               (/(&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 67(9('52%,1621                                       
          
                     'HEWRU                                  

         
67(9('52%,1621                                          
                                  
                     $SSHOODQW                                
                 
Y              1R
                      
&+$03$,*1/$1'0$5.,1&                                      
             
$SSHOOHH                                


                               $SSHDOIURPWKH8QLWHG6WDWHV%DQNUXSWF\&RXUW
                   IRUWKH6RXWKHUQ'LVWULFWRI2KLR(DVWHUQ'LYLVLRQDW&ROXPEXV
                                                          1R

                                     $UJXHGsXQH

                            'HFLGHGDQG)LOHG$XJXVW

             %HIRUH%52:1025*(167(51&/$55(1DQG5+2'(6
                        %DQNUXSWF\$SSHOODWH3DQHOsXGJHV

                                 

                                              &2816(/

$5*8('*UDG\/3HWWLJUHZsU&2;67(,1	3(77,*5(:&ROXPEXV2KLRIRU
$SSHOODQW5D\$&R[&2;	*,1*(5'D\WRQ2KLRIRU$SSHOOHH21%5,()*UDG\
/3HWWLJUHZsU&2;67(,1	3(77,*5(:&ROXPEXV2KLRIRU$SSHOODQW5D\$
&R[&2;	*,1*(5'D\WRQ2KLRIRU$SSHOOHH




                                                      1
                                           23,1,21


         :,//,$0+286721%52:1%DQNUXSWF\$SSHOODWH3DQHOsXGJH7KH'HEWRU
DSSHDOVWKHEDQNUXSWF\FRXUWjVRUGHURYHUUXOLQJKLVREMHFWLRQWRWKHFODLPRI&KDPSDLJQ
/DQGPDUN,QF)RUWKHIROORZLQJUHDVRQVZH$)),50WKHGHFLVLRQRIWKHEDQNUXSWF\
FRXUW


                                   ,,668(621$33($/

         7KHLVVXHVRQDSSHDODUHZKHWKHUWKHEDQNUXSWF\FRXUWDEXVHGLWVGLVFUHWLRQRU
HUUHGZKHQLWGHFLGHGWKDWWKHUHZHUHQRJURXQGVZDUUDQWLQJUHYRFDWLRQRIWKHDUELWUDWLRQ
DZDUGDQGZKHWKHUWKHEDQNUXSWF\FRXUWHUUHGZKHQLWUXOHGWKDWUHVMXGLFDWDEDUUHGWKH
'HEWRUjVREMHFWLRQWR/DQGPDUNjVFODLP$VDSDUWRIWKHVHLVVXHVWKHUHLVDTXHVWLRQRI
ZKHWKHU WKH EDQNUXSWF\ FRXUW HUUHG E\ GHQ\LQJ WKH 'HEWRU DQ RSSRUWXQLW\ WR SUHVHQW
HYLGHQFHLQVXSSRUWRIKLVOHJDODUJXPHQWV


                     ,,s85,6',&7,21$1'67$1'$5'2)5(9,(:

         7KH%DQNUXSWF\$SSHOODWH3DQHORIWKH6L[WK&LUFXLWKDVMXULVGLFWLRQRYHUILQDORUGHUV
RIWKHEDQNUXSWF\FRXUWVRIWKH6RXWKHUQ'LVWULFWRI2KLRSXUVXDQWWR86&D
DQGF7KHEDQNUXSWF\FRXUWjVRUGHUGLVSRVLQJRI/DQGPDUNjVFODLPLVDILQDODSSHDODEOH
RUGHUEHFDXVHLWmµHQGVWKHOLWLJDWLRQRQWKHPHULWVDQGOHDYHVQRWKLQJIRUWKHFRXUWWRGR
EXWH[HFXWHWKHMXGJPHQWjl2IILFLDO8QVHFXUHG&UHGLWRUV&RPPRI9DOOH\9XOFDQ0ROG&R
Y$PSFR3LWWVEXUJK&RUS,QUH9DOOH\9XOFDQ0ROG&R%5%$3WK
&LUTXRWDWLRQRPLWWHGDIIjG)GWK&LUXQSXEOLVKHG
         :HUHYLHZDGHFLVLRQWRFRQILUPRUYDFDWHDQDUELWUDWLRQDZDUGmIRUFOHDUHUURURQ
ILQGLQJVRIIDFWDQGGHQRYRRQTXHVWLRQVRIODZl'DZDKDUHY6SHQFHU)G
WK&LUFHUWGHQLHG6&Wmµ,WLVZHOOHVWDEOLVKHGWKDWFRXUWVVKRXOG
SOD\RQO\DOLPLWHGUROHLQUHYLHZLQJWKHGHFLVLRQVRIDUELWUDWRUVj7KH)HGHUDO$UELWUDWLRQ
$FWSUHVXPHVWKDWDUELWUDWLRQDZDUGVZLOOEHFRQILUPHGl,GTXRWDWLRQRPLWWHGmµ'HQRYR

                                               2
UHYLHZUHTXLUHVWKH3DQHOWRUHYLHZTXHVWLRQVRIODZLQGHSHQGHQWRIWKHEDQNUXSWF\FRXUWjV
GHWHUPLQDWLRQjl)LUVW0HULW1$&LWL]HQV1DWjO%DQNY*HW],QUH*HW]%5
%$3WK&LUTXRWDWLRQRPLWWHG


                                                       ,,,)$&76
          $SSHOODQW6WHYH5RELQVRQWKHm'HEWRUlLVDIDUPHU)RUPDQ\\HDUVKHKDGD
EXVLQHVV UHODWLRQVKLS ZLWK &KDPSDLJQ /DQGPDUN ,QF m/DQGPDUNl DQ DJULFXOWXUDO
FRRSHUDWLYH WKDW EX\V JUDLQ IRU UHVDOH IURP LWV PHPEHUV  7KH 'HEWRU DQG /DQGPDUN
HQWHUHGLQWRFRQWUDFWVXQGHUZKLFKWKH'HEWRUVROGJUDLQWR/DQGPDUN7KHFRQWUDFWVDUH
RIDW\SHFRPPRQO\UHIHUUHGWRDVmKHGJHWRDUULYHlFRQWUDFWV8QGHUWKHVHFRQWUDFWVWKH
'HEWRUZDVREOLJDWHGWRGHOLYHUDFHUWDLQDPRXQWRIJUDLQWR/DQGPDUNRQDGDWHWKDWZDV
HVWDEOLVKHG DW WKH WLPH WKH FRQWUDFWV ZHUH H[HFXWHG EXW ZKLFK FRXOG EH GHIHUUHG RU
mUROOHGl IRU D SHULRG RI QRW PRUH WKDQ WZR FURS \HDUV  7KH FRQWUDFWV FRQWDLQHG DQ
DUELWUDWLRQFODXVHZKLFKSURYLGHGmDOOGLVSXWHVDQGFRQWURYHUVLHVRIDQ\QDWXUHZKDWVRHYHU
EHWZHHQWKHPZLWKUHVSHFWWRWKLVFRQWUDFWVKDOOEHDUELWUDWHGDFFRUGLQJWRWKH$UELWUDWLRQ
UXOHVRIWKH1DWLRQDO*UDLQ	)HHG$VVRFLDWLRQWKHm1*)$lDQGWKDWWKHGHFLVLRQDQG
DZDUGGHWHUPLQHGWKHUHXQGHUVKDOOEHILQDODQGELQGLQJl
          $OOHJLQJWKDWWKH'HEWRUKDGGHIDXOWHGRQKLVREOLJDWLRQWRGHOLYHUJUDLQXQGHUWKUHH
RIWKHFRQWUDFWV/DQGPDUNFDQFHOHGWKHFRQWUDFWVDQGPDGHDFODLPIRUGDPDJHV7KH
'HEWRUGLVSXWHGKLVOLDELOLW\/DQGPDUNFRPPHQFHGOLWLJDWLRQLQWKH&RPPRQ3OHDV&RXUW
RI&KDPSDLJQ&RXQW\2KLRWRHQIRUFHWKHFRQWUDFWVjDUELWUDWLRQSURYLVLRQV/DQGPDUN
SUHYDLOHGRQDPRWLRQIRUVXPPDU\MXGJPHQWIRUHQIRUFHPHQWRIWKHDUELWUDWLRQFODXVHV
DQGWKDWFRXUWUHIHUUHGWKHSDUWLHVWRDUELWUDWLRQ
          /DQGPDUN WKHQ ILOHG LWV FRPSODLQW FRPPHQFLQJ DQ DUELWUDWLRQ EHIRUH WKH 1*)$
DOOHJLQJWKDWWKH'HEWRUIDLOHGWRGHOLYHUJUDLQLQDFFRUGDQFHZLWKWKHFRQWUDFWVDQGWKDWWKH
'HEWRU ZDV OLDEOH WR UHLPEXUVH LW IRU GDPDJHV UHVXOWLQJ IURP KLV EUHDFK  7KH 'HEWRU
DQVZHUHGDQGDUJXHGWKDW/DQGPDUNKDGXQIDLUO\DQGZLWKRXWFRQVHQWDOWHUHGWKHWHUPV


    
     )RU D GHVFULSWLRQ RI KHGJH WR DUULYH RU FDVK IRUZDUG FRQWUDFWV VHH 1DJHO Y $'0 ,QYHVWRU 6HUYV ,QF  )

6XSSG     1' ,,,   DPHQGHG E\   1R  &   :/  1' ,,,    DIIjG    )G  WK
&LU  DQG   $QGHUVRQ ,QF Y +RUWRQ )DUPV ,QF    IG   WK &LU 


                                                             3
RI WKH FRQWUDFWV DQG WKDW WKH DJUHHPHQWV YLRODWHG  86&   D SURYLVLRQ RI WKH
&RPPRGLW\([FKDQJH$FWDQGZHUHQRWHQIRUFHDEOH1HLWKHUSDUW\UHTXHVWHGDKHDULQJ
DQGWKHPDWWHUZDVVXEPLWWHGWRDUELWUDWLRQRQWKHSOHDGLQJV
        $SDQHORIWKUHHDUELWUDWRUVDSSRLQWHGE\1*)$LVVXHGDUHSRUWRQRUDERXWsXQH
ILQGLQJWKDWWKHFRQWUDFWVZHUHYDOLGDQGH[HPSWIURPWKH&RPPRGLW\([FKDQJH$FW
DQG WKDW WKH 'HEWRU KDG EUHDFKHG WKH FRQWUDFWV  7KH SDQHO DZDUGHG /DQGPDUN
SOXVLQWHUHVW7KH'HEWRUGLGQRWILOHDPRWLRQWRYDFDWHWKHDZDUG6HH
86&/DQGPDUNGLGQRWILOHDMXGLFLDODFWLRQWRFRQILUPWKHDZDUG6HHLG
        7KH'HEWRUILOHGKLV&KDSWHUFDVHRQ$XJXVW/DQGPDUNILOHGDFODLP
LQWKDWFDVHEDVHGRQWKHDUELWUDWLRQDZDUGRQ6HSWHPEHUDQGWKH'HEWRUILOHG
DQREMHFWLRQWRWKHFODLPRQ)HEUXDU\7KH'HEWRUjVREMHFWLRQLVQRWLQFOXGHGLQ
WKHUHFRUGRQDSSHDOKRZHYHULQDPHPRUDQGXPILOHGLQVXSSRUWRIWKHREMHFWLRQWKH
'HEWRU DUJXHG WKDW WKH DUELWUDWLRQ DZDUG VKRXOG QRW EH UHFRJQL]HG DV DQ HQIRUFHDEOH
REOLJDWLRQ+HDVVHUWHGWKDWWKHFODLPVKRXOGEHGLVDOORZHGEHFDXVH/DQGPDUNGLGQRW
KDYHDQHQIRUFHDEOHFRQWUDFWZLWKWKH'HEWRUKDGEUHDFKHGLWVILGXFLDU\GXW\WRWKH'HEWRU
KDGYLRODWHGWKH&RPPRGLW\([FKDQJH$FWDQGKDGYLRODWHGVWDWHDQGIHGHUDOODZ
        7KH'HEWRUDUJXHGWRWKHEDQNUXSWF\FRXUWWKDWWKHDUELWUDWLRQGHFLVLRQZDVVXEMHFW
WR UHYLHZ XQGHU VHFWLRQ  RI WKH )HGHUDO $UELWUDWLRQ $FW  86&   DQG WKDW KLV
REMHFWLRQZDVQRWEDUUHGE\UHVMXGLFDWDEHFDXVHWKHDUELWUDWLRQSURFHVVZDVIODZHG
WKHDUELWUDWLRQDZDUGZDVQRWFRQILUPHGE\DQ\FRXUWDQGWKH'HEWRUZDVKRQHVW
DQGLQQHHGRIEDQNUXSWF\UHOLHI+HDOVRDUJXHGWKDWWKHDZDUGVKRXOGEHYDFDWHGXQGHU
IHGHUDOODZEHFDXVHLWZDVPDGHLQPDQLIHVWGLVUHJDUGRIWKHODZ
        /DQGPDUNUHVSRQGHGWRWKH'HEWRUjVREMHFWLRQDQGDUJXHGWKDWWKHDUELWUDWLRQDZDUG
ZDVELQGLQJDQGZDVHQWLWOHGWRSUHFOXVLYHHIIHFW
        7KHEDQNUXSWF\FRXUWHQWHUHGDQDJUHHGRUGHUELIXUFDWLQJWKHKHDULQJRQWKHFODLP
REMHFWLRQ7KDWRUGHUSURYLGHGWKDWWKHFRXUWZRXOGILUVWFRQVLGHU/DQGPDUNjVDUJXPHQW
WKDWWKH'HEWRUjVREMHFWLRQZDVEDUUHGE\UHVMXGLFDWDDQGFROODWHUDOHVWRSSHO7KHRUGHU
SURYLGHGWKDWWKHSUHFOXVLRQLVVXHZDVWREHVXEPLWWHGRQWKHSOHDGLQJVDQGWKDW

    
     1HLWKHU   SDUW\ REMHFWHG WR DQ\ RI WKH DUELWUDWRUV DSSRLQWHG E\ 1*)$ LQ VSLWH RI WKHLU ULJKW WR GR VR 2QH DUELWUDWRU

YROXQWDULO\ ZLWKGUHZ DQG ZDV UHSODFHG




                                                            4
       2UDODUJXPHQWVKDOOEHKHDUGRQ6HSWHPEHUDWSPDIWHU
       ZKLFK WKH LVVXH ZLOO EH VXEPLWWHG RQ WKH UHFRUG  ,I WKH &RXUW ILQGV WKDW
       'HEWRUjV 2EMHFWLRQ LV EDUUHG E\ UHV MXGLFDWD RU FROODWHUDO HVWRSSHO WKH
       2EMHFWLRQRI'HEWRUPD\EHRYHUUXOHGZLWKRXWDQHYLGHQWLDU\KHDULQJDQGWKH
       &ODLPPD\EHDOORZHG,IWKH&RXUWILQGVWKDWWKH'HEWRUjV2EMHFWLRQLVQRW
       EDUUHG E\ WKH GRFWULQH RI UHV MXGLFDWD RU FROODWHUDO HVWRSSHO WKHQ DQ
       HYLGHQWLDU\KHDULQJRQ'HEWRUjV2EMHFWLRQVKDOOEHKHDUGRQ2FWREHU
       DQG2FWREHU>@

       7KHEDQNUXSWF\FRXUWKHDUGRUDODUJXPHQWVRQ6HSWHPEHU7KH'HEWRUjV
FRXQVHODUJXHGWKDWWKHREMHFWLRQZDVQRWEDUUHGE\UHVMXGLFDWDEHFDXVHWKHDUELWUDWLRQ
SURFHVVZDVIODZHGDVWKHDUELWUDWRUVmDOOFDPHRXWRIWKHLQGXVWU\lDQGEHFDXVHWKH
DUELWUDWRUV VKRXOG KDYH UXOHG WKDW WKH SDUWLHVj FRQWUDFWV ZHUH IXWXUHV FRPPRGLWLHV
WUDQVDFWLRQVUDWKHUWKDQFDVKIRUZDUGJUDLQVDOHV+HDOVRDUJXHGWKDWWKHDZDUGZDVQRW
ELQGLQJEHFDXVHLWKDGQRWEHHQFRQILUPHG/DQGPDUNjVFRXQVHODUJXHGWRWKHFRQWUDU\
7KHEDQNUXSWF\FRXUWWRRNWKHPDWWHUXQGHUDGYLVHPHQWDQGWKHQRQ2FWREHU
ZLWKRXWDVHSDUDWHHYLGHQWLDU\KHDULQJWKHFRXUWHQWHUHGDQRSLQLRQDQGRUGHURYHUUXOLQJ
WKH'HEWRUjVREMHFWLRQWR/DQGPDUNjVFODLP7KHEDQNUXSWF\FRXUWKHOGWKDWWKH'HEWRUKDG
IDLOHGWRDOOHJHRUWRSURYHDQ\VSHFLILFIDFWVZDUUDQWLQJDUHYRFDWLRQRIWKHDUELWUDWLRQ
DZDUGDQGWKHQIRXQGWKDWUHVMXGLFDWDSUHFOXGHGWKHFRXUWIURPDGGUHVVLQJWKHPHULWVRI
WKH 'HEWRUjV REMHFWLRQ WR WKH FODLP  7KH 'HEWRU ILOHG D PRWLRQ IRU UHFRQVLGHUDWLRQ RQ
1RYHPEHUDQGWKHEDQNUXSWF\FRXUWGHQLHGWKDWPRWLRQLQDQRUGHUHQWHUHGRQ
1RYHPEHU7KLVDSSHDOIROORZHG


                                        ,9',6&866,21
       $OWKRXJKWKH'HEWRUDUJXHVRQDSSHDOWKDWWKHEDQNUXSWF\FRXUWIDLOHGWRSURYLGHDQ
RSSRUWXQLW\ IRU KLP WR SUHVHQW SURRI WR VXSSRUW KLV REMHFWLRQ WR /DQGPDUNjV FODLP WKH
FULWLFDOLVVXHLQWKLVDSSHDOLVZKHWKHUWKHUHZHUHDQ\JURXQGVXSRQZKLFKWKHEDQNUXSWF\
FRXUWVKRXOGKDYHUHIXVHGWRUHFRJQL]HWKHSUHEDQNUXSWF\DUELWUDWLRQDZDUGDVWKHEDVLV
IRUDFODLPDJDLQVWWKH'HEWRU7KH3DQHOFRQFOXGHVWKDWWKHUHDUHQRVXFKJURXQGVDQG
ZH$)),50WKHEDQNUXSWF\FRXUWjVRUGHURYHUUXOLQJWKH'HEWRUjVREMHFWLRQWR/DQGPDUNjV
FODLPEXWZHGRVRZLWKRXWUHDFKLQJWKDWFRXUWjVUHVMXGLFDWDUXOLQJ


                                                 5
       7KH'HEWRUjVSULQFLSDODUJXPHQWLVWKDWWKHEDQNUXSWF\FRXUWIDLOHGWRFRQGXFWDQ
HYLGHQWLDU\KHDULQJWRDFFHSWSURRIRQWKH'HEWRUjVFRQWHQWLRQWKDWWKHDUELWUDWLRQDZDUG
ZDVVXEMHFWWRDWWDFNLQWKDWFRXUW:HH[DPLQHHDFKRIWKH'HEWRUjVDUJXPHQWV
       :HQRWHILUVWWKDWWKHEDQNUXSWF\FRXUWZDVZLWKRXWVXEMHFWPDWWHUMXULVGLFWLRQWR
UHYLHZWKHGHFLVLRQRIWKHVWDWHFRXUWWKDWWKH'HEWRUDQG/DQGPDUNmVLJQHGFRQWUDFWXDO
GRFXPHQWVl DQG mWKDW UHDVRQDEOH PLQGV FDQQRW GLIIHU RQ WKH TXHVWLRQ RI ZKHWKHU WKH
DUELWUDWLRQFODXVHZDVLQFOXGHGLQWKHFRQWUDFWVl2Q'HFHPEHUSULRUWRWKH
'HEWRUjVILOLQJIRU&KDSWHUUHOLHIWKHVWDWHFRXUWUHIHUUHGWKHSDUWLHVjFRQWUDFWXDOGLVSXWHV
WRDUELWUDWLRQ7KDWGHFLVLRQLVEH\RQGFROODWHUDODWWDFNLQWKHEDQNUXSWF\FRXUWXQGHUWKH
5RRNHU)HOGPDQGRFWULQHZKLFKJHQHUDOO\SUHFOXGHVDIHGHUDOWULDOFRXUWIURPH[HUFLVLQJ
DSSHOODWHUHYLHZRIDVWDWHFRXUWMXGJPHQW6HH6LQJOHWRQY)LIWK7KLUG%DQNRI:HVWHUQ
2KLR ,Q UH 6LQJOHWRQ  %5   %$3 WK &LU   $Q\ SRUWLRQ RI WKH
'HEWRUjVDWWDFNRQWKHDUELWUDWLRQDZDUGWKDWIORZVIURPWKH'HEWRUjVFRQWHQWLRQWKDWWKH
LQLWLDODUELWUDWLRQSURFHVVLVIODZHGLVWKHUHIRUHXQIRXQGHG
       0RUHSDUWLFXODUO\LIWKH'HEWRULVDJJULHYHGEHFDXVHKHZDVIRUFHGLQWRDUELWUDWLRQ
UDWKHUWKDQDMXGLFLDOSURFHHGLQJWKDWDUJXPHQWDOVRLVEH\RQGWKHEDQNUXSWF\FRXUWjVDQG
WKLV3DQHOjVMXULVGLFWLRQ7KHUHFRUGEHIRUHWKLV3DQHOFRQWDLQVLQIDFWDVSHFLILFFRQWUDFW
IRUDUELWUDWLRQHQWHUHGLQWRE\WKH'HEWRUDQG/DQGPDUNRQ)HEUXDU\VXEPLWWLQJ
WKHFRQWURYHUV\RYHUWKHFRQWUDFWVDWLVVXHLQWKLVDSSHDOWRDUELWUDWLRQXQGHUWKH1*)$
UXOHV  7KH 'HEWRUjV DUJXPHQW WR WKH EDQNUXSWF\ FRXUW WKDW WKH DUELWUDWLRQ FODXVH ZDV
KLGGHQLQWKHFRQWUDFWDQGWKDWKHZDVQRWIXOO\LQIRUPHGPXVWEHUHMHFWHG
       5HJDUGLQJWKH'HEWRUjVFRQWHQWLRQWKDWWKHDUELWUDWLRQSURFHVVZDVIODZHGEHFDXVH
RIDQLQKHUHQWELDVWKH'HEWRUGRHVQRPRUHWKDQPDNHDJHQHUDOL]HGDUJXPHQWWKDWDOO
RIWKHDUELWUDWRUVZHUHmWDLQWHGlEHFDXVHWKH\mDOOFDPHRXWRIWKH>JUDLQGHDOHU@LQGXVWU\l
7KHFRXUWLQ1DJHOY$'0,QYHVWRU6HUYV,QF)6XSSG1',OODPHQGHGE\
1R  &   :/  1' ,OO  DIIjG  )G  WK &LU 
SRLQWHG RXW WKH HVVHQWLDO IODZ LQ WKLV DUJXPHQW  sXVW DV LQ1DJHO WKLV 'HEWRU KDV QRW
DUJXHG WKDW mDQ\ RI WKH DUELWUDWRUV LV ELDVHG LQ WKH VHQVH WKDW KH KDV D VWDNH LQ WKH
RXWFRPHl1DJHO)6XSSGDW7KHEDQNUXSWF\FRXUWJDYH'HEWRUjVFRXQVHOD
IXOORSSRUWXQLW\WRSUHVHQWKLVWKHRULHVRIZK\WKHDUELWUDWLRQZDVVXEMHFWWRMXGLFLDOUHYLHZ

                                                  6
7KHDUJXPHQWLQUHIHUHQFHWRELDVZDVOLPLWHGWRWKHFRQFHSWWKDWQRQHRIWKHDUELWUDWRUV
FRXOGEHIDLUGXHWRWKHLUHPSOR\PHQWDVJUDLQGHDOHUPHPEHUVRIWKH1*)$m7KDWVRPH
RUDOORIWKHDUELWUDWRUVPD\EHJUDLQPHUFKDQWVGRHVQRWHTXDWHWRSDUWLDOLW\PRUHOLNHO\
LWHTXDWHVWRH[SHUWLVHDQGREWDLQLQJWKHEHQHILWVRIWKHODZPHUFKDQWLVDELJUHDVRQZK\
VRSKLVWLFDWHGFRPPHUFLDOSDUWLHVFKRRVHDUELWUDWLRQRYHUOLWLJDWLRQl,GDW
       8QGHUWKHODQJXDJHRIWKHFRQWUROOLQJVWDWXWHLQRUGHUWRHVWDEOLVKELDVWKHUHPXVW
EHDVKRZLQJRImHYLGHQWSDUWLDOLW\l86&D7KH6L[WK&LUFXLWKDVGHFOLQHGWR
KROG WKDW DUELWUDWLRQ XQGHU WKH 1*)$ UXOHV LV V\VWHPDWLFDOO\ ELDVHG DQG LWV GHFLVLRQ
FRQILUPV WKDW WKH REMHFWLQJ SDUW\ PXVW VKRZ WKDW D mUHDVRQDEOH SHUVRQ ZRXOG KDYH WR
FRQFOXGHWKDWDQDUELWUDWRUZDVSDUWLDOWRRQHSDUW\WRWKHDUELWUDWLRQl$QGHUVRQV,QFY
+RUWRQ)DUPV,QF)GWK&LUTXRWLQJ$SSHUVRQY)OHHW&DUULHU
&RUS)GWK&LUDGGLWLRQDOTXRWDWLRQRPLWWHG
       7KH'HEWRUQRZVD\VWKDWKHZDVQRWJLYHQWKHRSSRUWXQLW\WRSUHVHQWSURRIRQELDV
EXWLQWKHDEVHQFHRIDQ\DUJXPHQWRWKHUWKDQWKHJHQHUDORQHGHVFULEHGDERYHWKHUHLV
QRWKLQJWRLQGLFDWHWKDWKHKDGDQ\VXEVWDQWLYHSURRIWRRIIHU:HILQGQRHUURULQWKHWULDO
FRXUWjVUXOLQJZKHQWKHUHZDVQRSURIIHURISURRIWRWKHEDQNUXSWF\FRXUW
       7KH'HEWRUQH[WDUJXHVWKDWWKHDUELWUDWRUVH[FHHGHGWKHLUDXWKRULW\7KH6L[WK
&LUFXLWKDVVWDWHGWKDWVXFKDQDUJXPHQWPXVWEHJURXQGHGLQWKHUHOHYDQWVWDWXWHWKH
)HGHUDO $UELWUDWLRQ $FW  86&   WKH m)$$l  $QGHUVRQV  )G DW 
m&RXUWVSOD\RQO\DOLPLWHGUROHLQUHYLHZLQJDUELWUDWLRQGHFLVLRQVDQGµDUHQRWSHUPLWWHG
WRFRQVLGHUWKHPHULWVRIDQDUELWUDWLRQDZDUGHYHQLIWKHSDUWLHVDOOHJHWKDWWKHDZDUGUHVWV
RQHUURUVRIIDFWRUPLVLQWHUSUHWDWLRQVRIWKHFRQWUDFWj$IHGHUDOFRXUWPD\VHWDVLGHDQ
DUELWUDWLRQ DZDUG XQGHU WKH )$$ RQO\ XSRQ D ILQGLQJ WKDW FHUWDLQ VWDWXWRU\ RU MXGLFLDO
JURXQGVDUHSUHVHQWlFLWDWLRQVRPLWWHG7KH'HEWRUVLPSO\DUJXHVWKDWWKHDUELWUDWRUV
PLVLQWHUSUHWHGWKHFRQWUDFWVDWLVVXHZKHQWKH\IRXQGWKHPWREHKHGJHWRDUULYHFRQWUDFWV
7KLVDUJXPHQWWKDWWKHDUELWUDWRUVPDGHDPLVWDNHHLWKHURIIDFWRUODZIDLOVXQGHUWKH
DXWKRULW\LQWKLV&LUFXLWWKDWRQHFDQQRWGHPRQVWUDWHDQH[FHVVRIDXWKRULW\PHUHO\EHFDXVH
RQHGLVDJUHHVZLWKWKHDUELWUDWRUVjGHFLVLRQ)HGHUDWHG'HSjW6WRUHV,QFYs9%,QGXV
,QF  )G   WK &LU  m7KLV FLUFXLW KDV GHWHUPLQHG WKDW mµ>P@DQLIHVW
GLVUHJDUGRIWKHODZjlPHDQVPRUHWKDQDPHUHHUURULQLQWHUSUHWDWLRQRUDSSOLFDWLRQRIWKH

                                                 7
ODZlTXRWLQJ$QDFRQGD&RY'LVWULFW/RGJH1RRIWKH,QWjO$VVjQRI0DFKLQLVWVDQG
$HURVSDFH:RUNHUV)GWK&LU
       7KH6L[WK&LUFXLWUHFRJQL]HVWKDWDQDUELWUDWLRQDZDUGFDQEHYDFDWHGmZKHUHWKH
DUELWUDWRUVKDYHPDQLIHVWO\GLVUHJDUGHGWKHODZl'DZDKDUH)GDWFLWDWLRQ
RPLWWHG7KH'HEWRUKRZHYHUKDVIDLOHGWRLGHQWLI\ZKDWODZWKHDUELWUDWRUVGLVUHJDUGHG
,QKLVDUJXPHQWWKDWWKHEDQNUXSWF\FRXUWGHQLHGKLPDQRSSRUWXQLW\WRSUHVHQWSURRIWKDW
WKHDUELWUDWRUVPDQLIHVWO\GLVUHJDUGHGWKHODZWKH'HEWRURQO\PHQWLRQVWKDWKHZRXOGKDYH
RIIHUHGWKHFRQWUDFWVEHWZHHQWKHVHSDUWLHVWKHDIILGDYLWRIWKH'HEWRUDQGWKHDIILGDYLWRI
DQH[SHUWZLWQHVV$WWKHFRQFOXVLRQRIWKH6HSWHPEHUKHDULQJ&KDPSDLJQjV
DWWRUQH\WHQGHUHGWKHUHFRUGRIWKHDUELWUDWLRQSDQHODQGWKH'HEWRUjVDWWRUQH\FRQVHQWHG
WRLWVDGPLVVLRQ7KHEDQNUXSWF\FRXUWWKHUHIRUHKDGWKHFRQWUDFWVEHIRUHLWE\FRQVHQW
RIWKHSDUWLHV0RUHRYHUWKH'HEWRUjVDWWRUQH\TXRWHGUHOHYDQWSRUWLRQVIURPWKHFRQWUDFWV
LQKLVSUHVHQWDWLRQWRWKHEDQNUXSWF\FRXUW7KHEDQNUXSWF\FRXUWjVRSLQLRQLQGLFDWHVWKDW
WKHFRXUWIXOO\UHYLHZHGHYHU\WKLQJEHIRUHLWLQFOXGLQJWKHFRQWUDFWV:HILQGQRPHULWWR
WKH'HEWRUjVDUJXPHQWWKDWWKHEDQNUXSWF\FRXUWIDLOHGWRFRQVLGHUWKHFRQWUDFWV
       (VVHQWLDOO\ WKH 'HEWRU QRZ DUJXHV WKDW WKH DUELWUDWRUV ZHUH ZURQJ LQ WKHLU
LQWHUSUHWDWLRQRIWKHSDUWLHVjFRQWUDFWVEXWDJDLQZHILQGQRWKLQJLQWKH'HEWRUjVDUJXPHQW
WRLQGLFDWHWKDWDQ\SURRIFRXOGKDYHEHHQRIIHUHGLQVXSSRUWRIWKDWSRLQW7KH'HEWRUjV
FRQWHQWLRQ WR WKH EDQNUXSWF\ FRXUW ZDV WKDW WKH DUELWUDWRUV ZKR ZHUH IURP WKH JUDLQ
LQGXVWU\VKRXOGKDYHUHFRJQL]HGWKDWWKHVHFRQWUDFWVZHUHRQWKHLUIDFHIXWXUHVFRQWUDFWV
JRYHUQHGE\WKH&RPPRGLW\([FKDQJH$FW7KHFRQWUDFWVGRVSHDNIRUWKHPVHOYHVDQG
WKHSURIIHUHGDIILGDYLWRIWKH'HEWRUPHUHO\VD\VWKDWWKHFRQWUDFWVDWWDFKHGWRWKHDIILGDYLW
ZHUHWKHSDUWLHVjFRQWUDFWV
       $VWRWKHH[SHUWjVDIILGDYLWLWPHUHO\H[SUHVVHVDQRSLQLRQWKDWWKHFRQWUDFWVZHUH
mIXWXUHVFRQWUDFWVlDQRSLQLRQZKLFKWKHEDQNUXSWF\FRXUWZRXOGKDYHEHHQFRPSHOOHGWR
UHMHFWLQYLHZRIWKH$QGHUVRQVDXWKRULW\,QWKDWRSLQLRQWKH6L[WK&LUFXLWFOHDUO\KHOG
       WKDWLQGHWHUPLQLQJZKHWKHUDSDUWLFXODUFRPPRGLWLHVFRQWUDFWIDOOVZLWKLQWKH
       FDVK IRUZDUG H[FHSWLRQ >WR WKH &RPPRGLW\ ([FKDQJH $FW m&($l DQG
       &RPPRGLW\)XWXUHV7UDGLQJ&RPPLVVLRQm&)7&lUHJXODWLRQV@FRXUWVPXVW
       IRFXVRQZKHWKHUWKHUHLVDOHJLWLPDWHH[SHFWDWLRQWKDWSK\VLFDOGHOLYHU\RI
       WKHDFWXDOFRPPRGLW\E\WKHVHOOHUWRWKHRULJLQDOFRQWUDFWLQJEX\HUZLOORFFXU
       LQWKHIXWXUH

                                               8
$QGHUVRQV)GDW+HUHWKH'HEWRUZRXOGFOHDUO\IDLOLQKLVDWWDFNDVWKHUHLV
QRGLVSXWHLQWKHUHFRUGRUDUJXPHQWVDERXWWKH'HEWRUjVNQRZOHGJHWKDWDFWXDOGHOLYHU\
ZDVUHTXLUHGXQGHUWKHVHFRQWUDFWV7KHILQGLQJRIWKHDUELWUDWRUVLQWKLVUHJDUGLVQRWD
PDQLIHVWGLVUHJDUGRIWKHODZUDWKHULWLVDIDFWXDOILQGLQJWKDWWKH'HEWRUDGPLWWHG
             7KH'HEWRUDUJXHVDSSDUHQWO\DVDPDWWHURIODZWKDWWKHFRQWUDFWVDUHIXWXUHV
FRQWUDFWVEXWRQO\EHFDXVHRIWKHLUUROOLQJIHDWXUH+HGRHVQRWDUJXHWKHUHOHYDQFHRIDQ\
RI WKH RWKHU IDFWRUV GHVFULEHG LQ $QGHUVRQV  )G DW  IRU KHGJH WR DUULYH
FRQVLGHUDWLRQ7KH'HEWRUFRXOGUROOWKHVHFRQWUDFWVIRUZDUGIRUGHOLYHU\EXWWKDWIHDWXUH
PHUHO\PDNHVWKHVHFRQWUDFWVmIOH[LEOHlQRWIODZHG,GDW7KDWLVWKHVHOOHUjVRSWLRQ
WRUROOIRUZDUGWKHRULJLQDOGHOLYHU\GDWHWRDIXWXUHEXWGHILQLWHGDWHGRHVQRWFRQYHUWDQ
RWKHUZLVHYDOLGKHGJHWRDUULYHFRQWUDFWLQWRDIXWXUHVFRQWUDFW7KH'HEWRUjVFRQWHQWLRQ
WKDWWKHDUELWUDWRUVZHUHLQHUURUGLVUHJDUGVWKHFRQWUROOLQJODZLQWKLV&LUFXLWm$OWKRXJK
WKH\PD\DOORZPRUHIOH[LELOLW\WKDQLQDWUDGLWLRQDOFDVKIRUZDUGFRQWUDFWZHQRQHWKHOHVV
KROGWKDW+7$FRQWUDFWVZKLFKFRQWHPSODWHDFWXDOSK\VLFDOGHOLYHU\RIDFRPPRGLW\DUH
FDVKIRUZDUGFRQWUDFWVDQGDUHWKHUHIRUHH[FOXGHGIURPFRYHUDJHE\WKH&($DQG&)7&
UHJXODWLRQVl,G,QYLHZRIWKH'HEWRUjVDGPLVVLRQWKDWXOWLPDWHGHOLYHU\ZDVH[SHFWHGZH
ILQGQRHUURULQWKHEDQNUXSWF\FRXUWjVUXOLQJXSKROGLQJWKHDUELWUDWLRQDZDUG
             1RULVWKHUHHUURULQWKHDOOHJHGGHQLDORIDQHYLGHQWLDU\KHDULQJVLQFHWKH'HEWRUjV
DGPLVVLRQ ZRXOG KDYH EHHQ SURRI LQ VXSSRUW RI WKH EDQNUXSWF\ FRXUWjV UHVSHFW IRU WKH
DUELWUDWLRQSURFHVVDQGDZDUG:HQRWHWKDWWKHEDQNUXSWF\FRXUWjVRSLQLRQVD\VWKDWWKH
'HEWRU IDLOHG WR SUHVHQW mDXWKRULW\l UDWKHU WKDQ SURRI WR VKRZ WKDW WKH DUELWUDWRUV


       
       47 D GLVFXVVLRQ RI WKH HIIHFW RI WKH mUROOLQJl RU IOH[LEOH GHOLYHU\ IHDWXUH RI KHGJH WR DUULYH FRQWUDFWV VHH 1DJHO
   ) 6XSSG DW  DQG    $QGHUVRQV  )G DW    &DVK IRUZDUG FRQWUDFWV ZKLFK LQFOXGH IOH[LEOH KHGJH WR DUULYH
FRQWUDFWV DUH QRW FRQWUROOHG E\ WKH &RPPRGLW\ ([FKDQJH $FW DQG WKH &RPPRGLW\ )XWXUHV 7UDGLQJ &RPPLVVLRQ
UHJXODWLRQV ZKLFK LQVWHDG JRYHUQ mIXWXUHV FRQWUDFWVl GHILQHG E\ WKH $FW DV mµFRQWUDFWV RI VDOH RI D FRPPRGLW\ IRU IXWXUH
GHOLYHU\jl $QGHUVRQV  )G DW  TXRWLQJ  86&$  HPSKDVLV DGGHG 7KH $FW H[SOLFLWO\ H[FOXGHV IURP
WKH GHILQLWLRQ RI mIXWXUH GHOLYHU\l mµDQ\ VDOH RI DQ\ FDVK FRPPRGLW\ IRU GHIHUUHG VKLSPHQW RU GHOLYHU\jl 1DJHO  )
6XSSG DW  TXRWLQJ  86&  D HPSKDVLV DGGHG DFFRUG $QGHUVRQV  )G DW  Q 

       
       ,W   LV XQGLVSXWHG WKDW WKH FRQWUDFWV DW LVVXH SURYLGHG IRU GHIHUUHG GHOLYHU\ 'HEWRU DGPLWWHG WKDW WKH FRQWUDFWV GLG

QRW DOORZ LQGHILQLWH UROOLQJ EXW UDWKHU UHTXLUHG GHOLYHU\ ZLWKLQ WZR \HDUV    +H IXUWKHU WHVWLILHG LQ WKH DUELWUDWLRQ SURFHVV

WKDWKH GLG QRW FRQWUDFW WR VHOO PRUH JUDLQ WKDQ KH H[SHFWHG WR EH DEOH WR GHOLYHU EXW WKDW WKH ZHDWKHU SUHYHQWHG KLP IURP
SURGXFLQJ HQRXJK FURSV WR GHOLYHU XQGHU WKHVH FRQWUDFWV 7KH SDUWLHV KDG GRQH EXVLQHVV WRJHWKHU IRU \HDUV DQG WKH
'HEWRU SUHYLRXVO\ KDG H[HUFLVHG KLV ULJKWV WR UROO WKH FRQWUDFWV DQG KDG DOZD\V GHOLYHUHG      $00 3/078438  )G DW
 LQFOXGLQJ WKHVH IDFWRUV LQ FRQVLGHULQJ ZKHWKHU KHGJH WR DUULYH FRQWUDFWV ILW ZLWKLQ WKH mFDVK IRUZDUG H[FHSWLRQl
RI WKH &RPPRGLW\ ([FKDQJH $FW


                                                               9
PDQLIHVWO\GLVUHJDUGHGWKHDSSOLFDEOHODZ7KHEDQNUXSWF\FRXUWUHFRJQL]HGDVZHGR
WKDWWKHFRQWUROOLQJDXWKRULW\LQWKLV&LUFXLWUHMHFWVWKH'HEWRUjVDUJXPHQW
       7KH'HEWRUDOVRDUJXHVWKDWKHLVHQWLWOHGWRMXGLFLDOUHYLHZRIWKHDUELWUDWLRQDZDUG
VLQFHWKDWDZDUGKDVQRWEHHQFRQILUPHGE\DQ\FRXUW$QLQLWLDOIODZLQWKLVDUJXPHQWLV
WKDWWKH'HEWRULVODWHLIKLVREMHFWLRQWR/DQGPDUNjVSURRIRIFODLPLVFRQVWUXHGDVKLVHIIRUW
WRYDFDWHWKHDUELWUDWLRQDZDUG8QGHU86&DQRWLFHRIDPRWLRQWRYDFDWHPXVW
EHVHUYHGRQWKHDGYHUVHSDUW\ZLWKLQWKUHHPRQWKVRIWKHDZDUGjVILOLQJRUGHOLYHU\7KH
DUELWUDWLRQDZDUGDSSHDUVWRKDYHEHHQHQWHUHGRQsXO\7KH'HEWRUjVREMHFWLRQ
ZDVILOHGRQ)HEUXDU\$IDLOXUHWRWLPHO\VHUYHQRWLFHUHVXOWVLQDIRUIHLWXUHRIWKH
ULJKWWRMXGLFLDOUHYLHZRIWKHDZDUG6HH&RUH\Y1HZ<RUN6WRFN([FK)G
WK&LUFLWDWLRQVRPLWWHG
       :LWKRXW VKXWWLQJ WKH GRRU RQ WKH 'HEWRU RQ WKH WLPHOLQHVV LVVXH KRZHYHU ZH
FRQFOXGHWKDWWKHDEVHQFHRISUHEDQNUXSWF\MXGLFLDOFRQILUPDWLRQRIWKHDUELWUDWLRQDZDUG
LVQRWVLJQLILFDQWsXGLFLDOFRQILUPDWLRQVHHPVWREHLPSRUWDQWIRUFROOHFWLRQSXUSRVHVXQGHU
WKH)$$EXWLWLVQRWUHTXLUHGIRUSXUSRVHVRIUHFRJQL]LQJWKHYDOLGLW\RIWKHDZDUG6HH
.HQWXFN\5LYHU0LOOVYsDFNVRQ)GWK&LUm7KHODQJXDJHRI>
86&@DVWRDSSOLFDWLRQWRWKHFRXUWIRUDQRUGHU>RIFRQILUPDWLRQ@LVQRWPDQGDWRU\EXW
SHUPLVVLYH$SDUW\PD\WKHUHIRUHDSSO\WRWKHFRXUWIRUDQRUGHUFRQILUPLQJWKHDZDUG
EXWLVQRWOLPLWHGWRVXFKUHPHG\3ULRUWRWKHHQDFWPHQWRIWKH8QLWHG6WDWHV$UELWUDWLRQ
$FWDQDFWLRQDWODZRQWKHDZDUGZDVWKHSURSHUPHWKRGRIHQIRUFLQJLWlFLWLQJ8QLWHG
)XHO*DV&RY&ROXPELDQ)XHO&RUS)GWK&LU/HKLJK6WUXFWXUDO
6WHHO&RY5XVW(QJjJ&R)G'&&LUFI&RQVROLGDWHG5DLO&RUS
Y'HODQG+XGVRQ5\&R,QUH&RQVROLGDWHG5DLO&RUS)6XSS''&
KROGLQJWKDWWKHODQJXDJHLVQHLWKHUSHUPLVVLYHQRUPDQGDWRU\m7KLVFRXUWKROGV
WKDWWKHSODLQUHDGLQJRILQGLFDWHVWKDWLIDSDUW\GRHVQRWEULQJDQDFWLRQWRFRQILUPLWV
DUELWUDWLRQDZDUGZLWKLQRQH\HDUDIWHUWKHDZDUGLVPDGHWKHSDUW\ZLOOEHWLPHEDUUHGIURP
DYDLOLQJLWVHOIRIWKHVXPPDU\FRQILUPDWLRQSURFHVVSURYLGHGE\6LQFHZDV
PHDQW WR VXSSOHPHQW DQG QRW SUHFOXGH RWKHU UHPHGLHV FRQILUPDWLRQ XQGHU   LV QRW
PDQGDWRU\DQGDVVXFKDSDUW\LVQRWSUHYHQWHGIURPXVLQJHLWKHUVWDWHODZRUFRPPRQODZ



                                              10
SURFHGXUHVWRFRQILUPWKHDZDUG7RUXOHRWKHUZLVHZRXOGFRQVWLWXWHDOHJDOLQFRQJUXLW\
ZKLFKWKLVFRXUWGHWHUPLQHVZDVQRWLQWHQGHGE\&RQJUHVVl


                                     9&21&/86,21
       :KDWHYHUWKHSXUSRVHRIFRQILUPDWLRQRIDQDUELWUDWLRQDZDUGLWLVWKH'HEWRUZKR
KDGWKHEXUGHQRIGHPRQVWUDWLQJVRPHEDVLVIRUWKHEDQNUXSWF\FRXUWWRUHIXVHUHFRJQLWLRQ
RIWKHDZDUG,WLVQRWQHFHVVDU\IRUWKLV3DQHOWRH[SUHVVUHFRJQLWLRQRIWKHDZDUGLQWHUPV
RIWKHSUHFOXVLYHHIIHFWRIWKDWDZDUG,WLVHQRXJKWKDWWKH'HEWRUKDVRIIHUHGQRWKHRU\
WKDWZRXOGVXSSRUWWKHEDQNUXSWF\FRXUWGRLQJDQ\WKLQJEXWJLYLQJWKDWDZDUGWKHYDOLGLW\
WKH )$$ UHTXLUHV  7KH EDQNUXSWF\ FRXUW FRUUHFWO\ FRQVLGHUHG ZKHWKHU WKHUH ZDV DQ\
SODXVLEOHZD\LQZKLFKWKH'HEWRUFRXOGDWWDFNWKHDUELWUDWLRQDZDUGDQGILQGLQJQRQHWKDW
FRXUWZDVQRWLQHUURULQGHQ\LQJWKH'HEWRUDIXWLOHHYLGHQWLDU\KHDULQJ2XUFRQFOXVLRQ
WKDWWKHDUELWUDWLRQDZDUGLVYDOLGUHQGHUVWKH'HEWRUjVDUJXPHQWXQGHUUHVMXGLFDWDPRRW
       7KHGHFLVLRQRIWKHEDQNUXSWF\FRXUWLV$)),50('




                                             11
