00a0230p.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
%2<&( $ 60,7+DND
:RRG\6PLWK
3ODLQWLII$SSHOOHH
Y
/(**(77 :,5( &203$1<HW
DO
'HIHQGDQWV$SSHOODQWV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI.HQWXFN\DW/H[LQJWRQ
1R².DUO6)RUHVWHU'LVWULFW-XGJH
$UJXHG2FWREHU
'HFLGHGDQG)LOHG-XO\
%HIRUH0$57,1&KLHI-XGJH68+5+(,15,&+DQG
6,/(5&LUFXLW-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 5REHUW % &UDLJ 7$)7 67(77,1,86
+2//,67(5&RYLQJWRQ.HQWXFN\IRU$SSHOODQWV6XVDQ
& 6HDUV )5267 -$&2%6 /H[LQJWRQ .HQWXFN\ IRU
$SSHOOHH21%5,()5REHUW%&UDLJ0DUN-6KHSSDUG

-- 1 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
7$)767(77,1,86 +2//,67(5&RYLQJWRQ.HQWXFN\
IRU$SSHOODQWV6XVDQ&6HDUV&DWKHULQH6:ULJKW)5267
-$&2%6 /H[LQJWRQ .HQWXFN\ 'DYLG 5 ,UYLQ
02<1$+$1,59,1 60,7+1LFKRODVYLOOH.HQWXFN\
IRU$SSHOOHH
68+5+(,15,&+-GHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQ
ZKLFK 6,/(5 - MRLQHG 0$57,1 & - SS
GHOLYHUHGDVHSDUDWHGLVVHQWLQJRSLQLRQ
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
68+5+(,15,&+&LUFXLW-XGJH'HIHQGDQWV$GFRP:LUH
&RPSDQ\DQG/HJJHWW 3ODWW,QFDSSHDODQRUGHUDZDUGLQJ
3ODLQWLII%R\FH$6PLWKSOXVDWWRUQH\¶VIHHVDQG
FRVWVIRU ZURQJIXOWHUPLQDWLRQRIHPSOR\PHQWEDVHGRQD
MXU\¶VILQGLQJRIUDFLDOGLVFULPLQDWLRQ'HIHQGDQWVFODLPWKDW
WKHGLVWULFWFRXUWHUUHGLQGHQ\LQJWKHLUSRVWYHUGLFWPRWLRQIRU
MXGJPHQWDVDPDWWHURIODZSXUVXDQWWR)HG5&LY3 E
EHFDXVHWKHUHZDVLQVXIILFLHQWHYLGHQFHWRVXSSRUWWKHMXU\¶V
ILQGLQJ WKDW UDFH ZDV D VXEVWDQWLDOO\ PRWLYDWLQJ IDFWRU LQ
$GFRP¶V GHFLVLRQ WR WHUPLQDWH 6PLWK 'HIHQGDQWV DOVR
FKDOOHQJH WKH MXU\¶V ILQGLQJ WKDW /HJJHWW ZDV VXIILFLHQWO\
LQWHUUHODWHG ZLWK $GFRP WR EH KHOG OLDEOH IRU 6PLWK¶V
ZURQJIXO WHUPLQDWLRQ )LQDOO\ 'HIHQGDQWV REMHFW WR WKH
GLVWULFWFRXUW¶VDZDUGRIDWWRUQH\¶VIHHV
)RUWKHIROORZLQJUHDVRQVZH5(9(56(
,
%R\FH$6PLWK ³6PLWK´ DQ$IULFDQ$PHULFDQZRUNHG
DVDZLUHGUDZLQJPDFKLQHRSHUDWRUDW$GFRP:LUH&RPSDQ\
³$GFRP´ LQ1LFKRODVYLOOH.HQWXFN\IURPXQWLO
$GFRP LV D ZKROO\RZQHG VXEVLGLDU\ RI 0LVVRXULEDVHG
/HJJHWW 3ODWW,QF ³/HJJHWW´ 'XULQJWKRVH\HDUV6PLWK
ZDV SDLG RQ DQ LQFHQWLYH EDVLV GHSHQGLQJ RQ KLV ZHHNO\
1R 6PLWKY/HJJHWW:LUH&RHWDO
0RUHRYHU 6PLWK LQ P\ RSLQLRQ VDWLVILHG KLV HYLGHQWLDU\
EXUGHQ IRU D UHDVRQDEOH MXU\ WR ILQG WKDW WKH HPSOR\HU¶V
H[SODQDWLRQIRUILULQJKLPZDVSUHWH[WXQGHUWKHVHFRQGDQG
WKLUGSURQJVRIWKH0DQ]HUWHVW
$FFRUGLQJO\,UHVSHFWIXOO\GLVVHQW

-- 2 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
GLVFULPLQDWLRQ VXFK VWDWHPHQWV DUH QRW FDWHJRULFDOO\
H[FOXGHG6HHLG
)LQDOO\ WKH PDMRULW\ ZULWHV WKDW WKH HYLGHQFH RI UDFLVP
6PLWKSURGXFHGLQWKLVFDVHVKRXOGQRWKDYHUHDFKHGDMXU\
EHFDXVHVXFKHYLGHQFHDGGHGDQ³HPRWLRQDO HOHPHQW´DVD
EDVLVIRUWKHYHUGLFW%HLQJWKDWWKLVLVDUDFHGLVFULPLQDWLRQ
FDVHEURXJKWXQGHU7LWOH9,,RIWKH&LYLO5LJKWV$FWDQGJLYHQ
WKDWWKHFUX[RI6PLWK¶VFDVHGHSHQGVXSRQWKHSURGXFWLRQRI
HYLGHQFHVKRZLQJWKDWKHZDVILUHGIRUUDFLDOUHDVRQVLWLV
LQFRQFHLYDEOH WR PH WKDW WKH PDMRULW\ ZRXOG DUJXH WKDW
HYLGHQFHRIUDFLVPDWWKHSODQWVKRXOGKDYHEHHQH[FOXGHGIRU
LWVDOOHJHG³HPRWLRQDO´LPSDFWRQWKHMXU\7KHGLVWULFWFRXUW
DOORZHGVXFKHYLGHQFHWRJRWRWKHMXU\EHFDXVHLWZDVERWK
FULWLFDODQGUHOHYDQWWR6PLWK¶VFODLPV7KXVLQP\YLHZWKH
GLVWULFWFRXUWGLGQRWFRPPLWUHYHUVLEOHHUURULQDGPLWWLQJWKH
HYLGHQFH
,,,
,QVXP,EHOLHYHWKDWWKHGLVWULFWFRXUWGLGQRWHUUZKHQLW
DOORZHG HYLGHQFH RI UDFLDO UHPDUNV DQG FRQGXFW E\
VXSHUYLVRUVDQGHPSOR\HHVWRZDUG6PLWKDQGRWKHU$IULFDQ
$PHULFDQHPSOR\HHVDW$GFRPWRJRWRWKHMXU\8QGHUWKH
³WRWDOLW\RIWKHFLUFXPVWDQFHV´DSSURDFKVHWIRUWKLQ+DUULV
WKH IUHTXHQF\ DQG VHYHULW\ RI WKH GLVFULPLQDWRU\ EHKDYLRU
DPRQJ VXSHUYLVRUV DQG HPSOR\HHV ZHUH LQGLFDWLYH RI WKH
UDFLDOO\KRVWLOHZRUNHQYLURQPHQWDW$GFRPRYHUDQH[WHQGHG
SHULRGRIWLPH2QRQHRFFDVLRQ6PLWKZDVVKRZQDOHZG
DQGUDFLVWFDUWRRQE\KLVVXSHUYLVRUWKDWGHSLFWHG$IULFDQ
$PHULFDQVLQDKXPLOLDWLQJOLJKW2QRWKHURFFDVLRQV6PLWK
ZDV FDOOHG D ³QLJJHU´ E\ D IHOORZ ZKLWH HPSOR\HH ± DQ
HPSOR\HH ZKR PHUHO\ UHFHLYHG D YHUEDO UHSULPDQG IRU WKH
UHPDUN E\ 6PLWK¶V VXSHUYLVRU ± DQG ZDV SUHVHQW ZKLOH D
UDFLDOO\ RIIHQVLYH MRNH ZDV EHLQJ WROG E\ D VXSHUYLVRU
$FFRUGLQJWR6PLWKDQGRWKHUIHOORZHPSOR\HHVWKHXVHRI
WKH³1´ZRUGZDVFRPPRQSODFHDWWKHSODQWDQG6PLWKZDV
RIWHQ SUHVHQW ZKHQ WKH WHUP ZDV XVHG 6XFK UHPDUNV
FRQVWLWXWH PRUH WKDQ ³PHUH RIIHQVLYH XWWHUDQFHV´ DQG DUH
LQGLFDWLYH RI WKH UDFLDOO\ KRVWLOH DWPRVSKHUH DW $GFRP
1R 6PLWKY/HJJHWW:LUH&RHWDO
SURGXFWLYLW\$GFRPFRQVLGHUHG6PLWKWREHRQHRIWKHPRVW
SURGXFWLYHZLUHGUDZHUVLQWKHSODQW
,Q)HEUXDU\6PLWK¶VLQFHQWLYHSURGXFWLRQQXPEHUV
EHJDQWRGURSVWHDGLO\IRUQRDSSDUHQWUHDVRQUHVXOWLQJ LQ
GHFUHDVHVLQKLVZHHNO\SD\FKHFNV6PLWKFRPSODLQHGWRWKH
SODQWVXSHULQWHQGHQW&KLS)RUG ³)RUG´ )RUGWHVWLILHGWKDW
KHUHYLHZHG6PLWK¶VGDLO\SURGXFWLRQWRWDOVDQGWKHUDZGDWD
IRU KLV SURGXFWLRQ FKHFNHG ZLWK WKH 4XDOLW\ &RQWURO
'HSDUWPHQWUHYLHZHGWKHODEUHSRUWVRQUHMHFWVIRUUHMHFWHG
ZLUH PHW ZLWK WKH SODQW DFFRXQWDQW WR PDNH VXUH WKH
FDOFXODWLRQV ZHUH FRUUHFW DQG UHYLHZHG WKH SURGXFWLRQ
QXPEHUVIRURWKHURSHUDWRUVZRUNLQJRQWKHVDPHPDFKLQHVWR
GHWHUPLQHLIWKH\ZHUHFRQVLVWHQW)RUGLQIRUPHG6PLWKWKDW
KHFRXOGQRWILQGDQ\WKLQJDPLVVZLWKWKHFDOFXODWLRQV
6PLWK¶VSURGXFWLRQQXPEHUVFRQWLQXHGWRIDOORYHUWKHQH[W
PRQWK6PLWKDJDLQFRPSODLQHGWR)RUGZKRWHVWLILHGWKDW
KHFRXOGQRWILQGDQ\WKLQJZURQJ2Q0DUFK6PLWK
WROG KLV VXSHUYLVRU %REE\ *X\ ³*X\´ WKDW KH ZDV
H[WUHPHO\ XSVHW DERXW KLV LQFHQWLYH FDOFXODWLRQ 6KRUWO\
WKHUHDIWHU6PLWKUHWXUQHGWR*X\LQDUDJHDQGVWDWHGWKDW
XQOHVVKLVLQFHQWLYHSD\ZDVVWUDLJKWHQHGRXWE\WKHIROORZLQJ
PRUQLQJKH6PLWK³ZDVJRLQJWRNLOODEXQFKRI0)V´
6PLWK WKHQ OHIW WKH $GFRP SODQW DOWKRXJK KH KDG QRW
FRPSOHWHGKLVVKLIW
*X\LPPHGLDWHO\UHSRUWHGWKHWKUHDWWR)RUG)RUGWKHQ
UHSRUWHG WKH LQFLGHQW WR WKH 3ODQW 0DQDJHU 6WHYH 5LOH\
³5LOH\´ 5LOH\ GLVFXVVHG WKH PDWWHU ZLWK )RUG DQG %LOO
$YLVHWKH9LFH3UHVLGHQWRI2SHUDWLRQVIRUWKH/HJJHWW
3ODWW ZLUH JURXS ZKR KDSSHQHG WR EH YLVLWLQJ WKH $GFRP
IDFLOLW\)RUGWKHQPHWZLWK*X\LQSHUVRQ)RUGVWDWHGWKDW
*X\ ORRNHG VFDUHG DQG WKDW DW WKDW SRLQW )RUG KLPVHOI
EHFDPHVFDUHG)RUGPHWZLWK$YLVHDQG5LOH\DQGWKHWKUHH
DJUHHGWKDWWKH\ZRXOGWDONWR6PLWKWKHQH[WPRUQLQJ7KH\
DOVR FDOOHG 1LFKRODVYLOOH 3ROLFH WR OHW WKHP NQRZ WKDW DQ
HPSOR\HH KDG PDGH D WKUHDW DQG DVNHG WKDW DQ RIILFHU EH
SUHVHQWWKHQH[WPRUQLQJ

-- 3 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
7KHIROORZLQJPRUQLQJ6PLWKUHWXUQHGWRZRUNDVXVXDO
)RUG 5LOH\ DQG $YLVH PHW ZLWK 6PLWK XSRQ KLV DUULYDO
$FFRUGLQJWR5LOH\ZKHQDVNHGDERXWWKHWKUHDWDOO6PLWK
ZRXOGVD\ZDV³,PLJKWKDYHVDLGWKDW´5LOH\IHOWWKDW6PLWK
ZDV SUHRFFXSLHG ZLWK KLV LQFHQWLYH FDOFXODWLRQV 5LOH\
VXVSHQGHG 6PLWK DQG WROG KLP WR UHWXUQ WKH IROORZLQJ
0RQGD\6PLWKOHIWWKHSODQWZLWKRXWLQFLGHQWDQGZLWKRXWDQ
HVFRUW5LOH\FDOOHGWKHSROLFHDJDLQDQGDVNHGIRUDEDFNXS
2Q0RQGD\0DUFK$GFRPWHUPLQDWHG6PLWK
2Q6HSWHPEHU6PLWKVXHG/HJJHWW$GFRPDQG
/ 3$FTXLVLWLRQ&RPSDQ\,QFLQIHGHUDOFRXUWXQGHUWKH
.HQWXFN\&LYLO5LJKW$FW.\5HY6W††HWVHT
RQ WKH EDVLV RI GLYHUVLW\ MXULVGLFWLRQ 6PLWK DOOHJHG LQ
SHUWLQHQW SDUW WKDW KH VXIIHUHG XQHTXDO WUHDWPHQW ZKLOH
HPSOR\HGDW$GFRPDQGWKDWKHZDVWHUPLQDWHGEHFDXVHRIKLV
UDFH+HDOVRDVVHUWHGWKDW'HIHQGDQWVHQJDJHGLQDSDWWHUQRU
SUDFWLFHRIGLVFULPLQDWLRQ
6PLWK WHVWLILHG DW WULDO WKDW FRZRUNHUV DQG VXSHUYLVRUV
UHJXODUO\ PDGH UDFLDOO\ GLVFULPLQDWRU\ FRPPHQWV LQ KLV
SUHVHQFHDWZRUN6PLWKVWDWHGWKDWRQKLVILUVWGD\RIZRUN
LQVRPHHPSOR\HHVWKUHDWHQHGKLPVWDWLQJ³<RX¶UH
>VLF@QLJJHUDVVDLQ¶WJRLQJWRZRUNKHUH´6PLWKDOVRWHVWLILHG
WKDWRQRQHRFFDVLRQLQWKHODWH VRUHDUO\ V6PLWK¶V
VXSHUYLVRU6DPP\*X\FLUFXODWHGDUDFLDOO\GLVFULPLQDWRU\
DQGOHZGFDUWRRQDURXQGWKHSODQW7KHFDUWRRQGHSLFWHGDQ
$IULFDQ$PHULFDQ PDQ ZLWK D URSH DURXQG KLV QHFN DQG
FRQQHFWHG WR KLV SHQLV VWDQGLQJ LQ IURQW RI D &DXFDVLDQ
ZRPDQ 7KH FDUWRRQ ZDV HQWLWOHG ³+RZ D %ODFN 0DQ
&RPPLWV6XLFLGH´6RPHWLPHDIWHU6PLWKKHDUGKLV
VXSHUYLVRU%REE\*X\WHOOLQJD³QLJJHU´MRNH*X\DGPLWWHG
XVLQJ WKH WHUP 6PLWK WHVWLILHG DOVR WKDW VRPHWLPH LQ WKH
VKHKHDUGIRUHPDQ5RQQLH&XUU\UHIHUULQJWRDEODFN
HPSOR\HHDVD³JRULOOD´6PLWKVWDWHGWKDWKHFRPSODLQHGWR
&XUU\6PLWKDOVRVWDWHGWKDWKHKDG³EHHQWRDVXSHUYLVRU
RQFHEHIRUHDQGP\IRUHPDQ´WRFRPSODLQDERXWXVHRIWKH
³1´ZRUG
1R 6PLWKY/HJJHWW:LUH&RHWDO
LQIDFW WKHSURIIHUHGUHDVRQGLGQRWDFWXDOO\PRWLYDWHWKH
WHUPLQDWLRQRU WKHSURIIHUHGUHDVRQZDVQRWVXIILFLHQWWR
PRWLYDWHWKHGLVFKDUJH6HH0DQ]HUY'LDPRQG6KDPURFN
&KHP)G WK&LU
,Q WKLV FDVH 6PLWK GRHV QRW GLVSXWH WKDW KH PDGH WKH
WKUHDWHQLQJUHPDUNXQGHUWKHILUVWSURQJRIWKH0DQ]HUWHVWRU
WKH IDFW WKDW VXFK D UHPDUN XQGHU FHUWDLQ FLUFXPVWDQFHV
ZRXOG EH D VXIILFLHQW QRQGLVFULPLQDWRU\ UHDVRQ IRU ILULQJ
VRPHRQHXQGHUWKHWKLUG0DQ]HUSURQJ+RZHYHUXQGHUWKH
WKLUGSURQJWKHUHLVDUHDOGLVSXWHDVWRZKHWKHU6PLWK¶VWKUHDW
ZDVGLUHFWHGWRZDUGDQ\HPSOR\HHRIWKHFRPSDQ\RUZKHWKHU
DQ\RQHDWWKHSODQWWRRN6PLWK¶VWKUHDWVHULRXVO\0RUHRYHU
WKHUH LV QR H[SODQDWLRQ DV WR ZK\ WKHUH ZDV QR GLUHFW ODZ
HQIRUFHPHQW WKH GD\ DIWHU WKH WKUHDW ZDV PDGH RU ZK\ WKH
HPSOR\HU ZDLWHG XQWLO 0RQGD\ WR ILUH 6PLWK 7KHVH DUH
GLVSXWHGLVVXHVZKLFKLQP\RSLQLRQDUHTXHVWLRQVRIIDFWIRU
DMXU\QRWWKHFRXUWWRGHFLGH
8QGHUWKHVHFRQGSURQJRIWKH0DQ]HUWHVW6PLWKVHHNVWR
VKRZWKDW³WKHVKHHUZHLJKWRIWKHFLUFXPVWDQWLDOHYLGHQFHRI
GLVFULPLQDWLRQ PDNHV LW PRUH OLNHO\ WKDQ QRW WKDW WKH
HPSOR\HU¶V H[SODQDWLRQ LV SUHWH[W´ ,G DW 6PLWK
SURGXFHVHYLGHQFHRIUDFLVPDQGXQHTXDOWUHDWPHQWRYHUD
WZHQW\ \HDU SHULRG WR VKRZ WKDW D UDFLDOO\ KRVWLOH ZRUN
HQYLURQPHQWH[LVWHGDWWKHSODQW7KHGLVWULFWFRXUWDOORZHG
VXFKHYLGHQFHWRJRWRDMXU\VRWKDWWKHMXU\FRXOGGHFLGH
ZKHWKHU 6PLWK ZDV ILUHG EHFDXVH RI WKH WKUHDW RU
GLVFULPLQDWRU\UHDVRQV7KHPDMRULW\LQFRUUHFWO\GLVPLVVHV
WKLVHYLGHQFHRQWKHJURXQGVWKDWQRQHRIWKHUDFLDOFRPPHQWV
ZHUHPDGHE\WKHSHUVRQVZKRWHUPLQDWHG6PLWKDQGPRVWRI
WKHFRPPHQWVZHUHPDGHORQJEHIRUH6PLWK¶VWHUPLQDWLRQ
$JDLQ LW LV LPSRUWDQW WR UHLWHUDWH WKLV &RXUW¶V ODQJXDJH LQ
(UFHJRYLFK WKDW HYLGHQFH RI D FRUSRUDWH VWDWH RI PLQG RU
GLVFULPLQDWRU\DWPRVSKHUHLVQRWUHQGHUHGLUUHOHYDQWE\LWV
IDLOXUHWRFRLQFLGHSUHFLVHO\ZLWKWKHSDUWLFXODUDFWRUVRUWLPH
IUDPHLQYROYHGLQWKHVSHFLILFHYHQWVWKDWJHQHUDWHGDFODLPRI
GLVFULPLQDWRU\ WUHDWPHQW (UFHJRYLFK DW 7KXV
DOWKRXJKGLVFULPLQDWRU\VWDWHPHQWVE\DQRQGHFLVLRQPDNHU
VWDQGLQJ DORQH JHQHUDOO\ GR QRW VXSSRUW DQ LQIHUHQFH RI

-- 4 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
UDFLDOO\KRVWLOHIURPSODLQWLII¶VVXEMHFWLYHSRLQWRIYLHZ7KH
GLVWULFW FRXUW IRXQG WKDW HYLGHQFH RI UDFLDO VOXUV DQG WKH
RIIHQVLYH FDUWRRQ FRXSOHG ZLWK D ODFN RI DQ HIIHFWLYH
GLVFLSOLQDU\ UHVSRQVH WR HDFK LQFLGHQW RYHU WKH \HDUV
FRQVWLWXWHGDVXIILFLHQWEDVLVRQZKLFKDUHDVRQDEOHMXU\FRXOG
ILQG WKDW 6PLWK ZDV VXEMHFWHG WR D UDFLDOO\ KRVWLOH ZRUN
HQYLURQPHQW7KLVILQGLQJZDVQRWXQUHDVRQDEOHJLYHQWKH
VWDQGDUG RI UHYLHZ LQ WKLV FDVH ZKLFK VWDWHV WKDW D SRVW
YHUGLFWPRWLRQIRUMXGJPHQWDVDPDWWHURIODZVKRXOGQRWEH
JUDQWHG XQOHVV WKHUH LV D ³FRPSOHWH DEVHQFH RI SURRI RQ D
PDWHULDOLVVXHLQWKHDFWLRQ´6HH0RUDOHVY$PHULFDQ+RQGD
0RWRU&R)G WK&LU %\UHYHUVLQJ
WKH ORZHU FRXUW¶V GHFLVLRQ DQG JUDQWLQJ $GFRP LWV SRVW
YHUGLFWPRWLRQIRUMXGJPHQWDVDPDWWHURIODZWKLV&RXUW
IDLOVWRGUDZ³DOOUHDVRQDEOHIDYRUDEOHLQIHUHQFHVLQIDYRURI
WKH QRQPRYDQW 6HH LG $FFRUGLQJO\ , GLVDJUHH ZLWK WKH
PDMRULW\¶VGHFLVLRQWRJUDQWMXGJPHQWWRWKHGHIHQGDQWLQWKLV
FDVH RQ WKH EDVLV WKDW 6PLWK GLG QRW SURYLGH VXIILFLHQW
HYLGHQFHXQGHUWKH³WRWDOLW\RIWKHFLUFXPVWDQFHV´,WKLQNWKH
WHVW LV IRU D MXU\ WR ILQG WKDW KLV WHUPLQDWLRQ ZDV UDFLDOO\
PRWLYDWHG,ZRXOGDWOHDVWJLYHKLPDQHZWULDO
,,
7KHPDMRULW\DOVRKROGVWKDW6PLWK¶VUHPDUNLQWKHSUHVHQFH
RI%REE\*X\WKDWKH³ZDVJRLQJWRNLOODEXQFKRI0)
HUV´ ZKLFK KH GRHV QRW GHQ\ PDNLQJ FRQVWLWXWHG D WKUHDW
DJDLQVW WKH FRPSDQ\ DQG D OHJLWLPDWH QRQGLVFULPLQDWRU\
UHDVRQIRUILULQJKLP7KHPDMRULW\FRQFOXGHVWKDWEHFDXVH
6PLWKIDLOHGWRSURYHWKDWKLVWKUHDWGLGQRWDFWXDOO\PRWLYDWH
KLVGLVFKDUJHRUZDVSUHWH[WKHZDVQRWHQWLWOHGWRDGHFLVLRQ
LQKLVIDYRURQ$GFRP¶VSRVWYHUGLFWPRWLRQIRUMXGJPHQWDV
DPDWWHURIODZ
3UHWH[W LV HVWDEOLVKHG E\ HYLGHQFH VKRZLQJ WKDW WKH
OHJLWLPDWHUHDVRQFODLPHGE\WKHGHIHQGDQWIRUDSDUWLFXODU
DFWLRQ LV QRW WKH WUXH UHDVRQ EXW LQVWHDG LV D SUHWH[W IRU
GLVFULPLQDWLRQ6HH6W0DU\¶V+RQRU&WUY+LFNV86
7KHSODLQWLIIPD\GHPRQVWUDWHSUHWH[WE\
VKRZLQJWKDW WKHGHIHQGDQW¶VSURIIHUHGUHDVRQKDGQREDVLV
1R 6PLWKY/HJJHWW:LUH&RHWDO
6PLWKWHVWLILHGWKDWKHLQTXLUHGDERXWSURPRWLRQDQGZDV
WROGWKDWKHQHHGHGDKLJKVFKRROGLSORPD+HODWHUOHDUQHG
WKDWVHYHUDORIWKHZKLWHVXSHUYLVRUVGLGQRWKDYHKLJKVFKRRO
GLSORPDV 6PLWK VLJQHG XS WR EH SURPRWHG LQ
+RZHYHULQ%REE\*X\ZKRLVZKLWHUHFHLYHGWKH
SRVLWLRQ HYHQ WKRXJK KH KDG QHYHU UXQ D ZLUH GUDZLQJ
PDFKLQHRUVHWRQHXS 6PLWKWHVWLILHGWKDWLQKLVWZHQW\
\HDUVZLWK$GFRPWKHFRPSDQ\QHYHUKDGDEODFNVXSHUYLVRU
)XUWKHUPRUH 6PLWK RIIHUHG HYLGHQFH WKDW $GFRP QHYHU
HPSOR\HGPRUHWKDQIRXURUILYHEODFNVDWRQHWLPHDQGWKDW
EHWZHHQDQGWKHQXPEHUVRIEODFNHPSOR\HHVZDV
UHGXFHGE\KDOIWKURXJKLQYROXQWDU\WHUPLQDWLRQV6PLWKDOVR
SUHVHQWHG VWDWLVWLFV VKRZLQJ WKDW EHWZHHQ WKH \HDUV
WKURXJK WKHUH ZHUH QR EODFN VXSHUYLVRUV DW WKH
/HLWFKILHOGSODQWWKH$GFRPSODQWRUWKH:LQFKHVWHUSODQW
6PLWKIXUWKHUWHVWLILHGWKDWKHWKRXJKWWKDWKHZDVGLVFKDUJHG
EHFDXVHIRU\HDUVKHKDGFRPSODLQHGDERXWWKHODFNRIEODFN
VXSHUYLVRUV
6PLWKDOVRDVNHGWKHMXU\WRLQIHUGLVFULPLQDWRU\SXUSRVH
EHFDXVHRWKHUZKLWHHPSOR\HHVUHFHLYHGOHVVVHYHUHGLVFLSOLQH
IRU RIIHQVHV VLPLODU WR 6PLWK¶V (PSOR\HH :LOOLH 5HHG
EURXJKW D JXQ WR WKH SODQW EXW ZDV QRW WHUPLQDWHG 2Q
$XJXVW (PSOR\HH &HFLO +RSSHU WKUHDWHQHG D
VXSHUYLVRU ZLWK ERGLO\ KDUP EXW UHFHLYHG RQO\ D ZULWWHQ
ZDUQLQJGHVSLWHDGLVFLSOLQDU\UHFRUG2Q)HEUXDU\
HPSOR\HH-HII%DQWDKHDWHGXSDSDLURISOLHUVDQGWRXFKHG
WKHPDJDLQVWDFRZRUNHU¶VQHFN\HWKHUHFHLYHGRQO\DYHUEDO
ZDUQLQJ
'HIHQGDQWVPDLQWDLQHGWKDW6PLWK¶VWKUHDWQRWKLVUDFHZDV
WKH UHDVRQ IRU KLV WHUPLQDWLRQ 5LOH\ WHVWLILHG WKDW KH ZDV
FRQFHUQHGDERXWWKHWKUHDWEHFDXVHKHNQHZ6PLWKKDGJXQV
$VSODQWPDQDJHU5LOH\VWDWHGWKDWKHIHOWDQREOLJDWLRQWR
HQVXUHWKHVDIHW\RIDOOSODQWHPSOR\HHV
7KHGLVWULFWFRXUWJUDQWHGMXGJPHQWDVDPDWWHURIODZWR
'HIHQGDQWVRQ6PLWK¶VIDLOXUHWRSURPRWHFODLPDQGSDWWHUQ
RUSUDFWLFHGLVFULPLQDWLRQFODLP7KHMXU\IRXQGWKDW$GFRP
ILUHG6PLWKRQWKHEDVLVRIUDFHDQGDZDUGHGKLPLQ

-- 5 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
GDPDJHV'HIHQGDQWVWKHQPRYHGSXUVXDQWWR)HG5&LY3
E IRUDSRVWYHUGLFWMXGJPHQWDVDPDWWHURIODZRULQWKH
DOWHUQDWLYH IRU D QHZ WULDO 7KH GLVWULFW FRXUW GHQLHG WKH
PRWLRQ 7KH FRXUW WKHQ DZDUGHG 6PLWK LQ
DWWRUQH\¶V IHHV DQG LQ FRVWV DQG HQWHUHG D ILQDO
MXGJPHQW
,,
'HIHQGDQWVDUJXHWKDWWKHHYLGHQFHIDLOHGWRHVWDEOLVKWKDW
6PLWK ZDV WHUPLQDWHG EHFDXVH RI KLV UDFH 6SHFLILFDOO\
'HIHQGDQWVFRQWHQG6PLWKGLGQRWSURYHWKDWWKHSURIIHUHG
UHDVRQIRU6PLWK¶VWHUPLQDWLRQ±KLVWKUHDWWRNLOOFRZRUNHUV
±ZDVSUHWH[WIRUUDFLDOGLVFULPLQDWLRQ
:H UHYLHZ D GLVWULFW FRXUW¶V GHQLDO RI 'HIHQGDQWV¶ 5XOH
E PRWLRQGHQRYR6HH. 7(QWHUSU,QFY=XULFK,QV
&R)G WK&LU .HQWXFN\ODZJRYHUQV
WKHVWDQGDUGRIUHYLHZLQWKLVFDVH6HH0RUDOHVY$PHULFDQ
+RQGD0RWRU&R)G WK&LU KROGLQJ
WKDWLQGLYHUVLW\FDVHVDVWDWHODZVWDQGDUGRIUHYLHZDSSOLHV
ZKHQD5XOH E PRWLRQIRUMXGJPHQWDVDPDWWHURIODZLV
EDVHG RQ D FKDOOHQJH WR WKH VXIILFLHQF\ RI WKH HYLGHQFH
8QGHU.HQWXFN\ODZDSRVWYHUGLFWPRWLRQIRUMXGJPHQWDV
DPDWWHURIODZVKRXOGEHJUDQWHGRQO\LI³WKHUHLVDFRPSOHWH
DEVHQFHRISURRIRQDPDWHULDOLVVXHLQWKHDFWLRQRULIQR
GLVSXWHGLVVXH RIIDFWH[LVWVXSRQZKLFKUHDVRQDEOHPLQGV
FRXOGGLIIHU´:DVKLQJWRQY*RRGPDQ6:G
.\ &W $SS VHH DOVR 0RUDOHV )G DW
TXRWLQJ:DVKLQJWRQ $OOUHDVRQDEOHIDYRUDEOHLQIHUHQFHV
VKRXOGEHGUDZQLQIDYRURIWKHQRQPRYDQW6HH%D\OLVY
/RXUGHV+RVS,QF6:G .\ VHH
DOVR0RUDOHV)GDW TXRWLQJ%D\OLV
%HFDXVH.\5HY6W&KDSWHUPLUURUV7LWOH9,,RIWKH
&LYLO 5LJKWV $FW RI ³7LWOH 9,,´ ZH XVH WKH IHGHUDO
VWDQGDUGV IRU HYDOXDWLQJ UDFH GLVFULPLQDWLRQ FODLPV 6HH
.HQWXFN\ &RPPLVVLRQ RQ +XPDQ 5LJKWV Y .HQWXFN\
6:G .\ &W $SS VHH DOVR :DWKHQ Y
*HQHUDO(OHF&R)G WK&LU 7LWOH
9,,PDNHVXQODZIXODQHPSOR\HU¶VGHFLVLRQ³WRGLVFKDUJHDQ\
1R 6PLWKY/HJJHWW:LUH&RHWDO
RYHU D WZHQW\ \HDU SHULRG QR UHDVRQDEOH HPSOR\HH FRXOG
VXEMHFWLYHO\ YLHZ WKH DWPRVSKHUH DW WKH SODQW DV UDFLDOO\
KRVWLOH RU DEXVLYH , GLVDJUHH RQ WKH EDVLV RI WKLV &RXUW¶V
UHDVRQLQJLQ(UFHJRYLFKY*RRG\HDU7LUH 5XEEHU&R
)G WK &LU ZKHUHE\ ZH VDLG WKDW
HYLGHQFH RI D FRUSRUDWH VWDWH RI PLQG RU GLVFULPLQDWRU\
DWPRVSKHUHLVQRWUHQGHUHGLUUHOHYDQWE\LWVIDLOXUHWRFRLQFLGH
SUHFLVHO\ ZLWK WKH SDUWLFXODU ³WLPHIUDPH LQYROYHG LQ WKH
VSHFLILF HYHQWV WKDW JHQHUDWHG D FODLP RI GLVFULPLQDWRU\
WUHDWPHQW´ 'LVFULPLQDWRU\ VWDWHPHQWV PD\ UHIOHFW D
FXPXODWLYH PDQDJHULDO DWWLWXGH DPRQJ WKH GHIHQGDQW
HPSOR\HUV¶ VXSHUYLVRUV WKDW KDV LQIOXHQFHG WKH GHFLVLRQ
PDNLQJSURFHVVIRUDFRQVLGHUDEOHSHULRGRIWLPH6HHLG
,Q DGGLWLRQ WKH PDMRULW\ VHHPV WR EH HVWDEOLVKLQJ WKDW
XQOHVVUDFLDOO\PRWLYDWHGPLVFRQGXFWLVDLPHGDWWKHSODLQWLII
GLUHFWO\VLPSO\VHHLQJRURYHUKHDULQJLWWDUJHWHGDWDQRWKHULV
QRWVXIILFLHQWWRODEHOWKHPLVFRQGXFWDV³VHYHUH´:HKDYH
KHOGWKDWHYLGHQFHRIUDFLVWUHPDUNVRULVRODWHGLQFLGHQFHVRI
UDFLDO FRQGXFW GLUHFWHG WRZDUGV RWKHU $IULFDQ$PHULFDQ
HPSOR\HHV DW WKH SODQW PD\ EH FULWLFDO IRU WKH MXU\¶V
DVVHVVPHQWRIZKHWKHUDJLYHQHPSOR\HUZDVPRUHOLNHO\WKDQ
QRWWRKDYHDFWHGIURPDQXQODZIXOPRWLYH6HH5RELQVRQY
5XQ\RQ)G WK&LU $QHPSOR\HU
PD\FUHDWHDKRVWLOHHQYLURQPHQWIRUDQHPSOR\HHHYHQZKHUH
LWGLUHFWVLWVGLVFULPLQDWRU\DFWVRUSUDFWLFHVDWWKHSURWHFWHG
JURXSRIZKLFKWKHSODLQWLIILVDPHPEHUDQGQRWMXVWDWWKH
SODLQWLIIKLPVHOI6HH-DFNVRQY4XDQH[&RUS)G
WK&LU 7KXVWKHIDFWWKDW6PLWKZDVQRWWKHWDUJHWHG
YLFWLPRIDUDFLDOUHPDUNPDGHE\DVXSHUYLVRUGRHVQRWPHDQ
WKDWVXFKDUHPDUNZDVQRWRIIHQVLYHRUKXPLOLDWLQJWR6PLWK
7KH MXU\ ZDV HQWLWOHG WR IDFWRU VXFK UHPDUNV LQWR WKHLU
GHFLVLRQ
,EHOLHYHWKDWWKH6XSUHPH&RXUWGLGQRWLQWHQGIRUXVWR
LQWHUSUHWWKH³WRWDOLW\RIWKHFLUFXPVWDQFHV´WHVWVRQDUURZO\
E\GLVDJJUHJDWLQJWKHHIIHFWRIHDFKLQFLGHQWRYHUWLPHXQWLO
LWVVLJQLILFDQFHLVORVWRUGLOXWHG,QVWHDG ZHVKRXOGORRN
PRUHDWWKHFXPXODWLYHHIIHFWRIWKHVHLQFLGHQWVRYHUWLPHLQ
RUGHU WR DVVHVV ZKHWKHU WKH DWPRVSKHUH DW WKH SODQW ZDV

-- 6 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
ZKHWKHUDZRUNHQYLURQPHQWLVREMHFWLYHO\KRVWLOHRUDEXVLYH
LVQRWD³PDWKHPDWLFDOO\SUHFLVHWHVW´,G
,Q WKLV FDVH WKH PDMRULW\ ILQGV WKDW WKH FLUFXODWLRQ RI D
UDFLDOO\ GLVFULPLQDWRU\ DQG OHZG FDUWRRQ E\ D VXSHUYLVRU
DURXQGWKHSODQWWKHXVHRIWKH³1´ZRUGDQGRWKHUUDFLDOO\
GHPHDQLQJWHUPVE\IHOORZHPSOR\HHVDQGVXSHUYLVRUVLQWKH
SUHVHQFHRI6PLWKRQPRUHWKDQRQHRFFDVLRQDQGGLVSDUDWH
WUHDWPHQWFRQFHUQLQJGLVFLSOLQDU\PHDVXUHVLPSRVHGRQRWKHU
ZKLWHHPSOR\HHVDWWKHSODQWIRUFRPSDUDEOHRIIHQVHVZHUH
QRW³VHYHUHRUSHUYDVLYHHQRXJK´WRFUHDWHDJHQXLQHLVVXHRI
PDWHULDO IDFW DV WR ZKHWKHU DQ REMHFWLYHO\ KRVWLOH ZRUN
HQYLURQPHQWH[LVWHGDWWKHSODQW,QUHDFKLQJWKLVFRQFOXVLRQ
WKH PDMRULW\ IDLOV WR UHFRJQL]H WKLV &RXUW¶V GHFLVLRQ LQ
:LOOLDPV Y *HQHUDO 0RWRUV &RUS )G WK &LU
,Q:LOOLDPVZHUHYHUVHGWKHGLVWULFWFRXUW¶VJUDQWRI
VXPPDU\MXGJPHQWLQIDYRURIWKHGHIHQGDQW7KHSODLQWLII
DOOHJHG PXOWLSOH DFWV FUHDWLQJ D KRVWLOH ZRUN HQYLURQPHQW
IRXOODQJXDJHVH[XDOFRPPHQWVGLUHFWHGDWSODLQWLIIDWOHDVW
RQH LQFLGHQW RI SK\VLFDO FRQWDFW SHUFHLYHG LQHTXLWLHV RI
WUHDWPHQWDQGSUDQNVRUDQQR\LQJFRQGXFWE\FRZRUNHUV
6HHLGDW:HKHOGWKHGLVWULFWFRXUWHUUHGLQLWV
GLVPLVVDORIWKHVHLQFLGHQWVDV³μLQIUHTXHQWQRWVHYHUHQRW
WKUHDWHQLQJRUKXPLOLDWLQJEXWPHUHO\RIIHQVLYH¶´,GDW
:HIRXQGWKHGLVWULFWFRXUWIDLOHGWRFRQVLGHUWKHWRWDOLW\RI
WKHFLUFXPVWDQFHVDQGWKHUHE\³UREEHGWKHLQFLGHQWVRIWKHLU
FXPXODWLYHHIIHFW´,GDW
6LPLODUWRRXUKROGLQJLQ:LOOLDPVWKHPDMRULW\¶VRSLQLRQ
LQWKLVFDVHUREVWKHLQFLGHQWVRIUDFLVPSUHVHQWHGE\6PLWKRI
WKHLUFXPXODWLYHHIIHFW$OOWKDW6PLWKLVUHTXLUHGWRVKRZLV
WKDWWKHFRQGXFWLQTXHVWLRQZDVVHYHUHRUSHUYDVLYHHQRXJK
WRFUHDWHDQHQYLURQPHQWWKDWDUHDVRQDEOHSHUVRQZRXOGILQG
KRVWLOH RU DEXVLYH DQG WKDW KH VXEMHFWLYHO\ UHJDUGHG WKDW
HQYLURQPHQW DV DEXVLYH 7KLV LV D VXEMHFWLYH QRW DQ
REMHFWLYH WHVW 6PLWK KDG ZRUNHG DW WKH SODQW IRU QHDUO\
WZHQW\\HDUV2YHUWKH\HDUVKHZDVH[SRVHGWRDQXPEHURI
UDFLDOO\PRWLYDWHGDFWVDQGUHPDUNV6RPHRIWKHPLVFRQGXFW
ZDV GLUHFWHG DW KLP DQG VRPH ZDV QRW 7KH PDMRULW\
FRQFOXGHVWKDWEHFDXVHHDFKLQVWDQFHRIUDFLVPZDVVSUHDGRXW
1R 6PLWKY/HJJHWW:LUH&RHWDO
LQGLYLGXDORURWKHUZLVHGLVFULPLQDWHDJDLQVWDQ\LQGLYLGXDO
ZLWK UHVSHFW WR KLV FRPSHQVDWLRQ WHUPV FRQGLWLRQV RU
SULYLOHJHVRIHPSOR\PHQWEHFDXVHRIVXFKLQGLYLGXDO¶VUDFH
FRORUUHOLJLRQVH[RUQDWLRQDORULJLQ>@´86&†H
D
2QFH D SODLQWLII HVWDEOLVKHV D SULPD IDFLH FDVH RI
GLVFULPLQDWLRQWKHEXUGHQVKLIWVWRWKHGHIHQGDQWWRUHEXWWKH
SUHVXPSWLRQRIGLVFULPLQDWLRQE\SURYLGLQJHYLGHQFHVKRZLQJ
WKDW WKH SODLQWLII ZDV WHUPLQDWHG IRU D OHJLWLPDWH
QRQGLVFULPLQDWRU\UHDVRQ6HH0DQ]HUY'LDPRQG6KDPURFN
&KHP&R)G WK&LU 7KHSODLQWLII
PD\GHPRQVWUDWHWKDWWKHGHIHQGDQW¶VH[SODQDWLRQZDVPHUHO\
SUHWH[WE\VKRZLQJ WKDWWKHSURIIHUHGUHDVRQKDGQREDVLV
LQIDFW WKDWWKHSURIIHUHGUHDVRQGLGQRWDFWXDOO\PRWLYDWH
WKH WHUPLQDWLRQ RU WKDW WKH SURIIHUHG UHDVRQ ZDV QRW
VXIILFLHQWWRPRWLYDWHWKHGLVFKDUJH 6HHLGDW6HH
JHQHUDOO\5HHYHVY6DQGHUVRQ3OXPELQJ3URGV,QFBBBB
6&W BBBB 1R :/ 86 -XQH
KROGLQJWKDWDSODLQWLII¶VSULPDIDFLDFDVHFRPELQHG
ZLWKVXIILFLHQWHYLGHQFHWRILQGWKDWWKHHPSOR\HU¶VDVVHUWHG
MXVWLILFDWLRQZDVIDOVHPD\SHUPLWIDFWILQGHUWRFRQFOXGHWKDW
WKHHPSOR\HUXQODZIXOO\GLVFULPLQDWHG
$
6PLWK¶V GHDWK WKUHDW FRQVWLWXWHG D OHJLWLPDWH
QRQGLVFULPLQDWRU\UHDVRQIRUILULQJKLP6HHHJ/HQRLUY
5ROO &RDWHU ,QF )G WK &LU
KROGLQJ WKDW HPSOR\HH¶V WKUHDW WR NLOO WZR FRZRUNHUV
SURYLGHGVXIILFLHQWEDVLVIRUGLVFKDUJH 3D\WRQY5XQ\RQ
) 6XSS 6' ,QG KROGLQJ WKDW
HPSOR\HUSURIIHUHGOHJLWLPDWHQRQGLVFULPLQDWRU\UHDVRQIRU
WHUPLQDWLQJHPSOR\HHWKDWKHPDGHGHDWKWKUHDWVDJDLQVWKLV
VXSHUYLVRU 6PLWKY1HZ<RUN7LPHV)6XSS
' 6 & KROGLQJ WKDW SODLQWLII¶V WKUHDW WR NLOO
VXSHUYLVRUZDVOHJLWLPDWHQRQGLVFULPLQDWRU\UHDVRQIRUKLV
GLVFKDUJH DII¶G)G WK&LU 6PLWKGRHV
QRWGHQ\PDNLQJWKHWKUHDWHQLQJVWDWHPHQW)XUWKHUPRUHLW
ZDVXQGLVSXWHGWKDW*X\EHOLHYHG6PLWKZDVLUUDWLRQDODQG

-- 7 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
RXWRIFRQWURODQGWKDWKHFRPPXQLFDWHGWKLVIHHOLQJWRKLV
VXSHUYLVRU )RUG %HFDXVH 6PLWK KDV QRW SURYHQ WKDW WKH
WKUHDW ZDV ³IDFWXDOO\ IDOVH´ KH KDV QRW HVWDEOLVKHG SUHWH[W
XQGHUWKHILUVW0DQ]HUSURQJ6HH0DQ]HU)GDW
%
7RHVWDEOLVKSUHWH[WXQGHUWKHVHFRQG0DQ]HUPHWKRGWKH
SODLQWLIIDGPLWVWKHIDFWXDOEDVLVXQGHUO\LQJWKHGLVFKDUJHDQG
DFNQRZOHGJHVWKDWVXFKFRQGXFWFRXOGPRWLYDWHWKHGLVPLVVDO
EXW DWWDFNV WKH HPSOR\HU¶V H[SODQDWLRQ ³E\ VKRZLQJ
FLUFXPVWDQFHVZKLFKWHQGWRSURYHDQLOOHJDOPRWLYDWLRQZDV
PRUHOLNHO\WKDQWKDWRIIHUHGE\WKHGHIHQGDQW´0DQ]HU
)GDW³,QRWKHUZRUGVWKHSODLQWLIIDUJXHVWKDWWKH
VKHHUZHLJKWRIWKHFLUFXPVWDQWLDOHYLGHQFHRIGLVFULPLQDWLRQ
PDNHV LW μPRUH OLNHO\ WKDQ QRW¶ WKDW WKH HPSOR\HU¶V
H[SODQDWLRQLVDSUHWH[WRUFRYHUXS´,G

6PLWKDWWHPSWHGWRSURYHWKDWKLVWKUHDWGLGQRWDFWXDOO\
PRWLYDWHKLVGLVFKDUJHE\RIIHULQJSURRIRIUDFLDOVWDWHPHQWV
PDGH E\ KLV FRZRUNHUV +RZHYHU QRQH RI WKH UDFLDO
FRPPHQWVZHUHPDGHE\WKHSHUVRQVZKRWHUPLQDWHG6PLWK
5LOH\$YLVHRU)RUG³μ>6@WDWHPHQWVE\QRQGHFLVLRQPDNHUV
>FDQQRW@VXIILFHWRVDWLVI\WKHSODLQWLII¶VEXUGHQ¶RI
GHPRQVWUDWLQJDQLPXV´%XVKY'LFWDSKRQH&RUS)G
WK &LU TXRWLQJ 3ULFH :DWHUKRXVH Y
+RSNLQV 86 2¶&RQQRU -
FRQFXUULQJ 0F'RQDOGY8QLRQ&DPS&RUS)G
WK &LU KROGLQJ WKDW VWDWHPHQWV RI
LQWHUPHGLDWHOHYHOPDQDJHPHQWRIILFLDOVZHUHQRWLQGLFDWLYH
RIGLVFULPLQDWLRQZKHQWKHXOWLPDWHGHFLVLRQWRGLVFKDUJHLV
PDGHE\DQXSSHUOHYHORIILFLDO :LOVRQY6WURK&RV,QF
)G WK&LU KROGLQJWKDWUDFLDO
DQLPXVE\SODQWPDQDJHUFRXOGQRWEHLPSXWHGWRXSSHUOHYHO
PDQDJHUZKRPDGHGHFLVLRQWRWHUPLQDWHDEVHQWSURRIRID
FRQQHFWLRQ FI7DOOH\Y%UDYR3LWLQR5HVWDXUDQW/WG
)G WK&LU KROGLQJWKDWUHSHDWHGUDFLDO
VOXUV E\ WZR RZQHUV FRQVWLWXWHG GLUHFW HYLGHQFH WKDW WKH
SODLQWLII¶VWHUPLQDWLRQPLJKWKDYHEHHQUDFLDOO\PRWLYDWHG
1R 6PLWKY/HJJHWW:LUH&RHWDO
BBBBBBBBBBBBBBBBB
',66(17
BBBBBBBBBBBBBBBBB
%2<&()0$57,1-5&KLHI-XGJHGLVVHQWLQJ:H
KDYHKHUHWKHTXHVWLRQRIZKHWKHU6PLWKSURYLGHGVXIILFLHQW
HYLGHQFHWRVXSSRUWWKHMXU\¶VILQGLQJWKDWDUDFLDOO\KRVWLOH
ZRUNHQYLURQPHQWZDVSUHVHQWDWWKHSODQWDQGWKDWUDFHZDV
D VXEVWDQWLDOO\ PRWLYDWLQJ IDFWRU LQ $GFRP¶V GHFLVLRQ WR
WHUPLQDWH6PLWK7KHPDMRULW\KROGVWKDWVXFKHYLGHQFHRI
UDFLVPLIH[DPLQHGXQGHUWKH6XSUHPH&RXUW¶V³WRWDOLW\RI
WKHFLUFXPVWDQFHV´WHVWHVWDEOLVKHGLQ+DUULVY)RUNOLIW6\V
,QF86 ZDVQRWVXIILFLHQWWRRYHUFRPH
$GFRP¶VSRVWYHUGLFWPRWLRQIRUMXGJHPHQWDVDPDWWHURI
ODZ ,Q DGGLWLRQ WKH PDMRULW\ FRQFOXGHV WKDW 6PLWK¶V
VWDWHPHQWWKDW³KHZDVJRLQJWRNLOODEXQFKRI0)HUV´
FRQVWLWXWHGDOHJLWLPDWHQRQGLVFULPLQDWRU\UHDVRQIRUILULQJ
KLPDQGWKDW6PLWKIDLOHGWRHVWDEOLVKWKDWWKLVUHDVRQZDV
SUHWH[WXDO,PXVWUHVSHFWIXOO\GLVVHQW
,
,Q+DUULVWKH6XSUHPH&RXUWKHOGWKDWFRXUWVUHYLHZLQJD
KRVWLOHZRUNHQYLURQPHQWFODLPVKRXOGFRQVLGHU³DOORIWKH
FLUFXPVWDQFHV´ LQFOXGLQJ WKH ³IUHTXHQF\ RI WKH
GLVFULPLQDWRU\FRQGXFWLWVVHYHULW\ZKHWKHULWLVSK\VLFDOO\
WKUHDWHQLQJRUKXPLOLDWLQJRUDPHUHRIIHQVLYHXWWHUDQFHDQG
ZKHWKHU LW XQUHDVRQDEO\ LQWHUIHUHV ZLWK DQ HPSOR\HH¶V
SHUIRUPDQFH´ $FFRUGLQJ WR WKH &RXUW ³WKH FRQGXFW LQ
TXHVWLRQ PXVW EH VHYHUH RU SHUYDVLYH HQRXJK WR FUHDWH DQ
HQYLURQPHQWWKDWDUHDVRQDEOHSHUVRQZRXOGILQGKRVWLOHRU
DEXVLYH DQG WKH YLFWLP PXVW VXEMHFWLYHO\ UHJDUG WKDW
HQYLURQPHQW DV DEXVLYH´ ,G DW 0RUHRYHU WKH
SODLQWLII PXVW DOVR SURYH WKDW KLV HPSOR\HU ³WROHUDWHG RU
FRQGRQHGWKHVLWXDWLRQ´RUNQHZRUVKRXOGKDYHNQRZQRIWKH
DOOHJHGFRQGXFWDQGGLGQRWKLQJWRFRUUHFWWKHVLWXDWLRQ6HH
-DFNVRQY4XDQH[&RUS)G WK&LU
7KH6XSUHPH&RXUWLQ+DUULVDFNQRZOHGJHGWKDWGHWHUPLQLQJ

-- 8 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
,,,
*LYHQ WKLV RXWFRPH 'HIHQGDQWV¶ UHPDLQLQJ FODLPV
UHJDUGLQJDWWRUQH\¶VIHHVDQGFRUSRUDWHLQWHUUHODWLRQVKLSDUH
PRRW
,9
)RUWKHIRUHJRLQJUHDVRQVWKHGLVWULFWFRXUW¶VMXGJPHQWLQ
IDYRURI6PLWKLV5(9(56('DQGMXGJPHQWDVDPDWWHURI
ODZLVHQWHUHGIRU'HIHQGDQWV
1R 6PLWKY/HJJHWW:LUH&RHWDO
)XUWKHUWKHVWUD\FRPPHQWVZHUHPDGHORQJEHIRUH6PLWK¶V
WHUPLQDWLRQ6HH3KHOSVY<DOH6HFXULW\,QF)G
WK&LU VHHDOVR5XVVHOOY$FPH(YDQV&R
)G WK&LU KROGLQJWKDWWKUHDWWRVKRYHD
VKRWJXQXSWKHSODLQWLII¶V³EODFNDVV´PDGHILIWHHQ\HDUVSULRU
WR WHUPLQDWLRQ GHFLVLRQ ZDV ³WRR WHQXRXVO\ UHODWHG WR WKH
DOOHJHGGLVFULPLQDWRU\DFWLRQE\VXSHUYLVRUVPDQ\\HDUVODWHU´
WR FUHDWH DQ LQIHUHQFH RI GLVFULPLQDWLRQ 7KXV WKH VWUD\
UHPDUNVZHUHQRWUHOHYDQW6HH(UFHJRYLFKY*RRG\HDU7LUH
5XEEHU &R )G WK &LU ³,Q
DVVHVVLQJWKHUHOHYDQF\RIDGLVFULPLQDWRU\UHPDUNZHORRN
ILUVWDWWKHLGHQWLW\RIWKHVSHDNHU$QLVRODWHGGLVFULPLQDWRU\
UHPDUNPDGHE\RQHZLWKQRPDQDJHULDODXWKRULW\RYHUWKH
FKDOOHQJHGSHUVRQQHOGHFLVLRQVLVQRWFRQVLGHUHGLQGLFDWLYHRI
GLVFULPLQDWLRQ´ FI5RELQVRQY5XQ\RQ)G
WK &LU KROGLQJ WKDW HYLGHQFH VKRZLQJ WKDW
FRHPSOR\HHV FLUFXODWHG D IDNH HPSOR\PHQW DSSOLFDWLRQ
LQFRUSRUDWLQJ UDFLDO VWHUHRW\SHV ZDV UHOHYDQW ZKHUH WKH
SODLQWLII VKRZHG WKDW XSSHU PDQDJHPHQW NQHZ RI WKH
DSSOLFDWLRQEXWGLGQRWFRQGHPQLW
1RUFDQZHVD\WKDWWKHHUURUZDVKDUPOHVV7KHGHURJDWRU\
DQGJUDSKLFUDFLDOFRPPHQWVLQWKLVFDVHDUHWKH³VPRNLQJ
JXQ´W\SHHYLGHQFHWKDWDGGHGDQ³HPRWLRQDOHOHPHQW´DVD
EDVLVIRUDYHUGLFW6HH6FKUDQGY)HGHUDO3DFLILF(OHF&R
)G WK&LU DJHUHODWHGFRPPHQWVE\
QRQGHFLVLRQPDNHUV ZDV QRW UHOHYDQW ³HPEHOOLVKHG WKH
FLUFXPVWDQWLDO HYLGHQFH GLUHFWHG WR WKDW LVVXH E\ DGGLQJ
μVPRNLQJ JXQ¶ W\SH HYLGHQFH´ DQG ³RIIHUHG DQ HPRWLRQDO
HOHPHQWWKDWZDVRWKHUZLVHODFNLQJDVDEDVLVIRUDYHUGLFW´
IRU WKH SODLQWLII 7KH GLVWULFW FRXUW FRPPLWWHG UHYHUVLEOH
HUURU LQ DGPLWWLQJ WKH HYLGHQFH 6HH LG )G DW
KROGLQJWKDWGLVWULFWFRXUWFRPPLWWHGFOHDUHUURULQDGPLWWLQJ
³WRRROG´VWDWHPHQWVZDUUDQWLQJUHYHUVDO

6PLWKDOVRFODLPVWKDWWKHGLVFULPLQDWRU\UHPDUNVYLHZHG
FROOHFWLYHO\ HVWDEOLVK WKDW 'HIHQGDQWV WROHUDWHG D UDFLDOO\

-- 9 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
7KH GLVWULFW FRXUW JUDQWHG MXGJPHQW DV D PDWWHU RI ODZ RQ 6PLWK¶V
SDWWHUQ RU SUDFWLFH GLVFULPLQDWLRQ FODLP 6PLWK GRHV QRW FKDOOHQJH WKDW
UXOLQJ RQ DSSHDO 5DWKHU RQ DSSHDO KH DUJXHV WKDW WKH DOOHJHG UDFLDOO\
KRVWLOH DWPRVSKHUH LV SURSHU FLUFXPVWDQWLDO HYLGHQFH WKDW WKH SURIIHUHG
UHDVRQ GLG QRW DFWXDOO\ PRWLYDWH KLV GLVFKDUJH :H WKHUHIRUH HYDOXDWH WKLV
HYLGHQFH XQGHU WKH VHFRQG 0DQ]HU SURQJ
KRVWLOHDWPRVSKHUH,QRUGHUWRHVWDEOLVKDUDFLDOO\KRVWLOH
ZRUNHQYLURQPHQWXQGHU7LWOH9,,WKHSODLQWLIIPXVWVKRZ
WKDWWKHFRQGXFWLQTXHVWLRQZDVVHYHUHRUSHUYDVLYHHQRXJK
WRFUHDWHDQHQYLURQPHQWWKDWDUHDVRQDEOHSHUVRQZRXOGILQG
KRVWLOHRUDEXVLYHDQGWKDWWKHYLFWLPVXEMHFWLYHO\UHJDUGHG
LWDVDEXVLYH6HH-DFNVRQY4XDQH[&RUS)G
WK&LU VHHDOVR%XUQHWWY7\FR&RUS)G
1R:/DW WK&LU)HE
7KH SODLQWLII PXVW DOVR SURYH WKDW KLV HPSOR\HU
³WROHUDWHGRUFRQGRQHGWKHVLWXDWLRQ´RUNQHZRUVKRXOGKDYH
NQRZQRIWKHDOOHJHGFRQGXFWDQGGLGQRWKLQJWRFRUUHFWWKH
VLWXDWLRQ6HH-DFNVRQ)GDW
6PLWK¶VHYLGHQFH±DUDFLDOVOXULQE\DQXQNQRZQ
FRZRUNHU D UDFLDOO\ RIIHQVLYH DQG REVFHQH FDUWRRQ SDVVHG
DURXQGLQWKHODWH VRUHDUO\ VE\RQHZKRZDVQRW
LQYROYHGLQ6PLWK¶VWHUPLQDWLRQGHFLVLRQ%REE\*X\¶VUDFLVW
MRNH VRPHWLPH DIWHU DQG VXSHUYLVRU 5RQQLH &XUU\¶V
UHIHUHQFHWRDEODFNHPSOR\HHDVD³JRULOOD´±LVVLPSO\QRW
³VHYHUHRUSHUYDVLYHHQRXJK´WRFUHDWHDQREMHFWLYHO\KRVWLOH
ZRUNHQYLURQPHQW5DFLDODQLPXVFDQQRWEHLQIHUUHGIURPD
KDQGIXORIGLVFULPLQDWRU\FRPPHQWVE\ORZOHYHOHPSOR\HHV
PRVWRIZKLFKZHUHQRWGLUHFWHGDW6PLWKRYHUDWZHQW\\HDU
VSDQRIWLPH6HH%XUQHWW:/DW KROGLQJ
WKDWWKHRFFXUUHQFHRIWKUHHVH[XDOO\RIIHQVLYHUHPDUNVE\WKH
SODLQWLII¶VSHUVRQQHOPDQDJHUVSUHDGRXWDWWKHEHJLQQLQJDQG
DW WKH HQG RI D VL[PRQWK SHULRG ZHUH QRW FRPPRQSODFH
RQJRLQJ RU FRQWLQXLQJ DQG WKHUHIRUH QRW SHUYDVLYH
GLVFULPLQDWRU\FRQGXFW %ODFNY=DULQJ+RPHV,QF
)G WK &LU UHYHUVLQJ D MXU\ YHUGLFW
DOWKRXJK WKH SODLQWLII DOOHJHG YDULRXV GLVFULPLQDWRU\
FRPPHQWV PDGH FRQVLVWHQWO\ RYHU D IRXUPRQWK SHULRG
EHFDXVHYLHZHGXQGHUWKHWRWDOLW\RIWKHFLUFXPVWDQFHVWKH
1R 6PLWKY/HJJHWW:LUH&RHWDO
RWKHU $GFRP HPSOR\HHV LW ZDV GLVFRYHUHG E\ D FOHDQLQJ
SHUVRQ /XW] JDYH WKH KDQGJXQ WR 5HHG¶V ZLIH ZKR DOVR
ZRUNHGDWWKHSODQW DQGWROGKHUWRWHOO5HHGQRWWREULQJLW
EDFN DJDLQ /XW] WHVWLILHG WKDW EHFDXVH QR RQH ZDV
WKUHDWHQHGDWWKHSODQWKHGHFLGHGWRNHHSWKHPDWWHU³ORZ
NH\´DQGQRWUHSRUWLWWRWKHFRUSRUDWHRIILFH+RSSHULQYLWHG
KLV VXSHUYLVRU %LOO *ULPHV WR PHHW KLP RII SURSHUW\
SUHVXPDEO\WRILJKW/XW]GHFLGHGWRJLYH+RSSHUPHUHO\D
YHUEDOZDUQLQJEHFDXVHKHIHOW³XQGHUWKHFLUFXPVWDQFHVKH
GLGQ¶W GR DQ\ GDPDJH´ $OWKRXJK %DQWD VWXFN D SDLU RI
KHDWHGSOLHUVRQDFRZRUNHUVQHFN)RUGJDYHPHUHO\DYHUEDO
ZDUQLQJ EHFDXVH WKH HPSOR\HHV ZHUH ³KRUVHSOD\LQJ´ DQG
)RUG IHOW WKDW %DQWD ³GLGQ¶W LQWHQWLRQDOO\ PHDQ WR KXUW
VRPHRQH´
,QVKRUWQHLWKHU5HHG+RSSHURU%DQWDWKUHDWHQHGUDQGRP
SODQWZLGHYLROHQFH)XUWKHUPRUHLWLVLQDSSURSULDWHIRUWKH
MXGLFLDU\WRVXEVWLWXWHLWVMXGJPHQWIRUWKDWRIPDQDJHPHQW
6HH.UHQLNY&RXQW\RI/H6XHXU)G WK&LU
KROGLQJ WKDW FRXUW FDQQRW VLW DV D ³VXSHUSHUVRQQHO
GHSDUWPHQW´ (OURGY6HDUV5RHEXFN &R)G
WK&LU VDPH VHHDOVR0DQ]HU)GDW
KROGLQJ WKDW ³μMXVWFDXVH¶ DUJXPHQWV PXVW QRW EH
DOORZHG WR FUHHS LQWR DQ HPSOR\PHQW GLVFULPLQDWLRQ
ODZVXLW´ 6PLWK IDLOHG WR VKRZ WKDW KH ZDV WUHDWHG
GLIIHUHQWO\WKDQVLPLODUO\VLWXDWHGQRQPLQRULW\HPSOR\HHV
7KHGLVWULFWFRXUWHUUHGLQDGPLWWLQJWKLVHYLGHQFH
,Q VXP WKHUH ZDV LQVXIILFLHQW HYLGHQFH WR ILQG WKDW
'HIHQGDQWVSURIIHUHGUHDVRQIRUILULQJ6PLWKZDVSUHWH[WXDO
*LYHQWKH³FRPSOHWHDEVHQFHRISURRI´RQWKHPDWHULDOLVVXH
RIUDFLDODQLPXVLQWKLVFDVHWKHGLVWULFWFRXUWVKRXOGKDYH
JUDQWHG'HIHQGDQWV¶PRWLRQIRUMXGJPHQWDVDPDWWHURIODZ
)XUWKHUPRUH EHFDXVH WKH UHPDLQLQJ SURSHUO\ DGPLWWHG
HYLGHQFHLVLQVXIILFLHQWWRVKRXOGHU6PLWK¶VEXUGHQRISURRI
ZHQRZGLUHFWDQHQWU\RIMXGJPHQWDVDPDWWHURIODZIRU
'HIHQGDQWV 6HH :HLVJUDP Y 0DUOH\ &R ± 86 ±
86/::/DW )HEUXDU\

-- 10 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
HPSOR\HU¶VWUHDWPHQWRIWKHPIRULW´(UFHJRYLFK)G
DW TXRWLQJ0LWFKHOOY7ROHGR+RVS)G
WK&LU ([DFWFRUUHODWLRQLVQRWUHTXLUHGKRZHYHU
6HHLG5DWKHU³WKHSODLQWLIIDQGWKHHPSOR\HHZLWKZKRP
WKH SODLQWLII VHHNV WR FRPSDUH KLPVHOI RU KHUVHOI PXVW EH
VLPLODULQμDOORIWKHUHOHYDQWDVSHFWV¶´(UFHJRYLFK)G
DW TXRWLQJ3LHUFHY&RPPRQZHDOWK/LIH,QV&R
)G WK&LU VHHDOVR+DUULVRQY0HWUR
*RYHUQPHQW)G WK&LU QRWLQJWKDW
³SUHFLVHHTXLYDOHQFHLQFXOSDELOLW\EHWZHHQHPSOR\HHV´LVQRW
UHTXLUHG ZKHQ FRPSDULQJ VLPLODUO\ VLWXDWHG QRQPLQRULW\
HPSOR\HHV
$V HYLGHQFH RI GLVSDUDWH WUHDWPHQW 6PLWK DWWHPSWHG WR
FRPSDUHKLPVHOIWRFRZRUNHUV5HHG+RSSHUDQG%DQWD7KH
FRPSDULVRQV DUH LQDSW KRZHYHU EHFDXVH 6PLWK ZDV
GLVFLSOLQHG E\ D GLIIHUHQW GHFLVLRQPDNHU DQG HQJDJHG LQ
GLIIHUHQW FRQGXFW WKDQ 5HHG +RSSHU DQG %DQWD 6HH
(UFHJRYLFK)GDW0LWFKHOO)GDW
5HHG%DQWDDQG+RSSHUZHUHQRW³VLPLODUO\VLWXDWHG´DVD
PDWWHURIODZ5LOH\ZKRPDGHWKHGHFLVLRQWRILUH6PLWK
GLGQRWGHWHUPLQHWKHLUGLVFLSOLQH5DOSK/XW]ZKRZDVSODQW
PDQDJHUIRUDWLPHGLVFLSOLQHG5HHGDQG+RSSHU$OWKRXJK
5LOH\VLJQHG+RSSHU¶VGLVFLSOLQDU\IRUPLWZDVXQGLVSXWHG
WKDW 5LOH\ UHIHUUHG WKH PDWWHU WR /XW] DQG WKDW /XW]
GHWHUPLQHGWKHSXQLVKPHQW/XW]ZDVQRWHYHQHPSOR\HGDW
$GFRPZKHQ5LOH\WHUPLQDWHG6PLWK)RUGQRW5LOH\PDGH
WKHGHFLVLRQWRJLYH%DQWDDYHUEDOZDUQLQJ
6PLWK¶VFRQGXFWLVDOVRGLVVLPLODUWR5HHG¶V+RSSHU¶VDQG
%DQWD¶V5LOH\WHVWLILHGWKDWKHWHUPLQDWHG6PLWKEHFDXVHRI
KLVWKUHDWWR³EORZDZD\VRPH0)HUV´LIKLVLQFHQWLYHSD\
ZDVQRWLQFUHDVHG5LOH\WHVWLILHGWKDWDVSODQWPDQDJHUKH
ZDV FRQFHUQHG DERXW SODQW VDIHW\ 7KLV LV FOHDUO\ D
³PLWLJDWLQJFLUFXPVWDQFH´WKDWSUHYHQWVDQ\FRPSDULVRQZLWK
5HHG¶V+RSSHU¶VDQG%DQWD¶VVLJQLILFDQWO\OHVVWKUHDWHQLQJ
FRQGXFW DV GHWHUPLQHG E\ 'HIHQGDQWV 5HHG EURXJKW D
KDQGJXQ WR ZRUN WR SURWHFW KLPVHOI DJDLQVW WKUHDWV IURP D
IRUPHU$GFRPHPSOR\HH5HHGGLGQRWVKRZWKHJXQWRDQ\
1R 6PLWKY/HJJHWW:LUH&RHWDO
FRPPHQWVZHUHPHUHO\RIIHQVLYHDQGPRVWZHUHQRWGLUHFWHG
DW WKH SODLQWLII &I -DFNVRQ )G DW ILQGLQJ D
UDFLDOO\KRVWLOHZRUNHQYLURQPHQWZKHUHSODLQWLIIHVWDEOLVKHG
SHUVLVWHQWUDFLDOVOXUVDQGJUDIILWLDV³FRQYHQWLRQDOFRQGLWLRQV
RQWKHIDFWRU\IORRU´ :LOOLDPVY*HQHUDO0RWRU&RUS
)G WK &LU KROGLQJ WKDW ILIWHHQ
VHSDUDWHDOOHJDWLRQVRISHUVLVWHQWIRXOODQJXDJHDQGVH[XDOO\
H[SOLFLW FRPPHQWV GLUHFWHG DW WKH SODLQWLII WKUHH RI ZKLFK
LQYROYHG DQ ³HOHPHQW RI SK\VLFDO LQYDVLRQ´ RIIHQVLYH
FRPPHQWVWRZDUGVZRPHQLQJHQHUDOGHQLDORIWKHSODLQWLII¶V
RYHUWLPHYLHZHGFROOHFWLYHO\FUHDWHGLVVXHRIIDFWWKDWWKH
SODLQWLIIZDVVXEMHFWWRDVH[XDOO\KRVWLOHZRUNHQYLURQPHQW
$EHLWDY7UDQVDPHULFD0DLOLQJV)G WK&LU
KROGLQJ WKDW WKH SODLQWLII¶V DOOHJDWLRQV RI VH[XDOO\
RIIHQVLYH VWDWHPHQWV WKDW ZHUH FRPPRQSODFH DQG RQJRLQJ
RYHUDSHULRGRIVHYHQ\HDUVFRXSOHGZLWKGDLO\VWDWHPHQWVE\
WKHSUHVLGHQWRIWKHFRPSDQ\ZLWKZKRPWKHSODLQWLIIZRUNHG
FORVHO\ DERXW KLV VH[XDO LQWHUHVW LQ IHPDOH HPSOR\HHV DQG
PRGHOV FUHDWHG IDFW TXHVWLRQ RI VH[XDOO\ KRVWLOH ZRUN
HQYLURQPHQW (UFHJRYLFK )G DW KROGLQJ WKDW
LVRODWHGFRPPHQWE\VHQLRURIILFLDO³HYLGHQFLQJPDQDJHULDO
SROLF\´ ZKHQ FRXSOHG ZLWK QXPHURXV GLVFULPLQDWRU\
FRPPHQWV E\ LQGLYLGXDOV RFFXS\LQJ KLJK SRVLWLRQV PLJKW
³UHIOHFW D FXPXODWLYH PDQDJHULDO DWWLWXGH DPRQJ WKH
GHIHQGDQWHPSOR\HU¶V PDQDJHUV WKDW KDV LQIOXHQFHG WKH
GHFLVLRQPDNLQJSURFHVVIRUDFRQVLGHUDEOHWLPH´
1RULVWKHUHDQ\SURRIGLUHFWRULQGLUHFWWKDW'HIHQGDQWV
³WROHUDWHGRUFRQGRQHG´WKHUDFLDOKDUDVVPHQW6HH-DFNVRQ
)GDW:LWKRQHH[FHSWLRQLWZDVXQGLVSXWHGWKDW
5LOH\ )RUG DQG $YLVH ZHUH QRW DZDUH RI WKH DOOHJHG
LQFLGHQWV6PLWKWHVWLILHGVLPSO\WKDWKHFRPSODLQHGWRD
VXSHUYLVRUDERXWDUDFLDOFRPPHQWRQO\RQFH5LOH\WHVWLILHG
ZLWKRXWFRQWUDGLFWLRQWKDWDIWHU6PLWKVSRNHWRKLP5LOH\
ZDUQHGWKHHPSOR\HHWKDWKHZRXOGEHGLVFLSOLQHGSRVVLEO\
WHUPLQDWHGIRUDQ\IXUWKHUUDFLDOFRPPHQWV6PLWK¶VYDJXH
DVVHUWLRQWKDWWKHUHZDVDJHQHUDODWWLWXGHRIGLVFULPLQDWLRQDW
$GFRP LV LQVXIILFLHQW WR HVWDEOLVK SUHWH[W 6HH :L[VRQ Y
'RZDJLDF1XUVLQJ+RPH)G WK&LU
KROGLQJWKDWWKHSODLQWLIIVIDLOHGWRFUHDWHLVVXHRIIDFW E\

-- 11 of 12 --

6PLWKY/HJJHWW:LUH&RHWDO 1R
DOOHJLQJQXPHURXVLQVWDQFHVRIGLVSDUDWHWUHDWPHQWDQGKRVWLOH
ZRUNHQYLURQPHQWLQFRQFOXVRU\WHUPVZLWKQRUHIHUHQFHWR
QDPHVWLPHVRFFDVLRQV 7KXVDEVHQWSURRIWKDW'HIHQGDQWV
FRQGRQHGVHYHUHRUSHUYDVLYHUDFLDOKDUDVVPHQW6PLWKIDLOHG
WR VKRZ GLVFULPLQDWLRQ EDVHG RQ D UDFLDOO\ KRVWLOH ZRUN
HQYLURQPHQW&I(UFHJRYLFK)GDW KROGLQJWKDW
QXPHURXVDJHUHODWHGVWDWHPHQWVE\PDQDJHPHQWUHIOHFWHGD
FRUSRUDWHPLQGVHWRUGLVFULPLQDWRU\DWPRVSKHUH

2YHU 'HIHQGDQWV¶ REMHFWLRQV 6PLWK DOVR LQWURGXFHG
VWDWLVWLFVUHODWLQJWRWKHSHUFHQWDJHRIPLQRULW\VXSHUYLVRUVDW
$GFRP DQG DW /HJJHWW¶V RWKHU .HQWXFN\ IDFLOLWLHV LQ
/HLWFKILHOG6LPSVRQYLOOHDQG:LQFKHVWHUWRVKRZSUHWH[W
XQGHUWKHVHFRQG0DQ]HUSURQJ$GPLVVLRQRIWKLVHYLGHQFH
ZDV OLNHZLVH HUURQHRXV DQG QRW KDUPOHVV )LUVW 6PLWK¶V
VWDWLVWLFVZHUHQRWDGPLVVLEOHEHFDXVHKHGLGQRWHVWDEOLVKWKH
QXPEHURITXDOLILHGPLQRULWLHVDYDLODEOHLQHDFKODERUPDUNHW
6HH:DUGV&RYH3DFNLQJ&RY$WRQLR86
*LEVRQY)UDQN)G WK&LU
KROGLQJ WKDW WKH SODLQWLII IDLOHG WR VKRZ GLVFULPLQDWLRQ
EHFDXVH KH GLG QRW GHPRQVWUDWH WKH SURSRUWLRQ RI EODFNV
TXDOLILHGIRUWKHSRVLWLRQ 6LPSVRQY0LGODQG5RVV&RUS
)G WK &LU HPSOR\HH VWDWLVWLFV
XQDFFRPSDQLHG E\ HYLGHQFH UHJDUGLQJ TXDOLILHG SRWHQWLDO
IURP WKH UHOHYDQW ³HPSOR\HH VWDWLVWLFV XQDFFRPSDQLHG E\
HYLGHQFH UHJDUGLQJ TXDOLILHG SRWHQWLDO DSSOLFDQWV IURP WKH
UHOHYDQWODERUPDUNHW´ODFNSUREDWLYHYDOXH )XUWKHUPRUH
WKHVWDWLVWLFVUHODWLQJWRWKHSHUFHQWDJHRIPLQRULW\VXSHUYLVRUV
DW $GFRP DQG RWKHU /HJJHWW 3ODWW IDFLOLWLHV ZHUH QRW
UHOHYDQW WR WKH LVVXH RI ZKHWKHU $GFRP WHUPLQDWHG 6PLWK
EHFDXVHRIKLVUDFH6HH.LHUY&RPPHUFLDO8QLRQ,QV&RV
)G WK&LU KROGLQJWKDWVWDWLVWLFDO
HYLGHQFH UHODWLQJ WR WKH HPSOR\HU¶V KLULQJ SUDFWLFHV LV
LUUHOHYDQWLQGLVFULPLQDWRU\GLVFKDUJHFDVH %R[Y$ 37HD
&R )G WK &LU VWDWLVWLFV
VKRZLQJWKDWWKHHPSOR\HUIDYRUHGPHQLQSURPRWLRQVKDG
OLWWOH UHOHYDQFH WR FODLP WKDW WKH HPSOR\HU GLVFULPLQDWHG
EHFDXVH RI VH[ LQ GLVFLSOLQH 6PLWK¶V VWDWLVWLFV ODFNHG
1R 6PLWKY/HJJHWW:LUH&RHWDO
SUREDWLYHYDOXHDQGFRXOGQRWVXSSRUWDMXU\YHUGLFWRQWKH
XOWLPDWHTXHVWLRQRIGLVFULPLQDWLRQ

6PLWKDOVRFRQWHQGVWKDWWKHMXU\FRXOGKDYHLQIHUUHGUDFLDO
DQLPXVIURP'HIHQGDQWV¶SXUSRUWHGODFNRIIHDUWR6PLWK¶V
WKUHDW:HQRWHWKDWERWK*X\DQG)RUGWHVWLILHGWKDWWKH\
ZHUHDIUDLGRI6PLWKDIWHUKHPDGHWKHWKUHDW,QDQ\HYHQW
WKHLVVXHEHIRUHXVLVQRWZKHWKHU'HIHQGDQWVH[HUFLVHGJRRG
MXGJPHQW LQ ILULQJ 6PLWK EXW PHUHO\ ZKHWKHU WKH\ GLG VR
EHFDXVHRIDQLOOLFLWPRWLYH6HH0DQ]HU)GDW
$EVHQWVRPHHYLGHQFHRIUDFLDOGLVFULPLQDWLRQ6PLWKIDLOHG
WRPHHWKLVEXUGHQ
6PLWK¶VVXJJHVWLRQWKDW$GFRP¶VIDLOXUHWRSURPRWHKLPWR
WKHSRVLWLRQRISURGXFWLRQVXSHUYLVRULVDOVRLQVXIILFLHQWWR
FDUU\KLVEXUGHQ)LUVWWKHGLVWULFWFRXUWJUDQWHGMXGJPHQWDV
D PDWWHU RI ODZ DV WR 6PLWK¶V IDLOXUH WR SURPRWH FODLP
)XUWKHUWKHMXU\FRXOGQRWUHDVRQDEO\FRQFOXGHWKDW6PLWK
ZDVILUHGEDVHGXSRQWKHIDFWWKDW6PLWKZDVQRWSURPRWHGWR
WKH SRVLWLRQ RI IDFLOLWDWRU ILYH \HDUV HDUOLHU )LQDOO\ WKH
DOOHJHGO\ IDOVH VWDWHPHQW FRQFHUQLQJ WKH QHHG IRU D KLJK
VFKRROGLSORPDZDVQRWUHOHYDQWEHFDXVHLWZDVPDGHQLQH
\HDUVEHIRUH6PLWK¶VWHUPLQDWLRQ
&
6PLWKDOVRWULHGWRHVWDEOLVKSUHWH[WXQGHUWKHWKLUG0DQ]HU
SURQJE\GHPRQVWUDWLQJWKDWKHZDVWUHDWHGGLIIHUHQWO\WKDQ
VLPLODUO\VLWXDWHGHPSOR\HHV7KLVW\SHRIHYLGHQFH³FRQVLVWV
RIHYLGHQFHWKDWRWKHUHPSOR\HHVSDUWLFXODUO\HPSOR\HHVQRW
LQ WKH SURWHFWHG FODVV ZHUH QRW ILUHG HYHQ WKRXJK WKH\
HQJDJHGLQVXEVWDQWLDOO\LGHQWLFDOFRQGXFWWRWKDWZKLFKWKH
HPSOR\HUFRQWHQGVPRWLYDWHGLWVGLVFKDUJHRIWKHSODLQWLII´
0DQ]HU )G DW 7R EH VLPLODUO\ VLWXDWHG ³WKH
LQGLYLGXDOVZLWKZKRPWKHSODLQWLIIVHHNVWRFRPSDUHKLVKHU
WUHDWPHQW PXVW KDYH GHDOW ZLWK WKH VDPH VXSHUYLVRU KDYH
EHHQVXEMHFWWRWKHVDPHVWDQGDUGVDQGKDYHHQJDJHGLQWKH
VDPH FRQGXFW ZLWKRXW VXFK GLIIHUHQWLDWLQJ RU PLWLJDWLQJ
FLUFXPVWDQFHV WKDW ZRXOG GLVWLQJXLVK WKHLU FRQGXFW RU WKH

-- 12 of 12 --