                 (/(&7521,&&,7$7,21)('$SS3WK&LU
                              )LOH1DPHES

               %$1.5837&<$33(//$7(3$1(/2)7+(6,;7+&,5&8,7

,QUH *(5$/''$/(%8516s5DQG                                           
           /,1'$s$1(%8516                         
                                'HEWRUV 
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 
      
$1'5(::68+$575867((                                             
      
                                3ODLQWLII$SSHOOHH                   
      
Y          1R
                          
*(5$/''$/(%8516s5HWDO                                             
      
                                'HIHQGDQWV$SSHOOHHV                      
                                                                           
,0&0257*$*(&203$1<                                                      
                                'HIHQGDQW$SSHOODQW                       
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 


                               $SSHDOIURPWKH8QLWHG6WDWHV%DQNUXSWF\&RXUW
                  IRUWKH1RUWKHUQ'LVWULFWRI2KLR(DVWHUQ'LYLVLRQDW<RXQJVWRZQ
                                 &DVH1R$GYHUVDU\1R

                                     $UJXHG6HSWHPEHU

                              'HFLGHGDQG)LOHG1RYHPEHU

                              %HIRUH$8*%52:1DQG+2:$5'
                               %DQNUXSWF\$SSHOODWH3DQHOsXGJHV
                                   

                                                &2816(/

$5*8('  $PHOLD $ %RZHU 0F)$''(1 	 $662&,$7(6 &OHYHODQG 2KLR IRU
'HIHQGDQW$SSHOODQW)UHGHULF36FKZLHJ5RFN\5LYHU2KLRIRU3ODLQWLII$SSHOOHH21
%5,()$PHOLD$%RZHU0F)$''(1	$662&,$7(6&OHYHODQG2KLRIRU'HIHQGDQW
$SSHOODQW)UHGHULF36FKZLHJ5RFN\5LYHU2KLRIRU3ODLQWLII$SSHOOHH
                                    BBBBBBBBBBBBBBBB

                                        23,1,21
                                    BBBBBBBBBBBBBBBB



        :,//,$0+286721%52:1%DQNUXSWF\$SSHOODWH3DQHOsXGJH7KHDVVLJQHH
PRUWJDJH FRPSDQ\ DSSHDOV WKH EDQNUXSWF\ FRXUWjV ILQGLQJ WKDW WKH PRUWJDJH ZDV QRW
VLJQHGE\WKH'HEWRUVLQWKHSUHVHQFHRIWZRZLWQHVVHVDVUHTXLUHGE\2KLRODZDQGWKDW
FRXUWjVGHFLVLRQWKDWWKHWUXVWHHFRXOGDYRLGWKHPRUWJDJHXQGHU86&D
ZLWKRXWJLYLQJDQ\OLHQLQIDYRURIWKHPRUWJDJHFRPSDQ\XQGHUH


                                ,67$7(0(172),668(
        $OWKRXJK,0&0RUWJDJH&RPSDQ\m,0&lWKHDSSHOODQWDVVHUWVWKUHHLVVXHVRQ
DSSHDOWZRDUHQRORQJHUUHOHYDQWDVDUHVXOWRIWKHGHFLVLRQRIWKH&RXUWRI$SSHDOVIRU
WKLV&LUFXLWLQ6LPRQY&KDVH0DQKDWWDQ%DQN,QUH=DSWRFN\)GWK&LU
7KHUHPDLQLQJLVVXHLVRQHRIODZZKHWKHUWKHQRQSRVVHVVRU\PRUWJDJHHZKRVH
OLHQLVDYRLGHGSXUVXDQWWRDLVHQWLWOHGWRDQ\EHQHILWXQGHURIWKH%DQNUXSWF\
&RGH


                   ,,s85,6',&7,21$1'67$1'$5'2)5(9,(:
        7KH%DQNUXSWF\$SSHOODWH3DQHORIWKH6L[WK&LUFXLWKDVMXULVGLFWLRQRYHUDSSHDOV
IURPILQDORUGHUVIURPWKHEDQNUXSWF\FRXUWIRUWKH1RUWKHUQ'LVWULFWRI2KLR86&
DF7KHEDQNUXSWF\FRXUWjVRUGHUILQGLQJ,0&jVPRUWJDJHGHIHFWLYHDQG
DYRLGDEOHLVDILQDORUGHUEHFDXVHLWmµHQGVWKHOLWLJDWLRQRQWKHPHULWVDQGOHDYHVQRWKLQJ
IRUWKHFRXUWWRGREXWH[HFXWHWKHMXGJPHQWjl0LGODQG$VSKDOW&RUSY8QLWHG6WDWHV
866&WTXRWDWLRQRPLWWHG7KHDSSHOODQWWLPHO\ILOHG
D QRWLFH RI DSSHDO IURP WKH EDQNUXSWF\ FRXUWjV sDQXDU\   RUGHU EXW XQWLPHO\
DSSHDOHGWKDWFRXUWjVsDQXDU\GHQLDORILWVPRWLRQIRUUHFRQVLGHUDWLRQ7KLV3DQHO




                                              2
SUHYLRXVO\GLVPLVVHGWKHXQWLPHO\DSSHDODQGQRZOLPLWVLWVUHYLHZWRWKHDSSHDORIWKH
sDQXDU\RUGHU
       7KLV3DQHOUHYLHZVWKHEDQNUXSWF\FRXUWjVILQGLQJVRIIDFWIRUFOHDUHUURU)(' 5
%$1.5 3 5RVLQVNLY%R\G,QUH5RVLQVNL)GWK&LU$V
DUHVXOWRIRXUGHWHUPLQDWLRQWKDWWKHRQO\UHOHYDQWLVVXHLVRQHRIODZLWLVXQQHFHVVDU\WR
UHYLHZWKHWULDOFRXUWjVILQGLQJVRIIDFW/HJDOFRQFOXVLRQVVXFKDVWKHEDQNUXSWF\FRXUWjV
LQWHUSUHWDWLRQRIWKHDSSOLFDELOLW\RIDUHVXEMHFWWRGHQRYRUHYLHZ6HHHJ&RU]LQ
Y)RUGX,QUH)RUGX%5%$3WK&LUDIIjG)G
QWK&LUm8QGHUDGHQRYRVWDQGDUGRIUHYLHZWKHUHYLHZLQJFRXUWGHFLGHVDQ
LVVXHDVLIWKHFRXUWZHUHWKHRULJLQDOWULDOFRXUWLQWKHPDWWHUl,G


                               ,,,)$&78$/%$&.*5281'
       m7KLVLVDQRWKHULQDVHULHVRIFDVHVLQZKLFKD&KDSWHUWUXVWHHVHHNVWRDYRLGD
UHFRUGHGPRUWJDJHRQUHDOHVWDWHRZQHGE\DGHEWRURQWKHJURXQGWKDWWKHGHEWRUGLGQRW
VLJQWKHPRUWJDJHLQWKHSUHVHQFHRIWZRZLWQHVVHVDVUHTXLUHGE\2KLR5HYLVHG&RGH
7KHWUXVWHHVJHQHUDOO\FRQWHQGWKDWWKLVGHILFLHQF\LISURYHQSHUPLWVDWUXVWHH
WRDYRLGWKHPRUWJDJHDQGEULQJWKHDVVHWLQWRWKHHVWDWHXQGHU86&l(LVHQ
Y$OOLHG%DQFVKDUHV0RUWJDJH&RUS,QUH3ULHVW1R$GY:/
DW%DQNU1'2KLR0D\$OWKRXJKZHILQGLWXQQHFHVVDU\WRUHYLHZ
WKHEDQNUXSWF\FRXUWjVILQGLQJRIIDFWWKDWWKHPRUWJDJHDWLVVXHZDVGHIHFWLYHO\ZLWQHVVHG
WKHIDFWXDOEDFNJURXQGZLOOSODFHWKHOHJDOLVVXHEHIRUHXVLQWRIRFXV
       $WWKHLUKRPHRQ0DUFK*HUDOG'DOHDQG/LQGDsDQH %XUQVm'HEWRUVl
UHILQDQFHG WKHLU KRXVH E\ H[HFXWLQJ D PRUWJDJH DQG  QRWH SD\DEOH WR
$OWHUQDWLYH0RUWJDJH6RXUFH,QFm$06l$06LPPHGLDWHO\DVVLJQHGLWVLQWHUHVWLQWKH
QRWHDQGPRUWJDJHWR,0&7KHPRUWJDJHSXUSRUWHGWREHVLJQHGE\WZRZLWQHVVHVDQG
QRWDUL]HGDVUHTXLUHGE\2KLRODZDQGWKHGHHGZDVUHFRUGHG$IWHUWKH%XUQVHVILOHGD
&KDSWHUSHWLWLRQRQ6HSWHPEHUWKH&KDSWHUWUXVWHHLQTXLUHGZKHWKHUWZR
ZLWQHVVHV ZHUH SUHVHQW DW WKH 'HEWRUVj KRXVH ZKHQ WKH PRUWJDJH ZDV VLJQHG  7KH
'HEWRUV UHFDOOHG RQO\ RQH RWKHU LQGLYLGXDO SUHVHQW VR WKH WUXVWHH ILOHG DQ DGYHUVDU\
SURFHHGLQJ DJDLQVW WKH DVVLJQHH RI WKH PRUWJDJH ,0& FODLPLQJ WKDW WKH GHHG ZDV

                                                3
LPSURSHUO\H[HFXWHGXQGHU2KLR5HYLVHG&RGHDQGWKDWWKHWUXVWHHjVLQWHUHVW
LQWKHUHDOSURSHUW\ZDVVXSHULRUWRWKDWRI,0&XQGHU86&DDQG2KLR5HYLVHG
&RGH$
     7KH EDQNUXSWF\ FRXUW KHDUG WHVWLPRQ\ DQG DOWKRXJK LW GHWHUPLQHGWKDWWKH
DSSURSULDWHVWDQGDUGRISURRIZDVDSUHSRQGHUDQFHRIWKHHYLGHQFHWKHFRXUWIRXQGWKDW
WKHWUXVWHHKDGVDWLVILHGKLVEXUGHQXQGHUHLWKHUDSUHSRQGHUDQFHRUFOHDUDQGFRQYLQFLQJ
HYLGHQFH VWDQGDUG  )LQGLQJ WKDW WKH PRUWJDJH ZDV VLJQHG E\ RQO\ RQH ZLWQHVV WKH
EDQNUXSWF\FRXUWKHOGWKDWWKHGHHGZDVLPSURSHUO\H[HFXWHGXQGHU2KLR5HYLVHG&RGH
  DQG WKHUHIRUH WKH WUXVWHH FRXOG DYRLG WKH LQYDOLG GHHG XQGHU  D
0RUHRYHUWKHFRXUWKHOGWKDW,0&ZDVQRWHQWLWOHGWRDQ\OLHQXQGHUH
       ,0&jVDQVZHUWRWKHFRPSODLQWKDGGHQLHGWKHVXSHULRULW\RIWKHWUXVWHHjVFODLP
QRWHGWKHIDFLDOYDOLGLW\RIWKHGHHGDQGDYHUUHGWKDWHYHQLIWKHWUXVWHHjVLQWHUHVWVZHUH
VXSHULRU KH FRXOG UHFRYHU RQO\ WKH DPRXQW RI DOORZDEOH XQVHFXUHG FODLPV SOXV FRVWV
,0&jVVROHUHDVRQIRULWVILQDOGHIHQVHZDVWKDWWKHm7UXVWHHKDVDGXW\WRSURWHFWWKH
XQVHFXUHGFUHGLWRUVEXWRQO\WRWKHH[WHQWRIFODLPVGXO\DOORZHGl7KHDQVZHUGLGQRWFLWH
ZKLFKZDVDVVHUWHGIRUWKHILUVWWLPHLQ,0&jVWULDOEULHIDQGWKHWULDOEULHIFLWHGRQO\
VXEVHFWLRQ H  7KH EDQNUXSWF\ FRXUW GLVFXVVHG  H ZKLFK LW TXRWHG DORQJ ZLWK
DEXWWKHRSLQLRQQHLWKHUPHQWLRQHGQRUGLVFXVVHGDQ\RWKHUVXEVHFWLRQRI
       7KH FRXUW UHMHFWHG ,0&jV DUJXPHQW WKDW  H SURYLGHG LW ZLWK D OLHQ RQ WKH
UHVLGHQFHIRUWKHDPRXQWRImLPSURYHPHQWVlPDGHWKHUHRQ,0&WLPHO\ILOHGDQRWLFHRI
DSSHDOIURPWKHsDQXDU\RUGHURIWKHEDQNUXSWF\FRXUW7KHDSSHDOZDVVWD\HG
SHQGLQJWKHFRXUWjVUHVROXWLRQRI,0&jVPRWLRQIRUUHFRQVLGHUDWLRQ
       8SRQILOLQJLWVPRWLRQIRUUHFRQVLGHUDWLRQ,0&IRUWKHILUVWWLPHFLWHGEDQG
DVVHUWHGLWFRXOGVWDQGLQWKHVKRHVRI$067KHWUXVWHHILOHGDUHSO\EULHILQRSSRVLWLRQ
WRWKHPRWLRQWRUHFRQVLGHUDQGRQsDQXDU\WKHFRXUWGHQLHG,0&jVPRWLRQ7KH
FRXUWVWDWHGWKDW,0&KDGUDLVHGEIRUWKHILUVWWLPHLQLWVPRWLRQWRUHFRQVLGHUDQG
WKDWEGLGQRWDSSO\EHFDXVHWKHWUXVWHHZDVQRWUHFRYHULQJDQ\SURSHUW\RUWKH
YDOXHRISURSHUW\IURP,0&
       7KRXJKWKHEDQNUXSWF\FRXUWJUDQWHG,0&jV0DUFKPRWLRQWRDPHQGLWV
QRWLFHRIDSSHDOWRLQFOXGHWKHsDQXDU\RUGHUWKLV3DQHOXSRQPRWLRQE\WKHWUXVWHH

                                                4
SUHYLRXVO\GLVPLVVHG,0&jVDSSHDOIURPWKHsDQXDU\RUGHUDVXQWLPHO\ILOHG7KXVRXU
DSSHOODWHMXULVGLFWLRQLVOLPLWHGWRUHYLHZRIWKHsDQXDU\MXGJPHQWKRZHYHUDVD
UHVXOW RI RXU FRQFOXVLRQ WKDW   GRHV QRW DSSO\ WR WKLV DYRLGHG PRUWJDJH ,0&jV
DUJXPHQWVFRQFHUQLQJDOOVXEVHFWLRQVRIDUHUHMHFWHG
       7KH SDUWLHV ILOHG D VWLSXODWLRQ ZLWK WKLV 3DQHO DJUHHLQJ WR KROG WKLV DSSHDO LQ
DEH\DQFHSHQGLQJDGHFLVLRQE\WKH8QLWHG6WDWHV&RXUWRI$SSHDOVIRUWKH6L[WK&LUFXLW
LQ6LPRQY&KDVH0DQKDWWDQ%DQN,QUH=DSWRFN\%5%$3WK&LU
2Q0D\WKH6L[WK&LUFXLWHQWHUHGDQRSLQLRQDQGRUGHULQ,QUH=DSWRFN\
)GDIILUPLQJWKHRSLQLRQRIWKH%DQNUXSWF\$SSHOODWH3DQHO7KHUHVXOWRI=DSWRFN\
LVWKDWWKHEDQNUXSWF\WUXVWHHPD\DYRLGWKLVPRUWJDJHWKDWZDVIRXQGQRWWRKDYHEHHQ
ZLWQHVVHGE\DWOHDVWWZRZLWQHVVHVXQGHUDSSOLFDEOH2KLR/DZDQGDWRUDODUJXPHQWWKH
$SSHOODQW UHOLHG XSRQ WKH VHSDUDWH OHJDO LVVXH RI WUDQVIHUHH OLDELOLW\ ZKHQ UHFRYHU\ LV
VRXJKWE\WKHWUXVWHHXQGHU


                                       ,9',6&866,21
       %HFDXVH WKLV DSSHDO DURVH IURP D =DSWRFN\UHODWHG VFHQDULR WKH $SSHOODQW QR
ORQJHUSXUVXHVLWVDUJXPHQWWKDWWKHEDQNUXSWF\FRXUWHUUHGE\ILQGLQJWKDWWKHPRUWJDJH
GHHGZDVVLJQHGE\RQO\RQHZLWQHVVDQGWKHUHIRUHZDVLQYDOLGXQGHU2KLR5HYLVHG&RGH
$OWKRXJK,0&FRQWHQGHGLQLWVEULHIWKDWWKHEDQNUXSWF\FRXUWGLGQRWDSSO\WKH
SURSHUVWDQGDUGRISURRIWRLWVIDFWXDODQGFUHGLELOLW\GHWHUPLQDWLRQVWKHEDQNUXSWF\FRXUW
IRXQGWKDWWKHWUXVWHHjVSURRIVDWLVILHGERWKWKHSUHSRQGHUDQFHDQGFOHDUDQGFRQYLQFLQJ
HYLGHQFHUHTXLUHPHQWV%HFDXVHWKHVWULFWHUEXUGHQZDVPHWWKLV3DQHOGRHVQRWQHHG
WRIXUWKHUDGGUHVVWKHDSSURSULDWHVWDQGDUG
       7KHVROHLVVXHUHPDLQLQJLVZKHWKHUWKHEDQNUXSWF\FRXUWHUUHGLQFRQFOXGLQJWKDW
,0&ZDVQRWHQWLWOHGWRDUHSODFHPHQWOLHQXQGHUHZKLFKSURYLGHV
       H $ JRRG IDLWK WUDQVIHUHH IURP ZKRP WKH WUXVWHH PD\ UHFRYHU XQGHU
       VXEVHFWLRQDRIWKLVVHFWLRQKDVDOLHQRQWKHSURSHUW\UHFRYHUHGWRVHFXUH
       WKHOHVVHURIo
               $WKHFRVWWRVXFKWUDQVIHUHHRIDQ\LPSURYHPHQWPDGHDIWHUWKH
       WUDQVIHU OHVV WKH DPRXQW RI DQ\ SURILW UHDOL]HG E\ RU DFFUXLQJ WR VXFK
       WUDQVIHUHHIURPVXFKSURSHUW\DQG


                                                5
               % DQ\ LQFUHDVH LQ WKH YDOXH RI VXFK SURSHUW\ DV D UHVXOW RI VXFK
       LPSURYHPHQWRIWKHSURSHUW\WUDQVIHUUHG
       ,QWKLVVXEVHFWLRQmLPSURYHPHQWjLQFOXGHVo
               $SK\VLFDODGGLWLRQVRUFKDQJHVWRWKHSURSHUW\WUDQVIHUUHG
               %UHSDLUVWRVXFKSURSHUW\
               &SD\PHQWRIDQ\WD[RQVXFKSURSHUW\
               'SD\PHQWRIDQ\GHEWVHFXUHGE\DOLHQRQVXFKSURSHUW\WKDWLV
       VXSHULRURUHTXDOWRWKHULJKWVRIWKHWUXVWHHDQG
               (SUHVHUYDWLRQRIVXFKSURSHUW\

 86&  H  $V WKH &RGH VWDWHV mLPSURYHPHQWl LQFOXGHV SD\PHQW RI FHUWDLQ
VHFXUHGGHEWV7KHEDQNUXSWF\FRXUWIRXQGWKDWWKH%XUQVHVPDGHDQLPSURYHPHQWRQWKH
SURSHUW\E\SD\LQJRIIH[LVWLQJPRUWJDJHVZLWKWKHIXQGVSURYLGHGWKURXJKWKHUHILQDQFLQJ
EXWWKHFRXUWIRXQGWKDW$06VXSSOLHGWKHIXQGVWKDWWKH%XUQVHVDSSOLHGWRSD\RIIWKH
H[LVWLQJ PRUWJDJHV  6HH  H'  ,0& GLG QRW DSSHDO WKDW ILQGLQJ  ,QVWHDG LW
DUJXHGLQLWVPRWLRQIRUUHFRQVLGHUDWLRQWKDWLWVKRXOGVWDQGLQWKHVKRHVRI$06UHO\LQJ
WKHQXSRQVXEVHFWLRQVDDQGEZKLFKSURYLGH
       D>7@RWKHH[WHQWWKDWDWUDQVIHULVDYRLGHGXQGHUVHFWLRQWKHWUXVWHH
       PD\UHFRYHUIRUWKHEHQHILWRIWKHHVWDWHWKHSURSHUW\WUDQVIHUUHGRULIWKH
       FRXUWVRRUGHUVWKHYDOXHRIVXFKSURSHUW\IURPo
               WKHLQLWLDOWUDQVIHUHHRIVXFKWUDQVIHURUWKHHQWLW\IRUZKRVHEHQHILW
               VXFKWUDQVIHUZDVPDGHRU
               DQ\LPPHGLDWHRUPHGLDWHWUDQVIHUHHRIVXFKLQLWLDOWUDQVIHUHH
       E7KHWUXVWHHPD\QRWUHFRYHUXQGHUVHFWLRQDRIWKLVVHFWLRQIURPo
               DWUDQVIHUHHWKDWWDNHVIRUYDOXHLQFOXGLQJVDWLVIDFWLRQRUVHFXULQJ
               RIDSUHVHQWRUDQWHFHGHQWGHEWLQJRRGIDLWKDQGZLWKRXWNQRZOHGJH
               RIWKHYRLGDELOLW\RIWKHWUDQVIHUDYRLGHGRU
               DQ\LPPHGLDWHRUPHGLDWHJRRGIDLWKWUDQVIHUHHRIVXFKWUDQVIHUHH

86&DDQGE
       $OWKRXJKWKLV3DQHOZLOOQRWVHSDUDWHO\FRQVLGHU,0&jVEDUJXPHQWWKDWLWLV
V\QRQ\PRXVZLWK$06EHFDXVHWKDWLVVXHZDVUDLVHGIRUWKHILUVWWLPHLQ,0&jVPRWLRQIRU
UHFRQVLGHUDWLRQZKLFKLVQRWEHIRUHWKLV3DQHORXUFRQFOXVLRQWKDWLVQRWDSSOLFDEOH
WRWKLVDYRLGHGPRUWJDJHHIIHFWLYHO\UHMHFWVDOORI,0&jVDUJXPHQWV
       ,0&WLPHO\UDLVHGLWVHDUJXPHQWEHIRUHWKHEDQNUXSWF\FRXUWDQGWKDWFRXUW
SURSHUO\GHQLHG,0&jVSRVLWLRQDOWKRXJKWKDWFRXUWXQQHFHVVDULO\H[DPLQHGWKHVFRSHRI
H:HFRQFOXGHWKDW   GRHVQRWDSSO\DWDOOEHFDXVHWKHWUXVWHHKDVQRW


                                                  6
VRXJKW UHFRYHU\ RI DQ\ SURSHUW\ RU LWV YDOXH IURP ,0&  :H ILQG WKH DQDO\VLV RI WKH
EDQNUXSWF\FRXUWLQ,QUH3ULHVW:/WREHSHUVXDVLYH
       7KDWFRXUWEHJDQZLWKVWDWXWRU\FRQVWUXFWLRQRIDQGWRDQVZHUm>W@KH
TXHVWLRQRIZKHWKHUDWUXVWHHPD\DYRLGDWUDQVIHUXQGHUDVDQLQGHSHQGHQWUHPHG\
RUZKHWKHUWKHWUXVWHHLVDOVRUHTXLUHGWRUHFRYHUWKHDYRLGHGWUDQVIHUXQGHUl,GDW
  7KH 6L[WK &LUFXLW UHFHQWO\ KDV REVHUYHG DJDLQ WKDW mµ>L@Q DOO FDVHV RI VWDWXWRU\
FRQVWUXFWLRQ WKH VWDUWLQJ SRLQW LV WKH ODQJXDJH HPSOR\HG E\ &RQJUHVVjl  5RELQHU Y
'DQQ\jV0DUNHWV,QF,QUH'DQQ\jV0DUNHWV,QF)G:/DW
WK&LUTXRWLQJ$SSOHWRQY)LUVW1DWjO%DQNRI2KLR)GWK&LU
$VDSDUWRIWKHDQDO\VLVRIWKH&RGHjVODQJXDJHZHQRWHWKDWWKLV&LUFXLWKDV
UHFRJQL]HGWKH%DQNUXSWF\&RGHjVVHSDUDWLRQRIWKHmµLGHQWLILFDWLRQRIDYRLGDEOHWUDQVIHUV
IURPWKHLGHQWLILFDWLRQRIWKRVHZKRPXVWSD\jl+DUULVRQY%UHQW7RZLQJ
&R,QUH+	67UDQVS&R)GWK&LUTXRWLQJ/HYLWY,QJHUVROO
5DQG)LQ&RUS)GWK&LU,QWKHSUHVHQWFDVHWKHOHJDOLVVXH
LQYROYHVDQLQWHUSUHWDWLRQRIWKHUHODWLRQVKLSEHWZHHQWKHDYRLGDQFHSRZHUVJUDQWHGWRWKH
WUXVWHHE\DDQGWKHVHSDUDWHOLDELOLWLHVDQGSURWHFWLRQVDFFRUGHGFHUWDLQWUDQVIHUHHV
E\
       /RRNLQJILUVWWRDjVODQJXDJHLWJUDQWVDYRLGDQFHSRZHUVZLWKRXWDQ\UHTXLUHG
OLQNDJHWRUHFRYHU\IURP WKHWUDQVIHUHHV6HFWLRQDGRHVUHIHUWRDYRLGDQFHE\
UHTXLULQJDYRLGDQFHEHIRUHUHFRYHU\EXWWKHUHFRYHU\DXWKRULW\LVSHUPLVVLYHVWDWLQJWKDW
mWKHWUXVWHHPD\UHFRYHUl86&DsXVWDVWKH3ULHVWFRXUWGLGZHILQGLW
SHUVXDVLYHWKDWm&RQJUHVVGHDOWVHSDUDWHO\ZLWKWKHFRQFHSWVRIDYRLGDQFHDQGUHFRYHU\
LQ D QXPEHU RI ZD\Vl  ,Q UH 3ULHVW  :/  DW   &RQJUHVV SODFHG WKHVH
SURYLVLRQV LQ GLIIHUHQW VHFWLRQV JLYLQJ WKHP GLIIHUHQW VWDWXWHV RI OLPLWDWLRQV  6HH LG
FRPSDULQJ86&DjVOLPLWDWLRQSHULRGIRUFRPPHQFLQJDYRLGDQFHDQGIjV
SHULRG IRU FRPPHQFLQJ UHFRYHU\  m7KH &RGH DOVR WUHDWV DYRLGDQFH DQG UHFRYHU\
LQGHSHQGHQWO\ZKHQDFDVHLVGLVPLVVHGl,GFRPSDULQJ86&E%DQG
E:HDJUHHWKDWm>D@VWUDLJKWIRUZDUGUHDGLQJRIWKHVWDWXWRU\ODQJXDJHOHDGVWRWKH
FRQFOXVLRQ WKDW  D DYRLGDQFH DQG   UHFRYHU\ DUH LQGHSHQGHQW VWDWXWRU\
UHPHGLHVl,GFROOHFWLQJFDVHVVHHDOVR'$9,' * (367(,1(7 $/%$1.5837&<

                                                 7
DW:HVWVDPH7RP/DQH5HFRYHU\RI$YRLGDEOH7UDQVIHUVIURPWKHm,QLWLDO
7UDQVIHUHHlXQGHU6HFWLRQDRIWKH%DQNUXSWF\5HIRUP$FWRIl&200 /s
m,QWKHDUHDRIWKHWUXVWHHjVSRZHUVWRUHFRYHUSURSHUW\IURPWKLUGSHUVRQV
DQG UHWXUQ WKH SURSHUW\ WR WKH EDQNUXSWF\ HVWDWH WKH %DQNUXSWF\ 5HIRUP $FW RI 
VHSDUDWHV WKRVH VHFWLRQV ZKLFK DOORZ WKH DYRLGDQFH RI FHUWDLQ WUDQVDFWLRQV VXFK DV
SUHIHUHQFHVDQGIUDXGXOHQWFRQYH\DQFHVIURP6HFWLRQZKLFKLVWKHVHFWLRQZKLFK
VSHFLILHVZKRWKHWUXVWHHPD\UHFRYHUWKHSURSHUW\IURPlIRRWQRWHVRPLWWHG: ,//,$0
/ 125721 s5 125721 %$1.5837&< /$: $1' 35$&7,&( '   DW  m7KH
%DQNUXSWF\&RGHRQWKHRWKHUKDQGJHQHUDOO\VHSDUDWHVWKHLVVXHRIZKHWKHUDWUDQVIHU
LVYRLGDEOHIURPWKHLVVXHRIWKHOLDELOLW\RIDWUDQVIHUHHl
       $UHFHQWGHFLVLRQIURPDQRWKHUEDQNUXSWF\FRXUWLQWKLV&LUFXLWDJUHHGZLWKWKH3ULHVW
DQDO\VLVDQGOLNHWKLV3DQHOIRXQGLWPRUHSHUVXDVLYHWKDQWKHYLHZRIWKRVHFRXUWVWKDW
KDYHDYRLGHGWKHSODLQUHDGLQJRIWKHWZRVWDWXWHV+HQGRQY*(&DSLWDO0RUWJDJH
6HUYV,QF,QUH&DUSHQWHU%5%DQNU('7HQQUHMHFWLQJ+HOEOLQJ
Y.UXHJHU,QUH.UXHJHU1R$GY:/%DQNU1'
2KLRsXQH
       $OWKRXJK ZH FRQFOXGH WKDW WKH VWDWXWRU\ ODQJXDJH DQG VWUXFWXUH DUH FOHDU WKH
OHJLVODWLYHKLVWRU\WRDOVRVXSSRUWVRXULQWHUSUHWDWLRQm6HFWLRQSUHVFULEHVWKH
OLDELOLW\RIDWUDQVIHUHHRIDQDYRLGHGWUDQVIHUDQGHQXQFLDWHVWKHVHSDUDWLRQEHWZHHQWKH
FRQFHSWVRIDYRLGLQJDWUDQVIHUDQGUHFRYHULQJIURPWKHWUDQVIHUHHl6 5(3 12
 UHSULQWHG LQ  86&&$1   DQG +5 5(3 12  
UHSULQWHGLQ86&&$1
       %HFDXVH   DQG  SURYLGH LQGHSHQGHQW UHPHGLHV WKH WUXVWHH QHHG QRW
SXUVXHUHFRYHU\RISURSHUW\IURPWKHWUDQVIHUHHLIDYRLGDQFHDORQHLVDQDGHTXDWHUHPHG\
6HH,QUH3ULHVW:/DW$OWKRXJKWKLVWUXVWHHDUWIXOO\VRXJKWWRVNLUWWKLV
LVVXHFRPSOHWHO\E\DUJXLQJWKDWKHGLGQRWVHHNDYRLGDQFHRIWKHPRUWJDJHEXWPHUHO\
VRXJKWWRKDYHWKHWUXVWHHjVOLHQGHFODUHGVXSHULRUWRWKHLQWHUHVWRI,0&WKHWUXVWHHjV
FRPSODLQWUHOLHGXSRQDjVDYRLGDQFHDXWKRULW\DQGWKHEDQNUXSWF\FRXUWjVRUGHU




                                               8
GHWHUPLQHGWKDWDYRLGDQFHZDVDSSURSULDWHm2QFH>DYRLGDQFH@RFFXUVWKHLQWHUHVWLV
SUHVHUYHG IRU WKH >EDQNUXSWF\@ HVWDWHjV EHQHILW DQG SURWHFWLRQ E\   DQG EHFRPHV
SURSHUW\RIWKHHVWDWHSXUVXDQWWRDl,QUH&DUSHQWHU%5DWVHHDOVR
,QUH3ULHVW:/DW*ODQ]Y5s),QWjO&RUS,QUH*ODQ]%5
%DQNU'0Gm7KHDYRLGDQFHRI>DQ@XQSHUIHFWHGOLHQSXUVXDQWWRDLV
DPHDQLQJIXOHYHQWLQDQGRILWVHOIDQGUHTXLUHVQRIXUWKHUDFWLRQWREHWDNHQE\WKHGHEWRU
7KHUHLVVLPSO\QRWKLQJWRµUHFRYHUjXQGHUDDQGWKHUHIRUHWKHµEHQHILWWRWKHHVWDWHj
DQDO\VLVLVQRWGLUHFWO\DSSOLFDEOHWRWKLVOLHQDYRLGDQFHDFWLRQl'XQHV+RWHO$VVRFV
Y+\DWW&RUS%5'6&FROOHFWLQJFDVHVDQGFLWLQJ%/$&.j6
/$: ',&7,21$5<WKHGm$YRLG7RDQQXOFDQFHOPDNHYRLGl+5
5(3 12   UHSULQWHG LQ  86&&$1   VWDWLQJ WKDW WKH
DPHQGPHQWWRFKDQJHGWKHODZZKLFKKDGUHTXLUHGWKHFRXUWWRGHWHUPLQHZKHWKHU
WKHWUDQVIHUVKRXOGEHSUHVHUYHG'$9,' * (367(,1(7 $/%$1.5837&<DW
m5HFRYHU\JRHVEH\RQGDYRLGDQFH5HFRYHU\LVDEDQNUXSWF\UHPHG\IRUDYRLGDQFHWKDW
PDNHV WKH WUDQVIHUHH RI WKH DIIHFWHG SURSHUW\ DQG DOVR SHRSOH IRU ZKRVH EHQHILW WKH
WUDQVIHUZDVPDGHSHUVRQDOO\DFFRXQWDEOHWRWKHHVWDWHIRUWKHUHWXUQRIWKHSURSHUW\RU
LWV YDOXH  $YRLGDQFH LV DOZD\V QHFHVVDU\ IRU UHFRYHU\ EXW UHFRYHU\ LV QRW DOZD\V
QHFHVVDU\RUHYHQXVHIXODIWHUDYRLGDQFHlFLWDWLRQVRPLWWHG
       8SRQ WKH %XUQVHVj ILOLQJ RI WKHLU SHWLWLRQ LQ EDQNUXSWF\  D EURXJKW WKH
'HEWRUVjLQWHUHVWLQWKHUHDOHVWDWHLQWRWKHWUXVWHHjVKDQGV8SRQWKHWUXVWHHjVDYRLGDQFH
RI ,0&jV LQWHUHVW LQ WKH UHDO SURSHUW\ XQGHU     DXWRPDWLFDOO\ SUHVHUYHG WKDW
LQWHUHVWZKLFKLPPHGLDWHO\EHFDPHSDUWRIWKHHVWDWHSXUVXDQWWRDDOOZLWKRXW
UHVRUWWRWKHVHSDUDWHUHFRYHU\PHFKDQLVPRI$VDUHVXOWRIRXUFRQFOXVLRQZH
QHHGQRWIXUWKHUGLVFXVVWKHEDQNUXSWF\FRXUWjVUHDVRQVIRUGHQ\LQJHUHOLHIWR,0&




       
         :H DUH QRW FHUWDLQ WKDW WKHUH LV D GLVFHUQDEOH GLIIHUHQFH LQ UHVXOWV EHWZHHQ D
GHFODUDWLRQRIVXSHULRULW\RIWKHWUXVWHHjVOLHQDQGDYRLGDQFHEXWZHQHHGQRWH[SORUHWKDW
VLQFH WKH RUGHU VXEMHFW RI WKLV DSSHDO GHWHUPLQHG WKDW DYRLGDQFH ZDV WKH DSSURSULDWH
UHPHG\

                                                 9
                                     &21&/86,21
      7KHODQJXDJHDQGVWUXFWXUHRIDDQGDUHFOHDUDQGWKH&RGHUHYHDOV
WKDW&RQJUHVVGHDOWVHSDUDWHO\ZLWKWKHFRQFHSWVRIDYRLGDQFHDQGUHFRYHU\LQDQXPEHU
RIZD\V6HFWLRQHGRHVQRWDSSO\LQWKLVFDVHEHFDXVHWKHWUXVWHHDYRLGHG,0&jV
LQWHUHVWDQGDXWRPDWLFDOO\EURXJKW,0&jVDYRLGHGLQWHUHVWLQWRWKHEDQNUXSWF\HVWDWH
XSRQDYRLGDQFH7KHWUXVWHHjVUHPHG\XQGHUDZDVFRPSOHWHSUHFOXGLQJDQ\QHHG
IRUWKHVHSDUDWHUHFRYHU\UHPHG\7KHsDQXDU\RUGHURIWKHEDQNUXSWF\FRXUWLV
$)),50('




                                           10
