01a0055p.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
81,7(' 67$7(6 2) $0(5,&$
3ODLQWLII$SSHOOHH
Y
5($/ 3523(57< ,1 6(&7,21
72:1 1257+ 5$1*(
:(67 72:16+,3 2)
&+$5/721 276(*2 &2817<
0,*+,*$1HWDO
'HIHQGDQWV
'$1,(/ 6 *$+$*$1
0,&+$(/ - *$+$*$1
$*1(6 5,''/(*$+$*$1
&ODLPDQWV$SSHOODQWV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW%D\&LW\
1R²5REHUW+&OHODQG'LVWULFW-XGJH
$UJXHG0D\
'HFLGHGDQG)LOHG0DUFK
%HIRUH0(55,77-21(6DQG&/$<&LUFXLW-XGJHV

-- 1 of 4 --

8QLWHG6WDWHVY5HDO3URSHUW\HWDO 1R
7KH FULPLQDO FRQYLFWLRQV ZHUH DIILUPHG LQ D VHSDUDWH DSSHDO DQG DUH
QRW DW LVVXH KHUH 8QLWHG 6WDWHV Y *DKDJDQ )G WK &LU

BBBBBBBBBBBBBBBBB
&2816(/
$5*8(''DQLHO6*DKDJDQ/$:2)),&(2)'$1,(/
6*$+$*$1$YRQ&RORUDGRIRU$SSHOODQWV-DQHW/
3DUNHU$66,67$1781,7('67$7(6$77251(<%D\
&LW\ 0LFKLJDQ IRU $SSHOOHH 21 %5,() 'DQLHO 6
*DKDJDQ/$:2)),&(2)'$1,(/6*$+$*$1$YRQ
&RORUDGR IRU $SSHOODQWV -DQHW / 3DUNHU $66,67$17
81,7(' 67$7(6 $77251(< %D\ &LW\ 0LFKLJDQ IRU
$SSHOOHH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
0(55,77&LUFXLW-XGJH7KLVLVDQDSSHDOIURPVXPPDU\
MXGJPHQWIRUWKHJRYHUQPHQWLQDFLYLOIRUIHLWXUHDFWLRQRIUHDO
SURSHUW\XQGHU86&† D DQG D UHODWLQJWR
LOOHJDOGUXJDFWLYLW\%HFDXVHZHILQGWKDWLQWHUYHQLQJIHGHUDO
OHJLVODWLRQZKLFKUDLVHGWKHJRYHUQPHQW¶VEXUGHQRISURRIWR
SURYHIRUIHLWXUHRIWKHSURSHUW\PD\DIIHFWWKHRXWFRPHRI
WKLVFDVHDQGWKDWWKHQHZOHJLVODWLRQLVDSSOLFDEOHWRWKLVFDVH
ZHUHPDQGWRWKHGLVWULFWFRXUWIRUIXUWKHUSURFHHGLQJV
7KHJRYHUQPHQWEURXJKWDFLYLOIRUIHLWXUHDFWLRQDJDLQVW
SURSHUW\LQWKHSRVVHVVLRQRIFODLPDQWV'DQLHODQG0LFKDHO
*DKDJDQ DQG WKHLU PRWKHU $JQHV 5LGGOH*DKDJDQ DIWHU
'DQLHO DQG 0LFKDHO SOHG JXLOW\ WR IHGHUDO PDULMXDQD DQG
KDVKLVKFKDUJHV7KHRULJLQDODFWLRQLGHQWLILHGILYHSLHFHVRI
ODQGLQ2WVHJR&RXQW\0LFKLJDQWKDWPLJKWEHVXEMHFWWR
IRUIHLWXUH$IWHUQXPHURXVFURVVPRWLRQVWKHGLVWULFWFRXUW
JUDQWHGVXPPDU\MXGJPHQWWRWKHJRYHUQPHQWRQWZRSLHFHV
RISURSHUW\ NQRZQDVSDUFHOV&DQG' DQGWKRVHDUHWKHRQO\
1R 8QLWHG6WDWHVY5HDO3URSHUW\HWDO
6KLIWLQJ%XUGHQVRI3URRILQ&LYLO,Q5HP)RUIHLWXUH.\
/- /HRQDUG$/HY\$/LFHQVHWR6WHDO
7KH)RUIHLWXUHRI3URSHUW\
1HLWKHULVWKHUHDQ\³PDQLIHVWLQMXVWLFH´LQDSSO\LQJWKH
QHZVWDWXWHWRWKLVFDVH±WRWKHFRQWUDU\LWVHHPVWRXVWKDWLW
ZRXOGEHPDQLIHVWO\XQMXVWQRWWRDSSO\WKHQHZVWDQGDUGWR
WKLV FDVH 7KH 6XSUHPH &RXUW VWDWHG WKDW LQ GHWHUPLQLQJ
ZKHWKHU DSSOLFDWLRQ RI WKH ODZ LQ HIIHFW ZRXOG UHVXOW LQ
³PDQLIHVWLQMXVWLFH´UHTXLUHVDFRXUWWRFRQVLGHUWKUHHWKLQJV
³ D WKHQDWXUHDQGLGHQWLW\RIWKHSDUWLHV E WKHQDWXUHRI
WKHLUULJKWVDQG F WKHQDWXUHRIWKHLPSDFWRIWKHFKDQJHLQ
ODZXSRQWKRVHULJKWV´%UDGOH\86DW7KLVLVQRW
DFDVHEHWZHHQWZRSULYDWHSDUWLHVZKHUHWKHH[SHFWDWLRQVRI
RQH SDUW\ PD\ EH XSVHW E\ DSSOLFDWLRQ RI D QHZ UXOH WR D
SHQGLQJFDVH7KHUHLVQRLQMXVWLFHWRWKHJRYHUQPHQW7KH
OHJLVODWLRQ PD\ EHQHILW FODLPDQWV ZKR QRZ VWDQG WR ORVH
YDOXDEOH DVVHWV WR WKH JRYHUQPHQW WKDW WKH\ PD\ QHYHU
UHFODLP)XUWKHUPRUHFODLPDQWVUDLVHGWKHEXUGHQRISURRI
LVVXHDWWKHEHJLQQLQJRIWKHFLYLOIRUIHLWXUHSURFHHGLQJDQG
FRQWLQXHG WR DVVHUW WKDW WKH ROG UXOH ZDV XQIDLU DW HYHU\
RSSRUWXQLW\WKURXJKRXWWKLVSURFHHGLQJ&RQJUHVVKDVQRZ
DJUHHGZLWKWKHPDQGWKHVHFODLPDQWVVKRXOGEHDIIRUGHGWKH
EHQHILWVRIWKHQHZODZ
,Q FRQFOXVLRQ WKH FRQVLGHUDWLRQV PLOLWDWLQJ DJDLQVW
UHWURVSHFWLYH DSSOLFDWLRQ DUH QRW SUHVHQW LQ WKLV FDVH 7KH
OHJLVODWLRQLQQRZD\DOWHUVWKHHIIHFWJLYHQWRFRQGXFWEHIRUH
WKHFKDQJH)RUWKHIRUHJRLQJUHDVRQVWKHMXGJPHQWRIWKH
GLVWULFW FRXUW LV UHYHUVHG DQG WKH FDVH LV UHPDQGHG WR 7KH
+RQRUDEOH 9LFWRULD $ 5REHUWV RI WKH (DVWHUQ 'LVWULFW RI
0LFKLJDQ%D\&LW\IRUIXUWKHUSURFHHGLQJVDSSO\LQJWKHQHZ
IRUIHLWXUHVWDWXWHWRWKLVFDVH

-- 2 of 4 --

8QLWHG6WDWHVY5HDO3URSHUW\HWDO 1R
WRJRYHUQVHFRQGDU\QRWSULPDU\FRQGXFWPHDQLQJWKDWHYHQ
LIDSDUW\KDGNQRZQRIDSURFHGXUDOFKDQJHLQDGYDQFHLW
ZRXOG QRW KDYH FKDQJHG LWV FRQGXFW SULRU WR WKH ODZVXLW
/DQGJUDI86DW7KHGDQJHUVWKDWWKHUXOHDJDLQVW
UHWURVSHFWLYH DSSOLFDWLRQ RI VWDWXWHV JXDUGV DJDLQVW DUH QRW
JHQHUDOO\ SUHVHQW ZKHQ WKH QHZ OHJLVODWLRQ LV UHPHGLDO LQ
QDWXUHDQGLVGHVLJQHGWRUHFWLI\DQXQIDLUQHVVWRDQLQGLYLGXDO
YLVDYLVWKHJRYHUQPHQW
7KHFKDQJHWRWKHEXUGHQRISURRILQVWLWXWHGE\WKHQHZ
VWDWXWH PHHWV WKH /DQGJUDI WHVW IRU DSSOLFDWLRQ WR SHQGLQJ
FDVHV,WZRXOGQRWWDNHDZD\DQ\YHVWHGULJKWVSRVVHVVHGE\
HLWKHU SDUW\ LQFUHDVH OLDELOLW\ RU DWWDFK QHZ OHJDO
FRQVHTXHQFHVWRSDVWFRQGXFW7KHQHZODZGRHVQRWSUHVHQW
QHZ RU XQDQWLFLSDWHG REOLJDWLRQV IRU HLWKHU SDUW\ 7KH
UDWLRQDOHXQGHUO\LQJWKHUXOHDJDLQVWUHWURDFWLYHDSSOLFDWLRQ±
WKDWWKHLPSRVLWLRQRIQHZEXUGHQVDIWHUWKHIDFWZRXOGEH
XQIDLU±LVDEVHQW
0RVW VLJQLILFDQWO\ DV LWV WLWOH LPSOLHV &LYLO $VVHW
)RUIHLWXUH5HIRUP$FWWKHOHJLVODWLRQLVSULPDULO\UHPHGLDO
LQQDWXUH,WLVVSHFLILFDOO\GHVLJQHGWRUHFWLI\DQXQIDLUQHVV
WR WKH LQGLYLGXDO YLVDYLV WKH JRYHUQPHQW ,W FRUUHFWV DQ
DEHUUDWLRQWKDWH[LVWHGSUHYLRXVO\E\OHYHOLQJWKHSOD\LQJILHOG
EHWZHHQWKHJRYHUQPHQWDQGSHUVRQVZKRVHSURSHUW\KDVEHHQ
VHL]HG+HUHWKHOHJLVODWLRQUDLVHVWKHJRYHUQPHQW¶VEXUGHQ
RI SURRI LQ FLYLO IRUIHLWXUH DFWLRQV WR WKH EXUGHQ QRUPDOO\
ERUQHE\WKHSODLQWLIILQDFLYLOFDVH±SUHSRQGHUDQFHRIWKH
HYLGHQFH7KHOHJLVODWLRQFRUUHFWVDSURYLVLRQLQWKHODZWKDW
KDG EHHQ FULWLFL]HG UHSHDWHGO\ E\ WKH FRXUWV DQG OHJDO
FRPPHQWDWRUV6HHHJ8QLWHG6WDWHVY)RXU&RQWLJXRXV
3DUFHOV RI 5HDO 3URS 1RV )G
:/DW WK&LU6HSW &OD\-
GLVVHQWLQJ 86& † YLRODWHV WKH 'XH 3URFHVV
&ODXVH FHUWGHQLHG6&W 8QLWHG6WDWHVY
86&XUUHQF\)G WK&LU 8QLWHG
6WDWHVY'DFFDUHWW)G G&LU 1RWH
&LYLO)RUIHLWXUHDQGWKH([FHVVLYH)LQHV&ODXVH8)OD
-/ 3XE 3RO¶\ 6SULQJ 1RWH ([DFWO\ +RZ
0XFK3URFHVV,V'XH"7KH)HGHUDO&RXUWV*UDSSOHZLWKWKH
1R 8QLWHG6WDWHVY5HDO3URSHUW\HWDO
7KH IRUPHU VWDWXWH SURYLGHG
,QDOO VXLWV RU DFWLRQV EURXJKW IRU > @ IRUIHLWXUH ZKHUH WKH
SURSHUW\ LV FODLPHG E\ DQ\ SHUVRQ WKH EXUGHQ RI SURRI VKDOO OLH
XSRQ VXFK FODLPDQW 3URYLGHG 7KDW SUREDEOH FDXVH VKDOO ILUVW
EH VKRZQ IRU WKH LQVWLWXWLRQ RI VXFK VXLW RU DFWLRQ WR EH MXGJHG
E\ WKH FRXUW
86& †
WZR SDUFHOV DW LVVXH RQ DSSHDO ,W DOVR UHMHFWHG $JQHV
*DKDJDQ V LQQRFHQW RZQHU GHIHQVH DQG IRXQG WKDW WKH
PRUWJDJHVKHKHOGRQSDUFHO'VKRXOGQRWEDUIRUIHLWXUH
2QHRIWKHSULPDU\DUJXPHQWVUDLVHGE\FODLPDQWVEHORZ
DQGRQDSSHDOFRQFHUQVWKHXQFRQVWLWXWLRQDOLW\RIWKHEXUGHQ
VKLIWLQJDQDO\VLVIRXQGLQWKHIRUIHLWXUHVWDWXWHLQHIIHFWZKHQ
WKHGLVWULFWFRXUWUHQGHUHGLWVGHFLVLRQ86&†
8QGHUWKHROGVWDWXWRU\VFKHPHRQFHWKHJRYHUQPHQWPDGHD
VKRZLQJRISUREDEOHFDXVHWKHEXUGHQVKLIWHGWRWKHFODLPDQW
WRSURYHE\DKLJKHUVWDQGDUGRIHYLGHQFH±SUHSRQGHUDQFHRI
WKHHYLGHQFH±WKDWIRUIHLWXUHLVQRWUHTXLUHG,IWKHFODLPDQW
KDGVHWIRUWKHYLGHQFHRQO\HTXDOWRWKHJRYHUQPHQW V±WKDW
LV SUREDEOH FDXVH ± WKH JRYHUQPHQW SUHYDLOHG DQG WKH
SURSHUW\ZDVORVW&ODLPDQWVPDLQWDLQWKDWWKHORZHUEXUGHQ
RI SURRI RQ WKH JRYHUQPHQW FRXSOHG ZLWK WKH KHLJKWHQHG
EXUGHQRISURRIRQFODLPDQWYLRODWHVWKH'XH3URFHVV&ODXVH
&RQJUHVVSDVVHGUHPHGLDOOHJLVODWLRQRQ$SULO
RQHZHHNEHIRUHRUDODUJXPHQWZDVKHDUGLQWKLVFDVHWKDW
VLJQLILFDQWO\DOWHUVWKHVWDQGDUGVDQGSURFHGXUHVDSSOLFDEOHWR
FLYLOIRUIHLWXUHSURFHHGLQJV&LYLO$VVHW)RUIHLWXUH5HIRUP
$FWRI3XE/1R6WDW86&
† 2ISDUWLFXODUUHOHYDQFHWRWKLVDSSHDOWKHQHZ
OHJLVODWLRQ FKDQJHV DQG UDLVHV WKH JRYHUQPHQW¶V EXUGHQ RI
SURRI E\ UHTXLULQJ WKH JRYHUQPHQW ³WR HVWDEOLVK E\ D
SUHSRQGHUDQFHRIWKHHYLGHQFHWKDWWKHSURSHUW\LVVXEMHFWWR
IRUIHLWXUH´ 6WDW 7KH VWDWXWH VWDWHV WKDW LW
DSSOLHVZLWKRQHH[FHSWLRQQRWUHOHYDQWKHUHWRIRUIHLWXUH
SURFHHGLQJV³FRPPHQFHGRQRUDIWHUWKHGDWHWKDWLVGD\V

-- 3 of 4 --

8QLWHG6WDWHVY5HDO3URSHUW\HWDO 1R
DIWHUWKHGDWHRIHQDFWPHQWRIWKLV$FW´ZKLFKZDV$XJXVW
,G
1RGHILQLWLRQLVJLYHQRIZKDWLWPHDQVIRUIRUIHLWXUHWREH
³FRPPHQFHG´'RHVWKLVPHDQVHL]XUHRIWKHSURSHUW\WKH
ILOLQJRIDGRFXPHQWLQFRXUWDILQGLQJRISUREDEOHFDXVHWKH
HVWDEOLVKPHQWRIDSUHSRQGHUDQFHRIWKHHYLGHQFHRU VRPH
RWKHUDFWE\WKHJRYHUQPHQWRUWKHFRXUW"%HFDXVHIRUIHLWXUH
GRHVQRWRFFXUXQWLODFRXUWDFWVGRHVLWPHDQWKDWIRUIHLWXUH
LV QRW ³FRPPHQFHG´ XQWLO WKH FRXUW ILQDOO\ DOORZV WKH
IRUIHLWXUHWRWDNHSODFH±DWZKLFKWLPHWKHDFWXDOIRUIHLWXUH
³FRPPHQFHV"´ 7KH QHZ DFW VD\V LW LV DSSOLFDEOH WR ³DQ\
IRUIHLWXUHSURFHHGLQJFRPPHQFHG´GD\VDIWHUHQDFWPHQW
'RHVDQDSSHOODWHSURFHHGLQJTXDOLI\"
%HFDXVH WKH QHZ OHJLVODWLRQ EHDUV GLUHFWO\ RQ D SULPDU\
LVVXHLQWKHFDVHWKHSDQHOGLUHFWHGWKHSDUWLHVWRILOHOHWWHU
EULHIVRQWKHTXHVWLRQRIZKHWKHULWVKRXOGDSSO\WRSHQGLQJ
FDVHV7KHJRYHUQPHQWKHUHUHSUHVHQWHGE\WKH8QLWHG6WDWHV
$WWRUQH\¶V 2IILFH LQ %D\ &LW\ 0LFKLJDQ UHVSRQGHG LQ LWV
EULHI WKDW XQGHU WKH SODLQ ODQJXDJH RI WKH VWDWXWH WKH
OHJLVODWLRQ LV QRW WR EH DSSOLHG WR SHQGLQJ FDVHV 7KH
FODLPDQWV VWDWHG LQ WKHLU EULHI WKDW WKH\ KDG UHFHLYHG
LQIRUPDWLRQ IURP WKH 8QLWHG 6WDWHV $WWRUQH\¶V 2IILFH LQ
'HQYHU&RORUDGRZKLFKLVQRWWKH8QLWHG6WDWHV$WWRUQH\¶V
2IILFHLQFKDUJHRIWKLVFDVHWKDWWKHSRVLWLRQRIWKH8QLWHG
6WDWHV'HSDUWPHQWRI-XVWLFHLVWKDWWKHFRXUWVFRXOGSURFHHG
RQ D FDVHE\FDVH EDVLV FRQFHUQLQJ DSSOLFDELOLW\ RI WKH
OHJLVODWLRQWRSHQGLQJFDVHV
7KH 6XSUHPH &RXUW KDV VWDWHG WKDW ³HYHQ ZKHUH WKH
LQWHUYHQLQJ ODZ GRHV QRW H[SOLFLWO\ UHFLWH WKDW LW LV WR EH
DSSOLHGWRSHQGLQJFDVHVLWLVWREHJLYHQUHFRJQLWLRQ DQG
HIIHFW´%UDGOH\Y6FKRRO%GRI5LFKPRQG86
$FFRUG/DQGJUDIY86,)LOP3URGV86
³(YHQ DEVHQW VSHFLILF OHJLVODWLYH
DXWKRUL]DWLRQ DSSOLFDWLRQ RI QHZ VWDWXWHV SDVVHG DIWHU WKH
HYHQWV LQ WKH VXLW LV XQTXHVWLRQDEO\ SURSHU LQ PDQ\
VLWXDWLRQV´ %HFDXVH WKH VWDWXWH GRHV QRW H[SOLFLWO\ VWDWH
1R 8QLWHG6WDWHVY5HDO3URSHUW\HWDO
ZKHWKHU LW DSSOLHV WR SHQGLQJ FDVHV WKH FDVH ODZ RQ WKH
VXEMHFWFRQWUROV
:HDUHJXLGHGE\/DQGJUDIY86,)LOP3URGV86
/DQGJUDIUHFRQFLOHGWZRGLIIHUHQWOLQHVRIFDVHV
2QHOLQHRIFDVHVKROGVWKDWDFRXUWPXVWDSSO\WKHODZLQ
HIIHFWDWWKHWLPHLWUHQGHUVLWVGHFLVLRQ6HHHJ%UDGOH\
86DW ³>$@FRXUWLVWRDSSO\WKHODZLQHIIHFWDWWKH
WLPHLWUHQGHUVLWVGHFLVLRQXQOHVVGRLQJVRZRXOGUHVXOWLQ
PDQLIHVWLQMXVWLFHRUWKHUHLVVWDWXWRU\GLUHFWLRQRUOHJLVODWLYH
KLVWRU\WRWKHFRQWUDU\´ 7KHRWKHUOLQHRIFDVHVKROGVWKDW
UHWURDFWLYLW\RIQHZVWDWXWHVLVQRWIDYRUHGXQGHUWKHODZ6HH
%RZHQY*HRUJHWRZQ8QLY+RVS86
/DQGJUDIH[SODLQHGWKDWWKH WZR OLQHVRIFDVHVZHUHQRW
LQFRQVLVWHQW/DQGJUDIGLUHFWHGWKDWDFRXUWVKRXOGQRWDSSO\
D QHZ VWDWXWH WR FRQGXFW DULVLQJ EHIRUH SDVVDJH RI WKH
OHJLVODWLRQ LI D ³QHZ SURYLVLRQ DWWDFKHV QHZ OHJDO
FRQVHTXHQFHV WR HYHQWV FRPSOHWHG EHIRUH HQDFWPHQW´
86 DW RU ³ZRXOG LPSDLU ULJKWV D SDUW\ SRVVHVVHG
ZKHQKHDFWHGLQFUHDVHDSDUW\¶VOLDELOLW\IRUSDVWFRQGXFWRU
LPSRVH QHZ GXWLHV ZLWK UHVSHFW WR WUDQVDFWLRQV DOUHDG\
FRPSOHWHG´,GDW7KH&RXUWH[SODLQHGWKDWWKHSULPDU\
UHDVRQ IRU WKH UXOH DJDLQVW UHWURDFWLYLW\ LV JURXQGHG LQ
IDLUQHVVZKLFKGLFWDWHVWKDWLQGLYLGXDOVKDYHDQRSSRUWXQLW\
WRNQRZWKHODZDQGWRFRQIRUPWKHLUFRQGXFWDFFRUGLQJO\
*HQHUDOO\ ZKHQ D VWDWXWH LV DGGUHVVHG WR UHPHGLHV RU
SURFHGXUHV DQG GRHVQRWDOWHUVXEVWDQWLYHULJKWVLWZLOOEH
DSSOLHGWRSHQGLQJFDVHV/DQGJUDI86DW8QLWHG
6WDWHV Y &HUWDLQ )XQGV &RQWDLQHG LQ $FFRXQW 1RV
DQG)G
G &LU DSSO\LQJ WR D SHQGLQJ FDVH DQ
DPHQGPHQW WR WKH FLYLO IRUIHLWXUH VWDWXWH SURYLGLQJ IHGHUDO
FRXUWV ZLWK MXULVGLFWLRQ WR UHV ORFDWHG RYHUVHDV )ULHO Y
&HVVQD$LUFUDIW&R)G WK&LU FKDQJH
LQ VWDWXWH RI OLPLWDWLRQV WR EHQHILW RI SODLQWLII JLYHQ
UHWURVSHFWLYH HIIHFW VHH DOVR 6XWKHUODQG 6WDWXWHV DQG
6WDWXWRU\ &RQVWUXFWLRQ † 6DQGV WK HG ,Q
/DQGJUDIWKH6XSUHPH&RXUWVWDWHGWKDWSURFHGXUDOUXOHVWHQG

-- 4 of 4 --