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

)$ :,/+(/0 ; &216758&7,21 &2 ,1&  3ODLQWLII$SSHOOHH   1RV &URVV$SSHOODQW  !  Y   .(178&.< 67$7( ',675,&7  &281&,/ 2) &$53(17(56  $)/&,2   'HIHQGDQW$SSHOODQW  &URVV$SSHOOHH  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH:HVWHUQ'LVWULFWRI.HQWXFN\DW/RXLVYLOOH 1R nsRKQ*+H\EXUQ,,&KLHI'LVWULFWsXGJH $UJXHG 1RYHPEHU 'HFLGHGDQG)LOHG sXQH %HIRUH 0(55,77&/$<DQG*,/0$1&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('   $OWRQ ' 3ULGG\ 35,''< ,6(1%(5* 0,//(5 0($'(/RXLVYLOOH.HQWXFN\IRU$SSHOODQW

  )$:LOKHOP&RQVWUXFWLRQ&R 1RV ,QFY.<6WDWH'LVWULFW&RXQFLO RI&DUSHQWHUV

sDPHV86PLWK60,7+ 60,7+/RXLVYLOOH.HQWXFN\IRU $SSHOOHH  21 %5,()   $OWRQ ' 3ULGG\ 35,''< ,6(1%(5* 0,//(5  0($'( /RXLVYLOOH .HQWXFN\ 7KRPDV s 6FKXO] .(178&.< 67$7( ',675,&7 &281&,/ 2) &$53(17(56 )UDQNIRUW .HQWXFN\ IRU $SSHOODQWsDPHV86PLWK60,7+ 60,7+/RXLVYLOOH .HQWXFN\IRU$SSHOOHH 0(55,77sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK &/$< s MRLQHG  *,/0$1 s SS   GHOLYHUHG D VHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB 0(55,77&LUFXLWsXGJH7KLVLVDmVHFRQGDU\ER\FRWWl FDVH LQ ZKLFK WKH GHIHQGDQW XQLRQ FKDOOHQJHV WKH GLVWULFW FRXUWjV ILQGLQJ RI DQ XQODZIXO VHFRQGDU\ ER\FRWW DQG WKH DZDUGRILQGDPDJHVDQGWKHSODLQWLII:LOKHOP &RQVWUXFWLRQ FURVVDSSHDOV WKH FRXUWjV IDLOXUH WR DZDUG LW PRUH GDPDJHV  ,Q D mVHFRQGDU\ ER\FRWWl D XQLRQ EULQJV HFRQRPLF SUHVVXUH WR EHDU RQ D mSULPDU\ HPSOR\HUl WR GR VRPHWKLQJWKHXQLRQZDQWVVD\WRDJUHHWRDXQLRQFRQWUDFW E\LQGXFLQJDmVHFRQGDU\HPSOR\HUlGRLQJEXVLQHVVZLWK WKH SULPDU\ HPSOR\HU WR EULQJ HFRQRPLF SUHVVXUH RQ WKH SULPDU\HPSOR\HUVD\WRVWRSGRLQJDQ\IXUWKHUEXVLQHVV ZLWKWKHHPSOR\HU8QGHU† E  RIWKH7DIW+DUWOH\$FWRI   D VHFRQGDU\ ER\FRWW LV LOOHJDO LI WKH XQLRQ VHHNV WR SHUVXDGH VHFRQGDU\ HPSOR\HHV WR ER\FRWW WKH SULPDU\ HPSOR\HUEXWLWLVQRWLOOHJDOLIWKHVHFRQGDU\HPSOR\HHVDFW SXUHO\RQWKHLURZQLQLWLDWLYHWRER\FRWWWKHVHUYLFHVRIWKH  )$:LOKHOP&RQVWUXFWLRQ&R 1RV 1RV )$:LOKHOP&RQVWUXFWLRQ&R  ,QFY.<6WDWH'LVWULFW&RXQFLO ,QFY.<6WDWH'LVWULFW&RXQFLO RI&DUSHQWHUV RI&DUSHQWHUV

VSHFXODWLYH GDPDJHVl   $EVHQW HYLGHQFH WKDW :LOKHOP SULPDU\HPSOR\HU/RFDO,QWjO8QLRQRI(OHF5DGLR VXIIHUHG DQ DFWXDO ORVV DV D UHVXOW RI QRW XVLQJ WKH UHQWHG 0DFK:RUNHUVY1/5%86    HTXLSPHQWGXULQJWKHVWULNHWKHDZDUGRIGDPDJHVDSSURYHG E\ WKH PDMRULW\ DSSHDUV WR EH JURXQGHG LQ VSHFXODWLRQ DQG ,Q WKLV FDVH WKH XQLRQ DUJXHV WKDW WKH HPSOR\HHV RI WKH SRWHQWLDOO\SURYLGHV:LOKHOPZLWKDZLQGIDOODWWKHH[SHQVH VHFRQGDU\ HPSOR\HU :LOKHOP &RQVWUXFWLRQ DFWHG RQ WKHLU RI WKH 8QLRQ  , WKHUHIRUH GLVDJUHH ZLWK WKH PDMRULW\jV RZQLQLWLDWLYHDJDLQVWWKHSULPDU\HPSOR\HU'DQW&OD\WRQ FRQFOXVLRQ WKDW :LOKHOP HVWDEOLVKHG LWV ULJKW WR UHFRYHU :HFRQFOXGHWKDWWKHGLVWULFWFRXUWZDVFRUUHFWLQLWVILQGLQJ GDPDJHVEDVHGXSRQWKHORVWXVHRIWKHUHQWHGHTXLSPHQW2Q RIDQLOOHJDOVHFRQGDU\ER\FRWWEXWUHPDQGWKHFDVHIRUDQ WKHRWKHUKDQG,KDYHQRTXDUUHOZLWKWKHDXWKRULWLHVUHOLHG DGMXVWPHQWDQGUHFDOFXODWLRQRIRQHHOHPHQWRIWKHGDPDJH XSRQE\WKHPDMRULW\LQDZDUGLQJ:LOKHOPGDPDJHVIRUWKH DZDUG ORVWXVHRILWVRZQHTXLSPHQW ,)$&76 ,QVXP,ZRXOGDIILUPWKHGLVWULFWFRXUWjVFRQFOXVLRQWKDW WKH8QLRQYLRODWHG† E  RIWKH1/5$EXWZRXOGUHPDQG 3ODLQWLII)$:LOKHOP&RQVWUXFWLRQ&RPSDQ\,QFEURXJKW IRUDUHYLVHGFDOFXODWLRQRIGDPDJHVEHFDXVHRI:LOKHOPjV WKLVDFWLRQDJDLQVW'HIHQGDQW.HQWXFN\6WDWH'LVWULFW&RXQFLO IDLOXUHWRDGHTXDWHO\SURYHDQDFWXDOORVVUHVXOWLQJIURPWKH RI&DUSHQWHUV$)/&,2DXQLRQUHSUHVHQWLQJFDUSHQWHUVLQ UHQWHGHTXLSPHQWVLWWLQJLGOHGXULQJWKHVWULNH WKH /RXLVYLOOH DUHD  :LOKHOP FRQWHQGV WKDW LW ZDV LQMXUHG ZKHQWKHXQLRQHQFRXUDJHGDQLOOHJDOVHFRQGDU\ER\FRWWDQG YLRODWHG D QRVWULNH FODXVH LQ WKH FROOHFWLYH EDUJDLQLQJ DJUHHPHQWEHWZHHQWKHSDUWLHV

 6HFWLRQ  E  RI WKH 1DWLRQDO /DERU 5HODWLRQV $FW DV DPHQGHG SURYLGHV WKDW LW VKDOO EH DQ XQIDLU ODERU SUDFWLFH IRU D XQLRQ RU LWV DJHQWV

WR WKUHDWHQ FRHUFH RU UHVWUDLQ DQ\ SHUVRQ HQJDJHG LQ FRPPHUFH RU LQ DQ LQGXVWU\ DIIHFWLQJ FRPPHUFH ZKHUH LQ HLWKHU FDVH DQ REMHFW WKHUHRI LV 



IRUFLQJ RU UHTXLULQJ DQ\ SHUVRQ    WR FHDVH GRLQJ EXVLQHVV ZLWK DQ\ RWKHU SHUVRQ RU IRUFLQJ RU UHTXLULQJ DQ\ RWKHU HPSOR\HU WR UHFRJQL]H RU EDUJDLQ ZLWK D ODERU RUJDQL]DWLRQ DV WKH UHSUHVHQWDWLYH RI KLV HPSOR\HHV XQOHVV VXFK ODERU RUJDQL]DWLRQ KDV EHHQ FHUWLILHG DV WKH UHSUHVHQWDWLYH RI VXFK HPSOR\HHV    3URYLGHG 7KDW QRWKLQJ FRQWDLQHG LQ WKLV FODXVH % VKDOO EH FRQVWUXHG WR PDNH XQODZIXO ZKHUH QRW RWKHUZLVH XQODZIXO DQ\ SULPDU\ VWULNH RU SULPDU\ SLFNHWLQJ    

 86& †  E  LL %   )$:LOKHOP&RQVWUXFWLRQ&R 1RV 1RV )$:LOKHOP&RQVWUXFWLRQ&R  ,QFY.<6WDWH'LVWULFW&RXQFLO ,QFY.<6WDWH'LVWULFW&RXQFLO RI&DUSHQWHUV RI&DUSHQWHUV

,Q :LOKHOPZDVDFRQWUDFWRUIRUWKHFRQVWUXFWLRQRI WKDQDPRQWKEHIRUHWKHSLFNHWOLQHEHJDQWKDWVWDWHGm*22' WKH 8QLYHUVLW\ RI /RXLVYLOOHjV QHZ VWDGLXP  :LOKHOP ZDV 81,21 %8,/',1* 75$'(60(1 GR QRW ZRUN EHKLQG UHVSRQVLEOH IRU FRQVWUXFWLQJ D SRUWLRQ RI WKH VWDGLXPjV EDQQHUVHYHQZLWKJDWHVl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mDZLQNDQGDQRGlWRMRLQWKHVWULNHLIDQG XQLRQjV HIIRUWV 'DQW ZRXOG QRW HQWHU LQWR D FROOHFWLYH ZKHQ LW ZDV FDOOHG  $FFRUGLQJO\ , DP QRW OHIW ZLWK WKH EDUJDLQLQJ DJUHHPHQW ZLWK LW  'DQW VXEFRQWUDFWHG WKH mGHILQLWHDQGILUPFRQYLFWLRQlWKDWWKHGLVWULFWFRXUWHUUHGLQ LQVWDOODWLRQ RI WKH VHDWV WR 'DLOH\ 6HDWLQJ &RPSDQ\ EXW LQIHUULQJIURPWKHVHIDFWVWKDWWKH8QLRQLQWHQGHGWRFRQGXFW GHIHQGDQW XQLRQ ZDV DOVR XQVXFFHVVIXO LQ HQWHULQJ LQWR D D VHFRQGDU\ ER\FRWW LQ YLRODWLRQ RI †  E    6DQIRUG Y XQLRQFRQWUDFWZLWK'DLOH\ +DUYDUG ,QGXV ,QF  )G     WK &LU  QRWLQJWKDWDIDFWXDOILQGLQJLVFOHDUO\HUURQHRXVRQO\LIWKH  2Q 'HFHPEHU    GHIHQGDQW WROG 'DLOH\WKDWWKHUH UHYLHZLQJFRXUWLVmOHIWZLWKWKHGHILQLWHDQGILUPFRQYLFWLRQ ZRXOG EH D SLFNHW OLQH HVWDEOLVKHG DJDLQVW LW WKH IROORZLQJ WKDWDPLVWDNHKDVEHHQFRPPLWWHGl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m*22' 81,21 %8,/',1* WKHPRQWKO\UHQWDOFRVWRIWKHHTXLSPHQWWKDWVDWLGOH%XW 75$'(60(1 GR QRW ZRUN EHKLQG EDQQHUV HYHQ ZLWK  :LOKHOP QHYHU RIIHUHG SURRI WKDW LW ZDV UHTXLUHG WR SD\ D JDWHVl7KHRWKHUVLGHUHDG SHQQ\PRUHLQUHQWDOIHHVEHFDXVHRIWKHVWULNHLQGXFHGGHOD\ LQFRQVWUXFWLRQ7KHUHFRUGPRUHRYHUSURYLGHVQRVXSSRUW :KLFKVLGHDUH\RXRQ"3LFNHWLQJKDVEHHQGHVFULEHGE\ IRUWKHPDMRULW\jVDVVHUWLRQWKDWWKLVHTXLSPHQWmOLNHO\FRXOG WKH 6XSUHPH &RXUW DV WKH mZRUNLQJ PDQjV PHDQV RI KDYH EHHQ XVHG RQ DQRWKHU MRE VLWHl  0DM 2S DW  FRPPXQLFDWLRQl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m:KLFKVLGHDP,RQ"l VSHFXODWLRQ6HH1/5%Y)HUJXVRQ(OHF&R,QF)G   G &LU   m$ EDFNSD\ DZDUG PXVW EH ,QUHVSRQVHWRWKHXQLRQjVDFWLYLWLHVWKHSURMHFWPDQDJHUVHW VXIILFLHQWO\WDLORUHGWRUHPHG\RQO\WKHDFWXDOFRQVHTXHQFHV XS D mUHVHUYH JDWH V\VWHPl DQG ID[HG D OHWWHU WR WKH XQLRQ RI DQ XQIDLU ODERU SUDFWLFH DQG VKRXOG QRW DGGUHVV SXUHO\  )$:LOKHOP&RQVWUXFWLRQ&R 1RV 1RV )$:LOKHOP&RQVWUXFWLRQ&R  ,QFY.<6WDWH'LVWULFW&RXQFLO ,QFY.<6WDWH'LVWULFW&RXQFLO RI&DUSHQWHUV RI&DUSHQWHUV

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB RIILFHDW SPRQ7KXUVGD\'HFHPEHUQRWLI\LQJLWWKDW RIWKHWKUHHHQWUDQFHJDWHVWRWKHSURMHFWJDWHQXPEHURQH &21&855,1*,13$57',66(17,1*,13$57 ZRXOG EH UHVHUYHG IRU 'DQW &OD\WRQ HPSOR\HHV DQG WKHLU BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB VXEFRQWUDFWRUV VXSSOLHUV DQG YLVLWRUV  %HFDXVH WKH XQLRQ RIILFHVFORVHGDW SPWKHXQLRQGLGQRWUHFHLYHWKHOHWWHU 521$/'/((*,/0$1&LUFXLWsXGJHFRQFXUULQJLQSDUW LQIRUPLQJLWRIWKHUHVHUYHJDWHV\VWHPXQWLOWKHPRUQLQJRI DQGGLVVHQWLQJLQSDUW,FRQFXUZLWKWKHPDMRULW\jVKROGLQJ )ULGD\ 'HFHPEHU  DQG HPSOR\HHV GLG QRW NQRZ RI WKH WKDWWKHGLVWULFWFRXUWGLGQRWFOHDUO\HUULQFRQFOXGLQJWKDWWKH UHVHUYHJDWHV\VWHPEHIRUHFRPLQJWRZRUNWKDWGD\ .HQWXFN\6WDWH'LVWULFW&RXQFLORI&DUSHQWHUV$)/&,2 WKH 8QLRQ YLRODWHG† E  RIWKH1DWLRQDO/DERU5HODWLRQV$FW 7KHHVWDEOLVKPHQWRIDUHVHUYHJDWHV\VWHPLVFRPPRQLQ 1/5$ EXWZULWHVHSDUDWHO\WRH[SUHVVP\YLHZZLWKUHJDUG WKH FRQVWUXFWLRQ LQGXVWU\ SDUWLFXODUO\ ZKHUH QXPHURXV WRWKHSURSHUVFRSHRIWKDWKROGLQJ,QDGGLWLRQ,UHVSHFWIXOO\ HPSOR\HUVZRUNDWDVLWHEXWRQO\RQHLVH[SHULHQFLQJODERU GLVVHQWLQSDUWIURPWKHPDMRULW\jVFDOFXODWLRQRIWKHGDPDJHV XQUHVW8QGHUDUHVHUYHJDWHV\VWHPRQHJDWHRUHQWUDQFH RZHG)$:LOKHOP&RQVWUXFWLRQ&RPSDQ\,QF :LOKHOP FDOOHGWKHmSULPDU\lJDWHLVUHVHUYHGIRUWKHH[FOXVLYHXVHRI EHFDXVHRIWKH8QLRQjV† E  YLRODWLRQ WKHmSULPDU\l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jV ILQGLQJ LV QRW FOHDUO\ FRQILQHWKHLUSLFNHWLQJWRWKHJDWHUHVHUYHGIRUWKHWDUJHWHG HUURQHRXV,ZULWHVHSDUDWHO\KRZHYHUWRH[SUHVVP\FRQFHUQ FRQWUDFWRUDQGWKHSURMHFWLVQRWVKXWGRZQ WKDWWKHPDMRULW\jVKROGLQJRQWKLVLVVXHPLJKWEHFRQVWUXHGDV FUHDWLQJDSHUVHUXOHWKDWDODERUXQLRQQHFHVVDULO\LQWHQGVWR 2QWKHPRUQLQJRI'HFHPEHUVLJQVZHUHLQSODFHDWHDFK FRQGXFWDVHFRQGDU\ER\FRWWDQ\WLPHWKDWLWDVNVLWVPHPEHUV HQWUDQFH WR WKH SURMHFW  7KH VLJQV DW JDWHV  DQG D UHDG WRDVVLVWLQVWDIILQJDSLFNHWOLQH,QP\YLHZGUDZLQJVXFKDQ m6WRS5HDG'DQW&OD\WRQ&RPSDQ\,WVHPSOR\HHVVXSSOLHUV LQIHUHQFH ZRXOG QRW DOZD\V EH MXVWLILHG DV IRU H[DPSOH DQGYLVLWRUV DUHSURKLELWHGIURPXVLQJWKLVHQWUDQFHWRWKLV ZKHUHDXQLRQPDNHVFOHDUWKDWLWVHHNVWKHDVVLVWDQFHRILWV FRQVWUXFWLRQSURMHFWl7KHVLJQDWJDWHUHDG m6WRS5HDG PHPEHUVZKRZRUNIRUVHFRQGDU\HPSOR\HUVRQO\ZKHQWKRVH 7KLV HQWUDQFH LV UHVHUYHG H[FOXVLYHO\ IRU 'DQW &OD\WRQ HPSOR\HHVDUHRIIGXW\ &RPSDQ\,WVHPSOR\HHVVXSSOLHUVRUYLVLWRUVl7KHVLJQVGLG QRWPHQWLRQ'DLOH\VSHFLILFDOO\QRUGLGWKH\PHQWLRQ'DQW 7KH8QLRQLQWKHSUHVHQWFDVHKRZHYHUGLGQRWFODULI\LWV VXEFRQWUDFWRUV LQWHQWWROLPLWWKHSLFNHWFDOOWRRIIGXW\HPSOR\HHV,WLQVWHDG PDGHDQXQFRQGLWLRQDOUHTXHVWWKDWDOORILWVPHPEHUVKHOS %HFDXVHWKHVLJQVGLGQRWPHQWLRQ'DLOH\VSHFLILFDOO\E\ VWDIIWKHSLFNHWOLQHEHLQJRUJDQL]HGDJDLQVW'DQWDQG'DLOH\ QDPHGHIHQGDQWSLFNHWHGDOOJDWHVQRWMXVWWKHJDWHUHVHUYHG 0RUHRYHUWKH8QLRQGLVWULEXWHGDFDUGWRLWVPHPEHUVOHVV IRU'DQW2WKHUXQLRQPHPEHUVUHIXVHGWRFURVVGHIHQGDQWjV  )$:LOKHOP&RQVWUXFWLRQ&R 1RV 1RV )$:LOKHOP&RQVWUXFWLRQ&R  ,QFY.<6WDWH'LVWULFW&RXQFLO ,QFY.<6WDWH'LVWULFW&RXQFLO RI&DUSHQWHUV RI&DUSHQWHUV

SLFNHW OLQHV DQG DOO ZRUN RQ WKH SURMHFW ZDV VKXW GRZQ LQFXUUHG LQ UHQWLQJ FUDQHV DQG RWKHU KHDY\ HTXLSPHQW 'HIHQGDQWZDVLQIRUPHGE\OHWWHUWKDWWKHUHVHUYHJDWHV\VWHP 6SHFLILFDOO\WKHXQLRQDUJXHVWKDWWKHUHDUHRQO\WZRSRVVLEOH ZRXOGFRQWLQXHRQ0RQGD\'HFHPEHUDQGWKDW'DLOH\jV ZD\VLQZKLFK:LOKHOPFRXOGKDYHLQFXUUHGDGGLWLRQDOFRVWV QDPH ZRXOG EH DGGHG WR WKH VLJQV E\ WKH PRUQLQJ RI IRUWKHXVHRIWKHFUDQHDQGKHDY\HTXLSPHQW   KDYLQJWR 'HFHPEHU 2QFHWKHVLJQVZHUHFKDQJHGWKHXQLRQVWRSSHG SD\DGGLWLRQDOVXPVEHFDXVHWKHGHOD\FDXVHGLWWRH[FHHGWKH SLFNHWLQJDWJDWHVDQGDEXWNHSWJDWHREVHUYHUVDWWKHWZR VWDWHG FHLOLQJ RU FDS RQ WKH QXPEHU RI KRXUV WKDW WKH QHXWUDOJDWHV1RQHRIGHIHQGDQWjVPHPEHUVUHWXUQHGWRZRUN HTXLSPHQWFDQEHXVHGLQRQHPRQWKDFFRUGLQJWRWKHOHDVH RQ'HFHPEHU 2Q'HFHPEHUZRUNHUVIURPDOORWKHU DJUHHPHQWRU  EHFDXVHWKHKHDY\HTXLSPHQWZDVUHQWHGRQ XQLRQV H[FHSW GHIHQGDQWjV UHWXUQHG WR ZRUN  'HIHQGDQWjV DPRQWKO\QRWGDLO\EDVLVKDYLQJWRSD\IRUDQDGGLWLRQDO PHPEHUVFHDVHGSLFNHWLQJRQ'HFHPEHUDIWHUWKHKHDGRI PRQWK RI UHQWDO DQG RQO\ XVLQJ WKH HTXLSPHQW IRU VHYHUDO WKHQDWLRQDOFDUSHQWHUVj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mSULPDU\l HPSOR\HU LW PXVW IRFXV LWV DFWLYLWLHV RQ WKDW DQRWKHUMREVLWH:HGRQRWEHOLHYHWKHGLVWULFWFRXUWHUUHGLQ HPSOR\HURQO\,WPD\QRWH[HUWSUHVVXUHZKHWKHUGLUHFWRU DZDUGLQJGDPDJHVSURUDWHGIRUVL[DQGRQHKDOIGD\VRIWKH LQGLUHFWRQRWKHUQHXWUDORUXQUHODWHGmVHFRQGDU\lHPSOR\HUV PRQWKO\UHQWDOUDWH (QFRXUDJLQJ HPSOR\HHV WR HQJDJH LQ D FRQFHUWHG DFWLYLW\ DJDLQVWWKHLUHPSOR\HULQRUGHUWRKDYHWKDWHPSOR\HUUHIXVH $FFRUGLQJO\ZHDIILUPWKHMXGJPHQWRIWKHGLVWULFWFRXUWDV WRGHDOZLWKWKHSULPDU\HPSOR\HULVLOOHJDO7KHTXHVWLRQLV WRLWVILQGLQJRIDQXQIDLUODERUSUDFWLFHEXWZHUHYHUVHWKH D IDFWXDO RQH DV WR WKH XQLRQjV LQWHQW  $FFRUGLQJO\ LQ GDPDJHDZDUGDVWR:LOKHOPjVRZQHTXLSPHQWDQGUHPDQG GHWHUPLQLQJZKHWKHUDXQLRQKDVYLRODWHG† E  WKHFRXUW IRUUHFDOFXODWLRQLQDPDQQHUFRQVLVWHQWZLWKWKLVRSLQLRQ

 7KH OHWWHU VHQW WR GHIHQGDQW IURP WKH SUHVLGHQW RI WKH QDWLRQDO XQLRQ VDLG LQ SDUW

<RX DUH KHUHE\ GLUHFWHG    WR VHH WKDW WKH SURMHFW LV PDQQHG LPPHGLDWHO\ XQGHU WKH SURYLVLRQV RI WKH >FRQWUDFW@ XQGHU ZKLFK WKLV FRQWUDFWRU >:LOKHOP@ LV ZRUNLQJ   

/HWWHU IURP 'RXJODV 0F&DUURQ *HQHUDO 3UHVLGHQW RI WKH 8QLWHG %URWKHUKRRG RI &DUSHQWHUV DQG sRLQHUV RI $PHULFD WR 6WHYH %DUJHU 6HFUHWDU\ RI WKH .HQWXFN\ 6WDWH 'LVWULFW &RXQFLO RI &DUSHQWHUV 'HF    ([KLELW  s$ DW    )$:LOKHOP&RQVWUXFWLRQ&R 1RV 1RV )$:LOKHOP&RQVWUXFWLRQ&R  ,QFY.<6WDWH'LVWULFW&RXQFLO ,QFY.<6WDWH'LVWULFW&RXQFLO RI&DUSHQWHUV RI&DUSHQWHUV

:LOKHOPVXEPLWWHGQXPEHUVXVLQJWKHGDLO\UHQWDOUDWHIRULWV PXVW GHFLGH LI WKH XQLRQjV DFWLRQV ZHUH GLUHFWHG DW WKH HTXLSPHQWZKLFKLQWKHDEVHQFHRIVSHFLILFHYLGHQFHWKDWWKH VHFRQGDU\HPSOR\HURUPHUHO\KDGDQFLOODU\FRQVHTXHQFHVIRU HTXLSPHQWFRXOGKDYHEHHQUHQWHGDWWKHGDLO\UDWHHDFKGD\ WKDWHPSOR\HU,WLVQRWQHFHVVDU\WKDWWKHVROHREMHFWRIWKH SUREDEO\ RYHUVWDWHV WKH DPRXQW RI DFWXDO ORVV  $ PRUH VWULNH EH IRFXVHG RQ WKH VHFRQGDU\ HPSOR\HU LI RQH RI WKH UHDVRQDEOH DQG UHDOLVWLF DSSURDFK LQ WKLV VLWXDWLRQ LV WR XQLRQjVREMHFWLYHVZDVWRLQIOXHQFHWKHVHFRQGDU\HPSOR\HU FDOFXODWHWKHPRQWKO\UHQWDOUDWHDQGSURUDWHLWRYHUWKHDFWXDO WREULQJSUHVVXUHWREHDURQWKHSULPDU\HPSOR\HU:KHWKHU WLPH:LOKHOPZDVGHSULYHGRILWVXVH VL[DQGRQHKDOIGD\V  WKH XQLRQ ZDV PRWLYDWHG E\ D VHFRQGDU\ REMHFWLYH LV D :LOKHOP VKRXOG EH HQWLWOHG WR VRPH FRPSHQVDWLRQ IRU WKH TXHVWLRQRIIDFWDQGLVWREHGHWHUPLQHGE\WKHWRWDOLW\RIWKH XQDQWLFLSDWHG ORVV RI WKH RSSRUWXQLW\ WR XVH WKH HTXLSPHQW XQLRQjVFRQGXFWXQGHUWKHFLUFXPVWDQFHV FDXVHG E\ WKH XQLRQjV XQODZIXO FRQGXFW  :H WKHUHIRUH EHOLHYH WKDW :LOKHOP VKRXOG EH DZDUGHG GDPDJHV ZLWK 7KHTXHVWLRQIRUWKHGLVWULFWFRXUWWKHUHIRUHZDVRQHRI UHVSHFWWRWKHORVVRIXVHRILWVRZQHTXLSPHQWERWKRIILFH LQWHQW  7KH GLVWULFW FRXUW FRQFOXGHG DQG ZH DJUHH WKDW HTXLSPHQWDQGFRQVWUXFWLRQHTXLSPHQWIRU VL[DQG UHSUHVHQWDWLYHV RI WKH XQLRQ YLRODWHG †  E   ZKHQ WKH\ RQHKDOIWZHQW\VHFRQGV RIWKHDSSOLFDEOHPRQWKO\UDWH H[SOLFLWO\HQOLVWHGDGYDQFHKHOSIURP:LOKHOPHPSOR\HHVWR IRUPDSLFNHWOLQHDJDLQVW'DLOH\7KHGLUHFWVROLFLWDWLRQE\ :LOKHOPjV RWKHU DUJXPHQWV UHJDUGLQJ GDPDJHV IDLO  ,WV GHIHQGDQWRI:LOKHOPjVXQLRQHPSOR\HHVEHIRUHDQ\SLFNHW DUJXPHQW WKDW WKH GLVWULFW FRXUW HUUHG E\ QRW DZDUGLQJ OLQHKDGEHHQHVWDEOLVKHGGHPRQVWUDWHVWKDWGHIHQGDQWj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jV DIILUPLQJ WKH GLVWULFW FRXUWjV MXGJPHQW FRQFHUQLQJ WKH PDWK VHFRQGDU\ER\FRWWZHILQGLWXQQHFHVVDU\WRUHDFKWKH QR VWULNHLVVXHDVZHOO ,QLWVDSSHDOWKHXQLRQFRQWHQGVILUVWWKDWQRVHFRQGDU\ ER\FRWW RFFXUUHG DQG WKDW QR GDPDJHV VKRXOG EH DZDUGHG ,,,'$0$*(6 $OWHUQDWLYHO\LWFRPSODLQVWKDWLIGDPDJHVDUHWREHDZDUGHG WKH GLVWULFW FRXUW HUUHG LQ DZDUGLQJ  IRU FRVWV 6HFWLRQRIWKH1DWLRQDO/DERU5HODWLRQV$FW 86& †SURYLGHVDSULYDWHFDXVHRIDFWLRQIRUGDPDJHVDULVLQJ IURP D YLRODWLRQ RI †  E    7KH GLVWULFW FRXUW DZDUGHG :LOKHOP  LQ GDPDJHV  %RWK SDUWLHV DSSHDO WKH  7KLV IUDFWLRQ ZDV GHULYHG E\ XVLQJ WKH GLVWULFW FRXUWjV ILQGLQJ WKDW DZDUG WKH VWULNH ODVWHG  GD\V RXW RI D GD\ EXVLQHVV PRQWK WKH QXPEHU XVHG E\ :LOKHOP LQ RWKHU FDOFXODWLRQV  )$:LOKHOP&RQVWUXFWLRQ&R 1RV 1RV )$:LOKHOP&RQVWUXFWLRQ&R ,QFY.<6WDWH'LVWULFW&RXQFLO ,QFY.<6WDWH'LVWULFW&RXQFLO RI&DUSHQWHUV RI&DUSHQWHUV

7KHGLVWULFWFRXUWIRXQGWKDWWKHVWULNHODVWHGVL[DQGRQH VXFKDVGHSUHFLDWLRQILQDQFHFKDUJHVDQGWD[HVDFFXPXODWH KDOIGD\VDQGDZDUGHGGDPDJHVIRUWKRVHGD\VWR:LOKHOPIRU ZLWKRXWJHQHUDWLQJRIIVHWWLQJUHYHQXH.HHSLQJHTXLSPHQWRQ  UHQWDOHTXLSPHQWDQGVWHHOIRUPV   SD\PHQWRIH[SHQVHV DMREVLWHORQJHUWKDQH[SHFWHGZLWKRXWFRUUHVSRQGLQJUHYHQXH WRILYHmNH\HPSOR\HHV l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mGLUHFWO\ DQG SUR[LPDWHO\l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jV DVVHUWLRQ WKH VXVWDLQHGDVDUHVXOWRIWKHLOOHJDOVWULNHDQGVKRXOGQRWEH SUREOHPZDVQRWWKDWWKHGLVWULFWFRXUWGLGQRWXQGHUVWDQGWKDW PHUHO\VSHFXODWLYH2QO\DFWXDOORVVHVLQFXUUHGDVDUHVXOWRI :LOKHOPLQFXUUHGFRVWVZKHQLWVHTXLSPHQWVDWLGOHDQGZDV WKH VWULNH PD\ EH UHFRYHUHG  $OO WKDW LV UHTXLUHG LV WKDW QRWXVHGSURGXFWLYHO\ WKHSUREOHPZDVWKHPRUHEDVLFRQH VXIILFLHQW IDFWV EH LQWURGXFHG IRU D FRXUW WR DUULYH DW DQ RI:LOKHOPjVIDLOXUHWRVKRZZKHUHLWVSHFLILFDOO\VXIIHUHG LQWHOOLJHQWHVWLPDWHZLWKRXWFRQMHFWXUH7D\ORU0LON&RY DQ\ORVVZLWKUHVSHFWWRWKHUHQWDORILWVRZQHTXLSPHQW7KH ,QWHUQDWLRQDO%URWKHUKRRGRI7HDPVWHUV)G  ODZKRZHYHUGRHVQRWUHTXLUH:LOKHOPWRVKRZLWVORVVZLWK G&LU  WKH VSHFLILFLW\ UHTXLUHG E\ WKH GLVWULFW FRXUW  ,Q $PHULFDQ %ULGJH 'LY 86 6WHHO &RUS Y ,QWHUQDWLRQDO 8QLRQ RI 7XUQLQJWR:LOKHOPjVFURVVDSSHDOILUVW:LOKHOPFRQWHQGV 2SHUDWLQJ(QJLQHHUV/RFDO)G WK WKDWWKHGLVWULFWFRXUWjVIDLOXUHWRDZDUGDQ\GDPDJHVIRUWKH &LU    WKH DSSHDOV FRXUW VLPSO\ UHGXFHG EXW GLG QRW ORVVRIXVHRI:LOKHOPRZQHGHTXLSPHQWLVHUURU:HDJUHH HOLPLQDWH D GDPDJH DZDUG IRU ORVV RI XVH RI RZQHG 'DPDJHVIRUORVWRSSRUWXQLW\UHYHQXHPD\EHDZDUGHGIRU HTXLSPHQWZKHUHWKHUHZDVHYLGHQFHWKDW$PHULFDQ%ULGJH ORVV RI XVH RI RZQHG HTXLSPHQW  $V RWKHU FRXUWV KDYH IUHTXHQWO\UHQWHGLGOHHTXLSPHQWWRRWKHUFRPSDQLHVEXWWKHUH UHFRJQL]HGmLGOHHTXLSPHQWRUHTXLSPHQWWKDWUHPDLQVRQD ZDV QR HYLGHQFH WR VXSSRUW WKH DVVXPSWLRQ WKDW $PHULFDQ MRE VLWH ORQJHU WKDQ H[SHFWHG EHFDXVH D MRE LV GHOD\HG IRU %ULGJHFRXOGKDYHGRQHVRIRUWKHWLPHLWVRXJKWGDPDJHV,Q VRPHUHDVRQLVDUHDODQGTXDQWLILDEOHORVVWRWKHFRQWUDFWRU YLHZRIWKHIDLOXUHRISURRIWKHGDPDJHDZDUGZDVUHGXFHG ZKHWKHUUHQWLVSDLGWRDQRWKHURUFKDUJHGWRWKHFRQWUDFWRU 7KHVDPHVLWXDWLRQH[LVWVKHUH KLPVHOIDVDQDFFRXQWLQJH[SHQVHl5/&RROVDHW&RQVW&R Y/RFDO,QWjO8QLRQRI2SHUDWLQJ(QJLQHHUV)G :LOKHOPXQGRXEWHGO\ZDVKDUPHGWRVRPHH[WHQWE\EHLQJ  WK&LU :KHQHTXLSPHQWVLWVLGOHH[SHQVHV GHSULYHGRIWKHHIILFLHQWXVHRILWVRZQHTXLSPHQW+RZHYHU