Free Motion for Summary Judgment - District Court of Colorado - Colorado

Case 1:04-cv-00725-RPM

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rnenoAt trid, Q[izno's'reaklysugge$td DrorakEight hNvc tlut mr& rryhis damtiDg radum. To thiserd, Quiano's tvhettcrhekrcv tbtt laramie haddis' examired DvoBk about putedsolneof rhestatsneats Tr., 195).b ccrtairly attributed him in ErhibitIl3 (6/16/03 ro containirg therei8 no basiS suggesting Dvorak for ftat created of wholeclotha mcdorardum out such debil andothercannarts au6enticity.In thisregard, ulge ahat Courtitselfcarewe tbis of (6/l6io3, Tr., 142;ExhibitI-13).' Weu|geaswell thatftis tully examine memorundurn the Coult examircQuizno'!irtemrl fiDarcial stlteoents rportilgotrAFD's2002prfotmance, i0 squa&lycorroboratiig lffamic's stsEoeinrald showing AFD'S$20,000,000 profit$, iD of in $5,000,000 excss Schader's $15,000,000 projections.& ! lurportatly, kramie'8 "dispuae' mt !o with ttrecalqlatiorsatuibutod him rvas fhatl|e did not make them,hrr tharhdid norspecificaly tbe aurlbut frgucs to Qqitro's- Exhibit 154, Depocitiotr Malk l,aranie,pp. 87-89,Hoqvu, Lanmic actnowledged the caltbat U28il03 of arcua&ly descdbc AFD s,o*s, thatrbecalculrriors nrlncricdly sccurate, thst cularior$ Ire hory thefrgurcrto whichtl& calqrlatiotrr applied ftoE Quizno's, that, if aod rflectcd arc artualdata youapplythecalculrtions tb figurs, rcsultis $15,000,000. lDid. Givetr these admi!rhe to sion8, eo crll,oraDrous the Dturc of tberolDMurn, thr obvioNqodibilily of Dronk andthe factlhatAFD'Sicnul performtne exc&edd Etated tbr meoontdun, tbcaudEtficityof that h questiotr. I-13 is beyond Exhtbit ' Exhibitl-13 it!lf tumi6lres atrd of sroDgcvidcrce Quizroherpectatior8 Fojectionsfor AFD. ExhibirI-13'r valuein provingwhatAFD wa6 is LeighEned Quizlo's faihre to by about, generating have subsidiary, any in&rml autysisof rhBt rcveolre $t50,000,000 Uoduced detailed any projcriois AFD during20m atld2001 tcludinB analyris whichshowad its i rDal lor tllat rvhich differd from ttrose of reported l2lanie. Onemust$Estionthecatrdor a c.ompaoy by gemratd documeatio! pcdaiDlDC theplauhg of r subsidiary claimsncverto h e to of vital this ciz. s It is well-settled posr-mergp! by th.t evidengc should co$idered lhis Couft in deteroi4be itrgthc valucof Quizro'! at fic timeof tbemerger,For cxrmple,iD C?de Co, v, Teclukolor, & pre-Ecrgsr ,zc., 7J8 A.2d,|85(Del. 2000), plans colErplaEd tltessleof certaitr cxplessly Tcchnicolor dli'isiols h theyea!aftcl thcrler8erard foreast lessthl! $50million in cssh no Thccourtheldthattbeactut sslepdce,$55.7millioa,wasadmissibl validatc to tbe Foceds. pte-merger forcast statd it wareror to rcjccltbiopactof thcpq$-nergcractivitis io snd lhat dcttrmili4 &c hir value Technicolor thcring of U|e v. of udgpr. S.eolso,Gowalves rt (questioaitrg Struigttt Arlow Pub,lnc.,7Ol A.U 357,362(Del. 1997) court'srejectiorof tbeu3 of year-Gdactual rasnlts werc reulls drtcfloiniog vduc, evet haofb oDlyhalf-year fair b (continued. ..)
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posFmergcr In sum:Respordclts' oFracvidure provingAFD'Sinportanc Quiztro's !o tions,ard proviagtheSchadens' iotrto rploit thardrvelopnmtfor $eir ownbqlefit, inte! poltions thedepositior of of testimoay a laigclystards unrebufied. to rcfcrerce isolatd Quiztro's person trot does overtide importance not tie at Quizro'schosc to callai a witness trial, celtaiDly that of this docutnntary O! cstabllsh8, least, the$63.81pe! at eviderrc. it! face,thisevidencB figuE basd Quino's imFessive rcalizd a share oo storegrowth lgprsentssolidard rcalisard cvenole petuy of tic value. This is sobcausr $63.81 the fillrle docstrottskeintocotskientioa proltrs]i,hicnhadbeetr alticithe$20,000,000 rFw profitsgenefaled AFD du [g 209r,, il by p.ted andplaued for DyQuiao's befor.ad duriq Fall, 2001. For pulposes GmonsfttiogAFDt irpact upollQ{rinoh fair value,theFagan Grou! of per asked cotdesto calc-ulate additior8l shale Mr. the valucof Quizro'swlich wouldtEsultftom a! each calcdatio!establishcs edditiorslmilion do[a$ ofprofih earnd Quizmt. Cordcs' by addftional valuof $1,70r rhate(8/a5i03 p. 127). TheFagrnGroupsubmits olat,.t thcnd Tr., 21, of theday,Ois Courtshould fix t[e "falr valu." of Quizoo'8 ofDccember 2001withort as not giviq anycoosidration thcpoolof $bstadial profitsgcDcrated AFD. Otherwis, tllg by to SchadeN be wroqly rwarded iEplNrentiog s$EE-out strrles/ explicillydevill for tlcir rcribcdby Mr. laramic: ro "privatiz." Quizuo's before rhe bcfoEAFD badfirlly maud aDd iostitrtionof thedational bor. lhe advertisitg canpaiF to befudd by AFD, At triNlQuizno'8 burden explaiDiru it wouldbetigbt for thir Courtio nr'ruty of igoore AFD itr calsiating why 'fair value' in addition ertirrD igloritrg grow$ ad Quiztro's to Quizoo's , Qui'no'sactrrsl gmwtbe natheoutically ascertailed failue at Qoizno's , of cours, thesro riac to overlook

ryl- U991 st at &row[o fte tios of tl|e nsrger)., v. ., Ross Proco Mulg,genr4 I'/.,Del. Ch. 1983 15-6(19E3); Hoglev. AnefictMedlcal, , 63 P.3d80, 89(Utrb, 2@2). Inc.

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pelson perfom s "fair valuc' appBilal). Quizno's failcdto su$tail to retainaly iDdeperdent to atryof these burde$r, 4, To Quizno's"Fair Value"Bea$No Relaaiotrship TheMatketPdce Of Quizno's Stock The WhichNcvcrRellected Company's lts Ecotromic Littlc Effort To Publicizc S\lccss, Quialo'sMade Economic Suc{e3s TheMarketSoThatThMa*et P.ice To "Fair Value". WouldReflect Ouiztro's gro$'th prosperity, theunco raatrd TheuDcont adicted fNctE ard conccming Quiano's pricingof Quiztro's dictedfactscolceminS historyof thestock stock,iretutably esthe market's rcladonship thc true to tabltuh themalketpriceof Quizno's thai stock ncverboreary meaningful valueofthe corpaoy, Acaoditrgly,iawasfatuous TuckrAr hotryin 2001,aDdit is cqually for for ai fabrous Quizno's thislitigarion, u.geits na*et Dricp a proxyfur "fair valu'. Exin to hibit V(9X1)set$ forth dleconplling details: Dccenber, 1998 (Schadens' OtferTo 2000 Novanbcr, Flr8t Todcr Private) (Qdino's Ofrll) TsteConlany
StockPrice (citedby Schaders as prico) for basis olnderd EBffDA AnDualized Atutr|alized Systenwid S.ler

Decenber, 2001 (Merger) $8.s0 (merger pnc6)

$8.00 (schrdsE' offcr) $2,000,000 $l12,000,000

$8.00 pric) (tcldcrofrer $9,800,000 0332,0m,000

$r2,2oo,ooo
$42E,00o,mO

lha! the conparry Thus,thernalketplacd greater tro vahre upo! Quizno's a $428,000,000 .s placed market uponQuiztro's a $112,000,000 as compaly, lo TheSchadens tbemsetvec acutely welr awars ofthls phetfiIcno! andftey endervord pcr offef cias xploitit. lo Decrmber, 198 theSchadeos then$E,00 sharc cotferded thcfu that "fair". The Schldctrs jusdfidthir ofler by rsfqnccto Quizl|o'rmr*et pric. TheSchadens

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did soDotwidFtarditrg kDowledge Quialo'swargrowiry dramaaically b|d expaded their af,d tlut io a conpany s,ith a meatingtrllrdoMl p.rselcr. (ultinatety Then,drc years adva late!,theSchadeDs d thevlyrcrnc$8.00p{oposal io incrased $8.50), TheSchsdeDs justifiedtheamoudof theiroffr by reference to again price. But,by ltli$ ti[le, rs th9Schadens fully r*are, Quizno's EBITDA, market vere Quizno's whichhadbeen By in was $2,000,m0 199E, six tlrEs larger- $12,(}00,000. tbis time,as.the toSchadens werefully awarg, al$o as Quino'Esales, theftarchisorofa letwork of &anchisees, taled$428,000,000, conpaled $112,000,000 1998. as to h perhtls morcth8tr atryonc els,hew that Thecorclusiotr irEscapable tb Scbadn$, is thrt pric! wastncbvrnr !o Quiao'i vahe. Whrt is paniculady inponaotfor lhis Quizio's market "trurketprice' figurecouldbe case ut lheSghaderB/Quiano'r knewthatthisEeanirgless is also exploited justify theSch8ders' engaged iust in to unfair"mcrger Fic". the SchadrovQuinm's suchexploitrtion.3' malres dtis Exhib'rt V(9)(2)(a cosDanion above) summary V(9Xl), tle sumury quoted to poirt i! ro equally conpelling whrt Quiztro's mattetpricc wiy. ExbibitV(9)(2)denoErrates

!' As discussed ro thoughdr thlsbrief, durtngthislitigation has Quizoo's continued exploit thettteaDilgless for narktpriceol ik stook ajustifrcaiion |lrgitrglhatlhis Cout 8ccpt as $8.50 thaiflgurea$rptesltirgfait vsluc. Qsiao's litigationargunent thir rcspect furdamtrls h tally tbesatl|e, srticulabdi! a nore oblique tban althougb fashioa, Quizro'strctic in Fall, 2001. As cxplairrcd AryunentC,3 below,Qdzno'cEriticizcd Cotder'anraiBalot grotld! i! Mr. ih3tit did notac4ou for Qutzno's 2001. Thc o48s slull narketcapitrlizado! of December, premise tlis posidoris ftat Quiz[o'sDartct capilalization anNcrurate e,ssaly barolret. of of was v8lue. Io turD,thispremfue assrrms Quiztro's dEt mrr*et priccwasngaairgful. As demonstrated abovc, lrtter prelli6cls manifcstly tuc. TbcCourtsh@ld a.not &je{t all QdzDo's dre "fait valuc",ad atl guneDts concerniru Hoffun or Cordes, Quizro'sarfuEeftscritiquiDg whicl arebasd tie as$oprionthatQuizno's nu!on nartet pdcawarcoqect,or 8nt Quizno's ket capitrlizstbnwara meanitrgfrl numDel.

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prbc of I shueof Quizno's value rnaywell havebe{oner/ft market st0ctdid rellectQuizDo's (asQuiztro's argued ha$ througlout)3r:
Decenber, 1998 (Sehaders' OfferTo Dccsuber. Fint November, 2000 TakeConpany kivate) (Q{ia$'s Tc0der Offcr) 2001(Mergor) $55pershale $25persb.rc

Slockhice Brsi! Applic{rionOf SioreGrowlh Application Reverue Of CroPth
ADDlication Of

tl22 prshore pr S58 sh.re pr $117 sh're

pr $181 share t6l prshare pr $19? sbtre

sy"*riiJo sal6.".l

s39persiwe

2ml with I! accordance thisd^2, tfu nott cowen/stive valuatiotr Quiao's asof Decrnber, , of at i6 $61per sharc.But, h fact,asof Decs$er, 2001QulzDo's stockwasrtill latrguishing ap proximatrly $8.00per shafe, Thecoaclusion cl$r, asProhrpck is MomrcdQuiztro\BoardofDirectorsin his rletjust for ingswith them:"$e market do$tr't csre" I! thehcc of thisevidelcsit wasmirlesding . plice to merger h Quizno's urgcuponitr publicatockholdqs Fall, 2001tbefrirEss of its $E.50 price's"prcmiun" wer n rkd p.ic. Sidlarly, Quizno's arguaEreflectd O|at by litigatiotr "Eartet price" of its $tock (itherstadttrgdole me.tssuggesting thestdic ad meadlgless that or asillHded in QuizDo's bsmdebr of thc 'fat vdue" of na*et cspitslizrtior) atraccu.ate i$ thecoopanyarellatly wrong.r3 u As tbebase calculating drta,ExhibirV(9X2)u6cs economic rnetrics whichexfor the ahi! istdi! Febru.ry.1994,whenQui.ao'sclosed iritial pubticofferttu i! comectioD which wirh it! p.icedits stockat $5.00. Quizoo's tsIn ih Opditrg pricewa8a validbamne&rof Statement, argucd its market tbat Quizoo's vslu! becruse thc idportued by hadricd t0 stimdat narktard thr oarkct, although Quiztro's to rcognize cornpary's tbrt Qrizno'sw8sDot tbc valu,hrd decidrd thelterig oo Quiao's valuable: several steps punp up its stock gsErateifitpst. It met to ald Quiaro'shasta&en with theaDalyst rleatdly.I hirede Eoroocr... (continued. ..)

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5.

A synopsi!Of Thr PriDcipal Ad CbarDtedstics As$m$ios of To T[svaryin& "F i! V6lue' Opiniors hssented TheCoun.

Thc larative in Poiots 6e the A,1-A,4above discurses frctorsthatdistinguish varymg "fair laluc" opinioisnhich have Croupsetrfonh bebeen prseDted tlc Colrlt. TheFaBsn to low, in hopes assisting Cout in differeatiating opitriotrs, synopsis theprirEipal of a of the these characteristics ard assutnpttor8 of, in of udedying, each them,asdislssd thgnarrative.
VALOE SYNOPSIS PRINCIPAL MPUCATED TI{E 8Y POIN1S OF PERSHARE VARIqUS"FAIRVALI'E' OPINIONS Bf ADVANCED IE!48L o! $E.50 . SUFoncdby Tuctcr Alibory "fajmlr opidon". TucLcrArlbory's opiDionis ba8d
aoalysfu dtd ir Fr 2000rs thecmprry', rdvbor for fte $8 sclf-te{der. Tucter Antltey l}ony lr c! liq.d ar rdvisorto Special Coddiur dueto rclatiotr&ipwith Quizro's ard thc s4hi.bn'8. . Alalysb blid o! QuizDo'!ptoxy ltrlelE p4jrcrioff, i,hch \re,Eb6rrd oo Qublo's pojcctid! iEh!&d liacod rerulB ftrough 3/31/01rdth Projeclio!!lh.rftcr. Thcsc nodel. Therprqircccnsingfs rsvcN! for Qoizro'! b{rcd on thepIG-AFD opefatitr8 gto![th, deaphr tio$ atlo us\n d . dlctirirg rna of Dcs storc Quido'i bbtolt of accdretingne$rltott grofih, .Ignorlr DCF dcthodoloryandcofic4rcDtlyrli6 otr coqarnblc cmpany artrlysir. Hoc/cver,thft $r! m atLopt io vduc Quizno'8 coEpariru Quiao'3 to oltpt f.ri by gtowingrcstaurrntcor@loica. Irltcad, Tllckcr Ao$ony cooparr3Q!ia|o'3 to 3low grow& rrd uqrtrledtrslaurad corDprDi,s.

Ultimatcly,each everyoneof trc steps Quizm'stookir ancffort to plop up ald 0|at proved its stockatrdgercraei crast, Tr., uravailhg(5/5/03 pp. 1617) "analyst" testi&, Nor did But, duriogthetdal QuizDo's notcauany did to Quizro'scall thercf'promote!'. Inste3d, ar cupFort its rgp.entation8 ercnced lhatQuizno's Darketprice ad for was a validbarometrr \,"aluc of of bccause reflctd drenarket'sshrdid rs06$Ecrt thecomit prny, Quizro'E (6/4/03Tr,, 1(),refcniDgto offercdgeDeralizcd testimory Ma* Bromberg by "iDpromptu' cott|me Schsden made anilysts).In additiod, hirnseff s hc claiEr to have to claimed workedhtqBely at iBvestor he aDd relations theuakingofFe{cntrtiot6 to aDalysts wittrers, conlirm to ofrelednot a $hgledocungnr, cstled I single thid-pNrty Dot Quizno's ard Schadc|r's restimorrhl bald assertiolg Theabserrcc idepeodent rvidrtheinveshelr of evi&ncepmvilg Quizro'sacti\, dedings pdce,a carnmunity suggests at lealt stafling l99E tu *h&ns FeJefiedtbatthemarkt $at, ln , Iow. A low pricewouldemblcthemto doprecisly whrt theywa||ted do, i.e., takcover to piice at Quiano's thc cheapest pos6ibl.

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$36.76 .Re$lt of HoffDrln'a"bag! casc' analy3fu.
.Brled on a DCF alalysir llsing Qriz[o's prorrystatem.nt Projactiotb. Kcy as$mpliotr! ,lci l) 12%disaoultrat , 2) 8X EBITDA E[uinsl vahlcnultiplc. .Does not incftdealy stina@ iDcrcmcntal AFD velrc. of . co{fiff|.d throuih gDidetiEor an6p6rebhc$qa!) aElyrb. $46.41

'barcca$" aDAlysis. .Rcsuf of Cordes' projectioB.KEyassurlptions . Bas.d a DCFaralFb wiDgQuiztro's prory dlaGntla oo tarnitrd l}mHofurn),2) l2X EBITDA erc: l) l5t discount (mo&caNervativa ratc value tiplc(lesa m c.orrvadve Hoffm|ll], lhatr .fr addition diffrretrt lhi! diffeF fto'rr io EBnDA rtrultipler, enrlysir dircouitrateaDd of Hoffuro's qgrold iDltr.t Cordc$l) elisttatcdth. carl flownd sh{c courfeffc! SARprymetlt!3utpdo!. kyirc firaocing rba$ rEFrrcla!.ai 2) clitnilalcd and ald .Doeslot inalud!rtry crtimatc ilcrcdcnrei AFDvaluc. ot .confflnd lhrqrghgulleline caopffrblecorqrnysnrlysis or
a.!ra.lSrowtha! of l2BUol). tB.r.d on a DCF rralysir, usinS tlc rcviscdprqcctioDs Quirro's, Cordd tEvisd pro_ for jcctd rlorr groflb a!$qtion6, usilg Quizto'! actud stor! Smwth6rouh 9/$/ol. through9/30r'01, Coide! cr_ on Based thc tdrtoricelrcturl rat! of growtbof Elr, s0otrs trapolaedlrh.t Qrdao'! lew storcgrow6 ln tt? futurc{ould bc. For cxamPb,ihescrE_ vet' visnl projectioDs arsuncdQuirto't op.rcd 451 DetDar' .lorEsin cabnda.]e.i 20012' prqy staroDcrt plpjacdoos. lur 303 ir lfic Qut to's .ln redily, Qtizno't opcrcdr let 518 $orrs h 2flD, demoruhlliqglhat evcoCordas't_ visedprojectioDs wa& corscrvitivc. .mis aruw it ttu orrt, whetion bougrttlofiterd h th cat. *hich lookt at Qliaro's ac' tual flt. of tbn gtowh lhmugh9/30t0L ot opwed to Qui2rp'sslalePt&t statet@nt lrough 3mM @dwhich, i aa tut, P@iec,c.] Wjeclions t$ich ott, hd adaal |tJl/l.lts aa unptacdc$ed dov tefllttund. Doestlot irphdc .ry catimdcof [email protected]. .DCF rralysis cod nr to ule l) l5t dilcouat$8, ard 2) 12x EBITDA tslnin l vthrc.

$63-81 .Resuh of Cord$' sldysis (a! codnrdcd- indccd,lhorynto be too low - by Quizto's

$64+

.Cordcaquaflifi.ddc inprd of AID $ adirg ,pFoxina&ly$1.rup6 shar itrcrcof ildudel of me al vatuc Aosrach addidonel rnillion AFDproft. Ttit $1,70 shate $t Fr at drcidprct of lncrclFrtsladv.flieirg spcnding &c iistotic"l reesof rdvcrdsitrg Itowth withsoolt!. Soh cqlicitly rssumEs lode of ftc AFDptofit i3t iEdfor advcnisinS, li't to anilsonegoe!!o tbebosom aDd lis c.oDtribltr frc vrlu. ot Qqidlo'3, .Ia 2012, AFDcr.ratod ard $t54|Dn |trrcvcnuc!, $4rnd i! LEone,tirt ft ic afrrr an filnd. E forcd , edvdili4 futd ulpncldrted $20.nmco[Eibutltt rothcsdvertiliDg approxitDaDly coaEiburio& g@fsEd$A n6 in rdual imome 204 ve{sus ill AFD proJcstioos. iDlic$ilg fa. ircotoc iDhe pr([y strbfipD! $snn r$uecd

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B. TheSchrdens' 2001"Tak-Over" Schexne NotI ededTo, Nor Was Did Ir, &tablish Quizto's"Fair Value". The$8.50"MergerPrice' WasMerelyWl|atThcSchade$ To Who Decidcd PayTo Stockholde$ Hrd No Choice To Acaept But ThatNumbr. l. By $8,50Metge.PriceWarRecomrleded A'Sprrial Quizno's To WasToldThatTheSchadens hteDded Pay CoEmittee" lryhich No MoreThan$8.50PerSbarc ThePublicAnd$r,hicb To Acquiesced Thescha&ns'Ple!. Special h U CoEmittce W|ENot AskedTo Ald In FactMade EtfortTo BtablishQuizno's:Lir No ard Theparties haveaqudat leDgth fte of about merits DavidPtokupek's Tucke.Atrlot thooy's2001"valuation" thiE ofQuiap's. lna rcalsetrse, argulErt should evctrberccc$' atrd eary,because ir evidetrt it thal,in 2001 Prokupek TirctcrAdhory did sot stout to establi6h , "fuir value", qfie differently, was srgumslB Prollrlak's andTucker An&ory'sas8ignnd to develop promohg thc Schadn6' whichwouldpfinitQuizno's Douma flrblic let tiorFcatr|paigl to tstcwhy overplanasa platrintended benefit publh stokholdcrs. is oE of m ry reasons the Tbis to and ir is wiltout meritfor Quizro'$to eyen thar algoein thislitigatioD TuckcrAothony's Prckupek'$2001work coostiotd deteminatiotr "fair valuc",k Quizno's ielaledsrguoentthat a of Special Conminee 2001workvalidates $8,50 tr's the figrle (QuiaD'sTdd B ef, pp. 3-5; fiLd otrApril 18.2m3) is equally witbout nerit. EvideEat aial crtrblisM thaa ConnftteeU uderiook onlythemostmidnal Spccial (6l4ltBTr.,55). Ccrtai y tlrrc is trothilg efforts,if that,!o reprcsetrt publh $tockhoklers tbc

x Nonethclesr, trkiru ard co a! Quiztro's eotiotr b ftrckrArtiory oo its facs,theSadstoreGroupard drcSturkie/Croods G.ouptiorougtrly &tril in thei.cootnlporarEously-{ilcd PropoBd FitdingsOf FsotA l Cmcllrsiola l:{ tb tslhitld! of llavs iDhered Tueker in Of Anthony's 2001work ad tlE ursuiabiliay usilg Tuc*erAdhory's 2001wo* to .rgue "fair of value",

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pric" whichSrecialConmfuee did whichshould thc lI caus Court!o ac{apt $8.50"merger this eDdorscd Special by Co.nmitfre a.s tr i[dicativeof "fafuvalue".$ whelher tlird party a Conndti made effortto iNstigate II To begiowith, spcial no (6/4/03 lhe wouldbc i ercsted purchasing in i.,, Quiztro's, i srllttd in out+iddiDg Schadetts Tr., l4O. As a cooscquelce, $as ComBromberg re4uired admitat trial that,whenSpcial to mitteeII reconoeodcd $8.50nergcrp.ice, it hid no idoawhcther thtd+arty wouldvalue N its (rid)! d|esloct si $8,50or $30.00, $40.00 or jusdned CoruritteII's failur Brodbcrg Special

tttat EBtd to evniiquirc irio krtoqcdgeabls h&$&y obrew[s' vicws,on groutrds theSchadns thattheywouldnotsellthrir stock(6/4/03Tr., 146). But, Quizno's aaenlcluner to Special experiCorunilte did not bartheSpecial U Cosmittee from at lr6st iquiring hlo whatpercons elrd itr t[c industry wouldsay.$

{ &or$erS himwlf rcflowldBed, atbeilambiguousty, oeitbEr ihrr $pecial CoNftee I .s "fainess" ftom fte perspectivc (6/4/03Tr., ?4), special Committc deff$d ofthe Act tr s Thecltartq of SlEcialCommi@ II nassbtdin Erhibit F, thAplil I t, 2001Boardof Dilectorsninuteswhichhlsructed Commiuee "conslder altendivcdfor coryleringa to t[c Oc potentidsecond tra$actiotr fie Coryatryt rlf-leodpr step oftr'. Quizno's Boarddid fat to instuct SpecirlConnittgII rrotto isquir hto ftc viens of prsolseeedeDccd Acraung i! largcrcotauralr chaios.SlecialConmific dccided lts oxrr aot to nakesuchisquiry. tr on Speci.tConmitbeII nadc m eft0nJto .ct ilde?edentlyor seatively:it did trotcvm discuss, slo! rcotDDeDd, a p.udedstep ensure let that io i4ortiality woutdb!o rrcruit a rps' indcpsde Boardmeober(9to crve rheSpcial ard dut on Comittee, it did Dorsuggest ole proSchaders tbe coltsidcr edertairilg otbrs to spll,ard it accpted witiout queSiotr SchadetB' poarlthrt thorevoiitrgoDthc "merget"includ Schad$s as thenselves, sdl astlc pubuc tlrc (thereby slocfnoftDrs rerdedog yotea forgonc [E c&clusior)It .lso ir teltig tlBt Special of Coeoinetr lNtricd iE work,julti&ilg ils sclectiott Tlrcket Althony in part otrgrounds Tucker its wort ftsier thanot[rr fms. that AnthorycouLC compleF Threis ro etidenc.e aly publicstocktroldq pressing a thar was Quizoo'r!o quiaklyefrectuate merger. fherc h ,o evidctpe Quizdo's tlur problem r\'[ich Equheda fast sly faced busioe$ Irerger. Thor y persons eltsttd in qped tbeSchadem. discusscd i As the above, Schawere plamcdto tully irnplr&nlAFD by early2002aodto thereby gcrcrats dens ofdollals of nilliorB (co iiucd...)

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ridiculous"ro speak klowledgewith At tdsl Brombrg argued it "wouldbaye that ben wouldagree.37 Io able6ird prnies (6/4/03Tr., 145). Ole doubts rhepublicEtockholdeN tb$ upotrTirckerA bony's anyevent,Special itsef tr Committce coDtented {,ith relyi4gexclusively (6/4/03Ti., 149). evaluadon to conceming Special ll's Eviderrcc ComnittEe wort in generrliffluctably leads theconfor clusion$sl Spcial Il Comtnittee psidoolylipsrviceto its dutyto be tlle "champiotr fte mi(6/4/03Tr., 109). At trirl Quizro'sofrerd eviderce demonsrrting any nority stockbolders" m produced itrformal or actual tr. rc wort doneby thefirca Emblr Special Commiltqe QuizDo'3 eshrrdwriten notes thch meedngs oDg The of with another theire-nail exohaages. cviderc or tablirhed thc.cwasoolya single"rEgotiating" dlat bs$ryeetr ScbadenE Special the and ssssioo ColmmitE (614103 lr2-193\- Therclulr of rhis@id se6sion i egligiblo 6% ircterie vss 11 Tt., priceftom theScbadens' in thr rneryer lo originalofferof S8.00 $8.50,thelatlerbeirg a price betedh ttrcr'r{,e of "fair value"uponvhich Special ComoithcI reliedtwo yea$ arli{xwhe! fte Qtrizm'swasone-thi.d size. "irdepeidcEt advisor'for the Conminee selectioo Special II's ofTuckerAdhorlya! thE pqblicstoctlplden vividlydemoostatgs farcical procesi rv.s. Bromberg ctairtdto bow lhi8 hsveiquired ido thematry cLcuoxtltEcs suggesdrg Adhony's 'co lict of intergsf, Tucker co[rdd about lorcthelas$ {.biahftir Coult harbcqrd ald nucb evidcoec arguroert,Bto@beEg had dut Special CoDmiltc hadDoidatbat,for drcpreedingnilr nonths,Tirck . Anthoqv lI geDrrat by tiesesteps disqeriooary rl tbat Plofit, TheScladclscle$ly prefend atrypubltciry occnider, ra$r thatr brforc,thcrtreager ato6.d. was t At tbsr't| timc,itrd imonsisbntly, BrmbergcoDcedd SpccirlConnitteetr dA ttat ,tow !tr obltaaiob!o informilsclf wiefter ttlcrerycrre poplc placd higlrcrvalueupon who a thanfte vatue ScirdeDs of thc Quizno's flxedfor purpors eftctirg thsir takeovcrof tb! compaoy(6/4/03Tr., 140).

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special [E &at been "exclusive advisors" Quizno'Vthe lo Sciadens. is ir It lt inconciyable a sedous berpf( of thepublic r drd&.rive Committee wouldacquitits resporsibilitis hidng, for thedr by for Quizno'Vschadens,'3 stocl4plde$,theeotitywhichwasthedrcrrJiradvisor Qui of "fudcperde fina{cialadvisor",co!Sigtlificandy, Commitlee selection its "il{ II's Special graphically I In Commithe ir erCommittehaddonc.e l 199 Special DDc.3' nasld with whatSpcial I erieDca in viewed hvestnelt banktrgliltrrs besthowtr for experieDc4 lherlslaurlni Mustry. Spelhe (614103 (6/4/03Tr,, 57r, Two yarrlater,io cial Commince did notveocotrsider I Tuckr Aotlrotry ft:etr's IJ's 2001,TirckerAnthorywasat thelop of-Spccial Committee lirlo Itr t999 Special CoEnittecI hirdits owofinatsialadvi ard fi Schld s hiredlheirs. ial advisor in By conuast, 2001'tfucker Atrthony tbeort finsncial was cialadv iDvolved lhe ransaction advisor ifl 1' .{t trial, Bromberg, (Brcmberg been las displaying utrfliDc[itrg ,yalty!0 Quizno's his loyalty ( paid$7,500 month for on . ftom Aprtl, 2001to rhcpleseDr, iotalof $ e $225,000 his nservic" a ,r tu on: "xclusive advisor"strtus Spcial Comrdnee rflaintsined aliloughTucker that, AIIOony's U), soEehow, no! 'matewas that nay harc be! "importaof to tlle p{rblic stocklloldfrs, very status, trrony, Bromberg Bn admittelth!, hehinself titl' (614li3Tr., p. 125), At.nother pointi'l his testinony, "exclusivc advisor" otly certainly wouldhavew6 edto knowOutTncker Afitrotly wa6( Quizlo's (6/4/03Tr., p. 120)ihedid Dotexplain slockholdeN' slockhotd viewnould b qnydifferot. why thcAublic s Tllerearetwo probable why tlrercwas poblDlaric for equally oblDlaric Quizoo's, explanatio$, ch a dtaEath chargcin apFoach. "!o" First, afrerS!ciatcormittee I roldtlg SchadeDr iD ,1 Augiusr, 1999,oneofthc two members thatComnitlecsutldctrly on of foutrdbinself no lolgr o[ Quiao's Boardof Directors. (6/4/03Tr., pp. 7G71). $,ere drlay impediDg Secold,by MayJue, 2001theSchadeD6 longer williDgto toltatE no er $'erev pla[ theit squeeze-out TheSchadn8 rnxious,o frdly impl implefiFfitAFD andto gafnerfor we.e sapacity becamt ftemselver profitsAFD wouldgererate tle bcforE )'8 profitAFD'8profit-gercrattug 'selecdor"of Tircl Anhony promisd facillute to kmwn to thcpublic. Spcial f Tuckr CoDlDittee II's thisplaq,by avoiding delaywiich mightbcercounlerd rl 6erd rcspodingio a critical inquiry il| itr &e urdertaken a tuly iDde,peDdd firalcirl advisor. by {) After boasthg Spcciat into CoEmitter haditnuiredassi II that Uiredassiduously TuckerArthotry's 'apperrarc co!fli61", BronbcrS fur ierA hory of admieed Tucker l$r wa! dr ody candklatc tle $rt Committe cortr adviso.position whohadatryconflict(6/4/03,Tr., 99), Whyw , wouldSpecial clvably rclaitrTircl(crAtrthotry lhese in circuDrstarces?

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(614/03 42). Funhermore, 2001whenSpecial cormittee II contacted well-known tb Tr., in PiperLftsy {irm (whohadadvisd Co$mitbeD about witti4nFssto "adyise"Spcits S!eiat that cial conmitEe II, ttratfimr declined engsgetrred. Pipertafray understood whatwasbethe ing sought a cosneticsta@ of approval, iDdcpeldelf was advice.'' nrt io Finally, in examining recordoneis hardtrssd detrtrfteexactlywhlt substautive tbe II clainedttEt Special Coomittee had work Special Connittetr actnlly perfonned.Brctnbrg insistd ih wat uponQuizno's ohanging Fojactiorq hc thetr umbleio idenlifya singletten

o

'lvhichs!cirt Cc'Emitee rquircd recalcutrr.d (6/4/03Tr., p. 156). Bromberg, had, who tr bc ("DCF") to valuecompades, hir calh throughout career, a u$ed dircouDtrd flow thodologli that absadorrcd politiotreotitelyitr Sldtrg,2001andadDitted hedid mt knov ro wlut eneot lhat Prohpek considcrcd DCF(6/4i03Tr., p. U8-119).4 had AFD Bromberg admitted c/cll thrt hc did tro(kmw wlptherTuckd Atrthotry taketr ar Tt., h" ilto corsideradon, though agred "thet slEuldhrvc consideled (614103 p. eveo be tlBt ircludedlhecosEof thc Levlne 164), Brombelg couldnot rccrl iI Quizno's projectiots own (6/4/03Tr., p. 179),or lf Twker Aotboryhqdcorsideted costs that of L,ichttrulfrDarcing tbe (6/4/03Tr,, p,174). Brombery trotkDow finaocing wbetbcr TuckerA honyhadcoNideted did 'r At tdal Eromlergageedwith lds dcpositiotr declinql Iejob tlstimony PiperJatrray dut "thinkit coaldgiv. thareryice &c tj4e, r ati&, it didrr't int lQuiao's| wit reryire, Ard, ftafly, glojcts"(6/4/8 Tr., 101(eqbasis E'ewouldhc ftnercsted workltrgoo lqtch Bore lucrative in in supptid)). In otlle| words,PiperJaftay declioed participale a oinuct orchcsrabdfor purro poses blcssirgthepricerheSchadens of iBistedotrpayidg(6/4/03Tt., pp. 102.104).Tlcker A hory ard Spcial bsitation. Conmit@ tr exhibitd such tro { Bromberg Spesial bad iDcldulity'about &8tifiedthll in f9&1999 Schadm "qpressd position explairswhy I's Corqnittee usof DCF(6/4/03Tr., pp. 67{8). Th&ladc!s' thetr {o ftcker tutholy ad Spcial Conmftetr peidmirinal, if aoy,atteotiod DCPh 20ol SharEcly, hos,evet, tisl RicbrrdE. Scbsdetr at sened a8re tE valueof aoyft rrclsl to 6at inv$me i! lts discoudd now (6/9/03Tr., !p. 191-194). ca$

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atrd removing Aomits cdculadons of themillionsof dollan io expDss costsi[cuned by atry persoMlobjctivc takingovrtbeconpany(6/4/03Tr., to of ttE Quizno's accomplish Schadens' p. 191).

TheFagarGrouphas,of cour$, noIcharged Spcial Conmitt rvitlt fraudiDthis cas. II of for U'8 TheFagsn Grcupdetails factsretating Spcial Cor!trIitFe prfomrarce purposes tlle to in factsareirnporatt hercbecause supportiDg claimg thisdisse srs' right! procediDg. its Those to theydemonglrate noop Special Connittectr's sctions rny suppofi Quiztlo'sarguletd that of price' rcpre.s$ted "fair value' ofQsizno's. Spcial CoDoitte mentthll rhe$8.50"merger the adYi$o/ to tr's "\rork", like tbe "v{ork" ofTugkerADthoDy, looS{erm"exchrsiYe the "errclurive should advisor'to thepubligstoelfroldors, and Quizno'i/th Ssbrdens, thcteqorary be accorded wetghtin fixitrg "fair value". no 2, Rrmisbes Additional 5, Quizro'sNovcmber 2001koxy Statcmetrt "Take{wr" Process Be Should ProofWhy TheSobadns' "Fair value". Disresadd Fixi[s Ouinn's Is

the by The fede.al laws to securities &quiredtht, in ordEr efiectuate trergerUoposed the 6e Schad$s,Quiao's prcprrcard scnd all stocl{Dldrs proxystateme explsioing tras$cto N th6t to lion. Qriao's preptrd docunenr tbefltlposof arguitrg alc public8tocthotd,ers for fiiE for tlE Schad s' $8,50pricewasfair. Quiztro's mt pE?arethisdocument a brif arguitrg as did "fair value"lrithh theneadngof thcAct. Theproxy3tateffnt .pcrbdlyspeak in tam|! of pagp, 1,4,f6). Theprory satNtrcnt the 'mergerpric" beitrg'frir" (Bxhibit&2; cover !p. neverspeak itr termsof "fair valuc'. should viewthe Notwithstanding facB,Quiano's 6cse trplicd at trirl tbatthisCoula "hi! vdue", But, it wouldb proxy statqnnt a docunent as whichsupporu Quiao'r $8.50

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probativc vahe, in light of thefactthatthe lhe frivolousto endow Foxy stateme with anysuch of ptoxy statennt criticalto anasse$ment "fair not ecoromic factstrrost does dilclss those value": 2001' TheFoxy statencltdoes disclose asofNovrnDer-December' not tirt, Eoot by sellitrg rcrdred Match31, 2001projetiods its hrd abeady Quizoo's projccted;' morestores hadbetr tbarl aDd opening matsrially Theproxysbtemeot rcl discwsat all thematldty of AFD or QuiaD's does h lbat Fall, 2@1cxpectatiots AFD wouldgctela'$15,000,000 acditional advertising c!mplofits in 2002,enablitulhecompary laulchI Dational o
palgDi

-

-

projections were TheproxystaiEmelt notdisclo6e TuckcrAnthony's does fiat 'noftnl' business trolprmisd expense, uponircorporating, a as Quizno's as ard operational loadir.nrred to tinalcethebuy-out, werebasd well debt funre occurences; on takitEitrtoconsideration rprFrcuritrg (througb CoemitSPcial Theproxystatenent Dotexplahtiat Quizno's does methodology rlthe teetr) atd TltckerArxbony esshewed DCF valuatioo hld together,

-

oisled ary whbb nece$arily by Theproxy strteocEt is flawed luoeroosomissions also publicstockholden questioDcd validityof th $8.50prict. For etamplc,t[ proxy wio Ihe a8 descriH thedenouemcd ofthe Schadcns' 19&1999 offer to prit"fizc thecornpNny siatemetrt follows: of 29, OtrDecember 1998ttlle Schadensl otrercd buy !I of our o!$tandingshares !o to our baard Codeifi.e Il rePorted coEmoq stock,, ard on August 1999 9, [Spcciat largelyoDlhe inof dirwto$ thattle ScbadeDr withdraxm Foposal,based iad tboit prtuc to ability of lspecialComni$e andrheScbrders reaci a mrualy agleeable Il pgr sha&. ar hw ad, permftrd systEm flnancial Q|timo'sconpuErizd Quiao's to instrnbDeously alorF,there S&lrsoDcraiior6 tbelcfore,to DotE it$ proxt siatemeDt io QoizDo's irr thfit, UDited in ,, ad agrEenlts placfor the were"asof Novernber 2001...1359 1, rcstaulsnB operation in llstar|ta s' (Exhlbia p, 4), QutDo'scotrtlDtrd &2i opqing ofsn additional 11,{8 ftanchisd nalized fig' it6f with this passilgrferm, notcxplainiog, it wasits du]yio do, thatthese rs uresmate.iallycrceeded figurcsassuned mking Qdzmb proje.tio$ afr 0latthisdevlthe io optnedwouldmaleriay iErers QuizDo's fu[r$ caming&

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(ExhibitB-2, p. 8), Thprory sr8tement tllc oast inporta t Jac, tbereby failedto disclose single to in this corrcrming 1999occurere: thattll $8,50pricebeinghawked its publicstocldolders to 2001wa$only 25-50cents moreftaDthc Schadens ofrered t3keovta 1998 had Quizno's AFD. time,hadnotyet created whichaot ody wasozr-rrifd ih 2001sizebut whiah,at ihe samc publicltocliholde$thatQuiam's"lender Similady,thc proxy stalemcnt hformedQuizno's offer' to tender wouldnot oppose trarslctotr whichcomplebd secoldstep the Decrmber any a (ExhibitB-zi p. l0). Quirno'sfailed[o tell thepublicstockholde|r &is very "lcader"had dlat appmved proDosed tb $sosactior if qrizno's, tn effeci,collsuBratedthe ort rcord-ste! merger $8.50or less. at prcsenadoD. ir h theftnal analyEis, November 20Otprory statemeol mclctyr ssleE thc 5, refersto rhe"fairrss' of thc$8.50pric! a6justificdby tle nFadDglcss Qulzno'stpatedly price for Quizno's (E$ibit R2; p. l4). Quizmk lclls dr Frblis stockquoted rbcmarket on pointhg out stockholders tlremerger thal wouldpmit tlrcm"to obtail liquidig" (i6id.), Dever thatm publicstockihol&r exFssd tlad cotrcrtr about lackof liquidity. FiraUy,Quiztro's I makes attrnpt expl.i! bowits Board Dirclolshadcorcluded it wasnfair' to crerto that rc of cively liquidate hotdi4s of Quizp's lublic slockholdcB hadiDyr$ed bcneft ftour the obo to !o Quizno'stuurreprafib, but wto vere beitg forcd sellouton fte veryeveof Quino's ratizprofits. Quirno'sBoardofDiredors uDdersbod thercwasDothilgfait about this itrg Euch ftrr dcalstd certainly ulderstood Uc SclDdeDs' that choicrof r nuobcrto tatc ort thc mnpany wa! "fair valu", not Elatedto tlE company's

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FailcdTo Prcsent cot[pctrt Evidom C. QuizDo's Any Affinnatively "FairValue'Asof Decenber Proving 21,2001.Irytesd, Quizlo's TIle Arri!d At By Quizm'sConce ratedOr Paisiog OpioiotD Re$pondents' Three Mependont Experts.At tlle EodOf TheDay Arc Rerpondents' E&eds' Appraisah TheMoBtCoqetgllt Evidtrc

"Fair OfOuizno's value"
1.

"Fair value" hovirg Quizno's Quizr's Did Not OfrerEvidence As Of December 2001. 21-

tbis evideseupon',rhich Cowi fi.ie furnhbd sornpetsr$ no Quizuo's prirEiprl viitsesas( canor should in fixiag "faA vahe"": tely

{ In addition thefive wiln9sses Geoeral ro ideffifiedbelow,PatMeyet,Esq.,Quizno's le4lh. Mr. Meter merelysutr|BaCounsel Schaden's fieod andconfidante, ard best testified al (aod,ass trahdatto$sy,did soitl rq altkrrlatg\xay)anddid mt offr the.rcs rizsdQuizoo's his opi[iotr of "fair value", tlut Durhg Mr, Meyer'stasairnony Coultin effectob.lerved Mr. Mryer wassrnnmarizihe ofMyer's testiitrgevenb,ratherthanstifyiDgabout hcts. TheCoun$ardlhatits uieighiog "therearcotherpeople whomightbe able!o tell a difmoly mightbehlluenced thefactthat, by (5l5lo3Tr', p. ll2). frentsloryad nigbt beableio arll it fromtbeirowndirctknowledge" Theraffer, calledSchadetr a ri,itrE68a8 Quizno's 6 In lieuof ffrmishing by competem evi&nceof "fek value', establisbd a tlptougb ard preparcd an appraisr impartial iodepe[dent Quizro'sard not involvsditr thp apprai8al, of b 'take-ovcr", a.!d expens a approach parsbgCordes' Hofuatr's in adoptcd shot-gur Quizno's
teDorB.

nsde by QuiiDo's,in tle TheFagan Mr, Group discusss priqcipal tbe attacts upoD Cotdes projettions, ia and pp. 7-9,rgadhg Cordes' discussiotr to Quizoo's adjustEenE abovc, requird atr pp. thediscussion b10w, 45-47,rcgarding Quiao's clntintd wrongefrort!o confturd amlysisof "fair value"by relyingulon Quiap's meadtrgless rlwket ca.pftalizalior. pre{dd andtrial straregy, Tbrough hokupek,whoparticipabd in actively Quizno's "sensitiviry" the dEredenossusted ots a analysis.Quiztro's Quizro'salsopresntcdblacLboad vious,i,c., if otlex,eleto reduce DCF appraiser's multiple I unit, rod to mi$ain Nll by exit any of ftat appraiser'o othervariables, silutecharycwouldpsult in a clu!89 dowrwardof r celftrt tsin amoutfin a pet-share by valuatio[ tust asobviow,alholrghnotdepisted Quizno's,is that if onenere to decreaseDcF appriiser's a discount by o[e poilr, thepertharevaluewould rate ncfease. wrs Quiznot pres.ution il rhisregard thepre|MtioDof r Guistn. TlE prese!{rriordid notcorsti$@anatralysis "fair v|lue" (whict, asdircussed blov, Quizno's nevernade). laof stead, wasr transparc efrortto fitow outpossible it runbels, tro BhgleoDeof conpromise (cornhued-. .) -40\,lllsN$\r'rdvr.di'd!..r riJde df

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life Richard Schader! hadspent who oost of bis post{olleSe \r'orkingat E. tlat ircrdiblyclaimd his otD opiriot otr $roughout testimony bi$ Quizno's, but valucwasth$8,50per 6har offcrdto selle$,whohadno choice to he takeit:s lever did give l,e$Pattetr, although ccrtaidyqurlifiedto arriveat al opitrion, 'fah value";t atropinionasto Quiztro's "hir value"- But, DavidProkupek purpondly did testifyabout Quiztro's war ProkuDk entirlyconllictd.P.otrrFt obviously rcquircdto defetrd was paid ad tlle 'metgerpricc' whichhebadarchitrcted for whichhehadbeeo E "fail r"lue" whichmigbt rafter thallto calculate morcthan$1,000,000, price"; coDflict with thatntrFrger Committe gavetestisony tr, otr Mark Brorqberg, of rpcaking behau Spcial whichmade cl8rthrt Specid it CorlDittceII meElyrervd3oplacea patiDa "[Frge. price", atd did ard of acceptability theSchadsE' Prokupek's upotr *fair rralug"; not itselfpurportto arive at Quizoo's s'as what Rog.r Uptondid suggst heEulrnisd Qrizno's'fafu valus'.{ LiP only aorbssed viswupor !o aDalysis his wolthyqf otenatrE,sPeculating lewngdbuy-oot 6rm mtgbtpriceQuizro'sstockat fol whata third-party puiposes ftamirg a leveraged buyout.a of

whichbadcvenbecnargucd rprcse 'fair valuc",andall of wbichwerellawedin thc first to iDstsE becaus werebelofl Mr. HofrEno'soyerlycoDrenntive they $36.?6 { fuchardE. Schrden imdverE ly reveal crors-examilatio! wharho /earr}6ought did on al 850a tharc (619103 that Quizdo'rwa5wo.th, i.?., admitting hedtldMt k.tovt hewoM 'dl if Tr.,W.175-176). 1? adjusme s to porcertain Duringhis rcbrfial t stimony, Patten tsstifred makitrg how Mr. of tionsof M., Hoffuun's DCFanalysis, wouldlead!o a resultitgvaluerange $1795 to $19.50 (lr. 10D7/03,pp.15-m). It is t|ot cleat,however, PafiEn adopted tbetflgus ashis ever tlBt par8.drespoldeDts' erperts' ownopirion of Quiztro's DeceDber 2001falr valu, Patletr 21, work, but nevcrdid his ori|Irappraisal. { Durirg his er*imonyMr. Liptonacknowlcdgcd bebasd "opinion"otrtie premise bis thar "thercis a sucker ft8t Qriznot was8blcto sellimpressive Durtrbrs frr[cbisesotrlybecaus of bom everyailule'. Mt. Liptoninvobd thisflippsmyir thefrc! of thehantfactgwhichptovd ftstEhi666. in to of Quizro'ssuccss cotrlitruing rttr&ct6$eamr p.oapecdvc 4 Io fact, did Quizno's notrccd to call Liplonasa wi8Fsrto oa.kcthii poinl TbeSchahad tbemselves de!|sthemslves tbr already provo had Liplont poitrt. This b bc{sus Scbadens ttzir "lewraged decided $8.50wasthemaxhumprictlcy wctewinlu to payto cfrctuale thal buyor". (co Lnred...)
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in Moreover, experts operated a "team', not iubpeldendy. Quiao's filed lhis case as Quizno's Prokupek Liplor 8l a and or Patten" March,2002. WithitroDc twomonth!,Quiznot hadcnlisied plitrcipalg, uoveild trial, at team. They,togetber Quizoo'$ upo! drEstra&gy s,ith decided as on If this Counwereto focus of onlyuponthetgstimony Quizro'swlt0rses presented to dirertxamilrtion, tlrisCounwouldhlow only whatQuizro'$falslytprsentEd the publicstockholder. squeezd-out testified to whatTlrctcr Anttpny toldthepublic; herc Prokupek prirciples;atd witb Patten metbod, con6i6tcot valuation baricallyiestificd$at Prckrpck usd had fo! persisttrfly calculated Richard Schaden alserted hevahedqrizlo's at thepricPtokupek that puposes cfiectingtbeSchadenN' the For of coercive squeze-out. hir pan, Upmnoffered glib, what bitty-out back-of-thewelope of a lgwspapcr view .eporter speculatiog I leveraged business firm migbtdo. duringtriat is thrt Quiao's esse ialy ir askirE Courtto "prethis WhatbectllF Glear rcver hasciiedanylalewhich sune' 0ur fte $8,50nergerpricei! 'fair value', But,QuizDo'B pleeme tbata figurcusd ffectatrhEle$ed padymerger taDsacsuggsts Cout should this to 6ghtswith lhc rcalityof tiotr is represertslivc "fair valuc", Ihe notio! of such presumptior a of privatc'take-ovcr' nalsactiols. Thosc out typhdly atenadeto cash ninodty trarsactiorE the ir stockholde$.Atd, dleprilcipal pupore ofdiss ers' stah$s to prgvent oppottrDisE putNuhg takc-ovr. whighis motivating pcrEoDs th ttE

Thrcughout prm.EedirEs, th6 corflslrdtheSchr enr' dgrr&iratioDof, andLitr QtuizrD's ton's sumitc concming, lveraged priccwith 'fair value", Quizno's wroaglyimalso r buyout "meryer pliedthlt thc Courtshould p!sumc t[c $8,50 pdcc" reflotd frir valueof tbc th. th8t corDary. The law llady lolds ltut 8nyruchpre$mptiof, wro6g. Se discusrion is below,p, 42-

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For this re3soo, is notsuprisirg thatthlawspcifically hoLcs ra presumption {nt of ia bo validiryshould price:"No presumption, attach themerger favorable uofavorablc, or attaches to ei nr side'svahation,iffluding bc acnulmcrgerWise" Pintonv. Csnpbell-Taggen, . Inc., pricemusibaccompanied evidence f989 Del Ch. LEXIS50, i'20. At theleast,theErerger by "rathrthatr the just tendhglo showthatit represes Olegoingconcem valugof thecoEpany valueof thecompary o[r specific to buyer". M.P.M.Edcryliset Inc. v. Alben,73l A.2n790, ?97(Del. 199) (fiDdhgthatthrial courlhadnotabused di$qetiotr accodingno weigttlto its io plicc because failedto valucthcompary a goingconccn)i Gentile Sirglethemerger it v, as PointFin4ncial, to as LE.,2m3 Del. Ch. LEKS 21, '15 (fair valueis thevalue thstockholder a golngcorcern"rathcrthsD valucto a thitd-party 8nacquisition"). its as Moreover, trial coortis i0 payaly consl*rstion!o tDc*nergcrpdce" it murtexismifa iite thelnarxtet tlF procedurs $,hichthatpricew.s detE unard milcd. Irl thir reg.rd, courts by deistadablyqustion credibilityof nergcrprices fired by atritdeFndeDl untnc not app.aisal detilakerrw disliterc,$ed , firarEialadvisor. Pl,tson, +2O.Couts alsoquestioD credibility ote { of a meryer pricearrivd asherc,by an ilve3trItent paid at, banker for its opidonon a coffi& gencybasir. In tlE Matterof ttE AryraisaloJSlull Oil Co.,1990Del. Ch. I,EXIS 199,*89-90 "clgarly baoker whowouldreccive largccotrtinged if tlteofrerwassucoessfirl fec a ouvcsfircnt hadanimertive to skewits uulysis to ac.ommodaie" acquiring the cory8oy. Atthough therc "ttlbe exirtelcof suchan wcfenodirctfact! !o 6how thealulysiswardelibrstely that sl(swcd. obvious conflictof htefest,howcvrr,do$ dimilisbthcsrd$ilityof ltheinvcsbed banker's] opidons'); ,t alro, "lo,npi v. Slpll Oil. Co. 482A.zd 335,Y+345 (Dcl. Ch. lg8{)i turdberg , v, VhgiaiaBar*slures, /,rc., 891F.zd1112,1tZ, (46Ctr. 1989)i Brknrnv. Rus Cr& G.ea-

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(S.D.N.Y. lng Cat&, Inc.,454F.Supp. 791-92 787, Indu$198); lvire,v. Polulion Control fies, Inc.. lg8r'.Del. Ch. LEXIS550.*5-?. 2. Of TheFormOf Respoldent6' EviderFe, Added Ihe Substalce To "Fair ThatEvidence, Strongly S!4port|TheCorclusio!TbatQuiztro's O. . Value"WasAt lrast $46.41 Ard. MoreLikelv. $63.81 Grester providd each Respondents' mt experts coEeelliryeviderce, onlybcause of them brought considenble &ey expedelc dEir assigDmefi, alsobecaus acbdindfidedy to but of

togpfterto attend Eetiog a ooemother. Unlile Quizno's, did rcspondents mt call lhoirexprts mai at wlich diffcringviewsmightberconciled. Quiteto thecontrary respoldents sitrcdtbc separatercss theirxprts, ftomthsother. of oa For exarDlc,Mr. Hoffrlatrrrvr discussed c{sewith lrr. Cordes.Yet, theyboth tlis simitarme&odologies, aaempharis DCF.50 Thcirc.orlglusions differdprinciapplied with on pally becaure, uldralorg his origin l wo*, Mr. Hofua! made conservttive assumDtioDs iD overlygerErous Qui2trro's did lot sd&ess full distorting cauted to aod etfeclwhichQuiztro's $le wtcr it wroaglyiacorpotatd l9t/mged-buy.out into it6 expclres its projectiolsofcusloDaryoF cratingexpeurcs! addition, Ilofftnao,uDliLc Cords, ln Mr. simplydid lot elctro do addi Mr. the itrtionslresea.ch, io plep$elupphDcrtalopirtoDc ard barsdsetotr'renecd4g significsnt "fat v|lur' rsulting creass Quizno's to 8rd ftom: (a)Q{rizno'6 u.dbclosd matsrisllt accelcratedslolegrowttrbefore ln Deosrter 21, 2001;ald O) Quizro's"&L vahe", ar dramatirally creced by givingappropriate to recogniaion AFD.

s As discussd "guidclircornpany", to appro.ch coroborate above, Cordes a used market, the valueat whichheaEivcdby applyirB DCFntiod. Thcrsultof &at bsck-up approrch tle confiruFdhis DCFre6ult irdicabd$ ncl tlrcconsrvadve ald laturc of thercsdt at vhich Mr. bad HofBnan arrivd.

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Mr. Cowhey, persoo with anextnordilary aoouna also ofexperieoca, neyerdiscussd a this case with eithefCodesor Hoftrar ofvslultioo medrodYetMr, Cowhey\explanadons

ologi$ confirmed appropdatenss of wh4tbotbCordes Hofua.nlad done. fte ald is Of sigtrificanca wcll, ad paralleling independence expcrts, lhe fact$aa,in as lhe ofthe lateFebruary, to sepa2002,Mr. Hofroatrald Mr. Dvorak,lhenentirclyuoknowtr oneanother, the ralelyarrived very similar6timrte$ Quizrp's"fair valuc". Mr. Hoffrnatr, highlytraingd at ol valuatioo specialist, arrivdat approximatfly $31.00.Mr. DvoraKaniltellige .nd thoughtful to to busircssnatr familiarwifi th. limitedidomatiotr Oizno's hadclFsetr discloce thepublic, but oot a vahatioo"xpcrt' as6uch, arrived $34.00.51 at Thus,rheywsrpwithitr10%ofoDeana $rbst4trdal otFr. Moreover, of lrte Fehmary, 2102rcftberHoftnatrnor Dvorakpossessed as Hy of informadon beariB on "falr valDe", st whichwar amlyzed bi8l, mordur a yeatlatcr. 3, At Trial Quizoo's Wi!t$se3Critiqued Respo!&!ts' E pert8Bared Martca UponTheSaEe Of Bxploitatior Quizlo'sMeaniryless PriccAs Ttrcker AtrhonyAld Quiztro's Inploperlyltad Bxploited Durhq 2001To Jugtifv $8.50"McrqerPrtce", The

witEss. Mr, P ien expert OrrOctober 2003Qqie's called Patten . rebuttal 27, Irs as thencritiqued bothHofrnar's ad Crrder' reports opbtons. Prtte! prircipaly criiicized ud valuarion grourds Cordrshadadjusted projecriods eliminate o!!o lh Cordes' on frat Qtizrro's goingcosts servicirgdbtl ilrtlrred for Don-operatioral purposs, dtucussd above, of As pd[ciple8. Cordes' adjustment proper wasrequired bssicvaluatiotr was atrd by

rr lheir lareFcbleoglhcolcemit|g both Quizno's $EstioDed Hofurl aodDvonk &[solD mary, 2002exchs.nge severrl nt.s of uonmrrkablc i46iruafioD lhatlbe two hd c-Drils. QuizDo's conspird crcat a phony to ulnbct. This ind atio! ir utrwoflty, impeachedter alia, W ll,f. ; evidenc estsblfuhitrg mosr thsnalytic lh|t of workpeformedby bothw8sperfolflEdbeforetley commudcabd orc anoth6.. with

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the ior It wouldbedE leigh! oI unfaiflFss thiscoun to crFumber publicstockholdets' pmpottionate share thevaluof thiscompaDy cosishcundonly to satisry Schadetrs' 6 in with "legalopitriotr" of personal the Certairy, Pattell's concming Act's definitiotr 'fair objectives. i8 value"andsuggsting it wasperfectly to charge to that line ftesecosts thepublicstockiolders, lot a competetrt for tlis CoonreachiEanysuch basis conchrsioD. whichcall for a respoDre.' did two of Quizoo's make otlpr criticisms cordas'approach pdccwasa validmea$rc Darl@t Bothcritici$nswereba6d tt faultyFemisetbatQuizao's on of ufair vslue'. This is precisly melitless l\rckpl Anrhoryuscdduri4 2001to mistbe a$ument at teadthepublicstockholdcrs, to Quia|o's.rguDents lhisefrect td.l weremoreellipfical;they x,crje lesswotrg. Do ilp.eparEd chanaodoffcrrd teotimony. dronghPatten Prokupek, aod First, Quizno's a mmpanies" sub6urtially was lustr8fiE thattie market capitalization Codcs' 'carDparrble of greater (Exhibit2lS:Tr, 10127103,E), Quizm'$co!p. tlnn Quizno's martetcapitalization But, the lrlartEtapproach, tended this sizcdiflercfiial alorpuDdcrcut iulegrityof Cordes' that tlE oarket flaw in thisargunert is dut it dpcdsentilelyupor rssuni.g thcr"lidity of Quizao's p ce, giver lhal marker of capitaliz&tio! mcrelyfte rsult of rtrultiplttrgfte mrmber shNrs is e h addition tlEstwo critici$m!ofCordcs'workwbich,asdiscussed wereprcmabove, to pricand,0|e efotr, iseduponQuizio's falacio|s ard timGworn tlut Earkt arscrtionr Quiano's it6 malketc|pitalization, ncaningful, was for c Quiztro'$ tici4d Corde,s uriDga 12exit Eultiple for hi! DCF rpproach. But, in faet,itr choosilgthis nultiplc Cordr cbo6e afutnE lowerttan te 15multiplemegrowibcoryaris (ExhibitK14.9), ard f4ivalent to [t rrultiplenrediatr dianfor guideliDe guideliE for ftashise cotrpaDics ibit K-14.7). M!. holorpek'sfilrllEr 6eory, suddcDly 8rG it thulatdwhetr appard I rEbu0al hc wasvrong because lomeas wiuress, thc 12nultiplc tlut perpehral howassumed fiftre gowll| at I veryhighrate:(r) vr8 rcyer lubstrrlriad by Prohpk whopromird Foducehi! uiltcrlyiDgcalculations, rcvc. did; a[d O) v/arspecifically to rand butladby bothHoffrtratr Cordes thci! surrhnalestirlorry. ard in

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outstandiqby lhc priccper share.Cordes' flaw (reflected Exhibit in colrection thatobvious of N-14)demonstrated itr fact,Quiao's propc.lydeterflind capitalization, one i.e., market th8t, pric,wassignificaqtly not batedon a staticard mcanilgless clo6er sizeto themarket stock in "coEparables". inponatdy, ExhibitN-14established wheE capitalization tbeselcted that, of As orc examined factorof "size" by rferenc ottEr vdtd ecorcmic metrics, e.8., syslerFwide the b sales, of theeightcorparables afterextflsive research werc five ultimately selecbd Cordes by smaller thanQuiztro's, Scond, Mr. aFibutedto Quizno's t|e Quizro's,through Patbn,disputed sizepremium by boti Corde,s Hoffrna!aslafl ot theircalculation thediscoultrateused thek rcspech ad of a tive DCF appmaches, grouDds Quizno's required sizcFemiumof that trla*et capialization otr 8.42percent rathetthar 2.62Flc.nt (Tr. lunl$,pand 13). Bul rgEin,thelecssary,

wrcng,premis.of this argumrDt re rcceptalcc Quiaok eirket pricsasnr&itrgful(andat b of therefore fixiog a valid arketcipitaliz8tion), whetr markt pricercver bore8qytneatingtul rhe felatiorshipto Quiztro's value. true D. This Is A Case "BadFrith' Jusiifying Of ThisCourt'sAwardOf Fees TolcsDondentr.

to Thiscas preeisely typcof c.sin which Actcall$ theawN.ding fes thc of is the for rh disscniing stockhol&rs. Actprovides such of Thc for swar&in rcognition thcfactthat,h a disseners' action, issuer, Quizio's, dre her enjoys of theadvantagi: all
It possesse! of thereleva[tirformatio!; all stoc*tolders lt hssrcaourcer wlich typicallydwadthctsourcdof drssedi'lg braveenough eoteriDlosucb fighr; to a plofrtsfton thebusiDesshrs wrongty It coriinuEs operate to geoerate rd it !o prestake! frottrthepublk stocl'holders Sereforc, faces tine or cash no 8!d, sutp.

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of These factors,taken togrher, of explahvby theallocrtioo fesi8 ao imporafi componsDt a dissnteN' righb actioni proceeding b a deaunedto theidividual may Theexorbitrnt expense all apprahal of shareholder mustusually who bearttleburden.

factors is ln procreding8 ote of lhmostpotent of h [Thus]theallocation c.osts thesc liEttlsstatute] by dtermining efficacy fie renedy[provided a dissente!'s the of FlncharCyc@edis h lde Co,porutiortt, of l2 Wifliam M. Fletcher, t5906-1ffi. ThisCourt'sdeteraination c'tetherQdzno'sir 8lilty of 'bad fatt[" ory bei.Uurdof done during2001h renatd considGring a padyactitrg 'goodfaitb" s'ouldhaYe by wb4t in "Er.get" proposal: sporse theSchadens' to Speaial Comrnitiee; a A goodfefibissBer wouldhave formed truly independetrt tl|e Cofiiittee to examirc iDstructed Spcial A goodfaithiesrerwouldhave "Eerger",ircludiDg optio[ of efuriDg to vali' Ihc all optioisto theFoposd aDd resuud[irg ofm benclitb thepublicstockholdcrs it' datea corporate rstrucori4g all ol(e placr; at that cluditg thcoption reconnenditg r|o of Commiaee: A goodfaithirsuerwouldha\ insisled its special that rgtaiD hdepedeotfinatrcial an advisori rchiDar itdepgldor legaladvisori

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tbat requiring lhe voteon A goodfaithillucr wouldhave least at cotrsi&rcd in &p propondnergerbparticipaled by only thepublicnfuorig stocknoF atrd,therefore, by r "majorityofthe ninority"; ers deternind procd Contnil0ee A goodhith irsucrq,q{d hNve it$isttd OardE spcial to f| carcfully,8!d lot burryits procrses accofimodale hterctt! ofrhe majority slockholder, co raltedwi& &e iDtqcsttof tbeflrblic stokholders; .s prpared proxy statenent whichcodplct ly a A goodirit[ issur wqrld have ard accurarcly stited$lr faqsrclcva$to tif,itu lbc 'fair valu"of ihecoEpgrly'

-

-

Ofcou.s,Quizno'E DoF of this. Norhar Quizno's evetoffetdatrexplanatiotr of did why it did trotdo mt ofthi$. ThecoDclusio! inescrpsblc Quizno's *bal cot?oBtiorB lhd did ir

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of atrearliergeneration ald wouldrellexivcly do. Quizm'srtelely we $roughthemorions thensigned oa its najority stockholders' ofr prcposals. some Then,see[ftUlytavhg expDdcd p!trrittd Schade[s prog9pd tine andffort to examirE Scba&$' proposd, the the to Qutzno's with thcir phtr, vir&ally urlioged frgE tlE Schrdens' initid sally. conduct, $m&rized above, Group a$ wrn|nts ttE Coud'sawad lo thePagan Quizno's proceedinSs, of all feesandexpe$es tbse drcirexpeiseiofcodruelaoi experb,orl of ineludiog lhese fes two bases.First, Colo.Rev,Stat.g7-113-302(2)(a) providcs theCourtmayaward that .rd expeBs it ftds tlat QuizDo's trotsubstantialy if of did moDly n ilh therequiremctts hrt 2 of theAct, Thefacts8d fonh sbovc establish Quizno'rdid llot socomply:its offer of $8.50 thrt pef,sharc xc4ssivly ard Q'uizno's was low knewftat fact. ln deciding ofier $8.50per thafc, !0 persistiryin arguiDg legitirucy of thatfigurch thiscase, ad thetr the Quizro'r willfolly ren$es autbodty to even erdgavor calcula@ "hir value". Tbercis Eubsbntid holdiogdur s nsieto true jusrial dirparitybctween "fair valuc"of tberbrresfoundby theCouftandlhvalueofferd OE tifes a f a{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{{,ad, 984,991(Ilt. App. 19 ); Scs?eSPSS, v. &nta,tv*-Walsh, N.E.2d ItE. 641 cwity &de Ba,tkv. Aegeldorf,554 N.W.2d884,89t95 oowal9%), ard lle.r thereir bolha verymabdal disprri9 ard a c@du,rdrcfusal Quizno's evfl ackDowledga a disparity. by !o The6rond basis arbitradly,vexafor.n awad ofexpensec thefactdat Quizoo'racted is tiously,andnot ir goodfaith,justiryilg anaward Out urderColo,Rv.Stat.$7-113-302(2Xb). discussion above ofshat a c.rpontio0 wouldhavcdo[s fft sre Euly actitrg goodfaith. and itr illurh4tilg tbatQuizno'idid !o!e of this,clea y poilts up Quizno'rbrd faith. Quizro'snever Eally conridercd r&ntion a disiDrerestd stabthe of rcsolutety ignord app(aisd, QuizDo's lishedprirciplesof vahation,Quiao's enbncedtheSchade$' plan,rrc. Thir arbihrry, bad faithsoduct firro)efsuPortr Orc corplusio[dr|t respoodeDtr eodtled recovf ars to ttpir asor-

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v. Terut. Appoeys'ardexpetfe!s. See Tewessee Trswortotion East Cory. Ketrat,1991 *15 (affirming LHCS 167, (Tem.App.1991) of faiiltwhen coqany "didr|otrcly ffnding bad paragraph. upon va.loatiotr anestsblishd by appniser"), cdses itr theprceditg citd a 8rd
CONCLUSION in Theevidence thiscase took in estrblishcs theSchaderJ overQuizDo's 2001,and that huge squeezed its publicstocktolde$, oua bcause hopql to reap drey orotitsftom ddsworderthir by: compaiy. TheSchadeG/Quizno\ accortplilhd objective fully succssirl exploiting irrelcvaDl martetpdciqgof Quiznot stock; tbe to mooey, ffusiDg moncy, whichincluded publicstoeliholdets' tb6 Quizno'8 nance 8qu9ze-ouu tha (TlckerA.E6oly)!o do theil bidding; rrNining frn|lcial 8dvisor a proc6s,ircludingSpecial Commine whichmade tr, establishingcosoetic a no effon to neatrhgfirly cbrleDge Sch4d!s' th Foposal;a!d,

consumrtirg thedealwith lheNovember 2001prory satenentwhich 5, incorylctearrdwoog werebasd tite-n nt, oA figurcs,whichcontained otr faat projections theprolixityard formality whichobccurcd simplq the of and posi ofwhai wasgoiug i.e., thcSchade$ {lereeQloitingtheirrnooapoty otr, tiotrto seize idue of thiscompaly tbedslvcs, for tbe "value" Onevery c.mpeUiru dtivqr homc huge between sontrjvd the thc disparity fact "fair value"of ald in in Quiz[o's asserEd FalL2ml, ard co huesto assert thlscase, tbetruc this company.Thatfactis thatQui@'s totale erprise vdue ssof Dece!$cr21, 2ml wasaF proximately $34,5m,000 oo Ecrgerpriceatd on Detdebt),andthatdudag2002 Oased fte $8-50 - aftero y ole yearof opqadoDs lhis taktr{vercoryatry- Quiztro's geErated discrctiotrof ary cash0ow of $32,000,000. Thus,therecanbe no qustiotr lheschadell,whokiew ddr vould happen, a tad thrt hugemotive30"clo6e"thisdeal. Ard, sbictlyspeakitrg, of becaue tteir ow[ershipof a majority

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(assumhg ofthe co[rpatry thal oftlrc stock,theylegallywerccditled !0 uderta*e a rc$tructuriry that theycotnmitted fraudiu sodoing). But, at thesrmetl(re, theAct ir tbereto ensure !uno jorig sioctholdels fairly aDd siryly to serve putloss. ThcAct ir spetheirownselfrsh rct Dot of by cilically inendedto respoDd 8 najority stockioldr's to exercig power proectilg tIF mito nolity stockiottersvho rrilt bc dbedra$hi8dard depriwdof aly op,poronily fttlfrI ttreir ptEiscd uponQuizno\ grcll'th. originalinvestmcnt objecdvswhich,in Si$ garc,werentirly In this lstterregard Scbadens tbetemerity agueheilhatthe$5.00priceat which the have to whenirs 881e5 lhysoldtleir $14,000,000 conpqlry 1994, growtlto oDlyr $8.50compaoy, in had were$428,000,000. proTheScbadqtg "r - itr 194 - aggessively thvalueofgrowth kt Quiztro's t sold spctivc ro$/ Frblic stockholdffs.Thc Scbrdeos - in 2003- tell thcit fouDrrpubltcsioctholde$ thatgrowth,evctr whenacc.mplished, woltllcss. is brutepowr, In ci.cum$anc6 where is evideftlhata mqioritystoctbtler ir exerting it who ard fu mt corstraiEdby colbidentioNof himss,tts Act a hortes nitority stocllDlderE, havcfic fofiitudeto elurgeh pro$rcted r's lirigrtiotr,to itrvoke fieir di56r dghts, Ttat is preto cisclywhrt h8shappsed hcre. Rcrpudeot6 hlvc inaunEd cttaordinary4|eDsc pmve Quizro's 'fair value'. TheEsult oflhoseeffolb - whichsuely will cotrEaem surpdse aly io

"fair valuc"is a substafrial multipleof !e objective rDpraisr Quizno's ts &at Quizno's of "[rger pric.". A resolutiotr thFcase lhat of wldchdocs re{Icc,t sart rality wilt rcwaJd not in Schadens, for tlpir dceptive lirst, stralegy, sfrrnd, for theirtenacity releltand Quizrlo's/the 't lcsslyaryuingfor morptlur two ycars,thepueorEdmerdDg thohmaringicss ke-over" of pricils.

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Grouprspectfrrly reasoru. for tlE otherrcaso$disc{ssed abov, F Fagas For thes ard "fai valuc"aeof December 20Olwts' at 21, requsts this Coun:(a) find th.t Quizno's tlu 2001,and as rsults of December, operadng least,$46.41 and,comidering Quizno\ actual of the itrcltrding tull implenentation planfor gre|tergowth ard imminent chsngp, Quizno's in incurred this fcs lhoi! AFD, $63.81 morc;8rd O) awad respondents atlorngys ald costs or "de' !0 and Fotasted litigation,bothitr pursui4 0Eir claims tu responding Qtizlo's vexrtious feGes". Daled: Dccnber12,2003 Dcnver,Colorado Rcwccd ly subnifred, WAKE & FORsFS TTOROWITZ

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Iay S. Hoiowitr, tr/467 Steet, slite 3950 370Sever*cedh 80202 Denv6, Colorado (elcphone) 303572-5100 (hcsimile) 303572-511I AoonEysfor ResloldefltTheFrganGroup

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CERTIFICATE SERVICE OF I hereby certifythaton Dcenbr 2003a mreandconectcopyof rheforegoitgThe 12, in Respode theFagan BriflStatenent Po$ition placed tbeUnited Of was Group'6 Post-Trial properly States prcpared, msil, postage to: addressod JayScbnell, Esq. Brega& wintsrs POBor 46552 1700Lilcoltr Street, Suite1300 Denver,Colorado 80201 Edward WasnutlLBsq. H. SmithGrnbrell & RlssU, L.L.P. Suite3100,Promenade II l2l0 Peachhee SEeet, N.E. Adafia, Gorgia 30309 TheF.gaoCroup c./oMr, Wiliam S. F.gsn 5201N. O'Cotrtror Sheet, Suits440 Ifl,rng, TX75039-376 Chslcy C\tb m, E!q. IGy MoyGiles 1225l?tb tueet, 29thRoor Denver, WmL5529 CO F6q. Jeftey Chas, Frick KleinkQf & Keley Iacobs Chase Saect,Suite1500 1050 Seventcsa0 Denvcr, 80f,65 CO FredricA. cohen,E!q. PiperRudnick 203lasalle Sreet IL Chicago, 60601

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