United States v. Humphrey

U.S. Court of Appeals for the Sixth Circuit

United States v. Humphrey

Opinion

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

81,7(' 67$7(6 2) $0(5,&$ ;  3ODLQWLII$SSHOOHH   1R  Y  !  0217(/ /$9(//(  +803+5(<  'HIHQGDQW$SSHOODQW 1

$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG 1R n3DWULFLD$*DXJKDQ'LVWULFWsXGJH $UJXHG $XJXVW 'HFLGHGDQG)LOHG $SULO %HIRUH 0225(DQG&2/(&LUFXLWsXGJHV 526(1 'LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ $5*8('   0LFKDHO s %HQ]D &OHYHODQG 2KLR IRU $SSHOODQW  5RQDOG % %DNHPDQ $66,67$17 81,7('

7KH +RQRUDEOH *HUDOG ( 5RVHQ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

  8QLWHG6WDWHVY+XPSKUH\ 1R 

67$7(6 $77251(< &OHYHODQG 2KLR IRU $SSHOOHH 21 %5,()   0LFKDHO s %HQ]D &OHYHODQG 2KLR IRU $SSHOODQW  5RQDOG % %DNHPDQ $66,67$17 81,7(' 67$7(6$77251(<&OHYHODQG2KLRIRU$SSHOOHH &2/( s GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ ZKLFK 0225(sMRLQHG526(1's SS GHOLYHUHGD VHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB 5*8<&2/(s5&LUFXLWsXGJH ,,1752'8&7,21 0RQWHO/+XPSKUH\DSSHDOVKLVFRQYLFWLRQDQGVHQWHQFH IRU FRQVSLULQJ WR SRVVHVV ZLWK LQWHQW WR GLVWULEXWH FRFDLQH SRVVHVVLRQRIDILUHDUPDIWHUDSULRUIHORQ\FRQYLFWLRQDQG FRQVSLULQJWRFRPPLWPRQH\ODXQGHULQJ+XPSKUH\DVVLJQV VL[SRLQWVRIHUURU   WKH*RYHUQPHQWUHOLHGRQLQFRPSHWHQW HYLGHQFH DQG DUJXPHQW DW WULDO DQG LPSURSHUO\ XVHG LWV SHUHPSWRU\FKDOOHQJHVWRH[FOXGH$IULFDQ$PHULFDQVIURP WKHMXU\   WKHGLVWULFWFRXUWIDLOHGWRH[DPLQHDFRQIOLFWRI LQWHUHVWUDLVHGE\WULDOFRXQVHOSULRUWRVHQWHQFLQJDQGIDLOHG WR FRQGXFW D SURSHU LQTXLU\ LQWR +XPSKUH\jV %DWVRQ FKDOOHQJHUDLVHGGXULQJWKHFRXUVHRIYRLUGLUH   WKHMXU\ LQVWUXFWLRQV IDLOHG WR SURSHUO\ JXLGH WKH MXU\ LQ LWV FRQVLGHUDWLRQRIWKHPXOWLSOHFRQVSLUDFLHVDOOHJHGLQWKLVFDVH IDLOHGWRHQVXUHMXU\XQDQLPLW\RQHOHPHQWVRIWKHRIIHQVH DQGIDLOHGWRGLUHFWWKHMXU\WRGHWHUPLQHWKHW\SHRIGUXJV VROGE\+XPSKUH\   WKHGLVWULFWFRXUWYLRODWHG$SSUHQGLY 1HZsHUVH\86  ZKHQLWIDLOHGWRLQVWUXFW WKHMXU\WRILQGGUXJTXDQWLWLHVEH\RQGDUHDVRQDEOHGRXEW   +XPSKUH\jV WULDO FRXQVHO IDLOHG WR SURYLGH HIIHFWLYH DVVLVWDQFH EHFDXVH FRXQVHO IDLOHG WR UDLVH D WLPHO\ %DWVRQ FKDOOHQJHRSHUDWHGXQGHUDFRQIOLFWRILQWHUHVWIDLOHGWRDUJXH IRU RU SUHVHQW D PLWLJDWLRQ DUJXPHQW LQ VXSSRUW RI D GRZQZDUG GHSDUWXUH DQG IDLOHG WR REMHFW WR *RYHUQPHQW 1R  8QLWHG6WDWHVY+XPSKUH\ 

PLVFRQGXFW DW FULWLFDO VWDJHV RI WULDO  DQG   WKH *RYHUQPHQWjVSOHDDJUHHPHQWVZLWKDOOHJHGFRFRQVSLUDWRUV +HQU\ (DWRQ DQG 7\URQH &URPLW\ SXUVXDQW WR ZKLFK ERWK ZHUHmSDLGlIRUWKHLUWHVWLPRQ\YLRODWHGWKHH[SUHVVWHUPVRI 86&† F  DQG'LVFLSOLQDU\5XOH F RIWKH 2KLR&RGHRI3URIHVVLRQDO5HVSRQVLELOLW\ )RUWKHUHDVRQVWKDWIROORZZH$)),50WKHMXGJPHQWRI WKHGLVWULFWFRXUWZLWKWKHH[FHSWLRQRIWKHVHQWHQFH%HFDXVH WKH GLVWULFW FRXUWjV GUXJ TXDQWLW\ ILQGLQJ UHVXOWHG LQ DQ HQKDQFHG VWDWXWRU\ SHQDOW\ ZH FRQFOXGH WKDW +XPSKUH\jV VHQWHQFH YLRODWHG WKH 6XSUHPH &RXUWjV UXOH HVWDEOLVKHG LQ $SSUHQGL Y 1HZ sHUVH\  :H DFFRUGLQJO\ 9$&$7( +XPSKUH\jVVHQWHQFHDQG5(0$1'WKLVFDVHWRWKHGLVWULFW FRXUWIRUUHVHQWHQFLQJ ,,%$&.*5281' 7KH &DULEEHDQ *DQJ 7DVN )RUFH m7DVN )RUFHl  RI WKH 6KDNHU +HLJKWV 2KLR 3ROLFH 'HSDUWPHQW FRQGXFWHG DQ HLJKWHHQ PRQWK LQYHVWLJDWLRQ LQWR WKH GUXJGLVWULEXWLRQ DFWLYLWLHV RI +HQU\ (DWRQ DQG 7\URQH &URPLW\  2YHU WKH FRXUVHRIWKLVLQYHVWLJDWLRQWKH*RYHUQPHQWPDGHFRQWUROOHG EX\VIURPERWKLQGLYLGXDOVDQGLQWHUFHSWHGSKRQHFDOOVDQG SDJHVPDGHE\WKHPWR0RQWHO+XPSKUH\7KH7DVN)RUFH QHYHU PDGH DQ\ FRQWUROOHG EX\V IURP +XPSKUH\ QHYHU ZLWQHVVHG DQ\ GUXJ GHDOV LQYROYLQJ +XPSKUH\ DQG QHYHU REVHUYHGGUXJVLQ+XPSKUH\jVSRVVHVVLRQ,W QHYHUWKHOHVV VHFXUHG VXIILFLHQW HYLGHQFH WR H[HFXWH VHDUFK DQG DUUHVW ZDUUDQWV RQ sXQH    RQ QXPHURXV LQGLYLGXDOV DQG ORFDWLRQVLQFOXGLQJ+XPSKUH\DQGKLVSURSHUW\7KLVVHDUFK UHYHDOHG QR GUXJV RU GUXJ SDUDSKHUQDOLD LQ +XPSKUH\jV SRVVHVVLRQ  2Q sXO\    D IHGHUDO JUDQG MXU\ LQ WKH 1RUWKHUQ'LVWULFWRI2KLRUHWXUQHGDVXSHUVHGLQJLQGLFWPHQW DJDLQVW+XPSKUH\DQGIRXUWHHQRWKHULQGLYLGXDOVFKDUJLQJ YLRODWLRQV RI IHGHUDO QDUFRWLFV ILUHDUPV DQG PRQH\ ODXQGHULQJ ODZV  7KH *RYHUQPHQW HQWHUHG LQWR SOHD DJUHHPHQWVZLWKDOOGHIHQGDQWVH[FHSW+XPSKUH\DQG'DUU\O 0RUURZERWKRIZKRPSURFHHGHGWRWULDOEHIRUHsXGJH6DP +%HOORQsXQH    8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

7HVWLPRQ\DWWULDOUHYHDOHGWKDW(DWRQILUVWPHW+XPSKUH\ PDMRULW\jV GLVSRVLWLRQ RI 'HIHQGDQWjV $SSUHQGL FODLP DQG LQ$ODEDPDLQ6HSWHPEHU 7KHUHDIWHU(DWRQDOOHJHGO\ IURPLWVGHFLVLRQWRUHPDQGWKLVFDVHIRUUHVHQWHQFLQJ PHW +XPSKUH\ LQ &OHYHODQG 2KLR ZKHUH +XPSKUH\ GLVFXVVHG VXSSO\LQJ (DWRQ ZLWK FRFDLQH  (DWRQ UHFHLYHG DSSUR[LPDWHO\ RQHHLJKWK RI D NLORJUDP RI FRFDLQH IURP +XPSKUH\DVDUHVXOWRIWKDWFRQYHUVDWLRQDQGFRQWLQXHGWR UHFHLYHSHULRGLFVKLSPHQWVRIFRFDLQHIURP+XPSKUH\XQWLO 0DUFK )URP6HSWHPEHU WKURXJK0DUFK  +XPSKUH\GLVWULEXWHGFRFDLQHWR(DWRQmDSSUR[LPDWHO\WHQWR WZHOYH WLPHVl  (DWRQ DOVR WHVWLILHG WKDW KH DQG +XPSKUH\ FRPPXQLFDWHGZLWKHDFKRWKHUE\WHOHSKRQHDQGSDJHUXVLQJ SUHGHWHUPLQHGFRGHV 7DVN)RUFHPHPEHUDQG6KDNHU+HLJKWV2KLR'HWHFWLYH 0DUYLQ/D0LHOOHWHVWLILHGWKDWIURPsDQXDU\ WKURXJK sXQH    WKH 7DVN )RUFH XQGHUWRRN FRXUWDXWKRUL]HG LQWHUFHSWLRQVRIHOHFWURQLFDQGZLUHFRPPXQLFDWLRQVEHWZHHQ +XPSKUH\ DQG RWKHU LQGLYLGXDOV XQGHU LQYHVWLJDWLRQ /D0LHOOHDOVRWHVWLILHGWKDWKHREWDLQHG+XPSKUH\jVFHOOXODU WHOHSKRQHUHFRUGVZKLFKLQFRQMXQFWLRQZLWKWKHLQWHUFHSWHG FRPPXQLFDWLRQV UHYHDOHG WKDW VKRUWO\ DIWHU (DWRQ ZRXOG DUUDQJHWKHVDOHRIFRFDLQHWRWKLUGSDUWLHV(DWRQZRXOGSDJH +XPSKUH\ZLWKWKHDSSURSULDWHFRGHVRVWHQVLEO\WRSXUFKDVH  VRPHTXDQWLW\RIFRFDLQH , GR QRW XQGHUVWDQG WKH PDMRULW\jV FRQIXVLRQ DV WR WKH RXWFRPH , DP DGYRFDWLQJ LQ WKLV FDVH 6SHFLILFDOO\ , EHOLHYH WKDW 'HIHQGDQWjV $SSUHQGL &URPLW\WHVWLILHGWKDWKHPHW+XPSKUH\VRPHWLPHLQ  FKDOOHQJH VKRXOG EH UHMHFWHG DQG KLV VHQWHQFH DIILUPHG LQ DOO UHVSHFWV $V

RU   DQG WKDW WKHLU ILUVW GUXJ WUDQVDFWLRQ RFFXUUHG LQ DXWKRULW\ IRU WKLV , ZRXOG ORRN WR 3DJH 0XQR] DQG RXU RWKHU LQLWLDO SRVW $SSUHQGL 1RYHPEHU    &URPLW\ VWDWHG WKDW RQ WKLV RFFDVLRQ KH UXOLQJV WKDW , KDYH VXUYH\HG DERYH 7R WKH H[WHQW WKDW WKLV DSSURDFK UHTXLUHV XV WR mLJQRUHl FHUWDLQ RI RXU SXEOLVKHG GHFLVLRQV WKLV SDJHG+XPSKUH\DQGHQWHUHGKLVKRPHWHOHSKRQHQXPEHUWKH LV E\ QR PHDQV XQSUHFHGHQWHG 5DWKHU DV , REVHUYHG DW WKH RXWVHW ZH DSSURSULDWH FRGH WR LGHQWLI\ KLPVHOI DV WKH FDOOHU DQG WKH KDYH DGRSWHG D UXOH WR JRYHUQ WKLV SUHFLVH VLWXDWLRQ UHTXLULQJ WKDW ZH

DPRXQW RI PRQH\ KH KDG WR SXUFKDVH FRFDLQH  7KH WZR DGKHUH WR RXU ILUVW SXEOLVKHG UXOLQJ RQ D VXEMHFW RYHU D ODWHU EXW

VXEVHTXHQWO\ PHW ZKHUHXSRQ +XPSKUH\ DOOHJHGO\ VROG FRQIOLFWLQJ GHFLVLRQ 6HH 'DUUDK VXSUD  )G DW  &URPLW\RQHKDOINLORJUDPRIFRFDLQHIRU&URPLW\ ,Q FRQWUDVW LW LV LQWHUHVWLQJ WR FRQVLGHU ZKDW PLJKW RFFXU XSRQ WKH DOVRWHVWLILHGWKDW+XPSKUH\FRQWLQXHGWRVXSSO\KLPZLWK UHPDQG RUGHUHG E\ WKH PDMRULW\ $W KLV LQLWLDO VHQWHQFLQJ 'HIHQGDQW GUXJVWKURXJK)HEUXDU\ GXULQJZKLFKWLPHKHUHFHLYHG IDFHG D 6HQWHQFLQJ *XLGHOLQHV UDQJH RI  WR   PRQWKV DQG WKH

mSUREDEO\ EHWZHHQ VHYHQ DQG QLQHl NLORJUDPV RI FRFDLQH PDMRULW\ ILQGV QR HUURU LQ WKLV GHWHUPLQDWLRQ 2Q UHPDQG WKHQ 'HIHQGDQW

+XPSKUH\jV SKRQH UHFRUGV FRXSOHG ZLWK LQIRUPDWLRQ VWDQGV WR DFKLHYH DW PRVW D PRQWK UHGXFWLRQ LQ KLV VHQWHQFH <HW KLV

LQWHUFHSWHGIURP+XPSKUH\jVSDJHULQGLFDWHGWKDWRQPRUH VHQWHQFH DOVR FRXOG EH HQKDQFHG VLQFH DV WKH PDMRULW\ SRLQWV RXW RXU SRVW $SSUHQGL MXULVSUXGHQFH SHUPLWV WKH LPSRVLWLRQ RI D VHQWHQFH WKDW WKDQ RQH RFFDVLRQ &URPLW\ SDJHG +XPSKUH\ VHHNLQJ WR H[FHHGV EXW GRHV QRW HTXDO DQ HQKDQFHG VWDWXWRU\ PLQLPXP VR ORQJ DV LW GRHV QRW H[FHHG WKH GHIDXOW VWDWXWRU\ PD[LPXP XQGHU †  E  & n LQ WKLV FDVH  \HDUV 6HH .LQJ   )G DW   8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

,QWKHHQG,WDNH3DJHWRPHDQZKDWLWOLWHUDOO\VD\VQR SXUFKDVH FRFDLQH IURP KLP DIWHU ZKLFK +XPSKUH\ FDOOHG PRUHDQGQROHVV$GHIHQGDQWZKRmIDLO>V@WRREMHFWWRWKH &URPLW\WRPDNHSD\PHQWDUUDQJHPHQWV GLVWULFWMXGJHPDNLQJWKHGHWHUPLQDWLRQRIGUXJTXDQWLWLHVl IDFHV SODLQ HUURU UHYLHZ RI KLV $SSUHQGL FODLP RQ DSSHDO 2QsXQH DMXU\DFTXLWWHG0RUURZRIDOOFRXQWV 3DJH)GDW7REHVXUHWKHUHFDQEHFDVHVIDOOLQJ +XPSKUH\ KRZHYHU ZDV FRQYLFWHG RI FRQVSLULQJ WR DWWKHPDUJLQVRIWKLVUXOHDQGDVWKHPDMRULW\SRLQWVRXWZH GLVWULEXWH FRFDLQH &RXQWV 2QH DQG 7ZR  XQODZIXO UHTXLUHQRSDUWLFXODUmPDJLFZRUGVlWRSUHVHUYHDQ$SSUHQGL SRVVHVVLRQ RI D ILUHDUP E\ D SUHYLRXVO\ FRQYLFWHG IHORQ EDVHGFKDOOHQJH<HWLQP\YLHZWKLVFDVHOLHVQRZKHUHQHDU &RXQW7ZHOYH DQGFRQVSLULQJWRFRPPLWPRQH\ODXQGHULQJ DQ\JUH\DUHDLQ3DJHjVUXOH'HIHQGDQWQRWRQO\IDLOHGWR &RXQW 6HYHQWHHQ  KH ZDV DFTXLWWHG RI WZR VXEVWDQWLYH REMHFWWRWKH'LVWULFWsXGJHPDNLQJWKHGHWHUPLQDWLRQRIGUXJ PRQH\ ODXQGHULQJ FRXQWV &RXQWV (LJKWHHQ DQG 1LQHWHHQ  TXDQWLWLHVE\DSUHSRQGHUDQFHRIWKHHYLGHQFHKHH[SUHVVO\ 2Q 0DUFK    WKH GLVWULFW FRXUWGHQLHG +XPSKUH\jV DJUHHGWKDWWKLVSURFHGXUHJRYHUQHGKLVVHQWHQFLQJDQGKH SRVWWULDOPRWLRQVIRUD)UDQNVKHDULQJ DQGDQHZWULDODQG IUDPHGKLVREMHFWLRQVDFFRUGLQJO\LQYLWLQJWKH'LVWULFW&RXUW KLV PRWLRQ WR VHW DVLGH KLV VWDWH FRQYLFWLRQ IRU VHQWHQFLQJ LQ LWV UROH DV IDFWILQGHU WR GLVFRXQW WKH *RYHUQPHQWjV SXUSRVHV$W+XPSKUH\jVUHTXHVWsXGJH%HOOUHFXVHGKLPVHOI HYLGHQFHRIGUXJTXDQWLWLHVDVXQUHOLDEOH2QWKLVUHFRUG, RQ6HSWHPEHU  WKHFDVHZDVWKHQWUDQVIHUUHGWRsXGJH WKLQNLWFOHDUWKDW'HIHQGDQWjVSUHVHQW$SSUHQGLFODLPVKRXOG 3DWULFLD$*DXJKDQ EHUHYLHZHGRQO\IRUSODLQHUURU 'DYLG 'XGOH\ +XPSKUH\jV FRXQVHO UDLVHG D SRVVLEOH ,,, FRQIOLFW RI LQWHUHVW VKRUWO\ EHIRUH +XPSKUH\jV VFKHGXOHG VHQWHQFLQJ7KHJRYHUQPHQWILOHGDPRWLRQUHTXHVWLQJWKDW 7KH PDMRULW\jV GHFLVLRQ WR UHPDQG WKLV FDVH IRU WKH GLVWULFW FRXUW FRQVXOW ZLWK +XPSKUH\ DQG 'XGOH\ UHVHQWHQFLQJ UHVWV XSRQ WZR XQGHUO\LQJ GHWHUPLQDWLRQV UHJDUGLQJ'XGOH\jVFRQWLQXHGUHSUHVHQWDWLRQRI+XPSKUH\ L WKDWWKHUXOHRI$SSUHQGLLVYLRODWHGZKHQHYHUD'LVWULFW 7KHGLVWULFWFRXUWUHYLHZHGDWUDQVFULSWRIDQHDUOLHUKHDULQJ &RXUWjVIDFWXDOILQGLQJE\DSUHSRQGHUDQFHRIWKHHYLGHQFH KHOGEHIRUHsXGJH%HOORQWKLVLVVXHDQGFRQFOXGHGWKDWQR DOWHUVWKHUDQJHRISHQDOWLHVWRZKLFKDGHIHQGDQWLVH[SRVHG DGGLWLRQDOLQTXLU\ZDVZDUUDQWHG2Q0DUFK WKH DQG LL WKDW$SSUHQGLFODLPVDUHUHYLHZHGGHQRYRZKHQHYHU GLVWULFWFRXUWVHQWHQFHG+XPSKUH\WRDPDQGDWRU\PRQWK DGHIHQGDQWUDLVHVDQ\VRUWRIFKDOOHQJHDWVHQWHQFLQJWRWKH WHUPRILPSULVRQPHQWSXUVXDQWWR86&† E  $  'LVWULFW&RXUWjVIDFWXDOILQGLQJVDVWRGUXJTXDQWLW\%RWKRI DWHQ\HDUSHULRGRIVXSHUYLVHGUHOHDVHDILQHDQGD WKHVHXQGHUO\LQJSURSRVLWLRQV,EHOLHYHDUHGHPRQVWUDEO\LQ VSHFLDODVVHVVPHQW7KLVWLPHO\DSSHDOIROORZHG HUURU ZKHWKHU RQH SURFHHGV E\ ILUVW SULQFLSOHV IURP WKH UHOHYDQW6XSUHPH&RXUWSUHFHGHQWVRUZKHWKHURQHVLPSO\ UHYLHZVWKHLQLWLDO DQGSUHVXPDEO\VWLOOELQGLQJ 6L[WK&LUFXLW SUHFHGHQWV RQ HDFK RI WKHVH SRLQWV  $FFRUGLQJO\ ZKLOH , FRQFXULQDOORWKHUUHVSHFWV,UHVSHFWIXOO\GLVVHQWIURPWKH

 $ GHIHQGDQW LV HQWLWOHG WR D KHDULQJ WR FKDOOHQJH WKH YDOLGLW\ RI D VHDUFK ZDUUDQW LI KH mPDNHV D VXEVWDQWLDO SUHOLPLQDU\ VKRZLQJ WKDW D IDOVH VWDWHPHQW NQRZLQJO\ DQG LQWHQWLRQDOO\ RU ZLWK UHFNOHVV GLVUHJDUG IRU WKH WUXWK ZDV LQFOXGHG E\ WKH DIILDQW LQ WKH ZDUUDQW DIILGDYLW DQG    WKH DOOHJHGO\ IDOVH VWDWHPHQW LV QHFHVVDU\ WR WKH ILQGLQJ RI SUREDEOH FDXVHl )UDQNV Y 'HODZDUH  86       8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

,,,',6&866,21 GHIHQGDQWZKRGRHVQRWmREMHFWWRWKHGLVWULFWMXGJHPDNLQJ WKHGHWHUPLQDWLRQRIGUXJTXDQWLWLHVlIDFHVSODLQHUURUUHYLHZ $*RYHUQPHQW0LVFRQGXFW RQ DSSHDO3DJH)GDW HPSKDVLVDGGHG 7KH &RXUWjVIDLOXUHWRH[SUHVVO\FDWDORJHDFKDQGHYHU\REMHFWLRQ 6WDQGDUGRI5HYLHZ WKDWZDVPDGHDWVHQWHQFLQJLQWKDWFDVHDQGWRH[SODLQZK\ HDFK GLG QRW RSHUDWH WR SUHVHUYH WKH GHIHQGDQWVj $SSUHQGL :KHUH D GHIHQGDQW IDLOV WR UDLVH DQ REMHFWLRQ EHIRUH WKH FKDOOHQJHVGRHVQRWLQDQ\ZD\GLPLQLVKWKHIRUFHRI3DJHjV GLVWULFW FRXUW mD FRXUW RI DSSHDOV >KDV@ D OLPLWHG SRZHU WR H[SUHVVKROGLQJ1RUGRHVLWDIIRUGDQ\RSSRUWXQLW\LQP\ FRUUHFW HUURUV WKDW ZHUH IRUIHLWHG EHFDXVH >WKH\ ZHUH@ QRW YLHZIRUDODWHUSDQHOWRVHL]HXSRQ3DJHjVVLOHQFHDVDEDVLV WLPHO\UDLVHGLQGLVWULFWFRXUWl8QLWHG6WDWHVY2ODQR IRU GUDZLQJ D GLVWLQFWLRQ ZKLFK DV D PDWWHU RI EUXWH IDFW 86   ,QGHHGZHZLOOQRWLFHVXFKDQHUURU PLJKW QRW HYHQ H[LVW DQG DV D PDWWHU RI MXGLFLDO RQO\LQmH[FHSWLRQDOFLUFXPVWDQFHVlRUZKHQWKHIDLOXUHWRGR LQWHUSUHWDWLRQ PXVW KDYH ODFNHG OHJDO VLJQLILFDQFH WR WKH VRZRXOGSURGXFHDmSODLQPLVFDUULDJHRIMXVWLFHl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jV VXEVWDQWLDO ULJKWV  ,G  )LQDOO\ ZH FRQVLGHU HDUOLHU ZLWK UHJDUG WR RXU GHFLVLRQV DGGUHVVLQJ WKH VXEVWDQWLYH VFRSH RI ZKHWKHUWKHHUURUVHULRXVO\DIIHFWHGWKHmIDLUQHVVLQWHJULW\RU $SSUHQGL QDPHO\ WKDW OLNH FDVHV DUH EHLQJ GHFLGHG GLIIHUHQWO\ ZLWK

SXEOLFUHSXWDWLRQlRIWKHMXGLFLDOSURFHHGLQJV,G2QO\XSRQ 6WUD\KRUQ KDYLQJ HIIHFWLYHO\ RYHUUXOHG 1HXKDXVVHU DW OHDVW DQG DUJXDEO\ DOVR 3DJH  RQ WKH VWDQGDUG RI UHYLHZ LVVXH $QG DJDLQ DQ\ HIIRUW WR VXFK D ILQGLQJ PD\ ZH WKHQ H[HUFLVH RXU GLVFUHWLRQDU\ LGHQWLI\ D FRKHUHQW VWDWHPHQW RI RXU &LUFXLWjV SUHVHQW UXOH RQ WKLV LVVXH DXWKRULW\WRQRWLFHWKHHUURU6HHLG UXQV DIRXO RI WKH FDVH ODZ ZKHUH PDQ\ RI RXU UHFHQW GHFLVLRQV FRQWLQXH WR FLWH 3DJH DV DXWKRULW\ IRU DSSO\LQJ D SODLQ HUURU VWDQGDUG ZLWKRXW HYHU 3UHVHUYHG REMHFWLRQV WR D GLVWULFW FRXUWjV HYLGHQWLDU\ FRQVLGHULQJ ZKHWKHU D IDFWXDO FKDOOHQJH DW VHQWHQFLQJ PLJKW LQVWHDG GHFLVLRQVDUHUHYLHZHGIRUDEXVHRIGLVFUHWLRQ:HZLOORQO\ WULJJHU GH QRYR UHYLHZ 6HH HJ 8QLWHG 6WDWHV Y *UDKDP  :/

UHYHUVH LI WKH GHFLVLRQ FDXVHG PRUH WKDQ D KDUPOHVV HUURU   DW  WK &LU 'HF   8QLWHG 6WDWHV Y 0DUWLQ  :/  DW  WK &LU 'HF   0F/HPRUH VXSUD  :/ &RROH\Y&DUPLNH&LQHPDV,QF)G WK  DW  .LQJ VXSUD  )G DW  8QLWHG 6WDWHV Y 'H3D] &LU   :/  DW  WK &LU 2FW    $UEHODH]$JXGHOR VXSUD  :/   DW  Q &RRN VXSUD  :/  DW $QDO\VLV  0DUWLQH] VXSUD  )G DW  8QLWHG 6WDWHV Y 7D\ORU  :/   DW  WK &LU 0D\    ,QGHHG D UHYLHZ RI WKHVH +XPSKUH\DUJXHVWKDWWKH*RYHUQPHQWjVPLVFRQGXFWDWWULDO GHFLVLRQV UHYHDOV WKDW VRPH RI WKH GHIHQGDQWV GLG UDLVH IDFWXDO REMHFWLRQV WR WKH VHQWHQFLQJ MXGJHjV GHWHUPLQDWLRQV DQG \HW ZH VWLOO DSSOLHG SODLQ GHSULYHGKLPRIKLVULJKWDJDLQVWVHOILQFULPLQDWLRQDVZHOODV HUURU UHYLHZ 6HH *UDKDP  :/   DW  0F/HPRUH  KLVULJKWVWRDIDLUWULDODQXQELDVHGMXU\DQGGXHSURFHVVRI :/  DW     )G DW   .LQJ   :/ 'H3D] ODZ6SHFLILFDOO\+XPSKUH\DOOHJHV   WKDWWKH*RYHUQPHQW  DW   $UEHODH]$JXGHOR   :/   DW  Q LPSURSHUO\VKLIWHGWKHEXUGHQRISURRIWRKLPE\VXJJHVWLQJ 7KHVH FDVHV OLNH 1HXKDXVVHU DUH LQ GLUHFW FRQIOLFW ZLWK jV UXOH 6WUD\KRUQ WRWKHMXU\WKDW+XPSKUH\jVXQH[SODLQHGZHDOWKGHPRQVWUDWHG RI GH QRYR UHYLHZ $JDLQ , ZRXOG VXJJHVW WKDW WKH 6XSUHPH &RXUW KLVSDUWLFLSDWLRQLQQDUFRWLFVDQGPRQH\ODXQGHULQJDFWLYLWLHV WKURXJK LWV GHFLVLRQ LQ  VKRXOG VHUYH DV WKH mWLHEUHDNHUl LQ sRKQVRQ UHVROYLQJ WKLV FRQIOLFW  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

1H[W HYHQ DVVXPLQJ WKH IDFWXDO GLVWLQFWLRQV SRVLWHG LQ  WKDWWKH*RYHUQPHQWLPSURSHUO\XVHG+XPSKUH\jVLQFRPH 6WUD\KRUQ DFWXDOO\ H[LVWHG , IDLO WR VHH KRZ D IDFWEDVHG WD[UHWXUQVDQGWKHWHVWLPRQ\RIDQ,QWHUQDO5HYHQXH6HUYLFH REMHFWLRQWRDVHQWHQFLQJMXGJHjVGUXJTXDQWLW\FRPSXWDWLRQ m,56l DJHQWWRVXJJHVWWKDW+XPSKUH\jVFRPPLVVLRQRIDQ FRXOGSURSHUO\EHFRQVWUXHGDVSUHVHUYLQJWKHIDUGLIIHUHQWVRUW XQLQGLFWHGFULPHWD[HYDVLRQZDVHYLGHQFHRIJXLOW   WKDW RI FKDOOHQJH WKDW DULVHV IURP $SSUHQGL n QDPHO\ D OHJDO WKHSURVHFXWRULPSURSHUO\YRXFKHGIRUKLVZLWQHVVDQGVWDWHG FKDOOHQJHLPSOLFDWLQJWKHGLYLVLRQRIODERUEHWZHHQMXGJHDQG KLV SHUVRQDO EHOLHI LQ +XPSKUH\jV JXLOW    WKDW WKH MXU\ DV ZHOO DV WKH VWULQJHQW mEH\RQG D UHDVRQDEOH GRXEWl *RYHUQPHQWLPSURSHUO\H[HUFLVHGLWVSHUHPSWRU\FKDOOHQJHV EXUGHQRISURRIDWWHQGDQWWRDMXU\VXEPLVVLEOHLVVXH7KH WRH[FOXGH$IULFDQ$PHULFDQVIURP WKHMXU\   WKDWWKH UHFRUG LQ WKLV FDVH DPSO\ GHPRQVWUDWHV WKH GLVWLQFWLRQ *RYHUQPHQW DUJXHG IDFWV QRW LQ HYLGHQFH    WKDW WKH EHWZHHQIDFWXDODQG$SSUHQGLEDVHGREMHFWLRQVWRD'LVWULFW *RYHUQPHQWFRQIXVHGWKHMXU\E\PLVVWDWLQJWKHGHILQLWLRQRI &RXUWjVGHWHUPLQDWLRQRIGUXJTXDQWLWLHVn'HIHQGDQWKHUH D mEX\HUVHOOHU UHODWLRQVKLSl    WKDW WKH *RYHUQPHQW TXLWH SODLQO\ DVVHUWHG WKH IRUPHU W\SH RI REMHFWLRQ DW LQWHQWLRQDOO\ VXEPLWWHG LUUHOHYDQW HYLGHQFH WR WKH MXU\ DQG VHQWHQFLQJEXWH[SUHVVO\GLVDYRZHGDQ\FODLPRIWKHODWWHU SUHYHQWHG D IDLU UHEXWWDO E\ +XPSKUH\ RI WKDW HYLGHQFH VRUWDQGLQVWHDGDFNQRZOHGJHGWKH'LVWULFW&RXUWjVDXWKRULW\  WKDWWKH*RYHUQPHQWLPSURSHUO\DUJXHGWKDW+XPSKUH\jV WR PDNH VXFK D GHWHUPLQDWLRQ E\ D SUHSRQGHUDQFH RI WKH FRXQVHO NQHZ WKDW KLV FOLHQW ZDV JXLOW\  DQG  WKDW WKH HYLGHQFH  ,W ZRXOG EH VWUDQJH LQGHHG LI D GHIHQGDQWjV FXPXODWLYHLPSDFWRIHDFKRIWKHDIRUHPHQWLRQHGLQVWDQFHVRI FKDOOHQJH WR D 'LVWULFW &RXUWjV IDFWXDO ILQGLQJV ZKLFK ZH PLVFRQGXFWLVVXIILFLHQWWRZDUUDQWUHYHUVDO(DFKDUJXPHQW UHYLHZ IRU FOHDU HUURU VHH 1HXKDXVVHU  )G DW  ZLOOEHDGGUHVVHGLQWXUQ$OOXOWLPDWHO\IDLO VRPHKRZ WULJJHUHG GH QRYR UHYLHZ RI D GLIIHUHQW VRUW RI FKDOOHQJH WKDW ZDV QRW SUHVHQWHG WR WKH VHQWHQFLQJ FRXUW D8QH[SODLQHG:HDOWK $QGDJDLQ6WUD\KRUQVWDQGVDORQHLQLWVIDLOXUHWRREVHUYH WKLV GLVWLQFWLRQ  VHYHUDO RWKHU &LUFXLWV LQ FRQWUDVW KDYH +XPSKUH\VXEPLWVWKDWWKH*RYHUQPHQWjVFDVHDJDLQVWKLP H[SUHVVO\KHOGWKDWWKHSODLQHUURUVWDQGDUGDSSOLHVHYHQZKHUH ZDV SUHGLFDWHG RQ WKH VHOIVHUYLQJ WHVWLPRQ\ RI (DWRQ DQG WKHUH ZHUH IDFWXDO REMHFWLRQV WR WKH VHQWHQFLQJ FRXUWjV &URPLW\ERWKDGPLWWHGGUXJGHDOHUVDQGRQWHVWLPRQ\WKDW GHWHUPLQDWLRQRIGUXJTXDQWLWLHV6HHHJ)LHOGV)G LQVLQXDWHGD\RXQJ$IULFDQ$PHULFDQPDOHLVLQFDSDEOHRI DW 0RMLFD%DH] )GDW Q 1RUGE\ RSHUDWLQJDVXFFHVVIXOEXVLQHVVXQOHVVKHLVHQJDJHGLQLOOHJDO )GDW QDUFRWLFV DFWLYLW\  7R GULYH KRPH WKLV SRLQW +XPSKUH\ FRQWHQGVWKDWWKH*RYHUQPHQWUHOLHGLPSURSHUO\RQHYLGHQFH ,QGHHG,UHDG3DJHDVRXU&LUFXLWjVGHILQLWLYHVWDWHPHQWRQ RI+XPSKUH\jVXQH[SODLQHGZHDOWKLQFRQWUDYHQWLRQRIKLV WKHVXEMHFWOHDYLQJQRURRPIRUWKHGLVWLQFWLRQWKDW6WUD\KRUQ )LIWK$PHQGPHQWULJKWDJDLQVWVHOILQFULPLQDWLRQWRVXJJHVW VHHNVWRGUDZ3DJHGRHVQRWVD\PXFKRQWKHVXEMHFWnZH WKDWEHFDXVH+XPSKUH\KDGIDLOHGWRLGHQWLI\WKHVRXUFHRIKLV VHOGRP GR ZKHQ VHWWLQJ IRUWK WKH DSSOLFDEOH VWDQGDUG RI ZHDOWK WKHQ KH QHFHVVDULO\ PXVW KDYH EHHQ JXLOW\ RI GUXJ UHYLHZnEXWZKDWLWVD\VLVSODLQHQRXJK QDPHO\WKDWD WUDIILFNLQJ +XPSKUH\PDLQWDLQVWKDWLQPDNLQJVXFKDQDUJXPHQWWKH *RYHUQPHQWLPSURSHUO\VKLIWHGLWVEXUGHQRISURRIWRKLP WKH GHIHQGDQW GLG SUHVHQW IDFWXDO FKDOOHQJHV WR WKH 'LVWULFW sXGJHjV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV ERWK LQ ZULWWHQ REMHFWLRQV WR WKH SUHVHQWHQFH UHSRUW DQG DW KLV VHQWHQFLQJ KHDULQJ $V LQGLFDWHG EHORZ LI WKLV SRUWLRQ RI WKH UHFRUG ZDV QRW PHQWLRQHG LQ WKH SDQHOjV RSLQLRQ LW ZDV  7KH *RYHUQPHQWjV DOOHJHG XVH RI LWV SHUHPSWRU\ FKDOOHQJHV WR EHFDXVH ZH GHHPHG LW LUUHOHYDQW WR HLWKHU WKH LVVXHV EHIRUH WKH &RXUW RU H[FOXGH $IULFDQ$PHULFDQV IURP WKH MXU\ DQG WKH GLVWULFW FRXUWjV IDLOXUH WKH VWDQGDUG RI UHYLHZ WR EH DSSOLHG LQ UHVROYLQJ WKRVH LVVXHV WR VR ILQG DUH DGGUHVVHG LQ 3DUW ,,,%E  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

ZKLFKZDVHVSHFLDOO\SUHMXGLFLDOLQOLJKWRIWKHIDFWWKDWWKH GLVWULFWFRXUWjVIDFWXDOILQGLQJZLWKUHVSHFWWRGUXJTXDQWLW\l RQO\ HYLGHQFH OLQNLQJ KLP WR LOOHJDO GUXJ DFWLYLW\ ZDV WKH 6WUD\KRUQ)GDW7KHSDQHOFRQWUDVWHGWKLVZLWK WHVWLPRQ\RI(DWRQDQG&URPLW\,QIDFW+XPSKUH\QRWHV WKH VLWXDWLRQ SUHVHQWHG LQ 3DJH ZKHUH WKH GHIHQGDQWV WKH*RYHUQPHQWQHYHUREVHUYHGGUXJVLQKLVSRVVHVVLRQRUKLV SXUSRUWHGO\mIDLOHGWRREMHFWZKHQ>WKH@GLVWULFWFRXUWPDGHLWV UHVLGHQFHV QHYHU GLVFRYHUHG ODUJH VXPV RI FDVK LQ KLV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl  6WUD\KRUQ  )G DW SRVVHVVLRQQHYHUZLWQHVVHGKLPHQJDJHLQGUXJDFWLYLW\DQG  QHYHUDWWHPSWHGWRFRRUGLQDWHDFRQWUROOHGGUXJEX\IURPKLP +XPSKUH\REMHFWHGWRWKHDGPLVVLRQRIWD[HYLGHQFHs$DW 7KLVDWWHPSWHGGLVWLQFWLRQKRZHYHUIDLOVRQDWOHDVWWZR  WKHUHIRUHZHUHYLHZWKHGLVWULFWFRXUWjVGHFLVLRQIRUDQ VFRUHV)LUVWDVDIDFWXDOPDWWHUDQGDVERWKWKHPDMRULW\DQG DEXVHRIGLVFUHWLRQ , KDYH SRLQWHG RXW LQ RXU UHVSHFWLYH RSLQLRQV 3DJH VD\V DOPRVW QRWKLQJ DW DOO DERXW ZKDW REMHFWLRQV LI DQ\ ZHUH ,Q 8QLWHG 6WDWHV Y &DUWHU ZH UHMHFWHG DV LUUHOHYDQW WKH SUHVHQWHGWRWKH'LVWULFW&RXUWLQWKDWFDVH7KHORQHEUHDN *RYHUQPHQWjVXVHRIILQDQFLDOLQIRUPDWLRQLQLWVSURVHFXWLRQ IURP WKLV VLOHQFH DV , QRWHG HDUOLHU LV WKH &RXUWjV SRLQWHG RIDGHIHQGDQWIRUYLRODWLRQRIIHGHUDOQDUFRWLFVODZV  REVHUYDWLRQWKDWWKHGHIHQGDQWVmGLGQRWREMHFWWRWKHGLVWULFW )G  WK&LU  :HQHYHUWKHOHVVREVHUYHGWKDW FRXUWPDNLQJWKHGHWHUPLQDWLRQRIGUXJTXDQWLWLHVl3DJH HYLGHQFH RI mWKH ODFN RI D IHGHUDO WD[ ILOLQJ RU )GDW)RUDOOZHNQRZWKHQWKHGHIHQGDQWVLQ XQGHUUHSRUWLQJ  LQ FRPELQDWLRQ ZLWK SURRI RI YDOXDEOH 3DJHUDLVHGSUHFLVHO\WKHVDPHVRUWVRIIDFWXDOFKDOOHQJHVWR WDQJLEOH SRVVHVVLRQV RU H[WUDYDJDQW SXUFKDVHV FUHDWHV WKH WKH 'LVWULFW &RXUWjV GUXJ TXDQWLW\ GHWHUPLQDWLRQV DV ZHUH LQIHUHQFH WKDW WKH GHIHQGDQW GRHV QRW SRVVHVV D OHJLWLPDWH PDGHLQ6WUD\KRUQ VRXUFH RI LQFRPH WR VXSSRUW KLV DIIOXHQW OLIHVW\OH DQG WKHUHIRUH WKH LQFRPH PXVW RULJLQDWH IURP QDUFRWLFV RSHUDWLRQVlLGDWDQGWKDWmWKHUHDUHFDVHVWKDWDOORZWKH  6WUD\KRUQ FRPPLWV WKH VDPH HUURU ZLWK UHVSHFW WR RXU GHFLVLRQ LQ JRYHUQPHQWWRXVHDGHIHQGDQWjVWD[UHWXUQVDQGHYLGHQFHRI 1HXKDXVVHU YLHZLQJ WKDW FDVH OLNH 3DJH DV GLVWLQJXLVKDEOH RQ WKH KLV VSHQGLQJ KDELWV LQ RUGHU WR REWDLQ D FRQYLFWLRQ LQ D JURXQG WKDW WKH GHIHQGDQW SXUSRUWHGO\ mIDLOHG WR REMHFW ZKHQ >WKH@ GLVWULFW QDUFRWLFVFDVHl,G FRXUW PDGH LWV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl 6WUD\KRUQ  )G DW  FLWLQJ 1HXKDXVVHU  )G DW   ,Q IDFW 1HXKDXVVHU VWDWHV DW

%HIRUHXVLVVXFKDFDVH7KHUHZDVXQUHEXWWHGWHVWLPRQ\ WKH RXWVHW WKDW WKH GHIHQGDQW ZDV FKDOOHQJLQJ KLV VHQWHQFH DV mXQODZIXOO\ EDVHG LQ SDUW RQ WKH WULDO FRXUWjV GHWHUPLQDWLRQV RI GUXJ W\SHV DQG DWWULDOWKDW+XPSKUH\jVWRWDOH[SHQGLWXUHVIRU DQG  TXDQWLWLHV DW VHQWHQFLQJ XQGHU WKH µSUHSRQGHUDQFH RI WKH HYLGHQFHj DPRXQWHGWRGHVSLWHWKHIDFWWKDWKHKDGEHHQ VWDQGDUGl DQG WKDW EHFDXVH WKH GHIHQGDQW mIDLOHG WR UDLVH WKLV REMHFWLRQ mXQHPSOR\HGWKHSDVWHLJKWPRQWKVlGXHWRDGLVDELOLW\,W LQ WKH FRXUW EHORZ ZH UHYLHZ KLV VHQWHQFH RQO\ IRU SODLQ HUURUl  )G ZDV ZHOO ZLWKLQ WKH SUHURJDWLYH RI WKH *RYHUQPHQW WR DW  HPSKDVLV DGGHG  7KHQ LQ WKH SDVVDJH FLWHG LQ 6WUD\KRUQ 

HQFRXUDJHWKHMXU\WRFRQVLGHUKRZ+XPSKUH\PDLQWDLQHGWKLV 1HXKDXVVHU VXUYH\V WKH GHFLVLRQ LQ 3DJH  DQG VWDWHV WKDW mLQ 3DJH  DV KHUH WKH GHIHQGDQWV IDLOHG WR REMHFW ZKHQ WKH 'LVWULFW &RXUW LQLWLDOO\ PDGH DIIOXHQWOLIHVW\OHSDUWLFXODUO\LQOLJKWRIWKHGHFODUDWLRQVRIWKH LWV GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl 1HXKDXVVHU   )G DW  )URP GLVWULFWFRXUWDQGWKH*RYHUQPHQWWKDWWKHEXUGHQRISURRIDW WKH FRQWH[W DV ZHOO DV WKH UHIHUHQFH WR 3DJH  LW LV HYLGHQW WKDW1HXKDXVVHU DOOWLPHVUHPDLQHGZLWKWKH*RYHUQPHQW7KH*RYHUQPHQWjV LV VSHDNLQJ RI D SDUWLFXODU mIDLO>XUH@ WR REMHFWl n QDPHO\ WKH ODFN RI DQ\ FORVLQJDQGUHEXWWDODUJXPHQWVZHUHHQWLUHO\SURSHUFRPPHQWV REMHFWLRQ WKDW GUXJ W\SH DQG TXDQWLW\ PXVW EH GHWHUPLQHG E\ D MXU\ EH\RQG RQWKHTXDOLW\DQGFUHGLELOLW\RI+XPSKUH\jVHYLGHQFH D UHDVRQDEOH GRXEW DQG QRW E\ D MXGJH E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH 1HXKDXVVHU  OLNH 3DJH LV XWWHUO\ VLOHQW DV WR ZKHWKHU DQ\ RWKHU VRUWV RI REMHFWLRQV ZHUH UDLVHG DW WULDO RU VHQWHQFLQJ

3DUHQWKHWLFDOO\ DV D PHPEHU RI WKH SDQHO DQG WKH ZULWLQJ sXGJH LQ 1HXKDXVVHU , DP DEOH WR JR EDFN WR WKH UHFRUG DQG FRQILUP WKDW LQ IDFW  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\

WK &LU     /OR\G KRZHYHU DSSOLHG WKH GH QRYR E7D[(YLGHQFH VWDQGDUGWRIDFLDODWWDFNVRQWKHFRQVWLWXWLRQDOLW\RIDIHGHUDO VWDWXWHnVSHFLILFDOO\HTXDOSURWHFWLRQDQGVXEVWDQWLYHGXH +XPSKUH\DOVRFRQWHQGVWKDWWKH*RYHUQPHQWLPSURSHUO\ SURFHVV FKDOOHQJHV WR WKH VWDWXWRU\ WR VHQWHQFLQJ XVHGKLVLQFRPHWD[UHWXUQVDQGWKHWHVWLPRQ\RI,56$JHQW GLVSDULW\ XQGHU †  E  IRU GUXJ RIIHQVHV LQYROYLQJ FUDFN *DU\5DVROHWWLWRRXWOLQH+XPSKUH\jVVSHQGLQJKDELWVRYHU YHUVXVSRZGHUFRFDLQH6XFKTXHVWLRQVRIODZLPSOLFDWLQJ WKHHLJKWHHQPRQWKVWKDWKHZDVXQGHULQYHVWLJDWLRQ%HFDXVH WKHVFRSHRIFRQJUHVVLRQDODXWKRULW\XQGHUWKH&RQVWLWXWLRQ LWZDVXQGLVSXWHGWKDW+XPSKUH\KDGOHJLWLPDWHVRXUFHVRI FOHDUO\ZDUUDQWGHQRYRUHYLHZ LQFRPHIURPUHQWDOSURSHUW\DQGWHHVKLUWVDOHV+XPSKUH\ DUJXHVWKDWWKH*RYHUQPHQWjVLQWURGXFWLRQRIWD[UHFRUGVDQG ,Q FRQWUDVW 'HIHQGDQW KHUH KDV QRW PRXQWHG D 5DVROHWWLjVWHVWLPRQ\SUHMXGLFHGWKHMXU\DJDLQVWKLPDQGZDV FRQVWLWXWLRQDO DWWDFN XSRQ D IHGHUDO VWDWXWH EXW LQVWHDG LQFOHDUGLVUHJDUGRIRXUGHFLVLRQLQ&DUWHUZKLFKJHQHUDOO\ FKDOOHQJHVWKH'LVWULFW&RXUWj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jVUHIXVDOWRRUGHUWKHIRUIHLWXUHRIWKHYDVW s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jV XVH RI KLV WD[ UHWXUQV DQG GHQRYRUHYLHZ 5DVROHWWLjVWHVWLPRQ\VHUYHGQRSXUSRVHEXWWRSXWHYLGHQFH RIDQXQFKDUJHGFULPHWD[HYDVLRQRUIUDXGEHIRUHWKHMXU\ $UJXDEO\6WUD\KRUQHQGHDYRUVWRGLVWLQJXLVK3DJHDQGLWV ZKLFK LV WKH H[DFW VLWXDWLRQ SURKLELWHG E\ &DUWHU  7KH DSSOLFDWLRQRISODLQHUURUUHYLHZE\VXJJHVWLQJWKDWWKHWZR *RYHUQPHQWjVIDLOXUHWROLQN+XPSKUH\jVXQH[SODLQHGZHDOWK FDVHVLQYROYHGGLIIHUHQWVRUWVRIREMHFWLRQVLQWKHFRXUWEHORZ WRGUXJDFWLYLW\FRXSOHGZLWKWKHLQWURGXFWLRQRIXQLQGLFWHG ,Q6WUD\KRUQWKHGHIHQGDQWmUHSHDWHGO\REMHFW>HG@WRWKHGUXJ WD[ FKDUJHV ZDV XQGXO\ SUHMXGLFLDO DQG +XPSKUH\ TXDQWLW\ GHWHUPLQDWLRQ DW KLV SOHD KHDULQJ DQG DW KLV FRQFOXGHVZDUUDQWVUHYHUVDO VHQWHQFLQJKHDULQJDVZHOODVLQDZULWWHQREMHFWLRQWRWKH FDOFXODWLRQ RI KLV EDVH RIIHQVH OHYHO LQ KLV SUHVHQWHQFH +XPSKUH\jV DUJXPHQW LV IRUHFORVHG E\ RXU GHFLVLRQ LQ UHSRUWl DQG KH mPDGH LW ZHOO NQRZQ WKDW KH GLVSXWHG WKH 8QLWHG 6WDWHV Y &RSHODQG  )G  WK &LU    7KHUH D GHIHQGDQW FKDUJHG ZLWK YLRODWLRQ RI IHGHUDO GUXJ FRQVSLUDF\ ODZV UDLVHG D UHOHYDQF\ FKDOOHQJH WR WKH  6WUD\KRUQ ORRNV WR )ORZDO DQG 5DPLUH] IRU JXLGDQFH LQ 7KRXJK *RYHUQPHQWjVLQWURGXFWLRQRIFHUWDLQVWRUHUHFHLSWV,G DW FRQVWUXLQJ $SSUHQGL LW FDQQRW UHO\ XSRQ WKHVH GHFLVLRQV DV DXWKRULW\ IRU   7KRVH UHFHLSWV GHPRQVWUDWHG WKDW WKH GHIHQGDQW KDG GH QRYR UHYLHZ RI $SSUHQGL FODLPV IRU WKH VLPSOH UHDVRQ WKDW )ORZDO DQG SXUFKDVHG  LQ VWHUHR HTXLSPHQW RYHU D WZHQW\VL[ 5DPLUH] DUH FRPSOHWHO\ VLOHQW DV WR WKH VWDQGDUG RI UHYLHZ IRU VXFK FODLPV  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

PRQWKSHULRGGXULQJZKLFKWLPHKH UHSRUWHGQRVRXUFHRI TXHVWLRQHGWKH'LVWULFWsXGJHjVDXWKRULW\WRGHWHUPLQHGUXJ LQFRPH,G,QILQGLQJWKHUHFHLSWVUHOHYDQWDQGDIILUPLQJWKH TXDQWLWLHVIRUSXUSRVHVRIVHQWHQFLQJDQGPDGHRQO\DVLQJOH GLVWULFWFRXUWjVDGPLVVLRQRIWKHHYLGHQFHZHIRXQG&DUWHU UHIHUHQFHWRDmKLJKHUVWDQGDUGl s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nDQGZKLFKWKHPDMRULW\GRHVQRWnIHDWXUH H[SUHVVVWDWHPHQWVRI'HIHQGDQWjVSRVLWLRQV QDPHO\WKDWLW 7KH IDFWV RI WKH LQVWDQW FDVH DUH DQDORJRXV WR WKRVH RI ZDV WKH GXW\ RI WKH 'LVWULFW &RXUW WR GHWHUPLQH WKH GUXJ &RSHODQG+XPSKUH\SXUFKDVHGLQH[FHVVRIZRUWK TXDQWLWLHVIRUZKLFKKHZDVWREHKHOGUHVSRQVLEOHDQGWKDWLW RIJRRGVRYHUDWZR\HDUSHULRGZKHQKHZDVXQHPSOR\HGIDU ZDVWKH*RYHUQPHQWjVEXUGHQWRHVWDEOLVKWKHVHTXDQWLWLHVE\ PRUHWKDQWKHDWLVVXHLQ&RSHODQG)XUWKHUPRUHWKH DSUHSRQGHUDQFHRIWKHHYLGHQFH UHFHLSWVUHOLHGXSRQE\WKH*RYHUQPHQWLQWKLVFDVHUHIHUHQFHG IUXLWVRIWKHDOOHJHGFRQVSLUDF\(YHQZHUHZHLQFOLQHGWR $OWHUQDWLYHO\WKHPDMRULW\FLWHV6WUD\KRUQ)GDW ILQG+XPSKUH\jVFDVHIDFWXDOO\VLPLODUWR&DUWHUWKHGLVSXWHG IRU WKH SURSRVLWLRQ WKDW DQ REMHFWLRQ DV WR GUXJ TXDQWLW\ DW UHFHLSWVDUHHYLGHQFHRIWDQJLEOHSRVVHVVLRQVGHPRQVWUDWLQJ VHQWHQFLQJ n ZKLFK REMHFWLRQ 'HIHQGDQW SODLQO\ GLG UDLVH mH[WUDYDJDQW VSHQGLQJl IRU ZKLFK ILQDQFLDO LQIRUPDWLRQ KHUHnVXIILFHVWRSUHVHUYHGHQRYRUHYLHZRIDQ$SSUHQGL JHQHUDOO\PD\EHLQWURGXFHG&DUWHU  )GDW:H FODLPRQDSSHDO6WUD\KRUQLQWXUQUHVWVLWVGHQRYRUHYLHZ DUHIXUWKHUSHUVXDGHGWKDWWKHGLVWULFWFRXUWjVLQVWUXFWLRQRIWKH RQWKHDXWKRULW\RI8QLWHG6WDWHVY/OR\G)G  MXU\WRZKLFK+XPSKUH\UDLVHGQRREMHFWLRQFXUHGDQ\HUURU 6HH s$ DW   m7KH GHIHQGDQW LV QRW RQ WULDO IRU QRW UHSRUWLQJ LQFRPH RU DQ\ RWKHU FULPHV QRW FKDUJHG LQ WKH LQGLFWPHQWl  F9RXFKLQJ  7R WKH PDMRULW\jV VXJJHVWLRQ WKDW LW ZRXOG EH XQIDLU WR SHQDOL]H D GHIHQGDQW IRU IDLOLQJ WR DQWLFLSDWH D FKDQJH LQ WKH ODZ WKURXJK D QRW\HW +XPSKUH\DUJXHVWKDWWKH*RYHUQPHQWLPSURSHUO\VWDWHGLWV LVVXHG 6XSUHPH &RXUW UXOLQJ , FDQ RQO\ VD\ WKDW WKH UHTXLUHPHQW RI SHUVRQDOEHOLHILQ(DWRQjVFUHGLELOLW\6SHFLILFDOO\+XPSKUH\ FRQWHPSRUDQHRXV REMHFWLRQ VHH )HG 5 &ULP 3  DQG WKH OLPLWHG SRLQWV WR WKH *RYHUQPHQWjV FORVLQJ DUJXPHQW ZKHQ LW H[FHSWLRQ LQ FDVHV RI SODLQ HUURU VHH )HG 5 &ULP 3  E  UHIOHFW mD REVHUYHG FDUHIXO EDODQFLQJ RI RXU QHHG WR HQFRXUDJH DOO WULDO SDUWLFLSDQWV WR VHHN D IDLU DQG DFFXUDWH WULDO WKH ILUVW WLPH DURXQG DJDLQVW RXU LQVLVWHQFH WKDW REYLRXV LQMXVWLFH EH SURPSWO\ UHGUHVVHGl 8QLWHG 6WDWHV Y )UDG\  1RZMXVWUHDOTXLFNO\<RXNQRZDQG,GRQjWKDYHWLPH 86    6 &W      IRRWQRWH RPLWWHG  7KXV WKH \RXFDQFRQVLGHUWKHJRYHUQPHQWEHOLHYHVWKDWDIWHUDOO DYDLODELOLW\ RI SODLQ HUURU UHYLHZ LV LQWHQGHG WR PLWLJDWH WKH YHU\ WKDWFRUURERUDWLRQWKHWHVWLPRQ\RI+HQU\(DWRQWKDWLV XQIDLUQHVV RI ZKLFK WKH PDMRULW\ FRPSODLQV ,Q DQ\ HYHQW WKH 6XSUHPH FUHGLEOHUHODWLYHWRKLVUHODWLRQVKLSZLWK'DUU\O0RUURZ &RXUWjV DSSOLFDWLRQ RI WKH SODLQ HUURU VWDQGDUG LQ sRKQVRQ XQGHU OHJDOO\ DWOHDVWWKDWZKLFKLVRQWDSH LQGLVWLQJXLVKDEOH IDFWV DQG FLUFXPVWDQFHV n DQG RI FRXUVH 3DJHjV DSSOLFDWLRQ RI WKH VDPH VWDQGDUG XQGHU HYHQ PRUH VLPLODU FLUFXPVWDQFHV WR WKRVH FRQIURQWLQJ XV KHUH n GLFWDWHV RXU FRXUVH RI DFWLRQ LQ WKLV FDVH s$DW QR PDWWHU KRZ PXFK ZH PLJKW SUHIHU D GLIIHUHQW FDOLEUDWLRQ RI WKH FRPSHWLQJ SROLF\ FRQFHUQV  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

1HYHUWKHOHVVHYHQDFFHSWLQJWKHPDMRULW\jVYLHZIROORZLQJ $OWKRXJK +XPSKUH\ FRQFHGHV WKDW WKH *RYHUQPHQWjV )ORZDODQGLWVSURJHQ\WKDW$SSUHQGLLPSOLFDWHVVHQWHQFLQJ VWDWHPHQW ZDV GLUHFWHG PRUH DW WKH FUHGLELOLW\ RI (DWRQjV UDQJHVDQGQRWPHUHO\VWDWXWRU\PD[LPXPVWKLVILQGLQJRIDQ WHVWLPRQ\ ZLWK UHVSHFW WR 'DUU\O 0RUURZ KH QHYHUWKHOHVV $SSUHQGL HUURU ZRXOG VDWLVI\ DW PRVW RQO\ WKH ILUVW WZR FRQWHQGVWKDWEHFDXVH(DWRQjVFUHGLELOLW\DVWRERWK0RUURZ SURQJVRIWKHIRXUSDUWSODLQHUURUWHVW,QWKDWHYHQWZHVWLOO DQGKLPVHOIZDVDWLVVXHDQ\YRXFKLQJE\WKH*RYHUQPHQWDV FRXOG QRW FRQFOXGH WKDW WKLV SXUSRUWHG HUURU DIIHFWV WRRQHSDUWRI(DWRQjVWHVWLPRQ\QHFHVVDULO\DSSOLHGWRDOORI 'HIHQGDQWjVVXEVWDQWLDOULJKWV5DWKHULWLVZHOOHVWDEOLVKHG KLVWHVWLPRQ\ LQ WKLV &LUFXLW DQG RWKHUV WKDW VXEVWDQWLDO ULJKWV DUH QRW DIIHFWHG DQG WKH SODLQ HUURU VWDQGDUG LV QRW VDWLVILHG E\ D +XPSKUH\ DOVR DUJXHV WKDW WKH *RYHUQPHQW LPSURSHUO\ VHQWHQFH WKDW FRXOG KDYH EHHQ DFKLHYHG VROHO\ WKURXJK WKH VWDWHGLWVSHUVRQDOEHOLHILQKLVJXLOW MXU\jVYHUGLFW RUDGHIHQGDQWjVJXLOW\SOHD DQGDEVHQWWKH DGGLWLRQDO ILQGLQJV RI WKH VHQWHQFLQJ FRXUW XQGHU WKH WRR , WKLQN GXULQJ WKH FRXUVH RI 0U 'XGOH\jV ILQDO OHQLHQWSUHSRQGHUDQFHVWDQGDUG6HH8QLWHG6WDWHVY6WDIIRUG DUJXPHQW LW EHFDPH SUHWW\ DSSDUHQW , VWDUWHG JHWWLQJ )G  WK&LU 0DUWLQH])GDW DJLWDWHG   Q  3DJH  )G DW   VHH DOVR 8QLWHG :HOOOHWPHWHOO\RXP\SHUVSHFWLYHRQWKLVFDVHEDVHG 6WDWHV Y 3HDVH  )G   WK &LU  RQWKHHYLGHQFH 8QLWHG 6WDWHV Y 6WXUJLV  )G   WK &LU   8QLWHG6WDWHVY:KLWH)G WK&LU  $JDLQWKLVLVWKHFDVHKHUHZKHUH'HIHQGDQWjV 1RZIRONV,WKLQNWKHHYLGHQFHLVRYHUZKHOPLQJWKDW \HDUVHQWHQFHOLHVZLWKLQWKHSHUPLWWHGVWDWXWRU\UDQJHIRUWKH 0RQWHO +XPSKUH\ LV JXLOW\ RI WKH FULPHV WKDW KH LV LQGHWHUPLQDWHDPRXQWGUXJFRQVSLUDF\RIIHQVHHVWDEOLVKHGE\ FKDUJHG ZLWK  +H KDV QRW SURYLGHG \RX ZLWK DQ\ WKHMXU\jVYHUGLFW H[SODQDWLRQ

7KH PDMRULW\ LV DEOH WR FRQFOXGH RWKHUZLVH RQO\ E\ s$DW  DOWRJHWKHUDYRLGLQJDmVXEVWDQWLDOULJKWVlLQTXLU\DQGLQVWHDG UHYLHZLQJ'HIHQGDQWjV$SSUHQGLFODLPGHQRYR$VWKHEDVLV ,WLVZHOOHVWDEOLVKHGWKDWDSURVHFXWRUPD\QRWDUJXHKLV IRUWKLVWKHPDMRULW\ILUVWHQGHDYRUVWRVKRZWKDW'HIHQGDQW SHUVRQDOEHOLHILQDZLWQHVVjVFUHGLELOLW\RULQDGHIHQGDQWjV UDLVHGVRPHWKLQJDNLQWRDQ$SSUHQGLFKDOOHQJHEHIRUHWKH JXLOWVHH8QLWHG6WDWHVY.UHEV)G WK 'LVWULFW &RXUW  ,Q DOO RI WKH PDQ\ SDVVDJHV RI WKH UHFRUG &LU  DVMXULHVmZLOOQRUPDOO\SODFHJUHDWFRQILGHQFHLQ TXRWHG E\ WKH PDMRULW\ KRZHYHU 'HIHQGDQW QHYHU RQFH WKH IDLWKIXO H[HFXWLRQ RI WKH REOLJDWLRQV RI D SURVHFXWLQJ DWWRUQH\LPSURSHULQVLQXDWLRQVRUVXJJHVWLRQVDUHDSWWRFDUU\ PRUH ZHLJKW DJDLQVW D GHIHQGDQW WKDQ VXFK VWDWHPHQWV E\ ZLWQHVVHVl 8QLWHG 6WDWHV Y 6ROLYDQ  )G    7KHFRQFXUUHQFHLQ LV LQVWUXFWLYH RQ WKLV SRLQW sXGJH&OD\ WK &LU     7R FRQVWLWXWH HUURU KRZHYHU WKH HQGRUVHG WKH EURDGHU mVHQWHQFLQJ UDQJHl UHDGLQJ RI  6WDIIRUG

  )G DW   &OD\ s FRQFXUULQJ n QRW VXUSULVLQJO\ $SSUHQGL VHH SURVHFXWRUjVDOOHJHGPLVFRQGXFWPXVWEHIODJUDQW6HH8QLWHG VLQFH KH ZDV D PHPEHU RI WKH SDQHO LQ  1HYHUWKHOHVV sXGJH 6WDIIRUG 6WDWHVY&DUUROO)GQ WK&LU  $ &OD\ UHFRJQL]HG WKDW WKH SODLQ HUURU VWDQGDUG JRYHUQHG WKH GHIHQGDQWjV 6WUD\KRUQ

SURVHFXWRULDO FRPPHQW LV GHHPHG IODJUDQW LI LW WHQGV WR FKDOOHQJH +H WKHQ FRQFXUUHG LQ WKH PDMRULW\jV UXOLQJ WKDW WKLV PLVOHDGWKHMXU\RUSUHMXGLFHWKHGHIHQGDQW LILWLVRQHRID FODLP GLG QRW VXUYLYH SODLQ HUURU UHYLHZ DJUHHLQJ WKDW WKH GHIHQGDQWjV $SSUHQGL

VXEVWDQWLDO ULJKWV ZHUH QRW DIIHFWHG E\ D VHQWHQFH ZKLFK ZDV OHVV WKDQ WKH VHULHVRILQDSSURSULDWHFRPPHQWV LILWZDVGHOLEHUDWHO\SODFHG VWDWXWRU\ PD[LPXP XQGHU †  E  & IRU FRFDLQH DPRXQWV XQGHU  EHIRUHWKHMXU\ DQGLIWKHRWKHUHYLGHQFHRIJXLOWLVZHDN6HH JUDPV   )G DW  Q &OD\ s FRQFXUULQJ  6WDIIRUG  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

8QLWHG 6WDWHV Y )UDQFLV  )G    WK &LU $QG,ZRXOGVD\JLYHQLWDIIHFWVKLVOLEHUW\SHUKDSVKLV   OLIH WKDW WKH *RYHUQPHQW KDVQjW PHW WKDW EXUGHQ ZLWK UHVSHFWWRWKHVHZLWQHVVjWHVWLPRQ\ +XPSKUH\ IDLOHG WR REMHFW EHORZ WR WKHVH DOOHJHGO\ LPSURSHUFRPPHQWVDQGWKHUHIRUHZHUHYLHZWKLVFODLPIRU ,GDW HPSKDVLVDGGHG  ,GRQRWVHHKRZWKHUHFRUG SODLQHUURU:LWKUHVSHFWWRWKHILUVWFRPPHQWFRQFHUQLQJWKH FRXOG EH PRUH FOHDU LQ GHPRQVWUDWLQJ 'HIHQGDQWjV SURVHFXWRUjVVWDWHPHQWWKDW(DWRQjVWHVWLPRQ\ZDVFUHGLEOH DFNQRZOHGJPHQWRIWKHUROHRIWKH'LVWULFW&RXUWWRGHWHUPLQH +XPSKUH\FDQQRWGHPRQVWUDWHWKDWWKHFRPPHQWZDVRQHRI GUXJ TXDQWLWLHV XQGHU D SUHSRQGHUDQFHRIWKHHYLGHQFH D VHULHV RI LQDSSURSULDWH FRPPHQWV  7R WKH FRQWUDU\ WKH VWDQGDUG  7KLV LV KDUGO\ VXUSULVLQJ RI FRXUVH ZKHUH FRPPHQWDSSHDUVWRKDYHEHHQWKHRQO\VXFKFRPPHQWPDGH $SSUHQGLKDGQRW\HWEHHQGHFLGHGDQGZKHUHDWWKHWLPHRI E\ WKH *RYHUQPHQW  1HLWKHU GRHV WKH FRPPHQW DSSHDU WR WULDOWKHVHWWOHGODZGLFWDWHGSUHFLVHO\WKHSUDFWLFHIROORZHG KDYHEHHQDGHOLEHUDWHHIIRUWWRPLVOHDGRUSUHMXGLFHWKHMXU\ LQWKLVFDVH )LQDOO\WKHFRPPHQWZDVPDGHLQWKHFRQWH[WRIDGLVFXVVLRQ RIRWKHUFRUURERUDWLQJHYLGHQFHRIJXLOW ZHUHZHWRVHWDVLGH &RQVHTXHQWO\ XQGHU 3DJH DQG sRKQVRQ 'HIHQGDQWjV (DWRQjVWHVWLPRQ\RWKHULQFXOSDWRU\HYLGHQFHZRXOGUHPDLQ $SSUHQGLEDVHGFKDOOHQJHUDLVHGIRUWKHILUVWWLPHRQDSSHDO 7KXV+XPSKUH\FDQGHPRQVWUDWHQRHUURU VKRXOGEHUHYLHZHGRQO\IRUSODLQHUURU8QGHUWKLVVWDQGDUG 'HIHQGDQWLVHQWLWOHGWRUHOLHIRQO\LIZHLGHQWLI\  DQHUURU /LNHZLVH RQ WKH TXHVWLRQ RI ZKHWKHU WKH *RYHUQPHQW  WKDWLVSODLQ  WKDWDIIHFWVVXEVWDQWLYHULJKWVDQG  WKDW LPSURSHUO\FRPPHQWHGRQLWVYLHZRI+XPSKUH\jVJXLOWRQH VHULRXVO\DIIHFWVWKHIDLUQHVVLQWHJULW\RUSXEOLFUHSXWDWLRQRI ZH UHYLHZ IRU SODLQ HUURU +XPSKUH\ KDV DJDLQ IDLOHG WR MXGLFLDOSURFHHGLQJVsRKQVRQ86DW6&W HVWDEOLVK WKDW WKH FRPPHQW ZDV IODJUDQW  :KLOH WKH DW    )RU WKH UHDVRQV GLVFXVVHG HDUOLHU , EHOLHYH WKDW *RYHUQPHQW DUJXDEO\ VNLUWHG WKH OLPLWV RI SHUPLVVLEOH 'HIHQGDQWFDQQRWVDWLVI\HYHQWKHILUVWHOHPHQWRIWKLVWHVW DUJXPHQWE\HIIHFWLYHO\VXJJHVWLQJWKDWLWEHOLHYHG+XPSKUH\ EHFDXVHWKH'LVWULFW&RXUWjVILQGLQJVDVWRGUXJTXDQWLW\GLG ZDV JXLOW\  ZH DUH XQSHUVXDGHG E\ WKH *RYHUQPHQWjV QRW UHVXOW LQ WKH LPSRVLWLRQ RI SXQLVKPHQW EH\RQG WKH DUJXPHQWWKDWLWZDVPHUHO\FRPPHQWLQJRQWKHTXDOLW\DQG VWDWXWRU\PD[LPXPIRUWKHRIIHQVHHVWDEOLVKHGE\WKHMXU\jV WKHTXDQWLW\RIWKHHYLGHQFHWKHGLVWULFWFRXUWjVLQVWUXFWLRQ YHUGLFW n QDPHO\ D GUXJ FRQVSLUDF\ LQYROYLQJ DQ WRWKHMXU\WKDWFRXQVHOVjDUJXPHQWVZHUHQRWHYLGHQFHVHUYHG LQGHWHUPLQDWH DPRXQW RI FRFDLQH ZLWK  D \HDU VWDWXWRU\ WR FRXQWHUEDODQFH DQ\ SRWHQWLDO MXU\ FRQIXVLRQ  7KDW WKH PD[LPXPVHQWHQFHXQGHU† E  &  ,QP\YLHZWKHQ FRPPHQW ZDV PDGH LQ LVRODWLRQ PRUHRYHU FRQILUPV WKLV WKHUHZDVQRYLRODWLRQRI$SSUHQGLDWDOOLQWKLVFDVH SRLQW$FFRUGLQJO\+XPSKUH\jVDUJXPHQWPXVWIDLO G$UJXLQJ)DFWV1RWLQ(YLGHQFH +XPSKUH\DVVHUWVWKDWWKH*RYHUQPHQWFRPPLWWHGIXUWKHU PLVFRQGXFWE\DUJXLQJWRWKHMXU\IDFWVQRWLQHYLGHQFH  7KH *RYHUQPHQWjV FRXQVHO SODLQO\ VKDUHG WKLV YLHZ REVHUYLQJ DW VHQWHQFLQJIROORZLQJWKHDERYHTXRWHGVWDWHPHQWE\GHIHQVHFRXQVHOWKDW 1RZLI\RXWDNHWKDWVDPHHLJKWKRIDNLORJUDPDQG\RX m0U 'XGOH\ KDV DFFXUDWHO\ UHODWHG WR WKH &RXUW ZKDW RXU EXUGHQ LV DQG ZDQWWRORRNDWLWLQWHUPVRIVKHOIOLIHIRUSHUVRQDOXVH WKDWjV WKH OHVVHU EXUGHQ SUHSRQGHUDQFHl DW  ,G

DJDLQ\RXXVHSRLQWRUSRLQWJUDPVRIFRFDLQHDGD\ VRWKDWPHDQVDJUDPZLOOODVW\RXDSSUR[LPDWHO\WKUHH  $V QRWHG HDUOLHU WKLV \HDU VWDWXWRU\ PD[LPXP LV UDLVHG WR  \HDUV ZKHUH DV KHUH WKH GHIHQGDQW KDV D SULRU FRQYLFWLRQ IRU D IHORQ\ GUXJ RIIHQVH  86& †  E  &  6HH  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

%XW 'HIHQGDQW DQG KLV FRXQVHO MXVW DV VXUHO\ GLG QRW GD\V DQG \RX PXOWLSO\ WKUHH GD\V WLPHV  DQG \RX FRQWHVW WKH 'LVWULFW &RXUWjV DXWKRULW\ WR PDNH WKH KDYHGD\V GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV GLG QRW DUJXH WKDW WKLV GHWHUPLQDWLRQ VKRXOG EH PDGH EH\RQG D UHDVRQDEOH GRXEW s$DW UDWKHUWKDQE\DSUHSRQGHUDQFHRIWKHHYLGHQFHDQGGLGQRW REMHFWDWWULDOWKDWWKLVZDVDQLVVXHIRUWKHMXU\DQGQRWWKH 6SHFLILFDOO\KHDUJXHVWKDWWKHUHZDVQRWHVWLPRQ\SUHVHQWHG MXGJHWRGHFLGH7RWKHFRQWUDU\LQKLVZULWWHQREMHFWLRQVWR DW WULDO HLWKHU WKDW DQ HLJKWK RI D NLORJUDP RI FRFDLQH WKH SUHVHQWHQFH UHSRUW 'HIHQGDQW H[SUHVVO\ VWDWHG   L  KLV FRQVWLWXWHV D SHUVRQDO VXSSO\ ODVWLQJ IRU  GD\V RU WKDW UHTXHVW WKDW mWKH &RXUW    PDNH WKH    ILQGLQJ>@ DW FRQVXPSWLRQRIRUJUDPVRIFRFDLQHFRQVWLWXWHVSHUVRQDO VHQWHQFLQJWKDW'HIHQGDQWEHVHQWHQFHGWRDPDQGDWRU\ XVH PLQLPXP WHUP RI ILYH \HDUV LPSULVRQPHQW IRU KLV VDOH RI EHWZHHQJUDPVDQGILYHNLORJUDPVRISRZGHUFRFDLQHl +XPSKUH\jVDUJXPHQWZKLFKZHUHYLHZIRUSODLQHUURULV LG DW  HPSKDVLV DGGHG  DQG LL  WKDW mLW LV WKH ZLWKRXWPHULW)LUVWWKHIDFWVUHOLHGXSRQE\WKH*RYHUQPHQW JRYHUQPHQWjVEXUGHQWRSURYHE\DSUHSRQGHUDQFHRIWKH ZHUHDGGXFHGE\0RUURZjVFRXQVHOLQKLVFURVVH[DPLQDWLRQ HYLGHQFH WKH TXDQWLW\ RI QDUFRWLFV IRU ZKLFK D GHIHQGDQW RI(DWRQ6HHs$DW (DWRQjVWHVWLPRQ\ ZDV WKDWWKH VKRXOGEHKHOGUHVSRQVLEOHl LGDW HPSKDVLVDGGHG  VPDOOHVWDPRXQWVKHHYHUVROGZHUHmWZRRUWKUHHWHQWKVRID /LNHZLVHDWVHQWHQFLQJGHIHQVHFRXQVHOmDVN>HG@WKH&RXUWl JUDPlDQGWKDWSHRSOHEX\WHQWKVRIDJUDPRIGUXJVIRUWKHLU WRILQGWKDW'HIHQGDQWjVmWRWDOUHOHYDQWFRQGXFWLVOHVVWKDQ RZQSHUVRQDOXVH 6HFRQGWKH*RYHUQPHQWjVDUJXPHQWZDV ILYHNLORVlUHVXOWLQJLQDmWHQ\HDUPDQGDWRU\VHQWHQFHl LG D GLUHFW UHVSRQVH WR 0RUURZjV VXJJHVWLRQ WKDW WKH GUXJ DW   DQG WKHQ VWDWHG ZLWK UHJDUG WR WKH LQIRUPDQW TXDQWLWLHVGLVWULEXWHGE\(DWRQWRKLPZHUHIRUSHUVRQDOXVH WHVWLPRQ\LQGLFDWLQJJUHDWHUGUXJTXDQWLWLHV )LQDOO\DV+XPSKUH\KLPVHOIFRQFHGHVWKH*RYHUQPHQWjV DUJXPHQWZDVGLUHFWHGDW0RUURZRQO\ >7@KLV &RXUW DV WKH &RXUW NQRZV KDV LWV RZQ LQGHSHQGHQWGLVFUHWLRQWRGHFLGHRQFHDJDLQORZHU:H Hm%X\HU6HOOHUl5HODWLRQVKLS DJUHHZLWKWKDWSUHSRQGHUDQFHRIWKHHYLGHQFHEXWLWjV VWLOO n SUHSRQGHUDQFH RI HYLGHQFH PHDQV WKH 'XULQJ LWV FORVLQJ DUJXPHQW WKH *RYHUQPHQW VXJJHVWHG *RYHUQPHQWjVJRWWRVKRZPRUHOLNHO\WKDQQRW,Wj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jV DQDORJ\ VHQWHQFH RI  \HDUV WR OLIH LPSULVRQPHQW XQGHU †  E  %  'HIHQGDQW DFNQRZOHGJHG WKLV LQ KLV ZULWWHQ REMHFWLRQV WR WKH SUHVHQWHQFH PLVVWDWHGWKHODZVHH8QLIRUP&RPPHUFLDO&RGH† UHSRUW DQG DJDLQ DW VHQWHQFLQJ 6HH LG DW    mµ%X\LQJj PD\ EH FDVK    RU RQ VHFXUHG RU XQVHFXUHG  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

FUHGLWl DQGUHGXFHGWKHMXU\jVUHVSRQVLELOLW\WRRQHVWULFWO\ WKHLQVWUXFWLRQVWRWKHMXU\VLQFHLWGLFWDWHVLQFDVHVLQYROYLQJ RI GHWHUPLQLQJ ZKHWKHU +XPSKUH\ HQJDJHG LQ D GUXJ GUXJRIIHQVHVWKDWGUXJW\SHDQGTXDQWLW\GHWHUPLQDWLRQVWKDW WUDQVDFWLRQ IRU ZKLFK D SXUFKDVH ZDV PDGH RQ FUHGLW  ,Q UHVXOWLQDVHQWHQFHEH\RQGWKHGHIDXOWVWDWXWRU\PD[LPXP VXSSRUWRIWKLVDUJXPHQWKHUHOLHVRQ8QLWHG6WDWHVY:DUG PXVW EH PDGH E\ D MXU\ XQGHU WKH mEH\RQG D UHDVRQDEOH LQ ZKLFK ZH GHFODUHG WKDW mIURQWLQJ FRFDLQH ZLWKRXW GRXEWlVWDQGDUGsRKQVRQOLNHZLVHLQYROYHGDQLVVXHWKDW DGGLWLRQDO HOHPHQWV RI FRQWURO LV QRWKLQJ PRUH WKDQ D ZDVGHFLGHGE\WKHWULDOMXGJHEXWVKRXOGKDYHEHHQVXEPLWWHG YDULDWLRQRQWKHWUDGLWLRQDOEX\HUVHOOHUUHODWLRQVKLSl)G WR D MXU\  )LQDOO\ LQ sRKQVRQ DV LQ 3DJH DQG KHUH QR   WK &LU     +H QRWHV WKDW EHFDXVH WKH REMHFWLRQZDVUDLVHGDWWULDOWRWKH'LVWULFWsXGJHPDNLQJWKH *RYHUQPHQWIDLOHGWRGHPRQVWUDWHWKDW+XPSKUH\H[HUFLVHG GHWHUPLQDWLRQLQTXHVWLRQSUHVXPDEO\EHFDXVHWKLVSUDFWLFH DQ\ OHYHO RI FRQWURO RYHU WKH DOOHJHG FRQVSLUDF\ KDG DQ\ ZDVLQDFFRUGDQFHZLWKWKHVHWWOHGODZDWWKHWLPH&I.LQJ LQWHUHVWLQWKHGUXJRSHUDWLRQRUGLVSOD\HGDQ\FRQFHUQIRU  )G DW  Q QRWLQJ WKDW WKLV &LUFXLW KDV UHYLHZHG ZKDWKDSSHQHGWRWKHGUXJVDIWHUWKHLUVDOHDQGGLVWULEXWLRQLWV $SSUHQGLEDVHG FKDOOHQJHV IRU SODLQ HUURU mHYHQ ZKHQ SURRIPHUHO\VHWIRUWKDEX\HUVHOOHUUHODWLRQVKLSDQGQRWD $SSUHQGLKDGQRWEHHQGHFLGHGDWWKHWLPHDGHIHQGDQWZDV GUXJFRQVSLUDF\ WULHGDQGVHQWHQFHGl  ,QUHMHFWLQJ+XPSKUH\jVDUJXPHQWVZHQRWHILUVWWKDWKLV ,Q WKH SUHVHQW FDVH GXULQJ WKH SURFHHGLQJV LQ WKH FRXUW UHOLDQFHRQWKH8QLIRUP&RPPHUFLDO&RGHLVPLVSODFHGDVLW EHORZ'HIHQGDQWXQGHQLDEO\UDLVHGIDFWXDOFKDOOHQJHVWRWKH KDV QR DSSOLFDWLRQ LQ WKLV FULPLQDO QDUFRWLFV FDVH GUXJTXDQWLW\UHFRPPHQGDWLRQVVHWIRUWKLQWKHSUHVHQWHQFH +XPSKUH\jVDUJXPHQWWKDWSXUFKDVLQJRQFUHGLWFRQVWLWXWHV LQYHVWLJDWLRQUHSRUWDQGWKHQUHDVVHUWHGWKHVHFKDOOHQJHVDW EX\LQJZLWKLQWKHPHDQLQJRIDEX\HUVHOOHUUHODWLRQVKLSLV WKH VHQWHQFLQJ KHDULQJ  7KHVH FKDOOHQJHV UHVWHG RQ WKH OLNHZLVHZLWKRXWPHULW&I8QLWHG6WDWHVY1HVELWW )G FRQWHQWLRQWKDWWKH*RYHUQPHQWjVSURRIVDVWRGUXJTXDQWLWLHV  WK&LU   m:HILQGWKDWWKHWUXVWLQYROYHGLQ UHOLHG KHDYLO\ RQ WKH XQFRUURERUDWHG WHVWLPRQ\ RI WZR WKLVNLQGRIGHOD\HGSD\PHQW>RUFUHGLW@DUUDQJHPHQWVXJJHVWV FRRSHUDWLQJZLWQHVVHVZKRVHFUHGLELOLW\ZDVRSHQWRTXHVWLRQ PRUHWKDQDEX\HUVHOOHUUHODWLRQVKLSEHWZHHQ>WKHSDUWLHV@l  6HH s$ DW      )RU H[DPSOH LQ KLV ZULWWHQ )LQDOO\ ZH QRWH WKDW :DUG RQ ZKLFK +XPSKUH\ UHOLHV LV REMHFWLRQVWRWKHSUHVHQWHQFHUHSRUW'HIHQGDQWFKDUDFWHUL]HG IDFWXDOO\GLVVLPLODUIURPWKHLQVWDQWFDVHDVQRFRQWLQXLQJ WKHVHZLWQHVVHVDVmKLJKO\PRWLYDWHGLQIRUPDQWVlZLWKRQH FULPLQDOHQWHUSULVHLVDWLVVXHKHUH EHLQJmDQDGPLWWHGGUXJDGGLFWlDQGWKHRWKHUmDQDGPLWWHG OLDUZLWKDSHUVRQDOYHQGHWWDDJDLQVWl'HIHQGDQW ,GDW I,UUHOHYDQW(YLGHQFH ,Q OLJKW RI WKH VLJQLILFDQW VHQWHQFLQJ FRQVHTXHQFHV LI WKH WHVWLPRQ\RIWKHVHZLWQHVVHVZHUHFUHGLWHG'HIHQGDQWDQGKLV 7KH*RYHUQPHQWDUJXHGDWWULDOWKDWZKHQODZHQIRUFHPHQW FRXQVHOXUJHGWKH'LVWULFW&RXUWWRmH[HUFLVHVRPHFDXWLRQl RIILFLDOV VHDUFKHG +XPSKUH\jV KRPH WKH\ GLVFRYHUHG D LQDVVHVVLQJWKLVWHVWLPRQ\ ,GDW  ZLUHWDSDIILGDYLWXQUHODWHGWRWKHFRQGXFWFKDUJHGLQWKLVFDVH 7KHUHDIWHULWVXJJHVWHGWKDW+XPSKUH\jVSRVVHVVLRQRIWKLV DIILGDYLW ZDV HYLGHQFH WKDW KH ZDV D GUXJ GHDOHU  :KHQ +XPSKUH\jVFRXQVHOEHJDQWRGLVFXVVWKHDIILGDYLWGXULQJKLV FORVLQJDUJXPHQWWKH*RYHUQPHQWREMHFWHGDQGUHTXHVWHGD  VLGHEDUDIWHUZKLFKWKHGLVWULFWFRXUWLQVWUXFWHGWKHMXU\ m<RX ,Q DGGLWLRQ EHFDXVH WKH VHQWHQFLQJ MXGJH KDG QRW SUHVLGHG DW WULDO GHIHQVH FRXQVHO ZHQW WR VRPH OHQJWKV DW VHQWHQFLQJ WR SRLQW RXW WKDW WKH DUHLQVWUXFWHGDQ\DIILGDYLWWKDWZDVPHQWLRQHGE\FRXQVHOKDV MXU\jV JXLOW\ YHUGLFWV GLG QRW QHFHVVDULO\ PHDQ WKDW WKH MXU\ IRXQG WKH WZR QRWKLQJWRGRZLWKWKLVFDVH7KHDIILGDYLWZKLFKKDVEHHQ FRRSHUDWLQJ ZLWQHVVHV IXOO\ FUHGLEOH SDUWLFXODUO\ DV WR VSHFLILF GUXJ WUDQVDFWLRQV DQG TXDQWLWLHV 6HH LG DW   8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

0RUHRYHU PDQ\ RI RXU RZQ VXEVHTXHQW GHFLVLRQV KDYH PHQWLRQHGKDVDEVROXWHO\QRWKLQJWRGRZLWKWKHLQYHVWLJDWLRQ DGKHUHGWR3DJHjVSODLQHUURUVWDQGDUGLQDGGUHVVLQJ$SSUHQGL KHUH RU WKLV FDVH  3OHDVH GLVUHJDUG LWl  s$ DW   7KLV FKDOOHQJHV6HHHJ8QLWHG6WDWHVY.LQJ)G LQVWUXFWLRQ QRWZLWKVWDQGLQJ WKH *RYHUQPHQWjV UHEXWWDO  WK&LU 8QLWHG6WDWHVY0DUWLQH])G FORVLQJDUJXPHQWDJDLQPDGHUHIHUHQFHWRWKHDIILGDYLWDQG  WK&LU 8QLWHG6WDWHVY1HXKDXVVHU)G VXJJHVWHGWKDWLWZDVHYLGHQFHWKDW+XPSKUH\ZDVHQJDJHGLQ  WK&LU  LOOHJDO QDUFRWLFV DFWLYLW\  ,Q PDNLQJ VXFK DQ DUJXPHQW +XPSKUH\PDLQWDLQVWKDWWKH*RYHUQPHQWVXFFHVVIXOO\SODFHG ,Q HOHFWLQJ WR DSSO\ SODLQ HUURU UHYLHZ 3DJH FLWHV WKH EHIRUH WKH MXU\ RQO\ LWV LQWHUSUHWDWLRQ RI HYLGHQFH WKDW WKH 6XSUHPH&RXUWjVGHFLVLRQLQsRKQVRQY8QLWHG6WDWHV GLVWULFWFRXUWKDGDOUHDG\GHWHUPLQHGZDVLUUHOHYDQW 86   6 &W      sRKQVRQ LV LQVWUXFWLYH EHFDXVHLWOLNH3DJHDQGWKHSUHVHQWFDVHLQYROYHGDFODLP %HFDXVH+XPSKUH\IDLOHGWRUDLVHDQREMHFWLRQDWWULDOZH WKDW D 'LVWULFW &RXUW KDG IDLOHG WR VXEPLW DQ HOHPHQW RI D UHYLHZWKLVFODLPIRUSODLQHUURU7KH*RYHUQPHQWUHVSRQGV FULPLQDO RIIHQVH IRU WKH MXU\jV GHWHUPLQDWLRQ EH\RQG D DQGZHDJUHHWKDWWKHZLUHWDSDIILGDYLWOLNHWKHJXQPRQH\ UHDVRQDEOHGRXEW,QVWHDGWKHMXU\LQsRKQVRQZDVLQVWUXFWHG WHOHSKRQH VFUDPEOHU DQG ZLUHWDS GHWHFWRU VHL]HG IURP LQDFFRUGDQFHZLWKWKHQH[LVWLQJ(OHYHQWK&LUFXLWSUHFHGHQW +XPSKUH\jVUHVLGHQFHZDVFLUFXPVWDQWLDOHYLGHQFHRIWKH WKDWWKHHOHPHQWLQTXHVWLRQPDWHULDOLW\ZRXOGEHGHFLGHGE\ GHIHQGDQWjVNQRZOHGJHUHJDUGLQJWKHPDQQHUDQGPHDQVLQ WKH'LVWULFWs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mWRROVRIWKHWUDGHlLVSUREDWLYHRI+XPSKUH\jV DQG WKH 6XSUHPH &RXUW XSRQ JUDQWLQJ FHUWLRUDUL OLNHZLVH NQRZOHGJHRIGUXJWUDIILFNLQJLQYHVWLJDWLRQV FRQFOXGHGWKDWWKHSODLQHUURUVWDQGDUGJRYHUQHGLWVLQTXLU\ EHFDXVH WKH GHIHQGDQW mGLG QRW REMHFW WR WKH WULDO FRXUWjV :LWKUHVSHFWWR+XPSKUH\jVDUJXPHQWWKDWWKH*RYHUQPHQW WUHDWPHQWRIPDWHULDOLW\lsRKQVRQ86DW YLRODWHG D FRXUW RUGHU QRW WR GLVFXVV WKH DIILGDYLW KLV 6&WDW7REHVXUHWKLVODFNRIREMHFWLRQZDVWREH DUJXPHQWLVQRWZHOOWDNHQ)LUVWWKHGLVWULFWFRXUWPHUHO\ H[SHFWHG mDWWKHWLPHRIWULDOLWZDVVHWWOHGWKDWWKHLVVXHRI LQVWUXFWHGWKHMXU\WKDWWKHDIILGDYLWKDGQRWKLQJWRGRZLWK PDWHULDOLW\ZDVWREHGHFLGHGE\WKHFRXUWQRWWKHMXU\lEXW +XPSKUH\RUWKHFKDUJHGFRQGXFWLQWKHFDVH2XUUHYLHZRI mE\WKHWLPHRIDSSHOODWHFRQVLGHUDWLRQWKHODZKDGFKDQJHG WKH UHFRUG VXJJHVWV WKDW LW GLG QRW SURKLELW FRXQVHO IURP DQGLWLVQRZVHWWOHGWKDWPDWHULDOLW\LVDQLVVXHIRUWKHMXU\l UHIHUULQJWRLW7KH*RYHUQPHQWPDGHUHIHUHQFHLQLWVFORVLQJ 86DW6&WDW 1HYHUWKHOHVVWKLVODFNRI DUJXPHQW WR WKH DIILGDYLW EXW RQO\ WR GHPRQVWUDWH REMHFWLRQ KRZHYHU XQGHUVWDQGDEOH WULJJHUHG SODLQ HUURU +XPSKUH\jV NQRZOHGJH RI FULPLQDO LQYHVWLJDWLRQV  %\ UHYLHZ FRQWUDVWZKHQ+XPSKUH\jVFRXQVHOPHQWLRQHGWKHDIILGDYLW KHVXJJHVWHGWKDWWKHDIILGDYLWZDVHYLGHQFHWKDW+XPSKUH\ &RQVHTXHQWO\ HYHQ LI 3DJH KDG QRW VHWWOHG WKH LVVXH ZDVEHLQJLQYHVWLJDWHG m:HOO>+XPSKUH\jV@JRWDQDIILGDYLW sRKQVRQZRXOGGLFWDWHWKDWZHDSSO\SODLQHUURUUHYLHZWRDQ LQKLVKRXVHDQGZKDWGR\RXWKLQNWKHDIILGDYLWSUREDEO\ $SSUHQGLEDVHGFODLPUDLVHGIRUWKHILUVWWLPHRQDSSHDO$V VD\VWKHUH"7KDWULJKWO\RUZURQJO\KHjVEHLQJLQYHVWLJDWHGl WKHPDMRULW\UHFRJQL]HVDQGDVZHKDYHREVHUYHGHOVHZKHUH s$ DW   7KH *RYHUQPHQW SURPSWO\ REMHFWHG WR WKLV VHHHJ.LQJ)GDW Q$SSUHQGLLPSOLFDWHV  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

PLVVWDWHPHQWRIWKHHYLGHQFHDQGWKHGLVWULFWFRXUWVXVWDLQHG IRUFODLPVRI$SSUHQGLYLRODWLRQV3DJHVTXDUHO\DGGUHVVHV WKHREMHFWLRQ7KHUHZDVQRHUURU n DQG LQ P\ YLHZ GHILQLWLYHO\ UHVROYHV n WKLV LVVXH 6SHFLILFDOO\ZHKHOG J,PSURSHU&ORVLQJ$UJXPHQW 'HIHQGDQWV    IDLOHG WR REMHFW WR WKH GLVWULFW MXGJH ,Q LWV UHEXWWDO FORVLQJ DUJXPHQW WKH *RYHUQPHQW DUJXHG PDNLQJ WKH GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHV  :KHUH WKDW HYHQ +XPSKUH\jV FRXQVHO 'DYLG 'XGOH\ NQHZ WKDW WKHUHKDVEHHQQRREMHFWLRQUHYLHZLVIRUSODLQHUURU +XPSKUH\jVFRQYHUVDWLRQVZLWKKLVDFFRXQWDQWDPRXQWHGWR D FRQIHVVLRQ  m'DYLG 'XGOH\ NQRZV WKDW FRQYHUVDWLRQ 3DJH)GDW FLWLQJ)HG5&ULP3 E  >EHWZHHQ +XPSKUH\ DQG KLV DFFRXQWDQW@ LV DV FORVH WR D FRQIHVVLRQDVDQ\WKLQJLQWKLVZKROHFRXUWURRPDQGKHKDVWR 2QFHDJDLQ3DJHjVUXOLQJRQWKLVSRLQWLVLQDFFRUGZLWKWKH GHDOZLWKLWEHFDXVHKHNQRZV\RXDUHJRLQJWRVHHWKDWls$ GHFLVLRQVRIDOORIRXUVLVWHU&LUFXLWV6HH8QLWHG6WDWHVY DW +XPSKUH\VXJJHVWVWKDWWKLVDUJXPHQWLPSURSHUO\ 7LWFKHOO)G G&LU 8QLWHG6WDWHVY UHOLHG XSRQ +XPSKUH\jV FRXQVHO WR YRXFK IRU WKH )LHOGV  )G   '& &LU   8QLWHG *RYHUQPHQWjVYLHZRI+XPSKUH\jVJXLOW 6WDWHV Y :KLWH  )G   G &LU   8QLWHG 6WDWHVY6WXUJLV)G   WK&LU 8QLWHG 7KH*RYHUQPHQWUHVSRQGVWKDWmWKDWFRQYHUVDWLRQlUHIHUUHG 6WDWHVY:KLWH)G WK&LU 8QLWHG WRDQLQWHUFHSWHGWHOHSKRQHFRQYHUVDWLRQEHWZHHQ+XPSKUH\ 6WDWHVY1DQFH)G WK&LU 8QLWHG DQGKLVDFFRXQWDQWLQZKLFK+XPSKUH\DOOHJHGO\H[SUHVVHG 6WDWHVY.HHOLQJ)G WK&LU 8QLWHG VRPH FRQFHUQ RYHU SDSHUZRUN UHODWHG WR KLV SXUFKDVH RI D 6WDWHVY*HUURZ)G WK&LU 8QLWHG EXVLQHVVEHFDXVHWKHEXVLQHVVRZQHUKDGKDGSULRUGHDOLQJV 6WDWHVY0RMLFD%DH] )G  VW&LU ZLWK WKH 'UXJ (QIRUFHPHQW $GPLQLVWUDWLRQ m'($l  8QLWHG6WDWHVY1RUGE\)G  WK&LU )XUWKHUWKH*RYHUQPHQWPDLQWDLQVWKDWLWVUHIHUHQFHWRWKH  8QLWHG6WDWHVY0HVKDFN)G WK&LU FRQYHUVDWLRQ DV D mFRQIHVVLRQl ZDV PHUHO\ DQ DWWHPSW WR   DPHQGHG RQ UHKjJ  )G  WK &LU   GLVFUHGLW'XGOH\jVmVSLQRQWKHFRQYHUVDWLRQlE\VXJJHVWLQJ WKDWDOHJLWLPDWHEXVLQHVVRZQHUZLWKOHJLWLPDWHVRXUFHVRI LQFRPHZRXOGKDYHQRFRQFHUQDERXWDQ\'($LQYROYHPHQW  LQRQHRIKLVEXVLQHVVYHQWXUHV $V LW KDSSHQV WKH VWDQGDUG RI UHYLHZ ZDV QRW GHWHUPLQDWLYH LQ &RUUDGR DQG 5HEPDQQ ,Q WKH IRUPHU FDVH WKH &RXUW IRXQG QR $SSUHQGL 2Q WKLV UHFRUG ZH GR QRW ILQG WKDW WKH SURVHFXWRUjV YLRODWLRQ DQG WKH GHIHQGDQW FRXOG QRW KDYH SUHYDLOHG HYHQ XQGHU GH QRYR FRPPHQWV FDQ EH UHDVRQDEO\ FRQVWUXHG DV LPSO\LQJ WKDW UHYLHZ ,Q WKH ODWWHU WKH GHIHQGDQWjV VHQWHQFH H[FHHGHG WKH VWDWXWRU\ GHIHQVHFRXQVHOEHOLHYHGKLVFOLHQWZDVJXLOW\:HILQGQR PD[LPXP IRU WKH RIIHQVH WR ZKLFK VKH KDG SOHG JXLOW\ DQG KHU FODLP HUURULQWKHFORVLQJDUJXPHQW WKHUHIRUH FRXOG KDYH VDWLVILHG WKH PRUH VWULQJHQW SODLQ HUURU VWDQGDUG K&XPXODWLYH,PSDFW  2Q DSSHDO DW OHDVW RQH RI WKH IRXU GHIHQGDQWV LQ 3DJH TXHVWLRQHG WKH 'LVWULFW &RXUWjV PHWKRG RI FRPSXWLQJ GUXJ TXDQWLWLHV :H UHMHFWHG WKLV FKDOOHQJH DQG VWDWHG WKDW m>R@WKHU LVVXHV    UHJDUGLQJ GUXJ TXDQWLW\ :KHQWKHDIRUHPHQWLRQHGHUURUVDOOHJHGE\+XPSKUH\DUH DUH DGGUHVVHG LQ WKH XQSXEOLVKHG DSSHQGL[ WR WKLV RSLQLRQl 3DJH  YLHZHGLQWKHFRQWH[WRIWKHHQWLUHWULDO+XPSKUH\DUJXHVWKDW )G DW  Q $V REVHUYHG E\ WKH PDMRULW\ KRZHYHU 3DJH GRHV WKHLUFXPXODWLYHLPSDFWPDQGDWHVUHYHUVDOHYHQLIDQ\RQH QRW LQGLFDWH ZKDW VRUWV RI FKDOOHQJHV LI DQ\ ZHUH RU ZHUH QRW UDLVHG HUURU LQ LVRODWLRQ GRHV QRW  7KHVH HUURUV +XPSKUH\ EHIRUH WKH 'LVWULFW &RXUW n WKDW LV DSDUW IURP RXU GLUHFW VWDWHPHQW WKDW PDLQWDLQV ZHUH SDUWLFXODUO\ SUHMXGLFLDO JLYHQ WKDW KLV WULDO WKH GHIHQGDQWV GLG QRW UDLVH DQ $SSUHQGL LVVXH LQ WKH FRXUW EHORZ WKHUHE\ WULJJHULQJ SODLQ HUURU UHYLHZ  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

SUHVHQWVWKHLVVXHRIWKHSURSHULQWHUSUHWDWLRQRI$SSUHQGL ZDVEXLOWRQZHDNFLUFXPVWDQWLDOHYLGHQFHRIJXLOWLQZKLFK $V GLVFXVVHG EHORZ WKLV LV QRW VXFK D FDVH n RU PRUH KHZDVFRQYLFWHGRQO\RIFRQVSLUDF\ DQGQRWRIDQ\RIWKH DFFXUDWHO\LW ZRXOGQRWEHLI'HIHQGDQWjV$SSUHQGLFODLP XQGHUO\LQJ VXEVWDQWLYH FRXQWV  EDVHG RQ WKH WHVWLPRQ\ RI ZHUH HYDOXDWHG XQGHU WKH SURSHU VWDQGDUG RI UHYLHZ  7KH DOOHJHGFRFRQVSLUDWRUV:HGLVDJUHH([DPLQLQJWKHUHFRUG PDMRULW\jVGHFLVLRQWRDSSO\GHQRYRUHYLHZKRZHYHUOHQGV DV D ZKROH ZH IDLO WR ILQG DQ\ HUURU LQ WKH IRUHJRLQJ WKDW QHZ DQG XQGXH  VLJQLILFDQFH WR LWV H[SDQVLYH UHDGLQJ RI VLQJXODUO\RUFXPXODWLYHO\PDQGDWHVUHYHUVDO $SSUHQGLDQGFRPSRXQGVHUURUZLWKIXUWKHUHUURU %'LVWULFW&RXUW0LVFRQGXFW ,, 6WDQGDUGRI5HYLHZ %\ QRZ P\ YLHZV UHJDUGLQJ WKH FRUUHFW FRQVWUXFWLRQ RI $SSUHQGL VKRXOG EH HYLGHQW  $V FRQFHGHG DW WKH RXWVHW :HUHYLHZGHQRYRZKHWKHUDGLVWULFWFRXUWjVDOOHJHGIDLOXUH KRZHYHUWKH&RXUWjVRSLQLRQLQWKDWFDVHFRQWDLQVODQJXDJH WR FRQGXFW D KHDULQJ WR LQTXLUH LQWR D FRQIOLFW RI LQWHUHVW WKDWDUJXDEO\VXSSRUWVDIHZFRPSHWLQJLQWHUSUHWDWLRQV,Q EHWZHHQ D GHIHQGDQW DQG KLV WULDO FRXQVHO YLRODWHG D DQ\HYHQWZKHWKHURQHVXEVFULEHVWRWKHmPD[LPXPSHQDOW\l GHIHQGDQWjV 6L[WK $PHQGPHQW ULJKW WR HIIHFWLYH FRXQVHO RUmVHQWHQFLQJUDQJHlYLHZRI$SSUHQGLWKHRXWFRPHRIWKH 8QLWHG6WDWHVY+DOO)G   WK&LU :H SUHVHQW FDVH VKRXOG EH QR GLIIHUHQW EHFDXVH UHYLHZ IRU FOHDU HUURU D GLVWULFW FRXUWjV IDFWXDO ILQGLQJV 'HIHQGDQW$SSHOODQW+XPSKUH\FDQQRWSRVVLEO\VDWLVI\WKH FRQFHUQLQJ ZKHWKHU D SDUW\ KDV LPSURSHUO\ XVHG LWV JRYHUQLQJmSODLQHUURUlVWDQGDUG<HWWKHPDMRULW\FRQFOXGHV SHUHPSWRU\FKDOOHQJHVRQWKHEDVLVRIUDFH8QLWHG6WDWHVY RWKHUZLVHXSRQILUVWGHWHUPLQLQJWKDW'HIHQGDQWj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n DQG DOO WRR RIWHQ QR JXLGDQFH DW DOO n LQ FKDOOHQJH1HLWKHUDUJXPHQWKDVPHULW GHWHUPLQLQJWKHVWDQGDUGXQGHUZKLFK$SSUHQGLFKDOOHQJHV VKRXOGEHUHYLHZHG D&RQIOLFWRI,QWHUHVW

$OWKRXJKRXULQLWLDOSRVW$SSUHQGLGHFLVLRQVLQ&RUUDGR 2Q)HEUXDU\ HLJKWPRQWKVDIWHU+XPSKUH\jVWULDO DQG5HEPDQQGLGQRWFRQVLGHUWKHSURSHUVWDQGDUGRIUHYLHZ 'DYLG 'XGOH\ GLVFRYHUHG D FRQIOLFW RI LQWHUHVW EHWZHHQ KLPVHOI DQG +XPSKUH\ SURPSWLQJ 'XGOH\ WR ILOH ZLWK WKH GLVWULFWFRXUWDPRWLRQWRZLWKGUDZDVFRXQVHO6HHs$DW  GLVFXVVLQJ WKH mDSSDUHQWl FRQIOLFW FUHDWHG E\ +XPSKUH\jVSURVHPRWLRQVDOOHJLQJLQWHUDOLDWKDW'XGOH\ ZDVLQFRPSHWHQWDQGQRWmUHJLVWHUHGlWRSUDFWLFHODZLQWKH 1RUWKHUQ 'LVWULFW RI 2KLR DQG WKDW 'XGOH\ ZDV DFWLYHO\  2U SHUKDSV DV WKH PDMRULW\ VXJJHVWV WKH 6XSUHPH &RXUW ZLOO FRQVSLULQJWRmGHIUDXGDQGHQWUDSl+XPSKUH\ s$DW UHVROYH WKH PDWWHU IRU XV DV LW DSSHDUV WKDW WKH &RXUW ZLOO UHYLVLW $SSUHQGL GLVFXVVLQJWKHmDFWXDOlFRQIOLFWFUHDWHGE\+XPSKUH\jVILOLQJ LQ D IRUWKFRPLQJ RSLQLRQ  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

RI FRPSODLQWV ZLWK WKH 6WDWH %DU RI *HRUJLD DOOHJLQJ WKDW *LYHQWKLVVWDWHRIDIIDLUVSHUKDSVLWZRXOGEHKRRYHWKLV 'XGOH\ ZDV QRW OLFHQVHG WR SUDFWLFH ODZ LQ D QXPEHU RI &RXUW WR FRQVLGHU HQ EDQF UHYLHZ RI D FDVH WKDW VWDUNO\ IHGHUDO FULPLQDO PDWWHUV LQYROYLQJ SUHYLRXVO\ UHSUHVHQWHG GHIHQGDQWV   ,Q 'XGOH\jV HVWLPDWLRQ WKH GLVFRYHU\ RI WKLV FRQIOLFWPDGHLWLPSRVVLEOHIRUKLPWRDUJXHRQ'HIHQGDQWjV EHKDOILQIXUWKHUDQFHRIQHZWULDODQGVHQWHQFLQJLVVXHV sXGJH*DXJKDQUHYLHZHGWKHWUDQVFULSWRIDSULRUKHDULQJRQ  :/   DW  WK &LU 0D\   8QLWHG 6WDWHV Y 2OGKDP WKLV LVVXH FRQGXFWHG E\ sXGJH %HOO RQ 6HSWHPEHU     :/  DW  WK &LU $SU   8QLWHG 6WDWHV Y )LQGLQJ WKDW WKH LVVXH ZDV IXOO\ GLVFXVVHG DQG UHVROYHG E\ 1HXKDXVVHU  )G   WK &LU  8QLWHG 6WDWHV Y &DOGZHOO  )G   :/  DW  WK &LU 'HF   sXGJH %HOO WKH GLVWULFW FRXUW GHQLHG 'XGOH\jV PRWLRQ   1RW RQH RI WKHVH FDVHV DGGUHVVHV RU HYHQ PHQWLRQV D VWDWXWRU\ FRQFOXGLQJ WKDW LW ZRXOG EH SDWHQWO\ XQIDLU WR OHDYH WKH PLQLPXP VHQWHQFH DV ZRXOG EH QHFHVVDU\ LI )ORZDO ZHUH QRZ WKLV GHIHQGDQWXQUHSUHVHQWHGDWWKHVHQWHQFLQJSDUWLFXODUO\LQOLJKW &LUFXLWjV VROH DQG GHILQLWLYH VWDWHPHQW RI WKH VFRSH RI $SSUHQGL RIWKHIDFWWKDWSRVWWULDOPRWLRQVKDGEHHQIXOO\EULHIHGDQG $OWKRXJK WKH PDMRULW\ SODFHV VLJQLILFDQFH RQ WKH IDFW WKDW PRVW RI WKHVH SUHVHQWHQFHLQYHVWLJDWLRQUHSRUW m365l REMHFWLRQVDOUHDG\ FDVHV DUH XQSXEOLVKHG LW VHHPV WR PH WKDW WKH SDQHO LQ HDFK LQVWDQFH ZDV

ILOHG,WGLGQRWHKRZHYHUWKDW+XPSKUH\UHPDLQHGIUHHWR ERXQG WR DVFHUWDLQ DQG IROORZ WKH ODZ RI WKLV &LUFXLW ZKHWKHU RU QRW LW SODQQHG WR SXEOLVK LWV GHFLVLRQ ,QGHHG WKHUH ZDV QR QHHG IRU WKHVH ILUH 'XGOH\ DQG VHFXUH DQRWKHU DWWRUQH\ RU SURFHHG WR SDQHOV WR SXEOLVK WKHLU UXOLQJV DV WKH\ ZHUH PHUHO\ IROORZLQJ RXU SULRU VHQWHQFLQJSURVH+XPSKUH\GLGQHLWKHU+HQRZDVVLJQV SXEOLVKHG SUHFHGHQWV LQ &RUUDGR 3DJH DQG 0XQR] HUURUWRWKHGLVWULFWFRXUWjVGHQLDORIDGGLWLRQDOWLPHIRUKLPWR UHWDLQQHZFRXQVHODQGLWVIDLOXUHWRLQTXLUHLQWRWKHIDFWVRI 0RUH LPSRUWDQWO\ DV D OHJDO PDWWHU WKH PDMRULW\jV mGHYHORSPHQW RI

WKH DOOHJHG FRQIOLFW QRWZLWKVWDQGLQJ WKH *RYHUQPHQWjV WKH ODZl WKHRU\ FDQQRW KRSH WR DFFRXQW IRU FDVHV ZLWK OHJDOO\ LQGLVWLQJXLVKDEOH IDFWV EXW GLIIHUHQW RXWFRPHV 0XQR] DQG 5DPLUH] IRU PRWLRQVHHNLQJWRFRQGXFWMXVWVXFKDQLQTXLU\ H[DPSOH ERWK LQYROYHG GUXJUHODWHG ILQGLQJV E\ D 'LVWULFW sXGJH WKDW WULJJHUHG DQ HQKDQFHG VWDWXWRU\ VHQWHQFLQJ UDQJH ERWK PLQLPXP DQG $ GHIHQGDQW LV GHQLHG KLV 6L[WK $PHQGPHQW ULJKW WR PD[LPXP EXW WKH GHIHQGDQW LQ HDFK FDVH ZDV VHQWHQFHG ZLWKLQ WKH HIIHFWLYHFRXQVHOZKHQKLVDWWRUQH\RSHUDWHVXQGHUDFRQIOLFW GHIDXOW \HDU PD[LPXP RI †  E  &  0XQR] KHOG WKDW mWKH RI LQWHUHVW  *ODVVHU Y 8QLWHG 6WDWHV  86    $SSUHQGL UXOLQJ LV QRW DSSOLFDEOH KHUHl  )G DW  ZKLOH 5DPLUH]

  $WULDOFRXUWPRUHRYHUKDVDGXW\WRLQTXLUHLQWRWKH IRXQG D YLRODWLRQ RI $SSUHQGL  )G DW  ,I 5DPLUH] LV GHHPHG

QDWXUH RI D FRQIOLFW DW VXFK WLPH DV LW EHFRPHV DZDUH RI D FRUUHFW n RU PRUH WR WKH SRLQW ELQGLQJ RQ VXEVHTXHQW SDQHOV n WKH FRQFOXVLRQ LV LQHVFDSDEOH WKDW 0XQR] LV QRW 0XQR] WKHQ KDV EHHQ SRWHQWLDORUDFWXDOFRQIOLFWRILQWHUHVW:RRGY*HRUJLD RYHUUXOHG SODLQ DQG VLPSOH n QRWZLWKVWDQGLQJ RXU &LUFXLW UXOH WKDW RQH 86   )DLOXUHRIDWULDOFRXUWWRFRQGXFW SDQHO PD\ QRW RYHUUXOH DQRWKHU

VXFKDQLQTXLU\PDQGDWHVDUHYHUVDOLIWKHGHIHQGDQWFDQVKRZ WKH FRQIOLFW DGYHUVHO\ DIIHFWHG KLV FRXQVHOjV SHUIRUPDQFH 7KH TXHVWLRQ EHFRPHV ZKDW WR GR DERXW WKLV VWDWH RI DIIDLUV" 7KH

0LFNHQVY7D\ORU6&W   PDMRULW\ VXJJHVWV n DOEHLW WDFLWO\ JLYHQ LWV DVVHUWLRQ WKDW RXU SRVW $SSUHQGL GHFLVLRQV DUH QRW LQ FRQIOLFW n WKDW WKH ODWHU GHFLVLRQV VKRXOG SUHYDLO RYHU WKH HDUOLHU RQHV , DP XQFRPIRUWDEOH ZLWK WKLV DV LW VHHPV WR :HUHMHFW+XPSKUH\jVDUJXPHQW)LUVW+XPSKUH\jVFDVH VDQFWLRQ D mRQH IUHH ELWHl H[FHSWLRQ WR RXU UXOH RI VWDUH GHFLVLV ,Q LV GLVWLQJXLVKDEOH IURP WKH *ODVVHU OLQH RI FDVHV DV WKRVH FRQWUDVW DGKHUHQFH WR WKH HDUOLHU FDVHV UHLQIRUFHV WKH SULQFLSOH RI VWDUH

FDVHVLQYROYHGDQDWWRUQH\jVMRLQWUHSUHVHQWDWLRQRIPXOWLSOH GHFLVLV E\ GHPRQVWUDWLQJ RXU UHVROYH QRW WR SHUPLW RQH SDQHO WR RYHUWXUQ

GHIHQGDQWV D VLWXDWLRQ QRW SUHVHQW LQ WKH LQVWDQW FDVH WKH UXOLQJ RI DQRWKHU 8QGHU WKH SUHVHQW FLUFXPVWDQFHV PRUHRYHU WKHUH

6HFRQGLWZDVRQO\DIWHUWULDOWKDWDFRQIOLFWSUHVHQWHGLWVHOI LV WKH DGGLWLRQDO FRQVLGHUDWLRQ WKDW )ORZDO DQG LWV HIIHFWLYHO\ RYHUUXOHG WKH 6XSUHPH &RXUWjV 0F0LOODQ GHFLVLRQ DQG QRW SURJHQ\ KDYH

DQGWKDWRQO\DVDUHVXOWRI+XPSKUH\jVILOLQJRIQXPHURXV MXVW H[LVWLQJ 6L[WK &LUFXLW SUHFHGHQW 7KLV LQ P\ YLHZ LV WKH XOWLPDWH mWLHEUHDNHUl  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

PD[LPXPVRUVHQWHQFLQJUDQJHVJHQHUDOO\,ZRXOGUHVSHFWWKH SURVHSOHDGLQJVDOOHJLQJPLVFRQGXFWE\'XGOH\7KLUGDWD SUHURJDWLYHRIWKHSDQHOLQWKDWFDVHWRUHDFKDGHFLVLRQZKLFK 6HSWHPEHU    KHDULQJ RQ WKH PDWWHU DW ZKLFK ULJKWRUZURQJZRXOGELQGDOOVXEVHTXHQWSDQHOVLQFOXGLQJ +XPSKUH\ZDVVFKHGXOHGWREHVHQWHQFHG sXGJH%HOODVNHG WKLVRQH$VPDWWHUVQRZVWDQGKRZHYHU,QRWRQO\KDUERU +XPSKUH\ ZKHWKHU KH ZLVKHG 'XGOH\ WR FRQWLQXH DV KLV VXEVWDQWLDOGRXEWDERXWWKHDQDO\VLVLQ)ORZDOEXW,IHDUWKDW FRXQVHO DQG +XPSKUH\ UHVSRQGHG m<HVl  )LQDOO\ sXGJH WKLV GHFLVLRQ DQG LWV SURJHQ\ UHQGHUHG ZLWKRXW VXIILFLHQW *DXJKDQ SURSHUO\ UHYLHZHG WKH WUDQVFULSW RI sXGJH %HOOjV UHJDUGIRUWKLV&LUFXLWjVSUHH[LVWLQJSUHFHGHQWVKDYHUHGXFHG KHDULQJ DQG FRQFOXGHG WKDW QR DGGLWLRQDO KHDULQJ ZDV WKHUXOHRIVWDUHGHFLVLVIURPDVHWWOLQJSULQFLSOHLQWRDQHPSW\ QHFHVVDU\ DQG QR DGGLWLRQDO WLPH ZDV UHTXLUHG WR SHUPLW EURPLGH WKDW PD\ EH UHFLWHG DV mUHTXLULQJl HLWKHU RI WZR 'XGOH\WRUHWDLQQHZFRXQVHO7KHUHFRUGUHYHDOVWKDW'XGOH\ GLDPHWULFDOO\ RSSRVHG RXWFRPHV RI DQ $SSUHQGLEDVHG YLJRURXVO\ GHIHQGHG +XPSKUH\jV LQWHUHVWV ILOHG QXPHURXV FKDOOHQJH SUHWULDO DQG SRVWWULDO PRWLRQV RQ KLV EHKDOI DQG DUJXHG VXFFHVVIXOO\IRUWKHORZHVWVHQWHQFHSURYLGHGE\ODZ

 E%DWVRQ&KDOOHQJH ,Q FULWLFL]LQJ )ORZDO , PHDQ QR GLVUHVSHFW WR WKH SDQHO WKDW GHFLGHG LW , KDYH DOUHDG\ DFNQRZOHGJHG WKDW $SSUHQGL LWVHOI LV QRW D PRGHO RI +XPSKUH\DUJXHVWKDWWKH*RYHUQPHQWLPSURSHUO\XVHGLWV FODULW\ 0RUHRYHU UHJDUGLQJ )ORZDOjV IDLOXUH WR DFFRXQW IRU WKLV &LUFXLWjV H[LVWLQJ SRVW$SSUHQGL SUHFHGHQWV LW PXVW EH QRWHG WKDW 3DJH DQG 0XQR] SHUHPSWRU\FKDOOHQJHVGXULQJYRLUGLUHDJDLQVWWZR$IULFDQ ZHUH GHFLGHG LQ 1RYHPEHU RI  ZLWK )ORZDO IROORZLQJ VRRQ $PHULFDQ YHQLUHSHUVRQV MXURU QXPEHU IRXU +RZHOO  DQG WKHUHDIWHU RQ 'HFHPEHU   7KLV &LUFXLWjV LQLWLDO IOXUU\ RI SRVW DOWHUQDWHMXURUQXPEHUWKLUW\ /XFNLH LQDV\VWHPDWLFHIIRUW $SSUHQGL GHFLVLRQV DGPLWWHGO\ SRVHG D FKDOOHQJH WR SDQHOV VHHNLQJ WR WRH[FOXGH$IULFDQ$PHULFDQVIURPWKHMXU\ HQVXUH WKDW WKHLU GHFLVLRQV ZHUH FRQVLVWHQW ZLWK RXU H[LVWLQJ ODZ RQ WKH VXEMHFW 1HYHUWKHOHVV )ORZDO DQG LWV SURJHQ\ GR GHSDUW IURP WKH ,QHYDOXDWLQJVXFKDFODLPZHDUHJXLGHGE\DWKUHHVWHS GHFLVLRQV WKDW SUHFHGHG WKHP 7KXV , UHVSHFWIXOO\ GLIIHU IURP PDMRULW\j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mVWDWXWRU\ PD[LPXPl UHDGLQJ RI $SSUHQGL ZHUH QRZ D GHDG OHWWHU VXSSODQWHG E\ WKH EURDGHU KROGLQJV RI )ORZDO DQG LWV WRWKHVWULNHSURSRQHQW WKH*RYHUQPHQW WRVHWIRUWKDUDFH SURJHQ\ RQH ZRXOG H[SHFW WKDW SDQHOV ZRXOG QR ORQJHU FLWH RXU HDUOLHU QHXWUDO H[SODQDWLRQ IRU LWV FKDOOHQJH  LQ WKLV UHJDUG WKH VWDWHPHQW RI WKH UXOH RI $SSUHQGL EXW LQVWHDG ZRXOG DVN ZKHWKHU D *RYHUQPHQWjV SURIIHUHG UHDVRQ QHHG QRW EH SHUVXDVLYH RU 'LVWULFW sXGJHjV ILQGLQJV E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH DIIHFWHG WKH HYHQSODXVLEOHVRORQJDVLWLVQHXWUDO6HH8QLWHG6WDWHVY VHQWHQFLQJ UDQJH IDFHG E\ WKH GHIHQGDQW <HW LQ WKH WLPH VLQFH )ORZDO +DUULV )G WK&LU  FLWLQJ3XUNHWWY ZDV GHFLGHG VHYHUDO SDQHOV RI WKLV &RXUW KDYH FRQWLQXHG WR IROORZ WKH (OHP  86       )LQDOO\ WKH GLVWULFW FRXUW PXVW GHWHUPLQH ZKHWKHU WKH RSSRQHQW KDV SURYHG QDUURZHU UXOH RI &RUUDGR 3DJH DQG 0XQR] KROGLQJ WKDW $SSUHQGL GRHV QRW DSSO\ ZKHUH WKH GHIHQGDQWjV VHQWHQFH OLHV ZLWKLQ WKH VWDWXWRU\ PD[LPXP IRU WKH RIIHQVH HVWDEOLVKHG E\ WKH MXU\ YHUGLFW RU JXLOW\ SOHD SXUSRVHIXOUDFLDOGLVFULPLQDWLRQPLQGIXOWKDWmWKHXOWLPDWH DORQH 6HH HJ 8QLWHG 6WDWHV Y 0F/HPRUH  :/  DW  EXUGHQRISHUVXDVLRQUHJDUGLQJUDFLDOPRWLYDWLRQUHVWVZLWK WK &LU 'HF   8QLWHG 6WDWHV Y $UJR  :/   DW  DQGQHYHUVKLIWVIURPWKHRSSRQHQWRIWKHVWULNHl3XUNHWW WK &LU 2FW   8QLWHG 6WDWHV Y 'HOJDGR  :/  DW

 WK &LU 6HSW   8QLWHG 6WDWHV Y $UEHODH]$JXGHOR  86DW :/   DW  Q WK &LU $XJ   8QLWHG 6WDWHV Y &RRN  :/  DW WK &LU sXO\   8QLWHG 6WDWHV Y 5LGOH\ +XPSKUH\ DVVLJQV HUURU WR WKH GLVWULFW FRXUWjV DQDO\VLV  :/   DW  WK &LU 0D\   8QLWHG 6WDWHV Y 'HDWRQ XQGHU%DWVRQjVWKLUGSURQJFRQWHQGLQJWKDWWKHGLVWULFWFRXUW  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

IDLOHG WR HYDOXDWH WKH *RYHUQPHQWjV H[SODQDWLRQ DQG WKH SULQFLSOH WKH SDQHO YDFDWHG WKH GHIHQGDQWjV VHQWHQFH DQG FLUFXPVWDQFHVRIWKHFDVHWRGHWHUPLQHZKHWKHUSXUSRVHIXO UHPDQGHGIRUUHVHQWHQFLQJ UDFLDOGLVFULPLQDWLRQLQIDFWKDGRFFXUUHG+HFRQFHGHVWKDW DGLVWULFWFRXUWjVUHVROXWLRQRID%DWVRQFKDOOHQJHLVHQWLWOHG 5HDGSURSHUO\DQGDVDSSOLHGLQ5DPLUH]DQG6WUD\KRUQ WRJUHDWGHIHUHQFHVHH%DWVRQ86DW EXWVXEPLWV )ORZDOSODLQO\FDQQRWEHVDLGWREHLQDFFRUGZLWKWKHYLHZRI WKDWWKHGLVWULFWFRXUWjVIDLOXUHWRFRQGXFWDQ\LQTXLU\UHTXLUHV $SSUHQGLDGRSWHGE\RXUVLVWHU&LUFXLWV7RWKHFRQWUDU\DQG QRGHIHUHQFH DVQRWHGDWWKHRXWVHW)ORZDOSODFHVXVLQmDPLQRULW\RIRQHl +LOOVXSUD)GDW ,I,ZHUHFRQYLQFHGWKDW)ORZDO ,QDQXQSXEOLVKHGGHFLVLRQZHVXJJHVWHGWKDWDGHIHQGDQW KDGFRUUHFWO\FRQVWUXHG$SSUHQGL,ZRXOGKDYHIHZHUTXDOPV ZKRIDLOVWRLQVLVWXSRQDQGUHFHLYHDGHILQLWLYHUXOLQJIURPD DERXWRXUVROLWDU\SRVLWLRQRQWKLVSRLQW0RUHLPSRUWDQWO\ WULDOFRXUWRQD%DWVRQFKDOOHQJHPD\EHVDLGWRKDYHZDLYHG LI)ORZDOZHUHWKLV&LUFXLWjVILUVWZRUGRQ$SSUHQGLRULILWDW DQ\REMHFWLRQIRUSXUSRVHVRIDSSHDO6HH8QLWHG6WDWHVY OHDVWFRXOGEHVDLGWKDW)ORZDOSUHVHQWHGWKHILUVWRFFDVLRQIRU &RPSWRQ1RV    :/DW  XV WR GHFLGH ZKHWKHU $SSUHQGL LPSOLFDWHV RQO\ VWDWXWRU\ WK&LUsXO\   XQSXEOLVKHG  m7KHJRYHUQPHQWILUVW DUJXHVDQGZHEHOLHYHFRUUHFWO\WKDW&RPSWRQKDVZDLYHG KLV %DWVRQ FKDOOHQJH EHFDXVH KH IDLOHG WR JHW D GHILQLWLYH DPHQGPHQWV PDNH WKH MXU\ WKH ULJKW GHFLVLRQPDNHU XQOHVV WKH UXOLQJE\WKHGLVWULFWFRXUWIRUWKLVFRXUWWRUHYLHZl :KLOH GHIHQGDQW HOHFWV D EHQFK WULDO  DQG WKH UHDVRQDEOHGRXEW &RPSWRQ DV DQ XQSXEOLVKHG RSLQLRQ LV QRW GLVSRVLWLYH LW VWDQGDUG WKH SURSHU EXUGHQ ZKHQ D IDFW UDLVHV WKH PD[LPXP KLJKOLJKWVWKHGLIILFXOW\RIDVVHVVLQJDUXOLQJZKHUHDVKHUH ODZIXO SXQLVKPHQW +RZ VWDWXWHV DUH GUDIWHG RU LPSOHPHQWHG WKHUHLVDQLQFRPSOHWHUHFRUGXQGHUO\LQJLWWRUHYLHZ2QWKH WR IXOILO WKDW UHTXLUHPHQW LV D VXEMHFW WR ZKLFK WKH &RQVWLWXWLRQ

UHFRUGEHIRUHXVZHFRQFOXGHWKDW+XPSKUH\jVFODLPDVWR GRHV QRW VSHDN

/XFNLH LV ZLWKRXW PHULW  +XPSKUH\ IDLOHG WR UHEXW WKH 8QLWHG 6WDWHV Y %URXJK  )G   WK &LU  FLWDWLRQ *RYHUQPHQWjV UDFHQHXWUDO H[SODQDWLRQ IRU LWV GLVPLVVDO RI RPLWWHG  /XFNLH o WKDW WKH MXURUjV K\SHUWHQVLRQ ZRXOG KDYH EHHQ H[DFHUEDWHG KDG KH EHHQ HPSDQHOHG RQ WKH MXU\  DQG WKH 7KXV LQ WKH ZDNH RI $SSUHQGL  WKHUH LV QR FRQVWLWXWLRQDO VLJQLILFDQFH

GLVWULFWFRXUWjVFRQFOXVLRQRYHUUXOLQJ+XPSKUH\jVREMHFWLRQ LQ WKH TXHVWLRQ ZKHWKHU D \HDU VWDWXWRU\ PD[LPXP VHQWHQFH XQGHU †  E  & LV mUHDOO\l D VHQWHQFH ZLWKLQ WKH \HDUVWROLIH UDQJH FDQQRWWKHUHIRUHEHVDLGWRKDYHEHHQFOHDUO\HUURQHRXV:LWK JRYHUQLQJ WKH GLIIHUHQW mRIIHQVHl VHW IRUWK LQ †  E  $  ,QVWHDG WKH UHVSHFWWR+RZHOOZHKDYHOLWWOHWRUHYLHZSUHFLVHO\EHFDXVH RIIHQVH LV GHILQHG VROHO\ E\ UHIHUHQFH WR WKH MXU\jV YHUGLFW DQG WKH +XPSKUH\ OLPLWHG KLV REMHFWLRQ WR /XFNLH  %HFDXVH VHQWHQFLQJ FRXUW WKHQ LV IUHH WR GHWHUPLQH E\ D SUHSRQGHUDQFH RI WKH +XPSKUH\j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†  E  WKDQ WKH 6HQWHQFLQJ &RPPLVVLRQ PD\ DFFRPSOLVK WKURXJK WKH +RZHOOKHUKLVWRU\DVDQXQVXFFHVVIXOSODLQWLIILQDIHGHUDO *XLGHOLQHV 0RUHRYHU , FDQQRW FRQFHLYH WKDW $SSUHQGL jV IXQFWLRQDO

UDFLDOGLVFULPLQDWLRQVXLWVXJJHVWHGDSRVVLEOHELDVDJDLQVWWKH DSSURDFK ZDV PHDQW WR LQYLWH PRUH PLQGUHDGLQJ RI VHQWHQFLQJ MXGJHV WR GHWHUPLQH ZKLFK RI D VHW RI RYHUODSSLQJ VWDWXWRU\ SURYLVLRQV GHILQHG WKH MXGLFLDOV\VWHPZKLFKLISUHVHQWHGDWWULDOOLNHO\ ZRXOG UHDO mRIIHQVHl IRU ZKLFK D GHIHQGDQW ZDV VHQWHQFHG 5DWKHU D 'LVWULFW KDYHSURYHGDQDGHTXDWHUDFHQHXWUDOH[SODQDWLRQ%HFDXVH &RXUW mFUHDWHV D VHSDUDWH RIIHQVHl LQ WKH SDUODQFH RI 0F0LOODQ  RQO\ E\ KRZHYHULWLVDQDIWHUWKHIDFWH[SODQDWLRQZHDUHUHOXFWDQW VHQWHQFLQJ D GHIHQGDQW LQ H[FHVV RI WKH VWDWXWRU\ PD[LPXP IRU WKH RIIHQVH HVWDEOLVKHG WKURXJK WKH MXU\jV YHUGLFW  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

UDQJHl HYHQ WKRXJK WKH UHVXOWLQJ VHQWHQFH PLJKW VWLOO OLH WRFUHGLWLWDQGZHWKHUHIRUHGHFOLQHWRUHDFKWKLVLVVXHDVLW ZLWKLQ WKH ORZHU VWDWXWRU\ ERXQGV IRU WKH RIIHQVH DV UHODWHVWR+RZHOO GHWHUPLQHGE\WKHMXU\jVYHUGLFW6HH6WUD\KRUQ)GDW    $SSO \L QJ W KL V P XFK EURDGHU &sXU\,QVWUXFWLRQV 6WDQGDUGRI5HYLHZ  :KHQ UHYLHZLQJ D MXU\ LQVWUXFWLRQ WR ZKLFK D GHIHQGDQW 6WUD\KRUQ DW OHDVW DWWHPSWV WR DFFRXQW IRU WKH 6XSUHPH &RXUWjV GHFLVLRQ LQ 0F0LOODQ  FLWLQJ WKDW FDVH IRU WKH SURSRVLWLRQ WKDW mWKH IDLOHG WR REMHFW DW WULDO ZH UHYLHZ IRU SODLQ HUURU ZKLFK JRYHUQPHQW PD\ VWLOO UHO\ XSRQ D GLVWULFW FRXUWjV ILQGLQJ RI UHOHYDQW UHTXLUHV XV WR GHWHUPLQH mZKHWKHU WKH LQVWUXFWLRQV ZKHQ FRQGXFW E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH EXW RQO\ LQVRIDU DV LW WDNHQDVDZKROHZHUHVRFOHDUO\ZURQJDVWRSURGXFHDJUDYH µRSHUDWHV VROHO\ WR OLPLW WKH VHQWHQFLQJ FRXUWjV GLVFUHWLRQ LQ VHOHFWLQJ D SHQDOW\ ZLWKLQ WKH UDQJH DOUHDG\ DYDLODEOH WR LWj DQG GRHV QRW µDOWHU>@ WKH PLVFDUULDJHRIMXVWLFHl8QLWHG6WDWHVY6DQGHUVRQ )G PD[LPXP SHQDOW\ IRU WKH FULPH FRPPLWWHG QRU FUHDWH>@ D VHSDUDWH RIIHQVH  WK&LU   FDOOLQJ IRU D VHSDUDWH SHQDOW\jl 6WUD\KRUQ   )G DW  TXRWLQJ 0F0LOODQ   86 DW   6 &W DW   7KH TXRWHG SDVVDJH $QDO\VLV 0F0LOODQ IURP  KRZHYHU PHUHO\ GHVFULEHV WKH 3HQQV\OYDQLD ODZ DW LVVXH LQ WKDW FDVH DQG GRHV QRW SXUSRUW WR VHW IRUWK WKH HVVHQWLDO UHTXLUHPHQWV +XPSKUH\DUJXHVWKDWWKHGLVWULFWFRXUWjVLQVWUXFWLRQRIWKH IRU DQ\ PDQGDWRU\ PLQLPXP VHQWHQFLQJ VFKHPH WR SDVV FRQVWLWXWLRQDO MXU\ ZDV IODZHG LQ WKUHH UHVSHFWV  )LUVW WKH GLVWULFW FRXUW PXVWHU IDLOHG WR LQIRUP WKH MXU\ WKDW LW ZDV UHTXLUHG WR UHDFK 0RUHRYHU LI LW RQFH ZDV SRVVLEOH WR GHILQH 0F0LOODQ jV KROGLQJ E\ XQDQLPLW\RQHYHU\HOHPHQWRIWKHFKDUJHGRIIHQVHV6HFRQG UHIHUHQFH WR VXFK QRWLRQV DV mVHSDUDWH RIIHQVHVl RU mVHSDUDWH SHQDOWLHVl WKH GLVWULFW FRXUW IDLOHG WR LQVWUXFW WKH MXU\ WR GHWHUPLQH $SSUHQGL WKH GHFLVLRQ DQG DQDO\VLV LQ QRZ SUHFOXGH VXFK DQ HIIRUW $V ZH ZKHWKHUWKHUHZDVRQHFRQVSLUDF\RUPXOWLSOHFRQVSLUDFLHV UHFRJQL]HG LQ 5HEPDQQ $SSUHQGL  PDUNV D mUDGLFDO GHSDUWXUHl LQ WKH 7KLUGWKHGLVWULFWFRXUWIDLOHGWRLQVWUXFWWKHMXU\WRGHWHUPLQH 6XSUHPH &RXUWjV PHWKRG RI GHWHUPLQLQJ WKH mHOHPHQWVl RI DQ RIIHQVH 5HEPDQQ   )G DW  4XHVWLRQV RI VWDWXWRU\ VWUXFWXUH DQG WKH W\SH RI GUXJV WKDW +XPSKUH\ FRQVSLUHG WR SRVVHVV RU OHJLVODWLYH LQWHQW KDYH JLYHQ ZD\ WR SXUHO\ IXQFWLRQDO FRQVLGHUDWLRQV DQG GLVWULEXWH mWKH UHOHYDQW LQTXLU\ LV RQH QRW RI IRUP EXW RI HIIHFW n GRHV WKH UHTXLUHG ILQGLQJ H[SRVH WKH GHIHQGDQW WR D JUHDWHU SXQLVKPHQW WKDQ WKDW DXWKRUL]HG :HUHMHFW+XPSKUH\jVDUJXPHQWV E\ WKH MXU\jV JXLOW\ YHUGLFW"l $SSUHQGL   86 DW    6 &W DW  VHH DOVR 5HEPDQQ   )G DW  $V WKH 6HYHQWK &LUFXLW D8QDQLPLW\ UHFHQWO\ H[SODLQHG LQ UHMHFWLQJ WKH FRQWHQWLRQ WKDW  86& †  LV XQFRQVWLWXWLRQDO $WWKHFORVHRIWKHHYLGHQFHWKHGLVWULFWFRXUWSURYLGHGWKH ,I &RQJUHVV KDG VSHFLILHG WKDW RQO\ MXGJHV PD\ PDNH WKH IROORZLQJLQVWUXFWLRQWRWKHMXU\FRQFHUQLQJWKHUHTXLVLWHOHJDO ILQGLQJV UHTXLUHG E\ †  E  RU WKDW WKHVH ILQGLQJV PXVW EH HOHPHQWVRIDFULPLQDOFRQVSLUDF\ PDGH E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKHQ †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†  GRHV  RU HYHQ FRPPLWWKHFULPHRIPRQH\ODXQGHULQJ ZKHWKHU WKH\ DUH VFDWWHUHG DFURVV PXOWLSOH VWDWXWHV $SSUHQGL  KROGV WKDW WKH GXH SURFHVV FODXVH RI WKH ILIWK DQG IRXUWHHQWK  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

:KDW WKH JRYHUQPHQW PXVW SURYH LV WKDW WKHUH ZDV D )GDW sXGJH6LOHUFRQFXUUHGILQGLQJWKDWWKH PXWXDO XQGHUVWDQGLQJ HLWKHU VSRNHQ RU XQVSRNHQ SDQHOZDVERXQGE\WKHGHFLVLRQLQ)ORZDOEXWTXHVWLRQLQJ EHWZHHQ WZR RU PRUH SHRSOH WR FRRSHUDWH ZLWK HDFK ZKHWKHU$SSUHQGLmLVDVIDUUHDFKLQJDVZHGHWHUPLQHLQWKLV RWKHUWRFRPPLWWKHFULPHRIGLVWULEXWLRQRIQDUFRWLFVRU FDVHIROORZLQJ)ORZDOlDQGRSLQLQJWKDW0F0LOODQVKRXOG SRVVHVVLRQZLWKLQWHQWWRGLVWULEXWHQDUFRWLFVDVWR&RXQWV JRYHUQ FKDOOHQJHV WR PDQGDWRU\ PLQLPXP VHQWHQFHV DQGRUWRHQJDJHLQPRQH\ODXQGHULQJDVWR&RXQW 5DPLUH])GDW 6LOHUsFRQFXUULQJ   0RVWUHFHQWO\LQ6WUD\KRUQWKHSDQHODGGUHVVHGD\HDU s$DW PDQGDWRU\ PLQLPXP VHQWHQFH XQGHU †  E  %  IRU D PDULMXDQDGLVWULEXWLRQFRQVSLUDF\LQYROYLQJNLORJUDPVRU %HFDXVHWKHGLVWULFWFRXUWIDLOHGWRLQVWUXFWWKHMXU\WKDWLW PRUH RI PDULMXDQD WKDW SUHFLVHO\ PDWFKHG WKH \HDU ZDV UHTXLUHG WR GHFLGH XQDQLPRXVO\ WKDW WKH *RYHUQPHQW VWDWXWRU\PD[LPXPVHQWHQFHXQGHU† E  ' IRUDSULRU SURYHGHDFKHOHPHQWEH\RQGDUHDVRQDEOHGRXEW+XPSKUH\ GUXJIHORQFRQYLFWHGRIDQRIIHQVHLQYROYLQJDQLQGHWHUPLQDWH DUJXHV WKDW KLV FRQYLFWLRQ FDQQRW VWDQG  6SHFLILFDOO\ KH DPRXQW RI PDULMXDQD  $JDLQ WKH SDQHO FKRVH WR IROORZ VXEPLWVWKDWWKHGLVWULFWFRXUWVKRXOGKDYHLQVWUXFWHGWKHMXU\ )ORZDO DQG 5DPLUH] DQG GLG QRW GLVFXVV 3DJH RU 0XQR] WKDW LW ZDV WR LGHQWLI\ WKH mWZR RU PRUH SHRSOHl DV D ,QWHUHVWLQJO\6WUD\KRUQVWDWHVWKDWm>L@Q)ORZDOZHH[SODLQHG SUHFRQGLWLRQWRFRQYLFWLRQSDUWLFXODUO\JLYHQWKDW&RXQW2QH WKDWHDFKSHQDOW\SURYLVLRQRI† E FRQVWLWXWHVDGLIIHUHQW RIWKHLQGLFWPHQWLGHQWLILHGVHYHQSHRSOHE\QDPHDQGmRWKHUV FULPHZLWKGLIIHUHQWHOHPHQWVLQFOXGLQJGUXJZHLJKWZKLFK NQRZQ DQG XQNQRZQ WR WKH *UDQG sXU\l &RXQW 7ZR PXVWEHSURYHGEH\RQGDUHDVRQDEOHGRXEWZKHQVHQWHQFLQJ LGHQWLILHG VL[ SHRSOH E\ QDPH DQG mRWKHUV NQRZQ DQG DGHIHQGDQWLQH[FHVVRIWKHGHIDXOWVWDWXWRU\PD[LPXPVHW XQNQRZQWRWKH*UDQGsXU\lDQG&RXQW6HYHQWHHQLGHQWLILHG RXWLQ† E  & IRUDOOGUXJVH[FHSWPDULMXDQDRULQ IRXUSHRSOHE\QDPHDQGmRWKHUVNQRZQDQGXQNQRZQWRWKH † E  ' IRUPDULMXDQDlDQGWKDWm>R@XUVLVWHUFLUFXLWV *UDQGsXU\l+HUHDVRQVWKDWVLQFHDFRQVSLUDF\QHFHVVDULO\ KDYHXQLIRUPO\DJUHHGZLWKlWKLVUXOH6WUD\KRUQ)G LQYROYHVDWOHDVWWZRSHRSOHWKHQWKHVSHFLILFLGHQWLW\RID DW HPSKDVLVDGGHG  GHIHQGDQWjVFRFRQVSLUDWRUPXVWEHDQHOHPHQWRIWKHRIIHQVH 2IFRXUVHLIWKLVZHUHWKHUXOHDQQRXQFHGLQ)ORZDORXU +XPSKUH\jVDUJXPHQWLVQRWZHOOWDNHQ)LUVWWKHGLVWULFW VLVWHUFLUFXLWVZRXOGEHLQDJUHHPHQWDQGWKHVHQWHQFHDWLVVXH FRXUWSURYLGHGDWKRURXJKLQVWUXFWLRQRQZKDWFRQVWLWXWHVD LQ6WUD\KRUQZRXOGKDYHEHHQXSKHOGDVQRWLQH[FHVVRIWKH FRQVSLUDF\OLVWLQJDQGGHILQLQJHDFKRIWKHHOHPHQWVWKDWWKH GHIDXOW VWDWXWRU\ PD[LPXP IRXQG DW †  E  '   7KH *RYHUQPHQW ZDV UHTXLUHG WR SURYH EH\RQG D UHDVRQDEOH 6WUD\KRUQSDQHOTXLFNO\FRQILUPHGKRZHYHUWKDW)ORZDODQG GRXEW6HFRQGWKHVSHFLILFXQDQLPLW\LQVWUXFWLRQVRXJKWE\ 5DPLUH]JRDJRRGGHDOIDUWKHUHQFRPSDVVLQJDQ\FDVHLQ +XPSKUH\ LV JHQHUDOO\ UHTXLUHG RQO\ LQ RQH RI WKUHH ZKLFK D VHQWHQFLQJ FRXUW ILQGV mDJJUDYDWLQJ IDFWRUVl E\ D FLUFXPVWDQFHV ZKHQWKHQDWXUHRIWKHHYLGHQFHLVSDUWLFXODUO\ SUHSRQGHUDQFHRIWKHHYLGHQFHWKDWWULJJHUDmKLJKHUSHQDOW\ FRPSOH[ ZKHQWKHUHLVDYDULDQFHEHWZHHQWKHLQGLFWPHQWDQG WKH SURRI DGGXFHG DW WULDO  RU ZKHQ WKHUH LV VRPH WDQJLEOH HYLGHQFH RI MXU\ FRQIXVLRQ DV ZKHQ WKH MXU\ KDV DVNHG  TXHVWLRQVRIWKHFRXUW8QLWHG6WDWHVY:DVKLQJWRQ)G 1RWDEO\ WKH UXOH VWDWHG LQ5DPLUH] LV UHPDUNDEO\ VLPLODU WR WKH

 WK&LU  1RQHRIWKHVHVFHQDULRVH[LVWVLQ VWDQGDUG DGYRFDWHG E\ sXVWLFH 7KRPDV LQ KLV FRQFXUUHQFH LQ $SSUHQGL QDPHO\ WKDW mD µFULPHj LQFOXGHV HYHU\ IDFW WKDW LV E\ ODZ D EDVLV IRU WKLV FDVH  )LQDOO\ +XPSKUH\jV UHOLDQFH RQ 5LFKDUGVRQ LV LPSRVLQJ RU LQFUHDVLQJ SXQLVKPHQW LQ FRQWUDVW ZLWK D IDFW WKDW PLWLJDWHV PLVSODFHG DV DW LVVXH LQ WKDW FDVH ZDV D MXU\ LQVWUXFWLRQ SXQLVKPHQW l  86 DW   6 &W DW  7KRPDV s FRQFXUULQJ   8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

UHDVRQLQJKLVRSLQLRQLVLQWKHHQGRQO\DFRQFXUUHQFHDQG UHODWLQJWRDSURVHFXWLRQXQGHU86&† FRQWLQXLQJ QRW D UXOLQJ RI WKH &RXUW n DQG HYHQ sXVWLFH 7KRPDV FULPLQDOHQWHUSULVH DQGQRWXQGHU86&†DVLQWKH UHFRJQL]HG WKDW KLV SURSRVHG UXOH ZRXOG UHTXLUH WKDW LQVWDQWFDVH 0F0LOODQ EH RYHUWXUQHG ZKLOH WKH $SSUHQGL PDMRULW\ H[SUHVVO\ GHFOLQHG WR JR VR IDU  $V VWDWHG E\ WKH )RXUWK E1XPEHURI&RQVSLUDFLHV &LUFXLWLWLVmQRWRXUUROHlWRRYHUWXUQ0F0LOODQZKHUHWKH 6XSUHPH&RXUWKDVHOHFWHGQRWWRGRVR+DUULVVXSUD +XPSKUH\FRQWHQGVWKDWHYHQLIWKHLGHQWLW\RIKLVDOOHJHG )GDW )LQDOO\DQGPRVWVLJQLILFDQWO\)ORZDOjVEURDG FRFRQVSLUDWRULVQRWDQHOHPHQWRIWKHRIIHQVHWKHGLVWULFW UHDGLQJRI$SSUHQGLLVIODWO\DWRGGVZLWKRXUHDUOLHUGHFLVLRQ FRXUW QHYHUWKHOHVV VKRXOG KDYH LQVWUXFWHG WKH MXU\ WR LQ0XQR]LQZKLFKZHVTXDUHO\KHOGWKDW$SSUHQGLGLGQRW GHWHUPLQHZKHWKHUWKHUHZHUHPXOWLSOHFRQVSLUDFLHVRURQO\ DSSO\WRDVHQWHQFLQJMXGJHjVILQGLQJVE\DSUHSRQGHUDQFHRI RQH  +H UHDVRQV WKDW EHFDXVH (DWRQ ZDV QDPHG DV D FR WKHHYLGHQFHWKDWWULJJHUHGDQHOHYDWHGVHQWHQFLQJUDQJHVR FRQVSLUDWRULQERWKFRQVSLUDF\FRXQWV &RXQWV2QHDQG7ZR ORQJDVWKHUHVXOWLQJVHQWHQFHGLGQRWH[FHHGWKHPD[LPXP DQG WKH MXU\ ZDV QRW LQVWUXFWHG WR LGHQWLI\ VSHFLILFDOO\ DFKLHYDEOHDEVHQWWKHMXGJHjVDGGLWLRQDOGHWHUPLQDWLRQV7KH +XPSKUH\j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mVWDWXWRU\PD[LPXPlUXOH LQGLFWHGLQDFDVHLQYROYLQJPXOWLSOHFRQVSLUDFLHVDQGWKDWKH RI 0XQR] 3DJH DQG 5HEPDQQ  7KH PRVW SURPLQHQW ZDVQRWHQWLWOHGWRDQLQVWUXFWLRQRIWKHMXU\UHTXLULQJLWWR PHPEHUVRIWKH)ORZDOOLQHDQGWKHRQHVUHOLHGXSRQE\WKH GHWHUPLQH WKH QXPEHU RI FRQVSLUDFLHV  $OWKRXJK WKH PDMRULW\KHUHDUHWKHGHFLVLRQVLQ8QLWHG6WDWHVY5DPLUH] LQGLFWPHQW GRHV QRW VR DOOHJH WKH *RYHUQPHQW DUJXHV WKDW )G WK&LU DQG8QLWHG6WDWHVY6WUD\KRUQ &RXQW 2QH FKDUJHG D mKXEl RU mZKHHOl FRQVSLUDF\ ZLWK  )G  WK &LU    ,Q 5DPLUH] DV KHUH WKH +XPSKUH\ DV GUXJ VXSSOLHU SRVLWLRQHG DW WKH FHQWHU DQG GHIHQGDQWZDVFRQYLFWHGE\DMXU\RIFRQVSLUDF\WRGLVWULEXWH (DWRQDQGRWKHUPLGGOHPHQDVVSRNHVRIWKHZKHHO&RXQW FRFDLQH DQG WKH 'LVWULFW &RXUW LPSRVHG D PDQGDWRU\ 7ZR DFFRUGLQJ WR WKH *RYHUQPHQW FKDUJHG D FKDLQ PLQLPXP VHQWHQFH RI  \HDUVj LPSULVRQPHQW XQGHU FRQVSLUDF\ZLWKQDUFRWLFVIORZLQJIURP+XPSKUH\WKURXJK † E  $ XSRQILQGLQJWKDW L WKHGHIHQGDQWKDGDSULRU (DWRQ WR 0RUURZ DQG RWKHUV ZRUNLQJ GLUHFWO\ ZLWK (DWRQ IHORQ\ GUXJ FRQYLFWLRQ DQG LL  WKH DPRXQW RI FRFDLQH +XPSKUH\LQUHVSRQVHDUJXHVZLWKVRPHIRUFHWKDWLIKHZDV LQYROYHGLQWKHRIIHQVHH[FHHGHGNLORJUDPV7KHSDQHOGLG LQYROYHGLQDKXEFRQVSLUDF\ZLWK(DWRQWKHQWKDWFRQVSLUDF\ QRWFLWH3DJHRU0XQR]EXWLQVWHDGIRXQG)ORZDOFRQWUROOLQJ QHFHVVDULO\LQFOXGHGDQ\FKDLQFRQVSLUDF\ZLWK(DWRQDQGKLV VWDWLQJ WKDW m>D@JJUDYDWLQJ IDFWRUV RWKHU WKDQ D SULRU EX\HUV HJ 0RUURZ  DQG WKXV WKHUH H[LVWHG RQO\ RQH FRQYLFWLRQ WKDW LQFUHDVH WKH SHQDOW\ IURP D QRQPDQGDWRU\ FRQVSLUDF\ PLQLPXP VHQWHQFH WR D PDQGDWRU\ PLQLPXP VHQWHQFH RU IURP D OHVVHU WR D JUHDWHU PLQLPXP VHQWHQFH DUH QRZ :H QRWH WKDW EHFDXVH +XPSKUH\ QHLWKHU UHTXHVWHG D HOHPHQWVRIWKHFULPHWREHFKDUJHGDQGSURYHQl5DPLUH] PXOWLSOH FRQVSLUDF\ LQVWUXFWLRQ QRU REMHFWHG WR WKH GLVWULFW FRXUWjVXVHRIDJHQHUDOLQVWUXFWLRQRQWKHODZRIFRQVSLUDF\ ZH UHYLHZ WKLV FODLP IRU SODLQ HUURU 6HH 8QLWHG 6WDWHV Y  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

0DFN)G WK&LU  7KH*RYHUQPHQWjV RFFDVLRQIRUDGRSWLQJVXFKDFRQVWUXFWLRQRI$SSUHQGLDVWKH VXJJHVWLRQWKDW+XPSKUH\HQWHUHGLQWRDKXEFRQVSLUDF\ZLWK VHQWHQFHV LQ ERWK FDVHV YLRODWHG WKH QDUURZHU mVWDWXWRU\ (DWRQ DQG RWKHUV IRU FHUWDLQ WUDQVDFWLRQV RQO\ WR HQG WKDW PD[LPXPlYDULDQWRI$SSUHQGLjVmUXOHl FRQVSLUDF\WRIRUPDQHZFKDLQFRQVSLUDF\WRVXSSO\GUXJV IURP+XPSKUH\WR(DWRQWR0RUURZVHHPVGXELRXVDWEHVW 7KHUHDUHDQXPEHURIRWKHUIODZVDVZHOOLQWKHDQDO\VLV $VZHREVHUYHGLQ8QLWHG6WDWHVY*DLWDQ$FHYHGRm>W@KH WKURXJKZKLFKWKHSDQHOLQ)ORZDOVRXJKWWRVXSSRUWLWVEURDG NH\ WR HVWDEOLVKLQJ ZKHWKHU GLVWLQFW VXEDJUHHPHQWV DUH UHDGLQJ RI $SSUHQGL  )LUVW WKURXJKRXW LWV GLVFXVVLRQ RI HQFRPSDVVHGZLWKLQRQHVLQJOHFRQVSLUDF\LVWRGHWHUPLQH PDQGDWRU\PLQLPXPVHQWHQFHVDQGWKHUHVXOWLQJGLPLQXWLRQ ZKHWKHUWKHGLIIHUHQWVXEJURXSVDUHDFWLQJLQIXUWKHUDQFHRI RI D VHQWHQFLQJ FRXUWjV GLVFUHWLRQ )ORZDO QHYHU RQFH RQH RYHUDUFKLQJ SODQl  )G   WK &LU   PHQWLRQV WKH 6XSUHPH &RXUWjV FRQWUROOLQJ VWDWHPHQW RQ LQWHUQDOTXRWDWLRQPDUNVRPLWWHG  TXRWLQJ8QLWHG6WDWHVY PDQGDWRU\ PLQLPXPV LQ 0F0LOODQ QRU WKH ODQJXDJH LQ *KD]DOHK)G WK&LU  +HUHZLWKWKH $SSUHQGLH[SUHVVO\FRQILUPLQJWKDW0F0LOODQFRQWLQXHVWR EHQHILW RI KLQGVLJKW LW VHHPV FOHDU WKDW WKHUH ZDV RQH JRYHUQ LQ mFDVHV WKDW GR QRW LQYROYH WKH LPSRVLWLRQ RI D RYHUDUFKLQJ SODQ  IRU +XPSKUH\ WR GLVWULEXWH QDUFRWLFV WR VHQWHQFH PRUH VHYHUH WKDQ WKH VWDWXWRU\ PD[LPXP IRU WKH (DWRQZKRZRXOGWKHQUHVHOOWKHPDWDSURILWWRWKLUGSDUWLHV RIIHQVHHVWDEOLVKHGE\WKHMXU\jVYHUGLFWl$SSUHQGL86 :KLOH D PXOWLSOH FRQVSLUDF\ LQVWUXFWLRQ OLNHO\ ZRXOG KDYH DWQ6&WDWQ1H[W)ORZDOPLVUHDGV UHPRYHGDQ\GRXEWFRQFHUQLQJWKHQXPEHURIFRQVSLUDFLHV WKHSRVW$SSUHQGLGHFLVLRQVRIRWKHU&LUFXLWVFODLPLQJWKDW WKDWWKHMXU\IRXQGWREHDWLVVXHZHDUHXQFRQYLQFHGWKDW WKH(LJKWK&LUFXLWKHOGLQ$JXD\R'HOJDGRVXSUDWKDWmLWLV VXFKDQLQVWUXFWLRQZDVUHTXLUHG LPSURSHUIRUDMXGJHWRGHWHUPLQHDQ\IDFWVRWKHUWKDQDSULRU FRQYLFWLRQWKDWZRXOGLQFUHDVHWKHSHQDOW\UDQJHEH\RQGWKDW $OWKRXJK WKH SDUWLHV GR QRW UDLVH WKLV LVVXH DQ\ HUURU DSSOLFDEOHWRWKHFULPHIRUZKLFKWKHMXU\KDVFRQYLFWHGWKH DSSHDUV WR OLH QRW LQ WKH MXU\jV LQVWUXFWLRQ EXW LQ WKH GHIHQGDQWl)ORZDO)GDW Q,QIDFW$JXD\R LQGLFWPHQWjV VHHPLQJO\ GXSOLFDWLYH FRXQWV DV &RXQW 2QH 'HOJDGRH[SUHVVO\UHMHFWVDSURSRVHGUHDGLQJRI$SSUHQGLDV FKDUJHVWKHVDPHFRQGXFW IRUWKHVDPHWLPHSHULRGDVWKDW HQFRPSDVVLQJ PDQGDWRU\ PLQLPXP VHQWHQFHV UHFRJQL]LQJ FKDUJHG LQ &RXQW 7ZR  7KDW WKH RYHUW DFWV RI &RXQW 2QH WKDW 0F0LOODQ SURYLGHV WKH mJRYHUQLQJ FRQVWLWXWLRQDO IRFXVRQ+XPSKUH\DQGWKHRYHUWDFWVRI&RXQW7ZRIRFXVRQ VWDQGDUGlRQWKLVLVVXH$JXD\R'HOJDGR)GDW  0RUURZGRHVQRWFKDQJHWKHIDFWWKDWERWKUHODWHWRWKHVDPH  FRQVSLUDF\  ,QGHHG WKH *RYHUQPHQWjV FRQFHVVLRQ WKDW m>&RXQW 2QH@ ZRXOG KDYH EHHQ WKH RQO\ GUXJ FRQVSLUDF\ )XUWKHULWLVQRWHZRUWK\WKDW)ORZDOUHOLHVRQDQGTXRWHV FRXQW DV DJDLQVW +XPSKUH\ ZHUH LW QRW IRU WKH IDFW WKDW H[WHQVLYHO\IURPsXVWLFH7KRPDVjVFRQFXUUHQFHLQ$SSUHQGL +XPSKUH\ZDVMRLQHGDWWULDOE\'DU\O0RUURZlVWUHQJWKHQV :LWKRXWLQDQ\ZD\GHQ\LQJWKHIRUFHRIsXVWLFH7KRPDVjV RXU VXVSLFLRQ WKDW &RXQW 7ZR ZDV VXUSOXVDJH  %HFDXVH KRZHYHU +XPSKUH\ ZRXOG KDYH EHHQ VXEMHFW WR WKH VDPH

VWDWXWRU\DQG*XLGHOLQHVSHQDOWLHVLQHLWKHUFDVHZKHWKHUKH ,Q $JXD\R'HOJDGR DV LQ WKH FDVH EHIRUH XV WKH GHIHQGDQW ZDV ZDVFRQYLFWHGRI&RXQW2QHRU&RXQW7ZRRUERWKZHPXVW VHQWHQFHG WR D \HDU WHUP RI LPSULVRQPHQW 7KH (LJKWK &LUFXLW IRXQG FRQFOXGHWKDWDQ\HUURULQWKHGLVWULFWFRXUWjVLQVWUXFWLRQRIWKH WKDW WKLV VHQWHQFH ZDV mSHUPLVVLEOH XQGHU $SSUHQGL DQG 0F0LOODQl

MXU\ RU LQ WKH *RYHUQPHQWjV LQGLFWPHQW RI +XPSKUH\ ZDV EHFDXVH LW IHOO mZLWKLQ WKH VWDWXWRU\ UDQJH DXWKRUL]HG E\ †  E  & ZLWKRXW UHIHUHQFH WR GUXJ TXDQWLW\l  )G DW  ,W LV LURQLF WKDW KDUPOHVV $JXD\R'HOJDGR DV WUDQVIRUPHG WKURXJK LWV PLVUHDGLQJ E\ WKH SDQHO LQ )ORZDO QRZ LV DQ LQGLUHFW SDUW RI WKH FKDLQ RI DXWKRULW\ LQ WKLV &LUFXLW IRU D UHVXOW GLUHFWO\ RSSRVLWH WKDW UHDFKHG E\ WKH (LJKWK &LUFXLW XQGHU LGHQWLFDO IDFWV  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

$SSUHQGL WKH SDQHO FRQFOXGHG WKDW LW KDG DGRSWHG WKH F'UXJ7\SH'HWHUPLQDWLRQ SULQFLSOH VHW IRUWK LQ WKH 6XSUHPH &RXUWjV SULRU sRQHV GHFLVLRQ   QDPHO\ WKDW mDQ\ IDFW RWKHU WKDQ D SULRU +XPSKUH\DUJXHVWKDWWKHGLVWULFWFRXUWHUUHGE\IDLOLQJWR FRQYLFWLRQ WKDWLQFUHDVHVWKHPD[LPXPSHQDOW\IRUDFULPH LQVWUXFWWKHMXU\WRUHWXUQDVSHFLDOYHUGLFWRQWKHGUXJW\SHIRU PXVWEHFKDUJHGLQDQLQGLFWPHQWVXEPLWWHGWRDMXU\DQG ZKLFK KH ZDV FULPLQDOO\ UHVSRQVLEOH  +H PDLQWDLQV WKDW SURYHQEH\RQGDUHDVRQDEOHGRXEWl)ORZDO)GDW  ZKHUHDVKHUHDGHIHQGDQWLVFKDUJHGZLWKDPXOWLSOHGUXJ TXRWLQJsRQHV86DWQ 6&WDWQ FRQVSLUDF\IRUZKLFKWKHPD[LPXPVWDWXWRU\SHQDOW\IRUHDFK VHH DOVR )ORZDO  )G DW  TXRWLQJ $SSUHQGLjV GUXJLVGLIIHUHQWDQGDMXU\UHWXUQVRQO\DJHQHUDOYHUGLFWRI mLQFUHDVH>@EH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXPl JXLOW\ WKDW GHIHQGDQW LV HQWLWOHG WR EH VHQWHQFHG XQGHU WKH YDULDQW RI LWV UXOLQJ   7KH SDQHO WKHQ DGGUHVVHG 5HEPDQQ OHVVHUVWDWXWRU\SHQDOW\7KLVLVSDUWLFXODUO\VRLQKLVFDVH DOEHLW LQ D IRRWQRWH  DQG UHFRJQL]HG WKDW WKH GLVSRVLWLYH +XPSKUH\ FRQWHQGV EHFDXVH WKHUH ZDV HYLGHQFH WKDW KH IHDWXUH RI WKDW FDVH ZDV WKH VHQWHQFLQJ FRXUWjV IDFWXDO GLVWULEXWHGRQVHSDUDWHRFFDVLRQVERWKSRZGHUFRFDLQHDQG GHWHUPLQDWLRQE\DSUHSRQGHUDQFHRIWKHHYLGHQFHZKLFKKDG FUDFNFRFDLQH mVLJQLILFDQWO\ LPSDFW>HG@ WKH PD[LPXP SHQDOW\l  )ORZDO  )G DW  Q   6HHPLQJO\ WKHQ WKH SDQHO ZDV :HUHMHFW+XPSKUH\jVDUJXPHQWWKDWKHZDVHQWLWOHGWRD KHDGHGWRZDUGDFRQILUPDWLRQRI6L[WK&LUFXLWSUHFHGHQWWKDW VSHFLDOYHUGLFW6HH2OGHQY8QLWHG6WDWHV)G $SSUHQGLLPSOLFDWHVRQO\VHQWHQFLQJPD[LPXPV WK&LU  ILQGLQJQRHQWLWOHPHQWWRDVSHFLDOYHUGLFW EHFDXVH  86& †  D   JRYHUQV WKH GLVWULEXWLRQ RI $WWKLVSRLQWKRZHYHU)ORZDOWDNHVDQXQH[SHFWHG DQG mFRQWUROOHGVXEVWDQFHVlDQGZKHUHDVKHUHWKHGUXJVDWLVVXH XQZDUUDQWHG  WXUQ  $IWHU DOO WKLV GLVFXVVLRQ RI VHQWHQFLQJ DUHERWKSURVFULEHGFRQWUROOHGVXEVWDQFHV :HIXUWKHUQRWH PD[LPXPVWKH&RXUWVWDWHGWKDW$SSUHQGLZDVYLRODWHGLQWKH WKDWKLVUHOLDQFHRQ8QLWHG6WDWHVY'DOH)G  FDVHEHIRUHLWEHFDXVHmDILQGLQJDVWRWKHZHLJKWRIWKHGUXJV WK&LU LVPLVSODFHG$VZHQRWHGLQ8QLWHG6WDWHV GHWHUPLQHG WKH UDQJH RI SHQDOWLHV WKDW ZRXOG DSSO\ WR >WKH Y1HXKDXVVHUm'DOHJRYHUQVLQFDVHVZKHUHDMXU\jVJHQHUDO GHIHQGDQW@l DQG EHFDXVH WKH VHQWHQFLQJ MXGJHjV YHUGLFW LV DPELJXRXV VXFK WKDW LW FDQQRW EH GHWHUPLQHG mGHWHUPLQDWLRQ HIIHFWLYHO\ OLPLWHG WKH UDQJH RI DSSOLFDEOH ZKHWKHUWKHMXURUVXQDQLPRXVO\DJUHHGDVWRRQHRUDQRWKHURI SHQDOWLHVlE\UHPRYLQJmDQ\GLVFUHWLRQLQWHUPVRILPSRVLQJ WKHPXOWLSOHGUXJVDOOHJHGO\LQYROYHGLQDFRQVSLUDF\l DVKRUWHUVHQWHQFHlWKDQOLIHLPSULVRQPHQW)GDW  )G WK&LU :KLOHZHUHFRJQL]HWKDWWKH   5HPDUNDEO\ WKH SDQHO FODLPHG WKDW LWV KROGLQJ MXU\jV JHQHUDO YHUGLFW LQ WKLV FDVH ZDV DPELJXRXV ZH mUHDIILUP>HG@WKHORJLFRI5HEPDQQ DIDFWWKDWLQFUHDVHVWKH FRQFOXGHWKDWDQ\HUURUZDVKDUPOHVV8QOLNH+XPSKUH\WKH DSSOLFDEOHVWDWXWRU\SHQDOW\UDQJHIRUDSDUWLFXODUFULPHPXVW GHIHQGDQWV LQ 'DOH DQG 1HXKDXVVHU ZHUH FKDUJHG ZLWK EHSURYHGEH\RQGDUHDVRQDEOHGRXEWWRWKHWULHURIIDFWl FRQVSLULQJ WR GLVWULEXWH FRFDLQH RU FUDFN FRFDLQH  DQG )G DW  Q  $V GLVFXVVHG HDUOLHU KRZHYHU QHLWKHU PDULMXDQDFRQWUROOHGVXEVWDQFHVVXEMHFWWRGLIIHUHQWVWDWXWRU\ 5HEPDQQjVmORJLFlQRUPRUHLPSRUWDQWO\LWVH[SUHVVKROGLQJ SURYLVLRQV DQG IRU ZKLFK GLIIHUHQW SHQDOW\ UDQJHV DUH SURYLGHVDQ\DXWKRULW\IRUDEURDGmVHQWHQFLQJUDQJHl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

VXEMHFWWRVHQWHQFLQJXQGHU† E  & DQGVXEMHFWWRWKH WKHSULRUUXOLQJVLQ&RUUDGRDQG5HEPDQQnKDGPDQLIHVWO\ VDPHVWDWXWRU\SHQDOW\ HVWDEOLVKHGDVWKHODZRIWKLV&LUFXLWWKDW$SSUHQGLDGGUHVVHV RQO\VHQWHQFLQJPD[LPXPV:KDWLVPRUHWKHPDMRULW\LV ''UXJ4XDQWLW\'HWHUPLQDWLRQ$SSUHQGL DEOHWRLGHQWLI\DOLQHRI6L[WK&LUFXLWFDVHVLQVXSSRUWRILWV FRQFOXVLRQ  7R IXOO\ DSSUHFLDWH WKH KDYRF WKHVH ODWWHU :LWKUHVSHFWWRMXU\LQVWUXFWLRQV+XPSKUH\PDNHVDIRXUWK GHFLVLRQVKDYHZUHDNHGZLWKWKHSULQFLSOHRIVWDUHGHFLVLV DUJXPHQW  WKDW WKH GLVWULFW FRXUW YLRODWHG WKH 6XSUHPH DQGWKHFKDRWLFVWDWHRIRXUSRVW$SSUHQGLODZLQWKHZDNHRI &RXUWjV GHFLVLRQ LQ $SSUHQGL Y 1HZ s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jV$SSUHQGLFKDOOHQJH PRUH WKDQ  NLORJUDPV RI FRFDLQH WULJJHULQJ WKH HOHYDWHG LVWRGHWHUPLQHWKHDSSURSULDWHVWDQGDUGRIUHYLHZ+XPSKUH\ VHQWHQFLQJUDQJHIRXQGDW† D  $ 0RUHRYHULQOLJKW ZDVVHQWHQFHGLQ SULRUWR$SSUHQGLDQGRQO\PDGHD RI WKH GHIHQGDQWjV WZR SULRU IHORQ\ FRQYLFWLRQV IRU GUXJ IRUPDO $SSUHQGL REMHFWLRQ LQ KLV DSSHOODWH EULHI LQ  RIIHQVHV KH ZDV VXEMHFW WR PDQGDWRU\ OLIH LPSULVRQPHQW %HFDXVH KLV DSSHDO ZDV SHQGLQJ DW WKH WLPH$SSUHQGL ZDV XQGHU †  D  $  DQG WKH 'LVWULFW &RXUW LPSRVHG WKLV GHFLGHG+XPSKUH\LVHQWLWOHGWRUHWURDFWLYHDSSOLFDWLRQRID VHQWHQFH7KHSDQHOQHHGQRWKDYHORRNHGDQ\IXUWKHUWKDQ QHZUXOHRIFULPLQDOSURVHFXWLRQ*ULIILWKY.HQWXFN\ 3DJHnRUHYHQ5HEPDQQZKLFK)ORZDOGRHVFLWHnWRILQG 86   :KHUHDGHIHQGDQWUDLVHVDFRJQL]DEOH WKDW WKLV VHQWHQFH YLRODWHG $SSUHQGL  ,Q SDUWLFXODU WKH $SSUHQGL FKDOOHQJH LQ GLVWULFW FRXUW DQG UDLVHV LW DJDLQ RQ GHIHQGDQWjV OLIH VHQWHQFH H[FHHGHG WKH PD[LPXP \HDU DSSHDOZHUHYLHZWKH$SSUHQGLLVVXHGHQRYR6HH8QLWHG WHUP RI LPSULVRQPHQW KH IDFHG XQGHU †  E  &  DV D 6WDWHVY6WUD\KRUQ)G WK&LU ,I SULRUGUXJIHORQZKRVHODWHVWRIIHQVHDVGHWHUPLQHGVROHO\E\ KRZHYHU D GHIHQGDQW IDLOV WR UDLVH WKH LVVXH LQ WKH GLVWULFW WKH MXU\jV YHUGLFW LQYROYHG DQ LQGHWHUPLQDWH DPRXQW RI FRXUW RU DEDQGRQV LW RQ DSSHDO ZH UHYLHZ IRU SODLQ HUURU FRFDLQH RQO\6HH8QLWHG6WDWHVY*UDKDP)G  WK &LU  KROGLQJWKDWDFRXUWPD\QRWLFH$SSUHQGLHUURUV 1RWZLWKVWDQGLQJWKLVUHDGLO\GLVFHUQLEOHRXWFRPHXQGHUWKLV VXDVSRQWHXQGHUSODLQHUURUUHYLHZHYHQLIWKHLVVXHLVQRW &LUFXLWjVRZQSRVW$SSUHQGLSUHFHGHQWVWKHSDQHOLQ)ORZDO GHHPHGLWQHFHVVDU\WRLQWHUSUHW$SSUHQGLDQHZ,WVDQDO\VLV XQIRUWXQDWHO\LVDQ\WKLQJEXWFOHDU)LUVWXSRQ UHYLHZLQJ

 7KLV FRQFOXVLRQ DOVR UHQGHUV PRRW +XPSKUH\jV RWKHU DOOHJDWLRQ WKDW  WKH GLVWULFW FRXUW GLG QRW ILQG E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW KH 'HVSLWH WKLV $SSUHQGL YLRODWLRQ WKH *RYHUQPHQW DUJXHG WKDW WKH VROG FUDFN DQG QRW VRPH RWKHU W\SH RI FRFDLQH $V GLVFXVVHG LQ 3DUW ,,,' GHIHQGDQWjV VHQWHQFH FRXOG EH XSKHOG DV ZLWKLQ WKH UDQJH VHW IRUWK LQ EHORZ EHFDXVH +XPSKUH\jV VHQWHQFH YLRODWHV $SSUHQGL  XSRQ UHPDQG †  E  %  WHQ \HDUV WR OLIH LQ OLJKW RI WKH GHIHQGDQWjV DGPLVVLRQ WR +XPSKUH\ FDQQRW EH VHQWHQFHG XQGHU DQ\ SURYLVLRQ RWKHU WKDQ †  D TXDQWLW\ RI FRFDLQH MXVW XQGHU  NLORJUDPV 7KH SDQHO LQ )ORZDO UHMHFWHG E  &  ZKLFK GRHV QRW UHTXLUH D IDFWXDO ILQGLQJ RI DQ\ SDUWLFXODU WKLV DUJXPHQW ZLWKRXW HYHU VWDWLQJ WKH VWDQGDUG RI UHYLHZ WKDW JRYHUQHG VFKHGXOH , RU ,, FRQWUROOHG VXEVWDQFH LWV FRQVLGHUDWLRQ 7KLV DGGLWLRQDO GHIHFW LQ )ORZDO LV GLVFXVVHG EHORZ  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

FKDUJHG'HIHQGDQW$SSHOODQW0RQWHO+XPSKUH\DQGVHYHUDO UDLVHGRQDSSHDOE\WKHGHIHQGDQW VHHDOVR8QLWHG6WDWHVY FR'HIHQGDQWVZLWKWKUHHFRXQWVRIFRQVSLULQJWRGLVWULEXWH .LQJ)G WK&LU  DQGWRSRVVHVVZLWKLQWHQWWRGLVWULEXWHDmGHWHFWDEOHDPRXQWl RIFRFDLQHDQGRUFRFDLQHEDVH FUDFN  VHHs$DW   ,Q KLV ZULWWHQ REMHFWLRQV WR WKH SUHVHQWHQFH UHSRUW   DVZHOODVRWKHURIIHQVHV7KHMXU\UHWXUQHGDJXLOW\ +XPSKUH\j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jV YHUGLFW WKDW LW EHOLHYHG (DWRQjV  NLORJUDP 6HQWHQFLQJ *XLGHOLQHV DQG WULJJHULQJ WKH HQKDQFHG HVWLPDWH WR EH DFFXUDWH RU WKDW LW HYHQ EHOLHYHG WKDW VHQWHQFLQJUDQJHRI\HDUVWROLIHLPSULVRQPHQWXQGHU PXOWLSOH VDOHV EHWZHHQ (DWRQ DQG +XPSKUH\ DFWXDOO\ 86& †  E  $  IRU GUXJ RIIHQVHV LQYROYLQJ  WRRN SODFH    7KHUHIRUH DV D UHVXOW RI WKH ODFN RI NLORJUDPV RU PRUH RI FRFDLQH  ,Q WKH HQG KRZHYHU VXIILFLHQWFUHGLELOLW\UHJDUGLQJ(DWRQjVWHVWLPRQ\DVWR 'HIHQGDQW ZDV VHQWHQFHG WR D WHUP RI  \HDUVj WKHDPRXQWRIFRFDLQHWUDQVDFWHG'HIHQGDQW+XPSKUH\ LPSULVRQPHQWZKLFKDVQRWHGLQ3DJHGRHVQRWH[FHHGWKH VXJJHVWVWKH&RXUWUHMHFWWKHUHFRPPHQGDWLRQVWDWHGLQ \HDU PD[LPXP VHW IRUWK LQ †  E  &  IRU GUXJ WKH 365 DV WR WKH UHOHYDQW FRQGXFW LQ &RXQW ,, DQG RIIHQVHV LQYROYLQJ DQ LQGHWHUPLQDWH DPRXQW RI FRFDLQH LQVWHDGDGRSWWKHPLQLPXPDPRXQWZKLFKWKHMXU\PXVW 8QGHU3DJHDQG0XQR]WKHQ'HIHQGDQWjVVHQWHQFHGRHVQRW KDYHQHFHVVDULO\IRXQGWRVXSSRUWLWVYHUGLFWRIJXLOW\ YLRODWHWKHUXOHRI$SSUHQGL VSHFLILFDOO\NLORJUDPRIFRFDLQHZKLFKFRQVWLWXWHV WKHORZHVWDPRXQWRIFRFDLQHSXUFKDVHGE\(DWRQGXULQJ 7KH PDMRULW\ UHFRJQL]HV DV PXFK DOEHLW ZLWKRXW FLWLQJ DJLYHQVDOH 3DJH3UREOHPDWLFDOO\KRZHYHUWKHPDMRULW\JRHVRQWRKROG WKDW 'HIHQGDQWjV VHQWHQFH YLRODWHV D VHFRQG mUXOHl RI s$DW $SSUHQGL RQH ZKLFK LPSOLFDWHV VHQWHQFLQJ UDQJHV HYHQ WKRXJKRXUGHFLVLRQVLQ3DJHDQG0XQR]nQRWWRPHQWLRQ +HFRQWLQXHVLQWKHZULWWHQREMHFWLRQVVWDWLQJ $VZLWK(DWRQWKHRQO\WKLQJZHFDQEHVXUHRIZLWK UHJDUGVWR&URPLW\jVWHVWLPRQ\LVWKDWWKHMXU\IRXQGWKDW  7KH WKLUG FKDUJH RI FRQVSLUDF\ ZDV GLVPLVVHG EHIRUH WULDO DQDJUHHPHQWGLGH[LVWWRSXUFKDVHFRFDLQH$VWKHUHLV LQVXIILFLHQW HYLGHQFH WR VXSSRUW DQ DPRXQW RI FRFDLQH  7KLV UDQJH EHFRPHV  \HDUV WR OLIH LPSULVRQPHQW LI DV LV WKH FDVH KLJKHU WKDQ WKDW ZKLFK WKH MXU\ PXVW QHFHVVDULO\ KDYH KHUH D GHIHQGDQW SUHYLRXVO\ KDV EHHQ FRQYLFWHG RI D IHORQ\ GUXJ RIIHQVH IRXQG WR VXSSRUW +XPSKUH\jV FRQYLFWLRQ 'HIHQGDQW 6HH  86& †  E  $  7KH PDMRULW\ KROGV DQG , DJUHH WKDW UHTXHVWVWKDWWKH&RXUWUHMHFWWKH365jVUHFRPPHQGDWLRQ 'HIHQGDQWjV FKDOOHQJH WR KLV SULRU FRQYLFWLRQ LV ZLWKRXW PHULW UHJDUGLQJ UHOHYDQW FRQGXFW DQG WKDW WKH &RXUW LQVWHDG  KROG+XPSKUH\DFFRXQWDEOHLQ&RXQWIRUWKHVDOHRI. ,Q IDFW WKLV VWDWXWRU\ PD[LPXP LQFUHDVHV WR  \HDUV ZKHUH DV KHUH NLORJUDP RI SRZGHU FRFDLQH o D TXDQWLW\ ZKLFK WKH GHIHQGDQW KDV D SULRU FRQYLFWLRQ IRU D IHORQ\ GUXJ RIIHQVH 6HH  UHSUHVHQWV WKH PLQLPXP DPRXQW ZKLFK &URPLW\ 86& †  E  &  7KXV 'HIHQGDQWjV \HDU VHQWHQFH DFWXDOO\ LV ZHOO EHORZ WKH VWDWXWRU\ PD[LPXP HYHQ ZKHQ GUXJ TXDQWLWLHV DUH RPLWWHG LQGLFDWHGKHKDGSXUFKDVHGIURP+XPSKUH\ IURP WKH GHWHUPLQDWLRQ  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

s$DW   >,@Q WKH SUHVHQW FDVH GHIHQGDQWjV VHQWHQFH LV LQYDOLG XQGHU$SSUHQGLRQO\LIWKHGLVWULFWFRXUWjVILQGLQJWKDW $WWKHVHQWHQFLQJFROORTX\+XPSKUH\jVDWWRUQH\UHLWHUDWHG GHIHQGDQW FRQVSLUHG WR GLVWULEXWH PHWKDPSKHWDPLQH KLVREMHFWLRQVDQGPDGHWKHIROORZLQJUHTXHVW UHVXOWHGLQGHIHQGDQWUHFHLYLQJDVHQWHQFHLQH[FHVVRI WKH PD[LPXP VWDWXWRU\ SHQDOW\ IRU FRQVSLUDF\ WR ,IWKH&RXUWILQGVDVZHZRXOGDVNWKH&RXUWWRGR GLVWULEXWH FRFDLQH WKH FULPH WR ZKLFK GHIHQGDQW SOHG WKDWWKHWRWDOUHOHYDQWFRQGXFWLVOHVVWKDQILYHNLORVLW JXLOW\ ZRXOGEHDWHQ\HDUPDQGDWRU\VHQWHQFHDQG,ZRXOGDVN WKH&RXUWWRFRQVLGHUWKDWWKLVLVDoWKLVLVWHQ\HDUVRID 7KLVFDVHLQYROYHVJUDPVRIFRFDLQHDQG PDQjV OLIH SHUKDSV PRUH XQGHU WKH JXLGHOLQH JUDPV RI HLWKHU DPSKHWDPLQH R>U@ PHWKDPSKHWDPLQH FDOFXODWLRQVPD\EHDVPXFKDV\HDUVRIDPDQjVOLIH 7LWOH  86& †  SURYLGHV WKDW WKH SHQDOW\ IRU WKDWjV JRLQJ WR EH GHFLGHG E\ WKH WHVWLPRQ\ RI WKHVH FRQVSLUDF\WRGLVWULEXWHDQ\GUXJZLOOEHLGHQWLFDOWRWKH LQGLYLGXDOV >(DWRQ DQG &URPLW\@  $QG WKH WHVWLPRQ\ SHQDOWLHV IRU GLVWULEXWLRQ  8QGHU  86& VLPSO\ZKLOHLWPD\KDYHEHHQHQRXJKLWPD\KDYHEHHQ † E  & WKHVWDWXWRU\SHQDOW\IRUGLVWULEXWLRQRI HQRXJKWRDMXU\WRVD\FOHDUO\WKHUHZDVDQDJUHHPHQW JUDPVRIFRFDLQHUDQJHVIURP]HURWRWZHQW\\HDUV SHUKDSV DQ RQJRLQJ DJUHHPHQW IRU D FHUWDLQ SHULRG RI LPSULVRQPHQW7KHVWDWXWRU\SHQDOW\IRUGLVWULEXWLRQRI WLPH EHWZHHQ 0U +XPSKUH\ DQG 0U &URPLW\ LQ RQH  JUDPV RI PHWKDPSKHWDPLQH XQGHU  86& FRXQWDQG0U+XPSKUH\DQG0U(DWRQLQDQRWKHUFRXQW † E  % LVILYHWRIRUW\\HDUVLPSULVRQPHQW7KH WR GLVWULEXWH FRFDLQH WKDWjV DOO WKH MXU\ KDG WR EHOLHYH VWDWXWRU\ SHQDOW\ IRU GLVWULEXWLRQ RI  JUDPV RI EH\RQGDUHDVRQDEOHGRXEWZDVWKDWWKHUHZDVVXFKDQ DPSKHWDPLQHD6FKHGXOH,,GUXJLV]HURWRWZHQW\\HDUV DJUHHPHQW>@ >7@KH\ GLGQjW HYHQ KDYH WR EHOLHYH D XQGHU86&† E  & 'HIHQGDQWSOHGJXLOW\ WUDQVDFWLRQWRRNSODFH WRFRQVSLUDF\WRGHOLYHUWKHVSHFLILHGDPRXQWRIFRFDLQH 7KH RQO\ FRRSHUDWLRQ >VLF@ WKDW H[LVWHG IRU WKHLU )RUWKHFRFDLQHDORQHWKHVWDWXWHDXWKRUL]HVDPD[LPXP WHVWLPRQ\ZHUHFHUWDLQWDSHVDQGFHUWDLQSKRQHFDOOVEXW VHQWHQFH RI WZHQW\ \HDUV  'HIHQGDQW ZDV DFWXDOO\ WKH\GRQjWFRUURERUDWHWKLVZKROHDPRXQWRIGUXJVWKH VHQWHQFHGWRVHUYHPRQWKVDSSUR[LPDWHO\WHQ\HDUV *RYHUQPHQWjVWU\LQJWRSXWLQWRSOD\KHUHDWVHQWHQFLQJ 'HIHQGDQWjV VHQWHQFH GLG QRW H[FHHG WKH VWDWXWRU\  PD[LPXPIRUWKHSRUWLRQRIWKHLQGLFWPHQWWRZKLFKKH $QG , ZRXOG DVN WKH &RXUW WKDW o WR DSSO\ SHUKDSV D YDOLGO\SOHGJXLOW\7KHVHQWHQFLQJMXGJHjVGHWHUPLQDWLRQ KLJKHU VWDQGDUG WR WKH W\SH RI     UHOHYDQW FRQGXFW E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW GHIHQGDQW ZKDWHYHU\RXZDQWWRFDOOLWLQWKLVFDVH$QGLILW FRQVSLUHG WR GLVWULEXWH PHWKDPSKHWDPLQH UDWKHU WKDQ GRHV WKDW LW ZLOO ILQG WKH *RYHUQPHQWjV QRW PHW LWV DPSKHWDPLQH GLG QRW LQFUHDVH KLV SHQDOW\ EH\RQG WKH EXUGHQ DQG LW ZLOO LPSRVH D PDQGDWRU\ PLQLPXP SUHVFULEHG VWDWXWRU\ PD[LPXP IRU FRQVSLUDF\ WR VHQWHQFHEDVHGRQDTXDQWLW\RIOHVVWKDQILYHNLORVDQGD GLVWULEXWHJUDPVRIFRFDLQH7KXVWKH$SSUHQGL JXLGHOLQHVHQWHQFHEDVHGXSRQWKDWVDPHTXDQWLW\ UXOLQJ LV QRW DSSOLFDEOH KHUH DQG GRHV QRW LPSDFW GHIHQGDQWjVVHQWHQFH s$DW )GDW HPSKDVLVDGGHG  IRRWQRWHRPLWWHG  +XPSKUH\ FRXOG QRW KDYH NQRZQ DW WKH WLPH RI KLV VHQWHQFLQJ WKDW $SSUHQGL ZRXOG EH GHFLGHG D \HDU ODWHU 7KHDERYHTXRWHGSDVVDJHVIURP3DJHDQG0XQR]FRXOGEH 1HYHUWKHOHVV+XPSKUH\REMHFWHGDWWKHVHQWHQFLQJKHDULQJWR UHSHDWHGYHUEDWLPLQWKLVFDVH7KHVXSHUVHGLQJLQGLFWPHQW  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

RI GUXJV IRU ZKLFK HDFK GHIHQGDQW ZDV DFFRXQWDEOH ERWKWKHDPRXQWRIGUXJVDWWULEXWHGWRKLPDQGWKHVWDQGDUGRI %DVHG RQ WKLV GUXJ TXDQWLW\ GHWHUPLQDWLRQ HDFK SURRI UHTXLUHG WR VXSSRUW WKDW DPRXQW  +H UHLWHUDWHG WKLV GHIHQGDQW ZDV VHQWHQFHG WR D WHUP RI LPSULVRQPHQW REMHFWLRQDVDIRUPDO$SSUHQGLREMHFWLRQRQDSSHDO H[FHHGLQJ WKH  \HDU PD[LPXP VHW IRUWK LQ † E  & +RZHYHUDVLQVWUXFWHGLQ$SSUHQGLD 7KH GLVVHQW GLVPLVVHV WKHVH SDVVDJHV IURP WKH UHFRUG DV GHIHQGDQWPD\QRWEHH[SRVHGWRDJUHDWHUSXQLVKPHQW PHUH mIDFWXDO FKDOOHQJHVl WR WKH GUXJ TXDQWLW\ WKDQWKDWDXWKRUL]HGE\WKHMXU\jVJXLOW\YHUGLFW7KHMXU\ UHFRPPHQGDWLRQV LQ WKH SUHVHQWHQFH UHSRUW  7KH GLVVHQW PHUHO\IRXQGWKDWGHIHQGDQWVFRQVSLUHGWRGLVWULEXWHDQG FKDUJHV WKDW DEVHQW VRPH VSHFLILF FKDOOHQJH WR WKH GLVWULFW SRVVHVVWRGLVWULEXWHVRPHXQGHWHUPLQHGDPRXQWRIFUDFN FRXUWjVDXWKRULW\WRILQGGUXJDPRXQWVE\DSUHSRQGHUDQFHRI FRFDLQH$VVXFKGHIHQGDQWVFDQQRWEHVXEMHFWHGWRWKH WKHHYLGHQFHZHPD\UHYLHZ+XPSKUH\jV$SSUHQGLFKDOOHQJH KLJKHUSHQDOWLHVXQGHU† D  $ RU % 5DWKHUWKH IRUSODLQHUURURQO\ PD[LPXPVHQWHQFHWKDWPD\EHLPSRVHGRQWKLVFRXQWLV \HDUVSXUVXDQWWR†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jVVHQWHQFHGLGQRWH[FHHGWKH GHIDXOW\HDUPD[LPXPXQGHU† E  & 'HIHQGDQW 5XOHRIWKH)HGHUDO5XOHVRI&ULPLQDO3URFHGXUHVWDWHV =DIHULQR0XQR]SOHGJXLOW\WRDVLQJOHFRXQWRIFRQVSLUDF\WR GLVWULEXWH FRFDLQH DQG PHWKDPSKHWDPLQH EXW mZLWK WKH ([FHSWLRQV WR UXOLQJV RU RUGHUV RI WKH FRXUW DUH H[SOLFLW UHVHUYDWLRQ WKDW KH GLG QRW DGPLW WR FRQVSLULQJ WR XQQHFHVVDU\DQGIRUDOOSXUSRVHVIRUZKLFKDQH[FHSWLRQ GHOLYHUPHWKDPSKHWDPLQHEXWRQO\DGPLWWHGWRWKHFRFDLQH KDVKHUHWRIRUHEHHQQHFHVVDU\LWLVVXIILFLHQWWKDWDSDUW\ DQGDPSKHWDPLQHWKDWZDVDFWXDOO\GHOLYHUHGl0XQR] DW WKH WLPHWKHUXOLQJRURUGHURIWKHFRXUWLVPDGHRU )GDW7KH'LVWULFW&RXUWWKHQLPSRVHGDPRQWK VRXJKWPDNHVNQRZQWRWKHFRXUWWKHDFWLRQZKLFKWKDW VHQWHQFHmEDVHGLQSDUWRQKLVFRQFOXVLRQWKDWGHIHQGDQWGLG SDUW\GHVLUHVWKHFRXUWWRWDNHRUWKDWSDUW\jVREMHFWLRQWR FRQVSLUHWRGLVWULEXWHPHWKDPSKHWDPLQHl)GDW WKHDFWLRQRIWKHFRXUWDQGWKHJURXQGVWKHUHIRU EXWLID :HUHFRJQL]HGWKDWWKLVGHWHUPLQDWLRQE\DSUHSRQGHUDQFHRI SDUW\KDVQRRSSRUWXQLW\WRREMHFWWRDUXOLQJRURUGHUWKH WKH HYLGHQFH WULJJHUHG DQ HQKDQFHG VWDWXWRU\ VHQWHQFLQJ UDQJH ERWK PLQLPXP DQG PD[LPXP EXW QHYHUWKHOHVV IROORZHG&RUUDGRLQFRQFOXGLQJWKDWWKHUXOHRI$SSUHQGLKDG  QRWEHHQYLRODWHG ,QGHHG ZH EHOLHYH WRR KLJK D KXUGOH IRU GH QRYR UHYLHZ ZLOO UDLVH WKH VSHFWHU RI GHIHQGDQWjV FRXQVHO mPDNLQJ D ORQJ DQG YLUWXDOO\ XVHOHVV ODXQGU\ OLVW RI REMHFWLRQV WR UXOLQJV WKDW ZHUH SODLQO\ VXSSRUWHG E\ H[LVWLQJ SUHFHGHQWl sRKQVRQ Y 8QLWHG 6WDWHV  86       1HYHUWKHOHVV DV GLVFXVVHG EHORZ ZH XSKHOG WKH VHQWHQFHV RI WKUHH LQ RUGHU WR SUHVHUYH WKH LVVXH IRU DSSHDO $OWKRXJK WKH sRKQVRQ GHFLVLRQ RI WKH IRXU GHIHQGDQWV XQGHU WKH mSODLQ HUURUl VWDQGDUG RI UHYLHZ mVLQFH FRQFHUQHG WKH WLPLQJ RI SODLQ HUURU ZKHWKHU DQ HUURU PXVW EH SODLQ DW WKH DEVHQW WKH >$SSUHQGL @ HUURU WKHLU VHQWHQFHV ZRXOG KDYH EHHQ WKH VDPH DV WLPH RI WULDO RU DW WKH WLPH RI DSSHOODWH FRQVLGHUDWLRQ  ZH EHOLHYH WKDW WKRVH ZKLFK ZHUH LPSRVHGl  )G DW  VLPLODU FRQFHUQV DULVH LQ WKH SUHVHUYDWLRQ RI GH QRYR UHYLHZ  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

DEVHQFHRIDQREMHFWLRQGRHVQRWWKHUHDIWHUSUHMXGLFHWKDW VHQWHQFLQJUDQJHRI\HDUVWROLIHDQGDQDFWXDOVHQWHQFHRI SDUW\ \HDUVDQGPRQWKV8SRQUHYLHZLQJ$SSUHQGLZHVWDWHG WKDWm>R@XUGXW\LQOLJKWRIWKLVFOHDUGLFWDWHIURPWKH&RXUW :HDJUHHZLWKWKH6HFRQG&LUFXLWWKDWm>7@RFRPPXQLFDWH LVWRH[DPLQHZKHWKHUWKHVHQWHQFLQJIDFWRULQWKLVFDVHZDV WKH µQDWXUHj RI D FODLP D SDUW\ GRHV QRW KDYH WR SUHVHQW D IDFWXDO GHWHUPLQDWLRQ DQG ZKHWKHU WKDW GHWHUPLQDWLRQ SUHFLVHRUGHWDLOHGOHJDODUJXPHQWVl8QLWHG6WDWHVY6SUHL LQFUHDVHGWKHPD[LPXPSHQDOW\IRUWKHFULPHFKDUJHGLQWKH )G G&LU   LQWHUQDOTXRWDWLRQPDUNV LQGLFWPHQWl)GDW%HFDXVHWKH'LVWULFW&RXUWjV RPLWWHG $OOWKDWLVUHTXLUHGLVWKDWWKHSDUW\mPDNH>@NQRZQ IDFWXDOILQGLQJDWVHQWHQFLQJKDGmLQFUHDVH>G@WKHPD[LPXP WRWKHFRXUWWKHDFWLRQZKLFKWKDWSDUW\GHVLUHVWKHFRXUWWR SHQDOW\WRZKLFK>WKHGHIHQGDQW@ZDVH[SRVHGlZHKHOGWKDW WDNHRUWKDWSDUW\jVREMHFWLRQWRWKHDFWLRQRIWKHFRXUWDQGWKH WKLVZDVDQmHOHPHQW>@RIWKHRIIHQVHZKLFKPXVWEHSURYHQ JURXQGV WKHUHIRUl )HG 5 &ULP 3   FI &RRO Y 8QLWHG EH\RQG D UHDVRQDEOH GRXEWl DQG ZH UHPDQGHG IRU D 6WDWHV 86Q    QRWLQJWKDWDGHIHQVH UHGHWHUPLQDWLRQRIWKLVTXHVWLRQXQGHUWKHSURSHUVWDQGDUGRI REMHFWLRQWRMXU\LQVWUXFWLRQVZKLOHQRWDmPRGHORIFODULW\l SURRI)GDW ZDVVXIILFLHQWWRSUHVHUYHWKHREMHFWLRQRQDSSHDO 7RROHY %D[WHU +HDOWKFDUH &RUS  )G   WK &LU 0RUH WR WKH SRLQW RI WKH SUHVHQW DSSHDO ZH UHDFKHG WKH   KROGLQJ WKDW DQ REMHFWLRQ DV WR mIRXQGDWLRQl RI VDPHFRQFOXVLRQLQ8QLWHG6WDWHVY3DJH)G HYLGHQFH VXIILFLHQW WR SUHVHUYH D 'DXEHUW REMHFWLRQ RQ  WK &LU   D FDVH ZKLFK OLNH WKLV RQH LQYROYHG D DSSHDO  FKDOOHQJH WR WKH VHQWHQFLQJ FRXUWjV GHWHUPLQDWLRQ RI GUXJ TXDQWLW\E\DSUHSRQGHUDQFHRIWKHHYLGHQFHIROORZLQJDMXU\ +XPSKUH\jVDWWRUQH\PD\KDYHFRQFHGHGWKDWXQGHUWKHQ FRQYLFWLRQ RQ D GUXJ FRQVSLUDF\ FKDUJH  $IWHU H[DPLQLQJ FXUUHQWODZLWZDVZLWKLQWKHGLVWULFWFRXUWjVDXWKRULW\WRILQG $SSUHQGLDQG5HEPDQQZHVWDWHG GUXJ TXDQWLWLHV XVLQJ WKH SUHSRQGHUDQFH RI WKH HYLGHQFH VWDQGDUG  QHYHUWKHOHVV LW LV DSSDUHQW IURP WKH UHFRUG WKDW 7KH&RXUWILQGVWKHSULQFLSOHVVHW IRUWKLQ$SSUHQGL +XPSKUH\jV DWWRUQH\ FKDOOHQJHG WKH SURSULHW\ RI WKDW DSSOLFDEOH WR GHIHQGDQWVj FDVHV  ,Q FRXQW RQH RI WKH VWDQGDUG  $OWKRXJK +XPSKUH\j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†WKHTXDQWLW\RIGUXJVLVDIDFWXDOGHWHUPLQDWLRQ WKDWVLJQLILFDQWO\LPSDFWVWKHVHQWHQFHLPSRVHG6HFWLRQ 7KLV&RXUWILQGVE\DSUHSRQGHUDQFHRIWKHHYLGHQFHWKDW  E  &  SURYLGHV IRU D PD[LPXP SHQDOW\ RI  WKH TXDQWLW\ RI GUXJV WKDW LV UHDVRQDEO\ IRUHVHHDEOH LQ \HDUVXQOHVVWKHFULPHLQYROYHVDTXDQWLW\RIGUXJVDVVHW IXUWKHUDQFHRIWKHMRLQWO\XQGHUWDNHQFULPLQDODFWLYLW\LV IRUWK LQ VXEVHFWLRQV $  RU %   7KHVH VXEVHFWLRQV DWOHDVWEXWOHVVWKDQNLORJUDPVRIFRFDLQH SURYLGHIRUDPD[LPXPSHQDOW\RI\HDUVLIWKHFULPH 7KH 'HIHQGDQWjV DUJXPHQW JRHV GLUHFWO\ WR WKH LQYROYHG  JUDPV RU PRUH RI FUDFN FRFDLQH VHH FUHGLELOLW\ RI (DWRQ DQG &URPLW\  %DVLFDOO\ WKH †  E  %  DQG D PD[LPXP SHQDOW\ RI OLIH DUJXPHQWLVWKH\DUHQRWUHOLDEOHDQGFDQQRWEHEHOLHYHG LPSULVRQPHQWLIWKHFULPHLQYROYHGJUDPVRUPRUHRI $OWKRXJKWKHMXU\LQWKLVFDVHZDVQRWFDOOHGXSRQWR FUDFN FRFDLQH VHH †  E  $   7KH GLVWULFW MXGJH IRXQGE\DSUHSRQGHUDQFHRIWKHHYLGHQFHWKHTXDQWLW\  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

PD[LPXPVHQWHQFHEH\RQGWKHVWDWXWRU\UDQJHDXWKRUL]HGE\ GHWHUPLQH TXDQWLW\ RI FRFDLQH RU FUDFN WKH MXU\ ZDV WKHMXU\jVYHUGLFWl  FDOOHGXSRQWRSDVVRQWKHFUHGLELOLW\RIWKHZLWQHVVHV  0RUHLPSRUWDQWO\RXURZQ&LUFXLWLPPHGLDWHO\DGRSWHGWKH s$DW HPSKDVLVDGGHG  mVWDWXWRU\PD[LPXPlLQWHUSUHWDWLRQRI$SSUHQGL,QRXUYHU\ ILUVWSRVW$SSUHQGLGHFLVLRQ8QLWHG6WDWHVY&RUUDGR 7KHGLVVHQWHPSKDWLFDOO\FLWHV8QLWHG6WDWHVY3DJH )G WK &LU  ZHFRQIURQWHGDFDVHLQ )G  WK &LU   DV IRUHFORVLQJ GH QRYR UHYLHZ ZKLFKWKHGHIHQGDQWVjVHQWHQFHVIRUD5,&2FRQVSLUDF\ZHUH XQOHVVWKHGHIHQGDQWH[SUHVVO\FKDOOHQJHVWKHGLVWULFWFRXUWjV EDVHGLQSDUWXSRQWKH'LVWULFW&RXUWjVILQGLQJWKDWDPXUGHU DXWKRULW\ WR GHWHUPLQH GUXJ TXDQWLWLHV  +RZHYHU VXFK D SORWZDVRQHRIWKHREMHFWVRIWKLVFRQVSLUDF\EXWWKHMXU\jV IRUPDOREMHFWLRQUHTXLUHPHQWLJQRUHVWKHIDFWWKDW$SSUHQGL JHQHUDOYHUGLFWGLGQRWLQGLFDWHZKHWKHULWKDGUHDFKHGWKLV ZDVGHFLGHGXSRQERWKWKH6L[WK$PHQGPHQWMXU\DQGQRWLFH VDPHIDFWXDOFRQFOXVLRQ'HVSLWHWKHVHQWHQFLQJLPSOLFDWLRQV SURYLVLRQV DQG WKH 'XH 3URFHVV &ODXVHV RI WKH )LIWK DQG RIWKH'LVWULFW&RXUWjVIDFWILQGLQJXQGHUDSUHSRQGHUDQFHRI )RXUWHHQWK$PHQGPHQWV6HH$SSUHQGL86DW m$W WKHHYLGHQFHVWDQGDUGZHIRXQGQRYLRODWLRQRI$SSUHQGL VWDNHLQWKLVFDVHDUHFRQVWLWXWLRQDOSURWHFWLRQVRIVXUSDVVLQJ LPSRUWDQFH  WKH SURVFULSWLRQ RI DQ\ GHSULYDWLRQ RI OLEHUW\ ,QWKLVFDVH>WKHGHIHQGDQWV@IDFHGDPD[LPXPVHQWHQFH ZLWKRXW GXH SURFHVV RI ODZ DQG WKH JXDUDQWHH WKDW LQ DOO RI WZHQW\ \HDUV RQ WKH 5,&2 FRQVSLUDF\ FRXQWV FULPLQDOSURVHFXWLRQVWKHDFFXVHGVKDOOHQMR\WKHULJKWWRD GLVUHJDUGLQJWKHPXUGHUFRQVSLUDF\%HFDXVHWKHGLVWULFW VSHHG\ DQG SXEOLF WULDO E\ DQ LPSDUWLDO MXU\l HPSKDVLV FRXUWGLGQRWVHQWHQFHHLWKHUGHIHQGDQWWRDWHUPRIPRUH DGGHG  LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG 7KH WKDQWZHQW\\HDUVRQWKH5,&2FRXQWV$SSUHQGLLVQRW 'XH3URFHVV&ODXVHmSURWHFWVWKHDFFXVHGDJDLQVWFRQYLFWLRQ WULJJHUHGDQGWKHH[LVWHQFHRIDPXUGHUFRQVSLUDF\GLG H[FHSWXSRQSURRIEH\RQGDUHDVRQDEOHGRXEWRIHYHU\IDFW QRWKDYHWREHGHFLGHGE\DMXU\XQGHUWKH UHDVRQDEOH QHFHVVDU\WRFRQVWLWXWHWKHFULPHZLWKZKLFKKHLVFKDUJHGl GRXEWVWDQGDUG ,QUH:LQVKLS 86   $OWKRXJKUHODWHG WKH 6L[WK $PHQGPHQW ULJKW WR WULDO E\ MXU\ DQG WKH GXH )GDW FLWDWLRQRPLWWHG  SURFHVVULJKWWREHFRQYLFWHGE\HYLGHQFHEH\RQGDUHDVRQDEOH GRXEW DUH LQGHSHQGHQW OHJDO HQWLWOHPHQWV  6HH $SRGDFD Y 6RRQ WKHUHDIWHU ZH FRQVLGHUHG $SSUHQGL DW OHQJWK DQG 2UHJRQ86    m:HDUHTXLWHVXUH DJDLQIRXQGWKDWLWDGGUHVVHGPD[LPXPSHQDOWLHV,Q8QLWHG WKDW WKH 6L[WK $PHQGPHQW LWVHOI KDV QHYHU EHHQ KHOG WR 6WDWHVY5HEPDQQ)G WK&LU WKH UHTXLUHSURRIEH\RQGDUHDVRQDEOHGRXEWLQFULPLQDOFDVHV GHIHQGDQWSOHGJXLOW\WRKHURLQGLVWULEXWLRQDQRIIHQVHZLWK 7KH UHDVRQDEOHGRXEW VWDQGDUG GHYHORSHG VHSDUDWHO\ IURP DPD[LPXPVHQWHQFHRI\HDUVEXWWKH'LVWULFW&RXUWIRXQG ERWKWKHMXU\WULDODQGWKHXQDQLPRXVYHUGLFWl ,QIDFWZH DW VHQWHQFLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW D FRQILUPHGWKLVSRLQWLQ8QLWHG6WDWHVY5HEPDQQ)G GHDWKKDGUHVXOWHGIURPWKLVGLVWULEXWLRQOHDGLQJWRDVWDWXWRU\  WK&LU ZKHQZHIRXQGWKDWDGHIHQGDQWZKRKDG ZDLYHGKHUULJKWWRDWULDOE\MXU\mGLGQRWZDLYHWKHULJKWWR KDYHDFRXUWGHFLGHDQ\UHPDLQLQJHOHPHQWVRIWKHRIIHQVH  EH\RQGDUHDVRQDEOHGRXEWl,GDW 7KH '& &LUFXLW DSSDUHQWO\ KDV QRW VTXDUHO\ DGGUHVVHG WKH DSSOLFDWLRQ RI $SSUHQGL WR VWDWXWRU\ VHQWHQFLQJ UDQJHV EXW KDV KHOG ZLWK UHJDUG WR VHQWHQFLQJ HQKDQFHPHQWV XQGHU WKH 86 6HQWHQFLQJ *XLGHOLQHV 7KHSUHVHUYDWLRQRIDFRQVWLWXWLRQDOREMHFWLRQVKRXOGQRW WKDW m$SSUHQGL GRHV QRW DSSO\ WR VHQWHQFLQJ ILQGLQJV WKDW HOHYDWH D UHVW RQ PDJLF ZRUGV  LW VXIILFHV WKDW WKH GLVWULFW FRXUW EH GHIHQGDQWjV VHQWHQFH ZLWKLQ WKH DSSOLFDEOH VWDWXWRU\ OLPLWVl 8QLWHG 6WDWHV DSSULVHGRIWKHREMHFWLRQDQGRIIHUHGDQRSSRUWXQLW\WRFRUUHFW Y )LHOGV  )G   '& &LU    8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

LW+XPSKUH\jVDWWRUQH\QHYHUIRUPHGWKHZRUGVm$SSUHQGLl m$SSUHQGL KDV QR DSSOLFDWLRQ KHUHl DV LW mGHDOW ZLWK WKH EXWZHILQGWKHVXEVWDQFHRIKLVREMHFWLRQWRWKHGUXJTXDQWLW\ FRQVLGHUDWLRQRIIDFWVLQVHQWHQFLQJHQKDQFHPHQWEH\RQGWKH GHWHUPLQDWLRQFRPELQHGZLWKKLVREMHFWLRQWRWKHVWDQGDUGRI VWDWXWRU\PD[LPXPlZKLOHm>L@QWKHLQVWDQWFDVHWKHVHQWHQFH HYLGHQFHWREHXVHGVXIILFLHQWWRQRWLI\WKHGLVWULFWFRXUWRI LPSRVHG ZDV    EHORZ WKH VWDWXWRU\ PD[LPXPl  8QLWHG WKHEDVLVIRUWKHREMHFWLRQDQGVXIILFLHQWWRSUHVHUYHWKHLVVXH 6WDWHV Y :LOOLDPV  )G   WK &LU  IRUGHQRYRUHYLHZRQDSSHDO6HH6WUD\KRUQ)GDW m>:@KHQDGHIHQGDQWLVVHQWHQFHGWRDWHUPRILPSULVRQPHQW m$OWKRXJK >WKH GHIHQGDQW@ GLG QRW XWWHU WKH ZRUGV µGXH ZLWKLQWKHVWDWXWRU\PD[LPXPIRUWKHFULPHRIZKLFKKHZDV SURFHVVjDWHLWKHU>WKHSOHDRUVHQWHQFLQJKHDULQJ@KHPDGHLW FRQYLFWHG$SSUHQGLLVEHVLGHWKHSRLQWl LQWHUQDOTXRWDWLRQV ZHOONQRZQWKDWKHGLVSXWHGWKHGLVWULFWFRXUWjVIDFWXDOILQGLQJ DQGFLWDWLRQRPLWWHG 8QLWHG6WDWHVY%DOWDV)G ZLWKUHVSHFWWRGUXJTXDQWLW\l 8QLWHG6WDWHVY6WRNHV  VW &LU   m7KH UXOH LQ $SSUHQGL RQO\ DSSOLHV LQ )G    WK&LU  ILQGLQJWKH$SSUHQGLLVVXH VLWXDWLRQV ZKHUH WKH MXGJHPDGH IDFWXDO GHWHUPLQDWLRQ SUHVHUYHG IRU KDUPOHVV HUURU UHYLHZ ZKHUH D GHIHQGDQW LQFUHDVHV WKH PD[LPXP VHQWHQFH EH\RQG WKH VWDWXWRU\ REMHFWHGWRMXU\LQVWUXFWLRQVWKDWDOORZHGFRQYLFWLRQIRUDQ\ PD[LPXP DQG QRW LQ VLWXDWLRQV ZKHUH WKH 'HIHQGDQW V mPHDVXUDEOH DPRXQWl RI GUXJV UDWKHU WKDQ WKH LQGLFWHG SRWHQWLDOH[SRVXUHLVLQFUHDVHGZLWKLQWKHVWDWXWRU\UDQJHl DPRXQW 8QLWHG6WDWHVY0F&XOOLJDQ)G  G 8QLWHG6WDWHVY:LOOLDPV)G G&LU &LU   KROGLQJ WKDW ZKHUH D MXU\jV ILQGLQJ ILW WKH m>7@KRXJKWKH'LVWULFW&RXUWjVILQGLQJUHJDUGLQJWKHDPRXQW GHILQLWLRQRIRQHFULPHDQGQRWDQRWKHUDQGWKHGHIHQGDQW RI GUXJV VXEVWDQWLDOO\ LQFUHDVHG WKH SRVVLEOH VWDWXWRU\ DUJXHGWKDWKHVKRXOGEHVHQWHQFHGXQGHUWKHFRUUHFWVWDWXWRU\ PD[LPXPVHQWHQFHXQGHU86&† E  ZHKROGWKDW PD[LPXP mLQWRQDWLRQ RI WKH ZRUG µ$SSUHQGLj LV $SSUHQGL LV QRW DSSOLFDEOH WR >WKH GHIHQGDQWjV@ VHQWHQFH XQQHFHVVDU\lWRSUHVHUYHWKHLVVXHIRUDSSHDO  EHFDXVHWKHVHQWHQFHDFWXDOO\LPSRVHGZDVZHOOXQGHUWKH RULJLQDOVWDWXWRU\PD[LPXPRI\HDUVl 8QLWHG6WDWHVY )XUWKHUPRUH3DJHFDQEHGLVWLQJXLVKHG,Q3DJHZHIRXQG +LVKDZ)G WK&LU  m>$@VORQJDV WKDWGHIHQGDQWVZKRUDLVHGWKHLU$SSUHQGLFKDOOHQJHIRUWKH WKH GHIHQGDQWjV VHQWHQFH IDOOV ZLWKLQ WKH PD[LPXP ILUVWWLPHRQDSSHDOZHUHHQWLWOHGRQO\WRSODLQHUURUUHYLHZRI HVWDEOLVKHG E\ VWDWXWH $SSUHQGL GRHV QRW IRUHFORVH WKHLUFODLPV,GDW&RQWUDU\WRWKHGLVVHQWjVHIIRUWWR FRQVLGHUDWLRQ RI GUXJ TXDQWLWLHV EH\RQG WKH RIIHQVH RI ZUHQFK HYHU\ RXQFH RI LQIHUHQFH IURP WKDW FDVH KRZHYHU FRQYLFWLRQl 8QLWHG6WDWHVY.HLWK)G WK QRWKLQJLQ3DJHLQGLFDWHVZKDWW\SHRIREMHFWLRQLIDQ\ &LU  KROGLQJWKDWEHFDXVHWKHGHIHQGDQWjVmVHQWHQFHGLG WKHGHIHQGDQWVUHJLVWHUHGLQWKHGLVWULFWFRXUW3DJHPD\KDYH QRWH[FHHGWKHPD[LPXPVHQWHQFHRIWKLUW\\HDUVXQGHU> DGGUHVVHGWKHVWDQGDUGRIUHYLHZDSSOLFDEOHZKHQDSDUW\IDLOV 86&@† E  & WKHRIIHQVHHVWDEOLVKHGE\WKHMXU\jV WRREMHFWLQWKHGLVWULFWFRXUWEXW3DJHRIIHUVQRJXLGDQFHDV YHUGLFW LW GRHV QRW UXQ DIRXO RI $SSUHQGLjV FRQVWLWXWLRQDO WRZKDWW\SHRIREMHFWLRQLVVXIILFLHQWWRSUHVHUYHDQ$SSUHQGL OLPLWDWLRQVl 8QLWHG6WDWHVY5RJHUV)G FKDOOHQJHRQDSSHDO WK &LU   m$SSO\LQJ $SSUHQGLjV FRQVWLWXWLRQDO SULQFLSOHWRVHFWLRQFDVHVLWLVFOHDUWKDWWKHSULQFLSOHLV YLRODWHGLIDGHIHQGDQWLVVHQWHQFHGWRDJUHDWHUVHQWHQFHWKDQ  WKHVWDWXWRU\PD[LPXPEDVHGXSRQWKHTXDQWLW\RIGUXJVLI 7KH GLVVHQW DEVWUDFWV RQH OLQH IURP WKDW RSLQLRQ m'HIHQGDQWV    VXFKTXDQWLW\LVGHWHUPLQHGE\WKH VHQWHQFLQJMXGJHUDWKHU WKDQWKHWULDOMXU\l 8QLWHG6WDWHVY$JXD\R'HOJDGR IDLOHG WR REMHFW WR WKH GLVWULFW MXGJH PDNLQJ WKH GHWHUPLQDWLRQ RI GUXJ TXDQWLWLHVl 3DJH  )G DW  DV SURRI WKDW 3DJH UHTXLUHV D VSHFLILF REMHFWLRQ WR WKH MXGJHjV DXWKRULW\ 7KLV LV DW EHVW D ZHDN IRUP RI WKH )G   WK&LU  m7KHUXOHRI$SSUHQGLRQO\ IDPLOLDU PD[LP LQFOXVLR XQLXV HVW H[FOXVLR DOWHULXV mWKH LQFOXVLRQ RI RQH DSSOLHVZKHUHWKHQRQMXU\IDFWXDOGHWHUPLQDWLRQLQFUHDVHVWKH LV WKH H[FOXVLRQ RI WKH RWKHUl  (7KH GLVVHQWjV FLWDWLRQ WR 8QLWHG 6WDWHV Y 1HXKDXVVHU   )G  WK &LU  LV PHUHO\ DQRWKHU H[DPSOH RI  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

PDMRULW\j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jV VHQWHQFH ZLWKLQ WKLV H[SDQGHG VWDWXWRU\ UDQJH VLVWHU FLUFXLWV KDYH DGRSWHG D GLIIHUHQW DSSURDFK DQG KDYH 6HH86DW 6 &WDW  2j&RQQRUs KHOGWKDWIDFWXDOFKDOOHQJHVWRWKHFDOFXODWLRQRIGUXJDPRXQWV FRQFXUULQJ  7HOOLQJO\WKH&RXUWGLGQRWGHQ\WKDWVXFKD LQWKHGLVWULFWFRXUWE\LWVHOIPD\EHLQVXIILFLHQWWRSUHVHUYH VFKHPH ZRXOG SDVV FRQVWLWXWLRQDO PXVWHU EXW LQVWHDG WKH $SSUHQGL LVVXH RQ DSSHDO  6HH HJ 8QLWHG 6WDWHV Y FRQFHGHG WKDW mD 6WDWH FRXOG K\SRWKHWLFDOO\ XQGHUWDNH WR &DQGHODULR)G WK&LU  VWDWLQJ UHYLVH LWV HQWLUH FULPLQDO FRGH LQ WKH PDQQHU WKH GLVVHQW WKDWm>D@GHIHQGDQWjVREMHFWLRQWRWKHTXDQWLW\RIGUXJVWKDW VXJJHVWVnH[WHQGLQJDOOVWDWXWRU\PD[LPXPVHQWHQFHVWRIRU WKH *RYHUQPHQW DWWULEXWHV WR KLP LV QRW RQ LWV RZQ D H[DPSOH\HDUVDQGJLYLQJMXGJHVJXLGHGGLVFUHWLRQDVWR FRQVWLWXWLRQDO REMHFWLRQl  FHUW GHQLHG  6&W  DIHZVSHFLDOO\VHOHFWHGIDFWRUVZLWKLQWKDWUDQJHl86  +RZHYHULWLVE\QRPHDQVFOHDUWKDWWKLVUDWLRQDOHLV DW Q6&WDWQ1HYHUWKHOHVVWKH&RXUW FRQVLVWHQWO\DSSOLHG6HH8QLWHG6WDWHVY9D]TXH])G GLVPLVVHG WKLV SRVVLELOLW\ DV mUHPRWHl EHFDXVH m>D@PRQJ   G&LU  DSSO\LQJSODLQHUURUUHYLHZEHFDXVHWKH RWKHU UHDVRQV VWUXFWXUDO GHPRFUDWLF FRQVWUDLQWV H[LVW WR GHIHQGDQWGLGQRWmFRQWHVWWKHGUXJTXDQWLW\HYLGHQFHDWDQ\ GLVFRXUDJH OHJLVODWXUHV IURP HQDFWLQJ SHQDO VWDWXWHV WKDW VWDJHRIWKHSURFHHGLQJVl HPSKDVLVDGGHG  H[SRVHHYHU\GHIHQGDQWFRQYLFWHGRIIRUH[DPSOHZHDSRQV SRVVHVVLRQWRDPD[LPXPVHQWHQFHH[FHHGLQJWKDWZKLFKLV ,Q DQ\ HYHQW QRWZLWKVWDQGLQJ WKH ELQGLQJ HIIHFW RI LQ WKH OHJLVODWXUHjV MXGJPHQW JHQHUDOO\ SURSRUWLRQDO WR WKH 6WUD\KRUQ HYHQ XQGHU D PRUH ULJRURXV UHTXLUHPHQW IRU DQ FULPHl86DW Q6&WDWQ REMHFWLRQLWLVSODLQWKDW+XPSKUH\SUHVHUYHGWKH$SSUHQGL $OORIWKLVLVFRPSHOOLQJHYLGHQFHWKDWWKHUXOHRI$SSUHQGL LPSOLFDWHV RQO\ VHQWHQFLQJ PD[LPXPV DQG QRW VHQWHQFLQJ UDQJHVJHQHUDOO\)XUWKHUDVQRWHGHDFKDQGHYHU\RQHRIRXU WKLVLQFOXVLR DUJXPHQW %XW DV WKH 'LVWULFW RI &ROXPELD &LUFXLW KDV ZLVHO\ QRWHG m>W@KH PD[LPjV IRUFH LQ SDUWLFXODU VLWXDWLRQV GHSHQGV VLVWHU&LUFXLWVWKDWKDVDGGUHVVHGWKHTXHVWLRQnLQDOOWHQRI HQWLUHO\ RQ FRQWH[W ZKHWKHU RU QRW WKH GUDIWVPHQjV PHQWLRQ RI RQH WKLQJ WKHHOHYHQRWKHU&LUFXLWVnKDVDUULYHGDWWKLVFRQFOXVLRQ    GRHV UHDOO\ QHFHVVDULO\ RU DW OHDVW UHDVRQDEO\ LPSO\ WKH SUHFOXVLRQ RI 6HH8QLWHG6WDWHVY+DUULV)G  WK&LU DOWHUQDWLYHVl 6KRRN Y '& )LQ 5HVSRQVLELOLW\ 0JPW $VVLVWDQFH m:KLOHWKH6XSUHPH&RXUWPD\FHUWDLQO\RYHUUXOH0F0LOODQ $XWK   )G   '& &LU    *LYHQ WKDW WKH UHFRUG LQ 3DJH LQWKHIXWXUHDQGDSSO\$SSUHQGLWRDQ\IDFWRUWKDWLQFUHDVHV LV GHYRLG RI DQ\ UHIHUHQFH WR WKH IRUP RI WKH REMHFWLRQ LQ WKH GLVWULFW FRXUW DQG JLYHQ WKDW LW LV D SDQHO RI MXGJHV DQG QRW D OHJLVODWXUH ZH DUH WKHPLQLPXPVHQWHQFHRUmUDQJHlRISXQLVKPHQWUDWKHUWKDQ LQWHUSUHWLQJ ZH GR QRW DJUHH WKDW LW LV UHDVRQDEOH WR DVVXPH WKDW WKH 3DJH RQO\ WKH PD[LPXP SXQLVKPHQW WKDW LV QRW RXU UROHl FRXUW LQWHQGHG WR QDUURZ VR VHYHUHO\ WKH IRUP RI D FRJQL]DEOH $SSUHQGL FLWDWLRQVRPLWWHG 8QLWHG6WDWHVY:KLWH)G REMHFWLRQ G&LU  m>:@HUHDG>$SSUHQGL@WRDSSO\RQO\ZKHQD 7KH GLVVHQWjV UHOLDQFH RQ sRKQVRQ Y 8QLWHG 6WDWHV LV HUURQHRXV IRU VHQWHQFLQJFRXUWjVILQGLQJVLQFUHDVHWKHSHQDOW\IDFHGE\WKH D VLPLODU UHDVRQ sRKQVRQ GLG QRW LQGLFDWH ZKHWKHU WKH GHIHQGDQW UDLVHG

GHIHQGDQWDERYHWKHVWDWXWRU\PD[LPXPIRUDJLYHQFRXQW DQ REMHFWLRQ LQ WKH GLVWULFW FRXUW sRKQVRQ RQO\ QRWHV WKDW WKH GHIHQGDQW KHUVHOI LQVLVWHG WKDW WKH GLVWULFW FRXUW FRPPLW WKH HUURU  86 DW  DQG QRW ZKHQ WKH\ PHUHO\ DIIHFW WKH OHQJWK RI D VHQWHQFH  0RUHRYHU sRKQVRQ FDQ EH GLVWLQJXLVKHG IURP WKH SUHVHQW FDVH ZLWKLQ WKH VWDWXWRU\ UDQJHl  8QLWHG 6WDWHV Y *DUFLD EHFDXVH +XPSKUH\ FOHDUO\ REMHFWHG WR WKH HYLGHQWLDU\ VWDQGDUG WR EH XVHG 6DQFKH])G WK&LU  ILQGLQJWKDW D OHJDO HQWLWOHPHQW VHSDUDWH IURP WKH ULJKW WR D MXU\ &I 5HEPDQQ  )G DW   8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

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j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jVGHFLVLRQLQ$SSUHQGLDQGUHTXLUHVUHVHQWHQFLQJ7KH WKH UDQJH DYDLODEOH WR WKH MXGJH DIIHFWV KLV FKRLFH RI FRQVHTXHQFHRIWKLVDOOHJHGYLRODWLRQ+XPSKUH\PDLQWDLQV VHQWHQFH  )LQDOO\ LQ QXPHURXV FDVHV     WKH LVWKDWKHZDVVXEMHFWHGWRDQLQFUHDVHGSHQDOW\IRUFRQGXFW DJJUDYDWLQJIDFWUDLVHGWKHZKROHUDQJHnERWKWKHWRS QRW FKDUJHG LQ WKH LQGLFWPHQW EDVHG RQ WKH GLVWULFW FRXUWjV DQGERWWRP7KRVHFRXUWVLQKROGLQJWKDWVXFKDIDFWZDV ILQGLQJ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW KH ZDV DQHOHPHQWGLGQRWERWKHUZLWKDQ\GLVWLQFWLRQEHWZHHQ UHVSRQVLEOH IRU  NLORJUDPV RI FRFDLQH  $W RUDO FKDQJHV LQ WKH PD[LPXP DQG WKH PLQLPXP  :KDW DUJXPHQWWKH*RYHUQPHQWFRQFHGHGWKDWWKHGLVWULFWFRXUWjV PDWWHUHG ZDV VLPSO\ WKH RYHUDOO LQFUHDVH LQ WKH VHQWHQFLQJRI+XPSKUH\RIIHQGHG$SSUHQGLDVFRQVWUXHGE\ SXQLVKPHQWSURYLGHGE\ODZ RXUGHFLVLRQLQ8QLWHG6WDWHVY5DPLUH])G WK &LU $VRXUGLVFXVVLRQEHORZUHYHDOVZHWRRFRQFOXGH  86 DW    6 &W DW    WKDW+XPSKUH\KDVGHPRQVWUDWHGDQ$SSUHQGLYLRODWLRQWKDW 7KRPDVsFRQFXUULQJ  LQWHUQDOTXRWDWLRQVZLWKDOWHUDWLRQV UHTXLUHVXVWRYDFDWHKLVVHQWHQFHDQGUHPDQGWKLVFDVHIRU DQGFLWDWLRQVRPLWWHG 3ODLQO\sXVWLFH7KRPDVZRXOGQRW UHVHQWHQFLQJ KDYH GHHPHG LW QHFHVVDU\ WR DGYRFDWH D mEURDGHU UXOHl HQFRPSDVVLQJ ZKROH VHQWHQFLQJ UDQJHV DQG QRW MXVW 7KH6XSUHPH&RXUWLQ$SSUHQGLKHOGWKDWm>R@WKHUWKDQWKH PD[LPXPV LI WKH PDMRULW\ KDG DOUHDG\ DGRSWHG VXFK D IDFWRIDSULRUFRQYLFWLRQDQ\IDFWWKDWLQFUHDVHVWKHSHQDOW\ VWDQGDUG IRUDFULPHEH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXPPXVWEH VXEPLWWHGWRDMXU\DQGSURYHGEH\RQGDUHDVRQDEOHGRXEWl $SSUHQGLjV OLPLWDWLRQ WR VWDWXWRU\ PD[LPXPV LV IXUWKHU 86DW $OWKRXJK+XPSKUH\ZDVLQGLFWHGIRUDQG FRQILUPHGE\WKHPDMRULW\jVUHVSRQVHWRsXVWLFH2j&RQQRUjV FRQYLFWHGRIYLRODWLRQVRI86&† D  DQG† VXJJHVWLRQ WKDW LWV KROGLQJ mUHVWV RQ D PHDQLQJOHVV E  $ WKHMXU\jVIDLOXUHWRGHWHUPLQHEH\RQGDUHDVRQDEOH IRUPDOLVPl VLQFH D OHJLVODWXUH VHHPLQJO\ FRXOG VDWLVI\ WKH GRXEWWKHTXDQWLW\RIGUXJVIRUZKLFK+XPSKUH\VKRXOGEH  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

VHQWHQFHZKLFKPD\EHLPSRVHGZLWKLQWKHVWDWXWRU\SODQl KHOGUHVSRQVLEOHSURSHUO\UHTXLUHGKLPWREHVHQWHQFHGRQO\ 86DW6&WDW IRRWQRWHRPLWWHG  XQGHU86&† E  & 6HH5DPLUH])GDW 6HFWLRQ E  & SURYLGHVIRUDPD[LPXPSHQDOW\ sXVWLFH2j&RQQRULQVLVWHGLQKHU$SSUHQGLGLVVHQWWKDWmLW RIWZHQW\\HDUVH[FHSWZKHUHDVKHUHDGHIHQGDQWKDVDSULRU LVLQFXPEHQWRQWKH&RXUWWRDGPLWWKDWLWLVRYHUUXOLQJ IHORQ\GUXJFRQYLFWLRQLQZKLFKFDVHDGHIHQGDQWLVVXEMHFW 0F0LOODQl$SSUHQGL86DW6&WDW WR D WKLUW\\HDU PD[LPXP VWDWXWRU\ SHQDOW\ %HFDXVH WKH 2j&RQQRU s GLVVHQWLQJ   ,Q UHVSRQVH WKH $SSUHQGL GLVWULFWFRXUWjVWZHQW\\HDUVHQWHQFHGLGQRWH[FHHGWKHWKLUW\ PDMRULW\HPSKDVL]HGWKDWm>Z@HGRQRWRYHUUXOH0F0LOODQl \HDU PD[LPXP VWDWXWRU\ SHQDOW\ RQ WKLV EDVLV DORQH 86DWQ6&WDWQ5DWKHUWKH +XPSKUH\FDQVWDWHQRHUURU &RXUWVWDWHGWKDWm>Z@HOLPLW>0F0LOODQjV@KROGLQJWRFDVHV WKDWGRQRWLQYROYHWKHLPSRVLWLRQRIDVHQWHQFHPRUHVHYHUH 2XU $SSUHQGL DQDO\VLV KRZHYHU GRHV QRW HQG ZLWK D WKDQWKHVWDWXWRU\PD[LPXPIRUWKHRIIHQVHHVWDEOLVKHGE\WKH ILQGLQJ WKDW +XPSKUH\jV VHQWHQFH GLG QRW H[FHHG WKH MXU\jV YHUGLFW n D OLPLWDWLRQ LGHQWLILHG LQ WKH 0F0LOODQ SUHVFULEHGVWDWXWRU\PD[LPXPSHQDOW\DVDGHIHQGDQWPD\ RSLQLRQLWVHOIl86DWQ6&WDWQ QHYHUWKHOHVV VWDWH DQ $SSUHQGL YLRODWLRQ ZKHUH KH FDQ 7KXV$SSUHQGLDQG0F0LOODQUHDGLQWDQGHPSODLQO\ZRXOG GHPRQVWUDWH WKDW WKH GLVWULFW FRXUWjV IDFWXDO GHWHUPLQDWLRQ SHUPLWDVHQWHQFLQJMXGJHWRILQGE\DSUHSRQGHUDQFHRIWKH UHVXOWHG LQ DQ LQFUHDVH RI WKH UDQJH RI VWDWXWRU\ SHQDOWLHV HYLGHQFHIDFWVZKLFKLQFUHDVHWKHPLQLPXPSHQDOW\IDFHGE\ DSSOLFDEOHWRWKHGHIHQGDQWIRUSXUSRVHVRIVHQWHQFLQJ&I DGHIHQGDQWVRORQJDVWKHMXGJHjVILQGLQJVGRQRWOHDGWRWKH $SSUHQGL  86 DW   m>,@W LV XQFRQVWLWXWLRQDO IRU D LPSRVLWLRQRIDVHQWHQFHEH\RQGWKHVWDWXWRU\PD[LPXPIRU OHJLVODWXUHWRUHPRYHIURPWKHMXU\WKHDVVHVVPHQWRIIDFWV WKH RIIHQVH HVWDEOLVKHG E\ WKH MXU\jV YHUGLFW DORQH  7KLV WKDW LQFUHDVH WKH SUHVFULEHG UDQJH RI SHQDOWLHV WR ZKLFK D FRPSOHWHO\EHOLHVWKHEURDGmDOWHUWKHUDQJHlLQWHUSUHWDWLRQRI FULPLQDOGHIHQGDQWLVH[SRVHGl FLWDWLRQRPLWWHG :HKDYH WKHUXOHRI$SSUHQGL UHFRJQL]HGWKDWVXFKDYLRODWLRQPD\EHVWDWHGZKHQDGLVWULFW FRXUWjVGUXJTXDQWLW\GHWHUPLQDWLRQVXEMHFWVDGHIHQGDQWWRD 7KHUHDUHRWKHULQGLFDWLRQVZLWKLQ$SSUHQGLLWVHOIWKDWWKH PDQGDWRU\PLQLPXPWHUPRILPSULVRQPHQWZKLFKZRXOGQRW PDMRULW\GLGQRWDGRSWVXFKDVZHHSLQJUXOH)RUH[DPSOH KDYHEHHQWULJJHUHGEXWIRUWKHGLVWULFWFRXUWjVILQGLQJV sXVWLFH7KRPDVjVFRQFXUUHQFHGRHVHQGRUVHVRPHWKLQJDNLQ WRWKHmDOWHUWKHUDQJHlVWDQGDUGLQOLJKWRIKLVmYLHZWKDWWKH ,Q 8QLWHG 6WDWHV Y )ORZDO ZH YDFDWHG WKH GHIHQGDQWjV &RQVWLWXWLRQUHTXLUHVDEURDGHUUXOHWKDQWKH&RXUWDGRSWVl PDQGDWRU\ VHQWHQFH RI OLIH LPSULVRQPHQW ZLWKRXW WKH 86DW 6&WDW 7KRPDVsFRQFXUULQJ  SRVVLELOLW\RISDUROHDQGUHPDQGHGIRUUHVHQWHQFLQJZKHUHWKH 6SHFLILFDOO\sXVWLFH7KRPDVRSLQHGWKDWmDµFULPHjLQFOXGHV GLVWULFW FRXUWjV GUXJ TXDQWLW\ ILQGLQJ DORQH UHQGHUHG WKH HYHU\IDFWWKDWLVE\ODZDEDVLVIRULPSRVLQJRULQFUHDVLQJ GHIHQGDQWLQHOLJLEOHIRUDQRQPDQGDWRU\PLQLPXPVHQWHQFH SXQLVKPHQW LQ FRQWUDVW ZLWK D IDFW WKDW PLWLJDWHV REVHUYLQJWKDW SXQLVKPHQW l86DW6&WDW 7KRPDV sFRQFXUULQJ sXVWLFH7KRPDVREVHUYHGWKDWWKHHIIHFWRIKLV 7KLVGLIIHUHQFH>EHWZHHQSRVVLEOHSHQDOWLHV@LVVLJQLILFDQW SURSRVHG UXOH XSRQ WKH FRQWLQXLQJ YLWDOLW\ RI 0F0LOODQ LQWKLVFDVHEHFDXVHWKHWULDOMXGJHjVGHWHUPLQDWLRQRIWKH mVKRXOGEHSODLQHQRXJKlEXWKHWKHQZHQWRQWRH[SODLQWKDW ZHLJKWRIWKHGUXJVWRRNDZD\DQ\GLVFUHWLRQLQWHUPVRI WKLVUXOHZRXOGUHDFKDQGLQYDOLGDWHmWKH0F0LOODQVLWXDWLRQ LPSRVLQJ D VKRUWHU VHQWHQFH  ,W LV QRW D IRUHJRQH RI D PDQGDWRU\ PLQLPXP VHQWHQFHl EDVHG XSRQ D MXGJHjV FRQFOXVLRQ WKDW WKH WULDO MXGJH ZRXOG KDYH VHQWHQFHG ILQGLQJVE\DSUHSRQGHUDQFHRIWKHHYLGHQFH )ORZDOWROLIHZLWKRXWWKHSRVVLELOLW\RIUHOHDVHLIDMXU\ KDGGHWHUPLQHGWKHGUXJVZHLJKHG NLORJUDPV,Q  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

IDFWLIWKHMXU\KDGGHWHUPLQHGWKDWWKHGUXJVZHLJKHG SURYHG EH\RQG D UHDVRQDEOH GRXEW RQO\ LI WKDW IDFW DV D OHVVWKDQJUDPVDOLIHVHQWHQFHZRXOGQRWKDYHHYHQ IRUPDOPDWWHUH[WHQGVWKHUDQJHRISXQLVKPHQWEH\RQGWKH EHHQ DQ RSWLRQ XQGHU  86& †  E  &   7KH SUHVFULEHG VWDWXWRU\ PD[LPXPl RU LL  mWKH &RQVWLWXWLRQ MXGJHjV GHWHUPLQDWLRQ HIIHFWLYHO\ OLPLWHG WKH UDQJH RI UHTXLUHVWKDWDIDFWEHVXEPLWWHGWRDMXU\DQGSURYHGEH\RQG DSSOLFDEOH SHQDOWLHV DQG GHSULYHG )ORZDO RI WKH D UHDVRQDEOH GRXEW LI LW DV D IRUPDO PDWWHU LQFUHDVHV WKH RSSRUWXQLW\ WR UHFHLYH OHVV WKDQ OLIH LPSULVRQPHQW UDQJH RI SXQLVKPHQW EH\RQG WKDW ZKLFK FRXOG OHJDOO\ EH ZLWKRXWWKHSRVVLELOLW\RIUHOHDVH LPSRVHGDEVHQWWKDWIDFWl86DW6&WDW    2j&RQQRU s GLVVHQWLQJ   )LQDOO\ WKH &RXUWjV )G   WK&LU  LQLWLDO VWDWHPHQW RI LWV KROGLQJ FRXOG EH FRQVWUXHG DV D FRQVWLWXWLRQDOFRPPDQGWKDWD GHIHQGDQWjVDFWXDOVHQWHQFH /LNHZLVHLQ5DPLUH]ZHYDFDWHGWKHGHIHQGDQWjVWZHQW\ QRWH[FHHGWKHSUHVFULEHGVWDWXWRU\PD[LPXPIRUWKHRIIHQVH \HDUPDQGDWRU\VHQWHQFHXQGHU† E  $ DQGUHPDQGHG HVWDEOLVKHGE\WKHMXU\jVYHUGLFW KLV FDVH IRU UHVHQWHQFLQJ ZKHUH WKH DSSOLFDEOH VWDWXWRU\ SHQDOW\ ZDV GHWHUPLQHG H[FOXVLYHO\ E\ WKH GLVWULFW FRXUWjV :KLOHDOORIWKHVHUHDGLQJV DQGSHUKDSVPRUH HQMR\VRPH GUXJTXDQWLW\ILQGLQJ7KHUHZHREVHUYHGWKDWm>D@JJUDYDWLQJ GHJUHHRIVXSSRUWLQWKHEUXWHWH[WRIWKH$SSUHQGLGHFLVLRQ IDFWRUVRWKHUWKDQDSULRUFRQYLFWLRQWKDWLQFUHDVHWKHSHQDOW\ WKHUH LV DPSOH UHDVRQ WR UHMHFW WKH EURDGHVW RI WKHVH IURP D QRQPDQGDWRU\ PLQLPXP VHQWHQFH WR D PDQGDWRU\ LQWHUSUHWDWLRQV n LH WKDW IDFWV ZKLFK DOWHU WKH UDQJH RI PLQLPXPVHQWHQFHRUIURPDOHVVHUWRDJUHDWHUPLQLPXP SHQDOWLHVPXVWEHSURYHGWRDMXU\EH\RQGDUHDVRQDEOHGRXEW VHQWHQFHDUHQRZHOHPHQWVRIWKHFULPHWREHFKDUJHGDQG 0RVWVLJQLILFDQWO\ZHNQRZWKDWWKH6XSUHPH&RXUWGLGQRW SURYHGl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jV0DQGDWRU\0LQLPXP6HQWHQFLQJ$FWXQGHU VHQWHQFHGXQGHU† E  &  ZKLFKmDQ\RQHFRQYLFWHGRIFHUWDLQHQXPHUDWHGIHORQLHVLV VXEMHFW WR D PDQGDWRU\ PLQLPXP VHQWHQFH RI ILYH \HDUVj ,Q 8QLWHG 6WDWHV Y 6WUD\KRUQ ZH DJDLQ YDFDWHG D LPSULVRQPHQW LI WKH VHQWHQFLQJ MXGJH ILQGV E\ D GHIHQGDQWjVVHQWHQFHDQGUHPDQGHGKLVFDVHIRUUHVHQWHQFLQJ SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW WKH SHUVRQ µYLVLEO\ DIWHUDGLVWULFWFRXUWjVDWWULEXWLRQRISRXQGVRIPDULMXDQD SRVVHVVHGDILUHDUPjGXULQJWKHFRPPLVVLRQRIWKHRIIHQVHl WRWKHGHIHQGDQWUHVXOWHGLQDWHQ\HDUPDQGDWRU\PLQLPXP 0F0LOODQ86DW6&WDW,QVRUXOLQJ VHQWHQFHXQGHU† E  % 6LJQLILFDQWWRWKLVFDVHWKH WKH &RXUW REVHUYHG WKDW HDFK RI WKH HQXPHUDWHG IHORQ\ LQGLFWPHQW LQ 6WUD\KRUQ OLNH WKRVH DW LVVXH LQ )ORZDO DQG RIIHQVHVFDUULHGDPD[LPXPVHQWHQFHRIDWOHDVW\HDUVDQG 5DPLUH]IDLOHGWRVSHFLI\WKHTXDQWLW\RIGUXJVIRUZKLFKWKH WKDW WKH PDQGDWRU\ PLQLPXP VWDWXWH GLG QRW DOWHU WKHVH *RYHUQPHQW VRXJKW WR KROG WKH GHIHQGDQW FULPLQDOO\ PD[LPXPSHQDOWLHV86DW6&WDW UHVSRQVLEOH  ,Q VHWWLQJ DVLGH 6WUD\KRUQjV VHQWHQFH ZH ,QVWHDGWKH3HQQV\OYDQLDODZmRSHUDWH>G@VROHO\WROLPLWWKH REVHUYHGWKDW VHQWHQFLQJFRXUWjVGLVFUHWLRQLQVHOHFWLQJDSHQDOW\ZLWKLQWKH UDQJH DOUHDG\ DYDLODEOH WR LW ZLWKRXW WKH VSHFLDO ILQGLQJ RI 8QGHU5DPLUH]LIWKHJRYHUQPHQWVHHNVWRFRQYLFWDQG YLVLEOHSRVVHVVLRQRIDILUHDUPlDQGmµXS>SHG@WKHDQWHjIRU VHQWHQFH6WUD\KRUQXQGHU† E  % IRUFRQVSLUDF\ WKH GHIHQGDQW RQO\ E\ UDLVLQJ WR ILYH \HDUV WKH PLQLPXP WRSRVVHVVPRUHWKDQNLORJUDPVRIPDULMXDQDLWPXVW  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

UXOHVIRUWKHFRQGXFWRIFULPLQDOSURVHFXWLRQV,ZLOOGLVFXVV LQGLFWKLPDSSURSULDWHO\DQGWKHQSURYHWKHHOHPHQWVRI HDFKRIWKHVHSRLQWVLQWXUQ WKDWRIIHQVHEH\RQGDUHDVRQDEOHGRXEW2WKHUZLVHWKH JRYHUQPHQWPD\LQGLFWDGHIHQGDQWXQGHUWKHSURYLVLRQ )LUVW LW XQIRUWXQDWHO\ LV WUXH WKDW $SSUHQGLjV FHQWUDO ZLWKWKHORZHVWVWDWXWRU\PD[LPXPVHQWHQFHDQGWKHQDV mKROGLQJl LV VWDWHG LQ GLIIHUHQW ZD\V  ,QGHHG WKH YHU\ LQWKLVFDVHUHO\RQUHOHYDQWFRQGXFWILQGLQJVWRDFKLHYH SDUDJUDSK LQ ZKLFK WKH PDMRULW\ DQQRXQFHV LWV FRQFOXVLRQ ZKDWLWRWKHUZLVHPLJKWQRWLIKHOGWRDKLJKHUEXUGHQRI LQFOXGHVWZRYDULDQWVRImWKHUXOHlRI$SSUHQGL SURRI QDPHO\ D VHQWHQFH XQGHU D VHSDUDWH RIIHQVHjV HQKDQFHGSHQDOW\SURYLVLRQ ,QVXPRXUUHH[DPLQDWLRQRIRXUFDVHVLQWKLVDUHDDQG RIWKHKLVWRU\XSRQZKLFKWKH\UHO\FRQILUPVWKHRSLQLRQ )GDW WKDWZHH[SUHVVHGLQs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m>,@WLVXQFRQVWLWXWLRQDOIRUDOHJLVODWXUHWRUHPRYHIURP LW ZDV UHTXLUHG WR VHQWHQFH +XPSKUH\ WR D PDQGDWRU\ WKH MXU\ WKH DVVHVVPHQW RI IDFWV WKDW LQFUHDVH WKH PLQLPXP VHQWHQFH RI  PRQWKV DV SURYLGHG IRU LQ SUHVFULEHG UDQJH RI SHQDOWLHV WR ZKLFK D FULPLQDO † E  $ :HUHFRJQL]HWKDW5DPLUH]DQG6WUD\KRUQ GHIHQGDQWLVH[SRVHG,WLVHTXDOO\FOHDUWKDWVXFKIDFWV DUH GLVWLQJXLVKDEOH LQDVPXFK DV WKRVH FDVHV LQYROYHG PXVWEHHVWDEOLVKHGE\SURRIEH\RQGDUHDVRQDEOHGRXEWl VLWXDWLRQV LQ ZKLFK WKH VWDWXWRU\ PDQGDWRU\ PLQLPXP  86 DW    6&W  RSLQLRQ RI LPSRVHG ZDV HTXLYDOHQW WR WKH VWDWXWRU\ PD[LPXP 6WHYHQVs VHHDOVRLGDW 6&W RSLQLRQ +XPSKUH\ E\ FRQWUDVW ZDV VHQWHQFHG WR D WZHQW\\HDU RI6FDOLDs  PDQGDWRU\PLQLPXPVHQWHQFHXQGHU† E  $ GHVSLWH WKH IDFW WKDW KH VKRXOG KDYH EHHQ VHQWHQFHG XQGHU $SSUHQGL86DW 6&WDW IRRWQRWH RPLWWHG  $V REVHUYHG LQ sXVWLFH 2j&RQQRUjV GLVVHQW WKHVH WZR  IRUPXODWLRQVVHHPWRHPEUDFHDYDULHW\RIGLIIHUHQWmUXOHVl 7KH UHFRUG UHDGV DV IROORZV

)LUVWE\HQGRUVLQJWKHVWDWHPHQWVLQWKHFRQFXUULQJRSLQLRQV LQ sRQHV mWKH &RXUW DSSHDUV WR KROG WKDW DQ\ IDFW WKDW 7+( &2857 7KLV &RXUW GRHV LQ IDFW DFFHSW WKH

LQFUHDVHVRUDOWHUVWKHUDQJHRISHQDOWLHVWRZKLFKDGHIHQGDQW ILQGLQJV DQG JXLGHOLQH DSSOLFDWLRQV FRQWDLQHG LQ WKH SUHVHQWHQFH LQYHVWLJDWLRQ UHSRUW ZLWK WKH H[FHSWLRQ LVH[SRVHGnZKLFKE\GHILQLWLRQPXVWLQFOXGHLQFUHDVHVRU WKDW WKLV &RXUW ZLOO QRW DIIRUG D WZROHYHO HQKDQFHPHQW DOWHUDWLRQVWRHLWKHUWKHPLQLPXPRUPD[LPXPSHQDOWLHVn IRU WKH JXQ 7KHUHIRUH ZH DUH ORRNLQJ DW D FULPLQDO

PXVWEHSURYHGWRDMXU\EH\RQGDUHDVRQDEOHGRXEWl KLVWRU\ FDWHJRU\ RI  D WRWDO RIIHQVH OHYHO RI  ZKLFK

86DW6&WDW 2j&RQQRUsGLVVHQWLQJ  DFFRUGLQJ WR WKH JXLGHOLQH LPSULVRQPHQW UDQJH ZHjUH

sXVWLFH 2j&RQQRU WKHQ VXJJHVWV WZR IXUWKHU mSODXVLEOH ORRNLQJ DW  WR   PRQWKV +RZHYHU ZH DUH LQ IDFW

LQWHUSUHWDWLRQVl RI WKH PDMRULW\jV KROGLQJ   L  mWKH ORRNLQJ DW D PDQGDWRU\ PLQLPXP RI  PRQWKV

&RQVWLWXWLRQUHTXLUHVWKDWDIDFWEHVXEPLWWHGWRDMXU\DQG s$ DW   8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

†  E  &  ZKLFK SURYLGHV IRU D WKLUW\\HDU VWDWXWRU\ D GH QRYR VWDQGDUG WKDW DSSOLHV XQLTXHO\ WR VXFK FODLPV PD[LPXPSHQDOW\ UHJDUGOHVV RI ZKHWKHU WKH\ ZHUH UDLVHG EHIRUH WKH 'LVWULFW &RXUW $ FORVH LQVSHFWLRQ RI )ORZDO 5DPLUH] DQG 6WUD\KRUQ UHYHDOV WKDW VXFK D GLVWLQFWLRQ LV RI QR FRQVHTXHQFH  7KH ,Q UHVROYLQJ WKH $SSUHQGL FKDOOHQJH LQ WKLV FDVH WKH UDWLRQDOHXQGHUO\LQJHDFKRIWKHVHSDQHOjVGHFLVLRQVZDVQRW PDMRULW\ IROORZV WKHVH ODWWHU SDQHOV ERWK LQ WKHLU VWUDLQHG WKDWWKHPDQGDWRU\PLQLPXPVHQWHQFHRIRQHSURYLVLRQZDV UHDGLQJRI$SSUHQGLDQGLQWKHLUDSSOLFDWLRQRIDQLPSURSHU OHVVWKDQRUHTXDOWRWKHVWDWXWRU\PD[LPXPRIDQRWKHUEXWD VWDQGDUG RI UHYLHZ  $FFRUGLQJO\ ZKLOH , FRQFXU LQ WKH FRQFHUQ WKDW WKH GLVWULFW FRXUW ZDV FRPSHOOHG WR LVVXH D UHPDLQGHURIWKHPDMRULW\jVGHFLVLRQ,GLVVHQWIURPLWVUXOLQJ VHQWHQFHWKDWEXWIRULWVGUXJTXDQWLW\GHWHUPLQDWLRQLWZRXOG WKDWWKLVFDVHEHUHPDQGHGIRUUHVHQWHQFLQJ QRWKDYHEHHQREOLJDWHG RUHYHQSHUPLWWHG WRLPSRVH6HH 6WUD\KRUQ  )G DW  m,W PDWWHUV QRW DFFRUGLQJ WR , 5DPLUH]WKDWWKHVWDWXWRU\PD[LPXPIRU† E  ' LV HTXLYDOHQW WR WKH VWDWXWRU\ PDQGDWRU\ PLQLPXP IRU $V LQGLFDWHG DERYH , KDYH WZR SULQFLSDO FRQFHUQV ZLWK † E  % l 5DPLUH])GDW QRWLQJWKDWWKH HOHPHQWVRIWKLV&LUFXLWjVSRVW$SSUHQGLMXULVSUXGHQFH)LUVW GLIIHUHQFH EHWZHHQ D VWDWXWRU\ PD[LPXP SHQDOW\ DQG D ZKLOH DV sXVWLFH 2j&RQQRU DSWO\ REVHUYHG WKH $SSUHQGL PDQGDWRU\PLQLPXPSHQDOW\RIWKHVDPHOHQJWKLVVLJQLILFDQW PDMRULW\VWDWHGVHYHUDOIRUPXODWLRQVRILWVUXOLQJZKLFKDUH EHFDXVHWKHWULDOMXGJHjVGHWHUPLQDWLRQRIWKHZHLJKWRIWKH VRPHZKDWLQWHQVLRQZLWKHDFKRWKHULWLVLQFXPEHQWXSRQXV GUXJV mWRRN DZD\ DQ\ GLVFUHWLRQ LQ WHUPV RI LPSRVLQJ D QHYHUWKHOHVVWRDGRSWDQGDGKHUHWRRQHRIWKHVHIRUPXODWLRQV VKRUWHUVHQWHQFHl TXRWLQJ)ORZDO)GDW   DVWKHODZRIWKLV&LUFXLW,QVWHDGZHOLNHWKHPDMRULW\LQ $SSUHQGLKDYHHQGRUVHGVHYHUDOGLIIHUHQWDQGLQFRQVLVWHQW ,QGHHGWKHGLVWULFWFRXUWLQWKHLQVWDQWFDVHHYHQLILWKDG VWDWHPHQWVRImWKHUXOHlRI$SSUHQGL7REHVXUHLI$SSUHQGL EHHQVRLQFOLQHGZRXOGQRWKDYHVHQWHQFHG+XPSKUH\WR LWVHOILVDPELJXRXVWKHUHLVOLWWOHZHFDQGRWRRYHUFRPHWKLV PRQWKV WKH ORZ HQG RI WKH *XLGHOLQHV VHQWHQFLQJ UDQJH SUREOHP<HW,EHOLHYHDQGRXUVLVWHU&LUFXLWVFRQFXUWKDW EHFDXVHLWEHOLHYHGWKDWWKHWZHQW\\HDUVWDWXWRU\PDQGDWRU\ DQ\ SRWHQWLDO DPELJXLW\ LV FXUHG E\ UHDGLQJ $SSUHQGL PLQLPXPVHQWHQFHVHWIRUWKLQ†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† E  & ZKLFKVHWV HVWDEOLVKLQJWKHVWDQGDUGRIUHYLHZWKDWZLOOJRYHUQ$SSUHQGL IRUWKDWKLUW\\HDUHQKDQFHGVWDWXWRU\PD[LPXPSHQDOW\DQG FKDOOHQJHV DW WKH YDULRXV VWDJHV RI FULPLQDO SURFHHGLQJV VLJQLILFDQWO\QRPDQGDWRU\PLQLPXPWHUPRILPSULVRQPHQW 6RPH RI RXU GHFLVLRQV KRZHYHU GR QRW HYHQ DGGUHVV WKH ZKHUHDVKHUHQRGHDWKRUVHULRXVERGLO\LQMXU\KDVUHVXOWHG SURSHUVWDQGDUGRIUHYLHZDQGRWKHUVOLNHWKHPDMRULW\UXOLQJ IURP XVH RI WKH VXEVWDQFH  :H DFFRUGLQJO\ YDFDWH KHUH DUH DW RGGV ZLWK WKH JRYHUQLQJ )HGHUDO 5XOHV RI +XPSKUH\jV VHQWHQFH DQG UHPDQG WKLV FDVH WR SHUPLW WKH &ULPLQDO3URFHGXUH6XSUHPH&RXUWSUHFHGHQWDQGRXUPDQ\ SULRUGHFLVLRQVLQZKLFKZHKDYHDSSOLHGQHZO\DQQRXQFHG  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

%\WKHVHGHFLVLRQVRXU&LUFXLWKDVUHDOL]HGWKHIHDUVRIWKH GLVWULFW FRXUW DQ RSSRUWXQLW\ WR UHVHQWHQFH KLP ZLWKLQ WKH GLVVHQWHUV LQ $SSUHQGL  sXVWLFH 2j&RQQRU LQ SDUWLFXODU DSSURSULDWH*XLGHOLQHVVHQWHQFLQJUDQJH ZDUQHGWKDWWKH&RXUWjVRSLQLRQZRXOGKDYHDQmXQVHWWOLQJ HIIHFWRQVHQWHQFLQJFRQGXFWHGXQGHUFXUUHQWIHGHUDODQGVWDWH 7KLV&RXUWjVUHFHQWGHFLVLRQVLQ8QLWHG6WDWHVY.LQJDQG GHWHUPLQDWHVHQWHQFLQJ VFKHPHVl DQG WKDW mWKH &RXUWjV 8QLWHG6WDWHVY*DUFLD)G WK&LU ERWK GHFLVLRQWKUHDWHQVWRXQOHDVKDIORRGRISHWLWLRQVE\FRQYLFWHG VXSSRUW DQG OLPLW RXU KROGLQJ WRGD\  .LQJ SUHVHQWV IDFWV GHIHQGDQWVVHHNLQJWRLQYDOLGDWHWKHLUVHQWHQFHVLQZKROHRU DQDORJRXVWRWKHFDVHDWEDU,Q.LQJWZRGHIHQGDQWVZHUH LQ SDUWl   86 DW   6 &W DW    FRQYLFWHG E\ D MXU\ DQG VHQWHQFHG XQGHU WKH RYHUODSSLQJ 2j&RQQRUsGLVVHQWLQJ 7KLVFRQFHUQGLGQRWUHVWVROHO\ SURYLVLRQV RI  86& †  IRU PHWKDPSKHWDPLQH XSRQGLVDJUHHPHQWZLWKWKHUXOHDQQRXQFHGE\WKHPDMRULW\ WUDIILFNLQJ  LQ QHLWKHU LQVWDQFH ZHUH WKH GUXJ DPRXQWV EXWZDVEDVHGLQSDUWXSRQWKHmVHYHUDOIRUPXODWLRQVlWKURXJK VSHFLILHGLQWKHLQGLFWPHQWRUVXEPLWWHGWRWKHMXU\2QHRI ZKLFKWKHPDMRULW\DQQRXQFHGLWVUXOLQJOHDYLQJWKHORZHU WKHGHIHQGDQWVZDVDSULRUIHORQDQGWKXVIDFHGEHWZHHQ]HUR FRXUWV mLQ D VWDWH RI OLPERl UHJDUGLQJ WKH WUXH VFRSH RI DQG WKLUW\ \HDUV RI LPSULVRQPHQW IRU WUDIILFNLQJ LQ DQ\ $SSUHQGL86DW6&WDW  GHWHFWLEOHDPRXQWRIGUXJVXQGHU† E  & +HIDFHGD 2j&RQQRUsGLVVHQWLQJ  PD[LPXPUDQJHRIWZHQW\\HDUVWROLIHIRUSRVVHVVLQJILIW\ JUDPVRUPRUHRIPHWKDPSKHWDPLQHXQGHU† E  $  2WKHU &LUFXLWV WR WKHLU FUHGLW KDYH UHFRJQL]HG EXW 7KHGLVWULFWMXGJHIRXQGWKHGHIHQGDQWUHVSRQVLEOHIRUPRUH GRZQSOD\HG WKH mDODUPV VRXQGHG E\ WKH GLVVHQWHUVl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jVILQGLQJ FRQVWUXFWLRQ LQ RXU LQLWLDO SRVW$SSUHQGL FDVHV  6HH HJ DQG PDQGDWRU\ PLQLPXP VHQWHQFH RI WZHQW\ \HDUV KDG 8QLWHG6WDWHVY0XQR])G WK&LU LQFUHDVHG WKH SUHVFULEHG UDQJH RI SHQDOWLHV WR ZKLFK WKH 8QLWHG6WDWHVY3DJH)G WK&LU GHIHQGDQWZDVH[SRVHG,GDW FLWLQJ5DPLUH] 8QLWHG 6WDWHV Y 5HEPDQQ  )G   WK &LU )GDW   $KDQGIXORIVXEVHTXHQWSDQHOVKRZHYHUVHL]HGXSRQ $SSUHQGLjVmVHYHUDOIRUPXODWLRQVlRILWVUXOHnDQGLQRQH +RZHYHU LQ WKH YHU\ VDPH FDVH WKLV &RXUW IRXQG QR HVSHFLDOO\XQIRUWXQDWHLQVWDQFHUHOLHGXSRQDFRQFXUUHQFHWKDW $SSUHQGL YLRODWLRQ ZKHUH WKH RWKHU GHIHQGDQWjV VHQWHQFH GHFLGHGO\ODFNHGWKHVXSSRUWRIDPDMRULW\RIWKH$SSUHQGL XQGHU WKH *XLGHOLQHV H[FHHGHG EXW GLG QRW HTXDO WKH &RXUWnDVDQLQYLWDWLRQWRHPEUDFHDPXFKEURDGHUUHDGLQJ PDQGDWRU\ PLQLPXP RI †  E  $  \HW VWLOO UHPDLQHG 7KHVHVDPHSDQHOVHLWKHUIDLOHGWRDGGUHVVWKHSURSHUVWDQGDUG ZLWKLQWKHVWDWXWRU\PD[LPXPRI† E  & /LNHWKH RIUHYLHZIRU$SSUHQGLFKDOOHQJHVRUFXWRXWRIZKROHFORWK ILUVW GHIHQGDQW WKH VHFRQG GHIHQGDQW ZDV IRXQG E\ D

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

SUHSRQGHUDQFHRIWKHHYLGHQFHWRKDYHWUDIILFNHGLQEHWZHHQ VXFKFODLPVGHQRYRHYHQZKHUHDVKHUHDGHIHQGDQWKDVQRW JUDPVDQGRQHNLORJUDPRIPHWKDPSKHWDPLQH%HFDXVH UHPRWHO\ UDLVHG DQ $SSUHQGL FKDOOHQJH EHIRUH WKH 'LVWULFW KHKDGQRSULRUFRQYLFWLRQVKHZDVH[SRVHGWRDPDQGDWRU\ &RXUW EXW WR WKH FRQWUDU\ KDV H[SOLFLWO\ DFNQRZOHGJHG DW PLQLPXP RI WHQ \HDUV DQG D PD[LPXP RI OLIH XQGHU VHQWHQFLQJ WKDW WKH SUH$SSUHQGL VWDWH RI DIIDLUV VWLOO † E  $ :LWKQRDPRXQWVSHFLILFDWLRQKHZRXOGKDYH JRYHUQHG  $JDLQ WKHUH LV 6L[WK &LUFXLW DXWKRULW\ IRU WKH IDFHGQRPLQLPXPDQGDPD[LPXPRI WZHQW\ \HDUVXQGHU PDMRULW\jV SRVLWLRQ n EXW DJDLQ WKHUH LV SULRU FRPSHWLQJ † E  & 7KLVVHFRQGGHIHQGDQWZDVVHQWHQFHGWR DXWKRULW\QHYHURYHUUXOHGDQGVWLOOIROORZHGZKLFKGLFWDWHV PRQWKV WZHOYH\HDUVDQGVHYHQPRQWKV 5HO\LQJXSRQWKLV WKDW ZH DSSO\ SODLQ HUURU UHYLHZ XQGHU WKH FLUFXPVWDQFHV &RXUWjVGHFLVLRQLQ8QLWHG6WDWHVY*DUFLDZHIRXQGWKDWWKH SUHVHQWHG KHUH  $V mWLHEUHDNHUVl , DJDLQ ZRXOG SRLQW WR GLVWULFWFRXUWKDGQRWHUUHGEHFDXVHWKHWZHOYH\HDUVDQGVHYHQ XQDQLPLW\ DPRQJ WKH RWKHU &LUFXLWV WKDW WKH SODLQ HUURU PRQWKV RI LPSULVRQPHQW ZKLOH LW H[FHHGHG WKH WHQ\HDU VWDQGDUG VKRXOG JRYHUQ SOXV PRUH LPSRUWDQWO\ GLUHFW PDQGDWRU\PLQLPXPRI† E  $ GLGQRWHTXDOWKHWHQ 6XSUHPH&RXUWSUHFHGHQWDSSO\LQJSODLQHUURUUHYLHZXQGHU \HDUPLQLPXPRIWKHVDPHSURYLVLRQ6HH.LQJ)GDW OHJDOO\ LQGLVWLQJXLVKDEOH FLUFXPVWDQFHV n D UXOLQJ ZKLFK  SODLQO\WUXPSVDQ\LQWUDFLUFXLWFRQIOLFW :KLOHWKLVUHVXOWVHHPVDQRPDORXVLWLVGLFWDWHGE\DSULRU $GPLWWHGO\WKLVSDQHOFDQQRWVLQJOHKDQGHGO\XQUDYHOWKH UXOLQJ  ,Q 8QLWHG 6WDWHV Y *DUFLD ZKLFK .LQJ FLWHG WKH FRQXQGUXPRIWKLV&LUFXLWjVSRVW$SSUHQGLODZ7KHPDMRULW\ LQGLFWPHQWGLGQRWVSHFLI\DTXDQWLW\RIGUXJV$WDOORFXWLRQ WRLWVFUHGLWFHUWDLQO\WULHVWRGRVR LQGHHG,PXVWFRQIHVVD WKH GHIHQGDQW H[SOLFLWO\ DGPLWWHG WR RQO\ DQ DPRXQW RI JUXGJLQJDGPLUDWLRQIRULWVKHUFXOHDQHIIRUWWRKDUPRQL]HD PDULMXDQD WKDW FDUULHG D ILYH WR IRUW\\HDU VHQWHQFH XQGHU ERG\RIODZWKDWLWFKDUDFWHUL]HVnFKDULWDEO\LQP\YLHZn †  E  %   8VLQJ WKH SUHSRQGHUDQFH RI WKH HYLGHQFH DVmLQRUGLQDWHO\FRPSOLFDWHGl 0DMRULW\2SDW DQGDV VWDQGDUG WKH GLVWULFW MXGJH IRXQG WKDW WKH GHIHQGDQW KDG GHI\LQJmIRUPDOORJLFl LGDWQ 7KHPDMRULW\jVHIIRUW SRVVHVVHG HQRXJK GUXJV WR VHQWHQFH KLP WR D UDQJH RI WHQ KRZHYHUIDLOVWRDVVXDJHP\IXQGDPHQWDOFRQFHUQWKDWOLNH \HDUVWROLIHXQGHU† E  $ 7KHMXGJHVHQWHQFHGWKH FDVHVDUHEHLQJGHFLGHGGLIIHUHQWO\nDQGWKDWWKLVFDVHLQ GHIHQGDQW XQGHU WKH *XLGHOLQHV WR HOHYHQ \HDUV DQG WKUHH SDUWLFXODU LV DSSDUHQWO\ JRYHUQHG E\ WZR GLVWLQFW OLQHV RI PRQWKV  $OWKRXJK WKH VHQWHQFH H[FHHGHG WKH ILYH\HDU SXEOLVKHG SUHFHGHQW WKDW GLFWDWH WZR GLIIHUHQW RXWFRPHV PLQLPXP XQGHU †  E  %  DV ZHOO DV WKH WHQ\HDU 8QGHU WKHVH FLUFXPVWDQFHV , EHOLHYH WKDW ZH DUH ERXQG WR PLQLPXPRI† E  $ WKLV&RXUWIRXQGQR$SSUHQGL IROORZWKLV&LUFXLWjVILUVWFOHDUDQGXQPLVWDNDEOHVWDWHPHQW YLRODWLRQEHFDXVHWKHVHQWHQFHLPSRVHGHOHYHQ\HDUVDQG RIWKHUXOHRI$SSUHQGLLQLWVLQLWLDOHIIRUWVWRFRQVWUXHWKDW WKUHHPRQWKVZDVLQH[FHVVRIEXWQRWmDWWKHERWWRPRIWKH GHFLVLRQ,QVWHDGWKHPDMRULW\HOHFWVWRIROORZDODWHU DQG KLJKHUVWDWXWRU\UDQJHl*DUFLD)GDW%HFDXVHWKH FRQWUDU\  OLQH RI FDVHV WKHUHE\ EUHDWKLQJ QHZ OLIH LQWR VHQWHQFH GLG QRW HTXDO WKH VWDWXWRU\ PLQLPXP mQRWKLQJ GHFLVLRQVRITXHVWLRQDEOHSHGLJUHH$VD'LVWULFWsXGJHZKR LQGLFDWH>G@WKDWWKHGLVWULFWFRXUWWKRXJKWLWVHOIFRQVWUDLQHGE\ PXVW DSSO\ $SSUHQGL LQ WKH ILUVW LQVWDQFH , DP HVSHFLDOO\ DVSHFLILFVWDWXWHWRLPSRVHWKHVHQWHQFHLWGLGl,G WURXEOHGE\WKLV&LUFXLWjVIDLOXUHWRHQGRUVHDVLQJOHmUXOHlRI $SSUHQGLLQLWVGHFLVLRQVE\WKHKRSHOHVVMXPEOHWKDWLQVWHDG $IWHU *DUFLD DQG .LQJ ZH DUH OHIW ZLWK DQ LQRUGLQDWHO\ SUHVHQWV LWVHOI DV WKH mSUHFHGHQWl RI WKLV &RXUW RQ WKLV FRPSOLFDWHG$SSUHQGLGRFWULQH$OWKRXJKLWLVREYLRXVWKDW TXHVWLRQDQGE\WKHKDYRFWKLVVWDWHRIDIIDLUVSOD\VZLWKDQ\ WKHOLPLWDWLRQVSODFHGXSRQ5DPLUH]OHDGWRSHFXOLDUUHVXOWV SULQFLSOHG DWWHPSW WR DGKHUH WR WKH FDUGLQDO UXOH RI VWDUH ZHDUHFRQVWUDLQHGE\WKHSULQFLSOHRIVWDUHGHFLVLVWRDELGHE\ GHFLVLV WKRVH GHFLVLRQV  6HH 6DOPL Y 6HFj\ RI +HDOWK  +XPDQ  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB 6HUYV)G  WK&LU  ,WLVDOVRDSSDUHQW WKDWPXFKRIRXUFXUUHQW$SSUHQGLMXULVSUXGHQFHDVLWUHODWHV &21&855,1*,13$57',66(17,1*,13$57 WRPDQGDWRU\PLQLPXPVUHVWVXSRQZKDWZDVLQWKHPLQGRI BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB WKHGLVWULFWMXGJHZKHQVKHVHQWHQFHGWKHGHIHQGDQW8QGHU RXUFXUUHQWGRFWULQHDGLVWULFWMXGJHPD\VHQWHQFHDGHIHQGDQW 526(1'LVWULFWsXGJHFRQFXUULQJLQSDUWDQGGLVVHQWLQJ WRDWHUPRILPSULVRQPHQWZKLFKH[FHHGVEXWGRHVQRWHTXDO LQSDUW,FRQFXULQDOOEXW3DUW,,,VHFWLRQ'RIWKH&RXUWjV WKHPDQGDWRU\PLQLPXPRIDKLJKHUSHQDOW\UDQJHZLWKRXW GHFLVLRQ+RZHYHU,UHVSHFWIXOO\GLVVHQWIURPWKHPDMRULW\jV FRQFHUQWKDWVXFKDVHQWHQFHZLOOUDLVHDQLQIHUHQFHWKDWVKH GHWHUPLQDWLRQ WKDW WKLV FDVH EH UHPDQGHG IRU UHVHQWHQFLQJ IHOW KHUVHOI FRQVWUDLQHG E\ WKH PDQGDWRU\ PLQLPXP  6HH XQGHUWKHDXWKRULW\RI$SSUHQGLY1HZsHUVH\86 *DUFLD)GDW+RZHYHULIHYLGHQFHLQWKHUHFRUG 6&W  7KLVUXOLQJLQP\YLHZMRLQVWKH LQGLFDWHV WKDW WKH MXGJH WKRXJKW KHUVHOI FRQVWUDLQHG WR ZURQJ VLGH LQ DQ LQWUDFLUFXLW GHEDWH DV WR WKH SURSHU VHQWHQFHWKHGHIHQGDQWZLWKLQWKHKLJKHUVWDWXWRU\UDQJHVXFK FRQVWUXFWLRQRI$SSUHQGL7REHVXUHWKHUHLV6L[WK&LUFXLW HYLGHQFHZLOOGHPRQVWUDWHDSRWHQWLDO$SSUHQGLYLRODWLRQ6HH DXWKRULW\IRUWKHSRVLWLRQWDNHQE\WKHPDMRULW\n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mZKHQDODWHUGHFLVLRQRIWKLVFRXUWFRQIOLFWVZLWKRQHRIRXU JUDQWLQJ FHUWLRUDUL RQ WKH TXHVWLRQ RI ZKHWKHU IDFWXDO SULRUSXEOLVKHGGHFLVLRQVZHDUHVWLOOERXQGE\WKHKROGLQJRI ILQGLQJV WKDW UHVXOW LQ DQ LQFUHDVHG PDQGDWRU\ PLQLPXP WKHHDUOLHUFDVHl'DUUDKY&LW\RI2DN3DUN)G VHQWHQFHPXVWEHDOOHJHGLQDQLQGLFWPHQWDQGSURYHGEH\RQG  WK &LU    ,I DQ\ DGGLWLRQDO mWLHEUHDNHUVl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mPLQRULW\RIRQHlRQWKLVSRLQW 7KH GLVVHQWj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jV $SSUHQGL GHFLVLRQ RIIHUV PRUH WKDQ RQH ODZ QDPHO\WKDWDQREMHFWLRQLVIRUIHLWHGDQGKHQFHVXEMHFW IRUPXODWLRQ RI WKH WHVW o RQH WKDW DSSHDUV WR VXSSRUW D RQO\WRSODLQHUURUUHYLHZLIQRWWLPHO\DVVHUWHGEHIRUHWKH mVWDWXWRU\ PD[LPXPl UXOH DQG DQRWKHU WKDW DSSHDUV WR WULDOFRXUW,QVWHDGWKHPDMRULW\KROGVWKDWZHVKRXOGUHYLHZ VXSSRUWDQmLQFUHDVHGUDQJHlUXOH1HYHUWKHOHVVWKHGLVVHQW  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

IDXOWVWKLV&RXUWIRUIDLOLQJWRDGKHUHWRZKDWLWGHVFULEHVDVD DFNQRZOHGJPHQWWKDWWKH\KDGEHHQXVHGWRIXUWKHUKLVGUXJ mVWDWXWRU\PD[LPXPlLQWHUSUHWDWLRQRI$SSUHQGL7KHGLVVHQW VHOOLQJDFWLYLWLHV/LNHZLVH&URPLW\DGUXJGHDOHUZLWKDQ H[WUDFWV IURP RXU GHFLVLRQV LQ 8QLWHG 6WDWHV Y 3DJH DQG HYHQPRUHH[WHQVLYHRSHUDWLRQWKDQ(DWRQjVHQWHUHGLQWRD 8QLWHG6WDWHVY0XQR])G WK&LU DPRQJ SOHD DJUHHPHQW ZLWK WKH *RYHUQPHQW LQ H[FKDQJH IRU KLV RWKHUVDQH[FOXVLYHmVWDWXWRU\PD[LPXPlLQWHUSUHWDWLRQRI WHVWLPRQ\ ZKLFK UHVXOWHG LQ D VHQWHQFH RI  PRQWKV $SSUHQGL$VZLWKWKHVWDQGDUGRIUHYLHZKRZHYHUQRQHRI LPSULVRQPHQW ZLWKDWZHOYHPRQWKUHGXFWLRQIRUFRPSOHWLRQ WKHVHGHFLVLRQVSUHFOXGHDFRPSDQLRQmLQFUHDVHGUDQJHlUXOH RIDGUXJWUHDWPHQWSURJUDP WREHVHUYHGDWDORZVHFXULW\ WKDW ZRXOG FRYHU PDQGDWRU\ PLQLPXPV  3DJH KHOG WKDW IDFLOLW\ZKHUHKLVEURWKHULVDOVRKRXVHGDQGZKLFKLVOHVVWKDQ $SSUHQGLKDGEHHQYLRODWHGEHFDXVHWKHVHQWHQFHH[FHHGHG WZRKRXUVIURPKLVIDPLO\DQGIULHQGVLQ&OHYHODQG WKH VWDWXWRU\ PD[LPXP o LW VDLG QRWKLQJ DERXW$SSUHQGLjV DSSOLFDWLRQ WR PDQGDWRU\  PLQLPXPV  0XQR] KHOG WKDW +XPSKUH\UHDVRQVWKDWLIKHKDGRIIHUHG(DWRQDQG&URPLW\ $SSUHQGL KDG QRW EHHQ YLRODWHG ZKHUH D VHQWHQFH GLG QRW VRPHWKLQJRIYDOXHLQH[FKDQJHIRUWKHLUIDYRUDEOHWHVWLPRQ\ H[FHHG WKH VWDWXWRU\ PD[LPXP EXW DJDLQ ZH FDQQRW LQIHU KH ZRXOG KDYH EHHQ VXEMHFW WR LQGLFWPHQW IRU EULELQJ D IURP0XQR]WKDWWKHSDQHOLQWHQGHGWRHQGRUVHDQH[FOXVLYH ZLWQHVVSXUVXDQWWR86&† F  VRZK\WKHQVKRXOG mPD[LPXPRQO\lUXOH7KHGLVVHQWDUJXHVWKDWRXUGHFLVLRQ WKH*RYHUQPHQWEHDOORZHGWRGRWKDWZKLFKLIGRQHE\D LQ)ORZDOZKLFKZDVDFWXDOO\DUJXHGEHIRUH0XQR]EXW SULYDWH FLWL]HQ FRXOG UHVXOW LQ FULPLQDO SURVHFXWLRQ  +LV GHFLGHGWZRZHHNVDIWHUZDUGWRRNDQmXQZDUUDQWHGlWXUQ FODLPLVIRUHFORVHGE\RXUGHFLVLRQLQ8QLWHG6WDWHVY:DUH IURP WKH mPD[LPXP RQO\l UXOH RI 3DJH DQG0XQR]   %XW LQ ZKLFK ZH KHOG WKDW IHGHUDO SURVHFXWRUV DUH EH\RQG WKH WKHUHLVQRWKLQJIXQGDPHQWDOO\LUUHFRQFLODEOHDERXW$SSUHQGL VFRSHRI86&† F  )G WK SURWHFWLQJ D GHIHQGDQW IURP D VHQWHQFH WKDW H[FHHGV WKH &LU   VWDWXWRU\PD[LPXPDQGDVHQWHQFHWKDWLQFUHDVHVWKHUDQJHRI SHQDOWLHVE\UDLVLQJWKHPDQGDWRU\PLQLPXP &DVHVVKRXOG $OVR ZLWKRXW PHULW LV +XPSKUH\jV DUJXPHQW WKDW WKH *RYHUQPHQWjV XVH RI (DWRQjV DQG &URPLW\jV WHVWLPRQ\ YLRODWHG 'LVFLSOLQDU\ 5XOH  &  RI WKH 2KLR &RGH RI  $V D PDWWHU RI IRUPDO ORJLF ODQJXDJH LQ 0XQR] FRXOG EH FRQVWUXHG 3URIHVVLRQDO5HVSRQVLELOLW\ZKLFKSURYLGHVWKDWm>D@ODZ\HU WR H[FOXGH DQ\ $SSUHQGL YLRODWLRQ XQOHVV WKH GLVWULFW FRXUWjV ILQGLQJ VKDOO QRW SD\ RIIHU WR SD\ RU DFTXLHVFH LQ WKH SD\PHQW RI UHVXOWHG LQ D GHIHQGDQW UHFHLYLQJ D VHQWHQFH LQ H[FHVV RI WKH PD[LPXP FRPSHQVDWLRQWRDZLWQHVVFRQWLQJHQWXSRQWKHFRQWHQWRIKLV VWDWXWRU\ SHQDOW\ 6XFK IRUPDOLVP KRZHYHU ZRXOG LQHYLWDEO\ OHDG WR WHVWLPRQ\RUWKHRXWFRPHRIWKHFDVHl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m$ IRUPDO ORJLF ZKLFK UHDVRQV IURP SUHFHGHQW DORQH VRPHWLPHV LQVXODWHV WKH PLQG DJDLQVW WKH RYHUZKHOPLQJ ORJLF RI UHDOLW\l )RUWKHIRUHJRLQJUHDVRQVZH$)),50WKHMXGJPHQWRI .OLQJHQEHUJ Y &LW\ RI 5DOHLJK   6(    1&   &ODUNVRQ WKHGLVWULFWFRXUWRQDOOFODLPVEXW9$&$7(+XPSKUH\jV s GLVVHQWLQJ  VHQWHQFH DQG 5(0$1' WKLV FDVH WR WKH GLVWULFW FRXUW IRU UHVHQWHQFLQJ 7KH GLVVHQW DWWHPSWV WR IDVKLRQ 5DPLUH] DV D XVXUSHU RI 0XQR] EXW LWV DUJXPHQW LJQRUHV WKH LQWHUYHQLQJ GHFLVLRQ LQ )ORZDO .H\ WR RXU GHFLVLRQ LQ )ORZDO ZDV WKH IDFW WKDW mWKH WULDO MXGJHjV GHWHUPLQDWLRQ RI WKH ZHLJKW RI WKH GUXJV WRRN DZD\ DQ\ GLVFUHWLRQ LQ WHUPV RI LPSRVLQJ D  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

DUHUDLVHGIRUWKHILUVWWLPHRQDSSHDOXQOHVVmWKHUHFRUGLV EHFRQVWUXHGDVWRDYRLGLQWUDFLUFXLWFRQIOLFWVQRWWRFUHDWH DGHTXDWHWRDVVHVVWKHPHULWVRIWKHGHIHQGDQWjVDOOHJDWLRQVl WKHP&IHJ+DOHY$UL]RQD )G  WK 6HH8QLWHG6WDWHVY+LOO)G WK&LU  ,Q &LU   QRWLQJWKDWIRUSUXGHQWLDOUHDVRQVDFRXUWDYRLGV H[SODLQLQJWKHEDVLVIRUVXFKDSUDFWLFHZHKDYHREVHUYHG  XQQHFHVVDU\FRQIOLFWVZLWKRWKHUFLUFXLWV  7KLVUXOHVWHPVIURPWKHIDFWWKDWDILQGLQJRISUHMXGLFH 1HYHUWKHOHVVWKHGLVVHQWLQVLVWVWKDW)ORZDODQGLWVSURJHQ\ LVDSUHUHTXLVLWHWRDFODLPIRULQHIIHFWLYHDVVLVWDQFHRI KDYHVSDZQHGDmOLQHRIFDVHVSDUDOOHOWREXWDWRGGVZLWK FRXQVHODQGDSSHOODWHFRXUWVDUHQRWHTXLSSHGWRUHVROYH DQRWKHU GLVWLQFW OLQH RI FDVHV IROORZLQJ WKH µVWDWXWRU\ IDFWXDO LVVXHV  $V D UHVXOW RXU FRXUW KDV URXWLQHO\ PD[LPXPj UXOH RI 0XQR] 3DJH DQG 5HEPDQQl  7KLV FRQFOXGHG WKDW VXFK FODLPV DUH EHVW EURXJKW E\ D FRQFHSW RI D mSDUDOOHO SUHFHGHQWl LV QRWKLQJ PRUH WKDQ D GHIHQGDQW LQ D SRVWFRQYLFWLRQ SURFHHGLQJ XQGHU  EXJEHDU1HDUO\HYHU\FDVHWKHGLVVHQWPDUVKDOVWRSURYHWKH 86&†VRWKDWWKHSDUWLHVFDQGHYHORSDQDGHTXDWH H[LVWHQFH RI WKLV mSDUDOOHO SUHFHGHQWl LV DQ XQSXEOLVKHG UHFRUGRQWKHLVVXH GHFLVLRQZLWKQRELQGLQJHIIHFW6HHWK&LU5 8QLWHG 6WDWHV Y (QQHQJD  )G    WK &LU  8QLWHG6WDWHVY$JXZD)G WK&LU  XQSXEOLVKHG GHFLVLRQV DUH QRW FRQWUROOLQJ SUHFHGHQW LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG  6DODPDOHNLVY&RPPj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jVDGPLVVLRQRIWHVWLPRQ\DQG   6DOPL)GDW ,QUH3HQQ&HQWUDO7UDQVS RWKHUHYLGHQFHDWWULDOIRUDQDEXVHRIGLVFUHWLRQ6HH8QLWHG 6WDWHVY/RJDQ)G WK&LU  $QDO\VLV VKRUWHU VHQWHQFHl  )G DW  ,Q 5DPLUH] ZH KHOG $SSUHQGL ZDV YLRODWHG EHFDXVH WKH WULDO MXGJH ZDV FRQYLQFHG WKDW KLV GUXJ TXDQWLW\

+XPSKUH\VXEPLWVWKDWKHZDVFRQYLFWHGRQWKHEDVLVRIWKH ILQGLQJ KDG WDNHQ DZD\ KLV GLVFUHWLRQ WR VHQWHQFH WKH GHIHQGDQW EHORZ D

SXUFKDVHGWHVWLPRQ\RI(DWRQDQG&URPLW\6SHFLILFDOO\LQ PDQGDWRU\ PLQLPXP RI OLIH LPSULVRQPHQW 6HH 5DPLUH]  )G DW 

H[FKDQJHIRUWHVWLPRQ\DJDLQVW+XPSKUH\WKH*RYHUQPHQW  FI *DUFLD  )G DW  %\ FRQWUDVW 0XQR] QHYHU FRQVLGHUHG ZKHWKHU WKH MXGJH WKRXJKW WKDW KLV GLVFUHWLRQ ZDV FRQVWUDLQHG E\ D HQWHUHGLQWRDSOHDDJUHHPHQWZLWK(DWRQDPDMRUGUXJGHDOHU PDQGDWRU\ PLQLPXP DQG WKHUH LV QRWKLQJ LQ WKH FDVH WR VKRZ WKDW KH ZKLFKUHVXOWHGLQ(DWRQjVUHFHLSWRIDVHQWHQFHRIILIW\PRQWKV SHUFHLYHG KLPVHOI WR EH FRQVWUDLQHG %HFDXVH 5DPLUH] GHPRQVWUDWHG

LPSULVRQPHQW DQG ZKLFK SHUPLWWHG KLP WR PDLQWDLQ HYLGHQFH RI FRQVWUDLQW DQG 0XQR] FRQWDLQV QR HYLGHQFH RI FRQVWUDLQW LW

SRVVHVVLRQ RI WZR KRPHV DQG WKUHH FDUV GHVSLWH KLV LV HUURQHRXV WR FODLP WKDW WKH\ DUH EDVHG RQ mOHJDOO\ LQGLVWLQJXLVKDEOH IDFWVl  8QLWHG6WDWHVY+XPSKUH\ 1R  1R  8QLWHG6WDWHVY+XPSKUH\ 

&R)G G&LU  'RHY&KDUOHVWRQ$UHD LPSOLFDWHVWKHFXUUHQWmPDQGDWRU\PLQLPXPlSURWHFWLRQVRI 0HG&WU )G WK&LU  8QLWHG6WDWHV RXUMXULVSUXGHQFH,QGHHGDVQRWHGEHIRUHWKH*RYHUQPHQW Y2OLYDUHV9HJD )G  G&LU  VHHDOVR DGPLWWHGDVPXFKLQRUDODUJXPHQW,WLVHTXDOO\FOHDUWKDW WK&LU5 F <HWWKHGLVVHQWLQYLWHVXVWREHOLHYHWKDW +XPSKUH\jVVHQWHQFHZDVLQHUURUDQGWKDWKHLVHQWLWOHGWR WKHSULQFLSOHRIVWDUHGHFLVLVREOLJHVXVWRELIXUFDWHRXUSRVW KDYHKLVVHQWHQFHYDFDWHGDQGUHPDQGHG7KHGLVVHQWPD\ $SSUHQGLMXULVSUXGHQFHLQWRDmILUVWlOLQHRIFDVHVZKLFKZH GHVSDLUEXWWKLVLVWKHODZRIWKH&LUFXLWDQGRXUGXW\LVWR PXVW IROORZ DQG D mVHFRQGl OLQH RI FDVHV ZKLFK ZH DUH GHFLGHWKLVFDVHDFFRUGLQJWRWKHODZ SUHVXPDEO\ IUHHWRLJQRUH(YHQLIZHZHUHWRDJUHHZLWK WKHGLVVHQWDQGEHOLHYH)ORZDODQGLWVSURJHQ\WRKDYHEHHQ (,QHIIHFWLYH$VVLVWDQFHRI&RXQVHO GHFLGHGZURQJO\ZHFDQQRWFRQGRQHWKHVXJJHVWLRQWKDWZH DUHDWOLEHUW\VLPSO\WRRYHUORRNWKHVHGHFLVLRQV6HHHJ 6WDQGDUGRI5HYLHZ 6DOPL  )G DW   m7KH SULRU GHFLVLRQ UHPDLQV FRQWUROOLQJDXWKRULW\XQOHVVDQLQFRQVLVWHQW GHFLVLRQRIWKH :HUHYLHZGHQRYRDGHIHQGDQWjVFODLPWKDWKHZDVGHQLHG 8QLWHG 6WDWHV 6XSUHPH &RXUW UHTXLUHV PRGLILFDWLRQ RI WKH WKHHIIHFWLYHDVVLVWDQFHRIFRXQVHO6HH6LPVY/LYHVD\  GHFLVLRQ RU WKLV &RXUW VLWWLQJ HQ EDQF RYHUUXOHV WKH SULRU )G  WK&LU   GHFLVLRQl 5DPLUH])GDW 6LOHUsFRQFXUULQJ H[SUHVVLQJ GRXEW WKDW $SSUHQGL UHDFKHV PDQGDWRU\ $QDO\VLV PLQLPXPVEXWFRQFXUULQJLQWKHGHFLVLRQEHFDXVHWKHSDQHO +XPSKUH\FRQWHQGVWKDWLQIRXUUHVSHFWVWKHSHUIRUPDQFH FRXOGQRWRYHUUXOH)ORZDO 'DYLVY(VWHOOH )G RIKLVFRXQVHO'DYLG'XGOH\IHOOEHORZWKDWUHTXLUHGE\WKH  WK &LU    m2QH SDQHO RI WKLV &RXUW FDQQRW 6L[WK $PHQGPHQW  )LUVW DV GLVFXVVHG DERYH LQ 3DUW GLVUHJDUGWKHSUHFHGHQWVHWE\DSULRUSDQHOHYHQWKRXJKLW ,,,%E 'XGOH\ IDLOHG WR UDLVH D WLPHO\ FKDOOHQJH WR WKH FRQFHLYHVHUURULQWKHSUHFHGHQWl HPSKDVLVDGGHG  *RYHUQPHQWjVDOOHJHGO\GLVFULPLQDWRU\XVHRILWVSHUHPSWRU\ 8OWLPDWHO\ZHDUHXQVXUHRIKRZWKHGLVVHQWZRXOGGHFLGH FKDOOHQJHVWRH[FOXGHWZR$IULFDQ$PHULFDQVIURPWKHMXU\ WKHVXEVWDQWLYH$SSUHQGLFODLPLQWKLVFDVH7KHGLVVHQWXUJHV 6HFRQG DV GLVFXVVHG DERYH DW 3DUW ,,,%D +XPSKUH\ WKLV&RXUWWRFRQVLGHUHQEDQFUHYLHZ5HTXHVWIRUHQEDQF FRQWHQGVWKDW'XGOH\jVRSHUDWLRQXQGHUDFRQIOLFWRILQWHUHVW UHYLHZ LV FHUWDLQO\ WKH SUHURJDWLYH RI DQ\ PHPEHU RI WKLV FRQVWLWXWHGSHUVHLQHIIHFWLYHDVVLVWDQFH7KLUG'XGOH\PDGH &RXUWWK&LU5EXWHQEDQFUHYLHZLVXVHOHVVLQKHOSLQJ QRDUJXPHQWDQGSUHVHQWHGQRPLWLJDWLRQHYLGHQFHLQVXSSRUW XV GHFLGH WKLV FDVH  7KH GLVVHQW SURSRVHV D mWLH EUHDNHUl RIDGRZQZDUGGHSDUWXUH)LQDOO\'XGOH\IDLOHGWRREMHFWWR GRFWULQH WKDW ZRXOG DOORZ XV WR UHDFK WKURXJK )ORZDO   WKH *RYHUQPHQWjV LPSURSHU mXQH[SODLQHG ZHDOWKl 6WUD\KRUQDQG5DPLUH]DVLIWKH\ZHUHVRPHW\SHRIMXGLFLDO DUJXPHQW    WKH *RYHUQPHQWjV PLVXVH RI WD[ UHWXUQV DQG SKDQWDVPDQGUHO\RQ3DJH%XWWKLVVXJJHVWLRQYLRODWHVWKH ,56 WHVWLPRQ\    WKH *RYHUQPHQWjV LPSURSHU DUJXPHQWV YHU\SULQFLSOHRIVWDUHGHFLVLVWKHGLVVHQWZLVKHVWRFKDPSLRQ FRQFHUQLQJ mSHUVRQDO XVHl GUXJ TXDQWLWLHV    WKH 0RUHRYHUDV.LQJDQG*DUFLDGHPRQVWUDWHWKLV&RXUWKDV *RYHUQPHQWjV LPSURSHU DUJXPHQW FRQFHUQLQJ LWV EHOLHI LQ DOUHDG\UHMHFWHGVXFKDVWUDWHJ\RSWLQJWRGLVWLQJXLVKSULRU +XPSKUH\jV JXLOW    WKH *RYHUQPHQWjV GLVFULPLQDWRU\ FDVHVUDWKHUWKDQWRGLVUHJDUGWKHP:KLOHZHV\PSDWKL]H H[HUFLVHRISHUHPSWRU\FKDOOHQJHV DQG  WKHGLVWULFWFRXUWjV ZLWKWKHGLVVHQWjVIUXVWUDWLRQZLWKWKHGRFWULQH3DJH0XQR] XVHRIGHILFLHQWMXU\LQVWUXFWLRQV )ORZDO6WUD\KRUQDQG5DPLUH]DOOFRQVWLWXWHWKHFRUSXVRI %HFDXVH LQHIIHFWLYH DVVLVWDQFH RI FRXQVHO FODLPV DUH $SSUHQGLMXULVSUXGHQFHLQRXU&LUFXLW,WLVFOHDUIURPDOORI FXVWRPDULO\WKHVXEMHFWRID86&†SRVWFRQYLFWLRQ WKH SUHFHGHQW LQ RXU &LUFXLW WKDW +XPSKUH\jV VHQWHQFH SURFHHGLQJZHJHQHUDOO\GHFOLQHWRUHYLHZWKRVHFODLPVWKDW

Reference

Status
Published