02a0283p.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
),567 1$7,21$/ %$1. 2)
38/$6.,
3ODLQWLII
Y
-2+1 7 &855<HWDO
'HIHQGDQWV&RXQWHU
DQG7KLUG3DUW\
3ODLQWLIIV$SSHOOHHV
+(15< +(15< 63((5
3&HWDO
'HIHQGDQWV7KLUG3DUW\
'HIHQGDQWV$SSHOODQWV
:,//,$0 5 +251(HWDO
7KLUG3DUW\'HIHQGDQWV
BBBBBBBBBBBBBBBBBBBBBBBB
-2+11,( 0 &855<
3ODLQWLII$SSHOOHH
Y
;!

1R

-- 1 of 12 --

)LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO
1R
),567 1$7,21$/ %$1. 2)
38/$6.,HWDO
'HIHQGDQWV
+(15< +(15< 63((5
3&HWDO
'HIHQGDQWV$SSHOODQWV

1
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH0LGGOH'LVWULFWRI7HQQHVVHHDW&ROXPELD
1RV²:LOOLDP-+D\QHV-U
'LVWULFW-XGJH
$UJXHG-DQXDU\
'HFLGHGDQG)LOHG$XJXVW
%HIRUH0(55,77%2**6DQG0225(&LUFXLW
-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' :LQVWRQ 6 (YDQV (9$16 -21(6
5(<12/'61DVKYLOOH7HQQHVVHHIRU$SSHOODQWV&KDUOHV
: +ROW -U %26721 +2/7 62&.:(//
/DZUHQFHEXUJ 7HQQHVVHH IRU $SSHOOHHV 21 %5,()
:LQVWRQ 6 (YDQV :LOOLDP %XUJLQ +DZNLQV ,,, (9$16
-21(6 5(<12/'6 1DVKYLOOH 7HQQHVVHH IRU
$SSHOODQWV *HRUJH % %RVWRQ %26721 +2/7
62&.:(///DZUHQFHEXUJ7HQQHVVHHIRU$SSHOOHHV

-- 2 of 12 --

1R )LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO

BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
.$5(1 1(/621 0225( &LUFXLW -XGJH 7KH
$SSHOODQWVLQWKLVDSSHDOFKDOOHQJHWKHUHPDQGWRVWDWHFRXUW
RI WZR FDVHV FRQVROLGDWHG E\ WKH GLVWULFW FRXUW ³WKH
FRQVROLGDWHGFDVH´ 7KHILUVWFDVH ³WKHUHPRYHGFDVH´ ZDV
LQLWLDWHGLQVWDWHFRXUWE\WKH)LUVW1DWLRQDO%DQNRI3XODVNL
³WKH%DQN´ DJDLQVWYDULRXVPHPEHUVRIWKH&XUU\IDPLO\DV
ZHOO DV WZR &XUU\RZQHG SDUWQHUVKLSV $SSHOOHHV -RKQ 7
&XUU\&DUUROO0&XUU\&DWK\&XUU\&RQQLH*&XUU\& 7
3DUWQHUVKLS DQG & & 3DUWQHUVKLS KHUHLQDIWHU ³WKH &XUU\
)DPLO\ GHIHQGDQWV´ 7KH &XUU\ )DPLO\ GHIHQGDQWV WKHQ
FRXQWHUFODLPHGDQGLPSOHDGHGWKH%DQN¶VSUHVLGHQW:LOOLDP
5+RUQH ³+RUQH´ DVDWKLUGSDUW\GHIHQGDQWDQG+RUQH
UHPRYHG WKH FDVH WR IHGHUDO FRXUW 7KH VHFRQG FDVH ³WKH
IHGHUDOFDVH´ ZDVILOHGLQIHGHUDOFRXUWE\$SSHOOHH-RKQQLH
0&XUU\ ³-RKQQLH&XUU\´ WKHPRWKHU RUPRWKHULQODZ RI
-RKQ7&XUU\&DUUROO0&XUU\&DWK\&XUU\DQG&RQQLH*
&XUU\$SSHOODQWV+HQU\+HQU\ 6SHHU3&5REHUW&
+HQU\DQG-RH:+HQU\-U ³WKH+HQU\V´ ZHUHQDPHGDV
GHIHQGDQWVLQWKHVHFRQGIHGHUDOLQLWLDWHGDFWLRQDQGDGGHGDV
WKLUGSDUW\GHIHQGDQWVLQWKHILUVWVWDWHLQLWLDWHGDFWLRQDOORI
WKH FODLPV DJDLQVW WKH +HQU\V KRZHYHU ZHUH VWDWHODZ
FODLPV$IWHUWKHGLVPLVVDORIDOORWKHUGHIHQGDQWVLQFOXGLQJ
+RUQHDQGDOOIHGHUDOFODLPVWKHGLVWULFWFRXUWUHPDQGHGWKH
VWDWHODZ FODLPV WKDW UHPDLQHG DJDLQVW WKH +HQU\V LQ WKH
FRQVROLGDWHG FDVH WR VWDWH FRXUW 7KH +HQU\V QRZ DSSHDO
DUJXLQJWKDWWKHGLVWULFWFRXUWVKRXOGKDYHGLVPLVVHGZLWKRXW
SUHMXGLFHWKH&XUU\)DPLO\GHIHQGDQWV¶DQG-RKQQLH&XUU\¶V
FODLPVUDWKHUWKDQUHPDQGWKHPWRVWDWHFRXUW
%HFDXVHZHFRQFOXGHWKDWWKLUGSDUW\GHIHQGDQWVPD\QRW
UHPRYHDQDFWLRQWRIHGHUDOFRXUWDQGWKXVWKDWWKHUHPRYHG
FDVHZDVUHPRYHGLPSURSHUO\WRIHGHUDOFRXUWZH$)),50
WKH GLVWULFW FRXUW¶V UHPDQG RI WKH FDVH RQ WKHVH JURXQGV
+RZHYHUZH5(9(56(WKHGLVWULFWFRXUW¶VUHPDQGRIWKH

-- 3 of 12 --

)LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO
1R
7KH %DQN¶V DPHQGHG FRPSODLQW LQFOXGHG -RKQQLH 0 &XUU\ DV D
GHIHQGDQW VHH -$ DW LQ DGGLWLRQ WR WKH &XUU\ )DPLO\ GHIHQGDQWV
UHPDLQLQJFODLPVLQWKHIHGHUDOFDVHEHFDXVHDFDVHLQLWLDWHG
LQIHGHUDOFRXUWFDQQRWEHUHPDQGHGWRVWDWHFRXUW)RUWKLV
UHDVRQ ZH 5(0$1' WR WKH GLVWULFW FRXUW IRU IXUWKHU
SURFHHGLQJVLQWKHIHGHUDOFDVH
,%$&.*5281'
5REHUW0&XUU\ KHUHLQDIWHU³0LNH&XUU\´ ZDVIRUPHUO\
FKLHIH[HFXWLYHRIILFHURIWKH%DQN7KLVSRVLWLRQHQDEOHG
KLPWRRSHUDWHDFKHFNNLWLQJVFKHPHLQYROYLQJDQXPEHURI
FKHFNLQJDFFRXQWVWKDWKHDQGRWKHUPHPEHUVRIWKH&XUU\
)DPLO\ FRQWUROOHG $V SDUW RI WKLV VFKHPH 0LNH &XUU\
DOOHJHGO\H[HFXWHGDQXPEHURISURPLVVRU\QRWHVLQWKHQDPHV
RI RWKHU IDPLO\ PHPEHUV DV ZHOO DV RI IDPLO\RZQHG
EXVLQHVVHV$IWHUVRPHGHWDLOVRI0LNH&XUU\¶VVFKHPHFDPH
WROLJKWWKH%DQNRQ2FWREHUILOHGILYHODZVXLWVLQ
7HQQHVVHH VWDWH FRXUW WR FROOHFW RQ WKHVH QRWHV DJDLQVW WKH
&XUU\ )DPLO\ PHPEHUV ZKRVH VLJQDWXUHV 0LNH &XUU\ KDG
DOOHJHGO\ IRUJHG 7KH &XUU\ )DPLO\ GHIHQGDQWV
FRXQWHUFODLPHGDJDLQVWWKH%DQNDQGLPSOHDGHGFHUWDLQ%DQN
RIILFHUV LQFOXGLQJ +RUQH 7KH &XUU\ )DPLO\ GHIHQGDQWV
DOOHJHGWKDW+RUQHDQGWKH%DQNKDGYLRODWHGYDULRXVIHGHUDO
EDQNLQJODZV7KLUG3DUW\'HIHQGDQW+RUQHWKHQUHPRYHG
WKHFDVHWRIHGHUDOFRXUWEDVHGRQWKDWFRXUW¶VIHGHUDOTXHVWLRQ
MXULVGLFWLRQRQ0D\6HH-RLQW$SSHQGL[ ³-$´ DW
1HLWKHUWKHSDUWLHVQRUWKHGLVWULFWFRXUWHYHUTXHVWLRQHG
WKHSURSULHW\RIUHPRYDOE\+RUQH
7KH GLVWULFW FRXUW VXEVHTXHQWO\ GLVPLVVHG IRXU RI WKH
%DQN¶VILYHFDVHVDJDLQVWWKH&XUU\)DPLO\GHIHQGDQWVDQG
JDYHOHDYHIRUWKH%DQNWRILOHDQDPHQGHGFRPSODLQWLQWKH
UHPRYHGFDVHWKDWZRXOGLQFOXGHDOORILWVFODLPVDJDLQVWWKH
GHIHQGDQWV6HH-$DW7KLVDPHQGHGFRPSODLQW
ZDVILOHGLQ6HSWHPEHU,Q$XJXVWWKH&XUU\
1R )LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO

FODLPV DUH GLVPLVVHG EHIRUH WULDO WKH EDODQFH RI
FRQVLGHUDWLRQVXVXDOO\ZLOOSRLQWWRGLVPLVVLQJWKHVWDWHODZ
FODLPVRUUHPDQGLQJWKHPWRVWDWHFRXUWLIWKHDFWLRQZDV
UHPRYHG´ HPSKDVLVDGGHG
7KXVWKHGLVWULFWFRXUWHUUHGLQUHPDQGLQJ-RKQQLH&XUU\¶V
FODLPVWRVWDWHFRXUW2QWKLVSRLQWZHYDFDWHWKHGLVWULFW
FRXUW¶V UHPDQG RUGHU DQG UHPDQG IRU WKH GLVWULFW FRXUW WR
GHWHUPLQH ZKHWKHU WR GLVPLVV -RKQQLH &XUU\¶V VWDWHODZ
FODLPVRUWRFRQVLGHUKHUFODLPVRQWKH PHULWVSXUVXDQWWR
† F
,,,&21&/86,21
)RU WKH IRUHJRLQJ UHDVRQV ZH $)),50 LQ SDUW
5(9(56(LQSDUWDQG5(0$1'IRUIXUWKHUSURFHHGLQJV
FRQVLVWHQWZLWKWKLVRSLQLRQ

-- 4 of 12 --

)LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO
1R
&7KH3URSULHW\RI5HPDQGLQJWKH)HGHUDO&DVH
7KHGLVWULFWFRXUWUHPDQGHGWKHUHPDLQLQJVWDWHODZFODLPV
DJDLQVW WKH +HQU\V LQ WKH IHGHUDO FDVH WR VWDWH FRXUW HYHQ
WKRXJKWKDWFDVHZDVLQLWLDWHGLQIHGHUDOFRXUW2QDSSHDOWKH
+HQU\V HPSKDWLFDOO\ DUJXH WKDW ³>D@ GLVWULFW FRXUW FDQQRW
UHPDQGDFDVHWRDVWDWHFRXUWZKHUHWKDWFDVHZDVRULJLQDOO\
ILOHGLQIHGHUDOFRXUW´$SSHOODQW¶V%UDW HPSKDVLVLQ
RULJLQDO 7KH &XUU\ )DPLO\ GHIHQGDQWV FRXQWHU WKDW WKH
GLVWULFWFRXUWGLGQRWHUULQUHPDQGLQJ-RKQQLH&XUU\¶VFODLPV
LQWKHIHGHUDOFDVHWRVWDWHFRXUWHYHQWKRXJKWKRVHFODLPV
ZHUHILOHGRULJLQDOO\LQIHGHUDOFRXUWEHFDXVHWKHGLVWULFWFRXUW
KDGFRQVROLGDWHGWKHWZRFDVHV
7KH+HQU\VKDYHWKHEHWWHURIWKLVDUJXPHQW-RKQVRQY
0DQKDWWDQ5\&R86 KHOGWKDW
³FRQVROLGDWLRQLVSHUPLWWHGDVDPDWWHURIFRQYHQLHQFHDQG
HFRQRP\LQDGPLQLVWUDWLRQEXWGRHVQRWPHUJHWKHVXLWVLQWR
DVLQJOHFDXVHRUFKDQJHWKHULJKWVRIWKHSDUWLHV´'HVSLWH
WKHFRQVROLGDWLRQRIWKHWZRDFWLRQVLQWKHSUHVHQWFDVHWKHQ
WKHDFWLRQVGLG³QRWPHUJHLQWRDVLQJOHFDXVH´7KH7KLUG
&LUFXLW DGGUHVVHG D VRPHZKDW VLPLODU IDFWXDO VLWXDWLRQ LQ
%UDGJDWH$VVRFLDWHVDQGKHOGWKDW
ZKHQDUHPRYHGVWDWHFRXUWFDVHKDVEHHQFRQVROLGDWHG
ZLWK D FDVH RULJLQDOO\ ILOHG LQ IHGHUDO FRXUW DQG WKH
GLVWULFW FRXUW GHWHUPLQHV WKDW LW ODFNV VXEMHFW PDWWHU
MXULVGLFWLRQRYHUERWKWKHIHGHUDODQGVWDWHFRPSRQHQWVRI
WKH FDVH WKH FRXUW PXVW DSSO\ WKH UXOHV SHUWDLQLQJ WR
GLVPLVVDODQGUHPDQGDVLIWKHFDVHVKDGUHWDLQHGWKHLU
VHSDUDWHLGHQWLWLHVDQGKDGQHYHUEHHQFRQVROLGDWHG
)G DW 7KXV ZKLOH D GLVWULFW FRXUW KDV WKH
GLVFUHWLRQWRUHPDQGDFDVHUHPRYHGIURPVWDWHFRXUWLWPD\
QRWUHPDQGDFDVHWKDWZDVQHYHUUHPRYHGIURPVWDWHFRXUW
HYHQ WKRXJK WKH WZR FDVHV KDYH EHHQ FRQVROLGDWHG IRU
SXUSRVHVRIFRQYHQLHQFHDQGDGPLQLVWUDWLRQ6HHLGDW
6HHDOVR0XVVRQ7KHDWULFDO,QFY)HG([SUHVV&RUS
)G WK&LU ³:KHQDOOIHGHUDO
1R )LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO

-RKQQLH &XUU\ ZDV QRW D SDUW\ WR WKH &XUU\ )DPLO\ GHIHQGDQWV¶
VHFRQG DPHQGHG FRXQWHUFRPSODLQW DQG WKLUGSDUW\ FRPSODLQW ILOHG
0DUFK ZKLFK DGGHG WKH +HQU\V DV WKLUGSDUW\ GHIHQGDQWV LQ WKH
UHPRYHG DFWLRQ 6HH -$ DW $W WKH WLPH -RKQQLH &XUU\ ZDV DOUHDG\
VXLQJ WKH +HQU\V DV WKH SODLQWLII LQ WKH IHGHUDO LH QRQUHPRYHG DFWLRQ
DV GLVFXVVHG LQIUD
)DPLO\GHIHQGDQWVPRYHGWKHIHGHUDOGLVWULFWFRXUWWRSHUPLW
WKHPWRDPHQGWKHLUFRXQWHUFODLPLQWKHUHPRYHGFDVHWRDGG
WKH +HQU\V DV WKLUGSDUW\ GHIHQGDQWV DOOHJLQJ OHJDO
PDOSUDFWLFH JURVV QHJOLJHQFH UHFNOHVVQHVV DQG GXUHVV
DJDLQVWWKH+HQU\V7KHGLVWULFWFRXUWJUDQWHGWKLVPRWLRQLQ
)HEUXDU\6HH-$DW
0HDQZKLOHSDUDOOHOOLWLJDWLRQLQYROYLQJPDQ\RIWKHVDPH
SDUWLHVZDVLQLWLDWHGLQWKH0LGGOH'LVWULFWRI7HQQHVVHHLQ
$XJXVWZKHQ$SSHOOHH-RKQQLH&XUU\VXHGWKH%DQNWKH
+HQU\V DQG RWKHU GHIHQGDQWV RQ D QXPEHU RI WKHRULHV
LQFOXGLQJWKHYLRODWLRQRIIHGHUDOEDQNLQJODZVDQGDJDLQVW
WKH+HQU\VOHJDOPDOSUDFWLFH
7KXVWKH+HQU\V$SSHOODQWVLQWKHSUHVHQWFDVHDQGRWKHU
SDUWLHVZHUHEHLQJVXHGE\ERWK-RKQQLH&XUU\DQGWKH&XUU\
)DPLO\ GHIHQGDQWV $SSHOOHHV LQ WKH SUHVHQW FDVH LQ WZR
VHSDUDWHFDVHVLQWKH0LGGOH'LVWULFWRI7HQQHVVHH7KHVH
FDVHVZHUHFRQVROLGDWHGE\FRXUWRUGHURQ)HEUXDU\
6HH-$DW7KH%DQNWKH&XUU\)DPLO\GHIHQGDQWVDQG
-RKQQLH&XUU\DVZHOODVRWKHUSDUWLHVVXEVHTXHQWO\VHWWOHG
PRVWRIWKHLUFODLPV7KHGLVWULFWFRXUWGLVPLVVHGWKHVHWWOHG
FODLPVLQRUGHUVLVVXHGLQ$SULODQG0D\$VDUHVXOW
WKHRQO\UHPDLQLQJFODLPVLQWKHFRQVROLGDWHGFDVHZHUHWKH
VWDWHODZ FODLPV RI WKH $SSHOOHHV WKH &XUU\ )DPLO\
GHIHQGDQWV DQG -RKQQLH &XUU\ DJDLQVW WKH $SSHOODQWV WKH
+HQU\V
7KH+HQU\VVXEVHTXHQWO\ILOHGDPRWLRQWRGLVPLVVIRUODFN
RIVXEMHFWPDWWHUMXULVGLFWLRQRQ0D\6HH-$DW
7KH+HQU\VDUJXHGWKDWEHFDXVHWKHIHGHUDOFODLPV
DJDLQVW WKH %DQN DQG LWV RIILFHUV KDG EHHQ GLVPLVVHG WKH

-- 5 of 12 --

)LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO
1R
IHGHUDO GLVWULFW FRXUW ³QR ORQJHU >KDG@ VXEMHFW PDWWHU
MXULVGLFWLRQ´ RYHU WKH &XUU\ )DPLO\ GHIHQGDQWV¶ UHPDLQLQJ
FODLPV-$DW0RUHSUHFLVHO\WKH+HQU\VDUJXHGWKDW
DOWKRXJKWKHGLVWULFWFRXUWUHWDLQHGVXSSOHPHQWDOMXULVGLFWLRQ
RYHUWKH&XUU\)DPLO\GHIHQGDQWV¶VWDWHODZFODLPV³WKHUH
>ZD@V QR UHDVRQ ZK\ >WKH GLVWULFW FRXUW@ VKRXOG H[HUFLVH
VXSSOHPHQWDOMXULVGLFWLRQRYHU´WKRVHFODLPV-$DW
7KHGLVWULFWFRXUW³JUDQWHG´WKH+HQU\V¶PRWLRQLQDQRUGHU
LVVXHG RQ -XQH ZKLFK ERWK GLVPLVVHG ZLWKRXW
SUHMXGLFH WKH &XUU\ 'HIHQGDQWV¶ SHQGLQJ FODLPV DQG
UHPDQGHG WKRVH FODLPV WR VWDWH FRXUW ,Q H[SODLQLQJ LWV
GHFLVLRQWKHGLVWULFWFRXUWDOWHUQDWHGEHWZHHQVWDWLQJWKDWLW
³ODFN>HG@ MXULVGLFWLRQ WR DGMXGLFDWH WKH UHPDLQLQJ VWDWH
FODLPV´ DQG VWDWLQJ LQ WKH QH[W VHQWHQFH WKDW ³WKH &RXUW
GHFOLQHV WR H[HUFLVH SHQGHQW MXULVGLFWLRQ RQ WKH VWDWH ODZ
FODLPV´-$DW7KHGLVWULFWFRXUWWKHQVWDWHGWKDW³>W@KH
GLVFUHWLRQWRUHPDQGWRVWDWHFRXUW´ZDVZLWKLQLWVDXWKRULW\
-$DW FLWLQJ/RQJY%DQGR0IJRI$P,QF)G
WK &LU 7KH GLVWULFW FRXUW H[HUFLVHG WKLV
GLVFUHWLRQ LQ UHPDQGLQJ WKH &XUU\ )DPLO\ GHIHQGDQWV¶
UHPDLQLQJVWDWHODZFODLPVGHVSLWHLWVDVVHUWHGGLVPLVVDORI
WKRVHVDPHFODLPVLQWKHVDPHRUGHU7KHGLVSRVLWLRQPDGH
QRUHIHUHQFHWR-RKQQLH&XUU\¶VFODLPVDJDLQVWWKH+HQU\V
7KH+HQU\VWKHQPRYHGWKHGLVWULFWFRXUWWRDOWHURUDPHQG
LWVUHPDQGRUGHUDUJXLQJWKDWWKHGLVWULFWFRXUWKDGIDLOHGWR
GLVPLVV-RKQQLH&XUU\¶VFODLPVDJDLQVWWKHPLQLWVSUHYLRXV
RUGHUDQGWKDWDVWKHFRXUWKDGGLVPLVVHGWKH&XUU\)DPLO\
GHIHQGDQWV¶FODLPVWKHUHZDVQRWKLQJOHIWWRUHPDQGWRVWDWH
FRXUW6HH-$DW7KH+HQU\VWKXVUHTXHVWHGWKDWWKH
GLVWULFW FRXUW DPHQG WKH RUGHU WR GLVPLVV -RKQQLH &XUU\¶V
FODLPV DJDLQVW WKHP DQG WR VWDWH WKDW QRQH RI WKH FODLPV
DJDLQVWWKHPKDGEHHQUHPDQGHGWRVWDWHFRXUW6HH-$DW
7KH GLVWULFW FRXUW UHVSRQGHG WR WKLV PRWLRQ E\
UHLQVWDWLQJDOORIWKH&XUU\)DPLO\GHIHQGDQWV¶FODLPVDJDLQVW
WKH +HQU\V QRWLQJ DJDLQ WKDW LW ODFNHG VXEMHFW PDWWHU
MXULVGLFWLRQRYHUWKRVHFODLPVGLVPLVVLQJWKRVHFODLPVDQG
WKHQ UHPDQGLQJ ³DOO UHPDLQLQJ FODLPV DJDLQVW WKH +HQU\
1R )LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO

WRUWIHDVRUV UHVSRQVLEOH IRU WKH SODLQWLII¶V LQMXU\ DUH QRW
VHSDUDWH DQG LQGHSHQGHQW 6HH LG DW 7KH )LIWK
&LUFXLW H[SOLFLWO\ DGRSWHG WKLV GLVWLQFWLRQ LQ ,Q UH :LOVRQ
,QGXVWULHV,QF)G WK&LU
7KH0DUVK,QYHVWPHQWGLVWLQFWLRQKRZHYHUZDVEDVHGRQ
WKHSUHYHUVLRQRI† F ZKLFKSHUPLWWHGUHPRYDO
RIDVHSDUDWHDQGLQGHSHQGHQWFODLPRQWKHEDVLVRIGLYHUVLW\
6HH0DUVK,QY)6XSSDW ³>7@KHUHVSHFWLYHFRXUWV
KHOGWKDWGLYHUVLW\LQWKHLQGHPQLW\FODLPPDGHWKHHQWLUHFDVH
UHPRYDEOH XQGHU VHFWLRQ F ´ VHH DOVR &DUO +HFN
(QJ¶UV )G DW QRWLQJ GLYHUVLW\ RI FLWL]HQVKLS
EHWZHHQWKLUGSDUW\GHIHQGDQWLQVXUHUDQGWKLUGSDUW\SODLQWLII
LQVXUHG :KLOH LQVXUHUV ZLOO RIWHQ EH GLYHUVH IURP WKRVH
ZKRP WKH\ LQVXUH VXFK LQVXUDQFHEDVHG LQGHPQLW\ FODLPV
ZLOOUDUHO\LI HYHU EHUHPRYDEOHRQWKHEDVLVRIDIHGHUDO
TXHVWLRQ7KXVLWLVQRWFOHDUZKDWUHPDLQVRIWKHUHDVRQLQJ
RI&DUO+HFNDIWHUWKHDPHQGPHQWWR† F 6HH
$XWR 7UDQVSRUWHV *DFHOD 6$ GH &9 Y %RUGHU )UHLJKW
'LVWULE :DUHKRXVH,QF)6XSS 6'
7H[ ³>6HFWLRQ F @KDVEHHQUHFHQWO\DPHQGHG
DQG WKH DPHQGPHQW UHPRYHV WKH XQGHUSLQQLQJV RI >&DUO
+HFN@´ ,W LV FOHDU KRZHYHU WKDW D WKLUGSDUW\ FODLP RI
LQGHPQLILFDWLRQEDVHGVROHO\RQWKHGLYHUVLW\RIFLWL]HQVKLS
RIDQLQVXUHUDQGDQLQVXUHGVXFKDVWKDWLQYROYHGLQ&DUO
+HFNLVQRWSUHVHQWO\UHPRYDEOHSXUVXDQWWR† F
)RUWKHVHUHDVRQVZHFRQFOXGHWKDWWKHUHPRYHGFDVHZDV
LPSURSHUO\ UHPRYHG WR IHGHUDO FRXUW E\ 7KLUG3DUW\
'HIHQGDQW+RUQHDQGWKDWDVDUHVXOWWKHGLVWULFWFRXUWQHYHU
KDGVXEMHFWPDWWHUMXULVGLFWLRQRYHUWKHUHPRYHGFDVH&I
0LFK$IILOLDWHG+HDOWKFDUH6\V,QFY&&6\V&RUS
)G WK&LU KROGLQJWKDWGLVWULFWFRXUWGLG
QRWKDYHVXEMHFWPDWWHUMXULVGLFWLRQRYHULPSURSHUO\UHPRYHG
FDVH 7KHGLVWULFWFRXUW¶VUHPDQGWRWKHVWDWHFRXUWRIWKH
UHPRYHGFDVHZDVWKHUHIRUHSURSHUDQGZHDIILUPWKDWSDUWRI
WKHGLVWULFWFRXUW¶VRUGHURQWKHVHJURXQGV:HDGGUHVVWKH
UHPDQGRIWKHIHGHUDOFDVHLQWKHQH[WVHFWLRQ

-- 6 of 12 --

)LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO
1R
SDUW\ SODLQWLII IRU DOO RU SDUW RI WKH SODLQWLII¶V FODLP
DJDLQVWWKHWKLUGSDUW\SODLQWLII
7HQQ 5 &LY 3 7KXV XQGHU 7HQQHVVHH VWDWH
SURFHGXUDOUXOHV7KLUG3DUW\'HIHQGDQW+RUQHFRXOGRQO\EH
LPSOHDGHG E\ WKH &XUU\ )DPLO\ GHIHQGDQWV EDVHG RQ KLV
DOOHJHGOLDELOLW\WRWKH&XUU\)DPLO\GHIHQGDQWVEDVHGRQWKH
3ODLQWLII %DQN¶V DFWLRQ DJDLQVW WKHP 8QGHU WKHVH
FLUFXPVWDQFHV WKH &XUU\ )DPLO\ GHIHQGDQWV¶ WKLUGSDUW\
FODLPV DJDLQVW +RUQH ³DURVH IURP DQ LQWHUORFNHG VHULHV RI
WUDQVDFWLRQV´ DQG WKXV XQGHU )LQQ WKRVH FODLPV GLG QRW
DPRXQWWRDVHSDUDWHDQGLQGHSHQGHQWFDXVHRIDFWLRQXQGHU
† F ,QGHHGXQGHU7HQQHVVHH¶VUXOHVRILPSOHDGHUZH
GRQRWWKLQNWKDWWKLUGSDUW\FODLPVFDQVDWLVI\WKHVHSDUDWH
DQG LQGHSHQGHQW FDXVH RI DFWLRQ UHTXLUHPHQW IRXQG LQ
† F
7KHGHFLVLRQVWRWKHFRQWUDU\KDYHUHDVRQHGPLVWDNHQO\LQ
RXU YLHZ WKDW DQ LQGHPQLW\ FODLP PD\ EH FRQVLGHUHG D
³VHSDUDWH DQG LQGHSHQGHQW´ FODLP XQGHU † F 6HH
HVSHFLDOO\ &DUO +HFN (QJ¶UV )G DW 7KH &DUN
+HFNFRXUWFRQFOXGHGWKDWLQGHPQLW\DFWLRQVDUHVHSDUDWHDQG
LQGHSHQGHQW EHFDXVH ³>V@XFK DFWLRQV FDQ EH DQG RIWHQ DUH
EURXJKW LQ D VHSDUDWH VXLW IURP WKDW ILOHG E\ WKH RULJLQDO
SODLQWLIILQWKHPDLQFODLP´,G,QUHDFKLQJWKLVFRQFOXVLRQ
KRZHYHU WKH &DUO +HFN FRXUW IDLOHG WR DSSO\ )LQQ LQ
GHWHUPLQLQJ ZKHWKHU D FDXVH RI DFWLRQ LV VHSDUDWH DQG
LQGHSHQGHQWIURPWKHSODLQWLII¶VXQGHUO\LQJFODLP V ,QWKH
LPPHGLDWHZDNHRI&DUO+HFNDGLVWULFWFRXUWLQWKH(DVWHUQ
'LVWULFWRI/RXLVLDQDIRUPXODWHGDPRUHHODERUDWHWKHRU\IRU
H[SODLQLQJ ZKHQ DQ LQGHPQLW\ FODLP LV VHSDUDWH DQG
LQGHSHQGHQWXQGHU)LQQ6HH0DUVK,QY&RUSY/DQJIRUG
)6XSS ('/D DII¶G)G WK
&LU8QLW$ SHUFXULDP 7KH0DUVK,QYHVWPHQWFRXUW
H[DPLQHG WKH SUHFHGHQWV DQG GHWHUPLQHG WKDW LQGHPQLW\
FODLPV EURXJKW E\ GHIHQGDQWV DJDLQVW WKHLU LQVXUDQFH
SURYLGHUVVXFKDVLQ&DUO+HFNDUHVHSDUDWHDQGLQGHSHQGHQW
IURPWKHSODLQWLII¶VXQGHUO\LQJFODLPVXQGHU)LQQEXWWKDW
FODLPVEURXJKWDJDLQVWWKLUGSDUW\GHIHQGDQWVDOOHJHGWREH
1R )LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO

GHIHQGDQWVWRWKH&KDQFHU\&RXUWRI*LOHV&RXQW\´-$DW

7KLVDSSHDOIROORZHG7KH+HQU\VDUJXHRQDSSHDOWKDWWKH
GLVWULFWFRXUWODFNHGWKHDXWKRULW\WRUHPDQGWKHUHPDLQLQJ
VWDWHODZFODLPVDJDLQVWWKHPWRVWDWHFRXUWDQGWKXVWKDWWKH
GLVWULFWFRXUWVKRXOGKDYHGLVPLVVHGZLWKRXWSUHMXGLFHWKH
UHPDLQLQJFODLPVDJDLQVWWKHP
,,$1$/<6,6
$$SSHOODWH-XULVGLFWLRQ
$SSHOODWHUHYLHZRIUHPDQGRUGHUVLVOLPLWHGE\86&
† G 7KDWSURYLVLRQVWDWHVLQUHOHYDQWSDUW³$QRUGHU
UHPDQGLQJ D FDVH WR WKH 6WDWH FRXUW IURP ZKLFK LW ZDV
UHPRYHGLVQRWUHYLHZDEOHRQDSSHDORURWKHUZLVH´:H
KDYHKHOGKRZHYHUWKDW† G PHDQVRQO\WKDWDUHPDQG
RUGHULVXQUHYLHZDEOHRQDSSHDOZKHQWKHFDVHZDVUHPDQGHG
EDVHGRQWKHGLVWULFWFRXUW¶VFRQFOXVLRQWKDWLWODFNHGVXEMHFW
PDWWHU MXULVGLFWLRQ RYHU WKH UHPRYHG FDVH DW WKH WLPH RI
UHPRYDO7KXVDUHPDQGRUGHULVUHYLHZDEOHRQDSSHDOZKHQ
WKH GLVWULFW FRXUW FRQFOXGHV WKDW WKH DFWLRQ ZDV SURSHUO\
UHPRYHGEXWWKDWWKHFRXUWORVWVXEMHFWPDWWHUMXULVGLFWLRQDW
VRPHSRLQWSRVWUHPRYDO6HH/RQJY%DQGR0IJRI$P
,QF )G WK &LU KROGLQJ WKDW
DSSHOODWHMXULVGLFWLRQWRFRQVLGHUUHPDQGRUGHUH[LVWHGZKHUH
GLVWULFW FRXUW UHPDQGHG UHPDLQLQJ VWDWHODZ FODLPV DIWHU
GLVPLVVDORISODLQWLII¶VIHGHUDOODZFODLPVLQIHGHUDOTXHVWLRQ
FDVH VHHDOVR9DQ0HWHUY6WDWH)DUP)LUH &DV&R
)G WK&LU ³>,@IDGLVWULFWFRXUWGHWHUPLQHV
VXEMHFW PDWWHU MXULVGLFWLRQ WR KDYH H[LVWHG DW WKH WLPH RI
UHPRYDO \HW UHPDQGV IRU DOOHJHG ODFN RI VXEMHFW PDWWHU
MXULVGLFWLRQEDVHGRQVRPHSRVWUHPRYDOHYHQW V WKHUHPDQG
RUGHULVUHYLHZDEOH´ %DOGULGJHY.\2KLR7UDQVS
,QF)G WK&LU VDPH
,Q WKH SUHVHQW FDVH WKH GLVWULFW FRXUW FRQFOXGHG WKDW LW
UHWDLQHG VXSSOHPHQWDO MXULVGLFWLRQ SXUVXDQW WR 86&
† D WRFRQVLGHUWKHUHPDLQLQJVWDWHODZFODLPVDJDLQVW

-- 7 of 12 --

)LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO
1R
WKH+HQU\VGHVSLWHWKHGLVPLVVDORIDOOIHGHUDOFODLPVLQWKH
FRQVROLGDWHGFDVH7KHGLVWULFWFRXUWGHFOLQHGKRZHYHUWR
H[HUFLVHLWVVXSSOHPHQWDOMXULVGLFWLRQDQGLQVWHDGUHPDQGHG
WKRVHFODLPVWRVWDWHFRXUW7KHGLVWULFWFRXUWFRXOGQRWKDYH
FRQFOXGHGWKDWLWUHWDLQHGVXSSOHPHQWDOMXULVGLFWLRQRYHUWKRVH
VWDWHODZFODLPVKDGLWGHWHUPLQHGWKDWLWQHYHUKDGVXEMHFW
PDWWHUMXULVGLFWLRQRYHUWKHUHPRYHGFDVH8QGHUWKHVHIDFWV
ZH KDYH MXULVGLFWLRQ WR UHYLHZ WKH GLVWULFW FRXUW¶V RUGHU
UHPDQGLQJWKH&XUU\)DPLO\GHIHQGDQWV¶DQG-RKQQLH&XUU\¶V
VWDWHODZFODLPVDJDLQVWWKH+HQU\VWRVWDWHFRXUW&I/RQJ
)G DW VHH DOVR LG DW KROGLQJ WKDW XQGHU
† GLVWULFW FRXUWV KDYH WKH GLVFUHWLRQ WR UHPDQG
UHPDLQLQJUHPRYHGVWDWHODZFODLPVWRVWDWHFRXUWDVZHOODV
WRGLVPLVVVXFKFODLPV
,Q OLJKW RI WKH SUHFHGLQJ GLVFXVVLRQ KRZHYHU WKLV FDVH
SUHVHQWV D UDWKHU XQXVXDO VLWXDWLRQ :H ZRXOG EH ZLWKRXW
MXULVGLFWLRQWRUHYLHZWKLVUHPDQGRUGHUDWOHDVWZLWKUHVSHFW
WRWKHUHPRYHGFDVHLIWKHGLVWULFWFRXUWKDGGHWHUPLQHGWKDW
WKDWFDVHKDGEHHQLPSURSHUO\UHPRYHGDQGWKXVWKDWLWODFNHG
VXEMHFWPDWWHUMXULVGLFWLRQRYHUWKHFDVHIURPWKHVWDUW:LWK
UHVSHFWWRWKHUHPRYHGFDVHKRZHYHUZHFRQFOXGHLQIUDWKDW
WKDWFDVHZDVLPSURSHUO\UHPRYHGIURPVWDWHFRXUW²EHFDXVH
WKLUGSDUW\GHIHQGDQWVFDQQRWUHPRYHFDVHVWRIHGHUDOFRXUW²
DQG WKXV WKDW LQ IDFW WKH GLVWULFW FRXUW QHYHU KDG VXEMHFW
PDWWHUMXULVGLFWLRQRYHUWKHUHPRYHGFDVH
,QRWKHUZRUGVRXUMXULVGLFWLRQRYHUWKDWSDUWRIWKHGLVWULFW
FRXUW¶VUHPDQGRUGHULVEDVHGRQWKHGLVWULFWFRXUW¶VIDLOXUHWR
QRWHLWVODFNRIVXEMHFWPDWWHUMXULVGLFWLRQIURPWKHVWDUW+DG
WKHGLVWULFWFRXUWQRWHGVXDVSRQWHLWVODFNRIVXEMHFWPDWWHU
MXULVGLFWLRQRUKDGWKHSDUWLHVEURXJKWWKLVLVVXHWRWKHGLVWULFW
FRXUW¶VDWWHQWLRQZHZRXOGQRWKDYHDSSHOODWHMXULVGLFWLRQ
RYHU WKLV DVSHFW RI WKH SUHVHQW DSSHDO %HFDXVH RI WKLV
XQXVXDO VHW RI FLUFXPVWDQFHV WKLV DSSHDO SUHVHQWV D UDUH
RFFDVLRQ IRU DQ DSSHOODWH GHFLVLRQ RQ WKLUGSDUW\ UHPRYDO
XQGHU86&†2QO\WKH)LIWK6HYHQWKDQG(LJKWK
&LUFXLWVKDYH\HWDGGUHVVHGWKLVLVVXH$VGLVWULFWFRXUWVKDYH
QRWHG IURP WLPH WR WLPH ³>P@RVW RI WKH FDVH ODZ RQ WKLV
1R )LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO

LQWHUSUHWHG DV JHQHUDOO\ DXWKRUL]LQJ UHPRYDO LQ WKHVH
FRQWH[WV´ 7KXVHYHQLQWKHFRXUWVKROGLQJWKDW† F
SHUPLWVWKLUGSDUW\GHIHQGDQWVWRUHPRYHWRIHGHUDOFRXUWDV
DJHQHUDOSURSRVLWLRQWKRVHFRXUWVKDYHRIWHQKHOGWKDWWKH
WKLUGSDUW\FODLPVDWLVVXHGLGQRWVDWLVI\WKH³VHSDUDWHDQG
LQGHSHQGHQW´ UHTXLUHPHQW RI † F 6HH HJ 1HZ
9HQWXUH *HDU ,QF Y )RQHKRXVH ) 6XSS
1'1< KROGLQJWKDW³DWKLUGSDUW\FODLPFDQQRWEH
μVHSDUDWHDQGLQGHSHQGHQW¶LILWLVVXEVWDQWLDOO\GHULYHGIURP
WKHVDPHVHWRIIDFWVRULILWLVFRQWLQJHQWLQVRPHZD\RQWKH
SODLQWLII¶VQRQUHPRYDEOHFODLP´ TXRWDWLRQRPLWWHG 6RSHU
Y.DKQ)6XSS '0G KROGLQJWKDW
WKLUGSDUW\ FODLP IRU LQGHPQLW\ XQGHU VWDWH ODZ ZDV QRW
³VHSDUDWHDQGLQGHSHQGHQW´XQGHU† F &ROHPDQY$
'0DFK&R)6XSS Q ('&DO
KROGLQJWKDWUHPRYDOZDVLPSURSHUEHFDXVHWKHWKLUGSDUW\
FODLP ZDV QRW VHSDUDWH DQG LQGHSHQGHQW DQG QRWLQJ WKH
SRWHQWLDOLQFRQVLVWHQF\RIWKDWSRVLWLRQ
7KH WHVW IRU GHWHUPLQLQJ WKH H[LVWHQFH RI D VHSDUDWH DQG
LQGHSHQGHQW FODLPRUFDXVHRIDFWLRQXQGHU† F ZDV
HVWDEOLVKHG E\ WKH 6XSUHPH &RXUW LQ $PHULFDQ )LUH
&DVXDOW\&RY)LQQ86 ³>:@KHUHWKHUH
LV D VLQJOH ZURQJ WR SODLQWLII IRU ZKLFK UHOLHI LV VRXJKW
DULVLQJIURPDQLQWHUORFNHGVHULHVRIWUDQVDFWLRQVWKHUHLVQR
VHSDUDWH DQG LQGHSHQGHQW FODLP RU FDXVH RI DFWLRQ XQGHU
† F ´ /LNH )HGHUDO 5XOH RI &LYLO 3URFHGXUH
KRZHYHUVWDWHSURFHGXUDOUXOHVUHJDUGLQJWKLUGSDUW\SUDFWLFH
RIWHQUHTXLUHWKDWLPSOHDGHGWKLUGSDUW\GHIHQGDQWVEHOLDEOH
WRWKHWKLUGSDUW\SODLQWLII GHIHQGDQW EDVHGRQWKHSODLQWLII¶V
XQGHUO\LQJFODLP V 7KHUHPRYHGFDVHZDVILOHGRULJLQDOO\
LQ7HQQHVVHHVWDWHFRXUW7HQQHVVHH¶VYHUVLRQRI5XOH
ZKLFKLVLGHQWLFDOWRIHGHUDO5XOHVWDWHVLQUHOHYDQWSDUW
$W DQ\ WLPH DIWHU FRPPHQFHPHQW RI WKH DFWLRQ D
GHIHQGLQJSDUW\DVDWKLUGSDUW\SODLQWLIIPD\FDXVHD
VXPPRQVDQGFRPSODLQWWREHVHUYHGXSRQDSHUVRQQRW
DSDUW\WRWKHDFWLRQZKRLVRUPD\EHOLDEOHWRWKHWKLUG

-- 8 of 12 --

)LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO
1R
DGGLWLRQDODFWLRQVWDNHQE\WKHVDPHSDUW\,QFRQWUDVWWKH
)HGHUDO5XOHVXVHYHU\GLIIHUHQWODQJXDJHZKHQUHIHUULQJWR
WKLUGSDUW\FODLPVZKLFKWKH5XOHVFRQVLVWHQWO\GHVFULEHDV
EHLQJ³DVVHUW>HG@´UDWKHUWKDQMRLQHG6HHHJ)HG5&LY
3 $FFRUGLQJO\ ZKHQ † F DOORZV UHPRYDO RI
FHUWDLQ FODLPV WKDW DUH ³MRLQHG´ WKH VWDWXWH LV PRVW OLNHO\
UHIHUULQJQRWWRRWKHUFODLPVEURXJKWE\RWKHUSDUWLHVEXWWR
PXOWLSOHFODLPVEURXJKWE\WKHVDPHSDUW\
*LYHQWKHODQJXDJHRIWKHVWDWXWHDQGWKHUXOHWKDWUHPRYDO
VWDWXWHVDUHWREHFRQVWUXHGQDUURZO\ZHUHMHFWWKHYLHZWKDW
³MRLQHG´DVXVHGLQ† F VKRXOGEHLQWHUSUHWHGEURDGO\
DQGFRQFOXGHLQVWHDGWKDWLWVKRXOGEHLQWHUSUHWHGQDUURZO\WR
DSSO\RQO\WRFODLPVMRLQHGE\WKHSODLQWLIILQWKHRULJLQDOVWDWH
FRXUWDFWLRQ
$OWKRXJK RXU FRQFOXVLRQ RQ WKLV LVVXH LV EDVHG RQ RXU
FRQVWUXFWLRQRIWKHVWDWXWHLWVHOIZHQRWHWKDWLQPRVWLIQRW
DOOFDVHVWKLUGSDUW\FODLPVZLOOQRWVDWLVI\WKH³VHSDUDWHDQG
LQGHSHQGHQW´UHTXLUHPHQWRI† F $VWKH7KRPDVFRXUW
REVHUYHG
$ WKLUGSDUW\ FRPSODLQW LV XVXDOO\ FRQGLWLRQDO RQ WKH
VXFFHVVRIWKHPDLQFODLP7KHPRVWFRPPRQWKLUGSDUW\
FODLPLVDFODLPIRULQGHPQLW\WKDWLVDFODLPWKDWVKRXOG
WKHGHIHQGDQW WKLUGSDUW\SODLQWLII EHKHOGOLDEOHWRWKH
SODLQWLII WKH WKLUGSDUW\ GHIHQGDQW PXVW UHLPEXUVH WKH
GHIHQGDQW IRU WKH FRVW RI VDWLVI\LQJ WKH SODLQWLII¶V
MXGJPHQW
)GDW6HHDOVRHJ+ROORZD\Y*DPEOH6NRJPR
,QF)6XSS 1',OO ³>,@WLVGLIILFXOW
WRLPDJLQHDWKLUGSDUW\FRPSODLQWZKLFKLVQRWμGHSHQGHQW¶
RQWKHPDLQFDXVHRIDFWLRQVLQFHXQGHUHYHQWKHPRVWOLEHUDO
VWDWHWKLUGSDUW\SUDFWLFHDFORVHUHODWLRQEHWZHHQWKHWKLUG
SDUW\FODLPDQGWKHFDVHLQFKLHILVDPLQLPDOUHTXLUHPHQW´
& &KDUOHV $ODQ :ULJKW $UWKXU 5 0LOOHU (GZDUG +
&RRSHU)HGHUDO3UDFWLFHDQG3URFHGXUH†DW GHG
HQGRUVLQJWKHYLHZWKDW³6HFWLRQ F VKRXOGQRWEH
1R )LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO

6HFWLRQ E SODFHV DQ LPSRUWDQW OLPLWDWLRQ RQ WKH ULJKW RI
UHPRYDO FUHDWHG LQ † D LQ FDVHV LQ ZKLFK GLYHUVLW\ LV DVVHUWHG EXW
LW GRHV QRW HVWDEOLVK DQ LQGHSHQGHQW ULJKW WR UHPRYDO 7KXV WKH FDVHV
FRQVLGHULQJ WKH SURSULHW\ RI WKLUGSDUW\ UHPRYDO KDYH GLVFXVVHG
†† D DQG F DV WKH UHOHYDQW VWDWXWRU\ SURYLVLRQV
VXEMHFWLVIURPGLVWULFWFRXUWVEHFDXVHRIWKHOLPLWHGULJKWRI
DSSHDO RI UHPDQG GHFLVLRQV DV SURYLGHG IRU LQ 86&
†´%URRNRYHU)LQ6HUYV,QFY%HFNOH\)6XSS
G :'.\
2XU MXULVGLFWLRQ ZLWK UHVSHFW WR WKH UHPDQG RUGHU LQ WKH
IHGHUDOFDVHLVRQDVRPHZKDWGLIIHUHQWIRRWLQJ7KHGLVWULFW
FRXUW¶VVXEMHFWPDWWHUMXULVGLFWLRQLQWKDWFDVHSXUVXDQWWR
86&†LVDEXQGDQWO\FOHDU6HH-$DW
&RPSOˆˆ DOOHJLQJYLRODWLRQRIIHGHUDOEDQNLQJ
ODZV %HFDXVHPRUHRYHUWKDWFDVHZDVQHYHUUHPRYHGIURP
VWDWHFRXUWWKHGLVWULFWFRXUWFRXOGQRWKDYHFRQFOXGHGWKDWLW
ODFNHGMXULVGLFWLRQDWWKHWLPHRIUHPRYDO7KXVWKHGLVWULFW
FRXUW¶VUHPDQGRUGHULVUHYLHZDEOHRQDSSHDO6HH%UDGJDWH
$VVRFV,QFY)HOORZV5HDG $VVRFV,QF)G
G &LU KROGLQJ UHPDQG RUGHU UHYLHZDEOH
XQGHUVLPLODUFLUFXPVWDQFHV
% 7KH 3URSULHW\ RI 7KLUG3DUW\ 5HPRYDO 8QGHU
86&††
,Q KLV QRWLFH RI UHPRYDO 7KLUG3DUW\ 'HIHQGDQW +RUQH
DVVHUWHGWZREDVHVIRUUHPRYDO86&†† E DQG F
DOWKRXJK KH FOHDUO\ LQWHQGHG † D ZLWK UHVSHFW WR WKH
IRUPHUEDVLV$VQRWHGVXSUD QHLWKHUWKHSDUWLHVQRUWKH
GLVWULFWFRXUWUDLVHGWKHSURSULHW\RIUHPRYDOE\DWKLUGSDUW\
GHIHQGDQW:HKDYHKRZHYHUDQLQGHSHQGHQWREOLJDWLRQWR
FRQVLGHUERWKWKHGLVWULFWFRXUW¶VDQGRXURZQVXEMHFWPDWWHU
MXULVGLFWLRQ6HHHJ%DLUGY1RUWRQ)G
WK&LU +DYLQJFDUHIXOO\FRQVLGHUHGWKHLVVXHZH
FRQFOXGHWKDWQHLWKHU† D QRU† F SURYLGHVWKLUG
SDUW\GHIHQGDQWVZLWKWKHULJKWWRUHPRYHDFDVHWRIHGHUDO
FRXUW

-- 9 of 12 --

)LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO
1R
6HFWLRQ D
6HFWLRQVWDWHVLQUHOHYDQWSDUW
D ([FHSWDVRWKHUZLVHH[SUHVVO\SURYLGHGE\$FWRI
&RQJUHVV DQ\ FLYLO DFWLRQ EURXJKW LQ D 6WDWH FRXUW RI
ZKLFK WKH GLVWULFW FRXUWV RI WKH 8QLWHG 6WDWHV KDYH
RULJLQDOMXULVGLFWLRQPD\EHUHPRYHGE\WKHGHIHQGDQWRU
WKHGHIHQGDQWVWRWKHGLVWULFWFRXUWRIWKH8QLWHG6WDWHV
IRUWKHGLVWULFWDQGGLYLVLRQHPEUDFLQJWKHSODFHZKHUH
VXFKDFWLRQLVSHQGLQJ
$VWKHVWDWXWRU\ODQJXDJHPDNHVSODLQRQO\³WKHGHIHQGDQWRU
WKHGHIHQGDQWV´PD\UHPRYHXQGHU† D 7KHTXHVWLRQ
WKHQLVZKHWKHUDWKLUGSDUW\GHIHQGDQWLVD³GHIHQGDQW´DV
WKDW WHUP LV XVHG LQ † D 7KH PDMRULW\ YLHZ LV WKDW
WKLUGSDUW\GHIHQGDQWVDUHQRW³GHIHQGDQWV´IRUSXUSRVHVRI
† D 6HHHJ-RKQVWRQY6W3DXO)LUH 0DULQH,QV
&R ) 6XSS G (' 0LFK ³>7@KH
PDMRULW\YLHZ>LV@WKDWWKLUGSDUW\GHIHQGDQWVPD\QRWUHPRYH
XQGHU† D ´ *DOHQ0HG,QFY2ZHQV)6XSSG
:'9D VDPH 6FKPLGWY$VV¶QRI$SW
2ZQHUV ) 6XSS ' +DZ ³7KH
PDMRULW\YLHZLVWKDWWKHGHWHUPLQDWLRQRIZKRLVDGHIHQGDQW
LVGHWHUPLQHGE\WKHRULJLQDOFRPSODLQWQRWVXEVHTXHQWWKLUG
RUIRXUWKSDUW\FRPSODLQWV´ 7KLVLVDOVRWKHSRVLWLRQWDNHQ
E\WZRRIWKHOHDGLQJWUHDWLVHVRQFLYLOSURFHGXUH 6HH
0RRUH¶V )HGHUDO 3UDFWLFH † >@>E@>LY@ DW
0DWWKHZ%HQGHUGHG ³>7@KLUGSDUW\GHIHQGDQWVDUH
QRW GHIHQGDQWV ZLWKLQ WKH PHDQLQJ RI WKH UHPRYDO VWDWXWH
´ & &KDUOHV $ODQ :ULJKW $UWKXU 5 0LOOHU
(GZDUG+&RRSHU)HGHUDO3UDFWLFHDQG3URFHGXUH†
GHG ³1RUFDQWKLUGSDUW\GHIHQGDQWVEURXJKWLQWR
WKHVWDWHDFWLRQE\WKHRULJLQDOGHIHQGDQWH[HUFLVHWKHULJKWRI
UHPRYDOWRWKHIHGHUDOFRXUW´ 6LPLODUO\WKH$PHULFDQ
/DZ ,QVWLWXWH FRQVLGHUV WKLV WKH EHWWHU YLHZ DV LW KDV
UHFRPPHQGHGWKDW&RQJUHVVDPHQG†WR³PDNH>@FOHDU
ZKDWWKHSUHVHQWODZPHUHO\LPSOLHVWKHULJKWRIUHPRYDO
DSSOLHV RQO\ WR WKH DFWLRQ DV IUDPHG E\ WKH SOHDGLQJ WKDW
1R )LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO

FODLPVEURXJKWE\WKHRULJLQDOSODLQWLIILVDVPXFKμMRLQHG¶WR
WKRVHFODLPVDVDQ\RWKHUW\SHRIFODLP´ 8QGHUWKLV
LQWHUSUHWDWLRQWKHSODLQWLII¶VFODLPVDJDLQVWWKHGHIHQGDQWRU
WKH GHIHQGDQWV DUH ³MRLQHG´ ZLWK WKH GHIHQGDQWV¶
FRXQWHUFODLPVDJDLQVWWKHSODLQWLIIVZLWKWKLUGSDUW\FODLPV
DVVHUWHGE\WKHGHIHQGDQWVWKLUGSDUW\SODLQWLIIVDJDLQVWWKLUG
SDUW\GHIHQGDQWVZLWKFURVVFODLPVDVVHUWHGE\ GHIHQGDQWV
DJDLQVWRQHDQRWKHUDQGVRRQ2WKHUFRXUWVKDYHUHDFKHGWKH
RSSRVLWHFRQFOXVLRQDQGKHOGWKDW† F RQO\DSSOLHVWR
FODLPV MRLQHG E\ WKH RULJLQDO SODLQWLII V LQ WKH XQGHUO\LQJ
DFWLRQ6HHHJ(ONKDUW&RRS(TXLW\([FKY'D\)
6XSS ' .DQ ³>5@HPRYDO XQGHU
† F LVDYDLODEOHRQO\ZKHQDUHPRYDEOHFODLPμLVMRLQHG
ZLWK¶ D QRQUHPRYDEOH FODLP 6WULFWO\ FRQVWUXHG WKLV
SURYLVLRQ RQO\ SHUPLWV UHPRYDO RI FODLPV MRLQHG LQ WKH
SODLQWLII¶VFRPSODLQW´ 6KDYHUY$UN%HVW)UHLJKW6\V,QF
) 6XSS :' $UN ³>7@KH UHPRYDO
VWDWXWH OLPLWV UHPRYDO WR D VLWXDWLRQ ZKHUH WKHUH LV D
MRLQGHU RI FODLPV E\ WKH SODLQWLII DQG GRHV QRW DXWKRUL]H
UHPRYDOE\DWKLUGSDUW\GHIHQGDQW´
:H EHOLHYH WKDW WKH QDUURZHU UHDGLQJ RI ³MRLQHG´ LV WKH
FRUUHFWRQH$OWKRXJKWKHXVHRIWKHWHUP³MRLQHG´GRHVQRW
RQLWVRZQIRUHFORVHDQDOWHUQDWLYHLQWHUSUHWDWLRQWKH)HGHUDO
5XOHVRI&LYLO3URFHGXUHFRQVLVWHQWO\XVHWKHWHUPWRUHIHUWR
FODLPVRUSOHDGLQJVWKDWRQHSDUW\DGGVWRFODLPVRUSOHDGLQJV
WKDWWKHSDUW\KDVDOUHDG\PDGH5XOHRIIHUVWKHFOHDUHVW
H[DPSOHVWDWLQJWKDWDSDUW\ZKRDVVHUWVDFODLP³PD\MRLQ
DVPDQ\FODLPVDVWKHSDUW\KDVDJDLQVWDQRSSRVLQJ
SDUW\´5XOH E VWDWHVWKDWDSDUW\PD\³MRLQ>@´PXOWLSOH
GHIHQVHVRUREMHFWLRQVLQWKHVDPHSOHDGLQJRUPRWLRQDQG
5XOH J DOORZVDSDUW\PDNLQJDPRWLRQXQGHU5XOHWR
³MRLQ ZLWK LW DQ\ RWKHU PRWLRQV´ DOORZHG 5XOH D
ZKLFKJRYHUQVVXESRHQDVVWDWHVWKDWDFRPPDQGWRSURGXFH
HYLGHQFH PD\ EH ³MRLQHG´ ZLWK D FRPPDQG WR DSSHDU
)LQDOO\5XOH E DOORZVSDUWLHVHLWKHUWRILOHDVLQJOHPRWLRQ
IRUMXGJPHQWDVDPDWWHURIODZRUIRUDQHZWULDORUWR³MRLQ´
WKHWZRDVVHSDUDWHPRWLRQVILOHGDWWKHVDPHWLPH7KHXVH
RI³MRLQ´LQWKHVHUXOHVPDNHVVHQVHRQO\LILWLVUHIHUULQJWR

-- 10 of 12 --

)LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO
1R
$QXPEHURIFRXUWVKDYHFRQFOXGHGWKDW† F GRHVQRW
DXWKRUL]H WKLUGSDUW\ GHIHQGDQWV WR UHPRYH EHFDXVH
³>U@HPRYDORQVXFKEDVLVLVWRRPXFKDNLQWRWKHWDLOZDJJLQJ
WKHGRJ´(J/HZLV)GDW TXRWDWLRQRPLWWHG
$VRQHGLVWULFWFRXUWREVHUYHGPDQ\\HDUVDJR³>$@OORZLQJ
UHPRYDOE\DWKLUGSDUW\GHIHQGDQWEULQJVLQWRDIHGHUDOFRXUW
DVXLWEHWZHHQWKHRULJLQDOSDUWLHVZKLFKKDVQRLQGHSHQGHQW
EDVLV IRU IHGHUDO MXULVGLFWLRQ 7KLV LV DQ XQZDUUDQWHG
H[WHQVLRQ RI WKH IHGHUDO MXGLFLDO SRZHU´ %XUOLQJKDP
8QGHUZRRG%DUURQ:ULJKW :KLWHY/XFNHQEDFK66&R
) 6XSS 6'1< ,Q DGRSWLQJ WKLV
YLHZFRXUWVRIWHQHPSKDVL]HWKDWWKHUHPRYDOVWDWXWHVPXVW
EH QDUURZO\ FRQVWUXHG DQG WKDW † F ZDV DGRSWHG LQ
RUGHU ³WR UHVWULFW UDWKHU WKDQ H[SDQG WKH VFRSH RI UHPRYDO
IURPWKHVWDWHFRXUWV´$QGUHZVY(OHF0RWRU6\V,QF
)G 6'2KLR FLWLQJ$PHULFDQ)LUH &DV
&RY)LQQ86 6HHDOVRHJ)OHHW%DQN
1+ Y (QJHOHLWHU ) 6XSS '1+
KROGLQJWKDW&RQJUHVVLQWHQGHGRQO\WKDWRULJLQDOGHIHQGDQWV
EHDEOHWRUHPRYHSXUVXDQWWR† F 6HTXR\DK)HHG
6XSSO\&RY5RELQVRQ)6XSS :'$UN
KROGLQJWKDWXQGHUD³VWULFWFRQVWUXFWLRQ´RI† F
WKLUGSDUW\GHIHQGDQWVPD\QRWUHPRYHWRIHGHUDOFRXUW
7KLVYLHZRI† F LVFRQVLVWHQWZLWKRXUFRQFOXVLRQ
WKDW WKLUGSDUW\ GHIHQGDQWV PD\ QRW UHPRYH SXUVXDQW WR
† D 7KHGLIIHUHQFHEHWZHHQWKHWZRSURYLVLRQVLQWKLV
UHVSHFWLVWKDW† F XQOLNH† D GRHVQRWLQFOXGH
WKHSKUDVH³WKHGHIHQGDQWRUWKHGHIHQGDQWV´ZKLFKZHKHOG
VXSUDPXVWEHFRQVWUXHGQDUURZO\7KXVLWLVSRVVLEOHWKDW
† F HYHQLIFRQVWUXHGQDUURZO\PD\SHUPLWWKLUGSDUW\
GHIHQGDQWVWRUHPRYHWRIHGHUDOFRXUW7KHUHVWRI† F
PXVWDOVREHFRQVWUXHGQDUURZO\KRZHYHULQFOXGLQJWKHWHUP
³MRLQHG´6RPHFRXUWVKDYHLQWHUSUHWHG³MRLQHG´DVXVHGLQ
† F EURDGO\WRHQFRPSDVVDOOFODLPVEURXJKWWRJHWKHU
LQWKHOLWLJDWLRQLQTXHVWLRQ6HHHJ)RUG0RWRU&UHGLW&R
Y $DURQ/LQFROQ 0HUFXU\ ,QF ) 6XSS
1',OO ³$VHSDUDWHDQGLQGHSHQGHQWFODLPDJDLQVW
DWKLUGSDUW\GHIHQGDQWSODFHGLQWRDVLQJOHODZVXLWZLWKWKH
1R )LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO

FRPPHQFHV WKH DFWLRQ &RXQWHUFODLPV FURVVFODLPV DQG
WKLUGSDUW\ FODLPV FDQQRW EH WKH EDVLV IRU UHPRYDO´ XQGHU
† D $/, )HGHUDO -XGLFLDO &RGH 5HYLVLRQ 3URMHFW
†FPWDW 7HQW'UDIW1R$SULO
:HKROGWKDWWKLUGSDUW\GHIHQGDQWVDUHQRW³GHIHQGDQWV´
IRU SXUSRVHV RI † D $V ZH KDYH RIWHQ QRWHG WKH
UHPRYDO VWDWXWHV DUH WR EH QDUURZO\ FRQVWUXHG 6HH HJ
/RQJ)GDW ³>%@HFDXVHWKH\LPSOLFDWHIHGHUDOLVP
FRQFHUQVUHPRYDOVWDWXWHVDUHWREHQDUURZO\FRQVWUXHG´
%ULHUO\Y$OXVXLVVH)OH[LEOH3DFNDJLQJ,QF)G
WK&LU ³,QLQWHUSUHWLQJWKHVWDWXWRU\ODQJXDJH
ZH DUH PLQGIXO WKDW WKH VWDWXWHV FRQIHUULQJ UHPRYDO
MXULVGLFWLRQ DUH WR EH FRQVWUXHG VWULFWO\ EHFDXVH UHPRYDO
MXULVGLFWLRQHQFURDFKHVRQDVWDWHFRXUW¶VMXULVGLFWLRQ´ FHUW
GHQLHG 86 ,Q FRQVWUXLQJ WKH IHGHUDO
UHPRYDOVWDWXWHVVWULFWO\ZHKDYHUHOLHGXSRQ6KDPURFN2LO
*DV&RUSY6KHHWV86 ,QWKDWFDVHWKH
6XSUHPH&RXUWKHOGWKDWDVWDWHFRXUWSODLQWLIIDJDLQVWZKRP
WKHGHIHQGDQWKDGILOHGDFRXQWHUFODLPFRXOGQRWUHPRYHWR
IHGHUDO FRXUW XQGHU WKH VWDWXWRU\ SUHGHFHVVRU WR † D
7KH6KDPURFN2LO&RXUWQRWHGWKDWEHWZHHQDQG
WKHUHPRYDOVWDWXWHJDYHWKHULJKWRIUHPRYDOWR³HLWKHUSDUW\´
VHHLGDWEXWWKDW&RQJUHVVKDGDPHQGHGWKHSURYLVLRQ
LQ WR DOORZ UHPRYDO ³RQO\ μE\ WKH GHIHQGDQW RU
GHIHQGDQWVWKHUHLQ¶´,GDW TXRWLQJ† D 7KH
&RXUW FRQFOXGHG WKDW &RQJUHVV LQWHQGHG ³WR QDUURZ WKH
IHGHUDOMXULVGLFWLRQRQUHPRYDO´LQDPHQGLQJWKHVWDWXWHLQ
WKLVZD\LGDWDQGWKXVWKDWFRQJUHVVLRQDOLQWHQWERXQG
WKH&RXUWWRGHQ\SODLQWLIIVWKHULJKWWRUHPRYHHYHQLIWKH
SODLQWLIIVZHUHVXEMHFWHGWRDFRXQWHUFODLPE\WKHGHIHQGDQW
,Q UHDFKLQJ WKLV FRQFOXVLRQ WKH &RXUW DOVR UXOHG WKDW WKH
VWDWHV¶LPSRUWDQWLQWHUHVWLQWKHLQGHSHQGHQFHRIWKHLUFRXUWV
UHTXLUHG³VWULFWFRQVWUXFWLRQ´RIWKHUHPRYDOVWDWXWHV,GDW
6HHDOVR$KHDUQY&KDUWHU7ZSRI%ORRPILHOG
)G WK &LU ³'XH UHJDUG IRU VWDWH
JRYHUQPHQWV¶ULJKWIXOLQGHSHQGHQFHUHTXLUHVIHGHUDOFRXUWV
VFUXSXORXVO\ WR FRQILQH WKHLU RZQ MXULVGLFWLRQ WR SUHFLVH
VWDWXWRU\OLPLWV´

-- 11 of 12 --

)LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO
1R
$OWKRXJK 6KDPURFN 2LO LV QRW GLVSRVLWLYH RI WKH SUHFLVH
LVVXHEHIRUHXVLWGRHVGLFWDWHWKDWWKHSKUDVH³WKHGHIHQGDQW
RU WKH GHIHQGDQWV´ DV XVHG LQ † D EH LQWHUSUHWHG
QDUURZO\ WR UHIHU WR GHIHQGDQWV LQ WKH WUDGLWLRQDO VHQVH RI
SDUWLHV DJDLQVW ZKRP WKH SODLQWLII DVVHUWV FODLPV 7KLV
LQWHUSUHWDWLRQ RI ³WKH GHIHQGDQW RU WKH GHIHQGDQWV´ LV
EROVWHUHGE\WKHXVHRIPRUHH[SDQVLYHWHUPVLQRWKHUUHPRYDO
VWDWXWHV7LWOHJUDQWVUHPRYDOSRZHULQEDQNUXSWF\FDVHV
WRDQ\³SDUW\´VHH86&† D DEURDGHUJUDQWRI
SRZHU WKDW FRXUWV KDYH LQWHUSUHWHG WR H[WHQG WR WKLUGSDUW\
GHIHQGDQWV6HH7KRPDV%%HQQHWW5HPRYDO5HPDQGDQG
$EVWHQWLRQ5HODWHGWR%DQNUXSWFLHV<HW$QRWKHU/LWLJDWLRQ
4XDJPLUH&XPE/5HY
VXPPDUL]LQJ EDQNUXSWF\ FDVHV DOORZLQJ WKLUGSDUW\
UHPRYDO 7LWOHDOVRDOORZVUHPRYDOE\DQ\³IRUHLJQVWDWH´
DJDLQVW ZKLFK DQ DFWLRQ LV EURXJKW LQ VWDWH FRXUW VHH
86& G DQG FRXUWV KDYH LQWHUSUHWHG WKDW JUDQW WR
LQFOXGH IRUHLJQ VWDWHV WKDW DUH WKLUGSDUW\ GHIHQGDQWV 6HH
-RQDWKDQ5HP\1DVK3HQGHQW3DUW\-XULVGLFWLRQ8QGHUWKH
)RUHLJQ6RYHUHLJQ,PPXQLWLHV$FW%8,QW¶O/-
Q VXPPDUL]LQJ FDVHV %\ FRQWUDVW
† D ¶VJUDQWRIUHPRYDOSRZHULVPXFKPRUHOLPLWHG
LQVWLOOLQJ D ULJKW RI UHPRYDO RQO\ LQ WKH GHIHQGDQW RU WKH
GHIHQGDQWV6HHHJ-RKQVWRQ)6XSSDW QRWLQJ
WKDW WKH WHUPV ³GHIHQGDQW´ DQG ³WKLUGSDUW\ GHIHQGDQW´
³W\SLFDOO\ DUH XQGHUVWRRG DV UHIHUULQJ WR GLVWLQFW SDUWLHV´
.QLJKW Y +HOOHQLF /LQHV /WG ) 6XSS
('1< FRQFOXGLQJWKDWWKLUGSDUW\GHIHQGDQWLVQRW
D³GHIHQGDQW´DVWKDWWHUPLVXVHGLQ† D )ULGGOHY
+DUGHH¶V)RRG6\V,QF)6XSS :'$UN
³:HKROGWKDW D OLPLWVWKHULJKWWRUHPRYHWR
GHIHQGDQWVDQGGRHVQRWJLYHDULJKWRIUHPRYDOWRWKLUGSDUW\
GHIHQGDQWV´ 7KXVFRQVWUXLQJWKHUHPRYDOVWDWXWHQDUURZO\
ZH FRQFOXGH WKDW WKLUGSDUW\ GHIHQGDQWV GR QRW KDYH D
VWDWXWRU\ULJKWRIUHPRYDOSXUVXDQWWR† D
1R )LUVW1DW¶O%DQNRI
3XODVNLY&XUU\HWDO

6HFWLRQ F
7KLUG3DUW\ 'HIHQGDQW +RUQH DOVR DVVHUWHG 86&
† F DVDEDVLVIRUUHPRYDOLQWKHSUHVHQWFDVH7KDW
SURYLVLRQVWDWHV
:KHQHYHUDVHSDUDWHDQGLQGHSHQGHQWFODLPRUFDXVHRI
DFWLRQZLWKLQWKHMXULVGLFWLRQFRQIHUUHGE\VHFWLRQ
RIWKLVWLWOHLVMRLQHGZLWKRQHRUPRUHRWKHUZLVHQRQ
UHPRYDEOHFODLPVRUFDXVHVRIDFWLRQWKHHQWLUHFDVHPD\
EH UHPRYHG DQG WKH GLVWULFW FRXUW PD\ GHWHUPLQH DOO
LVVXHV WKHUHLQ RU LQ LWV GLVFUHWLRQ PD\ UHPDQG DOO
PDWWHUVLQZKLFK6WDWHODZSUHGRPLQDWHV
$VRQHGLVWULFWFRXUWLQWKLVFLUFXLWQRWHG\HDUVDJR³WKHUHLV
DQLUUHFRQFLODEOHFRQIOLFW>DPRQJWKHDXWKRULWLHV@UHJDUGLQJ
ZKHWKHU WKLUGSDUW\ DFWLRQV DQG FURVVFODLPV FDQ EH
FRQVLGHUHG XQGHU † F DV IXOILOOLQJ WKH μVHSDUDWH DQG
LQGHSHQGHQW FODLP¶ UHTXLUHPHQW RI WKDW VHFWLRQ´ :KLWH Y
+XJKHV)6XSS :'7HQQ 2IWKH
FLUFXLWVWRKDYHFRQVLGHUHGWKLVTXHVWLRQWKH(LJKWK&LUFXLW
KDVKHOGWKDW† F GRHVQRWSHUPLWWKLUGSDUW\GHIHQGDQWV
WRUHPRYHVHH/HZLVY:LQGVRU'RRU&R)G
WK &LU ³:H GR QRW EHOLHYH † F ZDV
LQWHQGHG WR HIIHFW UHPRYDO RI D VXLW QRW RWKHUZLVH ZLWKLQ
IHGHUDOMXULVGLFWLRQEHFDXVHRIWKHLQWURGXFWLRQRIDWKLUG
SDUW\FODLP´ TXRWDWLRQRPLWWHG WKH6HYHQWK&LUFXLWKDV
KHOG³WKDWLQWKHEURDGUXQRIWKLUGSDUW\FDVHVWKHWKLUG
SDUW\GHIHQGDQWFDQQRWUHPRYHXQGHUVHFWLRQ F ´EXWKDV
QRW DGRSWHG ³D XQLYHUVDO DQG DEVROXWH UXOH WR WKDW HIIHFW´
7KRPDVY6KHOWRQ)G WK&LU DQGWKH
)LIWK&LUFXLWKDVKHOGWKDWWKLUGSDUW\GHIHQGDQWVPD\UHPRYH
XQGHU† F ZKHQHYHUWKHUHTXLUHPHQWVRIWKDWSURYLVLRQ
DUH RWKHUZLVH VDWLVILHG &DUO +HFN (QJLQHHUV ,QF Y
/DIRXUFKH3DULVK3ROLFH-XU\)G WK&LU
DGRSWLQJ DV ³WKH PRUH UDWLRQDO YLHZ´ WKH YLHZ
³SHUPLWW>LQJ@ UHPRYDO RQ WKH EDVLV RI D WKLUG SDUW\ FODLP
ZKHUHDVHSDUDWHDQGLQGHSHQGHQWFRQWURYHUV\LVVWDWHG´

-- 12 of 12 --