           5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
                3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

        (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                    )LOH 1DPH DS




81,7('67$7(6&28572)$33($/6
                   )257+(6,;7+&,5&8,7
                     BBBBBBBBBBBBBBBBB


 81,7(' 67$7(6 2) $0(5,&$ ;
            3ODLQWLII$SSHOOHH 
   &URVV$SSHOODQW 
                                              1RV
                                              
            Y                    !
                                 
                                 
 s2( 6$%,12            
 '$1,(/ . 67(:$57               
  '211$ *             
 67(:$57              
                                 
       'HIHQGDQWV$SSHOODQWV 
               &URVV$SSHOOHHV 1

          $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
         IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL
        1Rn+HUPDQs:HEHU'LVWULFWsXGJH
                  $UJXHG6HSWHPEHU
             'HFLGHGDQG)LOHG'HFHPEHU
  %HIRUH'$8*+75(<DQG*,/0$1&LUFXLWsXGJHV
             &2+16HQLRU'LVWULFWsXGJH



    
     7KH +RQRUDEOH $YHUQ &RKQ 6HQLRU 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU
WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ



                                    
     8QLWHG6WDWHVY           1RV           1RV                8QLWHG6WDWHVY      
      6DELQRHWDO                                                                                                6DELQRHWDO

                     BBBBBBBBBBBBBBBBB                                 DQ\SK\VLFDOWKUHDWWRRWKHUVWKHDEVHQFHRIDULVNRIIOLJKW
                                                                       DQG WKH FRQFOXVLRQ WKDW 6DELQR SOD\HG D PLQRU UROH LQ WKH
                           &2816(/                                     FRQVSLUDF\7KHGLVWULFWFRXUWQRWHGWKDWWKLVRFFDVLRQZDVWKH
                                                                       VHFRQGWLPHVLQFHWKDWLWKDGGRZQZDUGGHSDUWHGLQD
$5*8('  5LFKDUG sRKQ 'RQRYDQ 5,&+$5' s                        FDVH7KHJRYHUQPHQWFLWHV7RFFRWRVXSSRUWLWVDUJXPHQWIRU
'2129$1	$662&,$7(6&ROXPEXV2KLR&KDUOHV(                       UHYHUVDO RI WKH GLVWULFW FRXUWjV GHWHUPLQDWLRQ  ,Q 7RFFR
0F)DUODQG &DPSEHOOVEXUJ .HQWXFN\ IRU $SSHOODQWV                KRZHYHUWKHFRXUWUHYHUVHGDWHQOHYHOGHSDUWXUHEDVHGXSRQ
*UHJRU\9'DYLV81,7('67$7(6'(3$570(172)                          WKHWRWDOLW\RIWKHIROORZLQJFLUFXPVWDQFHVWKHGHIHQGDQWjV
s867,&( $33(//$7( 6(&7,21 7$; ',9,6,21                          RYHUZKHOPLQJ FRPPXQLW\ VHUYLFH DQG VXSSRUW WKH
:DVKLQJWRQ'&IRU$SSHOOHH21%5,()5LFKDUGsRKQ               GHIHQGDQWjVDJHDQGGHELOLWDWLQJKHDOWKDQGWKHGHIHQGDQWjV
'RQRYDQ 5,&+$5' s '2129$1 	 $662&,$7(6                         ZLIHjVSRRUKHDOWK7RFFR)GDW%\DQDORJ\WKH
&ROXPEXV 2KLR &KDUOHV ( 0F)DUODQG &DPSEHOOVEXUJ              GLVWULFWFRXUWLQWKHFDVHDWEDUGHSDUWHGRQO\WKUHHOHYHOVZLWK
.HQWXFN\ IRU $SSHOODQWV  *UHJRU\ 9 'DYLV 5REHUW (         WKHLQFOXVLRQRIPRUHIDFWRUV$OWKRXJKPRVWRIWKHIDFWRUVLQ
/LQGVD\ $ODQ +HFKWNRSI 81,7(' 67$7(6                             WKH FDVH DW EDU GR QRW RUGLQDULO\ ZDUUDQW D GHSDUWXUH WKH
'(3$570(17 2) s867,&( $33(//$7( 6(&7,21                          GLVWULFW FRXUW FRQFOXGHG WKDW WKHLU FRQIOXHQFH FRPSHOOHG D
7$;',9,6,21:DVKLQJWRQ'&IRU$SSHOOHH                          GHSDUWXUH'XHWRWKHUHODWLYHVPDOOGHSDUWXUHZHILQGWKDW
                                                                       WKHGLVWULFWFRXUWGLGQRWDEXVHLWVGLVFUHWLRQLQWKHGHSDUWLQJ
                     BBBBBBBBBBBBBBBBB                                 GRZQZDUGRI6DELQRjVRIIHQVHOHYHOE\WKUHHOHYHOV
                         23,1,21                                                             ,,,&21&/86,21
                     BBBBBBBBBBBBBBBBB
                                                                         )RUWKHUHDVRQVVWDWHGDERYHZHILQGWKHUHLVQREDVLVRQ
  $9(51&2+16HQLRU'LVWULFWsXGJH'HIHQGDQWV'DQLHO                ZKLFKWRUHYHUVHWKHGHIHQGDQWVjFRQYLFWLRQVRUWKHPDMRULW\
6WHZDUW0U6WHZDUW'RQQD6WHZDUW0UV6WHZDUWDQGsRH           RIWKHGLVWULFWFRXUWjVVHQWHQFLQJGHWHUPLQDWLRQV+RZHYHU
6DELQR6DELQRFROOHFWLYHO\WKHGHIHQGDQWVZHUHFRQYLFWHG           ZHILQGWKDWWKHGLVWULFWFRXUWHUUHGLQIDLOLQJWRHQKDQFHHDFK
RIFRQVSLUDF\WRGHIUDXGWKH8QLWHG6WDWHVE\REVWUXFWLQJWKH          RIWKHGHIHQGDQWjVRIIHQVHOHYHOIRUHQJDJLQJLQmVRSKLVWLFDWHG
IXQFWLRQVRIWKH8QLWHG6WDWHV,QWHUQDO 5HYHQXH6HUYLFHLQ            PHDQVlDQGLQUHGXFLQJ6DELQRjVRIIHQVHOHYHOIRUPLQRUUROH
YLRODWLRQ RI  86&    7KH 6WHZDUWV ZHUH DOVR        7KHUHIRUHWKHMXGJPHQWRIWKHGLVWULFWFRXUWLV$)),50('LQ
FRQYLFWHGRIWD[HYDVLRQLQYLRODWLRQRI86&           SDUW DQG 5(9(56(' LQ SDUW DQG 5(0$1'(' IRU UH
                                                                       VHQWHQFLQJFRQVLVWHQWZLWKWKLVRSLQLRQ
   7KH6WHZDUWVDSSHDOWKHLUFRQYLFWLRQVUDLVLQJWKHIROORZLQJ
LVVXHVZKHWKHUWKH6SHHG\7ULDO$FWZDVYLRODWHGZKHWKHU
WKHLU )LIWK $PHQGPHQW ULJKW WR UHPDLQ VLOHQW ZDV YLRODWHG
ZKHQWKHLUIDLOXUHVWRILOHWD[UHWXUQVZHUHFKDUJHGDVRYHUW
DFWV LQ WKH LQGLFWPHQW DQG LQWURGXFHG DV HYLGHQFH DW WULDO
ZKHWKHUWKHGLVWULFWFRXUWHUUHGLQDOORZLQJDQ,56HPSOR\HH
WRWHVWLI\DVDVXPPDU\ZLWQHVVIRUWKHJRYHUQPHQWZKHWKHU
WKHMXU\ZDVSURSHUO\LQVWUXFWHGDQGZKHWKHUWKHLUQHWZRUWK
FDOFXODWLRQZDVHUURQHRXV
       8QLWHG6WDWHVY            1RV               1RV                8QLWHG6WDWHVY      
         6DELQRHWDO                                                                                                     6DELQRHWDO

FRXOG GLVWLQJXLVK D FDVH IURP WKH µKHDUWODQGj RI FDVHVl                 6DELQR DSSHDOV KLV FRQYLFWLRQ DUJXLQJ WKDW WKHUH ZDV
8QLWHG6WDWHVY&ROHPDQ)GWK&LU                    LQVXIILFLHQWHYLGHQFHWRFRQYLFWKLPRIFRQVSLUDF\WRGHIUDXG
HQEDQFFLWLQJ866*.FPW7KXVDVHQWHQFLQJ                  WKH8QLWHG6WDWHVLQYLRODWLRQRI86&
FRXUWLVmUHTXLUHGWRFRQVLGHUWKHSDUWLFXODUIDFWRUVRI>D@FDVH
DV D ZKROH DQG DQ\ FRPELQDWLRQ WKHUHRI LQ GHWHUPLQLQJ                  7KH JRYHUQPHQW FURVVDSSHDOV WKH GLVWULFW FRXUWjV
ZKHWKHUWKHUHZHUHVXIILFLHQWH[WUDRUGLQDU\IDFWRUVWRWDNH>D                 VHQWHQFLQJ GHFLVLRQV LQFOXGLQJ IDLOLQJ WR HQKDQFH 0UV
GHIHQGDQWjV@FDVHRXWRIWKHµKHDUWODQGjRIFDVHVl,GDW              6WHZDUWjV DQG 6DELQRjV RIIHQVH OHYHOV IRU REVWUXFWLRQ RI
+RZHYHUDGHSDUWXUHPXVWEHmUHDVRQDEOHLQWHUPVRI                     MXVWLFHIDLOLQJWRHQKDQFHHDFKGHIHQGDQWjVRIIHQVHOHYHOIRU
WKH DPRXQW DQG WKH H[WHQW RI WKH GHSDUWXUH LQ OLJKW RI WKH          VRSKLVWLFDWHGFRQFHDOPHQWUHGXFLQJ6DELQRjVRIIHQVHOHYHO
UHDVRQVIRUWKHGHSDUWXUH,QRWKHUZRUGVWKHUHDVRQV             IRU D PLQRU UROH LQ WKH RIIHQVH DQG JUDQWLQJ 6DELQR D
>PXVW@MXVWLI\WKHPDJQLWXGHRIWKHGHSDUWXUHl8QLWHG6WDWHV                 GRZQZDUGGHSDUWXUH
Y7RFFR)GWK&LUFLWLQJ8QLWHG
6WDWHVY&URXVH)GWK&LU                            )RUWKHUHDVRQVWKDWIROORZWKHGHIHQGDQWVjFRQYLFWLRQV
                                                                               ZLOOEHDIILUPHG:HILQGKRZHYHUWKDWWKHGLVWULFWFRXUW
  7KHGLVWULFWFRXUWGRZQZDUGGHSDUWHGRQ6DELQRjVRIIHQVH                     HUUHGLQJUDQWLQJ6DELQRDPLQRUUROHUHGXFWLRQDQGLQIDLOLQJ
OHYHOE\WKUHHOHYHOVVRDVWRVHQWHQFHKLPWRSUREDWLRQ7KH                WR HQKDQFH WKH 6WHZDUWVj DQG 6DELQRjV RIIHQVH OHYHOV IRU
GLVWULFWFRXUWEXWWUHVVHGLWVGHSDUWXUHEDVHGRQWKHWRWDOLW\RI               VRSKLVWLFDWHG FRQFHDOPHQW  7KHUHIRUH WKH VHQWHQFLQJ
WKHIROORZLQJFLUFXPVWDQFHVWKHGHDWKRI6DELQRjVZLIHD                     GHWHUPLQDWLRQVZLOOEHDIILUPHGLQSDUWDQGUHYHUVHGLQSDUW
IHZPRQWKVEHIRUHVHQWHQFLQJ6DELQRjVDJHDWWKHWLPH                    DQGWKHFDVHZLOOEHUHPDQGHGIRUUHVHQWHQFLQJFRQVLVWHQW
RI VHQWHQFLQJ KLV SK\VLFDO GHILFLHQFLHV DQG FRQGLWLRQ                  ZLWKWKLVRSLQLRQ
SDUWLFXODUO\DLOPHQWVZLWKKLVH\HVDQGHDUVWKHDEVHQFHRI
                                                                                                     ,%$&.*5281'
                                                                                                  $)DFWXDO%DFNJURXQG
     
      7KH FRPPHQWDU\ WR 866*  . SURYLGHV
                                                                                 ,QWKH&ULPLQDO,QYHVWLJDWLRQ'LYLVLRQRIWKH,QWHUQDO
     7KH &RPPLVVLRQ GRHV QRW IRUHFORVH WKH SRVVLELOLW\ RI DQ                   5HYHQXH6HUYLFHFRQGXFWHGDQLQYHVWLJDWLRQRI3KLOOLS0DUVK
     H[WUDRUGLQDU\ FDVH WKDW EHFDXVH RI D FRPELQDWLRQ RI VXFK                 WKH IRXQGHU RI DQ RUJDQL]DWLRQ FDOOHG WKH 3LORW &RQQHFWLRQ
     FKDUDFWHULVWLFV RU FLUFXPVWDQFHV >QRW RUGLQDULO\ UHOHYDQW WR D            6RFLHW\ 3&6 ZKLFK DPRQJ RWKHU DFWLYLWLHV LQVWUXFWHG
     GHSDUWXUH@ GLIIHUV VLJQLILFDQWO\ IURP WKH µKHDUWODQGj FDVHV
     FRYHUHG E\ WKH JXLGHOLQHV LQ D ZD\ WKDW LV LPSRUWDQW WR WKH
                                                                               LQGLYLGXDOV RQ PHWKRGV WR DYRLG SD\LQJ IHGHUDO DQG VWDWH
     VWDWXWRU\ SXUSRVHV RI VHQWHQFLQJ HYHQ WKRXJK QRQH RI WKH
                                                                               LQFRPHWD[HV7KURXJKWKHH[HFXWLRQRIDVHDUFKZDUUDQWRQ
     FKDUDFWHULVWLFV RU FLUFXPVWDQFHV LQGLYLGXDOO\ GLVWLQJXLVKHV WKH           0DUVKjV UHVLGHQFH DQG SURSHUW\ WKH ,56 REWDLQHG D OLVW RI
     FDVH +RZHYHU WKH &RPPLVVLRQ EHOLHYHV WKDW VXFK FDVHV ZLOO EH            SHRSOHZKRZHUHDIILOLDWHGZLWKWKH3&67ZRRIWKHSHRSOH
     H[WUHPHO\ UDUH                                                           RQWKHOLVWZHUHGHIHQGDQWV'DQLHODQG'RQQD6WHZDUW7KH
                                                                              6WHZDUWV RZQHG DQG RSHUDWHG 'DQFR 7UDQVPLVVLRQ ,QF
       $ VHQWHQFLQJ FRXUW PD\ JUDQW D GHIHQGDQW SUREDWLRQ XQGHU  %       'DQFRLQWKH&LQFLQQDWL2KLRDUHDVLQFH
:LWKRXW WKLV GHSDUWXUH DW WKH WLPH RI KLV VHQWHQFH 6DELQR ZDV DW OHYHO 
*LYHQ RXU ILQGLQJV WKDW 6DELQR ZDV QRW HQWLWOHG WR D UHGXFWLRQ LQ RIIHQVH
OHYHO IRU PLQRU UROH DQG VKRXOG KDYH KDG KLV RIIHQVH OHYHO HQKDQFHG IRU
                                                                                 %HFDXVHRIWKHLUFRQQHFWLRQZLWK3&6WKH&LYLO'LYLVLRQRI
VRSKLVWLFDWHG PHDQV 6DELQRjV RIIHQVH OHYHO LV  ZLWKRXW WKH GHSDUWXUH DW
                                                                               WKH,56LQYHVWLJDWHGWKH6WHZDUWVjFRPSOLDQFHZLWKIHGHUDO
LVVXH                                                                         WD[ODZVDQGGLVFRYHUHGLQWKDWWKH\ZHUHRYHUGXHLQ
     8QLWHG6WDWHVY           1RV            1RV                  8QLWHG6WDWHVY      
      6DELQRHWDO                                                                                                   6DELQRHWDO

VXEPLWWLQJ WKHLU  WD[ UHWXUQ  7KH ,56 TXHULHG WKH         GRZQZDUGIURPDVHQWHQFLQJUDQJHZKHQWKHUHLVDPLWLJDWLQJ
6WHZDUWV DERXW WKHLU IDLOXUH WR ILOH WKH WD[ UHWXUQ  7KH     IDFWRUWKDWKDVQRWEHHQDGHTXDWHO\FRQVLGHUHGLQIRUPXODWLQJ
6WHZDUWVUHVSRQGHGE\mUHYRNLQJlWKHLUWD[UHWXUQVIURP            WKH6HQWHQFLQJ*XLGHOLQHV86&E866*
WRDGHFODUDWLYHDFWZKLFKKDGQRVXEVWDQWLYHHIIHFWRQ           .$VHQWHQFLQJFRXUWjVGHFLVLRQWRGHSDUWGRZQZDUG
WKHLUWD[REOLJDWLRQV$VHULHVRIOHWWHUVHQVXHGEHWZHHQWKH         LVUHYLHZHGIRUDQDEXVHRIGLVFUHWLRQ6HH.RRQY8QLWHG
,56DQGWKH6WHZDUWVGXULQJZKLFKWKH6WHZDUWVVHQWWKH,56            6WDWHV86:KHWKHUDVWDWHGJURXQGIRU
DQWLWD[LQIRUPDWLRQREWDLQHGWKURXJKWKHLUFRQQHFWLRQZLWK             GHSDUWXUH LV D SHUPLVVLEOH EDVLV LV D TXHVWLRQ RI ODZ
3&6DQGRWKHUVRXUFHV7KH6WHZDUWVHYHQWXDOO\ILOHGWKHLU             UHYLHZDEOHGHQRYR6HHLGDW
 LQFRPH WD[ UHWXUQ EXW WKH\ GLG QRW ILOH DQ\ SHUVRQDO
LQFRPHWD[UHWXUQVIRUWKH\HDUVDQG               %HIRUHDGHSDUWXUHLVDXWKRUL]HGWKHVHQWHQFLQJFRXUWPXVW
'DQFRDOVRIDLOHGWRILOHFRUSRUDWHWD[UHWXUQVLQ          GHHPWKHFLUFXPVWDQFHVRIWKHFDVHVXIILFLHQWO\DW\SLFDODQG
DQG                                                               RXWVLGHWKHKHDUWODQGRIFDVHV6HHLGDW7RGHWHUPLQH
                                                                        ZKHWKHU D IDFWRU ZKLFK WDNHV D FDVH RXWVLGH WKH KHDUWODQG
  7KH,56WKHQFRPPHQFHGDFULPLQDOLQYHVWLJDWLRQRIWKH                VKRXOGUHVXOWLQDGLIIHUHQWVHQWHQFHDGLVWULFWFRXUWPXVWILUVW
6WHZDUWV  7KH LQYHVWLJDWLRQ HVWDEOLVKHG WKDW LQ  WKH      GHFLGH ZKHWKHU WKH IDFWRU LV IRUELGGHQ HQFRXUDJHG
6WHZDUWV FORVHG DOO RI WKHLU SHUVRQDO FKHFNLQJ DQG VDYLQJV      GLVFRXUDJHGRUXQDGGUHVVHGE\WKHJXLGHOLQHVDVDSRWHQWLDO
DFFRXQWVUHGHHPHGFHUWLILFDWHVRIGHSRVLWDQGSDLGRIIORDQV          EDVLV IRU GHSDUWXUH  6HH LG  ,I D IDFWRU LV IRUELGGHQ D
,QDGGLWLRQLQWKH\GLVVROYHG'DQFRSXUVXDQWWR2KLR             VHQWHQFLQJ FRXUW DEXVHV LWV GLVFUHWLRQ LQ XVLQJ LW WR GHSDUW
ODZ'DQFRKRZHYHUFRQWLQXHGWRRSHUDWH,QUHOLDQFHRQ             IURP WKH 6HQWHQFLQJ *XLGHOLQHV  6HH LG  ,I D IDFWRU LV
WKH 3&6 mXQWD[l LQVWUXFWLRQV WKH 6WHZDUWV FUHDWHG VHYHQ         HQFRXUDJHGDVHQWHQFLQJFRXUWPD\GHSDUWLIWKH6HQWHQFLQJ
SULPDU\ WUXVWV DQG WUDQVIHUUHG DOO RI WKHLU DVVHWV LQFOXGLQJ   *XLGHOLQHVGRQRWDOUHDG\WDNHWKDWIDFWRULQWRDFFRXQW6HH
'DQFRWRWKHWUXVWV(YLGHQFHDWWULDOVKRZHGWKDWWKHWUXVWV         LG  ,I D IDFWRU LV GLVFRXUDJHG RU LV DQ HQFRXUDJHG IDFWRU
SDLGWKHSHUVRQDODQGEXVLQHVVH[SHQVHVRIWKH6WHZDUWVDQG             DOUHDG\FRQVLGHUHGE\WKH6HQWHQFLQJ*XLGHOLQHVDVHQWHQFLQJ
ZHUHXVHGWRSXUFKDVHYDULRXVSHUVRQDOLWHPVIRUXVHE\WKH             FRXUW PD\ GHSDUW RQO\ mLI WKH IDFWRU LV SUHVHQW WR DQ
6WHZDUWVDQGWKHLUIDPLO\7KHUHZDVQRHYLGHQFHDWWULDOWKDW         H[FHSWLRQDO GHJUHH RU LQ VRPH RWKHU ZD\ PDNHV WKH FDVH
WKH,56UHFHLYHGDQ\RIWKHUHTXLVLWHSDSHUZRUNFRQFHUQLQJ              GLVWLQJXLVKDEOH IURP DQ RUGLQDU\ FDVH ZKHUH WKH IDFWRU LV
WKHWUXVWVQRILGXFLDU\LQFRPHWD[UHWXUQVZHUHILOHGRQEHKDOI        SUHVHQWl,G)LQDOO\DGLVWULFWFRXUWPD\GHSDUWRQWKHEDVLV
RIWKHWUXVWVIURPWR                                        RIDIDFWRUQRWDGGUHVVHGE\WKH6HQWHQFLQJ&RPPLVVLRQLILW
                                                                        ILQGVmDIWHUFRQVLGHULQJWKHVWUXFWXUHDQGWKHRU\RIUHOHYDQW
   'XULQJWKH\HDUVWKHWUXVWVmH[LVWHGlWKH6WHZDUWVDVNHG            LQGLYLGXDOJXLGHOLQHVDQGWKH>6HQWHQFLQJ@*XLGHOLQHVWDNHQ
UHODWLYHVIULHQGVDQGHPSOR\HHVRI'DQFRWRVHUYHDVWUXVWHHV         DVDZKROHlWKDWWKHIDFWRUWDNHVWKHFDVHRXWRIWKHDSSOLFDEOH
RIWKHWUXVWV7KHQRPLQDOWUXVWHHIRUHDFKRIWKHWUXVWVRIWHQ        JXLGHOLQH
VKHDUWODQG,GDW$GLVWULFWFRXUWGHSDUWLQJRQ
FKDQJHG  (YLGHQFH DW WULDO HVWDEOLVKHG WKDW PDQ\ RI WKH       WKHEDVLVRIDQXQHQXPHUDWHGIDFWRUKRZHYHUVKRXOGmEHDULQ
WUXVWHHVGLGQRWNQRZWKHQDWXUHRIDWUXVWRUFRXOGQRWH[SODLQ        PLQG WKH &RPPLVVLRQ
V H[SHFWDWLRQ WKDW >VXFK@
WKHQDWXUHRIWKHLUUHVSRQVLELOLWLHVDVWUXVWHH6RPHWUXVWHHV         GHSDUWXUHVZLOOEH
KLJKO\LQIUHTXHQW
,GDWTXRWLQJ
LQGLFDWHGWKDW0UV6WHZDUWJXLGHGWKHGDLO\RSHUDWLRQVRIWKH          866*FKSW$
WUXVWV7KHHYLGHQFHVKRZHGWKDW6DELQRVHUYHGDVWKHWUXVWHH
IRUVHYHUDORIWKHWUXVWVDQGKLVVLJQDWXUHRUVLJQDWXUHVWDPS           $VDSDQHORIWKLVFRXUWKDVVDLGWKH*XLGHOLQHVmH[SOLFLWO\
                                                                        DFNQRZOHGJH WKDW D FRPELQDWLRQ RU DJJUHJDWLRQ RI IDFWRUV
       8QLWHG6WDWHVY        1RV            1RV                8QLWHG6WDWHVY      
         6DELQRHWDO                                                                                              6DELQRHWDO

DSSO\LQJ  & HQKDQFHPHQW IRU DGGLWLRQDO REVWUXFWLYH          DSSHDUHGRQPDQ\RIWKHGRFXPHQWVUHJDUGLQJWUDQVDFWLRQV
FRQGXFWFRPPLWWHGDIWHUXQGHUO\LQJRIIHQVH8QLWHG6WDWHVY           XQGHUWDNHQE\WKHWUXVWV
$JRUR  )G   VW &LU  VDPH
8QLWHG6WDWHVY/XHGGHNH)GWK&LU                                 %3URFHGXUDO%DFNJURXQG
VDPH
                                                                          $ IHGHUDO JUDQG MXU\ UHWXUQHG DQ LQGLFWPHQW DJDLQVW WKH
   $QDO\VLVRIWKHWULDOFRXUWUHFRUGHVWDEOLVKHVWKDWLPSRVLQJ         6WHZDUWVRQ$SULODQGDVXSHUFHGLQJLQGLFWPHQWRQ
D&HQKDQFHPHQWLQWKLVFDVHZRXOGFRQVWLWXWHGRXEOH             sXQH   DGGLQJ 6DELQR DV D GHIHQGDQW  7KH
FRXQWLQJ,QDUJXLQJIRUDSSOLFDWLRQRIWKHHQKDQFHPHQWWR             VXSHUFHGLQJLQGLFWPHQWFKDUJHG6DELQRDQGWKH6WHZDUWVZLWK
6DELQR DQG 0UV 6WHZDUW WKH JRYHUQPHQW UHOLHV XSRQ              FRQVSLUDF\ WR GHIUDXG WKH 8QLWHG 6WDWHV E\ REVWUXFWLQJ WKH
m6DELQRjVWHVWLPRQ\WKDWWKH6WHZDUWVKDGQRLQWHUHVWLQWKH            IXQFWLRQVRIWKH,QWHUQDO5HYHQXH6HUYLFHLQYLRODWLRQRI
5HGQD7HUUDFH3URSHUW\DQGWKDWKHKDGQHYHUGLVFXVVHGWKH              86&DQGWKH6WHZDUWVZLWKDQDGGLWLRQDOIRXUFRXQWV
6WHZDUWVj EXVLQHVV DIIDLUV ZLWK 6DP 6SLQHl DQG 0UV             RIZLOOIXOO\DWWHPSWLQJWRHYDGHLQFRPHWD[HVLQYLRODWLRQRI
6WHZDUWjVIDOVHWHVWLPRQ\WRWKHJUDQGMXU\WKDWVKHGLGQRW            86&)ROORZLQJDGD\WULDOWKHMXU\UHWXUQHG
NQRZ 6DP 6SLQH  7KH VXSHUFHGLQJ LQGLFWPHQW KRZHYHU           JXLOW\ YHUGLFWV DJDLQVW WKH WKUHH GHIHQGDQWV RQ DOO FRXQWV
OLVWV IDOVH WHVWLPRQ\ WR WKH JUDQG MXU\ DV DQ RYHUW DFW LQ   H[FHSW WKDW 0U 6WHZDUW ZDV DFTXLWWHG RQ WKH FKDUJH RI
IXUWKHUDQFHRIWKHFRQVSLUDF\7KDWWKHJRYHUQPHQWWUHDWHG             ZLOOIXOO\DWWHPSWLQJWRHYDGHLQFRPHWD[HVIRU
WKHFRQGXFWEHIRUHWKHJUDQGMXU\DVDSDUWRIWKHFRQVSLUDF\
LV UHIOHFWHG LQ WKH REVHUYDWLRQ WKDW WKH RULJLQDO LQGLFWPHQW     $PRWLRQIRUMXGJPHQWRI DFTXLWWDOSXUVXDQWWR)(' 5
ZKLFK GLG QRW LQFRUSRUDWH D FRQVSLUDF\ FKDUJH GLG QRW          &5,0 3ZDVGHQLHG7KHGLVWULFWFRXUWVHQWHQFHGHDFKRI
PHQWLRQ DQ\ IDOVH WHVWLPRQ\ EHIRUH WKH JUDQG MXU\  7KH        WKH6WHZDUWVWRPRQWKFRQFXUUHQWWHUPVRILPSULVRQPHQW
JRYHUQPHQWFDOOHGWKHJUDQGMXU\UHSRUWHUDVDZLWQHVVDWWULDO         RQHDFKFRXQWRIFRQYLFWLRQWKUHH\HDUVVXSHUYLVHGUHOHDVH
WRUHDGWKHSRUWLRQVRIWKHJUDQGMXU\WHVWLPRQ\WKDWFRQWDLQHG         DQGILQHGWKHPHDFK5HVWLWXWLRQWRWDOLQJ
WKH IDOVH WHVWLPRQ\  6XUHO\ WKH MXU\ ZLWK FRS\ RI WKH      ZDVRUGHUHG
VXSHUFHGLQJLQGLFWPHQWLQKDQGFRXOGKDYHGHWHUPLQHGWKDW
WKHVWDWHPHQWVZHUHµSDUWDQGSDUFHOjRIWKHFRQVSLUDF\:H              6DELQR ZDV VXEMHFW WR D  WR  PRQWK VHQWHQFH RI
ILQGWKHUHIRUHWKDWWKHGLVWULFWFRXUWGLGQRWHUULQIDLOLQJWR      LQFDUFHUDWLRQXQGHUWKHJXLGHOLQHV7KHGLVWULFWFRXUWJUDQWHG
HQKDQFH6DELQRDQG0UV6WHZDUWjVVHQWHQFHVIRUREVWUXFWLRQ             DPRWLRQIRUGRZQZDUGGHSDUWXUHDQGVHQWHQFHGKLPWRILYH
RIMXVWLFH                                                             \HDUVj SUREDWLRQ  6DELQR ZDV LQFOXGHG LQ WKH RUGHUHG
                                                                        UHVWLWXWLRQRIMRLQWO\DQGVHYHUDOO\ZLWKWKH6WHZDUWV
                'RZQZDUG'HSDUWXUH6DELQR
  ,QLWVILQDODVVLJQPHQWRIHUURUWKHJRYHUQPHQWDUJXHVWKDW
WKH GLVWULFW FRXUW HUUHG LQ JUDQWLQJ 6DELQR D GRZQZDUG
GHSDUWXUH RQ KLV VHQWHQFH  $ VHQWHQFLQJ FRXUW PD\ GHSDUW


     
     $00 )LQDO EULHI RI WKH $SSHOOHH&URVV$SSHOODQW ILOHG sXQH 
 DW  
     8QLWHG6WDWHVY          1RV           1RV                8QLWHG6WDWHVY      
      6DELQRHWDO                                                                                               6DELQRHWDO

                       ,,',6&866,21                                WKDWWKHGLVWULFWFRXUWHUUHGLQILQGLQJWKDW6DELQRjVDQG0UV
                                                                      6WHZDUWjV IDOVH VWDWHPHQWV EHIRUH WKH JUDQG MXU\ ZHUH QRW
                      $6SHHG\7ULDO$FW                            PDWHULDOPLVUHSUHVHQWDWLRQV
                                                                      7KH  & HQKDQFHPHQW LV DSSOLFDEOH WR  
                                                                      FRQVSLUDFLHV  &RPPHQWDU\ WR  & SURYLGHV WKDW WKH
   7KH6WHZDUWVDUJXHWKDWWKHGLVWULFWFRXUWHUUHGLQGHQ\LQJ        HQKDQFHPHQW ZLOO QRW DSSO\ WR SHUVRQV FRQYLFWHG RI
WKHLUPRWLRQWRGLVPLVVWKHVXSHUFHGLQJLQGLFWPHQWEHFDXVHRI         m&RQWHPSWl m2EVWUXFWLRQ RI sXVWLFHl m3HUMXU\ RU
DYLRODWLRQRIWKH6SHHG\7ULDO$FW86&WKH            6XERUQDWLRQ RI 3HUMXU\ %ULEHU\ RI :LWQHVVl m)DLOXUH WR
67$ZKLFKUHTXLUHVWKDWDFULPLQDOGHIHQGDQWEHEURXJKWWR          $SSHDUE\'HIHQGDQWlm3D\PHQWWR:LWQHVVlm$FFHVVRU\
WULDOZLWKLQGD\VIURPWKHODWHVWGDWHRIDUUHVWWKHILOLQJRI    $IWHU WKH )DFWl RU m0LVSULVLRQ RI )HORQ\l XQOHVV mD
DQ LQGLFWPHQW RU WKH ILUVW DSSHDUDQFH EHIRUH WKH FRXUW      VLJQLILFDQW IXUWKHU REVWUXFWLRQ RFFXUUHG GXULQJ WKH
+HQGHUVRQY8QLWHG6WDWHV867KH            LQYHVWLJDWLRQSURVHFXWLRQRUVHQWHQFLQJRIWKHSURVHFXWLRQ
67$SURYLGHVWKDWLIWKLVWLPHOLPLWLVH[FHHGHGDQLQGLFWPHQW       IRUWKHREVWUXFWLRQRIIHQVHl6HHLG&FPWQ
mVKDOO EH GLVPLVVHG RQ PRWLRQ RI WKH GHIHQGDQWl ZLWK RU     %\ ORJLFDO H[WHQVLRQ RI &RPPHQW  WKH 6HQWHQFLQJ
ZLWKRXW SUHMXGLFH   86&  D  +RZHYHU WKH    *XLGHOLQHV GR QRW SURKLELW DSSOLFDWLRQ RI WKH  &
67$ DOVR SURYLGHV IRU SHULRGV RI H[FOXGDEOH GHOD\ GXULQJ      REVWUXFWLRQHQKDQFHPHQWWRDFRQVSLUDF\,ImIXUWKHUl
ZKLFKWKHGD\mFORFNlGRHVQRWRSHUDWH6HHLGK        REVWUXFWLYH FRQGXFW PD\ OHDG WR DQ HQKDQFHPHQW RI WKH
7KHGLVWULFWFRXUWKDVGLVFUHWLRQWRH[FOXGHDGHOD\IURPWKH         LQWULQVLFREVWUXFWLRQRIIHQVHVOLVWHGLQ&RPPHQWVXUHO\WKH
GD\WLPHOLPLWDQGDGHFLVLRQWRH[FOXGHDGHOD\ZLOORQO\        HQKDQFHPHQWPD\EHDSSOLHGDVSXQLVKPHQWIRUREVWUXFWLYH
EHUHYHUVHGXSRQDVKRZLQJRIDFWXDOSUHMXGLFH8QLWHG6WDWHV        FRQGXFW FRPPLWWHG DIWHU WKH WHUPLQDWLRQ RI D  
Y &LDQFLROD  )G   WK &LU  FLWLQJ    FRQVSLUDF\6HH8QLWHG6WDWHVY)XUNLQ)G
8QLWHG6WDWHVY0RQJHU)GWK&LU          WK&LU
  7KH LQGLFWPHQW ZDV UHWXUQHG RQ $SULO   WKH              $SDQHORIWKLVFRXUWKDVVLJQDOHGWKDWDVHQWHQFLQJFRXUW
VXSHUFHGLQJLQGLFWPHQWZDVUHWXUQHGRQsXQH7KH            PD\ QRW DSSO\ WKH  & HQKDQFHPHQW LI WKH DSSOLFDWLRQ
GLVWULFWFRXUWJUDQWHGLQGHILQLWHHQGVRIMXVWLFHFRQWLQXDQFHV        HQWDLOVGRXEOHFRXQWLQJLHZKHUHWKHREVWUXFWLYHFRQGXFWLV
RQ0D\6HSWHPEHUDQG2FWREHU              mSDUWDQGSDUFHOlRIWKHXQGHUO\LQJRIIHQVHRIFRQYLFWLRQ6HH
RQWKHEDVLVWKDWWKHFDVHZDVFRPSOH[7KH6WHZDUWVILOHGD         8QLWHG6WDWHVY%ODQGIRUG)GQWK&LU
PRWLRQWRGLVPLVVWKHLQGLFWPHQWIRUYLRODWLQJWKH67$RQ              UHMHFWLQJ GRXEOHFRXQWLQJ DUJXPHQW E\ QRWLQJ WKDW
sXQH    7KH 6WHZDUWV FRQFHGH WKDW VHYHUDO RI WKHLU   GHIHQGDQWXWWHUHGDPDWHULDOIDOVHVWDWHPHQWGXULQJSUHWULDO
PRWLRQV GHOD\HG FRPPHQFHPHQW RI WKH 67$ FORFN  7KH\          LQYHVWLJDWLRQ DQG GXULQJ WULDO WHVWLPRQ\ WKXV FRQVWLWXWLQJ
DUJXH WKDW WKH 67$ FORFN EHJDQ WLFNLQJ RQ $SULO      mVHSDUDWH LQFLGHQWV RFFXUULQJ DW VHSDUDWH WLPHVl VHH DOVR
ZKHQ WKH GLVWULFW FRXUW DFNQRZOHGJHG UHFHLSW RI ,56 MXU\      8QLWHG 6WDWHV Y /OR\G  )G   WK &LU 
LQIRUPDWLRQ WKH ILQDO LQIRUPDWLRQ UHTXHVWHG LQ WKHLU           m6HFWLRQ&GRHVQRWDSSO\WRFRQGXFWWKDWLVSDUWRIWKH
UHPDLQLQJPRWLRQPDGHDIWHUWKHLUDUUDLJQPHQWRQ0D\              FULPHLWVHOIlFLWLQJ8QLWHG6WDWHVY:HUOLQJHU)G
'LVFRXQWLQJH[FOXGDEOHGHOD\SHULRGVDIWHUWKHFORFN             WK &LU  8QLWHG 6WDWHV Y 5DQVRP
FRPPHQFHGXQWLOWKHWULDORQsXO\WKH6WHZDUWVDUJXH          )G   WK &LU  SHU FXULDP VDPH FI
WKDWQRQH[FOXGDEOHGD\VSDVVHGLQYLRODWLRQRIWKH67$          8QLWHG6WDWHVY)UHGHWWH)GG&LU
    8QLWHG6WDWHVY          1RV           1RV                8QLWHG6WDWHVY       
      6DELQRHWDO                                                                                               6DELQRHWDO

UHOHYDQW FRQGXFW UXOHV  6HH 866* 6XSSOHPHQW WR              7KHGLVWULFWFRXUWGHQLHGWKH6WHZDUWVjPRWLRQWRGLVPLVVRQ
$SSHQGL[ & $PHQGPHQW  DW   866*                sXQH   UHO\LQJ SDUWLDOO\ XSRQ D ILQGLQJ WKDW
%D%                                                     FRQWLQXDQFHVZHUHZDUUDQWHGWRVHUYHWKHHQGVRIMXVWLFHDVD
                                                                      UHVXOWRIWKHFDVHjVFRPSOH[LW\7KH6WHZDUWVDUJXHWKDWWKH
  7KHFRPSOH[LW\RIWKHFDVHDQGWKHXVHRIWKHVHYHQWUXVWV          GLVWULFWFRXUWGLGQRWPDNHVXIILFLHQWILQGLQJVWREXWWUHVVDQ
LQ WKH WD[ HYDVLRQ FRQVSLUDF\ FRQVWLWXWHV VRSKLVWLFDWHG         HQGVRIMXVWLFHFRQWLQXDQFHEDVHGRQWKHFRPSOH[LW\RIWKH
FRQFHDOPHQW  7KHUHIRUH WKH GLVWULFW FRXUW DEXVHG LWV         FDVH
GLVFUHWLRQLQIDLOLQJWRDSSO\WKHVRSKLVWLFDWHGFRQFHDOPHQW
HQKDQFHPHQWWR6DELQR                                                 $FFRUGLQJWRK$GHOD\UHVXOWLQJIURPDFRXUW
                                                                      RUGHUHGFRQWLQXDQFHLVH[FOXGHGLILWLVEDVHGRQDILQGLQJWKDW
           2EVWUXFWLRQRIsXVWLFH(QKDQFHPHQW                     WKHHQGVRIMXVWLFHVHUYHGE\WKHFRQWLQXDQFHmRXWZHLJKWKH
                                                                      EHVWLQWHUHVWRIWKHSXEOLFDQGWKHGHIHQGDQWLQDVSHHG\WULDOl
   7KHJRYHUQPHQWDUJXHVWKDWWKHGLVWULFWFRXUWjVIDLOXUHWR         :KHQ JUDQWLQJ DQ HQGVRIMXVWLFH FRQWLQXDQFH WKH GLVWULFW
DSSO\DQREVWUXFWLRQRIMXVWLFHHQKDQFHPHQWWR6DELQRjVDQG           FRXUWPXVWVHWIRUWKLWVDFWXDOUHDVRQLQJIRUWKHFRQWLQXDQFHLQ
0UV 6WHZDUWjV RIIHQVH OHYHOV FRQVWLWXWHG HUURU  7KH          WKHUHFRUG6HH86&K$8QLWHG6WDWHVY
6HQWHQFLQJ *XLGHOLQHV SURYLGH WKDW m>L@I >D@ GHIHQGDQW          &UDZIRUG)GWK&LU
ZLOOIXOO\REVWUXFWHGRULPSHGHGRUDWWHPSWHGWRREVWUXFWRU
LPSHGHWKHDGPLQLVWUDWLRQRIMXVWLFHGXULQJWKHLQYHVWLJDWLRQ          ,QLWVsXQHRUGHUWKHGLVWULFWFRXUWFOHDUO\VWDWHGWKDW
SURVHFXWLRQRUVHQWHQFLQJRIWKHLQVWDQWRIIHQVHLQFUHDVH       LWJUDQWHGDFRQWLQXDQFHGXHWRWKHFRPSOH[LW\RIWKHFDVHDQG
WKHRIIHQVHOHYHOE\OHYHOVl866*&2Q         WKDWWKHFRQWLQXDQFHVHUYHGWKHHQGVRIMXVWLFH7KHGLVWULFW
DSSHDODGLVWULFWFRXUWjVOHJDOLQWHUSUHWDWLRQRIWKH6HQWHQFLQJ     FRXUWUHIHUUHGEDFNWRLWVSUHYLRXVRUDODQGZULWWHQRUGHUVWKDW
*XLGHOLQHVSURYLVLRQVLVUHYLHZHGGHQRYR8QLWHG6WDWHVY          JUDQWHG FRQWLQXDQFHV EDVHG XSRQ HQGVRIMXVWLFH ILQGLQJV
sRQHV  )G   WK &LU   2Q DSSHDO     VWHPPLQJ IURP WKH FRPSOH[LW\ RI WKH FDVH  7KH UHFRUG
KRZHYHU ZH PD\ QRW UHMHFW WKH GLVWULFW FRXUWjV IDFWXDO       HVWDEOLVKHV WKDW WKH GLVWULFW FRXUW GHFODUHG WKH FDVH DV
ILQGLQJVXQOHVVWKH\DUHFOHDUO\HUURQHRXV8QLWHG6WDWHVY         FRPSOH[RVWHQVLEO\ZLWKWKHDJUHHPHQWRIWKH GHIHQGDQWVj
3UXLWW)GWK&LU                           DWWRUQH\V  7KLV ZDV D WD[ HYDVLRQ FDVH RI FRPSOH[
                                                                      SURSRUWLRQVLQYROYLQJWKHZURQJIXOXVHRIWKLUGSDUWLHVDQGWKH
   7KHJRYHUQPHQWDUJXHVWKDW6DELQRjVDQG0UV6WHZDUWjV             KLGLQJRIDVVHWVLQWUXVWV7KHGLVWULFWFRXUWFRQYHQHGSHULRGLF
VHQWHQFHVVKRXOGKDYHEHHQHQKDQFHGGXHWRIDOVHWHVWLPRQ\            VWDWXV FRQIHUHQFHV WR HQVXUH WKDW WKH FDVH SURFHHGHG
WKH\ JDYH LQ JUDQG MXU\ SURFHHGLQJV  $V REVHUYHG E\ WKH    H[SHGLWLRXVO\WRWULDO)XUWKHUPRUHWKH6WHZDUWVZDLWHGWR
JRYHUQPHQWDVHQWHQFLQJFRXUWPXVWDSSO\WKHHQKDQFHPHQW             EULQJDPRWLRQWRGLVPLVVWKHLQGLFWPHQWRYHUD\HDUDIWHUWKH
LIDGHIHQGDQWSURYLGHVDPDWHULDOO\IDOVHVWDWHPHQWWRDJUDQG       GDWHRQZKLFKWKH\FRQWHQGWKH67$FORFNFRPPHQFHG7KH
MXU\6HH8QLWHG6WDWHVY0DKDIIH\)GWK        6WHZDUWVjWDUGLQHVVUHIOHFWVWKHLUDJUHHPHQWZLWKWKHGLVWULFW
&LU   7KH JRYHUQPHQW DUJXHV WKDW WKH GLVWULFW FRXUW   FRXUWjVFDOHQGDUIRUEULQJLQJWKHFDVHWRWULDO$FFRUGLQJO\
GHFOLQHG WR DSSO\  & LQ SDUW EHFDXVH LW HUURQHRXVO\     WKHGLVWULFWFRXUWGLGQRWDEXVHLWVGLVFUHWLRQLQJUDQWLQJHQGV
GHWHUPLQHG WKDW REVWUXFWLRQ RI WKH ODZIXO RSHUDWLRQ RI WKH    RIMXVWLFHFRQWLQXDQFHV
8QLWHG 6WDWHV LV WKH HVVHQFH RI D   FRQVSLUDF\ DQG
WKHUHIRUH WKH REVWUXFWLRQ RI MXVWLFH LV LQFOXGHG LQ WKH
FRQVLGHUDWLRQRIWKHJXLGHOLQHV7KHJRYHUQPHQWDOVRDUJXHV
     8QLWHG6WDWHVY         1RV          1RV                 8QLWHG6WDWHVY      
      6DELQRHWDO                                                                                              6DELQRHWDO

                                                                    6R,ZRXOGWHQWDWLYHO\UXOHWKDW,ZRXOGQRWHQKDQFHWKH
                                                                      RIIHQVHOHYHOE\WKHWZRSRLQWVVXJJHVWHGWKDWWKLVZDV
  7KH 6WHZDUWV DOVR DUJXH UHO\LQJ XSRQ 1LQWK &LUFXLW          VRSKLVWLFDWHG UHDOL]LQJ WKDW LQ WKLV FDVH WKH 6WHZDUWV
SUHFHGHQWWKDWWKHGLVWULFWFRXUWHUUHGLQJUDQWLQJLQGHILQLWH       FRQWUROOHGWKHHQWLWLHVWKDWWKH6WHZDUWVFRQGXFWHGWKH
HQGVRIMXVWLFHFRQWLQXDQFHV6HH8QLWHG6WDWHVY&O\PHU        EXVLQHVVDQGWKDWWKHEXVLQHVVZDVFRQGXFWHGLQDQRSHQ
)GWK&LUKROGLQJWKDWDQHQGVRIMXVWLFH        DQG VWUDLJKWIRUZDUG PDQQHU DV IDU DV , FDQ WHOO DW DOO
FRQWLQXDQFHPXVWEHVSHFLILFDOO\OLPLWHGLQWLPH:KLOHWKLV        WLPHV7KHFKHFNV ZHUHGHSRVLWHGDVIDUDV,FDQWHOO
&LUFXLWKDVQRWDGGUHVVHGWKLVSDUWLFXODULVVXHRWKHUFLUFXLWV       $QG , ZRXOG FRQFOXGH WKDW WKH HQKDQFHPHQW IRU
KDYHZLWKUHVXOWVFRQWUDU\WRWKH1LQWK&LUFXLWjVKROGLQJ,Q       VRSKLVWLFDWHGPHDQVLQWKLVFDVHLVQRWDSSURSULDWHl
8QLWHG6WDWHVY5XVK)GVW&LUWKH)LUVW
&LUFXLWUHPDUNHGWKDWm>W@KHSXUSRVHRIKFRQWLQXDQFHLV       ,QDVXEVHTXHQWVWDWHPHQWWKHGLVWULFWFRXUWUHPDUNHGZLWK
WR PDNH WKH >67$@ µIOH[LEOH HQRXJK WR DFFRPPRGDWH WKH       UHVSHFW WR WKH FRQVSLUDF\ m>W@KHUH ZHUH QR RIIVKRUH EDQN
SUDFWLFDOLWLHVRIRXUDGYHUVDU\V\VWHPj:HGRQRWWKLQNDUXOH    DFFRXQWV>@ >W@KHUH ZHUH QR DOLDVHV XVHG>@ >W@KHUH ZHUH QR
EDUULQJ RSHQHQGHG FRQWLQXDQFHV DOWRJHWKHU VHUYHV WKLV         ILFWLWLRXVQDPHVXVHGl
SXUSRVHl,GDWTXRWLQJ8QLWHG6WDWHVY0LWFKHOO
)GVW&LU7KH)LUVW&LUFXLWRSLQHG           %HFDXVHRIWKHFRPSOH[LW\RIWKHFLUFXPVWDQFHVRIWKLVFDVH
WKDWRSHQHQGHGHQGVRIMXVWLFHFRQWLQXDQFHVPD\EHOLPLWHG         LQZKLFKQXPHURXVEDQNVDQGOHQGHUVZHUHFDOOHGWRWHVWLI\
E\DUHDVRQDEOHQHVVUHTXLUHPHQWVRDVWRSUHYHQWXQIDLUGHOD\V      DQGWKHIDFWWKDWWKHGHIHQGDQWVXVHGDWOHDVWVHYHQWUXVWVWR
DQGFLUFXPYHQWLRQV,GVHHDOVR8QLWHG6WDWHVY3ULQJOH        HYDGHWKHSD\PHQWRIWD[HVZHKROGWKDWWKH GLVWULFWFRXUW
)GVW&LU7KH7KLUG&LUFXLWDOVR          DEXVHG LWV GLVFUHWLRQ LQ IDLOLQJ WR DSSO\ WKH VRSKLVWLFDWHG
UHMHFWHG D EDU DJDLQVW RSHQHQGHG FRQWLQXDQFHV EXW LW       FRQFHDOPHQWHQKDQFHPHQWWRWKH6WHZDUWV
H[SUHVVO\DGRSWHGDUHDVRQDEOHQHVVOLPLWDWLRQXSRQMXVWLILHG
GHOD\V6HH8QLWHG6WDWHVY/DWWDQ\)GUG                           E$VDSSOLHGWR6DELQR
&LU6HYHUDORWKHUFLUFXLWVKDYHIROORZHGWKH)LUVWDQG
7KLUG&LUFXLWV6HH8QLWHG6WDWHVYsRQHV)G          6DELQRDFWHGDVWUXVWHHIRUVHYHUDORIWKHWUXVWVXVHGE\WKH
WK &LU  GLVWULFW FRXUW PD\ JUDQW RSHQHQGHG         6WHZDUWV  +H SHUPLWWHG WKH 6WHZDUWV WR XVH KLV VLJQDWXUH
FRQWLQXDQFHVLQVLWXDWLRQVZKHUHmLWLVLPSRVVLEOHRUDWOHDVW     VWDPSWRGHSRVLWPRQH\LQWREDQNLQJDFFRXQWVWRXVHDVIXQGV
TXLWHGLIILFXOWIRUWKHSDUWLHVRUWKHFRXUWWRJDXJHWKHOHQJWK   IRU WKHLU SHUVRQDO H[SHQVHV  6DELQR SDUWLFLSDWHG LQ WKH
RI DQ RWKHUZLVH MXVWLILHG FRQWLQXDQFHl 8QLWHG 6WDWHV Y   DFTXLVLWLRQRISURSHUW\IRUWKH6WHZDUWVVRDVWRFRQFHDOWKHLU
6SULQJ)GWK&LUDJUHHLQJZLWK          RZQHUVKLS LQWHUHVWV  6DELQR DOVR SDUWLFLSDWHG LQ WKH
WKH )LUVW 7KLUG DQG )LIWK &LUFXLWV WKDW RSHQHQGHG         SODFHPHQWRIDERJXVPRUWJDJHRQWKH6WHZDUWVjUHVLGHQFH
FRQWLQXDQFHVIRUDUHDVRQDEOHWLPHSHULRGDUHZDUUDQWHGLQ          7KHVHDFWLRQVHVWDEOLVKWKDW6DELQRZDVLQWLPDWHO\LQYROYHG
VRPH FDVHVVHH DOVR 8QLWHG 6WDWHV Y %XUNH  )6XSS   LQ WKH RSHUDWLRQ RI WKH WUXVWV DQG LQ WKH FRQVSLUDF\  +LV
1'*DLQVRPHFDVHVRSHQHQGHGHQGV          DFWLRQV HQDEOHG WKH 6WHZDUWV WR PDLQWDLQ WKH WUXVWV DQG WR
RIMXVWLFHFRQWLQXDQFHVDUHZDUUDQWHG7KH6HFRQG&LUFXLW         HYDGHWKH,56$FFRUGLQJO\WKHVRSKLVWLFDWHGFRQFHDOPHQW
KHOGWKDWWKHmOHQJWKRIDQH[FOXVLRQIRUFRPSOH[LW\PXVWEH        HQKDQFHPHQW LV DSSOLFDEOH WR 6DELQR EDVHG RQ KLV
QRWRQO\OLPLWHGLQWLPHEXWDOVRUHDVRQDEO\UHODWHGWRWKH        SDUWLFLSDWLRQLQWKHFRQVSLUDF\)XUWKHUWKH6WHZDUWVjDFWLRQV
DFWXDOQHHGVRIWKHFDVHl8QLWHG6WDWHVY*DPELQR)G       LQFRQQHFWLRQZLWKWKHWUXVWVZHUHUHDVRQDEO\IRUHVHHDEOHDFWV
G&LUFLWLQJ8QLWHG6WDWHVY%HHFK1XW          LQ IXUWKHUDQFH RI WKH FRQVSLUDF\ LQ DFFRUGDQFH ZLWK WKH
    8QLWHG6WDWHVY           1RV          1RV                   8QLWHG6WDWHVY         
      6DELQRHWDO                                                                                                  6DELQRHWDO

  DFFRXQWV KH NQHZ WR EH D VKDP DQG UHFHLYHG          1XWULWLRQ&RUS)GG&LU8QLWHG6WDWHV
  IURPRQHRIWKHDFFRXQWV7KH,56KDGWRVXPPRQVEDQN              Y/R)UDQFR)GG&LU
  UHFRUGVIURPDSSUR[LPDWHO\VL[EDQNVRYHUWKHFRXUVHRI
  VHYHUDO PRQWKV LQ RUGHU WR WUDFH WKH PRQH\ >WKH                ,Q+HQGHUVRQY8QLWHG6WDWHV86WKH
  GHIHQGDQW@KHOSHGWRKLGH7KHLQYHVWLJDWLQJ,56DJHQW             6XSUHPH&RXUWGLVFXVVHGWKHSURSULHW\RIDUHDVRQDEOHQHVV
  WHVWLILHG WKDW VHWWLQJ XS WKH WD[ DYRLGDQFH VFKHPH           UHTXLUHPHQW ZLWK UHJDUG WR DQRWKHU SURYLVLRQ HVWDEOLVKLQJ
  UHTXLUHG VRSKLVWLFDWLRQ DQG WKDW LW UHTXLUHG D PRUH         GHOD\V H[FOXGDEOH IURP WKH 67$jV FORFN VSHFLILFDOO\ 
  FRPSOH[ LQYHVWLJDWLRQ WKDQ WKDW QHFHVVDU\ IRU D IDOVH        86&  K) ZKLFK H[FOXGHV IURP VSHHG\ WULDO
  HQWU\RQDIRUP                                               FDOFXODWLRQVDQ\SHULRGRIGHOD\FDXVHGE\DSUHWULDOPRWLRQ
                                                                      7KH 6XSUHPH &RXUW UHDVRQHG WKDW WKH 67$ HPSOR\V D
,GDWFLWLQJ8QLWHG6WDWHVY3LHUFH)G          UHDVRQDEOHQHVVVWDQGDUGIRUWKHH[FOXVLRQRIWLPHRQO\ZKHQ
WK&LU                                                       &RQJUHVV H[SOLFLWO\   UHTXLUHV WKDW WKH SHULRG RI GHOD\ EH
                                                                      UHDVRQDEOH  :LWK UHVSHFW WR WKH SRVVLELOLW\ RI SRWHQWLDOO\
                 D$VDSSOLHGWRWKH6WHZDUWV                       H[FHVVLYH FRQWLQXDQFHV WKH 6XSUHPH &RXUW IRXQG WKDW
                                                                      &RQJUHVVOHIWVXFKFRQVLGHUDWLRQVZLWKLQWKHFRQWURORIGLVWULFW
  7KHGLVWULFWFRXUWHUUHGLQIDLOLQJWRDSSO\WKHVRSKLVWLFDWHG      FRXUWVUDWKHUWKDQWKHVWDWXWHLWVHOI6HH+HQGHUVRQ86
FRQFHDOPHQWHQKDQFHPHQWWRWKH6WHZDUWV7KHGLVWULFWFRXUW          DW   %\ DQDORJ\  K DOVR GRHV QRW FRQWDLQ D
QRWHG WKH mPRQXPHQWDO ZRUNl WKDW WKH ,56 VSHFLDO DJHQW        UHDVRQDEOHQHVV UHTXLUHPHQW VLQFH LWV ODQJXDJH PLUURUV
HQJDJHGLQWRSUHVHQWWKHFDVHIRUWULDOEXWLWGHFOLQHGWRDSSO\    K)LQDOOSHUWLQHQWUHVSHFWV6LQFH+HQGHUVRQ
WKHHQKDQFHPHQWIRUWKHIROORZLQJUHDVRQV                            VLJQDOVWKDWGLVWULFWFRXUWVPD\GHYLVHWKHLURZQWLPHOLPLWV
                                                                      ZLWKUHVSHFWWRWKLVLVVXHZHZLOOIROORZWKHUXOHRIWKH)LUVW
  m>7@KLV &RXUW FDQQRW ILQG E\ D SUHSRQGHUDQFH RI WKH         7KLUG )LIWK DQG 7HQWK &LUFXLWV DQG KROG WKDW RSHQHQGHG
  HYLGHQFH WKDW WKLV LV D VRSKLVWLFDWHG VFKHPH  ,W LV VR   HQGVRIMXVWLFHFRQWLQXDQFHVIRUUHDVRQDEOHWLPHSHULRGVDUH
  W\SLFDO RI D VFKHPH WKDW ZDV RULJLQDWHG E\ WKLV 3LORW
  &RQQHFWLRQ$V0U'LFNVWHLQ>0U6WHZDUWjVFRXQVHO@
  KDVSRLQWHGRXWLWjVDWD[SURWHVWRUFDVHWKDWLWjVWKH
  UHODWLRQVKLSEHWZHHQWKHVHWD[SD\HUVDQGWKHJRYHUQPHQW                 
                                                                            7KH 6XSUHPH &RXUW VWDWHG
  ZDVDOZD\VVWUDLJKWIRUZDUGDQGWKDWWKH\GLGPDNHVOLSV                 2Q LWV IDFH VXEVHFWLRQ ) H[FOXGHV m>D@Q\ SHULRG RI GHOD\l
  LQWKDWUHODWLRQVKLS%XWEDVLFDOO\WKHVLWXDWLRQDV,IRXQG           FDXVHG E\ mDQ\ SUHWULDO PRWLRQl mIURP WKH ILOLQJ RI WKH PRWLRQ
  LWDQGDV,OLVWHQHGWRWKHWULDOHYHQWKRXJKWKHFDVHZDV             WKURXJK WKH FRQFOXVLRQ RI WKH KHDULQJl 7KH SODLQ WHUPV RI WKH
  FRPSOH[HYHQWKRXJKWKHFDVHZDVPDQ\PDQ\H[KLELWV                  VWDWXWH DSSHDU WR H[FOXGH DOO WLPH EHWZHHQ WKH ILOLQJ RI DQG WKH
                                                                          KHDULQJ RQ D PRWLRQ ZKHWKHU WKDW KHDULQJ ZDV SURPSW RU QRW
  WKDW IRU WKH SXUSRVH RI VHQWHQFLQJ , DJUHH ZLWK WKH            0RUHRYHU VXEVHFWLRQ ) GRHV QRW UHTXLUH WKDW D SHULRG RI GHOD\
  DQDO\VLVWKDWWKLVTXRWHLVDUXQRIWKHPLOORIDWD[FDVH           EH mUHDVRQDEOHl WR EH H[FOXGHG DOWKRXJK &RQJUHVV FOHDUO\ NQHZ
  HYHQWKRXJKLWLVH[WUHPHO\FRPSOH[WLPHFRQVXPLQJ                    KRZ WR OLPLW DQ H[FOXVLRQ LQ  K &RQJUHVV SURYLGHG
  DQG,WKLQNHYHQWKHWLPHZHjYHVSHQWRQWKHVHQWHQFLQJ                 IRU H[FOXVLRQ RI D mUHDVRQDEOH SHULRG RI GHOD\ ZKHQ WKH
  LVVXHVGHPRQVWUDWHVLWVFRPSOH[LW\DQGWKHQHHGZLWKWKH                GHIHQGDQW LV MRLQHG IRU WULDO ZLWK D FRGHIHQGDQW DV WR ZKRP WKH

  FDVH o DQG WKH WLPH WKH FDVH QHHGHG WR SURSHUO\ EH            WLPH IRU WULDO KDV QRW UXQ DQG QR PRWLRQ IRU VHYHUDQFH KDV EHHQ
                                                                          JUDQWHGl $SDUW IURP WKLV VLQJOH LQVWDQFH HYHU\ RWKHU SURYLVLRQ
  SUHVHQWHG                                                              LQ  K SURYLGHV IRU H[FOXVLRQ RI mDQ\ SHULRG RI GHOD\l

                                                                      ,G DW 
    8QLWHG6WDWHVY           1RV            1RV                   8QLWHG6WDWHVY       
      6DELQRHWDO                                                                                                    6DELQRHWDO

SHUPLVVLEOHLQFDVHVZKHUHLWLVQRWSRVVLEOHWRSUHIHUDEO\VHW           7KHVRSKLVWLFDWHGFRQFHDOPHQWHQKDQFHPHQWLVDSSOLHGWR
VSHFLILFHQGLQJGDWHV                                                 DGHIHQGDQWmEDVHGRQWKHRYHUDOORIIHQVHFRQGXFWIRUZKLFK
                                                                        WKHGHIHQGDQWLVDFFRXQWDEOHlDFFRUGLQJWRWKHmXVXDOUHOHYDQW
  7KH GLVWULFW FRXUWjV RUDO DQG ZULWWHQ UXOLQJV JUDQWLQJ WKH    FRQGXFW UXOHVl 866* 6XSSOHPHQW WR $SSHQGL[ &
HQGVRIMXVWLFH FRQWLQXDQFHV GHPRQVWUDWH WKDW WKLV FDVH            $PHQGPHQWDW7KHUHOHYDQWFRQGXFWJXLGHOLQH
GHVHUYHG RSHQHQGHG FRQWLQXDQFHV  7KH GHOD\ LQ                   SURYLGHVWKDWm>L@QWKHFDVHRIDMRLQWO\XQGHUWDNHQFULPLQDO
FRPPHQFLQJ WULDO ZDV UHDVRQDEOH JLYHQ WKH YROXPH RI              DFWLYLW\DOOUHDVRQDEO\IRUHVHHDEOHDFWVDQGRPLVVLRQVRI
HYLGHQFHWKHJRYHUQPHQWPDUVKDOHGDQGWKHFRPSOH[LW\RIWKH             RWKHUV LQ IXUWKHUDQFH RI WKH MRLQWO\ XQGHUWDNHQ FULPLQDO
GHIHQGDQWVjWD[HYDVLRQVFKHPH)XUWKHUDODUJHSRUWLRQRI            DFWLYLW\lDUHXVHGWRVHWDGHIHQGDQWjVRIIHQVHOHYHO866*
WKH SUHWULDO SHULRG ZDV VSHQW DGGUHVVLQJ WKH GHIHQGDQWVj        %D%
QXPHURXVPRWLRQV$FFRUGLQJO\WKHUHZDVQRXQUHDVRQDEOH
GHOD\LQWKHPDQDJHPHQWRIWKLVFDVHDQGWKH67$ZDVQRW                  &RPSOH[VFKHPHVRIWD[HYDVLRQZDUUDQWLPSRVLWLRQRIWKH
YLRODWHGE\WKHGLVWULFWFRXUWjVJUDQWLQJRIRSHQHQGHGHQGV           VRSKLVWLFDWHGFRQFHDOPHQWHQKDQFHPHQW,Q8QLWHG6WDWHVY
RIMXVWLFHFRQWLQXDQFHV                                                0RUULV 1R   :/  WK &LU sDQ 
                                                                        DSDQHORIWKLVFRXUWDIILUPHGWKHDSSOLFDWLRQRIWKH
                  %)LIWK$PHQGPHQW&ODLP                             mVRSKLVWLFDWHG PHDQVl HQKDQFHPHQW WR WKH GHIHQGDQWjV
                                                                        RIIHQVHOHYHOQRWLQJWKHGHIHQGDQWjVDFNQRZOHGJPHQWWKDWKH
   'XULQJWKHJRYHUQPHQWjVLQYHVWLJDWLRQRIWKHFRQVSLUDF\LQ           XVHGWZRQRPLQHHWUXVWVWRFRQFHDOKLVLQFRPHDQGDVVHWV
 DQ ,56 LQYHVWLJDWRU GXULQJ DQ LQWHUYLHZ UHDG WKH          7KHSDQHOVWDWHGWKDWmWKHXVHRIQRPLQHHWUXVWVFRQVWLWXWHVD
6WHZDUWV WKHLU 0LUDQGD ULJKWV  7KHUHDIWHU DQ DWWRUQH\          VRSKLVWLFDWHGPHDQVWRFRQFHDOWD[HYDVLRQRIIHQVHVl,GDW
DOOHJHGO\DGYLVHGWKHPQRWWRILOHLQFRPHWD[UHWXUQVEHFDXVH           HPSKDVLVDGGHGFLWLQJ8QLWHG6WDWHVY0LQQHPDQ
GRLQJVRZRXOGFRQVWLWXWHWKHPDNLQJRIVHOILQFULPLQDWLQJ              )GWK&LU
VWDWHPHQWV7KH6WHZDUWVDUJXHWKDWWKHLU)LIWK$PHQGPHQW
ULJKWWRUHPDLQVLOHQWZDVYLRODWHGEHFDXVHWKHLUIDLOXUHVWR             6LPLODUO\LQ8QLWHG6WDWHVY6SLQH1R:/
ILOHWD[UHWXUQVZHUHFKDUJHGDVRYHUWDFWVLQWKHLQGLFWPHQW           WK&LU0D\DSDQHORIWKLVFRXUWDIILUPHG
DQGDGGLWLRQDOO\WKHIDLOXUHWRILOHWKHUHWXUQVZDVLQWURGXFHG         WKHDSSOLFDWLRQRIWKHmVRSKLVWLFDWHGPHDQVlHQKDQFHPHQWWR
DWWULDODVHYLGHQFHRIWKHLUZLOOIXOQHVVLQHYDGLQJWD[HV           WKHRIIHQVHOHYHORIGHIHQGDQWVWDWLQJ
   $WD[SD\HUFODLPLQJD)LIWK$PHQGPHQWSULYLOHJHDJDLQVW                >7KHGHIHQGDQW@SUHSDUHGWKHIRUPVWRLQGLFDWHWKDW
WKHILOLQJRIDWD[UHWXUQPXVWVSHFLILFDOO\FODLPWKHSULYLOHJH          >DFRUSRUDWLRQjV@LQFRPHZDVGLVWULEXWHGRIIVKRUHWRDQ
mLQUHVSRQVHWRSDUWLFXODUTXHVWLRQVQRWPHUHO\LQDEODQNHW             HQWLW\WKDWGLGQRWH[LVW+HDWWDFKHG6FKHGXOH&IRUPV
UHIXVDOWRIXUQLVKDQ\LQIRUPDWLRQl8QLWHG6WDWHVY6DXVV\            WKDWVKRXOGKDYHEHHQDWWDFKHGWRWKHIRUPVWRWKH
)GWK&LUTXRWLQJ8QLWHG6WDWHVY                IRUPV  +H ZDV D VLJQDWRU\ RQ RQH RI WKH WUXVW
sRKQVRQ  )G   WK &LU   )XUWKHU
mWD[SD\HUV FDQQRW DVVHUW D YLRODWLRQ RI WKHLU ULJKWV DJDLQVW
FRPSXOVRU\ VHOILQFULPLQDWLRQ ZKHQ WKH\ UHIXVH WR DQVZHU              
TXHVWLRQV RQ D WD[ UHWXUQ IRU IHDU DXWKRULWLHV ZLOO GLVFRYHU        ([SODQDWRU\ QRWHV WR WKH DPHQGPHQW H[SODLQ WKDW WKH ODQJXDJH RI WKH
                                                                        HQKDQFHPHQW IRU mVRSKLVWLFDWHG PHDQVl LQ WKH  HGLWLRQ RI WKH
LOOHJDODFWLYLW\l8QLWHG6WDWHVY6WXUPDQ)G            6HQWHQFLQJ *XLGHOLQHV LV mHVVHQWLDOO\ HTXLYDOHQWl WR WKH ODQJXDJH RI WKH
                                                                        HQKDQFHPHQW IRU mVRSKLVWLFDWHG HQKDQFHPHQWl 866* 6XSSOHPHQW WR
                                                                        $SSHQGL[ & $PHQGPHQW  DW  
       8QLWHG6WDWHVY          1RV              1RV                   8QLWHG6WDWHVY         
         6DELQRHWDO                                                                                                     6DELQRHWDO

LQSHUPLWWLQJWKH6WHZDUWVWRXVHKLVVLJQDWXUHVWDPSVHFXULQJ             WK&LU FLWLQJ8QLWHG6WDWHVY6XOOLYDQ
SURSHUW\IRUWKH6WHZDUWVDQGFUHDWLQJDERJXVPRUWJDJHZHUH               86
HVVHQWLDOWRWKHRSHUDWLRQRIWKHFRQVSLUDF\7KHUHIRUHZH
ILQGWKDW6DELQRjVDFWLRQVDVWUXVWHHZHUHLQGLVSHQVDEOHWRWKH                7KHUHTXLUHPHQWRIILOLQJWD[UHWXUQVZDVQRWGLUHFWHGDWWKH
FRQVSLUDF\ DQG WKH GLVWULFW FRXUWjV UHGXFWLRQ LQ KLV RIIHQVH        6WHZDUWVEHFDXVHWKH\ZHUHVXVSHFWHGRIFULPLQDODFWLYLWLHV
OHYHOZDVFOHDUO\HUURQHRXV                                                )XUWKHUWKH6WHZDUWVGLGQRWILOHDQ\UHWXUQVDQGWKXVGLGQRW
                                                                            ORGJH DQ\ SDUWLFXODU REMHFWLRQV WR ILOLQJ WKH UHTXLVLWH
           6RSKLVWLFDWHG&RQFHDOPHQW(QKDQFHPHQW                        LQIRUPDWLRQ7KHUHIRUHWKH\DUHQRWSURWHFWHGE\WKH)LIWK
                      WKH6WHZDUWVDQG6DELQR                               $PHQGPHQWSULYLOHJH7KH6WHZDUWVDUJXHKRZHYHUWKDWDQ\
                                                                            WD[UHWXUQILOHGDIWHUWKH\ZHUHUHDGWKHLU0LUDQGDULJKWVLQ
  7KHJRYHUQPHQWDUJXHVWKDWWKHGLVWULFWFRXUWVKRXOGKDYH                 E\DQ,56LQYHVWLJDWRUZRXOGKDYHFRQVWLWXWHGSRWHQWLDO
LQFUHDVHG WKH GHIHQGDQWVj RIIHQVH OHYHOV IRU XWLOL]LQJ                HYLGHQFH IRU D FULPLQDO SURVHFXWLRQ EHFDXVH WKH ,56 KDG
VRSKLVWLFDWHGPHDQVWRFRQFHDOWKHFRQVSLUDF\XQGHU866*                SODFHGDmIUHH]HFRGHlRQWKHLUDFFRXQWV$mIUHH]HFRGHl
 7  2Q DSSHDO WKH GLVWULFW FRXUWjV GHWHUPLQDWLRQ             KRZHYHUFRQVWLWXWHVQRWKLQJPRUHWKDQDQLQWHUQDODFWRIWKH
FRQFHUQLQJ WKH DSSOLFDELOLW\ RI WKLV JXLGHOLQH VHFWLRQ LV            ,56  6HH ,Q UH %XUURZ  %5   %DQNU ' 8W
UHYLHZHG IRU FOHDU HUURU  8QLWHG 6WDWHV Y .UDLJ  )G        m:KHQWKH,56UHFHLYHGQRWLFHRIGHEWRUVjILOLQJLW
WK&LU+RZHYHUWKHDSSOLFDWLRQRIWKH                SODFHGZKDWLWFDOOVDµIUHH]HFRGHjRUµEDQNUXSWF\FRGHjRQ
JXLGHOLQHWRDSDUWLFXODUVHWRIIDFWVLVUHYLHZHGGHQRYR6HH            GHEWRUVjDFFRXQWLQWKH,56FRPSXWHUV\VWHP$IUHH]HFRGH
8QLWHG6WDWHVY3LHUFH)GWK&LU                 SUHYHQWVWKHILOLQJRIWD[OLHQVWKHDVVHVVPHQWRIWD[HVWKH
                                                                            VHWRII RI WD[ RYHUSD\PHQWV DJDLQVW WD[ OLDELOLWLHV DQG WKH
   7KHHGLWLRQRIWKH6HQWHQFLQJ*XLGHOLQHVVWDWHVm>L@I             LVVXDQFHRIWD[UHIXQGVl7KHUHIRUHWKHGLVWULFWFRXUWGLGQRW
WKHRIIHQVHLQYROYHGVRSKLVWLFDWHGFRQFHDOPHQWLQFUHDVHE\                 HUULQUHMHFWLQJWKH6WHZDUWVjFODLP
OHYHOVl866*7E$SSOLFDWLRQQRWHVWDWHV
mµVRSKLVWLFDWHG FRQFHDOPHQWj PHDQV HVSHFLDOO\ FRPSOH[ RU
HVSHFLDOO\LQWULFDWHRIIHQVHFRQGXFWLQZKLFKGHOLEHUDWHVWHSV                  
DUHWDNHQWRPDNHWKHRIIHQVHRULWVH[WHQWGLIILFXOWWRGHWHFW                 7KH 6WHZDUWV UHO\ XSRQ WZR 1LQWK &LUFXLW FDVHV WR VXSSRUW WKHLU
                                                                            DUJXPHQW WKDW DFWXDOO\ FRQWUDGLFW WKHLU SRVLWLRQ ,Q 8QLWHG 6WDWHV Y
&RQGXFW VXFK DV KLGLQJ DVVHWV RU WUDQVDFWLRQV RU ERWK             7URHVFKHU  )G  WK &LU  WKH FRXUW GHFOLQHG WR DGGUHVV WKH
WKURXJK WKH XVH RI ILFWLWLRXV HQWLWLHV FRUSRUDWH VKHOOV RU        FODLP    ZH mQHHG QRW FRQVLGHU KRZ RU LQ ZKDW PDQQHU WKH )LIWK
RIIVKRUH EDQN DFFRXQWV RUGLQDULO\ LQGLFDWHV VRSKLVWLFDWHG              $PHQGPHQW PD\ EH LQYRNHG DV D GHIHQVH WR D SURVHFXWLRQ IRU IDLOXUH WR
FRQFHDOPHQWl866*7FPW                                   ILOH WD[ UHWXUQVl ,G DW  Q  FLWLQJ 6XOOLYDQ  86 DW 
                                                                            8QLWHG 6WDWHV Y 5HQGDKO  )G   WK &LU  ,Q 5HQGDKO
                                                                            WKH FRXUW H[SOLFLWO\ FRXQWHUHG WKH 6WHZDUWVj DUJXPHQW LQ WKH IROORZLQJ
                                                                            GLVFXVVLRQ

                                                                               ,Q 8QLWHG 6WDWHV Y &DUOVRQ  )G  WK &LU  WKH
      7KH SUHVHQWHQFH UHSRUW DQG WKH JRYHUQPHQWjV EULHI KRZHYHU UHIHU        GHIHQGDQW KDG ILOHG D IDOVH : IRUP FODLPLQJ QLQHW\QLQH
WR VRSKLVWLFDWHG PHDQV DQG WKH JRYHUQPHQWjV EULHI FLWHV WR WKH             ZLWKKROGLQJ H[HPSWLRQV DQG WKHQ GLG QRW ILOH D UHWXUQ $V
HGLWLRQ RI WKH *XLGHOLQHV PDQXDO LQ GLVFXVVLQJ WKLV LVVXH 7KH 6HQWHQFLQJ       GHIHQVH WR D FKDUJH RI ZLOOIXO IDLOXUH WR ILOH D UHWXUQ &DUOVRQ
*XLGHOLQHV mLQ HIIHFW RQ WKH GDWH WKDW WKH GHIHQGDQW LV VHQWHQFHGl DUH          FODLPHG WKDW ILOLQJ D UHWXUQ ZRXOG KDYH LQFULPLQDWHG KLP IRU
DSSOLHG 866*  %       7KHUHIRUH WKH  HGLWLRQ RI WKH            KDYLQJ SUHYLRXVO\ ILOHG WKH IDOVH ZLWKKROGLQJ IRUP 7KH FRXUW
6HQWHQFLQJ *XLGHOLQHV LV DSSOLFDEOH                                            IRXQG WKDW &DUOVRQ ZRXOG LQGHHG KDYH LQFULPLQDWHG KLPVHOI KDG
                                                                                KH ILOHG D UHWXUQ  )G DW  1HYHUWKHOHVV LW FRQFOXGHG
     8QLWHG6WDWHVY                 1RV      1RV                8QLWHG6WDWHVY      
       6DELQRHWDO                                                                                                 6DELQRHWDO

                  &6XPPDU\:LWQHVV7HVWLPRQ\                          WULDOWHVWLPRQ\VKRZHGWKDW6DELQRJDYHDEULHISUHVHQWDWLRQ
                                                                         DW D 3&6 PHHWLQJ DWWHQGHG E\ 0UV 6WHZDUW  7KHUH ZDV
                                                                       VXEVWDQWLDO HYLGHQFH IRU WKH MXU\ WR FRQFOXGH WKDW 6DELQR
                                                                         ZLOOIXOO\SDUWLFLSDWHGLQWKHFRQVSLUDF\
  7KHJRYHUQPHQWFDOOHG(PLO\)UDQ[PDQ)UDQ[PDQDQ
,56HPSOR\HHWRWHVWLI\DVDVXPPDU\ZLWQHVV7KH6WHZDUWV                             *6HQWHQFLQJ'HWHUPLQDWLRQV
DUJXH WKDW )UDQ[PDQ RIIHUHG LPSHUPLVVLEOH FUHGLELOLW\
GHWHUPLQDWLRQV DQG OHJDO FRQFOXVLRQV DQG WKDW LW ZDV SODLQ                     0LQRU5ROH5HGXFWLRQ6DELQR
HUURUIRUWKHGLVWULFWFRXUWWRDGPLW)UDQ[PDQjVWHVWLPRQ\DV
HYLGHQFH7KHUHIRUHWKH6WHZDUWVDUJXHWKDWWKLVFRXUWVKRXOG             7KH JRYHUQPHQW DUJXHV WKDW WKH GLVWULFW FRXUW HUUHG LQ
UHPDQGWKHFDVHWRWKHGLVWULFWFRXUWZLWKLQVWUXFWLRQVWRVWULNH        JUDQWLQJ6DELQRDUHGXFWLRQLQKLVRIIHQVHOHYHOIRUVHUYLQJDV
)UDQ[PDQjVWHVWLPRQ\DQGGLVPLVVWKHFDVH$GLVWULFWFRXUWjV           D PLQRU SDUWLFLSDQW LQ WKH FRQVSLUDF\  7KH 6HQWHQFLQJ
HYLGHQWLDU\UXOLQJVDUHUHYLHZHGIRUDQDEXVHRIGLVFUHWLRQ             *XLGHOLQHVSURYLGHWKDWDVHQWHQFLQJFRXUWVKRXOGGHFUHDVHDQ
6HH0RUDOHVY$PHULFDQ+RQGD0RWRU&RPSDQ\,QF                   RIIHQVHOHYHOE\OHYHOVLIDGHIHQGDQWLVDPLQRUSDUWLFLSDQW
)GWK&LU                                           LQDFULPLQDORIIHQVH866*%7KHGLVWULFW
                                                                         FRXUWjVUHGXFWLRQRIDQRIIHQVHOHYHOXQGHUWKLVJXLGHOLQHLV
  7HVWLPRQ\VXPPDUL]LQJHYLGHQFHLVDGPLVVLEOHLQLQFRPH                 UHYLHZHG IRU FOHDU HUURU 6HH 8QLWHG 6WDWHV Y /DWRXI 
WD[SURVHFXWLRQV6WXUPDQ)GDWFLWLQJ8QLWHG              )GWK&LUFLWLQJ8QLWHG6WDWHVY0LOOHU
6WDWHVY/DWWXV)GWK&LU6XFK              )GWK&LU7KHGHIHQGDQWEHDUVWKH
WHVWLPRQ\LVDGPLVVLEOHLQDFULPLQDOWULDOmZKHQWKHMXGJH              EXUGHQ RI SURRI LQ HVWDEOLVKLQJ KLV HQWLWOHPHQW WR WKH
FKDUJHV WKH MXU\ DV WR DOO WKH HOHPHQWV QHFHVVDU\ IRU           UHGXFWLRQ6HHLGmµ$QDGMXVWPHQWLVQRWDSSURSULDWHLQWKH
FRQYLFWLRQZKHUHWKHVXPPDU\LVLQWHQGHGWRDLGWKHMXU\LQ             DEVHQFHRIDILQGLQJWKDWWKHGHIHQGDQWZDVµVXEVWDQWLDOO\OHVV
                                                                         FXOSDEOH WKDQ WKH DYHUDJH SDUWLFLSDQWj LQ WKH FULPLQDO
                                                                         HQWHUSULVHjl  ,G TXRWLQJ 0LOOHU  )G DW   m$
                                                                         GHIHQGDQWZKRVHSDUWLFLSDWLRQLVLQGLVSHQVDEOHWRWKHFDUU\LQJ
     WKDW &DUOVRQ KDG QRW YDOLGO\ LQYRNHG WKH SULYLOHJH 7KH FRXUW
     QRWHG WKDW LQ FDVHV ZKHUH WKH SULYLOHJH LV LQYRNHG WR DYRLG
                                                                         RXWRIWKHSODQLVQRWHQWLWOHGWRDUROHUHGXFWLRQl,GFLWDWLRQ
     LQFULPLQDWLRQ IRU SDVW WD[ FULPHV WKH SULYLOHJH DJDLQVW            RPLWWHG
     VHOILQFULPLQDWLRQ FRPHV LQ FRQIOLFW ZLWK WKH QHHG IRU SXEOLF
     UHYHQXH FROOHFWLRQ E\ D SURFHVV QHFHVVDULO\ UHOLDQW RQ                7KHJRYHUQPHQWOLVWVVHYHUDODFWVRI6DELQRWKDWLWVXEPLWV
     VHOIUHSRUWLQJ  )G DW  ,Q VXFK FDVHV WKH FRXUW PXVW     FRPSULVHG PRUH WKDQ D PLQRU UROH LQ WKH FRQVSLUDF\
     EDODQFH WKHVH WZR LQWHUHVWV ,Q &DUOVRQ WKH FRXUW FRQFOXGHG WKDW   VSHFLILFDOO\KLVFRQGXFWLQVHUYLQJDVDWUXVWHHIRUVHYHUDORI
     WKH SXEOLF LQWHUHVW LQ UDLVLQJ UHYHQXH RXWZHLJKHG &DUOVRQ
V )LIWK
     $PHQGPHQW LQWHUHVWV 7ZR IDFWRUV ZHUH VLJQLILFDQW LQ WKH
                                                                         WKH WUXVWV VLJQLQJ RU KDYLQJ KLV VLJQDWXUH VWDPSHG RQ D
     GHFLVLRQ )LUVW &DUOVRQ KDG XVHG WKH SULYLOHJH DV SDUW RI D        FRQWUDFW IRU WKH SXUFKDVH RI SURSHUW\ RQ EHKDOI RI WKH
     VFKHPH WR DYRLG SD\PHQW RI WD[HVKLV VXEPLVVLRQ RI D IDOVH :     6WHZDUWV KDYLQJ KLV VLJQDWXUH VWDPSHG RQ D WUXVW EDQNLQJ
     IRUP ZDV FRQFHDOHG E\ KLV IDLOXUH WR ILOH D UHWXUQ ZKLFK DOVR      DFFRXQWWKDWEHQHILWWHGWKH6WHZDUWVDQGSDUWLFLSDWLQJLQWKH
     HQDEOHG KLP WR FRQFHDO KLV RYHUDOO WD[ OLDELOLWLHV 6HFRQG WKH     SODFHPHQWRIDERJXVPRUWJDJHRQWKH6WHZDUWVjUHVLGHQFH
     UHTXLUHPHQW RI ILOLQJ DQ DQQXDO WD[ UHWXUQ LV GLUHFWHG DW UHYHQXH
     FROOHFWLRQ QRW FULPLQDO SURVHFXWLRQ WKH TXHVWLRQV LQ WKH UHWXUQ
                                                                         6DELQRDUJXHVWKDWKHFRQWULEXWHGQRVSHFLDONQRZOHGJHRU
     DUH QHXWUDO DQG GLUHFWHG DW WKH SXEOLF DW ODUJH                    VNLOOVWKDWZHUHHVVHQWLDOWRWKHFRPSOHWLRQRIWKHFRQVSLUDF\
                                                                         +RZHYHU6DELQRjVZLOOIXOFRQGXFWDVDWUXVWHHRIWKHWUXVWV
5HGDKO     )G DW  FLWLQJ   6XOOLYDQ     86 DW 
    8QLWHG6WDWHVY           1RV           1RV               8QLWHG6WDWHVY     
      6DELQRHWDO                                                                                               6DELQRHWDO

  DOOHJHGDQGVXFKRYHUWDFWZDVNQRZLQJO\GRQH             RUJDQL]LQJSURRIDQGZKHUHWKHVXPPDU\LVQRWLQIODPPDWRU\
  LQ IXUWKHUDQFH RI VRPH REMHFW RU SXUSRVH RI WKH              RUSUHMXGLFLDOO\ZRUGHGl,G
  FRQVSLUDF\DVFKDUJHGl
                                                                         :KLOHDVXPPDU\ZLWQHVVPD\JLYHDQRSLQLRQWKDWmHYHQWV
.UDLJ)GDWFLWLQJ8QLWHG6WDWHVY6WXUPDQ           DVVXPHG LQ >D@ TXHVWLRQ ZRXOG WULJJHU WD[ OLDELOLW\>@l RU
)GWK&LU$OWKRXJKLVEURDGO\           mZKHWKHUSDUWLFXODUSD\PHQWVXQGHUDVVXPHGFLUFXPVWDQFHV
FRQVWUXHG m>L@W LV IXQGDPHQWDO WKDW D FRQYLFWLRQ IRU           ZRXOGEHWD[DEOHlKHRUVKHPD\QRWJLYHDOHJDORSLQLRQWKDW
FRQVSLUDF\XQGHU86&FDQQRWEHVXVWDLQHGXQOHVV            QHFHVVDULO\GHWHUPLQHVWKHJXLOWRIDGHIHQGDQWRULQVWUXFWVWKH
WKHUHLV
SURRIRIDQDJUHHPHQWWRFRPPLWDQRIIHQVHDJDLQVW           MXU\RQFRQWUROOLQJOHJDOSULQFLSOHV8QLWHG6WDWHVY0RQXV
WKH8QLWHG6WDWHVjl8QLWHG6WDWHVY&ROOLQV)G           )GWK&LU7KHUHIRUHLQDWD[FDVH
WK&LUTXRWLQJ,QJUDPY8QLWHG6WDWHV             WKHVXPPDU\ZLWQHVVLVDOORZHGWRmVXPPDUL]HDQGDQDO\]H
86m>7@KHJRYHUQPHQWQHHGQRWSURYH            WKHIDFWVLQGLFDWLQJZLOOIXOWD[HYDVLRQVRORQJDV>VKHGRHV@
DIRUPDODJUHHPHQWDWDFLWRUPXWXDOXQGHUVWDQGLQJWRHQJDJH          QRWµGLUHFWO\HPEUDFHWKHXOWLPDWHTXHVWLRQRIZKHWKHU>WKH
LQDFRPPRQSODQLVVXIILFLHQWl,GFLWLQJ8QLWHG6WDWHVY         GHIHQGDQWV@ GLG LQ IDFW LQWHQG WR HYDGH LQFRPH WD[HVjl
(OO]H\  )G   WK &LU  )XUWKHU m>W@KH   8QLWHG 6WDWHV Y 0RRUH  )G   WK &LU 
DJUHHPHQWPD\EHLQIHUUHGIURPWKHDFWVGRQHLQIXUWKHUDQFH            TXRWLQJ8QLWHG6WDWHVY'RWVRQ)GWK
RIWKHFRQVSLUDF\l8QLWHG6WDWHVY+LWRZ)G            &LU
 WK &LU   2QFH WKH JRYHUQPHQW SURYHV WKDW D
FRQVSLUDF\ H[LVWHG WKH GHIHQGDQW
V mFRQQHFWLRQ WR WKH             7KH WHVWLPRQ\ RI D VXPPDU\ ZLWQHVV mVKRXOG EH
FRQVSLUDF\PXVWEHVKRZQEH\RQGDUHDVRQDEOHGRXEWEXWWKH            DFFRPSDQLHGE\DOLPLWLQJLQVWUXFWLRQZKLFKLQIRUPVWKHMXU\
LPSRUWDQFH RI WKH FRQQHFWLRQ QHHG QRW EH JUHDWl  8QLWHG      RIWKHVXPPDU\jVSXUSRVHDQGWKDW>WKHVXPPDU\LWVHOI@GRHV
6WDWHVY%HWDQFRXUW)GWK&LU               QRWFRQVWLWXWHHYLGHQFHl8QLWHG6WDWHVY3DXOLQR)G
                                                                       WK&LU,Q3DXOLQRDSDQHORIWKLVFRXUW
  7KHJRYHUQPHQWPXVWVKRZWKDWWKHFRQVSLUDWRUVLQWHQGHG              KHOG WKH WHVWLPRQ\ RI D QRQH[SHUW VXPPDU\ ZLWQHVV
WRLPSDLUWKHIXQFWLRQVRIWKH,56:KLOHWKHJRYHUQPHQW              DGPLVVLEOHXQGHU)(' 5 (9,'DEHFDXVHWKHGLVWULFW
QHHG QRW mSURYH WKDW WKH FRQVSLUDWRUV ZHUH DZDUH RI WKH       FRXUWJDYHDOLPLWLQJLQVWUXFWLRQDQGWKHGHIHQVHKDGDIXOO
FULPLQDOLW\RIWKHLUREMHFWLYHlLWPXVWmVKRZWKDWWKH\NQHZ          RSSRUWXQLW\WRFURVVH[DPLQHWKHZLWQHVV,G
RIWKHOLDELOLW\IRUIHGHUDOWD[HVl&ROOLQV)GDW
                                                                         7KH GLVWULFW FRXUW LQVWUXFWHG WR WKH MXU\ UHJDUGLQJ
   7KHUHZDVDPSOHHYLGHQFHDWWULDOWRVXVWDLQWKHFRQYLFWLRQ         )UDQ[PDQjVWHVWLPRQ\DVIROORZV
RI 6DELQR IRU FRQVSLUDF\  7KH 6WHZDUWV ZHUH WKH SULPDU\
SOD\HUV LQ WKH WD[ HYDVLRQ VFKHPH  <HW 6DELQR VHUYHG DV       7KLVLVDQRSLQLRQZLWQHVV:KHWKHUVKHZLOOEHDEOHWR
WUXVWHHIRUVRPHRIWKHWUXVWVDQGLQKLVFDSDFLW\IDFLOLWDWHG           JLYHDQRSLQLRQRQDFHUWDLQVXEMHFWZLOOGHSHQGXSRQ
WUDQVIHUVRIWKH6WHZDUWVjLQWHUHVWVWRWKHWUXVWV+LVVLJQDWXUH       ZKDWWKHVXEMHFWLV6KHLVQRWDQH[SHUW7KHUHDUHQR
DXWKRUL]HGWKHSD\PHQWRIWKH6WHZDUWVjOLYLQJH[SHQVHVDQG              H[SHUWVLQWKLVFRXUW6KHLVDQRSLQLRQZLWQHVV$QG
PRUWJDJHVDQGKHDFWHGDVWKHmPDQDJHUlIRU'DQFRDOWKRXJK              WKDWjVDOOVKHZLOOEHDEOHWRKHOSXVZLWK
KHGLGQRWKDYHDQ\VXEVWDQWLYHUHVSRQVLELOLWLHV6DELQRDOVR
WHVWLILHG IDOVHO\ WR WKH JUDQG MXU\ FRQFHUQLQJ YDULRXV                                        
WUDQVDFWLRQVFRQGXFWHGRQEHKDOIRIWKHWUXVWV,QDGGLWLRQ
    8QLWHG6WDWHVY          1RV         1RV                  8QLWHG6WDWHVY     
      6DELQRHWDO                                                                                               6DELQRHWDO

  7KHUHLVDOHJDOGHILQLWLRQRIQHWZRUWKWKDWWKH&RXUWZLOO      JRYHUQPHQW LPSURSHUO\ LQFOXGHG 'DQFRjV  ORDQ WR
  JLYH\RX+RZHYHUDWWKLVWLPHWKHZLWQHVVLVJLYLQJWKH        0UV6WHZDUWjVPRWKHUDVDQDVVHWEXWDVPHQWLRQHGDERYH
  EDVLV RI KHU RSLQLRQ IRU \RX WR DQDO\]H DQG IRU WKDW   RQHPD\SURSHUO\GLVUHJDUGWKLVDUJXPHQWEHFDXVHHYLGHQFH
  SXUSRVHVKHKDVVWDWHGZKDWVKHEHOLHYHVQHWZRUWKWREH         UHYHDOHG WKDW WKH PRWKHU UHSD\HG WKH ORDQ WR 0UV 6WHZDUW
  7KHGHILQLWLRQWKHOHJDOGHILQLWLRQRIQHWZRUWKZLOOEH         UDWKHUWKDQWR'DQFR$FFRUGLQJO\WKH6WHZDUWVjDUJXPHQWV
  JLYHQWR\RXDWDVXEVHTXHQWWLPHLQWKHSURFHHGLQJV       UHJDUGLQJQHWZRUWKDUHPHULWOHVV
  >7@KHUHZLOOEHFHUWDLQVXPPDULHVWHVWLILHGWRLQWKHQH[W
  VHYHUDO KRXUV  7KHVH VXPPDULHV ZHUH SUHSDUHG E\ D                ),QVXIILFLHQW(YLGHQFHRI&RQVSLUDF\&RXQW
  ZLWQHVV DQG DUH VXEPLWWHG WR \RX IRU WKH SXUSRVH RI
  H[SODLQLQJ IDFWV GLVFORVHG E\ WHVWLPRQ\ DQG RWKHU             6DELQR DUJXHV WKDW KLV FRQYLFWLRQ VKRXOG EH UHYHUVHG
  GRFXPHQWVZKLFKDUHOHJDOHYLGHQFHLQWKHFDVH6XFK             EHFDXVHWKHUHZDVLQVXIILFLHQWHYLGHQFHWRILQGKLPJXLOW\RQ
  VXPPDULHV DUH QRW LQ DQG RI WKHPVHOYHV SURRI RI DQ\      WKHFRQVSLUDF\FRXQW,QSDUWLFXODU6DELQRDUJXHVWKDWWKHUH
  IDFWV,IVXFKVXPPDULHVGRQRWFRUUHFWO\UHIOHFWIDFWVRU       ZDVQRHYLGHQFHWKDWKHSHUSHWUDWHGDQ\GHFHLWIXORUGLVKRQHVW
  ILJXUHVVKRZQE\WKHOHJDOHYLGHQFHLQWKHFDVHWKHQ\RX         DFWV WKDW KH FRQVSLUHG ZLWK RWKHU SHUVRQV ZKR FRPPLWWHG
  PD\GLVUHJDUGWKHPHQWLUHO\7KH\DUHVLPSO\WRDVVLVW           GHFHLWIXORUGLVKRQHVWDFWVRUWKDWKHKDGNQRZOHGJHRIWD[
  \RX LQ VXPPDUL]LQJ ZKDW WKH ZLWQHVV EHOLHYHV WKH           ODZV SHUWDLQLQJ WR WKH WUXVWV IRU ZKLFK KH ZDV WUXVWHH
  HYLGHQFHWREH                                                   m(YLGHQFH LV VXIILFLHQW WR XSKROG D MXU\ FRQYLFWLRQ LI DIWHU
                                                                    YLHZLQJ WKH HYLGHQFH LQ WKH OLJKW PRVW IDYRUDEOH WR WKH
  7KHVHLQVWUXFWLRQVLQFOXGHGWKHDSSURSULDWHOLPLWDWLRQVE\        JRYHUQPHQWDQGGUDZLQJDOOLQIHUHQFHVLQWKHJRYHUQPHQWjV
WKHFRXUWDQGGLGQRWSUHVHQWDQ\LPSURSHUGLUHFWLRQ)XUWKHU     IDYRUDUHDVRQDEOHMXURUFRXOGILQGWKDWHDFKHOHPHQWRIWKH
XVHRI)UDQ[PDQDVDVXPPDU\ZLWQHVVZDVQRWHUURUEHFDXVH          RIIHQVH KDV EHHQ HVWDEOLVKHG EH\RQG D UHDVRQDEOH GRXEWl
WKH GHIHQGDQWVFURVVH[DPLQHGKHUH[WHQVLYHO\)UDQ[PDQ           8QLWHG6WDWHVY.UDLJ)GWK&LU
DQDO\]HGWKHPXOWLWXGHRIGRFXPHQWVDQGWHVWLPRQ\DGPLWWHG          FLWLQJ8QLWHG6WDWHV Y 7D\ORU)GWK&LU
LQWRHYLGHQFHDQGSURSHUO\WHVWLILHGDVWRWKHJRYHUQPHQWjV         
FDOFXODWLRQRIWD[GXHIURPWKH6WHZDUWV6HH8QLWHG6WDWHVY
0RKQH\)GWK&LU6KHGLGQRW             6DELQR ZDV FRQYLFWHG RI FRQVSLULQJ WR GHIUDXG WKH ,56
UHQGHUDQRSLQLRQFRQFHUQLQJWKHJXLOWRIWKHGHIHQGDQWVVKH       XQGHU86&$FFRUGLQJWRm>L@IWZRRUPRUH
VLPSO\FDOFXODWHGWKHWD[HVWKDWWKH6WHZDUWVRZHGEDVHGRQ         SHUVRQV FRQVSLUH    WR GHIUDXG WKH 8QLWHG 6WDWHV RU DQ\
WKHHYLGHQFHDWWULDO                                            DJHQF\WKHUHRILQDQ\PDQQHURUIRUDQ\SXUSRVHDQGRQHRU
                                                                    PRUHRIVXFKSHUVRQVGRDQ\DFWWRHIIHFWWKHREMHFWRIWKH
                                                                  FRQVSLUDF\HDFKVKDOOEHILQHGl86&7KH
                                                                    HOHPHQWVRIDFRQVSLUDF\DUH
   7KH 6WHZDUWV DOVR REMHFWHG WR SDUWV RI )UDQ[PDQjV
WHVWLPRQ\  )LUVW WKH 6WHZDUWV DUJXH WKDW VKH LPSURSHUO\     m WKH FRQVSLUDF\ GHVFULEHG LQ WKH LQGLFWPHQW ZDV
WUHDWHG D SURPLVVRU\ QRWH IURP 'DQFR WR 0UV 6WHZDUWjV        ZLOIXOO\IRUPHGDQGZDVH[LVWLQJDWRUDERXWWKHWLPH
PRWKHUDVDSHUVRQDODVVHWRI0UV6WHZDUWDQGVHFRQGVKH           DOOHJHGWKHDFFXVHGZLOOIXOO\EHFDPHDPHPEHU
DVVLJQHGRZQHUVKLSWRWKH6WHZDUWVRISURSHUW\WLWOHGLQRWKHU        RI WKH FRQVSLUDF\     RQH RI WKH FRQVSLUDWRUV
SHUVRQVjQDPHV)UDQ[PDQKRZHYHUPHUHO\DFFRUGHGWKHVH             WKHUHDIWHU NQRZLQJO\ FRPPLWWHG DW OHDVW RQH RYHUW DFW
DVVHWV WKH WUHDWPHQW WKDW WKH HYLGHQFH GHPRQVWUDWHG WKH\       FKDUJHGLQWKHLQGLFWPHQWDWRUDERXWWKHWLPHDQGSODFH
    8QLWHG6WDWHVY          1RV           1RV                8QLWHG6WDWHVY     
      6DELQRHWDO                                                                                               6DELQRHWDO

DFFRXQWLQJIRUFDVKLQWKHRSHQLQJQHWZRUWKFRPSXWDWLRQl            GHVHUYHG:LWKUHVSHFWWRWKHSURPLVVRU\QRWHWULDOWHVWLPRQ\
*LDFDORQH)GDW7KHUHIRUHWKHHVWDEOLVKPHQWRI          VKRZHGWKDW0UV6WHZDUWjVPRWKHUUHSDLGWKHORDQWR0UV
UHTXLVLWHSURRISHUPLWVWKHmXVHRIGDVKHVlWRUHSUHVHQWmFDVKl       6WHZDUWUDWKHUWKDQ'DQFR/LNHZLVHWKHHYLGHQFHVXSSRUWHG
IRUFRQWHVWHG\HDUVVXFKV\PEROLFGHQRPLQDWLRQVm>GR@QRW            )UDQ[PDQjVVWDWHPHQWIRUWD[FDOFXODWLRQSXUSRVHVWKDWWKH
LQYDOLGDWHWKHQHWZRUWKVWDWHPHQWl,GDW                     6WHZDUWV WUXO\ RZQHG DVVHWV WLWOHG LQ WKH WUXVWV DQG RWKHU
                                                                      SHUVRQV
   )UDQ[PDQSUHVHQWHGWKH6WHZDUWVjFDVKDVVHWVDVDGDVKDQG
WKXVFRQVWDQWIRUWKHFRQWHVWHG\HDUV6KHUHOLHGXSRQYDULRXV        )LQDOO\ WKH 6WHZDUWV DOVR DUJXH WKDW )UDQ[PDQ LJQRUHG
IDFWRUVWRFRQFOXGHWKDWWKH6WHZDUWVGLGQRWKDYHDFDVKKRDUG       HYLGHQFHWKDWDVDPDWWHURI2KLRFRUSRUDWHODZ'DQFRKDG
DW WKH FORVH RI  LQFOXGLQJ  HYLGHQFH RI ORDQV RI    EHHQ GLVVROYHG LQ   )UDQ[PDQ SDUWLDOO\ UHOLHG XSRQ
  DQG  LQ   DQG        'DQFRWUDQVDFWLRQVPDGHXQGHUWKHDXVSLFHVRIWKHWUXVWVWR
UHVSHFWLYHO\WKDWVXJJHVWWKHODFNRIDFDVKKRDUGHYLGHQFH      GHWHUPLQH 'DQFRjV WD[ OLDELOLW\  (VVHQWLDOO\ WKH 6WHZDUWV
WKDWFKHFNVZULWWHQRQSHUVRQDODFFRXQWVGLGQRWUHYHDOWKH           FRQWHQGWKDWWKLVWHVWLPRQ\ZDVLPSURSHUEHFDXVH'DQFRGLG
SXUFKDVH RI DQ\ LQFRPHSURGXFLQJ DVVHWV RU LQYHVWPHQWV         QRWH[LVWDVDPDWWHURI2KLRVWDWHODZ
DQGWKHODFNRIHYLGHQFHWRVXSSRUWWKDWWKH6WHZDUWVKDGD
KLVWRU\ RI HQJDJLQJ LQ ODUJH FDVK WUDQVDFWLRQV  2Q FURVV      $WUXVWKDYLQJWKHDWWULEXWHVRIDFRUSRUDWLRQZLOOEHWUHDWHG
H[DPLQDWLRQ0U6WHZDUWjVDWWRUQH\VXJJHVWHGWKHH[LVWHQFH           IRUIHGHUDOLQFRPHWD[SXUSRVHVDVDQDVVRFLDWLRQDQGWKXV
RI FDVK LWHPV WRWDOLQJ  EXW WKH 6WHZDUWV               FRJQL]DEOHDVDWD[DEOHHQWLW\m7KHIDFWWKDWXQGHUVWDWHODZ
DFNQRZOHGJHG LQ WKHLU EULHI RQ DSSHDO WKDW WKH\ FRXOG QRW    RUJDQL]DWLRQVDUHQRWOHJDOHQWLWLHVlLVQRWFRQWUROOLQJLQ
SURYLGH DQ\ OHDGV IRU WKH LWHPV  ,Q DQ\ HYHQW )UDQ[PDQ    GHWHUPLQLQJZKHWKHUWKH\FRQVWLWXWHGDQDVVRFLDWLRQWD[DEOH
SURSHUO\GLVSRVHGRIWKHVHVXJJHVWLRQV                              DV D FRUSRUDWLRQ  &RPPLVVLRQHU RI ,QWHUQDO 5HYHQXH Y
                                                                      )RUWQH\2LO&R)GWK&LUFLWLQJ
  7KH 6WHZDUWV DOVR FODLPHG DGGLWLRQDO HUURUV LQ WKH           %XUN:DJJRQHU 2LO $VVjQ Y +RSNLQV  86  
JRYHUQPHQWjVQHWZRUWKFDOFXODWLRQVSHFLILFDOO\GLUHFWLQJWKLV       m7KHFRUHWHVWRIFRUSRUDWHH[LVWHQFHIRUSXUSRVHVRI
FRXUW WR VHYHUDO PLVVHG DVVHWV   LQ KRXVHKROG         IHGHUDOLQFRPHWD[DWLRQLVDOZD\VDPDWWHURIIHGHUDOODZl
IXUQLWXUH WKH  YDOXH RI D  OLIH LQVXUDQFH     8QLWHG6WDWHVY0F'RQDOG	(LGH,QF)GUG
SROLF\DQGLQORDQVWKH6WHZDUWVDOOHJHGO\PDGHWR           &LU7KH6WHZDUWVjFRQWHQWLRQVUHJDUGLQJWKHWUHDWPHQW
'DQFR$VVHWIRUWKE\WKHJRYHUQPHQWWKRXJKWKHUHZDVQR          RI 'DQFR DUH PHULWOHVV  7KH H[LVWHQFH RI 'DQFR DV DQ
HYLGHQFHWKDWWKH6WHZDUWVGLVSRVHGRIWKHIXUQLWXUHGXULQJWKH       DVVRFLDWLRQWD[DEOHDVDFRUSRUDWLRQIRUIHGHUDOWD[SXUSRVHV
FRQWHVWHG \HDUV VR LWV YDOXH UHPDLQHG FRQVWDQW GXULQJ WKH    GLGQRWGHSHQGXSRQLWVVWDWXVXQGHU2KLRODZ
SHULRG7KH6WHZDUWVFODLPWKDWWKHIXUQLWXUHFRQVWLWXWHGDQ
DVVHWEHFDXVHLQVXUDQFHSURFHHGVFRYHUHGGHVWUXFWLRQRIWKH                                'sXU\,QVWUXFWLRQV
IXUQLWXUHGXULQJDILUHEXWWKHHYLGHQFHVKRZHGWKDWSURFHHGV
IURP WKH LQVXUDQFH VHWWOHPHQW FKHFN  SULPDULO\ ZHQW WR D       ,QWKHLUIRXUWKDVVLJQPHQWRIHUURUWKH6WHZDUWVDUJXHWKDW
FRQWUDFWRUWRFOHDQVPRNHGDPDJHQRWWREX\QHZIXUQLWXUH           WKHGLVWULFWFRXUWLPSURSHUO\LQVWUXFWHGWKHMXU\E\IDLOLQJWR
7KH6WHZDUWVGLGQRWHOLFLWDQ\HYLGHQFHWKDWWKH\GLVSRVHGRI        LQFOXGHWKH6WHZDUWjVSURIIHUHGLQVWUXFWLRQWKDW 'DQFRZDV
WKHOLIHLQVXUDQFHSROLF\RUERUURZHGDJDLQVWLWDQGWKH\GLG       GLVVROYHG DQG E\ DGPLQLVWHULQJ D FRQIXVLQJ LQVWUXFWLRQ
QRW GHPRQVWUDWH WKDW WKHLU ORDQV WR 'DQFR ZHUH UHSDLG RU     UHJDUGLQJ RSLQLRQ ZLWQHVVHV  7KH 6WHZDUWV DUJXH WKDW WKH
EHFDPH ZRUWKOHVV  7KH 6WHZDUWV DOVR DUJXHG WKDW WKH          GLVWULFWFRXUWjVUHIXVDOWRJLYHWKHLUSURIIHUHGLQVWUXFWLRQDQG
    8QLWHG6WDWHVY           1RV            1RV                8QLWHG6WDWHVY     
      6DELQRHWDO                                                                                                 6DELQRHWDO

WKH RYHUDOO FRQIXVLRQ RI WKH MXU\ LQVWUXFWLRQV FRQVWLWXWHG       FRXUWVPXVWFORVHO\VFUXWLQL]HLWVXVHl+ROODQG86DW
UHYHUVLEOHHUURU>7KHFRXUW@UHYLHZ>V@MXU\LQVWUXFWLRQVDVD          7KXV RSHQLQJ QHW ZRUWK PXVW EH HVWDEOLVKHG ZLWK
ZKROH WR GHWHUPLQH ZKHWKHU WKH\ IDLUO\ DQG DGHTXDWHO\            mUHDVRQDEOHFHUWDLQW\l,GDWm$VDQDGGHGPHDVXUHRI
VXEPLWWHGWKHLVVXHVDQGDSSOLFDEOHODZWRWKHMXU\8QLWHG           SURWHFWLRQWKHJRYHUQPHQWLVUHTXLUHGWRGHPRQVWUDWHWKDWLW
6WDWHVY:LOOLDPV)GWK&LU$             KDVLQYHVWLJDWHGWKHH[LVWHQFHRIVRXUFHVRIQHWZRUWKRWKHU
MXGJPHQW ZLOO EH UHYHUVHG mEDVHG XSRQ DQ LPSURSHU MXU\          WKDQ XQUHSRUWHG WD[DEOH LQFRPHl  *LDFDORQH  )G DW
LQVWUXFWLRQµRQO\LIWKHLQVWUXFWLRQVYLHZHGDVDZKROHZHUH          )DLOXUHWRLQYHVWLJDWHOHDGVIXUQLVKHGE\WKHWD[SD\HU
FRQIXVLQJ PLVOHDGLQJ RU SUHMXGLFLDOjl  8QLWHG 6WDWHV Y       PD\UHVXOWLQmVHULRXVLQMXVWLFHl+ROODQG86DW
%HDW\)GWK&LU                               DQGWKXVWKHmFRJHQF\RI>WKHJRYHUQPHQWjV@SURRIGHSHQGV
                                                                        XSRQLWVHIIHFWLYHQHJDWLRQRIUHDVRQDEOHH[SODQDWLRQVE\WKH
                                                                      WD[SD\HULQFRQVLVWHQWZLWKJXLOWl,Gm+RZHYHUZKHUHWKH
                                                                        JRYHUQPHQWSURYHVDVRXUFHRIWD[DEOHLQFRPHLWQHHGQRW
  7KH 6WHZDUWV DUJXH WKDW WKH GLVWULFW FRXUW LPSURSHUO\          QHJDWHDOOWKHSRVVLEOHQRQWD[DEOHVRXUFHVRIWKHDOOHJHGQHW
UHIXVHG WR LQVWUXFW WKH MXU\ WKDW 'DQFR ZDV GLVVROYHG DV D    ZRUWKLQFUHDVHVVXFKDVJLIWVORDQVDQGLQKHULWDQFHV3URRI
PDWWHU RI ODZ  7KH 6WHZDUWV SURIIHUHG WKH IROORZLQJ            RIDVRXUFHRIWD[DEOHLQFRPHFDUULHVZLWKLWWKHQHJDWLRQRI
LQVWUXFWLRQ DQG LWV UDWLRQDOH WR WKH GLVWULFW FRXUW m>$@V D   XQWD[DEOHLQFRPHl8QLWHG6WDWHVY%HQFV)G
PDWWHURIODZWKDWWKHFRUSRUDWLRQZDVGLVVROYHG%HFDXVH              WK&LU
FRUSRUDWLRQV DUH FUHDWHG E\  DV WKH\jUH ILFWLWLRXV HQWLWLHV
FUHDWHGE\WKHVWDWHDQGXOWLPDWHO\GLVVROYHGE\WKHVWDWHDQG            7KH 6WHZDUWV DUJXH WKDW WKH JRYHUQPHQW LPSURSHUO\
ZHVXUHKDYHWKRVHGLVVROXWLRQSDSHUVLQWKHUHFRUGZLWKRXW             FDOFXODWHGWKHLUQHWZRUWKEHFDXVHLWIDLOHGWRWUHDWWKHDVVHWV
DQ\LQGLFDWLRQRIDQ\WKLQJWKDWZRXOGUHQGHUWKRVHGLVVROXWLRQ          RI'DQFRDVWKRVHRIDVROHSURSULHWRUVKLS7KHGLVFXVVLRQ
SDSHUVLQYDOLGl                                                       DERYHUHJDUGLQJ'DQFRjVVWDWXVDVDGLVVROYHGFRUSRUDWLRQ
                                                                        SDUWLFXODUO\ZLWKUHVSHFWWRIHGHUDOWD[ODZGLVSRVHVRIWKLV
   $VVWDWHGLQ:LOOLDPVm>D@UHIXVDOWRGHOLYHUDUHTXHVWHG     DUJXPHQW
LQVWUXFWLRQLVUHYHUVLEOHRQO\LIWKDWLQVWUXFWLRQLVDFRUUHFW
VWDWHPHQW RI WKH ODZ  QRW VXEVWDQWLDOO\ FRYHUHG E\ WKH        1H[W WKH 6WHZDUWV DUJXH WKDW WKH JRYHUQPHQW IDLOHG WR
FKDUJHDFWXDOO\GHOLYHUHGWRWKHMXU\DQGFRQFHUQVDSRLQW         HVWDEOLVK RSHQLQJ FDVK RQ KDQG ZLWK UHDVRQDEOH FHUWDLQW\
VRLPSRUWDQWLQWKHWULDOWKDWWKHIDLOXUHWRJLYHLWVXEVWDQWLDOO\     EHFDXVHLWIDLOHGWRLQYHVWLJDWHOHDGVSURYLGHGE\WKHPm$
LPSDLUV WKH GHIHQGDQW
V GHIHQVHl   )G DW   7KH     GHIHQVH RIWHQ DVVHUWHG LQ QHW ZRUWK FDVHV LV WKDW WKH
6WHZDUWVjSURIIHUHGLQVWUXFWLRQZDVZURQJ:KHWKHUWKHWUXVWV          JRYHUQPHQWjVRSHQLQJQHWZRUWKLVQRWDFFXUDWHEHFDXVHRI
VKRXOG EH WD[HG DV D FRUSRUDWLRQ ZDV QRW FRQWLQJHQW RQ         VXEVWDQWLDO FDVK RU DVVHWV RQ KDQG DW WKH VWDUWLQJ SRLQWl
ZKHWKHU'DQFRZDVGLVVROYHGXQGHU2KLRODZ5DWKHULWZDV             %HQFV)GDW7KHH[LVWHQFHRIDFDVKKRDUGPD\EH
D TXHVWLRQ RI IDFW ZKHWKHU 'DQFR DQG WKH UHOHYDQW WUXVWV       UHIXWHGKRZHYHUE\m>H@YLGHQFHZKLFKFDUHIXOO\WUDFHVWKH
VKRXOG EH WUHDWHG DV D FRUSRUDWLRQ IRU WD[ SXUSRVHV  7KH     ILQDQFLDOKLVWRU\RIDGHIHQGDQWDQGGLVFORVHVH[SHQGLWXUHVLQ
SURIIHUHG LQVWUXFWLRQ HUURQHRXVO\ VWDWHG WKDW WKLV LVVXH ZDV     H[FHVV RI UHSRUWHG UHVRXUFHV LQ WKH SHULRG LPPHGLDWHO\
UHVROYHGDVDPDWWHURI2KLRODZ                                       SUHFHGLQJWKHLQGLFWPHQW\HDUVl*LDFDORQH)GDW
                                                                        )XUWKHUPRUHWKHmUHFRJQLWLRQRIDFDVKEDQNUROOWUHDWHGDVD
                                                                        FRQVWDQWWRJHWKHUZLWKSURRIZKLFKZRXOGVXSSRUWDILQGLQJ
                                                                        WKDW QR VLJQLILFDQW FDVK KRDUG H[LVWHG >LV@ D VXIILFLHQW
    8QLWHG6WDWHVY           1RV            1RV                8QLWHG6WDWHVY     
      6DELQRHWDO                                                                                                 6DELQRHWDO

7KHUHIRUHEHFDXVHWKHVXPRIWKHGLVWULFWFRXUWjVLQVWUXFWLRQV                                         
VHW IRUWK WKH UHTXLVLWH JXLGDQFH WR WKH MXU\ ZH GHFOLQH WR
FRQFOXGHWKDWWKHLQVWUXFWLRQVDVDZKROHZHUHmFRQIXVLQJ                7KH 6WHZDUWVj VHFRQG FRQWHQWLRQ WKDW WKH GLVWULFW FRXUW
PLVOHDGLQJRUSUHMXGLFLDOl%HDW\)GDW                 GHOLYHUHGFRQIXVLQJLQVWUXFWLRQVUHJDUGLQJRSLQLRQZLWQHVVHV
                                                                        LQYROYHVWKHGLVWULFWFRXUWjVLQVWUXFWLRQFRQFHUQLQJ)UDQ[PDQ
                   (1HW:RUWK&DOFXODWLRQ                            7KHGLVWULFWFRXUWLQVWUXFWHGWKHMXU\DVIROORZV
  ,QWKHLUVL[WKDVVLJQPHQWRIHUURUWKH6WHZDUWVFRQWHQGWKDW          23,1,21:,71(66$1'+<327+(7,&$/48(67,21
WKH SURVHFXWLRQjV FDOFXODWLRQ RI WKHLU QHW ZRUWK GXULQJ WKH
FRQWHVWHG\HDUVZDVHUURQHRXV                                               ,QWKLVFDVH\RXKDYHKHDUGWKHWHVWLPRQ\RIZLWQHVVHV
                                                                          ZKR KDYH UHQGHUHG RSLQLRQV  3HUVRQV ZKR KDYH
   7LWOH  86&   SURYLGHV WKDW m>D@Q\ SHUVRQ ZKR        H[SHULHQFHLQDQ\DUWVFLHQFHSURIHVVLRQRUFDOOLQJPD\
ZLOOIXOO\DWWHPSWVLQDQ\PDQQHUWRHYDGHRUGHIHDWDQ\WD[               VWDWHWKHLURSLQLRQVLQDPDWWHUZKLFKLVUHOHYDQWWRWKH
LPSRVHGE\WKLVWLWOHRUWKHSD\PHQWWKHUHRIVKDOOEHJXLOW\        FDVH7KH\PD\DOVRVWDWHWKHUHDVRQVIRUWKHLURSLQLRQ
RIDIHORQ\lm7KHUHDUHWZRPHWKRGVRISURRILQDWD[
FDVH,QWKHµGLUHFWjRUµVSHFLILFLWHPjPHWKRGVSHFLILFLWHPV             <RXVKRXOGFRQVLGHUHDFKRSLQLRQUHFHLYHGLQWKLVFDVH
DUHGHPRQVWUDWHGDVWKHVRXUFHRIXQUHSRUWHGLQFRPH,QWKH              VHSDUDWHO\ DQG JLYH LW VXFK ZHLJKW DV \RX WKLQN LW
µLQGLUHFWjPHWKRGWKHGHIHQGDQW
VILQDQFHVDUHUHFRQVWUXFWHG             GHVHUYHV<RXPD\FRQVLGHUWKHHGXFDWLRQWUDLQLQJDQG
YLDFLUFXPVWDQWLDOHYLGHQFHLQFOXGLQJQHWZRUWKDQDO\VLV             H[SHULHQFHRIWKHRSLQLRQZLWQHVVHVZKHQGHWHUPLQLQJ
 EDQN GHSRVLWV DQG  FDVK H[SHQGLWXUHV LQ H[FHVV RI        WKHZHLJKWRIWKHLURSLQLRQV<RXPD\UHMHFWWKHRSLQLRQ
UHSRUWHGLQFRPHl8QLWHG6WDWHVY+DUW)G                LQZKROHRULQSDUWLI\RXFRQFOXGHWKHUHDVRQVJLYHQLQ
Q  WK &LU   8QGHU WKH QHW ZRUWK PHWKRG WKH         VXSSRUWRIWKHRSLQLRQVDUHXQVRXQG
JRYHUQPHQWDWWHPSWVWRHVWDEOLVKDQmRSHQLQJQHWZRUWKlRU
UDWKHUWRWDOQHWYDOXHH[FHVVRIDVVHWVDWFRVWRYHUOLDELOLWLHV           4XHVWLRQVKDYHEHHQDVNHGLQZKLFKRSLQLRQZLWQHVVHV
RI WKH WD[SD\HUjV ZHDOWK DW WKH EHJLQQLQJ RI D JLYHQ \HDU      ZHUHSHUPLWWHGWRDVVXPHWKDWFHUWDLQIDFWVZHUHWUXHDQG
7KHQLWGHWHUPLQHVLQFUHDVHVLQWKHWD[SD\HUjVQHWZRUWKDQG             WRJLYHWKHLURSLQLRQVEDVHGRQWKRVHDVVXPSWLRQV<RX
DGGV QRQGHGXFWLEOH H[SHQGLWXUHV LQFXUUHG GXULQJ WKH \HDU           PXVWGHWHUPLQHZKHWKHUWKHDVVXPHGIDFWVXSRQZKLFK
7KH GLIIHUHQFH EHWZHHQ WKH DGMXVWHG QHW YDOXHV DW WKH             WKHVH ZLWQHVVHV EDVH WKHLU RSLQLRQV DUH WUXH  ,I DQ\
EHJLQQLQJDQGHQGRIWKH\HDULVWUHDWHGDVWKHWD[DEOHLQFRPH            DVVXPHGIDFWZDVQRWHVWDEOLVKHGE\WKHJRYHUQPHQWE\
UHFHLYHGGXULQJWKH\HDU7KHJRYHUQPHQWPXVWUXOHRXWWKH               OHJDO HYLGHQFH EH\RQG D UHDVRQDEOH GRXEW \RX PXVW
H[LVWHQFHRIQRQWD[DEOHIXQGVDVWKHVRXUFHRIH[SHQGLWXUHVRU            GHWHUPLQH WKH HIIHFW RI WKDW IDFW QRW EHLQJ HVWDEOLVKHG
LQFUHDVHV LQ QHW ZRUWK  6HH +ROODQG Y 8QLWHG 6WDWHV       XSRQWKHYDOXHRIWKHRSLQLRQRIWKHZLWQHVV
868QLWHG6WDWHVY*LDFDORQH)G
WK&LU                                                   <RXPD\FRQVLGHUWKHIROORZLQJTXHVWLRQVLQGHFLGLQJ
                                                                          ZKHWKHUWREHOLHYHWKHVHZLWQHVVHVDQGKRZPXFKWRUHO\
   ,QmLQGLUHFWPHWKRGlFDVHVmWKHHYLGHQFHRIJXLOWLVODUJHO\          RQWKHLUWHVWLPRQ\
FLUFXPVWDQWLDODQGWKHQHWZRUWKPHWKRGLVDWEHVWRQO\DQ
DSSUR[LPDWLRQl*LDFDORQH)GDW7KHQHWZRUWK                 :KDWIDFWVGLGWKHZLWQHVVDVVXPH"5HPHPEHU
PHWKRGLVmVRIUDXJKWZLWKGDQJHUIRUWKHLQQRFHQWWKDWWKH                 WKDW\RXPXVWGHFLGHZKLFKIDFWVDUHWUXHEDVHGXSRQ
                                                                            WKHOHJDOHYLGHQFHLQWKLVFDVH
    8QLWHG6WDWHVY          1RV           1RV              8QLWHG6WDWHVY     
      6DELQRHWDO                                                                                             6DELQRHWDO

     'RHVWKHRSLQLRQRIWKHZLWQHVVWDNHLQWRDFFRXQW            GLVWULFWFRXUWjVUHIHUHQFHWRmDVVXPHGIDFWVlFRUUHVSRQGHGWR
     PRVWRUDOORIWKHLPSRUWDQWIDFWVWKDW\RXGHFLGHG              WKHWULDOHYLGHQFHUHOLHGXSRQE\)UDQ[PDQLQKHUWHVWLPRQ\
     DUHWUXH"                                                        6XUHO\ WKH HYLGHQFH UHOLHG XSRQ E\ )UDQ[PDQ FRQVWLWXWHG
       'RHV WKH RSLQLRQ RI WKH ZLWQHVV DGHTXDWHO\           mDVVXPHGIDFWVlEHFDXVHWKHFDVHKDGQRWEHHQVXEPLWWHGWR
     H[SODLQ WKH LPSRUWDQW IDFWV WKDW \RX GHFLGHG DUH          WKHMXU\DWWKDWMXQFWXUH7KXVWKHSURVHFXWLRQVWLOOKDGWKH
     WUXH"                                                            EXUGHQRIHVWDEOLVKLQJWKHH[LVWHQFHRIWKHmDVVXPHGIDFWVl
     'RHVWKHRSLQLRQRIWKHZLWQHVVUHO\RQIDFWVWKDW           DOWKRXJK)UDQ[PDQUHOLHGXSRQWKHPIRUKHUWD[FDOFXODWLRQV
     \RXGHFLGHGDUHIDOVH"
                                                                         )LQDOO\WKH6WHZDUWVDUJXHGWKDWWKHLQVWUXFWLRQDOORZHGWKH
    <RXUDQVZHUVWRWKHVHTXHVWLRQVPD\VXJJHVWUHDVRQV               MXU\ WR MXGJH WKH FUHGLELOLW\ RI )UDQ[PDQ RQ WKH VDPH
  WRUHO\RQRUUHMHFWWKHRSLQLRQRIWKHZLWQHVV                    VWDQGDUGVDVDQH[SHUWZLWQHVV7KHGLVWULFWFRXUWjVLQVWUXFWLRQ
                                                                      RQmRSLQLRQZLWQHVVHVlODUJHO\UHVHPEOHVWKH6L[WK&LUFXLWjV
    $V ZLWK RWKHU ZLWQHVVHV KRZHYHU \RX PXVW GHFLGH          PRGHOLQVWUXFWLRQRQH[SHUWZLWQHVVHV
  ZKDW ZHLJKW VKRXOG EH JLYHQ WKH WHVWLPRQ\ RI HDFK
  RSLQLRQZLWQHVV,QGHWHUPLQLQJLWVZHLJKW\RXPD\WDNH               <RX KDYH WKH WHVWLPRQ\ RI BBBBBBBBB DQ H[SHUW
  LQWRFRQVLGHUDWLRQWKHZLWQHVVjVNQRZOHGJHH[SHULHQFH               ZLWQHVV  $Q H[SHUW ZLWQHVV KDV VSHFLDO NQRZOHGJH RU
  HGXFDWLRQWUXWKIXOQHVVDQGIDPLOLDULW\ZLWKWKHIDFWVRI             H[SHULHQFHWKDWDOORZVWKHZLWQHVVWRJLYHDQRSLQLRQ
  WKHFDVHDVZHOODVRWKHUPHDQVRIWHVWLQJFUHGLELOLW\DQG            <RXGRQRWKDYHWRDFFHSWDQH[SHUWjVRSLQLRQ,Q
  GHWHUPLQLQJWKHZHLJKWWREHJLYHQWRWKHWHVWLPRQ\,Q              GHFLGLQJ KRZ PXFK ZHLJKW WR JLYH LW \RX VKRXOG
  VKRUW\RXPD\XVHDOOWKRVHWHVWV\RXRUGLQDULO\XVHLQ              FRQVLGHUWKHZLWQHVVjVTXDOLILFDWLRQVDQGKRZKHUHDFKHG
  HYHU\GD\OLIHWRGHWHUPLQHZKHWKHUDQLQGLYLGXDOLVZHOO             KLVFRQFOXVLRQV
  LQIRUPHG UHJDUGLQJ WKH PDWWHUV KH RU VKH KDV WDONHG             5HPHPEHU WKDW \RX DORQH GHFLGH KRZ PXFK RI D
  DERXW                                                                ZLWQHVVjVWHVWLPRQ\WREHOLHYHDQGKRZPXFKZHLJKWLW
                                                                        GHVHUYHV
   )LUVWWKH6WHZDUWVFRQWHQGWKDWWKHLQVWUXFWLRQJDYHZHLJKW
WR)UDQ[PDQjVWHVWLPRQ\DVWRWKHOHJDOVWDWXVRI'DQFR:H          6L[WK &LUFXLW ,QVWUXFWLRQ  3DWWHUQ &ULPLQDO sXU\
GLVDJUHHHVSHFLDOO\VLQFHWKHGLVWULFWFRXUWLQVWUXFWHGWKHMXU\     ,QVWUXFWLRQV6L[WK&LUFXLW'LVWULFWsXGJHV$VVRFLDWLRQ
DV WR WKH VWDQGDUGV IRU GHOLQHDWLQJ DVVRFLDWLRQV WD[DEOH DV
FRUSRUDWLRQV                                                          7KH6WHZDUWVGLGQRWREMHFWWRWKHLQVWUXFWLRQ7KHUHIRUH
                                                                      DQ\HUURULVUHYLHZHGXQGHUWKHSODLQHUURUGRFWULQH8QLWHG
  7KH6WHZDUWVDUJXHVRPHZKDWFRQIXVLQJO\WKDWWKHGLVWULFW         6WDWHV Y %XVDFFD  )G   WK &LU 
FRXUWjVLQVWUXFWLRQEHZLOGHUHGWKHMXU\EHFDXVHLWVXJJHVWHG          $OWKRXJKWKHGLVWULFWFRXUWVKRXOGKDYHJLYHQDQLQVWUXFWLRQ
WKDW WKH SURVHFXWLRQ KDG D GXW\ WR HVWDEOLVK EH\RQG D        WKDW RSLQLRQ WHVWLPRQ\ ZDV WR EH MXGJHG OLNH DQ\ RWKHU
UHDVRQDEOH GRXEW DVVXPHG IDFWV WKDW WKH GHIHQGDQWV KDG         WHVWLPRQ\QRWZLWKVWDQGLQJDQRSLQLRQZLWQHVVjVHGXFDWLRQRU
SUHVHQWHG LQ FURVVH[DPLQDWLRQ  ,Q WKLV DUJXPHQW WKH         H[SHULHQFHIDLOXUHWRGRVRGLGQRWSUHMXGLFHWKHGHIHQGDQWV
6WHZDUWVUHIHUUHGWRWKHSRUWLRQRIWKHLQVWUXFWLRQDERYHWKDW        DQGWKXVGLGQRWULVHWRWKHOHYHORISODLQHUURUJLYHQWKDWWKH
LQVWUXFWVWKHMXU\WRGHWHUPLQHZKHWKHUDVVXPHGIDFWVUHOLHG          GHIHQGDQWVFRXOGKDYHHIIHFWLYHO\DUJXHGWRWKHMXU\WKDWWKH\
XSRQE\RSLQLRQZLWQHVVHVDUHWUXH7KH6WHZDUWVKRZHYHU           GLGQRWKDYHWREHOLHYHWKHWHVWLPRQ\DWLVVXH6HH8QLWHG
PLVLQWHUSUHWWKHGLVWULFWFRXUWjVLQVWUXFWLRQ$SSDUHQWO\WKH       6WDWHVY0HQGR]D)GWK&LU
