         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


 52%(57 $ %8(//                 ;
        3HWLWLRQHU$SSHOODQW      
                                   
                                     1R
           Y                      
                                    !
                                   
 %(77< 0,7&+(//:DUGHQ           
        5HVSRQGHQW$SSHOOHH 
                                  1
      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
     IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
   1Rn3DXO50DWLD&KLHI'LVWULFWsXGJH
                  $UJXHGsDQXDU\
           'HFLGHGDQG)LOHG'HFHPEHU
   %HIRUH%2**66,/(5DQG'$8*+75(<&LUFXLW
                       sXGJHV
                     BBBBBBBBBBBBBBBBB
                          &2816(/
$5*8('sHIIU\).HOOHKHUs())5<).(//(+(5	
$662&,$7(6 &OHYHODQG 2KLR IRU $SSHOODQW  sRQ :
2HENHU 2)),&( 2) 7+( $77251(< *(1(5$/ 2)
2+,2&OHYHODQG2KLRIRU$SSHOOHH21%5,()sHIIU\)
.HOOHKHU s())5< ) .(//(+(5 	 $662&,$7(6
&OHYHODQG 2KLR  3DWULFLD $ 0LOOKRII  $NURQ 2KLR IRU
$SSHOODQW6WXDUW$&ROH2)),&(2)7+($77251(<

                                
     %XHOOY0LWFKHOO                              1R       1R                                %XHOOY0LWFKHOO      

*(1(5$/ &255(&7,216 /,7,*$7,21 6(&7,21                                                BBBBBBBBBBBBBBBBBBB
&ROXPEXV2KLRIRU$SSHOOHH
                                                                                             &21&855(1&(
  %2**6sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK                                  BBBBBBBBBBBBBBBBBBB
6,/(5 s MRLQHG  '$8*+75(< s S  GHOLYHUHG D
VHSDUDWHRSLQLRQFRQFXUULQJLQWKHMXGJPHQW                              0$57+$&5$,*'$8*+75(<&LUFXLWsXGJH,FRQFXU
                                                                       LQ WKH PDMRULW\jV GHFLVLRQ WR DIILUP WKH MXGJPHQW RI WKH
                     BBBBBBBBBBBBBBBBB                                 GLVWULFW FRXUW LQ WKLV FDVH , ZULWH VHSDUDWHO\ KRZHYHU WR
                                                                       LQGLFDWH WKDW , GR QRW MRLQ LQ WKDW SRUWLRQ RI VHFWLRQ
                         23,1,21                                       ,,,%DWKDWWUHDWVWKHTXHVWLRQRIWKHFRQVWLWXWLRQDOLW\RI
                     BBBBBBBBBBBBBBBBB                                 2KLRjV PHWKRG RI H[HFXWLRQ QRU LQ VHFWLRQ ,,,%E
                                                                       LQYROYLQJWKHSHWLWLRQHUjVFKDOOHQJHVWR2KLRjVGHDWKSHQDOW\
  %2**6 &LUFXLW sXGJH  3HWLWLRQHUDSSHOODQW 5REHUW $          VWDWXWHEDVHGRQLQWHUQDWLRQDOODZ%RWKTXHVWLRQVZHUHDVWKH
%XHOODSSHDOVWKHMXGJPHQWRIWKHGLVWULFWFRXUWGHQ\LQJKLV           PDMRULW\ RSLQLRQ QRWHV SURFHGXUDOO\ GHIDXOWHG DQG LQ P\
SHWLWLRQ IRU D ZULW RI KDEHDV FRUSXV SXUVXDQW WR  86&   MXGJPHQWGRQRWZDUUDQWDQDGYLVRU\GHFLVLRQRQWKHLUPHULWV
)RUWKHIROORZLQJUHDVRQVZHDIILUP
                                 ,
   %XHOOjVKDEHDVSHWLWLRQUHODWHVWRKLVFRQYLFWLRQDQG
GHDWKVHQWHQFHIRUWKHVH[XDODVVDXOWDQGPXUGHURIHOHYHQ
\HDUROG.ULVWD/HH+DUULVRQ2Q6DWXUGD\sXO\
.ULVWDDQGDVFKRROPDWHZHUHFROOHFWLQJDOXPLQXPFDQVLQD
EDOOSDUNDFURVVWKHVWUHHWIURP.ULVWDjVKRPHLQ0DUVKDOOYLOOH
2KLR.ULVWDZDVNLGQDSSHGIURPWKHSDUNWKDWGD\6L[GD\V
ODWHU .ULVWD ZDV IRXQG GHDG LQ D UHPRWH DUHD RI +ROPHV
&RXQW\ 2KLR  $Q DXWRSV\ UHYHDOHG WKDW VKH KDG EHHQ
VH[XDOO\DVVDXOWHGE\WKHWKUXVWLQJRIDULJLGREMHFWDJDLQVWWKH
LQOHWRIKHUYDJLQDDQGWKHQVWUDQJOHGWRGHDWK7KHUHPDLQGHU
RIWKHIDFWXDOILQGLQJVRIWKH2KLR6XSUHPH&RXUWUHODWHGWR
WKLVFDVHFDQEHIRXQGLQ6WDWHY%XHOO1(G
2KLR
                                 ,,
  %XHOOZDVLQGLFWHGRQ1RYHPEHU+HUHFHLYHGD
MXU\WULDO2Q$SULOWKHMXU\IRXQG%XHOOJXLOW\RI
DJJUDYDWHGPXUGHUDQGWKHVSHFLILFDWLRQFKDUJLQJ%XHOODVWKH
SULQFLSDORIIHQGHUZKRFRPPLWWHGWKHPXUGHURI.ULVWD/HH
+DUULVRQ ZKLOH NLGQDSSLQJ RU IOHHLQJ LPPHGLDWHO\ DIWHU
NLGQDSSLQJ KHU  7KH WULDO FRXUW DJUHHG ZLWK WKH MXU\jV
   %XHOOY0LWFKHOO                            1R      1R                                 %XHOOY0LWFKHOO        

                              ,9                                   UHFRPPHQGDWLRQ WKDW D GHDWK VHQWHQFH EH LPSRVHG DQG RQ
                                                                   $SULOWKHWULDOFRXUWVHQWHQFHG%XHOOWRGHDWK%XHOO
   )RUWKHIRUHJRLQJUHDVRQVWKHMXGJPHQWRIWKHGLVWULFWFRXUW   VXEVHTXHQWO\DSSHDOHGWRWKH2KLR&RXUWRI$SSHDOVDQGWKH
LV $)),50(' DQG %XHOOjV SHWLWLRQ IRU D ZULW RI KDEHDV     2KLR 6XSUHPH &RXUW  %RWK DSSHDOV ZHUH GHQLHG  2Q
FRUSXVLV'(1,('                                                  2FWREHU%XHOOILOHGDSRVWFRQYLFWLRQSHWLWLRQLQWKH
                                                                   2KLR WULDO FRXUW ZKLFK ZDV GHQLHG  7KH SHWLWLRQ ZDV
                                                                   DSSHDOHGWRWKH2KLR&RXUWRI$SSHDOVDQGWKH2KLR6XSUHPH
                                                                   &RXUWERWKRIZKLFKGHQLHGWKHSHWLWLRQ
                                                                     2Q6HSWHPEHU%XHOOILOHGDKDEHDV SHWLWLRQLQ
                                                                   IHGHUDO GLVWULFW FRXUW  7KH GLVWULFW FRXUW JUDQWHG D VWD\ RI
                                                                   H[HFXWLRQ WR DOORZ WKH 2KLR &RXUW RI $SSHDOV WR FRQVLGHU
                                                                   %XHOOjV$SSOLFDWLRQIRU'HOD\HG5HFRQVLGHUDWLRQUHODWLQJWR
                                                                   %XHOOjVFODLPRILQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHO
                                                                   7KLVFODLPZDVGHQLHGE\WKH&RXUWRI$SSHDOVDQGWKH2KLR
                                                                   6XSUHPH&RXUW
                                                                     2Q$SULO%XHOOILOHGDVHFRQGKDEHDVSHWLWLRQLQ
                                                                   IHGHUDOGLVWULFWFRXUWUDLVLQJWKLUW\WKUHHJURXQGVIRUUHOLHI
                                                                   7KHSHWLWLRQZDVGHQLHGRQsXO\
                                                                                                     ,,,
                                                                                                     $
                                                                     7KLVFRXUWUHYLHZVWKHGLVWULFWFRXUWjVMXGJPHQWGHQRYR
                                                                   6HH5LFNPDQY%HOO)GWK&LU
                                                                   /XQG\Y&DPSEHOO)GWK&LU7KH
                                                                   GLVWULFWFRXUWjVIDFWXDOILQGLQJVDUHUHYLHZHGIRUFOHDUHUURU
                                                                   6HH5LFNPDQ)GDW0F&DOOY'XWWRQ)G
                                                                   WK&LU6WDWHFRXUWGHWHUPLQDWLRQVRIIDFW
                                                                   DUH HQWLWOHG WR D SUHVXPSWLRQ RI FRUUHFWQHVV XQOHVV WKH
                                                                   SHWLWLRQHUFDQGHPRQVWUDWHE\FRQYLQFLQJHYLGHQFHWKDWWKH
                                                                   IDFWV DUH HUURQHRXV RQ RQH RI WKH HLJKW EDVHV OLVWHG LQ 
                                                                   86&G6HH0F4XHHQY6FURJJ\)G
                                                                   WK&LU
                                                                     7KHUHFHQWDPHQGPHQWVWRWKHKDEHDVVWDWXWHVHQDFWHGE\
                                                                   WKH$QWLWHUURULVPDQG(IIHFWLYH'HDWK3HQDOW\$FWRI
                                                                   $('3$GRQRWDSSO\WRWKLVFDVHEHFDXVH%XHOOILOHGKLV
                                                                   SHWLWLRQIRUDZULWRIKDEHDVFRUSXVEHIRUHWKHHIIHFWLYHGDWH
      %XHOOY0LWFKHOO                                 1R        1R                                      %XHOOY0LWFKHOO        

RI$('3$6HH/LQGKY0XUSK\86                  FRXQWU\jVLQWHUQDWLRQDOREOLJDWLRQVDQGKRZEHVWWRFDUU\WKHP
  7KHUHIRUH %XHOO mLV HQWLWOHG WR KDYH WKH IHGHUDO         RXW
KDEHDVFRXUWPDNHLWVRZQLQGHSHQGHQWGHWHUPLQDWLRQRIKLV
IHGHUDOFODLPZLWKRXWEHLQJERXQGE\WKHGHWHUPLQDWLRQRQ                     &RXUWV WKDW KDYH FRQVLGHUHG WKH TXHVWLRQ RI ZKHWKHU
WKH PHULWV RI WKDW FODLP UHDFKHG LQ WKH VWDWH SURFHHGLQJVl        LQWHUQDWLRQDOODZEDUVFDSLWDOSXQLVKPHQWLQWKH8QLWHG6WDWHV
:DLQZULJKWY6\NHV86%XHOOPD\QRW                KDYHXQLIRUPO\FRQFOXGHGWKDWLWGRHVQRW6HHHJsDPLVRQ
KRZHYHU UDLVH mFRQWHQWLRQV RI IHGHUDO ODZ ZKLFK DUH QRW            )6XSSGDWmWKH&RXUWILQGVQRLQGLFDWLRQWKDWWKH
UHVROYHG RQ WKH PHULWV LQ WKH VWDWH SURFHHGLQJV GXH WR             LQWHUQDWLRQDO REOLJDWLRQV RI WKH 8QLWHG 6WDWHV FRPSHO
SHWLWLRQHUjV IDLOXUH WR UDLVH WKHP WKHUH DV UHTXLUHG E\ VWDWH      HOLPLQDWLRQ RI FDSLWDO SXQLVKPHQWl 3HRSOH Y *KHQW 
SURFHGXUHl,ELG                                                          3G&DO0RVNsFRQFXUULQJm,FDQQRW
                                                                            DJUHH ZLWK GHIHQGDQW WKDW RXU LQWHUQDWLRQDO REOLJDWLRQV DW
                                   %                                        OHDVW XS WR WKHSUHVHQW WLPH FRPSHO HOLPLQDWLRQ RI FDSLWDO
                                                                            SXQLVKPHQWl :HPXVWMRLQLQWKDWFRQFOXVLRQ
   %XHOO UDLVHV WHQ FODLPV RQ DSSHDO   WKH GLVWULFW MXGJH
UHYLHZLQJ%XHOOjVVHFRQGKDEHDVSHWLWLRQHUUHGLQQRWUHFXVLQJ
KLPVHOIIURPWKHFDVHWKHGLVWULFWFRXUWHUUHGLQUXOLQJWKDW
FHUWDLQ RI %XHOOjV FODLPV ZHUH SURFHGXUDOO\ GHIDXOWHG
%XHOOjVFRQVWLWXWLRQDOULJKWWRGXHSURFHVVZDVYLRODWHGE\
WKHWULDOFRXUWjVSHQDOW\SKDVHMXU\LQVWUXFWLRQV%XHOOjV
FRQVWLWXWLRQDOULJKWVZHUHGHQLHGE\WKHWULDOFRXUWjVUHIXVDOWR
SHUPLWDSV\FKRORJLVWjVWHVWLPRQ\UHODWLQJWRWKHFUHGLELOLW\RI                
                                                                                     2XU KROGLQJ LV OLPLWHG WR WKH TXHVWLRQ RI ZKHWKHU FXVWRPDU\
FHUWDLQ ZLWQHVVHVj LGHQWLILFDWLRQ WHVWLPRQ\  %XHOO ZDV            LQWHUQDWLRQDO ODZ SUHYHQWV D 6WDWH IURP FDUU\LQJ RXW WKH GHDWK SHQDOW\

GHSULYHG RI WKH HIIHFWLYH DVVLVWDQFH RI WULDO DQG DSSHOODWH         ZKHQ LW LV DFWLQJ LQ IXOO FRPSOLDQFH ZLWK WKH 8QLWHG 6WDWHV &RQVWLWXWLRQ

FRXQVHO%XHOOZDVGHSULYHGRIKLVULJKWWRFRQIURQWWKH                :H WDNH QR SRVLWLRQ RQ WKH TXHVWLRQ RI WKH UROH RI IHGHUDO FRXUWV WR DSSO\

ZLWQHVVHV DJDLQVW KLP E\ WKH SURVHFXWLRQjV ZLWKKROGLQJ RI            FXVWRPDU\ LQWHUQDWLRQDO ODZ DV IHGHUDO ODZ LQ RWKHU FRQWH[WV D VXEMHFW RI
                                                                                                                                                      ,V
H[FXOSDWRU\HYLGHQFH%XHOOZDVGHSULYHGRIKLVULJKWWR                ,QWHUQDWLRQDO /DZ 5HDOO\ 6WDWH /DZ"      +#' / 5'  
                                                                            UHFHQW   OLYHO\   DFDGHPLF   GHEDWH   &RPSDUH   +DUROG   +RQJMX   .RK


EH SUHVHQW DW DOO FULWLFDO VWDJHV RI KLV WULDO  %XHOO ZDV     m&XVWRPDU\ LQWHUQDWLRQDO ODZ LV IHGHUDO ODZ WR EH HQXQFLDWHG
GHQLHG KLV FRQVWLWXWLRQDO ULJKW WR D IDLU WULDO DV D UHVXOW RI   DXWKRULWDWLYHO\ E\ WKH IHGHUDO FRXUWVl ZLWK &XUWLV $ %UDGOH\ 	 sDFN /
SURVHFXWRULDO PLVFRQGXFW  %XHOO ZDV GHQLHG KLV                    *ROGVPLWK &XVWRPDU\ ,QWHUQDWLRQDO /DZ DV )HGHUDO &RPPRQ /DZ $
FRQVWLWXWLRQDOULJKWWRGXHSURFHVVDVDUHVXOWRIHUURUVLQWKH            &ULWLTXH RI WKH 0RGHUQ 3RVLWLRQ  +   #' / 5 '
                                                                                                                                    m,V
                                                                            WKHUH GRPHVWLF IHGHUDO DXWKRUL]DWLRQ IRU IHGHUDO FRXUWV WR LQWHUSUHW DQG
WULDOFRXUWjVJXLOWSKDVHMXU\LQVWUXFWLRQVDQGWKH2KLR              DSSO\ >FXVWRPDU\ LQWHUQDWLRQDO ODZ@ DV IHGHUDO ODZ LQ WKH ZKROHVDOH
GHDWK SHQDOW\ VWDWXWH LV XQFRQVWLWXWLRQDO DQG YLRODWHV                IDVKLRQ FRQWHPSODWHG E\ WKH PRGHUQ SRVLWLRQ" 1RWKLQJ RQ WKH IDFH RI WKH
LQWHUQDWLRQDOODZ:HZLOODGGUHVVHDFKRIWKHVHLVVXHVLQ                 &RQVWLWXWLRQ RU DQ\ IHGHUDO VWDWXWH DXWKRUL]HV VXFK D SUDFWLFHl
WXUQ
                                                                                
                                                                                    :H QRWH WKDW LQ WKH UHFHQW /D*UDQG &DVH *HUPDQ\ Y 86 
    5HIXVDORI'LVWULFWsXGJHWR5HFXVH+LPVHOI                         ,&s BB sXQH  LQ ZKLFK WKH ,QWHUQDWLRQDO &RXUW RI sXVWLFH IRXQG WKH
                                                                            8QLWHG 6WDWHV WR KDYH YLRODWHG WKH 9LHQQD &RQYHQWLRQ RQ &RQVXODU
  %XHOO DUJXHV WKDW WKH GLVWULFW FRXUW MXGJH UHYLHZLQJ KLV          3URWHFWLRQ E\ QRW LQIRUPLQJ WZR *HUPDQ FLWL]HQV VHQWHQFHG WR WKH GHDWK

KDEHDVSHWLWLRQsXGJH3DXO50DWLDHUUHGLQQRWUHFXVLQJ                 SHQDOW\ LQ $UL]RQD RI WKHLU ULJKW WR FRQWDFW *HUPDQ FRQVXODU RIILFLDOV DIWHU
                                                                            WKHLU DUUHVW DQG FRQYLFWLRQ WKH FRXUWjV KROGLQJ ZDV OLPLWHG WR WKH LVVXH RI
KLPVHOIDIWHU%XHOOILOHGDPRWLRQWRGLVTXDOLI\SXUVXDQWWR             FRQVXODU SURWHFWLRQ DQG GLG QRW GLVFXVV ZKHWKHU WKH LPSRVLWLRQ RI WKH
86&  D ,Q KLV PRWLRQ %XHOO DVVHUWHG WKDW sXGJH          GHDWK SHQDOW\ YLRODWHV LQWHUQDWLRQDO ODZ
    %XHOOY0LWFKHOO                                 1R       1R                               %XHOOY0LWFKHOO       

GHDWKSHQDOW\DWWKHWLPHSURKLELWHGWKHH[HFXWLRQRIMXYHQLOHV           0DWLDKDGDGXW\WRUHFXVHKLPVHOIEHFDXVHDVDPHPEHU
DQGWKDWVRPHRIWKHRWKHUQDWLRQVKDGUDWLILHGLQWHUQDWLRQDO             RIWKH2KLR6WDWH6HQDWHLQKHKDGVSRQVRUHGWKHELOO
WUHDWLHVWKDWSURKLELWHGWKHH[HFXWLRQRIMXYHQLOHV,GDW          UHVWRULQJ 2KLRjV GHDWK SHQDOW\ DQG  KH KDG H[SUHVVHG
%UHQQDQ s GLVVHQWLQJ  7KH GLVVHQW FRQFOXGHG WKDW            VXSSRUW IRU WKH GHDWK SHQDOW\ ZKLOH FDPSDLJQLQJ IRU
m>Z@LWKLQWKHZRUOGFRPPXQLW\WKHLPSRVLWLRQRIWKHGHDWK                /LHXWHQDQW*RYHUQRURI2KLRLQ 7KLVFODLPKDVQRW
SHQDOW\ IRU MXYHQLOH FULPHV DSSHDUV WR EH RYHUZKHOPLQJO\           EHHQGHIDXOWHGDQGKDVEHHQSURSHUO\SUHVHUYHGIRUDSSHOODWH
GLVDSSURYHGl,GDW$OWKRXJKWKHSOXUDOLW\RSLQLRQGLG            UHYLHZ
QRWVSHFLILFDOO\DGGUHVVWKLVDUJXPHQWLWUHMHFWHGLWLQKROGLQJ
WKDW WKH H[HFXWLRQ RI MXYHQLOHV ZDV FRQVWLWXWLRQDO DQG LQ            7KLV FRXUW UHYLHZV D GLVWULFW FRXUWjV UHIXVDO WR JUDQW D
QRWLQJ WKDW mQR PRGHUQ VRFLHWDO FRQVHQVXVl IRUELGV WKH             PRWLRQ IRU UHFXVDO IRU DEXVH RI GLVFUHWLRQ  6HH (DVOH\ Y
LPSRVLWLRQRIGHDWKSHQDOW\LQGLYLGXDOVDV\RXQJDVVL[WHHQ              8QLYRI0LFK%GRI5HJHQWV)GWK&LU
6XEVHTXHQWFRXUWVKDYHUHOLHGRQ6WDQIRUGLQUHMHFWLQJDWWDFNV            7KLVFRXUWKDVVWDWHGWKDWDGLVWULFWMXGJHPXVWUHFXVH
RQWKHMXYHQLOHGHDWKSHQDOW\DVDYLRODWLRQRILQWHUQDWLRQDO             KLPVHOIZKHUHmDUHDVRQDEOHSHUVRQZLWKNQRZOHGJHRIDOOWKH
DJUHHPHQWV SDUWLFXODUO\ WKH ,QWHUQDWLRQDO &RYHQDQW DQG             IDFWV ZRXOG FRQFOXGH WKDW WKH MXGJHjV LPSDUWLDOLW\ PLJKW
FXVWRPDU\QRUPVRILQWHUQDWLRQDOODZ6HH([SDUWH3UHVVOH\             UHDVRQDEO\EHTXHVWLRQHGl8QLWHG6WDWHVY1HOVRQ)G
6RG$ODFHUWGHQLHG6&W                 WK &LU   %XHOO SURYLGHV QR FDVHODZ WR
'RPLQJXHVY1HYDGD3G1HY                   VXSSRUW KLV SURSRVLWLRQ WKDW sXGJH 0DWLD VKRXOG KDYH
FHUWGHQLHG86                                 GLVTXDOLILHG KLPVHOI IRU KDYLQJ VSRQVRUHG WKH OHJLVODWLRQ
                                                                          UHVWRULQJWKHGHDWKSHQDOW\WR2KLRRUIRUKLVVWDWHPHQWVZKLOH
    &RXUWVKDYHPDGHFOHDUWKDWm>L@QWHUQDWLRQDOODZGRHVQRW             FDPSDLJQLQJIRU/LHXWHQDQW*RYHUQRURI2KLR7KHUHLVQR
UHTXLUH DQ\ SDUWLFXODU UHDFWLRQ WR YLRODWLRQV RI ODZ       DOOHJDWLRQFODLPLQJQRUHYLGHQFHLQWKHUHFRUGLQGLFDWLQJWKDW
:KHWKHUDQGKRZWKH8QLWHG6WDWHVZLVKHVWRUHDFWWRVXFK                 sXGJH0DWLDPDGHDQ\VWDWHPHQWVUHODWLQJLQDQ\ZD\WR%XHOO
YLRODWLRQV DUH GRPHVWLF TXHVWLRQVl  (VWDWH RI )HUGLQDQG           RU %XHOOjV SURVHFXWLRQ  ,QGHHG WKH DFWLYLWLHV XSRQ ZKLFK
0DUFRV  )G   WK &LU  TXRWLQJ 7HO         %XHOOjV PRWLRQ LV SUHGLFDWHG DOO RFFXUUHG SULRU WR %XHOOjV
2UHQY/LE\DQ$UDE5HSXEOLF)G'&&LU                LQGLFWPHQWDQGFRQYLFWLRQ
 (GZDUGV s FRQFXUULQJ  :H EHOLHYH WKDW LQ WKH
FRQWH[W RI WKLV FDVH ZKHUH FXVWRPDU\ LQWHUQDWLRQDO ODZ LV          ,WLVZHOOHVWDEOLVKHGWKDWDMXGJHjVH[SUHVVHGLQWHQWLRQWR
EHLQJXVHGDVDGHIHQVHDJDLQVWDQRWKHUZLVHFRQVWLWXWLRQDO               XSKROGWKHODZRUWRLPSRVHVHYHUHSXQLVKPHQWZLWKLQWKH
DFWLRQWKHUHDFWLRQWRDQ\YLRODWLRQRIFXVWRPDU\LQWHUQDWLRQDO          OLPLWV RI WKH ODZ XSRQ WKRVH IRXQG JXLOW\ RI D SDUWLFXODU
ODZ LV D GRPHVWLF TXHVWLRQ WKDW PXVW EH DQVZHUHG E\ WKH         RIIHQVH ZLOO QRW RUGLQDULO\ VDWLVI\ WKH UHTXLUHPHQWV RI
H[HFXWLYH DQG OHJLVODWLYH EUDQFKHV  :H KROG WKDW WKH             GLVTXDOLILFDWLRQXQGHU6HFWLRQD6HH8QLWHG6WDWHVY
GHWHUPLQDWLRQ RI ZKHWKHU FXVWRPDU\ LQWHUQDWLRQDO ODZ                 *LJD[)GWK&LU8QLWHG6WDWHVY
SUHYHQWVD6WDWHIURPFDUU\LQJRXWWKHGHDWKSHQDOW\ZKHQWKH            +DOGHPDQ)GQ'&&LUFLWLQJ
6WDWH RWKHUZLVH LV DFWLQJ LQ IXOO FRPSOLDQFH ZLWK WKH             .QDSSY.LQVH\)GWK&LUsXGJH
&RQVWLWXWLRQLVDTXHVWLRQWKDWLVUHVHUYHGWRWKHH[HFXWLYH             0DWLDjVDFWLRQVDQGVWDWHPHQWVUHJDUGLQJWKHGHDWKSHQDOW\DUH
DQGOHJLVODWLYHEUDQFKHVRIWKH8QLWHG6WDWHVJRYHUQPHQWDV              QRW HQRXJK WR GHPRQVWUDWH WKDW KH VKRXOG KDYH UHFXVHG
LW WKHLU FRQVWLWXWLRQDO UROH WR GHWHUPLQH WKH H[WHQW RI WKLV     KLPVHOI
                                                                            0RUHJHQHUDOO\WKLVFRXUWKDVLQGLFDWHGWKDWDMXGJHLVQRW
                                                                          DXWRPDWLFDOO\GLVTXDOLILHGIURPDFDVHRQWKHEDVLVRIKDYLQJ
       %XHOOY0LWFKHOO                                   1R        1R                               %XHOOY0LWFKHOO     

VSRQVRUHGRUYRWHGXSRQDODZLQWKHVWDWHOHJLVODWXUHWKDWKH                 LQWHUSRVH FXVWRPDU\ LQWHUQDWLRQDO ODZ DV D GHIHQVH DJDLQVW
LVODWHUFDOOHGXSRQWRUHYLHZDVDMXGJH6HH/HDPDQY2KLR                 mDFWVFRPPLWWHGE\JRYHUQPHQWRIILFLDOVDJDLQVWDFLWL]HQ
'HSWRI0HQWDO5HWDUGDWLRQ)G	QWK                   RIWKH8QLWHG6WDWHVl+DZNLQV)6XSSGDW,I
&LU7KLVFRXUWKDVVWDWHGWKDWVSRQVRUVKLSRIDODZLV               DQ\WKLQJWKHVWDQGDUGVIRULPSO\LQJDFLYLOSULYDWHULJKWRI
VLPLODUWRWKHH[SUHVVLRQRIDQRSLQLRQRQDOHJDOLVVXHZKLFK                DFWLRQXQGHULQWHUQDWLRQDOODZVKRXOGEHOHVVWKDQWKRVHIRU
GRHVQRWFUHDWHWKHDSSHDUDQFHRILPSURSULHW\6HHLGDW                 XVLQJLQWHUQDWLRQDOODZDVDGHIHQVHDJDLQVWRWKHUZLVHODZIXO
Q)XUWKHUPRUHLQUXOLQJRQDQLQHIIHFWLYHDVVLVWDQFHRI                  JRYHUQPHQWDFWLRQXQGHUWKH&RQVWLWXWLRQ6HH&KULVWHQVRQ
FRXQVHO FODLP SUHGLFDWHG RQ WKH DVVHUWLRQ WKDW D FDSLWDO               VXSUDDWVWDWLQJWKDWm>H@VSHFLDOO\LQYHQWLYHEXW
GHIHQGDQWjVODZ\HUVKRXOGKDYHWROGKLPWKDWKLVVWDWHFRXUW                   JRLQJQRZKHUH>LV@WKHUHFHQWFODLP>@WKDWSHUHPSWRU\
VHQWHQFLQJMXGJHKDGSUHYLRXVO\YRWHGIRUDVWDWXWHSHUPLWWLQJ                 QRUPVSODFHOLPLWVXSRQFHUWDLQFRQVWLWXWLRQDOSRZHUVJUDQWHG
WKH GHDWKSHQDOW\ZKLOHD6RXWK&DUROLQDVWDWHVHQDWRUWKH                   XQGHU WKH &RQVWLWXWLRQl DQG QRWLQJ WKDW WKH FODLP LV
)RXUWK&LUFXLWVWDWHGWKDWm>R@QHZKRKDVYRWHGDVDOHJLVODWRU               mPLVJXLGHGLQLQWHUQDWLRQDOODZl
LQIDYRURIDVWDWXWHSHUPLWWLQJWKHGHDWKSHQDOW\LQDSURSHU
FDVHFDQQRWWKHUHDIWHUEHSUHVXPHGGLVTXDOLILHGWRKHDUFDSLWDO                   :H QRWH WKDW FRXUWV KDYH UHMHFWHG WKH DSSOLFDWLRQ RI
FDVHVDVDMXGJHRUSUHGLVSRVHGWRJLYHDGHDWKVHQWHQFHLQDQ\                LQWHUQDWLRQDOODZLQWKHFRQWH[WRIWKHH[HFXWLRQRIMXYHQLOH
SDUWLFXODUFDVHl6KDZY0DUWLQ)GWK&LU                 RIIHQGHUVZKHUHDVHHPLQJO\VWURQJHUDUJXPHQWPLJKWH[LVW
                                                                       IRUWKHXVHRILQWHUQDWLRQDOODZWRSUHYHQWVXFKDFWLRQV6HH
                                                                               &RQQLHGHOD9HJD	sHQQLIHU)LRUH7KH6XSUHPH&RXUWRI
  2WKHU FRXUWV KDYH H[SOLFLWO\ KHOG WKDW MXGJHV DUH QRW                WKH 8QLWHG 6WDWHV KDV EHHQ &DOOHG XSRQ WR 'HWHUPLQH WKH
GLVTXDOLILHGIURPKHDULQJFDVHVLQYROYLQJOHJLVODWLRQWKH\KDG                 /HJDOLW\RIWKHsXYHQLOH'HDWK3HQDOW\LQ0LFKDHO'RPLQJXHV
YRWHG XSRQ RU GUDIWHG EHIRUH VHUYLQJ RQ WKH EHQFK  6HH              Y6WDWHRI1HYDGD:+,77,(5 / 5(9
1HZEXU\SRUW 5HGHYHORSPHQW $XWK Y &RPPRQZHDOWK                       9HG31DQGD7KH8QLWHG6WDWHV5HVHUYDWLRQWRWKH%DQRQ
1(G0DVV$SS&WUHMHFWLQJFRQWHQWLRQ                    WKH 'HDWK 3HQDOW\ IRU sXYHQLOH 2IIHQGHUV  $Q $SSUDLVDO
WKDW MXGJH VKRXOG KDYH UHFXVHG KLPVHOI VLQFH KH ZDV D                 8QGHU WKH ,QWHUQDWLRQDO &RYHQDQW RQ &LYLO DQG 3ROLWLFDO
PHPEHU RI 0DVVDFKXVHWWV OHJLVODWXUH ZKHQ ELOO WKDW ZDV                  5LJKWV  '(3$8/ / 5(9    'DYLG
VXEMHFW RI OLWLJDWLRQ ZDV HQDFWHG :LOOLDPV Y 0D\RU 	                :HLVVEURGW([HFXWLRQRIsXYHQLOH2IIHQGHUVE\WKH8QLWHG
&RXQFLORIWKH&LW\RI$WKHQV6(G*D&W                    6WDWHV9LRODWHV,QWHUQDWLRQDO+XPDQ5LJKWV/DZ$0 8 s
                                                                               ,17
/ / 	 32/
<    sRDQ ) +DUWPDQ
                                                                               m8QXVXDOl 3XQLVKPHQW  7KH 'RPHVWLF (IIHFWV RI
                                                                              ,QWHUQDWLRQDO1RUPV5HVWULFWLQJWKH$SSOLFDWLRQRIWKH'HDWK
       %XHOO DUJXHV WKDW/HDPDQ    LQYROYHG VSHFLDO FLUFXPVWDQFHV WKDW OLPLW    3HQDOW\8 &,1 / 5(9
WKH UXOLQJ WR WKDW FDVH +H QRWHV WKDW WKH FDVH LQYROYHG D 6L[WK &LUFXLW
MXGJH ZKR KDG UHFXVHG KLPVHOI    DIWHU  KDYLQJ YRWLQJ IRU UHKHDULQJ HQ EDQF
DQG DIWHU KDYLQJ SDUWLFLSDWHG LQ UHDUJXPHQW ,Q LWV HQ EDQF RSLQLRQ WKLV
                                                                                 ,Q6WDQIRUGY.HQWXFN\86WKH6XSUHPH
FRXUW GLVFXVVHG WKH HIIHFW RI WKH MXGJHjV UHFXVDO ,Q WKH SURFHVV WKH FRXUW   &RXUW VWDWHG WKDW >Z@H GLVFHUQ QHLWKHU D KLVWRULFDO QRU D
VWDWHG mWKH PHUH IDFW RI UHFXVDO GRHV QRW PHDQ WKDW WKH UHFXVLQJ MXGJH KDG     PRGHUQ VRFLHWDO FRQVHQVXV IRUELGGLQJ WKH LPSRVLWLRQ RI
FRQFOXGHG WKDW KLV UHFXVDO ZDV PDQGDWRU\l  )G DW  ,Q GLFWD WKH      FDSLWDOSXQLVKPHQWRQDQ\SHUVRQZKRPXUGHUVDWRU
FRXUW VWDWHG WKDW D MXGJH LV QRW UHTXLUHG WR UHFXVH KLPVHOI ZKHUH DV D        \HDUVRIDJHl,GDW$VDUHVXOWWKH&RXUWKHOGWKDW
OHJLVODWRU KH KDG EHHQ LQYROYHG LQ OHJLVODWLRQ WKDW KH ZDV QRZ UHYLHZLQJ
DV D MXGJH $OWKRXJK WKLV GLFWD ZDV LVVXHG ZLWKRXW WKH EHQHILW RI EULHILQJ
                                                                               mVXFKSXQLVKPHQWGRHVQRWRIIHQGWKH(LJKWK$PHQGPHQW
V
RU DUJXPHQW E\ WKH SDUWLHV LG DW  0HUULWW s GLVVHQWLQJ LW ZDV       SURKLELWLRQDJDLQVWFUXHODQGXQXVXDOSXQLVKPHQWl,ELG7KH
LVVXHG RQ WKH EDVLV RI LQWHUSUHWDWLRQ RI MXGLFLDO SUHFHGHQWV %XHOO SURYLGHV   GLVVHQWQRWHGWKDWRYHUKDOIRIWKHQDWLRQVWKDWUHWDLQHGWKH
QR FUHGLEOH OHJDO DUJXPHQWV IRU QRW DSSO\LQJ WKH SULQFLSOH LQ WKLV FDVH
    %XHOOY0LWFKHOO                               1R       1R                                 %XHOOY0LWFKHOO       

UHYjG RQ RWKHU JURXQGV  )G  WK &LU           $SSWULDOMXGJHQRWUHTXLUHGWRUHFXVHKLPVHOIZKHUH
m>7@KLV&RXUWLVDOVRKHVLWDQWWRLQWHUIHUHLQDQDUHDWKDWLV         ZKLOHSUHYLRXVO\VHUYLQJDVFLW\DWWRUQH\KHGUDIWHGRUGLQDQFH
WUDGLWLRQDOO\ HQWUXVWHG WR WKH OHJLVODWLYH DQG H[HFXWLYH          EDQQLQJSRVVHVVLRQDQGRSHUDWLRQRIDSLQEDOOPDFKLQHLQFLW\
EUDQFKHV,WLVWKHVHWZREUDQFKHVZKLFKPXVWLQWHUSUHWZKDW           OLPLWVDQGGHIHQGDQWDSSHDULQJEHIRUHKLPZDVFKDUJHGZLWK
LQWHUQDWLRQDOREOLJDWLRQVWKH8QLWHG6WDWHVZLOOXQGHUWDNHDQG          YLRODWLRQ RI WKDW RUGLQDQFH ,Q WKH 0DWWHU RI 7KRPDV :
KRZWRLPSOHPHQWWKHPGRPHVWLFDOO\l                                  6XOOLYDQ6RG$ODm$MXGJHLVQRW
                                                                        GLVTXDOLILHGWRWU\DFDVHEHFDXVHKHKDGEHHQDPHPEHURIWKH
  &RXUWVWKDWKDYHGHWHUPLQHGWKDWSULYDWHULJKWVRIDFWLRQV            OHJLVODWXUH HQDFWLQJ D VWDWXWH LQYROYHG LQ OLWLJDWLRQ EHIRUH
H[LVWXQGHUFXVWRPDU\QRUPVRILQWHUQDWLRQDOODZKDYHGRQH              KLPl7KHVHFDVHVZHUHQRWHGLQ/HDPDQWRVXSSRUWWKH
VR ZKHUH DFWV ZHUH FRPPLWWHG RQ D IRUHLJQ FLWL]HQ RU DFWV     SURSRVLWLRQ WKDW LW LV SHUPLVVLEOH IRU D MXGJH WR KHDU FDVHV
ZHUH FRPPLWWHG E\ D IRUHLJQ JRYHUQPHQW RU JRYHUQPHQW             LQYROYLQJODZVSDVVHGZKLOHWKHMXGJHVHUYHGDVDOHJLVODWRU
RIILFLDO6HH+DZNLQV)6XSSGDWFLWLQJFDVHV          7KH/HDPDQFRXUWQRWHGWKDWWKLVZDVWKHSUDFWLFHRIWKHODWH
m7KHUH LV QR UHSRUWHG FDVH RI D FRXUW LQ WKH 8QLWHG 6WDWHV   8QLWHG6WDWHV6XSUHPH&RXUW&KLHIsXVWLFH)UHG9LQVRQDQG
UHFRJQL]LQJ D FDXVH RI DFWLRQ XQGHU MXV FRJHQV QRUPV RI        WKH ODWH 6XSUHPH &RXUW sXVWLFHV +DUROG %XUWRQ DQG +XJR
LQWHUQDWLRQDO ODZ IRU DFWV FRPPLWWHG E\ 8QLWHG 6WDWHV            %ODFN ZKR mURXWLQHO\ VDW RQ FDVHV LQYROYLQJ OHJLVODWLRQ
JRYHUQPHQWRIILFLDOVDJDLQVWDFLWL]HQRIWKH8QLWHG6WDWHVl           SDVVHGZKLOHWKH\ZHUHPHPEHUVRI&RQJUHVVl)GDW
,ELGVHHDOVR*RUGRQ$&KULVWHQVRQ)HGHUDO&RXUWVDQG                
:RUOG&LYLO6RFLHW\s 75$161$7j/ / 	 32/j<
 m1R 86 FRXUW KDV LQYRNHG WKH LQWHUQDWLRQDO                7KH/HDPDQFRXUWDOVRLQGLFDWHGWKDWRQO\RQHSXEOLVKHG
SURKLELWLRQ DJDLQVW RIILFLDO WRUWXUH DV D SHUHPSWRU\ RU MXV     FDVH/LPHFR,QFY'LYLVLRQRI/LPH)6XSS1'
FRJHQVQRUPWRMXVWLI\DFDXVHRIDFWLRQE\LWVHOIH[FHSWE\           0LVV  KDV WDNHQ D FRQWUDU\ SRVLWLRQ  ,Q /LPHFR D
SRVVLEOH GLFWXP  ,Q IDFW FRXUWV LQ WKH 8QLWHG 6WDWHV KDYH   VHQLRUGLVWULFWMXGJHUHFXVHGKLPVHOIIURPDFDVHLQYROYLQJWKH
XQLIRUPO\UHMHFWHGDSSOLFDWLRQRIDQDVVHUWHGMXVFRJHQVQRUP           6WDWH RI 0LVVLVVLSSLjV 'LYLVLRQ RI /LPH RQ WKH EDVLV WKDW
DVWKHVROHEDVLVIRUDFDXVHRIDFWLRQl&KULVWHQVRQIXUWKHU        IRUW\RQH\HDUVSULRUZKLOHDPHPEHURIWKHVWDWHOHJLVODWXUH
QRWHV WKDW m>Z@KLOH VRPH ODQJXDJH LQ VHYHUDO GHFLVLRQV RI       KH YRWHG DJDLQVW OHJLVODWLRQ DOORZLQJ WKH VWDWH WR HVWDEOLVK
FRXUWVRIDSSHDOVWDWHVWKDW86FRXUWVKDYHUHFRJQL]HGWKH            VWDWHUXQOLPHFUXVKLQJIDFLOLWLHV7KHMXGJHDGPLWWHGKHKDG
FRQFHSWRIMXVFRJHQVDVSDUWRI86ODZQRWDVLQJOHFDVH            IRUJRWWHQKLVYRWHVWDWLQJmWKHSDVVDJHRI>WLPH@LVRIVXFK
KDV EHHQ GHFLGHG RQ WKDW EDVLV DORQH ZLWKRXW KDYLQJ EHHQ       PDJQLWXGH DV WR REOLWHUDWH DQ\ UHFDOO RI D VLQJOH DFW ZKLFK
RYHUWXUQHGl  ,ELG FLWLQJ 3ULQF] Y )5*  )G      DSSDUHQWO\RFFXUUHGLQWKHSHOOPHOOUXVKRIWKHEHJLQQLQJRI
'& &LU  UHYHUVLQJ GLVWULFW FRXUWjV UHOLDQFH RQ MXV    DVHVVLRQRIWKH0LVVLVVLSSL/HJLVODWXUHl,GDW<HWWKH
FRJHQVLQFODLPRI$PHULFDQFLWL]HQDQG+RORFDXVWVXUYLYRU              MXGJH VWLOO UHFXVHG KLPVHOI VWDWLQJ WKDW KLV YRWH LQ WKH
ZKR VXHG WKH )HGHUDO 5HSXEOLF RI *HUPDQ\ IRU GDPDJHV            OHJLVODWXUHPLJKWFUHDWHDVLWXDWLRQLQZKLFKKLVLPSDUWLDOLW\
EDVHG RQ KDYLQJ EHHQ D SULVRQHU LQ 1D]L FRQFHQWUDWLRQ           PLJKWUHDVRQDEO\EHTXHVWLRQHG,ELG
FDPSV
                                                                          :HGHFOLQHWRKROGWKDW/LPHFRFRUUHFWO\VWDWHVDUXOHRI
  :HEHOLHYHWKDWWKHVDPHORJLFDSSOLHVLQWKLVFDVHWKRXJK           PDQGDWRU\UHFXVDODQGEHOLHYHWKHZHLJKWRIDXWKRULW\WRWKH
%XHOOD8QLWHG6WDWHVFLWL]HQLVQRWDVVHUWLQJDSULYDWHULJKW        FRQWUDU\WREHIDUPRUHSHUVXDVLYH:HKROGWKDWDMXGJHZKR
RIDFWLRQEXWLQVWHDGLVXVLQJLQWHUQDWLRQDOODZDVDGHIHQVH          DV D OHJLVODWRU VSRQVRUHG RU YRWHG IRU OHJLVODWLRQ
DJDLQVWDFWLRQVWDNHQE\2KLRjVJRYHUQPHQWWKDWFRPSO\IXOO\            LPSOHPHQWLQJ RU IDYRULQJ WKH GHDWK SHQDOW\ FDQQRW EH
ZLWK WKH 8QLWHG 6WDWHV &RQVWLWXWLRQ  +H LV DWWHPSWLQJ WR      SUHVXPHGWREHGLVTXDOLILHGIURPUHYLHZLQJFDSLWDOFDVHVDV
     %XHOOY0LWFKHOO                               1R       1R                               %XHOOY0LWFKHOO     

DMXGJH(VWDEOLVKLQJDUXOHWKDWDMXGJHPXVWUHFXVHKLPVHOI          RIWKH3ULQFLSDO,QWHUQDWLRQDO+XPDQ5LJKWV7UHDWLHVsXQH
LQFDVHVLQYROYLQJOHJLVODWLRQWKDWKDGEHHQHQDFWHGZKHQD             DWKWWSZZZXQKFKUFKSGIUHSRUWSGI
MXGJH VHUYHG DV D OHJLVODWRU ZRXOG IRUFH UHFXVDO LQ DQ
LQRUGLQDWH DPRXQW RI FDVHV   ,Q DGGLWLRQ LW PLJKW SUHYHQW     7KHUHLVQRLQGLFDWLRQWKDWWKHFRXQWULHVWKDWKDYHDEROLVKHG
LQGLYLGXDOV ZKR DUH RU ZHUH OHJLVODWRUV IURP VHUYLQJ DV         WKH GHDWK SHQDOW\ KDYH GRQH VR RXW RI D VHQVH RI OHJDO
PHPEHUV RI WKH MXGLFLDU\ DQG IURP EULQJLQJ WKHLU XQLTXH         REOLJDWLRQUDWKHUWKDQIRUPRUDOSROLWLFDORURWKHUUHDVRQV
SHUVSHFWLYHVWRWKHEHQFK6HH8QLWHG6WDWHVY$ODEDPD           0RUHRYHUVLQFH WKHDEROLWLRQRIWKHGHDWKSHQDOW\LVQRWD
)G   WK &LU  m,W DSSHDUV WR EH DQ        FXVWRPDU\QRUPRILQWHUQDWLRQDOODZLWFDQQRWKDYHULVHQWR
LQHVFDSDEOHSDUWRIRXUV\VWHPRIJRYHUQPHQWWKDWMXGJHVDUH            WKH OHYHO WKDW WKH LQWHUQDWLRQDO FRPPXQLW\ DV D ZKROH
GUDZQSULPDULO\IURPODZ\HUVZKRKDYHSDUWLFLSDWHGLQSXEOLF            UHFRJQL]HV LW DV MXV FRJHQV RU D QRUP IURP ZKLFK QR
DQG SROLWLFDO DIIDLUVl +RPH 3ODFHPHQW 6HUY ,QF Y          GHURJDWLRQLVSHUPLWWHG7KHUHIRUHZHFDQQRWFRQFOXGHWKDW
3URYLGHQFHsRXUQDO&R)GVW&LU               WKH DEROLWLRQ RI WKH GHDWK SHQDOW\ LV D FXVWRPDU\ QRUP RI
m,WLVFRPPRQNQRZOHGJHRUDWOHDVWSXEOLFNQRZOHGJHWKDW            LQWHUQDWLRQDOODZRUWKDWLWKDVULVHQWRWKHKLJKHUVWDWXVRIMXV
WKHILUVWVWHSWRWKHIHGHUDOEHQFKIRUPRVWMXGJHVLVHLWKHUD         FRJHQV
KLVWRU\ RI DFWLYH SDUWLVDQ SROLWLFV RU VWURQJ SROLWLFDO
FRQQHFWLRQVl                                                         (YHQLIZHZHUHWRFRQFOXGHWKDWWKHDEROLWLRQRIWKHGHDWK
                                                                        SHQDOW\ZDVDFXVWRPDU\QRUPRILQWHUQDWLRQDOODZRUURVHWR
  0RUHRYHU VXFK D UXOH GRHV QRW FRPSRUW ZLWK  86&        WKHKLJKHUOHYHORIEHLQJDSHUHPSWRU\QRUPRUMXVFRJHQVZH
DZKLFKVWDWHVWKDWDMXGJHmVKDOOGLVTXDOLI\KLPVHOILQ        GRQRWEHOLHYHWKDWWKLVZRXOGEHDVXIILFLHQWEDVLVIRURXU
DQ\SURFHHGLQJLQZKLFKKLVLPSDUWLDOLW\PLJKWUHDVRQDEO\EH            FRXUWWRLQYDOLGDWH2KLRjVGHDWKSHQDOW\VWDWXWH
TXHVWLRQHGl7KLVUXOHUHTXLUHVDIDFWVSHFLILFDQDO\VLVRIWKH
MXGJHjVSULRUDFWLYLW\OHJLVODWLYHRURWKHUZLVHWRGHWHUPLQHLI          ,Q :KLWH Y 3DXOVHQ  ) 6XSS   ('
GLVTXDOLILFDWLRQ LV UHTXLUHG  ,Q WKLV FDVH sXGJH 0DWLDjV      :DVKWKHGLVWULFWFRXUWDQDORJL]LQJWR%LYHQVY6L[
VSRQVRUVKLS RI OHJLVODWLRQ UHLQVWDWLQJ WKH GHDWK SHQDOW\ LQ      8QNQRZQ1DPHG$JHQWVRIWKH)HG%XUHDXRI1DUFRWLFV
2KLR DQG RSLQLRQV LQ IDYRU RI WKH GHDWK SHQDOW\ ZKLOH          86    VWDWHG WKDW mIHGHUDO FRXUWV KDYH WKH
FDPSDLJQLQJ IRU SXEOLF RIILFH DUH QRW VXIILFLHQW WR              DXWKRULW\WRLPSO\WKHH[LVWHQFHRIDSULYDWHULJKWRIDFWLRQIRU
GHPRQVWUDWH WKDW KLV mLPSDUWLDOLW\ PLJKW UHDVRQDEO\ EH            YLRODWLRQVRIMXVFRJHQVQRUPVRILQWHUQDWLRQDOODZl,GDW
TXHVWLRQHGlLQDSDUWLFXODUFDVHDQ\PRUHWKDQVXSSRUWIRU             :KLOHWKHFRXUWUHFRJQL]HGWKLVDXWKRULW\LWZHQWRQWR
FLYLOULJKWVODZVDVDOHJLVODWRUZRXOGGLVTXDOLI\DMXGJHIURP         VWDWHm>Z@KHWKHUDIHGHUDOFRXUWVKRXOGLPSO\WKHH[LVWHQFHRI
KHDULQJDOOGLVFULPLQDWLRQFDVHV                                     VXFKDUHPHG\LQWKHFRQWH[WRIDSDUWLFXODUFDVHLVDGLIIHUHQW
                                                                        TXHVWLRQl,GDW,QGHFOLQLQJWRLPSO\WKHH[LVWHQFHRI
   :HUHDOL]HWKDWLQVRPHFDVHVDMXGJHjVOHJLVODWLYHDFWLYLWLHV       DSULYDWHULJKWRIDFWLRQWKHFRXUWH[SUHVVO\QRWHGWKDWLWZDV
PD\EHLQWLPDWHO\FRQQHFWHGZLWKWKHIDFWVRIDSDUWLFXODUFDVH         mEHLQJDVNHGWRDGGUHVVDPDWWHUWKDWLVSULQFLSDOO\HQWUXVWHG
DQGPD\WKHUHIRUHUHTXLUHUHFXVDO6HHHJ8QLWHG6WDWHVY         E\WKHIHGHUDOFRQVWLWXWLRQWR&RQJUHVVRUWKH([HFXWLYHl,G
$ODEDPD  )G DW  KROGLQJ WKDW GLVWULFW MXGJH       DW7KHFRXUWVWDWHGWKDWm>W@KHGHWHUPLQDWLRQRIZKDW
PXVWEHGLVTXDOLILHGQRWEHFDXVHRIKLVmYLHZVH[SUHVVHG          LQWHUQDWLRQDO REOLJDWLRQV WKH 8QLWHG 6WDWHV FKRRVHV WR
DVDSROLWLFDOILJXUHDQGPHPEHURIWKH$ODEDPD6WDWH6HQDWHl           UHFRJQL]HRUHQIRUFHLVDQDUHDWKDWKDVEHHQUHFRJQL]HGDV
EXWEHFDXVHm>G@XULQJKLVWHQXUHLQWKHVWDWHOHJLVODWXUHWKH          HQWUXVWHG SULQFLSDOO\ WR WKH /HJLVODWLYH DQG ([HFXWLYH
WULDOMXGJHDFWLYHO\SDUWLFLSDWHGLQWKHYHU\HYHQWVDQGVKDSHG         EUDQFKHVRIWKHIHGHUDOJRYHUQPHQWl,ELGVHHDOVR+DZNLQV
WKHYHU\IDFWVWKDWDUHDWLVVXHLQWKLVVXLWl+RZHYHUWKHUH       Y&RPSDUHW&DVVDQL)6XSSG&'&DO
    %XHOOY0LWFKHOO                               1R     1R                                    %XHOOY0LWFKHOO         

  UHDFKHGj0HLMHUV+RZ,V,QWHUQDWLRQDO/DZ0DGH"               LVQRDOOHJDWLRQLQWKLVFDVHWKDWsXGJH0DWLDjVOHJLVODWLYHRU
  1(7+(5/$1'6 <% ,17
/ / $VWRZKDW                 SROLWLFDO DFWLYLWLHV ZHUH VSHFLILFDOO\ FRQQHFWHG WR %XHOOjV
  FRQVWLWXWHVWKHQHFHVVDU\QXPEHURIµUHOHYDQWVWDWHVjWKH          SURVHFXWLRQ,QGHHGWKH DFWLYLWLHVRFFXUUHGEHIRUH%XHOOjV
  >,QWHUQDWLRQDO &RXUW RI sXVWLFH@ KDV VDLG WKDW µ6WDWH        SURVHFXWLRQ  0RUHRYHU sXGJH 0DWLDjV UHYLHZ RI WKH
  SUDFWLFH    VKRXOG KDYH EHHQ ERWK H[WHQVLYH DQG         OHJLVODWLRQKHVSRQVRUHGZDVOLPLWHGWR%XHOOjVFRQWHQWLRQ
  YLUWXDOO\XQLIRUPLQWKHVHQVHRIWKHSURYLVLRQLQYRNHGj           WKDW2KLRjVGHDWKSHQDOW\VWDWXWHLVXQFRQVWLWXWLRQDORQHRI
  7KH1RUWK6HD&RQWLQHQWDO6KHOI&DVHsXGJPHQW               WKLUW\WKUHHJURXQGVIRUUHOLHI%XHOOSUHVHQWHGWRWKHGLVWULFW
  ,&s)LQDOO\LQRUGHUIRUVXFKDFXVWRPDU\QRUP          FRXUW
  RILQWHUQDWLRQDOODZWREHFRPHDSHUHPSWRU\QRUPWKHUH
  PXVW EH D IXUWKHU UHFRJQLWLRQ E\ µWKH LQWHUQDWLRQDO            %XHOOGRHVQRWSURYLGHOHJDOVXSSRUWIRUWKHSURSRVLWLRQWKDW
  FRPPXQLW\    DV D ZKROH >WKDW WKLV LV@ D QRUP IURP   sXGJH0DWLDZDVUHTXLUHGWRUHFXVHKLPVHOI0XFKRI%XHOOjV
  ZKLFKQRGHURJDWLRQLVSHUPLWWHGj9LHQQD&RQYHQWLRQ               DUJXPHQWLVEDVHGRQZKDWMXGJHVVKRXOGGR7KLVFRXUWjV
  >RQWKH/DZRI7UHDWLHV@DUWHPSKDVLVDGGHG                 DQDO\VLVKRZHYHULVEDVHGRQZKDWMXGJHVPXVWGRsXGJH
                                                                      0DWLDZDVQRWUHTXLUHGWRUHFXVHKLPVHOIDQGGLGQRWDEXVH
)GDW                                                    KLVGLVFUHWLRQLQFKRRVLQJQRWWRGRVR
   7KHSURKLELWLRQRIWKHGHDWKSHQDOW\LVQRWVRH[WHQVLYHDQG         3URFHGXUDO'HIDXOW
YLUWXDOO\XQLIRUPDPRQJWKHQDWLRQVRIWKHZRUOGWKDWLWLVD
FXVWRPDU\LQWHUQDWLRQDOQRUP7KLVLVFRQILUPHGE\WKHIDFW            %XHOOFRQWHQGVWKDWWKHGLVWULFWFRXUWHUUHGLQGHWHUPLQLQJ
WKDWODUJHQXPEHUVRIFRXQWULHVLQWKHZRUOGUHWDLQWKHGHDWK         WKDWFHUWDLQRI%XHOOjVFODLPVZHUHSURFHGXUDOO\GHIDXOWHG
SHQDOW\6HH:LOOVY7H[DV86Q
%ODFNPXQ s GLVVHQWLQJ UHFRJQL]LQJ WKDW RYHU VHYHQW\          7KHSDUWLHVDJUHHDQGZHFRQFXUWKDW%XHOOjVILUVWDQGIRXUWK
QDWLRQVUHWDLQHGWKHGHDWKSHQDOW\DVRIWKHQ6KRUWVXSUD          FODLPVKDYHEHHQIXOO\SUHVHUYHG7KH6WDWHDUJXHVWKDWDOORU
SDJH  DW  LQGLFDWLQJ WKDW DV RI 'HFHPEHU      SRUWLRQV RI WKH UHPDLQLQJ VHYHQ FODLPV KDYH EHHQ
QLQHW\FRXQWULHVUHWDLQHGIXOOXVHRIWKHGHDWKSHQDOW\ZKLOH        SURFHGXUDOO\GHIDXOWHG6SHFLILFDOO\WKH6WDWHDVVHUWVWKDWDOO
DV RI WKH HQG RI  RQO\ VL[W\RQH FRXQWULHV RU          RUSRUWLRQVRI%XHOOjVWKLUGFODLPSRUWLRQUHODWLQJWRSHQDOW\
DSSUR[LPDWHO\WKLUW\WZRSHUFHQWRIFRXQWULHVKDGFRPSOHWHO\         SKDVH MXU\ LQVWUXFWLRQV DQG QRQXQDQLPRXV VHQWHQFLQJ
DEROLVKHG XVH RI WKH GHDWK SHQDOW\ :LOOLDP $ 6FKDEDV      YHUGLFWVL[WKFODLPSRUWLRQUHODWLQJWR5R\:LOVRQjVPHQWDO
,QWHUQDWLRQDO/DZDQGWKH$EROLWLRQRIWKH'HDWK3HQDOW\          VWDWHVHYHQWKFODLPULJKWWREHSUHVHQWDWSRUWLRQVRIWULDO
:$6+ 	 /(( / 5(9     FLWLQJ             HLJKWKFODLPSURVHFXWRULDOPLVFRQGXFWQLQWKFODLPJXLOW
8QLWHG1DWLRQVUHSRUWWKDWVWDWHVKDYHDEROLVKHGWKHGHDWK        SKDVHMXU\LQVWUXFWLRQVDQGWHQWKFODLPLQWHUQDWLRQDOODZ
SHQDOW\ZKLOHQLQHW\UHWDLQLWDQG$PQHVW\,QWHUQDWLRQDO         DQGHOHFWURFXWLRQSRUWLRQVRIGHDWKSHQDOW\FKDOOHQJHZHUH
ILJXUHV WKDW QLQHW\QLQH VWDWHV KDYH DEROLVKHG WKH GHDWK       QRWSUHVHQWHGRQGLUHFWDSSHDO,QDGGLWLRQWKH6WDWHDUJXHV
SHQDOW\LQODZRULQSUDFWLFHZKLOHQLQHW\IRXUQDWLRQVUHWDLQ       WKDW SRUWLRQV RI %XHOOjV ILIWK FODLP UHODWLQJ WR LQHIIHFWLYH
LW,QGHHGLWLVLPSRVVLEOHWRFRQFOXGHWKDWWKHLQWHUQDWLRQDO
FRPPXQLW\DVDZKROHUHFRJQL]HVWKHSURKLELWLRQRIWKHGHDWK
SHQDOW\ ZKHQ DV RI   VWDWHV ZHUH SDUWLHV WR WKH
,QWHUQDWLRQDO &RYHQDQW ZKLFK VSHFLILFDOO\ UHFRJQL]HV WKH
H[LVWHQFHRIWKHGHDWKSHQDOW\2IILFHRIWKH8QLWHG1DWLRQV             
                                                                           %HIRUH FRQVLGHULQJ WKLV FODLP ZH QRWH WKDW ZH UHYLHZ WKH SURFHGXUDO
+LJK&RPPLVVLRQHUIRU+XPDQ5LJKWV6WDWXVRI5DWLILFDWLRQ            VWDWXV RI HDFK RI %XHOOjV FODLPV DW WKH EHJLQQLQJ RI RXU GLVFXVVLRQ RI HDFK
                                                                      FODLP GXULQJ WKH FRXUVH RI WKLV RSLQLRQ
       %XHOOY0LWFKHOO                                   1R         1R                                 %XHOOY0LWFKHOO      

DVVLVWDQFH RI DSSHOODWH FRXQVHO ZHUH GHIDXOWHG SXUVXDQW WR                UHOLHVGRQRWVSHFLILFDOO\RXWODZWKHGHDWKSHQDOW\7RWKH
2KLR5$SS3                                                             H[WHQWWKDWWKHDJUHHPHQWVEDQFUXHODQGXQXVXDOSXQLVKPHQW
                                                                                 WKH8QLWHG6WDWHVKDVLQFOXGHGH[SUHVVUHVHUYDWLRQVSUHVHUYLQJ
   7KH6XSUHPH&RXUWKDVVWDWHGWKDWm>L@QDOOFDVHVLQZKLFK                    WKHULJKWWRLPSRVHWKHGHDWKSHQDOW\ZLWKLQWKHOLPLWVRIWKH
DVWDWHSULVRQHUKDVGHIDXOWHGKLVIHGHUDOFODLPVLQVWDWHFRXUW                 8QLWHG6WDWHV&RQVWLWXWLRQ0RUHRYHUQHLWKHUDJUHHPHQWLV
SXUVXDQWWRDQLQGHSHQGHQWDQGDGHTXDWHVWDWHSURFHGXUDOUXOH                   ELQGLQJRQFRXUWVRIWKH8QLWHG6WDWHV
IHGHUDOKDEHDVFRUSXVUHYLHZRIWKHFODLPVLVEDUUHGXQOHVVWKH
SULVRQHU FDQ GHPRQVWUDWH FDXVH IRU WKH GHIDXOW DQG DFWXDO                  LL&XVWRPDU\,QWHUQDWLRQDO/DZ
SUHMXGLFHDVDUHVXOWRIWKHDOOHJHGYLRODWLRQRIIHGHUDOODZRU
GHPRQVWUDWHWKDWIDLOXUHWRFRQVLGHUWKHFODLPVZLOOUHVXOWLQ                     $FFRUGLQJWRWKH5HVWDWHPHQWm>F@XVWRPDU\LQWHUQDWLRQDO
DIXQGDPHQWDOPLVFDUULDJHRIMXVWLFHl&ROHPDQY7KRPSVRQ                     ODZUHVXOWVIURPDJHQHUDODQGFRQVLVWHQWSUDFWLFHRIVWDWHV
86VHHDOVR 6LPSVRQYsRQHV                        IROORZHG E\ WKHP IURP D VHQVH RI OHJDO REOLJDWLRQVl
)GWK&LU7KLVFRXUWDSSOLHVDIRXUSDUW                   5(67$7(0(17 7+,5' 2) )25(,*1 5(/$7,216 /$:
WHVWWRGHWHUPLQHLIDFODLPLVSURFHGXUDOO\GHIDXOWHGWKH                 &XVWRPDU\LQWHUQDWLRQDOODZWKHQFRQVLVWVRIWZR
FRXUWPXVWGHWHUPLQHWKDWWKHUHLVDVWDWHSURFHGXUDOUXOHWKDW                  FRPSRQHQWV)LUVWWKHUHPXVWEHDmJHQHUDODQGFRQVLVWHQW
LVDSSOLFDEOHWRWKHSHWLWLRQHUjVFODLPDQGWKDWWKHSHWLWLRQHU                  SUDFWLFHRIVWDWHVl7KLVGRHVQRWPHDQWKDWWKHSUDFWLFHPXVW
IDLOHGWRFRPSO\ZLWKWKHUXOHWKHFRXUWPXVWGHWHUPLQH                     EH mXQLYHUVDOO\ IROORZHGl UDWKHU mLW VKRXOG UHIOHFW ZLGH
ZKHWKHUWKHVWDWHFRXUWVDFWXDOO\HQIRUFHGWKHVWDWHSURFHGXUDO                  DFFHSWDQFH DPRQJ WKH VWDWHV SDUWLFXODUO\ LQYROYHG LQ WKH
VDQFWLRQLWPXVWEHGHFLGHGZKHWKHUWKHVWDWHSURFHGXUDO                    UHOHYDQWDFWLYLW\l,GDWFPWE6HFRQGWKHUHPXVWEH
IRUIHLWXUHLVDQDGHTXDWHDQGLQGHSHQGHQWVWDWHJURXQGXSRQ                      mDVHQVHRIOHJDOREOLJDWLRQlRURSLQLRMXULVVLYHQHFHVVLWDWLV
ZKLFK WKH VWDWH FDQ UHO\ WR IRUHFORVH UHYLHZ RI D IHGHUDO              ,Q RWKHU ZRUGV mD SUDFWLFH WKDW LV JHQHUDOO\ IROORZHG EXW
FRQVWLWXWLRQDOFODLPDQGLIWKHFRXUWKDVGHWHUPLQHGWKDW                   ZKLFKVWDWHVIHHOOHJDOO\IUHHWRGLVUHJDUGGRHVQRWFRQWULEXWH
DVWDWHSURFHGXUDOUXOHZDVQRWFRPSOLHGZLWKDQGWKDWWKHUXOH                  WR FXVWRPDU\ ODZl UDWKHU WKHUH PXVW EH D VHQVH RI OHJDO
ZDV DQ DGHTXDWH DQG LQGHSHQGHQW VWDWH JURXQG WKHQ WKH                   REOLJDWLRQ  ,G DW   FPW F  6WDWHV PXVW IROORZ WKH
SHWLWLRQHULVUHTXLUHGWRGHPRQVWUDWHWKDWWKHUHZDVFDXVHIRU                   SUDFWLFHEHFDXVHWKH\EHOLHYHLWLVUHTXLUHGE\LQWHUQDWLRQDO
KLPQRWWRIROORZWKHSURFHGXUDOUXOHDQGWKDWKHZDVDFWXDOO\                   ODZQRWPHUHO\EHFDXVHWKDWWKH\WKLQNLWLVDJRRGLGHDRU
SUHMXGLFHGE\WKHDOOHJHGFRQVWLWXWLRQDOHUURU6HH0DXSLQY                   SROLWLFDOO\XVHIXORURWKHUZLVHGHVLUDEOH6RPHFXVWRPDU\
6PLWK)GWK&LU                                       QRUPVRILQWHUQDWLRQDOODZUHDFKDmKLJKHUVWDWXVlLQZKLFK
                                                                                 WKH\mDUHUHFRJQL]HGE\WKHLQWHUQDWLRQDOFRPPXQLW\RIVWDWHV
                                                                                 DV SHUHPSWRU\ >QRUPV@ SHUPLWWLQJ QR GHURJDWLRQl  ,G DW
     
      %XHOO FKRVH QRW WR SXUVXH DQ LQHIIHFWLYH DVVLVWDQFH RI WULDO FRXQVHO
                                                                                 FPWN	FPWQ7KHVHSHUHPSWRU\QRUPVDUHDOVR
FODLP RQ GLUHFW UHYLHZ   %XHOO LQFOXGHG DQ LQHIIHFWLYH DVVLVWDQFH RI WULDO      UHIHUUHGWRDVMXVFRJHQV
FRXQVHO FODLP LQ KLV SRVWFRQYLFWLRQ SHWLWLRQ 6LQFH %XHOO ZDV UHSUHVHQWHG
E\ WKH VDPH FRXQVHO DW WULDO DQG RQ GLUHFW DSSHDO LW ZDV SURSHU IRU KLP WR        7KHFRXUWjVGLVFXVVLRQLQ&LWL]HQV/LYLQJLQ1LFDUDJXDRI
UDLVH KLV LQHIIHFWLYH DVVLVWDQFH RI WULDO FRXQVHO FODLPV IRU WKH ILUVW WLPH LQ   ZKHQ D UXOH EHFRPHV D FXVWRPDU\ DQG ODWHU SHUHPSWRU\
KLV SRVWFRQYLFWLRQ SHWLWLRQ $00 6WDWH Y &ROH  1(G  
2KLR  7KHUHIRUH %XHOOjV LQHIIHFWLYH DVVLVWDQFH RI WULDO FRXQVHO
                                                                                 QRUPRUMXVFRJHQVLVLQVWUXFWLYH
FODLPV ZHUH QRW GHIDXOWHG DQG DUH SUHVHUYHG IRU KDEHDV UHYLHZ
                                                                                   >&@XVWRPDU\ LQWHUQDWLRQDO ODZ LV FRQWLQXDOO\ HYROYLQJ
     
     :H QRWH WKDW WKLV FRXUW LQGLFDWHG LQ 6FRWW Y 0LWFKHOO m>D@OWKRXJK ZH
                                                                                   $WDFUXFLDOVWDJHRIWKDWSURFHVVµ>Z@LWKLQWKHUHOHYDQW
KDYH UHPDLQHG IDLWKIXO WR WKH DQDO\VLV HQGRUVHG E\ 0DXSLQ RXU PRUH
                                                                                   VWDWHVWKHZLOOKDVWREHIRUPHGWKDWWKHUXOHZLOOEHFRPH
UHFHQW GHFLVLRQV KDYH QRW DOZD\V HPSOR\HG D µ0DXSLQ WHVWj SHU VHl              ODZLIWKHUHOHYDQWQXPEHURIVWDWHVZKRVKDUHWKLVZLOOLV
    %XHOOY0LWFKHOO                             1R      1R                                  %XHOOY0LWFKHOO       

  &ULPHRI*HQRFLGH7KLVSHQDOW\FDQRQO\EHFDUULHGRXW              7KH 6WDWH SUHVHQWV FRQYLQFLQJ DUJXPHQWV DV WR %XHOOjV
  SXUVXDQWWRDILQDOMXGJHPHQWUHQGHUHGE\DFRPSHWHQW              SURFHGXUDO GHIDXOWV ZKLFK %XHOO FDQQRW RYHUFRPH  2KLR
  FRXUW                                                             FRXUWVKDYHVHWIRUWKDGHIDXOWUXOHEDUULQJFRQVLGHUDWLRQRI
                                                                     FODLPV WKDW VKRXOG KDYH EHHQ UDLVHG RQ GLUHFW DSSHDO 6HH
,&&35  8176    )XUWKHUPRUH ZKHQ WKH         &ROH1(GDW6WDWHY3HUU\1(G
8QLWHG 6WDWHV UDWLILHG WKH WUHDW\ LQ  LW VSHFLILFDOO\   2KLR2KLRFRXUWVKDYHFRQVLVWHQWO\KHOGWKDWFODLPV
UHVHUYHGWKHULJKW                                                  WKDWFDQEHDGMXGLFDWHGEDVHGRQIDFWVLQWKHUHFRUGFDQRQO\
                                                                     EHSUHVHQWHGRQGLUHFWDSSHDO6HHHJ6WDWHY/HQW]
  VXEMHFWWRLWV&RQVWLWXWLRQDOFRQVWUDLQWVWRLPSRVHFDSLWDO       1(G2KLR7KLVFRXUWKDVKHOGWKDWWKLV
  SXQLVKPHQWRQDQ\SHUVRQRWKHUWKDQDSUHJQDQWZRPDQ             UXOHLVUHJXODUO\DQGFRQVLVWHQWO\DSSOLHGE\2KLRFRXUWVDV
  GXO\FRQYLFWHGXQGHUH[LVWLQJRUIXWXUHODZVSHUPLWWLQJ            UHTXLUHGE\WKHIRXUSDUW0DXSLQWHVW6HH%\UG)GDW
  WKH LPSRVLWLRQ RI FDSLWDO SXQLVKPHQW LQFOXGLQJ VXFK         
  SXQLVKPHQW IRU FULPHV FRPPLWWHG E\ SHUVRQV EHORZ
  HLJKWHHQ\HDUVRIDJH                                               %XHOOFRQWHQGVWKDWWKH2KLRVWDWHFRXUWVGLGQRWLQYRNHDQ\
                                                                     DSSOLFDEOH SURFHGXUDO UXOH  <HW WKH 2KLR FRXUWV FRXOG QRW
6HH  &21* 5(& 6 6  VHH DOVR          LQYRNHDSURFHGXUDOUXOHDJDLQVWFODLPVWKDWZHUHQRWEURXJKW
6KRUWVXSUDSDJHDW	Q                                 EHIRUHLW%XHOODVVHUWHGIRXUFODLPVRQGLUHFWDSSHDODQGLQ
                                                                     KLV SRVWFRQYLFWLRQ SHWLWLRQ ZKLOH KLV KDEHDV SHWLWLRQ
  )LQDOO\ZHQRWHWKDWHYHQLIWKHDJUHHPHQWVZHUHWREDQWKH       FRQWDLQHGWKLUW\WKUHHFODLPVDQGKXQGUHGVRIVXEFODLPV7KLV
LPSRVLWLRQRIWKHGHDWKSHQDOW\QHLWKHULVELQGLQJRQIHGHUDO       FRXUWKDVSUHYLRXVO\VWDWHGWKDWDSHWLWLRQHUjVIDLOXUHWRUDLVH
FRXUWVm&RXUWVLQWKH8QLWHG6WDWHVDUHERXQGWRJLYHHIIHFW       KLVFODLPVLQ2KLRFRXUWVLVDQDGHTXDWHDQGLQGHSHQGHQWVWDWH
WRLQWHUQDWLRQDOODZDQGWRLQWHUQDWLRQDODJUHHPHQWVH[FHSW         ODZ JURXQG IRU XSKROGLQJ WKH SHWLWLRQHUjV FRQYLFWLRQ DQG
WKDWDµQRQVHOIH[HFXWLQJjDJUHHPHQWZLOOQRWEHJLYHQHIIHFW       VHQWHQFH6HH0DSHVY&R\OH)GWK&LU
DVODZLQWKHDEVHQFHRIQHFHVVDU\DXWKRULW\l5(67$7(0(17          5HFHQWO\ZHVWDWHGWKDWDSHWLWLRQHUmFDQQRWREWDLQ
7+,5' 2) )25(,*1 5(/$7,216 /$:1HLWKHU              IHGHUDOKDEHDVUHOLHIXQGHU86&XQOHVVKHKDV
WKH$PHULFDQ'HFODUDWLRQQRUWKH,QWHUQDWLRQDO&RYHQDQWLV           FRPSOHWHO\H[KDXVWHGKLVDYDLODEOHVWDWHFRXUWUHPHGLHVWRWKH
VHOIH[HFXWLQJ QRU KDV &RQJUHVV HQDFWHG LPSOHPHQWLQJ           VWDWHjVKLJKHVWFRXUWl&ROHPDQY0LWFKHOO)G
OHJLVODWLRQIRUHLWKHUDJUHHPHQW6HH*DU]DY/DSSLQ          WK&LU)XUWKHUPRUHZHQRWHGWKDWmDSHWLWLRQHU
)G   WK &LU  VWDWLQJ WKDW WKH m$PHULFDQ   FDQQRWFLUFXPYHQWWKHH[KDXVWLRQUHTXLUHPHQWE\IDLOLQJWR
'HFODUDWLRQLVDQDVSLUDWLRQDOGRFXPHQWZKLFKGLGQRW    FRPSO\ZLWKVWDWHSURFHGXUDOUXOHVl,ELG7KLVLVSUHFLVHO\
RQLWVRZQFUHDWHDQ\HQIRUFHDEOHREOLJDWLRQVRQWKHSDUWRI         ZKDW%XHOOKDVGRQH:HFRQFOXGHWKDWSRUWLRQVRI%XHOOjV
DQ\RIWKH2$6PHPEHUQDWLRQVl%HD]OH\YsRKQVRQ             WKLUGVL[WKDQGWHQWKFODLPVDQGKLVHQWLUHVHYHQWKHLJKWK
)G   WK &LU  FLWLQJ FDVHV DQG RWKHU    DQGQLQWKFODLPVZHUHSURFHGXUDOO\GHIDXOWHGEHFDXVHWKH\
VRXUFHVLQGLFDWLQJWKDWWKH,QWHUQDWLRQDO&RYHQDQWLVQRWVHOI      ZHUHQRWSUHVHQWHGWRWKH2KLRFRXUWVRQGLUHFWDSSHDO
H[HFXWLQJ +DZNLQV  ) 6XSS G DW  QRWLQJ WKDW
&RQJUHVV KDV QRW HQDFWHG LPSOHPHQWLQJ OHJLVODWLRQ IRU WKH
,QWHUQDWLRQDO&RYHQDQW
  :H PXVW FRQFOXGH WKDW 2KLRjV LPSRVLWLRQ RI WKH GHDWK
                                                                     )G   Q WK &LU  FLWLQJ %\UG Y &ROOLQV  )G 
SHQDOW\GRHVQRWYLRODWHDQ\LQWHUQDWLRQDODJUHHPHQWVHQWHUHG         WK &LU  DQG sRQHV Y 7RRPEV  )G   WK &LU
LQWRE\WKH8QLWHG6WDWHV7KHDJUHHPHQWVXSRQZKLFK%XHOO           6HH DOVR 6LPSVRQ Y sRQHV  )G DW 
    %XHOOY0LWFKHOO                               1R       1R                               %XHOOY0LWFKHOO      

   %XHOODWWHPSWVWRXVHWKHLQHIIHFWLYHDVVLVWDQFHRIDSSHOODWH        6WDWHV6HQDWHDSSURYHGWKH2$6&KDUWHUZLWKWKHUHVHUYDWLRQ
FRXQVHOFODLPVWKDWKHEURXJKWWRWKH2KLRFRXUWVDVFDXVHWR           WKDWmQRQHRILWVSURYLVLRQVVKDOOEHFRQVLGHUHGDVOLPLWLQJ
H[FXVH KLV SURFHGXUDOO\ GHIDXOWHG FODLPV  ,Q (GZDUGV Y        WKHSRZHUVRIWKHVHYHUDOVWDWHVZLWKUHVSHFWWRDQ\PDWWHUV
&DUSHQWHU WKH 6XSUHPH &RXUW KHOG WKDW mDQ                        UHFRJQL]HG XQGHU WKH &RQVWLWXWLRQ DV EHLQJ ZLWKLQ WKH
LQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLPDVVHUWHGDVFDXVHIRU           UHVHUYHG SRZHUV RI WKH VHYHUDO VWDWHVl  &KDUWHU RI WKH
WKH SURFHGXUDO GHIDXOW RI DQRWKHU FODLP FDQ LWVHOI EH           2UJDQL]DWLRQRI$PHULFDQ6WDWHV867
SURFHGXUDOO\ GHIDXOWHGl   86     7KH
&RXUWSRLQWHGRXWWKDWLWPD\EHSRVVLEOHIRUDSURFHGXUDOO\              7KH ,QWHUQDWLRQDO &RYHQDQW ZDV UDWLILHG E\ WKH 8QLWHG
GHIDXOWHGLQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHOFODLPWR          6WDWHV6HQDWHRQsXQH&RQWUDU\WRWKHSRVLWLRQVRI
mEHH[FXVHGLIWKHSULVRQHUFDQVDWLVI\WKHFDXVHDQGSUHMXGLFH         %XHOO DQG SHUKDSV RI WKH 8QLWHG 1DWLRQV &RPPLVVLRQ RQ
VWDQGDUGZLWKUHVSHFWWRWKDWFODLPl,ELG                        +XPDQ5LJKWVWKH,QWHUQDWLRQDO&RYHQDQWGRHVQRWUHTXLUHLWV
                                                                        PHPEHUFRXQWULHVWRDEROLVKWKHGHDWKSHQDOW\$UWLFOHRI
   7KH 6WDWH DVVHUWV WKDW %XHOO GHIDXOWHG KLV LQHIIHFWLYH        WKH ,QWHUQDWLRQDO &RYHQDQW SURKLELWV FUXHO LQKXPDQH RU
DVVLVWDQFHRIDSSHOODWHFRXQVHOFODLPVE\IDLOXUHWRFRPSO\             GHJUDGLQJSXQLVKPHQW,QWHUQDWLRQDO&RYHQDQWRQ&LYLODQG
ZLWK2KLR5$SS3,Q)HEUXDU\ZKLOH%XHOOjV               3ROLWLFDO5LJKWV,&&35RSHQHGIRUVLJQDWXUH'HF
LQLWLDOKDEHDVSHWLWLRQZDVSHQGLQJLQIHGHUDOGLVWULFWFRXUW          DUW   8176   HQWHUHG LQWR IRUFH 0DU 
WKH 2KLR 6XSUHPH &RXUW GHFLGHG 6WDWH Y 0XUQDKDQ            7KH8QLWHG6WDWHVDJUHHGWRDELGHE\WKLVSURKLELWLRQ
1(G  2KLR   0XUQDKDQ KHOG WKDW FODLPV RI         RQO\ WR WKH H[WHQW WKDW WKH )LIWK (LJKWK DQG )RXUWHHQWK
LQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHOVKRXOGEHUDLVHGLQ         $PHQGPHQWV EDQ FUXHO DQG XQXVXDO SXQLVKPHQW  6HH 
D PRWLRQ IRU UHFRQVLGHUDWLRQ EHIRUH WKH 2KLR &RXUW RI           &21* 5(& 6 6  m7KDW WKH 8QLWHG
$SSHDOVDQGQRWLQDSHWLWLRQIRUSRVWFRQYLFWLRQUHOLHI,GDW       6WDWHVFRQVLGHUVLWVHOIERXQGE\DUWLFOHWR WKHH[WHQWWKDW
  7KH FRXUW VWDWHG WKDW LI mWKH WLPH SHULRGV IRU         µFUXHOLQKXPDQRUGHJUDGLQJWUHDWPHQWRUSXQLVKPHQWjPHDQV
UHFRQVLGHUDWLRQLQFRXUWVRIDSSHDOVDQGGLUHFWDSSHDOWR>WKH          WKHFUXHODQGXQXVXDOWUHDWPHQWRUSXQLVKPHQWSURKLELWHGE\
2KLR6XSUHPH&RXUW@KDYHH[SLUHG>DGHIHQGDQW@PXVW              WKH )LIWK (LJKWK DQGRU )RXUWHHQWK $PHQGPHQWV WR WKH
DSSO\ IRU GHOD\HG UHFRQVLGHUDWLRQ LQ WKH FRXUW RI DSSHDOV       &RQVWLWXWLRQ RI WKH 8QLWHG 6WDWHVl VHH DOVR sDPLVRQ Y
ZKHUHWKHDOOHJHGHUURUWRRNSODFHSXUVXDQWWR$SS5DQG           &ROOLQV)6XSSG6'2KLRFLWLQJ
%l,GDW2Q6HSWHPEHU%XHOOILOHGD             &KULVW\ $ 6KRUW &RPPHQW 7KH $EROLWLRQ RI WKH 'HDWK
PRWLRQ IRU GHOD\HG UHFRQVLGHUDWLRQ RI KLV GLUHFW DSSHDO         3HQDOW\  ,1' s */2%$/ /(*$/ 678'   
UDLVLQJ VHYHQW\RQH UHDVRQV ZK\ KH KDG EHHQ GHQLHG WKH          
HIIHFWLYHDVVLVWDQFHRIFRXQVHOLQKLVGLUHFWDSSHDO$W
WKHWLPH0XUQDKDQZDVGHFLGHGDQG%XHOOILOHGKLVPRWLRQ                  0RUHRYHU WKH ,QWHUQDWLRQDO &RYHQDQW VSHFLILFDOO\
IRUGHOD\HGUHFRQVLGHUDWLRQ2KLR5$SS3VWDWHGWKDWD           UHFRJQL]HV WKH H[LVWHQFH RI WKH GHDWK SHQDOW\  $UWLFOH 
SDUW\ PXVW ILOH LWV PRWLRQ IRU UHFRQVLGHUDWLRQ mEHIRUH WKH      SDUDJUDSKRIWKHWUHDW\VWDWHV
MXGJPHQWRURUGHURIWKHFRXUWKDVEHHQDSSURYHGE\WKHFRXUW
DQG ILOHG E\ WKH FRXUW ZLWK WKH FOHUN IRU MRXUQDOL]DWLRQ RU     ,QFRXQWULHVZKLFKKDYHQRWDEROLVKHGWKHGHDWKSHQDOW\
ZLWKLQ WHQ GD\V DIWHU WKH DQQRXQFHPHQW RI WKH FRXUWjV             VHQWHQFH RI GHDWK PD\ EH LPSRVHG RQO\ IRU WKH PRVW
GHFLVLRQZKLFKHYHULVWKHODWHUl7KLVSHULRGKDGORQJSDVVHG           VHULRXVFULPHVLQDFFRUGDQFHZLWKWKHODZLQIRUFHDWWKH
VLQFHWKHMXGJPHQWLQ%XHOOjVGLUHFWDSSHDOZDVILOHGRQ$SULO            WLPHRIWKHFRPPLVVLRQRIWKHFULPHDQGQRWFRQWUDU\WR
   +RZHYHU DW WKH WLPH %XHOO ILOHG KLV PRWLRQ IRU      WKH SURYLVLRQV RI WKH SUHVHQW &RYHQDQW DQG WR WKH
GHOD\HGUHFRQVLGHUDWLRQ2KLR5$SS3%SURYLGHGWKDW              &RQYHQWLRQ RQ WKH 3UHYHQWLRQ DQG 3XQLVKPHQW RI WKH
    %XHOOY0LWFKHOO                             1R     1R                                    %XHOOY0LWFKHOO        

TXHVWLRQVRIULJKWGHSHQGLQJXSRQLWDUHGXO\SUHVHQWHGIRU         m7KHFRXUWIRUJRRGFDXVHVKRZQPD\XSRQPRWLRQHQODUJHRU
WKHLUGHWHUPLQDWLRQl7KH3DTXHWH+DEDQD86            UHGXFHWKHWLPHSUHVFULEHGE\WKHVHUXOHVl
,QRUGHUWRGHILQHZKDWLVDmUXOHRILQWHUQDWLRQDO
ODZl WKH 5HVWDWHPHQW 7KLUG RI )RUHLJQ 5HODWLRQV /DZ         7KH 2KLR &RXUW RI $SSHDOV GHQLHG %XHOOjV PRWLRQ RQ
LQVWUXFWVXV                                                       6HSWHPEHUVWDWLQJVROHO\m0RWLRQE\DSSHOODQWIRU
                                                                    GHOD\HGUHFRQVLGHUDWLRQGHQLHGSHU6WDWHY0XUQDKDQ
   $ UXOH RI LQWHUQDWLRQDO ODZ LV RQH WKDW KDV EHHQ    2KLR6WGl7KH2KLR6XSUHPH&RXUWDIILUPHGRQ
  DFFHSWHGDVVXFKE\WKHLQWHUQDWLRQDOFRPPXQLW\RIVWDWHV         1RYHPEHUVWDWLQJLQSHUWLQHQWSDUWm7KLVFDXVH
                                                                    KHUH RQ DSSHDO IURP WKH &RXUW RI $SSHDOV IRU &X\DKRJD
     DLQWKHIRUPRIFXVWRPDU\ODZ                             &RXQW\ZDVFRQVLGHUHGLQWKHPDQQHUSUHVFULEHGE\ODZ2Q
                                                                    FRQVLGHUDWLRQWKHUHRIWKHMXGJPHQWRIWKHFRXUWRIDSSHDOVLV
     EE\LQWHUQDWLRQDODJUHHPHQWRU                            DIILUPHGl
     FE\GHULYDWLRQIURPJHQHUDOSULQFLSOHVFRPPRQWR               *LYHQWKHSURFHGXUDOIDFWVRIWKLVFDVHZHDUHUHOXFWDQWWR
     WKHPDMRUOHJDOV\VWHPVRIWKHZRUOG                        FRQFOXGHWKDW%XHOOjVPRWLRQIRUGHOD\HGUHFRQVLGHUDWLRQZDV
                                                                    EDVHGRQDQDGHTXDWHDQGLQGHSHQGHQWVWDWHJURXQGDQGWKDW
5(67$7(0(17 7+,5' 2) )25(,*1 5(/$7,216 /$:               WKHUHIRUH KLV LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH FRXQVHO
%XHOODUJXHVWKDWWKHDEROLWLRQRIWKHGHDWKSHQDOW\       FODLPVZHUHSURFHGXUDOO\GHIDXOWHG%RWKWKH2KLR&RXUWRI
KDVEHHQDFFHSWHGE\LQWHUQDWLRQDODJUHHPHQWDQGDVDIRUPRI       $SSHDOVDQG2KLR6XSUHPH&RXUWGHFLVLRQVGHQ\LQJ%XHOOjV
FXVWRPDU\ODZ:HZLOODGGUHVVHDFKRIWKHVHDUJXPHQWVLQ          PRWLRQIRUGHOD\HGUHFRQVLGHUDWLRQRIIHUHGOLWWOHH[SODQDWLRQ
WXUQ                                                              IRUZK\%XHOOjVGHOD\HGPRWLRQZDVGHQLHG:HUHFRJQL]H
                                                                    WKDWWKHUHTXLUHPHQWWKDWDVWDWHFRXUWmFOHDUO\DQGH[SUHVVO\l
  L,QWHUQDWLRQDO$JUHHPHQW                                       VWDWHWKDWLWVMXGJPHQWZDVEDVHGRQDVWDWHSURFHGXUDOUXOH
   ,WLVUHFRJQL]HGWKDWm>D@QLQWHUQDWLRQDODJUHHPHQWFUHDWHV      DSSOLHVRQO\ZKHQDVWDWHFRXUWMXGJPHQWUHVWVSULPDULO\RQ
REOLJDWLRQVELQGLQJEHWZHHQWKHSDUWLHVXQGHULQWHUQDWLRQDO         IHGHUDOODZRULVLQWHUZRYHQZLWKIHGHUDOODZ6HH6LPSVRQY
ODZl5(67$7(0(17 7+,5' 2) )25(,*1 5(/$7,216 /$:                 sRQHV)GDW6LPSVRQY6SDUNPDQ)G
FPWI7KHELQGLQJQDWXUHRILQWHUQDWLRQDODJUHHPHQWV        WK &LU   7KHUHIRUH m>Z@KHQ LW GRHV QRW
LVDOVRUHIHUUHGWRDVMXVGLVSRVLWLYXP%XHOOFRQWHQGVWKDWWKH   IDLUO\DSSHDUWKDWWKHVWDWHFRXUWUHVWHGLWVGHFLVLRQRQIHGHUDO
2KLRGHDWKSHQDOW\YLRODWHVLQWHUQDWLRQDODJUHHPHQWVHQWHUHG        JURXQGVRULWVGHFLVLRQZDVLQWHUZRYHQZLWKIHGHUDOODZWKH
LQWR E\ WKH 8QLWHG 6WDWHV VSHFLILFDOO\ WKH $PHULFDQ         SUHVXPSWLRQWKDWWKHGHFLVLRQGRHVQRWUHVWRQLQGHSHQGHQW
'HFODUDWLRQ DV PDGH ELQGLQJ E\ WKH 2$6 &KDUWHU DQG WKH     DQG DGHTXDWH VWDWH JURXQGV GRHV QRW DSSO\l  6LPSVRQ Y
,QWHUQDWLRQDO&RYHQDQW7KHVHDJUHHPHQWVGRQRWSURKLELWWKH       6SDUNPDQ)GDWFLWLQJ&ROHPDQY7KRPSVRQ
GHDWK SHQDOW\ KRZHYHU  0RUHRYHU WKH 8QLWHG 6WDWHV KDV
DSSURYHGHDFKDJUHHPHQWZLWKUHVHUYDWLRQVWKDWSUHVHUYHWKH
SRZHURIHDFKRIWKHVHYHUDOVWDWHVDQGRIWKH8QLWHG6WDWHV           
                                                                           :H DOVR QRWH WKDW LQ 0XUQDKDQ WKH 2KLR 6XSUHPH &RXUW LQVWUXFWHG
XQGHUWKH&RQVWLWXWLRQ                                             VWDWH FRXUWV RI DSSHDO WKDW m>L@I WKH FRXUW VXPPDULO\ GLVPLVVHV WKH UHTXHVW
                                                                    IRU UHFRQVLGHUDWLRQ LW VKDOO VWDWH LQ LWV HQWU\ WKH UHDVRQV IRU QRW IXUWKHU
  1HLWKHU WKH 2$6 &KDUWHU QRU WKH $PHULFDQ 'HFODUDWLRQ       UHYLHZLQJ WKH GHIHQGDQWjV UHTXHVWl  1(G DW  7R WKH H[WHQW
VSHFLILFDOO\SURKLELWFDSLWDOSXQLVKPHQW6HH6WDWHY3KLOOLSV   WKDW WKH 2KLR &RXUW RI $SSHDOV GRHV QRW DSSHDU WR KDYH FRPSOLHG ZLWK WKLV

1(G2KLR)XUWKHUPRUHWKH8QLWHG           UHTXLUHPHQW WKLV ZRXOG EH DQ HUURU RI VWDWH ODZ WKDW LV QRW FRJQL]DEOH RQ
                                                                    KDEHDV UHYLHZ 6HH (VWHOOH Y 0F*XLUH  86   
    %XHOOY0LWFKHOO                               1R       1R                                 %XHOOY0LWFKHOO       

86DW:KLOHWKHEULHIRSLQLRQVRIWKH2KLRFRXUWVPD\            E   ,QWHUQDWLRQDO/DZ&KDOOHQJHVWR2KLRjV'HDWK3HQDOW\
KDYHEHHQVXIILFLHQWWRHUHFWDSURFHGXUDOEDULQWKLVFDVHZH                6WDWXWH
PXVWFRQFOXGHWKDWWKHUXOHWKDWZDVDSSOLHGWREDU%XHOOjV
FODLPVZDVQRWmILUPO\HVWDEOLVKHGDQGUHJXODUO\IROORZHGlDW              %XHOODUJXHVWKDW2KLRjVGHDWKSHQDOW\VWDWXWHYLRODWHVWKH
WKHWLPHRIWKHUHOHYDQWGHFLVLRQVLQWKLVFDVH6HHsRKQVRQY        6XSUHPDF\&ODXVHRIWKH8QLWHG6WDWHV&RQVWLWXWLRQE\QRW
0LVVLVVLSSL  86    DFFRUG 5RJHUV Y         FRPSO\LQJZLWKWKH$PHULFDQ'HFODUDWLRQRIWKH5LJKWV
+RZHV)GWK&LU                          DQG'XWLHVRI0HQm$PHULFDQ'HFODUDWLRQlDVPDGHELQGLQJ
                                                                        RQWKH8QLWHG6WDWHVE\WKH&KDUWHURIWKH2UJDQL]DWLRQRI
   ,Q&ROHPDQY0LWFKHOOWKLVFRXUWUHFHQWO\FRQFOXGHGWKDW           $PHULFDQ6WDWHVm2$6&KDUWHUlDQGWKH,QWHUQDWLRQDO
WKHGHQLDORIDSULVRQHUjVPRWLRQIRUGHOD\HGUHFRQVLGHUDWLRQ           &RYHQDQW RQ &LYLO DQG 3ROLWLFDO 5LJKWV m,QWHUQDWLRQDO
E\WKH2KLRFRXUWVFRQVWLWXWHGDSURFHGXUDOGHIDXOW)G           &RYHQDQWl,QDGGLWLRQ%XHOOQRWHVVWDWLVWLFVLQGLFDWLQJWKDW
DW7KHFLUFXPVWDQFHVLQ&ROHPDQGLIIHUHGIURPWKLVFDVH           RYHURQHKXQGUHGQDWLRQVSURKLELWH[HFXWLRQVDQXPEHUWKDW
LQ VHYHUDO FULWLFDO UHVSHFWV  7KH GLIIHUHQFHV LOOXVWUDWH WKH   KH FODLPV LV IDU JUHDWHU WKDQ QHFHVVDU\ WR HVWDEOLVK D
UHDVRQV ZK\ JLYHQ WKH XQLTXH IDFWV RI WKLV FDVH WKH          FXVWRPDU\ LQWHUQDWLRQDO ODZ QRUP  &I )LODUWLJD Y 3HQD
SURFHGXUDO EDU ZDV QRW ILUPO\ HVWDEOLVKHG DQG UHJXODUO\          ,UDOD)GG&LUQRWLQJVXUYH\WKDW
IROORZHG)LUVWLQ&ROHPDQRXUFRXUWVSHFLILFDOO\QRWHGWKDW         ILIW\ILYHQDWLRQVEDQWRUWXUHLQWKHSURFHVVRIFRQFOXGLQJWKDW
&ROHPDQZDLWHGVL[WHHQPRQWKVDIWHU0XUQDKDQZDVGHFLGHG                RIILFLDO WRUWXUH LV SURKLELWHG E\ WKH ODZ RI QDWLRQV  %XHOO
EHIRUHILOLQJKLVPRWLRQIRUUHFRQVLGHUDWLRQ)GDW         UHOLHVRQWKHXUJLQJRIWKH8QLWHG1DWLRQV&RPPLVVLRQ RQ
%XHOORQWKHRWKHUKDQGZDLWHGVHYHQPRQWKV6HFRQGWKH             +XPDQ 5LJKWV WKDW FRXQWULHV DELGH E\ WKH ,QWHUQDWLRQDO
&ROHPDQFRXUWFRQFOXGHGWKDWWKHUXOHDGRSWHGE\WKH2KLR               &RYHQDQW DQG HOLPLQDWH WKH GHDWK SHQDOW\  6HH 8QLWHG
6XSUHPH&RXUWLQ0XUQDKDQZDVZHOOHVWDEOLVKHGLQ2KLRjV                1DWLRQV+LJK&RPPLVVLRQHUIRU+XPDQ5LJKWV4XHVWLRQRI
)LUVW$SSHOODWH'LVWULFWZKHUH&ROHPDQILOHGKLVPRWLRQIRU            WKH'HDWK3HQDOW\&RPPLVVLRQRQ+XPDQ5LJKWV5HVROXWLRQ
GHOD\HGUHFRQVLGHUDWLRQORQJEHIRUH0XUQDKDQZDVGHFLGHG               DW1RVSURPRWLQJUHVWULFWLRQVRQWKHXVHRIWKH
DQGEHIRUH&ROHPDQjVFDVHHYHUDURVH&ROHPDQY0LWFKHOO             GHDWKSHQDOW\LQFOXGLQJWKHLPSRVLWLRQRIDPRUDWRULXPRQDOO
 )G DW  FLWLQJ 6WDWH Y 5RQH 1RV &          H[HFXWLRQVmZLWKDYLHZWRFRPSOHWHO\DEROLVKLQJWKHGHDWK
%:/2KLR&W$SSsXQH,Q               SHQDOW\l%XHOOFRQWHQGVWKDWWKHSURKLELWLRQRIH[HFXWLRQV
%XHOOjVFDVHWKH0XUQDKDQUXOHKDGEHHQZHOOHVWDEOLVKHGLQ            LVQRWRQO\DFXVWRPDU\QRUPRILQWHUQDWLRQDOODZEXWUDWKHU
2KLRjV (LJKWK $SSHOODWH 'LVWULFW ZKHUH %XHOO ILOHG KLV          DSHUHPSWRU\QRUPRILQWHUQDWLRQDOODZRUMXVFRJHQVWKDWLV
PRWLRQIRUGHOD\HGUHFRQVLGHUDWLRQDWOHDVWDVHDUO\DV          DFFHSWHGDQGUHFRJQL]HGE\WKHLQWHUQDWLRQDOFRPPXQLW\DQG
6HH6WDWHY$QGHUVRQ1R:/2KLR&W              WKDWFDQQRWEHGHURJDWHG6HH9LHQQD&RQYHQWLRQRQWKH/DZ
$SS sXQH  6WDWH Y 0LWFKHOO  1(G        RI7UHDWLHV0D\DUW8176VHH
 2KLR &W $SS  VHH DOVR 6WDWH Y 0RUDOHV       DOVR ,Q UH (VWDWH RI )HUGLQDQG 0DUFRV +XPDQ 5LJKWV
1RV:/DW2KLR&W$SSsDQ              /LWLJDWLRQ)GWK&LU&RPPLWWHHRI
  0F0DQDPRQ s FRQFXUULQJ m7KLV FRXUW                8QLWHG6WDWHV&LWL]HQV/LYLQJLQ1LFDUDJXDY5HDJDQ
FRQVLVWHQWO\KDVKHOGWKDW>LQHIIHFWLYHDVVLVWDQFHRIDSSHOODWH         )G'&&LU
FRXQVHO@FODLPVDUHQRWFRJQL]DEOHXQGHUWKHSRVWFRQYLFWLRQ
UHOLHIVWDWXWHlFLWLQJ$QGHUVRQDQG0LWFKHOO+RZHYHULQ            %XHOOjVDUJXPHQWLVZKROO\PHULWOHVV,WLVDORQJVWDQGLQJ
0RUDOHV WKH (LJKWK $SSHOODWH 'LVWULFW UHFRJQL]HG WKDW LQ        SULQFLSOHXQGHU8QLWHG6WDWHVODZWKDWm>L@QWHUQDWLRQDOODZLV
VRPH FDVHV D GHIHQGDQW FRXOG UDLVH D FODLP IRU LQHIIHFWLYH     SDUWRIRXUODZDQGPXVWEHDVFHUWDLQHGDQGDGPLQLVWHUHGE\
DVVLVWDQFH RI DSSHOODWH FRXQVHO LQ D SHWLWLRQ IRU SRVW         WKH FRXUWV RI MXVWLFH RI DSSURSULDWH MXULVGLFWLRQ DV RIWHQ DV
    %XHOOY0LWFKHOO                                1R       1R                                    %XHOOY0LWFKHOO       

   :KHQ LW UHYLHZHG %XHOOjV FKDOOHQJH WR WKH 2KLR GHDWK          FRQYLFWLRQUHOLHI:/DW7KHUHIRUHZKHQ
SHQDOW\VWDWXWHWKH2KLR6XSUHPH&RXUWUHDIILUPHGLWVSULRU             %XHOO ILOHG KLV PRWLRQ IRU GHOD\HG UHFRQVLGHUDWLRQ LQ
KROGLQJV WKDW 2KLR ODZ UHTXLUHV WKH DGGLWLRQDO HOHPHQWV RI       6HSWHPEHULWZDVQRWILUPO\HVWDEOLVKHGLQWKH(LJKWK
SURORQJHG UHVWUDLQW VHFUHWLYH FRQILQHPHQW RU VLJQLILFDQW          $SSHOODWH'LVWULFWWKDWDGHIHQGDQWPXVWILOHKLVLQHIIHFWLYH
PRYHPHQW VHSDUDWH IURP WKDW LQYROYHG LQ WKH XQGHUO\LQJ            DVVLVWDQFH RI DSSHOODWH FRXQVHO FODLPV LQ D PRWLRQ IRU
FULPH LQ RUGHU WR ZDUUDQW DSSOLFDWLRQ RI WKH DJJUDYDWHG          UHFRQVLGHUDWLRQJLYHQWKHFRQIOLFWLQJRSLQLRQVLQ0LWFKHOOLQ
FLUFXPVWDQFH RI NLGQDSSLQJ XQGHU 2+,2 5(9 &2'(                      LQ0RUDOHVLQDQGLQ0XUQDKDQLQ7KLUG
$6WDWHY%XHOO1(GDWVHHDOVR            WKH IDFW WKDW WKH UXOH ZDV ILUPO\ HVWDEOLVKHG DQG UHJXODUO\
6WDWHY0DXUHU1(G2KLR7KH2KLR              IROORZHGLQWKH)LUVW$SSHOODWH'LVWULFWZDVUHLQIRUFHGZKHQ
6XSUHPH &RXUW QRWHG WKDW WKH VLJQLILFDQW PRYHPHQW DQG             LQGLVPLVVLQJ&ROHPDQjVPRWLRQIRUGHOD\HGUHFRQVLGHUDWLRQ
UHVWUDLQWRI.ULVWD+DUULVRQZHUHQRWLQWULQVLFWRKHUPXUGHU           WKH2KLR&RXUWRI$SSHDOVVSHFLILFDOO\QRWHGWKDWLWZDVILOHG
6WDWHY%XHOO1(GDW$VDUHVXOWWKHDJJUDYDWLQJ         QLQHW\ GD\V DIWHU &ROHPDQjV DSSHOODWH MXGJPHQW DQG WKDW
FLUFXPVWDQFHVWKDWWKHMXU\IRXQGDWWKHSHQDOW\SKDVHRIWULDO          &ROHPDQKDGQRWVKRZQJRRGFDXVHIRUWKHGHOD\DVUHTXLUHG
GLVWLQJXLVKHG %XHOOjV FDVH IURP RWKHUV LQ ZKLFK GHDWK             E\2KLR5$SS3%  ,Q%XHOOjVFDVHKRZHYHUWKH
VHQWHQFHVZHUHQRWLPSRVHG7KHUHIRUHDQDUURZLQJSULQFLSOH            (LJKWK$SSHOODWH'LVWULFWVLPSO\VWDWHGWKDW%XHOOjVPRWLRQ
ZDVDSSOLHGWRMXVWLI\WKHLPSRVLWLRQRIWKHGHDWKSHQDOW\              IRU GHOD\HG UHFRQVLGHUDWLRQ ZDV mGHQLHG SHU 6WDWH Y
                                                                         0XUQDKDQ2KLR6WGl*LYHQWKHFRQIXVLRQ
  )LQDOO\ %XHOO DVVHUWV WKDW GHDWK E\ HOHFWURFXWLRQ DV          UHJDUGLQJ WKH SURSHU PHFKDQLVP IRU UDLVLQJ PRWLRQV IRU
UHTXLUHG XQGHU 2+,2 5(9 &2'(   YLRODWHV WKH              GHOD\HGUHFRQVLGHUDWLRQWKDWH[LVWHGLQWKH(LJKWK$SSHOODWH
FRQVWLWXWLRQDOSURKLELWLRQRIFUXHODQGXQXVXDOSXQLVKPHQW              'LVWULFWSULRUWR0XUQDKDQWKLVH[SODQDWLRQXQOLNHWKDWJLYHQ
&RXUWVKDYHFRQVLVWHQWO\XSKHOGWKHFRQVWLWXWLRQDOLW\RIWKH             E\WKH)LUVW$SSHOODWH'LVWULFWWR&ROHPDQLVQRWVXIILFLHQWWR
LPSRVLWLRQRIWKHGHDWKSHQDOW\LQJHQHUDOVHH*UHJJ              GHPRQVWUDWHWKDWWKH0XUQDKDQUXOHZDVILUPO\HVWDEOLVKHG
86 DW  DQG E\ HOHFWURFXWLRQ LQ SDUWLFXODU  6HH ,Q UH   DQGUHJXODUO\IROORZHGLQ2KLRjV(LJKWK$SSHOODWH'LVWULFWDW
.HPPOHU866XOOLYDQY'XJJHU               WKH WLPH LW UHYLHZHG %XHOOjV PRWLRQ IRU GHOD\HG
)GWK&LU6SLQNHOOLQNY:DLQZULJKW               UHFRQVLGHUDWLRQ LQ 6HSWHPEHU   $V D UHVXOW ZH DUH
 )G   WK &LU   7KLV FRXUW UHFHQWO\        XQDEOHWRFRQFOXGHWKDWWKH0XUQDKDQUXOHZDVDQDGHTXDWH
FRQFOXGHGWKDWDSHWLWLRQHUDWWDFNLQJWKHFRQVWLWXWLRQDOLW\RI           DQGLQGHSHQGHQWVWDWHJURXQGWRIRUHFORVHUHYLHZRI%XHOOjV
GHDWKE\HOHFWURFXWLRQIDLOHGHYHQWRSUHVHQWDQLQGLFDWLRQRI           LQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHOFODLPV
DOLNHOLKRRGRIVXFFHVVRQWKHPHULWV6HH,QUH6DSS
)GWK&LU0RUHRYHUZHQRWHWKDWWKH                 $OWKRXJK %XHOOjV FODLPV IRU LQHIIHFWLYH DVVLVWDQFH RI
2KLR VWDWXWH DOORZV %XHOO WKH RSWLRQ RI FKRRVLQJ EHWZHHQ         DSSHOODWHFRXQVHOZHUHQRWGHIDXOWHG%XHOOjVWDVNLVQRWGRQH
GHDWKE\HOHFWURFXWLRQRUGHDWKE\OHWKDOLQMHFWLRQDIRUPRI           %XHOOjVLQHIIHFWLYHDVVLVWDQFHRIDSSHOODWHFRXQVHOFODLPVFDQ
H[HFXWLRQ WKDW %XHOO GRHV QRW DUJXH LV FUXHO DQG XQXVXDO       VHUYHDVFDXVHIRUWKHSURFHGXUDOGHIDXOWRIKLVRWKHUFODLPV
2+,2 5(9 &2'(%VHHDOVR6PLWKY$QGHUVRQ
)6XSSG6'2KLR(OHFWURFXWLRQ
KDV \HW WR EH IRXQG FUXHO DQG XQXVXDO SXQLVKPHQW E\ DQ\            
$PHULFDQFRXUW6HH6DSS)GDW:HGHFOLQHWREH                   &ROHPDQ
                                                                                 ,Q            )G DW  WKH 2KLR &RXUW RI $SSHDOV DSSOLHG
                                                                         2KLR 5 $SS 3 % ZKLFK ZDV HQDFWHG sXO\   DW WKH UHTXHVW RI
WKHILUVW                                                             WKH 0XUQDKDQ      FRXUW  1(G   Q 7KH 2KLR &RXUW RI
                                                                         $SSHDOV GHQLHG %XHOOjV UHTXHVW IRU FRQVLGHUDWLRQ RQ 6HSWHPEHU  
                                                                         D OLWWOH RYHU QLQH PRQWKV EHIRUH WKH DPHQGPHQWV WR 2KLR 5 $SS 3 %
                                                                         ZHUH HQDFWHG
    %XHOOY0LWFKHOO                              1R       1R                                %XHOOY0LWFKHOO      

RQO\LI%XHOOFDQGHPRQVWUDWHWKDWKLVDSSHOODWHFRXQVHOZDV           UHYLHZLQJFRXUWLQZKLFKWKHGHDWKSHQDOW\KDVEHHQLPSRVHG
FRQVWLWXWLRQDOO\LQHIIHFWLYH6HH(GZDUGV86DW           2KLRKDVSURSHUO\DFWHGZLWKLQWKHZLGHODWLWXGHLWLVDOORZHG
7R GR VR D GHIHQGDQW PXVW VKRZ WKDW KLV FRXQVHOjV
SHUIRUPDQFHZDVGHILFLHQWDQGWKDWWKHGHILFLHQWSHUIRUPDQFH              %XHOODOVRDUJXHVWKDWWKHXVHRIWKHVDPHXQGHUO\LQJFULPH
SUHMXGLFHGWKHGHIHQVH6HH6WULFNODQGY:DVKLQJWRQ             RINLGQDSSLQJWRHOHYDWHPXUGHUWRDJJUDYDWHGPXUGHUDQGWR
86     %XHOOjV DSSHOODWH FRXQVHO ZDV QRW      PDNH%XHOOHOLJLEOHIRUWKHGHDWKSHQDOW\LVXQFRQVWLWXWLRQDO
GHILFLHQWIRUIDLOLQJWRUDLVHRQGLUHFWDSSHDOQRQIULYRXORXV          %XHOODVVHUWVWKDWXQGHU2+,2 5(9 &2'($LI
FODLPVDIWHUGHFLGLQJDVDPDWWHURISURIHVVLRQDOMXGJPHQWQRW         D GHIHQGDQW FRPPLWV PXUGHU GXULQJ WKH FRPPLVVLRQ RI D
WRUDLVHWKRVHSRLQWV&ROHPDQY0LWFKHOO)GDW          IHORQ\WKHIHORQ\FDQVHUYHDVDQDJJUDYDWLQJFLUFXPVWDQFH
(YHQLI%XHOOjVFRXQVHOZDVGHILFLHQWIRUQRWKDYLQJUDLVHGWKH        DQGWKHGHIHQGDQWFDQEHFRQYLFWHGRIFDSLWDOPXUGHUZLWKRXW
GHIDXOWHGFODLPVRQDSSHDOZHKDYHUHYLHZHGWKHVXEVWDQFH             SURRI RI DQ DGGLWLRQDO QHZ IDFWRU  %XHOO DUJXHV WKDW WKLV
RIHDFKRIWKHVHFODLPVDQGKDYHGHWHUPLQHGWKDWHDFKRIWKHP          VFKHPHIDLOVWRmJHQXLQHO\QDUURZWKHFODVVRISHUVRQVHOLJLEOH
ODFNVPHULW7KHUHIRUH%XHOOLVXQDEOHWRGHPRQVWUDWHWKDW          IRUWKHGHDWKSHQDOW\DQGUHDVRQDEO\MXVWLI\WKHLPSRVLWLRQ
HYHQ LI KLV DSSHOODWH FRXQVHO ZDV GHILFLHQW KLV FRXQVHOjV     RI D PRUH VHYHUH VHQWHQFH RQ WKH GHIHQGDQW FRPSDUHG WR
GHILFLHQWSHUIRUPDQFHSUHMXGLFHGKLVGHIHQVH6LQFH%XHOO             RWKHUVIRXQGJXLOW\RIPXUGHUl=DQW86DW
FDQQRW SUHYDLO RQ KLV LQHIIHFWLYH DVVLVWDQFH RI DSSHOODWH
FRXQVHO FODLPV WKHVH FODLPV FDQQRW VHUYH DV FDXVH IRU            ,Q/RZHQILHOGY3KHOSV86WKH6XSUHPH
SXUSRVHVRIFXULQJKLVRWKHUSURFHGXUDOO\GHIDXOWHGFODLPV            &RXUWUHMHFWHGDQDUJXPHQWVLPLODUWR%XHOOjVUHJDUGLQJWKH
                                                                       MXU\jV XVH RI DQ DJJUDYDWLQJ FLUFXPVWDQFH ZKLFK ZDV
  3HQDOW\3KDVHsXU\,QVWUXFWLRQV                                  LGHQWLFDO WR DQ HOHPHQW RI WKH FDSLWDO FULPH RI ZKLFK WKH
                                                                       GHIHQGDQWZDVFRQYLFWHGDVWKHEDVLVIRULPSRVLQJWKHGHDWK
  %XHOOFKDOOHQJHVWKHGLVWULFWFRXUWjVGHWHUPLQDWLRQWKDWKLV         SHQDOW\  ,Q /RZHQILHOG WKH VROH DJJUDYDWLQJ FLUFXPVWDQFH
FRQVWLWXWLRQDO ULJKWV ZHUH QRW YLRODWHG E\ WKH WULDO FRXUWjV   IRXQGE\WKHMXU\LQLWVVHQWHQFLQJGHFLVLRQZDVLGHQWLFDOWR
SHQDOW\SKDVH MXU\ LQVWUXFWLRQV  $OWKRXJK %XHOO SUHVHQWV        WKH XQGHUO\LQJ RIIHQVH WKDW WKH MXU\ KDG DOUHDG\ IRXQG LQ
WKUHHFKDOOHQJHVWRWKHSHQDOW\SKDVHMXU\LQVWUXFWLRQVRQO\          FRQYLFWLQJWKHGHIHQGDQW7KH6XSUHPH&RXUWFRQFOXGHGWKDW
%XHOOjV&DOGZHOOFODLPWKHILUVWRIKLVWKUHHFKDOOHQJHVZDV         WKLVIDFWGLGQRWUHQGHUWKHGHDWKVHQWHQFHXQFRQVWLWXWLRQDO
IDLUO\ SUHVHQWHG WR DQG FRQVLGHUHG E\ WKH 2KLR DSSHOODWH       7KH&RXUWKHOGWKDWDVWDWHOHJLVODWXUHPD\PHHWWKHQDUURZLQJ
FRXUWV$VDUHVXOW%XHOOKDVSURFHGXUDOO\GHIDXOWHGKLVWZR         UHTXLUHPHQWE\OLPLWLQJWKHGHILQLWLRQRIFDSLWDORIIHQVHV
DGGLWLRQDOFODLPV(DFKRI%XHOOjVFODLPVZLOOEHDQDO\]HG           VR WKDW WKH QDUURZLQJ IXQFWLRQ RFFXUV DW WKH JXLOW SKDVH RI
KRZHYHU1RQHKDYHPHULW                                             WULDO RU  E\ PRUH EURDGO\ GHILQLQJ FDSLWDO RIIHQVHV DQG
                                                                       SURYLGLQJ IRU QDUURZLQJ E\ MXU\ ILQGLQJV RI DJJUDYDWLQJ
  D,QVWUXFWLRQVDW2XWVHWRI3HQDOW\3KDVH                          FLUFXPVWDQFHV DW WKHSHQDOW\SKDVHRIWULDO,GDW,Q
                                                                       /RZHQILHOGWKH&RXUWVWDWHGWKDWWKHQDUURZLQJUHTXLUHPHQW
  %XHOOjVILUVWFKDOOHQJHLVWRWKHWULDOFRXUWLQVWUXFWLRQVWRWKH    ZDVPHWDWWKHJXLOWSKDVHRIWULDOZLWKWKHUHTXLUHPHQWWKDW
MXU\ DW WKH RXWVHW RI WKH SHQDOW\SKDVH RI %XHOOjV WULDO     WKHMXU\ILQGWKDWWKHGHIHQGDQWKDGDVSHFLILFLQWHQWWRNLOORU
6SHFLILFDOO\%XHOOWDNHVLVVXHZLWKWKHIROORZLQJLQVWUXFWLRQV       WRLQIOLFWJUHDWERGLO\KDUPXSRQPRUHWKDQRQHSHUVRQ6LQFH
                                                                       WKHQDUURZLQJRFFXUUHG DW WKHJXLOWSKDVHWKHIDFWWKDWWKH
  WKHMXU\ZLOOEHDVNHGWRPDNHDUHFRPPHQGDWLRQWRWKH               SHQDOW\ SKDVH DJJUDYDWLQJ FLUFXPVWDQFH ILQGLQJ ZDV
  FRXUWDVWRWKHVHQWHQFHWREHLPSRVHGRQWKHGHIHQGDQW              GXSOLFDWLYHGLGQRWPDNHWKHVHQWHQFHFRQVWLWXWLRQDOO\LQILUP
  RQWKHFKDUJHRI$JJUDYDWHG0XUGHU
    %XHOOY0LWFKHOO                             1R       1R                                 %XHOOY0LWFKHOO      

WKDWDGHDWKSHQDOW\LVFRQVWLWXWLRQDOLILWmLVLPSRVHGRQO\         DQG
DIWHU D GHWHUPLQDWLRQ WKDW WKH DJJUDYDWLQJ FLUFXPVWDQFHV
RXWZHLJK WKH PLWLJDWLQJ FLUFXPVWDQFHV SUHVHQW LQ WKH              >WKHGHIHQVHKDV@WKHEXUGHQRIJRLQJIRUZDUGWRSUHVHQW
SDUWLFXODUFULPHFRPPLWWHGE\WKHSDUWLFXODUGHIHQGDQWRUWKDW         HYLGHQFHFRQFHUQLQJPLWLJDWLQJIDFWRUV
WKHUHDUHQRVXFKPLWLJDWLQJFLUFXPVWDQFHVl,Q%XHOOjVFDVH
ERWKWKHMXU\DWWKHSHQDOW\SKDVHRIWULDODQGWKHUHYLHZLQJ           %XHOOFODLPVWKDWWKHILUVWLQVWUXFWLRQVWDWLQJWKDWWKHMXU\
FRXUWVVSHFLILFDOO\FRQVLGHULQJWKHDJJUDYDWLQJFLUFXPVWDQFHV         YHUGLFWZDVDmUHFRPPHQGDWLRQlLPSURSHUO\GLPLQLVKHGWKH
DQGPLWLJDWLQJIDFWRUVSUHVHQWHGDQGGHWHUPLQHGWKDWFDSLWDO          MXU\jV VHQVH RI UHVSRQVLELOLW\ IRU UHWXUQLQJ D GHDWK YHUGLFW
SXQLVKPHQW ZDV DSSURSULDWH  %\ ZHLJKLQJ WKHVH VSHFLILF        6HH&DOGZHOOY0LVVLVVLSSL 86
FRQVLGHUDWLRQV LW FDQQRW EH VDLG WKDW D PDQGDWRU\ GHDWK      %XHOODVVHUWVWKDWWKLVSRUWLRQRIWKHLQVWUXFWLRQLVPLVOHDGLQJ
SHQDOW\ZDVLPSRVHGRQ%XHOO                                         DV WR 2KLR ODZ  ,Q DGGLWLRQ %XHOO VWDWHV WKDW ZKLOH WKH
                                                                      GHIHQGDQWKDVWKHEXUGHQRIJRLQJIRUZDUGSXUVXDQWWR2+,2
   %XHOOjVFRQWHQWLRQVUHJDUGLQJLQDGHTXDWHDSSHOODWHUHYLHZ          5(9 &2'(  ' WKH VWDWH EHDUV WKH EXUGHQ RI
RI WKH SURSRUWLRQDOLW\ RI GHDWK VHQWHQFHV XQGHU WKH 2KLR      SURRI WKDW WKH DJJUDYDWLQJ FLUFXPVWDQFHV RXWZHLJK WKH
VWDWXWH IDLO EHFDXVH QR SURSRUWLRQDOLW\ UHYLHZ LV               PLWLJDWLQJIDFWRUVLQDFDSLWDOPXUGHUWULDOSXUVXDQWWR 2+,2
FRQVWLWXWLRQDOO\UHTXLUHG6HH3XOOH\Y+DUULV86        5(9 &2'(  '  7KHUHIRUH %XHOO FODLPV WKDW
   ,Q DGGLWLRQ WKHUH LV QR FRQVWLWXWLRQDO        LQVWUXFWLQJ WKH MXU\ WKDW WKH GHIHQGDQW KDG WKH EXUGHQ RI
UHTXLUHPHQWWKDWDMXU\PDNHVSHFLILFILQGLQJVDXWKRUL]LQJWKH        mJRLQJ IRUZDUGl ZLWKRXW PHQWLRQLQJ WKH VWDWHjV EXUGHQ RI
LPSRVLWLRQ RI D GHDWK VHQWHQFH MXVW DV WKHUH LV QR          SURRIZDVPLVOHDGLQJ
FRQVWLWXWLRQDO ULJKW WR MXU\ VHQWHQFLQJ  6HH +LOGZLQ Y
)ORULGD  86     +RZHYHU XQGHU            7KLV FODLP LV XQDYDLOLQJ  ,W LV DQ DFFXUDWH VWDWHPHQW RI
2KLRjV VFKHPH WKH WULDO MXGJH LV JLYHQ WKH VWDWXWRU\         2KLRODZIRUDWULDOMXGJHWRLQVWUXFWDMXU\WKDWWKHLUILQGLQJ
UHVSRQVLELOLW\WRUHZHLJKWKHDJJUDYDWLQJFLUFXPVWDQFHVDQG           WKDWDGHDWKVHQWHQFHLVZDUUDQWHGLVDUHFRPPHQGDWLRQ,WLV
PLWLJDWLQJ IDFWRUV EHIRUH GHWHUPLQLQJ ZKHWKHU WR LPSRVH D      VSHFLILFDOO\VWDWHGLQ2+,2 5(9 &2'('WKDW
GHDWK VHQWHQFH RU D OLIH VHQWHQFH  2+,2 5(9 &2'(             LIWKHMXU\XQDQLPRXVO\ILQGVWKDWDJJUDYDWLQJFLUFXPVWDQFHV
 '  7KHQ WKH WULDO MXGJH PXVW VWDWH KLV       RXWZHLJKPLWLJDWLQJIDFWRUVmWKHWULDOMXU\VKDOOUHFRPPHQGWR
VHQWHQFLQJILQGLQJVLQDVHSDUDWHRSLQLRQ2+,2 5(9 &2'(            WKH FRXUW WKDW WKH VHQWHQFH RI GHDWK EH LPSRVHG RQ WKH
)$VDUHVXOWWKHDSSHOODWHFRXUWVKDYHERWKWKH        RIIHQGHUl7KHWULDOFRXUWKDVWKHGLVFUHWLRQWRDFFHSWRUUHMHFW
WULDO MXGJHjV VHQWHQFLQJ RSLQLRQ DQG WKH WULDO UHFRUG IRU     WKLV UHFRPPHQGDWLRQ VLQFH LW PXVW PDNH WKH ILQDO
UHYLHZ,QDGGLWLRQWKH2KLR6XSUHPH&RXUWKDVLQGLFDWHG            GHWHUPLQDWLRQ RI ZKHWKHU D GHDWK VHQWHQFH LV DSSURSULDWH
WKDWSURSRUWLRQDOLW\UHYLHZLVUHTXLUHGXQGHU2+,2 5(9 &2'(          DFFRUGLQJWR2+,2 5(9 &2'(')XUWKHUPRUH
 $ WR WKH H[WHQW WKDW WKH UHYLHZLQJ FRXUW PXVW     WKHGHIHQVHKDVWKHEXUGHQRISUHVHQWLQJHYLGHQFHFRQFHUQLQJ
FRQVLGHUFDVHVDOUHDG\GHFLGHGE\WKHFRXUWLQZKLFKWKHGHDWK        PLWLJDWLQJIDFWRUVDVWKHWULDOFRXUWVWDWHGWRWKHMXU\1HLWKHU
SHQDOW\KDGEHHQLPSRVHG6HH6WDWHY6WHIIHQ1(G           RIWKHWZRFRQWHVWHGLQVWUXFWLRQVZDVFRQWUDU\WR2KLRODZ
2KLR6LQFHSURSRUWLRQDOLW\UHYLHZLVQRW
UHTXLUHG E\ WKH &RQVWLWXWLRQ VWDWHV KDYH JUHDW ODWLWXGH LQ     ,Q &DOGZHOO WKH &RXUW KHOG WKDW mLW LV FRQVWLWXWLRQDOO\
GHILQLQJWKHSRRORIFDVHVXVHGIRUFRPSDULVRQ6HH/LQGVH\          LPSHUPLVVLEOH WR UHVW D GHDWK VHQWHQFH RQ D GHWHUPLQDWLRQ
Y6PLWK)GWK&LU%\OLPLWLQJ          PDGH E\ D VHQWHQFHU ZKR KDV EHHQ OHG WR EHOLHYH WKDW WKH
SURSRUWLRQDOLW\UHYLHZWRRWKHUFDVHVDOUHDG\GHFLGHGE\WKH          UHVSRQVLELOLW\ IRU GHWHUPLQLQJ WKH DSSURSULDWHQHVV RI WKH
                                                                      GHIHQGDQW
VGHDWKUHVWVHOVHZKHUHl86DW7KH
                                                                      SURVHFXWRULQ&DOGZHOOWROGWKHMXU\WKDWLILWLPSRVHGDGHDWK
    %XHOOY0LWFKHOO                               1R       1R                               %XHOOY0LWFKHOO      

VHQWHQFHRQWKHGHIHQGDQWLWVGHFLVLRQZRXOGEHVXEMHFWWR             RSWLRQ WR FKRRVH D OLIH VHQWHQFH ZKHQ RQO\ VWDWXWRU\
DSSHOODWHUHYLHZJLYLQJWKHMXU\WKHPLVWDNHQLPSUHVVLRQWKDW          DJJUDYDWLQJ FLUFXPVWDQFHV KDYH EHHQ SURYHQ RU ZKHQ
WKHVWDWHDSSHOODWHFRXUWVQRWWKHMXU\LWVHOIZRXOGPDNHWKH         PLWLJDWLQJIDFWRUVDUHPLQLPDO%XHOOFODLPVWKDWE\OLPLWLQJ
ILQDOGHFLVLRQRQWKHVHQWHQFHWREHLPSRVHG,GDW,Q          WKHVHQWHQFHUjVDELOLW\WRUHWXUQDOLIHVHQWHQFHRQO\WRWKRVH
GHFLVLRQV VXEVHTXHQW WR &DOGZHOO WKH 6XSUHPH &RXUW KDV          FLUFXPVWDQFHV ZKHQ DJJUDYDWLQJ IDFWRUV IDLO WR RXWZHLJK
UHLWHUDWHGWKDWm>W@RHVWDEOLVKD&DOGZHOOYLRODWLRQDGHIHQGDQW       PLWLJDWLQJIDFWRUV2KLRjVVWDWXWHFUHDWHVDPDQGDWRU\GHDWK
QHFHVVDULO\PXVWVKRZWKDWWKHUHPDUNVWRWKHMXU\LPSURSHUO\           SHQDOW\,QDGGLWLRQ%XHOODUJXHVWKDWWKHVWDWXWHSUHYHQWV
GHVFULEHGWKHUROHDVVLJQHGWRWKHMXU\E\ORFDOODZl'XJJHU          DGHTXDWH SURSRUWLRQDOLW\ UHYLHZ  %XHOO FRQWHQGV WKDW WKH
Y$GDPV86VHHDOVR6FRWW)G            VWDWXWH GRHV QRW UHTXLUH LGHQWLILFDWLRQ RI PLWLJDWLQJ IDFWRUV
DW8QOLNHLQ&DOGZHOOZKHUHWKHMXU\ZDVJLYHQWKH              ZKHQDOLIHVHQWHQFHLVLPSRVHG%XHOOFODLPVWKDWWKLVOHDGV
XQFRUUHFWHGLPSUHVVLRQWKDWWKHDSSHOODWHFRXUWVZRXOGPDNH             WRQRPHDQLQJIXODSSHOODWHUHYLHZDVQRFRPSDULVRQFDQEH
WKHILQDOGHFLVLRQRQWKHLPSRVLWLRQRIDGHDWKVHQWHQFHQRW           PDGHEHWZHHQOLIHVHQWHQFHDQGGHDWKSHQDOW\FDVHV%XHOO
PHUHO\UHYLHZWKHDSSURSULDWHQHVVRIWKHMXU\jVGHFLVLRQWR             DOVRDVVHUWVWKDW2KLRFRXUWVGRQRWIROORZ2+,2 5(9 &2'(
LPSRVHDGHDWKVHQWHQFH%XHOOKDVQRWGHPRQVWUDWHGWKDWWKH            ZKLFKUHTXLUHV2KLRDSSHOODWHFRXUWVWRmDIILUPD
LQVWUXFWLRQVDWKLVWULDOLPSURSHUO\GHVFULEHGWKHUROHDVVLJQHG        VHQWHQFH RI GHDWK RQO\ LI WKH SDUWLFXODU FRXUW LV SHUVXDGHG
WRWKHMXU\E\ORFDOODZ,QLQVWUXFWLQJWKHMXU\WKDWWKH\DUH       IURP WKH UHFRUG WKDW WKH DJJUDYDWLQJ FLUFXPVWDQFHV WKH
WRPDNHDUHFRPPHQGDWLRQDVWRDGHDWKVHQWHQFHDQGWKDWWKH           RIIHQGHU ZDV IRXQG JXLOW\ RI FRPPLWWLQJ RXWZHLJK WKH
ILQDOGHFLVLRQUHJDUGLQJLPSRVLWLRQRIDGHDWKVHQWHQFHUHVWV           PLWLJDWLQJIDFWRUVSUHVHQWLQWKHFDVHDQGWKDWWKHVHQWHQFHRI
ZLWK WKH WULDO FRXUW WKH MXU\ LQVWUXFWLRQ FRPSOLHG ZLWK WKH   GHDWKLVWKHDSSURSULDWHVHQWHQFHLQWKHFDVHl%XHOOVWDWHV
OHWWHURI2KLRODZDQGGHVFULEHGZLWKFRPSOHWHDFFXUDF\WKH             WKDW WKH DSSURSULDWHQHVV UHYLHZ FRQGXFWHG LQ HDFK FDVH LV
MXU\jVUROHLQWKHVHQWHQFLQJSURFHVV%\GRLQJVRWKHMXU\jV         FXUVRU\DQGGRHVQRWFRPSRUWZLWKWKHVWDWXWRU\UHTXLUHPHQWV
VHQVHRIUHVSRQVLELOLW\ZDVQRWGLPLQLVKHG7KHUHIRUHWKLV
FODLPPXVWIDLO                                                           %XHOOjVDUJXPHQWVDUHXQDYDLOLQJ,Q3URIILWWY)ORULGD
                                                                         86    WKH 6XSUHPH &RXUW XSKHOG D
  E,QVWUXFWLRQV3ULRUWR'HOLEHUDWLRQVDW3HQDOW\3KDVH              VWDWXWRU\ VFKHPH IRU ZHLJKLQJ DJJUDYDWLQJ FLUFXPVWDQFHV
                                                                        DJDLQVWPLWLJDWLQJIDFWRUVWKDWLVVLPLODUWR2KLRjVZKLFKOD\V
   %XHOOFKDOOHQJHVVL[SRUWLRQVRIWKHWULDOFRXUWjVLQVWUXFWLRQV      RXWVSHFLILFDJJUDYDWLQJFLUFXPVWDQFHVDQGPLWLJDWLQJIDFWRUV
WRWKHMXU\SULRUWRWKHFRPPHQFHPHQWRIGHOLEHUDWLRQVDWWKH           WKDW DUH WR EH FRQVLGHUHG DW VHQWHQFLQJ  2+,2 5(9 &2'(
SHQDOW\SKDVHRIWULDO                                               7KH&RXUWDOVRKDVDSSURYHGRIDVWDWXWHWKDWGLG
                                                                        QRWHQXQFLDWHVSHFLILFIDFWRUVWRFRQVLGHURUDVSHFLILFPHWKRG
   )LUVW%XHOOFKDOOHQJHVWKHWULDOFRXUWjVVWDWHPHQWWKDWm>W@KH      RIEDODQFLQJWKHFRPSHWLQJFRQVLGHUDWLRQV6HH)UDQNOLQY
DUJXPHQWVRIFRXQVHODUHQRWHYLGHQFHEXWPHUHO\WRDVVLVW             /\QDXJK86=DQWY6WHSKHQV
\RXLQ\RXUGXW\l%XHOOFODLPVWKDWWKLVLVFRQWUDU\WR 2+,2          86     7KH &RXUW KDV KHOG WKDW mLW LV
5(9 &2'(  ' ZKLFK FDOOV IRU WKH MXU\ WR           FRQVWLWXWLRQDOO\UHTXLUHGWKDWWKHVHQWHQFLQJDXWKRULW\KDYH
FRQVLGHUDQGKHDUDUJXPHQWVRIFRXQVHO7KHGLVWULFWFRXUW             LQIRUPDWLRQVXIILFLHQWWRHQDEOHLWWRFRQVLGHUWKHFKDUDFWHU
FRQFOXGHG WKDW WKH LQVWUXFWLRQ VHW IRUWK WKH SURSHU OHJDO       DQG LQGLYLGXDO FLUFXPVWDQFHV RI D GHIHQGDQW SULRU WR
VWDQGDUG  1RWKLQJ LQ 2+,2 5(9 &2'(  '                LPSRVLWLRQRIDGHDWKVHQWHQFHl6XPQHUY6KXPDQ86
LQGLFDWHVWKDWWKHMXU\LQVWUXFWLRQZDVLPSURSHU                       TXRWLQJ*UHJJ86DWQ7KH
                                                                        VHQWHQFHLPSRVHGRQ%XHOOFRPSOLHVZLWK6XPQHUDVZHOODV
 6HFRQG %XHOO FKDOOHQJHV WKH WULDO FRXUWjV GHILQLWLRQ RI        WKH6XSUHPH&RXUWjVKROGLQJLQ%O\VWRQH86DW
PLWLJDWLQJIDFWRUVm7KHVHPLWLJDWLQJIDFWRUVPD\LQFOXGHEXW
     %XHOOY0LWFKHOO                             1R       1R                                 %XHOOY0LWFKHOO     

  D    &RQVWLWXWLRQDO &KDOOHQJHV WR 2KLRjV 'HDWK 3HQDOW\         DUHQRWOLPLWHGWRWKHQDWXUHDQGFLUFXPVWDQFHVRIWKHRIIHQVH
        6WDWXWH                                                        WKHKLVWRU\DQGEDFNJURXQGRIWKHGHIHQGDQWDQGDQ\RWKHU
                                                                       IDFWRUV ZKLFK \RX PD\ ILQG H[LVW IURP WKH HYLGHQFH LQ
   %XHOOFRQWHQGVWKDW2KLRjVGHDWKSHQDOW\VFKHPHDOORZVIRU          PLWLJDWLRQ RI WKH VHQWHQFHl  7KLV LQVWUXFWLRQ LV FRQVLVWHQW
LPSRVLWLRQRIWKHGHDWKSHQDOW\LQDQDUELWUDU\DQGFDSULFLRXV         ZLWKWKH6XSUHPH&RXUWjVUXOLQJLQ3HQU\Y/\QDXJK
PDQQHUWKDWYLRODWHVFRQVWLWXWLRQDOJXDUDQWHHVRIGXHSURFHVV          86LQZKLFKWKH6XSUHPH&RXUWKHOGWKDW
DQGHTXDOSURWHFWLRQ6HH)XUPDQY*HRUJLD86            WKH MXU\ mPXVW EH DEOH WR FRQVLGHU DQG JLYH HIIHFW WR DQ\
7KLVDUJXPHQWZDVUHFHQWO\UHMHFWHGLQ%\UG          PLWLJDWLQJHYLGHQFHUHOHYDQWWRDGHIHQGDQWjVEDFNJURXQGDQG
)G DW   :H QRWH WKDW WKH 2KLR GHDWK SHQDOW\ VWDWXWH   FKDUDFWHURUWKHFLUFXPVWDQFHVRIWKHFULPHl
LQFOXGHVDQXPEHURIFDSLWDOVHQWHQFLQJSURFHGXUHVWKDWWKH
8QLWHG6WDWHV6XSUHPH&RXUWKHOGLQ*UHJJY*HRUJLD                 7KLUG%XHOOFKDOOHQJHVWKHWULDOFRXUWjVLQVWUXFWLRQUHODWLQJ
86VSHFLILFDOO\WRUHGXFHWKHOLNHOLKRRG         WR%XHOOjVXQVZRUQVWDWHPHQWLQWURGXFHGDWWKHSHQDOW\SKDVH
RIDUELWUDU\DQGFDSULFLRXVLPSRVLWLRQRIWKHGHDWKSHQDOW\           m,Q WKLV FDVH WKHUH KDV EHHQ RQH ZLWQHVV DQG WKDW ZDV WKH
7KHVHSURFHGXUHVLQFOXGHFRQVLGHUDWLRQRIDSUHVHQWHQFH         XQVZRUQVWDWHPHQWRIWKHGHIHQGDQWl7KLVVWDWHPHQWZDVD
UHSRUWE\WKHVHQWHQFLQJDXWKRULW\MXU\VHQWHQFLQJZKHUH          IDLUFRPPHQWRQWKHHYLGHQFH)XUWKHUPRUHWKHVWDWHPHQWGLG
WKH MXU\ LV DGHTXDWHO\ LQIRUPHG DQG JLYHQ PHDQLQJIXO            QRWUHVWULFWWKHMXU\IURPFRQVLGHULQJWKHWHVWLPRQ\,QGHHG
VWDQGDUGVWRJXLGHLWVXVHRIWKHLQIRUPDWLRQDELIXUFDWHG        WKH MXGJH ODWHU H[SOLFLWO\ VWDWHG WKDW WKH WULDO MXU\ PXVW
JXLOWSKDVHVHQWHQFLQJSKDVHWULDOZHLJKLQJRIDJJUDYDWLQJ        FRQVLGHUDOOWKHHYLGHQFHLQFOXGLQJWKHXQVZRUQVWDWHPHQWRI
FLUFXPVWDQFHV DQG PLWLJDWLQJ IDFWRUV  D VHQWHQFLQJ           %XHOO
GHFLVLRQ EDVHG RQ VSHFLILF ILQGLQJV DQG  PHDQLQJIXO
DSSHOODWHUHYLHZ,Q*UHJJWKH&RXUWVWDWHGWKDWWKHFRQFHUQV           )RXUWK %XHOO FKDOOHQJHV WKH WULDO FRXUWjV VWDWHPHQWV
H[SUHVVHG LQ )XUPDQ FRXOG EH PHW E\ mD FDUHIXOO\ GUDIWHG      LQVWUXFWLQJWKHMXU\WRFRQVLGHUmDOORIWKHUHOHYDQWHYLGHQFH
VWDWXWH WKDW HQVXUHV WKDW WKH VHQWHQFLQJ DXWKRULW\ LV JLYHQ    UDLVHG >GXULQJ WKH JXLOWSKDVH SRUWLRQ RI WKH WULDO@l  %XHOO
DGHTXDWHLQIRUPDWLRQDQGJXLGDQFHl*UHJJ86DW           FODLPV WKDW WKLV LQVWUXFWLRQ PLVVWDWHV 2+,2 5(9 &2'(
%\FRPSO\LQJZLWKWKLVUHTXLUHPHQWWKH2KLRGHDWKSHQDOW\             'ZKLFKVWDWHVWKDWWKHMXU\VKDOOFRQVLGHUmDQ\
VWDWXWHVLJQLILFDQWO\UHGXFHVWKHOLNHOLKRRGRIDUELWUDU\DQG          HYLGHQFH UDLVHG DW WULDO WKDW LV UHOHYDQW WR WKH DJJUDYDWLQJ
FDSULFLRXVLPSRVLWLRQRIWKHGHDWKSHQDOW\DQGGRHVQRWUXQ            FLUFXPVWDQFHVWKHRIIHQGHUZDVIRXQGJXLOW\RIFRPPLWWLQJRU
DIRXORIWKH&RQVWLWXWLRQ                                             WRDQ\IDFWRUVLQPLWLJDWLRQRIWKHLPSRVLWLRQRIWKHVHQWHQFH
                                                                       RIGHDWKl:KLOHWKHMXU\LQVWUXFWLRQPD\EHDWUXQFDWLRQRI
   %XHOOQH[WDWWDFNV2KLRjVUHTXLUHPHQWVWKDWWKHVHQWHQFLQJ          WKH2KLRVWDWXWRU\VHFWLRQ%XHOOFDQQRWGHPRQVWUDWHWKDWLW
MXU\VKDOOUHFRPPHQGHGWKHGHDWKSHQDOW\LILWILQGVEH\RQGD          PLVVWDWHVWKHODZRUWKDWLWSUHMXGLFHGKLP
UHDVRQDEOH GRXEW WKDW DJJUDYDWLQJ FLUFXPVWDQFHV RXWZHLJK
PLWLJDWLQJIDFWRUVDQGWKDWWKHDSSHOODWHFRXUWVKDOODIILUPWKH          )LIWK%XHOOFKDOOHQJHVWKHWULDOFRXUWjVLQVWUXFWLRQWKDWm>L@I
VHQWHQFH LI LW LV SHUVXDGHG WKDW DJJUDYDWLQJ FLUFXPVWDQFHV      DOO WZHOYH RI \RX ILQG EH\RQG D UHDVRQDEOH GRXEW WKDW WKH
RXWZHLJK PLWLJDWLQJ IDFWRUV  2+,2 5 (9 & 2'(                     DJJUDYDWLQJ FLUFXPVWDQFHV ZKLFK WKH GHIHQGDQW ZDV IRXQG
'$%XHOODVVHUWVWKDWWKH2KLR             JXLOW\RIFRPPLWWLQJRXWZHLJKWKHPLWLJDWLQJIDFWRUVWKHQ\RX
VWDWXWHGRHVQRWVSHFLILFDOO\UHTXLUHWKHSURVHFXWLRQWRSURYH         KDYH QR FKRLFH DQG PXVW UHFRPPHQG WR WKH FRXUW WKDW WKH
WKHDEVHQFHRIDQ\PLWLJDWLQJIDFWRUVRUWKDWGHDWKLVWKHRQO\        VHQWHQFH RI GHDWK EH LPSRVHG XSRQ GHIHQGDQW 5REHUW $
DSSURSULDWHSHQDOW\,QDGGLWLRQ%XHOODUJXHVWKDWWKH2KLR          %XHOOl%XHOOFRQWHQGVWKDWWKLVVWDWHPHQWSDUWLFXODUO\WKH
VFKHPH IDLOV WR SURYLGH WKH VHQWHQFLQJ DXWKRULW\ ZLWK DQ       SKUDVH m\RX KDYH QR FKRLFHl FUHDWHV D FRQVWLWXWLRQDOO\
       %XHOOY0LWFKHOO                                 1R              1R                                 %XHOOY0LWFKHOO      

LPSHUPLVVLEOHPDQGDWRU\GHDWKSHQDOW\7KHLQVWUXFWLRQLVLQ                       XVHGWRILQGVSHFLILFLQWHQW&I6WDWHY&RWWRQ1(G
IXOODFFRUGZLWK2+,2 5(9 &2'('KRZHYHU                             2KLRm7KHFLUFXPVWDQFHVVXUURXQGLQJWKH
0RUHRYHU WKH FRQVWLWXWLRQDOLW\ RI VXFK DQ LQVWUXFWLRQ ZDV                   ILULQJ RI WKH QRQIDWDO VKRWV DQG WKH FLUFXPVWDQFHV
XSKHOGE\WKH6XSUHPH&RXUWLQ%O\VWRQHY3HQQV\OYDQLD                            VXUURXQGLQJ WKH ILULQJ RI WKH ODVW VKRW MXVWLI\ D ILQGLQJ RI
86                                                           GHVLJQl  7KLV FRXUW KDV KHOG WKDW HYHQ HUURQHRXV
                                                                                    LQVWUXFWLRQVDUHQRWVXIILFLHQWWRGHPRQVWUDWHDYLRODWLRQRI
  6L[WK %XHOO FRQWHQGV WKDW VWDWHPHQWV LQ WKH MXU\                          FRQVWLWXWLRQDOULJKWVUDWKHUWKHLQVWUXFWLRQmPXVWVRLQIHFWWKH
LQVWUXFWLRQVWKDWDMXU\UHFRPPHQGDWLRQWKDWWKHGHDWKSHQDOW\                      WULDO WKDW WKH UHVXOWLQJ FRQYLFWLRQ YLRODWHV GXH SURFHVVl
EHLPSRVHGLVRQO\DUHFRPPHQGDWLRQDQGLVQRWELQGLQJRQ                           %URIIRUGY0DUVKDOO)GWK&LU
WKH FRXUW KDG WKH HIIHFW RI GLPLQLVKLQJ WKH MXU\jV VHQVH RI               FLWLQJ+HQGHUVRQY.LEEH86%XHOOLV
UHVSRQVLELOLW\7KLVFRQWHQWLRQIDLOVIRUWKHVDPHUHDVRQVWKDW                    XQDEOHWRGHPRQVWUDWHWKDWWKLVRUDQ\RIWKHRWKHUFRQWHVWHG
%XHOOjV&DOGZHOOFODLPIDLOV                                                       LQVWUXFWLRQV ZDV HUURQHRXV OHW DORQH WKDW WKH\ URVH WR WKLV
                                                                                    KLJKHU FRQVWLWXWLRQDO VWDQGDUG QHFHVVDU\ WR SURYH D GXH
  F      &RXUWjV5HVSRQVHWRsXU\4XHVWLRQ'XULQJ3HQDOW\                         SURFHVVYLRODWLRQ
          3KDVH'HOLEHUDWLRQV
                                                                                        &KDOOHQJHV WR 'HDWK 3HQDOW\ XQGHU &RQVWLWXWLRQDO
   %XHOOjVILQDOFKDOOHQJHWRWKHSHQDOW\SKDVHMXU\LQVWUXFWLRQV                     DQG,QWHUQDWLRQDO/DZ
UHODWHVWRWKHWULDOFRXUWjVUHVSRQVHWRDMXU\TXHVWLRQDERXWD
QRQXQDQLPRXVVHQWHQFLQJYHUGLFW'XULQJMXU\GHOLEHUDWLRQV                          ,QKLVILQDOJURXQGIRUUHOLHI%XHOOFRQWHQGVWKDWWKHGLVWULFW
IROORZLQJWKHSHQDOW\SKDVHRI%XHOOjVWULDOWKHMXU\VXEPLWWHG                    FRXUWHUUHGLQGHQ\LQJKLVIDFLDODQGDVDSSOLHGFKDOOHQJHVWR
WRWKHWULDOFRXUWWKHIROORZLQJTXHVWLRQZULWWHQE\RQHRIWKH                     2KLRjV GHDWK SHQDOW\ RQ WKH JURXQGV WKDW WKH SXQLVKPHQW
MXURUVm0D\,DVNWKHMXGJHLI,DPXQGHFLGHGRQRQHSDUW                         YLRODWHVWKH)LIWK6L[WK(LJKWKDQG)RXUWHHQWK$PHQGPHQWV
DQGWKHRWKHUVDUHLQDJUHHPHQWZLOOWKLVKDYHDQ\DIIHFW>VLF@                    WRWKH8QLWHG6WDWHV&RQVWLWXWLRQDQGLQWHUQDWLRQDOODZ
RQWKHUHFRPPHQGDWLRQ"l8SRQUHFHLSWRIWKLVTXHVWLRQWKH
WULDOFRXUWDQGFRXQVHOIRUWKHSDUWLHVFRQYHQHGLQFKDPEHUV                           %XHOOFDQUDLVHRQO\WKRVHFKDOOHQJHVWRWKHFRQVWLWXWLRQDOLW\
DQGGLVFXVVHGDWOHQJWKWKHDSSURSULDWHUHVSRQVH%XHOOjV                         RIFDSLWDOSXQLVKPHQWDQG2KLRjVGHDWKSHQDOW\VWDWXWHWKDWKH
FRXQVHOLQGLFDWHGWKDWmZKDW>WKHMXURU@ZDQWVWRNQRZLVLI                        IDLUO\SUHVHQWHGRQGLUHFWDSSHDOWRWKH2KLRDSSHOODWHFRXUWV
VKHGLVDJUHHVZLWKWKHUHVWZKDWLVWKHHIIHFWRIDQXQ                     7KHSRUWLRQVRI%XHOOjVFODLPFKDOOHQJLQJWKHGHDWKSHQDOW\DV
XQDQLPRXVYHUGLFWl%XHOOjVFRXQVHOVWDWHGmWKHODZGRHVQjW                        DYLRODWLRQRILQWHUQDWLRQDOODZDQGHOHFWURFXWLRQDVFUXHODQG
WHOO\RXZKDW\RXGRLQFHUWDLQFLUFXPVWDQFHVZKHWKHURUQRW                       XQXVXDOSXQLVKPHQWKDYHQRWEHHQSUHVHQWHGSUHYLRXVO\E\
                                                                                    %XHOO WR DQ\ VWDWH RU IHGHUDO FRXUW  7KHVH FKDOOHQJHV DUH
                                                                                    SURFHGXUDOO\GHIDXOWHG(YHQLIZHUHYLHZWKHPHULWVRIWKHVH
                                                                                    DUJXPHQWV ZH FRPH WR WKH VDPH FRQFOXVLRQ DV ZH GR LQ
     
     7KH MXGJH DQG FRXQVHO ZHUH          LQWHUSUHWLQJ 2   +,2   5   (9   &   2'(   UHYLHZLQJWKHDUJXPHQWVWKDW%XHOOKDVSUHVHUYHGIRUUHYLHZ
 ' ZKLFK VWDWHV                                                      ZKLFKLVWKDW2KLRjVGHDWKSHQDOW\YLRODWHVQHLWKHUWKH8QLWHG
                                                                                    6WDWHV&RQVWLWXWLRQQRULQWHUQDWLRQDOODZWKDWELQGVWKH8QLWHG
     ,I WKH WULDO MXU\ XQDQLPRXVO\ ILQGV E\ SURRI EH\RQG D UHDVRQDEOH              6WDWHV
     GRXEW WKDW WKH DJJUDYDWLQJ FLUFXPVWDQFHV WKH RIIHQGHU ZDV
     IRXQG JXLOW\ RI FRPPLWWLQJ RXWZHLJK WKH PLWLJDWLQJ IDFWRUV WKH
     WULDO MXU\ VKDOO UHFRPPHQG WKH VHQWHQFH RI GHDWK EH LPSRVHG RQ
     WKH RIIHQGHU $EVHQW VXFK D ILQGLQJ WKH MXU\ VKDOO UHFRPPHQG
     WKH RIIHQGHU EH VHQWHQFHG WR RQH RI WKH >OLIH VHQWHQFHV@
    %XHOOY0LWFKHOO                               1R       1R                                 %XHOOY0LWFKHOO      

ZLWQHVVDFWXDOO\REVHUYHG%XHOO7KHFRXUWGLGQRWLQGLFDWH            LWKDVWREHXQDQLPRXVDVLWUHODWHVWROLIH,WRQO\WHOOV\RXDV
DQ\SUHVXPSWLRQWKDWWKHZLWQHVVHVREVHUYHG%XHOO                      LWUHODWHVWRGHDWKl
   6HFRQG%XHOOFKDOOHQJHVWKHFRXUWjVLQVWUXFWLRQUHJDUGLQJ              7KHWULDOMXGJHDVNHGm'R\RXWKLQNLWjVFOHDUWKH\KDYHWR
UHDVRQDEOHGRXEW7KHFRXUWUHDGWKHVWDWXWRU\GHILQLWLRQRI           UHDFKDXQDQLPRXVILQGLQJIRUOLIHLPSULVRQPHQW"l%XHOOjV
UHDVRQDEOH GRXEW VHW IRUWK LQ 2+,2 5(9 &2'(                       FRXQVHO UHVSRQGHG m1R  'HDWK RQO\  7KDW KDV WR EH
 '  7KLV FRXUW KDV GHWHUPLQHG WKDW 2KLRjV         XQDQLPRXVDQGLIWKH\FDQQRWUHDFKDYHUGLFWRQGHDWKWKH
VWDWXWRU\GHILQLWLRQRIUHDVRQDEOHGRXEWGRHVQRWRIIHQGGXH            UHPDLQLQJTXHVWLRQLVZKDWLVWKHSHQDOW\"l,QWKHHQGWKH
SURFHVV6HH7KRPDVY$UQ)GWK&LU             WULDOMXGJHGHFLGHGWRLQVWUXFWWKHMXU\WKDWmZKLFKHYHUYHUGLFW
                                                                \RX UHDFK PXVW EH XQDQLPRXVl %XHOOjV FRXQVHO REMHFWHG
                                                                        VWDWLQJ m, WKLQN WKH RQO\ XQDQLPRXV YHUGLFW KDV WR EH IRU
  7KLUG %XHOO FKDOOHQJHV WKH MXU\ LQVWUXFWLRQ UHJDUGLQJ          FDSLWDOSXQLVKPHQWDQGIRUWKDWUHDVRQ,REMHFWWRWKDWEHLQJ
SXUSRVH  %XHOO FRQWHQGV WKDW WKH FKDUJH FRQWDLQHG D            UHDG,WKLQNZKDWRXJKWWREHWROGLVZKDWWKH\DVNHGl7KH
PDQGDWRU\LQIHUHQFH7KHLQVWUXFWLRQVWDWHGm7KHSXUSRVH             WULDOFRXUWVWDWHGWRWKHMXU\m:KLFKHYHUYHUGLFW\RXUHDFK
ZLWK ZKLFK D SHUVRQ GRHV DQ DFW RU EULQJV DERXW D FHUWDLQ    ZKHWKHU LWjV D UHFRPPHQGDWLRQ RI WKH GHDWK SHQDOW\ RU D
UHVXOWLVGHWHUPLQHGIURPWKHPDQQHULQZKLFKLWZDVGRQH              UHFRPPHQGDWLRQRIOLIHLPSULVRQPHQWWKHYHUGLFWPXVWEH
WKH PHDQV XVHG DQG DOO RWKHU FLUFXPVWDQFHV LQ HYLGHQFHl        XQDQLPRXVl
%XHOODUJXHVWKDWWKLVLQVWUXFWLRQYLRODWHVWKH2KLRVWDWXWHRQ
FDSLWDOPXUGHUZKLFKUHTXLUHVWKDWDQLQGLYLGXDOKDYHVSHFLILF            %XHOO DUJXHV WKDW WKH MXU\jV TXHVWLRQ SUHVHQWHG WKH VDPH
LQWHQW WR FDXVH WKH GHDWK RI DQRWKHU  <HW %XHOO GRHV QRW   LVVXHUHVROYHGE\WKH2KLR6XSUHPH&RXUWLQ6WDWHY%URRNV
PHQWLRQ WKDW WKH FRXUW GHYHORSHG WKH PHDQLQJ RI SXUSRVH         1(G2KLRDQGWKDWKDG%XHOOjVFRXQVHO
PRUHIXOO\LQFOXGLQJJLYLQJWKHLQVWUXFWLRQWKDWm>D@SHUVRQ           UDLVHG WKH LVVXH RQ DSSHDO WKH 2KLR 6XSUHPH &RXUW
DFWV SXUSRVHO\ ZKHQ LW LV KLV VSHFLILF LQWHQWLRQ WR FDXVH D   FRQFHLYDEO\ZRXOGKDYHKHOGDVLWHYHQWXDOO\GLGLQ%URRNV
FHUWDLQUHVXOWl                                                        WKDWWKHWULDOFRXUWVKRXOGKDYHDQVZHUHGWKHMXU\TXHVWLRQLQ
                                                                        WKHIROORZLQJPDQQHUm$VROLWDU\MXURUPD\SUHYHQWDGHDWK
  )RXUWK%XHOOFKDOOHQJHVWKHMXU\LQVWUXFWLRQUHJDUGLQJSULRU         SHQDOW\ UHFRPPHQGDWLRQ E\ ILQGLQJ WKDW DJJUDYDWLQJ
FDOFXODWLRQDQGGHVLJQ%XHOOFODLPVWKDWWKHMXU\LQVWUXFWLRQ        FLUFXPVWDQFHV LQ WKH FDVH GR QRW RXWZHLJK WKH PLWLJDWLQJ
m>L@I D ZRXQG LV LQIOLFWHG XSRQ D SHUVRQ LQ D PDQQHU          IDFWRUVl,GDW
FDOFXODWHGWRGHVWUR\OLIHSXUSRVHWRNLOOPD\EHLQIHUUHGIURP
WKDWl ZDV LQ GLUHFW FRQIOLFW ZLWK WKH LQVWUXFWLRQ WKDW mQR      7RZDUUDQWKDEHDVUHOLHImMXU\LQVWUXFWLRQVPXVWQRWRQO\
SHUVRQPD\EHFRQYLFWHGRIDJJUDYDWHGPXUGHUXQOHVVKHLV               KDYHEHHQHUURQHRXVEXWDOVRWDNHQDVDZKROHVRLQILUPWKDW
VSHFLILFDOO\ IRXQG WR KDYH LQWHQGHG WR FDXVH WKH GHDWK RI      WKH\ UHQGHUHG WKH HQWLUH WULDO IXQGDPHQWDOO\ XQIDLU  7KH
DQRWKHUl%XHOOFRQWHQGVWKDWWKHSRUWLRQRIWKHLQVWUXFWLRQ           EXUGHQLVHYHQJUHDWHUWKDQWKDWUHTXLUHGWRGHPRQVWUDWHSODLQ
JLYLQJWKHMXU\WKHDELOLW\WRLQIHUmSXUSRVHWRNLOOlLVLQGLUHFW     HUURURQDSSHDOl6FRWW)GDW%XHOOFRQWHQGVWKDW
FRQWUDGLFWLRQWRWKHSRUWLRQRIWKHLQVWUXFWLRQVWDWLQJWKHMXU\        WKH WULDO FRXUW HUUHG LQ OLJKW RI%URRNV DQG WKDW WKH FRXUWjV
PXVWILQGVSHFLILFLQWHQW7KHWULDOFRXUWjVLQVWUXFWLRQLVWKH        HUURU URVH WR VXFK D OHYHO WKDW LW UHQGHUHG KLV HQWLUH WULDO
SUHFLVH FKDUJH FRQWDLQHG LQ  2KLR sXU\ ,QVWUXFWLRQV             IXQGDPHQWDOO\XQIDLU%XHOOUHOLHVRQWKLVFRXUWjVGHFLVLRQLQ
 $  0RUHRYHU WKH WZR VWDWHPHQWV DUH QRW              0DSHV  )G DW  LQ ZKLFK WKLV FRXUW UXOHG WKDW
LQFRQVLVWHQWLQWKDWWKHPDQQHULQZKLFKDZRXQGLVLQIOLFWHG           m>D@OWKRXJKWKHWULDOFRXUWGLGQRWKDYHWKHEHQHILWRI%URRNV
FDQVXSSRUWDQLQIHUHQFHRIDSXUSRVHWRNLOOZKLFKFDQEH             WKDW FDVH FOHDUO\ HVWDEOLVKHV WKDW WKH WULDO FRXUW PLVDSSOLHG
    %XHOOY0LWFKHOO                              1R       1R                                  %XHOOY0LWFKHOO      

2+,2 5(9 &2'(  ' E\ UHTXLULQJ WKH MXU\ WR         GUXJ GHDOHUV WKDW WKH GHDOHUV DQG WKHLU GUXJV ZRXOG QRW EH
XQDQLPRXVO\UHMHFWWKHGHDWKSHQDOW\EHIRUHFRQVLGHULQJDOLIH         WROHUDWHGLQWKHMXURUVjFRPPXQLW\,GDW
VHQWHQFHl  0DSHV  )G DW   7KH 0DSHV FRXUW
DGRSWHGWKHUHDVRQLQJIURP%URRNVVWDWLQJWKDWm>L@IDMXURU            7KH SURVHFXWLRQjV FRPPHQWV GLG QRW ULVH WR WKH OHYHO RI
EHOLHYHGKLVRQHYRWHFRXOGQRWDIIHFWWKHXOWLPDWHUHVXOWKH         FRQVWLWXWLRQDOHUURU:HPXVWUHMHFWWKLVFODLP
PLJKWDFTXLHVFHLQWKHGHDWKVHQWHQFH,QWKLVFDVHWKHMXU\
LQVWUXFWLRQXQGHUPLQHGWKHUHOLDELOLW\RIWKHMXU\YHUGLFWDQG           *XLOW3KDVHsXU\,QVWUXFWLRQV
ULVNHG HUURQHRXV LPSRVLWLRQ RI WKH GHDWK VHQWHQFH WKHUHE\
PDWHULDOO\SUHMXGLFLQJ%URRNVjVULJKWWRDIDLUWULDOl0DSHV           %XHOO DVVHUWV WKDW WKH GLVWULFW FRXUW HUUHG LQ UHMHFWLQJ KLV
)GDWTXRWLQJ%URRNV1(GDW                FODLP WKDW KH ZDV GHQLHG KLV FRQVWLWXWLRQDO ULJKW WR GXH
                                                                       SURFHVV DV D UHVXOW RI HUURUV LQ KLV JXLOW\SKDVH MXU\
    :HQRWHKRZHYHUWKDWWKHMXU\LQVWUXFWLRQVLQ%URRNVDQG         LQVWUXFWLRQV$WWULDO%XHOOGLGQRWREMHFWWRWKHLQVWUXFWLRQV
0DSHV ZHUH QRW LQ UHVSRQVH WR MXU\ TXHVWLRQV EXW ZHUH        KHQRZFKDOOHQJHV$FFRUGLQJWR2KLR&ULPLQDO5XOH$
mDFTXLWWDO ILUVWl LQVWUXFWLRQV FRQWDLQHG LQ JHQHUDO SHQDOW\    DSDUW\FDQQRWUDLVHDFODLPRIHUURUUHODWHGWRMXU\LQVWUXFWLRQV
SKDVHMXU\FKDUJHV,QERWKFDVHVWKHMXU\ZDVLQVWUXFWHGWKDW        RQDSSHDOXQOHVVWKHSDUW\HQWHUHGDVSHFLILFREMHFWLRQWRWKH
LW PXVW mGHWHUPLQH XQDQLPRXVO\ WKDW WKH GHDWK SHQDOW\ LV       LQVWUXFWLRQVEHIRUHWKHMXU\UHWLUHGWRFRQVLGHULWVYHUGLFW6HH
LQDSSURSULDWH EHIRUH \RX FDQ FRQVLGHU D OLIH VHQWHQFHl         6WDWHY:KLWH1(G2KLR%XHOODOVR
0DSHV)GDW%URRNV1(GDW%XHOO             GLGQRWUDLVHWKLVLVVXHRQGLUHFWDSSHDORULQSRVWFRQYLFWLRQ
DUJXHVWKDWWKHVDPHSULQFLSOHVFDQEHDSSOLHGWRWKLVFDVH           SURFHHGLQJV$OWKRXJKWKLVFODLPLVSURFHGXUDOO\GHIDXOWHG
:HGLVDJUHH                                                          LWDOVRODFNVPHULW

   ,Q%URRNVWKH2KLR6XSUHPH&RXUWUHMHFWHGWKHDFTXLWWDO              (UURUV LQ MXU\ LQVWUXFWLRQV GR QRW ULVH WR WKH OHYHO RI D
ILUVWMXU\LQVWUXFWLRQDQGLQGLFDWHGWKDWDMXU\QHHGQRWUXOHRXW     FRQVWLWXWLRQDO YLRODWLRQ XQOHVV WKH KDEHDV SHWLWLRQHU FDQ
WKHGHDWKSHQDOW\EHIRUHFRQVLGHULQJDOLIHVHQWHQFH,GDW          HVWDEOLVKWKDWWKHmLQVWUXFWLRQE\LWVHOIVRLQIHFWHGWKHHQWLUH
&RQVLVWHQWZLWKWKLVKROGLQJWKHFRXUWPDGHFOHDU           WULDOWKDWWKHUHVXOWLQJFRQYLFWLRQYLRODWHVGXHSURFHVVl&XSS
WKDWDORQHMXURUFRXOGSUHYHQW WKHLPSRVLWLRQRIWKHGHDWK           Y1DXJKWHQ866FRWW)G
SHQDOW\   ,ELG  7R WKH H[WHQW WKDW %XHOO FKDOOHQJHV WKH   DW%XHOOFKDOOHQJHVIRXUMXU\LQVWUXFWLRQVJLYHQDWWKH
LQVWUXFWLRQJLYHQWRWKHMXU\LQWKLVFDVHKHLVIRFXVHGRQWKH       JXLOWSKDVHRIKLVWULDO+HFODLPVWKDWWKHVHLQVWUXFWLRQVLQ
ODWWHUSURSRVLWLRQUDWKHUWKDQWKHIRUPHU1HLWKHULQDQVZHUWR       WKHLU WRWDOLW\ DIIHFWHG KLV WULDO WR VXFK DQ H[WHQW WKDW KLV
WKHMXURUjVTXHVWLRQQRULQWKHMXU\LQVWUXFWLRQVWKHPVHOYHV          FRQYLFWLRQYLRODWHVGXHSURFHVV
GLGWKHWULDOFRXUWVWDWHWKDWWKHMXU\PXVWUXOHRXWWKHGHDWK
SHQDOW\EHIRUHFRQVLGHULQJDOLIHVHQWHQFH,QVWHDGWKHFRXUW           )LUVW %XHOO FKDOOHQJHV WKH MXU\ LQVWUXFWLRQ UHJDUGLQJ
VWDWHG WKDW ZKDWHYHU YHUGLFW WKH MXU\ UHDFKHG PXVW EH          H\HZLWQHVVLGHQWLILFDWLRQ7KHFRXUWLQVWUXFWHGWKHMXU\WKDW
XQDQLPRXV:KDWWKHWULDOFRXUWVWDWHGWRWKHMXU\ZDVQRW            m>L@QFRQVLGHULQJH\HZLWQHVVWHVWLPRQ\\RXVKRXOGFRQVLGHU
FRQWUDU\WR2KLRODZ7KHUHLVQRVSHFLILFODQJXDJHLQ2+,2           WKH FDSDFLW\ DQG RSSRUWXQLW\ RI WKH ZLWQHVV WR REVHUYH WKH
5(9 &2'('OLPLWLQJMXU\XQDQLPLW\WRRQO\              GHIHQGDQWl%XHOODVVHUWVWKDWWKHFRXUWIDLOHGWRLQGLFDWH
GHDWKUHFRPPHQGDWLRQV0RUHYHUWKHWULDOFRXUWjVLQVWUXFWLRQ         WRWKHMXU\ZKLFKZLWQHVVHVZHUHJLYLQJH\HZLWQHVVWHVWLPRQ\
ZDV LQ IXOO DFFRUG ZLWK 2KLR &ULPLQDO 5XOH $ ZKLFK       +HDUJXHVWKDWWKHLQVWUXFWLRQSUHVXPHGWKDWWKHZLWQHVVHVKDG
UHTXLUHVWKDWYHUGLFWVVKDOOEHXQDQLPRXV2KLRFRXUWVDQG            WKHRSSRUWXQLW\WRREVHUYH%XHOO$VWKH6WDWHSRLQWVRXW
WKLVFRXUWKDYHPDGHLWFOHDUWKDWERWKGHDWKDQGOLIHVHQWHQFHV       KRZHYHU WKH MXU\ ZDV UHTXLUHG WR FRQVLGHU ZKHWKHU WKH
    %XHOOY0LWFKHOO                               1R       1R                                 %XHOOY0LWFKHOO      

SURVHFXWRUjVRSLQLRQDVWRZKDW%XHOOjVVHQWHQFHVKRXOGEH              PXVWEHXQDQLPRXVXQGHU2KLRODZDQGWKDWMXU\LQVWUXFWLRQV
ZDV QRW SUHMXGLFLDO  7KH MXU\ KHDUG WKH HYLGHQFH DQG WKH     WRWKDWHIIHFWDUHQRWXQFRQVWLWXWLRQDO6FRWW)GDW
FRXUWjV LQVWUXFWLRQV RQ WKH ODZ DQG ZDV DEOH WR PDNH DQ       m%URRNV GLG QRW KROG WKDW DOO LQVWUXFWLRQV UHTXLULQJ
LQWHOOLJHQWGHFLVLRQDVWRWKHXOWLPDWHRXWFRPHRIWKHFDVHl           XQDQLPRXVUHFRPPHQGDWLRQVRIOLIHRUGHDWK LQSUHYLRXVO\
                                                                        GHFLGHG2KLRGHDWKSHQDOW\FDVHVZHUHXQFRQVWLWXWLRQDOl
   )LQDOO\%XHOOREMHFWVWRWKHSURVHFXWLRQjVVWDWHPHQWWKDWWKH       6WDWH Y sHQNLQV  1(G   2KLR  mZH
MXU\ VKRXOG mVHQG D PHVVDJH WR WKH 5REHUW %XHOOV RI WKH       FRQFOXGHLQUHWXUQLQJDVHQWHQFHRIOLIHLPSULVRQPHQWXQGHU
ZRUOGlWKDWmLI\RXjUHJRLQJWRFRPPLWWKLVNLQGRIDFULPH             5&'WKHMXU\jVYHUGLFWPXVWEHXQDQLPRXVl
WKHQ \RX EHWWHU EH H[SHFWLQJ WR SD\ WKH XOWLPDWH SULFH
\RXUVHOIl  7KLV FRXUW KDV KHOG RQ VHYHUDO RFFDVLRQV WKDW         7KHIRFXVRI%XHOOjVFODLPLVQRWRQZKDWWKHWULDOFRXUW
VLPLODUVWDWHPHQWVZHUHQRWSUHMXGLFLDO6HH8QLWHG6WDWHVY          VWDWHGWRWKHMXU\EXWUDWKHURQZKDWWKHFRXUWGLGQRWVWDWHWR
5HOLIRUG)GWK&LUKROGLQJWKDW             WKH MXU\  %XHOO FRQWHQGV WKDW WKH WULDO FRXUW HUUHG E\ QRW
SURVHFXWRUjVVWDWHPHQWWKDWMXU\VKRXOGmUHWXUQDYHUGLFWWKDW          LQVWUXFWLQJWKHMXU\WKDWLIWKH\FRXOGQRWFRPHWRDXQDQLPRXV
WHOOVWKHGHIHQGDQWWKDWWKHFLWL]HQVRIWKH:HVWHUQ'LVWULFW     YHUGLFWWKH\VKRXOGDGYLVHWKHFRXUWRIWKDWIDFWDQGWKDWWKH
RI7HQQHVVHHZRQ
WWROHUDWHWKHVHW\SHVRIFULPHVlZDVQRW              FRXUWZRXOGWKHQGHWHUPLQHWKHDSSURSULDWHVHQWHQFH%XHOO
SUHMXGLFLDO8QLWHG6WDWHVY$OORZD\)GWK          EDVHV WKLV FODLP RQ WKH 2KLR 6XSUHPH &RXUWjV RSLQLRQ LQ
&LUKROGLQJWKDWGHIHQGDQWZDVQRWSUHMXGLFHGZKHQ              %URRNVLVVXHGWZHOYH\HDUVDIWHU%XHOOjVWULDOLQZKLFKWKH
SURVHFXWRUVWDWHGm<RXWKHMXURUVDUHFDOOHGXSRQLQWKLV            FRXUW FRQFOXGHG WKDW MXURUV PXVW EH LQVWUXFWHG mIURP WKLV
FDVHWREHWKHZRUOGFRQVFLHQFHRIWKHFRPPXQLW\$QG,
P              SRLQW IRUZDUGl WKDW mD VROLWDU\ MXURU PD\ SUHYHQW D GHDWK
FDOOLQJRQWKLVMXU\WRVSHDNRXWIRUWKHFRPPXQLW\DQGOHWWKH         SHQDOW\ UHFRPPHQGDWLRQ E\ ILQGLQJ WKDW WKH DJJUDYDWLQJ
sRKQ $OORZD\V NQRZ WKDW WKLV W\SH RI FRQGXFW ZLOO QRW EH      FLUFXPVWDQFHV LQ WKH FDVH GR QRW RXWZHLJK WKH PLWLJDWLQJ
WROHUDWHGWKDWZHjUHQRWJRLQJWRWROHUDWHl              IDFWRUVl1(GDW%XHOOjVFODLPIDLOVIRUVHYHUDO
                                                                        UHDVRQV
   ,Q GLVWLQJXLVKLQJ $OORZD\ IURP D VLWXDWLRQ LQ ZKLFK D
SURVHFXWRUjVFRPPHQWVZHUHGHHPHGSUHMXGLFLDOEHFDXVHWKH\                 )LUVW%XHOOLVXQDEOHWRGHPRQVWUDWHDQ\EDVLVLQ2KLRODZ
JDYHMXURUVWKHLPSUHVVLRQWKDWWKHGUXJWUDGHZRXOGFRQWLQXH           IRUWKHLQVWUXFWLRQWKDWKHEHOLHYHVVKRXOGKDYHEHHQJLYHQWR
LQWKHMXURUVjFRPPXQLW\LIWKH\GLGQRWFRQYLFWWKLVFRXUW            WKHMXU\DQLQVWUXFWLRQWKDWLVGLVWLQFWIURPWKDWPDQGDWHGLQ
VWDWHGWKDWWKHSURVHFXWRULQ$OORZD\GLGmQRWJREH\RQGD              %URRNV,Q%URRNVWKH2KLR6XSUHPH&RXUWUHDIILUPHGWKDW
PHUHDOOXVLRQWRWKHJHQHUDOQHHGWRFRQYLFWJXLOW\SHRSOH        WKH MXU\jV GHWHUPLQDWLRQ WKDW D OLIH VHQWHQFH LV DSSURSULDWH
DQGEULQJWREHDUXSRQWKHMXU\
VGHOLEHUDWLRQVWKHDWWHQGDQW           PXVWEHXQDQLPRXVDQGWKDWDMXU\VKRXOGEHLQVWUXFWHGRIWKDW
VRFLDOFRQVHTXHQFHVRIGHIHQGDQW
VFULPLQDOFRQGXFWRUXUJH             IDFW1(GDWVWDWLQJWKDW2KLRVWDWXWHVDQGSDVW
WKH MXU\ WR FRQYLFW DQ LQGLYLGXDO GHIHQGDQW LQ DQ HIIRUW WR   FDVHVFRXOGEHPDGHFRQVLVWHQW mWKURXJKDMXU\LQVWUXFWLRQ
DPHOLRUDWHVRFLHW\
VZRHVl8QLWHG6WDWHVY6ROLYDQ)G         ZKLFKUHTXLUHVWKHMXU\ZKHQLWFDQQRWXQDQLPRXVO\DJUHHRQ
WK&LU:HEHOLHYHWKHVDPHFDQEHVDLG            D GHDWK VHQWHQFH WR PRYH RQ LQ WKHLU GHOLEHUDWLRQV WR D
RIWKHSURVHFXWRUjVFRPPHQWVLQWKLVFDVH7KHSURVHFXWRUjV            FRQVLGHUDWLRQRIZKLFKOLIHVHQWHQFHLVDSSURSULDWHZLWKWKDW
FRPPHQWV ZHUH D JHQHUDO VWDWHPHQW UHJDUGLQJ WKH QHHG WR         GHWHUPLQDWLRQ WR EH XQDQLPRXVl HPSKDVLV DGGHG  7KH
FRQYLFWSHRSOHZKRFRPPLWVH[XDOPROHVWDWLRQDQGPXUGHU                FRXUWDGGUHVVHGRQO\DMXU\jVLQDELOLW\WRFRPHWRDXQDQLPRXV
7KH SURVHFXWRU ZDV QRW PDNLQJ D VWDWHPHQW UHJDUGLQJ WKH         GHFLVLRQDVWRDUHFRPPHQGDWLRQUHJDUGLQJDGHDWKVHQWHQFH
MXU\jV DELOLW\ WR DGGUHVV D VSHFLILF VRFLHWDO SUREOHP DV WKH   QRWDMXU\jVLQDELOLW\WRFRPHWRDXQDQLPRXVGHFLVLRQDVWRD
SURVHFXWRUGLGLQ6ROLYDQE\VWDWLQJWKDWWKHMXURUVFRXOGWHOO
       %XHOOY0LWFKHOO                                     1R         1R                                %XHOOY0LWFKHOO      

UHFRPPHQGDWLRQUHJDUGLQJDOLIHVHQWHQFHRULQHIIHFWDQ\                        GLUHFW DSSHDO RU KLV SRVWFRQYLFWLRQ SHWLWLRQ  $V D UHVXOW
VHQWHQFH                                                                        %XHOOKDVSURFHGXUDOO\GHIDXOWHGWKLVFODLP$UHYLHZRIWKH
                                                                                   PHULWV RI WKH FODLP QHYHUWKHOHVV LQGLFDWHV WKDW WKH DOOHJHG
  6HFRQG WR WKH H[WHQW WKDW 2KLR ODZ DIWHU %URRNV                    SURVHFXWRULDO PLVFRQGXFW GLG QRW GHSULYH %XHOO RI KLV
1(GDWQRZUHTXLUHVDQLQVWUXFWLRQUHJDUGLQJDORQH                       FRQVWLWXWLRQDOULJKWV
MXURUjVDELOLW\WRSUHYHQWWKHLPSRVLWLRQRIWKHGHDWKSHQDOW\
ZH KDYH KHOG WKDW WKLV UHTXLUHPHQW mLV SURVSHFWLYH RQO\l                    ,Q RUGHU IRU KDEHDV UHOLHI WR EH JUDQWHG D SURVHFXWRUjV
6FRWW)GDW                                                          FRQGXFWPXVWEHVRHJUHJLRXVDVWRUHQGHUWKHSHWLWLRQHUjVWULDO
                                                                                   IXQGDPHQWDOO\XQIDLU6HH8QLWHG6WDWHVY<RXQJ86
  7KLUG HYHQ LI WKH %URRNV UHTXLUHPHQW ZHUH WR DSSO\                      'RQQHOO\Y'H&KULVWRIRUR86
UHWURDFWLYHO\WR%XHOOjVFDVHWKHIDLOXUHRIWKHWULDOFRXUWWR                   %\UG)GDW7KLVGHWHUPLQDWLRQPXVW
JLYHVXFKDQLQVWUXFWLRQZRXOGEHDQHUURUXQGHUVWDWHODZWKDW                    EHPDGHE\FRQVLGHULQJWKHWRWDOLW\RIWKHFLUFXPVWDQFHVRI
GRHVQRWSURYLGHDEDVLVIRUKDEHDVUHOLHI6HH(VWHOOH                      HDFKFDVH6HH%\UG)GDW
86 DW   7KLV FRXUW KDV KHOG WKDW LW mGRHV QRW
QHFHVVDULO\ PLVOHDG D MXU\ UHJDUGLQJ LWV UROH WR DYRLG                        %XHOOFDWDORJVDYDULHW\RIFRQGXFWDQGFRPPHQWVE\WKH
GLVFORVLQJ ZKDW ZLOO KDSSHQ LI WKH MXU\ IDLOV WR DFKLHYH                  SURVHFXWRUVDWKLVWULDOVRPHRIZKLFKUHVWDWHFODLPV%XHOOKDV
XQDQLPLW\l&RHY%HOO)GWK&LU                       DOUHDG\ UDLVHG  )LUVW %XHOO DUJXHV WKDW EHIRUH WULDO
)XUWKHUPRUHLQsRQHVY8QLWHG6WDWHV86                       FRPPHQFHGWKHSURVHFXWLRQZLWKKHOGGLVFRYHUDEOHHYLGHQFH
WKH6XSUHPH&RXUWGLVFXVVHGWKHFRQVHTXHQFHRIWKHGLVWULFW                        WKDWWKUHHRIWKH6WDWHjVZLWQHVVHVKDGEHHQK\SQRWL]HGDQG
FRXUWGHQ\LQJDSHWLWLRQHUjVUHTXHVWIRUDMXU\LQVWUXFWLRQRQ                     WKDWRQHRIWKHZLWQHVVHVKDGPHQWDOGHIHFWV7KLVIRUPVWKH
WKH FRQVHTXHQFHV RI D MXU\ GHDGORFN LQ WKH FRQWH[W RI WKH                EDVLVIRU%XHOOjVVL[WKFODLPZKLFKWKLVFRXUWKDVUHMHFWHG
)HGHUDO'HDWK3HQDOW\$FWRI86&7KH                          6HFRQG %XHOO DVVHUWV WKDW WKH SURVHFXWRUV PLVOHG SRWHQWLDO
&RXUWKHOGWKDWWKH&RQVWLWXWLRQGRHVQRWUHTXLUHWKDWDMXU\LQ                   MXURUV GXULQJ YRLU GLUH E\ VWDWLQJ WKDW WKHLU VHQWHQFLQJ
HYHU\FDSLWDOFDVHEHLQVWUXFWHGDVWRWKHFRQVHTXHQFHVRID                       GHFLVLRQZDVRQO\DUHFRPPHQGDWLRQWRWKHMXU\7KLVUHODWHV
EUHDNGRZQ LQ WKH GHOLEHUDWLYH SURFHVV  sRQHV Y 8QLWHG                    WR%XHOOjVWKLUGFODLPZKLFKWKLVFRXUWKDVUHMHFWHG7KLUG
6WDWHV86DW)XUWKHUPRUHWKH&RXUWQRWHGWKDW                     %XHOODUJXHVWKDWWKHSURVHFXWLRQPDGHQXPHURXVLPSURSHU
YDULRXV&RXUWVRI$SSHDOVLQFOXGLQJWKLVFRXUWLQ&RHKDYH                       FRPPHQWV GXULQJ FORVLQJ DUJXPHQW  %XHOO DVVHUWV WKDW WKH
UHMHFWHG D FRQVWLWXWLRQDO XQDQLPLW\ UHTXLUHPHQW RU D                         SURVHFXWLRQLQVWUXFWHGMXURUVWRGLVUHJDUGPLWLJDWLRQHYLGHQFH
UHTXLUHPHQWRIDMXU\LQVWUXFWLRQDVWRWKHFRQVHTXHQFHVRID                      <HWQRQHRIWKHFRPPHQWVWKDW%XHOOSRLQWVWRH[SOLFLWO\VWDWH
EUHDNGRZQLQWKHGHOLEHUDWLYHSURFHVV,GDWQ                           WKLV  ,QVWHDG WKH SURVHFXWLRQ UHSHDWHGO\ DUJXHG WKDW WKH
                                                                                   PLWLJDWLQJ IDFWRUV GLG QRW RXWZHLJK WKH DJJUDYDWLQJ
                                                                                   FLUFXPVWDQFHV,QDGGLWLRQWKHSURVHFXWLRQUHIHUUHGWRDQG
     
      :H DOVR QRWH WKDW WR WKH H[WHQW WKDW       0DSHV    IROORZHG  %URRNV   LW
                                                                                   GHVFULEHG WKH DJJUDYDWLQJ FLUFXPVWDQFHV  7KH VWDWHPHQWV
VLPSO\ VWDWHG LQ GLFWD KDYLQJ IRXQG WKDW WKH SHWLWLRQHUjV FODLP ZDV               LQGLFDWHWKDWWKHSURVHFXWRUVZHUHQRWHQJDJLQJLQPLVFRQGXFW
SURFHGXUDOO\ GHIDXOWHG WKDW mWKH WULDO FRXUW PLVDSSOLHG 2KLR 5HYLVHG              EXWVLPSO\GRLQJWKHLUMRE
&RGH  ' E\ UHTXLULQJ WKH MXU\ WR XQDQLPRXVO\ UHMHFW WKH
GHDWK SHQDOW\ EHIRUH FRQVLGHULQJ D OLIH VHQWHQFHl  )G DW                %XHOODOVRDOOHJHVWKDWDSURVHFXWRULPSURSHUO\LQMHFWHGKLV
0DSHV    WKHUHIRUH LV LQDSSOLFDEOH WR WKLV FDVH IRU WZR UHDVRQV  WKH WULDO
                                                                                   SHUVRQDORSLQLRQUHJDUGLQJDQDSSURSULDWHVHQWHQFHIRU%XHOO
FRXUW LQ WKLV FDVH GLG QRW LPSRVH D UHTXLUHPHQW WKDW WKH MXU\ XQDQLPRXVO\
UHMHFW WKH GHDWK SHQDOW\ EHIRUH FRQVLGHULQJ D OLIH VHQWHQFH DQG      0DSHV      E\VWDWLQJWKDWWKHMXU\VKRXOGLPSRVHWKHGHDWKSHQDOW\:H
GLG QRW DGGUHVV ZKHWKHU LW ZDV QHFHVVDU\ IRU WKH FRXUW WR KDYH JLYHQ DQ            DJUHH ZLWK WKH GLVWULFW FRXUWjV FRQFOXVLRQ WKDW m>W@KH
LQVWUXFWLRQ WKDW D VROH MXURU FRXOG SUHYHQW D GHDWK VHQWHQFH
    %XHOOY0LWFKHOO                                1R       1R                               %XHOOY0LWFKHOO     

  %XHOOSURYLGHVQROHJDOEDVLVIRUZK\KLVSUHVHQFHDWWKH                   ([FOXVLRQ RI ([SHUW 7HVWLPRQ\ RQ (\HZLWQHVV
PHHWLQJZDVUHTXLUHG%XHOODUJXHVWKDWWKHMXU\GHOLEHUDWLRQV                 ,GHQWLILFDWLRQ
ZHUHWDLQWHGE\WKHLGHQWLILFDWLRQRIWKHFDUSHWVDPSOHVDQG
WKDWm>X@QOLNHWKHODZ\HUVKHPD\ZHOOKDYHDSSUHFLDWHGWKH               %XHOOFKDOOHQJHVWKHGLVWULFWFRXUWjVILQGLQJWKDWWKH WULDO
FRQWDPLQDWLRQRIWKHMXU\WKDWKDGWDNHQSODFHl<HW%XHOO              FRXUWjVGHFLVLRQWRH[FOXGHWKHWHVWLPRQ\RI6WHYHQ3HQURG
GRHVQRWH[SODLQKRZWKHMXU\GHOLEHUDWLRQVZHUHWDLQWHGRU              DQ H[SHUW LQ H\HZLWQHVV LGHQWLILFDWLRQ UHJDUGLQJ WKH
FRQWDPLQDWHG  7KH MXU\ ZDV JLYHQ WKH VRXUFH RI WKH             FUHGLELOLW\RIDQLGHQWLILFDWLRQZLWQHVVGLGQRWULVHWRWKHOHYHO
LGHQWLILFDWLRQVIRUHDFKRIWKHFDUSHWILEHUVH[FHSWWKHRQHV            RI FRQVWLWXWLRQDO HUURU  7KLV FODLP ZDV QRW SURFHGXUDOO\
JDWKHUHGIURPWKHRWKHULQFLGHQW7KHFRXUWWROGWKHMXU\WKDW          GHIDXOWHGDVLWZDVUDLVHGDQGDGGUHVVHGRQGLUHFWDSSHDODV
WKHLGHQWLILFDWLRQIRUWKHDGGLWLRQDOILEHUVZDVmDODERUDWRU\           %XHOOjVILUVWDVVLJQPHQWRIHUURULQERWKWKH2KLR&RXUWRI
PDUNLQJZKLFK\RXVKRXOGGLVUHJDUGl7KHPHHWLQJEHWZHHQ                $SSHDOVDQG2KLR6XSUHPH&RXUW
WKHMXGJHDQGFRXQVHOZDVIRUWKHSXUSRVHRILGHQWLI\LQJWKH
VDPSOHV ZKLFK WKH SDUWLHV GLG LQ DQVZHU WR WKH MXU\jV            7KHWULDOFRXUWjVGHFLVLRQWRH[FOXGHH[SHUWWHVWLPRQ\LVDQ
TXHVWLRQV  7R WKH H[WHQW WKDW RQH RI WKH H[KLELWV WKH MXU\   H[HUFLVHRIMXGLFLDOGLVFUHWLRQ6HH8QLWHG6WDWHVY+DUULV
UHYLHZHGLQFOXGHGFDUSHWVDPSOHVQRWUHODWHGWRWKHFULPHIRU             )G   WK &LU   0RUHRYHU DV %XHOO
ZKLFK%XHOOZDVEHLQJWULHGWKHMXU\ZDVQRWPDGHDZDUHRI              KLPVHOIUHFRJQL]HVKDEHDVUHYLHZGRHVQRWRUGLQDULO\H[WHQG
WKLV IDFW DQG ZDV WROG WR GLVUHJDUG WKRVH VDPSOHV  %XHOOjV    WRVWDWHFRXUWUXOLQJVRQWKHDGPLVVLELOLW\RIHYLGHQFH6HH
FRXQVHODJUHHGWRWKHLGHQWLILFDWLRQV0RUHRYHU%XHOOGRHV             %XUJHWW Y 7H[DV  86    )XVRQ Y
QRWFRQWHQGWKDWWKLVUHVSRQVHZDVLQHUURURUZDVLPSURSHU             sDJR)GWK&LU%HOOY$UQ)G
                                                                         WK&LU%XHOOFODLPVKRZHYHUWKDWWKLV
   7KHFDVHVFLWHGE\%XHOODUHQRWDSSOLFDEOHWRWKLVVLWXDWLRQ        HUURUGHSULYHGKLPRIIXQGDPHQWDOFRQVWLWXWLRQDOJXDUDQWHHV
DVHDFKUHODWHVWRMXU\LQVWUXFWLRQV,QWKRVHVLWXDWLRQVFRXUWV       XQGHUWKH)LIWK6L[WK(LJKWKDQG)RXUWHHQWK$PHQGPHQWV
KHOG WKDW D GHIHQGDQW PXVW EH SUHVHQW LQ RUGHU WR YRLFH        VXFKWKDWDIHGHUDOFRXUWPXVWLQTXLUHLQWRWKHVWDWHUXOLQJRQ
REMHFWLRQVWRWKHLQVWUXFWLRQVJLYHQWRWKHMXU\6HH)LOOLSSRQ         KDEHDVUHYLHZ6HH)XVRQ)GDW%HOO)GDW
Y$OELRQ9HLQ6ODWH&R86(YDQVY               7KH6WDWHFRUUHFWO\SRLQWVRXWLQUHVSRQVHWKDWmHUURUVRI
8QLWHG6WDWHV)GWK&LUsRQHVY            VWDWHODZHVSHFLDOO\HUURUVEDVHGRQDWULDOFRXUWjVHYLGHQWLDU\
6WDWH2KLR6W2KLR$PHHWLQJVLPLODU              UXOLQJVGRQRWLQDQGRIWKHPVHOYHVYLRODWHWKHFRQVWLWXWLRQl
WRDEHQFKFRQIHUHQFHDWZKLFKWKHWULDOMXGJHDQGFRXQVHO               1HXPDQQYsRUGDQ)GWK&LUVHH
LGHQWLILHG FDUSHW VDPSOHV LV QRW VXIILFLHQWO\ VLPLODU WR MXU\    DOVR/XQG\)GDW
LQVWUXFWLRQV VXFK WKDW %XHOOjV SUHVHQFH ZDV UHTXLUHG
)XUWKHUPRUH%XHOOjVFRXQVHODJUHHGWRWKHDQVZHUJLYHQWR                  %XHOO DVVHUWV WKDW WKH WULDO FRXUWjV GHFLVLRQ WR H[FOXGH
WKHMXU\%XHOOjVDEVHQFHIURPWKLVSURFHHGLQJGLGQRWYLRODWH          3HQURGjVWHVWLPRQ\YLRODWHG%XHOOjVULJKWVDWERWKWKHIDFW
KLVFRQVWLWXWLRQDOULJKWV                                               ILQGLQJDQGSHQDOW\SKDVHVRIKLVWULDO:LWKUHJDUGWRWKH
                                                                         IDFWILQGLQJSKDVH%XHOOVWDWHVWKDWWKUHHZLWQHVVHVFODLPHG
  3URVHFXWRULDO0LVFRQGXFW                                           WRKDYHVHHQ%XHOOLQDEDOOSDUNRQHZHHNEHIRUH+DUULVRQjV
                                                                         DEGXFWLRQ WZR ZLWQHVVHV FODLPHG WR KDYH VHHQ KLP LQ WKH
  %XHOOFKDOOHQJHVWKHGLVWULFWFRXUWjVGHFLVLRQUHMHFWLQJKLV           SDUNRQWKHGD\+DUULVRQZDVNLGQDSSHGDQGRQHFODLPHGWR
FODLPWKDWKHZDVGHQLHGKLVFRQVWLWXWLRQDOULJKWVDVDUHVXOWRI        KDYHVHHQKLPOHDYLQJWKHVLWHZKHUHWKHERG\ZDVIRXQG
SURVHFXWRULDO PLVFRQGXFW  %XHOO GLG QRW REMHFW WR WKH
SURVHFXWLRQjVUHPDUNVDWWULDOQRUGLGKHUDLVHWKHFODLPLQKLV          %XHOO VWDWHV WKDW WZR RI WKH WKUHH ZLWQHVVHV IURP WKH
                                                                         EDOOSDUNLGHQWLILHG%XHOORQO\DIWHUVHHLQJKLPRQWHOHYLVLRQ
       %XHOOY0LWFKHOO                                1R       1R                               %XHOOY0LWFKHOO     

DQGLQWKHQHZVSDSHUVL[WHHQPRQWKVDIWHUKHZDVVXSSRVHGO\                   3UHVHQFHDW&ULWLFDO6WDJHVRI7ULDO
DWWKHEDOOSDUN%XHOOQRWHVWKDWWKHWZRH\HZLWQHVVHVIURP
WKHSDUNJDYHVLPLODUGHVFULSWLRQVRIWKHNLGQDSSHUEXWFRXOG                 %XHOOWDNHVLVVXHZLWKWKHGLVWULFWFRXUWjVUHMHFWLRQRIKLV
QRWLGHQWLI\%XHOOLQFRXUW7KHZLWQHVVZKRFODLPHGWRKDYH               FODLPWKDWKHZDVGHSULYHGRIKLVULJKWWREHSUHVHQW DWDOO
VHHQ%XHOOOHDYLQJWKHVLWHZKHUHWKHERG\ZDVIRXQGFODLPHG                FULWLFDOVWDJHVRIKLVWULDO%XHOOKDVSURFHGXUDOO\GHIDXOWHG
WR KDYH VHHQ D PDQ GULYLQJ D UDVSEHUU\FRORUHG FDU  7KH          WKLVFODLP$WWULDO%XHOOGLGQRWUHTXHVWWREHSUHVHQWIRUWKH
ZLWQHVVjV REVHUYDWLRQ ZDV OLPLWHG WR ILYH VHFRQGV DV KLV            PHHWLQJV LQ FKDPEHUV IRU ZKLFK KH QRZ FODLPV KH VKRXOG
SLFNXS WUXFN SDVVHG WKH FDU  7KH ZLWQHVV LGHQWLILHG %XHOO         KDYHEHHQSUHVHQW,QDGGLWLRQWKHFODLPZDVQRWLQFOXGHGLQ
DIWHUVHHLQJKLPRQWHOHYLVLRQDQGEHLQJVKRZQDSLFWXUHRID               %XHOOjV GLUHFW DSSHDO QRU LQ KLV SRVWFRQYLFWLRQ SHWLWLRQ
YDQ%XHOODQGDFDU                                                      (YHQLIZHORRNWRWKHVXEVWDQFHRIWKLVFODLPKRZHYHULWLV
                                                                            PHULWOHVV
  3HQURGLQWHQGHGWRWHVWLI\DVWRWKHIDFWRUVLQYROYHGLQWKH
PHQWDOSURFHVVHVRILGHQWLILFDWLRQVDQGWRUHQGHUKLVRSLQLRQ                  7KH 6XSUHPH &RXUW KDV UHFRJQL]HG WKDW mD GHIHQGDQW LV
DERXW WKH DFFXUDF\ DQG FUHGLELOLW\ RI WKH VSHFLILF                   JXDUDQWHHGWKHULJKWWREHSUHVHQWDWDQ\VWDJHRIWKHFULPLQDO
LGHQWLILFDWLRQ WHVWLPRQ\ RI WKH ZLWQHVVHV  7KH WULDO FRXUW         SURFHHGLQJ WKDW LV FULWLFDO WR WKH RXWFRPH LI KLV SUHVHQFH
GHQLHGWKHUHTXHVWVWDWLQJm,WjVWKH&RXUWjVRSLQLRQWKDWWKH            ZRXOGFRQWULEXWHWRWKHIDLUQHVVRIWKHSURFHGXUHl.HQWXFN\
MXU\FDQPDNHWKHGHWHUPLQDWLRQRQZKRWREHOLHYHDQGZKR                   Y6WLQFHU867KH&RXUWVWDWHGWKDW
QRWWREHOLHYHXVLQJWKHWHVWWKDW,ZLOOGHVFULEHWRWKHPXVLQJ          LWPXVWEHVKRZQWKDWWKHSUHVHQFHmZRXOGKDYHEHHQXVHIXO
WKHLUFRPPRQVHQVHDQGWKH\GRQRWQHHGDQH[SHUWWRKHOS                  LQHQVXULQJDPRUHUHOLDEOHGHWHUPLQDWLRQl,GDW
WKHPGRWKDWl
                                                                              7KH FRQIHUHQFH LQ FKDPEHUV DW ZKLFK %XHOO FODLPV KH
   2QDSSHDOWKH2KLR6XSUHPH&RXUWVWDWHGWKDWmWKHH[SHUW                VKRXOGKDYHEHHQSUHVHQWUHODWHGWRDJUDSKSUHSDUHGE\$JHQW
WHVWLPRQ\ RI DQ H[SHULPHQWDO SV\FKRORJLVW UHJDUGLQJ WKH               $ODQ5RXELOODUGRIWKH)%,WKDWLQFOXGHGFDUSHWILEHUVDPSOHV
FUHGLELOLW\ RI WKH LGHQWLILFDWLRQ WHVWLPRQ\ RI D SDUWLFXODU          IURP%XHOOjVKRPHDQGYDQDQGVDPSOHVIURPDEHGVSUHDG
ZLWQHVVLVLQDGPLVVLEOHXQGHU(YLG5DEVHQWDVKRZLQJ                IRXQG DW WKH VDPH WLPH DV WKH YLFWLPjV ERG\  5RXELOODUG
WKDWWKHZLWQHVVVXIIHUVIURPDPHQWDORUSK\VLFDOLPSDLUPHQW               WHVWLILHGWKDWmWKHUHZHUHVHYHUDOLWHPVWKDW,DOVRH[DPLQHGLQ
ZKLFKZRXOGDIIHFWWKHZLWQHVVjVDELOLW\WRREVHUYHRUUHFDOO              WKLVFDVHDQGWKH\DSSHDURQWKLVFKDUWDQG\RXFDQVHHWKDW
HYHQWVl6WDWHY%XHOO1(GDWHPSKDVLVDGGHG               WKH\IDOOULJKWLQWRWKHVDPHDEVRUSWLRQl7KHMXU\TXHVWLRQHG
,Q DGGLWLRQ WKH FRXUW IRXQG WKDW mWKH HYLGHQFH RI WKH             VRPH RI WKHVH XQLGHQWLILHG DGGLWLRQDO VDPSOHV VSHFLILFDOO\
GHIHQGDQWjVJXLOWZDVEDVHGSULPDULO\RQSK\VLFDOHYLGHQFH                  DVNLQJZKHUHWKH\ZHUHIRXQG,QFKDPEHUVLQDQVZHUWRD
UDWKHUWKDQLGHQWLILFDWLRQWHVWLPRQ\,QOLJKWRIWKHVXEVWDQWLDO          TXHVWLRQIRUWKHWULDOFRXUWMXGJHWKHSURVHFXWLRQLQGLFDWHG
SK\VLFDOHYLGHQFHLWFDQQRWEHVDLGWKDWµLWLVPRUHSUREDEOH              WKDWVRPHRIWKHVDPSOHVDERXWZKLFKWKHMXU\LQTXLUHGZHUH
WKDQ QRW WKDW WKH >H[FOXVLRQ@ DIIHFWHG WKH YHUGLFWjl  ,ELG       JDWKHUHGLQDQLQYHVWLJDWLRQUHODWLQJWRDQRWKHUFULPH
LQWHUQDOFLWDWLRQVRPLWWHG:HDJUHHZLWKWKH2KLR6XSUHPH
                                                                              7KHMXU\TXHVWLRQVZHUHUHVROYHGLQZKDWWKH6WDWHDVVHUWV
                                                                            ZDVDSURFHHGLQJmDNLQWRDEHQFKFRQIHUHQFHl&RXQVHOIRU
                                                                           ERWK%XHOODQGWKH6WDWHZHUHSUHVHQWDWWKHPHHWLQJ7KH\
      %XHOO DUJXHV WKDW WKLV ODQJXDJH EHFRPHV LPSRUWDQW ZKHQ LW ZDV ODWHU
                                                                            GLVFXVVHG DQG DJUHHG WR DQ LGHQWLILFDWLRQ RI WKH FDUSHW
GLVFRYHUHG WKDW RQH RI WKH ZLWQHVVHV DERXW ZKRP 3HQURG LQWHQGHG WR
                                                        6HH LQIUD 6HFWLRQ   VDPSOHV%XHOOjVFRXQVHOVSHFLILFDOO\DJUHHGWRWKHDQVZHU
                                                                            JLYHQWRWKHMXU\
WHVWLI\ UHFHLYHG WUHDWPHQW DW D PHQWDO KHDOWK FHQWHU
,,,%   +RZHYHU DW PRVW WKLV LV DQ HUURU RI VWDWH ODZ WKDW LV QRW
FRJQL]DEOH RQ KDEHDV UHYLHZ   6HH (VWHOOH  86 DW 
    %XHOOY0LWFKHOO                              1R       1R                                 %XHOOY0LWFKHOO      

DQXQQDPHG\RXQJZRPDQZDVDOVRK\SQRWL]HG6HFRQGWKH               &RXUW DQG FRQFOXGH XSRQ WKH UHYLHZ RI WKH HYLGHQFH
2KLR &RXUW RI $SSHDOV VWDWHG WKDW WKH SRVWK\SQRWLF             SUHVHQWHG DW %XHOOjV WULDO WKDW WKH H[FOXVLRQ RI 3HQURGjV
LQIRUPDWLRQIURP:LOVRQZDVHVVHQWLDOO\WKHVDPHDVWKHSUH           WHVWLPRQ\GLGQRWDIIHFW%XHOOjVFRQVWLWXWLRQDOULJKWV
K\SQRWLF LQIRUPDWLRQ :LOVRQ VXSSOLHG WR WKH SROLFH  7KH
FRXUWLQGLFDWHGWKDWWKHUHZDVQRDGPLVVLRQRIK\SQRWLFDOO\              $VWRWKHSHQDOW\SKDVHRIWKHWULDO%XHOOQRWHVWKDW2+,2
UHIUHVKHGWHVWLPRQ\WKDWZDVRIDQ\VLJQLILFDQFH7KLUGWKH          5(9 &2'('SURYLGHVWKDWm>W@KHGHIHQGDQW
&RXUW RI $SSHDOV FRQFOXGHG WKDW HYHQ LI WKH K\SQRWLFDOO\       VKDOOEHJLYHQJUHDWODWLWXGHLQWKHSUHVHQWDWLRQRIHYLGHQFHRI
UHIUHVKHG WHVWLPRQ\ RI 0LGGOHWRQ ZDV HOLPLQDWHG IURP             WKH PLWLJDWLQJ IDFWRUV VHW IRUWK LQ GLYLVLRQ % RI VHFWLRQ
FRQVLGHUDWLRQ WKHUH ZDV VXIILFLHQW HYLGHQFH WR FRQVWLWXWH        RI WKH 5HYLVHG &RGH DQG RI DQ\ RWKHU IDFWV LQ
RYHUZKHOPLQJSURRIRI%XHOOjVJXLOW:HDJUHH6XEVWDQWLDO          PLWLJDWLRQ RI WKH VHQWHQFH RI GHDWKl  %XHOO VWDWHV WKDW KLV
SK\VLFDOHYLGHQFHVXSSRUWHG%XHOOjVFRQYLFWLRQ,QDGGLWLRQ          GHIHQVH FRXQVHO PDGH D WDFWLFDO GHFLVLRQ QRW WR SUHVHQW
:LOVRQjVWHVWLPRQ\ZKLFKZDVQRWVXEVWDQWLDOO\DIIHFWHGE\            PLWLJDWLQJHYLGHQFHUHJDUGLQJ%XHOOjVSDVWUHO\LQJLQVWHDGRQ
KLV K\SQRVLV DQG FLUFXPVWDQWLDO HYLGHQFH UHODWLQJ WR WKH       UHVLGXDOGRXEW%XHOODUJXHVWKDWWKHH[SHUWWHVWLPRQ\VKRXOG
PDQQHULQZKLFKWKHFULPHZDVFRPPLWWHGDOVRFRQWULEXWHGWR            KDYHEHHQDOORZHGDVDIRUPRIPLWLJDWLQJHYLGHQFHUHODWLQJ
%XHOOjVFRQYLFWLRQ1HLWKHUWKHGLVFORVXUHWKDWZLWQHVVHVKDG         WRUHVLGXDOGRXEW
EHHQK\SQRWL]HGQRUWKHVXSSUHVVLRQRIK\SQRWLFDOO\UHIUHVKHG
WHVWLPRQ\ZRXOGKDYHFUHDWHGDUHDVRQDEOHSUREDELOLW\WKDW                %XHOOSURYLGHVQROHJDOVXSSRUWIRUWKHFODLPWKDW3HQURGjV
WKHUHVXOWRI%XHOOjVWULDOZRXOGKDYHEHHQGLIIHUHQW               H[SHUW WHVWLPRQ\ LV D W\SH RI mIDFW>@ LQ PLWLJDWLRQ RI WKH
                                                                       VHQWHQFH RI GHDWKl FRQWHPSODWHG XQGHU 2+,2 5(9 &2'(
   :HDOVRUHMHFW%XHOOjVDUJXPHQWUHJDUGLQJ:LOVRQjVEULHI            '$OORIWKHIDFWRUVVHWIRUWKLQ
WUHDWPHQWDWDPHQWDOKHDOWKIDFLOLW\:HQRWHWKDWLQGHQ\LQJ        ZKLFK'FURVVUHIHUHQFHVFRQFHUQmWKHQDWXUH
%XHOOjVLQHIIHFWLYHDVVLVWDQFHRIWULDOFRXQVHOFODLPSUHGLFDWHG       DQGFLUFXPVWDQFHVRIWKHRIIHQVH>DQG@WKHKLVWRU\FKDUDFWHU
RQ WULDO FRXQVHOjV IDLOXUH WR GLVFRYHU :LOVRQjV PHQWDO          DQGEDFNJURXQGRIWKHRIIHQGHUlDQGDUHWREHFRQVLGHUHGDV
FRQGLWLRQWKH2KLR&RXUWRI$SSHDOVLQGLFDWHGWKDW:LOVRQjV           PLWLJDWLQJHYLGHQFHWRGHWHUPLQHZKHWKHUWKHGHDWKSHQDOW\
WHVWLPRQ\KHOSHGUDWKHUWKDQKXUW%XHOOVLQFH:LOVRQWKHRQO\         VKRXOGEHLPSRVHG3HQURGjVWHVWLPRQ\UHODWHVWRH\HZLWQHVV
H\HZLWQHVVWRWKHDEGXFWLRQKDGWURXEOH LGHQWLI\LQJ%XHOO           LGHQWLILFDWLRQ WKDW FRQFHUQV ZKHWKHU %XHOO FRPPLWWHG WKH
IDLOLQJWRSLFNKLP RXW RI D SKRWRDUUD\RIVXVSHFWV$VD        RIIHQVHIRUZKLFKKHZDVIRXQGJXLOW\7KHWHVWLPRQ\GRHV
UHVXOWWKH&RXUWRI$SSHDOVGHWHUPLQHGWKDW%XHOOjVFRXQVHO           QRWFRQFHUQDPLWLJDWLQJIDFWRUWKDWVKRXOGEHFRQVLGHUHGDIWHU
ZDV QRW LQHIIHFWLYH IRU IDLOLQJ WR GLVFRYHU LQIRUPDWLRQ         DILQGLQJRIJXLOWLVPDGH,QGHHGWKLVFRXUWUHFHQWO\QRWHG
UHJDUGLQJ :LOVRQjV PHQWDO VWDWH  ,Q D VLPLODU ZD\ WKH       WKDW2KLRODZGRHVQRWUHFRJQL]HUHVLGXDOGRXEWWKHEDVLVIRU
GLVFORVXUHRI:LOVRQjVPHQWDOVWDWHZRXOGQRWKDYHFUHDWHGD           ZKLFK%XHOOFODLPVWKDW3HQURGjVWHVWLPRQ\VKRXOGKDYHEHHQ
UHDVRQDEOHSUREDELOLW\WKDWWKHUHVXOWRI%XHOOjVWULDOZRXOG          DGPLWWHGDVDQDFFHSWDEOHPLWLJDWLQJIDFWRU
KDYHEHHQGLIIHUHQW:LOVRQjVWHVWLPRQ\DOUHDG\KDGLQGLFLD
RI XQUHOLDELOLW\ \HW WKH MXU\ VWLOO IRXQG %XHOO JXLOW\ DQG     2XU V\VWHP UHTXLUHV WKDW WKH SURVHFXWLRQ SURYH DOO
DVVLJQHGWKHGHDWKSHQDOW\%XHOOKDVQRWGHPRQVWUDWHGWKDW            HOHPHQWV RI D FULPH EH\RQG D UHDVRQDEOH GRXEW
HYHQ LI WKH MXU\ RU WKH GHIHQVH NQHZ RI :LOVRQjV EULHI         7KHUHIRUH LW LV LOORJLFDO WR ILQG WKDW WKH GHIHQGDQW LV
WUHDWPHQW DW D PHQWDO KHDOWK FHQWHU WKHUH LV D UHDVRQDEOH      JXLOW\ EH\RQG D UHDVRQDEOH GRXEW \HW WKHQ GRXEW WKH
SUREDELOLW\ WKDW WKH RXWFRPH RI KLV WULDO ZRXOG KDYH EHHQ       FHUWDLQW\RIWKHJXLOW\YHUGLFWE\UHFRPPHQGLQJPHUF\LQ
GLIIHUHQW                                                               FDVH D PLVWDNH KDV RFFXUUHG   5HVLGXDO GRXEW FDVWV D
                                                                         VKDGRZRYHUWKHUHOLDELOLW\DQGFUHGLELOLW\RIRXUOHJDO
    %XHOOY0LWFKHOO                                 1R       1R                                  %XHOOY0LWFKHOO      

  V\VWHP LQ WKDW LW DOORZV WKH MXU\ WR VHFRQGJXHVV LWV          SURFHHGLQJ ZRXOG KDYH EHHQ GLIIHUHQW  $ µUHDVRQDEOH
  YHUGLFWRIJXLOWLQWKHVHSDUDWHSHQDOW\SKDVHRIDPXUGHU              SUREDELOLW\j LV D SUREDELOLW\ VXIILFLHQW WR XQGHUPLQH
  WULDO                                                           FRQILGHQFH LQ WKH RXWFRPHl  8QLWHG 6WDWHV Y %DJOH\ 
                                                                          86
  5HVLGXDO GRXEW LV QRW DQ DFFHSWDEOH PLWLJDWLQJ IDFWRU
  XQGHU5&%VLQFHLWLVLUUHOHYDQWWRWKHLVVXH                 %XHOOFRQWHQGVWKDWWKHWULDOFRXUWFRPPLWWHGFRQVWLWXWLRQDO
  RIZKHWKHUWKHGHIHQGDQWVKRXOGEHVHQWHQFHGWRGHDWK                 HUURU LQ LWV ILQGLQJ WKDW WKH IDLOXUH RI SURVHFXWRUV WR WHOO
                                                                          %XHOOjVDWWRUQH\VWKDW WKUHHZLWQHVVHVKDGEHHQK\SQRWL]HG
&ROHPDQ Y 0LWFKHOO  )G DW  TXRWLQJ 6WDWH Y           ZDVmQHJOLJHQWDQGQRWLQDQ\ZD\LQWHQWLRQDOl%XHOODVVHUWV
0F*XLUH1(G2KLR                              WKDWWKHSURVHFXWLRQDFWHGLQWHQWLRQDOO\SRLQWLQJWRHYLGHQFH
                                                                          LQGLFDWLQJWKDWWKHSURVHFXWLRQZDVDZDUHWKDWWKHLQIRUPDWLRQ
  %XHOO LV XQDEOH WR GHPRQVWUDWH WKDW WKH H[FOXVLRQ RI            H[LVWHG7KHPRWLYHVRIWKHSURVHFXWLRQDUHQRWWKHVXEMHFWRI
3HQURGjV WHVWLPRQ\ DW HLWKHU WKH JXLOW SKDVH RU WKH SHQDOW\      RXULQTXLU\KRZHYHU7KH6XSUHPH&RXUWLQVWUXFWVXVWKDW
SKDVH RI KLV WULDO URVH WR WKH OHYHO RI FRQVWLWXWLRQDO HUURU   RXUUHYLHZPXVWIRFXVRQZKHWKHUmWKHHYLGHQFHLVPDWHULDO
0RUHRYHUWKLVFRXUWKDVUHFRJQL]HGWKDWDKDEHDVSHWLWLRQHU              HLWKHUWRJXLOWRUSXQLVKPHQWLUUHVSHFWLYHRIWKHJRRGIDLWKRU
GRHV QRW KDYH D FRQVWLWXWLRQDO ULJKW WR WKH SUHVHQWDWLRQ RI      WKH EDG IDLWK RI WKH SURVHFXWLRQl %UDG\  86 DW 
H[SHUW WHVWLPRQ\ RQ WKH UHOLDELOLW\ RI H\HZLWQHVV                   HPSKDVLVDGGHG
LGHQWLILFDWLRQ6HH0RRUHY7DWH)GWK
&LU7KHFRXUWLQ0RRUHQRWHGWKDWWKHH[DPLQDWLRQ                   %XHOO FRQWHQGV WKDW WKLV LQIRUPDWLRQ ZDV PDWHULDO  +H
DQGFURVVH[DPLQDWLRQRIDSDUWLFXODUZLWQHVVDWWULDODIIRUGHG           VWDWHVWKDW5R\:LOVRQjVREVHUYDWLRQVDWWKHWLPHRI.ULVWD
WKHMXU\DQDGHTXDWHRSSRUWXQLW\WRDVVHVVWKHUHOLDELOLW\RIWKH         +DUULVRQjVDEGXFWLRQZHUHWKHRQO\HYLGHQFHSODFLQJ%XHOO
ZLWQHVVjVLGHQWLILFDWLRQRIWKHGHIHQGDQW,GDW7KH             DQG KLV YDQ DW WKH VFHQH  ,Q DGGLWLRQ %XHOO DVVHUWV WKDW
FRXUWFRQFOXGHGWKDWmZKLOHWKHH[SHUW
VWHVWLPRQ\PD\ZHOO               :LOVRQjV WHVWLPRQ\ ZDV FRUURERUDWHG E\ WKH WHVWLPRQ\ RI
KDYH JLYHQ WKH MXURUV DQRWKHU SHUVSHFWLYH IURP ZKLFK WR           6WHSKDQLH %DNHU DQRWKHU ZLWQHVV ZKR DOOHJHGO\ ZDV
DVVHVV>WKHH\HZLWQHVVj@WHVWLPRQ\ZHGRQRWEHOLHYHWKDWWKLV           K\SQRWL]HG%XHOODUJXHVWKDWLIWKHSURVHFXWLRQKDGSURYLGHG
SHUVSHFWLYHZDVFRQVWLWXWLRQDOO\UHTXLUHG,ELG$OWKRXJKDV           KLPZLWKWKLVHYLGHQFHWKHUHLVDUHDVRQDEOHSUREDELOLW\WKDW
%XHOOSRLQWVRXW0RRUHGLGQRWLQYROYHDELIXUFDWHGWULDOWKLV          KHZRXOGKDYHFRQGXFWHGGLIIHUHQWWULDOSUHSDUDWLRQDQGFURVV
IDFW GRHV QRW DIIHFW LWV DSSOLFDELOLW\ WR WKLV FDVH VLQFH QR    H[DPLQDWLRQ DQG WKH RXWFRPH RI WKH WULDO FRXOG KDYH EHHQ
FRQVWLWXWLRQDO HUURU DURVH HLWKHU DW WKH JXLOW SKDVH RU WKH      GLIIHUHQW
SHQDOW\SKDVHRI%XHOOjVWULDOE\WKHH[FOXVLRQRI3HQURGjV
WHVWLPRQ\                                                                 :HDJUHHZLWKWKHUHDVRQLQJRIWKH2KLR&RXUWRI$SSHDOV
                                                                          ZKLFKFRQFOXGHGWKDWWKHK\SQRVLVRIWKHZLWQHVVHVGLGQRW
  ,QHIIHFWLYH$VVLVWDQFHRI&RXQVHO                                   DIIHFW WKH UHVXOW RI %XHOOjV WULDO  )LUVW WKH 2KLR &RXUW RI
                                                                          $SSHDOVGLVSXWHGWKHWULDOFRXUWjVFRQFOXVLRQWKDW%DNHUZDV
   %XHOO FODLPV WKDW WKH GLVWULFW FRXUW HUUHG LQ UHMHFWLQJ KLV   K\SQRWL]HG  7KH &RXUW RI $SSHDOV LQGLFDWHG WKHUH LV QR
FODLPVRILQHIIHFWLYHDVVLVWDQFHRIWULDODQGDSSHOODWHFRXQVHO          HYLGHQFHLQWKHUHFRUGWKDW%DNHUZDVK\SQRWL]HG:HQRWH
%XHOO FKRVH QRW WR SXUVXH DQ LQHIIHFWLYH DVVLVWDQFH RI WULDO     WKDW LQ KLV EULHI WR WKLV FRXUW %XHOO GRHV QRW SRLQW WR DQ\
FRXQVHOFODLPRQGLUHFWUHYLHZ%XHOOLQFOXGHGDQLQHIIHFWLYH            HYLGHQFHLQWKHUHFRUGVSHFLILFDOO\LQGLFDWLQJWKDW%DNHUZDV
DVVLVWDQFH RI WULDO FRXQVHO FODLP LQ KLV SRVWFRQYLFWLRQ           K\SQRWL]HGEXWLQVWHDGKHVLPSO\UHOLHVRQWKHWHVWLPRQ\RI
SHWLWLRQ6LQFH%XHOOZDVUHSUHVHQWHGE\WKHVDPHFRXQVHODW             WZRSROLFHRIILFHUVDWWKHSRVWFRQYLFWLRQKHDULQJVWDWLQJWKDW
WULDODQGRQGLUHFWDSSHDOLWZDVSURSHUIRUKLPWRUDLVHKLV
    %XHOOY0LWFKHOO                                 1R        1R                               %XHOOY0LWFKHOO     

  :LWKKROGLQJRI(YLGHQFH                                              LQHIIHFWLYHDVVLVWDQFHRIWULDOFRXQVHOFODLPVLQLWLDOO\LQKLV
                                                                           SRVWFRQYLFWLRQ SHWLWLRQ  6HH &ROH  1(G DW 
   %XHOO DVVHUWV WKDW WKH GLVWULFW FRXUW HUUHG LQ UHMHFWLQJ KLV   7KHUHIRUHWKHVHFODLPVZHUHQRWGHIDXOWHGDQGDUHSUHVHUYHG
FODLP WKDW KH ZDV SUHMXGLFHG E\ WKH 6WDWH ZLWKKROGLQJ              IRUKDEHDVUHYLHZ
HYLGHQFH WKDW WKUHH WULDO ZLWQHVVHV ZHUH K\SQRWL]HG  7KLV
FODLP ZDV SURSHUO\ SUHVHQWHG DQG FRQVLGHUHG E\ WKH 2KLR               ,Q6WULFNODQG86DWWKH6XSUHPH&RXUWKHOGWKDW
FRXUWV LQ SRVWFRQYLFWLRQ SURFHHGLQJV  %XHOO DOVR QRZ              mWKHEHQFKPDUNIRUMXGJLQJDQ\FODLPRILQHIIHFWLYHQHVVPXVW
FRQWHQGVWKDWWKH6WDWHIDLOHGWRGLVFORVHHYLGHQFHUHJDUGLQJ              EH ZKHWKHU FRXQVHOjV FRQGXFW VR XQGHUPLQHG WKH SURSHU
ZLWQHVV5R\:LOVRQjVPHQWDOFDSDFLW\7KLVFODLPZDVQRW                  IXQFWLRQLQJRIWKHDGYHUVDULDOSURFHVVWKDWWKHWULDOFDQQRWEH
UDLVHGLQ%XHOOjVGLUHFWDSSHDORUKLVSRVWFRQYLFWLRQSHWLWLRQ           UHOLHGRQDVKDYLQJSURGXFHGDMXVWUHVXOWl7KHGHIHQGDQW
DOWKRXJK%XHOOZDVDZDUHRIWKLVFODLPZKHQKHSXUVXHGKLV                 PXVWVKRZWKDWFRXQVHOjVSHUIRUPDQFHZDVGHILFLHQWDQGWKDW
SRVWFRQYLFWLRQUHPHGLHVVLQFHKHDUJXHGDWWKHWLPHWKDWKLV              WKHSHUIRUPDQFHSUHMXGLFHGWKHGHIHQVH,GDW:LWK
WULDOFRXQVHOZDVLQHIIHFWLYHLQLQYHVWLJDWLQJ5R\:LOVRQjV                UHJDUGWRVKRZLQJSUHMXGLFHWKH6XSUHPH&RXUWODWHUVWDWHG
PHQWDO VWDWH   :H DJUHH ZLWK WKH 6WDWH WKDW %XHOOjV SRVW      WKDW WKH FRPSRQHQW mIRFXVHV RQ WKH TXHVWLRQ ZKHWKHU
FRQYLFWLRQLQHIIHFWLYHDVVLVWDQFHRIFRXQVHOFODLPGRHVQRW                FRXQVHOjVGHILFLHQWSHUIRUPDQFHUHQGHUVWKHUHVXOWRIWKHWULDO
FRQVWLWXWH D IDLU SUHVHQWDWLRQ RI WKH XQGHUO\LQJ FODLP IRU         XQUHOLDEOHRUWKHSURFHHGLQJIXQGDPHQWDOO\XQIDLUl/RFNKDUW
IHGHUDO KDEHDV SXUSRVHV  (YHQ LI ZH RYHUORRN %XHOOjV              Y)UHWZHOO86+RZHYHUWKLVFRXUW
SURFHGXUDOGHIDXOWDQGUHYLHZWKLVFODLPKRZHYHULWODFNV                KDVQRWHGWKDWXQGHU6WULFNODQGVWUDWHJLFFKRLFHVE\GHIHQVH
PHULW                                                                    FRXQVHODUHmYLUWXDOO\XQFKDOOHQJHDEOHl0HHNVY %HUJHQ
                                                                           )GWK&LU
  %XHOOVWDWHVWKDWWKUHHZLWQHVVHVZHUHK\SQRWL]HGGXULQJWKH
FRXUVH RI WKH LQYHVWLJDWLRQ UHJDUGLQJ .ULVWD +DUULVRQjV                 %XHOOUHIHUVWKLVFRXUWWRDFDWDORJRIVSHFLILFLQVWDQFHVRI
PXUGHU  5R\ :LOVRQ 6WHSKDQLH %DNHU DQG 'RQDOG                    DOOHJHGLQHIIHFWLYHDVVLVWDQFHRIKLVWULDOFRXQVHOFRQWDLQHGLQ
0LGGOHWRQ,QDGGLWLRQ%XHOOVWDWHVWKDWGXULQJWKHFRXUVHRI            WKHVHYHQWHHQWKFODLPLQ%XHOOjVKDEHDVSHWLWLRQ%XHOOVWDWHV
SRVWFRQYLFWLRQSURFHHGLQJVLWZDVOHDUQHGWKDW:LOVRQZKR               WKDW mVLJQLILFDQW H[DPSOHVl LQFOXGH FRXQVHOjV IDLOXUH WR
ZDVHOHYHQDWWKHWLPHRI.ULVWD+DUULVRQjVDEGXFWLRQKDG                 LQWHUYLHZZLWQHVVHV:LOVRQ%DNHUDQG0LGGOHWRQEHIRUH
EHHQWUHDWHGEULHIO\DWDPHQWDOKHDOWKFHQWHU5HFRUGVDWWKH            WULDO  OHDUQ WKDW WKH\ KDG EHHQ K\SQRWL]HG E\ ODZ
LQVWLWXWLRQZKHUH:LOVRQZDVWUHDWHGLQGLFDWHWKDWKHVXIIHUHG             HQIRUFHPHQWDJHQWVDQGOHDUQWKDW:LOVRQKDGXQGHUJRQH
IURP DQ DGMXVWPHQW GLVRUGHU GLVWXUEDQFH RI FRQGXFW DQG            PHQWDOWUHDWPHQW%XHOODVVHUWVWKDWWKHSURVHFXWLRQjVIDLOXUH
ERUGHUOLQHLQWHOOHFWXDOIXQFWLRQLQJ                                     WRGLVFORVHWKLVLQIRUPDWLRQFUHDWHGD%UDG\YLRODWLRQ%XHOOjV
                                                                           VL[WKFODLPEXWKHDOVRDUJXHVWKDWKLVODZ\HUVVKRXOGKDYH
  %XHOODUJXHVWKDWWKHVXSSUHVVLRQRIWKLVHYLGHQFHYLRODWHV              REWDLQHGWKLVLQIRUPDWLRQWKHPVHOYHV%XHOOQRWHVWKDWKLV
%UDG\ Y 0DU\ODQG  86    ,Q %UDG\ WKH            WULDO FRXQVHO ZDV IXUQLVKHG ZLWK WKH ZLWQHVVHVj QDPHV DQG
6XSUHPH&RXUWVWDWHGWKDWmVXSSUHVVLRQE\WKHSURVHFXWLRQRI               DGGUHVVHVLQSUHWULDOGLVFRYHU\DQGNQHZWKHZLWQHVVHVZHQW
HYLGHQFHIDYRUDEOHWRDQDFFXVHGXSRQUHTXHVWYLRODWHVGXH                 WKURXJK H[WHQVLYH SUHWULDO LGHQWLILFDWLRQ SURFHGXUHV ZLWK
SURFHVV ZKHUH WKH HYLGHQFH LV PDWHULDO HLWKHU WR JXLOW RU         LQYHVWLJDWRUV DQG ZRXOG EH DVNHG WR PDNH LQFRXUW
SXQLVKPHQWLUUHVSHFWLYHRIWKHJRRGIDLWKRUEDGIDLWKRIWKH             LGHQWLILFDWLRQV%XHOODVVHUWVWKDWKLVWULDOFRXQVHONQHZWKDW
SURVHFXWLRQl  ,G DW   (YLGHQFH LV FRQVLGHUHG PDWHULDO        WKH\ZRXOGKDYHWRFKDOOHQJHWKHLQFRXUWLGHQWLILFDWLRQVDQG
mRQO\ LI WKHUH LV D UHDVRQDEOH SUREDELOLW\ WKDW KDG WKH          WKDW WKHUHIRUH WKHLU ODFN RI SUHSDUDWLRQ WR FRQIURQW WKHVH
HYLGHQFH EHHQ GLVFORVHG WR WKH GHIHQVH WKH UHVXOW RI WKH         ZLWQHVVHVZDVFRQVWLWXWLRQDOO\GHILFLHQW
    %XHOOY0LWFKHOO                               1R       1R                               %XHOOY0LWFKHOO      

  %XHOODOVRFRQWHQGVWKDWKLVFRXQVHOjVIDLOXUHWRLQYHVWLJDWH            7KH JUHDW EXON RI %XHOOjV DOOHJDWLRQV FRQFHUQ VWUDWHJLF
PLWLJDWLQJHYLGHQFHFRQVWLWXWHVLQHIIHFWLYHDVVLVWDQFHVLQFH           GHFLVLRQV WKDW GR QRW DPRXQW WR FRQVWLWXWLRQDOO\ GHILFLHQW
IDLOXUH WR LQYHVWLJDWH %XHOOjV EDFNJURXQG DQG GHYHORS             SHUIRUPDQFH  :LWK UHJDUG WR WKH SULPDU\ FODLP WR ZKLFK
HYLGHQFH mSURGXFHG WKH VFDQW\ SHQDOW\ SKDVH KHDULQJ               %XHOOGLUHFWVWKLVFRXUWjVDWWHQWLRQKLVDOOHJDWLRQVFRQFHUQLQJ
PLWLJDWLQJ>HYLGHQFH@l                                              FRXQVHOjV LQYHVWLJDWLRQ RI ZLWQHVVHV :LOVRQ %DUNHU DQG
                                                                        0LGGOHWRQ ZH QRWH WKDW %XHOOjV FRXQVHO UHYLHZHG WKH
  %XHOODVVHUWVWKDWKLVWULDOFRXQVHOjVGHFLVLRQVmFDQQRWEH           VWDWHPHQWVRIWKHVHZLWQHVVHVEHIRUHWULDO0RUHRYHU%XHOOLV
H[SODLQHGDZD\DVWULDOVWUDWHJ\l+HQRWHVWKDWLQ6WULFNODQG       XQDEOHWRGHPRQVWUDWHKRZWKHODFNRILQWHUYLHZVFRQGXFWHG
WKH&RXUWVWDWHGWKDWmFRXQVHOKDVDGXW\WRPDNHUHDVRQDEOH            E\ KLV FRXQVHO PDGH KLV WULDO IXQGDPHQWDOO\ XQIDLU  :LWK
LQYHVWLJDWLRQVRUWRPDNHDUHDVRQDEOHGHFLVLRQWKDWPDNHV              UHJDUG WR %XHOOjV FODLP WKDW KLV GHIHQVH FRXQVHO IDLOHG WR
SDUWLFXODULQYHVWLJDWLRQVXQQHFHVVDU\,QDQ\LQHIIHFWLYHQHVV          GLVFRYHUWKDWWKHVHZLWQHVVHVZHUHK\SQRWL]HGDQGWKDWRQH
FDVHDSDUWLFXODUGHFLVLRQQRWWRLQYHVWLJDWHPXVWEHGLUHFWO\         ZLWQHVVKDGXQGHUJRQHPHQWDOWUHDWPHQWZHFRQFOXGHWKDW
DVVHVVHGIRUUHDVRQDEOHQHVVLQDOOWKHFLUFXPVWDQFHVDSSO\LQJ          HYHQ LI WKH DFWLRQV RI %XHOOjV FRXQVHO ZHUH FRQVLGHUHG
DKHDY\PHDVXUHRIGHIHUHQFHWRFRXQVHOjVMXGJPHQWVl              GHILFLHQWKHQRWZDVQRWSUHMXGLFHGIRUWKHUHDVRQVZHGLVFXVV
86 DW   7KLV DUJXPHQW LV HVSHFLDOO\ IDXOW\ WKRXJK      EHORZLQUHMHFWLQJ%XHOOjVVL[WKFODLP,QWKHHQG%XHOOLV
EHFDXVHWKHSUHFLVHODQJXDJHTXRWHGE\%XHOOLQGLFDWHVWKDW             XQDEOHWRGHPRQVWUDWHKRZKLVWULDOFRXQVHOjVSHUIRUPDQFH
WKHUHVKRXOGEHmDKHDY\PHDVXUHRIGHIHUHQFHWRFRXQVHOjV              ZDVGHILFLHQWDQGSUHMXGLFHGKLVGHIHQVH
MXGJPHQWVl,ELG7KHEXONRIDOOHJDWLRQVWKDWIRUPWKHEDVLV
RI %XHOOjV FODLPV RI LQHIIHFWLYH DVVLVWDQFH RI WULDO FRXQVHO      %XHOODOVRSUHVHQWVYDULRXVFODLPVRILQHIIHFWLYHDVVLVWDQFH
FRQFHUQMXGJPHQWVWKDWKLVFRXQVHOPDGHGXULQJWKHFRXUVHRI            RIDSSHOODWHFRXQVHO7KHVHFODLPVZHUHQRWGHIDXOWHGIRUWKH
WKHLUUHSUHVHQWDWLRQRI%XHOODWWULDO7KH\GRQRWULVHWRWKH        UHDVRQV ZH GLVFXVVHG DERYH LQ UHYLHZLQJ %XHOOjV VHFRQG
OHYHORIFRQVWLWXWLRQDOLQHIIHFWLYHQHVV7KLVLVKLJKOLJKWHGE\        FODLP
WKHLQFRQVLVWHQFLHVLQ%XHOOjVRZQDUJXPHQWV7RVXSSRUWKLV
IRXUWKFODLPWKDWWKHWULDOFRXUWLPSURSHUO\H[FOXGHGH[SHUW              %XHOODUJXHVWKDWKLVDSSHOODWHFRXQVHOZDVLQHIIHFWLYHERWK
WHVWLPRQ\UHJDUGLQJH\HZLWQHVVLGHQWLILFDWLRQ%XHOODVVHUWHG           GXULQJKLVGLUHFWDSSHDODQGKLVSRVWFRQYLFWLRQSURFHHGLQJV
WKDWmGHIHQVHFRXQVHOPDGHDWDFWLFDOGHFLVLRQWRQRWSUHVHQW           %XHOODVVHUWVWKDWKHZDVSUHMXGLFHGE\IDLOXUHRIKLVDSSHOODWH
PLWLJDWLQJHYLGHQFHUHJDUGLQJ%XHOOjVSDVWUHO\LQJLQVWHDGRQ          FRXQVHOWRUDLVHWKHLVVXHVFDWDORJHGDVFODLPVWZHQW\VHYHQ
UHVLGXDOGRXEWl%XHOOQRZDUJXHVWKLVKLVWULDOFRXQVHOZDV           DQG WKLUW\WZR LQ KLV KDEHDV SHWLWLRQ  %XHOO VWUHVVHV KLV
LQHIIHFWLYH E\ QRW FRQGXFWLQJ LQYHVWLJDWLRQV QHFHVVDU\ WR         DSSHOODWHFRXQVHOjVIDLOXUHWRDSSHDOWKHWULDOFRXUWjVUHVSRQVH
SUHVHQWFRPSHOOLQJPLWLJDWLQJHYLGHQFH%XHOOFDQQRWKDYHLW           WRWKHMXU\jVXQDQLPLW\TXHVWLRQDUHVSRQVHWRZKLFK%XHOOjV
ERWK ZD\V  $V WKLV FRXUW KDV QRWHG WDFWLFDO GHFLVLRQV DUH   FRXQVHOPDGHDFRQWHPSRUDQHRXVREMHFWLRQ,QDGGLWLRQKH
mYLUWXDOO\XQFKDOOHQJHDEOHl0HHNV)GDW%RWK             VSHFLILFDOO\GLVFXVVHVKLVDSSHOODWHFRXQVHOjVIDLOXUHWRDSSHDO
WKH WULDO FRXUW DQG WKH 2KLR &RXUW RI $SSHDOV IRXQG DV D     WKHWULDOFRXUWjVGHFLVLRQQRWWRDGPLWWKHH[SHUW WHVWLPRQ\
IDFWXDOPDWWHU WKDW%XHOOjVFRXQVHOSHUIRUPHGDQH[WHQVLYH             %XHOOSUHVHQWHGUHJDUGLQJH\HZLWQHVVLGHQWLILFDWLRQ(YHQLI
SUHWULDOLQYHVWLJDWLRQ7RWKHH[WHQWWKDW%XHOOEHOLHYHVKLV         %XHOOjV DSSHOODWH FRXQVHO ZDV GHILFLHQW LQ IDLOLQJ WR UDLVHV
FRXQVHO VKRXOG KDYH XQGHUWDNHQ D GLIIHUHQW VWUDWHJ\ LQ           WKHVH FODLPV ZH KDYH GHPRQVWUDWHG WKDW %XHOO ZDV QRW
FRQGXFWLQJ WKH LQYHVWLJDWLRQ DQG GHWHUPLQLQJ KRZ EHVW WR         SUHMXGLFHGE\RXUUHMHFWLRQRI%XHOOjVWKLUGDQGIRXUWKFODLPV
DGYRFDWHRQ%XHOOjVEHKDOIWKHVHDUHWDFWLFDOGHFLVLRQVWKDW           LQ WKLV DSSHDO %XHOO FDQQRW VXSSRUW D FODLP RI LQHIIHFWLYH
FDQQRWIRUPWKHEDVLVIRUDQLQHIIHFWLYHDVVLVWDQFHFODLP              DVVLVWDQFHRIDSSHOODWHFRXQVHO
