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 DS

81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB

67(3+(1 ( '8))< 68( $11 ; '8))<  3ODLQWLIIV$SSHOODQWV   1RV      Y !    )25' 02725 &203$1<  'HIHQGDQW$SSHOOHH   1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV 1RV   n%HUQDUG$)ULHGPDQ 'LVWULFWsXGJH $UJXHG 'HFHPEHU  'HFLGHGDQG)LOHG sXQH %HIRUH %$7&+(/'(5DQG0225(&LUFXLWsXGJHV 2j0$//(< 'LVWULFWsXGJH

7KH +RQRUDEOH .DWKOHHQ 0F'RQDOG 2j0DOOH\ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

  'XII\HWDOY 1RV     )RUG0RWRU&R

BBBBBBBBBBBBBBBBB &2816(/ $5*8(' 3DWULFN0$UGLV:2/))$5',60HPSKLV 7HQQHVVHHIRU$SSHOODQWV/HH$OOHQ0LFNXV:+((/(5 75,**  .(11('< 'HQYHU &RORUDGR IRU $SSHOOHH 21%5,() 3DWULFN0$UGLV*DUUHWW0(VWHS:2/)) $5',6 0HPSKLV 7HQQHVVHH IRU $SSHOODQWV  /HH $OOHQ 0LFNXV3DXO)+XOWLQ:+((/(575,** .(11('< 'HQYHU &RORUDGR 6WHSKHQ $ 0DUFXP %$.(5 '21(/621 %($50$1  &$/':(// +XQWVYLOOH 7HQQHVVHHIRU$SSHOOHH 0225(sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK %$7&+(/'(5sMRLQHG2j0$//(<'s SS  GHOLYHUHGDVHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJ LQSDUW BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB .$5(11(/621 0225(&LUFXLWsXGJH6WHSKHQ( 'XII\ DQG 6XH $QQ 'XII\ mWKH 'XII\Vl  WKH SODLQWLIIV DSSHOODQWVYROXQWDULO\GLVPLVVHGWKHLUSHUVRQDOLQMXU\ODZVXLW DJDLQVW WKH GHIHQGDQWDSSHOOHH )RUG 0RWRU &RPSDQ\ m)RUGl RQWKHWKLUGGD\RIWULDO7KHZULWWHQGLVPLVVDORUGHU HQWHUHG VHYHUDO GD\V ODWHU LPSRVHG WZR FRQGLWLRQV RQ WKH YROXQWDU\ GLVPLVVDO  WKDW WKH 'XII\V SD\ )RUGjV OLWLJDWLRQ FRVWVLQFOXGLQJDWWRUQH\IHHVLIWKHFDVHLVUHILOHG DQGWKDW WKH UXOLQJV IURP WKH RULJLQDO DFWLRQ LQFOXGLQJ PRVW HYLGHQWLDU\UXOLQJVDQGDSDUWLDOJUDQWRIVXPPDU\MXGJPHQW JRYHUQWKHUHILOHGDFWLRQDVWKHODZRIWKHFDVH:KHQWKH 'XII\V UHILOHG WKHLU FDVH DSSUR[LPDWHO\ RQH \HDU ODWHU WKH GLVWULFW FRXUW GLVPLVVHG LW ZLWKRXW SUHMXGLFH EHFDXVH WKH 'XII\V ZHUH XQDEOH WR SD\ )RUGjV FRVWV  7KH 'XII\V QRZ DSSHDO WKH FRQGLWLRQV LPSRVHG E\ WKH GLVWULFW FRXUW LQ FRQQHFWLRQZLWKWKHILUVWGLVPLVVDO:HKROGWKDWXQGHUWKH  'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

UHQHZHGRSSRUWXQLW\WRVDWLVI\WKHFRQGLWLRQRISD\PHQWRI XQLTXHFLUFXPVWDQFHVRIWKLVFDVHWKHGLVWULFWFRXUWDEXVHGLWV )RUGjVFRVWVLPSRVHGE\WKHWULDOFRXUW GLVFUHWLRQ LQ IDLOLQJ WR FRQVLGHU ZKHWKHU WKH 'XII\V WKHPVHOYHVnUDWKHUWKDQWKHLUDWWRUQH\VnZHUHUHVSRQVLEOH IRUWKHGLODWRU\FRQGXFWRIWKHWULDO:HDOVRKROGWKDWLWZDV DQDEXVHRIGLVFUHWLRQWRLPSRVHWKRVHOLWLJDWLRQFRVWVDQGWR DSSO\WKHODZRIWKHRULJLQDOFDVHWRWKHUHILOHGFDVHZLWKRXW JLYLQJWKH'XII\VVXIILFLHQWQRWLFHRIWKRVHFRQGLWLRQVDQG DOORZLQJ WKHP DQ RSSRUWXQLW\ WR ZLWKGUDZ WKHLU PRWLRQ WR GLVPLVVSULRUWRHQWHULQJWKHILUVWGLVPLVVDO7KHUHIRUHZH 9$&$7( WKH GLVWULFW FRXUWjV RUGHU RI GLVPLVVDO DQG WKH UHODWHG RUGHUV DQG 5(0$1' IRU WKH GLVWULFW FRXUW WR UHFRQVLGHULWVUXOLQJVLQOLJKWRIWKLVRSLQLRQ ,%$&.*5281' 7KH 'XII\V RULJLQDOO\ ILOHG WKLV SURGXFWV OLDELOLW\ VXLW DJDLQVW )RUG LQ IHGHUDO FRXUW LQ )HEUXDU\   DOOHJLQJ VHYHUDOVWDWHODZFODLPVDULVLQJRXWRIWKHGHDWKRIWKHLUVRQ :LOOLDP 'XII\ ZKR ZDV NLOOHG LQ DQ DFFLGHQW ZKHQ KLV %URQFR,,FROOLGHGZLWKDQRWKHUYHKLFOHDQGUROOHGRYHU7KH GLVWULFW FRXUW GLVPLVVHG WKH 'XII\Vj IUDXG GHFHSWLRQ DQG PLVUHSUHVHQWDWLRQFODLPVWKURXJKDSDUWLDOJUDQWRIVXPPDU\ MXGJPHQWWR)RUGOHDYLQJRQO\WKH'XII\VjQHJOLJHQFHDQG VWULFWOLDELOLW\FODLPVIRUWULDO $IWHU UHSHDWHG UHVFKHGXOLQJ WKH WULDO FRPPHQFHG RQ sDQXDU\ 2QWKHWKLUGGD\RIWULDOWKH'XII\VVRXJKW WRLQWURGXFHWKHH[SHUWWHVWLPRQ\RIWZRZLWQHVVHV 7KRPDV s)HDKHQ\DIRUPHU)RUGHQJLQHHUZKRZDVWRWHVWLI\DVWR WKH LQVWDELOLW\ RI WKH %URQFRjV GHVLJQ DQG WKH YHKLFOHjV SURSHQVLW\WRUROORYHU DQG2IILFHU0UXND0HPSKLVSROLFH LQYHVWLJDWRU ZKR ZDV WR JLYH DQ RSLQLRQ DV WR ZKHWKHU :LOOLDP 'XII\ ZDV ZHDULQJ D VHDW EHOW DW WKH WLPH RI WKH DFFLGHQW$IWHUDKHDULQJWKHGLVWULFWFRXUWGHFLGHGWRH[FOXGH WKHWHVWLPRQ\RIWKRVHWZRZLWQHVVHVILQGLQJWKDW)HDKHQ\jV WHVWLPRQ\GLGQRWSDVVWKH'DXEHUWWHVWDQGWKDW0UXNFRXOG  $JDLQ , ZRXOG SURYLGH WKLV UHQHZHG RSSRUWXQLW\ WR VDWLVI\ WKH FRVW QRWJLYHDQH[SHUWRSLQLRQDVWRVHDWEHOWXVDJHEHFDXVHWKH FRQGLWLRQ EHFDXVH WKH YDOXH RI RU EXUGHQ LPSRVHG E\ WKDW FRQGLWLRQ LV 'XII\VKDGQRWOLVWHGKLPDVDQH[SHUWZLWQHVVLQWKHILQDO PDWHULDOO\ GLIIHUHQW LQ WKH DEVHQFH RI WKH FRQFRPLWDQW ODZRIWKHFDVH SUHWULDORUGHU,QWKHZDNHRIWKHVHUXOLQJVWKH'XII\VPRYHG FRQGLWLRQ  'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

IRUYROXQWDU\GLVPLVVDORIWKHLUFDVHSXUVXDQWWR)HGHUDO5XOH WRSODLQWLIIVZKRVHHNWRGLVPLVVDFWLRQVZKLFKKDYHPDWXUHG RI&LYLO3URFHGXUH D  )RUGGLGQRWRSSRVHWKHPRWLRQ WRWKHSRLQWRIWULDO EXWVWDWHGWKDWLWZDVmQRWZLOOLQJWRIRUHJRFRVWVls$DW  7U 7KHGLVWULFWFRXUWRUDOO\JUDQWHGWKHPRWLRQDQG 7KHWH[WRI5XOH G PRUHRYHUOHQGVIXUWKHUVXSSRUWWR DJUHHGZLWK)RUGWKDWWKH'XII\VZRXOGEHUHVSRQVLEOHIRU WKH FRQFOXVLRQ WKDW WKH GLVWULFW FRXUW ZDV QRW UHTXLUHG WR )RUGjVFRVWVVKRXOGWKH\FKRRVHWRUHILOH6RPHGLVFXVVLRQ SURYLGHDFRVWHVWLPDWHWRWKH'XII\V5XOH G JUDQWVD HQVXHG EHWZHHQ WKH GLVWULFW FRXUW DQG WKH 'XII\Vj FRXQVHO GLVWULFWFRXUWWKHDXWKRULW\WRLPSRVHFRVWV LQFOXGLQJDWWRUQH\ UHJDUGLQJZKHWKHUWKRVHFRVWVZRXOGLQFOXGHDWWRUQH\IHHVEXW IHHVDFFRUGLQJWRFDVHODZ RQDSODLQWLIIXSRQWKHUHILOLQJRI WKHTXHVWLRQZDVQRWUHVROYHGDWWKDWWLPH DQDFWLRQSUHYLRXVO\GLVPLVVHGLQDQ\FRXUWZKHWKHURUQRW WKHHDUOLHUGLVPLVVDOZDVFRQGLWLRQHGXSRQWKHWKUHDWRIVXFK 2Q sDQXDU\    WKH GLVWULFW FRXUW LVVXHG D ZULWWHQ FRVWV7KLVUXOHQRWFLWHGE\WKHPDMRULW\DWDOOFRQWDLQVDQ RUGHUJUDQWLQJWKH'XII\VjPRWLRQRQWKHFRQGLWLRQWKDWWKH LQGHSHQGHQWJUDQWRIDXWKRULW\WRLPSRVHFRVWV7KHDXWKRULW\ 'XII\VFRPSHQVDWH)RUGIRULWVOLWLJDWLRQFRVWVVKRXOGWKH\ JUDQWHG LQ 5XOH  G  LV QRW GHSHQGHQW XSRQ QRWLFH WR FKRRVHWRUHILOHWKHDFWLRQDQGWKDWWKHUXOLQJVPDGHGXULQJ SODLQWLIIV WKHWH[WRIWKHUXOHLWVHOIFRQVWLWXWHVVXFKQRWLFH WKHRULJLQDOFDVHZRXOGDSSO\WRDUHILOHGFDVH8SRQ)RUGjV 7KXV,ZRXOGILQGWKDWWKHGLVWULFWFRXUWUHWDLQHGWKHDXWKRULW\ PRWLRQWKHGLVWULFWFRXUWDPHQGHGWKDWRUGHUWRFODULI\WKDWWKH XQGHU5XOH G WRLPSRVHFRVWVXSRQWKH'XII\VHYHQLQWKH OLWLJDWLRQmFRVWVlPHQWLRQHGLQWKHGLVPLVVDORUGHULQFOXGHG DEVHQFHRIQRWLFHRILWVLQWHQWLRQWRGRVR WKRVH DWWRUQH\ IHHV LQFXUUHG E\ )RUG WKDW FRXOG QRW EH UHFRXSHGLQDVXEVHTXHQWDFWLRQ7KHGLVWULFWFRXUWGHFOLQHG ,9 WRFDOFXODWHWKHWRWDODPRXQWRIWKRVHOLWLJDWLRQFRVWVDWWKDW WLPHKRZHYHUSURSRVLQJLQVWHDGWRGRVRLIDQGZKHQWKH :KLOH,DPQRWZLWKRXWVRPHV\PSDWK\IRUWKHSRVLWLRQLQ 'XII\V UHILOHG WKHLU FRPSODLQW  7KH 'XII\V DWWHPSWHG WR ZKLFKWKH'XII\VILQGWKHPVHOYHVDQGUHVSHFWWKHPDMRULW\jV DSSHDOWKDWRUGHUEXWWKLVFRXUWKHOGLQDQXQSXEOLVKHGRUGHU HIIRUWWRGHDOZLWKWKHVHGLIILFXOWLVVXHV,FDQQRWDJUHHZLWK WKDWLWZDVQRWDSSHDODEOH6HH2UGHU&DVH1R  WK DOORIWKHFRQFOXVLRQVWKHPDMRULW\UHDFKHV,ZRXOGUHYHUVH &LU6HSW  6SHFLILFDOO\ZHQRWHGWKDWWKHGLVWULFW WKHGLVPLVVDORIWKH'XII\VjUHILOHGDFWLRQYDFDWHWKHGLVWULFW FRXUWjV RUGHU IHOO ZLWKLQ WKH VFRSH RI WKH JHQHUDO UXOH WKDW FRXUWjV GHFLVLRQ WR LPSRVH D ODZRIWKHFDVH UXOH XSRQ SODLQWLIIV FDQQRW DSSHDO DQ RUGHU JUDQWLQJ D YROXQWDU\ UHILOLQJDQGUHPDQGZLWKGLUHFWLRQVWRSURYLGHWKH'XII\VD GLVPLVVDOZLWKRXWSUHMXGLFH)XUWKHUPRUHZHDGGHGWKDWWKH DSSHDOZRXOGEHSUHPDWXUHLQDQ\FDVHVLQFHWKHDPRXQWRI IHHVSD\DEOHWRWKHGHIHQGDQWKDGQRW\HWEHHQVSHFLILHG 2Q sDQXDU\    WKH 'XII\V UHSUHVHQWHG E\ QHZ

FRXQVHOUHFRPPHQFHGWKHLUDFWLRQDJDLQVW)RUGLQ7HQQHVVHH 6HH (VTXLYHO Y $UDX  ) 6XSS    1' &DO  

VWDWHFRXUW)RUGVXEVHTXHQWO\UHPRYHGWKHFDVHDQGLWZDV XQGHUWDNLQJ D WKRURXJK DQDO\VLV DQG KROGLQJ WKDW DWWRUQH\ IHHV PD\ UHDVVLJQHG WR WKH GLVWULFW MXGJH ZKR KDG SUHVLGHG RYHU WKH DOZD\V EH DZDUGHG XQGHU UXOH  G (GZDUG ; &OLQWRQ sU 'RHV 5XOH  G $XWKRUL]H DQ $ZDUG RI $WWRUQH\jV )HHV"  6W sRKQjV /5HY  RULJLQDO FDVH  ,Q DQ RUGHU HQWHUHG RQ sXQH    WKH    m>P@RVW FRXUWV WKDW KDYH DGGUHVVHG WKH LVVXH KDYH KHOG WKDW IHHV GLVWULFWFRXUWDVVHVVHG)RUGjVQRQRYHUODSSLQJOLWLJDWLRQFRVWV PD\ EH DZDUGHGl EXW VHH $QGHUV Y )3$ &RUS  )5'    DW  DQGLQIRUPHGWKH'XII\VWKDWWKH\PXVWSD\WKDW ' 1s   KROGLQJ WKDW DWWRUQH\ IHHV PD\ QRW EH DZDUGHG XQGHU 5XOH DPRXQW ZLWKLQ WKLUW\ GD\V RU VXIIHU GLVPLVVDO RI WKHLU  G XQOHVV WKH XQGHUO\LQJ DFWLRQ DOUHDG\ DOORZV IRU VKLIWLQJ RI DWWRUQH\ IHHV   'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

GLVPLVV$V,QRWHGHDUOLHUZKHQGLVFXVVLQJWKHLPSURSULHW\ FRPSODLQW7KHGLVWULFWFRXUWDOVRRUGHUHGWKDWDOOWKHUXOLQJV RIWKHGLVWULFWFRXUWjVEHODWHGLPSRVLWLRQRIDODZRIWKHFDVH IURPWKHRULJLQDODFWLRQZRXOGEHWKHODZRIWKHFDVHLQWKH FRQGLWLRQRQWKH'XII\VjGLVPLVVDO,DJUHHWKDW5XOH D UHILOHGDFWLRQH[FHSWWKDWWKH'XII\VZRXOGEHSHUPLWWHGWR JHQHUDOO\ LPSOLHV D QRWLFH REOLJDWLRQ o LH D GLVWULFW FRXUW QDPHRQHDGGLWLRQDOH[SHUWLQWKHUHILOHGDFWLRQ2QsXQH  JHQHUDOO\PD\QRWmFRQGLWLRQlDGLVPLVVDOXSRQDUHTXLUHPHQW  LQUHVSRQVHWR)RUGj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mFRVWVl DGGUHVVWKHMXULVGLFWLRQDOLVVXHVLQWKHLUDSSHOODWHEULHIV6HH ZRXOGLQFOXGHZKDWHYHUFRVWVPLJKWEHDXWKRUL]HGXQGHUmWKH 2UGHU&DVH1RV   WK&LU1RY   UXOHVl  7KXV WKHUH LV QR GRXEW WKDW WKH 'XII\V DQG WKHLU FRXQVHOZHUHDZDUHERWKWKDWFRVWVZRXOGEHLPSRVHGDQGWKDW )DFLQJGLVPLVVDORIWKHLUUHILOHGFDVHGXHWRWKHLULQDELOLW\ LWZDVWKH'XII\VZKRZRXOGEHDUWKHULVNWKDWWKRVHFRVWV WRSD\WKHUHTXLUHGFRVWVWKH'XII\VILOHGDPRWLRQWRVWD\ PLJKW HQWDLO PRUH WKDQ WKH\ KRSHG 7KLV QRWLFH LV VXUHO\ HQIRUFHPHQW RI WKH GLVWULFW FRXUWjV RUGHU RI sXQH     VXIILFLHQW WR PHHW WKH UHTXLUHPHQWV RI 5XOH  D  LQGHHG ZKLFK ZDV GHQLHG LQ DQ RUGHU GDWHG $XJXVW     2Q WKHUH LV QRWKLQJ LQ WKH WH[W RI 5XOH  D  RU LQ WKH FDVHV 2FWREHU WKHGLVWULFWFRXUWGHQLHGWKH'XII\Vj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jV RUGHUV DQG JLYH WKH 'XII\V WLPH WR FRQWHPSODWH WKHLU GHFLVLRQ WR UHTXLULQJWKHPWRSD\)RUGjVDWWRUQH\IHHVDQGLPSRVLQJWKH DEDQGRQSURVHFXWLRQRIWKHLUFDVH7KLVH[HUFLVHZRXOGKDYH ODZ RI WKH FDVH RQ WKH UHILOHG DFWLRQ FDXVHG WKHP OHJDO UHTXLUHG)RUGj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

,,$1$/<6,6 RI)RUGjVFRVWVIXOO\XSRQWKH'XII\V7KDWLVSUHFLVHO\ZKDW 5XOH G DXWKRUL]HVWKHGLVWULFWFRXUWWRGRKRZHYHUDQG $$SSHDODELOLW\RIWKH'LVWULFW&RXUWjV2UGHUV SUHFLVHO\ZKDWWKLVGLVWULFWFRXUWLQGLFDWHGLWZRXOGGRLIWKH ILUVWDFWLRQZHUHGLVPLVVHGPLGWULDO7KHUHDUHPRUHRYHU )RUG DUJXHV WKDW WKH GLVWULFW FRXUWjV RUGHUV JUDQWLQJ WKH PHFKDQLVPVIRUWKHVKLIWLQJRIFRVWVEHWZHHQFOLHQWDQGHUUDQW 'XII\Vj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jVFRQFOXVLRQWKDW 6FKROO Y )HOPRQW 2LO &RUS  )G    WK &LU WKH GLVWULFW FRXUW ZDV REOLJDWHG WR    GHWHUPLQH WKH     &+$5/(6 $/$1 :5,*+7 $57+85 5 0,//(5 DSSUR[LPDWHDPRXQWRImFRVWVlWKH'XII\VPLJKWIDFHXSRQ )('(5$/ 35$&7,&( $1' 352&('85(† DW  6XSS UHILOLQJRIWKHLUDFWLRQ DQG  SURYLGHWKH'XII\VZLWKQRWLFH  6HYHUDOFLUFXLWVKDYHUHFRJQL]HGDQH[FHSWLRQWRWKLV RIWKDWILJXUHEHIRUHDFFHSWLQJWKH'XII\VjPRWLRQWRGLVPLVV UXOH RI QRQDSSHDODELOLW\ KRZHYHU ZKHQ WKH SODLQWLII KDV 1RWRQO\LVVXFKDQREOLJDWLRQLQFRQVLVWHQWZLWKWKHDXWKRULW\ VXIIHUHGmOHJDOSUHMXGLFHlIURPWKHFRQGLWLRQVLPSRVHGE\WKH JUDQWHG WR GLVWULFW FRXUWV XQGHU WKH )HGHUDO 5XOHV RI &LYLO GLVWULFWFRXUWDQGKDVQRWDFTXLHVFHGLQWKRVHFRQGLWLRQV6HH 3URFHGXUHLWLPSRVHVDEXUGHQRQWULDOFRXUWVZKLFKZRXOGEH %HOOH0LGZHVW,QFY0LVVRXUL3URSHUW\ &DV,QV*XDU XQZRUNDEOHLQSUDFWLFH $VVjQ)G   WK&LU  0F*UHJRUY%RDUG RI&RPPjUV )G WK&LU  8QLRLO 7KHPDMRULW\FRQFOXGHVWKDW5XOH D FRQWDLQVDQRWLFH ,QFY()+XWWRQ &R )G WK&LU   UHTXLUHPHQWoWKDWLVWKDWDGLVWULFWFRXUWPD\QRWFRQGLWLRQ FHUWGHQLHG86   <RIIHY.HOOHU,QGXV,QF DYROXQWDU\GLVPLVVDOZLWKRXWSUHMXGLFHXSRQDUHTXLUHPHQW )G  WK&LU  FHUWGHQLHG86 WKDW LV QRW GLVFORVHG WR WKH SDUW\ VHHNLQJ GLVPLVVDO EHIRUH     :5,*+7 0,//(5VXSUD†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jV LQVWDQFH VDYH XSRQ RUGHU RI WKH FRXUW DQG XSRQ VXFK WHUPV DQG FRQGLWLRQV  DV WKH FRXUW GHHPV SURSHU    ,QGHHG DW RUDO DUJXPHQW FXUUHQW FRXQVHO IRU WKH 'XII\V LQGLFDWHG )(' ,9  5 &  3  D   WKDW WKH 'XII\V KDYH DVVHUWHG D PDOSUDFWLFH FODLP DJDLQVW WKH 7KRPDVHV  'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

7KHUHLVPRUHRYHUQRDSSDUHQWPHFKDQLVPE\ZKLFKWKH FDVH ODZ LQ WKLV FLUFXLW VXJJHVWV WKDW WKLV FRXUW ZRXOG GLVWULFWFRXUWFRXOGKDYHLPSRVHG)RUGj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oWKH7KRPDVHVZHUHUHSODFHG WKH\ ZHUH XQUHDVRQDEOH  6HH  )G DW   ,Q DQG ZHUH QR ORQJHU FRXQVHO RI UHFRUG ZKHQ WKH UHILOLQJ 0DQDJHPHQW ,QYHVWRUV ZH VWDWHG WKDW DQ DSSHDO IURP D RFFXUUHG  ,W ZRXOG EH GLIILFXOW IRU WKH GLVWULFW FRXUW WR YROXQWDU\GLVPLVVDOZLWKRXWSUHMXGLFHmGRHVQRWOLHWRUHYLHZ FRQGLWLRQWKH'XII\VjULJKWWRUHILOHXSRQWKHSHUIRUPDQFHRI UXOLQJVZKLFKGRQRWKDYHWKHHIIHFWRIGHWHUPLQLQJWKHFDVH DQDFWE\VRPHRQHQRORQJHULQYROYHGLQWKHOLWLJDWLRQ DJDLQVWSODLQWLIIl)GDW ,QWKDWFDVHWKHGLVWULFW FRXUWKDGGHFOLQHGWRH[HUFLVHVXSSOHPHQWDOMXULVGLFWLRQRYHU )LQDOO\DVWKHPDMRULW\PDNHVDSRLQWRIQRWLQJWKHGLVWULFW WKHSODLQWLIIj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m>:@KLOH WKH RSSRVLQJ SDUW\  VHHNLQJ VXFK VDQFWLRQV RU D UHFRUG ZKLFK GLVPLVVDORIWKHVWDWHFODLPVSUHFOXGHGWKHLUDGMXGLFDWLRQRQ UHIOHFWVDFOHDUIDFWXDOSUHGLFDWHIRUGRLQJVR WKHPHULWVLQWKLVODZVXLWLWGLGQRWSUHFOXGHWKHLUDGMXGLFDWLRQ LQ D VWDWH FRXUWl   7KH FRXUW DOVR SRLQWHG RXW WKDW WKH ,ILWWUXO\ZDVFRXQVHOjVIDLOXUHVDORQHZKLFKFDXVHGWKHILUVW GLVPLVVDO KDG QR UHV MXGLFDWD HIIHFW HYHQ LQ IHGHUDO FRXUW WULDOWREHDERUWHGLWGRHVVHHPXQIDLUWRLPSRVHWKHEXUGHQ EHFDXVHLWZDVZLWKRXWSUHMXGLFH6HHLG VHHDOVR/H&RPSWH Y 0U &KLS ,QF  )G   WK &LU   GHVFULELQJ OHJDO SUHMXGLFH DV D UXOLQJ WKDW mVHYHUHO\  ,QGHHG LQ DOO LQVWDQFHV LQ ZKLFK D GLVWULFW FRXUW FRQGLWLRQHG UHILOLQJ RI D FDVH XSRQ SD\PHQW RI FRVWV , FRXOG ILQG RQO\ RQH ZKHUH WKH SODLQWLIIjV FRXQVHO DV RSSRVHG WR WKH SODLQWLII KLPVHOI ZDV RUGHUHG WR PDNH SD\PHQW 6HH :KLWHKHDG Y 0LOOHU %UHZLQJ &R  )5'   0DQDJHPHQW ,QYHVWRUV LV GLIIHUHQW IURP WKH LQVWDQW FDVH LQ WKDW WKH 0' *D    $QG HYHQ LQ :KLWHKHDG WKH GLVWULFW FRXUW FKDUDFWHUL]HG UXOLQJ WKDW DVVHUWHGO\ FDXVHG OHJDO SUHMXGLFH WR WKH SODLQWLIIV LQ WKDW FDVH LWV GHFLVLRQ WR LPSRVH SD\PHQW RI FRVWV RQ FRXQVHO DV D VDQFWLRQ IRU n WKH GLVWULFW FRXUWjV GLVPLVVDO RI WKH SODLQWLIIVj VWDWHODZ FODLPV n mZLOOIXO DEXVH >RI@ MXGLFLDO SURFHVVHVl ,G DW  FLWDWLRQ RPLWWHG  7KH RFFXUUHG EHIRUH WKH SODLQWLIIVj YROXQWDU\ GLVPLVVDO UDWKHU WKDQ DV D :KLWHKHDG FRXUW HQIRUFHG WKLV mVDQFWLRQl E\ DOORZLQJ FRXQVHO WR FRQGLWLRQ RI WKDW GLVPLVVDO :H EHOLHYH WKDW WKLV GLIIHUHQFH LV LUUHOHYDQW ZLWKGUDZ IURP WKH UHILOHG FDVH RQO\ DIWHU SD\PHQW RI WKH FRVWV KRZHYHU VLQFH WKH JRDO RI WKH OHJDO SUHMXGLFH LQTXLU\ LV VLPSO\ WR GHWHUPLQH ZKHWKHU WKH GLVWULFW FRXUWjV DFWLRQV DPRXQW WR DQ LQYROXQWDU\  7KH GLVWULFW FRXUW FKDUDFWHUL]HG WKH SHUIRUPDQFH RI WKH 7KRPDVHV DV DGYHUVH MXGJPHQW DJDLQVW WKH SODLQWLII LUUHVSHFWLYH RI ZKHWKHU WKDW UXOLQJ mLQHSWl EXW GLG QRW ILQG RU VXJJHVW WKDW WKHLU DFWLRQV ZHUH VDQFWLRQDEOH LV WKH FDXVH RU WKH FRQGLWLRQ RI WKH mYROXQWDU\l GLVPLVVDO  'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

FLUFXPVFULEH>V@lDSODLQWLIIjVDELOLW\WREULQJDQRWKHUVXLW VHH UHILOLQJl SULRU WR HQWHULQJ DQ RUGHU JUDQWLQJ WKH 'XII\Vj DOVR %RODQG Y (QJOH  )G   WK &LU   UHTXHVWIRUGLVPLVVDO 0DMRULW\RSLQLRQDW %HOOH0LGZHVW)GDW  ,, 7KH'XII\VDUJXHWKDWWKHWHUPVDQGFRQGLWLRQVLPSRVHGE\ WKHGLVWULFWFRXUWDUHXQUHDVRQDEOHDQGVHYHUHO\FLUFXPVFULEH $V WR WKH ILUVW RI WKHVH FRQFOXVLRQV D UHYLHZ RI WKH WKHLUDELOLW\WREULQJVXLWDJDLQ:LWKUHVSHFWWRWKHDWWRUQH\ WUDQVFULSWUHYHDOVWKDWWKHWULDOFRXUWPDGHFOHDUWRDOOSUHVHQW IHHVFRQGLWLRQWKH'XII\VDUJXHWKDWWKH\DUHXQDEOHWRSD\ GXULQJWKHSURFHHGLQJVLQFOXGLQJWKH'XII\VWKDWSODLQWLIIV WKRVHIHHVDQGDUHWKHUHIRUHHIIHFWLYHO\EDUUHGIURPUHILOLQJ ZRXOGEHUHTXLUHGWRSD\GHIHQGDQWjVFRVWVDVDFRQGLWLRQRI WKHLUVXLW7KH'XII\Vj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mFRVWVlWKHSDUWLHVZHUHUHIHUULQJ RXW WKDW FRXUWV KDYH IRXQG VLPLODU IHH FRQGLWLRQV QRW WR WRWKHODQJXDJHRI5XOH G RIWKH)HGHUDO5XOHVRI&LYLO FRQVWLWXWH OHJDO SUHMXGLFH  LQ8QLRLO ,QF Y () +XWWRQ 3URFHGXUHZKLFKH[SUHVVO\SURYLGHVWKDWXSRQUHILOLQJRID &R )G WK&LU  WKHWRWDOFRVWVLPSRVHGRQ GLVPLVVHG DFWLRQ mWKH FRXUW PD\ PDNH VXFK RUGHU IRU WKH WKHSODLQWLIIZHUHVHHLGDWDQGLQ<RIIHY SD\PHQWRIFRVWVRIWKHDFWLRQSUHYLRXVO\GLVPLVVHGDVLWPD\ .HOOHU,QGXV,QF)G WK&LU  PRUHWKDQ GHHPSURSHUDQGPD\VWD\WKHSURFHHGLQJVLQWKHDFWLRQXQWLO WZRGHFDGHVDJRWKHWRWDOFRVWZDVVHHLGDW WKH SODLQWLII KDV FRPSOLHGZLWK WKH RUGHUl  5XOH  G 7KH NH\ TXHVWLRQ WKHQ LV ZKHWKHU WKH UHDVRQDEOHQHVV )5&3 HPSKDVLVDGGHG  7KXVWKHUHFRUGUHYHDOVWKDW VWDQGDUGIRULPSRVLQJDWWRUQH\IHHVXQGHU5XOH D  LVD QRWLFHRIWKHGLVWULFWFRXUWjVLQWHQWLRQWRLPSRVHFRVWVXSRQ VXEMHFWLYHRUREMHFWLYHRQHon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

RWKHUDUHDRIDSSHOODWHMXULVGLFWLRQLQZKLFKWKHPHDQVRIWKH ZHUH UHIHUULQJ WR WKH WH[W RI 5XOH  ZKHQ GLVFXVVLQJ WKH PRWLRQ WR GLVPLVV DQG WKH LPSRVLWLRQ RI FRVWV XSRQ UHILOLQJ $00 s$ DW  SDUWLHV UDWKHU WKDQ WKH QDWXUH RI WKH GHFLVLRQ GHWHUPLQHV ZKHUH WKH FRXUW UHIHUV WR WKH FRQFHSW RI UHILOLQJ mFRVWVl XQGHU mWKH UXOHVl DSSHDODELOLW\  )XUWKHUPRUH DSSHOODWH FRXUWV DUH QRW ZHOO DQG WKH 'XII\Vj FRXQVHO GLVFXVVHV H[DPLQLQJ WKH FRVW TXHVWLRQ IRU RYHU SRVLWLRQHG WR PDNH WKH SUHGLFDWH IDFWXDO GHWHUPLQDWLRQ WKLUW\ PLQXWHV SULRU WR PDNLQJ WKH PRWLRQ WR GLVPLVV  ,W LV DOVR FOHDU ZKHWKHUDSDUW\WUXO\FDQQRWDIIRUGWRSD\FRVWVZKLFKZRXOG PRUHRYHU WKDW WKH RQO\ VHFWLRQ RI 5XOH  ZKLFK PHQWLRQV WKH FRQFHSW RI FRVWV SDUWLFXODUO\ FRVWV LPSRVHG XSRQ UHILOLQJ LV 5XOH  G   'XII\HWDOY 1RV     1RV     'XII\HWDOY )RUG0RWRU&R )RUG0RWRU&R

:KHQWKH'XII\VjFRXQVHOVRXJKWGLVPLVVDOPLGWULDOWKH EHUHTXLUHGE\WKHUXOHWKDWWKH'XII\VDSSHDUWRDGYRFDWH GLVWULFW FRXUW KDG VHYHUDO FKRLFHV   WR GHQ\ WKH UHTXHVW WR 7KHUHIRUHZHFRQFOXGHWKDWDQDSSHDOLQJSDUW\PXVWVKRZ JUDQW LW XQFRQGLWLRQDOO\ RU WR JUDQW LW XSRQ VSHFLILHG WKDW D FRVW FRQGLWLRQ LV REMHFWLYHO\ XQUHDVRQDEOH ZLWKRXW FRQGLWLRQV7KHGLVWULFWFRXUWFKRVHWKHODVWRIWKHVHURXWHV UHJDUGWRWKDWSDUW\jVILQDQFLDOPHDQVLQRUGHUWRGHPRQVWUDWH WKH FRXUW H[SUHVVO\ JUDQWHG WKH 'XII\Vj UHTXHVW XSRQ WKH OHJDOSUHMXGLFH FRQGLWLRQWKDWWKH'XII\VSD\GHIHQGDQWj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mSUHVVWKHUHVWDUW LWHPL]LQJ LWV H[SHQVHV ZKLFK WKH 'XII\V GR QRW FRQWHVW EXWWRQl XSRQ GLVPLVVDO RI WKHLU ILUVW DFWLRQ  7KH GLVWULFW 5DWKHUWKH\DUJXHWKDWWKRVHIHHVDUHXQUHDVRQDEOHEHFDXVH FRXUWjVSRVWKRFGHFLVLRQWRLPSRVHGLIIHUHQWFRQGLWLRQVDIWHU WKH\UHVXOWLQWKH'XII\VjLQDELOLW\WREULQJDVHFRQGVXLW:H GLVPLVVDODQGDIWHUUHOHDVHRIWKHMXU\OHIWWKH'XII\VLQWKH WKHUHIRUHKROGWKDWWKHGLVWULFWFRXUWjVRUGHUZLWKUHVSHFWWR SRVLWLRQRIKDYLQJWRSD\WKHGHIHQGDQWIRUWKHSULYLOHJHRI FRVWVGRHVQRWUHVXOWLQOHJDOSUHMXGLFHWRWKH'XII\V UHWU\LQJWKHFDVHIRUZKLFKWKHLUFRXQVHOZDVLOOSUHSDUHGLQ WKH ILUVW LQVWDQFH  :KLOH WKH GLVWULFW FRXUW FRXOG KDYH 7KH'XII\VDOVRFRQWHQGWKDWWKH\ZHUHOHJDOO\SUHMXGLFHG SUHVHQWHGWKLVmFKRLFHlWRWKH'XII\VDQGWKHLUFRXQVHOEHIRUH E\WKHGLVWULFWFRXUWjVGHFLVLRQWRLPSRVHRQWKHUHILOHGDFWLRQ GLVPLVVDODFKRLFHWKH'XII\VOLNHO\ZRXOGKDYHUHMHFWHGLW WKHODZRIWKHFDVHIURPWKHRULJLQDODFWLRQ7KH\DUJXHWKDW GLGQRWGRVR7KHGLVWULFWFRXUWjV EHODWHGODZRIWKHFDVH WKHGLVWULFWFRXUWjVHYLGHQWLDU\UXOLQJVIURPWKHRULJLQDODFWLRQ UXOLQJUHQGHUHGWKH'XII\VGLVPLVVDOXVHOHVVIURPDVWUDWHJ\ SUHYHQWWKH'XII\VIURPLQWURGXFLQJWKHHYLGHQFHQHFHVVDU\ VWDQGSRLQWDQGFRQVWLWXWHGDQDEXVHRIWKHFRXUWjVGLVFUHWLRQ WRSUHYDLOLQWKHUHILOHGDFWLRQ$V)RUGSRLQWVRXWKRZHYHU XQGHU5XOH D   WKH'XII\VKDYHQRWSRLQWHGWRDQ\VSHFLILFHYLGHQFHWKDWWKH\ QHHGWRLQWURGXFHLQRUGHUWRSUHYDLOQRUKDYHWKH\H[SODLQHG , UHVSHFWIXOO\ GLVVHQW KRZHYHU IURP WKH PDMRULW\jV ZKDW VKRZLQJV WKH\ ZLOO EH XQDEOH WR PDNH ZLWK WKH FRQFOXVLRQWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQZKHQLW FRQVLGHUDEOHHYLGHQFHWKH\KDGDPDVVHGIRUWKHRULJLQDOWULDO LPSRVHG )RUGjV DWWRUQH\ IHHV DQG FRVWV XSRQ WKH 'XII\V )XUWKHUPRUHWKHGLVWULFWFRXUWjVRUGHUSHUPLWWHGWKH'XII\VWR UDWKHUWKDQWKHLUFRXQVHODVDFRQGLWLRQRIUHILOLQJ$QG, QDPHRQHDGGLWLRQDOH[SHUWLQWKHUHILOHGDFWLRQ GLVVHQW IURP WKH FRQFOXVLRQ WKDW WKH GLVWULFW FRXUW KDG DQ REOLJDWLRQ mWR JLYH WKH 'XII\V QRWLFH RI WKH DSSUR[LPDWH 7KH&RXUWRI$SSHDOVIRUWKH6HYHQWK&LUFXLWGHDOWZLWKD DPRXQWRIFRVWVIRUZKLFKWKH\ZRXOGEHUHVSRQVLEOHXSRQ VLWXDWLRQ YHU\ VLPLODU WR WKLV RQH LQ 3DUNHU Y )UHLJKWOLQHU &RUS )G  WK&LU  ,QWKDWFDVHWKHGLVWULFW FRXUW KDG JUDQWHG WKH SODLQWLII D YROXQWDU\ GLVPLVVDO XQGHU  5XOH D  RQWKHFRQGLWLRQWKDWWKHFRXUWjVRUGHUEDUULQJ $JDLQ LW LV LPSRUWDQW WR HPSKDVL]H WKDW LW ZRXOG QRW EH DQ DEXVH RI WKHSODLQWLIIj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

RXWDSULPDIDFLHFDVHZLWKRXWWKHXVHRIH[SHUWWHVWLPRQ\ FRQGLWLRQVZKLFKZHUHWKHSUHGLFDWHIRUWKDWGLVPLVVDO7KLV 6HHLGDW Q,QWKHLQVWDQWFDVHDOWKRXJKWKH LVWUXHUHJDUGOHVVRIZKHQWKRVHFRQGLWLRQVZHUHLPSRVHG 'XII\Vj FRXQVHO GHVFULEHG )HDKHQ\ DV D mFULWLFDO ZLWQHVVl s$ DW  7U  DQG VWDWHG WKDW WKH H[FOXVLRQ RI KLV ,QOLJKWRIWKHFRQFOXVLRQWKDWWKHGLVWULFWFRXUWjVGLVPLVVDO WHVWLPRQ\ ZDV WKH LPSHWXV IRU UHTXHVWLQJ D YROXQWDU\ RI WKH UHILOHG DFWLRQ JDYH ULVH WR DQ DSSHDODEOH RUGHU D GLVPLVVDO WKH 'XII\V KDYH QRW VKRZQ WKDW WKH\ ZRXOG EH FRQFOXVLRQ ZLWK ZKLFK WKH PDMRULW\ DJUHHV , ZRXOG KDYH XQDEOHWRPDNHRXWDSULPDIDFLHFDVHZLWKWKHHYLGHQFHWKH\ GHFOLQHGWRUHDFKWKHTXHVWLRQRIZKHWKHUWKHGLVWULFWFRXUWjV DOUHDG\ KDYH RU ZLWK WKH DGGLWLRQ RI RQH H[SHUW ZLWQHVV WR GLVPLVVDORIWKHRULJLQDODFWLRQZLWKLWVVWULQJHQWFRQGLWLRQV UHSODFH)HDKHQ\,QGHHGLWVHHPVSDUWLFXODUO\LPSODXVLEOH ZDVRWKHUZLVHDSSHDODEOH7KHTXHVWLRQRIZKDWFRQVWLWXWHV WKDW)HDKHQ\FRXOGEHVRFHQWUDOWRWKH'XII\VjFDVHZKHQLQ mOHJDOSUHMXGLFHlLQWKHFRQWH[WRI5XOH D  GLVPLVVDOVLV IDFW KH DGPLWWHG WKDW KH KDG QRW H[DPLQHG WKH YHKLFOH DFRPSOH[IDFWVSHFLILFRQH,GRQRWEHOLHYHLWLVXVHIXOWR LQYROYHG LQ WKH DFFLGHQW DQG WKDW KH GLG QRW KDYH VSHFLILF HQJDJH LQ D GLVFXVVLRQ ZKLFK FRXOG EH UHDG WR HVWDEOLVK NQRZOHGJH DERXW WKH HQJLQHHULQJ RI WKH SDUWLFXODU %URQFR SDUDPHWHUV IRU WKLV OHJDO FRQFHSW ZKHQ WKDW GLVFXVVLRQ LV PRGHOWKDW:LOOLDP'XII\ZDVGULYLQJZKHQKHZDVNLOOHG XQQHFHVVDU\WRWKH&RXUWjVGHWHUPLQDWLRQRIWKHDSSHDOEHIRUH 7KHUHIRUHWKH'XII\VKDYHQRWVKRZQWKDWWKHGLVWULFWFRXUWjV LW LPSRVLWLRQ RI WKH UXOLQJV IURP WKH RULJLQDO DFWLRQ RQ WKH UHILOHGDFWLRQFRQVWLWXWHGOHJDOSUHMXGLFH ,DOVRDJUHHWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQLQ LPSRVLQJDODZRIWKHFDVHUXOHXSRQWKHUHILOLQJRIDQDFWLRQ :HQRQHWKHOHVVKROGWKDWZHKDYHMXULVGLFWLRQWRUHYLHZWKH E\WKH'XII\V/LNHWKHPDMRULW\,DJUHHWKDWVXFKDQRUGHU GLVWULFWFRXUWjVGLVPLVVDORIWKHUHILOHGFDVH$OWKRXJK WKH FDQEHDSSURSULDWHLQVRPHFLUFXPVWDQFHVDQGWKDWWKHGLVWULFW GLVWULFW FRXUWj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jV GLVPLVVDO ZLWK SUHMXGLFH RI WKH SODLQWLIIVj UHILOHGVXLWZKHQWKHSODLQWLIIVIDLOHGWRSD\WKHGHIHQGDQWVj DWWRUQH\IHHVDVUHTXLUHGE\WKHGLVWULFWFRXUWjVRUGHUJUDQWLQJ WKHSODLQWLIIVjUHTXHVWIRUDYROXQWDU\GLVPLVVDO 7KH)LIWK  &LUFXLWKDVVXJJHVWHGWKDWDSODLQWLIIFDQREWDLQUHYLHZRID 7KH WZR FRQGLWLRQV LPSRVHG LQ WKLV FDVH PXVW EH FRQVLGHUHG LQ FRQGLWLRQDOYROXQWDU\GLVPLVVDOE\DFFHSWLQJWKRVHFRQGLWLRQV WDQGHP :KLOH WKH 'XII\V SULPDULO\ IRFXV RQ WKHLU LQDELOLW\ WR SD\ )RUGjV

EXW WKHQ UHIXVLQJ WR FRPSO\ ZLWK WKHP DQG VXIIHULQJ D FRVWV DV D FRQGLWLRQ RI UHILOLQJ WKH DGGLWLRQDO ODZRIWKHFDVH FRQGLWLRQ DIIHFWV WKH YDOXH RI WKDW UHILOLQJ WR WKH 'XII\V DQG WKXV LV SHUWLQHQW WR WKH GLVPLVVDOZLWKSUHMXGLFHDVDUHVXOW6HH0RUWJDJH*XDU,QV QDWXUH RI WKH EXUGHQ FUHDWHG E\ WKH GLVWULFW FRXUWjV LPSRVLWLRQ RI FRVWV &RUSY5LFKDUG&DUO\RQ&R )G Q WK&LU   <RIIH)GDWQ7KDWLVZKDWWKH'XII\V  ,I SUHVVHG WR DGGUHVV WKH LVVXH , ZRXOG EH LQFOLQHG WR ILQG WKDW mOHJDO GLG LQ WKLV FDVH  $OWKRXJK WKH GLVWULFW FRXUW WHFKQLFDOO\ SUHMXGLFHl GLG DULVH IURP LPSRVLWLRQ RI WKH ODZRIWKHFDVH FRQGLWLRQ RQ GLVPLVVHGWKHUHILOHGFDVHZLWKRXWSUHMXGLFHWKDWGLVPLVVDO WKH 'XII\Vj RULJLQDO GLVPLVVDO , ZRXOG GR VR IRU WKH VDPH UHDVRQV WKH ZDVLQYROXQWDU\DQGDVWKH'XII\VSRLQWRXWLQWKHLUEULHI PDMRULW\ ODWHU FRQFOXGHV WKH GLVWULFW FRXUW DEXVHG LWV GLVFUHWLRQ E\ LQVLVWLQJ RQ FRPSOLDQFH ZLWK WKDW VDPH FRQGLWLRQ  'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RSHUDWHGDVDGLVPLVVDOZLWKSUHMXGLFHEHFDXVHWKHVWDWXWHRI OLPLWDWLRQVKDGUXQRQWKH'XII\VjFODLPVDWWKDWSRLQW&I &21&855,1*,13$57',66(17,1*,13$57 /H&RPSWH)GDW VWDWLQJWKDWLWLVWKHHIIHFWUDWKHU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKDQ WKH IRUPDO ODQJXDJH RI WKH GLVPLVVDO WKDW GHWHUPLQHV ZKHWKHUOHJDOSUHMXGLFHUHVXOWV 2IFRXUVHWKHGLFWDRIWKH )LIWK&LUFXLWLQ<RIIHDQG0RUWJDJH*XDUDQW\DUHQRWELQGLQJ .$7+/((10F'21$/'2j0$//(<'LVWULFWsXGJH RQ WKLV FRXUW EXW WKH ORJLF RI WKRVH FDVHV LV SHUVXDVLYH FRQFXUULQJ LQ SDUW DQG GLVVHQWLQJ LQ SDUW  $OWKRXJK WKH 7KHUHIRUHZHKROGWKDWWKLVFRXUWFDQKHDUWKH'XII\VjDSSHDO PDMRULW\HORTXHQWO\GHDOVZLWKDQXPEHURIGLIILFXOWFRQFHSWV RIWKHGLVPLVVDORIWKHUHILOHGFDVH , FDQ RQO\ FRQFXU LQ SDUW LQ WKH FRQFOXVLRQV WKH PDMRULW\ UHDFKHV  6SHFLILFDOO\ , FRQFXU LQ WKH UHVXOW UHDFKHG LQ %3HUPLVVLELOLW\RIWKH'LVWULFW&RXUWj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jVVHFRQGGLVPLVVDO ,Q FRQGXFWLQJ WKDW UHYLHZ ZH PXVW FRQVLGHU ZKHWKHU WKH , GLVWULFWFRXUWjVFRQGLWLRQVRQWKH'XII\VjYROXQWDU\GLVPLVVDO FRQVWLWXWHG DQ DEXVH RI GLVFUHWLRQ  6HH ':* &RUS Y ,DJUHHWKDWWKLV&RXUWKDVMXULVGLFWLRQWRFRQVLGHUWKHLVVXHV *UDQDGD,QYV,QF )G WK&LU  ,I UDLVHGLQWKH'XII\VjDSSHDO7KHGLVWULFWFRXUWjVGLVPLVVDORI WKH\GLGQRWWKHQWKHGLVWULFWFRXUWZDVHQWLWOHGWRGLVPLVVWKH WKH 'XII\Vj mUHILOHGl DFWLRQ ZDV D ILQDO DSSHDODEOH RUGHU 'XII\VjUHILOHGDFWLRQHYHQLIWKDWVHFRQGGLVPLVVDORSHUDWHG YHVWLQJ WKLV &RXUW ZLWK MXULVGLFWLRQ WR FRQVLGHU WKH UXOLQJV DVDGLVPLVVDOZLWKSUHMXGLFH6HH6WHUQY,QWHU0RXQWDLQ XSRQ ZKLFK WKDW GLVPLVVDO ZDV SUHPLVHG  7KH 'XII\Vj 7HO&R)G   WK&LU   :5,*+7 UHILOHGDFWLRQZDVGLVPLVVHGEHFDXVHWKH'XII\VZRXOGQRWRU 0,//(5VXSUD†DW,IWKRVHFRQGLWLRQVZHUH FRXOGQRWVDWLVI\FHUWDLQFRQGLWLRQVWKHGLVWULFWFRXUWLPSRVHG DQ DEXVH RI GLVFUHWLRQ KRZHYHU WKHQ WKH GLVWULFW FRXUWj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mZLWKRXW SUHMXGLFHl WKH SUDFWLFDO HIIHFW RI WKH GLVPLVVDO ZDV WR UHLQVWLWXWLRQ RI WKH 'XII\Vj FRPSODLQW DIWHU WKH VHFRQG GLVPLVVDO Y 7RPSNLQV IRUHYHU EDU WKH 'XII\Vj FODLPV 7KXV GHVSLWH WKH FKDUDFWHUL]DWLRQ WKH  &+$5/(6 $/$1 :5,*+7 $57+85 5 0,//(5 )('(5$/ 6HH GLVPLVVDO ZDV FHUWDLQO\ DQ mLQYROXQWDU\ DGYHUVH MXGJPHQWl IURP ZKLFK DQ 35$&7,&( $1' 352&('85( † DW   G HG    JHQHUDOO\ DSSHDO GRHV OLH  'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

GLVPLVVLQJWKHUHILOHGDFWLRQGXHWRWKH'XII\VjIDLOXUHWRPHHW SRVLWLRQ WR GHWHUPLQH LQLWLDOO\ ZKHWKHU WKHUH LV D EDVLV IRU WKRVHFRQGLWLRQVPXVWEHUHYHUVHG UHFRQVLGHULQJLWVHYLGHQWLDU\UXOLQJVZKHWKHUWKH'XII\VDUH VWLOO FDSDEOH RI SUHYDLOLQJ LQ OLJKW RI WKRVH UXOLQJV DQG 5HTXLULQJWKH'XII\VWR3D\)RUGjV&RVWV ZKHWKHUUHWDLQLQJWKHODZRIWKHFDVHLQWKHUHILOHGDFWLRQLV QHFHVVDU\IRUWKHSURWHFWLRQRI)RUGjVLQWHUHVWV 7KH 'XII\V GR QRW FRQWHVW WKH GLVWULFW FRXUWjV DELOLW\ WR UHTXLUHUHLPEXUVHPHQWRI)RUGjVDWWRUQH\IHHVDQGFRVWVQRU :HWKHUHIRUHILQGLWQHFHVVDU\WRYDFDWHWKHGLVWULFWFRXUWjV GR WKH\ FRQWHVW WKH DPRXQW RI WKRVH IHHV DQG FRVWV  7KH\ RUGHUDSSO\LQJWKHODZRIWKHRULJLQDOFDVHWRWKHUHILOHGFDVH DUJXH RQO\ WKDW WKH GLVWULFW FRXUW DEXVHG LWV GLVFUHWLRQ LQ DQG GLUHFW WKH GLVWULFW FRXUW RQ UHPDQG WR UHFRQVLGHU LWV UHTXLULQJWKH'XII\VUDWKHUWKDQWKHLUWULDOFRXQVHOWRSD\7KH GHFLVLRQLQOLJKWRIDQ\REMHFWLRQVWKDWWKH'XII\VPD\ZLVK 'XII\V FRQWHQG WKDW WKHLU IRUPHU FRXQVHO WKH 7KRPDVHV WRPDNH:HQRWHKRZHYHUWKDWLIWKHGLVWULFWFRXUWjVUXOLQJV VKRXOG KDYH WR SD\ )RUGjV FRVWV EHFDXVH WKH 7KRPDVHVj IURPWKHRULJLQDODFWLRQQRORQJHUDSSO\LQWKHUHILOHGDFWLRQ LQFRPSHWHQFHQHFHVVLWDWHGWKHYROXQWDU\GLVPLVVDO:HKROG )RUG PD\ EH HQWLWOHG WR UHLPEXUVHPHQW IRU DQ\ DGGLWLRQDO WKDWLWZDVDQDEXVHRIGLVFUHWLRQIRUWKHFRXUWQRWWRFRQVLGHU FRVWV DQG IHHV WKDW LW ZLOO KDYH WR H[SHQG LQ WKH UHILOHG WKH'XII\VjUHVSRQVLELOLW\IRU)RUGjVZDVWHGFRVWVLQDVVHVVLQJ OLWLJDWLRQ DV D UHVXOW RI KDYLQJ WR UHOLWLJDWH WKRVH UXOLQJV FRVWV DJDLQVW WKH 'XII\V UDWKHU WKDQ WKHLU FRXQVHO FRQVLVWHQWZLWKRXUGLVFXVVLRQLQ3DUW,,% )XUWKHUPRUH ZH KROG WKDW WKH GLVWULFW FRXUW DEXVHG LWV GLVFUHWLRQLQIDLOLQJSULRUWRWKHHQWU\RIWKHsDQXDU\  ,,,&21&/86,21 GLVPLVVDORUGHUWRJLYHWKH'XII\VQRWLFHRIWKHDSSUR[LPDWH DPRXQWRIFRVWVIRUZKLFKWKH\ZRXOGEHUHVSRQVLEOHXSRQ )RUWKHIRUHJRLQJUHDVRQVZH9$&$7(WKHGLVWULFWFRXUWjV UHILOLQJDQGWRDIIRUGWKHPDQRSSRUWXQLW\WRZLWKGUDZWKHLU $XJXVW GLVPLVVDORUGHUDQGLWVRUGHUV RI sXQH  PRWLRQ  7KHUHIRUH ZH YDFDWH WKH GLVWULFW FRXUWjV RUGHU RI  DQGsXQH  UHTXLULQJWKH'XII\VWRSD\)RUGjV GLVPLVVDO DQG LWV RUGHU UHTXLULQJ WKH 'XII\V WR SD\ )RUGjV FRVWVDQGLPSRVLQJWKHODZRIWKHFDVHRQWKHUHILOHGDFWLRQ FRVWVEHIRUHUHILOLQJDQGZHUHPDQGIRUUHFRQVLGHUDWLRQLQ DQGZH5(0$1'WKHFDVHIRUIXUWKHUSURFHHGLQJVFRQVLVWHQW OLJKWRIWKLVKROGLQJ ZLWKWKLVRSLQLRQ ,Q +HUULQJ Y &LW\ RI :KLWHKDOO  )G  WK &LU   WKH&RXUWRI$SSHDOVIRUWKH(LJKWK&LUFXLWKHOGWKDWLW ZDVDQDEXVHRIGLVFUHWLRQIRUWKHGLVWULFWFRXUWWRUHTXLUHWKH SODLQWLIIVWRSD\DWWRUQH\IHHVEHIRUHWKH\FRXOGUHILOHWKHLU FDVHZLWKRXWFRQVLGHULQJZKHWKHUWKH\ZHUHUHVSRQVLEOHIRU WKHGHIHQGDQWVjZDVWHGFRVWV,QWKDWFDVHWKHGLVWULFWFRXUW KDGJUDQWHGWKHSODLQWLIIVjPRWLRQIRUDYROXQWDU\GLVPLVVDO GXHWRWKHLUFRXQVHOjVXQSUHSDUHGQHVVRQWKHFRQGLWLRQWKDW WKHSODLQWLIIVjFRXQVHOSD\WKHGHIHQGDQWVjIHHVDQGFRVWVLIWKH SODLQWLIIVUHILOHGEXWLIWKHSODLQWLIIVUHWDLQHGQHZFRXQVHOn ZKLFKWKH\GLGnWKHSODLQWLIIVZRXOGEHUHVSRQVLEOHIRUWKH FRVWV6HHLGDW:KLOHQRWLQJWKDWWKHUHPD\EHVRPH GXHSURFHVVFRQFHUQVDVVRFLDWHGZLWKDVVHVVLQJFRVWVGLUHFWO\  'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

PHDQWWKDWWKH'XII\VGLGQRWKDYHDVXIILFLHQWRSSRUWXQLW\WR DJDLQVW WKH DWWRUQH\ UDWKHU WKDQ WKH FOLHQW VHH LG DQG FRQWHVW WKH GLVWULFW FRXUWjV GHFLVLRQ RU WR ZLWKGUDZ WKHLU DFNQRZOHGJLQJWKDWFOLHQWVDUHJHQHUDOO\KHOGUHVSRQVLEOHIRU PRWLRQIRUYROXQWDU\GLVPLVVDOLIWKH\GLGQRWZLVKWRDFFHSW WKH DFWV RI WKHLU DWWRUQH\V ZKR DUH WKHLU mIUHHO\ VHOHFWHG WKDW FRQGLWLRQ  $V ZH VWDWHG ZLWK UHVSHFW WR WKH FRVW DJHQW>V@l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jFRVWVVKRXOGEHDOORFDWHG UHDVRQV IRU GHFLGLQJ WR DSSO\ LWV UXOLQJV IURP WKH RULJLQDO 6HHLGDW Q DFWLRQWRWKHUHILOHGDFWLRQ)RUWKLVUHDVRQLWLVSDUWLFXODUO\ GLIILFXOWWRGHWHUPLQHZKHWKHUWKHGLVWULFWFRXUWDSSURSULDWHO\ :HILQGLWXVHIXOWRDQDORJL]HWKHLQVWDQWFDVHWRWKRVHFDVHV H[HUFLVHG LWV GLVFUHWLRQ LQ DWWDFKLQJ WKLV FRQGLWLRQ WR WKH GHDOLQJZLWK5XOH E LQYROXQWDU\GLVPLVVDOV7KHGLVWULFW 'XII\VjYROXQWDU\GLVPLVVDO6HHHJ':*&RUS )G FRXUWj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jVFRQGLWLRQSUHYHQWVWKHPIURPSUHYDLOLQJLQ SDUWLFXODUFDVHZKHUHWKH'XII\VZHUHQRWQHFHVVDULO\HYHQ WKHLU VXLW DQG LV QRW QHFHVVDU\ IRU WKH SURWHFWLRQ RI WKH GHIHQGDQW:HEHOLHYHWKDWWKHGLVWULFWFRXUWLVLQWKHEHWWHU  7KH +HUULQJ FRXUW IXUWKHU VWDWHG WKDW m>Z@KHQ LPSRVLQJ FRQGLWLRQV IRU D 5XOH  QRQVXLW WKH GLVWULFW FRXUW PXVW LQTXLUH LQWR WKH PRYLQJ SDUW\jV DELOLW\ WR SHUIRUP WKH FRQGLWLRQV SDUWLFXODUO\ ZKHQ WKH SDUW\ ,7 ,6 )857+(5 25'(5(' WKDW SODLQWLIIV PD\ DGG RQH H[SHUW DOOHJHV KH FDQQRW VDWLVI\ WKH FRQGLWLRQV ,Q VRPH FLUFXPVWDQFHV IDLOXUH WR WKHLU ZLWQHVV OLVW 3ODLQWLIIV PXVW PDNH DQ\ VXFK HOHFWLRQ WR GR VR PD\ EH DQ DEXVH RI GLVFUHWLRQl ,G DW  $V D UHVXOW WKH FRXUW ZLWKLQ  GD\V RI WKH GDWH RI WKLV RUGHU DQG QRWLI\ GHIHQGDQW RUGHUHG WKH GLVWULFW FRXUW RQ UHPDQG WR WDNH LQWR DFFRXQW WKH SODLQWLIIVj SURPSWO\ 'HIHQGDQW PD\ WDNH H[SHUWjV GHSRVLWLRQ DELOLW\ WR SD\ WKH GHIHQGDQWjV FRVWV DQG WR FRQVLGHU DOWHUQDWLYH PHDVXUHV s$ DW  2UGHU    LI WKH SODLQWLIIV DUH IRXQG WR EH FXOSDEOH EXW XQDEOH WR SD\ 6HH LG DW  Q :H GR QRW DJUHH WKDW WKH 'XII\Vj DELOLW\ WR SD\ )RUGjV FRVWV VKRXOG  2Q $XJXVW    WKH 'XII\V ILOHG D PRWLRQ IRU UHFRQVLGHUDWLRQ SOD\ D UROH LQ WKH GLVWULFW FRXUWjV GHWHUPLQDWLRQ RI ZKHWKHU WKH 'XII\V RU RI WKH GLVWULFW FRXUWjV RUGHUV DVVHVVLQJ FRVWV DQG IHHV DQG HVWDEOLVKLQJ WKH WKH 7KRPDVHV DUH DW IDXOW +RZHYHU EHFDXVH WKH UHVSRQVLEOH SDUW\ PD\ ODZ RI WKH FDVH DQG LWV RUGHU GLVPLVVLQJ WKH FDVH ZLWKRXW SUHMXGLFH XOWLPDWHO\ EH XQDEOH WR SD\ )RUGjV FRVWV ZH QRWH WKDW WKH GLVWULFW FRXUW +RZHYHU EHFDXVH WKH 'XII\V KDG DOUHDG\ ILOHG D QRWLFH RI DSSHDO WKH VKRXOG FRQVLGHU WKH SRVVLELOLW\ RI DOWHUQDWLYH VROXWLRQV WKDW ZRXOG PHHW WKH GLVWULFW FRXUW IRXQG WKDW LW ZDV ZLWKRXW MXULVGLFWLRQ WR FRQVLGHU WKRVH JRDOV RI ERWK SURWHFWLQJ )RUG DQG HQVXULQJ WKDW WKH 'XII\V LI WKH\ DUH PRWLRQV EODPHOHVV DUH QRW GHSULYHG RI WKHLU GD\ LQ FRXUW  'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

DZDUHRIWKHFKRLFHVIDFHGE\WKHLUFRXQVHODQGZHUHJLYHQ 8QGHUDSSURSULDWHFLUFXPVWDQFHVZHEHOLHYHWKDWLWZRXOG LQVXIILFLHQW QRWLFH RI WKH SRVVLEOH FRQVHTXHQFHV RI WKRVH QRWEHDQDEXVHRIGLVFUHWLRQIRUWKHGLVWULFWFRXUWWRJUDQWD FKRLFHV WKH 7KRPDVHV UDWKHU WKDQ WKHLU FOLHQWV VKRXOG EH YROXQWDU\GLVPLVVDORQWKHFRQGLWLRQWKDWDOOUXOLQJVIURPWKH UHTXLUHG WR SD\ LI WKH 7KRPDVHV DUH WR EODPH IRU )RUGjV RULJLQDODFWLRQFDUU\RYHUWRWKHUHILOHGDFWLRQ'LVWULFWFRXUWV ZDVWHGFRVWV6HHLG KDYH EURDG GLVFUHWLRQ WR DWWDFK FRQGLWLRQV WR YROXQWDU\ GLVPLVVDOVXQGHU5XOH D  6HHLG)XUWKHUPRUHVHYHUDO 7KHUHLVHYLGHQFHLQWKLVFDVHWKDWWKH'XII\VjFRXQVHOZHUH FRXUWV RI DSSHDOV KDYH XSKHOG FRQGLWLRQV RQ YROXQWDU\ SULPDULO\WREODPHIRUWKHQHFHVVLW\RIUHTXHVWLQJDYROXQWDU\ GLVPLVVDOVVLPLODUWRWKHRQHDWLVVXHKHUH6HHHJ3DUNHU GLVPLVVDODQGDVGLVFXVVHGDERYHWKH'XII\VFODLPWKDWWKH  )G DW  XSKROGLQJ WKH GLVWULFW FRXUWjV RUGHU WKDW GLVPLVVDORIWKHILUVWDFWLRQZDVHTXLYDOHQWWRDGLVPLVVDOZLWK H[SHUWWHVWLPRQ\H[FOXGHGLQWKHRULJLQDODFWLRQFRXOGQRWEH SUHMXGLFHEHFDXVHWKH\DUHXQDEOHWRSD\)RUGjVFRVWV7KH UHLQWURGXFHG LQ WKH UHILOHG DFWLRQ  7HPSOHWRQ Y 1HGOOR\G FRQFHUQDWWKHKHDUWRI+HUULQJDQG&ROHPDQnWKDWLQQRFHQW /LQHV  )G   WK &LU    QRWLQJ ZLWK SODLQWLIIVVKRXOGQRWEHIRUFHGOLJKWO\WREHDUWKHFRVWVFUHDWHG DSSURYDOWKHGLVWULFWFRXUWjVGHFLVLRQWRFRQGLWLRQDYROXQWDU\ E\ WKHLU LQFRPSHWHQW FRXQVHO HVSHFLDOO\ QRW LI WKH FRVW GLVPLVVDO RQ WKH SODLQWLIIV DJUHHLQJ WKDW WKH\ ZRXOG QRW XOWLPDWHO\WKH\EHDULVORVLQJWKHLUGD\LQFRXUWnLVWKHUHIRUH RSSRVHWKHXVHRIH[LVWLQJGLVFRYHU\LQDVXEVHTXHQWVXLW  DSSOLFDEOH WR WKH 'XII\Vj FDVH  +RZHYHU ZH UHMHFW WKH 7KXV LI QHFHVVDU\ IRU WKH SURWHFWLRQ RI )RUGjV OHJLWLPDWH 'XII\VjDSSHOODWHFRXQVHOjVVXJJHVWLRQDWRUDODUJXPHQWWKDW LQWHUHVWVVHHHJ/H&RPSWH)GDW  :5,*+7 WKH GLVWULFW FRXUW KDV PDGH D VSHFLILF mILQGLQJl WKDW WKH 0,//(5 VXSUD †  DW  WKH GLVWULFW FRXUW FRXOG 'XII\VjWULDOFRXQVHOZHUHLQFRPSHWHQW$OWKRXJKWKHGLVWULFW YDOLGO\ LPSRVH WKH HYLGHQWLDU\ UXOLQJV IURP WKH 'XII\Vj FRXUW GLG PHQWLRQ WKH 7KRPDVHVj LQHSWQHVV LQ RQH RI LWV RULJLQDODFWLRQRQWKHLUUHILOHGDFWLRQ RUGHUVGXHSURFHVVDSSHDUVWRUHTXLUHWKDWWKH7KRPDVHVKDYH QRWLFHDQGDQRSSRUWXQLW\WREHKHDUGEHIRUHWKHGLVWULFWFRXUW :H DUH DJDLQ WURXEOHG KRZHYHU E\ WKH GLVWULFW FRXUWjV FRXOGUHTXLUHWKHPWRSD\)RUGjVIHHV6HHHJ+HUULQJ IDLOXUH WR JLYH QRWLFH WR WKH 'XII\V WKDW LW LQWHQGHG WR )GDW FRQGLWLRQWKHYROXQWDU\GLVPLVVDORQUHWDLQLQJWKHODZRIWKH FDVHLQWKHUHILOHGDFWLRQ7KHUHFRUGUHYHDOVQRGLVFXVVLRQRI WKDW FRQGLWLRQ RQ sDQXDU\    ZKHQ WKH 'XII\V  UHTXHVWHG DQG WKH GLVWULFW FRXUW RUDOO\ JUDQWHG D YROXQWDU\ :H DUH QRW SHUVXDGHG E\ )RUGjV DUJXPHQW WKDW WKH GLVWULFW FRXUW LV GLVPLVVDO7KHILUVWPHQWLRQRIWKHODZRIWKHFDVHFRQGLWLRQ ZLWKRXW DXWKRULW\ WR UHTXLUH WKH 7KRPDVHV WR SD\ )RUGjV DWWRUQH\ IHHV DSSHDUHG LQ WKH GLVWULFW FRXUWjV ZULWWHQ RUGHU JUDQWLQJ WKH XQGHU 5XOH  D   6HH +HFNHWKRUQ Y 6XQDQ &RUS  )G   WK &LU    5HO\LQJ SULPDULO\ RQ $O\HVND 3LSHOLQH 6HUY &R Y YROXQWDU\GLVPLVVDORQsDQXDU\ ,QDGGLWLRQWKH :LOGHUQHVV 6RFj\  86     WKH &RXUW RI $SSHDOV IRU WKH FRXUWGLGQRWVSHFLI\WKHPDWWHUVWREHJRYHUQHGE\WKHODZRI 1LQWK &LUFXLW VWDWHG LQ +HFNHWKRUQ WKDW WKH IHGHUDO FRXUWV FDQQRW mDOWHU WKH WKH FDVH XQWLO DQ RUGHU HQWHUHG RQ sXQH    DIWHU WKH XQLIRUP V\VWHP RI FRVWEHDULQJ FUHDWHG E\ &RQJUHVVl +HFNHWKRUQ  'XII\V DWWHPSWHG WR UHILOH WKHLU VXLW  7KLV ODFN RI QRWLFH )G DW  TXRWLQJ =DPEUDQR Y &LW\ RI 7XVWLQ  )G   WK &LU    +RZHYHU ZH UHMHFW +HFNHWKRUQjV UHDGLQJ RI $O\HVND $O\HVND VD\V QRWKLQJ DERXW WKH DOORFDWLRQ RI FRVWV DV EHWZHHQ DWWRUQH\V  DQG FOLHQWV EXW UDWKHU PHUHO\ KROGV WKDW WKH FRXUWV FDQQRW SURYLGH IRU WKH 2Q WKDW GDWH LQ DQ RUGHU UHVSRQGLQJ LQ SDUW WR WKH GHIHQGDQWVj SD\PHQW RI DWWRUQH\ IHHV ZLWKRXW VWDWXWRU\ DXWKRULW\ ZLWK FHUWDLQ QDUURZ PRWLRQ WR GHWHUPLQH WKH LWHPV WR EH JRYHUQHG E\ WKH ODZ RI WKH FDVH WKH H[FHSWLRQV 6HH $O\HVND  86 DW   )XUWKHUPRUH WKH 6XSUHPH GLVWULFW FRXUW VWDWHG &RXUW KDV VWDWHG WKDW D FRXUWjV DXWKRULW\ RYHU DWWRUQH\V LQFOXGLQJ LWV ,7 ,6 )857+(5 25'(5(' WKDW WKH UXOLQJV PDGH LQ WKH  DXWKRULW\ WR LPSRVH DWWRUQH\ IHHV RQ WKHP mLV DW OHDVW DV JUHDW DV LWV  DFWLRQ VKDOO EH WKH ODZ RI WKH FDVH LQ WKH  DFWLRQ  'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

$1' 352&('85(†DW GHG  ,QGHHG :H DOVR KROG WKDW LW ZDV DQ DEXVH RI GLVFUHWLRQ IRU WKH 5XOH  G  LV mLQWHQGHG WR VHUYH DV D GHWHUUHQW WR IRUXP GLVWULFWFRXUWWRZDLWXQWLOsXQHRI WRGHWHUPLQHWKHFRVWV VKRSSLQJ DQG YH[DWLRXV OLWLJDWLRQl RI ZKLFK WKHUH ZDV QR IRUZKLFKWKH'XII\VZRXOGEHUHVSRQVLEOH$WWKHWLPHWKDW HYLGHQFHLQWKLVFDVH(VTXLYHOY$UDX )6XSS WKH 'XII\V PRYHG YROXQWDULO\ WR GLVPLVV WKH DFWLRQ WKH\  &'&DO   TXRWLQJ6LPHRQHY)LUVW%DQN1DWjO VKRXOG KDYH EHHQ LQIRUPHG RI WKH VSHFLILF FRQGLWLRQV WKDW $VVjQ )G WK&LU  ,QDQ\HYHQWD ZRXOGEHSODFHGRQWKHLUGLVPLVVDODQGJLYHQWKHRSSRUWXQLW\ GLVWULFWFRXUWjVDSSOLFDWLRQRI5XOH G OLNHLWVLPSRVLWLRQ WRZLWKGUDZWKHPRWLRQLIWKH\IRXQGWKRVHFRQGLWLRQVWREH RI WHUPV DQG FRQGLWLRQV SXUVXDQW WR 5XOH  D   LV VWLOO WRRRQHURXV6HH0DUORZY:LQVWRQ 6WUDZQ )G VXEMHFW WR UHYLHZ E\ WKH DSSHOODWH FRXUW IRU DEXVH RI  WK&LU   m$FRXUWVKRXOGQRWODEHOVRPHWKLQJDV GLVFUHWLRQ6HH'$1,(/ 5 &248,//(77( (7 $/ 0225(j6 D WHUP DQG FRQGLWLRQ \HW QRW DIIRUG WKH DIIHFWHG SDUW\ DQ )('(5$/ 35$&7,&(†>@ GHG  :HWKHUHIRUH RSSRUWXQLW\ WR FRQVLGHU KLV RSWLRQV EHIRUH PDNLQJ KLV EHOLHYHWKDWRXUGHFLVLRQLVLQKDUPRQ\ZLWKWKHXQGHUVWDQGLQJ GHFLVLRQl /DXY*OHQGRUD8QLILHG6FK'LVW )G   RI5XOH G H[SUHVVHGLQWKRVHFDVHV  WK&LU  FI*$)&RUSY7UDQVDPHULFD,QV&R )G '&&LU  6FKROO)GDW  ,PSRVLQJ$OO5XOLQJVIURPWKH2ULJLQDO$FWLRQRQ m7KHUHZDVQRUHTXLUHPHQWWKDWWKHDSSHOODQWDJUHHWRWKH WKH5HILOHG$FWLRQ HQWU\RIWKLVRUGHU,WZDVDQDOWHUQDWLYHDYDLODEOHWRDSSHOODQW LQOLHXRISURFHHGLQJZLWKWKHWULDOl 3DUWLFXODUO\JLYHQWKH 7KH'XII\VDOVRDUJXHWKDWLWZDVDQDEXVHRIGLVFUHWLRQIRU VL]H RI )RUGjV FRVWV WKHUH DSSHDUV WR EH D VLJQLILFDQW WKHGLVWULFWFRXUWWRLPSRVHRQWKHUHILOHGDFWLRQWKHODZRIWKH OLNHOLKRRGWKDWWKH'XII\VZRXOGKDYHZLWKGUDZQWKHLUPRWLRQ FDVH IURP WKH RULJLQDO DFWLRQ  7KH\ FODLP WKDW WKLV UXOLQJ IRU YROXQWDU\ GLVPLVVDO KDG WKH\ EHHQ JLYHQ WKH UHOHYDQW UHQGHUHGWKHPXQDEOHWRSUHYDLOLQWKHUHILOHGFDVHVLQFHWKH LQIRUPDWLRQDQGDQRSSRUWXQLW\WRGRVR:KHQIDFHGZLWK LQHSWQHVVRIWKH'XII\VjRULJLQDOFRXQVHOKDGOHIWVLJQLILFDQW WKH 'XII\Vj UHTXHVW IRU D YROXQWDU\ GLVPLVVDO XQGHU 5XOH JDSV LQ WKHLU SURRI  )XUWKHUPRUH WKH\ SRLQW RXW WKDW WKH  D  DQG)RUGjVUHTXHVWIRUFRVWVWKHGLVWULFWFRXUWVKRXOG GLVWULFWFRXUWjVUXOLQJXQGHUPLQHVWKHSROLF\EHKLQG5XOH KDYHWDNHQVWHSVWRGHWHUPLQHWKHDSSUR[LPDWHFRVWVIRUZKLFK ZKLFK LV WR OHDYH WKH SDUWLHV DV LI WKH VXLW KDG QHYHU EHHQ WKHSODLQWLIIVZRXOGEHUHVSRQVLEOHEHIRUHJUDQWLQJWKHPRWLRQ EURXJKW6HH1DWLRQDO553DVVHQJHU&RUSY,QWHUQDWLRQDO DQGGLVPLVVLQJWKHMXU\7KH'XII\VWKHQZRXOGKDYHEHHQ $VVjQRI0DFKLQLVWV )G VW&LU  )RUGLQ IRUFHGWRGHFLGHZKHWKHUWRDFFHSWWKHFRQGLWLRQVDQGGLVPLVV UHVSRQVHSRLQWVRXWWKDW5XOHLVDOVRLQWHQGHGWRSURWHFW WKHFDVHRUWRZLWKGUDZWKHPRWLRQ WKHGHIHQGDQWIURPXQIDLUQHVV LQDGGLWLRQ)RUGGLVSXWHVWKH 'XII\VjFRQWHQWLRQWKDWWKHGLVWULFWFRXUWjVUXOLQJVOHIWWKHP :HWKHUHIRUHYDFDWHWKHGLVWULFWFRXUWjVRUGHUVGLVPLVVLQJ XQDEOHWRSUHYDLOLQWKHLUFDVH7KHUHIRUH)RUGXUJHVWKDWWKH WKHUHILOHGDFWLRQDQGUHTXLULQJWKH'XII\VWRSD\)RUGjVIHHV GLVWULFWFRXUWjVUXOLQJGLGQRWFRQVWLWXWHDQDEXVHRIGLVFUHWLRQ DQGZHUHPDQGIRUWKHGLVWULFWFRXUWWRUHFRQVLGHULWVUXOLQJV 2Q UHPDQG WKH GLVWULFW FRXUW LV GLUHFWHG WR DVVHVV DQG DSSRUWLRQ WKH REOLJDWLRQ WR SD\ )RUGjV FRVWV EHWZHHQ WKH  $W RUDO DUJXPHQW FRXQVHO IRU WKH 'XII\V VWDWHG WKDW WKH 'XII\V GR 'XII\VDQGWKH7KRPDVHVDFFRUGLQJWRWKHLUUHVSHFWLYHIDXOW QRW FRQWHVW WKH GLVWULFW FRXUWjV GHFLVLRQ WR JUDQW VXPPDU\ MXGJPHQW RQ VHYHUDO RI WKHLU FODLPV EHIRUH WULDO WKHUHIRUH ZH FRQVLGHU RQO\ WKH DSSURSULDWHQHVV RI WKH GLVWULFW FRXUWjV GHFLVLRQ WR DSSO\ WR WKH UHILOHG DFWLRQ DOO UXOLQJV IURP WKH RULJLQDO DFWLRQ UHJDUGLQJ GLVFRYHU\ DQG WKH DXWKRULW\ RYHU OLWLJDQWVl 5RDGZD\ ([SUHVV ,QF Y 3LSHU  86  DGPLVVLELOLW\ RI HYLGHQFH      'XII\HWDOY 1RV     1RV     'XII\HWDOY  )RUG0RWRU&R )RUG0RWRU&R

LQWKHILUVWWULDO$OWKRXJKWKHGLVWULFWFRXUWjVIDLOXUHWRJLYH QRWEHOLHYHWKDW5XOH G ZKLFKDOORZVGLVWULFWFRXUWVIDFHG WKH'XII\VSURSHUQRWLFHZDVDQDEXVHRIGLVFUHWLRQZHILQG ZLWKWKHUHILOLQJRIDSUHYLRXVO\GLVPLVVHGDFWLRQWRmPDNH WKDW LW ZDV UHDVRQDEOH WR FRQGLWLRQ WKH YROXQWDU\ GLVPLVVDO VXFKRUGHUIRUWKHSD\PHQWRIFRVWVRIWKHDFWLRQSUHYLRXVO\ XSRQWKHSD\PHQWRI)RUGjVFRVWV:HWKHUHIRUHKROGWKDWWKH GLVPLVVHG DV LW PD\ GHHP SURSHUl DQG WR mVWD\ WKH REOLJDWLRQ WR SD\ )RUGjV FRVWV KDV QRW EHHQ H[WLQJXLVKHG SURFHHGLQJVLQWKHDFWLRQXQWLOWKHSODLQWLIIKDVFRPSOLHGZLWK +RZHYHU LI WKH 'XII\V DUH WKHPVHOYHV WR EODPH EXW DUH WKHRUGHUlLVGLUHFWO\DSSOLFDEOHKHUH)(' 5 &,9 3  G  XQDEOHWRSD\DOORUVRPHRIWKHFRVWVDOORFDWHGWRWKHPWKH :KHQWKH'XII\VDWWHPSWHGEDVHGRQWKHODQJXDJHRI5XOH GLVWULFWFRXUWPD\GHFLGHLQLWVGLVFUHWLRQZKHWKHUDQGRQ  G WRSHUVXDGHWKHGLVWULFWFRXUWPHUHO\WRVWD\WKHUHILOHG ZKDWWHUPVWKHFDVHVKRXOGJRIRUZDUG6KRXOGWKH7KRPDVHV FDVHLQVWHDGRIGLVPLVVLQJLWWKHGLVWULFWFRXUWH[SOLFLWO\VWDWHG IDLO WR SD\ WKHLU VKDUH RI )RUGjV FRVWV WKH 'XII\V ZLOO EH WKDWLWKDGLPSRVHGWKHSD\PHQWFRQGLWLRQSXUVXDQWWR5XOH DOORZHG WR SURFHHG ZLWK WKHLU VXLW QRWZLWKVWDQGLQJ WKH  D  QRW5XOH G 6HHs$DW  2UGHU'HQ3OjV 7KRPDVHVj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jV)HHV"67 s2+1j6 UHTXLUHG WR EHDU LWV FRVWV LQ WKLV OLWLJDWLRQ  )XUWKHUPRUH / 5(9  QQ    QRWLQJWKDWWKHIHGHUDOFRXUWV DOWKRXJKRXUKROGLQJLVOLPLWHGWRWKHXQLTXHFLUFXPVWDQFHVRI DUHVSOLWRQWKHLVVXHRIZKHWKHUDWWRUQH\IHHVPD\EHDZDUGHG WKLVFDVHGLVWULFWFRXUWVZLOOEHDEOHWRDYRLGWKHGDQJHURI XQGHU5XOH G DQGFLWLQJFDVHVRQERWKVLGHV 5XOH G VXFKXQIDLURXWFRPHVLQWKHIXWXUHE\UHTXLULQJGHIHQGDQWVWR WKHUHIRUH GRHVQRWFRQVWLWXWHFOHDUDXWKRULW\IRUWKHGLVWULFW DSSUR[LPDWHWKHLUFRVWVEHIRUHJUDQWLQJDYROXQWDU\GLVPLVVDO FRXUWjV DFWLRQV  ,Q DGGLWLRQ D QXPEHU RI FRXUWV KDYH 6KRXOG WKH GLVWULFW FRXUW QHJOHFW LWV UHVSRQVLELOLW\ WKH H[SUHVVHG UHOXFWDQFH WR H[HUFLVH WKHLU GLVFUHWLRQ WR DZDUG GHIHQGDQWnWKHSDUW\ZLWKWKHHDVLHVWDFFHVVWRWKHUHOHYDQW FRVWVXQGHU5XOH G ZKHQWKHUHVXOWZRXOGEHWRGHSULYH FRVWLQIRUPDWLRQnZLOOKDYHDQLQFHQWLYHWRHQFRXUDJHWKH LQQRFHQWSODLQWLIIVRIWKHLUGD\LQFRXUWGXHWRWKHLULQDELOLW\ FRXUWWRIXOILOOLW,QGHHGLQWKHLQVWDQWFDVH)RUGFRXOGKDYH WRSD\WKHGHIHQGDQWjVFRVWV6HH*UHJRU\Y'LPRFN WULHG WR SURWHFW LWVHOI E\ UHTXHVWLQJ WKDW WKH GLVWULFW FRXUW )G G&LU  =XFNHUY.DW])6XSS FODULI\ LWV WHUPV DQG FRQGLWLRQV ZKHQ WKDW FRXUW RUDOO\    6'1<    3KRHQL[ &DQDGD 2LO &R Y DQQRXQFHG LWV LQWHQWLRQ WR JUDQW WKH 'XII\Vj YROXQWDU\ 7H[DFR,QF)5'  ''HO  VHHDOVR GLVPLVVDOPRWLRQ /RXELHUY0RGHUQ$FRXVWLFV,QF)5' ' &RQQ   QRWLQJWKDWDOWKRXJKQRVKRZLQJRIEDGIDLWKLV )LQDOO\ ZH QRWH RXU GLVDJUHHPHQW ZLWK WKH GLVVHQWjV UHTXLUHGEHIRUHFRVWVPD\EHLPSRVHGRQWKHSODLQWLIIXQGHU DVVHUWLRQ WKDW )(' 5 &,9 3  G  GHPRQVWUDWHV WKDW WKH 5XOH  G  WKH SODLQWLIIjV PRWLYH LQ GLVPLVVLQJ WKH SULRU GLVWULFWFRXUWjVLPSRVLWLRQRI)RUGjVFRVWVDQGDWWRUQH\IHHVRQ DFWLRQPD\EHWDNHQLQWRDFFRXQW VHHJHQHUDOO\ &+$5/(6 WKH'XII\VZDVSHUPLVVLEOH$VDSUHOLPLQDU\PDWWHUZHGR $/$1 :5,*+7 $57+85 5 0,//(5 )('(5$/ 35$&7,&(