01a0140p.06

8QLWHG6WDWHVY
3HWHUPDQHWDO
1RV
*UDQW Y 8QLWHG 6WDWHV )G WK &LU
GHFOLQLQJ WR JUDQW † UHOLHI RQ D GHIDXOWHG FODLP RI
VHQWHQFLQJHUURUEHFDXVHWKHUHZDVQR³EUHDNGRZQRIWKHWULDO
SURFHVV´ 6FRWWY8QLWHG6WDWHV)G WK&LU
KROGLQJ WKDW WKH GLVWULFW FRXUW VKRXOG QRW KDYH
FRQVLGHUHG D † SHWLWLRQ EDVHG RQ DQ DOOHJHG
PLVDSSOLFDWLRQRIWKHVHQWHQFLQJJXLGHOLQHV
)RUWKHVHUHDVRQVZHKROGWKDWGHIHQGDQWVKDYHIDLOHGWR
VKRZWKDW†ZDV³LQDGHTXDWHRULQHIIHFWLYH´IRUWKHLU
FODLPVDQGWKHUHIRUHWKHGLVWULFWFRXUWODFNHGMXULVGLFWLRQWR
JUDQW UHOLHI XQGHU † :H GR QRW UHDFK %HOO¶V FURVV
DSSHDOUHJDUGLQJDIXUWKHUVHQWHQFLQJUHGXFWLRQ
,,,
$FFRUGLQJO\ ZH UHYHUVH WKH JUDQWV RI KDEHDV UHOLHI DQG
UHPDQGWKHVHFDXVHVWRWKHGLVWULFWFRXUWZLWKLQVWUXFWLRQVWR
YDFDWHWKHQHZVHQWHQFHVDQGUHLQVWDWHWKHRULJLQDOVHQWHQFHV

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

81,7(' 67$7(6 2) $0(5,&$
3ODLQWLII$SSHOODQW
Y
'$55(// 3(7(50$1
'HIHQGDQW$SSHOOHH

81,7(' 67$7(6 2) $0(5,&$
3ODLQWLII$SSHOODQW
Y
&5$,* )25(67
'HIHQGDQW$SSHOOHH

81,7(' 67$7(6 2) $0(5,&$
3ODLQWLII$SSHOODQW
&URVV$SSHOOHH
Y
;!

1RV

-- 1 of 4 --

8QLWHG6WDWHVY
3HWHUPDQHWDO
1RV
7KH +RQRUDEOH 5 $OODQ (GJDU &KLHI 8QLWHG 6WDWHV 'LVWULFW -XGJH
IRU WKH (DVWHUQ 'LVWULFW RI 7HQQHVVHH VLWWLQJ E\ GHVLJQDWLRQ
52%(57 %(//
'HIHQGDQW$SSHOOHH
&URVV$SSHOODQW

1
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWVRI2KLRDW&OHYHODQGDQG$NURQ
1R²3DWULFLD$*DXJKDQ-DPHV6*ZLQ
'DQ$3ROVWHU'LVWULFW-XGJHV
$UJXHG1RYHPEHU
'HFLGHGDQG)LOHG$SULO
%HIRUH5<$1DQG1255,6&LUFXLW-XGJHV('*$5
&KLHI'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' (OL]DEHWK ' &ROOHU\ 81,7(' 67$7(6
'(3$570(17 2) -867,&( &5,0,1$/ ',9,6,21
$33(//$7(6(&7,21:DVKLQJWRQ'&IRU$SSHOODQW
'HQQLV * 7HUH] $66,67$17 )('(5$/ 38%/,&
'()(1'(5 &OHYHODQG 2KLR +HQU\ ) 'H%DJJLV
&OHYHODQG2KLR-RVHSK70F*LQQHVV&OHYHODQG2KLRIRU
$SSHOOHHV21%5,()(OL]DEHWK'&ROOHU\'DYLG6.ULV
/LQGD 0 %HW]HU 81,7(' 67$7(6 '(3$570(17 2)
-867,&(&5,0,1$/',9,6,21$33(//$7(6(&7,21
:DVKLQJWRQ '& IRU $SSHOODQW 'HQQLV * 7HUH]
$66,67$17)('(5$/38%/,&'()(1'(5&OHYHODQG
2KLR +HQU\ ) 'H%DJJLV &OHYHODQG 2KLR -RVHSK 7
0F*LQQHVV&OHYHODQG2KLRIRU$SSHOOHHV
1RV 8QLWHG6WDWHVY
3HWHUPDQHWDO

QRWDQDGGLWLRQDODOWHUQDWLYHRUVXSSOHPHQWDOUHPHG\WRWKDW
SUHVFULEHGXQGHU†´&KDUOHV)GDW FLWDWLRQV
RPLWWHG
:HLQYRNHGWKHSUHYDLOLQJVWDQGDUGWKDWLVVDLGWRZDUUDQW
WKHEULQJLQJRIVXFK†SHWLWLRQVLQRXU&KDUOHVRSLQLRQ
ZKHQZHQRWHGWKDW³>Q@RFLUFXLWFRXUWKDVWRGDWHSHUPLWWHG
DSRVW$('3$SHWLWLRQHUZKRZDVQRWHIIHFWLYHO\PDNLQJD
FODLPRIμDFWXDOLQQRFHQFH¶WRXWLOL]H† YLD†¶V
μVDYLQJV FODXVH¶ DV D ZD\ RI FLUFXPYHQWLQJ † ¶V
UHVWULFWLRQV RQ WKH ILOLQJ RI VHFRQG RU VXFFHVVLYH KDEHDV
SHWLWLRQV´,GDW7KHVH³DFWXDOLQQRFHQFH´FDVHVKDYH
DULVHQ IURP D FRPPRQ IDFWXDO VFHQDULR VRPH SULVRQHUV
FRQYLFWHGRI³XVLQJ´DILUHDUPGXULQJDGUXJFULPHRUYLROHQW
FULPHIRXQGWKHPVHOYHVLQQRFHQWZKHQWKH6XSUHPH&RXUW
VXEVHTXHQWO\GHILQHG³XVH´LQDUHVWULFWLYHPDQQHULQ%DLOH\
Y 8QLWHG 6WDWHV 86 6HH 86&
† F 7KHVHSULVRQHUVZKRFRXOGQRWHVWDEOLVKWKHLU
LQQRFHQFHEHIRUH%DLOH\ZHUHEDUUHGIURP†UHOLHIDIWHU
%DLOH\ EHFDXVH VXFFHVVLYH † SHWLWLRQV DUH OLPLWHG WR
QHZO\GLVFRYHUHGHYLGHQFHRUDQHZDQGUHWURDFWLYHUXOHRI
FRQVWLWXWLRQDOODZ6HH86&†,QUH'DYHQSRUW
)G WK&LU 7ULHVWPDQY8QLWHG6WDWHV
)G G&LU ,QUH'RUVDLQYLO)G G
&LU VHHDOVR%RXVOH\Y8QLWHG6WDWHV86
KROGLQJLQD†FDVHWKDWWKHIDLOXUHWR
UDLVHD%DLOH\FODLPRQGLUHFWUHYLHZFDQEHRYHUFRPHE\D
VKRZLQJRI³DFWXDOLQQRFHQFH´
:LWKRXWGHWHUPLQLQJWKHH[DFWVFRSHRIWKHVDYLQJVFODXVH
ZHFRQFOXGHWKDWGHIHQGDQWV¶FODLPVGRQRWIDOOZLWKLQDQ\
DUJXDEOH FRQVWUXFWLRQ RI LW EHFDXVH GHIHQGDQWV KDYH QRW
VKRZQDQLQWHUYHQLQJFKDQJHLQWKHODZWKDWHVWDEOLVKHVWKHLU
DFWXDOLQQRFHQFH8QGHU&KDUOHVLISHWLWLRQHUVGRQRWPDNH
DFODLPIRUDFWXDOLQQRFHQFHWKH\DUHQRWHQWLWOHGWRUHOLHI
WKURXJK†¶VVDYLQJVFODXVH%HOO3HWHUPDQDQG)RUHVW
GRQRWDUJXHLQQRFHQFHEXWLQVWHDGFKDOOHQJHWKHLUVHQWHQFHV
&RXUWV KDYH JHQHUDOO\ GHFOLQHG WR FROODWHUDOO\ UHYLHZ
VHQWHQFHVWKDWIDOOZLWKLQWKHVWDWXWRU\PD[LPXP6HHHJ

-- 2 of 4 --

8QLWHG6WDWHVY
3HWHUPDQHWDO
1RV
UHPHG\E\PRWLRQLVLQDGHTXDWHRULQHIIHFWLYHWRWHVWWKH
OHJDOLW\RIKLVGHWHQWLRQ
$\HDUSHULRGRIOLPLWDWLRQVKDOODSSO\WRDPRWLRQ
XQGHUWKLVVHFWLRQ
86&†
'HIHQGDQWVLQWKHLQVWDQWFDVHVFDQQRWUDLVHWKHLUFODLPVLQ
D†PRWLRQIRUVHYHUDOUHDVRQV)LUVWWKHRQH\HDUOLPLW
EDUVWKHLUPRWLRQV,QDGGLWLRQDVHFRQGRUVXFFHVVLYHPRWLRQ
LV RQO\ SHUPLWWHG LI WKH FRXUW RI DSSHDOV FHUWLILHV WKDW WKH
GHIHQGDQWKDVSUHVHQWHGQHZO\GLVFRYHUHGHYLGHQFHRUDQHZ
DQGUHWURDFWLYHUXOHRIFRQVWLWXWLRQDOODZWKDWZDVSUHYLRXVO\
XQDYDLODEOH 86& † %HOO DQG 3HWHUPDQ DUH
SUHFOXGHGIURPSUHVHQWLQJDQRWKHU†PRWLRQEHFDXVH
WKH\DUHQRWDVVHUWLQJDQHZUXOHRIFRQVWLWXWLRQDOODZRUQHZ
HYLGHQFH6LQFH)RUHVWGLGQRWILOHSUHYLRXV†PRWLRQV
KHZRXOGQRWKDYHWRPHHWWKLVVWDQGDUGEXWKLVFODLPOLNH
WKRVHRI%HOODQG3HWHUPDQZRXOGVWLOOEHEDUUHGE\WKHRQH
\HDUUXOH
7KHXQDYDLODELOLW\RI†UHOLHIGRHVQRWDORQHHVWDEOLVK
LQDGHTXDF\RULQHIIHFWLYHQHVVXQGHUWKHVDYLQJVFODXVH7KLV
FRXUW KDV FOHDUO\ VWDWHG WKDW ³WKH † UHPHG\ LV QRW
FRQVLGHUHGLQDGHTXDWHRULQHIIHFWLYHVLPSO\EHFDXVH†
UHOLHIKDVDOUHDG\EHHQGHQLHGRUEHFDXVHWKHSHWLWLRQHULV
SURFHGXUDOO\EDUUHGIURPSXUVXLQJUHOLHIXQGHU†RU
EHFDXVHWKHSHWLWLRQHUKDVEHHQGHQLHGSHUPLVVLRQWRILOHD
VHFRQGRUVXFFHVVLYHPRWLRQWRYDFDWH>@´&KDUOHV)G
DW FLWDWLRQVRPLWWHG
7KH FLUFXPVWDQFHV LQ ZKLFK † LV LQDGHTXDWH DQG
LQHIIHFWLYH DUH QDUURZ IRU WR FRQVWUXH † UHOLHI PXFK
PRUHOLEHUDOO\WKDQ†UHOLHIZRXOGGHIHDWWKHSXUSRVHRI
WKHUHVWULFWLRQV&RQJUHVVSODFHGRQWKHILOLQJRIVXFFHVVLYH
SHWLWLRQVIRUFROODWHUDOUHOLHI6HH$QWLWHUURULVPDQG(IIHFWLYH
'HDWK3HQDOW\$FWRI3XE/1R6WDW
DPHQGLQJ 86& † ³$('3$´ $V ZH
H[SODLQHGLQ&KDUOHV³>W@KHUHPHG\DIIRUGHGXQGHU†LV
1RV 8QLWHG6WDWHVY
3HWHUPDQHWDO

BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
$/$1(1255,6&LUFXLW-XGJH'DUUHOO3HWHUPDQ&UDLJ
)RUHVW DQG 5REHUW %HOO SOHDGHG JXLOW\ WR FRQVSLULQJ WR
SRVVHVV DQG GLVWULEXWH FRFDLQH LQ YLRODWLRQ RI 86&
†3HWHUPDQDQG%HOOHDFKILOHGDQXQVXFFHVVIXODSSHDO
DQG VHYHUDO FROODWHUDO DWWDFNV FKDOOHQJLQJ WKHLU VHQWHQFHV
3HWHUPDQ%HOODQG)RUHVWWKHQILOHGWKHLQVWDQWKDEHDVFRUSXV
SHWLWLRQVXQGHU86&†7KHGLVWULFWFRXUWJUDQWHG
WKH SHWLWLRQV DQG GHIHQGDQWV ZHUH UHVHQWHQFHG WR VKRUWHU
WHUPV7KHJRYHUQPHQWDSSHDOVDUJXLQJWKDWWKHGLVWULFWFRXUW
GLG QRW KDYH MXULVGLFWLRQ RYHU WKH † SHWLWLRQV :H
UHYHUVHWKHGLVWULFWFRXUWDQGUHLQVWDWHWKHRULJLQDOVHQWHQFHV
,
'HIHQGDQWV ZHUH SDUW RI D ODUJH FRFDLQH FRQVSLUDF\ LQ
<RXQJVWRZQ2KLRZKLFKRSHUDWHGIURP6HSWHPEHU
WR -DQXDU\ 3HWHUPDQ )RUHVW DQG %HOO SOHDGHG
JXLOW\LQ1RYHPEHUWRGUXJFRQVSLUDF\FKDUJHVDQGWKH
GLVWULFWFRXUWVHQWHQFHGWKHPEDVHGRQWKHHQWLUHWR
NLORJUDPVRIFRFDLQHLQYROYHGLQWKHFRQVSLUDF\3HWHUPDQ
DQG%HOOZHUHVHQWHQFHGWRPRQWKVDQG)RUHVWWR
PRQWKV 7KH HYLGHQFH DW VHQWHQFLQJ LQGLFDWHG WKDW WKHVH
GHIHQGDQWVGLGQRWMRLQWKHFRQVSLUDF\XQWLO'HFHPEHU
%HOODQG3HWHUPDQDSSHDOHGWKHLUVHQWHQFHVLQ%HOO
DOOHJHGWKDWKHZDVQRWDFFRXQWDEOHIRUWKHZKROHDPRXQWRI
FRFDLQHDQGWKDWWKHJRYHUQPHQWKDGQRWPHWLWVEXUGHQRI
SURRIRQWKHGUXJDPRXQWDWWULEXWHGWRKLP3HWHUPDQDUJXHG
WKDWWKHIXOOGUXJDPRXQWZDVQRWUHDVRQDEO\IRUHVHHDEOHLQ
KLVFDVH7KLVFRXUWDIILUPHGWKHLUVHQWHQFHV8QLWHG6WDWHV
Y%HOO1RV:/ WK&LU
'HF %HOODQG3HWHUPDQHDFKSURFHHGHGWRILOH
VHYHUDOFROODWHUDODWWDFNVRQWKHLUVHQWHQFHVZKLFKWKHGLVWULFW
FRXUWWUHDWHGDVPRWLRQVXQGHU86&†DQGGHQLHG
)RUHVWDWWHPSWHGWRDSSHDOEXWKLVDSSHDOZDVGLVPLVVHGDV

-- 3 of 4 --

8QLWHG6WDWHVY
3HWHUPDQHWDO
1RV
7KH GLVWULFW FRXUW GHQLHG 0LOOHGJH¶V † SHWLWLRQ EXW UHHQWHUHG
MXGJPHQW ZKLFK SHUPLWWHG 0LOOHGJH WR WDNH D GLUHFW DSSHDO
XQWLPHO\+HGLGQRWILOHDQ\FROODWHUDODWWDFNVEHIRUHWKH
LQVWDQW†SHWLWLRQ
,QWKHPHDQWLPHDQRWKHUFRQVSLUDWRULQWKHVDPHGUXJULQJ
9LFWRU0LOOHGJHDFKLHYHGDVHQWHQFHUHGXFWLRQLQIURP
KLVRULJLQDOVHQWHQFHRIPRQWKVIRUWKHFRQVSLUDF\FKDUJH
7KHGLVWULFWFRXUWDOORZHGKLPWRWDNHDODWHDSSHDOIURPKLV
FRQYLFWLRQ DQG VHQWHQFH VLQFH WKH FRXUW KDG QRW
LQIRUPHG 0LOOHGJH RI KLV ULJKW WR DSSHDO DIWHU WKH LQLWLDO
VHQWHQFLQJ/LNH3HWHUPDQ%HOODQG)RUHVW0LOOHGJHKDG
RULJLQDOO\ EHHQ VHQWHQFHG EDVHG RQ WKH IXOO WR
NLORJUDPVLQYROYHGLQWKHFRQVSLUDF\7KLVFRXUWUHYHUVHG
0LOOHGJH¶V VHQWHQFH RQ GLUHFW DSSHDO FRQFOXGLQJ WKDW WKH
GLVWULFW FRXUW KDG QRW PDGH DGHTXDWH IDFWXDO ILQGLQJV WR
VXSSRUWWKHGUXJDPRXQWDWWULEXWHGWR0LOOHGJH8QLWHG6WDWHV
Y0LOOHGJH)G WK&LU 2QUHPDQG
0LOOHGJHZDVUHVHQWHQFHGWRPRQWKVRILPSULVRQPHQW
EDVHGRQNLORJUDPVRIFRFDLQH
:KHQ 3HWHUPDQ )RUHVW DQG %HOO OHDUQHG RI WKHLU
FRFRQVSLUDWRU¶V UHVHQWHQFLQJ WKH\ ILOHG WKH LQVWDQW †
SHWLWLRQV 7KH\ DUJXHG WKDW WKHUH KDG EHHQ DQ LQWHUYHQLQJ
FKDQJH LQ WKH ODZ DQG WKDW † ZKRVH VWDWXWH RI
OLPLWDWLRQV DQG UHVWULFWLRQV RQ VXFFHVVLYH SHWLWLRQV EDUUHG
WKHLUFODLPV ZDVLQDGHTXDWHDQGLQHIIHFWLYH WRUHGUHVVWKH
ZURQJ7KHGLVWULFWFRXUWJUDQWHGWKHSHWLWLRQV,WIRXQGWKDW
WKHODZKDGFKDQJHGVLQFHWKHRULJLQDOVHQWHQFLQJWRUHTXLUH
LQGLYLGXDOL]HGILQGLQJVIRUGUXJFRQVSLUDWRUV¶VHQWHQFHV7R
GHQ\ D ZULW RI KDEHDV FRUSXV LQ VXFK FLUFXPVWDQFHV
FRQFOXGHGWKHFRXUW³ZRXOGEHDPLVFDUULDJHRIMXVWLFHLQWKDW
>GHIHQGDQWV KDYH@ D GXH SURFHVV ULJKW WR EH VHQWHQFHG RQ
DFFXUDWH LQIRUPDWLRQ´ 3HWHUPDQ Y /DPDQQD 1R
&9VOLSRSDW 1'2KLR6HSW )RUHVW
Y/DPDQQD1R&9VOLSRSDW 1'2KLR6HSW
%HOOY/DPDQQD1R&9VOLSRSDW
1RV 8QLWHG6WDWHVY
3HWHUPDQHWDO

1'2KLR6HSW 7KHFRXUWRUGHUHGDKHDULQJRQ
WKHVH GHIHQGDQWV¶ SDUWLFLSDWLRQ LQ WKH FRQVSLUDF\ DQG WKH
WKUHH ZHUH UHVHQWHQFHG EDVHG RQ OHVVHU DPRXQWV %HOO
UHFHLYHG PRQWKV 3HWHUPDQ PRQWKV DQG )RUHVW
PRQWKV DQG HDFK ZDV DOVR VHQWHQFHG WR ILYH \HDUV RI
VXSHUYLVHG UHOHDVH ZLWK FUHGLW IRU WLPH VHUYHG 7KH\ DUH
FXUUHQWO\RQVXSHUYLVHGUHOHDVH
7KHJRYHUQPHQWDSSHDOVIURPWKHJUDQWVRIKDEHDVUHOLHI
DUJXLQJWKDWWKHGLVWULFWFRXUWGLGQRWKDYHMXULVGLFWLRQRYHU
WKH†SHWLWLRQVEHFDXVHSULVRQHUVPXVWVHHNFROODWHUDO
UHOLHI XQGHU 86& † XQOHVV WKH\ FDQ VKRZ WKDW
†LV³LQDGHTXDWHRULQHIIHFWLYH´ZKLFKWKHJRYHUQPHQW
FODLPVGHIHQGDQWVKDYHQRWGHPRQVWUDWHG%HOOFURVVDSSHDOV
DUJXLQJWKDWLQWKHUHVHQWHQFLQJKHDULQJKHZDVGHQLHG
DQHYLGHQWLDU\KHDULQJWKDWVKRXOGKDYHUHVXOWHGLQDUHGXFWLRQ
RIKLVRIIHQVHOHYHO
,,
:HUHYLHZDGLVWULFWFRXUW¶VOHJDOFRQFOXVLRQVLQDKDEHDV
FRUSXVGHFLVLRQGHQRYR&KDUOHVY&KDQGOHU)G
WK &LU SHU FXULDP 6HFWLRQ LV WKH
SULPDU\DYHQXHIRUUHOLHIIRUIHGHUDOSULVRQHUVSURWHVWLQJWKH
OHJDOLW\ RI WKHLU VHQWHQFH ZKLOH † LV DSSURSULDWH IRU
FODLPV FKDOOHQJLQJ WKH H[HFXWLRQ RU PDQQHU LQ ZKLFK WKH
VHQWHQFH LV VHUYHG +RZHYHU D IHGHUDO SULVRQHU PD\ DOVR
FKDOOHQJH WKH YDOLGLW\ RI KLV FRQYLFWLRQ RU VHQWHQFH XQGHU
† LI † LV ³LQDGHTXDWH RU LQHIIHFWLYH WR WHVW WKH
OHJDOLW\RIKLVGHWHQWLRQ´DFFRUGLQJWRWKH³VDYLQJVFODXVH´RI
86&†ZKLFKVWDWHV
$QDSSOLFDWLRQIRUDZULWRIKDEHDVFRUSXVLQEHKDOIRI
DSULVRQHUZKRLVDXWKRUL]HGWRDSSO\IRUUHOLHIE\PRWLRQ
SXUVXDQW WR WKLV VHFWLRQ VKDOO QRW EH HQWHUWDLQHG LI LW
DSSHDUVWKDWWKHDSSOLFDQWKDVIDLOHGWRDSSO\IRUUHOLHIE\
PRWLRQWRWKHFRXUWZKLFKVHQWHQFHGKLPRUWKDWVXFK
FRXUWKDVGHQLHGKLPUHOLHIXQOHVVLWDOVRDSSHDUVWKDWWKH

-- 4 of 4 --