00a0273p.06

8QLWHG6WDWHVY
5DQGROSKHWDO
1RV

FHUWDLQO\ FRXOG KDYH EHHQ +H KDG VRPH KRSH WKDW WKH
SURVHFXWRUVLQ7H[DVZRXOGFRQVLGHUWKHFDVHFRQFOXGHGDQG
JRRQWRRWKHUEXVLQHVV,QWRGD\¶VZRUOGRIFRQJHVWHGFRXUWV
DQGKHDY\SURVHFXWRUFDVHORDGVWKLVZDVQRWDQXQUHDVRQDEOH
RULOOXVRU\KRSH7KH7H[DVSURVHFXWRUVFRXOGHDVLO\KDYH
IDLOHG WR JR WR WKH WURXEOH RI SURYLGLQJ PDWHULDO WR WKHLU
FROOHDJXHVLQ7HQQHVVHH7KH7HQQHVVHHSURVHFXWRUVPLJKW
KDYHGHFLGHGWKDWWKHGHIHQGDQWVKDGDOUHDG\³EHHQSXQLVKHG
HQRXJK´ DQG WKDW WKH\ KDG ELJJHU RU RWKHU ILVK WR IU\ LQ
7HQQHVVHH 7KH ZKROH FDVH PLJKW KDYH EHHQ ORVW LQ WKH
VKXIIOHLQ7H[DVEHIRUHDQ\RWKHUVWHSVZHUHWDNHQ7KHVH
ZHUHDOOSRVVLELOLWLHVWKDW5DQGROSKJRWWKHDGYDQWDJHRI
$VHYHQWVWXUQHGRXWWKHVHDGYDQWDJHVGLGQRWPDWHULDOL]H
EXW ZKHQ D GHIHQGDQW LQ WKLV FDVH UHSUHVHQWHG DQG IXOO\
DGYLVHGE\FRXQVHOHQWHUVLQWRDSOHDDJUHHPHQWWKHUHLVQR
UHTXLUHPHQW RI HLWKHU FRQWUDFW RU FRQVWLWXWLRQDO ODZ WKDW D
EDUJDLQEDVHGRQFRQWLQJHQWIXWXUHHYHQWVZLOOWXUQRXWWRKLV
EHQHILW7KHFRXUWVWDWHVVXSUDDWWKDW5DQGROSKKDGD
³UHDVRQDEOHH[SHFWDWLRQWKDWWKHSOHDDJUHHPHQWSURWHFWHGKLP
IURPSURVHFXWLRQERWKZLWKLQ>WKH1RUWKHUQ'LVWULFWRI
7H[DV@ DQG LQ DGGLWLRQ ZLWKRXW WKDW MXULVGLFWLRQ XQOHVV
IRXQGHGRQDQLQYHVWLJDWLRQLQGHSHQGHQWRIWKDWSHUIRUPHGE\
WKH7H[DQDXWKRULWLHV´%XWWKHUHFRUGFRQWDLQVQRVXSSRUW
RWKHUWKDQ5DQGROSK¶VSRVWKRFDVVHUWLRQVWKDWKHKDGVXFKDQ
H[SHFWDWLRQDQGQRVXSSRUWZKDWVRHYHUIRUWKHLGHDWKDWLW
ZDVUHDVRQDEOH
)LQDOO\WRWKHH[WHQWWKDWWKLVFRXUWVKRXOGUXOHEDVHGVROHO\
RQRXUYLHZRIWKHHTXLW\RIWKHVLWXDWLRQ5DQGROSKGRHVQRW
GHVHUYHVXFKDVRIWHQLQJRIWKHODZ+HLQHIIHFWHQWHUHG
LQWR WKH SOHD DJUHHPHQW ZLWK XQFOHDQ KDQGV QDPHO\ WKH
JXLOW\NQRZOHGJHWKDWKHZDVLQIDFWDELJJHUILVKWKDQWKH
7H[DV DXWKRULWLHV WRRN KLP IRU ,W ZDV SULPDULO\ WKHLU
UHDOL]DWLRQRIWKLVFRQFHDOPHQWDQGRXWUDJHRYHUWKHOHQLHQF\
5DQGROSK REWDLQHG IRU KLPVHOI WKDW SURPSWHG WKHP WR
H[HUFLVHWKHLUULJKWXQGHUWKHSOHDDJUHHPHQWDQGWRFRQWDFW
WKH7HQQHVVHHDXWKRULWLHV,WKHUHIRUHUHVSHFWIXOO\',66(17

5(&200(1'(' )25 3$57,$/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
81,7(' 67$7(6 2) $0(5,&$
3ODLQWLII$SSHOOHH
Y
0(/9,1 /(( 5$1'2/3+ -5
$1*(/$ %$//$5'
$17+21< 3(77,6
DQG&('5,&
-2+1621
'HIHQGDQWV$SSHOODQWV
;!

1
1RV

$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW-DFNVRQ
1R²-DPHV'7RGG'LVWULFW-XGJH
$UJXHGDQG6XEPLWWHG-DQXDU\
'HFLGHGDQG)LOHG$XJXVW
%HIRUH*8<5<$1DQG%2**6&LUFXLW-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8('5LFKDUG+0RUJDQ-U3RQWLDF0LFKLJDQ0
'LDQQH 6PRWKHUV 08(//(5 6027+(56 3//&
-DFNVRQ 7HQQHVVHH 0LFKDHO / :HLQPDQ 7$780

-- 1 of 10 --

8QLWHG6WDWHVY
5DQGROSKHWDO
1RV

7$780 +HQGHUVRQ 7HQQHVVHH IRU $SSHOODQWV
21%5,()5LFKDUG+0RUJDQ-U3RQWLDF0LFKLJDQ0
'LDQQH 6PRWKHUV 08(//(5 6027+(56 3//&
-DFNVRQ 7HQQHVVHH 0LFKDHO / :HLQPDQ 7$780
7$780 +HQGHUVRQ 7HQQHVVHH 3DWULFN ) 0DUWLQ
+$5'(( 0$57,1 -$<1(6 ,9< 3$ -DFNVRQ
7HQQHVVHHIRU$SSHOODQWV-HQQLIHU/:HEEHU$66,67$17
81,7('67$7(6$77251(<0HPSKLV7HQQHVVHHIRU
$SSHOOHH
5<$1 - GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW *8< -
S GHOLYHUHGDVHSDUDWHFRQFXUULQJRSLQLRQ%2**6-
SS GHOLYHUHGDVHSDUDWHRSLQLRQFRQFXUULQJLQSDUW
DQGGLVVHQWLQJLQSDUW
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
5<$1&LUFXLW-XGJH'HIHQGDQWV0HOYLQ/HH5DQGROSK
-U $QJHOD %DOODUG $QWKRQ\ 3HWWLV DQG &HGULF -RKQVRQ
DSSHDOIURPWKHLUFRQYLFWLRQVIRUFRQVSLUDF\WRSRVVHVVZLWK
LQWHQWWRGLVWULEXWH6FKHGXOH,DQG6FKHGXOH,,QDUFRWLFVLQ
YLRODWLRQRI86&† D $OOIRXUDPRQJRWKHUV
ZHUHDOOHJHGWREHPHPEHUVRIDFRQVSLUDF\HQJDJHGLQWKH
WUDQVSRUWDWLRQRIFRFDLQHSRZGHUFRFDLQHEDVHDQGPDULMXDQD
EHWZHHQ'DOODV7H[DVDQG-DFNVRQ7HQQHVVHH
5DQGROSK KDG SUHYLRXVO\ EHHQ SURVHFXWHG LQ D IHGHUDO
GLVWULFWFRXUWLQ7H[DVIRUDFWLRQVLQIXUWKHUDQFHRIWKHVDPH
FRQVSLUDF\LQWKDWFDVHKHHQWHUHGLQWRDSOHDDJUHHPHQWZLWK
WKHJRYHUQPHQW+HQRZFODLPVWKHHDUOLHUSOHDDJUHHPHQW
VKRXOG KDYH SUHFOXGHG KLV SURVHFXWLRQ LQ 7HQQHVVHH ,Q
DGGLWLRQ 5DQGROSK DVVHUWV D GRXEOH MHRSDUG\ FODLP DQG D
FODLP RI HYLGHQWLDU\ HUURU %DOODUG DUJXHV QXPHURXV
HYLGHQWLDU\VHQWHQFLQJDQGRWKHUHUURUV3HWWLVDUJXHVWZR
VHQWHQFLQJ HUURUV DQG -RKQVRQ DUJXHV ERWK DQ HYLGHQWLDU\
HUURUDQGWKDWWKHGLVWULFWFRXUWHUUHGLQGHQ\LQJKLVUHTXHVWIRU
DVSHFLDOYHUGLFW
1RV

8QLWHG6WDWHVY
5DQGROSKHWDO

BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
&21&855,1*,13$57',66(17,1*,13$57
BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
%2**6&LUFXLW-XGJHFRQFXUULQJLQSDUWDQGGLVVHQWLQJ
LQSDUW,FRQFXULQDOORI-XGJH5\DQ¶VRSLQLRQIRUWKHFRXUW
H[FHSW LWV GLVSRVLWLRQ RI WKH SURVHFXWLRQ RI 5DQGROSK LQ
7HQQHVVHH7KHFRXUWLVTXLWHFRUUHFWVXSUDDWZKHQLW
VWDWHVWKDW³5DQGROSK¶VμDPELJXLW\¶DUJXPHQWLVDVXQIRFXVHG
DV LW LV XQSHUVXDVLYH´ 7KH FRXUW WKHQ JRHV RQ WR H[SODLQ
FRUUHFWO\ KRZ WKH SODLQ ODQJXDJH RI 5DQGROSK¶V SOHD
DJUHHPHQWPHDQVWKDWWKHJRYHUQPHQWGLGQRWYLRODWHWKHSOHD
DJUHHPHQWZKHQWKH8QLWHG6WDWHV$WWRUQH\LQWKH:HVWHUQ
'LVWULFWRI7HQQHVVHHSURVHFXWHG5DQGROSKDVKHZDVIXOO\
IUHHWRGRXQGHUWKHSOHDDJUHHPHQW+RZHYHU,GLVDJUHHZLWK
WKH FRXUW¶V KROGLQJ WKDW ³LW LV VLPSO\ XQIDLU´ IRU VXFK D
SURVHFXWLRQWRWDNHSODFHZKHQLWLVSURPSWHGE\LQIRUPDWLRQ
IXUQLVKHG E\ WKH 7H[DV DXWKRULWLHV RU WKDW VXFK D
GHWHUPLQDWLRQRIXQIDLUQHVVFUHDWHVDELQGLQJUXOHRIODZDQG
,WKHUHIRUHGLVVHQW
5XG\DUG.LSOLQJFDSWXUHGWKHFRXUW¶VDWWLWXGHSHUIHFWO\LQ
KLVSRHP1RUPDQDQG6D[RQ
7KH6D[RQLVQRWOLNHXV1RUPDQV+HPDQQHUVDUHQRW
VRSROLWH
%XWKHQHYHUPHDQVDQ\WKLQJVHULRXVWLOOKHWDONVDERXW
MXVWLFHDQGULJKW
:KHQKHVWDQGVOLNHDQR[LQWKHIXUURZZLWKKLVVXOOHQ
VHWH\HVRQ\RXURZQ
$QGJUXPEOHV³7KLVLVQ¶WIDLUGHDOLQJ´0\VRQOHDYH
WKH6D[RQDORQH
:KLOHWKLVLVJHQHUDOO\DQDGPLUDEOHVHQWLPHQW,WKLQNLWLV
PLVDSSOLHGLQWKLVFDVH
7R EHJLQ ZLWK 5DQGROSK REYLRXVO\ GLG VHFXUH VRPH
EHQHILW+HZDVQRWSURVHFXWHGIXUWKHULQ7H[DVZKHQKH

-- 2 of 10 --

8QLWHG6WDWHVY
5DQGROSKHWDO
1RV

BBBBBBBBBBBBBBBBBBBBBBB
&21&855(1&(
BBBBBBBBBBBBBBBBBBBBBBB
*8<&LUFXLW-XGJHFRQFXUULQJ,FRQFXULQWKHFRXUW¶V
RSLQLRQ EXW ZULWH VHSDUDWHO\ WR PDNH LW FOHDU WKDW P\
FRQFXUUHQFHLQ3DUW,,$LVOLPLWHGWRWKHIDFWVRIWKLVFDVH
, ZRXOG QRW ZDQW WKLV FDVH WR EH FLWHG IRU WKH JHQHUDO
SURSRVLWLRQ WKDW D SOHD EDUJDLQ LQ RQH GLVWULFW SUHFOXGHV
SURVHFXWLRQLQDQRWKHUGLVWULFWIRUUHODWHGRIIHQVHV
1RV

8QLWHG6WDWHVY
5DQGROSKHWDO

)RU UHDVRQV ZH VKDOO GLVFXVV ZH ZLOO 9$&$7( WKH
FRQYLFWLRQDQGVHQWHQFHRI5DQGROSK9$&$7(-RKQVRQ¶V
VHQWHQFH DQG 5(0$1' KLV FDVH IRU UHVHQWHQFLQJ DQG
$)),50WKHFRQYLFWLRQVDQGVHQWHQFHVRI%DOODUGDQG3HWWLV
%HFDXVHLVVXHVRISUHFHGHQWLDOLPSRUWDQFHDULVHRQO\ZLWK
UHJDUG WR GHIHQGDQWV 5DQGROSK DQG -RKQVRQ RQO\ WKHLU
DSSHDOVZLOOEHDGGUHVVHGEHORZ7KHDSSHDOVRIGHIHQGDQWV
%DOODUG DQG 3HWWLV ZLOO EH DGGUHVVHG LQ DQ XQSXEOLVKHG
DSSHQGL[WRWKLVRSLQLRQ
,
6RPH WLPH GXULQJ RU EHIRUH HDUO\ GHIHQGDQW
5DQGROSK PRYHG IURP KLV KRPH LQ 'HWURLW 0LFKLJDQ WR
'DOODV7H[DV $URXQG$XJXVW5DQGROSKPHW7UHQW
%UHZHU DSSDUHQWO\ D ODUJHVFDOH GUXJ GHDOHU )URP WKLV
PHHWLQJEORVVRPHGWKHGUXJFRQVSLUDF\ZLWKZKLFKWKLVFDVH
LV FRQFHUQHG %UHZHU ZRXOG VXSSO\ WKH GUXJV²PDLQO\
FRFDLQHSRZGHUDQGFRFDLQHEDVHEXWRFFDVLRQDOO\PDULMXDQD
DV ZHOO²DQG 5DQGROSK ZRXOG SURYLGH WKH PDUNHW
VSHFLILFDOO\ FRQQHFWLRQV WR GUXJ UHWDLOHUV LQ -DFNVRQ
7HQQHVVHH 5DQGROSK¶V 7HQQHVVHH FRQQHFWLRQV ZHUH
GHIHQGDQWV3HWWLVDQG-RKQVRQZKRDUHFRXVLQVWR5DQGROSK¶V
FKLOGKRRGIULHQGDQGFRFRQVSLUDWRU-RKQQ\0DFN%XVK
7KH FRQVSLUDF\ LQYROYHG LQ DGGLWLRQ WR %UHZHU DQG
5DQGROSK LQ 7H[DV DQG %XVK 3HWWLV DQG -RKQVRQ LQ
7HQQHVVHH DW OHDVW WKH IROORZLQJ LQGLYLGXDOV GHIHQGDQW
%DOODUG0RQLFD0LFKHOOH,QIDQWH5D\ROD%XUFKDQG-DPHV
-RKQVRQ DOO RI ZKRP ZHUH GULYHUV RU ³PXOHV´ ZKR
WUDQVSRUWHGGUXJVIURP'DOODVWR-DFNVRQE\DXWRPRELOHDQG
)RVWHU'DYLV&RUULH+DUEHUWDQG7HUUDQFH/RWWXQGHUOLQJVWR
%UHZHULQ'DOODV
7ULDOWHVWLPRQ\UHYHDOHGWKDWYDULRXVRIWKH³PXOHV´PDGH
QXPHURXVWULSVIURP'DOODVWR-DFNVRQ7HQQHVVHHEHWZHHQ
$XJXVWDQG$SULOIRUWKHSXUSRVHRIGHOLYHULQJ

-- 3 of 10 --

8QLWHG6WDWHVY
5DQGROSKHWDO
1RV

GUXJV 2Q HDFK WULS EHWZHHQ WZR DQG ILYH NLORJUDPV RI
FRFDLQHSRZGHURUFRFDLQHEDVHZHUHWUDQVSRUWHG
7KH EHJLQQLQJ RI WKH HQG RI WKLV OXFUDWLYH QDUFRWLFV
HQWHUSULVHFDPHGXULQJD0DUFK³UXQ´IURP'DOODV
WR-DFNVRQ$FFRUGLQJWR%UHZHU¶VWHVWLPRQ\%UHZHU/RWW
'DYLV DQG +DUEHUW PHW 5DQGROSK %XVK DQG %DOODUG LQ D
&UDFNHU%DUUHOUHVWDXUDQWLQ'H6RWR7H[DV%UHZHU¶VJURXS
DUULYHG LQ %UHZHU¶V ZLIH¶V -DJXDU ZLWK WKUHH NLORJUDPV RI
FRFDLQHSRZGHUDQGNLORJUDPVRIFRFDLQHEDVHZKLOH
5DQGROSK %XVK DQG %DOODUG DUULYHG VHSDUDWHO\ LQ WZR
YHKLFOHV5DQGROSK¶V6XEXUEDQDQG&DGLOODF7KHSODQZDV
IRU%DOODUGWRGULYHWKH-DJXDUZLWKWKHQDUFRWLFVWR-DFNVRQ
IRU5DQGROSK%XVK'DYLVDQG+DUEHUWWRIROORZ%DOODUGLQ
WKH6XEXUEDQDQGIRU%UHZHUDQG/RWWWRUHWXUQWR'DOODVLQ
WKH&DGLOODF%UHZHUDQG/RWWOHIWDVSODQQHGEXWYHU\VKRUWO\
DIWHU WKH MRXUQH\ EHJDQ %DOODUG QRWLFHG WKDW WKHUH ZHUH QR
LQVXUDQFHSDSHUVIRUWKH-DJXDUDQGVREDONHGDWGULYLQJLW
IXUWKHU7KHQDUFRWLFVZHUHWKHQWUDQVIHUUHGWRWKH6XEXUEDQ
ZKLFK%DOODUGZRXOGGULYHZLWK5DQGROSKDVKHUSDVVHQJHU
%XVK'DYLVDQG+DUEHUWUHWXUQHGWR'DOODVLQWKH-DJXDUWR
H[FKDQJH LW IRU 5DQGROSK¶V &DGLOODF EHIRUH UHVXPLQJ WKH
GULYHWR-DFNVRQ
6KRUWO\ WKHUHDIWHU WKH VFKHPH FDPH XQUDYHOHG 7KH
6XEXUEDQZDVVWRSSHGE\VWDWHSROLFHRIILFHUVQHDU6XOSKXU
6SULQJV 7H[DV 7KH RIILFHUV IRXQG WKH QDUFRWLFV LQ WKH
6XEXUEDQDQG5DQGROSKDQG%DOODUGZHUHDUUHVWHGRQIHGHUDO
GUXJFKDUJHV0HDQZKLOHWKH&DGLOODFFDXJKWXSZLWKWKH
6XEXUEDQDQGLWVRFFXSDQWVVDZWKDW5DQGROSKDQG%DOODUG
KDGEHHQVWRSSHG7KHSROLFHWKHQVWRSSHGWKH&DGLOODFDQG
VHDUFKHGLWZKHQWKHVHDUFKSURYHGIUXLWOHVVWKHYHKLFOH¶V
RFFXSDQWV ZHUH UHOHDVHG ZKHUHXSRQ WKH\ UHWXUQHG WR
%UHZHU¶VKRPHLQ'DOODV
$
5DQGROSKDQG%DOODUGZHUHSURVHFXWHGLQWKH8QLWHG6WDWHV
'LVWULFW&RXUWIRUWKH(DVWHUQ'LVWULFWRI7H[DV$WWKDWWULDO
1RV

8QLWHG6WDWHVY
5DQGROSKHWDO

VHQWHQFLQJFRQVHTXHQFHVLWWKHJRYHUQPHQWPXVWDOVRVHHN
DVSHFLDOYHUGLFW+RZHYHUQRWKLQJLQ'DOHSXUSRUWVWRELQG
IXWXUHFRXUWVH[FOXVLYHO\WRWKHUHPHG\JUDQWHGLQWKDWFDVH
WKDWLVDUHPDQGJLYLQJWKHJRYHUQPHQWWKHRSWLRQWR³SHUPLW´
WKHGHIHQGDQWWREHVHQWHQFHGIRUWKHOHVVHUSHQDOW\RUIRUFH
KLPWRVXEPLWWRDQHZWULDO-RKQVRQ¶VSURVHFXWRUVXQOLNH
WKRVHRIWKH'DOHGHIHQGDQWKDYHDOUHDG\RQFHGHFOLQHGWR
VHHN D VSHFLDO YHUGLFW DIWHU EHLQJ SODFHG RQ QRWLFH WKDW
-RKQVRQLQWHQGHGWRDUJXHWKDWKHFRXOGEHKHOGUHVSRQVLEOH
RQO\IRUWKHOHVVJUDYHREMHFWRIWKHFRQVSLUDF\ZLWKZKLFKKH
ZDVFKDUJHGDQGWKHUHIRUHLWZRXOGEHXQMXVWWRUHZDUGWKHLU
HIIRUWVWRVHQWHQFHKLPLPSURSHUO\ZLWKDQRWKHU³ELWHDWWKH
DSSOH´E\SURYLGLQJWKHPZLWKD'DOHW\SHHOHFWLRQ
)RUWKHVHUHDVRQVZHZLOOYDFDWHWKHVHQWHQFHLPSRVHGRQ
-RKQVRQDQGUHPDQGKLVFDVHIRUUHVHQWHQFLQJZLWKGLUHFWLRQV
WKDWKHEHVHQWHQFHGIRUFRQVSLUDF\WRSRVVHVVPDULMXDQDWKH
FRQWUROOHG VXEVWDQFH FDUU\LQJ WKH PRUH OHQLHQW VWDWXWRULO\
SUHVFULEHGVHQWHQFH
,,,
)RU WKH UHDVRQV GHVFULEHG DERYH ZH 9$&$7( WKH
FRQYLFWLRQ DQG VHQWHQFH RI 5DQGROSK :H $)),50 WKH
FRQYLFWLRQ EXW 9$&$7( WKH VHQWHQFH RI -RKQVRQ DQG
5(0$1' KLV FDVH IRU WKH SXUSRVH RI UHVHQWHQFLQJ LQ
DFFRUGDQFH ZLWK WKH GLUHFWLRQV H[SUHVVHG LQ WKLV RSLQLRQ
)LQDOO\ ZH $)),50 WKH FRQYLFWLRQV DQG VHQWHQFHV RI
%DOODUGDQG3HWWLVIRUWKHUHDVRQVGHVFULEHGLQWKHXQSXEOLVKHG
DSSHQGL[WRWKLVRSLQLRQ

-- 4 of 10 --

8QLWHG6WDWHVY
5DQGROSKHWDO
1RV

EHHQIRXQGJXLOW\RIDPDULMXDQDRQO\FRQVSLUDF\86&
† E ' 1HYHUWKHOHVV-RKQVRQ¶VPRWLRQZDVGHQLHG
DQGKHUHFHLYHGDVHQWHQFHRIPRQWKV
7KLV FRXUW KDV DOUHDG\ KDG RFFDVLRQ WR H[DPLQH WKH
VLWXDWLRQLQZKLFKDGHIHQGDQWLVFRQYLFWHGXQGHUDJHQHUDO
YHUGLFWIRUFRQVSLUDF\WRSRVVHVVDFRQWUROOHGVXEVWDQFHZKHQ
PRUH WKDQ RQH VXEVWDQFH LV LQYROYHG DQG WKH VXEVWDQFHV
LQYROYHGFDUU\GLIIHUHQWVHQWHQFLQJFRQVHTXHQFHV6HH8QLWHG
6WDWHVY'DOH)G WK&LU 7KH'DOHFRXUW
KHOGWKDWLWZDV³SODLQHUURU´WRLPSRVHRQVXFKDGHIHQGDQW
DVHQWHQFHZKLFKVXUSDVVHGWKHPD[LPXPDOORZDEOHIRUWKH
REMHFWRIWKHFRQVSLUDF\FDUU\LQJWKHOHDVWJUDYHVHQWHQFLQJ
FRQVHTXHQFHV ,G DW 7ULDO FRXQVHO IRU WKH 'DOH
GHIHQGDQW KDG QRWIRUPDOO\REMHFWHGWRWKHJHQHUDOYHUGLFW
XVHG LQ WKDW FDVH DQG KDG QRW UHTXHVWHG D VSHFLDO YHUGLFW
QRQHWKHOHVV WKH FRXUW KHOG WKDW LPSRVLWLRQ RI D VHQWHQFH
ZKLFK VXUSDVVHG WKH ILYH\HDU VWDWXWRU\ PD[LPXP IRU
FRQVSLUDF\ WR SRVVHVV PDULMXDQD FRQVWLWXWHG D ³PDQLIHVW
PLVFDUULDJHRIMXVWLFH´6HH)HG5&ULP3 E 8QLWHG
6WDWHVY&R[)G WK&LU 'DOH¶VFDVH
ZDV UHPDQGHG WR WKH GLVWULFW FRXUW IRU D GHFLVLRQ HLWKHU WR
VHQWHQFH 'DOH DV WKRXJK KH KDG EHHQ FRQYLFWHG RI D
PDULMXDQDRQO\FRQVSLUDF\RUHOVHWRRUGHUDQHZWULDODWWKH
SURVHFXWLRQ¶VHOHFWLRQ
-RKQVRQ¶VVLWXDWLRQGLIIHUVIURP'DOH¶VRIFRXUVHLQWKDW
-RKQVRQ¶VFRXQVHOH[SOLFLWO\UHTXHVWHGDVSHFLDOYHUGLFWRQWKH
TXHVWLRQ ZKHWKHU -RKQVRQ KDG FRQVSLUHG WR GLVWULEXWH
PDULMXDQD FRFDLQH RU ERWK +HUH WKH WULDO MXGJH DQG WKH
JRYHUQPHQWZHUHRQQRWLFHWKDW-RKQVRQZLVKHGWRKDYHWKH
RSSRUWXQLW\ WR FRQYLQFH D MXU\ WKDW KLV SDUWLFLSDWLRQ LQ WKH
FRQVSLUDF\UHODWHGRQO\WRPDULMXDQD%\GHQ\LQJ-RKQVRQ¶V
UHTXHVWWKHWULDOFRXUWHIIHFWLYHO\GHQLHG-RKQVRQDFFHVVWR
WKHMXU\ZLWKUHVSHFWWRWKLVLPSRUWDQWTXHVWLRQRIIDFW
2XUGHFLVLRQLQ'DOHPDNHVFOHDUWKDWLIWKHJRYHUQPHQW
VHHNVLPSRVLWLRQRIDVHQWHQFHUHIOHFWLQJFXOSDELOLW\IRUDQ
REMHFWRIDFRQVSLUDF\FDUU\LQJJUHDWHUWKDQWKHOHDVWJUDYH
1RV

8QLWHG6WDWHVY
5DQGROSKHWDO

WKH GLVWULFW MXGJH LQ FRQQHFWLRQ ZLWK KLV UXOLQJ LQ WKH
GHIHQGDQWV¶PRWLRQWRVXSSUHVVPDGHWKHIROORZLQJILQGLQJV
RIIDFWZLWKUHJDUGWRWKH6XOSKXU6SULQJVVWRSDQGVHDUFKRI
WKH6XEXUEDQ
3ROLFH RIILFHUV LQ D PDUNHG SROLFH YHKLFOH VDZ WKH
GHIHQGDQWV¶ ³YDQ´ PRPHQWDULO\ FURVV D ODQH PDUNHU DQG
WKHUHXSRQSXOOHGDORQJVLGHWKHYDQWRORRNDWLWVRFFXSDQWV
:KHQ5DQGROSKDQG%DOODUGIDLOHGWRPDNHH\HFRQWDFWZLWK
WKHPWKHRIILFHUVSXOOHGLQIURQWRIWKHYDQDQGVORZHGWR
PLOHVSHUKRXU7KHYDQPRYHGWRWKHOHIWODQHDQGSURFHHGHG
DW DSSUR[LPDWHO\ PLOHV SHU KRXU 7KH SROLFH RIILFHUV
UHVXPHGKLJKZD\VSHHGDQGIROORZHGWKHYDQIRUVRPHILYH
PLOHV7KHRIILFHUVUHSRUWHGZLWQHVVLQJDWOHDVWRQHYHKLFOH
SDVVWKHYDQLQWKHULJKWODQHWKHSRVWHGVSHHGOLPLWZDV
PLOHVSHUKRXU
7KHRIILFHUVSXOOHGWKHYDQRYHUIRUIDLOXUHWRPDLQWDLQD
ODQH DQG LPSHGLQJ WUDIILF 9DULRXV FROORTXLHV RFFXUUHG
EHWZHHQ WKH RIILFHUV DQG WKH GHIHQGDQWV GXULQJ ZKLFK
5DQGROSK SURYLGHG D IDOVH QDPH DQG YDULRXV IDOVH VRFLDO
VHFXULW\QXPEHUVEHIRUHILQDOO\DGPLWWLQJKLVUHDOQDPH7KH
RIILFHUV UHSHDWHGO\ DVNHG IRU SHUPLVVLRQ WR VHDUFK WKH
GHIHQGDQWV¶ YHKLFOH EXW ERWK GHIHQGDQWV UHIXVHG 7KH
GHIHQGDQWVZHUHKHOGDWWKHVFHQHZKLOHDQRIILFHUZHQWWRD
GLVWULFWDWWRUQH\¶VRIILFHLQRUGHUWRREWDLQDVHDUFKZDUUDQW
EXWWKHZDUUDQWZDVUHIXVHGRQWKHJURXQGWKDWWKHUHZDVQR
SUREDEOHFDXVHWRMXVWLI\DVHDUFK$SSUR[LPDWHO\RQHKRXU
DIWHU WKH RULJLQDO VWRS D GUXJVQLIILQJ GRJ DQG LWV KDQGOHU
ZHUHEURXJKWWRWKHVFHQH6RRQWKHUHDIWHULWEHJDQWRUDLQ
DQGWKHZKROHFDYDOFDGHPRYHGWRWKH6XOSKXU6SULQJVSROLFH
VWDWLRQWRFRQWLQXHWKHSURFHHGLQJVXQGHUDFDQRS\5DQGROSK
ZDVDUUHVWHGIRUIDOVHO\LGHQWLI\LQJKLPVHOIWRDSROLFHRIILFHU
7KHRIILFHUVKRSHGWKHDUUHVWZRXOGJLYHWKHPWKHULJKWWR
VHDUFKWKHYDQEXWWKHLUKRSHVZHUHGDVKHGZKHQWKHGLVWULFW
DWWRUQH\LQIRUPHGWKHPWKDWWKH\ZRXOGVWLOOQHHGSUREDEOH
FDXVHWRVHDUFKWKHYHKLFOH)LQDOO\DSSUR[LPDWHO\RQHDQG
RQHKDOIKRXUVDIWHUWKHRULJLQDOVWRSRFFXUUHGWKHGUXJGRJ
DOHUWHGWRWKHYDQ7KHFRFDLQHZDVTXLFNO\GLVFRYHUHGDORQJ

-- 5 of 10 --

8QLWHG6WDWHVY
5DQGROSKHWDO
1RV

ZLWK D ORDGHG KDQGJXQ DQG D VPDOO DPRXQW RI PDULMXDQD
DSSDUHQWO\ IRU WKH SHUVRQDO XVH RI 5DQGROSK DQG %DOODUG
GXULQJWKHORQJGULYH
7KH GLVWULFW MXGJH DSSOLHG D 7HUU\ Y 2KLR 86
DQDO\VLV WR WKH GHIHQGDQWV¶ PRWLRQ WR VXSSUHVV WKH
HYLGHQFH7KLVQHFHVVLWDWHGDWZRVWHSLQTXLU\ILUVWLQWRWKH
UHDVRQDEOHQHVVRIWKHLQLWLDOVWRSDQGWKHQLQWRWKHUHODWHGQHVV
RIWKHVHDUFKWRWKHLQLWLDOVWRS¶VSXUSRVH
7KHMXGJHIRXQGWKDWWKH³LPSHGLQJWUDIILF´MXVWLILFDWLRQ
ZDVLQYDOLGEHFDXVHWKHSUHVHQFHRIWKHYDQLQWKHOHIWODQH
ZKHUHLWWUDYHOHGDWQHDUO\WKHVSHHGOLPLWZDVODUJHO\DUHVXOW
RIWKHRIILFHUV¶RZQDFWLRQV+HDOVRKHOGWKDWWKHGHIHQGDQWV¶
IDLOXUHWRPDNHH\HFRQWDFWZLWKWKHRIILFHUVZKLOHGULYLQJRQ
WKHKLJKZD\FRXOGQRWEHFRQVLGHUHGVXVSLFLRXVDQGLQGHHG
VKRXOGQRWHYHQKDYHEHHQFRQVLGHUHGDVDQHOHPHQWLQWKH
³WRWDOLW\RIWKHFLUFXPVWDQFHV´+RZHYHUKHIRXQGWKDWWKH
³IDLOXUH WR PDLQWDLQ D ODQH´ MXVWLILFDWLRQ ZDV VXIILFLHQW WR
MXVWLI\WKHLQLWLDOVWRS
+RZHYHUWKHMXGJHZHQWRQWRKROGWKDWWKHSHUPLVVLEOH
GXUDWLRQRIDVWRSIRUDPLQRUWUDIILFRIIHQVHLVEULHI$SROLFH
RIILFHULVSHUPLWWHGWRDVNTXHVWLRQVXQUHODWHGWRWKHWUDIILF
VWRSDQGWKHVHTXHVWLRQVFDQIRUPWKHEDVLVIRUSURORQJLQJ
WKH VWRS¶V GXUDWLRQ EXW LQ WKLV LQVWDQFH WKH PDWWHU RI
5DQGROSK¶VLGHQWLW\DQGWKHTXHVWLRQZKHWKHUWKHYDQPLJKW
KDYHEHHQVWROHQZHUHFRPSOHWHO\VHWWOHGDWOHDVWPLQXWHV
EHIRUH WKH GRJ DOHUWHG DQG SURYLGHG SUREDEOH FDXVH IRU D
VHDUFK RI WKH YHKLFOH 7KH MXGJH KHOG WKDW WKLV ZDV DQ
XQUHDVRQDEOH OHQJWK RI WLPH DQG FRQVHTXHQWO\ JUDQWHG
5DQGROSK¶VDQG%DOODUG¶VPRWLRQVWRVXSSUHVVWKHHYLGHQFHRI
DOO HYHQWV WDNLQJ SODFH DIWHU 5DQGROSK UHYHDOHG KLV WUXH
LGHQWLW\7KLVLQFOXGHGWKHGLVFRYHU\RIWKHQDUFRWLFV
$IWHU WKH HYLGHQFH IURP WKH 6XOSKXU 6SULQJV VWRS ZDV
VXSSUHVVHG5DQGROSKHQWHUHGLQWRDSOHDDJUHHPHQWZLWKWKH
JRYHUQPHQWZKHUHE\KHSOHDGHGJXLOW\WRWKHOHVVHUFKDUJHRI
XVLQJDWHOHSKRQLFGHYLFHWRIDFLOLWDWHDQDUFRWLFVWUDQVDFWLRQ
1RV

8QLWHG6WDWHVY
5DQGROSKHWDO

LV WKDW WKH ZLGHVSUHDG SUDFWLFH RI RIIHULQJ ZLWQHVVHV
VHQWHQFLQJ OHQLHQF\ LQ WKH IRUP RI PRWLRQV XQGHU 6HFWLRQ
.RIWKH8QLWHG6WDWHV6HQWHQFLQJ*XLGHOLQHVRU5XOH
RIWKH)HGHUDO5XOHVRI&ULPLQDO3URFHGXUHYLRODWHV86&
† F WKHIHGHUDODQWLEULEHU\VWDWXWH%HFDXVHWKLVYLHZ
KDVEHHQH[SORGHGHYHQ LQWKH7HQWK&LUFXLWZHQHHGQRW
H[SORUHWKHDUJXPHQWLQIXOO
6LQJOHWRQ,ZDVUHYHUVHGHQEDQFLQWKH7HQWK&LUFXLWDQG
WKHRULJLQDO6LQJOHWRQKROGLQJZDVH[SOLFLWO\UHMHFWHGLQWKLV
FLUFXLWLQ8QLWHG6WDWHVY:DUH)G WK&LU
FHUWGHQLHG86 7KH:DUHFRXUWQRWHG
WKDW³>W@KHSURVHFXWRULDOSUHURJDWLYHWRUHFRPPHQGOHQLHQF\
LQH[FKDQJHIRUWHVWLPRQ\GDWHVEDFNWRWKHFRPPRQODZLQ
(QJODQGDQGKDVEHHQUHFRJQL]HGDQGDSSURYHGE\&RQJUHVV
WKH FRXUWV DQG WKH 6HQWHQFLQJ &RPPLVVLRQ RI WKH 8QLWHG
6WDWHV´,GDW
7KH:DUHFRXUWKHOGWKDWWKHZRUG³:KRHYHU´LQ6HFWLRQ
F GRHV QRW DSSO\ WR WKH JRYHUQPHQW DQG WKDW WKH
VWDWXWH GRHV QRW SUHFOXGH D SURVHFXWRU IURP RIIHULQJ D
FRRSHUDWLQJ GHIHQGDQW OHQLHQF\ LQ H[FKDQJH IRU WUXWKIXO
WHVWLPRQ\ DJDLQVW DQRWKHU LQGLYLGXDO ,G DW
7KHUHIRUHWKLVFRXUWZLOOQRWGLVWXUEDFKDOOHQJHGFRQYLFWLRQ
RQWKHJURXQGWKDWLWZDVSURFXUHGRQWKHEDVLVRIWHVWLPRQ\
VROLFLWHG E\ WKH JRYHUQPHQW LQ H[FKDQJH IRU SURPLVHV RI
OHQLHQF\LQVHQWHQFLQJ6HHLGDW
7KLVFKDOOHQJHLVZLWKRXWPHULW
6SHFLDO9HUGLFW5HTXHVW
'XULQJ SURFHHGLQJV EHORZ -RKQVRQ UHTXHVWHG WKDW WKH
GLVWULFWFRXUWVXEPLWDVSHFLDOYHUGLFWIRUPWRWKHMXU\IRUWKH
SXUSRVH RI DVFHUWDLQLQJ ZKHWKHU -RKQVRQ ZDV JXLOW\ RI
FRQVSLUDF\ WR SRVVHVV ZLWK LQWHQW WR GHOLYHU FRFDLQH RU
ZKHWKHU KLV SDUW LQ WKH FRQVSLUDF\ SHUWDLQHG PHUHO\ WR
PDULMXDQD 7KH UDWLRQDOH IRU WKH UHTXHVW LV WKDW -RKQVRQ
ZRXOGKDYHEHQHILWWHGIURPDPRQWKVHQWHQFLQJFDSKDGKH

-- 6 of 10 --

8QLWHG6WDWHVY
5DQGROSKHWDO
1RV

FRQVWLWXWLRQDOJXDUDQWHH RI GXHSURFHVVUHTXLUHVXVWRJLYH
ZHLJKW WR 5DQGROSK¶V UHDVRQDEOH H[SHFWDWLRQ WKDW WKH SOHD
DJUHHPHQWSURWHFWHGKLPIURPSURVHFXWLRQIRUWKHFRQVSLUDF\
FKDUJHZLWKZKLFKKHZDVLQGLFWHGLQWKH1RUWKHUQ'LVWULFWRI
7H[DVERWKZLWKLQWKDWMXULVGLFWLRQDVSURYLGHGLQWKHWH[WRI
WKHSOHDDJUHHPHQWDQGLQDGGLWLRQZLWKRXWWKDWMXULVGLFWLRQ
XQOHVV IRXQGHG RQ DQ LQYHVWLJDWLRQ LQGHSHQGHQW RI WKDW
SHUIRUPHGE\WKH7H[DQDXWKRULWLHV%XWDVZHNQRZWKH
7HQQHVVHHDXWKRULWLHVZHUHHQWLUHO\GHSHQGHQWXSRQWKH7H[DQ
LQYHVWLJDWLRQ'UXJ(QIRUFHPHQW$GPLQLVWUDWLRQ$JHQW%LOO\
-RH 0XQG\ ZKR UDQ WKH 7HQQHVVHH LQYHVWLJDWLRQ WHVWLILHG
WKDWKHNQHZQRWKLQJDERXWWKH'DOODVHQGRIWKHFRQVSLUDF\
XQWLO '($ $JHQW -HIIUH\ *UHHQ ZKR UDQ WKH 7H[DV
LQYHVWLJDWLRQWROGKLVRIILFHDERXWLWZKLFKRFFXUUHGDIWHU
5DQGROSK%UHZHUDQGRWKHUVEHJDQWRFRRSHUDWH
)RUWKHVHUHDVRQVWKHH[LJHQFLHVRIGXHSURFHVVDQGWKH
RSHUDWLRQRIWKHIXQGDPHQWDOFDQRQVRIFRQWUDFWFRQVWUXFWLRQ
FRPSHOXVWRWKHFRQFOXVLRQWKDW5DQGROSK¶VSURVHFXWLRQLQ
7HQQHVVHH ZDV HQWLUHO\ EDUUHG E\ WKH SOHD DJUHHPHQW KH
HQWHUHG LQWR LQ WKH 1RUWKHUQ 'LVWULFW RI 7H[DV +DYLQJ VR
KHOGZHQHHGQRWDGGUHVV5DQGROSK¶VUHPDLQLQJDUJXPHQWV
%-RKQVRQ
-RKQVRQDSSHDOVRQWZRJURXQGV WKDWWKHGLVWULFWFRXUW
HUUHG LQ DGPLWWLQJ WHVWLPRQ\ SURFXUHG E\ SURVHFXWRUV LQ
H[FKDQJHIRUUHGXFWLRQVRUSURPLVHVRIUHGXFWLRQVLQWHUPVRI
LQFDUFHUDWLRQLQYLRODWLRQRI86&† F DQG WKDW
WKHGLVWULFWFRXUWHUUHGLQGHQ\LQJKLVUHTXHVWIRUDVSHFLDO
YHUGLFW:HZLOODGGUHVVWKHVHLVVXHVVHSDUDWHO\
)HGHUDO$QWLEULEHU\6WDWXWH
7RVXSSRUWKLVILUVWDUJXPHQW-RKQVRQUHOLHVRQWKH7HQWK
&LUFXLW¶VVKRUWOLYHGGHFLVLRQLQ8QLWHG6WDWHVY6LQJOHWRQ
)G WK&LU 6LQJOHWRQ, UHY¶GHQEDQF
8QLWHG6WDWHVY6LQJOHWRQ)G WK&LU FHUW
GHQLHG6&W 6LQJOHWRQ,, 7KHDUJXPHQW
1RV

8QLWHG6WDWHVY
5DQGROSKHWDO

LQYLRODWLRQRI86&† E DQGDJUHHGWRFRRSHUDWH
ZLWK WKH JRYHUQPHQW¶V LQYHVWLJDWLRQ )RU LWV SDUW WKH
JRYHUQPHQW DJUHHG WR GURS WKH FKDUJH RI FRQVSLUDF\ WR
SRVVHVVZLWKWKHLQWHQWWRGHOLYHUD6FKHGXOH,,QDUFRWLF7KH
JRYHUQPHQW DOVR SURPLVHG ³QRW WR IXUWKHU SURVHFXWH WKH
GHIHQGDQW IRU DQ\ RWKHU RIIHQVHV RI ZKLFK LW PD\ KDYH
NQRZOHGJH SULRU WR VHQWHQFLQJ´ EXW WKH VDPH SDUDJUDSK
H[SUHVVO\ OLPLWHG WKH DJUHHPHQW WR ³WKH 8QLWHG 6WDWHV
$WWRUQH\¶V2IILFHIRUWKH1RUWKHUQ'LVWULFWRI7H[DVDQG>GLG@
QRW ELQG DQ\ RWKHU IHGHUDO VWDWH RU ORFDO SURVHFXWLQJ
DXWKRULWLHV´,Q-XQH5DQGROSKUHFHLYHGDVHQWHQFHRI
PRQWKV¶ LPSULVRQPHQW WKH PD[LPXP DYDLODEOH IRU WKH
FKDUJHWRZKLFKKHSOHDGHG
$IWHU 5DQGROSK FRPSOLHG ZLWK WKH WHUPV RI KLV SOHD
DJUHHPHQW E\ SURYLGLQJ WKH JRYHUQPHQW ZLWK FRPSOHWH
LQIRUPDWLRQDVWRKLVNQRZOHGJHRIWKHFRQVSLUDF\DQGKLVUROH
LQ LW WKH 7H[DV SURVHFXWRUV HYLGHQWO\ IHOW 5DQGROSK ZDV D
³ELJJHUILVK´WKDQWKH\KDGWKHUHWRIRUHVXVSHFWHG7KH\WKHQ
FRQWDFWHGWKHLUFRXQWHUSDUWVLQ7HQQHVVHHDQGSURYLGHGWKHP
ZLWK DOO WKH LQIRUPDWLRQ REWDLQHG DV D UHVXOW RI WKH 7H[DQ
LQYHVWLJDWLRQ
%
2Q1RYHPEHUWKHFDVHQRZRQDSSHDOEHIRUHWKLV
FRXUW EHJDQ ZKHQ 5DQGROSK 3HWWLV -RKQVRQ %XVK DQG
,QIDQWHZHUHLQGLFWHGLQWKH:HVWHUQ'LVWULFWRI7HQQHVVHH
,Q$XJXVWDVXSHUVHGLQJLQGLFWPHQWFKDUJHG5DQGROSK
%DOODUG3HWWLV-RKQVRQ%XVK,QIDQWHDQG%XUFKZLWKRQH
FRXQW RI FRQVSLUDF\ WR SRVVHVV ZLWK LQWHQW WR GLVWULEXWH D
6FKHGXOH,QDUFRWLFDQGRQHFRXQWRIFRQVSLUDF\ZLWKLQWHQWWR
GLVWULEXWH D 6FKHGXOH ,, QDUFRWLF ERWK LQ YLRODWLRQ RI
86& † D 3HWWLV %XVK DQG %XUFK DOO SOHDGHG
JXLOW\ ,QIDQWH DEVFRQGHG DQG KHU ZKHUHDERXWV UHPDLQ
XQNQRZQ7KHUHPDLQLQJGHIHQGDQWVZHQWWRWULDO
5DQGROSK¶VDQG%DOODUG¶VFDVHVZHUHVHYHUHGIURPWKRVHRI
WKHLUFRGHIHQGDQWVDQGWKH\ZHUHWULHGMRLQWO\EXWVHSDUDWHO\

-- 7 of 10 --

8QLWHG6WDWHVY
5DQGROSKHWDO
1RV

IURPWKHLUDOOHJHGFRFRQVSLUDWRUV%DOODUGILOHGDPRWLRQWKDW
KHUFDVHEHVHYHUHGIURP5DQGROSK¶VEXWWKLVPRWLRQZDV
GHQLHG
-RKQVRQUHTXHVWHGWKDWDVSHFLDOYHUGLFWIRUPEHVXEPLWWHG
WRWKHMXU\WRDVFHUWDLQZKHWKHUKHZDVJXLOW\RIFRQVSLULQJWR
SRVVHVV FRFDLQH D 6FKHGXOH , QDUFRWLF RU PDULMXDQD D
6FKHGXOH,,QDUFRWLF7KHGLVWULFWMXGJHGHQLHGWKLVUHTXHVW
VWDWLQJWKDW³WKHUHZDVRQHFRQVSLUDF\WKDWRQRFFDVLRQV
UHVXOWHGLQWKHGLVWULEXWLRQRIHDFKRIWKHWKUHHGUXJVDOOHJHG´
5DQGROSK%DOODUGDQG-RKQVRQZHUHIRXQGJXLOW\DIWHUD
MXU\ WULDO 5DQGROSK UHFHLYHG D VHQWHQFH RI PRQWKV
%DOODUGRIPRQWKVDQG-RKQVRQRIPRQWKV3HWWLV
UHFHLYHGDVHQWHQFHRIPRQWKVDIWHUKLVJXLOW\SOHD$OO
IRXUGHIHQGDQWVEURXJKWWLPHO\DSSHDOV
,,
$5DQGROSK
5DQGROSKEULQJVWKUHHDVVLJQPHQWVRIHUURU WKDWKLV
SURVHFXWLRQLQ7HQQHVVHHZDVZURQJIXOLQWKDWLWVKRXOGKDYH
EHHQHQWLUHO\EDUUHGE\WKHSOHDDJUHHPHQWKHHQWHUHGLQWR
ZLWK WKH JRYHUQPHQW LQ WKH 1RUWKHUQ 'LVWULFW RI 7H[DV
WKDWKLVSURVHFXWLRQLQ7HQQHVVHHYLRODWHGWKHSURKLELWLRQ
DJDLQVWGRXEOHMHRSDUG\LQOLJKWRIKLVSUHYLRXVSURVHFXWLRQLQ
7H[DVDQG WKDWWKH7HQQHVVHHGLVWULFWFRXUWHUUHGLQWKH
GHJUHHWRZKLFKLWJDYHHIIHFWWRWKH7H[DVGLVWULFWFRXUW¶V
RUGHUWKDWHYLGHQFHIURPWKH6XOSKXU6SULQJVWUDIILFVWRSEH
VXSSUHVVHG%HFDXVHZHDJUHHZLWKKLVILUVWDVVLJQPHQWRI
HUURU²DOWKRXJKQRWZLWKDOORIWKHDUJXPHQWVKHHQOLVWVLQLWV
VXSSRUW²ZHQHHGQRWUHDFKKLVVHFRQGDQGWKLUGWKHRULHV
5DQGROSK DUJXHV ILUVW WKDW WKH ODQJXDJH RI KLV SOHD
DJUHHPHQWSUHFOXGHVKLVSURVHFXWLRQLQ7HQQHVVHHEHFDXVH
WKHODQJXDJHLVDPELJXRXVDQGWKHUHIRUHPXVWEHFRQVWUXHG
DJDLQVW WKH JRYHUQPHQW ,W LV WUXH RI FRXUVH WKDW DQ\
DPELJXLWLHV LQ WKH ODQJXDJH RI D SOHD DJUHHPHQW PXVW EH
FRQVWUXHG DJDLQVW WKH JRYHUQPHQW 6HH 8QLWHG 6WDWHV Y
1RV

8QLWHG6WDWHVY
5DQGROSKHWDO

IXQGDPHQWDO SULQFLSOHV RI FRQVWLWXWLRQDO IDLUQHVV GR QRW
SHUPLWXVWRDELGHWKLVSDWHQWO\XQMXVWUHVXOW
$GHIHQGDQWLQ5DQGROSK¶VSRVLWLRQLVHQWLWOHGWRSUHVXPH
WKDW D SOHD DJUHHPHQW ZRXOG FRQIHU VRPH EHQHILW RQ KLP
(YHQLIWKH1RUWKHUQ'LVWULFWRI7H[DVDORQHZDVERXQGE\WKH
DJUHHPHQWVXFKDGHIHQGDQWFRXOGUHDVRQDEO\LQIHUWKDWWKH
UHVXOWVRIWKH1RUWKHUQ'LVWULFW¶VSURVHFXWRUV¶LQYHVWLJDWLRQ
ZRXOG QRW EH KDQGHG RYHU WR SURVHFXWRUV IURP RWKHU
MXULVGLFWLRQV QRW ERXQG E\ WKH DJUHHPHQW 7KLV LQIHUHQFH
ZRXOGKROG WUXHZLWKUHJDUGRQO\WRRIIHQVHVWKH1RUWKHUQ
'LVWULFW RI 7H[DV SURVHFXWRUV NQHZ DERXW DW WKH WLPH WKH\
HQWHUHG LQWR WKH DJUHHPHQW ZLWK 5DQGROSK WKH 7H[DV
SURVHFXWRUV ZRXOG QRW RI FRXUVH EH EDUUHG IURP VKDULQJ
LQIRUPDWLRQ ZLWK RWKHU MXULVGLFWLRQV FRQFHUQLQJ QHZO\
GLVFRYHUHGRIIHQVHVMXVWDVWKH\ZRXOGQRWEHEDUUHGIURP
SURVHFXWLQJ5DQGROSKWKHPVHOYHVIRURIIHQVHVWKH\OHDUQHGRI
RQO\ DIWHU KLV FRRSHUDWLRQ ZLWK WKH JRYHUQPHQW ,QGHHG
VKRXOG WKLV UHDVRQDEOH LQIHUHQFH SURYH IDOVH WKHQ WKH
DJUHHPHQW5DQGROSKHQWHUHGLQWRFRXOGSURYLGHQREHQHILWEXW
RQO\ GHWULPHQW WR WKH GHIHQGDQW DQG LV WKXV DQ
XQFRQVFLRQDEOHFRQWUDFWDQGXQHQIRUFHDEOH
7KHUHTXLUHPHQWWKDWDGHIHQGDQWEHDIIRUGHGGXHSURFHVV
RIODZQHFHVVLWDWHVWKDW5DQGROSK¶VUHDVRQDEOHH[SHFWDWLRQRI
EHQHILW IURP WKH SOHD DJUHHPHQW EH UHVSHFWHG IRU LW LV D
YLRODWLRQ RI GXH SURFHVV WR KROG D GHIHQGDQW WR DQ
XQFRQVFLRQDEOHDJUHHPHQWLQWKHDEVHQFHRISURRIRIKLVIXOO\
LQIRUPHGFRQVHQWWRWKHULVNWKDWWKHEDUJDLQHGDZD\FRXQWRI
WKHLQGLFWPHQWPLJKWUHWXUQOLNH+\GUD¶VKHDGWKHVWURQJHU
IRUKDYLQJEHHQRQFHFXWRII
,W LV VHWWOHG ODZ WKDW D SOHD DJUHHPHQW LV XQHQIRUFHDEOH
XQOHVVPDGHNQRZLQJO\DQGYROXQWDULO\6HH0DEU\86
DW6DQWREHOOR86DW&HUWDLQO\5DQGROSKZDV
UHSUHVHQWHG E\ FRXQVHO ZKHQ KH HQWHUHG LQWR WKLV SOHD
DJUHHPHQWQRQHWKHOHVVZHFDQQRWVD\WKDWKHHQWHUHGLQWRLW
NQRZLQJO\RUYROXQWDULO\VLQFHKHZDVLQQRZD\LQIRUPHGDV
WR WKH LOOXVRU\ QDWXUH RI WKH JRYHUQPHQW¶V SURPLVH 7KH

-- 8 of 10 --

8QLWHG6WDWHVY
5DQGROSKHWDO
1RV

$VLQWHUSUHWHGE\WKHGLVWULFWFRXUWIRUWKH:HVWHUQ'LVWULFW
RI7HQQHVVHHWKHHIIHFWRIWKH7H[DVDJUHHPHQWLVWKDWWKH
JRYHUQPHQWFRXOGEDUJDLQZLWK5DQGROSKH[WUDFWDEHQHILW
IURPWKHEDUJDLQDQGWKHQWUHDWLWVRZQSURPLVHDVLOOXVRU\
)RU DOWKRXJK 5DQGROSK SOHDGHG JXLOW\ DQG FRRSHUDWHG LQ
H[FKDQJHIRUZKDWKHUHDVRQDEO\EHOLHYHGZDVLPPXQLW\IURP
SURVHFXWLRQIRUWKHFRQVSLUDF\FKDUJHZLWKZKLFKKHKDGEHHQ
LQGLFWHGLQ7H[DVLQIDFWWKHDJUHHPHQWSHUPLWWHGWKH7H[DV
SURVHFXWRUV WR SDVV WKHLU LQIRUPDWLRQ WR WKHLU 7HQQHVVHH
FRXQWHUSDUWV LQ RUGHU WR EULQJ WKH VDPH FRQVSLUDF\ FKDUJH
DJDLQVWKLPLQDGLIIHUHQWFRXUWKRXVH$VIDUDV5DQGROSKZDV
FRQFHUQHGWKHUHVXOWRIHQWHULQJWKHSOHDDJUHHPHQWLQ7H[DV
DQG WKHQ EHLQJ SURVHFXWHG LQ 7HQQHVVHH ZDV WKDW WKH
SURVHFXWRUV LQ 7HQQHVVHH KDG WKH DGGLWLRQDO EHQHILW RI
5DQGROSK¶V IXOO FRRSHUDWLRQ ZKLOH 5DQGROSK KDG WKH
DGGLWLRQDOGHWULPHQWRIWKH7H[DVJXLOW\SOHDDQGFRQYLFWLRQ
IRU WKH WHOHSKRQH FKDUJH LQ KLV FULPLQDO UHFRUG QHLWKHU RI
ZKLFKDGYDQWDJHVWKH7H[DVSURVHFXWRUVZRXOGKDYHHQMR\HG
KDG5DQGROSKUHIXVHGWKHEDUJDLQKHZDVRIIHUHGDQGFKRVHQ
WRJRWRWULDO
,QKLV7HQQHVVHHSURVHFXWLRQ5DQGROSK¶V7H[DVFRQYLFWLRQ
ZDV XVHG LQ WKH FRPSXWDWLRQ RI KLV RIIHQVH OHYHO IRU
VHQWHQFLQJSXUSRVHVWKHDPRXQWRIQDUFRWLFVLQYROYHGLQWKH
WHOHSKRQHRIIHQVHZDVLQFOXGHGDWVHQWHQFLQJLQ7HQQHVVHHDV
EHLQJLQYROYHGLQDUHODWHGRIIHQVH+RZHYHUDUXOHZKLFK
ZRXOGSHUPLWIHGHUDOSURVHFXWRUVLQDVHFRQGMXULVGLFWLRQWR
DFFHSW WKH IUXLWV RI DQ LQYHVWLJDWLRQ SHUIRUPHG LQ D ILUVW
MXULVGLFWLRQZLWKRXWVXEVWDQWLDOLQYHVWLJDWLRQRIWKHLURZQDQG
NQRZLQJ WKDW SURVHFXWLRQ RI D VSHFLILF RIIHQVH LQ WKH ILUVW
MXULVGLFWLRQ²KHUHWKHFRQVSLUDF\FKDUJH²ZDVEORFNHGE\D
SOHDDJUHHPHQWWKDWWKHILUVWMXULVGLFWLRQ¶VSURVHFXWRUVZHUH
VHHNLQJWRDYRLGTXLWHDVLGHIURPEHLQJPDQLIHVWO\XQIDLU
ZRXOGDOORZWKHSOHDDJUHHPHQWWREULQJVWLOOIXUWKHUGHWULPHQW
WRDGHIHQGDQWVXFKDV5DQGROSK,WZRXOGSHUPLWXVHRIWKH
FRQYLFWLRQ IRU WKH FKDUJH SOHDGHG WR LQ WKH ILUVW
MXULVGLFWLRQ²KHUH WKH WHOHSKRQH RIIHQVH²WR LPSHDFK WKH
GHIHQGDQW¶V WHVWLPRQ\ DW WULDO LQ WKH VHFRQG FDVH DQG WR
DXJPHQW KLV FULPLQDO KLVWRU\ DW VHQWHQFLQJ 7KH PRVW
1RV

8QLWHG6WDWHVY
5DQGROSKHWDO

-RKQVRQ)G WK&LU %XWWKDWGRHVQRW
OHDGXVWRWKHFRQFOXVLRQIRUZKLFK5DQGROSKDUJXHV7KH
SDUDJUDSK FRQWDLQLQJ WKH JRYHUQPHQW¶V SURPLVH ZKLFK
5DQGROSKFODLPVLVDPELJXRXVUHDGVLQIXOODVIROORZV
7KH *RYHUQPHQW DJUHHV QRW WR IXUWKHU SURVHFXWH WKH
GHIHQGDQWIRUDQ\RWKHURIIHQVHVRIZKLFKLWPD\KDYH
NQRZOHGJHSULRUWRVHQWHQFLQJ7KHJRYHUQPHQWIXUWKHU
DJUHHVWRGLVPLVVWKHUHPDLQLQJFRXQWVRIWKHLQGLFWPHQW
DVWRWKLVGHIHQGDQWRQO\DWWKHWLPHRIVHQWHQFLQJ7KH
JRYHUQPHQW VKDOO DGYLVH WKH FRXUW RI WKH H[WHQW RI
5$1'2/3+¶VFRRSHUDWLRQ3XUVXDQWWR†%RIWKH
8QLWHG 6WDWHV 6HQWHQFLQJ *XLGHOLQHV WKH JRYHUQPHQW
DOVR DJUHHV WKDW DQ\ VHOILQFULPLQDWLQJ LQIRUPDWLRQ
SURYLGHG SXUVXDQW WR WKLV DJUHHPHQW ZLOO QRW EH XVHG
DJDLQVW WKH GHIHQGDQW LQ GHWHUPLQLQJ KLV DSSOLFDEOH
JXLGHOLQHUDQJH7KLVDJUHHPHQWLVOLPLWHGWRWKH8QLWHG
6WDWHV $WWRUQH\¶V 2IILFH IRU WKH 1RUWKHUQ 'LVWULFW RI
7H[DVDQGGRHVQRWELQGDQ\RWKHUIHGHUDOVWDWHRUORFDO
SURVHFXWLQJDXWKRULWLHV
5DQGROSK¶V³DPELJXLW\´DUJXPHQWLVDVXQIRFXVHGDVLWLV
XQSHUVXDVLYH$VZHXQGHUVWDQGLW5DQGROSKLVVD\LQJWKDW
WKH ODQJXDJH RI WKH TXRWHG SRUWLRQ RI WKH DJUHHPHQW LV
DPELJXRXVEHFDXVHWKHUHIHUHQFHVWR³WKH*RYHUQPHQW´DQG
³WKH8QLWHG6WDWHV$WWRUQH\¶V2IILFH´DQGSDUWLFXODUO\WKH
PDQQHU LQ ZKLFK WKH SURYLVLRQV RI WKH DJUHHPHQW DUH
VHTXHQFHGOHDYHLWXQFOHDUZKHWKHU5DQGROSK¶V³GHDO´LVZLWK
WKHIHGHUDOJRYHUQPHQWJHQHUDOO\RUZLWKWKH86$WWRUQH\LQ
WKH1RUWKHUQ'LVWULFWRI7H[DV
7KLV LPSUHFLVH ODQJXDJH 5DQGROSK DUJXHV PXVW EH
FRQVWUXHGDJDLQVWWKHJRYHUQPHQWDQGWKHUHIRUHLQIDYRURI
5DQGROSK¶VLQWHUSUHWDWLRQWKDWWKHODQJXDJHRIWKHDJUHHPHQW
SUHFOXGHGWKH7HQQHVVHHIHGHUDOFRXUWSURVHFXWLRQ
,WLVWUXHWKDWWKH8QLWHG6WDWHV$WWRUQH\¶V2IILFHIRUWKH
1RUWKHUQ'LVWULFWRI7H[DVLVUHIHUUHGWRZLWKLQWKHDJUHHPHQW
DV³WKH8QLWHG6WDWHVRI$PHULFD´DQGDV³WKH*RYHUQPHQW´

-- 9 of 10 --

8QLWHG6WDWHVY
5DQGROSKHWDO
1RV

EXWWKLVLVDZLGHVSUHDGDQGFXVWRPDU\SUDFWLFHQRWFDOFXODWHG
WR JLYH ULVH WR FRQIXVLRQ LQ D GHIHQGDQW UHSUHVHQWHG E\
FRXQVHO,WLVDOVRWUXHWKDWWKHODQJXDJHOLPLWLQJWKHHIIHFWRI
WKHSOHDDJUHHPHQWWRWKH1RUWKHUQ'LVWULFWRI7H[DVFRXOG
KDYHEHHQEHWWHUSODFHGZLWKLQWKHVWUXFWXUHRIWKHGRFXPHQW
VR DV WR EH ERWK PRUH VDOLHQW DQG PRUH FOHDU LQ LWV HIIHFW
1HYHUWKHOHVV XQGHU DQ\ UHDVRQDEOH LQWHUSUHWDWLRQ RI WKH
GRFXPHQW DV D ZKROH WKH OLPLWLQJ ODQJXDJH FDQ RQO\ EH
RSHUDWLYHZLWKUHJDUGWRWKHWRWDOLW\RIWKHDJUHHPHQW
+RZHYHU 5DQGROSK LGHQWLILHV DQ LVVXH RI PXFK JUHDWHU
GLIILFXOW\ZKHQKHDUJXHVWKDWZKDWHYHUWKHWHFKQLFDOQLFHWLHV
WKDWJRYHUQWKHFRQWUDFWXDOPHDQLQJRIWKHSOHDDJUHHPHQW
ODQJXDJHLWLVVLPSO\XQIDLUIRUWKHJRYHUQPHQW WRH[WUDFW
XVHIXO LQIRUPDWLRQ DQG D JXLOW\ SOHD IURP 5DQGROSK LQ
H[FKDQJHIRUDSURPLVHQRWWRSURVHFXWHKLPIXUWKHUDQGWKHQ
WRGRVRDQ\ZD\
7REHVXUH³>S@OHDDJUHHPHQWVDUHFRQWUDFWXDOLQQDWXUH,Q
LQWHUSUHWLQJ DQG HQIRUFLQJ WKHP ZH DUH WR XVH WUDGLWLRQDO
SULQFLSOHVRIFRQWUDFWODZ´8QLWHG6WDWHVY5RELVRQ
)G WK&LU +RZHYHUWKH\DUHPRUHWKDQ
WKDW,Q6DQWREHOORY1HZ<RUN86
WKH6XSUHPH&RXUWVWDWHGWKDWWKHFRQVLGHUDWLRQVMXVWLI\LQJWKH
SUDFWLFHRISOHDEDUJDLQLQJ³SUHVXSSRVHIDLUQHVVLQVHFXULQJ
DJUHHPHQW EHWZHHQ DQ DFFXVHG DQG D SURVHFXWRU´²D
SUHVXSSRVLWLRQGHULYHGIURPWKHFRQVWLWXWLRQDOJXDUDQWHHRI
GXHSURFHVV)XUWKHUPRUHWKLVFRXUWKDVVWDWHG
$OWKRXJK SOHD DJUHHPHQWV DUH FRQWUDFWXDO LQ QDWXUH D
GHIHQGDQW¶VXQGHUO\LQJULJKWRIFRQWUDFWLVFRQVWLWXWLRQDO
DQG WKHUHIRUH LPSOLFDWHV FRQFHUQV LQ DGGLWLRQ WR WKRVH
SHUWDLQLQJ WR WKH IRUPDWLRQ DQG LQWHUSUHWDWLRQ RI
FRPPHUFLDOFRQWUDFWVEHWZHHQSULYDWHSDUWLHV7KHUHIRUH
³>E@RWKFRQVWLWXWLRQDODQGVXSHUYLVRU\FRQFHUQVUHTXLUH
KROGLQJ WKH JRYHUQPHQW WR D JUHDWHU GHJUHH RI
UHVSRQVLELOLW\WKDQWKHGHIHQGDQW RUSRVVLEO\WKDQZRXOG
1RV

8QLWHG6WDWHVY
5DQGROSKHWDO

EH HLWKHU RI WKH SDUWLHV WR FRPPHUFLDO FRQWUDFWV IRU
LPSUHFLVLRQVRUDPELJXLWLHVLQWKHSOHDDJUHHPHQWV´
-RKQVRQ )G DW FLWDWLRQV RPLWWHG $PRQJ WKH
FRQVWLWXWLRQDOFRQFHUQVUHIHUUHGWRDUHWKRVHSHUWDLQLQJWRWKH
GXH SURFHVV FODXVH RI WKH )LIWK $PHQGPHQW 7KH 8QLWHG
6WDWHV6XSUHPH&RXUWKDVVWDWHGWKDWZKHUHWKHFRQVHQVXDO
QDWXUHRIDSOHDDJUHHPHQWLVFDOOHGLQWRTXHVWLRQ²ZKHUH³WKH
GHIHQGDQWZDVQRWIDLUO\DSSULVHGRILWVFRQVHTXHQFHV´²LWFDQ
EHDWWDFNHGXQGHUWKHGXHSURFHVVFODXVH0DEU\Y-RKQVRQ
86
7KHSOHDDJUHHPHQW5DQGROSKHQWHUHGLQWRLQ7H[DVZDVD
FRQWUDFWZLWKRXWEHQHILWRUDGYDQWDJHWRKLP²LQGHHGDVZH
VKDOOH[SODLQLWFRXOGRQO\EULQJKLPGHWULPHQW²DQGDVVXFK
ZDVRIIHQVLYHERWKWRWKHIXQGDPHQWDOFRPPRQODZFDQRQVRI
FRQWUDFWFRQVWUXFWLRQDQGWRWKHFRQVWLWXWLRQDOJXDUDQWHHRI
GXHSURFHVV,QWKHDJUHHPHQW5DQGROSKSURPLVHGERWKWR
SOHDG JXLOW\ WR WKH FULPH RI XVLQJ D WHOHSKRQLF GHYLFH WR
IDFLOLWDWHDQDUFRWLFVWUDQVDFWLRQDQGWR³FRRSHUDWHZLWKWKH
JRYHUQPHQWE\JLYLQJWUXWKIXODQGFRPSOHWHLQIRUPDWLRQDQG
RU >VLF@ WHVWLPRQ\ FRQFHUQLQJ KLV SDUWLFLSDWLRQ LQ DQG
NQRZOHGJH RI FULPLQDO DFWLYLWLHV´ WKHUHE\ VDYLQJ WKH
JRYHUQPHQWWLPHPRQH\DQGKXPDQUHVRXUFHVERWKMXGLFLDO
DQGLQYHVWLJDWLYH,QH[FKDQJHIRU5DQGROSK¶VSURPLVHVWKH
JRYHUQPHQW LQ WKH 1RUWKHUQ 'LVWULFW RI 7H[DV SURPLVHG
DPRQJRWKHUWKLQJV³QRWWRIXUWKHUSURVHFXWHWKHGHIHQGDQW
IRUDQ\RWKHURIIHQVHVRIZKLFKLWPD\KDYHNQRZOHGJHSULRU
WRVHQWHQFLQJ´DQG³WRGLVPLVVWKHUHPDLQLQJFRXQWVRIWKH
LQGLFWPHQW´7KHUHZDVQRPHQWLRQRIWKHSRVVLELOLW\WKDWWKH
7H[DVSURVHFXWRUVZRXOG³VLOYHUSODWWHU´WKHUHVXOWVRIWKHLU
LQYHVWLJDWLRQ²LQFOXGLQJLQIRUPDWLRQJOHDQHGDVDUHVXOWRI
5DQGROSK¶V H[WHQVLYH EDUJDLQHGIRU FRRSHUDWLRQ²WR
SURVHFXWRUV LQ DQRWKHU MXULVGLFWLRQ WKXV VXSSRUWLQJ WKH
SURVHFXWLRQRIWKHGHIHQGDQWIRUDQRIIHQVHLGHQWLFDOWRWKH
³UHPDLQLQJ FRXQW>@´ WKH 7H[DV SURVHFXWRUV KDG DJUHHG WR
GLVPLVV

-- 10 of 10 --