5(&200(1'(' )25 )8//7(;7 38%/,&$7,21  0F/DXJKOLQHWDOY+ROW 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

3XEOLF6FKRROV%GHWDO (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU )LOH 1DPH DS

FKRRVLQJWKHHGXFDWLRQDOPHWKRGPRVWVXLWDEOHWRWKHFKLOG V QHHGVZDVOHIWE\WKH>,'($@WRVWDWHDQGORFDOHGXFDWLRQDO 81,7('67$7(6&28572)$33($/6 DJHQFLHVLQFRRSHUDWLRQZLWKWKHSDUHQWVRUJXDUGLDQRIWKH FKLOGl ,QWKLVFDVHQXPHURXVVFKRRORIILFLDOVWHVWLILHGWKDW )257+(6,;7+&,5&8,7 WKHFDWHJRULFDOFODVVURRPSODFHPHQWZDVQHFHVVDU\EDVHGRQ BBBBBBBBBBBBBBBBB (PPDjVJRDOVDQGQHHGVDQGEDVHGRQDFRPSDULVRQRIWKH WHDFKLQJ PHWKRGRORJLHV :H QHHG QRW GHWDLO WKDW HYLGHQFH KHUHEHFDXVHWKHUHLVQRGLVSXWHDERXWWKHIDFWVWKDWVXSSRUW WKHH[SHUWVj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jV GD\  %HFDXVH WKH +ROW VFKRRO V\VWHP KDV 720 :(67'LUHFWRURI  FHUWDLQ W\SHV RI VSHFLDO HGXFDWLRQ FODVVURRPV DW FHUWDLQ 6SHFLDO(GXFDWLRQ  HOHPHQWDU\VFKRROVWKHGHFLVLRQDERXWWKHW\SHRIFODVVURRP ZRXOGQHFHVVDULO\GHWHUPLQHZKLFKHOHPHQWDU\VFKRRO(PPD 'HIHQGDQWV$SSHOODQWV   ZRXOG DWWHQG  7KH 0F/DXJKOLQV ZDQWHG (PPD WR DWWHQG 1 'LPRQGDOHDQGKDYHJRQHWRJUHDWHIIRUWWRFRQWHQGWKDWWKH UHVRXUFH URRP DW 'LPRQGDOH FRXOG EH DGDSWHG WR VHUYH $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW (PPDjV JRDOV DQG QHHGV  +RZHYHU WKH KHDULQJ RIILFHUV IRUWKH:HVWHUQ'LVWULFWRI0LFKLJDQDW*UDQG5DSLGV GHFLGHGDQGDQLQGHSHQGHQWUHYLHZRIWKHUHFRUGUHYHDOVWKDW 1R n'DYLG:0F.HDJXH'LVWULFWsXGJH DFDWHJRULFDOFODVVURRPLVEHVWGHVLJQHGWRVHUYHWKHQHHGVRI VWXGHQWVOLNH(PPD,QWKHHQGWKHSODLQWLIIVKDYHIDLOHGWR $UJXHG 1RYHPEHU PHHW WKHLU EXUGHQ RI GHPRQVWUDWLQJ WKDW D FDWHJRULFDO FODVVURRPLVDQLQDSSURSULDWHSODFHPHQW 'HFLGHGDQG)LOHG )HEUXDU\

,WIROORZVWKDWWKHMXGJPHQWRIWKHGLVWULFWFRXUWPXVWEH 5(9(56('DQGWKHFDVH5(0$1'('IRUHQWU\RIDQRUGHU VXVWDLQLQJWKHGHFLVLRQRIWKHVWDWHKHDULQJUHYLHZRIILFHU

  0F/DXJKOLQHWDOY+ROW 1R 1R 0F/DXJKOLQHWDOY+ROW  3XEOLF6FKRROV%GHWDO 3XEOLF6FKRROV%GHWDO

%HIRUH 6,/(5DQG'$8*+75(<&LUFXLWsXGJHV 5RQFNHU FRXUW ZKHQ mWKH GLVSXWH LV VLPSO\ RQH RI $/'5,&+'LVWULFWsXGJH PHWKRGRORJ\>@    WKH 6XSUHPH &RXUW KDV HPSKDWLFDOO\ VWDWHGWKDWVXFKTXHVWLRQVVKRXOGEHOHIWWRWKHVWDWHVl,G BBBBBBBBBBBBBBBBB FLWLQJ5RZOH\86DW ,Q5RQFNHUKRZHYHU mWKH TXHVWLRQ >ZDV@ QRW RQH RI PHWKRGRORJ\ EXW UDWKHU &2816(/ LQYROYH>G@ D GHWHUPLQDWLRQ RI ZKHWKHU WKH VFKRRO GLVWULFW KD>G@ VDWLVILHG WKH $FW V UHTXLUHPHQW WKDW KDQGLFDSSHG $5*8('   sDPHV 6 sDPR *58$ s$02  <281* FKLOGUHQEHHGXFDWHGDORQJVLGHQRQKDQGLFDSSHGFKLOGUHQWR /DQVLQJ0LFKLJDQIRU$SSHOODQWV0\UD6'XWWRQsRKQVRQ WKHPD[LPXPH[WHQWDSSURSULDWHl,G7KLVFDVHSUHVHQWVDQ 10XVNHJRQ0LFKLJDQIRU$SSHOOHHV21%5,() sDPHV LVVXH RI PHWKRGRORJ\ QRW RI WKH H[WHQW WR ZKLFK (PPD 6 sDPR *58$ s$02  <281* /DQVLQJ 0LFKLJDQ VKRXOGEHPDLQVWUHDPHG 0LFKDHO/%HYLQV/$32,17( $662&,$7(62NHPRV 0LFKLJDQ IRU $SSHOODQWV  0\UD 6 'XWWRQsRKQVRQ 1 (PPDjVSDUHQWVKDGDGXHSURFHVVKHDULQJLQZKLFKWKH\ 0XVNHJRQ 0LFKLJDQ sDVRQ ' .RONHPD s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sXGJH  7KH 6WDWHV DQG VFKRRO GLVWULFWV VKRXOG EH DIIRUGHG VRPH SODLQWLIIV&DUODQG0DU\6XH0F/DXJKOLQILOHGVXLWLQGLVWULFW GLVFUHWLRQLQGHWHUPLQLQJZKDWW\SHRISURJUDPLVDSSURSULDWH FRXUWSXUVXDQWWRWKH,QGLYLGXDOVZLWK'LVDELOLWLHV(GXFDWLRQ EDVHGRQWKHLQGLYLGXDOQHHGVRIDGLVDEOHGFKLOG6HHLGDW $FW86&††HWVHTVHHNLQJWRRYHUWXUQWKHRUGHU  m7KH SULPDU\ UHVSRQVLELOLW\ IRU IRUPXODWLQJ WKH RI D VWDWH KHDULQJ UHYLHZ RIILFHU LQ IDYRU RI WKH GHIHQGDQW HGXFDWLRQ WR EH DFFRUGHG D KDQGLFDSSHG FKLOG DQG IRU VFKRROERDUGLQDGLVSXWHRYHUWKH,QGLYLGXDOL]HG(GXFDWLRQ 3URJUDP ,(3 IRUWKHLUGDXJKWHU (PPD0F/DXJKOLQWKDW KDGEHHQSURSRVHGE\+ROW3XEOLF6FKRROVIRUWKH   VFKRRO\HDU7KHGLVWULFWFRXUWUHYHUVHGWKH DGPLQLVWUDWLYH 5RQFNHU VHW IRUWK WKUHH IDFWRUV IRU GHWHUPLQLQJ ZKHQ WKH

UXOLQJKROGLQJWKDWWKHVFKRROV\VWHPPXVWDIIRUGWKHFKLOG PDLQVWUHDPLQJ UHTXLUHPHQW PD\ EH RYHUFRPH  ZKHWKHU WKH GLVDEOHG

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j RU GHIHQGDQWVj SUHIHUUHG RXWFRPH (PPD ZRXOG EH PDLQVWUHDPHG DQG IXOO\ LQFOXGHG LQ WKH +ROW JHQHUDO HGXFDWLRQ

7KH +RQRUDEOH $QQ $OGULFK 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH NLQGHUJDUWHQ SURJUDP $V SUHYLRXVO\ QRWHG WKH RQO\ TXHVWLRQ LV ZKHUH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ VKH ZLOO VSHQG KHU VSHFLDO HGXFDWLRQ SRUWLRQ RI WKH VFKRRO GD\  0F/DXJKOLQHWDOY+ROW 1R 1R 0F/DXJKOLQHWDOY+ROW  3XEOLF6FKRROV%GHWDO 3XEOLF6FKRROV%GHWDO

,QWKLVFDVHWKHSDUWLHVGLGQRWGLVDJUHHDERXWWKHH[WHQWWR (PPDjVSDUWLFXODUQHHGV7KLVSODFHPHQWWKHGLVWULFWFRXUW ZKLFK (PPD ZRXOG EH PDLQVWUHDPHG ZLWK QRQGLVDEOHG UXOHGFRQVWLWXWHGWKHmOHDVWUHVWULFWLYHHQYLURQPHQWlXQGHUWKH SHHUV  VKH ZDV WR EH IXOO\ LQFOXGHG LQ WKH +ROW KDOIGD\ UHTXLUHPHQWVRIWKH$FW NLQGHUJDUWHQ SURJUDP  +HQFH WKH GLVSXWHG LVVXH GLG QRW LQYROYHGHWHUPLQDWLRQRIWKHOHDVWUHVWULFWLYHHQYLURQPHQWIRU %HFDXVHZHFRQFOXGHWKDWWKHGLVWULFWFRXUWjVDQDO\VLVRIWKH (PPD+HQFHWKHGLVWULFWFRXUWjVUHOLDQFHRQWKDWSURYLVLRQ mOHDVW UHVWULFWLYH HQYLURQPHQWl PDQGDWH ZDV IODZHG DQG LQ WKH $FW LQ RUGHU WR JUDQW VXPPDU\ MXGJPHQW LQ WKH EHFDXVHWKHFRXUWDSSOLHGWKHLQFRUUHFWEXUGHQRISURRIDQG SODLQWLIIVj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†   $ VWDWH UHFHLYLQJ IXQGV XQGHU WKH $FW LV WKDWWKHVFKRROV\VWHPKDGIDLOHGWRGHPRQVWUDWHWKDW(PPDjV UHTXLUHGWRSURYLGHDmIUHHDSSURSULDWHSXEOLFHGXFDWLRQWR QHHGVFRXOGQRWEHPHWDW'LPRQGDOH(OHPHQWDU\  7R JHW DOO FKLOGUHQ ZLWK GLVDELOLWLHV UHVLGLQJ LQ WKH 6WDWHl  ,G DW DURXQG WKH 0F/DXJKOLQVj IDLOXUH WR GHPRQVWUDWH WKH †  D    8QGHU WKH $FW DQ ,QGLYLGXDOL]HG (GXFDWLRQ FDWHJRULFDO FODVVURRP ZDV LQDSSURSULDWH WKH GLVWULFW FRXUW 3URJUDPPXVWEHGHYHORSHGIRUHDFKFKLOGZLWKDGLVDELOLW\ DSSDUHQWO\GHFLGHGWKDW(PPDjVSODFHPHQWLQWKHUHVRXUFH LQFOXGLQJ VWDWHPHQWV RI   WKH FKLOGjV SUHVHQW OHYHO RI URRPZRXOGEHDOHVVUHVWULFWLYHDOWHUQDWLYHDQGWKHUHIRUHD HGXFDWLRQDOSHUIRUPDQFH  PHDVXUDEOHDQQXDOJRDOVDQG SUHIHUUHGSODFHPHQWWRWKDWRIDFDWHJRULFDOFODVVURRP$V   WKH VSHFLDO HGXFDWLRQ DQG UHODWHG VHUYLFHV DV ZHOO DV QRWHG DERYH KRZHYHU WKHUH LV QR EDVLV LQ WKH mOHDVW VXSSOHPHQWDU\DLGVDQGVHUYLFHVWKDWZLOOEHSURYLGHGWRWKH UHVWULFWLYH HQYLURQPHQWl SURYLVLRQ IRU HYDOXDWLQJ WKH FKLOG,GDW† G  $ 7KHSODQLVGHYHORSHGE\WKH mUHVWULFWLYHQHVVlRIDOWHUQDWLYHVSHFLDOHGXFDWLRQSODFHPHQW ,(3 7HDP ZKLFK LQFOXGHV WKH FKLOGjV SDUHQWV DV ZHOO DV RSWLRQV DOO RI ZKLFK UHTXLUH VHSDUDWLRQ IURP QRQGLVDEOHG UHJXODU DQG VSHFLDO HGXFDWLRQ WHDFKHUV DQG RWKHUV  ,G DW SHHUV † G  % 7KH$FWFRQWDLQVDUHTXLUHPHQWWKDWWKH,(3 IRUDGLVDEOHGFKLOGHGXFDWHWKDWFKLOGLQWKHmOHDVWUHVWULFWLYH 7KHGLVWULFWFRXUWFDPHWRLWVFRQFOXVLRQE\UHO\LQJXSRQ HQYLURQPHQWl  RXU RSLQLRQ LQ 5RQFNHU  )G DW  LQ ZKLFK ZH GLVFXVVHG WKH PDLQVWUHDPLQJ UHTXLUHPHQW LQ WKH mOHDVW 7R WKH PD[LPXP H[WHQW DSSURSULDWH FKLOGUHQ ZLWK UHVWULFWLYH HQYLURQPHQWl SURYLVLRQ  +RZHYHU WKH FRXUWj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

WKH XVH RI VXSSOHPHQWDU\ DLGV DQG VHUYLFHV FDQQRW EH RIWKHUHTXLUHPHQWLQWKH$FWFOHDUO\FRPPDQGVVFKRROVWR DFKLHYHGVDWLVIDFWRULO\ PDLQVWUHDPGLVDEOHGFKLOGUHQDVPXFKDVSRVVLEOHLWLVVLOHQW DERXWZKHUHZLWKLQWKHVFKRROGLVWULFWWKDWPDLQVWUHDPLQJ ,G DW †  D    (GXFDWLRQDO SODFHPHQW GHFLVLRQV DUH VKRXOGWDNHSODFH6HH+XGVRQE\+XGVRQY%ORRPILHOG+LOOV EDVHGRQWKH,(3 3XE 6FK  ) 6XSS    (' 0LFK   KROGLQJWKDWQRWKLQJLQWKH$FWUHTXLUHVDVFKRROGLVWULFWWR 7KH$FWDOVRHVWDEOLVKHVSURFHGXUDOVDIHJXDUGVWRHQVXUH SODFHDGLVDEOHGFKLOGLQWKHVFKRROWKDWFKLOGZRXOGDWWHQGLI WKDWFKLOGUHQZLWKGLVDELOLWLHVDQGWKHLUSDUHQWVFDQmSUHVHQW QRWKDQGLFDSSHG DIIjG)G WK&LU  0XUUD\ FRPSODLQWV ZLWK UHVSHFW WR DQ\ PDWWHU UHODWLQJ WR WKH %\DQG7KURXJK0XUUD\Y0RQWURVH&RXQW\6FK'LVW LGHQWLILFDWLRQ HYDOXDWLRQ RU HGXFDWLRQDO SODFHPHQW RI WKH )G    WK&LU   KROGLQJWKHVWDWXWHjVSODLQ FKLOGRUWKHSURYLVLRQRIDIUHHDSSURSULDWHSXEOLFHGXFDWLRQ PHDQLQJ GRHV QRW LQFOXGH D SUHVXPSWLRQ WKDW WKH OHDVW WRVXFKFKLOGl,GDW† E  8SRQSUHVHQWLQJVXFKD UHVWULFWLYHHQYLURQPHQWLVDQHLJKERUKRRGVFKRRO  FRPSODLQWWKHSDUHQWVRUJXDUGLDQVKDYHWKHSURFHGXUDOULJKW WR DQ mLPSDUWLDO GXH SURFHVV KHDULQJl FRQGXFWHG E\ WKH 7KHSODLQWLIIVDWWHPSWWRUHO\RQWKH$FWjVLPSOHPHQWLQJ DSSURSULDWHVWDWHRUORFDOHGXFDWLRQDODJHQF\,GDW† I  UHJXODWLRQV&)5††WRVXSSRUWWKHLU ,Q0LFKLJDQWKHUHLVDWZRWLHUUHYLHZV\VWHP DGLVSXWHLV QHLJKERUKRRG VFKRRO DUJXPHQW EXW WKH LPSOHPHQWLQJ ILUVWSUHVHQWHGWRDORFDOKHDULQJRIILFHUDQGLIDQDJJULHYHG UHJXODWLRQVDOVRGRQRWPDQGDWHSODFHPHQWLQDQHLJKERUKRRG SDUW\FKRRVHVWRDSSHDOWRDVWDWHKHDULQJUHYLHZRIILFHU6HH VFKRRODVWKHOHDVWUHVWULFWLYHHQYLURQPHQW7KHUHJXODWLRQV 0LFKLJDQ $GPLQLVWUDWLYH &RGH 5XOH   $IWHU WKH SURYLGHRQO\WKDW>W@KHHGXFDWLRQDOSODFHPHQWRIHDFKFKLOG DGPLQLVWUDWLYH DSSHDOV DQ DJJULHYHG SDUW\ mVKDOO KDYH WKH ZLWKDGLVDELOLW\>VKDOOEH@DVFORVHDVSRVVLEOHWRWKHFKLOG V ULJKW WR EULQJ D FLYLO DFWLRQ ZLWK UHVSHFW WR WKH FRPSODLQW KRPH&)5† D  DQGWKDW>X@QOHVVWKH,(3 SUHVHQWHGlLQWKHDGPLQLVWUDWLYHUHYLHZSURFHVV86& RIDFKLOGZLWKDGLVDELOLW\UHTXLUHVVRPHRWKHUDUUDQJHPHQW † L   WKHFKLOGLVHGXFDWHGLQWKHVFKRROWKDWKHRUVKHZRXOGDWWHQG LIQRQGLVDEOHG&)5† F $VZHFRQFOXGHGLQ (PPD0F/DXJKOLQZDVERUQRQ'HFHPEHU DQG +XGVRQ ZH UHLWHUDWH WKDW WKHVH WZR UHJXODWLRQV VKRXOG EH GLDJQRVHG ZLWK D FRQGLWLRQ FRPPRQO\ NQRZQ DV 'RZQ UHDGDVWKHLUSODLQODQJXDJHLQGLFDWHVWRSURYLGHWKDWDFKLOG 6\QGURPH VKRUWO\ WKHUHDIWHU  %HFDXVH RI WKLV FRQGLWLRQ VKRXOGEHHGXFDWHGLQWKHQHLJKERUKRRGVFKRRO WKHVFKRROKH (PPDLVDmFKLOGZLWKDGLVDELOLW\lDVGHILQHGLQWKH$FW RUVKHZRXOGDWWHQGLIQRWGLVDEOHG H[FHSWZKHQWKHJRDOVRI 86&†  &)5†DQGVKHKDVUHFHLYHG WKHFKLOGjV,(3SODQUHTXLUHDVSHFLDOHGXFDWLRQSODFHPHQWQRW VSHFLDOHGXFDWLRQVHUYLFHVVLQFHVKHZDVWZRPRQWKVROG6KH DYDLODEOHDWWKDWVFKRRODQGLQDVLWXDWLRQZKHQSODFHPHQW OLYHV ZLWK KHU SDUHQWV LQ 'LPRQGDOH 0LFKLJDQ DQG LV HOVHZKHUHLVUHTXLUHGWKHJHRJUDSKLFSUR[LPLW\RIVFKRROV FXUUHQWO\HOLJLEOHIRUVSHFLDOHGXFDWLRQVHUYLFHVDVDFKLOGZKR WKDW RIIHU WKDW SODFHPHQW WR WKH FKLOGjV KRPH VKRXOG EH IDOOVLQWRWKHFDWHJRU\RImHGXFDEOHPHQWDOO\LPSDLUHGl FRQVLGHUHG6HH+XGVRQ )6XSSDW DFFRUG)ORXU %OXII,QGHS6FK'LVWY.DWKHULQH0E\/HVD7 )G 8QWLO sXQH   (PPDjV SDUHQWV VLJQHG ,(3 SODQV LQ       WK &LU    HPSKDVL]LQJ WKDW WKH DJUHHPHQW ZLWK WKH VFKRRO GLVWULFWjV SURSRVDOV HDFK \HDU FRQVLGHUDWLRQ RI SUR[LPLW\ LV QRW D SUHVXPSWLRQ WKDW D 6LQFH WKDW WLPH KRZHYHU WKH SDUWLHV KDYH KDG D VHULHV RI GLVDEOHG VWXGHQW DWWHQG KLV RU KHU QHLJKERUKRRG VFKRRO GLVDJUHHPHQWV DERXW KRZ WR VWUXFWXUH (PPDjV HGXFDWLRQ 0XUUD\)GDW  %DUQHWWY)DLUID[&RXQW\6FK%G $IWHUWKH  VFKRRO\HDULQZKLFK(PPDDWWHQGHGD )G WK&LU    0F/DXJKOLQHWDOY+ROW 1R 1R 0F/DXJKOLQHWDOY+ROW  3XEOLF6FKRROV%GHWDO 3XEOLF6FKRROV%GHWDO

WKH DSSURSULDWH W\SH RI FODVVURRP SODFHPHQW WR WKH SUHSULPDU\ VSHFLDO HGXFDWLRQ FODVVURRP RSHUDWHG E\ +ROW DSSURSULDWHVFKRROSODFHPHQW7KHFRXUWFRQFHGHGWKDWLWZDV 3XEOLF 6FKRROV KHU SDUHQWV UHIXVHG WR FRQWLQXH FODVVURRP UHIUDPLQJ WKH LVVXH H[SODLQLQJ WKDW WKH DGPLQLVWUDWLYH VHUYLFHVWKURXJK+ROWDQGWKH\FKRVHWRHQUROO(PPDIRUWKH KHDULQJRIILFHUVKDGIDLOHGWRFRQVLGHUWKHmOHDVWUHVWULFWLYH    VFKRRO \HDU LQ WKH 0LFKLJDQ 6WDWH 8QLYHUVLW\jV HQYLURQPHQWlPDQGDWH,WDSSHDUVWRXVKRZHYHUWKDWWKH &KLOG'HYHORSPHQW/DE6FKRRODWWKHLURZQH[SHQVH7KH DGPLQLVWUDWLYHRIILFHUVGLGQRWRYHUORRNWKDWUHTXLUHPHQWEXW +ROW 6FKRRO 'LVWULFW FRQWLQXHG WR SURYLGH DQFLOODU\ DQG SURSHUO\IRXQGWKDWLWZDVQRWUHOHYDQWWRWKHLVVXHLQGLVSXWH UHODWHGVHUYLFHV7KH0F/DXJKOLQVUHHQUROOHG(PPDDWWKH :HIXUWKHUFRQFOXGHWKDWWKHGLVWULFWFRXUWPLVLQWHUSUHWHGWKH /DE6FKRROGXULQJWKH  VFKRRO\HDUDJDLQZLWKWKH $FWjVmOHDVWUHVWULFWLYHHQYLURQPHQWlPDQGDWHPLVDSSOLHGLW +ROW6FKRRO'LVWULFWSURYLGLQJFHUWDLQDQFLOODU\DQGUHODWHG WR(PPDjV ,(3SODQDQGLQGRLQJVRLPSURSHUO\VKLIWHG VHUYLFHV WKHEXUGHQRISURRIIURPKHUSDUHQWVWRWKHVFKRROV\VWHP ,Q 0D\   (PPDjV SDUHQWV GLVDJUHHG ZLWK WKH SODQ $ ,QDSSOLFDELOLW\ RI ,'($jV /HDVW 5HVWULFWLYH SURSRVHG IRU WKH    VFKRRO \HDU DQG UHTXHVWHG D (QYLURQPHQW5HTXLUHPHQW KHDULQJ  :KLOH WKH KHDULQJ ZDV SHQGLQJ D WKUHH\HDU UHHYDOXDWLRQZDVGXHDWWKHVDPHWLPHDVWKHQH[WDQQXDO,(3 7KH GLVWULFW FRXUW PD\ KDYH JRWWHQ RII WUDFN HDUO\ E\ +HQFHWKHKHDULQJRQWKH ,(3ZDVSRVWSRQHGWRDOORZ EHJLQQLQJLWVDQDO\VLVEDVHGRQWKHLQFRUUHFWSUHPLVHWKDWDW FRPSOHWLRQRIWKRVHWDVNVDQGLWZDVDJUHHGWKDWDQ\LVVXHV WKHDGPLQLVWUDWLYHKHDULQJVmERWKVLGHVDJUHHGLQWKHDEVWUDFW VXUURXQGLQJ WKH   ,(3 ZRXOG EH VXEVXPHG LQ DQ\ QHZ WKDW'LPRQGDOH(OHPHQWDU\UHSUHVHQWHGWKHOHDVWUHVWULFWLYH KHDULQJUHTXHVWDIWHUWKHUHHYDOXDWLRQDQGWKH ,(3 IRU HQYLURQPHQWl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oLWGRHVQRWDGGUHVVWKHTXHVWLRQRI ,WZDVDOVRDJUHHGWKDW(PPDZRXOGQHHGDIXOOGD\SURJUDP PDLQVWUHDPLQJ DW D SDUWLFXODU VFKRRO  7KH GLVWULFW FRXUWjV PHDQLQJ VKH ZRXOG UHFHLYH VSHFLDO HGXFDWLRQ FODVVURRP DVVXPSWLRQ WKDW WKH $FW LQFOXGHV D GLUHFWLYH WKDW LQ WKH VXSSRUWGXULQJWKHRWKHUKDOIGD\7KHSDUWLHVGLVDJUHHGDVWR DEVWUDFWDFKLOGjVQHLJKERUKRRGVFKRROLVWKHOHDVWUHVWULFWLYH ZKDW W\SH RI FODVVURRP ZDV DSSURSULDWH IRU (PPD  D HQYLURQPHQWIRUWKDWFKLOGLVVLPSO\HUURQHRXV7KHUHLVQR FDWHJRULFDOFODVVURRPRUDUHVRXUFHURRP VXFK UHTXLUHPHQW HLWKHU LQ WKH WH[W RI WKH $FW RU LQ WKH LPSOHPHQWLQJUHJXODWLRQV  ,QVWHDGWKHUHTXLUHPHQWWKDWWKHVFKRROV\VWHPSURYLGHD $W WKH WLPH RI WKH  ,(3 D FDWHJRULFDO FODVVURRP RU EDVLF GLVDEOHG FKLOG ZLWK WKH OHDVW UHVWULFWLYH HQYLURQPHQW LV D FODVVURRP ZDV GHVLJQHG WR DGGUHVV WKH QHHGV RI VWXGHQWV ZLWKLQ SDUWLFXODU

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

7KH VFKRRO RIILFLDOV RQ WKH ,(3 7HDP GHWHUPLQHG WKDW D KHDULQJ RIILFHU IRXQG WKH SUHSRQGHUDQFH RI WKH HYLGHQFH FDWHJRULFDO FODVVURRP ZDV QHFHVVDU\ WR PHHW (PPDjV VXSSRUWHG(PPDjVSODFHPHQWLQWKHFDWHJRULFDOFODVVURRPDV LQGLYLGXDO JRDOV DQG HGXFDWLRQ QHHGV %HFDXVH (PPDjV QHFHVVDU\WRPHHWKHU,(3JRDOVDQGREMHFWLYHV SDUHQWV GLVDJUHHG ZLWK WKDW GHWHUPLQDWLRQ WKH\ ILOHG D GLVVHQWLQJ UHSRUW WR WKH   ,(3 LQGLFDWLQJ WKDW WKH\ IHOW 2Q DSSHDO WR WKH VWDWH KHDULQJ UHYLHZ RIILFHU WKH (PPDjVVSHFLDOHGXFDWLRQQHHGVFRXOGEHPHWLQDUHVRXUFH 0F/DXJKOLQV DUJXHG WKDW WKH ORFDO KHDULQJ RIILFHU HUUHG LQ URRPUDWKHUWKDQDFDWHJRULFDOFODVVURRP7KH\QRWHGLQWKH GHWHUPLQLQJ WKDW WKH FDWHJRULFDO FODVVURRP ZDV WKH GLVVHQWLQJUHSRUWWKDW(PPDTXDOLILHGIRUWKHUHVRXUFHURRP DSSURSULDWHGHOLYHU\PHWKRGIRU (PPDjVVSHFLDOHGXFDWLRQ EHFDXVH KHU QHHGV GLG QRW UHTXLUH PRUH WKDQ KDOI RI KHU VHUYLFHV7KH\EHOLHYHGWKDWEHFDXVHWKHUHVRXUFHURRPZDV LQVWUXFWLRQDOGD\LQVSHFLDOHGXFDWLRQZKLFKZDVWKHFXWRII QRWLQDSSURSULDWHDQGEHFDXVHLWZDVORFDWHGDW'LPRQGDOH IRUDOORZLQJWKHGHOLYHU\RIVSHFLDOHGXFDWLRQVHUYLFHVWKURXJK (OHPHQWDU\ (PPDjV QHLJKERUKRRG VFKRRO WKH mOHDVW DUHVRXUFHURRP6HH0LFKLJDQ$GPLQLVWUDWLYH&RGH5XOH UHVWULFWLYH HQYLURQPHQWl UHTXLUHPHQW PDQGDWHG (PPDjV  D   7KHSULPDU\UHDVRQIRUWKHLUGLVDJUHHPHQW SODFHPHQWLQWKDWFODVVURRP7KHVWDWHKHDULQJUHYLHZRIILFHU ZLWK WKH FDWHJRULFDO FODVVURRP SODFHPHQW ZDV WKDW WKH IRXQG WKH SDUHQWV KDG WKH EXUGHQ RI SURYLQJ WKDW SODFLQJ FDWHJRULFDO FODVVURRP SODFHPHQW UHTXLUHG (PPD WR DWWHQG (PPDLQDKDOIGD\FDWHJRULFDOFODVVURRPZDVLQDSSURSULDWH 6\FDPRUH (OHPHQWDU\ 6FKRRO UDWKHU WKDQ 'LPRQGDOH /LNH WKH RULJLQDO KHDULQJ RIILFHU KH UHMHFWHG WKH (OHPHQWDU\6FKRROKHUmQHLJKERUKRRGVFKRROl 0F/DXJKOLQjV FODLP WKDW WKH $FWjV mOHDVW UHVWULFWLYH HQYLURQPHQWl SURYLVLRQ UHTXLUHG (PPD EH SODFHG DW KHU 7KH +ROW 3XEOLF 6FKRRO 'LVWULFW RSHUDWHV VL[ HOHPHQWDU\ mKRPHVFKRROlRI'LPRQGDOH(OHPHQWDU\,QVWHDGKHQRWHG VFKRROV LQFOXGLQJ 'LPRQGDOH (OHPHQWDU\ DQG 6\FDPRUH WKDWDFKLOGZLWKDGLVDELOLW\VKRXOGEHHGXFDWHGLQWKHVFKRRO (OHPHQWDU\WKHWZRVFKRROVDWLVVXHLQWKLVFDVH'LPRQGDOH KH RU VKH ZRXOG DWWHQG LI QRQGLVDEOHG H[FHSW ZKHQ WKH (OHPHQWDU\ZDVWKHFORVHVWVFKRROWR(PPDjVKRXVHoDQGWKH FKLOGjV ,(3 UHTXLUHG SODFHPHQW HOVHZKHUH  +H WKHUHIRUH RQH VKH ZRXOG KDYH DWWHQGHG LI QRW GLVDEOHG  6\FDPRUH FRQFOXGHG WKDW (PPDj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sXQH   $ 70, FDWHJRULFDO FODVVURRP LV QRZ EHQFK WULDO WKDW m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l,QLWVZULWWHQ GLG QRW UHTXLUH PRUH WKDQ  SHUFHQW RI KHU WLPH LQ D VSHFLDO HGXFDWLRQ RSLQLRQKRZHYHUWKHGLVWULFWFRXUWFKDQJHGWKHLVVXHIURP VHWWLQJ  0F/DXJKOLQHWDOY+ROW 1R 1R 0F/DXJKOLQHWDOY+ROW  3XEOLF6FKRROV%GHWDO 3XEOLF6FKRROV%GHWDO

7KH ORFDO KHDULQJ RIILFHU UHFRJQL]HG WKDW WKH mOHDVW ,Q UHVSRQVH WR WKH 0F/DXJKOLQjV REMHFWLRQ WR (PPDjV UHVWULFWLYH HQYLURQPHQWl TXHVWLRQ LQYROYHG WKH LVVXH RI SODFHPHQWDORFDOKHDULQJRIILFHUKHOGDGXHSURFHVVKHDULQJ mPDLQVWUHDPLQJl(PPDLQDJHQHUDOHGXFDWLRQFODVVURRPIRU LQsXO\ WRGHWHUPLQHZKLFKVSHFLDOHGXFDWLRQFODVVURRP SDUW RI WKH VFKRRO GD\ DQG QRW WKH GHWHUPLQDWLRQ RI ZKLFK VHWWLQJZDVDSSURSULDWHWRDGGUHVV(PPDjVLQGLYLGXDOQHHGV VSHFLDO HGXFDWLRQ FODVVURRP ZDV DSSURSULDWH IRU WKH DQGIRXQGWKDWWKHDSSURSULDWHSODFHPHQWIRU(PPDZDVWKH UHPDLQGHURIWKHFKLOGjVVFKRROGD\$VKHSXWLWm>(@YLGHQFH FDWHJRULFDO FODVVURRP  (PPDjV SDUHQWV DSSHDOHG DQG LQ UHODWLQJWR(PPDEHLQJSODFHGDWKHUQHLJKERUKRRGVFKRRO 6HSWHPEHU DVWDWHKHDULQJUHYLHZRIILFHUDIILUPHGWKH >LV@QRWUHOHYDQW>EHFDXVH@WKHLVVXHLVQRWRQHRI>OHDVW ORFDOKHDULQJRIILFHUjVGHFLVLRQWKDW(PPDVKRXOGSDUWLFLSDWH UHVWULFWLYHHQYLURQPHQW@EXWUDWKHUZKLFKVSHFLDOHGXFDWLRQ LQWKHFDWHJRULFDOFODVVURRPLQVWHDGRIWKHUHVRXUFHURRP FODVVURRPVHWWLQJLVDSSURSULDWHWRDGGUHVV(PPDjVLQGLYLGXDO QHHGVl 6XEVHTXHQW WR WKDW GHFLVLRQ WKH 0F/DXJKOLQV ILOHG WKH FXUUHQW DFWLRQ LQ IHGHUDO GLVWULFW FRXUW DQG XOWLPDWHO\ $IWHUKHDULQJWHVWLPRQ\IURPDPRQJRWKHUVD+ROWJHQHUDO UHFHLYHGDUXOLQJLQWKHLUIDYRU,WLVIURPWKDWMXGJPHQWWKDW HGXFDWLRQNLQGHUJDUWHQWHDFKHUD+ROWUHVRXUFHURRPWHDFKHU WKHFXUUHQWDSSHDOE\WKHVFKRROV\VWHPDULVHV D +ROW FDWHJRULFDO FODVVURRP WHDFKHU +ROWjV 'LUHFWRU RI 6SHFLDO (GXFDWLRQ D VSHHFK DQG ODQJXDJH SDWKRORJLVW D ',6&866,21 VSHFLDOHGXFDWLRQUHVRXUFHURRPWHDFKHULQWKH/DQVLQJVFKRRO GLVWULFW DQG (PPDjV WHDFKHU DW WKH /DE 6FKRRO WKH ORFDO ,6WDQGDUGVRI5HYLHZ $,QWKH'LVWULFW&RXUW 'LPRQGDOH (OHPHQWDU\ DQG QR RWKHU VFKRRO ,QGHHG RXU UHDGLQJ RI WKH ,QDFWLRQVILOHGSXUVXDQWWRWKH,'($WKHUHDUHWZRSDUWVWR UHFRUG VXJJHVWV  DQG WKH VWDWHPHQWV E\ FRXQVHO DW RUDO DUJXPHQW RI WKLV D FRXUW V LQTXLU\  )LUVW WKH GLVWULFW FRXUW PXVW GHWHUPLQH FDVH WHQGHG WR FRQILUP o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jV VSHFLDO HGXFDWLRQ VHUYLFHV WKURXJK WKH $FW V SURFHGXUHV LV UHDVRQDEO\ FDOFXODWHG WR $W DUJXPHQW FRXQVHO VSRNH LQ WHUPV RI 0DU\ 6XH 0F/DXJKOLQjV ZLVK WR HQDEOHWKHFKLOGWRUHFHLYHHGXFDWLRQDOEHQHILWV6HHLGDW EH DEOH WR mJR GRZQ WKH VWUHHW DQG HQUROO KHU GDXJKWHU LQ WKH QHLJKERUKRRG VFKRRO OLNH HYHU\RQH HOVHl LQ WKH DUHD ,W LV ZHOOHVWDEOLVKHG KRZHYHU WKDW 7KH$FWUHTXLUHVVWDWHVWRSURYLGHDmIUHHDSSURSULDWH WKHUH LV QR DEVROXWH ULJKW WR DWWHQG D QHLJKERUKRRG VFKRRO 6HH 0XUUD\ %\ SXEOLFHGXFDWLRQlWRDOOFKLOGUHQZKRDUHGLVDEOHGDQGLQQHHG DQG 7KURXJK 0XUUD\ Y 0RQWURVH &RXQW\ 6FK 'LVW  )G   RIVSHFLDOHGXFDWLRQ86&† D  $ 0LFKLJDQ WK &LU   6FKXOGW Y 0DQNDWR ,QGHS 6FK 'LVW 1R   )G KDVDGGHGWRWKLVVWDQGDUGDUHTXLUHPHQWWKDWWKHHGXFDWLRQDO   WK &LU   %DUQHWW Y )DLUID[ &RXQW\ 6FK %G  )G SODQPXVWEHGHVLJQHGWRGHYHORSWKHmPD[LPXPSRWHQWLDOl   WK &LU   RI D FKLOG  0LFK &RPS /DZV $QQ ††  D     D   VHHDOVR%XULORYLFKY%RDUG (PSKDVLV LQ WKH RULJLQDO WUDQVFULSW %HIRUH WKH KHDULQJ FRPPHQFHG RI(GXFRI/LQFROQ&RQVRO6FK)G WK&LU WKH SDUHQWV DFNQRZOHGJHG WKDW LI WKH KHDULQJ RIILFHU GHFLGHG WKDW D FDWHJRULFDO FODVVURRP ZDV WKH VSHFLDO HGXFDWLRQ FODVVURRP QHFHVVDU\ WR   LQFRUSRUDWLQJ WKH 0LFKLJDQ mPD[LPXP SRWHQWLDOl PHHW (PPDjV QHHGV WKH\ ZHUH QRW GHPDQGLQJ WR KDYH WKDW FODVVURRP VWDQGDUG LQWR WKH $FW   ,W LV FOHDUO\ HVWDEOLVKHG WKDW WKH GXSOLFDWHG DW 'LPRQGDOH (OHPHQWDU\ 0F/DXJKOLQVEHDUWKHEXUGHQRISURYLQJE\DSUHSRQGHUDQFH  0F/DXJKOLQHWDOY+ROW 1R 1R 0F/DXJKOLQHWDOY+ROW 3XEOLF6FKRROV%GHWDO 3XEOLF6FKRROV%GHWDO

RIWKHHYLGHQFHWKDWWKH,(3GHYLVHGE\+ROW3XEOLF6FKRROV %2Q$SSHDO LVLQDSSURSULDWH6HH'RQJY%RDUGRI(GXFRI5RFKHVWHU &PW\6FK )G   WK&LU  OLVWLQJFDVHV 2Q DSSHDO IURP WKH GLVWULFW FRXUW ZH DSSO\ D mFOHDUO\ 'RH%\DQG7KURXJK'RHY%RDUGRI(GXFRI7XOODKRPD HUURQHRXVlVWDQGDUGRIUHYLHZWRWKHGLVWULFWFRXUW VILQGLQJV &LW\6FK )G WK&LU   RIIDFWDQGDGHQRYRVWDQGDUGRIUHYLHZWRLWVFRQFOXVLRQVRI ODZ6HH.QDEOH)GDW:HPXVWDOVRDFFRUGGXH ,QDQ,'($DFWLRQmWKHFRXUW L VKDOOUHFHLYHWKHUHFRUGV GHIHUHQFHWRWKHVWDWHKHDULQJUHYLHZRIILFHUjVGHFLVLRQ6HH RIWKHDGPLQLVWUDWLYHSURFHHGLQJV  LL VKDOOKHDUDGGLWLRQDO 5RQFNHUY:DOWHU)G WK&LU   HYLGHQFHDWWKHUHTXHVWRIDSDUW\ DQG LLL EDVLQJLWVGHFLVLRQ RQWKHSUHSRQGHUDQFHRIWKHHYLGHQFHVKDOOJUDQWVXFKUHOLHI ,,7KH'LVWULFW&RXUWjV,'($$QDO\VLV DV WKH FRXUW GHWHUPLQHV LV DSSURSULDWHl   86& †  L  %   7KH 6XSUHPH &RXUW KDV FRQVWUXHG WKLV ,Q UHVROYLQJ WKH GLVSXWH RYHU (PPD 0F/DXJKOLQjV  SURYLVLRQWRPHDQWKDWDQLQLWLDOUHYLHZLQJFRXUWVKRXOGPDNH HGXFDWLRQDOSODQWKHGLVWULFWFRXUWDWWHPSWHGWRUHFRQFLOHWKH DQLQGHSHQGHQWGHFLVLRQEDVHGRQWKHSUHSRQGHUDQFHRIWKH $FWjV OHDVW UHVWULFWLYH HQYLURQPHQW UHTXLUHPHQW ZLWK HYLGHQFH EXW DOVR VKRXOG JLYH mGXH ZHLJKWl WR WKH 0LFKLJDQjVVWDWHODZmPD[LPXPSRWHQWLDOl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jVSDUHQWV 5HYLHZLQJFRXUWVPD\QRWmVXEVWLWXWHWKHLURZQQRWLRQVRI 7KHORFDOKHDULQJRIILFHUOLPLWHGWKHGXHSURFHVVKHDULQJWR VRXQGHGXFDWLRQDOSROLF\IRUWKRVHRIWKHVFKRRODXWKRULWLHV WKLVGLVFUHWHLVVXHoZKLFKRIWKHWZRRSWLRQVIRUGHOLYHU\RI ZKLFKWKH\UHYLHZl'RH )GDW TXRWLQJ5RZOH\ VSHFLDOHGXFDWLRQZDVDSSURSULDWHIRU(PPD$VWKHORFDO 86DW  KHDULQJRIILFHUUHSHDWHGO\HPSKDVL]HGWKHFDVHEHIRUHKLP GLG QRW SUHVHQW D QHLJKERUKRRG VFKRROV LVVXH RU D mOHDVW 7KLVPRGLILHGGHQRYRVWDQGDUGRIUHYLHZDSSOLHVWRERWK UHVWULFWLYHHQYLURQPHQWlLVVXH7KH0F/DXJKOLQVDQG+ROW SURFHGXUDODQGVXEVWDQWLYHPDWWHUV6HH%XULORYLFK)G ZHUH LQ DJUHHPHQW WKDW (PPD ZRXOG EH IXOO\ LQFOXGHG RU DWm$FFRUGLQJWRWKLVµPRGLILHGjGHQRYRVWDQGDUGRI mPDLQVWUHDPHGl LQ +ROWjV KDOIGD\ NLQGHUJDUWHQ SURJUDP UHYLHZDGLVWULFWFRXUWLVUHTXLUHGWRPDNHILQGLQJVRIIDFW 7KXVWKHVROHLVVXHIRUWKHDGPLQLVWUDWLYHUHYLHZLQYROYHGKHU EDVHGRQDSUHSRQGHUDQFHRIWKHHYLGHQFHFRQWDLQHGLQWKH VSHFLDOHGXFDWLRQSODFHPHQWIRUWKHVHFRQGKDOIRIWKHGD\ FRPSOHWH UHFRUG ZKLOH JLYLQJ VRPH GHIHUHQFH WR WKH IDFW ILQGLQJVRIWKHDGPLQLVWUDWLYHSURFHHGLQJVl.QDEOHH[UHO .QDEOHY%H[OH\&LW\6FK'LVW)G WK&LU  :KDW EHFRPHV DSSDUHQW DIWHU D UHYLHZ RI WKH UHFRUG DV D ZKROH   LQFOXGLQJ WKH WUDQVFULSW RI WKH ,(3 7HDP PHHWLQJ DQG WKH H[KLELWV DQG WHVWLPRQ\ JLYHQ GXULQJ WKH GXH SURFHVV KHDULQJ LV WKDW WKH 0F/DXJKOLQV KDG ILUPO\ GHFLGHG WKDW WKH\ ZDQWHG WKHLU GDXJKWHU WR DWWHQG