01a0318p.06

:DOOHWDOY(3$HWDO 1R
WKH 6WDWH ZLOO LPSOHPHQW DOO PHDVXUHV ZLWK UHVSHFW WR WKH
FRQWURORIWKHDLUSROOXWDQWFRQFHUQHGZKLFKZHUHFRQWDLQHG
LQ WKH 6WDWH LPSOHPHQWDWLRQ SODQ IRU WKH DUHD EHIRUH
UHGHVLJQDWLRQ RI WKH DUHD DV DQ DWWDLQPHQW DUHD´ ,G
HPSKDVLV DGGHG 7KLV ODQJXDJH VXJJHVWV WKDW &RQJUHVV
FRQWHPSODWHGWKDW5$&7FRQWUROPHDVXUHVZRXOGDOUHDG\EH
SDUWRIWKH6,3LQWKHILUVWSODFH
:HWKHUHIRUHFRQFOXGHWKDWWKH(3$DEXVHGLWVGLVFUHWLRQ
ZKHQLWGHWHUPLQHGWKDWLWFRXOGUHGHVLJQDWHWKH&LQFLQQDWL
PHWURSROLWDQDUHDDVDFKLHYLQJDWWDLQPHQWEHIRUH2KLRKDG
IXOO\DGRSWHGDOORIWKH5$&7UXOHVRI3DUW'6XESDUWRI
WKH &$$ 7KLV UHVXOW LV FRPSHOOHG E\ WKH IDFW WKDW WKH
VWDWXWRU\ ODQJXDJH LV XQDPELJXRXV DQG EHFDXVH &RQJUHVV
FOHDUO\ LQWHQGHG WKDW DFWXDO SURYLVLRQV WR UHTXLUH WKH
LPSOHPHQWDWLRQRI5$&7PHDVXUHVPXVWEHFRQWDLQHGLQ6,3V
VXEPLWWHGZLWKUHVSHFWWRUHGHVLJQDWLRQUHTXHVWV
,,,&21&/86,21
)RUDOOWKHUHDVRQVVHWIRUWKDERYHZH9$&$7(WKH(3$¶V
DFWLRQ LQ UHGHVLJQDWLQJ &LQFLQQDWL PHWURSROLWDQ DUHD WR
DWWDLQPHQWVWDWXVIRUJURXQGOHYHOR]RQHDQG5(0$1'IRU
IXUWKHUSURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS 3 WK &LU
)LOH 1DPH DS
81,7('67$7(6&28572)$33($/6
)257+(6,;7+&,5&8,7
BBBBBBBBBBBBBBBBB
0$5,/<1 :$//DQG0,.(
)5(0217
3HWLWLRQHUV
6,(55$ &/8%
,QWHUYHQRU
Y
81,7(' 67$7(6
(19,5210(17$/
3527(&7,21 $*(1&<DQG
&+5,67,1( :+,70$1
$GPLQLVWUDWRU8QLWHG6WDWHV
(QYLURQPHQWDO3URWHFWLRQ
$JHQF\
5HVSRQGHQWV
;!

1
1R
2Q3HWLWLRQIRU5HYLHZRID)LQDO'HFLVLRQRI
WKH(QYLURQPHQWDO3URWHFWLRQ$JHQF\
1R&)53DUWV
$UJXHG$XJXVW
'HFLGHGDQG)LOHG6HSWHPEHU

-- 1 of 14 --

:DOOHWDOY(3$HWDO 1R
7KH +RQRUDEOH 7KRPDV $ :LVHPDQ -U 8QLWHG 6WDWHV 'LVWULFW
-XGJH IRU WKH 0LGGOH 'LVWULFW RI 7HQQHVVHH VLWWLQJ E\ GHVLJQDWLRQ
%HIRUH&/$<DQG*,/0$1&LUFXLW-XGJHV:,6(0$1
'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 'DYLG 6 %DURQ ($57+-867,&( /(*$/
'()(16( )81' :DVKLQJWRQ '& IRU 3HWLWLRQHUV DQG
,QWHUYHQRU0HODLQH$XUHLOLD:LOOLDPV81,7('67$7(6
'(3$570(17 2) -867,&( (19,5210(17$/
'()(16(6(&7,21:DVKLQJWRQ'&IRU5HVSRQGHQWV
21 %5,() 'DYLG 6 %DURQ ($57+-867,&( /(*$/
'()(16( )81' :DVKLQJWRQ '& IRU 3HWLWLRQHUV DQG
,QWHUYHQRU0HODLQH$XUHLOLD:LOOLDPV81,7('67$7(6
'(3$570(17 2) -867,&( (19,5210(17$/
'()(16(6(&7,21:DVKLQJWRQ'&.HQGUD+6DJRII
(19,5210(17$/3527(&7,21$*(1&<2)),&(2)
*(1(5$/&2816(/:DVKLQJWRQ'&IRU5HVSRQGHQWV
%U\DQ)=LPD2)),&(2)7+($77251(<*(1(5$/
&ROXPEXV2KLRIRU$PLFXV&XULDH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
521$/' /(( *,/0$1 &LUFXLW -XGJH 7KLV DSSHDO
LQYROYHVWKHUHYLHZRIDILQDOGHFLVLRQE\WKH8QLWHG6WDWHV
(QYLURQPHQWDO3URWHFWLRQ$JHQF\ (3$ UHGHVLJQDWLQJWKH
VWDWXV RI WKH &LQFLQQDWL PHWURSROLWDQ DUHD IURP
³QRQDWWDLQPHQW´WR³DWWDLQPHQW´IRUJURXQGOHYHOR]RQHDQG
DSSURYLQJDFOHDQDLUPDLQWHQDQFHSODQIRUWKHDUHD0DULO\Q
:DOO DQG 0LNH )UHPRQW UHVLGHQWV RI 2KLR ILOHG VXLW WR
UHTXHVWWKDWWKLVFRXUWYDFDWHWKH(3$¶VGHFLVLRQ7KH6LHUUD
&OXEDQRUJDQL]DWLRQZLWKPHPEHUVOLYLQJLQWKH2KLR
DUHD LQWHUYHQHG LQ VXSSRUW RI :DOO DQG )UHPRQW )RU WKH
1R :DOOHWDOY(3$HWDO
SRLQWLQJ RXW WKDW HPLVVLRQV UHGXFWLRQV IURP 5$&7
PHDVXUHV DUH QRW SUHVHQWO\ QHHGHG IRU DWWDLQPHQW DQG
PDLQWHQDQFH LQ &LQFLQQDWL XSRQ UHGHVLJQDWLRQ 2KLR
FRXOGKDOWWKHLPSOHPHQWDWLRQRIHYHQIXOO\DSSURYHG5$&7
PHDVXUHV DQG PRYH WKHP LQWR WKH FRQWLQJHQF\ SODQV DQG
WKHUHVXOWRILWVDFWLRQKHUHLVQRWPXFKGLIIHUHQWWKDQKDG
LWUHTXLUHGWKHVWDWHWRFRPSO\ZLWKWKH5$&7UHTXLUHPHQW
EHIRUHUHGHVLJQDWLRQ
7KHVH DUJXPHQWV DUH LQ DGGLWLRQ WR WKRVH IRUPDOO\
SURPXOJDWHGE\WKH(3$LQWKH)HGHUDO5HJLVWHUWRMXVWLI\LWV
GHSDUWXUHIURPWKHVWDQGDUGSROLF\UHTXLUHPHQWVUHJDUGLQJWKH
FHUWLILFDWLRQRIDWWDLQPHQW VHHSDJHDERYHFLWLQJ)HG
5HJDW $OWKRXJKDOORIWKHVHMXVWLILFDWLRQVFRXOGZHOO
VXSSRUWLWVSRVLWLRQLIWKHVWDWXWHRQLPSOHPHQWDWLRQRIWKH
5$&7PHDVXUHVZHUHDPELJXRXVWKH\GRQRWDOORZWKH(3$
WR WDNH D SRVLWLRQ WKDW FRQIOLFWV ZLWK WKH FOHDU LQWHQWLRQ RI
&RQJUHVV WR UHTXLUH DFWXDO SURYLVLRQV UDWKHU WKDQ RSWLRQDO
FRQWLQJHQF\PHDVXUHV6HH&KHYURQ86$,QFY1DWXUDO
5HV'HI&RXQFLO,QF86Q ³,ID
FRXUWHPSOR\LQJWUDGLWLRQDOWRROVRIVWDWXWRU\FRQVWUXFWLRQ
DVFHUWDLQV WKDW &RQJUHVV KDG DQ LQWHQWLRQ RQ WKH SUHFLVH
TXHVWLRQDWLVVXHWKDWLQWHQWLRQLVWKHODZDQGPXVWEHJLYHQ
HIIHFW´
)LQDOO\WKH(3$DUJXHVWKDW&$$†$ G SURYLGHVLW
ZLWKWKHDXWKRULW\WRSODFHWKH5$&7PHDVXUHVRQDOLVWRI
FRQWLQJHQF\PHDVXUHVLQVWHDGRIUHTXLULQJWKHLUDGRSWLRQLQD
VXEPLWWHG6,37KLVVHFWLRQUHTXLUHVWKDWPDLQWHQDQFHSODQV
VXEPLWWHG IRU UHGHVLJQDWLRQ SXUSRVHV PXVW ³FRQWDLQ VXFK
FRQWLQJHQF\SURYLVLRQVDVWKH$GPLQLVWUDWRUGHHPVQHFHVVDU\
WRDVVXUHWKDWWKH6WDWHZLOOSURPSWO\FRUUHFWDQ\YLRODWLRQRI
WKH VWDQGDUG >R]RQH 1$$46@ ZKLFK RFFXUV DIWHU WKH
UHGHVLJQDWLRQRIWKHDUHDDVDQDWWDLQPHQWDUHD´,G
%XW&$$†$GRHVQRWSURYLGHWKHDXWKRULW\IRUDVWDWH
WR DYRLG WKH DGRSWLRQ RI 5$&7 FRQWURO PHDVXUHV VLPSO\
EHFDXVH LW LQFRUSRUDWHV WKHP DV RSWLRQDO FRQWLQJHQF\
SURYLVLRQVLQLWVPDLQWHQDQFHSODQ&$$†$ G LQIDFW
IXUWKHUVWDWHVWKDWWKHVHPHDVXUHVPXVW³LQFOXGHDUHTXLUHPHQW

-- 2 of 14 --

:DOOHWDOY(3$HWDO 1R
JLYHQ WKDW 2KLR¶V FRQWLQJHQF\ SODQ LQFOXGHV WKH 5$&7
PHDVXUHVDPRQJHOHYHQRWKHU³FRQWLQJHQF\PHDVXUHVWREH
FRQVLGHUHGIRULPSOHPHQWDWLRQIRUWKH 2KLR SRUWLRQRIWKH
&LQFLQQDWL+DPLOWRQDUHD´)HG5HJDW HPSKDVLV
DGGHG 6R HYHQ LI WKH FRQWLQJHQF\ PHDVXUHV EHFRPH
WULJJHUHGWKHUHDSSHDUVWREHQRUHTXLUHPHQWWKDWWKH5$&7
PHDVXUHV EH DPRQJ WKRVH DFWXDOO\ DGRSWHG 6HH LG 7KH
DYDLODELOLW\RI5$&7UXOHVLQ2KLR¶VFRQWLQJHQF\SURYLVLRQV
WKHUHIRUH GRHV QRW VDWLVI\ WKH SODLQ ODQJXDJH RI &$$
† E
$GGLWLRQDO VWDWXWRU\ DQG DJHQF\ JXLGDQFH ODQJXDJH DOVR
FRQWUDGLFWV WKH (3$¶V DVVHUWLRQ WKDW LW FDQ VXEVWLWXWH
FRQWLQJHQF\ SURYLVLRQV IRU DFWXDO DGRSWLRQ RI WKH 5$&7
UXOHV &$$ † E IRU LQVWDQFH UHTXLUHV WKDW SODQ
SURYLVLRQV³VKDOOEHVXEPLWWHGZLWKLQWKHSHULRGVHWIRUWKE\
WKH$GPLQLVWUDWRULQLVVXLQJWKHUHOHYDQW&7*GRFXPHQW´,Q
WXUQHDFK&7*GRFXPHQWVHWVH[SUHVVWLPHOLQHVE\ZKLFK
VWDWHVPXVWLPSOHPHQWYDULRXV5$&7UXOHV6HHHJ&RQWURO
7HFKQLTXHV *XLGHOLQHV 'RFXPHQW $GGHQGXP WR &RQWURO
7HFKQLTXHV *XLGHOLQHV 'RFXPHQW 5HDFWRU 3URFHVVHV DQG
'LVWLOODWLRQ2SHUDWLRQV3URFHVVHV)HG5HJ 0DU
³$Q\6WDWHZKLFKKDVQRWDGRSWHGDQDSSURYDEOH
5$&7UXOHIRUWKHVRXUFHVFRYHUHGE\WKLV&7*PXVWVXEPLW
D 5$&7 UXOH IRU WKHVH VRXUFHV EHIRUH 0DUFK ´
0RUHRYHU D (3$ JXLGDQFH PHPRUDQGXP VWDWHV WKDW
³IXOODGRSWLRQRIDOORIWKHVWDWXWRULO\UHTXLUHGSURJUDPVDV
ZHOODVDVFKHGXOHDQGDQHQIRUFHPHQWFRPPLWPHQWIRUDQ
LPSOHPHQWDWLRQ GDWH DUH QHFHVVDU\ IRU UHGHVLJQDWLRQ WR
DWWDLQPHQW IURP QRQDWWDLQPHQW IRU R]RQH RU &2 LI WKH
UHGHVLJQDWLRQUHTXHVWLVVXEPLWWHGDIWHUWKHVWDWXWRU\GXHGDWH
RIWKHSURJUDP´0HPRUDQGXPIURP0LFKDHO+6KDSLUR
$FWLQJ$VVLVWDQW$GPLQLVWUDWRUIRU$LUDQG5DGLDWLRQ(3$
WRHLJKWGLUHFWRUVRIWKH(3$DW 6HSW HPSKDVLV
DGGHG
7KH (3$ KRZHYHU DUJXHV WKDW LW ODWHU PRGLILHG LWV
JXLGDQFHPHPRUDQGXPZKHQLWDSSURYHGWKHUHGHVLJQDWLRQ
UHTXHVWIRUWKH*UDQG5DSLGV0LFKLJDQDUHD,WDOVRFODLPV
VXSSRUWIRUWKHGHSDUWXUHIURPSROLF\LQWKHSUHVHQWFDVHE\
1R :DOOHWDOY(3$HWDO
UHDVRQVVHWIRUWKEHORZZH9$&$7(WKH(3$¶VDFWLRQLQ
UHGHVLJQDWLQJWKH&LQFLQQDWLPHWURSROLWDQDUHDWRDWWDLQPHQW
VWDWXV IRU JURXQGOHYHO R]RQH DQG 5(0$1' IRU IXUWKHU
SURFHHGLQJVFRQVLVWHQWZLWKWKLVRSLQLRQ
,%$&.*5281'
$ )DFWXDOEDFNJURXQG
*URXQGOHYHO R]RQH LV D SULQFLSDO FRPSRQHQW RI XUEDQ
VPRJ 6HH +5 5HS 1R DW $V D
KLJKO\ UHDFWLYH FKHPLFDO R]RQH FDQ FUHDWH VHYHUH KHDOWK
SUREOHPVVXFKDV³FKHVWSDLQVVKRUWQHVVRIEUHDWKFRXJKLQJ
QDXVHD WKURDW LUULWDWLRQ DQG LQFUHDVHG VXVFHSWLELOLW\ WR
UHVSLUDWRU\LQIHFWLRQV´HYHQZKHQLQKDOHGE\KHDOWK\DGXOWV
,GDW,WLVDOVRH[WUHPHO\FRUURVLYHFDXVLQJPHWDOVWR
UXVWDQGSDLQWVWRFUDFNDQGIDGH6HHLG
3ROOXWLRQVRXUFHVGRQRWHPLWR]RQHGLUHFWO\,QVWHDGLWV
SUHFXUVRUV ² QLWURJHQ R[LGHV 12[ DQG YRODWLOH RUJDQLF
FRPSRXQGV 92&V ²UHDFWWRIRUPR]RQHLQWKHSUHVHQFHRI
VXQOLJKW 6HH LG DW 7KHVH SUHFXUVRUV LQ WXUQ DUH
HPLWWHGE\VRXUFHVVXFKDVPRWRUYHKLFOHVSRZHUSODQWVDQG
LQGXVWULDOIDFWRULHV%HFDXVHR]RQHLVRIWHQIRUPHGLQODUJH
VWDJQDQWDLUPDVVHVWKDWGULIWIURPRQHUHJLRQWRDQRWKHUDLU
TXDOLW\PRGHOVDUHXVHGWRIRUHFDVWWKHR]RQHOHYHOVWKDWPLJKW
UHVXOWIURPDSDUWLFXODUFRPELQDWLRQRISUHFXUVRUVRXUFHV6HH
2KLRY(3$)G WK&LU
% 6WDWXWRU\DQGUHJXODWRU\EDFNJURXQG
1DWLRQDODPELHQWDLUTXDOLW\VWDQGDUGV
7KH&OHDQ$LU$FW &$$ 86&††T
DVDPHQGHGLQDQGUHTXLUHVWKH(3$WRHVWDEOLVK
QDWLRQDODPELHQWDLUTXDOLW\VWDQGDUGV 1$$46 IRUFHUWDLQ
DLUERUQHSROOXWDQWVLQFOXGLQJR]RQHDVQHFHVVDU\WRSURWHFW
WKHSXEOLFKHDOWKDQGZHOIDUH6HH&$$†86&
†8QGHUWKH&$$WKH(3$GHVLJQDWHVWKHVWDWXVRI
YDULRXVJHRJUDSKLFDUHDVDV³DWWDLQPHQW´³QRQDWWDLQPHQW´RU
³XQFODVVLILDEOH´ GHSHQGLQJ RQ ZKHWKHU WKH DUHD PHHWV WKH

-- 3 of 14 --

:DOOHWDOY(3$HWDO 1R
1$$46IRUDSDUWLFXODUSROOXWDQW6HH&$$† G
86& † G 0RUH VWULQJHQW DLU SROOXWLRQ FRQWURO
UHTXLUHPHQWVDSSO\WRQRQDWWDLQPHQWDUHDVWKDQWRDWWDLQPHQW
DUHDV 6HH &$$ †† 86& ††
1RQDWWDLQPHQW DUHDV IRU R]RQH DUH IXUWKHU FODVVLILHG DV
³PDUJLQDO´³PRGHUDWH´³VHULRXV´³VHYHUH´RU³H[WUHPH´
GHSHQGLQJ RQ WKH VHYHULW\ DQG SHUVLVWHQFH RI WKH R]RQH
SUREOHP6HH&$$† D E 86&† D
E
5HVSRQVLELOLW\ IRU PHHWLQJ WKH 1$$46 UHVWV ZLWK WKH
VWDWHV 8QGHU WKH &$$ HDFK VWDWH PXVW GUDIW D 6WDWH
,PSOHPHQWDWLRQ 3ODQ 6,3 FRQWDLQLQJ VSHFLILF SROOXWLRQ
FRQWURO PHDVXUHV IRU HDFK SROOXWDQW 6HH &$$ †
86&†7KH&$$VSHFLILHVGLIIHUHQWGHDGOLQHVE\
ZKLFKPDUJLQDOPRGHUDWHVHULRXVVHYHUHDQGH[WUHPHR]RQH
QRQDWWDLQPHQWDUHDVPXVWDWWDLQWKH1$$46DVZHOODVWKH
SURJUDPVWKDWHDFKVWDWHPXVWDGRSWLQLWV6,3WRDFKLHYHVXFK
DWWDLQPHQW6HH&$$††86&††
$UHDVZLWKPRUHVHYHUHFODVVLILFDWLRQVDUHJLYHQPRUHWLPHWR
UHDFK DWWDLQPHQW EXW DUH UHTXLUHG WR LPSOHPHQW PRUH
VWULQJHQWFRQWUROPHDVXUHV6HH&$$†† D
86&††D
7KH (3$ PXVW UHYLHZ HDFK VXEPLWWHG 6,3 DQG HLWKHU
DSSURYH RU GLVDSSURYH WKH SODQ ZLWKLQ RQH \HDU DIWHU WKH
DJHQF\ KDV GHWHUPLQHG WKDW WKH VWDWH FRPSOHWHG LWV 6,3
VXEPLVVLRQ6HH&$$† N ,IWKH(3$DSSURYHVWKH
6,3HLWKHULQZKROHRULQSDUWWKHQWKHDSSURYHGSURYLVLRQV
EHFRPH IHGHUDOO\ HQIRUFHDEOH 6HH &$$ ††
86&††%XWLIWKH6,3LVGLVDSSURYHGWKHQWKH
VWDWHEHFRPHVVXEMHFWWRVDQFWLRQVVHH&$$†86&
†DVZHOODVWRIHGHUDOO\LPSRVHGFOHDQDLUPHDVXUHV
6HH&$$† F
1R :DOOHWDOY(3$HWDO
DVDQRSWLRQDOPHDVXUHLQDFRQWLQJHQF\SODQLVQRVXEVWLWXWH
IRUDFWXDODGRSWLRQ:HDJUHH
7KH DSSOLFDELOLW\ RI WKH WUDQVSRUWDWLRQFRQIRUPLW\
UHTXLUHPHQWVGLVFXVVHGLQ3DUW,,&DERYHLVLQGLVSXWHDQG
WKHVWDWXWHLVDPELJXRXVRQWKHLUDSSOLFDELOLW\WRUHGHVLJQDWLRQ
UHTXHVWV,QFRQWUDVWWKHDSSOLFDELOLW\RIWKH5$&7UXOHVWR
UHGHVLJQDWLRQ UHTXHVWV LV QRW LQ GLVSXWH ,QGHHG LQ WKH
DJHQF\¶VLQLWLDOUHGHVLJQDWLRQHYDOXDWLRQWKH(3$DJUHHGWKDW
LWVRZQSROLF\³ZRXOGUHTXLUHIXOODGRSWLRQVXEPLVVLRQDQG
DSSURYDO RI >FHUWDLQ 5$&7 UXOHV@ SULRU WR DSSURYDO RI WKH
UHGHVLJQDWLRQUHTXHVW´)HG5HJDW,WIXUWKHUVWDWHG
WKDW ³WKH UHTXLUHPHQW IRU WKHVH 5$&7 UXOHV UHPDLQV DQ
DSSOLFDEOH UHTXLUHPHQW IRU SXUSRVHV RI HYDOXDWLQJ WKH
UHGHVLJQDWLRQUHTXHVWVLQFHLWSUHGDWHGWKHVXEPLVVLRQRIWKH
UHTXHVW´,G HPSKDVLVDGGHG
0RUHRYHU WKH VWDWXWRU\ ODQJXDJH UHJDUGLQJ WKH
LPSOHPHQWDWLRQ RI 5$&7 UXOHV LV QRW DPELJXRXV 7KH
UHOHYDQW ODQJXDJH SURYLGHV DV IROORZV ³7KH 6WDWH VKDOO
VXEPLWDUHYLVLRQWRWKHDSSOLFDEOHLPSOHPHQWDWLRQSODQWR
LQFOXGH SURYLVLRQV WR UHTXLUH WKH LPSOHPHQWDWLRQ RI
UHDVRQDEO\DYDLODEOHFRQWUROWHFKQRORJ\´&$$† E
%\WKLVODQJXDJHLWLVFOHDUWKDW&RQJUHVVLQWHQGHGIRU6,3V
VXEPLWWHGLQUHGHVLJQDWLRQUHTXHVWVWRLQFOXGH³SURYLVLRQVWR
UHTXLUHWKHLPSOHPHQWDWLRQRI´5$&7PHDVXUHV
7KH(3$KRZHYHUFODLPVWKDWWKHVWDWXWHGRHVQRWVSHDN
WRZKDWFRQVWLWXWHVDQDFFHSWDEOH³SURYLVLRQ´$FFRUGLQJO\
WKHDJHQF\FRQWHQGVWKDWZHPXVWGHIHUWRLWVLQWHUSUHWDWLRQRI
WKHVWDWXWHDVDOORZLQJ5$&7UXOHVWREHLQFRUSRUDWHGZLWKLQ
DVWDWH¶VFRQWLQJHQF\SURYLVLRQVUDWKHUWKDQUHTXLULQJWKHPWR
EHDFWXDOO\DGRSWHGDQGLPSOHPHQWHG
$ FRQWLQJHQF\ SURYLVLRQ KRZHYHU LV QRW LPPHGLDWHO\
HIIHFWLYH6HH%ODFN¶V /DZ'LFWLRQDU\ WKHG
GHILQLQJDFRQWLQJHQF\DVDPRQJRWKHUWKLQJV³>D@QHYHQW
WKDWPD\RUPD\QRWRFFXUDSRVVLELOLW\´DQG³>W@KHFRQGLWLRQ
RI EHLQJ GHSHQGHQW RQ FKDQFH XQFHUWDLQW\´ ,QGHHG WKH
5$&7 UXOHV DV XWLOL]HG LQ 2KLR DUH RQH DGGLWLRQDO VWHS
UHPRYHGIURPHYHQEHLQJUHTXLUHGDVFRQWLQJHQF\PHDVXUHV

-- 4 of 14 --

:DOOHWDOY(3$HWDO 1R
(3$ KDV FRQVLVWHQWO\ DSSOLHG WKH VDPH LQWHUSUHWDWLRQ
UHJDUGLQJ WKH DSSOLFDELOLW\ RI WUDQVSRUWDWLRQFRQIRUPLW\
UHTXLUHPHQWVLQHYDOXDWLQJUHGHVLJQDWLRQUHTXHVWV6HHHJ
$SSURYDO DQG 3URPXOJDWLRQ RI ,PSOHPHQWDWLRQ 3ODQV DQG
'HVLJQDWLRQ RI $UHDV IRU $LU 4XDOLW\ 3ODQQLQJ 3XUSRVHV
2KLR )HG 5HJ 0D\ $SSURYDO DQG
3URPXOJDWLRQ RI ,PSOHPHQWDWLRQ 3ODQV DQG 'HVLJQDWLRQ RI
$UHDVIRU$LU4XDOLW\3ODQQLQJ3XUSRVHV6WDWHRI:LVFRQVLQ
)HG5HJ $XJ
$VWKH6XSUHPH&RXUWREVHUYHGLQ5XVWY6XOOLYDQ
86 ³DUHYLVHGLQWHUSUHWDWLRQGHVHUYHV
GHIHUHQFH EHFDXVH DQ LQLWLDO DJHQF\ LQWHUSUHWDWLRQ LV QRW
LQVWDQWO\ FDUYHG LQ VWRQH DQG WKH DJHQF\ WR HQJDJH LQ
LQIRUPHGUXOHPDNLQJPXVWFRQVLGHUYDU\LQJLQWHUSUHWDWLRQV
DQG WKH ZLVGRP RI LWV SROLF\ RQ D FRQWLQXLQJ EDVLV´
%UDFNHWV DQG TXRWDWLRQ PDUNV RPLWWHG 0RUHRYHU WKH
LQWHUSUHWDWLRQSXWIRUWKLQWKH)ORULGDUXOHPDNLQJGRHV
QRWFRQIOLFWZLWKWKHVWDWXWHDQGLQVWHDG ³LV DVXIILFLHQWO\
UDWLRQDORQHWRSUHFOXGHDFRXUWIURPVXEVWLWXWLQJLWVMXGJPHQW
IRUWKDWRI(3$´ &KHP0IUV$VV¶QY1DWXUDO5HV'HI
&RXQFLO ,QF 86 :H DFFRUGLQJO\
GHIHUWRWKH(3$¶VGHWHUPLQDWLRQWKDW.HQWXFN\¶VIDLOXUHWR
VXEPLW D UHYLVLRQ WR LWV 6,3 WKDW PHHWV WKH 3DUW '
WUDQVSRUWDWLRQFRQIRUPLW\UHTXLUHPHQWVLVQRWDEDVLVWRGHQ\
WKH GHVLJQDWLRQ RI WKH &LQFLQQDWL PHWURSROLWDQ DUHD WR
DWWDLQPHQWVWDWXV
' $GRSWLRQ RI WKH UHDVRQDEO\ DYDLODEOH WHFKQRORJ\
5$&7 UXOHV
7KHSHWLWLRQHU¶VILQDOFKDOOHQJHLVWRWKH(3$¶VDXWKRULW\WR
JUDQW.HQWXFN\¶VDQG2KLR¶VUHTXHVWVIRUUHGHVLJQDWLRQZKHQ
2KLRKDGQRWDGRSWHGDOORIWKH5$&7UXOHVSURYLGHGLQ3DUW
'6XESDUW6SHFLILFDOO\WKH\SRLQWRXWWKDW2KLRKDVQRW
DGRSWHGDOORIWKH5$&7UXOHVIRUWKH92&VRXUFHFDWHJRULHV
FRYHUHG E\ WKH &7* GRFXPHQWV LVVXHG VLQFH 7KH\
DUJXHWKDWXQGHU&$$† E 2KLRLVUHTXLUHGWRDGRSWWKH
5$&7UXOHVLQLWV6,3DQGWKDWWKHLQFRUSRUDWLRQRIWKHUXOHV
1R :DOOHWDOY(3$HWDO
(YDOXDWLRQRIZKHWKHUDQDUHDKDVDWWDLQHGWKHR]RQH
1$$46
7KH (3$ UHJXODWLRQV WKDW ZHUH SURPXOJDWHG LQ
HVWDEOLVKWKHDSSOLFDEOH1$$46IRUYDULRXVSROOXWDQWVDQG
WKHPHWKRGRORJ\IRUGHWHUPLQLQJZKHWKHUDQDUHDKDVDWWDLQHG
WKDWVWDQGDUG6HH&)5SW7ZRW\SHVRI1$$46
DUHVHWIRUWKLQWKHUHJXODWLRQV QDWLRQDOSULPDU\DPELHQW
DLUTXDOLW\VWDQGDUGVZKLFK³GHILQHOHYHOVRIDLUTXDOLW\ZKLFK
WKH $GPLQLVWUDWRU MXGJHV DUH QHFHVVDU\ ZLWK DQ DGHTXDWH
PDUJLQ RI VDIHW\ WR SURWHFW WKH SXEOLF KHDOWK´ DQG
QDWLRQDOVHFRQGDU\DPELHQWDLUTXDOLW\VWDQGDUGVZKLFK
³GHILQHOHYHOVRIDLUTXDOLW\ZKLFKWKH$GPLQLVWUDWRUMXGJHV
QHFHVVDU\WRSURWHFWWKHSXEOLFZHOIDUHIURPDQ\NQRZQRU
DQWLFLSDWHG DGYHUVH HIIHFWV RI D SROOXWDQW´ &)5 SW
E
6HFWLRQ D RIWKHUHJXODWLRQVVHWVWKHSULPDU\VWDQGDUG
IRUR]RQHDWDFRQFHQWUDWLRQRISDUWVSHUPLOOLRQ8QGHU
WKLV VHFWLRQ WKH R]RQH ³VWDQGDUG LV DWWDLQHG ZKHQ WKH
H[SHFWHGQXPEHURIGD\VSHUFDOHQGDU\HDUZLWKPD[LPXP
KRXUO\ DYHUDJH R]RQH FRQFHQWUDWLRQV DERYH SDUWV SHU
PLOOLRQ LV HTXDO WR RU OHVV WKDQ DV GHWHUPLQHG E\
DSSHQGL[+´&)5SW D $SSHQGL[+LQWXUQ
H[SODLQVWKHPHWKRGRORJ\E\ZKLFKH[SHULPHQWDOUHVXOWVDUH
FRQYHUWHGLQWRWKHH[SHFWHGQXPEHURIGD\VWKDWWKHR]RQH
VWDQGDUGZRXOGEHH[FHHGHG6HH&)5SWDSS+
%HFDXVH WKH PHWKRGRORJ\ LQYROYHV DYHUDJLQJ D UHJLRQ¶V
UHVXOWVRYHUDWKUHH\HDUSHULRGIRUHDFKPRQLWRULQJVLWHLQWKH
UHJLRQDQDUHDZLOODWWDLQWKH1$$46RQO\LIRYHUWKHWKUHH
\HDUSHULRGHDFKRILWVPRQLWRULQJVLWHVUHFRUGWKUHHRUIHZHU
WLPHVGXULQJZKLFKWKHR]RQHFRQFHQWUDWLRQKDVH[FHHGHGWKH
1$$466HHLG
5HTXLUHPHQWVIRUR]RQHQRQDWWDLQPHQWDUHDV
3DUW ' RI 6XEFKDSWHU , RI WKH &$$ SURYLGHV VSHFLILF
SROOXWLRQ FRQWURO UHTXLUHPHQWV WKDW DSSO\ RQO\ WR
QRQDWWDLQPHQW DUHDV ,Q JHQHUDO D 6,3 IRU DQ R]RQH
QRQDWWDLQPHQW DUHD PXVW LQFOXGH PHDVXUHV WR HQVXUH WKH
WLPHO\DWWDLQPHQWDQGPDLQWHQDQFHRIWKHVWDQGDUG6HH&$$

-- 5 of 14 --

:DOOHWDOY(3$HWDO 1R
†† D $ F E 7KH6,3PXVWDOVR
LQFOXGH SURYLVLRQV IRU WKH HQIRUFHPHQW RI WKH PHDVXUHV
LQFOXGHGLQWKH6,3VHH&$$† D & DVZHOODVWKH
FRPPLWPHQW RI DGHTXDWH UHVRXUFHV DQG OHJDO DXWKRULW\ WR
LPSOHPHQW WKH HQIRUFHPHQW PHDVXUHV 6HH &$$
† D ( L
)RU D PRGHUDWH R]RQH QRQDWWDLQPHQW DUHD D 6,3 PXVW
LQFOXGHWKHIROORZLQJVSHFLILFPHDVXUHV SROOXWLRQOLPLWV
WKDW UHIOHFW WKH ³UHDVRQDEO\ DYDLODEOH FRQWURO WHFKQRORJ\´
5$&7 IRU H[LVWLQJ IDFWRULHV WKDW HPLW 92&V VHH &$$
†† F E DQG SURFHGXUHV WR HQVXUH WKDW
VWDWHDQGORFDOWUDQVSRUWDWLRQSODQVDQGSURMHFWVFRQIRUPWR
WKH FOHDQ DLU SODQV 6HH &$$ † F $ 86&
† F $
5HTXLUHPHQWVIRUWKHUHGHVLJQDWLRQRIDQDUHDIURP
QRQDWWDLQPHQWWRDWWDLQPHQW
$VWDWHPD\UHTXHVWWKH(3$WRUHGHVLJQDWHDQDUHDIURP
QRQDWWDLQPHQWWRDWWDLQPHQWVWDWXVLIWKDWDUHDKDVLPSURYHG
LQDLUTXDOLW\6HH&$$† G ' $IWHUDQDUHDLVVR
UHGHVLJQDWHG LW QR ORQJHU QHHG FRPSO\ ZLWK WKH PRUH
VWULQJHQW DLU SROOXWLRQ PHDVXUHV WKDW DSSO\ RQO\ WR
QRQDWWDLQPHQWDUHDV&I&$$† D , UHTXLULQJ6,3V
IRUQRQDWWDLQPHQWDUHDVWRPHHWWKH³DSSOLFDEOHUHTXLUHPHQWV
RISDUW'RIWKLVVXEFKDSWHU´ 7KHUHVSRQVLELOLW\LQVWHDGLV
RQWKHVWDWHWRDSSO\WKHHQIRUFHPHQWSURYLVLRQVFRQWDLQHGLQ
LWV PDLQWHQDQFH SODQ 6HH &$$ † $ G 86&
†D G UHTXLULQJPDLQWHQDQFHSODQVWKDWDUHVXEPLWWHG
ZLWK UHGHVLJQDWLRQ UHTXHVWV WR LQFOXGH ³VXFK FRQWLQJHQF\
SURYLVLRQVDVWKH$GPLQLVWUDWRUGHHPVQHFHVVDU\WRDVVXUH
WKDW WKH 6WDWH ZLOO SURPSWO\ FRUUHFW DQ\ YLRODWLRQ RI WKH
VWDQGDUGZKLFKRFFXUVDIWHUWKHUHGHVLJQDWLRQRIWKHDUHDDVDQ
DWWDLQPHQWDUHD´
)LYH FULWHULD PXVW EH PHW IRU DQ DUHD WR EH UHGHVLJQDWHG
IURPQRQDWWDLQPHQWWRDWWDLQPHQWVWDWXV
1R :DOOHWDOY(3$HWDO
7KH(3$¶VLQWHUSUHWDWLRQLQOLHXRIRWKHUJXLGDQFHRQWKLV
PDWWHULVQRWXQUHDVRQDEOH$OWKRXJK³DSSOLFDEOH´FRXOGEH
LQWHUSUHWHGDVOLPLWLQJRQO\WKHJHRJUDSKLFDODUHDWRZKLFKWKH
VWDWXWRU\UHTXLUHPHQWVPXVWDSSO\LWFDQDOVREHLQWHUSUHWHG
DVOLPLWLQJWKHQXPEHURIDFWXDOUHTXLUHPHQWVZLWKLQ&$$
†DQG3DUW'WKDWDSSO\WRDJLYHQDUHD7KHSHWLWLRQHUV
KRZHYHUFRQWHQGWKDWWKHLQWHUSUHWDWLRQSXWIRUWKE\WKH(3$
LQWKLVUXOHPDNLQJSURFHHGLQJFRQIOLFWVZLWKWKHDJHQF\¶VRZQ
*HQHUDO 3UHDPEOH IRU WKH ,PSOHPHQWDWLRQ RI 7LWOH , RI WKH
&$$$PHQGPHQWVRI,QWKLVJHQHUDOSUHDPEOHWKH
(3$VWDWHGWKDWDVDSUHUHTXLVLWHWRGHVLJQDWLRQ³>W@KH6WDWH
PXVWVKRZWKDWWKHVHFWLRQUHTXLUHPHQWVRIFRQIRUPLW\
KDYHEHHQPHW´DQGWKDWWKH³6,3FRQIRUPLW\SURYLVLRQVPXVW
EH FRQVLVWHQW ZLWK (3$ JXLGDQFH´ )HG 5HJ
$SU
7KHSHWLWLRQHUVDOVRFLWHWKH(3$¶V&DOFDJQL0HPRUDQGXP
ZKLFK SURYLGHV ³,I WKH 6WDWH VXEPLWV WKH UHGHVLJQDWLRQ
UHTXHVW VXEVHTXHQW WR (3$¶V LVVXDQFH RI WKH FRQIRUPLW\
UHJXODWLRQV DQG WKH FRQIRUPLW\ UHTXLUHPHQW EHFDPH
DSSOLFDEOH WR WKH DUHD SULRU WR VXEPLVVLRQ WKH 6WDWH PXVW
DGRSWWKHDSSOLFDEOHFRQIRUPLW\UHTXLUHPHQWVEHIRUH(3$FDQ
UHGHVLJQDWHWKHDUHD´,GDW7KLVODQJXDJHWKH\DUJXH
LQGLFDWHV WKDW WKH DJHQF\ LWVHOI KDV LQWHUSUHWHG WKH
WUDQVSRUWDWLRQFRQIRUPLW\ UHJXODWLRQV DV DSSO\LQJ WR
UHGHVLJQDWLRQUHTXHVWV
%XW GXULQJ D ODWHU UXOHPDNLQJ SURFHHGLQJ WKDW FRPSOLHG
ZLWKDOOQRWLFHDQGFRPPHQWUHTXLUHPHQWVWKH(3$LQIRUPHG
WKH SXEOLF WKDW LW ZDV UHYHUVLQJ LWV HDUOLHU LQWHUSUHWDWLRQ
UHJDUGLQJ WKH DSSOLFDELOLW\ RI WUDQVSRUWDWLRQFRQIRUPLW\
UHTXLUHPHQWVWRUHGHVLJQDWLRQUHTXHVWVVXFKWKDWWKH\ZRXOG
QR ORQJHU EH GHHPHG DSSOLFDEOH 6HH $SSURYDO DQG
3URPXOJDWLRQ RI ,PSOHPHQWDWLRQ 3ODQV DQG 'HVLJQDWLRQ RI
$UHDV IRU $LU 4XDOLW\ 3ODQQLQJ 3XUSRVHV 6WDWH RI )ORULGD
&KDQJH LQ 1DWLRQDO 3ROLF\ 5HJDUGLQJ $SSOLFDELOLW\ RI
&RQIRUPLW\5HTXLUHPHQWVWR5HGHVLJQDWLRQ5HTXHVWV)HG
5HJ 'HF ,QGRLQJVRWKH(3$VHW
IRUWKWKHVDPHWZRUDWLRQDOHVWKDWLWJLYHVLQWKHFDVHEHIRUH
XV)XUWKHUPRUHDIWHULWVUXOHPDNLQJSURFHHGLQJWKH

-- 6 of 14 --

:DOOHWDOY(3$HWDO 1R
WUDQVSRUWDWLRQFRQIRUPLW\ UHTXLUHPHQWV DUH LQDSSOLFDEOH WR
UHTXHVWVIRUUHGHVLJQDWLRQ
,Q&$$† G ( &RQJUHVVVHWIRUWKWKHILYHFULWHULD
WKDW PXVW EH PHW IRU DQ DUHD WR EH UHGHVLJQDWHG IURP
QRQDWWDLQPHQW WR DWWDLQPHQW VWDWXV 6SHFLILFDOO\
† G ( Y VWDWHVWKDWWKH(3$PXVWGHWHUPLQHWKDW³WKH
6WDWH FRQWDLQLQJ VXFK DUHD KDV PHW DOO UHTXLUHPHQWV
DSSOLFDEOHWRWKHDUHDXQGHUVHFWLRQRIWKLVWLWOHDQGSDUW
' RI WKLV VXEFKDSWHU´ (PSKDVLV DGGHG 7KH VWDWXWH
KRZHYHUGRHVQRWGHVFULEHKRZWKH(3$LVWRGHFLGHZKLFK
3DUW ' UHTXLUHPHQWV DUH ³DSSOLFDEOH´ LQ HYDOXDWLQJ D
UHGHVLJQDWLRQUHTXHVW
,Q WKLV DQG RWKHU UXOHPDNLQJ SURFHHGLQJV WKH (3$ KDV
LQWHUSUHWHGWKHWUDQVSRUWDWLRQFRQIRUPLW\UHTXLUHPHQWVRI3DUW
' DV LQDSSOLFDEOH IRU WKH SXUSRVHV RI UHGHVLJQDWLRQ ,WV
JHQHUDO UDWLRQDOH LV WKDW UHTXLULQJ WKH VXEPLVVLRQ RI
WUDQVSRUWDWLRQFRQIRUPLW\UXOHVDWWKHUHGHVLJQDWLRQUHTXHVW
VWDJHLVXQQHFHVVDU\WRHQVXUHWKDWWKHDUHDZLOODELGHE\WKH
WUDQVSRUWDWLRQFRQIRUPLW\SURYLVLRQVRI3DUW'EHFDXVHRWKHU
UHTXLUHPHQWVDSDUWIURP&$$† G ( Y DUHDOUHDG\
LQ SODFH WR HQVXUH WKDW WKH DUHD GRHV VR 7KH DJHQF\
GLVWLQJXLVKHVWKHWUDQVSRUWDWLRQFRQIRUPLW\UHTXLUHPHQWVIURP
WKHRWKHUUHTXLUHPHQWVLQ&$$†DQG3DUW'RQWKHEDVLV
WKDW WKH RWKHU UHTXLUHPHQWV XQOLNH WKH WUDQVSRUWDWLRQ
FRQIRUPLW\ UHTXLUHPHQWV DUH OLQNHG WR WKH QRQDWWDLQPHQW
VWDWXVRIDQDUHDDQGWKXVQHHGQRORQJHUEHFRPSOLHGZLWK
XSRQ UHGHVLJQDWLRQ WR DWWDLQPHQW VWDWXV 6SHFLILFDOO\ WKH
(3$SRLQWVRXWWKDW .HQWXFN\ZLOOVWLOOUHPDLQREOLJDWHG
WR DGRSW WKH WUDQVSRUWDWLRQFRQIRUPLW\ UXOHV HYHQ DIWHU
UHGHVLJQDWLRQ VHH &$$ † F $ DSSO\LQJ
WUDQVSRUWDWLRQFRQIRUPLW\UXOHVWRDOODUHDVZLWKRXWUHJDUGWR
DWWDLQPHQWRUQRQDWWDLQPHQWVWDWXV DQGZRXOGULVNVDQFWLRQV
LI LW IDLOV WR GR VR DQG WKH IHGHUDO WUDQVSRUWDWLRQ
FRQIRUPLW\ UXOHV ZLOO VWLOO UHTXLUH .HQWXFN\ WR SHUIRUP
WUDQVSRUWDWLRQ FRQIRUPLW\ DQDO\VHV HYHQ LQ WKH DEVHQFH RI
IHGHUDOO\DSSURYHGVWDWHUXOHV6HH† F SURYLGLQJWKDW
WUDQVSRUWDWLRQFRQIRUPLW\PXVWEHGHPRQVWUDWHG³>X@QWLOVXFK
WLPHDVWKHLPSOHPHQWDWLRQSODQUHYLVLRQLVDSSURYHG´
1R :DOOHWDOY(3$HWDO
7KH$GPLQLVWUDWRUPD\QRWSURPXOJDWHDUHGHVLJQDWLRQ
RIDQRQDWWDLQPHQWDUHD RUSRUWLRQWKHUHRI WRDWWDLQPHQW
XQOHVV²
L WKH$GPLQLVWUDWRUGHWHUPLQHVWKDWWKHDUHDKDVDWWDLQHG
WKHQDWLRQDODPELHQWDLUTXDOLW\VWDQGDUG
LL WKH$GPLQLVWUDWRUKDVIXOO\DSSURYHGWKHDSSOLFDEOH
LPSOHPHQWDWLRQSODQIRUWKHDUHDXQGHUVHFWLRQ N
RIWKLVWLWOH
LLL WKH$GPLQLVWUDWRUGHWHUPLQHVWKDWWKHLPSURYHPHQW
LQ DLU TXDOLW\ LV GXH WR SHUPDQHQW DQG HQIRUFHDEOH
UHGXFWLRQVLQHPLVVLRQVUHVXOWLQJIURPLPSOHPHQWDWLRQRI
WKH DSSOLFDEOH LPSOHPHQWDWLRQ SODQ DQG DSSOLFDEOH
)HGHUDO DLU SROOXWDQW FRQWURO UHJXODWLRQV DQG RWKHU
SHUPDQHQWDQGHQIRUFHDEOHUHGXFWLRQV
LY WKH$GPLQLVWUDWRUKDVIXOO\DSSURYHGDPDLQWHQDQFH
SODQIRUWKHDUHDDVPHHWLQJWKHUHTXLUHPHQWVRIVHFWLRQ
DRIWKLVWLWOHDQG
Y WKH 6WDWH FRQWDLQLQJ VXFK DUHD KDV PHW DOO
UHTXLUHPHQWVDSSOLFDEOHWRWKHDUHDXQGHUVHFWLRQRI
WKLVWLWOHDQGSDUW'RIWKLVVXEFKDSWHU
&$$† G ( $WLVVXHLQWKHSUHVHQWFDVHLVZKHWKHU
WKH&LQFLQQDWLPHWURSROLWDQDUHDKDVPHWWKHVHFRQGIRXUWK
DQGILIWKFULWHULD
&$$ 6HFWLRQ JHQHUDO HQIRUFHDELOLW\
UHTXLUHPHQWV
7RVDWLVI\WKHVHFRQGDQGWKHILIWKUHGHVLJQDWLRQFULWHULDWKH
(3$ PXVW IXOO\ DSSURYH WKH DSSOLFDEOH 6,3 LQ DFFRUGDQFH
ZLWK†RIWKH&$$6HFWLRQ N ZKLFKLVFRGLILHGDW
86&† N LQWKHVHFRQGUHGHVLJQDWLRQFULWHULRQVHWV
IRUWK WKH SURFHVV E\ ZKLFK WKH (3$ PXVW UHYLHZ D 6,3
VXEPLVVLRQ$FFRUGLQJWRWKLVVHFWLRQWKH(3$LVUHTXLUHGWR
DSSURYHRUGLVDSSURYHDVXEPLWWHG6,3ZLWKLQRQH\HDUDIWHU
FRQFOXGLQJWKDWWKH6,3FRQWDLQV³WKHLQIRUPDWLRQQHFHVVDU\
WRHQDEOHWKH$GPLQLVWUDWRUWRGHWHUPLQHZKHWKHUWKHSODQ
VXEPLVVLRQ FRPSOLHV ZLWK WKH SURYLVLRQV RI WKLV FKDSWHU´
&$$† N $ $FRPSOHWHG6,3VXEPLVVLRQLQ

-- 7 of 14 --

:DOOHWDOY(3$HWDO 1R
WXUQFDQRQO\EHDSSURYHGLILW³PHHWVDOORIWKHDSSOLFDEOH
UHTXLUHPHQWVRIWKLVFKDSWHU´&$$† N
6XEVHFWLRQ D RI † VHWV IRUWK WKH JHQHUDO
UHTXLUHPHQWVIRUD6,3$FFRUGLQJWRWKLVVXEVHFWLRQD6,3
PXVW LQFOXGH ³HQIRUFHDEOH HPLVVLRQ OLPLWDWLRQV DQG RWKHU
FRQWURO PHDVXUHV PHDQV RU WHFKQLTXHV´ &$$
† D $ SURYLVLRQV IRU WKH ³HVWDEOLVKPHQW DQG
RSHUDWLRQRIDSSURSULDWHGHYLFHV´QHFHVVDU\WRFROOHFWGDWDRQ
DPELHQWDLUTXDOLW\&$$† D % DQGSURJUDPVWR
HQIRUFHWKHOLPLWDWLRQV6HH&$$† D &
&$$ 6HFWLRQ $ JHQHUDO PDLQWHQDQFH
UHTXLUHPHQWV
$ ³PDLQWHQDQFH SODQ´ LV UHTXLUHG E\ &$$
† G ( LY DVDFRPSRQHQWRIDVWDWH¶VUHGHVLJQDWLRQ
UHTXHVW6XFKDSODQPXVW³SURYLGHIRUWKHPDLQWHQDQFHRI
WKH >1$$46@ IRU DW OHDVW \HDUV DIWHU WKH
UHGHVLJQDWLRQ´ &$$ † $ D 0DLQWHQDQFH LV
GHPRQVWUDWHG E\ VKRZLQJ WKDW IXWXUH HPLVVLRQV ZLOO QRW
H[FHHG WKH OHYHO HVWDEOLVKHG LQ WKH DWWDLQPHQW HPLVVLRQV
LQYHQWRU\ZKLFKIRUR]RQHLVSDUWVSHUPLOOLRQ6HH
&)5SW D $Q(3$PHPRUDQGXPVWDWHVWKDWDQ\ILQDO
GHWHUPLQDWLRQUHJDUGLQJWKHDGHTXDF\RIDPDLQWHQDQFHSODQ
ZLOOEHPDGH³LQOLJKWRIWKHSDUWLFXODUFLUFXPVWDQFHVIDFLQJ
WKHDUHDSURSRVHGIRUUHGHVLJQDWLRQDQGEDVHGRQDOOUHOHYDQW
LQIRUPDWLRQDYDLODEOHDWWKHWLPH´0HPRUDQGXPIURP-RKQ
&DOFDJQL'LUHFWRU$LU4XDOLW\0DQDJHPHQW'LYLVLRQ(3$
3URFHGXUHVIRU3URFHVVLQJ5HTXHVWVWR5HGHVLJQDWH$UHDVWR
$WWDLQPHQW 6HSW &DOFDJQL0HPRUDQGXP
7KH PDLQWHQDQFH SODQ PXVW DOVR LQFOXGH HQIRUFHPHQW
SURYLVLRQV³DVWKH$GPLQLVWUDWRUGHHPVQHFHVVDU\WRDVVXUH
WKDW WKH 6WDWH ZLOO SURPSWO\ FRUUHFW DQ\ YLRODWLRQ RI WKH
VWDQGDUGZKLFKRFFXUVDIWHUWKHUHGHVLJQDWLRQRIWKHDUHDDVDQ
DWWDLQPHQW DUHD´ &$$ † $ G ,Q SDUWLFXODU WKHVH
FRQWLQJHQF\SURYLVLRQVPXVWUHTXLUHWKHVWDWHWRLPSOHPHQWDOO
RIWKHR]RQHFRQWUROPHDVXUHVWKDWZHUHDOUHDG\LQWKH6,3
SULRUWRWKHWLPHWKDWWKHQRQDWWDLQPHQWDUHDLVUHGHVLJQDWHG
WRDWWDLQPHQW6HHLG
1R :DOOHWDOY(3$HWDO
FRPPLWPHQWVUDWKHUWKDQ³DVVXP>LQJ@WKDWWKHSODQFRQWDLQV
DGHTXDWHHQIRUFHPHQWDQGUHVRXUFHFRPPLWPHQWVEDVHGRQ
LQIHUHQFHVDERXWSODQVIURPGHFDGHVDJR´
:H DJUHH WKDW D PRUH FRQWHPSRUDU\ FRPPLWPHQW RI
UHVRXUFHVDQGDXWKRULW\ZRXOGDOORZWKHVWDWHVWRWDLORUWKHLU
FRPPLWPHQWV VSHFLILFDOO\ WR WKH SODQV IRU ZKLFK (3$
DSSURYDOLVVRXJKW%XWWKHUHLVQRODQJXDJHLQWKH&$$RULQ
WKH(3$¶VUHJXODWLRQVWKDWVSHFLILFDOO\UHTXLUHVWKDWDVHSDUDWH
FRPPLWPHQW EH PDGH ZLWKLQ WKH PDLQWHQDQFH SODQV
WKHPVHOYHV 7KXV WKH (3$ SHUPLVVLEO\ GHWHUPLQHG WKDW
.HQWXFN\DQG2KLRIXOILOOHGWKHUHTXLUHPHQWRIVXEPLWWLQJ³D
SURJUDPWRSURYLGHIRUWKHHQIRUFHPHQWRIWKH>PDLQWHQDQFH@
PHDVXUHV´ ZKHQ VXFK PHDVXUHV ZHUH DOUHDG\ DSSURYHG LQ
WKHLUHDUOLHU6,3V0RUHRYHUWKLVGHFLVLRQLVLQDFFRUGZLWK
WKH LQWHUSUHWDWLRQ JLYHQ WR WKH &$$ XQGHU WKH &DOFDJQL
0HPRUDQGXP DGYLVLQJ WKDW ³DQ (3$ DFWLRQ RQ D
UHGHVLJQDWLRQUHTXHVWGRHVQRWPHDQWKDWHDUOLHULVVXHVZLWK
UHJDUGWRWKH6,3ZLOOEHUHRSHQHG´LGDWDQLQWHUSUHWDWLRQ
WKDW KDV EHHQ XSKHOG E\ WKLV FRXUW 6HH 6RXWKZHVWHUQ 3D
*URZWK$OOLDQFHY%URZQHU)G WK&LU
XSKROGLQJWKHGHFLVLRQRIWKH(3$WRUHGHVLJQDWHWKH
&OHYHODQG$NURQ/RUDLQDUHDDVDQDWWDLQPHQWDUHDIRUR]RQH
HYHQWKRXJKWKHLQWHUVWDWHWUDQVSRUWSURYLVLRQVZHUHFRQWDLQHG
LQ D SULRU 2KLR 6,3 $FFRUGLQJO\ ZH XSKROG WKH (3$¶V
DSSURYDORIWKHFOHDQDLUPDLQWHQDQFHSODQVIRUWKH&LQFLQQDWL
PHWURSROLWDQDUHD
& $SSOLFDELOLW\ RI WKH WUDQVSRUWDWLRQFRQIRUPLW\
UHTXLUHPHQWV
7KH(3$DFNQRZOHGJHVWKDW.HQWXFN\KDVIDLOHGWRVXEPLW
DUHYLVLRQRILWV6,3FRQWDLQLQJSURFHGXUHVWKDWPHHWDOORIWKH
WUDQVSRUWDWLRQFRQIRUPLW\UHTXLUHPHQWVRI3DUW'6XESDUW
RI WKH &$$ :KDW HIIHFW LI DQ\ WKLV IDLOXUH KDV RQ WKH
UHGHVLJQDWLRQ UHTXHVWV LV WKH TXHVWLRQ EHIRUH XV 7KH
SHWLWLRQHUVFRQWHQGWKDWXQWLO.HQWXFN\VXEPLWVDUHYLVLRQWKDW
PHHWVWKHVHWUDQVSRUWDWLRQFRQIRUPLW\UHTXLUHPHQWVWKH(3$
KDVQRDXWKRULW\WRUHGHVLJQDWHWKH&LQFLQQDWLPHWURSROLWDQ
DUHD WR DWWDLQPHQW VWDWXV %XW WKH (3$ DUJXHV WKDW WKH

-- 8 of 14 --

:DOOHWDOY(3$HWDO 1R
SURFHHGLQJDQGWKDWXVHGLQWKH7LHUSURFHHGLQJWKH(3$¶V
GHFLVLRQ WR WUHDW WKH 7LHU ILQGLQJV DV LQDSSOLFDEOH WR WKH
SUHVHQWFDVH³LVDVXIILFLHQWO\UDWLRQDORQHWRSUHFOXGHDFRXUW
IURPVXEVWLWXWLQJLWVMXGJPHQWIRUWKDWRI(3$´&KHP0IUV
$VV¶QY1DWXUDO5HV'HI&RXQFLO,QF86
:HWKHUHIRUHXSKROGWKH(3$¶VDSSURYDORIWKHWZR
VWDWHV¶ FOHDQ DLU PDLQWHQDQFH SODQV IRU WKH &LQFLQQDWL
PHWURSROLWDQDUHD
&RPPLWPHQWRIHQIRUFHPHQWUHVRXUFHVDQGDXWKRULW\
7KH SHWLWLRQHUV DOVR FRQWHQG WKDW WKH (3$ HUUHG LQ
DSSURYLQJWKH&LQFLQQDWLPHWURSROLWDQDUHDPDLQWHQDQFHSODQV
EHFDXVHWKHVXEPLWWHGSODQVODFNHGWKHUHTXLUHGUHVRXUFHDQG
DXWKRULW\FRPPLWPHQWVIRUHQIRUFHPHQW$FFRUGLQJWRWKHLU
DUJXPHQW &$$ † D & UHTXLUHV WKDW ³>H@DFK
LPSOHPHQWDWLRQSODQLQFOXGHDSURJUDPWRSURYLGHIRUWKH
HQIRUFHPHQWRIWKHPHDVXUHV´GHVFULEHGLQWKHSODQ7KH\
DVVHUWWKDWWKHVWDWXWHUHTXLUHVVSHFLILFHQIRUFHPHQWPHDVXUHV
WREHLQFOXGHGLQWKHPDLQWHQDQFHSODQVWKDWDUHVXEPLWWHGLQ
UHTXHVWVIRUUHGHVLJQDWLRQ
7KHSHWLWLRQHUVIXUWKHUFODLPWKDWWKH(3$HUUHGLQUHO\LQJ
XSRQWKHUHVRXUFHDQGDXWKRULW\FRPPLWPHQWVFRQWDLQHGLQ
WKHRULJLQDO6,3VIRU.HQWXFN\DQG2KLR6HH$SSURYDODQG
3URPXOJDWLRQRI,PSOHPHQWDWLRQ3ODQV.HQWXFN\$SSURYDO
RI6XOIXU'LR[LGH5HYLVLRQV)HG5HJ 2FW
SURPXOJDWLQJWKH(3$¶VDSSURYDORI.HQWXFN\¶V
6,3 DQG $SSURYDO DQG 3URPXOJDWLRQ RI ,PSOHPHQWDWLRQ
3ODQV 2KLR )HG 5HJ 2FW
SURPXOJDWLQJWKH(3$¶VDSSURYDORISRUWLRQVRI2KLR¶V6,3
LQFOXGLQJ WKH SRUWLRQV SHUWDLQLQJ WR WKH &LQFLQQDWL
PHWURSROLWDQDUHD $VVXSSRUWIRUWKHLUDUJXPHQWWKH\FLWH
WKHIROORZLQJIHGHUDOUHJXODWLRQ³(DFKSODQPXVWLQFOXGHD
GHVFULSWLRQRIWKHUHVRXUFHVDYDLODEOHWRWKH6WDWHDQGORFDO
DJHQFLHV DW WKH GDWH RI VXEPLVVLRQ RI WKH SODQ DQG RI DQ\
DGGLWLRQDOUHVRXUFHVQHHGHGWRFDUU\RXWWKHSODQGXULQJWKH
\HDUSHULRGIROORZLQJLWVVXEPLVVLRQ´&)5†
HPSKDVLV DGGHG LQ WKH SHWLWLRQHUV¶ EULHI 7KLV ODQJXDJH
WKH\ DUJXH HPSKDVL]HV WKH XVH RI VHSDUDWH XSWRGDWH
1R :DOOHWDOY(3$HWDO
3DUW ' UHTXLUHPHQWV VSHFLILFDOO\ SHUWDLQLQJ WR
QRQDWWDLQPHQWDUHDV
3DUW ' RI 6XEFKDSWHU , RI WKH &$$ SURYLGHV VSHFLILF
UHTXLUHPHQWVWKDWDQRQDWWDLQPHQWDUHDPXVWPHHWLQRUGHUWR
IXOILOO WKH ILIWK FULWHULRQ IRU UHGHVLJQDWLRQ 7KHUH DUH WZR
VXESDUWVDWLVVXHLQ3DUW'6XESDUWZKLFKVHWVIRUWKWKH
EDVLFUHTXLUHPHQWVDSSOLFDEOHWRDOOQRQDWWDLQPHQWDUHDVVHH
&$$†$DQG6XESDUWZKLFKHVWDEOLVKHVDGGLWLRQDO
VSHFLILF UHTXLUHPHQWV IRU DUHDV FODVVLILHG DV PDUJLQDO
PRGHUDWHVHULRXVVHYHUHDQGH[WUHPHQRQDWWDLQPHQWDUHDV
6HH&$$†%$VWRWKHUHODWLRQVKLSEHWZHHQWKHWZR
VXESDUWV³>L>QVRPHFDVHVWKHSROOXWDQWVSHFLILFUHTXLUHPHQWV
FRQWDLQHG LQ VXESDUWV RI SDUW ' RYHUULGH VXESDUW ¶V
JHQHUDO SURYLVLRQV´ 6WDWH ,PSOHPHQWDWLRQ 3ODQV *HQHUDO
3UHDPEOHIRUWKH,PSOHPHQWDWLRQRI7LWOH,RIWKH&OHDQ$LU
$FW $PHQGPHQWV RI )HG 5HJ
$SU
D 6XESDUWWUDQVSRUWDWLRQFRQIRUPLW\UHTXLUHPHQWV
7R DGGUHVV DLU SROOXWLRQ VWHPPLQJ IURP WUDQVSRUWDWLRQ
VRXUFHV &RQJUHVV HQDFWHG FRQIRUPLW\ UHTXLUHPHQWV
DSSOLFDEOH WR WUDQVSRUWDWLRQ SODQV DQG SURMHFWV 7KHVH
UHTXLUHPHQWVZKLFKDUHSDUWRIWKH&$$$PHQGPHQWV
SURYLGHWKDWQRIHGHUDODJHQF\VKDOO³HQJDJHLQVXSSRUWLQ
DQ\ZD\RUSURYLGHILQDQFLDODVVLVWDQFHIRUOLFHQVHRUSHUPLW
RUDSSURYHDQ\DFWLYLW\ZKLFKGRHVQRWFRQIRUPWR>D6,3@
DIWHULWKDVEHHQDSSURYHGRUSURPXOJDWHGXQGHUVHFWLRQ
RIWKLVWLWOH´† F ³7KHGHWHUPLQDWLRQRIFRQIRUPLW\
VKDOOEHEDVHGRQWKHPRVWUHFHQWHVWLPDWHVRIHPLVVLRQV´
&$$† F %
6XESDUW RI 3DUW ' VHWV IRUWK WKH DFWXDO WUDQVSRUWDWLRQ
FRQIRUPLW\UHTXLUHPHQWVIRUIHGHUDODFWLYLWLHV$QDFWLYLW\
FRQIRUPV WR D 6,3 LI WKH DQWLFLSDWHG HPLVVLRQV IURP WKH
DFWLYLW\ZLOOQRWIUXVWUDWHD6,3¶VSXUSRVHRIHOLPLQDWLQJRU
UHGXFLQJ WKH VHYHULW\ DQG QXPEHU RI YLRODWLRQV RI WKH
>1$$46@ DQG DFKLHYLQJ H[SHGLWLRXV DWWDLQPHQW RI VXFK
VWDQGDUGV FDXVH RU FRQWULEXWH WR DQ\ QHZ YLRODWLRQ
H[DFHUEDWH DQ H[LVWLQJ YLRODWLRQ RU GHOD\ WKH WLPHO\

-- 9 of 14 --

:DOOHWDOY(3$HWDO 1R
DWWDLQPHQWRIWKH1$$46RUDQ\RWKHUVXFKPLOHVWRQHV6HH
&$$† F $ %
E 6XESDUWUHDVRQDEO\DYDLODEOHFRQWUROWHFKQRORJ\
5$&7 UHTXLUHPHQWV
6XESDUWRI3DUW'UHTXLUHVD6,3IRUDQRQDWWDLQPHQWDUHD
WRFRQWDLQYDULRXV5$&7UXOHVGHSHQGLQJXSRQWKHVHYHULW\
RI WKH DUHD¶V QRQDWWDLQPHQW 7KH 5$&7 UXOHV JRYHUQ DOO
IRUPVRIDLUSROOXWLRQIURPVRXUFHVRWKHUWKDQWUDQVSRUWDWLRQ
)RUDPDUJLQDOQRQDWWDLQPHQWDUHDD6,3LVUHTXLUHGWRDGRSW
DQXPEHURIJHQHUDO5$&7UXOHVIRUH[LVWLQJ92&VRXUFHV
6HH &$$ † D $ $ 6,3 IRU D PRGHUDWH
QRQDWWDLQPHQW DUHD PXVW QRW RQO\ FRPSO\ ZLWK WKH
UHTXLUHPHQWVIRUPDUJLQDOQRQDWWDLQPHQWDUHDVVHHLGEXW
PXVWDOVRDGRSWDGGLWLRQDO5$&7UXOHVIRUVSHFLILFFDWHJRULHV
RI92&HPLVVLRQV6HH&$$† E 6SHFLILFDOO\&$$
† E $ SURYLGHVDVIROORZV
7KH 6WDWH VKDOO VXEPLW D UHYLVLRQ WR WKH DSSOLFDEOH
LPSOHPHQWDWLRQSODQWRLQFOXGHSURYLVLRQVWRUHTXLUHWKH
LPSOHPHQWDWLRQ RI UHDVRQDEO\ DYDLODEOH FRQWURO
WHFKQRORJ\ XQGHU VHFWLRQ F RI WKLV WLWOH ZLWK
UHVSHFWWR>H@DFKFDWHJRU\RI92&VRXUFHVLQWKHDUHD
FRYHUHGE\D>&RQWURO7HFKQLTXH*XLGHOLQH@GRFXPHQW
LVVXHG E\ WKH $GPLQLVWUDWRU EHWZHHQ 1RYHPEHU
DQGWKHGDWHRIDWWDLQPHQW
7KH(3$KDVDOVRVHWIRUWKJXLGDQFHRQKRZLWLQWHQGVWR
LQWHUSUHWYDULRXVSURYLVLRQVRIWKH&$$$PHQGPHQWVLQ
WKH JHQHUDO SUHDPEOH WR WKH DPHQGPHQWV )HG 5HJ
$SU VXSSOHPHQWHGDW)HG5HJ
$SU DQGLQYDULRXVPHPRUDQGDIURPLWV
UHJLRQDO RIILFHV ,Q WKLV JHQHUDO SUHDPEOH WKH (3$ KDV
GLUHFWO\DGGUHVVHGWKHUHTXLUHPHQWVIRUUHGHVLJQDWLRQ6HH
)HG5HJDW
1R :DOOHWDOY(3$HWDO
GHPRQVWUDWHG E\ VKRZLQJ WKDW WKH IXWXUH HPLVVLRQV RI D
SROOXWDQW¶VSUHFXUVRUVZLOOQRWH[FHHGWKHOHYHOWKDWDOORZHG
WKHDUHDWRDFKLHYHDWWDLQPHQWLQWKHILUVWSODFH
7KHSHWLWLRQHUVDOVRSRLQWWRILQGLQJVPDGHE\WKH(3$LQ
DVHSDUDWHUXOHPDNLQJSURFHHGLQJSXEOLVKHGRQ)HEUXDU\
²WKH7LHU0RWRU9HKLFOH(PLVVLRQV6WDQGDUGVDQG
*DVROLQH 6XOIXU &RQWURO 5HTXLUHPHQWV ² WKDW WKH\ DOOHJH
FRQWUDGLFWWKHILQGLQJVPDGHE\WKH(3$LQWKHSUHVHQWFDVH
,QWKH7LHUUXOHPDNLQJSURFHHGLQJWKH(3$LQFOXGHGWKH
&LQFLQQDWLPHWURSROLWDQDUHDDPRQJWKRVHWKDWDUH³FHUWDLQRU
KLJKO\OLNHO\WRUHTXLUHDGGLWLRQDOHPLVVLRQUHGXFWLRQV´
)HG5HJDW
%XWWKHILQGLQJVLQWKH7LHUUXOHPDNLQJSURFHHGLQJDVWKH
(3$H[SODLQVDUHQRWDSSOLFDEOHKHUH7KHIRFXVRIWKH7LHU
SURFHHGLQJZDVQRWVSHFLILFDOO\WRHYDOXDWHWKHDWWDLQPHQW
RU QRQDWWDLQPHQW RI WKH &LQFLQQDWL PHWURSROLWDQ DUHD EXW
UDWKHUWRGHYHORSD³PDMRUSURJUDPGHVLJQHGWRVLJQLILFDQWO\
UHGXFH WKH HPLVVLRQV IURP QHZ SDVVHQJHU FDUV DQG OLJKW
WUXFNVLQFOXGLQJSLFNXSWUXFNVYDQVPLQLYDQVDQGVSRUW
XWLOLW\YHKLFOHV´YHKLFOHVZKRVHHPLVVLRQVFRQWULEXWHKHDYLO\
WR WKH JHQHUDWLRQ RI JURXQGOHYHO R]RQH )HG 5HJ DW

)XUWKHUPRUHWKH(3$UHOLHGXSRQPRUHUHFHQWGDWDLQWKH
SUHVHQWSURFHHGLQJWKDQLQWKH7LHUSURFHHGLQJ7KH(3$
SRLQWV RXW WKDW WKH DLU TXDOLW\ GDWD XVHG LQ WKH 7LHU
UXOHPDNLQJSURFHHGLQJFDPHIURPEHIRUHDQGGLGQRW
FRQWDLQ WKH GDWD WKDW ZDV LQFOXGHG LQ WKH &LQFLQQDWL
PHWURSROLWDQ DUHD UHGHVLJQDWLRQ UHTXHVW ,QGHHG WKH (3$
DFNQRZOHGJHGWKHDYDLODELOLW\RIWKHPRUHUHFHQWDLUTXDOLW\
GDWDIRUWKH&LQFLQQDWLPHWURSROLWDQDUHDLQDVHSDUDWH7LHU
UXOHPDNLQJSURSRVDOWKDWLWSXEOLVKHGDIWHUSURPXOJDWLQJWKH
)HEUXDU\7LHUUXOH6HH&RQWURORI$LU3ROOXWLRQ
)URP1HZ0RWRU9HKLFOHV3URSRVHG+HDY\'XW\(QJLQHDQG
9HKLFOH6WDQGDUGVDQG+LJKZD\'LHVHO)XHO6XOIXU&RQWURO
5HTXLUHPHQWV)HG5HJ -XQH
*LYHQWKHGLIIHUHQFHVEHWZHHQWKHGDWDXVHGWRJHQHUDWHWKH
ILQGLQJV LQ WKH &LQFLQQDWL PHWURSROLWDQ DUHD UHGHVLJQDWLRQ

-- 10 of 14 --

:DOOHWDOY(3$HWDO 1R
DSSHQGL[:RIWKLVSDUW *XLGHOLQHRQ$LU4XDOLW\0RGHOV ´
7KLV ODQJXDJH WKH\ FRQWHQG UHTXLUHV WKH (3$ WR XVH
PRGHOLQJWRVKRZWKDWWKH&LQFLQQDWLPHWURSROLWDQDUHDZLOO
PDLQWDLQWKH1$$46$FFRUGLQJWRWKHLULQWHUSUHWDWLRQRI
WKLVODQJXDJHWKH(3$¶VUHOLDQFHRQWKHHPLVVLRQVLQYHQWRU\
DSSURDFK ZKLFKGRHVQRWLQYROYHPRGHOLQJ GRHVQRWPHHW
WKHUHTXLUHPHQWVRIWKH&$$
7KH (3$¶V UHVSRQVH LV WKDW WKH VHFWLRQ RI WKH &RGH RI
)HGHUDO 5HJXODWLRQV UHOLHG XSRQ E\ WKH SHWLWLRQHUV DSSOLHV
RQO\WR³DWWDLQPHQWGHPRQVWUDWLRQVDQGQRWWRVWDQGDORQH
PDLQWHQDQFHSODQVVXEPLWWHGXQGHU&$$VHFWLRQ$´,Q
LWV EULHI WKH DJHQF\ TXRWHV &)5 † D ZKLFK
SURYLGHV WKDW ³>H@DFK SODQ PXVW GHPRQVWUDWH WKDW WKH
PHDVXUHVUXOHVDQGUHJXODWLRQVFRQWDLQHGLQLWDUHDGHTXDWHWR
SURYLGH IRU WKH WLPHO\ DWWDLQPHQW DQG PDLQWHQDQFH RI WKH
QDWLRQDOVWDQGDUGWKDWLWLPSOHPHQWV´7KH(3$DOVRSRLQWV
RXWWKDWWKHVXEVHFWLRQFRQWDLQVQRUHIHUHQFHWR&$$†$
WKH VHFWLRQ RI WKH &$$ WKDW VSHFLILFDOO\ DGGUHVVHV
PDLQWHQDQFH SODQV ,QGHHG WKH (3$¶V RZQ LQWHUSUHWLYH
PHPRUDQGXP SXEOLVKHG SULRU WR WKH HYDOXDWLRQ RI WKH
UHGHVLJQDWLRQUHTXHVWLQTXHVWLRQSURYLGHVWKDWD³6WDWHPD\
JHQHUDOO\GHPRQVWUDWHPDLQWHQDQFHRIWKH1$$46E\HLWKHU
VKRZLQJWKDWIXWXUHHPLVVLRQVRIDSROOXWDQWRULWVSUHFXUVRUV
ZLOOQRWH[FHHGWKHOHYHORIWKHDWWDLQPHQWLQYHQWRU\RUE\
PRGHOLQJWRVKRZWKDWWKHIXWXUHPL[RIVRXUFHVDQGHPLVVLRQ
UDWHVZLOOQRWFDXVHDYLRODWLRQRIWKH1$$46´&DOFDJQL
0HPRUDQGXPDW HPSKDVLVDGGHG
$OWKRXJK WKH SHWLWLRQHUV¶ LQWHUSUHWDWLRQ RI WKH UHOHYDQW
ODQJXDJH LV DW OHDVW DV UHDVRQDEOH DV WKDW RI WKH (3$ WKH
(3$¶VFRQVWUXFWLRQLVQHLWKHULPSHUPLVVLEOHQRULQFRQIOLFW
ZLWKDVWDWXWRU\PDQGDWH7KHSKUDVH³WLPHO\DWWDLQPHQWDQG
PDLQWHQDQFH´FRXOGEHLQWHUSUHWHGDVOLPLWLQJWKHDSSOLFDWLRQ
RIWKHVHFWLRQH[FOXVLYHO\WRVLWXDWLRQVLQZKLFKWKHVWDWHPXVW
GHPRQVWUDWH ERWK DWWDLQPHQW DQG PDLQWHQDQFH UDWKHU WKDQ
HQFRPSDVVLQJVLWXDWLRQVLQZKLFKWKHVWDWHPXVWGHPRQVWUDWH
RQO\FRQWLQXHGPDLQWHQDQFH0RUHRYHUWKH(3$¶VDFWLRQV
DUH FRPSOHWHO\ FRQVLVWHQW ZLWK LWV RZQ LQWHUSUHWLYH
PHPRUDQGXPZKLFKDOORZVIRU1$$46PDLQWHQDQFHWREH
1R :DOOHWDOY(3$HWDO
& 7KH &LQFLQQDWL PHWURSROLWDQ DUHD¶V VWDWXV DV D
QRQDWWDLQPHQWDUHD
,QWKH&LQFLQQDWLPHWURSROLWDQDUHDZDVGHVLJQDWHGDV
DQ R]RQH QRQDWWDLQPHQW DUHD SXUVXDQW WR WKH
$PHQGPHQWVWRWKH&$$6HH$SSURYDODQG3URPXOJDWLRQRI
,PSOHPHQWDWLRQ 3ODQV DQG 'HVLJQDWLRQ RI $UHDV IRU $LU
4XDOLW\3ODQQLQJ3XUSRVHV2KLR)HG5HJ 0DU
7KH&LQFLQQDWLPHWURSROLWDQDUHDFRYHUVFRXQWLHVLQ
ERWK.HQWXFN\DQG2KLRDQGLVDFFRUGLQJO\UHIHUUHGWRDVD
³PXOWL6WDWHR]RQHQRQDWWDLQPHQWDUHD´† M ,QWKH
\HDUDIWHUWKH&$$$PHQGPHQWVZHUHSDVVHGWKH(3$
UHDIILUPHG LWV GHVLJQDWLRQ RI WKH DUHD IRU PRGHUDWH R]RQH
QRQDWWDLQPHQWZLWKDQDWWDLQPHQWGHDGOLQHRI1RYHPEHU
6HH 'HVLJQDWLRQ RI $UHDV IRU $LU 4XDOLW\ 3ODQQLQJ
3XUSRVHV)HG5HJ 1RY
%HFDXVH RI WKH DUHD¶V VWDWXV .HQWXFN\ DQG2KLRZHUH
UHTXLUHGWRVXEPLWUHYLVLRQVWRWKHLUUHVSHFWLYH6,3VE\QR
ODWHU WKDQ 1RYHPEHU WDNLQJ LQWR DFFRXQW WKH
PHDVXUHVDSSOLFDEOHWRPRGHUDWHR]RQHDUHDVDQGSURYLGLQJ
IRUWKHDWWDLQPHQWRIWKHR]RQHVWDQGDUGE\WKH1RYHPEHU
DWWDLQPHQWGHDGOLQH6HH&$$† E $ %RWK
VWDWHVVXEPLWWHGWLPHO\UHYLVLRQVEXWWKH(3$ZDVXQDEOHWR
IXOO\DSSURYHWKHVXEPLWWHG6,3VGXHWRYDULRXVGHILFLHQFLHV
6HH$SSURYDODQG3URPXOJDWLRQRI,PSOHPHQWDWLRQ3ODQVDQG
'HVLJQDWLRQRI$UHDVIRU$LU4XDOLW\3ODQQLQJ3XUSRVHV2KLR
DQG.HQWXFN\)HG5HJ SURSRVHG-DQ

7KH(3$QHYHUSXEOLVKHGDQRWLFHRIGLVDSSURYDOSXUVXDQW
WR&$$† N EHFDXVHLQ1RYHPEHURI.HQWXFN\
DQG 2KLR VXEPLWWHG UHTXHVWV WR UHGHVLJQDWH WKH &LQFLQQDWL
PHWURSROLWDQ DUHD WR R]RQH DWWDLQPHQW VWDWXV 7KH VWDWHV
EDVHGWKHLUUHTXHVWVRQWKHIDFWWKDWWKHDUHDKDGQRWYLRODWHG
WKHR]RQH1$$46RYHUWKHSUHYLRXVWKUHH\HDUSHULRG7KHVH
UHGHVLJQDWLRQ UHTXHVWV KRZHYHU ZHUH HYHQWXDOO\ GHQLHG
EHFDXVHWKH&LQFLQQDWLPHWURSROLWDQDUHDKDGH[SHULHQFHGD
YLRODWLRQRIWKHR]RQH1$$46LQWKHVXPPHURI6HH
'LVDSSURYDO RI WKH 5HTXHVW WR 5HGHVLJQDWH WKH .HQWXFN\

-- 11 of 14 --

:DOOHWDOY(3$HWDO 1R
SRUWLRQRIWKH&LQFLQQDWL1RUWKHUQ.HQWXFN\0RGHUDWH2]RQH
1RQDWWDLQPHQW $UHD WR $WWDLQPHQW DQG WKH $VVRFLDWHG
0DLQWHQDQFH 3ODQ )HG 5HJ 6HSW
$OWKRXJK.HQWXFN\SHWLWLRQHGIRUDUHYLHZRIWKH$JHQF\¶V
GHWHUPLQDWLRQWKHDJHQF\¶VGLVDSSURYDOZDVXSKHOGE\WKLV
FRXUWLQ.HQWXFN\Y(3$1R:/
WK &LU 6HSW XQSXEOLVKHG WDEOH RSLQLRQ 7KH
(3$ UDWKHU WKDQ SXEOLVK D QRWLFH RI GLVDSSURYDO LQVWHDG
JUDQWHGWKHDUHDWZRRQH\HDUH[WHQVLRQV6HH$SSURYDODQG
3URPXOJDWLRQ RI ,PSOHPHQWDWLRQ 3ODQV DQG 'HVLJQDWLRQ RI
$UHDVIRU$LU4XDOLW\3ODQQLQJ3XUSRVHV2KLRDQG.HQWXFN\
)HG 5HJ -XQH 7KHVH
H[WHQVLRQVDUHQRWFKDOOHQJHGLQWKHSUHVHQWFDVH
,Q.HQWXFN\DQG2KLRDJDLQVXEPLWWHGUHTXHVWVWR
KDYH WKH &LQFLQQDWL PHWURSROLWDQ DUHD UHGHVLJQDWHG WR
DWWDLQPHQWVWDWXV7KHLUUHTXHVWVZHUHEDVHGRQWKUHH\HDUVRI
TXDOLW\DVVXUHGDPELHQWDLUTXDOLW\PRQLWRULQJGDWDVKRZLQJ
WKDWWKHDUHDZDVQRWLQYLRODWLRQRIWKHR]RQH1$$46IRUWKH
SHULRGIURPWR7KH(3$DOVRFRQVLGHUHGR]RQH
PRQLWRULQJGDWDVKRZLQJWKDWWKH&LQFLQQDWLPHWURSROLWDQDUHD
FRQWLQXHGWRDWWDLQWKHR]RQH1$$46LQ6HH)HG
5HJ DW $ QRWLFH SURSRVLQJ WKH DSSURYDO RI
.HQWXFN\¶VDQG2KLR¶V6,3VXEPLVVLRQVDQGUHGHVLJQDWLRQ
UHTXHVWVZDV SXEOLVKHGRQ-DQXDU\6HH)HG
5HJDW
,Q SXEOLVKLQJ WKH QRWLFH WKH (3$ DFNQRZOHGJHG WKDW
.HQWXFN\ GLG QRW KDYH IXOO\ DSSURYHG WUDQVSRUWDWLRQ
FRQIRUPLW\ UHTXLUHPHQWV LQ LWV 6,3 IRU WKH &LQFLQQDWL
PHWURSROLWDQDUHD,WGHWHUPLQHGKRZHYHUWKDWWKH3DUW'
WUDQVSRUWDWLRQFRQIRUPLW\UHTXLUHPHQWVZHUHQRWDSSOLFDEOH
IRU WKH SXUSRVHV RI HYDOXDWLQJ WKH UHGHVLJQDWLRQ UHTXHVWV
³EHFDXVH DUHDV DUH VXEMHFW WR WKH FRQIRUPLW\ UHTXLUHPHQWV
UHJDUGOHVVRIZKHWKHUWKH\DUHUHGHVLJQDWHGWRDWWDLQPHQWDQG
PXVWLPSOHPHQWFRQIRUPLW\XQGHU)HGHUDOUXOHVLIVWDWHUXOHV
DUHQRW\HWDSSURYHG´)HG5HJDW
7KH(3$DOVRDFNQRZOHGJHGWKDW2KLRKDGQRW\HWIXOO\
DGRSWHGWKH5$&7UXOHVFRQFHUQLQJWKHFDWHJRULHVRI92&
1R :DOOHWDOY(3$HWDO
UHVRXUFH DQG DXWKRULW\ FRPPLWPHQWV IRU HQIRUFHPHQW
%HFDXVHRIWKHVLPLODULW\RIWKHILUVWWZRDUJXPHQWVWKH\ZLOO
EH DGGUHVVHG WRJHWKHU ZKLOH WKH WKLUG DUJXPHQW ZLOO EH
DGGUHVVHGVHSDUDWHO\
'HPRQVWUDWLRQRIPDLQWHQDQFH
,QHYDOXDWLQJ.HQWXFN\¶VDQG2KLR¶VPDLQWHQDQFHSODQV
WKH(3$XVHGDQDWWDLQPHQWHPLVVLRQVLQYHQWRU\DSSURDFKWR
GHWHUPLQH WKDW WKH VWDWHV¶ SODQV ZRXOG ³SURYLGH IRU
PDLQWHQDQFH RI WKH >1$$46@ IRU DW OHDVW \HDUV DIWHU
UHGHVLJQDWLRQ´ DV UHTXLUHG XQGHU &$$ † $ 7KLV
DSSURDFKLQYROYHVPDNLQJWZRVHWVRIGHWHUPLQDWLRQV WKDW
WKH DUHD LV FXUUHQWO\ LQ FRPSOLDQFH DQG WKDW IXWXUH
HPLVVLRQV LQ WKH DUHD DUH SURMHFWHG WR UHPDLQ EHORZ WKH
FXUUHQWOHYHOIRUWKHQH[WWHQ\HDUV7KHUHDVRQLQJEHKLQGWKLV
DSSURDFKLVWKDWDQDUHDLVH[SHFWHGWRUHPDLQLQFRPSOLDQFH
VR ORQJ DV WKH SUHGLFWHG HPLVVLRQV ZLWKLQ WKH DUHD UHPDLQ
EHORZWKHOHYHOWKDWDOORZHGWKHDUHDWRDFKLHYHFRPSOLDQFH
ZLWKWKH1$$46LQWKHILUVWSODFH
,QWKHSUHVHQWFDVHWKH(3$GHWHUPLQHGWKDWWKH&LQFLQQDWL
PHWURSROLWDQDUHDZDVLQDWWDLQPHQWIRUERWKWKHWR
DQGWKHWRWLPHSHULRGV6HH)HG5HJDW
7KH(3$DOVRGHWHUPLQHGWKDWIXWXUHHPLVVLRQVLQWKH
DUHDZHUHSURMHFWHGWRGHFUHDVHIURPWKHOHYHOV6HHLG
$SSO\LQJWKHDWWDLQPHQWHPLVVLRQVLQYHQWRU\DSSURDFKWKH
DJHQF\ FRQFOXGHG WKDW WKH FRPELQDWLRQ RI WKHVH ILQGLQJV
³VKRZVWKDWWKHFXUUHQWOHYHORIHPLVVLRQVLVDGHTXDWHWRNHHS
WKHDUHDLQDWWDLQPHQW´IRUWKHQH[WWHQ\HDUV)HG5HJDW

7KH SHWLWLRQHUV KRZHYHU DUJXH WKDW WKH DWWDLQPHQW
HPLVVLRQVLQYHQWRU\DSSURDFKGRHVQRWPHHWWKHUHTXLUHPHQWV
RIWKH&$$7KH\FKDOOHQJHWKH(3$¶VDXWKRULW\WRUHO\RQ
PHWKRGV RWKHU WKDQ DLU TXDOLW\ PRGHOLQJ WR GHPRQVWUDWH
PDLQWHQDQFHZKHQWKHGHPRQVWUDWLRQRIDWWDLQPHQWLVQRWDOVR
UHTXLUHG 7KH SHWLWLRQHUV SRLQW RXW WKDW XQGHU &)5
† D WKH ³DGHTXDF\ RI D FRQWURO VWUDWHJ\
VKDOO EH GHPRQVWUDWHG E\ PHDQV RI DSSOLFDEOH DLU TXDOLW\
PRGHOV GDWD EDVHV DQG RWKHU UHTXLUHPHQWV VSHFLILHG LQ

-- 12 of 14 --

:DOOHWDOY(3$HWDO 1R
VHHDOVR6RXWKZHVWHUQ3D*URZWK$OOLDQFHY%URZQHU
)G WK &LU 7KH 6XSUHPH &RXUW KDV
HVWDEOLVKHG D WZRVWHS SURFHVV IRU UHYLHZLQJ DQ DJHQF\¶V
LQWHUSUHWDWLRQRIDVWDWXWHWKDWLWDGPLQLVWHUV6HH&KHYURQ
86$,QFY1DWXUDO5HV'HI&RXQFLO,QF86
,I ³&RQJUHVV KDV GLUHFWO\ VSRNHQ WR WKH SUHFLVH
TXHVWLRQDWLVVXH´LGDWWKHQWKLVFRXUW³PXVWJLYHHIIHFW
WRWKHXQDPELJXRXVO\H[SUHVVHGLQWHQWRI&RQJUHVV´,GDW
%XW³LIWKHVWDWXWHLVVLOHQWRUDPELJXRXVZLWKUHVSHFWWR
WKHVSHFLILFLVVXHWKHTXHVWLRQIRUWKHFRXUWLVZKHWKHUWKH
DJHQF\¶VDQVZHULVEDVHGRQDSHUPLVVLEOHFRQVWUXFWLRQRIWKH
VWDWXWH´,G
,QHYDOXDWLQJZKHWKHUWKH(3$¶VFRQVWUXFWLRQRIDVWDWXWHLV
SHUPLVVLEOH D FRXUW ³QHHG QRW ILQG WKDW LW LV WKH RQO\
SHUPLVVLEOHFRQVWUXFWLRQWKDW(3$PLJKWKDYHDGRSWHGEXW
RQO\WKDW(3$¶VXQGHUVWDQGLQJRIWKLVYHU\FRPSOH[VWDWXWHLV
D VXIILFLHQWO\ UDWLRQDO RQH WR SUHFOXGH D FRXUW IURP
VXEVWLWXWLQJLWVMXGJPHQWIRUWKDWRI(3$´&KHP0IUV$VV¶Q
Y1DWXUDO5HV'HI&RXQFLO,QF86
LQWHUQDO TXRWDWLRQ PDUNV RPLWWHG 7KLV FRXUW KRZHYHU
PXVW DOVR ³UHMHFW DGPLQLVWUDWLYH FRQVWUXFWLRQV WKDW DUH
LQFRQVLVWHQWZLWKWKHVWDWXWRU\PDQGDWH´6HF,QGXV$VV¶QY
%GRI*RYHUQRUVRIWKH)HG5HVHUYH6\V86
FLWDWLRQVRPLWWHG DQGFRQGXFWD³VHDUFKLQJUHYLHZ´
RIWKH(3$¶VXVHRIDLUTXDOLW\SURMHFWLRQVXQGHUWKH&$$
2KLRY(3$)G WK&LU
% $SSURYDO RI .HQWXFN\¶V DQG 2KLR¶V FOHDQ DLU
PDLQWHQDQFHSODQV
:DOO)UHPRQWDQGWKH6LHUUD&OXEUDLVHWKUHHFKDOOHQJHV
WRWKH(3$¶VHYDOXDWLRQRIWKHFOHDQDLUPDLQWHQDQFHSODQVIRU
WKH &LQFLQQDWL PHWURSROLWDQ DUHD 7KH\ DUJXH WKDW WKH
PHWKRGVXVHGE\WKH(3$WRGHPRQVWUDWHPDLQWHQDQFHGRQRW
PHHW WKH UHTXLUHPHQWV RI WKH &$$ WKH (3$¶V RZQ
PRGHOV DSSOLHG LQ D GLIIHUHQW UXOHPDNLQJ SURFHHGLQJ
GHPRQVWUDWH WKDW WKH &LQFLQQDWL PHWURSROLWDQ DUHD ZLOO QRW
PDLQWDLQFRPSOLDQFHZLWKWKHR]RQH1$$46RYHUWKHQH[W
WHQ \HDUV DQG WKH PDLQWHQDQFH SODQV ODFN WKH UHTXLUHG
1R :DOOHWDOY(3$HWDO
VRXUFHVFRYHUHGE\WKH&RQWURO7HFKQLTXH*XLGHOLQH &7*
GRFXPHQWLVVXHGE\WKH(3$EHWZHHQ1RYHPEHU
DQG WKH DWWDLQPHQW GDWH 7KHVH 92& VRXUFH FDWHJRULHV
LQFOXGHG WKH DHURVSDFH V\QWKHWLF RUJDQLF FRPSRXQG
PDQXIDFWXULQJ UHDFWRU DQG GLVWLOODWLRQV SURFHVVHV
VKLSEXLOGLQJDQGZRRGIXUQLWXUHLQGXVWULHV6HH)HG5HJ
DW'HVSLWHLWVVWDQGDUGUHGHVLJQDWLRQSROLF\WKDW³ZRXOG
UHTXLUH IXOO DGRSWLRQ VXEPLVVLRQ DQG DSSURYDO RI >FHUWDLQ
5$&7 UXOHV@ UXOHV SULRU WR DSSURYDO RI WKH UHGHVLJQDWLRQ
UHTXHVW´LGWKH(3$SURSRVHGWRGHSDUWIURPWKLVSROLF\E\
DSSURYLQJ.HQWXFN\¶VDQG2KLR¶VUHGHVLJQDWLRQUHTXHVWEDVHG
RQWKHIROORZLQJH[SODQDWLRQIRXQGLQWKH)HGHUDO5HJLVWHU
6LQFH WKH GXH GDWH IRU WKH &7* 5$&7 UXOHV DW LVVXH
SUHFHGHG WKH VXEPLVVLRQ RI WKH UHGHVLJQDWLRQ UHTXHVW
(3$ EHOLHYHV KRZHYHU WKDW LQ WKH FRQWH[W RI WKH
SDUWLFXODUFLUFXPVWDQFHVRIWKLVUHGHVLJQDWLRQWKDWLWLV
SHUPLVVLEOHWRGHSDUWIURPWKDWSROLF\DQGLQVWHDGDFFHSW
D FRPPLWPHQW WR LPSOHPHQW WKHVH 5$&7 UXOHV DV
FRQWLQJHQF\ PHDVXUHV LQ WKH PDLQWHQDQFH SODQ UDWKHU
WKDQUHTXLUHIXOODGRSWLRQDQGDSSURYDORIWKHUXOHVSULRU
WR DSSURYDO RI WKH UHGHVLJQDWLRQ 6HH *UDQG 5DSLGV
0LFKLJDQ UHGHVLJQDWLRQ )5 -XQH
)LUVW WKH 5$&7 UXOHV DW LVVXH LQ WKLV
UHGHVLJQDWLRQZHUHQRWQHHGHGWREULQJDERXWDWWDLQPHQW
RI WKH VWDQGDUG LQ &LQFLQQDWL 6HFRQG 2KLR KDV
GHPRQVWUDWHG FRQWLQXHG PDLQWHQDQFH RI WKH R]RQH
VWDQGDUG WKURXJK ZLWKRXW WKH LPSOHPHQWDWLRQ RI
WKHVH PHDVXUHV 7KLUG 2KLR KDV SODFHG RWKHU
FRQWLQJHQF\PHDVXUHVLQWKHPDLQWHQDQFHSODQWKDWZRXOG
EULQJ DERXW IDU JUHDWHU HPLVVLRQ UHGXFWLRQV WKDQ WKH
5$&7UXOHVDQGZRXOGWKHUHIRUHEHVXEVWDQWLDOO\PRUH
HIIHFWLYHLQWHUPVRIFRUUHFWLQJYLRODWLRQVDWWULEXWDEOHWR
ORFDOHPLVVLRQVIURPWKH&LQFLQQDWLDUHDWKDWPD\RFFXU
DIWHUUHGHVLJQDWLRQ
,G
,Q WKHLU FRPPHQWV WR WKH (3$¶V QRWLFH RI SURSRVHG
DSSURYDO:DOO)UHPRQWDQGWKH6LHUUD&OXEFKDOOHQJHGWKH

-- 13 of 14 --

:DOOHWDOY(3$HWDO 1R
(3$¶VMXVWLILFDWLRQV6HH/HWWHUIURP0DUWL6LQFODLU$FWLQJ
&KDLU RI WKH 2KLR &KDSWHU RI WKH 6LHUUD &OXE WR - (OPHU
%RUW]HU&KLHIRIWKH5HJXODWLRQ'HYHORSPHQW6HFWLRQRIWKH
(3$ )HE 7KH\ DUJXHG WKDW .HQWXFN\¶V DQG
2KLR¶VPDLQWHQDQFHSODQVUHTXLUHGXQGHU&$$†$ZHUH
GHILFLHQW 7R VXSSRUW WKHLU DUJXPHQW WKH SHWLWLRQHUV
FRQWHQGHGWKDWWKH&$$UHTXLUHVWKDWDLUTXDOLW\PRGHOVEH
XVHGWRGHWHUPLQHDVWDWH¶VDELOLW\WRDFKLHYHPDLQWHQDQFH
ZKLFK WKH (3$ KDG QRW GRQH 7KH\ DOVR FKDOOHQJHG WKH
UHOLDELOLW\ RI WKH (3$¶V DVVXPSWLRQV UHJDUGLQJ IXWXUH
HPLVVLRQ OHYHOV DUJXLQJ WKDW ³>W@KH KLVWRU\ RI WKLV
QRQDWWDLQPHQWDUHDVKRZVWKDW(3$FDQQRWUDWLRQDOO\DVVXPH
WKDWHPLVVLRQOHYHOVFRUUHODWHZLWKR]RQHOHYHOVLQVRPHVRUW
RIOLQHDURUFRQVLVWHQWIDVKLRQ´
0RUHRYHU WKH SHWLWLRQHUV SRLQWHG RXW WKDW WKH (3$ KDG
PDGH FRQWUDGLFWRU\ ILQGLQJV LQ D VHSDUDWH UXOHPDNLQJ
SURFHHGLQJ GHDOLQJ ZLWK WKH DGRSWLRQ RI PRUH VWULQJHQW
QDWLRQDOHPLVVLRQOLPLWVIRUQHZFDUVDQGWUXFNV6HH&RQWURO
RI $LU 3ROOXWLRQ IURP 1HZ 0RWRU 9HKLFOHV 7LHU 0RWRU
9HKLFOH (PLVVLRQV 6WDQGDUGV DQG *DVROLQH 6XOIXU &RQWURO
5HTXLUHPHQWV)HG5HJ )HE ,QWKLV
VHSDUDWH UXOHPDNLQJ SURFHHGLQJ WKH (3$ LQFOXGHG WKH
&LQFLQQDWL PHWURSROLWDQ DUHD RQ D OLVW RI DUHDV ³FHUWDLQ RU
KLJKO\ OLNHO\ WR UHTXLUH DGGLWLRQDO HPLVVLRQ UHGXFWLRQV LQ
RUGHUWRDWWDLQDQGPDLQWDLQWKHKRXUR]RQH1$$46´
)HG5HJDW7KLVILQGLQJZDVEDVHGRQFRPSXWHU
PRGHOV WKDW VKRZHG WKDW WKH &LQFLQQDWL PHWURSROLWDQ DUHD
ZRXOGH[FHHGWKHR]RQH1$$46E\LIQRDGGLWLRQDO
HPLVVLRQ UHGXFWLRQV ZHUH PDGH EH\RQG WKRVH DOUHDG\
H[SHFWHG6HH)HG5HJDW
7KH SHWLWLRQHUV DOVR DUJXHG WKDW WKH PDLQWHQDQFH SODQV
IDLOHG WR FRPSO\ ZLWK &$$ † F ( L EHFDXVH WKH
SODQV ODFNHG ³H[SOLFLW FRPPLWPHQWV RI OHJDO DXWKRULW\ DQG
UHVRXUFHV WR LPSOHPHQW´ DOO RI WKH SODQV¶ PHDVXUHV ,Q
SDUWLFXODUWKHSHWLWLRQHUVFODLPHGWKDWWKHPDLQWHQDQFHSODQV
ODFNHGHQIRUFHPHQWSURJUDPVDVZHOODVFRQFUHWHDVVXUDQFHV
WKDW.HQWXFN\DQG2KLRZRXOGKDYHWKHQHFHVVDU\SHUVRQQHO
DQGIXQGLQJWRFDUU\RXWWKHSODQV
1R :DOOHWDOY(3$HWDO
7KHLU DOWHUQDWLYH DUJXPHQW ZDV WKDW WKH (3$ KDG QR
DXWKRULW\ WR GHWHUPLQH WKDW WKH WUDQVSRUWDWLRQFRQIRUPLW\
UHTXLUHPHQWV RI 3DUW ' 6XESDUW GLG QRW DSSO\ WR WKH
UHGHVLJQDWLRQUHTXHVWV$FFRUGLQJWRWKHSHWLWLRQHUV³>W@KH
IDFW WKDW WKH VWDWH LV VWLOO REOLJDWHG WR VXEPLW >VWDWH
WUDQVSRUWDWLRQ FRQIRUPLW\@ SURFHGXUHV DQG WKDW IHGHUDO
FRQIRUPLW\SURFHGXUHVVWLOODSSO\KDUGO\H[FXVHVWKHVWDWH¶V
IDLOXUHWRDGRSWVXFKSURFHGXUHVDVUHTXLUHGE\VWDWXWH´
7KHILQDODUJXPHQWRIWKHSHWLWLRQHUVZDVWKDWWKH(3$KDG
QRDXWKRULW\WRUHGHVLJQDWHWKH&LQFLQQDWLPHWURSROLWDQDUHD
EHIRUHWKHVWDWHVKDGIXOO\DGRSWHGDOORIWKH5$&7UXOHVRI
3DUW ' 6XESDUW WKDW ZHUH VSHFLILFDOO\ PDQGDWHG XQGHU
&$$† E 7KH\FODLPHGWKDWWKH&$$GLGQRWDOORZ
WKH VWDWHV WR GHIHU WKH DGRSWLRQ RI 5$&7 UXOHV E\
LQFRUSRUDWLQJWKHPRQO\DVRSWLRQDOFRQWLQJHQF\PHDVXUHV
)XUWKHUPRUHWKH\UHDVRQHGWKDWEHFDXVHRIWKLVGHILFLHQF\LQ
WKH DGRSWLRQ RI WKH 5$&7 UXOHV WKH (3$ QHYHU IXOO\
DSSURYHGWKH6,3VLQDFFRUGDQFHZLWK&$$† N
)LYHPRQWKVDIWHUWKH(3$SXEOLVKHGLWVQRWLFHRISURSRVHG
DSSURYDO DQG DIWHU UHFHLYLQJ SXEOLF FRPPHQWV IURP WKH
SHWLWLRQHUV DQG RWKHU SDUWLHV WKH (3$ PDGH D ILQDO
GHWHUPLQDWLRQ WKDW WKH &LQFLQQDWL PHWURSROLWDQ DUHD KDG
DWWDLQHGWKHRQHKRXU1$$46 IRUJURXQGOHYHOR]RQHDQG
KDGPHWWKHRWKHUUHTXLUHPHQWVIRUUHGHVLJQDWLRQ7KH(3$
DFFRUGLQJO\ LVVXHG D ILQDO UXOLQJ RQ -XQH WR EH
HIIHFWLYH -XO\ JUDQWLQJ .HQWXFN\¶V DQG 2KLR¶V
UHGHVLJQDWLRQUHTXHVWV6HH$SSURYDODQG3URPXOJDWLRQRI
,PSOHPHQWDWLRQ 3ODQV DQG 'HVLJQDWLRQ RI $UHDV IRU $LU
4XDOLW\3ODQQLQJ3XUSRVHV2KLRDQG.HQWXFN\)HG5HJ
-XQH 7KLV WLPHO\ SHWLWLRQ IRU UHYLHZ
IROORZHG
,,$1$/<6,6
$ 6WDQGDUGRIUHYLHZ
$ILQDODFWLRQRIWKH(3$ZLOOQRWEHRYHUWXUQHGXQOHVVWKH
GHFLVLRQLV³DUELWUDU\FDSULFLRXVDQDEXVHRIGLVFUHWLRQRU
RWKHUZLVHQRWLQDFFRUGDQFHZLWKODZ´86&† $

-- 14 of 14 --