02a0420p.06

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
-$0(6 /,1*/(5DQG-())5(<
*(=<0$//$
3ODLQWLIIV$SSHOODQWV
Y
-2+1 5 )(&+.2
'HIHQGDQW$SSHOOHH
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
1R²'RQDOG&1XJHQW'LVWULFW-XGJH
$UJXHG2FWREHU
'HFLGHGDQG)LOHG'HFHPEHU
%HIRUH0$57,1&KLHI&LUFXLW-XGJH1(/621DQG
*,/0$1&LUFXLW-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8('3DXO:)ORZHUV/$:2)),&(2)3$8/:
)/2:(56&OHYHODQG2KLRIRU$SSHOODQWV1LFN7RPLQR
720,12 /$7&+1(<//&0HGLQD2KLRIRU$SSHOOHH
21%5,()3DXO:)ORZHUV/$:2)),&(2)3$8/:
)/2:(56 &OHYHODQG 2KLR : &UDLJ %DVKHLQ /$:

-- 1 of 4 --

/LQJOHUHWDOY)HFKNR 1R
2)),&(62)5:,//,$0%$6+(,1&OHYHODQG2KLRIRU
$SSHOODQWV1LFN7RPLQR720,12 /$7&+1(<//&
0HGLQD2KLRIRU$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
'$9,' $ 1(/621 &LUFXLW -XGJH 7KH LVVXH LQ WKLV
DSSHDO LV ZKHWKHU LW ZDV XQFRQVWLWXWLRQDO XQGHU WKH )LIWK
$PHQGPHQW IRU D SROLFH FKLHI WR H[DFW VWDWHPHQWV IURP
VXERUGLQDWHRIILFHUVDERXWRQWKHMREDFWLYLWLHVLQZKLFKWKH
RIILFHUVPD\KDYHEURNHQWKHODZ7KHGLVWULFWFRXUWKHOGWKDW
WKH H[DFWLRQ RI VXFK VWDWHPHQWV GLG QRW YLRODWH WKH )LIWK
$PHQGPHQWZKHUHWKHUHZDVQRHYLGHQFHWKDWWKHRIILFHUVKDG
EHHQ UHTXLUHG WR ZDLYH WKHLU SULYLOHJH DJDLQVW VHOI
LQFULPLQDWLRQDQGWKHVWDWHPHQWVKDGQRWEHHQXVHGDJDLQVW
WKHP LQ FULPLQDO SURFHHGLQJV :H DJUHH ZLWK WKH GLVWULFW
FRXUW¶VKROGLQJZKLFKLVFRQVLVWHQWZLWKWKHFDVHODZLQRWKHU
FLUFXLWVDQGZHVKDOODIILUPWKHMXGJPHQWHQWHUHGLQIDYRURI
WKHSROLFHFKLHI
,
2QZKDWPXVWKDYHEHHQDVORZGD\IRUFULPHLQ6HYHQ
+LOOV 2KLR SROLFH RIILFHUV -DPHV /LQJOHU DQG -HIIUH\
*H]\PDOODWKHSODLQWLIIVLQWKLVFLYLOULJKWVDFWLRQGHFLGHGWR
WLG\XSWKHVWDWLRQKRXVH,QWKHFRXUVHRIWKHLUKRXVHNHHSLQJ
HIIRUWV WKH RIILFHUV UHPRYHG DQ ROG FRXFK DQG VRPH
GLODSLGDWHGFKDLUVIURPDWUDLQLQJURRP7KHIXUQLWXUHZDV
SODFHGLQDGXPSVWHUEHKLQGWKHEXLOGLQJ
7KH FKLHI RI SROLFH GHIHQGDQW -RKQ 5 )HFKNR KDG QRW
DXWKRUL]HGDQ\VXFKSURSHUW\GLVSRVDO:KHQKHIRXQGWKDW
WKH IXUQLWXUH ZDV QRW LQ LWV XVXDO SODFH KH RUGHUHG D ³IXOO
LQYHVWLJDWLRQ´6XVSLFLRQVRRQIHOORQ2IILFHUV/LQJOHUDQG
*H]\PDOOD ZKRVH GDLO\ DFWLYLW\ ORJV PDGH UHIHUHQFH WR
³VWDWLRQFOHDQXS´
1R /LQJOHUHWDOY)HFKNR
SXEOLFHPSOR\HHV:LOH\)GDW3ODLQWLIIVZKRZHDU
WKHXQLIRUPVRISROLFHRIILFHUV³FDQPDNHQRWHQDEOHFODLP
WKDWD)LIWK$PHQGPHQWYLRODWLRQRFFXUUHGZKHQWKH3ROLFH
'HSDUWPHQW PHUHO\ H[HUFLVHG LWV OHJLWLPDWH ULJKW DV DQ
HPSOR\HUWRTXHVWLRQWKHPDERXWPDWWHUVQDUURZO\UHODWLQJWR
WKHLUMRESHUIRUPDQFH´,G
$)),50('

-- 2 of 4 --

/LQJOHUHWDOY)HFKNR 1R
QRWLPSOLFDWHWKH)LIWK$PHQGPHQWXQOHVVWKHHPSOR\HHLV
DOVRFRPSHOOHGWRZDLYHKLVSULYLOHJH´:LOH\LG
1RZDLYHURIWKHSULYLOHJHKDYLQJEHHQFRPSHOOHGLQ:LOH\
-XVWLFH 3RZHOO¶V RSLQLRQ GHFODUHG WKDW QR FRQVWLWXWLRQDO
YLRODWLRQKDGRFFXUUHGLQWKDWFDVH,GDW2QWKHIDFWV
SUHVHQWHG LQ WKH FDVH DW EDU ZH DUH VDWLVILHG WKDW QR
FRQVWLWXWLRQDOYLRODWLRQRFFXUUHGKHUHHLWKHU
$OWKRXJK WKHUH LV QR HYLGHQFH KHUH WKDW &KLHI )HFKNR
UHTXLUHG 2IILFHUV /LQJOHU DQG *H]\PDOOD WR ZDLYH WKHLU
SULYLOHJHDJDLQVWVHOILQFULPLQDWLRQWKHRIILFHUVFRQWHQGWKDW
DZDLYHURIWKHSULYLOHJHLVLPSOLFLWLQDQ\VWDWHPHQWJLYHQE\
DSXEOLFHPSOR\HHXQGHUWKUHDWRIGLVFLSOLQDU\DFWLRQ7KH
FDVHODZGRHVQRWVXSSRUWWKLVFRQWHQWLRQ±DQG*DUULW\WR
UHSHDW WHDFKHV WKDW DQ\ VXFK ZDLYHU ZRXOG KDYH EHHQ
LQHIIHFWLYH
,QWKH1LQWK&LUFXLWZHDFNQRZOHGJHWKHLQDGPLVVLELOLW\
RI VXFK VWDWHPHQWV LQ FULPLQDO SURFHHGLQJV ZRXOG QRW EH
FRQVLGHUHGPDWHULDOWRWKHDQDO\VLV6HH&RRSHUY'XSQLN
)G WK&LU HQEDQF FHUWGHQLHG
86 KROGLQJWKDWDQH[DFWLRQRILQFULPLQDWLQJ
VWDWHPHQWV IURP D PHPEHU RI WKH SXEOLF LQ YLRODWLRQ RI
0LUDQGD Y $UL]RQD 86 ZDV DFWLRQDEOH
XQGHU†DQGWKH)LIWK$PHQGPHQWGHVSLWHWKHIDFWWKDW
WKH VWDWHPHQWV ZHUH QRW XVHG DJDLQVW WKH GHFODUDQW LQ DQ\
FULPLQDO FDVH 2WKHU FLUFXLWV ZRXOG DOPRVW FHUWDLQO\
GLVDJUHH6HHHJ*XLIIUHY%LVVHOO)G G
&LU ZKHUHD7KLUG&LUFXLWSDQHOREVHUYHGWKDW³>W@KH
GLVVHQWLQJMXGJHVLQ&RRSHUSUHVHQWHGDSHUVXDVLYHDUJXPHQW
WKDWWKH)LIWK$PHQGPHQWSULYLOHJHDJDLQVWVHOILQFULPLQDWLRQ
LVQRWYLRODWHGXQWLOHYLGHQFHLVDGPLWWHGLQDFULPLQDOFDVH´
:KHWKHUWKHKROGLQJRIWKH1LQWK&LUFXLWLQ&RRSHUZDV
ULJKW RU ZURQJ &RRSHU GRHV QRW XQGHUPLQH WKH MXGJPHQW
UHQGHUHGE\WKHGLVWULFWFRXUWLQWKHFDVHDWEDU7KHUHLVDQ
LPSRUWDQWGLVWLQFWLRQDV-XVWLFH3RZHOOH[SODLQHGLQ:LOH\
EHWZHHQSODLQWLIIVQRWRQWKHSXEOLFSD\UROO±³SULYDWHFLWL]HQV
ZKRPD\FODLPDJHQHUDOL]HGULJKWWREHIUHHIURPFRPSHOOHG
LQWHUURJDWLRQ E\ WKH JRYHUQPHQW´ ± DQG SODLQWLIIV ZKR DUH
1R /LQJOHUHWDOY)HFKNR
&KLHI)HFKNRFDOOHG2IILFHU*H]\PDOODLQWRKLVRIILFHDQG
DVNHGKLPWRH[SODLQWKHORJHQWU\7KHRIILFHUGHWDLOHGKLV
HIIRUWVWRFOHDQXSWKHVWDWLRQKRXVHLQFOXGLQJWKHGLVFDUGLQJ
RIWKHROGIXUQLWXUH:KHWKHULQHDUQHVWRULQDQDWWHPSWWR
³LPSUHVVXSRQ2IILFHU*H]\PDOODWKHJUDYLW\RIKLVDFWLRQV´
&KLHI)HFKNRREVHUYHGWKDWWKHGLVSRVDORIWKHIXUQLWXUHFRXOG
EHFRQVLGHUHGWKHIWRIFLW\SURSHUW\,QWKLVFRQQHFWLRQWKH
FKLHIVSRNHRIUHDGLQJWKHRIILFHUKLVULJKWV
&KLHI)HFKNRQH[WPHWZLWK2IILFHU/LQJOHUZKRUHVSRQGHG
LQWKHQHJDWLYHWRDTXHVWLRQDERXWNQRZOHGJHRI³SRVVLEOH
WKHIWPLVVLQJFLW\SURSHUW\´:KHQDVNHGDERXWWKH³VWDWLRQ
FOHDQXS´HQWU\RQKLVDFWLYLW\ORJ2IILFHU/LQJOHUUHSOLHG³RK
\RXPHDQWKHMXQNIXUQLWXUH´'XULQJWKLVLQWHUYLHZ2IILFHU
/LQJOHU VDLG KH ZDQWHG WR KDYH DQ DWWRUQH\ SUHVHQW LI WKH
LQYHVWLJDWLRQZHUHFULPLQDOLQQDWXUH
)ROORZLQJ WKHVH PHHWLQJV &KLHI )HFKNR RUGHUHG WKH
RIILFHUVWRSUHSDUHGHWDLOHGZULWWHQVWDWHPHQWVFRQFHUQLQJWKH
VWDWLRQFOHDQXS7KHRIILFHUVREMHFWHGDQG2IILFHU/LQJOHU
DJDLQVWDWHGWKDWKHZDQWHGDODZ\HU&KLHI)HFKNRVDLGWKDW
WKHPDWWHUZDVQRWFULPLQDODQGKHRUGHUHGWKHPHQWRWXUQLQ
WKHLUVWDWHPHQWVE\WKHHQGRIWKHLUZRUNVKLIW
7KHRIILFHUVGLGVRSURGXFLQJVWDWHPHQWVWKDWGHVFULEHGWKH
FOHDQXS HIIRUWV JHQHUDOO\ EXW PDGH QR UHIHUHQFH WR WKH
IXUQLWXUH%HFDXVHRIZKDWKHYLHZHGDVDIDLOXUHWRFRPSO\
ZLWK KLV RUGHU WKH FKLHI WKHQ LQLWLDWHG GLVFLSOLQDU\
SURFHHGLQJVDJDLQVWWKHRIILFHUV$IWHUFRQVXOWLQJFRXQVHOWKH
RIILFHUVVXEPLWWHGVWDWHPHQWVZLWKGHWDLOHGDFFRXQWVRIWKH
VWDWLRQKRXVHFOHDQXSDQGWKHUHPRYDORIWKHIXUQLWXUH$WQR
VWDJH DV IDU DV WKH UHFRUG GLVFORVHV ZDV HLWKHU RIILFHU
UHTXLUHG WR ZDLYH KLV FRQVWLWXWLRQDO SULYLOHJH DJDLQVW VHOI
LQFULPLQDWLRQ
$OWKRXJK &KLHI )HFKNR UHFRPPHQGHG WKDW WKH PD\RU
VXVSHQGWKHRIILFHUVIRUGD\VQRSXQLVKPHQWRIDQ\NLQG
ZDVLPSRVHG:HDUHWROGWKDWWKHFKLHIDOVRUHFRPPHQGHG
WKH LQLWLDWLRQ RI FULPLQDO SURFHHGLQJV EXW WKDW WKLV
UHFRPPHQGDWLRQ ZDV UHMHFWHG DV ZHOO 7KH RIILFHUV ZHUH
QHYHUSURVHFXWHG

-- 3 of 4 --

/LQJOHUHWDOY)HFKNR 1R
,QGXHFRXUVHWKHRIILFHUVVXHGWKHFKLHILQDQ2KLRFRXUW
7KHFRPSODLQWDVVHUWHGDFODLPXQGHU86&†IRU
YLRODWLRQ RI WKH FRQVWLWXWLRQDO SULYLOHJH DJDLQVW VHOI
LQFULPLQDWLRQ DQG D FRPPRQ ODZ FODLP IRU LQWHQWLRQDO
LQIOLFWLRQRIVHYHUHHPRWLRQDOGLVWUHVV7KHFDVHZDVUHPRYHG
WRWKH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH1RUWKHUQ'LVWULFWRI
2KLRZKHUHWKHFKLHIPRYHGIRUVXPPDU\MXGJPHQW7KH
GLVWULFWFRXUWJUDQWHGWKHPRWLRQDVWRWKHFRQVWLWXWLRQDOFODLP
DQGGLVPLVVHGWKHFRPPRQODZFODLPZLWKRXWSUHMXGLFH$
ILQDO MXGJPHQW WKXV KDYLQJ EHHQ HQWHUHG WKH RIILFHUV
SHUIHFWHGWKHSUHVHQWDSSHDO
,,
7RSUHYDLORQWKHLUILUVWFODLPWKHRIILFHUVZRXOGKDYHWR
SURYHWKDWWKHFKLHIZKLOHDFWLQJXQGHUFRORURIVWDWHODZ
VXEMHFWHGWKHPWRWKHGHSULYDWLRQRIDULJKWVHFXUHGE\WKH
&RQVWLWXWLRQ RU ODZV RI WKH 8QLWHG 6WDWHV 6HH 86&
†7KHULJKWRIZKLFKWKHRIILFHUVFRQWHQGWKH\ZHUH
GHSULYHGLVRQHDULVLQJIURPWKH)LIWK$PHQGPHQWSURKLELWLRQ
PDGHDSSOLFDEOHWRWKHVWDWHVE\WKH)RXUWHHQWK$PHQGPHQW
DJDLQVWDQ\SHUVRQEHLQJ³FRPSHOOHGLQDQ\FULPLQDOFDVHWR
EH D ZLWQHVV DJDLQVW KLPVHOI´ :H DJUHH ZLWK WKH GLVWULFW
FRXUWWKDWWKHFKLHIGLGQRWYLRODWHWKLVULJKW
%\LWVWHUPVWKH)LIWK$PHQGPHQWGRHVQRWSURKLELWWKHDFW
RIFRPSHOOLQJDVHOILQFULPLQDWLQJVWDWHPHQWRWKHUWKDQIRU
XVHLQDFULPLQDOFDVH6HH'HVKDZQ(Y6DILU)G
G&LU ³(YHQLILWFDQEHVKRZQWKDWD
VWDWHPHQW ZDV REWDLQHG E\ FRHUFLRQ WKHUH FDQ EH QR )LIWK
$PHQGPHQW YLRODWLRQ XQWLO WKDW VWDWHPHQW LV LQWURGXFHG
DJDLQVWWKHGHIHQGDQWLQDFULPLQDOSURFHHGLQJ´ 0DKRQH\Y
.HVHU\ )G WK &LU TXRWLQJ
:LONLQV Y 0D\ )G WK &LU WR WKH
HIIHFWWKDW³WKH)LIWK$PHQGPHQWGRHVQRWIRUELGWKHIRUFLEOH
H[WUDFWLRQRILQIRUPDWLRQEXWRQO\WKHXVHRILQIRUPDWLRQVR
H[WUDFWHGDVHYLGHQFHLQDFULPLQDOFDVH´
7KHVWDWHPHQWVJLYHQE\2IILFHUV/LQJOHUDQG*H]\PDOOD
ZHUH QRW XVHG DJDLQVW WKHP LQ DQ\ FULPLQDO FDVH ,QGHHG
XQGHU *DUULW\ Y 1HZ -HUVH\ 86 WKH
1R /LQJOHUHWDOY)HFKNR
VWDWHPHQWVFRXOGQRWKDYHEHHQVRXVHG6HH*DUULW\
86DW KROGLQJWKDWWKHFRQVWLWXWLRQDOSURWHFWLRQDJDLQVW
FRHUFHG VWDWHPHQWV ³SURKLELWV XVH LQ VXEVHTXHQW FULPLQDO
SURFHHGLQJVRIVWDWHPHQWVREWDLQHGXQGHUWKUHDWRIUHPRYDO
IURP RIILFH DQG LW H[WHQGV WR DOO ZKHWKHU WKH\ DUH
SROLFHPHQRURWKHUPHPEHUVRIRXUERG\SROLWLF´
2IILFHUV /LQJOHU DQG *H]\PDOOD DUJXH WKDW WKH FRXUW RI
DSSHDOVGHFLVLRQVLQ'HVKDZQY6DILU0DKRQH\Y.HVHU\
DQGFDVHVOLNHWKHP VHHHJ5LOH\Y'RUWRQ)G
WK&LU HQEDQF DQG'DYLVY&LW\RI&KDUOHVWRQ
0R)G WK&LU FDQQRWEHUHFRQFLOHGZLWK
WKH 6XSUHPH &RXUW GHFLVLRQV LQ *DUULW\ *DUGQHU Y
%URGHULFN86 DQG8QLIRUPHG6DQLWDWLRQ
0HQ $VV¶Q Y &RPPLVVLRQHU RI 6DQLWDWLRQ 86
D WULORJ\ VWDQGLQJ IRU WKH SURSRVLWLRQ WKDW D
JRYHUQPHQWDOERG\PD\QRWUHTXLUHDQHPSOR\HHWRZDLYHKLV
SULYLOHJHDJDLQVWVHOILQFULPLQDWLRQDVDFRQGLWLRQWRNHHSLQJ
KLVMRE7KHRIILFHUVVWUHVVWKDWLQ*DUGQHUDQG6DQLWDWLRQ
0HQWKHODVWWZRFDVHVRIWKHWULORJ\WKHHPSOR\HHVSUHYDLOHG
RQ WKHLU FRQVWLWXWLRQDO FODLPV HYHQ WKRXJK QR FULPLQDO
SURFHHGLQJVZHUHHYHULQVWLWXWHGDJDLQVWWKHP
$VUHWLUHG6XSUHPH&RXUW-XVWLFH/HZLV3RZHOOSRLQWHGRXW
LQ:LOH\Y0D\RURI%DOWLPRUH)G WK&LU FHUW
GHQLHG86 KRZHYHUWKH6XSUHPH&RXUW
³ZDVFDUHIXOWRSUHVHUYHWKHULJKWRIDSXEOLFHPSOR\HUWR
TXHVWLRQ DQ HPSOR\HH DERXW PDWWHUV UHODWLQJ WR WKH
HPSOR\HH¶VMRESHUIRUPDQFH´,GDW FLWLQJ*DUGQHU
86 DW ³$FFRUGLQJ WR WKH &RXUW¶V RSLQLRQ´ -XVWLFH
3RZHOOFRQWLQXHG³WKHUHZRXOGKDYHEHHQQRFRQVWLWXWLRQDO
YLRODWLRQ LI WKH HPSOR\HH KDG EHHQ IRUFHG WR DQVZHU
μTXHVWLRQVVSHFLILFDOO\GLUHFWO\DQGQDUURZO\UHODWLQJWRWKH
SHUIRUPDQFH RI KLV RIILFLDO GXWLHV ZLWKRXW EHLQJ UHTXLUHG
ZDLYHKLVLPPXQLW\ZLWKUHVSHFWWRWKHXVHRIKLVDQVZHUVRU
WKHIUXLWVWKHUHRI¶´,G TXRWLQJ*DUGQHU86DW
HPSKDVLV DGGHG ³7KLV ODQJXDJH VWURQJO\ LQGLFDWHV´
DFFRUGLQJWR-XVWLFH3RZHOO³WKDWIRUFLQJDSXEOLFHPSOR\HH
WRDQVZHUSRWHQWLDOO\LQFULPLQDWLQJMREUHODWHGTXHVWLRQVGRHV

-- 4 of 4 --