           5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
                3XUVXDQW WR 6L[WK &LUFXLW 5XOH                              8QLWHG6WDWHVY)LQNOH\HWDO        1RV
        (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                    )LOH 1DPH DS
                                                                          s 'HEROG $66,67$17 81,7(' 67$7(6 $77251(<
                                                                          'HWURLW0LFKLJDQIRU$SSHOOHH
81,7('67$7(6&28572)$33($/6
                                                                                               BBBBBBBBBBBBBBBBB
                   )257+(6,;7+&,5&8,7
                     BBBBBBBBBBBBBBBBB                                                             23,1,21
                                                                                               BBBBBBBBBBBBBBBBB
                                                                            521$/'/((*,/0$1&LUFXLWsXGJH5LFKDUG)LQNOH\
 81,7(' 67$7(6 2) $0(5,&$         ;                                      DQG :LOOLDP +DOOLEXUWRQ ZHUH FRQYLFWHG RI FRQVSLUDF\ WR
           3ODLQWLII$SSHOOHH                                           GHIUDXGWKH8QLWHG6WDWHV+DOOLEXUWRQZDVDOVRFRQYLFWHGRQ
                                                                         QXPHURXV VXEVWDQWLYHFRXQWVIRUPDNLQJIUDXGXOHQWFODLPV
                                      1RV                  DJDLQVWWKHJRYHUQPHQW2QDSSHDO+DOOLEXUWRQFKDOOHQJHV
            Y                      
                                     !                                    WKH VHQWHQFLQJ HQKDQFHPHQW WKDW KH UHFHLYHG IRU EHLQJ D
                                                                         PDQDJHU RI WKH FRQVSLUDF\  ,Q DGGLWLRQ )LQNOH\ DQG
 5,&+$5' ),1./(<                                                +DOOLEXUWRQERWKFKDOOHQJHWKHDPRXQWRIUHVWLWXWLRQWKDWWKH\
 DQG:,//,$0 +$//,%85721                                                 ZHUH RUGHUHG WR SD\  )RU WKH UHDVRQV VHW IRUWK EHORZ ZH
                                                               $)),50 WKH MXGJPHQW RI WKH GLVWULFW FRXUW DV WR
        'HIHQGDQWV$SSHOODQWV                                           +DOOLEXUWRQjVVHQWHQFHEXW5(0$1'WKHUHVWLWXWLRQSRUWLRQ
                                                                         RI WKH MXGJPHQWV DJDLQVW )LQNOH\ DQG +DOOLEXUWRQ IRU
                                   1                                      UHFRQVLGHUDWLRQ
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
      IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW                                          ,%$&.*5281'
     1Rn*HRUJH&6WHHK'LVWULFWsXGJH
                                                                          $ )DFWXDOEDFNJURXQG
                   6XEPLWWHG0DUFK                                )LQNOH\DQG+DOOLEXUWRQZHUHFRQYLFWHGRISDUWLFLSDWLQJLQ
                                                                          D VFKHPH WR GHIUDXG WKH 8QLWHG 6WDWHV  7KH VFKHPH ZDV
                'HFLGHGDQG)LOHG$SULO                         GHVLJQHG WR REWDLQ WD[ UHIXQGV DQG XQHPSOR\PHQW FKHFNV
                                                                          IURP WKH ,QWHUQDO 5HYHQXH 6HUYLFH WKH 6WDWH RI 0LFKLJDQ
 %HIRUH&2/(*,/0$1DQG%5,*+7&LUFXLWsXGJHV                      7UHDVXU\ 'HSDUWPHQW DQG WKH &LW\ RI 'HWURLW 7UHDVXU\
                 BBBBBBBBBBBBBBBBB                                        'HSDUWPHQW7KHFRQVSLUDWRUVDOOHJHGO\ILOHGPRUHWKDQ
                             &2816(/                                      WD[UHWXUQVWKDWZHUHHLWKHUIDOVHRUVXEVWDQWLDOO\LQIODWHG%\
                                                                          FUHDWLQJVKHOOFRPSDQLHVREWDLQLQJ(PSOR\HU,GHQWLILFDWLRQ
21%5,()sRKQ/%HODQJHU6WHUOLQJ+HLJKWV0LFKLJDQ                  1XPEHUV (,1V DQG FUHDWLQJ IDNH : IRUPV WKH
:LOOLDP:6ZRU'HWURLW0LFKLJDQIRU$SSHOODQWV'DYLG                FRQVSLUDWRUVPDGHIDOVHFODLPVLQH[FHVVRI
                                                                            +DOOLEXUWRQ MRLQHG WKH VFKHPH EHJXQ E\ FRFRQVSLUDWRU
                                                                          sXOLDQ7XUQHULQHDUO\7XUQHULVQRWDSDUW\WRWKLV
                                                                         DSSHDO+DOOLEXUWRQFUHDWHGDFRPSDQ\WKDWZDVXWLOL]HGWR
     7KH +RQRUDEOH 0\URQ + %ULJKW 6HQLRU &LUFXLW sXGJH RI WKH 8QLWHG
6WDWHV &RXUW RI $SSHDOV IRU WKH (LJKWK &LUFXLW VLWWLQJ E\ GHVLJQDWLRQ
                                                                          FDVKDQXPEHURIWKHFKHFNVWKDWKHIUDXGXOHQWO\REWDLQHG+H

                                   
1RV          8QLWHG6WDWHVY)LQNOH\HWDO                 8QLWHG6WDWHVY)LQNOH\HWDO     1RV

DOVR SUHSDUHG IDOVH WD[ UHWXUQV XVLQJ WKH QDPHV RI IULHQGV   ,G7KHDSSOLFDWLRQRIWKH6HQWHQFLQJ*XLGHOLQHVEDVHGRQ
DVVRFLDWHV DQG IDPLO\ PHPEHUV DQG UHFUXLWHG KLV QHSKHZ        WKHVHIDFWVKRZHYHULVDTXHVWLRQRIODZWKDWZHUHYLHZGH
sDVRQ+DOOLEXUWRQWRKHOSREWDLQDIUDXGXOHQWUHIXQGFKHFN            QRYR8QLWHG6WDWHVY3HUNLQV)GWK&LU
(YHQWXDOO\ +DOOLEXUWRQ EHJDQ RSHUDWLQJ RQ KLV RZQ              
LQGHSHQGHQWO\RI7XUQHU
                                                                       % 7KH GLVWULFW FRXUW GLG QRW HUU LQ HQKDQFLQJ
  )LQNOH\ZDVUHFUXLWHGE\+DOOLEXUWRQWREHFRPHSDUWRIWKH              +DOOLEXUWRQjVVHQWHQFHSXUVXDQWWR%FRIWKH
VFKHPHEHFDXVHWKHFRQVSLUDWRUVQHHGHGDFFHVVWRDGGLWLRQDO               6HQWHQFLQJ*XLGHOLQHV
QDPHVDQGVRFLDOVHFXULW\QXPEHUVLQRUGHUWRILOHPRUHIDOVH
UHWXUQV$VDQDJHQWDQGVXSHUYLVRUDWDFROOHFWLRQDJHQF\             +DOOLEXUWRQ DUJXHV WKDW KH ZDV LPSURSHUO\ JLYHQ D
)LQNOH\jV MRE JDYH KLP DFFHVV WR QDPHV VRFLDO VHFXULW\        VHQWHQFLQJ HQKDQFHPHQW RI WZR OHYHOV DV mDQ RUJDQL]HU
QXPEHUVDQG(,1VRIYDULRXVGHEWRUV                                 OHDGHUPDQDJHURUVXSHUYLVRUlRIWKHFRQVSLUDF\SXUVXDQWWR
                                                                       %FRIWKH6HQWHQFLQJ*XLGHOLQHV+HLQVLVWVWKDWWKH
% 3URFHGXUDOEDFNJURXQG                                               UHFRUG GRHV QRW VXSSRUW WKH ILQGLQJ WKDW KH VXSHUYLVHG RU
                                                                       PDQDJHG DQ\ SDUW RI WKH FRQVSLUDF\ DQG WKDW m>P@HUHO\
   )LQNOH\ DQG +DOOLEXUWRQ ZHUH LQGLFWHG RQ RQH FRXQW RI       SOD\LQJDQHVVHQWLDOUROHLQWKHRIIHQVHLVQRWHTXLYDOHQWWR
FRQVSLUDF\WRGHIUDXGWKH8QLWHG 6WDWHVLQYLRODWLRQRI           H[HUFLVLQJPDQDJHULDOFRQWURORYHURWKHUSDUWLFLSDQWVl
86&DQGRQPXOWLSOHVXEVWDQWLYHFRXQWVRIPDNLQJ             8QLWHG 6WDWHV Y 9DQGHEHUJ  )G   WK &LU
IUDXGXOHQWFODLPVDJDLQVWWKHJRYHUQPHQWLQYLRODWLRQRI           
86&7KH\ZDLYHGWKHLUULJKWWRDMXU\WULDO$IWHUD
ZHHNORQJEHQFKWULDOFRQGXFWHGLQ'HFHPEHURIWKH                 ,Q RUGHU WR EH VXEMHFWHG WR DQ HQKDQFHPHQW XQGHU WKLV
GLVWULFWFRXUWIRXQGERWKGHIHQGDQWVJXLOW\RIWKHFRQVSLUDF\          VHFWLRQ D FRQVSLUDWRU PXVW EH IRXQG WR KDYH EHHQ mWKH
FKDUJH DQG +DOOLEXUWRQ JXLOW\ RI WKH VXEVWDQWLYH RIIHQVHV      RUJDQL]HUOHDGHUPDQDJHURUVXSHUYLVRURIRQHRUPRUHRWKHU
)LQNOH\DQG+DOOLEXUWRQGRQRWFKDOOHQJHWKHLUFRQYLFWLRQVRQ          SDUWLFLSDQWVl  86 6(17(1&,1* *8,'(/,1(6 0$18$/
DSSHDO,QVWHDGWKH\ERWKFKDOOHQJHWKHDPRXQWRIUHVWLWXWLRQ        %FPWQ7KHFRPPHQWDU\IXUWKHUSURYLGHVWKDW
FKDUJHG DJDLQVW WKHP DQG +DOOLEXUWRQ FKDOOHQJHV WKH             IDFWRUVWREHFRQVLGHUHGLQGHWHUPLQLQJZKHWKHUDFRQVSLUDWRU
VHQWHQFLQJHQKDQFHPHQWWKDWKHUHFHLYHGEHFDXVHWKHGLVWULFW           ZDVDPDQDJHURUVXSHUYLVRULQFOXGH
FRXUW GHWHUPLQHG WKDW KH ZDV D PDQDJHU RI WKH FRQVSLUDF\
ZLWKLQ WKH PHDQLQJ RI  %F RI WKH 8QLWHG 6WDWHV             WKHH[HUFLVHRIGHFLVLRQPDNLQJDXWKRULW\WKHQDWXUHRI
6HQWHQFLQJ*XLGHOLQHV                                                     WKHSDUWLFLSDWLRQLQWKHFRPPLVVLRQRIWKHRIIHQVHWKH
                                                                           UHFUXLWPHQWRIDFFRPSOLFHVWKHFODLPHGULJKWWRDODUJHU
                        ,,$1$/<6,6                                     VKDUH RI WKH IUXLWV RI WKH FULPH WKH GHJUHH RI
                                                                           SDUWLFLSDWLRQLQSODQQLQJRURUJDQL]LQJWKHRIIHQVHWKH
$ 6WDQGDUGRIUHYLHZ                                                      QDWXUHDQGVFRSHRIWKHLOOHJDODFWLYLW\DQGWKHGHJUHHRI
                                                                           FRQWURODQGDXWKRULW\H[HUFLVHGRYHURWKHUV
   7KH 8QLWHG 6WDWHV KDV WKH EXUGHQ RI SURYLQJ WKH
DSSOLFDELOLW\ RI WKH HQKDQFHPHQW XQGHU  % RI WKH           866(17(1&,1* *8,'(/,1(6 0$18$/ %FPWQ
6HQWHQFLQJ*XLGHOLQHVE\DSUHSRQGHUDQFHRIWKHHYLGHQFH
8QLWHG6WDWHVY0DUWLQH])GWK&LU             ,QDSSO\LQJWKHVH IDFWRUVWRWKHFDVHDWKDQGWKHGLVWULFW
LQWHUQDOFLWDWLRQVRPLWWHG$GLVWULFWFRXUWjVIDFWXDOILQGLQJV     FRXUWIRXQGWKDWWKHUROHSOD\HGE\+DOOLEXUWRQLQVXSHUYLVLQJ
RQWKLVLVVXHZLOOQRWEHGLVWXUEHGXQOHVVFOHDUO\HUURQHRXV          KLVQHSKHZsDVRQZDVLQDQGRILWVHOIVXIILFLHQWWRDGGWKH
1RV          8QLWHG6WDWHVY)LQNOH\HWDO                 8QLWHG6WDWHVY)LQNOH\HWDO       1RV

HQKDQFHPHQWWR+DOOLEXUWRQjVVHQWHQFH7HVWLPRQ\EHIRUHWKH               7KH JRYHUQPHQW GRHV QRW UHVSRQG GLUHFWO\ WR WKH
GLVWULFW FRXUW LQGLFDWHG WKDW +DOOLEXUWRQ DQG 7XUQHU KDG         GHIHQGDQWVj H[ SRVW IDFWR DUJXPHQW EXW GRHV FRQWHQG WKDW
UHFUXLWHG sDVRQ LQWR WKH VFKHPH ZLWK DQ RIIHU RI PRQHWDU\      UHVWLWXWLRQZDVRUGHUHGRQO\XQGHU86&%L,
UHZDUGV+DOOLEXUWRQWKHQLQVWUXFWHGsDVRQWRFDVKDUHIXQG            JRYHUQLQJUHVWLWXWLRQIRUmWKHDPRXQWRIWKHORVVVXVWDLQHGE\
FKHFN WKDW ZRXOG EH PDLOHG WR KLP DQG FODLP WKDW LW ZDV      HDFKYLFWLPDVDUHVXOWRIWKHRIIHQVHl,QDQ\HYHQWWKH
OHJLWLPDWHO\REWDLQHG,QDGGLWLRQWKHUHFRUGLVUHSOHWHZLWK         JRYHUQPHQWDJUHHVWKDWDUHPDQGLVQHFHVVDU\RQWKLVLVVXH
RWKHU HYLGHQFH UHJDUGLQJ +DOOLEXUWRQjV LQYROYHPHQW LQ              ,WFRQFHGHVWKDWE\RUGHULQJWKHGHIHQGDQWVWRPDNHUHVWLWXWLRQ
FDUU\LQJ RXW WKH VFKHPH DQG LQ KLV UHFUXLWPHQW RI RWKHU        LQ WKH DPRXQW RI WKH mLQWHQGHGl ORVV DV GHWHUPLQHG E\ WKH
LQGLYLGXDOVLQFOXGLQJ)LQNOH\                                         FRXUWXQGHU)ERIWKH6HQWHQFLQJ*XLGHOLQHVDVHFWLRQ
                                                                        WKDW ZDV GHOHWHG DV RI 1RYHPEHU   WKH GHIHQGDQWV
  $OWKRXJK +DOOLEXUWRQ WULHV WR SDLQW KLV UROH LQ D SDVVLYH    ZHUHLPSHUPLVVLEO\RUGHUHGWRSD\PRUHWKDQWKHDFWXDOORVVHV
PDQQHUWKHGLVWULFWFRXUWGLGQRWFOHDUO\HUULQILQGLQJWKDW          VXVWDLQHGE\WKHJRYHUQPHQWDOHQWLWLHV:HWKHUHIRUHUHPDQG
+DOOLEXUWRQ KDG D VXSHUYLVRU\ RU PDQDJHULDO UROH LQ WKH         WKH UHVWLWXWLRQ SRUWLRQ RI )LQNOH\jV DQG +DOOLEXUWRQjV
FRQVSLUDF\:HWKHUHIRUHVXVWDLQWKHVHQWHQFLQJHQKDQFHPHQW            MXGJPHQW VR WKDW WKH DPRXQW RI UHVWLWXWLRQ PD\ EH
SXUVXDQWWR %FRIWKH6HQWHQFLQJ*XLGHOLQHV                    UHFDOFXODWHGE\WKHGLVWULFWFRXUWDFFRUGLQJWRWKHDPRXQWRI
                                                                        WKHDFWXDOORVVVXVWDLQHG
& 7KHUHVWLWXWLRQSRUWLRQRIHDFKGHIHQGDQWjVMXGJPHQW
   PXVWEHUHPDQGHGIRUUHFDOFXODWLRQ                                                       ,,,&21&/86,21
  )LQNOH\ DQG +DOOLEXUWRQ DUJXH WKDW WKH GLVWULFW FRXUW            )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH
LPSURSHUO\ FDOFXODWHG WKH UHVWLWXWLRQ SRUWLRQ RI WKHLU            MXGJPHQWRIWKHGLVWULFWFRXUWDVWR+DOOLEXUWRQjVVHQWHQFHEXW
MXGJPHQWV  7KH\ SRLQW RXW WKDW 6HQWHQFLQJ *XLGHOLQHV            5(0$1'WKHUHVWLWXWLRQSRUWLRQRIWKHMXGJPHQWVDJDLQVW
(DGLUHFWVWKHGLVWULFWFRXUWWRmHQWHUDUHVWLWXWLRQ        )LQNOH\DQG+DOOLEXUWRQIRUUHFRQVLGHUDWLRQ
RUGHUIRUWKHIXOODPRXQWRIWKHYLFWLPjVORVVLIVXFKRUGHULV
DXWKRUL]HGXQGHU86&
RU$>@l'HIHQGDQWVDUHREOLJDWHGWR
PDNH UHVWLWXWLRQ RQO\ WR WKH H[WHQW WKDW DQ DFWXDO ORVV ZDV
VXVWDLQHGDVDUHVXOWRIWKHRIIHQVH86&%L,
  )LQNOH\ DQG +DOOLEXUWRQ ILUVW DUJXH WKDW WKH DPRXQW RI
UHVWLWXWLRQRUGHUHGH[FHHGVWKHFXPXODWLYHORVVVXVWDLQHGE\
WKHJRYHUQPHQWDOHQWLWLHV6HFRQGWKH\FRQWHQGWKDWWRWKH
H[WHQWWKDWWKHGLVWULFWFRXUWRUGHUHGUHVWLWXWLRQSXUVXDQWWR
86&$WKHQDYLRODWLRQRIWKH([3RVW)DFWR&ODXVH
RFFXUUHGEHFDXVH$ZDVHQDFWHGDIWHUDOORIWKHDFWV
FKDUJHGLQWKHLQGLFWPHQWWRRNSODFH)LQNOH\DOVRDUJXHVWKDW
KH VKRXOG EH KHOG UHVSRQVLEOH RQO\ IRU WKH DPRXQW RI ORVV
DFWXDOO\DWWULEXWDEOHWRKLPDIWHUKHEHFDPHLQYROYHGLQWKH
FRQVSLUDF\
