipated to be employed by the acquirer), and
ranking such employees in order of compensation
for the immediately preceding fiscal year of the
pre-acquisition target or pre-acquisition
acquirer, as appropriate. In the case of an asset
acquisition, the entity or entities to whom the
target's assets are transferred shall be treated
as the direct recipient of the financial
assistance for purposes of determining which other
related entities are treated, in the aggregate, as
the TARP recipient under the definition of “TARP
recipient” in § 30.1 (Q-1).