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
1RV
0,&+,*$1 %(// 7(/(3+21(
&203$1<GED$0(5,7(&+
0,&+,*$1
3ODLQWLII$SSHOODQW
&URVV$SSHOOHH
Y
-2+1 (1*/(5LQKLV2IILFLDO
&DSDFLW\DV*RYHUQRURIWKH
6WDWHRI0LFKLJDQ'$9,' $
69$1'$LQKLV2IILFLDO
&DSDFLW\DV&RPPLVVLRQHURI
WKH0LFKLJDQ3XEOLF6HUYLFH
&RPPLVVLRQ52%(57 %
1(/621LQKLV2IILFLDO
&DSDFLW\DV&RPPLVVLRQHURI
WKH0LFKLJDQ3XEOLF6HUYLFH
&RPPLVVLRQ-2+1 *
675$1'LQKLV2IILFLDO
&DSDFLW\DV&KDLUPDQRIWKH
0LFKLJDQ3XEOLF6HUYLFH
&RPPLVVLRQ
'HIHQGDQWV$SSHOOHHV
&URVV$SSHOODQWV
;!
1RV
-- 1 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
1RV
9(5,=21 1257+
,1&25325$7('DQG&217(/
2) 7+( 6287+
,1&25325$7('GED*7(
6<67(06 2) 0,&+,*$1
3ODLQWLIIV$SSHOODQWV
&URVV$SSHOOHHV
Y
-2+1 (1*/(5LQKLV2IILFLDO
&DSDFLW\DV*RYHUQRURIWKH
6WDWHRI0LFKLJDQ'$9,' $
69$1'$LQKLV2IILFLDO
&DSDFLW\DV&RPPLVVLRQHURI
WKH0LFKLJDQ3XEOLF6HUYLFH
&RPPLVVLRQ52%(57 %
1(/621LQKLV2IILFLDO
&DSDFLW\DV&RPPLVVLRQHURI
WKH0LFKLJDQ3XEOLF6HUYLFH
&RPPLVVLRQ-2+1 *
675$1'LQKLV2IILFLDO
&DSDFLW\DV&KDLUPDQRIWKH
0LFKLJDQ3XEOLF6HUYLFH
&RPPLVVLRQ-(11,)(5 0
*5$1+2/0LQKHU2IILFLDO
&DSDFLW\DV$WWRUQH\*HQHUDO
RIWKH6WDWHRI0LFKLJDQ
'HIHQGDQWV$SSHOOHHV
&URVV$SSHOODQWV
1
-- 2 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
PD\EHIDOOWKHPRXWZHLJKVDQ\SRWHQWLDOKDUPWRWKH6WDWHRI
0LFKLJDQDQGPRUHLPSRUWDQWO\WRWKHLURZQVXEVFULEHUV
$FFRUGLQJO\DSUHOLPLQDU\LQMXQFWLRQDJDLQVWHQIRUFHPHQWRI
07$ DQG UHVSHFWLYHO\ LV ZDUUDQWHG 6HH
)ULHQGVKLS0DWHULDOV,QFY0LFKLJDQ%ULFN,QF)G
WK&LU
,,,&21&/86,21
)RUWKHIRUHJRLQJUHDVRQVWKHGHFLVLRQRIWKHGLVWULFWFRXUW
WRHQMRLQ07$LV$)),50('DQGWKHGLVWULFWFRXUW¶V
GHQLDO RI SODLQWLIIV¶ PRWLRQ WR HQMRLQ 07$ LV
5(9(56('$FFRUGLQJO\WKLVPDWWHULV5(0$1'('WR
WKHGLVWULFWFRXUWIRUIXUWKHUSURFHHGLQJV
1RV
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
7KH +RQRUDEOH 3HWHU & (FRQRPXV 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU
WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
1RV²3DXO'%RUPDQ
'LVWULFW-XGJH
$UJXHG0D\
'HFLGHGDQG)LOHG-XO\
%HIRUH-21(6DQG'$8*+75(<&LUFXLW-XGJHV
(&212086'LVWULFW-XGJH
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 0LFKDHO . .HOORJJ .(//2** +8%(5
+$16(172'' (9$16:DVKLQJWRQ'&3DWULFN)
3KLOELQ .,5./$1' (//,6 :DVKLQJWRQ '& IRU
$SSHOODQWV'DYLG$9RJHV2)),&(2)7+($77251(<
*(1(5$//DQVLQJ0LFKLJDQIRU$SSHOOHHV21%5,()
0LFKDHO . .HOORJJ 6HDQ $ /HY 0DUN /HZLV (YDQV
.(//2** +8%(5 +$16(1 72'' (9$16
:DVKLQJWRQ '& 3DWULFN ) 3KLOELQ $QGUHZ % &OXERN
0DWWKHZ7+HQGHUVRQ.,5./$1' (//,6:DVKLQJWRQ
'&-HIIHU\96WXFNH\3HWHU+(OOVZRUWK',&.,1621
:5,*+702219$1'86(1 )5((0$1/DQVLQJ
0LFKLJDQIRU$SSHOODQWV'DYLG$9RJHV2)),&(2)7+(
$77251(< *(1(5$/ /DQVLQJ 0LFKLJDQ 3DWULFLD 6
%DURQH 0,&+,*$1 $77251(< *(1(5$/ 38%/,&
6(59,&( ',9,6,21 /DQVLQJ 0LFKLJDQ IRU $SSHOOHHV
5RGHULFN 6 &R\ 7KRPDV ( 0DLHU &/$5. +,// 3/&
2NHPRV0LFKLJDQIRU$PLFXV&XULDH
-- 3 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
3(7(5 & (&212086 'LVWULFW -XGJH 3ODLQWLIIV
0LFKLJDQ %HOO 7HOHSKRQH &RPSDQ\ GED $PHULWHFK
0LFKLJDQ DQG 9HUL]RQ 1RUWK ,QFRUSRUDWHG FROOHFWLYHO\
³SODLQWLIIV´ DSSHDOWKHGLVWULFWFRXUW¶VRUGHUGHQ\LQJWKHLU
UHTXHVW IRU D SUHOLPLQDU\ LQMXQFWLRQ RI RI WKH
0LFKLJDQ7HOHFRPPXQLFDWLRQV$FWRI ³07$´ 07$
DEROLVKHGDIHHLPSRVHGXSRQFXVWRPHUVNQRZQDV
WKHHQGXVHUFRPPRQOLQHFKDUJH ³(8&/´ 'HIHQGDQWV
-RKQ(QJOHU*RYHUQRURIWKH6WDWHRI0LFKLJDQDQG'DYLG$
6YDQGD 5REHUW % 1HOVRQ DQG -RKQ * 6WUDQG
&RPPLVVLRQHUVRIWKH0LFKLJDQ3XEOLF6HUYLFH&RPPLVVLRQ
³036&´ FURVVDSSHDOWKHGLVWULFWFRXUW¶VRUGHUHQMRLQLQJ
DQRWKHUSURYLVLRQRIWKH07$ZKLFKIUR]HUHJXODWHG
WHOHSKRQHUDWHVDWWKHLU0D\OHYHOXQWLO'HFHPEHU
H[FHSW IRU VHUYLFHV WKH 036& GHHPHG FRPSHWLWLYH
7KHSURYLVLRQVRIWKH07$DWLVVXHDSSOLHGRQO\WRWHOHSKRQH
VHUYLFH SURYLGHUV ZLWK PRUH WKDQ VXEVFULEHUV ±
QDPHO\WKHSODLQWLIIV
)RUWKHIROORZLQJUHDVRQVZH$)),50WKHGLVWULFWFRXUW¶V
RUGHUSUHOLPLQDULO\HQMRLQLQJ07$DQG5(9(56(WKH
GLVWULFWFRXUW¶VGHQLDORIWKHSODLQWLIIV¶PRWLRQIRUHQMRLQPHQW
RI07$
, )$&76$1'352&('85$/%$&.*5281'
3ODLQWLIIV HDFK SURYLGH ORFDO WHOHSKRQH VHUYLFH WR RYHU
FXVWRPHUVLQWKH6WDWHRI0LFKLJDQ7RJHWKHUWKH
SODLQWLIIVVXSSO\RYHURIWKHORFDOWHOHSKRQHVHUYLFHLQ
WKH 6WDWH 7KLUW\VL[ RWKHU FRPSDQLHV DFFRXQW IRU WKH
UHPDLQGHURIORFDOWHOHSKRQHVHUYLFHEXWQRQHRIWKHPKDV
PRUHWKDQVXEVFULEHUV
7KHSODLQWLIIVFKDUJHWKHLU0LFKLJDQFXVWRPHUVDPRQWKO\
IHH IRU ³ORFDO H[FKDQJH VHUYLFH´ 7KLV VHUYLFH LQFOXGHV D
1RV
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
,IODZIXODQGUHDVRQDEOHUDWHVIL[HGE\WKHFRPPLVVLRQ
DUH DV JUHDW RU JUHDWHU WKDQ WKRVH HVWDEOLVKHG DQG
FROOHFWHGE\WKHFRPSDQ\QRUHIXQGVZLOOEHUHTXLUHG
KRZHYHULIWKHFRPPLVVLRQVKDOOIL[DQGGHWHUPLQHUDWHV
ZKLFK DUH ORZHU WKDQ WKH >@ UDWHV FROOHFWHG E\ WKH
FRPSDQ\ DQG VDLG UDWHV IL[HG E\ WKH FRPPLVVLRQ DUH
ODZIXO UHDVRQDEOH DQG QRQFRQILVFDWRU\ WKHQ WKH
GLIIHUHQFHEHWZHHQWKHUDWHVFROOHFWHGE\WKHFRPSDQ\
DQGVDLGUDWHVSUHVFULEHGE\WKHFRPPLVVLRQVKDOOEH
UHIXQGHGWRWKHFRPSDQ\¶VFXVWRPHUV
,G 6HH DOVR 0LFKLJDQ &RQVROLGDWHG *DV &RPSDQ\ Y
0LFKLJDQ3XEOLF6HUYLFH&RPPLVVLRQ1:G
0LFK &RQVXPHUV3RZHU&RPSDQ\Y0LFKLJDQ
3XEOLF 6HUYLFH &RPPLVVLRQ 1:G
0LFK &RQVHTXHQWO\LIWKH6WDWHXOWLPDWHO\SUHYDLOV
LQWKLVDFWLRQWKHSODLQWLIIVPD\EHUHTXLUHGWRLVVXHUHIXQGV
RIWKH(8&/FKDUJHVFROOHFWHGDQGRUUDWHVFROOHFWHGDERYH
D ODZIXOO\ HVWDEOLVKHG OHYHO $V VXFK WKH DELOLW\ RI WKH
SODLQWLIIVWRLVVXHUHIXQGVVXEVWDQWLDOO\GLPLQLVKHVWKHKDUP
WKDWPD\EHIDOOWKHLUVXEVFULEHUVLIDQLQMXQFWLRQLVJUDQWHG
DQGLVRXWZHLJKHGE\WKHKDUPWKDWPD\EHIDOOWKHSODLQWLIIV
)LQDOO\ ZH PXVW GHWHUPLQH ZKHWKHU WKH LVVXDQFH RI DQ
LQMXQFWLRQZLOOVHUYHWKHSXEOLFLQWHUHVW7KHSODLQWLIIVKDYH
PDGH D VKRZLQJ WKDW WKHUH LV D VXEVWDQWLDO OLNHOLKRRG WKDW
07$ DQG UHVSHFWLYHO\ DUH XQFRQVWLWXWLRQDO
LQVRIDUDVHDFKVWDWXWHIDLOVWRSURYLGHDGHTXDWHVDIHJXDUGV
DJDLQVWFRQILVFDWRU\UDWHV$VVXFKWKHSXEOLFLQWHUHVWZRXOG
EH VHUYHG E\ WKH HQMRLQPHQW RI HDFK RI WKH FKDOOHQJHG
VHFWLRQVRIWKH07$6HH3ODQQHG3DUHQWKRRG$VVRFLDWLRQ
RI&LQFLQQDWL,QFY&LW\RI&LQFLQQDWL)G
WK &LU UHFRJQL]LQJ WKDW ³WKH SXEOLF LV FHUWDLQO\
LQWHUHVWHG LQ WKH SUHYHQWLRQ RI HQIRUFHPHQW RI RUGLQDQFHV
ZKLFKPD\EHXQFRQVWLWXWLRQDO´
,QVXPPDU\WKHSODLQWLIIVKDYHSUHVHQWHGDVHULRXVTXHVWLRQ
DVWRWKHFRQVWLWXWLRQDOLW\RIWKHFKDOOHQJHGSURYLVLRQVRIWKH
07$DQGKDYHGHPRQVWUDWHGWKDWWKHLUUHSDUDEOHKDUPZKLFK
-- 4 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
$OWKRXJKWKHSODLQWLIIVPD\UHFRXSWKHLUORVVHVE\UDLVLQJ
UDWHVDQGFRQVHTXHQWO\ZRXOGQRWVXIIHULUUHSDUDEOHILQDQFLDO
KDUPWKHUHDUHRWKHUIRUPVRILUUHSDUDEOHKDUPZKLFKPD\
EHIDOOWKHPLIWKHFRXUWGRHVQRWHQMRLQHQIRUFHPHQWRI07$
DQG UHVSHFWLYHO\SHQGHQWOLWH7KHSODLQWLIIV
DVVHUWWKDWWKH\ZLOOORVHFXVWRPHUJRRGZLOOLIWKH\DUHIRUFHG
WRUHFRXSORVVHVE\VXEVWDQWLDOO\UDLVLQJUDWHVDQGIHHVIRUWKH
SHULRGGXULQJZKLFKWKLVDFWLRQPD\EHOLWLJDWHG7KLVFRXUW
KDV KHOG WKDW HYHQ LI KLJKHU UDWHV DQG IHHV GR QRW GULYH
FXVWRPHUVDZD\ORVVRIHVWDEOLVKHGJRRGZLOOPD\LUUHSDUDEO\
KDUPDFRPSDQ\6HH%DVLFRPSXWHU&RUSY6FRWW)G
WK &LU %HFDXVH ³GDPDJHV IORZLQJ IURP
VXFKORVVHV>RIFXVWRPHUJRRGZLOO@DUHGLIILFXOWWRFRPSXWH´
WKDW ORVV WRR ³DPRXQWV WR LUUHSDUDEOH LQMXU\´ VHH DOVR
*DWHZD\(5\&RY7HUPLQDO55$VV¶Q)G
WK &LU ³>6@KRZLQJ LQMXU\ WR JRRGZLOO FDQ
FRQVWLWXWH LUUHSDUDEOH KDUP WKDW LV QRW FRPSHQVDEOH E\ DQ
DZDUGRIPRQH\GDPDJHV´ 7KHUHLVVXIILFLHQWHYLGHQFHLQ
WKH UHFRUG WR VXSSRUW D ILQGLQJ WKDW WKH SODLQWLIIV ZLOO EH
LUUHSDUDEO\ KDUPHG LI WKH\ DUH FRPSHOOHG WR UHFRXS WKHLU
VXEVWDQWLDOSURMHFWHGORVVHVWKURXJKLQFUHDVHGUDWHVDQGIHHV
2IFRXUVHZHPXVWEDODQFHWKHKDUPVZKLFKWKHSODLQWLIIV
PD\VXIIHUDJDLQVW WKRVHZKLFKSODLQWLIIV¶VXEVFULEHUVPD\
VXIIHULI07$DQG UHVSHFWLYHO\DUHHQMRLQHG
7KH SODLQWLIIV DVVHUW WKDW LI WKH FKDOOHQJHG SRUWLRQV RI WKH
07$ DUH XOWLPDWHO\ GHFODUHG XQFRQVWLWXWLRQDO WKH\ ZLOO
SURYLGHUHIXQGVWRWKHLUVXEVFULEHUVZLWKLQWHUHVW,Q*HQHUDO
7HOHSKRQH&RPSDQ\RI0LFKLJDQY0LFKLJDQ3XEOLF6HUYLFH
&RPPLVVLRQ1:G 0LFK WKHFRXUWGHFODUHG
WKDW LW ZDV D SURSHU H[HUFLVH RI WKH WULDO FRXUW¶V HTXLW\
MXULVGLFWLRQ³WRSURWHFWWKHFRPSDQ\IURPFRQILVFDWRU\UDWHV´
E\ DOORZLQJ WKH FRPSDQ\ WR FROOHFW KLJKHU UDWHV ZKLOH WKH
036& FRQVLGHUHG WKH QHFHVVLW\ IRU WKH UHTXHVWHG UDWH
LQFUHDVH ,G DW ,Q GRLQJ VR WKH 0LFKLJDQ 6XSUHPH
&RXUWDSSURYHGRIWKHWULDOFRXUW¶VRUGHUWKDWWKHWHOHSKRQH
FRPSDQ\HVWDEOLVKDWUXVWIXQGIURPZKLFKUHIXQGVFRXOGEH
SDLGWRLWVVXEVFULEHUV7KH0LFKLJDQ6XSUHPH&RXUWTXRWHG
WKHWULDOFRXUW¶VUHDVRQLQJZLWKDSSURYDO
1RV
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
FHUWDLQQXPEHURI³ORFDO´WHOHSKRQHFDOOVZKLFKRULJLQDWHDQG
WHUPLQDWHZLWKLQDGHILQHGFDOOLQJDUHD7KHSODLQWLIIVDOVR
RIIHU³ORFDOWROOVHUYLFH´ZKLFKFRYHUVFDOOVQRWGHILQHGDV
HLWKHUORFDORUORQJGLVWDQFH7KHSODLQWLIIVFKDUJHFXVWRPHUV
RQDSHUPLQXWHEDVLVIRUORFDOWROOFDOOV
7KHSODLQWLIIVDOVRFKDUJHWKHLUFXVWRPHUVRWKHUIHHVWZRRI
ZKLFK DUH WKH LQWHUVWDWH HQG XVHU FRPPRQ OLQH FKDUJH
SUHVHQWO\ DQG WKH LQWUDVWDWH HQG XVHU FRPPRQ OLQH
FKDUJH9HUL]RQLPSRVHVDQLQWUDVWDWH(8&/PRQWKO\FKDUJH
RIDQG$PHULWHFKLPSRVHVDPRQWKO\LQWUDVWDWH
(8&/ FKDUJH )XUWKHU SULRU WR WKH HQDFWPHQW RI 07$
WKHSODLQWLIIVFRXOGLPSRVHRULQFUHDVHDWDQ\WLPH
WKH LQWUDVWDWH (8&/ FKDUJH ZLWKRXW SULRU DSSURYDO RI WKH
036&RUDKHDULQJEHIRUHWKDWERG\7KHRQO\OLPLWDWLRQRQ
WKHLQWUDVWDWH(8&/FKDUJHLVWKDWLWPXVWUHPDLQEHORZWKH
LQWHUVWDWH (8&/ UDWH VHW E\ WKH )HGHUDO &RPPXQLFDWLRQV
&RPPLVVLRQ ³)&&´
2Q-XO\$FWRIWKH3XEOLF$FWVRIWKH6WDWH
RI0LFKLJDQIRUZDVVLJQHGE\*RYHUQRU-RKQ(QJOHU
DQGWRRNLPPHGLDWHHIIHFW$FWDPHQGHGWKH07$WR
HQVXUHWKDW³HYHU\SHUVRQKDVDFFHVVWRMXVWUHDVRQDEOHDQG
DIIRUGDEOHEDVLFUHVLGHQWLDOWHOHFRPPXQLFDWLRQVHUYLFH´DQG
WR ³DOORZ DQG HQFRXUDJH FRPSHWLWLRQ >LQ@ SURYLGLQJ
WHOHFRPPXQLFDWLRQ VHUYLFHV´ 0LFK &RPS /DZV
D E $VVWDWHGSUHYLRXVO\WZRSURYLVLRQVRI
$FW DUH DW LVVXH KHUHLQ ± DQG
DEROLVKHVWKHLQWUDVWDWH(8&/DQGIUHH]HVWHOHSKRQH
UDWHVIRUVHUYLFHSURYLGHUVZLWKPRUHWKDQVXEVFULEHUV
XQWLO 'HFHPEHU XQOHVV D SURYLGHU¶V VHUYLFHV DUH
GHHPHGFRPSHWLWLYHE\WKH036&LQYDULRXVFLUFXPVWDQFHV
,QWKHSURFHHGLQJVEHIRUHWKHGLVWULFWFRXUWWKHSODLQWLIIV
DUJXHGLQWHUDOLDWKDW07$ DQG YLRODWHWKH
'XH 3URFHVV &ODXVH RI WKH )RXUWHHQWK $PHQGPHQW 7KH
SODLQWLIIV DVVHUW WKDW WKHVH SURYLVLRQV DUH IDFLDOO\
XQFRQVWLWXWLRQDOEHFDXVHWKH\GRQRWSURYLGHDPHFKDQLVP
-- 5 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
WKURXJKZKLFKWHOHSKRQHVHUYLFHSURYLGHUVPD\HQVXUHWKDW
WKH\ UHFHLYH D MXVW DQG UHDVRQDEOH UDWH RI UHWXUQ RQ WKHLU
LQYHVWPHQW $V QRWHG DERYH WKH GLVWULFW FRXUW GHQLHG WKH
SODLQWLIIV¶PRWLRQIRUSUHOLPLQDU\LQMXQFWLRQZLWKUHVSHFWWR
07$ DQG JUDQWHG LW ZLWK UHVSHFW WR 2Q
6HSWHPEHUWKHSODLQWLIIVILOHGDQRWLFHRIDSSHDORI
WKHGLVWULFWFRXUW¶VRUGHUDQGVLPXOWDQHRXVO\PRYHGWKLVFRXUW
IRUDQHPHUJHQF\LQMXQFWLRQRI07$ 2Q6HSWHPEHU
&KLHI -XGJH 0DUWLQ JUDQWHG WKH SODLQWLIIV¶
HPHUJHQF\PRWLRQ
,, /$:
$6HYHUDELOLW\
$V DQ LQLWLDO PDWWHU WKH FRXUW PXVW GHWHUPLQH ZKHWKHU
07$WKHUDWHIUHH]HSURYLVLRQPD\EHVHYHUHGIURP
ZKLFKDEROLVKHVWKH(8&/7KHSODLQWLIIVDUJXHWKDW
WKHWZRSURYLVLRQVPD\QRWEHVHYHUHGDQGWKHUHIRUHWKH
GLVWULFWFRXUWVKRXOGKDYHHQMRLQHGERWKVWDWXWRU\SURYLVLRQV
0LFKLJDQ¶VVHYHUDELOLW\VWDWXWHSURYLGHV
,IDQ\SRUWLRQRIDQDFWRUWKHDSSOLFDWLRQWKHUHRIWRDQ\
SHUVRQRUFLUFXPVWDQFHVVKDOOEHIRXQGWREHLQYDOLGE\
D FRXUW VXFK LQYDOLGLW\ VKDOO QRW DIIHFW WKH UHPDLQLQJ
SRUWLRQVRUDSSOLFDWLRQVRIWKHDFWZKLFKFDQEHJLYHQ
HIIHFWZLWKRXWWKHLQYDOLGSRUWLRQRUDSSOLFDWLRQSURYLGHG
VXFKUHPDLQLQJSRUWLRQVDUHQRWGHWHUPLQHGE\WKHFRXUW
WREHLQRSHUDEOHDQGWRWKLVHQGDFWVDUHGHFODUHGWREH
VHYHUDEOH
0LFK &RPS /DZV 7KH 0LFKLJDQ 6XSUHPH &RXUW
H[SODLQHGWKHRSHUDWLRQRIDQLGHQWLFDOSURYLVLRQLQDQRWKHU
VWDWXWHDVIROORZV
5HO\LQJRQWKH$FW¶VVHYHUDELOLW\FODXVHGHIHQGDQWV
PDLQWDLQ WKDW WKH /HJLVODWXUH H[SUHVVO\ LQWHQGHG WR
SUHVHUYH DV PXFK RI WKH $FW DV SRVVLEOH 7KLV FODXVH
SURYLGHV μ6HF ,I DQ\ SRUWLRQ RI WKLV DFW RU WKH
DSSOLFDWLRQRIWKLVDFWWRDQ\SHUVRQRUFLUFXPVWDQFHLV
1RV
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
&RPPLVVLRQ WR DOWHU RU UHDGMXVW UDWHV RU FKDUJHV
UHWURDFWLYHO\,QGHHGWKH6XSUHPH&RXUWIRXQGWKDWWKH
&RPPLVVLRQ¶VVWDWXWRU\DXWKRULW\WRIL[XWLOLW\UDWHVZDV
μTXLWHFOHDUO\SURVSHFWLYHRQO\¶,QWKLVSURFHHGLQJ
KRZHYHU$PHULWHFK0LFKLJDQ¶VHIIRUWWRUHELOOWKH,;&V
LVQRWEDVHGRQD&RPPLVVLRQRUGHUWKDWUHWURDFWLYHO\
DIIHFWV$PHULWHFK0LFKLJDQ¶VUDWHVEXWXSRQDVWDWXWRU\
SURYLVLRQ WKDW H[SUHVVO\ SUHFOXGHV HQIRUFHPHQW RI WKH
GLVFRXQWRUGHUHGE\WKH&RPPLVVLRQXQWLO-XO\
,Q SDVVLQJ 6HFWLRQ E WKH /HJLVODWXUH ZDV
DZDUH RI WKH &RPPLVVLRQ¶V SULRU RUGHUV ,QGHHG LQ
6HFWLRQ E WKH /HJLVODWXUH PDGH UHIHUHQFH WR
WKRVH RUGHUV $FFRUGLQJO\ WKH &RPPLVVLRQ GRHV QRW
DJUHH WKDW WKH SURKLELWLRQ DJDLQVW UHWURDFWLYH
UDWHPDNLQJZKLFKLVJURXQGHGRQLQWHUSUHWDWLRQRIWKH
&RPPLVVLRQ¶VVWDWXWRU\UDWHPDNLQJDXWKRULW\VKRXOGEH
DSSOLHGWRWKLVVLWXDWLRQ$PHULWHFK0LFKLJDQ¶VULJKWWR
UHFRYHU WKH XQGLVFRXQWHG DPRXQW IRU DFFHVV FKDUJHV
EHWZHHQ-XO\DQG-XQHLVEDVHGXSRQ
DQ DFW RI WKH /HJLVODWXUH WKDW WKH 6XSUHPH &RXUW KDV
GHWHUPLQHG FRQWUROV WKH RXWFRPH RI WKLV SURFHHGLQJ
7KHUHIRUH WKH &RPPLVVLRQ DJUHHV ZLWK $PHULWHFK
0LFKLJDQWKDWWKH6XSUHPH&RXUW¶VGHFLVLRQSUHFOXGHV
DSSOLFDWLRQ RI WKH SURKLELWLRQ DJDLQVW UHWURDFWLYH
UDWHPDNLQJ WR WKRVH SURFHHGLQJ EHFDXVH WKH 6XSUHPH
&RXUWKDVGHWHUPLQHGWKDWWKH&RPPLVVLRQ¶VLPSRVLWLRQ
RI D GLVFRXQW LQ DFFHVV FKDUJHV IRU $PHULWHFK
0LFKLJDQ¶VFXVWRPHUVEHWZHHQ-XO\DQG-XQH
ZDVXQODZIXO
0&, 7HOHFRPPXQLFDWLRQV &RUS Y $PHULWHFK :/
DW 0LFK36&'HF 1R8
8 FLWDWLRQRPLWWHG HPSKDVLVDGGHG %HFDXVHWKH
0LFKLJDQ/HJLVODWXUHDEROLVKHGWKH(8&/DQGIUR]HUDWHVE\
VWDWXWHWKH036&LVQRWSUHFOXGHGIURPVHWWLQJDUHWURDFWLYH
UDWHZKLFKDOORZVWKHSODLQWLIIVWRUHFRXSORVVHVFDXVHGE\
HQIRUFHPHQW RI WKH VWDWXWRU\ SURYLVLRQV $FFRUGLQJO\ WKH
SODLQWLIIV¶DUJXPHQWWKDWWKHUHWURDFWLYHUDWHPDNLQJGRFWULQH
DSSOLHVWRWKLVFDVHLVZLWKRXWPHULW
-- 6 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
,Q *HQHUDO 7HOHSKRQH &RPSDQ\ RI 0LFKLJDQ Y 0LFKLJDQ 3XEOLF
6HUYLFH &RPPLVVLRQ 1:G 0LFK WKH FRXUW DGGUHVVHG
WKH 036&¶V RUGHU JUDQWLQJ D UDWH LQFUHDVH VPDOOHU WKDQ WKH XWLOLW\
FRPSDQ\¶V UHTXHVW DQG D 0LFKLJDQ FLUFXLW FRXUW¶V VXEVHTXHQW GHFUHH
RUGHULQJ D WHPSRUDU\ LQFUHDVH LQ UDWHV DERYH WKH 036&¶V GHWHUPLQDWLRQ
,Q DGGUHVVLQJ DQ DUJXPHQW FRQFHUQLQJ WKH 036&¶V GHOD\ LQ FRQVLGHULQJ
IDFWV UHOHYDQW WR WKH UDWH GHWHUPLQDWLRQ WKH FRXUW UHPDUNHG ³7KLV &RXUW
PDGH LW YHU\ FOHDU LQ 0LFKLJDQ %HOO >VXSUD@ WKDW WKH FRPPLVVLRQ FDQQRW
HVWDEOLVK D UHWURDFWLYH UDWH WKHUHE\ FRUUHFWLQJ LQMXVWLFH FDXVHG E\ GHOD\ LQ
HVWDEOLVKLQJ UDWHV IRU WKH SDVW´ ,G DW
S 1:G >@ 7KXV KDG WKH SUHOLPLQDU\
LQMXQFWLRQQRWLVVXHGDQGKDGWKHFRPSDQ\SUHYDLOHGLQ
WKHWULDORIWKLVFDXVHWKHODWWHUZRXOGKDYHDFKLHYHGD
KROORZYLFWRU\LQGHHGVLQFHWKHUHZRXOGKDYHEHHQQR
OHJDODYHQXHRSHQWRWKHFRPSDQ\E\ZKLFKWRUHFRXSLWV
ILQDQFLDOORVVHV:HWKLQNWKLVFDVHSUHVHQWVDFODVVLF
H[DPSOH RI D VLWXDWLRQ LQ ZKLFK D SDUW\ ZLOO VXIIHU
μLUUHSDUDEOH KDUP¶ LQ WKH HYHQW WKDW D SUHOLPLQDU\
LQMXQFWLRQLVQRWLVVXHG´
,GDW TXRWLQJDSSHOODWHFRXUWFDVHRIWKHVDPHQDPH
1:G 0LFK&W$SS
7KHFDVHVGLVFXVVHGDERYHVWDQGRQO\IRUWKHSURSRVLWLRQ
WKDW WKH 036& PD\ QRW DGMXVW SDVW UDWHV E\ HVWDEOLVKLQJ
UHWURDFWLYHUDWHV7KLVSURSRVLWLRQLQKHUHVIURPWKH0LFKLJDQ
6XSUHPH&RXUW¶VGHWHUPLQDWLRQLQ0LFKLJDQ%HOOVXSUDWKDW
WKH036&¶V³ODZIXOO\HVWDEOLVKHGUDWHUHPDLQVLQIRUFHXQWLO
DOWHUHGE\DVXEVHTXHQWO\ODZIXOUDWH´1:GDW
7KHUHIRUHEDVHGXSRQ0LFKLJDQ%HOODQGWKHFDVHVZKLFK
IROORZ LW WKH 036& PD\ QRW LPSRVH UHWURDFWLYH UDWHV
DIIHFWLQJ LWV HVWDEOLVKHG UDWHV +RZHYHU WKHUH LV QR
SURKLELWLRQRQUHWURDFWLYHUDWHPDNLQJZKHUHUDWHVKDYHEHHQ
HVWDEOLVKHG VWDWXWRULO\ $PHULWHFK DJUHHG ZLWK WKLV
LQWHUSUHWDWLRQLQDUHFHQWFDVHEHIRUHWKH036&
,Q0LFKLJDQ%HOOVXSUDWKH6XSUHPH&RXUWJURXQGHGLWV
GHFLVLRQ RQ WKH IDFW WKDW WKHUH ZDV QR H[SUHVV RU
UHDVRQDEO\ LPSOLHG VWDWXWRU\ SURYLVLRQ DXWKRUL]LQJ WKH
1RV
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
IRXQGWREHLQYDOLGE\DFRXUWWKHLQYDOLGLW\VKDOOQRW
DIIHFWWKHUHPDLQLQJSRUWLRQVRUDSSOLFDWLRQVRIWKLVDFW
ZKLFKFDQEHJLYHQHIIHFWZLWKRXWWKHLQYDOLGSRUWLRQRU
DSSOLFDWLRQLIWKHUHPDLQLQJSRUWLRQVDUHQRWGHWHUPLQHG
E\ WKH FRXUW WR EH LQRSHUDEOH¶ 7KH GRFWULQH RI
VHYHUDELOLW\KROGVWKDWVWDWXWHVVKRXOGEHLQWHUSUHWHGWR
VXVWDLQWKHLUFRQVWLWXWLRQDOLW\ZKHQLWLVSRVVLEOHWRGRVR
:KHQHYHUDUHYLHZLQJFRXUWPD\VXVWDLQDQHQDFWPHQWE\
SURSHUFRQVWUXFWLRQLWZLOOXSKROGWKHSDUWVZKLFKDUH
VHSDUDEOHIURPWKHUHSXJQDQWSURYLVLRQV7REHFDSDEOH
RIVHSDUDWHHQIRUFHPHQWWKHYDOLGSRUWLRQRIWKHVWDWXWH
PXVWEHLQGHSHQGHQWRIWKHLQYDOLGVHFWLRQVIRUPLQJD
FRPSOHWHDFWZLWKLQLWVHOI$IWHUVHSDUDWLRQRIWKHYDOLG
SDUWV RI WKH HQDFWPHQW WKH ODZ HQIRUFHG PXVW EH
UHDVRQDEOHLQYLHZRIWKH$FWDVRULJLQDOO\GUDIWHG2QH
WHVWDSSOLHGLVZKHWKHUWKHODZPDNLQJERG\ZRXOGKDYH
SDVVHGWKHVWDWXWHKDGLWEHHQDZDUHWKDWSRUWLRQVWKHUHLQ
ZRXOG EH GHFODUHG WR EH LQYDOLG DQG FRQVHTXHQWO\
H[FLVHGIURPWKH$FW
3OHW]Y$XVWLQ1:G 0LFK IRRWQRWHV
RPLWWHG 7KH SODLQWLIIV FRQWHQG WKDW WKH 0LFKLJDQ
/HJLVODWXUH FRXSOHG WKH (8&/ DEROLVKPHQW ZLWK WKH UDWH
IUHH]HWRJLYHVXEVFULEHUVUDWHUHOLHIDQGWKXVVHYHULQJRQH
IURP WKH RWKHU ZLOO GHIHDW WKH SXUSRVH RI HQDFWLQJ WZR
SURYLVLRQV&RQWUDU\WRWKHSODLQWLIIV¶SRVLWLRQHQMRLQPHQWRI
07$ GRHV QRW UHQGHU WKH UHPDLQGHU RI WKH VWDWXWH
LQRSHUDEOH 6HYHUDQFH ZLOO JLYH WKH VWDWXWH LWV LQWHQGHG
SXUSRVH ± UDWH UHOLHI LQ WKH IRUP RI (8&/ DEROLVKPHQW ±
DOWKRXJKWRDOHVVHUH[WHQW7HOHSKRQHVHUYLFHSURYLGHUVPXVW
VWLOODSSO\IRUDUDWHLQFUHDVHDQGWKHUHOHYDQWDXWKRULWLHVPD\
WUHDW VXFK DSSOLFDWLRQV ZLWK WKH LQWHQWLRQ RI SURWHFWLQJ
FRQVXPHUVIURPH[FHVVLYHUDWHV$FFRUGLQJO\WKHSODLQWLIIV¶
DUJXPHQWODFNVPHULWDQG07$PD\EHHQMRLQHGZLWK
QRDIIHFWRQ
-- 7 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
%6WDQGDUGRI5HYLHZ
7KH FRXUW UHYLHZV WKH JUDQW RU GHQLDO RI D SUHOLPLQDU\
LQMXQFWLRQIRUDQDEXVHRIGLVFUHWLRQ$FFRUGLQJO\WKLVFRXUW
ZLOOQRWGLVWXUEDGLVWULFWFRXUW¶VILQGLQJVRIIDFWXQOHVVFOHDUO\
HUURQHRXVEXWUHYLHZVDGLVWULFWFRXUW¶VOHJDOFRQFOXVLRQVGH
QRYR6HH6RXWKZHVW:LOOLDPVRQ&RXQW\Y6ODWHU)G
WK&LU FLWLQJ6DQGLVRQY0LFKLJDQ+LJK
6FK$WKOHWLF$VV¶Q)G WK&LU
$GLVWULFWFRXUWPXVWFRQVLGHUIRXUIDFWRUVLQGHWHUPLQLQJ
ZKHWKHUWRLVVXHDSUHOLPLQDU\LQMXQFWLRQ7KHGLVWULFWFRXUW
PXVW FRQVLGHU ³ ZKHWKHU WKH PRYDQW KDV D VWURQJ
OLNHOLKRRGRIVXFFHVVRQWKHPHULWV ZKHWKHUWKHPRYDQW
ZRXOG RWKHUZLVH VXIIHU LUUHSDUDEOH LQMXU\ ZKHWKHU
LVVXDQFHRIDSUHOLPLQDU\LQMXQFWLRQZRXOGFDXVHVXEVWDQWLDO
KDUPWRRWKHUVDQG ZKHWKHUWKHSXEOLFLQWHUHVWZRXOGEH
VHUYHGE\LVVXDQFHRIDSUHOLPLQDU\LQMXQFWLRQ´6ODWHU
)G DW TXRWLQJ 0F3KHUVRQ Y 0LFKLJDQ +LJK 6FK
$WKOHWLF$VV¶Q)G WK&LU ³7KHIRXU
FRQVLGHUDWLRQVDSSOLFDEOHWRSUHOLPLQDU\LQMXQFWLRQGHFLVLRQV
DUHIDFWRUVWREHEDODQFHGQRWSUHUHTXLVLWHVWKDWPXVWEHPHW´
6L[&OLQLFV+ROGLQJ&RUS,,Y&DIFRPS6\VWHPV)G
WK&LU FLWLQJ:DVKLQJWRQY5HQR)G
WK &LU ³1R VLQJOH IDFWRU ZLOO EH
GHWHUPLQDWLYHDVWRWKHDSSURSULDWHQHVVRIHTXLWDEOHUHOLHI
DQGWKHGLVWULFWFRXUW¶VZHLJKLQJDQGEDODQFLQJRIWKHHTXLWLHV
LV RYHUUXOHG μRQO\ LQ WKH UDUHVW RI FDVHV¶´ ,G LQWHUQDO
TXRWDWLRQ PDUNV DQG FLWDWLRQV RPLWWHG )LQDOO\ ³>W@KH
SXUSRVHRIDSUHOLPLQDU\LQMXQFWLRQLVPHUHO\WRSUHVHUYHWKH
UHODWLYHSRVLWLRQVRIWKHSDUWLHVXQWLODWULDORQWKHPHULWVFDQ
EHKHOG´,G
&&RQVWLWXWLRQDOLW\RI&KDOOHQJHG3URYLVLRQV
/LNHOLKRRGRI6XFFHVVRQWKH0HULWV
%\ HQDFWLQJ $FW WKH 6WDWH RI 0LFKLJDQ VRXJKW WR
FRQWURO LQWUDVWDWH WHOHSKRQH UDWHV FKDUJHG E\ $PHULWHFK
0LFKLJDQ DQG 9HUL]RQ &RXUWV KDYH ORQJ KHOG WKDW 6WDWH
1RV
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
HDUQLQJV,QVWHDGWKHFRPPLVVLRQ¶VUDWHIL[LQJRUGHUVDUH
HIIHFWLYHRQO\SURVSHFWLYHO\
,GDW7KHFRXUW¶VKROGLQJZDVEDVHGRQWKHIROORZLQJ
SURSRVLWLRQ³>2@UGHUO\SURWHFWLRQRIWKHULJKWVRIWKHSDUWLHV
FRQFHUQHG UHTXLUHV WKH KROGLQJ LQ ODZ WKDW D ODZIXOO\
HVWDEOLVKHG UDWH UHPDLQV LQ IRUFH XQWLO DOWHUHG E\ D
VXEVWDQWLDOO\ODZIXOUDWH´,GDW7KHUHIRUHWKH036&¶V
DXWKRULW\LQIL[LQJUDWHVLVRQO\SURVSHFWLYHDQGLWPD\QRW
LPSRVH D UHWURDFWLYH UDWH ZKHUH WKH SUHYLRXV UDWHV ZHUH
ODZIXOO\HVWDEOLVKHGDQGLPSRVHG
7KHSODLQWLIIVDQGWKHGLVWULFWFRXUWLQFRUUHFWO\UHOLHGXSRQ
0LFKLJDQ &RQVROLGDWHG *DV &RPSDQ\ Y 0LFKLJDQ 3XEOLF
6HUYLFH&RPPLVVLRQ1:G 0LFK IRUWKHLU
FRQFOXVLRQWKDWWKHSODLQWLIIVFRXOGQRWUHFRXSWKHLUORVVHVLI
WKH VWDWXWHV UHPDLQHG LQ HIIHFW GXULQJ WKH OLWLJDWLRQ ,Q
0LFKLJDQ&RQVROLGDWHG*DVWKHSODLQWLIIXWLOLW\FRPSDQ\KDG
SHWLWLRQHG IRU D UDWH LQFUHDVH DQG WKH 036& JUDQWHG RQH
ZKLFKZDVVPDOOHUWKDQWKDWUHTXHVWHGE\WKHFRPSDQ\$
0LFKLJDQ FLUFXLW FRXUW XSRQ UHYLHZ LVVXHG D WHPSRUDU\
LQMXQFWLRQJUDQWLQJDUDWHLQFUHDVHLQDGGLWLRQWRWKDWJUDQWHG
E\WKH036&7KH0LFKLJDQ&RXUWRI$SSHDOVDIILUPHGWKH
FLUFXLWFRXUW¶VUXOLQJDQGWKH6WDWHDSSHDOHGWRWKH0LFKLJDQ
6XSUHPH&RXUW,QLWVVXPPDU\VWDWHPHQWDIILUPLQJWKHORZHU
FRXUW¶V MXGJPHQW WKH FRXUW TXRWHG ZLWK DSSURYDO WKH
IROORZLQJSDVVDJHIURPWKH0LFKLJDQ&RXUWRI$SSHDOV
³2XU 6XSUHPH &RXUW KDV H[SOLFLWO\ KHOG WKDW D
FRPPLVVLRQPD\QRWHVWDEOLVKUHWURDFWLYHUDWHVWKHUHE\
FRUUHFWLQJDQ\LQMXVWLFHFDXVHGE\DGHOD\LQHVWDEOLVKLQJ
QHFHVVDU\LQFUHDVHGUDWHV0LFKLJDQ%HOO7HOHSKRQH&R
Y3XEOLF6HUYLFH&RPPLVVLRQ 0LFK
1:G*HQHUDO7HOHSKRQH&RPSDQ\RI0LFKLJDQ
Y 3XEOLF 6HUYLFH &RPPLVVLRQ 6XSUD 0LFK $W
-- 8 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
%DODQFHRI+DUGVKLSVDQG3XEOLF,QWHUHVW
7KHSODLQWLIIVDVVHUWWKDWWKH\ZRXOGEHXQDEOHWRUHFRXS
DQ\ ORVVHV LQFXUUHG DV D UHVXOW RI WKH DEROLVKPHQW RI WKH
(8&/SXUVXDQWWR07$ DQGWKHUDWHIUHH]HLPSRVHG
E\ 7KH\ DVVHUW WKDW WKH ³UHWURDFWLYH UDWHPDNLQJ
GRFWULQH´EDUVDQ\UHFRXSPHQWRIWKHLUORVVHV7KHSODLQWLIIV¶
DUJXPHQWLVZLWKRXWPHULW
7KH0LFKLJDQ6XSUHPH&RXUWILUVWGLVFXVVHGWKHUHWURDFWLYH
UDWHPDNLQJ GRFWULQH LQ 0LFKLJDQ %HOO 7HOHSKRQH &R Y
0LFKLJDQ 3XEOLF 6HUYLFH &RPPLVVLRQ 1:G
0LFK ,Q 0LFKLJDQ %HOO 7HOHSKRQH WKH SODLQWLII
WHOHSKRQH FRPSDQ\ FKDOOHQJHG WKH 036&¶V RUGHU WR WKH
FRPSDQ\WRUHGXFHJURVVUHYHQXHVIRUWKHSUHYLRXV\HDUE\
PDNLQJSURUDWDUHIXQGVWRLWVVXEVFULEHUV7KHFRXUWVWDWHG
WKHLVVXHLQWKHFDVHDVIROORZV
+DV WKH FRPPLVVLRQ VWDWXWRU\ SRZHU WR RUGHU
UHWURDFWLYHO\ D UHIXQG WR EH PDGH E\ WKH WHOHSKRQH
FRPSDQ\WRLWVVXEVFULEHUVRXWRIFKDUJHV IRUVHUYLFHV
UHQGHUHG DQGLQODUJHSDUWSDLGSULRUWRWKHGDWHRIWKH
RUGHU VXFK FKDUJHV KDYLQJ EHHQ PDGH LQ FRQIRUPLW\
ZLWKWKHH[LVWLQJUDWHVIL[HGE\WKHFRPPLVVLRQ RULWV
SUHGHFHVVRU DQGLQHIIHFWGXULQJWKHWLPHWKHVHUYLFHV
ZHUHUHQGHUHG"
,G DW $IWHU UHYLHZLQJ 0LFKLJDQ ODZ WKH FRXUW
FRQFOXGHGWKDW³>W@KHUHLVQRH[SUHVVRUUHDVRQDEO\LPSOLHG
VWDWXWRU\ SURYLVLRQ DXWKRUL]LQJ WKH FRPPLVVLRQ WR DOWHU RU
UHDGMXVWWHOHSKRQHUDWHVRUFKDUJHVUHWURDFWLYHO\´,GDW
7KHUHIRUHWKHFRXUWKHOG
>7@KHFRPPLVVLRQKDVRQO\VXFKSRZHUUHODWLYHWRIL[LQJ
WKHUDWHVRUHDUQLQJVRIWKHWHOHSKRQHFRPSDQ\DVDUHE\
VWDWXWHH[SUHVVO\RUE\QHFHVVDU\LPSOLFDWLRQYHVWHGLQLW
8QGHUVXFKUXOHZHFDQQRWILQGWKDWWKHFRPPLVVLRQKDV
HLWKHU H[SUHVV RU LPSOLHG VWDWXWRU\ DXWKRULW\ WR
UHWURDFWLYHO\ UHGXFH DSSHOOHH¶V UDWHV RU LWV DFFUXHG
1RV
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
LPSRVHGUHJXODWRU\SULFHFRQWUROVDUHFRQVWLWXWLRQDOZLWKLQ
FHUWDLQ OLPLWV 3XUVXDQW WR WKH 'XH 3URFHVV &ODXVH RI WKH
)RXUWHHQWK $PHQGPHQW WR WKH 8QLWHG 6WDWHV &RQVWLWXWLRQ
³>S@ULFH FRQWURO LV μXQFRQVWLWXWLRQDO LI DUELWUDU\
GLVFULPLQDWRU\RUGHPRQVWUDEO\LUUHOHYDQWWRWKHSROLF\WKH
OHJLVODWXUHLVIUHHWRDGRSW¶´,Q5H3HUPLDQ%DVLQ$UHD
5DWH&DVHV86 TXRWLQJ1HEELDY
3HRSOH RI 6WDWH RI 1HZ <RUN 86
HPSKDVLVLQRULJLQDO 5DWHVHQDFWHGE\WKH6WDWHPXVWEH
MXVW DQGUHDVRQDEOH6HHLGDW FLWLQJ)HGHUDO3RZHU
&RPPLVVLRQY1DWXUDO*DV3LSHOLQH&R86
³5DWHV ZKLFK HQDEOH >D@ FRPSDQ\ WR RSHUDWH
VXFFHVVIXOO\ WR PDLQWDLQ LWV ILQDQFLDO LQWHJULW\ WR DWWUDFW
FDSLWDODQGWRFRPSHQVDWHLWVLQYHVWRUVIRUWKHULVNDVVXPHG
FHUWDLQO\ FDQQRW EH FRQGHPQHG DV LQYDOLG ´ )HGHUDO
3RZHU&RPPLVVLRQY+RSH1DWXUDO*DV&R86
6HHDOVR&DOIDUP,QVXUDQFH&RY'HXNPHMLDQ
3G &DO ³7KH MXVW FRPSHQVDWLRQ
VDIHJXDUGHGWRWKHXWLOLW\E\WKH)RXUWHHQWK$PHQGPHQWLVD
UHDVRQDEOHUDWHRIUHWXUQRQWKHYDOXHRIWKHSURSHUW\XVHGDW
WKHWLPHWKDWLWLVEHLQJXVHGIRUWKHSXEOLFVHUYLFH´
7KHUHIRUH ³WKH &RQVWLWXWLRQ SURWHFWV XWLOLWLHV IURP EHLQJ
OLPLWHGWRDFKDUJHIRUWKHLUSURSHUW\VHUYLQJWKHSXEOLFZKLFK
LVVRμXQMXVW¶DVWREHFRQILVFDWRU\´'XTXHVQH/LJKW&RY
%DUDVFK86 FLWLQJ&RYLQJWRQ /H[LQJWRQ
7XUQSLNH5RDG&RY6DQGIRUG86
)HGHUDO3RZHU&RPPLVVLRQY1DWXUDO*DV3LSHOLQH&R
86 )HGHUDO3RZHU&RPPLVVLRQY7H[DFR
,QF 86 VHH DOVR 2NODKRPD
1DWXUDO *DV &R Y 5XVVHOO 86
KROGLQJWKDWWKHSODLQWLIIXWLOLW\FRPSDQ\GHVHUYHGDUHPHG\
IRUFRQILVFDWRU\UDWHV 3UHQGHUJDVWY1HZ<RUN7HOHSKRQH
&R 86 VDPH 3DFLILF 7HOHSKRQH
7HOHJUDSK&RY.X\NHQGDOO86
VDPH %DQWRQY%HOW/LQH5DLOZD\&RUS86
VDPH
7KH 'XH 3URFHVV &ODXVH UHTXLUHV D PHFKDQLVP WKURXJK
ZKLFKDUHJXODWHGXWLOLW\PD\FKDOOHQJHWKHLPSRVLWLRQRIUDWHV
-- 9 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
7KH UHOHYDQW SURYLVLRQV RI 07$ VWDWH
1RWZLWKVWDQGLQJ DQ\ RWKHU SURYLVLRQ RI WKLV DFW DQG
H[FHSW DV DOORZHG E\ VHFWLRQ RU IRU VHUYLFHV GHWHUPLQHG
WR EH FRPSHWLWLYH XQGHU VXEVHFWLRQ DQG IRU UDWHV FKDUJHG
XQGHU FRQWUDFW WKH UDWH FKDUJHG IRU HYHU\ WHOHFRPPXQLFDWLRQ
VHUYLFH SURYLGHG WR DQ HQGXVHU LQ WKLV VWDWH VKDOO EH QR KLJKHU
WKDQ WKH UDWH FKDUJHG IRU WKH VHUYLFH DV RI 0D\
7KH UDWHV GHWHUPLQHG XQGHU WKLV VHFWLRQ VKDOO UHPDLQ LQ
HIIHFW IRU HDFK VHUYLFH XQWLO 'HFHPEHU RU XQWLO WKH
FRPPLVVLRQ GHWHUPLQHV WKDW D VHUYLFH LV FRPSHWLWLYH IRU DQ
LGHQWLILDEOH FODVV RU JURXS RI FXVWRPHUV LQ DQ H[FKDQJH JURXS
RI H[FKDQJHV RU RWKHU FOHDUO\ GHILQHG JHRJUDSKLFDO DUHD
ZKLFKHYHU LV HDUOLHU
ZKLFKPD\EHFRQILVFDWRU\6HH&DOIDUPVXSUD*XDUDQW\
1DW¶O,QV&RY*DWHV)G WK&LU 6WDWH
)DUP 0XW $XWR ,QV &R Y 1HZ -HUVH\ $G
1- 7KH TXHVWLRQ WKHQ LV ZKHWKHU WKH 07$
DGHTXDWHO\ VDIHJXDUGV DJDLQVW FRQILVFDWRU\ UDWHV DQG
WKHUHIRUHHQVXUHVDFRQVWLWXWLRQDOUDWHRIUHWXUQ
07$ SURKLELWV DQ\ UDWH LQFUHDVH IRU HYHU\
³WHOHFRPPXQLFDWLRQVHUYLFH´RIIHUHGWRVXEVFULEHUVIRUPRUH
WKDQWKUHH\HDUVEHWZHHQ0D\DQG'HFHPEHU
ZLWK WZR H[FHSWLRQV 5DWH UHOLHI PD\ EH REWDLQHG
ZKHUH SXUVXDQW WR 07$ D VHUYLFH SURYLGHU
VHUYHVIHZHUWKDQVXEVFULEHUVDQG ZKHUHVHUYLFHV
DUHGHWHUPLQHGWREHFRPSHWLWLYHSXUVXDQWWR07$
7KH ILUVW LV LQDSSOLFDEOH WR WKH SODLQWLIIV KHUHLQ DQG WKH
VHFRQGLVFRQVWLWXWLRQDOO\LQDGHTXDWH
7KH FRPSHWLWLYH RSWRXW SURYLVLRQ FRQWDLQHG LQ 07$
RQLWVIDFHIDLOVLQIRXUUHVSHFWV)LUVWLWGRHVQRW
DGGUHVV WKH UHDVRQDEOHQHVV RI FXUUHQWO\ UHJXODWHG UDWHV
6HFRQGWKHPHUHSRVVLELOLW\WKDWUHJXODWHGUDWHVPD\EHFRPH
FRPSHWLWLYHGRHVQRWUHGXFHRUHOLPLQDWHWKHSRVVLELOLW\WKDW
VXFKUDWHVDUHFRQILVFDWRU\1H[WWKHRSWRXWSURYLVLRQIDLOV
1RV
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
7KH FRXUW DOVR QRWHV WKDW LQ DGGLWLRQ WR WKH FRQVWLWXWLRQDO LQDGHTXDF\
RI 07$ H ZLWK UHVSHFW WR GHILQLQJ DQ ³HFRQRPLFDOO\ MXVWLILDEOH´
UDWH LW RQO\ SURYLGHV IRU LQFUHDVHG UDWHV LQ DUHDV ZKHUH WHOHSKRQH VHUYLFH
SURYLGHUV ZLVK WR LQYHVW LQ QHZ LQIUDVWUXFWXUH ,W GRHV QRW DGGUHVV WKH
QHHG WR LQFUHDVH UDWHV LQ RWKHU JHRJUDSKLF DUHDV ZKHUH UDWHV PD\ EH
FRQILVFDWRU\ ZKHWKHU RU QRW WHOHSKRQH VHUYLFH SURYLGHUV KDYH SURSRVHG
EHJXQ RU FRPSOHWHG QHZ LQIUDVWUXFWXUH LQYHVWPHQW
QRWFRQVLGHUWKHQHHGIRUDUHWXUQRQLQYHVWPHQWZKLFKWKH
DERYHGLVFXVVHG SUHFHGHQW UHTXLUHV &RQVHTXHQWO\ 07$
G GRHVQRWDGHTXDWHO\VDIHJXDUGDJDLQVWFRQILVFDWRU\
UDWHV
:LWKUHVSHFWWR H WKHGLVWULFWFRXUWUHDVRQHGWKDW
³>L@QRUGHUIRUDSURYLGHU¶VLQYHVWPHQWLQWKHORFDOH[FKDQJH
QHWZRUN WR EH μHFRQRPLFDOO\ MXVWLILDEOH¶ LW PXVW EH
VXIILFLHQWWRFRYHUFRVWVDQGWRVHUYLFHERWKGHEWDQGHTXLW\
LQYHVWPHQWVLQWKHFRPSDQ\7KDWLVWKHHVVHQFHRIHFRQRPLF
MXVWLILFDWLRQ´ -$ 7KHGLVWULFWFRXUWGRHVQRWFLWHWRDQ\
DXWKRULW\ LQ VXSSRUW RI WKLV SURSRVLWLRQ &RQVLGHULQJ WKH
LQDGHTXDF\ RI WKH GHILQLWLRQ RI ³MXVW DQG UHDVRQDEOH´
FRQWDLQHGLQ07$ GLVFXVVHGE\WKHFRXUWDQWHLWPD\
EH LQIHUUHG WKDW DQ ³HFRQRPLFDOO\ MXVWLILDEOH´ UDWH LV RQH
ZKLFK PHUHO\ FRYHUV WKH LQFUHDVHG FRVW RI SURYLGLQJ ORFDO
H[FKDQJHVHUYLFH$VZHSUHYLRXVO\VWDWHGPHUHO\SURYLGLQJ
IRUDUHWXUQZKLFKRQO\FRYHUVFRVWVLVLQDGHTXDWHXQGHUZHOO
HVWDEOLVKHGGXHSURFHVVVWDQGDUGV$EVHQWDQ\LQGLFDWLRQWKDW
WKH0LFKLJDQ/HJLVODWXUHLQWHQGHGWRGHILQHDQ³HFRQRPLFDOO\
MXVWLILDEOH´UDWHWRHQVXUHDUDWHRIUHWXUQZKLFKFRPSRUWVZLWK
GXHSURFHVVWKHFRXUWFDQQRWFRQFOXGHWKDW07$ H
SURYLGHVDQDGHTXDWHVDIHJXDUGDJDLQVWFRQILVFDWRU\UDWHV
,QVXP07$IUHH]HVWHOHSKRQHUDWHVDQG
DEROLVKHV WKH (8&/ ZLWKRXW SURYLGLQJ D PHFKDQLVP WR
VDIHJXDUG WKH ULJKW WR HDUQ D FRQVWLWXWLRQDO UDWH RI UHWXUQ
$FFRUGLQJO\WKHSODLQWLIIV¶KDYHGHPRQVWUDWHGDVXEVWDQWLDO
OLNHOLKRRG RI GHPRQVWUDWLQJ WKDW 07$ DQG
UHVSHFWLYHO\DUHXQFRQVWLWXWLRQDO
-- 10 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
7KHGLVWULFWFRXUWDOVRHUURQHRXVO\GHWHUPLQHGWKDW07$
SURYLGHV DGHTXDWH VDIHJXDUGV DJDLQVW FRQILVFDWRU\
UDWHV07$ VWDWHV
,QUHYLHZLQJDUDWHDOWHUDWLRQXQGHUVXEVHFWLRQ WKH
>036&@VKDOOFRQVLGHURQO\RQHRUPRUHRIWKHIROORZLQJ
IDFWRUVLIUHOHYDQWWRWKHUDWHDOWHUDWLRQDVVSHFLILHGE\WKH
SURYLGHU
D 7RWDOVHUYLFHORQJUXQLQFUHPHQWDOFRVWRIEDVLFORFDO
H[FKDQJHVHUYLFHV
E &RPSDULVRQRIWKHSURSRVHGUDWHWRWKHUDWHVFKDUJHG
E\RWKHUSURYLGHUVLQWKLVVWDWHIRUWKHVDPHVHUYLFH
F :KHWKHU D QHZ IXQFWLRQ IHDWXUH RU FDSDELOLW\ LV
EHLQJRIIHUHGDVDFRPSRQHQWRIEDVLFORFDOH[FKDQJH
VHUYLFH
G :KHWKHUWKHUHKDVEHHQDQLQFUHDVHLQWKHFRVWVWR
SURYLGHEDVLFORFDOH[FKDQJHVHUYLFHLQWKHJHRJUDSKLF
DUHDRIWKHSURSRVHGUDWH
H :KHWKHU WKH SURYLGHU¶V IXUWKHU LQYHVWPHQW LQ WKH
QHWZRUN LQIUDVWUXFWXUH RI WKH JHRJUDSKLF DUHD RI WKH
SURSRVHG UDWH LV HFRQRPLFDOO\ MXVWLILDEOH ZLWKRXW WKH
SURSRVHGUDWH
0LFK &RPS /DZV 7KH GLVWULFW FRXUW
GHWHUPLQHG WKDW WKH ODVW WZR IDFWRUV DGHTXDWHO\ SURWHFWHG
SODLQWLIIV¶ULJKWWRDQDGHTXDWHUDWHRIUHWXUQ
07$ G GRHV QRW JXDUDQWHH WHOHSKRQH VHUYLFH
SURYLGHUVDFRQVWLWXWLRQDOUDWHRIUHWXUQ2QLWVIDFHLWPHUHO\
SURYLGHV IRU D UDWH LQFUHDVH WR FRYHU WKH FRVW RI SURYLGLQJ
VHUYLFHLQDJHRJUDSKLFDUHD8QGHU07$ G WKH
SODLQWLIIVDJDLQPD\EHUHTXLUHGWRVXEVLGL]HUDWHVLQFHUWDLQ
JHRJUDSKLFDUHDVZLWKUDWHVLQRWKHUDUHDVRUZLWKUHYHQXHV
FROOHFWHG IURP RWKHU XQUHJXODWHG OLQHV RI EXVLQHVV
)XUWKHUPRUHWKHVWDWXWH¶VSURYLVLRQIRULQFUHDVHGFRVWVGRHV
1RV
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
7KH FRXUW QHHG QRW DGGUHVV WKH WLPLQJ RI UDWH UHOLHI ± WKDW LV ZKHWKHU
WKH SODLQWLIIV DUH HQWLWOHG WR D SUH RU SRVWGHSULYDWLRQ KHDULQJ RQ D UDWH
UHGXFWLRQ ± IRU WKH SXUSRVH RI WKLV IDFLDO FKDOOHQJH DW WKH SUHOLPLQDU\
LQMXQFWLRQ VWDJH
WRSURYLGHIRUWLPHO\UHOLHIIURPFRQILVFDWRU\UDWHV)LQDOO\
DOWKRXJK WKH SODLQWLIIV KDYH RWKHU XQUHJXODWHG LQFRPH
VWUHDPV WKH\ DUH QRW UHTXLUHG WR VXEVLGL]H WKHLU UHJXODWHG
VHUYLFHV ZLWK LQFRPH IURP UDWHV HLWKHU GHHPHG WR EH
FRPSHWLWLYH RU ZLWK UHYHQXHV JHQHUDWHG IURP XQUHJXODWHG
VHUYLFHV6HH%URRNV6FDQORQ&RY5DLOURDG&RPPLVVLRQ
86 &DOIDUP3GDW7KHUHIRUH
XQGHU07$LIWKHSODLQWLIIV¶UDWHVEHFDPHFRPSHWLWLYH
LQ0LFKLJDQ¶VDUHDFRGHEXWZHUHQRWFRPSHWLWLYHLQWKH
DUHD FRGH DQG WKXV UHPDLQHG IUR]HQ WKH\ FDQQRW EH
IRUFHGWRVXEVLGL]HWKHIUR]HQUDWHV ZLWKUHYHQXHIURPWKH
FRPSHWLWLYHUDWHVRUIURPRWKHUXQUHJXODWHGVHUYLFHZKLFK
WKH\ RIIHU ,Q VXP 07$ GRHV QRW LQFOXGH DQ\
SURYLVLRQVZKLFKDGHTXDWHO\VDIHJXDUGDJDLQVWLPSRVLWLRQRI
FRQILVFDWRU\UDWHV
$OWKRXJK07$GRHVQRWFRQWDLQDGHTXDWHVDIHJXDUGV
RWKHUSURYLVLRQVRIWKH07$DUJXDEO\DWWHPSWWRHQVXUHWKH
SODLQWLIIV UHFHLYH D FRQVWLWXWLRQDO UDWH RI UHWXUQ 07$
SURYLGHV WKDW ³WKH UDWHV IRU EDVLF ORFDO H[FKDQJH
VHUYLFHVKDOOEHMXVWDQGUHDVRQDEOH´LWGHILQHV³UHDVRQDEOH
UDWH´ RU ³MXVW DQG UHDVRQDEOH UDWH´ DV ³D UDWH WKDW LV QRW
LQDGHTXDWHH[FHVVLYHRUXQUHDVRQDEO\GLVFULPLQDWRU\$UDWH
LV LQDGHTXDWH LI LW LV OHVV WKDQ WKH WRWDO VHUYLFH ORQJ UXQ
LQFUHPHQWDOFRVWRISURYLGLQJWKHVHUYLFH>76/5,&@´6HHLG
\ 7KH SODLQWLIIV DUJXH WKDW WKH VWDWXWRU\
GHILQLWLRQRID³MXVWDQGUHDVRQDEOHUDWH´FRQWDLQHGLQ07$
GRHV QRW SDVV FRQVWLWXWLRQDO PXVWHU 7KH FRXUW
DJUHHV 7KH GHILQLWLRQ FRQWDLQHG LQ 07$ FOHDUO\
GRHVQRWJXDUDQWHHDFRQVWLWXWLRQDOO\DGHTXDWHUDWHRIUHWXUQ
IRUUHJXODWHGWHOHSKRQHVHUYLFHSURYLGHUVEHFDXVHLWPHUHO\
SHUPLWVWHOHSKRQHVHUYLFHSURYLGHUVWRFRYHUFRVWVDQGGRHV
-- 11 of 12 --
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
1RV
,PSRUWDQWO\ WKH FRXUW DOVR KHOG WKDW ³>Q@HLWKHU >WKH VWDWXWH@ QRU WKH
1HYDGD ,QVXUDQFH &RGH RI ZKLFK LW >ZDV@ D SDUW SURYLGH>G@ DQ\
PHFKDQLVP WR JXDUDQWHH D FRQVWLWXWLRQDOO\ IDLU DQG UHDVRQDEOH UHWXUQ´
,G DW
$OWKRXJK WKH GLVWULFW FRXUW PD\ EH FRUUHFW LQ LWV GHWHUPLQDWLRQ WKDW
WKHUH LV QR OLPLW RQ WKH 036&¶V DXWKRULW\ WR VHW UDWHV ³DQ\ZKHUH ZLWKLQ
WKH UDQJH IURP LQDGHTXDWH RQ WKH RQH KDQG WR H[FHVVLYH RQ WKH RWKHU´ LW
QRWHQVXUHDIDLUDQGUHDVRQDEOHUDWHRIUHWXUQRQLQYHVWPHQW
6HH,Q5H3HUPLDQ%DVLQVXSUD
0RUHRYHU WKH 1LQWK &LUFXLW LQ *XDUDQW\ 1DWLRQDO
,QVXUDQFH&RY*DWHV)G DGGUHVVHGWKH
FRQVWLWXWLRQDOLW\ RI D 1HYDGD LQVXUDQFH VWDWXWH VLPLODU WR
07$ LQ LWV GHILQLWLRQ RI DQ ³LQDGHTXDWH´ UDWH
6HFWLRQ% RIWKH1HYDGD5HYLVHG6WDWXWHVVWDWHG
³>U@DWHVDUHLQDGHTXDWHLIWKH\DUHFOHDUO\LQVXIILFLHQWWRJHWKHU
ZLWK WKH LQFRPH IURP LQYHVWPHQWV DWWULEXWDEOH WR WKHP WR
VXVWDLQSURMHFWHGORVVHVDQGH[SHQVHVLQWKHFODVVRIEXVLQHVV
RI ZKLFK WKH\ DSSO\´ ,G DW 7KH 1HYDGD VWDWXWH
HVVHQWLDOO\SUHVHUYHGLQVXUDQFHFRPSDQLHV¶DELOLW\WRUHFRXS
WKH FRVWV RI WKHLU VHUYLFHV 7KH 1LQWK &LUFXLW KHOG WKDW
DOWKRXJKWKH1HYDGDVWDWXWHJXDUDQWHHGWKDWLQVXUHUVZRXOG
³EUHDN HYHQ LW GRHV QRW JXDUDQWHH WKH FRQVWLWXWLRQDOO\
UHTXLUHGμIDLUDQGUHDVRQDEOHUHWXUQ¶´,G FLWLQJ)HGHUDO
3RZHU&RPP¶QY+RSH1DWXUDO*DV&R86
³>7@KHIL[LQJRIμMXVWDQGUHDVRQDEOH¶UDWHVLQYROYHV
DEDODQFLQJRIWKHLQYHVWRUDQGFRQVXPHULQWHUHVWV>7@KH
LQYHVWRULQWHUHVWKDVDOHJLWLPDWHFRQFHUQZLWKWKHILQDQFLDO
LQWHJULW\ RI WKH FRPSDQ\ ZKRVH UDWHV DUH EHLQJ UHJXODWHG
)URPWKHLQYHVWRURUFRPSDQ\SRLQWRIYLHZLWLVLPSRUWDQW
WKDWWKHUHEHHQRXJKUHYHQXHQRWRQO\IRURSHUDWLQJH[SHQVHV
EXWDOVRIRUWKHFDSLWDOFRVWVRIWKHEXVLQHVV7KHVHLQFOXGH
WKH VHUYLFH RI WKH GHEW DQG WKH GLYLGHQGV RQ WKH VWRFN´
3XUVXDQW WR WKH UHDVRQLQJ VHW IRUWK LQ *XDUDQW\ 1DWLRQDO
VXSUDWKH07$¶VGHILQLWLRQRID³MXVWDQGUHDVRQDEOHUDWH´
GRHV QRW JXDUDQWHH WKH FRQVWLWXWLRQDOO\UHTXLUHG IDLU DQG
UHDVRQDEOHUDWHRIUHWXUQ
1RV
0,%HOO7HOHSKRQH&R
HWDOY(QJOHUHWDO
LV D[LRPDWLF WKDW GXH SURFHVV JXDUDQWHHV D IDLU DQG UHDVRQDEOH UHJXODWRU\
UDWH QRW MXVW WKH SRVVLELOLW\ RI DFTXLULQJ VXFK D UDWH IURP DQ DXWKRULW\
VHOHFWLQJ UDWHV ZLWKLQ D SUHVFULEHG UDQJH FRQWDLQLQJ FRQILVFDWRU\ DQG IDLU
UDWHV -$
)XUWKHUPRUHWKH76/5,&EDVHGGHILQLWLRQRIDQLQDGHTXDWH
UDWHZKLFKWKHGLVWULFWFRXUWUHOLHGXSRQGRHVQRWHQVXUHWKDW
WHOHSKRQHVHUYLFHSURYLGHUVUHFHLYHDFRQVWLWXWLRQDOO\IDLUDQG
UHDVRQDEOH UDWH RI UHWXUQ 7KH 0LFKLJDQ /HJLVODWXUH KDV
GHILQHG76/5,&DVIROORZV
7RWDOVHUYLFHORQJUXQLQFUHPHQWDOFRVWVPHDQVJLYHQ
FXUUHQW VHUYLFH GHPDQG LQFOXGLQJ DVVRFLDWHG FRVWV RI
HYHU\FRPSRQHQWQHFHVVDU\WRSURYLGHWKHVHUYLFHRI
WKHIROORZLQJ
L 7KH WRWDO IRUZDUGORRNLQJ FRVW RI D
WHOHFRPPXQLFDWLRQVHUYLFHUHOHYDQWJURXSRIVHUYLFHRU
EDVLF QHWZRUN FRPSRQHQW XVLQJ FXUUHQW OHDVW FRVW
WHFKQRORJ\ WKDW ZRXOG EH UHTXLUHG LI WKH SURYLGHU KDG
QHYHURIIHUHGWKHVHUYLFH
LL 7KHWRWDOFRVWWKDWWKHSURYLGHUZRXOG LQFXULIWKH
SURYLGHU ZHUH WR LQLWLDOO\ RIIHU WKH VHUYLFH JURXS RI
VHUYLFHRUEDVLFQHWZRUNFRPSRQHQW
0LFK&RPS/DZV II 2QLWVIDFH II
VHWVWKH76/5,&DWDOHYHOZKLFKRQO\DFFRXQWVIRUWKHFRVWRI
SURYLGLQJVHUYLFHV8QGHUWKHGHILQLWLRQVHWIRUWKLQ07$
DUDWHZRXOGRQO\EHLQDGHTXDWHLILWZDVVHWEHORZ
WKHFRVWLQFXUUHGE\WKHVHUYLFHSURYLGHU7KLVFOHDUO\GRHV
QRWVDWLVI\WKHFRQVWLWXWLRQDOVWDQGDUGVHWIRUWKDERYHEHFDXVH
LWPHUHO\HQVXUHVFRVWUHFRYHU\ZLWKRXWJXDUDQWHHLQJDIDLU
DQGUHDVRQDEOHUDWHRIUHWXUQRQLQYHVWPHQW6HH*XDUDQW\
1DWLRQDO VXSUD DW ,Q VXP 07$ GRHV QRW
GHILQH D ³MXVW DQG UHDVRQDEOH´ UDWH LQ D PDQQHU ZKLFK
JXDUDQWHHV SODLQWLIIV DQ DGHTXDWH UDWH RI UHWXUQ RQ WKHLU
LQYHVWPHQW
-- 12 of 12 --