Der KI-Arbeitsbereich für Juristen
- Rechtsrecherche mit Zugriff auf über 1 Million Quellen
- Dokumentenautomatisierung
- Mandatsverwaltung
- Gehostet in der EU und der Schweiz
14 Tage kostenlos testen (10 Fragen/Tag während der Testphase)
Der KI-Arbeitsbereich für Juristen
14 Tage kostenlos testen (10 Fragen/Tag während der Testphase)
98-5309; 98-5594•00a0250p.06
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 DS
81,7('67$7(6&28572)$33($/6
)257+(6,;7+&,5&8,7
BBBBBBBBBBBBBBBBB
:$//$&( +$5':$5(
&203$1< ,1&
3ODLQWLII$SSHOODQW
&URVV$SSHOOHH
Y
%,// $%5$06
'HIHQGDQW$SSHOOHH
&URVV$SSHOODQW
/' ³/211,(´ $%5$06
'HIHQGDQW$SSHOOHH
'HIHQGDQW
;!
1
1RV
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI.HQWXFN\DW/RQGRQ
1R²-HQQLIHU%&RIIPDQ'LVWULFW-XGJH
$UJXHGDQG6XEPLWWHG$XJXVW
'HFLGHGDQG)LOHG-XO\
-- 1 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
7KH +RQRUDEOH *HUDOG ( 5RVHQ 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU WKH
(DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ
%HIRUH1(/621DQG0225(&LUFXLW-XGJHV526(1
'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' : 7KRPDV %XQFK %81&+ %52&.
/H[LQJWRQ .HQWXFN\ IRU $SSHOODQW 21 %5,() :
7KRPDV %XQFK 0DWWKHZ % %XQFK %81&+ %52&.
/H[LQJWRQ .HQWXFN\ +RZDUG 2 0DQQ 75,0%/(
0$11&RUELQ.HQWXFN\IRU$SSHOODQW.HQQHWK$6PLWK
-U/RQGRQ.HQWXFN\IRU$SSHOOHHV
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
526(1'LVWULFW-XGJH
,,1752'8&7,21
3ODLQWLII$SSHOODQW :DOODFH +DUGZDUH &RPSDQ\ ,QF
³:DOODFH+DUGZDUH´ DSSHDOVIURPYDULRXV'LVWULFW&RXUW
UXOLQJVLQIDYRURI'HIHQGDQW$SSHOOHH&URVV$SSHOODQW%LOO
$EUDPVDQGKLVEURWKHU'HIHQGDQW$SSHOOHH/' ³/RQQLH´
$EUDPV0RVWVLJQLILFDQWO\:DOODFH+DUGZDUHFRQWHQGVWKDW
WKH'LVWULFW&RXUWHUUHGE\UHIXVLQJWRHQIRUFHD7HQQHVVHH
FKRLFHRIODZSURYLVLRQLQDJXDUDQW\SXUSRUWHGO\H[HFXWHGE\
WKH SDUWLHV 7KH ORZHU FRXUW LQVWHDG HOHFWHG WR DSSO\
.HQWXFN\ ODZ WKHUHE\ UHQGHULQJ WKH JXDUDQW\ LQYDOLG DQG
XQHQIRUFHDEOHDQGWKHQDZDUGHGVXPPDU\MXGJPHQWLQIDYRU
RI WKH$EUDPVEURWKHUVRQ:DOODFH+DUGZDUH¶VEUHDFKRI
JXDUDQW\FODLP)RUKLVSDUW'HIHQGDQW&URVV$SSHOODQW%LOO
$EUDPVDSSHDOVWKH'LVWULFW&RXUW¶VRUGHUSHUPLWWLQJ:DOODFH
-- 2 of 26 --
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
&R'HIHQGDQW /RQQLH $EUDPV KDV QRW MRLQHG LQ WKLV FURVVDSSHDO
7KH SDUWLHV VHWWOHG WKH UHPDLQLQJ FODLP RQH RI :DOODFH +DUGZDUH¶V
WZR FODLPV RI IUDXG
+DUGZDUHWRILOHDQDPHQGHGFRPSODLQWDVVHUWLQJFODLPVLQ
DGGLWLRQWRWKLVEUHDFKRIJXDUDQW\FODLP
,QLWVDPHQGHGFRPSODLQW:DOODFH+DUGZDUHDXJPHQWHGLWV
EUHDFKRIJXDUDQW\ FODLP E\ DVVHUWLQJ D EUHDFKRIFRQWUDFW
FODLPDQGWZRFODLPVRIIUDXG7KH'LVWULFW&RXUWXOWLPDWHO\
HQWHUHGVXPPDU\MXGJPHQWLQIDYRURIWKH$EUDPVEURWKHUV
RQWZRRIWKHVHWKUHHFODLPVDQG:DOODFH+DUGZDUHDOVR
FKDOOHQJHVWKHVHUXOLQJVRQDSSHDO)LQDOO\LQWKHHYHQWZH
UHLQVWDWHRQHRUPRUHRILWVFODLPV:DOODFH+DUGZDUHDUJXHV
WKDW WKH 'LVWULFW &RXUW HUURQHRXVO\ GHFLGHG FHUWDLQ PDWWHUV
EHDULQJXSRQWKHLVVXHRIGDPDJHV
)RUWKHUHDVRQVVWDWHGEHORZZHKROGWKDWWKHSDUWLHVDUH
ERXQG E\ WKHLU FKRLFH RI 7HQQHVVHH ODZ LQ WKH JXDUDQW\
DJUHHPHQWDQGZHWKHUHIRUHUHYHUVHWKHDZDUGRIVXPPDU\
MXGJPHQWWRWKH$EUDPVEURWKHUVRQWKHEUHDFKRIJXDUDQW\
FODLP$VWRWKHUHPDLQLQJLVVXHVZHJHQHUDOO\DIILUPWKH
GHFLVLRQRIWKH'LVWULFW&RXUWZLWKWKHH[FHSWLRQRIFHUWDLQ
UXOLQJVUHODWLQJWRGDPDJHV
,,)$&78$/$1'352&('85$/%$&.*5281'
$ 7KH3DUWLHV
3ODLQWLII$SSHOODQW :DOODFH +DUGZDUH &RPSDQ\ LV D
7HQQHVVHH FRUSRUDWLRQ WKDW SURYLGHV ZKROHVDOH KDUGZDUH
JRRGVDQGVHUYLFHVWRUHWDLOKDUGZDUHVWRUHV,QWKHVXPPHU
RI :DOODFH +DUGZDUH HQWHUHG LQWR DQ DJUHHPHQW WR
VXSSO\KDUGZDUHLQYHQWRU\WR7UL&RXQW\+RPH&HQWHU,QF
³7UL&RXQW\´ DQHZO\RSHQLQJKDUGZDUHVWRUHORFDWHGLQ
&RUELQ .HQWXFN\ 7UL&RXQW\ ZDV LQFRUSRUDWHG E\
'HIHQGDQW$SSHOOHH /RQQLH $EUDPV ZKR VHUYHG DV 7UL
&RXQW\¶VSUHVLGHQW'HIHQGDQW$SSHOOHH&URVV$SSHOODQW%LOO
-- 3 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
$EUDPVSURYLGHGILQDQFLQJIRU7UL&RXQW\DQGDVVLVWHGLQ
RSHUDWLQJWKHEXVLQHVV
% 7KH 7UL&RXQW\ 2SHUDWLQJ $JUHHPHQW 6HFXULW\
$JUHHPHQWDQG*XDUDQW\
,QFRQQHFWLRQZLWK:DOODFH+DUGZDUH¶VVDOHRIKDUGZDUH
LQYHQWRU\WR7UL&RXQW\WKHVHWZRFRUSRUDWHHQWLWLHVH[HFXWHG
D ³1HZ $FFRXQW $SSOLFDWLRQ DQG 2SHUDWLQJ $JUHHPHQW´
GDWHG $XJXVW 8QGHU WKLV $JUHHPHQW :DOODFH
+DUGZDUHH[WHQGHGDOLQHRIFUHGLWWRHQDEOH7UL&RXQW\WR
SXUFKDVHKDUGZDUHJRRGVDQGVHUYLFHV%RWK/RQQLHDQG%LOO
$EUDPV VLJQHG WKH $JUHHPHQW RQ EHKDOI RI 7UL&RXQW\
7KURXJKWKHLUVLJQDWXUHVWKH$EUDPVEURWKHUV³DJUHH>G@WREH
MRLQWO\ VHYHUDOO\ DQG LQGLYLGXDOO\ UHVSRQVLEOH IRU WKH
SD\PHQW RI DQ\ DQG DOO JRRGV DQG VHUYLFHV IXUQLVKHG E\
:DOODFH +DUGZDUH &RPSDQ\ ,QF WR RXU ILUP RU WR XV
LQGLYLGXDOO\´ -$DW
7R VHFXUH WKLV OLQH RI FUHGLW 7UL&RXQW\ H[HFXWHG DQ
$XJXVW ³6HFXULW\ $JUHHPHQW´ JUDQWLQJ :DOODFH
+DUGZDUH D VHFXULW\ LQWHUHVW LQ ³>D@Q\ DQG DOO LQYHQWRU\
SXUFKDVHG E\ >7UL&RXQW\@ IURP :DOODFH RU RWKHUZLVH
>I@LQDQFHGE\:DOODFH´ -$DW /RQQLH$EUDPVVLJQHG
WKLV VHFXULW\ DJUHHPHQW RQ EHKDOI RI 7UL&RXQW\ DV LWV
SUHVLGHQW7KHDJUHHPHQW¶VGHILQLWLRQDOVHFWLRQUHIHUUHGWR
7HQQHVVHH¶V HQDFWPHQW RI WKH 8QLIRUP &RPPHUFLDO &RGH
³8&&´ DVWKHVRXUFHIRUUHVROYLQJDQ\TXHVWLRQVDVWRWKH
PHDQLQJRIWHUPV)LQDOO\WKHVHFXULW\DJUHHPHQWSURYLGHG
WKDW³WKHYDOLGLW\LQWHUSUHWDWLRQFRQVWUXFWLRQDQGHQIRUFHPHQW
RIWKLV6HFXULW\$JUHHPHQWWKHREOLJDWLRQVRI>7UL&RXQW\@
DQGWKHULJKWVRI:DOODFHKHUHXQGHUDQGDQ\TXHVWLRQZKLFK
PD\ DULVH FRQFHUQLQJ WKLV 6HFXULW\ $JUHHPHQW RU WKH
WUDQVDFWLRQV FRQWHPSODWHG KHUHE\ VKDOO EH JRYHUQHG LQ DOO
UHVSHFWVE\WKHODZ LQFOXGLQJODZVVWDWXWHVDQGFDVHODZ RI
WKH6WDWHRI7HQQHVVHH´ -$DW
,QDGGLWLRQWRWKLVVHFXULW\DJUHHPHQW:DOODFH+DUGZDUH
DOVRVRXJKWSHUVRQDOJXDUDQWLHVIURPERWKRIWKH$EUDPVLQ
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
8QGHU WKHVH FLUFXPVWDQFHV ZH FDQQRW VD\ WKDW :DOODFH
+DUGZDUH¶VPRWLRQIRUOHDYHWRDPHQGZDVEURXJKWVRODWHLQ
WKH SURFHHGLQJV WKDW SUHMXGLFH PD\ EH SUHVXPHG 7R WKH
FRQWUDU\%LOO$EUDPVKDGDPSOHRSSRUWXQLW\WRDGGUHVVDQG
GHIHQG DJDLQVW WKH DGGLWLRQDO DOOHJDWLRQV DQG FODLPV LQ
:DOODFH¶V DPHQGHG FRPSODLQW &RQVHTXHQWO\ WKH FRXUW
EHORZGLGQRWDEXVHLWVGLVFUHWLRQLQJUDQWLQJOHDYHWRILOHDQ
DPHQGHGFRPSODLQW
9&21&/86,21
)RUWKHIRUHJRLQJUHDVRQVZH5(9(56(WKHUXOLQJVRIWKH
FRXUW EHORZ RQ WKH EUHDFKRIJXDUDQW\ FODLP DQG WKH WZR
LVVXHV RI GDPDJHV UDLVHG LQ :DOODFH +DUGZDUH¶V DSSHDO
$)),50 DV WR WKH UHPDLQLQJ LVVXHV DQG 5(0$1' WKLV
PDWWHUWRWKH'LVWULFW&RXUWIRUIXUWKHUSURFHHGLQJVFRQVLVWHQW
ZLWKWKLVGHFLVLRQ
-- 4 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
EDQNUXSWF\HVWDWHWRUHVROYHWKHWUXVWHH¶VDYRLGDEOHSUHIHUHQFH
FODLP
( 7KH'LVWULFW&RXUW'LG1RW(UULQ*UDQWLQJ/HDYHIRU
:DOODFH+DUGZDUHWR)LOHDQ$PHQGHG&RPSODLQW
$VKLVVROHLVVXHRQDSSHDO%LOO$EUDPVDUJXHVWKDWWKH
'LVWULFW&RXUWHUUHGLQSHUPLWWLQJ:DOODFH+DUGZDUHWRILOHDQ
DPHQGHGFRPSODLQW+HQRWHVWKDW:DOODFH+DUGZDUHVRXJKW
OHDYHWRDPHQGVRPHWZHQW\RQHPRQWKVDIWHUILOLQJLWVLQLWLDO
FRPSODLQW DQG FRQWHQGV WKDW WKH DGGLWLRQDO FODLPV DQG
DOOHJDWLRQVFRQWDLQHGLQWKHDPHQGHGFRPSODLQWZHUHLQQR
ZD\³QHZO\GLVFRYHUHG´EXWZHUHRUVKRXOGKDYHEHHQNQRZQ
WR:DOODFH+DUGZDUHIURPWKHRXWVHWRIWKLVOLWLJDWLRQ7KXV
%LOO $EUDPV PDLQWDLQV WKDW :DOODFH +DUGZDUH¶V DPHQGHG
FRPSODLQWZDVWKHSURGXFWRIXQGXHGHOD\DQGFDXVHGKLP
SUHMXGLFHDQGWKDWWKHORZHUFRXUWWKHUHIRUHHUUHGLQJUDQWLQJ
OHDYHWRILOHWKLVDPHQGHGFRPSODLQW
:HILQGQRHUURULQWKHORZHUFRXUW¶VGHWHUPLQDWLRQ7KH
GHFLVLRQZKHWKHUWRJUDQWOHDYHWRDPHQGLVHQWUXVWHGWRWKH
GLVFUHWLRQRIWKH'LVWULFW&RXUWDQGZHZLOOUHYHUVHRQO\LIWKH
ORZHU FRXUW DEXVHV WKLV GLVFUHWLRQ 6LQD\ Y /DPVRQ
6HVVLRQV&R)G WK&LU 'HOD\
VWDQGLQJDORQHLVDQLQVXIILFLHQWEDVLVIRUGHQ\LQJOHDYHWR
DPHQGDQGWKLVLVWUXHQRPDWWHUKRZORQJWKHGHOD\0RRUH
Y&LW\RI3DGXFDK)G WK&LU
,Q WKLV FDVH %LOO $EUDPV¶ FKDOOHQJH UHVWV DOPRVW
H[FOXVLYHO\RQWKHOHQJWKRI:DOODFH+DUGZDUH¶VGHOD\DORQJ
ZLWKWKHEDUHDVVHUWLRQWKDWKHVXIIHUHGSUHMXGLFHDVDUHVXOWRI
WKLVGHOD\+RZHYHUKHKDVQRWLGHQWLILHGDQ\ZD\LQZKLFK
KH ZDV DFWXDOO\ SUHMXGLFHG E\ :DOODFH¶V GHOD\ DQG QR
SUHMXGLFHLVHYLGHQWLQWKHUHFRUGEHIRUHXV,QSDUWLFXODUZH
QRWHWKDWWKHGLVFRYHU\SHULRGUHPDLQHGRSHQZKHQ:DOODFH
+DUGZDUHEURXJKWLWVPRWLRQIRUOHDYHWRDPHQGRQ0DUFK
WKDWWKH'LVWULFW&RXUW¶VILUVWVXEVWDQWLYHUXOLQJZDVQRW
LVVXHGXQWLO$XJXVWDQGWKDWWKHORZHUFRXUWGLGQRW
LVVXH LWV ILQDO VXEVWDQWLYH UXOLQJ XQWLO 'HFHPEHU
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
ZKLFK WKH\ DJUHHG WR DFFHSW LQGLYLGXDO OLDELOLW\ IRU 7UL
&RXQW\¶VLQGHEWHGQHVVWR:DOODFH+DUGZDUH$FFRUGLQJO\
RQ$XJXVW:DOODFH+DUGZDUHWHQGHUHGD³*XDUDQW\
$JUHHPHQW´IRUVLJQDWXUHE\ERWK/RQQLHDQG%LOO$EUDPV
$OWKRXJKERWKEURWKHUV¶VLJQDWXUHVDSSHDURQWKLV*XDUDQW\
%LOO$EUDPVGHQLHVWKDWKHVLJQHGWKLVGRFXPHQWDQGKHKDV
SURIIHUHG WKH RSLQLRQ RI D KDQGZULWLQJ H[SHUW WKDW KLV
SXUSRUWHGVLJQDWXUHLVDIRUJHU\)RUKLVSDUW/RQQLH$EUDPV
DGPLWVWKDWKHVLJQHGWKH*XDUDQW\
8QGHUWKHWHUPVRIWKH*XDUDQW\$JUHHPHQWWKH$EUDPV
EURWKHUV³XQFRQGLWLRQDOO\JXDUDQWHH>G@DQGSURPLVH>G@WRSD\
WR:DOODFHDQ\DQGDOOLQGHEWHGQHVV´RZHGE\7UL&RXQW\
WR:DOODFH+DUGZDUH -$DW 7KHJXDUDQWRUV¶OLDELOLW\
ZDV ³XQOLPLWHG´ ³FRQWLQXLQJ´ DQG HQFRPSDVVHG ³DQ\
LQGHEWHGQHVV´LQFXUUHGE\7UL&RXQW\LQFOXGLQJ³WKDWDULVLQJ
XQGHUVXFFHVVLYHWUDQVDFWLRQVZKLFKVKDOOHLWKHUFRQWLQXHWKH
LQGHEWHGQHVVRUIURPWLPHWRWLPHUHQHZLWDIWHULWKDVEHHQ
VDWLVILHG´ ,G 7KHREOLJDWLRQVDVVXPHGE\WKHJXDUDQWRUV
ZHUH³LQGHSHQGHQW´RI7UL&RXQW\¶VREOLJDWLRQVDQGZHUHQRW
DIIHFWHG³E\UHVRUWRQWKHSDUWRI:DOODFHWRDQ\RWKHUVHFXULW\
RU UHPHG\ IRU WKH FROOHFWLRQ RI VDLG LQGHEWHGQHVV´ ,G
0RUHRYHUWKHJXDUDQWRUV³ZDLYH>G@DQ\GHIHQVHDULVLQJE\
UHDVRQRIDQ\GLVDELOLW\RURWKHUGHIHQVHRI>7UL&RXQW\@RUE\
UHDVRQ RI WKH FHVVDWLRQ IURP DQ\ FDXVH ZKDWVRHYHU RI WKH
OLDELOLW\RI>7UL&RXQW\@IRUWKHLQGHEWHGQHVV´ ,G )LQDOO\
E\LWVWHUPVWKH*XDUDQW\$JUHHPHQWZDVWREH³JRYHUQHGE\
DQG FRQVWUXHG LQ DFFRUGDQFH ZLWK WKH ODZV RI WKH 6WDWH RI
7HQQHVVHH´ ,G
& 7UL&RXQW\¶V /LPLWHG 2SHUDWLRQV 8QGHU ,WV
$JUHHPHQWZLWK:DOODFH+DUGZDUH
6KRUWO\DIWHUWKHDERYHDJUHHPHQWVZHUHH[HFXWHG:DOODFH
+DUGZDUHEHJDQWRVKLSPHUFKDQGLVHWR7UL&RXQW\¶VUHWDLO
VWRUHLQ&RUELQ.HQWXFN\DQGDOVRDVVLVWHGLQVHWWLQJXSWKH
VWRUHGLVSOD\LQJJRRGVRQWKHVKHOYHVDQGHVWDEOLVKLQJUHWDLO
SULFLQJ IRU HDFK LWHP 7KH VWRUH RSHQHG LQ 6HSWHPEHU RI
EXWVRRQEHJDQWRORVHPRQH\2Q1RYHPEHU
-- 5 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
$ .HQWXFN\ 6WDWH 3ROLFH DUVRQ LQYHVWLJDWRU GHWHUPLQHG WKDW WKH ILUH
ZDV GHOLEHUDWHO\ VHW ,Q 7UL&RXQW\¶V VXEVHTXHQW EDQNUXSWF\ SURFHHGLQJV
WKH %DQNUXSWF\ &RXUW QRWHG WKDW /RQQLH $EUDPV KDG EHHQ LQGLFWHG RQ
FKDUJHV RI FRPSOLFLW\ WR FRPPLW DUVRQ DQG IDOVH UHSRUWLQJ RI D EXUJODU\
DQG WKDW KLV XQFOH 'HQYHU 0D\HV KDG EHHQ LQGLFWHG RQ D FKDUJH RI
VHFRQG GHJUHH DUVRQ -$ DW 7KH %DQNUXSWF\ &RXUW WKHQ IRXQG
WKDW WKH LQVXUHU RI WKH ZDUHKRXVH KDG ³HVWDEOLVKHG DUVRQ DV D GHIHQVH WR
OLDELOLW\ XQGHU WKH VXEMHFW LQVXUDQFH FRQWUDFW´ -$ DW
D ILUH EURNH RXW DW D ZDUHKRXVH DW ZKLFK 7UL&RXQW\ NHSW
VXUSOXVLQYHQWRU\UHVXOWLQJLQDOPRVWLQSURSHUW\
GDPDJH ,Q 'HFHPEHU RI 7UL&RXQW\ FHDVHG
RSHUDWLRQV $W WKH WLPH LWV RXWVWDQGLQJ EDODQFH XQGHU LWV
DFFRXQWZLWK:DOODFH+DUGZDUHVWRRGDWRYHU
' 3URFHGXUDO%DFNJURXQG
6LQFH7UL&RXQW\¶VKDUGZDUHVWRUHFORVHGLQ'HFHPEHURI
WKHSDUWLHVKDYHHQJDJHGLQOHQJWK\OHJDOSURFHHGLQJV
LQWKUHHGLIIHUHQWIRUXPV)LUVWRQ'HFHPEHU7UL
&RXQW\ EURXJKW D EUHDFKRIFRQWUDFW VXLW DJDLQVW :DOODFH
+DUGZDUHLQ.HQWXFN\VWDWHFRXUW,QWXUQ:DOODFH+DUGZDUH
FRPPHQFHGDVWDWHFRXUWDFWLRQDJDLQVW7UL&RXQW\MXVWWZR
GD\V ODWHU DOVR DOOHJLQJ EUHDFK RI FRQWUDFW 7KH SDUWLHV
UHVROYHGWKHVHVXLWV VKRUWO\WKHUHDIWHUWKURXJKDVWLSXODWHG
RUGHURIYROXQWDU\GLVPLVVDOZLWKRXWSUHMXGLFHHQWHUHGE\WKH
.HQWXFN\FRXUWRQ'HFHPEHU
3XUVXDQWWRWKLVVWDWHFRXUWRUGHU:DOODFH+DUGZDUHZDV
DXWKRUL]HG WR UHSRVVHVV WKH LQYHQWRU\ LW KDG VROG WR 7UL
&RXQW\XQGHUWKHSDUWLHV¶2SHUDWLQJ$JUHHPHQW7KLVRUGHU
IXUWKHU SURYLGHG WKDW ³:DOODFH VKDOO WKHUHE\ LPPHGLDWHO\
DOORZWR7UL&RXQW\DFUHGLWIRUDOOVXFKLQYHQWRU\UHFHLYHGDW
WKHSULFHVDWZKLFKLWZDVLQYRLFHGE\:DOODFHWR7UL&RXQW\
DQG 7UL&RXQW\ VKDOO OLNHZLVH WKHUHXSRQ LPPHGLDWHO\
UHFHLYHVDWLVIDFWLRQRUSDUWLDOVDWLVIDFWLRQDVWKHFDVHPD\EH
RIDQ\GHEWRUFODLPZKLFKPD\KHUHDIWHUEHGHWHUPLQHGWR
H[LVWE\7UL&RXQW\WRDQGLQIDYRURI:DOODFH´ -$DW
HPSKDVLV LQ RULJLQDO %\ LWV WHUPV WKH RUGHU GLG QRW
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
,QKROGLQJWRWKHFRQWUDU\WKH'LVWULFW&RXUWUHDVRQHGLQ
SDUWWKDW:DOODFH+DUGZDUHZRXOGQRWKDYHEHHQYXOQHUDEOH
WRDSUHIHUHQWLDOWUDQVIHUFKDOOHQJHLILWKDGSURSHUO\SHUIHFWHG
LWV VHFXULW\ LQWHUHVW LQ WKH ILUVW LQVWDQFH E\ ILOLQJ D 8&&
IRUPLQWKHDSSURSULDWHFRXQW\ 2SDW-$DW
:H EHOLHYH WKDW VXFK QRWLRQV RI ³IDXOW´ DUH
PLVSODFHG LQ WKH SUHVHQW FRQWH[W ZKHUH WKH VROH UHOHYDQW
TXHVWLRQ LV ZKHWKHU WKH VHWWOHPHQW DJUHHPHQW H[HFXWHG E\
:DOODFH +DUGZDUH DQG 7UL&RXQW\ VKRXOG EH WUHDWHG DV
ELQGLQJLQVSLWHRI7UL&RXQW\¶VVXEVHTXHQWEDQNUXSWF\7KLV
TXHVWLRQWXUQVSXUHO\RQFRQWUDFWDQGEDQNUXSWF\SULQFLSOHV
DQGQRWRQWKHUHODWLYHEODPHZRUWKLQHVVRIWKHSDUWLHV,QWKLV
UHJDUG ZH REVHUYH WKDW :DOODFH +DUGZDUH ZDV SHUPLWWHG
XQGHUWKHWHUPVRIWKH*XDUDQW\WRSURFHHGGLUHFWO\DJDLQVW
WKHJXDUDQWRUVZLWKRXWPDNLQJDQ\HIIRUWWRFROOHFWIURP7UL
&RXQW\/LNHZLVHXQGHUWKH*XDUDQW\:DOODFHFRXOGKDYH
RSWHGQRWWRILOHDFODLPLQWKHEDQNUXSWF\SURFHHGLQJV²RU
DOWHUQDWLYHO\FRXOGKDYHFRPSURPLVHGWKLVFODLP²ZLWKRXW
LQ DQ\ ZD\ LPSDLULQJ LWV ULJKW WR UHFRYHU DQ\ RXWVWDQGLQJ
LQGHEWHGQHVVIURPWKH$EUDPVEURWKHUV*LYHQDOOWKLVWKH
$EUDPVDUHLQQRSRVLWLRQWRFRPSODLQLI:DOODFH+DUGZDUH¶V
FROOHFWLRQHIIRUWVDJDLQVW7UL&RXQW\XOWLPDWHO\SURYHGOHVV
WKDQFRPSOHWHO\VXFFHVVIXOZKHUHDQ\VXFFHVVDWDOODFFUXHG
WRWKH$EUDPV¶EHQHILW
,Q DQ\ HYHQW ZH QRWH WKDW WKH ³EODPH´ LV QRW VR HDVLO\
SODFHGKHUH:DOODFH+DUGZDUHTXLWHOHJLWLPDWHO\VRXJKWWR
FROOHFWRQDGHEWE\UHSRVVHVVLQJ7UL&RXQW\¶VLQYHQWRU\²
DFRXUVHRIDFWLRQZHQRWHWKDW7UL&RXQW\H[SUHVVO\DJUHHG
WR LQ LWV VWDWH FRXUW VHWWOHPHQW ZLWK :DOODFH 7KLV HIIRUW
ZRXOGKDYHVXFFHHGHGLI7UL&RXQW\²DFRUSRUDWLRQRZQHG
DQGRSHUDWHGE\WKH$EUDPVEURWKHUV²KDGQRWEHHQSODFHG
LQWREDQNUXSWF\6XUHO\:DOODFH+DUGZDUHFDQQRWEHEODPHG
IRUWKLVWXUQRIHYHQWVZKLFKLWSUHVXPDEO\KDGQRUHDVRQWR
DQWLFLSDWHDWWKHWLPHLWVHFXUHG7UL&RXQW\¶VDJUHHPHQWWR
UHSRVVHVVWKHLQYHQWRU\7KHUHIRUHLQNHHSLQJZLWKWKHJUHDW
ZHLJKWRIDXWKRULW\ZHKROGWKDW:DOODFH+DUGZDUHPD\VHHN
WR UHFRYHU WKH SD\PHQW LW PDGH WR 7UL&RXQW\¶V
-- 6 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
RIDFFRUGDQGVDWLVIDFWLRQWRJLYH7UL&RXQW\IXOOGROODUIRU
GROODUFUHGLWIRUWKHYDOXHRIWKHUHSRVVHVVHGLQYHQWRU\HYHQ
WKRXJK :DOODFH VXEVHTXHQWO\ GLVJRUJHG D SRUWLRQ RI WKLV
UHFRYHU\WR7UL&RXQW\¶VEDQNUXSWF\HVWDWH:HGRQRWVHH
ZK\ WKLV LV VR $V ZH H[SODLQHG LQ ,QWHUQDWLRQDO 8QLRQ
8QLWHG$XWR$HURVSDFHDQG$JULF,PSOHPHQW:RUNHUVRI
$PHULFDY<DUG0DQ,QF)G WK&LU
DQDFFRUGDQGVDWLVIDFWLRQRSHUDWHVXQGHUWUDGLWLRQDO
FRQWUDFWSULQFLSOHV7KXVDQDFFRUGDQGVDWLVIDFWLRQOLNHDQ\
FRQWUDFWFDQEHVHWDVLGHLQZKROHRULQSDUWIRUVXFKUHDVRQV
DV PXWXDO PLVWDNH VXSHUYHQLQJ LOOHJDOLW\ RU IUXVWUDWLRQ RI
SXUSRVH6HH5HVWDWHPHQW 6HFRQG RI&RQWUDFWV
0RUHRYHUWKHRXWFRPHKHUHZRXOGVHHPWREHGLFWDWHGE\
WKHYHU\QDWXUHRIDQ³DYRLGDEOH´SUHIHUHQWLDOWUDQVIHUXQGHU
RIWKH%DQNUXSWF\&RGH1RWVXUSULVLQJO\WKHFRXUWV
KDYHXQLIRUPO\KHOGWKDWDSD\PHQWRIDGHEWWKDWLVODWHUVHW
DVLGH DV DQ DYRLGDEOH SUHIHUHQFH GRHV QRW GLVFKDUJH D
JXDUDQWRURIKLVREOLJDWLRQWRUHSD\WKDWGHEW6HH/RZUH\Y
0DQXIDFWXUHUV+DQRYHU/HDVLQJ&RUS ,QUH5RELQVRQ%URV
'ULOOLQJ,QF )G WK&LU &URFNHUY
7KLUG1DW¶O%DQN ,QUH4XDOLW\7DNHV7LPH,QF %5
%DQNU0'7HQQ 6FKZDU]Y(TXLWDEOH
%DQN1$ ,QUH([SUHVV/LTXRUV,QF %5
%DQNU'0G 1HLOOY%RUUHVRQ ,QUH-RKQ3HWHUVRQ
0RWRUV ,QF %5 Q %DQNU ' 0LQQ
+HUPDQ&DQWRU&RUSY&HQWUDO)LGHOLW\%DQN1$
,QUH+HUPDQ&DQWRU&RUS %5 %DQNU('
9D 7KLVLVSUHFLVHO\ZKDWRFFXUUHGKHUH:DOODFH
+DUGZDUH VRXJKW UHSD\PHQW RI 7UL&RXQW\¶V GHEW WKURXJK
UHSRVVHVVLRQ RI LQYHQWRU\ EXW WKHQ ZDV IRUFHG WR UHWXUQ D
SRUWLRQRIWKLVUHSD\PHQWWRVHWWOHWKHEDQNUXSWF\WUXVWHH¶V
FODLPRIDQDYRLGDEOHSUHIHUHQFH,WIROORZVWKDWWKH$EUDPV
EURWKHUVDVJXDUDQWRUVUHPDLQOLDEOHIRUWKHSRUWLRQRI7UL
&RXQW\¶VGHEWWKDWUHPDLQVRXWVWDQGLQJLQOLJKWRI:DOODFH
+DUGZDUH¶V SDUWLDO UHWXUQ RI WKH SURFHHGV RI LWV LQYHQWRU\
UHSRVVHVVLRQ
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
,Q WKH FXUUHQW VXLW :DOODFH +DUGZDUH DOOHJHV WKDW WKH RXWVWDQGLQJ
EDODQFH DW WKH WLPH DFWXDOO\ ZDV ² WKH DFFRXQW EDODQFH RI
SOXV D ³UHVWRFNLQJ IHH´ RI SOXV RXWRISRFNHW
H[SHQVHV RI LQFXUUHG LQ UHSRVVHVVLQJ WKH LQYHQWRU\
³>D@IIHFWHLWKHUSDUW>\¶V@ULJKWWRDVVHUWDQ\FODLPVIRUGDPDJHV
RURWKHUZLVHQRWVSHFLILFDOO\DGGUHVVHGKHUHLQ´DQGQHLWKHU
SDUW\ ZDV GHHPHG WR KDYH ³ZDLYH>G@ DQ\ RI LWV ULJKWV RU
FDXVHVRIDFWLRQLQDQ\PDQQHUZKDWVRHYHUDJDLQVWWKHRWKHU
DVDUHVXOWRI7UL&RXQW\¶VZLOOLQJQHVVWRUHOHDVHLQYHQWRU\
DQGDVDUHVXOWRI:DOODFH¶VGHVLUHWRUHFHLYHDQGUHWDLQWKH
LQYHQWRU\´ -$DW
%HIRUH:DOODFH+DUGZDUHFRXOGFRPPHQFHUHSRVVHVVLRQRI
WKH LQYHQWRU\ KRZHYHU LW ILUVW KDG WR FRUUHFW DQ HDUOLHU
PLVWDNH LQ LWV HIIRUW WR SHUIHFW LWV VHFXULW\ LQWHUHVW LQ WKLV
LQYHQWRU\:KHQ:DOODFH+DUGZDUHDQG7UL&RXQW\H[HFXWHG
WKH2SHUDWLQJ$JUHHPHQWLQ$XJXVWRI/RQQLH$EUDPV
VLJQHGD8&&IRUPRQEHKDOIRI7UL&RXQW\FRQILUPLQJ
:DOODFH+DUGZDUH¶VVHFXULW\LQWHUHVWLQWKHLQYHQWRU\WREH
VXSSOLHGXQGHUWKH2SHUDWLQJ$JUHHPHQW:DOODFH+DUGZDUH
WKHQILOHGWKLV8&&IRUPLQ:KLWOH\&RXQW\.HQWXFN\RQ
$XJXVW%HFDXVH7UL&RXQW\¶VVWRUHZDVORFDWHGLQ
/DXUHO &RXQW\ WKLV LQLWLDO ILOLQJ ZDV LQHIIHFWLYH WR SHUIHFW
:DOODFH+DUGZDUH¶VVHFXULW\LQWHUHVW$FFRUGLQJO\:DOODFH
+DUGZDUH UHILOHG WKH 8&& LQ /DXUHO &RXQW\ RQ
'HFHPEHUWKHUHE\SHUIHFWLQJLWVVHFXULW\LQWHUHVW
2Q 'HFHPEHU DQG :DOODFH +DUGZDUH
UHSRVVHVVHG7UL&RXQW\¶VLQYHQWRU\DQGJDYH7UL&RXQW\D
FUHGLW LQ WKH DPRXQW RI OHDYLQJ D EDODQFH RI
-XVWXQGHUGD\VODWHURQ0DUFK7UL&RXQW\¶V
XQVHFXUHG FUHGLWRUV FRPPHQFHG DQ LQYROXQWDU\ &KDSWHU
SURFHHGLQJ LQ WKH 86 %DQNUXSWF\ &RXUW IRU WKH (DVWHUQ
'LVWULFWRI.HQWXFN\2Q-XQH7UL&RXQW\LWVHOI
EURXJKWDYROXQWDU\&KDSWHUSURFHHGLQJLQWKH%DQNUXSWF\
&RXUW$VSDUWRIWKHVHSURFHHGLQJVWKHEDQNUXSWF\WUXVWHH
VRXJKWWRUHVWRUHWRWKHHVWDWHWKHLQYHQWRU\UHSRVVHVVHGE\
-- 7 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
$V GLVFXVVHG EHORZ LI :DOODFH +DUGZDUH KDG SURSHUO\ SHUIHFWHG LWV
VHFXULW\ LQWHUHVW LQ LWV LQLWLDO 8&& ILOLQJ RQ $XJXVW LW ZRXOG
QRW KDYH EHHQ VXEMHFW WR WKLV SUHIHUHQFH DWWDFN E\ WKH EDQNUXSWF\ WUXVWHH
DV LW ZRXOG QRW KDYH LPSURYHG LWV SRVLWLRQ GXULQJ WKH GD\V SULRU WR WKH
EDQNUXSWF\ SURFHHGLQJ
7KH UHFRUG GRHV QRW GLVFORVH WKH ILQDO RXWFRPH RI WKH EDQNUXSWF\
SURFHHGLQJV QRU ZKHWKHU :DOODFH +DUGZDUH HYHU UHFHLYHG DQ\
GLVWULEXWLRQV IURP WKH EDQNUXSWF\ HVWDWH WKDW PLJKW KDYH IXUWKHU UHGXFHG
7UL&RXQW\¶V UHPDLQLQJ LQGHEWHGQHVV DQG KHQFH WKH SRWHQWLDO OLDELOLW\
RI WKH $EUDPV EURWKHUV DV SXUSRUWHG JXDUDQWRUV RI WKDW LQGHEWHGQHVV
:DOODFH +DUGZDUH XQGHU WKH WKHRU\ WKDW WKLV UHSRVVHVVLRQ
ZDVDQDYRLGDEOHSUHIHUHQWLDOWUDQVIHUWRDFUHGLWRUZLWKLQ
GD\VEHIRUHWKHGDWHWKHLQYROXQWDU\EDQNUXSWF\SHWLWLRQZDV
ILOHG
7KHWUXVWHHDQG:DOODFH+DUGZDUHXOWLPDWHO\UHVROYHGWKLV
PDWWHUWKURXJKDQDJUHHPHQW DSSURYHGE\WKH%DQNUXSWF\
&RXUW RQ 'HFHPEHU %HFDXVH WKH LQYHQWRU\
UHSRVVHVVHG IURP 7UL&RXQW\ KDG EHHQ FRPPLQJOHG ZLWK
RWKHUJRRGVDQGUHVROG:DOODFH+DUGZDUHZDVQRWUHTXLUHG
XQGHUWKHVHWWOHPHQWDJUHHPHQWWRUHWXUQWKLVLQYHQWRU\WRWKH
EDQNUXSWF\HVWDWH,QVWHDG:DOODFH+DUGZDUHSDLG
WRWKHWUXVWHH³LQIXOODQGFRPSOHWHVHWWOHPHQWDFFRUGDQG
VDWLVIDFWLRQRIDQ\DQGDOOFODLPVWKH7UXVWHHKDVKDGRUPD\
KDYH DJDLQVW :DOODFH´ DQG WKH WUXVWHH¶V FODLPV DJDLQVW
:DOODFH+DUGZDUHZHUHGLVPLVVHGZLWKSUHMXGLFH -$DW
8QGHU WKH VHWWOHPHQW DJUHHPHQW :DOODFH +DUGZDUH
SUHVHUYHG LWV FODLP DJDLQVW WKH EDQNUXSWF\ HVWDWH DV DQ
XQVHFXUHGFUHGLWRUZLWKWKHH[FHSWLRQWKDWLWDJUHHGQRWWR
VHHN³GLVWULEXWLRQIURPWKH7UXVWHHRIDQ\VKDUHGLYLGHQGRU
SD\PHQWEDVHGXSRQRUUHODWLQJWRWKH>@6HWWOHPHQW
6XP´ -$DW
:DOODFH +DUGZDUH WKHQ EURXJKW WKH SUHVHQW VXLW DJDLQVW
/RQQLH DQG %LOO $EUDPV LQ WKH 86 'LVWULFW &RXUW IRU WKH
(DVWHUQ'LVWULFWRI.HQWXFN\,QLWVLQLWLDOFRPSODLQWILOHGRQ
-XO\:DOODFH+DUGZDUHDVVHUWHGDVLQJOHEUHDFKRI
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
E\ WKH SULQFLSDO GHEWRU $OWKRXJK WKLV WDVN FDQ EH
FRPSOLFDWHG ZKHUH DV KHUH WKHUH DUH VXFK LQWHUYHQLQJ
GHYHORSPHQWV DV EDQNUXSWF\ VHWWOHPHQWV DQG WKH OLNH WKH
EDVLFWDVNUHPDLQVWKHVDPHWRVXPXSWKHSULQFLSDOGHEWRU¶V
REOLJDWLRQV WR WKH FUHGLWRU DQG WKHQ VXEWUDFW HDFK SDUWLDO
VDWLVIDFWLRQRIWKLVLQGHEWHGQHVVZKHWKHUWKURXJKUHSD\PHQW
UHSRVVHVVLRQWKHFUHGLWRU¶VIDLOXUHWRIXOO\SHUIRUPRUDQ\
RWKHUPHDQV7KHUHVXOWLVWKHRXWVWDQGLQJLQGHEWHGQHVVRIWKH
SULQFLSDOGHEWRUZKLFKDVVXPLQJWKHJXDUDQW\LVHQIRUFHDEOH
DQG LWV FRQGLWLRQV DUH VDWLVILHG PD\ EH FROOHFWHG IURP WKH
JXDUDQWRU
9LHZHGLQWKLVFRQWH[WLWLVFOHDUWKDW:DOODFH+DUGZDUH¶V
SD\PHQW WR 7UL&RXQW\¶V EDQNUXSWF\ HVWDWH LV
UHFRYHUDEOH IURP WKH $EUDPV EURWKHUV DV JXDUDQWRUV ²
DVVXPLQJRIFRXUVHWKH*XDUDQW\LVRWKHUZLVHHQIRUFHDEOH
DJDLQVWWKH$EUDPVDTXHVWLRQZHGRQRWGHFLGH:KHQ7UL
&RXQW\ GHIDXOWHG RQ LWV LQGHEWHGQHVV :DOODFH +DUGZDUH
DWWHPSWHGWRVDWLVI\WKHGHILFLHQF\²DQGLQIDFWVXFFHHGHG
LQ VXEVWDQWLDO SDUW ² E\ UHSRVVHVVLQJ WKH LQYHQWRU\ LW
SUHYLRXVO\KDGVXSSOLHGWR7UL&RXQW\+RZHYHUDVDUHVXOW
RI7UL&RXQW\¶VVXEVHTXHQWEDQNUXSWF\:DOODFH+DUGZDUH
ZDV XQDEOH WR UHWDLQ WKH IXOO YDOXH RI WKH UHSRVVHVVHG
LQYHQWRU\,QVWHDGWKHEDQNUXSWF\WUXVWHHVRXJKWWKHUHWXUQ
RIDOORIWKHUHSRVVHVVHGLQYHQWRU\DQGWKHPDWWHUXOWLPDWHO\
ZDVVHWWOHGWKURXJK:DOODFH¶VSD\PHQWLQWR 7UL
&RXQW\¶V EDQNUXSWF\ HVWDWH ,Q HIIHFW WKHQ :DOODFH
+DUGZDUH¶V UHSRVVHVVLRQ HIIRUW UHGXFHG 7UL&RXQW\¶V
LQGHEWHGQHVVE\WKHGROODUIRUGROODUYDOXHRIWKHUHSRVVHVVHG
LQYHQWRU\ OHVV WKH :DOODFH UHIXQGHG WR WKH
EDQNUXSWF\ HVWDWH $IWHU WKLV DPRXQW ² WKH YDOXH RI WKH
UHSRVVHVVHGLQYHQWRU\PLQXV²LVVXEWUDFWHGIURP
7UL&RXQW\¶V LQLWLDO LQGHEWHGQHVV :DOODFH +DUGZDUH PD\
VHHNWRUHFRYHUDQ\UHPDLQLQJLQGHEWHGQHVVIURPWKH$EUDPV
DVJXDUDQWRUV
,QDUJXLQJWKDW:DOODFH+DUGZDUHPD\QRWVHHNWRUHFRYHU
LWVSD\PHQW%LOO$EUDPVDVVHUWVDQGWKH'LVWULFW
&RXUWKHOGWKDW:DOODFH+DUGZDUHLVERXQGXQGHUSULQFLSOHV
-- 8 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
' :DOODFH+DUGZDUH0D\6HHNWR5HFRYHUWKH
6HWWOHPHQW 6XP 3DLG WR 7UL&RXQW\¶V %DQNUXSWF\
7UXVWHHDQG$OVR0D\3UHVHQW3URRIVDVWR:KHWKHU
7UL&RXQW\¶V 2XWVWDQGLQJ ,QGHEWHGQHVV ,QFOXGHV D
3HUFHQW5HVWRFNLQJ)HH
:DOODFH+DUGZDUHKDVUDLVHGWZRILQDOLVVXHVRQDSSHDO
ERWKEHDULQJXSRQWKHGDPDJHVLWPD\VHHNWRUHFRYHUIURP
WKH$EUDPVEURWKHUV)LUVW:DOODFH+DUGZDUHFKDOOHQJHVWKH
'LVWULFW&RXUW¶VVWDWHPHQWLQLWV'HFHPEHU2SLQLRQ
WKDW :DOODFH FDQQRW UHFRYHU D SHUFHQW ³UHVWRFNLQJ IHH´
DEVHQWSURRIWKDWLWSURYLGHG7UL&RXQW\ZLWKDFRS\RIDQ
³LQWHUQDOSROLF\VWDWHPHQW´VHWWLQJIRUWKWKHREOLJDWLRQWRSD\
WKLVIHH 2SDW-$DW 7KLVVWDWHPHQWZH
QRWH ZDV HVVHQWLDOO\ GLFWD DV WKH &RXUW ZHQW RQ WR KROG
L WKDW:DOODFH+DUGZDUHFRXOGUHFRYHUWKLVIHHLILWZHUH
VKRZQWREHVWDQGDUGLQWKHLQGXVWU\EXW LL WKDWWKHH[LVWLQJ
UHFRUGGLGQRWHVWDEOLVKWKLVIDFWDVDPDWWHURIODZ7KXVWKH
'LVWULFW&RXUWGLGQRWLQDQ\ZD\UXOHRXW:DOODFH+DUGZDUH¶V
UHFRYHU\RIWKHUHVWRFNLQJIHH,QDQ\HYHQWZHDJUHHZLWK
:DOODFH+DUGZDUHWKDWWKLV8&&EDVHG³LQGXVWU\VWDQGDUG´
LQTXLU\GRHVQRWWXUQVROHO\RQZKHWKHU7UL&RXQW\ZDVRU
ZDVQRWJLYHQDFRS\RI:DOODFH+DUGZDUH¶V³LQWHUQDOSROLF\
VWDWHPHQW´ DGGUHVVLQJ WKLV IHH WKHUH DUH RWKHU SHUPLVVLEOH
PHDQVRISURYLQJWKDWWKHSHUFHQWIHHLVURXWLQHO\FKDUJHG
LQ WKH UHOHYDQW LQGXVWU\ 7R WKH H[WHQW WKH 'LVWULFW &RXUW
VXJJHVWHGRWKHUZLVHZHUHYHUVHLWVGHFLVLRQ
1H[W:DOODFH+DUGZDUHDUJXHVWKDWLWLVHQWLWOHGWRVHHN
UHLPEXUVHPHQW RI WKH LW SDLG LQWR 7UL&RXQW\¶V
EDQNUXSWF\HVWDWHDVSDUWRILWVVHWWOHPHQWZLWKWKHEDQNUXSWF\
WUXVWHH:HDJUHHIRUPDQ\RIWKHVDPHUHDVRQVVHWIRUWK
DERYHLQRXUUXOLQJWKDWWKH$EUDPVEURWKHUVPD\GHIHQVLYHO\
DVVHUW7UL&RXQW\¶VEUHDFKRIFRQWUDFWFODLPV$VGLVFXVVHG
HDUOLHUDQGDVZHKHOGLQ&RIIH\VXSUD)GDW
DJXDUDQWRU¶VOLDELOLW\LVFRPPHQVXUDWHZLWKWKHRXWVWDQGLQJ
LQGHEWHGQHVV RI WKH SULQFLSDO GHEWRU &RQVHTXHQWO\ WKH
SULQFLSDOJRDOLQDQDFWLRQWRFROOHFWRQDJXDUDQW\VXFKDVZH
KDYHKHUHLVWRDVFHUWDLQWKHRXWVWDQGLQJLQGHEWHGQHVVRZHG
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
JXDUDQW\FODLPDOOHJLQJWKDWWKH$EUDPVEURWKHUVZHUHOLDEOH
IRUWKHLQGHEWHGQHVVWKHQRZHGE\7UL&RXQW\WR:DOODFH²
LQWKHDPRXQWRIDFFRUGLQJWRWKHFRPSODLQW²
PLQXVDQ\GLVEXUVHPHQWVVXEVHTXHQWO\UHFHLYHGE\:DOODFH
IURP7UL&RXQW\¶VEDQNUXSWF\HVWDWH
1HDUO\ WZR \HDUV ODWHU RQ 0DUFK :DOODFH
+DUGZDUHILOHGDPRWLRQVHHNLQJ OHDYHWRILOHDQDPHQGHG
FRPSODLQW ,Q WKLV SURSRVHG SOHDGLQJ :DOODFH +DUGZDUH
VRXJKWWRVXSSOHPHQWLWVEUHDFKRIJXDUDQW\FODLPZLWK D
EUHDFKRIFRQWUDFW FODLP EDVHG RQ WKH $XJXVW
2SHUDWLQJ $JUHHPHQW VLJQHG E\ ERWK /RQQLH DQG %LOO
$EUDPV D FODLP RI QHJOLJHQW DQGRU LQWHQWLRQDO
PLVUHSUHVHQWDWLRQ DULVLQJ IURP WKH $EUDPV¶ DOOHJHG
DVVXUDQFHVDVWRWKHLUFUHGLWKLVWRU\VROYHQF\DQGH[SHULHQFH
WKDW LQGXFHG :DOODFH +DUGZDUH WR H[WHQG FUHGLW WR 7UL
&RXQW\DQG DIUDXGFODLPUHODWLQJWRWKH$EUDPV¶DOOHJHG
IDOVH VWDWHPHQWV DV WR WKH VWUXFWXUH DQG RSHUDWLRQ RI 7UL
&RXQW\ WKHLU DOOHJHG FRQYHUVLRQ DQG GHVWUXFWLRQ RI JRRGV
REWDLQHG E\ 7UL&RXQW\ DQG WKHLU IDLOXUH WR OLVW :DOODFH
+DUGZDUHDVDEHQHILFLDU\RQILUHLQVXUDQFHSROLFLHV$OVRRQ
0DUFKWKH$EUDPVEURWKHUVILOHGDPRWLRQVHHNLQJ
WKH DSSOLFDWLRQ RI .HQWXFN\ ODZ WR WKH EUHDFKRIJXDUDQW\
FODLPDQGDPRWLRQVHHNLQJVXPPDU\MXGJPHQWLQWKHLUIDYRU
RQWKLVFODLP
,QD0HPRUDQGXP2SLQLRQDQG2UGHULVVXHGRQ$XJXVW
86'LVWULFW-XGJH-HQQLIHU%&RIIPDQJUDQWHGHDFK
RIWKHVHPRWLRQVLQVXEVWDQWLDOSDUW:DOODFH+DUGZDUHZDV
SHUPLWWHGWRILOHDQDPHQGHGFRPSODLQWZLWKWKHH[FHSWLRQRI
WKHSURSRVHGFODLPRIQHJOLJHQWPLVUHSUHVHQWDWLRQZKLFKWKH
'LVWULFW&RXUWKHOGZDVQRWDUHFRJQL]HGWKHRU\RIUHFRYHU\
XQGHU .HQWXFN\ ODZ 1H[W WKH ORZHU FRXUW UXOHG WKDW
.HQWXFN\ODZVKRXOGJRYHUQWKHEUHDFKRIJXDUDQW\FODLP
QRWZLWKVWDQGLQJWKH7HQQHVVHHFKRLFHRIODZSURYLVLRQLQWKH
*XDUDQW\ LWVHOI 8SRQ VXUYH\LQJ .HQWXFN\ FKRLFHRIODZ
UXOHV DQG FRQFOXGLQJ WKDW WKH\ FDOO IRU WKH DSSOLFDWLRQ RI
.HQWXFN\ ODZ ZKHQHYHU WKDW VWDWH¶V LQWHUHVWV SUHGRPLQDWH
RYHU DOO RWKHUV WKH 'LVWULFW &RXUW IRXQG WKDW ³.HQWXFN\
-- 9 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
FOHDUO\KDVWKHJUHDWHULQWHUHVWLQWKHSUHVHQWFDVH´ -$DW
)LQDOO\JLYHQLWVFKRLFHRI.HQWXFN\ODZWKH&RXUW
UHDGLO\ FRQFOXGHG WKDW WKH *XDUDQW\ ZDV LQYDOLG DQG
XQHQIRUFHDEOH DV :DOODFH +DUGZDUH FRQFHGHG WKDW WKH
*XDUDQW\IDLOHGWRFRPSRUWZLWKWKHUHTXLUHPHQWVLPSRVHGE\
D.HQWXFN\VWDWXWHJRYHUQLQJWKHIRUPRIJXDUDQWLHV.\5HY
6WDW$QQ
1H[WRQ0D\%LOO$EUDPVILOHGDPRWLRQVHHNLQJ
OHDYHWRDPHQGKLVDQVZHUWRDVVHUWWKDW:DOODFH+DUGZDUH¶V
DOOHJHGEUHDFKRILWVFRQWUDFWZLWK7UL&RXQW\VHUYHGWRGHIHDW
LWVHIIRUWWRFROOHFWIURPWKH$EUDPVEURWKHUVDVJXDUDQWRUV
DQ\DPRXQWVDOOHJHGO\RZHGXQGHUWKDWFRQWUDFW$VQRWHGLQ
WKLVPRWLRQ/RQQLH$EUDPVSUHYLRXVO\KDGDVVHUWHGWKLVVDPH
GHIHQVHLQKLVDQVZHUWRWKHLQLWLDOFRPSODLQW2Q0D\
:DOODFH+DUGZDUHILOHGDUHVSRQVHLQRSSRVLWLRQWR%LOO
$EUDPV¶PRWLRQDVZHOODVDVHSDUDWHPRWLRQDVNLQJWKDWWKLV
GHIHQVHEHVWULFNHQIURP/RQQLH$EUDPV¶DQVZHU7KHQH[W
GD\ :DOODFH +DUGZDUH ILOHG D PRWLRQ UHTXHVWLQJ WKDW WKH
'LVWULFW&RXUWUHFRQVLGHULWVHDUOLHUFKRLFHRIODZUXOLQJLQ
OLJKWRIDUHFHQWGHFLVLRQE\WKH.HQWXFN\6XSUHPH&RXUWLQ
3UH]RFNL Y %XOORFN *DUDJHV ,QF 6:G .\
)LQDOO\LQODWH$XJXVWDQGHDUO\6HSWHPEHURI
WKH SDUWLHV ILOHG FURVVPRWLRQV IRU VXPPDU\ MXGJPHQW RQ
YDULRXVFRXQWVRIWKHILUVWDPHQGHGFRPSODLQW
2Q 'HFHPEHU WKH 'LVWULFW &RXUW LVVXHG D
0HPRUDQGXP 2SLQLRQ DQG 2UGHU DGGUHVVLQJ WKH LVVXHV LQ
WKHVHYDULRXVPRWLRQV)LUVWWKH&RXUWSHUPLWWHG%LOO$EUDPV
WRDPHQGKLVDQVZHUDQGGHFOLQHGWRVWULNHDQ\GHIHQVHVIURP
/RQQLH $EUDPV¶ DQVZHU 1H[W WKH ORZHU FRXUW IRXQG QR
EDVLVLQWKH3UH]RFNLGHFLVLRQRURWKHUZLVHIRUUHYHUVLQJLWV
HDUOLHU UXOLQJ DSSO\LQJ .HQWXFN\ ODZ WR WKH EUHDFKRI
JXDUDQW\FODLP7KH&RXUWWKHQDZDUGHGVXPPDU\MXGJPHQW
WR WKH $EUDPV EURWKHUV RQ :DOODFH +DUGZDUH¶V EUHDFKRI
FRQWUDFWFODLPILQGLQJWKDWWKH2SHUDWLQJ$JUHHPHQWVXIIHUHG
IURP WKH VDPH GHIHFWV XQGHU .HQWXFN\ ODZ DV GLG WKH
*XDUDQW\ )LQDOO\ WKH 'LVWULFW &RXUW IRXQG WKDW RQH RI
:DOODFH +DUGZDUH¶V WZR FODLPV RI IUDXG ZDV VXEMHFW WR
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
RQDIRUJRQHFODLPEXWDWOHDVWWZRFRXUWVKDYHVXJJHVWHGD
ZD\WRPDNHWKLVGHWHUPLQDWLRQ6HH&HQWUDO6R\D&R
)GDW,QUH(O3DVR5HILQLQJ,QF%5
%DQNU:'7H[ ,IQHFHVVDU\WKH'LVWULFW
&RXUWVKRXOGFRQVXOWWKHVHGHFLVLRQVRQUHPDQG
& 7KH'LVWULFW&RXUW3URSHUO\'LVPLVVHG&RXQW,9RI
WKH $PHQGHG &RPSODLQW DV )DLOLQJ WR $OOHJH WKH
1HFHVVDU\ (OHPHQWV RI D &ODLP RI )UDXG RU
0LVUHSUHVHQWDWLRQ
$VLWVQH[WLVVXHRQDSSHDO:DOODFH+DUGZDUHFRQWHQGV
WKDW WKH 'LVWULFW &RXUW HUUHG LQ GLVPLVVLQJ &RXQW ,9 RI LWV
DPHQGHGFRPSODLQWIRUIDLOXUHWRDOOHJHDOORIWKHQHFHVVDU\
HOHPHQWVRIDFODLPRIIUDXGRUPLVUHSUHVHQWDWLRQ:HDIILUP
WKHORZHUFRXUW¶VGLVPLVVDORIWKLVFRXQW
$V REVHUYHG E\ WKH FRXUW EHORZ D FODLP RI IUDXG RU
PLVUHSUHVHQWDWLRQ FDQQRW VXFFHHG DEVHQW SURRI WKDW WKH
SODLQWLIIDFWHGLQUHOLDQFHRQWKHSXUSRUWHGPLVUHSUHVHQWDWLRQV
6HH&RIIH\VXSUD)GDWQ:KHUHWKHDOOHJHG
PLVVWDWHPHQWV UHODWH WR IXWXUH HYHQWV WKH SODLQWLII PD\
HVWDEOLVKWKLVQHFHVVDU\HOHPHQWRIUHOLDQFHE\VKRZLQJWKDW
WKH VWDWHPHQWV LQGXFHG KLP WR HQWHU LQWR D FRQWUDFWXDO
UHODWLRQVKLS6HH&RIIH\)GDW7KH'LVWULFW
&RXUWIRXQGWKDW:DOODFH+DUGZDUHKDGIDLOHGWRDOOHJHHLWKHU
UHOLDQFHRULQGXFHPHQWLQVXSSRUWRI&RXQW,9RILWVDPHQGHG
FRPSODLQW
8SRQ LQGHSHQGHQW GH QRYR UHYLHZ RI WKH DPHQGHG
FRPSODLQW ZH DJUHH WKDW LW FRQWDLQV QR VXFK DOOHJDWLRQV
,QGHHG HYHQ RQ DSSHDO :DOODFH +DUGZDUH VWLOO KDV QRW
LGHQWLILHG DQ\ DFWLRQV LW DOOHJHGO\ WRRN LQ UHOLDQFH RQ WKH
$EUDPV¶ SXUSRUWHG PLVUHSUHVHQWDWLRQV 7KXV WKH 'LVWULFW
&RXUW SURSHUO\ GLVPLVVHG &RXQW ,9 RI WKH DPHQGHG
FRPSODLQW
-- 10 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
:H QRWH DJDLQ WKDW WKHUH LV QR HYLGHQFH LQ WKH VHWWOHPHQW
GRFXPHQW LWVHOI WKDW WKH SDUWLHV YLHZHG WKH EUHDFKRIFRQWUDFW FODLPV DV
SDUW RI WKH EDUJDLQ RU WKDW WKH\ DVVLJQHG DQ\ YDOXH WR WKH WUXVWHH¶V
DJUHHPHQW QRW WR SXUVXH WKHVH FODLPV 3HUKDSV WKLV UHIOHFWV WKH SDUWLHV¶
DVVHVVPHQW RI WKH GH PLQLPLV YDOXH RI WKHVH FODLPV RU SHUKDSV WKH SDUWLHV
VLPSO\ IDLOHG WR DFFRXQW IRU WKHVH FODLPV LQ UHDFKLQJ WKHLU VHWWOHPHQW ZH
FDQQRW VD\ XQGHU WKH SUHVHQW UHFRUG
WKHUHFRUGEHIRUHXVWKDWWKHYDOXHRI7UL&RXQW\¶VEUHDFKRI
FRQWUDFWFODLPVZDVVRPHKRZDFFRXQWHGIRULQWKHWUXVWHH¶V
VHWWOHPHQW ZLWK :DOODFH +DUGZDUH ,I VR WKH $EUDPV¶
DVVHUWLRQRIWKHVHVDPHFODLPVLQWKLVDFWLRQSUHVHQWVWKHULVN
RI D ³GRXEOH VHWRII´ DJDLQVW 7UL&RXQW\¶V RYHUDOO
LQGHEWHGQHVV WR :DOODFH +DUGZDUH EHFDXVH XQGHU WKHVH
FLUFXPVWDQFHV WKH EDQNUXSWF\ VHWWOHPHQW SUHVXPDEO\ KDV
DOUHDG\SURGXFHGDUHGXFWLRQLQ7UL&RXQW\¶VLQGHEWHGQHVVLQ
H[FKDQJH IRU WKH UHOLQTXLVKPHQW RI 7UL&RXQW\¶V FODLPV
:HZRXOGWKHQEHFRQIURQWHGZLWKDVLWXDWLRQPRUHOLNHWKH
RQHSUHVHQWHGLQ,QUH9DQ'UHVVHU&RUSDQGWKH$EUDPV
EURWKHUV ZRXOG QRW EH SHUPLWWHG WR UHDVVHUW 7UL&RXQW\¶V
EUHDFKRIFRQWUDFW FODLPV LQ WKLV FDVH HYHQ LI RQO\
GHIHQVLYHO\
(YHQVRWKLVZRXOGQRWEHWKHHQGRIWKHPDWWHU,QVWHDG
LW ZRXOG WKHQ EH QHFHVVDU\ WR GHWHUPLQH WKH YDOXH RI 7UL
&RXQW\¶V EUHDFKRIFRQWUDFW FODLPV DV UHIOHFWHG LQ WKH
EDQNUXSWF\ VHWWOHPHQW $EVHQW WKLV GHWHUPLQDWLRQ WKHUH
ZRXOG EH QR ³GRXEOH VHWRII´ KHUH EHFDXVH WKH $EUDPV
EURWKHUVZRXOGQRWEHJLYHQWKHEHQHILWRIWKHLQLWLDOVHWRII
WKDWSUHVXPDEO\ZDVREWDLQHGE\WKHEDQNUXSWF\WUXVWHHLQ
H[FKDQJHIRUWKHDJUHHPHQWWRGLVPLVV7UL&RXQW\¶VFODLPV
7KH $EUDPV FOHDUO\ DUH HQWLWOHG WR WKLV FUHGLW DJDLQVW WKH
DPRXQWRZHGXQGHUWKH*XDUDQW\VLQFHDQ\UHGXFWLRQLQ7UL
&RXQW\¶VLQGHEWHGQHVVZKHWKHUWKURXJKDFDVKSD\PHQWRU
DQ\RWKHUPHDQVDOVRVHUYHVWRUHGXFHWKH$EUDPV¶OLDELOLW\
XQGHUWKH*XDUDQW\²DQGWKLVLVVRHYHQZKHUHWKHUHGXFWLRQ
LV DFKLHYHG WKURXJK DQ DJUHHPHQW WR UHOHDVH D FODLP 6HH
&HQWUDO6R\D&RY(SVWHLQ)LVKHULHV,QF)G
WK&LU $GPLWWHGO\LWLVQRHDV\WDVNWRSODFHDYDOXH
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
GLVPLVVDODVODFNLQJWKHQHFHVVDU\DOOHJDWLRQVRILQGXFHPHQW
RU UHOLDQFH EXW WKDW LVVXHV RI IDFW SUHFOXGHG DQ DZDUG RI
VXPPDU\ MXGJPHQW WR HLWKHU VLGH RQ WKH UHPDLQLQJ IUDXG
FODLP
,QDVXEVHTXHQW0HPRUDQGXP2SLQLRQDQG2UGHULVVXHGRQ
'HFHPEHU WKH 'LVWULFW &RXUW DGGUHVVHG WZR
RXWVWDQGLQJLVVXHVRIGDPDJHV)LUVWWKH&RXUWIRXQGWKDW
LVVXHVRIIDFWUHPDLQHGDVWRZKHWKHU:DOODFH+DUGZDUHFRXOG
FROOHFWWKHSHUFHQWUHVWRFNLQJIHHLQFOXGHGDVDQHOHPHQW
RI LWV FODLPHG GDPDJHV 1H[W WKH &RXUW UXOHG WKDW WKH
GRFWULQH RI DFFRUG DQG VDWLVIDFWLRQ SUHFOXGHG :DOODFH
+DUGZDUHIURPUHFRYHULQJWKHVHWWOHPHQWDPRXQWLW
SDLGWRWKHEDQNUXSWF\WUXVWHHIROORZLQJLWV'HFHPEHU
UHSRVVHVVLRQRI7UL&RXQW\¶VLQYHQWRU\
,QOLJKWRIWKHVHUXOLQJVRQO\RQHFODLPRIIUDXGUHPDLQHG
WREHUHVROYHG7KHSDUWLHVVHWWOHGWKLVFODLPDQGRQ)HEUXDU\
VWLSXODWHGRUGHUVZHUHHQWHUHGUHIOHFWLQJWKHILQDO
GLVSRVLWLRQ RI DOO SURFHHGLQJV LQ WKH ORZHU FRXUW 7KHVH
DSSHDOVIROORZHG
,,,7+(3$57,(6¶$5*80(17621$33($/
,Q LWV DSSHDO :DOODFH +DUGZDUH KDV LGHQWLILHG IRXU
SXUSRUWHGGHIHFWVLQWKH'LVWULFW&RXUW¶VUXOLQJV)LUVWDQG
IRUHPRVW:DOODFH+DUGZDUHFRQWHQGVWKDWWKHFRXUWEHORZ
HUUHGE\LQYDOLGDWLQJWKH7HQQHVVHHFKRLFHRIODZSURYLVLRQ
LQWKH*XDUDQW\DQGLQVWHDGHOHFWLQJWRDSSO\.HQWXFN\ODZ
WRGHWHUPLQHWKHSDUWLHV¶REOLJDWLRQVXQGHUWKDWGRFXPHQW$V
D UHVXOW RI WKLV FKRLFHRIODZ GHWHUPLQDWLRQ WKH &RXUW
FRQFOXGHG WKDW WKH *XDUDQW\ ZDV XQHQIRUFHDEOH DQG LW
DZDUGHGVXPPDU\MXGJPHQWWRWKH$EUDPVEURWKHUVRQWKH
EUHDFKRIJXDUDQW\FODLP
1H[W :DOODFH +DUGZDUH FKDOOHQJHV WKH 'LVWULFW &RXUW¶V
GHFLVLRQWRSHUPLW%LOO$EUDPVWRDPHQGKLVDQVZHUWRDVVHUW
WKHVRFDOOHG³FRUSRUDWHGHIHQVHV´RI7UL&RXQW\DVZHOODV
WKH GHFLVLRQ QRW WR VWULNH VLPLODU GHIHQVHV DVVHUWHG LQ WKH
DQVZHUILOHGE\/RQQLH$EUDPV7KLUG:DOODFH+DUGZDUH
-- 11 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
DUJXHVWKDWWKH'LVWULFW&RXUWHUUHGLQGLVPLVVLQJRQHRILWV
IUDXGFODLPVIRUIDLOXUHWRDOOHJHDOORIWKHUHTXLVLWHHOHPHQWV
LQVXSSRUWRIWKDWFODLP)LQDOO\:DOODFH+DUGZDUHFRQWHQGV
WKDWWKHFRXUWEHORZHUUHGLQUXOLQJWKDWWKHUHFRYHUDELOLW\RI
WKH SHUFHQW ³UHVWRFNLQJ IHH´ WXUQHG XSRQ ZKHWKHU 7UL
&RXQW\RUWKH$EUDPVEURWKHUVZHUHSURYLGHGZLWKDFRS\RI
:DOODFH+DUGZDUH¶VLQWHUQDOSROLF\FDOOLQJIRUWKHLPSRVLWLRQ
RIWKLVIHH
,QKLVFURVVDSSHDO%LOO$EUDPVKDVUDLVHGRQHDGGLWLRQDO
LVVXH6SHFLILFDOO\KHDVVHUWVWKDWWKH'LVWULFW&RXUWHUUHGLQ
SHUPLWWLQJ:DOODFH+DUGZDUHWRDPHQGLWVFRPSODLQWRYHUD
\HDUDQGDKDOIDIWHUWKHLQLWLDOFRPSODLQWZDVILOHG$EUDPV
FRQWHQGV WKDW WKLV ZDV XQGXH GHOD\ DQG WKDW KH ZDV
SUHMXGLFHGE\WKHORZHUFRXUW¶VUXOLQJ
,9$1$/<6,6
$ 7KH *XDUDQW\¶V &KRLFHRI /DZ 3URYLVLRQ ,V
(QIRUFHDEOH
$OWKRXJKDGGLWLRQDOWKHRULHVRIOLDELOLW\DUHDVVHUWHGLQWKH
DPHQGHGFRPSODLQWLWLVFOHDUWKDW:DOODFH+DUGZDUH¶VFKLHI
EDVLVIRUUHFRYHU\LQWKLVFDVHUHVWVXSRQWKH$XJXVW
*XDUDQW\ $JUHHPHQW LQ ZKLFK WKH $EUDPV EURWKHUV
SXUSRUWHGO\DJUHHGWRUHSD\WKHLQGHEWHGQHVVRZHGE\7UL
&RXQW\ WR :DOODFH +DUGZDUH %\ LWV H[SUHVV WHUPV WKLV
*XDUDQW\SURYLGHVWKDWLWLVWREH³JRYHUQHGE\DQGFRQVWUXHG
LQDFFRUGDQFHZLWKWKHODZVRIWKH6WDWHRI7HQQHVVHH´ -$
DW 7KH'LVWULFW&RXUWKRZHYHUFRQFOXGHGWKDW.HQWXFN\
FRXUWVZRXOGQRWKRQRUWKLVFKRLFHRIODZSURYLVLRQZKHUH
WKH SDUWLHV DQG WKH XQGHUO\LQJ WUDQVDFWLRQ ERUH D VWURQJHU
UHODWLRQVKLS WR .HQWXFN\ WKDQ WR 7HQQHVVHH :DOODFH
+DUGZDUHDUJXHVWKDWWKH*XDUDQW\¶VFKRLFHRIODZSURYLVLRQ
VKRXOGEHHQIRUFHGDQGWKDW7HQQHVVHHODZVKRXOGJRYHUQLWV
EUHDFKRIJXDUDQW\FODLP)RUWKHUHDVRQVGLVFXVVHGEHORZ
ZHDJUHH
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
FODLPVDJDLQVW7UL&RXQW\ZLWKRXWUHOLQTXLVKLQJLWVULJKWWR
UHFRYHUDQ\UHPDLQLQJLQGHEWHGQHVVIURPWKH$EUDPVEURWKHUV
DVJXDUDQWRUV)XUWKHUXQGHUEDQNUXSWF\ODZDVZHOODVWKH
WHUPVRIWKH*XDUDQW\7UL&RXQW\¶VLQGHEWHGQHVVWR:DOODFH
+DUGZDUH FRXOG KDYH EHHQ FRPSOHWHO\ GLVFKDUJHG ZLWKRXW
DIIHFWLQJ WKH OLDELOLW\ RI WKH JXDUDQWRUV 8QGHU WKHVH
FLUFXPVWDQFHVZHEHOLHYHLWZRXOGEHLQHTXLWDEOHWRSHUPLW
:DOODFH+DUGZDUHDQGWKHEDQNUXSWF\WUXVWHHWRUHVROYHDQ\
FODLPV DV EHWZHHQ :DOODFH DQG 7UL&RXQW\ ² ZKLFK
VHWWOHPHQWZRXOGIXOO\SUHVHUYH:DOODFH¶VFODLPVDJDLQVWWKH
JXDUDQWRUV ² DQG DW WKH VDPH WLPH LUUHYRFDEO\ IL[ WKH
DPRXQWRI7UL&RXQW\¶VLQGHEWHGQHVVWR:DOODFH+DUGZDUH
WKHUHE\IRUHFORVLQJDQ\RSSRUWXQLW\IRUWKH$EUDPVEURWKHUV
WR FKDOOHQJH WKH IDFWXDO EDVLV IRU WKLV GHWHUPLQDWLRQ &I
5KRGH ,VODQG %DQN VXSUD )G DW FLWLQJ
³SULQFLSOHV RI HTXLW\´ LQ KROGLQJ WKDW D JXDUDQWRU ZDV
SHUPLWWHGWRDVVHUWDGHIHQVHRIWKHSULQFLSDOGHEWRUZKHUHWKH
GHIHQVHLQTXHVWLRQZDVEDVHGXSRQWKHFUHGLWRU¶VIDLOXUHWR
SHUIRUP
6XFKDUHVXOWZRXOGSURGXFHDQXQGXHZLQGIDOOIRU:DOODFH
+DUGZDUH DV LW ZRXOG DOORZ LWV VLQJOH VHWWOHPHQW ZLWK WKH
EDQNUXSWF\ WUXVWHH WR ELQG WKH SDUWLHV WR WZR VHSDUDWH DQG
LQGHSHQGHQWFRQWUDFWXDOUHODWLRQVKLSV:DOODFH+DUGZDUHKDV
DOUHDG\ REWDLQHG WKH ³EHQHILW RI WKH EDUJDLQ´ XQGHU WKH
VHWWOHPHQW²LQH[FKDQJHIRULWVSD\PHQWRILQWR
WKH EDQNUXSWF\ HVWDWH LW ZDV JLYHQ WKH ULJKW WR UHWDLQ WKH
LQYHQWRU\LWKDGUHSRVVHVVHGSOXVWKHWUXVWHH¶VSURPLVHQRWWR
FRQWHVW WKH RXWVWDQGLQJ EDODQFH RI LWV FODLP DJDLQVW WKH
EDQNUXSWF\ HVWDWH ZKHWKHU WKURXJK SXUVXLW RI D EUHDFKRI
FRQWUDFW FODLP RU RWKHUZLVH ,Q RXU MXGJPHQW :DOODFH
+DUGZDUHLVQRWDOVRHQWLWOHGWKURXJKWKLVVDPHVHWWOHPHQWWR
SUHFOXGH WKH $EUDPV EURWKHUV IURP DVVHUWLQJ D EUHDFKRI
FRQWUDFWGHIHQVHWRDFKLHYHDVHWRIIDJDLQVWWKHUHPDLQLQJ
DPRXQWRI7UL&RXQW\¶VLQGHEWHGQHVV
%HIRUHOHDYLQJWKLVLVVXHZHZLVKWRUDLVHRQHILQDOSRLQW
IRU WKH 'LVWULFW &RXUW¶V FRQVLGHUDWLRQ RQ UHPDQG $V ZH
VXJJHVWHGHDUOLHULWLVSRVVLEOHWKRXJKQRWGHPRQVWUDWHGLQ
-- 12 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
$QG RI FRXUVH WKHUH FDQ EH QR FODLP RI LVVXH SUHFOXVLRQ KHUH
ZKHUH 7UL&RXQW\¶V EUHDFKRIFRQWUDFW FODLPV DJDLQVW :DOODFH +DUGZDUH
KDYH QHYHU EHHQ DFWXDOO\ OLWLJDWHG
QRWPHQWLRQHGLQWKHSDUDJUDSKRIWKHDJUHHPHQWVHWWLQJIRUWK
WKH EDVLV IRU WKH VHWWOHPHQW DPRXQW SDLG E\ :DOODFH
+DUGZDUH 6HH$JUHHG2UGHURI6HWWOHPHQWDW-$DW
)URPDOOWKDWDSSHDUVLQWKHGRFXPHQWLWVHOIWKHSDUWLHV
PDLQO\ZHUHFRQFHUQHGZLWKUHVROYLQJWKHWUXVWHH¶VFODLPWKDW
:DOODFH+DUGZDUH¶VUHSRVVHVVLRQRI7UL&RXQW\¶VLQYHQWRU\
FRQVWLWXWHGDQDYRLGDEOHSUHIHUHQWLDOWUDQVIHU
7KLV ODFN RI VSHFLILFLW\ RI FRXUVH ZRXOG SURYLGH QR
GHIHQVHLI7UL&RXQW\RUWKHWUXVWHHVXEVHTXHQWO\VRXJKWWR
DVVHUWDEUHDFKRIFRQWUDFWFODLPDJDLQVW:DOODFH+DUGZDUH
$V SDUWLHV WR WKH VHWWOHPHQW WKH\ ZRXOG EH ERXQG E\ WKH
EURDGVFRSHRIWKHUHOHDVHWRZKLFKWKH\DJUHHG:LWKUHVSHFW
WR WKH $EUDPV DV JXDUDQWRUV KRZHYHU WKH LQTXLU\ LV
VRPHZKDWGLIIHUHQW7KH\ZHUHQRWSDUWLHVWRWKHVHWWOHPHQW
DQGDVWKH'LVWULFW&RXUWUHFRJQL]HGWKHWUXVWHH¶VLQWHUHVWV
ZHUH QRW VXIILFLHQWO\ DOLJQHG ZLWK WKHLUV WR WUHDW WKHP DV
ERXQGE\WKHWUXVWHH¶VDJUHHPHQW6HH%HFKHUHUVXSUD
)GDW,QSDUWLFXODUWKHWUXVWHHGLGQRWVKDUHWKH
$EUDPV¶GLUHFWSHUVRQDODQGFRQVLGHUDEOHILQDQFLDOLQFHQWLYH
WR SURYH WKDW :DOODFH +DUGZDUH EUHDFKHG LWV FRQWUDFWXDO
REOLJDWLRQVWR7UL&RXQW\*LYHQWKLVODFNRIDSHUVRQDOVWDNH
LQWKHRXWFRPHWKHWUXVWHHSUHVXPDEO\JDYHPRUHZHLJKWWR
VXFKFRQVLGHUDWLRQVDVWKHH[SHQVHRIIXUWKHUOLWLJDWLRQDQGWKH
GHVLUDELOLW\ RI D VSHHG\ UHVROXWLRQ WR WKH GLVSXWH DQG OHVV
ZHLJKW WR WKH SRWHQWLDO YDOXH RI 7UL&RXQW\¶V EUHDFKRI
FRQWUDFWFODLPVDJDLQVW:DOODFH+DUGZDUH
0RUHLPSRUWDQWO\WRDOORZWKHJXDUDQWRUVWREHERXQGE\
WKHWUXVWHH¶VVHWWOHPHQWRQEHKDOIRIWKHSULQFLSDOGHEWRU7UL
&RXQW\ZRXOGLJQRUHWKHLQGHSHQGHQWQDWXUHRIWKHVHSDUDWH
FUHGLWRUGHEWRUDQGFUHGLWRUJXDUDQWRUDJUHHPHQWVDQGLQVWHDG
FRQYHUWWKLV³LQGHSHQGHQFH´LQWRDRQHZD\VWUHHWIDYRULQJ
WKH FUHGLWRU $V QRWHG HDUOLHU XQGHU WKH WHUPV RI WKH
*XDUDQW\ :DOODFH +DUGZDUH ZDV IUHH WR FRPSURPLVH LWV
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
6HFWLRQRIWKH5HVWDWHPHQW 6HFRQG RI&RQIOLFW
RI /DZV *RYHUQV WKH (QIRUFHDELOLW\ RI WKH
*XDUDQW\¶V&KRLFHRI/DZ3URYLVLRQ
7KLVFDVHZDVEURXJKWXQGHUWKH'LVWULFW&RXUW¶VGLYHUVLW\
MXULVGLFWLRQ &RQVHTXHQWO\ DV WKH ORZHU FRXUW FRUUHFWO\
REVHUYHG WKH FKRLFHRIODZ UXOHV RI WKH IRUXP VWDWH
.HQWXFN\JRYHUQWKHGHWHUPLQDWLRQZKHWKHUWRHQIRUFHWKH
*XDUDQW\¶VVHOHFWLRQRI7HQQHVVHHODZ6HH.OD[RQ&RY
6WHQWRU(OHF0IJ&R866&W
%DQHN,QFY<RJXUW9HQWXUHV86$,QF)G
WK&LU 7KH'LVWULFW&RXUWUHVROYHGWKLVLVVXHDVD
PDWWHU RI ODZ DQG ZH UHYLHZ WKLV UXOLQJ GH QRYR 6HH
0DF'RQDOGY*HQHUDO0RWRUV&RUS)G WK
&LU
,QHOHFWLQJQRWWRJLYHHIIHFWWRWKH*XDUDQW\¶VFKRLFHRI
ODZSURYLVLRQDQGWRLQVWHDGDSSO\.HQWXFN\ODZWKH'LVWULFW
&RXUWEHJDQLWVDQDO\VLVZLWKWKHREVHUYDWLRQWKDW³.HQWXFN\
FRXUWVDUHHJRFHQWULFFRQFHUQLQJFKRLFHRIODZTXHVWLRQV´
2S DW -$ DW FLWLQJ 3DLQH Y /D 4XLQWD
0RWRU,QQV,QF6:G .\&W$SS
2Q DW OHDVW WZR RFFDVLRQV ZH OLNHZLVH KDYH QRWHG WKLV
SURYLQFLDO WHQGHQF\ LQ .HQWXFN\ FKRLFHRIODZ UXOHV 6HH
$GDPY-%+XQW7UDQVS,QF)G WK
&LU +DUULV &RUS Y &RPDLU ,QF )G
WK&LU ,QGHHGLQ+DUULV&RUSZHFRQVWUXHG
DWKHQUHFHQW.HQWXFN\6XSUHPH&RXUWGHFLVLRQDVLQGLFDWLQJ
WKDW³.HQWXFN\ODZZLOODSSO\WRDFRQWUDFWLVVXHLIWKHUHDUH
VXIILFLHQW FRQWDFWV DQG QR RYHUZKHOPLQJ LQWHUHVWV WR WKH
FRQWUDU\HYHQLIWKHSDUWLHVKDYHYROXQWDULO\DJUHHGWRDSSO\
WKHODZRIDGLIIHUHQWVWDWH´+DUULV&RUS)GDW
FLWLQJ%UHHGLQJY0DVVDFKXVHWWV,QGHPDQG/LIH,QV&R
6:G .\
:LWK WKLV VWDUWLQJ SUHPLVH WKH 'LVWULFW &RXUW WXUQHG
VSHFLILFDOO\WRWKHGHFLVLRQLQ%UHHGLQJVXSUDZKLFK
VWLOOVWDQGVDVWKHPRVWUHFHQWRFFDVLRQRQZKLFK.HQWXFN\¶V
KLJKHVW FRXUW DGGUHVVHG D FRQWUDFWXDO FKRLFHRIODZ
-- 13 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
%RWK LQ WKH ORZHU FRXUW DQG RQ DSSHDO :DOODFH +DUGZDUH KDV
SRLQWHG WR WKH .HQWXFN\ 6XSUHPH &RXUW¶V PRUH UHFHQW UXOLQJ LQ 3UH]RFNL
Y %XOORFN *DUDJHV ,QF 6:G .\ ZKLFK IHDWXUHG D
FRQWUDFWXDO FODXVH WKDW FRQWDLQHG ERWK FKRLFHRIODZ DQG FKRLFHRIIRUXP
ODQJXDJH <HW DV :DOODFH +DUGZDUH FRQFHGHV 3UH]RFNL DGGUHVVHG RQO\
WKH IRUXP VHOHFWLRQ SRUWLRQ RI WKLV FODXVH DQG WKXV EHDUV RQO\ LQGLUHFWO\
RQ WKH LVVXH QRZ EHIRUH XV
SURYLVLRQ,QWKDW FDVHWKHSODLQWLIIDGPLQLVWUDWUL[RIWKH
HVWDWH RI 'DQQ\ %UHHGLQJ VRXJKW WR FROOHFW XQGHU DQ
DFFLGHQWDO GHDWK SROLF\ WDNHQ RXW E\ 0U %UHHGLQJ D
.HQWXFN\UHVLGHQWZKHQKHUHQWHGDFDUIURPD%XGJHW5HQW
$&DUDJHQF\LQ/RXLVYLOOH0U%UHHGLQJGLHGZKLOHWKLV
LQVXUDQFHSROLF\ZDVLQHIIHFWDQGZDVOHJDOO\LQWR[LFDWHGDW
WKHWLPHRIKLVGHDWK7KHGHIHQGDQWLQVXUHUFRQWHQGHGWKDW
WKH SODLQWLII¶V FODLP ZDV H[FOXGHG XQGHU SROLF\ ODQJXDJH
GHQ\LQJFRYHUDJHIRUORVVHVFDXVHGGLUHFWO\RULQGLUHFWO\E\
LQWR[LFDQWV ,Q UHVSRQVH WKH SODLQWLII DUJXHG WKDW WKLV
H[FOXVLRQZDVXQHQIRUFHDEOHGXHWRWKHLQVXUHU¶VIDLOXUHWR
FRPSO\ ZLWK D SURYLVLRQ LQ .HQWXFN\¶V LQVXUDQFH FRGH
UHTXLULQJWKDWSROLF\KROGHUVEHSURYLGHGZLWKDFHUWLILFDWHRI
LQVXUDQFH VHWWLQJ IRUWK WKH WHUPV RI FRYHUDJH DV ZHOO DV D
SURYLVLRQLQWKHSROLF\LWVHOIFDOOLQJIRUVLPLODUGLVFORVXUHV
%HFDXVH0U%UHHGLQJKDGQRWEHHQJLYHQVXFKDFHUWLILFDWHRI
LQVXUDQFHWKHSODLQWLIIDUJXHGWKDWWKHGHIHQGDQWLQVXUHUFRXOG
QRWHVFDSHOLDELOLW\E\DSSHDOLQJWRDSROLF\H[FOXVLRQWKDW
ZDVQHYHUGLVFORVHGWRWKHLQVXUHG
,Q%UHHGLQJWKHSROLF\DWLVVXHLQFOXGHGDFKRLFHRIODZ
FODXVHSURYLGLQJWKDWLWVWHUPVZHUHJRYHUQHGE\³WKHODZVRI
WKHVWDWHRIGHOLYHU\RIWKHSROLF\´6:GDWDQG
WKH PDVWHU SROLF\ ZDV GHOLYHUHG WR %XGJHW DW LWV FRUSRUDWH
RIILFHV LQ 'HODZDUH 8QGHU 'HODZDUH ODZ LQ FRQWUDVW WR
.HQWXFN\ ODZ WKH LQVXUHU ZDV QRW UHTXLUHG WR IXUQLVK D
FHUWLILFDWHRILQVXUDQFHWRHDFKSROLF\KROGHU7KXVLQRUGHU
WR GHWHUPLQH ZKHWKHU DQ\ SROLF\ H[FOXVLRQV DSSOLHG WKH
.HQWXFN\6XSUHPH&RXUWILUVWKDGWRGHFLGHZKHWKHUWKHFDVH
EHIRUHLWZDVJRYHUQHGE\.HQWXFN\RU'HODZDUHODZ
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
RIVRPHRILWVGHEWZDVERXQGE\WKHEDQNUXSWF\WUXVWHHV¶
VHWWOHPHQWRIWKHFRUSRUDWLRQ¶VFODLPVDJDLQVW&RPHULFD%DQN
DQG FRXOG QRW SXUVXH VHSDUDWH FODLPV RQ KLV RZQ EHKDOI
1H[WLQ)U:LQNOHU.*Y6WROOHU)G
G&LU WKH7KLUG&LUFXLWIRXQGWKDWDJXDUDQWRU*HQH
6WROOHU ZDV SUHFOXGHG IURP UDLVLQJ WKH EUHDFKRIFRQWUDFW
GHIHQVHVRIWKHSULQFLSDOGHEWRU%(:ZKHUH6WROOHUKLPVHOI
KDG H[HFXWHG D UHOHDVH RI WKHVH FODLPV RQ EHKDOI RI %(:
GXULQJ WKH FRXUVH RI %(:¶V EDQNUXSWF\ SURFHHGLQJV LQ
H[FKDQJH IRU WKH FUHGLWRU¶V DJUHHPHQW WR ZLWKGUDZ LWV
REMHFWLRQV WR %(:¶V SODQ RI UHRUJDQL]DWLRQ )LQDOO\ LQ
5RXOLHUVXSUD)6XSSDWWKH&RXUWKHOGWKDW
DJXDUDQWRUFRXOGQRWDVVHUWWKHFRQWUDFWXDOGHIHQVHVRIWKH
SULQFLSDOGHEWRUZKHUHWKHEDQNUXSWF\WUXVWHHIRUWKHGHEWRU
KDGVROGWRWKHFUHGLWRUDWSXEOLFDXFWLRQ³DOORIWKHGHEWRU¶V
FODLPVDQGFDXVHVRIDFWLRQ´LQFOXGLQJWKHEUHDFKRIFRQWUDFW
FODLPVRXJKWWREHDVVHUWHGE\WKHJXDUDQWRU
8SRQFDUHIXOUHIOHFWLRQKRZHYHUZHGRQRW EHOLHYHWKH
VDPHUHVXOWLVZDUUDQWHGKHUHDWOHDVWRQWKHUHFRUGEHIRUHXV
$V DQ LQLWLDO PDWWHU LQ HDFK RI WKH DERYHFLWHG FDVHV WKH
VHWWOHPHQW H[HFXWHG GXULQJ WKH EDQNUXSWF\ SURFHHGLQJV
H[SUHVVO\UHOHDVHGWKHFODLPWKDWWKHJXDUDQWRUVXEVHTXHQWO\
VRXJKWWRDVVHUW,QGHHGLQRQHFDVH5RXOLHUWKHFDXVHRI
DFWLRQZDVDFWXDOO\VROGDWDXFWLRQ,QWKLVFDVHE\FRQWUDVW
WKH EDQNUXSWF\ VHWWOHPHQW EHWZHHQ :DOODFH +DUGZDUH DQG
7UL&RXQW\¶VWUXVWHHGLGQRWVSHFLILFDOO\UHIHUWR7UL&RXQW\¶V
EUHDFKRIFRQWUDFWFODLPEXWLQVWHDGJHQHUDOO\UHVROYHG³DQ\
DQG DOO FODLPV WKH 7UXVWHH KDV KDG RU PD\ KDYH DJDLQVW
:DOODFH´DQGUHVXOWHGLQWKHGLVPLVVDORI³DOORIWKH7UXVWHH¶V
FODLPVLQKLV&RPSODLQWDJDLQVW:DOODFH´ $JUHHG2UGHURI
6HWWOHPHQWDW-$DW 6LJQLILFDQWO\ZHKDYHQRW
EHHQSURYLGHGZLWKDFRS\RIWKHWUXVWHH¶VFRPSODLQWDJDLQVW
:DOODFH+DUGZDUH1RULVWKHUHDQ\VROLGHYLGHQFHLQWKH
VHWWOHPHQWDJUHHPHQWLWVHOIRUHOVHZKHUHLQWKHUHFRUGWKDWWKH
WUXVWHH²RU:DOODFH+DUGZDUHIRUWKDWPDWWHU²KDG7UL
&RXQW\¶V EUHDFKRIFRQWUDFW FODLPV LQ PLQG DV DPRQJ WKH
FODLPV WKDW ZHUH EHLQJ H[WLQJXLVKHG E\ RSHUDWLRQ RI WKH
EDQNUXSWF\FRXUWVHWWOHPHQW7KHVHFODLPVIRUH[DPSOHDUH
-- 14 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
027 KDG DVVHUWHG FRXQWHUFODLPV DQG DIILUPDWLYH GHIHQVHV
FKDOOHQJLQJLWVFRQWUDFWXDOREOLJDWLRQWRSD\WKH&RIIH\VDQG
0RRUHOLNHZLVHKDGDVVHUWHGDIILUPDWLYHGHIHQVHVFODLPLQJDQ
³HQWLWOHPHQW WR DQ\ DQG DOO ULJKWV FODLPV DQG GHIHQVHV
DYDLODEOHWR027´)GDW:HUXOHGWKDW027¶V
GHIHQVHV KDG WR EH DGMXGLFDWHG EHIRUH MXGJPHQW FRXOG EH
HQWHUHGDJDLQVW0RRUHDVJXDUDQWRU
>0RRUH@LVFRUUHFWLQKLVJHQHUDODVVHUWLRQWKDWKLV
REOLJDWLRQ RQ WKH JXDUDQW\ FDQQRW EH GHWHUPLQHG XQWLO
027¶V REOLJDWLRQ RQ WKH XQGHUO\LQJ FRQWUDFW LV
GHWHUPLQHG,WLVFOHDUWKDWWKH³OLDELOLW\RIDVXUHW\LV
FRPPHQVXUDWHZLWKWKDWRIKLVSULQFLSDO´7KXVLI
WKHFRXQWHUFODLPVDQGDIILUPDWLYHGHIHQVHVDVVHUWHGE\
027DJDLQVWWKH&RIIH\VDUHDGMXGJHGPHULWRULRXVVXFK
WKDW027LVUHOLHYHGRILWVFRQWUDFWXDOREOLJDWLRQVWKHQ
0RRUH ZLOO DOVR HLWKHU EH UHOHDVHG IURP KLV JXDUDQW\
REOLJDWLRQRUDOWHUQDWLYHO\HQWLWOHGWRWKHEHQHILWRIWKH
VHWRIIV UHFHLYHG E\ 027 7KH &RIIH\V FRQFHGH WKDW
027¶VVHWRIIFODLPVKDYHQRW\HWEHHQGHFLGHG
)GDW FLWDWLRQRPLWWHG :HIXUWKHUREVHUYHGWKDW
WKH GHWHUPLQDWLRQ RI WKHVH VHWRIIV ³FDQ EH PDGH LQ WKLV
DFWLRQ´RQUHPDQGWRWKHGLVWULFWFRXUW)GDW
7KXVWKHUHLVDPSOHDXWKRULW\IRUDOORZLQJDJXDUDQWRUWR
DVVHUWWKHFRQWUDFWXDOGHIHQVHVRIWKHSULQFLSDOGHEWRUDVWKH
$EUDPVEURWKHUVVHHNWRGRKHUH1HYHUWKHOHVVXQGHUWKH
FLUFXPVWDQFHVRIWKLVFDVHWKH$EUDPVPXVWRYHUFRPHRQH
DGGLWLRQDOKXUGOH6SHFLILFDOO\:DOODFH+DUGZDUHFRQWHQGV
WKDWWKHEDQNUXSWF\WUXVWHHUHOHDVHG7UL&RXQW\¶VEUHDFKRI
FRQWUDFW FODLPV DQG WKDW WKLV UHOHDVH RSHUDWHV WR EDU WKH
$EUDPV EURWKHUV IURP DVVHUWLQJ WKHVH VDPH FRQWUDFWXDO
WKHRULHVGHIHQVLYHO\LQWKHSUHVHQWDFWLRQ
$WILUVWJODQFHVRPHFDVHODZDSSHDUVWRVXSSRUW:DOODFH
+DUGZDUH¶V DUJXPHQW )LUVW LQ ,Q UH 9DQ 'UHVVHU &RUS
VXSUD)GDWZHKHOGWKDW+RQLJPDQDFUHGLWRU
DQGVKDUHKROGHURIWKHEDQNUXSWFRUSRUDWLRQDQGWKHJXDUDQWRU
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
6HFWLRQ SURYLGHV LQ UHOHYDQW SDUW
7KH ULJKWV DQG GXWLHV RI WKH SDUWLHV ZLWK UHVSHFW WR DQ
LVVXH LQ FRQWUDFW DUH GHWHUPLQHG E\ WKH ORFDO ODZ RI WKH VWDWH
ZKLFK ZLWK UHVSHFW WR WKDW LVVXH KDV WKH PRVW VLJQLILFDQW
UHODWLRQVKLS WR WKH WUDQVDFWLRQ DQG WKH SDUWLHV
,Q WKH DEVHQFH RI DQ HIIHFWLYH FKRLFH RI ODZ E\ WKH
SDUWLHV VHH WKH FRQWDFWV WR EH WDNHQ LQWR DFFRXQW WR
GHWHUPLQH WKH ODZ DSSOLFDEOH WR DQ LVVXH LQFOXGH
D WKH SODFH RI FRQWUDFWLQJ
E WKH SODFH RI QHJRWLDWLRQ RI WKH FRQWUDFW
F WKH SODFH RI SHUIRUPDQFH
G WKH ORFDWLRQ RI WKH VXEMHFW PDWWHU RI WKH FRQWUDFW
DQG
H WKH GRPLFLOH UHVLGHQFH QDWLRQDOLW\ SODFH RI
LQFRUSRUDWLRQ DQG SODFH RI EXVLQHVV RI WKH SDUWLHV
5HVWDWHPHQW 6HFRQG RI &RQIOLFW RI /DZV
7KH&RXUWUXOHGWKDWWKHLQVXUDQFHSROLF\LQTXHVWLRQZDV
FRQWUROOHGE\.HQWXFN\ODZDQGWKDWWKHGHIHQGDQWLQVXUHU
ZDVHVWRSSHGIURPDVVHUWLQJWKHSROLF\H[FOXVLRQIRUORVVHV
DWWULEXWDEOH WR LQWR[LFDQWV ,Q VR KROGLQJ WKH &RXUW ILUVW
REVHUYHGWKDWLWKDGSUHYLRXVO\DEURJDWHGWKHULJLGOH[ORFL
FRQWUDFWXVDSSURDFKWRGHWHUPLQLQJWKHJRYHUQLQJODZLQD
FRQWUDFW GLVSXWH DQG KDG LQVWHDG DGRSWHG WKH ³PRVW
VLJQLILFDQW UHODWLRQVKLS´ WHVW VHW IRUWK DW RI WKH
5HVWDWHPHQW 6HFRQG RI&RQIOLFWRI/DZV6:GDW
FLWLQJ/HZLVY$PHULFDQ)DPLO\,QV*URXS6:G
.\ 7KH&RXUWWKHQDSSOLHGWKLV
WHVW FRPSDULQJ WKH UHVSHFWLYH LQWHUHVWV RI .HQWXFN\ DQG
'HODZDUHXQGHUWKHIDFWVRIWKHFDVHEHIRUHLW
,W LV SDWHQWO\ REYLRXV WKDW .HQWXFN\ KDV WKH JUHDWHU
LQWHUHVWLQDQGWKHPRVWVLJQLILFDQWUHODWLRQVKLSWRWKLV
WUDQVDFWLRQDQGWKHSDUWLHV7KHLQVXUDQFHZDVSXUFKDVHG
LQ .HQWXFN\ E\ D .HQWXFN\ UHVLGHQW IURP D .HQWXFN\
FRUSRUDWLRQ>LHWKHORFDO%XGJHWUHQWDOFDUIUDQFKLVH@
7KHFODLPZDVLQLWLDWHGE\D.HQWXFN\UHVLGHQWDQGWKH
FODLPDURVHIURPDQDFFLGHQWDOGHDWKLQ.HQWXFN\
-- 15 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
8QGHU D FKRLFHRIODZ FODXVH ZLOO EH HQIRUFHG XQOHVV HLWKHU
D WKH FKRVHQ VWDWH KDV QR VXEVWDQWLDO UHODWLRQVKLS WR WKH
SDUWLHV RU WKH WUDQVDFWLRQ DQG WKHUH LV QR RWKHU UHDVRQDEOH EDVLV
IRU WKH SDUWLHV¶ FKRLFH RU
E DSSOLFDWLRQ RI WKH ODZ RI WKH FKRVHQ VWDWH ZRXOG EH
FRQWUDU\ WR D IXQGDPHQWDO SROLF\ RI D VWDWH ZKLFK KDV D PDWHULDOO\
JUHDWHU LQWHUHVW WKDQ WKH FKRVHQ VWDWH LQ WKH GHWHUPLQDWLRQ RI WKH
SDUWLFXODU LVVXH ZKLFK XQGHU WKH UXOH RI ZRXOG EH WKH
VWDWH RI WKH DSSOLFDEOH ODZ LQ WKH DEVHQFH RI DQ HIIHFWLYH FKRLFH
RI ODZ E\ WKH SDUWLHV
5HVWDWHPHQW 6HFRQG RI &RQIOLFW RI /DZV :KLOH %UHHGLQJ
GRHV QRW FLWH WKLV SURYLVLRQ LW LQGLUHFWO\ LQFRUSRUDWHV WKH ³IXQGDPHQWDO
SROLF\´ VWDQGDUG KROGLQJ WKDW ³>Q@RWLFH RI OLPLWDWLRQV WR WKH LQVXUDQFH
FRYHUDJH SURYLGHG DQ LQVXUHG LV D IXQGDPHQWDO SROLF\ RI WKLV
FRPPRQZHDOWK´ %UHHGLQJ 6:G DW
2Q WKH RWKHU KDQG 'HODZDUH KDV QR VLJQLILFDQW
UHODWLRQVKLS WR WKH WUDQVDFWLRQ DQG WKH SDUWLHV 7KH
>LQVXUHU@PHUHO\GHOLYHUHGWKHPDVWHULQVXUDQFHSROLF\WR
WKH'HODZDUHFRUSRUDWHRIILFHRI%XGJHW5HQW$&DURI
$PHULFD D QDWLRQZLGH FRUSRUDWLRQ KDYLQJ IUDQFKLVHV
DPRQJWKHILIW\VWDWHV7KLVRQHDFWRIGHOLYHU\WKHRQO\
FRQWDFW LQYROYLQJ 'HODZDUH GRHV QRW HVWDEOLVK D
VLJQLILFDQWUHODWLRQVKLSEXWPHUHO\RQHWKDWLVWHQXRXVDW
EHVW
6:GDW
1RWDEO\ WKH %UHHGLQJ &RXUW GLG QRW DSSO\ QRU HYHQ
PHQWLRQ RI WKH 5HVWDWHPHQW ZKLFK VSHFLILFDOO\
DGGUHVVHV FRQWUDFWXDO FKRLFHRIODZ SURYLVLRQV $W D
PLQLPXPWKHQ%UHHGLQJLQGLFDWHVWKDWWKH.HQWXFN\FRXUWV
ZLOOQRWDXWRPDWLFDOO\KRQRUDFKRLFHRIODZSURYLVLRQWRWKH
H[FOXVLRQ RI DOO RWKHU FRQVLGHUDWLRQV 5DWKHU GHVSLWH D
FKRLFHRIODZ FODXVH LQ WKH DFFLGHQWDO GHDWK SROLF\ WKH
%UHHGLQJ&RXUWZHLJKHGWKHUHODWLYHLQWHUHVWVRI.HQWXFN\
DQG'HODZDUHLQGHFLGLQJZKLFKODZWRDSSO\)XUWKHULQ
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
,W LV SRVVLEOH RI FRXUVH WKDW WKHUH FRXOG EH D ULVN RI D ³GRXEOH VHW
RII´ KHUH LI WKH WUXVWHH IRU 7UL&RXQW\¶V EDQNUXSWF\ HVWDWH DOUHDG\
UHFHLYHG VRPH VRUW RI FUHGLW IRU 7UL&RXQW\¶V EUHDFKRIFRQWUDFW FODLPV DV
SDUW RI WKH EDQNUXSWF\ VHWWOHPHQW ZLWK :DOODFH +DUGZDUH :H GLVFXVV
WKLV SRVVLELOLW\ EHORZ
DQ DEDQGRQPHQW RI WKH HVWDWHV¶ FODLP KLV IDLOXUH WR
REMHFW WRWKHSURSRVDOSUHFOXGHVKLVDUJXPHQWWKDWWKH
VHWWOHPHQWZDVDQ\WKLQJOHVVWKDQDIDLUFRPSURPLVHRI
&RPHULFD¶VSRWHQWLDOOLDELOLW\6LPSO\SXWWKHGHEWRUV¶
HVWDWHV FDQ DQG GLG UHFRYHU IURP &RPHULFD IRU
+RQLJPDQDQG9DQ'UHVVHU¶VFRPPRQGDPDJHV$Q\
UHFRYHU\E\>+RQLJPDQ@ZRXOGEHQHILWKLPWZLFHRQFH
DVJXDUDQWRUDQGDJDLQDVFUHGLWRU
,QUH9DQ'UHVVHU&RUS)GDW&OHDUO\LQWKH
SUHVHQWFDVHZHIDFHQRVLPLODUULVNRID SRWHQWLDOGRXEOH
UHFRYHU\EHFDXVHWKH$EUDPVEURWKHUVDUHVHHNLQJRQO\DVHW
RIIDJDLQVWWKHDPRXQWRILQGHEWHGQHVVFODLPHGE\:DOODFH
+DUGZDUHDQGQRWDQDIILUPDWLYHUHFRYHU\
0XFKPRUHRQSRLQWLVRXUGHFLVLRQLQ&RIIH\VXSUDZKLFK
QHLWKHUSDUW\FLWHGLQDGGUHVVLQJWKHSUHVHQWLVVXHRQDSSHDO
,QWKDWFDVHFUHGLWRUV/&ROHPDQ&RIIH\DQG5REHUW%UXFH
&RIIH\DVVHUWHGFODLPVDJDLQVWWKHSULQFLSDOGHEWRU027DQG
DOVR EURXJKW D VHSDUDWH VXLW DJDLQVW JXDUDQWRU 7KRPDV 2
0RRUH7KHVHWZRVXLWVZHUHFRQVROLGDWHGDQGWKH&RIIH\V
EURXJKWVXPPDU\MXGJPHQWPRWLRQVDJDLQVWERWK027DQG
0RRUH VHHNLQJ HQWU\ RI MXGJPHQW RQ 027¶V PLOOLRQ
SURPLVVRU\ QRWH DQG 0RRUH¶V JXDUDQW\ RI 027¶V
LQGHEWHGQHVV7KHGD\EHIRUHWKHVHPRWLRQVZHUHWREHKHDUG
027 ILOHG IRU EDQNUXSWF\ UHOLHI DQG IXUWKHU SURFHHGLQJV
DJDLQVWWKHSULQFLSDOGHEWRUZHUHVWD\HG7KHGLVWULFWFRXUW
KRZHYHU HQWHUHG VXPPDU\ MXGJPHQW DJDLQVW 0RRUH DV
JXDUDQWRULQDQDPRXQWLQH[FHVVRI027¶VQRWH
2Q DSSHDO 0RRUH DUJXHG WKDW MXGJPHQW FRXOG QRW EH
HQWHUHG DJDLQVW KLP XQWLO WKH WUXH DPRXQW RI 027¶V
XQGHUO\LQJREOLJDWLRQKDGILUVWEHHQGHWHUPLQHG,QSDUWLFXODU
-- 16 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
9DQ 'UHVVHU &RUSRUDWLRQ DVVHUWHG YDULRXV VWDWHODZ WRUW
FODLPVDJDLQVW&RPHULFD%DQNXQGHUWKHWKHRU\WKDWWKHEDQN
KDGFRQWULEXWHGWRWKHGRZQIDOORI9DQ'UHVVHUE\DLGLQJDQG
DEHWWLQJWKHGHSOHWLRQRIDVVHWVRIWZRRILWVVXEVLGLDULHV$V
DUHVXOWRILWVILQDQFLDOGLIILFXOWLHV9DQ'UHVVHUGHIDXOWHGRQ
WZRORDQVWRWDOLQJDQG+RQLJPDQZDVIRUFHGWR
UHSD\WKHPDVFRVLJQHUDQGJXDUDQWRU+RQLJPDQDUJXHGWKDW
KH ZDV HQWLWOHG WR UHFRYHU WKHVH SHUVRQDO ORVVHV LQ DQ
LQGLYLGXDOWRUWVXLWDJDLQVWWKHEDQN
:HGLVDJUHHGDQGVXEVWDQWLDOO\DIILUPHGWKHGLVWULFWFRXUW¶V
GLVPLVVDORI+RQLJPDQ¶VVWDWHODZFODLPV,QVRKROGLQJZH
SRLQWHGRXWWKDWWKHEDQNUXSWF\WUXVWHHVIRU9DQ'UHVVHUDQG
LWVWZRVXEVLGLDULHVKDGDOUHDG\SXUVXHGFODLPVDJDLQVWWKH
EDQNGXULQJWKHFRXUVHRIWKHEDQNUXSWF\SURFHHGLQJVWKDW
WKHVH FODLPV KDG EHHQ VHWWOHG DQG WKDW +RQLJPDQ DV D
FUHGLWRUKDGEHHQJLYHQQRWLFHRIWKHSURSRVHGVHWWOHPHQWDQG
KDG QRW REMHFWHG 7KXV +RQLJPDQ¶V VHSDUDWH FODLPV
DPRXQWHGWRDQDWWHPSWWRUHFRYHUWZLFHIRUWKHVDPHWRUWLRXV
FRQGXFW
>+RQLJPDQ@KDVFLWHGQRFDVHIRUWKHSURSRVLWLRQWKDW
DFRUSRUDWLRQDQGLWVVKDUHKROGHUFDQERWKUHFRYHUIXOO\
IRUDVLQJOHWRUWLRXVDFWLRQDQGZHFRQFOXGHWKDWQRQH
H[LVWV 7KH DEVHQFH RI FDVH ODZ RQ WKLV SRLQW LV QRW
VXUSULVLQJLQOLJKWRIWKHIDFWWKDWWKHUHVXOWIRUZKLFK
+RQLJPDQ DUJXHV FDQQRW ORJLFDOO\ EH VXVWDLQHG 7KH
GHIHQGDQWVKHUHDOOHJHGO\WRRNDILQLWHDPRXQWRIPRQH\
IURP>9DQ'UHVVHU¶VVXEVLGLDULHV@>7@KH\FDQQRWEH
UHTXLUHGWRUHSD\WKHSULQFLSDODPRXQWRIPLOOLRQ
PRUH WKDQ RQFH ,I D WKLHI VWHDOV D GLDPRQG QHFNODFH
IURPDPDUULHGFRXSOHWKHKXVEDQGFDQQRWUHFRYHUWKH
YDOXHRIWKHFRQYHUWHGQHFNODFHIURPWKHWKLHIDIWHUWKH
ZLIHKDVDOUHDG\UHFRYHUHGWKHQHFNODFHLWVHOI
>7@KHHVWDWHV¶UHFRYHU\KHUHDJDLQVW&RPHULFD
PDNHV+RQLJPDQZKROHLQWHUPVRIWKHORVVFDXVHGE\
&RPHULFD $OWKRXJK +RQLJPDQ PDLQWDLQV WKDW WKH
WUXVWHHV¶PLQLPDOVHWWOHPHQWZLWK&RPHULFDLVLQHIIHFW
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
PDNLQJWKLVGHWHUPLQDWLRQWKH&RXUWJDYHYLUWXDOO\QRZHLJKW
WRWKHFKRLFHRIODZSURYLVLRQ
,Q WKH SUHVHQW FDVH WKH 'LVWULFW &RXUW IXOO\ DGRSWHG
%UHHGLQJ¶VDQDO\VLVDQGFRQFOXGHGWKDW³.HQWXFN\FOHDUO\KDV
WKHJUHDWHULQWHUHVW´ 2SDW-$DW 7KH
ORZHUFRXUWREVHUYHGWKDWWKH$EUDPVEURWKHUVDUH.HQWXFN\
UHVLGHQWV7UL&RXQW\¶VVWRUHZDVORFDWHGLQ.HQWXFN\DQGWKH
*XDUDQW\LWVHOIZDVH[HFXWHGLQ.HQWXFN\7KHVROHFRQWDFW
ZLWK7HQQHVVHHLQWKH'LVWULFW&RXUW¶VYLHZZDV:DOODFH
+DUGZDUH¶VVWDWXVDVD7HQQHVVHHFRUSRUDWLRQ&RQVSLFXRXVO\
DEVHQWIURPWKLVFDOFXOXVZDVDQ\GLVFXVVLRQRIWKHZHLJKWWR
EH JLYHQ WR WKH SDUWLHV¶ RZQ FKRLFH RI 7HQQHVVHH ODZ WR
JRYHUQWKHLUDJUHHPHQW3UHVXPDEO\WKHFRXUWEHORZUHDG
%UHHGLQJDVUHTXLULQJDZKROO\LQWHUHVWEDVHGLQTXLU\ZLWKRXW
UHJDUGIRUWKHFKRLFHRIODZVHWIRUWKLQWKHSDUWLHV¶FRQWUDFW
:HILQGWKLVZDVHUURU6SHFLILFDOO\ZHGRQRWEHOLHYHWKDW
%UHHGLQJFDQEHFRQVWUXHGDVEURDGO\SUHFOXGLQJSDUWLHVIURP
PDNLQJDUHDVRQDEOHDQGELQGLQJFKRLFHDVWRWKHODZWKDWZLOO
JRYHUQ WKHLU FRQWUDFWXDO UHODWLRQVKLS ,Q UHDFKLQJ WKLV
FRQFOXVLRQZHEHJLQE\QRWLQJWKHVLJQLILFDQWGLVWLQFWLRQV
EHWZHHQ %UHHGLQJ DQG WKH SUHVHQW FDVH ,Q %UHHGLQJ WKH
DFFLGHQWDOGHDWKSROLF\DQGLWVFKRLFHRIODZFODXVHZHUHQRW
WKH VXEMHFW RI DQ\ QHJRWLDWLRQV DUPVOHQJWK RU RWKHUZLVH
,QGHHG 0U %UHHGLQJ ZDV QHYHU HYHQ JLYHQ D FRS\ RI WKH
SROLF\ DQG KH KDG QR NQRZOHGJH RI LWV WHUPV 7KH &RXUW
IRXQGWKDWWKLVIDLOXUHWRDSSULVH0U%UHHGLQJRIWKHSROLF\¶V
H[FOXVLRQVYLRODWHGD.HQWXFN\VWDWXWHWKHSROLF\LWVHOIDQG
WKH³IXQGDPHQWDOSROLF\RIWKLVFRPPRQZHDOWK´%UHHGLQJ
6:GDW)XUWKHUHYHQLIWKHSROLF\KDGEHHQ
SURYLGHGWR0U%UHHGLQJKHZRXOGKDYHOHDUQHGRQO\WKDWLW
ZDVWREHJRYHUQHGE\³WKHODZVRIWKHVWDWHRIGHOLYHU\RIWKH
SROLF\´ 6:G DW +H ZRXOG QRW KDYH EHHQ
VSHFLILFDOO\ LQIRUPHG WKDW 'HODZDUH ODZ ZRXOG DSSO\ QRU
ZRXOGWKLVKDYHEHHQDSSDUHQWIURPWKHSROLF\ODQJXDJH
+HUHE\FRQWUDVWWKH$EUDPVEURWKHUVZHUHUHSUHVHQWHGE\
FRXQVHOLQWKHLUGHDOLQJVZLWK:DOODFH+DUGZDUHDQGWKH\
-- 17 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
LQVLVWHGWKDWWKHLUDWWRUQH\UHYLHZWKH*XDUDQW\EHIRUHWKH\
ZRXOGFRQVLGHUVLJQLQJLW7KHRQHSDJH*XDUDQW\SURYLGHG
LQ SODLQ ODQJXDJH WKDW LW ZDV WR EH ³JRYHUQHG E\ DQG
FRQVWUXHG LQ DFFRUGDQFH ZLWK WKH ODZV RI WKH 6WDWH RI
7HQQHVVHH´ -$ DW 7KHUH LV QRWKLQJ LQ WKH UHFRUG
EHIRUHXVWKDWPLJKWVXJJHVWWKDWWKH$EUDPVEURWKHUVZHUH
XQDZDUH RI WKLV SURYLVLRQ RU WKDW WKH\ ODFNHG D IXOO
RSSRUWXQLW\WRFRQVLGHULWVUDPLILFDWLRQV
0RUHRYHUZKLOHWKH'LVWULFW&RXUWSRLQWHGWRD³GLVSDULW\
LQ EDUJDLQLQJ SRZHU´ DV RQH MXVWLILFDWLRQ IRU LWV UXOLQJ
2SDW-$DW ZHILQGQRHYLGHQWLDU\EDVLV
IRUWKLVFRQFOXVLRQ5DWKHUWKLVFDVHDSSDUHQWO\LQYROYHVD
IDLUO\W\SLFDODUPVOHQJWKEXVLQHVVWUDQVDFWLRQDPRQJSDUWLHV
RIUHODWLYHO\HTXDOEDUJDLQLQJSRZHU:DOODFH+DUGZDUH¶V
PHUHLQVLVWHQFHRQSHUVRQDOJXDUDQWLHVDVDGGLWLRQDOVHFXULW\
IRULWVH[WHQVLRQRIFUHGLWWR7UL&RXQW\GRHVQRWDPRXQWWR
WKH VRUW RI RYHUUHDFKLQJ RU RSSUHVVLYH FRQGXFW WKDW PLJKW
DOORZDSDUW\WRHYDGHLWVFRQWUDFWXDOREOLJDWLRQV6HH=HLW]Y
)ROH\ 6:G .\ ³>&@RQWUDFWV
YROXQWDULO\PDGHEHWZHHQFRPSHWHQWSHUVRQVDUHQRWWREHVHW
DVLGH OLJKWO\´ &DUEROLQH &R Y 2[PRRU &WU 8&&
5HS6HUY &DOODJKDQ :/ .\&W$SS
ILQGLQJLQDVDOHRIJRRGVFDVHJRYHUQHGE\WKH8&&
WKDW ³LQ WKH VRSKLVWLFDWHG FRPPHUFLDO VHWWLQJ RI WKLV
WUDQVDFWLRQWKHSURYLVLRQRIWKHSDUWLHV¶DJUHHPHQWH[FOXGLQJ
OLDELOLW\IRUFRQVHTXHQWLDOGDPDJHVZDVQRWXQFRQVFLRQDEOH´
3UXGHQWLDO5HVRXUFHV&RUSY3OXQNHWW6:G
.\&W$SS HQIRUFLQJDIRUXPVHOHFWLRQFODXVHDQG
ILQGLQJQRRYHUUHDFKLQJFRQGXFWZKHUHWKHSDUWLHVGHDOWZLWK
HDFK RWKHU ³DW DUPV OHQJWK´ LQ H[HFXWLQJ D ³VRSKLVWLFDWHG
GULOOLQJFRQWUDFW´ VHHDOVR)RUV\WKHY%DQF%RVWRQ0RUWJDJH
&RUS)G WK&LU REVHUYLQJWKDWLQ
WKH.HQWXFN\FDVHODZ³>W@KHGRFWULQHRIXQFRQVFLRQDELOLW\LV
RQO\XVHGLQUDUHLQVWDQFHVVXFKDVZKHQDSDUW\DEXVHVLWV
ULJKW WR FRQWUDFW IUHHO\´ /. &RPVWRFN &R Y %HFRQ
&RQVWU &R ) 6XSS (' .\
³.HQWXFN\FRXUWVIUHTXHQWO\KDYHXSKHOGSDUWLHV¶EDUJDLQV
HYHQ LI RQHVLGHG H[DPLQLQJ DOO WKH FLUFXPVWDQFHV
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
3ODLQO\WKHWKLUGRIWKHVHH[FHSWLRQVDSSOLHVKHUHVLQFH7UL
&RXQW\ KDV EHHQ SODFHG LQ EDQNUXSWF\ ³>,@W LV ZHOO
HVWDEOLVKHGWKDWZKHQWKHSULQFLSDOLVLQVROYHQWWKHJXDUDQWRU
PD\ VHWRII WKH SULQFLSDO¶V FODLPV DJDLQVW WKH FUHGLWRU´
&RQWLQHQWDO*URXS)6XSSDW FLWLQJFDVHV 2I
FRXUVHWKLVLVSUHFLVHO\ZKDWWKH$EUDPVEURWKHUVVHHNWRGR
WKURXJKWKHFKDOOHQJHGDIILUPDWLYHGHIHQVHV0RUHRYHUWKH
ILUVWRIWKHVHH[FHSWLRQVDUJXDEO\DSSOLHVDVZHOODV³>V@HYHUDO
FRXUWVKDYHKHOGWKDWWKHSULQFLSDO¶VFRQVHQWWRWKHJXDUDQWRU¶V
DVVHUWLRQ RI FODLPV ZLOO EH SUHVXPHG ZKHQ WKH JXDUDQWRU
FRQWUROV WKH SULQFLSDO´ 5RXOLHU ) 6XSS DW
$FFRUGLQJWRWKHEDQNUXSWF\FRXUW/RQQLH$EUDPVZDVWKH
³SUHVLGHQWDQGVROHVKDUHKROGHURI7UL&RXQW\´ -$DW
7KXVWKHUHZRXOGDSSHDUWREHDPSOHEDVLVIRUSHUPLWWLQJWKH
$EUDPVEURWKHUVWRDVVHUWWKH³FRUSRUDWH´GHIHQVHVDWLVVXH
,QDUJXLQJWRWKHFRQWUDU\:DOODFH+DUGZDUHLJQRUHVWKH
DERYHFLWHGFDVHODZDQGDWWHPSWVLQVWHDGWRLQYRNHGHFLVLRQV
DQG DSSO\ ³UXOHV´ WKDW VLPSO\ GR QRW H[WHQG WR WKH
FLUFXPVWDQFHV SUHVHQWHG KHUH )LUVW ZKLOH LW LV WUXH DV
:DOODFH+DUGZDUHDVVHUWVWKDWDJXDUDQWRUPD\QRWDVVHUWWKH
³SHUVRQDO´GHIHQVHVRIWKHSULQFLSDOGHEWRUWKHVH³SHUVRQDO´
GHIHQVHVHQFRPSDVVVXFKPDWWHUVDVLQIDQF\DQGGXUHVVVHH
5KRGH,VODQG%DQN)GDWQDQGQRWWKHEUHDFKRI
FRQWUDFWGHIHQVHWKH$EUDPVEURWKHUVVHHNWRDGYDQFHKHUH
1H[W DOWKRXJK D JXDUDQWRU FDQQRW SXUVXH DQ DIILUPDWLYH
UHFRYHU\E\SRLQWLQJWRWKHFUHGLWRU¶VEUHDFKRILWVXQGHUO\LQJ
FRQWUDFWZLWKWKHSULQFLSDOGHEWRUWKHJXDUDQWRUPD\LQYRNH
WKLVVDPHEUHDFKRIFRQWUDFWWKHRU\GHIHQVLYHO\²VXEMHFWRI
FRXUVHWRWKHJHQHUDOUXOHDQGH[FHSWLRQVVHWIRUWKDERYH²
WRDFKLHYHDVHWRIIDJDLQVWWKHDPRXQWKHRWKHUZLVHZRXOG
RZHWRWKHFUHGLWRU6HH&RQWLQHQWDO*URXS)6XSSDW
7KLV GLVWLQFWLRQ EHWZHHQ DIILUPDWLYH UHFRYHULHV DQG
GHIHQVLYH VHWRIIV SURYLGHV EXW RQH RI VHYHUDO EDVHV IRU
GLVWLQJXLVKLQJWKHSUHVHQWPDWWHUIURPWKHFDVHXSRQZKLFK
:DOODFH+DUGZDUHVHHNVWRUHO\,QUH9DQ'UHVVHU&RUS,Q
WKDWFDVH'DQLHO+RQLJPDQDVKDUHKROGHURIWKHEDQNUXSW
-- 18 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
:H QRWH WKDW 7UL&RXQW\ DSSDUHQWO\ GLG DVVHUW WKHVH PDWWHUV DV
DIILUPDWLYH EUHDFKRIFRQWUDFW FODLPV LQ D VXLW EURXJKW DJDLQVW :DOODFH
+DUGZDUH LQ .HQWXFN\ VWDWH FRXUW RQ 'HFHPEHU DQG WKDW
:DOODFH +DUGZDUH LQ WXUQ EURXJKW D EUHDFKRIFRQWUDFW VXLW DJDLQVW 7UL
&RXQW\ MXVW WZR GD\V ODWHU ,Q D VHWWOHPHQW GDWHG 'HFHPEHU WKH
SDUWLHV DJUHHG WR DOORZ :DOODFH +DUGZDUH WR UHSRVVHVV WKH LQYHQWRU\ LW
KDG VROG WR 7UL&RXQW\ EXW H[SUHVVO\ GHFOLQHG WR ZDLYH DQ\ RI WKHLU ULJKWV
RU FDXVHV RI DFWLRQ DJDLQVW HDFK RWKHU -$ DW
:LWKLQWKHVHEURDGFRQILQHVZHQRZWXUQWRWKHVSHFLILF
TXHVWLRQEHIRUHXVZKHWKHUWKH$EUDPVEURWKHUVPD\DVVHUW
WKHEUHDFKRIFRQWUDFWGHIHQVHVWKDW7UL&RXQW\FRXOGKDYH
DVVHUWHG LI VXHG GLUHFWO\ RQ WKH XQGHUO\LQJ LQGHEWHGQHVV
³$VDJHQHUDOUXOHZKHQDFUHGLWRUVXHVDJXDUDQWRUDQGGRHV
QRWQDPHWKHSULQFLSDOGHEWRULQWKHDFWLRQWKHJXDUDQWRULV
QRWHQWLWOHGWRUDLVHGHIHQVLYHO\WKHFODLPVRIWKHSULQFLSDO
GHEWRU DJDLQVW WKH FUHGLWRU´ )LUVW 7H[DV 6HUY &RUS Y
5RXOLHU)6XSS '&ROR VHHDOVR
5KRGH,VODQG%DQN)GDWQ7KLVJHQHUDOUXOH
KRZHYHUH[WHQGVRQO\VRIDUDVQHFHVVDU\WRVHUYHLWVSXUSRVH
ZKLFK LV ³WR SURWHFW WKH FODLPV RI WKH SULQFLSDO VLQFH WKH
JXDUDQWRU PD\ QRW EH LQ WKH EHVW SRVLWLRQ WR DVVHUW WKHP´
5RXOLHU)6XSSDWVHHDOVR&RQWLQHQWDO*URXS
,QF Y -XVWLFH ) 6XSS ' 'HO
REVHUYLQJWKDWWKHJHQHUDOUXOHLV³GHVLJQHGWRSURWHFWWKH
XQGHUO\LQJFODLPVRIWKHSULQFLSDODQGWRPLQLPL]HOLWLJDWLRQ
DPRQJWKHSDUWLHV´ $FFRUGLQJO\WKHFRXUWVKDYHUHFRJQL]HG
WKUHHH[FHSWLRQVWRWKLVUXOH
$ JXDUDQWRU PD\ DVVHUW WKH LQGHSHQGHQW FODLP RI WKH
SULQFLSDO WR VHWRII WKH FUHGLWRU¶V FODLP DJDLQVW WKH
JXDUDQWRUZKHUH WKHVXUHW\KDVWDNHQDQDVVLJQPHQWRI
WKHFODLPRUWKHSULQFLSDOKDVFRQVHQWHGWRWKHVXUHW\¶V
XVHRIWKHFODLP ERWKSULQFLSDODQGVXUHW\DUHMRLQHG
DVGHIHQGDQWVRU WKHSULQFLSDOLVLQVROYHQW
&RQWLQHQWDO*URXS)6XSSDW FLWLQJ5HVWDWHPHQW
RI6HFXULW\
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
,QGHHG JLYHQ %LOO $EUDPV¶ FRQWHQWLRQ WKDW KH UHIXVHG WR VLJQ WKH
*XDUDQW\ LW FDQQRW EH VDLG WKDW KH DQG KLV EURWKHU ZHUH VRPHKRZ
FRPSHOOHG WR H[HFXWH LW
VXUURXQGLQJ WKH WUDQVDFWLRQ DQG WKH UHODWLYH EDUJDLQLQJ
SRVLWLRQV RI WKH SDUWLHV´ DQG WKH ³H[FHSWLRQDO FDVHV´
GHYLDWLQJIURPWKLVJHQHUDOUXOHKDYH³LQYROYHGRQHVLGHG
RSSUHVVLYHDQGXQIDLUO\VXUSULVLQJFRQWUDFWVDQGQRWWKH
FRQVHTXHQFHVSHUVHRIXQHYHQEDUJDLQLQJSRZHURUHYHQD
VLPSOHROGIDVKLRQHGEDGEDUJDLQ´ ,QWHUQDOTXRWDWLRQVDQG
FLWDWLRQ RPLWWHG 7KH $EUDPV EURWKHUV ZHUH IUHH WR
QHJRWLDWHFKDQJHVWRWKH*XDUDQW\$JUHHPHQWRUIDLOLQJWKDW
WRHQWHULQWRDUHODWLRQVKLSZLWKDQRWKHUVXSSOLHU)XUWKHU
WKH SDUWLHV¶ FKRLFH RI 7HQQHVVHH ODZ LV QRW VR LQKHUHQWO\
VXVSHFWDVWRVXSSRUWDQLQIHUHQFHRIXQIDLUDGYDQWDJH
*LYHQ WKHVH FUXFLDO GLIIHUHQFHV ZH GHFOLQH WR UHDG
%UHHGLQJ DV GLFWDWLQJ WKDW QR ZHLJKW EH JLYHQ WR WKH
*XDUDQW\¶VFKRLFHRIODZSURYLVLRQ1HLWKHUKDYHZHORFDWHG
DQ\RWKHU.HQWXFN\FDVHVXJJHVWLQJWKDWLWLVDSSURSULDWHLQ
DOOFLUFXPVWDQFHVWRGLVSODFHWKHSDUWLHV¶H[SUHVVFRQWUDFWXDO
DJUHHPHQWDVWRWKHJRYHUQLQJODZ7REHVXUHLQ +DUULV
&RUSVXSUD)GDWDQGDJDLQLQ$GDPVXSUD
)GDWZHQRWHGWKHWHQGHQF\RI.HQWXFN\FRXUWV
WRDSSO\WKHLURZQODZHYHQZKHQDFRQWUDFWXDOSURYLVLRQ
PLJKWVWDWHRWKHUZLVH+RZHYHUWKHVWDWHFRXUWGHFLVLRQVRQ
ZKLFK ZH UHOLHG DV ZHOO DV +DUULV &RUS DQG $GDP
WKHPVHOYHVDOODURVHIURPSHUVRQDOLQMXULHVVXIIHUHGHLWKHU
ZLWKLQ.HQWXFN\RUE\.HQWXFN\UHVLGHQWV6HH$GDP
)GDW DXWRDFFLGHQWLQ.HQWXFN\ +DUULV&RUS
)GDW SODQHFUDVKLQ.HQWXFN\ *UDQWY%LOO:DONHU
3RQWLDF*0& ,QF )G WK &LU
DXWRDFFLGHQWLQ.HQWXFN\ %UHHGLQJ6:GDW
DFFLGHQWDO GURZQLQJ LQ .HQWXFN\ )RVWHU Y /HJJHWW
6:G .\ DXWR DFFLGHQW LQ 2KLR EXW
GHFHDVHG SDVVHQJHU ZDV .HQWXFN\ UHVLGHQW DQG IDWDO WULS
EHJDQDQGZDVWRKDYHHQGHGWKHUH $UQHWWY7KRPSVRQ
6:G .\ DXWR DFFLGHQW LQ .HQWXFN\
-- 19 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
,Q WKLV UHJDUG LW LV ZRUWK QRWLQJ WKDW LQ +DUULV &RUS ZH DSSOLHG
2KLR UDWKHU WKDQ .HQWXFN\ ODZ LQ UHVROYLQJ RQH RI WKH FODLPV DW LVVXH
QRWZLWKVWDQGLQJ RXU LQLWLDO UHFRJQLWLRQ RI WKH .HQWXFN\ FRXUWV¶ SUHIHUHQFH
IRU FKRRVLQJ WKHLU RZQ ODZ ,Q VR KROGLQJ ZH FKDUDFWHUL]HG WKLV FODLP DV
³TXDVLFRQWUDFWXDO´ LQ QDWXUH DQG GLVWLQJXLVKHG ³WKH TXHVWLRQ RI
QHJOLJHQFH XQTXHVWLRQDEO\ DQ LVVXH WR EH UHVROYHG XQGHU WKH ODZV RI
.HQWXFN\ ZLWK WKH TXHVWLRQ RI WKH ULJKWV RI WKH SDUWLHV XQGHU D FRQWUDFW
RI HPSOR\PHQW´ ZKHUH ZH GHWHUPLQHG WKDW 2KLR ODZ VKRXOG JRYHUQ
+DUULV &RUS )G DW
7KXV 3DLQH IHDWXUHG WKH VRPHZKDW XQXVXDO FLUFXPVWDQFH WKDW
.HQWXFN\ UHVLGHQWV VRXJKW WR HQIRUFH WKH FKRLFHRIODZ FODXVH VHOHFWLQJ
DQRWKHU VWDWH¶V ODZ ZKLOH WKH RXWRIVWDWH GHIHQGDQW VRXJKW WR DSSO\ ORFDO
.HQWXFN\ ODZ
:HVVOLQJ Y 3DULV 6:G .\ DXWR
DFFLGHQW LQ ,QGLDQD EXW ERWK GULYHU DQG SDVVHQJHU ZHUH
.HQWXFN\UHVLGHQWVDQGWULSEHJDQWKHUH 0RVWRIWKHVHFDVHV
GLGQRWIHDWXUHFKRLFHRIODZSURYLVLRQV²+DUULV&RUSDQG
$GDPIRUH[DPSOHGLGQRW²DQGQRQHLQYROYHGWKHDOOHJHG
EUHDFKRIDVWDQGDUGFRPPHUFLDOFRQWUDFW
,QFRQWUDVWWZRRIWKHFDVHVFLWHGE\WKHSDUWLHVDQGWKH
'LVWULFW &RXUW GLG LQYROYH FRPPHUFLDO FRQWUDFWV )LUVW LQ
3DLQHY/D4XLQWD0RWRU,QQV,QF6:G .\&W
$SS WKH .HQWXFN\ &RXUW RI $SSHDOV DGGUHVVHG D
FRQWUDFWIRUWKHVDOHRIODQGLQ.HQWXFN\ZKLFKSURYLGHGWKDW
7H[DVODZZRXOGJRYHUQ7KHSODLQWLIIVHOOHUVDJURXSRI
MRLQWYHQWXUHUVZHUH.HQWXFN\UHVLGHQWVZKLOHWKHGHIHQGDQW
EX\HU /D 4XLQWD ZDV D 7H[DV FRUSRUDWLRQ WKDW ZLVKHG WR
EXLOGDPRWHORQWKHSURSHUW\)LYH\HDUVDIWHUWKHVDOHZDV
FRPSOHWHGWKHSODLQWLIIVDGYLVHG/D4XLQWDWKDWWKH\SODQQHG
WR VHOO DQ DGMDFHQW SDUFHO RI SURSHUW\ WR DQRWKHU EX\HU IRU
SXUSRVHVRIFRQVWUXFWLQJDFRPSHWLQJPRWHO:KHQ/D4XLQWD
UHVSRQGHGWKDWWKLVZRXOGEUHDFKWKHSDUWLHV¶DJUHHPHQWWKH
SODLQWLIIVEURXJKWVXLWVHHNLQJDGHFODUDWLRQWKDWHQIRUFHPHQW
RIWKHDJUHHPHQWZDVEDUUHGE\D7H[DVIRXU\HDUVWDWXWHRI
OLPLWDWLRQV
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
$V QRWHG HDUOLHU %LOO $EUDPV FODLPV WKDW KH GLG QRW VLJQ WKH
*XDUDQW\ )RU SXUSRVHV RI RXU SUHVHQW GLVFXVVLRQ RQO\ KRZHYHU ZH ZLOO
DVVXPH WKDW KH LV D JXDUDQWRU RI 7UL&RXQW\¶V LQGHEWHGQHVV WR :DOODFH
+DUGZDUH
:HEHJLQRXUDQDO\VLVRIWKLVLVVXHE\QRWLQJVRPHEDVLF
SULQFLSOHV RI WKH ODZ RI JXDUDQWLHV $V JXDUDQWRUV WKH
$EUDPVEURWKHUVDUHOLDEOHWR:DOODFH+DUGZDUHRQO\WRWKH
H[WHQW WKDW WKH SULQFLSDO GHEWRU 7UL&RXQW\ ZDV OLDEOH WR
:DOODFH6HH0RRUH2ZHQ7KRPDV &RY&RIIH\
)G WK&LU 5KRGH,VODQG+RVS7UXVW
1DW¶O%DQNY2KLR&DVXDOW\,QV&R)G VW
&LU 7KXVIRUH[DPSOHLI7UL&RXQW\KDGEURXJKWVXLW
DQGSUHYDLOHGRQWKHWKHRULHV QRZDVVHUWHGE\WKH$EUDPV
EURWKHUVDVDIILUPDWLYHGHIHQVHVERWK7UL&RXQW\¶VDQGWKH
$EUDPV¶ OLDELOLW\ WR :DOODFH +DUGZDUH ZRXOG KDYH EHHQ
UHGXFHGE\WKHDPRXQWRIWKHMXGJPHQWLQWKDWVXLW
7KHUHDUHFLUFXPVWDQFHVKRZHYHULQZKLFKDGLVFKDUJHRI
WKH SULQFLSDO GHEWRU¶V OLDELOLW\ GRHV QRW H[WLQJXLVK WKH
JXDUDQWRU¶VOLDELOLW\)RULQVWDQFHWKHWHUPVRIWKHJXDUDQW\
LWVHOIPD\SHUPLWDFUHGLWRUWRFRPSURPLVHDFODLPDJDLQVWWKH
SULQFLSDOGHEWRUZLWKRXWGLVFKDUJLQJWKHJXDUDQWRU¶VOLDELOLW\
DQGWKHFRXUWVJHQHUDOO\ZLOOHQIRUFHVXFKWHUPV6HHHJ
8QLWHG6WDWHVY%HDUGVOHH)G WK&LU
$HWQD/LIH,QV&RY$QGHUVRQ)G
WK&LU 7KH*XDUDQW\LQWKLVFDVHVRSURYLGHVVWDWLQJ
WKDW³*XDUDQWRUDXWKRUL]HV:DOODFHZLWKRXWQRWLFHRUGHPDQG
DQGZLWKRXWDIIHFWLQJ*XDUDQWRU¶VOLDELOLW\KHUHXQGHUIURP
WLPHWRWLPHWR D UHQHZFRPSURPLVHH[WHQGDFFHOHUDWHRU
RWKHUZLVH FKDQJH WKH WLPH IRU SD\PHQW RI RU RWKHUZLVH
FKDQJH WKH WHUPV RI WKH LQGHEWHGQHVV RU DQ\ SDUW WKHUHRI´
-$DW $OVRRIUHOHYDQFHWRWKLVFDVHLV³>W@KHJHQHUDO
UXOH WKDW D GLVFKDUJH LQ EDQNUXSWF\ GRHV QRW DIIHFW D
JXDUDQWRU¶VOLDELOLW\´$SSOHZRRG&KDLU&RY7KUHH5LYHUV
3ODQQLQJ 'HY'LVW ,QUH$SSOHZRRG&KDLU&R )G
WK&LU FLWLQJ86& H VHHDOVR
&RIIH\)GDW
-- 20 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
FRPSHWHQWEXVLQHVVDGYLFHDQGDVVLVWDQFHIDLOHGWRSURYLGH
LQYHQWRU\DWDFRPSHWLWLYHFRVWIDLOHGWRSURYLGHFRPSHWHQW
DVVLVWDQFH LQ WKH SULFLQJ RI VXFK LQYHQWRU\ DQG IDLOHG WR
SURYLGH IDYRUDEOH WHUPV RI ILQDQFLQJ DQG UHSD\PHQW´
/RQQLH $EUDPV¶ $QVZHU DW -$ DW /LNHZLVH
DOWKRXJK%LOO$EUDPV¶LQLWLDODQVZHUODFNHGWKHVHDOOHJDWLRQV
KHVXEVHTXHQWO\VRXJKWDQGZDVJUDQWHGOHDYHWRDPHQGKLV
DQVZHU WR LQFOXGH WKHVH VRFDOOHG ³FRUSRUDWH GHIHQVHV´
FKDOOHQJLQJ7UL&RXQW\¶VXQGHUO\LQJLQGHEWHGQHVVWR:DOODFH
+DUGZDUH$VLWVVHFRQGLVVXHRQDSSHDO:DOODFH+DUGZDUH
FRQWHQGVWKDWWKH'LVWULFW&RXUWHUUHGE\DOORZLQJWKH$EUDPV
EURWKHUVWRDVVHUWWKHVH³FRUSRUDWHGHIHQVHV´:KLOHZHGR
QRWIXOO\VXEVFULEHWRWKHUHDVRQLQJRIWKHFRXUWEHORZZH
ILQGQRHUURULQLWVXOWLPDWHGHWHUPLQDWLRQ
,QDUJXLQJWKDWWKHVHGHIHQVHVVKRXOGEHVWULFNHQ:DOODFH
+DUGZDUH ILUVW FRQWHQGV WKDW WKH $EUDPV EURWKHUV ODFN
³VWDQGLQJ´WRDVVHUWDQ\GHIHQVHV7UL&RXQW\PLJKWKDYHSXW
IRUZDUGWRFKDOOHQJHLWVXQGHUO\LQJLQGHEWHGQHVVWR:DOODFH
+DUGZDUH,QDGGLWLRQ:DOODFH+DUGZDUHDUJXHVWKDWWKHVH
GHIHQVHVEHORQJHGH[FOXVLYHO\WRWKHEDQNUXSWF\HVWDWHZKHQ
WKH &KDSWHU SURFHHGLQJ ZDV FRPPHQFHG DJDLQVW 7UL
&RXQW\DQGWKDWWKHGHIHQVHVZHUHZDLYHGRUUHOHDVHGZKHQ
WKHEDQNUXSWF\WUXVWHHHQWHUHGLQWRDVHWWOHPHQWZLWK:DOODFH
+DUGZDUH ,Q VXSSRUW RI WKHVH WZR FRQWHQWLRQV :DOODFH
+DUGZDUHUHOLHVSULQFLSDOO\RQRXUGHFLVLRQLQ+RQLJPDQY
&RPHULFD%DQN ,QUH9DQ'UHVVHU&RUS )G WK
&LU %LOO $EUDPV UHVSRQGV DQG WKH 'LVWULFW &RXUW
KHOGWKDWWKHEDQNUXSWF\WUXVWHH¶VVHWWOHPHQWZLWK:DOODFH
+DUGZDUHFDQQRWELQGWKH$EUDPVEURWKHUVEHFDXVHXQGHUWKH
VWDQGDUG VHW IRUWK LQ %HFKHUHU Y 0HUULOO /\QFK 3LHUFH
)HQQHU 6PLWK,QF)G WK&LU
WKHWUXVWHHDQGWKH$EUDPVZHUHQRWLQSULYLW\ 2S
DW-$DW :HEHOLHYHWKDWERWK:DOODFH+DUGZDUH¶V
DUJXPHQWDQG%LOO$EUDPV¶UHVSRQVHODUJHO\PLVVWKHSRLQW
DV QHLWKHU IXOO\ DGGUHVVHV WKH VLJQLILFDQFH RI WKH $EUDPV¶
VWDWXVDVJXDUDQWRUVRI7UL&RXQW\¶VLQGHEWHGQHVV
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
,Q DGGLWLRQ ZH QRWH WKDW 3DLQH¶V FKRLFHRIODZ UXOLQJ ZDV
HVVHQWLDOO\ GLFWD DV WKH &RXUW QH[W FRQFOXGHG WKDW /D 4XLQWD FRXOG WLPHO\
DVVHUW D EUHDFKRIFRQWUDFW FODLP HYHQ XQGHU WKH 7H[DV IRXU\HDU VWDWXWH
RI OLPLWDWLRQV
&LWLQJ%UHHGLQJDQG+DUULV&RUSWKH&RXUWRI$SSHDOV
FRQGXFWHG DQ LQWHUHVWEDVHG DQDO\VLV DQG KHOG WKDW
.HQWXFN\¶VILIWHHQ\HDUVWDWXWHRIOLPLWDWLRQVJRYHUQHG
,Q WKH LQVWDQW FDVH WKH SURSHUW\ DW WKH KHDUW RI WKH
FRQWURYHUV\ LV ORFDWHG LQ .HQWXFN\ WKH VHOOHUV DUH LQ
.HQWXFN\WKHEX\HUVDUHLQ.HQWXFN\E\YLUWXHRIWKH
IUDQFKLVHHDQGWKHFRQWUDFWZDVDSSDUHQWO\H[HFXWHGDW
OHDVWSDUWLDOO\LQ.HQWXFN\7KHRQO\FRQWDFWV7H[DVKDV
DUHWKHORFDWLRQRIWKHSDUHQWFRUSRUDWLRQDQGWKHVRXUFH
RIWKHFRQWUDFW2XURZQFLWL]HQVZRXOGKDYHDFDXVHRI
DFWLRQLQWKHVHFLUFXPVWDQFHVDQGRXUVWDWXWHHYLQFHVD
SXEOLFSROLF\WKDWWKHOHJLVODWXUHGHHPVILIWHHQ\HDUVWREH
DQDSSURSULDWHVWDWXWHRIOLPLWDWLRQVIRUZULWWHQFRQWUDFWV
:HVHHQRUHDVRQWRFLUFXPVFULEHWKLVSROLF\YLVDYLVD
IRUHLJQFRUSRUDWLRQKDYLQJWKHHQXPHUDWHGFRQWDFWVZLWK
WKLVIRUXP
3DLQH6:GDW$JDLQDVLQ%UHHGLQJWKH&RXUW
JDYHQRZHLJKWWRWKHSDUWLHV¶H[SUHVVDJUHHPHQWDVWRWKH
JRYHUQLQJODZ
1H[WLQ7UDFWRU )DUP6XSSO\,QFY)RUG1HZ+ROODQG
,QF)6XSS :'.\ WKHIHGHUDO'LVWULFW
&RXUW FRQVLGHUHG D IDUP LPSOHPHQW IUDQFKLVH DJUHHPHQW
SURYLGLQJ WKDW 0LFKLJDQ ODZ ZRXOG DSSO\ 7KH SODLQWLII
IUDQFKLVHH D .HQWXFN\ FRUSRUDWLRQ FODLPHG WKDW WKH
GHIHQGDQWWHUPLQDWHGWKHIUDQFKLVHDJUHHPHQWZLWKRXWJRRG
FDXVH LQ YLRODWLRQ RI DQ DOOHJHG RUDO DJUHHPHQW WKDW WKH
UHODWLRQVKLS ZRXOG FRQWLQXH DEVHQW WKH SODLQWLII¶V SRRU
SHUIRUPDQFH DQG LQ YLRODWLRQ RI 0LFKLJDQ¶V )UDQFKLVH
,QYHVWPHQW/DZ7KHGHIHQGDQWD'HODZDUHFRUSRUDWLRQWKDW
-- 21 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
7KXV DV LQ 3DLQH WKH .HQWXFN\ UHVLGHQW VRXJKW WR DSSO\ 0LFKLJDQ
ODZ ZKLOH WKH RXWRIVWDWH GHIHQGDQW PDLQWDLQHG WKDW .HQWXFN\ ODZ VKRXOG
JRYHUQ
GHDOWZLWKWKHSODLQWLIISULPDULO\WKURXJKLWV0LFKLJDQEUDQFK
RIILFHDUJXHGWKDW.HQWXFN\ODZVKRXOGDSSO\
8SRQUHYLHZLQJWKHGHFLVLRQVLQ%UHHGLQJDQG3DLQHWKH
&RXUW IRXQG ERWK ZHUH GLVWLQJXLVKDEOH )LUVW WKH &RXUW
REVHUYHG WKDW %UHHGLQJ ³LQYROYHG D UHODWLYHO\ QRQVSHFLILF
GHVLJQDWLRQRIWKHDSSOLFDEOHVXEVWDQWLYHODZ´DQGWKDWWKH
GHIHQGDQWLQVXUHUFRXOGQRW³FODLPWKDWLWZRXOGEHGHSULYHG
RIFOHDUO\DVFHUWDLQHGDQGEDUJDLQHGIRUULJKWVLIWKHIRUXP
VWDWH¶V ODZ ZHUH DSSOLHG VLQFH WKH FRPSDQ\ FRQGXFWHG
EXVLQHVVDQGGHOLYHUHGSROLFLHVLQ.HQWXFN\´)6XSS
DW7KH&RXUWIXUWKHUQRWHGWKDWWKHSROLF\LQ%UHHGLQJ
ZDVD³FRQWUDFWRIDGKHVLRQDQGDGHFLVLRQWRDSSO\LWVFKRLFH
RIODZSURYLVLRQZRXOGKDYHUHVXOWHGLQDVXEVWDQWLDOLQMXVWLFH
WR WKH LQVXUHG´ ) 6XSS DW $V IRU 3DLQH WKH
&RXUWREVHUYHGWKDWLWLQYROYHGDFKRLFHDPRQJWZRVWDWHV¶
VWDWXWHVRIOLPLWDWLRQVVRWKDW³WKHFRXUW¶VGHFLVLRQLQ3DLQH
ZDVZHOOLQNHHSLQJZLWKWKHWUDGLWLRQWRDSSO\WKHSURFHGXUDO
ODZ RI WKH IRUXP VWDWH UHJDUGOHVV RI WKH FKRLFH RI ODZ
GHFLVLRQUHJDUGLQJVXEVWDQWLYHLVVXHV´)6XSSDW
+DYLQJVXUYH\HGDQGGLVWLQJXLVKHGWKHVHSULRUGHFLVLRQV
WKH&RXUWWXUQHGWRWKHFDVHEHIRUHLWDQGHOHFWHGWRHQIRUFH
WKHIUDQFKLVHDJUHHPHQW¶VFKRLFHRIODZFODXVH
7KH&RXUWLVFRQIURQWHGZLWKFRQIOLFWLQJFKRLFHVHDFK
KDYLQJDFHUWDLQDSSHDO1HYHUWKHOHVVWKHGHFLVLRQLVD
FOHDURQH$OWKRXJKWKH6L[WK&LUFXLWVWDWHGLQ+DUULV
&RUSVXSUDWKDW³.HQWXFN\DSSOLHVLWVRZQODZXQOHVV
WKHUHDUHRYHUZKHOPLQJLQWHUHVWVWRWKHFRQWUDU\´DPRUH
IXQGDPHQWDO JRDO RI FRQWUDFW ODZ LV WR XSKROG FOHDUO\
DVFHUWDLQHGDQGQHJRWLDWHGFRQWUDFWULJKWV7RSHUPLWD
GUDIWHU RI WKH FKRLFH RI ODZ SURYLVLRQ WR FKDOOHQJH LWV
OHJDOLW\LVXQSDODWDEOHWRVD\WKHOHDVW,IDQ\DPELJXLWLHV
LQ D FRQWUDFW DUH WR EH FRQVWUXHG VWULFWO\ DJDLQVW WKH
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
7KH 'LVWULFW &RXUW DOVR UHOLHG RQ .\ 5HY 6WDW $QQ LQ
GLVPLVVLQJ &RXQW ,, RI :DOODFH +DUGZDUH¶V DPHQGHG FRPSODLQW &RXQW
,, UHVWV XSRQ WKH 2SHUDWLQJ $JUHHPHQW ZKLFK XQOLNH WKH *XDUDQW\ ODFNV
D FKRLFHRIODZ SURYLVLRQ ,Q OLJKW RI WKLV VLJQLILFDQW GLVWLQFWLRQ ZH
DIILUP WKH 'LVWULFW &RXUW¶V GLVPLVVDO RI &RXQW ,, ILQGLQJ QR HUURU LQ LWV
GHFLVLRQ WR DSSO\ .HQWXFN\ ODZ ² DQG VSHFLILFDOO\ ² LQ UXOLQJ
WKDW WKH 2SHUDWLQJ $JUHHPHQW GLG QRW RSHUDWH WR UHQGHU WKH $EUDPV
EURWKHUV SHUVRQDOO\ OLDEOH IRU 7UL&RXQW\¶V GHEW
ODZLVWRXSKROGFOHDUO\DVFHUWDLQHGDQGQHJRWLDWHGFRQWUDFW
ULJKWV´ DQG ³SXEOLF SROLF\ LQ .HQWXFN\ IDYRUV SDUWLHV¶
IUHHGRPWRFRQWUDFWIRUVXEVWDQWLYHULJKWV´7UDFWRU )DUP
6XSSO\)6XSSDW1RWKLQJLQWKHUHFRUGEHIRUHXV
VXJJHVWVWKDWWKH$EUDPVEURWKHUVODFNHGNQRZOHGJHRIRUDQ
RSSRUWXQLW\WRUHYLHZWKHWHUPVRIWKH*XDUDQW\WKH\ZHUH
EHLQJ DVNHG WR VLJQ LQFOXGLQJ LWV FKRLFHRIODZ SURYLVLRQ
7KH\UHFHLYHGWKHEHQHILWRIWKHEDUJDLQLQWKLVWUDQVDFWLRQ
ZKHQ :DOODFH +DUGZDUH H[WHQGHG FUHGLW DQG SURYLGHG
LQYHQWRU\WKDWDOORZHGWKHPWRRSHQWKHLUKDUGZDUHVWRUH:H
VHHQRUHDVRQWRGHQ\:DOODFH+DUGZDUHDEHQHILWIRUZKLFK
LWEDUJDLQHGLQWKLVVDPHWUDQVDFWLRQ²QDPHO\WKHULJKWWR
DSSO\ 7HQQHVVHH ODZ LQ FRQVWUXLQJ DQG HQIRUFLQJ WKH
*XDUDQW\ $FFRUGLQJO\ ZH UHYHUVH WKH 'LVWULFW &RXUW¶V
DSSOLFDWLRQRI.HQWXFN\ODZLQUHVROYLQJ:DOODFH+DUGZDUH¶V
EUHDFKRIJXDUDQW\FODLPDQGZHUHLQVWDWHDQGUHPDQGWKLV
FODLP WR WKH ORZHU FRXUW IRU DGMXGLFDWLRQ XQGHU 7HQQHVVHH
ODZ
% 7KH $EUDPV %URWKHUV $UH (QWLWOHG WR $VVHUW 7UL
&RXQW\¶V%UHDFKRI&RQWUDFW'HIHQVHVLQ&RQWHVWLQJ
:DOODFH+DUGZDUH¶V&ODLPV
,Q KLV DQVZHU WR :DOODFH +DUGZDUH¶V LQLWLDO FRPSODLQW
/RQQLH$EUDPVDOOHJHGWKDWKLVSXUSRUWHGOLDELOLW\XQGHUWKH
*XDUDQW\ ZDV UHGXFHG RU HOLPLQDWHG E\ YLUWXH RI :DOODFH
+DUGZDUH¶VSULRUEUHDFKRILWVDJUHHPHQWZLWK7UL&RXQW\
0RUH VSHFLILFDOO\ KH DOOHJHG LQ KLV DQVZHU WKDW :DOODFH
+DUGZDUH ³IDLOHG WR SURYLGH FRPSHWHQW DVVLVWDQFH LQ WKH
PDLQWHQDQFH RI SURSHU LQYHQWRU\ OHYHOV IDLOHG WR SURYLGH
-- 22 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
WKDW WKLV UHVXOW FRPSRUWV ZLWK 5HVWDWHPHQW DQG LWV FRPPHQWDU\
ZKLFK VWDWHV WKDW ³>W@KH PRUH FORVHO\ WKH VWDWH RI WKH FKRVHQ ODZ LV UHODWHG
WR WKH FRQWUDFW DQG WKH SDUWLHV WKH PRUH IXQGDPHQWDO PXVW EH WKH SROLF\
RI WKH VWDWH RI WKH RWKHUZLVH DSSOLFDEOH ODZ WR MXVWLI\ GHQ\LQJ HIIHFW WR WKH
FKRLFHRIODZ SURYLVLRQ´ 5HVWDWHPHQW 6HFRQG RI &RQIOLFW RI /DZV
FPW J 8SRQ DSSO\LQJ WKLV ³VOLGLQJ VFDOH´ DSSURDFK KHUH ZH
FRQFOXGH WKDW .HQWXFN\¶V LQWHUHVW LV QRW VR ³IXQGDPHQWDO´ XQGHU WKH IDFWV
RI WKLV FDVH WR UHQGHU WKH *XDUDQW\¶V FKRLFHRIODZ SURYLVLRQ
XQHQIRUFHDEOH
,QGHHGWKRXJK:DOODFH+DUGZDUHKDVDFNQRZOHGJHGWKH
*XDUDQW\¶V IDLOXUH WR FRPSRUW ZLWK WKH OLWHUDO WHUPV RI
ZHQRWHWKDWWKHSXUSRVHVEHKLQGWKDWVWDWXWHZHUH
ODUJHO\ VHUYHG KHUH $OWKRXJK WKH *XDUDQW\ ZDV QHLWKHU
ZULWWHQRQQRUH[SUHVVO\UHIHUVWRWKHXQGHUO\LQJLQVWUXPHQW
EHLQJJXDUDQWHHGLWGRHVSURYLGHWKDWWKHJXDUDQWRUV¶SURPLVH
WRSD\HQFRPSDVVHG7UL&RXQW\¶V³REOLJDWLRQSXUVXDQWWRD
FHUWDLQQRWH V DFFRXQWVUHFHLYDEOHDQGRUVHFXULW\DJUHHPHQW
H[HFXWHG E\ >7UL&RXQW\@ LQ IDYRU RI :DOODFH RQ WKH GDWH
KHUHRI´ -$DW 7KXVWKH$EUDPVEURWKHUVFRXOGQRW
KDYHEHHQXQFHUWDLQ²DQGLPSRUWDQWO\WKH\GRQRWFODLP
DQ\XQFHUWDLQW\²DVWRWKHLQGHEWHGQHVVWKH\ZHUHDJUHHLQJ
WR UHSD\ SDUWLFXODUO\ VLQFH ERWK EURWKHUV VLJQHG WKH
FRQWHPSRUDQHRXV2SHUDWLQJ$JUHHPHQWDQG/RQQLH$EUDPV
VLJQHGWKH6HFXULW\$JUHHPHQW0RUHRYHUJLYHQWKHVKRUW
GXUDWLRQRIWKHSDUWLHV¶UHODWLRQVKLSWKHUHFDQEHQRFODLPWKDW
:DOODFH+DUGZDUHVXEVHTXHQWO\H[SDQGHGWKHVFRSHRIWKH
$EUDPV¶REOLJDWLRQVEH\RQGWKHSDUWLHV¶FRQWHPSODWLRQZKHQ
WKH\ H[HFXWHG WKH *XDUDQW\ 5DWKHU VR IDU DV WKH UHFRUG
UHYHDOV WKHVH REOLJDWLRQV H[WHQGHG RQO\ WR WKH KDUGZDUH
LQYHQWRU\ VXSSOLHG E\ :DOODFH LQ DFFRUGDQFH ZLWK WKH
2SHUDWLQJ$JUHHPHQW,QVKRUWWKHUHZDVQRRYHUUHDFKLQJ
KHUHRIWKHVRUWDGGUHVVHGE\WKH.HQWXFN\VWDWXWHHLWKHULQ
WKHWHUPVRIWKH*XDUDQW\LWVHOIRULQWKHSDUWLHV¶VXEVHTXHQW
FRQGXFWXQGHUWKHLUDJUHHPHQWV
)LQDOO\ ZH VKRXOG QRW RYHUORRN WKH IDFW WKDW
UHSUHVHQWVRQO\RQHRIWKHSROLFLHVLQSOD\KHUH$VREVHUYHG
LQ7UDFWRU )DUP6XSSO\D³IXQGDPHQWDOJRDORIFRQWUDFW
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
GUDIWHUWKH&RXUWGRHVQRWFRQVLGHUELQGLQJ'HIHQGDQWE\
LWV RZQ SURYLVLRQ WR EH PXFK RI D ORJLFDO OHDS
0RUHRYHUJLYHQWKDW'HIHQGDQWKDGVXEVWDQWLDOFRQWDFWV
ZLWK 0LFKLJDQ DW WKH WLPH RI WKH FRQWUDFW¶V FUHDWLRQ
ZKLFK UHQGHUV WKH FKRLFH RI 0LFKLJDQ ODZ KLJKO\
UHDVRQDEOH 3ODLQWLII VKRXOG EH HQWLWOHG WR UHO\ RQ WKH
VLJQHG DJUHHPHQW )LQDOO\ SXEOLF SROLF\ LQ .HQWXFN\
IDYRUVSDUWLHV¶IUHHGRPWRFRQWUDFWIRUVXEVWDQWLYHULJKWV
&RQVHTXHQWO\WKH&RXUWZLOOXSKROGWKHFKRLFHRIODZ
SURYLVLRQDQGZLOOLQWHUSUHWWKHFRQWUDFWLQDFFRUGDQFH
ZLWK0LFKLJDQODZ
)6XSSDW FLWDWLRQVRPLWWHG
$VLVSODLQIURPWKHIRUHJRLQJUHFLWDWLRQWKHFDVHODZGRHV
QRWSURYLGHDGHILQLWLYHDQVZHUWRWKHTXHVWLRQEHIRUHXV7KH
FDVHVWKDWDUHIDFWXDOO\PRVWVLPLODUWRWKLVRQH3DLQHDQG
7UDFWRU )DUP6XSSO\UHDFKFRQWUDU\UHVXOWV,I3DLQHD
.HQWXFN\&RXUWRI$SSHDOVGHFLVLRQZHUHVTXDUHO\RQSRLQW
ZHZRXOGEHREOLJHGWRIROORZLWXQOHVV³FRQYLQFHGE\RWKHU
SHUVXDVLYH GDWD WKDW WKH KLJKHVW FRXUW RI WKH VWDWH ZRXOG
GHFLGHRWKHUZLVH´=LHEDUW,QW¶O&RUSY&1$,QV&RV
)G WK &LU LQWHUQDO TXRWDWLRQV DQG
FLWDWLRQVRPLWWHG %XWDVQRWHGLQ7UDFWRU )DUP6XSSO\
3DLQHLPSOLFDWHGDQLVVXHQRWSUHVHQWHGKHUHWKHGLVWLQFWLRQ
EHWZHHQVXEVWDQWLYHDQGSURFHGXUDOODZ6HH7UDFWRU )DUP
6XSSO\)6XSSDWVHHDOVR&ROHY0LOHWL
)G WK&LU ³>&@RQWUDFWXDOFKRLFHRIODZ
FODXVHV LQFRUSRUDWH RQO\ VXEVWDQWLYH ODZ QRW SURFHGXUDO
SURYLVLRQV VXFK DV VWDWXWHV RI OLPLWDWLRQV´ $QG PRUH
LPSRUWDQWO\QHLWKHU3DLQHQRUDQ\RWKHUVWDWHFRXUWGHFLVLRQ
H[SUHVVO\LQIRUPVXVZKHWKHUWKH.HQWXFN\FRXUWVZRXOGEH
ZLOOLQJWRDSSO\RIWKH5HVWDWHPHQWLQDSURSHUFDVH
7XUQLQJWR7UDFWRU )DUP6XSSO\ZHQRWHILUVWWKDWZH
QHHGQRWGHIHUWRWKLVIHGHUDO'LVWULFW&RXUWH[SOLFDWLRQRIDQ
LVVXHRI.HQWXFN\ODZ6HH6DOYH5HJLQD&ROOHJHY5XVVHOO
866&W ,Q
DQ\HYHQWWKDWFDVHDOVRLVGLVWLQJXLVKDEOHIURPWKLVRQHDV
-- 23 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
LWIHDWXUHGDFRQWUDFWLQJSDUW\¶VDWWHPSWWRQXOOLI\DFKRLFHRI
ODZFODXVHLQVHUWHGLQWKHFRQWUDFWDWLWVRZQLQVLVWHQFH7REH
VXUH 7UDFWRU )DUP 6XSSO\ GLUHFWO\ ZHLJKV LQ RQ WKH
TXHVWLRQEHIRUHXVHPSOR\LQJDDQDO\VLVWRXSKROGD
FKRLFHRIODZ FODXVH <HW WKDW FDVH VHUYHV DV GXELRXV
DXWKRULW\RQWKLVSRLQWVLQFHWKH&RXUWDSSOLHGRQO\
DIWHUILUVWVWDWLQJWKDW%UHHGLQJKDGGRQHVR6HH7UDFWRU
)DUP6XSSO\)6XSSDW,QIDFWDVZHREVHUYHG
HDUOLHU%UHHGLQJDSSOLHGRIWKH5HVWDWHPHQWDQGGLG
QRWHYHQPHQWLRQ
,QVKRUWZHILQGQRFOHDUVLJQSRVWVLQWKHSULRUGHFLVLRQDO
ODZ 1HYHUWKHOHVV ZH FRQFOXGH WKDW LQ D VWDQGDUG
FRPPHUFLDOEUHDFKRIFRQWUDFWFDVHVXFKDVZHKDYHKHUHWKH
.HQWXFN\ FRXUWV ZRXOG FKRRVH WR DGRSW RI WKH
5HVWDWHPHQWDVWKHLUDQDO\WLFDOIUDPHZRUNIRUDGGUHVVLQJD
FRQWUDFWXDO FKRLFHRIODZ FODXVH ,QLWLDOO\ ZH QRWH WKDW
%UHHGLQJLWVHOIOHQGVFRQVLGHUDEOHVXSSRUWWRWKLVFRQFOXVLRQ
:KLOHWKH.HQWXFN\6XSUHPH&RXUWGLGQRWFLWHLQWKDW
GHFLVLRQLWVDQDO\VLVSUHFLVHO\WUDFNHGWKHODQJXDJHRIWKDW
SURYLVLRQ)LUVWMXVWDVFDOOVIRUUHMHFWLRQRIDFKRLFH
RIODZ FODXVH ZKHUH ³WKH FKRVHQ VWDWH KDV QR VXEVWDQWLDO
UHODWLRQVKLSWRWKHSDUWLHVRUWKHWUDQVDFWLRQ´%UHHGLQJIRXQG
WKDW WKH FKRVHQ VWDWH LQ WKDW FDVH 'HODZDUH KDG ³QR
VLJQLILFDQW UHODWLRQVKLS WR WKH WUDQVDFWLRQ DQG WKH SDUWLHV´
%UHHGLQJ 6:G DW 1H[W MXVW DV DVNV
ZKHWKHU³DSSOLFDWLRQRIWKHODZRIWKHFKRVHQVWDWHZRXOGEH
FRQWUDU\ WR D IXQGDPHQWDO SROLF\ RI D VWDWH ZKLFK KDV D
PDWHULDOO\JUHDWHULQWHUHVW´%UHHGLQJKHOGWKDWWKHDSSOLFDWLRQ
RI 'HODZDUH ODZ ZRXOG YLRODWH D ³IXQGDPHQWDO SROLF\´ RI
.HQWXFN\WRVHHWKDWLQVXUHGVDUHJLYHQQRWLFHRIOLPLWDWLRQV
WRWKHLULQVXUDQFHFRYHUDJH6:GDW7KXVZH
YLHZ %UHHGLQJ DV HPSOR\LQJ D DQDO\VLV DOEHLW RQO\
LPSOLFLWO\
:HDOVRILQGRXUVHOYHVLQDJUHHPHQWZLWKDSRUWLRQRIWKH
'LVWULFW&RXUW¶VUHDVRQLQJLQ7UDFWRU )DUP6XSSO\DFDVH
WKDWDVQRWHGHDUOLHUIDLUO\FORVHO\UHVHPEOHVWKLVRQH$VWKH
&RXUW HPSKDVL]HG LQ WKDW FDVH D ³IXQGDPHQWDO JRDO RI
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
2XU GHFLVLRQ LQ 7HOH6DYH VXSUD KDV EHHQ FULWLFL]HG IRU HQJDJLQJ
LQ D FDVHVSHFLILF LQTXLU\ WR GHWHUPLQH ZKHWKHU D VWDWH¶V SROLF\ LV
³IXQGDPHQWDO´ 6HH 7HOH6DYH )G DW Q 0LOEXUQ -
GLVVHQWLQJ 0RGHUQ &RPSXWHU 6\V ,QF Y 0RGHUQ %DQNLQJ 6\V ,QF
)G Q WK &LU +HDQH\ - GLVVHQWLQJ 3ODLQO\
ZH DUH FRPPLWWLQJ WKH VDPH ³WUDQVJUHVVLRQ´ KHUH :H EHOLHYH KRZHYHU
HPERG\ D ³IXQGDPHQWDO´ VWDWH SROLF\ LI LW LV ³GHVLJQHG WR
SURWHFW D SHUVRQ DJDLQVW WKH RSSUHVVLYH XVH RI VXSHULRU
EDUJDLQLQJ SRZHU´ DQG ZH FLWHG DV DQ H[DPSOH D VWDWXWH
³LQYROYLQJWKHULJKWVRIDQLQGLYLGXDOLQVXUHGDVDJDLQVWDQ
LQVXUDQFHFRPSDQ\´)GDW TXRWLQJ5HVWDWHPHQW
6HFRQG RI &RQIOLFW RI /DZV FPW J :H WKHQ
FRQFOXGHG WKDW WKH VWDWXWH DW LVVXH LQ WKDW FDVH WKH 2KLR
%XVLQHVV 2SSRUWXQLW\ 3ODQV $FW GLG QRW DGYDQFH D
IXQGDPHQWDO VWDWH SROLF\ UHDVRQLQJ WKDW WKH FRQWUDFW LQ
TXHVWLRQ ZDV QRW WKH SURGXFW RI ³XQHTXDO EDUJDLQLQJ
VWUHQJWK´EXWKDGEHHQ³IUHHO\QHJRWLDWHGE\DJJUHVVLYHDQG
VXFFHVVIXOEXVLQHVVH[HFXWLYHVXQWDLQWHGE\WKHVXVSLFLRQDQG
PLVJLYLQJVFKDUDFWHULVWLFRIDGKHVLRQFRQWUDFWV´)GDW
,Q WKLV FDVH WKH $EUDPV EURWKHUV SRLQW WR WKH EDUH
HQDFWPHQWRIDVSURRIRID³IXQGDPHQWDO´SROLF\
DQGWKH\FLWHQRDGGLWLRQDODXWKRULW\IRUWKLVSURSRVLWLRQ7R
EHVXUHWKH.HQWXFN\VWDWXWHRQLWVIDFHUHIOHFWVDGHVLUHWR
SURWHFWDJDLQVWRYHUEURDG JXDUDQWLHVRILQGHEWHGQHVVPDGH
ZLWKRXWDGHTXDWHGLVFORVXUH:HPD\SUHVXPHWKHQWKDWWKH
VWDWXWHLVLQWHQGHGWRSURWHFWDJDLQVWWKHPLVXVHRIVXSHULRU
EDUJDLQLQJSRZHULQWKHFRQWH[WRIFUHGLWWUDQVDFWLRQV<HWDV
ZHKDYHDOUHDG\QRWHGWKHHYLGHQFHLQWKLVFDVHUHYHDOVDQ
DUPVOHQJWK WUDQVDFWLRQ EHWZHHQ SDUWLHV UHSUHVHQWHG E\
FRXQVHODQGQRWDFRQWUDFWRIDGKHVLRQGLFWDWHGE\RQHSDUW\
&RQVHTXHQWO\ ZKLOH PLJKW ZHOO YLQGLFDWH D
³IXQGDPHQWDO´SROLF\LQRWKHULQVWDQFHVZHILQGQREDVLVIRU
FRQFOXGLQJWKDW.HQWXFN\KDVD³IXQGDPHQWDO´LQWHUHVWXQGHU
WKH IDFWV RI WKLV FDVH LQ SURWHFWLQJ WKH $EUDPV EURWKHUV
DJDLQVWKDYLQJWRFRPSO\ZLWKWKHWHUPVRIWKHLUDUPVOHQJWK
DJUHHPHQWZLWK:DOODFH+DUGZDUH
-- 24 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
DV JXDUDQWRUV 7HQQHVVHH ODZ KRZHYHU LPSRVHV QR
FRPSDUDEOH UHVWULFWLRQV XSRQ WKH IRUP DQG FRQWHQW RI
JXDUDQWLHV7KXVDVWKHORZHUFRXUWUHFRJQL]HGWKHFKRLFH
RIODZGHWHUPLQDWLRQLVWUXO\GLVSRVLWLYHRI:DOODFH¶VEUHDFK
RIJXDUDQW\FODLP
7KLV OHDGV WR WKH TXHVWLRQ ZKHWKHU .HQWXFN\¶V VWDWXWRU\
UHVWULFWLRQVRQJXDUDQWLHVUHSUHVHQWD³IXQGDPHQWDOSROLF\´RI
WKDW VWDWH ,Q DUJXLQJ WKDW WKH\ GR QRW :DOODFH +DUGZDUH
DVVHUWVWKDW.HQWXFN\¶VLQWHUHVWVGRQRWH[WHQGWRFRQWUDFWV
EHWZHHQ SULYDWH SDUWLHV DQG WKDW ³.HQWXFN\ GRHV QRW FDUH
ZKHWKHUWKH$EUDPVPXVWSD\RUQRWSD\:DOODFH+DUGZDUH´
XQGHU WKH *XDUDQW\ $SSHOODQW¶V %U DW :H FDQQRW
DFFHSWWKLVQDUURZYLHZRI.HQWXFN\SXEOLFSROLF\6XUHO\
WKH.HQWXFN\OHJLVODWXUH¶VHQDFWPHQWRIHYLQFHVLWV
FRQFHUQ ZLWK ZKROO\ ³SULYDWH´ WUDQVDFWLRQV LQYROYLQJ
JXDUDQWLHVDQGLWVGHVLUHWRSURWHFWLWVUHVLGHQWVDJDLQVWRSHQ
HQGHG DQG RYHUUHDFKLQJ REOLJDWLRQV WR UHSD\ LQGHEWHGQHVV
7KHVHDUHVXIILFLHQW³VWDWHLQWHUHVWV´WRZDUUDQWIXUWKHULQTXLU\
XQGHUWKH³IXQGDPHQWDOSROLF\´SURQJRI&RQWUDU\WR
:DOODFH+DUGZDUH¶VDVVHUWLRQZHNQRZRIQRUHTXLUHPHQW
WKDW D ODZ PXVW WRXFK XSRQ PDWWHUV RI XQLTXHO\ ³SXEOLF´
FRQFHUQLQRUGHUWRFRQVWLWXWHDVWDWH¶V³IXQGDPHQWDOSROLF\´
&I %DQHN VXSUD )G DW ILQGLQJ WKDW D 0LFKLJDQ
VWDWXWH UHJXODWLQJ IUDQFKLVH DJUHHPHQWV EHWZHHQ SULYDWH
SDUWLHV³UHSUHVHQWV0LFKLJDQSXEOLFSROLF\´
1HYHUWKHOHVV.HQWXFN\¶VHQDFWPHQWRI LV QRW
HQRXJKVWDQGLQJDORQHWRLQYDOLGDWHWKHSDUWLHV¶FKRLFHRI
7HQQHVVHHODZ³7KHIDFWWKDWDGLIIHUHQWUHVXOWPLJKWEH
DFKLHYHGLIWKHODZRIWKHFKRVHQIRUXPLVDSSOLHGGRHVQRW
VXIILFH WR VKRZ WKDW WKH IRUHLJQ ODZ LV UHSXJQDQW WR D
IXQGDPHQWDOSROLF\RIWKHIRUXPVWDWH´-RKQVRQ)GDW
VHHDOVR5HVWDWHPHQW 6HFRQG RI&RQIOLFWRI/DZV
FPWJ5DWKHU³LWPXVWEHVKRZQWKDWWKHUHDUHVLJQLILFDQW
GLIIHUHQFHVLQWKHDSSOLFDWLRQRIWKHODZRIWKHWZRVWDWHV´
7HOH6DYH0HUFKDQGLVLQJ&RY&RQVXPHUV'LVWULE&R
)G WK&LU )XUWKHULQ7HOH6DYHZH
TXRWHG WKH 5HVWDWHPHQW¶V FRPPHQWDU\ WKDW D VWDWXWH PD\
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
,Q WKH FRXUW EHORZ :DOODFH +DUGZDUH DUJXHG WKDW 8&&
VKRXOG DSSO\ WR WKH *XDUDQW\ DQG LWV FKRLFHRIODZ SURYLVLRQ EHFDXVH WKH
*XDUDQW\ ZDV LQWHQGHG WR VHUYH DV DGGLWLRQDO VHFXULW\ IRU DQ XQGHUO\LQJ
VDOH RI JRRGV JRYHUQHG E\ $UWLFOH RI WKH 8&& 7KH 'LVWULFW &RXUW
UHMHFWHG WKLV FRQWHQWLRQ UHO\LQJ RQ WZR )LIWK &LUFXLW GHFLVLRQV KROGLQJ
WKDW ³>W@KH H[HFXWLRQ RI D JXDUDQW\ LV QRW D &RGH WUDQVDFWLRQ´
2S DW -$ DW FLWLQJ 8QLZHVW 0RUWJDJH &R Y 'DGHFRU
&RQGRPLQLXPV ,QF )G WK &LU DQG TXRWLQJ ($&
&UHGLW &RUS Y .LQJ )G WK &LU :DOODFH
+DUGZDUH DSSDUHQWO\ KDV DEDQGRQHG WKLV DUJXPHQW RQ DSSHDO 6HH
$SSHOODQW¶V %U DW Q
7KLV LVVXH KDG :DOODFH +DUGZDUH HOHFWHG WR SXUVXH LW ZRXOG KDYH
EHHQ D FORVH RQH 2Q RQH KDQG WKH ORZHU FRXUW¶V UXOLQJ FRPSRUWV ZLWK
WKH DGPLWWHGO\ VSDUVH FDVH ODZ RQ WKLV LVVXH :KLOH ZH KDYH QHYHU
FRQVLGHUHG ZKHWKHU D JXDUDQW\ H[HFXWHG LQ FRQQHFWLRQ ZLWK D 8&&
WUDQVDFWLRQ LV LWVHOI JRYHUQHG E\ WKH 8&& WKRVH FRXUWV WKDW KDYH
DGGUHVVHG WKLV TXHVWLRQ KDYH XQDQLPRXVO\ KHOG WKDW VXFK JXDUDQWLHV DUH
VHSDUDWH DJUHHPHQWV QRW UHDFKHG E\ WKH 8&& 6HH HJ )',& Y 1REOHV
)G WK &LU 8QLZHVW 0RUWJDJH )G DW
($& &UHGLW &RUS )G DW 8QLRQ 3ODQWHUV 1DW¶O %DQN Y
0DUNRZLW] ) 6XSS :' 7HQQ *XDUDQWRU
3DUWQHUV Y +XII 6:G 7HQQ &W $SS %URRNV Y
8QLWHG .HQWXFN\ %DQN 6:G .\ &W $SS
0RUHRYHU WKH GHFLVLRQ PRVW FORVHO\ RQ SRLQW 8QLZHVW 0RUWJDJH
VTXDUHO\ KHOG WKDW FRPPRQODZ UDWKHU WKDQ 8&& FKRLFHRIODZ SULQFLSOHV
JRYHUQHG WKH JXDUDQW\ DW LVVXH LQ WKDW FDVH <HW ZH UHFRJQL]H WKDW WKHUH
LV D GHJUHH RI LQFRQVLVWHQF\ LQ WKH UHVXOW KHUH ZKHUH :DOODFH +DUGZDUH
LV GHQLHG WKH EHQHILW RI 8&& EXW DV GLVFXVVHG EHORZ WKH $EUDPV
EURWKHUV DUH SHUPLWWHG WR DVVHUW GHIHQVHV DULVLQJ IURP 7UL&RXQW\¶V
XQGHUO\LQJ 8&&EDVHG VDOHRIJRRGV WUDQVDFWLRQ ZLWK :DOODFH +DUGZDUH
)XUWKHU LW PDNHV VHQVH WR YLHZ WKH *XDUDQW\ DV SDUW DQG SDUFHO RI D 8&&
FRQWUDFWODZLVWRXSKROGFOHDUO\DVFHUWDLQHGDQGQHJRWLDWHG
FRQWUDFWULJKWV´)6XSSDW.HQWXFN\¶VH[SUHVV
UHFRJQLWLRQRIWKLVSULQFLSOHLQWKHFKRLFHRIODZFRQWH[WLV
HYLGHQFHG E\ LWV DGRSWLRQ RI RI WKH 8QLIRUP
&RPPHUFLDO &RGH ³8&&´ ZKLFK JLYHV HIIHFW WR WKH
FRQWUDFWLQJSDUWLHV¶DJUHHPHQWDVWRWKHODZWKDW³VKDOOJRYHUQ
WKHLUULJKWVDQGGXWLHV´LQDJLYHQ8&&WUDQVDFWLRQ.\5HY
6WDW $QQ :DOODFH +DUGZDUH GRHV QRW
FRQWHQGRQDSSHDOWKDWWKLV8&&SURYLVLRQGLUHFWO\FRQWUROV
WKH *XDUDQW\ DW LVVXH 1RQHWKHOHVV :DOODFH +DUGZDUH
-- 25 of 26 --
:DOODFH+DUGZDUH&R
Y$EUDPVHWDO
1RV
VDOHRIJRRGV WUDQVDFWLRQ UDWKHU WKDQ DV D ZKROO\ VHSDUDWH XQGHUWDNLQJ
ZKHUH WKH IRUPHU QHYHU ZRXOG KDYH H[LVWHG ZLWKRXW WKH ODWWHU
1HYHUWKHOHVV LQ OLJKW RI RXU VHSDUDWH FRPPRQODZ EDVLV IRU FRQFOXGLQJ
WKDW WKH *XDUDQW\¶V FKRLFHRIODZ FODXVH LV HQIRUFHDEOH ZH OHDYH WKLV
LQWHUHVWLQJ TXHVWLRQ IRU DQRWKHU GD\
DVVHUWV DQG ZH DJUHH WKDW 8&& GHPRQVWUDWHV
.HQWXFN\¶VZLOOLQJQHVVWRDOORZWKHSDUWLHVWRDFRQWUDFWWR
VHOHFWWKHODZWKDWZLOOJRYHUQWKHLUUHODWLRQVKLSDVZHOODVLWV
GHWHUPLQDWLRQWRHQIRUFHDUHDVRQDEOHFKRLFHRIODZ
)LQDOO\ ZH FDQQRW RYHUORRN WKH JHQHUDO WHQGHQF\ RI WKH
.HQWXFN\ 6XSUHPH &RXUW WR ORRN WR D YDULHW\ RI RWKHU
5HVWDWHPHQWSURYLVLRQVLQUHVROYLQJFKRLFHRIODZDQGUHODWHG
LVVXHV6HHHJ%HDYHQY0F$QXOW\6:G
.\ DSSO\LQJRIWKH5HVWDWHPHQW 6HFRQG RI
&RQIOLFW RI /DZV 3UH]RFNL VXSUD 6:G DW
DSSO\LQJRIWKH5HVWDWHPHQW %UHHGLQJ6:GDW
DSSO\LQJ /HZLVVXSUD6:GDW
DSSO\LQJDQG :HVHHQREDVLVIRUFRQFOXGLQJ
WKDWLVVRPHKRZGLVIDYRUHGE\WKHFRXUWVRIWKDWVWDWH
UDWKHUWKHPRUHORJLFDOFRQFOXVLRQWREHGUDZQIURPWKHFDVH
ODZLVWKDWWKHSURSHURFFDVLRQKDVQRW\HWDULVHQIRUDGRSWLQJ
WKDWSURYLVLRQ6LPSO\VWDWHGZHEHOLHYHZHDUHFRQIURQWHG
ZLWKVXFKFLUFXPVWDQFHVKHUH7KXVZKLOHZHDFNQRZOHGJH
WKDWZHDUHZULWLQJRQVRPHWKLQJRIDEODQNVODWHZHILQGWKDW
RIWKH5HVWDWHPHQWVHWVIRUWKWKHDSSURSULDWHVWDQGDUGV
IRUGHWHUPLQLQJZKHWKHUWRHQIRUFHWKH*XDUDQW\¶VFKRLFHRI
7HQQHVVHHODZ
8QGHU RI WKH 5HVWDWHPHQW WKH *XDUDQW\¶V
&KRLFHRI/DZ&ODXVH,V(QIRUFHDEOH
$VQRWHGDERYHWKH'LVWULFW&RXUWGLGQRWFRQVLGHU
RIWKH5HVWDWHPHQWLQPDNLQJLWVFKRLFHRIODZGHWHUPLQDWLRQ
,QVWHDGLWHPSOR\HGDSXUHO\LQWHUHVWEDVHGDSSURDFKDQGLQ
VR GRLQJ DFFRUGHG QR ZHLJKW ZKDWVRHYHU WR WKH SDUWLHV¶
ZULWWHQ DJUHHPHQW WKDW 7HQQHVVHH ODZ ZRXOG JRYHUQ WKHLU
FRQWUDFWXDOUHODWLRQVKLS8SRQDSSO\LQJWRWKHIDFWVRI
1RV :DOODFH+DUGZDUH&R
Y$EUDPVHWDO
WKLVFDVHDQGDGGLQJWKHSDUWLHV¶FKRLFHRIODZWRWKHRWKHU
IDFWRUVDGGUHVVHGE\WKHFRXUWEHORZZHILQGWKDWWKHEDODQFH
WLSVGHFLVLYHO\LQIDYRURIHQIRUFLQJWKH*XDUDQW\¶VVHOHFWLRQ
RI7HQQHVVHHODZ
8QGHUWKHSDUWLHV¶FKRLFHRIODZVKRXOGEHKRQRUHG
XQOHVV ³WKHFKRVHQVWDWHKDVQRVXEVWDQWLDOUHODWLRQVKLSWR
WKHSDUWLHVRUWKHWUDQVDFWLRQDQGWKHUHLVQRRWKHUUHDVRQDEOH
EDVLVIRUWKHSDUWLHV¶FKRLFH´RU ³DSSOLFDWLRQRIWKHODZRI
WKHFKRVHQVWDWHZRXOGEHFRQWUDU\WRDIXQGDPHQWDOSROLF\RI
DVWDWHZKLFKKDVDPDWHULDOO\JUHDWHULQWHUHVW´5HVWDWHPHQW
6HFRQG RI&RQIOLFWRI/DZV7KHILUVWSURQJRIWKLV
WHVWLVHDVLO\VDWLVILHGKHUH:DOODFH+DUGZDUHLVORFDWHGLQ
7HQQHVVHHDQG7UL&RXQW\HOHFWHGWRGREXVLQHVVZLWKDQG
SXUFKDVHJRRGVIURPWKLV7HQQHVVHHFRUSRUDWLRQ)XUWKHU
ZKHQ7UL&RXQW\GHIDXOWHGRQLWVFRQWUDFWXDOREOLJDWLRQVWKH
LQMXU\ ZDV IHOW E\ :DOODFH LQ 7HQQHVVHH 7KLV SURYLGHV D
VXIILFLHQWO\ UHDVRQDEOH EDVLV IRU WKH SDUWLHV¶ FKRLFH RI
7HQQHVVHHODZ6HH-RKQVRQY9HQWUD*URXS,QF)G
WK&LU
7KHVHFRQG³IXQGDPHQWDOSROLF\´SURQJRISUHVHQWV
DFORVHUTXHVWLRQ7KH'LVWULFW&RXUWLQYDOLGDWHGWKH*XDUDQW\
RQWKHEDVLVRID.HQWXFN\VWDWXWHSURYLGLQJ
1R JXDUDQW\ RI DQ LQGHEWHGQHVV ZKLFK HLWKHU LV QRW
ZULWWHQRQRUGRHVQRWH[SUHVVO\UHIHUWRWKHLQVWUXPHQW
RU LQVWUXPHQWV EHLQJ JXDUDQWHHG VKDOO EH YDOLG RU
HQIRUFHDEOHXQOHVVLWLVLQZULWLQJVLJQHGE\WKHJXDUDQWRU
DQG FRQWDLQV SURYLVLRQV VSHFLI\LQJ WKH DPRXQW RI WKH
PD[LPXPDJJUHJDWHOLDELOLW\RIWKHJXDUDQWRUWKHUHXQGHU
DQGWKHGDWHRQZKLFKWKHJXDUDQW\WHUPLQDWHV
.\ 5HY 6WDW $QQ :DOODFH +DUGZDUH
FRQFHGHVWKDWWKH*XDUDQW\GLGQRWFRPSO\ZLWKWKLVVWDWXWH
DVLWZDVGUDZQXSVHSDUDWHO\IURPWKHXQGHUO\LQJ2SHUDWLQJ
$JUHHPHQWDQG6HFXULW\$JUHHPHQWEHWZHHQ:DOODFHDQG7UL
&RXQW\LWGLGQRWH[SUHVVO\UHIHUWRWKRVHDJUHHPHQWVDQGLW
GLGQRWVSHFLI\WKHPD[LPXPOLDELOLW\RIWKH$EUDPVEURWKHUV
-- 26 of 26 --
Verbinden Sie Omnilex, um den Rechtskorpus über Ihren KI-Assistenten zu durchsuchen.