       5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
            3XUVXDQW WR 6L[WK &LUFXLW 5XOH                   +DPDGHWDOY:RRGFUHVW           1RV
    (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                                                                 &RQGR$VVjQHWDO
                )LOH 1DPH DS

                                                           $SSHOODQWV(ULN*&KDSSHOO/<'(1/,(%(17+$/	
81,7('67$7(6&28572)$33($/6                             &+$33(//7ROHGR2KLRIRU$SSHOOHHV

              )257+(6,;7+&,5&8,7                          *,/0$1sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
                BBBBBBBBBBBBBBBBB                          &2/( s MRLQHG  1(/621 s SS  GHOLYHUHG D
                                                           VHSDUDWHGLVVHQWLQJRSLQLRQ
                                                                                 BBBBBBBBBBBBBBBBB
 7(55, / +$0$'HWDO            ;
          3ODLQWLIIV$SSHOODQWV                                                    23,1,21
                                                                                BBBBBBBBBBBBBBBBB
                                      1RV
            Y                                        521$/'/((*,/0$1&LUFXLWsXGJH.D\ODsR\HOOD
                                     !                     7HUUL/+DPDGDQG$NUDP+DPDGEURXJKWVXLWDJDLQVWWKH
                                                          :RRGFUHVW&RQGRPLQLXP$VVRFLDWLRQLWVSURSHUW\PDQDJHU
 :22'&5(67 &21'20,1,80              
 $662&,$7,21HWDO                                       DQG ILYH PHPEHUV RI LWV ERDUG RI GLUHFWRUV DOOHJLQJ WKDW
                                                          :RRGFUHVWjV E\ODZV GLVFULPLQDWHG RQ WKH EDVLV RI IDPLOLDO
        'HIHQGDQWV$SSHOOHHV                             VWDWXV LQ YLRODWLRQ RI WKH )DLU +RXVLQJ $FW  86&
                                                          5HWDOLDWLRQFODLPVXQGHUWKH$FWZHUHDGGHG
                                   1                       LQDQDPHQGHGFRPSODLQW7KHGLVWULFWFRXUWGHQLHGsR\HOODjV
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW        DQGWKH+DPDGVjPRWLRQVIRUDSUHOLPLQDU\LQMXQFWLRQDQGIRU
      IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW     VXPPDU\MXGJPHQWJUDQWHGVXPPDU\MXGJPHQWDJDLQVWWKHP
  1RnsRKQ&RUEHWW2j0HDUD'LVWULFWsXGJH       RQ WKH GLVFULPLQDWLRQ FODLPV DQG JUDQWHG MXGJPHQW DV D
                                                           PDWWHURIODZDJDLQVWWKHPDWWKHFORVHRIWKHLUFDVHLQFKLHI
                $UJXHG0DUFK                    RQWKHUHWDOLDWLRQFODLPV)RUWKHUHDVRQVVHWIRUWKEHORZZH
                                                           5(9(56(WKHMXGJPHQWRIWKHGLVWULFWFRXUWDQG5(0$1'
           'HFLGHGDQG)LOHG$SULO              WKHFDVHIRUIXUWKHUSURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ
 %HIRUH1(/621&2/(DQG*,/0$1&LUFXLWsXGJHV                             ,%$&.*5281'
                  BBBBBBBBBBBBBBBBB                           :RRGFUHVW D IRXUEXLOGLQJ WKUHHVWRU\ FRQGRPLQLXP
                                                           GHYHORSPHQWLVORFDWHGLQ0RQURH0LFKLJDQ,QLWV
                       &2816(/                             E\ODZVSURKLELWHGIDPLOLHVZLWKFKLOGUHQIURPSXUFKDVLQJRU
                                                           OLYLQJ LQ XQLWV RQ WKH VHFRQG RU WKLUG IORRUV  7KH E\ODZV
$5*8('  6WHSKHQ 0 'DQH &223(5 	 :$/,16.,        IXUWKHUSURYLGHGWKDWLIDFKLOGPRYHGLQZLWKDVHFRQGRU
7ROHGR2KLRIRU$SSHOODQWV(ULN* &KDSSHOO/<'(1   WKLUGIORRURZQHUWKHRZQHUZRXOGEHILQHGLIKHRUVKHGLG
/,(%(17+$/	&+$33(//7ROHGR2KLRIRU$SSHOOHHV        QRWYDFDWHWKHXQLWZLWKLQRQH\HDURIWKHFKLOGjVDUULYDO
21%5,()6WHSKHQ0'DQHsDQHW(+DOHV0HUHGLWK/
0HUFXULR &223(5 	 :$/,16., 7ROHGR 2KLR IRU          7HUULDQG$NUDP+DPDGLQTXLUHGDERXWSXUFKDVLQJDXQLW
                                                           LQsXO\RI$FFRUGLQJWRWKH+DPDGVSURSHUW\PDQDJHU

                            
1RV         +DPDGHWDOY:RRGFUHVW                  +DPDGHWDOY:RRGFUHVW          1RV
                                   &RQGR$VVjQHWDO                     &RQGR$VVjQHWDO

%DUEDUD'LHGULFKWROGWKHPDERXWWKHE\ODZUHVWULFWLRQVDQG          DJDLQVW WKH +DPDGV RQ WKHLU GLVFULPLQDWLRQ FODLP DQG
VXJJHVWHGWKDWWKH\SXUFKDVHDILUVWIORRUXQLWLIWKH\mZHUH        SRVWSRQHGDUXOLQJRQWKHPRWLRQIRUVXPPDU\MXGJPHQW
HYHQ WKLQNLQJ DERXW KDYLQJ FKLOGUHQl  7KH\ GLG LQ IDFW     DJDLQVWsR\HOODRQKHUGLVFULPLQDWLRQFODLPWRDOORZKHU
SXUFKDVHDILUVWIORRUXQLW:KHQWKH\KDGDFKLOGLQ         GD\VWRmVXEPLWDGGLWLRQDOLQIRUPDWLRQDVWRWKHVWDWXVRI
WKH\GHFLGHGWRPRYHGHVSLWHQRWEHLQJUHTXLUHGWRGRVR           KHUJXDUGLDQVKLSRI>KHUQHSKHZ@l7KHFRXUWVXEVHTXHQWO\
7KH\DWWULEXWHSDUWRIWKHLUGLIILFXOW\LQVHOOLQJWKHXQLWWRWKH   JUDQWHG VXPPDU\ MXGJPHQW DJDLQVW sR\HOOD RQ WKH
E\ODZVWKDWUHVWULFWFKLOGUHQWRILUVWIORRUFRQGRPLQLXPXQLWV      GLVFULPLQDWLRQFODLP
  .D\ODsR\HOODRZQVDWKLUGIORRUXQLW6KHZDVWKLQNLQJ             $IWHUWKHGLVWULFWFRXUWGHQLHGDPRWLRQE\sR\HOODDQGWKH
DERXW EHFRPLQJ WKH OHJDO FXVWRGLDQ RI KHU \HDUROG         +DPDGVWRILOHDVHFRQGDPHQGPHQWWRWKHLUFRPSODLQWWULDO
QHSKHZDQGKDGWDNHQSUHOLPLQDU\VWHSVWRZDUGWKDWHQGLQ            FRPPHQFHG RQ WKH UHWDOLDWLRQ FODLPV LQ )HEUXDU\ RI 
0D\RI%XWWKH:RRGFUHVWERDUGRIGLUHFWRUVGHQLHG            7KHGLVWULFWFRXUWJUDQWHGMXGJPHQWDVDPDWWHURIODZLQIDYRU
sR\HOODjVUHTXHVWIRUSHUPLVVLRQWRDOORZKHUQHSKHZWRPRYH         RIWKHGHIHQGDQWVDWWKHFORVHRIsR\HOODjVDQGWKH+DPDGVj
LQZLWKKHU                                                         FDVHLQFKLHI$WLPHO\QRWLFHRIDSSHDOZDVILOHG%RWKWKLV
                                                                     DSSHDO DQG WKH DSSHDO IURP WKH GHQLDO RI sR\HOODjV DQG WKH
  ,QsXQHRIsR\HOODDQGWKH+DPDGVILOHGVXLWLQWKH          +DPDGVjPRWLRQIRUDSUHOLPLQDU\LQMXQFWLRQDUHQRZEHIRUH
8QLWHG 6WDWHV 'LVWULFW &RXUW IRU WKH (DVWHUQ 'LVWULFW RI     XV
0LFKLJDQ DJDLQVW :RRGFUHVW SURSHUW\ PDQDJHU %DUEDUD
'LHGULFK DQG ILYH PHPEHUV RI :RRGFUHVWjV ERDUG RI                                   ,,$1$/<6,6
GLUHFWRUV7KH\FKDOOHQJHGWKHE\ODZVDVDYLRODWLRQRIERWK
WKH )DLU +RXVLQJ $FW  86&   DQG RI        $ 7KHGLVWULFWFRXUWHUUHGLQGHQ\LQJWKHPRWLRQIRUD
0LFKLJDQjV (OOLRW/DUVHQ &LYLO 5LJKWV $FW 0LFK &RPS            SUHOLPLQDU\LQMXQFWLRQRQWKHEDVLVRIVWDQGLQJ
/DZV$QQ$SUHOLPLQDU\LQMXQFWLRQ
ZDVDOVRVRXJKWWRHQMRLQHQIRUFHPHQWRIWKHE\ODZV                    :H UHYLHZ WKH GHQLDO RI D PRWLRQ IRU D SUHOLPLQDU\
                                                                     LQMXQFWLRQXQGHUWKHmDEXVHRIGLVFUHWLRQlVWDQGDUG8QLWHG
   sR\HOOD DQG WKH +DPDGV DPHQGHG WKHLU FRPSODLQW WZR         6WDWHVY%HQW2DN+LJKZD\)GWK&LU
PRQWKV ODWHU  7KH DPHQGHG FRPSODLQW RPLWWHG WKH HDUOLHU     m$GLVWULFWFRXUWDEXVHVLWVGLVFUHWLRQZKHQLWDSSOLHV
VWDWHODZFDXVHRIDFWLRQEXWDGGHGWKDWWKHGHIHQGDQWVKDG         WKH LQFRUUHFW OHJDO VWDQGDUG PLVDSSOLHV WKH FRUUHFW OHJDO
UHWDOLDWHG DJDLQVW sR\HOOD DQG WKH +DPDGV IRU EULQJLQJ WKH   VWDQGDUGRUUHOLHVXSRQFOHDUO\HUURQHRXVILQGLQJVRIIDFWl
RULJLQDOVXLWXQGHUWKH)DLU+RXVLQJ$FW%RWKVLGHVPRYHG          6FKHQNY&LW\RI+XGVRQ)GWK&LU
IRU VXPPDU\ MXGJPHQW VKRUWO\ WKHUHDIWHU  7KH PRWLRQ E\      7KLVVWDQGDUGmLVDVKRUWKDQGZD\RIH[SUHVVLQJWKHLGHDWKDW
sR\HOODDQGWKH+DPDGVZDVOLPLWHGWRWKHLVVXHRIOLDELOLW\        WKLVFRXUWRUGLQDULO\H[WHQGVDKLJKGHJUHHRIGHIHUHQFHWRWKH
                                                                     GLVWULFWFRXUWjVGHFLVLRQEXWGRHVVRRQO\LIWKHGLVWULFWFRXUW
   ,Q1RYHPEHURIWKHGLVWULFWFRXUWGHQLHGWKHPRWLRQ         SURSHUO\ XQGHUVWRRG WKH SHUWLQHQW ODZ DQG DSSOLHG LW LQ D
IRUDSUHOLPLQDU\LQMXQFWLRQsR\HOODDQGWKH+DPDGVWLPHO\         GHIHQVLEOHPDQQHUWRWKHIDFWVDVWKH\DSSHDULQWKHUHFRUGl
ILOHGDQRWLFHRIDSSHDOIURPWKLVGHQLDO,QsDQXDU\RI      %HQW2DN+LJKZD\)GDW
WKHGLVWULFWFRXUWHQWHUHGDQRUGHUWKDWGHQLHGWKHPRWLRQ
E\ sR\HOOD DQG WKH +DPDGV IRU VXPPDU\ MXGJPHQW                 $GLVWULFWFRXUWPXVWDVVHVVIRXUIDFWRUVLQGHFLGLQJZKHWKHU
 JUDQWHG WKH GHIHQGDQWVj PRWLRQ IRU VXPPDU\ MXGJPHQW       WRLVVXHDSUHOLPLQDU\LQMXQFWLRQmZKHWKHUWKHSODLQWLII
                                                                     KDV HVWDEOLVKHG D VXEVWDQWLDO OLNHOLKRRG RU SUREDELOLW\ RI
1RV           +DPDGHWDOY:RRGFUHVW                     +DPDGHWDOY:RRGFUHVW          1RV
                                     &RQGR$VVjQHWDO                        &RQGR$VVjQHWDO

VXFFHVV RQ WKH PHULWV  ZKHWKHU WKHUH LV D WKUHDW RI         86    DOWHUDWLRQ RPLWWHG  8QGHU WKH )DLU
LUUHSDUDEOHKDUPWRWKHSODLQWLIIZKHWKHULVVXDQFHRIWKH            +RXVLQJ$FWDSODLQWLIIWKXVQHHGVKRZRQO\WKDWKHRUVKH
LQMXQFWLRQ ZRXOG FDXVH VXEVWDQWLDO KDUP WR RWKHUV DQG             KDVVXIIHUHGDQLQMXU\LQIDFWWKDWLVFDXVDOO\FRQQHFWHG
ZKHWKHUWKHSXEOLFLQWHUHVWZRXOGEHVHUYHGE\JUDQWLQJ               WR WKH GHIHQGDQWVj FRQGXFW DQG  WKDW LV OLNHO\ WR EH
LQMXQFWLYHUHOLHIl1LJKWFOXEV,QFY&LW\RI3DGXFDK             UHGUHVVHG E\ D IDYRUDEOH UXOLQJ  /XMDQ Y 'HIHQGHUV RI
)G   WK &LU   m7KH IRXU FRQVLGHUDWLRQV         :LOGOLIH  86    KROGLQJ WKDW WKHVH
DSSOLFDEOHWRSUHOLPLQDU\LQMXQFWLRQGHFLVLRQVDUHIDFWRUVWREH          WKUHH HOHPHQWV FRQVWLWXWH WKH FRQVWLWXWLRQDO PLQLPXP IRU
EDODQFHGQRWSUHUHTXLVLWHVWKDWPXVWEHPHWl0LFK%HOO7HO           VWDQGLQJ 'H%ROW Y (VS\  )G   WK &LU
&RY(QJOHU)GWK&LU                         DSSO\LQJWKHVHWKUHHIDFWRUVWRGHWHUPLQHVWDQGLQJLQ
                                                                          D)DLU+RXVLQJ$FWFDVH
   3HUKDSVIROORZLQJWKLVFRXUWjVVWDWHPHQWWKDWm>D@OWKRXJKQR
RQH IDFWRU LV FRQWUROOLQJ D ILQGLQJ WKDW WKHUH LV VLPSO\ QR      7KH UDWLRQDOH RQ ZKLFK WKH GLVWULFW FRXUW EDVHG LWV
OLNHOLKRRGRIVXFFHVVRQWKHPHULWVLVXVXDOO\IDWDOl*RQ]DOHV           GHFLVLRQnWKDWWKHVHUHTXLUHPHQWVFDQEHPHWRQO\E\SHUVRQV
Y1DWjO%GRI 0HG([DPjUV)GWK&LU                ZKR DUH GLUHFWO\ DQG LPPHGLDWHO\ VXEMHFWHG WR
 WKH GLVWULFW FRXUW DQDO\]HG RQO\ WKH ILUVW IDFWRU  ,W   GLVFULPLQDWLRQnKDVEHHQUHMHFWHGE\WKH6XSUHPH&RXUW,Q
GHQLHGWKHPRWLRQIRUDSUHOLPLQDU\LQMXQFWLRQRQWKHEDVLV               7UDIILFDQWHY0HWURSROLWDQ/LIH,QVXUDQFH&R86
WKDWQHLWKHUsR\HOODQRUWKH+DPDGVKDGVWDQGLQJWRVXHXQGHU              D EODFN WHQDQW DQG D ZKLWH WHQDQW RI DQ DSDUWPHQW
WKH)DLU+RXVLQJ$FW                                                     FRPSOH[EURXJKWVXLWXQGHUWKH)DLU+RXVLQJ$FWDOOHJLQJ
                                                                          WKDWWKHLUODQGORUGUDFLDOO\GLVFULPLQDWHGDJDLQVWQRQZKLWHV
   7KH)DLU+RXVLQJ$FWSURKLELWVGLVFULPLQDWLRQLQWKHVDOH              ,GDW7KH&RXUWKHOGWKDWERWKWHQDQWVKDGVWDQGLQJ
RU UHQWDO RI KRXVLQJ EHFDXVH RI mUDFH FRORU UHOLJLRQ VH[     EHFDXVHmWKHDOOHJHGLQMXU\WRH[LVWLQJWHQDQWVE\H[FOXVLRQRI
IDPLOLDOVWDWXVRUQDWLRQDORULJLQl86&$Q\             PLQRULW\SHUVRQVIURPWKHDSDUWPHQWFRPSOH[LVWKHORVVRI
mDJJULHYHG SHUVRQl LV DXWKRUL]HG WR EULQJ D FLYLO DFWLRQ          LPSRUWDQWEHQHILWVIURPLQWHUUDFLDODVVRFLDWLRQVl,GDW
SXUVXDQWWR86&7KH$FWGHILQHVDQmDJJULHYHG              m7KHSHUVRQRQWKHODQGORUGjVEODFNOLVWLVQRWWKHRQO\
SHUVRQl DV RQH ZKR m FODLPV WR KDYH EHHQ LQMXUHG E\ D       YLFWLPRIGLVFULPLQDWRU\KRXVLQJSUDFWLFHVLWLVWKHZKROH
GLVFULPLQDWRU\ KRXVLQJ SUDFWLFH RU  EHOLHYHV WKDW VXFK         FRPPXQLW\l,GDWLQWHUQDOTXRWDWLRQPDUNVRPLWWHG
SHUVRQZLOOEHLQMXUHGE\DGLVFULPLQDWRU\KRXVLQJSUDFWLFH
WKDW LV DERXW WR RFFXUl ,G L  ,Q GHFLGLQJ WKDW WKH     sR\HOOD KDV VWDQGLQJ WR FKDOOHQJH :RRGFUHVWjV E\ODZV
+DPDGVGLGQRWKDYHVWDQGLQJWRVXHDVmDJJULHYHGSHUVRQVl               ZKLFK IDFLDOO\ GLVFULPLQDWH RQ WKH EDVLV RI IDPLOLDO VWDWXV
WKH GLVWULFW FRXUW UHDVRQHG m>7@KH +DPDGV OLYH LQ DQG DUH       EHFDXVHWKH\DGYHUVHO\DIIHFWHGKHUGHVLUHWRKDYHKHUWHHQDJH
DWWHPSWLQJ WR VHOO D FRQGRPLQLXP XQLW WKDW LV RQ WKH ILUVW      QHSKHZ PRYH LQ ZLWK KHU DQG EHFDXVH JLYHQ WKDW sR\HOOD
IORRURQHWKDWPD\EHSXUFKDVHGE\IDPLOLHVZLWKFKLOGUHQl              FRXOGQRWVHOOKHUVHFRQGIORRUXQLWWRDIDPLO\ZLWKFKLOGUHQ
$V IRU sR\HOOD WKH FRXUW FRQFOXGHG WKDW VKH WRR ODFNHG          WKHE\ODZVGLPLQLVKHGWKHQXPEHURISRWHQWLDOEX\HUVIRUKHU
VWDQGLQJEHFDXVHVKHGLGmQRW\HWKDYHOHJDOFXVWRG\RIKHU               XQLW  7KH 6HYHQWK &LUFXLW UHDFKHG D VLPLODU FRQFOXVLRQ LQ
PLQRUQHSKHZl                                                            *RUVNLY7UR\)GWK&LU,Q*RUVNL
                                                                          WHQDQWV ZKR ZDQWHG WR EHFRPH IRVWHU SDUHQWV VRXJKW
  7KH6XSUHPH&RXUWKDVKHOGKRZHYHUWKDWVWDQGLQJWRVXH               SHUPLVVLRQIURPWKHLUODQGORUGWRKDYHFKLOGUHQOLYHLQWKHLU
XQGHUWKH$FWLVmDVEURDGDVLVSHUPLWWHGE\$UWLFOH,,,RIWKH          VHFRQGIORRUDSDUWPHQWEXWWKHODQGORUGUHIXVHGH[SODLQLQJ
&RQVWLWXWLRQl*ODGVWRQH5HDOWRUVY9LOORI%HOOZRRG             WKDWFKLOGUHQZHUHSHUPLWWHGRQO\LQILUVWIORRUDSDUWPHQWV,G
1RV         +DPDGHWDOY:RRGFUHVW                   +DPDGHWDOY:RRGFUHVW           1RV
                                   &RQGR$VVjQHWDO                      &RQGR$VVjQHWDO

DW7KHWHQDQWVZHUHHYLFWHGZKHQWKH\VRXJKWWRKDYH           ,G DW   ,Q WKH 6XSUHPH &RXUWjV DQDO\VLV VWDQGLQJ WR
WKH GLVFULPLQDWRU\ SROLF\ FKDQJHG  ,G  ,Q UHYHUVLQJ WKH    FKDOOHQJHWKHDOOHJHGGLVFULPLQDWRU\SUDFWLFHGLGQRWWXUQRQ
GLVPLVVDORIWKHFRPSODLQWZKLFKWKHGLVWULFWFRXUWEDVHGRQ         WKHPDQQHURUH[WHQWRIWKHPDQLSXODWLRQ6HH+HLJKWV&RPW\
DODFNRIVWDQGLQJWKH6HYHQWK&LUFXLWVWDWHG                       &RQJ Y +LOOWRS 5HDOW\ ,QF  )G   WK &LU
                                                                       UHMHFWLQJ WKH DUJXPHQW WKDW WKH FDVH VKRXOG EH
  (YHQLIZHDVVXPHDUJXHQGRWKDWWKH*RUVNLVKDGQRW               GLVPLVVHGRQVWDQGLQJJURXQGVZKHUHWKHUHDOWRUVDUJXHGWKDW
  \HWDFKLHYHGmIDPLOLDOVWDWXVlDVWKDWWHUPLVGHILQHGLQ           WKH &LW\ RI &OHYHODQG +HLJKWV DQG WKH QRQSURILW DGYRFDF\
  WKH$FWWKH7UR\VjDOOHJHGDFWLRQVDWWKHYHU\OHDVWVWLOO       RUJDQL]DWLRQ KDG IDLOHG WR SURYH DW WULDO WKDW FLW\ UHVLGHQWV
  ZHUH GLVFULPLQDWRU\ EHFDXVH WKH 7UR\V H[SUHVVHG D             ZHUHEHLQJGHSULYHGRIWKHEHQHILWVRILQWHUUDFLDODVVRFLDWLRQV
  SUHIHUHQFHIRUWHQDQWVRQWKHEDVLVRIIDPLOLDOVWDWXVLQ           GHVSLWHWKHUHDOWRUVjFRQWHQWLRQWKDWmWKH&LW\ZDVUHODWLYHO\
  YLRODWLRQRIVHFWLRQFDQGLQYLRODWLRQRIVHFWLRQ           VWDEOHUDFLDOO\ZKHQWKHDOOHJHGYLRODWLRQVRFFXUUHGDQG
   UHWDOLDWHG DJDLQVW WKH *RUVNLV ZKHQ WKH FRXSOH         WKH&LW\IDLOHGWRSURYHDQ\FRQQHFWLRQEHWZHHQDQ\RIWKH
  DWWHPSWHG WR KDYH WKH GLVFULPLQDWRU\ SROLF\ FKDQJHG          DOOHJHGYLRODWLRQVDQGDQ\WKUHDWHQHGUHVHJUHJDWLRQlLQWHUQDO
  7KHVHDFWLYLWLHVFOHDUO\ZHUHWKHVRXUFHRIWKH*RUVNLVj            TXRWDWLRQPDUNVRPLWWHG
  DOOHJHGLQMXU\
                                                                         ,QVWHDGVWDQGLQJGHSHQGVRQZKHWKHURQHLVDPHPEHURI
,GDW                                                       WKHFRPPXQLW\LQZKLFKDOOHJHGO\XQODZIXOGLVFULPLQDWLRQLV
                                                                      WDNLQJSODFH7KH6XSUHPH&RXUWDSSOLHGWKLVSULQFLSOHLQ
   :KHWKHUWKH+DPDGVKDYHVWDQGLQJWRFKDOOHQJHWKHE\ODZV           *ODGVWRQHE\KROGLQJWKDWWKHSODLQWLIIVZKRmFODLPHGWREH
LVDPRUHGLIILFXOWTXHVWLRQ%HFDXVHWKH+DPDGVOLYHGLQD          LQMXUHGDVKRPHRZQHUVLQWKHFRPPXQLW\lKDGVWDQGLQJ
ILUVWIORRUFRQGRPLQLXPXQLWWKHE\ODZVGLGQRWGLVFRXUDJH           86DWZKHUHDVWKHSODLQWLIIVZKRZHUHQRWPHPEHUVRI
WKHP IURP KDYLQJ FKLOGUHQ QRU GLG WKH E\ODZV IRUPDOO\        WKHDIIHFWHGFRPPXQLW\GLGQRWLGDWQm>1@HLWKHU
UHVWULFW WKH PDUNHW RI SRWHQWLDO SXUFKDVHUV IRU WKH XQLW     UHVSRQGHQW 3HUU\ QRU UHVSRQGHQW 6KDUS UHVLGHV ZLWKLQ WKH
0RUHRYHU:RRGFUHVWGLGQRWWRWDOO\EDQFKLOGUHQIURPWKH             WDUJHWQHLJKERUKRRGRI%HOOZRRG:HUHDGWKHFRPSODLQWVDV
SUHPLVHV,WVLPSO\FRQILQHGWKHPWRILUVWIORRUXQLWV7KH         FODLPLQJLQMXU\RQO\WRWKDWDUHDDQGLWVUHVLGHQWV2QWKH
+DPDGVZHUHWKXVQRWHQWLUHO\GHSULYHGRIWKHEHQHILWVWREH          UHFRUG EHIRUH XV ZH WKHUHIRUH FRQFOXGH WKDW VXPPDU\
GHULYHG IURP VRFLDO DVVRFLDWLRQV ZLWK IDPLOLHV KDYLQJ           MXGJPHQWDVWRWKHVHWZRUHVSRQGHQWVZDVDSSURSULDWHl
FKLOGUHQ
                                                                         6LPLODUO\WKH+DPDGVDOOHJHGWKDWWKH\ZHUHPHPEHUVRI
   ,Q*ODGVWRQHKRZHYHUWKH&RXUWKHOGWKDWWKHLQGLYLGXDO          DFRPPXQLW\ZKRVHIDPLOLDOVWDWXVFRPSRVLWLRQZDVEHLQJ
SODLQWLIIVKDGVWDQGLQJEHFDXVHWKH\mFODLPHGWREHLQMXUHGDV        PDQLSXODWHG$QDORJRXVWRWKHSODLQWLIIVLQ*ODGVWRQHWKH
KRPHRZQHUV LQ WKH FRPPXQLW\ DJDLQVW ZKLFK SHWLWLRQHUVj          +DPDGVZHUHQRWFRPSOHWHO\GHSULYHGRIWKHEHQHILWVWREH
DOOHJHG>GLVFULPLQDWRU\SUDFWLFH@KDVEHHQGLUHFWHGl86       GHULYHG IURP VRFLDO DVVRFLDWLRQV ZLWK IDPLOLHV KDYLQJ
DW*ODGVWRQHLQYROYHGDOOHJHGUDFLDOGLVFULPLQDWLRQE\          FKLOGUHQ EXW DV UHVLGHQWV RI :RRGFUHVW WKH\ VXIIHUHG WKH
UHDOWRUVLQDSDUWLFXODUQHLJKERUKRRGEXWQRDOOHJDWLRQVZHUH        VWLJPDWLF KDUP RI OLYLQJ LQ D FRPPXQLW\ ZKRVH PHPEHUV
PDGH WKDW WKH UHVLGHQWV RI WKH FRPPXQLW\ KDG EHHQ             ZHUHVHJUHJDWHGRQWKHEDVLVRIDSURKLELWHGFODVVLILFDWLRQ
FRPSOHWHO\GHSULYHGRIWKHEHQHILWVRILQWHUUDFLDODVVRFLDWLRQV      6HH7UDIILFDQWH86DWUHFRJQL]LQJDVSDUWRIWKH
7KH SODLQWLIIVj FRQWHQWLRQ UDWKHU ZDV WKDW WKH mUDFLDO       LQMXU\WKDWFRQIHUUHGVWDQGLQJRQWKHSODLQWLIIVWKDWmWKH\KDG
FRPSRVLWLRQlRIWKHLUQHLJKERUKRRGZDVmEHLQJPDQLSXODWHGl           VXIIHUHG HPEDUUDVVPHQW DQG HFRQRPLF GDPDJH LQ VRFLDO
1RV         +DPDGHWDOY:RRGFUHVW                 +DPDGHWDOY:RRGFUHVW         1RV
                                   &RQGR$VVjQHWDO                     &RQGR$VVjQHWDO

EXVLQHVVDQGSURIHVVLRQDODFWLYLWLHVIURPEHLQJµVWLJPDWL]HGj       VHJUHJDWLRQHYHQLIWKH\GLGQRWLQWURGXFHHYLGHQFHWKDWWKH\
DVUHVLGHQWVRIDµZKLWHJKHWWRjl7KHGLVVHQWGLVDJUHHVZLWK      VXIIHUHGVXFKKDUP
WKLVDQDORJ\FLWLQJWKH*ODGVWRQH&RXUWjVVWDWHPHQWWKDWm>D@
µQHLJKERUKRRGjZKRVHUDFLDOFRPSRVLWLRQDOOHJHGO\LVEHLQJ              7KHMXULVSUXGHQFHRIWKH6XSUHPH&RXUWDQGWKLVFRXUWRQ
PDQLSXODWHGPD\EHVRH[WHQVLYHLQDUHDVRKHDYLO\RUHYHQ          VWDQGLQJWRVXHIRUGLVFULPLQDWLRQXQGHUWKH)DLU+RXVLQJ$FW
VR VSDUVHO\ SRSXODWHG RU VR ODFNLQJ LQ VKDUHG VRFLDO DQG   ZDVGHYHORSHGEHIRUH&RQJUHVVDPHQGHGWKH$FWLQWR
FRPPHUFLDOLQWHUFRXUVHWKDWWKHUHZRXOGEHQRDFWXDOLQMXU\         LQFOXGH mIDPLOLDO VWDWXVl DV D SURVFULEHG FODVVLILFDWLRQ
WRDSDUWLFXODUUHVLGHQWl86DW'LVVHQWLQJ2SDW     3HUKDSV IRU WKLV UHDVRQ ZH KDYH IRXQG QR SUHFHGHQW WKDW
$OWKRXJKWKLVSRLQWPLJKWZHOODSSO\WREDUDKRPHRZQHU         GLUHFWO\ DGGUHVVHV WKH VWDQGLQJ WR VXH RI SHUVRQV LQ D
OLYLQJLQVD\&KLFDJRIURPFKDOOHQJLQJ:RRGFUHVWjVE\ODZV          FRPPXQLW\ZKHUHVHJUHJDWLRQLVWDNLQJSODFHIORRUE\IORRU
E\ GHILQLQJ KLV RU KHU mQHLJKERUKRRGl DV WKH 0LGZHVW LW    UDWKHU WKDQ E\ EXLOGLQJ RU DUHD  :H KDYH QR GLIILFXOW\
VXUHO\GRHVQRWDSSO\WRWKHRZQHUVRIFRQGRPLQLXPXQLWVLQ          FRQFOXGLQJ KRZHYHU WKDW KDG WKH 6XSUHPH &RXUW LQ
DIRXUEXLOGLQJGHYHORSPHQW                                         7UDIILFDQWHDQG*ODGVWRQHEHHQIDFHGZLWKDOOHJDWLRQVWKDWWKH
                                                                     SODLQWLIIVOLYHGLQDFRPPXQLW\ZKHUHZKLWHUHVLGHQWVZHUH
   7KHGLVVHQWDOVRDUJXHVWKDWsR\HOODDQGWKH+DPDGVIDLOHG        SHUPLWWHG WR OLYH RQ DQ\ IORRU EXW EODFN UHVLGHQWV ZHUH
WRSOHDGWKHSUHFLVHQDWXUHRIWKHKDUPWKDWWKH\VXIIHUHGDV        UHVWULFWHGWRWKHILUVWIORRUWKH&RXUWZRXOGKDYHIRXQGWKDW
KRPHRZQHUV LQ WKH FRPPXQLW\  'LVVHQWLQJ 2S DW          DOOSHUVRQVLQWKHFRPPXQLW\ZRXOGKDYHKDGVWDQGLQJWRVXH
,QMXU\ KRZHYHU LV QRW D PDWWHU WKDW PXVW EH SOHG ZLWK    IRUDYLRODWLRQRIWKH)DLU+RXVLQJ$FW6HH*ODGVWRQH
SDUWLFXODULW\6HH6ZLHUNLHZLF]Y6RUHPD1$86       86 DW  m3HWLWLRQHUV VXJJHVW WKDW WKHUH LV D FULWLFDO
m5XOHDjVVLPSOLILHGSOHDGLQJVWDQGDUGDSSOLHV        GLVWLQFWLRQEHWZHHQDQDSDUWPHQWFRPSOH[HYHQRQHDVODUJH
WRDOOFLYLODFWLRQVZLWKOLPLWHGH[FHSWLRQVl,QDQ\HYHQW     DV WKDW LQ 7UDIILFDQWH DQG D  E\ EORFN UHVLGHQWLDO
WKH WRXFKVWRQH IRU VWDQGLQJ XQGHU WKH )DLU +RXVLQJ $FW LV   QHLJKERUKRRG$OWKRXJKWKHUHDUHIDFWXDOGLIIHUHQFHVZHGR
ZKHWKHU RQH LV D PHPEHU RI WKH FRPPXQLW\ LQ ZKLFK           QRW YLHZ WKHP DV FRQWUROOLQJ LQ WKLV FDVHl IRRWQRWH
DOOHJHGO\XQODZIXOGLVFULPLQDWLRQLVWDNLQJSODFHDQGsR\HOOD       RPLWWHG:HWKHUHIRUHFRQFOXGHWKDWWKHDOOHJDWLRQVRIWKH
DQGWKH+DPDGVFOHDUO\DOOHJHGWKDWWKH\ZHUHUHVLGHQWVRI           +DPDGV LQ WKLV FDVH ZHUH VXIILFLHQW WR VDWLVI\ WKH
:RRGFUHVW                                                           FRQVWLWXWLRQDOVWDQGLQJUHTXLUHPHQWV
   :HDUHDOVRXQSHUVXDGHGE\WKHGLVVHQWjVFRQWHQWLRQWKDW             7KHGLVWULFWFRXUWLQWKHSUHVHQWFDVHLQUHDFKLQJDFRQWUDU\
sR\HOODDQGWKH+DPDGVODFNHGVWDQGLQJEHFDXVHWKH\IDLOHG           FRQFOXVLRQUHOLHGSULQFLSDOO\XSRQ)DLU+RXVLQJ&RQJUHVVY
WRRIIHUHYLGHQFHWKDWWKH\VXIIHUHGDQ\RIWKHVWLJPDWLFRU         :HEHU)6XSS&'&DO,Q)DLU+RXVLQJ
HFRQRPLFKDUPDVVRFLDWHGZLWKPHPEHUVKLSLQDFRPPXQLW\              WKHmGHIHQGDQWVDUJXH>G@WKDWWKHLQGLYLGXDOSODLQWLIIVZHUH
ZKRVH IDPLOLDOVWDWXV FRPSRVLWLRQ ZDV EHLQJ PDQLSXODWHG        QRWWKHPVHOYHVVWHHUHG3ODLQWLIIVFRQFHGH>G@WKDWWKLVLVVR
'LVVHQWLQJ2SDW%LQGLQJFLUFXLWSUHFHGHQWLVWRWKH       DVDUHVXOWWKH>WZRLQGLYLGXDOSODLQWLIIV@ODFN>HG@VWDQGLQJDV
FRQWUDU\+HLJKWV&RPW\&RQJ)GDWKROGLQJ            µDJJULHYHGSHUVRQVjZKRPD\ILOHVXLWXQGHU86&
WKDWPHPEHUVRIWKHFRPPXQLW\LQZKLFKDOOHJHGO\XQODZIXO            WRUHPHG\KRXVLQJGLVFULPLQDWLRQl,GDWm6WHHULQJl
GLVFULPLQDWLRQZDVWDNLQJSODFHKDGVWDQGLQJWRVXHEHFDXVH         LV WKH SUDFWLFH RI GLUHFWLQJ VHHNHUV RI KRXVLQJ DZD\ IURP
DVPHPEHUVRIWKHFRPPXQLW\WKH\ZHUHWKUHDWHQHGZLWKWKH           FHUWDLQORFDWLRQVIRUWKHSXUSRVHRIPDLQWDLQLQJSDWWHUQVRI
VWDJPDWLF DQG HFRQRPLF KDUP DWWHQGDQW WR SURVFULEHG            VHJUHJDWLRQ   +HLJKWV &RPW\ &RQJ  )G DW 
                                                                     FLWLQJ+DYHQV5HDOW\&RUSY&ROHPDQ86
1RV          +DPDGHWDOY:RRGFUHVW                 +DPDGHWDOY:RRGFUHVW             1RV
                                    &RQGR$VVjQHWDO                      &RQGR$VVjQHWDO

Q   7KH GHFLVLRQ LQ )DLU +RXVLQJ VWULNHV XV DV     DSSHOODWHEULHILQJWKDWVXEVHTXHQWWRWKHGLVWULFWFRXUWjVGHQLDO
LQFRQVLVWHQWZLWKWKHKROGLQJVLQ7UDIILFDQWHDQG*ODGVWRQH           RIWKHSUHOLPLQDU\LQMXQFWLRQWKHGHIHQGDQWVHQWHUHGLQWRDQ
86DW86DW,QDQ\HYHQWWKH             DJUHHPHQWZLWKWKH8QLWHG6WDWHV'HSDUWPHQWRIsXVWLFHWRQR
UHDVRQLQJRIWKH)DLU+RXVLQJFRXUWLVQRWDSSOLFDEOHWRWKH           ORQJHUHQIRUFHWKHFKDOOHQJHGSROLFLHV&ODLPVE\sR\HOODDQG
LQVWDQWFDVHEHFDXVHQRQHRIsR\HOODjVFODLPVDQGRQO\RQHRI          WKH +DPDGV IRU LQMXQFWLYH UHOLHInDW OHDVW WKRVH FODLPV
WKH+DPDGVjFODLPVLVSUHPLVHGXSRQXQODZIXOVWHHULQJ                 VHHNLQJWRHQMRLQHQIRUFHPHQWRIWKHE\ODZVnPD\WKHUHIRUH
                                                                       EHPRRW6HH'HWURLW)LUH)LJKWHUV$VVjQ/RFDO1RY
  %HFDXVH WKH GLVWULFW FRXUW LQ WKH SUHVHQW FDVH GHQLHG WKH   'L[RQ  )G   WK &LU  SHU FXULDP
SUHOLPLQDU\ LQMXQFWLRQ H[FOXVLYHO\ RQ WKH UDWLRQDOH WKDW         KROGLQJWKDWDUHTXHVWIRULQMXQFWLYHUHOLHIZDVUHQGHUHGPRRW
sR\HOODDQGWKH+DPDGVODFNHGVWDQGLQJDQGEHFDXVHLWGLG             ZKHUHmWZRILQDOQRQDSSHDODEOHRUGHUVIURPVWDWHFRXUWVLQ
QRWDSSO\WKHFRUUHFWODZRIVWDQGLQJXQGHUWKH)DLU+RXVLQJ           0LFKLJDQ HQMRLQ>HG@ RQ LQGHSHQGHQW VWDWH ODZ JURXQGV WKH
$FW ZH FRQFOXGH WKDW WKH FRXUW DEXVHG LWV GLVFUHWLRQ LQ      VDPHFRQGXFWHQMRLQHGE\WKH&RXUWEHORZRQFRQVWLWXWLRQDO
GHQ\LQJ WKH SUHOLPLQDU\ LQMXQFWLRQ RQ WKDW EDVLV  7KH         JURXQGVl%XWVHH+DPDGY:RRGFUHVW&RQGR$VVjQ1RV
TXHVWLRQ QRZ LV KRZ WR SURFHHG  sR\HOOD DQG WKH +DPDGV      WK&LUsXQHRUGHUQRWLQJWKDW
DUJXHWKDWWKHUHLVQRQHHGWRUHPDQGIRUIXUWKHUSURFHHGLQJV          sR\HOOD DQG WKH +DPDGV mDUH DOVR DSSHDOLQJ WKH GHQLDO RI
RQWKHSUHOLPLQDU\LQMXQFWLRQLVVXH,QVWHDGWKH\DVVHUWWKLV       LQMXQFWLYH UHOLHI DJDLQVW IXWXUH DFWV RI UHWDOLDWLRQ    :H
FRXUWVKRXOGLVVXHWKHLQMXQFWLRQLWVHOI                              FDQQRW FRQFOXGH WKDW WKH SODLQWLIIVj DSSHDO LQ  LV
                                                                       PRRWl  8QGHU WKHVH FLUFXPVWDQFHV ZH EHOLHYH WKDW WKH
   7KHUHDUHWZRUHDVRQVKRZHYHUZK\VXFKDFRXUVHLVQRW            SUXGHQWFRXUVHLVWRDOORZWKHGLVWULFWFRXUWWRGHWHUPLQHLQWKH
DSSURSULDWHLQWKLVFDVH)LUVWWKHEDODQFLQJRISUHOLPLQDU\        ILUVW LQVWDQFH ZKHWKHU LQMXQFWLYH UHOLHI UHPDLQV DSSURSULDWH
LQMXQFWLRQIDFWRUVLVDWDVNHQWUXVWHGWRWKHVRXQGGLVFUHWLRQRI      XQGHUWKHFRUUHFWOHJDOVWDQGDUG
WKH GLVWULFW FRXUW  0F3KHUVRQ Y 0LFK +LJK 6FK $WKOHWLF
$VVjQ ,QF  )G   WK &LU  HQ EDQF     % 7KHGLVWULFWFRXUWHUUHGLQJUDQWLQJWKHGHIHQGDQWVj
m7KHVHIDFWRUVVLPSO\JXLGHWKHGLVFUHWLRQRIWKHFRXUW          PRWLRQIRUVXPPDU\MXGJPHQWRQWKH)DLU+RXVLQJ
>7@KHGLVWULFWFRXUWjVZHLJKLQJDQGEDODQFLQJRIWKHHTXLWLHV             $FWFODLPVRIsR\HOODDQGWKH+DPDGV
RIDSDUWLFXODUFDVHLVRYHUUXOHGRQO\LQWKHUDUHVWRIFDVHVl
LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG  :KHQ ZH GR ILQG DQ          :HUHYLHZWKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\MXGJPHQW
DEXVHRIGLVFUHWLRQWKLVFRXUWW\SLFDOO\YDFDWHVRUUHYHUVHVWKH      GHQRYR6SHUOHY0LFK'HSjWRI&RUU)G
LPSURSHUGHQLDORIDSUHOLPLQDU\LQMXQFWLRQDQGUHPDQGVIRU            WK&LU6XPPDU\MXGJPHQWLVSURSHUZKHUHWKHUHLV
IXUWKHU FRQVLGHUDWLRQ  (J * 	 9 /RXQJH ,QF Y 0LFK    QRJHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKHPRYLQJSDUW\
/LTXRU&RQWURO&RPPjQ)GWK&LU             LVHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ)HG5&LY3
VHHDOVR$&KDUOHV$ODQ:ULJKWHWDO)HGHUDO3UDFWLFHDQG          F,QFRQVLGHULQJVXFKDPRWLRQWKHFRXUWFRQVWUXHVDOO
3URFHGXUHDWGHGm,QJHQHUDOZKHQWKH          UHDVRQDEOHIDFWXDOLQIHUHQFHVLQIDYRURIWKHQRQPRYLQJSDUW\
DSSHOODWHFRXUWGHWHUPLQHVWKDWWKHWULDOFRXUWjVRUGHUGHQ\LQJ        0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS86
LQMXQFWLYHUHOLHIZDVHUURQHRXVLWZLOOUHYHUVHDQGUHPDQGWKH        7KHFHQWUDOLVVXHLVmZKHWKHUWKHHYLGHQFH
FDVHIRUIXUWKHUSURFHHGLQJVEHORZl                                 SUHVHQWVDVXIILFLHQWGLVDJUHHPHQWWRUHTXLUHVXEPLVVLRQWRD
                                                                       MXU\RUZKHWKHULWLVVRRQHVLGHGWKDWRQHSDUW\PXVWSUHYDLO
  7KHVHFRQGUHDVRQIRUXVQRWWREDODQFHWKHSUHOLPLQDU\             DVDPDWWHURIODZl$QGHUVRQY/LEHUW\/REE\,QF86
LQMXQFWLRQIDFWRUVLVEHFDXVHWKHSDUWLHVKDYHLQGLFDWHGLQWKHLU      
1RV          +DPDGHWDOY:RRGFUHVW                 +DPDGHWDOY:RRGFUHVW          1RV
                                    &RQGR$VVjQHWDO                      &RQGR$VVjQHWDO

   sR\HOODDQGWKH+DPDGVDUJXHWKDWWKHGLVWULFWFRXUWHUUHGLQ       ,W]KDNL)GWK&LUUHMHFWLQJWKH
JUDQWLQJWKHGHIHQGDQWVjPRWLRQIRUVXPPDU\MXGJPHQWRQ                FRQWHQWLRQ WKDW PRUH UHFHQW 6XSUHPH &RXUW SUHFHGHQW
WKHLUGLVFULPLQDWLRQFODLPV$WRUDODUJXPHQWRQWKHPRWLRQV         XQGHUPLQHVWKLVFRQFOXVLRQLQWKHFRQWH[WRIFODLPVXQGHUWKH
WKHGLVWULFWFRXUWVWDWHGWKDWLWZDVJUDQWLQJm'HIHQGDQW>Vj@          )DLU+RXVLQJ$FW
PRWLRQ IRU VXPPDU\ MXGJPHQW LQVRIDU DV LW DSSOLHV WR WKH
+DPDGV ZKR WKH &RXUW UXOHV DV D PDWWHU RI ODZ KDYH QR    & 7KHGLVWULFW FRXUW VKRXOG UHFRQVLGHU WKH PRWLRQ E\
VWDQGLQJ WR PDLQWDLQ WKLV ODZVXLW EDVHG XSRQ WKHLUnDV ,           sR\HOOD DQG WKH +DPDGV IRU SDUWLDO VXPPDU\
XQGHUVWDQGLWWKHLUUHVLGHQF\DQGVHQWHQFH>VLF@RIWKHRIIHQVH          MXGJPHQW
LQ UHODWLRQVKLS WR WKH SROLFLHV LQ WKH :RRGFUHVW
&RQGRPLQLXPV$VVRFLDWLRQl7KHFRXUWVXEVHTXHQWO\VWDWHG                 sR\HOOD DQG WKH +DPDGV DOVR DSSHDO WKH GLVWULFW FRXUWjV
WKDWLWZDVGLVPLVVLQJsR\HOODjVGLVFULPLQDWLRQFODLPEHFDXVH          GHQLDO RI WKHLU PRWLRQ IRU SDUWLDO VXPPDU\ MXGJPHQW DV WR
VKH mODFN>HG@ VWDQGLQJ DV DQ µDJJULHYHG SHUVRQj XQGHU WKH      OLDELOLW\RQWKHLUGLVFULPLQDWLRQFODLPVm$GLVWULFWFRXUWjV
)+$l                                                                  GHQLDORIVXPPDU\MXGJPHQWLVDQLQWHUORFXWRU\RUGHUWKDWLV
                                                                       QRWRUGLQDULO\DSSHDODEOHl7KRPDVY8QLWHG6WDWHV)G
   $VH[SODLQHGLQ3DUW,,$DERYHKRZHYHUWKHGLVWULFWFRXUW       WK&LUm:KHUHKRZHYHUDQDSSHDOIURP
GLG QRW DSSO\ WKH FRUUHFW ODZ RI VWDQGLQJ XQGHU WKH )DLU     DGHQLDORIVXPPDU\MXGJPHQWLVSUHVHQWHGLQWDQGHPZLWKD
+RXVLQJ$FW7KLVPHDQVWKDWWKHFRXUWQHYHUUHDFKHGWKH              JUDQW RI VXPPDU\ MXGJPHQW WKLV FRXUW KDV MXULVGLFWLRQ WR
TXHVWLRQ RI ZKHWKHU JHQXLQH LVVXHV RI PDWHULDO IDFW H[LVW      UHYLHZWKHSURSULHW\RIWKHGLVWULFWFRXUWjVGHQLDORIVXPPDU\
UHJDUGLQJWKHVXEVWDQWLYHDOOHJDWLRQVUDLVHGE\sR\HOODDQGWKH        MXGJPHQWl*DUQHUY0HPSKLV3ROLFH'HSjW)G
+DPDGV  :H ILQG WKDW WKH DSSURSULDWH DFWLRQ XQGHU WKHVH     WK&LU7KLVFRXUWKDVKHOGWKDWLQVXFKDVLWXDWLRQ
FLUFXPVWDQFHV LV WR UHYHUVH WKH GLVWULFW FRXUWjV JUDQW RI     m>Z@KHUHDPRWLRQIRUVXPPDU\MXGJPHQWLVGHQLHGRQWKH
VXPPDU\ MXGJPHQW DQG UHPDQG IRU IXUWKHU FRQVLGHUDWLRQ           JURXQGV WKDW WKHUH H[LVWV D JHQXLQH LVVXH RI PDWHULDO IDFW
0F&XUG\Y0RQWJRPHU\&RXQW\)GWK&LU              UHYLHZRIWKLVUXOLQJLVXQGHUWKHDEXVHRIGLVFUHWLRQVWDQGDUG
 UHYHUVLQJ DQG UHPDQGLQJ IRU IXUWKHU SURFHHGLQJV D        :KHUH KRZHYHU D GHQLDO RI VXPPDU\ MXGJPHQW LV EDVHG
GLVWULFWFRXUWjVJUDQWRIVXPPDU\MXGJPHQWZKHUHWKHORZHU             VROHO\XSRQOHJDOJURXQGVUHYLHZLVGHQRYRl,GFLWDWLRQ
FRXUW KDG HUUHG LQ LWV DSSOLFDWLRQ RI WKH ODZ RI TXDOLILHG   RPLWWHG
LPPXQLW\ DQG WKHUHIRUH KDG QRW \HW KDG DQ RSSRUWXQLW\ WR
FRQVLGHUZKHWKHUPDWHULDOIDFWVZHUHLQGLVSXWH                         7KHGLVWULFWFRXUWGLGQRWVHWIRUWKLWVUHDVRQVIRUGHQ\LQJ
                                                                       WKHPRWLRQE\sR\HOODDQGWKH+DPDGVIRUSDUWLDOVXPPDU\
  )LQDOO\WKHGHIHQGDQWVFRQWHQGWKDWWKHDJUHHPHQWZLWKWKH          MXGJPHQWEXWSUHVXPDEO\GLGVREHFDXVHLWFRQFOXGHGWKDW
8QLWHG 6WDWHV 'HSDUWPHQW RI sXVWLFH QRWHG LQ 3DUW ,,$       WKH\ODFNHGVWDQGLQJ$VH[SODLQHGDERYHLQ3DUW,,%WKLV
DERYH UHQGHUV WKH HQWLUH FDVH PRRW  :H GLVDJUHH             PHDQV WKDW ZH GR QRW NQRZ ZKHWKHU JHQXLQH LVVXHV RI
m,UUHVSHFWLYHRIWKHLVVXHRILQMXQFWLYHUHOLHI>sR\HOODDQGWKH      PDWHULDOIDFWUHPDLQ&RXQVHOIRUsR\HOODDQGWKH+DPDGV
+DPDGV@ FRQWLQXH WR VHHN GDPDJHV WR UHGUHVV DOOHJHG             SURIHVVHG GXULQJ RUDO DUJXPHQW WKDW WKH SDUWLHV ZHUH LQ
YLRODWLRQV RI WKH )DLU +RXVLQJ $FW     *LYHQ >WKHLU@    DJUHHPHQW WKDW QR GLVSXWHG IDFWXDO LVVXHV H[LVW  %XW WKH
FRQWLQXHGDFWLYHSXUVXLWRIPRQHWDU\UHOLHIWKLVFDVHUHPDLQV         UHFRUGLVQRWVRFOHDURQWKLVLVVXH,QGHHGLQRSSRVLQJWKH
µGHILQLWHDQGFRQFUHWHWRXFKLQJWKHOHJDOUHODWLRQVRISDUWLHV        PRWLRQIRUSDUWLDOVXPPDU\MXGJPHQWEHORZWKHGHIHQGDQWV
KDYLQJ DGYHUVH OHJDO LQWHUHVWVjl  +DYHQV 5HDOW\ &RUS Y      DW OHDVW SXUSRUWHG WR UDLVH IDFWXDO GLVSXWHV  :H WKHUHIRUH
&ROHPDQ  86    VHH DOVR +DUULV Y
1RV           +DPDGHWDOY:RRGFUHVW                   +DPDGHWDOY:RRGFUHVW         1RV
                                     &RQGR$VVjQHWDO                        &RQGR$VVjQHWDO

UHYHUVHWKHGHQLDORIWKHPRWLRQIRUSDUWLDOVXPPDU\MXGJPHQW                7HUUL +DPDG LQWURGXFHG LQWR HYLGHQFH D OHWWHU GDWHG
DQGUHPDQGIRUIXUWKHUFRQVLGHUDWLRQ                                     sXQHIURP:RRGFUHVWjVSURSHUW\PDQDJHUDQGWKH
                                                                          PDMRULW\RILWVERDUGRIGLUHFWRUVWR7HUUL+DPDGjVHPSOR\HU
' 7KH GLVWULFW FRXUW HUUHG LQ JUDQWLQJ MXGJPHQW DV D             WKH0RQURH&RXQW\%RDUGRI&RPPLVVLRQHUVFRPSODLQLQJ
   PDWWHU RI ODZ LQ IDYRU RI WKH GHIHQGDQWV RQ WKH               WKDW +DPDG KDG ILOHG WKH LQVWDQW ODZVXLW DQG DVNLQJ WKH
   UHWDOLDWLRQFODLPVRIsR\HOODDQGWKH+DPDGV                           &RPPLVVLRQHUV WR mGR ZKDWHYHU \RX FDQ WR HOLPLQDWH WKLV
                                                                          VLWXDWLRQl+DPDGDOVRWHVWLILHGWKDWDOWKRXJKVKHDQGKHU
   $GLVWULFWFRXUWjVGHFLVLRQWRJUDQWMXGJPHQWDVDPDWWHURI           KXVEDQGKDGDWWHQGHG:RRGFUHVW&RQGRPLQLXP$VVRFLDWLRQ
ODZLVUHYLHZHGGHQRYR'LDPRQGY+RZG)G                  PHHWLQJVSULRUWRWKHILOLQJRIWKLVVXLWWKH\ZHUHDVNHGWR
 WK &LU   sXGJPHQW DV D PDWWHU RI ODZ LV           OHDYHSUHVXPDEO\E\WKHGHIHQGDQWVZKHQWKH\DWWHQGHGD
DSSURSULDWHZKHUHDIWHUDSDUW\KDVEHHQIXOO\KHDUGRQDQ               PHHWLQJDIWHUWKHVXLWKDGEHHQILOHG,QDVLPLODUYHLQsR\HOOD
LVVXHmWKHUHLVQR OHJDOO\VXIILFLHQWHYLGHQWLDU\EDVLVIRUD           WHVWLILHGWKDWDIWHUWKHODZVXLWKDGEHHQILOHGWKHGHIHQGDQWV
UHDVRQDEOHMXU\WRILQGIRUWKDWSDUW\RQWKDWLVVXHl)HG5           WRRN DFWLRQ DJDLQVW KHU IRU DOOHJHGO\ YLRODWLQJ VHYHUDO
&LY3D,QPDNLQJWKLVGHWHUPLQDWLRQWKHFRXUWPXVW              FRQGRPLQLXPUXOHVHYHQWKRXJKZKHQsR\HOODKDGFRQGXFWHG
YLHZ WKH HYLGHQFH LQ WKH OLJKW PRVW IDYRUDEOH WR WKH             KHUVHOIWKHVDPHZD\EHIRUHWKHODZVXLWWKHGHIHQGDQWVKDG
QRQPRYDQW'LDPRQG)GDW                                     WDNHQQRDFWLRQ
   3XUVXDQW WR  86&   LW LV mXQODZIXO WR FRHUFH        :KHQ YLHZHG LQ WKH OLJKW PRVW IDYRUDEOH WR WKH
LQWLPLGDWH WKUHDWHQ RU LQWHUIHUH ZLWK DQ\ SHUVRQ LQ WKH         QRQPRYDQWVWKHDERYHHYLGHQFHLVVXIILFLHQWWRUDLVHDMXU\
H[HUFLVH RU HQMR\PHQW RI RU RQ DFFRXQW RI KLV KDYLQJ            TXHVWLRQRQWKHUHWDOLDWLRQFODLPV6HH8QLWHG6WDWHVY&LW\
H[HUFLVHGRUHQMR\HGlKLVRUKHUULJKWVXQGHUWKH)DLU+RXVLQJ            RI%LUPLQJKDP)GWK&LUDIILUPLQJ
$FW  7KLV VHFWLRQ UHDFKHV mDFWRUV ZKR DUH LQ D SRVLWLRQ        WKHGLVWULFWFRXUWjVILQGLQJWKDWWKHFLW\YLRODWHGRIWKH
GLUHFWO\WRGLVUXSWWKHH[HUFLVHRUHQMR\PHQWRIDSURWHFWHG              )DLU+RXVLQJ$FWZKHUHWKHm&LW\&RPPLVVLRQWRRNDFWLRQ
ULJKWDQGH[HUFLVHWKHLUSRZHUVZLWKDGLVFULPLQDWRU\DQLPXVl            WKDWVXSSRUWHGRSSRQHQWVRIWKH%DOGZLQ+RXVHSURSRVDO>IRU
0LFK3URW	$GYRFDF\6HUY,QFY%DELQ)G             ORZLQFRPH KRXVLQJ@ E\ DJUHHLQJ WR GHIHU D ILQDO YRWH RQ
WK&LU                                                          H[WHQGLQJWKH%DOGZLQ+RXVHFRQWUDFWDQGE\DGGLQJVHYHUDO
                                                                          DPHQGPHQWVWRWKHSURSRVHGFRQWUDFWWKDWPDGHLWLPSRVVLEOH
   sR\HOODDQGWKH+DPDGVDOOHJHGLQWKHLUDPHQGHGFRPSODLQW              IRU%DOGZLQ+RXVHWRFRQWLQXHLWVQHJRWLDWLRQVVXFFHVVIXOO\
WKDWWKHGHIHQGDQWVKDGXQODZIXOO\UHWDOLDWHGDJDLQVWWKHPIRU            ZLWK>WKHVWDWHILQDQFLQJDJHQF\@l6DQ3HGUR+RWHO&RY
WKH ILOLQJ RI WKHLU LQLWLDO FRPSODLQW  $IWHU sR\HOOD DQG WKH   &LW\ RI /RV $QJHOHV  )G   WK &LU 
+DPDGV SUHVHQWHG WKHLU UHWDOLDWLRQ FODLP WR WKH MXU\ WKH         KROGLQJWKDWDJHQXLQHLVVXHRIPDWHULDOIDFWH[LVWHGRQWKH
GLVWULFWFRXUWJUDQWHGDPRWLRQE\WKHGHIHQGDQWVIRUMXGJPHQW            SODLQWLIIjVUHWDOLDWLRQFODLPZKHUHWKHSODLQWLIIKDGLQWURGXFHG
DVDPDWWHURIODZ7KHFRXUWFRQFOXGHGWKDWWKHUHZDVmQR               HYLGHQFHWKDWVHYHUDOZHHNVDIWHUSXEOLFO\VWDWLQJmWKDWWKH
VXIILFLHQWHYLGHQFHXSRQZKLFKDUHDVRQDEOHMXU\FRXOGILQG              &LW\KDGDFWHGLOOHJDOO\E\UHIXVLQJWRIXQGKRXVLQJIRUWKH
ILUVWRIDOOWKDWWKHUHZDVDQ\LOOHJDOUHWDOLDWRU\DFWLRQZKLFK         PHQWDOO\LOODQGWKDWKLVIDPLO\ZRXOGVXH>@WKH&LW\RI
FDQ EH DWWULEXWHG WR WKH GHIHQGDQWV KHUHl  ,W IXUWKHU           /RV$QJHOHV%XLOGLQJDQG6DIHW\&RPPLVVLRQHUDQGVHYHUDO
GHWHUPLQHGWKDWWKHUHZDVmQRHYLGHQFHRIOHJDOO\FRJQL]DEOH              PHPEHUVRIWKH&LW\jVµ6OXPKRXVH7DVN)RUFHjFRQGXFWHGDQ
LQMXULHVl  :H EHOLHYH WKDW WKH UHFRUG FOHDUO\ UHIXWHV WKHVH     LQVSHFWLRQlRIWKHSODLQWLIIjVKRWHOFLWHGKLPIRUYLRODWLRQV
UXOLQJVE\WKHGLVWULFWFRXUW                                            DQG JDYH KLP RQO\ D VKRUW WLPH WR PDNH UHSDLUV IRRWQRWH
1RV          +DPDGHWDOY:RRGFUHVW                  +DPDGHWDOY:RRGFUHVW            1RV
                                    &RQGR$VVjQHWDO                       &RQGR$VVjQHWDO

RPLWWHG7KHGLVVHQWUHDFKHVWKHFRQWUDU\FRQFOXVLRQRQO\E\          LWVGLVFUHWLRQ%HJDODY31&%DQN2KLR1DWjO$VVjQ
UHYLHZLQJWKHHYLGHQFHDQGGUDZLQJLQIHUHQFHVLQWKHOLJKW              )GWK&LUm$GLVWULFWFRXUWDEXVHVLWV
PRVWIDYRUDEOHWRWKHPRYDQWV7KLVVWUDWHJ\LVLPSHUPLVVLEOH          GLVFUHWLRQ ZKHQ LW DSSOLHV WKH LQFRUUHFW OHJDO VWDQGDUG
LQFRQVLGHULQJZKHWKHUDSDUW\LVHQWLWOHGWRMXGJPHQWDVD             PLVDSSOLHVWKHFRUUHFWOHJDOVWDQGDUGRUUHOLHVXSRQFOHDUO\
PDWWHU RI ODZ XQGHU 5XOH   'LDPRQG  )G DW        HUURQHRXVILQGLQJVRIIDFWl6FKHQNY&LW\RI+XGVRQ
KROGLQJWKDWWKHHYLGHQFHPXVWEHYLHZHGmLQWKHOLJKWPRVW            )GWK&LU
IDYRUDEOHWRWKHQRQPRYDQWlHPSKDVLVDGGHG
                                                                           7KH GLVWULFW FRXUW LQ WKLV FDVH JDYH WKUHH UHDVRQV IRU LWV
  7KH GHIHQGDQWV KRZHYHU XUJH XV WR DIILUP WKH GLVWULFW       UHIXVDOWRDOORZWKHDPHQGPHQW)LUVWLWREVHUYHGWKDWmWKH
FRXUWjVMXGJPHQWRQWKHDOWHUQDWLYHUDWLRQDOHWKDWsR\HOODDQG          WLPLQJRI3ODLQWLIIVjUHTXHVWLQWKLVFDVHLVVLJQLILFDQWDVLW
WKH +DPDGV GLG QRW SURGXFH DQ\ mHYLGHQFH RI OHJDOO\             ZDVPDGHDIWHUGLVFRYHU\KDVFORVHGDIWHUWKHGHDGOLQHIRU
FRJQL]DEOH LQMXULHVl  %XW LI WKH MXU\ GHWHUPLQHV WKDW WKH     GLVSRVLWLYH PRWLRQV KDV SDVVHG DQG RQO\ D PRQWK EHIRUH
GHIHQGDQWVYLRODWHGWKH)DLU+RXVLQJ$FWWKHQsR\HOODDQGWKH          WULDOl  %XW WKH UHFRUG GRHV QRW UHIOHFW WKDW DQ\ VFKHGXOLQJ
+DPDGV QHHG WR SURYH RQO\ WKDW WKH\ mVXIIHUHG D QRQ           RUGHUZDVHYHUHQWHUHG7KHIDFWXDOILQGLQJVWKDWGLVFRYHU\
TXDQWLILDEOHLQMXU\DWWKHKDQGVRI>WKH@GHIHQGDQWV>WR@MXVWLI\       KDGFORVHGDQGWKDWWKHGHDGOLQHIRUGLVSRVLWLYHPRWLRQVKDG
>DQ@DZDUGRIQRPLQDOGDPDJHVl+HLJKWV&RPW\&RQJY                SDVVHGZHUHWKHUHIRUHFOHDUO\HUURQHRXV
+LOOWRS 5HDOW\ ,QF  )G   WK &LU 
%HFDXVH sR\HOOD DQG WKH +DPDGV LQWURGXFHG VXIILFLHQW                6HFRQGWKHGLVWULFWFRXUWQRWHGWKDWm3ODLQWLII>V@FRXOGKDYH
HYLGHQFH WR FUHDWH D MXU\ TXHVWLRQ DV WR ZKHWKHU WKH           DGGHGWKHDPHQGPHQWVZKHQWKH\ILOHGWKH )LUVW$PHQGHG
GHIHQGDQWVYLRODWHGWKHSODLQWLIIVjUHWDOLDWLRQFODLPV          &RPSODLQWWKHPDLQSXUSRVHRIZKLFKZDVWRDGGDUHWDOLDWLRQ
VKRXOG KDYH EHHQ VXEPLWWHG WR WKH MXU\ ZKLFK FRXOG KDYH       FODLPl%XWsR\HOODDQGWKH+DPDGVDUJXHGERWKEHORZDQG
DZDUGHGQRPLQDOGDPDJHVDWDPLQLPXPXSRQDILQGLQJLQ                RQDSSHDOWKDWWKHSXUSRVHRIWKHVHFRQGDPHQGPHQWZDVWR
WKHLUIDYRU                                                            LQFOXGHDFWLRQVXQGHUWDNHQE\WKHGHIHQGDQWVDIWHUWKHILUVW
                                                                        DPHQGHGFRPSODLQWKDGEHHQILOHG:HWKHUHIRUHFRQFOXGH
( 7KH GLVWULFW FRXUW VKRXOG UHFRQVLGHU WKH PRWLRQ RI            WKDWWKLVUDWLRQDOHIRUGHQ\LQJWKHSODLQWLIIVjPRWLRQWRILOHD
   sR\HOODDQGWKH+DPDGVWRDPHQGWKHLUFRPSODLQW                      VHFRQGDPHQGHGFRPSODLQWLVXQSHUVXDVLYH
   2Q$XJXVWsR\HOODDQGWKH+DPDGVVRXJKWOHDYH                 7KH GLVWULFW FRXUWjV ILQDO FRQVLGHUDWLRQ ZDV WKDW WKH
WRILOHDVHFRQGDPHQGPHQWWRWKHLUFRPSODLQW7KHSULQFLSDO           DOOHJDWLRQVFRQWDLQHGLQWKHVHFRQGDPHQGPHQWZHUHYDJXH
DOOHJDWLRQ RI WKH SURSRVHG VHFRQG DPHQGPHQW ZDV WKDW             DQG ZRXOG WKHUHIRUH XQGXO\ SUHMXGLFH WKH GHIHQGDQWV
m>R@WKHU UHWDOLDWRU\ DFWV HQJDJHG LQ E\ 'HIHQGDQWV DQG           $OWKRXJKWKLVLVWKHW\SHRIGLVFUHWLRQDU\MXGJPHQWWKDWFRXOG
GLUHFWHG DW 3ODLQWLIIV DIWHU WKH ILOLQJ RI WKLV ODZVXLW DOVR   MXVWLI\DUHIXVDOWRDOORZOHDYHWRDPHQG)RPDQY'DYLV
FRQVWLWXWHFRHUFLRQl/HDYHWRILOHWKLVVHFRQGDPHQGHG         86ZHKDYHQRZD\WRGHWHUPLQHWKHH[WHQW
FRPSODLQWZDVGHQLHGE\WKHGLVWULFWFRXUW                             WR ZKLFK WKH GLVWULFW FRXUWjV UXOLQJ ZDV LQIOXHQFHG E\ WKH
                                                                        FOHDUO\HUURQHRXVIDFWXDOILQGLQJVGLVFXVVHGDERYH%HFDXVH
  5XOHDRIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUHSURYLGHV           WKHGLVWULFWFRXUWEDVHGLWVGHFLVLRQLQSDUWRQWKHVHHUURQHRXV
WKDWOHDYHWRDPHQGDFRPSODLQWmVKDOOEHIUHHO\JLYHQZKHQ             IDFWXDOILQGLQJVZHUHYHUVHWKHFRXUWjVGHQLDORIsR\HOODjVDQG
MXVWLFHVRUHTXLUHVl7KLVFRXUWZLOOUHYHUVHWKHGHQLDORID          WKH+DPDGVjPRWLRQIRUOHDYHWRDPHQGWKHLUFRPSODLQWDQG
PRWLRQIRUOHDYHWRDPHQGRQO\LIWKHGLVWULFWFRXUWKDVDEXVHG         UHPDQGWKHPDWWHUIRUIXUWKHUFRQVLGHUDWLRQ
1RV           +DPDGHWDOY:RRGFUHVW                  +DPDGHWDOY:RRGFUHVW          1RV
                                     &RQGR$VVjQHWDO                       &RQGR$VVjQHWDO

) (YLGHQWLDU\LVVXHVDWWULDODUHHQWUXVWHGWRWKHVRXQG                UHTXLUHUHFXVDOXQGHU86&:HWKHUHIRUHHYDOXDWH
   GLVFUHWLRQRIWKHGLVWULFWFRXUW                                      WKHLUUHTXHVWE\FRQVLGHULQJWKHIROORZLQJWKUHHIDFWRUV
  'XULQJWKHWULDORIWKHLUUHWDOLDWLRQFODLPVsR\HOODDQGWKH             ZKHWKHU WKH RULJLQDO MXGJH ZRXOG UHDVRQDEO\ EH
+DPDGVVRXJKWRQVHYHUDORFFDVLRQVWRH[DPLQHZLWQHVVHVRU                 H[SHFWHGXSRQUHPDQGWRKDYHVXEVWDQWLDOGLIILFXOW\LQ
LQWURGXFH HYLGHQFH FRQFHUQLQJ WKH GHIHQGDQWVj ILQDQFLDO               SXWWLQJ RXW RI KLV RU KHU PLQG SUHYLRXVO\>@H[SUHVVHG
UHVRXUFHVDQGDVVHWVEXWWKHGLVWULFWFRXUWUHIXVHGWRSHUPLW             YLHZVRUILQGLQJVGHWHUPLQHGWREHHUURQHRXVRUEDVHGRQ
WKHP WR GR VR  sR\HOOD DQG WKH +DPDGV DVN WKLV FRXUW WR       HYLGHQFHWKDWPXVWEHUHMHFWHGZKHWKHUUHDVVLJQPHQW
LQVWUXFW WKH GLVWULFW FRXUW WR DOORZ VXFK H[DPLQDWLRQ DQG          LVDGYLVDEOHWRSUHVHUYHWKHDSSHDUDQFH RI MXVWLFHDQG
HYLGHQFH                                                                   ZKHWKHU UHDVVLJQPHQW ZRXOG HQWDLO ZDVWH DQG
                                                                           GXSOLFDWLRQRXWRISURSRUWLRQWRDQ\JDLQLQSUHVHUYLQJ
  (YLGHQWLDU\GHFLVLRQVDUHHQWUXVWHGWRWKHVRXQGGLVFUHWLRQ              WKHDSSHDUDQFHRIIDLUQHVV
RIWKHWULDOFRXUW*HQ(OHF&RYsRLQHU86
:HDUHWKHUHIRUHUHOXFWDQWWRPLFURPDQDJHKRZDQG               %URZQY&URZOH\)GWK&LU
ZKHQFHUWDLQW\SHVRIHYLGHQFHVKRXOGEHLQWURGXFHGDWWULDO
%HFDXVHsR\HOODDQGWKH+DPDGVLPSO\WKDWWKHGLVWULFWFRXUW               sR\HOODDQGWKH+DPDGVDUJXHWKDWWKHFODLPVDQGGHIHQVHV
ZDV ODERULQJ XQGHU DQ HUURQHRXV XQGHUVWDQGLQJ RI WKH              LQ WKLV FDVH DUH XQFRPSOLFDWHG VR WKDW D QHZ MXGJH FRXOG
VWDQGDUGIRUSXQLWLYHGDPDJHVXQGHUWKH)DLU+RXVLQJ$FW                IDPLOLDUL]HKLPVHOIRUKHUVHOIZLWKWKHFDVHTXLFNO\DQGHDVLO\
KRZHYHUZHVLPSO\QRWHWKDWWKHSURSHUVWDQGDUGmLVZKHWKHU             7KLVDUJXPHQWKRZHYHULVUHIXWHGQRWRQO\E\WKHH[WHQVLYH
WKHGHIHQGDQWVDFWHGZLWKPDOLFHRUUHFNOHVVLQGLIIHUHQFHWKDW           MRLQW DSSHQGL[ DQG KXQGUHGV RI SDJHV RI EULHIV ILOHG RQ
WKHLUDFWLRQVPLJKWYLRODWHDIHGHUDOVWDWXWHRIZKLFKWKH\ZHUH         DSSHDOEXWDOVRE\WKHSODLQWLIIVjRZQVWDWHPHQWLQVXSSRUWRI
DZDUHl3UHIHUUHG3URSV,QFY,QGLDQ5LYHU(VWDWHV,QF           RUDODUJXPHQWWKDWm>W@KLVDSSHDOLQYROYHVDIXOO\>@GHYHORSHG
 )G   WK &LU LQWHUQDO TXRWDWLRQ PDUNV           DQGFRPSOH[IDFWXDOUHFRUGl&RPPHQWVPDGHE\WKHGLVWULFW
RPLWWHGDGRSWLQJWKLVVWDQGDUGIRUSXQLWLYHGDPDJHVLQ)DLU            FRXUWLQWKLVFDVHPRUHRYHUGRQRWXQGHUPLQHWKHDSSHDUDQFH
+RXVLQJ$FWFDVHVFHUWGHQLHG6&W                RIMXVWLFH,QVXSSRUWRIWKHLUDUJXPHQWWKDWWKHGLVWULFWFRXUW
                                                                         ZDVRUDSSHDUHGWREHVZD\HGE\KLVSHUVRQDOYLHZVUDWKHU
* 7KLV FDVH VKRXOG QRW EH UHDVVLJQHG WR D GLIIHUHQW             WKDQ E\ WKH ODZ sR\HOOD DQG WKH +DPDGV FLWH VHYHUDO
   MXGJHXSRQUHPDQG                                                     FRPPHQWVWKDWWKHGLVWULFWMXGJHPDGHGXULQJWKHFRXUVHRI
                                                                         WKHSURFHHGLQJV
  sR\HOODjVDQGWKH+DPDGVjILQDOUHTXHVWLVWKDWZHUHDVVLJQ
WKHLUFDVHWRDGLIIHUHQWMXGJHXSRQUHPDQG$OWKRXJKZH                   $VDQH[DPSOHRIWKHMXGJHjVDOOHJHGSUHGLOHFWLRQDJDLQVW
KDYHWKHDXWKRULW\SXUVXDQWWR86&WRUHPDQGWKH            WKHLUFODLPVWKH\TXRWHKLVUHPDUNWKDWLQFRQWUDVWWRUDFH
FDVH WR D GLIIHUHQW GLVWULFW MXGJH mWKLV LV DQ H[WUDRUGLQDU\   GLVFULPLQDWLRQmZHjUHQRWLRQDOO\LQDGLIIHUHQWDUHDZKHQ\RX
SRZHUDQGVKRXOGUDUHO\EHLQYRNHG6XFKUHDVVLJQPHQWV            EHJLQWRWDONDERXWlGLVFULPLQDWLRQRQWKHEDVLVRIIDPLOLDO
VKRXOGEHPDGHLQIUHTXHQWO\DQGZLWKWKHJUHDWHVWUHOXFWDQFHl           VWDWXV  %XW WKH GLVWULFW MXGJH FRPSOHWHG WKH UHPDUN E\
$UPFR,QFY8QLWHG6WHHOZRUNHUVRI$P)G             UHFRJQL]LQJWKDWm&RQJUHVVKDVFRPPDQGHGWKDW>D@QGLI
WK &LU  DOWHUDWLRQ LQ RULJLQDO  sR\HOOD DQG WKH      WKH\ KDYH ZH EHWWHU HQIRUFH WKH ODZl  sR\HOOD DQG WKH
+DPDGVKDYHQRWVXEPLWWHGSURRIRISHUVRQDOELDVWKDWZRXOG              +DPDGV DOVR TXRWH WKH GLVWULFW FRXUWjV FRPPHQW D IHZ
                                                                         PRPHQWVODWHUWKDWm>P@D\EHWKDWjVWKHODZEXW,jPVD\LQJ
1RV          +DPDGHWDOY:RRGFUHVW                +DPDGHWDOY:RRGFUHVW          1RV
                                    &RQGR$VVjQHWDO                     &RQGR$VVjQHWDO

,GRQjWNQRZWKDWVKRXOGEHWKHODZl7KHYHU\QH[WVHQWHQFH                                BBBBBBBBBBBBBBB
XWWHUHG E\ WKH GLVWULFW MXGJH KRZHYHU ZDV m%XW ,jP YHU\
PXFKFRQYLQFHGDERXWWKHIDFWWKDW,GRQjWPDNHWKHODZVVR                                     ',66(17
,ZHDUHWU\LQJWRILQGRXWZKDWODZVDUHWKHUHDQGZKDWODZV                               BBBBBBBBBBBBBBB
, PXVW HQIRUFHl  7KXV ZKHQ FRQVLGHUHG LQ FRQWH[W WKHVH
FRPPHQWV GR QRW GHPRQVWUDWH WKDW WKH GLVWULFW MXGJH ZDV          '$9,' $ 1(/621 &LUFXLW sXGJH GLVVHQWLQJ  ,I WKH
SDUWLDORUWKDWKHFRXOGQRWSXWDVLGHKLVSHUVRQDOYLHZV            SODLQWLIIV VXIIHUHG DQ\ SDOSDEOH LQMXU\ LQ ZKDW WKH GLVWULFW
                                                                      FRXUWDFFXUDWHO\FKDUDFWHUL]HGDVWKHLUmQHLJKERUKRRGILJKWl
  7KHGLVWULFWFRXUWFOHDUO\HUUHGLQLWVDSSOLFDWLRQRIWKHODZ      LWGRHVQRWVHHPWRPHWKDWWKHLQMXU\ZDVWKHUHVXOWRIDQ\
RIVWDQGLQJXQGHUWKH)DLU+RXVLQJ$FWWRWKHIDFWVRIWKLV           YLRODWLRQRIWKH)DLU+RXVLQJ$FW2QWKHUHFRUGEHIRUHXV,
FDVH  1HLWKHU WKH FRPPHQWV QRU WKH FRQGXFW RI WKH MXGJH   EHOLHYH WKDW WKH GHIHQGDQWV ZHUH HQWLWOHG WR VXPPDU\
KRZHYHUHVWDEOLVKHVWKDWKHZRXOGQRWEHDEOHWRGHFLGHIDLUO\       MXGJPHQWRQWKHmIDPLOLDOVWDWXVlGLVFULPLQDWLRQFODLPVMXVW
WKLVIDFWXDOO\FRPSOLFDWHGFDVHXSRQUHPDQG:HWKHUHIRUH            DV,EHOLHYHWKH\ZHUHHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ
GHFOLQHWRUHDVVLJQWKLVFDVHWRDGLIIHUHQWGLVWULFWMXGJH          RQWKHUHWDOLDWLRQFODLPV$FFRUGLQJO\DQGEHFDXVH,DPQRW
                                                                      SHUVXDGHG WKDW WKH GLVWULFW FRXUW DEXVHG LWV GLVFUHWLRQ LQ
                    ,,,&21&/86,21                                GHQ\LQJOHDYHWRDPHQGWKHFRPSODLQW,ZRXOGDIILUPWKH
                                                                      GLVWULFWFRXUWjVGLVSRVLWLRQLQDOOUHVSHFWV
  )RUDOORIWKHUHDVRQVVHWIRUWKDERYHZH5(9(56(WKH
MXGJPHQW RI WKH GLVWULFW FRXUW DQG 5(0$1' WKH FDVH IRU                                        ,
IXUWKHUSURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ
                                                                        ,WPD\EHKHOSIXOWRWDNHDEULHIORRNDWWKHIDFWXDOFRQWH[W
                                                                      LQZKLFKWKLVODZVXLWDURVH7KHRSHQLQJVDOYRRIWKHEDWWOH
                                                                      VHHPV  WR KDYH EHHQ ILUHG LQ 6HSWHPEHU RI  ZKHQ
                                                                      SODLQWLII 7HUUL +DPDG VHQW D OHWWHU WR PHPEHUV RI WKH
                                                                      FRQGRPLQLXP DVVRFLDWLRQ GHWDLOLQJ D VHULHV RI FRPSODLQWV
                                                                      DJDLQVWWKHDVVRFLDWLRQjVERDUGRIGLUHFWRUV
                                                                        6LJQLQJ KHU OHWWHU DV m2ZQHU  DQG 'LUHFWRU 0RQURH
                                                                      &RXQW\&RPPLVVLRQRQ$JLQJl0UV+DPDGFRPSODLQHGWKDW
                                                                      WKHERDUGKDGDWWHPSWHGWRSUHYHQWDQHOGHUO\FRRZQHUDQ
                                                                      \HDUROG ZLGRZ DFFRUGLQJ WR VXEVHTXHQW QHZVSDSHU
                                                                      DFFRXQWVIURPDUUDQJLQJIRUEXVVHUYLFHDWWKHGRRURIKHU
                                                                      EXLOGLQJ  0UV +DPDGjV OHWWHU VDLG WKDW WKH ERDUG KDG
                                                                      mWKUHDWHQHG/DNH(ULH7UDQVLWZLWKDODZVXLWLIWKH\HQWHUWKH
                                                                      GULYHWRSLFNXSWKHFRRZQHUl
                                                                        7KLVOLWLJDWLRQWKUHDWZDVWKHSURGXFWRIDERDUGPHHWLQJ
                                                                      KHOGZLWKRXWWKHNQRZOHGJHRIDVVRFLDWLRQPHPEHUVDQGLQ
                                                                      YLRODWLRQ RI WKH DVVRFLDWLRQjV E\ODZV DFFRUGLQJ WR 0UV
1RV            +DPDGHWDOY:RRGFUHVW                    +DPDGHWDOY:RRGFUHVW          1RV
                                      &RQGR$VVjQHWDO                         &RQGR$VVjQHWDO

+DPDG'HFLVLRQVE\WKHERDUGWRVSHQGPRQH\RQFHUWDLQ                    FRQGRVl  6KH ODWHU ZURWH WR D PHPEHU RI WKH 0LFKLJDQ
SK\VLFDO LPSURYHPHQWV ZHUH DOVR VDLG WR KDYH EHHQ WDNHQ             OHJLVODWXUH IRU KHOS mUHJDUGLQJ WKH EXV VLWXDWLRQ DW
ZLWKRXW WKH NQRZOHGJH DQG DSSURYDO RI WKH DVVRFLDWLRQjV              :RRGFUHVWl
PHPEHUV  )LQDOO\ 0UV +DPDG ZURWH mDJDLQ ZLWKRXW RXU
NQRZOHGJHSUHSDUDWLRQVDUHEHLQJPDGHWRWXUQWKLVFRPSOH[                    ,Q $SULO RI  WKH SUHVLGHQW RI WKH ERDUG RI WKH
LQWRDFRPSOH[l$OWKRXJKWKHUXOHOLPLWLQJIDPLOLHVZLWK              FRQGRPLQLXPDVVRFLDWLRQZURWHWRWKHFRXQW\FRPPLVVLRQHUV
FKLOGUHQ WR ILUVWIORRU XQLWV KDG EHHQ LQ HIIHFW IRU RYHU D       WRSURWHVWWKHDFWLRQVRIWKHFRPPLVVLRQRQDJLQJZLWKUHVSHFW
GHFDGH0UV+DPDGPDGHQRPHQWLRQRIWKHILUVWIORRUUXOH                  WRWKHEXVLQJLVVXH7KHOHWWHUSRVHGWKHTXHVWLRQm:K\GLG
LQKHUOHWWHU                                                            WKH 0RQURH &RXQW\ &RPPLVVLRQ RQ $JLQJ FKDPSLRQ WKH
                                                                            FDXVHDQGFRQFHUQRIRQHUHVLGHQWZKLOHLJQRULQJWKHFRQFHUQV
   0UV +DPDG DOVR VHQW D OHWWHU WR WKH HGLWRU RI D ORFDO        RIWKHUHPDLQLQJVHQLRUUHVLGHQWV"l
QHZVSDSHUGHVFULELQJWKHERDUGjVUHIXVDOWRDOORZEXVHVRQ
:RRGFUHVWjVGULYHZD\DVmGLVJXVWLQJlmGLVUHVSHFWIXOlDQG                    ,Q0D\RISODLQWLII.D\ODsR\HOODGLVWULEXWHGDOHWWHU
mLOOHJDOl7KHQHZVSDSHUGHFOLQHGWRSXEOLVKWKHOHWWHUEXW               WR RWKHU :RRGFUHVW RZQHUV mWR PDNH VXUH DOO RZQHUV DUH
UDQDIHDWXUHDUWLFOHRQWKHmEDWWOHRYHUEXVHVl0UV+DPDG               DZDUH RI WKH UHFHQW FRQGXFW >RI@ ERDUG PHPEHUV >DQG WKH
ODWHUWHVWLILHGWKDWVKHKDGVRXJKWSXEOLFLW\RIWKHEXVLQJLVVXH           SURSHUW\PDQDJHU@l7KHOHWWHUEHJDQZLWKDUHIHUHQFHWR
LQ DQ HIIRUW WR mH[SRVH WKH ERDUG DQG HPEDUUDVV WKHP               WKH mUHIHUUDO IHHl WKDW 0UV +DPDG KDG UHSRUWHG WR WKH
SXEOLFO\l                                                                  0LFKLJDQ 'HSDUWPHQW RI &RQVXPHU DQG ,QGXVWU\ 6HUYLFHV
                                                                            DQG WKH OHWWHU ZHQW RQ WR UHFRPPHQG WKDW RWKHU RZQHUV
   ,Q 2FWREHU 0UV +DPDG ILOHG D FRPSODLQW ZLWK WKH                FRQWDFWWKHLUWLWOHFRPSDQLHVWRGHWHUPLQHZKHWKHUVLPLODUIHHV
0LFKLJDQ 'HSDUWPHQW RI &RQVXPHU DQG ,QGXVWU\ 6HUYLFHV                 KDGEHHQSDLGDWWKHLUFORVLQJV0VsR\HOODWKHQFRPSODLQHG
DOOHJLQJWKDW:RRGFUHVWjVSURSHUW\PDQDJHUKDGUHFHLYHGDQ                  WKDW VKH ZDV WUHDWHG UXGHO\ ZKHQ VKH DVNHG WKH SURSHUW\
LOOHJDO mUHIHUUDO IHHl IURP D UHDO HVWDWH EURNHU  7KH             PDQDJHUDERXWWKHE\ODZOLPLWLQJFKLOGUHQWRILUVWIORRUXQLWV
'HSDUWPHQWHYHQWXDOO\FRQFOXGHGWKDWWKHDOOHJDWLRQFRXOGQRW               0VsR\HOODjVOHWWHUVXJJHVWVWKDWVKHGLGQRWLQWHQGDWWKDW
EHVXEVWDQWLDWHG                                                           WLPHWRVHHNSHUPLVVLRQWRKDYHKHUQHSKHZOLYHZLWKKHU
                                                                            +HURQO\UHDVRQIRUZDQWLQJWRVHHWKHE\ODZKHUOHWWHUVD\V
   7KHQH[WPRQWKLQKHUFDSDFLW\DVGLUHFWRURIWKHFRXQW\                ZDV WR PDNH D FRS\ WR VKRZ WR KHU QHSKHZ mVR KH ZRXOG
FRPPLVVLRQ RQ DJLQJ 0UV +DPDG FRPSODLQHG WR WKH                    NQRZ LW ZDVQjW WKDW VKH GLG QRW ZDQW KLP EXW VKH KDG WR
0LFKLJDQ&LYLO5LJKWV&RPPLVVLRQRIVHYHUDOm)DLU+RXVLQJ                   KRQRUWKHUXOHVl
,VVXHVl DW :RRGFUHVW  7KHVH LQFOXGHG m>L@QWLPLGDWLRQ DQG
KDUDVVPHQWlRIWKHHOGHUO\ZLGRZZKRVRXJKWEXVVHUYLFHDW                    7KHERDUGDQGSURSHUW\PDQDJHUGLVWULEXWHGDOHWWHURIWKHLU
KHUGRRUDQGWKHKROGLQJRIERDUGPHHWLQJVZLWKRXWQRWLFHWR               RZQUHEXWWLQJWKHSRLQWVUDLVHGLQ0VsR\HOODjVOHWWHU7KH
WKHUHVLGHQWV0UV+DPDGDOVRFRPSODLQHGIRUWKHILUVWWLPH             ERDUGDOVRFLUFXODWHGDSRUWLRQRIWKHPLQXWHVIURPDERDUG
WKDW m>I@DPLOLHV ZLWK FKLOGUHQ DUH OLPLWHG WR ILUVW IORRU           PHHWLQJRI0D\ZKHUH0VsR\HOODKDGDVNHGERDUG
                                                                            PHPEHUVWRVLJQDGRFXPHQWVWDWLQJWKDWKHUQHSKHZFRXOG
                                                                            QRWPRYHLQZLWKKHU$FFRUGLQJWRWKHPLQXWHVWKHPHHWLQJ
    
     ,Q D OHQJWK\ IROORZXS DUWLFOH RQ WKH EXV GLVSXWH WKH QHZVSDSHU
                                                                            LQFOXGHG m>P@XFK KHDWHG GLVFXVVLRQ    FRQFHUQLQJ >0V
TXRWHG 0UV +DPDG DV VD\LQJ WKDW WKH ERDUGjV DFWLRQ m LV ZURQJ DQG LW      sR\HOODjV@OHWWHUDQGLWVFRQWHQWVWKDWLQFOXGHGOLDEOH>VLF@DQG
QHHGV WR EH VWRSSHG :HjYH HYHQ FDOOHG IRU D SROLFH HVFRUW IRU WKH EXV LI   VODQGHURXVUHPDUNVl,WLVLPSRUWDQWWRQRWHWKDWWKHmKHDWHG
ZH QHHG RQHl
1RV          +DPDGHWDOY:RRGFUHVW                +DPDGHWDOY:RRGFUHVW             1RV
                                    &RQGR$VVjQHWDO                     &RQGR$VVjQHWDO

GLVFXVVLRQlGLGQRWFRQFHUQWKHILUVWIORRUUXOHRUWKHERDUGjV       ZLWKLQWKHLUFRPPXQLW\GHSHQGVRQmWKHSUHVHQFHRIDEVHQFH
HQIRUFHPHQWRILW                                                    RIDµGLVWLQFWDQGSDOSDEOHLQMXU\jl*ODGVWRQH86DW
                                                                      TXRWLQJ:DUWK86DW7KH&RXUWQRWHGWKDW
  3ULRU WR WKH ILOLQJ RI WKHLU ODZVXLW WR VXPPDUL]H 0UV
+DPDGDQG0VsR\HOODZHUHERWKHPEURLOHGLQHPRWLRQDOO\               m>D@µQHLJKERUKRRGjZKRVHUDFLDOFRPSRVLWLRQDOOHJHGO\
FKDUJHGGLVSXWHVZLWKWKHERDUG0UV+DPDGjVFRPSODLQWV               LV EHLQJ PDQLSXODWHG PD\ EH VR H[WHQVLYH LQ DUHD VR
DJDLQVWWKHERDUGUHODWHGSULPDULO\WRWKHEXVLQJLVVXHVKH            KHDYLO\RUHYHQVRVSDUVHO\SRSXODWHGRUVRODFNLQJLQ
UDLVHG WKH LVVXH RI GLVFULPLQDWLRQ DJDLQVW IDPLOLHV ZLWK         VKDUHG VRFLDO DQG FRPPHUFLDO LQWHUFRXUVH WKDW WKHUH
FKLOGUHQRQO\LQFLGHQWDOO\0VsR\HOODjVFRPSODLQWVIRFXVHG           ZRXOGEHQRDFWXDOLQMXU\WRDSDUWLFXODUUHVLGHQWl,G
RQKHUWUHDWPHQWE\WKHSURSHUW\PDQDJHUDQGERDUGPHPEHUV
QRWRQKHULQDELOLW\WRKDYHKHUQHSKHZOLYHZLWKKHU,WZDV        7KLV REVHUYDWLRQ FDQQRW EH VTXDUHG ZLWK WKH QRWLRQ WKDW
DJDLQVWWKLVEDFNJURXQGWKDWWKH+DPDGVDQG0VsR\HOODILOHG         LQMXU\LQIDFWLVQHFHVVDULO\VXIIHUHGE\HYHU\UHVLGHQWRID
WKHLUODZVXLWXQGHUWKH+RXVLQJ$FWLQsXQHRI                  FRPPXQLW\ZKHUHGLVFULPLQDWLRQLVWDNLQJSODFH
                                ,,                                       *ODGVWRQHDQG7UDIILFDQWHLQYROYHGUDFLDOGLVFULPLQDWLRQ
                                                                      PRUHRYHU DQGWKH6XSUHPH&RXUWH[SUHVVO\UHOLHGRQmWKH
  7KH6XSUHPH&RXUWKDVPDGHLWFOHDUWKDWVWDQGLQJWRVXH            LPSRUWDQFHRIWKHµEHQHILWVIURPLQWHUUDFLDODVVRFLDWLRQVjlLQ
XQGHU WKH +RXVLQJ $FW LV DV EURDG DV $UWLFOH ,,, RI WKH    FRQFOXGLQJ WKDW WKH FKDOOHQJHG GLVFULPLQDWRU\ SUDFWLFHV
&RQVWLWXWLRQSHUPLWV6HH*ODGVWRQH5HDOWRUVY%HOOZRRG           KDUPHGUHVLGHQWVZKRZHUHQRWWKHWDUJHWVRIGLVFULPLQDWLRQ
867UDIILFDQWHY0HWURSROLWDQ/LIH,QV        *ODGVWRQH86DWTXRWLQJ7UDIILFDQWH86DW
&R86%XWRIFRXUVHLWFDQEHQR          :KHWKHUWKHEHQHILWVRIDOORZLQJFKLOGUHQRQHYHU\
EURDGHU/LNHDQ\RWKHUSODLQWLIIDSODLQWLIIVXLQJXQGHUWKH       IORRU RI D FRQGRPLQLXP FRPSOH[ DUH DV LPSRUWDQW DV WKH
+RXVLQJ$FWPXVWVDWLVI\WKHFRQVWLWXWLRQDOUHTXLUHPHQWRI            EHQHILWV RI UDFLDO LQWHJUDWLRQ UHPDLQV DQ RSHQ TXHVWLRQ ,
mLQMXU\LQIDFWlLHKHPXVWKDYHVXIIHUHGmµDGLVWLQFWDQG        EHOLHYH
SDOSDEOHLQMXU\WRKLPVHOIjWKDWLVOLNHO\WREHUHGUHVVHGLI
WKHUHTXHVWHGUHOLHILVJUDQWHGl*ODGVWRQH86DW           *LYHQWKHVHFRQVLGHUDWLRQVLWLVDSSURSULDWHWRWDNHDFORVH
TXRWLQJ:DUWKY6HOGLQ86                  ORRN DW WKH SDUWLFXODU LQMXULHV WKH SODLQWLIIV FODLP WR KDYH
                                                                      VXIIHUHG  ,Q GRLQJ VR ZH QHHG WR GHWHUPLQH ZKHWKHU WKH
  ,DPQRWSHUVXDGHGWKDWLQMXU\LQIDFWQHFHVVDULO\UHVXOWHG         FODLPVDUHVXSSRUWHGE\IDFWVDFWXDOO\DOOHJHGLQWKHFRPSODLQW
IURPWKHSODLQWLIIVjKDYLQJUHVLGHGLQDFRQGRPLQLXPFRPSOH[          RUUHYHDOHGLQGLVFRYHU\
ZLWK D SUHVXPDEO\ LOOHJDO ILUVWIORRU UXOH  *ODGVWRQH DQG
7UDIILFDQWHGRHVWDEOLVKWKDWDUHVLGHQWRIDFRPPXQLW\QHHG            )LUVW WKH SODLQWLIIV DUJXH KHUH WKDW WKH FKDOOHQJHG UXOH
QRWEHDWDUJHWRILOOHJDOGLVFULPLQDWLRQLQRUGHUWREHLQMXUHG      GHSULYHGWKHPRImWKHEHQHILWVRIOLYLQJLQDQHQYLURQPHQW
E\LW6HH*ODGVWRQH86DW7UDIILFDQWH           LQWHJUDWHG ZLWK FKLOGUHQl  ,W LV WUXH WKDW KDUP RI WKLV W\SH
86DW$V,UHDGWKHVHFDVHVKRZHYHUWKH\GRQRW          PLJKWVDWLVI\WKHLQMXU\LQIDFWUHTXLUHPHQW1RZKHUHLQWKHLU
HVWDEOLVKWKDWHYHU\GLVFULPLQDWRU\SROLF\QHFHVVDULO\LQMXUHV        DPHQGHGFRPSODLQWKRZHYHUGRWKHSODLQWLIIVDOOHJHWKDWWKH\
HYHU\UHVLGHQWRIWKHFRPPXQLW\ZKHUHWKHSROLF\H[LVWV              VXIIHUHG VXFK KDUP  7KH\ DOOHJH RQO\ mHFRQRPLF ORVVHV
                                                                      KXPLOLDWLRQHPEDUUDVVPHQWPHQWDODQJXLVKLQFRQYHQLHQFH
  )RURQHWKLQJWKH6XSUHPH&RXUWLQ*ODGVWRQHH[SUHVVO\             DQJHUDQGWKHGHSULYDWLRQRIFLYLOULJKWVl/LNHZLVH0UDQG
UHFRJQL]HGWKDWUHVLGHQWVjVWDQGLQJWRSURWHVWGLVFULPLQDWLRQ         0UV+DPDGQHYHUWHVWLILHGWKDWWKH\ZHUHGHSULYHGRIVRFLDO
1RV          +DPDGHWDOY:RRGFUHVW                       +DPDGHWDOY:RRGFUHVW           1RV
                                    &RQGR$VVjQHWDO                            &RQGR$VVjQHWDO

UHODWLRQVEXVLQHVVDGYDQWDJHVRURWKHUEHQHILWVDWWULEXWDEOH            GRHVQRWVXSSRUWWKDWVSHFXODWLRQ0UV+DPDGWHVWLILHGWKDW
WR OLYLQJ LQ D FRPPXQLW\ ZLWK PRUH FKLOGUHQ  2QO\ 0V          WKH SRWHQWLDO EX\HUV ZKR KDG YLHZHG WKH FRQGRPLQLXP
sR\HOODKDVVWDWHGLQDQDIILGDYLWWKDW:RRGFUHVWjVE\ODZV              GHFLGHGQRWWRSXUFKDVHLWIRUUHDVRQVKDYLQJQRWKLQJWRGR
mSUHYHQWHG>KHU@IURPHQMR\LQJWKHVRFLDOEHQHILWVRIOLYLQJLQ           ZLWKFKLOGUHQmWKH\KDYHSHWVlm>W@KH\GRQjWZDQWDILUVW
D FRPPXQLW\ WKDW LQFOXGHV IDPLOLHVl  7KLV XQDGRUQHG DQG          IORRUXQLWlmWKH\jUHORRNLQJIRUOHVVVSDFHlRUWKH\mZHUHQjW
FRQFOXVRU\ VWDWHPHQW SUHVHQWV D FORVH FDOO EXW , DP QRW         UHDG\WREX\\HWl
SHUVXDGHGWKDWDQ\RIWKHSODLQWLIIVKDVDOOHJHGVXIILFLHQWIDFWV
WRVXSSRUWWKHFODLPRILQMXU\                                              )RXUWK 0V sR\HOOD FODLPV WKDW VKH ZDV GHSULYHG RI WKH
                                                                          RSSRUWXQLW\WROLYHZLWKKHUQHSKHZ,WLVWUXHWKDWWKH%RDUG
   6HFRQGWKHSODLQWLIIVFRQWHQGWKDWWKH\VXIIHUHGHPRWLRQDO            LQLWLDOO\GHQLHGSHUPLVVLRQIRU0VsR\HOODjVQHSKHZWROLYH
GLVWUHVVDQGLQGLJQLW\EHFDXVHRIWKHFKDOOHQJHGUXOH7KHUH             ZLWK KHU DQG DW KHU UHTXHVW VLJQHG D GRFXPHQW WR WKDW
LVWREHVXUHHYLGHQFHWKDWWKHSODLQWLIIVIHOWXQZHOFRPHDQG           HIIHFW%XW0VsR\HOODGLGQRWKDYHFXVWRG\RIKHUQHSKHZ
HYHQ KDUDVVHG GXULQJ WKHLU UHVLGHQF\ DW :RRGFUHVW  7KH           DW WKDW WLPH  :KHQ KH ZDV ILQDOO\ SODFHG LQ KHU FDUH WKH
SODLQWLIIVjGLVWUHVVLVFOHDUO\DWWULEXWDEOHWRWKHLUGLVSXWHVZLWK       QHSKHZLQIDFWFDPHWROLYHZLWK0VsR\HOODDW:RRGFUHVW
:RRGFUHVWjV ERDUG KRZHYHU DQG QRW WR HQIRUFHPHQW RI              7KHUHLVQRHYLGHQFHWKDWKHFRXOGKDYHOLYHGZLWKKLVDXQW
:RRGFUHVWjVILUVWIORRUUXOH7KH+DPDGVOLYHGDW:RRGFUHVW             VRRQHUKDGLWQRWEHHQIRUWKHERDUGjVGHQLDORISHUPLVVLRQ
IRU RYHU WZR \HDUV DQG KDG D FKLOG IRU DERXW  PRQWKV       ,Q VXP WKH UHFRUG GRHV QRW GHPRQVWUDWH WKDW WKH SODLQWLIIV
EHIRUHWKHLUUHODWLRQVKLSZLWKWKHERDUGEHFDPHVWUDLQHGDVD             VXIIHUHG DQ\ mGLVWLQFW DQG SDOSDEOHl LQMXU\ FDXVHG E\
UHVXOW RI 0UV +DPDGjV DGYRFDF\ RQ WKH EXVLQJ LVVXH              HQIRUFHPHQWRIWKHFKDOOHQJHGUXOH,ZRXOGDIILUPWKHGLVWULFW
6LPLODUO\LWZDVQRWHQIRUFHPHQWRIWKHILUVWIORRUUXOHWKDW            FRXUWjVVXPPDU\MXGJPHQWUXOLQJVRQWKDWEDVLV
FDXVHG0VsR\HOODjVGLVWUHVVKHUGLVFRPILWXUHVWHPPHGIURP
KHUOHWWHUZULWLQJEDWWOHZLWKWKHERDUGDQGIURPmJRVVLSDQG                )RU WKH VDPH UHDVRQ , ZRXOG DIILUP WKH GLVWULFW FRXUWjV
VODQGHUlDERXWKHUQHSKHZ$QGQRQHRIWKHSODLQWLIIVRIIHUHG            GHQLDORIWKHSODLQWLIIVjPRWLRQIRUDSUHOLPLQDU\LQMXQFWLRQ
DQ\HYLGHQFHRImVWLJPDWLFlKDUPIURPOLYLQJLQDFRPPXQLW\               $QGWKHUHDUHRWKHUUHDVRQVZK\WKHSODLQWLIIVDUHQRWHQWLWOHG
ZKHUHFKLOGUHQZHUHZHOFRPHRQO\LQJURXQGIORRUXQLWV                   WRLQMXQFWLYHUHOLHI,QDVHWWOHPHQWDJUHHPHQWZLWKWKH8QLWHG
                                                                          6WDWHV:RRGFUHVWKDVDJUHHGWRUHVFLQGWKHFKDOOHQJHGUXOH
  7KLUG WKH +DPDGV PDLQWDLQ WKDW WKH\ KDYH VXIIHUHG               7KHSODLQWLIIVjFODLPIRULQMXQFWLYHUHOLHILVWKXVPRRWLQVRIDU
LQFRQYHQLHQFH IURP OLYLQJ LQ D JURXQGIORRU FRQGRPLQLXP             DV LW UHODWHV WR mIDPLOLDO VWDWXVl GLVFULPLQDWLRQ  )RU WKH
DQG WKDW :RRGFUHVWjV UXOH KDV PDGH VHOOLQJ WKHLU                   UHDVRQVVHWIRUWK EHORZ,EHOLHYHWKDWWKHGHIHQGDQWVZHUH
FRQGRPLQLXP PRUH GLIILFXOW  %XW WKH +DPDGV FKRVH WKH
JURXQGIORRUFRQGRPLQLXPDIWHUEHLQJVKRZQWZRDYDLODEOH
WKLUGIORRUXQLWVZKLFKWKH\ZHUHIUHHWRSXUFKDVH$QGWKH                  
UXOH GRHV QRW SUHYHQW WKH +DPDGV IURP VHOOLQJ WKHLU                     7KH PDMRULW\ RSLQLRQ VWDWHV WKDW 0V sR\HOOD ZDV LQMXUHG LQVRIDU DV


FRQGRPLQLXPWRDQ\RQHWKH\FKRRVHLQFOXGLQJDIDPLO\ZLWK                VKH ZDV OLPLWHG LQ KHU DELOLW\ WR VHOO KHU WKLUGIORRU FRQGRPLQLXP   7KDW
                                                                          PLJKW ZHOO EH WKH FDVH EXW 0V sR\HOOD GLG QRW DOOHJH VXFK DQ LQMXU\ RU
FKLOGUHQ7KH+DPDGVVSHFXODWHWKDW:RRGFUHVWjVUXOHKDV                 RIIHU IDFWV WR SURYH LW
DIIHFWHG WKH PDUNHW IRU WKHLU FRQGRPLQLXP EXW WKH UHFRUG
                                                                               
                                                                                ,W VHHPV WR PH WKDW WKH FDVH RI *RUVNL Y 7UR\  )G  WK
                                                                          &LU  LV IDFWXDOO\ LQDSSRVLWH 8QOLNH WKH SODLQWLIIV LQ *RUVNL 0V
                                                                          sR\HOOD ZDV QRW HYLFWHG EHFDXVH RI KHU GHVLUH WR KDYH KHU QHSKHZ OLYH ZLWK
    
     0U +DPDG WHVWLILHG WKDW WKH EDE\ ZDV ERUQ LQ $XJXVW RI         KHU
1RV          +DPDGHWDOY:RRGFUHVW                 +DPDGHWDOY:RRGFUHVW         1RV
                                    &RQGR$VVjQHWDO                      &RQGR$VVjQHWDO

HQWLWOHG WR MXGJPHQW DV D PDWWHU RI ODZ RQ WKH UHWDOLDWLRQ   EHHQFRQFHUQHGZLWKJHQXLQHYLRODWLRQV,GRQRWWKLQNWKH\
LVVXHWKDWEHLQJVR,GRQRWEHOLHYHWKDWWKHSODLQWLIIVKDYH        FDQUHDVRQDEO\EHFRQVWUXHGDVUHWDOLDWRU\
DQ\ULJKWWRDQLQMXQFWLRQDJDLQVWUHWDOLDWLRQ
                                                                                                      ,9
                                ,,,
                                                                          7KH GLVWULFW FRXUW GLG QRW DEXVH LWV GLVFUHWLRQ LQ P\
  $VWRWKHGLVWULFWFRXUWjVJUDQWLQJRIMXGJPHQWDVDPDWWHU          RSLQLRQ E\ GHQ\LQJ WKH SODLQWLIIVj PRWLRQ WR DPHQG WKHLU
RIODZRQWKHSODLQWLIIVjUHWDOLDWLRQFODLPWKHKLVWRU\RIHYHQWV     FRPSODLQW7KHDPHQGPHQWZRXOGKDYHDGGHGJHQHUDOL]HG
GHVFULEHGDERYHVXJJHVWVWKDWWKHGHIHQGDQWVWRRNQRDFWLRQ            DOOHJDWLRQVWKDWWKHGHIHQGDQWVHQJDJHGLQm>R@WKHUUHWDOLDWRU\
DJDLQVWWKHSODLQWLIIVmRQDFFRXQWRIlWKHSODLQWLIIVjH[HUFLVH        DFWVlDIWHUWKHILOLQJRIWKHSODLQWLIIVjODZVXLW%\EURDGHQLQJ
RIWKHLUULJKWWRVXHXQGHUWKH+RXVLQJ$FW6HH86&            WKH VFRSH RI WKH FRPSODLQW ZLWKRXW JLYLQJ WKH GHIHQGDQWV
                                                                QRWLFHRIWKHVSHFLILFDFWVRIZKLFKWKH\ZHUHDFFXVHGWKH
                                                                       DPHQGPHQW PLJKW ZHOO KDYH SUHMXGLFHG WKH GHIHQGDQWV
   7KHmQHLJKERUKRRGILJKWlKDGEHHQLQSURJUHVVIRUPRQWKV           XQIDLUO\$QGWKHIDFWWKDWWKHPRWLRQWRDPHQGZDVPDGH
DIWHU DOO ZKHQ WKH GHIHQGDQWV o H[HUFLVLQJ WKHLU ULJKW WR    ODWHLQWKHSUHWULDOSURFHVVLQFUHDVHGWKDWGDQJHU
SHWLWLRQ IRU UHGUHVV RI JULHYDQFHV o  ZURWH WR WKH FRXQW\
FRPPLVVLRQHUV DERXW WKH ODZVXLW UHFHQWO\ ILOHG E\ WKH             7KH PDMRULW\ RSLQLRQ IDXOWV WKH GLVWULFW FRXUW IRU LWV
m'LUHFWRURI0RQURH&RXQW\&RPPLVVLRQRQ$JLQJl0UV                  FRPPHQW WKDW WKH PRWLRQ ZDV PDGH mDIWHU GLVFRYHU\ KDV
+DPDG  7KH GHIHQGDQWV FRPSODLQHG WKDW WKH ODZVXLW ZDV         FORVHGDIWHUWKHGHDGOLQHIRUGLVSRVLWLYHPRWLRQVKDVSDVVHG
FRQWUDU\WRWKHSXUSRVHRIWKHFRPPLVVLRQRQDJLQJDQGDVNHG           DQGRQO\DPRQWKEHIRUHWULDOl1RWZLWKVWDQGLQJWKHDEVHQFH
WKH FRXQW\ FRPPLVVLRQHUV WR mGR ZKDWHYHU >WKH\@ FDQ WR         RISHUWLQHQWGRFNHWHQWULHV,GRQRWYLHZWKDW FRPPHQWDV
HOLPLQDWHWKHVLWXDWLRQl7KHUHZDVDOVRHYLGHQFHDWWULDOWKDW       VXJJHVWLYHRIDQDEXVHRIGLVFUHWLRQ,GRQRWNQRZWKDWWKH
RQHRIWKHGHIHQGDQWVKDGVSRNHQZLWKWKHFKDLUPDQRIWKH              GLVWULFWFRXUWKDGQRWVHWLQIRUPDOGHDGOLQHVIRUGLVFRYHU\DQG
ERDUGRIFRXQW\FRPPLVVLRQHUVDERXWWKHODZVXLW                       GLVSRVLWLYHPRWLRQVDQGWKHJLVWRIWKHFRXUWjVVWDWHPHQWo
                                                                       WKDWLWZDVWRRODWHLQWKHJDPHWRDPHQGWKHFRPSODLQWoZDV
  7KHVHFRQWDFWVZLWKZKDWPD\EHFRQVLGHUHG0UV+DPDGjV              UHDVRQDEOH
HPSOR\HUKDUGO\FRQVWLWXWHGLOOHJDOUHWDOLDWLRQIRUDQH[HUFLVH
RIULJKWVXQGHUWKH+RXVLQJ$FW7KHFRQWDFWVKDGQRWKLQJWR                                         9
GRZLWKIDLUKRXVLQJULJKWVDV,VHHLWDQGHYHU\WKLQJWRGR
ZLWKWKHERDUGjVSHUFHSWLRQWKDW0UV+DPDGZDVVXEMHFWLQJ                ,ZRXOGDIILUPWKHGLVWULFWFRXUWjVUXOLQJVDFURVVWKHERDUG
WKH FRQGRPLQLXP DVVRFLDWLRQ WR XQIDLU KDUDVVPHQW DQG             0\FROOHDJXHVRQWKHSDQHOKDYLQJVHHQWKHPDWWHUGLIIHUHQWO\
H[SHQVH  ,Q DQ\ HYHQW WKH GHIHQGDQWV GLG QR PRUH WKDQ      ,UHVSHFWIXOO\GLVVHQW
LQIRUPWKHFRXQW\FRPPLVVLRQHUVRIWKHODZVXLWH[SUHVVWKHLU
GLVSOHDVXUHDQGDVNIRUKHOS:KDWNLQGRISROLW\LVLWWKDW
ZRXOGEUDQGWKLVDVDFWLRQDEOHUHWDOLDWLRQ"
   $V WR 0V sR\HOOD WKHUH ZDV HYLGHQFH DW WULDO WKDW WKH
GHIHQGDQWVSRVWHGWZRRUWKUHHQRWHVRQKHUGRRUZLWKUHJDUG
WRYLRODWLRQVRI:RRGFUHVWjVE\ODZV7KHVHQRWHVZHUHQRWRI
D WKUHDWHQLQJ RU KDUDVVLQJ QDWXUH DQG WKH\ DSSHDU WR KDYH
