       5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
            3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

    (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                )LOH 1DPH DS




81,7('67$7(6&28572)$33($/6
              )257+(6,;7+&,5&8,7
                BBBBBBBBBBBBBBBBB


 1$7,21$/ &,7< %$1.              ;
 1257+:(67                        
          3ODLQWLII$SSHOODQW     
                                     1R
                                   
            Y                      !
                                   
                                   
 &2/80%,$1 0878$/ /,)(             
 ,1685$1&( &203$1<HWDO        
        'HIHQGDQWV$SSHOOHHV 
                                   
                                  1
      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
       IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW7ROHGR
      1RnsDPHV*&DUU'LVWULFWsXGJH
               $UJXHGsDQXDU\
          'HFLGHGDQG)LOHG)HEUXDU\
   %HIRUH0(55,77%2**6DQG0225(&LUFXLW
                      sXGJHV
                  BBBBBBBBBBBBBBBBB
                       &2816(/
$5*8('7KRPDV6=DUHPED52(7=(/	$1'5(66
7ROHGR2KLRIRU$SSHOODQW7KRPDVs7XFNHU&223(5	
:$/,16., 7ROHGR 2KLR IRU $SSHOOHHV  21 %5,()
7KRPDV6=DUHPED52(7=(/	$1'5(667ROHGR2KLR

                            
     1DWjO&LW\%DQNY&ROXPELDQ                     1R
      0XWXDO/LIHHWDO

IRU $SSHOODQW  7KRPDV s 7XFNHU &DU\ 5RGPDQ &RRSHU
&223(5	:$/,16.,7ROHGR2KLRIRU$SSHOOHHV
                      BBBBBBBBBBBBBBBBB
                          23,1,21
                      BBBBBBBBBBBBBBBBB
   0(55,77&LUFXLWsXGJH+HUH&ROXPELDQWKHGHIHQGDQW
LQVXUDQFHFRPSDQ\KDGDFRQWUDFWXDOULJKWRIUHFRXSPHQWRU
VHWRII IRU XQHDUQHG SUHPLXPV DGYDQFHG WR LWV DJHQW  7KH
DJHQWDOVRJDYHWKHSODLQWLIIEDQNDSHUIHFWHGVHFXULW\LQWHUHVW
LQ LWV DFFRXQWV UHFHLYDEOH LQ H[FKDQJH IRU D ORDQ  7KH
TXHVWLRQEHIRUHXVLVZKHWKHUWKHLQVXUDQFHFRPSDQ\RUWKH
EDQNLVILUVWHQWLWOHGWRUHFRXSLWVORVVHVIURPQHZLQVXUDQFH
FRPPLVVLRQVFROOHFWHGE\WKHLQVXUDQFHFRPSDQ\3ODLQWLII
1DWLRQDO&LW\%DQN1RUWKZHVWEULQJVWKLVGLYHUVLW\DFWLRQ
DOOHJLQJWKDW'HIHQGDQWV&ROXPELDQ0XWXDO/LIH,QVXUDQFH
&RPSDQ\DQG&ROXPELDQ/LIH,QVXUDQFH&RPSDQ\HQJDJHG
LQDVHULHVRIWUDQVDFWLRQVE\ZKLFKWKH\UHWDLQHGLQVXUDQFH
FRPPLVVLRQVWRZKLFKWKH\ZHUHQRWHQWLWOHG:HDJUHHZLWK
WKHGLVWULFWFRXUWWKDW&ROXPELDQjVULJKWLVVXSHULRU
   ,Q&ROXPELDQEHJDQWRVHOOOLIHLQVXUDQFHZLWKWKH
LVVXDQFHRIFUHGLWFDUGV$WWKDWWLPH&ROXPELDQHQWHUHGLQWR
DQLQVXUDQFHDJHQF\FRQWUDFWZLWK1HZ%HJLQQLQJ,QVXUDQFH
WRVHOOWKHLQVXUDQFH,QVXUDQFHDJHQW+DUROG$XEU\LVWKH
SUHVLGHQWDQGVROHVKDUHKROGHURI1HZ%HJLQQLQJ,QVXUDQFH
DQG LWV FRPSDQLRQ FRPSDQ\ 1HZ %HJLQQLQJ )LQDQFLDO
$OOLDQFH  8QGHU WKH DJHQF\ FRQWUDFW &ROXPELDQ ZRXOG
DGYDQFHDSHUFHQWDJHRIWKHILUVW\HDUSROLF\FRPPLVVLRQVXS
WRWKVWR1HZ%HJLQQLQJ,QVXUDQFHXSRQUHFHLSWRID
VXEPLWWHGSROLF\DSSOLFDWLRQ7KHLQVXUHGXQGHUWKHSROLF\
ZRXOGWKHQEHELOOHGPRQWKO\RQDFUHGLWFDUGRYHUWKHFRXUVH
RI WKH \HDU  8QGHU WKH WHUPV RI WKH FRQWUDFW LQ VLWXDWLRQV
ZKHUHWKHSROLF\ZDVmQRWWDNHQQRWGHOLYHUHGRURWKHUZLVH
ODSVHGl 1HZ %HJLQQLQJ ,QVXUDQFH ZDV UHTXLUHG WR UHSD\
&ROXPELDQ WKH DGYDQFHG EXW VXEVHTXHQWO\ XQHDUQHG
FRPPLVVLRQV7KHDJUHHPHQWEHWZHHQ&ROXPELDDQG1HZ
      1DWjO&LW\%DQNY&ROXPELDQ                 1R       1R                1DWjO&LW\%DQNY&ROXPELDQ          
       0XWXDO/LIHHWDO                                                                                   0XWXDO/LIHHWDO

   7KH%DQNUHVSRQGVWKDWWKHVHWRIIH[FOXVLRQFRQWDLQHGLQ           %HJLQQLQJ,QVXUDQFHSURYLGHGDULJKWRIUHFRXSPHQWRUVHWRII
 L RI WKH 8&& n VWDWLQJ WKDW WKH SURYLVLRQV RI   IRU &ROXPELDQ WR SURWHFW LWVHOI LQ WKH HYHQW WKDW SUHPLXPV
8&&$UWLFOHmGRQRWDSSO\>W@RDQ\ULJKWRIVHWRIIln     ZHQW XQSDLG  7KH UHFRXSPHQW ODQJXDJH RI WKH DJUHHPHQW
PHDQVWKDWGRHVQRWSURWHFW&ROXPELDQjVFRQWUDFWXDO           VWDWHG WKDW &ROXPELDQ mVKDOO KDYH D ILUVW OLHQ RQ DOO
ULJKWWRmGHGXFWlIURPLWVSUHPLXPVmDQ\GHEWVGXHlIURPWKH          FRPPLVVLRQVDQGWKH&RPSDQ\>&ROXPELDQ@PD\DWDQ\
DJHQWVLPSO\EHFDXVHLWLVDmVHWRIIlQRWFRYHUHGE\$UWLFOH         WLPHGHGXFWIURPDQ\PRQLHVGXHWRWKH*HQHUDO$JHQW>1HZ
3URIHVVRU*UDQW*LOPRUHRQHRIWKHGUDIWHUVRI$UWLFOH         %HJLQQLQJ,QVXUDQFH@DQ\GHEWRUGHEWVGXHDWDQ\WLPH
DQGWKHDXWKRURIDPDMRUWUHDWLVHRQWKHVXEMHFWFKDUDFWHUL]HG       IURPWKH*HQHUDO$JHQWWRWKH&RPSDQ\lHPSKDVLVDGGHG
VXFKDUJXPHQWVEDVHGRQWKHVRFDOOHGmVHWRIIH[FOXVLRQlDV
IROORZVm2IFRXUVHDULJKWRIVHWRIILVQRWDVHFXULW\LQWHUHVW      7KHUHVXOWRIWKHEXVLQHVVSUDFWLFHEHWZHHQWKHSDUWLHVZDV
DQGKDVQHYHUEHHQFRQIXVHGZLWKRQHWKHVWDWXWHPLJKWDV           DQ DFFXPXODWLRQ RI D ODUJH GHEW RQ WKH SDUW RI WKH 1HZ
DSSURSULDWHO\ H[FOXGH IDQ GDQFLQJl   *LOPRUH 6HFXULW\       %HJLQQLQJ,QVXUDQFH)URPsDQXDU\WR)HEUXDU\
,QWHUHVWVLQ3HUVRQDO3URSHUW\DWSS          &ROXPELDQDGYDQFHGWR1HZ%HJLQQLQJ,QVXUDQFH
:HILQGQRDXWKRULW\IRUWKH%DQNjVDUJXPHQWWKDWWKHVHWRII          EXW E\ WKH HQG RI  1HZ %HJLQQLQJ ,QVXUDQFH RZHG
H[FOXVLRQ RYHUULGHV WKH EDVLF SULQFLSOH VWDWHG LQ WKH          &ROXPELDQ  LQ DGYDQFHG FRPPLVVLRQV IRU
5HVWDWHPHQW RI &RQWUDFWV TXRWHG DERYH RU   RI WKH      SROLFLHVZLWKXQSDLGSUHPLXPV
8&&  7KHUH LV QR DXWKRULW\ IRU WKH SURSRVLWLRQ WKDW D
SHUIHFWHGDVVLJQPHQWWRDWKLUGSHUVRQWDNHVSUHFHGHQFHRYHU             'XULQJWKHVXPPHURI1HZ%HJLQQLQJ,QVXUDQFHDQG
DULJKWRIUHFRXSPHQWFUHDWHGEHWZHHQWKHRULJLQDOFRQWUDFWLQJ        LWVFRPSDQLRQFRPSDQ\1HZ%HJLQQLQJ)LQDQFLDOEHJDQWR
SDUWLHVLQWKHLUFRQWUDFW                                            QHHG PRQH\ WR VXVWDLQ WKHLU RSHUDWLRQV  $XEU\ REWDLQHG D
                                                                       OLQH RI FUHGLW IURP 1DWLRQDO &LW\ DQG ERUURZHG
    7KHUHIRUHWKHMXGJPHQWRIWKHGLVWULFWFRXUWLVDIILUPHG          $V FROODWHUDO IRU WKH OLQH RI FUHGLW $XEU\
                                                                      XQFRQGLWLRQDOO\ JXDUDQWHHG WKH ORDQV E\ JUDQWLQJ 1DWLRQDO
                                                                      &LW\DILUVWVHFXULW\LQWHUHVWLQDOODFFRXQWVUHFHLYDEOHRIERWK
                                                                      1HZ%HJLQQLQJ,QVXUDQFHDQG1HZ%HJLQQLQJ)LQDQFLDO,Q
                                                                      sDQXDU\DQG)HEUXDU\$XEU\ERUURZHGDQDGGLWLRQDO
                                                                       IURP 1DWLRQDO &LW\  1DWLRQDO &LW\ SHUIHFWHG LWV
                                                                      VHFXULW\LQWHUHVWXQGHU$UWLFOHRIWKH8&&E\ILOLQJWKH
                                                                      SURSHUILQDQFLQJVWDWHPHQWVLQ2FWREHU%\FRQWUDVW
                                                                      &ROXPELDQ GLG QRW SHUIHFW LWV mILUVW OLHQl XQWLO LW ILOHG
                                                                      ILQDQFLQJ VWDWHPHQWV RQ $XJXVW   SHUIHFWLQJ LWV
                                                                      VHFXULW\LQWHUHVWLQWKHDVVHWVRI1HZ%HJLQQLQJ,QVXUDQFH
                                                                        6WDUWLQJ LQ 0DUFK  &ROXPELDQ FHDVHG DGYDQFLQJ
                                                                      FRPPLVVLRQV WR 1HZ %HJLQQLQJ IRU QHZO\ VROG SROLFLHV
                                                                      HQGLQJ LWV SUHYLRXV SUDFWLFH  ,Q DGGLWLRQ &ROXPELDQ XVHG
                                                                      QHZO\ HDUQHG FRPPLVVLRQV WR UHFRXS WKH PRQH\ RZHG WR
                                                                      &ROXPELDQE\1HZ%HJLQQLQJ,QVXUDQFHEDVHGRQDGYDQFHG
                                                                      FRPPLVVLRQV RQ WKH ODSVHG SROLFLHV  :LWKRXW WKRVH QHZO\
     1DWjO&LW\%DQNY&ROXPELDQ                      1R       1R                 1DWjO&LW\%DQNY&ROXPELDQ                
      0XWXDO/LIHHWDO                                                                                         0XWXDO/LIHHWDO

JHQHUDWHGFRPPLVVLRQV1HZ%HJLQQLQJ,QVXUDQFHGHIDXOWHG                  HOHPHQWDU\SULQFLSOHVRIFRQWUDFWODZDQDVVLJQRUFDQDVVLJQ
RQLWVRSHUDWLQJFUHGLWOLQHGHEWZLWK1DWLRQDO&LW\1DWLRQDO           mRQO\ZKDWKHKDVlDQGmLVVXEMHFWWROLPLWDWLRQVLPSRVHGE\
&LW\ WKHQ DWWHPSWHG WR FROOHFW RQ WKH EDODQFH RI WKH             WKHWHUPVRIWKDWFRQWUDFW>FUHDWLQJWKHULJKW@DQGWRGHIHQVHV
FRPPLVVLRQVUHWDLQHGE\&ROXPELDQ7KH%DQNFODLPHGWKDW                 ZKLFK ZRXOG KDYH EHHQ DYDLODEOH DJDLQVW WKH REOLJHH KDG
&ROXPELDQRZHGWKHVHWR1HZ%HJLQQLQJ,QVXUDQFH                          WKHUH EHHQ QR DVVLJQPHQWl  5HVWDWHPHQW 6HFRQG RI
                                                                          &RQWUDFWVFPWE6HH6HSWHPEHUWLGH3XEOJ
  7KLVFDVHZDVEHIRUHXVSUHYLRXVO\:LWKRXWGLVFXVVLRQ                %9Y6WHLQDQG'D\,QF)GG&LU
WKH GLVWULFW FRXUW IRXQG WKDW WKH FRQWUDFWXDO VHWRII ULJKW RI    REVHUYLQJWKDWLWLVWKHmHOHPHQWDU\DQFLHQWODZlWKDW
&ROXPELDQWRRNSULRULW\RYHUWKHSHUIHFWHGVHFXULW\LQWHUHVWV             DQ DVVLJQHH mQHYHU VWDQGV LQ DQ\ EHWWHU SRVLWLRQ WKDQ KLV
RI 1DWLRQDO &LW\  :H UHPDQGHG WKH FDVH WR GHWHUPLQH             DVVLJQRUl
ZKHWKHUWKHDJHQF\DJUHHPHQWVSURYLGHG&ROXPELDQZLWKD
VHSDUDWH FRQWUDFWXDO ULJKW RI UHFRXSPHQW RU VHWRII WKDW LV           1HYHUWKHOHVV1DWLRQDO&LW\FODLPVWKDWXQGHUWKHVWDWXWRU\
GLVWLQFW IURP D OLHQ DQG ZKHWKHU WKDW ULJKW LV VXSHULRU WR     VFKHPHRIWKH8QLIRUP&RPPHUFLDO&RGHDGRSWHGE\2KLR
1DWLRQDO&LW\jVSHUIHFWHGVHFXULW\LQWHUHVWLQ1HZ%HJLQQLQJ              WKLV FRPPRQ ODZ FRQWUDFW SULQFLSOH LV UHSODFHG E\ WKH
,QVXUDQFHjVDFFRXQWVUHFHLYDEOH2QUHPDQGWKHGLVWULFWFRXUW           VWDWXWRU\UHTXLUHPHQWSUHIHUULQJWKHILUVWWRSHUIHFWDQGWKXV
DJDLQJUDQWHGVXPPDU\MXGJPHQWIRU&ROXPELDQKROGLQJWKDW                LWFODLPVLWVLQWHUHVWLVVXSHULRUWRWKDWRI&ROXPELDQ7KLV
WKH FRQWUDFWXDO ULJKW RI VHWRII ZDV D GLVWLQFW ULJKW DQG WKDW   DUJXPHQWLVZURQJXQGHUWKHSODLQODQJXDJHRIWKH8&&
&ROXPELDQjVFRQWUDFWXDOULJKWLVVXSHULRU
                                                                             1DWLRQDO&LW\LVFRUUHFWDVDJHQHUDOPDWWHULQSRLQWLQJRXW
  7R GHWHUPLQH ZKLFK LQWHUHVW WDNHV SUHFHGHQFH ZH PXVW            WKDWDSHUIHFWHGVHFXULW\DJUHHPHQWXQGHU8&&VHFWLRQ
DQDO\]H WKH EDVLF FRQWUDFWXDO LQWHUHVWV DW VWDNH  6WULFWO\       2KLR5HY&RGHLVHIIHFWLYHDJDLQVWFUHGLWRUV
VSHDNLQJ&ROXPELDQjVFRQWUDFWXDOULJKWWRUHWDLQWKHHDUQHG              +RZHYHU   VSHFLILFDOO\ OLVWV VHFWLRQV SURYLGLQJ
FRPPLVVLRQV WR UHSD\ LWVHOI IRU DGYDQFH FRPPLVVLRQV LV             H[FHSWLRQVWRWKDWJHQHUDOUXOH2QHRIWKRVHVHFWLRQV
UHIHUUHGWRDVDULJKWRImUHFRXSPHQWlUDWKHUWKDQmVHWRIIl              2KLR5HY&RGH$VSHFLILFDOO\DGGUHVVHVWKH
DFFRUGLQJWR%ODFNjV/DZ'LFWLRQDU\WKHGDQGWKH               VLWXDWLRQDWLVVXHKHUH
DXWKRULWLHVFLWHGWKHUH$FFRUGLQJWRWKHVHDXWKRULWLHVDULJKW
RImUHFRXSPHQWlDULVHVIURPWKHVDPHWUDQVDFWLRQRUFRQWUDFW                $    WKH ULJKWV RI DQ DVVLJQHH >RI DQ DFFRXQW@ DUH
WKDW FUHDWHV DQ DVVHW ZKHUHDV mVHWRIIl LV D EURDGHU WHUP           VXEMHFWWR
UHIHUULQJWRDQ\FODLPRUGHPDQGKRZHYHUFUHDWHGWKDWWKH
KROGHURIWKHDVVHWKDVDJDLQVWWKHGHEWRU6HHLGDW                  DOO WKH WHUPV RI WKH FRQWUDFW EHWZHHQ WKH
GHILQLQJmUHFRXSPHQWlDQGGLVWLQJXLVKLQJLWIURPmVHWRIIl                       DFFRXQWGHEWRUDQGDVVLJQRUDQGDQ\GHIHQVHRI
&ROXPELDQjV FODLP WR WKH FRPPLVVLRQV GHULYHV IURP WKH                     FODLPDULVLQJWKHUHIURP
UHFRXSPHQWODQJXDJHLQWKHFRQWUDFWEHWZHHQ&ROXPELDQDQG
1HZ%HJLQQLQJ,QVXUDQFHWKDWFUHDWHGWKHFRPPLVVLRQV7KH                2KLR 5HY &RGH  $  7KXV WKH 8&& FOHDUO\
FRPPLVVLRQVDUHSDUWRISUHPLXPSD\PHQWVDQGDUHSDLGWR                  OLPLWVWKHULJKWVRI1DWLRQDO&LW\DVWKHDVVLJQHHWRWKRVHRI
&ROXPELDQ E\ LWV LQVXUHGV  1DWLRQDO &LW\jV FODLP WR WKH         WKHDVVLJQRU1HZ%HJLQQLQJ,QVXUDQFHDQGPDNHVLWVULJKWWR
FRPPLVVLRQV LV VXEMHFW WR &ROXPELDQjV FRQWUDFW EHFDXVH              DFFRXQWVUHFHLYDEOHVXEMHFWWRWKHSURYLVLRQVRI&ROXPELDQjV
1DWLRQDO&LW\E\LWVRZQDGPLVVLRQLVRQO\DQDVVLJQHHRI               FRQWUDFW ZLWK 1HZ %HJLQQLQJ ,QVXUDQFH LQFOXGLQJ
1HZ%HJLQQLQJ,QVXUDQFHjVULJKWVXQGHUWKHFRQWUDFW8QGHU               &ROXPELDQjVULJKWRIUHFRXSPHQW
