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

'21$/' 0$57,1 ; 3ODLQWLII$SSHOODQW    1R Y  !  /$.( &2817< 6(:(5 &2  ,1& %5(:(5< :25.(56  %((5 %277/(56 $1' 62)7  '5,1. :25.(56j /2&$/  81,21 12    'HIHQGDQWV$SSHOOHHV  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG 1Rn3DXO50DWLD&KLHI'LVWULFWsXGJH $UJXHG 6HSWHPEHU 'HFLGHGDQG)LOHG 2FWREHU %HIRUH '$8*+75(<DQG*,/0$1&LUFXLWsXGJHV &2+1'LVWULFWsXGJH

7KH +RQRUDEOH $YHUQ &RKQ 6HQLRU 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

  0DUWLQY/DNH&RXQW\6HZHUHWDO 1R

BBBBBBBBBBBBBBBBB &2816(/ $5*8('   &\QWKLD ' /RZHQNDPS &<17+,$ ' /2:(1.$03&2 /3$5LFKPRQG+HLJKWV2KLRIRU $SSHOODQW  sRKQ 3 2j'RQQHOO /<216  2j'211(// 3DLQHVYLOOH 2KLR sRVHSK & +RIIPDQ sU )$8/.1(5 086.29,7= 3+,//,36&OHYHODQG2KLRIRU$SSHOOHHV 21 %5,()   &\QWKLD ' /RZHQNDPS &<17+,$ ' /2:(1.$03&2/3$5LFKPRQG+HLJKWV2KLR1HLO 0\HUV 1(,/ 0<(56 &203$1< (DVWODNH 2KLR IRU $SSHOODQW  sRKQ 3 2j'RQQHOO /<216  2j'211(// 3DLQHVYLOOH2KLR*HRUJH+)DXONQHUsRVHSK&+RIIPDQ sU )$8/.1(5 086.29,7=  3+,//,36 &OHYHODQG 2KLRIRU$SSHOOHHV BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB 521$/'/((*,/0$1&LUFXLWsXGJH'RQDOG0DUWLQ DQHPSOR\HHRI/DNH&RXQW\6HZHU&R,QF /DNH DQGD PHPEHURIWKH7HDPVWHUV8QLRQZDVGLVFKDUJHGLQ0D\RI   DIWHU IDLOLQJ WR DWWHQG DQ LQVWUXFWLRQDO FODVV WKDW ZDV UHTXLUHGRIDOOHPSOR\HHV0DUWLQILOHGVXLWRQsDQXDU\  DOOHJLQJ YLRODWLRQV RI WKH )DLU /DERU 6WDQGDUGV $FW )/6$ WKH/DERU0DQDJHPHQW5HODWLRQV$FW /05$ DQG WKH1DWLRQDO/DERU5HODWLRQV$FW 1/5$ 7KHGHIHQGDQWV PRYHGWRGLVPLVV0DUWLQjVDFWLRQDVXQWLPHO\DQGWKHGLVWULFW FRXUWJUDQWHGWKHPRWLRQ)RUWKHUHDVRQVVHWIRUWKEHORZZH $)),50WKHMXGJPHQWRIWKHGLVWULFWFRXUW ,%$&.*5281' $ )DFWXDOEDFNJURXQG ,QHYDOXDWLQJDQDSSHDOIURPWKHJUDQWLQJRIDPRWLRQWR GLVPLVV SXUVXDQW WR 5XOH  E   RI WKH )HGHUDO 5XOHV RI &LYLO3URFHGXUHZHPXVWFRQVLGHUDOORIWKHSODLQWLIIjVIDFWXDO  0DUWLQY/DNH&RXQW\6HZHUHWDO 1R 1R 0DUWLQY/DNH&RXQW\6HZHUHWDO 

FRQVLGHUHG XQGHU WKH K\EULG †  FDXVH RI DFWLRQ DQG LV DOOHJDWLRQVDVWUXH%XFKDQDQY$SIHO )G WKHUHIRUHXQWLPHO\2QWKHRWKHUKDQGWRWKHH[WHQWWKDWWKLV WK&LU :HKDYHGRQHVRLQVHWWLQJIRUWKWKHIDFWV FODLP DOOHJHV EDGIDLWK EDUJDLQLQJ RQ EHKDOI RI /DNH WKLV EHORZ FKDUJHLVLQGHHGDQXQIDLUODERUSUDFWLFHFODLPRYHUZKLFKWKH 1/5% KDV H[FOXVLYH MXULVGLFWLRQ  ,W LV XQFOHDU IURP WKH $FFRUGLQJWR0DUWLQjVFRPSODLQWKHZDVHPSOR\HGE\/DNH FRPSODLQWRUIURP0DUWLQjVEULHIZKLFKW\SHRIFODLPKHLV DVD79DQG*URXW 7UXFN2SHUDWRUIURP0DUFK  DOOHJLQJ  1HYHUWKHOHVV HLWKHU ZD\ WKH FRXQW ZDV XQWLO 0D\     0DUWLQjV XQLW ZDV UHSUHVHQWHG E\ WKH DSSURSULDWHO\GLVPLVVHG %UHZHU\ :RUNHUV %HHU %RWWOHUV DQG 6RIW 'ULQN :RUNHUVj /RFDO8QLRQ1RRIWKH7HDPVWHUV8QLRQ 8QLRQ RI 7KH RWKHU FRXQW WKDW WKH GLVWULFW FRXUW GHHPHG WR EH DQ ZKLFK0DUWLQZDVDPHPEHU XQIDLUODERUSUDFWLFHFKDUJHZDV&RXQW)LYHZKLFKDOOHJHG WKDW mWKH FRQGXFW RI WKH 8QLRQ DPRXQWV WR GLUHFW DQGRU %HJLQQLQJLQ /DNHEHJDQHQJDJLQJLQFRQGXFWWKDW FLUFXPVWDQWLDOHYLGHQFHRIODFNRIUHSUHVHQWDWLRQSHUIXQFWRU\ 0DUWLQEHOLHYHGZDVTXHVWLRQDEOHDQGSRWHQWLDOO\LQFRQIOLFW UHSUHVHQWDWLRQDUELWUDU\DQGLQEDGIDLWKLQYLRODWLRQRI† ZLWKWKHFROOHFWLYHEDUJDLQLQJDJUHHPHQW &%$ ,Q0DUFKRI RIWKH/05$DQGLQYLRODWLRQRIWKH1/5$l:KHWKHUWKLV  IRUH[DPSOH/DNHEHJDQGHGXFWLQJDQDGGLWLRQDO FODLP FRQVWLWXWHV DQ XQIDLU ODERU SUDFWLFH RYHU ZKLFK WKH SHU PRQWK IURP 0DUWLQjV ZDJHV IRU LQVXUDQFH SUHPLXPV 1/5% KDV H[FOXVLYH MXULVGLFWLRQ LV D FORVHU FDVH  7KH /DNHjVUHVSRQVHVWR0DUWLQjVLQTXLULHVDERXWWKLVZLWKKROGLQJ 6XSUHPH&RXUWDFNQRZOHGJHGWKHVLPLODULW\RIVXFKFODLPVLQ ZHUH LQFRQVLVWHQW DQG XQFOHDU DQG /DNH UHIXVHG WR VWRS 'HO&RVWHOORZKHQLWGHFODUHGWKDWm>H@YHQLIQRWDOOEUHDFKHV ZLWKKROGLQJWKLVPRQH\HYHQDIWHU0DUWLQGHFODUHGWKDWKHGLG RIWKHGXW\>RIIDLUUHSUHVHQWDWLRQ@DUHXQIDLUODERUSUDFWLFHV QRWQHHGDGGLWLRQDOLQVXUDQFH0DUWLQDOVRDOOHJHVWKDWKHZDV KRZHYHUWKHIDPLO\UHVHPEODQFHLVXQGHQLDEOHDQGLQGHHG QRWSDLGWKHSUHYDLOLQJZDJHDQGQHYHUUHFHLYHGRYHUWLPHSD\ WKHUHLVDVXEVWDQWLDORYHUODSl'HO&RVWHOOR86DW RQ WKH IUHTXHQW RFFDVLRQV ZKHQ KH ZRUNHG PRUH WKDQ  *LYHQWKLVFORVHUHODWLRQVKLSDQGEHFDXVH0DUWLQjVFRPSODLQW KRXUVSHUZHHN VHHPV WR EH PRUH FRQFHUQHG ZLWK WKH 8QLRQjV IDLOXUH WR UHSUHVHQW KLP DV UHTXLUHG XQGHU WKH &%$ WKDQ ZLWK WKH ,QDGGLWLRQ/DNHXQLODWHUDOO\UHGXFHG0DUWLQjVZDJHVDQG 8QLRQjVIDLOXUHWRIXOILOOLWVJHQHUDOREOLJDWLRQVWKLVFRXQWLV EHQHILWVLQ DIWHUDQDXGLWE\WKH'HSDUWPHQWRI/DERU PRUHDSSURSULDWHO\YLHZHGDVSDUWRIWKHK\EULG†FODLP 7KHFRPSODLQWIDLOVWRFODULI\KRZWKHVHFKDQJHVFDPHDERXW GLVFXVVHGDERYH(LWKHUZD\WKLVFRXQWLVWLPHEDUUHGE\WKH EXW 0DUWLQ DOOHJHV WKDW WKH 8QLRQ ZDV QRW LQYROYHG LQ DQ\ VL[PRQWKVWDWXWHRIOLPLWDWLRQV EDUJDLQLQJIRUWKHVHDOWHUDWLRQVWRWKH&%$0DUWLQIXUWKHU FODLPV WKDW ZKHQ KH DVNHG WKH 8QLRQ IRU FRSLHV RI WKH ,,,&21&/86,21 UHVXOWLQJ m1HZ /DERU $JUHHPHQWl WKH GRFXPHQW ZDV QRW PDGHDYDLODEOHWRKLP,QsDQXDU\RI DIWHUDQHZXQLRQ )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH VWHZDUG ZDV DSSRLQWHG 0DUWLQ DWWHPSWHG WR SURWHVW WKH MXGJPHQWRIWKHGLVWULFWFRXUW UHGXFWLRQVLQEHQHILWVDQGSD\DVZHOODVWKHPRQWKO\ ZLWKKROGLQJ WKURXJK WKH &%$ JULHYDQFH SURFHGXUH  7KH 8QLRQKRZHYHUGHFOLQHGWRSXUVXHWKHJULHYDQFHV 0DUWLQDOVRDOOHJHVWKDW/DNHWUHDWHGKLPGLIIHUHQWO\WKDQ RWKHU VLPLODUO\VLWXDWHG HPSOR\HHV  $OO HPSOR\HHV IRU H[DPSOH DUH UHTXLUHG WR REWDLQ WKHLU FRPPHUFLDO GULYHUjV OLFHQVHEXW0DUWLQZDVWKHRQO\RQHZKRZDVUHTXLUHGWRUHQW  0DUWLQY/DNH&RXQW\6HZHUHWDO 1R 1R 0DUWLQY/DNH&RXQW\6HZHUHWDO

KLVRZQWUXFNWRWDNHWKHWHVWDQGZDVQRWSDLGIRUWKHGD\KH 7KH 7KLUG &LUFXLW ZKHQ IDFHG ZLWK D VLPLODU LVVXH WRRNWKHH[DPLQDWLRQ UHJDUGLQJWKHDSSURSULDWHOLPLWDWLRQVSHULRGWRDSSO\ZKHQDQ )/6$ FODLP LV DOOHJHG LQ WKH VDPH FRPSODLQW DV D K\EULG 2Q 6DWXUGD\ 0D\    /DNH KHOG D PDQGDWRU\ †FODLPKHOGWKDWmZKLOHFODLPVUHVWLQJRQWKHODQJXDJH m&RQILQHG 6SDFH (QWU\ &ODVVl IRU LWV HPSOR\HHV  /DNH RIVHFWLRQ D >RIWKH)/6$@DUHFOHDUO\FRJQL]DEOHXQGHUWKDW LQIRUPHGLWVHPSOR\HHVLQZULWLQJWKDWODWHHQWU\ZRXOGQRWEH VHFWLRQZHEHOLHYHWKDWFODLPVZKLFKUHVWRQLQWHUSUHWDWLRQV DOORZHGDQGWKDWDQHPSOR\HHZRXOGQRWEHDVVLJQHGIXUWKHU RI WKH XQGHUO\LQJ FROOHFWLYH EDUJDLQLQJ DJUHHPHQW PXVW EH ZRUN LI KH RU VKH IDLOHG WR DWWHQG  'HVSLWH 0DUWLQjV HDUO\ UHVROYHGSXUVXDQWWRWKHSURFHGXUHVFRQWHPSODWHGXQGHUWKH DUULYDOIRUWKHFODVVWKHLQVWUXFWRUZDVPRUHWKDQDQKRXUODWH /05$l9DGLQRY$9DOOH\(QJjUV )G 0DUWLQOHIWLQVWHDGRIZDLWLQJIRUWKHLQVWUXFWRUWRDUULYH$V G&LU  7KLVKROGLQJDSSHDUVWRXVWREHDUHDVRQDEOH DUHVXOWRIKLVQRQDWWHQGDQFH0DUWLQZDVUHPRYHGIURPWKH DFFRPPRGDWLRQRIERWKVWDWXWRU\VFKHPHVZKHUHWKHDQDO\VLV IROORZLQJZHHNjVZRUNVFKHGXOHDQGGLVFKDUJHGRQ0D\ RIDZDJHFODLPUHTXLUHVDQLQWHUSUHWDWLRQRIWKHXQGHUO\LQJ    0DUWLQ DOOHJHV WKDW RWKHU HPSOR\HHV ZKR ZHUH ODWH &%$$FFRUGLQJO\ZHDIILUPWKHGLVWULFWFRXUWjVFRQFOXVLRQ ZHUHQRWSXQLVKHGDQGWKDWVRPHHPSOR\HHVZHUHH[FXVHG WKDW0DUWLQjVSXUSRUWHG)/6$FODLPLVDOVRJRYHUQHGE\WKH IURP DWWHQGLQJ WKH FODVV DOWRJHWKHU  +H DOVR FODLPV WKDW VL[PRQWKVWDWXWHRIOLPLWDWLRQVWKDWDSSOLHVWRWKHUHVWRIKLV GHVSLWH KLV UHSHDWHG UHTXHVWV WKH 8QLRQ GLG QRW IXUQLVK K\EULG†FDXVHRIDFWLRQ 0DUWLQZLWKDFRPSOHWHFRS\RIWKH&%$XQWLOsXQH  & 7KH GLVWULFW FRXUW FRUUHFWO\ GLVPLVVHG WKRVH FODLPV )ROORZLQJKLVGLVFKDUJH0DUWLQILOHGVXLWDJDLQVW/DNHLQ WKDWFRQVWLWXWHFKDUJHVRIDQXQIDLUODERUSUDFWLFH WKH 6PDOO &ODLPV &RXUW RI :LOORXJKE\ 2KLR VHHNLQJ DSSUR[LPDWHO\LQYDFDWLRQSD\7KHVPDOOFODLPVFRXUW  7KH GLVWULFW FRXUW FRQFOXGHG WKDW &RXQW 7KUHH DOOHJLQJ IRXQG LQ IDYRU RI /DNH RQ $XJXVW     $V D UHVXOW XQLODWHUDO FKDQJHV LQ WKH &%$ E\ /DNH DQG &RXQW )LYH 0DUWLQDOOHJHVWKDWKHKDVVWLOOQRWEHHQSDLGDOORIWKHZDJHV DOOHJLQJWKH8QLRQjVIDLOXUHWRUHSUHVHQW0DUWLQLQJRRGIDLWK WKDW/DNHRZHVKLP ZHUH DFWXDOO\ XQIDLU ODERU SUDFWLFH FKDUJHV  %HFDXVH WKH 1/5% KDV H[FOXVLYH MXULVGLFWLRQ RYHU DOO FODLPV RI XQIDLU % 3URFHGXUDOEDFNJURXQG ODERU SUDFWLFHV 1/5% Y .\ 0D\ &RDO &R ,QF   )G   WK&LU  WKHGLVWULFWFRXUWGLVPLVVHG 2QsDQXDU\0DUWLQILOHGDVL[FRXQWFRPSODLQWLQ WKRVHFRXQWV WKH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH1RUWKHUQ'LVWULFWRI 2KLR/DNHDQGWKH8QLRQILOHGPRWLRQVWRGLVPLVVSXUVXDQW $OWKRXJK WKH VWDWXWRU\ EDVLV RI &RXQW 7KUHH LV XQFOHDU WR 5XOH  E   RI WKH )HGHUDO 5XOHV RI &LYLO 3URFHGXUH 0DUWLQ FLWHV D VWDWXWH WKDW GRHV QRW H[LVWn†    RI WKH DUJXLQJ WKDW 0DUWLQjV FODLP ZDV WLPHEDUUHG  7KH GLVWULFW /05$  ZH ZLOO DVVXPH WKDW WKLV WKLUG FRXQW ZDV EURXJKW FRXUW GLVPLVVHG WKH FRPSODLQW UHDVRQLQJ WKDW LW ODFNHG SXUVXDQW WR †  D   RI WKH /05$ ZKLFK SURKLELWV DQ MXULVGLFWLRQRYHUWZR RI 0DUWLQjVFODLPVDQGWKDWKLVRWKHU HPSOR\HU IURP UHIXVLQJ mWR EDUJDLQ FROOHFWLYHO\ ZLWK WKH FODLPV ZHUH EDUUHG E\ D VL[PRQWK VWDWXWH RI OLPLWDWLRQV UHSUHVHQWDWLYHVRIKLVHPSOR\HHVVXEMHFWWRWKHSURYLVLRQVRI 0DUWLQQRZDSSHDOVDUJXLQJWKDWKLVFRPSODLQWZDVWLPHO\ VHFWLRQ  D  RI WKLV WLWOHl    86& †  D    7KLV EHFDXVHDORQJHUVWDWXWHRIOLPLWDWLRQVDSSOLHV FODLP VXJJHVWV FRQWUDFWXDO YLRODWLRQV WKDW DIIHFWHG 0DUWLQ SHUVRQDOO\DVZHOODVXQIDLUEDUJDLQLQJSUDFWLFHVE\/DNH7R WKHH[WHQWWKDW0DUWLQLQWHQGHGWKLVFODLPWRDGGUHVVDOOHJHG HQWLWOHPHQWV XQGHU WKH &%$ &RXQW 7KUHH LV DSSURSULDWHO\  0DUWLQY/DNH&RXQW\6HZHUHWDO 1R 1R 0DUWLQY/DNH&RXQW\6HZHUHWDO 

UHOXFWDQFHWRSXUVXHKLVPDQ\JULHYDQFHVDJDLQVW/DNHLQWKH ,,$1$/<6,6 SDVW$FFRUGLQJO\ZHFRQFOXGHWKDW0DUWLQjVFDXVHRIDFWLRQ DFFUXHGQRODWHUWKDQsXQH  $ 0DUWLQjVFRXQWVFRQVWLWXWLQJDK\EULG†FRPSODLQW DUH WLPHEDUUHG XQGHU WKH FRQWUROOLQJ VL[PRQWK 0DUWLQKRZHYHUDUJXHVWKDWWKHVWDWXWHRIOLPLWDWLRQVZDV VWDWXWHRIOLPLWDWLRQV WROOHGXQWLOKLVVPDOOFODLPVFRXUWODZVXLWDJDLQVW/DNHZDV GHFLGHGRQ$XJXVW $FFRUGLQJWR0DUWLQKHILOHG 7KLVFRXUWUHYLHZVGHQRYRDGLVWULFWFRXUWjVFRQFOXVLRQWKDW KLVVWDWHFRXUWFDVHDWWKHVXJJHVWLRQRIWKH'HSDUWPHQW RI DSODLQWLIIKDVIDLOHGWRPHHWDVWDWXWHRIOLPLWDWLRQV7ROEHUW /DERU LQ RUGHU WR UHFRYHU YDFDWLRQ SD\  %XW WKH UHFRUG LV Y2KLR'HSjWRI7UDQVS)G   WK&LU  VLOHQWDVWRWKHUHODWLRQVKLSLIDQ\EHWZHHQWKHFODLPVILOHGLQ 0DUWLQjVFRPSODLQWDOOHJHVWKDW/DNHEUHDFKHGLWVREOLJDWLRQV VWDWHFRXUWDQGWKHK\EULGFODLPVDWLVVXHKHUH0DUWLQDOVR WRKLPXQGHUWKH&%$DQGWKDWWKH8QLRQYLRODWHGLWVGXW\RI FLWHV QR DXWKRULW\ WR VXSSRUW KLV FRQWHQWLRQ WKDW WKH VPDOO IDLUUHSUHVHQWDWLRQRZHGWR0DUWLQDOOLQYLRODWLRQRI†RI FODLPVFRXUWODZVXLWVKRXOGWROOWKHVWDWXWHRIOLPLWDWLRQVRQ WKH/05$7KH6XSUHPH&RXUWKDVGHVFULEHGVXFKDODZVXLW KLV IHGHUDO FDXVH RI DFWLRQ  :H WKXV ILQG QR PHULW LQ KLV DVDmK\EULG†IDLUUHSUHVHQWDWLRQFODLPlZKLFK WROOLQJDUJXPHQW FRPSULVHV WZR FDXVHV RI DFWLRQ  7KH VXLW DJDLQVW WKH ,QFRQFOXVLRQ0DUWLQVKRXOGKDYHGLVFRYHUHGWKDWKHKDG HPSOR\HUUHVWVRQ†VLQFHWKHHPSOR\HHLVDOOHJLQJ DFDXVHRIDFWLRQDJDLQVW/DNHDQGWKH8QLRQQRODWHUWKDQ DEUHDFKRIWKHFROOHFWLYHEDUJDLQLQJDJUHHPHQW7KHVXLW sXQH %HFDXVHWKHVWDWHFRXUWSURFHHGLQJGLGQRWWROO DJDLQVWWKHXQLRQLVRQHIRUEUHDFKRIWKHXQLRQ VGXW\RI WKH VWDWXWH RI OLPLWDWLRQV WKH VL[PRQWK OLPLWDWLRQ SHULRG IDLUUHSUHVHQWDWLRQZKLFKLVLPSOLHGXQGHUWKHVFKHPHRI HQGHG RQ 'HFHPEHU     0DUWLQ GLG QRW ILOH KLV WKH1DWLRQDO/DERU5HODWLRQV$FW<HWWKHWZRFODLPVDUH FRPSODLQWXQWLOsDQXDU\7KHGLVWULFWFRXUWWKHUHIRUH LQH[WULFDEO\LQWHUGHSHQGHQW7RSUHYDLODJDLQVWHLWKHUWKH FRPPLWWHGQRHUURUZKHQLWGLVPLVVHG0DUWLQjVFRPSODLQWDV FRPSDQ\RUWKH8QLRQ>HPSOR\HHSODLQWLIIV@PXVW XQWLPHO\ILOHG QRWRQO\ VKRZWKDWWKHLUGLVFKDUJHZDVFRQWUDU\WRWKH FRQWUDFWEXWPXVWDOVRFDUU\WKHEXUGHQRIGHPRQVWUDWLQJ % 0DUWLQjV )DLU /DERU 6WDQGDUGV $FW FODLP LV EUHDFKRIGXW\E\WKH8QLRQ FRQWUROOHGE\WKH†VWDWXWHRIOLPLWDWLRQV 'HO&RVWHOORY,QWjO%KGRI7HDPVWHUV86 &RXQW6L[RI0DUWLQjVFRPSODLQWDOOHJHVWKDW/DNHYLRODWHG    LQWHUQDO FLWDWLRQV DQG TXRWDWLRQ PDUNV RPLWWHG †  E  RI WKH )/6$ ZKLFK PDNHV HPSOR\HUV OLDEOH IRU LQWHUQDOEUDFNHWVLQRULJLQDO  XQSDLGZDJHVSXUVXDQWWR†DQG†RIWKH)/6$ 86& † E 0DUWLQDUJXHVWKDWWKLVFDXVHRIDFWLRQLVGLVWLQFW ,Q'HO&RVWHOORWKH&RXUWDGRSWHGWKHVL[PRQWKVWDWXWHRI IURPKLV†FODLPDQGLVWKHUHIRUHFRQWUROOHGE\DWZR OLPLWDWLRQVIRXQGLQ† E RIWKH1/5$ 86&† E \HDUVWDWXWHRIOLPLWDWLRQV 86&† HVWDEOLVKLQJD LPSRVLQJ D VL[PRQWK VWDWXWH RI OLPLWDWLRQV RQ DOO XQIDLU WZR\HDUVWDWXWHRIOLPLWDWLRQVIRU)/6$FODLPV 0DUWLQjV ODERUSUDFWLFHFKDUJHVILOHGZLWKWKH1DWLRQDO/DERU5HODWLRQV FRPSODLQWDOOHJHVWKDWKHmZDVHQWLWOHGWRUHFHLYHIURP/DNH %RDUG  IRU DOO K\EULG †  FDVHV WKDW LPSOLFDWH FRQFHUQV DQKRXUO\ZDJHSXUVXDQWWR$UWLFOHRI$JUHHPHQWDWWDFKHG VLPLODU WR WKRVH WKDW DUH DW VWDNH LQ XQIDLU ODERU SUDFWLFH ,QEUHDFKDQGYLRODWLRQRIWKH$JUHHPHQW/DNHGLGQRW FKDUJHVEURXJKWXQGHUWKH1/5$'HO&RVWHOOR86DW SD\SODLQWLIIDFFRUGLQJWRWKH$JUHHPHQWl$OWKRXJK0DUWLQ    6SHFLILFDOO\ WKRVH FRQFHUQV LQFOXGH mWKH UDSLG DOOHJHV YLRODWLRQV RI WKH )/6$ WKHVH FODLPV UHO\ RQ DQ UHVROXWLRQ RI FROOHFWLYH EDUJDLQLQJ GLVSXWHV EHWZHHQ WKH LQWHUSUHWDWLRQRIWKHWHUPVRIWKHXQGHUO\LQJ&%$ HPSOR\HUDQGHPSOR\HHVl:RRVOH\Y$9&2&RUS )G  0DUWLQY/DNH&RXQW\6HZHUHWDO 1R 1R 0DUWLQY/DNH&RXQW\6HZHUHWDO 

  WK &LU     7KH 'HO&RVWHOOR &RXUW DOVR 0DUWLQKRZHYHUDUJXHVWKDW2KLRjVSHUVRQDOLQMXU\VWDWXWH GHVFULEHGWKHVHFRQFHUQVDVIROORZV RIOLPLWDWLRQVVKRXOGDSSO\SXUVXDQWWRWKH6XSUHPH&RXUWjV UXOLQJLQ5HHGY8QLWHG7UDQVSRUWDWLRQ8QLRQ86 ,Q †  E  RI WKH 1/5$ &RQJUHVV HVWDEOLVKHG D     7KH 6XSUHPH &RXUW GHFLGHG LQ 5HHG WKDW FODLPV OLPLWDWLRQVSHULRGDWWXQHGWRZKDWLWYLHZHGDVWKHSURSHU EURXJKW SXUVXDQW WR WKH /DERU0DQDJHPHQW 5HSRUWLQJ DQG EDODQFH EHWZHHQ WKH QDWLRQDO LQWHUHVWV LQ VWDEOH 'LVFORVXUH$FW /05'$  86&† D   DVWDWXWH EDUJDLQLQJ UHODWLRQVKLSV DQG ILQDOLW\ RI SULYDWH SURKLELWLQJWKHLQWHUIHUHQFHZLWKDXQLRQPHPEHUjVULJKWWR VHWWOHPHQWVDQGDQHPSOR\HH VLQWHUHVWLQVHWWLQJDVLGH IUHH VSHHFK  DUH JRYHUQHG E\ VWDWH VWDWXWHV RI OLPLWDWLRQ ZKDW KH YLHZV DV DQ XQMXVW VHWWOHPHQW XQGHU WKH 5HHG  86 DW   VHH DOVR $OOJRRG Y (O\ULD 8QLWHG FROOHFWLYHEDUJDLQLQJ V\VWHP  7KDW LV SUHFLVHO\ WKH 0HWKRGLVW+RPH )G WK&LU   m,QOLJKW EDODQFHDWLVVXHLQWKLVFDVH7KHHPSOR\HH VLQWHUHVWLQ RIWKH6XSUHPH&RXUW VGHFLVLRQLQ5HHGZHDOVRILQGWKDW VHWWLQJ DVLGH WKH ILQDO DQG ELQGLQJ GHWHUPLQDWLRQ RI D VHFWLRQ D  FODLPVDUHPRUHDSSURSULDWHO\JRYHUQHGE\ JULHYDQFH WKURXJK WKH PHWKRG HVWDEOLVKHG E\ WKH WKHVWDWHUHVLGXDOSHUVRQDOLQMXU\VWDWXWHRIOLPLWDWLRQV7KH FROOHFWLYHEDUJDLQLQJ DJUHHPHQW XQTXHVWLRQDEO\ 2KLR UHVLGXDO SHUVRQDO LQMXU\ VWDWXWH RI OLPLWDWLRQV LV WZR LPSOLFDWHVWKRVHFRQVHQVXDOSURFHVVHVWKDWIHGHUDOODERU \HDUVl  ODZLVFKLHIO\GHVLJQHGWRSURPRWHnWKHIRUPDWLRQRIWKH    DJUHHPHQW DQG WKH SULYDWH VHWWOHPHQW RI GLVSXWHV $OWKRXJK 0DUWLQ LV FRUUHFW WKDW D WZR\HDU OLPLWDWLRQV XQGHU LW      $FFRUGLQJO\ >W@KH QHHG IRU XQLIRUPLW\ SHULRGZRXOGDSSO\LIWKLVFDVHKDGEHHQEURXJKWXQGHUWKH DPRQJSURFHGXUHVIROORZHGIRUVLPLODUFODLPVDVZHOO /05'$ KH GLG QRW SOHDG WKLV VWDWXWH LQ KLV FRPSODLQW DV WKH FOHDU FRQJUHVVLRQDO LQGLFDWLRQ RI WKH SURSHU 'HVSLWHDUDWKHUFRQWRUWHGDUJXPHQWWKDWWKHXVDJHRImHWVHTl EDODQFH EHWZHHQ WKH LQWHUHVWV DW VWDNH FRXQVHOV WKH IROORZLQJKLVFLWDWLRQWRWKH1/5$LQFRUSRUDWHGWKH/05'$ DGRSWLRQ RI †  E  RI WKH 1/5$ DV WKH DSSURSULDWH LQKLVFRPSODLQWWKHGLVWULFWFRXUWGLGQRWHUULQFRQFOXGLQJ OLPLWDWLRQVSHULRGIRUODZVXLWVVXFKDVWKLV WKDWWKLVVWDWXWHZDVQRWDSSURSULDWHO\SOHG7KHIDLOXUH WR SOHDG WKH /05'$ PRUHRYHU ZDV QRW DQ LQDGYHUWHQW 'HO&RVWHOOR86DW LQWHUQDOFLWDWLRQVDQGTXRWDWLRQ RPLVVLRQ  UDWKHU WKHUH DUH VLPSO\ QR IDFWV DOOHJHG LQ WKH PDUNVRPLWWHG %DVHGRQWKHVHFRQVLGHUDWLRQVWKLVFRXUWKDV FRPSODLQWWKDWFRPHZLWKLQWKHVFRSHRIWKDWVWDWXWH DGRSWHG WKH JHQHUDO UXOH WKDW m>D@ VL[PRQWK VWDWXWH RI OLPLWDWLRQVVKRXOGDSSO\ZKHUHWKHSODLQWLII>VLF@FODLPV 0DUWLQ WKHUHIRUH KDG WR ILOH KLV FRPSODLQW ZLWKLQ VL[ DUHEURXJKWXQGHUWKH$JUHHPHQWDQGLQYROYHWKHTXHVWLRQRI PRQWKVDIWHUKLVFDXVHRIDFWLRQDFFUXHGLQRUGHUIRULWWREH HQWLWOHPHQW IRU HPSOR\PHQW XQGHU D FROOHFWLYH EDUJDLQLQJ WLPHO\7RGHWHUPLQHZKHQDGXW\RIIDLUUHSUHVHQWDWLRQFODLP DJUHHPHQWl:RRVOH\ )GDW KDV DFFUXHG WKLV FRXUW ORRNV LQWR mZKHQ DQ HPSOR\HH GLVFRYHUV RU VKRXOG KDYH GLVFRYHUHG ZLWK H[HUFLVH RI GXH 0DUWLQjV K\EULG FODLPV OLH DW WKH FRUH RI KLV DOOHJHG GLOLJHQFHDFWVJLYLQJULVHWRWKHFDXVHRIDFWLRQl:LOVRQY mHQWLWOHPHQW WR HPSOR\PHQWl  +H DUJXHV WKDW KH ZDV ,QWjO %KG RI 7HDPVWHUV &KDXIIHXUV :DUHKRXVHPHQ DQG ZURQJIXOO\GLVFKDUJHGWKDW/DNHGLVFULPLQDWHGDJDLQVWKLP +HOSHUVRI$P)G WK&LU  0DUWLQ DQG WKDW WKH 8QLRQ YLRODWHG LWV GXW\ RI IDLU UHSUHVHQWDWLRQ DOOHJHVWKDWWKH8QLRQIDLOHGWRVXSSO\KLPZLWKDFRPSOHWH ZKHQLWIDLOHGWRSXUVXHDJULHYDQFHEDVHGRQ/DNHjVDOOHJHGO\ FRS\RIWKH&%$XQWLOsXQH %\WKLVWLPH0DUWLQ ZURQJIXO FRQGXFW  7KXV XQGHU :RRVOH\ WKHVH FDXVHV RI KDGEHHQRXWRIZRUNIRUDOPRVWWZRPRQWKV+HVKRXOGKDYH DFWLRQPXVWEHEURXJKWSXUVXDQWWRWKHVL[PRQWKVWDWXWHRI EHHQ DZDUH E\ WKHQ WKDW WKH 8QLRQ ZDV QRW JRLQJ WR ILOH D OLPLWDWLRQVFRGLILHGLQ† E RIWKH1/5$ JULHYDQFHRQKLVEHKDOIHVSHFLDOO\JLYHQWKH8QLRQjVDOOHJHG