                                                                                 5(&200(1'(' )25 3$57,$/7(;7 38%/,&$7,21
    8QLWHG6WDWHVY/DVWHUHWDO         1RV                        3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

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

WKHEXVLQHVVUHFRUGVLQWKLVFDVHZHUHDGPLVVLEOHXQGHUWKH                                 )LOH 1DPH DS

UHVLGXDOKHDUVD\H[FHSWLRQ7KHEXVLQHVVUHFRUGVDWLVVXHKHUH
ZHUH LPSURSHUO\ DGPLWWHG XQGHU WKH EXVLQHVV UHFRUGV
H[FHSWLRQ EHFDXVH DV WKH PDMRULW\ FRUUHFWO\ FRQFOXGHV           81,7('67$7(6&28572)$33($/6
$TXLVWR ZDV XQDEOH WR OD\ WKH SURSHU IRXQGDWLRQ IRU WKHLU                         )257+(6,;7+&,5&8,7
DGPLVVLRQ  7KH JRYHUQPHQW LQ VKRUW GLG QRW SURGXFH D                             BBBBBBBBBBBBBBBBB
VSRQVRULQJ ZLWQHVV VDWLVI\LQJ WKH DOUHDG\ ORZ VWDQGDUG RI
8QLWHG6WDWHVY+DWKDZD\)GWK&LU
m>$@OO WKDW LV UHTXLUHG LV WKDW WKH >VSRQVRULQJ@ ZLWQHVV EH
IDPLOLDUZLWKWKHUHFRUGNHHSLQJV\VWHPl                              81,7(' 67$7(6 2) $0(5,&$       ;
                                                                                   3ODLQWLII$SSHOOHH    
   7KLVODFNRIDIRXQGDWLRQIRUWKHDGPLVVLRQRIWKHEXVLQHVV                                            
UHFRUGVLVLUUHOHYDQWKRZHYHUXQGHUWKHPDMRULW\jVKROGLQJ                                                1RV
7KHUHVLGXDOH[FHSWLRQDIWHUDOOLVDOZD\VDYDLODEOHXQGHUWKH                    Y                    
PDMRULW\jV WKHRU\ IRU WKH DGPLVVLRQ RI KHDUVD\ HYLGHQFH                                             !
                                                                                                          
LQDGPLVVLEOH XQGHU WKH RWKHU VSHFLILF KHDUVD\ H[FHSWLRQV          s$0(6 0 /$67(5        
LQFOXGLQJ WKH EXVLQHVV UHFRUGV H[FHSWLRQ  7KH PDMRULW\jV         DQGs(55< /($5        
KROGLQJ WKXV DSSHDUV WR PDNH LW XQQHFHVVDU\ HYHU WR FDOO D            'HIHQGDQWV$SSHOODQWV 
VSRQVRULQJZLWQHVVWRHVWDEOLVKWKHDGPLVVLELOLW\RIEXVLQHVV                                             
UHFRUGVDWOHDVWVRORQJDVWKHUHLVmµQRLQGLFDWLRQjWKDWWKH                                          1
UHFRUGV>DUH@QRWUHOLDEOHl7KLVFDQQRWEHVTXDUHGZLWKWKH
ODQJXDJHRI5XOHZKLFKUHTXLUHVmWKHWHVWLPRQ\RIWKH                  $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
FXVWRGLDQ>RIWKHUHFRUGV@RURWKHUTXDOLILHGZLWQHVVlWRYRXFK            IRUWKH:HVWHUQ'LVWULFWRI.HQWXFN\DW2ZHQVERUR
IRUWKHH[LVWHQFHRIWKHRWKHUHOHPHQWVRIWKHEXVLQHVVUHFRUGV           1RnsRVHSK+0F.LQOH\sU'LVWULFWsXGJH
H[FHSWLRQ1RULVLWFOHDUKRZDVDJHQHUDOPDWWHUEXVLQHVV
UHFRUGV LQWURGXFHG ZLWKRXW WKH WHVWLPRQ\ RI D TXDOLILHG                               $UJXHG$SULO
VSRQVRULQJ ZLWQHVV FDQ EH VDLG WR KDYH mFLUFXPVWDQWLDO
JXDUDQWHHVRIWUXVWZRUWKLQHVVlHTXLYDOHQWWRWKRVHWKDWH[LVW                           'HFLGHGDQG)LOHGsXO\
ZKHQ D TXDOLILHG VSRQVRULQJ ZLWQHVV WHVWLILHV WR WKH
WUXVWZRUWKLQHVVRIWKHUHFRUGVLQTXHVWLRQ                               %HIRUH6,/(5DQG0225(&LUFXLWsXGJHV67$**
                                                                                            'LVWULFWsXGJH
   ,QVXPXQGHUWKHPDMRULW\jVmFORVHHQRXJKlDSSURDFKWKH
UHVLGXDOH[FHSWLRQVZDOORZVDOOWKHRWKHUH[FHSWLRQVDVZHOO
DVWKHUXOH7KLVFRXUWVKRXOGQRWMRLQWKHRWKHUFLUFXLWVLQ
H[SDQGLQJ WKH UHVLGXDO KHDUVD\ H[FHSWLRQ WR FRYHU KHDUVD\
VLWXDWLRQV FOHDUO\ DQWLFLSDWHG E\ WKH GUDIWHUV RI WKH )HGHUDO
5XOHVRI(YLGHQFH,WVKRXOGFHUWDLQO\QRWGRVRLQWKHSUHVHQW
FDVH LQ ZKLFK DQ HVWDEOLVKHG KHDUVD\ H[FHSWLRQ FOHDUO\
DSSOLHGEXWUHQGHUHGWKHGRFXPHQWVLQDGPLVVLEOH
                                                                            
                                                                             7KH +RQRUDEOH 7RP 6WDJJ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH
                                                                        :HVWHUQ 'LVWULFW RI /RXLVLDQD VLWWLQJ E\ GHVLJQDWLRQ



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

                     BBBBBBBBBBBBBBBBB                                    7KLVSODLQODQJXDJHLQWHUSUHWDWLRQRIWKHUHVLGXDOH[FHSWLRQ
                                                                       LV VRPHWLPHV GHVFULEHG E\ LWV GHWUDFWRUV DV WKH mQHDUPLVV
                           &2816(/                                     WKHRU\lRIWKHUHVLGXDOH[FHSWLRQm>W@KHGRFWULQHWKDWDµQHDU
                                                                       PLVVj XQGHU D VSHFLILHG H[FHSWLRQ    UHQGHUV HYLGHQFH
$5*8('  *HUDOG / *XOOH\ sU %$.(5 *8//(< 	                LQDGPLVVLEOHXQGHU>WKH@UHVLGXDOH[FHSWLRQl8QLWHG6WDWHV
2/'+$0 .QR[YLOOH 7HQQHVVHH $OOHQ : +ROEURRN                  Y&ODUNH)GWK&LUFHUWGHQLHG86
68//,9$1 02817s2< 67$,1%$&. 	 0,//(5                               ,Q WKH VDPH YHLQ KRZHYHU WKH PDMRULW\
2ZHQVERUR .HQWXFN\ IRU $SSHOODQWV  0DUN / 0LOOHU           DSSURDFKPLJKWEHFDOOHGWKHmFORVHHQRXJKlWKHRU\RIWKH
$66,67$1781,7('67$7(6$77251(</RXLVYLOOH                          UHVLGXDOH[FHSWLRQLHWKHGRFWULQHWKDWKHDUVD\LVDGPLVVLEOH
.HQWXFN\IRU$SSHOOHH21%5,()*HUDOG/*XOOH\sU             XQGHU WKH UHVLGXDO H[FHSWLRQ HYHQ ZKHQ LW MXVW PLVVHV
%$.(5 *8//(< 	 2/'+$0 .QR[YLOOH 7HQQHVVHH                     DGPLVVLELOLW\ XQGHU DQ HVWDEOLVKHG H[FHSWLRQ  6XFK DQ
$OOHQ : +ROEURRN 68//,9$1 02817s2<                             DSSURDFK PDNHV OLWWOH VHQVH JLYHQ WKH OLVWLQJ RI H[SOLFLW
67$,1%$&. 	 0,//(5 2ZHQVERUR .HQWXFN\ IRU                      KHDUVD\H[FHSWLRQVLQ5XOHVDQGH[FHSWLRQVWKDWWKH
$SSHOODQWV0DUN/0LOOHU7HUU\0&XVKLQJ$66,67$17               GUDIWHUVRIWKHUHVLGXDOH[FHSWLRQWKRXJKWVXIILFLHQWWRFRYHU
81,7('67$7(6$77251(</RXLVYLOOH.HQWXFN\IRU                      DQWLFLSDWHGLQRWKHUZRUGVFRPPRQKHDUVD\VLWXDWLRQV6HH
$SSHOOHH                                                              8QLWHG6WDWHVY7XUQHU)GWK&LU
                                                                       m$OORZLQJ7XUQHUWRLQWURGXFHWKHPHGLFDOWH[WVXQGHU>WKH
  6,/(5 s GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ ZKLFK     UHVLGXDOH[FHSWLRQ@ZKHQ)HGHUDO5XOHRI(YLGHQFH
67$**'sMRLQHG0225(sSSGHOLYHUHGD              VSHFLILFDOO\ GHDOV ZLWK WKH DGPLVVLELOLW\ RI WKLV W\SH RI
VHSDUDWHGLVVHQWLQJRSLQLRQ                                           HYLGHQFH ZRXOG FLUFXPYHQW WKH JHQHUDO SXUSRVHV RI WKH
                                                                       UXOHVl
                     BBBBBBBBBBBBBBBBB
                                                                          7KHPDMRULW\WRGD\UHMHFWVLQVZHHSLQJIDVKLRQWKHSODLQ
                         23,1,21                                       ODQJXDJHLQWHUSUHWDWLRQRIWKHUHVLGXDOH[FHSWLRQ,QGRLQJVR
                     BBBBBBBBBBBBBBBBB                                 LWJRHVIDUEH\RQGWKLVFLUFXLWjVSULRUKROGLQJLQ%DUORZ)RU
  6,/(5&LUFXLWsXGJH'HIHQGDQWVsHUU\/HDUDQGsDPHV0            SUHVHQW SXUSRVHV %DUORZ VWDQGV IRU WKH UDWKHU QDUURZ
/DVWHU DSSHDO WKHLU FRQYLFWLRQV DQG VHQWHQFHV IRU GUXJ          SURSRVLWLRQWKDWJUDQGMXU\WHVWLPRQ\PD\EHDGPLVVLEOHLQ
RIIHQVHV7KLVSXEOLVKHGRSLQLRQVHWVIRUWKWKHFRXUWjVUXOLQJ        FHUWDLQFLUFXPVWDQFHVXQGHUWKHUHVLGXDOKHDUVD\H[FHSWLRQ
DV WR GHIHQGDQWVj FODLPV WKDW WKH GLVWULFW FRXUW HUURQHRXVO\   %DUORZ)GDW,QWKHSUHVHQWFDVHWKHPDMRULW\
DGPLWWHG UHFRUGV LQYROYLQJ WKH SXUFKDVH DQG DWWHPSWHG            DGRSWVDVDJHQHUDOUXOHDSSDUHQWO\FRYHULQJHYHU\KHDUVD\
SXUFKDVH RI K\GULRGLF DFLG DQG WKH LPSDFW RI $SSUHQGL Y     H[FHSWLRQWKHmFORVHHQRXJKlUHDVRQLQJRI(DUOHVDQGVLPLODU
1HZsHUVH\86RQWKHFDOFXODWLRQRIWKHLU           FDVHV,WGRHVVRZLWKRXWGLVFXVVLRQRIWKHVWUXFWXUHRIWKH
UHVSHFWLYHVHQWHQFHV2XUGHFLVLRQFRQFHUQLQJGHIHQGDQWVj             KHDUVD\ H[FHSWLRQV WKH OHJLVODWLYH KLVWRU\ RI WKH UHVLGXDO
UHPDLQLQJDSSHOODWHLVVXHVFDQEHIRXQGLQWKHXQSXEOLVKHG             H[FHSWLRQRUWKHVSHFLILFKHDUVD\H[FHSWLRQDWLVVXHLQWKH
RSLQLRQIRUWKHVHFDVHV:HDIILUP                                  SUHVHQWFDVHWKHEXVLQHVVUHFRUGVH[FHSWLRQ

                      ,%$&.*5281'                                      *LYHQ WKH SODLQ ODQJXDJH RI 5XOH  WKH ODQJXDJH DQG
                                                                       VWUXFWXUHRI5XOHVDQGDQGWKHOHJLVODWLYHKLVWRU\RI
  ,QsDPHV$FTXLVWRDGHWHFWLYHIRUDVWDWHGUXJWDVN            WKH)HGHUDO5XOHVRI(YLGHQFHWKLVKROGLQJLVEDGO\IODZHG
IRUFH UHFHLYHG LQIRUPDWLRQ IURP 8QLYHUVDO 7HVWLQJ                0RUHRYHUVSHFLDOFRQVLGHUDWLRQVFRXQVHODJDLQVWKROGLQJWKDW
       8QLWHG6WDWHVY/DVWHUHWDO           1RV           1RV             8QLWHG6WDWHVY/DVWHUHWDO         

RQHRIWKHRWKHU>H[FHSWLRQV@PXVWVDWLVI\WKHFRQGLWLRQV                ,QFRUSRUDWHGm87,lWKDWRQHRILWVHPSOR\HHV/DVWHUKDG
ODLGGRZQIRULWVDGPLVVLRQDQGWKDWRWKHUNLQGVRIHYLGHQFH                  RUGHUHGK\GULRGLFDFLGDFRPSRQHQWRIPHWKDPSKHWDPLQH
QRWFRYHUHGEHFDXVHWKHGUDIWHUVFRXOGQRWEHH[KDXVWLYHDUH                 IURP :LOVRQ 2LO &RPSDQ\  XVLQJ WKH 87, FRPSDQ\ QDPH
DGPLVVLEOH LI WKH HYLGHQFH LV DSSUR[LPDWHO\ DV UHOLDEOH DV             ZLWKRXWLWVSHUPLVVLRQ
HYLGHQFH WKDW ZRXOG EH DGPLVVLEOH XQGHU WKH VSHFLILF
>H[FHSWLRQV@lFHUWGHQLHG86EXWLWLV                    $IWHU UHYLHZLQJ WKH :LOVRQ 2LO &RPSDQ\ GRFXPHQWV
DOVR FRQVLVWHQW ZLWK WKH OHJLVODWLYH KLVWRU\ RI WKH UHVLGXDO           FRQILUPLQJ WKHVH SXUFKDVHV $FTXLVWR FRQWDFWHG 'UXJ
H[FHSWLRQVHH65HS1RDWUHSULQWHGLQ                 (QIRUFHPHQW 6SHFLDO $JHQW *DU\ 7HQQDQW  7RJHWKHU WKH\
 86&&$1   m,W LV LQWHQGHG WKDW WKH                 DSSURDFKHG /DVWHU RQ sXO\    /DVWHU VWDWHG WKDW
UHVLGXDOKHDUVD\H[FHSWLRQVZLOOEHXVHGYHU\UDUHO\DQGRQO\                 DSSUR[LPDWHO\IRXURUILYHPRQWKVSULRUKHZDVFRQWDFWHGE\
LQH[FHSWLRQDOFLUFXPVWDQFHV7KHFRPPLWWHHGRHVQRWLQWHQG                   DQmXQQDPHGROGHUPDQlVHHNLQJFHUWDLQFKHPLFDOVLQFOXGLQJ
WRHVWDEOLVKDEURDGOLFHQVHIRUWULDOMXGJHVWRDGPLWKHDUVD\                 K\GULRGLFDFLGUHGSKRVSKRURXVDQGVXOIXULFDFLGVWKURXJK
VWDWHPHQWVWKDWGRQRWIDOOZLWKLQRQHRIWKHRWKHUH[FHSWLRQV                 87,/DVWHUVWDWHGKHZDVDFWLQJXQGHUWKHDVVXPSWLRQWKDWKH
FRQWDLQHGLQUXOHVDQG>@lHPSKDVHVDGGHGDQGWKH                  ZRXOGEHSDLGIRUVHFXULQJWKHVHFKHPLFDOVZKLFKKHEHOLHYHG
RULJLQDO $GYLVRU\ &RPPLWWHH 1RWH WR 5XOH jV                           ZHUHWREHXVHGWRPDNHPHWKDPSKHWDPLQH
SUHGHFHVVRUVVHH)HG5(YLG$GYLVRU\&RPPLWWHH
1RWH  $GRSWLRQ UHSHDOHG  m,W ZRXOG    EH                ,QDVHFRQGVWDWHPHQWSURYLGHGRQsXO\/DVWHU
SUHVXPSWXRXVWRDVVXPHWKDWDOOSRVVLEOHGHVLUDEOHH[FHSWLRQV                  DGPLWWHGWRPDNLQJWKUHHWULSVZLWK/HDUWR,OOLQRLVWRSLFNXS
WRWKHKHDUVD\UXOHKDYHEHHQFDWDORJXHG([FHSWLRQ               K\GULRGLFDFLGDQGUHFHLYLQJSHUERWWOHIRULW2QsXO\
DQGLWVFRPSDQLRQSURYLVLRQDUHDFFRUGLQJO\LQFOXGHG                      /HDU JDYH D VWDWHPHQW WR $FTXLVWR DQG 7HQQDQW
7KH\GRQRWFRQWHPSODWHDQXQIHWWHUHGH[HUFLVHRIMXGLFLDO                     FRUURERUDWLQJ WKHVH WULSV ZLWK /DVWHU  +H DOVR DGPLWWHG
GLVFUHWLRQEXWWKH\GRSURYLGHIRUWUHDWLQJQHZDQGSUHVHQWO\                 WUDYHOLQJDORQHWR,OOLQRLVRQWZRRWKHURFFDVLRQVWRSLFNXS
XQDQWLFLSDWHGVLWXDWLRQVZKLFKGHPRQVWUDWHDWUXVWZRUWKLQHVV                   ERWWOHV RI K\GULRGLF DFLG  $FFRUGLQJ WR /HDU DOO RI WKHVH
ZLWKLQ WKH VSLULW RI WKH VSHFLILFDOO\ VWDWHG H[FHSWLRQVl             FKHPLFDOV ZHUH SLFNHG XS IRU WKH mROGHU PDQl  /DVWHUjV
HPSKDVLVDGGHG                                                              DGPLVVLRQVZHUHFRQVLVWHQWZLWKWKHLQIRUPDWLRQFRQWDLQHGLQ
                                                                               WKH :LOVRQ 2LO &RPSDQ\ SXUFKDVH GRFXPHQWV DGPLWWHG DV
                                                                               H[KLELWVDWWKHWULDO
        6HH DOVR  $7(3+(1 $ 6$/7=%85* 0,&+$(/ 0 0$57,1 	
     

'$1,(/ s &$35$ )('(5$/ 58/(6 2) (9,'(1&( 0$18$/  WK HG                  $ PHHWLQJ ZDV KHOG LQ 6HSWHPEHU  EHWZHHQ
 m8QIRUWXQDWHO\ WKH LQWHQW RI WKH GUDIWHUV KDV RIWHQ EHHQ LJQRUHG       JRYHUQPHQWDJHQWV/HDU/DVWHUDQGWKHLUUHVSHFWLYHFRXQVHO
    $ EURDG DSSOLFDWLRQ RI WKH UHVLGXDO H[FHSWLRQ FRXOG SHUPLW WKH FDVH   ZKHUHE\WKHGHIHQGDQWVDJUHHGWRDVVLVWWKHJRYHUQPHQWLQLWV
E\FDVH H[FHSWLRQ WR VZDOORZ WKH FDWHJRULFDO UXOHVl 'DQLHO s &DSUD        LQYHVWLJDWLRQ RI PHWKDPSKHWDPLQH PDQXIDFWXULQJ LQ
,80 /DZ 'LYHUJHQFH IURP WKH )HGHUDO 5XOHV RI (YLGHQFH  )5'             .HQWXFN\
    m5XOH >@ SHUPLWV WKH DGPLVVLRQ RI UHVLGXDO
KHDUVD\ RQO\ LI WKDW KHDUVD\ LV µQRW VSHFLILFDOO\ FRYHUHGj E\ DQRWKHU
H[FHSWLRQ 7KLV PLJKW VHHP WR LQGLFDWH WKDW KHDUVD\ WKDW µQHDUO\ PLVVHVj
RQH RI WKH HVWDEOLVKHG H[FHSWLRQV VKRXOG QRW EH DGPLVVLEOH DV UHVLGXDO
KHDUVD\ EHFDXVH LW LV VSHFLILFDOO\ FRYHUHG E\ DQG \HW QRW DGPLVVLEOH
XQGHU DQRWKHU H[FHSWLRQ ,Q IDFW KRZHYHU PRVW FRXUWV KDYH FRQVWUXHG
                                                                                   
WKH WHUP µQRW VSHFLILFDOO\ FRYHUHGj E\ DQRWKHU KHDUVD\ H[FHSWLRQ WR PHDQ             %HFDXVH RI WKH SRWHQWLDO LOOHJDO XVH RI K\GULRGLF DFLG D FKHPLFDO
µQRW DGPLVVLEOH XQGHUj DQRWKHU KHDUVD\ H[FHSWLRQl FLWLQJ WKH PDMRULW\       GLYHUVLRQ OHWWHU ZDV QHHGHG WR DOORZ :LOVRQ 2LO &RPSDQ\ WR VHOO WKLV
YLHZ DV DQ m([DPSOH>@ RI &DVH /DZ LQ &RQIOLFW ZLWK WKH 7H[W RI WKH 5XOH       SURGXFW WR 87, 7KH FKHPLFDO GLYHUVLRQ OHWWHU SUHVHQWHG WR :LOVRQ 2LO
WKH &RPPLWWHH 1RWH RU %RWKl                                                 &RPSDQ\ IURP 87, OLVWHG /DVWHU DV WKH DXWKRUL]HG SXUFKDVLQJ DJHQW
     8QLWHG6WDWHVY/DVWHUHWDO         1RV        1RV           8QLWHG6WDWHVY/DVWHUHWDO     

   ,Q$XJXVW2IILFHU5LFKDUG'HUNVRIWKH6WXUJLV&LW\          IRUPHU WHVWLPRQ\ DQG WKXV VSHFLILFDOO\ FRYHUHG DQG
3ROLFH'HSDUWPHQWVWRSSHG/HDUGULYLQJDWUXFNLQDUHFNOHVV           LQDGPLVVLEOH XQGHU 5XOH E D QXPEHU RI FLUFXLWV
PDQQHU  /DVWHU H[LWHG WKH SDVVHQJHU VLGH RI WKH YHKLFOH      LQFOXGLQJWKLVRQHKDYHKHOGWKDWWKHJUDQGMXU\WHVWLPRQ\RI
FDUU\LQJDFRQWDLQHUDQGSODFHGLWRQWKHEHGRIWKHWUXFN$         DQ XQDYDLODEOH ZLWQHVV LV DGPLVVLEOH XQGHU WKH UHVLGXDO
PP VHPLDXWRPDWLF SLVWRO ZDV UHPRYHG IURP /HDUjV                H[FHSWLRQ ZKHQ LW EHDUV WKH mHTXLYDOHQW FLUFXPVWDQWLDO
ZDLVWEDQG$QDGGLWLRQDOPDJD]LQHIRUWKHSLVWROZDVIRXQG            JXDUDQWHHVRIWUXVWZRUWKLQHVVl6HH8QLWHG6WDWHVY%DUORZ
LQWKHFDERIWKHWUXFNDORQJZLWKDFDOLEHUVHPLDXWRPDWLF        )GWK&LUFHUWGHQLHG86
SLVWRO  'UDLQR FRIIHH ILOWHUV SODVWLF WXELQJ 0DVRQ MDUV   6HHDOVRHJ8QLWHG6WDWHVY(DUOHV)G
WRZHOVO\HDQDVSLUDWLRQPDVNDIXQQHODQGWKUHHSODVWHU          WK&LUKROGLQJWKDWJUDQGMXU\WHVWLPRQ\
HQFDVHG JODVV MDUV FRQWDLQLQJ OLTXLG ZHUH IRXQG LQ WKH         DOWKRXJKLQDGPLVVLEOHXQGHURWKHUKHDUVD\H[FHSWLRQVmPD\
FRQWDLQHUVLQWKHWUXFNEHG7KHOLTXLGLQWKHMDUVZDVODWHU            EH FRQVLGHUHG IRU DGPLVVLRQ XQGHU WKH FDWFKDOO
GHWHUPLQHGWREHJUDPVRISXUH'PHWKDPSKHWDPLQH                 H[FHSWLRQl FHUW GHQLHG  86   8QLWHG
7KLVOLTXLGDOVRFRQWDLQHGUHGSKRVSKRURXVDQGLRGLQHZKLFK           6WDWHV Y 0DUFKLQL  )G   WK &LU 
DUHFRQVLVWHQWZLWKWKHXVHRIK\GULRGLFDFLGWRPDQXIDFWXUH           KROGLQJWKDWJUDQGMXU\WHVWLPRQ\ZDVDGPLVVLEOHXQGHUWKH
PHWKDPSKHWDPLQH                                                       UHVLGXDOH[FHSWLRQFHUWGHQLHG86%XW
                                                                       VHH8QLWHG6WDWHVY9LJRD)6XSS'1s
  $EDJLQVLGHWKHFDERIWKHWUXFNFRQWDLQHGIRXURWKHUEDJV          FRQFOXGLQJmWKDWDGPLVVLRQRIJUDQGMXU\WHVWLPRQ\
RIPHWKDPSKHWDPLQHZHLJKLQJDWRWDORIJUDPVUD]RUV             XQGHU>WKHUHVLGXDOH[FHSWLRQ@LVDSHUYHUVLRQRIWKH)HGHUDO
UD]RUEODGHVDYLDODVSRRQDOLJKWHUS+VWULSVFRUQHUVRI        5XOHVRI(YLGHQFHDQGVKRXOGQRWEHFRQGRQHGlDIIjG
SODVWLFEDJVDQGUXEEHUEDQGV$OVRVHL]HGZDVDQRWHERRN            )GG&LU
RQWKHGDVKRIWKHWUXFNZKLFKFRQWDLQHGLQDGGLWLRQWRRWKHU
QRQLQFULPLQDWLQJSDJHVUHIHUHQFHVWRJUDPTXDQWLWLHVQH[WWR            7KHFRQWUDU\PLQRULW\YLHZRIWKHUHVLGXDOH[FHSWLRQLV
GROODUILJXUHVDQGLQLWLDOVDVZHOODVIRXUWHHQHQWULHVRIGUXJ       WKDWWKHUHVLGXDOH[FHSWLRQPHDQVZKDWLWVD\VnLHWKDWLW
VDOHVWRWDOLQJ0RWLRQVWRVXSSUHVVVRPHRIWKHLWHPV          DSSOLHV WR WKRVH H[FHSWLRQDO FDVHV LQ ZKLFK DQ HVWDEOLVKHG
WDNHQIURP/HDUjVYHKLFOHZHUHGHQLHGE\WKHGLVWULFWFRXUW           H[FHSWLRQ WR WKH KHDUVD\ UXOH GRHV QRW DSSO\ EXW LQ ZKLFK
                                                                       FLUFXPVWDQWLDO JXDUDQWHHV RI WUXVWZRUWKLQHVV HTXLYDOHQW WR
  7KHGHIHQGDQWVZHUHWULHGEHIRUHDMXU\RQWKHIROORZLQJ             WKRVH H[LVWLQJ IRU WKH HVWDEOLVKHG KHDUVD\ H[FHSWLRQV DUH
FKDUJHV &RXQW  FRQVSLUDF\ WR PDQXIDFWXUH                       SUHVHQW6HH&RQRFR,QFY'HSjWRI(QHUJ\)G
PHWKDPSKHWDPLQHIURP0DUFKWKURXJKsXO\               )HG&LUKROGLQJWKDWVXPPDULHVE\FHUWDLQ
LQYLRODWLRQRI86&&RXQWVDQGDLGLQJ           SXUFKDVHUV PDGH ORQJ DIWHU WKH SXUFKDVHV KDG EHHQ PDGH
DQG DEHWWLQJ LQ WKH DWWHPSW WR NQRZLQJO\ DQG LQWHQWLRQDOO\     ZHUH QRW DGPLVVLEOH XQGHU WKH UHVLGXDO H[FHSWLRQ EHFDXVH
PDQXIDFWXUHPHWKDPSKHWDPLQHRQ0DUFK$SULO               VXFKVXPPDULHVZHUHQRWDVWUXVWZRUWK\DVHLWKHUEXVLQHVV
 $SULO   DQG 0D\   UHVSHFWLYHO\ LQ      UHFRUGVZKLFKDUHFRYHUHGE\)HG5(YLGRUPDUNHW
YLRODWLRQ RI  86&   DQG  86&   &RXQW    UHSRUWV DQG FRPPHUFLDO SXEOLFDWLRQV FRYHUHG E\ )HG 5
FRQVSLULQJRQ$XJXVWWRNQRZLQJO\DQGLQWHQWLRQDOO\           (YLG1RWRQO\LVWKLVPLQRULW\DSSURDFKFRQVLVWHQW
PDQXIDFWXUH PHWKDPSKHWDPLQH LQ YLRODWLRQ RI  86&            ZLWKWKHSODLQODQJXDJHRIWKHUXOHVHH8QLWHG6WDWHVY'HQW
&RXQWDLGLQJDQGDEHWWLQJHDFKRWKHURQ$XJXVW            )G   WK &LU (DVWHUEURRN s
 LQ NQRZLQJO\ DQG LQWHQWLRQDOO\ SRVVHVVLQJ                    FRQFXUULQJMRLQHGE\%DXHU&sm5XOH>@UHDGVPRUH
PHWKDPSKHWDPLQHZLWKWKHLQWHQWWRGLVWULEXWHLQYLRODWLRQRI          QDWXUDOO\LIZHXQGHUVWDQGWKH LQWURGXFWRU\FODXVHWRPHDQ
86&DDQG86&&RXQWDLGLQJDQG           WKDWHYLGHQFHRIDNLQGVSHFLILFDOO\DGGUHVVHGmFRYHUHGlE\
    8QLWHG6WDWHVY/DVWHUHWDO        1RV        1RV          8QLWHG6WDWHVY/DVWHUHWDO     

                      BBBBBBBBBBBBBBBB                                DEHWWLQJ HDFK RWKHU RQ $XJXVW   LQ NQRZLQJO\ DQG
                                                                      LQWHQWLRQDOO\PDQXIDFWXULQJPHWKDPSKHWDPLQHLQYLRODWLRQRI
                          ',66(17                                     86&DDQG86&DQG&RXQWDLGLQJ
                      BBBBBBBBBBBBBBBB                                DQG DEHWWLQJ HDFK RWKHU RQ $XJXVW   LQ NQRZLQJO\
                                                                      FDUU\LQJDILUHDUPGXULQJDQGLQUHODWLRQWRGUXJWUDIILFNLQJ
  .$5(1 1(/621 0225( &LUFXLW sXGJH GLVVHQWLQJ                 FULPHVLQYLRODWLRQRI86&DQGF
/DVWHUDQG/HDUDUJXHWKDWWKHGLVWULFWFRXUWHUUHGLQDGPLWWLQJ
FHUWDLQEXVLQHVVUHFRUGVLQWRHYLGHQFH7KHPDMRULW\DJUHHV             /HDUZDVFRQYLFWHGRQ&RXQWVWKURXJKDQGWKURXJK
ZLWK /HDU DQG /DVWHU WKDW WKHVH EXVLQHVV UHFRUGV ZHUH QRW     DQG UHFHLYHG D VHQWHQFH RI  PRQWKV LPSULVRQPHQW
SURSHUO\DGPLWWHGLQWRHYLGHQFHXQGHUWKHEXVLQHVVUHFRUGV            /DVWHUZDVFRQYLFWHGRQ&RXQWVDQGDQGUHFHLYHGD
H[FHSWLRQWRWKHKHDUVD\UXOH)HG5(YLGEHFDXVH          VHQWHQFHRIPRQWKVLPSULVRQPHQW
WKH JRYHUQPHQW IDLOHG WR OD\ D SURSHU IRXQGDWLRQ  7KH
PDMRULW\FRQFOXGHVKRZHYHUWKDWWKHFRXUWEHORZSURSHUO\                                  ,,',6&866,21
DGPLWWHG WKHVH UHFRUGV XQGHU WKH UHVLGXDO H[FHSWLRQ WR WKH
KHDUVD\UXOH)HG5(YLG)RUWKHUHDVRQVH[SODLQHG           $7KH:LOVRQ2LO&RPSDQ\UHFRUGV
EHORZ,UHVSHFWIXOO\GLVVHQWIURPWKLVKROGLQJ
                                                                        7KH GHIHQGDQWV DUJXH WKDW WKH GLVWULFW FRXUW LPSURSHUO\
  7KHUHVLGXDOH[FHSWLRQ5XOHUHDGVLQUHOHYDQWSDUW           DGPLWWHGSXUFKDVHUHFRUGVIURP:LOVRQ2LO&RPSDQ\XQGHU
                                                                      WKHEXVLQHVVUHFRUGVH[FHSWLRQRI)HG5(YLG7KH
  $VWDWHPHQWQRWVSHFLILFDOO\FRYHUHGE\5XOHRU             FRXUWUHYLHZVGHQRYRWKHGLVWULFWFRXUWjVFRQFOXVLRQWKDWWKLV
  EXW KDYLQJ HTXLYDOHQW FLUFXPVWDQWLDO JXDUDQWHHV RI             SURIIHUHGHYLGHQFHZDVQRWLQDGPLVVLEOHKHDUVD\6HH8QLWHG
  WUXVWZRUWKLQHVVLVQRWH[FOXGHGE\WKHKHDUVD\UXOHLIWKH        6WDWHVY'DNRWD)GWK&LU
  FRXUW GHWHUPLQHV WKDW $ WKH VWDWHPHQW LV RIIHUHG DV
  HYLGHQFH RI D PDWHULDO IDFW % WKH VWDWHPHQW LV PRUH       7KH UHFRUGV IURP :LOVRQ 2LO &RPSDQ\ LQFOXGHG IRXU
  SUREDWLYHRQWKHSRLQWIRUZKLFKLWLVRIIHUHGWKDQDQ\             LQYRLFHV GDWHG 0DUFK   $SULO   $SULO 
  RWKHUHYLGHQFHZKLFKWKHSURSRQHQWFDQSURFXUHWKURXJK              DQG0D\ZKLFKUHVSHFWLYHO\UHIOHFWHGWKHVDOH
  UHDVRQDEOHHIIRUWVDQG&WKHJHQHUDOSXUSRVHVRIWKHVH           RQHDFKGDWHRIRQHPLOOLOLWHUERWWOHRIK\GULRGLFDFLG
  UXOHVDQGWKHLQWHUHVWVRIMXVWLFHZLOOEHVWEHVHUYHGE\           H[FHSWIRUWKH0D\LQYRLFHZKHUHLQWZRERWWOHVZHUH
  DGPLVVLRQRIWKHVWDWHPHQWLQWRHYLGHQFH                           VROGLQDGGLWLRQWRWZRERWWOHVRIVXOIXULFDFLGDQGRQHSODVWLF
                                                                      EDUUHO$QDGGLWLRQDORUGHUIRUVL[PLOOLOLWHUERWWOHVKDG
)HG5(YLG'HVSLWHWKHSODLQODQJXDJHRIWKHUXOH           EHHQVRXJKWE\/DVWHUEXWZDVFDQFHOHGE\WKHVXSSOLHUWR
ZKLFKVWDWHVWKDWLWDSSOLHVRQO\WRVWDWHPHQWVmQRWVSHFLILFDOO\     :LOVRQ2LO&RPSDQ\$OVRLQFOXGHGLQWKHVHUHFRUGVZDVWKH
FRYHUHGE\5XOHRU5XOHlVRPHFRXUWVKDYHDSSOLHG            FKHPLFDOGLYHUVLRQOHWWHUVLJQHGE\/DVWHUZKLFKUHIHUHQFHG
5XOHWRVWDWHPHQWVQRWDGPLVVLEOHXQGHUHLWKHU5XOH           WKHVDOHRIK\GULRGLFDFLGWR87,E\:LOVRQ2LO&RPSDQ\
RU   8QGHU WKLV DSSURDFK RXWRIFRXUW VWDWHPHQWV          7KHGLVWULFWFRXUWKHOGWKDWWKH:LOVRQ2LO&RPSDQ\UHFRUGV
LQDGPLVVLEOH XQGHU HLWKHU 5XOH  RU  PD\ VWLOO EH       ZHUH DGPLVVLEOH XQGHU HLWKHU WKH EXVLQHVV UHFRUGV KHDUVD\
DGPLVVLEOH XQGHU 5XOH  HYHQ ZKHQ WKH\ DUH RI D VRUW     H[FHSWLRQRI)HG5(YLGRUWKHUHVLGXDOH[FHSWLRQRI
mVSHFLILFDOO\ FRYHUHGl E\ 5XOH  RU  LI WKH\ SRVVHVV   )HG5(YLG$FTXLVWRZDVGHWHUPLQHGWREHDTXDOLILHG
mHTXLYDOHQW FLUFXPVWDQWLDO JXDUDQWHHV RI WUXVWZRUWKLQHVVl
7KXVIRUH[DPSOHDOWKRXJKJUDQGMXU\WHVWLPRQ\LVDUJXDEO\
       8QLWHG6WDWHVY/DVWHUHWDO        1RV         1RV            8QLWHG6WDWHVY/DVWHUHWDO       

ZLWQHVVXQGHU)HG5(YLGDQGZDVSHUPLWWHGWROD\                                   ,,,&21&/86,21
WKHIRXQGDWLRQXSRQZKLFKWKHUHFRUGVZHUHDGPLWWHG
                                                                           7KH GLVWULFWFRXUWGLGQRWHUULQDGPLWWLQJWKHUHFRUGV RI
   7KHEXVLQHVVUHFRUGVH[FHSWLRQLVDYDLODEOHLIWKHHYLGHQFH           :LOVRQ2LO&RPSDQ\DVWKHVHUHFRUGVZHUHDGPLVVLEOHXQGHU
WREHLQWURGXFHGZDVmPDGHLQWKHFRXUVHRIDUHJXODUO\              )HG 5 (YLG   ,W DOVR GLG QRW HUU LQ FDOFXODWLQJ WKH
FRQGXFWHGEXVLQHVVDFWLYLW\lmNHSWLQWKHUHJXODUFRXUVH            DPRXQWRI'PHWKDPSKHWDPLQHDWWULEXWDEOHWRWKHGHIHQGDQWV
RI >@ EXVLQHVVl  D UHVXOW RI D mUHJXODU SUDFWLFH RI WKH   ZKRZHUHXOWLPDWHO\VHQWHQFHGEHORZWKHVWDWXWRU\PD[LPXP
EXVLQHVVlWRFUHDWHWKHGRFXPHQWVDQGmPDGHE\DSHUVRQ             DQG$SSUHQGLLVQRWWULJJHUHGLQWKLVFDVH
ZLWK NQRZOHGJH RI WKH WUDQVDFWLRQ RU IURP LQIRUPDWLRQ
WUDQVPLWWHGE\DSHUVRQZLWKNQRZOHGJHl8QLWHG6WDWHVY                 $OO RWKHU PDWWHUV KDYLQJ EHHQ FRQVLGHUHG LQ WKH UHODWHG
)DZD])GWK&LUTXRWLQJ5HGNHQ                  XQSXEOLVKHG RSLQLRQ IRU FDVH QRV  
/DEV,QFY/HYLQ)GWK&LU               GHIHQGDQWVjUHVSHFWLYHFRQYLFWLRQVDQGVHQWHQFHVDUHKHUHE\
                                                                         $)),50('
  'HIHQGDQWVDWWDFNWKHDGPLVVLELOLW\RIWKHUHFRUGVRQWKH
JURXQGV WKDW $FTXLVWR ZDV QRW TXDOLILHG WR DGPLW WKHVH
UHFRUGVXQGHUWKHEXVLQHVVUHFRUGVH[FHSWLRQ$FTXLVWRGLG
QRW H[DPLQH WKH ERRNV RU OHGJHU VKHHWV RI :LOVRQ 2LO
&RPSDQ\ QRU GLG KH NQRZ ZKHWKHU :LOVRQ KDG DQ
DFFRXQWDQWRUERRNNHHSHU1HLWKHUGLG$FTXLVWRDVN:LOVRQ
ZKHWKHUWKHVHGRFXPHQWVZHUHSUHSDUHGVLPXOWDQHRXVO\ZLWK
WKHWUDQVDFWLRQVUHIOHFWHGWKHUHRQ'HIHQGDQWVWKXVDUJXHWKDW
$FTXLVWRKDGQRSHUVRQDONQRZOHGJHRUDQ\IDPLOLDULW\ZLWK
WKHUHFRUGNHHSLQJSUDFWLFHVRI:LOVRQ2LO&RPSDQ\
  8QLWHG6WDWHVY+DWKDZD\)GWK&LU
KROGVWKDWDIRXQGDWLRQIRUWKHDSSOLFDWLRQRI)HG5(YLG
PD\EHODLGLQZKROHRULQSDUWmE\WKHWHVWLPRQ\RI
DJRYHUQPHQWDJHQWRURWKHUSHUVRQRXWVLGHWKHRUJDQL]DWLRQ
ZKRVHUHFRUGVDUHVRXJKWWREHDGPLWWHGl,GDW7KH
RQO\ UHTXLUHPHQW LV WKDW WKH mZLWQHVV EH IDPLOLDU ZLWK WKH
UHFRUGNHHSLQJV\VWHPl,G2WKHUWKDQDIHZFRQYHUVDWLRQV
EHWZHHQ $FTXLVWR DQG :LOVRQ WKHUH LV QR HYLGHQFH WKDW
$FTXLVWR ZDV IDPLOLDU ZLWK WKH UHFRUGNHHSLQJ V\VWHP RI
:LOVRQ 2LO &RPSDQ\  7KHUHIRUH WKH HYLGHQFH ZDV QRW
DGPLVVLEOHXQGHU)HG5(YLG



    
    0U :LOVRQ WKH DSSDUHQW VROH RZQHU DQG RSHUDWRU RI :LOVRQ 2LO
&RPSDQ\ GLHG E\ WKH WLPH WKH WULDO EHJDQ
    8QLWHG6WDWHVY/DVWHUHWDO         1RV        1RV             8QLWHG6WDWHVY/DVWHUHWDO           

KHOGWKDWm>R@WKHUWKDQWKHIDFWRIDSULRUFRQYLFWLRQDQ\IDFW         +RZHYHU WKH GLVWULFW FRXUW GLG QRW HUU LQ DGPLWWLQJ WKH
WKDWLQFUHDVHVWKHSHQDOW\IRUDFULPHEH\RQGWKHSUHVFULEHG           SXUFKDVH RUGHUV DQG RWKHU UHODWHG GRFXPHQWV XQGHU WKH
VWDWXWRU\PD[LPXPPXVWEHVXEPLWWHGWRDMXU\DQGSURYHG              UHVLGXDOKHDUVD\H[FHSWLRQRI)HG5(YLGDVWKHUHZDV
EH\RQGDUHDVRQDEOHGRXEWl                                            mQRLQGLFDWLRQlWKDWWKHUHFRUGVZHUHQRWUHOLDEOH7KLVUXOH
                                                                       ILQGV DQ HTXDOO\ WUXVWZRUWK\ VWDWHPHQW mQRW VSHFLILFDOO\
  7KH GLVWULFW FRXUWjV ILQGLQJ WKDW GHIHQGDQWV LQWHQGHG WR      FRYHUHGE\5XOHRUDGPLVVLEOHLILWLVmPDWHULDOl
PDNH ' UDWKHU WKDQ /PHWKDPSKHWDPLQH LQFUHDVHG                   mPRUHSUREDWLYHRQWKHSRLQWIRUZKLFKLWLVRIIHUHGWKDQDQ\
GHIHQGDQWVj EDVH RIIHQVH OHYHO IURP  WR   8QGHU          RWKHU HYLGHQFH ZKLFK WKH SURSRQHQW FDQ SURFXUH WKURXJK
$SSUHQGLGHIHQGDQWVDUJXHWKDWWKHGHWHUPLQDWLRQRIWKHW\SH          UHDVRQDEOHHIIRUWVlDQGLWVDGPLVVLRQEHVWVHUYHVWKHLQWHUHVWV
RIPHWKDPSKHWDPLQHWKH\LQWHQGHGWRPDNHVKRXOGKDYHEHHQ              RIMXVWLFH)HG5(YLG
UHVROYHGE\DMXU\
                                                                          $OWKRXJKVRPHFRXUWVKDYHKHOGWKDWLISURIIHUHGHYLGHQFH
   &RQWUDU\ WR GHIHQGDQWVj DUJXPHQWV WKHLU UHVSHFWLYH            IDLOV WR PHHW WKH UHTXLUHPHQWV RI WKH )HG 5 (YLG 
VHQWHQFHV  GR QRW WULJJHU $SSUHQGL EHFDXVH WKH W\SH RI        KHDUVD\H[FHSWLRQLWFDQQRWTXDOLI\IRUDGPLVVLRQXQGHUWKH
PHWKDPSKHWDPLQH DWWULEXWHG WR WKHP GRHV QRW DIIHFW WKH          UHVLGXDO H[FHSWLRQ WKH FRXUW GHFOLQHV WR DGRSW WKLV QDUURZ
VWDWXWRU\PD[LPXP6LQFHWKHLUUHVSHFWLYHVHQWHQFHVZHUHQRW          LQWHUSUHWDWLRQ RI )HG 5 (YLG  DV VXJJHVWHG E\
LQFUHDVHG EH\RQG WKH VWDWXWRU\ PD[LPXP WKHLU $SSUHQGL           GHIHQGDQWV5DWKHUWKLVFRXUWLQWHUSUHWV)HG5(YLG
DUJXPHQWKDVQRPHULW$SSUHQGLGRHVQRWZDUUDQWDUHPDQG             DORQJ ZLWK WKH PDMRULW\ RI FLUFXLWV  WR PHDQ WKDW mLI D
RI GHIHQGDQWVj VHQWHQFHV IRU WKH GHWHUPLQDWLRQ RI ZKHWKHU       VWDWHPHQWLVDGPLVVLEOHXQGHURQHRIWKHKHDUVD\H[FHSWLRQV
WKH\ DWWHPSWHG WR PDQXIDFWXUH ' RU /PHWKDPSKHWDPLQH            WKDW H[FHSWLRQ VKRXOG EH UHOLHG RQ LQVWHDG RI WKH UHVLGXDO
EHFDXVHWKHW\SHRIPHWKDPSKHWDPLQHLQYROYHGLQWKLVFDVHLV           H[FHSWLRQl   sDFN % :HLQVWHLQ 	 0DUJDUHW $ %HUJHU
QRWDQDJJUDYDWLQJIDFWRUZKLFKmLQFUHDVH>V@WKHSHQDOW\IURP          :HLQVWHLQjV )HGHUDO (YLGHQFH   G HG 
DQRQPDQGDWRU\PLQLPXPVHQWHQFHWRDPDQGDWRU\PLQLPXP                 :HHQGRUVHWKHUHDVRQLQJLQ8QLWHG6WDWHVY(DUOHV)G
VHQWHQFHRUIURPDOHVVHUWRDJUHDWHUPLQLPXPVHQWHQFHl          WK&LUZKLFKKHOGWKDWmWKHSKUDVHµVSHFLILFDOO\
8QLWHG 6WDWHV Y 5DPLUH]  )G   WK &LU      FRYHUHGj >E\ D KHDUVD\ H[FHSWLRQ@ PHDQV RQO\ WKDW LI D
7RDFFHSWGHIHQGDQWVjDUJXPHQWVZRXOGUHTXLUHWKH              VWDWHPHQWLVDGPLVVLEOHXQGHURQHRI WKH>@H[FHSWLRQV
FRXUW WR H[SDQG LWV LQWHUSUHWDWLRQ RI $SSUHQGL WR LQFOXGH D   VXFK >@ VXEVHFWLRQ VKRXOG EH UHOLHG XSRQl LQVWHDG RI WKH
UHPDQG IRU MXU\ GHWHUPLQDWLRQ DOPRVW DQ\ WLPH WKH IDFWXDO      UHVLGXDO H[FHSWLRQ  ,G DW  HPSKDVLV LQ RULJLQDO
ILQGLQJVRIWKHGLVWULFWFRXUWVLJQLILFDQWO\LQFUHDVHDVHQWHQFH      7KHUHIRUHWKHDQDO\VLVRIDKHDUVD\VWDWHPHQWVKRXOGQRWHQG
                                                                       ZKHQ D VWDWHPHQW IDLOV WR TXDOLI\ DV D SULRU LQFRQVLVWHQW
  )XUWKHUPRUHWKHUHLVQRPDUNHWIRU/PHWKDPSKHWDPLQH
EHFDXVH LW KDV RQO\ RQHWHQWK WKH SRWHQF\ RI '
PHWKDPSKHWDPLQH DQG LWV PDLQ LQJUHGLHQW LV GLIILFXOW WR
REWDLQXQOLNHWKHPDLQLQJUHGLHQWRI'PHWKDPSKHWDPLQH
7KLVFRXUWUHDFKHGDVLPLODUFRQFOXVLRQLQ8QLWHG6WDWHVY
2ZXVX)GWK&LUZKHQLWKHOGWKDW
WKHTXHVWLRQRImZKHWKHUDGUXJLVFUDFNRUVRPHRWKHUIRUP                
RI FRFDLQH EDVHl LV D IDFW IRU WKH VHQWHQFLQJ FRXUW WR            $00 DOVR 8QLWHG 6WDWHV Y ,VPRLOD  )G   WK &LU 
                                                                       8QLWHG 6WDWHV Y 'HHE  )G   WK &LU  8QLWHG
GHWHUPLQH                                                             6WDWHV Y &ODUNH )G   WK &LU  8QLWHG 6WDWHV Y *XLQDQ
                                                                        )G   WK &LU  8QLWHG 6WDWHV Y 0DUFKLQL  )G
                                                                         WK &LU 
       8QLWHG6WDWHVY/DVWHUHWDO          1RV          1RV             8QLWHG6WDWHVY/DVWHUHWDO              

VWDWHPHQWEXWVKRXOGEHHYDOXDWHGXQGHUWKHUHVLGXDOKHDUVD\               PHWKDPSKHWDPLQH+RZHYHUWKH\FRQWHQGWKDWWKHUHLVQR
H[FHSWLRQ                                                                HYLGHQFHWKDW'PHWKDPSKHWDPLQHZRXOGKDYHEHHQFUHDWHG
                                                                            IURPWKHK\GULRGLFDFLGDVWKHGLVWULFWFRXUWRQO\UHOLHGRQWKH
%7KHFDOFXODWLRQRIGHIHQGDQWVjVHQWHQFHV                                WHVWLPRQ\RI$FTXLVWRDQG3HWHU3RROHDJRYHUQPHQWZLWQHVV
                                                                            ZKR WHVWLILHG DV WR KRZ ' DQG /PHWKDPSKHWDPLQH ZHUH
  7KH FDOFXODWLRQ RI WKH TXDQWLW\ RI GUXJV XSRQ ZKLFK D            PDGHDQGWKHLUUHVSHFWLYHSRWHQF\DQGPDUNHWYDOXH7KXV
GHIHQGDQWLVVHQWHQFHGLVUHYLHZHGIRUFOHDUHUURU6HH8QLWHG             GHIHQGDQWVDUJXHWKDWWKHJRYHUQPHQWIDLOHGWRSURYHWKDWmWKH
6WDWHV Y 2ZXVX  )G   WK &LU                 PHWKDPSKHWDPLQHDWWULEXWHGWR>WKHP@ZDVPRUHOLNHO\WKDQ
'HIHQGDQWVj VHQWHQFHV ZHUH FDOFXODWHG XQGHU WKH                   QRWGPHWKDPSKHWDPLQHl8QLWHG6WDWHVYsRQHV)G
6HQWHQFLQJ *XLGHOLQHV ZKLFK GLVWLQJXLVKHG EHWZHHQ '                     WK &LU  VHH HJ 8QLWHG 6WDWHV Y
PHWKDPSKHWDPLQH DQG /PHWKDPSKHWDPLQH  7KH GLVWULFW                   5DPVGDOH)GWK&LU
FRXUWGHWHUPLQHGWKDWWZRRXQFHVRISXUHPHWKDPSKHWDPLQH
FRXOGEHPDGHIURPHDFKPLOOLOLWHUERWWOHRIK\GULRGLF                    'HIHQGDQWVDUJXHWKHLUFDVHLVVLPLODUWR8QLWHG6WDWHVY
DFLG  $ WZRRXQFH \LHOG SURGXFHV ILIW\VL[ JUDPV RI SXUH          'XGGHQ)GWK&LULQZKLFKWKH
PHWKDPSKHWDPLQH  :LOVRQ 2LO &RPSDQ\ UHFRUGV LQGLFDWH                 1LQWK&LUFXLWKHOGLWZDVFOHDUHUURUWRVHQWHQFHWKHGHIHQGDQW
WKDW ILYH ERWWOHV RI K\GULRGLF DFLG ZHUH SXUFKDVHG DQG DQ          EDVHG RQ ' UDWKHU WKDQ /PHWKDPSKHWDPLQH ZKHQ WKH
DGGLWLRQDOVL[ERWWOHVZHUHRUGHUHGDQGWKHQFDQFHOHG7KLV                JRYHUQPHQW IDLOHG WR SURYH WKDW 'PHWKDPSKHWDPLQH ZDV
PHDQVWKDWWKHGHIHQGDQWVFRXOGKDYHFUHDWHGJUDPVRI                   LQYROYHG7KHJRYHUQPHQWjVHYLGHQFHLQ'XGGHQFRQVLVWHGRI
PHWKDPSKHWDPLQH  $Q DGGLWLRQDO  JUDPV RI SXUH                   H[SHUW DIILGDYLWV UHJDUGLQJ WKH SUHGRPLQDQFH RI '
PHWKDPSKHWDPLQHLQOLTXLGIRUPZHUHDOVRVHL]HGIURPWKH                    PHWKDPSKHWDPLQH LQ WKH GUXJ PDUNHWSODFH  7KHUHIRUH
GHIHQGDQWVGXULQJWKH$XJXVWWUDIILFVWRS+HQFH                 GHIHQGDQWVXUJHWKLVFRXUWWRUHPDQGWKLVFDVHIRUVHQWHQFLQJ
WKH WRWDO ZHLJKW RI SXUH PHWKDPSKHWDPLQH ZKLFK WKH                   EDVHG RQ /PHWKDPSKHWDPLQH UDWKHU WKDQ '
GHIHQGDQWV FRXOG KDYH SURGXFHG ZDV  JUDPV  8SRQ               PHWKDPSKHWDPLQHDVWKHGLVWULFWFRXUWVKRXOGKDYHmHUU>HG@
GHWHUPLQLQJWKDWDOOHYLGHQFHLQGLFDWHGGHIHQGDQWVjLQWHQWLRQ               RQWKHVLGHRIFDXWLRQlDQGRQO\KHOGWKHPUHVSRQVLEOHIRUWKH
WR FUHDWH 'PHWKDPSKHWDPLQH WKH GLVWULFW FRXUW VHQWHQFHG             TXDQWLW\RIGUXJVIRUZKLFKWKH\ZHUHmPRUHOLNHO\WKDQQRW
/DVWHUWRPRQWKVLPSULVRQPHQWDQG/HDUWRPRQWKV                    UHVSRQVLEOHl6HH8QLWHG6WDWHVY5XVVHOO)G
LPSULVRQPHQW                                                              WK&LULQWHUQDOTXRWDWLRQVDQGFLWDWLRQVRPLWWHG
 7KHGHIHQGDQWVGRQRWGLVSXWHWKDWWKHJUDPVRIOLTXLG                  )LQDOO\ GHIHQGDQWV DVVHUW WKDW WKHLU )LIWK DQG 6L[WK
PHWKDPSKHWDPLQH VHL]HG RQ $XJXVW   ZHUH '                    $PHQGPHQW ULJKWV ZHUH YLRODWHG EHFDXVH WKH MXU\ GLG QRW
                                                                            GHWHUPLQH ZKHWKHU WKH\ LQWHQGHG WR FUHDWH ' RU /
                                                                            PHWKDPSKHWDPLQH7KLVDUJXPHQWLVEDVHGRQWKHSUHPLVH
    
      7KH FRXUW ZDV OHDQLQJ WRZDUG WKLV LQWHUSUHWDWLRQ RI WKH UHVLGXDO      WKDWGXHSURFHVVPDQGDWHVWKDWRQO\DMXU\PD\GHWHUPLQHD
KHDUVD\ H[FHSWLRQ LQ 8QLWHG 6WDWHV Y 3RSHQDV  )G   WK    VHWRIIDFWVZKLFKLQFUHDVHWKHSUHVFULEHGUDQJHRISHQDOWLHVWR
&LU  ZKHQ LW UHYHUVHG D GLVWULFW FRXUW ZKLFK KHOG WKDW D VWDWHPHQW
                                                                            ZKLFKDFULPLQDOGHIHQGDQWLVH[SRVHG'HIHQGDQWVUHO\RQ
IDLOLQJ WR PHHW WKH KHDUVD\ UHTXLUHPHQWV RI )HG 5 (YLG G
LQYROYLQJ SULRU LQFRQVLVWHQW VWDWHPHQWV FDQ QHYHU TXDOLI\ IRU DGPLVVLRQ
                                                                            $SSUHQGLY1HZsHUVH\86  ZKLFK
XQGHU WKH UHVLGXDO KHDUVD\ H[FHSWLRQ

                                                                              
      7KHVH VHQWHQFHV ZHUH RQ WKH ORZHU HQG RI WKH JXLGHOLQH UDQJH RI         8QGHU WKH  6HQWHQFLQJ *XLGHOLQHV WKH EDVH RIIHQVH OHYHO IRU '
WR  PRQWKV IRU WKH GUXJ FRQYLFWLRQV /HDU UHFHLYHG DQ DGGLWLRQDO VL[W\   PHWKDPSKHWDPLQH    ZDV      ZKLOH   WKH   EDVH   RIIHQVH   OHYHO   IRU   /
PRQWKV EHFDXVH RI KLV  86&  F FRQYLFWLRQ XQGHU &RXQW        PHWKDPSKHWDPLQH ZDV 
