                                                                            5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
    &KDRY+DOO+ROGLQJ              1RV                    3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

      &RHWDO                                                        (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                                                                                     )LOH 1DPH DS

6HFUHWDU\jVYDOXDWLRQRIWKH+DOO+ROGLQJVWRFNZKLFKZHUHLQ
LVVXHDWDYHU\HDUO\VWDJHLQWKLVOLWLJDWLRQ                      81,7('67$7(6&28572)$33($/6
   )LQDOO\ D GLVWULFW FRXUW LV JLYHQ ZLGH ODWLWXGH LQ                     )257+(6,;7+&,5&8,7
FRPSHQVDWLQJWKHSDUWLFLSDQWVLQDQ(623ZKHQDEUHDFKRI                            BBBBBBBBBBBBBBBBB
ILGXFLDU\GXW\KDVEHHQVKRZQm>,@WLVµFOHDUWKDW&RQJUHVV
LQWHQGHG WR SURYLGH WKH FRXUWV ZLWK EURDG UHPHGLHV IRU
UHGUHVVLQJWKHLQWHUHVWVRISDUWLFLSDQWVDQGEHQHILFLDULHVZKHQ
WKH\KDYHEHHQDGYHUVHO\DIIHFWHGE\EUHDFKHVRIDILGXFLDU\         (/$,1( / &+$26HFUHWDU\RI       ;
GXW\jl  'RQRYDQ Y %LHUZLUWK  )G DW  TXRWLQJ    WKH8QLWHG6WDWHV'HSDUWPHQW        
(DYHVY3HQQ)GWK&LUFLWLQJ6         RI/DERU                           
5(3 12  UHSULQWHG LQ  86&&$1                       3ODLQWLII$SSHOOHH
                                                                                                           1RV
%HFDXVHGHIHQGDQWVKDYHSURYLGHGQRDXWKRULW\WR                                                  
VKRZWKDWWKHGLVWULFWFRXUWHUUHGLQDZDUGLQJPRQH\GDPDJHV                                              !
                                                                                                         
WRFRPSHQVDWHWKHSDUWLFLSDQWVLQWKH+DOO&KHPLFDO(623                        Y                      
WKH&RXUWILQGVWKDWWKHDZDUGJUDQWHGE\WKHGLVWULFWFRXUW                                             
VKDOOVWDQG                                                        +$// +2/',1* &203$1<               
                                                                     ,1& '$9,' / *2/'0$1             
                     9&21&/86,21                                                                      
                                                                     .$7+/((1 $ .($7,1*
                                                                                                         
  )RU WKH DERYHVWDWHG UHDVRQV WKH GLVWULFW FRXUW SURSHUO\   *(25*( $ $+($51                   
JUDQWHG WKH 6HFUHWDU\jV PRWLRQ IRU VXPPDU\ MXGJPHQW           0,&+$(/ ) 6+,(/'6DQG             
&RQVHTXHQWO\ WKH GHFLVLRQ RI WKH GLVWULFW FRXUW LV           *2/'0$1 ),1$1&,$/ *5283 
$)),50('                                                            ,1&                               
                                                                             'HIHQGDQWV$SSHOODQWV 
                                                                                                         
                                                                                                        1
                                                                            $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
                                                                           IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
                                                                            1Rn$QQ$OGULFK'LVWULFWsXGJH
                                                                                     $UJXHG0DUFK
                                                                                 'HFLGHGDQG)LOHG$SULO




                                                                                                 
     &KDRY+DOO+ROGLQJ                  1RV       1RV                 &KDRY+DOO+ROGLQJ         
      &RHWDO                                                                                                        &RHWDO

    %HIRUH1255,6DQG'$8*+75(<&LUFXLWsXGJHV                      %HQHILWVVXFKDVDQ(623mDUHQRWDJUDWXLW\VHH,QODQG6WHHO
              =$7.2))&KLHI'LVWULFWsXGJH                           &RY1/5%)GWK&LUFHUWGHQ
                                                                        866&W/(GEXWDIRUPRI
                         BBBBBBBBBBBBBBBBB                              GHIHUUHGZDJHVl5HLFKY9DOOH\1DW%DQNRI$UL]RQD
                                                                        ) 6XSS   6'1<   'HIHQGDQWV E\
                             &2816(/                                    DUJXLQJ WKDW WKH LQLWLDO SULFH RI WKH VWRFN GRHV QRW PDWWHU
                                                                        HVVHQWLDOO\LJQRUHWKHIDFWWKDWWKHPRQH\SDLGIRUWKH+DOO
$5*8('  (GZDUG $ 6FDOOHW *5220 /$: *5283                     +ROGLQJVWRFNZDVDIRUPRIGHIHUUHGFRPSHQVDWLRQIRUWKH
:DVKLQJWRQ '& IRU $SSHOODQWV  (GZDUG ' 6LHJHU             SDUWLFLSDQWVLQWKH+DOO&KHPLFDO(623+RZHYHUEHFDXVH
81,7('67$7(6'(3$570(172)/$%252)),&(                               WKH +DOO &KHPLFDO (623 RYHUSDLG IRU WKH VKDUHV RI +DOO
2) 7+( 62/,&,725 :DVKLQJWRQ '& IRU $SSHOOHH                 +ROGLQJ VWRFN LW VXIIHUHG D ORVV  &RQVHTXHQWO\ WKLV
21%5,()(GZDUG$6FDOOHW*5220/$:*5283                          DUJXPHQWOLNHWKHRWKHUVFDQQRWVWDQG
:DVKLQJWRQ'&0LFKDHOs)UDQW])5$17=:$5'//3
&OHYHODQG2KLR.DWKHULQH6.DPHQ/H%2(8)/$0%                       7KH'LVWULFW&RXUWjV5HPHG\
*5((1( 	 0DF5$( :DVKLQJWRQ '& IRU $SSHOODQWV
(GZDUG'6LHJHU1DWKDQLHO,6SLOOHU81,7('67$7(6                     'HIHQGDQWVj ILQDO DUJXPHQW LV WKDW WKH GLVWULFW FRXUW LQ
'(3$570(17 2) /$%25 2)),&( 2) 7+(                                 GLVWULEXWLQJ FDVK WR WKH +DOO &KHPLFDO (623 SDUWLFLSDQWV
62/,&,725:DVKLQJWRQ'&IRU$SSHOOHH                             mZRXOGFRQVWLWXWHEHQHILWVIRUWKH(623SDUWLFLSDQWVWKDW
                                                                        WKH\QHYHUHDUQHGQRUH[SHFWHGQRUPRUHVHULRXVO\FRXOG
                         BBBBBBBBBBBBBBBBB                              REWDLQOHJDOO\XQGHUWKH,QWHUQDO5HYHQXH&RGHl$JDLQWKLV
                                                                        DUJXPHQWPXVWDOVRIDLO
                             23,1,21
                         BBBBBBBBBBBBBBBBB                                  )LUVWGHIHQGDQWVjVWDWHPHQWWKDWWKH+DOO&KHPLFDO(623
                                                                        SDUWLFLSDQWVGLGQRWHDUQWKHEHQHILWVLVVLPSO\QRWWUXH$V
  /$:5(1&( 3 =$7.2)) &KLHI 'LVWULFW sXGJH                       VWDWHGSUHYLRXVO\EHQHILWVVXFKDVDQ(623mDUHQRWDJUDWXLW\
3ODLQWLII$SSHOOHH(ODLQH/&KDR6HFUHWDU\RIWKH8QLWHG             EXWDIRUPRIGHIHUUHGZDJHVl9DOOH\1DW%DQN)
6WDWHV 'HSDUWPHQW RI /DERU EURXJKW WKLV DFWLRQ DJDLQVW          6XSS DW   6HFRQG DOWKRXJK LW LV WUXH WKDW DW WKH
'HIHQGDQWV$SSHOODQWV+DOO+ROGLQJ&RPSDQ\,QF'DYLG                LQFHSWLRQRIWKH+DOO&KHPLFDO(623WKHSDUWLFLSDQWVPD\
/ *ROGPDQ .DWKOHHQ $ .HDWLQJ *HRUJH $ $KHDUQ               QRW KDYH DQWLFLSDWHG D FDVK GLVWULEXWLRQ WKH\ FHUWDLQO\ GLG
0LFKDHO)6KLHOGVDQG*ROGPDQ)LQDQFLDO*URXS,QF,Q               DQWLFLSDWHSD\LQJDGHTXDWHFRQVLGHUDWLRQDQGQRWKLQJPRUH
KHUFRPSODLQWWKH6HFUHWDU\DOOHJHGWKDWYDULRXVFRPSRQHQWV            IRU WKH VWRFN LQ +DOO +ROGLQJ  +RZHYHU EHFDXVH RI
                                                                        GHIHQGDQWVjDFWLRQVWKH+DOO&KHPLFDO(623RYHUSDLGIRUWKH
                                                                        VWRFNE\PRUHWKDQPLOOLRQ7KLUGGHIHQGDQWVDUJXHZLWK
                                                                        QRFLWDWLRQWRDXWKRULW\WKDWVXFKDGLVWULEXWLRQZRXOGYLRODWH
                                                                        WKH,QWHUQDO5HYHQXH&RGH'HIHQGDQWVRQO\UHIHUWKH&RXUW
    
     7KH +RQRUDEOH /DZUHQFH 3 =DWNRII &KLHI 8QLWHG 6WDWHV 'LVWULFW    ZLWKQRH[SODQDWLRQWRD OLWLJDWLRQUHSRUWVXEPLWWHGWRWKH
sXGJH IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ     GLVWULFWFRXUW+RZHYHUDFXUVRU\UHYLHZRIWKHUHSRUWVKRZV
                                                                        WKDW LW GRHV QRW HYHQ FRQWHPSODWH WKH ILJXUHV DW LVVXH RQ
    
      3XUVXDQW WR ) ('       ,9
                         5 &  3 G 6HFUHWDU\ &KDR KDV EHHQ   DSSHDO  ,QVWHDG LW GHDOV ZLWK ILJXUHV EDVHG XSRQ WKH
VXEVWLWXWHG DV D SDUW\ IRU $OH[LV 0 +HUPDQ
    &KDRY+DOO+ROGLQJ                1RV         1RV                   &KDRY+DOO+ROGLQJ            
      &RHWDO                                                                                                          &RHWDO

  'HIHQGDQWV DOVR UDLVH DQRWKHU EDIIOLQJ DUJXPHQW LQ WKHLU       RIDQHPSOR\HHVWRFNRZQHUVKLSSODQKHUHLQDIWHUm(623l
EULHIm>)@URPWKHSHUVSHFWLYHRIWKH(623SDUWLFLSDQWVWKH            IRUWKHEHQHILWRIHPSOR\HHVRIDVXEVLGLDU\RI+DOO+ROGLQJ
EHJLQQLQJ SULFH RI WKHLU VWRFN LV LUUHOHYDQW ZKDW FRXQWV LV   &RPSDQ\YLRODWHGWKH(PSOR\HH5HWLUHPHQW,QFRPH6HFXULW\
ZKDW WKH VWRFN LV ZRUWK ZKHQ WKH\ UHWLUHl  $JDLQ WKLV       $FW KHUHLQDIWHU m(5,6$l  86&   HW VHT
DUJXPHQW IDLOV WR UHDOL]H WKH UHDOLWLHV RI LQYHVWLQJ  7KH     6SHFLILFDOO\WKH6HFUHWDU\DOOHJHGWKDWGHIHQGDQWVEUHDFKHG
SDUWLFLSDQWVLQWKH+DOO&KHPLFDO(623KDYHHYHU\LQFHQWLYH             WKHLU ILGXFLDU\ GXWLHV E\ SXUFKDVLQJ VWRFN RQ WKH (623jV
WRSXUFKDVHWKHVWRFNDWWKHORZHVWSRVVLEOHSULFH+DGWKH            EHKDOIZLWKRXWDGHTXDWHLQYHVWLJDWLRQDQGE\RYHUSD\LQJIRU
VWRFNEHHQSXUFKDVHGDWDORZHUSULFHWKHSODQSDUWLFLSDQWV            WKH VWRFN  7KH GLVWULFW FRXUW DJUHHG ZLWK WKH 6HFUHWDU\jV
FRXOGKDYHSXUFKDVHGPRUHVKDUHVDQGUHDOL]HGDODUJHUUHWXUQ          SRVLWLRQ DQG JUDQWHG KHU PRWLRQ IRU VXPPDU\ MXGJPHQW
)RU H[DPSOH VXSSRVH WZR LQYHVWRUV HDFK KDYH  WR         ILQGLQJ LQWHU DOLD  GHIHQGDQWV DV ILGXFLDULHV IDLOHG WR
LQYHVW,QYHVWRU$SXUFKDVHVVKDUHVRI;FRUSRUDWLRQDW             FRQGXFWDSUXGHQWDQGLQGHSHQGHQWLQYHVWLJDWLRQWRGHWHUPLQH
 D VKDUH ZKLOH LQYHVWRU % SXUFKDVHV  VKDUHV RI ;       WKHIDLUPDUNHWYDOXHRIWKHVWRFNDVKRZLQJRIKDUPRU
FRUSRUDWLRQ DW  D VKDUH  $ IHZ \HDUV ODWHU ERWK       ORVV LV QRW DQ HOHPHQW RI D FODLP XQGHU  86&
LQYHVWRUVZLVKWRVHOOWKHLUVWRFNZKHQDVKDUHLVVHOOLQJIRU          DDQGGHIHQGDQWVRZHGWKHHPSOR\HHVWRFN
,QYHVWRU$QRZKDVVKDUHVZRUWKGROODUV            RZQHUVKLS SODQ  SOXV LQWHUHVW ZKLFK
UHSUHVHQWLQJDSURILWRIZKHUHDVLQYHVWRU%KDV              UHSUHVHQWHGWKHGLIIHUHQFHEHWZHHQWKHDPRXQWRULJLQDOO\SDLG
VKDUHV ZRUWK  UHSUHVHQWLQJ D SURILW RI            IRU WKH VWRFN DQG WKH IDLU PDUNHW YDOXH RI WKH VWRFN DV
GROODUV                                                               GHWHUPLQHGE\WKHGLVWULFWFRXUW)RUWKHUHDVRQVWKDWIROORZ
                                                                        ZH$)),50WKHMXGJPHQWRIWKHGLVWULFWFRXUW
  7KLV H[DPSOH GHPRQVWUDWHV WZR WKLQJV  )LUVW D SODQ
SDUWLFLSDQW LV GHILQLWHO\ FRQFHUQHG ZLWK WKH YDOXH RI +DOO                             ,%$&.*5281'
+ROGLQJ 6WRFN DW WKH WLPH KH RU VKH UHWLUHV  +RZHYHU
GHIHQGDQWVDUHZURQJLQDVVHUWLQJWKDWWKLVLVWKHSDUWLFLSDQWVj        $6XEVWDQWLYH)DFWV
RQO\FRQFHUQ7KLVLVEHFDXVHWKHH[DPSOHDOVRGHPRQVWUDWHV
WKDWDQLQYHVWRULVDOVRFRQFHUQHGZLWKWKHSULFHWKDWKHRUVKH          3ULRUWRGHIHQGDQW*ROGPDQ)LQDQFLDO*URXS,QF
PXVWSD\WRSXUFKDVHWKHVWRFNDVLWGLUHFWO\DIIHFWVWKHUHWXUQ        KHUHLQDIWHUmGHIHQGDQW*)*,lZDVDEURNHUWKDWZRXOGKHOS
DSDUWLFLSDQWFRXOGKRSHWRUHFHLYH                                  EXVLQHVVHQWLWLHVEX\DQGVHOORWKHUEXVLQHVVHV+RZHYHULQ
                                                                         GHIHQGDQW *)*, EHJDQ SXUFKDVLQJ DQG KROGLQJ
  )LQDOO\GHIHQGDQWVPDNHWKHIROORZLQJVWDWHPHQW                     FRPSDQLHVIRULWVRZQDFFRXQW$VDOOHJHGLQWKH6HFUHWDU\jV
                                                                        FRPSODLQW WKH RZQHUV RI GHIHQGDQW *)*, DUH 'DYLG /
  8QGHU HLWKHU WKH DFWXDO SULFH RU WKH GLVWULFW FRXUWjV         *ROGPDQ KHUHLQDIWHU mGHIHQGDQW *ROGPDQl DQG D WUXVW
  YHUVLRQRIIDLUPDUNHWYDOXHWKH(623ZRXOGVWLOORZQ                EHQHILWWLQJGHIHQGDQW*ROGPDQjVFKLOGUHQ
  RI+DOO+ROGLQJDQGWKHSDUWLFLSDQWVZRXOGEHLQ
  WKH H[DFW VDPH SRVLWLRQ WKH\ DUH LQ WRGD\ WKH\ ZRXOG         ,Q WKHVXPPHURIGHIHQGDQW*)*,SXUFKDVHG+DOO
  KDYHH[DFWO\WKHVDPHQXPEHURIVKDUHVLQWKHLUDFFRXQWV              &KHPLFDO &RPSDQ\ KHUHLQDIWHU m+DOO &KHPLFDOl WKURXJK
  YDOXHGDWZKDWHYHUWKRVHVKDUHVDUHZRUWKWRGD\
  7KHGLIILFXOW\ZLWKWKLVDUJXPHQWLVWKDWLWDJDLQJLYHVQR               
                                                                             $Q (623 LV DQ HPSOR\HH EHQHILW SODQ WKDW SULPDULO\ LQYHVWV LQ
FRQVLGHUDWLRQ WR WKH RULJLQDO SULFH SDLG IRU WKH VKDUHV        VHFXULWLHV RI WKH HPSOR\HU                        )G   WK
                                                                        &LU 
                                                                                                      .XSHU Y ,RYHQNR
     &KDRY+DOO+ROGLQJ                1RV         1RV                 &KDRY+DOO+ROGLQJ         
      &RHWDO                                                                                                        &RHWDO

+DOO +ROGLQJ &RPSDQ\ KHUHLQDIWHU m+DOO +ROGLQJl IRU               ZKHQWKH\EHFRPHHQWLWOHGWRUHFHLYHGLVWULEXWLRQVIURP
DSSUR[LPDWHO\PLOOLRQ+DOO+ROGLQJLVDVXEVLGLDU\RI               WKH(623
GHIHQGDQW*)*,DQGDKROGLQJFRPSDQ\ZKRVHSULPDU\DVVHW
LV+DOO&KHPLFDO'HIHQGDQW*ROGPDQZDVWKHVROHGLUHFWRU              (PSKDVLVLQRULJLQDO7KH&RXUWLVDWDORVVWRXQGHUVWDQG
RI+DOO+ROGLQJ7KHSUHVLGHQWRI+DOO&KHPLFDOZDV*HRUJH             GHIHQGDQWVjDUJXPHQW,WDSSHDUVDVWKRXJKGHIHQGDQWVDUH
$ $KHDUQ KHUHLQDIWHU mGHIHQGDQW $KHDUQl DQG LWV 9LFH         DUJXLQJ WKDW DW WKH WLPH WKH VKDUHV RI VWRFN DUH WUDQVIHUUHG
3UHVLGHQWRI)LQDQFHDQG&KLHI)LQDQFLDO2IILFHUZDV0LFKDHO            IURPDQHPSOR\HUWRWKH(623LWLVLQDQHPSOR\HHjVEHQHILW
) 6KLHOGV KHUHLQDIWHU mGHIHQGDQW 6KLHOGVl  'HIHQGDQW          WRKDYHWKHVWRFNDWWKHKLJKHVWSRVVLEOHSULFH7KLVPDNHV
$KHDUQDQGGHIHQGDQW6KLHOGVZHUHDOVRWKHWUXVWHHVRIWKH              OLWWOHVHQVH$WWKHWLPHWKH(623DFTXLUHVWKHVWRFNLWLVLQ
+DOO&KHPLFDOHPSOR\HHVWRFNRZQHUVKLSSODQKHUHLQDIWHU                WKH (623 SDUWLFLSDQWjV EHVW LQWHUHVW WR GR VR DW WKH ORZHVW
m+DOO &KHPLFDO (623l  $IWHU WKH DFTXLVLWLRQ RI +DOO           SULFHSRVVLEOH7KHORZHUWKHSULFHRIWKH VWRFNWKHPRUH
&KHPLFDO+DOO+ROGLQJRZQHGRI+DOO&KHPLFDODQG                  VKDUHV WKDW FDQ EH SXUFKDVHG E\ WKH (623 DVVXPLQJ WKH
GHIHQGDQW$KHDUQKDGWKHULJKWWRDFTXLUHWKHUHPDLQLQJ             LQYHVWRUZLOOLQYHVWWKHVDPHDPRXQWZLWKRXWUHJDUGWRWKH
                                                                        SULFHSHUVKDUH)XUWKHUDKLJKHUUHWXUQRQLQYHVWPHQWFDQEH
  7KH ILQDO GHIHQGDQW LV .DWKOHHQ $ .HDWLQJ KHUHLQDIWHU        JHQHUDWHGZLWKDORZHUSXUFKDVHSULFH
mGHIHQGDQW.HDWLQJlWKH'LUHFWRURI+XPDQ5HVRXUFHVIRU
GHIHQGDQW *)*,  $IWHU WKH SXUFKDVH RI +DOO &KHPLFDO              $OWKRXJKLWLVWUXHWKDWLQWKHSUHVHQWFDVHGHIHQGDQW*)*,
GHIHQGDQW .HDWLQJ ZDV WDVNHG ZLWK DQDO\]LQJ LWV                   DQGGHIHQGDQW*ROGPDQRQO\ZLVKHGWRVHOORI+DOO
FRPSHQVDWLRQ SURJUDPV  $V D UHVXOW RI KHU DQDO\VLV DQG D     +ROGLQJVWRFNLWLVHDV\WRVHHZK\DORZHUVWRFNSULFHZRXOG
PHHWLQJZLWKDEHQHILWVFRQVXOWLQJILUPGHIHQGDQW.HDWLQJ              EHQHILWWKH(623LQDIDFWXDOVFHQDULRVLPLODUWRWKHSUHVHQW
PDGH D QXPEHU RI UHFRPPHQGDWLRQV LQFOXGLQJ WKH                   FDVH,QWKHSUHVHQWFDVHWKHWUDQVDFWLRQZDVVWUXFWXUHGDVD
HVWDEOLVKPHQW RI WKH +DOO &KHPLFDO (623  $OWKRXJK               OHYHUDJHG(623,QRUGHUWRFRPSOHWHWKHWUDQVDFWLRQWKH
GHIHQGDQW*ROGPDQGLGQRWZDQWWRVHOODQ\ VWRFNKHZDV               0DVWHU7UXVWORDQHGWKH+DOO&KHPLFDO(623PLOOLRQWR
HYHQWXDOO\SHUVXDGHGWKDWFUHDWLRQRIWKH+DOO&KHPLFDO(623            SXUFKDVH WKH VKDUHV  $V WKH GLVWULFW FRXUW H[SODLQHG LQ LWV
ZDVDJRRGLGHD                                                        LQLWLDORSLQLRQWKHVKDUHVRI+DOO+ROGLQJZHUHSODFHGLQ
                                                                        DVXVSHQVHDFFRXQW6HH+DOO+ROGLQJ)6XSSDW
  ,Q RUGHU WR VHW XS WKH +DOO &KHPLFDO (623 GHIHQGDQW         +DOO&KHPLFDOPDGHFDVKFRQWULEXWLRQVZKLFKZHUHXVHGWR
.HDWLQJUHWDLQHGDWWRUQH\sDPHV6KXPDNHURI&KRDWH+DOO	              UHWLUHWKHPLOOLRQORDQ$VHDFKSD\PHQWZDVPDGHD
6WHZDUW LQ %RVWRQ 0DVVDFKXVHWWV ZKRP VKH GHVFULEHG DV          FRUUHVSRQGLQJ DPRXQW RI VWRFN ZDV UHOHDVHG IURP WKH
mYHU\ ZHOO UHJDUGHG LQ WKH %RVWRQ DUHD DV VRUW RI D VHQLRU   VXVSHQVHDFFRXQWDQGSODFHGLQWRWKHLQGLYLGXDOSDUWLFLSDQWjV
(5,6$ VSHFLDOLVWl 7KURXJKRXW WKH VXPPHU RI                  DFFRXQWV  $VVXPLQJ WKDW WKH +DOO &KHPLFDO (623 ZRXOG
GHIHQGDQW.HDWLQJDQG6KXPDNHUVSRNHRQDGDLO\EDVLVDERXW             KDYH SDLG WKH DPRXQW WKH GLVWULFW FRXUW GHWHUPLQHG ZDV
WKH +DOO &KHPLFDO (623  6KXPDNHU DGYLVHG GHIHQGDQW              SURSHUWKHSDUWLFLSDQWVLQWKH+DOO&KHPLFDO
.HDWLQJWKDWDQLQGHSHQGHQWDSSUDLVDOVKRXOGEHFRPSOHWHGE\            (623ZRXOGKDYHEHQHILWWHG%HFDXVHWKHDPRXQWRIWKHGHEW
DTXDOLILHGLQGHSHQGHQWDSSUDLVHU&RQVHTXHQWO\GHIHQGDQW             ZRXOGKDYHEHHQPRUHWKDQPLOOLRQOHVVWKDQWKHDFWXDO
.HDWLQJ FRQWDFWHG sDPHV &XQQLQJKDP DERXW WKH DSSUDLVDO           SXUFKDVH SULFH RI  PLOOLRQ LW FRXOG KDYH EHHQ UHWLUHG
$OWKRXJK GHIHQGDQW $KHDUQ UHIHUUHG WR &XQQLQJKDP DV               PXFKPRUHTXLFNO\&RQVHTXHQWO\SDUWLFLSDQWVLQWKH+DOO
mSUREDEO\ WKH SUHPLHUH RI DQDO\VWV :DOO 6WUHHW DQDO\VW RI      &KHPLFDO (623 ZRXOG KDYH EHHQ IXOO\ YHVWHG LQ WKH 
VSHFLDOW\ FKHPLFDO FRPSDQLHVl &XQQLQJKDP KDG QHYHU                VKDUHVRI+DOO+ROGLQJVWRFNVRRQHU
     &KDRY+DOO+ROGLQJ                  1RV           1RV              &KDRY+DOO+ROGLQJ        
       &RHWDO                                                                                                         &RHWDO

UHPDLQVWKDWGHIHQGDQWVPDNHQRDUJXPHQWLQWKHLUUHSO\EULHI                mSHUIRUP>HG@DYDOXDWLRQZLWKUHJDUGWRDVXEMHFWFRPSDQ\
DVWRWKHYLRODWLRQRID$ZKLFKKDVQRVXEMHFWLYH               ZKHUHDQ(623ZDVSXUFKDVLQJDQLQWHUHVWl
LQWHQWUHTXLUHPHQW7KHUHIRUHWKH&RXUWDIILUPVWKHGLVWULFW
FRXUWjV GHFLVLRQ EDVHG XSRQ LWV ILQGLQJ RI D YLRODWLRQ RI             %\ZD\RIEDFNJURXQG&XQQLQJKDPZDVHPSOR\HGE\7KH
D$                                                            )LUVW%RVWRQ&RUSRUDWLRQ'XULQJKLVHPSOR\KHZDVDVNHG
                                                                             WR YDOXH GHIHQGDQW *)*, DQG LWV YDULRXV SURSHUWLHV ZKLFK
''HIHQGDQWVj7KLUG&ODLPRI(UURU                                         LQFOXGHG+DOO&KHPLFDO7KLVZDVVHYHUDOPRQWKVSULRUWRWKH
                                                                             IRUPDWLRQ RI WKH +DOO &KHPLFDO (623  &XQQLQJKDP
  'HIHQGDQWVj WKLUG FODLP RI HUURU GHDOV ODUJHO\ ZLWK WKH            FRPSOHWHGWKLVYDOXDWLRQLQWKHVSULQJRI6RRQDIWHU
GLVWULFW FRXUWjV DZDUG RI PRQHWDU\ GDPDJHV  %HFDXVH                  FRPSOHWLQJKLVYDOXDWLRQ&XQQLQJKDPOHIW7KH)LUVW%RVWRQ
GHIHQGDQWVjDUJXPHQWVDUHEDVHGXSRQIDXOW\SUHPLVHVDQG                    &RPSDQ\  $IWHU OHDYLQJ KH ZDV DJDLQ FRQWDFWHG E\
EHFDXVHWKH\IDLOWRFLWHDQ\DXWKRULW\IRUWKHLUFODLPVWKH\               GHIHQGDQW*)*,DERXWFRPSOHWLQJDVHFRQGYDOXDWLRQRI+DOO
PXVWIDLO                                                                   &KHPLFDO  &XQQLQJKDP VWDWHG WKDW KH ZRXOG FRPSOHWH D
                                                                             VHFRQGYDOXDWLRQEXWWKDWKLVPDLQSULRULW\ZDVWRILQGDMRE
      'HIHQGDQWVj$UJXPHQWV&RQFHUQLQJWKH6WUXFWXUH                       &XQQLQJKDPDOVRH[SODLQHGWKDWKHZRXOGQRWEHZLOOLQJWR
        RI/HYHUDJHG(623V                                                   LQIODWH KLV ILUVW YDOXDWLRQ RI +DOO &KHPLFDO  )LQDOO\
                                                                             &XQQLQJKDP VDLG WKDW KH ZRXOG FRQVLGHU DQ\ QHZ
  6LPSO\SXWGHIHQGDQWVPDNHDUJXPHQWVLQWKHLUEULHIZKLFK                 LQIRUPDWLRQ EXW WKDW KH GLG QRW H[SHFW WKDW WKLV ZRXOG
ZRXOG FRQIRXQG DQ\ UDWLRQDO LQYHVWRU  )RU H[DPSOH                   mPDWHULDOO\FKDQJHlWKHSULRUYDOXDWLRQ7KHVHWHUPVZHUH
GHIHQGDQWVPDNHWKHIROORZLQJFODLP                                         DFFHSWDEOHWRGHIHQGDQW*)*,
  )LUVWDQGSHUKDSVIRUHPRVWWKH(623SDUWLFLSDQWVGRQRW                     ,QFRPSOHWLQJWKHVHFRQGYDOXDWLRQ&XQQLQJKDPH[SODLQHG
  KDYH D GLUHFW LQWHUHVW LQ REWDLQLQJ WKH ORZHVW SRVVLEOH            WKDW KH SHUIRUPHG D YDOXDWLRQ RI  RI +DOO &KHPLFDO
  SULFH IRU WKH VWRFN DW WKH LQFHSWLRQ RI WKH (623 VLQFH           $OWKRXJKVRPHRQHPD\KDYHPHQWLRQHGVRPHWKLQJDERXWDQ
  WKHLURZQHUVKLSGRHVQRWRFFXUXQWLOODWHU,QGHHGWKH                   (623&XQQLQJKDPVWDWHGWKDWKLVRQO\MREZDVWRYDOXH+DOO
  PRPHQWWKHVDOHWDNHVSODFHWKH(623SDUWLFLSDQWVjRQO\                   &KHPLFDO)XUWKHU&XQQLQJKDPVWDWHGWKDWLIKHKDGEHHQ
  LQWHUHVWLVLQREWDLQLQJWKHKLJKHVWSRVVLEOHSULFHVLQFH                  DVNHGWRGHWHUPLQHmKRZPXFKDQ(623VKRXOGSD\IRUVWRFN
  WKH\ DUH JRLQJ WR EH VHOOHUV RI WKH VWRFN LQ WKH IXWXUH         LQDFRPSDQ\lKLVYDOXDWLRQZRXOGKDYHEHHQGLIIHUHQW,Q
                                                                             DQ\HYHQW&XQQLQJKDPFRPSOHWHGKLVVHFRQGYDOXDWLRQRI
                                                                             +DOO&KHPLFDOLQ$XJXVW+LVYDOXDWLRQGHWHUPLQHGWKDW
µSURKLELWHG WUDQVDFWLRQVj WKDW UHSUHVHQW SHU VH YLRODWLRQV RI ILGXFLDU\      +DOO&KHPLFDOZDVZRUWKEHWZHHQDQGPLOOLRQ
GXW\l /HVOLH / :HOOPDQ 	 6KDUL s &ODUN 2YHUYLHZ RI 3HQVLRQ
                                                $Q                           H[FOXVLYH RI GHEW ZKLFK WKH GLVWULFW FRXUW QRWHG ZDV
%HQHILW DQG )LGXFLDU\ /LWLJDWLRQ XQGHU (5,6$  :,//$0(77( / 5(9          FRQVLVWHQWZLWKKLVILUVWYDOXDWLRQ6HH5HLFKY+DOO+ROGLQJ
   m7KH REMHFW RI > @ ZDV WR PDNH LOOHJDO SHU VH WKH       &R,QF)6XSS1'2KLR
W\SHV RI WUDQVDFWLRQV WKDW H[SHULHQFH KDG VKRZQ WR HQWDLO D KLJK SRWHQWLDO
IRU DEXVHl $ODQ 3 :RRGUXII (5,6$ /   $: 16:(5 $1'%22.
                                              $       +             4 
                                                                               8SRQUHFHLYLQJ&XQQLQJKDPjVVHFRQGYDOXDWLRQGHIHQGDQW
G HG  H[SODLQLQJ WKDW JRRG IDLWK LV QR GHIHQVH WR D YLRODWLRQ RI
  EHFDXVH WKH VHFWLRQ FRQWHPSODWHV SHU VH YLRODWLRQV 0DWWKHZ 0
                                                                             .HDWLQJGLVWULEXWHGLWWRVHYHUDOSHRSOHLQFOXGLQJGHIHQGDQW
2j7RROH &RPPHQW      7KH   'LVSURSRUWLRQDWH (IIHFWV RI DQ (623jV           $KHDUQ GHIHQGDQW 6KLHOGV 6KXPDNHU DQG RWKHU SHRSOH DW
3URSRUWLRQDO 9RWLQJ     1: 8 / 5'    GHVFULELQJ       GHIHQGDQW*)*,ZKRPGHIHQGDQW.HDWLQJEHOLHYHGWRLQFOXGH
YLRODWLRQV XQGHU   DV SHU VH YLRODWLRQV
      &KDRY+DOO+ROGLQJ                1RV      1RV                     &KDRY+DOO+ROGLQJ            
       &RHWDO                                                                                                         &RHWDO

GHIHQGDQW*ROGPDQ$IWHUVRPHGLVFXVVLRQZLWK6KXPDNHU
FKDQJHVZHUHPDGHWRWKHYDOXDWLRQVRWKDWLWZRXOGFRPSO\
ZLWK SURSRVHG UHJXODWLRQV FRQFHUQLQJ VWRFN SXUFKDVHV E\         SURYLVLRQV>6HFWLRQ@VHWVIRUWKFHUWDLQWUDQVDFWLRQVWKDWDUHSURKLELWHG
(623V  $ ILQDOL]HG YHUVLRQ RI &XQQLQJKDPjV UHSRUW ZDV        SHU VHl            
                                                                                 *UD\ Y %ULJJV  ) 6XSSG   6'1<  m7KH
VLJQHGDQGGDWHG6HSWHPEHU                                 WUDQVDFWLRQV FRYHUHG E\ 6HFWLRQ D µDUH SHU VH YLRODWLRQV RI (5,6$
                                                                      UHJDUGOHVV RI WKH PRWLYDWLRQ ZKLFK LQLWLDWHG WKH WUDQVDFWLRQ WKH SUXGHQFH
  $W WKLV SRLQW GHIHQGDQW .HDWLQJ ZDV OHIW WR GHWHUPLQH D   RI WKH WUDQVDFWLRQ RU WKH DEVHQFH RI DQ\ KDUP DULVLQJ IURP WKH
SULFH WR SD\ IRU WKH VKDUHV WR EH SXUFKDVHG E\ WKH +DOO                          5HLFK Y 3ROHUD %OGJ &RUS
                                                                      WUDQVDFWLRQjl TXRWLQJ                                    1R  &LY 

&KHPLFDO(623'XULQJKHUGHSRVLWLRQGHIHQGDQW.HDWLQJ               :/    6'1< )HE  0HW]OHU Y 6ROLGDULW\ RI
                                                                      /DERU 2UJ +HDOWK 	 :HOIDUH )XQG        1R  &,9   :/ 
H[SODLQHGKRZWKHHYHQWXDO SXUFKDVHSULFHRIPLOOLRQ            6'1< $XJ   DIIjG +HUPDQ Y *ROGVWHLQ            )G  G
ZDVGHWHUPLQHG)LUVWWKHQXPEHUVRIWKHYDOXDWLRQUDQJH           &LU FHUW GHQLHG *ROGVWHLQ Y &KDR         BBB6 &W BBB  :/
DQGPLOOLRQZHUHDGGHGDQGWKHQGLYLGHGE\WZR           86 sXQH   UHIHUULQJ WR WKH SHU VH SURKLELWLRQV LQ
7KH UHVXOWDQW ILJXUH  PLOOLRQ ZDV PXOWLSOLHG E\ WKH      3ROHUD %OGJ &RUS  :/    m&RQJUHVV PDGH LW D SHU

DPRXQWRIVWRFNWREHSXUFKDVHGZKLFKGHIHQGDQW.HDWLQJ              VH YLRODWLRQ RI (5,6$ WR FRQGXFW WUDQVDFWLRQV >VHW IRUWK LQ  D@

HUURQHRXVO\ VDLG ZDV   7KH SURGXFW RI WKHVH WZR
                                                                      EHFDXVH WKH\ LQKHUHQWO\ FRPSURPLVH WKH GXW\ RI WUXVW WKDW LV LPSRVHG RQ
                                                                      D ILGXFLDU\l 5HLFK Y 9DOOH\ 1DW %DQN RI $UL]RQD  ) 6XSS 
QXPEHUV ZDV  PLOOLRQ  +RZHYHU LQVWHDG RI XVLQJ        6'1<  H[SODLQLQJ WKDW DFWLRQV WDNHQ LQ JRRG IDLWK ZKLFK
PLOOLRQDVWKHSXUFKDVHSULFHLWZDVGHWHUPLQHGWREH        YLRODWH   DUH VWLOO D YLRODWLRQ EHFDXVH WKLV LV D SHU VH UXOH 0F'RXJDOO
PLOOLRQ'HIHQGDQW.HDWLQJH[SODLQHG                           Y 'RQRYDQ  ) 6XSS   1' ,OO  m>L@W LV DSSDUHQW
                                                                      WKDW &RQJUHVV LQWHQGHG  >@ WR EH YLUWXDOO\ D SHU VH SURKLELWLRQ DJDLQVW

    *LYHQWKHVHYDOXHV,ZRXOGGRH[DFWO\WKHVDPHQXPEHU            WKH HQXPHUDWHG WUDQVDFWLRQVl *LQD 0DULH $JUHVWD5LFKDUGVRQ
                                                                      m(PSOR\HH 6WRFN 2ZQHUVKLS 3ODQV 8QFHUWDLQWLHV 3ODJXLQJ WKH 'XWLHV RI
    WRGD\ZKLFKLVDOPRVWGLUHFWO\LQWKHPLGGOHH[FHSWLWjV         WKH (623 )LGXFLDU\ ZLWK 5HVSHFW WR 9RWLQJ DQG 'HIHQVLYH (623Vl 
    D URXQG QXPEHU VR IRU SXUSRVHV RI FRPPXQLFDWLRQ          $.521 $;  7      s    IRRWQRWHV RPLWWHG m(5,6$  
    SXUSRVHVRIWKHGRFXPHQWDWLRQLWMXVWZRXOGZRUNEHWWHU          LPSRVHV D OLVW RI SURKLELWHG WUDQVDFWLRQV (QJDJLQJ LQ WKHVH WUDQVDFWLRQV
    DW  PLOOLRQ WKDQ >@ ZKLFK LV DIWHU DOO \RX   LV D SHU VH YLRODWLRQ RI (5,6$l 0LFKDHO s &ROOLQV ,WjV &RPPRQ EXW LV

    NQRZ \RX NQRZ  SHUFHQW RI WKH WUDQVDFWLRQ RU          LW 5LJKW" 7KH &RPPRQ /DZ RI 7UXVWV LQ (5,6$ )LGXFLDU\ /LWLJDWLRQ 
                                                                      /$% $:
                                                                           /         m>6@HFWLRQ  RI (5,6$ GHOLQHDWHV VSHFLILF
    VRPHWKLQJWKDWZHjUHWDONLQJDERXWKHUH                          FDWHJRULHV RI WUDQVDFWLRQV WKDW DUH GHHPHG WR SHU VH YLRODWH WKH ILGXFLDU\
                                                                      UHVSRQVLELOLW\ UXOHVl 5RQDOG s &RRNH (5,6$ 3             5$&7,&( $1'
:KHQ DVNHG ZKR ZDV LQYROYHG LQ GHWHUPLQLQJ WKH            352&('85(         G HG 6XSS  IRRWQRWH RPLWWHG m,Q HVVHQFH
PLOOLRQILJXUHGHIHQGDQW.HDWLQJUHVSRQGHGWKDWGHIHQGDQW            WKH SURKLELWHG WUDQVDFWLRQ UXOHV RI (5,6$   GHYHORS D SHU VH UXOH
*ROGPDQDQGDQRWKHUSHUVRQDWGHIHQGDQW*)*,ZRXOGKDYH               SURKLELWLQJ FHUWDLQ WUDQVDFWLRQV EHWZHHQ D SODQ DQG D SDUW\ LQ LQWHUHVWl

EHHQ LQYROYHG  'HIHQGDQW .HDWLQJ ZDV WKHQ VSHFLILFDOO\        (PPDOLQG *DUFLD (5,6$ ,WV)LGXFLDU\'XWLHVDQG,QYHVWPHQWVIRU6RFLDO
DVNHG ZKDW GHIHQGDQW *ROGPDQjV LQYROYHPHQW ZDV LQ WKH
                                                                      3XUSRVHV  5(9 s85 8,35    6HFWLRQ D mFRYHUV
                                                                      SHU VH SURKLELWLRQVl sDPHV ) sRUGHQ :DOGHPDU s 3IOHSVHQ sU 	
GHWHUPLQDWLRQ RI WKH  PLOOLRQ ILJXUH WR ZKLFK VKH        6WHSKHQ + *ROGEHUJ +$1'%22. 21 (5,6$ /,7,*$7,21  >%@>@
UHVSRQGHGm+HKDGWREHZLOOLQJWRVHOOWKHVWRFNDWDSULFHl       G HG 6XSS  IRRWQRWHV RPLWWHG m3URKLELWHG µSDUW\ LQ LQWHUHVWj
                                                                      WUDQVDFWLRQV DUH RIWHQ FKDUDFWHUL]HG E\ WKH FRXUWV DV µSHU VHj YLRODWLRQV RI
                                                                      (5,6$EHFDXVHOLDELOLW\PD\EHLPSRVHGHYHQZKHUHVXFKWUDQVDFWLRQVDUH
                                                                      HQWHUHG LQWR LQ JRRG IDLWK ZKHUH VXFK WUDQVDFWLRQV ZRXOG EH IRXQG WR EH
                                                                      SUXGHQW XQGHU (5,6$jV SUXGHQFH VWDQGDUG DQG ZKHUH QR KDUP UHVXOWV WR
                                                                      WKHSODQl+RZDUG 3LDQNR 	 6WHSKHQ s 1HOVRQ 6SHFLDO ,VVXHV ,QYROYLQJ
   
        DFWXDO SHUFHQWDJH RI VWRFN SXUFKDVHG E\ WKH +DOO &KHPLFDO
      7KH                                                             %URNHU'HDOHUV DQG WKHLU (PSOR\HH %HQHILW 3ODQ &OLHQWV  5($/ 3# !
(623 ZDV            QRWHV   DQG 
                    6HH LQIUD                                         3#  	 7# s    m(5,6$ VHFWLRQ  FRQWDLQV D OLVW RI
     &KDRY+DOO+ROGLQJ                    1RV             1RV                   &KDRY+DOO+ROGLQJ            
       &RHWDO                                                                                                                  &RHWDO

                                                                                   $IWHUWKHPLOOLRQILJXUHZDVGHFLGHGXSRQLWZDVWDNHQ
                                                                                 WR GHIHQGDQW *ROGPDQ IRU KLV DSSURYDO ZKLFK ZDV JLYHQ
     IRXQGDWLRQV   DQG   DPHQGHG   WKHVH   GHILQLWLRQV   RI    SURKLELWHG
                                                                                 7KH QH[W VWHS ZDV WR SUHSDUH WKH +DOO &KHPLFDO (623
                                                                                 GRFXPHQWVZKLFKZHUHHQWLWOHG7KH+DOO&KHPLFDO&RPSDQ\
                   EHWZHHQ WKH WUXVW DQG LQWHUHVWHG SDUWLHV 7KH
     WUDQVDFWLRQV IRU WKH PRVW SDUW WR SURKLELW RXWULJKW TXHVWLRQDEOH
                                                                                 (PSOR\HH 6WRFN 3DUWLFLSDWLRQ 3ODQ  2QFH SUHSDUHG WKHVH
     FRPPLWWHHjV ELOO JHQHUDOO\ IROORZV WKH DSSURDFK WKDW ZDV
     WUDQVDFWLRQV

                                                                                 GRFXPHQWVSURYLGHGWKDW+DOO+ROGLQJZDVWKHDGPLQLVWUDWRU
     GHYHORSHG LQ      HVWDEOLVKLQJ    GHILQLWLRQV   IRU   SURKLELWHG
                                                                                 DQGQDPHGILGXFLDU\$VWKHVROHPHPEHURI+DOO+ROGLQJjV
     7KH FRPPLWWHHjV GHILQLWLRQV RI SURKLELWHG WUDQVDFWLRQV DQG WKH
     WUDQVDFWLRQV WKDW ZLOO PDNH LW PRUH SUDFWLFDO WR HQIRUFH WKH ODZ
                                                                                 %RDUGRI'LUHFWRUVGHIHQGDQW*ROGPDQKDGWKHDXWKRULW\WR
     H[FHSWLRQV IURP WKHVH GHILQLWLRQV KRZHYHU DUH GHVLJQHG WR WDNH            DSSRLQWLQGLYLGXDOVWRDGPLQLVWHUWKH+DOO&KHPLFDO(623
     DFFRXQW RI WKH XQLTXH VLWXDWLRQ RI HPSOR\HH EHQHILW WUXVWV                 DQGWRDSSRLQWWUXVWHHVWRLQYHVWSODQDVVHWV,QWKLVFDSDFLW\
                                                                                 GHIHQGDQW *ROGPDQ DSSRLQWHG GHIHQGDQW $KHDUQ DQG
6 5! 1   UHSULQWHG LQ  86&&$1                      GHIHQGDQW6KLHOGVDVPHPEHUVRIWKHFRPPLWWHHZKLFKVHUYHG
HPSKDVLV DGGHG $OWKRXJK WKH 6HQDWH 5HSRUW GRHV QRW VWDWH WKDW WKH
SURKLELWHG WUDQVDFWLRQV VHW IRUWK LQ  D DUH SHU VH YLRODWLRQV LW
                                                                                 DVDGPLQLVWUDWRURIWKH+DOO&KHPLFDO(623IRUSXUSRVHVRI
GRHV QRWH WKDW WKH FRQFHUQ ZDV WR DYRLG mVSRUDGLF DQG XQFHUWDLQ
                                                                                 (5,6$  )XUWKHU GHIHQGDQW $KHDUQ DQG GHIHQGDQW 6KLHOGV
HIIHFWLYHQHVVl ZKLFK LV WKH UHVXOW RI D SHU VH UXOH ,G )XUWKHU WKH 6HQDWH    ZHUHDSSRLQWHGWUXVWHHVRIWKH+DOO&KHPLFDO(623,QWKLV
                                                                                                               
5HSRUW QRWHV WKDW WKH LQWHQW ZDV WR mSURKLELW RXWULJKWl WKHVH W\SHV RI           FDSDFLW\WKH\VHFXUHGDORDQ
                                                                                                      
                                                                                                                LQWKHDPRXQWRIPLOOLRQ
WUDQVDFWLRQV ,G )LQDOO\ WKH &RQJUHVV ZDV FRQFHUQHG ZLWK SUDFWLFDO             IURPD0DVWHU7UXVW VSRQVRUHGE\GHIHQGDQW*)*,7KHORDQ
HQIRUFHPHQW RI WKH SURKLELWHG WUDQVDFWLRQV 6HH LG 6XFK OHJLVODWLYH
                                                                                 DPRXQW ZDV XVHG WR SXUFKDVH  RI WKH VWRFN LQ +DOO
KLVWRU\ HYLQFHV &RQJUHVVjV LQWHQW WR FUHDWH SHU VH YLRODWLRQV LQ  D
                                                                                 +ROGLQJ QRW +DOO &KHPLFDO WKH FRPSDQ\ YDOXHG E\
     )LQDOO\ WKH &RXUW LV DOVR FRQFHUQHG WKDW UHTXLULQJ VXEMHFWLYH LQWHQW       &XQQLQJKDP
IRU D YLRODWLRQ RI  D' LV DJDLQVW WKH JUHDW ZHLJKW RI DXWKRULW\
0RVW FRXUWV DQG FRPPHQWDWRUV KDYH IRXQG WKDW  D FRQWHPSODWHV SHU
VH YLRODWLRQV 6HH (WWHU Y s 3HDVH &RQVW &R ,QF  )G  
WK &LU  VWDWLQJ WKDW QR LQMXU\ ZDV UHTXLUHG mIRU D FRXUW WR ILQG D
                                                                                     
                                                                                       7KH XVH RI D ORDQ WR IXQG DQ (623 LV UHIHUUHG WR DV D OHYHUDJHG
WUDQVDFWLRQ SURKLELWHG RU RWKHUZLVH LPSHUPLVVLEOHl %URFN Y &LWL]HQV           (623 $V WKH GLVWULFW FRXUW H[SODLQHG DQ (623 ERUURZV PRQH\ WR PDNH
%DQN RI &ORYLV  )G   WK &LU  UHIHUULQJ WR WKH             DQ LQLWLDO SXUFKDVH RI VWRFN 7KHQ DQ HPSOR\HU FRQWULEXWHV PRQH\ XQWLO
WUDQVDFWLRQV OLVWHG LQ   DV SHU VH YLRODWLRQV /HLJK Y (QJOH  )G     WKH GHEW LV UHWLUHG $00 +DOO +ROGLQJ       ) 6XSS DW  FLWLQJ
  WK &LU  m7KH SHU VH UXOHV RI VHFWLRQ  PDNH PXFK                                         )G   WK &LU  )XUWKHU
                                                                                 LQ WKH SUHVHQW FDVH WKH +DOO +ROGLQJ VWRFN ZDV SODFHG LQ D mVXVSHQVH
                                                                                 'RQRYDQ Y &XQQLQJKDP
VLPSOHU WKH HQIRUFHPHQW RI (5,6$jV PRUH JHQHUDO ILGXFLDU\ REOLJDWLRQVl
FLWLQJ 6 5! 1   UHSULQWHG LQ  86&&$1           DFFRXQWl $V WKH +DOO &KHPLFDO (623 PDGH GHEW SD\PHQWV ZLWK WKH
'RQRYDQ Y &XQQLQJKDP  )G   WK &LU  m7KH              HPSOR\HU FRQWULEXWLRQV D FRUUHVSRQGLQJ DPRXQW RI VWRFN ZDV UHOHDVHG
REMHFW RI 6HFWLRQ  ZDV WR PDNH LOOHJDO SHU VH WKH W\SHV RI WUDQVDFWLRQV
                                                                       0	5
                                                                                 IURP WKH VXVSHQVH DFFRXQW DQG SODFHG LQ WKH +DOO &KHPLFDO (623
WKDW H[SHULHQFH KDG VKRZQ WR HQWDLO D KLJK SRWHQWLDO IRU DEXVHl
,QY &R ,QF Y )LW]VLPPRQV     )G   WK &LU  m7KH
                                                                                 SDUWLFLSDQWjV DFFRXQWV 6HH LG


SDUW\LQLQWHUHVW SURKLELWLRQV DFW WR LQVXUH DUPjVOHQJWK WUDQVDFWLRQV E\             
                                                                                       $V WKH GLVWULFW FRXUW H[SODLQHG WKH 0DVWHU 7UXVW KHOG WKH DVVHWV RI
ILGXFLDULHV RI IXQGV VXEMHFW WR (5,6$ $ WUDQVDFWLRQ ZLWK D SDUW\ LQ
                                                                                 RWKHU SHQVLRQ SODQV UHODWHG WR GHIHQGDQW *)*,                      )
                                                                                 6XSS DW 
                                                                                                                                 6HH +DOO +ROGLQJ
LQWHUHVW LV SURKLELWHG XQGHU WKH SUHVXPSWLRQ WKDW LW LV QRW DUPjVOHQJWK
7KH UHVXOW LV D EURDG SHU VH SURKLELWLRQ RI WUDQVDFWLRQV (5,6$ LPSOLFLWO\
GHILQHV DV QRW DUPjVOHQJWKl  (DYHV Y 3HQQ     )G   WK
&LU  QRWLQJ WKDW XQGHU FHUWDLQ FLUFXPVWDQFHV D ILGXFLDU\ PD\ EH
                                                                                      
                                                                                       7KH  ILJXUH ZDV UHDFKHG DIWHU GHIHQGDQW .HDWLQJ FRQVXOWHG
UHOHDVHG IURP WKH SHU VH YLRODWLRQV HQXPHUDWHG LQ              +XIIHU Y   ZLWK 6KXPDNHU 6KXPDNHU RSLQHG WKDW D ORDQ IURP WKH 0DVWHU 7UXVW WR WKH
+HUPDQ    1R &  :/  DW   6' 2KLR $SU               +DOO &KHPLFDO (623 ZRXOG QRW YLRODWH (5,6$ VR ORQJ DV OHVV WKDQ 
 m>7@KHUH LV QR µJRRG IDLWKj H[FHSWLRQ WR (5,6$jV ILGXFLDU\                RI WKH VWRFN RI +DOO &KHPLFDO ZDV SXUFKDVHG
     &KDRY+DOO+ROGLQJ               1RV        1RV                      &KDRY+DOO+ROGLQJ                  
      &RHWDO                                                                                                           &RHWDO

  2Q6HSWHPEHUGHIHQGDQW$KHDUQDQGGHIHQGDQW               GLVWULFWFRXUWl&LW\0JPW&RUSY86&KHPLFDO&R,QF
6KLHOGVRIIHUHGWRSXUFKDVHIRUWKH+DOO&KHPLFDO(623           )G   WK  &LU   ,Q JUDQWLQJ VXPPDU\
VKDUHV RU  RI +DOO +ROGLQJ VWRFN IRU  PLOOLRQ    MXGJPHQW WKH GLVWULFW FRXUW IRXQG WKDW GHIHQGDQWV YLRODWHG
'HIHQGDQW *ROGPDQ DFFHSWHG WKH RIIHU DQG  VKDUHV RI       D$DQGD'sRUGDQDQG&RPSWRQDUH
+DOO +ROGLQJ QRW +DOO &KHPLFDO ZHUH VROG WR WKH +DOO       FRQFHUQHG ZLWK YLRODWLRQV XQGHU  D' KRZHYHU
&KHPLFDO(623                                                      QHLWKHU FDVH PHQWLRQV D VXEMHFWLYH LQWHQW UHTXLUHPHQW IRU
                                                                      D$5HJDUGOHVVRIZKHWKHUGHIHQGDQWVKDGWKH
%3URFHGXUDO+LVWRU\                                                VXEMHFWLYH LQWHQW QHFHVVLWDWHG E\ sRUGDQ DQG &RPSWRQ     LQ
                                                                      RUGHU WR SURYH D YLRODWLRQ RI  D' WKH IDFW
  2QsDQXDU\WKH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH
1RUWKHUQ'LVWULFWRI2KLRUXOHGRQWKH6HFUHWDU\jVPRWLRQIRU
SDUWLDO VXPPDU\ MXGJPHQW DQG RQ GHIHQGDQWVj PRWLRQ IRU             
VXPPDU\ MXGJPHQW DQG SDUWLDO VXPPDU\ MXGJPHQW  ,Q                     $OWKRXJK sRUGDQ DQG &RPSWRQ UHTXLUH D VKRZLQJ RI VXEMHFWLYH
GHQ\LQJERWKPRWLRQVWKHGLVWULFWFRXUWIRXQGGHIHQGDQWVj       LQWHQW WR EHQHILW D SDUW\ LQ LQWHUHVW IRU D YLRODWLRQ XQGHU  D'
                                                                      WKH &RXUW QRWHV LWV FRQFHUQ ZLWK WKHVH KROGLQJV )LUVW WKHUH DSSHDUV WR EH
DFWLRQV ZHUH ILGXFLDU\ GHFLVLRQV VXEMHFW WR (5,6$ QRW         LQFRQVLVWHQFLHV LQ WKH sRUGDQ RSLQLRQ 7KH RSLQLRQ VWDWHV WKDW m>W@KLV
VSRQVRUFRUSRUDWHGHFLVLRQVGHIHQGDQWVjFRQWULEXWLRQVWR        &RXUW DV ZHOO DV RWKHUV KDYH >VLF@ QRWHG WKDW EHFDXVH  D
WKH+DOO&KHPLFDO(623ZHUHQRWJLIWVmGHIHQGDQWVDV            FKDUDFWHUL]HV SHU VH YLRODWLRQV LW VKRXOG EH LQWHUSUHWHG QDUURZO\l
WKH >+DOO &KHPLFDO@ (623V ILGXFLDULHV GLG QRW FRQGXFW D      sRUGDQ  )G            +RZHYHU WKH RSLQLRQ DOVR VWDWHV WKDW
SUXGHQWDQGLQGHSHQGHQWLQYHVWLJDWLRQWRGHWHUPLQHWKHIDLU            D' UHTXLUHV D VKRZLQJ RI VXEMHFWLYH LQWHQW WR EHQHILW D SDUW\

PDUNHWYDOXHRIWKHVWRFNSXUFKDVHGE\WKH>+DOO&KHPLFDO@            LQ LQWHUHVW 6WDWLQJ WKDW  D mFKDUDFWHUL]HV SHU VH YLRODWLRQVl DQG
                                                                      WKHQ KROGLQJ WKDW D YLRODWLRQ RI  D' UHTXLUHV D VKRZLQJ RI
(623lDQGWKHUHZDVDJHQXLQHLVVXHRIPDWHULDOIDFWDV          VXEMHFWLYH LQWHQW LV LQKHUHQWO\ DW RGGV 7KLV LV EHFDXVH D SHU VH YLRODWLRQ
WR ZKHWKHU D UHDVRQDEOH ILGXFLDU\ ZRXOG KDYH UHOLHG XSRQ      LV D YLRODWLRQ m>R@I LQ RU E\ LWVHOI VWDQGLQJ DORQH ZLWKRXW UHIHUHQFH WR
&XQQLQJKDPjV YDOXDWLRQ LQ GHWHUPLQLQJ WKH  PLOOLRQ          DGGLWLRQDO IDFWVl %   /$&. 6 $:
                                                                                                    j /       ',&7,21$5<     WK HG 
SXUFKDVH SULFH IRU WKH  VKDUHV RI +DOO &KHPLFDO  +DOO   7KHUHIRUH EHFDXVH LW LV D SHU VH YLRODWLRQ WKH SDUWLHVj LQWHQW VKRXOG KDYH

+ROGLQJ)6XSSDW                          QR EHDULQJ DV WR ZKHWKHU D YLRODWLRQ RFFXUUHG

                                                                           6HFRQG WKH SDQHO LQ sRUGDQ ZKLOH TXRWLQJ &RPSWRQ VWDWHV WKHUH LV
   2Q 0DUFK   XSRQ WKH 6HFUHWDU\jV PRWLRQ IRU         mVWURQJ VXSSRUW IRU D VXEMHFWLYH LQWHQW UHTXLUHPHQW LQ WKH ODQJXDJH RI
UHFRQVLGHUDWLRQWKHGLVWULFWFRXUWKHOGWKDWmJLYHQWKHIDFWXDO      VHFWLRQ D'l DQG WKDW WKHUH LV mQR FRQWUDU\ HYLGHQFH LQ WKH
ILQGLQJVPDGHE\WKLV&RXUWLQLWV>sDQXDU\@RUGHUWKH       OHJLVODWLYH KLVWRU\l sRUGDQ  )G DW  TXRWLQJ &RPSWRQ  )G
6HFUHWDU\LVHQWLWOHGWRVXPPDU\MXGJPHQWDVDPDWWHURIODZ          DW  +RZHYHU WKH &RXUWjV UHYLHZ RI WKH OHJLVODWLYH KLVWRU\ UHYHDOV WKH

RQKHUFODLPVXQGHU(5,6$D$DQG'86&           IROORZLQJ

 D$ DQG 'l  ,G DW   6SHFLILFDOO\ WKH           $Q DGGLWLRQDO SUREOHP H[LVWV EHFDXVH RI WKH SUHVHQW
GLVWULFWFRXUWKHOGWKDWQRORVVQHHGHGWREHVKRZQLQRUGHUWR           GHILQLWLRQ RI SURKLELWHG WUDQVDFWLRQV &XUUHQWO\ WUDQVDFWLRQV
HVWDEOLVKDYLRODWLRQRIWKHVHVHFWLRQVRI(5,6$IDLOXUHWR              JHQHUDOO\ DUH SURKLELWHG ZKHQ WKH GHDOLQJV LQYROYHG DUH RQ RWKHU
FRQGXFWDSUXGHQWDQGLQGHSHQGHQWLQYHVWLJDWLRQZDVHQRXJK                WKDQ DQ DUPjVOHQJWK EDVLV +RZHYHU DUPjVOHQJWK VWDQGDUGV

WRHVWDEOLVKDYLRODWLRQRID$DQG',GDW          UHTXLUH VXEVWDQWLDO HQIRUFHPHQW HIIRUWV UHVXOWLQJ LQ VSRUDGLF
                                                                          DQG XQFHUWDLQ HIIHFWLYHQHVV RI WKHVH SURYLVLRQV 7KLV LV WKH VDPH


  7KHGLVWULFWFRXUWUHIHUUHGWKHPDWWHUWRDPDJLVWUDWHMXGJH
                                                                          SUREOHP ZKLFK ZDV IDFHG E\ WKH &RQJUHVV LQ  ZKHQ LW DFWHG
                                                                          ZLWK UHVSHFW WR SURKLELWHG WUDQVDFWLRQV DQG SULYDWH IRXQGDWLRQV
IRUDGHWHUPLQDWLRQRIWKHIDLUPDUNHWYDOXHRIWKHVKDUHV            $W WKDW WLPH WKH &RQJUHVV FRQFOXGHG WKDW LQ PRVW FDVHV DUPjV
                                                                          OHQJWK   VWDQGDUGV   GLG   QRW   SUHVHUYH   WKH   LQWHJULW\   RI   SULYDWH
    &KDRY+DOO+ROGLQJ               1RV       1RV                    &KDRY+DOO+ROGLQJ              
      &RHWDO                                                                                                        &RHWDO

  HOHPHQWV DUH VDWLVILHG  WKH SHUVRQ RU HQWLW\ LV m>D@   RI+DOO+ROGLQJVWRFN2Q'HFHPEHUWKHPDJLVWUDWH
  ILGXFLDU\ ZLWK UHVSHFW WR >WKH@ SODQ  WKH ILGXFLDU\    MXGJHLVVXHGDUHSRUWDQGUHFRPPHQGDWLRQDIWHUFRQVLGHULQJ
  mFDXVH>V@lWKHSODQWRHQJDJHLQWKHWUDQVDFWLRQDWLVVXH         WKH WHVWLPRQ\ RI HLJKW ZLWQHVVHV  7KH PDJLVWUDWH MXGJH
   WKH WUDQVDFWLRQ mXVH>V@l SODQ DVVHWV  WKH             FRQFOXGHG WKDW DV RI 6HSWHPEHU   WKH IDLU PDUNHW
  WUDQVDFWLRQjVXVHRIWKHDVVHWVLVmIRUWKHEHQHILWRIlD          YDOXHRIWKH+DOO+ROGLQJVWRFNZDV
  SDUW\LQLQWHUHVWDQGWKHILGXFLDU\mNQRZVRUVKRXOG
  NQRZlWKDWHOHPHQWVWKUHHDQGIRXUDUHVDWLVILHG                    2Q $XJXVW   WKH GLVWULFW FRXUW DFFHSWHG WKH
                                                                     PDJLVWUDWHMXGJHjVDQDO\VLVRIWKHSDUWLHVH[SHUWWHVWLPRQ\EXW
sRUGDQ)GDWTXRWLQJ&RPSWRQ)GDW             UHMHFWHGKLVILQDOYDOXDWLRQ&RQVHTXHQWO\WKHGLVWULFWFRXUW
7KHSDQHOLQsRUGDQH[SODLQHGLWVUHDVRQVIRUDGRSWLQJ        KHOG WKDW WKH IDLU PDUNHW YDOXH RI  RI +DOO +ROGLQJ
WKHKROGLQJLQ&RPSWRQ                                              VWRFN RQ 6HSWHPEHU   ZDV   7KLV
                                                                     UHVXOWHG LQ GDPDJHV WR WKH +DOO &KHPLFDO (623 RI
  7KHFRXUW>LQ&RPSWRQ@FRQFOXGHGWKDW WKH IRXUWK           ZKLFKUHSUHVHQWHGWKHGLIIHUHQFHEHWZHHQWKH
  HOHPHQWUHTXLUHVDVXEMHFWLYHLQWHQWWREHQHILWDSDUW\LQ         DPRXQWSDLGE\WKH+DOO&KHPLFDO(623IRUWKH+DOO+ROGLQJ
  LQWHUHVW  ,I D VKRZLQJ RI VXEMHFWLYH LQWHQW ZHUH QRW     VWRFNDQGWKHIDLUPDUNHWYDOXHRIWKHVWRFNDVGHWHUPLQHGE\
  UHTXLUHG mVHFWLRQ D' ZRXOG SURGXFH                  WKHGLVWULFWFRXUW6HH5HLFKY+DOO+ROGLQJ&R,QF)
  XQUHDVRQDEOH FRQVHTXHQFHV WKDW ZH IHHO FRQILGHQW              6XSSG1'2KLR
  &RQJUHVVFRXOGQRWKDYHZDQWHGl7KDWLVZRXOG
  SURKLELW ILGXFLDULHV IURP HQJDJLQJ LQ WUDQVDFWLRQV WKDW        2Q6HSWHPEHUWKHGLVWULFWFRXUWRQDPRWLRQIRU
  ZRXOGEHQHILWWKHSODQm:HWKXVILQGVWURQJVXSSRUWIRU          UHFRQVLGHUDWLRQ ILOHG E\ WKH 6HFUHWDU\ IRXQG WKDW WKH +DOO
  DVXEMHFWLYHLQWHQWUHTXLUHPHQWLQWKHODQJXDJHRIVHFWLRQ         &KHPLFDO(623ZDVHQWLWOHGWRLQSUHMXGJPHQW
  D' DQG ILQGLQJ QR FRQWUDU\ HYLGHQFH LQ WKH
  OHJLVODWLYH KLVWRU\ ZH FRQFOXGH WKDW HOHPHQW IRXU
  UHTXLUHVSURRIRIDVXEMHFWLYHLQWHQWWREHQHILWDSDUW\LQ            
                                                                          7KH GLVWULFW FRXUW H[SODLQHG WKDW WKH PDJLVWUDWH MXGJH HUURQHRXVO\
  LQWHUHVWl                                                        XVHG  LQVWHDG RI     6HH 5HLFK Y +DOO +ROGLQJ  ) 6XSS G
                                                                       1' 2KLR 
sRUGDQ)GDWLQWHUQDOFLWDWLRQVRPLWWHG$IWHU
QRWLQJWKDWWKHGHIHQGDQWVKDGQHYHUFKDOOHQJHGWKHDPRXQW               
                                                                            7KH GLVWULFW FRXUW DUULYHG DW LWV YDOXDWLRQ RI  RI +DOO +ROGLQJ
RIDWWRUQH\IHHVRUKRXUVWKHFRXUWIRXQGWKDWWKHm'HIHQGDQWV      VWRFN E\ WDNLQJ &XQQLQJKDPjV YDOXDWLRQ UDQJHV RI +DOO &KHPLFDO XQGHU
FDQQRWQRZDVVHUWWKDWWKH\VXEMHFWLYHO\LQWHQGHGWREHQHILW         WKUHH YDOXDWLRQ IRUPXODV DQG VXEWUDFWLQJ  WKH  PLOOLRQ GHEW RI
WKH >,QWHUQDWLRQDO %URWKHUKRRG RI 7HDPVWHUV $)/&,2@ E\        +DOO +ROGLQJ DQG  D  PLQRULW\ GLVFRXQW WR DFFRXQW IRU WKH IDFW WKDW
                                                                     WKH +DOO &KHPLFDO (623 SXUFKDVHG RQO\ D PLQRULW\ LQWHUHVW  LQ
FRPSO\LQJ ZLWK WKH DWWRUQH\jV IHHV DJUHHPHQW LQ WKH           +DOO +ROGLQJ 7KH GLVWULFW FRXUW WKHQ DYHUDJHG WKHVH WKUHH UDQJHV WRRN
VHWWOHPHQWl,G                                                   WKH ORZHVW YDOXH LQ WKH UDQJH DQG WKHQ VXEWUDFWHG  QHJDWLYH DFFRXQWV
                                                                     UHFHLYDEOH DQG OLDELOLWLHV RI +DOO +ROGLQJ   PDUNHWDELOLW\ GLVFRXQW
  $OWKRXJKGHIHQGDQWVjDUJXPHQWPD\JLYHVRPHSDXVHLWLV           WR UHIOHFW WKDW WKH PDUNHW IRU D FORVHG FRUSRUDWLRQ VXFK DV +DOO +ROGLQJ LV
E\QRPHDQVGLVSRVLWLYHRIWKHSUHVHQWDSSHDO7KLV&RXUW           QRW DV UHDGLO\ DYDLODEOH DV D PDUNHW IRU SXEOLFO\ WUDGHG VWRFN DQG  
UHYLHZVmWKHJUDQWRIVXPPDU\MXGJPHQWGHQRYRDQGPD\         GLVFRXQW WR UHIOHFW GHIHQGDQW $KHDUQjV LQWHUHVW LQ  RI +DOO &KHPLFDO
                                                                     VWRFN )LQDOO\ WKH GLVWULFW FRXUW PXOWLSOLHG WKH ILQDO YDOXH RI +DOO +ROGLQJ
DIILUPRQDQ\JURXQGVVXSSRUWHGE\WKHUHFRUGHYHQWKRXJK           VWRFN E\  WR UHIOHFW WKH SHUFHQWDJH RI +DOO +ROGLQJ VWRFN SXUFKDVHG
WKH\ PD\ EH GLIIHUHQW IURP WKH JURXQGV UHOLHG RQ E\ WKH    E\ WKH +DOO &KHPLFDO (623 DQG URXQGHG WKDW QXPEHU XS WR WKH QHDUHVW
                                                                     GROODU 6HH +DOO +ROGLQJ  ) 6XSS G DW 
    &KDRY+DOO+ROGLQJ               1RV         1RV                &KDRY+DOO+ROGLQJ        
      &RHWDO                                                                                                      &RHWDO

LQWHUHVW ZKLFK ZKHQ DGGHG WR WKH LQLWLDO DZDUG RI            (623 DQG GHIHQGDQWVj IDLOXUH WR LQYHVWLJDWH FDQQRW VWDQG
HTXDOHGDWRWDODZDUGRI)LQDOO\          EHFDXVH.XSHUGLGQRWFRQWHPSODWHDYLRODWLRQXQGHU
RQ 'HFHPEHU   WKH GLVWULFW FRXUW LVVXHG DQ RUGHU      DQGIXUWKHUUHTXLULQJVXFKDFDXVDOOLQNZRXOGEHFRQWUDU\WR
GHWDLOLQJWKHPHWKRGLQZKLFKWKHDZDUGZDV              &RQJUHVVjVFUHDWLRQRISHUVHYLRODWLRQVXQGHU
WREHDOORFDWHG6SHFLILFDOO\WKHDOORFDWLRQZDVWREHEDVHG
XSRQWKHDPRXQWRIVWRFNWKDWDJLYHQSDUWLFLSDQWKDGUHFHLYHG              sRUGDQ Y 0LFKLJDQ &RQIHUHQFH RI 7HDPVWHUV
RUZRXOGUHFHLYHLQWKHIXWXUH                                               :HOIDUH)XQG
  $V D UHVXOW RI WKH SURFHHGLQJV EHIRUH WKH GLVWULFW FRXUW     7KH WKLUG DQG ILQDO FDVH ZKLFK ZDV UHOLHG XSRQ E\
GHIHQGDQWVILOHGWZRQRWLFHVRIDSSHDOLQWKLVPDWWHU7KHILUVW      GHIHQGDQWVLVsRUGDQY0LFKLJDQ&RQIHUHQFHRI7HDPVWHUV
QRWLFHRIDSSHDOZDVILOHGRQ6HSWHPEHUDQGDSSHDOHG           :HOIDUH)XQG)GWK&LU,QWKHLUUHSO\
WKHGLVWULFWFRXUWjVRUGHUVRIsDQXDU\0DUFK        EULHIGHIHQGDQWVDVVHUWWKDWWKLVFDVHFRPSHOVUHYHUVDORIWKH
DQG$XJXVW7KHVHFRQGQRWLFHRIDSSHDOZDVILOHG            GLVWULFWFRXUWjVGHFLVLRQEHFDXVHWKHUHZDVQRVKRZLQJRID
E\GHIHQGDQWVRQ1RYHPEHU7KLVQRWLFHDSSHDOHG              VXEMHFWLYHLQWHQWWREHQHILWWKHSDUWLHVLQLQWHUHVWDVGHIHQGDQWV
WKHVDPHRUGHUVLQWKHILUVWQRWLFHRIDSSHDOLQDGGLWLRQWRWKH      FRQWHQGLVUHTXLUHGXQGHU
GLVWULFWFRXUWjVRUGHURI6HSWHPEHU
                                                                          ,QsRUGDQWKHSODLQWLIIVEURXJKWDFODVVDFWLRQFDVHDJDLQVW
               ,,67$1'$5'2)5(9,(:                                 WKHGHIHQGDQWV7KHSDUWLHVUHVROYHGWKHGLVSXWHDQGDVSDUW
                                                                       RIWKHVHWWOHPHQWDJUHHPHQWWKHGHIHQGDQWVDJUHHGWRSD\WKH
   7KH&RXUWUHYLHZVDGLVWULFWFRXUWjVGHFLVLRQRQDPRWLRQ           SODLQWLIIVjUHDVRQDEOHDWWRUQH\jVIHHV7KHGLVWULFWFRXUWKDG
IRU VXPPDU\ MXGJPHQW GH QRYR XVLQJ WKH VDPH OHJDO             DKHDULQJGXULQJZKLFKLWFHUWLILHGWKHFODVVDQGSUHOLPLQDULO\
VWDQGDUGVHPSOR\HGE\WKHGLVWULFWFRXUW6HH+HQGHUVRQY            DSSURYHG WKH VHWWOHPHQW DJUHHPHQW  +RZHYHU DIILGDYLWV
$UGFR,QF)G WK&LU6XPPDU\              VXSSRUWLQJWKHUHTXHVWIRUDWWRUQH\jVIHHVGLVFORVHGWKDWWKH
MXGJPHQWLVDSSURSULDWHRQO\LIWKHDQVZHUVWRLQWHUURJDWRULHV        ,QWHUQDWLRQDO%URWKHUKRRGRI7HDPVWHUV$)/&,2KHOSHGWR
GHSRVLWLRQV DGPLVVLRQV DQG SOHDGLQJV FRPELQHG ZLWK WKH         ILQDQFH WKH  SODLQWLIIVj FODVV DFWLRQ VXLW  7KH GHIHQGDQWV
DIILGDYLWV LQ VXSSRUW VKRZ WKDW QR JHQXLQH LVVXH DV WR DQ\   UHIXVHG WR PDNH DQ\ SD\PHQWV WR WKH ,QWHUQDWLRQDO
PDWHULDO IDFW UHPDLQV DQG WKH PRYLQJ SDUW\ LV HQWLWOHG WR     %URWKHUKRRGRI7HDPVWHUV$)/&,2EHFDXVHWKH\EHOLHYHG
MXGJPHQWDVDPDWWHURIODZ6HH)(' 5 &,9 3F$            WKDW VXFK D SD\PHQW ZRXOG YLRODWH  D' mZKLFK
JHQXLQHLVVXHRIPDWHULDOIDFWH[LVWVZKHQWKHUHLVmVXIILFLHQW        SURKLELWVDEHQHILWSODQIURPWUDQVIHUULQJDVVHWVWRDSDUW\LQ
HYLGHQFHIDYRULQJWKHQRQPRYLQJSDUW\IRUDMXU\WRUHWXUQD           LQWHUHVWl7KHGLVWULFWFRXUWDJUHHGZLWKWKHGHIHQGDQWVWKDW
YHUGLFWIRUWKDWSDUW\l$QGHUVRQY/LEHUW\/REE\,QF          VXFK D WUDQVIHU ZRXOG EH D SURKLELWHG WUDQVDFWLRQ XQGHU
86FLWDWLRQVRPLWWHG,QDSSOLFDWLRQRI           D',GDW
WKLV VXPPDU\ MXGJPHQW VWDQGDUG WKH &RXUW PXVW YLHZ DOO
PDWHULDOVVXSSOLHGLQFOXGLQJDOOSOHDGLQJVLQWKHOLJKWPRVW           +RZHYHUDQRWKHUSDQHORIWKLV&RXUWGLVDJUHHGZLWKWKH
IDYRUDEOH WR WKH QRQPRYLQJ SDUW\  6HH 0DWVXVKLWD (OHF        GLVWULFWFRXUWjVFRQFOXVLRQDQGUHYHUVHG7KDWSDQHODGRSWHG
,QGXV &R /WG Y =HQLWK 5DGLR &RUS  86      WKHIROORZLQJODQJXDJHLQ5HLFKY&RPSWRQ)GG
  m,I WKH HYLGHQFH LV PHUHO\ FRORUDEOH RU LV QRW      &LU
VLJQLILFDQWO\SUREDWLYHVXPPDU\MXGJPHQWPD\EHJUDQWHGl
$QGHUVRQ86DWFLWDWLRQVRPLWWHG                        $VZHUHDGWKLVODQJXDJH>LQD'@LWSURYLGHV
                                                                         WKDWDILGXFLDU\EUHDFKRFFXUVZKHQWKHIROORZLQJILYH
    &KDRY+DOO+ROGLQJ               1RV         1RV                &KDRY+DOO+ROGLQJ        
      &RHWDO                                                                                                      &RHWDO

H[DPLQLQJWKHILGXFLDU\UHTXLUHPHQWVRIEXWLWGLGQRW            7KH PRYLQJ SDUW\ EHDUV WKH LQLWLDO UHVSRQVLELOLW\ RI
H[DPLQHDYLRODWLRQRIEHFDXVHQRQHRIWKHSURKLELWHG            LQIRUPLQJWKH&RXUWRIWKHEDVLVIRULWVPRWLRQDQGLGHQWLI\LQJ
WUDQVDFWLRQV XQGHUZHUHDWLVVXH&RQVHTXHQWO\WKH            WKRVHSRUWLRQVRIWKHUHFRUGWKDWHVWDEOLVKWKHDEVHQFHRID
&RXUWGHFOLQHVWRUHDGDmFDXVDWLRQlHOHPHQWLQWRDYLRODWLRQ          JHQXLQHLVVXHRIPDWHULDOIDFW6HH&HORWH[&RUSY&DWUHWW
RIEHFDXVH.XSHUKDGQRLQWHQWLRQWRGRVRDQGVXFKD            862QFHWKHPRYLQJSDUW\KDVPHWLWV
UHDGLQJLVIDUEH\RQGWKHVFRSHRIWKHLVVXHVSUHVHQWHGLQWKDW        EXUGHQWKHQRQPRYLQJSDUW\PXVWJREH\RQGWKHSOHDGLQJV
FDVH                                                                  DQGFRPHIRUZDUGZLWKVSHFLILFIDFWVWRGHPRQVWUDWHWKDWWKHUH
                                                                       LVDJHQXLQHLVVXHIRUWULDO6HH)(' 5 &,9 3H&HORWH[
   )XUWKHUWKH&RXUWILQGVWKDWUHTXLULQJDFDXVDOOLQNEHWZHHQ       86DW7KHQRQPRYLQJSDUW\PXVWGRPRUHWKDQ
WKHIDLOXUHWRLQYHVWLJDWHDQGWKHUHVXOWDQWKDUPLQRUGHUWR          VKRZWKDWWKHUHLVVRPHPHWDSK\VLFDOGRXEWDVWRWKHPDWHULDO
SURYH D YLRODWLRQ XQGHU   ZRXOG EH FRQWUDU\ WR            IDFWV  6HH 0DWVXVKLWD  86 DW   ,W PXVW SUHVHQW
&RQJUHVVjVLQWHQWLQHQDFWLQJ%DVLFDOO\LQFUHDWLQJ           VLJQLILFDQWSUREDWLYHHYLGHQFHLQVXSSRUWRILWVRSSRVLWLRQWR
 D &RQJUHVV LQWHQGHG WR FUHDWH D FDWHJRU\ RI SHU VH   WKH PRWLRQ IRU VXPPDU\ MXGJPHQW LQ RUGHU WR GHIHDW WKH
YLRODWLRQV6HHsRUGDQY0LFKLJDQ&RQIHUHQFHRI7HDPVWHUV            PRWLRQIRUVXPPDU\MXGJPHQW6HH$QGHUVRQ86DW
:HOIDUH)XQG)GWK&LU$VRQH              
FRXUWH[SODLQHGWKHUHDVRQLQJIRUWUHDWLQJDYLRODWLRQRI
DVDSHUVHYLRODWLRQLVDVIROORZV                                                    ,,,/(*$/67$1'$5'6
  m&RQJUHVVLQ(5,6$LQWHQGHGWRFUHDWHDQHDVLO\              $7KH(5,6$)UDPHZRUN
  DSSOLHGSHUVHSURKLELWLRQRIFHUWDLQWUDQVDFWLRQVQR
  PDWWHU KRZ IDLU XQOHVV WKH VWDWXWRU\ H[HPSWLRQ                  8QGHU(5,6$D86&DFHUWDLQW\SHV
  SURFHGXUHVRI(5,6$DDUHIROORZHGl&XWDLDU               RI WUDQVDFWLRQV EHWZHHQ D SODQ DQG D SDUW\ LQ LQWHUHVW DUH
  Y0DUVKDOO)GG&LUVHH                SURKLELWHG$SDUW\LQLQWHUHVWLVEURDGO\GHILQHGWRLQFOXGH
  DOVR (DYHV Y 3HQQ  )G   WK &LU         DQ\ ILGXFLDU\ D SHUVRQ SURYLGLQJ VHUYLFHV WR WKH SODQ DQ
  /DFNRIKDUPWRWKHSODQRUWKHJRRGIDLWKRUODFN            HPSOR\HU ZKRVH HPSOR\HHV DUH FRYHUHG E\ WKH SODQ DQG
  RIWKHVDPHRQWKHSDUWRIWKHERUURZHUDUHQRWUHOHYDQW            FHUWDLQ VKDUHKROGHUV DQG UHODWLYHV  6HH  $) 
  DQG FHUWDLQO\ QRW FRQWUROOLQJ XQGHU (5,6$               86&  $)  7KH SURKLELWHG WUDQVDFWLRQV
  5DWKHUm&RQJUHVVZDVFRQFHUQHGLQ(5,6$WR                  EHWZHHQDSODQDQGDSDUW\LQLQWHUHVWDVVHWIRUWKLQD
  SUHYHQWWUDQVDFWLRQVZKLFKRIIHUHGDKLJKSRWHQWLDOIRU              DUHDVIROORZV
  ORVVRISODQDVVHWVRUIRULQVLGHUDEXVHl0DUVKDOO
  Y.HOO\)6XSS:'2NOD                     ([FHSWDVSURYLGHGLQVHFWLRQRIWKLVWLWOH

5HLFK Y 9DOOH\ 1DW %DQN RI $UL]RQD  ) 6XSS        $ILGXFLDU\ZLWKUHVSHFWWRDSODQVKDOOQRWFDXVHWKH
 6'1<  TXRWLQJ 0 	 5 ,QYHVW &R ,QF Y       SODQWRHQJDJHLQDWUDQVDFWLRQLIKHNQRZVRUVKRXOG
)LW]VLPPRQV)6XSS'1HY                  NQRZ WKDW VXFK WUDQVDFWLRQ FRQVWLWXWHV D GLUHFW RU
                                                                         LQGLUHFWo
 ,Q VXP WKH FODLPV RI HUURU UDLVHG E\ GHIHQGDQWV XQGHU           $ VDOH RU H[FKDQJH RU OHDVLQJ RI DQ\ SURSHUW\
.XSHUPXVWIDLO'HIHQGDQWVjFRQWHQWLRQWKDWDFDXVDOOLQN                EHWZHHQWKHSODQDQGDSDUW\LQLQWHUHVW
PXVWEHHVWDEOLVKHGEHWZHHQWKHORVVWRWKH+DOO&KHPLFDO                  % OHQGLQJ RI PRQH\ RU RWKHU H[WHQVLRQ RI FUHGLW
                                                                           EHWZHHQWKHSODQDQGDSDUW\LQLQWHUHVW
    &KDRY+DOO+ROGLQJ               1RV       1RV                &KDRY+DOO+ROGLQJ         
      &RHWDO                                                                                                    &RHWDO

     &IXUQLVKLQJRIJRRGVVHUYLFHVRUIDFLOLWLHVEHWZHHQ        4XDQWXPjV EHQHILW FRPPLWWHH WHVWLILHG WKDW WKH\ QHYHU
     WKHSODQDQGDSDUW\LQLQWHUHVW                               FRQVLGHUHG OLTXLGDWLQJ RU GLYHUVLI\LQJ WKH (623jV DVVHWV
     'WUDQVIHUWRRUXVHE\RUIRUWKHEHQHILWRIDSDUW\       GXULQJ WKLV HLJKWHHQ PRQWK SHULRG HYHQ WKRXJK WKH\ ZHUH
     LQLQWHUHVWRIDQ\DVVHWVRIWKHSODQRU                      DZDUHRIWKHIROORZLQJHYHQWVWKDWRFFXUUHGGXULQJWKHSHULRG
     (DFTXLVLWLRQRQEHKDOIRIWKHSODQRIDQ\HPSOR\HU         WKHWUDQVIHUZDVSHQGLQJ
     VHFXULW\ RU HPSOR\HU UHDO SURSHUW\ LQ YLRODWLRQ RI
     VHFWLRQDRIWKLVWLWOH                                    4XDQWXPjV UHFDSLWDOL]DWLRQ ZKLFK DGYHUVHO\ DIIHFWHG
                                                                       4XDQWXPjV ILQDQFLDO FRQGLWLRQ E\ LQFUHDVLQJ LWV GHEW
86&D7KHSXUSRVHRIDLVmWRSURKLELW          EXUGHQ LQWHUHVW H[SHQVH DQG SULQFLSDO UHSD\PHQW
WUDQVDFWLRQVWKDWZRXOGFOHDUO\LQMXUHWKHSODQlsRUGDQY           4XDQWXPjVGHFUHDVHGRSHUDWLRQDOGLYHUVLW\DPDMRUILUH
0LFKLJDQ&RQIRI7HDPVWHUV:HOIDUH)XQG)G                DWRQHRI4XDQWXPjVSODQWVWKDWKLQGHUHGWKHFRPSDQ\jV
WK&LUFLWLQJ/RFNKHHG&RUSY6SLQN86          SURGXFWLRQFDSDFLW\DQGDGHFOLQHLQ4XDQWXPjVQHWVDOHV
m&RQJUHVVDGRSWHGWRSUHYHQWHPSOR\HH              DQGLQFRPH
EHQHILWSODQVIURPHQJDJLQJLQWUDQVDFWLRQVWKDWZRXOGEHQHILW
SDUWLHVLQLQWHUHVWDWWKHH[SHQVHRISODQSDUWLFLSDQWVDQGWKHLU    ,GDW
EHQHILFLDULHVl,GFLWLQJ/RFNKHHG&RUS86DW
                                                                       7KHSODLQWLIIVILOHGVXLWDJDLQVWWKHGHIHQGDQWVDQGUDLVHG
   $OWKRXJK  D SURKLELWV WUDQVDFWLRQV EHWZHHQ DQ         PXOWLSOHFODLPV$OORIWKHFODLPVZHUHGLVPLVVHGH[FHSWIRU
LQWHUHVWHGSDUW\DQGDSODQWKHUHDUHH[FHSWLRQVWRWKLVUXOH      WKHSODLQWLIIVjFODLPVXQGHU(5,6$ZKLFKZHUHEDVHGXSRQ
8QGHU  H RI (5,6$   GRHV QRW DSSO\ WR WKH   WKHGURSRI4XDQWXPjVVWRFNSULFHGXULQJWKHHLJKWHHQPRQWK
DFTXLVLWLRQRUVDOHE\DSODQRIWKHHPSOR\HUjVVHFXULWLHVDV        SHULRGWKHWUDQVIHURIWKH(623jVDVVHWVZDVSHQGLQJ7KH
ORQJDVWKHDFTXLVLWLRQRUVDOHLVIRUmDGHTXDWHFRQVLGHUDWLRQl     SRVLWLRQVRIWKHSODLQWLIIVDQGWKHGHIHQGDQWVZHUHDVIROORZV
86&H7KHWHUPmDGHTXDWHFRQVLGHUDWLRQl           m3ODLQWLIIV DUJXH WKDW GHIHQGDQWV EUHDFKHG WKHLU ILGXFLDU\
LVGHILQHGDVIROORZV                                               GXWLHV E\ IDLOLQJ WR GLYHUVLI\ RU OLTXLGDWH WKH (623 IXQGV
                                                                     GXULQJWKHSHQGHQF\RIWKHWUDQVIHU'HIHQGDQWVFRXQWHU
  >,@QWKHFDVHRIDQDVVHWRWKHUWKDQDVHFXULW\IRUZKLFK          WKDWWKHWHUPVRIWKH3ODQGLGQRWJLYHWKHPDQ\GLVFUHWLRQWR
  WKHUH LV D JHQHUDOO\ UHFRJQL]HG PDUNHW WKH IDLU PDUNHW     GLYHUVLI\ RU OLTXLGDWH WKH (623 IXQGVl  ,G DW 
  YDOXH RI WKH DVVHW DV GHWHUPLQHG LQ JRRG IDLWK E\ WKH    (YHQWXDOO\WKH&RXUWKHOGWKDWWKHmSODLQWLIIVKDYHIDLOHGWR
  WUXVWHHRUQDPHGILGXFLDU\SXUVXDQWWRWKHWHUPVRIWKH            SUHVHQWVXIILFLHQWHYLGHQFHWKDWDUHDVRQDEOHILGXFLDU\ZRXOG
  SODQDQGLQDFFRUGDQFHZLWKUHJXODWLRQVSURPXOJDWHGE\             KDYH GLYHUVLILHG RU OLTXLGDWHG WKH (623 $FFRUGLQJO\ ZH
  WKH6HFUHWDU\                                                   KROGWKDWWKHGLVWULFWFRXUWGLGQRWHUULQGHWHUPLQLQJWKDW>WKH@
                                                                     GHIHQGDQWVjIDLOXUHWRGLYHUVLI\RUOLTXLGDWHWKH(623IXQGV
 86&  % VHH DOVR +HUPDQ Y 0HUFDQWLOH       ZDVQRWDEUHDFKRIWKHLUILGXFLDU\GXWLHVl,GDW
%DQN1$)GWK&LU7KHLPSHWXV
EHKLQGWKHH[FHSWLRQVHWIRUWKLQHDQGRWKHUVWDWXWRU\          $VWKHDERYHGLVFXVVLRQVKRZVDYLRODWLRQRIZDV
(623 SURYLVLRQV ZDV &RQJUHVVjV LQWHQW mWR HQFRXUDJH            QRW DW LVVXH LQ .XSHU EHFDXVH QRQH RI WKH SURKLELWHG
HPSOR\HHVjRZQHUVKLSRIWKHLUHPSOR\HUFRPSDQ\l.XSHU             WUDQVDFWLRQVLQDZDVDWLVVXH,QVWHDGDWLVVXHLQ
)GDW                                                     .XSHUZDVZKHWKHUWKHGHIHQGDQWVKDGYLRODWHGWKHLUILGXFLDU\
                                                                     GXWLHV XQGHU    7KH &RXUW VSHQW D JUHDW GHDO RI WLPH
    &KDRY+DOO+ROGLQJ               1RV        1RV                 &KDRY+DOO+ROGLQJ        
      &RHWDO                                                                                                      &RHWDO

K\SRWKHWLFDOUHDVRQDEOHILGXFLDU\LVLUUHOHYDQWLQGHWHUPLQLQJ          8QGHU(5,6$DSODQWKDWSULPDULO\LQYHVWVLQWKHVKDUHVRI
ZKHWKHUGHIHQGDQWVYLRODWHGD                            VWRFNRIWKHHPSOR\HUWKDWFUHDWHVWKHSODQLVUHIHUUHGWRDVDQ
                                                                      (6236HHLGDW&RQJUHVVLQWHQGHG(623VWRIXQFWLRQ
  .XSHUY,RYHQNR                                                DVERWKmDQHPSOR\HHUHWLUHPHQWEHQHILWSODQDQGDµWHFKQLTXH
                                                                      RI FRUSRUDWH ILQDQFHj WKDW ZRXOG HQFRXUDJH HPSOR\HH
  ,QDGGLWLRQGHIHQGDQWVDOVRDUJXHWKDWZHUHWKH&RXUWWR           RZQHUVKLSl,GTXRWLQJ0DUWLQY)HLOHQ)G
DJUHHZLWKWKHGLVWULFWFRXUWLWZRXOGLJQRUHWKHKROGLQJLQ         WK&LUm%HFDXVHRIWKHVHGXDOSXUSRVHV(623VDUH
.XSHUY,RYHQNR)GWK&LU,Q.XSHU            QRWGHVLJQHGWRJXDUDQWHHUHWLUHPHQWEHQHILWVDQGWKH\SODFH
DQRWKHUSDQHOLQWKLVFLUFXLWVWDWHG                                 HPSOR\HH UHWLUHPHQW DVVHWV DW PXFK JUHDWHU ULVN WKDQ WKH
                                                                      W\SLFDO GLYHUVLILHG (5,6$ SODQl  ,G FLWLQJ 0RHQFK Y
  +RZHYHU D ILGXFLDU\jV IDLOXUH WR LQYHVWLJDWH DQ              5REHUWVRQ)GG&LUTXRWLQJ0DUWLQ
  LQYHVWPHQWGHFLVLRQDORQHLVQRWVXIILFLHQWWRVKRZWKDW            )GDW
  WKHGHFLVLRQZDVQRWUHDVRQDEOH,QVWHDGWRVKRZWKDWDQ
  LQYHVWPHQW GHFLVLRQ EUHDFKHG D ILGXFLDU\jV GXW\ WR DFW         (YHQ WKRXJK (623V FDQ EH PXFK ULVNLHU WKDQ D W\SLFDO
  UHDVRQDEO\LQDQHIIRUWWRKROGWKHILGXFLDU\OLDEOHIRUD          (5,6$ SODQ WKH ILGXFLDULHV RI WKHVH SODQV DUH VWLOO KHOG WR
  ORVVDWWULEXWDEOHWRWKLVLQYHVWPHQWGHFLVLRQDSODLQWLII          WKHLU ILGXFLDU\ UHVSRQVLELOLWLHV EHFDXVH WKH VWDWXWRU\
  PXVWVKRZDFDXVDOOLQNEHWZHHQWKHIDLOXUHWRLQYHVWLJDWH          H[HPSWLRQVIRU(623V
  DQGWKHKDUPVXIIHUHGE\WKHSODQ
                                                                        GR> @ QRW UHOLHYH D ILGXFLDU\    IURP WKH JHQHUDO
,GDWHPSKDVLVLQRULJLQDOFLWLQJ'LGXFNY.DV]\FNL           ILGXFLDU\UHVSRQVLELOLW\SURYLVLRQVRI>86&@
	6RQV&RQWUDFWRUV,QF)GG&LU            ZKLFK DPRQJ RWKHU WKLQJV UHTXLUH D ILGXFLDU\ WR
$V H[SODLQHG E\ GHIHQGDQWV D VKRZLQJ RI mFDXVDWLRQl LV         GLVFKDUJH KLV GXWLHV UHVSHFWLQJ WKH SODQ VROHO\ LQ WKH
UHTXLUHGWRVKRZDYLRODWLRQRI7KLV&RXUWGLVDJUHHV            LQWHUHVWVRISODQSDUWLFLSDQWVDQGEHQHILFLDULHVDQGLQD
ZLWKGHIHQGDQWVjFODLPDQGILQGVWKDWWKHKROGLQJLQ.XSHULV           SUXGHQWIDVKLRQQRUGRHVLWDIIHFWWKHUHTXLUHPHQW
LQDSSOLFDEOH WR WKH SUHVHQW FDVH DV .XSHU RQO\ DGGUHVVHG        WKDWDSODQPXVWEHRSHUDWHGIRUWKHH[FOXVLYHEHQHILWRI
YLRODWLRQVRIQRW                                         HPSOR\HHVDQGWKHLUEHQHILFLDULHV
   ,Q .XSHU WKLV &LUFXLW ZDV IDFHG ZLWK WKH TXHVWLRQ RI     .XSHU  )G DW  TXRWLQJ 0DUWLQ  )G DW 
ZKHWKHUILGXFLDULHVRIDQ(623WKDWRQO\KHOGVWRFNRIWKH            TXRWLQJ)HG5HJ1RDWS$XJ
HPSOR\HU FRXOG EH KHOG OLDEOH IRU IDLOLQJ WR GLYHUVLI\ RU    &RQVHTXHQWO\ WKH GXWLHV UHTXLUHG RI D ILGXFLDU\ VKDOO EH
OLTXLGDWH LWV KROGLQJV  ,Q WKDW FDVH WKH SODLQWLIIV ZHUH   H[DPLQHG
HPSOR\HHVRIDGLYLVLRQRI4XDQWXP&KHPLFDO&RUSRUDWLRQ
KHUHLQDIWHU m4XDQWXPl WKDW SDUWLFLSDWHG LQ DQ (623           %)LGXFLDU\6WDQGDUGVXQGHU(5,6$
4XDQWXPGHFLGHGWRVHOOWKHGLYLVLRQLQTXHVWLRQWRDQRWKHU
FRUSRUDWLRQ  7KH WUDQVDFWLRQ ZDV FRPSOHWHG RQ $SULO         m(5,6$LVDFRPSUHKHQVLYHVWDWXWHGHVLJQHGWRSURPRWHWKH
  +RZHYHU D WUDQVIHU RI WKH (623jV DVVHWV WR WKH      LQWHUHVWV RI HPSOR\HHV DQG WKHLU EHQHILFLDULHV LQ HPSOR\HH
SXUFKDVLQJ FRUSRUDWLRQ ZDV QRW FRPSOHWHG IRU DQRWKHU            EHQHILWSODQVl6KDZY'HOWD$LU/LQHV,QF86
HLJKWHHQ PRQWKV  'XULQJ WKLV HLJKWHHQ PRQWK SHULRG WKH      &RQVHTXHQWO\(5,6$ILGXFLDULHVmPXVWDFWIRUWKH
YDOXHRI4XDQWXPjVVWRFNGURSSHGIURPPRUHWKDQD              H[FOXVLYHEHQHILWRISODQEHQHILFLDULHVl+RZDUGY6KD\
VKDUH WR D OLWWOH PRUH WKDQ  D VKDUH  0HPEHUV RI
    &KDRY+DOO+ROGLQJ                1RV        1RV                 &KDRY+DOO+ROGLQJ        
      &RHWDO                                                                                                       &RHWDO

)GWK&LU7KHILGXFLDU\GXWLHVDUHVHW           WKHLU GHWHUPLQDWLRQ RI IDLU PDUNHW YDOXH E\ ZD\ RI D
IRUWKLQ(5,6$DZKLFKVWDWHV                                SUXGHQW LQYHVWLJDWLRQ LQ WKH FLUFXPVWDQFHV WKHQ
                                                                         SUHYDLOLQJ
  >$@ILGXFLDU\VKDOOGLVFKDUJHKLVGXWLHVZLWKUHVSHFW
  WR D SODQ VROHO\ LQ WKH LQWHUHVW RI WKH SDUWLFLSDQWV DQG   ,GDWHPSKDVLVLQRULJLQDOIRRWQRWHVRPLWWHGVHH
  EHQHILFLDULHVDQGo                                                  DOVR5HLFKY9DOOH\1DW%DQNRI$UL]RQD)6XSS
  $IRUWKHH[FOXVLYHSXUSRVHRI                                    6'1<
         L SURYLGLQJ EHQHILWV WR SDUWLFLSDQWV DQG WKHLU
         EHQHILFLDULHVDQG                                              5HWXUQLQJ WR WKH SUHVHQW FDVH WKH &RXUW ILQGV WKDW WKH
         LLGHIUD\LQJUHDVRQDEOHH[SHQVHVRIDGPLQLVWHULQJ           GLVWULFW FRXUW GLG QRW HUU LQ IDLOLQJ WR GHWHUPLQH ZKHWKHU D
         WKHSODQ                                                     K\SRWKHWLFDOUHDVRQDEOHILGXFLDU\ZRXOGKDYHSXUFKDVHGWKH
  %ZLWKWKHFDUHVNLOOSUXGHQFHDQGGLOLJHQFHXQGHUWKH          +DOO +ROGLQJ VWRFN DW WKH VDPH SULFH  :KHQ GHWHUPLQLQJ
  FLUFXPVWDQFHVWKHQSUHYDLOLQJWKDWDSUXGHQWPDQDFWLQJ              mDGHTXDWH FRQVLGHUDWLRQl  % UHTXLUHV QRW RQO\ D
  LQDOLNHFDSDFLW\DQGIDPLOLDUZLWKVXFKPDWWHUVZRXOG              GHWHUPLQDWLRQRIIDLUPDUNHWYDOXHEXWDOVRDQH[DPLQDWLRQRI
  XVHLQWKHFRQGXFWRIDQHQWHUSULVHRIDOLNHFKDUDFWHUDQG          WKHSURFHVVWKDWOHGWRWKHGHWHUPLQDWLRQRIIDLUPDUNHWYDOXH
  ZLWKOLNHDLPV                                                      LQOLJKWRIjVILGXFLDU\GXWLHV$VWKHGLVFXVVLRQLQWKH
  &E\GLYHUVLI\LQJWKHLQYHVWPHQWVRIWKHSODQVRDVWR             SULRUVHFWLRQGHPRQVWUDWHGGHIHQGDQWVGLGQRWPDNHDJRRG
  PLQLPL]H WKH ULVN RI ODUJH ORVVHV XQOHVV XQGHU WKH          IDLWKGHWHUPLQDWLRQDVWRWKHSULFHRIWKH+DOO+ROGLQJVWRFN
  FLUFXPVWDQFHVLWLVFOHDUO\SUXGHQWQRWWRGRVRDQG                7KLV ODFN RI JRRG IDLWK LV GHPRQVWUDWHG E\ WKH IROORZLQJ
  'LQDFFRUGDQFHZLWKWKHGRFXPHQWVDQGLQVWUXPHQWV                  'HIHQGDQWVj UHOLDQFH RQ &XQQLQJKDPjV YDOXDWLRQ ZDV
  JRYHUQLQJWKHSODQ                                           LPSURSHU EHFDXVH &XQQLQJKDP ZDV QRW JLYHQ DOO RI WKH
                                                                       LQIRUPDWLRQKHQHHGHGWRFRPSOHWHWKHYDOXDWLRQDQGEHFDXVH
86&D,Q.XSHUDQRWKHUSDQHORIWKLVFRXUW         KHYDOXHGWKHZURQJFRPSDQ\WKHWUXVWHHVZHUHJHQHUDOO\
H[SODLQHG WKDW WKH ILGXFLDU\ GXWLHV HQXPHUDWHG XQGHU             XQDZDUH RI ZKDW ZDV JRLQJ RQ  WKH WUXVWHHV ZHUH QRW
DKDGmWKUHHFRPSRQHQWVl                                    FRQVXOWHGRQPDMRUGHFLVLRQVVXFKDVWKHSULFHWRSD\IRU+DOO
                                                                       +ROGLQJVWRFNWKHUHZDVQRQHJRWLDWLRQDVWRWKHSULFHRI
  7KH ILUVW LV D mGXW\ RI OR\DOW\l SXUVXDQW WR ZKLFK mDOO    WKH+DOO+ROGLQJVWRFNWKHUHZDVPRUHFRQFHUQIRUWKH
  GHFLVLRQVUHJDUGLQJDQ(5,6$SODQµPXVWEHPDGHZLWK                 UHWXUQRQLQYHVWPHQWIRUWKH0DVWHU7UXVWDQGWKH+DOO
  DQ H\H VLQJOH WR WKH LQWHUHVWV RI WKH SDUWLFLSDQWV DQG      &KHPLFDO(623ZDVFKDUJHGVHYHUDOWKRXVDQGGROODUVPRUH
  EHQHILFLDULHVjl%HUOLQY0LFKLJDQ%HOO7HOH&R             VRWKDWGHIHQGDQWVFRXOGGHDOLQURXQGQXPEHUV
  )GWK&LUTXRWLQJ'RQRYDQY
  %LHUZLUWK)GG&LUFHUWGHQLHG               7KHVHIDFWVFOHDUO\GHPRQVWUDWHWKDWGHIHQGDQWVHQJDJHGLQ
  866&W/(GG7KH             DSURKLELWHGWUDQVDFWLRQ%HFDXVHGHIHQGDQWVGLGQRWHQJDJH
  VHFRQGREOLJDWLRQLPSRVHGXQGHU(5,6$WKHmSUXGHQW                  LQDJRRGIDLWKGHWHUPLQDWLRQRIWKHIDLUPDUNHWYDOXHRI+DOO
  PDQlREOLJDWLRQLPSRVHVmDQXQZDYHULQJGXW\lWRDFW                 +ROGLQJ VWRFN WKH GHILQLWLRQ RI mDGHTXDWH FRQVLGHUDWLRQl
  ERWK mDV D SUXGHQW SHUVRQ ZRXOG DFW LQ D VLPLODU            XQGHU  % ZDV QRW VDWLVILHG  6HH  86&
  VLWXDWLRQl DQG mZLWK VLQJOHPLQGHG GHYRWLRQl WR WKRVH           % 7KHUHIRUH WKH &RXUW VSHFLILFDOO\ UHMHFWV
  VDPHSODQSDUWLFLSDQWVDQGEHQHILFLDULHV,G)LQDOO\DQ          GHIHQGDQWVj FRQWHQWLRQ DQG ILQGV WKDW WKH SULFH SDLG E\ D
  (5,6$ILGXFLDU\PXVWmµDFWIRUWKHH[FOXVLYHSXUSRVHjl
    &KDRY+DOO+ROGLQJ                  1RV          1RV              &KDRY+DOO+ROGLQJ       
      &RHWDO                                                                                                        &RHWDO

FRQVLGHUDWLRQlLQWKHFORVHO\KHOGFRUSRUDWLRQVLWXDWLRQDVmWKH             RISURYLGLQJEHQHILWVWRSODQEHQHILFLDULHV,GTXRWLQJ
IDLUPDUNHWYDOXHRIWKHDVVHWDVGHWHUPLQHGLQJRRGIDLWKE\               >%LHUZLUWK@)GDW
WKHWUXVWHHl86&%$VH[SODLQHGE\
WKHGLVVHQWLQ0HUFDQWLOH%DQNWKHGHILQLWLRQRImDGHTXDWH                .XSHU)GDW
FRQVLGHUDWLRQlKDVWZRGLVWLQFWSDUWV)LUVWWKHUHLVWKHmIDLU
PDUNHWYDOXHlSDUWWKHQWKHUHLVWKHmDVGHWHUPLQHGLQJRRG                  &OHDUO\WKHGXWLHVFKDUJHGWRDQ(5,6$ILGXFLDU\DUHmWKH
IDLWK E\ WKH WUXVWHHl SDUW   86&  %             KLJKHVW NQRZQ WR WKH ODZl  +RZDUG  )G DW 
+RZHYHUWKHPDMRULW\RSLQLRQLQ0HUFDQWLOH%DQNJLYHVQR                  TXRWLQJ%LHUZLUWK)GDWQVHHDOVR0RHQFK
ZHLJKWWRWKHJRRGIDLWKGHWHUPLQDWLRQXQGHU%6HH              )GDWGHVFULELQJDILGXFLDU\jVREOLJDWLRQVDVmVWULFWl
86&%                                                   DQG mGHWDLOHGl  :KHQ HQIRUFLQJ WKHVH GXWLHV mWKH FRXUW
                                                                           IRFXVHVQRWRQO\RQWKHPHULWVRIWKHWUDQVDFWLRQEXWDOVRRQ
    ,Q'RQRYDQY&XQQLQJKDP)GWK&LU               WKHWKRURXJKQHVVRIWKHLQYHVWLJDWLRQLQWRWKHPHULWVRIWKH
WKH)LIWK&LUFXLWVWDWHGWKDWm>W@KHIRFXVRIWKHLQTXLU\LVKRZ           WUDQVDFWLRQl+RZDUG)GDWFLWLQJ'RQRYDQY
WKHILGXFLDU\DFWHGLQKLVVHOHFWLRQRIWKHLQYHVWPHQWDQGQRW            &XQQLQJKDP)GWK&LU'RQRYDQ
ZKHWKHU KLV LQYHVWPHQWV VXFFHHGHG RU IDLOHGl ,G DW          Y0D]]ROD)GWK&LU)DLOXUHWR
TXRWLQJ % 6 <RXQJ %86,1(66 25*$1,=$7,216                         PHHWWKHVHKLJKVWDQGDUGVPD\UHVXOWLQSHUVRQDOOLDELOLW\IRU
 >@  7KH )LIWK &LUFXLW WKHQ H[SODLQHG WKDW ZKHQ          WKHILGXFLDU\6HH86&DVHHDOVR.XSHU
GHWHUPLQLQJZKHWKHUmDGHTXDWHFRQVLGHUDWLRQlKDVEHHQSDLG                )GDW
LW LV QRW HQRXJK WKDW D ILGXFLDU\ E\ FKDQFH DUULYHG DW IDLU
PDUNHWYDOXH                                                                                     ,9$1$/<6,6

  (5,6$jV UHTXLUHPHQW WKDW (623 ILGXFLDULHV SXUFKDVH                     7KH&RXUWZLOOQRZWXUQWRWKHFODLPVRIHUURUUDLVHGE\
  HPSOR\HU VWRFN IRU mDGHTXDWH FRQVLGHUDWLRQl PXVW EH                GHIHQGDQWV RQ DSSHDO  $ UHYLHZ RI GHIHQGDQWVj EULHI
  LQWHUSUHWHGVRDVWRJLYHHIIHFWWRWKH6HFWLRQGXWLHV               GHPRQVWUDWHVWKDWWKH\KDYHWKUHHFODLPVRIHUURURQDSSHDO
  WRZKLFKWKRVHSHUVRQVUHPDLQVXEMHFW,QWKLVUHJDUGLW               LQDGGLWLRQWRDQRWKHUPDWWHUWKDWZDVUDLVHGLQDIRRWQRWH
  LVHVSHFLDOO\VLJQLILFDQWWKDWWKHDGHTXDWHFRQVLGHUDWLRQ                7KH&RXUWZLOOILUVWH[DPLQHWKHPDWWHUUDLVHGE\GHIHQGDQWV
  WHVWOLNHWKHSUXGHQWPDQUXOHLVH[SUHVVO\IRFXVHGXSRQ               LQDIRRWQRWHZKLFKFRQFHUQVZKHWKHUGHIHQGDQW*)*,LVD
  WKH FRQGXFW RI WKH ILGXFLDULHV  $ FRXUW UHYLHZLQJ WKH          SDUW\WRWKLVFDVHDQGZKHWKHURWKHUGHIHQGDQWVDUHILGXFLDULHV
  DGHTXDF\RIFRQVLGHUDWLRQXQGHU6HFWLRQLVWRDVN                  7KH &RXUW ZLOO WKHQ H[DPLQH GHIHQGDQWVj WKUHH UHPDLQLQJ
  LIWKHSULFHSDLGLVmWKHIDLUPDUNHWYDOXHRIWKHDVVHWDV              FODLPVZKLFKDUHZKHWKHUWKHUHZDVDJHQXLQHLVVXHRI
  GHWHUPLQHGLQJRRGIDLWKE\WKHILGXFLDU\LWLVQRWWR           PDWHULDOIDFWWRSUHFOXGHVXPPDU\MXGJPHQWZKHWKHUWKH
  UHGHWHUPLQHWKHDSSURSULDWHDPRXQWIRULWVHOIGHQRYR                   GLVWULFWFRXUWHUUHGLQUHIXVLQJWRFRQVLGHUZKDWDUHDVRQDEOH
  &RQWUDU\WRWKHDSSHOOHHVjFRQWHQWLRQVWKLVLVQRWDVHDUFK             K\SRWKHWLFDO ILGXFLDU\ ZRXOG KDYH SDLG IRU WKH VWRFN DQG
  IRUVXEMHFWLYHJRRGIDLWKDSXUHKHDUWDQGDQHPSW\KHDG                ZKHWKHUWKHUHLVDFDXVDWLRQHOHPHQWIRUFODLPVXQGHU(5,6$
  DUHQRWHQRXJK7KHVWDWXWRU\UHIHUHQFHWRJRRGIDLWKLQ                 D  86&  D DQG  ZKHWKHU WKH
  6HFWLRQ  PXVW EH UHDG LQ OLJKW RI WKH RYHUULGLQJ           GLVWULFWFRXUWjVDZDUGWRWKH+DOO&KHPLFDO(623SDUWLFLSDQWV
  GXWLHVRI6HFWLRQ'RLQJVRZHKROGWKDWWKH(623                  ZDV SURSHU  $V WKH IROORZLQJ GLVFXVVLRQ ZLOO VKRZ
  ILGXFLDULHVZLOOFDUU\WKHLUEXUGHQWRSURYHWKDWDGHTXDWH               GHIHQGDQWVFDQQRWSUHYDLORQDQ\RIWKHLUFODLPV
  FRQVLGHUDWLRQZDVSDLGE\VKRZLQJWKDWWKH\DUULYHGDW
    &KDRY+DOO+ROGLQJ                1RV         1RV                &KDRY+DOO+ROGLQJ        
      &RHWDO                                                                                                       &RHWDO

$ 'HIHQGDQWVj &ODLPV DV WR 'HIHQGDQW *)*, DQG                      mVHOIGHDOLQJl DQG mFRQIOLFWV RI LQWHUHVWl +RZHYHU
   'HIHQGDQWVj)LGXFLDU\6WDWXV                                           &RQJUHVV FUHDWHG  H RI (5,6$  86&
                                                                          HWRSURYLGHDQDUURZH[HPSWLRQWRWKHD
   $VDQLQLWLDOPDWWHUWKH&RXUWZLOODGGUHVVDQLVVXHWKDW             SURKLELWLRQ  6HFWLRQ H SHUPLWV HPSOR\HH EHQHILW
FRXOGSRVVLEO\EHGLVSRVLWLYHDVWRVRPHGHIHQGDQWV7KLV                SODQVWRSXUFKDVHRUVHOOHPSOR\HUVHFXULWLHVRQO\LIWKH
LVVXHUDLVHGE\GHIHQGDQWVLQDIRRWQRWHFRQWHQGVWKDWQRWDOO          VDOH RU SXUFKDVH RI WKH VHFXULWLHV LV IRU DGHTXDWH
GHIHQGDQWVDUHILGXFLDULHVDQGWKDWQRDOOHJDWLRQVZHUHPDGH              FRQVLGHUDWLRQ  7KH GHILQLWLRQ RI mDGHTXDWH
DJDLQVWGHIHQGDQW*)*,7KH&RXUWZLOODGGUHVVHDFKFODLP                FRQVLGHUDWLRQl XQGHU (5,6$ LPSRVHV D WZRIROG
LQWXUQ                                                                  UHTXLUHPHQW  WKH SULFH SDLG PXVW UHIOHFW WKH IDLU
                                                                          PDUNHW YDOXH RI WKH DVVHW DQG  WKH WUXVWHH PXVW
  'HIHQGDQW*)*,                                                      FRQGXFWDFDUHIXODQGLQGHSHQGHQWLQYHVWLJDWLRQRIWKH
                                                                          FLUFXPVWDQFHVSUHYDLOLQJDWWKHWLPHRIWKHLQYHVWPHQW
   'HIHQGDQWV ILUVW DUJXH WKDW DV WR GHIHQGDQW *)*, WKH          'RQRYDQY&XQQLQJKDP)GWK
6HFUHWDU\mPDGHQRDOOHJDWLRQVDQGVRXJKWQRUHOLHIDJDLQVW               &LU
GHIHQGDQW*)*,LQWKHFRXQWRIWKHFRPSODLQWGHDOLQJZLWKWKH
(623SXUFKDVHRIVWRFNWKHRQO\PHQWLRQRIGHIHQGDQW*)*,              ,G DW  %ULJKW s GLVVHQWLQJ HPSKDVLV DGGHG  7KH
LV LQ FRXQW WZR RI WKH FRPSODLQW ZKLFK ZDV YROXQWDULO\         GLVVHQWFRQFOXGHGWKDW0HUFDQWLOH%DQNYLRODWHGLWVGXWLHVLQ
GLVPLVVHGE\WKH>6HFUHWDU\@l7KH6HFUHWDU\UHVSRQGVWRWKLV          WKUHHVHSDUDWHZD\VE\IDLOLQJWRFRQGXFWDQLQGHSHQGHQW
DUJXPHQW E\ QRWLQJ WKDW LW LV UDLVHG IRU WKH ILUVW WLPH RQ   LQYHVWLJDWLRQ RIWKHWUDQVDFWLRQVDWLVVXHDQG)RUGmE\
DSSHDO  +RZHYHU WKH 6HFUHWDU\ GRHV DFNQRZOHGJH WKLV            IDLOLQJ WR LQYHVWLJDWH ZKHWKHU WKH GHWDLOV RI WKH VDOH
mSOHDGLQJRPLVVLRQl                                                    WUDQVDFWLRQ ZRXOG DGYDQWDJH WKH (623 HPSOR\HH
                                                                        EHQHILFLDULHVlDQGE\IDLOLQJWRFRUUHFWLWVSDVWIDLOXUHV
   *HQHUDOO\m>W@KLVFRXUWZLOOQRWGHFLGHLVVXHVRUFODLPVQRW        ZKHQLWUHVXPHGLWVSRVLWLRQDVWUXVWHHDIWHU)RUGjVGHDWK,G
OLWLJDWHGEHIRUHWKHGLVWULFWFRXUWl:KLWHY$QFKRU0RWRU
)UHLJKW ,QF  )G   WK &LU  FLWLQJ         $IWHU UHYLHZLQJ ERWK SRVLWLRQV WKH &RXUW ILQGV WKDW WKH
%RGGLHY$P%URDG&RV,QF)GQWK            SRVLWLRQDQQRXQFHGLQWKHGLVVHQWLQJRSLQLRQLQ0HUFDQWLOH
&LU<HLWHUY6HFUHWDU\+HDOWKDQG+XPDQ6HUYV            %DQNLVPXFKPRUHSHUVXDVLYH:HUHWKH&RXUWWRDGRSWWKH
)GWK&LUm>:@HUHYLHZWKHFDVHSUHVHQWHG           SRVLWLRQ HVSRXVHG E\ GHIHQGDQWV DQG WKH PDMRULW\ LQ
WRWKHGLVWULFWFRXUWUDWKHUWKDQDEHWWHUFDVHIDVKLRQHGDIWHU         0HUFDQWLOH %DQN WKH &RXUW ZRXOG EH UHTXLUHG WR LJQRUH D
WKHGLVWULFWFRXUWjVRUGHUl:KLWH)GDWTXRWLQJ           SRUWLRQRIWKHGHILQLWLRQRImDGHTXDWHFRQVLGHUDWLRQl  7KH
$GDPV Y sDPHV  )G   WK &LU          &RXUWEHOLHYHVVXFKDQLQWHUSUHWDWLRQLVLPSURSHUDQGFRQWUDU\
+RZHYHUm>Z@HKDYHRQRFFDVLRQGHYLDWHGIURPWKHJHQHUDO             WR&RQJUHVVjVLQWHQW
UXOH LQ µH[FHSWLRQDO FDVHV RU SDUWLFXODU FLUFXPVWDQFHVj RU
ZKHQWKHUXOHZRXOGSURGXFHµDSODLQPLVFDUULDJHRIMXVWLFHjl            (5,6$  D SURKLELWV WUDQVDFWLRQV LQ ZKLFK DQ
)RVWHUY%DULORZ)GWK&LULQWHUQDO            HPSOR\HHEHQHILWSODQSXUFKDVHVVWRFNIURPWKHHPSOR\HU
TXRWDWLRQVRPLWWHGTXRWLQJ3LQQH\'RFNDQG7UDQVSRUW&R              86&D+RZHYHUWKHH[FHSWLRQWRWKLVUXOHLV
Y3HQQ&HQWUDO&RUS)GWK&LU             IRXQG LQ  H ZKLFK VWDWHV WKDW  D VKDOO QRW
FLWDWLRQ RPLWWHG TXRWLQJ +RUPHO Y +HOYHULQJ  86        DSSO\ LI WKH SXUFKDVH LV IRU mDGHTXDWH FRQVLGHUDWLRQl  
VHHDOVR6LQJOHWRQY:XOII86          86&  H  (5,6$  % GHILQHV mDGHTXDWH
    &KDRY+DOO+ROGLQJ                1RV       1RV                &KDRY+DOO+ROGLQJ        
      &RHWDO                                                                                                     &RHWDO

,GDWIRRWQRWHRPLWWHG)LQDOO\0HUFDQWLOHPDGHQR               $OWKRXJK WKHUH DUH H[FHSWLRQV WR WKLV
LQYHVWLJDWLRQDVWRLWVUHSODFHPHQW0XHOOHURUKLVLQWHQWLRQV      JHQHUDOUXOHWKH\DUHQDUURZ6HH)RVWHU)GDW7KH
,G                                                                   &RXUWKDVGLVFUHWLRQWRUHVROYHDQLVVXHWKDWZDVQRWUDLVHG
                                                                      EHIRUH WKH GLVWULFW FRXUW mZKHUH WKH SURSHU UHVROXWLRQ LV
  $IWHU QRWLQJ WKDW DQ (623 PD\ RQO\ SXUFKDVH DQ              EH\RQGDQ\GRXEWRUZKHUHLQMXVWLFHPLJKWRWKHUZLVHUHVXOWl
HPSOR\HUjV VWRFN IRU DGHTXDWH FRQVLGHUDWLRQ WKH (LJKWK         (QHUWHFK(OHF,QFY0DKRQLQJ&RXQW\&RPPjUV)G
&LUFXLWKHOG                                                         WK&LUFLWLQJ%URZQY&URZH)G
                                                                      WK&LU1HZP\HUY3KLODWHOLF/HDVLQJ
  (YHQ LI D WUXVWHH IDLOV WR PDNH D JRRG IDLWK HIIRUW WR   /WG)GWK&LU
  GHWHUPLQH WKH IDLU PDUNHW YDOXH RI WKH VWRFN mKH LV
  LQVXODWHGIURPOLDELOLW\LIDK\SRWKHWLFDOSUXGHQWILGXFLDU\          $IWHUUHYLHZLQJWKHDUJXPHQWVSUHVHQWHGLQWKHEULHIVDV
  ZRXOGKDYHPDGHWKHVDPHGHFLVLRQDQ\ZD\l5RWKY                 ZHOODVWKHUHFRUGEHORZWKH&RXUWILQGVQRUHDVRQWRDGGUHVV
  6DZ\HU&OHDWRU/XPEHU&R)GWK&LU               WKLVLVVXHZKLFKKDVEHHQUDLVHGIRUWKHILUVWWLPHRQDSSHDO
  7KXVLIDSUXGHQWWUXVWHHZRXOGKDYHSXUFKDVHG             $VWRWKHLVVXHRIZKHWKHULQMXVWLFHPLJKWUHVXOWLQ6PLWKY
  WKH /HQFR VWRFN IRU WKH SULFH IRU ZKLFK 0XHOOHU             &07$,$03HQVLRQ7UXVW)GWK&LUWKH
  SXUFKDVHG LW WKHQ 0XHOOHU GLG QRW YLRODWH (5,6$            1LQWK&LUFXLWZDVSUHVHQWHGZLWKDVLWXDWLRQVLPLODUWRWKH
  UHJDUGOHVV RI ZKHWKHU KH PDGH D JRRG IDLWK HIIRUW WR       SUHVHQW FDVH  ,Q 6PLWK WKH SDUWLHV FRQGXFWHG WKHPVHOYHV
  GHWHUPLQHWKHIDLUPDUNHWYDOXHRIWKHVWRFN                     EHIRUHWKHGLVWULFWFRXUWDVWKRXJKWKHUHZHUHDQ(5,6$FODLP
                                                                      DV ZHOO DV DQRWKHU VWDWH ODZ FODLP  6HH LG DW  Q
,G DW   7KH (LJKW &LUFXLW WKHQ UHYLHZHG WKH HYLGHQFH   +RZHYHUWKHVHFODLPVZHUHQHYHUSUHVHQWHGWRWKHGLVWULFW
SUHVHQWHGDWWULDO7KHH[SHUWZLWQHVVIRUHDFKVLGHSUHVHQWHG       FRXUW6HHLG&RQVHTXHQWO\WKHm$SSHOOHHVDUJXH>G@WKDWWKH
YDVWO\ GLIIHUHQW YDOXHV IRU /HQFR  7KH GLVWULFW FRXUW        (5,6$FODLP>FRXOGQRW@EHUDLVHGEHFDXVH LW ZDVQRW
FRQFOXGHG WKDW HDFK H[SHUW ZDV FUHGLEOH DQG WKDW HYHQ LI    SURSHUO\EHIRUHWKHGLVWULFWFRXUWl6HHLG7KH1LQWK&LUFXLW
0XHOOHUGLGRYHUSD\LWZDVRQO\VOLJKWO\DQG0XHOOHUKDGQR          GLVDJUHHGVWDWLQJ
UHDVRQWRNQRZWKH(623RYHUSDLGIRU/HQFRjVVWRFN7KH
(LJKW&LUFXLWFRQFOXGHGWKDWm>W@KLVDPRXQWVWRDILQGLQJWKDW          $OWKRXJK>WKH@FRPSODLQWZDVQHYHUWHFKQLFDOO\DPHQGHG
DK\SRWKHWLFDOSUXGHQWILGXFLDU\LQ0XHOOHUjVSODFHFRXOGKDYH          WRLQFOXGHHLWKHUWKH(5,6$RUWKHVWDWHFODLPERWKZHUH
DQGZRXOGKDYHSDLGZKDW0XHOOHUSDLGIRUWKHVWRFNlDQG                IXOO\ DUJXHG LQ WKH SDUWLHVj SUHKHDULQJ PHPRUDQGD DV
WKHUHIRUH(5,6$ZDVQRWYLRODWHG,GDW                     ZHOODVDWWKHPRWLRQVKHDULQJ:KLOHZHGRQRWDSSURYH
                                                                        RIDSSHOODQWjVIDLOXUHWRDGKHUHVWULFWO\WRWKHSURFHGXUHV
  2EYLRXVO\ WKH GLVVHQW GLVDJUHHG ZLWK PDMRULW\jV                 IRUDPHQGPHQWPDQGDWHGE\)(' 5 &,9 3 DZKHUH
FRQFOXVLRQ$IWHUGLVFXVVLQJWKHKLJKILGXFLDU\VWDQGDUGVWR           ERWK SDUWLHV KDYH IXOO\ DUJXHG D FODLP EHORZ ZH ZLOO
ZKLFKWUXVWHHVRI(623VDUHKHOGWKHGLVVHQWH[DPLQHGWKH              WUHDWWKHSOHDGLQJVDVWKRXJKWKH\KDYHEHHQDPHQGHGIRU
mDGHTXDWHFRQVLGHUDWLRQlH[FHSWLRQWRD$DQG'            SXUSRVHV RI DSSHOODWH UHYLHZ  6HH 5LOH\ Y 0(%$
DQGWKHGHILQLWLRQRIWKDWWHUP                                        3HQVLRQ 7UXVW  )G   G &LU 
                                                                        6KHUPDQ Y +DOOEDXHU  )G   WK &LU
  (5,6$  D$ DQG '  86&                        %REULFN&RUSY$PHULFDQ'LVSHQVHU&R,QF
  D$DQG'SURKLELWDSODQIURPEX\LQJRU               )G   WK &LU  $OXPLQXP &R RI
  VHOOLQJVHFXULWLHVLVVXHGE\WKHSODQjVHPSOR\HUVSRQVRU              $PHULFDY$GPLUDO0HUFK0RWRU)UHLJKW,QF)
  EHFDXVH VXFK WUDQVDFWLRQV FDUU\ DQ LQKHUHQW ULVN RI
    &KDRY+DOO+ROGLQJ                  1RV          1RV                &KDRY+DOO+ROGLQJ         
      &RHWDO                                                                                                          &RHWDO

  6XSS1',OODIILUPHG)G                     LWRZQHGRIWKHRXWVWDQGLQJVWRFNEHFDXVH/HQFR
  >WK&LU@FHUWGHQLHG866&W                   KDG XVHG PRVW RI WKH SURFHHGV RI WKH >EDQN@ ORDQ WR
  /(GG>@                                               /HQFRWRUHGHHPRILWVSUHYLRXVO\RXWVWDQGLQJ
                                                                             VKDUHVPRVWO\KHOGE\)RUG(YHQWKRXJKWKH(623QRZ
6PLWK)GDWQ                                                  RZQHG D JUHDWHU VWDNH LQ /HQFR /HQFR QRZ KDG
                                                                             H[WUDRUGLQDU\ GHEW UHVWULFWLRQV RQ LWV FDVK IORZ DV D
   ,QWKHSUHVHQWFDVHQRLQMXVWLFHZLOOUHVXOWEHFDXVHDVLQ              FRQGLWLRQRI>DEDQN@ORDQDQGJUHDWO\UHGXFHGHTXLW\
6PLWK DOO SDUWLHV FRQGXFWHG WKHPVHOYHV EHIRUH WKH GLVWULFW           %HIRUH WKH OHYHUDJHG EX\RXW /HQFRjV WRWDO OLDELOLWLHV
FRXUW DV WKRXJK GHIHQGDQW *)*, ZHUH D SDUW\ WR WKLV FDVH          HTXDOHG$IWHUWKHEX\RXW/HQFRjVWRWDO
)LUVWDQGIRUHPRVWGHIHQGDQW*)*,ZDVQDPHGLQWKHFDSWLRQ                  OLDELOLWLHV WULSOHG WR DQ DPRXQW H[FHHGLQJ VL[ PLOOLRQ
DWDOOVWDJHVEHIRUHWKHGLVWULFWFRXUW6HFRQGWKH6HFUHWDU\jV            GROODUV  %HIRUH WKH EX\RXW /HQFR UHSRUWHG DQ HTXLW\
PRWLRQ IRU VXPPDU\ MXGJPHQW DQG KHU UHSO\ EULHI WUHDW                ERRNYDOXHRIPLOOLRQ7KH>EDQN@ORDQRI
GHIHQGDQW*)*,DVWKRXJKLWLVDSDUW\UHIHUULQJFROOHFWLYHO\               PLOOLRQ DOPRVW ZLSHG RXW WKLV HTXLW\  )RUG DGGHG QR
WRmWKHGHIHQGDQWVl7KLUGGHIHQGDQWVjUHVSRQVLYHEULHIDOVR               DVVHWVRURWKHUHTXLW\DVSDUWRIWKHEX\RXW7KXV/HQFR
UHIHUVWRWKHPVHOYHVFROOHFWLYHO\DVGHIHQGDQWV)RXUWKWKH                ZHQWIURPDVXEVWDQWLDOEXVLQHVVZLWKRYHUILYHPLOOLRQ
GLVWULFW FRXUWjV YDULRXV RSLQLRQV FRQWHPSODWH WKDW HDFK                GROODUV LQ HTXLW\ WR D FRUSRUDWLRQ ZLWK JUHDW GHEW DQG
GHIHQGDQW LV D SDUW\ WR WKH FDVH DV WKH\ DOVR UHIHU WR mWKH     SUDFWLFDOO\QRHTXLW\
GHIHQGDQWVlFROOHFWLYHO\&RQVHTXHQWO\EHFDXVHDOOSDUWLHV
DFWHG DV WKRXJK GHIHQGDQW *)*, ZDV D SDUW\ DQG LQ VXFK          ,G DW  %ULJKW s GLVVHQWLQJ IRRWQRWHV RPLWWHG  ,Q
LQVWDQFHVRWKHUFRXUWVKDYHWUHDWHGWKHFRPSODLQWDVWKRXJKLW             DGGLWLRQ 0HUFDQWLOH %DQN ZDV DOVR WKH WUXVWHH RYHU WZR
KDGEHHQDPHQGHGVHHLGWKH&RXUWILQGVWKDWQRLQMXVWLFH               WHVWDPHQWDU\WUXVWVWKDWKDGEHHQHVWDEOLVKHGE\WKHGHFHDVHG
ZLOO UHVXOW IURP WUHDWLQJ GHIHQGDQW *)*, DV DQ\ RWKHU              RZQHURI/HQFR7KHSULPDU\DVVHWRIWKHVHWUXVWVZDVWKH
GHIHQGDQWLQWKHSUHVHQWFDVH                                             PDMRULW\ RI YRWLQJ VWRFN LQ /HQFR  7KH VDPH SHUVRQ DW
                                                                           0HUFDQWLOH%DQNsDFN1LHPH\HUZDVWKHUHSUHVHQWDWLYHIRU
   )XUWKHU WKH &RXUW ILQGV WKH UHVROXWLRQ RI WKH LVVXH RI        WKH(623DQGWKHWUXVWVRQ/HQFRjVERDUGRIGLUHFWRUV,GDW
ZKHWKHUGHIHQGDQW*)*,LVDGHIHQGDQWLVQRWLQGRXEW2WKHU              
FRXUWVKDYHDOORZHGSOHDGLQJVWREHDPHQGHGDWDYHU\ODWH
VWDJHLQVLPLODUFLUFXPVWDQFHV6HHLG7KHUHIRUHLWLVTXLWH             )XUWKHUWKHGLVVHQWWRXFKHGXSRQWKHPLQLPDODPRXQWRI
SRVVLEOHWKDWWKH6HFUHWDU\jVFRPSODLQWFRXOGEHDPHQGHGDW                LQYHVWLJDWLRQ XQGHUWDNHQ E\ 0HUFDQWLOH %DQN  $OWKRXJK
WKLVODWHVWDJH&RQVHTXHQWO\WKH&RXUWGHFOLQHVWRDGGUHVV              0HUFDQWLOH%DQNFRQGXFWHGDYDOXDWLRQRI/HQFRSULRUWRWKH
WKHLVVXHRIZKHWKHUGHIHQGDQW*)*,LVDSURSHUSDUW\LQWKLV              VDOHDQGEX\EDFNLWNQHZOLWWOHDERXW)RUGjVILQDQFLQJSODQV
FDVH EHFDXVH QR LQMXVWLFH ZLOO UHVXOW DQG UHVROXWLRQ RI WKH
PDWWHUZRXOGPRVWSUREDEO\QRWEHLQGHIHQGDQWjVIDYRU                      )RUG SURYLGHG 0HUFDQWLOH ZLWK D FRS\ RI D WZR
                                                                             SDUDJUDSK SUHOLPLQDU\ FRPPLWPHQW OHWWHU IURP KLV
                                                                             ILQDQFLQJEDQN7KHOHWWHUQHJOHFWHGWRLGHQWLI\DQ\
                                                                             WHUPVRIWKHORDQLWVDPRXQWLWVERUURZLQJIRUPXODRU
                                                                             WKHLQWHUHVWUDWH0HUFDQWLOHGLGQRWKLQJIXUWKHUWRYHULI\
                                                                             WKHILQDQFLDOIHDVLELOLW\RI)RUGjVWDNHRYHURI/HQFR
    &KDRY+DOO+ROGLQJ               1RV         1RV                &KDRY+DOO+ROGLQJ        
      &RHWDO                                                                                                      &RHWDO

&'HIHQGDQWVj6HFRQG&ODLPRI(UURU                                    'HIHQGDQWVj)LGXFLDU\6WDWXV
   'HIHQGDQWVjQH[WFODLPRIHUURURQDSSHDOLVWKDWWKHGLVWULFW       'HIHQGDQWVDOVRFRQWHQGWKDWWKH\DUHQRWDOOILGXFLDULHV
FRXUW HUUHG LQ QRW ILQGLQJ ZKDW D K\SRWKHWLFDO UHDVRQDEOH      :LWKQRFLWDWLRQWRDXWKRULW\GHIHQGDQWVDUJXHWKDWGHIHQGDQW
ILGXFLDU\ZRXOGKDYHSDLGIRUWKHVKDUHVRI+DOO+ROGLQJ           +DOO+ROGLQJDQGGHIHQGDQW*ROGPDQ
VWRFN  (VVHQWLDOO\ GHIHQGDQWV DUJXH WKDW LI D K\SRWKHWLFDO
UHDVRQDEOHILGXFLDU\ZRXOGKDYHSDLGWKHVDPHSULFHIRUWKH              ZHUH DOOHJHG WR EH ILGXFLDULHV VROHO\ EHFDXVH WKH\
VKDUHV DV WKH +DOO &KHPLFDO (623 GLG WKHQ GHIHQGDQWV            DSSRLQWHGWKH(623WUXVWHHVEXWWKHUHLVQRDOOHJDWLRQ
FDQQRWEHOLDEOH+RZHYHUDVWKHIROORZLQJGLVFXVVLRQZLOO             DQG>WKH6HFUHWDU\@RIIHUHGQRHYLGHQFHWKDWDSSRLQWLQJ
VKRZ D YLRODWLRQ RI   LV D SHU VH YLRODWLRQ              0HVVUV$KHDUQDQG6KLHOGVZDVVRPHKRZDEUHDFKRI
QRWZLWKVWDQGLQJWKHSULFHDUHDVRQDEOHK\SRWKHWLFDOILGXFLDU\            ILGXFLDU\GXW\RUKDGDQ\WKLQJWRGRZLWKWKHSULFHSDLG
ZRXOGKDYHSDLGIRUWKHVWRFN                                    IRUWKHVWRFN
  +HUPDQY0HUFDQWLOH%DQN1$                                  'HIHQGDQWV DOVR DUJXH WKDW WKH GLVWULFW FRXUW HUURQHRXVO\
                                                                       mDVVXPHGlWKDW>GHIHQGDQW@.HDWLQJZDVDILGXFLDU\ZKLFKLV
   ,Q WKHLU EULHI RQ DSSHDO GHIHQGDQWV UHO\ RQ +HUPDQ Y     DFRPSOHWHPLVFKDUDFWHUL]DWLRQRIWKHSURFHHGLQJVEHIRUHWKH
0HUFDQWLOH %DQN 1$  )G  WK &LU  LQ       GLVWULFWFRXUW,QLWVRSLQLRQWKHGLVWULFWFRXUWH[SODLQHGLWV
VXSSRUWRIWKHLUSRVLWLRQWKDWWKHGLVWULFWFRXUWHUUHGZKHQLW        GHWHUPLQDWLRQDVWRWKHLVVXHRIGHIHQGDQWVjILGXFLDU\VWDWXV
GLG QRW PDNH D GHWHUPLQDWLRQ DV WR WKH SULFH D UHDVRQDEOH
K\SRWKHWLFDOILGXFLDU\ZRXOGKDYHSDLG,Q0HUFDQWLOH%DQN             7KHRQO\DUJXPHQWWKHGHIHQGDQWVPDNHWRFRQWHVWWKH
DFORVHO\KHOGFRUSRUDWLRQFDOOHG/HQFRHVWDEOLVKHGDQ(623              6HFUHWDU\jV SRVLWLRQ WKDW HDFK GHIHQGDQW LV D ILGXFLDU\
XQGHUZKLFKLWVHPSOR\HHVRZQHGVWRFN0HUFDQWLOH%DQN                  XQGHU (5,6$ LV WKDW WKH DFWLRQV DQG GHFLVLRQV RI WKH
ZDV WKH (623jV WUXVWHH DQG RQ $SULO   VROG WKH         GHIHQGDQWV VXUURXQGLQJ WKH VWRFN SXUFKDVH ZHUH
(623jV VWRFN WR D SHUVRQ QDPHG sHUU\ )RUG  $SSDUHQWO\         FRUSRUDWH RU VSRQVRU DFWLRQV QRW VXEMHFW WR (5,6$jV
)RUGHQJDJHGLQVHYHUDOWUDQVDFWLRQVZKLFKUHVXOWHGLQKLP               ILGXFLDU\VWDQGDUGV$VGLVFXVVHGDERYHWKLVDUJXPHQW
RZQLQJDOORI/HQFRjVVWRFN2QWKDWVDPHGD\0HUFDQWLOH               LVUHMHFWHG7KHGHIHQGDQWVKDYHQRWRWKHUZLVHFKDOOHQJHG
%DQNZDVUHSODFHGDVWKH(623jVWUXVWHHE\3DXO0XHOOHU                 WKH6HFUHWDU\jVFKDUDFWHUL]DWLRQRIWKHPDVILGXFLDULHV,Q
7KHGD\DIWHUWKHVHWUDQVDFWLRQVWRRNSODFH0XHOOHUKDGWKH             IDFWWKHGHIHQGDQWVH[SOLFLWO\VWDWHWKDWLIWKH&RXUWGRHV
(623UHSXUFKDVHWKHVWRFNIURP)RUGDWWKHVDPHSULFHLWKDG             UHMHFWWKHLUVSRQVRUILGXFLDU\GLVWLQFWLRQDUJXPHQWWKH\
VROG WKH VWRFN RQ WKH SULRU GD\  ,Q  0XHOOHU SDVVHG     mDUH QRW DIUDLG WR DUJXH WKLV FDVH RQ WKH 6HFUHWDU\jV
DZD\DQG0HUFDQWLOH%DQNDJDLQWRRNRYHUDVWUXVWHHRIWKH              WKHRU\   l  7KHUHIRUH LQ OLJKW RI WKH GHIHQGDQWVj
(6232YHUWKHQH[WIHZ\HDUV/HQFREHJDQWRH[SHULHQFH                SRVLWLRQ DQG WKLV &RXUWjV RZQ OHJDO RSLQLRQ WKDW WKH
ILQDQFLDOSUREOHPVZKLFKFXOPLQDWHGLQILOLQJIRUEDQNUXSWF\             GHIHQGDQWVZHUHLQGHHGILGXFLDULHVWKH&RXUWKROGVWKDW
RQsXQH,GDW,QDGGLWLRQWRWKHVHIDFWVWKH          WKHGHIHQGDQWVZHUH+DOO>&KHPLFDO(623@ILGXFLDULHV
GLVVHQWLQJRSLQLRQKDGWKHIROORZLQJWRDGG                             GXULQJWKHWLPHLQTXHVWLRQ
  %HIRUHWKH(623VROGLWVVWRFNWR)RUGWKH(623RZQHG               5HLFKY+DOO+ROGLQJ&R)6XSSQ1'
  RIWKHRXWVWDQGLQJVWRFN7KHQH[WGD\ZKHQWKH               2KLR
  (623ERXJKWEDFNWKHVWRFNIRUWKHVDPHSULFHSHUVKDUH
       &KDRY+DOO+ROGLQJ                1RV            1RV                 &KDRY+DOO+ROGLQJ         
         &RHWDO                                                                                                           &RHWDO

  ,WLVFOHDUIURPWKHGLVWULFWFRXUWjVRSLQLRQWKDWGHIHQGDQWV               DV WR WKH SULFH RI WKH +DOO +ROGLQJ VWRFN WKHUH ZDV PRUH
FRQVLGHUHG WKH LVVXH RI ZKHWKHU WKH\ ZHUH ILGXFLDULHV                 FRQFHUQIRUWKHUHWXUQRQLQYHVWPHQWIRUWKH0DVWHU7UXVWDQG
'HIHQGDQWV FKRVH WR FRQWHVW WKHLU ILGXFLDU\ VWDWXV RQO\ E\            WKH LQFRQYHQLHQFH RI GHDOLQJ ZLWK XQHYHQ QXPEHUV FRXOG
DUJXLQJWKDWWKHGHFLVLRQVPDGHFRQFHUQLQJWKHSXUFKDVHRI                    MXVWLI\ FKDUJLQJ WKH +DOO &KHPLFDO (623 DQ DGGLWLRQDO
+DOO+ROGLQJVWRFNZHUHFRUSRUDWHGHFLVLRQVQRWILGXFLDU\                    IRUWKHVWRFNLWSXUFKDVHG6XFKIDFWVGHPRQVWUDWH
GHFLVLRQV'HIHQGDQWVFDQQRWQRZKRSHWRDUJXHWKDWWKH\                     QRWRQO\WKHXQLTXHO\FDUHOHVVDQGKDSKD]DUGPDQQHULQZKLFK
ZHUHQRWILGXFLDULHV DW DOOEHFDXVHWKH&RXUWRQO\UHYLHZV                 WKH+DOO&KHPLFDO(623ZDVFUHDWHGEXWDOVRFOHDUYLRODWLRQV
mWKHFDVHSUHVHQWHGWRWKHGLVWULFWFRXUWUDWKHUWKDQDEHWWHU                RIGHIHQGDQWVjILGXFLDU\GXWLHV
FDVHIDVKLRQHGDIWHUWKHGLVWULFWFRXUWjVRUGHUl:KLWH
)G DW  TXRWLQJ $GDPV  )G DW                            ,QIDFWUHYLHZLQJWKHGLVFXVVLRQLQ.XSHURIDILGXFLDU\jV
&RQVHTXHQWO\EHFDXVHWKLVLVVXHZDVQRWUDLVHGEHIRUHWKH                    GXWLHV XQGHU  D LW LV FOHDU WKDW HDFK RI WKH WKUHH
GLVWULFWFRXUWWKLV&RXUWZLOOQRWUHYLHZLWIRUWKHILUVWWLPHRQ           GXWLHVZDVEUHDFKHGE\DWOHDVWRQHGHIHQGDQWLQWKLVPDWWHU
DSSHDO                                                                    6HH.XSHU)GDW'HIHQGDQW.HDWLQJjVWHVWLPRQ\
                                                                              WKDWVKHZDVPRUHFRQFHUQHG DERXWJHWWLQJDQLQWHUHVWUDWH
%'HIHQGDQWVj)LUVW&ODLPRI(UURU                                          IDYRUDEOHWRWKH0DVWHU7UXVWDQGWKHIDLOXUHRIGHIHQGDQW
                                                                              $KHDUQRUGHIHQGDQW6KLHOGVWRTXHVWLRQWKLVGHPRQVWUDWHWKDW
  'HIHQGDQWVjILUVWFODLPRQDSSHDOLVWKDWWKHGLVWULFWFRXUW                WKH GXW\ RI OR\DOW\ ZDV EUHDFKHG  1RQH RI WKHVH WKUHH
HUUHG LQ JUDQWLQJ VXPPDU\ MXGJPHQW EHFDXVH WKHUH ZDV D                GHIHQGDQWVDFWHGZLWKDQmH\HVLQJOHWRWKHLQWHUHVWVlRIWKH
JHQXLQH LVVXH RI PDWHULDO IDFW DV WR ZKHWKHU GHIHQGDQWV               +DOO&KHPLFDO(623SDUWLFLSDQWV$VWRWKHmSUXGHQWPDQl
FRPSOLHGZLWKWKHLUILGXFLDU\GXWLHV,QFRQMXQFWLRQZLWKWKLV              VWDQGDUGWKHWUXVWHHjVXWWHUIDLOXUHWREHLQYROYHGLQWKHSULFH
DUJXPHQW GHIHQGDQWV UDLVH VHYHQ GLIIHUHQW VHWV RI IDFWV               FKDUJHGIRUWKH+DOO+ROGLQJVWRFNGHPRQVWUDWHVWKDWWKLVGXW\
                                                                              ZDV EUHDFKHG  )XUWKHU LW LV GLIILFXOW WR EHOLHYH WKDW DQ\
                                                                              SUXGHQW SHUVRQ ZRXOG XVH WKH YDOXDWLRQ RI D GLIIHUHQW
                                                                             FRPSDQ\DQGUHO\RQLWZKHQQRWDOOUHOHYDQWLQIRUPDWLRQZDV
      'HIHQGDQWV VWDWH WKDW WKH PDJLVWUDWH MXGJH IRXQG WKHUH LV mPXFK
HYLGHQFHl WR VKRZ WKDW D JHQXLQH LVVXH RI PDWHULDO IDFW H[LVWHG        7KH
                                                                              JLYHQ WR WKH H[SHUW FRQGXFWLQJ WKH YDOXDWLRQ  )LQDOO\ WKH
SKUDVH mPXFK HYLGHQFHl LV TXRWHG IURP WKH PDJLVWUDWH MXGJHjV UHSRUW DQG
                                                                              ILGXFLDULHV GLG QRW mDFW IRU WKH H[FOXVLYH SXUSRVHl RI
UHFRPPHQGHG GHFLVLRQ LQ ZKLFK KH VWDWHV DV IROORZV                          SURYLGLQJEHQHILWVWRWKH+DOO&KHPLFDO(623SDUWLFLSDQWV
                                                                              ,QVWHDGWKHSXUFKDVHSULFHZDVURXQGHGXSVRLWZDVHDVLHUWR
     'HIHQGDQWV RIIHUHG   PXFK HYLGHQFH DQG VXEPLWWHG OHJDO DXWKRULW\         FRPPXQLFDWHDQGWKHWUXVWHHVZHUHXQDZDUHWKDWDQ\RIWKLV
     ZKLFK HVVHQWLDOO\ VHHNV WR UHDUJXH WKH OLDELOLW\ ILQGLQJ RI WKLV         ZDVWDNLQJSODFH7KHGHFLVLRQVZHUHVLPSO\PDGHZLWKQR
     FRXUW ,Q DQ DEXQGDQFH RI FDXWLRQ WKH HYLGHQFH ZDV DGPLWWHG
     IRU ZKDWHYHU YDOXH LW PLJKW KDYH RQ WKH IDLU PDUNHW YDOXH LVVXH         LQSXW IURP WKH SHRSOH WKDW D KDG D ILGXFLDU\ GXW\ WR EH
     $IWHU FRQVLGHUDWLRQ WKDW HYLGHQFH LV RI OLWWOH RU QR UHOHYDQFH         LQYROYHGLQWKHGHFLVLRQV7KHVHEUHDFKHVRIILGXFLDU\GXW\
     7KH OLDELOLW\ LVVXH LV EH\RQG WKH VFRSH RI WKH UHIHUHQFH                VLPSO\ UHLQIRUFH WKLV &RXUWjV ILQGLQJ WKDW WKH GLVWULFW FRXUW
                                                                              ZDVFRUUHFWLQJUDQWLQJWKH6HFUHWDU\jVPRWLRQIRUVXPPDU\
(PSKDVLV DGGHG 'HIHQGDQWVj VWDWHPHQW WKDW WKH PDJLVWUDWH MXGJH IRXQG       MXGJPHQWDVWKHUHDUHQRJHQXLQHLVVXHVRIPDWHULDOIDFW
mWKHUH LV µPXFK HYLGHQFHj LQ WKH UHFRUG UDLVLQJ JHQXLQH LVVXHV RI PDWHULDO
IDFW LQ WKLV FDVHl LV D PLVFKDUDFWHUL]DWLRQ RI WKH PDJLVWUDWH MXGJHjV
VWDWHPHQW 7KH PDJLVWUDWH MXGJH VLPSO\ VWDWHG WKDW GHIHQGDQWV SUHVHQWHG
mPXFK HYLGHQFHl +H GLG QRW ILQG WKDW WKHUH ZDV D JHQXLQH LVVXH RI
PDWHULDO IDFW QRU GLG KH PDNH DQ\ GHWHUPLQDWLRQV DV WR WKH HIIHFW RU
SHUVXDVLYHQHVV RI WKLV HYLGHQFH DW WKH VXPPDU\ MXGJPHQW VWDJH ,Q IDFW
    &KDRY+DOO+ROGLQJ                1RV         1RV                  &KDRY+DOO+ROGLQJ          
      &RHWDO                                                                                                         &RHWDO

E\ WKH DPRXQW RI VWRFN WR EH SXUFKDVHG ZKLFK GHIHQGDQW        ZKLFKWKH\FODLPGHPRQVWUDWHWKDWDJHQXLQHLVVXHRIPDWHULDO
.HDWLQJHUURQHRXVO\VDLGZDV7KHSURGXFWRIWKHVHWZR            IDFWH[LVWHG+RZHYHUDIWHUUHYLHZLQJWKHUHFRUGWKH&RXUW
QXPEHUVZDV+RZHYHULQVWHDGRIWDNLQJ                 ILQGVWKDWWKHGLVWULFWFRXUWSURSHUO\JUDQWHGWKH6HFUHWDU\jV
PLOOLRQDVWKHSXUFKDVHSULFHWKHDPRXQWZDVGHWHUPLQHGWR             PRWLRQIRUVXPPDU\MXGJPHQW
EHPLOOLRQ'HIHQGDQW.HDWLQJH[SODLQHG
                                                                          'HIHQGDQWVj5HOLDQFHRQ&XQQLQJKDPjV9DOXDWLRQ
  *LYHQWKHVHYDOXHV,ZRXOGGRH[DFWO\WKHVDPHQXPEHU
  WRGD\ZKLFKLVDOPRVWGLUHFWO\LQWKHPLGGOHH[FHSWLWjV               ,QDQDWWHPSWWRGHPRQVWUDWHDJHQXLQHLVVXHRIPDWHULDO
  D URXQG QXPEHU VR IRU SXUSRVHV RI FRPPXQLFDWLRQ              IDFWGHIHQGDQWVILUVWSRLQWWR&XQQLQJKDPjVYDOXDWLRQ7KH
  SXUSRVHVRIWKHGRFXPHQWDWLRQLWMXVWZRXOGZRUNEHWWHU              PRVWWURXEOLQJDVSHFWRIGHIHQGDQWVjDUJXPHQWFRQFHUQLQJWKH
  DW  PLOOLRQ WKDQ >@ ZKLFK LV DIWHU DOO \RX       YDOXDWLRQLVWKHLUVWDWHPHQWWKDWmGHIHQGDQWVPDGHVXUHWKDW
  NQRZ \RX NQRZ  SHUFHQW RI WKH WUDQVDFWLRQ RU              0U &XQQLQJKDP KDG DFFHVV WR DOO RI WKH LQIRUPDWLRQ KH
  VRPHWKLQJWKDWZHjUHWDONLQJDERXWKHUH                              QHHGHGWRSUHSDUHWKHYDOXDWLRQl6LPSO\SXWWKLVLVQRWWUXH
                                                                        $UHYLHZRI&XQQLQJKDPjVGHSRVLWLRQWHVWLPRQ\UHYHDOVWKDW
(VVHQWLDOO\GHIHQGDQW.HDWLQJjVWHVWLPRQ\GHPRQVWUDWHVWKDW            KH ZDV QRW IXOO\ LQIRUPHG RI DOO FLUFXPVWDQFHV ZKHQ KH
VKHZDVZLOOLQJWRFKDUJHWKH+DOO&KHPLFDO(623DQH[WUD               FRPSOHWHG KLV YDOXDWLRQ RI +DOO &KHPLFDO  &XQQLQJKDP
WKHGLIIHUHQFHEHWZHHQWKHDFWXDOPLOOLRQ              WHVWLILHGWKDWKHZDVDVNHGE\DQRIILFLDODWGHIHQGDQW*)*,WR
SXUFKDVH SULFH DQG  mIRU SXUSRVHV RI              GRDYDOXDWLRQRI+DOO&KHPLFDODQGWKDWKHZDVXQDZDUHWKDW
FRPPXQLFDWLRQl                                                       WKHSXUSRVHRIWKHYDOXDWLRQmZDVWRHVWDEOLVKDYDOXHWRKDYH
                                                                        DQ(623EX\DVWDNHLQ+DOO&KHPLFDOl&XQQLQJKDPDOVR
   $JDLQWKH&RXUWKDVKHOGWKDWWKHDERYHGLVFXVVHGLVVXHV            WHVWLILHGWKDWWKHRIILFLDODWGHIHQGDQW*)*,PD\KDYHVDLG
ZLWK&XQQLQJKDPjVYDOXDWLRQDORQHDUHHQRXJKWRDIILUPWKH              VRPHWKLQJDERXWDQ(623EXWWKLVmZRXOGQjWKDYHFKDQJHG
GLVWULFW FRXUWjV KROGLQJ WKDW D YLRODWLRQ RI  86&          KRZ,GLGWKHYDOXDWLRQl$VNHGZK\WKLVZRXOGQRWKDYH
DRFFXUUHG1RQHWKHOHVVWKHSUHFHGLQJGLVFXVVLRQ           FKDQJHGWKHYDOXDWLRQ&XQQLQJKDPH[SODLQHGWKDWKHZDVQRW
ZDV LQWHQGHG WR VKRZ WKH QXPHURXV FRQFHUQV ZLWK WKH             DVNHGWRFRQVLGHUWKH+DOO&KHPLFDO(623+HVWDWHGWKDWKH
FUHDWLRQRIWKH+DOO&KHPLFDO(623(VVHQWLDOO\WKHIDFWV             mZDVDVNHGWRYDOXH+DOO&KHPLFDO&RPSDQ\7KDWjVDOO,
GHPRQVWUDWHWKDWWKH+DOO&KHPLFDO(623ZDVHVWDEOLVKHGLQ              ZDV DVNHG WR GRl  $IWHU WKLV WHVWLPRQ\ WKH IROORZLQJ
DQHQYLURQPHQWZKHUHWKHWUXVWHHVZHUHXQDZDUHRIZKDWZDV              H[FKDQJHWRRNSODFHEHWZHHQFRXQVHOIRUWKH6HFUHWDU\DQG
JRLQJRQWKHWUXVWHHVZHUHQRWFRQVXOWHGRQPDMRUGHFLVLRQV            &XQQLQJKDP
DIIHFWLQJWKH+DOO&KHPLFDO(623WKHUHZDVQRQHJRWLDWLRQ
                                                                          4 6ROHWjVVD\WKDW,FRPHLQDQGFKDUJH\RXZLWKWKH
                                                                             IROORZLQJ,ZDQW\RXWRFRQGXFWDYDOXDWLRQWKDW
                                                                           ZLOO WHOO PH KRZ PXFK DQ (623 VKRXOG SD\ IRU
       7KH &RXUW DFNQRZOHGJHV WKDW GHIHQGDQW .HDWLQJ GLG QRW XVH WKH
SURSHU SHUFHQWDJH LQ KHU FDOFXODWLRQV 'HIHQGDQW .HDWLQJ XVHG  WR        VWRFNLQDFRPSDQ\WKDWLWZDQWVWREX\:RXOG\RXU
UHSUHVHQW WKH DPRXQW RI VWRFN WKDW WKH +DOO &KHPLFDO (623 ZRXOG              YDOXDWLRQEHGLIIHUHQW"
SXUFKDVH IURP +DOO +ROGLQJ +RZHYHU WKH +DOO &KHPLFDO (623
SXUFKDVHG  RI +DOO +ROGLQJjV VWRFN 1RQHWKHOHVV WKH +DOO
&KHPLFDO (623 ZDV RYHUFKDUJHG E\  VR WKDW GHIHQGDQWV FRXOG
GHDO ZLWK URXQG QXPEHUV 7KH  ILJXUH LV GHWHUPLQHG E\
PXOWLSO\LQJ  PLOOLRQ E\  DQG WKHQ VXEWUDFWLQJ WKH SURGXFW    WKH PDJLVWUDWH MXGJH FRQFOXGHG WKDW WKH mPXFK HYLGHQFHl VXEPLWWHG E\
IURP  PLOOLRQ                                                      GHIHQGDQWV ZDV VLPSO\ RI OLWWOH RU QR UHOHYDQFH WR WKH LVVXHV EHIRUH KLP
    &KDRY+DOO+ROGLQJ              1RV        1RV             &KDRY+DOO+ROGLQJ       
      &RHWDO                                                                                                 &RHWDO

  $ :HOO\RXjYHDVNHGPHDGLIIHUHQWTXHVWLRQ                       ,QDGGLWLRQWRWKHFRQFHUQVUDLVHGE\GHIHQGDQW$KHDUQDQG
                                                                     GHIHQGDQW 6KLHOGV WKH GHSRVLWLRQ WHVWLPRQ\ RI GHIHQGDQW
  4 7KDWjVULJKW:RXOGWKHYDOXDWLRQEHGLIIHUHQW"                .HDWLQJ LVHYHQPRUHGLVWXUELQJ)LUVWGHIHQGDQW.HDWLQJ
                                                                     WHVWLILHGUHJDUGLQJWKHORDQIURPWKH0DVWHU7UXVWWRIXQGWKH
  $ <HV  , ZRXOG KDYH GRQH D VHFRQG o SUREDEO\ D         SXUFKDVHRI+DOO+ROGLQJVVKDUHV7KHIROORZLQJH[FKDQJH
     VHFRQG o , ZRXOG KDYH EHHQ IRUFHG KDG , EHHQ          WRRNSODFHGXULQJGHIHQGDQW.HDWLQJjVWHVWLPRQ\
     ZLOOLQJ WR WDNH RQ WKDW DVVLJQPHQW , ZRXOG KDYH
     EHHQ IRUFHG WR GR D VHFRQG VWDJH LI \RX ZLOO           4 $WWKHWLPH\RXZHUHFRQVLGHULQJWKH(623V
     YDOXDWLRQ                                                           ORDQLQJ ERUURZLQJ PRQH\ WR PDNH WKLV SXUFKDVH
                                                                          GLG\RXKDYHDDSDUWLFXODULQWHUHVWUDWHLQPLQG"
  4 $QGZKDWZRXOGWKDWKDYHHQWDLOHG"
                                                                       $ )URPWKH(623VWDQGSRLQWRUIURPWKH0DVWHU7UXVW
  $ 7KDWZRXOGKDYHLQYROYHGZKDWoLI+DOO&KHPLFDO                     VWDQGSRLQW"
     &RPSDQ\LVZRUWK;DQGWKH(623LVJRLQJWREX\
     VRPH SHUFHQWDJH RI ; WKDW ZRXOG KDYH LQYROYHG             4 )URPWKH(623VWDQGSRLQW
     ZKDWLVDPLQRULW\VWDNHLQDSULYDWHO\KHOGFRPSDQ\
     ZRUWK                                                            $ , ZDV PRUH FRQFHUQHG IURP WKH 0DVWHU 7UXVW
                                                                          VWDQGSRLQWVRQR,ZDQWHGWRJHWDUDWHWKDWZDV
  4 $QG \RXjUHVD\LQJWKDW\RXGLGQjWFRQGXFWVXFKD                    IDYRUDEOHWRWKH0DVWHU7UXVW
     YDOXDWLRQEHFDXVH\RXZHUHQjWDVNHGWR"
                                                                     'HIHQGDQW .HDWLQJ DOVR WHVWLILHG WKDW DIWHU UHFHLYLQJ
  $ 1R,ZDVQRWDVNHGWR,GLGQjWGRLW                        &XQQLQJKDPjV GUDIW YDOXDWLRQ UHSRUW VKH UHYLHZHG LW DQG
                                                                     VROLFLWHG LQSXW IURP GHIHQGDQW $KHDUQ DQG 6KXPDNHU
   ,Q +RZDUG Y 6KD\  )G  WK &LU  WKH   +RZHYHUVKHVSHFLILFDOO\VWDWHGWKDWVKHmPRVWSUREDEO\lGLG
1LQWK&LUFXLWGLVFXVVHGWKHXVHRIDQGUHOLDQFHXSRQILQDQFLDO       QRWVSHDNZLWKWKHRWKHUWUXVWHHGHIHQGDQW6KLHOGVDERXWWKH
DGYLVRUV DQG OHJDO FRXQVHO  m$OWKRXJK VHFXULQJ DQ            GUDIWYDOXDWLRQ
LQGHSHQGHQW DVVHVVPHQW IURP D ILQDQFLDO DGYLVRU RU OHJDO
FRXQVHO LV HYLGHQFH RI D WKRURXJK LQYHVWLJDWLRQ 0DUWLQ Y     7KHPRVWGLVWXUELQJSDUWRIGHIHQGDQW.HDWLQJjVWHVWLPRQ\
)HLOHQ  )G   WK &LU LW LV QRW D   FRQFHUQHGWKHGHWHUPLQDWLRQRIWKHSULFHWRSD\IRUWKH+DOO
FRPSOHWHGHIHQVHWRDFKDUJHRILPSUXGHQFHl+RZDUG            +ROGLQJ VWRFN  'HIHQGDQW .HDWLQJ WHVWLILHG WKDW EHVLGHV
)G DW  FLWLQJ 'RQRYDQ Y 0D]]ROD  )G      KHUVHOIGHIHQGDQW*ROGPDQDQGPD\EHRQHRWKHUSHUVRQZDV
WK&LU)XUWKHUmLQGHSHQGHQWH[SHUWDGYLFH         LQYROYHG LQ GHWHUPLQLQJ WKH SULFH  +RZHYHU QHLWKHU
LVQRWDµZKLWHZDVKjl,GFLWLQJ'RQRYDQY%LHUZLUWK         GHIHQGDQW $KHDUQ QRU GHIHQGDQW 6KLHOGV WKH WZR WUXVWHHV
)G   G &LU  'RQRYDQ Y :DOWRQ  )    ZHUH LQYROYHG LQ VHWWLQJ WKH SULFH  )LQDOO\ GHIHQGDQW
6XSSQ6')OD&DWRUY+HUUJRWW	          .HDWLQJjVWHVWLPRQ\DVWRKRZVKHUHDFKHGWKHSULFHRI
:LOVRQ ,QF  ) 6XSS   1' &DO         PLOOLRQLVH[WUHPHO\GLVFRQFHUWLQJ7KLVWHVWLPRQ\ZDVVHW
&RQVHTXHQWO\ WKH 1LQWK &LUFXLW SURPXOJDWHG WKUHH               IRUWKLQWKHEDFNJURXQGVHFWLRQEXWLWEHDUVUHSHDWLQJKHUH
UHTXLUHPHQWVZKLFKWKLV&RXUWDGRSWVIRUDILGXFLDU\RIDQ         6KH WHVWLILHG WKDW WKH KLJK DQG ORZ HQG RI &XQQLQJKDPjV
(623ZKHQUHO\LQJXSRQH[SHUWDGYLFH                                YDOXDWLRQ UDQJH  DQG  PLOOLRQ ZHUH DGGHG DQG
                                                                     GLYLGHGE\WZRDQGWKHUHVXOWDQWILJXUHZDVPXOWLSOLHG
    &KDRY+DOO+ROGLQJ             1RV        1RV               &KDRY+DOO+ROGLQJ       
      &RHWDO                                                                                                  &RHWDO

   $VWR&XQQLQJKDPjVYDOXDWLRQGHIHQGDQW6KLHOGVWHVWLILHG          7KH ILGXFLDU\ PXVW  LQYHVWLJDWH WKH H[SHUWjV
WKDWKHQHYHUFRQVXOWHGZLWK&XQQLQJKDPKDGQRLQSXWLQWR            TXDOLILFDWLRQVSURYLGHWKHH[SHUWZLWKFRPSOHWH
WKH GHFLVLRQ WR KLUH &XQQLQJKDP QRU GLG KH NQRZ ZKDW        DQGDFFXUDWHLQIRUPDWLRQDQGPDNHFHUWDLQWKDW
GRFXPHQWV &XQQLQJKDP UHYLHZHG LQ SUHSDUDWLRQ RI WKH             UHOLDQFH RQ WKH H[SHUWjV DGYLFH LV UHDVRQDEO\ MXVWLILHG
YDOXDWLRQ  )XUWKHU GHIHQGDQW 6KLHOGV GLG QRW NQRZ LI        XQGHUWKHFLUFXPVWDQFHV
GHIHQGDQW $KHDUQ KDG DQ\ LQSXW LQWR WKH GHFLVLRQ WR KLUH
&XQQLQJKDP  'HIHQGDQW 6KLHOGV EHOLHYHG WKDW GHIHQGDQW          +RZDUG)GDW
.HDWLQJ ZDV WKH SHUVRQ WKDW PDGH WKH DUUDQJHPHQWV WR
FRQGXFWWKHYDOXDWLRQ)LQDOO\WKHIROORZLQJH[FKDQJHWRRN          ,Q WKH SUHVHQW FDVH WKH SDUWLHV GR QRW GLVSXWH
SODFHEHWZHHQGHIHQGDQW6KLHOGVDQGRQHRIWKH6HFUHWDU\jV          &XQQLQJKDPjVTXDOLILFDWLRQVWRYDOXH+DOO&KHPLFDO7KH
DWWRUQH\V                                                          FRQFHUQZLWKWKHYDOXDWLRQFRPHVXQGHUWKHVHFRQGDQGWKLUG
                                                                    UHTXLUHPHQWV$VWRWKHVHFRQGUHTXLUHPHQWLWLVFOHDUWKDW
  4    +RZ ZDV LW GHFLGHG WKDW WKH (623 ZRXOG         &XQQLQJKDPZDVQRWSURYLGHGZLWKFRPSOHWHDQGDFFXUDWH
     SXUFKDVHPLOOLRQZRUWKRIVKDUHV"+RZGLGZH             LQIRUPDWLRQ+LVRZQWHVWLPRQ\HVWDEOLVKHGWKDWKLVRQO\MRE
     DUULYHDWWKDWQXPEHU"                                         ZDV WR YDOXDWH +DOO &KHPLFDO  &XQQLQJKDP WHVWLILHG WKDW
                                                                    VRPHWKLQJ PD\ KDYH EHHQ PHQWLRQHG DERXW DQ (623 EXW
  $ ,KDYHQRLGHD                                                WKDWDVH[SODLQHGWRKLPWKLVKDGQRHIIHFW RQ KLVWDVNRI
                                                                    YDOXDWLQJ+DOO&KHPLFDO%DVLFDOO\&XQQLQJKDPZDVQHYHU
  4 <RXjUHWKHWUXVWHHRIWKH(623FRUUHFW"                       JLYHQWKHWUXHSXUSRVHIRUZKLFKKLVYDOXDWLRQZDVWREHXVHG
                                                                    +DG&XQQLQJKDPEHHQJLYHQIXOOLQIRUPDWLRQKHWHVWLILHGWKDW
  $ 8KKXK                                                        KHZRXOGKDYHGRQHDGLIIHUHQWYDOXDWLRQ,QDGGLWLRQWRWKHVH
                                                                    FRQFHUQV&XQQLQJKDPjVYDOXDWLRQGLGQRWWDNHLQWRDFFRXQW
  4 2UDWOHDVWDWWKDWWLPH\RXZHUH"                             GHIHQGDQW$KHDUQjVULJKWVWRDFTXLUHRI+DOO&KHPLFDO
                                                                    DQGDVGHIHQGDQW6KLHOGVWHVWLILHGWKHQHWOLDELOLW\QXPEHU
  $ 8KKXK                                                        WKDW&XQQLQJKDPXVHGLQWKHYDOXDWLRQIDLOHGWRDFFRXQWIRU
  4 $QG \RX GRQjW NQRZ KRZ WKH  PLOOLRQ ZDV             VRPHZKHUHEHWZHHQDQG
     DUULYHGDW"                                                      $VWRWKHWKLUGUHTXLUHPHQWWKH&RXUWILQGVWKDWLWDOVRKDV
  $ , ZDVQjW WKH RZQHU  , ZRXOG H[SHFW WKH RZQHU         QRWEHHQVDWLVILHG5HOLDQFHXSRQ&XQQLQJKDPjVYDOXDWLRQ
     GHFLGHVKRZPXFKRIWKHFRPSDQ\KHjVZLOOLQJWR                ZDVQRWMXVWLILHGXQGHUWKHFLUFXPVWDQFHVSUHVHQWLQWKLVFDVH
     VHOO                                                          &XQQLQJKDP YDOXHG +DOO &KHPLFDO QRW +DOO +ROGLQJ
                                                                    +RZHYHU &XQQLQJKDPjV YDOXDWLRQ RI +DOO &KHPLFDO ZDV
  ,Q+RZDUGWKH1LQWK&LUFXLWZDVWURXEOHGE\WKHIDFWWKDW        XVHGWRHVWDEOLVK+DOO+ROGLQJjVYDOXH$OWKRXJKLWLVWUXH
m>W@KH ILGXFLDULHV FRPSOHWHG WKH WUDQVDFWLRQ ZLWKRXW           WKDW+DOO&KHPLFDOZDVWKHPDMRUDVVHWRI+DOO+ROGLQJWKH
QHJRWLDWLRQl+RZDUG)GDW,QWKHSUHVHQWFDVH      IDFW UHPDLQV WKDW +DOO &KHPLFDO DQG +DOO +ROGLQJ DUH WZR
QRWRQO\GLGWKHILGXFLDULHVFRPSOHWHO\IDLOWRQHJRWLDWHDVWR     GLIIHUHQWHQWLWLHV7KHUHIRUHLIGHIHQGDQWVZLVKHGWRVHOOWKH
WKHSXUFKDVHSULFHIRUWKH+DOO+ROGLQJVWRFNEXWWKH\ZHUH        VWRFN RI +DOO +ROGLQJ WKHQ WKH\ VKRXOG KDYH KDG WKDW
JHQHUDOO\XQDZDUHRIZKRGHWHUPLQHGWKHSXUFKDVHSULFH           FRPSDQ\DSSUDLVHGQRW+DOO&KHPLFDO
    &KDRY+DOO+ROGLQJ                   1RV           1RV                &KDRY+DOO+ROGLQJ         
      &RHWDO                                                                                                            &RHWDO

   ,QVXPGHIHQGDQWVjUHOLDQFHXSRQ&XQQLQJKDPjVYDOXDWLRQ                    2WKHU&RQFHUQVZLWK'HIHQGDQWVj'HWHUPLQDWLRQRI
LV QRW D GHIHQVH LQ WKLV FDVH  $V WKH SUHYLRXV GLVFXVVLRQ          WKH3XUFKDVH3ULFHIRUWKH+DOO+ROGLQJ6WRFN
GHPRQVWUDWHG&XQQLQJKDPZDVQRWSURYLGHGZLWKFRPSOHWH
DQGDFFXUDWHLQIRUPDWLRQ)XUWKHUGHIHQGDQWVjUHOLDQFHRQ                  ,Q DGGLWLRQ WR WKH LVVXHV VXUURXQGLQJ &XQQLQJKDPjV
&XQQLQJKDPjV YDOXDWLRQ RI +DOO &KHPLFDO LQ GHWHUPLQLQJ                 YDOXDWLRQWKH&RXUWZRXOGQRWHVHYHUDORWKHUFRQFHUQVZLWK
+DOO+ROGLQJjVYDOXHZDVQRWUHDVRQDEO\MXVWLILHG,QVWHDG                 WKHSURFHVVRIGHWHUPLQLQJWKHSULFHIRUWKHVKDUHVRI+DOO
GHIHQGDQWVj UHOLDQFH RQ KLV YDOXDWLRQ ZDV D EUHDFK RI                +ROGLQJ VWRFN  )LUVW HYHQ WKRXJK GHIHQGDQW $KHDUQ DQG
GHIHQGDQWVjILGXFLDU\GXWLHVXQGHUD6SHFLILFDOO\                GHIHQGDQW 6KLHOGV ZHUH WKH WUXVWHHV RI WKH +DOO &KHPLFDO
GHIHQGDQWVEUHDFKHGWKHmSUXGHQWPDQlREOLJDWLRQZKLFKWKH                  (623WKH\KDGYHU\OLWWOHWRGRZLWKWKHPDMRUGHFLVLRQVWKDW
FRXUW LQ .XSHU H[SODLQHG ZDV RQH RI WKH GXWLHV XQGHU                FRQFHUQHG LW  'XULQJ KLV GHSRVLWLRQ GHIHQGDQW $KHDUQ
D,QGHWHUPLQLQJWKHYDOXHRIWKHVKDUHVRI                  WHVWLILHGWKDWKHQHYHUFRQVXOWHGZLWKOHJDOFRXQVHOFRQFHUQLQJ
+DOO +ROGLQJ VWRFN GHIHQGDQWV GLG QRW DFW mDV D SUXGHQW            WKHVHWXSRIWKH+DOO&KHPLFDO(623DQGWKDWKHZHQWWRRQH
SHUVRQZRXOGDFWLQDVLPLODUVLWXDWLRQlQRUGLGWKH\DFWZLWK              PHHWLQJ ZLWK 6KXPDNHU DW ZKLFK GHIHQGDQW .HDWLQJ DQG
D mVLQJOHPLQGHG GHYRWLRQl WR WKH +DOO &KHPLFDO (623                  GHIHQGDQW6KLHOGVZHUHSUHVHQW)XUWKHUGHIHQGDQW$KHDUQ
SDUWLFLSDQWV5DWKHUGHIHQGDQWVIDLOHGWRJLYH&XQQLQJKDP                  DOVRKDGQRLQSXWRQWKHSULFHWKDWZDVWREHSDLGE\WKH+DOO
WKHLQIRUPDWLRQKHQHHGHGWRPDNHDSURSHUYDOXDWLRQDQG                   &KHPLFDO(623IRUWKHSXUFKDVHRIWKH+DOO+ROGLQJVKDUHV
ZLWKRXWLQSXWIURPDQ\H[SHUWLQFOXGLQJ&XQQLQJKDPWKH\                    'HIHQGDQW$KHDUQWHVWLILHGWKDWKHZDVWROGWKDWWKHYDOXHIRU
DVVXPHGWKDWWKHYDOXDWLRQRI+DOO&KHPLFDOZDVWKHVDPHDV                  +DOO+ROGLQJZDVWKHPLGSRLQWRI&XQQLQJKDPjVYDOXDWLRQRI
DYDOXDWLRQRI+DOO+ROGLQJ&RQVHTXHQWO\WKH&RXUWILQGV                  +DOO &KHPLFDO ZKLFK ZDV DSSUR[LPDWHO\  PLOOLRQ
WKHVHSUREOHPVDORQHDUHHQRXJKWRDIILUPWKHGLVWULFWFRXUWjV               (YHQWXDOO\WKHPLOOLRQSXUFKDVHSULFHZDVGHULYHGIURP
KROGLQJ7KHUHLVQRJHQXLQHLVVXHRIPDWHULDOIDFWLQWKLV                 WKLVPLGSRLQWILJXUHKRZHYHUGHIHQGDQW$KHDUQKDGQRLQSXW
FDVHDYLRODWLRQRI86&DRFFXUUHG                        RQWKHVHGHFLVLRQVQRUZDVKHDZDUHRIKRZWKHYDOXHVZHUH
                                                                             GHWHUPLQHG
                                                                                'HIHQGDQW6KLHOGVWHVWLPRQ\LVYHU\VLPLODUWRGHIHQGDQW
     
       $V GLVFXVVHG DERYH LQ WKHLU EULHI RQ DSSHDO GHIHQGDQWV UDLVH        $KHDUQjV LQ WKDW KH DOVR KDG YHU\ OLWWOH LQSXW RQ WKH +DOO
VHYHUDO VHWV RI IDFWV ZKLFK WKH\ FODLP GHPRQVWUDWH D JHQXLQH LVVXH RI        &KHPLFDO(623jVSXUFKDVHRIWKHVWRFNHYHQWKRXJKKHZDV
PDWHULDO IDFW     'HIHQGDQWV VXEPLW WKDW EHFDXVH WKH\ UHYLHZHG              DWUXVWHH,QLWLDOO\GHIHQGDQW6KLHOGVWHVWLILHGWKDWWKH+DOO
&XQQLQJKDPjV GUDIW YDOXDWLRQ GLVFXVVHG LW ZLWK RXWVLGH (5,6$ FRXQVHO       &KHPLFDO (623 ZDV RULJLQDOO\ JRLQJ WR SXUFKDVH VWRFN LQ
UHFRPPHQGHG FKDQJHV WR WKH GUDIW YDOXDWLRQ DQG UHYLHZHG DQG GLVFXVVHG       +DOO&KHPLFDO$WVRPHODWHUGDWHWKHGHFLVLRQZDVPDGHWR
WKH ILQDO YDOXDWLRQ DPRQJ WKHPVHOYHV DQG ZLWK RXWVLGH (5,6$ FRXQVHO
WKHUH LV D JHQXLQH LVVXH RI PDWHULDO IDFW DV WR ZKHWKHU WKH\ FRQGXFWHG D     SXUFKDVHVWRFNLQ+DOO+ROGLQJLQVWHDG'HIHQGDQW6KLHOGV
SUXGHQW DQG LQGHSHQGHQW LQYHVWLJDWLRQ +RZHYHU WKH &RXUW ILQGV WKDW         WHVWLILHGWKDWGHIHQGDQW.HDWLQJPDGHWKHGHFLVLRQWRSXUFKDVH
QRQH RI WKH DERYHOLVWHG IDFWV DUH UHOHYDQW WR WKLV GHWHUPLQDWLRQ %HFDXVH   VWRFN LQ +DOO +ROGLQJ DQG WKDW KH GLG QRW KHOS PDNH WKDW
&XQQLQJKDPjV YDOXDWLRQ ZDV WDLQWHG E\ WKH IDFW WKDW KH GLG QRW KDYH DOO RI   GHFLVLRQ  ,Q DGGLWLRQ $UWLFOH  RI WKH +DOO &KHPLFDO
WKH LQIRUPDWLRQ KH QHHGHG DQG EHFDXVH WKH YDOXDWLRQ RI +DOO &KHPLFDO        &RPSDQ\ (PSOR\HH 6WRFN 3DUWLFLSDWLRQ 3ODQ UHTXLUHV WKDW
ZDV LPSURSHUO\ DSSOLHG WR +DOO +ROGLQJ LW GLG QRW PDWWHU WKDW GHIHQGDQWV    m>W@KHFRPSDQ\VKDOOQRWLI\WKH7UXVWHHRIWKHLGHQWLW\RIWKH
VSHQW D JUHDW GHDO RI WLPH UHYLHZLQJ DQG UHFRPPHQGLQJ FKDQJHV WR
&XQQLQJKDPjV YDOXDWLRQ 'HIHQGDQWV FDQQRW FODLP DV D GHIHQVH WR WKLV         $GPLQLVWUDWRUl+RZHYHUGHIHQGDQW6KLHOGVWHVWLILHG
DFWLRQ WKDW D JUHDW GHDO RI WLPH ZDV VSHQW UHYLHZLQJ DQG FKDQJLQJ D          WKDW DV WR KLV UHFROOHFWLRQ KH GLG QRW UHPHPEHU DQ
YDOXDWLRQ ZKLFK ZDV IODZHG IURP LWV LQFHSWLRQ DQG SHUIRUPHG RQ WKH           DGPLQLVWUDWRUEHLQJDSSRLQWHG
ZURQJ FRPSDQ\
