5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

(/(&7521,& &,7$7,21  )(' $SS  3 WK &LU )LOH 1DPH D S

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

5,&+$5' $*1(: /,1'$ ; $*1(:  3ODLQWLIIV$SSHOODQWV   1R  Y !   %$6) &25325$7,21D  'HODZDUHFRUSRUDWLRQ  'HIHQGDQW$SSHOOHH   1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW 1R n$YHUQ&RKQ6HQLRU'LVWULFWsXGJH $UJXHG 6HSWHPEHU 'HFLGHGDQG)LOHG $SULO %HIRUH '$8*+75(<*,/0$1DQG*,%621&LUFXLW sXGJHV

7KH +RQRUDEOH sRKQ 5 *LEVRQ &LUFXLW sXGJH RI WKH 8QLWHG 6WDWHV &RXUW RI $SSHDOV IRU WKH (LJKWK &LUFXLW VLWWLQJ E\ GHVLJQDWLRQ

  $JQHZHWDOY%$6)&RUS 1R 1R $JQHZHWDOY%$6)&RUS 

BBBBBBBBBBBBBBBBB WKHOHDYHWLPHWRJHWDGLIIHUHQWMREDQGWKHQTXLWIRUJRRGWKH GD\KHUHSRUWHGEDFNIRUGXW\$QHPSOR\HHZKRTXLWVDMRE &2816(/ LQDSSUHKHQVLRQWKDWFRQGLWLRQVPD\GHWHULRUDWHODWHULVQRW FRQVWUXFWLYHO\GLVFKDUJHG,QVWHDGWKHHPSOR\HHLVREOLJHG $5*8('   5LWD 0 /DXHU :$6,1*(5 .,&.+$0 QRWWRDVVXPHWKHZRUVWDQGQRWWRMXPSWRFRQFOXVLRQVWRR +$1/(<5R\DO2DN0LFKLJDQIRU$SSHOODQWV&DPHURQ IDVW*DUQHUY:DO0DUW6WRUHV,QF)G s(YDQV+21,*0$10,//(56&+:$57= &2+1 WK&LU  VHH)LVFKDEHUY*HQHUDO0RWRUV&RUS %LQJKDP)DUPV0LFKLJDQIRU$SSHOOHH21%5,() 5LWD 1:G    0LFK &W $SS    QR FRQVWUXFWLYH 0/DXHU6WHSKHQ):DVLQJHU:$6,1*(5.,&.+$0 GLVFKDUJHZKHUHSODLQWLIIUHWLUHGZLWKRXWHYHULQTXLULQJLQWR +$1/(<5R\DO2DN0LFKLJDQIRU$SSHOODQWV&DPHURQ ZKDWKLVKRXUO\DVVLJQPHQWZRXOGEH .RFVLVY0XOWLFDUH s (YDQV 6WXDUW + 7HJHU +21,*0$1 0,//(5 0DQDJHPHQW ,QF  )G   WK &LU    QR 6&+:$57=  &2+1 %LQJKDP )DUPV 0LFKLJDQ IRU DGYHUVHHPSOR\PHQWDFWLRQZKHUHSODLQWLIIDVVLJQHGWRQHZ $SSHOOHH MRE IDLOHG WR PDNH D UHDO DWWHPSW WR FRPSDUH WKH WZR SRVLWLRQV EHIRUH VKH ILOHG KHU GLVFULPLQDWLRQ FODLP BBBBBBBBBBBBBBBBB &OHYHUO\ Y 'LJLWDO (TXLS &RUS 1R    :/  DW  WK &LU    XQSXEOLVKHG   $JQHZ V 23,1,21 UHVLJQDWLRQZDVSUHPDWXUHVHH.RFVLV )GDWDQG BBBBBBBBBBBBBBBBB WKHUHIRUHKHFDQQRWPDNHDVXEPLVVLEOHFDVHRIFRQVWUXFWLYH s2+1 5 *,%621 &LUFXLW s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†  DOOHJLQJWKDW%$6)IRUFHG$JQHZWR UHVLJQ DQG WKDW LWV DFWLRQV ZHUH PRWLYDWHG E\ DJH GLVFULPLQDWLRQ7KHGLVWULFWFRXUWKHOGWKDWWKH$JQHZVIDLOHG WR SURGXFH HYLGHQFH WKDW $JQHZ VXIIHUHG DQ DGYHUVH HPSOR\PHQWDFWLRQDQHFHVVDU\HOHPHQWRIWKHLUFDVH7KH\ FKDOOHQJHWKDWKROGLQJRQDSSHDO:HDIILUP $JQHZZDVERUQRQsDQXDU\ DQGKHUHVLJQHGIURP %$6) RQ  0DUFK    DW WKH DJH RI  DIWHU KDYLQJ  7KH SDUWLHV KDYH QRW EULHIHG WKH TXHVWLRQ RI ZKHWKHU D ORVV RI

FRQVRUWLXP FODLP ZRXOG EH SURSHU LQ WKLV FDVH ,Q DQ\ FDVH /LQGD  7KH +RQRUDEOH $YHUQ &RKQ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH $JQHZ V FODLP LV GHIHDWHG E\ 5LFKDUG $JQHZ V IDLOXUH WR HVWDEOLVK DQ

(DVWHUQ 'LVWULFW RI 0LFKLJDQ DGYHUVH HPSOR\PHQW DFWLRQ  $JQHZHWDOY%$6)&RUS 1R 1R $JQHZHWDOY%$6)&RUS 

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sRKQVRQY5RFNZHOO,QWHUQDW O1R $JQHZ REMHFWHG WR WKH HYDOXDWLRQ LQ ZULWLQJ RQ VHYHUDO  :/DW  WK&LU   JURXQGV $JQHZ DUJXHV WKDW WHUPLQDWLRQ ZRXOG KDYH EHHQ WKH 2YHU WKH FRXUVH RI   $JQHZ V VXSHUYLVRU UHFHLYHG LQHYLWDEOHUHVXOWRIWKH3HUIRUPDQFH,PSURYHPHQW3ODQ7KH YDULRXVFRPSODLQWVIURPFXVWRPHUVZKLFKWKHVXSHUYLVRUWRRN 3ODQGLGPHQWLRQWKHSRVVLELOLW\RIWHUPLQDWLRQLQWKHHYHQW WR EH SRRU UHIOHFWLRQV RQ $JQHZ V SHUIRUPDQFH  $JQHZ WKDW$JQHZGLGQRWFRPSOHWHWKH3ODQZLWKDQDFFHSWDEOH GLVSXWHV ZKHWKHU KH ZDV WR EODPH IRU WKH FXVWRPHUV

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

QRW ELQGLQJ DXWKRULW\ EXW DUH SHUVXDVLYH DW PRVW $00  ; RI DEVHQFH ZKLFK KH WHVWLILHG ZDV QHFHVVLWDWHG E\ +DUEHUW<HDUJLQ ,QF  )G    WK &LU    $JQHZHWDOY%$6)&RUS 1R 1R $JQHZHWDOY%$6)&RUS 

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sDFREVRQ :HUHYLHZDJUDQWRIVXPPDU\MXGJPHQWGHQRYR/RJDQ Y3DUGD)HG&UHGLW8QLRQ1:G 0LFK Y'HQQ\ V,QF )G WK&LU 6XPPDU\     ,I VR ZH WKHQ LQTXLUH LQWR ZKHWKHU WKH HPSOR\HU MXGJPHQWLVDSSURSULDWHLIWKHUHFRUGEHIRUHWKHGLVWULFWFRXUW LPSRVHGWKHVHFRQGLWLRQVZLWKLQWHQWWRFDXVHWKHHPSOR\HHWR VKRZVWKHUHLVQRJHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKH TXLWRUDWOHDVWZKHWKHUWKHHPSOR\HUUHDVRQDEO\VKRXOGKDYH PRYLQJSDUW\LVHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ,G IRUHVHHQ WKH FRQGLWLRQV ZRXOG OHDG WR WKH HPSOR\HH V )HG5&LY3 F  UHVLJQDWLRQsHQNLQVY6RXWKHDVWHUQ0LFK&KDS$P5HG &URVV   1:G    0LFK &W $SS     6HH 7KH 0LFKLJDQ (OOLRWW/DUVHQ &LYLO 5LJKWV $FW SURKLELWV JHQHUDOO\/RJDQ )GDW  FRQVWUXFWLYHGLVFKDUJH HPSOR\HUV IURP GLVFULPLQDWLQJ DJDLQVW LQGLYLGXDOV ZLWK UHTXLUHV ERWK HPSOR\HU V GHOLEHUDWH FUHDWLRQ RI LQWROHUDEOH UHVSHFWWRHPSOR\PHQWFRPSHQVDWLRQRUDWHUPFRQGLWLRQRU FRQGLWLRQVDQGLQWHQWLRQWRIRUFHUHVLJQDWLRQ  SULYLOHJHRIHPSOR\PHQWEHFDXVHRIDJH RUDQXPEHURIRWKHU SURKLELWHGUHDVRQV 0LFK&RPS/DZV†   ([DPSOHVRILQWROHUDEOHFRQGLWLRQVDUHUDSHE\DVXSHUYLVRU 0LFKLJDQFRXUWVDQDO\]HDJHGLVFULPLQDWLRQFODLPVEDVHGRQ &KDPSLRQ  1:G DW  DQG PRUH FRPPRQO\

 0F'RQQHOO 'RXJODV &RUS Y *UHHQ  86