       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


 81,7(' 67$7(6 2) $0(5,&$       ;
           3ODLQWLII$SSHOOHH    
                                 
                                    1R
          Y                      
                                   !
                                  
 721< 7(55(// 52%(576            
         'HIHQGDQW$SSHOODQW 
                                 1
      $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
   IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV
   1Rn%HUQLFH%'RQDOG'LVWULFWsXGJH
              $UJXHG6HSWHPEHU
         'HFLGHGDQG)LOHG1RYHPEHU
   %HIRUHs21(66,/(5DQG&/$<&LUFXLWsXGJHV
                  BBBBBBBBBBBBBBBBB
                       &2816(/
$5*8('  'RULV $ 5DQGOH+ROW 2)),&( 2) 7+(
)('(5$/ 38%/,& '()(1'(5 )25 7+( :(67(51
',675,&7 2) 7(11(66(( 0HPSKLV 7HQQHVVHH IRU
$SSHOODQW7UDF\/%HUU\$66,67$1781,7('67$7(6
$77251(< 0HPSKLV 7HQQHVVHH IRU $SSHOOHH
21 %5,()  'RULV $ 5DQGOH+ROW 2)),&( 2) 7+(
)('(5$/ 38%/,& '()(1'(5 )25 7+( :(67(51
',675,&7 2) 7(11(66(( 0HPSKLV 7HQQHVVHH IRU

                            
     8QLWHG6WDWHVY5REHUWV                          1R        1R                      8QLWHG6WDWHVY5REHUWV      

$SSHOODQW7UDF\/%HUU\$66,67$1781,7('67$7(6                        FRXUWjVILQGLQJWKDWIROORZLQJKLVLQLWLDODUUHVW5REHUWVIDOVHO\
$77251(<0HPSKLV7HQQHVVHHIRU$SSHOOHH                                GHQLHG KDYLQJ LQWLPDWH FRQWDFW ZLWK WKH QLQH\HDUROG DQG
                                                                           IDOVHO\LQGLFDWHGWKDWKHKDGWDONHGWKHIRXUWHHQ\HDUROGLQWR
                       BBBBBBBBBBBBBBBBB                                   KDYLQJ VH[ WKH FRXUW GHWHUPLQHG WKDW WKH DFFHSWDQFH RI
                                                                           UHVSRQVLELOLW\UHGXFWLRQZDVQRWZDUUDQWHGs$DW
                           23,1,21
                       BBBBBBBBBBBBBBBBB                                     $SSOLFDWLRQ 1RWH  VSHFLILFDOO\ VWDWHV m>W@KH VHQWHQFLQJ
                                                                           MXGJH LV LQ D XQLTXH SRVLWLRQ WR HYDOXDWH D GHIHQGDQWjV
  3(5&85,$0'HIHQGDQW$SSHOODQW7RQ\7HUUHOO5REHUWV                    DFFHSWDQFH RI UHVSRQVLELOLW\  )RU WKLV UHDVRQ WKH
FODLPV WKDW WKH GLVWULFW FRXUW HUUHG LQ LWV DSSOLFDWLRQ RI WKH   GHWHUPLQDWLRQ RI WKH VHQWHQFLQJ MXGJH LV HQWLWOHG WR JUHDW
8QLWHG6WDWHV6HQWHQFLQJ*XLGHOLQHV+HDSSHDOVWKHVHQWHQFH              GHIHUHQFHRQUHYLHZl7KHVHQWHQFLQJMXGJHjVGHWHUPLQDWLRQV
LPSRVHG  ,Q SDUWLFXODU KH DUJXHV WKDW WKH FRXUW HUUHG LQ       ZHUHQRWZLWKRXWIRXQGDWLRQDQGZHUHQRWFOHDUO\HUURQHRXV
HQKDQFLQJKLVVHQWHQFLQJOHYHOIRUREVWUXFWLRQRIMXVWLFHDQG
LQ IDLOLQJ WR UHGXFH KLV VHQWHQFLQJ OHYHO IRU DFFHSWDQFH RI         )RUWKHUHDVRQVVWDWHGDERYHZH$)),50WKHVHQWHQFH
UHVSRQVLELOLW\)RUWKHUHDVRQVVHWIRUWKEHORZZH$)),50
WKHGLVWULFWFRXUW
                                   ,
  ,QsDQXDU\RI7RQ\7HUUHOO5REHUWVZDVLQGLFWHGLQWKH
&LUFXLW &RXUW IRU &ULWWHQGHQ &RXQW\ $UNDQVDV IRU IHORQ\
UDSHDQGNLGQDSLQJ2QHFRXQWLQYROYHGDQLQH\HDUROGJLUO
DQGWKHRWKHUDIRXUWHHQ\HDUROGJLUO2QVHSDUDWHRFFDVLRQV
5REHUWVOXUHGWKHJLUOVRYHUWRKLVFDUSXOOHGWKHPLQWRKLV
FDU DQG WKHQ GURYH DZD\ DQG UDSHG WKHP  :KLOH LQ VWDWH
FXVWRG\IRUWKHVHRIIHQVHV5REHUWVHVFDSHG7KHVWDWHLVVXHG
DZDUUDQWIRU5REHUWVjHVFDSHRQ0D\
  2QsXQHZLWKUHVSHFWWRWKHVDPHNLGQDSLQJVD
IHGHUDO JUDQG MXU\ LQ WKH :HVWHUQ 'LVWULFW RI 7HQQHVVHH
LQGLFWHG 5REHUWV RQ WZR FRXQWV RI LQWHUVWDWH NLGQDSLQJ RI
MXYHQLOHV IRU WKH SXUSRVH RI HQJDJLQJ LQ VH[XDOO\ H[SOLFLW
FRQGXFWLQYLRODWLRQRI86&D3XUVXDQWWRWKH
LQGLFWPHQWIHGHUDODXWKRULWLHVDUUHVWHG5REHUWVLQ0LFKLJDQ
PRQWKVDIWHUKLVHVFDSHLQ$UNDQVDV
  5REHUWV SOHG JXLOW\ WR WKH LQGLFWPHQW RQ 6HSWHPEHU 
7KHSUHVHQWHQFHLQYHVWLJDWLRQUHSRUWUHFRPPHQGHGDQ
HQKDQFHPHQWIRUREVWUXFWLRQRIMXVWLFHEHFDXVHRI5REHUWVj
HVFDSHDQGUHFRPPHQGHGGHQ\LQJDGHFUHDVHIRUDFFHSWDQFH
RI UHVSRQVLELOLW\ EHFDXVH RI LWV LQFRQVLVWHQF\ ZLWK WKH
    8QLWHG6WDWHVY5REHUWV                        1R       1R                      8QLWHG6WDWHVY5REHUWV        

ZLWKRXWIRXQGDWLRQl8QLWHG6WDWHVY&DVWLOOR*DUFLD             REVWUXFWLRQRIMXVWLFHHQKDQFHPHQW$SSHOODQWREMHFWHGWRWKH
)G   WK &LU   FLWLQJ 8QLWHG 6WDWHV Y       GHQLDORIWKHDFFHSWDQFHRIUHVSRQVLELOLW\UHGXFWLRQDQGWRWKH
0RUULVRQ)GWK&LU                            HQKDQFHPHQWIRUREVWUXFWLRQRIMXVWLFH
   *XLGHOLQH ( SURYLGHV WKDW WKH RIIHQVH OHYHO VKDOO EH       7KHGLVWULFWFRXUWKHOGDVHQWHQFLQJKHDULQJRQ$SULO
GHFUHDVHGE\WZROHYHOVLIWKHmGHIHQGDQWFOHDUO\GHPRQVWUDWHV          $WWKHKHDULQJWKHJRYHUQPHQWFDOOHGWKHIRXUWHHQ\HDU
DFFHSWDQFH RI UHVSRQVLELOLW\ IRU KLV RIIHQVHl $SSOLFDWLRQ        ROGYLFWLPDVDZLWQHVVDQGSUHVHQWHGWKHKHDUVD\WHVWLPRQLDOV
1RWH  VWDWHV m>H@QWU\ RI D JXLOW\ SOHD SULRU WR WKH         RIWKHQLQH\HDUROGDQGRQHRIWKHYLFWLPVRIDQDWWHPSWHG
FRPPHQFHPHQWRIWULDOFRPELQHGZLWKWUXWKIXOO\DGPLWWLQJ                DEGXFWLRQ5REHUWVDOVRWHVWLILHG+HDGPLWWHGWRWKHFULPLQDO
WKH FRQGXFW FRPSULVLQJ WKH RIIHQVH RI FRQYLFWLRQ DQG            FRQGXFW LQYROYHG EXW KH DOVR DGPLWWHG WKDW IROORZLQJ KLV
WUXWKIXOO\DGPLWWLQJDGGLWLRQDOUHOHYDQWFRQGXFW       LQLWLDODUUHVWKHWROGLQYHVWLJDWRUVWKDWKHKDGOHWWKHQLQH\HDU
ZLOO FRQVWLWXWH VLJQLILFDQW HYLGHQFH RI DFFHSWDQFH RI             ROGJRZLWKRXWWRXFKLQJKHUDQGWKDWKHKDGWROGLQYHVWLJDWRUV
UHVSRQVLELOLW\         +RZHYHU WKLV HYLGHQFH PD\ EH   WKDWKHWDONHGWKHIRXUWHHQ\HDUROGLQWRKDYLQJVH[5REHUWV
RXWZHLJKHGE\FRQGXFWRIWKHGHIHQGDQWWKDWLVLQFRQVLVWHQW             DOVRVDLGWKDWKHIHOWEDGIRUWKHYLFWLPVDQGWKHLUIDPLOLHV
ZLWKVXFKDFFHSWDQFHRIUHVSRQVLELOLW\lHPSKDVLVDGGHG
                                                                           7KHGLVWULFWFRXUWIRFXVLQJLWVDWWHQWLRQRQKLVHVFDSHDQG
    7KH FRXUW IRXQG WKDW 5REHUWVj FRQGXFW ZDV LQFRQVLVWHQW       WKHIDOVHVWDWHPHQWV5REHUWVPDGHWRSROLFHGHQLHG5REHUWVj
ZLWK DFFHSWDQFH RI UHVSRQVLELOLW\  $SSOLFDWLRQ 1RWH            REMHFWLRQ WR WKH REVWUXFWLRQ RI MXVWLFH HQKDQFHPHQW  7KH
LQGLFDWHV WKDW WKH DFFHSWDQFH RI UHVSRQVLELOLW\ GHFUHDVH LV      GLVWULFW FRXUW DOVR GHQLHG WKH DFFHSWDQFH RI UHVSRQVLELOLW\
JHQHUDOO\ QRW DSSURSULDWH LI WKH GHIHQGDQWjV FRQGXFW KDV         UHGXFWLRQ,QGRLQJVRWKHFRXUWVDLGWKDWLWZDVORRNLQJDWWKH
UHVXOWHG LQ DQ REVWUXFWLRQ RI MXVWLFH HQKDQFHPHQW XQGHU          mVSHFWUXPRIGHIHQGDQWjVFRQGXFWDVLWUHODWHVWRWKHSDUWLFXODU
866*&+RZHYHULWGRHVVD\WKDWm>W@KHUHPD\               RIIHQVHls$DW7KHFRXUWUHIHUUHGWR5REHUWVjIDOVH
EHH[WUDRUGLQDU\FDVHVLQZKLFKDGMXVWPHQWVXQGHUERWK         VWDWHPHQWVWRSROLFHDQGWKHIDFWWKDWWKHFRXUWZDVJRLQJWR
&DQG(PD\DSSO\l                                          JUDQW WKH REVWUXFWLRQ RI MXVWLFH HQKDQFHPHQW ZKLFK LV
                                                                        RUGLQDULO\ QRW FRQVLVWHQW ZLWK DFFHSWDQFH RI UHVSRQVLELOLW\
  m6L[WK &LUFXLW ODZ LQWHUSUHWLQJ WKLV SURYLVLRQ KDV              7KH FRXUW VSHFLILFDOO\ VWDWHG WKDW WKHUH ZDV QRWKLQJ
FRQVLVWHQWO\JUDQWHGGLVWULFWFRXUWVJUHDWOHHZD\ZKHQPDNLQJ           H[WUDRUGLQDU\DERXWWKHFDVHWRZDUUDQWDGHGXFWLRQRISRLQWV
WKLVGHWHUPLQDWLRQl8QLWHG6WDWHVY.HOOLKDQ1R          IRUDFFHSWDQFHRIUHVSRQVLELOLW\ZKLOHDWWKHVDPHWLPHDGGLQJ
  :/   WK &LU  )HE             SRLQWVIRUREVWUXFWLRQRIMXVWLFHs$DW
XQSXEOLVKHG,Q8QLWHG6WDWHVY:LOOLDPV)G
WK&LUWKH&RXUWUHIHUHQFHGWKHmH[WUDRUGLQDU\                                          ,,
FDVHVl SURYLVLRQ DQG VWDWHG mFRXUWV KDYH HPSOR\HG DQ
H[DFWLQJ VWDQGDUG WR GHWHUPLQH ZKHWKHU D GHIHQGDQW KDV             ,QUHYLHZLQJDGLVWULFWFRXUWjVDSSOLFDWLRQRIREVWUXFWLRQRI
DFFHSWHGUHVSRQVLELOLW\DIWHUKDYLQJREVWUXFWHGMXVWLFHl,WLV         MXVWLFH HQKDQFHPHQWV XQGHU 86 6HQWHQFLQJ *XLGHOLQHV
WKH GHIHQGDQW ZKR EHDUV WKH EXUGHQ RI VKRZLQJ E\ D             0DQXDOm866*l&ZHHPSOR\DWKUHHVWHS
SUHSRQGHUDQFHRIWKHHYLGHQFHWKDWKHDFFHSWHGUHVSRQVLELOLW\           SURFHVVRIUHYLHZ6HH8QLWHG6WDWHVY0F'RQDOG)G
IRUWKHFULPHKHFRPPLWWHG6HHLGDW7KHVHQWHQFLQJ           WK&LU)LUVWWKLV&RXUWDSSOLHVDFOHDUO\
FRXUWIRXQGWKDWWKHUHZDVQRWKLQJH[WUDRUGLQDU\DERXWWKLV             HUURQHRXVVWDQGDUGWRWKHGLVWULFWFRXUWjVILQGLQJVRIIDFWZLWK
FDVHWKDWZDUUDQWHGLWVIDOOLQJZLWKLQWKLVH[FHSWLRQ5DWKHU         UHVSHFWWRWKHHQKDQFHPHQW6HHLG6HFRQGDGLVWULFWFRXUWjV
LQmHYDOXDWLQJWKHGHIHQGDQWjVWRWDOFRQGXFWlLQFOXGLQJWKH            GHWHUPLQDWLRQ RI ZKHWKHU IDFWV FRQVWLWXWH REVWUXFWLRQ RI
                                                                        MXVWLFHLVDPL[HGTXHVWLRQRIODZDQGIDFWWKDWUHTXLUHVGH
      8QLWHG6WDWHVY5REHUWV                         1R     1R                                8QLWHG6WDWHVY5REHUWV               

QRYRUHYLHZ6HHLG7KLUGRQFHWKHUHKDVEHHQDILQGLQJWKDW        VHQWHQFHDQGH[SODLQHGWKDWWRDSSO\866*&mWKHUH
WKH GHIHQGDQW REVWUXFWHG MXVWLFH DSSOLFDWLRQ RI WKH              PXVWEHDQDFWXDOREVWUXFWLYHHIIHFWRQWKHµLQVWDQWRIIHQVHjWR
HQKDQFHPHQWLVPDQGDWRU\VRUHYLHZRIWKHHQKDQFHPHQWDW               WULJJHUDQHQKDQFHPHQWl,GDW7KHFRXUWIXUWKHUVWDWHG
WKDWSRLQWLVGHQRYR6HHLG                                       WKDW mHYHQ WKRXJK WKH VWDWH RIIHQVH FRQVWLWXWHG SDUW RI WKH
                                                                        IHGHUDORIIHQVHWKHREVWUXFWLYHFRQGXFWRQO\DIIHFWHG3HUH]jV
 *XLGHOLQH  & SURYLGHV IRU VHQWHQFH HQKDQFHPHQW              VWDWH SURVHFXWLRQ DQG KDG QR HIIHFW RQ WKH LQYHVWLJDWLRQ
ZKHUHWKHGHIHQGDQWKDVREVWUXFWHGMXVWLFH,WVWDWHV                 SURVHFXWLRQRUVHQWHQFLQJRI3HUH]jVIHGHUDORIIHQVHl,G
    ,I$WKHGHIHQGDQWZLOOIXOO\REVWUXFWHGRULPSHGHGRU               7KLVFDVHFDQEHGLVWLQJXLVKHGIURPWKHRQHDWEDULQWKDW
    DWWHPSWHGWRREVWUXFWRULPSHGHWKHDGPLQLVWUDWLRQ RI             WKHIHGHUDOFKDUJHVZHUHQRWLQLWLDWHGDJDLQVW3HUH]XQWLODIWHU
    MXVWLFH GXULQJ WKH FRXUVH RI WKH LQYHVWLJDWLRQ               KHKDGUHWXUQHGWRWKLVFRXQWU\ZDVUHDUUHVWHGDQGVHUYHGKLV
    SURVHFXWLRQ RU VHQWHQFLQJ RI WKH LQVWDQW RIIHQVH RI         VWDWHLPSRVHG VHQWHQFHG  5REHUWV RQ WKH RWKHU KDQG ZDV
    FRQYLFWLRQ DQG % WKH REVWUXFWLYH FRQGXFW UHODWHG WR       IHGHUDOO\LQGLFWHGDIWHUKHKDGHVFDSHGIURPWKHFXVWRG\RIWKH
    LWKHGHIHQGDQWjVRIIHQVHRIFRQYLFWLRQDQGDQ\UHOHYDQW          VWDWH RI $UNDQVDV DQG EHIRUH KH ZDV UHDUUHVWHG  ,Q RWKHU
    FRQGXFW RU LL D FORVHO\ UHODWHG RIIHQVH LQFUHDVH WKH    ZRUGVKHZDVVWLOORQWKHUXQZKHQIHGHUDOFKDUJHVZHUHILOHG
    RIIHQVHOHYHOE\OHYHOV                                          DJDLQVWKLP7KHIDFWWKDWKHZDVRQWKHUXQUDWKHUWKDQLQWKH
                                                                        FXVWRG\RIWKHVWDWHZRXOGKDYHPDGHLWPXFKPRUHGLIILFXOW
,Q DGGLWLRQ $SSOLFDWLRQ 1RWH H RI 866*   &        IRU IHGHUDO DXWKRULWLHV WR SURVHFXWH 5REHUWV  8QOLNH WKH
HVWDEOLVKHVWKDWmHVFDSLQJIURPFXVWRG\EHIRUHWULDORU        VLWXDWLRQLQ3HUH]5REHUWVjREVWUXFWLYHFRQGXFWHVFDSHGLG
VHQWHQFLQJlLVDQH[DPSOHRIFRQGXFWWRZKLFKWKHREVWUXFWLRQ           KDYH DQ HIIHFW RQ WKH IHGHUDO SURVHFXWLRQ  6HH LG
RI MXVWLFH HQKDQFHPHQW DSSOLHV  +RZHYHU IRU WKH                1HYHUWKHOHVVWRWKHH[WHQWWKDW3HUH]PD\EHLQWHUSUHWHGDV
HQKDQFHPHQWJXLGHOLQHWRDSSO\WKHREVWUXFWLYHFRQGXFWPXVW            KROGLQJ WKDW DQ HVFDSH IURP VWDWH FXVWRG\ WKDW SUHFHGHV
KDYH RFFXUUHG mGXULQJ WKH FRXUVH RI WKH LQYHVWLJDWLRQ           IHGHUDO LQYROYHPHQW FDQQRW EH WKH EDVLV IRU HQKDQFLQJ WKH
SURVHFXWLRQ RU VHQWHQFLQJ RI WKH LQVWDQW RIIHQVH RI             VHQWHQFHIRUDIHGHUDORIIHQVHWKDWKDVDVLWVXQGHUO\LQJEDVLV
FRQYLFWLRQl866*&HPSKDVLVDGGHG7KHUHIRUH            WKHVDPHFRQGXFWIRUZKLFKWKHGHIHQGDQWZDVKHOGE\VWDWH
ZH PXVW GHWHUPLQH ZKHWKHU WKH SKUDVH mLQVWDQW RIIHQVHl           DXWKRULWLHVZHGLVDJUHH
SUHYHQWV WKH FRXUW IURP DSSO\LQJ WKH HQKDQFHPHQW RQ WKH
EDVLVRIWKHHVFDSHIURPVWDWHDXWKRULWLHVEHIRUHWKHIHGHUDO                                                    ,,,
LQYHVWLJDWLRQEHJDQ:HFRQFOXGHWKDW5REHUWVjHVFDSHIURP
VWDWH DXWKRULWLHV GLG FRQVWLWXWH REVWUXFWLRQ RI MXVWLFH XQGHU      5REHUWV DOVR FKDOOHQJHV WKH GLVWULFW FRXUWjV GHQLDO RI D
866*&VRWKDWHQKDQFHPHQWZDVSURSHU                       VHQWHQFLQJ UHGXFWLRQ IRU DFFHSWDQFH RI UHVSRQVLELOLW\
                                                                        m%HFDXVHLWLVJHQHUDOO\DTXHVWLRQRIIDFWWKHWULDOFRXUWjV
  ,Q8QLWHG6WDWHVY6PDUW)GWK&LUWKLV        GHWHUPLQDWLRQ RI ZKHWKHU D GHIHQGDQW KDV DFFHSWHG
&RXUW DIILUPHG WKH GLVWULFW FRXUWjV HQKDQFHPHQW RI WKH           UHVSRQVLELOLW\QRUPDOO\HQMR\VWKHSURWHFWLRQRIWKHµFOHDUO\
GHIHQGDQWjV VHQWHQFH HYHQ WKRXJK WKH REVWUXFWLYH FRQGXFW          HUURQHRXVjVWDQGDUGDQGZLOOQRWEHRYHUWXUQHGXQOHVVLWLV
SUHFHGHG IHGHUDO FKDUJHV  7KH GHIHQGDQW ZDV DUUHVWHG E\
ORFDO SROLFH LQ &LQFLQQDWL 2KLR IRU SRVVHVVLRQ RI FUDFN
FRFDLQH6HHLGDW+HJDYHSROLFHDIDOVHQDPHDQG                 
DSSHDUHGEHIRUHWKHPXQLFLSDOFRXUWXVLQJWKDWQDPH7KHQ                  +DYLQJ      FRQFOXGHG    WKDW   WKH    REVWUXFWLRQ    RI   MXVWLFH   VHQWHQFH


DIWHU KH ZDV UHOHDVHG RQ EDLO KH IDLOHG WR DSSHDU IRU KLV
                                                                        HQKDQFHPHQW ZDV SURSHU EDVHG RQ 5REHUWVj HVFDSH IURP VWDWH FXVWRG\ ZH
                                                                        GHFOLQH   WR   DGGUHVV   ZKHWKHU   WKH   HQKDQFHPHQW      ZDV   SURSHU    EDVHG   RQ
DUUDLJQPHQW6HHLG+HZDVDUUHVWHGDJDLQLQ6WHXEHQYLOOH           PLVVWDWHPHQWV PDGH E\ 5REHUWV WR DXWKRULWLHV IROORZLQJ KLV DUUHVW
     8QLWHG6WDWHVY5REHUWV                      1R       1R                        8QLWHG6WDWHVY5REHUWV         

FRPSDQLHVl,G7KXVWKHREVWUXFWLYHFRQGXFWZDVFRQQHFWHG          XVHGKLVDOLDVPDGHEDLODQGIOHGWKHMXULVGLFWLRQ6HHLG$W
WRWKHLQVWDQWRIIHQVH                                               WKDWSRLQWORFDODXWKRULWLHVHQOLVWHGWKHDVVLVWDQFHRIWKH)%,
                                                                      7KUHH\HDUVODWHUDIHGHUDOJUDQGMXU\LQGLFWHGWKHGHIHQGDQW
  ,QHDFKRIWKHVHFDVHVWKHIDFWWKDWWKHIHGHUDOFKDUJHVZHUH      FKDUJLQJKLPZLWKSRVVHVVLRQZLWKLQWHQWWRGLVWULEXWHFUDFN
GLIIHUHQW IURP VWDWH FKDUJHV ZDV QRW VLJQLILFDQW  7KH        FRFDLQH  $ MXU\ IRXQG KLP JXLOW\ DQG EDVHG RQ KLV WZR
GHWHUPLQDWLYHIDFWRUZDVWKDWERWKVHWVRIFKDUJHVDQGWKH           IUDXGXOHQW XVHV RI WKH DOLDV WKH GLVWULFW FRXUW DSSOLHG WKH
REVWUXFWLRQ DFWLYLW\ ZHUH UHODWHG WR WKH VDPH XQGHUO\LQJ      REVWUXFWLRQ RI MXVWLFH VHQWHQFH HQKDQFHPHQW 6HH LG  7KH
DFWLYLW\                                                           6L[WK &LUFXLW UHMHFWHG WKH GHIHQGDQWjV DUJXPHQW WKDW KLV
                                                                      REVWUXFWLYHDFWLRQVZHUHXQUHODWHGWRWKHmLQVWDQWlFDVHDQG
  ,QWKHFDVHDWEDU5REHUWVHVFDSHGZKLOHKHZDVLQVWDWH           FRQFOXGHG WKDW m>L@Q WKH SUHVHQW FDVH 6PDUWjV LQGLFWPHQW
FXVWRG\RQFKDUJHVLQYROYLQJNLGQDSLQJDQGUDSH$IWHUKLV           FRQYLFWLRQ DQG VHQWHQFH VWHP GLUHFWO\ IURP WKH DUUHVWV LQ
HVFDSHDQGEHIRUHKLVUHDUUHVW5REHUWVZDVLQGLFWHGRQWZR         ZKLFKKHXVHGDIDOVHQDPHWRPDNHEDLODQGIOHH7KHORZHU
FRXQWVRILQWHUVWDWHNLGQDSLQJRIMXYHQLOHVIRUWKHSXUSRVHRI        FRXUWGLGQRWHUULQHQKDQFLQJ6PDUWjVVHQWHQFHSXUVXDQWWR
HQJDJLQJLQVH[XDOO\H[SOLFLWFRQGXFW%RWKVHWVRIFKDUJHV          866*&l,GDW
ZHUHEDVHGRQWKHVDPHXQGHUO\LQJDFWLYLW\WKHNLGQDSLQJV
DQGUDSHV7KHUHIRUHWKHREVWUXFWLYHFRQGXFWWKHHVFDSH             5REHUWVDUJXHVWKDW6PDUWLVGLVWLQJXLVKDEOHIURPWKHFDVH
ZDV FRQQHFWHG WR WKH mLQVWDQWl RU IHGHUDO RIIHQVH HYHQ     DWEDUEHFDXVHLQ6PDUWWKHVWDWHDQGIHGHUDORIIHQVHVZHUHWKH
WKRXJKLWSUHFHGHGWKHIHGHUDOLQGLFWPHQW0RUHRYHUDVLQ           VDPHZKHUHDVLQWKLVFDVHWKHVWDWHFKDUJHVZHUHIRUIHORQ\
/DWR5REHUWVjHVFDSHZDVGHVLJQHGWRSUHYHQWKLPVHOIIURP            UDSH DQG NLGQDSLQJ DQG WKH IHGHUDO LQGLFWPHQW ZDV IRU
EHLQJ SURVHFXWHG DW DOOE\ DQ\ HQWLW\IRU KLV DFWLRQV        LQWHUVWDWHNLGQDSLQJRIMXYHQLOHVIRUWKHSXUSRVHRIHQJDJLQJ
LQYROYLQJWKHJLUOV,G7KXVE\HVFDSLQJKHZDVREVWUXFWLQJ       LQVH[XDOO\H[SOLFLWFRQGXFW:HILQGWKLVGLVWLQFWLRQWREHRI
MXVWLFH                                                            OLWWOHVLJQLILFDQFH$Q\TXHVWLRQDVWRZKHWKHUWKHKROGLQJLQ
                                                                      6PDUWDSSOLHVWRWKLVFDVHLVHDVLO\UHVROYHG,Q6PDUWZH
   5REHUWVUHOLHVRQD6HYHQWK&LUFXLWFDVH8QLWHG6WDWHVY         FLWHG ZLWK DSSURYDO FDVHV IURP RWKHU FLUFXLWV ZKLFK KDG
3HUH])GWK&LULQZKLFKWKHFRXUWKHOG          UHMHFWHGGHIHQGDQWVjDUJXPHQWVWKDWWKHLUREVWUXFWLRQDFWLYLW\
WKDWDQREVWUXFWLRQRIMXVWLFHHQKDQFHPHQWZDVLQDSSURSULDWH          GLGQRWUHODWHWRWKHLQVWDQWRIIHQVHEHFDXVHLWSUHFHGHGIHGHUDO
ZKHUHWKHGHIHQGDQWKDGIOHGWKHFRXQWU\ZKLOHVWDWHFKDUJHV          LQYROYHPHQWLQQRQHRIWKHVHFDVHVZHUHWKHIHGHUDOFKDUJHV
ZHUHSHQGLQJDJDLQVWKLP,Q$SULOWKHGHIHQGDQWZDV             LGHQWLFDOWRWKHHDUOLHUVWDWHFKDUJHV6HHLGDWFLWLQJ
DUUHVWHG E\ VWDWH DXWKRULWLHV IRU SRVVHVVLRQ ZLWK LQWHQW WR   8QLWHG6WDWHVY$GHGLUDQ)G WK&LU
GLVWULEXWHFRFDLQHDQGZKLOHKHZDVRXWRQERQGSULRUWRKLV         8QLWHG6WDWHVY(PHU\)GVW&LU
WULDOKHOHIWWKHVWDWHDQGHYHQWXDOO\IOHGWR1LFDUDJXD6HHLG    8QLWHG 6WDWHV Y /DWR  )G   WK &LU
DW   +H YROXQWDULO\ UHWXUQHG WR WKH 8QLWHG 6WDWHV LQ    :HUHLWHUDWHKHUHWKDWZHDJUHHZLWKRXUVLVWHUFLUFXLWV
1RYHPEHUDQGDPRQWKODWHUKHZDVUHDUUHVWHGRQWKH             WKDWKDYHKHOGWKDWREVWUXFWLYHFRQGXFWRFFXUULQJGXULQJWKH
VWDWHZDUUDQW+HVHUYHGPRQWKVRIKLVWKUHH\HDUVHQWHQFH        VWDWH LQYHVWLJDWLRQ RU SURVHFXWLRQ DQG SUHFHGLQJ IHGHUDO
DQG ZDV UHOHDVHG  6HH LG  ,Q 'HFHPEHU  D IHGHUDO     LQYROYHPHQW WULJJHUV WKH HQKDQFHPHQW HYHQ LI WKH IHGHUDO
LQYHVWLJDWLRQEHJDQ2QsDQXDU\KHZDVLQGLFWHGRQ           FKDUJH LV QRW LGHQWLFDO WR WKH VWDWH FKDUJH VR ORQJ DV WKH
RQHFRXQWRIFRQVSLUDF\WRGLVWULEXWHFRFDLQHLQYLRODWLRQRI         XQGHUO\LQJEHKDYLRULVFRQQHFWHGWRERWKRIIHQVHV
86&6HHLG7KHGLVWULFWFRXUWDSSOLHG866*
&DQGLQFUHDVHGKLVRIIHQVHOHYHOIRUREVWUXFWLQJMXVWLFH        )RULQVWDQFHLQ8QLWHG6WDWHVY$GHGLUDQ)GWK
6HH LG  7KH 6HYHQWK &LUFXLW YDFDWHG WKDW SRUWLRQ RI WKH    &LUWKHFRXUWKHOGWKDWWKHGHIHQGDQWjVVHQWHQFHZDV
     8QLWHG6WDWHVY5REHUWV                       1R       1R                        8QLWHG6WDWHVY5REHUWV         

SURSHUO\HQKDQFHGIRUREVWUXFWLRQRIMXVWLFHRQWKHEDVLVWKDW         GHIHQGDQWKDGDWWHPSWHGWRHVFDSHIURPVWDWHFXVWRG\6HHLG
WKHGHIHQGDQWKDGIDLOHGWRDSSHDUIRUVWDWHSURFHHGLQJV7KH         ,QDQDO\]LQJWKHGHIHQGDQWjVFRPSODLQWWKDWWKHREVWUXFWLRQRI
GHIHQGDQWLQWKDWFDVHZDVDUUHVWHGE\ORFDOSROLFHDIWHUKH           MXVWLFHHQKDQFHPHQWZDVQRWSURSHUEHFDXVHWKHDWWHPSWHG
XVHGIDOVHQDPHVIDOVHVRFLDOVHFXULW\QXPEHUVDQGDIDOVH           HVFDSHSUHFHGHGWKHIHGHUDOLQYHVWLJDWLRQWKHFRXUWVDLGWKDW
VWDWHLGHQWLILFDWLRQFDUGWRRSHQFKHFNLQJDQGRWKHUDFFRXQWV         LW ZDV REYLRXV WKDW HVFDSLQJ RU DWWHPSWLQJ WR HVFDSH
6HH)GDW+HZDVKHOGIRUVHYHUDOGD\VDQGZKHQKH          FRQVWLWXWHV REVWUXFWLRQ  6HH LG  DW   7KHQ WKH FRXUW
SRVWHGERQGKHZDVUHOHDVHGZLWKWKHLQVWUXFWLRQWRDSSHDUIRU         UHFRJQL]HG m>W@KH VOLJKWO\ PRUH GLIILFXOW WDVN LV GHILQLQJ
DUUDLJQPHQW+HIDLOHGWRGRVR6HHLG7KHGHIHQGDQWZDV          ZKHQ FRQGXFW FDQ EH VDLG WR KDYH RFFXUUHG µGXULQJ WKH
HYHQWXDOO\DUUHVWHGDJDLQDQGLQGLFWHGRQDIHGHUDOFKDUJHIRU         LQYHVWLJDWLRQRIWKHLQVWDQWRIIHQVHjl,G7KHFRXUW
IDOVHO\PLVUHSUHVHQWLQJKLV6RFLDO6HFXULW\$FFRXQW1XPEHU            LQVLVWHG WKDW D FRPPRQVHQVH UHDGLQJ RI WKH *XLGHOLQH
ZLWKWKHLQWHQWWRGHFHLYHDQGIRUWKHSXUSRVHRIREWDLQLQJ            VXJJHVWHG WKDW WKH HQKDQFHPHQW ZDV PHDQW WR DSSO\ LI
VRPHWKLQJ RI YDOXH LQ YLRODWLRQ RI  86&                   mQRWZLWKVWDQGLQJWKHODFNRIDQRQJRLQJIHGHUDOLQYHVWLJDWLRQ
D%6HHLGDW,QFRQVLGHULQJKLV           WKHUHLVDFORVHFRQQHFWLRQEHWZHHQWKHREVWUXFWLYHFRQGXFW
DSSHDORIDQREVWUXFWLRQRIMXVWLFHVHQWHQFHHQKDQFHPHQWWKH          DQGWKHRIIHQVHRIFRQYLFWLRQl,G7KDWUHTXLUHPHQWZDV
FRXUWVDLGm>Z@LWKRXWDGRXEWLI>WKHGHIHQGDQW@KDGIDLOHGWR       VDWLVILHG DFFRUGLQJ WR WKH FRXUW EHFDXVH WKH EHKDYLRU IRU
DSSHDUIRUDIHGHUDOFRXUWGDWHWKHHQKDQFHPHQWZRXOGKDYH            ZKLFK WKH ORFDO SROLFH DUUHVWHG WKH GHIHQGDQW XVLQJ IDOVH
EHHQ SURSHU  :H PXVW WKHUHIRUH GHFLGH ZKHWKHU WKH PHUH       GRFXPHQWVWRRSHQEDQNDFFRXQWVDQGZLWKGUDZPRQH\ZDV
IRUWXLW\ RI EHLQJ FKDUJHG LQ VWDWH FRXUW VKRXOG H[FXVH >WKH   mWKHYHU\HVVHQFHlRIWKHIHGHUDORIIHQVH6HHLG
GHIHQGDQWjV@ EODWDQW DWWHPSW WR DYRLG WKH DGPLQLVWUDWLRQ RI
MXVWLFHl,GDW7KHFRXUWQRWHGWKDWWKHODQJXDJHRIWKH          /LNHZLVHLQ8QLWHG6WDWHVY/DWR)GWK&LU
*XLGHOLQH PDNHV QR GLVWLQFWLRQ EHWZHHQ VWDWH DQG IHGHUDO        WKHFRXUWKHOGWKDWDQREVWUXFWLRQRIMXVWLFHVHQWHQFH
DXWKRULWLHVRUSURFHHGLQJV6HHLGDW7KHFRXUWVDLGWKDW        HQKDQFHPHQW ZDV DSSURSULDWH HYHQ WKRXJK WKH REVWUXFWLYH
WKH mLQVWDQW RIIHQVHl ODQJXDJH mUHTXLUHV VRPH FRQQHFWLRQ         FRQGXFW KDG RFFXUUHG GXULQJ WKH VWDWH UDWKHU WKDQ IHGHUDO
EHWZHHQWKHREVWUXFWHGVWDWHSURFHHGLQJVDQGWKHLQYHVWLJDWLRQ         LQYHVWLJDWLRQ  7KH GHIHQGDQW LQ /DWR ZDV LQLWLDOO\
RIWKHIHGHUDORIIHQVHl,G7KHFRXUWIRXQGWKLVUHTXLUHPHQW         LQYHVWLJDWHGE\VWDWHDXWKRULWLHVLQUHODWLRQWRLQVXUDQFHIUDXG
HDVLO\VDWLVILHGEHFDXVHWKHGHIHQGDQWjVPLVUHSUHVHQWDWLRQRI          DFWLYLWLHV,GDW$IWHUKLVDUUHVWWKHGHIHQGDQWGHQLHG
KLV6RFLDO6HFXULW\$FFRXQW1XPEHUWKHEDVLVRIWKHIHGHUDO           XVLQJDQRWKHUQDPHHYHQWKRXJKKHKDGVRFLDOVHFXULW\FDUGV
FKDUJHVmZDVDQLQWLPDWHSDUWRIWKHFRQGXFWIRUZKLFKORFDO          DQGDSDVVSRUWEHDULQJGLIIHUHQWQDPHV6HHLG,QDGGLWLRQ
SROLFHDUUHVWHGKLPl,G                                            KHVHQWOHWWHUVWRDZLWQHVVWHOOLQJKHUWROLHWRWKHSROLFH6HH
                                                                       LG(YHQWXDOO\IHGHUDOFKDUJHVZHUHEURXJKWDJDLQVWKLPDQG
   6LPLODUO\LQ8QLWHG6WDWHVY(PHU\)GVW&LU       KH SOHG JXLOW\ WR IHGHUDO PDLO IUDXG  6HH LG  7KH FRXUW
 WKH FRXUW DIILUPHG DQ REVWUXFWLRQ RI MXVWLFH             GHWHUPLQHGWKDWWKHmLQVWDQWRIIHQVHlODQJXDJHLQ866*
HQKDQFHPHQWWKDWZDVLPSRVHGRQWKHEDVLVRIWKHGHIHQGDQWjV           &UHTXLUHVDmFRQQHFWLRQEHWZHHQWKHREVWUXFWLRQDQG
DWWHPSWHGHVFDSHHYHQWKRXJKWKHDWWHPSWHGHVFDSHRFFXUUHG            WKHIHGHUDORIIHQVHIRUZKLFKGHIHQGDQWLVEHLQJVHQWHQFHGl
EHIRUHWKHIHGHUDOLQYHVWLJDWLRQEHJDQ7KHGHIHQGDQWZDV             ,G  DW   +RZHYHU WKH FRXUW FDOOHG WKH GLVWLQFWLRQ
LQLWLDOO\DUUHVWHGE\ORFDOSROLFHDIWHUKHKDGEHHQLQYROYHGLQ       EHWZHHQREVWUXFWLRQGXULQJWKHLQYHVWLJDWLRQE\VWDWHYHUVXV
D FRPSOH[ FKHFN NLWLQJ VFKHPH  0XOWLSOH IHGHUDO FKDUJHV       IHGHUDO DXWKRULWLHV IDOVH DQG VDLG m>W@KH DFWLRQV RI >WKH
ZHUHILOHG+HSOHGJXLOW\WR LPSHUVRQDWLRQRIDQ,QWHUQDO           GHIHQGDQW@ ZHUH FHUWDLQO\ GHVLJQHG WR REVWUXFW WKH
5HYHQXH6HUYLFHDJHQWDQGEDQNIUDXG6HHLGDW$IWHU         LQYHVWLJDWLRQRIWKHRIIHQVHKHFRPPLWWHGWKDWLVWRSUHYHQW
KLVVWDWHDUUHVWEXWEHIRUHWKHIHGHUDOLQYHVWLJDWLRQEHJDQWKH      WKHVXFFHVVIXOXQFRYHULQJRIKLVVFKHPHWRGHIUDXGLQVXUDQFH
