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MCCAINRECEIVED

FFDEPALFLCCTIONCOMMISSIONSECRETARIAT

M A I - 3 A E 03March 28,2008

TbomasemaP Duncan, EsqGeneral CounselFederal

SENSITIVE-Z! c*oOm30

999 E Street, NWWashington, DC 20463

Re: MUR5976

Dear Ms Duncan

..U faco

01

Please find enclosed a response to the February 25,2008 complaint filed by the DemocraticNational Committee This Response is filed jointly on behalf of Senator John McCain and JohnMcCain 2008, Inc (Joseph Schmuckler, Treasurer)

I am honored to be joined on this Response Brief by Charles Fried, Beneficial Professor of Lawat Harvard Law School and a former Solicitor General of the United States, and Thomas Memll,the Charles Keller Beekman Professor of Law at Columbia University and a former DeputySolicitor General of the United States Both Professor Fried and Professor Merrill areparticipating in this representation in then* individual capacities and not on behalf of their LawSchools or Universities Additionally, an Opinion of Counsel is appended hereto from ProfessorJonathan Macey, Sam Hams Professor of Corporate Law, Corporate Finance, and SecuritiesLaw at Yale University Professor Macey offers his expert Opinion on mis Matter's banking andsecurities law issues in his personal capacity and not on behalf of Yale Law School

Should you have any questions concerning this Response, please feel free to contact either me orToddSteggerda, Chief Counsel to John McCain 2008

Sincerely,

General CounselJohn McCam 2008

PO Bar till! | Afhtfa*VA 22215

| jf^]^jjiE OF JOHN MCCAIN AND JOHN MCCAm 2008. JOSEPH SJ^MUOCTtlfrBAS TPJCACT pfdtJL TO COMPLAINT IN MATTER UNDER REVIEW 3976

INTRODUCTION

There can be no speech without the expenditure of resources The United States SupremeCourt recognized this fundamental truth in Buckley v Valeo. ruling tfmt just as the FustAmendment does not allow limitations on the content or quantity of speech, it does notcountenance limitations on expenditures by the speaker in aid of that speaker's speech Buckleyv Valeo. 424 U S 1 (1976) This is a fbundauonal First Amendment truth and it applies mosturgently to political speech--the Amendment's core Through all the vagaries and varieties of

«T pronouncements on campaign finance issues since Buckley, the Court—though often invited to<-D do so—has never retreated from this position See, e ?. Pf "**\\ y Svntf |, sd*T T g 230(20061^ The public financing regime does not contradict this established premise because it is entirely^ voluntary Now conies the Democratic National Committee (the "DNC") and seeks to entrapr,j Senator John McCain and John McCain 2008, Inc (collectively, "Respondents" or "McCain'-T Campaign") into spending limits through a series of baseless and vague arguments without any^ legitimate constitutional foundations Yet, even if such a misguided approach to constitutional£•? rights were appropriate, it would fail on its own terms!*J

The principal hook by which the DNC hopes to catch the Campaign is the perfectlyreasonable provision in the campaign finance laws that require a candidate who receives publicfunds from the U S Department of the Treasury (the 'Treasury Department") to stay withinspecified expenditure limits But in this case, neither the Campaign, nor any Campaign creditor,has ever accepted a single penny from the Treasury Department Nor has the Campaign everpledged federal matching-funds certifications as security for private financing, which furtherundermines the DNC's baseless suggestion that the expenditure limits remain in force To thecontrary, the Campaign entered into an agreement with a private lender that purposely aypjdfidpledging matching-funds certifications as security Although that agreement included aconditional and unfulfilled covenant that the Campaign would, on the happening of certainevents—events that never occurred—later seek public matching funds and pledge those funds ascollateral if it were found to be eligible for them, a private contract that does not in net cause orresult in a pledge of matching-funds certifications as security has no statutory or regulatoryimplications and, more importantly, cannot force the Campaign to forsake its First Amendmentngjhts

The DNC's other arguments are similarly without merit Though the Campaign, likeevery political actor, has a constitutional right to stay clear of (he pubkc financing system, theDNC wrongly claims that having once contemplated receiving funds and having sought toestablish its eligibility for them, the Campaign is now trapped within mat system and theassociated spending limits—even though it has not accepted any funds from the TreasuryDepartment The DNC's theories on the effect of the Federal Election Commission's lack ofquorum are equally flawed Indeed, it is simply wrong as a matter of law to suggest, as the DNCargues here, that the Campaign must now languish in the public finance system and be subject tothe expenditure limits thereof on the quantity of political speech because there is at present noFederal Election Commission quorum (and, because of a political impasse, may not soon have a

quorum) rendering the Commission unable to issue its ministerial recognition of the Campaign'sdecision not to accept public funds.

Any claim that there is a limit on a candidate's expenditures must be evaluated in light ofthe serious First Amendment concerns this would present In the brief that follows, theRespondents demonstrate how the DNC's arguments, even without consideration of theconstitutional difficulties presented, fail on their own terms under principles of campaign-finance, administrative, banking, p*xE contract law

STATEMENT OF FACTS

u.> United States Senator John McCain is a candidate for the office of President of thelj? United States His principal campaign committee u John McCain 2008, Inc (Joseph R,,j Schmuckler, Treasurer) On August 13,2007, Senator McCain filed with the Federal Election<-i Commission (the "Commission") a Candidate and Committee Agreement and Certification'M Letter and a Threshold Submission1 (collectively, "Matehmg-Funds Application*1) to establish^ eligibility for the Presidential Primary Matching Payments Account Act's ("Matching Fund Act"^ or "Act") public funding program (the "Program") Pub L No 93-443 (1974), 11 CFR §oo 9033 1 (2007) Senator McCain asked the Commission to determine his eligibility for the,-.j Program in order to preserve the option of accepting public funds As was widely reported at the

time, the Campaign never committed to accept public funds for the primary election To thecontrary, the Campaign publicly announced from the onset of establishing program eligibilitythat it was merely preserving the option to accept federal funding if it later decided to do so 2

In subsequent months, the Campaign submitted additional matchable contributions forCommission review and certification By late December 2007, it became clear that the U SSenate would neither confirm the President's Commission nominees, nor allow him to makerecess appointments over the year-end holidays As a result, the Commission knew it would beleft without a quorum and unable to take official actions concerning Matching Fund Actpayments Accordingly, the Commission on December 19,2007, while still in possession of aquorum, issued to the Treasury Department a certification of the Campaign's eligibility to"receive payment from the Presidential Primary Matching Payment Account "l Notably, the

'McCam Candidate uxl Committee Agreemem and Certifkat^ 13,2007)(attached hereto as Exhibit 1)*SM.a g . The Day m Polifaca. StanLadatt- (New Jenevl Any 29, 2007 (Communicationi Director Jill Hszelbtkerstated that "[w]e have not made a final decision, but we are domgwfaafi necessary should we decide to opt mto the

MlkflLSlDda Boston Globe, Oct 2, 2007 Cipokeswoman Jill Hazelbaker said Mformally opting mto the public ftmdmy avatem"). POX Newi Sunday ff OK N21. 2007) (WALLACE "Are yOTgomg to tcc^fedeidint^nignjndfr MCCAIN "We havent made thatdecision yet. and its not a decision we need to mate immediately We cucooaaue to consider all options'1),AmmcanMornmgfCNNteleviiiQnbtt»dcMtOct 23, 2007) ("KXRAN CHETRY "All right So that at this point,you an not gong to be (dung federal n^ M We haven't made a decision We'll make adecinon Staytnned")3FedenUElectK)nCormnissic>nlNoticeofC^rQfication(Dec 19, 2007) (attached hereto u Exhibit 2)

Treasury Department had previously announced that the Matching Funds Account balance wasnot likely to be sufficient to make any payments to eligible candidates until March 2008 4

On February 6,2008, after having won the New Hampshire, South Carolina, and FloridaRepublican primaries, and having substantially prevailed in the "Super Tuesday*1 primaries,Senator McCain notified the Commission that he was withdrawing his Matching-FundsApplication from the primary public funding system and would not accept any public funds fatthe primary election period5 In so doing, Senator McCain accurately represented that theCampaign had neither accepted any funds from the Treasury Department, nor pledged anymatclung-funds certifications as security for a bank loan By letter dated February 7,2008, theCampaign informed the Treasury Department that it had withdrawn the Matching-Funds

'£ Application from the Program and would not accept pubhc funds tor the primary decfto^(.0

^ On February 19, 2008, Commission Chairman David Mason sent a letter to Senator,«, McCain indicating that the Commission would consider Senator McCain's February 6M withdrawal notice "at such tune as it has a quorum"7 Chairman Mason also asked for•rjr information concerning a line of ci^J? accurately disclosed through appropriate filings In his February 19 letter, Chairman Mason2 invited Senator McCain to "expand on [Senator McCain's] rationale" for concluding that neither,',* he nor the Campaign had pledged mntching-funds certifications as security for private

financing8 C^m™" Maann'a tiaqiMMf wa« apparently prompted hy puttM mpftrta eftneeming th»

Campaign's line of credit from Fidelity Bank & Trust

The private financing at issue in Chairman Mason's letter was a $3 million line of creditnegotiated in November 2007 with Fidelity & Trust Bank of Bethesda, Maryland (the "Bank")This line of credit was negotiated and executed in the normal course of the Bank's business9 onNovember 14, 2007 pursuant to three principal documents a Business Loan Agreement (the"Loan Agreement")t a Commercial Security Agreement (the "Security Agreement"), and aPromissory Note (the "Note") (collectively, the "Loan Documents")10 Under the LoanDocuments, the Bank required certain collateral and other assurances mat funds loaned to theCampaign would be repaid On December 17, 2007, the Campaign and the Bank executed aLoan Modification Agreement pursuant to which the line of credit was iiKreased from $3 milhonto $4 million " On March 20, 2008, the Campaign repaid to the Bank all funds borrowedpursuant to the Loan

4 Press Release, Federal Election Commission, FBC Approves MBtcfaing Funds fbr 2008 Candidites (Dec 20.

9 Letter from John McCain, US Seiiator, to FederiJ Election Commission (Feb 6, 2008) (attached hereto as Exhibit3)' Letter fiom Trevor Potter, General Counsel, John McCam 2008, Inc. to US Treasury (Feb 7, 2008) (attachedhereto ai Exhibit 4)7 Utter fixmDt^Kl Mason, Oiainnan,Fe<kralElectiooCofnm Senator (Feb 19,2008)(Attached hereto as Exhibit 5)'ML9 Barry Watkms Aff f 3 (attached hereto as Exhibit 6)10 Loan Documents (Nov 14, 2007) (attached hereto as Exhibit 7)11 Loan Moottaftra Agreement (Dec 17, 2007) (attached hereto as Exhibit 8) [heraiianwIxMUi ModificationAgreement]

The Loan Documents and the Loan Modification Agreement embodied the Bank'sthe Campaign's (collectively, the Tarties") express agreement and intent that the Campaign wasnot pledging matching-funds certifications as security for the line of credit The SecurityAgreement (in original and modified form)— the document through which security interests in

loot. ifNitiM nn inn** ifitetiAid In ha, fttiH mmM in fact, ****** frvpmMly fflfr|ujfl| fi*im ftm

collateral** any MiH ail Mftifiojrfintia «f "Hrty-hing fluid* Specifically, the originalSecurity Agreement excluded "any certifications of matching fund eligibility, including relatedrights, currently possessed by [the Campaign] or obtained before January 1, 2008" as collateralfor the line of credit12 Likewise, the modified Security Agreement stated "any certifications ofmatching fund eligibility, including related rights, now held by [the Campaign] are notthcniffftlvBs b<Mng pffflJUffffd as security for the Indebtedness and are not themselves gniiateral for

f. the Indebtedness or subject to this Security Agreement**13 The Parties* intent was likewiseu> embodied in the Loan Agreement (in original and modified form), which also specificallyw excluded matching-funds certifications from the description of "collateral " According to the:" J original Loan Agreement, "It is expressly understood and agreed that 'Collateral' specifically'"^ excluded any certifications of matching fund ehgibihty currently possessed by Borrower orv-r obtained before January 1, 2008 "l4 Similarly, the modified Loan Agreement stated as follows*yO It is expressly understood and agreed that "Collateral" specifically•c' excludes any certification of matching fund eligibility now held by

Borrower and/or John McCain and any right, title and interest ofBorrower and/or John McCain to receive payments thereunder is

The Loan Modification Agreement further clarified mat these certifications were not pledged ascollateral, plainly excluding as such "any nght, title and interest of [the Campaign] and/or JohnMcCain to receive payments" under the matching-funds certifications l6

Three other provisions of the Loan Documents addressed the matching-fundscertifications, but none of them created a security interest in them First, the Parties agreed thatthe Campaign could grant a security interest in the new matching-fimds certifications for the lineof credit in the future, but only if certain conditions first occurred and a separate agreement wasexecuted Specifically, if Senator McCain had withdrawn from the Program before December31, 2007 and failed to win or place within at least 10 percentage points of the winner in the NewHampshire primary (or the next primary or caucus, pursuant to the modified Loan Agreement),then the Loan Agreement required the Campaign to reenter the Program and then grant to theBank a security interest in its new matching funds l7 However, these conditions precedent neveroccurred Second, the Campaign promised that it would not transfer, grant a security in, orotherwise encumber the public matching-funds certifications to or for the benefit of any other

12 Security Agreement, at I (Nov 14,2007) [hereinafter Security Agreement]11 Security Agreement, at I (Nov 14.2007) (ai modified on Dec 17.2007) (ciiiplM«fid<JecOIhereii»ner SecurityAgreement (es modified)]"Lou Agreement.* 5 (Nov 14,2007) [heremanfelxian Agreement]15 Loan Agreement, at 3 (Nov 14,2007) (u modified on Dec 17,2007) (emphtiiiidded) [hereinafter LoanAgreement (at modified)]"LLttS"U.at2

person or entity1B Third, the Loan Agreement required that the Campaign not, without theBank's prior consent, exceed the Program's spending limits, irrespective of whether theCampaign was subject to the Program as of any applicable date of determination19 Neither theBank nor the Campaign intended to create a security interest m any matching-fiinds certificationspursuant to these provisions

On February 25,2008, the Campaign's General Counsel responded to Chairman Mason'sFebruary 19 letter, with, among other things, a letter from the Bank's counsel, confirming thatthe certifications had not been pledged as collateral for the Campaign's line of credit TheBank's counsel stated

i i iriff panic ooes not ^Mny nave» nor (fliu it ever receive Bom tlic'^' Committee, a security ffltfffffft in any certification for matchingrj fimda Any finding or determination to the contrary would be-I wholly inconsistent with the language of the loan documents, the• j intent and understanding of the parties and basic principles of^ banking, secunty, and uniform commercial code law

\.c. The DNC filed the present complaint with the Commission on February 28,2008

ARGUMENT

I. THE MATCfflNG-FUNDS PROGRAM'S SPENDING LIMITS DO NOT APPLYTO THE MCCAIN CAMPAIGN

A Smnmtnr MffPaln hm • PniMfltnflAnal Hi«ht tn \VithHi-aw Vnan fh* PHmarv

The U S Supreme Court in Buckley v Valeo recognized a candidate's constitutionalright to spend unlimited funds on election activities, holding that the Tint Amendment requiresthe invalidation of ceilings on overall campaig" expenditures " Buckley v Valeo. 424 U S1, 58 (1976) The Buckley Court was faced with two sets of spending limits One set wasautomatically imposed on all presidential candidates and the other was accepted voluntarily bycandidates in conjunction with public funding Federal Election Campaign Act Amendments of1974, Pub L 93-443 § 404(a) (Oct IS, 1974) The Court overturned the generally applicablespending limits because they restricted candidates' First Amendment rights The Program'sspending limits were upheld, but only because they were voluntary a It is for this reason that theMatching Fund Act and its implementing regulations do not impose any. restrictions on a

11 U. it3'•id. 1418 Richard DBVU AIT 16 (MKhed hereto « Exhibit 9), Wtfkini Aff 1S11 Letter from Trevor Potter, OownlCounwl, John McCun 2008,100, to DividMiion,FECChtinnMi(Feb 25,2008) gitttlDg Letter from MtfthewS Bagman and Scott E Thomas, AttOfMyB,Dickitem Shapiro LLP, to lYevorPotter, OcnenUCounael, John McCain 2008, Ine (Fcb 25,2008) (omphans added) (attached hereto ai Exhibit 10)aBHcJ^diroctiycc<npaTed a candidate*! dec»on to participate mchoice to ohintinlyliinn the 1U8 (>fco«mbutioiiitecandidate ft. at 57 n 65

candidate's ability to voluntarily withdraw from the Program The Commission itself hasexpressly recognized that the Program must remain voluntary to be constitutional As theCommission emphasized in its Gephardt Advisory Opinion ("Gephardt" or "Gephardt Opinion"),it is the voluntary nature of the Program that is so ftmrimnentnl

The Supreme Court held that the voluntary nature of all of thepublic funding programs permits the related expenditure limits,while simultaneously striking down expenditure limits that werenot voluntarily accepted as part of a public funding program FedElection Comm'n Adv Op 2003-35 at 3 (Gephardt), available athttp //saos nictusa com/aodocs/2003-35 pdf (emphasis added)

r,ji Unless the Program affords presidential candidates a voluntary decision to participate —,-1 and, more fundamentally, not to participate— its spending limits are indistinguishable from those'M invalidated by Buckley and its structure is unconstitutional Common Cause v Schmitt. 512 F7 Supp 489, 49S (D C 1 980) ("Candidates, the constitutional rationale goes, are permitted to? forgo their own right to private contnbutions and unlimited expenditures in exchange forJjJ (exclusive) financing from the public coffers This is a voluntary decision made by ther j candidate, presumably, because the candidate believes that his or her political communication is

enhanced by public funding, even given the restrictions ") Accordingly, Senator McCain has aconstitutional right not to participate in the Program, and may therefore decide to accept or rejectpublic funds after individually weighing each action's consequences Republican Nat'l Commv Fed Election CfcfflliBi'Pi 487 F Supp 280, 286 (1 980) (in upholding the Presidential ElectionCampaign Fund portion of the presidential public funding program the Court said, "the candidatehas a legitimate choice whether to accept public funding and forego private contnbutions")(summarily afTd 445 U S 9SS (1 980)) See generally. Roaenstielv Rodriguez. I0l F 3d 1544,!S49(8thCir 1996\ Vote Choice v DiSteftno. 4 F 3d 26 (1st Cir 1993)

B The McCain Camnaion Never Accented Matching Funds. Which !• theMfm ^jg^jigjgg^^gj^^g^w^jggggj^^^ggjg^jgjjiigjgfg]jgjj^jggffgi^^g^^^^^^f_jfjfjgg^j^^^g^

Ml anH Remlafnrv Trlown* flip AnnHeaMnn nt Pmoram Snendincr

The McCain Campaign never received or accepted matching funds Nor does the DNCallege that it did Under the statutory and regulatory conn iea of the Program's legal frameworkand the principles of Buckley v Valeo embodied therein, this undisputed fact means that theCampaign is not bound by the Program's spending limits It is a necessary corollary of BlddfiXthat a candidate voluntarily binds himself to spending limits only through the jscejg ofassociated ntF**""g funds "Congress may engage in public financing of election campaignsand may condition acceptance of public funds on an agreement by the candidate to abide byspecified expenditure limitations " Buckley- 424 U S at 57 (^ynphflffig added) Thus, the importof Buckley is that (a) a candidate's decision to participate in the Program must be voluntary, and(b) a candidate surrenders his constitutional right to unlimited spending only if he rjEejyes. public

funds See. BucklfiX, 424 U S at 95 ("[A]cceptancc of public financing entails voluntaryacceptance of an expenditure ceiling ") M

Consistent with Buckley, the Commission's regulations make dear that spending limitsdo not apply to a candidate unless that candidate has actually received public funds under theProgram

The expenditure limitations of 11 CFR9035 1 shall not apply to acandidate who does not zsssm matching funds at any time duringthe matching payment period 11 CFR § 9035 1(4 (2007)(emphasis added)

o£; Accordingly, under section 9035 l(d) of the regulations and in step with the principlesr] underlying Buckley, spending limits are not applicable to the Campaign because it never,<.i accepted public funds under the ProgramfM

"^ C. Commission Practice Hai Been to Recognize that Candidate! Mav WithdrawPrior to the RecaJnt of Federal Fimdio * ™vf ™ W¥ r*wnn vi ff f¥Wft« f win"

.-..-.'vw

IM hi the past, the Commission has faithfully administered the Program in compliance withBuckley by recognizing the Program's voluntary nature Neither its action nor inaction has everimpeded the withdrawal of any candidate's matching-funds application In feet, it has limited itsinvolvement to simply recognizing candidates' withdrawals and notifying the TreasuryDepartment of candidates' consequent meligibihty In the only available interpretation by theCommission of its role in the withdrawal process, the Commission in its Gephardt Opinion saidit would simply "withdraw a certification of a candidate's eligibility to receive MatchingPayment Act funds prior to the payment date upon receipt of a written request by thecandidate" under normal circumstances Gephardt at 4 (emphasis added) Gephardt's "holding",then, prescribes at most a purely ministerial role for the Commission in recognizing an eligiblecandidate's ultimate refusal to participate in the Program Indeed, Congressman Gephardt wastold the Commission would process his withdrawal in one business day—just long enough to"deliver a certification withdrawal to the Secretary of Treasury prior to his issuance ofpayments" Id Consistent with BucJdg, past Program participants have established mirtchmg-funds eligibility and elected subsequently to refuse public funds QfrfuP1* at 3 (TheCommission's previous resolution of similar issues is consistent with permitting rescissions priorto the payment of any Matching Payment funds ") Then-presidential candidate Howard Deanwas declared eligible to participate in the Program in June 2003, but declined public funds on

n Statutory provisions and legislative history alsospeaJcofo^iajejpiofpubUcfimo^umemoinentwhenacandidate's voluntary commitment to the Program's spending louts becomes binding Sea. Republican Nat'lCojDDLi487F Suppat2U(^erethecoiiditioniiniposedbyCongreei^^donotmfrmgeutwntheFimAiiieixImemn^ 955(1980)) SMUte HR Rep No 94-1057.at54(1976)(Conf RcpXngmteLll 1976USCCAN 946,969rn>efenuumng prevuuoni of mil section transfer into IheActihonpnrviHOiiiof 18USC 608 which imposedexpenditure luuitAUou on presidential candidates, conditioning their application, m accordance with the SupremeCourfi decision m Buckley v Valeow upon the affCTptincB of public fhiainTff|g **)

November 12, 2003.24 Similarly, Repubhcan Elizabeth Dole withdrew her matchmg-fundsapplication on December 17,1999 aftoqiialifying earlier that year2* Commission precedent hasthus established a ministerial role for the Commission that carefully preserves candidates'autonomy as outlined inBUfiUey.

Nothing should fundamentally alter the Commission's normal practice here Moreoverits current lack of quorum is not cause to depart from Commission precedent or from Buckley'smandate of a voluntary program Senator McCain's right to not participate in the Program isequal to that of past candidates He contemplated participating in the Program, and qualifiedthrough the eligibility process in order to be able to do so, but eventually exercised his right tovoluntarily withdraw his Matching-Funds Application His February 6,2008 withdrawal letter

*-i was therefore effective, at the latest, "upon receipt*1 by the Commission unless Senator McCain^ had actually received public funds under the Program any tune prior to his withdrawal, which he^ had not Had a Commission quorum existed on February 6,2008, doubtless the Commission's,lt exercise of its ministerial role would have closely mirrored the Commission's two-dayf-v processing of Elizabeth Dole's withdrawal the Treasury Department would have been informed^ forthwith that Senator McCain was no longer entitled to receive federal matching funds due to(=T his withdrawal from the Program M

D The McCain Camnaisn Did Not Grant a Security Interest in Matchinv-

The DNC argues, without basis, that Senator McCain "pledged matching funds ascollateral for a loan to his campaign," and has therefore surrendered his constitutional nght tovoluntarily withdraw from the Program In so arguing, the DNC incorrectly relies on languagein the Gephardt Opinion that discusses pledging matching-funds certifications as "security forprivate financing "

The DNC Complaint attempts to make much of the met that the Gephardt Opinion states,as a factual condition precedent, that Congressman Gephardt had not pledged the certificationshis campaign had received from the Commission as collateral for a private loan ComplainantDNC completely misconstrues the reasons mis was relevant to the Commission, and suggeststhat the Commission created a new standard that would restrict withdrawal of an eligibilityapplication for the matching funds system Even apart from its constitutional shortcomings,27 the

* Letter flan Howard Dem, preiideatitl candidate, to ElknWemtnub.FEC Chair (Nov 12, 2003) (hereinafterDean Letter) (attached hereto u Exhibit 1 1)23 Letter from Elizabeth Dole, US Senator to Scott Thomas, FEC Chairman (Dec 17, 1999) (hereinafter DoleLetter) (attached hereto ai Exhibit 12)* Elizabeth Dole's letter was received by theCommiwon on December 20, 1999 The Commission notifiedTreasury of her Withdrawal on December 22, 1999 Sea Dola Letter. Fad Election Cnmm'n. Tha ReentdfifFeh2000), lyjibhlftjihttp //www foe gov/paTrecoraV2000/f*00 pdf

The statement n Gephardt rogardnn the pledge of certiflcationi at collateral n no way rapmentB accfiititutienahy penniiiible barrier to voluntary withdrawal from the |iiuaiaui llwmjidpfflfltt theory embodied

Provided publicmonies have Mrt been released, me govenmert has provi^"ma1* TheonryralevmteYemfbrpnfpoief oftnggwin^is the acceptance of public flmds Prrvate agreements mat take place maiteipation of such a release have no

8

DNC's interpretation is contrary to both the language and likely purpose of this phrase in theGephardt Opinion (and ignoring the net that the Commission can only lawfully establish a newregulatory standard through a notice and a comment rulemakmg, not through an AdvisoryOpinion)21

The more likely reason the Commission noted a bank's lack of security interest inCongressman Gephardt's certifications was that its regulations prescribe certain procedures to

as security Under 11 C F R § 100 82, a loan secured byprimary matching-funds certifications satisfies the Commission's loan security requirementswhen

rvi (TV) The Loan agreement requires the deposit of the public'- financing payments, contributions, and interest income pledged asrjl collateral into me separate depository account for the purpose of^ retiring the debt according to the repayment requirements of thej> i

"^ (v) In the case of public financing payments, the borrower~ authorizes the Secretary of the Treasury to directly deposit the?, payments into the depository account for the purpose of rearing the

debt 11CFR f 10082(eX2XivHv)(2007)

These procedures appear to protect the Secretary of the Treasury when publicpayments have been pledged as a security interest By requiring that public financing paymentsbe placed in a separate depository account when such payments collateraiize a loan, theregulations assure that the Treasury Department does not race uncertainty about who is entitledto receive the payments It is logical, then, that the Commission recognized these practicalimplications when it authored the Gephardt Opinion29 Nevertheless, the fr"g™g» has noapplicability to the current Complaint in any event because (as explained in detail below) boththe Bank and the McCain Campaign agree there was no such security interest

The Loan Documents, reflecting the Parties' clear intent, did not create any securityinterest in any matching-funds certifications Under Maryland law, which the Parties agreedwould govern the loan transaction and which is based on the Uniform Commercial Code, asecurity interest is "an interest in personal property or fixtures mat secures the payment or

fbimance of an obligation " U C C § l-201(bX35) (2008) Moreover, "[the creditor] cannot

beerin§j on tho relationship between the ajpvenunent and DIB candidate, which is the solo basis lor raenQfying a QJUJ}

Sfifi2USC |437flJ>) 0008) (-Any rule of law which is not stated m this Act or m chapter 95 or 96 of Title 26miy be initiiMy proposed by the Commiuimsection 438(4) of this tub ")

Alternatively, the statement could merely be a recapflnlatiOB of the facts, n dicta, that had been presented ID theCommission for pmposes of raideniigtl»K The Gephardt committee liad stated that "the^^ODOOttBattQQ 8 €0a l lGsVDQD WIU DOC D6 D10QB6Q aV apQGUsTIOr IOsT HaV lOaVI ODnBasai ••••» JOOUlUliBBO • V0CQDsttD8s?BiDQD Of

its puftcyBtioii n the Matching Payment Act's public Jundnia program * Qsfibsdist2 AdvwxyopniojDsaregenereUy couched SB tenns of roe facts presented by the party seeknn the opnuon But the lacilaliun of ttjose factsAn mm mtfmt mmmmtmt l/Lmmi dmtmmm %tmmtmmmmt tmtmml mmtmMmmmmmmmmml k»aul«Mk mmm mmJmtmmtfmammmt mtmmtfmmUUOT HOv OlDID KDBK ^BBjT UvwQUlO flv^BU IvBHDvlDBDvB DlDBim QB WDWOUBilK BIBUBB

have an enforceable security interest where there is no security agreement signed by the debtor"Tllyh1ITm F«rdware v TiflmFPftTti *M A M 21si 71Q f^ 1QOT) A security agreement mustnot only evidence the Parties' intent to create a security interest in an item of property that isclearly defined, the agreement must also include the debtor's specific grant of a security interestto the secured party Jd. at 399-401 Indeed, the "granting wads" are the sine qua nog of thesecurity agreement—"necessary to indicate the intention of the parties to create a securityinterest, and in the absence of such words, it seems rather clear mat the parties did not intend tocreate a security interestH Id

The Loan Documents included a Security Agreement, and its operable provisionexpressly excluded from the grant any and all interest in public matching funds, as follows

N F

^ GRANT OF SECURITY INTEREST For valuable consideration,, . Grantor grants to T-atifter a security interest in the Collateral toi'j jmaaaaB-^MMiiiy irr r*~m*im it T-r-Kaaaa*—I'HflFTT* ir* **ffr Tpm"""Tna •»»^ secure the Indebtedness and agrees that the Lender shall have the••-•* rights stated in this agreement with respect to the Collateral in^ addition to all other rights that Lender may have by law

£ COLLATERAL DESCRIPTION The word "Collateral" as used:--j in this Agreement means inventory, equipment, accounts [and

other property] Grantor and Lender agree that anycertifications of matching funds eligibility, including related rights,now held by [the Campaign] are not themselves frying pledged assecurity for the Indebtedness and are not themselves collateral forthe Indebtedness or subject to this Security Agreementw

The Parties* intent was also plainly embodied in the Loan Agreement, which likewiseexcluded matching-funds certifications from the description of "Collateral" "It is expresslyunderstood and "H'ccd tf»** 'Collateral* specifically excludes *nv cerTificationa of ffjitiftjrhinff fifflKleligibility now held by Borrower and/or John McCain and any right, tide and interest ofBorrower and/or John McCain to receive payments thereunder1131 Here, the Partiesunambiguously expressed their intent to exclude matching-funds certifications from the SecurityAgreement's operative grant, so the Loan Documents are properly not subject to any alternativeinterpretation SeeCanarasv Lift Truck Services. Inc. 322 A 2d 866,873 (Md 1974) ("Wherea contract is plain and unambiguous there is no room for construction and it must be presumedthat the parties meant what they expressed ") The feet that the Parties did not, and did notintend to create any security interest in any matching-funds certifications is confirmed byJonathan Macey, Sain Hams Professor of Corporate Law, Corporate Finance, and SecuritiesLaw at the Yale Law School and an independent expert in banking law who, upon examining the

30 Security Agreemem (as modified), it 1 (empbam added) Even prwr to modification, the defmmon of"Collaterir n the Security Agreement specifically ocJudejL in substantially similar form, matching ftmdcertificatioDB Security Agreement at 1lllx>anAgreeraem(asniodified)lBtS(eniphasBsxlQ^d) Even prior to modification, me definition of "Collateral"m the Loan Agreement specifically fljcJadai. m substantially similar form, matching rand certifications LoanAgreement, at 5

10

'at no tunesecured by matching funds certificates

The DNC's suggestion that the Campaign "made a current pledge and encumbrance offuture rights to receive funds" through the Loan Document language that describes the excludedcertificates as those "now held"33 is misguided in law and in fact Among other fundamentalshortcomings, it is simply not possible, as a matter of commercial law, to create a valid securityinterest by implication See Haft v Haft.671 A2d413.417rDel Ch 19951 r*[qt is elementarythat the intention necessary to form a contract is not found in the private subjective mental stateof either of the parties ") As explained more fully in the attached expert opinion letter ofProfessor Macey, the DNC's argument that the Loan Documents' silence as to future

' entitlements somehow implies that future certifications are included as collateral is "logicallyJl flawed and at odds with the Uniform Commercial Code nM

rjr-t Moreover, the Bank's attorneys at Dickstein Shapiro LIP stated unequivocally that the•"••I Bank never received a security interest in matching-funds certifications, before or after the date^ of the Loan Documents

[T]he bank does not now have, nor did it ever receive from the<\\ Committee, a security interest in any certification for matching

funds Any finding or determination to the contrary would bewholly inconsistent with the language of the loan documents, theintent and understanding of the parties and basic principles ofbanking, security, and uniform commercial code law

Instead, the Bank and the Campaign understood that "[a]ny certifications of matching fundseligibility, including related rights, now held" included any certification the Campaign held orwas to receive based on all submissions for funds during the Campaign's period of eligibility inthe Program (Hence the inclusion of the words "related rights ") As the President of the Bankstates in his attached affidavit,

At the tune when each of the Loan Documents was executed anddelivered by the Campaign, the Bank intended to expressly excludeany present and future right of the CaBipflig" to Matching Funds ascollateral for the Loan, notwithstanding any date referencepertaining to when certifications for Matching Funds might comeinto being The reason why the Loan Documents staled that theexclusion (from collateral for the Loan) applied to Matching Fundsentitlements 'now held1 (as opposed to 'now held or hereafteracquired') was because the Bank's attorneys advised the Bank to

M Expert Opinion, Profeuor Jonathan Macey 1 (Much 14,2008) (hereiiiiftoMeceyOpmion) (attached hereto uExhibit 13)"FECQmiplMi^DemocnrticNitioiitl Committee 5 (Feb 25f2008)(heremifterDNCCompIwnt)34 Micey Opinion 535 Letter from Matthew S Bergman end Scott B Thomv, Attorneys, DickstemShepmjLlJ1, to TrevorOenertlCounid, John McCmm 2008, Inc (Feb 25, 2001) (emphMUtoVtod)(itt^ed hereto •$ Exhibit 10)

11

do so, in order to avoid any inconsistency within the LoanDocuments that could arguably anso pursuant to the 'AdditionalRequirement' section of the Loan Documents M

Thus, the Parties intended to exclude from collateral any present and future right of theCampaign to matching-funds certifications, regardless of when those certifications came intoexistence

Similarly, the DNC misconstrues language in the "Additional Requirements" section ofthe Loan Agreement as allegedly creating a "present encumbrance, however conditional, of theCampaign's firture interest in any entitlement to matching funds The Campaign did agree toreapply to the Program and separately grant to the Bank a security interest in any futurematchmg-funds certifications it might obtain but only in the event that the Campaign withdrewfrom the Program in 2007 and then lost the New Hampshire primary election by more than tenpoints (and made a similar promise in the December 17 Loan Modification Agreement), but thatconditional promise did not create a security interest At most, the language contractually boundthe Campaign to do something in the future, should the conditions precedent occur (which theydid not) While failure to perform this obligation could possibly create an action against theCampaign for breach of contract, mis does not transform the promise into a security interestProfessor Macey confirms this conclusion, stating that

[The DNC's] interpretation of the text confuses an agreement topotentially grant a security interest in the future with the actualgranting of a security interest On the contrary, by discussing theagreement to possibly grant [the Bank] a security interest in thefuture, the text instead reaffirms that the Campaign had not alreadygranted [the Bank] a security interest in this part or any other partof the agreement

This same analysis applies to the contractual provisions that prevent the Campaign fromexceeding the Program's spending limits or prevent it from granting a security interest in thematching funds certifications to anyone else These are contractual obligations which giveadditional protection to the Bank, but cannot give rise to a security interest, as they do notcontain the requisite granting language Moreover, they do not, as the DNC Complainterroneously asserts, lead to the conclusion that an implied security interest has arisen

The Loan Documents' language is clear and explicit on this score Even if it were not,the law is clear that "if the language under consideration is ambiguous or uncertain the courtmust then determine the intention of the parties" CBJUJOS, 322 A2d. at 874 Notably, as theaffidavits of officers from both the Campaign and me Bank matesecure the subject loan with every asset of the Campaign QCjgt matching-funds certifications40

This is hardly surprising, given that both the Campaign and the Bank relied upon experienced

MWatkiniAff17"LLDmvuAfM611 DNC Complaint 5M Macey Opinion 340 DtVtt Aff 14, Watkmi Aff 15

12

election taw counsel advising as to the prudence-Hinder the most conservative interpretation ofexisting guidance, including the Gephardt Opinion—of excluding the matching-fundscertifications from the loan collateral in order to preclude even a potential argument that theCampaign had somehow foreclosed its right to voluntarily withdraw from the Program41

E» The McCfrjfi Campaign Is Not Bound. Under a Contract Law Theory. To

Mfltwhr Rv Ibtehllflhlna Pmaivm KHvlMIMv nr Rv finhmlttlBa Hhm fmntitAmtm

The McCain Campaign did not commit itself to accept public funds and comply with the(I) Program's spending limits simply by establishing eligibility for the Program Yet, the DNCjj, wrongly equates the Matching-Funds Application and the establishment of Program eligibilityr,j with the actual acceptance of public funds, as if those events were constitutionally equivalentr-t under Buckley 42 Its argument then, is that establishing eligibility itself is sufficient to forever:'"-J bind a candidate to the Program and to its spending limits fiucJd&Z forbids this result As^ discussed, the Program must be voluntary And the Program is not voluntary if a candidate musto irrevocably tie himself to spending limits merely to ask the Commission if he is qualified to,x-, receive public funds By submitting the Matching-Funds Application, the Campaign agreed only^i to abide by spending limits and other Program conditions if it accepted public funds during the

2008 primary election 11 C F R § 9035 l(d) (2007) ("The expenditure limitations of 11 CFR9035 1 shall not apply to a candidate who does not receive rmrtchinp funds at any tone during thematching payment period ") (emphasis added), see also 26 U S C § 9033(b) (2008) (providingno statutory barrier to withdrawal of eligibility) The Campaign cannot be deemed to haveeffectively accepted public funds, and therefore be subject to spending limits by only takingsteps to establish eligibility to participate in the Progn

Seeking credibility for its supposition that the McCain Campaign is bound by virtue of itsinitial submissions and candidate letter, the DNC relies exclusively—and erroneously—onGephardt's "binding contract1' language, which Gephardt used to discuss the Program'seligibility process Gephardt was quite obviously invoking contractual terms only by way ofanalogy * For example, when Congressman Gephardt asked whether he could defer payment ofProgram funds, the Commission replied by saying that the Commission and the Treasury

41 DecmiK the McCain Campaign nude no pledge of • lecunty interest in the matchmg-fundi certification*, theDNC'a allegation that the McCain Campaign violated FBC reporting requirementi by inaccurately stating on theSchedule C-l that the collateral far the km doe* not awlufc "certification for federal inatchm^financing" n without merit41 This IB abo an argument at odds with the net mat its own Oiair, Howard I>ai^e«abliihed eligibility ami thenwithdrew from the Program and ibj spending laniti) m the 2004 cycle41 Immediately after suggesting that the tew of cojttracls|)rovidei fee proper fail toComnusaion proceeded to anaryzB the question whether withdrawal • pernuttod n light of due voluntary nature ofAepro«rm and Ifae quid oro quo «»lv«MmphM«^ ThB inatyiisyielded the correct coriduiion that wrtMn^ Indeed, giventhat wimdrewalnpennitted any tiBMbefbnreferring to the application for lunda aa cmtmg • "binding contract * Ai statedi though, the Gephardt Comnuaiionviewed the contract baied analyiia ej notfamg more trian a uietul analogy Ganh«tfctf irThaCommtttaflwiilMtto reconaider itt decision to participate m the MatchuigPaynMrt Act public ftadoig program aiidnwhether the Comnuaiion would content to • rnaciiiion of thia cuuuact") (emphm added)

13

Department Mlack[ed] discretion to delay certification of eligible payments or payments ofcertified amounts" because of statutory requirements Gephardt at 6 ("Thus, the Commissionand the Secretary of the Treasury lack discretion to delay certification of eligible payments orpayments of certified amounts Consequently, requests for such delays cannot be granted") Itcorrectly made no mention of contractual obligations to Congressman Gephardt or to otherpresidential candidates The Commission only referenced statutes and regulations because it isbound by statutes and regulations—not contracts-Hn administenng the Program Simply put, ifthe Commission is not actually bound by a contract in administering the iH«gtmn1 candidatescannot be forced to participate in the Program on the theory that the Commission has not yet"rescinded** a metaphorical contractual obligation

The Commission in Gephardt could not have intended the contractual analogy to be takenliterally because under applicable adimnistrative law concepts, an award of rnatchingruri^performance of a binding contract In administrative law terms, an award of matching funds is a"license", and the process of determining whether a candidate qualifies for such an award is"licensing" Sfifi 5 U S C §§ 551(8), (9) (2008) (Administrative Procedure Act definitions of"license" and "licensing") Licensing, in turn, is a type of adjudication S&5USC §551(7)(2008) The license here is a conditional one—it comes with regulatory restrictions attachedCandidates know this, and hence they know that when they accent public matching funds theybecome subject to restrictions on expenditures and other limitations But none of this transformsthe mere submission of an application, and the Commission's processing of the application, intoa binding contract If this were properly viewed as a binding contract, such that a rescissionmust be requested and approved by the other party to the contract, then presumably otherfundamental contractual rights and remedies would be available, including the right to bring abreach of contract suit against a party unilaterally rescinding a contract Surely the Commissioncould not, in this case, seek an order of specific performance requiring a candidate to acceptmatching funds, nor could it sue for damages to recover its administrative costs if SenatorMcCain had pulled out of a race before receiving public funds Establishing matching-fundseligibility is a public administrative process, not a contractual one

The same would be true with typical licensing at other federal agencies, such as theFederal Communications Commission's (the "FCC") licensing of broadcast rights In thatinstance, a company applies for a broadcast license with the FCC, and the FCC checks over theapplication to ensure it is in proper form If the company later decides to withdraw itsapplication, administrative law principles would not dictate that there had been a bindingcontract created between the company and the FCC To the contrary, if the applicant decided towithdraw the application before it is ruled upon, that would be the end of the matterGovernment agencies process applications for licenses all the time, and applicants change theirmind about whether they want licenses all the time But neither agencies nor courts analyze thisprocess in terms of the law of contracts, and the Commission should not conduct the regulatoryanalysis through such pnsm here *

44 Even if thu proem u analyzed as a contract, where a poriy hn noderaditielf (or iiothMwiie) unable to fldfilUcondition of Ibe contract^ it thereby refenoi tho odior pvty of iho racjuuounit OMC the cofKhhon bo not Sceiey.BMOMV BnttolDev Co.4Q2P2d S39.S6SfCri 1965)(MEadipvlytoicontncthMldutytodowlutttliecontract pramppofoi ho will do to •cconpluh ill pupooB Thus, *[•] porty who pravonti flilfiUnont of •conditran of his own obligation cnnotralyonsuchacoixiitiontodefetthaownhibiuiy'") Assuch,

14

F« The McC*fa QiiDDiitai It Not Bomd to ApMPt M^trigfrhrFBHiPf fflild

BHrlMIHrlfrAl toSfrfrl

The DNC argues that the McCain CannNugn lecaved Ma rnatenal, financial benefithe certification of eligibility for matching finds through the ability to avail itself of theautomatic right of access to the ballot; in some stales,' and imphes ttiai tbs *1)eriefitM somehowrequires the McCain Campaign to accept matching funds and adhere to spending limitationsThis argument is simply unfounded BlKate specifically establishes that a candidate is subjectto spending limitations only when he has accepted pubhc matching funds Neither gucJdgy. nor

00 any other existing authority supports the DNC's theory that the McCain Campaign is bound toro participate in the Program because it obtained what the DNC incorrectly and vaguely

as some form of "material financial benefit," through the McCain Campaign's use of Program•-•* eligibility to obtain access to the primary ballots in select states To be clear, measures used in

J some states that allow Program-eligible candidates to qualify for presidential-primary ballots are^ meant to provide states with a convenient method to measure a candidate's electoral strengthQ See, eg. IS Del Code Ann § 3183 (2008) (directing each political party's chairperson tox submit a list of candidates "who have become eligible by the close of business on the precedingr-,j day to receive payments from the Presidential Primary Matching Payment Account of the

Internal Revenue Code") In essence, states view the matching-funds eligibility application atthe federal level (which includes a demonstrated level of financial support across a broad rangeof states) as a sufficient proxy for electoral strength to qualify such candidates for the primaryballot in that state Notably, in no state utilizing this process does a candidate encumber—oreven submit—the actual certifications authorizing him to receive matching funds Rather, theshowing is merely one of eligibility, which for the reasons we explained above, do not bind acandidate to the Program, nor subject him to its associated spending limits

n. OFFICIAL COMMISSION ACTION IS NEITHER REQUIRED NORAPPROPRIATE TO EFFECTUATE THE MCCAIN CAMPAIGN'S PROPERWITHDRAWAL FROM THE PROGRAM

As articulated above, the McCain Campaign has a right—and properly exercised thatnght—to voluntarily withdraw its Matching-Funds Application because it had never receivedany pubhc funds from the Treasury Department To the extern the Gephardt Opinion is read tosuggest that advance FEC approval is requued before a candidate can voliints^participation in the Program, as the DNC suggests, such reading is flawed for several reasonsMost fundamentally, such a requirement would represent an unconstitutional prior restraint onthe exercise of protected five speech rights, given a candidate's First Amendment nsjht toconduct a campaign without spending limits See generally. Buckley. 424 US 1 Noproposition of Fust Amendment law is more clearly established than that the exercise ofprotected speech rights cannot be made conditional either on the discretionary approval of anadministrative agency, or on an spproval process mat has rio efiecti\^ time Imiit SeeFW/PBS.

the FEC u unable to fulfill • cooditioo (nlone the Cunpugnfhnn the Program) of the contract, it i^43 DNC Complaint 6

IS

ine v City of pajlflff &*" s 215 (1990) (holding that "a prior restraint that fails to place timelimits on the time withmwmch me dec^^

Moreover, even if the Gephardt Opinion is construed as requiring the Commission'sapproval of withdrawal, and insofar as the Commission is unable to perform what in any eventmust be no more than the ministerial (booldceeping) function of rulmg on such requests promptly(because it lacks a quorum or otherwise), this violates the candidate's procedural due processrights The ability to conduct one's campaign without spending limits is a significant libertyinterest foggj yfRffgfflflffY Roth. 408 US 564,572 (1972) (protected liberty memoes notjust freedom from bodily restraint but other rights grounded in the Constitution) A candidatecannot be deprived of such an interest without a timely hearing and decision See I^gtm y

^ Zimmerman Bnijfi Cpr 455 US 422 (1982) (procedural scheme that allows protecteden entitlement to be extinguished through administrative delay violates due process) If the

j administrative scheme, as structured or as administered, fails to provide a timely decision, it-"' effectively extinguishes the liberty interest in question, and does so in a manner that violates both2J procedural and—because of the core First Amendment interests implicated—substantive due<-.% processo<o Interpreting the Gephardt Opinion as establishing a Commission approval requirement in><J this regard also defies basic tenets of administrative law The Act dearly distinguishes between

rules and regulations, on the one hand, and advisory opinions on the other, and in met prohibitsthe establishment of a regulation through an advisory opinion Sfi&2USC §S 437f, 438 (2008)The Gephardt Opinion therefore cannot be invoked as the basis for any requirement not set forthin the Act or in any regulation The statute provides "Any rule of law which is not stated in thisAct or in chapter 95 or 96 of Title 26 may be initially proposed by the Commission only as a ruleor regulation pursuant to procedures established in section 438(d) of this title " Id. at § 437f(b)Consequently, insofar as the Gephardt Opinion is construed as either requiring advanceCommission approval to withdraw (or, for that matter, as precluding withdrawal whenfunds have been pledged as collateral, or as treating applications for m«tr-hing funds as bindingcontracts), the requirements are invalid because they were not adopted through an officialrulemakmg procedure

For all of these reasons, an affirmative vote of the Commission (at such time as it has aquorum) is not required to effectuate the McCain Campaign's withdrawal from the ProgramAny interpretation of the Gephardt Opinion that might support such a requirement should bedisclaimed to avoid the senous constitutional and statutory issues that such a reading of the Actwould present Indeed, there is ample evidence that the Gephardt Opinion did not envision anyrequirement of an affirmative vote of the Commission before permitting rumre withdrawals Thefinal sentence of the Commission's analysis states mat "the Commission cautions mat it mustreceive any such written request no later than December 30, 2003, to provide the Commissionwith one business day to deliver a certification withdrawal to the Secretary of Treasury prior to

of payments on the first business day of the Presidential election year4 The clear implication is that the action of processing a request to withdraw is purelyministerial, and the Commission has no discretion to deny a written request to withdraw beforefunds are disbursed This, of course, is entirely consistent with the voluntary nature of theProgram and the quid pyp quo structure it represents A candidate cannot be forced to apply for

16

matching fends, and certainly does not need to obtain the Commission's approval beforeapplying for funds Similarly, a candidate cannot be forced to abide by spending limits beforepublic matching funds are received— nor can he be forced to obtain the Commission's approvalbefore withdrawing an application for matching funds

CONCLUSION

Senator McCain properly exercised his right to not participate in the Program He follyretained this right because he never accepted public funds, and is therefore not subject to theProgram's spending limits in light of his recent withdrawal Buckley, the Primary MatchingPayment Account Act's terms and legislative history, Commission regulations, and past Program

5 withdrawals all establish mat to the extent the Commission takes any action on SenatorU McCain's withdrawal notice, such action must be ministerial in nature only, and given ther,j discussion on the merits described herein, would merely validate the proper withdrawal notice>«f filed with the Commission on February 6, 2008

O

17

Respectfully Submitted,

flfvJFnedProfessor Charles

cc

r"-J

Professor Thomas Memll

Trevor PotterTodd StcggerdaCounselJohn McCain 2008, Inc

MCCAINAugust 13.2007

Hie HooonUe Robert D Lenhard, ChamnanFederal Election Cooxmiisioo999 E Street, NWWashington,DC 20463

'• -J

.^ AJ a caodttate seeking to become eligible to reoavePresidentrt^ I certify aiid agree to the following provision as pre«OT^M $9033 2

^r^ I In accorftra with 11CFR {9033 2(bXl)t^^O thatlamieekingthenoinmationoftheReiHiblicinPi^or of Pmideot in more tfan one Stale I and/or my •uflioiiad oomnuttiee(s) have<'*•* received inatohiiblo wdLunAiiQBS, fach in the iggpegaie exceed SStOOO ftoni

zesidentBofeaebofatleafttwnityStateal^iichwitbretpecttoaoyo^not exceed $250 00

n Puisucntto II C!FR§90332(bX2XI«od/ormyantfaonzedooiiumttee^nouned nd will not incur (juuifled cunptign expenses n excess of theexpenditurtillinit«ionJpreacnbedby25USC {9035 and 11 CFR §9035

m In accordant wth 11 C1R $9033 l(bXl)i I adox^of piDvnf that disbuisenienti naae by tOBi nd my of my mtfaocoiniiuttee(>) or agwifi are ojualified canpsisjB BKpenffw as *^M^**>T>* at 1 1 CFRJ90329

IV PinsiisrttollC3R$9Q331(bX&Iaiidiiywith the dofirnnffltfaftoniequtteaieati set ibi^ mil CFR §9033 11

V UpoatbezequeitofteCaoinissu^Iandmyaatbozi^supply an explanation of the connection between any disbunement made by me ormy autfaonzed committee(s) and the oamptign is presonbed by 1 1 CFR§9033

VI Inacooid*ix*witfallCFR$9Q331(bX4),Ia^^gtiaa lift feaap anrf Htmtmn to ma QmimmMMi all Hf>«iiiiMi«B»i

y books, reowdiCioawfaiig bank nwoidi^

supporting documentation and other mfbnnation that the Commission mayrequest

As provided* 11 (TO 59033 l(bX5XIandmy aiitho^keep nd furnish to me Coonniiiion all dooumeotitxoiirelimigtod^sbiviemeatBand receipts mcloding any books, records (mdiidmg bank records for allaoeounts), ill doonoMotttiaD nqumd by Oil section (indadmgmoso required tobe mamtamed ante 11CFR §9033 1 IX and other nrfbnnaiioa met theComniBsiQo msy request If I or my authoilzed committee(s) milntiiini or usesumuyuteiued mfan^onooirtammg any of the categories of dm fasted m 1 1CFR §9033 J2(a), the uuuuiuttBe wifl provide oonyatenzodniiignnfio media, rooh

CFR §9033.120)) Vpcm request, feanenfrtiQiiexpli<?' system's software otpabibtiessbsJl be provUsdiiid such penmmeJM ire•'^l necessary to eaqalsa the opeiitfou of the computer syitiem^'-« ooii^utenzediDfbzination prepared or inainti^^rj made available•cj

' vm As prescribed at 11 CFR §9033 l(bX$), I and my authorized mfnmitfnf(s) will•*•• obtain and ibnush to tho Commission opon lepjmt ill documentation relatnig to^ finds received and disbursements made on ray behalf by other political

committees and organizations associated with me

DC In accordance wrth26 USC $9038 and 11 CFR }9033 l(bX7), I androyauthorized conumttee(s) shau penmt an audit and an examination pursuant to 1 1CFR §9038 of all receipts and disbursements, including those made by me, allauthorized oommittee(s) and any agent or person anthonzed to make expenditureson my behalf or on behalf of my anthonzed comnuttee(s) I end my authorizedcommittees) shall also provide any material reouired m oonnechon with en audi^investigation, or exammanon conducted pursuant to 11 CFR §9039 I and myauthorized commrttee(s) shall faqhtate u^audrt by making available in onecentral location, office space, records and such pcnormd as are necessary toffffldmrt tfaff audit f™^ fyat>>fii>*ltftn. Hid ffr*n pay mny ^nvwrrtf rBiritgBd to berepaid under 11 CFR 59038 and 11 CFR 59039

X Pursuant to 11 CFR 59033 l(bX8X the penonUstedbelowisentrtWmatching fond payments on my behalf; wmcbwiH be deposited into the listeddepository, wmoh I have designated aa the campeum depository Any chanajn inthe mformanon reqmred by this paragraph shaUrxrt be eflfectrveurml submitted tothe Commission mftMttarsunedby me or me Treasurer of my autbonzedpnncipai i

Name of Person Joseph Schmuclder, Treasurer, John McCain 2008

Mailing Address PO Box 16118, Arlmgtoo, Virginia 22215

DesignatedBUT

Address

r j

XI

1 909 K Street. NWWaihmgton, DC 20006

Pursuant to 11 CFR J9033.1 (bX9), 1! CFR §9033.1 (bXlO), tad 11 CFRoosHHtf*^

^D IOOOVQBDOO ^WH^L iD0 •nDOQEaU ^••OGUflDQmdebno for Presentation In Good Older, including the provision of my

rhnisftndro

iequacmentiof2USC §431 AIM 25USC $9031 Ajfifl wd theCoxnniiwion^wgalBtKffli it 11 CFR P«rt» 100-300, tad 9W1^civil poniltiM iDGihidfid in A ooDcuinon igrouiMnt or odiBwifO unposod under 2USC ^7g«gBnftmyteli;tnyofiny«rthonzed«>imnittee<s)ori^'• - - -•*IIIBIIXII

XH Puno^tollCFR§90331(bX12XttVtBlevidiitiibuted by me or my Kirthonzcd ooBmnttee(8) will be ptepated in a mmnerwhich ensures thtt the ooonnetcisl contitns or is scconnMnied by closedcspdomng of the onl oomteiit of tfa0 oonuneKcisl to bo brosjdcut in line 21 of dieverticil blanking interval, or is capable of being viewed by deaf udbeanngunpaired individuals VIA any compatible nesessor technology to line 21 of the

• 11 CFR $9033 2(aXl) roqinrcs the CanHidrte and Committee Agreements and Cernficsnoas tobo signed by the Candidate

co The Honorable David M MuonVice GhanmanFederal Election Commuaon

BEFORE THE FEDERAL ELECTION COMMISSION

IntheMatterof ))

John McCain/John McCain 2008, me )

j I, Mary W Dove, Secretary of the Federal Blecaon Commission, do hereby

—ir,j certify that on December 19, 2007, the Commission decided by a vote of 5-0 to<*^r notify the Secretary of the Treasuiy mat John McCain/John McCain 2008, Inc areOlX-' entitled to receive payment fiom the Presidential Primary Matching Payment

Account m the amount of $5,812,197 35

Commissioners Lenhard, Mason, von Spakovsky, WaKher, m^ Wemtraub

voted affirmatively for the decision

Attest

Date ' /Vo MaryW DoveSecretary of the O

MCCAIN

CO

O-co

February 6,2008

VIA HAND DELIVERY

The Honorable David Mason, Chairman The Honorable Ellen Weintraub, Vice ChairFederal Election Commission Federal Election Commission999EStreet,NW 999 E Street, NWWashington, DC 20463 Washington, DC 20463

RE John McCain 2008, Inc

Dear Commissioners

This letter is to advise you that I, on behalf of myself and John McCain 2008, Inc, my principalcampaign committee, am withdrawing from participation in the federal primary-election fundingprogram established by the Presidential Primary Matching Payment Account Act No funds have beenpaid to date by the Department of the Treasury, and the certification of funds has not been pledged assecurity for private financing

I will niflkft no further requests for *««trfiiTig-fiind payment certifications End will not accept anymatchmg-fund payments, mrFinfoig the "nfia! Mnognt mid other amounts certified by the Commission inconnection with my campaign's previous submissions My campaign has not submitted to theDepartment of Treasury any bank account information and will also inform them directly of ourwithdrawal from the matching funds system

Should you have any questions or desire any additional information, please contact my counsel, TrevorPotter, at 703-418-2008

Sincerely,

Senator-AZ

cc The Honorable Henry Paulson, Secretary, Dept of the TreasuryThe Honorable Judith TUlman, Commissioner, Dept of the Treasury Financial Management Service

I Md far br John McCMi

tO t«r 1*1111 AffcglMV VA 22213

MCCAIN

<-•*

oCO

February 7.2008

VIA HAND DELIVERY

Conuiussioner Judith R TdhnanFinancial Management ServiceUnited States Treasury Department401 14* Street, SWWashington, DC 20227

RE John McCain 2008, Inc

Dear Commissioner TiUman

This letter is to advise you that Senator John McCam and John McCain 2008, foe have withdrawn fromparticipation in the federal primary-election funding program established by the Presidential PrimaryMatching Payment Account Act A copy of Senator McCain's letter of withdrawal to the FederalElection Commission is enclosed

Senator McCain and John McCain 2008, Inc will make no requests for matching payments and will notaccept marching-fund payments, including the initial amount and other amounts certified by the FederalElection Commission in ^onpffo*1*?11 with previous *>>^Tnf*-<BQfV? John McCain 2008, Fnfi fr*y notsubmitted any bank account information to the Department of Treasury

Should you have any questions or desire any additional information, please contact me at 703-418-2008

Sincerely,

General CounselJohn McCain 2008, Inc

cc The Honorable Henry Paulson, Secretary, Department of the TreasuryThe Honorable David Mason, Chairman, Federal Election CommissionThe Honorable Ellen Wemtraub, Vice Chair, Federal Election Comrmss

| Md far by John Mcdm 2001 |

PO Box 16118 | Arimfton, VA 22215

FEDERAL ELECTION COMMISSIONWAStONGIDH DC 20463

February 19. 2008

BY FACSIMTjr.fl ATS^TI FIRST CLASS MAWf00

'•'•' Senator John McCain{T> John McCam 2008, Incrj Post Office Box 16118!!,, Arlington, Virginia 22215

«.;r Re John McCain 2008, be (LRA 731)Oo:> Dear Senator McCain|*-J

TTua is in response to your letter dated February 6, 2008, recewed by tne CommissionlateFebruaiy 8, advising Chat you are withdrawing from me Presidential Primary MatchingPayment Program

As you may be aware, in Advisory Opinion 2003-35 (Gephardt), the Commusionbalanced the voluntary nature of participating in the Matching Payment Piogiaai with thecontractual obligations t candidate commits to once be soda and receives Commissioncertification of eligibility to receive payments under the Matching Payment Program TlieCommission made clear that a candidate enters into a binding contract with the Commissionwhm hft wfttnrtftff frg Cimdidafg Agrggrnm-itTi and Cwnflftatiftnii AO 2003-35 The Commissionstated mat it would withdraw a candidate's certification upon written request, thus agreeing torescind the contract, so long as fee candidate 1) hid not received Matching Payment Programfunds, and 2) had not pledged the cernfioaoon of Matching Payment Progiam funds "as securityfor private financing " Id

, urn ofUMifW your ]fft*r m p rp^ii^* that OM rnrmni

previous certifications Just as 2 US C §437c(c)reqiaredanafiBrniativevoteoffburi mnffUBfi to make these certifications, it requires an affirmative vote of four

Commissioners to withdraw them Therefore, the Commission will consider your request at suchtune as it hat a quorum

We note that m your letter, you state that neimer you nor your contmittee has pledged thecertification of Matching Payment funds at security for private financing In preparation forCommission consideration of your request upones^hshmemofaquorum.weuiviteyoutoexpand on the rationale for that conclusion, mduo^ but not minted to addVessmg the following

•JobaMcGunFebraary 19.2008Ptfe2

provisions of die loan agreement executed between John McCta 2008, me, and fidelity andTrust Bank of Bethesda, Maryland on November 14, 2007, aa modified on December 17, 2007

The paragraph entitled "Additional ReqiuiementB*' tet forth in the AffirmativeCovenants section of the November 14 agreement (page 2), u well as theDecember 17 modification to rant paragraph (page 2 of the modification)

TTie references to matching funds in the paragraph entitled "CollateralDescnpnon" set forth in the November 14 "Commercial Security Agreement"(page 1 of that agreement) (The paragraph contains no zeference to certifications

o> of matching fund eligibility or related rights obtained after January 1, 2008, thus<x> apparently bringing any roch certifications that might occur within the

paragraph's more general description of the collateral for the line of credit)

The December 17 modification to the paragraph just mentioned (page 3 of themodification), which removed the reftrence to certifications pnd related nghts"currently possetaed by grantor or obtained before January 1, 2008" and replacedit with a reference to certiflcanons or n^its' iow held by Orantor[]'f

We would appreciate receiving any response you choose to make by not later than March7,2008 If you have any questions, please contact Lawrence L Calvert, Associate GeneralCounsel, or Lorenzo Holloway, Assistant General Counsel, at (202) 694-1650

Sincerely,

David M Mason

cc The Honorable Judith Tilhnan, Commissioner,FinanaaJ Management Service, Department of the Treasury

DISTRICT OF COLUMBIA))»

CnY OF WASHINGTON )

Personally appeared bdbre me fc Watkms (the

"Affiant"). who bemg duly sworn according to law, deposes and says on oalh, as follows

1 I am me President and (^ of Fidelity & Trust Bai*^

2 Ihawpeisradbiowiea^efte

"Loan") provided by the Bank to John McCain 2008, Inc. (ine "Campaign")

pursuant to a oectain Business Loan Agreement dated November 14, 2007 (as

mrimdcd on December 17, 2007 puisoant to a certamIx>anModifi

glTffftlllffff},

O dated November 14, 2007 (as amended on December 17, 2007 pursuant to meco

j herembeforc iefeieuoed Loan Mbdificnfion Agreement; the "SecurrtyMl «a>ftM« nm r Avaimggita^ inaffiifwiaBiff anH BgreCBOeDtS

(togelfaer wife fee T-*»f" Am»tfiingnt unH g Security Agreementy

collectively, fee "Loan Docuiiieuts*>X in each case by and between fee Bank and

3 The T-*>»^ was gAn*"mnmlf^1 in fee «o"»>y1 course of fee Bank's busmess.

imnnlling tin flpatit Jiff «ii» RmiV • aftminfy inteBMt in federal tnafrfiing fiitvla

(fee 'Matching Funds") as collateialfbr fee Loan because fee Can^

to remam fiee to wimdraw fiom fee Matching Fimdsprognmi (fee 'Trognun") at

all tunes ntior ID IDO JauiDBiBn a rooomt Of anyj ox IVUDCOUIK FunolB DRDDI UDB

Department of fee Tieasiny of me Unned Stages of A any pledge of

MatchmgFimds to secure repayment of me Ix>anmig^ability to withdraw fion fee Program.

5 TTjeBankostaiiiiiiaiilfeatithadadBonalPSBCun^ibf feelxianwiUiCMitapledaB

of Matching Fonda fltxn fee Campaign TheI/)anwascollatBrahzedwn1i, mchirimg, wrtnout torflation,

v VMV^MMII tM&k mMUBimn •vwl 4hfcim iwnflvlfwitii'vtfl Awn tflfWMM hnt

DSMDB-2411500v06

not Matching Funds or any of the Campaign's tight; title or interest with respectthereto The Loan Documents expressly excbded Matching Funds from

"Collateral" for the Loan pursuant to the operative grant clauses (xnluzied therei

and did not create a security interest in any Matching Fimds, past, present or

future.

6 AHhnnaft tha I jmn Dnmtnenhi rrmtomeA pmyiamia enntemplatmg fly

that the Bank nngfa m the future, be granted a security interest m futurecertifications of Matching Funds, these proviso

several CDXumstances described m the Ix>an Documents were to occur (wmch

never did)1«—fr,--j 7 At the time when each of me Loan Docniments was executed and c^!3[ fVmn»iont nV FUnlf intended fri gupreMtly amlnnVi any pmnentrnid fiifann* ngnt/if

'X' rfm Pampttign to Matentng l^ifvl. •« enlhrtaml far HM T^IMI, nn»winWfmvlmg any

date reference pertaining ID when certrficantHis for MirichnigFiindsmigte come

into namff The reason why me Lofln Documents stated that the exclusion (from

collateral for the Loan) appUed to Matching Funds entitlements "now held" (asopposed to "now held or hereafter aoquned") was because the Bank's aOomeys

advised the Bank to do so, m order to avoid any inccusisteDcywnlim the Loan

Documents that could arguably arise pursuaoi to the MAddibond Requirement

section of the Loan Documents (aa described m paragraph 6 above) Such an

inconsistency could arise if the Campaign later gnmted to the Bank a securityifitenpal ip naftrfuMtiniia fipr •ighnig ffimda fimf cmmm nttn eflfeet«« a mmlt fif»

withdrawal of John McCain from the PBappMq, the conseojuent nullification of the

August 2007 qua!

JohnMcCammtomeProgiam,andtfaeuwanc^

from that later qualified status However, uwMnow held" language was not

1 If Senator McCam withdrew from thePiognunandniereaftBrniiledtowmorplacewidun at least 10 pniuentajp pobrfa of uie winner of me New Hampshire pnmary (or thenext pnumy or caucus^ ftp Loan Douumonti raouBDd the Campaign to jack to:

u^BankaaecinitynitorejtttithenewMatDhu

2D8MDB-24I1500V06

intended to create a security interest m any Matching Funds certificates received

at any point daring the penod of eligibility resiiltag from the August 2007qualification and prior to wffiidYBwal from the Program

8 In aider to penmt the Bank to obtain a pledge of Matchizig Funds as collateral for

the Loan m the future if arcumstBnces warranted it (as descnbedmparagraoh 6aboveX and in order to preserve the Campaign's nght to Matching Funds

ttffB provuHtmn were mpfr^ted uyfl*1"* the T/oim rVKfliiTMiiitg ***** ft}!^ required the Campaign to reniamwiorautt

o> Program (inespectrve of whether me Cainr«gn opted to reinamm the Program orrNj «*t withdraw from the Program and opt mat a later date)', and (u) prohibited the^ CainTMign from nsmgnhig, pledging, leasmgtgranm^

umhenng any of the Campaign's ngfat, ttfle or interest in and to MatchingFunds llie Bank determmed that me foiegoiiig pronecessary and appropnate m the absence of having a secuiity mterest ui and to

9 Further, *tn*m sayeni not

Sworn to and subscribed before me thisjZ^L day of March, 2008JENFFERA MEJIA

NOTARY PUBLICPRINCE GEORGES COUNTY

MARYLANDMY COMMISSION EXPIRES SEPT flflBMARYSEAL)

Notary

My Commission Expires

If die Campaign ware to withdraw from the Program, ft consequent nullification of all ofits related rigjrts would occur. Hpwpvcrt it was the bank's uudetalBiiriing pat, by way of

Matching Funds certiikatlons, but only tfmeQmqjaia^of the Prosnin at all timeSi

D8MDB-2411SOOv06

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COMMERCIAL SBWJRITY AGREEMENT

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LOAN MODIFICATION AGREEMENT

THIS LOAN MODIFICATION AGREEMENT (to "Modification") is made this __day of December, 2007, by and between (0 FIDELITY * TRUST BANK, a Maryland bankingooqxnlkn having an office at 4*31 Cordell Avenue, Betfaesda, Maiyknd 20814 ("Lender"); and (u)JOHN MCCAIN 2008, INC. a Delaware ooiponrtionhavinganaddressof P.O.Box 161 IS, Arlington,Virginia 22213 ("Borrower"), AD ct^italted tana iiced b^attributed to such terms m the beremsfiernibivooed Loan Agreement

WITNE88ETHTHAT:

J™j WHEREAS, pursuant to the teems and conditions of a certain Business Loan Agreement[7! dated November 14, 2007 (ea the tame may be modified or amended from tfane to rime, the "Loan^ Agreement"), by and between Borrower and Lender, Bonower obmmed a loan and oerla^7, aooonnn()0 tions (collectives^^ and No/100 Dollars ($3,000,000 OCX and

Q WHEREAS, the Loan la (0 evidenced by a certain Promissory Note dated November 14,c« 2007 (together with any and all extensions, renewals, modifications, amendments replacements and^ substrtiffloiiameraoforthcre^

ongmal principal amount of Three Million and No/100 DoHars ($3,000,00000), and (u) secured by,among other things, a certain Commercial Security Agreement dated November 14, 2007 (as the samemay be modified or amended from tone to time, the "SeciirityAgnjementTXof me aaeeta of Bonower, and

WHEREAS, BaHMMM" IIM BBqpMMfMl thai tha prfruJpal •maimtaf dia \^nmn frtj pnCTHUffd from

Three MOHon and No/100 DoDars ($3,000,000.00) to Pour Million and No/100 Dollars ($4,000,000.00),and Lender has agreed to menace me principal ainount of the Loan pursuant to Bonower*e recjueet,subject to the terms and provisions of this Modification which ahaO itself evidence the morease to theprnicipeJ amount of Ae Loan and Nbte^the Security Agreement and the on^I^Docuiiien1a,Mnereinaiuypiovided

NOW THEREFORE, for Ten Dolltrs (910.00) and other good and valuable ooniidention,the receipt and sufficiency of which are hereby aokxiowledfeed, to pertes hereto

li The Ibregoing redtala are hereby incorporated herein by mn reftrenoe and made apart hereot; wHh the same force and effect aa tffUty set forth herein

2 If 11 fc • • ml *A 4h^ ^m^^m^ —•* ifcta • fm JmmSmm£f^^ afc • •HIM mtm •! A^^AK^—A —^*f T *_ •- •Buojeoi MJ me mnne or msj amuimiauon, mo pnnoipai amount or me IXMB la nancyincreased from Three MOUon end No/100 Dollars (e3jOOOLOOO.OQ) to Four Million and No/100 DoUars($4,000,000 OOX and all reforences to a loan amount of "$3,000,000.00" or "Three MOIbm and 00/100

are hereby substituted and replaced with "HOWXXMKT end "Four Million and OQflOO Dollars", aaappboabiOi

3. Tbe addrdonai One Milbon and Nc/100 Dollars ($1.000.000.00) of Loan proceedsbemg made available to Bonower pursuant to mis Modification ahaO be^) disbursed m accordance wnh•ftaV^ i^i^^BHi^^J^b^iB ^h^P aiaV^ T ^^AMK A flM^^^MM^Ma} AiMflftllflfeA^J^ a^sx ^U|UBI^UI^BI^ ••^ftdl ^BTiM^MaeiBi MBA^^MBliB *^f V ^^AIIB ^^^^^^M^i^hJ^••ID HiI^VwIamlDB^sni Ott ^MaiD tavOlsjD • •••TJvejklBiBei fli^DDKiPMiyjDeiB Ha7 HOveiiBejBap lUB ^ewiVVVKBvKiDGBHelBp QB •wDHB Hl JBOTBni

gBoeraQy, and (fa) except ae odierwise expraesry provided hi mis ModHlcefion below, ssoured byBratofbresecnrmg the Loan.

DSMDB-2368018

4. Without limiting anything nt flbitb in this Modification to the contrary, oertunprovisions of me Ix>ao Agreement aivhere^

(a) lliepaiigraph entitled "Addn^^Covemnti section of the Loan Agreement is hereby deleted n to outlrety end the following fubitltuled inbeu thereof

"Additional Requirement Borrower tnd Lender agree that if Borrowerwithdraws from the public matching Hindi progianit but John McCain then doeinot win the next primary or oaocus b which be n active (which can be anyprimary or caucus held the me day) or does not place at least within 10

— ! percentage points of the whiimr of mat primary or oauouit Borrower will oanaeQ John McCain to remain an active poHncal candidate and Borrower will, withinN, mirty (30) days of said primary or canon (0 reapply for pablfe owtchmg ftinds,,^ (h) gram toller, as additional ooHstaBlter,j security Interest in and to all of Dunuwei i ifajn^ hue and mteiwl m and to the•c; pubno matenfauj funds jjtogrBm, and (ni) execute and deliver to Lender such^? dooumenti, matnunentB and agreemcnti aa Lender may reojinre with respect toO the foregomg Borrower and Lender agree that Borrower will provide oral orco written nonce to Leader at bast 24 hours belbfeiiotioeof withdrawal from ther'* public matching flmdi program n provided by Boirawer or John McCau to the

Federal Election Commimoa."

(b) The paragraph entitlod4<COMPLIANCB WITH IBB FEDERAL ELECTIONCOMMISSION'S MATCHING 1TOTO PROGRAM" let form rathein n§ entirety and the following substituted m lieu (hcreon

"COMPUANCE WTIH THE FEDERAL ELECTION COMMISSION'SMATCHING FUNDS PROGRAM. Borrower agrees and covenants withLender that white this Agreement is hi effect^ Borrower shall not^ withoutLendert prior winteu consent^ exceed overall or state spending limits imposedunder the Federal Matching Funds Plograuif UTespcctrve of whefter Borrower ta

(o) The paragraph entitled "STATUS OP CURRENTLY HELDCERTIFICATIONS OP MATCHING FUNDS" set form b the Loan Agrecmert is hereby deleted In toentirety and the following snbstfated m lira thereof

-STATUS OF CURRENTLY HELD CKRT1FICATTONS OF MATCHINGVHTVOTtO BA^MH^^M I W «_ JA_ mfm^m^ 4liA* mm*mm m^^iUtm^4&^^^ ^/f ^MadukLlnA Ammm^^rijiwoi Dorrower ana i^anoer agree mai any oBmuoanons ox manmmg lunoseligibility now held by Borrower, and the fight of Bonower arid/or John McCainto receive payment under anoh oerbfIostioiis,arenot(andshBJ!notbe)oollatenlBrmeLoan"

Agreement si hereby deleted into cntuety end the fcDowing subsututed m hen thereoft

The word "Collaterar means all property and assets granted aacollateral SDonrny for the Loan, whether real or personal property, whether^_»—«^J Jmm^mfS** • • •»•- - M&^Ah^H f^^^—f^J ^u^__ H_ _ Jk^ AlJlB^^ ^^ul ••A^4L^«gnuunu uiicuuy or moueony, wueiuei gpameu now or m me nnure, unu wnemergranted m me form of a seourny interest, mortgage, collateral mortgage, deed of

DSMI»2368018

trust; assignment, pledge, crop pledg^chattel mortgage, collateral chattelmortgage, flfrfl*!1** trust, factor's Hen! cqmpmeiit treat; conditional aale, traitreceipt, lien, charge, lien or trtfe mention conflict, lease or consignment intendedas • security device, or eny other security or Hen interett whatsoever, whethercreeled by lew, ooutiiot, or otherwiie It ii expressly imdentood end agreed that;"Collateral" specifically exohxlei eny certification of matching fbndi eligibilitynow held by Borrower tod/or John McCain, and any right; title and inter** ofBonower andfor John McCain to receive payment! thenander."

W fVjBM 4lM0BMS)wMBi flbST MLjj^A^IV AMfr SMMHMI ISM VMA ACs^VASMM*S}fl4feahAN A^MHftl^k^ ^Mf 4SV^ V ^h^^a DJB fdOKXDIKIOD Oft •niVaiD V0v NsTwH IH UIB ^^BKUIKUIDIlav BwDDDsTl ^9sT HID A^OVi

cr, Agreement la hereby deleted fa to entirety and the fblkwiiig substituted m Hen fteiwif

S| -Not» The woid "Note" means the Promissory Note dated die date hereof;r^ executed by Bonower and piy^ to the onlar of Unto,_* amount of 13,000,000, aa hicreaaed to a face amount of S4.000.000 00 pursuant,~,j to that certain Modification Agreement dated December f7. 2007, by and*:j between Boirower and Lender, together with all other amendments;<? modhHostiaos, extensions, renewals, replacements, restatements and substitutionsO thereof or therefor*1

M (0 The ptn^rsi* erased 4Xk)lIateimJDe*cnpUon" artAgreement is hereby deleted in its entirety and the following substituted m Heu thereof1

"COLLATERAL DESCRIPTION. Tne word "Collateral" aa used in thisAgreement means the following described property, whether now owned orhereafter acquired, whether now existing or hereafter arising, and whereverlocated, m which Qiantor is grvmg to Lender a security interest for the paymentOf (DO XDQODBOQDBiV sUBd D0VXOnilleVIOO OB ftUJ ODl0r OOlUBttiO118 IDlflQaT UlO arvOtO ttldthis Agreement

All mventory, equipment; accounts (meludmg but not Iinuted to all heafth-oare-insniince receivablesX chattel paper, mstniments (moajding but not Umlted to allpromissory notes), lottoro&credit rights, totters of oredtt, documents, deposrt

mvaauBent property, money, other ruJUs to payment and perionand general intangiblca (moludmg but not Ifanfted to all software and all paymentintangibles); all oil, gaa and other minerals before extraction: «U oil. gas, otherminerals and eooovnts constituting as-eHiaoted oollafenl, all fixtures; all tunbarto be oiit;aUatu^ii«itB, accessions, aooessones,flttm^repant, anpphea, and oomflrfngled goods relating to the Ibregpmg pnnw^ail additions, rephwementsofandsiibstitittonsfbralloranyproperty; all inaivuioe relunds idstmg to ttorelating to the ftregomg property; ail feooiA and data

^^m^^tA^ ^^B^^fl^Sl^ka%B ^^Bjl Hl^Hk^^^AB ^MHK« •MMM •HaMMMaMlB ^Mkfll fll^A^MaTVBHaiL ^I^^K^v^MW^uw aUH DK^JOBtBiB sa^DlF auauaH IBBBBwlBp ••••• DBanni

mndhi. and all aupportrng ohUgntioni relatfaig to the fcraajnilnsj property; allflOW flaVsaVtHsaV OaT Utt9tfOtf 9fiMuOf fMsWOBaT OO IT O^HfROQ Of

aoonbod or whether now or hereafter subject to any rights m the fbraejomgproperty; and all products and preoeeda (moludmg Maotlimfted to all buuranoepayments/ of or relating to me ftteajoing property t Gramtt'aod Lender agree thatanyoertifioatkaiaofmatofaiiigfbiMbeUgnHI^

DSMDB-2368018

•re not themtetot collators! for the Indebtedness or subject to this SecurityAgreements Oiuilof agrees not to will transfer, convey, pledgB, bypothooitD orotherwise ttansftr to toy penon or entity my of to pretert or ftitnre right, titleand interest ta and to the public matching fluids pfognm or any osrttfloillons ofmatching funds eligibility, faohidfcig rebted righto, issued with respect theretowftbout the prior writtan consent of Lender."

5 AsacoiinWoiipieoedemtothoefMof the Policy on the life of John MbCtin shsfl be increased from S3.000.000 00 to $4,000,000.00, (10evidence of nioh increase shall be provided by Bonower to Lender in fora and substance acceptable toLender in ill raapecta. and (hi) the AssisflmentshaU be deemed motffM

"^ 6 Borrower hereby luprosenti and warrants that (a) at of December t7. 2007, the'-/ outalanding principal balance of the Loan was S3iy7.*TT7.3o . and all accrued and unpaid^ mterest mereonhu been paid wton o^ (b) Aere are|7! Bventi of Default under, the Note, the Loan Agreement, the Security Agreement or any other Loani-J Doounent,(c) there existt no act; event or oondltxmw^^^ would constitute a default or Event of Default under the Note, the Loan Agreement, the Securityp Agreement or any other Loan Document, (d) the itMesentatlons and wamndct of Borrower set forth m.^ the Note, the Loan Agreement, the Security Agreement and afl of die onW Loan Doconienla are ho^ nns4eajidiedafedMof1iieoteofto

of fuoh date, and (e) the executlou, delivery and pcrfonuauoe by Bonower of this Modification (0 itwrtfam rts corpoiatepoweii, (n)hu been duty authoraed by all neoenary corporate action, and (nQ doesnot require the consent or approval of any penon or emlly which hw not ihvao> been obouned

7. Aaaooa^h^onpieoedenttotheefleotivenesBofthuall of Lender's oosta and expenses associated with this Modification and the tnuisachons contemplatedhereby, including, without limitation, Lender's legal fees and expensei

8 TneexeertionandddiveiyofthniModttTca(past, piesedt or fuujra) lelated to flwpresent acts or omissions taken or fbiegoue or payments made or to bo made by any party hereto orthereto m relation to such documents, shaH not, dU not and wfll not many way constclaims that Lender may have against Boupwer or any other obligor with respect to any default or event ofdefault under the Note tnoVor the other Lon DoouneinX and Lnnteany kind that Lender may now or hereafter have against Bonower andfar any other obligor, mendingwithout limhadon, Lander's claims for payment m (nil of the amounts due under the Note, the LoanAgreement, the Security Agreement, aiid the ote tan Documents, sndfoderan^ofl& and any and all such rights. lufsiejlSi defenses, offsets and causes of action are hereby expresslyreserved and preserved

9 1B^^MM^B^^H AM^ IflM ^M^^^BH^^^MAL^B. ^^i^^^^^Hjg^— M^uf ^^^^1^^^^ L^^^^^« m^tm^fUmm ^i^J• jjonower anu na i nvsenmnves. suueesson am assis/iSi iNteu/ jomcn/ anaseverally, knowingly and voluntarily RHUASB> DISCHARGE* and FOREVER WAIVE andRELINQUISH any and all ehhus, demands, obligrtiooi, IkbilmX daftness, aflbmabVe deftness.BBtD^f^b fiBDinBpQ]|QflHL B0QQI1IL ttDfl QttmW Or ftOQOD Owl ^WUHBOO^FOr KBllfl Off UIKOs^Bsi ^WHttlBBr KDO^Wtt Ofnnlmown, which each of them has, may havc^Lender dveotly or mdireutjy. ariamg out o( based upon, or In any manner eonneotad wnh any tnmssotlon,event^ oimiinsfanBej aothm. ftflure to act ^r oecuirence of any sort or type, m each case related to, srisnigflram or m enuisetlon wift the L^

Bonower hereby aDknowledgss andtaken, penmttsd, or beam prior to the date of tfafaModfflostfonagrees natfte execution of ttts Mocfi^loatJon by Lender shall not

DSMDB-2368018

•dmtota by Leader of tbe oxntonoe of ay web obJxns or of UibiUty fbr 09 mittw or praoedeot uponwhiob toy liability may be eeiartedt

10 Li the event of • oonfflet between the pravukus of this Modifloidoo ind thogreemei

tepfOviitoM of to Modification ahall

II ThiaMttiifioatkaiahali evidence the nKritfloahnM

12, EScoept n hereby expren|y modified, the Note, AD Lou Agreement, the SecurityAgreement and roe other IxmDocomeiito i

fj= 13. ThU Modification^ be governed by the laws of the State of N^^ be binding upon and inure to the benefit of the pntief hereto and their reapeoOveauooeaBon and assigns

' 14 This Mbdlfloition may be executed m any number of coonterparta, each of whichf ahall be deemed an anginal and ell of which together ahall be deemed one and the same instrument Bach^ party agrees to be bound by ita faeahnile aujnatuieCO

'""•J [nmamcbr qfpage mtmnonaffy Ufl blank -ttptaturepagffollows]

DSMDB-2368018

o

occ

HV WHNBSS WUBMJSOF, the oodemgned Juve exeoutod tbli Mbdifioction on the dty todyeir fint above wrrtten

WITNESS

Nune

JOHN MCCAIN 2008, INC

I*r

• Mftiylnd banking

deed of said corporation.

on ifaii JJ£ day of December, 2007, byof John McCain 2008, Ino , a Delaware

(or scbaflwtonty proven) to be the person who00 S0a< OClQlO^WOOHGfl tOO 8UDO vO DO OO BOt 4VKI

J 1.1011

DSMDB-2368018

AFFIDAVIT OF RICHARD DAVIS IN SUPPORT OFREPLY TO THE COMPLAINT OF JOHN MCCAIN 2008. INC. AND JOHN MCCAIN

Richard Davis, being first duly sworn upon oath, deposes and states the following

1 I am President of John McCain 2008, Inc, (the "Campaign"), and function as the

Manager of the McCain Campaign

2 I have personal knowledge of the facts and circumstances relating to the Ime of

credit (the "Loan") between John McCain 2008, Inc and Fidelity ft Trust Bank of Bethesda,

<i Maryland (the "Bank") The Loan was negotiated at arm's length, and the Bank informed us it

^ was in the ordinary course of the Bank's business

co 3 In August 2007, Senator McCain filed an application with the Commission to

determine his eligibility for the federal matching-funds program for the primary election

("Program") Senator McCain and the McCain Campaign stated at the time that the purpose of

qualifying for the Program was for the Campaign to preserve the option of participating in the

primary matching funds system, but that no decision had been made whether the Campaign

would actually accept public funds from the US Treasury

4 From the onset of negotiations with the Bank to obtain a line of credit, the

lat it was seeking a loan that would gpj be secured by any federal

matching-funds certifications, whether past or future All negotiations with the n*nir concerning

the Loan were based on this express statement The Bank conchidedthat the Loan would be

adequately secuntized. and the Bank would have adeqjiateassiiiance of repayment, without their

obtaining a security interest in matching-funds certifications

S On November 14,2007, the Bank and the Campaign executed three principal

dcxnimentstoinemoTializelheLoan aBusmessIx>anAgreenieat(meMLo4mAgreement>1)»A

1

Commercial Security Agreement (the "Security Agreement"), and a Promissory Note (the

"Note") (collectively the MLoan Documents'1) Under the Loan Documents, the Bank extended a

$3 million line of credit to the Campaign On December 17,2007, the Bank and the Campaign

executed a Loan Modification Agreement that increased this line of credit to $4 million At the

time the November 14,2007 documents were signed, it was our expectation that we would make

a decision on withdrawal from the Program on or before December 31,2007 (and thus prior to

,lf the expected January 2 payments by the U S Treasury to Program participants, since receipt andoNI acceptance of such funds from the Treasury would have obligated the Campaign to remain in the•-•k^ Program and subject itself to spending limitations) When the December 17 Loan Modification

o Agreement was signed, it had become clear that the US Treasury would not be makingcu'"'•J payments in January, and likely not until March, which meant as a practical matter that the

Campaign would not have to make a decision pnor to December 31,2007 on whether to

withdraw from me system The documents were accordingly modified to reflect this change

6 When the Campaign negotiated and executed the Loan Documents and Loan

Modification Agreement, it expressly intended throughout the process (and understood the

Bank's intent to be identical) that no security interest of any sort in the Campaign's matching

funds entitlement would be provided to the Bank Therefore, the Campaign intended to

expressly exclude from definition of "collateral** BHV and all the matchmir-fiinda mtificatianfl

obtained from the FEC at any time as a result of Senator McCam's August 2007 qualification for

digibility to participates the matching For this reason, the Ix>an Documents

and the Loan Modification Agreement were drafted to create no security interest in any

matching-rund certifications, past, present or future TTie Campaign explicitly understood from

legal counsel and the Bank mat the Campaign's December 1,2007 and January 1,2008

matching-funds submissions and any other submissions and certifications stemming from the

August 2007 qualification were all excluded from the definition of "collateral" as "certifications

now held, and related rights" (and through other provisions contained in the Loan Documents

reflecting the parties' intent)

7 The only circumstances under which the Bank, in the future, could have been

granted by the Campaign a security interest in any matching funds never occurred If SenatorL"in McCain withdrew from the Program and subsequently failed to wm, or place within at least 10oN| percentage points of the winner in the New Hampshire primary (or the next primary or caucus,»-(

^ under the Modified Loan Agreement), and the Senator thereafter ic-apphed to the Program, wasvy

o declared eligible by a fully-constituted Commission, and made new matching funds submissions00

™ which resulted in new certifications from the FEC Since these circumstances did not occur, the

Campaign at no tune took any of the further steps mat would have been required to provide to

the Bank in the future a security interest in the matching fund certifications

8 In March 2008, the Campaign repaid the Loan in its entirety

I declare under penalty of perjury that the foregmng is true snd^pnect

Richard DavisPresidentJohn McCain 2008, rnc

County of ArlingtonCommonwealth of VirginiaThe foregoing instrument was subscribed and swornbefore me this Zg day of/Mftlg£fc/ .2008 by

Notary registration number ?" |*y T* \ &&My Commission Expires

FUTfii

MCCAINFebruary 25, 2008

VIA HAND DELIVERY

Chairman David MasonFederal Election

'* 999EStreet,NW;:" Washington, DC 20463N>^ RE John McCain 2008, Inc•*j<3 Chainnan Mason*%O This responds to your February 1 9, 2008 letter concerning Senator John McCam's' February 6, 2008 withdrawal from the federal pnmaiy^ecoon matching fimds pi ogiaiu

established by the Presidential Primary Matching Payment Account Act ("the Program")

The Federal Election Commission recogniTad in Advisory Opinion 2003-35 (Gephardtfbr President) that the Supreme Court's Bwldey opinion found the Piogiam to be constitutionalbecause the Program is voluntary As a result, candidates have a constitutional nght to withdrawfrom the Program The Commission mGepfanfr expressed its view that this constitutional rightto withdraw was conditioned on the candidate not receiving Program funds fiom the USTreasury and not pledging Program certifications received from the FEC as security fbr pnvatefinancing The campaign has received no finds from the U S Treasury, and has notified theTreasury mat it will not accept any such funds Consistent with the reports to the FBC noted inyntir letter, Hie campaign did not MM rta federal matching fimd aartifie«fift|if oo a*e***ty ftr tV

campaign's bank loan, as discussed further below

Two previous presidential candidates were certified by the FEC as qualified to participatein the Program and withdrew prior to receiving iedentf funds. Democratic Natooo^Chair Howard Dean (a presidential candidate during the 2003-2004 election cycle) qualified forthe Program m June of 2003, but withdrew on November 12, 2CXO Similarry, Republicancandidate Elizabeth Dole withdrew from me Program on December 17, 1999 after qiialifymgearlier that year

In your letter, you stated your belief that "Just as 2 USC Section 437c(c) required 0affirmative vote of four Commissioners to make these certificatioiis, it requires an affinnanvevote of lour Commisnonen to withdraw mem n We respectrully disagree wroimUconchisionfor the following reasons Fh^2USC437o(o)oofltBm8nosuchz«qdrementMacondio^withdrawal Thiswasrecc^mzedbyanFECspotespersoowhoacoiinrte^Press that although "[t]he statute says a vote of fo^someone as ehgible, [tJhereisnovmgmtestatateraattallDis^^

POSocltllS

program "Second, the FEC's regulations are similarly silent on the subject Thud, your lettercites Advisory Opinion 2003-35, issued to former Congressman Gephardt, which outlinedprocedures the Commission chose to follow in that instance The procedure included anaffirmative vote by the Commission accepting Congressman Ocphaidt'swithdrawd from meProgram (a similar procedure was followed in the Dole and Dean withdrawals) However, thisAdvisory Opinion does not establish a legal r«^im»w«rt that the Commission must approve allwithdrawals from die Program As yon are aware, the statute prohibits the Commission fromestablishing regulatory requirements through an Advisory Opinion 2USC437f(b) TheCommission has not taken the numerous additional steps thzougli a forxnalndemakmg procedurewith notice and comment that would be necessary to nKorporate the GepAonft Advisory Opinion

^ procedures into its regulations and make them binding on the Commission arid on candidatesj- -t participating in the Program

rH! This is particularly important in light of the extaoidbnaiy circumstances m which we and,-,j the Commission find ourselves at this tune Senator McCain submitted his withdrawal letter on*z February 6* of this year, and as your February 19* letter notes, the FEC does not currently have

UlO IZUllQDUflS OUnXDQaT Oz ^^Ofl9KDls)820O6IV OOCCSSeVy cO OOtDfltutUvO ft OUOfl^BQ flDfl GODuUGt DIU1D688We beheve tins necessarily means that the Commission cannot detenmne at this tune whether avote is required to recognize and accept Senator McCain'! withdrawal (as you conclude) oroc

whether ha withdrawal occurred automatically upon his February 6th notification (as we believeis the case) Accordingly, we understand the current status to be that once a quorum exists, theSenator's withdrawal letter will be presented to the Cozmnission for its decision on whether anyfurther action is required Even if the Commission (xnidudes that a vote is necessary, we areconfident that the Commission will find that its role is*Vnimstenarmf\mction,BndthattheProgram's voluntary nature requires it to recogmze that Senator McCam's withdrawal from meProgram was effective as of February 6*

The legal effect of Senator McCam's withdrawal—whether it is found to occurautomatically via his letter of February 6* or is later ratified by vote of the newConmiissJoners—-will be the same Senator McCain will not be subject to the Program'sspenduglinutanoiis ate February 6,2008 We understand that you beheve this is a matter thatcan only be decided by the full Commission when a quorum is present, and we are omfident matthe full Commission will concur with us rt considers the question Both as a candidate and as aMember of Congress, Senator McCain is hopeful mat the Senate will nioveexpeditiously toconfirm new Commissioners so that the FEC may omduct all of its important business, mchidinga review of these issues.

Your letter also requests that we provide addftioriHlinformanontotfaePECconcatimgthe rationale for concluding that the can^ugn's bank luie of credu was not secured wro^ federalmatching fund certifications JohnMcCam 2008 has already placed the loan documents on mepxblic record at the EBQ as required by law Today, the bank, tinougfr to attorneys,unequivocalry stated n^ the matrhfag fund c^^collateral for the line of credit I am attaching a copy of n^ letter I recerved Itconchides

Accordmgly, the bank does not now have, nor dUrteverreoenmfromtheComnuttee,asecurity interest in any certification for matching funds Any findnigOT determination to

the contrary would be wildly inconsistent with the language of the loan documents, theintent and understanding of the parties and bane principles of banking, secunty anduniform commercial code law

News services report today that the Democratic National Committee ("DNC") has filed acomplaint with the Commission concerning this loan, citing these very documents Accordingly,we expect to respond as provided in 2 USC 437g to the DNC's complaint with whateveradditional infbnnanon may be necessary to explain any finmer grounds for Ihecondusion thatno Program certifications received by Senator McCain and John McCain 2008 constituted

t)Ct secunty for pnvate financing-HO I trust this information, and any that we may provide m response to the DNC complaint,N> will answer any questions which you, or the Commission when a quorum exists, may have<~i concerning these issues•"M

'v?

?I Sincerely Yours,

Trevor PotterCounselJohn McCain 2008

cc The Honorable Judith TiUman, Commissioner, Dept of the Treasury Financial Management Scrvi

End Letter from Counsel for Fidelity A Trust Bank, dated February 25,2008

DICKSTEINSHAPIROupiMSBytSlrMtNW | Wiihington, DC 20006-5403TBI flflB ^3fr"3300 I BfUiflflBj ^30 3301 I fldBficBsMiplioooM

February 25,2008

Mr, Trevor Potter^ John McCain 2008, Ine" PO Box 161180' Arlington, VA 22215

,^ Re Fidelity ft Trust Bank Loan

cr Dear Trevor,

r. We understand that a number of questions have been raised regarding the loan made by Fidelity,;,. A Trust Bank to John McCain 2008, Ine (the "Committee^ In that regard, we offer the^ following perspective at the bank's request

As outside counsel for the bank, we worked closely with the bank and the Committee since theinception of the lending relationship At the outset, and with guidance provided by FECAdvisory Opinion 2003-35, we were mindful of two potentially competing concerns (i) the bankhaving adequate assurance of loan repayment, and (u) the Committee retaining flexibility towithdraw from the matching funds program (which we understand might not be possible ifcertifications for matching funds were pledged as collateral)

After the bank determined mat adequate assurances of loan repayment existed without obtaininga pledge of any certification for matching funds, the loan terms were carefully drafted to excludefiom me bank's collateral any matching funds certification (so as to assure that the Committeeretained the flexibility to withdraw from the program in accordance with the principles ofAdvisory Opinion 2003-35) The fact that there was no pledge of any certification for matchingfunds is further evidenced by the fact that covenants were included within the loin documentsthat expressly required the Committee to pledge, m the future, and if (and only if) certainspecified events occurred after the Committee ware to withdraw from the program (such as theCommittee's re-entry into the program), future certifications of matching funds as collateral forthe loan It is our understanding that, to date, none of those events have occurred. Accordingly,the bank does not now have, nor did it ever receive fiom the Committee, a security luteiest many certification for matching funds Any finding or determination to the contrary would bewholly inconsistent wrth the language of the loan documents, me intern and iindenumo^parties and basic principles of banking, security and umfbmi eommsrelal code law

Smoersly,

Matthews Bergman, Partner Scott E Thomas, Of Counsel(202)420-4722 G>02)420-2601

i COIln •DQnDssillBflQBiGKBvKCflAIDIOIaY^D GOID

DC I Han ram, NY [

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PO Box 1226Burfangtan,Vr 06402

November 12, 2003

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oonmction with «y cmnpiiign'f tfccihold mbnuttton Mycaopaignhuziotrabinittedto the Dc^iiiiniBiit of Tkcmny My bug icoouct

Should you have any question or derira aqr iddmontl mfonnacxoo, pktsecornier nqr counsel. Brio XbtaftU, it 2Q2499-1 177.

Dwm,M.D.

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FEWZ-1996 0528MtUtlVLU

FEDERAL EUCTIOHMHS1.!!***SFG'i" • 'I

feZO 9 as AH'33ELIZABETH DOLE FOR PRESIDENT

EXPLORATORY COMBflTTEKIBS N.I*na tot* Soft 400

December]?, 1999

° VIA HAND DELIVERYNI Tifi iMiny y%M TMH.

, The HonDnbto Scott Thomas'rr ChmnKi^r Ffffatri Bteofton ^ffim0 999BStre«t>NW.^ VMhiagton.DC 20463

R0 HighBtfi Date fig Pi*"idjBtRxpltM**<*|'V Coimnittee

I m wrtbdmwing nqr iBfont for poblio matching Audi on behalf ofthe Ehabah Dote tbr PrwdentExptofitay Cammfttee ("CommteaQ. TluwiOdrawal fa conditioned ontbe imdBCTtndingthittbfCuinimttee will not b«subjoet 10 IB tudit under His Pieskkotiil PnrntiyMiteUiigPiyincnt Account Acicontained in Title 26 of tte US Code.its acttvitiai IB u axpacbtioiu flroiton

Sincerely,

TOTAL P 02

SKADDEN, ARPS, SLATE, MEAQHER & FLOM LLP1440 NEWT YORK AVCNUC, N.W

WASHINGTON, DC. COOQaVtlll

TCI. BOB

17 1999

OVTA VAi^flnurrr.v. A

The Hononble Scott Tbomat

fwOv iU JSlBCDOA

999 E Street, N.W20463

RjB* Rlt»«lM»rt| Pole for Prtnidmt

ASOOUDBO! for tta EbBtboCh DQ!B fbr Picnclsnt ExpiozvioiyCoinniittee COnmnutteifymatching fundi. Thtt withdntwil is cooditaaned on tbo u&denttndiog that theComnrittee mil not be ntgect to in adit undvTltbtf of to Pradeotial PrimaryMaichingPaymenlAccoiml Thtt \ i!iow the Comnutfee to wind down its•ctivitiOf in in npodhtoui

oc Ray LIB

Yale Law School

March 14, 2008

.-j Thomasenia P Duncan, Esqo General CounselN - Federal Election Commission? 999 E Street, NW~i Washington, DC 20463vy

C Re MUR5976o&:"'J Dear Ms Duncan

In this letter I present my views regarding the Complaint filed with the FederalElection Commission by the Democratic National Committee ("DNC") alleging thatPresidential candidate Senator John McCain (R-Anz) and his Presidential campaignommittee, John McCain 2008. me (me "campaign*) pledged certifications

funds he received or was entitled to receive from the Federal Election Commission assecurity for private financing The DNC argues that such apledge of security interests inthe FEC certifications was made by the campaign, and that this pledge prevents SenatorMcCain and the campaign from withdrawing from the Presidential Primary Fundingsystem and obligates the Senator and the campaign to abide by the aggregate spendinglimits for participants in that system

I have examined certain loans that the campaign obtained in November andDecember 2007, and in January 2008, from Fidelity ft Trust Bank £ 'Fidelity" or "theBank*1) in order to determine whether, from a banking and commercial law perspective,these loans were secured by matching funds certificates' I have determined that toeLpytM «f «»««* iinyp ^ ^ ***» ntt»A ky •i«teh«ig fiitwia r^rhfJrjrf^c AS a profeSSOT B&d

scholar in the field of banking law,21 believe that I am competent to render an expertopinion m tnis matter

In the United States the law of security interests is governed by Article 9 of theUniform Commercial Code (UCQ A security interest grants the holder thereof a right to

I hi¥B been aikod to provido my independent^ objective view of thii HUM n n export in binking taw I•mnotmyoIvedmtlieMcCim'OSceinpaignmiiiywiy I am ireguteivdDeniocrit resident m the stite

listing my publieanoni and qnthfkatioiu

ro BOX aoliif NEW HAVBM, CONNICTICUT 06520-8215COURIBR ADDBMI 127 WALL ITBIIF NBW HAVIN, CONNIC1ICUT 06511

take remedial action with respect to the property that is subject to the security interestupon the occurrence of certain events - the classic example being the non-payment of aloan A security interest generally is created with a security agreement, which is acontract governed by UCC Article 9 and state law governing contracts' Under the UCC,a security interest is a right in property of the debtor that has been used to secure paymentof an obligation such as a loan A security interest is created by a security agreement,under which the debtor grants a security interest in certain of the debtor's property isgranted for the purpose of serving as collateral for a loan or other obligation A securityinterest is a contractual right A security interest comes into being if, and only if, aborrower enters into a contract that allows the lender, or secured party, to take collateralthe borrower owns in the event that the borrower cannot pay back the loan It is

*:j dementi^ thyf & security interest wo*** be created unless there is an agreement ttiftf such'lj a security agreement be created4 This, in turn, requires an understanding (that is, a[j| meeting of the minds) between the lender and the borrower that a security interest be

—j.—•r-t created

^ Thus, the issue of whether a sccunty mteiest m property (such as the certifications7 of matching funds at issue here) exists depends on whether there was an understanding^ between the bank and the campaign There are, in turn, two key factors that are relevantr..j to a determination of whether there was an understanding that matching fund certificates

were pledged as security for the McCain 2008 loans in November and December 2007These factors are (1) whether John McCain 2008, Inc intended to use matching Rindcertificates as collateral for a loan, and (2) whether the Bank reasonably believed thatmafrfiitifl fhnH Mrtifigatea wetm actually hamg pMj**A PC *n11ttf»ra1 My aiialySlS reveals

mat the McCain campaign clearly did not intend to use matching fund certificates ascollateral for a loan It also is very plain that the Bank did not believe - and could notreasonably have believed - that any matching fund certificates were being pledged ascollateral Thus, this is a clear and unambiguous case

The text of the applicable loan agreements clearly states that John McCain 2008,Inc did not grant a security mteiest in the matching funds to Fidelity See Business LoanAgreement between John McCain 2008, Inc and Fidelity & Trust Bank (Nov 14,2007)and Modification Agreement between John McCain 2008, Inc and Fidelity & Trust Bank(Dec 17,2007) Specifically, the "Affirmative Covenants,*' "Additional Requnernents"provision of the Loan Agreement states that H if the Borrower [the Campaign]withdraws from the public m«t^h«ig fund program by the end of December 2007, but1 The UCC hu been adopted, with tome modifications, by every state, u well u the District of Columbia,Guam and the US Virgin blands

All of the nues nsjHdmsj the creation of a locuiily interest depend on an agreement (celled a "securitytejntwsif) being leeched between the tender end the borrower Specifically, UCC Article 9 sets frithteMrequnvmenti that must be satisfied mand thud parties Each of these reojuramenta clearly envisions that the bonower and lender have raachedan aareBineBt that a Becurny aareenent be creeled These rcojumnenti are (1) that value be provided mexchange lor the collateral! (2) that the debtor most have iisjits m the collatenlt and (3) that either theflBOBDeT BBfllC AAVD aVRDBDEDGlBBQ A aTflflUIDF BSsVapOBMBI HfllD ft flBBG IDOOD OT UI0 OOUaBvBflaU Of iD0 GVDQIvOr

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John McCain then does not win the New Hampshire primary or place at least within 10percentage points of the winner of the New Hampshire primary, Borrower will causeJohn McCain to remain an active political candidate and Borrower will, within thirty (30)day of the New Hampshire Primary (i) reapply for public funds, (11) grant to Lender, asadditional collateral for the Loan, a first priority perfected security interest in and to all ofBorrower's right, title and interest in and to the public matching fund program "Loan Agreement at 2 (emphasis added) This text indicates that while the Campaign didcontemplate a potential Ju/ure grant of a security interest in the certifications of matchingfunds, no such grant ever was made, either in the documents or elsewhere

l/t The conclusion that no matching funds were pledged as security for private^ financing is inevitable if one looks fairly at the documents and the business and economicO contest in which the loans were made Fidelity, a bank with experience in the business ofNI making loans to candidates for public office, was aware that if Senator McCain^ performed well in the New Hampshire primary, additional capital would flow into the.^ Campaign which, in turn would reduce the risk of default on the loan On the other hand,rj if Senator McCain did poorly in the New Hampshire primary, Fidelity understood that the0 McCain Campaign might not be able to raise funds as easily and that the nsk of de&ult^ on the loan would be higher In order to protect itself incase of a poor McCain showing1 J Fidelity might want to further secure the loan by having Senator McCain reapply for

matching funds and grant Fidelity a security interest in such funds But there was nosecurity interest here because the future applications that would have to be granted inseparate agreements in the future

Under the Loan Agreement, no security interest was created because no securityinterest could have been created in non-existent, future certifications of matching fundsMore precisely, it was clear at all times that no security interest would be created unlessthe McCain Campaign (1) withdrew from the federal matching funds program, (2)started losing primaries by large margins, (3) applied for federal matching fundscertifications, and (4) received such certifications Not one of these four conditionsprecedent was fulfilled, and therefore no security interest ever was created

The Democratic National Committee, in its Complaint Against Senator JohnMcCain and John McCain 2008, Inc (Feb 25,2008), tries to falsely paint this provisionas creating Ma present encumbrance of the Campaign's Juture interest in andentitlement to «y»«i«hi«g funds, as part of the security for the line of credit," however, thisinterpretation of the text confuses an agreement to potentially grant a security interest mthe future with the actual granting of a security interest On the contrary, by discussingthe agreement to possibly grant Fidelity a security interest in the future, the text insteadreaffirms mat the Campaign had not already granted Fidelity a security interest in thispart or any other part of me agreement

Moreover, in conformity with the "Affirmative Covenants," "AdditionalRequirements" portion of the Loan Agreement, other provisions of the loan agreementsrequire the Cwnpfffgp* to «*»f«i*»«n eligibility for the ™fTrhiy>B funds p»>y«n» so mat m thefuture the f^"r«FgF» would be able to apply for and assign ngirts to certificates of

matching funds if need be Under the "Negative Covenants" section in the loanAgreement, the Campaign agreed with Fidelity that "while this Agreement is in effect,Borrower shall not, without the prior written consent of Lender grant a securityinterest in, or encumber any of Borrower's assets, including, without limitation, any ofBorrower's right, title or interest in and to the public matching fund programs of any

fund settlement " Loan Agreement at 3 If the Campaign had granted asecunty interest in the matching funds to Fidelity, as the DNC erroneously asserts, therewould obviously be no purpose for this clause restricting the Campaign from assigningthe rights to the matching funds in the future The DNC's complaint erroneously citesthis negative covenant to not pledge rights in future matching fund entitlements insupport of their interpretation that the bank assumed it had a perfected secunty interest in

!^ the matching funds entitlement In fact, the clear interpretation of the language is insteadO that Fidelity understood that no parties had been assigned rights to the future matchingHI fiimfe ot|trtkmgn* an^ Fidelity waqfcd to ensure thff* nghts to those entitlements would be•"1 available for assignment to themselves as secunty in the future, should they require it' The Campaign was not encumbering the funds, but agreed not to encumber the funds in,~t the event they may need to pledge them to Fidelity as a secunty interest in the futureo They did not See Modification Agreement and subsequent discussion infra

rx| Additionally, as with the "Negative Covenants" section discussed above, the"Compliance with the Federal Election Commission's Matching Funds Program" sectionin the Loan Agreement states that "Borrower agrees and covenants with Lender thatwhile this Agreement is in effect, Borrower shall not exceed overall or state spendinglimits set forth in the Federal Matching Funds Program ," so to ensure the Campaignremains eligible for the program to protect the Campaign's ability to reapply for fundsand assign rights in the future if need be Loan Agreement at page 4 Although the DNCcomplaint asserts the only reason for inclusion of this provision on compliance with theFCC program is so the bank can treat ngjits in future certificates of matching funds ascollateral, in met, the language used in the agreement simply describes the Bank's effortto protect its ability to obtain a secunty interest in the matching funds in the future Inparticular, the Modification Agreement added to mis section that the Campaign mustabide by the spending limits of the Matching Funds Program "irrespective of whetherBorrower is subject to such program as of any applicable date of determination"Modification Agreement at page 2 Thus, the Bank clearly contemplated that theCampaign might not be subject to the Program at some future date, i c that the Campaignmay have withdrawn from the program, so the Bank certainly cannot have believed it wasobtaining a secunty interest in the entitlements ***•* were contingent upon the Campaign'scontinuation m *"^ xvUDComff funds JProsri

The "Collateral Description" in the Secunty Agreement provides further evidencethat the Bank never possessed a secunty interest in the Matching Funds Simply put, thissection does not identify any ngjits or interests to matching funds as collateral In fact,the section explicitly states that all current entitlements arising from the program are notcollateral The section remains silent as to whether potential future entitlements to thei^pfr|tMig program's funds count as collateral Commercial Secunty Agreement between,John McCam 2008. Inc and Fidelity & Trust Bank at 1 The DNC argues mat this silence

as to future entitlements implies that rights to these entitlements are included ascollateral However, this argument is both logically flawed and at odds with the UniformCommercial Code (UCC) The DNC is relying on the Expressio Umus canon of textualinterpretation for the idea mat the acceptance of one thing is the exclusion of anotherSpecifically, the DNC argues that the explicit exclusion of current rights tofunds implies the inclusion of future nghts to mflteh|"g funds Unfortunately, theExpressio Umus canon is not helpful in this situation as it can just as easily be used insupport of the opposite argument the fact mat the "Collateral Description" sectionincludes such a long, detailed list of collateral would suggest that any type of collateralnot expressly listed in the section (i e future nghts to •"•teh|"g funds) is excluded fromthe section While the Expressio Umus does not contribute to the analysis, the UCC

r- provides definitive guidance Section 9-203(3)(a) of the UCC states that in order forarf*t secunty interest to attach to collateral the secunty agreement must "provide)] a,yj description of the collateral" Further, the description of collateral must "reasonablyrt identity the collateral and must not be "supergenenc " UCC § 9-108 Thus, given the' J UCC descnpdon requirement, the "Collateral Description" section's failure to list future^ nghts to matching funds as collateral indicates that these nghts were not intended to beYn collateralCO

<M As soil further evidence that no secunty interest had been created, the negativecovenant at the end of the "Collateral Description" section of the Secunty Agreementforbids the Campaign from assigning nghts to their entitlements to matching fundswithout the bank's consent Under UCC § 9-322, the first party with a secured interestin the collateral to file a financing statement gets first-pnonty If Fidelity already had asecunty interest in the future nghts to matching funds then there would be no need forFidelity to create a negative covenant of this sort Rather, Fidelity could simply perfectand thus guarantee its spot as a first-priority secured creditor Any subsequentassignments made by the McCain Campaign would be subservient to Fidelity's interestThus, the fact that such a negative covenant exists suggests that Fidelity did not perceiveitself to have a secunty interest in the Campaign's nghts to future entitlements under thematching program Rather, they wanted to make sure no other creditors had anopportunity to gam a secunty interest in these funds before Fidelity did

Finally, the DNC Complaint ciwr* that the Modification Agreement altered (helangMgB of the exemption in the "Collateral Descnpaon" Section to indicate that theCollateral will include future amounts of matching funds paid DNC Complaint at p*gff5 However, there is nothing in the "Collateral Description" in the ModificationAgreement to suggest that the Collateral will necessarily include future amounts ofmatching funds Instead, the modification clearly states, "Grantor and Lender agree thatany certifications of matching funds eligibility, including related nghts, now held byGrantor are not themselves being pledged as secunty for the Indebtedness and are notthemselves collateral" Modification Agreement at 3-4 While the Campaign was holdingopen the possibility to pledgfc a secunty interest m the funds to Fideln^ m the future, it isclear that it was not presentty gnmtuig such an interest

My research into the applicable documentation concludes that at no time did theJohn McCain 2008 Campaign secure its loans from Fidelity with matching fund

Sincerely,

•jo

Jonathan R MaceySam Hams Professor of Corporate Law,Corporate Finance, and Securities LawYale Law School

OfC-- i

Resume

Name

o

TelephoneFax

E-mail

Education

Jonathan R Macey

Yale Law School127 Wall Street P O Box 208215New Haven, CT 06511 (comer) New Haven, CT 06520-8215 (postal)

(203)432-7913(203)432-4871

J D Yale Law School, Article and Book Review Editor, Yale Law Journal. 1982A B, cumlaude (economics), Harvard College, 1977

O

CO Current Positions

Other

Sam Hams Professor of Corporate Law, Finance, and SecuritiesRegulation, Yale University,Deputy Dean, Yale Law School,Professor, Yale School of Management,Board of Directors, Yale Law School Center for the Study of CorporateGovernance,Faculty Advisory Group, Yale Center for Corporate Governance andPerformanceFinancial Industry Regulatory Association ("FINRA*1) (formerly theNational Association of Securities Dealers C"NASD")» NationalA4)udicatory Council

Subjects Business Organizations (Corporations and Other BusinessAssociations), Corporate Finance, Corporate Governance, Banking and FinancialInstitutions Regulation, Corporate Finance, The Economics of Regulation

Ph d (Law) honoris causa Stockholm School of Economics, 1996,

DP Jacobs prize for the most significant paper in volume 6 of the JfiujSflLfiffor "The Law & Economics of Best Execution** (co-

authored with Maureen O'Hara) (1997),

PaulM Bator Award for Excellence in Teaching, Scholarship and Public Serviceawarded by the University of Chicago Law School Chapter of the FederalistSociety, 1995;

Member, Legal Advisory Committee to the Board of Directors, New York StockExchange,

Member, Economic Advisory Board, Financial Industry Regulatory AssociationCTINRA") (formerly the National Association of Securities Dealers ("NASD")

Articles"Getting the Word Out About Fraud" A Theoretical Analysis of WhisUeblowingand Insider Trading?* 105 Mi*fl"pn Ijfpv Review 1 899 (2007)

oro Too Many Notes and Not Enough Votes Lucian Bebchuk and Emperor Joseph Ho Kvetch about Contested Director Elections and Mozart's Seraglio" 93 Virgmj§"; Law Review 759 (2007).•"•j'3 "Executive Branch Usurpation of Power Corporations and Capital Markets," 1 1 5-<t Yale Law Journal 2416 (vol 9, 2006)O;° "The Nature of Conflicts of Interest Within the Firm," 31 The Journal of

"The Pokticization of Amencan Corporate Governance,'' 1 viinnnTfBusiness Review 10 (2006) (corrected (forthcoming) in volume 2, #2, YugBUfiLaw ft BM**nffffs Review)

"Government as Investor Tax Policy and the State," 23 Social Philosophy ftPolicy, (2006),

"Commercial Banking and Democracy The Illusive Quest for Deregulation," 23Yale JopTifll °H Reg"*«*|on 1 (2006),

"Occupation Code 541 110 Lawyers, Self-Regulation, and me Idea of aProfession," 74 Ffnlhflf" T*w Rcwaw 1079 (2005),

"From Markets to Venues Securities Regulation in an Evolving World," 58Stanford Law Review 563 (2005) ) (with Maureen O'Haza),

"Comment- The Limits of Legal Analysis Using Externalities to Explain LegalOpimonsrn Structured Finance," 84TexaaL Rev 75(2005),

"Delaware Home of the World's Most Expensive Raincoat," 33 HpJHrA1131(2005),

"Stock Transfer Restrictions and Issuer Choice in Trading Venues," 55 £fl2fi587 (2005) (with Maureen O'Hara),

"Institutional and Evolutionary Failure and Economic Development in the MiddleEast," 30 The Yale Journal of International Law 397 (2005) (with Ian Ayres),

"Positive Political Theory and Federal Usurpation of the Regulation of CorporateGovernance The Coming Preemption of the Martin Act** 80 Notre Dame LawReview 951 Q005).

"Best Execution Regulation From Orders to Markets,** 13 fpniHrt ?f FlIUUTClfllTranafarmanon 1 (2005),

,., "Legal Scholarship A Corporate Scholar's Perspective," 41 San Diego LawHI Review. 1759 f20Q4VO"' "Wall Street in Turmoil Federal State Relations Post Eliot Sprtzer." 70 Brooklyn;:' Law Review 117 (2004),

*tf "Was Arthur Andersen Different? An Empirical Examination of MajorO Accounting Firm Audits of Large Clients,

July 2004, vol 1, issue 2, pp 263-300(38) (with Ted Eisenberg),

"Monitoring, Corporate Performance The Role of Objectivity, Proximity andAdaptability in Corporate Governance." Cornell Law Review. 2004. vol 89, issue2, p 356-393 (with Amoud Boot) (reprinted (in English and Portuguese) inDueito Empresanal Aspectos atuais de Direito Empresanal brasileuoecomparado, pp 416-441 (English), 442-470 (Portuguese) (2005),

"Efficient Capital Markets, Corporate Disclosure and Enron," Cornell LawReview. 2004, vol 89, issue 2, p 394-422,

"Regulatory Globalization as a Response to Regulatory Competition," 52 EmorvLJ 1353(2003),

"A Pox on Both Your Houses Enron, Sarbanes-Oxley and the Debate Concerning

University Law Qu,fjflHiYi 329 (2003),

"Observatioiiso&tbeRoleofagzm

(2003) (with Hillary Sale),

"The Corporate Governance of Banks," 9 Economic/ Pffhcv Review 91 (2003)(Publication of the Federal Reserve Bank of New York) (with Maureen O'Hara),

"Solving the Corporate Governance Problems of Banks A Proposal" 120 The309 (2003) (with Maureen O'Hara),

"The Economics of Stock Exchange Lifting Fees *"d Listing Requirements" 11JflVTfflll rf Pnme|Bl intemMMJiatniQ 297 (2002) (with Maureen O'Hara),

"Displacing Delaware Can the Feds Do a Better Job Than the States inRegulating Takeovers7" 57 The Business Lawyer 1025 (2002),

"Smith v VanGorkom Insights About CEOs, Corporate Law Rules, and theJurisdictions! Competition for Corporate Charters" 96 Northwestern Law Review607(2002),

r ; "Cynicism and Trust in Politics and Constitutional Theory" 87 Cornell LawMI Review 280 (20021.OMl "Creditors Versus Capital Formation The Case Against the European Legal^ Capital Rules" 86 Cornell Law Review 1165 (2001), rewritten in Italian as^ "Ra(xx)ltadiCapitded^RischioeTiiteladeiCrediton Una Cnuca Radicale allevr Regole Europee sul Capitale Sociale" (Capital Formation and Creditor ProtectionO A Radical Critique of the European Legal Capital Rules), 57 RivistadelleSocietaf 78 (2002) (with Luca Ennques),

"Regulatory Competition in the US Federal System Banking and FinancialService" m Retaliatory Compe^^ Comparative

edited by Daniel C Esty and Damien Geradui (Oxford UniversityPress 2001) at pages 95-1 10,

"The 'Demand' for International Regulatory Cooperation A Public ChoicePerspective" in XEBBS^ ££salPrpblemsandPolitical Perspectives" edited by George A Bcrmann, Matthias Herdegen, &Peter L Lmdseth (Oxford University Press 2000) at pages 147-166,

"US and EU Structures of Governance as Barriers to Transatlantic RegulatoryCooperation" in Traimatlmfic Regulatory Co-operation LffRlil Problems andyojincal Perspectives, edited by George A Bennann, Matthias Herdegen, ftPeter L Undseth (Oxford University Press 2000) at pages 357-372,

"The Business of Banking Before and After Gramm-Leach-Bhley" 25 TheJournal of Corporation Law 691 (2000),

"Securities Trading A f^ttfy-o^iai Peigpeetive" SO Case West"p L Rev 269(1999),

"Information and Transaction Costa as the Determinants of Tolerable GrowthLevels" 155 Journal of hstrtjjtlflnil ff"f« TTr«?riflrl *mmto 617 (1999) (withEnrico Colombatto),

"Fiduciary Duties as Residual Claims Obligations to Non-shareholderConstituencies from a Theory of the Firm Perspective," 84 Cornell L Rev 1266(1999),

"Globalization, Exchange Governance, and the Future of Exchanges" BrookingsWharton Papers on Financial Services 1999, the Brookings Institution (withMaureen O'Hara),

"Regulating Exchanges and Alternative Trading Systems A Law and EconomicsPerspective" 28 Journal of Legal Studies 17 (1999 with Maureen O'Hara),

Ni

NX "Lawyers in Agencies Economics. Social Psychology, and Process." 61 Law &O <Pffntg?PPmirYft?Memff 109 (1998 (published in January, 1999)),to~* "The Legality and Utility of (he Shareholder Rights Bylaw," 26 HofstraLaw^ Review 835 (1998V*To "Wall Street Versus Mam Street How Ignorance, Hyperbole, and Fear Lead to

Regulation," 65 The Univerntv of PhMmp« Law Review 1487 (1998),••M

"Professor Simon on the Kaye Scholer Affair Shock at the Gambling at Rick'sPlace in Casablanca" 23 Ikflw *pd EQCMI Lummy 323 (1998),

"Winstar, Bureaucracy and Public Choice," 6 Supreme Court Economic Review173 (1998),

"On the Failure of Libeitananism to Capture the Popular Imagination," IS JgSBOof Social Philosophy 372 (1998),

"Regulation and Disaster Some Observations in the Context of Systemic Risk,"1 998 BroftlgngB-W^<M'tpn PBMM on Financial Services 405,

"Public Choice and the Legal Academy" (reviewing Mashaw, Greed, Chaos andGovernance), 86 Georgetown Law Journal 1075 (1998),

"Italian Corporate Governance One American's Perspective" 1998J™*ff™>u' 121 (1998).

"Measuring the Effectiveness of Different Corporate Governance SystemsTVnuaid • Mm* .Qmginfifii. ApptiiwJi* 10 fffUTflaJ flf ftfflrfied CorpQraft FlIUJTI

(1998),

"The Legality of the Shareholder Rights By-Law in Delaware Preserving theMarket for Corporate Control" 10 Journal of Applied Corporate Finance 63(1998),

"Tim T jnif and TtennftiMMM nfRr*t Rvee»ti«n " 6 Jffmaj flf F|flffln.0|fllIntermediation 188 (1977, published in 1998, with Maureen O'Haxa),

"An Economic Analysis of Conflict of Interest Regulation," 82 Iowa Law Review965 (1997, published in 1998, with Geoffiey P Miller),

"Law «nd the Social Sciences1* 21 Harvard Jwfpfll, of Law & Public Pol'v 1 71(1997),

"Flexibility in Determining the Role of the Board of Directors in the Age ofInformation11 19 Cardozo Law Review 291 (1997 with Ennco Colombatto),

'-j£.[ "Public and Private Ordering and the Production of Legitimate and IllegitimateJ"/s Legal Rules". 1 82 Cornell Law Review 1 123 (1 997),rs)

^ "Lessons from Transition in Eastern Europe A Property-Right Interpretation," I.*! Inteniatio™^ Bullet™ °^tfrft faffttfute of Macroecono""c Anajyjmm|,2 Development 10 (1997 with Ennco Colombatto .rj

"Manipulation on Trial Economic Analysis and the Hunt Silver Case" 35 Jopppof Economic Literature 162 (1997) (book review),

"A Public Choice Model of International Economic Cooperation and the Declineof the Nation State," 18 Cardozo Law Review 925 (1996 with EnncoColombatto),

"Externalities and the Matching Principle The Case for ReallocatingEnvironmental Regulatory Authority,11 23 Yale Law A Policy Review/ YaleJournal on Regulation Symposium Constructing a New Federalism 25 (1996),

"Exchange-Rate Management in Eastern Europe A Public-Choice Perspective,"16 International Review of Law ajrf Ewn?IPJ7g 195 (1996 with EnncoColombatto),

"Den vanve Instruments Lessons For the Regulatory State," 2 1Corporation Law 69 ((1995) published in 1996),

"Public Choice, Public Opinion, an<l the Fuller Court,"373 (1996) (book review),

"Ongmaksm As An 'Ism'," 19 HflTYBrf Journal of Law A P"Mic Policy. 301(1996),

"Exchange-Rate Management in Eastern Europe A Public Choice Perspective,"6 JftVTPfll des EcononaMtes et des Etudes Hunmmics 259-275 (1995 with EnricoColombatto),

"Reflections on Professional Responsibility in a Regulatory State," 63 Georgeraw Review 1 105 (1995 with Geoffrey P Miller),

"Corporate Governance and Commercial Banking A Comparative Examinationof Germany, Japan, and the United States" 48 Stflnftri Lflw Review 73 (1995)(with Geoffrey P Miller) reprinted in 9 iVynq] of Ap°hed Corporate Finance 57(1997),

O "Public Choice Theory and the Transition Market Economy in Eastern EuropeN i Currency Convertibility and Exchange Rates" 28 Cornell Joupmi of Intprwntionfll' -* Law 387 (1995) (with Enrico Colombatto),r.inqf..rj "The Regulation of Corporate Acquisitions A Law and Economics Analysis ofo European Proposals for Reform" 1995 frPlwirftlP B\mam Irfry RtTlF" 495cc (1995) (with Clas Bergstrom, Peter Hogfeldt and Per Samuelsson),^j

"A Market Approach to Tort Reform via Rule 78" 80 Cornell Law Review 909(1995) (with Geoffrey P Miller),

"Language and Self-interest Preliminary Notes Towards a Public ChoiceApproach to Legal Language" in Northwestern University/Washington UniversityLaw and Linguistics Conference, 73 Washington University Law Quarterly lOOl(1995),

"The Limited Liability Company Lessons for Corporate Law" in F HodgeO'Neal Corporate and Securities Law Symposium Limited Liability Companies,73 Washington University Law flfffrtriy 433 (1 995),

"Path Dependence, Public Choice, and Transition in Russia A BargainingApproach" 4 Cor"*H Journal of TJIW nn^ Pyfrliy Poliyv 379 (1995) (win EnricoColombatto),

"A Rejoinder" 16 Catdozo Law Review 1781 (1995),

"Deposit Insurance, the Implicit Regulatory Contract, and the Mismatch in theTerm Stnirtiim of RanW Amahi and T.i«Ki1itift«" 12 V«|ff ^fTffll pn Regulation 1(1995) (with Geoffrey P Miller),

Towards a Regulatory Analysis of Deposit Insinnce" m Pnidential Regulationof Banks and Securities Firms" (Giudo Ferranni, editor. 1995) (wim Geoffrey PMiller),

"Packaged Preferences and the Institutional Transformation of Interests1161University of ^hicflgo Law Review 1443 (1994),

"Health Care Reform Perspectives from the Economic Theory of Regulation andthe Economic Theory of Statutory Interpretation 79 Cornell Law Review 1434(1994),

"Judicial Preferences, Public Choice, and the Rules of Procedure" 23 %"iuil ?fLapa! Studies 627 (1994).

"Property Rights, Innovation and Constitutional Structure" 11 Social Philosophy;f; ajuLMar 181 (1994),oso "A Public Choice View of Transition in Eastern Europe" 2-3 Economia delle-M Sceltepubbhche 113 (1994) (with Enrico Colombatto),i--.ji^L "Chief Justice Rehnqiust, Interest Group Theory, and the Founders' Design" 25o Rutgers Law Review 577 (1994).CO

f j "Comment Confrontation or Cooperation for Mutual Gain'" 57 Law andContemporary Problems 45 (comment on Moe & Wilson, Presidents and thePolitics of Structure 1994),

"Administrative Agency Obsolescence and Interest Group Formation A CaseStudy of the SEC at Sixty" 15 Cardozo Law Review 909 (1994),

"The Pervasive Influence of Economic Analysis on Legal Decisionmakmg" 17Harvard Journal of Law P"4 Pwfrlic Policy 107 (1994),

"Civic Education and Interest Group Formation in the American Law School" 45

"Corporate Law and Corporate Governance A Contractual Perspective" 18 TheJournal of Comomhon Law 185 (1993).

"Thayer, Nagel and the Founders1 Design A Comment" 88 Northwestern LawBfiyjew. 2261993),

"TheMcCarran-FergusonActof 1945 Reconcervmg the Federal Role inInsurance Regulation" 68 New Yotk University Law Review 13 (with Geoffiey PMiller 1993),

"The Transformation of the American Law Institute" 61 George w>fffrflflfln [jwBfiOfiw. 1412 (1993),

"Corporate Stakeholders A Contractual Perspective" 43 University of TorontoLaw Journal 401 (with Geoffiey P Miller 1993),

"Double Liability of Bank Shareholders A Look at the New Date" 28 WakeForest Law Review 933 (1993),

"The Inevitability of Universal Banking" 19 Brooklyn,Law 203 (1993),

"Congress, the Court, and the Bill of Rights" 23 CTOlfrfTlfflKl LflW RffYlf *V 93K (Comment at Sixth Annual Federalist Society Symposium 1993),r^O "Kaye, Scholer, Furea, and the Desirability of Early Closure A View of the"i Kaye, Scholer Case From the Perspective of Bank Regulatory Policy" 66^ Southern California Law Review 1 115 (with Geoffiey P Miller 1993),. *-j•"iqr "Representative Democracy" 1 6 Harvard Journal of Law A Public Policy 49O (1993),Otfrj "The Community Reinvestment Act An Economic Analysis" 79 Virginia Law

Review 291 (with Geoffiey P Miller 1993),

"Auctioning Class Action and Derivative Litigation A Rejoinder" 87Northwestern Law Review 458 (with Geoffiey P Miller 1993),

"Bank Failure The Polinazanon of a Social Problem" 45 Stanford Law Review289 (with Geoffiey P Miller 1992),

"Implementing the FDIC Improvement Act of 1 99 1" in Rebuilding PublicConfidence Through Financial Reform, Conference Proceedings Volume, OhioState University Business School, June 25, 1992,

"Nondeposit Deposits and the Future of Bank Regulation" 91 MUThUHIP Lff?Review 237 fwith Geoffiev P Miller 1992),

"Judicial Discretion and the Internal Organization of Congress" 12 InternationalReview of Hw anj BCTffliMMM 280 (1992),

"Mandatory Pro Bono Comfort for the Poor or Welfare for the Rich?" 77Cornell Law Review 1115 (1992),

"The End of History and the New World Order ThelhunmhofQuntalismandthe Competition Between Liberalism and Democracy" 25Law Journal 277 fwrth Geoffiey P Miller 1992),

"Separated Powers and Positive Pobtical Theory The Tug of War OverAdministrative Agencies" 80 Georgetown LflTf fPUTPfl! 671 (1992),

"Organizational Design and the Political Control of Administrative Agencies" 8Journal of Uw.EcoiMmica A Onamizafaon 93 (1992),

"The Canons of Statutory Construction and Judicial Preferences" 45 VanderbiltLaw Review 647 (with Geoffrey P Miller 1992),

"Some Causes and Consequences of the Bifurcated Treatment of Economic(, Rights and'Other1 Rights Under the US Constitution" 9 Social Philosophy andN"I Pohcv 141 (1992),om "Double Liability of Bank Shareholders History and Implications" 27 WakeT* Forest Law Review 31 (with Geoffrey P Miller 1992 Symposium),f-y-ry "Origin of the Blue Sky Laws" 70 Texas Law Review 347 (with Geoffrey PO Miller 1991),0£

J "Toward Enhanced Consumer Choice in nkipg Uninsured Deposit Facilitiesas Financial Intermediaries for the 1990's" 1991 New York University AHiiP11?!Survey of Amencan Law 865 (with Geoffrey P Miller 1991),

"The Fraud-on-the-Maiket Theory Revisited" 77 Virgimi H-qw Review 1001(with Geoffrey P Miller 1991),

"Lessons From Financial Economics Materiality, Reliance, and Extending theReach of Basic y LffYUffffn" 77 YliQBff Ml Law Review 1017 (with Geoffrey PMiller, Mark L Mitchell and JeffiyM Netterl991),

"The Plaintiffs' Attorney's Role in Class Action and Derivative LitigationEconomic Analysis and Recommendations for Reform" 58 University of ChicagoLaw Review Ifwith QeoffievP Miller 1991),

"The Glajs-SteagaU Art aiid the Riskmess of Financ^ 14Research m Lyy flflfl Beonomics 19 (with M Wayne Marr and S David Young1991),

" Agency Theory and the Criminal Liability of Corporations" 71 BostonUnivemty Law Review 315 (1991 Symposium),

"State and Federal Regulation of Corporate Takeovers A View From theDemand Side" 69 Washington Unfveraitv T j»™ ftVfflrtBlY 383 (1991),

"Amenca's Banking System The Origins and Future of the Current Crisis" 69University \jgtf flujflatly 769 (1991 Symposium),

10

"An Economic Analysis of the Various Rationales for Making Shareholders theExclusive Beneficiaries of Corporate Fiduciary Dunes'1 21 Stetson Law Review23 (1991 Symposium),

"Politics, Bureaucracies, and Financial Markets Bank Entry into CommercialPaper Underwriting in the United States and Japan" 139 University ofPennsylvania Law Review 369 (with David G Litt, Geoffrey P Miller andEdward L Rubin 1990),

"The Role of the Democratic and Republican Parties as Organizers of Shadow°]' Interest Groups" 89 Mr*1?"" T *w Review 1 (1990),

1^ "Federal Deference to Local Regulators and the Economic Theory of Regulation"i~4 75 VirjHflifl Law Review 265 (1991),r-.i

*J "Good Finance, Bad Economics An Analysis of the Fraud on the Market2 Theory" 42 Stanford Law Review 1059 (with Geoffrey P Miller 1990),<cVE "The Stock Exchange as a Firm The Emergence of Close Substitutes tor the

New York and Tokyo Stock Exchanges" 76 Cornell Law Review 1007 (withHidehKandal990),

"Auction Theory, MBO's and Property Rights in Corporate Assets" 25 WakeForest Law Review 85 (1990 Symposium),

"Firm-Specific Human Capital Investments and Hegelian Ethics A Comment onCornell and Posner" 1 1 Caidom Law Review 505 (1990),

"Courts and Corporations A Comment nn Coffee1692(1990).

"Macey Responds to Lubet" 75 Cornell Law Review 959 (1990),

"The Fraud on the Market Theory Some Preliminary Issues" 74 Cornell LawREUfig 923 (1989),

"Restrictions on Short Sales An Analysis of the Uptick Rule and its Role inView of the October 1987 Stock Market Crash" 74 Cornell Law Review 799(with Mark Mitchell and Jeffiy Nettar 1989),

"Externalities, Finn-Specific Capital Investments, and the Legal Treatment ofFundamental Corporate Changes" 1989 Mm LOT JfrmMll 173 (1989),

"The Political Science of Regulating Bank Risk" 49 Ohio State TJW Journal 1277(1989),

11

"The Myth of 'Re-Regulation1 The Interest Group Dynamics of RegulatoryChange in the Financial Services Industry" 45 Washington A Lee Law Review1275(1989),

"Public Choice The Theory of the Finn and the Theory of Market Exchange11 74Cornell Law Review 43 (1989),

"How Separation of Powers Protects Individual Liberties" 41 Rutgers LawBevjfis 813 (1989),

o TTieC^cken Wars as a Prisoners' DUemma What is in a Game?" 64 NotreY Dame Law Review 447 ( 19891 (review of John A C Convbeare. Trade Wan

The Theory **$ Prpcnce of Tiflfointitifl™1^ Co""^grcial Rivalry}»--tr ,j "The Dangers of Pop Thinking About Japan" 22 Cornell Journal of lnternfftignfl*-T Law 623 (1989) (review of Daniel Burstein, Yen* Japan's Ny* ^HfinTl?! ErFffTn1*^ apd its Threat to AmencaXO', "The Internal and External Costs and Benefits of Stare Decisia" 65 Chicago-Kent

Law Review 93 (Special Symposium Issue on Post-Chicago Law and Economics,1989),

"Trans Union Reconsidered" 98 YflkLinvJo^fll 127 (with Geoffrey P Miller1988),

"The Missing Element in the Republican Revival" 97 Yft|ff|frfflw1

f?"Ffl 1673(1988).

"Bank Failures, Risk Monitoring and the Market for Bank Control" 88 ColumbiaLaw Review 1 153 (with Geoffrey P Miller 1988),

"The Myth of Competition in the Dual Banking System" 73 Cornell Law Review677 (with Henry N Butler 1988),

"State Anti-Takeover Statutes Good Politics, Bad Economics" 1988 S&sc£BSBLaw Review 467 f!988\

"Ethics, Economies and Insider Trading Ayn Rand Meets the Theory of theFirm" 1 1 Hajvajfl Joinr"»i of LflW UPd PuMlff Policy 785 (1988),

"Alan Bloom and the American Law School" 73 Cornell Law Review 1038(1988) (review of Alan Bloom, Htf dffJIflg ftf tfaff AflMifflUi Mlllfti

"The Private Creation of Private Trusts" 37 FrmffTY TffPY fftmfll 295 (1988),

12

"From Judicial Solutions to Political Solutions The New, New Direction of theRules Against Insider Trading" 39 AMfflPIP Tflw Review 355 (1988 SYmpOBgjprepnntcd 30 Corporate Practice Commentator 459 (1989),

"Transaction Costs and the Normative Elements of the Public Choice Model Anapplication to Constitutional Theory" 74 Vfrnni Lfiw Review 471 (1988

"Market Discipline by Depositors A Summary of the Theoretical and EmpiricalArguments" 5 Yale Journal on. RfffV]fltOT 21 5 (with Elizabeth H Garrett 1988),

t~t*;.? "Regulation on Demand Special Interest Groups and Insider Trading Law" 30O .T^WUl! of Law an/fl F-^ponucs 311 (with David D Haddock 1987)Ml

' H "Competing Economic Views of the Constitution" 56 George^ Review 50 (1 987 Symposium).

o "Regulation 13D and the Regulatory Process" 65 Washington University Law«- Quarterly 131 (with Jeffiy M Netter 1987

"Takeover Defensive Tactics and Legal Scholarship Market Forces vs thePolicymaker's Dilemma" 96 Yfllff LftW fagml 342 (1987),

"A Coasian Model of Insider Trading" 88 Northwestern Law Review 1449 (withDavid D Haddock 1987),

"Toward An Interest Group Theory of Delaware Corporate Law" 65 Texas LawReview 469 (with Geoffiey P Miller 1987),

"Property Rights in Assets and Resistance to Tender Offers" 73 Virginia LawReview 701 (with David D Haddock and Fred S McChesney 1987),

"Promoting Public-Regarding Legislation Through Statutory Inteipietauon AnInterest Group Model" 86 Columbia Law Review 223 (1986),

"ESOP's and Market Distortions" 23 Harvard JoujH ™1 I-fBlfrrUvfl 103 (withRichard L Doemberg 1986),

"From Fairness to Contract The New Direction of the Rules Against InsiderTrading" 14 Hofirtra LfPf ReYlffTtf ^ ^1M^ SYTOffffM11^- reprinted in 18 SecnntieaLaw Review H9861.

"A Theoretical Analysis of Corporate Greemnail" 95 YfllffLtP^mnul 13 (withFred S. McChesney 1985),

13

"Controlling binder Trading in Europe and America The Economics of thePolitics" (with David D Haddock) (1986), in Law and Economics and theEconomics of Regulation 149 (International Studies in Economics andEconometrics, Volume 13, Kluwer Academic Publishers),

"Shirking at the SEC The Failure of the National Market System" University ofnimois Law Review. 315 (with David Haddock 198S),

"Specid Interest Groups I^gislanon and the Judicial Function The Dilemma ofGlass-SteagalT 33 EmPTY LflW t ffUfTflll 1 (1984), Reprinted in 17 Securities Law

} Bogs 401 (1985),*xn "Toward a New Pedagogy" (Review of Loss, fvmflr?'7nfr'g of Secunfaeg"i RffgVlfltTftn) M Yalc Law Journal 1 173 f 19841

vs "Cases and Materials on Corporations Including Partnerships and LimitedO Liabihty Compames," (TlionMon*West, co Hamilton)'M

"Macey on Corporation Laws" (2 volume treatise), originally published in 1998,updated annually, Aspen Law & Business,

"Costly Policies State Regulation and Antitrust Exemption in InsuranceMarkets" (with Geoffrey P Miller, Hie AEI Press 1993),

"SvenskAkneboIagsRattlOmvandbng En Rattsekonomisk Analys" (SwedishCorporate Law in Transition A Law and Economics Analysis (published inSwedish and English by SNS Forlag 1993),

"Banking Law and Regulation Cases and Materials11 (Aspen Law &Busecond edition, 1997) with Geoffrey P Miller, (first addition, Little Brown andCo, 1992),

"Third Party Legal Opinions Evaluations and Analysis" (Prentice Hall Law andBusiness. 1992),

"Insider Trading Economics, Politics, and Policy" (The AEI Press, 1991),

"An Introduction to Modern Financial Theory" (The American College of Trustand Estate Council Foundation (1991)

MigoeHmaomPublications

14

"From Orders to Markets Who Should Decide What is 'Best Execution'"Regulation. Vol 28, No 2, Summer 2005

MA Misguided Proposal to Regulate Risk-Taking" (letter) The Wall Street Journal.Tuesday, April 5,2005

"A Risky Proposition" (book review) The Wall Street Journal. Tuesday, March15,2005,

^ "How Does the SEC Arrive at its Fines Against Corporate Wrongdoers" June 21,v:r 2004. Forbes.aN ii "Securities and Exchange Nanny" The ^yall Street JffyjnaJi Tuesday, December>H 29.2003.A10,'K-J

^ "Public Choice and the Law "In The New Palgrave Dictionary of Economics andQ the Law, Vol 3 P Newman, ed New York Stockton (1998)•X'1 * "A Poison Pill That Shareholders Can Swallow" The Wall Street Journal,

Monday, May 4, 1998,

"A Critical Test of Corporate Governance" Thff l OS Aftpete Times. Sunday*February 22, 1998, M2,

"Shareholder Rights Will Be Next Battleground" The N"ftqr»| [,-TIW Journal.Monday, February 16, 1998,

"Will Euro's Heat Make U S Funs Wilt?" The National Law Journal. Monday,September 1, 1997

"Banking, A Reform PI*?1 that Leaves Consumers Out" The Log Angeles,Sunday, Mayl8, 1997,

"Fed Does End Run on Glass-SteagaU" Hyp WVfl1 [f w MTPflfi Monday, April28, 1997,

"Blame Managers, Not Derivatives" Thff NatiPMl LffY f ffTiBMl Monday, August26,1996,

"Wealth Creation as a 'Sin'," XVH The Journal ofCornorate Go vernflnce 12(1996), reprinted in TndffifflldBIt PffllffY RffOTtf Independent Institute (1996),

"Appeals Court Decision Validates Shady Deals" The Nati«""i Law Jour*"!Monday, September 25, 1995,

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"The Court Oeta It Half Right on Finea" The WaU Street Journal Wednesday.September 13, 1995,

"Thg Lowdown on Lfnding PMcniff|FM*|m>* TheWednesday, August 9, 1995,

"Hie '80s Villain, Vindicated" The Wall Street Journal. July 18, 1995,

"A Poison Pill to Destroy Banking Reform" The Wall Street Journal. Wednesday,June?. 1995,

',':[ "Banking by Quota" TTie Wall Street Journal. Wednesday, September 7, 1994,ON c "Mutual Banks Take Your Money and Run" The Wall Street Journal. Wednesday,-I December 29, 1993,'--i^ "Porkbarrel Banking" The Wall Street Journal. Monday, July 19, 1993,

£ "Not All Pro Bono Work Helps the Poor" The Wall Street Journal. Wednesday.•M December 30, 1992,

TsladenteMoashacka Lose Control Over Corporate Law" The WaU StreetJournal. Wednesday, June 24, 1992,

"Needless Nationalization at the FDIC" The Wall Street Journal Friday, February14, 1992,

"The SEC Dinosaur Expands its Turf Tfrf U^flU Street JoiirfH, Wednesday,January 29, 1992,

"Dont Blame Salomon, Blame the Regulators" The Wall Sfrryt JftmuBl- Monday,August 19, 1991,

"In Wake of Bailout, Why are we Rewarding Banks7" The Log Angeles Times.Sunday, July 14, 1991,

"While Politicians Fiddle Pinking Crises Explode" The Los Angeles Times.Sunday, September 23, 1990,

•SAL Bailout Plan Victim of Hysteria" The Wall Street Journal Monday. June25,1990,

"A Good Idea Gone Sour r^n n«nir IMIUMIM F«IT"Sunday, June 24, 1990,

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"It's Time for Bush to Pav the Finer on the SAL Bailout" The Los AngeleaTiSunday, April 22, 1990,

The Politics of Denying an SAL Crisis11 Tiff Lv? Ancles Times. Sunday,December 10, 1990,

"Savings and Loan Regulations Create 'Win- Win' Situation for Risk Taken" TheLog Angeles Times. Sunday, February 5, 1989,

"Hie SEC's Insider Trading Proposal Good Politics, Bad Policy" Catolqsfttute101- March 31, 1988,

•3TQ "Market for Corporate Control" The Wall Street Journal. Friday, March 4, 1 988,"

* •» "Senators Would Shoot SEC Messengers" The Wall Sijppet Joyf^L Thursday,^ September 10, 1987,<3TO "SEC Vigilant Against Insider Trading -But is it Within Law1? TooStncta<..o Crackdown Will Harm Markets" The Wall Street Journal. Wednesday, May 28,' 1986,

"Financial Planners - A New Professional Cartel?" The Wall Street Journal.Tuesday, October 31, 1985,

"Conservative Judgment Tune" The Wall Stmfr J?»m|r Friday, August 23, 1985,

"Introduction" to Volume V (1989) of the BHpig Irflw Anthology.

Remarks at Symposium on the First Amendment and Federal SecuritiesRegulation, 20 Conn<^ticiit Law Review (assorted pages) 1 988,

Remarks at Colloquium on the ALI Corporate Governance Project, 7 1 CornellLaw Review (assorted pages) (1986),

" A Conduct Oriented Approach to the Qlass-SteagaU Act" 91 Yale Law Journal102 (1981) (published as a student)

17

Activities Chair, Association of American Law Schools Section on Legal Scholarship

Executive Committee, Association of American Law Schools Section onCorporate Law,

Member, American Law Institute,

Academic Advisory Board Committee, the R«"i"ng Law Anthology,»vy

' Academic Advisory Board, The Social Philosophy a^\fl Pohcv Center.m».«4 Board of Editors. Journal

VJ Board of Editors, Jour"*! f Bgnjgng LflTYrj

#"-, Board of Editors, Jour"*!

Board of Editors, Corporate

Sam Hams Professor of Corporate Law, Securities Law and Corporate Finance,Yale University, 2004 - present

J DuPratt White Professor of Law, Cornell Law School, 1991-2004,

Visiting Professor of Law, Yale University, 2003-2004,

Member, Board of Directors, Telxon Corporation, 1998- 1999 (appointed asdissident director in settlement of proxy contest dispute), Director nomineeRexene Corporation, 1999, Circon Corporation, 1998, Arvin Mentor, Inc 2004)

Visiting Professor, Faculty of Law, Stockholm School of Economics, fell, 1993,

Research Fellow, International Centre for Economic Research, Turin Italy, winter,1993. spring, 1994,

Professor of Law (with tenure), University of Chicago, 1990-1991,

Professor of Law, (with tenure), Cornell University, 1987-1990,

Visiting Professor of Law, The University of Chicago, fell quarter, 1989-1990,

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Visiting Professor, University of Tokyo Faculty of Law, summer, 1989,

Visiting Associate Professor of Law, University of Virginia, 1986-1987,

Assistant to Associate Professor of Law, Emory University, 1983-1986,

Law Clerk to the Honorable Henry J Friendly, United States Court of Appeals,Second Circuit, 1982-1983 term of court,

Consultant, Municipal Finance Department; Lloyd Bush & Associates, New,. York, NY (consultant representing municipalities and investment banks before<-T credit rating agencies (1978-1 979)),o"i Municipal Bond Trader, Bankers Trust Company, New York, NY (1977-1978)

O

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