5(&200(1'(' )25 )8//7(;7 38%/,&$7,21  %H]WDN/DQG&RY7KH 1R  3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

&LW\RI'HWURLWHWDO (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU )LOH 1DPH DS

%H]WDNjVFRQVSLUDF\FODLPVZHUHSURSHUO\GLVPLVVHG%H]WDNjV FRQVSLUDF\ FRXQWV DOVR IDLO  *ODVVQHU Y 5s 5H\QROGV 81,7('67$7(6&28572)$33($/6 7REDFFR&R)G WK&LU  KROGLQJWKDW EHFDXVH WKH SODLQWLIIjV VXEVWDQWLYH FODLPV XQGHU 2KLR ODZ )257+(6,;7+&,5&8,7 IDLOHGKLVFRQVSLUDF\FODLPDOVR IDLOHG 'HQQH\Y&LW\RI BBBBBBBBBBBBBBBBB $OEDQ\)G  WK&LU  H[SODLQLQJWKDW WKH SODLQWLIIVj FRQVSLUDF\ FODLP DOOHJLQJ D YLRODWLRQ RI  86&†   IDLOHGEHFDXVHWKHXQGHUO\LQJVXEVWDQWLYH FODLPVODFNHGPHULW :HWKHUHIRUHFRQFOXGHWKDWWKHGLVWULFW %(=7$. /$1' &203$1< ; FRXUWGLGQRWHUULQGLVPLVVLQJ%H]WDNjVFRQVSLUDF\FODLPV 3ODLQWLII$SSHOODQW   ,,,&21&/86,21  1R  Y  )RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH !  MXGJPHQWRIWKHGLVWULFWFRXUW 7+( &,7< 2) '(752,7HWDO  'HIHQGDQWV$SSHOOHHV  1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW 1R n3DWULFNs'XJJDQ'LVWULFWsXGJH $UJXHG 0DUFK 'HFLGHGDQG)LOHG sXQH %HIRUH 1255,66,/(5DQG*,/0$1&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('   0DULO\Q + 0LWFKHOO (9$16  /837$. 'HWURLW0LFKLJDQIRU$SSHOODQW0RUOH\:LWXV%$55,6 6277 '(11  '5,.(5 'HWURLW 0LFKLJDQ /LVD $ 5RELQVRQ:,//,$0608//(1&/$5. '2%%,16 'HWURLW0LFKLJDQIRU$SSHOOHHV21%5,() 0DULO\Q+ 0LWFKHOO (9$16  /837$. 'HWURLW 0LFKLJDQ IRU $SSHOODQW  0RUOH\ :LWXV %$55,6 6277 '(11 '5,.(5 'HWURLW 0LFKLJDQ /LVD $ 5RELQVRQ 5REHUW $

  %H]WDN/DQG&RY7KH 1R  1R  %H]WDN/DQG&RY7KH  &LW\RI'HWURLWHWDO &LW\RI'HWURLWHWDO

0DUVDF :,//,$06 08//(1 &/$5.  '2%%,16 WKHUHIRUHGLGQRWHUULQGLVPLVVLQJ%H]WDNjVFODLPVUHODWLQJWR 'HWURLW0LFKLJDQIRU$SSHOOHHV GHYHORSHUVHOHFWLRQ BBBBBBBBBBBBBBBBB & 6LWHVHOHFWLRQFODLPV 23,1,21 %H]WDNjV VLWHVHOHFWLRQ FODLPV DUH SUHGLFDWHG XSRQ LWV BBBBBBBBBBBBBBBBB DOOHJDWLRQWKDW2UGLQDQFH JDYHLWWKHULJKWWRORFDWHD FDVLQRDW$WZDWHU&RXQWV,,,,99DQG;RI%H]WDNjV 521$/' /(( *,/0$1 &LUFXLW s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jV LWVHOI WKH &LW\ GHIHQGDQWV  DQG   WKRVH DIILOLDWHG ZLWK DUJXPHQWV WKDW WKH GLVWULFW FRXUW HUUHG LQ GHWHUPLQLQJ WKDW 'HWURLW 3OD]D /LPLWHG 3DUWQHUVKLS WKH '3/3 GHIHQGDQWV  %H]WDNODFNVWKHULJKWWRHVWDEOLVKDULYHUERDWFDVLQRDW $FFRUGLQJWR%H]WDNZKLFKLVDPLQRULW\SDUWQHURI'3/3 $WZDWHU WKHGHIHQGDQWVFRQVSLUHGWRSUHYHQWDQ\RQHIURPRSHUDWLQJD ULYHUERDW FDVLQR DW D VLWH WKDW '3/3 RZQHG  7KH $WZDWHU 7KLVFRQFOXVLRQDOVRGLVSRVHVRI%H]WDNjVFRQWHQWLRQWKDW GHIHQGDQWV ILOHG D PRWLRQ WR GLVPLVV IRU IDLOXUH WR VWDWH D WKH GLVWULFW FRXUW HUUHG LQ UHIXVLQJ WR DOORZ LW WR FRQGXFW FODLPRULQWKHDOWHUQDWLYHIRUVXPPDU\MXGJPHQW$PRWLRQ DGGLWLRQDO GLVFRYHU\ EHIRUH GLVPLVVLQJ LWV VLWHVHOHFWLRQ IRUVXPPDU\MXGJPHQWZDVDOVRILOHGRQEHKDOIRIWKH&LW\ FODLPV3ORWWY*HQ0RWRUV&RUS3DFNDUG(OHF'LY GHIHQGDQWV$IWHUFRQFOXGLQJWKDW%H]WDNODFNHGVWDQGLQJWR )G     WK &LU    KROGLQJ WKDW WKH GLVWULFW DVVHUWVRPHRILWVFODLPVWKDWLWIDLOHGWRVWDWHDFODLPIRULWV FRXUWjVUHIXVDOWRDOORZDGGLWLRQDOGLVFRYHU\DIWHUWKHSODLQWLII UHPDLQLQJDOOHJDWLRQVDJDLQVWWKH$WZDWHUGHIHQGDQWVDQGWKDW ILOHGDQDIILGDYLWSXUVXDQWWR5XOH I RIWKH)HGHUDO5XOHV WKH&LW\GHIHQGDQWVZHUHHQWLWOHGWRMXGJPHQWDVDPDWWHURI RI&LYLO3URFHGXUHZDVQRWDQDEXVHRIGLVFUHWLRQEHFDXVHWKH ODZWKHGLVWULFWFRXUWJUDQWHGWKH$WZDWHUGHIHQGDQWVjPRWLRQ UHTXHVWHGPDWHULDOVZRXOGQRWKDYHDOWHUHGWKHRXWFRPHRIWKH WR GLVPLVV DQG WKH &LW\ GHIHQGDQWVj PRWLRQ IRU VXPPDU\ FDVH  MXGJPHQW7KHGLVWULFWFRXUWWKHQGLVPLVVHG%H]WDNjVFODLPV DJDLQVW WKH '3/3 GHIHQGDQWV DIWHU ERWK RI WKHVH SDUWLHV ' &RQVSLUDF\FODLPV VWLSXODWHGWRWKHGLVPLVVDO)RUWKHUHDVRQVVHWIRUWKEHORZ ZH$)),50WKHMXGJPHQWRIWKHGLVWULFWFRXUW &RXQWV,;DQG;,RI%H]WDNjVDPHQGHGFRPSODLQWDOOHJH WKDW WKH GHIHQGDQWV FRQVSLUHG WR YLRODWH LWV FRQVWLWXWLRQDO ULJKWV DQG &RXQW ;, VSHFLILFDOO\ FRQWHQGV WKDW WKH DOOHJHG FRQVSLUDF\YLRODWHG86&†   2XUSULRUDQDO\VLV FRQFOXGHVWKDW%H]WDNODFNVVWDQGLQJWRDVVHUWLWVGHYHORSHU VHOHFWLRQFODLPVDQGWKDWWKH&LW\GHIHQGDQWVDUHHQWLWOHGWR MXGJPHQWDVDPDWWHURIODZRQ%H]WDNjVVLWHVHOHFWLRQFODLPV %HFDXVH WKH VXEVWDQWLYH DOOHJDWLRQV WKDW IRUP WKH EDVLV RI  %H]WDN/DQG&RY7KH 1R  1R  %H]WDN/DQG&RY7KH  &LW\RI'HWURLWHWDO &LW\RI'HWURLWHWDO

mGHYHORSPHQW DJUHHPHQWl VXJJHVW WKDW WKH SURVSHFWLYH ,%$&.*5281' GHYHORSHU WKH DSSOLFDQW  ZLOO LQ IDFW IXOILOO WKDW UROH  7KH 5)34 PRUHRYHU LV GLUHFWHG WRZDUGV DSSOLFDQWV ZKR ZLOO $ )DFWXDOEDFNJURXQG mGHYHORSRZQDQGRSHUDWHlDFDVLQRDSRLQWHPSKDVL]HGERWK E\ WKH LQWURGXFWRU\ VHQWHQFH DQG E\ WKH GHILQLWLRQ RI WKH %H]WDND0LFKLJDQFRUSRUDWLRQLVRQHRIWKUHHJHQHUDODQG &LW\jVm3URMHFWl OLPLWHGSDUWQHUVRI'3/3'HIHQGDQWVsDPHV'%ODLQDQGs s6ODYLN,QF ss6ODYLN D0LFKLJDQFRUSRUDWLRQRZQHG )RU WKHVH UHDVRQV DQ DSSOLFDQWjV LQWHQW WR GHYHORS DQG DQGRSHUDWHGE\GHIHQGDQWs5RQDOG6ODYLNDUH'3/3jVRWKHU RSHUDWH D FDVLQR ZDV DQG LV D QHFHVVDU\ SUHGLFDWH IRU SDUWQHUV  +DUROG %H]QRV DQG sHUU\ ' /XSWDN DUH WKH HVWDEOLVKLQJ VWDQGLQJ WR FKDOOHQJH WKH GHYHORSHUVHOHFWLRQ SULQFLSDOVRI%H]WDN$WDOOWLPHVUHOHYDQWWRWKHSUHVHQWFDVH SURFHVV%H]WDNjVUHSHDWHGGHFODUDWLRQWKDWLWGLGQRWVHHNWR '3/3RZQHGDDFUHSDUFHORIXQGHYHORSHGUHDOHVWDWHLQ RSHUDWH D FDVLQR WKXV SUHYHQWV LW IURP KDYLQJ VWDQGLQJ WR 'HWURLWORFDWHGDW$WZDWHU6WUHHWDVLWHWKDWERUGHUVWKH DVVHUWFODLPVIRUYLRODWLRQVRILWVFRQVWLWXWLRQDOULJKWVWKDWDUH 'HWURLW 5LYHU  7KH &LW\ RI 'HWURLW KRZHYHU DFTXLUHG WKH EDVHG XSRQ WKH &LW\jV SURFHGXUH IRU VHOHFWLQJ FDVLQR SURSHUW\ E\ HPLQHQW GRPDLQ GXULQJ WKH SHQGHQF\ RI WKLV GHYHORSHUV$OWKRXJK%H]WDNDOOHJHGWKDWLWVDPHQGHGVLWH DSSHDO SODQ IRU  $WZDWHU ZDV mSUHSDUHG LQ FRQMXQFWLRQ ZLWK H[SHULHQFHG FDVLQR DUFKLWHFWV DQG D SURPLQHQW ULYHUERDW ,QWKHVSULQJRI /XSWDNDFWLQJRQEHKDOIRI'3/3 FDVLQRRSHUDWRUlDQG/XSWDNj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jV H[HFXWLYH GLUHFWRU LQGLFDWHGWKDWWKHSODLQWLIIZDVSUHSDUHGWRVXEPLWDSURSRVDO  2Q sXO\    GHIHQGDQWV %ODLQ s56ODYLN GHVFULELQJ LWV H[SHULHQFH LQ WKH RSHUDWLRQ RI D FDVLQR  $VVRFLDWHV ,, DQ HQWLW\ DOVR RZQHG E\ s 5RQDOG 6ODYLN  3UHSDULQJDSODQLQFRQMXQFWLRQZLWKDFDVLQRRSHUDWRUDQG 6WUDWKHUDQG1HOOLH9DUQHUHQWHUHGLQWRDQDJUHHPHQWWRIRUP QHJRWLDWLQJ ZLWK VXFK DQ HQWLW\ DUH QRW WKH HTXLYDOHQW RI $WZDWHU(QWHUWDLQPHQW$VVRFLDWHV,QF $($,QF IRUWKH HQWHULQJLQWRDOHJDOUHODWLRQVKLSZKHUHE\DFDVLQRRSHUDWRU SXUSRVH RI GHYHORSLQJ D ULYHUERDW FDVLQR DW  $WZDWHU KDG FRPPLWWHG WR GHYHORS DQG RSHUDWH D FDVLQR DW  6WUDWKHUjVUHVSRQVLELOLWLHVLQFOXGHGFDPSDLJQLQJIRUSDVVDJH $WZDWHU RIDYRWHULQLWLDWLYHWKDWZRXOGDOORZULYHUERDWJDPEOLQJDW $WZDWHUSURPRWLQJ$($,QFjVYHQWXUHWRWKHJHQHUDO $V D UHVXOW ZH FRQFOXGH WKDW %H]WDN ODFNV VWDQGLQJ WR SXEOLFDQGILQDQFLQJDQ\DVVRFLDWHGOREE\LQJHIIRUWV%ODLQ FKDOOHQJHWKHGHYHORSHUVHOHFWLRQSURFHVV7KHGLVWULFWFRXUW DQG6ODYLNDJUHHGWRmXVHWKHLUEHVWHIIRUWWRGHOLYHUl $WZDWHUWR$($,QF  %H]WDN/DQG&RY7KH 1R  1R  %H]WDN/DQG&RY7KH  &LW\RI'HWURLWHWDO &LW\RI'HWURLWHWDO

'HWURLWYRWHUVDSSURYHGWZRLQLWLDWLYHVWKHIROORZLQJPRQWK mSURVSHFWLYH GHYHORSHUl DV mD SHUVRQ WKDW KDV VXEPLWWHG D WKDWUHODWHGWRWKHRSHUDWLRQRIFDVLQRVLQWKH&LW\7KH&LW\ SURSRVDOWRGHYHORSDFDVLQRRUFDVLQRFRPSOH[DQGHQWHULQWR WKHQ HQDFWHG 2UGLQDQFHV   DQG   ERWK RI ZKLFK DGHYHORSPHQWDJUHHPHQWZLWKWKHFLW\l'HWURLW&LW\&RGH UHSHDOHG DQ H[LVWLQJ RUGLQDQFH WKDW KDG SURKLELWHG FDVLQR †   $ mSURSRVDOl LV D mUHVSRQVH WR D UHTXHVW IRU JDPEOLQJ2UGLQDQFH DOVRSHUPLWWHGWKH&LW\WRHQWHU SURSRVDODQGDOOVXSSOHPHQWVDQGDPHQGPHQWVWKHUHWRl,G LQWR D FRQWUDFW IRU WKH HVWDEOLVKPHQW RI DQ ,QGLDQ 7ULEDO 7KH6HOHFWLRQ2UGLQDQFHGHILQHVDmGHVLJQDWHGGHYHORSHUlDV &DVLQRLQWKH*UHHNWRZQDUHDRI'HWURLWZKHUHDV2UGLQDQFH mDSURVSHFWLYHGHYHORSHUWKDWKDVEHHQVHOHFWHGE\WKHPD\RU  HQDEOHGWKH&LW\WRHQWHUDFRQWUDFWIRUWKHGHYHORSPHQW WR HQWHU LQWR D GHYHORSPHQW DJUHHPHQW ZLWK WKH FLW\ WR RIDULYHUERDWFDVLQRWREHGRFNHGDW$WZDWHUDVLWHWKDW GHYHORSDQGRSHUDWHDFDVLQRRUFDVLQRFRPSOH[l,G)LQDOO\ ZDVGHVLJQDWHGWKHm$WZDWHU5HFUHDWLRQDQG(QWHUWDLQPHQW DmGHYHORSPHQWDJUHHPHQWlLVmDZULWWHQDJUHHPHQWEHWZHHQ 'LVWULFWl  7KH DELOLW\ WR GHYHORS WKH VLWHV ZDV VXEMHFW WR WKH FLW\ DQG D GHVLJQDWHG GHYHORSHU WKDW GHILQHV WKH JDLQLQJWKHDSSURYDORI0LFKLJDQjVOHJLVODWXUHDQGJRYHUQRU FRQWUDFWXDO REOLJDWLRQV RI WKH SDUWLHV UHJDUGLQJ WKH GHYHORSPHQWDQGRSHUDWLRQRIDFDVLQRRUFDVLQRFRPSOH[DQG ,Q 1RYHPEHU RI   0LFKLJDQ YRWHUV DSSURYHG RWKHUPDWWHUVSURSHUO\UHODWLQJWKHUHWRl,G 3URSRVDO ( D VWDWH LQLWLDWLYH WKDW UHVXOWHG LQ WKH 0LFKLJDQ OHJLVODWXUH HQDFWLQJ WKH 0LFKLJDQ *DPLQJ &RQWURO DQG 7KH 5)34 FRQWDLQV VLPLODU GHILQLWLRQV WKDW LGHQWLI\ 5HYHQXH$FW0LFK&RPS/DZV†7KLV$FW SURVSHFWLYHDSSOLFDQWV,WVLQWURGXFWRU\VHQWHQFHVWDWHVWKDW OHJDOL]HG FDVLQR JDPEOLQJ LQ 'HWURLW DQG DOORZHG IRU WKH m>W@KLVUHTXHVWIRUSURSRVDOVTXDOLILFDWLRQV µ5)34j LVEHLQJ HVWDEOLVKPHQWRIWKUHHFDVLQRVZLWKLQWKHFLW\OLPLWV$VD LVVXHGWRVROLFLWWKHKLJKHVWTXDOLW\SURSRVDOV µ3URSRVDOVj WR SUHUHTXLVLWH WR JDLQLQJ DSSURYDO WR RSHUDWH D FDVLQR DQ GHYHORS RZQ DQG RSHUDWH WKH WKUHH FDVLQRV DQG UHODWHG DSSOLFDQW KDG WR ILUVW HQWHU LQWR D FHUWLILHG GHYHORSPHQW IDFLOLWLHV HDFKDµ&DVLQR&RPSOH[j WKDWFRPSULVHWKH&LW\ DJUHHPHQWZLWKWKH&LW\$FFRUGLQJWR%H]WDNWKH$WZDWHU RI'HWURLW&DVLQR3URMHFW µ3URMHFWj l7KH5)34GHILQHV GHIHQGDQWVSOD\HGDFUXFLDOUROHLQGUDIWLQJ3URSRVDO(DQG mSURSRVDOlDQGmSURSRVHUlLQWHUPVWKDWUHTXLUHVXEPLVVLRQRI SODFLQJLWRQWKHEDOORW D UHVSRQVH WR WKH 5)34  $ mFDVLQRl LV m>W@KH SURSRVHG FDVLQR IDFLOLW\ WR EH GHYHORSHG FRQVWUXFWHG RZQHG DQG 'LVVHQVLRQ EHWZHHQ %H]WDN DQG LWV '3/3 SDUWQHUV ZDV RSHUDWHGLQWKH&LW\RI'HWURLWIXOO\OLFHQVHGDQGLQZKLFK DSSDUHQWE\sXQHRI 2QsXQH /XSWDNDFWLQJRQ ODZIXO JDPEOLQJ LV DXWKRUL]HG RU FRQGXFWHGl  )LQDOO\ WKH EHKDOIRI%H]WDNVHQWDOHWWHUWR WKH 'HWURLW&LW\3ODQQLQJ 5)34GHILQHVWKHRYHUDOOm3URMHFWlDVm>W@KH&LW\RI'HWURLWjV &RPPLVVLRQ DGYLVLQJ WKH &RPPLVVLRQ WKDW %ODLQ KDG QR SODQWRSURYLGHWKHRSSRUWXQLW\WRGHYHORSFRQVWUXFWRZQDQG DXWKRULW\WRVSHDNRQEHKDOIRI'3/3$WWRUQH\VUHSUHVHQWLQJ RSHUDWHWKHWKUHH&DVLQR&RPSOH[HVl %ODLQ DQG ss 6ODYLN UHVSRQGHG E\ ID[LQJ D OHWWHU WR WKH &RPPLVVLRQ RQ sXQH    WKDW H[SODLQHG WKDW EHFDXVH 7KHVH GHILQLWLRQV OHDG WR WKH FRQFOXVLRQ WKDW ERWK WKH %ODLQDQGss6ODYLNFRQVWLWXWHGDPDMRULW\RI'3/3jVSDUWQHUV 6HOHFWLRQ 2UGLQDQFH DQG WKH 5)34 OLPLWHG DSSOLFDQWV WR WKRVH SDUWQHUV UDWKHU WKDQ %H]WDN KDG WKH DXWKRULW\ WR WKRVH ZKR ZHUH SUHSDUHG WR GHYHORS DQG RSHUDWH D FDVLQR UHSUHVHQW'3/3DQGDFWRQLWVEHKDOI %H]WDN E\ LWV RZQ DGPLVVLRQ KDG QR VXFK LQWHQWLRQV $OWKRXJK WKH 6HOHFWLRQ 2UGLQDQFHjV GHILQLWLRQ RI D 2QsXQH WKH&LW\HQDFWHG2UGLQDQFH ZKLFK mSURVSHFWLYHGHYHORSHUlGRHVQRWUHTXLUHWKDWWKHSHUVRQZKR DPHQGHGWKH'HWURLW&LW\&RGHE\DGGLQJ$UWLFOH;,,,WLWOHG VXEPLWVDSURSRVDOEHWKHVDPHLQGLYLGXDOZKRZRXOGGHYHORS m&DVLQR'HYHORSPHQW&RPSHWLWLYH6HOHFWLRQ3URFHVVl WKH DQGRSHUDWHWKHFDVLQRWKHWHUPVmGHVLJQDWHGGHYHORSHUlDQG  %H]WDN/DQG&RY7KH 1R  1R  %H]WDN/DQG&RY7KH  &LW\RI'HWURLWHWDO &LW\RI'HWURLWHWDO

m>'3/3@ WKURXJK LWV %H]WDN SDUWQHU DORQH LQ FRQMXQFWLRQ 6HOHFWLRQ2UGLQDQFH 7KH6HOHFWLRQ2UGLQDQFHSHUPLWWHGWKH ZLWKDPDMRUFDVLQRRSHUDWRUVXFKDV3UHVLGHQW&DVLQRV,QF &LW\WRHQWHULQWRWKUHHGHYHORSPHQWDJUHHPHQWVZLWKFDVLQR DQG 3ULPDGRQQD 5HVRUWV ,QF ZLWK ZKLFK ZH ZHUH RSHUDWRUVDQGLWHVWDEOLVKHGDFRPSHWLWLYHVHOHFWLRQSURFHVV QHJRWLDWLQJEHWZHHQ DQG WRHVWDEOLVKDSHUPDQHQW IRU WKH &LW\ WR XVH LQ FKRRVLQJ WKH PRVW TXDOLILHG FDVLQR ULYHUERDW FDVLQR DW  $WZDWHU 'HWURLW KDG VXIILFLHQW GHYHORSHUV  'HWURLW &LW\ &RGH ††    ,Q ILQDQFLDO UHVRXUFHV WR VXEPLW D SURSRVDO IRU D ZRUOGFODVV DGGLWLRQWRVHWWLQJIRUWKWKHUHOHYDQWFULWHULDIRUHYDOXDWLQJWKH FDVLQRl DSSOLFDQWVWKH6HOHFWLRQ2UGLQDQFHSURYLGHGDSUHIHUHQFHIRU GHYHORSHUVZKR  VXEPLWWHGDSURSRVDOWKDWPHWWKH&LW\jV 7KH GLVWULFW FRXUW QHYHU DGGUHVVHG WKLV ILQDQFLDO FULWHULD  JHQHUDWHGWKHYRWHULQLWLDWLYHWKDWUHVXOWHGLQHLWKHU UHSUHVHQWDWLRQ,QVWHDGLWFRQFOXGHGWKDWm>H@YHQLI3ODLQWLIIjV 2UGLQDQFH   RU 2UGLQDQFH   DQG   DFWLYHO\ VXEPLVVLRQ WR WKH 3ODQQLQJ &RPPLVVLRQ TXDOLILHG DV SURPRWHGDQGVXSSRUWHG3URSRVDO(,G†7ZRRI GHPRQVWUDWLQJWKDWLWZDVµDEOHDQGUHDG\jWRELGIRUDFDVLQR WKH WKUHH FDVLQR RSHUDWRUV XOWLPDWHO\ VHOHFWHG E\ WKH &LW\ OLFHQVH 3ODLQWLIIjV FRPSODLQW IDLOV WR DOOHJH WKDW LW KDG WKH TXDOLILHGIRUWKHVHSUHIHUHQFHVDOWKRXJKWKHPD\RUDYHUUHG QHFHVVDU\IXQGLQJIRUVXFKDQDSSOLFDWLRQRUWKDWEXWIRUWKH WKDW WKH SUHIHUHQFH EHQHILWWHG RQO\ WKH *UHHNWRZQ FDVLQR SUHIHUHQWLDOWUHDWPHQWJLYHQWR*UHHNWRZQDQG$($LWZRXOG GHYHORSHU KDYH VXEPLWWHG D SURSRVDOl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sXO\ RI   %ODLQ DQG ss 6ODYLN HQWHUHG LQWR D WKHSURSHUW\IRUDSHUPDQHQWFDVLQRE\OHDVLQJRUVHOOLQJWKH m6HWWOHPHQW$JUHHPHQWDQG5HOHDVHl 6HWWOHPHQW$JUHHPHQW VLWHRQDSDUWLFLSDWLQJEDVLVWRDFDVLQRRSHUDWRU ZLWK DOO RI WKH $WZDWHU GHIHQGDQWV  7KH 6HWWOHPHQW $JUHHPHQWHQDEOHG%ODLQDQGss6ODYLNWREHFRPHPHPEHUV /XSWDNjVDIILGDYLWZKHQYLHZHGLQDOLJKWPRVWIDYRUDEOH RI$($ WKHVXFFHVVRULQLQWHUHVWWR$($,QF $OOQDPHG WR %H]WDN SHUPLWV D ILQGLQJ WKDW %H]WDN KDG VXIILFLHQW GHIHQGDQWVRWKHUWKDQWKH&LW\GHIHQGDQWVVLJQHGDm)XOODQG ILQDQFLDO UHVRXUFHV WR SD\ WKH DSSOLFDWLRQ IHHV IRU WKH 8QFRQGLWLRQDO 0XWXDO 5HOHDVHl LQ FRQQHFWLRQ ZLWK WKH SURSRVDO  7KLV OHDYHV XV ZLWK WKH TXHVWLRQ RI ZKHWKHU 6HWWOHPHQW$JUHHPHQW7KLVUHOHDVHDEDQGRQHGDQ\FODLPV %H]WDNjVUHSUHVHQWDWLRQWKDWLWKDGQRLQWHQWLRQRIRSHUDWLQJ WKDW WKH VLJQDWRULHV PLJKW KDYH KDG UHODWLQJ WR QXPHURXV DFDVLQRSUHYHQWVLWIURPFKDOOHQJLQJWKHGHYHORSHUVHOHFWLRQ WUDQVDFWLRQVLQFOXGLQJDQ\DWWHPSWV  WRVHOO$WZDWHU SURFHVV:HPXVWWKHUHIRUHGHWHUPLQHZKHWKHU%H]WDNDFWLQJ WR $($ RU 6WUDWKHU DQG   WR GHYHORS D FDVLQR DW  DORQHZDVHOLJLEOHWRVXEPLWDSURSRVDOWRWKH&LW\ $WZDWHU RU HOVHZKHUH  'XULQJ WKH VDPH PRQWK WKDW WKH\ H[HFXWHG WKH 6HWWOHPHQW $JUHHPHQW %ODLQ DQG ss 6ODYLN 6HYHUDOGHILQLWLRQVWKDWDSSHDULQWKH6HOHFWLRQ2UGLQDQFH ZURWHDOHWWHURQEHKDOIRI'3/3WRWKH&LW\jVODZGHSDUWPHQW DQGWKH5)34LGHQWLI\ZKRZDVTXDOLILHGWRSDUWLFLSDWHLQWKH IRUWKHSXUSRVHRIGLVFODLPLQJDQ\LQWHUHVWWKDW'3/3KDGLQ DSSOLFDWLRQ SURFHVV  7KH 6HOHFWLRQ 2UGLQDQFH GHILQHV D VHHNLQJDFDVLQRJDPEOLQJOLFHQVHIRU$WZDWHU  %H]WDN/DQG&RY7KH 1R  1R  %H]WDN/DQG&RY7KH  &LW\RI'HWURLWHWDO &LW\RI'HWURLWHWDO

%H]WDNILOHGDVWDWHFRXUWODZVXLWLQsXO\RI DJDLQVW LQMXU\ ZRXOG EH UHGUHVVHG E\ D IDYRUDEOH GHFLVLRQ RI WKH %ODLQDQGss6ODYLNWKDWFKDOOHQJHVWKHLUGHFLVLRQVWRHQWHU &RXUWl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j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mQHHGQRWDOOHJHWKDWLWZRXOGKDYHEHHQDZDUGHGDFRQWUDFW 'HWURLW (QWHUWDLQPHQW LV DQ HQWLW\ WKDW WKH $WZDWHU EXWIRUWKHSUHIHUHQWLDODQGWKHUHE\DOOHJHGO\XQFRQVWLWXWLRQDO GHIHQGDQWVIRUPHGLQ$XJXVWRI LQUHVSRQVHWRWKH&LW\jV VHOHFWLRQSURFHVVEXWRQO\WKDWLWZDVFDSDEOHRIVXEPLWWLQJ 5)34IRU3KDVH2QH$IWHUJDLQLQJDSSURYDOIURPWKH&LW\ DSURSRVDOl VHHDOVR$VVRFLDWHG*HQ&RQWUDFWRUVRI$PY 'HWURLW (QWHUWDLQPHQW VXEPLWWHG LWV DSSOLFDWLRQ WR WKH &LW\RIsDFNVRQYLOOH86    H[SODLQLQJ 0LFKLJDQ*DPLQJ&RQWURO%RDUG7KH%RDUGLVVXHG'HWURLW WKDW WR HVWDEOLVK VWDQGLQJ mD SDUW\ FKDOOHQJLQJ D VHWDVLGH (QWHUWDLQPHQWDFDVLQROLFHQVHRQ'HFHPEHU  SURJUDPOLNHsDFNVRQYLOOHjVQHHGRQO\GHPRQVWUDWHWKDWLWLV DEOHDQGUHDG\WRELGRQFRQWUDFWVDQGWKDWDGLVFULPLQDWRU\ %H]WDN FODLPV WKDW WKH UHDVRQ LW GLG QRW VXEPLW DQ SROLF\SUHYHQWVLWIURPGRLQJVRRQDQHTXDOEDVLVl  DSSOLFDWLRQLQUHVSRQVHWRWKH5)34IRU3KDVH2QHZDVWKDW LWEHOLHYHGWKH&LW\jVVHOHFWLRQSURFHVVWREHXQFRQVWLWXWLRQDO %H]WDN UHOLHV XSRQ ERWK LWV DPHQGHG FRPSODLQW DQG DQ $V D UHVXOW %H]WDN ZDV QRW DPRQJ WKH LQLWLDO HOHYHQ DIILGDYLWVLJQHGE\/XSWDNWRVXSSRUWLWVDUJXPHQWWKDWWKH DSSOLFDQWV WKDW 0D\RU $UFKHU FRQVLGHUHG  %H]WDN GLG GLVWULFWFRXUWHUUHGLQFRQFOXGLQJWKDW%H]WDNZDVQRWmUHDG\ KRZHYHU ILOH DQ DSSOLFDWLRQ ZLWK WKH &LW\ 3ODQQLQJ DQGDEOHlWRVXEPLWDSURSRVDO7KHDIILGDYLWZKLFK%H]WDN &RPPLVVLRQ RQ $XJXVW    VHHNLQJ DSSURYDO RI DQ WHQGHUHG LQ RSSRVLWLRQ WR WKH &LW\ GHIHQGDQWVj PRWLRQ IRU DPHQGHGVLWHSODQIRU$WZDWHU$FFRUGLQJWR%H]WDNLWV VXPPDU\ MXGJPHQW FRQWDLQV D UHSUHVHQWDWLRQ WKDW WKH QHW DSSOLFDWLRQmZDVVXSSRUWHGE\DGHWDLOHGSUHVHQWDWLRQIRUD ZRUWKRIWKH%H]QRVDQG/XSWDNIDPLOLHV %H]WDNjVSULQFLSDOV SHUPDQHQW ULYHUERDW FDVLQR SUHSDUHG LQ FRQMXQFWLRQ ZLWK H[FHHGV   $V D UHVXOW /XSWDN DYHUUHG WKDW  %H]WDN/DQG&RY7KH 1R  1R  %H]WDN/DQG&RY7KH  &LW\RI'HWURLWHWDO &LW\RI'HWURLWHWDO

SDUWQHUVUHIXVHRUDUHXQOLNHO\WRGRVR0LFK&RPS/DZV H[SHULHQFHG FDVLQR DUFKLWHFWV DQG D SURPLQHQW ULYHUERDW †  m$OLPLWHGSDUWQHUPD\EULQJDQDFWLRQLQ WKH FDVLQR RSHUDWRU DQG ZDV D SODQ ZKLFK '3/3 ZDV UHDG\ ULJKW RI D OLPLWHG SDUWQHUVKLS WR UHFRYHU D MXGJPHQW LQ LWV ZLOOLQJDQGDEOHWRLPSOHPHQWl'3/3jVRWKHUWZRSDUWQHUV IDYRULIJHQHUDOSDUWQHUVZLWKDXWKRULW\WRGRVRKDYHUHIXVHG KRZHYHU GLG QRW MRLQ LQ %H]WDNjV DSSOLFDWLRQ WR WKH WR EULQJ WKH DFWLRQ RU LI DQ HIIRUW WR FDXVH WKRVH JHQHUDO &RPPLVVLRQ SDUWQHUVWREULQJWKHDFWLRQLVQRWOLNHO\WRVXFFHHGl $GHOO Y6RPPHUV6FKZDUW]6LOYHU 6FKZDUW]3&1:G 7KH &RPPLVVLRQ UHMHFWHG %H]WDNjV DPHQGHG VLWH SODQ   0LFK&W$SS   QRWLQJWKDWOLPLWHGSDUWQHUVDUH SURSRVDOEHFDXVHLWZDVQRWVXEPLWWHGLQDFFRUGDQFHZLWKWKH DXWKRUL]HGERWKWRFRPPHQFHGHULYDWLYHDFWLRQVRQEHKDOIRI 6HOHFWLRQ 2UGLQDQFH DQG WKH 5)34  0RUHRYHU SULRU WR WKHSDUWQHUVKLSLIWKHJHQHUDOSDUWQHUVUHIXVHWRGRVRDQGWR RIILFLDOO\ UHMHFWLQJ %H]WDNjV SURSRVDO WKH &RPPLVVLRQ SXUVXHWKHLULQGLYLGXDOFODLPV %H]WDN%ODLQDQGss6ODYLN LQIRUPHG%H]WDNWKDWLWZRXOGUHTXLUHIRUPDOGRFXPHQWDWLRQ DUHDOOJHQHUDODQGOLPLWHGSDUWQHUVRI'3/3*LYHQWKDWQRQH WRVKRZZKRZDVDXWKRUL]HGWRVSHDNRQEHKDOIRI'3/3LQ RIWKHGHIHQGDQWVFKDOOHQJHG%H]WDNjVDELOLW\WRDVVHUW'3/3jV OLJKWRIWKHFRQIOLFWLQJUHSUHVHQWDWLRQVWKDWKDGEHHQPDGHE\ FODLPVDJDLQVWWKLUGSDUWLHVZHFRQFOXGHWKDW%H]WDNKDGWKH '3/3jVSDUWQHUVLQsXQHRI %H]WDNQHYHUUHVSRQGHG DXWKRULW\ WR UDLVH FODLPV UHODWLQJ WR  $WZDWHU EHFDXVH ZLWKVXFKGRFXPHQWDWLRQ '3/3jVRWKHUSDUWQHUVUHIXVHGRUZHUHXQOLNHO\WRGRVR % 3URFHGXUDOEDFNJURXQG %RWK WKH $WZDWHU GHIHQGDQWV DQG WKH &LW\ GHIHQGDQWV FRQWHQGWKDW%H]WDNODFNHGVWDQGLQJWRFKDOOHQJHWKHSURFHVV 7KLVODZVXLWZDVILOHGLQWKH8QLWHG6WDWHV'LVWULFW&RXUW IRU VHOHFWLQJ FDVLQR GHYHORSHUV EHFDXVH %H]WDN QHYHU IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ LQ 0D\ RI   VXEPLWWHG D SURSRVDO LQ UHVSRQVH WR WKH &LW\jV 5)34 $FFRUGLQJ WR %H]WDNjV DPHQGHG FRPSODLQW WKH 6HOHFWLRQ $FFRUGLQJWRWKHVHGHIHQGDQWVWKLVSUHFOXGHV%H]WDNIURP 2UGLQDQFHDQGWKH&LW\jVUHIXVDOWRSLFN$WZDWHUDVD UDLVLQJDQ\RILWVFODLPVWKDWDUHEDVHGXSRQWKHVHOHFWLRQRI FDVLQRVLWH  YLRODWHGWKH(TXDO3URWHFWLRQDQG'XH3URFHVV 'HWURLW(QWHUWDLQPHQW*UHHNWRZQ&DVLQRDQG0*0*UDQG &ODXVHVRIWKH)RXUWHHQWK$PHQGPHQW  GHSULYHG%H]WDN 'HWURLW&RXQWV,,,9,9,,DQG9,,,RI%H]WDNjVDPHQGHG RILWVSURSHUW\ZLWKRXWMXVWFRPSHQVDWLRQLQYLRODWLRQRIWKH FRPSODLQWDOOHJLQJYLRODWLRQVRIWKH(TXDO3URWHFWLRQ&ODXVH 7DNLQJV&ODXVHRIWKH)LIWK$PHQGPHQW  LQIULQJHGRQLWV WKH 'XH 3URFHVV &ODXVH WKH )LUVW $PHQGPHQW DQG WKH )LUVW$PHQGPHQWULJKWVWRIUHHGRPRIVSHHFKDQGIUHHGRPRI 0LFKLJDQ &RQVWLWXWLRQjV SURKLELWLRQ DJDLQVW VSHFLDO SROLWLFDODVVRFLDWLRQEHFDXVHWKHSUHIHUHQFHVZHUHDOOHJHGO\ OHJLVODWLRQ IDOO ZLWKLQ WKLV FDWHJRU\  %H]WDN RQ WKH RWKHU UHZDUGV IRU SURYLGLQJ SROLWLFDO VXSSRUW DQG   YLRODWHG KDQG DUJXHV WKDW LW ZDV IXOO\ FDSDEOH RI VXEPLWWLQJ D %H]WDNjVVWDWHFRQVWLWXWLRQDOULJKWVDQGVWDWHODZ%H]WDNDOVR SURSRVDOEXWFKRVHQRWWRGRVREHFDXVHSDUWLFLSDWLQJLQWKH FODLPHGWKDWWKHGHIHQGDQWVHQJDJHGLQDFRQVSLUDF\WRYLRODWH &LW\jVVHOHFWLRQSURFHVVZRXOGKDYHSUHYHQWHGLWIURPEHLQJ %H]WDNjVIHGHUDODQGVWDWHFRQVWLWXWLRQDOULJKWV DEOHWRUDLVHLWVFRQVWLWXWLRQDOFODLPV 7KH &LW\ GHIHQGDQWV ILOHG WKHLU PRWLRQ IRU VXPPDU\ m7R VDWLVI\ WKH FRQVWLWXWLRQDO UHTXLUHPHQW RI VWDQGLQJ D MXGJPHQWSXUVXDQWWR5XOHRIWKH)HGHUDO5XOHVRI&LYLO SODLQWLIIPXVWHVWDEOLVKWKUHHHOHPHQWV   DQLQMXU\LQIDFW 3URFHGXUHLQ'HFHPEHURI /DWHUWKDWVDPHPRQWKWKH WKDWLVFRQFUHWHDQGSDUWLFXODUL]HG   DFRQQHFWLRQEHWZHHQ $WZDWHUGHIHQGDQWVILOHGWKHLUPRWLRQWRGLVPLVVIRUIDLOXUHWR WKHLQMXU\DQGWKHFRQGXFWDWLVVXHnWKHLQMXU\PXVWEHIDLUO\ VWDWHDFODLPSXUVXDQWWR5XOH E  RIWKH)HGHUDO5XOHV WUDFHDEOHWRWKHGHIHQGDQWjVDFWLRQ DQG  OLNHOLKRRGWKDWWKH RI&LYLO3URFHGXUHRUDOWHUQDWLYHO\IRUVXPPDU\MXGJPHQW  %H]WDN/DQG&RY7KH 1R  1R  %H]WDN/DQG&RY7KH &LW\RI'HWURLWHWDO &LW\RI'HWURLWHWDO

%H]WDNVXEVHTXHQWO\ILOHGDQDIILGDYLWVHHNLQJDGGLWLRQDO ,,$1$/<6,6 GLVFRYHU\SXUVXDQWWR5XOH I RIWKH)HGHUDO5XOHVRI&LYLO 3URFHGXUH,QDOHWWHUVHQWWRWKHSDUWLHVLQ)HEUXDU\RI $ 6WDQGDUGVRIUHYLHZ WKHGLVWULFWFRXUWLQIRUPHGWKHPWKDWLWVDZQRQHHGWRDOORZ IRU DGGLWLRQDO GLVFRYHU\ EHFDXVH WKH &LW\ GHIHQGDQWV KDG $GLVWULFWFRXUWjVGLVPLVVDORIDFRPSODLQWSXUVXDQWWR5XOH DFFHSWHG DV WUXH DOO RI WKH IDFWXDO DOOHJDWLRQV FRQWDLQHG LQ  E  RIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUHLVUHYLHZHG %H]WDNjVDPHQGHGFRPSODLQWIRUWKHSXUSRVHRIWKHPRWLRQIRU GHQRYR%ORFKY5LEDU)G WK&LU   VXPPDU\MXGJPHQW ,QFRQVLGHULQJDPRWLRQWRGLVPLVVm>W@KHFRXUWPXVWFRQVWUXH WKHFRPSODLQWLQDOLJKWPRVWIDYRUDEOHWRWKHSODLQWLIIDQG 7KHGLVWULFWFRXUWJUDQWHGWKHGHIHQGDQWVjPRWLRQVLQsXO\ DFFHSWDOORI>WKH@IDFWXDODOOHJDWLRQVDVWUXHl,Gm$PRWLRQ RI$FFRUGLQJWRWKHFRXUW%H]WDNODFNHGVWDQGLQJWR WRGLVPLVVXQGHU5XOH E  VKRXOGQRWEHJUDQWHGµXQOHVV FKDOOHQJHWKH&LW\jVSUHIHUHQFHV\VWHPEHFDXVH%H]WDNQHYHU LWDSSHDUVEH\RQGGRXEWWKDWWKHSODLQWLIIFDQSURYHQRVHWRI VXEPLWWHGDSURSRVDOWRDSSO\IRUDFDVLQROLFHQVHDQGIDLOHG IDFWV LQ VXSSRUW RI KLV FODLP ZKLFK ZRXOG HQWLWOH KLP WR WRGHPRQVWUDWHWKDWLWZRXOGKDYHDSSOLHGIRUDOLFHQVHHYHQ UHOLHIjl  %XFKDQDQ Y $SIHO   )G   WK &LU LIWKH6HOHFWLRQ2UGLQDQFHKDGQRWFRQWDLQHGWKHHOHPHQWVWKDW   TXRWLQJ&RQOH\Y*LEVRQ86    %H]WDN DOOHJHG ZHUH XQFRQVWLWXWLRQDO  :LWK UHJDUG WR %H]WDNjV UHPDLQLQJ VXEVWDQWLYH FODLPV WKH FRXUW JUDQWHG $VZLWKDGLVPLVVDOIRUIDLOXUHWRVWDWHDFODLPDGLVWULFW VXPPDU\MXGJPHQWLQIDYRURIWKH&LW\GHIHQGDQWV7KHFRXUW FRXUWj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m6'6SHFLDO'HYHORSPHQW'LVWULFW DQGGUDZDOOUHDVRQDEOHLQIHUHQFHVLQIDYRURIWKHQRQPRYLQJ IRU&DVLQRVlWKDWGLGQRWLQFOXGH$WZDWHUDQGUHSHDOHG SDUW\0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS DQ\FRQIOLFWLQJRUGLQDQFHV7KH&LW\VXEVHTXHQWO\DPHQGHG 86       7KH FHQWUDO LVVXH LV mZKHWKHU WKH WKH ERXQGDULHV RI WKH FDVLQR GLVWULFW ZKHQ LW HQDFWHG HYLGHQFH SUHVHQWV D VXIILFLHQW GLVDJUHHPHQW WR UHTXLUH 2UGLQDQFH LQ ZKLFKDJDLQGLGQRWLQFOXGH VXEPLVVLRQWRDMXU\RUZKHWKHULWLVVRRQHVLGHGWKDWRQH $WZDWHUZLWKLQWKHUHYLVHGGLVWULFW)LQDOO\KDYLQJIRXQGQR SDUW\PXVWSUHYDLODVDPDWWHURIODZl$QGHUVRQY/LEHUW\ PHULW WR WKH VXEVWDQWLYH FKDUJHV WKDW IRUPHG WKH EDVLV RI /REE\,QF86    %H]WDNj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