Perceptron v. Sensor Adaptive

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
 3HUFHSWURQ,QFY6HQVRU 1RV 3XUVXDQW WR 6L[WK &LUFXLW 5XOH 

$GDSWLYH0DFKLQHV (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
)LOH 1DPH DS

GXHVWKDWRQO\FRPHGXHSHULRGLFDOO\)XUWKHUWKHGHFLVLRQLQ
0F.HOYLHVXSSRUWV3HUFHSWURQjV SRVLWLRQ7KHUHWKHFRXUW 81,7('67$7(6&28572)$33($/6
DIILUPHGWKHGHQLDORISUHMXGJPHQWLQWHUHVWIURPWKHGDWHWKH
FRPSODLQWZDVILOHGEHFDXVHWKHFODLPRQZKLFKWKHSODLQWLII )257+(6,;7+&,5&8,7
SUHYDLOHGZDVDGGHGE\DPHQGPHQWDQGDFWXDOO\DURVHZKHQ BBBBBBBBBBBBBBBBB
WKHQRIDXOWLQVXUHUUHGXFHGWKHSODLQWLIIjVEHQHILWVVRPHWLPH
DIWHU WKH RULJLQDO FRPSODLQW ZDV ILOHG  7KH FRXUW DOVR
LQGLFDWHG WKDW LI WKH SUHMXGJPHQW LQWHUHVW KDG UHODWHG WR D
FODLPWKDWZDVVWDWHGLQWKHRULJLQDOFRPSODLQWWKHGHQLDORI 3(5&(37521 ,1&25325$7(' ;
LQWHUHVWZRXOGEHUHYHUVHG,QIDFWLQ3KLQQH\WKHFRXUWKHOG D0LFKLJDQ&RUSRUDWLRQ 
WKDWSUHMXGJPHQWLQWHUHVWKDGWREHFDOFXODWHGIURPWKHILOLQJ 3ODLQWLII$SSHOOHH 
RIWKHFRPSODLQWHYHQWKRXJKWKHSODLQWLIIKDGSUHYDLOHGRQD  1RV
&URVV$SSHOODQW 
QHZWKHRU\WKDWZDVDGGHGE\DQDPHQGHGFRPSODLQW !

,QWKLVFDVHWKHEUHDFKRIFRQWUDFWFODLPZDVDOOHJHGLQWKH Y 
FRPSODLQWDQGFOHDUO\DURVHEHIRUHWKHFRPSODLQWZDVILOHG 
7KLV LV QRW DOWHUHG E\ WKH IDFW WKDW DV ZLWK PDQ\ FODLPV 6(1625 $'$37,9( 
6$0,jVFRQWLQXHGEUHDFKDOOHJHGO\UHVXOWHGLQGDPDJHVWKDW 0$&+,1(6 ,1&25325$7(' 
GLGQRWDFFUXHXQWLODIWHUWKHFRPSODLQWZDVILOHG:HILQG 
WKLVFDVHWREHDQDORJRXVWRWKHUHFHQWGHFLVLRQLQ+s7XFNHU 6$0,D&DQDGLDQ

DQG$VVRFLDWHV,QFY$OOLHG&KXFNHUDQG(QJLQHHULQJ&R &RUSRUDWLRQ 
1:G0LFK$SSDSSHDOGHQLHG 'HIHQGDQW$SSHOODQW 
1:G  0LFK  ZKLFK DIILUPHG DQ DZDUG RI &URVV$SSHOOHH 
SUHMXGJPHQWLQWHUHVWRQWKHHQWLUHMXGJPHQWmLQFOXGLQJWKDW 
SRUWLRQRIGDPDJHVWKDWUHIOHFWHGFRPPLVVLRQVGXHDIWHUWKH 1
FRPSODLQWZDVILOHGEXWEHIRUHHQWU\RIMXGJPHQWIURPWKH
GDWHWKDWWKHRULJLQDOFRPSODLQWZDVILOHGl&RQVLVWHQWZLWK $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
WKH SODLQ PHDQLQJ RI WKH VWDWXWH 3HUFHSWURQ LV HQWLWOHG WR IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW
SUHMXGJPHQWLQWHUHVWRQWKHGDPDJHVDZDUGHGRQLWVEUHDFKRI 1Rn$QQD'LJJV7D\ORU'LVWULFWsXGJH
FRQWUDFWFODLPIURPWKHGDWHWKHFRPSODLQWZDVILOHG
$UJXHGsXQH
)RUWKHUHDVRQVVHWIRUWKDERYHZH$)),50WKHGLVWULFW
FRXUWjVGHQLDORI6$0,jVPRWLRQIRUMXGJPHQWDVDPDWWHURI 'HFLGHGDQG)LOHGsXO\
ODZ RU IRU QHZ WULDO DQG WKH GLVWULFW FRXUWjV GHQLDO RI
3HUFHSWURQjV PRWLRQ IRU HTXLWDEOH H[WHQVLRQ RI WKH QRQ %HIRUH0(55,77*8<DQG&2/(&LUFXLWsXGJHV
FRPSHWHDJUHHPHQW:H5(9(56(RQO\ZLWKUHVSHFWWRWKH
SUHMXGJPHQWLQWHUHVWFDOFXODWLRQDQG5(0$1'IRUHQWU\RI
MXGJPHQWLQDFFRUGDQFHZLWKWKLVRSLQLRQ


 3HUFHSWURQ,QFY6HQVRU 1RV 1RV 3HUFHSWURQ,QFY6HQVRU 
$GDSWLYH0DFKLQHV $GDSWLYH0DFKLQHV

BBBBBBBBBBBBBBBBB WKH GDWH WKDW WKH FRPSODLQW ZDV ILOHG  7KH SUHMXGJPHQW
LQWHUHVWVWDWXWHLVUHPHGLDOLQQDWXUHDQGLVWREHFRQVWUXHG
&2816(/ OLEHUDOO\ LQ IDYRU RI WKH SUHYDLOLQJ SDUW\  6HH 'HQKDP Y
%HGIRUG  1:G  0LFK  3KLQQH\ Y
$5*8('  &OD\ $ *XLVH )((1(< .(//(77 3HUOPXWWHU1:G0LFK$SS7KH
:,(11(5  %86+ %ORRPILHOG +LOOV 0LFKLJDQ IRU SXUSRVHRIDZDUGLQJVWDWXWRU\SUHMXGJPHQWLQWHUHVWLVQRWRQO\
$SSHOODQW  5REHUW s /HQLKDQ ,, +$51(66 ',&.(< WRFRPSHQVDWHWKHSUHYDLOLQJSDUW\IRUWKHGHOD\LQWKHXVHRI
3,(5&(3/&7UR\0LFKLJDQIRU$SSHOOHH21%5,() WKHPRQH\EXWDOVRWRRIIVHWWKHFRVWVRIEULQJLQJWKHDFWLRQ
&OD\$*XLVH67KRPDV:LHQQHU)((1(<.(//(77 DQG WR SURYLGH DQ LQFHQWLYH IRU SURPSW VHWWOHPHQW  6HH
:,(11(5 %86+%ORRPILHOG+LOOV0LFKLJDQ5RJHU+ +DGILHOGY2DNODQG&RXQW\'UDLQ&RPPjU1:G
&XPPLQJV ',&.,1621 :5,*+7 3//& %ORRPILHOG  0LFK $SS    7KH VWDWXWH PXVW EH DSSOLHG LQ
+LOOV 0LFKLJDQ IRU $SSHOODQW  5REHUW s /HQLKDQ ,, DFFRUGDQFH ZLWK LWV SODLQ WHUPV  6HH 3DXOLWFK Y 'HWURLW
+$51(66',&.(< 3,(5&(3/&7UR\0LFKLJDQIRU (GLVRQ &R  1:G  0LFK $SS  2P(O
$SSHOOHH ([SRUW &R Y 1HZFRU ,QF  1:G   0LFK
$SS
BBBBBBBBBBBBBBBBB
7KH SDUWLHV UHO\ XSRQ WZR OLQHV RI DXWKRULW\ IURP WKH
23,1,21 0LFKLJDQ &RXUW RI $SSHDOV ZLWK VHHPLQJO\ GLYHUJHQW
BBBBBBBBBBBBBBBBB DSSOLFDWLRQV RI WKH SUHMXGJPHQW LQWHUHVW VWDWXWH  6$0,
FRQWHQGV WKDW SUHMXGJPHQW LQWHUHVW RQ SRVWFRPSODLQW
5$/3+%*8<s5&LUFXLWsXGJH3ODLQWLII3HUFHSWURQ GDPDJHVVKRXOGEHFDOFXODWHGIURPWKHGDWHWKHFODLPDURVH
,QFDQGGHIHQGDQW6HQVRU$GDSWLYH0DFKLQHV,QF6$0, QRWWKHILOLQJRIWKHFRPSODLQWLQRUGHUWKDWWKHSUHYDLOLQJ
DSSHDOIURPWKHMXGJPHQWHQWHUHGIROORZLQJDMXU\WULDORQ SDUW\ EH FRPSHQVDWHG RQO\ IRU DFWXDO GHOD\ LQ UHFHLYLQJ
WKHLUUHVSHFWLYHFODLPVDQGWKHGLVWULFWFRXUWjVGLVSRVLWLRQRI FRPSHQVDWLRQ6HHHJ%HDFKY6WDWH)DUP0XW$XWR,QV
VHYHUDO SRVWWULDO PRWLRQV  7KH MXU\ IRXQG LQ IDYRU RI &R1:G0LFK$SS0F.HOYLHY$XWR
3HUFHSWURQRQLWVEUHDFKRIFRQWUDFWFODLPDOOHJLQJWKDW6$0, &OXE,QV$VVjQ1:G0LFK$SS)DUPHUV
EUHDFKHG D QRQFRPSHWH DJUHHPHQW DQG WKH MXU\ DZDUGHG ,QV *URXS Y /\QFK  1:G  0LFK $SS 
3HUFHSWURQLQGDPDJHV7KHMXU\IRXQGDJDLQVW &HQWUDO0LFK8QLY)DFXOW\$VVjQY6WHQJUHQ1:G
6$0, RQ LWV FRXQWHUFODLPV ZKLFK DOOHJHG WKDW WKH QRQ 0LFK$SSDQG)RUHPRVW/LIH,QV&RY:DWHUV
FRPSHWH DJUHHPHQW YLRODWHG DQWLWUXVW ODZV DQG WKDW 1:G0LFK$SS
3HUFHSWURQjV UHVSRQVH WR WKH SHUFHLYHG EUHDFK RI WKH
DJUHHPHQW FRQVWLWXWHG WRUWLRXV LQWHUIHUHQFH ZLWK EXVLQHVV ,Q%HDFKWKHFRXUWH[SODLQHGWKDWm>I@RUFODLPVWKDWDULVH
UHODWLRQVKLSV DIWHUWKHFRPSODLQWLVILOHGlmSUHMXGJPHQWLQWHUHVWUHJDUGLQJ
VXEVHTXHQWFODLPVZRXOGEHSURSHUO\DZDUGHGIURPWKHµGDWH
6$0,DSSHDOVIURPWKHGLVWULFWFRXUWjVGHQLDORILWVPRWLRQ RIGHOD\jLHWKHSRVWFRPSODLQWGDWHRQZKLFKWKHLQVXUHU
IRU MXGJPHQW DV D PDWWHU RI ODZ RU IRU QHZ WULDO RQ UHIXVHG WR SD\ DQG WKH GHOD\ LQ UHFHLYLQJ PRQH\ EHJDQl
3HUFHSWURQjV EUHDFK RI FRQWUDFW FODLP DQG 6$0,jV %HDFK1:GDW7KHUHDVRQLQJLQ%HDFK/\QFK
FRXQWHUFODLPV3HUFHSWURQDSSHDOVIURPWKHGLVWULFWFRXUWjV DQG6WHQJUHQLVLQDSSRVLWHKHUH EHFDXVHWKLVFDVHGRHVQRW
SRVWWULDO GHQLDO RI 3HUFHSWURQjV UHTXHVW IRU DQ HTXLWDEOH LQYROYHDQREOLJDWLRQVLPLODUWRLQVXUDQFHEHQHILWVRUVHUYLFH
H[WHQVLRQRIWKHQRQFRPSHWHDJUHHPHQWDVDIXUWKHUUHPHG\
 3HUFHSWURQ,QFY6HQVRU 1RV 1RV 3HUFHSWURQ,QFY6HQVRU 
$GDSWLYH0DFKLQHV $GDSWLYH0DFKLQHV

& 3UHMXGJPHQW,QWHUHVW IRU LWV EUHDFK  3HUFHSWURQ DOVR DSSHDOV IURP WKH GLVWULFW
FRXUWjV FDOFXODWLRQ RI SUHMXGJPHQW LQWHUHVW  $IWHU FDUHIXO
3UHMXGJPHQWLQWHUHVWLVDVXEVWDQWLYHHOHPHQWRIGDPDJH UHYLHZRIWKHUHFRUGDQGWKHDUJXPHQWVSUHVHQWHGRQDSSHDO
ZKLFK PXVW EH GHWHUPLQHG XQGHU VWDWH ODZ LQ WKLV FDVH ZHDIILUPH[FHSWDVWRWKHFDOFXODWLRQRISUHMXGJPHQWLQWHUHVW
0LFKLJDQODZZKHQMXULVGLFWLRQLVEDVHGXSRQGLYHUVLW\RI
FLWL]HQVKLS6HH%DLOH\Y&KDWWHP,QF)G ,
WK&LU/\QFKY(OHFWUR5HIUDFWRULHV $EUDVLYHV
&RUS  )G   WK &LU   ,Q 0LFKLJDQ 7KH KHDUW RI WKLV PDWWHU LV WKH QRQFRPSHWH DJUHHPHQW
SUHMXGJPHQW LQWHUHVW LV QRW GLVFUHWLRQDU\ DV WKH VWDWXWH 3HUFHSWURQ VHFXUHG IURP 6$0, LQ sXO\  DV SDUW RI D
SURYLGHVLQUHOHYDQWSDUWWKDWmLQWHUHVWRQDPRQH\MXGJPHQW WUDQVDFWLRQ WR SXUFKDVH FHUWDLQ LQWDQJLEOH DVVHWV IURP
UHFRYHUHGLQDFLYLODFWLRQVKDOOEHFDOFXODWHGIURPWKH 'LIIUDFWR/WG'LIIUDFWRZDVIRXQGHGLQE\7LP3U\RU
GDWHRIILOLQJWKHFRPSODLQWlDQGmVKDOOEHFDOFXODWHGRQWKH DQG RWKHUV WR GHYHORS ODVHU EHDP WHFKQRORJ\ IRU XVH LQ
HQWLUHDPRXQWRIWKHPRQH\MXGJPHQWLQFOXGLQJDWWRUQH\IHHV PHDVXULQJ DQG FKHFNLQJ PDFKLQHG SDUWV  3HUFHSWURQ ZDV
DQGRWKHUFRVWVl0,&+ &203 /$:6 $11 † IRXQGHGLQE\'ZLJKW&DUOVRQDQGEHJDQGHYHORSLQJ
:HVW6XSS7KHVWDWXWHH[FHSWVIURPWKLVSURVFULSWLRQ ODVHU EHDP VHQVRUV IRU XVH LQ VKHHW PHWDO DSSOLFDWLRQV  ,Q
SUHMXGJPHQWLQWHUHVWRQIXWXUHGDPDJHVIRUSHUVRQDOLQMXULHV 'LIIUDFWRUHFHLYHGDQLQIXVLRQRIFDSLWDOIURP*HQHUDO
6HH0,&+ &203 /$:6 $11 † 7KH0LFKLJDQ 0RWRUV &RUSRUDWLRQ WR GHYHORS FRPSHWLQJ HOHFWURRSWLFDO
FRXUWV KDYH KHOG WKDW D WULDO FRXUWjV LQWHUSUHWDWLRQ RI WKH PHDVXULQJ GHYLFHV IRU VKHHW PHWDO DSSOLFDWLRQV  'LIIUDFWR
SUHMXGJPHQW LQWHUHVW VWDWXWH LV D TXHVWLRQ RI ODZ ZKLFK LV GHYHORSHGLWVm=VHQVRUlZKLFKZDVXVHGLQV\VWHPVVXSSOLHG
UHYLHZHG GH QRYR  6HH $WWDUG Y &LWL]HQV ,QV &R  WRDXWRPRELOHFRPSDQLHVLQFRPSHWLWLRQZLWK3HUFHSWURQjV
1:G0LFK$SS SURGXFWV$WWKDWWLPHERWK3HUFHSWURQDQG'LIIUDFWRXVHG
WKHWHFKQRORJ\LQODUJHHQGRIOLQHV\VWHPV7KHFRPSHWLWLRQ
,Q VXSSRUW RI LWV GDPDJH FODLP 3HUFHSWURQ SUHSDUHG D FDXVHG ERWK RI WKHP WR H[SHULHQFH ILQDQFLDO GLIILFXOW\  $
VFKHGXOHRIWKHMREVWKDWLWFODLPHGWRKDYHORVWWR6$0,DVD PHUJHUZDVGLVFXVVHGLQHDUO\EXWWKHWDONVIDLOHGWR
UHVXOW RI WKH EUHDFK IRU D WRWDO HVWLPDWHG GDPDJHV RI RYHU UHVXOWLQDQDJUHHPHQW
 PLOOLRQ  7KH MXU\ DZDUGHG D OXPS VXP DPRXQW IRU
GDPDJHV DULVLQJ IURP 6$0,jV EUHDFK RI WKH QRQFRPSHWH 3U\RUIRUPHG6$0,LQPLGDQGGHVFULEHGLWDVDmVSLQ
DJUHHPHQW3HUFHSWURQVRXJKWSUHMXGJPHQWLQWHUHVWRQWKH RIIlRUmVLVWHUlFRPSDQ\RI'LIIUDFWR$OWKRXJK3U\RUOHIW
HQWLUHDPRXQWFDOFXODWHGIURPWKHGDWHWKDWWKHFRPSODLQWZDV 'LIIUDFWR KH KDG EHHQ LWV PRVW SUROLILF LQYHQWRU DQG
ILOHG6$0,DUJXHGWKDWQRLQWHUHVWVKRXOGEHDZDUGHGEXW FRQWLQXHGWREHLWVODUJHVWVLQJOHVKDUHKROGHU,QUHWXUQIRUD
WKDWDQ\LQWHUHVWVKRXOGDFFUXHRQO\RQDSURUDWDEDVLVIURP FDSLWDOLQYHVWPHQW'LIIUDFWRUHFHLYHGDSHUFHQWRZQHUVKLS
WKHWLPHWKDWWKHGDPDJHVDURVH7KHGLVWULFWFRXUWDJUHHGDQG LQWHUHVW LQ 6$0,  3U\RU RZQHG WKH UHPDLQLQJ  SHUFHQW
GHFLGHGWKDWLQWHUHVWZRXOGEHFDOFXODWHGSURUDWDRQWKHMREV 6$0, KDG D OLFHQVH ZLWK DQ RSWLRQ WR SXUFKDVH FHUWDLQ
IRUZKLFK3HUFHSWURQVRXJKWGDPDJHVIURPWKHGDWHRIHDFK 'LIIUDFWRWHFKQRORJ\ZKLFKZDVSDUWRIWKHODWHUSXUFKDVHE\
SXUFKDVHRUGHU$FFRUGLQJO\WKHDPHQGHGMXGJPHQWLQFOXGHG 3HUFHSWURQ
SUHMXGJPHQWLQWHUHVWLQWKHDPRXQWRI
:KHQ 'LIIUDFWR EHJDQ ORRNLQJ IRU D EX\HU LQ 
:HDUHFRQYLQFHG0LFKLJDQODZUHTXLUHVWKDWSUHMXGJPHQW QHJRWLDWLRQV UHVXPHG ZLWK 3HUFHSWURQ  3HUFHSWURQ DQG
LQWHUHVWEHFDOFXODWHGLQWKLVFDVHRQWKHHQWLUHMXGJPHQWIURP 'LIIUDFWRHQWHUHGLQWRD6DOHV$JUHHPHQWLQ0D\ZKLFK
 3HUFHSWURQ,QFY6HQVRU 1RV 1RV 3HUFHSWURQ,QFY6HQVRU 
$GDSWLYH0DFKLQHV $GDSWLYH0DFKLQHV

FORVHG LQ HVFURZ SHQGLQJ FRPSOHWLRQ RI RWKHU PDWWHUV WKH&RXUWFRPSHQVDWHGWKHSODLQWLIIIRUWKHORVVHVWKDWLW
LQFOXGLQJWKHQRQFRPSHWHDJUHHPHQWZLWK6$0,DQG3U\RU LQFXUUHGEHFDXVHRIWKHEUHDFKHVDOOHJHG
7KH6DOHV$JUHHPHQWSURYLGHG
3HUFHSWURQ FRQWHQGV WKDW LW ZDV DQG ZLOO FRQWLQXH WR EH
:+(5($6WKH6HOOHU>'LIIUDFWR@GHVLUHVWRVHOOWRWKH LUUHSDUDEO\KDUPHGEH\RQGWKHPRQHWDU\GDPDJHVDZDUGHG
%X\HU >3HUFHSWURQ@ FHUWDLQ DVVHWV GHVFULEHG LQ WKLV 3HUFHSWURQ HPSKDVL]HV WKH SURYLVLRQ LQ WKH QRQFRPSHWH
$JUHHPHQW ZKLFK DUH XVHG LQ WKH )LW 'LYLVLRQ RI DJUHHPHQWLWVHOIZKLFKVWDWHVWKDWDQ\YLRODWLRQRUWKUHDWHQHG
>'LIIUDFWRjV@EXVLQHVVWRGHVLJQGHYHORSPDQXIDFWXUH YLRODWLRQRIWKHDJUHHPHQWmZLOOFDXVHLUUHSDUDEOHLQMXU\lWKH
VHOODQGVHUYLFHHOHFWURRSWLFDOPHDVXULQJSURGXFWVXVHG UHPHG\DWODZmVKDOOEHLQDGHTXDWHlDQGm3HUFHSWURQVKDOOEH
WR GHWHUPLQH WKH GLPHQVLRQDO FKDUDFWHULVWLFV RI RU WKH HQWLWOHGWRWHPSRUDU\DQGSHUPDQHQWLQMXQFWLYHUHOLHIZLWKRXW
ORFDWLRQRIIRUPHGQRWPDFKLQHGSDUWVRUDVVHPEOLHV WKH QHFHVVLW\ RI SURYLQJ DFWXDO GDPDJHVl  7KLV ODQJXDJH
WKH m)LW 3URGXFWVl XSRQ WKH WHUPV DQG FRQGLWLRQV ZRXOG FDUU\ JUHDWHU VLJQLILFDQFH LI ZH ZHUH UHYLHZLQJ WKH
FRQWDLQHGLQWKLV$JUHHPHQW GHQLDORIDPRWLRQIRUSUHOLPLQDU\LQMXQFWLRQ
 5HO\LQJ XSRQ WKH H[WHQGHG QDWXUH RI 6$0,jV EUHDFK
3HUFHSWURQ DOVR DUJXHV WKDW WKH ORVV RI JRRGZLOO DQG WKH
6HOOHUVKDOODVHOOWUDQVIHUDQGGHOLYHUWRWKH%X\HU RSSRUWXQLW\WRFDSLWDOL]HRQWKDWJRRGZLOOZHUHLPSRVVLEOHWR
DOOWKH6HOOHUjVULJKWWLWOHDQGLQWHUHVWLQWKHWDQJLEOH PHDVXUH3HUFHSWURQVSHFLILFDOO\DUJXHGWKDWEHWZHHQ
DVVHWVGHVFULEHGRUOLVWHGLQ6FKHGXOHKHUHRIDQGLQLWV DQG6$0,EXLOWFRQVXPHUUHODWLRQVKLSVDQGDSURGXFW
WKHQH[LVWLQJWDQJLEOHDQGLQWDQJLEOHDVVHWVQHFHVVDU\IRU UHSXWDWLRQ IRU 6PDUW3UR[ ZKLFK 6$0, ZDV QRW IUHH WR GR
%X\HU >3HUFHSWURQ@ WR FRQGXFW    WKH EXVLQHVV RI XQWLODIWHUWKHQRQFRPSHWHDJUHHPHQWH[SLUHGLQsXO\
GHVLJQLQJ PDQXIDFWXULQJ VHOOLQJ DQG VHUYLFLQJ )LW 7KHEXONRIWKHGDPDJHVWKDW3HUFHSWURQVRXJKWIRUMREVLWORVW
3URGXFWV WR6$0,KRZHYHUZHUHIRUMREVWKDWZHUHQRWTXRWHGXQWLO
DIWHU WKH H[SLUDWLRQ RI WKH QRQFRPSHWH DJUHHPHQW
(PSKDVLVDGGHG7KHDVVHWV3HUFHSWURQSXUFKDVHGLQFOXGHG 3HUFHSWURQ KDV IDLOHG WR GHPRQVWUDWH DQG ZH FDQQRW
RZQHUVKLSRIRQHSDWHQWDQGDIXOO\SDLGSHUSHWXDOOLFHQVHWR FRQFOXGH WKDW WKH GLVWULFW FRXUWjV ILQGLQJ RI QR LUUHSDUDEOH
XVH  RWKHU SDWHQWV RSHUDWLRQ DQG PDLQWHQDQFH PDQXDOV LQMXU\ZDVFOHDUO\HUURQHRXV1RUKDV3HUFHSWURQVKRZQDQ
GRFXPHQWDWLRQ IRU 'LIIUDFWR V\VWHP FRQWUROOHUV LPDJH DEXVHRIGLVFUHWLRQLQWKHGLVWULFWFRXUWjVFRQFOXVLRQWKDWRQ
SURFHVVRUVDQGVHQVRUVIRULQOLQHLQVSHFWLRQV\VWHPVDQG WKHPHULWVWKLVFDVHGLGQRWSUHVHQWDSSURSULDWHFLUFXPVWDQFHV
LQIRUPDWLRQFRQFHUQLQJ'LIIUDFWRjVFXVWRPHUVDQGLQVWDOOHG IRU DQ LQMXQFWLRQ UHLQVWDWLQJ DQG H[WHQGLQJ 6$0,jV QRQ
VKHHW PHWDO V\VWHPV LQFOXGLQJ FXVWRPHU FRQWDFWV DQG WKH FRPSHWHDJUHHPHQW
SURMHFWPDQDJHUVjZRUNLQJILOHV'LIIUDFWRUHFHLYHGRYHU
PLOOLRQ LQ QRWHV DQG DERXW  SHUFHQW RI 3HUFHSWURQjV
RXWVWDQGLQJ VWRFN  6HSDUDWH QRQFRPSHWLWLRQ DJUHHPHQWV
ZHUHH[HFXWHGE\NH\'LIIUDFWRRIILFHUV 
6$0, DUJXHV WKDW VXFK UHOLHI VKRXOG EH EDUUHG E\ ODWFKHV LQ WKLV FDVH
EHFDXVH HTXLW\ GRHV QRW DLG WKRVH ZKR VOXPEHU RQ WKHLU ULJKWV 6HH 0HG;
,QF Y 5DQJHU  ) 6XSS   (' /D  :KLOH LW ZRXOG EH

7KH 6DOHV $JUHHPHQW DOVR LQFOXGHG UHVWULFWLYH FRYHQDQWV E\ ZKLFK UHOHYDQW WKDW 3HUFHSWURQ GLG QRW ILOH VXLW XQWLO QHDUO\ D \HDU DIWHU WKH QRQ
'LIIUDFWR DJUHHG QRW WR FRPSHWH LQ WKH )LW %XVLQHVV DQG 3HUFHSWURQ FRPSHWH DJUHHPHQW KDG H[SLUHG ZH QHHG QRW GHFLGH ZKHWKHU LW FRXOG EH
DJUHHG QRW WR FRPSHWH LQ WKH )LQLVK %XVLQHVV IRU D ILYH\HDU SHULRG 7KH D FRPSOHWH EDU LQ WKLV FDVH
 3HUFHSWURQ,QFY6HQVRU 1RV 1RV 3HUFHSWURQ,QFY6HQVRU 
$GDSWLYH0DFKLQHV $GDSWLYH0DFKLQHV

IORXWHG WKH WHUPV RI D QRQFRPSHWLWLRQ DJUHHPHQW WKH $VSDUWRIWKHGHDO3HUFHSWURQLQVLVWHGXSRQDQGQHJRWLDWHG
FRXUW VKRXOG EH DEOH WR IDVKLRQ DSSURSULDWH HTXLWDEOH D QRQFRPSHWH DJUHHPHQW ZLWK 6$0, DQG 3U\RU  ,Q
UHOLHIGHVSLWHWKHIDFWWKDWWKHSDUWLHVGLGQRWH[SUHVVO\ H[FKDQJH6$0,UHFHLYHGDUHGXFWLRQLQWKHRSWLRQ
SURYLGHIRUVXFKUHOLHILQWKHLUDJUHHPHQW)XUWKHUPRUH SXUFKDVHSULFHIRUWKH'LIIUDFWRWHFKQRORJ\LWKDGOLFHQVHGDV
DV FRXUWV DOORZLQJ H[WHQVLRQV RI WKH WHUPV RI ZHOO DV WKH ULJKW WR EX\ EDFN 6$0, VKDUHV RZQHG E\
QRQFRPSHWLWLRQ DJUHHPHQWV KDYH IRXQG LW PD\ QRW EH 'LIIUDFWR  7KH UHOHYDQW SRUWLRQ RI WKH 3U\RU6$0, QRQ
SRVVLEOHWRGHWHUPLQHPRQHWDU\GDPDJHVZLWKDQ\GHJUHH FRPSHWHDJUHHPHQWGDWHGsXO\SURYLGHGWKDW
RIFHUWDLQW\:KHUHWKLVLVWKHFDVHWKHEUHDFKLQJSDUW\
VKRXOG QRW EH UHZDUGHG EHFDXVH WKH DJUHHPHQW KDV :LWKRXW WKH SULRU ZULWWHQ FRQVHQW RI 3HUFHSWURQ
DOUHDG\H[SLUHG QHLWKHU3U\RUQRU6$0,VKDOOGLUHFWO\RULQGLUHFWO\IRU
DSHULRGRIVL[W\PRQWKVIURPWKHGDWHKHUHRIDQG
,GFLWDWLRQRPLWWHG7KLVFRXUWKDVREVHUYHGWKDWm7KHORVV DQ\ZKHUHLQWKHZRUOGFRPSHWHZLWK3HUFHSWURQLQWKH
RI FXVWRPHU JRRGZLOO RIWHQ DPRXQWV WR LUUHSDUDEOH LQMXU\ EXVLQHVVRIGHVLJQLQJGHYHORSLQJPDQXIDFWXULQJVHOOLQJ
EHFDXVHWKHGDPDJHVIORZLQJIURPVXFKORVVHVDUHGLIILFXOWWR DQGVHUYLFLQJHOHFWURRSWLFDOPHDVXULQJSURGXFWVXVHG
FRPSXWH6LPLODUO\WKHORVVRIIDLUFRPSHWLWLRQWKDWUHVXOWV L WR JDJH FDU ERGLHV WUXFN ERGLHV ZKLWH JRRGV
IURPWKHEUHDFKRIDQRQFRPSHWLWLRQFRYHQDQWLVOLNHO\WR IXUQLWXUHRUPDMRUVXEDVVHPEOLHVRIDQ\RIWKHIRUHJRLQJ
LUUHSDUDEO\KDUPDQHPSOR\HUl%DVLFRPSXWHU&RUSY6FRWW RU LL LQ WKH SURGXFW DSSOLFDWLRQV NQRZQ DV mZKHHO
 )G   WK &LU  FLWDWLRQ RPLWWHG DOLJQPHQWlRUmELQSLFNLQJl:LWKRXWWKHSULRUZULWWHQ
SUHOLPLQDU\LQMXQFWLRQHQWHUHGLQHPSOR\PHQWFRQWH[W FRQVHQW RI 3HUFHSWURQ QHLWKHU 3U\RU QRU 6$0, VKDOO
GLUHFWO\ RU LQGLUHFWO\ IRU D SHULRG RI WKLUW\VL[ 
3HUFHSWURQ UHTXHVWHG D PRQWK LQMXQFWLRQ WR IXUWKHU PRQWKVIURPWKHGDWHKHUHRIDQGDQ\ZKHUHLQWKHZRUOG
UHPHG\6$0,jVEUHDFKRIWKHQRQFRPSHWHDJUHHPHQWGXULQJ FRPSHWH ZLWK 3HUFHSWURQ LQ WKH EXVLQHVV RI
WKH SHULRG EHWZHHQ 0DUFK  ZKHQ 6$0, EHJDQ PDQXIDFWXULQJ VHOOLQJ DQG VHUYLFLQJ HOHFWURRSWLFDO
GHYHORSLQJ6PDUW3UR[DQGsXO\ZKHQWKHQRQFRPSHWH PHDVXULQJ SURGXFWV XVHG WR ORFDWH FDU ERGLHV WUXFN
DJUHHPHQW H[SLUHG  7KH GLVWULFW FRXUW GHQLHG WKH PRWLRQ ERGLHVZKLWHJRRGVIXUQLWXUHRUPDMRUVXEDVVHPEOLHVRI
VWDWLQJ DQ\RIWKHIRUHJRLQJ
,W DSSHDUV WKDW WKH &RXUW LV FRQVWUDLQHG WR GHQ\ WKH (PSKDVLVDGGHG7KHDJUHHPHQWH[SOLFLWO\VWDWHGWKDWWKH
PRWLRQIRUDOORIWKHUHDVRQVEULHIHGDQGDUJXHGE\WKH SDUWLHVFRQVLGHUHGWKHUHVWULFWLRQVWREHIDLUDQGUHDVRQDEOH
GHIHQVHKHUH
$QG,DOVRPXVWVD\WKDWLWGRHVQjWDSSHDUWKDWLWZRXOG
EH DSSURSULDWH IRU WKLV &RXUW WR DWWHPSW WR DSSO\ WKH m)LQLVK %XVLQHVVl ZDV GHILQHG WR EH WKH EXVLQHVV RI WKH GHVLJQ
VWDQGDUGVRISUHOLPLQDU\LQMXQFWLYHUHOLHIWRDQLQMXQFWLRQ PDQXIDFWXUH VDOH DQG VHUYLFLQJ RI QRQFRQWDFW PHDVXUHPHQW HTXLSPHQW
UHTXHVWHGDWWKLVSRLQWDIWHUSODLQWLIIKDVEHHQ,ZRXOG XWLOL]HG E\ FXVWRPHUV LQ GHWHFWLQJ DQG HOLPLQDWLQJ VXUIDFH GHIHFWV LQ WKH
KDYHWKRXJKWPDGHZKROHE\GDPDJHV ILQLVK RI IRUPHG SDUWV 6$0, DUJXHV WKDW 3HUFHSWURQjV DJUHHPHQW KDG
QRWKLQJ WR GR ZLWK WKH SURWHFWLRQ RI WKH DVVHWV SXUFKDVHG IURP 'LIIUDFWR
DQG FKDUDFWHUL]HV WKHVH UHFLSURFDO FRYHQDQWV WR EH D GLYLVLRQ RI WKH PDUNHW
$QG , GRQjW VHH WKDW , FRXOG ILQG LUUHSDUDEOH KDUP DQG WKH HOLPLQDWLRQ RI FRPSHWLWLRQ ,W ZDV 6$0,jV VHSDUDWH QRQFRPSHWH
LQDVPXFKDVWKHMXU\KDVTXLWHDGHTXDWHO\LWDSSHDUVWR DJUHHPHQW KRZHYHU WKDW 3HUFHSWURQ FODLPHG 6$0, EUHDFKHG DQG 6$0,
FKDOOHQJHG DV D YLRODWLRQ RI DQWLWUXVW ODZ
 3HUFHSWURQ,QFY6HQVRU 1RV 1RV 3HUFHSWURQ,QFY6HQVRU 
$GDSWLYH0DFKLQHV $GDSWLYH0DFKLQHV

&RQVLGHUDEOHWHVWLPRQ\ZDVDGGXFHGDWWULDOFRQFHUQLQJWKH 6$0, PDLQWDLQHG WKDW 3HUFHSWURQ XQHWKLFDOO\ DQG
VFRSHRIWKLVQRQFRPSHWHDJUHHPHQWDQGZKHWKHULWZDVD IUDXGXOHQWO\ PLVUHSUHVHQWHG WKH VFRSH RI WKH QRQFRPSHWH
UHDVRQDEOHUHVWUDLQWRQFRPSHWLWLRQDVDOHJLWLPDWHSDUWRIWKH DJUHHPHQWLQLWVOHWWHUWR&KU\VOHUDQGLQFRQWDFWVZLWKRWKHU
SXUFKDVHRIWKH'LIIUDFWRDVVHWV FXVWRPHUV&RQFHGLQJDPELJXLW\LQWKHOHWWHU3HUFHSWURQjV
ZLWQHVVHVWHVWLILHGWKDWWKHOHWWHUZDVQRWLQWHQGHGWRPLVOHDG
8QWLO6$0,IRFXVHGLWVHIIRUWVRQVPDOOVHQVRUVIRU EXW UDWKHU WR DVVXUH FXVWRPHUV WKDW LW ZRXOG FRQWLQXH WR
PDFKLQHGSDUWVURERWJXLGDQFHFRQFHSWVDQGQHZPDFKLQH VHUYLFHWKHLQVWDOOHG'LIIUDFWRVHQVRUVXQGHUWKHSXUFKDVHDQG
WRROV%\ODWHKRZHYHU6$0,ZDVLQVHULRXVILQDQFLDO QRQFRPSHWH DJUHHPHQWV  $OWKRXJK 6$0, SURPSWO\
WURXEOHDQGVKLIWHGLWVIRFXV%\$SULO6$0,EHJDQ UHVSRQGHG ZLWK D WKRURXJK PHPRUDQGXP VHWWLQJ IRUWK LWV
GHYHORSLQJLWV6PDUW3UR[VHQVRUVDQGFRPSRQHQWVIRUXVHLQ YLHZ RI WKH QRQFRPSHWH DJUHHPHQW 6$0, FODLPHG WKDW
JDJLQJ VKHHW PHWDO SDUWV DQG DVVHPEOLHV  6$0, SXEOLFO\ &KU\VOHUDQG*HQHUDO0RWRUVGHOD\HGRUGLGQRWSXUFKDVHLWV
LQWURGXFHG WKH 6PDUW3UR[ V\VWHP LQ 6HSWHPEHU  DQG 6PDUW3UR[ V\VWHP EHFDXVH RI WKH PLVUHSUHVHQWDWLRQV  7KH
EHJDQPDUNHWLQJLWWKURXJKEURFKXUHVGHPRQVWUDWLRQVDQG MXU\IRXQGWKDW6$0,YLRODWHGWKHQRQFRPSHWHDJUHHPHQW
WHVWLQVWDOODWLRQV7KH6PDUW3UR[V\VWHPZDVGHVLJQHGWREH DQG FRXOG UHDVRQDEO\ KDYH IRXQG WKDW 3HUFHSWURQ GLG QRW
LQVWDOOHG mXSVWUHDPl LQ WKH DVVHPEO\ SURFHVV DQG ZDV IUDXGXOHQWO\ RU XQHWKLFDOO\ LQWHUIHUH ZLWK 6$0,jV EXVLQHVV
PDUNHWHG DV DQ DOWHUQDWLYH WR HQGOLQH VHQVRU V\VWHPV OLNH H[SHFWDQFLHV
WKRVHVROGE\3HUFHSWURQ3HUFHSWURQREMHFWHGDQGH[SUHVVHG
LWVEHOLHIWKDW6$0,DQG3U\RUKDGYLRODWHGWKHQRQFRPSHWH % 3HUFHSWURQjV0RWLRQIRU(TXLWDEOH([WHQVLRQRIWKH
DJUHHPHQWE\XVLQJ6PDUW3UR[VHQVRUVLQV\VWHPVIRUJDJLQJ $JUHHPHQW
DXWRPRELOHDVVHPEOLHV
:HUHYLHZWKHGLVWULFWFRXUWjVJUDQWRUGHQLDORILQMXQFWLYH
3HUFHSWURQ ZURWH D OHWWHU WR &KU\VOHU &RUSRUDWLRQ DQG UHOLHIIRUDQDEXVHRIGLVFUHWLRQ6HH,QUH'XEOLQ6HF,QF
FRPPXQLFDWHGWRRWKHUFXVWRPHUVFRQFHUQLQJLWVSXUFKDVHRI )GWK&LUFHUWGHQLHG86
'LIIUDFWRjVEXVLQHVVDQGWKHQRQFRPSHWHDJUHHPHQWVZLWK $GLVWULFWFRXUWDEXVHVLWVGLVFUHWLRQZKHQLWUHOLHV
'LIIUDFWR6$0,DQG3U\RU6$0,EHOLHYHGWKDW3HUFHSWURQ XSRQFOHDUO\HUURQHRXVILQGLQJVRUZKHQLWLPSURSHUO\DSSOLHV
PLVUHSUHVHQWHGWKHQRQFRPSHWHDJUHHPHQWDQGVHQW&KU\VOHU WKH ODZ  6HH &6; 7UDQVS ,QF Y 7HQQHVVHH 6WDWH %G RI
DQH[WHQVLYHUHVSRQVHVWDWLQJLWVSRVLWLRQ6$0,FODLPHGWKDW (TXDOL]DWLRQ  )G   WK &LU   7KH
WKHPLVUHSUHVHQWDWLRQVDQGWKUHDWVRIOLWLJDWLRQFDXVHGGHOD\V 0LFKLJDQ &RXUW RI $SSHDOV KDV KHOG mWKDW LQ DSSURSULDWH
LQ6PDUW3UR[RUGHUV7KLVZDVWKHEDVLVRI6$0,jVWRUWLRXV FLUFXPVWDQFHVWKHWHUPRIDQRQFRPSHWLWLRQDJUHHPHQWPD\
LQWHUIHUHQFHFODLP EHH[WHQGHGEH\RQGLWVVWDWHGH[SLUDWLRQGDWHl7KHUPDWRRO
&RUSY%RU]\P1:G0LFK$SS
3HUFHSWURQILOHGVXLWLQsXQHDOPRVWD\HDUDIWHUWKH
QRQFRPSHWHDJUHHPHQWKDGH[SLUHGLQsXO\3HUFHSWURQ 6SHFLILF SHUIRUPDQFH RI DQ DJUHHPHQW PD\ EH DQ
VXHG 'LIIUDFWR 6$0, DQG 3U\RU EXW ODWHU YROXQWDULO\ DSSURSULDWHUHPHG\ZKHUHHQIRUFHPHQWRIWKHSURPLVHLV
GLVPLVVHG 'LIIUDFWR DQG DQ\ FODLP WKDW WKH QRQFRPSHWH QHFHVVDU\WRDYRLGLQMXVWLFH,QFDVHVZKHUHDSDUW\KDV


&DUOVRQ FRQFHGHG DW WULDO WKDW 6$0, FRXOG KDYH XVHG WKH 6PDUW3UR[
VHQVRUV LQ RWKHU DSSOLFDWLRQV WKDW ZRXOG QRW KDYH YLRODWHG WKH QRQ UHVXOWHG LQ LQMXU\ WR WKH SODLQWLII 6HH 0RQHWWH Y $0 %DNLQJ &R 
FRPSHWH DJUHHPHQW )G   WK &LU 
 3HUFHSWURQ,QFY6HQVRU 1RV 1RV 3HUFHSWURQ,QFY6HQVRU 
$GDSWLYH0DFKLQHV $GDSWLYH0DFKLQHV

 1HZ7ULDO FODXVH ZDV EUHDFKHG WKURXJK WKH XVH RI WKH =VHQVRU
WHFKQRORJ\  6$0, UDLVHG VHYHUDO GHIHQVHV DQG DVVHUWHG
)RU PDQ\ RI WKH VDPH UHDVRQV GLVFXVVHG DERYH 6$0, FRXQWHUFODLPV DJDLQVW 3HUFHSWURQ DOOHJLQJ WKDW WKH QRQ
DUJXHG LQ WKH DOWHUQDWLYH WKDW WKH YHUGLFW ZDV DJDLQVW WKH FRPSHWHDJUHHPHQWYLRODWHGDQWLWUXVWODZDQGWKDW3HUFHSWURQ
ZHLJKWRIWKHHYLGHQFH:HUHYLHZWKHGHFLVLRQWRGHQ\D KDG WRUWLRXVO\ LQWHUIHUHG ZLWK LWV EXVLQHVV UHODWLRQVKLSV RU
PRWLRQIRUQHZWULDOXQGHUWKHDEXVHRIGLVFUHWLRQVWDQGDUG H[SHFWDQFLHVFRQFHUQLQJWKH6PDUW3UR[V\VWHP7ULDOEHJDQ
6HH *DIIRUG Y *HQHUDO (OHF &R  )G   WK 2FWREHUDQGFRQWLQXHGWKURXJK'HFHPEHU
&LU,QUHYLHZLQJWKHGHQLDORIDQHZWULDOEURXJKWRQ 7KHMXU\UHWXUQHGDVSHFLDOYHUGLFWDGGUHVVLQJWKHFODLPVDQG
WKHJURXQGVWKDWWKHYHUGLFWZDVDJDLQVWWKHFOHDUZHLJKWRI FRXQWHUFODLPVEHJLQQLQJZLWKWKHIROORZLQJTXHVWLRQVDQG
WKH HYLGHQFH ZH DFFHSW WKH YHUGLFW LI LW ZDV UHDVRQDEO\ DQVZHUV
UHDFKHG6HH5LGJZD\)GDW
 'LG3HUFHSWURQHVWDEOLVKE\DSUHSRQGHUDQFHRIWKH
&HUWDLQO\ WKHUH ZDV FRQIOLFWLQJ HYLGHQFH SUHVHQWHG HYLGHQFHWKDWWKH$JUHHPHQW1RWWR&RPSHWHDPRQJ
FRQFHUQLQJZKHWKHUWKHQRQFRPSHWHDJUHHPHQWZDVDQFLOODU\ 3HUFHSWURQ6$0,DQG'U3U\RUm$JUHHPHQW1RW
WRWKHWUDQVDFWLRQDQGDUHDVRQDEOHUHVWULFWLRQRQFRPSHWLWLRQ WR &RPSHWHl ZDV UHDVRQDEOH HQIRUFHDEOH
+DYLQJUHYLHZHGWKHHYLGHQFHKRZHYHUZHFRQFOXGHWKDWWKH LQFOXGLQJSHUPLWWHGXQGHUWKHDQWLWUXVWODZV"
MXU\jV YHUGLFW ZDV UHDVRQDEO\ UHDFKHG DQG WKDW WKH GLVWULFW $QVZHU<(6\HVRUQR
FRXUWGLGQRWDEXVHLWVGLVFUHWLRQE\GHQ\LQJ6$0,jVPRWLRQ ,I\RXUDQVZHULVmQRlJRWR4XHVWLRQRWKHUZLVH
IRUQHZWULDORQWKHEUHDFKRIFRQWUDFWFODLP:LWKUHVSHFWWR JRWR4XHVWLRQ
WKHDQWLWUXVWFODLP6$0,DFNQRZOHGJHVWKDWWKHPRWLRQIRU
QHZWULDOZDVGHSHQGHQWXSRQWKHEUHDFKRIFRQWUDFWFODLP  ,I\RXUDQVZHUWR4XHVWLRQLVm\HVlGLG3HUFHSWURQ
6LQFH ZH DIILUP WKH GHQLDO RI WKH UHQHZHG PRWLRQ IRU HVWDEOLVK E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH WKDW
MXGJPHQWDVDPDWWHURIODZRUIRUQHZWULDOZLWKUHVSHFWWR 6$0,EUHDFKHGWKH$JUHHPHQW1RWWR&RPSHWH"
WKH EUHDFK RI FRQWUDFW FODLP ZH DIILUP WKH GHFLVLRQ ZLWK $QVZHU<(6\HVRUQR
UHVSHFWWR6$0,jVDQWLWUXVWFODLPDVZHOO
7KHMXU\IXUWKHUIRXQGWKDW3HUFHSWURQVXIIHUHGGDPDJHVDVD
1RQHWKHOHVV 6$0, FRQWLQXHV WR VHHN D QHZ WULDO RQ LWV SUR[LPDWHDQGIRUHVHHDEOHUHVXOWRI6$0,jVEUHDFKDQGQRW
FODLP IRU WRUWLRXV LQWHUIHUHQFH ZLWK EXVLQHVV UHODWLRQVKLSV DVDUHVXOWRI3HUFHSWURQjVRZQIDLOXUHWRPLWLJDWHLWVGDPDJHV
8QGHU 0LFKLJDQ ODZ WKH LQWHUIHUHQFH ZLWK D EXVLQHVV 7KHMXU\WKHQDZDUGHG3HUFHSWURQDOXPSVXPRI
UHODWLRQVKLS mPXVW EH LPSURSHU LQ DGGLWLRQ WR EHLQJ RQLWVFODLPDJDLQVW6$0,7KHMXU\DOVRIRXQGQRVHSDUDWH
LQWHQWLRQDO,PSURSHUPHDQVLOOHJDOXQHWKLFDORUIUDXGXOHQWl EUHDFKRIFRQWUDFWE\3U\RU&RQVLVWHQWZLWKLWVGHFLVLRQRQ
0LFKLJDQ 3RGLDWULF 0HG $VVjQ Y 1DWLRQDO )RRW &DUH WKHEUHDFKRIFRQWUDFWFODLPWKHMXU\DOVRIRXQG6$0,KDG
3URJUDP ,QF  1:G   0LFK $SS  IDLOHG WR SURYH HLWKHU  WKDW WKH QRQFRPSHWH DJUHHPHQW
FRQVWLWXWHGDQXQUHDVRQDEOHUHVWUDLQWRIWUDGHLQYLRODWLRQRI
IHGHUDO DQG VWDWH DQWLWUXVW ODZV RU  WKDW 3HUFHSWURQ

7KH HOHPHQWV RI WKLV FODLP DUH  WKH H[LVWHQFH RI D YDOLG EXVLQHVV
LPSURSHUO\ LQWHUIHUHG ZLWK 6$0,jV EXVLQHVV UHODWLRQVKLSV
UHODWLRQ RU H[SHFWDQF\  WKDW WKH GHIHQGDQW NQHZ RI WKH UHODWLRQVKLS RU ZLWKFXVWRPHUVRUSURVSHFWLYHFXVWRPHUV7KHGLVWULFWFRXUW
H[SHFWDQF\  WKDW WKH GHIHQGDQW LQWHQWLRQDOO\ LQWHUIHUHG E\ LPSURSHUO\ HQWHUHGMXGJPHQWLQDFFRUGDQFHZLWKWKHVSHFLDOYHUGLFWRQ
LQGXFLQJ RU FDXVLQJ D EUHDFK RU WHUPLQDWLRQ RI WKH UHODWLRQVKLS RU 'HFHPEHU
H[SHFWDQF\ DQG  WKDW GHIHQGDQWjV LPSURSHU RU XQMXVWLILHG LQWHUIHUHQFH
 3HUFHSWURQ,QFY6HQVRU 1RV 1RV 3HUFHSWURQ,QFY6HQVRU 
$GDSWLYH0DFKLQHV $GDSWLYH0DFKLQHV

,QLWVSRVWWULDOPRWLRQV3HUFHSWURQPRYHGIRUSUHMXGJPHQW SURGXFWOLQHEHFDXVHLWZRXOGKDYHEHHQLQHIILFLHQWWRNHHS
LQWHUHVW IURP WKH GDWH WKH FRPSODLQW ZDV ILOHG DQG IRU DQ VHSDUDWHSURGXFWOLQHV5HO\LQJXSRQ3HUFHSWURQjVDFFRXQWLQJ
HTXLWDEOH H[WHQVLRQ RI WKH 6$0, QRQFRPSHWH DJUHHPHQW WUHDWPHQW RI WKH DFTXLUHG DVVHWV 6$0, DOVR DUJXHG WKDW
6$0, PRYHG IRU MXGJPHQW DV D PDWWHU RI ODZ RU LQ WKH 3HUFHSWURQDFWXDOO\DEDQGRQHGWKH'LIIUDFWRWHFKQRORJ\,Q
DOWHUQDWLYH IRU D QHZ WULDO RQ ERWK WKH EUHDFK RI FRQWUDFW UHVSRQVH 3HUFHSWURQ RIIHUHG HYLGHQFH WKDW WKH LQWDQJLEOH
FODLP DQG LWV FRXQWHUFODLPV  6$0, DUJXHG DV LW GRHV RQ DVVHWVZHUHRQO\ZULWWHQRIIWRFRQVHUYDWLYHO\UHSUHVHQWWKH
DSSHDO WKDW WKHUH ZDV QR EDVLV WR FRQFOXGH WKDW WKH QRQ YDOXH RI WKH FRPSDQ\ DQG WKH OLNHOLKRRG WKDW WKRVH DVVHWV
FRPSHWHDJUHHPHQWZDVDUHDVRQDEOHUHVWUDLQWFRQVLVWHQWZLWK ZRXOGJHQHUDWHIXWXUHLQFRPH7KHDFFRXQWLQJWUHDWPHQWRI
DQWLWUXVW ODZ  7KH GLVWULFW FRXUW KHDUG RUDO DUJXPHQW WKHERRNYDOXHRIWKHDVVHWVUDLVHGDQLVVXHRIIDFWFRQFHUQLQJ
FRQFHUQLQJWKHVHPRWLRQVDQGIRUWKHUHDVRQVVWDWHGRQWKH 3HUFHSWURQjVXVHRIWKHDVVHWV$OWKRXJK6$0,DUJXHGWKDW
UHFRUGGHQLHG6$0,jVPRWLRQGHQLHG3HUFHSWURQjVUHTXHVW DQ\ MXVWLILFDWLRQ IRU WKH QRQFRPSHWH DJUHHPHQW FHDVHG WR
IRU DQ H[WHQVLRQ RI WKH DJUHHPHQW DQG JUDQWHG LQ SDUW WKH H[LVWZKHQ3HUFHSWURQDEDQGRQHGWKHPDQXIDFWXUHDQGVDOHRI
UHTXHVWIRUSUHMXGJPHQWLQWHUHVW$QDPHQGHGMXGJPHQWZDV 'LIIUDFWRjV=VHQVRUVUHDVRQDEOHPLQGVFRXOGGLIIHULQWKDW
HQWHUHGRQ0D\%RWK6$0,DQG3HUFHSWURQDSSHDO UHJDUG
)LQDOO\6$0,FRQWHQGVWKDWWKHQRQFRPSHWHDJUHHPHQW
ZDVQRWRIDUHDVRQDEOHGXUDWLRQ7KHGXUDWLRQDOVFRSHRID
FRYHQDQW QRW WR FRPSHWH PXVW EH UHDVRQDEO\ FDOFXODWHG WR
SURWHFWWKHOHJLWLPDWHLQWHUHVWRIWKHSXUFKDVHULQZKDWLWKDV
SXUFKDVHG  6HH 9HUVRQ  ) 6XSS DW   7KDW
GHWHUPLQDWLRQ PD\ LQFOXGH ZKHWKHU WKH DJUHHG SHULRG ZDV
UHDVRQDEO\QHFHVVDU\IRUWKHSXUFKDVHUWRHVWDEOLVKLWVHOIDVD
IXOOIOHGJHGPDUNHWSDUWLFLSDQWDVZHOODVWKHWLPHUHTXLUHGWR
UHYHUVHHQJLQHHUWKHWHFKQRORJ\LQTXHVWLRQ6HHLGDW
:KLOH WKHUH ZDV HYLGHQFH WKDW LW ZRXOG WDNH OHVV WKDQ WZR
\HDUVWRGHYHORSDSURGXFWmIURPVFUDWFKlWRFRPSHWHZLWK
3HUFHSWURQjVVHQVRUVWKHUHZDVDOVRWHVWLPRQ\WKDWWKHILYH
\HDU UHVWULFWLRQ ZDV UHDVRQDEOH LQ OLJKW RI WKH WRROLQJ DQG
VHOOLQJF\FOHVLQWKHDXWRPRWLYHLQGXVWU\5HDVRQDEOHPLQGV
FRXOG GLIIHU DERXW ZKHWKHU ILYH \HDUV ZDV UHDVRQDEO\
FDOFXODWHGWRSURWHFW3HUFHSWURQjVDELOLW\WRUHDOL]HWKHEHQHILW
RIWKHWUDQVDFWLRQ
 3HUFHSWURQ,QFY6HQVRU 1RV 1RV 3HUFHSWURQ,QFY6HQVRU 
$GDSWLYH0DFKLQHV $GDSWLYH0DFKLQHV

ZDV GULYLQJ WKHP ERWK RXW RI EXVLQHVV  6XFK PRWLYDWLRQ ,,
DORQH GRHV QRW PDNH WKH QRQFRPSHWH DJUHHPHQW DQ
XQUHDVRQDEOHUHVWUDLQWRQFRPSHWLWLRQm/HJLWLPDWHUHDVRQV $ 6$0,jV0RWLRQIRUsXGJPHQWDVD0DWWHURI/DZRU
H[LVW WR XSKROG QRQFRPSHWLWLRQ FRYHQDQWV HYHQ WKRXJK E\ IRUD1HZ7ULDO
QDWXUHWKH\QHFHVVDULO\UHVWUDLQWUDGHWRVRPHGHJUHH7KH
UHFRJQL]HGEHQHILWVRIUHDVRQDEO\HQIRUFHGQRQFRPSHWLWLRQ sXGJPHQWDVD0DWWHURI/DZ
FRYHQDQWVDUHE\QRZEH\RQGTXHVWLRQl/HNWUR9HQG
)GDW :H UHYLHZ WKH GLVWULFW FRXUWjV GHFLVLRQ RQ D PRWLRQ IRU
MXGJPHQW DV D PDWWHU RI ODZ GH QRYR DQG XVH WKH VDPH
6$0, DUJXHV WKDW WKH QRQFRPSHWH DJUHHPHQW ZDV QRW VWDQGDUGV DV WKH GLVWULFW FRXUW  6HH . 7 (QWHUV ,QF Y
DQFLOODU\ WR WKH WUDQVDFWLRQ EHFDXVH 3HUFHSWURQ SXUFKDVHG =XULFK,QV&R)GWK&LU,QGLYHUVLW\
QRWKLQJPRUHWKDQWKH=VHQVRUWHFKQRORJ\ZKLFKZDVQRW FDVHVWKHGHQLDORIDPRWLRQIRUMXGJPHQWDVDPDWWHURIODZ
XVHGLQWKH6PDUW3UR[V\VWHP7KHUHZDVHYLGHQFHKRZHYHU EDVHGXSRQWKHVXIILFLHQF\RIWKHHYLGHQFHLVJRYHUQHGE\WKH
WKDWFRXOGOHDGUHDVRQDEOHPLQGVWRFRQFOXGHWKDW3HUFHSWURQ ODZ RI WKH IRUXP VWDWH  6HH 5LGJZD\ Y )RUG 'HDOHU
SXUFKDVHG'LIIUDFWRjVFXVWRPHUEDVHDQGJRRGZLOOLQWKHILW &RPSXWHU 6HUYV ,QF  )G   WK &LU 
EXVLQHVV3HUFHSWURQSXUFKDVHGWKHULJKWWRVHUYLFH'LIIUDFWR 8QGHU0LFKLJDQODZZKLFKLVQHDUO\LGHQWLFDOWRWKHIHGHUDO
VHQVRUVDQGGHDOZLWK'LIIUDFWRjVFXVWRPHUVLQDQHIIRUWWR VWDQGDUGmDMXGJPHQWDVDPDWWHURIODZµPD\QRWEHJUDQWHG
PDNH'LIIUDFWRjVJRRGZLOOLWVRZQ6$0,GLVSXWHGZKHWKHU
JRRGZLOOZDVSDUWRIWKHWUDQVDFWLRQVLQFHLWZDVQRWOLVWHG
DPRQJWKHDVVHWVLQWKH6DOHV$JUHHPHQW7KHFDVH6$0, 
3HUFHSWURQ RSSRVHG 6$0,jV SRVWWULDO PRWLRQ IRU MXGJPHQW DV D
UHOLHVXSRQKRZHYHUDFWXDOO\IRXQGWKDWWKHIDFWWKDWUHOHYDQW PDWWHU RI ODZ XQGHU )HG 5 &LY 3 E RQ WKH JURXQGV WKDW LW ZDV
ILQDQFLDOGRFXPHQWVGLGQRWUHIOHFWWKHWUDQVIHURIJRRGZLOO SURFHGXUDOO\ ZDLYHG E\ 6$0,jV IDLOXUH WR PDNH D PRWLRQ IRU MXGJPHQW DV
ZDVQRWSDUWLFXODUO\SUREDWLYH6HH 9HUVRQ:LONLQV/WGY D PDWWHU RI ODZ mDW WKH FORVH RI DOO WKH HYLGHQFHl 6HH sDFNVRQ Y &LW\ RI
$OOLHG 3URGV &RUS  ) 6XSS   1' ,OO  &RRNHYLOOH  )G   WK &LU  7HFKQLFDO GHYLDWLRQ IURP

5DWKHU LW LV WKH WRWDOLW\ RI WKH FLUFXPVWDQFHV ZKLFK WKH UHTXLUHPHQW WKDW D PRWLRQ EH PDGH DW WKH FORVH RI DOO WKH HYLGHQFH LV
QRW IDWDO KRZHYHU ZKHQ WKH SXUSRVH IRU WKH UHTXLUHPHQW KDV EHHQ VHUYHG
GHWHUPLQHV ZKHWKHU JRRGZLOO ZDV D FRPSRQHQW RI WKH 6HH 5LYHUYLHZ ,QYHVWPHQWV ,QF Y 2WWDZD &RPP ,PSURYHPHQW &RUS
WUDQVDFWLRQ6HHLG  )G   WK &LU  %R\QWRQ Y 75: ,QF  )G 
 WK &LU  HQ EDQF :H ILQG DV GLG WKH GLVWULFW FRXUW WKDW
6$0, DOVR DUJXHV WKDW WKHUH FRXOG EH QR WUDQVIHU RI WKH SXUSRVH RI 5XOH EjV UHTXLUHPHQW ZDV VHUYHG LQ WKLV FDVH 7KH
JRRGZLOO EHFDXVH 3HUFHSWURQ GLG QRW SXUFKDVH WKH GLVWULFW FRXUW FRQVLGHUHG WKH PRWLRQ DW WKH FORVH RI WKH UHOHYDQW SURRIV DQG

PDQXIDFWXULQJIDFLOLWLHVHTXLSPHQWRULQYHQWRU\WRFRQWLQXH WKH UHEXWWDO ZLWQHVVjV WHVWLPRQ\ ZDV EULHI DQG LQFRQVHTXHQWLDO WR WKH
LVVXH 6HH 5LYHUYLHZ  )G DW 
'LIIUDFWRjVEXVLQHVVDVDmJRLQJFRQFHUQl:KLOH3HUFHSWURQ
GLGQRWPDQXIDFWXUHDQ\'LIIUDFWR=VHQVRUVRUVHOODQ\QHZ 
6$0, WLWOHG WKH PRWLRQ DV RQH IRU MXGJPHQW QRWZLWKVWDQGLQJ WKH
LQVWDOODWLRQV ZLWK =VHQVRUV LW SXUFKDVHG WKH WDQJLEOH DQG YHUGLFW EXW WKDW LV WKH VDPH DV WKH 5XOH E PRWLRQ QRZ WHUPHG D
LQWDQJLEOHDVVHWVQHFHVVDU\WRFRQGXFW'LIIUDFWRjVILWEXVLQHVV PRWLRQ IRU MXGJPHQW DV D PDWWHU RI ODZ 6HH sDFNVRQ  )G DW 
LWSURYLGHGVHUYLFHWR'LIIUDFWRjVLQVWDOOHGEDVHRIFXVWRPHUV
DQG LW FXOWLYDWHG UHODWLRQVKLSV WKURXJK WKH VHUYLFLQJ RI WKH 
7KH SDQHO LQ 5LGJZD\ TXHVWLRQHG WKH YDOLGLW\ RI DSSO\LQJ WKH IRUXP
'LIIUDFWR HTXLSPHQW  7KHUH ZDV DOVR WHVWLPRQ\ WKDW VWDWHjV VWDQGDUGV LQ WKLV FRQWH[W 1RWLQJ WKDW WKH IHGHUDO DQG 0LFKLJDQ
3HUFHSWURQLQFRUSRUDWHG'LIIUDFWRjVWHFKQRORJ\LQWRLWVRZQ VWDQGDUGV DUH QHDUO\ LGHQWLFDO DQG WKDW RQH SDQHO FDQQRW RYHUUXOH DQRWKHU
WKH UXOH ZDV QRQHWKHOHVV DSSOLHG 6HH 5LGJZD\  )G DW  Q
 3HUFHSWURQ,QFY6HQVRU 1RV 1RV 3HUFHSWURQ,QFY6HQVRU 
$GDSWLYH0DFKLQHV $GDSWLYH0DFKLQHV

XQOHVVUHDVRQDEOHPLQGVFRXOGQRWGLIIHUDVWRWKHFRQFOXVLRQV ZKHWKHUXQGHUDOOWKHFLUFXPVWDQFHVRIWKHFDVHWKHUHVWULFWLYH
WREHGUDZQIURPWKHHYLGHQFHjl,GTXRWLQJ7RWKY&@RYHQDQWVQRWWRFRPSHWHDUHYDOLGLIDQFLOODU\WR HOHFWURRSWLFDOGHYLFHVDQGZDVOLVWHGDVWKHLQYHQWRURQDOO
WKHPDLQEXVLQHVVSXUSRVHRIDODZIXOFRQWUDFWDQG EXW RQH RI WKH SDWHQWV FRQYH\HG RU OLFHQVHG WR 3HUFHSWURQ
QHFHVVDU\WRSURWHFWWKHFRYHQDQWHHjVOHJLWLPDWHSURSHUW\ 3U\RUDVDIRXQGHURI'LIIUDFWRKDGSULRUUHODWLRQVKLSVZLWK
LQWHUHVWVZKLFKUHTXLUHWKDWWKHFRYHQDQWVEHDVOLPLWHG 'LIIUDFWRjVFXVWRPHUVDQGPDUNHWHG6$0,DVDmVSLQRIIlRU
DV LV UHDVRQDEOH WR SURWHFW WKH FRYHQDQWHHjV LQWHUHVWV mVLVWHU FRPSDQ\l RI 'LIIUDFWR  3HUFHSWURQ LQVLVWHG XSRQ
8QLWHG6WDWHVY$GG\VWRQ3LSH 6WHHO&R) VHFXULQJDQRQFRPSHWHDJUHHPHQWZLWK6$0,DQG3U\RUWR
WK&LUDIIjGDVPRGLILHG86 SURWHFW WKH YDOXH RI LWV SXUFKDVH  3HUFHSWURQ RIIHUHG WKH
>@ WHVWLPRQ\RIDQH[SHUWZLWQHVVFRQFHUQLQJWKHQHHGIRUWKH
QRQFRPSHWHDJUHHPHQWWKHYDOXHRIWKHJRRGZLOODFTXLUHG
,G  7KH 6XSUHPH &RXUW H[SODLQHG WKDW  m$V LWV QDPH DQGWKHUHDVRQDEOHQHVVRIWKHGXUDWLRQJHRJUDSKLFUHDFKDQG
VXJJHVWVWKHUXOHRIUHDVRQUHTXLUHVWKHIDFWILQGHUWRGHFLGH SURGXFWVFRSHRIWKHQRQFRPSHWHDJUHHPHQW:HWXUQWRWKH
VSHFLILFDUJXPHQWVSXWIRUWKE\6$0,

7KH 0LFKLJDQ $QWLWUXVW 5HIRUP $FW 0LFK &RPS /DZV $QQ
6$0, HPSKDVL]HV WKDW 3HUFHSWURQ ZDV PRWLYDWHG WR
†  :HVW  DGRSWHG ODQJXDJH IURP DQG LV LQWHUSUHWHG FRQVXPPDWHWKHSXUFKDVHIURP'LIIUDFWRLQRUGHUWREX\EDFN
FRQVLVWHQW ZLWK WKH 6KHUPDQ $FW  86& †  6HH &RPSWRQ Y sRVHSK WKHPDUNHWLQWKHILWEXVLQHVVDQGHVFDSHWKHFRPSHWLWLRQWKDW
/HSDN ''6 3&  1:G  0LFK $SS