01a0361p.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$SSHOODQW
Y
1,&+2/$6 *$5&,$DQG-2+1
2¶9$//( -5
'HIHQGDQWV$SSHOOHHV
;!

1
1RV
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW%D\&LW\
1R²'DYLG0/DZVRQ9LFWRULD$5REHUWV
'LVWULFW-XGJHV
$UJXHG-XQH
'HFLGHGDQG)LOHG2FWREHU
%HIRUH*8<%$7&+(/'(5DQG0225(&LUFXLW
-XGJHV
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 'DYLG - 'HEROG $66,67$17 81,7('
67$7(6 $77251(< 'HWURLW 0LFKLJDQ IRU $SSHOODQW
'DYLG & 7KRPDV &KLFDJR ,OOLQRLV 5RGQH\ - 2¶)DUUHOO
6DJLQDZ0LFKLJDQIRU$SSHOOHHV21%5,()'DYLG-

-- 1 of 8 --

8QLWHG6WDWHVY*DUFLDHWDO 1RV
'HEROG $66,67$17 81,7(' 67$7(6 $77251(<
'HWURLW 0LFKLJDQ IRU $SSHOODQW 5RGQH\ - 2¶)DUUHOO
6DJLQDZ 0LFKLJDQ 'DYLG 6 6WHLQJROG '$9,' 6
67(,1*2/' $662&,$7(6 'HWURLW 0LFKLJDQ IRU
$SSHOOHHV
0225(-GHOLYHUHGWKHRSLQLRQRIWKHFRXUW*8<-
S GHOLYHUHG D VHSDUDWH FRQFXUULQJ RSLQLRQ
%$7&+(/'(5-FRQFXUUHGLQERWKWKHRSLQLRQRIWKHFRXUW
DQGWKHVHSDUDWHFRQFXUUHQFH
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
.$5(1 1(/621 0225( &LUFXLW -XGJH 7KH
JRYHUQPHQWDSSHDOVWKHGLVWULFWFRXUW¶VGHFLVLRQGLVPLVVLQJDV
EH\RQG WKH UHOHYDQW VWDWXWH RI OLPLWDWLRQV WKH IRXUWK
VXSHUVHGLQJ LQGLFWPHQW FKDUJLQJ GHIHQGDQWVDSSHOOHHV
1LFKRODV*DUFLDDQG-RKQ2¶9DOOH-U FROOHFWLYHO\UHIHUUHG
WR DV ³GHIHQGDQWV´ ZLWK SRVVHVVLQJ ZLWK WKH LQWHQW WR
GLVWULEXWHRQHWKRXVDQGRUPRUHNLORJUDPVRIPDULMXDQDLQ
YLRODWLRQ RI 86& † D $OWKRXJK WKH IRXUWK
VXSHUVHGLQJ LQGLFWPHQW ZDV ILOHG RXWVLGH WKH DSSOLFDEOH
VWDWXWHRIOLPLWDWLRQVSHULRGEHFDXVHWKHIRXUWKVXSHUVHGLQJ
LQGLFWPHQWGLGQRWPDWHULDOO\EURDGHQWKHLQGLFWPHQWDOUHDG\
SHQGLQJDJDLQVWWKHGHIHQGDQWVWKHJRYHUQPHQWZDVZLWKLQLWV
DXWKRULW\LQILOLQJLW$FFRUGLQJO\ZH5(9(56(WKHGLVWULFW
FRXUW¶VGHFLVLRQ
,%$&.*5281'
*DUFLDDQG2¶9DOOHDORQJZLWKRWKHUFRGHIHQGDQWVDUH
DFFXVHGRIFRQVSLULQJWRWUDQVSRUWPDULMXDQDIURP0H[LFRWR
WKH8QLWHG6WDWHV3XUVXDQWWRDSROLFHLQYHVWLJDWLRQLQODWH
1RYHPEHUDQGHDUO\'HFHPEHURIILFHUVXQFRYHUHGWKUHH
WKRXVDQGSRXQGVRIPDULMXDQDLQDVHDUFKRIDWUDFWRUWUDLOHU
SDUNHG DW D KRWHO LQ %LUFK 5XQ 0LFKLJDQ %DVHG RQ WKLV
LQYHVWLJDWLRQ RQ 'HFHPEHU QLQH GHIHQGDQWV
LQFOXGLQJ*DUFLDDQG2¶9DOOHZHUHLQGLFWHGIRUFRQVSLUDF\WR
1RV 8QLWHG6WDWHVY*DUFLDHWDO
BBBBBBBBBBBBBBBBBBBB
&21&855(1&(
BBBBBBBBBBBBBBBBBBBB
5$/3+%*8<-5&LUFXLW-XGJHFRQFXUULQJ,FRQFXU
LQ-XGJH0RRUH¶VRSLQLRQDQGZULWHDGGLWLRQDOO\RQO\WRVD\
WKDW,GRQRWEHOLHYHWKDWGUXJTXDQWLW\LVDQHOHPHQWRIWKH
RIIHQVHLQDOOGUXJSURVHFXWLRQV,QDVLPLODUYHLQ,GRQRW
EHOLHYHWKDWGUXJTXDQWLW\QHHGEHDOOHJHGLQDOOLQGLFWPHQWV
LQYROYLQJGUXJRIIHQVHVWRVDWLVI\$SSUHQGL

-- 2 of 8 --

8QLWHG6WDWHVY*DUFLDHWDO 1RV
DPRXQWRIGUXJVLQYROYHGLQWKHFRQVSLUDF\1HYHUWKHOHVV
WKH GHIHQGDQWV KDYH EHHQ SXW RQ QRWLFH IURP WKH YHU\
EHJLQQLQJ LQ RI WKH ODUJH TXDQWLW\ RI GUXJV WKDW WKH
JRYHUQPHQWFODLPVLVLQYROYHGLQWKLVFRQVSLUDF\DQGRIWKH
IDFWWKDWWKH\ZRXOGKDYHWRSUHSDUHDGHIHQVHDJDLQVWWKLV
GUXJ DPRXQW LI DQG ZKHQ WKH SURFHHGLQJV UHDFKHG WKH
VHQWHQFLQJKHDULQJ:HGRQRWEHOLHYHVLPSO\EHFDXVHWKH
EXUGHQRISUHVHQWLQJDGHIHQVHFRQFHUQLQJGUXJTXDQWLW\KDV
EHHQPRYHGWRWKHWULDOWKDWWKHWLPHO\QRWLFHRIGUXJDPRXQW
SURYLGHG E\ WKH JRYHUQPHQW LQ LV QRZ LQKHUHQWO\
GHIHFWLYHSDUWLFXODUO\LQOLJKWRIWKHIDFWWKDWWKHJRYHUQPHQW
ZKHQWKHGHIHQGDQWVDUHWULHGZLOOKDYHDIDUKLJKHUVWDQGDUG
RISURRIWRPHHWZLWKUHVSHFWWRGUXJTXDQWLW\
8OWLPDWHO\WKHFUXFLDOLVVXHLQWKLVFDVHLVQRWLFH$OWKRXJK
WKHIRXUWKVXSHUVHGLQJLQGLFWPHQWZDVLVVXHGEH\RQG†¶V
VWDWXWHRIOLPLWDWLRQVLWLVDSSDUHQWWKDWWKHGHIHQGDQWVNQHZ
IXOO ZHOO WKDW WKH JRYHUQPHQW ZRXOG DWWHPSW WR KROG WKHP
UHVSRQVLEOH IRU D GUXJ FRQVSLUDF\ LQYROYLQJ RQH WKRXVDQG
SRXQGV RU PRUH RI PDULMXDQD ,Q OLJKW RI WKH WLPHO\ DQG
VSHFLILFZULWWHQQRWLFHSURYLGHGE\WKHJRYHUQPHQWZHKROG
WKDWWKHIRXUWKVXSHUVHGLQJLQGLFWPHQWWKRXJKLWDOOHJHVIDFWV
FRQFHUQLQJ GUXJ TXDQWLW\ WKDW FRXOG OHDG WR VHQWHQFLQJ
HQKDQFHPHQWVGLGQRWPDWHULDOO\EURDGHQWKHFKDUJHVDOUHDG\
SHQGLQJ DJDLQVW WKH GHIHQGDQWV 7KXV IRU SXUSRVHV RI
† ¶V VL[PRQWK VWDWXWH RI OLPLWDWLRQV WKH IRXUWK
VXSHUVHGLQJLQGLFWPHQWUHODWHVEDFNWRWKHWLPHO\ILOLQJRIWKH
VHFRQGVXSHUVHGLQJLQGLFWPHQW
,,,&21&/86,21
)RU WKH IRUHJRLQJ UHDVRQV ZH 5(9(56( WKH GLVWULFW
FRXUW¶VGHFLVLRQGLVPLVVLQJWKHIRXUWKVXSHUVHGLQJLQGLFWPHQW
DV WLPHEDUUHG DQG 5(0$1' IRU IXUWKHU SURFHHGLQJV
FRQVLVWHQWZLWKWKLVRSLQLRQ
1RV 8QLWHG6WDWHVY*DUFLDHWDO
7KH SDUWLHV UHIHU WR WKLV LQGLFWPHQW DV WKH ³VHFRQG VXSHUVHGLQJ
LQGLFWPHQW´ GHVSLWH WKH IDFW WKDW LW IROORZHG RXU UHYHUVDO RI WKH
GHIHQGDQWV¶ LQGLFWPHQWV DQG FRQYLFWLRQV 2WKHU FRXUWV KDYH UHFRJQL]HG
WKDW DQ LQGLFWPHQW LV SURSHUO\ FODVVLILHG DV ³VXSHUVHGLQJ´ RQO\ ZKHQ LW
VXSSODQWV D YDOLG SHQGLQJ LQGLFWPHQW 6HH HJ 8QLWHG 6WDWHV Y ,WDOLDQR
)G Q WK &LU FHUW GHQLHG 86
%HFDXVH WKH VXSHUVHGLQJ LQGLFWPHQW VXIIHUHG IURP GHIHFWV LQ WKH (DVWHUQ
'LVWULFW RI 0LFKLJDQ¶V JUDQG MXU\ VHOHFWLRQ SURFHGXUH LW ZDV QHLWKHU YDOLG
QRU SHQGLQJ IROORZLQJ RXU UHYHUVDO LQ 2YDOOH , 1HYHUWKHOHVV IRU
SXUSRVHV RI VHPDQWLFDO FRQVLVWHQF\ ZLWK WKH SDUWLHV ZH ZLOO UHIHU WR WKH
SRVVHVV ZLWK WKH LQWHQW ³WR GLVWULEXWH YDULRXV TXDQWLWLHV RI
PDULKXDQD>@´-RLQW$SSHQGL[ ³-$´ DW 2ULJLQDO
,QGLFWPHQW /HVVWKDQRQHZHHNDIWHUWKHRULJLQDOLQGLFWPHQW
WKHJRYHUQPHQWJDYHWKHGHIHQGDQWVZULWWHQQRWLFH³WKDWWKH
HYLGHQFHZLWKUHVSHFWWR&RXQWRIWKH,QGLFWPHQW>ZRXOG@
LQFOXGH GUXJ TXDQWLWLHV RI NLORJUDPV RU PRUH RI
PDULKXDQDDQGWKDWVXFKHYLGHQFHFRXOGJLYHULVHWRHQKDQFHG
SHQDOWLHV SXUVXDQW WR > 86& † E @´ -$ DW
1RWLFHRI(QKDQFHG3HQDOW\ 7KHGHIHQGDQWVERWKVLJQHGDQ
DFNQRZOHGJPHQWRILQGLFWPHQWIRUPLQZKLFKWKH\UHFRJQL]HG
WKDWLIFRQYLFWHGRIWKHFKDUJHVVHWIRUWKLQWKHLQGLFWPHQW
WKH\IDFHGDPD[LPXPWHUPRIOLIHLPSULVRQPHQW
7KH JUDQG MXU\ UHWXUQHG D VXSHUVHGLQJ LQGLFWPHQW RQ
0DUFKZKLFKDVLGHIURPH[SDQGLQJE\WZRPRQWKV
WKHDOOHJHGOHQJWKRIWKHGUXJFRQVSLUDF\ZDVLGHQWLFDOWRWKH
RULJLQDO*DUFLDDQG2¶9DOOHZHUHWKHQWULHGDQGFRQYLFWHG
RQWKLVLQGLFWPHQW2QDSSHDOZHUHYHUVHGDQGUHPDQGHGWKH
GHIHQGDQWV¶LQGLFWPHQWVDQGFRQYLFWLRQVRQWKHJURXQGVWKDW
WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ¶V JUDQG DQG SHWLW MXU\
VHOHFWLRQV\VWHPYLRODWHGERWKWKH-XU\6HOHFWLRQDQG6HUYLFH
$FW 86& † HW VHT DQG WKH HTXDO SURWHFWLRQ
FRPSRQHQWRIWKH)LIWK$PHQGPHQW 6HH8QLWHG 6WDWHVY
2YDOOH )G WK &LU KHUHLQDIWHU
UHIHUUHGWRDV2YDOOH,
2Q0D\IROORZLQJUHPDQGDVHFRQGVXSHUVHGLQJ
LQGLFWPHQWZDVUHWXUQHGLQZKLFKWKRVHGHIHQGDQWVZKRVH
FDVHVKDGDOUHDG\EHHQUHVROYHGZHUHUHPRYHGIURPWKHSULRU
LQGLFWPHQW 1RW WHQ GD\V ODWHU D WKLUG VXSHUVHGLQJ

-- 3 of 8 --

8QLWHG6WDWHVY*DUFLDHWDO 1RV
LQGLFWPHQWV E\ WKH QDPHV ERWK SDUWLHV KDYH DJUHHG WR JLYH WKHP
LQGLFWPHQW ZDV ILOHG WKLV WLPH PDNLQJ VHYHUDO VXEVWDQWLYH
FKDQJHV WR WKH VHFRQG VXSHUVHGLQJ LQGLFWPHQW ,Q WKLV
LQGLFWPHQW LW ZDV DOOHJHG WKDW WKH GHIHQGDQWV¶ GUXJ
FRQVSLUDF\EHJDQLQUDWKHUWKDQLQ6HSWHPEHUDQG
IXUWKHUDOOHJHGWKDWLQDGGLWLRQWRPDULMXDQDWKHGHIHQGDQWV
ZHUHDOVRGHDOLQJLQKHURLQDQGFRFDLQH7KHGLVWULFWFRXUW
SXUVXDQW WR WKH GHIHQGDQWV¶ PRWLRQ GLVPLVVHG WKH WKLUG
VXSHUVHGLQJLQGLFWPHQWDVLPSURSHUO\H[SDQGLQJWKHFKDUJHV
LQWKHRULJLQDOLQGLFWPHQWEH\RQGWKHILYH\HDUSHULRGJLYHQ
WKHJRYHUQPHQWXQGHU86&†WRLQGLFWDGHIHQGDQW
DIWHUWKHDFWLRQDEOHRIIHQVHLVFRPPLWWHG7KHJRYHUQPHQW
GLGQRWDSSHDOWKLVGLVPLVVDO7KXVWKHVHFRQGVXSHUVHGLQJ
LQGLFWPHQWUHPDLQHGLQHIIHFW
)LQDOO\ RQ $XJXVW IROORZLQJ WKH 6XSUHPH
&RXUW¶VGHFLVLRQLQ$SSUHQGLY1HZ-HUVH\86
D IRXUWK VXSHUVHGLQJ LQGLFWPHQW ZDV ILOHG
$QWLFLSDWLQJ $SSUHQGL¶V DSSOLFDWLRQ WR WKH IHGHUDO GUXJ
VWDWXWHV WKH JRYHUQPHQW LQ WKH IRXUWK VXSHUVHGLQJ
LQGLFWPHQWDOOHJHGQHZIDFWVFRQFHUQLQJWKHTXDQWLW\RIGUXJV
LQYROYHG LQ WKH FRQVSLUDF\ DV ZHOO DV IDFWV UHODWLQJ WR
*DUFLD¶VDQG2¶9DOOH¶VSULRUIHORQ\FRQYLFWLRQV:KHUHDVWKH
VHFRQG VXSHUVHGLQJ LQGLFWPHQW FKDUJHG GHIHQGDQWV ZLWK
FRQVSLULQJ ³WR SRVVHVV ZLWK LQWHQW WR GLVWULEXWH DQG WR
GLVWULEXWH YDULRXV TXDQWLWLHV RI PDULKXDQD´ -$ DW
6HFRQG 6XSHUVHGLQJ ,QGLFWPHQW WKH IRXUWK VXSHUVHGLQJ
LQGLFWPHQWFKDUJHGGHIHQGDQWVZLWKFRQVSLULQJ³WRSRVVHVV
ZLWKLQWHQWWRGLVWULEXWHDQGWRGLVWULEXWHYDULRXVTXDQWLWLHV
WRWDOLQJNLORJUDPVRUPRUHRIPDULMXDQD>@´-$DW
)RXUWK6XSHUVHGLQJ,QGLFWPHQW $VLGHIURPWKHDGGLWLRQDO
GUXJ TXDQWLW\ DQG SULRU IHORQ\ FRQYLFWLRQ LQIRUPDWLRQ WKH
VHFRQGDQGIRXUWKVXSHUVHGLQJLQGLFWPHQWVZHUHLGHQWLFDO
)ROORZLQJWKHLVVXDQFHRIWKLVLQGLFWPHQWWKHGHIHQGDQWV
DJDLQILOHGDPRWLRQWRGLVPLVVWKHLQGLFWPHQWDVLPSURSHUO\
H[SDQGLQJWKHFKDUJHVDJDLQVWWKHGHIHQGDQWVEH\RQG†¶V
ILYH\HDUVWDWXWHRIOLPLWDWLRQV7KHGLVWULFWFRXUWDJUHHGDQG
1RV 8QLWHG6WDWHVY*DUFLDHWDO
VXSHUVHGLQJLQGLFWPHQWPDWHULDOO\EURDGHQHGWKHGHIHQGDQWV¶
DOUHDG\SHQGLQJFKDUJHV
7KH GHIHQGDQWV DUJXH WKDW LW LV REYLRXV WKDW WKH IRXUWK
VXSHUVHGLQJ LQGLFWPHQW PDWHULDOO\ EURDGHQV WKH VHFRQG
VXSHUVHGLQJLQGLFWPHQWEHFDXVHXQGHUWKHODWHULQGLFWPHQW
WKH\ DUH VXEMHFWHG WR VXEVWDQWLDOO\ JUHDWHU VHQWHQFHV
2UGLQDULO\ ZH ZRXOG DJUHH ,Q WKLV FDVH KRZHYHU WKH
GHIHQGDQWVNQHZDOODORQJDERXWWKHDPRXQWRIGUXJVWKDWWKH
JRYHUQPHQW LQWHQGHG WR VKRZ ZHUH LQYROYHG LQ WKH
FRQVSLUDF\ +DG VXFK IDFWV EHHQ DOOHJHG LQ D VXSHUVHGLQJ
LQGLFWPHQWRXWVLGHWKHDSSOLFDEOHOLPLWDWLRQVSHULRGDQGWKH
JRYHUQPHQWQRWSURYLGHGWLPHO\DQGVSHFLILFQRWLFHRIVXFK
IDFWVWRWKHGHIHQGDQWVDIWHUWKHRULJLQDOLQGLFWPHQWZHDUH
FRQILGHQWWKDWEHFDXVHWKHVXSHUVHGLQJLQGLFWPHQWH[SRVHV
WKH GHIHQGDQWV WR VLJQLILFDQW VHQWHQFLQJ HQKDQFHPHQWV LW
ZRXOGQRWUHODWHEDFNWRWKHHDUOLHULQGLFWPHQW7KLVZDVQRW
WKHFDVHKHUHKRZHYHU
7KHGHIHQGDQWVIXUWKHUDUJXHWKDWHYHQLIZHFRQVLGHUWKH
QRWLFHRIGUXJTXDQWLW\SURYLGHGWRWKHGHIHQGDQWVRXWVLGHWKH
LQGLFWPHQWVXFKQRWLFHZDVLQDGHTXDWHLQWKLVFDVHEHFDXVH
LW GLG QRW LQIRUP WKHP WKDW WKH\ ZRXOG KDYH WR SUHSDUH D
GHIHQVHDJDLQVWGUXJTXDQWLW\DWWULDODVRSSRVHGWRGXULQJD
VHQWHQFLQJKHDULQJ$OWKRXJKWKLVFHUWDLQO\LVWUXHZHGRQRW
EHOLHYHWKDWWKLVUHTXLUHVXVWRILQGWKDWWKHIRXUWKVXSHUVHGLQJ
LQGLFWPHQWPDWHULDOO\EURDGHQHGWKHDOUHDG\SHQGLQJFKDUJHV
,Q IDFW ZKLOH XQGHU WKH IRXUWK VXSHUVHGLQJ LQGLFWPHQW WKH
GHIHQGDQWV¶RSSRUWXQLW\WRFKDOOHQJHWKHGUXJTXDQWLW\ZLOOEH
DWWULDOLQVWHDGRIDWDVHQWHQFLQJKHDULQJWKHGHIHQGDQWVZLOO
UHDSWKHEHQHILWVRI$SSUHQGLE\RQO\KDYLQJWRFUHDWHIRUWKH
MXU\ D UHDVRQDEOH GRXEW WKDW WKH GUXJ FRQVSLUDF\ GLG QRW
LQYROYH PRUH WKDQ RQH WKRXVDQG NLORJUDPV RI PDULMXDQD
8QGHUSUH$SSUHQGLODZWKHJRYHUQPHQWZRXOGKDYHKDGWKH
EHQHILWRIDSUHSRQGHUDQFHRIWKH HYLGHQFHVWDQGDUGDWWKH
VHQWHQFLQJ KHDULQJ DQG WKH GHIHQGDQWV¶ DELOLW\ WR PRXQW D
GHIHQVHZRXOGKDYHVXIIHUHGJUHDWO\
:HUHFRJQL]HWKDWWKHGHIHQGDQWV¶WULDOVWUDWHJ\PD\FKDQJH
VRPHZKDW LQ OLJKW RI WKHLU GXW\ WR FKDOOHQJH DW WULDO WKH

-- 4 of 8 --

8QLWHG6WDWHVY*DUFLDHWDO 1RV
SXUSRVHVRIDPDULMXDQDFRQVSLUDF\LIWKHFRQVSLUDF\LQYROYHG
³NLORJUDPVRUPRUHRIDPL[WXUHRUVXEVWDQFHFRQWDLQLQJ
DGHWHFWDEOHDPRXQWRIPDULMXDQDRURUPRUHPDULMXDQD
SODQWVUHJDUGOHVVRIZHLJKW>@´86&† E $ YLL
$OWKRXJKQRUPDOO\ZHZRXOGIRFXVRQWKHODQJXDJHRIWKH
WZRLQGLFWPHQWVLQGHWHUPLQLQJZKHWKHUWKHODWHULQGLFWPHQW
KDV PDWHULDOO\ EURDGHQHG WKH HDUOLHU RQH WKH XQXVXDO
FLUFXPVWDQFHVRIWKLVFDVHGLFWDWHDPRUHIOH[LEOHDSSURDFK
8SRQ ORRNLQJ DW WKH ODQJXDJH RI WKH VHFRQG DQG IRXUWK
VXSHUVHGLQJ LQGLFWPHQWV LW LV FOHDU WKDW WKH VHFRQG
VXSHUVHGLQJLQGLFWPHQWGRHVQRWFRQWDLQDQ\DOOHJDWLRQRIWKH
VSHFLILFGUXJTXDQWLW\LQYROYHGLQWKHFRQVSLUDF\ZKHUHDVWKH
IRXUWKVXSHUVHGLQJLQGLFWPHQWGRHV7KHRQO\UHDVRQIRUWKLV
GLVWLQFWLRQ EHWZHHQ WKH WZR LQGLFWPHQWV KRZHYHU LV WKH
FKDQJH LQ WKH OHJDO ODQGVFDSH FUHDWHG E\ WKH $SSUHQGL
GHFLVLRQ
7KHJRYHUQPHQWLQDFFRUGDQFHZLWKSUH$SSUHQGLSUDFWLFH
LQGLFWHG WKH GHIHQGDQWV ZLWKRXW VWDWLQJ D VSHFLILF GUXJ
TXDQWLW\ WKHUHLQ EXW LQVWHDG SURYLGHG WKH GHIHQGDQWV ZLWK
ZULWWHQQRWLFHRXWVLGHRIWKHLQGLFWPHQWWKDWWKHDPRXQWRI
GUXJVDOOHJHGO\LQYROYHGLQWKHLUFRQVSLUDF\ZRXOGVXEMHFW
WKHP WR VHQWHQFLQJ HQKDQFHPHQWV XQGHU † E 1RZ
XQGHUWKHIRXUWKVXSHUVHGLQJLQGLFWPHQWDQGDIWHU†¶V
VL[PRQWKLQGLFWPHQWSHULRGKDVH[SLUHGWKHJRYHUQPHQWKDV
DWWHPSWHGWRFRPSO\VWULFWO\ZLWKWKHPDQGDWHRI$SSUHQGLE\
FKDUJLQJLQWKHLQGLFWPHQWDQGSURYLQJEH\RQGDUHDVRQDEOH
GRXEWDWWULDOWKHVSHFLILFGUXJTXDQWLW\WKDWZRXOGOHDGWR
VHQWHQFLQJHQKDQFHPHQWV$VZHVWDWHGLQ8QLWHG6WDWHVY
6DXVV\)G WK&LU FHUWGHQLHG
86 ³>W@KHFRQFHUQVJHQHUDOO\XQGHUO\LQJVWDWXWHV
RIOLPLWDWLRQVKDYHWRGRZLWKSODFLQJDGHIHQGDQWRQQRWLFH
RIWKHFKDUJHVEURXJKWDJDLQVWKLPEHIRUHWKRVHFKDUJHVDUH
SUHVXPSWLYHO\VWDOH´1RWLFHWRWKHGHIHQGDQWVRIWKHFKDUJHV
WREHEURXJKWDJDLQVWWKHPLVWKHNH\IDFWRULQWKHPDWHULDO
EURDGHQLQJDQDO\VLVDQGLQWKLVFDVHLQOLJKWRIWKHVSHFLILF
WLPHO\DQGRIILFLDOQRWLFHSURYLGHGWRWKHGHIHQGDQWVRIWKH
GUXJTXDQWLW\IRUZKLFKWKHJRYHUQPHQWZRXOGVHHNWRKROG
WKHP UHVSRQVLEOH ZH VLPSO\ FDQQRW VWDWH WKDW WKH IRXUWK
1RV 8QLWHG6WDWHVY*DUFLDHWDO
GLVPLVVHG WKH IRXUWK VXSHUVHGLQJ LQGLFWPHQW 7KH
JRYHUQPHQW¶VDSSHDOWRWKLVFRXUWIROORZHG
,,$1$/<6,6
7KLV FDVH SRVHV WKH LQWHUHVWLQJ TXHVWLRQ RI ZKHWKHU WKH
JRYHUQPHQW FDQ HYHU VXFFHVVIXOO\ UHLQGLFW D GHIHQGDQW LQ
RUGHUWRFRPSO\ZLWK$SSUHQGLLIWKDWVXSHUVHGLQJLQGLFWPHQW
LVLVVXHGEH\RQGWKH DSSOLFDEOHVWDWXWHRIOLPLWDWLRQV:H
KROG WKDW XQGHU WKH IDFWV RI WKLV FDVH D VXSHUVHGLQJ
LQGLFWPHQWLVSHUPLVVLEOH
6HFWLRQ RI 7LWOH RI WKH 8QLWHG 6WDWHV &RGH VHWV
IRUWKWKHJHQHUDOVWDWXWHRIOLPLWDWLRQVSHULRGIRUWKHLVVXDQFH
RILQGLFWPHQWVLQQRQFDSLWDOIHGHUDOFULPLQDOFDVHV,WVWDWHV
WKDW³QRSHUVRQVKDOOEHSURVHFXWHGWULHGRUSXQLVKHGIRUDQ\
RIIHQVH QRW FDSLWDO XQOHVV WKH LQGLFWPHQW LV IRXQG RU WKH
LQIRUPDWLRQ LV LQVWLWXWHG ZLWKLQ ILYH \HDUV QH[W DIWHU VXFK
RIIHQVHVKDOOKDYHEHHQFRPPLWWHG´86&†7KLV
FLUFXLWKDVDFNQRZOHGJHG³WKDWQRUPDOO\WKHGDWHRIWKHODVW
RYHUW DFW LQ IXUWKHUDQFH RI WKH FRQVSLUDF\ DOOHJHG LQ WKH
LQGLFWPHQW EHJLQV WKH FORFN IRU SXUSRVHV RI WKH ILYH\HDU
VWDWXWHRIOLPLWDWLRQV´8QLWHG6WDWHVY6PLWK)G
WK&LU :LWKUHVSHFWWRWKHFKDUJHVEURXJKWLQ
WKHLQGLFWPHQWKRZHYHUWKHILYH\HDUOLPLWDWLRQVSHULRGVWRSV
UXQQLQJDVVRRQDVWKHLQGLFWPHQWLVEURXJKW,GDW
:HKDYHIROORZHGWKHOHDGRIRWKHUFLUFXLWVLQKROGLQJWKDW
EHFDXVH†¶VOLPLWDWLRQVSHULRGVWRSVUXQQLQJZKHQWKH
RULJLQDOLQGLFWPHQWLVILOHGDVXSHUVHGLQJLQGLFWPHQWEURXJKW
RXWVLGH WKH ILYH\HDU OLPLWDWLRQV SHULRG ZKLOH DQ HDUOLHU
LQGLFWPHQWLVVWLOOYDOLGO\SHQGLQJZLOOQHYHUWKHOHVVEHWLPHO\
XQGHU†VRORQJDVLWGRHVQRWPDWHULDOO\EURDGHQWKH
FKDUJHVRIWKHRULJLQDOLQGLFWPHQW,GDW FLWLQJ8QLWHG
6WDWHVY*UDG\)G G&LU 8QLWHG
6WDWHVY)ULHGPDQ)G G&LU 8QLWHG
6WDWHVY6FKPLFN)G WK&LU FHUW
GHQLHG 86 :KHQ D VXSHUVHGLQJ
LQGLFWPHQWLVILOHGRXWVLGHWKHOLPLWDWLRQVSHULRGEXWGRHVQRW
EURDGHQWKHFKDUJHVVHWIRUWKLQWKHRULJLQDOWLPHO\LQGLFWPHQW

-- 5 of 8 --

8QLWHG6WDWHVY*DUFLDHWDO 1RV
6KRXOG WKH JRYHUQPHQW FKRRVH WR DSSHDO WKH GLVPLVVDO RI WKH
LQGLFWPHQW LW ZLOO KDYH VL[W\ GD\V IURP WKH GDWH WKH GLVPLVVDO RI WKH
LQGLFWPHQW EHFRPHV ILQDO LQ ZKLFK WR LVVXH D QHZ LQGLFWPHQW 86&
†
LW LV VDLG WR ³UHODWH EDFN´ WR WKH ILOLQJ RI WKH RULJLQDO
LQGLFWPHQW6PLWK)GDW
$V RWKHU FLUFXLWV KDYH KHOG WKH SUDFWLFH RI WROOLQJ WKH
VWDWXWHRIOLPLWDWLRQVIRUVXSHUVHGLQJLQGLFWPHQWVWKDWGRQRW
PDWHULDOO\EURDGHQWKHFKDUJHVRIWKHRULJLQDOLQGLFWPHQWLV
HTXDOO\ DSSOLFDEOH WR 86& † WKH VWDWXWRU\
SURYLVLRQDWLVVXHLQWKLVFDVH,WDOLDQR)GDW
8QLWHG6WDWHVY&KDUQD\)G WK&LU FHUW
GHQLHG86 6HFWLRQDSSOLHVLQFDVHV
ZKHUHDQLQGLFWPHQW³FKDUJLQJDIHORQ\LVGLVPLVVHGIRUDQ\
UHDVRQDIWHUWKHSHULRGSUHVFULEHGE\WKHDSSOLFDEOHVWDWXWHRI
OLPLWDWLRQVKDVH[SLUHG´DQGSURYLGHVWKHJRYHUQPHQWZLWKDQ
DGGLWLRQDO ³VL[ FDOHQGDU PRQWKV´ IURP WKH GDWH RI WKH
GLVPLVVDORIWKHLQGLFWPHQWWRLVVXHDQHZLQGLFWPHQWDJDLQVW
WKH GHIHQGDQW 86& † 6LPLODU WR WKH FRXUWV¶
KROGLQJV LQ ,WDOLDQR DQG &KDUQD\ ZH KROG WKDW MXVW DV
VXSHUVHGLQJLQGLFWPHQWVUHWXUQHGDIWHUWKHILYH\HDUVWDWXWHRI
OLPLWDWLRQVPD\QRWPDWHULDOO\EURDGHQWKHFKDUJHVVHWIRUWK
LQWKHRULJLQDOLQGLFWPHQWDQ\QHZLQGLFWPHQWLVVXHGDIWHUWKH
ILYH\HDUOLPLWDWLRQVSHULRGSXUVXDQWWR†LVVLPLODUO\
FRQILQHGWRWKHFKDUJHVLQFOXGHGLQWKHILUVWLQGLFWPHQW
,Q WKLV FDVH SXUVXDQW WR RXU KROGLQJ LQ 2YDOOH , WKH
LQGLFWPHQWV RQ ZKLFK WKH GHIHQGDQWV ZHUH RULJLQDOO\
FRQYLFWHGZHUHHIIHFWLYHO\GLVPLVVHGGXHWRIDWDOIODZVLQWKH
(DVWHUQ'LVWULFWRI0LFKLJDQ¶VJUDQGMXU\VHOHFWLRQSURFHGXUH
7KXV IROORZLQJ WKDW GLVPLVVDO WKH JRYHUQPHQW KDG VL[
PRQWKV LQ ZKLFK WR UHLQGLFW WKH GHIHQGDQWV 7KH
JRYHUQPHQW¶VVHFRQGVXSHUVHGLQJLQGLFWPHQWZKLFKDVZH
VWDWHG HDUOLHU LV EHWWHU GHVFULEHG DV D QHZ LQGLFWPHQW
DOWRJHWKHU EHFDXVH WKH ILUVW VXSHUVHGLQJ LQGLFWPHQW ZDV
GLVPLVVHG ZDV ILOHG ZLWKLQ VL[ PRQWKV RI WKH ILUVW
VXSHUVHGLQJ LQGLFWPHQW¶V GLVPLVVDO LQ FRPSOLDQFH ZLWK
1RV 8QLWHG6WDWHVY*DUFLDHWDO
VXSHUVHGLQJLQGLFWPHQWPDWHULDOO\EURDGHQHGWKHGHIHQGDQWV¶
DOUHDG\SHQGLQJFKDUJHV
% 'LG WKH )RXUWK 6XSHUVHGLQJ ,QGLFWPHQW 0DWHULDOO\
%URDGHQWKH6HFRQG6XSHUVHGLQJ,QGLFWPHQW"
$OWKRXJK WKHUH DUH IHZ FDVHV LQ WKLV FLUFXLW DQDO\]LQJ
ZKHWKHUDQLQGLFWPHQWILOHGRXWVLGHWKHDSSOLFDEOHOLPLWDWLRQV
SHULRGPDWHULDOO\EURDGHQVDQHDUOLHUFKDUJHZHKDYHQRWHG
LQ6PLWKWKDW³>Q@RWLFHWRWKHGHIHQGDQWVRIWKHFKDUJHVVRWKDW
WKH\FDQDGHTXDWHO\SUHSDUHWKHLUGHIHQVHLVWKHWRXFKVWRQH
LQ´PDNLQJWKLVGHWHUPLQDWLRQ6PLWK)GDW7KXV
LQ6PLWKZKHUHWKHVXSHUVHGLQJLQGLFWPHQWVLPSO\LQFOXGHG
DVRYHUWDFWVLQDFRQVSLUDF\FKDUJHLQFRXQWRQHFHUWDLQDFWV
RULJLQDOO\ FKDUJHG XQGHU FRXQWV WZR WKURXJK ILYH RI WKH
LQGLFWPHQW WKH GHIHQGDQWV KDG QRWLFH DW DOO WLPHV RI WKH
FKDUJHVDJDLQVWZKLFKWKH\ZRXOGKDYHWRGHIHQGWKHPVHOYHV
DQGWKHVXSHUVHGLQJLQGLFWPHQWGLGQRWEURDGHQWKHRULJLQDO
LQGLFWPHQW,G
,Q WKH FXUUHQW FDVH LW LV FOHDU WKDW ZKLOH WKH GHIHQGDQWV
ZHUH QRW LQIRUPHG LQ WKH RULJLQDO LQGLFWPHQW RI WKH GUXJ
TXDQWLW\IRUZKLFKWKHJRYHUQPHQWZRXOGVHHNWRKROGWKHP
UHVSRQVLEOHWKH\GLGUHFHLYHFOHDUQRWLFHRIWKLVDPRXQWRQ
VHYHUDO RFFDVLRQV VRRQ DIWHU WKH RULJLQDO LQGLFWPHQW ZDV
LVVXHG /HVV WKDQ WZR ZHHNV DIWHU WKH GHIHQGDQWV ZHUH
LQGLFWHGWKHJRYHUQPHQWJDYHWKHPZULWWHQQRWLFH³WKDWWKH
HYLGHQFHZLWKUHVSHFWWR&RXQWRIWKH,QGLFWPHQW>ZRXOG@
LQFOXGH GUXJ TXDQWLWLHV RI NLORJUDPV RU PRUH RI
PDULKXDQDDQGWKDWVXFKHYLGHQFHFRXOGJLYHULVHWRHQKDQFHG
SHQDOWLHV SXUVXDQW WR > 86& † E @´ -$ DW
'HF1RWLFHRI(QKDQFHG3HQDOW\ 7KHGHIHQGDQWV
DOVR HDFK VLJQHG DQ DFNQRZOHGJPHQW RI LQGLFWPHQW IRUP
LQGLFDWLQJWKDWWKH\ZHUHDZDUHWKDWWKH\IDFHGDVHQWHQFHRI
EHWZHHQ WHQ \HDUV DQG OLIH LPSULVRQPHQW DQG WKDW WKLV
VHQWHQFLQJUDQJHFRXOGEHLQFUHDVHGLIWKH\KDGDSULRUIHORQ\
GUXJFRQYLFWLRQ-$DW 'HF$FNQRZOHGJPHQW
RI,QGLFWPHQW 8QGHU† E LWLVFOHDUWKDWDVHQWHQFLQJ
UDQJHRIWHQ\HDUVWROLIHLPSULVRQPHQWDEVHQWHQKDQFHPHQW
IRUDSULRUIHORQ\GUXJFRQYLFWLRQFDQRQO\EHDUULYHGDWIRU

-- 6 of 8 --

8QLWHG6WDWHVY*DUFLDHWDO 1RV
$V ZH UHFHQWO\ QRWHG LQ 8QLWHG 6WDWHV Y 6WDIIRUG )G
WK &LU RWKHU FLUFXLWV KDYH KHOG WKDW GUXJ TXDQWLW\ PXVW EH
VWDWHG LQ WKH LQGLFWPHQW LI WKH JRYHUQPHQW LQWHQGV WR VHHN VHQWHQFLQJ
HQKDQFHPHQWV EDVHG RQ GUXJ TXDQWLW\ 6HH HJ 8QLWHG 6WDWHV Y )LHOGV
)G '& &LU 8QLWHG 6WDWHV Y -RQHV )G
WK &LU 8QLWHG 6WDWHV Y 5RJHUV )G
WK &LU 6WDIIRUG KRZHYHU GHVSLWH RXU VWDWHPHQWV LQ
6WUD\KRUQ DQG 5DPLUH] VWDWHG WKDW ³>Z@H KDYH \HW WR VTXDUHO\ DGGUHVV´
WKH LVVXH ZKHWKHU GUXJ TXDQWLW\ QHHG EH VWDWHG LQ WKH LQGLFWPHQW LQ RUGHU
WR VHHN VHQWHQFLQJ HQKDQFHPHQWV XQGHU † E 6WDIIRUG )G DW
$V VWDWHG HDUOLHU ZH DVVXPH IRU SXUSRVHV RI WKLV DSSHDO WKDW
$SSUHQGL DQG LWV SURJHQ\ LQ WKLV FLUFXLW GR VR UHTXLUH
VHQWHQFHDUHQRZHOHPHQWVRIWKHFULPHWREHFKDUJHGDQG
SURYHG´5DPLUH])GDW HPSKDVLVDGGHG 6HH
DOVRLGDW UHPDQGLQJZLWKLQVWUXFWLRQVWRUHVHQWHQFHWKH
GHIHQGDQW XQGHU WKH DSSOLFDEOH GHIDXOW VWDWXWRU\ PD[LPXP
EHFDXVH³WKHJRYHUQPHQWGLGQRWFKDUJHRUDWWHPSWWRSURYH
WRWKHMXU\DTXDQWLW\RIGUXJVWKDWZRXOGSHUPLWDPDQGDWRU\
VHQWHQFH´
%DVHG RQ WKH JRYHUQPHQW¶V DVVXPSWLRQ WKDW $SSUHQGL
UHTXLUHVFHUWDLQIDFWVWREHVWDWHGLQWKHLQGLFWPHQWLIWKRVH
IDFWVZLOOEHXVHGWRHQKDQFHDVHQWHQFHLWVRXJKWWKURXJKWKH
IRXUWK VXSHUVHGLQJ LQGLFWPHQW WR DOOHJH D VSHFLILF GUXJ
DPRXQW LQ WKH LQGLFWPHQW $V VWDWHG HDUOLHU WKH IRXUWK
VXSHUVHGLQJLQGLFWPHQWZDVUHWXUQHGEH\RQG†¶VVL[
PRQWKVWDWXWHRIOLPLWDWLRQVDQGLQRUGHUIRUWKLVLQGLFWPHQW
WRUHODWHEDFNWRWKHVHFRQGVXSHUVHGLQJLQGLFWPHQWLWPXVW
QRWPDWHULDOO\EURDGHQWKHFKDUJHVVHWIRUWKLQWKDWLQGLFWPHQW
,IWKHIRXUWKVXSHUVHGLQJLQGLFWPHQWGRHVPDWHULDOO\EURDGHQ
WKHHDUOLHUFKDUJHVPDGHDJDLQVWWKHGHIHQGDQWVWKHQXQGHU
RXURSHUDWLQJDVVXPSWLRQGUXJTXDQWLW\PD\QRWEHXVHGWR
HQKDQFH WKHLU VHQWHQFHV EHFDXVH WKH RQO\ YDOLGO\ SHQGLQJ
LQGLFWPHQWZLOOEHWKHVHFRQGVXSHUVHGLQJLQGLFWPHQWZKLFK
PDNHVQRVSHFLILFDOOHJDWLRQRIWKHGUXJTXDQWLW\LQYROYHGLQ
WKHFRQVSLUDF\,IFRQYLFWHGXQGHUWKHVHFRQGVXSHUVHGLQJ
LQGLFWPHQWWKHGHIHQGDQWVFDQEHVHQWHQFHGWRQRPRUHWKDQ
WKHGHIDXOWVWDWXWRU\PD[LPXPVHWRXWLQ† E ' :H
QRZ WXUQ WR WKH DOOLPSRUWDQW TXHVWLRQ ZKHWKHU WKH IRXUWK
1RV 8QLWHG6WDWHVY*DUFLDHWDO
,W LV XQFOHDU ZKHQ WKH GLVPLVVDO RI WKH ILUVW VXSHUVHGLQJ LQGLFWPHQW
EHFDPH ILQDO 2QH SRWHQWLDO SRLQW IURP ZKLFK WR EHJLQ WKH VL[PRQWK
OLPLWDWLRQV SHULRG LV 0D\ WKH GDWH RQ ZKLFK ZH LVVXHG WKH
PDQGDWH WR WKH GLVWULFW FRXUW UHJDUGLQJ RXU 2YDOOH , GHFLVLRQ <HW DQRWKHU
WULJJHULQJ HYHQW FRXOG EH WKH GDWH RQ ZKLFK WKH 8QLWHG 6WDWHV 6XSUHPH
&RXUW GHQLHV D SDUW\¶V SHWLWLRQ IRU D ZULW RI FHUWLRUDUL WKRXJK WKH
JRYHUQPHQW GLG QRW ILOH D FHUWLRUDUL SHWLWLRQ LQ WKLV FDVH 5HJDUGOHVV RI WKH
VWDUWLQJ SRLQW KRZHYHU LW LV FOHDU WKDW WKH JRYHUQPHQW¶V VHFRQG
VXSHUVHGLQJ LQGLFWPHQW ILOHG RQ 0D\ ZDV LVVXHG ZLWKLQ † ¶V
VL[PRQWK SHULRG RI OLPLWDWLRQV
† 7KH GHIHQGDQWV GR QRW FODLP WKDW WKH VHFRQG
VXSHUVHGLQJ LQGLFWPHQW ZKLFK PDGH QR FKDQJHV IURP WKH
SULRUVXSHUVHGLQJLQGLFWPHQWRWKHUWKDQWRUHPRYHIURPWKH
LQGLFWPHQWWKRVHGHIHQGDQWVZKRVHFDVHVKDGDOUHDG\EHHQ
UHVROYHG PDWHULDOO\ EURDGHQHG WKH FKDUJHV VHW IRUWK LQ WKH
RULJLQDOLQGLFWPHQW
$SSO\LQJWKHVDPHWROOLQJSULQFLSOHVXVHGXQGHU†WR
RXU†VFHQDULR†¶VVL[PRQWKVWDWXWHRIOLPLWDWLRQV
VWRSSHG UXQQLQJ RQ 0D\ WKH GD\ WKH VHFRQG
VXSHUVHGLQJLQGLFWPHQWZDVILOHG0RUHRYHUDQ\LQGLFWPHQW
ILOHGEH\RQGWKLVVL[PRQWKWLPHSHULRGZLOOUHODWHEDFNWRWKH
ILOLQJRIWKHQHZLQGLFWPHQWXQGHU† ZKDWWKHSDUWLHV
UHIHUWRDVWKHVHFRQGVXSHUVHGLQJLQGLFWPHQW VRORQJDVLW
GRHVQRWPDWHULDOO\EURDGHQWKHFKDUJHVVHWIRUWKLQWKHVHFRQG
VXSHUVHGLQJLQGLFWPHQW
7KHFHQWHURIFRQWHQWLRQLQWKLVFDVHLVWKHJRYHUQPHQW¶V
IRXUWKVXSHUVHGLQJLQGLFWPHQWZKLFKQHZO\DOOHJHGWKHGUXJ
TXDQWLWLHVLQYROYHGLQWKHFRQVSLUDF\LQRUGHUWRFRPSO\ZLWK
WKHDSSDUHQWPDQGDWHRI$SSUHQGL7KHIRXUWKVXSHUVHGLQJ
LQGLFWPHQWZDVLVVXHGRQ$XJXVWEH\RQGWKHVL[
PRQWKOLPLWDWLRQVSHULRGSURYLGHGE\†7KXVWKHNH\
LVVXH LQ WKLV DSSHDO LV ZKHWKHU WKH IRXUWK VXSHUVHGLQJ
LQGLFWPHQWPDWHULDOO\EURDGHQHGWKHFKDUJHVVHWIRUWKLQWKH
VHFRQG VXSHUVHGLQJ LQGLFWPHQW ,I LW GRHV WKHQ WKH IRXUWK
VXSHUVHGLQJLQGLFWPHQWZLOOQRW³UHODWHEDFN´WRWKHILOLQJRI
WKH VHFRQG VXSHUVHGLQJ LQGLFWPHQW DQG ZLOO EH EDUUHG E\
†¶VVL[PRQWKVWDWXWHRIOLPLWDWLRQV:LWKRXWWKHIRXUWK
VXSHUVHGLQJLQGLFWPHQWWKHJRYHUQPHQWZLOOKDYHWRSURFHHG

-- 7 of 8 --

8QLWHG6WDWHVY*DUFLDHWDO 1RV
WRWULDODJDLQVWWKHGHIHQGDQWVXQGHUWKHVHFRQGVXSHUVHGLQJ
LQGLFWPHQWZKLFKFRQWDLQVQRIDFWVDOOHJLQJWKHTXDQWLW\RI
GUXJV LQYROYHG LQ WKH FRQVSLUDF\ $V ZLOO EH GLVFXVVHG
VKRUWO\WKHGLIIHUHQFHLQWKHVHWZRLQGLFWPHQWVPD\KDYHD
SURIRXQG HIIHFW RQ WKH VHQWHQFLQJ UDQJH WR ZKLFK WKH
GHIHQGDQWVLIFRQYLFWHGZLOOEHH[SRVHG
$7KH$SSUHQGL%DFNGURS
,Q$SSUHQGLWKH6XSUHPH&RXUWKHOGWKDWWKH'XH3URFHVV
&ODXVHRIWKH)RXUWHHQWK$PHQGPHQWUHTXLUHVWKDW³>R@WKHU
WKDQWKHIDFWRIDSULRUFRQYLFWLRQDQ\IDFWWKDWLQFUHDVHVWKH
SHQDOW\IRUDFULPHEH\RQGWKHSUHVFULEHGVWDWXWRU\PD[LPXP
PXVWEHVXEPLWWHGWRDMXU\DQGSURYHGEH\RQGDUHDVRQDEOH
GRXEW>@´UDWKHUWKDQEHVXEPLWWHGWRDMXGJHDQGSURYHGE\D
SUHSRQGHUDQFHRIWKHHYLGHQFH$SSUHQGL86DW
7KLVFLUFXLWKDVUHFHQWO\DSSOLHG$SSUHQGLWRWKH
IHGHUDO GUXJ VWDWXWH VHW RXW LQ 86& † 6HH HJ
8QLWHG6WDWHVY6WUD\KRUQ)G WK&LU
8QLWHG6WDWHVY5DPLUH])G WK&LU
8QLWHG6WDWHVY)ORZDO)G WK&LU
,QVRGRLQJZHKDYHKHOGWKDWWKHGHWHUPLQDWLRQRI
GUXJ TXDQWLW\ ZKHQ LW VXEMHFWV D GHIHQGDQW WR HQKDQFHG
VHQWHQFLQJ XQGHU † E FRQVWLWXWHV DQ HOHPHQW RI WKH
RIIHQVHWKDWWKHJRYHUQPHQWPXVWSURYHWRWKHMXU\EH\RQGD
UHDVRQDEOHGRXEW6WUD\KRUQ)GDW)ORZDO
)GDW
,Q WKLV FDVH WKH JRYHUQPHQW VHHNV WR SURYH WKDW WKH
GHIHQGDQWVFRQVSLUHGWRSRVVHVVZLWKWKHLQWHQWWRGLVWULEXWH
RQH WKRXVDQG NLORJUDPV RU PRUH RI PDULMXDQD 7KLV GUXJ
TXDQWLW\ VXEMHFWV WKH GHIHQGDQWV WR SURIRXQG VHQWHQFLQJ
HQKDQFHPHQWV6KRXOGWKHJRYHUQPHQWEHDEOHWRSURYHWKDW
WKHGHIHQGDQWV¶FRQVSLUDF\LQYROYHGGUXJVRIWKLVDPRXQWWKH
GHIHQGDQWVEHFDXVHERWKKDYHDSULRUIHORQ\GUXJFRQYLFWLRQ
ZRXOG IDFH D PLQLPXP VHQWHQFH RI WZHQW\ \HDUV DQG D
PD[LPXPVHQWHQFHRIOLIHLPSULVRQPHQW† E $ YLL
,QFRQWUDVWLIWKH\ZHUHFRQYLFWHGRIWKHVDPHRIIHQVHZLWKRXW
DQ\ GUXJ TXDQWLW\ VSHFLILFDWLRQ WKH GHIHQGDQWV ZRXOG EH
VHQWHQFHGXQGHU† E ' WKHSURYLVLRQSHUWDLQLQJWR
1RV 8QLWHG6WDWHVY*DUFLDHWDO
FRQVSLUDFLHVLQYROYLQJWUDFHDPRXQWVRIPDULMXDQDXSWRILIW\
NLORJUDPVDQGWKHLUPD[LPXPVHQWHQFHZRXOGEHWHQ\HDUV¶
LPSULVRQPHQW6WUD\KRUQ)GDW Q
7KXVDV$SSUHQGLDQGLWVSURJHQ\LQWKLVFLUFXLWWHDFKXV
EHFDXVH WKH DOOHJHG GUXJ TXDQWLWLHV LQYROYHG LQ WKLV
FRQVSLUDF\VRGUDPDWLFDOO\LQFUHDVHWKHVHQWHQFLQJUDQJHWR
ZKLFKWKHGHIHQGDQWVZLOOEHH[SRVHGWKHVHIDFWVFRQVWLWXWH
DQ HOHPHQW RI WKH FULPH WKDW PXVW EH SURYHQ EH\RQG D
UHDVRQDEOHGRXEWDWWULDO6WUD\KRUQ)GDW7KH
JRYHUQPHQW GRHV QRW GLVSXWH WKLV DQG LQGHHG LW SODQV RQ
SUHVHQWLQJHYLGHQFHWRWKHMXU\WRPHHWWKLVEXUGHQZKHQWKH
GHIHQGDQWVDUHUHWULHG
5DWKHUWKDQVLPSO\JRIRUZDUGZLWKLWVVHFRQGVXSHUVHGLQJ
LQGLFWPHQW ZKLFK FRQWDLQV QR VSHFLILF DOOHJDWLRQV RI GUXJ
TXDQWLW\ DQG DWWHPSW WR SURYH WKH VSHFLILF DPRXQW RI
PDULMXDQD LQYROYHG LQ WKH FRQVSLUDF\ WR WKH MXU\ WKH
JRYHUQPHQW KDV DFNQRZOHGJHG WKDW WKH SURWHFWLRQV RI
$SSUHQGLOLNHO\H[WHQGEH\RQGWKHWULDOWRWKHHDUOLHUVWDJHRI
LQGLFWPHQW0RUHVSHFLILFDOO\WKHJRYHUQPHQWDVVXPHVDV
ZLOO ZH IRU SXUSRVHV RI WKLV DSSHDO WKDW SXUVXDQW WR
$SSUHQGLLIWKHJRYHUQPHQWVHHNVVHQWHQFLQJHQKDQFHPHQWV
EDVHGRQWKHTXDQWLW\RIGUXJVLQYROYHGLQDQRIIHQVHWKHQ
GUXJ TXDQWLW\ PXVW DOVR EH VSHFLILFDOO\ DOOHJHG LQ WKH
LQGLFWPHQW,QGHHGEDVHGRQRXUUHDGLQJRI$SSUHQGLZH
KDYHDOUHDG\VWDWHGRQPRUHWKDQRQHRFFDVLRQWKDW$SSUHQGL
VSHDNVQRWRQO\WRWKRVHIDFWVWKDWPXVWEHSURYHQEH\RQGD
UHDVRQDEOHGRXEWDWWULDOEXWDOVRWRWKRVHIDFWVWKDWPXVWEH
LQFOXGHGLQWKHLQGLFWPHQW)RUH[DPSOHLQ6WUD\KRUQZH
QRWHG WKDW WKH ILUVW RI WKUHH SULQFLSDO OHVVRQV WDXJKW E\
$SSUHQGLZDV³WKDWμ>W@KHRIIHQVHFKDUJHGLQDQLQGLFWPHQW
PXVWEHVWDWHGZLWKVXIILFLHQWμFHUWDLQW\DQGSUHFLVLRQ¶VRWKDW
WKHUHFDQEHQRGRXEWDVWRWKHMXGJPHQWZKLFKVKRXOGEH
JLYHQLIWKHGHIHQGDQWLVFRQYLFWHG>@¶´6WUD\KRUQ)G
DW TXRWLQJ5DPLUH])GDW 0RUHRYHULQ
5DPLUH]ZHQRWHGWKDWSXUVXDQWWR$SSUHQGL³>D@JJUDYDWLQJ
IDFWRUVRWKHUWKDQDSULRUFRQYLFWLRQWKDWLQFUHDVHWKHSHQDOW\
IURP D QRQPDQGDWRU\ PLQLPXP VHQWHQFH WR D PDQGDWRU\
PLQLPXPVHQWHQFHRUIURPDOHVVHUWRDJUHDWHUPLQLPXP

-- 8 of 8 --