02a0135p.06

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
FRPLFDOO\VPDOOWKHULJKWWRUHDGWKHSODLQWLII¶VRQHOHWWHU
ZH QRQHWKHOHVV KHOG E\ LPSOLFDWLRQ WKDW LW PD\
GLVSURSRUWLRQDWHO\EHQHILWWKHXQLRQPHPEHUVLIWKH\GLGQRW
KHOSIRRWWKHOHJDOELOO
$VWKHVHFDVHVGHPRQVWUDWHWKHSURSRUWLRQDOLW\RIEHQHILW
WR FRVW LQ DQ /05'$ DFWLRQ OLNH WKH DZDUG RI SXQLWLYH
GDPDJHVGRHVQRWDGPLWWRDQHDV\FDOFXOXV&I%0:RI1
$P ,QF Y *RUH 86 8OWLPDWHO\
SURSRUWLRQDOLW\LVLQHVFDSDEO\DIDFWLQWHQVLYHLQYHVWLJDWLRQ
3ODLQWLIIVZKRGHI\DSDUWLFXODUO\HJUHJLRXVDEXVHRISRZHU
WKURXJKDQ/05'$DFWLRQPD\FRQIHUDJUHDWHUEHQHILWXSRQ
WKDW XQLRQ¶V PHPEHUVKLS WKDQ D SODLQWLII ZKR EULQJV VXLW
DJDLQVW D OHVV HJUHJLRXV YLRODWRU 7KH FRPPRQ EHQHILW
H[FHSWLRQLVDQH[HUFLVHRIDFRXUW¶VHTXLWDEOHSRZHUV+DOO
86DWDQGOLNHDQ\HTXLWDEOHUHPHG\LWVSURSULHW\
ZLOOFKDQJHIURPFLUFXPVWDQFHWRFLUFXPVWDQFH6HH/XVVLHU
Y5XQ\RQ)G VW&LU QRWLQJWKDW
³WKH KDOOPDUNV RI HTXLW\ KDYH ORQJ EHHQ IOH[LELOLW\ DQG
SDUWLFXODULW\´
)RUWKDWUHDVRQ,EHOLHYHZHVKRXOGEHPRUHGHIHUHQWLDOWR
WKHWULDOFRXUWDQGVKRXOGGLVWXUEWKHGLVWULFWFRXUW¶VGHFLVLRQ
RQO\ ZKHUH WKH SURSRUWLRQ EHWZHHQ EHQHILW WR WKH XQLRQ
PHPEHUVDQGFRVWWRWKHSODLQWLIIVLVFOHDUO\XQVXSSRUWHGE\
WKHUHFRUG&I0XUUD\Y/DERUHUV8QLRQ/RFDO1R
)G Q WK &LU KROGLQJ WKDW WKH
TXHVWLRQRIZKHWKHUDSODLQWLIIKDVFRQIHUUHGD³VXEVWDQWLDO
EHQHILW´WRSHUPLWDZDUGRIDWWRUQH\IHHVLVUHYLHZHGIRUFOHDU
HUURU 7KHUHZDVFOHDUO\VXIILFLHQWHYLGHQFHLQWKLVFDVHIRU
WKH GLVWULFW FRXUW WR FRQFOXGH WKDW WKH XQLRQ KDG EHKDYHG
SDUWLFXODUO\EDGO\DQGWKDWWKHXQLRQPHPEHUV¶ULJKWVZHUH
VHULRXVO\MHRSDUGL]HG,WZDVWKHUHIRUHUDWLRQDOIRUWKHFRXUW
WRFRQFOXGHWKHXQLRQPHPEHUVVKRXOGSD\WKHLUSRUWLRQRIWKH
OLWLJDWLRQFRVWV)RUWKHVHUHDVRQV,UHVSHFWIXOO\GLVVHQW
7KH +RQRUDEOH &XUWLV / &ROOLHU 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU WKH
(DVWHUQ 'LVWULFW RI 7HQQHVVHH VLWWLQJ E\ GHVLJQDWLRQ

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
&+$5/(6 $5*(17,1( -2+1
*22&+ 526( $11 :,1*2
ILGXFLDU\IRUWKHHVWDWHRI
&/$5(1&( :,1*2
3ODLQWLIIV$SSHOOHHV
&URVV$SSHOODQWV
Y
81,7(' 67((/:25.(56 2)
$0(5,&$ $)/&,2 &/&
'HIHQGDQW$SSHOODQW
&URVV$SSHOOHH
;!

1
1RV

$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&ROXPEXV
1R²$OJHQRQ/0DUEOH\'LVWULFW-XGJH
$UJXHG1RYHPEHU
'HFLGHGDQG)LOHG$SULO
%HIRUH68+5+(,15,&+DQG&2/(&LUFXLW-XGJHV
&2//,(5'LVWULFW-XGJH

-- 1 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' $QGUHZ ' 5RWK %5('+2)) .$,6(5
:DVKLQJWRQ '& IRU $SSHOODQW ,UD - 0LUNLQ *5((1
+$,1(66*$0%$7,&203$1<<RXQJVWRZQ2KLRIRU
$SSHOOHHV21%5,()$QGUHZ'5RWK5REHUW$OH[DQGHU
%5('+2)) .$,6(5 :DVKLQJWRQ '& 6WHZDUW 5
-DII\ 67(:$57 -$))< $662&,$7(6 &ROXPEXV
2KLRIRU$SSHOODQW,UD-0LUNLQ%DUU\5/DLQH5REHUW6
0RRUH *5((1 +$,1(6 6*$0%$7, &203$1<
<RXQJVWRZQ2KLRIRU$SSHOOHHV
&2//,(5 ' - GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW LQ
ZKLFK68+5+(,15,&+-MRLQHG&2/(- SS
GHOLYHUHGDVHSDUDWHGLVVHQWLQJRSLQLRQ
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
&857,6 / &2//,(5 'LVWULFW -XGJH 'HIHQGDQW
$SSHOODQW 8QLWHG 6WHHOZRUNHUV RI $PHULFD ³86:$´
DSSHDOVMXGJPHQWIRU3ODLQWLIIV$SSHOOHHVRQWKHLUFODLPRI
XQODZIXO UHPRYDO IURP WKHLU ORFDO XQLRQ RIILFHV DQG
LPSRVLWLRQRIDWUXVWHHVKLSRQWKHLUORFDOXQLRQ/RFDO
3ODLQWLIIVFURVVDSSHDOWKHGHQLDORIWKHLUPRWLRQIRUVXPPDU\
MXGJPHQW )RU WKH UHDVRQV VWDWHG EHORZ ZH $)),50
MXGJPHQW IRU 3ODLQWLIIV EXW 5(9(56( WKH GLVWULFW FRXUW¶V
DZDUGRIDWWRUQH\IHHV)RUMXULVGLFWLRQDOUHDVRQVZHGRQRW
UHDFK3ODLQWLIIV¶FURVVDSSHDO
%$&.*5281'
'HIHQGDQW8QLWHG6WHHOZRUNHUVRI$PHULFD ³86:$´ LV
DQLQWHUQDWLRQDOODERUXQLRQZLWKORFDODIILOLDWHV2QHRIWKRVH
ORFDODIILOLDWHV/RFDOUHSUHVHQWVZRUNHUVDW7LWDQLXP
0HWDOV&RPSDQ\ ³7LPHW´ LQ7RURQWR2KLR
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

&RQIXVLQJO\ ZH ODWHU VWDWHG WKDW WKLV EHQHILW ZDV DOVR ³LQFLGHQWDO´
6KLPPDQ )G DW 7KH UHODWLRQVKLS EHWZHHQ WKHVH WHUPV LV QRW
DW DOO FOHDU IURP WKDW FDVH 3UHVXPDEO\ D SODLQWLII PD\ UHQGHU D
³VXEVWDQWLDO EHQHILW´ WR KLV XQLRQ PHPEHUVKLS E\ EULQJLQJ VXLW EXW LI WKDW
³VXEVWDQWLDO EHQHILW´ LV RQO\ ³LQFLGHQWDO´ WR WKH DFWLRQ IRU H[DPSOH E\
GHWHUULQJ IXWXUH EHKDYLRU WKDQ DQ\ UHVXOWLQJ FRPSHQVDWLRQ ZLOO QRW EH IRU
WKH ³FRPPRQ EHQHILW´ , EHOLHYH WKDW WR JHW RXW RI WKLV WKLFNHW RI WHUPV LW
LV EHWWHU WR IRFXV RQ ZKDW WKH 6KLPPDQ FRXUW IRXQG WR EH GLVSRVLWLYH ±
ZKHWKHU WKH SODLQWLIIV RU WKH XQLRQ PHPEHUV UHFHLYHG D EHQHILW RXW RI
SURSRUWLRQ WR WKH OLWLJDWLRQ FRVWV WKH\ LQFXUUHG
PRQHWDU\DZDUG)GDW7KHUDWLRQDOHZDVWKDW
WKHIHHDZDUGPXVW³RSHUDWHVRDVWRLPSRVHWKHEXUGHQLQ
SURSRUWLRQWRWKHEHQHILWVUHFHLYHG´,GDW
7KHFDWFKRIFRXUVHLVZKDWLVSURSRUWLRQDO"7KHXQVWDWHG
DVVXPSWLRQLQ6KLPPDQLVWKDWWKHXQLRQPHPEHUV¶7LWOH,
ULJKWVZHUHZRUWKVRPHWKLQJOHVVWKDQPLQXVWKH
SODLQWLII¶V FRVWV WR OLWLJDWH WKH FDVH 7KDW DVVXPSWLRQ LV
DGRSWHGE\WKHPDMRULW\GHFLVLRQLQWKLVFDVH(VVHQWLDOO\WKH
PDMRULW\DWWDFKHVDSULFHWDJWRWKHORFDOPHPEHUV¶ULJKWVDW
DURXQGKDOIRI3ODLQWLIIV¶WRWDOUHFRYHU\+RZHYHUQHLWKHU
WKH 6KLPPDQ FRXUW QRU WKH PDMRULW\ LQ WKLV FDVH RIIHU DQ\
UHDVRQ ZK\ ZH VKRXOG GLVFRXQW WKH XQLRQ PHPEHUV¶ IUHH
VSHHFKULJKWVE\WKHDPRXQWDQ\SDUWLFXODUSODLQWLIIUHFHLYHV
LQFRPSHQVDWRU\RUSXQLWLYHGDPDJHV
)XUWKHUPRUHWKHPDMRULW\¶VSURSRUWLRQDOLW\WHVWFDQQRWEH
VTXDUHGZLWKDQRWKHUFDVHIURPWKLV&LUFXLWFRLQFLGHQWDOO\
DOVR FDOOHG 6KLPPDQ ,Q 6KLPPDQ Y 0LOOHU D SODLQWLII
EURXJKW DQ /05'$ DFWLRQ VHHNLQJ EURDG PRQHWDU\ DQG
LQMXQFWLYHUHOLHIDJDLQVWKLVXQLRQDQGUHFHLYHGLQWKHHQG
RQO\WKHULJKWWRKDYHKLVRQHOHWWHUSULQWHGLQLWVHQWLUHW\LQ
D XQLRQ QHZVSDSHU )G WK &LU
1HYHUWKHOHVVZHUHPDQGHGWKDWFDVHWRWKHGLVWULFWFRXUWWR
FRQVLGHU DZDUGLQJ DWWRUQH\ IHHV EHFDXVH WKH SODLQWLII¶V
VXFFHVVKDG³UHQGHUHGDVXEVWDQWLDOVHUYLFHWRKLVXQLRQDVDQ
LQVWLWXWLRQDQGWRDOORILWVPHPEHUVE\YLQGLFDWLQJKLVRZQ
ULJKWRIIUHHVSHHFK´,GDW$OWKRXJKRQLWVIDFHWKH
EHQHILWWRWKHXQLRQPHPEHUVLQ6KLPPDQY0LOOHULVDOPRVW

-- 2 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
-$DW
7KHPDMRULW\FRQFHGHVWKDW3ODLQWLIIVLQYLQGLFDWLQJWKHLU
RZQIUHHVSHHFKULJKWV³EHQHILWWHGWKH/RFDODVDZKROH´
0DMRULW\DW7KLVSHUFHSWLRQLVIXOO\VXSSRUWHGE\+DOOY
&ROH
:KHQDXQLRQPHPEHULVGLVFLSOLQHGIRUWKHH[HUFLVHRI
DQ\ RI WKH ULJKWV SURWHFWHG E\ 7LWOH , WKH ULJKWV RI DOO
PHPEHUVRIWKHXQLRQDUHWKUHDWHQHG$QGE\YLQGLFDWLQJ
KLVRZQULJKWWKHVXFFHVVIXOOLWLJDQWGLVSHOVWKH³FKLOO´
FDVWXSRQWKHULJKWVRIRWKHUV,QGHHGWRWKHH[WHQWWKDW
VXFK ODZVXLWV FRQWULEXWH WR WKH SUHVHUYDWLRQ RI XQLRQ
GHPRFUDF\WKH\IUHTXHQWO\SURYHEHQHILFLDOQRWRQO\LQ
WKHLPPHGLDWHLPSDFWRIWKHUHVXOWVDFKLHYHGEXWLQWKHLU
LPSOLFDWLRQVIRUWKHIXWXUHFRQGXFWRIWKHXQLRQ¶VDIIDLUV
86 LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQ
RPLWWHG
1HYHUWKHOHVVWKHPDMRULW\GHQLHV3ODLQWLIIVDWWRUQH\IHHV
EHFDXVH³WKHORFDOXQLRQLVQRWEHQHILWWLQJIURPWKHHIIRUWVRI
WKHVXFFHVVIXO3ODLQWLIIVLQWKHVDPHZD\DVWKH3ODLQWLIIVDQG
VRZRXOGQRWEHXQMXVWO\HQULFKHGDWWKH3ODLQWLIIV¶H[SHQVHLI
WKH\ GLG QRW HTXDOO\ FRQWULEXWH WR WKH OLWLJDWLRQ H[SHQVH´
0DMRULW\ DW 7KH PDMRULW\¶V UHDVRQLQJ LV VRPHZKDW
HOOLSWLFDOEXWDSSHDUVWRUHVWRQWKHSUHPLVHWKDWZKDWHYHU
EHQHILWWKHORFDOPD\KDYHUHFHLYHGE\3ODLQWLIIV¶YLFDULRXV
SURWHFWLRQ RI LWV IUHH VSHHFK ULJKWV LV QRW SURSRUWLRQDO WR
3ODLQWLIIV¶ FRPSHQVDWRU\ DQG SXQLWLYH GDPDJH DZDUG WR
ZKLFKWKHORFDOFDQFODLPQRVKDUH6HH6KLPPDQ Y ,QW¶O
8QLRQRI2SHUDWLQJ(QJ¶UV/RFDO)G
WK&LU HQEDQF
,Q6KLPPDQY,QW¶O8QLRQRI2SHUDWLQJ(QJ¶UV/RFDO
ZH KHOG WKDW D SODLQWLII ZKR UHFHLYHG RYHU LQ
FRPSHQVDWRU\DQGSXQLWLYHGDPDJHVLQDQ/05'$FDVHPD\
KDYH³UHQGHUHGDVXEVWDQWLDOEHQHILW´WRWKHXQLRQPHPEHUVE\
YLQGLFDWLQJIUHHVSHHFKULJKWVEXWGLGQRWUHQGHUD³FRPPRQ
EHQHILW´EHFDXVHWKHXQLRQPHPEHUVFRXOGQRWSDUWDNHRIWKH
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

7KH :$51 $FW SURYLGHV ³$Q HPSOR\HU VKDOO QRW RUGHU D SODQW
FORVLQJ RU PDVV OD\RII XQWLO WKH HQG RI D GD\ SHULRG DIWHU WKH HPSOR\HU
VHUYHV ZULWWHQ QRWLFH RI VXFK DQ RUGHU´ 86& † D
86:$LVWKHFROOHFWLYHEDUJDLQLQJUHSUHVHQWDWLYHIRUWKH
XQLRQL]HGHPSOR\HHVDW7LPHW7KHSUDFWLFHRI86:$LVWR
ZRUN RXW D WHQWDWLYH DJUHHPHQW ZLWK D FRPSDQ\ DQG WKHQ
VXEPLWLWWRWKHORFDOXQLRQIRUGHEDWHDQGUDWLILFDWLRQ7KH
XQLRQPHPEHUVWKHQYRWHRQZKHWKHUWRUDWLI\WKHSURSRVHG
FROOHFWLYHEDUJDLQLQJDJUHHPHQW ³&%$´
3ODLQWLIIV &KDUOHV $UJHQWLQH &ODUHQFH :LQJR DQG -RKQ
*RRFK ZHUH PHPEHUV RI /RFDO ZKR ZHUH HOHFWHG DV
/RFDORIILFHUVLQ$VSDUWRIWKHLUFDPSDLJQ3ODLQWLIIV
SURPLVHGQRWWRJLYHDQ\PRUHFRQFHVVLRQVWR7LPHWLQIXWXUH
DJUHHPHQWV :KHQ 3ODLQWLIIV ZHUH HOHFWHG LQ
QHJRWLDWLRQVZHUHXQGHUZD\ IRUDQHZ&%$7KH86:$
GLVWULFWGLUHFWRURYHUVHHLQJ/RFDO-LP%RZHQZDVWKH
OHDGQHJRWLDWRUIRU86:$DQGDVWDIIUHSUHVHQWDWLYH$QGUHZ
3RZOH\DVVLVWHGKLP3ODLQWLIIVDSSRLQWHGWKHPVHOYHVDQG
VHYHQRWKHU/RFDOPHPEHUVWRWKHQHJRWLDWLQJFRPPLWWHHRI
/RFDODQGDOVRWRRNSDUWLQWKHQHJRWLDWLRQV7KH\ZHUH
SDLGIRUWKHLUWLPHDQGH[SHQVHV
,Q ODWH -XO\ 7LPHW SUHVHQWHG LWV ILQDO FRQWUDFW
SURSRVDOWR86:$3ODLQWLIIVRSHQO\RSSRVHGWKHSURSRVDO
DQGWKHXQLRQYRWHGWRUHMHFWLW2Q-XO\
/RFDO ZHQW RQ VWULNH 7LPHW LVVXHG D :$51 $FW
QRWLFHVWDWLQJWKH&RPSDQ\ZRXOGFORVHPRVWRILWVRSHUDWLRQV
DWWKHSODQWDQGPRYHWKHPWRDQRWKHUVWDWHXQOHVV/RFDO
PDGHVXEVWDQWLDOFRQWUDFWFRQFHVVLRQV3ODLQWLIIVFRQWLQXHG
WRRSSRVHWKHFRQFHVVLRQVLQWKHSURSRVDO2Q2FWREHU
%RZHQDQG7LPHWDJUHHGWRHQGWKHVWULNHDQGH[WHQG
WKHFXUUHQW&%$XQWLODWOHDVW0D\
$W 3ODLQWLIIV¶ UHTXHVW 86:$ DQG 7LPHW UHVWDUWHG
QHJRWLDWLRQVRQWKH&%$LQ0D\3ODLQWLIIVSDUWLFLSDWHG
LQWKRVHQHJRWLDWLRQVDVPHPEHUVRIDFRPPLWWHHFRPSRVHG
RI ORFDO XQLRQ PHPEHUV 3ODLQWLIIV VWDWHG LQ WKH PHHWLQJ

-- 3 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
EHWZHHQ86:$DQG7LPHWWKDWWKHFXUUHQWSURSRVDOXQGHU
QHJRWLDWLRQE\WKHSDUWLHVGLGQRWPHHWZLWKWKHLUDSSURYDODQG
WKH\ZRXOGQRWWDNHLWEDFNWRWKHORFDOPHPEHUVIRUDYRWH
6KRUWO\WKHUHDIWHUWDONVEURNHRIIEHWZHHQ86:$DQG7LPHW
$W WKH VDPH WLPH WKH QHJRWLDWLRQV ZHUH WDNLQJ SODFH D
ILQDQFLDOLQYHVWLJDWLRQRI/RFDOZDVEHLQJFRQGXFWHGE\
86:$DXGLWRUV,Q)HEUXDU\3RZOH\WKH86:$VWDII
PHPEHUZRUNLQJDWWKH/RFDOVDLGKHWKRXJKWVSHQGLQJDWWKH
/RFDOIURPWKHWLPH3ODLQWLIIVWRRNRIILFHXSWRWKHSUHVHQW
PRPHQWZDVRXWRIFRQWURODQGKHFRXOGQRWUHLJQLWLQ+H
VXJJHVWHG86:$FRQGXFWDQDXGLW/DWHUWKDWVDPHPRQWK
%RZHQUHTXHVWHGDQDXGLWRI/RFDO7KHDXGLWRIWKH
/RFDOZDVFRPSOHWHGLQ0D\DQGUHYHDOHGVXEVWDQWLDO
H[SHQGLWXUHV E\ WKH 3ODLQWLIIV %RZHQ DQG WKH DXGLWRU
UHFRPPHQGHG86:$LPSRVHDWUXVWRQWKH/RFDODQGUHPRYH
LWVRIILFHUVIURPWKHLUSRVLWLRQV$WUXVWHHVKLSZDVLPSRVHG
RQ -XQH DQG 3ODLQWLIIV ZHUH UHPRYHG IURP RIILFH
7KH\UHFHLYHGDOHWWHUIURP86:$3UHVLGHQW%HFNHUVWDWLQJ
7RDVVXUHWKHSHUIRUPDQFHRIWKHFROOHFWLYHEDUJDLQLQJ
DJUHHPHQWVRURWKHUGXWLHVRIDEDUJDLQLQJUHSUHVHQWDWLYH
\RXDUHKHUHE\QRWLILHGWKDW/RFDO8QLRQLVEHLQJ
SODFHG XQGHU D >WUXVWHHVKLS@ DQG DOO WKH RIILFHUV DUH
KHUHE\UHOLHYHGRIWKHLUGXWLHV
$FFRUGLQJWRWKHOHWWHUDKHDULQJZRXOGEHKHOGODWHUDWZKLFK
WKH\FRXOGDSSHDU7KHOHWWHUGLGQRWPHQWLRQDQ\ILQDQFLDO
LUUHJXODULWLHV
6KRUWO\DIWHU3ODLQWLIIVZHUHUHPRYHGIURPRIILFH86:$
DQG7LPHWUHDFKHGDWHQWDWLYHDJUHHPHQW%RZHQVHQWDOHWWHU
WR/RFDOPHPEHUVXUJLQJUDWLILFDWLRQ3ODLQWLIIVRSSRVHG
WKHDJUHHPHQW&RQWUDU\WRXVXDOSUDFWLFH86:$FRQGXFWHG
WKHUDWLILFDWLRQYRWHE\PDLO/RFDOUDWLILHGWKHFRQWUDFW
E\DYRWHRIWR
2Q$XJXVW3ODLQWLIIVZHUHQRWLILHGRIDKHDULQJ
EHIRUH D 86:$ IDFWILQGLQJ &RPPLVVLRQ WR EH KHOG RQ
$XJXVW7KHQRWLFHGLGQRWPHQWLRQILQDQFLDOPDWWHUV
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

BBBBBBBBBBBBBBBB
',66(17
BBBBBBBBBBBBBBBB
5 *8< &2/( -5 &LUFXLW -XGJH , FRQFXU ZLWK WKH
PDMRULW\RQHYHU\LVVXHH[FHSWIRULWVGHFLVLRQWRUHYHUVHWKH
GLVWULFWFRXUW¶VDZDUGRIDWWRUQH\IHHVWRWKH3ODLQWLIIV:LWK
UHVSHFW WR WKDW LVVXH , DJUHH WKDW QR LQMXQFWLYH UHOLHI LV
QHFHVVDU\ WR HQWLWOH 3ODLQWLIIV WR WKH ³FRPPRQ EHQHILW´
H[FHSWLRQWRWKH$PHULFDQ5XOH+RZHYHU,GRQRWDJUHH
ZLWKWKHPDMRULW\¶VFRQFOXVLRQWKDWWKHGLVWULFWFRXUWDEXVHGLWV
GLVFUHWLRQ LQ DZDUGLQJ DWWRUQH\ IHHV )RU WKDW UHDVRQ ,
UHVSHFWIXOO\GLVVHQW
7KLV&LUFXLWUHYLHZVDQDZDUGRIDWWRUQH\IHHVIRUDEXVHRI
GLVFUHWLRQ6PRRWY8QLWHG7UDQVS8QLRQ)G
WK&LU $GLVWULFWFRXUWDEXVHVLWVGLVFUHWLRQ
LILWUHOLHGXSRQFOHDUO\HUURQHRXVILQGLQJVRIIDFWLPSURSHUO\
DSSOLHG WKH JRYHUQLQJ ODZ RU XVHG DQ HUURQHRXV OHJDO
VWDQGDUG ,G TXRWLQJ 2ZQHU2SHUDWRU ,QGHS 'ULYHU¶V
$VV¶Q ,QF Y %LVVHOO )G WK &LU
8QGHUWKLVVWDQGDUGWKHDSSHOODWHFRXUWUHYLHZVWKHGLVWULFW
FRXUW¶VOHJDOFRQFOXVLRQVGHQRYRDQGLWVIDFWXDOILQGLQJVIRU
FOHDUHUURU,G
2QWKHEDVLVRIKLVWKRURXJKUHYLHZRIWKHUHFRUGDQGWKH
ODZ-XGJH0DUEOH\FRQFOXGHG
WKDW 3ODLQWLIIV UHQGHUHG D VXEVWDQWLDO VHUYLFH WR WKHLU
XQLRQ DQG IHOORZ XQLRQ PHPEHUV LQ YLQGLFDWLQJ WKHLU
7LWOH,ULJKWVE\FKDOOHQJLQJWKHLUUHPRYDOIURPRIILFH
DQG WKH ODZIXOQHVV RI 'HIHQGDQW¶V LPSRVLWLRQ RI
WUXVWHHVKLSXQGHU7LWOH,,,,QWKHDEVHQFHRIDQDWWRUQH\
IHHV DZDUG 3ODLQWLIIV ZRXOG FRQIHU WKLV EHQHILW DW DQ
H[SHQVHSRVVLEO\DPRXQWLQJWRQHDUO\KDOIRIWKHLUWRWDO
UHFRYHU\ 7KH EXUGHQ WKDW VXFK DQ H[SHQVH ZRXOG
LPSRVHRQ3ODLQWLIIVVWDQGV RXWRISURSRUWLRQZLWKWKH
EHQHILWUHFHLYHGE\WKHXQLRQPHPEHUVKLSDVDZKROH

-- 4 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
VKRXOGKDYHJUDQWHGWKHPVXPPDU\MXGJPHQWRQFRXQWVWZR
DQGWKUHH$VDJHQHUDOUXOHWKHGHQLDORIVXPPDU\MXGJPHQW
LVQRWUHYLHZDEOHDIWHUDIXOOWULDORQWKHPHULWV-DUUHWWY
(SSHUO\ )G Q WK &LU
$FFRUGLQJO\ZHQHHGQRWUHDFK3ODLQWLIIV¶FODLP
&21&/86,21
)RU WKH UHDVRQV VWDWHG DERYH ZH $)),50 WKH MXU\ V
YHUGLFWDQGGDPDJHDZDUGDJDLQVW86:$:H5(9(56(
WKHGLVWULFWFRXUW¶VDZDUGRIDWWRUQH\IHHVDQGUHPDQGWKHFDVH
WRWKHGLVWULFWFRXUWZLWKGLUHFWLRQVWRHQWHUDQRUGHUGHQ\LQJ
DWWRUQH\ IHHV ,Q OLJKW RI WKH MXU\¶V YHUGLFW LQ IDYRU RI
3ODLQWLIIVDIWHUDIXOOWULDORQWKHPHULWVZHGRQRWUHDFKWKHLU
FODLPWKDWWKHGLVWULFWFRXUWHUUHGLQGHQ\LQJWKHLUPRWLRQIRU
VXPPDU\MXGJPHQW
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

DQGWKH3ODLQWLIIVZHUHXQDZDUHWKHKHDULQJZRXOGLQYROYH
ILQDQFLDO PDWWHUV 7KH\ UHTXHVWHG D SRVWSRQHPHQW RI WKH
KHDULQJ ZKLFK ZDV GHQLHG 7KH &RPPLVVLRQ LVVXHG D
&RPPLVVLRQ 5HSRUW ZKLFK UHFRPPHQGHG FRQWLQXLQJ WKH
WUXVWHHVKLS86:$FRQGXFWHGWZRDGGLWLRQDOKHDULQJV2Q
1RYHPEHU DQ $SSHDOV 3DQHO KHOG D KHDULQJ
DGRSWHG WKH &RPPLVVLRQ 5HSRUW DQG UHFRPPHQGHG WKH
([HFXWLYH %RDUG DGRSW WKH &RPPLVVLRQ UHSRUW 7KH
([HFXWLYH %RDUG DGRSWHG WKH &RPPLVVLRQ UHSRUW DQG RQ
$XJXVWWKH&RQYHQWLRQ$SSHDOV&RPPLWWHHKHOGD
KHDULQJDQGDGRSWHGWKHGHFLVLRQRIWKH([HFXWLYH%RDUG7KH
WUXVWHHVKLSZDVPDLQWDLQHGXQWLO0D\WKHWLPHIRUWKH
QH[WUHJXODUO\VFKHGXOHGHOHFWLRQIRURIILFHUV
6XEVHTXHQWWRWKHVHDGPLQLVWUDWLYHSURFHHGLQJV3ODLQWLIIV
ILOHG VXLW LQ IHGHUDO FRXUW DJDLQVW 86:$ IRU 3ODLQWLIIV¶
³XQODZIXO´UHPRYDOIURPWKHLU/RFDORIILFHVDQGLPSRVLWLRQ
RI D WUXVWHHVKLS RQ WKH /RFDO ,Q WKH FRPSODLQW 3ODLQWLIIV
DOOHJHG LQWHU DOLD WKUHH GLIIHUHQW FODLPV &RXQW , VWDWHG
86:$YLRODWHG3ODLQWLIIV¶IUHHVSHHFKULJKWVFRQWUDU\WRWKH
/DERU 0DQDJHPHQW 5HSRUWLQJ DQG 'LVFORVXUH $FW
³/05'$´ † D 86&† D &RXQW,,
DOOHJHG 86:$ LPSRVHG WKH WUXVWHHVKLS IRU DQ LPSURSHU
SXUSRVH FRQWUDU\ WR /05'$ † DQG † 86&
† DQG † &RXQW ,,, FODLPHG 86:$ EUHDFKHG LWV
FRQWUDFW ZLWK 3ODLQWLIIV E\ LPSRVLQJ WKH WUXVWHHVKLS LQ
YLRODWLRQRILWVFRQVWLWXWLRQDQGE\ODZVFRQWUDU\WR/05'$
†86&†7KHPDWWHUZHQWWRWULDODQGWKHMXU\
IRXQGIRU3ODLQWLIIV7KHMXU\DZDUGHGHDFK3ODLQWLIILQ
FRPSHQVDWRU\GDPDJHVIRUFRXQW,DZDUGHG$UJHQWLQHDQG
*RRFK HDFK DQG :LQJR LQ SXQLWLYH
GDPDJHV IRU FRXQW , DZDUGHG HDFK SODLQWLII IRU
FRPSHQVDWRU\GDPDJHVRQFRXQW,,DQGRQFRXQW,,,DZDUGHG
WR $UJHQWLQH DQG *RRFK DQG WR :LQJR LQ
FRPSHQVDWRU\GDPDJHV
$IWHUWKHWULDO86:$PRYHGIRUMXGJPHQWDVDPDWWHURI
ODZDQHZWULDORUDUHPLWWLWXURISXQLWLYHGDPDJHV7KHWULDO
FRXUWGHQLHG86:$¶VPRWLRQ3ODLQWLIIVPRYHGIRUDWWRUQH\

-- 5 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
IHHVDQGWRDPHQGWKHMXGJPHQWWRLQFOXGHGHFODUDWRU\DQG
LQMXQFWLYH UHOLHI 7KH GLVWULFW FRXUW JUDQWHG WKH DZDUG RI
DWWRUQH\IHHVEXWGHQLHGWKHRWKHUUHOLHI
',6&866,21
, 86:$¶V&ODLPIRU-XGJPHQWDVD0DWWHURI/DZ
$WWULDO86:$DUJXHGLWLPSRVHGWKHWUXVWHHVKLSWRFRUUHFW
3ODLQWLIIV¶ILQDQFLDOPLVPDQDJHPHQWRI/RFDOZKLFKLV
DSHUPLVVLEOHSXUSRVHXQGHUWKH/05'$2QDSSHDO86:$
QRZDUJXHVHYHQLIWKHFRXUWDFFHSWHG3ODLQWLIIV¶WKHRU\RIWKH
FDVH WKDW WKH\ LPSRVHG WKH WUXVWHHVKLS IRU WKH SXUSRVH RI
VLOHQFLQJWKH3ODLQWLIIVVXFKDUHDVRQZRXOGEHODZIXOXQGHU
WKH/05'$,WVDUJXPHQWLQWKLVUHJDUG³ZKLFKWDNH>V@WKH
MXU\¶V ILQGLQJV DW IDFH YDOXH´ SUHVHQWV D ³SXUHO\ OHJDO´
TXHVWLRQWKDWLVVXEMHFWWRGHQRYRDSSHOODWHUHYLHZ. 7
(QWHUSULVHV Y =XULFK ,QV &R )G WK &LU

6HFWLRQRIWKH/05'$VWDWHVRQHRIWKHSXUSRVHVD
WUXVWHHVKLSFDQEHLPSRVHGLVIRU³DVVXULQJWKHSHUIRUPDQFH
RI FROOHFWLYH EDUJDLQLQJ DJUHHPHQWV RU RWKHU GXWLHV RI WKH
EDUJDLQLQJ UHSUHVHQWDWLYHV´ /05'$ † 86&
† 86:$ DUJXHV RQH RI WKH GXWLHV RI D EDUJDLQLQJ
UHSUHVHQWDWLYH LV WR QHJRWLDWH FROOHFWLYH EDUJDLQLQJ
DJUHHPHQWV DQG 3ODLQWLIIV¶ VWDWHPHQWV WKDW WKH\ ZRXOG QRW
WDNHWKHFXUUHQWFRQWUDFWXQGHUQHJRWLDWLRQVEHWZHHQ86:$
DQG7LPHWEDFNWRWKH/RFDOIRUDYRWHLQWHUIHUHGZLWKWKDW
GXW\ 7KXV LW ZDV ODZIXO IRU 86:$ WR LPSRVH WKH
WUXVWHHVKLSWRUHPRYHWKDWLQWHUIHUHQFH
86:$LVFRUUHFWLQLWVDVVHUWLRQWKDWWKHLPSRVLWLRQRID
WUXVWHHVKLSWRSUHYHQWORFDORIILFLDOVIURPGLVUXSWLQJFROOHFWLYH
EDUJDLQLQJ LV D OHJLWLPDWH SXUSRVH XQGHU WKH /05'$
&DVFDGH/RFDO/RGJH1RY,QW¶O$VV¶QRI0DFKLQLVW
)G WK &LU *RUGRQ Y /DERUHUV¶ ,QW¶O
8QLRQ )G WK &LU (YHQ LI WKH
WUXVWHHVKLSZDVLPSRVHGIRUDSURSHUSXUSRVHKRZHYHUWKLV
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

:HGHFOLQHWRIROORZHLWKHULQWHUSUHWDWLRQRIWKHFRPPRQ
EHQHILWUXOH7KHFHQWUDOLVVXHIRUDFRXUWLQGHWHUPLQLQJWKH
DSSOLFDELOLW\ RI WKH FRPPRQ EHQHILW WKHRU\ LV ZKHWKHU WKH
PHPEHUVRIWKH/RFDOVKDUHGLQWKHEHQHILWRIWKHVXLWLQWKH
VDPHZD\DVWKHSODLQWLII)RULQVWDQFHLQ6KLPPDQZHGLG
QRW DOORZ DQ DZDUG RI DWWRUQH\ IHHV EHFDXVH WKH EHQHILW
REWDLQHGE\WKHXQLRQZDVRQO\DVPDOOSDUWRIWKHEHQHILWV
UHFHLYHGE\WKHSODLQWLIIV6KLPPDQ)GDW7R
DOORZ WKH SODLQWLIIV WR UHFRYHU WKHLU DWWRUQH\ IHHV IURP WKH
XQLRQ ZRXOG ³QRW RSHUDWH WR VSUHDG WKH FRVWV RI OLWLJDWLRQ
SURSRUWLRQDWHO\ DPRQJ WKHVH EHQHILFLDULHV WKH NH\
UHTXLUHPHQWRIWKH FRPPRQEHQHILW WKHRU\,G
:KHUH D 3ODLQWLII UHFRYHUV RQO\ D VPDOO DPRXQW RI
FRPSHQVDWLRQDQGWKHVXLWSURYLGHVDVXEVWDQWLDOEHQHILWWR
ORFDO XQLRQ PHPEHUV DWWRUQH\ IHHV DUH DSSURSULDWH 6HH
0XUSK\ )G DW ,Q VXFK FDVHV WKH SODLQWLIIV DUH
VKDULQJWKHEHQHILWVRIWKHVXLWHTXDOO\ZLWKWKHXQLRQDQGVR
WKHXQLRQVKRXOGKDYHWRVKDUHWKHEXUGHQRUFRVWRIWKHVXLW
ZLWKWKHSODLQWLII
$SSO\LQJWKHFRPPRQEHQHILWWKHRU\WRWKLVFDVHUHTXLUHV
ZH5(9(56(WKHGLVWULFWFRXUW¶VGHFLVLRQWRDZDUGDWWRUQH\
IHHVWR3ODLQWLIIV$OWKRXJK3ODLQWLIIVYLQGLFDWHGWKHLUIUHH
VSHHFKULJKWVDQGWKHUHE\EHQHILWWHGWKH /RFDODVDZKROH
WKH\DOVRUHFHLYHGFRPSHQVDWRU\DQGSXQLWLYHGDPDJHVWKDW
H[FHHGHG WZLFH WKH VWLSXODWHG YDOXH RI WKH DWWRUQH\ IHHV
3ODLQWLIIV UHFHLYHG PRUH WKDQ LQ GDPDJHV LQ WKLV
FDVHLQZKLFKPHPEHUVRIWKH/RFDOFDQQRWVKDUH7KHUHIRUH
WKH ORFDO XQLRQ LV QRW EHQHILWWLQJ IURP WKH HIIRUWV RI WKH
VXFFHVVIXO3ODLQWLIIVLQWKHVDPHZD\DVWKH3ODLQWLIIVDQGVR
ZRXOGQRWEHXQMXVWO\HQULFKHGDWWKH3ODLQWLIIV¶H[SHQVHLI
WKH\GLGQRWHTXDOO\FRQWULEXWHWRWKHOLWLJDWLRQH[SHQVH+DOO
86DW6&WDW
9,, 3ODLQWLIIV6XPPDU\-XGJPHQW&ODLP
(YHQWKRXJK3ODLQWLIIVSUHYDLOHGDWWULDORQDOOWKUHHFRXQWV
RIWKHLUFRPSODLQWWKH\DUJXHSULRUWRWULDOWKHGLVWULFWFRXUW

-- 6 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
³FRPPRQEHQHILW´WKHRU\WKDWLVQRWDYDLODEOHWR3ODLQWLIIV
EHFDXVHWKH\RQO\EHQHILWWHGWKHPVHOYHVDQGGLGQRWREWDLQ
LQMXQFWLYHUHOLHIWKDWEHQHILWWHGRWKHUPHPEHUVRI/RFDO
8QGHUWKH³$PHULFDQ5XOH´FRXUWVGRQRWRUGLQDULO\DZDUG
DWWRUQH\IHHVWRWKHSUHYDLOLQJSDUW\$O\HVND3LSHOLQH6HUY
&RY:LOGHUQHVV6RF¶\866&W
/(GG $QH[FHSWLRQWRWKLVUXOH
RFFXUV LQ /05'$ FDVHV XQGHU D FRPPRQ EHQHILW WKHRU\
+DOO Y &ROH 86 6 &W /(GG
7KHUDWLRQDOHEHKLQGWKHWKHRU\LVLIRWKHUPHPEHUV
RIWKH/RFDOZRXOGEHQHILWIURPWKHHIIRUWVRIDVXFFHVVIXO
SODLQWLIILQWKHVDPHZD\DVWKHSODLQWLIIWKHQWKRVHPHPEHUV
ZRXOGEHXQMXVWO\HQULFKHGDWWKHSODLQWLII¶VH[SHQVHLIWKH\
GLGQRWHTXDOO\FRQWULEXWHWRWKHOLWLJDWLRQH[SHQVH,GDW
6&WDW
3ODLQWLIIVFODLPWKHFRPPRQEHQHILWWKHRU\VKRXOGDSSO\
ZKHQDSDUW\YLQGLFDWHVWKHULJKWVRIDOOPHPEHUVRID/RFDO
,Q+DOOWKHSODLQWLIIVZRQWKHLUIUHHVSHHFKFODLPDQGWKHUHVW
RI WKH /RFDO¶V IUHH VSHHFK ULJKWV ZHUH WKHUHIRUH SURWHFWHG
7KHFRXUWDZDUGHGDWWRUQH\IHHVWRWKHSODLQWLIIVXQGHUWKH
WKHRU\WKHUHVWRIWKH/RFDOVKRXOGKDYHWRVKDUHLQWKHFRVWRI
SURWHFWLQJWKHLUIUHHVSHHFKULJKWV,G$ZDUGLQJDWWRUQH\
IHHVLQIUHHVSHHFKFDVHVOLNHWKLV³VLPSO\VKLIWVWKHFRVWVRI
OLWLJDWLRQWRWKHFODVVWKDWKDVEHQHILWWHGIURPWKHPDQGWKDW
ZRXOGKDYHKDGWRSD\WKHPKDGLWEURXJKWWKHVXLW´,G
86:$FRQWHQGVWKHFRPPRQEHQHILWWKHRU\RQO\DSSOLHV
ZKHQVRPHLQMXQFWLYHUHOLHILVDZDUGHGWRWKHXQLRQEHFDXVH
RIDSDUW\¶VHIIRUWV+DOOZDVLQIDFWVXFKDFDVH7KH\DUJXH
ZH KDYH DZDUGHG DWWRUQH\ IHHV XQGHU D FRPPRQ EHQHILW
WKHRU\RQO\ZKHQLQMXQFWLYHUHOLHIZDVJLYHQ6KLPPDQY
,QWHUQDWLRQDO8QLRQRI2SHUDWLQJ(QJUV/RFDO)G
WK &LU SODLQWLIIV GLG QRW UHFHLYH LQMXQFWLYH
UHOLHIDQGDWWRUQH\IHHVZHUHQRWDOORZHG %ODFNY5\GHU
)G WK&LU 0XUSK\Y,82(/RFDO
)G WK&LU DWWRUQH\IHHVJUDQWHGDQG
SODLQWLIIUHFHLYHGLQMXQFWLYHUHOLHI
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

DORQHZRXOGQRWHQWLWOH86:$WRMXGJPHQWDVDPDWWHURIODZ
RQWKLVLVVXH
$WUXVWHHVKLSLVSUHVXPHGWREHYDOLGZKHQLWLVLPSRVHGIRU
DSXUSRVHDOORZDEOHXQGHUVHFWLRQDQGLWLVLPSRVHGLQD
SURFHGXUDOO\ FRUUHFW PDQQHU /05'$ † 86&
† F 3DUWLHVFKDOOHQJLQJWKHODZIXOQHVVRIDWUXVWHHVKLS
WKHUHIRUHFDQVKRZWKHWUXVWHHVKLSZDVEHLQJLPSRVHGIRUDQ
XQODZIXO SXUSRVH RU WKH\ FDQ FKDOOHQJH WKH WUXVWHHVKLS
EHFDXVHLWZDVQRWLPSRVHGDFFRUGLQJWRSURSHUSURFHGXUHV
7HDPVWHU/RFDO8QLRQ1RY&UDQH)G
WK&LU 7KXVDWUXVWHHVKLSFDQEHFKDOOHQJHGE\D
SODLQWLIIHYHQLILWZDVLPSRVHGIRUDSURSHUSXUSRVH
,Q WKLV FDVH 3ODLQWLIIV FKDOOHQJHG WKH WUXVWHHVKLS RQ
SURFHGXUDOJURXQGV,QGHFLGLQJFURVVPRWLRQVIRUVXPPDU\
MXGJPHQW WKH GLVWULFW FRXUW KHOG DV D PDWWHU RI ODZ WKH
SURFHGXUHVIRULPSOHPHQWLQJDQGPDLQWDLQLQJWKHWUXVWHHVKLS
XVHG E\ 86:$ GLG QRW FRPSRUW ZLWK WKH SURFHGXUDO
UHTXLUHPHQWV RI WKH /05'$ $UJHQWLQH Y 8QLWHG 6WHHO
:RUNHUV$VV¶Q)6XSSG 6'2KLR
%HFDXVHWKHWUXVWHHVKLSZDVGHIHFWLYHRQSURFHGXUDOJURXQGV
LW ORVW LWV SUHVXPSWLRQ RI YDOLGLW\ 2QFH 86:$ ORVW LWV
SUHVXPSWLRQRIYDOLGLW\IRUWKHWUXVWHHVKLS3ODLQWLIIVFRXOG
SURSHUO\DWWDFNWKHUHDVRQVIRUWKHWUXVWHHVKLSDWWULDO7KXV
HYHQ LI VLOHQFLQJ 3ODLQWLIIV ZDV D ODZIXO SXUSRVH 86:$
ZRXOGQRWEHHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ

-- 7 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
7KH /05'$ DIIRUGV PHPEHUV RI ODERU RUJDQL]DWLRQV FHUWDLQ IUHH
VSHHFK ULJKWV LQ FRQQHFWLRQ ZLWK WKH EXLVQHVV RI WKH ODERU RUJDQL]DWLRQ
³(YHU\ PHPEHU RI DQ\ ODERU RUJDQL]DWLRQ VKDOO KDYH WKH ULJKW WR PHHW DQG
DVVHPEOH IUHHO\ ZLWK RWKHU PHPEHUV DQG WR H[SUHVV DQ\ YLHZV
DUJXPHQWV RU RSLQLRQV DQG WR H[SUHVV DW PHHWLQJV RI WKH ODERU
RUJDQL]DWLRQ KLV YLHZV XSRQ FDQGLGDWHV LQ DQ HOHFWLRQ RI WKH ODERU
RUJDQL]DWLRQ RU XSRQ DQ\ EXVLQHVV SURSHUO\ EHIRUH WKH PHHWLQJ VXEMHFW WR
WKH RUJDQL]DWLRQ V HVWDEOLVKHG DQG UHDVRQDEOH UXOHV SHUWDLQLQJ WR WKH
FRQGXFW RI PHHWLQJV´ /05'$ † D 86& † D
,, ,QVXIILFLHQF\RI(YLGHQFH
86:$ DUJXHV WKH HYLGHQFH SUHVHQWHG WR WKH MXU\ RQ
3ODLQWLIIV¶IUHHVSHHFKFODLPVZDVLQVXIILFLHQWDVDPDWWHURI
ODZ :H UHYLHZ LQVXIILFLHQF\ FODLPV GH QRYR ZLWKRXW
GHWHUPLQLQJFUHGLELOLW\RUZHLJKLQJHYLGHQFHDQGJLYLQJWKH
SUHYDLOLQJSDUW\WKHEHQHILWRIDOOUHDVRQDEOHLQIHUHQFHV. 7
(QWHUSULVHV,QF)GDW
86:$ FRQWHQGV 3ODLQWLIIV¶ IDFWXDO WKHRU\ RI WKH FDVH
GHSHQGHG RQ %RZHQ¶V UROH LQ WKH GHFLVLRQ WR LPSRVH WKH
WUXVWHHVKLS \HW WKH\ SURGXFHG QR HYLGHQFH RQ WKLV LVVXH
3ODLQWLIIV KRZHYHU GLG SUHVHQW HYLGHQFH RI %RZHQ¶V
LQYROYHPHQWLQWKHGHFLVLRQWRLPSRVHWKHWUXVWHHVKLS7KH\
SUHVHQWHGHYLGHQFH%RZHQUHVHQWHG3ODLQWLIIV¶LQWHUIHUHQFH
ZLWKWKH&%$QHJRWLDWLRQV7KH\SUHVHQWHGHYLGHQFH%RZHQ
DJUHHG WR D FRQWUDFW ZLWK 7LPHW VRRQ DIWHU 3ODLQWLIIV ZHUH
UHPRYHG IURP WKHLU SRVLWLRQV 7KH\ SUHVHQWHG HYLGHQFH
%RZHQUHTXHVWHGDQDXGLWRI3ODLQWLIIVZKLFKDFFRUGLQJWR
86:$ZDVWKHXOWLPDWHUHDVRQIRUWKHLUUHPRYDO)LQDOO\
DOWKRXJK%HFNHU86:$¶VSUHVLGHQWXOWLPDWHO\DSSURYHGWKH
WUXVWHHVKLS%RZHQKDGMXVWEHFRPHKLVVSHFLDODVVLVWDQWZKHQ
KHPDGHWKHGHFLVLRQ
)URPWKLVHYLGHQFHDUHDVRQDEOHMXURUFRXOGLQIHU86:$
DQGLWVUHSUHVHQWDWLYHVZHUHPRWLYDWHGWRUHPRYH3ODLQWLIIV
EHFDXVH RI WKHLU FULWLFLVP RI WKH QHJRWLDWLQJ SURFHVV DQG
%RZHQSOD\HGDUROHLQWKDWGHFLVLRQ$IWHUWKH&RXUWJLYHV
3ODLQWLIIV WKH EHQHILW RI DOO UHDVRQDEOH LQIHUHQFHV WKLV
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

&RXUWVWDWHGWKDWSXQLWLYHGDPDJHVPXVWEHDUD³UHDVRQDEOH
UHODWLRQVKLS´WRFRPSHQVDWRU\GDPDJHV%0:86DW
6&WDW$OWKRXJKWKH%0:&RXUWDSSOLHGD
WRUDWLRWKH&RXUWGLGQRWHVWDEOLVKDULJLGPDWKHPDWLFDO
IRUPXOD,QGHHGWKH&RXUWVWDWHGUDWLRVPD\EHKLJKHUZKHUH
WKHKDUPLVSDUWLFXODUO\HJUHJLRXVEXWWKHHFRQRPLFKDUPLV
PLQRURUWKHPRQHWDU\YDOXHRIWKHLQMXU\LVGLIILFXOWWRDVVHVV
,G DW 6 &W DW ,Q WKLV FDVH 3ODLQWLIIV¶
UHSXWDWLRQV DQG IUHH VSHHFK ULJKWV ZHUH LPSDLUHG 7KHVH
LQMXULHVDUHZLWKRXWDUHDG\PRQHWDU\YDOXHDVRSSRVHGWRWKH
LQMXULHVLQ%0:7KXVZKLOHWKHWRUDWLRLVODUJHUWKDQ
WKHWRUDWLRDSSURYHGE\WKH&RXUWLQ%0:ZHFDQQRW
VD\LWLVXQUHDVRQDEOH
& 6LPLODU&DVHV
86:$DUJXHVLQRWKHUFDVHVUDWLRVRIOHVVWKDQWR
KDYHEHHQVXEMHFWWRDUHPLWWLWXUDQGDFFRUGLQJO\WKHSXQLWLYH
GDPDJHVLQWKLVFDVHVKRXOGEHDVZHOO 6HH5XELQVWHLQY
$GPLQLVWUDWRUVRI7XODQH(GXFDWLRQDO)XQG)G
WK &LU SXQLWLYH GDPDJHV DZDUG WKDW ZDV
WLPHVJUHDWHUWKDQWKHFRPSHQVDWRU\DZDUGZDVXQUHDVRQDEOH
ZKHUHKDUP3ODLQWLIIVXIIHUHGZDVORVVRIDSHUFHQWSD\
UDLVH 7KH FDVHV 86:$ UHOLHV RQ KRZHYHU LQYROYHG
HFRQRPLFKDUPWRDSODLQWLIIZKLFKLVPXFKHDVLHUWRTXDQWLI\
WKDQ WKH LPSDLUPHQW RI RQHV IUHH VSHHFK ULJKWV ,Q FDVHV
ZKHUHWKHKDUPWRWKH3ODLQWLIILQYROYHGIUHHVSHHFKULJKWVWKH
FRXUWV DOORZ IRU KLJKHU UDWLRV 6HH .LQVORZ Y $PHULFDQ
3RVWDO:RUNHUV8QLRQ&KLFDJR/RFDO)G WK&LU
/05'$ SODLQWLII DZDUGHG GROODUV LQ
SXQLWLYHGDPDJHVDQGGROODULQFRPSHQVDWRU\GDPDJHVIRU
KLVIUHHVSHHFKFODLP
$IWHUFRQVLGHULQJWKHWKUHHIDFWRUVSUHVFULEHGLQ%0:ZH
GHFOLQHWRH[HUFLVHRXUSRZHUWRRUGHUDUHPLWWLWXULQWKLVFDVH
9, $WWRUQH\)HHV$ZDUG6KRXOG%H5HYHUVHG
86:$DUJXHV3ODLQWLIIV¶DWWRUQH\IHHVDZDUGLQWKLVFDVH
PXVW EH UHYHUVHG ,W FRQWHQGV WKH DZDUG LV EDVHG RQ D

-- 8 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
GHWHUPLQLQJ ZKHWKHU DQ DZDUG LV H[FHVVLYH D FRXUW VKRXOG
FRQVLGHU WKHGHJUHHRIUHSUHKHQVLELOLW\RIWKHFRQGXFW
WKHGLVSDULW\EHWZHHQWKHKDUPRUSRWHQWLDOKDUPVXIIHUHGE\
WKH SODLQWLII DQG KLV SXQLWLYH GDPDJH DZDUG DQG WKH
GLIIHUHQFH EHWZHHQ WKH SXQLWLYH GDPDJHV DQG WKH FLYLO
SHQDOWLHVDXWKRUL]HGRULPSRVHGLQFRPSDUDEOHFDVHV,GDW
6&WDW
$ 5HSUHKHQVLEOH&RQGXFW
,QGHWHUPLQLQJUHSUHKHQVLELOLW\ZHFRQVLGHUDQXPEHURI
³DJJUDYDWLQJIDFWRUV´LQFOXGLQJZKHWKHUWKHKDUPZDVPRUH
WKDQ³SXUHO\HFRQRPLFLQQDWXUH´DQGZKHWKHUDGHIHQGDQW¶V
DFWLRQV FRQVWLWXWH ³WULFNHU\ RU GHFHLW´ DV RSSRVHG WR PHUH
QHJOLJHQFH%0:86DW6&WDW
+HUHWKHKDUPZDVPRUHWKDQSXUHO\HFRQRPLFDOLQQDWXUH
7KHMXU\DZDUGHGSXQLWLYHGDPDJHVWR3ODLQWLIIVEHFDXVHLW
FRQFOXGHG86:$YLRODWHG3ODLQWLIIV¶IUHHVSHHFKULJKWV
)URP WKH MXU\¶V GHFLVLRQ LW LV FOHDU WKH MXU\ GHWHUPLQHG
86:$DFWHGGHOLEHUDWHO\86:$GLGQRWFRPSO\ZLWKLWV
RZQFRQVWLWXWLRQRUE\ODZVZKHQLWLPSRVHGDWUXVWHHVKLSRQ
/RFDODQGUHPRYHG3ODLQWLIIVIURPRIILFH,WGLGQRW
LQIRUP 3ODLQWLIIV RI WKH UHDVRQV IRU WKH LPSRVLWLRQ RI WKH
WUXVWHHVKLSXQWLOWKHGD\RIWKHKHDULQJZKLFKGLGQRWDOORZ
WKHPDQRSSRUWXQLW\WRGHIHQGWKHPVHOYHV,WGLGQRWDIIRUG
3ODLQWLIIV GXH SURFHVV GXULQJ WKH PDLQWHQDQFH RI WKH
WUXVWHHVKLSDQGWKURXJKRXWWKHDSSHOODWHSURFHVV,WUHPRYHG
3ODLQWLIIV IURP WKHLU SRVLWLRQV DQG WKHQ VKRUWO\ WKHUHDIWHU
UHDFKHG DQ DJUHHPHQW ZLWK 7LPHW $OO RI WKLV HYLGHQFH LV
PRUH WKDQ DGHTXDWH WR VXSSRUW D FRQFOXVLRQ 86:$¶V
EHKDYLRU LQ WKLV FDVH DPRXQWHG WR PXFK PRUH WKDQ PHUH
QHJOLJHQFHEXWUDWKHUFRXOGEHFKDUDFWHUL]HGDVLQWHQWLRQDO
GHOLEHUDWHDQGDNLQWRGHFHLW
% 5DWLR%HWZHHQ+DUPDQG$ZDUG
7KHUDWLREHWZHHQFRPSHQVDWRU\DQGSXQLWLYHGDPDJHVLQ
WKLVFDVHLVWR,Q%0:WKH8QLWHG6WDWHV6XSUHPH
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

HYLGHQFH LV VXIILFLHQW WR VKRZ %RZHQ ZDV LQ SDUW
UHVSRQVLEOHIRUWKHLPSRVLWLRQRIWKHWUXVWHHVKLS,G
,,, 3XQLWLYH'DPDJHV
86:$QH[WFODLPVWKHIDFWVRIWKLVFDVHGRQRWZDUUDQW
SXQLWLYHGDPDJHV:HDOORZSXQLWLYHGDPDJHVIRU/05'$
YLRODWLRQVRQO\XSRQDVKRZLQJRIDGHIHQGDQW¶VPDOLFHRU
UHFNOHVV RU ZDQWRQ LQGLIIHUHQFH WR D SODLQWLII¶V ULJKWV
7KRPSVRQY2IILFH 3URI¶O(PSOR\HHV,QW¶O8QLRQ)G
WK&LU 86:$DUJXHVWKLVLVQRWDQ
HJUHJLRXVFDVHGHVHUYLQJRISXQLWLYHGDPDJHVHYHQDVVXPLQJ
3ODLQWLIIV¶WKHRU\RIWKHFDVH,WFRQWHQGVWKHLPSRVLWLRQRI
WKHWUXVWHHVKLSZDVRQO\WRKHOSWKH/RFDO¶VPHPEHUVNHHS
WKHLUMREV86:$¶VPRWLYDWLRQWRZDUGWKH/RFDOKRZHYHU
LV LUUHOHYDQW 7KH SURSHU IRFXV RI WKH &RXUW¶V LQTXLU\ LV
ZKHWKHU86:$¶VLPSRVLWLRQRIDWUXVWHHVKLSZDVDVKRZRI
PDOLFHRUZDQWRQLQGLIIHUHQFHWR3ODLQWLIIV¶ULJKWV
3ODLQWLIIVVXEPLWWHGVHYHUDOSLHFHVRIHYLGHQFHWRWKHMXU\
ZKLFKZRXOGDOORZLWWRFRQFOXGH86:$DFWHGZLWKZDQWRQ
LQGLIIHUHQFH WR 3ODLQWLIIV¶ ULJKWV )LUVW 86:$ UHPRYHG
3ODLQWLIIV IURP WKHLU HOHFWHG SRVLWLRQV VRRQ DIWHU WKH\
VWULGHQWO\FULWLFL]HG86:$¶VFRQWUDFWQHJRWLDWLRQV6HFRQG
86:$LPSRVHGWKHWUXVWHHVKLSZLWKRXWDGHTXDWHQRWLFHDQG
WKHQKHOGVHYHUDOKHDULQJVDOORIZKLFKZHUHQRW³IXOODQG
IDLU´EHFDXVHWKH\ODFNHGGXHSURFHVV7KLUGWKHYRWHIRU
UDWLILFDWLRQRIWKHSURSRVHG&%$DIWHU3ODLQWLIIVZHUHRXVWHG
IURPRIILFHZDVKHOGE\PDLOLQEDOORWLQJ7KLVSURFHGXUH
ZDVDGHYLDWLRQIURPWKHQRUPDOUDWLILFDWLRQSURFHVVDQGGLG
QRW DOORZ 3ODLQWLIIV WKH VDPH IRUXP WR H[SUHVV WKHLU
GLVDSSURYDORIWKH&%$DVLQWLPHVSDVW7KHMXU\FRXOGKDYH
UHDVRQDEO\FRQFOXGHGIURPWKLVHYLGHQFH86:$DFWHGZLWK
ZDQWRQGLVUHJDUGIRU3ODLQWLIIV¶ULJKWV
,9 0RWLRQIRUD1HZ7ULDO
$IWHU WKH MXU\ UHWXUQHG D YHUGLFW IRU 3ODLQWLIIV 86:$
PRYHGIRUDQHZWULDODQGWKHGLVWULFWFRXUWGHQLHGLWVPRWLRQ
86:$FRQWHQGVLWLVHQWLWOHGWRDQHZWULDOEHFDXVH DMXU\

-- 9 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
LQVWUXFWLRQ³HIIHFWLYHO\´WROGWKHMXU\86:$KDGZURQJIXOO\
LPSRVHGDQGPDLQWDLQHGWKHWUXVWHHVKLSDQGWKHGLVWULFWFRXUW
GLGQRWDOORZ86:$WRSUHVHQWHYLGHQFHRQWKDWLVVXH WKH
GLVWULFW FRXUW GLG QRW SHUPLW 86:$ WR FURVVH[DPLQH D
ZLWQHVVZKRZDVDOLJQHGZLWK86:$EXWPDGH86:$FDOO
KLPLQLWVFDVHLQFKLHIDQG WKHGLVWULFWFRXUWH[FOXGHG
VRPHRI86:$¶VUHEXWWDOWHVWLPRQ\
7KH&RXUWUHYLHZVDGLVWULFWFRXUW¶VGHQLDORIDPRWLRQIRU
D QHZ WULDO XQGHU DQ DEXVH RI GLVFUHWLRQ VWDQGDUG '\QR
&RQVWU &R Y 0F:DQH ,QF )G WK &LU
$QDEXVHRIGLVFUHWLRQRFFXUVZKHQWKLV&RXUWKDV³D
GHILQLWHDQGILUPFRQYLFWLRQWKHWULDOFRXUWFRPPLWWHGDFOHDU
HUURULQMXGJPHQW´/RJDQY'D\WRQ+XGVRQ&RUS)G
WK&LU
$3UHMXGLFLDO-XU\,QVWUXFWLRQ
86:$DUJXHVRQHRIWKHGLVWULFWFRXUW¶VLQVWUXFWLRQVWRWKH
MXU\ ³HIIHFWLYHO\ LQVWUXFWHG WKH MXU\´ WKDW 86:$ KDG
LPSURSHUO\LPSRVHGWKHWUXVWHHVKLS)XUWKHUWKHLQVWUXFWLRQ
DVNHGWKHMXU\WRFRQVLGHUHYLGHQFHZKLFKZDVQRWUHOHYDQWWR
WKHLVVXHVDWWULDO:HUHYLHZMXU\LQVWUXFWLRQVDVDZKROHWR
GHWHUPLQHLIWKH\DGHTXDWHO\LQIRUPWKHMXU\RIWKHUHOHYDQW
FRQVLGHUDWLRQVDQG³SURYLGHDEDVLVLQODZIRUDLGLQJWKHMXU\
LQUHDFKLQJLWVGHFLVLRQ´-RQHVY&RQVROLGDWHG5DLO&RUS
)G WK&LU :HZLOOUHYHUVHDMXU\
YHUGLFWRQO\LQVLWXDWLRQVZKHUHWKHLQVWUXFWLRQYLHZHGDVD
ZKROHLV³FRQIXVLQJPLVOHDGLQJDQGSUHMXGLFLDO´%DUQHVY
2ZHQV&RUQLQJ)LEHUJODVV&RUS)G WK&LU

7KHLQVWUXFWLRQWRZKLFK86:$REMHFWVSURYLGHG
,QGHFLGLQJZKHWKHUWKH86:$LPSRVHGWKHWUXVWHHVKLS
LQEDGIDLWK\RXPD\FRQVLGHUDPRQJRWKHUWKLQJV
ZKHWKHUWKHLQWHUQDWLRQDOXQLRQKDVVKRZQE\FOHDU
DQG FRQYLQFLQJ HYLGHQFH WKDW WKH FRQWLQXDWLRQ RI WKH
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

7KH VWDWH RI PLQG H[FHSWLRQ WR WKH KHDUVD\ UXOH SURYLGHV ³$
VWDWHPHQW RI WKH GHFODUDQW¶V WKHQ H[LVWLQJ VWDWH RI PLQG VXFK DV LQWHQW
SODQ RU PRWLYH ´ LV QRW H[FOXGHG E\ WKH KHDUVD\ UXOH )HG 5 (YLG

0U3RZOH\QHHGHGJULHYDQFHSHRSOHLQSODFHDVTXLFNO\
DVSRVVLEOH7KH\DUHUHDOO\WKHPRVWHVVHQWLDOLQWHUIDFH
ZLWKWKHFRPSDQ\+HLQIDFWPDGHHIIRUWVWRJHWROGHU
SHRSOHZKRKDGEHHQJULHYDQFHFRPPLWWHHPHQWRGRLW
,W¶V D WKDQNOHVV MRE DQG WKH RQO\ SHRSOH KH FRXOG
FRQYLQFHZHUHWKH\RXQJHUSHRSOH
-$DW86:$ZDQWHGWKLVHYLGHQFHDGPLWWHGWR
VKRZ3RZOH\UHDSSRLQWHGWKHVHPHPEHUVEHFDXVHWKH\ZHUH
WKHRQO\RQHVZKRZRXOGWDNHWKHMREDQGKHZDVQRWVLPSO\
LQGLIIHUHQWWR/RFDO¶VILQDQFHV7KHGLVWULFWFRXUWH[FOXGHG
WKHVWDWHPHQWDVKHDUVD\
86:$ DUJXHV HYHQ WKRXJK .LUNSDWULFN¶V VWDWHPHQW ZDV
KHDUVD\WKHVWDWHPHQWVKRXOGKDYHEHHQDGPLVVLEOHXQGHUWKH
³VWDWH RI PLQG´ H[FHSWLRQ WR WKH KHDUVD\ UXOH DQG LWV
H[FOXVLRQSUHMXGLFHGWKHPEHFDXVHWKH\FRXOGQRWXVHLWWR
UHEXWWKHLPSUHVVLRQ3RZOH\ZDVQRWUHDOO\FRQFHUQHGDERXW
WKH/RFDO¶VILQDQFHV:HILQGWKLVVWDWHPHQWWREHHTXLYRFDO
RQWKLVSRLQW$FFRUGLQJO\ZHGRQRWVHHWKDWWKHH[FOXVLRQ
RIWKLVVWDWHPHQWSUHMXGLFHG86:$HYHQLILWVKRXOGKDYH
EHHQ DGPLWWHG XQGHU WKH ³VWDWH RI PLQG´ H[FHSWLRQ :H
WKHUHIRUHFRQFOXGHLIWKHUHZDVDQ\HUURULWZDVKDUPOHVV
9 5HPLWWLWXU
7KH MXU\ DZDUGHG 3ODLQWLIIV LQ FRPSHQVDWRU\
GDPDJHVDQGLQSXQLWLYHGDPDJHV86:$FODLPV
WKLVH[WUHPHGLVSDULW\UHTXLUHVWKH&RXUWWRRUGHUDUHPLWWLWXU
RIWKHSXQLWLYHGDPDJHDZDUG
$ FRXUW PD\ RUGHU D UHPLWWLWXU LI DQ DZDUG RI SXQLWLYH
GDPDJHVLVJURVVO\H[FHVVLYH%0:RI1$Y*RUH86
6 &W / (G G ,Q

-- 10 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
&([FOXVLRQRI5HEXWWDO(YLGHQFH
86:$ DUJXHV WKH GLVWULFW FRXUW LPSURSHUO\ H[FOXGHG
VWDWHPHQWVRIRQHRILWVZLWQHVVHVDVKHDUVD\*HQHUDOO\ZH
UHYLHZ D GLVWULFW FRXUW V HYLGHQWLDU\ GHFLVLRQV IRU DEXVH RI
GLVFUHWLRQDQGZLOOUHYHUVHRQO\ZKHQZHILQGWKDWVXFKDEXVH
RIGLVFUHWLRQKDVFDXVHGPRUHWKDQKDUPOHVVHUURU&RROH\Y
&DUPLNH &LQHPDV ,QF )G WK &LU
5HFHQWO\ZHKDYHDSSOLHGWKLVVWDQGDUGWRKHDUVD\HYLGHQWLDU\
UXOLQJVDVZHOO7UHSHOY5RDGZD\([S,QF)G
WK&LU ,QRUGHUIRU86:$WRSUHYDLORQWKLV
FODLPLWPXVWQRWRQO\GHPRQVWUDWHWKHGLVWULFWFRXUWHUUHGLQ
H[FOXGLQJWKHKHDUVD\VWDWHPHQWLWPXVWGHPRQVWUDWHWKHHUURU
SUHMXGLFHGLWVFDVH,G
7KH VWDWHPHQW 86:$ GHVLUHG WR DGPLW ZDV PDGH E\
$QGUHZ3RZOH\3RZOH\ZDVWKHWUXVWHHRIWKH/RFDODIWHUWKH
3ODLQWLIIVZHUHUHPRYHGIURPRIILFH$VSDUWRIKLVGXWLHVDV
WUXVWHHKHDSSRLQWHGPHPEHUVRIWKH/RFDOWRVHUYHZLWKKLP
LQWKHRSHUDWLRQRIWKHWUXVWHHVKLS,Q-XO\VKRUWO\DIWHU
WKH3ODLQWLIIVKDGEHHQUHPRYHGIURPWKHLURIILFHV3RZOH\
DSSRLQWHGWKUHHPHPEHUVRIWKH/RFDOZKRKDGHQJDJHGLQWKH
VDPHILQDQFLDOVSHQGLQJSUDFWLFHVDV3ODLQWLIIVWRZRUNZLWK
KLP86:$DUJXHGDWWULDOLWKDGUHPRYHG3ODLQWLIIVIURP
WKHLURIILFHVEHFDXVHRIILQDQFLDOPLVPDQDJHPHQWRI/RFDO
IXQGV3ODLQWLIIVDUJXHGDWWULDOWKLVUHDVRQZDVQRWJHQXLQH
DQGDVHYLGHQFHRIWKLVSRLQWHGWRWKHIDFW3RZOH\UHDSSRLQWHG
WKHVHWKUHHPHPEHUVHYHQWKRXJKWKH\KDGEHHQUHPRYHGIRU
PDNLQJWKHVDPHW\SHRIH[SHQGLWXUHVDV3ODLQWLIIVZKHQWKH
WUXVWHHVKLSZDVLPSRVHG
86:$WULHGWRUHVSRQGWRWKLVWKHRU\DWWULDOE\SXWWLQJRQ
HYLGHQFH3RZOH\KDGOHJLWLPDWHUHDVRQVIRUUHDSSRLQWLQJWKHVH
WKUHHPHPEHUVDQGZDVQRWLQGLIIHUHQWWRWKH/RFDO¶VILQDQFHV
3RZOH\GLHGEHIRUHWULDODQGZDVXQDEOHWRWHVWLI\+RZHYHU
3RZHO\ KDG WDONHG WR -DPHV .LUNSDWULFN WKH DSSRLQWHG
SUHVLGHQW RI WKH /RFDO GXULQJ WKH WUXVWHHVKLS DERXW KLV
UHDVRQVIRUUHDSSRLQWLQJWKHWKUHHPHPEHUV7KHVWDWHPHQW
.LUNSDWULFNPDGHZDV
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

)RU H[DPSOH VHFWLRQ RI WKH /05'$ SURYLGHV
,Q DQ\ SURFHHGLQJ SXUVXDQW WR WKLV VHFWLRQ D WUXVWHHVKLS
HVWDEOLVKHG E\ D ODERU RUJDQL]DWLRQ LQ FRQIRUPLW\ ZLWK WKH
SURFHGXUDO UHTXLUHPHQWV RI LWV FRQVWLWXWLRQV DQG E\ODZV DQG
DXWKRUL]HG RU UDWLILHG DIWHU D IDLU KHDULQJ VKDOO EH SUHVXPHG
YDOLG IRU D SHULRG RI HLJKWHHQ PRQWKV IURP WKH GDWH RI LWV
HVWDEOLVKPHQW DIWHU WKH H[SLUDWLRQ RI WKH HLJKWHHQ PRQWKV WKH
WUXVWHHVKLS VKDOO EH SUHVXPHG LQYDOLG LQ DQ\ VXFK SURFHHGLQJ DQG
LWV GLVFRQWLQXDQFH VKDOO EH GHFUHHG XQOHVV WKH ODERU RUJDQL]DWLRQ
VKDOO VKRZ E\ FOHDU DQG FRQYLQFLQJ SURRI WKDW WKH FRQWLQXDWLRQ
RI WKH WUXVWHHVKLS LV QHFHVVDU\ IRU D SXUSRVH DOORZDEOH XQGHU
VHFWLRQ RI WKLV WLWOH
86&† F
WUXVWHHVKLSIRUPRUHWKDQPRQWKVZDVQHFHVVDU\IRUDQ
DOORZDEOHSXUSRVHDQG
WKHIDLOXUHRIWKHLQWHUQDWLRQDOXQLRQWRSURYLGHWKH
SURFHGXUDO UHTXLUHPHQWV PDQGDWHG E\ WKDW XQLRQ¶V
&RQVWLWXWLRQDQGE\ODZV
7KHLQVWUXFWLRQGRHVQRWPLVVWDWHWKHODZDQGLVLQDFFRUG
ZLWK WKH VWDWXWRU\ ODQJXDJH RI WKH /05'$ )XUWKHU WKH
LQVWUXFWLRQLVIDFWXDOO\FRUUHFWEHFDXVHWKHGLVWULFWFRXUWKHOG
DV D PDWWHU RI ODZ WKH DFWLRQV RI 86:$ LQ LPSRVLQJ DQG
FRQWLQXLQJ WKH WUXVWHHVKLS GLG QRW FRPSRUW ZLWK WKH
SURFHGXUDOUHTXLUHPHQWVUHTXLUHGE\WKHXQLRQ¶VFRQVWLWXWLRQ
DQGE\ODZV
6WLOO86:$DUJXHVWKHLQVWUXFWLRQ³HIIHFWLYHO\´LQVWUXFWHG
WKHMXU\WKDW86:$KDGZURQJIXOO\LPSRVHGDQGPDLQWDLQHG
WKHWUXVWHHVKLS,WFRQWHQGVWKHGLVWULFWFRXUWUHIXVHGWRDGPLW
HYLGHQFH WKDW ZRXOG VKRZ D UHDVRQ IRU WKH WUXVWHHVKLS¶V
FRQWLQXDWLRQ 86:$ DUJXHV LQ WKH IDFH RI LWV LQDELOLW\ WR
SUHVHQWLWVHYLGHQFHIRUFRQWLQXDWLRQWKHLQVWUXFWLRQKDGWKH
HIIHFW RI WHOOLQJ WKH MXU\ WKH WUXVWHHVKLS ZDV FRQWLQXHG IRU
XQODZIXOUHDVRQV7KLVLQWXUQKDGWKHHIIHFWRIWDUQLVKLQJWKH
UHSXWDWLRQ RI 86:$ DQG PDGH LW DOO WKH PRUH EHOLHYDEOH

-- 11 of 12 --

$UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P
1RV
86:$LPSRVHGWKHWUXVWHHVKLSIRUXQODZIXOUHDVRQVLQWKH
ILUVWSODFH
86:$¶VHYLGHQFHRQFRQWLQXDWLRQRIWKHWUXVWHHVKLSWKDW
ZDV H[FOXGHG ZDV 86:$¶V &RPPLVVLRQ 5HSRUW WKDW
UHFRPPHQGHG FRQWLQXDWLRQ RI WKH WUXVWHHVKLS DQG IXUWKHU
DXGLWV DOHWWHURI-DQXDU\WKDWVWDWHG86:$¶V
([HFXWLYH %RDUG $SSHDO 3DQHO DGRSWHG WKH &RPPLVVLRQ
5HSRUW WKHUHVXOWVRIIXUWKHUDXGLWVDQG DWUDQVFULSWRI
WKH $XJXVW KHDULQJ EHIRUH D 86:$ &RQYHQWLRQ
$SSHDOV&RPPLWWHHXSKROGLQJWKHGHFLVLRQRIWKH([HFXWLYH
%RDUG $SSHDOV 3DQHO 7KH GLVWULFW FRXUW GHWHUPLQHG WKLV
HYLGHQFH ZDV QRW SUREDWLYH WR WKH XOWLPDWH LVVXH DW WULDO
ZKHWKHUWKHWUXVWHHVKLSKDGEHHQODZIXOO\LPSRVHG,WDOVR
GHWHUPLQHGWKLVHYLGHQFHPLJKWXQGXO\LQIOXHQFHWKHMXU\DQG
XVXUSLWVIDFWILQGLQJIXQFWLRQ
86:$DUJXHVWKDWZKLOHWKLVHYLGHQFHPD\QRWKDYHEHHQ
UHOHYDQWWRWKHFHQWUDOLVVXHDWWULDOWKHGLVWULFWFRXUWPDGHWKLV
HYLGHQFH UHOHYDQW E\ LWV MXU\ LQVWUXFWLRQ $V PHQWLRQHG
DERYHKRZHYHUWKHGLVWULFWFRXUWDOVRIRXQGVXFKHYLGHQFHWR
EHSUHMXGLFLDO$GPLWWLQJRUH[FOXGLQJUHOHYDQWHYLGHQFHWKDW
LV SUHMXGLFLDO RU FRQIXVLQJ LV ZLWKLQ WKH GLVWULFW FRXUW¶V
GLVFUHWLRQ&ODUNVYLOOH0RQWJRPHU\&RXQW\6FKRRO6\VWHPY
8QLWHG6WDWHV*\SVXP&R)G WK&LU
)XUWKHUH[FOXVLRQRIUHOHYDQWHYLGHQFHLVKDUPOHVVLIRWKHU
VXEVWDQWLDOO\HTXLYDOHQWHYLGHQFHLVDGPLWWHG,QUH$LU&UDVK
'LVDVWHU )G WK &LU $OO RI WKH
HYLGHQFHH[FOXGHGRQWKHFRQWLQXDWLRQLVVXHVKRZHG86:$
LPSRVHG DQG PDLQWDLQHG WKH WUXVWHHVKLS EHFDXVH RI WKH
3ODLQWLIIV¶ILQDQFLDOGHFLVLRQV86:$SURYLGHGVXEVWDQWLDOO\
HTXLYDOHQW HYLGHQFH WKLV ZDV LWV UHDVRQ IRU LPSRVLQJ WKH
WUXVWHHVKLS GXULQJ WKH WULDO ,QGHHG ZKHQ 86:$ WULHG WR
SURFXUHDGPLVVLRQRIWKLVHYLGHQFHDVHFRQGWLPHWKHGLVWULFW
FRXUW GHQLHG LWV UHTXHVW EHFDXVH LQ SDUW WKH FRXUW IHOW WKH
HYLGHQFHZDVFXPXODWLYH7KHH[FOXVLRQRIWKLVHYLGHQFHGLG
QRWSUHMXGLFH86:$¶VFDVHRQWKHFRQWLQXDWLRQLVVXH7KXV
WKHLQVWUXFWLRQGLGQRW³HIIHFWLYHO\´LQVWUXFWWKHMXU\86:$
1RV $UJHQWLQHHWDOY8QLWHG
6WHHOZRUNHUVRI$P

KDG XQODZIXOO\ LPSRVHG WKH WUXVWHHVKLS DQG ZDV QRW
SUHMXGLFLDO
%86:$¶V5LJKWWR&URVV([DPLQH.LQJ
86:$FODLPVWKHGLVWULFWFRXUWLPSURSHUO\GHQLHGLWWKH
ULJKWRIFURVVH[DPLQDWLRQRIRQHRILWVZLWQHVVHV5RQ.LQJ
DQDXGLWRUIRU86:$ZDVFDOOHGE\WKH3ODLQWLIIVLQWKHLU
FDVH LQ FKLHI 7KH GLVWULFW MXGJH GLG QRW DOORZ 86:$ WR
FURVVH[DPLQH .LQJ DIWHU 3ODLQWLIIV¶ GLUHFW H[DPLQDWLRQ
EHFDXVH WKH FRXUW FRQFOXGHG KH ZDV HVVHQWLDOO\ D 86:$
ZLWQHVV,QVWHDGWKHFRXUWUHTXLUHG86:$WRFDOO.LQJLQLWV
FDVHLQFKLHIDZHHNODWHU86:$DUJXHVLWKDVDULJKWWR
FURVVH[DPLQHZLWQHVVHVGLUHFWO\DIWHUGLUHFWH[DPLQDWLRQDQG
WKHGHOD\LQWKLVFDVHFUHDWHGMXU\FRQIXVLRQ
&URVVH[DPLQDWLRQLVDWULDOULJKW$OIRUGY8QLWHG6WDWHV
866&W/(G
$ FRXUW PXVW SHUPLW D SDUW\ WR VXEVWDQWLDOO\ DQG IDLUO\
H[HUFLVH LWV ULJKW WR FURVVH[DPLQDWLRQ )UDQFLV Y &ODUN
(TXLS&R)G WK&LU +RZHYHU
³>VRPHWLPHV@FURVVH[DPLQDWLRQLVFURVVH[DPLQDWLRQLQIRUP
RQO\DQGQRWLQIDFWDVIRUH[DPSOHWKHμFURVVH[DPLQDWLRQ¶
RI D SDUW\ E\ KLV RZQ FRXQVHO DIWHU EHLQJ FDOOHG E\ WKH
RSSRQHQW´)HG5(YLG$GYLVRU\&RPPLWWHH1RWHV
7KHGLVWULFWFRXUWGHWHUPLQHG.LQJZDVDSDUW\ZKHUHFURVV
H[DPLQDWLRQ ZRXOG RQO\ EH LQ IRUP DQG QRW LQ IDFW
$FFRUGLQJO\WKHGLVWULFWFRXUWGHFLGHGWRUHTXLUH86:$WR
H[DPLQH.LQJLQLWVFDVHLQFKLHIDVRSSRVHGWRGXULQJWKH
3ODLQWLIIV¶FDVH
7KH)HGHUDO5XOHVRI(YLGHQFHJLYHGLVFUHWLRQWRWKHWULDO
MXGJHDVWRWKHRUGHUZLWQHVVHVDUHFDOOHG)HG5(YLG
D )XUWKHU D WULDO FRXUW¶V FRQWURO RYHU WKH RUGHU RI WKH
HYLGHQFHZLOOQRWEHGLVWXUEHGDEVHQWDQDEXVHRIGLVFUHWLRQ
*HGHUV Y 8QLWHG 6WDWHV 86 6 &W
/(GG :HFDQQRWFRQFOXGHLWZDVDQ
DEXVH RI GLVFUHWLRQ IRU WKH GLVWULFW FRXUW WR UHTXLUH .LQJ¶V
H[DPLQDWLRQLQ86:$¶VFDVHLQFKLHI

-- 12 of 12 --