01a0389p.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
1R
1257+:(67(51 2+,2
$'0,1,675$7256 ,1&
3ODLQWLII
Y
:$/&+(5 )2; ,1&
'HIHQGDQW$SSHOOHH
7KLUG3DUW\3ODLQWLII
,17(51$7,21$/ $662&,$7,21
2) %5,'*( 6758&785$/
$1' 251$0(17$/ ,521
:25.(56 /2&$/ 81,21 12
9$/ +(//'2%/(5
'HIHQGDQWV$SSHOODQWV
7KLUG3DUW\'HIHQGDQWV
1R
1257+:(67(51 2+,2
$'0,1,675$7256 ,1&
3ODLQWLII$SSHOOHH
Y
;!

1RV

-- 1 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
:$/&+(5 )2; ,1&
'HIHQGDQW$SSHOODQW
7KLUG3DUW\3ODLQWLII

1
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW7ROHGR
1R²'DYLG$.DW]'LVWULFW-XGJH
$UJXHG$XJXVW
'HFLGHGDQG)LOHG1RYHPEHU
%HIRUH.(,7+1255,6DQG%$7&+(/'(5&LUFXLW
-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8('-RKQ05RFD*$//21 7$.$&67ROHGR
2KLR$ODQ*5RVV5266%5,77$,1 6&+21%(5*
&OHYHODQG 2KLR IRU 'HIHQGDQWV 5REHUW $ .RHQLJ
6+80$.(5 /223 .(1'5,&. 7ROHGR 2KLR IRU
3ODLQWLII21%5,()-RKQ05RFD-RVHSK0'¶$QJHOR
*$//21 7$.$&67ROHGR2KLR$ODQ*5RVV)UHG1
6HOHPDQ5266%5,77$,1 6&+21%(5*&OHYHODQG
2KLR IRU 'HIHQGDQWV 5REHUW $ .RHQLJ -DPHV +
2¶'RKHUW\6+80$.(5/223 .(1'5,&.7ROHGR
2KLRIRU3ODLQWLII
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
$/,&( 0 %$7&+(/'(5 &LUFXLW -XGJH 7KHVH WZR
LQWHUORFXWRU\DSSHDOVDULVHRXWRIDVLQJOHFDVHDQGZHKDYH
WKHUHIRUH FRQVROLGDWHG WKHP IRU SXUSRVHV RI WKLV DSSHDO

-- 2 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
SDUWRIWKHFROOHFWLYHEDUJDLQLQJSURFHVVDQGZDVWKHUHIRUH
LPPXQHIURPVXLWIRUPDOSUDFWLFHE\WKHXQLRQPHPEHU7KH
IDFWVRIWKHVHWZRFDVHVDUHHDVLO\GLVWLQJXLVKHGIURPWKRVHLQ
WKHLQVWDQWFDVHDQGZKHWKHUWKHDWWRUQH\ZDVDFWLQJRQEHKDOI
RIWKHXQLRQZDVQRWDWLVVXHLQHLWKHURIWKHP
7KH LVVXH RI ZKHWKHU +HOOGREOHU ZDV DFWXDOO\ DFWLQJ RQ
EHKDOIRIWKH8QLRQZKHQKHFRPPLWWHGKLVDOOHJHGIUDXGLV
VWLOORSHQ0RUHLPSRUWDQWO\WKHLPPXQLW\HVWDEOLVKHGE\WKH
6XSUHPH&RXUWLQ$WNLQVRQDQGH[SDQGHGLQ&RPSOHWH$XWR
7UDQVLW,QFY5HLV86 KROGLQJ³WKDW
† D GRHVQRWVDQFWLRQGDPDJHVDFWLRQVDJDLQVWLQGLYLGXDO
HPSOR\HHV IRU YLRODWLQJ WKH QRVWULNH SURYLVLRQ RI WKH
FROOHFWLYHEDUJDLQLQJDJUHHPHQWZKHWKHURUQRWWKHLUXQLRQ
SDUWLFLSDWHGLQRUDXWKRUL]HGWKHVWULNH´ LVLPPXQLW\IURP
DFWLRQVEURXJKWXQGHUVHFWLRQIRU³YLRODWLRQRIFRQWUDFWV
EHWZHHQ DQ HPSOR\HU DQG D ODERU RUJDQL]DWLRQ´ /DERU
0DQDJHPHQW 5HODWLRQV $FW RI † D 86&
† D :H MRLQ WKH 7KLUG &LUFXLW LQ FRQFOXGLQJ
³WKDWDVWDWHODZFODLPEURXJKWDJDLQVWDXQLRQRIILFHUWKDW
GRHVQRWLPSOLFDWHDFROOHFWLYHEDUJDLQLQJDJUHHPHQWFRYHUHG
E\ VHFWLRQ D GRHV QRW JLYH ULVH WR VHFWLRQ E
LPPXQLW\:KHQVHFWLRQ D LVLQDSSOLFDEOHWKHLPPXQLW\
SURYLGHGE\VHFWLRQ E LVDOVRLQDSSOLFDEOH´6HYHU
)GDW
7KHDFWLRQEHIRUHXVWRGD\LVQRWDQDFWLRQIRUYLRODWLRQRI
DFRQWUDFWEHWZHHQ:DOFKHU )R[DQGWKHXQLRQ:DOFKHU
)R[ZDVQRWDSDUW\WRWKHFROOHFWLYHEDUJDLQLQJDJUHHPHQW
ZLWKWKHXQLRQ,QGHHGWKDWIDFWLVDWWKHKHDUWRI:DOFKHU
)R[¶VFODLPVDJDLQVW+HOOGREOHU$FFRUGLQJO\ZHKROGWKDW
+HOOGREOHULVQRWHQWLWOHGWRFODLPLPPXQLW\IURPVXLWRQWKLV
FRXQWHUFODLP
&RQFOXVLRQ
)RUWKHIRUHJRLQJUHDVRQVWKHMXGJPHQWRIWKHGLVWULFWFRXUW
LV$)),50('
1RV 1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO

3ODLQWLII$SSHOOHH1RUWKZHVWHUQ2KLR$GPLQLVWUDWRUV,QF
³12$´ DQRQSURILWFRUSRUDWLRQWKDWDGPLQLVWHUVHPSOR\HH
EHQHILW SODQV XQGHU WKH (PSOR\PHQW 5HWLUHPHQW ,QFRPH
6HFXULW\$FW ³(5,6$´ DQGWKH/DERU0DQDJHPHQW5HODWLRQV
$FW ³/05$´ VXHG'HIHQGDQW$SSHOODQW:DOFKHU )R[
,QF ³: )´ DQ 2KLR FRUSRUDWLRQ HQJDJHG LQ WKH
FRQVWUXFWLRQEXVLQHVVFODLPLQJWKDW: )RZHGIULQJHEHQHILW
DQG SHQVLRQ IXQG FRQWULEXWLRQV IRU DOO RI LWV HPSOR\HHV
SXUVXDQWWRSURMHFWDJUHHPHQWVHQWHUHGLQWRE\: )DQGWKH
,QWHUQDWLRQDO $VVRFLDWLRQ RI %ULGJH 6WUXFWXUDO DQG
2UQDPHQWDO,URQZRUNHUV/RFDO8QLRQ1R ³WKH8QLRQ´
12$PRYHGIRUSDUWLDOVXPPDU\MXGJPHQWDQGWKHGLVWULFW
FRXUWGHQLHGWKHPRWLRQKROGLQJWKDWWKHSURMHFWDJUHHPHQWV
ZHUHDPELJXRXVEHFDXVHKDQGZULWWHQQRWDWLRQVRQVRPHRI
WKRVHDJUHHPHQWVLQGLFDWHGWKDWWKHSDUWLHVPD\KDYHLQWHQGHG
WKHDJUHHPHQWVWRFRYHURQO\WKHIHZXQLRQPHPEHUVKLUHGE\
: ) DW WKH EHKHVW RI WKH 8QLRQ¶V UHSUHVHQWDWLYH 9DO
+HOOGREOHU : ) LPSOHDGHG WKH 8QLRQ DQG +HOOGREOHU
DOOHJLQJWKDWWKH\KDGIUDXGXOHQWO\PLVUHSUHVHQWHGWKHVFRSH
RIWKHSURMHFWDJUHHPHQWVDQGWKDWWKH\ZHUHWKHUHIRUHOLDEOH
IRUFRQWULEXWLRQDQGLQGHPQLILFDWLRQIRUDQ\PRQLHVRZHGE\
: )WR12$7KH8QLRQDQG+HOOGREOHUPRYHGWRGLVPLVV
: )¶VWKLUGSDUW\FRPSODLQW
7KH GLVWULFW FRXUW WKHQ WULIXUFDWHG WKH FDVH WR GHWHUPLQH
WKH VFRSH RI WKH DJUHHPHQWV OLDELOLW\ XQGHU WKH
DJUHHPHQWVDQG OLDELOLW\RIWKH8QLRQDQG+HOOGREEOHU
$IWHUDEHQFKWULDORQWKHVFRSHRIFRYHUDJHLVVXHWKHFRXUW
FRQFOXGHGWKDW12$ZDVHQWLWOHGWRUHO\RQWKHW\SHZULWWHQ
ODQJXDJH RI WKH DJUHHPHQWV DQG WKDW WKH KDQGZULWWHQ
QRWDWLRQVRQWKRVHDJUHHPHQWVZHUHQRWVXIILFLHQWWRSXW12$
RQ QRWLFH RI WKH ³PRGLILFDWLRQ´ HQYLVLRQHG E\ WKH SDUWLHV
$FFRUGLQJO\ WKH FRXUW KHOG 12$ ZDV HQWLWOHG WR FROOHFW
FRQWULEXWLRQV IRU DOO RI WKH &RPSDQ\¶V HPSOR\HHV ZKR
ZRUNHGXQGHUWKHSURMHFWDJUHHPHQWVUHJDUGOHVVRIZKHWKHU
WKHSDUWLHVLQWHQGHGWROLPLWWKHEHQHILWVDYDLODEOHXQGHUWKH
SURMHFWDJUHHPHQWVWRDKDQGIXORI8QLRQHPSOR\HHV7KH
FRXUWFHUWLILHGWKHLVVXHIRULQWHUORFXWRU\DSSHDO

-- 3 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
,Q WKHLU PRWLRQ WR GLVPLVV WKH WKLUGSDUW\ FRPSODLQW
SXUVXDQWWR)HGHUDO5XOHVRI&LYLO3URFHGXUH E DQG
+HOOGREOHUDQGWKH8QLRQFODLPHGWKDWWKHIHGHUDOFRXUWGLG
QRWKDYHVXEMHFWPDWWHUMXULVGLFWLRQRYHUWKHDFWLRQDQGWKDW
WKH FODLPV ZHUH SUHHPSWHG 7KH GLVWULFW FRXUW GHQLHG WKH
PRWLRQ WR GLVPLVV DQG FHUWLILHG WKH LVVXH IRU LQWHUORFXWRU\
UHYLHZ
:HDFFHSWHGERWKLQWHUORFXWRU\DSSHDOVDQGZH$)),50
ERWKRIWKHGLVWULFWFRXUW¶VRUGHUV
,)DFWXDO%DFNJURXQG
7KLVFDVHDULVHVRXWRI DQRQJRLQJHPSOR\PHQWGLVSXWH
EHWZHHQ WKH 8QLRQ DQG : ) : ) LV D FRQVWUXFWLRQ
VXEFRQWUDFWRU SULPDULO\ HQJDJHG LQ WKH HUHFWLRQ RI SUH
HQJLQHHUHGVWHHOEXLOGLQJVLWFRQWUDFWVZLWKHPSOR\HHVRQD
SURMHFWE\SURMHFWEDVLV)RUPRVWRILWVH[LVWHQFH: )XVHG
H[FOXVLYHO\QRQXQLRQODERU9DO+HOOGREOHUDQRUJDQL]HUIRU
WKH8QLRQDSSURDFKHGWKHRZQHUVRI: )LQ6HSWHPEHURI
UHTXHVWLQJ WKDW : ) XQLRQL]H LWV ZRUNIRUFH 7KH
RZQHUVGHFOLQHGFODLPLQJWKDW: )FRXOGQRWDIIRUGWRSD\
8QLRQZDJHVDQGEHQHILWVWRDOOLWVHPSOR\HHV+HOOGREOHU
VXJJHVWHGWKDW: )HDVHLQWRXQLRQL]DWLRQE\KLULQJRQHRU
WZRXQLRQZRUNHUVSHUMRE,WZDV+HOOGREOHU¶VKRSHWKDWWKLV
LQFUHPHQWDO DSSURDFK ZRXOG GHPRQVWUDWH WR : ) WKH
³DGYDQWDJHVRID8QLRQZRUNIRUFH´
: ) DQG WKH 8QLRQ QHJRWLDWHG D FRPSURPLVH DQG
+HOOGREOHUPDGHKDQGZULWWHQQRWDWLRQVRQWZRRIWKHSULQWHG
3URMHFW$JUHHPHQWIRUPV2QHRIWKRVH$JUHHPHQWVEHDUVWKH
QRWDWLRQ³PHQ$UNDP6WHHOMRERQO\´WKHRWKHUEHDUVWKH
KDQGZULWWHQ QRWH ³ -RXUQH\PDQ $SSUHQWLFH WK PDQ
ZHHNO\ EHQHILW SD\´ 7KHVH PDUNLQJV DSSHDU QHDU WKH
VLJQDWXUH OLQH RI WKH DJUHHPHQWV DQG QR UHIHUHQFH WR WKHP
DSSHDUVDQ\ZKHUHLQWKHERG\RIWKHDJUHHPHQW7KHWKUHH
UHPDLQLQJ DJUHHPHQWV WKDW DUH WKH VXEMHFW RI WKLV DFWLRQ
FRQWDLQQRVXFKQRWDWLRQVEXW: )DOOHJHVWKDWWKH\ZHUH
HQWHUHG LQWR RQ VLPLODU WHUPV +HOOGREOHU GHQLHV WKDW WKH
1RV 1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO

H[HFXWHG QRW DQ\ WHUP RI WKH $JUHHPHQWV WKHPVHOYHV
6HFWLRQWKHUHIRUHGRHVQRWSUHHPSWWKHWKLUGSDUW\VWDWH
ODZFODLP
)LQDOO\DOORZLQJWKHGLVWULFWFRXUWWRUXOHRQWKHIUDXGFODLP
SUHVHQWVQRWKUHDWWRIHGHUDOODERUODZ%HFDXVHUXOLQJRQWKH
IUDXGFODLPGRHVQRWLQYROYHWKHLQWHUSUHWDWLRQRIDFROOHFWLYH
EDUJDLQLQJ DJUHHPHQW UXOLQJ RQ WKDW FODLP SUHVHQWV QR
FKDOOHQJHWRWKHXQLIRUPLW\RIIHGHUDOODZJRYHUQLQJODERU
FRQWUDFWV,QVKRUWVHFWLRQGRHVQRWSUHHPSW:DOFKHU
)R[¶VFODLPRIIUDXGLQWKHLQGXFHPHQW
',QGLYLGXDOLPPXQLW\XQGHU$WNLQVRQ
/DVWO\+HOOGREOHUFODLPVWKDW$WNLQVRQY6LQFODLU5HILQLQJ
&R86 RYHUUXOHGRQRWKHUJURXQGVE\%R\V
0DUNHWV,QFY5HWDLO&OHUN¶V8QLRQ/RFDO86
SURYLGHV KLP LPPXQLW\ IURP VXLW +HOOGREOHU
PLVUHDGV $WNLQVRQ $WNLQVRQ DGGUHVVHG WKH TXHVWLRQ RI
ZKHWKHULQGLYLGXDOXQLRQPHPEHUVFRXOGEHKHOGOLDEOHIRU
WKHXQLRQ¶VYLRODWLRQRIDQRVWULNHFODXVHLQWKHLUFRQWUDFW
7KH6XSUHPH&RXUWKHOGWKDWWKH\FRXOGQRW,GDW
$WNLQVRQ GRHV QRW VWDQG IRU WKH PRUH UDGLFDO SURSRVLWLRQ
DGYDQFHGKHUHE\+HOOGREOHUWKDWXQLRQPHPEHUVDUHLPPXQH
IURPVXLWIRUWKHLULQGLYLGXDODFWVVLPSO\E\YLUWXHRIXQLRQ
PHPEHUVKLS6HH)HOLFHY6HYHU)G G
&LU ³>7KHGHIHQGDQWV@YLHZWKHLPPXQLW\H[WHQGHGE\
VHFWLRQ E DVFRYHULQJDOOμFRQGXFWUHODWHGWRWKHLUDFWLRQV
DV8QLRQRIILFHUV¶>7@KHOHJDOSULQFLSOHDVHQXQFLDWHGE\
>WKHGHIHQGDQWV@LVWRREURDG´
+HOOGREOHUDOVRFLWHVWZR2KLRFDVHV6HOOHUVY'RH
1(G 2KLR$SS DQG&ROOLQVY/HINRZLW]
1(G 2KLR $SS LQ VXSSRUW RI KLV FODLP RI
LPPXQLW\(DFKRIWKHVHFDVHVLQYROYHGDQDWWRUQH\KLUHGE\
WKHXQLRQWRSHUIRUPVHUYLFHVRQEHKDOIRIDXQLRQPHPEHULQ
FRQQHFWLRQ ZLWK WKH HPSOR\HU¶V GLVFLSOLQDU\ DFWLRQ DJDLQVW
WKDWXQLRQPHPEHU,QHDFKRIWKRVHFDVHVWKHFRXUWKHOGWKDW
WKHDWWRUQH\ZDVDQDJHQWRIWKHXQLRQSHUIRUPLQJVHUYLFHVDV

-- 4 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
$OWKRXJK WKH (PSOR\HU 3DUWLFLSDWLRQ $JUHHPHQWV LQFRUSRUDWH WKH
WHUPV RI D FROOHFWLYH EDUJDLQLQJ DJUHHPHQW DV ZH KDYH SUHYLRXVO\ QRWHG
: ) ZDV QRW D SDUW\ WR WKH FROOHFWLYH EDUJDLQLQJ DJUHHPHQW DQG WKH
8QLRQ ZDV QRW DXWKRUL]HG WR EDUJDLQ RQ EHKDOI RI : )¶V HPSOR\HHV
)G WK&LU ³6HFWLRQSUHHPSWV
RQO\ VWDWH ODZ FODLPV WKDW DUH μVXEVWDQWLDOO\ GHSHQGHQW RQ
DQDO\VLVRIDFROOHFWLYHEDUJDLQLQJDJUHHPHQW¶QRWFODLPV
WKDWRQO\μWDQJHQWLDOO\¶LQYROYH&%$SURYLVLRQV´,GDW
LQWHUQDOFLWDWLRQVRPLWWHG
7KH1LQWK&LUFXLWFDVH2SHUDWLQJ(QJ¶UV3HQVLRQ7UXVWY
:LOVRQ)G WK&LU LQYROYHGIDFWVVLPLODU
WRWKRVHLQWKHFDVHDWKDQG7KHUHWKHFRXUWUXOHGWKDWDVWDWH
ODZ FODLP RI IUDXGXOHQW LQGXFHPHQW GLG QRW UHTXLUH
LQWHUSUHWDWLRQRIWKHFROOHFWLYHEDUJDLQLQJDJUHHPHQW,GDW
7KH DJUHHPHQW DW LVVXH ZDV DQ RZQHURSHUDWRU
DJUHHPHQWWKDWWKHXQLRQSUHVHQWHGWRWKHHPSOR\HUFODLPLQJ
WKDWWKHHPSOR\HUKDGWRVLJQLWWRFRQWLQXHZRUNDWWKDWMRE
VLWH ,G 7KH 1LQWK &LUFXLW KHOG WKDW WKH IUDXGXOHQW
LQGXFHPHQW FODLP ZDV QRW SUHHPSWHG EHFDXVH LW GLG QRW
UHTXLUH WKH FRXUW WR LQWHUSUHW WKH DJUHHPHQW EXW LQVWHDG
LQYROYHG RQO\ WKH IDFWV VXUURXQGLQJ WKH IRUPDWLRQ RI WKH
DJUHHPHQWZLWKRXWUHIHUHQFHWRWKHDJUHHPHQWLWVHOI,GDW

7KHFODLPDGYDQFHGE\: )²WKDWWKH8QLRQIUDXGXOHQWO\
LQGXFHG LW WR VLJQ WKH (PSOR\HU 3DUWLFLSDWLRQ
$JUHHPHQWV²OLNH WKH FODLP LQ :LOVRQ GRHV QRW UHTXLUH
LQWHUSUHWDWLRQRIDFROOHFWLYHEDUJDLQLQJDJUHHPHQWRUHYHQ
RI WKH (PSOR\HU 3DUWLFLSDWLRQ $JUHHPHQWV WKHPVHOYHV
,QVWHDGWKHULJKWVDQGGXWLHVDWLVVXHDULVHIURPWKH8QLRQ¶V
DFWLRQVSULRUWRWKHIRUPDWLRQRIWKH(PSOR\HU3DUWLFLSDWLRQ
$JUHHPHQWV : ) DOOHJHV WKDW WKH 8QLRQ FODLPHG LW ZDV
VHHNLQJRQO\WRVKRZ: )WKHEHQHILWVRIKDYLQJDXQLRQ
ODERUIRUFHZKHQLQIDFWLWZDVGHFHLYLQJWKHHPSOR\HULQWR
SD\LQJ XQLRQ EHQHILWV IRU DOO LWV HPSOR\HHV 7KH UHOHYDQW
LQTXLU\KHUHFRQFHUQVWKHUHSUHVHQWDWLRQVPDGHE\WKH8QLRQ
DQGRU+HOOGREOHUDWWKHWLPHWKH3URMHFW$JUHHPHQWVZHUH
1RV 1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO

(DFK DJUHHPHQW H[SUHVVO\ SURYLGHV WKDW :DOFKHU )R[ LV ³7KH
&RPSDQ\´
SDUWLHVDJUHHGWROLPLWXQLRQSDUWLFLSDWLRQRQDQ\SURMHFWDQG
VWDWHVWKDWWKHKDQGZULWWHQQRWDWLRQVLQGLFDWHDIORRUIRUXQLRQ
SDUWLFLSDWLRQUDWKHUWKDQDFHLOLQJ
(DFK RI WKH 3URMHFW $JUHHPHQWV²HQWLWOHG ³(PSOR\HU
3DUWLFLSDWLRQ$JUHHPHQWV´²DWLVVXHLQWKLVFDVHLQFRUSRUDWHV
WKH WHUPV DQG FRQGLWLRQV RI WKH &ROOHFWLYH %DUJDLQLQJ
$JUHHPHQW ³&%$´ HQWHUHG LQWR E\ WKH /DERU 5HODWLRQV
'LYLVLRQRIWKH$VVRFLDWHG*HQHUDO&RQWUDFWRUVRI1RUWKZHVW
2KLR DQG WKH 8QLRQ 7KRVH (PSOR\HU 3DUWLFLSDWLRQ
$JUHHPHQWVSURYLGH
7KH&RPSDQ\>@KHUHE\UHFRJQL]HVWKH8QLRQDVWKH
UHSUHVHQWDWLYHRIDPDMRULW\RILWVHPSOR\HHVGHVLJQDWHG
DFNQRZOHGJHVUHFHLSWRIDFRS\RIWKHFXUUHQW%DUJDLQLQJ
$JUHHPHQW DQG DJUHHV WR EH ERXQG E\ WKH WHUPV DQG
FRQGLWLRQVFRQWDLQHGWKHUHLQ

7KH&RPSDQ\DJUHHVWRPDNHWKHFRQWULEXWLRQVDQG
GHGXFWLRQV WR WKH VDLG 3ODQV DW WKH WLPHV DQG LQ WKH
DPRXQWVVSHFLILHGLQWKH%DUJDLQLQJ$JUHHPHQWIRUDOO
LWV HPSOR\HHV SHUIRUPLQJ WKH ZRUN VSHFLILHG LQ WKH
%DUJDLQLQJ$JUHHPHQW
7KH&%$SURYLGHVWKDWHDFK3DUWLFLSDWLQJ(PSOR\HUVKDOO
PDNHSD\PHQWVRIIULQJHFRQWULEXWLRQVDQGGHGXFWLRQVWR
HDFKDQGHYHU\HPSOR\HHEHQHILWSODQIRUDOOHPSOR\HHV
RIHDFKVXFK3DUWLFLSDWLQJ(PSOR\HUZKRDUHPHPEHUVRI
WKHFROOHFWLYHEDUJDLQLQJXQLWUHSUHVHQWHGE\WKH8QLRQ
ZKHWKHU RU QRW WKH HPSOR\HHV DUH PHPEHUV RI WKH
8QLRQ
&%$$UW;;9, % 3DU

-- 5 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
: ) SUHVHQWHG WHVWLPRQ\ WKDW WKH DJUHHPHQWV ZHUH
LQWHQGHG WR FRYHU WKH 8QLRQ ZRUNHUV RQO\ DQG QRW DOO
HPSOR\HHV%HWZHHQ6HSWHPEHUDQG6HSWHPEHU
: )SDLGIULQJHEHQHILWDQGSHQVLRQFRQWULEXWLRQVIRUWKH
8QLRQHPSOR\HHVDQGDGPLQLVWHUHGLWVRZQEHQHILWSODQIRU
WKHQRQXQLRQHPSOR\HHV+HOOGREOHUSLFNHGXSWKHZHHNO\
EHQHILWFKHFNVIRUWKH8QLRQPHPEHUV,Q6HSWHPEHURI
+HOOGREOHUDWWHPSWHGWRRUJDQL]HWKHQRQXQLRQZRUNHUVDWWKH
MRE VLWH EXW WKH\ XQLYHUVDOO\ GHFOLQHG WR MRLQ 'HVSLWH WKH
DSSDUHQW ODFN RI LQWHUHVW RQ WKH SDUW RI : )¶V QRQXQLRQ
HPSOR\HHV +HOOGREOHU GHPDQGHG WKDW : ) HPSOR\ RQO\
8QLRQ ZRUNHUV IRU WZR SURMHFWV LQ WKH 7ROHGR 2KLR DUHD
: ) UHIXVHG WR DFFHSW +HOOGREOHU¶V XOWLPDWXP DQG WKH
GLVSXWHVRRQHVFDODWHGWRLQFOXGH8QLRQSLFNHWLQJRI: )
6KRUWO\WKHUHDIWHU+HOOGREOHUQRWLILHG12$WKDW: )KDG
IDLOHGWRPDNHWKHIULQJHEHQHILWDQGSHQVLRQFRQWULEXWLRQV
WKDW+HOOGREOHUFODLPHGWKH&%$SURYLVLRQVLQFRUSRUDWHGLQWR
WKH3URMHFW$JUHHPHQWVUHTXLUHGIRUDOORI: )¶VHPSOR\HHV
,Q 2FWREHU RI 12$ UHTXHVWHG WKDW : ) DOORZ D
SD\UROO DXGLW IRU DOO HPSOR\HHV ZRUNLQJ RQ WKH SURMHFWV
FRYHUHGE\WKHILYHDJUHHPHQWVWRGHWHUPLQHZKHWKHU: )
ZDVSURSHUO\SD\LQJWKHIULQJHEHQHILWFRQWULEXWLRQVIRULWV
HPSOR\HHV: )UHIXVHGFODLPLQJWKDW12$KDGWKHULJKW
WRDXGLWRQO\WKHUHFRUGVRIWKHKDQGIXORI8QLRQHPSOR\HHV
SHUIRUPLQJZRUNXQGHUWKH3URMHFW$JUHHPHQWV7KLVODZVXLW
HQVXHG
,,6WDQGDUGRIUHYLHZ
%HFDXVH WKLV LV DQ LQWHUORFXWRU\ DSSHDO ZH KDYH QR
DXWKRULW\WRUHYLHZWKHGLVWULFWFRXUW¶VILQGLQJVRIIDFWEXW
PXVWFRQILQHRXUUHYLHZWRSXUHTXHVWLRQVRIODZ6HH)RVWHU
:KHHOHU(QHUJ\&RUSY0HWUR.QRZ6ROLG:DVWH$XWK,QF
)G WK&LU :HUHYLHZWKHGLVWULFW
FRXUW¶VFRQFOXVLRQVRIODZGHQRYR%DUQHVY:LQFKHOO
)G WK&LU
1RV 1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO

WKDW ULJKWV DQG GXWLHV DUH FOHDUO\ XQGHUVWRRG DQG WR OHVVHQ
LQGXVWULDO VWULIH RFFDVLRQHG E\ FRQIOLFW RYHU GLIIHULQJ
LQWHUSUHWDWLRQVRIFROOHFWLYHEDUJDLQLQJDJUHHPHQWV,QW¶O%KG
RI(OHF:RUNHUVY+HFKOHU86
6LQFHIHGHUDOODZLVWKHH[FOXVLYHODZXVHGWRLQWHUSUHWWKH
GXWLHVDQGREOLJDWLRQVFRQWDLQHGZLWKLQFROOHFWLYHEDUJDLQLQJ
DJUHHPHQWVDQ\VWDWHODZFODLPWKDWLVQRWLQGHSHQGHQWRI
ULJKWVHVWDEOLVKHGE\DQDJUHHPHQWDQGWKDWLV³LQH[WULFDEO\
LQWHUWZLQHG´ZLWKDGHWHUPLQDWLRQRIWKHPHDQLQJRIWKHWHUPV
RIDQDJUHHPHQWLVSUHHPSWHGE\VHFWLRQ$OOLV&KDOPHUV
&RUSY/XHFN86 7KXVLIDVWDWHWRUW
UHOLHVRQRUHQWDLOVLQWHUSUHWDWLRQRIDFROOHFWLYHEDUJDLQLQJ
DJUHHPHQWWKHVWDWHFODLPLVSUHHPSWHG,GDW,Q
$OOLV&KDOPHUV IRU H[DPSOH WKH &RXUW IRXQG WKDW WKH
:LVFRQVLQFDXVHRIDFWLRQDOOHJLQJDEUHDFKRIJRRGIDLWKLQ
SHUIRUPDQFH RI D FRQWUDFW ZDV SUHHPSWHG E\ VHFWLRQ
EHFDXVHWKH³VWDWHODZULJKWVDQGREOLJDWLRQV>GLG@QRWH[LVW
LQGHSHQGHQWO\RI´WKHFROOHFWLYHEDUJDLQLQJDJUHHPHQW,GDW

7KH6XSUHPH&RXUWKDVIXUWKHUGHILQHGZKHQDVWDWHODZ
ULJKW RU GXW\ LV LQGHSHQGHQW RI D FROOHFWLYH EDUJDLQLQJ
DJUHHPHQWKROGLQJWKDWHYHQLIWKHVWDWHFODLPUHTXLUHVDFRXUW
WR GLVFXVV DQG HYDOXDWH WKH VDPH IDFWV DV LW ZRXOG ZKHQ
LQWHUSUHWLQJWKHDJUHHPHQWVRORQJDVWKHFRXUWLVQRWDFWXDOO\
LQWHUSUHWLQJWKHDJUHHPHQWWKHUHLVQRSUHHPSWLRQ/LQJOHY
1RUJH'LYRI0DJLF&KHI,QF86 ,I
WKH VWDWH FODLP LV QRW ³VXEVWDQWLDOO\ GHSHQGHQW´ XSRQ DQ
LQWHUSUHWDWLRQ RI WKH DJUHHPHQW WKH FDXVH RI DFWLRQ LV
LQGHSHQGHQWDQGFDQJRIRUZDUG,GDWQ,QVXPDQ\
WLPHDVWDWHFDXVHRIDFWLRQUHTXLUHVWKHLQWHUSUHWDWLRQRID
FROOHFWLYHEDUJDLQLQJDJUHHPHQWRULQYRNHVULJKWVWKDWDUHQRW
LQGHSHQGHQW RI WKH DJUHHPHQW VHFWLRQ SUHHPSWV WKH
FODLP
$OWKRXJK VHFWLRQ KDV EURDG SUHHPSWLYH HIIHFW WKLV
FRXUWKDVKHOGWKDW³>W@KHSUHHPSWLYHUHDFKRIVHFWLRQ
LVE\QRPHDQVERXQGOHVV´)R[Y3DUNHU+DQQLILQ&RUS

-- 6 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
+HQFHWKH8QLRQKDVIDLOHGWRVKRZWKDWWKHDFWLYLW\: )
FRPSODLQV RI ZDV ³DUJXDEO\´ FRYHUHG E\ VHFWLRQ RI WKH
1/5$
7KHSROLFLHVXQGHUO\LQJWKHUDQJHDQGH[WHQWRI*DUPRQ
SUHHPSWLRQ DOVR FRXQVHO D ILQGLQJ RI QR SUHHPSWLRQ 7KH
FRQGXFW FRPSODLQHG RI KHUH FDQ EH GLVWLQJXLVKHG IURP
SURWHFWHGRUSURKLELWHGODERUSUDFWLFHVEHFDXVHWKHGLVSXWHKDV
QRWKLQJWRGRZLWKWKHSURFHVVRIFROOHFWLYHEDUJDLQLQJWKH
ULJKWVRIZRUNHUVWREDUJDLQFROOHFWLYHO\RUWKHEDODQFHRI
SRZHU EHWZHHQ ODERU DQG PDQDJHPHQW ,Q WKLV FDVH WKH
8QLRQLVQRWUHSUHVHQWLQJDQ\HPSOR\HHV7KHUHLVQRGLVSXWH
EHWZHHQHPSOR\HHVDQGPDQDJHPHQW7KHGLVSXWHLVEHWZHHQ
WKH DGPLQLVWUDWRU RI WKH SHQVLRQ DQG EHQHILW IXQG D WKLUG
SDUW\ EHQHILFLDU\ DQG WKH &RPSDQ\ 6LQFH WKLV GLVSXWH
SUHVHQWVQRWKUHDWWRWKHXQLIRUPLW\RIIHGHUDOODERUODZDQG
WKH %RDUG¶V SRVLWLRQ DV WKH DXWKRULWDWLYH LQWHUSUHWHU RI WKH
1/5$LVQRWWKUHDWHQHGWKHSROLFLHVXQGHUO\LQJ*DUPRQGR
QRWUHTXLUHSUHHPSWLRQ
,QVXPEHFDXVHWKH8QLRQKDVIDLOHGWRGHPRQVWUDWHWKDWLWV
FRQGXFWZDVDUJXDEO\SURKLELWHGE\VHFWLRQRIWKH1/5$
*DUPRQSUHHPSWLRQGRHVQRWDSSO\
&6HFWLRQ3UHHPSWLRQ
7KH 8QLRQ DQG +HOOGREOHU QH[W DUJXH WKDW WKH VWDWH ODZ
FODLPDVVHUWHGLQWKHWKLUGSDUW\FRPSODLQWLVSUHHPSWHGE\
VHFWLRQRIWKH/05$8QGHUWKHLUWKHRU\WKHVWDWHFODLP
VKRXOGEHSUHHPSWHGXQGHUIHGHUDOODZEHFDXVHWKHLVVXHVWKH
FRXUWPXVWGHWHUPLQHDUH³LQH[WULFDEO\LQWHUWZLQHGZLWKWKH
WHUPVRIWKHODERUFRQWUDFW´
6HFWLRQ JUDQWV WR WKH FRXUWV RI WKH 8QLWHG 6WDWHV
MXULVGLFWLRQ RYHU LVVXHV SHUWDLQLQJ WR FROOHFWLYH EDUJDLQLQJ
DJUHHPHQWV7KH6XSUHPH&RXUWKDVFRQVWUXHGVHFWLRQDV
D JUDQW IURP &RQJUHVV WR FUHDWH D IHGHUDO FRPPRQ ODZ RI
ODERUFRQWUDFWV7H[WLOH:RUNHUV8QLRQY/LQFROQ0LOOV
86 7KHJUDQWLVQHFHVVDU\WRHQVXUHXQLIRUP
QDWLRQDOLQWHUSUHWDWLRQRIODERUDJUHHPHQWVDQGWKXVWRHQVXUH
1RV 1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO

,,,12$¶VULJKWWRFROOHFWFRQWULEXWLRQV
: )FODLPVWKDWWKHGLVWULFWFRXUW¶VGHWHUPLQDWLRQRQWKH
PRWLRQ IRU SDUWLDO VXPPDU\ MXGJPHQW LQ ZKLFK WKH FRXUW
IRXQG WKH KDQGZULWWHQ QRWDWLRQV RQ WKH $JUHHPHQWV
DPELJXRXVFRQWUDGLFWVWKHFRXUW¶VODWHUFRQFOXVLRQWKDW: )
LVUHTXLUHGWRUHPLWWR12$FRQWULEXWLRQVIRUDOORI: )¶V
HPSOR\HHV12$FRXQWHUVWKDWIROORZLQJWKHEHQFKWULDOWKH
GLVWULFWFRXUWIRXQGWKDWWKH$JUHHPHQWVZHUHQRWDPELJXRXV
WKDWWKHZULWWHQWHUPVRIWKRVH$JUHHPHQWVUHTXLUHG: )WR
PDNH FRQWULEXWLRQV IRU DOO RI LWV HPSOR\HHV DQG WKDW
HVWDEOLVKHG (5,6$ ODZ HQWLWOHG 12$ WR UHO\ RQO\ RQ WKH
SULQWHGWHUPVRIWKRVH$JUHHPHQWV
,WLVWUXHWKDWLQGHQ\LQJ12$¶VPRWLRQIRUSDUWLDOVXPPDU\
MXGJPHQWWKHGLVWULFWFRXUWIRXQGWKDWEHFDXVHRIDPELJXLW\
LQWKH$JUHHPHQWVWKHFRXUWFRXOGQRWGHWHUPLQHWKHLQWHQWRI
WKHSDUWLHV%XWIROORZLQJWKHEHQFKWULDORQWKHVROHLVVXHRI
ZKHWKHU: )ZDVREOLJDWHGXQGHUWKH$JUHHPHQWVWRPDNH
FRQWULEXWLRQVRQEHKDOIRIDOORILWVHPSOR\HHVWKHGLVWULFW
FRXUWKHOGDVDPDWWHURIODZWKDWWKHLQWHQWRIWKHSDUWLHVLV
QRWUHOHYDQWWRWKLVLVVXH&LWLQJ&HQWUDO6WDWHV6RXWKHDVW
DQG6RXWKZHVW$UHDV3HQVLRQ)XQGY*HUEHU7UXFN6HUY
,QF)G WK&LU WKHGLVWULFWFRXUW
KHOGWKDWVHFWLRQRI(5,6$SHUPLWVPXOWLHPSOR\HUSODQV
WRHQIRUFHWKHSODLQWHUPVRIWKHZULWWHQDJUHHPHQWUHJDUGOHVV
RIFRQWUDFWXDOGHIHQVHVDSSOLFDEOHWRWKHRULJLQDOSDUWLHVVR
ORQJDVWKHZULWWHQGRFXPHQWGRHVQRWSODFHWKHSODQRQQRWLFH
RI DQ\ PRGLILFDWLRQV )XUWKHU FLWLQJ %DNHU\ DQG
&RQIHFWLRQDU\ 8QLRQ DQG ,QGXV ,QW¶O +HDOWK %HQHILWV DQG
3HQVLRQ)XQGVY1HZ%DNHU\&RRI2KLR)G
WK&LU WKHFRXUWKHOGWKDWWKHDFWXDOLQWHQWLRQVRIWKH
FRQWUDFWLQJ SDUWLHV DQG KHQFH WKH IDFWXDO GLVSXWH EHWZHHQ
+HOOGREOHUDQG: )DUHLPPDWHULDOWRWKLVLVVXH
$VZHKDYHDOUHDG\SRLQWHGRXWWKLVPDWWHULVEHIRUHXVRQ
DQ LQWHUORFXWRU\ DSSHDO DQG ZH DUH ZLWKRXW DXWKRULW\ WR
LQTXLUHLQWRWKHFRUUHFWQHVVRIWKHGLVWULFWFRXUW¶VILQGLQJVRI
IDFWZLWKUHJDUGWRWKHLQWHQWLRQVRIWKHSDUWLHVDQGZKHWKHU

-- 7 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
WKHQRWDWLRQVRQWKH$JUHHPHQWVUHIOHFWHGWKRVHLQWHQWLRQV
5DWKHU ZH PXVW GHFLGH ZKHWKHU WKH GLVWULFW FRXUW HUUHG LQ
KROGLQJ WKDW DV D PDWWHU RI ODZ WKH LQWHQWLRQV RI WKH
FRQWUDFWLQJ SDUWLHV DUH LPPDWHULDO WR WKH GHWHUPLQDWLRQ RI
: )¶V REOLJDWLRQ WR PDNH WKH FRQWULEXWLRQV DQG WKDW WKH
ZULWWHQ QRWDWLRQV PDGH E\ : ) DQG WKH 8QLRQ ZHUH QRW
VXIILFLHQWWRSODFH12$RQQRWLFHWKDWLWFRXOGQRWUHO\VROHO\
RQ WKH W\SHG ODQJXDJH RI WKH 3URMHFW $JUHHPHQWV DQG WKH
&%$
: )DUJXHVWKDWWKLUGSDUW\EHQHILFLDU\12$¶VULJKWWR
FROOHFW FRQWULEXWLRQV IORZV IURP WKH &%$ DQG WKHUHIRUH
FDQQRWEHVXSHULRUWRWKHULJKWVRIWKHSULPDU\SDUWLHV)RU
WKLV SURSRVLWLRQ LW FLWHV D GLVWULFW FRXUW RSLQLRQ &HQWUDO
6WDWHV 6RXWKHDVW DQG 6RXWKZHVW $UHDV 3HQVLRQ )XQG Y
.URJHU&R1R&'LVW/(;,6 1',OO
0DUFK ,QWKDWFDVHWKHGLVWULFWFRXUWGHQLHGWKH
SODLQWLII¶VPRWLRQIRUVXPPDU\MXGJPHQWEHFDXVHWKHSODLQWLII
VRXJKWWRUHO\RQSDVWSUDFWLFHVDQGRUDOXQGHUVWDQGLQJVRIWKH
FRQWUDFWQRWUHGXFHGWRZULWLQJ$OWKRXJKLWPDNHVFOHDUWKDW
DSHQVLRQIXQG¶VULJKWVWRFROOHFWDUHERXQGHGE\WKHZULWWHQ
&%$.URJHUGRHVQRWDGGUHVVWKHVLWXDWLRQEHIRUHXVKHUHLQ
ZKLFK WKH SDUWLHV PHPRULDOL]HG WKHLU PRGLILFDWLRQV RQ WKH
IDFHRIDFRQWUDFWDOEHLWDPELJXRXVO\,QIDFW.URJHUSODLQO\
VSHOOVRXWWKH(5,6$SROLF\WKDW³SHQVLRQIXQGVDUHHQWLWOHG
WRUHO\RQWKHZULWLQJVWKDWHVWDEOLVKWKHHPSOR\HU¶VREOLJDWLRQ
WR WKHP´ LG DW FRQFOXGLQJ WKDW DQ RUDO DJUHHPHQW
EHWZHHQWKHHPSOR\HUDQGWKHXQLRQWRGLVUHJDUGWKHWH[WDQG
FRXUVHRISHUIRUPDQFHFDQQRWSUHYHQWWKHZULWWHQDJUHHPHQW
IURPEHLQJHQIRUFHGDWWKHLQVLVWHQFHRIWKHSHQVLRQIXQGV
EHFDXVH³>D@Q\OHVVSURWHFWLRQμPD\ZHOOVDGGOHWKHSODQVZLWK
XQIXQGHGREOLJDWLRQV¶´,GDW FLWDWLRQVRPLWWHG
: )DOVRFLWHVWKHXQUHSRUWHG&UDLJY6HYHULQR,QF1R
86$SS/(;,6 WK&LU-XQH
: )¶V UHOLDQFH RQ 6HYHULQR LV PLVSODFHG ,Q
6HYHULQR WKH SDUWLHV VLJQHG D GXSOLFDWH RI D FROOHFWLYH
EDUJDLQLQJDJUHHPHQWEXWVSHFLILHGLQZULWLQJRQWKHFRQWUDFW
WKDWLWZDVOLPLWHGLQVFRSHWRMXVWRQHMRE7KHFRXUWIRXQG
1RV 1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO

&DVHV LQ ZKLFK WKH 6XSUHPH &RXUW IRXQG WKDW VWDWH ODZ
FODLPV ZHUH QRW SUHHPSWHG DUH DSSOLFDEOH WR WKH
FLUFXPVWDQFHVKHUHSUHVHQWHG,Q,QW¶O/RQJVKRUHPHQ¶V$VV¶Q
Y'DYLV86 IRUH[DPSOHWKHVWDWHODZ
FODLPDWLVVXHZDVRQHRIIUDXGDQGPLVUHSUHVHQWDWLRQDJDLQVW
WKHXQLRQ7KHXQLRQKDGUHSUHVHQWHGWRDQHPSOR\HHWKDWKH
ZDVSURWHFWHGIURPGLVFKDUJHE\WKH1/5$EHFDXVHKHZDV
QRWDVXSHUYLVRUEXWUDWKHUZDVDQHPSOR\HH,GDW7KH
XQLRQDUJXHGWKDWWKHVWDWHEDVHGFODLPIRUIUDXGZDVDUJXDEO\
LGHQWLFDO WR WKH XQIDLU ODERU SUDFWLFH RI GLVFKDUJLQJ DQ
HPSOR\HHIRUSURWHFWHGXQLRQDFWLYLWLHV,G7KH&RXUWVSRNH
VSHFLILFDOO\WRWKH8QLRQ¶VEXUGHQLQDUJXLQJSUHHPSWLRQ
7KHSUHFRQGLWLRQIRUSUHHPSWLRQWKDWWKHFRQGXFWEH
³DUJXDEO\´ SURWHFWHG RU SURKLELWHG LV QRW ZLWKRXW
VXEVWDQFH,WLVQRWVDWLVILHGE\DFRQFOXVRU\DVVHUWLRQRI
SUHHPSWLRQDQGZRXOGWKHUHIRUHQRWEHVDWLVILHGLQWKLV
FDVH E\ D FODLP ZLWKRXW PRUH WKDW 'DYLV ZDV DQ
HPSOR\HH UDWKHU WKDQ D VXSHUYLVRU ,I WKH ZRUG
³DUJXDEO\´LVWRPHDQDQ\WKLQJLWPXVWPHDQWKDWWKH
SDUW\ FODLPLQJ SUHHPSWLRQ LV UHTXLUHG WR GHPRQVWUDWH
WKDWKLVFDVHLVRQHWKDWWKH%RDUGFRXOGOHJDOO\GHFLGHLQ
KLVIDYRU
,GDW%HFDXVHWKHXQLRQKDGIDLOHGWRSURYLGHDQ\
HYLGHQFHWKDWWKHHPSOR\HHZDV³DUJXDEO\´QRWDVXSHUYLVRU
WKH &RXUW KHOG WKDW WKH XQLRQ KDG IDLOHG WR VKRZ WKDW WKH
HPSOR\HU¶VDFWLRQRIILULQJWKHHPSOR\HHZDV³DUJXDEO\´DQ
XQIDLUODERUSUDFWLFH,G
7KHFDVHEHIRUHWKLVFRXUWLVVLPLODUWR'DYLVLQWKDWWKH
7KLUG3DUW\'HIHQGDQWVKDYHIDLOHGWRRIIHUDQ\HYLGHQFHWKDW
WKLV³FDVHLVRQHWKDWWKH%RDUGFRXOGOHJDOO\GHFLGHLQ>WKH
8QLRQ¶V@IDYRU´,GDW+HUHWKH8QLRQDSSHDUVWRFODLP
WKDW LWV DOOHJHGO\ IUDXGXOHQW FRQGXFW RFFXUUHG GXULQJ WKH
FROOHFWLYHEDUJDLQLQJSURFHVVDQGLPSOLFDWHVWKHGXW\RIJRRG
IDLWKUHTXLUHGGXULQJWKDWSURFHVV,WLVLQGLVSXWDEOHKRZHYHU
WKDW WKH 8QLRQ ZDV QRW WKH UHSUHVHQWDWLYH RI : )¶V
HPSOR\HHVDQGZDVWKXVQRWHQJDJHGLQFROOHFWLYHEDUJDLQLQJ

-- 8 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
IRUWKHHPSOR\PHQWRIDGLVFUHWHQXPEHURIXQLRQHPSOR\HHV
RQSDUWLFXODUMREVDWSDUWLFXODUMREVLWHV
7KH1LQWK&LUFXLWIDFHGDYHU\VLPLODUVLWXDWLRQLQZKLFK
WKHHPSOR\HUILOHGDWKLUGSDUW\FRPSODLQWDJDLQVWDXQLRQIRU
IUDXGXOHQWLQGXFHPHQW2SHUDWLQJ(QJ¶UV3HQVLRQ7UXVWY
:LOVRQ )G WK &LU 7KH 1LQWK &LUFXLW
UXOHGWKDWWKHXQLRQ¶VDFWLRQVZHUHQRW³DUJXDEO\´SURKLELWHG
DVDQXQIDLUODERUSUDFWLFH,GDW$VDUHVXOW*DUPRQ
GLGQRWHYHQDSSO\DQGWKHUHZDVWKXVQRQHHGWRUHDFKWKH
TXHVWLRQ RI ZKHWKHU D *DUPRQ H[FHSWLRQ DSSOLHG ,G
/LNHZLVH KHUH WKH 8QLRQ KDV RIIHUHG QR HYLGHQFH
GHPRQVWUDWLQJ WKDW LWV DFWLYLWLHV DUH XQIDLU ODERU SUDFWLFHV
7KH DJUHHPHQW LQ TXHVWLRQ LV QRW D FROOHFWLYH EDUJDLQLQJ
DJUHHPHQW EHFDXVH WKH XQLRQ ZDV QRW WKH GXO\ HOHFWHG
UHSUHVHQWDWLYHRIDPDMRULW\RIWKHHPSOR\HHVDQGZDVQRW
DXWKRUL]HGWREDUJDLQRQWKHHPSOR\HHV¶EHKDOIRQWKHWHUPV
DQG FRQGLWLRQV RI HPSOR\PHQW 7KH 8QLRQ KDV RIIHUHG
QRWKLQJWRVXSSRUWLWVDVVHUWLRQWKDWWKHFRQGXFWDWLVVXHLQ
: )¶VFRXQWHUFODLPLVDUJXDEO\SURKLELWHGE\WKH1/5$
DQG KDV WKHUHIRUH IDLOHG WR PHHW LWV EXUGHQ WR VKRZ
SUHHPSWLRQ
7KH UHVXOW ZRXOG EH GLIIHUHQW LI WKH 8QLRQ KDG PDGH D
PLVUHSUHVHQWDWLRQ FRQQHFWHG ZLWK D FROOHFWLYH EDUJDLQLQJ
DJUHHPHQW,Q6HUUDQRY-RQHV /DXJKOLQ6WHHO&R
)G WK&LU WKLVFRXUWUXOHGWKDWDVWDWHFODLP
RI IUDXG EDVHG RQ DQ HPSOR\HU¶V IUDXGXOHQW
PLVUHSUHVHQWDWLRQV FRQFHUQLQJ D FROOHFWLYH EDUJDLQLQJ
DJUHHPHQW ZDV SUHHPSWHG EHFDXVH WKH HPSOR\HU DOVR
EUHDFKHGLWVGXW\RIJRRGIDLWKIRXQGLQVHFWLRQ8QOLNHWKH
VLWXDWLRQKHUHWKHVWDWHFODLPLQYROYHGDFROOHFWLYHEDUJDLQLQJ
DJUHHPHQW ZDV LGHQWLFDO WR D FODLP WKDW FRXOG KDYH EHHQ
EURXJKWEHIRUHWKH%RDUGDQGWKH%RDUGWKXVKDGH[FOXVLYH
MXULVGLFWLRQXQGHU*DUPRQ,WZDVWKHSUHVHQFHRIDFROOHFWLYH
EDUJDLQLQJDJUHHPHQWDQGDOORIWKHGXWLHVDWWHQGDQWWRWKH
EDUJDLQLQJSURFHVV²ZKLFKDUHDEVHQWKHUH²WKDWFDXVHGWKH
SUHHPSWLRQRIWKHVWDWHODZFODLPLQ6HUUDQR
1RV 1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO

WKDW WKH SDUWLHV KDG H[HFXWHG D QHZ DJUHHPHQW ZLWK WKH
OLPLWDWLRQLQFOXGHG,QWKHFDVHDWEDUWKHUHLVQRTXHVWLRQ
WKDW WKH 8QLRQ DQG : ) VRXJKW WR DPHQG WKH 3URMHFW
$JUHHPHQWVLQVRPHZD\7KHTXHVWLRQLVZKHWKHUWKH\SXW
12$RQQRWLFHRIWKHLQWHQGHGDPHQGPHQWVE\PDNLQJZKDW
WKHGLVWULFWFRXUWGHVFULEHGDV³FU\SWLF´QRWDWLRQVRQWKHSUH
SULQWHG DJUHHPHQW ,Q 6HYHULQR WKH OLPLWDWLRQ ZDV FOHDUO\
VSHOOHGRXWDWWKHWRSRIWKHVLJQDWXUHSDJHRIWKHFRQWUDFW
+HUH RQO\ WZR RI WKH 3URMHFW $JUHHPHQWV EHDU DQ\
KDQGZULWWHQPDUNLQJVDWDOODQGWKH\DUHLQVHUWHGQHDUWKH
VLJQDWXUH OLQH UDWKHU WKDQ LQ WKH ERG\ RI WKH FRQWUDFW RU
DGMDFHQWWRDQ\UHODWHGSURYLVLRQ0RUHRYHUDVWKHGLVWULFW
FRXUWFRUUHFWO\QRWHGWKHSDUWLHVPDGHQRDWWHPSWWRH[FLVH
FURVVRXW RU RWKHUZLVH PDQLIHVW WKHLU LQWHQW WR QXOOLI\ WKH
SRUWLRQRIWKHSUHSULQWHGFRQWUDFWWKDWUHTXLUHGWKDWEHQHILWV
EHSDLGIRUERWKXQLRQDQGQRQXQLRQHPSOR\HHVRURWKHUZLVH
WRFDOODWWHQWLRQWRWKHPRGLILFDWLRQ
(YHQLIWKHQRWDWLRQVRQWKH3URMHFW$JUHHPHQWVSHUKDSV
VKRXOGKDYHFDXJKWWKHDWWHQWLRQRIDQ12$DGPLQLVWUDWRU
QRWKLQJLQWKH$JUHHPHQWVLQGLFDWHGWKDWWKHQRWDWLRQVZHUH
LQWHQGHGWRVXSHUFHGHWKHXQDPELJXRXVSULQWHGSRUWLRQVRI
WKH$JUHHPHQWV7KHGLVWULFWFRXUWFRUUHFWO\DSSOLHGWKHZHOO
HVWDEOLVKHGSUHFHGHQWWKDW(5,6$IXQGVDUHDFFRUGHGDVSHFLDO
VWDWXVDQGDUHHQWLWOHGWRHQIRUFHWKHZULWLQJUHJDUGOHVVRI
ZKDWGHIHQVHVPD\EHDYDLODEOHXQGHUWKHFRPPRQODZRI
FRQWUDFWV 6HH 1HZ %DNHU\ &R RI 2KLR )G DW
³7KH IXQG VWDQGV PXFK OLNH D KROGHU LQ GXH FRXUVH LQ
FRPPHUFLDO ODZ ZKR LV HQWLWOHG WR HQIRUFH WKH ZULWLQJ
μZLWKRXWUHJDUGWRXQGHUVWDQGLQJVRUGHIHQVHVDSSOLFDEOHWR
WKHRULJLQDOSDUWLHV¶´ FLWDWLRQRPLWWHG 7KHGLVWULFWFRXUW
DOVRUHOLHGRQ*HUEHU7UXFN6HUY,QF)GZKLFK
SUHVHQWVDIDFWXDOVFHQDULRVLPLODUWRWKHRQHEHIRUHXVWRGD\
7KH *HUEHU FRXUW DUWLFXODWHG WKH SROLF\ RI VHFWLRQ RI
(5,6$QDPHO\WKDWWKHDGPLQLVWUDWRULVQRWUHTXLUHGWRORRN
LQWRSRWHQWLDOVLGHDJUHHPHQWV7KLVFRXUWKDVDGRSWHGWKH
*HUEHUSRVLWLRQ6HH1HZ%DNHU\&RRI2KLR)GDW
³%HFDXVHXQGHUVHFWLRQPXOWLHPSOR\HUSODQVDUH
HQWLWOHGWRUHO\RQWKHOLWHUDOWHUPVRIZULWWHQFRPPLWPHQWV

-- 9 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
EHWZHHQ WKH SODQ WKH HPSOR\HU DQG WKH XQLRQ WKH DFWXDO
LQWHQWRIDQGXQGHUVWDQGLQJVEHWZHHQWKHFRQWUDFWLQJSDUWLHV
DUHLPPDWHULDO´
:KHWKHUDFRQWUDFWWHUPLVDPELJXRXVLVDTXHVWLRQRIODZ
IRUWKHFRXUWWRGHWHUPLQH7HQQHVVHH&RQVRO&RDO&RY
8QLWHG0LQH:RUNHUVRI$P)G WK&LU
7KH GLVWULFW FRXUW FRQFOXGHG WKDW WKH KDQGZULWWHQ
QRWDWLRQVLQWKHWZR$JUHHPHQWVZHUHDPELJXRXV:HDJUHH
7KHODZRIWKLVFLUFXLWGRHVQRWUHTXLUHIXQGDGPLQLVWUDWRUVWR
UHDGWKHPLQGVRIFRQWUDFWLQJSDUWLHVUDWKHUDGPLQLVWUDWRUV
PD\UHO\RQWKHXQDPELJXRXVWHUPVRIWKHZULWLQJ6HH1HZ
%DNHU\&RRI2KLR)GDW+HUHWKHFXUVRU\DQG
QRQVSHFLILF QRWHV RQ WZR RI WKH ILYH 3URMHFW $JUHHPHQWV
ZHUHWKHRQO\SLHFHVRILQIRUPDWLRQ12$KDGWKDWWKHSDUWLHV
PLJKWKDYHLQWHQGHGDQ\PRGLILFDWLRQ:LWKRXWPRUHWKHVH
QRWDWLRQV GR QRW LQGLFDWH DQ LQWHQW WR VXSHUFHGH WKH
XQDPELJXRXVW\SHGSURYLVLRQV
: )DOVRFODLPVWKDWWKHHQWLUHFRQWUDFWLVYRLGEHFDXVHWKH
GLVWULFW FRXUW UXOHG WKDW ³WKH DWWHPSWHG DPHQGPHQWV LI
HIIHFWLYHZRXOGKDYHSURGXFHGDQLOOHJDOFRQWUDFW´%XWWKH
GLVWULFWFRXUWGLGQRWKROGWKDWWKRVHDWWHPSWHGPRGLILFDWLRQV
ZHUH LQ IDFW HIIHFWLYH UDWKHU WKH FRXUW RSLQHG WKDW WKH
KDQGZULWWHQQRWDWLRQVLILQWHUSUHWHGDVPRGLI\LQJWKHFRQWUDFW
LQWKHZD\LQZKLFK: )FODLPVZRXOGPDNHWKHFRQWUDFW
LOOHJDODQGWKDW12$KDGQRUHDVRQWRVXSSRVHWKDWWKRVH
KDQGZULWWHQQRWDWLRQVZHUHLQWHQGHGWRPRGLI\WKHFRQWUDFWVR
DVWRUHQGHULWLOOHJDO7KHGLVWULFWFRXUW¶VREVHUYDWLRQRQWKLV
LVVXHKDVQRWKLQJWRGRZLWKZKHWKHU12$ZDVRQQRWLFHWKDW
DVLGHDJUHHPHQWKDGEHHQUHDFKHG
$FFRUGLQJO\ZH$)),50WKHGLVWULFWFRXUW¶VGHFLVLRQWKDW
12$ZDVHQWLWOHGWRUHO\VROHO\RQWKHSULQWHGWHUPVRIWKH
3URMHFW$JUHHPHQWV
,90RWLRQWR'LVPLVV7KLUGSDUW\&RPSODLQW
,Q LWV WKLUGSDUW\ FRPSODLQW LQYRNLQJ ERWK VXSSOHPHQWDO
MXULVGLFWLRQDQGMXULVGLFWLRQXQGHU86&† F
1RV 1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO

7KH XQLRQ GRHV QRW DUJXH WKDW WKH DFWLYLW\ DW LVVXH LV DUJXDEO\
VXEMHFW WR VHFWLRQ
SHUPLVVLEO\UHJXODWHWKHXQLRQ¶VSLFNHWLQJRQWKHHPSOR\HU¶V
SURSHUW\,GDW
/DWHU GHFLVLRQV KDYH IXUWKHU H[SDQGHG WKH UDWLRQDOH RI
*DUPRQDQGKDYHDOVRGLVSOD\HGWKHH[WHQWRIWKHH[FHSWLRQV
WR*DUPRQ,Q%HONQDS,QFY+DOH86
WKH&RXUWUHMHFWHGDFODLPRI*DUPRQSUHHPSWLRQEDVHGRQ
VWDWHODZ PLVUHSUHVHQWDWLRQ DQG EUHDFK RI FRQWUDFW FODLPV
EURXJKW E\ UHSODFHPHQW ZRUNHUV DJDLQVW WKHLU IRUPHU
HPSOR\HU7KHUHWKHHPSOR\HUKDGSURPLVHGWKHUHSODFHPHQW
ZRUNHUV WKDW WKH\ ZRXOG UHWDLQ WKHLU MREV HYHQ DIWHU WKH
VHWWOHPHQWRIWKHODERUGLVSXWHZLWKWKHXQLRQ,GDW
+RZHYHUDVDUHVXOWRIXQIDLUODERUSUDFWLFHFKDUJHV%HONQDS
DJUHHGWROD\RIILWV³SHUPDQHQW´UHSODFHPHQWZRUNHUVDQG
UHKLUHWKHVWULNHUV,GDW7KH6XSUHPH&RXUWKHOGWKDW
WKHUHSODFHPHQWZRUNHUV¶VWDWHVXLWDJDLQVW%HONQDSIRUIUDXG
LQUHODWLRQWR%HONQDS¶VSURPLVHWRWKHUHSODFHPHQWVZDVQRW
SUHHPSWHGEHFDXVHWKHVWDWHFODLPIRUIUDXGZDVQRWLGHQWLFDO
WR WKH XQIDLU ODERU SUDFWLFH FODLP EURXJKW E\ WKH VWULNLQJ
ZRUNHUV,GDW6LQFHWKH%RDUGZDVQRWFRQFHUQHG
ZLWK%HONQDS¶VUHSUHVHQWDWLRQVWRWKHUHSODFHPHQWZRUNHUV
DQG WKH UHSODFHPHQW ZRUNHUV¶ VXLW KDG QR LPSDFW RQ WKH
VWULNHUV¶XQIDLUODERUFODLPVWKHVWDWHUHJXODWLRQZRXOGQRW
LQWHUIHUH ZLWK QDWLRQDO ODERU SROLF\ DV HOXFLGDWHG E\ WKH
%RDUG,G)LQDOO\WKH&RXUWIRXQGWKDWWKHVWDWH¶VLQWHUHVWLQ
SURWHFWLQJ LWV FLWL]HQV IURP PLVUHSUHVHQWDWLRQV ZDV D
³VXEVWDQWLDOLQWHUHVW´,G
%HIRUH ZH DGGUHVV WKH *DUPRQ IDFWRUV ZH PXVW ILUVW
DGGUHVV WKH WKUHVKROG TXHVWLRQ RI ZKHWKHU WKH 8QLRQ¶V
FRQGXFW DW LVVXH KHUH LV DUJXDEO\ SURKLELWHG E\ VHFWLRQ
7KHVWDWHODZFRXQWHUFODLPEURXJKWE\: )LVIRUIUDXGLQ
WKH LQGXFHPHQW 7KH FODLP LV EDVHG RQ WKH DOOHJHGO\
IUDXGXOHQW PLVUHSUHVHQWDWLRQV PDGH E\ WKH XQLRQ
UHSUHVHQWDWLYHWRLQGXFH: )WRVLJQDJUHHPHQWVSURYLGLQJ

-- 10 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
FRQJUHVVLRQDOGLUHFWLRQZHFRXOGQRWLQIHUWKDW&RQJUHVVKDG
GHSULYHGWKH6WDWHVRIWKHSRZHUWRDFW´WKH&RXUWZRXOGQRW
ILQG 1/5$ SUHHPSWLRQ ,G DW /LNHZLVH ZKHUH WKH
UHJXODWHG DFWLYLW\ LV ³PHUHO\ SHULSKHUDO´ WR WKH FHQWUDO
FRQFHUQVRIWKH1/5$WKHVWDWHVPD\UHJXODWHWKHDFWLYLW\
,GDW
7KH H[WHQW RI WKH 1/5$¶V SUHHPSWLRQ ZDV HOXFLGDWHG
IXUWKHULQ6HDUV5RHEXFNDQG&RY6DQ'LHJR&RXQW\'LVW
&RXQFLORI&DUSHQWHUV 86 ,QWKDWFDVH
6HDUVEURXJKWDWUHVSDVVDFWLRQLQVWDWHFRXUWWRHQMRLQWKH
XQLRQ IURP SLFNHWLQJ RQ LWV SURSHUW\ ,G DW 7KH
6XSUHPH &RXUW UXOHG WKDW WKH 1/5$ GLG QRW SUHHPSW WKH
HPSOR\HU¶V VWDWH WUHVSDVV DFWLRQ ,G DW 7KH &RXUW
UHIXVHG WR DSSO\ *DUPRQ SUHHPSWLRQ PHFKDQLVWLFDOO\ DQG
LQVWHDGRSWHGIRUDIOH[LEOHEDODQFLQJRIWKHIHGHUDOQHHGIRU
XQLIRUPLW\ WKH VWDWH¶V LQWHUHVW LQ UHJXODWLQJ WKH FRQGXFW DW
LVVXHDQGWKHSRWHQWLDOIRUWKHVWDWH¶VUHJXODWLRQWRWKUHDWHQ
XQGXO\WKHIHGHUDOUHJXODWRU\VFKHPH,GDW 7KH
&RXUW H[SODLQHG WKDW ZKHQ WKH FRQGXFW LV ³DUJXDEO\´
SURKLELWHGWZRIDFWRUVZHLJKLQGHWHUPLQLQJZKHWKHUVWDWH
UHJXODWLRQ LV SUHHPSWHG ZKHWKHU WKHUH H[LVWV D
³VLJQLILFDQW´VWDWHLQWHUHVWLQSURWHFWLQJLWVFLWL]HQVIURPWKH
FRQGXFWDQG ZKHWKHUVWDWHMXULVGLFWLRQRYHUWKHDUJXDEOH
ODERUYLRODWLRQZRXOGHQWDLO³OLWWOHULVN´RILQWHUIHULQJZLWKWKH
XQLIRUP QDWLRQDO ODERU SROLF\ ,G DW 7KH VHFRQG RI
WKHVHIDFWRUVLVHTXLYDOHQWWRWKHTXHVWLRQRIZKHWKHUWKHVWDWH
FDXVHRIDFWLRQLV³LGHQWLFDO´WRDFODLPWKDWFRXOGKDYHEHHQ
PDGH WR WKH %RDUG ,G ,I WKH VWDWHEDVHG FODLP DQG D
SRWHQWLDOFODLPWRWKH%RDUGDUHLGHQWLFDOWKHQWKH%RDUGKDV
H[FOXVLYHMXULVGLFWLRQEHFDXVHWKHVWDWHUHJXODWLRQLPSLQJHV
GLUHFWO\RQWKH%RDUG¶VSUHURJDWLYHWRIDVKLRQDXQLIRUPODERU
SROLF\,G,Q6HDUVWKH&RXUWUXOHGWKDWWKHVWDWHWUHVSDVV
ODZUHJXODWHGWKHORFDWLRQRIWKHSLFNHWLQJZKLOHDFODLPWR
WKH %RDUG ZRXOG KDYH ORRNHG DW WKH PRWLYH EHKLQG WKH
SLFNHWLQJWRGLVFHUQZKHWKHUWKHSLFNHWLQJZDVDQXQIDLUODERU
SUDFWLFH ,G DW %HFDXVH WKH WZR FODLPV ZHUH QRW
LGHQWLFDO DQG EHFDXVH WKH VWDWH KDV D VWURQJ LQWHUHVW LQ
SURWHFWLQJWKHLQWHJULW\RILWVFLWL]HQV¶SURSHUW\WKHVWDWHFRXOG
1RV 1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO

: ) FODLPV WKDW WKH 8QLRQ DQG +HOOGREOHU IUDXGXOHQWO\
LQGXFHG : ) WR HQWHU LQWR WKH 3URMHFW $JUHHPHQWV
IUDXGXOHQWO\H[HFXWHGWKH3URMHFW$JUHHPHQWVDQGQHJOLJHQWO\
PLVUHSUHVHQWHG WKH VFRSH RI WKRVH $JUHHPHQWV : )
GHPDQGVDGHFODUDWRU\MXGJPHQWWKDWEHFDXVHRIWKH7KLUG
3DUW\'HIHQGDQWV¶IUDXGWKH3URMHFW$JUHHPHQWVDUHHLWKHU
YRLGRUYRLGDEOHDQGIXUWKHUVHHNVDMXGJPHQWDJDLQVWWKHP
IRULQGHPQLILFDWLRQFRPSHQVDWRU\DQGSXQLWLYHGDPDJHVDQG
DWWRUQH\¶V IHHV 7KH 8QLRQ DQG +HOOGREOHU FODLP WKDW WKH
GLVWULFW FRXUW HUUHG LQ UHIXVLQJ WR GLVPLVV WKH WKLUGSDUW\
FRPSODLQWDJDLQVWWKHPSXUVXDQWWR)HGHUDO5XOHVRI&LYLO
3URFHGXUH E DQG 6SHFLILFDOO\WKH\FODLPWKDW
WKHWKLUGSDUW\FRPSODLQWLVVXEMHFWWRGLVPLVVDOXQGHUWKH
UXOHRI7H[WURQ/\FRPLQJ5HFLSURFDWLQJ(QJLQH'LY$YFR
&RUSY8$:86 WKHFRPSODLQWLV
SUHHPSWHGE\WKHUXOHRI6DQ'LHJR%OGJ7UDGHV&RXQFLOY
*DUPDQ86 WKHFRPSODLQWLVSUHHPSWHG
E\ VHFWLRQ DQG WKHUHIRUH VXEMHFW WR GLVPLVVDO DQG
+HOOGREOHULVLPPXQHIURPVXLWDVDQLQGLYLGXDOSXUVXDQWWR
VHFWLRQ E DQGWKHUXOHLQ$WNLQVRQY6LQFODLU5HILQLQJ
&R86
:HILQGWKHVHFODLPVWREHZLWKRXWPHULWDQG$)),50WKH
GLVWULFWFRXUW¶VGHQLDORIWKHPRWLRQWRGLVPLVV
$6XSSOHPHQWDO-XULVGLFWLRQ
+HOOGREOHUDQGWKH8QLRQILUVWFODLPWKDWWKHIHGHUDOFRXUW
ODFNHGMXULVGLFWLRQRYHUWKHWKLUGSDUW\FRPSODLQWEHFDXVHRI
WKHOLPLWDWLRQVVHWRXWE\WKH6XSUHPH&RXUWLQ7H[WURQ,Q
WKDW FDVH WKH &RXUW FRQFOXGHG WKDW VHFWLRQ D RI WKH
/05$³FRQIHUVIHGHUDOVXEMHFWPDWWHUMXULVGLFWLRQRQO\RYHU
μ>V@XLWVIRUYLRODWLRQRIFRQWUDFWV¶´7H[WURQ86DW
DQGWKDW³μ>V@XLWVIRUYLRODWLRQRIFRQWUDFWV¶XQGHU†DUH
QRWVXLWVWKDWFODLPDFRQWUDFWLVLQYDOLGEXWVXLWVWKDWFODLP
DFRQWUDFWKDVEHHQYLRODWHG´,GDW%HFDXVH: )GRHV
QRW FODLP LQ LWV WKLUGSDUW\ FRPSODLQW WKDW WKH 8QLRQ DQG
+HOOGREOHUYLRODWHGWKH&%$EXWLQVWHDGFODLPVWKDWWKHWKLUG
SDUW\¶V DFWLRQV UHQGHU WKH 3URMHFW $JUHHPHQWV YRLG WKH

-- 11 of 12 --

1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO
1RV
'HIHQGDQWVDUJXHWKHIHGHUDOFRXUWODFNVMXULVGLFWLRQRYHUWKH
FRPSODLQW7KH8QLRQDQG+HOOGREOHUKDYHPLVVHGWKHSRLQW
:KLOH: )KDVLQGHHGDVNHGIRUDGHWHUPLQDWLRQWKDWWKH
3URMHFW$JUHHPHQWVDUHYRLGRUYRLGDEOHLWKDVDOVRDVNHGIRU
MXGJPHQW DJDLQVW WKH 8QLRQ DQG +HOOGREOHU IRU
LQGHPQLILFDWLRQ DQG GDPDJHV LQ WKH HYHQW : ) LV IRXQG
OLDEOHWR12$IRUWKHDGGLWLRQDOFRQWULEXWLRQV²OLDELOLW\WKDW
: ) FODLPV DURVH RQO\ EHFDXVH RI WKH 7KLUG3DUW\
'HIHQGDQWV¶ IUDXG DQG PLVUHSUHVHQWDWLRQ 7KH WKLUGSDUW\
FRPSODLQW GRHV QRW SUHVHQW D 7H[WURQ VLWXDWLRQ DQG LW LV
LPPDWHULDOWKDWWKHIUDXGDQGPLVUHSUHVHQWDWLRQFODLPVDUHQRW
FRJQL]DEOHXQGHUVHFWLRQ7KRVHFODLPVDUHFOHDUO\ZLWKLQ
WKHVXSSOHPHQWDOMXULVGLFWLRQRIWKHIHGHUDOFRXUWDVVSHOOHG
RXWLQ86&† D
D ([FHSWDVSURYLGHGLQVXEVHFWLRQV E DQG F RUDV
H[SUHVVO\SURYLGHGRWKHUZLVHE\)HGHUDOVWDWXWHLQDQ\
FLYLO DFWLRQ RI ZKLFK WKH GLVWULFW FRXUWV KDYH RULJLQDO
MXULVGLFWLRQWKHGLVWULFWFRXUWVVKDOOKDYHVXSSOHPHQWDO
MXULVGLFWLRQRYHUDOORWKHUFODLPVWKDWDUHVRUHODWHGWR
FODLPVLQWKHDFWLRQZLWKLQVXFKRULJLQDOMXULVGLFWLRQWKDW
WKH\ IRUP SDUW RI WKH VDPH FDVH RU FRQWURYHUV\ XQGHU
$UWLFOH ,,, RI WKH 8QLWHG 6WDWHV &RQVWLWXWLRQ 6XFK
VXSSOHPHQWDO MXULVGLFWLRQ VKDOO LQFOXGH FODLPV WKDW
LQYROYHWKHMRLQGHURULQWHUYHQWLRQRIDGGLWLRQDOSDUWLHV
1HLWKHUVXEVHFWLRQ E QRU F LVDSSOLFDEOHKHUH7KHUHIRUH
XQOHVVWKHGLVWULFWFRXUWODFNHGVXEMHFWPDWWHUMXULVGLFWLRQIRU
VRPHUHDVRQRWKHUWKDQWKH7H[WURQUXOHZKLFKLVLQDSSRVLWH
KHUH WKHVH FODLPV DUH SURSHUO\ ZLWKLQ WKH VXSSOHPHQWDO
MXULVGLFWLRQRIWKHFRXUWDULVLQJDVWKH\GRRXWRIH[DFWO\WKH
VDPHIDFWVWKDWJDYHULVHWR12$¶VFRPSODLQWDJDLQVW: )
7KH 8QLRQ DQG +HOOGREOHU DOVR FODLP WKDW QR FDVH RU
FRQWURYHUV\ H[LVWV EHFDXVH WKH 3URMHFW $JUHHPHQWV KDYH
H[SLUHG7KLVFODLPLVDOVRPHULWOHVV: )KDVQRZEHHQ
KHOGOLDEOHWR12$IRUFRQWULEXWLRQVIDULQH[FHVVRIZKDWLW
DOOHJHGO\ EHOLHYHG LW ZDV ERXQG E\ WKRVH $JUHHPHQWV WR
PDNH :KDW LV DW LVVXH LQ WKLV WKLUGSDUW\ FRPSODLQW LV
1RV 1RUWKZHVWHUQ2KLR$GPY
:DOFKHU )R[HWDO

ZKHWKHUWKH8QLRQDQG+HOOGREOHUDUHOLDEOHWR: )IRUWKHLU
DOOHJHG IUDXG LQ LQGXFLQJ : ) WR HQWHU LQWR WKRVH
$JUHHPHQWV WKHLU DOOHJHG IUDXG LQ WKH H[HFXWLRQ RI WKRVH
$JUHHPHQWVDQGWKHLUDOOHJHGPLVUHSUHVHQWDWLRQVDVWRWKH
QXPEHURIHPSOR\HHVFRYHUHGE\WKRVH$JUHHPHQWV7KHIDFW
WKDW WKH $JUHHPHQWV WKHPVHOYHV KDYH QRZ H[SLUHG LV
LPPDWHULDO
%*DUPRQ3UHHPSWLRQ
7KH7KLUG3DUW\'HIHQGDQWVQH[WFODLPWKDWWKHWKLUGSDUW\
FRPSODLQWLVSUHHPSWHGE\IHGHUDOODZXQGHUWKHUXOHLQ6DQ
'LHJR%OGJ7UDGHVY*DUPRQ86 7KH
SDUW\ DUJXLQJ *DUPRQ SUHHPSWLRQ EHDUV WKH EXUGHQ RI
VKRZLQJWKDWWKHFRQGXFWDWLVVXHLVSURKLELWHGRUSURWHFWHGE\
WKH1DWLRQDO/DERU5HODWLRQV$FW86&†
³1/5$´ ,QW¶O/RQJVKRUHPHQ¶V$VV¶QY'DYLV86

,Q*DUPRQWKH6XSUHPH&RXUWV\QWKHVL]HGLWVSULRU1/5$
SUHHPSWLRQFDVHV³:KHQDQDFWLYLW\LVDUJXDEO\VXEMHFWWR
†RU†RIWKH$FWWKH6WDWHVDVZHOODVWKHIHGHUDOFRXUWV
PXVWGHIHUWRWKHH[FOXVLYHFRPSHWHQFHRIWKH1DWLRQDO/DERU
5HODWLRQV %RDUG LI WKH GDQJHU RI VWDWH LQWHUIHUHQFH ZLWK
QDWLRQDOSROLF\LVWREHDYHUWHG´*DUPRQ86DW
7KH 6XSUHPH &RXUW ZDV PRWLYDWHG E\ WKH H[SUHVVHG
FRQJUHVVLRQDO GHVLUH IRU XQLIRUPLW\ LQ WKH QDWLRQ¶V ODERU
SROLF\,GDW7RDOORZWKH%RDUGWRFUHDWHXQLIRUPODERU
UHJXODWLRQVIRUWKHQDWLRQ¶VZRUNHUVDQGHPSOR\HUVDQGWR
PDNH XVH RI WKH %RDUG¶V H[SHUWLVH LQ WKH DUHD RI ODERU
UHODWLRQV WKH &RXUW VRXJKW WR H[FOXGH WKH VWDWHV IURP WKH
LQLWLDOSURFHVVRIFRQVWUXLQJWKHUHDFKDQGDSSOLFDWLRQRIWKH
1/5$
7KLVVDPHXQGHUO\LQJPRWLYDWLRQIRUXQLIRUPLW\DQGWKH
SULQFLSOHVRIIHGHUDOLVPDOVRDOORZHGIRUH[FHSWLRQVWRWKH
JHQHUDO*DUPRQSUHHPSWLRQUXOH7KXVZKHUHWKHUHJXODWHG
FRQGXFWDWLVVXH³WRXFKHGLQWHUHVWVVRGHHSO\URRWHGLQORFDO
IHHOLQJDQGUHVSRQVLELOLW\WKDWLQWKHDEVHQFHRIFRPSHOOLQJ

-- 12 of 12 --