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

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




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


 s8'< /<11 7$+)6                 ;
          3ODLQWLII$SSHOODQW     
             &URVV$SSHOOHH       
                                     1RV
                                     
           Y                       !
                                   
                                   
 :,//,$0 1 352&725               
 0,5$1'$ . 352&725               
        'HIHQGDQWV$SSHOOHHV 
             &URVV$SSHOODQWV 
                                   
                                  1
      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
     IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
 1RnsRKQ&RUEHWW2j0HDUD'LVWULFWsXGJH
                      $UJXHGsXO\
              'HFLGHGDQG)LOHGsDQXDU\
 %HIRUH5<$1DQG%2**6&LUFXLWsXGJHV+$<1(6
                  'LVWULFWsXGJH




    
     7KH +RQRUDEOH :LOOLDP s +D\QHV sU 8QLWHG 6WDWHV 'LVWULFW sXGJH
IRU WKH 0LGGOH 'LVWULFW RI 7HQQHVVHH VLWWLQJ E\ GHVLJQDWLRQ



                                   
     7DKIVY3URFWRUHWDO     1RV

                     BBBBBBBBBBBBBBBBB
                           &2816(/
$5*8('  0LFKDHO 6 &DIIHUW\ 9$1'(5 0$/(
%(//$0< 	 *,/&+5,67 'HWURLW 0LFKLJDQ IRU
$SSHOODQW  )UDQN ' (DPDQ %(//$1&$ %($77,( 	
'(/,6/( +DUSHU :RRGV 0LFKLJDQ IRU $SSHOOHHV
21 %5,()  0LFKDHO 6 &DIIHUW\ 9$1'(5 0$/(
%(//$0< 	 *,/&+5,67 'HWURLW 0LFKLJDQ IRU
$SSHOODQW)UDQN'(DPDQ6WHYHQs*UREEHO%(//$1&$
%($77,( 	 '(/,6/( +DUSHU :RRGV 0LFKLJDQ IRU
$SSHOOHHV
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
  5<$1 &LUFXLW sXGJH  7KH SODLQWLII sXG\ /\QQ 7DKIV
DSSHDOVIURPWKHGLVWULFWFRXUWjVRUGHUGLVPLVVLQJSXUVXDQWWR
)HG5&LY3EWKHFRPSODLQW7DKIVKDGILOHGXQGHU
86&DJDLQVW:LOOLDP13URFWRUDQG0LUDQGD.
3URFWRU DOOHJLQJ WKDW WKH\ KDG DFWHG LQ FRQFHUW ZLWK VWDII
PHPEHUV RI WKH :D\QH &RXQW\ 0LFKLJDQ 7KLUG &LUFXLW
&RXUW WR REWDLQ SHUVRQDO SURWHFWLRQ RUGHUV WKDW YLRODWHG
7DKIVjV)LUVWDQG)RXUWHHQWK$PHQGPHQWULJKWV
   7DKIVDOVRDSSHDOVIURPWKHGLVWULFWFRXUWjVRUGHUDZDUGLQJ
WKH3URFWRUVLQDWWRUQH\IHHVSXUVXDQWWR)HG5&LY
3DQG86&2QFURVVDSSHDOWKH3URFWRUV
DUJXHWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQZKHQLWIDLOHG
WRDZDUGLQDWWRUQH\IHHVDVGHIHQVHFRXQVHOKDG
VRXJKW
  )RUWKHUHDVRQVVHWIRUWKEHORZZH$)),50WKHGLVWULFW
FRXUWjVGLVPLVVDORI7DKIVjVFODLP+RZHYHUEHFDXVH
7DKIVjVOHJDODUJXPHQWZDVQRWXQUHDVRQDEOHIULYRORXVRU
ZLWKRXWIRXQGDWLRQZHKROGWKDWWKHGLVWULFWFRXUWDEXVHGLWV
GLVFUHWLRQ LQ DZDUGLQJ  LQ DWWRUQH\ IHHV DQG ZH
5(9(56(WKDWDZDUG
1RV          7DKIVY3URFWRUHWDO       

                      ,%$&.*5281'
                     $0RWLRQWR'LVPLVV
   )URPWKHHDUO\VWR2FWREHUsXG\/\QQ7DKIV
DQG:LOOLDP13URFWRUD'HWURLWEDVHGWHOHYLVLRQUHSRUWHU
FDUULHGRQDQH[WUDPDULWDODIIDLU7DKIVDOOHJHVWKDWDIWHUWKH
DIIDLU HQGHG 3URFWRU EHJDQ D FDPSDLJQ RI KDUDVVPHQW DQG
LQWLPLGDWLRQGHVLJQHGWRSUHYHQWKHUIURPPDNLQJSXEOLFWKHLU
UHODWLRQVKLS  7DKIV VWDWHV WKDW GXH WR WKH KDUDVVPHQW VKH
LQWHQGHGLQ2FWREHUWRREWDLQDSHUVRQDOSURWHFWLRQRUGHU
332EXWWKDW3URFWRUSHUVXDGHGKHUQRWWRILOHWKHSHWLWLRQ
6KRUWO\WKHUHDIWHU3URFWRUDQGKLVZLIH0LUDQGD.3URFWRU
ILOHG WKHLU RZQ SHWLWLRQV IRU 332V DJDLQVW 7DKIV  2Q
2FWREHU   WKH :D\QH &RXQW\ 7KLUG &LUFXLW &RXUW
LVVXHG VHSDUDWH H[ SDUWH 332V IRU :LOOLDP DQG 0LUDQGD
3URFWRUDJDLQVW7DKIV,QUHVSRQVH7DKIVILOHGDFRPSODLQWLQ
IHGHUDOGLVWULFWFRXUWRQsDQXDU\DOOHJLQJLQHIIHFW
FRUUXSW FRPSOLFLW\ EHWZHHQ WKH 3URFWRUV DQG XQQDPHG
SHUVRQQHO RI WKH :D\QH &RXQW\ &LUFXLW &RXUW WR GHSULYH
7DKIV RI KHU FRQVWLWXWLRQDO ULJKWV DV PRUH IXOO\ GHWDLOHG
EHORZ
  8QGHU0LFKLJDQODZDUHVSRQGHQWKDVWKHULJKWWREULQJD
PRWLRQWRUHVFLQGD332ZLWKLQGD\VRIEHLQJVHUYHGZLWK
QRWLFHRUUHFHLYLQJDFWXDOQRWLFHRIWKH3320LFK&RPS
/DZVDQGmWKHFRXUWVKDOOVFKHGXOHDKHDULQJ
RQ WKH PRWLRQ WR PRGLI\ RU UHVFLQG WKH H[ SDUWH SHUVRQDO
SURWHFWLRQRUGHUZLWKLQGD\VDIWHUWKHILOLQJRIWKHPRWLRQ
WRPRGLI\RUUHVFLQGl0LFK&RPS/DZV
'HVSLWH 7DKIVjV DWWHPSWV WR REWDLQ D WLPHO\ KHDULQJ LQ WKH
:D\QH&RXQW\&LUFXLW&RXUWWRGLVVROYHWKH332VQRKHDULQJ
ZDVKHOGXQWLO$SULO:KHQWKHKHDULQJZDVILQDOO\
KHOG7DKIVjVFRXQVHOFRQWHQGHGWKDWWKH332V DVZULWWHQ
LQIULQJHG XSRQ KLV FOLHQWjV )LUVW $PHQGPHQW ULJKWV  ,Q
DGGLWLRQ WR SUHYHQWLQJ KHU IURP KDYLQJ FRQWDFW ZLWK WKH
3URFWRUVWKH332VSUHYHQWHG7DKIVIURPmXV>LQJ@LQGLYLGXDOV
RU PHGLD WR KDUDVV ERWKHU WKUHDWHQ LH SUHVHQWLQJ
LQIRUPDWLRQSKRWRVGHWDLOVRISDVWUHODWLRQVKLSl7KHVWDWH
     7DKIVY3URFWRUHWDO    1RV         1RV        7DKIVY3URFWRUHWDO     

FRXUWGHFOLQHGWRVHWDVLGHWKH 332VDQGLQVWHDGLVVXHGD         XQGLVSXWHGIDFWVLQIURQWRI7DKIVjVDWWRUQH\DWWKHWLPHWKH
QHZ332SUHYHQWLQJ:LOOLDP3URFWRUIURPFRQWDFWLQJ7DKIV            FRPSODLQWZDVILOHG0XFKRIZKDWZHKDYHVDLGZLWKUHJDUG
                                                                     WRWKH5XOHEDVLVIRUDZDUGLQJDWWRUQH\IHHVRQDVDQFWLRQ
   7DKIV WKHQ DPHQGHG KHU SUHYLRXVO\ ILOHG   IHGHUDO    DSSOLHVKHUHDOWKRXJKWKHFULWHULDIRUWKHWZREDVHVDUHQRW
FRPSODLQWDQGDOOHJHGDPRQJRWKHUWKLQJVYLRODWLRQRIKHU          LGHQWLFDO  ,Q OLJKW RI WKH UHSHDWHG KHDULQJ GHOD\V WKH
IUHH VSHHFK DQG GXH SURFHVV ULJKWV XQGHU WKH )LUVW DQG      LQDFFHVVLEOHFRXUWILOHVDQG:LOOLDP3URFWRUjVDOOHJHGWKUHDW
)RXUWHHQWK$PHQGPHQWVUHVSHFWLYHO\7DKIVFRQWHQGHGWKDW           ZH KROG WKDW WKH ILOLQJ RI WKH   VXLW ZDV QHLWKHU
WKH3URFWRUVKDGDFWHGLQFRQFHUWZLWKVWDWHDFWRUVWRGHSULYH       mIULYRORXVXQUHDVRQDEOHRUJURXQGOHVVl,G,QVKRUWWKLVLV
KHU RI mKHU )LUVW $PHQGPHQW ULJKWV EHFDXVH VKH FDQQRW        QRW DQ mHJUHJLRXV FDVH>@l WKDW PHULWV DQ DZDUG RI  
WUXWKIXOO\VSHDNWRWKLUGSHUVRQVRUPHGLDRUSURYLGHWKHP          DWWRUQH\ IHHV  ,G DW   $V ZH KDYH VWDWHG 7DKIVjV
ZLWK SKRWRV DQG GRFXPHQWV UHJDUGLQJ WKH 'HIHQGDQWVl          FRPSODLQWZDVLQDGHTXDWHEXWQRWIULYRORXV
7DKIV DOVR FODLPHG WKDW WKH 3URFWRUV REWDLQHG WKH 332V
mFRUUXSWO\l DQG WKDW EHFDXVH VWDII PHPEHUV RI WKH :D\QH                          ,,,&21&/86,21
&RXQW\&LUFXLW&RXUWDFWHGMRLQWO\ZLWKWKH3URFWRUVWRREWDLQ
XQFRQVWLWXWLRQDO332VWKHGHIHQGDQWVZHUHVWDWHDFWRUVIRU             %HFDXVH7DKIVjVFRPSODLQWIDLOVWRSURYLGHPRUHWKDQEDUH
SXUSRVHV,QUHVSRQVHWKH3URFWRUVILOHGDPRWLRQWR        DOOHJDWLRQVRIVWDWHDFWLRQLWGRHVQRWPDNHRXWDQDFWLRQDEOH
GLVPLVV                                                           FODLPDQGZH$)),50WKHGLVWULFWFRXUWjVRUGHUGLVPLVVLQJ
                                                                     KHUFRPSODLQWSXUVXDQWWR5XOHE+RZHYHUEHFDXVH
   $WDKHDULQJKHOGLQIHGHUDOGLVWULFWFRXUW7DKIVjVFRXQVHO      WKHFRPSODLQWZDVQRWXQUHDVRQDEOHZLWKLQWKHPHDQLQJRI
DUJXHG WKDW RQFH WKH 3URFWRUV REWDLQHG DQ mLPPHGLDWHO\        5XOHXQGHUWKHFLUFXPVWDQFHVDQGEHFDXVHWKHILOLQJRIWKH
HQIRUFHDEOHVWDWHMXGJPHQWlWKH\FRXOGLQYRNHWKHIXOOSRZHU          DFWLRQ GLG QRW FRQVWLWXWH HJUHJLRXV FRQGXFW ZH
RIWKHVWDWHDQGFRXOGEHFRQVLGHUHGVWDWHDFWRUVIRU         5(9(56( WKH DZDUG RI DWWRUQH\ IHHV XQGHU 5XOH  DQG
SXUSRVHV7KHGLVWULFWFRXUWQRWHGWKDWZKLOH7DKIVPD\KDYH        
EHHQmGLVDSSRLQWHGDERXWWKHWUHDWPHQW>VKH@UHFHLYHGE\
DFOHUNLQWKH:D\QH&RXQW\&LUFXLW&RXUWlWKHFRPSODLQW
IDLOHG WR PDNH DQ\ VKRZLQJ WKDW WKH GHIHQGDQWV ZHUH VWDWH
DFWRUV,QSDUWLFXODUWKHGLVWULFWFRXUWQRWHGWKDW7DKIVIDLOHG
WRDOOHJHDQ\IDFWVWKDWZRXOGGHPRQVWUDWHWKDWWKHGHIHQGDQWV
RU :D\QH &RXQW\ &LUFXLW &RXUW VWDII PHPEHUV KDG DFWHG
FRUUXSWO\  7KH GLVWULFW FRXUW GLVPLVVHG 7DKIVjV FRPSODLQW
SXUVXDQWWR5XOHE
     %5XOH6DQFWLRQVDQG$WWRUQH\)HHV
  2Q $SULO   RQH PRQWK EHIRUH WKH GLVWULFW FRXUW
GLVPLVVHG7DKIVjVFRPSODLQWWKH3URFWRUVjFRXQVHOVHUYHGD
PRWLRQIRU5XOHVDQFWLRQVRQ7DKIVDQGRQWKHVDPHGDWH
FRXQVHO ILOHG DQ LGHQWLFDO PRWLRQ ZLWK WKH GLVWULFW FRXUW
$SSDUHQWO\FRXQVHOYHU\VRRQUHFRJQL]HGWKDWE\ILOLQJWKH
5XOHPRWLRQFRQWHPSRUDQHRXVO\ZLWKLWVVHUYLFHXSRQWKH
SODLQWLIIFRXQVHOKDGIDLOHGWRFRPSO\ZLWK5XOHjVmVDIH
    7DKIVY3URFWRUHWDO      1RV           1RV          7DKIVY3URFWRUHWDO       

                    $WWRUQH\)HHV                             KDUERUl SURYLVLRQ  6HH )HG 5 &LY 3 F$  +H
                                                                         WKHUHIRUHSURPSWO\ILOHGD1RWLFHRI:LWKGUDZDORI0RWLRQLQ
   7KH GLVWULFW FRXUWjV DOWHUQDWLYH EDVLV IRU DZDUGLQJ WKH        WKH GLVWULFW FRXUW  $OWKRXJK WKH SDUWLHV GLVSXWH WKH
GHIHQGDQWVDWWRUQH\IHHVZDV:HGRQRWGLVWXUEDQ               VLJQLILFDQFH RI GHIHQVH FRXQVHOjV QRQFRPSOLDQFH ZLWK WKH
DZDUGRIDWWRUQH\IHHVSXUVXDQWWRXQOHVVZHFRQFOXGH             mVDIHKDUERUlSURYLVLRQVIRURXUSXUSRVHVLWLVVXIILFLHQWWR
WKDWWKHFRXUWDEXVHGLWVGLVFUHWLRQLQDZDUGLQJWKHP+DGL[            QRWHWKDWRQ0D\GHIHQVHFRXQVHOUHILOHGKLVPRWLRQ
YsRKQVRQ)GWK&LUm%HFDXVHRI               IRU5XOHVDQFWLRQVUHTXHVWLQJLQDWWRUQH\IHHVDQG
µWKHGLVWULFWFRXUWjVVXSHULRUXQGHUVWDQGLQJRIWKHOLWLJDWLRQ           H[SHQVHV,QDGGLWLRQWKH3URFWRUVSHWLWLRQHGWKHFRXUWIRU
DQGWKHGHVLUDELOLW\RIDYRLGLQJIUHTXHQWDSSHOODWHUHYLHZRI            DWWRUQH\IHHVSXUVXDQWWR86&EDOVRVHHNLQJ
ZKDWHVVHQWLDOO\DUHIDFWXDOPDWWHUVjDQDZDUGRIDWWRUQH\Vj            7KHPDWWHUZDVUHIHUUHGWRDPDJLVWUDWHMXGJH IRU
IHHVXQGHULVHQWLWOHGWRVXEVWDQWLDOGHIHUHQFHl,G            FRQVLGHUDWLRQ
TXRWLQJ+HQVOH\Y(FNHUKDUW86
                                                                            7KHPDJLVWUDWHMXGJHLVVXHGD5HSRUWDQG5HFRPPHQGDWLRQ
   m,Q DQ\ DFWLRQ RU SURFHHGLQJ WR HQIRUFH D SURYLVLRQ RI       FRQFOXGLQJWKDW7DKIVjVFRPSODLQWHYHQUHDGOLEHUDOO\IDLOHG
VHFWLRQWKHFRXUWLQLWVGLVFUHWLRQPD\DOORZ       WR PDNH RXW DQ DFWLRQDEOH FODLP WKDW WKH 3URFWRUVj 332V
WKHSUHYDLOLQJSDUW\RWKHUWKDQWKH8QLWHG6WDWHVDUHDVRQDEOH         YLRODWHG 7DKIVjV )LUVW $PHQGPHQW ULJKWV  7KH PDJLVWUDWH
DWWRUQH\jVIHHDVSDUWRIWKHFRVWVl86&E        MXGJH DOVR KHOG WKDW WKH FRPSODLQWjV YDJXH XQVXSSRUWHG
:HVW6XSS+RZHYHU                                            DOOHJDWLRQVRIFRUUXSWMRLQWDFWLRQIDLOHGDGHTXDWHO\WRDOOHJH
                                                                         WKDW WKH 3URFWRUV ZHUH VWDWH DFWRUV  7KH PDJLVWUDWH MXGJH
  >D@QDZDUGRIDWWRUQH\IHHVDJDLQVWDORVLQJSODLQWLIILQD            FRQFOXGHG WKDW   IHHV DQG 5XOH  VDQFWLRQV ZHUH
  FLYLOULJKWVDFWLRQLVDQH[WUHPHVDQFWLRQDQGPXVWEH                mFOHDUO\ZDUUDQWHGl
  OLPLWHGWRWUXO\HJUHJLRXVFDVHVRIPLVFRQGXFW$
  SUHYDLOLQJGHIHQGDQWVKRXOGRQO\UHFRYHUXSRQDILQGLQJ                  ,Q D WZRSDUDJUDSK RUGHU WKH GLVWULFW FRXUW DFFHSWHG WKH
  E\ WKH GLVWULFW FRXUW WKDW WKH SODLQWLIIjV DFWLRQ ZDV          PDJLVWUDWHMXGJHjVUHFRPPHQGDWLRQDQGLQDVHSDUDWHRUGHU
  IULYRORXV XQUHDVRQDEOH RU ZLWKRXW IRXQGDWLRQ HYHQ              GLUHFWHGWKHSDUWLHVWRVXEPLWSURSRVDOVIRU5XOHVDQFWLRQV
  WKRXJKQRWEURXJKWLQVXEMHFWLYHEDGIDLWK                          DQG DSSOLFDEOH DWWRUQH\ IHHV  ,Q UHVSRQVH WKH 3URFWRUVj
                                                                         FRXQVHO UHFDOFXODWHG KLV HVWLPDWHG IHHV DQG FRVWV DQG
5LGGOH Y (JHQVSHUJHU  )G   WK &LU         UHTXHVWHGDWRWDORI7KHGLVWULFWFRXUWWKHQLVVXHG
LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQV RPLWWHG  m>,@W LV      DQRUGHUGHQ\LQJ7DKIVjVPRWLRQWRUHFRQVLGHUWKHPDJLVWUDWH
LPSRUWDQW WKDW D GLVWULFW FRXUW UHVLVW WKH XQGHUVWDQGDEOH         MXGJHjV UHFRPPHQGDWLRQ DQG DZDUGHG GHIHQVH FRXQVHO
WHPSWDWLRQ WR HQJDJH LQ SRVW KRF UHDVRQLQJ E\ FRQFOXGLQJ         7KHGLVWULFWFRXUWGLGQRWLQGLFDWHWKHEDVLVIRULWV
WKDWEHFDXVHDSODLQWLIIGLGQRWXOWLPDWHO\SUHYDLOKLVDFWLRQ         GHFLVLRQRUKRZLWDUULYHGDWWKHDZDUGDPRXQW
PXVW KDYH EHHQ XQUHDVRQDEOH RU ZLWKRXW IRXQGDWLRQl
&KULVWLDQVEXUJ*DUPHQW&RY((2&86                                          ,,$1$/<6,6
  7KHUHIRUH m>W@R GHWHUPLQH ZKHWKHU D FODLP LV
IULYRORXV XQUHDVRQDEOH RU JURXQGOHVV WKH FRXUW PXVW                %HIRUHSURFHHGLQJWRWKHPHULWVRIWKHSDUWLHVjDUJXPHQW
GHWHUPLQHSODLQWLIIjVEDVLVIRUILOLQJWKHVXLWl5LGGOH           ZH DGGUHVV D WKUHVKROG TXHVWLRQ UDLVHG E\ WKH GHIHQGDQWV
)GDW                                                           FRQFHUQLQJ RXU MXULVGLFWLRQ WR SURFHHG  ,Q WKHLU EULHI WKH
                                                                         3URFWRUVFKDOOHQJHGZKHWKHUZHKDYHDSSHOODWHMXULVGLFWLRQ
  3URSHUO\ IRFXVHG RQ RXU WDVN RI mGHWHUPLQ>LQJ WKH@              QRWLQJ WKDW 7DKIVjV EULHI KDG RPLWWHG DQ\ UHIHUHQFH WR
SODLQWLIIjV EDVLV IRU ILOLQJ WKH VXLWl ZH DJDLQ WXUQ WR WKH   86&RUVRPHVLPLODUVWDWXWHZKHQGLVFXVVLQJ
     7DKIVY3URFWRUHWDO     1RV          1RV          7DKIVY3URFWRUHWDO      

WKHEDVLVIRUDSSHOODWHMXULVGLFWLRQ,QDGGLWLRQWKH3URFWRUV       VKRXOGKDYHUHDOL]HGWKDWKLVVXLWZDVXQOLNHO\WRVXUYLYHD
FRQWHQGHGWKDWWKHSHQGHQF\RIWKHDWWRUQH\IHHLVVXHUHQGHUHG         5XOH E PRWLRQ DEVHQW PRUH VSHFLILF DOOHJDWLRQV RI
WKH5XOHEPRWLRQDQRQILQDORUGHU7KHVHDUJXPHQWV           FRUUXSWLRQ WKDWDORQHZRXOGQRWZDUUDQWWKHLPSRVLWLRQRI
DUHZLWKRXWPHULW                                                   VDQFWLRQV
   7KH LQYROXQWDU\ GLVPLVVDO RI DQ DFWLRQ mRSHUDWHV DV DQ         $UHYLHZRIWKHILQGLQJVE\WKHPDJLVWUDWHMXGJHZKLFK
DGMXGLFDWLRQXSRQWKHPHULWVl)HG5&LY3E:KHQ           ZHUH DGRSWHG E\ WKH GLVWULFW FRXUW DUH LQVWUXFWLYH  7KH
WKH GLVWULFW FRXUW GLVPLVVHG 7DKIVjV FRPSODLQW LW LVVXHG D    PDJLVWUDWH MXGJH EHJDQ E\ H[DPLQLQJ 7DKIVjV )LUVW
ILQDODSSHDODEOHRUGHU7KHSODLQWLIIjVIDLOXUHWRFLWH       $PHQGPHQW DUJXPHQW  :LWKRXW FLWLQJ DQ\ FDVHV KH
LVRIQRMXULVGLFWLRQDOPRPHQW)XUWKHUPRUHWKH6XSUHPH              GHWHUPLQHG WKDW WKH 332V DW LVVXH GLG QRW LQIULQJH DQ\ RI
&RXUWKDVDGRSWHGmDXQLIRUPUXOHWKDWDQXQUHVROYHGLVVXHRI          7DKIVjVIUHHVSHHFKULJKWV1H[WKHWUHDWHG7DKIVjVFODLPV
DWWRUQH\jVIHHVIRUWKHOLWLJDWLRQLQTXHVWLRQGRHVQRWSUHYHQW        UHJDUGLQJFRUUXSWLRQDQGMRLQWDFWLRQLQWKH:D\QH&RXQW\
MXGJPHQWRQWKHPHULWVIURPEHLQJILQDOl%XGLQLFKY%HFWRQ          &LUFXLW &RXUW DV FRQVSLUDF\ DOOHJDWLRQV  5HYLHZLQJ WKH
'LFNLQVRQ DQG &R  86     :H DUH         mFRQVSLUDF\ FODLPVl DV VWDWXWRU\ YLRODWLRQV RI  86&
VDWLVILHGWKDWZHKDYHDSSHOODWHMXULVGLFWLRQ                         DQG  WKH PDJLVWUDWH MXGJH FRQFOXGHG WKDW
                                                                       7DKIVjV DOOHJDWLRQV ZHUH FRQFOXVRU\ XQVXSSRUWHG E\ IDFWV
                    $0RWLRQWR'LVPLVV                              DQG YDJXH  %DVHG RQ WKHVH ILQGLQJV WKH PDJLVWUDWH MXGJH
                                                                       GHWHUPLQHGWKDWm>L@WLVFOHDUWKDW3ODLQWLIIjVFRPSODLQWZDV
  :HUHYLHZGHQRYRWKHGLVPLVVDORIDFRPSODLQWSXUVXDQW              ODFNLQJLQIDFWXDOVXSSRUWDQGXQZDUUDQWHGE\H[LVWLQJODZl
WR5XOHE3IHQQLJY+RXVHKROG&UHGLW6HUYV,QF           :KLOH ZH DJUHH WKDW WKH PDJLVWUDWH MXGJHjV 5HSRUW DQG
)GWK&LUm$OWKRXJKWK>H@VWDQGDUG           5HFRPPHQGDWLRQSURYLGHVDIRUFHIXODUJXPHQWIRUGLVPLVVDO
IRU5XOHEGLVPLVVDOVLVTXLWHOLEHUDOlWKHFRPSODLQW          RI7DKIVjVFRPSODLQWSXUVXDQWWR5XOHEIRUODFNRI
PXVW FRQWDLQ mHLWKHU GLUHFW RU LQIHUHQWLDO DOOHJDWLRQV           IDFWXDO VSHFLILFLW\ LW GRHV QRW IROORZ WKHUHIURP WKDW mWKH
UHVSHFWLQJDOOWKHPDWHULDOHOHPHQWVlDQGWKHDOOHJDWLRQVPXVW         FODLPVWKHUHLQDUH>XQ@ZDUUDQWHGE\H[LVWLQJODZlDVWKH
FRQVWLWXWHmPRUHWKDQEDUHDVVHUWLRQVRIOHJDOFRQFOXVLRQVl           H[SUHVVLRQLVXVHGLQ5XOHE,IWKDWZHUHVRDOPRVW
6FKHLGY)DQQ\)DUPHU&DQG\6KRSV,QF)G                DQ\FRPSODLQWGLVPLVVHGXQGHU5XOHEZRXOGZDUUDQW
 WK &LU LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQV      WKH LPSRVLWLRQ RI VDQFWLRQV  +DG WKH GLVWULFW FRXUW UHDG
RPLWWHG                                                            7DKIVjVFRPSODLQWLQDOLJKWPRVWIDYRUDEOHWRKHUDVLWZDV
                                                                       REOLJDWHGWRGRZHDUHFRQYLQFHGLWZRXOGKDYHVHHQWKDWWKH
  7KHGLVWULFWFRXUWGLVPLVVHG7DKIVjVFODLPKROGLQJ           ILOLQJRIDIHGHUDOFRPSODLQWZDVQRWmXQUHDVRQDEOHlXQGHUWKH
WKDW WKH 3URFWRUV FRXOG QRW EH FRQVLGHUHG VWDWH DFWRUV IRU    FLUFXPVWDQFHV  6HH 0DQQ  )G DW   7DKIVjV
SXUSRVHVm$FODLPPXVWVDWLVI\WZRHOHPHQWV           FRPSODLQW ZDV GLVPLVVHG EHFDXVH LW IDLOHG WR SURYLGH WKH
WKHGHSULYDWLRQRIDULJKWVHFXUHGE\WKH&RQVWLWXWLRQRU           GHIHQGDQWV VXIILFLHQW QRWLFH UHJDUGLQJ WKH DFWRUV ZKR
ODZVRIWKH8QLWHG6WDWHVDQGWKHGHSULYDWLRQZDVFDXVHG            DOOHJHGO\ZHUHFRUUXSWDQGWKHLUDOOHJHGO\FRUUXSWDFWLRQV$
E\ D SHUVRQ DFWLQJ XQGHU FRORU RI VWDWH ODZl  (OOLVRQ Y   FRPSODLQWDOOHJLQJFRQVSLUDF\ZKRVHHVVHQWLDOGHILFLHQF\LV
*DUEDULQR  )G   WK &LU  LQWHUQDO          WKDWLWLVODFNLQJLQVXIILFLHQWIDFWXDOGHWDLODQGVSHFLILFLW\LV
TXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG$SODLQWLIIPD\QRW            QRWSHUIRUFHm>XQ@ZDUUDQWHGE\H[LVWLQJODZlRUIULYRORXV
SURFHHGXQGHUDJDLQVWDSULYDWHSDUW\mQRPDWWHUKRZ            $FRPSODLQWGRHVQRWPHULWVDQFWLRQVXQGHU5XOHVLPSO\
GLVFULPLQDWRU\RUZURQJIXOlWKHSDUW\jVFRQGXFW$P0IUV            EHFDXVHLWPHULWVGLVPLVVDOSXUVXDQWWR5XOHE:H
0XW,QV&RY 6XOOLYDQ86LQWHUQDO           FRQFOXGHWKDWDWWRUQH\IHHVZHUHQRWDZDUGDEOHXQGHU5XOH
TXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG
    7DKIVY3URFWRUHWDO    1RV          1RV           7DKIVY3URFWRUHWDO        

EDVLVWRVXSSRUWWKHFODLPVDOOHJHGLQWKHFRPSODLQW%XWWKDW          1HYHUWKHOHVVWKHUHDUHFLUFXPVWDQFHVXQGHUZKLFKSULYDWH
ZDVQRWWKHFLUFXPVWDQFHFRQIURQWLQJWKHPDJLVWUDWHMXGJHRU          SHUVRQV PD\ E\ WKHLU DFWLRQV EHFRPH mVWDWH DFWRUVl IRU
WKHGLVWULFWFRXUWKHUH$WWKHSOHDGLQJVWDJHLQWKHOLWLJDWLRQ    SXUSRVHVm3ULYDWHSHUVRQVMRLQWO\HQJDJHGZLWKVWDWH
RUGLQDULO\WKHUHLVOLWWOHRUQRHYLGHQFHEHIRUHWKHFRXUWDWDOO    RIILFLDOVLQ>D@SURKLELWHGDFWLRQDUHDFWLQJXQGHUFRORURIODZ
DQGVXFKIDFWVDVDUHDOOHJHGPXVWEHLQWHUSUHWHGLQIDYRURI        IRUSXUSRVHVRIWKHVWDWXWH7RDFWXQGHUFRORURIODZGRHVQRW
WKHQRQPRYDQW:KLOHDSDUW\LVERXQGE\5XOHWRUHIUDLQ          UHTXLUH WKDW WKH DFFXVHG EH DQ RIILFHU RI WKH 6WDWH  ,W LV
IURP ILOLQJ D FRPSODLQW mIRU DQ\ LPSURSHU SXUSRVHl IURP      HQRXJKWKDWKHLVDZLOOIXOSDUWLFLSDQWLQMRLQWDFWLYLW\ZLWKWKH
PDNLQJ FODLPV m>XQ@ZDUUDQWHG E\ H[LVWLQJ ODZl RU IURP         6WDWHRULWVDJHQWVl$GLFNHVY6+.UHVV	&R86
PDNLQJmDOOHJDWLRQVDQGRWKHUIDFWXDOFRQWHQWLRQV>ZLWKRXW@              LQWHUQDO TXRWDWLRQ PDUNV DQG FLWDWLRQ
HYLGHQWLDU\VXSSRUWlVHH)HG5&LY3EPDNLQJ        RPLWWHG7KHUHIRUHDSULYDWHSDUW\FDQIDLUO\EHVDLGWREHD
WKRVHGHWHUPLQDWLRQVLVGLIILFXOWZKHQWKHUHLVQRWKLQJEHIRUH        VWDWHDFWRULIWKHGHSULYDWLRQFRPSODLQHGRIZDVmFDXVHG
WKHFRXUWH[FHSWWKHFKDOOHQJHGFRPSODLQW:HGRQRWGLVSXWH         E\WKHH[HUFLVHRIVRPHULJKWRUSULYLOHJHFUHDWHGE\WKH6WDWHl
mWKDWWKHFHQWUDOSXUSRVHRI5XOHLVWRGHWHUEDVHOHVVILOLQJV     DQG  WKH RIIHQGLQJ SDUW\ mDFWHG WRJHWKHU ZLWK RU KDV
LQGLVWULFWFRXUWl&RRWHU	*HOO86DWDQGFRXUWV        REWDLQHGVLJQLILFDQWDLGIURPVWDWHRIILFLDOVRUEHFDXVHKLV
PXVWEHZDU\RISODLQWLIIVZKRPD\PDNHEDVHOHVVDOOHJDWLRQV          FRQGXFW LV RWKHUZLVH FKDUJHDEOH WR WKH 6WDWHl  /XJDU Y
RIVWDWHFRUUXSWLRQLQDQHIIRUWWRVXUYLYHWKHHDUO\VWDJHVRI       (GPRQGVRQ2LO&R86*HQHUDOO\mD
  VXLWV  %XW m5XOH >@ PXVW EH UHDG LQ OLJKW RI   SULYDWH SDUW\jV PHUH XVH RI WKH 6WDWHjV GLVSXWH UHVROXWLRQ
FRQFHUQV WKDW LW ZLOO VSDZQ VDWHOOLWH OLWLJDWLRQ DQG FKLOO    PDFKLQHU\ZLWKRXWWKHµRYHUWVLJQLILFDQWDVVLVWDQFHRIVWDWH
YLJRURXVDGYRFDF\l,G5XOHmµLVQRWLQWHQGHGWRFKLOODQ       RIILFLDOVjFDQQRW>EHFRQVLGHUHGVWDWHDFWLRQ@l$P0IUV
DWWRUQH\jVHQWKXVLDVPRUFUHDWLYLW\LQSXUVXLQJIDFWXDORUOHJDO      86DWTXRWLQJ7XOVD3URIjO&ROOHFWLRQ6HUYV,QFY
WKHRULHVjl0F*KHHY6DQLODF&RXQW\)GWK           3RSH86)LQDOO\
&LUTXRWLQJ)HG5&LY3DGYLVRU\FRPPLWWHHjV
QRWH                                                                  7KLV FLUFXLW UHFRJQL]HV WKUHH WHVWV IRU GHWHUPLQLQJ
                                                                        ZKHWKHUSULYDWHFRQGXFWLVIDLUO\DWWULEXWDEOHWRWKHVWDWH
   %DVHGRQWKHXQGLVSXWHGIDFWVVHWIRUWKLQWKHSDUWLHVjEULHIV       WKHSXEOLFIXQFWLRQWHVWWKHVWDWHFRPSXOVLRQWHVWDQGWKH
DQG GLVFXVVHG DW RUDO DUJXPHQW LW DSSHDUV WKDW SODLQWLIIjV     QH[XV WHVW  7KH SXEOLF IXQFWLRQ WHVW UHTXLUHV WKDW WKH
FRXQVHOjV LQYHVWLJDWLRQ VKRZHG WKH IROORZLQJ  IRU                SULYDWH HQWLW\ H[HUFLVH SRZHUV ZKLFK DUH WUDGLWLRQDOO\
XQH[SODLQHG UHDVRQV 7DKIVjV KHDULQJ FRQWHVWLQJ WKH 332V          H[FOXVLYHO\ UHVHUYHG WR WKH VWDWH     7KH VWDWH
ZDV UHSHDWHGO\ GHOD\HG WKH ILOHV IURP WKH 332 ZHUH             FRPSXOVLRQWHVWUHTXLUHVSURRIWKDWWKHVWDWHVLJQLILFDQWO\
LQDFFHVVLEOHWR7DKIVjVDWWRUQH\ZKHQKHDWWHPSWHGWRDFFHVV            HQFRXUDJHGRUVRPHKRZFRHUFHGWKHSULYDWHSDUW\HLWKHU
WKHPDWWKHFRXUWKRXVHDQG7DKIVUHSRUWHGWRKHUDWWRUQH\WKDW         RYHUWO\RUFRYHUWO\WRWDNHDSDUWLFXODUDFWLRQVRWKDWWKH
:LOOLDP 3URFWRU D ORFDO WHOHYLVLRQ QHZV UHSRUWHU KDG           FKRLFHLVUHDOO\WKDWRIWKHVWDWH)LQDOO\WKHQH[XVWHVW
WKUHDWHQHGWRXVHKLVmFRQQHFWLRQVlLQ:D\QH&RXQW\&LUFXLW             UHTXLUHV D VXIILFLHQWO\ FORVH UHODWLRQVKLS LH WKURXJK
&RXUWVWDIIPHPEHUV2QWKHEDVLVRIWKLVLQIRUPDWLRQWKH             VWDWH UHJXODWLRQ RU FRQWUDFW EHWZHHQ WKH VWDWH DQG WKH
FRPSODLQWZDVGUDIWHGDQGILOHGDSSDUHQWO\LQWKHEHOLHIWKDW          SULYDWHDFWRUVRWKDWWKHDFWLRQWDNHQPD\EHDWWULEXWHGWR
GLVFRYHU\ZRXOGERWKUHYHDOWKHLGHQWLW\RIWKHFRXUWVWDIIHUV          WKHVWDWH
ZLWKZKRP3URFWRUDOOHJHGO\KDGmFRQQHFWLRQVlDQGUHYHDO
KRZ WKRVH mFRQQHFWLRQVl UHVXOWHG LQ MRLQW FRUUXSW DFWLRQ      (OOLVRQ)GDWLQWHUQDOTXRWDWLRQPDUNVDQGLQWHUQDO
7KRVHSODQVZHUHIUXVWUDWHGE\WKHGHIHQGDQWVjWLPHO\PRWLRQ          FLWDWLRQVRPLWWHG
WRGLVPLVVSXUVXDQWWR5XOHE:KLOH7DKIVjVDWWRUQH\
     7DKIVY3URFWRUHWDO      1RV            1RV            7DKIVY3URFWRUHWDO      

   $OOHJDWLRQVLQDSODLQWLIIjVFRPSODLQWWKDWDSULYDWHFLWL]HQ                   WKH DOOHJDWLRQV DQG RWKHU IDFWXDO FRQWHQWLRQV
GHIHQGDQWDFWHGFRUUXSWO\LQFRQFHUWZLWKDVWDWHRIILFLDOPD\                 KDYH HYLGHQWLDU\ VXSSRUW RU LI VSHFLILFDOO\ VR
EH VXIILFLHQW WR PDNH RXW D FODLP WKDW DV WR WKH DFWLRQ LQ        LGHQWLILHGDUHOLNHO\WRKDYHHYLGHQWLDU\VXSSRUWDIWHU
TXHVWLRQWKHGHIHQGDQWLVDVWDWHDFWRU,Q'HQQLVY6SDUNV                D UHDVRQDEOH RSSRUWXQLW\ IRU IXUWKHU LQYHVWLJDWLRQ RU
 86   WKH 6XSUHPH &RXUW H[DPLQHG D VWDWH                GLVFRYHU\>@
FRXUWLQMXQFWLRQWKDWKDGEHHQREWDLQHGWKRXJKFRUUXSWPHDQV
,GDW7KH&RXUWKHOGWKDWm>S@ULYDWHSDUWLHVZKRFRUUXSWO\          )HG5&LY3E
FRQVSLUHZLWKDMXGJHLQFRQQHFWLRQZLWKVXFKFRQGXFWDUH
WKXVDFWLQJXQGHUFRORURIVWDWHODZZLWKLQWKHPHDQLQJRI                   5XOHVDQFWLRQVDUHDSSURSULDWHZKHQWKHGLVWULFWFRXUW
l,GDW'HQQLVDFFHSWHGWKHDOOHJDWLRQVRI           GHWHUPLQHVWKDWDQDWWRUQH\jVFRQGXFWLVQRWmUHDVRQDEOHXQGHU
FRUUXSWLRQ DV WUXH DQG ZDV PRUH FRQFHUQHG ZLWK WKH OHJDO        WKHFLUFXPVWDQFHVl0DQQY*	*0IJ,QF)G
TXHVWLRQ RI ZKHWKHU SULYDWH SDUWLHV ZKR FRQVSLUH ZLWK D          WK&LU$JRRGIDLWKEHOLHILQWKHPHULWVRIDFDVH
MXGJHFDQEHFRQVLGHUHGVWDWHDFWRUVZKHQE\ODZWKHMXGJH               LVLQVXIILFLHQWWRDYRLGVDQFWLRQV,G
LVHQWLWOHGWRMXGLFLDOLPPXQLW\+HUHZHDUHFRQFHUQHGZLWK
WKH VXIILFLHQF\ RI WKH DOOHJDWLRQ LQ WKH FRPSODLQW DV WR WKH      'HVSLWH WKH FRQVLGHUDEOH GHIHUHQFH ZH RZH WKH GLVWULFW
DOOHJHG DFWLRQ XQGHU FRORU RI ODZ  ,Q WKDW FRQQHFWLRQ ZH      FRXUWXSRQWKHUHYLHZRI5XOHVDQFWLRQVZHDUHFRQYLQFHG
KDYHIRXQGLWVLJQLILFDQWWKDWWKHSODLQWLIIIDLOHGWRLQFOXGHLQ         WKDWWKHGLVWULFWFRXUWmLPSURSHUO\DSSOLH>G@WKHODZlRI5XOH
WKHFRPSODLQWDOOHJDWLRQVWKDWWKHSULYDWHSDUW\VRXJKWmWKH              E DQG WKHUHIRUH DEXVHG LWV GLVFUHWLRQ ZKHQ LW
VWDWHFRXUWUHVWUDLQLQJRUGHULQEDGIDLWKZLWKNQRZOHGJHWKDW           JUDQWHG WKH 3URFWRUVj 5XOH  PRWLRQ  :H UHFRJQL]H RI
DQH[SDUWHUHVWUDLQLQJRUGHUZRXOGEHXQFRQVWLWXWLRQDORU               FRXUVHWKHLOORJLFRIHTXDWLQJDQHUURURIODZZLWKDEXVHRI
ZLWK DQ LPSURSHU SXUSRVHl  /RXLVYLOOH $UHD ,QWHU)DLWK            mGLVFUHWLRQl EXW LW LV WRR ODWH LQ WKH OLIH RI 5XOH  FDVH
&RPP IRU 8QLWHG )DUP :RUNHUV Y 1RWWLQJKDP /LTXRUV               SUHFHGHQW WR XQPDNH WKDW UXOH RI ODZ  :H UHDFK RXU
/WG  )G   WK &LU   $V ZH UHFHQWO\       FRQFOXVLRQUHJDUGLQJWKH5XOHVDQFWLRQVIRUWZRUHDVRQV
QRWHG D   SODLQWLIIjV IDLOXUH WR DOOHJH WKDW WKH           )LUVWZHEHOLHYHWKDWZKLOH7DKIVjVVWDWHDFWRUDUJXPHQWLV
mGHIHQGDQWV SHWLWLRQHGWKHVWDWHFRXUWVLQEDGIDLWKRUZLWK             XOWLPDWHO\XQDYDLOLQJLWZDVQRWFRPSOHWHO\XQZDUUDQWHGE\
NQRZOHGJH WKDW REWDLQLQJ DQ LQMXQFWLRQ ZRXOG EH                     H[LVWLQJODZQRUGLGWKHFRPSODLQWFRQWDLQIDFWXDODOOHJDWLRQV
XQFRQVWLWXWLRQDOlPHULWHGGLVPLVVDORIWKHVXLWRQWKHJURXQGV            XQZDUUDQWHG E\ WKH HYLGHQFH  $OWKRXJK 7DKIV IDLOHG WR
WKDW WKHUH LV QR VWDWH DFWLRQ  *RWWIULHG Y 0HG 3ODQQLQJ      LQFOXGH PRUH WKDQ EDUH FRQFOXVRU\ DVVHUWLRQV LQ KHU
6HUYV,QF)GWK&LU                        FRPSODLQW DQG WKXV IDLOHG WR SOHDG ZLWK WKH UHTXLVLWH
                                                                          VSHFLILFLW\QHFHVVDU\WRPDNHDQDFWLRQDEOHFODLPVKHGLGQRW
   7DKIVjV VWDWH DFWRU DUJXPHQW LV SUHGLFDWHG RQ WZR EURDG        IDLO LQ WKLV HQGHDYRU E\ D ZLGH PDUJLQ  7KLV OHDGV WR RXU
FRQWHQWLRQV7KHILUVWLVEDVHGRQDOOHJDWLRQVRIFRUUXSWLRQLQ          VHFRQGSRLQW$VDJHQHUDOSURSRVLWLRQDGLVWULFWFRXUWVKRXOG
WKH:D\QH&RXQW\&LUFXLW&RXUW7DKIVKDVLQFOXGHGLQKHU                EH KHVLWDQW WR GHWHUPLQH WKDW D SDUW\jV FRPSODLQW LV LQ
FRPSODLQWDOOHJDWLRQVWKDWWKH3URFWRUVjSHWLWLRQVIRUWKH332V           YLRODWLRQRI5XOHEZKHQWKHVXLWLVGLVPLVVHGSXUVXDQWWR
ZHUH LQ EDG IDLWK DQG GRQH ZLWK WKH NQRZOHGJH WKDW WKH\         5XOHEDQGWKHUHLVQRWKLQJEHIRUHWKHFRXUWVDYHWKH
ZRXOG EH XQFRQVWLWXWLRQDO  :KLOH 7DKIV KDV PDGH WKH              EDUH DOOHJDWLRQV RI WKH FRPSODLQW  7KH VLWXDWLRQ LV YHU\
DOOHJDWLRQV RI FRUUXSWLRQ WKDW ZHUH PLVVLQJ IURP WKH               GLIIHUHQW ZKHQ VDQFWLRQV DUH VRXJKW DIWHU GLVFRYHU\ LV
FRPSODLQWV ILOHG LQ WKH 1RWWLQJKDP /LTXRUV DQG *RWWIULHG           FRPSOHWHDQGDPRWLRQIRUVXPPDU\MXGJPHQWXQGHU)HG5
FDVHV7DKIVjVJHQHUDODOOHJDWLRQVRIFRUUXSWLRQIDLOWRVDWLVI\          &LY3LVEHIRUHWKHFRXUWZKLFKFKDUJHVWKHFKDOOHQJHG
HYHQWKHPLQLPDOQRWLFHSOHDGLQJUHTXLUHPHQWVRIWKH)HGHUDO              SOHDGHUZLWKIDLOLQJWRSURGXFHHYLGHQFHRIDVXIILFLHQWIDFWXDO
    7DKIVY3URFWRUHWDO     1RV           1RV           7DKIVY3URFWRUHWDO       

     %5XOH6DQFWLRQVDQG$WWRUQH\)HHV                     5XOHV RI &LYLO 3URFHGXUH  6HH )HG 5 &LY 3 D  ,Q
                                                                        'HQQLV WKH 6XSUHPH &RXUW KDG EHIRUH LW D VWDWH DSSHOODWH
   7KH GLVWULFW FRXUW DZDUGHG WKH GHIHQGDQWV  LQ           FRXUW UXOLQJ WKDW FOHDUO\ HVWDEOLVKHG WKDW WKH VWDWH MXGJH LQ
DWWRUQH\ IHHV XQGHU ERWK 5XOH  DQG    :H VKDOO       TXHVWLRQFRUUXSWO\FRQVSLUHGZLWKSULYDWHDFWRUVDQGmLOOHJDOO\
FRQVLGHUWKRVHEDVHVLQRUGHU                                        LVVXHGlDQLQMXQFWLRQSURKLELWLQJDWKLUGSDUW\IURPH[WUDFWLQJ
                                                                        RLO   86 DW   7KLV FDVH GLYHUJHV IURP 'HQQLV
                            5XOH                                 EHFDXVHWKHUHKDVEHHQQRSUHYLRXVILQGLQJWKDWWKH0LFKLJDQ
                                                                        MXGJHRUDQ\PHPEHUVRIKLVVWDIIDFWHGLOOHJDOO\LQLVVXLQJ
   :H UHYLHZ DOO DVSHFWV RI D GLVWULFW FRXUWjV LPSRVLWLRQ RI   WKH332,QGHHG7DKIVDVVXUHVXVVKHLVQRWFODLPLQJWKDWWKH
VDQFWLRQVSXUVXDQWWR5XOHIRUDEXVHRIGLVFUHWLRQ&RRWHU          0LFKLJDQ VWDWH FRXUW MXGJH DFWHG LQDSSURSULDWHO\ ZKHQ KH
	*HOOY+DUWPDU[&RUS867URSI               LVVXHGWKH332VWKH3URFWRUVUHTXHVWHG,QVWHDG7DKIVPDNHV
Y)LG1DWjO7LWOH,QV&R)GWK&LU        XQYHULILDEOHDOOHJDWLRQVRImFRUUXSWLRQlWKDWFHQWHURQDVHULHV
$Q DEXVH RI GLVFUHWLRQ RFFXUV ZKHQ WKH GLVWULFW FRXUW KDV      RIRXWFRPHVWKDWKDYHJRQHDJDLQVWKHULQFOXGLQJWKH
UHOLHG RQ FOHDUO\ HUURQHRXV ILQGLQJV RI IDFW ZKHQ LW           VHDOLQJRIWKHILOHVFRQQHFWHGZLWKWKH332SURFHHGLQJV
LPSURSHUO\DSSOLHVWKHODZRUZKHQLWXVHVDQHUURQHRXVOHJDO          WKH LVVXDQFH RI H[ SDUWH 332V DQG  WKH UHSHDWHG
VWDQGDUG5RPVWDGWY$OOVWDWH,QV&R)GWK         DGMRXUQPHQWVRIWKH332KHDULQJV7DKIVPD\QRWVLPSO\OLVW
&LUm$EXVHRIGLVFUHWLRQLVGHILQHGDVDGHILQLWHDQG           DVHULHVRIVWDWHFRXUWUXOLQJVWKDWKDYHQRWJRQHDVVKHZRXOG
ILUPFRQYLFWLRQWKDWWKHWULDOFRXUWFRPPLWWHGDFOHDUHUURURI         KDYHOLNHGPDNHWKHFRQFOXVRU\DOOHJDWLRQWKDWWKH\DUHWKH
MXGJPHQWl$PHUQDWLRQDO,QGXV,QFY$FWLRQ7XQJVUDP               UHVXOWRIFRUUXSWLRQDQGH[SHFWWRVXUYLYHD5XOHE
,QF  )G   WK &LU LQWHUQDO TXRWDWLRQ      PRWLRQ0LFKLJDQSHUPLWVFRXUWVWRVHDOFHUWDLQILOHV0&5
PDUNVDQGFLWDWLRQRPLWWHG                                          ) DQG WR LVVXH H[ SDUWH 332V 0LFK &RPS /DZV
                                                                        :HILQGLWVLJQLILFDQWWKDW7DKIVGRHVQRW
  5XOHVWDWHV                                                     DUJXHWKDWWKHVWDWHMXGJHjVGHFLVLRQVWRVXSSUHVVWKHILOHVRU
     E5HSUHVHQWDWLRQVWR&RXUW%\SUHVHQWLQJWRWKH               LVVXHWKHH[SDUWH332VZHUHZURQJDVPDWWHUVRIODZ0RVW
  FRXUWDSOHDGLQJZULWWHQPRWLRQRURWKHUSDSHUDQ            VLJQLILFDQWO\7DKIVQHYHULGHQWLILHVWKHVWDWHFRXUWDFWRUVZLWK
  DWWRUQH\LVFHUWLI\LQJWKDWWRWKHEHVWRIWKHSHUVRQjV         ZKRP WKH 3URFWRUV DOOHJHGO\ FRQVSLUHG RWKHU WKDQ WR
  NQRZOHGJH LQIRUPDWLRQ DQG EHOLHI IRUPHG DIWHU DQ             GHVLJQDWH WKHP DV :D\QH &RXQW\ &LUFXLW &RXUW VWDII
  LQTXLU\UHDVRQDEOHXQGHUWKHFLUFXPVWDQFHVn                          PHPEHUV,WLVFOHDUWKDWHYHQZLWKGLVFRYHU\7DKIVFRXOG
                                                                        QRW LGHQWLI\ WKHVH VXSSRVHGO\ FRUUXSW LQGLYLGXDOV EHFDXVH
         LW LV QRW EHLQJ SUHVHQWHG IRU DQ\ LPSURSHU         QRZKHUH LQ KHU FRPSODLQW FDQ VKH LGHQWLI\ EHKDYLRU DV
     SXUSRVH VXFK DV WR KDUDVV RU WR FDXVH XQQHFHVVDU\         RSSRVHGWRRXWFRPHVVXJJHVWLQJFRUUXSWLRQ:KLOHZHDUH
     GHOD\RUQHHGOHVVLQFUHDVHLQWKHFRVWRIOLWLJDWLRQ             FRJQL]DQWRIWKHOLEHUDOQRWLFHSOHDGLQJVWDQGDUGWKDWSUHYDLOV
                                                                        XQGHUWKH)HGHUDO5XOHVRI&LYLO3URFHGXUHZHDUHFRQYLQFHG
       WKHFODLPVGHIHQVHVDQGRWKHUOHJDOFRQWHQWLRQV           WKDWXQGHUQRVHWRIFLUFXPVWDQFHVFRXOG7DKIVGHPRQVWUDWH
     WKHUHLQ DUH ZDUUDQWHG E\ H[LVWLQJ ODZ RU E\ D              E\WKHDOOHJDWLRQVPDGHLQKHUFRPSODLQWWKDWVWDIIPHPEHUV
     QRQIULYRORXVDUJXPHQWIRUWKHH[WHQVLRQPRGLILFDWLRQ             RIWKH:D\QH&RXQW\&LUFXLW&RXUWXQGHUWRRNFRUUXSWDFWLRQ
     RUUHYHUVDORIH[LVWLQJODZRUWKHHVWDEOLVKPHQWRIQHZ            LQSDUWQHUVKLSZLWKWKH3URFWRUV
     ODZ
                                                                          7DKIVjV VHFRQG EDVLV IRU DUJXPHQW FHQWHUV RQ D GHFLVLRQ
                                                                        IURP WKH )LIWK &LUFXLW KROGLQJ WKDW D SDUW\ ZKR REWDLQV DQ
    7DKIVY3URFWRUHWDO     1RV           1RV           7DKIVY3URFWRUHWDO       

LPPHGLDWHO\HQIRUFHDEOHVWDWHFRXUWMXGJPHQWLVDVWDWHDFWRU           WRWKHVWDWH(OOLVRQ)GDW+HUH7DKIVIDLOHGWR
IRUSXUSRVHVRIDFODLP+HQU\Y)LUVW1DWjO%DQNRI           SURYLGH DQ\ KLVWRULFDO DUJXPHQW RU DQDO\VLV  m&RQVLGHULQJ
&ODUNVGDOH)GWK&LU 7KHFRXUW              WKDWSODLQWLIIEHDUVWKHEXUGHQRQWKLVLVVXHWKLVIDLOXUHDORQH
VWDWHG                                                               UHQGHUVWKLVWHVWLQDSSOLFDEOHl,G)XUWKHUPRUHLWFDQQRWEH
                                                                        VDLGWKDWE\REWDLQLQJD332WKHSHWLWLRQHULVWDNLQJRYHUD
  7KHFUXFLDOGLIIHUHQFHEHWZHHQDSULYDWHSDUW\ZKRKDV                VWDWHUROHm0RUHWKDQPHUHDSSURYDORUDFTXLHVFHQFHLQWKH
  PHUHO\ ILOHG D FLYLO VXLW LQ D VWDWH IRUXP DQG WKH          LQLWLDWLYHVRIWKHSULYDWHSDUW\LVQHFHVVDU\WRKROGWKHVWDWH
  VXFFHVVIXO OLWLJDQW ZKR SRVVHVVHV DQ LPPHGLDWHO\                 UHVSRQVLEOHIRUWKRVHLQLWLDWLYHVl:RORWVN\Y+XKQ)G
  HQIRUFHDEOHVWDWHMXGJPHQWLVWKDWLQWKHODWWHUFDVHWKH               WK &LU   ,Q IDFW WKH VWDWH WKURXJK LWV
  IXOOSRZHUDQGDXWKRULW\RIWKHVWDWHFDQEHLQYRNHGRQ               FRXUWV DQG SROLFH SRZHUV UHWDLQV WKH DXWKRULW\ DQG
  EHKDOIRIWKHOLWLJDQW                                             UHVSRQVLELOLW\WRHQIRUFHWKH332
,G HPSKDVLV DGGHG  7DKIV ILQGV WKLV FDVH VLJQLILFDQW           8QGHUWKHmVWDWHFRPSXOVLRQWHVWlLWLVFOHDUWKDW0LFKLJDQ
EHFDXVHDFFRUGLQJWR0LFKLJDQODZm$SHUVRQDOSURWHFWLRQ              GLGQRWHQFRXUDJHRUFRHUFHWKH3URFWRUVWRILOHIRUD332WKH
RUGHULVHIIHFWLYHDQGLPPHGLDWHO\HQIRUFHDEOHDQ\ZKHUHLQ              VWDWHPHUHO\PDGHLWSRVVLEOHWRREWDLQD332,Q(OOLVRQWKH
WKLV VWDWH ZKHQ VLJQHG E\ D MXGJHl  0LFK &RPS /DZV         VWDWH SURYLGHG D SURFHGXUH DOORZLQJ SULYDWH SK\VLFLDQV WR
HPSKDVLVLQRULJLQDO:HVW6XSSVHH             FRPPLWPHQWDOO\LOOSDWLHQWVWRWKHKRVSLWDODQGLWZDVKHOG
                                                       WKDWWKHFRPPLWPHQWDFWLRQmFRPSOHWHO\OHDYHV>WKHGHFLVLRQ@
                                                                        WR WKH SULYDWH LQGLYLGXDOjV GLVFUHWLRQl  (OOLVRQ  )G DW
   +HQU\ D QRQELQGLQJ )LIWK &LUFXLW GHFLVLRQ LV D XQLTXH     $VLQ(OOLVRQKHUHWKHGHFLVLRQWRVHHND332LVHQWLUHO\
FLYLO ULJKWV FDVH LQYROYLQJ D VWDWH FRXUW LQMXQFWLRQ EDUULQJ    WKHSULYDWHGHFLVLRQRIWKHSHWLWLRQHU
SURWHVWRUV IURP ER\FRWWLQJ PHUFKDQWV ZKR UHIXVHG WR
GHVHJUHJDWH WKHLU VKRSV   )G DW   $IWHU FDUHIXOO\      )LQDOO\XQGHUWKHmQH[XVWHVWl7DKIVDUJXHVWKDWEDVHGRQ
VWXG\LQJ+HQU\ZHDUHVDWLVILHGWKDWLWLVWKHTXLQWHVVHQWLDO          KHUDOOHJDWLRQVRIMRLQWDFWLRQDQGFRQVWUXLQJWKHFRPSODLQW
KDUGIDFWVPDNHEDGODZ FDVH DQG ZH GHFOLQH WR DGRSW LWV        OLEHUDOO\ LQ KHU IDYRU VKH KDV SOHG D mVXIILFLHQWO\ FORVH
UHDVRQLQJRUFRQFOXVLRQ7KHPHUHIDFWWKDWWKH3URFWRUVZHUH           UHODWLRQVKLSl  ,G DW   <HW DV GLVFXVVHG 7DKIV GRHV
DEOH WR VHFXUH DQ LPPHGLDWHO\ HQIRUFHDEOH 332 GRHV QRW          QRWKLQJPRUHWKDQPDNHFRQFOXVRU\DOOHJDWLRQVDERXWFRUUXSW
UHQGHUWKHPVWDWHDFWRUVm>0@HUHO\UHVRUWLQJWRWKHFRXUWVDQG        MRLQW DFWLRQ LQ WKH :D\QH &RXQW\ &LUFXLW &RXUW ZLWKRXW
EHLQJRQWKHZLQQLQJVLGHRIDODZVXLWGRHVQRWPDNHDSDUW\            GHVFULELQJDQ\FRUUXSWDFWLRQRULGHQWLI\LQJDQ\FRUUXSWDFWRU
DFRFRQVSLUDWRURUDMRLQWDFWRUZLWKWKHMXGJHl'HQQLV         7DKIVjVJHQHUDOL]HGDQGFRQFOXVRU\DFFXVDWLRQVGRQRWPHHW
86DW                                                           HYHQ WKH ORZ WKUHVKROG QHFHVVDU\ WR VXUYLYH D PRWLRQ WR
                                                                        GLVPLVV7DKIVjVFRPSODLQWGRHVQRWVDWLVI\WKHQH[XVWHVW
   $SSO\LQJWKHWKUHHSDUWVWDWHDFWLRQWHVWODLGGRZQE\WKH
FRXUWLQ(OOLVRQLWLVFOHDUWKDWE\REWDLQLQJD332IURPD              %HFDXVH WKH SODLQWLIIjV FRPSODLQW GRHV QRW SOHDG IDFWV
VWDWHFRXUWDSULYDWHOLWLJDQWGRHVQRWPDNHKLPVHOIRUKHUVHOI        ZKLFKLISURYHGZRXOGVKRZWKH3URFWRUVWREHVWDWHDFWRUV
DVWDWHDFWRU)LUVW7DKIVGRHVQRWPHHWWKHmSXEOLFIXQFWLRQ         IRUSXUSRVHVRIWKHGLVWULFWFRXUWSURSHUO\GLVPLVVHG
WHVWlZKLFKmUHTXLUHVWKDWWKHSULYDWHHQWLW\H[HUFLVHSRZHUV          7DKIVjVFRPSODLQW
ZKLFK DUH WUDGLWLRQDOO\ H[FOXVLYHO\ UHVHUYHG WR WKH VWDWHl
(OOLVRQ)GDW:KHQDSSO\LQJWKLVWHVWWKHFRXUW
JHQHUDOO\FRQGXFWVDQKLVWRULFDODQDO\VLVWRGHWHUPLQHZKHWKHU
WKHSULYDWHSDUW\KDVHQJDJHGLQDFWLRQVWUDGLWLRQDOO\UHVHUYHG
