based on very sound contract principles of interpretation and this is a contract interpretation case we're fighting over a contract between bene fuel and the apple east center board whereby been a fuel hir person you've got interest on top of that that you have to worry about it so they wanted equity they wanted people to buy stock in the company and they hired centerboard for that purpose now ben if you already had some investors the the largest one at twenty percent being koch industries through its wholly owned subsidiary f h r l l c or flint hill's resources l l c in turn through its wholly owned company h r renewables now we certainly acknowledge that f h r renewables is the precise entity that own twenty percent of the stock in than a fuel but i will refer to coke h r throughout my presentation and i do that not to hide the fact that it was if they char renewables that was the shareholder i do that because that's how the parties themselves referred to b primary backer both during the negotiations leading up to the agreement and while the agreement was in place both bene fuel and center board referred to coke slash f h r as the retainer amount every month and they did provide some advising services in some of the negotiations that that took place but they were wholly unsuccessful in bringing in any new investors to ben despite being unsuccessful center board sued bene fuel to recover the successful under the agreement in their two primary contract terms that issue in this case the first one is what the parties mean by the term investment and in turn we also need to look at the terms transaction and aggregate investment because both of those terms were defined by the use of the undefined term investment so all three of those terms worries and will and you've been running so we'll give you another minute boys used to start again but no it's to be stopped right now and i'll try to talk louder as well ok well all work together  give another minute place so the first term is investment and then the second term is what is meant by the term or the phrase current investor in my short time with you today i certainly want to answer any questions a court about any aspect of the case but i suspect i'm going to focus most of my time on the first issue which is what did the parties mean by investment in by that i mean this did investment include just purchases of ben a fuel stock in other words equity or did it also include loans of money made to benefield so we have just equity or did it include equity and did not position is that included just equity and there were two deals that we have to look at there was the that took place while this agreement was it was in effect there was the mezzanine loan which to which took place while the agreement was and in place a thirty two million dollar loan with warrants issued the warrants represented a right to purchase then a fuel stock at a later date then if the end of the there was a tail period after that the agreement was terminated for another year and during that tail period towards the end that there was a convertible note and that was by converting that i mean that the debt wo convert to or could convert to equity benefield stock under certain circumstances particularly if the note was was not repaid of the note was repaid that it would never convert to stock so both of these were about that but it's undisputed that and you agree that equity investment yes so they say they were primarily loans with this equity component because the critical part of it's undisputed that under the mezzanine loan none of the warrants were exercised during the term of the agreement or during the tail here so there was no stock issue there was a potential for stock issued if the warrant holders triggered it by paying their penny pushchair but that did not happen and under the but that option was available it was a bit it's our under the convertible no undisputed that during the term of the agreement or the till period none of that debt was converted to stock so again no equity was issued no shares of stock were issued and a new convertible note might never be under the agreement because these two deals were primarily loans to the extent there was an equity component no equity had been issued and that the agreement was solely for equity and did not include lines now to contract interpretation principles i ask you to keep in mind and we are under delaware law but these are not unusual contract principles that we familiar with them first is we have to look at the entire contract not just isolated words or phrases but the entire contract and secondly it is a rule of construction in delaware as elsewhere that if the same word or phrase is used in one part of the contract and that meaning is clear in that part of the contract you have to use that term and interpret it consistently throughout the contract where ever it is used and here we submit to you  that the contract terms are an ambiguous because you can discern the intent of the parties simply by looking at the contract language that they used and now i'd ask you to turn to the demonstrative a that i provided to the poor and this is not the chart but it's the one that's the two page and this comes from defendant's exhibit thirteen which is the agreement at issue and specifically it's the compensation portion of the agreement at issue now i retyped it word for word because it was difficult to read from the exhibit i also point out that the  get fifteen thousand dollars and this is kind of the retainer i was talking about fifteen thousand dollars in cash every month no matter what and they were paid that and there's no dispute about that if there is a successful transaction they get paid an additional fifteen thousand dollars per month upon the due upon the successful completion of a transaction so that's the trigger a transaction well what this tells us is because that success component of the work is payable in equity at the transaction cries that tells us that when the parties talk about a transaction they are contemplating an equity transaction because only an equity transaction will result in a transaction  prize for the shares of stock there is no transaction price if transaction includes a loan of money so this provision tells us that when the parties use the word transaction they were contemplating an equity transaction i'm going to skip b for a minute because that's the portion in dispute if you look down in the second part of  this is the provision dealing with current investors if a current investor makes an additional investment into benefield the seven percent successfully is only going to be applied to that aggregate investment that increases their program to equity ownership what does this tell us it tells us that when the parties use the word aggregate investment they contemplate that it is going to be an equity investment because only an for that auction to be yes in the mizzen intransigent there were units that were sold in so a lender for every one hundred thousand dollars that a lender agreed to loan they got i think it was three thousand words and so as it was a unit they made a loan and then with that loan they got the right to exercise morns but again none of those words had been exercised during the agreement so there was no equity issue  so and then paragraph c talks about certain exclusions again contemplating consistent with the idea that a transaction is going to be an equity transaction so then you go back and look at the success rate and this is this is the provision that's in dispute they are claiming seven percent of the aggregate investment all of the money that was loane in both mezzanine transaction and the convertible down thirty two million dollars seven million of it was from f h r treasury and then six million dollars was loaned in the convertible no they're claiming seven percent of that in the district court awarded seven percent of that of those sons so seven percent of any aggregate investment and it says for purposes here of aggregate investment means the total amount of all investments received in connection with a transaction from the paragraph above we know that when the parties use the word transaction they were contemplating an equity transaction now center board argues that these provisions are rights apart from equity could have a price i can't think of one i can't think of one  it's talking about cable in equity at the transaction price so the parties clearly were saying centerboard if you bring in new money not only we're going to give you your successfully but we're going to pay you in equity at the transaction prize whatever this new investor paid for their stock say they bought it at five dollars a share this new investor then center board would get an additional success work so they say well ignore these other provisions because they're irrelevant we're only fighting over the the first part of paragraph b which is the six successfully well i say no you have to read all of the provisions in total and you have to construe the terms consistently throughout so in some of these provisions we know that when the parties use the word transaction they were contemplating an equity transaction when the parties used the word aggregate investment they were contemplating an equity investment therefore when you get to the success b you have to construe that consistently i want to speak very briefly about the the district courts alternative argument that  even if this term is ambiguous the district court found that the parties subject of intent was to have investment broadly defined to include both equity and debt and i submit to you that was an error as well two points i want to make there look at the negotiations leading up to the agreement and look at industry custom it is clear that the parties wanted very different things when they first began the a fuel wanted preferred stock they wanted just equity centerboard wanted dead included when then a fuel here's the difference so the parties were at odds and they ended up not defining the term here's the significant part when benefield said no delete the word debt we don't want debt in there they made it clear that they didn't want the word debt in the dream because they didn't want debt they didn't want the agreement to cover debt they just do with expanding the scope of the agreement to include debt they reasoned that there might be another special purpose vehicle like they had done previously it was an equity like transaction but it didn't involve preferred stock and then second industry custom both expert witnesses for both parties testified that a seven percent fee is consistent with an agreement for a company to go out and find new equity investors if you hire a company to find lenders the fee is going to be much much smaller so a seven percent success be in this agreement is consistent only with an agreement that it covers equity only and not d k this is a contract that was heavily heavily negotiated at trial we spent hours reviewing all of the steps of the really council has tried to do is pick out certain sections and say see it says equity here but it doesn't say there so we can imply that this is a contract that uses words in certain paragraphs that it doesn't use and others yes the work and you can't have a work fee payable in the same price as the equity that's it on the transaction so there was no work again the words equity do not between the two principals of this company make clear that they understood the transaction included that there was some confusion and it was the present a company quinn's action under delaware law under it under the dictionary definitions whether you go to merriam webster or oxford or even blacks  that the word transaction includes debt and equity because it's any time you put up your money in the hopes of making a profit sometimes a profits bigger sometimes a smaller sometimes is not a lot and some vehicles offer less risk less profit some were more risk more profit but they're all investment and get violent you money i had to put up my money in the hope of getting interest i e getting it again on my investment and that's what the judge found that the definition of  we give you another example where they use different words there is a provision in the agreement that says if you make it an investment is made by any one of the following four people in this field or in a still year of those  you is used there but then when you go down into the current into the area where they talk about her an investor the word so it doesn't appear so then of the parties knew how to use the word affiliates when they wanted to but when first of all this is a contract and the contract is pretty clear and they did do what they did a lot of they designed the mezzanine transaction a there's at evidence the judge noted that evidence a lot of work that they  and that was the contract they signed the ones who were they wanted the service and they signed it nobody held a gun to their head it was heavily negotiating the agreed to and we're not at that argument rewrite the contract right so even though she says well they didn't write anybody our well that's not true either personally it was an earlier transaction they were involved in with some sort of canada and they got paid for doing that but also they didn't get paid for the turn investor which was flynn hill resources renewable tello see that's they've had two names so it's a little confusing the fact is the tale period the whole set up of this of this contract is very standard for it on wall street but it's what the parties negotiated in it agree took this is not a bilateral contract this who doesn't like the banks and get down before they sign it or you don't get our kind of situation this isn't we sent down the point is foremost a laser pro sign it or you don't get your money this is a negotiated back and forth and back and forth and then they broke and then after they thought they were done everybody understood it and to make certain i'm going to look at what they said to each other in their private email they understood included and more importantly when they went to the mezzanine transaction to that day isn't deemed a current investor any different person who invests after the agreement is not occurring but there's a finite list of those who could be called current investors yes in your view yes which to me seems to ignore the meaning of the word current why couldn't the current invested be anybody who currently invents first of all that argument wasn't made below i do want to make clear are clear that that was waived but your honor if i want to say that somebody is an investor at the time they make the investment not now i would say then you are an investor who is an investor at the time of a new investor or was an investor current investor at the time in the second investment is make but they didn't say that they said current investor in this document i think this day who's occurr investor now and that's why i gave you the chart and this is an exhibit this is it is an exhibit in the in the record and that's in the public record and that was an example of we have with the court else he told us it was totally separate had separate management he did not know what assets they had did not know how it was managed did not know where it got its money from didn't know if it had its own bank account didn't know any pretty much anything about he said this totally separate but more importantly more importantly said had to be separate it's important to then each of these energies be separate for tax purposes can't have it together or you can have a subsidy consolidation they know it had to be they went to a lot of trouble to maintain all the separateness they talk about some a cold coke i bester what's in all of that is it was somewhere between five and twenty companies each of which have now sixty or so subsidiaries and subsidiaries a subsidiary flint hill resources company which if he couldn't tell me who owns what or where it went delaware law on corporate separateness beyond almost anything to pierce a corporate veil you have to show an awful lot and there's been no showing of anything the piercing corporate occurring investor the time this was done to disagree was made with fl they were new they didn't exist at the time the green was made they were not a common investor the argument that they might have been a current investor when they made a second investment first of all was it right below but second of all i don't think that hundred contract doesn't say at the time of the investment  one thing about those warrants i'd like to make a comment about these were penny watch which are automatic automatically exercised at the end of the term so if you do nothing more to automatically exercise and they only cost a pe up without ever having to put up any money and when you finally get to so let's say it's a dollar when you start it's five dollars when you finish you know have a for all the game you all you have to do is pay your pennies and just in case you forget to exercise or you don't do anything at the end of the term it's in order mark exercise and you get a start and that they have your penny for whatever it's going up  to it's a mechanism to enable it to give a debt holder of an added incentive to it gets to share in the gains of the company without having to put up any more money and the money ultimately put up is extremely nominal one cent per share  triggered if there's not an equity transaction that's what the judge found it and that's reasonable but this successfully is not triggered by a current investor in other words i but to have some an amorphous term that anybody in this group of somewhere between forty fifty and twenty parents with sixty or more subs each  becomes a university can you define the word coke was used earlier in the investment process and the reason it was used is the company had prepared investment materials  looked at this topic of the hundreds of people that center board introduced to this investment of judge this went further by the way than just dictionary definition for investment and transaction he also looked at the evidence he looked at the because we have three days of trial of evidence you need to put your phone there and you need to give her back her full time please will start when you get this phone up there thank you appreciate your he right i'm going to jump into it  phil harmer talked a lot about the different dictionary definition of investment and under delaware law you don't resort to dictionaries unless the meaning is unclear and we submitted again it is clear from the context of language of the parties used what their intent was and you have to look at those three terms together transaction investment and aggregate investment and from that compensation tire section of the agreement it's clear that the parties contemplated expansive definition of the term investment it's it goes on for probably a hundred words it's got i think seven different components it includes debt loans mergers and acquisition of more than fifty percent of the capital stock the different kinds of transactions what that tells us is when the parties wanted an expansive definition of investment they think they knew how to do that but they didn't do it here so you have to read it in context want to talk briefly about per investor is there was a lot of discussion about that and i think the the thing that tells us most about what the parties intended by that term is how they operated while the contract was in place how they operated was the center board's primary representative who was the boots on the ground doing this work for ben a few were trying to go just point out to a few of them again this disagreement was in place during basically during the calendar year of two thousand and fourteen early in the year where mr singer is trying to entice investors defendants exhibit thirty he revers refers to coke owning majority of the company defendants exhibit forty three in june mr singer describes the partnership between benefield and coke if h r defendants exhibit fifty nine is in august  he refers to ben a few as a company jointly owned by koch industries he refers in the defendant's exhibit sixty two and others he refers to koch as an existing shareholder so how the parties operated while the agreement is in place tells us the most about what they intended by the term the parties both parties knew and understood the current best it was going to include the koch family the f h our family and step my own and affiliates in that section when they added affiliates and other section as our representative mr riley testified at trial they didn't include affiliates because everyone knew who they meant they didn't need other sections they didn't other sections where they specifically identified specific corporate entities and then also wanted to clarify oh and by the way also their affiliates but when they use the term current investors the parties understood had a common understanding of that step back or step up thirty thousand feet what is this agreement about it's about hiring centerboard to bring new money new decision makers new people to the table the people that benefield dealt with the negotiating the mezzanine transaction in the convertible note were the exact same people the same decision makers that had already participated in benefield they were already the existing shareholders council you need to wrap it up look at the contract center board didn't get a windfall they got a two point three million dollars windfall we ask that you reverse the decision below consistent with interpret the contract consistent with the clear intent of the parties and reverse the decision thank you thank the arguments for today