Garrison v. Cassens Transp

U.S. Court of Appeals for the Sixth Circuit

Garrison v. Cassens Transp

Opinion

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH   *DUULVRQY&DVVHQV 1RV  (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU 7UDQVS&R )LOH 1DPH DS

BBBBBBBBBBBBBBBBB 81,7('67$7(6&28572)$33($/6 &2816(/ )257+(6,;7+&,5&8,7 $5*8(' 5REHUW/0HUFDGR'($1 )8/.(5621 BBBBBBBBBBBBBBBBB 7UR\ 0LFKLJDQ IRU $SSHOODQW  .HQW / %URZQ sHIIHUVRQ &LW\ 0LVVRXUL IRU $SSHOOHH  21 %5,()   5REHUW / 0HUFDGR 3DWULFLD 0 0RUURZ '($1  )8/.(5621 '$9,' / *$55,621 ; 7UR\ 0LFKLJDQ + 5RZDQ /HDWKHUV ,,, 0$1,(5 3ODLQWLII$SSHOOHH  +(52' 1DVKYLOOH 7HQQHVVHH IRU $SSHOODQW  .HQW /  %URZQsHIIHUVRQ&LW\0LVVRXULIRU$SSHOOHH  1RV Y   BBBBBBBBBBBBBBBBB !  23,1,21 &$66(16 75$163257  BBBBBBBBBBBBBBBBB &203$1<  'HIHQGDQW$SSHOODQW  6,/(5&LUFXLWsXGJH,Q1RGHIHQGDQW&DVVHQV  7UDQVSRUW&RPSDQ\ m&DVVHQVl DSSHDOVWKHMXGJPHQWDIWHU 1 DMXU\YHUGLFWLQIDYRURISODLQWLII'DYLG/*DUULVRQLQWKLV $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW K\EULG †    86& †   EUHDFK RI FRQWUDFWIDLU IRUWKH0LGGOH'LVWULFWRI7HQQHVVHHDW1DVKYLOOH UHSUHVHQWDWLRQ VXLW  ,Q 1R  &DVVHQV DSSHDOV WKH 1R n$OHWD$7UDXJHU'LVWULFWsXGJH RUGHU  E\ WKHGLVWULFWFRXUWKROGLQJLWLQFLYLOFRQWHPSWIRU IDLOXUH WR   LPPHGLDWHO\ UHLQVWDWH *DUULVRQ WR HPSOR\PHQW $UJXHG 0DUFK PDNH FHUWDLQ SHQVLRQ SD\PHQWV  DQG DVVLJQ D mFRPSDQ\ VHQLRULW\lGDWHWKDWFRUUHVSRQGVZLWKWKHGDWHWKDW*DUULVRQ 'HFLGHGDQG)LOHG sXO\ FRXOGKDYHFRPPHQFHGZRUNLQJIRU&DVVHQVXSRQKLVUHWXUQ IURP KLV ZRUNHUjV FRPSHQVDWLRQ LQMXU\  1XPHURXV LVVXHV %HIRUH %2**6DQG6,/(5&LUFXLWsXGJHV 67((+ KDYH EHHQ UDLVHG RQ DSSHDO  $IWHU FDUHIXOO\ UHYLHZLQJ WKH 'LVWULFWsXGJH UHFRUGDQGYLHZLQJWKHHYLGHQFHLQWKHOLJKWPRVWIDYRUDEOH WR*DUULVRQZHILQGWKDWWKHHYLGHQFHDWWULDOZDVLQVXIILFLHQW WRHVWDEOLVKDEUHDFKRIWKHGXW\RIIDLUUHSUHVHQWDWLRQE\WKH XQLRQ$FFRUGLQJO\WKHGLVWULFWFRXUWHUUHGLQQRWHQWHULQJ MXGJPHQW LQ IDYRU RI &DVVHQV SXUVXDQW WR 5XOH  RI WKH )HGHUDO5XOHVRI&LYLO3URFHGXUH$OVREHFDXVHWKHUHZDVQR EDVLVIRUWKHLPSRVLWLRQRIOLDELOLW\ZHQHFHVVDULO\ILQGWKDW WKHFLYLOFRQWHPSWRUGHUFDQQRORQJHUVWDQG7KHUHIRUHZH 5(9(56( WKH MXU\ YHUGLFW DQG 5(0$1' WR WKH GLVWULFW

7KH +RQRUDEOH *HRUJH &DUDP 6WHHK 8QLWHG 6WDWHV 'LVWULFW FRXUWIRUWKHHQWU\RIMXGJPHQWDVDPDWWHURIODZIRU&DVVHQV sXGJH IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

 1RV  *DUULVRQY&DVVHQV   *DUULVRQY&DVVHQV 1RV  7UDQVS&R 7UDQVS&R

$OVR WKH FLYLO FRQWHPSW RUGHU RI sDQXDU\   LV 1LVVDQjV GHFLVLRQ WR WUDQVIHU LWV ZRUN WR &DVVHQV DQG 5(9(56('DQG9$&$7('LQLWVHQWLUHW\ &RPPHUFLDO&DUULHUV$PHPRUDQGXPZDVVHQWHQFORVLQJD IRUPRQZKLFKGULYHUVFRXOGGHVLJQDWHZKHWKHUWKH\ZLVKHG ,%$&.*5281' WRIROORZWKHZRUNWR&DVVHQVRU&RPPHUFLDO&DUULHUVRUVWD\ ZLWK$OOLHGDQGVHHNZRUNDWDQRWKHUWHUPLQDO *DUULVRQ EHJDQ KLV HPSOR\PHQW DV D GULYHU ZLWK $OOLHG 6\VWHPV/WG m$OOLHGl DQGRULWVSUHGHFHVVRU$XWR&RQYH\ $VDUHVXOWRI1LVVDQjVGHFLVLRQWRWUDQVIHULWVZRUN$OOLHG ,QFLQ $OOLHGLVDWUXFNLQJFRPSDQ\HQJDJHGLQWKH &DVVHQV &RPPHUFLDO &DUULHUV DQG /RFDO  VXEPLWWHG D DXWR WUDQVSRUW EXVLQHVV  ,Q   *DUULVRQ WUDQVIHUUHG WR UHTXHVW WR WKH 1DWLRQDO sRLQW $UELWUDWLRQ &RPPLWWHH WKH $OOLHGjV 6P\UQD 7HQQHVVHH WHUPLQDO ZKHUH KH ZDV m1s$&l IRUDGHWHUPLQDWLRQRIWKHVHQLRULW\ULJKWVRI$OOLHG HPSOR\HG DV D GULYHU XQWLO 1RYHPEHU    ZKHQ KH HPSOR\HHVDIIHFWHGE\WKHZRUNWUDQVIHU7KH1s$&LVVXHG VXVWDLQHG DQ RQWKHMRE LQMXU\  &DVVHQV LV DOVR D WUXFNLQJ LWVGHFLVLRQUXOLQJWKDWSXUVXDQWWR10$7$$OOLHGGULYHUV FRPSDQ\HQJDJHGLQWKHGHOLYHU\RIDXWRPRELOHVWRYHKLFOH KDG WKH ULJKW WR WUDQVIHU HLWKHU WR &DVVHQV RU &RPPHUFLDO GHDOHUVKLSVLQWKH 8QLWHG6WDWHV6LQFH &DVVHQVKDV &DUULHUV WR IROORZ WKH 1LVVDQ ZRUN  5HJDUGLQJ VHQLRULW\ PDLQWDLQHGDQRSHUDWLRQLQ6P\UQD7HQQHVVHH ULJKWVWKH1s$&VWDWHGWKDW$OOLHGjVVHQLRULW\OLVWZDVmWREH GRYHWDLOHG E\ WHUPLQDO VHQLRULW\ ZLWK WKH &DVVHQV DQG 'ULYHUVIRU$OOLHGDQG&DVVHQVDUHPHPEHUVRI7HDPVWHUV &RPPHUFLDO>&DUULHUV@6P\UQD6HQLRULW\/LVWVl /RFDOZKLFKLVDIILOLDWHGZLWKWKH,QWHUQDO%URWKHUKRRG RI 7HDPVWHUV &KDXIIHXUV :DUHKRXVHPHQ DQG +HOSHUV RI $VUHTXLUHGE\WKH1s$&jVGHFLVLRQ$OOLHGZDVUHVSRQVLEOH $PHULFD$)/&,2/RFDOLVWKHH[FOXVLYHEDUJDLQLQJ IRU SUHSDULQJ VHSDUDWH OLVWV RI $OOLHG GULYHUV VHHNLQJ WR UHSUHVHQWDWLYH RI $OOLHG DQG &DVVHQV GULYHUV IRU FROOHFWLYH WUDQVIHU WR &DVVHQV DQG &RPPHUFLDO &DUULHUV  $IWHU WKH EDUJDLQLQJ SXUSRVHV  $OOLHG &DVVHQV DQG /RFDO  DUH 1s$&GHFLVLRQ*DUULVRQZKRZDVVWLOORIIZRUNUHFHLYHG VLJQDWRULHV WR D PXOWLHPSOR\HU PXOWLXQLRQ FROOHFWLYH WZR OHWWHUV IURP $OOLHG  7KH ILUVW DGYLVHG *DUULVRQ RI KLV EDUJDLQLQJ DJUHHPHQW UHIHUUHG WR DV WKH 1DWLRQDO 0DVWHU ZRUNRSWLRQVDQGVWDWHGWKDWLIKHGLGQRWFKRRVHWRIROORZWKH $XWRPRELOH 7UDQVSRUWHUV $JUHHPHQW m10$7$l  DQG WKH ZRUNWR&DVVHQVRU&RPPHUFLDO&DUULHUVKHZRXOGEHODLGRII &HQWUDO6RXWKHUQ$UHDV6XSSOHPHQWDO$JUHHPHQW10$7$ JRYHUQVWKHWHUPVDQGFRQGLWLRQVRIGULYHUHPSOR\PHQWZLWK WKHVHFRPSDQLHV:KLOHHPSOR\HGE\$OOLHGDVDGULYHUDWWKH 6P\UQDWHUPLQDO*DUULVRQZDVDPHPEHURI/RFDODQG  &3/07 10$7$ $UW  †  mµ'RYHWDLO VHQLRULW\j LV D WHUP WKDW

ZDVFRYHUHGE\10$7$ LV DSSOLHG ZKHQ WZR  RU PRUH VHQLRULW\ OLVWV DUH PHUJHG RU FRPELQHG

ZLWK D VLQJOH VHQLRULW\ OLVW ZKLFK UHFRJQL]HV WKH WHUPLQDO VHQLRULW\ GDWH RI

HDFK HPSOR\HH 7KH OLVW LV DUUDQJHG E\ WHUPLQDO VHQLRULW\ GDWH ZLWK WKH

$W DOO WLPHV UHOHYDQW WR WKLV FDVH 1LVVDQ 0RWRUV KDG DQ PRVW VHQLRU HPSOR\HH DW WKH WRSl

DVVHPEO\SODQWORFDWHGQHDU$OOLHGjVDQG&DVVHQVjV6P\UQD  RSHUDWLRQV,Q6HSWHPEHU DVDUHVXOWRIDFRPSHWLWLYH 10$7$ UHFRJQL]HV WZR GLIIHUHQW W\SHV RI VHQLRULW\ FRPSDQ\

ELGSURFHVV1LVVDQDZDUGHG&DVVHQVDQGDQRWKHUWUXFNLQJ VHQLRULW\ DQG WHUPLQDO VHQLRULW\ mµ&RPSDQ\ VHQLRULW\j LV D WHUP WKDW LV

FRPSDQ\ &RPPHUFLDO &DUULHUV ,QF LWV 6P\UQD WUDQVSRUW DSSOLHG WR DQ HPSOR\HHjV GDWH RI KLUH E\ WKH (PSOR\HUl $UW  † 

ZRUN ZKLFK  SUHYLRXVO\ KDG EHHQ SHUIRUPHG E\ $OOLHG mµ7HUPLQDO 6HQLRULW\j LV D WHUP WKDW LV DSSOLHG WR WKH HPSOR\HHjV PRVW

6KRUWO\ WKHUHDIWHU $OOLHG QRWLILHG DOO $OOLHG HPSOR\HHV UHFHQW GDWH RI HPSOR\PHQW DW D VSHFLILF WHUPLQDOl ,G mµ7HUPLQDOj LV D

WHUP WKDW LV DSSOLHG WR DQ\ IDFLOLW\ RI DQ (PSOR\HU WR ZKLFK HPSOR\HHV DUH

ZRUNLQJRXWRIWKH6P\UQDWHUPLQDOLQFOXGLQJ*DUULVRQRI DVVLJQHG WR ZRUN ZKHWKHU FDOOHG D EUDQFK WHUPLQDO GLYLVLRQ RU RSHUDWLRQl

,G 1RV  *DUULVRQY&DVVHQV   *DUULVRQY&DVVHQV 1RV  7UDQVS&R 7UDQVS&R

IURP$OOLHGHIIHFWLYHVHYHUDOGD\VODWHU7KHVHFRQGOHWWHU DJHQW DQG 'DYLG +RGJLQ WKH SUHVLGHQW RI /RFDO  WR ZDVDSUHPDWXUHOD\RIIQRWLFH GLVFXVVKLVSUHGLFDPHQW$IWHUGLVFXVVLQJWKHVLWXDWLRQ1HDO H[SUHVVHGKLVYLHZWKDW*DUULVRQjVFDVHZDVDmVODPGXQNl 7KH QH[W GD\ DIWHU UHFHLYLQJ WKHVH OHWWHUV *DUULVRQ +HSURYLGHG*DUULVRQZLWKDIRUPVRWKDWKHFRXOGSUHSDUHD WHOHSKRQHG$OOLHGjVWHUPLQDOPDQDJHUDQGDGYLVHGKLPWKDWKH JULHYDQFHWREHVXEPLWWHGWR&DVVHQV1HDODOVRDUUDQJHGDQ ZDQWHG WR IROORZ WKH ZRUN WR &DVVHQV  ,Q WZR IROORZXS LQIRUPDO PHHWLQJ WR EH KHOG WKH IROORZLQJ GD\ WR GLVFXVV OHWWHUV GDWHG 1RYHPEHU    *DUULVRQ FRQILUPHG KLV *DUULVRQjVUHTXHVWWRUHWXUQWRZRUN UHFHLSWRI$OOLHGjVOHWWHUVDQGUHVWDWHGKLVLQWHQWLRQVWRIROORZ WKH ZRUN WR &DVVHQV  *DUULVRQ FRSLHG WKH OHWWHUV WR WKH 7KHQH[WGD\DQLQIRUPDOPHHWLQJZDVKHOGDW&DVVHQVjV EXVLQHVVDJHQWIRU/RFDO*DUULVRQjVOHWWHUVZHUHERWK 6P\UQDWHUPLQDOEHWZHHQ*DUULVRQ1HDO)LUNXVDQG0DUN VLJQHG m5HFHLYHGl E\ sDPHV )LUNXV &DVVHQVjV 6P\UQD )OHWWDXQLRQVWHZDUGIRU&DVVHQVjVHPSOR\HHV)LUNXVZRXOG WHUPLQDOPDQJHU6HYHUDOGD\VODWHU*DUULVRQUHFHLYHGQRWLFH QRWDJUHHWRSXW*DUULVRQWRZRUN$FFRUGLQJWR*DUULVRQ IURP $OOLHG WKDW EDVHG XSRQ KLV GHFLVLRQ WR WUDQVIHU WR )LUNXVLQGLFDWHGWKDWWKHSUREOHPZDVWKDW*DUULVRQKDGQHYHU &DVVHQVKLVQDPHZDVEHLQJUHPRYHGIURP$OOLHGjVVHQLRULW\ EHHQSODFHGRQWKHVHQLRULW\OLVWEDFNLQ 7KHQH[WGD\ OLVW  +H ZDV QHYHU LQIRUPHG WKDW KH ZRXOG EH UHTXLUHG WR *DUULVRQ GLVFRYHUHG WKDW )LUNXV KDG VLJQHG IRU WKH UHSRUWWRZRUNZLWKLQWKLUW\GD\VRIKLVQRWLILFDWLRQHOHFWLRQ HPSOR\PHQWQRWLILFDWLRQOHWWHUVKHVHQWLQ1RYHPEHU  7KDW DIWHUQRRQ KH FRQIURQWHG )LUNXV DERXW KLV VLJQDWXUHV 2Q sXQH    DSSUR[LPDWHO\ QLQHWHHQ PRQWKV DIWHU ,QLWLDOO\)LUNXVLQGLFDWHGWKDWKHEHOLHYHGWKHVLJQDWXUHVZHUH *DUULVRQVXEPLWWHGKLVWUDQVIHUHOHFWLRQIRUPVKHREWDLQHGD IRUJHULHV6XEVHTXHQWO\KHDGPLWWHGLWZDVKLVVLJQDWXUHRQ PHGLFDOUHOHDVHIURPKLVGRFWRUSHUPLWWLQJKLPWRUHWXUQWR HDFKRIWKHOHWWHUV ZRUN7KDWVDPHGD\KHFRQWDFWHG&DVVHQVLQTXLULQJLQWR ZKHQKHFRXOGEHJLQZRUN7KHDVVLVWDQWWHUPLQDOPDQDJHU /HVVWKDQDZHHNODWHU*DUULVRQVXEPLWWHGDJULHYDQFHWR DW &DVVHQVjV 6P\UQD WHUPLQDO LQIRUPHG *DUULVRQ WKDW KLV /RFDORXWOLQLQJKLVSRVLWLRQWKDWKHKDGSURSHUO\QRWLILHG QDPHGLGQRWDSSHDURQ&DVVHQVjV6P\UQDVHQLRULW\URVWHUDQG &DVVHQVRIKLVSUHIHUHQFHWRIROORZWKH1LVVDQZRUN$ORFDO WKDW KH ZRXOG QHHG WR VSHDN ZLWK )LUNXV ZKR ZDV RQ KHDULQJ ZDV WKHQ KHOG FRQFHUQLQJ *DUULVRQjV JULHYDQFH DW YDFDWLRQ6HYHUDOGD\VODWHU*DUULVRQVSRNHZLWK)LUNXVZKR &DVVHQVjV6P\UQDWHUPLQDO$WWKHKHDULQJ1HDOZKRZDV VWDWHGWKDW*DUULVRQZDVQRWRQ&DVVHQVjVDSSOLFDEOHVHQLRULW\ *DUULVRQjVXQLRQUHSUHVHQWDWLYHDVVHUWHGWKDW*DUULVRQVKRXOG OLVWDQGWKDWLWZRXOGEHQHFHVVDU\WRFRQWDFW&DVVHQVjV/DERU EHSHUPLWWHGWRZRUNIRU&DVVHQVDQGVKRXOGEHSODFHGRQ 5HODWLRQV'LUHFWRUsRH&ODUNWRGLVFXVVWKHVLWXDWLRQ &DVVHQVjVVHQLRULW\OLVWZLWKD VHQLRULW\GDWH&DVVHQV WRRN WKH SRVLWLRQ WKDW LW ZDV XQDZDUH WKDW *DUULVRQ KDG *DUULVRQWKHQZHQWWRWKH/RFDORIILFHLQ1DVKYLOOH HOHFWHGWRWUDQVIHUWR&DVVHQVWKDWKLVQDPHKDGQRWDSSHDUHG 7HQQHVVHHDQGPHWZLWKsLPP\1HDO/RFDO VEXVLQHVV RQDQ\RIWKHVHQLRULW\OLVWVRUWKHWUDQVIHUOLVWVWKDWKDGEHHQ

 *DUULVRQ DOVR ZURWH D VHSDUDWH OHWWHU WR /RFDO  V QRZ IRUPHU

EXVLQHVV DJHQW *HRUJH %DUORZ LQIRUPLQJ KLP WKDW KH ZDQWHG WR IROORZ

WKH ZRUN WR &DVVHQV DQG WKDW KH KDG QRWLILHG $OOLHG RI WKLV SUHIHUHQFH ,Q

WKDW OHWWHU *DUULVRQ VSHFLILFDOO\ DVNHG %DUORZ WR IROORZ XS KLV UHTXHVW WR  ZRUN IRU &DVVHQV DQG WR PDNH VXUH WKDW KLV QDPH ZDV SODFHG RQ WKH ,Q sDQXDU\   1HDO UHSODFHG %DUORZ DV /RFDO  V EXVLQHVV

VHQLRULW\ OLVW DW &DVVHQV DJHQW 1RV  *DUULVRQY&DVVHQV   *DUULVRQY&DVVHQV 1RV  7UDQVS&R 7UDQVS&R

SURYLGHG E\ $OOLHG DQG WKDW &DVVHQV GLG QRW KDYH D WKLVSUHSDUDWLRQVWDJH*DUULVRQIRFXVHGH[FOXVLYHO\RQWU\LQJ FRQWUDFWXDOREOLJDWLRQWRHPSOR\KLP WRSURYHWKDWKHSURSHUO\QRWLILHG&DVVHQVRIKLVLQWHQWLRQVWR IROORZWKH1LVVDQZRUN8OWLPDWHO\*DUULVRQIRUZDUGHGWR 7KHSDUWLHVjLQDELOLW\WRUHDFKDQDFFHSWDEOHUHVROXWLRQWR 1HDODWHQSDJHQLQHW\VHYHQSDUDJUDSKW\SHGSUHVHQWDWLRQ *DUULVRQjVJULHYDQFHUHVXOWHGLQWKHPDWWHUjVEHLQJVXEPLWWHG ZLWKWZHQW\HLJKWH[KLELWVIRUWKHXSFRPLQJDUELWUDWLRQ1HDO IRU DUELWUDWLRQ  1HDO GRFNHWHG WKH JULHYDQFH ZLWK WKH UHYLHZHGWKHSUHVHQWDWLRQDQGWKRXJKWWKDWLWZDVRQHRIWKH 6RXWKHUQ $UHD $XWRPRELOH 7UDQVSRUWHUV *ULHYDQFH EHVWKHKDGHYHUVHHQ &RPPLWWHH WR EH DGGUHVVHG DW LWV $XJXVW   PHHWLQJ LQ 1HZ 2UOHDQV /RXLVLDQD  $W 1HDOjV UHFRPPHQGDWLRQ $SSUR[LPDWHO\ IRUW\HLJKW KRXUV EHIRUH WKH SURFHHGLQJ *DUULVRQGLGQRWDWWHQGWKLVSURFHHGLQJDOWKRXJK1HDOZDV 1HDO*DUULVRQDQG&ODUNPHWWRH[FKDQJHGRFXPHQWVDQG SUHVHQW RQ KLV EHKDOI  'XULQJ WKH SURFHHGLQJ &DVVHQV LQIRUPDWLRQ*DUULVRQJDYH&ODUNDFRS\RIKLVSUHVHQWDWLRQ WKURXJKLWVUHSUHVHQWDWLYHsRH&ODUNUHDVVHUWHGLWVSRVLWLRQ DQG&ODUNJDYH1HDODQG*DUULVRQVHYHQSULRUMRLQWDUELWUDWLRQ WKDWLWGLGQRWKDYHDFRQWUDFWXDOREOLJDWLRQWR*DUULVRQ,Q FRPPLWWHH GHFLVLRQV WKDW KH LQWHQGHG WR XVH LQ VXSSRUW RI DGGLWLRQIRUWKHILUVWWLPH&DVVHQVLQYRNHGDmGD\UXOHl &DVVHQVjVWKLUW\GD\GHIHQVH7KLVDSSHDUVWREHWKHILUVWWLPH DQGDUJXHGWKDW*DUULVRQjVVHQLRULW\WUDQVIHURSSRUWXQLW\KDG WKDW*DUULVRQZDVPDGHDZDUHRIWKHH[LVWHQFHRIDWKLUW\GD\ H[SLUHG EHFDXVH KH KDG QRW UHSRUWHG WR ZRUN DW &DVVHQV UXOH*DUULVRQDQG1HDOUHYLHZHGWKHVHGHFLVLRQVDQGGHFLGHG ZLWKLQ WKLUW\ GD\V RI WKH WUDQVIHU RSSRUWXQLW\  $W WKH WKDWWKH\ZHUHQRWDSSOLFDEOHRUZHUHGLVWLQJXLVKDEOHIURPWKH FRQFOXVLRQRIWKHSURFHHGLQJ*DUULVRQjVFDVHZDVUHIHUUHGWR FLUFXPVWDQFHV LQYROYHG LQ WKH LQVWDQW PDWWHU  1HDO IDLOHG WKH 1DWLRQDO sRLQW 6WDQGLQJ 6HQLRULW\ &RPPLWWHH WKH KRZHYHUWRUHDOL]HRUH[SODLQWKHSRWHQWLDOVLJQLILFDQFHWKH m1s66&l LQ'DQD3RLQW&DOLIRUQLD  ,W DSSHDUVWKDWDWQR WKLUW\GD\ UXOH FRXOG KDYH RQ *DUULVRQjV JULHYDQFH SRLQW DIWHU WKH 6RXWKHUQ $UHD SURFHHGLQJ GLG 1HDO LQIRUP &RQVHTXHQWO\QRUHEXWWDOHLWKHUE\1HDORU*DUULVRQZDV *DUULVRQWKDW&DVVHQVKDGUDLVHGWKHGHIHQVHRIWKHWKLUW\GD\ SUHSDUHGRQWKHLVVXHRIWKHWKLUW\GD\UXOH UXOH  ,W LV WKLV VRPHZKDW REVFXUH UXOH WKDW VHUYHV DV WKH GULYLQJIRUFHEHKLQGWKLVOLWLJDWLRQ ,Q SUHVHQWLQJ *DUULVRQjV JULHYDQFH WR WKH 1s66& 1HDO LQWURGXFHG *DUULVRQ WR WKH FRPPLWWHH DQG UHDG *DUULVRQjV *DUULVRQjVJULHYDQFHZDVXOWLPDWHO\VFKHGXOHGWREHKHDUG JULHYDQFHLQWRWKHUHFRUG*DUULVRQUHDGDSUHSDUHGVWDWHPHQW RQ 1RYHPEHU     ,Q SUHSDULQJ IRU WKLV SURFHHGLQJ DQGLQWURGXFHGH[KLELWVLQVXSSRUWRIKLVFDVH1HLWKHU1HDO *DUULVRQDQG1HDONHSWLQFRQVWDQWFRQWDFW7KH\KDGVHYHUDO QRU*DUULVRQPDGHDQ\PHQWLRQRURWKHUZLVHWULHGWRREYLDWH PHHWLQJVDQGVSRNHRQWKHSKRQHDOPRVWHYHU\GD\'XULQJ DQ\ DUJXPHQW UHJDUGLQJ WKH WKLUW\GD\ UXOH  2Q &DVVHQVjV EHKDOI&ODUNDUJXHGWKDW  &DVVHQVKDGQRWEHHQQRWLILHGRI *DUULVRQjV LQWHQW WR WUDQVIHU IURP $OOLHG WR &DVVHQV   *DUULVRQKDGQHYHUDSSHDUHGRQD&DVVHQVVHQLRULW\OLVW $W WULDO *DUULVRQjV WKHRU\ IRU &DVVHQVjV UHIXVDO WR KLUH KLP ZDV   &DVVHQV GLG QRW KDYH DQ\ FRQWUDFWXDO REOLJDWLRQ WR WKDW &DVVHQV GLG QRW ZDQW VRPHRQH RQ WKH SD\UROO ZKR KDG VXIIHUHG *DUULVRQ DQG  *DUULVRQGLGQRWFRPSO\ZLWKWKHWKLUW\GD\ UXOH ZKHQ KH DSSHDUHG IRU ZRUN LQ    &ODUN KDQGHG VHULRXV EDFN LQMXULHV EHFDXVH RI WKH ULVN RI IXWXUH ZRUNHUjV FRPSHQVDWLRQ

FODLPV

FRPPLWWHH PHPEHUV FRSLHV RI DUELWUDO SUHFHGHQW WKDW KH  EHOLHYHGVXSSRUWHG&DVVHQVjVSRVLWLRQWKDWmDPDQKDVWKLUW\ 1HDO WROG *DUULVRQ WKDW QRWKLQJ VXEVWDQWLYH ZRXOG KDSSHQ DW WKH

6RXWKHUQ $UHD SURFHHGLQJ DQG WKDW KLV JULHYDQFH ZRXOG EH VFKHGXOHG WR GD\VIURPWKHGDWHRIWKHWUDQVIHU>LQ@ZKLFKKHPXVWPDNH EH KHDUG E\ WKH 1DWLRQDO sRLQW 6WDQGLQJ 6HQLRULW\ &RPPLWWHH LQ KLPVHOIDYDLODEOHl$OWKRXJKKHGLGQRWUHIHUWRDQ\RIWKHVH &DOLIRUQLD 1RV  *DUULVRQY&DVVHQV  *DUULVRQY&DVVHQV 1RV  7UDQVS&R 7UDQVS&R

FDVHVE\QDPHKHDVVHUWHGWKDW&DVVHQVGLGQRWEHOLHYHWKDW  WKDW,JDYH\RX$JDLQLWVSHFLILFDOO\UHODWHVWRWKH LWKDGDQ\REOLJDWLRQVWR*DUULVRQmXQGHUWKHSURFHGXUHVDQG JULHYDQW LQ WKDW SDUWLFXODU FDVH EHLQJ RQ DQ RQWKHMRE GHFLVLRQVSUHYLRXVO\UHQGHUHGE\WKH&RPPLWWHHl2WKHUWKDQ LQMXU\DQGFRXOGQRWUHSRUW7KHYHU\VDPHWKLQJWKDWZH WKHVH EULHI VWDWHPHQWV DQG WKH VXEPLVVLRQ RI WKH SULRU KDYH KHUH JHQWOHPDQ  0U *DUULVRQ FLWHV WR \RX WKH FRPPLWWHHGHFLVLRQV&ODUNGLGQRWLQLWLDOO\PDNHDQ\RWKHU ODQJXDJH LQ WKH FRQWUDFW DERXW VHQLRULW\  :HjUH QRW DUJXPHQWVUHJDUGLQJWKHDSSOLFDELOLW\RIWKHWKLUW\GD\UXOHWR WU\LQJ WR EUHDN KLV VHQLRULW\  $OO ZHjUH VD\LQJ LV 0U *DUULVRQjVFDVH *DUULVRQGRHVQRWEHORQJRQRXUVHQLRULW\OLVWDJDLQIRU DOOWKHUHDVRQVZHFLWHGWR\RX $OWKRXJK /RFDO  ZDV IUHH WR UHEXW DQ\ DVSHFW RI &DVVHQVjV FDVH LW DSSHDUV WKDW 1HDO FRPSOHWHO\ IDLOHG WR )ROORZLQJ WKLV KHDULQJ WKH 1s66& LVVXHG LWV GHFLVLRQ DGGUHVV WKH DSSOLFDELOLW\ RI WKH WKLUW\GD\ UXOH  *DUULVRQ GHQ\LQJ *DUULVRQjV UHTXHVW IRU HPSOR\PHQW ZLWK &DVVHQV KLPVHOIKRZHYHUSXWIRUWKVRPHUHEXWWDOWR&DVVHQVjVWKLUW\ 7KH FRPPLWWHH KHOG IRU *DUULVRQ RQ WKH QRWLFH LVVXH GD\UXOHDUJXPHQWVWDWLQJWKDWm,GLGQRWEHOLHYHWKHWKLUW\ 6SHFLILFDOO\LWIRXQGWKDW*DUULVRQPDGHDWLPHO\UHTXHVWWR  GD\UHSRUWUXOHLVDSSOLFDEOHEHFDXVH\RXZLOOILQG &DVVHQV IRU HPSOR\PHQW DQG WKDW WKLV UHTXHVW ZDV >WKDW@LQ10$7$VHQLRULW\VKDOOQRWEHEURNHQH[FHSWE\ DFNQRZOHGJHGE\&DVVHQVjVWHUPLQDOPDQDJHU7KH1s66& GLVFKDUJH YROXQWDU\ TXLW >RU PRUH WKDQ D VHYHQ  \HDU IRXQG KRZHYHU WKDW m>S@ULRU GHFLVLRQV RI WKLV &RPPLWWHH OD\RII@l$IWHU*DUULVRQjVUHEXWWDORQHRIWKHPHPEHUVRIWKH UHTXLUH WKDW HPSOR\HHV ZKR IROORZ WKHLU ZRUN    PDNH FRPPLWWHHDVNHG1HDOZKHWKHUKHKDGDQ\WKLQJIXUWKHUWRDGG WKHPVHOYHV DYDLODEOH IRU ZRUN ZLWKLQ WKLUW\ GD\V DIWHU DQG1HDOUHVSRQGHGm1RVLU,GRQjW,WKLQN\RXJRWWKH H[SUHVVLQJWKHLUGHVLUHWRGRVRl%HFDXVH*DUULVRQZDVQRW FDVHl,QKLVILQDOUHVSRQVH&ODUNPRUHIRUFHIXOO\IOHVKHGRXW DYDLODEOHWRZRUNIRU&DVVHQVGXULQJWKHDSSOLFDEOHWKLUW\GD\ &DVVHQVjVSRVLWLRQRQWKHDSSOLFDELOLW\RIWKHWKLUW\GD\UXOH SHULRG WKH 1s66& IRXQG WKDW KLV WUDQVIHU ULJKWV ZHUH H[WLQJXLVKHG  7KXV WKH WKLUW\GD\ UXOH XOWLPDWHO\ SURYHG 0U*DUULVRQFRXOGQRWUHSRUWLQWKLUW\  GD\VRU GLVSRVLWLYHRI*DUULVRQjVJULHYDQFH$OWKRXJKWKHFRPPLWWHH DQ\UHOHYDQWWLPHSHULRG<RXj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jV MXVW RQH RI WKH VHYHQ 7KH RQH DSSDUHQW 1s66& GHFLVLRQ WKDW SUHVHQWHG D VWULNLQJO\VLPLODULVVXHDVWKDWLQYROYHGLQ*DUULVRQjVFDVHZDV QRW EURXJKW WR WKH FRPPLWWHHjV DWWHQWLRQ  ,Q 0D\    &DVVHQVSUHYLRXVO\DVNHGWKH1s66&IRUJXLGDQFHmDVWRKRZ &DVVHQV DUJXHV WKDW 1HDO UHVSRQGHG WR WKH WKLUW\GD\ UHSRUWLQJ ORQJ>&DVVHQV@LVREOLJDWHGWRDIIRUGZRUNDWWKH$YRQ/DNH UXOH EXW DOOHJHV WKDW WKH WDSH GLG QRW SLFN XS DOO RI WKH 1HDOjV FRPPHQWV

UHIOHFWHG E\ WKH JDS  QRWHG LQ WKH WUDQVFULSWLRQ :H FRQFXU ZLWK WKH IDFLOLW\ WR DQ ( / /RUDLQ GULYHU SUHVHQWO\ RQ D OHDYH RI DEVHQFHGXHWRDQRQWKHMRELQMXU\l&DVVHQV7UDQVS&RY DV

GLVWULFW FRXUWjV YLHZ WKDW WKLV DUJXPHQW LV XQSHUVXDVLYH JXHVVZRUN RQ &DVVHQVjV SDUW ,W LV MXVW DV OLNHO\ WKDW WKH JDS QRWHG LQ WKH WUDQVFULSWLRQ /RFDO8QLRQ1RDQG( /7UDQVS&R/RFDO8QLRQ  VLJQLILHV D SDXVH LQ 1HDOjV UHEXWWDO DV 1HDO ZDV DWWHPSWLQJ WR JDWKHU KLV 1R    $7KH1s66&GHWHUPLQHGWKDWm>Z@LWK WKRXJKWV 1RV  *DUULVRQY&DVVHQV   *DUULVRQY&DVVHQV 1RV  7UDQVS&R 7UDQVS&R

UHJDUGWRWKH( /HPSOR\HHRQZRUNHUVjFRPSHQVDWLRQZKR 7KHGLVWULFWFRXUWHUUHGLQGHQ\LQJ &DVVHQVjVPRWLRQIRU KDV HOHFWHG WR WUDQVIHU WR &DVVHQV KH LV WR EH GHHPHG DV MXGJPHQW DV D PDWWHU RI ODZ XQGHU )HGHUDO 5XOH RI &LYLO WUDQVIHUUHGDQGZLOOKROGVHQLRULW\DW$YRQ/DNHDQGZLOOEH 3URFHGXUH&RQVHTXHQWO\ZHQHHGQRWGHFLGHWKHPDQ\ SHUPLWWHGWRDVVXPHDQDFWLYHSRVLWLRQXSRQKLVUHOHDVHIURP RWKHUDVVLJQPHQWVRIHUURUUDLVHGE\&DVVHQVRQDSSHDOZKLFK FRPSHQVDWLRQ VWDWXVl ,G  ,Q OLJKW RI WKLV KROGLQJ LW PD\ KDYH DOO EHHQ UHQGHUHG PRRW  $OVR EHFDXVH D UHPHGLDO KDYH EHHQ GLIILFXOW IRU WKH FRPPLWWHH WR GLVWLQJXLVK FRQWHPSWRUGHUFDQQRWVXUYLYHWKHUHYHUVDORIWKHXQGHUO\LQJ *DUULVRQjVVLWXDWLRQIURPLWVHDUOLHUSUHFHGHQW RUGHUJLYLQJUDLVHWRWKHFRQWHPSWMXGJPHQWZHUHYHUVHDQG YDFDWHWKHGLVWULFWFRXUWjVRUGHULQFDVH1R 7KHUHDIWHU*DUULVRQLQLWLDWHGDIHGHUDODFWLRQXQGHU† RIWKH/DERU0DQDJHPHQW5HODWLRQV$FW 86&† ,,$1$/<6,6 DJDLQVW&DVVHQV/RFDODQGRWKHUV$OOGHIHQGDQWVH[FHSW &DVVHQV DQG /RFDO  ZHUH GLVPLVVHG IURP WKH ODZVXLW $'HQLDORI6XPPDU\sXGJPHQW )ROORZLQJDVHWWOHPHQWDJUHHPHQW/RFDOZDVYROXQWDULO\ GLVPLVVHG IURP WKH VXLW  7KHUHDIWHU WKH K\EULG DFWLRQ &DVVHQV DUJXHV DW OHQJWK WKDW WKH GLVWULFW FRXUW HUUHG LQ FRQWLQXHGVROHO\DJDLQVW&DVVHQV7KHFDVHWKHQSURFHHGHGWR GHQ\LQJLWVPRWLRQIRUVXPPDU\MXGJPHQWDQGUHFRQVLGHUDWLRQ WULDO$WWKHFRQFOXVLRQRI*DUULVRQjVFDVHLQFKLHIDQGDJDLQ SXUVXDQWWR5XOHRIWKH)HGHUDO5XOHVRI&LYLO3URFHGXUH DWWKHFORVHRIWULDO&DVVHQVPRYHGIRUMXGJPHQWDVDPDWWHU +RZHYHU mZKHUH VXPPDU\ MXGJPHQW LV GHQLHG DQG WKH RI ODZ SXUVXDQW WR 5XOH  RI WKH )HGHUDO 5XOHV RI &LYLO PRYDQWVXEVHTXHQWO\ORVHVDIWHUDIXOOWULDORQWKHPHULWVWKH 3URFHGXUH7KHFRXUWGHQLHGWKHPRWLRQDQGVXEPLWWHGWKH GHQLDORIVXPPDU\MXGJPHQWPD\QRWEHDSSHDOHGlsDUUHWW FDVH WR WKH MXU\  7KH MXU\ IRXQG LQ IDYRU RI *DUULVRQ DQG Y (SSHUO\   )G   WK &LU    VHH DOVR DZDUGHG  LQ FRPSHQVDWRU\ GDPDJHV DOORFDWLQJ . 7(QWHUV,QFY=XULFK,QV&R )G WK VHYHQW\ILYHSHUFHQWRIOLDELOLW\WR&DVVHQVDQGWZHQW\ILYH &LU   KROGLQJWKDWm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l $FFRUGLQJO\EHFDXVHWKHUHKDVEHHQ ,QFDVH1R&DVVHQVDUJXHVWKDWWKHGLVWULFWFRXUW DWULDORQWKHPHULWVZHZLOOQRWUHYLHZWKHGLVWULFWFRXUWjV HUUHG LQ    GHQ\LQJ LWV SUHWULDO PRWLRQ IRU VXPPDU\ GHQLDORIVXPPDU\MXGJPHQW MXGJPHQW   GHQ\LQJLWVPRWLRQIRUMXGJPHQWDVDPDWWHURI ODZSXUVXDQWWR)HGHUDO5XOH   UHIXVLQJWRLQVWUXFWWKH %0RWLRQIRUsXGJPHQWDVD0DWWHURI/DZ MXU\RQLWVGHIHQVHWKDWDSDUWLFXODUVHFWLRQRI10$7$PXVW EHFRQVLGHUHGLQGHWHUPLQLQJZKHWKHU&DVVHQVEUHDFKHGWKH &DVVHQVPRYHGIRUMXGJPHQWDVDPDWWHURIODZSXUVXDQWWR FROOHFWLYH EDUJDLQLQJ DJUHHPHQW    DIILUPLQJ WKH 5XOHDWWKHFRQFOXVLRQRI*DUULVRQjVFDVHLQFKLHIDWWKH FRPSHQVDWRU\ DZDUG ZKHQ WKH UHFRUG HVWDEOLVKHG WKDW HQGRIWULDODQGDJDLQDIWHUWKHMXU\jVYHUGLFW2QDSSHDOLW *DUULVRQIDLOHGWRPLWLJDWHGDPDJHV   DIILUPLQJWKHMXU\jV DUJXHVWKDWWKHHYLGHQFHDWWULDOZDVLQVXIILFLHQWWRVXSSRUWWKH DOORFDWLRQ RI OLDELOLW\  DQG   XSKROGLQJ DQ DZDUG RI MXU\jV ILQGLQJ WKDW   /RFDO  EUHDFKHG LWV GXW\ RI IDLU LQSXQLWLYHGDPDJHV UHSUHVHQWDWLRQ  DQ\DOOHJHGEUHDFKE\WKHXQLRQPRUHWKDQ OLNHO\ DGYHUVHO\ LPSDFWHG WKH JULHYDQFH SURFHVV DQG 1RV  *DUULVRQY&DVVHQV   *DUULVRQY&DVVHQV 1RV  7UDQVS&R 7UDQVS&R

  &DVVHQV EUHDFKHG WKH FROOHFWLYH EDUJDLQLQJ DJUHHPHQW FDQQRWVXFFHHGDJDLQVWHLWKHUSDUW\l%DJVE\Y/HZLV%URV m$QDSSHDOVFRXUWUHYLHZVDGHQLDORID5XOH E PRWLRQGH ,QFRI7HQQ)G  WK&LU   HPSKDVLV QRYRDSSO\LQJWKHVDPHWHVWDVWKHGLVWULFWFRXUWPXVWDSSO\l RPLWWHG   ,Q RUGHU WR SURYH D EUHDFK RI WKH GXW\ RI IDLU *UD\Y7RVKLED$P&RQVXPHU3URGV)G   UHSUHVHQWDWLRQ DQ HPSOR\HH PXVW GHPRQVWUDWH WKDW WKH WK&LU m:HGRQRWZHLJKWKHHYLGHQFHHYDOXDWHWKH XQLRQjV DFWLRQV RU RPLVVLRQV GXULQJ WKH JULHYDQFH SURFHVV FUHGLELOLW\RIWKHZLWQHVVHVRUVXEVWLWXWHRXUMXGJPHQWIRUWKDW ZHUHDUELWUDU\GLVFULPLQDWRU\RULQEDGIDLWK9DFDY6LSHV RIWKHMXU\l:HKUY5\DQjV)DPLO\6WHDNKRXVHV,QF 86    (DFKRIWKHVHZURQJVLVPXWXDOO\ )G WK&LU  m,QVWHDGZHPXVWYLHZWKH LQGHSHQGHQWPHDQLQJWKDWmWKHWKUHHQDPHGIDFWRUVDUHWKUHH HYLGHQFHLQWKHOLJKWPRVWIDYRUDEOHWRWKHSDUW\DJDLQVWZKRP VHSDUDWHDQGGLVWLQFWSRVVLEOHURXWHVE\ZKLFKDXQLRQPD\EH WKH PRWLRQ LV PDGH DQG JLYH WKDW SDUW\ WKH EHQHILW RI DOO IRXQG WR KDYH EUHDFKHG LWV GXW\l %ODFN  )G DW  UHDVRQDEOHLQIHUHQFHVl3KHOSVY<DOH6HF,QF )G m$FWLRQVIRUDXQLRQjVEUHDFKRILWVGXW\RIIDLUUHSUHVHQWDWLRQ   WK &LU  FHUW GHQLHG  86     GHSHQGIRUWKHLUUDWLRQDOHRQWKHXQLRQjVRWKHUZLVHFRPSOHWH m7KH PRWLRQ VKRXOG EH JUDQWHG DQG WKH GLVWULFW FRXUW FRQWURORYHUWKHKDQGOLQJRIDQHPSOR\HHjVJULHYDQFHl,G UHYHUVHG RQO\ LI UHDVRQDEOH PLQGV FRXOG QRW FRPH WR D msXVWDVILGXFLDULHVRZHWKHLUEHQHILFLDULHVDGXW\RIFDUH FRQFOXVLRQRWKHUWKDQRQHIDYRULQJWKHPRYDQWl. 7(QWHUV DVZHOODVGXW\RIOR\DOW\DXQLRQRZHVHPSOR\HHVDGXW\WR ,QF )GDW UHSUHVHQWWKHPDGHTXDWHO\DVZHOODVKRQHVWO\ DQGLQJRRG IDLWKl$LU/LQH3LORWV$VVjQ,QWjOY2j1HLOO 86 ,QWKHLQVWDQWFDVHIROORZLQJWKHMXU\jVYHUGLFWWKHGLVWULFW    FLWDWLRQVRPLWWHG .7KHUHLVQRUHTXLUHPHQWKRZHYHU FRXUWVWDWHGWKDWLWZDVERWKmGXPEIRXQGHGlDQGmVXUSULVHGl WKDWWKHJULHYDQFHSURFHVVEHmHUURUIUHHl +LQHVY$QFKRU E\ WKH UHVXOW  :KLOH UXOLQJ IURP WKH EHQFK WKH FRXUW 0RWRU)UHLJKWV,QF86    VXJJHVWHG WKDW LW GLVDJUHHG ZLWK WKH YHUGLFW  KRZHYHU LW H[SODLQHGWKDWmWKHODZUHDOO\GRHVQjWIDYRUVHWWLQJDVLGHD :LWKUHJDUGWRWKHDUELWUDU\SURQJmDXQLRQjVDFWLRQVDUH MXU\YHUGLFWFHUWDLQO\QRWEHFDXVHWKHMXGJHGLVDJUHHVZLWK DUELWUDU\RQO\LILQOLJKWRIWKHIDFWXDODQGOHJDOODQGVFDSHDW WKHYHUGLFWl2XUFDUHIXOUHYLHZRIWKHH[WHQVLYHDSSHOODWH WKHWLPHRIWKHXQLRQjVDFWLRQVWKHXQLRQjVEHKDYLRULVVRIDU UHFRUGFRQYLQFHVXVWKDWWKHHYLGHQFHSUHVHQWHGWRWKHMXU\ RXWVLGHDµZLGHUDQJHRIUHDVRQDEOHQHVVjDVWREHLUUDWLRQDOl ZDVLQVXIILFLHQWWRVXSSRUWDILQGLQJRIOLDELOLW\RQWKHLVVXH 2j1HLOO 86DW FLWDWLRQRPLWWHG 0HUHQHJOLJHQFH RI/RFDO VEUHDFKRILWVGXW\RIIDLUUHSUHVHQWDWLRQ RQ WKH SDUW RI D XQLRQ GRHV QRW VDWLVI\ WKLV UHTXLUHPHQW 8QLWHG6WHHOZRUNHUVRI$PY5DZVRQ 86  (OHPHQWVRID+\EULG†$FWLRQ    0RUHRYHURUGLQDU\PLVWDNHVHUURUVRUIODZVLQ MXGJPHQW DOVR ZLOO QRW VXIILFH  6HH :DON Y 3 , ( m$ K\EULG VHFWLRQ  DFWLRQ LQYROYHV WZR FRQVWLWXHQW 1DWLRQZLGH ,QF  )G   WK &LU   FODLPV EUHDFKRIDFROOHFWLYHEDUJDLQLQJDJUHHPHQWE\WKH FLWDWLRQV RPLWWHG   7KDW LV mDQ XQZLVH RU HYHQ DQ HPSOR\HUDQGEUHDFKRIWKHGXW\RIIDLUUHSUHVHQWDWLRQE\WKH XQFRQVLGHUHG GHFLVLRQ E\ WKH XQLRQ LV QRW QHFHVVDULO\ DQ XQLRQl%ODFNY5\GHU3,(1DWLRQZLGH,QF)G LUUDWLRQDOGHFLVLRQl,G,QHVVHQFHWKHQWRSUHYDLODSODLQWLII  WK&LU   FLWDWLRQRPLWWHG 7KHWZRFODLPVDUH mLQH[WULFDEO\LQWHUGHSHQGHQWl'HO&RVWHOORY7HDPVWHUV 86    LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQ  ,W LV RI QR FRQVHTXHQFH WKDW *DUULVRQ KDV DOUHDG\ VHWWOHG ZLWK RPLWWHG 8QOHVVDSODLQWLIImGHPRQVWUDWHVERWKYLRODWLRQVKH /RFDO  ,Q D K\EULG †  VXLW DQ mHPSOR\HH PD\ LI KH FKRRVHV VXH RQH GHIHQGDQW DQG QRW WKH RWKHU EXW WKH FDVH KH PXVW SURYH LV WKH VDPH ZKHWKHU KH VXHV RQH WKH RWKHU RU ERWKl 'HO&RVWHOOR   86 DW  1RV  *DUULVRQY&DVVHQV   *DUULVRQY&DVVHQV 1RV  7UDQVS&R 7UDQVS&R

KDVWKHGLIILFXOWWDVNRIVKRZLQJWKDWWKHXQLRQjVDFWLRQVZHUH D 8QLRQjV%UHDFKRILWV'XW\RI)DLU5HSUHVHQWDWLRQ mZKROO\LUUDWLRQDOl2j1HLOO 86DW7KHmZKROO\ LUUDWLRQDOl VWDQGDUG LV GHVFULEHG LQ WHUPV RI mH[WUHPH *DUULVRQjVDOOHJDWLRQRIEUHDFKDJDLQVW/RFDOFDQEH DUELWUDULQHVVl%ODFN)GDW m>7@KHUHOHYDQWLVVXHLQ VHSDUDWHGLQWRWZRFDWHJRULHV   WKRVHDFWLRQVFRQFHUQLQJ DVVHVVLQJ D 8QLRQjV MXGJPHQW LV QRW ZKHWKHU LW DFWHG WKHIDLOXUHWRHQVXUHWKDW&DVVHQVZDVQRWLILHGRI*DUULVRQjV LQFRUUHFWO\ EXW ZKHWKHU LW DFWHG LQ EDG IDLWK RU H[WUHPHO\ LQWHQW WR IROORZ WKH 1LVVDQ ZRUN DQG   WKRVH DFWLRQV DUELWUDULO\ RU GLVFULPLQDWRULO\l  LQWHUQDO TXRWDWLRQ PDUNV FRQFHUQLQJWKHIDLOXUHWRSUHSDUHIRUDQGFKDOOHQJH&DVVHQVjV DQGFLWDWLRQRPLWWHG  DUJXPHQW DV WR WKH WKLUW\GD\ UHSRUWLQJ UXOH  7KH ILUVW FDWHJRU\FDQQRWJLYHULVHWROLDELOLW\ $FFRUGLQJO\RXUIRFXV :KHQ UHYLHZLQJ D XQLRQ UHSUHVHQWDWLYHjV DFWLRQV RU VKLIWVWRWKHVHFRQG*DUULVRQSULPDULO\SRLQWVWRWKUHHHUURUV RPLVVLRQV ZH PXVW QHYHU ORVH VLJKW RI WKH IDFW WKDW XQLRQ LQWKHXQLRQjVKDQGOLQJRIWKHLVVXHRIWKHWKLUW\GD\UXOHWR DJHQWVDUHQRWODZ\HUVDQGDVDJHQHUDOSURSRVLWLRQFDQQRWEH VXSSRUWDILQGLQJRIDUELWUDU\FRQGXFW)LUVWKHDUJXHVWKDWLW KHOGWRWKHVDPHVWDQGDUGDVWKDWRIOLFHQVHGSURIHVVLRQDOV ZDV DUELWUDU\ FRQGXFW IRU 1HDO QRW WR QRWLI\ *DUULVRQ WKDW 6HH6FKRRQRYHUY&RQVRO)UHLJKWZD\V&RUS)G  &DVVHQV KDG UDLVHG D QHZ GHIHQVH DW WKH $XJXVW     WK &LU    .HQQHG\ s GLVVHQWLQJ  m>8@QLRQ SURFHHGLQJLQ1HZ2UOHDQV6HFRQG*DUULVRQPDLQWDLQVWKDW UHSUHVHQWDWLYHV DUH QRW ODZ\HUV  7KH\ GR QRW KDYH WKH 1HDOjV IDLOXUH WR SUHSDUH D UHEXWWDO LQ DQWLFLSDWLRQ RI DGYDQWDJHRIGLVFRYHU\SURFHGXUHVl FHUWGHQLHG86 &DVVHQVjV WKLUW\GD\ UXOH GHIHQVH DPRXQWHG WR DUELWUDU\    3RROHY%XGG&R)G WK&LU FRQGXFW/DVWKHDUJXHVWKDWLWZDVDOVRDUELWUDU\EHKDYLRUIRU    m8QLRQUHSUHVHQWDWLYHVDUHQRWWREHVWULFWO\KHOGWRWKH 1HDO QRW WR DUJXH DJDLQVW WKH DSSOLFDELOLW\ RI WKH DUELWUDO VWDQGDUGVRIDWWRUQH\Vl  FLWDWLRQRPLWWHG 7KLVREVHUYDWLRQ SUHFHGHQWUHOLHGRQE\&DVVHQVDWWKH1s66&SURFHHGLQJLQ LV VLPSO\ D UHVWDWHPHQW RI WKH ZHOOHVWDEOLVKHG OHJDO &DOLIRUQLD  $OWKRXJK 1HDO DFWHG ZLWK OHVV WKDQ IXOO XQGHUVWDQGLQJ WKDW   m>R@QO\ WKRVH LPSRUWDQW RU WDFWLFDO SURIHVVLRQDOLVPWKHUHZDVLQVXIILFLHQWHYLGHQFHIURPZKLFK GHFLVLRQVPDGHE\DXQLRQRIILFLDODWDUELWUDWLRQWKDWH[KLELW WKH MXU\ FRXOG FRQFOXGH WKDW KLV HUURUV URVH WR WKH OHYHO RI DUELWUDU\RUGLVFULPLQDWRU\FRQGXFWRUDFWLRQVWDNHQLQEDG mH[WUHPHDUELWUDULQHVVl IDLWK FRQVWLWXWH EUHDFK RI D GXW\ RI IDLU UHSUHVHQWDWLRQl :DON )GDW FLWDWLRQRPLWWHG  1HDOILUVWOHDUQHGRIWKHWKLUW\GD\UXOHDWWKH1HZ2UOHDQV SURFHHGLQJZKHQ&DVVHQVLQYRNHGWKHUXOHDVDQDIILUPDWLYH 2QFHDQHPSOR\HHVXFFHVVIXOO\GHPRQVWUDWHVWKDWWKHXQLRQ GHIHQVHWRGHIHDW*DUULVRQjVJULHYDQFH ,WLVXQGLVSXWHGWKDW DFWHGFRQWUDU\WRLWVOHJDOGXW\WKHHPSOR\HHPXVWWKHQVKRZ SULRU WR WKLV KHDULQJ DQG GXULQJ KLV UHODWLYHO\ VKRUW WHQXUH WKDWWKHXQLRQjVDFWLRQVRURPLVVLRQVmWDLQWHGWKHJULHYDQFH LHWZHQW\PRQWKV DV/RFDO VEXVLQHVVDJHQW1HDOKDG SURFHGXUH VXFK WKDW WKH RXWFRPH ZDV PRUH WKDQ OLNHO\ QHYHUGHDOWZLWKRURWKHUZLVHEHHQPDGHDZDUHRIWKHOLWWOH DIIHFWHG E\ WKH 8QLRQjV EUHDFKl  'XVKDZ Y 5RDGZD\ NQRZQ WKLUW\GD\ UXOH  $V *DUULVRQ KLPVHOI FRQFHGHV WKH ([SUHVV ,QF  )G    WK &LU    FLWDWLRQ WKLUW\GD\mUXOHZDVRQH>1HDO@KDGQHYHUKHDUGRILQDOORIKLV RPLWWHG   7KH LPSDFW RI WKH XQLRQjV EUHDFK PXVW EH VXEVWDQWLDO VXFK WKDW WKH SODLQWLII mPXVW PHHW WKH RQHURXV EXUGHQRISURYLQJWKDWWKHJULHYDQFHSURFHVVZDVµVHULRXVO\ *DUULVRQ SUHYDLOHG RQ WKLV LVVXH EHIRUH WKH 1s66& DQG KHQFH IODZHGE\WKHXQLRQjVEUHDFKjl%ODFN)GDW DQ\ DOOHJHG EUHDFK FRXOG QRW KDYH WDLQWHG WKH FRPPLWWHHjV GHFLVLRQ $V TXRWLQJ+LQHV86DW  WKH 1s66& IRXQG m0U *DUULVRQ PDGH D WLPHO\ UHTXHVW IRU HPSOR\PHQW FRQVLVWHQW ZLWK WKLV &RPPLWWHHjV SULRU GHFLVLRQ    DQG WKLV UHTXHVW ZDV DFNQRZOHGJHG E\ &DVVHQVjV WHUPLQDO PDQDJHU >)LUNXV@l 1RV  *DUULVRQY&DVVHQV   *DUULVRQY&DVVHQV 1RV  7UDQVS&R 7UDQVS&R

\HDUVZLWKWKHXQLRQl*DUULVRQDOVRUHFRJQL]HVWKDWDWWKH DQG *DUULVRQ GLG QRW SUHSDUH D UHVSRQVH WR WKLV GHIHQVH WLPH RI KLV JULHYDQFH SURFHHGLQJV WKH WKLUW\GD\ UXOH ZDV 1HDOjVGHFLVLRQQRWWRUHVHDUFKDQGSUHSDUHDUHVSRQVHWRD UDUHO\LQYRNHGDQGHYHQPRUHUDUHO\UHOLHGRQDVDEDVLVWR GHIHQVHWKDWKHEHOLHYHGZDVLQDSSOLFDEOHWRWKHJULHYDQFHKH GHIHDW D JULHYDQFH  )RU LQVWDQFH *DUULVRQ UHSHDWHGO\ DQG ZDVKDQGOLQJLVDWDFWLFDOGHFLVLRQVXEMHFWWRGHIHUHQFH$IWHU EROGO\HPSKDVL]HVWKDWKHmLVWKHRQO\HPSOR\HHLQWKHVL[W\ HYDOXDWLQJ WKH GHFLVLRQV VXEPLWWHG E\ &DVVHQVDQG \HDU KLVWRU\ RI FDU KDXO ZKR HYHU ORVW KLV ULJKW WR EH RQ D GHWHUPLQLQJ WKH\ ZHUH LUUHOHYDQW RU GLVWLQJXLVKDEOH IURP VHQLRULW\>OLVW@EHFDXVHKHGLGQjWVKRZXSZLWKLQWKLUW\GD\Vl *DUULVRQjV FODLPLW ZDV LQ 1HDOjV GLVFUHWLRQ WR GHWHUPLQH *LYHQWKHUHODWLYHREVFXULW\DQGGHFHSWLYHXQLPSRUWDQFHRI KRZKHZDQWHGWRH[SHQGKLVWLPHHIIRUWVDQGUHVRXUFHVLQ WKH WKLUW\GD\ UXOH 1HDOjV RYHUVLJKW LQ QRW UHOD\LQJ WKLV FRQWLQXLQJ WR SURVHFXWH *DUULVRQjV JULHYDQFH  ,I 1HDO GHIHQVHWR*DUULVRQGLGQRWDPRXQWWRDUELWUDU\FRQGXFW DW GHWHUPLQHG WKDW D FKDQJH LQ VWUDWHJ\ ZDV QRW ZDUUDQWHG D ZRUVWWKHHUURUZDVQHJOLJHQFH&I:DON )GDW FRQFOXVLRQ WKDW *DUULVRQ FRQFXUUHG ZLWK WKHQ XQOHVV H[SODLQLQJ WKDW D XQLRQ DJHQWjV IDLOXUH WR LQYHVWLJDWH GLVFULPLQDWRU\ZKROO\LUUDWLRQDORUPDGHLQEDGIDLWKLWLV DGHTXDWHO\DJULHYDQWjVFDVHEHIRUHVXEPLVVLRQWRDUELWUDWLRQ QRW IRU XV WR VHFRQG JXHVV WKH ZLVGRP RI WKH GHFLVLRQ ZDV QHJOLJHQW EXW QRW LQ DQG RI LWVHOI DUELWUDU\  2OVHQ Y 0RUHRYHUOLNHRWKHUFRQWH[WVZKHUHZHHQJDJHLQSRVWKRF 8QLWHG3DUFHO6HUY )G    WK&LU  HYDOXDWLRQRIFRQGXFWZHPXVWEHHYHUYLJLODQWWRDYRLGWKH m:KLOHZHFDQLPDJLQHVLWXDWLRQVLQZKLFKDXQLRQ VIDLOXUH GLVWRUWLQJHIIHFWVRIKLQGVLJKW$OWKRXJK1HDOjVGHFLVLRQQRW WR LQYHVWLJDWH PLJKW FRQVWLWXWH VXEVWDQWLDO HYLGHQFH RI D WRREYLDWHRURWKHUZLVHSUHSDUHDUHEXWWDOWRWKHWKLUW\GD\UXOH EUHDFK WKH PHUH IDLOXUH WR LQYHVWLJDWH LQ LWVHOI GRHV QRW FRQVWLWXWHDEUHDFKRIWKHGXW\RIIDLUUHSUHVHQWDWLRQl  $SSUR[LPDWHO\ IRUW\HLJKW KRXUV SULRU WR WKH 1s66& ZHUH RI WKH YLHZ WKDW WKH GHFLVLRQV ZHUH LQDSSOLFDEOH WR *DUULVRQjV SURFHHGLQJ1HDO*DUULVRQDQGs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jV JULHYDQFH   $FFRUGLQJO\ 1HDO GLGQjW \RX" $ , GLG ORRN DW WKHP \HV VLU 4 $QG 0U 1HDO DOVR ORRNHG DW WKRVH GHFLVLRQV GLGQjW KH" $ <HV VLU  4 $QG ERWK RI \RX FDPH WR WKH VDPH FRQFOXVLRQ ZKLFK $W WULDO 1HDO WHVWLILHG WKDW KH VLPSO\ GLG QRW UHFDOO WKH WKLUW\ ZDV WKDW \RX IHOW LQ \RXU MXGJPHQW WKDW WKRVH GHFLVLRQV GD\ UXOH DUJXPHQW EHLQJ DGYDQFHG E\ &DVVHQV DW WKH 1HZ 2UOHDQV ZHUH GLIIHUHQW WKDQ \RXU VLWXDWLRQ FRUUHFW" SURFHHGLQJ 7KH UHFRUG LQGLFDWHV WKDW DW WLPHV 1HDO KDV EHHQ LQ FKDUJH $ :H IHOW WKDW WKRVH GHFLVLRQV KDG QRWKLQJ WR GR ZLWK RXU RI VL[W\ WR VHYHQW\ JULHYDQFHV D PRQWK FDVH 7KDWjV ZKDW , IHOW DQG WKDWjV ZKDW KH >LH 1HDO@  WROG PH WKDW KH IHOW *DUULVRQ LQVLVWV WKDW WKHUH LV QR HYLGHQFH WKDW 1HDO DQG KH

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

SURYHG WR EH D GHYDVWDWLQJ HUURU WKH HUURU FDQ DW ZRUVW EH HUURURIMXGJPHQWWKDWZDVQRWGLUHFWHGDJDLQVWSODLQWLII YLHZHG DV D PLVFDOFXODWLRQ RI VWUDWHJ\  &HUWDLQO\ FDSULFLRXVO\RULQEDGIDLWK:HDFFRUGLQJO\FRQFOXGH LQGHSHQGHQWUHVHDUFKDQGFRQVXOWDWLRQZRXOGKDYHEHHQWKH GHVSLWH VRPH UHVHUYDWLRQ WKDW WKLV FRQGXFW ZDV QRW SUHIHUDEOHFRXUVHRIDFWLRQSDUWLFXODUO\ZKHQVXFKUHVHDUFK RXWVLGHWKH2j1HLOOVWDQGDUGXQGHUDOOWKHFLUFXPVWDQFHV PD\KDYHXQFRYHUHGWKH$YRQ/DNHDUELWUDOSUHFHGHQWWKDW VXSSRUWHG*DUULVRQjVJULHYDQFH+RZHYHUDVRXUFDVHODZ ,G7KXV:DONSUHVHQWHGDPXFKPRUHGLIILFXOWTXHVWLRQWKDQ PDNHVFOHDUmDQXQZLVHRUHYHQDQXQFRQVLGHUHGGHFLVLRQE\ WKHFDVHDWEDUEHFDXVHXQOLNHWKHVLWXDWLRQKHUHLQ:DONWKH WKHXQLRQLVQRWQHFHVVDULO\DQLUUDWLRQDOGHFLVLRQl:DON  XQLRQjV GHFLVLRQ QRW WR UHVHDUFK DQG SUHVHQW D SDUWLFXODU )GDW GHIHQVHZDVQRWHYHQWKHSURGXFWRIDWDFWLFDOGHFLVLRQ+HUH 1HDOjVGHFLVLRQQRWWRSUHSDUHDUHVSRQVHWRWKHDSSOLFDELOLW\ ,Q:DONDSODLQWLIIEURXJKWDK\EULG†VXLWDOOHJLQJWKDW RI WKH WKLUW\GD\ UXOH ZDV D WDFWLFDO GHFLVLRQ VXEMHFW WR KHZDVZURQJIXOO\GLVFKDUJHGGXHWRDQHUURQHRXVGUXJWHVW GHIHUHQFH$FFRUGLQJO\WKHUHZDVLQVXIILFLHQWHYLGHQFHWR UHVXOW WKDW LQGLFDWHG D SRVLWLYH ILQGLQJ RI PDULMXDQD  7KH VXSSRUWDILQGLQJRIDUELWUDU\FRQGXFWRQWKLVLVVXH SODLQWLIIDUJXHGQXPHURXVHUURUVLQWKHXQLRQjVKDQGOLQJRIKLV DUELWUDWLRQSURFHHGLQJV7KHPRVWGLIILFXOWLVVXHZDVZKHWKHU /DVW*DUULVRQPDLQWDLQVWKDWLWZDVDUELWUDU\EHKDYLRUIRU WKH XQLRQjV IDLOXUH WR FKDOOHQJH WKH FOLQLFjV PHWKRG RI 1HDOWRVLWVLOHQWGXULQJWKH1s66&KHDULQJDQGQRWFKDOOHQJH FROOHFWLQJDQGVHDOLQJWKHVSHFLPHQDPHWKRGWKDWZDVQRWLQ WKHDUJXPHQWVPDGHE\&DVVHQVLQVXSSRUWRIWKHDSSOLFDELOLW\ FRPSOLDQFH ZLWK WKH SURFHGXUHV RXWOLQHG LQ WKH FROOHFWLYH RIWKHWKLUW\GD\UXOH$JDLQDOWKRXJK1HDOjVPXWHQHVVZDV EDUJDLQLQJDJUHHPHQWDPRXQWHGWREUHDFKRIWKHGXW\RIIDLU QRW WKH PRVW HIIHFWLYH PHWKRG WR DVVLVW *DUULVRQ LQ KLV UHSUHVHQWDWLRQ8QGHUH[LVWLQJFDVHODZIURPWKH1RUWKHUQ JULHYDQFHLWZDVQRWVRXQUHDVRQDEOHWRFRQVWLWXWHVXIILFLHQW 'LVWULFWRI2KLRDGHIHFWLQWKHPDQGDWHGFKDLQRIFXVWRG\ HYLGHQFHRIEUHDFKRIWKHGXW\RIIDLUUHSUHVHQWDWLRQ DWZRUVW DUJXDEO\ FRXOG VHUYH DV D EDVLV WR VHW DVLGH D GLVFKDUJH LW ZDV QHJOLJHQFH  6HH %ODFN  )G DW  m$V WKH UHVXOWLQJ IURP D GUXJ WHVW YLRODWLRQ  6HH LG DW   6XSUHPH&RXUWKDVPDGHDEXQGDQWO\FOHDUDSODLQWLIIZLOOQRW $FFRUGLQJO\ZHKDGWRFRQVLGHUZKHWKHUWKHXQLRQjVIDLOXUH VXFFHHGLIKHFDQVKRZRQO\VOLJKWO\XQUHDVRQDEOHEHKDYLRURQ mWRUDLVHWKLVLVVXHLQDWLPHO\IDVKLRQPD\KDYHFRQVWLWXWHG WKHSDUWRIWKHXQLRQl 7KHIDFWRIWKHPDWWHULVWKDW PRUHWKDQPHUHQHJOLJHQFHDQGZKHWKHUQRWUDLVLQJWKHFKDLQ *DUULVRQDVVXPHGSULPDU\UHVSRQVLELOLW\IRUSUHVHQWLQJKLV RIFXVWRG\LVVXHPD\KDYHEHHQIDURXWVLGHDZLGHUDQJHRI JULHYDQFH EHIRUH WKH 1s66&  ,Q KLV FDSDFLW\ DV FKLHI UHDVRQDEOHQHVVEHFDXVHLWPD\ZHOOKDYHPDGHDGLIIHUHQFHLQ SUHVHQWHUKHUHVSRQGHGWRDQGFKDOOHQJHG&DVVHQVjVDVVHUWLRQ WKH RXWFRPH RI >WKH SODLQWLIIjV@ JULHYDQFHl  ,G LQWHUQDO WKDWWKHWKLUW\GD\UXOHVKRXOGGHIHDWKLVFODLP%HIRUHWKH TXRWDWLRQ PDUNV RPLWWHG   $OWKRXJK UHFRJQL]LQJ WKDW WKH FRPPLWWHH *DUULVRQ VSHFLILFDOO\ DUJXHG WKDW m, GLG QRW LVVXHZDVDFORVHFDOOZHKHOGWKDWWKHHUURUGLGQRWULVHWRWKH EHOLHYH WKH WKLUW\  GD\ UHSRUW UXOH    LV DSSOLFDEOH OHYHORIEUHDFK6SHFLILFDOO\ZHIRXQGWKDW EHFDXVH\RXZLOOILQG>WKDW@LQ10$7$VHQLRULW\VKDOOQRW EHEURNHQH[FHSWE\GLVFKDUJHYROXQWDU\TXLW>RUPRUHWKDQ 7KHFKDLQRIFXVWRG\LVVXHLVWKHPRVWGLIILFXOWRIWKRVH D VHYHQ  \HDU OD\RII@l  *LYHQ WKDW 1HDO KDG PDGH WKH UDLVHGE\:DON)DLOXUHWRFKDOOHQJHWKHSURFHGXUHGLG UHDVRQHG MXGJPHQW QRW WR UHVHDUFK RU SUHSDUH IRU ZKDW KH QRWLQYROYHDPHUHWDFWLFDOGHFLVLRQE\/RFDO DQGLW EHOLHYHG ZDV DQ LQDSSOLFDEOH UXOH ZH FDQQRW VHHDQG GLGQRWLQYROYHDODUJHH[SHQGLWXUHRIIXQGV,WSUHVHQWV *DUULVRQKDVQRWH[SODLQHGZKDWPRUH1HDOFRXOGKDYHVDLG D YHU\ FORVH TXHVWLRQ EXW ZH DUH SHUVXDGHG WKDW WKLV RU GRQH EHIRUH WKH FRPPLWWHH RWKHU WKDQ UHSHDW *DUULVRQjV IDLOXUHZDVPRUHRIDQRPLVVLRQRURYHUVLJKWDQHJOLJHQW LQWHUSUHWDWLRQRI10$7$$OWKRXJK*DUULVRQLVFRUUHFWWR 1RV  *DUULVRQY&DVVHQV   *DUULVRQY&DVVHQV 1RV  7UDQVS&R 7UDQVS&R

DVVHUW WKDW 1HDO ZRXOG OLNHO\ KDYH PRUH FUHGLELOLW\ WKDQ ZDVRUGHUHGWRSD\ORVWZDJHVWR*DUULVRQLQWKHDPRXQWRI *DUULVRQ DQ\ LQWHUYHQWLRQ E\ 1HDO ZRXOG QRW KDYH DGGHG DQGWRDVVLJQ*DUULVRQDFRPSDQ\VHQLRULW\GDWH PXFKLIDQ\YDOXHWRZKDWZDVDOUHDG\DUJXHGE\*DUULVRQ RIsXQH RQLWVURVWHUDQGDOOUHFRUGV&DVVHQVZDV $OVRUHJDUGOHVVRIWKHDUJXPHQWVPDGHDWWKHKHDULQJWKH DOVRRUGHUHGWRSD\*DUULVRQUHWURDFWLYHSHQVLRQFRQWULEXWLRQV 1s66& SDQHO ZDV VXSSOLHG FRSLHV RI WKH SULRU DUELWUDWLRQ EHJLQQLQJIURPsXQH %HFDXVHZHILQGQREDVLVIRU GHFLVLRQVDQGLWVHOIZDVDEOHWRDVVHVVWKHUHOHYDQFHRIWKRVH OLDELOLW\XQGHU†ZHQHFHVVDULO\UHYHUVHDQGYDFDWHWKH GHFLVLRQV GLVWULFWFRXUWjVFLYLOFRQWHPSWRUGHULQLWVHQWLUHW\ :LWKRXW VXIILFLHQW HYLGHQFH WKDW /RFDO  EUHDFKHG LWV m%URDGO\ WKH SXUSRVH RI FLYLO FRQWHPSW LV WR FRHUFH DQ GXW\ RI IDLU UHSUHVHQWDWLRQ *DUULVRQjV K\EULG †  DFWLRQ LQGLYLGXDO WR SHUIRUP DQ DFW RU WR FRPSHQVDWH DQ LQMXUHG PXVW IDLO  $FFRUGLQJO\ ZH QHHG QRW DGGUHVV &DVVHQVjV FRPSODLQDQWl8QLWHG6WDWHVY%D\VKRUH$VVRFV,QF  DOOHJHGEUHDFKRIWKHFROOHFWLYHEDUJDLQLQJDJUHHPHQWRUWKH )G  WK&LU  7KHSXUSRVHRIDFULPLQDO QXPHURXV RWKHU LVVXHV WKDW &DVVHQV KDV UDLVHG RQ DSSHDO FRQWHPSWRUGHUKRZHYHULVmSXQLWLYHl LWLVmWRYLQGLFDWHWKH %HFDXVH ZH UHYHUVH WKH GHQLDO RI &DVVHQVjV PRWLRQ IRU DXWKRULW\RIWKHFRXUWl*RPSHUVY%XFNV6WRYH 5DQJH MXGJPHQW DV D PDWWHU RI ODZ ZH FRQVLGHU ZKHWKHU DQ\ &R  86       m7KH JHQHUDO UXOH LV WKDW JURXQGVH[LVWWKDWPLJKWZDUUDQWDQHZWULDO6HH1HHO\Y ZKHWKHUDFRQWHPSWMXGJPHQWVXUYLYHVWKHDYRLGDQFHRIDQ 0DUWLQ . (E\ &RQVWU &R  86       XQGHUO\LQJ RUGHU GHSHQGV RQ WKH QDWXUH RI WKH FRQWHPSW *DUULVRQGLGQRWUHTXHVWDQHZWULDOLQKLVEULHILQWKHHYHQW GHFUHH,IWKHFRQWHPSWLVFULPLQDOLWVWDQGV LILWLVFLYLOLW ZHUHYHUVHGWKHGLVWULFWFRXUWDQGKDVSUHVHQWHGQRUHDVRQV IDOOVl/DWUREH6WHHO&RY8QLWHG6WHHOZRUNHUV)G ZK\DQHZWULDOVKRXOGEHRUGHUHG2XUUHYLHZRIUHFRUGDOVR  G&LU   FLWDWLRQRPLWWHG  FRQYLQFHVXVWKDWQRVXFKJURXQGVH[LVW7KHUHIRUHZHGLUHFW WKHHQWU\RIMXGJPHQWDVDPDWWHURIODZIRU&DVVHQV6HHLG $VWKH6XSUHPH&RXUWKDVORQJKHOG DW KROGLQJWKDWDQDSSHOODWHFRXUWPD\LQLWVGLVFUHWLRQ DSSURSULDWHO\ LQVWUXFW WKH GLVWULFW FRXUW WR HQWHU MXGJPHQW ,W GRHV QRW IROORZ RI FRXUVH WKDW VLPSO\ EHFDXVH D DJDLQVWDMXU\YHUGLFWZLQQHUZKHQIXUWKHUSURFHHGLQJVDUH GHIHQGDQW PD\ EH SXQLVKHG IRU FULPLQDO FRQWHPSW IRU XQZDUUDQWHG   $FFRUGLQJO\ WKH MXGJPHQW EHORZ LV GLVREHGLHQFHRIDQRUGHUODWHUVHWDVLGHRQDSSHDOWKDW 5(9(56(' DQG WKLV FDVH LV 5(0$1'(' WR WKH GLVWULFW WKH SODLQWLII LQ WKH DFWLRQ PD\ SURILW E\ ZD\ RI D ILQH FRXUWIRUWKHHQWU\RIMXGJPHQWDVDPDWWHURIODZIRU&DVVHQV LPSRVHGLQDVLPXOWDQHRXVSURFHHGLQJIRUFLYLOFRQWHPSW EDVHGXSRQDYLRODWLRQRIWKHVDPHRUGHU7KHULJKWWR & &LYLO&RQWHPSW2UGHU UHPHGLDO UHOLHI IDOOV ZLWK DQ LQMXQFWLRQ ZKLFK HYHQWV SURYHZDVHUURQHRXVO\LVVXHG 2Q sDQXDU\   WKH GLVWULFW FRXUW HQWHUHG DQ RUGHU KROGLQJ&DVVHQVLQFLYLOFRQWHPSWRIWKHFRXUWjVSULRURUGHURI 8QLWHG6WDWHVY8QLWHG0LQH:RUNHUV86   sXO\6SHFLILFDOO\LWIRXQGWKDW&DVVHQVIDLOHGWR    HPSKDVLV DGGHG   ,Q D VLPLODU YHLQ ZH KDYH DOVR WLPHO\UHLQVWDWH*DUULVRQWRKLVMREDQGWRKLVULJKWIXOSODFHRQ H[SODLQHGWKDW WKH&DVVHQVVHQLRULW\OLVWDQGIDLOHGWRPDNHFHUWDLQSHQVLRQ SD\PHQWV DV RUGHUHG E\ WKH FRXUW  %HFDXVH *DUULVRQ KDG $FRQYLFWLRQIRUFULPLQDOFRQWHPSWPD\LQGHHGVXUYLYH DOUHDG\EHHQUHLQVWDWHGE\&DVVHQVDWWKHWLPHWKHFRXUWLVVXHG WKHUHYHUVDORIWKHGHFUHHGLVREH\HG WKHSXQLVKPHQWLVWR LWVUXOLQJDVFRPSHQVDWRU\GDPDJHVIRUFRQWHPSW&DVVHQV YLQGLFDWHWKHFRXUWjVDXWKRULW\ZKLFKKDVEHHQHTXDOO\ IORXWHGZKHWKHURUQRWWKHFRPPDQGZDVULJKW%XWWKH 1RV  *DUULVRQY&DVVHQV  7UDQVS&R

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jVDOOHJHGFRQWHPSW 7KHFRXUWjVQDUURZIRFXVOHDYHVQRGRXEWWKDWWKHFRQWHPSW RUGHUDWLVVXHLVUHPHGLDOLQQDWXUH6HH/DWUREH6WHHO&R  )G DW  m5HPHGLDO RU FRPSHQVDWRU\ DFWLRQV DUH HVVHQWLDOO\ EDFNZDUG ORRNLQJ VHHNLQJ WR FRPSHQVDWH WKH FRPSODLQDQW WKURXJK WKH SD\PHQW RI PRQH\ IRU GDPDJHV FDXVHG E\ SDVW DFWV RI GLVREHGLHQFHl  FLWDWLRQV RPLWWHG  7KDWEHLQJVRDQGKDYLQJDOUHDG\GHWHUPLQHGWKDWWKHUHLVQR EDVLVIRUOLDELOLW\LQWKHXQGHUO\LQJDFWLRQWKHQSXUVXDQWWR FRQWUROOLQJ DXWKRULW\ WKH GLVWULFW FRXUWjV FRPSHQVDWRU\ FRQWHPSWRUGHUFDQQRORQJHUVWDQG ,,,&21&/86,21 :H 5(9(56( WKH MXU\ YHUGLFW DQG 5(0$1' WR WKH GLVWULFWFRXUWIRUWKHHQWU\RIMXGJPHQWDVDPDWWHURIODZIRU &DVVHQV LQ FDVH 1R   ,Q FDVH 1R  ZH 5(9(56(DQG9$&$7(WKHGLVWULFWFRXUWjVFRQWHPSWRUGHU LQLWVHQWLUHW\

Reference

Status
Published