Holloway v. OH

Court: Court of Appeals for the Sixth Circuit
Date filed: 2000-07-31
Citations:
Copy Citations
Click to Find Citing Cases
Combined Opinion
       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


6$00<( 5 +2//2:$<              ;
        3ODLQWLII$SSHOODQW      
                                  
                                    1R
          Y                      
                                   !
                                  
6$//< %586+ &/(50217             
&2817< 2+,2                     
       'HIHQGDQWV$SSHOOHHV 
                                  
                                  
                                  
                                 1
     $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
    IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL
   1RnsDFN6KHUPDQ0DJLVWUDWHsXGJH
               $UJXHG'HFHPEHU
            'HFLGHGDQG)LOHGsXO\
 %HIRUH0$57,1&KLHIsXGJH0(55,771(/621
 5<$1%2**61255,668+5+(,15,&+6,/(5
%$7&+(/'(5'$8*+75(<0225(&2/(&/$<
            DQG*,/0$1&LUFXLWsXGJHV




                            
    +ROORZD\Y6WDWHRI2KLRHWDO            1R

                    BBBBBBBBBBBBBBBBB
                         &2816(/
$5*8(''RQQD65RVH526(/$:),50)W7KRPDV
.HQWXFN\ IRU $SSHOODQW  +HOHQ ( 0DVRQ &/(50217
&2817<3526(&87,1*$77251(<&,9,/',9,6,21
%DWDYLD2KLRIRU$SSHOOHHV21%5,()'RQQD65RVH
526( /$: ),50 )W 7KRPDV .HQWXFN\ IRU $SSHOODQW
+HOHQ(0DVRQ&/(50217&2817<3526(&87,1*
$77251(< &,9,/ ',9,6,21 %DWDYLD 2KLR sRKQ 7
:LOOLDPV 2)),&( 2) 7+( $77251(< *(1(5$/ 2)
2+,2&ROXPEXV2KLRIRU$SSHOOHHV
  %2**6sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
0$57,1 & s 0(55,77 1(/621 5<$1 1255,6
68+5+(,15,&+6,/(5%$7&+(/'(5'$8*+75(<
0225( &2/( DQG *,/0$1 ss MRLQHG  &/$< s
SSGHOLYHUHGDVHSDUDWHGLVVHQWLQJRSLQLRQ
                    BBBBBBBBBBBBBBBBB
                        23,1,21
                    BBBBBBBBBBBBBBBBB
   %2**6 &LUFXLW sXGJH  7KH GLVWULFW FRXUW DZDUGHG
VXPPDU\MXGJPHQWWRDOOGHIHQGDQWVLQ6DPP\H+ROORZD\jV
†  VXLW IRU GDPDJHV EURXJKW DIWHU DQ RUGHU RI WKH
&OHUPRQW&RXQW\&RXUWRI&RPPRQ3OHDVsXYHQLOH'LYLVLRQ
WHUPLQDWHGKHUSDUHQWDOULJKWVDQGJUDQWHGSHUPDQHQWFXVWRG\
RIKHUFKLOGUHQWRWKH&OHUPRQW&RXQW\'HSDUWPHQWRI+XPDQ
6HUYLFHVm&&'+6l+ROORZD\DSSHDOHGWKHGLVWULFWFRXUWjV
UXOLQJDVWRWZRRIWKHGHIHQGDQWV6DOO\%UXVKDQG&OHUPRQW
&RXQW\$WKUHHMXGJHSDQHORIWKLVFRXUWKHOGWKDWERWKWKHVH
GHIHQGDQWV HQMR\ DEVROXWH LPPXQLW\ IURP VXLW IRU DFWLRQV
WDNHQLQDMXGLFLDOFRQWH[W6HH+ROORZD\Y2KLR)G
WK&LU7KHIXOOFRXUWWKHQJUDQWHGDUHKHDULQJ
HQEDQFWRGHFLGHWKHTXHVWLRQRIWKHH[WHQWWRZKLFKDSXEOLF
FKLOGVHUYLFHVDJHQF\FDVHZRUNHULQWKLVFDVH6DOO\%UXVK
PD\EHHQWLWOHGWRLPPXQLW\IRUKHUDFWVLQFRQQHFWLRQZLWKD
FKLOGFXVWRG\SURFHHGLQJ6HH+ROORZD\Y2KLR)G
1R              +ROORZD\Y6WDWHRI2KLRHWDO        

WK&LU)RUWKHUHDVRQVWKDWIROORZZHUHYHUVH
WKH GLVWULFW FRXUWjV UXOLQJ WKDW 6DOO\ %UXVK HQMR\V DEVROXWH
LPPXQLW\ IRU KHU FRQGXFW LQ WKLV FDVH DQG LWV JUDQW RI
VXPPDU\MXGJPHQWLQKHUIDYRURQWKDWEDVLV7KHGLVWULFW
FRXUWjV JUDQW RI VXPPDU\ MXGJPHQW WR &OHUPRQW &RXQW\
KRZHYHULVDIILUPHG
                                 ,
  6DPP\H +ROORZD\ D PRWKHU ZKR GHVSLWH D KLJKVFKRRO
GLSORPD UHDGV DQG ZULWHV DW D WKLUGJUDGH OHYHO GXH WR
G\VOH[LDORVWWUDFNRIKHUWZRFKLOGUHQWKHQVL[PRQWKVDQG
WZR\HDUVROGZKHQDVDOOHJHGLQKHUFRPSODLQWKHUKXVEDQG
WKUHZKHURXWRIWKHLU2NODKRPDKRPHLQ1RYHPEHUDQG
DEVFRQGHGZLWKWKHFKLOGUHQWRDQRWKHUVWDWH2YHUVHYHUDO
\HDUVVKHPDGHQXPHURXVDWWHPSWVWRORFDWHWKHPWKURXJKWKH
UHOHYDQWDJHQFLHVRIPDQ\VWDWHV6KHKDGQRVXFFHVVXQWLOLQ
KHUOHWWHUWRDXWKRULWLHVLQWKH6WDWHRI:DVKLQJWRQOHG
WKHPWRQRWLI\2KLRUHVXOWLQJXOWLPDWHO\LQFRQWDFWEHWZHHQ
+ROORZD\ DQG WKH &&'+6 LQ WKH SHUVRQ RI 6DOO\ %UXVK D
FDVHZRUNHUWKHUH7KHVHTXHQFHRIHYHQWVDSSHDUVWREHDV
IROORZV
   ,QDIWHUDQRG\VVH\WKURXJKVHYHUDOVWDWHVDVHTXHQFH
RIIDLOHGMREVDQGWKHWKUHHRIWKHPOLYLQJRXWRIYHKLFOHVWKH
IDWKHUDQGWKHFKLOGUHQZHUHVWUDQGHGLQ&OHUPRQW&RXQW\
2KLR DIWHU KLV FDU EURNH GRZQ WKHUH  ,Q 1RYHPEHU 2KLR
DXWKRULWLHVEHFDPHDZDUHWKDWWKHFKLOGUHQZHUHOLYLQJLQD
FDULQH[WUHPHO\XQVDQLWDU\FRQGLWLRQV3URFHHGLQJVZHUH
LQVWLWXWHGWRGHSULYHWKHIDWKHURIFXVWRG\RQJURXQGVRIDEXVH
DQGWRDZDUGFXVWRG\WR&&'+6SUHSDUDWRU\WRKDYLQJWKH
FKLOGUHQDGRSWHG&&'+6ZDVJUDQWHGWHPSRUDU\FXVWRG\RI
WKH +ROORZD\ FKLOGUHQ RQ 1RYHPEHU    (IIRUWV WR
QRWLI\+ROORZD\E\PDLOZHUHIUXLWOHVVVR&OHUPRQW&RXQW\
DWWHPSWHGWRQRWLI\KHURIWKHSURFHHGLQJVE\SXEOLFDWLRQLQ
WKH VSULQJ RI   &&'+6 DOVR DWWHPSWHG WR SODFH WKH
FKLOGUHQZLWKDSDWHUQDOUHODWLYHLQ6SRNDQH:DVKLQJWRQEXW
WKLVZDVXQVXFFHVVIXODQGWKHFKLOGUHQZHUHUHWXUQHGWR2KLR
LQ 0D\ RU sXQH RI   %UXVK EHJDQ DGPLQLVWHULQJ WKH
FKLOGUHQjVFDVHSODQRQ0DUFK,Q1RYHPEHU
     +ROORZD\Y6WDWHRI2KLRHWDO             1R       1R                  +ROORZD\Y6WDWHRI2KLRHWDO            

%UXVK SURYLGHG DQ DIILGDYLW WKDW 6DPP\H +ROORZD\jV              LWLVFOHDUWKDWOLNHWKH.DQVDV'LVWULFW&RXUWWKHGLVWULFWFRXUW
ZKHUHDERXWVZHUHXQNQRZQSHUPLWWLQJKHUWREHVHUYHGZLWK            EHORZDVZHOODVWKLV&RXUWRQDSSHDOGRQRWKDYHMXULVGLFWLRQ
QRWLFHE\SXEOLFDWLRQLQ7KH&OHUPRQW6XQ2Q'HFHPEHU           WR KHDU WKH PDWWHU  'LVPLVVLQJ WKH FDVH RQ MXULVGLFWLRQDO
 %UXVK WHVWLILHG EHIRUH D UHIHUHH DSSRLQWHG E\ WKH       JURXQGVZRXOGQRWRQO\EHOHJDOO\VRXQGLWZRXOGQRWOHDYH
&OHUPRQW &RXQW\ sXYHQLOH &RXUW WKDW WKH FKLOGUHQjV IDWKHU      3ODLQWLIILQDQ\ZRUVHSRVLWLRQ+RZHYHUIDLOLQJWRGLVPLVV
VKRXOGQRWUHJDLQFXVWRG\DQGUHFRPPHQGHGWKDWSHUPDQHQW              WKHFDVHDQGVHQGLQJWKHPDWWHUEDFNIRUWULDOPD\KDYHWKH
FXVWRG\ EH DZDUGHG WR &&'+6  7KH UHIHUHH DJUHHG             DIIHFWRISXWWLQJFKLOGUHQLQDZRUVHSRVLWLRQE\GHWULPHQWDOO\
HPERG\LQJKLVUHFRPPHQGDWLRQVLQDUHSRUWILOHGRQsDQXDU\            DQGXQMXVWLILDEO\XQGHUWKHVHIDFWVDIIHFWLQJWKHSHRSOHZKR
6HH7ZHOIWK$SSHOODWH'LVWULFW&RXUWRI$SSHDOV           FKDPSLRQWKHLUULJKWVDQGFDUHIRUWKHP7KHDQVZHUDVWR
2ULJLQDO$FWLRQLQ+DEHDV&RUSXV&DVH1R&$               ZKHWKHUWKHGLVWULFWFRXUWjVRUGHUGLVPLVVLQJ3ODLQWLIIjVFDVH
6WLSXODWHG6WDWHPHQWRI(YLGHQFHDWˆ2FWREHU         VKRXOGEHDIILUPHGFRXOGQRWEHPRUHFOHDUZHVKRXOGDIILUP
2KLRODZSURYLGHVWKDWVXFKDUHIHUHHjVUHFRPPHQGDWLRQVDUH           DOEHLWRQGLIIHUHQWJURXQGV,DPQRWZLWKRXWFRPSDVVLRQIRU
WREHUHYLHZHGDQGPD\EHDGRSWHGPRGLILHGRUVHWDVLGHE\         3ODLQWLII+RZHYHUQHLWKHUWKHGLVWULFWFRXUWQRUWKLV&RXUW
WKHMXYHQLOHFRXUWZKLFKDOVRmPD\KHDUDGGLWLRQDOWHVWLPRQ\         LVWKHSURSHUIRUXPIRUWKHUHOLHIZKLFKVKHDFWXDOO\VHHNV
   l  2KLR 5HY &RGH $QQ †  %DOGZLQ    3ODLQWLIIjVFDVHEHORQJHGLQWKHKDQGVRIWKH2KLRFRXUWVDQG
%UXVKFRQWLQXHGWRIROORZWKHSURFHVVWKURXJKRXWLQ             XOWLPDWHO\LQWKHKDQGVRIWKH8QLWHG6WDWHV6XSUHPH&RXUW
FRRUGLQDWLRQ ZLWK &OHUPRQW &RXQW\ $VVLVWDQW 3URVHFXWRU           ,WKHUHIRUHUHVSHFWIXOO\GLVVHQW
7KRPDV)OHVVD
   2Q0D\WKH:DVKLQJWRQ'HSDUWPHQWRI6RFLDO
DQG+HDOWK6HUYLFHVZURWHWR&&'+6DGGUHVVLQJWKHOHWWHUWR              
ERWK0HOLVVD2j)DUUHOO6XSHUYLVRUDQG6DOO\%UXVK6RFLDO
                                                                             7KH PDMRULW\ PDNHV WKH XQIRXQGHG DVVHUWLRQ WKDW , DP KRVWLOH
                                                                      WRZDUG 3ODLQWLII DQG WKDW , mUHSHDWHGO\ RSLQ>H@ WKDW ILQDOLW\ LQ WKLV FDVH LV
:RUNHUDWWDFKLQJWKHOHWWHU:DVKLQJWRQKDGUHFHLYHGIURP             LQ WKH FKLOGUHQjV EHVW LQWHUHVW    l 6LPSO\ EHFDXVH , FKRRVH QRW WR LJQRUH
+ROORZD\UHTXHVWLQJLQIRUPDWLRQDERXWKHUFKLOGUHQ$FRS\           WKH ODZ RI WKH FDVH VXEMHFW PDWWHU MXULVGLFWLRQ DQG D YDULHW\ RI SURFHGXUDO

RIWKHOHWWHUZDVVHQWWR+ROORZD\%UXVKUHFHLYHGWKDWOHWWHU       SUREOHPV DVVRFLDWHG ZLWK 3ODLQWLIIjV DSSHDO IRU ZKLFK RWKHU OLWLJDQWV KDYH

RQ0D\WKDQGFDOOHG)OHVVDDERXWLWWKDWGD\+HUQRWHVRQ       EHHQ KHOG DFFRXQWDEOH GRHV QRW HTXDWH ZLWK KRVWLOLW\ +RZHYHU RQH PD\


WKLVFDOOUHDGm7HOHSKRQHFDOOWR7RP)OHVVDWROG          VD\ WKDW WKH PDMRULW\ LV KRVWLOH WRZDUG 0V %UXVK ZKHQ LW UHSHDWHGO\ DQG
                                                                      LQDSSURSULDWHO\ PDNHV FUHGLELOLW\ GHWHUPLQDWLRQV DERXW 0V %UXVK EHIRUH
KLPDERXWOHWWHU/HJDOO\ZHKDYHFXVWRG\l6XSSOHPHQWDO             UHPDQGLQJ WKH FDVH IRU WULDO o LH 0V %UXVK mOLHGl mUHIXVHG WR GLVFXVV
%ULHIRI$SSHOOHHV(Q%DQF5HKHDULQJDW$SSHQGL[&             WKH FDVHl DQG mKLGl 3ODLQWLII 7KHVH DUH PDWWHUV IRU WKH MXU\ DQG KDYH QR

+ROORZD\'LFWDWLRQ 2Q 0D\   %UXVK UHFHLYHG D         SODFH LQ WKH PDMRULW\ RSLQLRQ 0RUHRYHU LW ZDV WKH 2KLR 6XSUHPH &RXUW

OHWWHUIURP+ROORZD\UHTXHVWLQJWKDWVKHSXWWKHFKLOGUHQRQ          QRW , ZKLFK RSLQHG WKDW LW ZDV QRW LQ WKH FKLOGUHQjV EHVW LQWHUHVWV WR EH

D SODQH WR .DQVDV &LW\ ZKHUH +ROORZD\ SURSRVHG WR SLFN      UHWXUQHG WR 3ODLQWLII   :KHQ WKH PDMRULW\ FDOOV IRU 3ODLQWLII WR KDYH WKH
                                                                      SURSHU KHDULQJV LQ WKH 2KLR FRXUWV LW LPSOLFLWO\ XQGHUPLQHV WKH 2KLR
WKHPXS7KHIROORZLQJGD\%UXVKDQG+ROORZD\VSRNHE\               6XSUHPH &RXUWjV UHIXVDO WR JUDQW 3ODLQWLII D ZULW RI KDEHDV FRUSXV HDFK
WHOHSKRQH                                                           WLPH WKDW VKH VRXJKW VXFK UHOLHI IURP WKDW FRXUW    2EYLRXVO\ 3ODLQWLII LV
                                                                      QRW VHHNLQJ D FXVWRG\ KHDULQJ LQ WKH 2KLR FRXUWV DV DQ H[HUFLVH LQ GXH

  $W WKDW WLPH &&'+6 KDG WHPSRUDU\ FXVWRG\ RI WKH            SURFHVV IXWLOLW\   3ODLQWLII ZDQWV WKH FXVWRG\ KHDULQJ EHFDXVH 3ODLQWLII

FKLOGUHQ ZKLOH WKH MXYHQLOH FRXUW ZDV FRQVLGHULQJ WKH         ZDQWV WKH UHWXUQ RI KHU FKLOGUHQ $QG DJDLQ WKH 2KLR &RXUW RI $SSHDOV

UHIHUHHjVUHFRPPHQGDWLRQUHJDUGLQJSHUPDQHQWFXVWRG\IRU              DQG WKH 2KLR 6XSUHPH &RXUW KDYH H[SUHVVO\ GHQLHG KHU VXFK UHOLHI
                                                                      ILQGLQJ WKDW LW ZDV QRW LQ WKH FKLOGUHQjV EHVW LQWHUHVWV 8QOLNH WKH PDMRULW\
&&'+6  %XW WKDW LV QRW ZKDW %UXVK WROG +ROORZD\  )RU     , PDNH QR DVVHUWLRQ LPSOLFLWO\ RU RWKHUZLVH DV WR ZKHWKHU WKH 2KLR FRXUWV
UHDVRQVWKDWKDYHQRWEHHQVDWLVIDFWRULO\H[SODLQHGLQWKHLU         ZHUH FRUUHFW LQ VR KROGLQJ UDWKHU , GLUHFW 3ODLQWLII WR WKH 8QLWHG 6WDWHV
                                                                      6XSUHPH &RXUW ZKHUH VKH VKRXOG KDYH SURFHHGHG ORQJ DJR
    +ROORZD\Y6WDWHRI2KLRHWDO               1R       1R               +ROORZD\Y6WDWHRI2KLRHWDO          

   ,QVKRUWmLPPXQLW\KHOSVVRFLDOZRUNHUVSXWWKHLUSULYDWH           WHOHSKRQH FRQYHUVDWLRQ RQ 0D\   %UXVK IDOVHO\
LQWHUHVWV DVLGH DQG FRQFHQWUDWH RQ WKH ZHOIDUH RI FKLOGUHQ     LQIRUPHG+ROORZD\WKDW&&'+6KDGDOUHDG\EHHQDZDUGHG
8QIRUWXQDWHO\LPPXQLW\DOVRPD\HPEROGHQVRFLDOZRUNHUV                SHUPDQHQWFXVWRG\RIKHUFKLOGUHQ%UXVKFRQFHGHVWKLVEXW
WRSXUVXHWKHLUSULYDWHDJHQGDV2QHHIIHFWLVLQVHSDUDEOH      FKDUDFWHUL]HVLWDVDmPLVVWDWHPHQWl6XSSOHPHQWDO%ULHIRI
IURPWKHRWKHUl0LOOVSDXJK)GDW+RZHYHULW            $SSHOOHHV(Q%DQF5HKHDULQJDW%UXVKjVRZQQRWHVRI
LVIRUWKHJUHDWHUJRRGWKDWFKLOGVRFLDOZRUNHUVSURFHHGLQ            WKDWFRQYHUVDWLRQKRZHYHULQGLFDWHVKHGLGQRWPHUHO\PLV
WKHLU TXDVLMXGLFLDO FDSDFLWLHV ZLWKRXW IHDU RI UHGUHVV IURP     VSHDN  m, WROG 0UV +ROORZD\ KHU EHVW EHW LV WR WDON WR D
SDUHQWV ZKR SHUKDSV VRPHWLPHV WKURXJK QR IDXOW RI WKHLU        ODZ\HU DERXW KHU ULJKWV  $W WKLV SRLQW RXU DJHQF\ KDV
RZQ VLPSO\ FDQQRW SURSHUO\ FDUH IRU WKHLU FKLOGUHQ  $V       SHUPDQHQW FXVWRG\l  ,G DW  $SSHQGL[ &
HVSRXVHGE\sXGJH/HDUQHG+DQGZKHQFRPPHQWLQJRQWKH                   +ROORZD\'LFWDWLRQ0RUHRYHU+ROORZD\FODLPVWKDW%UXVK
DEVROXWHLPPXQLW\DIIRUGHGWRSROLFHRIILFHUZLWQHVVHVZKR              WROGKHUmWKH\KDGWDNHQDZD\KHUSDUHQWDOULJKWVZKHWKHUVKH
NQRZLQJO\SURYLGHIDOVHWHVWLPRQ\DJDLQVWGHIHQGDQWVZKRVH              OLNHV LW RU QRWl DQG UHIXVHG WR GLVFXVV WKH PDWWHU IXUWKHU
OLEHUW\LVDWVWDNH                                                    DGYLVLQJ+ROORZD\WRJHWDODZ\HU%ULHIIRU$SSHOODQWDW
                                                                        %UXVKUHSHDWHGWKHODWWHUDGYLFHLQDOHWWHUWR+ROORZD\GDWHG
  m$VLVVRRIWHQWKHFDVHWKHDQVZHUPXVWEHIRXQGLQD               sXQH$OWKRXJKWKHPDWWHURIDZDUGLQJSHUPDQHQW
  EDODQFHEHWZHHQWKHHYLOVLQHYLWDEOHLQHLWKHUDOWHUQDWLYH           FXVWRG\ WR &&'+6 ZDV VWLOO SHQGLQJ EHIRUH WKH MXYHQLOH
  ,QWKLVLQVWDQFHLWKDVEHHQWKRXJKWLQWKHHQGEHWWHUWR             FRXUWWKHORQJVRXJKWDSSHDUDQFHRIWKHFKLOGUHQjVPRWKHU
  OHDYHXQUHGUHVVHGWKHZURQJVGRQHE\GLVKRQHVWRIILFHUV               ZKRKDGQRWEHHQKHDUGDWWKH'HFHPEHUSURFHHGLQJZDVQRW
  WKDQVXEMHFWWKRVHZKRWU\WRGRWKHLUGXW\WRWKHFRQVWDQW           EURXJKW WR WKH FRXUWjV DWWHQWLRQ E\ %UXVK QRU E\ DVVLVWDQW
  GUHDGRIUHWDOLDWLRQl                                                SURVHFXWRU )OHVVD ZKR NQHZ DV HDUO\ DV 0D\ WK WKDW
                                                                        +ROORZD\KDGVXUIDFHG,QGHHG+ROORZD\DOOHJHVWKDWZKHQ
%ULVFRH Y /D+XH  86    TXRWLQJ             RQ 0D\   %UXVK IDLOHG WR NHHS DQ DSSRLQWPHQW WR
*UHJRLUHY%LGGOH)GG&LU                  VSHDN ZLWK +ROORZD\ E\ SKRQH GXH DV %UXVKjV sXQH QG
                                                                        OHWWHUVWDWHVWRWKHIDFWWKDW%UXVKZDVRXWRIKHURIILFHWKDW
   +HUHLQWKHHQGLWLVIDUEHWWHUWROHDYHXQUHGUHVVHGWKH          DIWHUQRRQ %UXVK ZDV DFWXDOO\ LQ FRXUW WR ILOH D GRFXPHQW
DOOHJHGZURQJVRI0V%UXVKWKDQWRVXEMHFWKHUWROLWLJDWLRQ           UHODWHGWRWKH+ROORZD\FXVWRG\FDVH%ULHIIRU$SSHOODQWDW
XQGHU WKH FLUFXPVWDQFHV RI WKLV FDVH  $OORZLQJ WKH FDVH         7KH UHFRUG LQGLFDWHV WKDW D &DVH 3ODQ 'RFXPHQW
DJDLQVW 0V %UXVK WR SURFHHG WKHUHE\ VXEMHFWLQJ KHU WR         $PHQGPHQW ZDV LQ IDFW ILOHG RQ WKDW GDWH  6HH 7ZHOIWK
SRWHQWLDOOLDELOLW\PD\SURYLGH3ODLQWLIIZLWKPRQH\GDPDJHV           $SSHOODWH 'LVWULFW &RXUW RI $SSHDOV 2ULJLQDO $FWLRQ LQ
WRFRYHUH[SHQVHVIRUDVKRUWSHULRGRIWLPHKRZHYHULWZLOO          +DEHDV&RUSXV&DVH1R&$6WLSXODWHG6WDWHPHQW
DOVRVHQGDPHVVDJHWRFKLOGVRFLDOZRUNHUVFDXVLQJWKHPWR             RI(YLGHQFHDWˆ2FWREHU
VHFRQGJXHVVWKHLUDFWLRQVLQDZD\ZKLFKFRXOGIRUHYHUDIIHFW
WKHOLYHVRIFKLOGUHQZKRDUHYLFWLPVRIQHJOHFWDQGDEXVH               %UXVKjVWHOHSKRQHORJRIWKLVSHULRGFRQWLQXHVZLWKHQWULHV
                                                                        UHODWLQJ WR WKH FKLOGUHQjV PHGLFDO FRYHUDJH SODFHPHQW LQ
,9 &21&/86,21                                                          VFKRRODVIRVWHUFKLOGUHQDQGRWKHUGHWDLOV2QsXQHWKWKH
                                                                        GD\EHIRUHWKHFRXUWDFWHGRQSHUPDQHQWFXVWRG\WKHUHLVWKH
  ,W LV ZHOO HVWDEOLVKHG WKDW IHGHUDO FRXUWV KDYH D GXW\ WR   IROORZLQJ HQWU\  m  7HOHSKRQH FDOO WR >DVVLVWDQW
H[DPLQHWKHLVVXHRIVXEMHFWPDWWHUMXULVGLFWLRQmWKURXJKRXW            SURVHFXWRU@7RP)OHVVD+HLVZULWLQJWKHOHWWHUWR6DPP\H
WKH SHQGHQF\ RI HYHU\ PDWWHU EHIRUH WKHPl VHH &KLOGUHQjV        +ROORZD\,VKRXOGQRWZRUU\QHHGOHVVO\DWWKLVSRLQWDERXW
+HDOWKFDUHLVD/HJDO'XW\,QF)GDWQDQGWKLV         KHUGLVUXSWLQJWKHZKROHSURFHVV:HGLGHYHU\WKLQJOHJDOO\
&RXUWVKRXOGWKHUHIRUHIXOILOOLWVGXW\LQWKLVFDVH,QGRLQJVR
     +ROORZD\Y6WDWHRI2KLRHWDO               1R       1R             +ROORZD\Y6WDWHRI2KLRHWDO       

DV WR SXEOLFDWLRQQRWLFHl HPSKDVLV DGGHG  6XSSOHPHQWDO         XQFRQVWLWXWLRQDOEHKDYLRUE\FKLOGVRFLDOZRUNHUVLQWKHVDPH
%ULHIRI$SSHOOHHV(Q%DQF5HKHDULQJDW$SSHQGL[&               ZD\WKDWDOWHUQDWLYHPHDQVDUHDYDLODEOHWRWKHSXEOLFIURP
+ROORZD\'LFWDWLRQ                                                    VXFK FRQGXFW E\ SURVHFXWRUV DQG MXGJHV  6HH ,PEOHU Y
                                                                        3DFKWPDQ  86     )RU H[DPSOH
  2QsXQHWKHFRXUWDFFHSWHGWKHUHIHUHHjVUHSRUWE\          DSSHOODWH UHYLHZ LV DYDLODEOH  6HH LG VHH DOVR %XW] Y
ZULWWHQRUGHUDZDUGLQJSHUPDQHQWFXVWRG\RIWKHFKLOGUHQWR            (FRQRPRX86(UQVW)GDW
&&'+67KHIDWKHU$OEHUW+ROORZD\DSSHDOHGWKHMXYHQLOH             0LOOVSDXJK  )G DW   ,Q DGGLWLRQ WKH DJHQF\
FRXUWjV DZDUG RI SHUPDQHQW FXVWRG\ WR &&'+6 WKLV ZDV           ZKLFKHPSOR\VVRFLDOZRUNHUVKDYHDQLQFHQWLYHWRLQVXUHWKDW
DIILUPHG6HH,QWKH0DWWHURI7s+ROORZD\sRKQ+ROORZD\           LWV HPSOR\HHV GR QRW YLRODWH WKH &RQVWLWXWLRQ EHFDXVH WKH
 :/  
 2K $SS  'LVW sDQ            DJHQFLHVDUHQRWLPPXQHIURPOLDELOLW\IRUDEXVHVFRPPLWWHG
XQSXEOLVKHG2QsXQHWZRGD\VDIWHUWKHMXYHQLOH          E\HPSOR\HHVZLWKSROLF\PDNLQJDXWKRULW\6HH(UQVW
FRXUWDFWHG)OHVVDZURWH6DPP\H+ROORZD\WRLQIRUPKHU                 )GDW$QGRIFRXUVHVRFLDOZRUNHUVOLNHSURVHFXWRUV
WKDW &&'+6 KDG SHUPDQHQW FXVWRG\ RI KHU VRQV DQG               DQG MXGJHV DUH VXEMHFW WR FULPLQDO SURVHFXWLRQ XQGHU 
FRQWLQXHGm,VXJJHVWWKDW\RXFRQWDFWDQDWWRUQH\LQUHJDUGWR          86&†IRUZLOOIXOGHSULYDWLRQVRIFRQVWLWXWLRQDOULJKWV
\RXUOHJDOULJKWVDVRXUSODQLVWRVHHNDGRSWLYHKRPHVIRUWKH        HYHQLIDEVROXWHO\LPPXQHIURPFLYLOOLDELOLW\6HH%ULVFRHY
FKLOGUHQl                                                             /D+XH86
   6DPP\H+ROORZD\PRYHGWRKDYHWKHRUGHURISHUPDQHQW                    6HFRQGFKLOGVRFLDOZRUNHUVDUHEHWWHUDEOHWRSHUIRUPWKHLU
FXVWRG\VHWDVLGHE\WKHMXYHQLOHFRXUWWKHPRWLRQZDVGHQLHG          MREVDQGWKHUHIRUHRVWHQVLEO\SURWHFWRXUFKLOGUHQLIWKHLU
DQG+ROORZD\DSSHDOHG7KH2KLR&RXUWRI$SSHDOVUXOHG                 MXGJPHQW LV QRW FRPSURPLVHG E\ WKH WKUHDW RI SHUVRQDO
WKDW&OHUPRQW&RXQW\KDGQRWIROORZHGSURSHUSURFHGXUHVWR              OLDELOLW\ XQGHU †  IURP D GLVJUXQWOHG SDUHQW  $V
JLYHKHUQRWLFHDQGUHPDQGHGWKHFDVHIRUDQHZKHDULQJ6HH          UHFRJQL]HG E\ WKH 6XSUHPH &RXUW mLI OLWLJDWLRQ H[SHQVHV
,QUH+ROORZD\1R&$:/2KLR                   PRXQWVRFLDOZRUNHUVPD\ZHOOEHFRPHOHVVZLOOLQJWR
$SS'LVW0D\XQSXEOLVKHG%XWQRUHKHDULQJ           VHHNSODFHPHQWVIRUFKLOGUHQRYHUWKHLUSDUHQWVjREMHFWLRQV
ZDV KHOG DQG +ROORZD\ VRXJKW KDEHDV FRUSXV UHOLHI              ZKHWKHU UDWLRQDO RU LUUDWLRQDO HYHQ WKRXJK LQ WKHLU KRQHVW
8OWLPDWHO\ WKH 2KLR 6XSUHPH &RXUW GHQLHG +ROORZD\jV              MXGJPHQWWKHFKLOGjVEHVWLQWHUHVWVGHPDQGLWl/HKPDQ
KDEHDV SHWLWLRQ LQ SDUW DW OHDVW EHFDXVH WKH 2KLR &RXUW RI   86 DW  Q  ,QGHHG m>V@RFLDO ZRUNHUV RIWHQ DFW RQ
$SSHDOV KDG SUHYLRXVO\ UHPDQGHG WKH FDVH WR &OHUPRQW             OLPLWHGLQIRUPDWLRQWKRVHZKRWDUU\RUUHVROYHDOOGRXEWVLQ
&RXQW\IRUUHQHZHGSURFHHGLQJVZLWK+ROORZD\SUHVHQW,Q               IDYRURIWKHSDUHQWVFKDQFHHQGXULQJGDPDJHWRWKHFKLOGUHQl
LWVUXOLQJWKH2KLR6XSUHPH&RXUWVSHFLILFDOO\UHOLHGRQDQG            0LOOVSDXJK  )G DW  FLWLQJ 'H6KDQH\ Y
UHLWHUDWHG DVVXUDQFHV WKDW +ROORZD\jV ULJKWV ZRXOG EH             :LQQHEDJR &RXQW\ 'HSjW RI 6RF 6HUYV  86 
SURWHFWHGE\UHQHZHGFXVWRG\SURFHHGLQJV6HH+ROORZD\Y              /LNHZLVHGHIHQGLQJDJDLQVWVXFKVXLWVZRXOGGLYHUW
&OHUPRQW&RXQW\'HSjWRI+XPDQ6HUYV2KLR6WG              WKHVRFLDOZRUNHUjVWLPHDQGDWWHQWLRQDZD\IURPKHURIILFLDO
1(G2KLR1HYHUWKHOHVVWR               GXWLHVLQZKLFKFDVHLQQRFHQWFKLOGUHQDUHWKHSDUWLHVZKR
WKLV GD\ VHYHQ \HDUV DIWHU &&'+6 VHFXUHG SHUPDQHQW              VXIIHU WKH FRQVHTXHQFHV  6HH ,PEOHU  86 DW 
FXVWRG\RIWKH+ROORZD\FKLOGUHQZLWKRXWWKHLUPRWKHUEHLQJ             ,PSRVLQJOLDELOLW\DQGUHTXLULQJVRFLDOZRUNHUVWRGHIHQGVXFK
KHDUG QR UHKHDULQJ KDV WDNHQ SODFH DQG +ROORZD\jV VRQV         VXLWV ZRXOG LPSRVH mLQWROHUDEOH EXUGHQVl XSRQ WKH
UHPDLQLQWKHFDUHRIWKHIRVWHUSDUHQWVZKRDGRSWHGWKHP              FDVHZRUNHU ZKR LV OLNHO\ ZRUNLQJ XQGHU VHULRXV WLPH
                                                                        FRQVWUDLQWVDQGFDUU\LQJDKHDY\FDVHORDG6HHLG
    +ROORZD\Y6WDWHRI2KLRHWDO                1R       1R              +ROORZD\Y6WDWHRI2KLRHWDO          

LPPHGLDWHO\ SUHVHQWLQJ KHUVHOI WR WKH FRXUW LV HQWLWOHG WR         ,Q0DUFK+ROORZD\VXHGWKH6WDWHRI2KLRWKH2KLR
DEVROXWHLPPXQLW\6HHLGDWVHHDOVR0LOOVSDXJKY            'HSDUWPHQWRI+XPDQ6HUYLFHV&OHUPRQW&RXQW\DQG6DOO\
&RXQW\'HSjWRI3XE:HOIDUH)GWK&LU              %UXVKIRUPRQHWDU\GDPDJHVLQIHGHUDOGLVWULFWFRXUWLQ2KLR
                                                                   XQGHU  86& †   7KH VXLW DJDLQVW WKH ILUVW WZR
                                                                         SODLQWLIIV ZDV GLVPLVVHG DV EDUUHG E\ WKH (OHYHQWK
   &KDUDFWHUL]LQJ0V%UXVKjVDFWLRQVDVXVXUSDWLRQVRIWKH              $PHQGPHQWjVJXDUDQWHHRIDVWDWHjVVRYHUHLJQLPPXQLW\IURP
FRXUWjVDXWKRULW\WKHPDMRULW\FRQWHQGVWKDW(UQVWGRHVQRW             VXLW LQ IHGHUDO FRXUW  +ROORZD\ QRZ DSSHDOV WKH GLVWULFW
DSSO\EHFDXVHDOORI0V%UXVKjVDFWLRQVGHQLHGWKHFRXUWWKH            FRXUWjVJUDQWRIVXPPDU\MXGJPHQWRQJURXQGVRIDEVROXWH
RSSRUWXQLW\ WR HYDOXDWH DQ\ UHFRPPHQGDWLRQV  ,Q RWKHU            LPPXQLW\WRGHIHQGDQWV&OHUPRQW&RXQW\DQG6DOO\%UXVK
ZRUGV WKH PDMRULW\ FODLPV WKDW (UQVW H[WHQGV RQO\ WR
UHFRPPHQGDWLRQVWKDWDVRFLDOZRUNHUPDNHVWRWKHFRXUWDQG                                              ,,
QRWWRWKHMXGJPHQWH[HUFLVHGE\WKHVRFLDOZRUNHUOHDGLQJXS
WRGHFLGLQJZKDWWRUHFRPPHQGDQGZKHWKHUWRUHFRPPHQG                      7KLV FRXUW UHYLHZV D GLVWULFW FRXUWjV JUDQW RI VXPPDU\
DQ\WKLQJDWDOO+RZHYHUDVVWDWHGDERYH(UQVWH[SUHVVO\              MXGJPHQWGHQRYR6HHHJ+DUWVHOY.H\V)G
KHOGWKDWDVRFLDOZRUNHULVHQWLWOHGWRDEVROXWHLPPXQLW\IRU            WK &LU  FHUW GHQLHG  86  
WKHIRUPXODWLRQRIMXGJPHQWVmWRGHWHUPLQHZKHWKHUDQGLQ                6XPPDU\ MXGJPHQW LV FDOOHG IRU mLI WKH SOHDGLQJV
ZKDW PDQQHU WR VHHN MXGLFLDO DFWLRQl DQG WKDW GHQ\LQJ           GHSRVLWLRQV DQVZHUV WR LQWHUURJDWRULHV DQG DGPLVVLRQV RQ
DEVROXWH LPPXQLW\ IRU WKH DFWLRQV ZKLFK OHG WR                    ILOHWRJHWKHUZLWKWKHDIILGDYLWVLIDQ\VKRZWKDWWKHUHLVQR
UHFRPPHQGDWLRQVoZKHWKHURUQRWWKHUHVXOWRIWKHH[HUFLVH              JHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKDWWKHPRYLQJSDUW\
RISURIHVVLRQDOMXGJPHQWOHGWRDUHFRPPHQGDWLRQWRWKHFRXUW            LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZl)HG5&LY3
DWDOOoZRXOGmHYLVFHUDWHlWKHDEVROXWHLPPXQLW\DIIRUGHGWR            F7KHFRXUWZLOOYLHZWKHIDFWVDQGDOOLQIHUHQFHVWREH
WKHP6HH)GDWFLWLQJ%XFNOH\86DW             GUDZQ IURP WKHP LQ WKH OLJKW PRVW IDYRUDEOH WR WKH
                                                                     QRQPRYLQJSDUW\6HHHJ0DWVXVKLWD(OHF,QGXV&RY
                                                                         =HQLWK 5DGLR &RUS  86     7KH
   )LQGLQJWKDW0V%UXVKLVHQWLWOHGWRDEVROXWHLPPXQLW\IRU           QRQPRYLQJ SDUW\ LQ DQVZHULQJ D PRWLRQ IRU VXPPDU\
KHU DFWLRQV  RU SHUKDSV PRUH DFFXUDWHO\ VWDWHG IRU KHU       MXGJPHQWWKDWLVVXSSRUWHGSURSHUO\PXVWVKRZWKDWWKHUHLV
LQDFWLRQV  RI ZKLFK 3ODLQWLII FRPSODLQV FRPSRUWV ZLWK          LQGHHGDJHQXLQHLVVXHIRUWULDO6HH)R[Y9DQ2RVWHUXP
VWURQJSROLF\UHDVRQVEDVHGXSRQWKHZHOIDUHRIRXUFKLOGUHQ             )GWK&LU6XFKDQLVVXHH[LVWVmLI
DQG WKH ERG\ RI WKRVH LQGLYLGXDOV ZKR KDYH PDGH LW WKHLU       WKH HYLGHQFH LV VXFK WKDW  D UHDVRQDEOH MXU\ FRXOG UHWXUQ D
FKRVHQ SURIHVVLRQ WR DFW LQ EHVW LQWHUHVWV RI FKLOGUHQ  ,Q    YHUGLFWIRUWKHQRQPRYLQJSDUW\l$QGHUVRQY/LEHUW\/REE\
VWDWLQJ WKHVH SROLF\ UHDVRQV DQG LQ ILQGLQJ 0V %UXVK            ,QF86
DEVROXWHO\ LPPXQH LQ QR ZD\ GR , ZLVK WR VXJJHVW WKDW D
SDUHQWjV FXVWRG\ ULJKW WR KLV RU KHU FKLOGUHQ LV QRW VWURQJ                                    $
+RZHYHUZKDWZHPXVWNHHSLQPLQGLVWKDWSDUHQWDOULJKWV
DUHQRWDEVROXWHDQGWKDWWKH\ERZWRZKDWLVLQWKHFKLOGUHQjV             7KH GLVWULFW FRXUW FRQFOXGHG WKDW &OHUPRQW &RXQW\ ZDV
EHVWLQWHUHVWV7KHSROLF\UHDVRQVIRUDIIRUGLQJ0V%UXVK              DEVROXWHO\LPPXQHIURPVXLWEHFDXVHLWDFWHGDVDQLQWHJUDO
LPPXQLW\DUHWZRIROG                                                   SDUWRIWKHMXGLFLDOV\VWHPLQWKHPDWWHURIWKHFXVWRG\RIWKH
                                                                         +ROORZD\ FKLOGUHQ  +RZHYHU FRXQWLHV DQG RWKHU ORFDO
   )LUVWSDUHQWVKDYHDYDLODEOHWRWKHPRWKHUPHDQVWKDQVXLWV          JRYHUQPHQWVoZKLOHmSHUVRQVlIRUWKHSXUSRVHVRI†
ILOHG XQGHU †  LQ RUGHU WR SURWHFW DJDLQVW DOOHJHG          OLDELOLW\LQWKHVHQVHWKDWWKH\FDQEHVXHGoGRQRWHQMR\WKH
                                                                         GHIHQVHVRIDEVROXWHDQGTXDOLILHGLPPXQLW\WKDWDUHDYDLODEOH
      +ROORZD\Y6WDWHRI2KLRHWDO                1R       1R             +ROORZD\Y6WDWHRI2KLRHWDO     

WRKXPDQGHIHQGDQWVVXHGLQWKHLULQGLYLGXDOFDSDFLWLHV6HH               )RUH[DPSOH0V%UXVKjVDFWLRQVPD\EHDQDORJL]HGWRD
2ZHQ Y &LW\ RI ,QGHSHQGHQFH  86             SURVHFXWRUZKRZRXOGEHSURWHFWHGE\DEVROXWHLPPXQLW\IRU
0RQHOOY'HSjWRI6RFLDO6HUY86                LQLWLDWLRQRIDFDVHDJDLQVWDGHIHQGDQW,QGHHGWKHPDMRULW\
/HDFKY6KHOE\&RXQW\6KHULII)GWK&LU             FODLPV WKDW 0V %UXVK VKRXOG KDYH GRQH H[DFWO\ WKDW n
7KDWLVWRVD\WKHOLDELOLW\RIFRXQWLHVDQGRWKHUORFDO         LQLWLDWHGSURFHHGLQJVZKHQ3ODLQWLIIVXUIDFHG,WIROORZVWKDW
JRYHUQPHQWV XQGHU †  GHSHQGV VROHO\ RQ ZKHWKHU WKH            VLQFH 0V %UXVK ZRXOG KDYH EHHQ HQWLWOHG WR DEVROXWH
SODLQWLIIjVFRQVWLWXWLRQDOULJKWVKDYHEHHQYLRODWHGDVDUHVXOW          LPPXQLW\KDGVKHLQLWLDWHGSURFHHGLQJVDJDLQVW3ODLQWLIIDQG
RIDmSROLF\lRUmFXVWRPlDWWULEXWDEOHWRWKHFRXQW\RUORFDO             LQFRUSRUDWHG KHU LQWR D FDVH SODQ 0V %UXVK VKRXOG EH
JRYHUQPHQW  1HYHUWKHOHVV WKH GLVWULFW FRXUW UHDFKHG WKH           HQWLWOHGWRDEVROXWHLPPXQLW\IRUKHUIDLOXUHWRGRVR6HH
FRUUHFW UHVXOW LQ DZDUGLQJ VXPPDU\ MXGJPHQW WR &OHUPRQW            %XFNOH\86DW(UQVWY&KLOGDQG$@ORFDOJRYHUQPHQWPD\QRWEHVXHGXQGHU†IRU                 DW$VWKH&RXUWRI$SSHDOVIRUWKH7KLUG&LUFXLWKHOG
    DQ LQMXU\ LQIOLFWHG VROHO\ E\ LWV HPSOR\HHV RU DJHQWV        LQ(UQVWm>W@RJUDQW>FKLOGVRFLDOZRUNHUV@DEVROXWHLPPXQLW\
    ,QVWHDGLWLVZKHQH[HFXWLRQRIDJRYHUQPHQWjVSROLF\RU             IRUWKHUHFRPPHQGDWLRQVWKDWWKH\PDGHWRWKHFRXUWEXWGHQ\
    FXVWRP ZKHWKHU PDGH E\ LWV ODZPDNHUV RU E\ WKRVH             WKHPVXFKLPPXQLW\IRUWKHREVHUYDWLRQVDQGMXGJPHQWVWKDW
    ZKRVH HGLFWV RU DFWV PD\ IDLUO\ EH VDLG WR UHSUHVHQW         ZHUH WKH QHFHVVDU\ SUHGLFDWH IRU WKRVH UHFRPPHQGDWLRQV
    RIILFLDOSROLF\LQIOLFWVWKHLQMXU\WKDWWKHJRYHUQPHQWDV           ZRXOG HYLVFHUDWH WKH LPPXQLW\ WKH\ GLG UHFHLYH DQG
    DQHQWLW\LVUHVSRQVLEOHXQGHU†                                XQGHUPLQHWKHSXUSRVHVVRXJKWWREHDGYDQFHGE\WKHJUDQWRI
                                                                          DEVROXWHLPPXQLW\l,GDW7KHUHIRUHLWIROORZVWKDW
0RQHOO86DW7KXVmDPXQLFLSDOLW\FDQQRWEH               0V%UXVKLVDEVROXWHO\LPPXQHIRUKHUDFWLRQVLQHYDOXDWLQJ
PDGH OLDEOH E\ DSSOLFDWLRQ RI WKH GRFWULQH RI UHVSRQGHDW          LQIRUPDWLRQFRQFHUQLQJ3ODLQWLIIPDNLQJFRQWDFWHYHQLIWKDW
VXSHULRUl3HPEDXUY&LW\RI&LQFLQQDWL86              HYDOXDWLRQDQGMXGJPHQWGLGQRWOHDGWRDUHFRPPHQGDWLRQWR
  7KH DFWV LQ TXHVWLRQ PXVW EH mDFWV ZKLFK WKH           WKHFRXUW,GDWQRWLQJWKDWmWKH>6XSUHPH@&RXUWKDV
PXQLFLSDOLW\KDVRIILFLDOO\VDQFWLRQHGRURUGHUHGl,GDW          H[SUHVVO\HPEUDFHGWKHLGHDWKDWLPPXQLW\PXVWEHDIIRUGHG
8QGHU DSSURSULDWH FLUFXPVWDQFHV HYHQ D VLQJOH DFW RU              WRWKHHYDOXDWLRQRIDYDLODEOHGDWDWRGHWHUPLQHZKHWKHUDQG
GHFLVLRQPD\TXDOLI\DVDQRIILFLDOJRYHUQPHQWSROLF\WKRXJK             LQZKDWPDQQHUWRVHHNMXGLFLDODFWLRQlHPSKDVLV DGGHG
LWEHXQSUHFHGHQWHGDQGXQUHSHDWHG6HHLELG%XWLQDQ\               FLWLQJ%XFNOH\86DW,QDVLPLODUYHLQDQ\
FDVHDFWVZLOORQO\EHFRQVWUXHGDVRIILFLDOSROLF\ZKHQWKH\            SURIHVVLRQDOMXGJPHQWWKDW0V%UXVKPD\KDYHH[HUFLVHG
DUHWKRVHRIDERG\RUDQRIILFLDOmUHVSRQVLEOHIRUHVWDEOLVKLQJ          FRUUHFWO\RULQFRUUHFWO\UHJDUGLQJWKHVWDWXVRIWKHRQJRLQJ
                                                                          MXGLFLDOSURFHHGLQJZKLFKPD\KDYHSUHYHQWHG3ODLQWLIIIURP
    +ROORZD\Y6WDWHRI2KLRHWDO                     1R      1R              +ROORZD\Y6WDWHRI2KLRHWDO        

SDUHQW6HH2KLR5HY&RGH$QQ†&$QGHUVRQ                   ILQDOJRYHUQPHQWSROLF\UHVSHFWLQJVXFKDFWLYLW\l,GDW
,QGHHGWKHWKHRU\EHKLQG DIIRUGLQJVRFLDOZRUNHUV                  
LPPXQLW\ LV WR DOORZ WKHP WR SURFHHG RQ EHKDOI RI WKH
FKLOGUHQjV EHVW LQWHUHVWV ZLWKRXW IHDU RI UHSULVDO IURP                 +ROORZD\ KDV QRW HYHQ DOOHJHG PXFK OHVV DGGXFHG
GLVJUXQWOHGSDUHQWV7KHUHIRUHE\WKHYHU\QDWXUHRIWKHZRUN              HYLGHQFHWRVXSSRUWDFODLPWKDWLWZDV&OHUPRQW&RXQW\jV
WKH\SHUIRUPFKLOGVRFLDOZRUNHUVDUHQRWVHHQE\SDUHQWVDV                RIILFLDO SROLF\ WR GLVSRVH RI FKLOG FXVWRG\ LVVXHV ZLWKRXW
LQGLYLGXDOVDFWLQJRQWKHLUEHKDOIUDWKHUWKH\DUHYLHZHGDV               KHDULQJ HDFK RI WKH FKLOGjV SDUHQWV D FODLP WKDW ZRXOG EH
SDUHQWDODGYHUVDULHVZKHWKHULQWKHFRXUVHRIGHYHORSLQJD                  PRVWXQXVXDOVLQFHVXFKDQRIILFLDOSROLF\LQDGGLWLRQWRLWV
FDVHSODQRUSHUIRUPLQJVRPHRWKHUWDVNZKHUHWKHLUHIIRUWV                 EHLQJ EODWDQWO\ XQFRQVWLWXWLRQDO VHH /DVVLWHU Y 'HSjW RI
PD\XOWLPDWHO\OHDGWRDWHUPLQDWLRQRISDUHQWDOULJKWV                   6RFLDO6HUYRI'XUKDP&LW\86ZRXOG
                                                                             QHYHUEHWROHUDWHGE\DQ\FRQFHLYDEOHPDMRULW\)XUWKHUPRUH
  )RFXVLQJRQWKHUHOHYDQWDFWVIRUZKLFK3ODLQWLIIFRPSODLQV               QHLWKHU %UXVK QRU )OHVVD ZHUH ILQDO GHFLVLRQPDNHUV LQ
IDLOLQJWRQRWLI\WKHWULDOFRXUWWKDW3ODLQWLIIKDGPDGHFRQWDFW            &OHUPRQW&RXQW\DQGWKHUHFRUGQHLWKHUQDPHVQRULPSOLFDWHV
DQGZLVKHGWRDVVHUWKHUSDUHQWDOULJKWVWHOOLQJ3ODLQWLIIWKDW             RWKHULQGLYLGXDOVQRUDQ\FRXQW\FRXQFLORUGHFLVLRQPDNLQJ
KHUULJKWVKDGEHHQVHYHUHGZKHQWKH\KDGQRW\HWEHHQDQG                  ERG\
ZLWKKROGLQJLQIRUPDWLRQWKDWZRXOGKDYHHQDEOHG3ODLQWLIIWR
UDLVHKHUULJKWVLQFRXUWEHIRUHWKH\KDGEHHQWHUPLQDWHG,                   )RUWKHVHUHDVRQVWKHGHFLVLRQRIWKHGLVWULFWFRXUWWRJUDQW
EHOLHYHWKDWDOORIWKHVHDFWVZHUHLQWLPDWHO\DVVRFLDWHGZLWK               VXPPDU\MXGJPHQWWR&OHUPRQW&RXQW\ZDVFRUUHFWDQGLV
WKHMXGLFLDOSURFHVVVXFKWKDW0V%UXVKZDVIXQFWLRQLQJDVDQ               DIILUPHG
DGYRFDWH DW WKH WLPH DQG VKRXOG WKHUHIRUH EH HQWLWOHG WR
DEVROXWHLPPXQLW\%HFDXVHWKLVFDVHSUHVHQWVDXQLTXHVHWRI                                                %
IDFWVLQWKDW3ODLQWLIIZDVQRWDSDUW\WRWKHFXVWRG\PDWWHULW
GRHV QRW ILW VTXDUHO\ ZLWKLQ DQ\ FDVHV SUHVHQWHG WKXV IDU            ,QWKH%ULHIIRU$SSHOODQWRULJLQDOO\ILOHGE\+ROORZD\ZLWK
0RUHRYHUWKHFDVHLVXQLTXHEHFDXVH3ODLQWLIILVVHHNLQJWR                 WKLVFRXUWWKHGLVWULFWFRXUWjVUXOLQJWKDW%UXVKDQG&OHUPRQW
KROG0V%UXVKOLDEOHIRUDFWVWKDWVKHGLGQRWSHUIRUPDV                  &RXQW\ZHUHLPPXQHIURPVXLWDVDFWRUVLQDMXGLFLDOSURFHVV
RSSRVHGWRDIILUPDWLYHDFWVSHUIRUPHGDVLVXVXDOO\WKHFDVH               ZDV FKDOOHQJHG EDVHG RQ WKH DUJXPHQW WKDW WKH &OHUPRQW
+RZHYHUE\DQDORJ\DQGQHJDWLYHLPSOLFDWLRQ0V%UXVKjV                    &RXQW\FRXUWVODFNHGMXULVGLFWLRQRYHU+ROORZD\DQGKHQFH
DFWLRQVZRXOGEHSURWHFWHGE\DEVROXWHLPPXQLW\                             FRXOGQRWEHHQWLWOHGWRLPPXQLW\7KLVDUJXPHQWLVFOHDUO\
                                                                             PLVWDNHQLWFRQIXVHVSHUVRQDOMXULVGLFWLRQDUJXDEO\ODFNLQJ
                                                                             LQ WKLV FDVH ZLWK VXEMHFW PDWWHU MXULVGLFWLRQ ZKLFK WKH
                                                                             &OHUPRQW&RXQW\&RXUWRI&RPPRQ3OHDVsXYHQLOH'LYLVLRQ
     
       7KH VDPH PD\ EH OLNHQHG WR 8QLWHG 6WDWHV $WWRUQH\V IRU H[DPSOH
                                                                             LQGLVSXWDEO\ KDG  2QO\ LQ WKH DEVHQFH RI VXEMHFW PDWWHU
ZKR DUH SDUW RI WKH 'HSDUWPHQW RI sXVWLFH ZKRVH LQWHUHVWV OLH LQ VHHLQJ
                                                                             MXULVGLFWLRQ DUH MXGLFLDO DFWRUV GHYRLG RI WKH VKLHOG RI
WKDW mMXVWLFH VKDOO EH GRQHl   %HUJHU Y 8QLWHG 6WDWHV    86     LPPXQLW\  6HH 6WXPS Y 6SDUNPDQ  86  
                                                                      FLWLQJ%UDGOH\Y)LVKHU86:DOO
     
                                                                                :KHQ KRZHYHU D FRXUW ZLWK VXEMHFW PDWWHU
       7KH DGYHUVDULDO QDWXUH RI UHODWLRQV EHWZHHQ SDUHQWV DQG VRFLDO        MXULVGLFWLRQ DFWV ZKHUH SHUVRQDO MXULVGLFWLRQ LV ODFNLQJ
ZRUNHUV LV QRW XQNQRZQ LQ WKH VRFLDO ZRUN SURIHVVLRQ ,Q IDFW D ELOO LV     MXGLFLDODQGSURVHFXWRULDODEVROXWHLPPXQLW\UHPDLQLQWDFW
SHQGLQJ LQ 0LFKLJDQ DW WKH FXUUHQW WLPH ZKLFK VHHNV WR SURWHFW DV ZHOO DV
WR FRPSHQVDWH VRFLDO ZRUNHUV ZKR DUH LQMXUHG DV D UHVXOW RI DVVDXOWV E\
                                                                             6HHLGDW
SDUHQWV ZKR DUH XQGHU LQYHVWLJDWLRQ 6HH +5  WK /HJ 5HJ 6HVV
0LFK 
    +ROORZD\Y6WDWHRI2KLRHWDO                1R       1R               +ROORZD\Y6WDWHRI2KLRHWDO         

   7KH GLVWULFW FRXUW UXOLQJ OHDYHV XQUHVROYHG KRZHYHU           ,QRWKHUZRUGVWKHPDMRULW\FODLPVWKDW0V%UXVKZDVQRW
ZKHWKHU%UXVKDVDVRFLDOZRUNHUFRXOGFODLPSURVHFXWRULDO             IXQFWLRQLQJDVDQDGYRFDWHIRUWKHVWDWHUHJDUGLQJWKHDFWLRQV
LPPXQLW\ IRU KHU SDUWLFXODU DFWLRQV LQ WKLV FDVH  +HU          IRUZKLFK3ODLQWLIIFRPSODLQVEHFDXVHWKHDFWLRQVVRPHKRZ
LPPXQLW\ ZDV QRW DGGUHVVHG E\ +ROORZD\ DSDUW IURP WKH            FRPH GRZQ WR D YLRODWLRQ RI 0V %UXVKjV GXW\ XQGHU
SUHFHGLQJDQGXQDYDLOLQJFRQWHQWLRQUHJDUGLQJMXULVGLFWLRQ            †DQG†WRPDNH3ODLQWLIISDUWRIWKHFDVH
5DWKHU+ROORZD\DWWDFNHGIRUWKHILUVWWLPHLQKHUUHSO\EULHI          SODQ ZKHUH 0V %UXVK ZDV VWDQGLQJ LQ WKH VKRHV RI WKH
%UXVKjV FODLP WKDW VKH KDG LPPXQLW\ EHFDXVH VKH ZDV              &&'+6 ZKLFK ZDV D SDUW\ WR WKH FDVH  6LPSO\ SXW WKH
LQYROYHG LQ SURVHFXWLRQ  7KH TXHVWLRQ WKXV DULVHV DV WR        PDMRULW\FRQWHQGVWKDWEHFDXVH0V%UXVKZDVVWDQGLQJLQWKH
ZKHWKHUWKDWLVVXHKDVEHHQZDLYHGDQGLVQRWUHYLHZDEOHRQ              VKRHV RI D SDUW\ LQ IDLOLQJ WR LQFRUSRUDWH 3ODLQWLII LQWR WKH
DSSHDO6HH8QLWHG6WDWHVY:DVKLQJWRQ)G              SODQVKHFRXOGQRWEHFRQVLGHUHGDQDGYRFDWHIRUWKHVWDWH
WK &LU  FLWLQJ 8QLWHG 6WDWHV Y 3HUNLQV  )G      UDWKHU0V%UXVKVKRXOGKDYHEHHQVRPHVRUWRIDGYRFDWHIRU
WK&LUKROGLQJWKDWLVVXHVUDLVHGIRUWKH          3ODLQWLII,GLVDJUHHZLWKZKDW,EHOLHYHWREHWKHPDMRULW\jV
ILUVWWLPHLQDUHSO\EULHIDUHQRWUHYLHZDEOH                         IODZHGORJLF
  7KH GRFWULQH RI :DVKLQJWRQ DQG 3HUNLQV LV LQWHQGHG WR             7REHJLQ3ODLQWLIIGLGQRWDOOHJHWKDW0V%UXVKYLRODWHG
HQVXUH WKDW WKH RSSRVLQJ SDUW\ KDV KDG D IXOO DQG IDLU         KHUGXW\WR3ODLQWLIIE\IDLOLQJWRPDNHKHUSDUWRIWKHFDVH
RSSRUWXQLW\WRFRQVLGHUDQGUHVSRQGWRWKHLVVXHLQTXHVWLRQ            SODQ XQGHU WKH VWDWXWH  :KHWKHU 0V %UXVK KDG VXFK D
,QWKHLQVWDQWFDVHWKHLVVXHZDVILUVWDUJXHGWRWKLVFRXUWE\         VWDWXWRU\GXW\WR3ODLQWLIIDQGZKHWKHU0V%UXVKYLRODWHG
%UXVK QRW +ROORZD\  7KH %ULHI IRU $SSHOOHH DW          WKDWGXW\LIVKHLQIDFWKDGRQHLVQRWUHOHYDQWWRWKHPDWWHUDW
DUJXLQJLQWKHDOWHUQDWLYHGHIHQGVWKHGLVWULFWFRXUWjVUXOLQJ          KDQG  ,QVWHDG ZH ORRN WR 0V %UXVKjV DFWLRQV IRU ZKLFK
RQ WKLV YHU\ JURXQG FLWLQJ DQG DQDO\]LQJ FDVHV WKDW             3ODLQWLII FRPSODLQV DQG ZKHWKHU WKRVH DFWLRQV FDQ EH
+ROORZD\jV5HSO\%ULHIIRU$SSHOODQWDWVXEVHTXHQWO\             FRQVLGHUHG SURVHFXWRULDO MXGLFLDO RU RWKHUZLVH LQWLPDWHO\
DGGUHVVHG7KXVWKLVLVQRWWKHVLWXDWLRQWKDW:DVKLQJWRQDQG          UHODWHGWRWKHMXGLFLDOSURFHVVZKHWKHULQVLGHRURXWVLGHRIWKH
3HUNLQVHQMRLQLQZKLFKDPDWWHULVUDLVHGIRUWKHILUVWWLPHLQ        FRXUWURRPVXFKWKDW3ODLQWLIIZDVDFWLQJDVDQDGYRFDWHIRU
WKHUHSO\EULHIOHDYLQJWKHRWKHUSDUW\DWDORVVWRUHVSRQG           WKHVWDWHDWWKHWLPH:HGRQRWORRNWRWKHDFWRULQYROYHG
+ROORZD\jVLQLWLDOEULHIFKDOOHQJLQJWKHGLVWULFWFRXUWjVUXOLQJ        QRU WKH VWDWXWH XQGHU ZKLFK VKH PD\ KDYH EHHQ DFWLQJ LQ
RIDEVROXWHLPPXQLW\REYLRXVO\JDYH%UXVKQRWLFHWKDWKHU               GHWHUPLQLQJ WKH OHYHO RI LPPXQLW\ WR EH DIIRUGHG  6HH
DEVROXWHLPPXQLW\ZDVFRQWHVWHG7KLVSURSHUO\SXWEHIRUH               %XFNOH\86DW5DWKHUZHORRNWRWKHQDWXUHRIWKH
WKLV FRXUW WKH LVVXH RI KHU DEVROXWH LPPXQLW\  %UXVK           IXQFWLRQSHUIRUPHG,G
UHVSRQGHG ZLWK D UHDVRQ IRU DEVROXWH LPPXQLW\ KHU
SURVHFXWRULDOUROH0RUHRYHULQ+ROORZD\jVVXSSOHPHQWDO                   +RZHYHUHYHQZKHQFRQVLGHULQJWKHVWDWXWHFLWHGE\WKH
EULHI ILOHG IRU WKLV UHKHDULQJ HQ EDQF WKH HQWLUH LVVXH RI   PDMRULW\DQG0V%UXVKjVGXW\WRLQFOXGH3ODLQWLIILQWKHFDVH
%UXVKjV HQWLWOHPHQW WR DEVROXWH LPPXQLW\ LV RQFH DJDLQ            SODQ,GLVDJUHHZLWKWKHPDMRULW\jVFRQWHQWLRQWKDW0V%UXVK
WKRURXJKO\GLVFXVVHG%UXVKWKXVKDGDQRWKHURSSRUWXQLW\WR             ZDVQRWDFWLQJLQDQDGYHUVDULDOUROHWRZDUG3ODLQWLIIRUDVDQ
DGGUHVV LQ IXOO WKH LVVXH RI KHU LPPXQLW\ DQG +ROORZD\jV        DGYRFDWHIRUWKHVWDWH$VDFKLOGVRFLDOZRUNHUIRUWKH6WDWH
DUJXPHQWVWRWKHFRQWUDU\7KHLVVXHLVWKHUHIRUHSURSHUO\            RI2KLR0V%UXVKLVQRWDQDGYRFDWHIRUSDUHQWVRUOHJDO
EHIRUHWKLVFRXUW                                                       FXVWRGLDQV5DWKHUKHUDGYRFDF\HIIRUWVOLHLQDVVLVWLQJWKH
                                                                         VWDWHWRVHFXUHZKDWHYHULVLQWKHEHVWLQWHUHVWVRIWKHFKLOGUHQ
                                                                         ZKLFKWKHVWDWHH[SUHVVO\VD\VVXSHUVHGHVWKHLQWHUHVWVRIWKH
    +ROORZD\Y6WDWHRI2KLRHWDO               1R       1R             +ROORZD\Y6WDWHRI2KLRHWDO      

.XU]DZD Y 0XHOOHU  )G   WK &LU                                        ,,,
H[WHQGLQJWKHDEVROXWHLPPXQLW\DIIRUGHGWRSURVHFXWRUVWR
WKRVHLQGLYLGXDOVZKRSHUIRUPDQDORJRXVIXQFWLRQVVXFKDV                 sXGJHVDQGRWKHUFRXUWRIILFHUVDUHDEVROXWHO\LPPXQHIURP
HPSOR\HHV RI VWDWH GHSDUWPHQW RI VRFLDO VHUYLFHV  7KH         VXLWRQFODLPVDULVLQJRXWRIWKHLUSHUIRUPDQFHRIMXGLFLDORU
DQDORJ\ JRHV DV IROORZV  D SURVHFXWRU IXQFWLRQV DV DQ         TXDVLMXGLFLDOIXQFWLRQV3LHUVRQY5D\86
DGYRFDWHIRUWKHVWDWHLQEULQJLQJDGHIHQGDQWWRWULDOIRUKLV         %XVKY5DXFK)GWK&LUEXW
DOOHJHGDFWVDJDLQVWDFULPHYLFWLPDVRFLDOZRUNHUIXQFWLRQV          QRWIURPVXLWVWKDWDULVHRXWRIRWKHUFRQGXFW )RUUHVWHUY
DV DQ DGYRFDWH IRU WKH VWDWH LQ EULQJLQJ SDUHQWV RU OHJDO     :KLWH86&OLQWRQYsRQHV86
FXVWRGLDQVRIFKLOGUHQWRmWULDOlIRUWKHLUDOOHJHGDFWLRQVRU         $EVROXWHLPPXQLW\LVGHWHUPLQHGE\D
SHUKDSVLQDFWLRQVDJDLQVWFKLOGUHQZKRDUHYLFWLPVRUDEXVH            IXQFWLRQDODQDO\VLVWKDWORRNVWRmµWKHQDWXUHRIWKHIXQFWLRQ
RU QHJOHFW  2I FRXUVH LQ WKH ILUVW LQVWDQFH WKH FULPLQDO   SHUIRUPHGQRWWKHLGHQWLW\RIWKHDFWRUZKRSHUIRUPHGLWjl
FXOSDELOLW\LVDOZD\VLQYRNHGZKLOHLQWKHODWWHULQVWDQFHD          %XFNOH\Y)LW]VLPPRQV86TXRWLQJ
SDUHQWPD\QRWEHFULPLQDOO\FXOSDEOHLQWKHWUDGLWLRQDOVHQVH         %XUQV Y 5HHG  86     7KH RIILFLDO
$OWKRXJKDSDUHQW PD\EHZHOOLQWHQGHGKHRUVKHVLPSO\               VHHNLQJDEVROXWHLPPXQLW\EHDUVWKHEXUGHQRIVKRZLQJWKDW
PD\QRWKDYHWKHFDSDFLW\EHLWPHQWDORUSK\VLFDOWRSURYLGH         LPPXQLW\ LV MXVWLILHG LQ OLJKW RI WKH IXQFWLRQ VKH ZDV
WKHSURSHUOHYHORIFDUHIRUKLVRUKHUFKLOGUHQVXFKWKDWLWPD\       SHUIRUPLQJ6HH%XUQV86DW
EHQHFHVVDU\IRUWKHVWDWHYLDLWVVRFLDOVHUYLFHVGHSDUWPHQW
WRLQWHUYHQHDQGXOWLPDWHO\WHUPLQDWHSDUHQWDOULJKWV,QIDFW          7KLVFRXUWKDVKHOGWKDWXQGHUFHUWDLQFLUFXPVWDQFHVVRFLDO
XQGHUWKH2KLRSUREDWHFRGHmDFRXUWVKDOOQRWFRQVLGHUWKH            ZRUNHUVDUHHQWLWOHGWRDEVROXWHLPPXQLW\6HH.XU]DZDY
HIIHFWWKHJUDQWLQJRISHUPDQHQWFXVWRG\WRWKHDJHQF\ZRXOG            0LOOHU  )G   WK &LU  KROGLQJ WKDW
KDYHXSRQDQ\SDUHQWRIWKHFKLOGlZKHUHWKHVWDWHjVSULPDU\           VRFLDO ZRUNHUV DUH HQWLWOHG WR DEVROXWH LPPXQLW\ ZKHQ
FRQFHUQLVWKHmEHVWLQWHUHVWVRIWKHFKLOGUHQl6HH2KLR5HY         SURVHFXWLQJFKLOGGHOLQTXHQF\SHWLWLRQV6DO\HUY3DWULFN
&RGH$QQ†&$QGHUVRQ                                 )G   WK &LU  UHFRJQL]LQJ WKH
                                                                        IXQFWLRQDORULHQWDWLRQRIWKHDEVROXWHLPPXQLW\GRFWULQHDQG
  7XUQLQJWRWKHPDWWHUDWKDQGWKHPDMRULW\EDVHVLWVKROGLQJ         KROGLQJWKDWVRFLDOZRUNHUVDUHHQWLWOHGWRDEVROXWHLPPXQLW\
WKDW0V%UXVKLVQRWHQWLWOHGWRDEVROXWHLPPXQLW\IRUKHU             ZKHQ ILOLQJ FKLOG DEXVH SHWLWLRQV  EXW VHH $FKWHUKRI Y
DFWLRQVRIZKLFK3ODLQWLIIFRPSODLQVRQWKHJURXQGWKDWWKH             6HOYDJJLR)GWK&LUKROGLQJWKDW
&&'+6 KDG D VWDWXWRU\ GXW\ WR DWWHPSW WR LQFRUSRUDWH            VRFLDO ZRUNHUV DUH QRW HQWLWOHG WR DEVROXWH LPPXQLW\ ZKHQ
3ODLQWLII LQWR WKH FDVH SODQ SXUVXDQW WR †   7KH     GHFLGLQJ ZKHWKHU WR RSHQ RU FRQWLQXH DQ LQYHVWLJDWLRQ RU
PDMRULW\ILQGVWKLVVLJQLILFDQWIRUWZRUHDVRQV)LUVWE\YLUWXH      ZKHQGHFLGLQJWRHQWHUDSDUHQWjVQDPHLQDFHQWUDOUHJLVWHURI
RIWKLVVWDWXWRU\GXW\WKH&&'+6ZDVRQHRIWKHSDUWLHVDQG           DEXVHUVDOORIZKLFKDUHDGPLQLVWUDWLYHRULQYHVWLJDWLYHE\
VHFRQG WKH &&'+6 ZDV D SDUW\ ZLWK D GXW\ WR DWWHPSW WR      QDWXUHUDWKHUWKDQSURVHFXWRULDO,QDOOWKUHHRIWKHVHFDVHV
REWDLQWKHDJUHHPHQWRIRWKHUSDUWLHVLQFOXGLQJWKHSDUHQWV           WKLV FRXUW KDV H[SOLFLWO\ DQDORJL]HG WKH VRFLDO ZRUNHUV WR
DQGLWGLGVRWKURXJK0V%UXVK7KHPDMRULW\WKHQFRQFOXGHV           SURVHFXWRUVIRUSXUSRVHVRIWKHIXQFWLRQDODQDO\VLV7KXVWR
WKDW0V%UXVKYLRODWHGWKLVVWDWXWRU\GXW\ZKHQVKHIDLOHGWR          GHWHUPLQH WKH VFRSH RI WKH LPPXQLW\ H[WHQGHG WR VRFLDO
LQFRUSRUDWH 3ODLQWLII LQWR WKH SODQ ZKHQ 3ODLQWLII PDGH          ZRUNHUVZHORRNWRWKHVFRSHRISURVHFXWRULDOLPPXQLW\
FRQWDFW%DVHGXSRQWKLVFRQFOXVLRQWKHPDMRULW\FRQWHQGV
WKDW0V%UXVKLPSURSHUO\GHVFULEHGKHUVHOIWR3ODLQWLIIDVKHU           $EVROXWH SURVHFXWRULDO LPPXQLW\ LV MXVWLILHG mRQO\ IRU
mDGYHUVDU\lDQGDUURJDWHGKHUVHOIWRDQDGYHUVDULDODQGTXDVL          DFWLRQV WKDW DUH FRQQHFWHG ZLWK WKH SURVHFXWRUjV UROH LQ
SURVHFXWRULDOUROHZKLFK2KLRODZGLGQRWLQWHQGKHUWRKDYH           MXGLFLDO SURFHHGLQJV QRW IRU HYHU\ OLWLJDWLRQLQGXFLQJ
    +ROORZD\Y6WDWHRI2KLRHWDO             1R       1R             +ROORZD\Y6WDWHRI2KLRHWDO        

FRQGXFWl%XUQV86DWm3URVHFXWRUVDUHHQWLWOHG         %XFNOH\UHJDUGLQJDEVROXWHLPPXQLW\DIIRUGHGWRSURVHFXWRUV
WRDEVROXWHLPPXQLW\IRUFRQGXFWµLQWLPDWHO\DVVRFLDWHGZLWK          DQGZDVH[SUHVVO\UHMHFWHGE\WKH6XSUHPH&RXUW
WKH MXGLFLDO SKDVH RI WKH FULPLQDO SURFHVVjl  ,PEOHU Y
3DFKWPDQ863URVHFXWRUV DUHQRW                  3HWLWLRQHU DUJXHV WKDW ,PEOHUjV SURWHFWLRQ IRU D
DEVROXWHO\ LPPXQH ZKHQ WKH\ SHUIRUP DGPLQLVWUDWLYH                SURVHFXWRUjVFRQGXFWLQLQLWLDWLQJDSURVHFXWLRQDQGLQ
LQYHVWLJDWLYHRURWKHUIXQFWLRQVIRUH[DPSOHZKHQWKH\JLYH          SUHVHQWLQJ WKH 6WDWHjV FDVH H[WHQGV RQO\ WR WKH DFW RI
OHJDODGYLFHWRWKHSROLFHKROGDSUHVVFRQIHUHQFHRUIDEULFDWH       LQLWLDWLRQ LWVHOI DQG WR FRQGXFW RFFXUULQJ LQ WKH
HYLGHQFH  ,ELG  m>7@KH DFWLRQV RI D SURVHFXWRU DUH QRW      FRXUWURRP7KLVH[WUHPHSRVLWLRQLVSODLQO\IRUHFORVHG
DEVROXWHO\LPPXQHPHUHO\EHFDXVHWKH\DUHSHUIRUPHGE\D                E\ RXU RSLQLRQ LQ ,PEOHU >Y 3DFKWPDQ  86 
SURVHFXWRU4XDOLILHGLPPXQLW\UHSUHVHQWVWKHQRUP7KH         @LWVHOI:HH[SUHVVO\VWDWHGWKDWWKHGXWLHVRIWKH
TXHVWLRQWKHQLVZKHWKHUWKHSURVHFXWRUVKDYHFDUULHGWKHLU           SURVHFXWRULQKLVUROHDVDGYRFDWHIRUWKH6WDWHLQYROYH
EXUGHQ RI HVWDEOLVKLQJ WKDW WKH\ ZHUH IXQFWLRQLQJ DV             DFWLRQVSUHOLPLQDU\WRWKHLQLWLDWLRQRIDSURVHFXWLRQDQG
µDGYRFDWHVjlZKHQWKH\SHUIRUPHGWKHDFWLRQVFRPSODLQHGRI             DFWLRQVDSDUWIURPWKHFRXUWURRPDQGDUHQRQHWKHOHVV
%XFNOH\86DWHPSKDVLVDGGHG7KH6XSUHPH              HQWLWOHG WR DEVROXWH LPPXQLW\  :H QRWHG LQ SDUWLFXODU
&RXUW KDV H[WHQGHG DEVROXWH LPPXQLW\ WR SURVHFXWRUV RQO\         WKDWDQRXWRIFRXUWHIIRUWWRFRQWUROWKHSUHVHQWDWLRQRI
ZKHUHWKHLUFKDOOHQJHGDFWVZHUHSHUIRUPHGZKLOHVHUYLQJDV             >D@ZLWQHVVjWHVWLPRQ\ZDVHQWLWOHGWRDEVROXWHLPPXQLW\
DQ DGYRFDWH LQ OHJDO SURFHHGLQJV  .DOLQD Y )OHWFKHU      EHFDXVHLWZDVIDLUO\ZLWKLQ>WKHSURVHFXWRUjV@IXQFWLRQDV
86                                                   DQDGYRFDWH7REHVXUH%XUQVPDGHH[SOLFLWWKHSRLQW
                                                                        ZHKDGUHVHUYHGLQ,PEOHU$SURVHFXWRUjVDGPLQLVWUDWLYH
   7KLV &LUFXLW KDV IROORZHG WKH 6XSUHPH &RXUW FORVHO\          GXWLHVDQGWKRVHLQYHVWLJDWRU\IXQFWLRQVWKDWGRQRWUHODWH
3URVHFXWRULDOLPPXQLW\H[WHQGVWRmµDSURVHFXWRUjVGHFLVLRQ             WR DQ DGYRFDWHjV SUHSDUDWLRQ IRU WKH LQLWLDWLRQ RI D
WRILOHDFULPLQDOFRPSODLQWDQGVHHNDQDUUHVWZDUUDQWDQGWKH         SURVHFXWLRQRUIRUMXGLFLDOSURFHHGLQJVDUHQRWHQWLWOHGWR
SUHVHQWDWLRQRIWKHVHPDWHULDOVWRDMXGLFLDORIILFHUjl0DQHWWD       DEVROXWH LPPXQLW\  :H KDYH QRW UHWUHDWHG KRZHYHU
Y 0DFRPE &RXQW\ (QIRUFHPHQW 7HDP  )G              IURPWKHSULQFLSOHWKDWDFWVXQGHUWDNHQE\DSURVHFXWRU
WK &LU  TXRWLQJ ,UHODQG Y 7XQLV  )G       LQSUHSDULQJIRUWKHLQLWLDWLRQRIMXGLFLDOSURFHHGLQJVRU
WK&LUFHUWGHQLHG866&W             IRUWULDODQGZKLFKRFFXULQWKHFRXUVHRIKLVUROHDVDQ
3URVHFXWRUVDUHQRWDEVROXWHO\LPPXQHKRZHYHU               DGYRFDWHIRUWKH6WDWHDUHHQWLWOHGWRWKHSURWHFWLRQVRI
ZKHQ WKH\ SHUIRUP DGPLQLVWUDWLYH LQYHVWLJDWLYH RU RWKHU         DEVROXWH LPPXQLW\  7KRVH DFWV PXVW LQFOXGH WKH
IXQFWLRQV  0DQHWWD  )G DW  GHQ\LQJ DEVROXWH          SURIHVVLRQDOHYDOXDWLRQRIWKHHYLGHQFHDVVHPEOHGE\WKH
LPPXQLW\ WR D SURVHFXWRU IRU LQYHVWLJDWLQJ D FRXSOH DQG         SROLFHDQGDSSURSULDWHSUHSDUDWLRQIRULWVSUHVHQWDWLRQ
KROGLQJWKHPRQH[WRUWLRQFKDUJHVZLWKRXWSUREDEOHFDXVH              DWWULDORUEHIRUHDJUDQGMXU\DIWHUDGHFLVLRQWRVHHNDQ
m6L[WK &LUFXLW SUHFHGHQW KDV HVWDEOLVKHG WKDW µWKH FULWLFDO      LQGLFWPHQWKDVEHHQPDGH
LQTXLU\LVKRZFORVHO\UHODWHGLVWKHSURVHFXWRUjVFKDOOHQJHG
DFWLYLW\WRKLVUROHDVDQDGYRFDWHLQWLPDWHO\DVVRFLDWHGZLWK        %XFNOH\ 86DWLQWHUQDOTXRWDWLRQPDUNVDQG
WKHMXGLFLDOSKDVHRIWKHFULPLQDOSURFHVVjl3XVH\Y&LW\RI       FLWDWLRQVRPLWWHGHPSKDVLVDGGHG
µ@WKHQDWXUHRIWKHIXQFWLRQ        PDLQWDLQ D FDVH SODQ IRU DQ\ FKLOG WR ZKRP WKH DJHQF\ LV
SHUIRUPHGQRWWKHLGHQWLW\RIWKHDFWRUZKRSHUIRUPHGLWjl            SURYLGLQJVHUYLFHVlWKLVDSSOLHVIRUH[DPSOHZKHQDVLQWKLV
%XFNOH\Y)LW]VLPPRQV86TXRWLQJ               FDVHWKDWDJHQF\KDVWHPSRUDU\FXVWRG\RIWKHFKLOG2KLR
)RUUHVWHUY:KLWH86                         5HY&RGH$QQ†$DQG$%DOGZLQ
                                                                        'D\WRGD\UHVSRQVLELOLW\IRUWKDWFDVHSODQjVPDQDJHPHQWLV
   %HFDXVHVRFLDOZRUNHUVDUHDQDORJL]HGWRSURVHFXWRUVIRU             LQWKHKDQGVRIWKHFDVHZRUNHU,GDW†%,Q
LPPXQLW\ SXUSRVHV DQG EHFDXVH , DFNQRZOHGJH WKDW LQ             VXFK D VLWXDWLRQ WKH DJHQF\ SUHSDULQJ WKH FDVH SODQ mVKDOO
GHWHUPLQLQJ ZKHWKHU D SURVHFXWRU LV HQWLWOHG WR DEVROXWH         DWWHPSWWRREWDLQDQDJUHHPHQWDPRQJDOOSDUWLHVLQFOXGLQJ
LPPXQLW\ ZH ORRN WR KRZ FORVHO\ UHODWHG WKH FKDOOHQJHG          EXWQRWOLPLWHGWRWKHSDUHQWVJXDUGLDQRUFXVWRGLDQRIWKH
DFWLYLW\LVWRWKHSURVHFXWRUjVUROHDVDQDGYRFDWHVHH3XVH\          FKLOG DQG WKH JXDUGLDQ DG OLWHP RI WKH FKLOG UHJDUGLQJ WKH
Y&LW\RI056 +2//2:$<@ 7+(1 &217$&7(' 7+(

SUHVHQWHG RU ZLWKKHOG E\ D SURVHFXWRU LQ D FULPLQDO                  '(37>@ 2) +80$1 6(59,&(6 ,1 &/(50217 &2 ,1
                                                                              %$7$9,$>@ 2+,2 $7 :+,&+ 7,0( $ 6$//< %586+
SURFHHGLQJ5DWKHULWZDVWKHIDFWWKDWDSDUW\ORQJVRXJKWE\              7+( &+,/'5(1>j@6 62&,$/ :25.(5 6(7 83 $ 7,0(
WKH FRXUW KDG DSSHDUHG DQG ZLVKHG WR DGGUHVV WKH FRXUW WR           72 &$// +(5>@ '85,1* 7+,6 3+21( &$// 06>@
DVVHUWKHUOHJDOULJKWVLWZDVWKHIDFWWKDWWKHMXYHQLOHFRXUWjV            %586+ ,1)250(' 056>@ +2//2:$< 7+$7 7+(<
GHFLVLRQRQWKHUHFRPPHQGDWLRQVRIWKHUHIHUHHZKRKDGKHOG                  +$' 7$.(1 7+( .,'6 )520 7+(,5 )$7+(5 $1'
WKH'HFHPEHUKHDULQJDQGILOHGWKHsDQXDU\                  7+$7 7+(< +$' $/62 7$.(1 $:$< +(5 3$5(17$/
                                                                              5,*+76>@ 7+(< &28/' 127 7(// +(5 :+< 25 (9(1
UHSRUW ZDV VWLOO SHQGLQJ DQG WKH IDFW WKDW LQ $SULO  D       +2: 7+(< 7+28*+ >VLF@ 7+(< &28/' '2 7+,6 $1'
KHDULQJ KDG EHHQ KHOG WR DIIRUG WKH FKLOGUHQjV IDWKHU DQ             7+(1 7+(< &87 2)) $// &217$&7 :,7+ +(5
RSSRUWXQLW\WRDVVHUWKLVULJKWVLWZDVWKHIDFWWKDW+ROORZD\              :,7+287 $1< .,1' 2) 3529( >VLF@
                                                                          s$ DW  HPSKDVLV LQ RULJLQDO
    +ROORZD\Y6WDWHRI2KLRHWDO                1R        1R              +ROORZD\Y6WDWHRI2KLRHWDO        

FRQFHGHG,VLPSO\VHHQRGXHSURFHVVYLRODWLRQRQWKHSDUW              KDGVKHQRWEHHQPLVLQIRUPHG E\ %UXVKZRXOGKDYHEHHQ
RI0V%UXVKXQGHUWKHVHIDFWV                                           DEOHWRDVNWKHFRXUWIRUDVLPLODUKHDULQJRQKHUULJKWVEHIRUH
                                                                          DGHFLVLRQZHUHPDGH7KLVLVQRWHYLGHQFHLQWKHFDVHEXW
   ,I WKH PDMRULW\ EHOLHYHV RWKHUZLVH DV LW PXVW VLQFH LW LV   UDWKHU DGPLQLVWUDWLYH LQIRUPDWLRQ DERXW WKH FDVH DQG LWV
UHPDQGLQJWKHFDVHIRUWULDO,ZRXOGDGPRQLVKWKHPDMRULW\               SRVWXUH
IRUPDNLQJFUHGLELOLW\ILQGLQJVDERXW0V%UXVKVXFKDVVKH
mOLHGlWR3ODLQWLIIRUmKLGl3ODLQWLIIRUmUHIXVHGWRGLVFXVVWKH         1RU DUH %UXVKjV DFWLRQV DQDORJRXV WR D SURVHFXWRUjV
FDVHl ZLWK 3ODLQWLII  7KHVH ILQGLQJV DUH FRPSOHWHO\               GHFLVLRQ DERXW ZKHWKHU D JLYHQ ZLWQHVV VKDOO RU VKDOO QRW
LQDSSURSULDWHDWWKLVVWDJHRIWKHSURFHHGLQJVXQVXSSRUWHGE\            WHVWLI\ZKLFKLVHQWLWOHGWRDEVROXWHLPPXQLW\6HH%XFNOH\
WKHUHFRUGDQGLQGLFDWHWKHPDMRULW\jVXQIRXQGHGELDVDJDLQVW             86 DW  FLWLQJ ,PEOHU  86 DW  Q
0V%UXVK)RUH[DPSOHEDVHGXSRQWKHDERYHUHFLWDWLRQRI               :KDWHYHUODWLWXGHDSURVHFXWRUKDVWRFRQWUROWKHWHVWLPRQ\RI
XQGLVSXWHGIDFWVLWLVGLIILFXOWWRLPDJLQHLQZKDWUHVSHFW0V          KLV ZLWQHVV LV LUUHOHYDQW KHUH  :LWQHVVHV RWKHU WKDQ WKH
%UXVKmKLGl3ODLQWLII6KHWROGDWWRUQH\)OHVVDRI3ODLQWLIIjV           GHIHQGDQW JHQHUDOO\ KDYH QR ULJKW WR WHVWLI\ LQ FULPLQDO
ZKHUHDERXWV DGYLVHG 3ODLQWLII WR VHHN OHJDO FRXQVHO DQG          SURFHHGLQJV%XW+ROORZD\GLGKDYHDULJKWWREHKHDUGE\
LQIRUPHGKHUVXSHUYLVRURIWKHVLWXDWLRQLQWKHHYHQW3ODLQWLII           WKH MXYHQLOH FRXUW  0RUHRYHU +ROORZD\ ZDV LQ QR VHQVH
WHOHSKRQHGZKLOH0V%UXVKZDVRXWRIWKHRIILFH2QHFDQ                %UXVKjVZLWQHVVDQGWKLVLVQRWDVLWXDWLRQRIDSURVHFXWRUjV
MXVW DV HDVLO\ VXUPLVH XQGHU WKHVH IDFWV WKDW 0V %UXVKjV        FRQWUROOLQJ%UXVKjVDFWLRQV+ROORZD\ZDVDSDUW\DQDORJRXV
DFWLRQV ZHUH OHJDOO\ VRXQG DQG LQ DFFRUGDQFH ZLWK DGYLFH          WRDGHIHQGDQW LQDFULPLQDOSURFHHGLQJZKRVHULJKWWREH
IURP DWWRUQH\ )OHVVD ZKR DVVXUHG KHU WKDW QR GXH SURFHVV         KHDUGLQFRXUWPD\KDYHEHHQGHQLHGE\%UXVKjVDFWLRQVXQGHU
YLRODWLRQKDGRFFXUUHGDVZHOODVKRQRUDEOHLQWKDWVKHDFWHG            FRORURIODZ
RXWRIFRQFHUQIRUZKDWZDVLQWKHFKLOGUHQjVEHVWLQWHUHVWVo
ZKLFKLVSDUDPRXQWWRWKHSDUHQWVjLQWHUHVWVXQGHU2KLRODZ                 2QFHVXFKSRWHQWLDODQDORJLHVWRSURVHFXWRULDOIXQFWLRQVDUH
6HH2KLR5HY&RGH$QQ†&m>$@FRXUWVKDOOQRW               VHHQDVVSXULRXVLWLVGLIILFXOWWRVHHLQZKDWVHQVH%UXVKjV
FRQVLGHUWKHHIIHFWWKHJUDQWLQJRISHUPDQHQWFXVWRG\WRWKH              DFWLRQVZHUHLQWKHZRUGVRIWKH0DJLVWUDWHsXGJHjV5HSRUW
DJHQF\ZRXOGKDYHXSRQDQ\SDUHQWRIWKHFKLOGl                        DQG 5HFRPPHQGDWLRQ DGRSWHG E\ WKH GLVWULFW FRXUW mDQ
                                                                          LQWHJUDOSDUWRIWKHMXGLFLDOSURFHVVl,WLVWUXHWKDW%UXVK
   %HIRUH DGGUHVVLQJ WKH LPPXQLW\ LVVXH , SDXVH WR WDNH          ZDVLQYROYHGmLQLQLWLDWLQJWKHFRXUWSURFHHGLQJVLQYROYLQJ
H[FHSWLRQZLWKWKHPDMRULW\jVGHFLVLRQWRLJQRUH\HWDQRWKHU              WKH +ROORZD\ FKLOGUHQ DQG LQ WHVWLI\LQJ RQ EHKDOI RI WKH
EDVLV XSRQ ZKLFK WR GHFOLQH UHYLHZ o 3ODLQWLIIjV IDLOXUH WR      LQWHUHVWVRIWKHFKLOGUHQLQFRXUWl,ELG%XWWKRVHDUHQRWWKH
UDLVHDQGDUJXH0V%UXVKjVLPPXQLW\LQWKLVFRQWH[WERWKLQ             DFWLRQV FRPSODLQHG RI  ,W LV KHU RXWRIFRXUW DFWLRQV
WKHGLVWULFWFRXUWDVZHOODVLQKHULQLWLDOEULHIWRWKLV&RXUW         PLVLQIRUPLQJ+ROORZD\DQGIDLOLQJWRLQIRUPWKHFRXUWRIWKH
$OWKRXJKLWLVWUXHWKDW0V%UXVKUDLVHGDQGDUJXHGWKDWVKH             ODWWHUjVDSSHDUDQFHWKDWDUHWKHEDVLVRIWKLVVXLW%UXVKPD\
ZDVDEVROXWHO\LPPXQHIURPOLDELOLW\EHORZDQGWRWKLV&RXUW             KDYH EHHQ DQ LQWHJUDO SDUW RI WKH MXGLFLDO SURFHVV DW RWKHU
LWLVHTXDOO\DVWUXHWKDW3ODLQWLIIIDLOHGWRFRPSO\ZLWKWZR            VWDJHV%XWVXFKDQLQYROYHPHQWLVQRWE\LWVHOIVXIILFLHQW
SURFHGXUDOSUHUHTXLVLWHVWRWKLV&RXUWjVUHYLHZ6HH:KLWHY            IRUDEVROXWHLPPXQLW\7KH6XSUHPH&RXUWKDVH[SOLFDWHGWKH
$QFKRU 0RWRU )UHLJKW ,QF  )G   WK &LU          DSSURSULDWH VWDQGDUG RQ VHYHUDO RFFDVLRQV  m7KH TXHVWLRQ
:ULJKW Y +ROEURRN  )G   WK &LU          LVZKHWKHUWKHSURVHFXWRUVKDYHFDUULHGWKHLUEXUGHQRI
7KHPDMRULW\FRQWHQGVWKDWEHFDXVH0V%UXVKKDGDQ               HVWDEOLVKLQJ WKDW WKH\ ZHUH IXQFWLRQLQJ DV µDGYRFDWHVjl DV
RSSRUWXQLW\DQGLQIDFWZDVWKHILUVWWRDGGUHVVKHUOHYHORI             RSSRVHG IRU H[DPSOH WR DX[LOLDU\ SROLFH ZKHQ WKH\
LPPXQLW\LQWKLVUHJDUGWKH&RXUWjVSURFHGXUDOSUHUHTXLVLWHV             SHUIRUPHGWKHDFWLRQVFRPSODLQHGRI%XFNOH\86DW
    +ROORZD\Y6WDWHRI2KLRHWDO                1R       1R              +ROORZD\Y6WDWHRI2KLRHWDO        

 VHH DOVR .DOLQD  86 DW  H[WHQGLQJ DEVROXWH       DQGDVVXUHG0V%UXVKWKDWVKHmVKRXOGQRWZRUU\QHHGOHVVO\
LPPXQLW\ WR SURVHFXWRUV RQO\ ZKHUH WKHLU FKDOOHQJHG DFWV          DERXW >3ODLQWLII@ GLVUXSWLQJ WKH ZKROH SURFHVV  :H GLG
ZHUH SHUIRUPHG ZKLOH VHUYLQJ DV DQ DGYRFDWH LQ OHJDO             HYHU\WKLQJ OHJDOO\ DV WR SXEOLFDWLRQQRWLFHl  ,G  7KH QH[W
SURFHHGLQJV3XVH\)GDWLPPXQLW\WXUQVRQWKH               GD\ sXQH   0V %UXVK FDOOHG DWWRUQH\ )OHVVD DQG
SURVHFXWRUjVUROHDVDQDGYRFDWHLQWLPDWHO\DVVRFLDWHGZLWK              UHTXHVWHGDFRS\RIWKHOHWWHUWKDWKHWROG0V%UXVKKHZDV
WKH MXGLFLDO SKDVH RI WKH FULPLQDO SURFHVV  (YHQ LI %UXVK    VHQGLQJ WR 3ODLQWLII WKH &&s& ILOHG DQ RUGHU DGRSWLQJ WKH
FRXOGVXFFHVVIXOO\H[SODLQKRZIDLOLQJWRWHOOWKHFRXUWWKDW            UHIHUHHjV UHFRPPHQGDWLRQ WKDW WKH &&'+6 EH DZDUGHG
+ROORZD\ KDG DSSHDUHG DQG ZLVKHG WR DVVHUW KHU SDUHQWDO          SHUPDQHQW FXVWRG\ RI WKH FKLOGUHQ  ,G  3ODLQWLII GLG QRW
ULJKWV O\LQJ WR +ROORZD\ DERXW KHU ULJKWV DQG IDLOLQJ WR      FRQWDFW WKH &&s& XQWLO )HEUXDU\   o GHVSLWH EHLQJ
LQIRUP +ROORZD\ WKDW WKH PDWWHU ZDV VWLOO SHQGLQJ ZHUH           GLUHFWHGE\WKH.DQVDV'LVWULFW&RXUWWRGRVRVRPHHLJKWHHQ
LQWLPDWHO\FRQQHFWHGZLWKWKHMXGLFLDOSURFHVVVKHKDVQRW              PRQWKVEHIRUHKDQGDQGRQO\DIWHULWZDVUHFRPPHQGHGLQWKH
H[SODLQHG KRZ WKH\ ZHUH WKH IXQFWLRQV RI DQ DGYRFDWH RU         2KLR 'LVWULFW &RXUW WKDW WKH 6WDWH RI 2KLR DQG 2KLR
FRQVLVWHQWZLWKKHUVWDWXWRU\UROH                                      'HSDUWPHQWRI+XPDQ6HUYLFHVEHGLVPLVVHGIURPVXLWoDW
                                                                         ZKLFKWLPHDQDWWRUQH\ZDVDSSRLQWHGIRU3ODLQWLIIDQGVKH
  1RU DUH WKH DFWLRQV RI ZKLFK +ROORZD\ FRPSODLQV                 VRXJKWDUHYHUVDORIWKHFRXUWjVSHUPDQHQWFXVWRG\RUGHU
DQDORJRXVWRUHFRPPHQGDWLRQVPDGHE\FDVHZRUNHUVWRWKH
FRXUW RU WKH mIRUPXODWLRQ RI SURIHVVLRQDO MXGJPHQWV WKDW           8QGHUWKHVHIDFWVDQGFRQVLGHULQJWKDW3ODLQWLIIjVFRXQVHO
VHUYHG DV WKH EDVLV IRUl VXFK UHFRPPHQGDWLRQV ZKLFK WKH         FRQFHGHGDWRUDODUJXPHQWWKDW0V%UXVKGLGDOOWKDWZDV
7KLUG&LUFXLWKDVKHOGDUHHQWLWOHGWRLPPXQLW\6HH(UQVWY           QHFHVVDU\WRVHUYH3ODLQWLIIZLWKQRWLFHRIWKHKHDULQJV,ILQG
&KLOG	@DVDQ                LQFOXGHDUHTXHVWIRUSHUPDQHQWFXVWRG\,G7KH&&'+6
DGMXGLFDWLRQRQWKHPHULWVlIRUSUHFOXVLYHSXUSRVHV)HG5                 WKURXJK6DOO\%UXVKDWWHPSWHGWRVHUYH3ODLQWLIIZLWKDFRS\
&LY 3 5XOH E  6LPLODUO\ mWKH ODZ RI WKH FDVH LV      RIWKHDPHQGHGFRPSODLQWE\FHUWLILHGPDLODQGZKHQWKDW
EDVHGXSRQVRXQGSROLF\WKDWZKHQDQLVVXHLVRQFHOLWLJDWHG                  IDLOHGLWDWWHPSWHGWRVHUYH3ODLQWLIIYLDSXEOLFDWLRQ,G,Q
DQGGHFLGHGWKDWVKRXOGEHWKHHQGRIWKHPDWWHUl8QLWHG                   )HEUXDU\ RI  WKH &&s& DGMXGLFDWHG WKH FKLOGUHQ
6WDWHVY8QLWHG6WDWHV6PHOWLQJ5HILQLQJ	0LQLQJ&R                   GHSHQGHQWDQGFRQWLQXHGWKHDJHQF\jVWHPSRUDU\FXVWRG\,G
86:KHQDFDVHLVGLVPLVVHGRUDPRWLRQ
GHQLHGIRUODFNRIVXEMHFWPDWHUMXULVGLFWLRQQRWKLQJKDVEHHQ                 7KH FKLOGUHQ ZHUH SODFHG ZLWK UHODWLYHV LQ WKH VWDWH RI
mOLWLJDWHGDQGGHFLGHGlDQGQHLWKHUVHWRISULQFLSOHVFRPHV                   :DVKLQJWRQ KRZHYHU WKDW SODFHPHQW IDLOHG DQG LQ
LQWR SOD\  7KH PHULWV RI +ROORZD\jV GDPDJHV FODLP ZHUH              6HSWHPEHURIWKH&&'+6ILOHGDPRWLRQIRUSHUPDQHQW
QHLWKHUOLWLJDWHGQRUGHFLGHGE\WKH.DQVDVGLVWULFWFRXUWQRU               FXVWRG\  +ROORZD\  1(G DW   2QFH DJDLQ WKH
LVWKDWFODLPDWDOOWKHVDPHDVWKHRQHEHIRUHXVVDYHLQWKH               &&'+6DWWHPSWHGWRVHUYH3ODLQWLIIQRWLFHRIWKHPRWLRQE\
H\HVRIWKHGLVVHQW7KHGHQLDORIKHUODWHUPRWLRQWKXVDGGV                SXEOLFDWLRQ,G%UXVKILOHGDQDIILGDYLWZLWKWKH&&s&LQ
QRIRUFHWRWKHGLVVHQWjVODZRIWKHFDVHDUJXPHQW                           ZKLFK VKH VWDWHG WKDW VKH ZDV XQDEOH WR REWDLQ D FXUUHQW
                                                                              DGGUHVV IRU 3ODLQWLII GHVSLWH KHU FDOOV WR VRFLDO VHUYLFH
  7KH GLVVHQWjV DOWHUQDWLYH EDVLV LQ WKH 5RRNHU)HOGPDQ                 DJHQFLHVLQ$UL]RQD:DVKLQJWRQ2NODKRPD&DOLIRUQLDDQG
GRFWULQHEHJVWKHTXHVWLRQ7KDWGRFWULQHWHDFKHVWKDWIHGHUDO               &RORUDGR2Q'HFHPEHUDKHDULQJRQWKHPRWLRQ
FRXUWVKDYHQRVXEMHFWPDWWHUMXULVGLFWLRQWRHQWHUWDLQIHGHUDO               ZDV KHOG DQG LW ZDV UHFRPPHQGHG E\ WKH UHIHUHH WKDW WKH
    +ROORZD\Y6WDWHRI2KLRHWDO               1R       1R              +ROORZD\Y6WDWHRI2KLRHWDO        

UHTXLUHPHQW RI VHHNLQJ GLUHFW UHYLHZ LQ WKH 8QLWHG 6WDWHV       FRQVWLWXWLRQDOFODLPVWKDWDUHmLQH[WULFDEO\LQWHUWZLQHGlZLWK
6XSUHPH &RXUW E\ FDVWLQJ KHU ODZVXLW DV D VHFWLRQ          D VWDWH FRXUWjV UXOLQJ LQ DQ HDUOLHU DFWLRQ ZKHQ WKHLU
DFWLRQ )HOGPDQjV MXULVGLFWLRQDO EDU DSSOLHVl 'XE\ Y          DGMXGLFDWLRQZRXOGEHWDQWDPRXQWWRDmUHYLHZ>RI@WKHVWDWH
0RUDQ  ) 6XSS   6' :9D                FRXUWGHFLVLRQl'LVWULFWRI&ROXPELD&RXUWRI $SSHDOVY
GLVPLVVLQJWKHSODLQWLIIjV†GXHSURFHVVFODLPVHHNLQJ            )HOGPDQ86Q1RFRXUWVDYHWKH
WKHUHWXUQRIKHUFKLOGUHQDQGGDPDJHVIRUODFNRIVXEMHFW             GLVWULFWFRXUWZKRVHGHFLVLRQZHUHYLHZKHUHKDVDGGUHVVHG
PDWWHUMXULVGLFWLRQXQGHU5RRNHU)HOGPDQZKLOHFRQFOXGLQJ              WKHTXHVWLRQRIZKHWKHU%UXVKHQMR\VLPPXQLW\IURPVXLWIRU
WKDW WKH SODLQWLIIjV UHFRXUVH ZDV ZLWK WKH 8QLWHG 6WDWHV        KHU DOOHJHG DFWV  7KH GLVVHQW DVVXPHV SUHFLVHO\ ZKDW LV DW
6XSUHPH&RXUW                                                         LVVXHLWWKLQNV)HOGPDQLVDSSOLFDEOHEHFDXVHLWDVVXPHVWKDW
                                                                        DFWVXQGHUWDNHQLQWKHFRXUVHRIWKHFXVWRG\SURFHHGLQJVZHUH
  ' 6XPPDU\                                                            DQ LQWHJUDO SDUW RI WKRVH SURFHHGLQJV KHQFH HQWLWOHG WR
                                                                        DEVROXWHLPPXQLW\%XWHYHQDGHFLVLRQWKDWWKH\DUHQRWVR
  ,Q VXPPDU\ , ZRXOG DIILUP WKH GLVWULFW FRXUWjV RUGHU         HQWLWOHGGRHVQRWFRQVWLWXWHDUHYLHZRIWKHFXVWRG\GHFLVLRQ
GLVPLVVLQJ 3ODLQWLIIjV FDVH KRZHYHU , ZRXOG GR VR RQ          ZKLFKLVDQHQWLUHO\VHSDUDWHVWDWHPDWWHU7KRVHFRXUWVKDYH
GLIIHUHQWJURXQGV6HHsDFNVRQY&LW\RI&ROXPEXV)G           KHOGWKDW+ROORZD\jVSDUHQWDOULJKWVZHUHVHYHUHGZLWKRXWD
WK&LUFLWLQJ5XVVj.ZLN&DU:DVK,QFY           SURSHU KHDULQJ WKH TXHVWLRQ EHIRUH XV LV UDWKHU ZKHWKHU
0DUDWKRQ3HWUROHXP&R)GWK&LU             FHUWDLQDFWLRQVLQWKHFRXUVHRIWKRVHSURFHHGLQJVPD\KDYH
6SHFLILFDOO\,ZRXOGDIILUPWKHGLVWULFWFRXUWjVGLVPLVVDORQ          LQYROYHG DYLRODWLRQRIKHUIHGHUDOFRQVWLWXWLRQDOULJKWVIRU
WKHEDVLVRIWKHODZRIWKHFDVHGRFWULQHRUIRUODFNRIVXEMHFW        ZKLFKWKHUHVSRQVLEOHSDUW\PD\EHKHOGOLDEOHIRUGDPDJHV
PDWWHUMXULVGLFWLRQ                                                    7KHFRQFHSWXDOGLVWLQFWLRQFRXOGQRWEHPRUHFOHDU
   $OWKRXJK,ILUPO\EHOLHYHWKHGLVWULFWFRXUWDQGWKLV&RXUW             +ROORZD\KDVQRWVRXJKW†GDPDJHVDJDLQVW%UXVKLQ
DOLNHVKRXOGQRWEHH[HUFLVLQJRXUKHDY\KDQGVLQUHDFKLQJWKH          VWDWH FRXUW DQG KHU FRPSODLQW WKHUH WKDW VHYHUDQFH RI KHU
LPPXQLW\LVVXHKHUH,ZLOODGGUHVVWKHPDWWHULQWKHVHFWLRQ           SDUHQWDOULJKWVFRQVWLWXWHGDGXHSURFHVVYLRODWLRQUHVWHGRQO\
WKDWIROORZVEHFDXVH,EHOLHYHZLWKHYHQJUHDWHUFRQYLFWLRQ             RQ D FODLP RI LQVXIILFLHQW QRWLFH QRWLFH FDQ EH IDWDOO\
WKDW 6DOO\ %UXVK LV HQWLWOHG WR DEVROXWH LPPXQLW\ IRU KHU      GHIHFWLYHDQGZDVKHOGWREHLQWKLVFDVHE\WKH2KLRFRXUWV
DFWLRQV DW LVVXH LQ WKLV FDVH ZKLFK ZHUH SURVHFXWRULDO LQ      ZLWKRXW DQ\ TXHVWLRQ RI SHUVRQDO OLDELOLW\ EHLQJ UDLVHG
QDWXUH                                                                 ,QGHHGWKHFODLPVDJDLQVW%UXVKWKDWZHSHUPLWWRJRIRUZDUG
                                                                        GRQRWUHODWHWRWKHGHIHFWVLQQRWLFHIRXQGE\WKH2KLRFRXUWV
,,, 3/$,17,))j6 †  352&('85$/ '8(                              2QFHDJDLQ+ROORZD\ZDVQRWVHHNLQJGDPDJHVLQVWDWHFRXUW
     352&(66 &/$,0 $1' 7+( /(9(/ 2)                                EXWWKHUHRSHQLQJRIFXVWRG\SURFHHGLQJV,WLVWKHGLVVHQW
     ,0081,7< $))25'(' 72 '()(1'$176 ,1                             QRW+ROORZD\ZKRNHHSVHQWDQJOLQJWKHVHVHSDUDWHPDWWHUV
     7+,60$77(5
                                                                          &RQVHTXHQWO\ LW LV FOHDU WKDW WKH GRPHVWLF UHODWLRQV
  ,DJUHHWKDW&OHUPRQW&RXQW\ZDVSURSHUO\GLVPLVVHGIRU               H[FHSWLRQ WR IHGHUDO MXULVGLFWLRQ KDV QR DSSOLFDELOLW\  ,Q
WKH UHDVRQV VWDWHG E\ WKH PDMRULW\ KRZHYHU , VWURQJO\         FRQVLGHULQJWKLVFDVHWKLVFRXUWKDVQRWWUHVSDVVHGLQDQ\ZD\
GLVDJUHH ZLWK WKH PDMRULW\jV SRVLWLRQ WKDW WKH GLVWULFW FRXUW   RQ WKH VWDWH FRXUWVj DSSURSULDWH MXULVGLFWLRQ RYHU WKH
HUUHGLQJUDQWLQJ6DOO\%UXVKDEVROXWHLPPXQLW\LQFRQQHFWLRQ           XQGHUO\LQJFKLOGFXVWRG\GLVSXWH1RUKDYHZHH[SUHVVHGLQ
ZLWKKHUDFWLRQVIRUZKLFK3ODLQWLIIFRPSODLQVSDUWLFXODUO\LQ         WKHVOLJKWHVWGHJUHHDQ\YLHZDVWRWKHPHULWVRIRQHVLGHRU
WKLVFDVHZKLFK,EHOLHYHLVZLWKRXWPHULW                             WKHRWKHULQWKDWPDWWHU7KHGLVVHQWRQWKHRWKHUKDQGGRHV
    +ROORZD\Y6WDWHRI2KLRHWDO                1R       1R               +ROORZD\Y6WDWHRI2KLRHWDO         

QRW GLVJXLVH LWV KRVWLOLW\ WR +ROORZD\jV GHVLUH IRU WKH          sHIIHUVRQ &RXQW\ &RORUDGR FODLPLQJ WKDW WKH GHIHQGDQWV
UHVWRUDWLRQ RI SDUHQWDO ULJKWV EXW UDWKHU HYLQFHV D FXULRXV     YLRODWHGKLVULJKWWRHTXDOSURWHFWLRQDQGGXHSURFHVVRIODZ
DQLPXV DJDLQVW KHU RQ WKH PHULWV UHSHDWHGO\ RSLQLQJ WKDW        E\ DZDUGLQJ PRWKHUV FXVWRG\ RI FKLOGUHQ LQ FKLOG FXVWRG\
ILQDOLW\LQWKLVFDVHLVLQWKHFKLOGUHQjVEHVWLQWHUHVWDVZHOODV     GLVSXWHV  7KH SODLQWLII VRXJKW GHFODUDWRU\ DQG LQMXQFWLYH
VKRZLQJDQ2O\PSLDQGLVGDLQIRUKHUVHDUFKIRUGDPDJHVZLWK              UHOLHI XQGHU †  DV ZHOO DV D ZULW RI KDEHDV FRUSXV
ZKLFKmWRFRYHUH[SHQVHVIRUDVKRUWSHULRGRIWLPHl,QIUDDW          GLUHFWLQJWKDWKLVVRQEHUHWXUQHGWRKLVFXVWRG\6HHLG,Q
                                                                      DIILUPLQJWKHGLVWULFWFRXUWjVGLVPLVVDORIWKHSODLQWLIIjVFODLP
                                                                         WKH&RXUWRI$SSHDOVIRUWKH7HQWK&LUFXLWILUVWQRWHGWKDWWKH
   7RIRFXVDWOHQJWKDVWKHGLVVHQWGRHVRQZKHWKHUQRWLFHWR         3ODLQWLIIjVDWWHPSWWRLQYRNHIHGHUDOKDEHDVMXULVGLFWLRQZDV
+ROORZD\ZDVRUZDVQRWGHIHFWLYHDVWKRXJKWKDWZHUHWKH               IRUHFORVHGXQGHU/HKPDQ,G7KH7HQWK&LUFXLWWKHQIRXQG
EDVLV IRU WKLV FRPSODLQW DQG WR LQVLVW WKDW VXFK QRWLFHjV      WKDW XQGHU WKH 5RRNHU)HOGPDQ GRFWULQH WKH FRXUW ODFNHG
VXIILFLHQF\ZDVmFRQFHGHGlE\+ROORZD\LVLGOHTXLWHDSDUW             MXULVGLFWLRQWRKHDUWKH†FODLPVEHFDXVHWKHSODLQWLII
IURPWKHIDFWWKDWWKH2KLR&RXUWRI$SSHDOVKDVQRWFRQFHGHG            ZDV PDNLQJ D VSHFLILF FKDOOHQJH WR D VWDWH FRXUW GHFLVLRQ
WKLVEXWKDVKHOGWKDWQRWLFHE\SXEOLFDWLRQZDVLQVXIILFLHQW           ZKHUHWKHUHOLHIVRXJKWZDVLQWKHQDWXUHRIDSSHOODWHUHYLHZ
LQWKLVFDVH6HHVXSUDDW1RWLFHWR+ROORZD\LVKDUGO\WKH         RIDVWDWHFRXUWMXGJPHQW,G7KHFRXUWFRQFOXGHGWKDWWKH
LVVXHKHUH7KHUHDOLVVXHLVZKHWKHU%UXVKjVDOOHJHGIDLOXUH           SODLQWLIIjVmUHFRXUVHLIDQ\LVWRH[KDXVWKLVDSSHDOVLQWKH
WRQRWLI\WKHFRXUWWKDW+ROORZD\KDGILQDOO\VXUIDFHGZKLOH            &RORUDGR FRXUWV DQG WR SHWLWLRQ WKH 6XSUHPH &RXUW RI WKH
LWVGHFLVLRQRQSHUPDQHQWFXVWRG\ZDVVWLOOSHQGLQJDQGKHU             8QLWHG6WDWHVIRUFHUWLRUDULUHYLHZRIWKHGHFLVLRQRIWKHVWDWH
DOOHJHGFRQFHDOPHQWIURP+ROORZD\RIWKDWSHQGHQF\ZDVD                VXSUHPHFRXUWl,GDW
YLRODWLRQRI+ROORZD\jVULJKWVWRZKLFKOLDELOLW\DWWDFKHV
                                                                           /LNHZLVHLQWKHSUHVHQW FDVHWRWKHH[WHQWWKDW3ODLQWLII
  1RUGRHVWKHFKLOGUHQjVEHVWLQWHUHVWZKLFKLVQRWEHIRUH             UHTXHVWVWKDWWKHGLVWULFWFRXUWRUGHU'HIHQGDQWVWRUHWXUQKHU
WKLVFRXUWDQGDVWRZKLFKWKLVFRXUWKROGVQRYLHZKDYHDQ\           FKLOGUHQ WR KHU VKH LV DWWHPSWLQJ WR LQYRNH IHGHUDO KDEHDV
EHDULQJ RQ WKH VROH LVVXH DW EDU ZKLFK LV ZKHWKHU %UXVK       MXULVGLFWLRQ LQ YLRODWLRQ RI /HKPDQ  6HH  86 DW 
HQMR\V DEVROXWH LPPXQLW\ LQ D †  VXLW IRU PRQHWDU\          )XUWKHUPRUHDVLQ$QGHUVRQKHU†FODLPLVSUHFOXGHG
GDPDJHV IRU KHU DFWLRQV  7KH GLVVHQWjV EHOLHI WKDW VRFLDO      XQGHUWKH5RRNHU)HOGPDQGRFWULQHEHFDXVHVKHLVDWWHPSWLQJ
ZRUNHUVVKRXOGDQGGRHQMR\DEVROXWHLPPXQLW\ZKHQHYHU                   WR VHHN DQ LPSHUPLVVLEOH DSSHOODWH UHYLHZ E\ WKH IHGHUDO
WKH\XQGHUWDNHDQ\DFWLQZKDWWKH\UHJDUGDVDFKLOGjVEHVW             GLVWULFWFRXUWRIWKHVWDWHFRXUWjVFXVWRG\GHWHUPLQDWLRQ6HH
LQWHUHVWVHHLQIUDDWJRHVIDUEH\RQGWKHWUDGLWLRQDO           $QGHUVRQ)GDW3ODLQWLIIjVUHFRXUVHDWWKHWLPH
SURVHFXWRULDOEDVLVIRUVXFKLPPXQLW\DQGZRXOGSHUPLWWRJR            VKH ILOHG VXLW LQ WKH GLVWULFW FRXUW ZDV WR H[KDXVW KHU VWDWH
XQUHGUHVVHGHYHQWKHPRVWEODWDQWIRUPVRIGLVFULPLQDWLRQRU             FRXUWUHPHGLHVDQG DSSHDODQ\XQIDYRUDEOHGHFLVLRQRIWKH
RWKHUFRQVWLWXWLRQDOYLRODWLRQ                                          2KLR6XSUHPH&RXUWWRWKH8QLWHG6WDWHV6XSUHPH&RXUW6HH
                                                                         LG,QOLJKWRIWKHVWDWHFRXUWSURFHHGLQJVILOHGLQWKLVFDVH
                                 9,                                      DIWHU3ODLQWLIIILOHGKHUFODLPLQWKHGLVWULFWFRXUWVHHWLPHOLQH
                                                                         VXSUD3DUW,,$3ODLQWLIIjVUHPHG\ZDVWRSHWLWLRQIRUZULWRI
   :KDW%UXVKGLGZDVQRWWKHHYDOXDWLRQDQGSUHVHQWDWLRQRI             FHUWLRUDULWRWKH8QLWHG6WDWHV6XSUHPH&RXUWFKDOOHQJLQJWKH
HYLGHQFH,WZDVQRWFRQWUROOLQJWKHWHVWLPRQ\RIKHUZLWQHVV          2KLR 6XSUHPH &RXUWjV GHQLDO RI KHU VWDWH ZULW RI KDEHDV
,WZDVQRWLQWLPDWHO\DVVRFLDWHGZLWKWKHMXGLFLDOSURFHVVQRU          FRUSXV6HHLGVHHDOVR86&†)HOGPDQ
ZDV LW WKH IXQFWLRQ RI DQ DGYRFDWH  )LQDOO\ LW ZDV QRW D   86DW.HHQH&RUSY&DVV)GWK
UHFRPPHQGDWLRQWRWKHFRXQW\FRXUW,WZDVDXVXUSDWLRQRI              &LU  m:KHUH D OLWLJDQW DWWHPSWV WR FLUFXPYHQW WKH
WKHMXGLFLDOSURFHVVWKDWGHQLHG+ROORZD\KHUULJKWWREHKHDUG
     +ROORZD\Y6WDWHRI2KLRHWDO                     1R         1R             +ROORZD\Y6WDWHRI2KLRHWDO      

SURFHVVFRPPDQGVZHUHQRWPHWEDVHGXSRQDOOHJDWLRQVPDGH                        LQFRXUW7KHSURSHUWHVW LVZKHWKHU%UXVKKDVFDUULHGKHU
E\3ODLQWLIIUHJDUGLQJ0V%UXVK+DGWKHGLVWULFWFRXUWPDGH                   EXUGHQRIHVWDEOLVKLQJWKDWVKHZDVIXQFWLRQLQJDVDQDGYRFDWH
VXFKDGHWHUPLQDWLRQWKHUHVXOWZRXOGKDYHEHHQWRGHFODUH                      ZKHQVKHSHUIRUPHGWKHDFWLRQVFRPSODLQHGRI6HH%XFNOH\
WKH SHUPDQHQW FXVWRG\ RUGHU LQYDOLG DV XQFRQVWLWXWLRQDOO\                  86DW6KHZDVQRW7KHMXGJPHQWRIWKHGLVWULFW
REWDLQHG6XFKDGHWHUPLQDWLRQE\WKHGLVWULFWFRXUWPD\QRW                    FRXUW JUDQWLQJ VXPPDU\ MXGJPHQW RQ JURXQGV RI DEVROXWH
KDYHEHHQLQWKHEHVWLQWHUHVWVRIWKHFKLOGUHQDVGHWHUPLQHG                    LPPXQLW\WR'HIHQGDQW%UXVKLV5(9(56('
E\WKHVWDWHFRXUWDQLVVXHZKLFKOLHVDWWKHKHDUWRIDQ\FKLOG
FXVWRG\PDWWHU,QGHHGDVQRWHGVXSUDWKH2KLR6XSUHPH                                                      9,,
&RXUWDIILUPHGWKHGHQLDORI3ODLQWLIIjVDSSOLFDWLRQIRUZULWRI
KDEHDV FRUSXV EHFDXVH LW ZRXOG QRW KDYH EHHQ LQ WKH                       )LQDOO\WKLVFRXUWQRWHVZLWKFRQFHUQWKHIDVKLRQLQZKLFK
FKLOGUHQjVEHVWLQWHUHVWVWRUHWXUQWKHFKLOGUHQWR3ODLQWLII6HH              &OHUPRQW&RXQW\KDVSURFHHGHGLQWKLVOLWLJDWLRQ2YHUWKUHH
+ROORZD\  1(G DW   )XUWKHUPRUH                             \HDUVDJRWKH&RXUWRI$SSHDOVRI2KLRVHWDVLGHWKHRUGHURI
5RRNHU)HOGPDQLVDOVRVDWLVILHGEHFDXVH3ODLQWLIIFOHDUO\LV                    WKH &OHUPRQW &RXQW\ &RXUW RI &RPPRQ 3OHDV JUDQWLQJ
mFKDOOHQJ>LQJ@>D@VWDWHFRXUWGHFLVLRQ>@LQ>D@SDUWLFXODUFDVH                 SHUPDQHQWFXVWRG\RIWKH+ROORZD\FKLOGUHQWR&&'+6DQG
DULVLQJRXWRIMXGLFLDOSURFHHGLQJV>ZKLOH@DOOHJLQJWKDWWKH                    UHPDQGHG WKH FDVH IRU IXUWKHU SURFHHGLQJV RUGHULQJ DV
VWDWHFRXUWjVDFWLRQZDVXQFRQVWLWXWLRQDOl6HH)HOGPDQ                    IROORZVmWKHWULDOFRXUWLVGLUHFWHGWRVHWDVLGHLWVSUHYLRXV
86 DW   6LPSO\ SXW 3ODLQWLII LV FKDOOHQJLQJ WKH               RUGHUJUDQWLQJSHUPDQHQWFXVWRG\RIWKHFKLOGUHQWR&&'+6
&&s&jVGHFLVLRQWRDZDUGWKH&&'+6SHUPDQHQWFXVWRG\RI                          DQG WR REWDLQ SURSHU VHUYLFH RI SURFHVV XSRQ DSSHOODQW
KHUFKLOGUHQDVEHLQJXQFRQVWLWXWLRQDO
6HHLG                               >6DPP\H +ROORZD\@ EHIRUH FRQGXFWLQJ D KHDULQJ RQ WKH
                                                                                 PHULWVl  ,Q UH +ROORZD\ 1R &$  :/
  ,Q $QGHUVRQ Y &RORUDGR  )G   WK &LU                  DW
2KLR&W$SS0D\XQSXEOLVKHG
WKHSODLQWLIIEURXJKWD†DFWLRQDJDLQVWWKH6WDWH                   7KHUH ZDV QR KHDULQJ  +ROORZD\ SXUVXHG WKH PDWWHU E\
RI&RORUDGRDQGWKHMXGJHVRIWKH)LUVWsXGLFLDO'LVWULFWRI                     PRYLQJLQWKHVWDWHWULDOFRXUWIRULPPHGLDWHUHXQLILFDWLRQ$W
                                                                                 DSUHWULDOFRQIHUHQFHRQKHU0RWLRQWR%HJLQ5HXQLILFDWLRQ
                                                                                 KHOGRQsXQH&&'+6VWDWHGLWVLQWHQWLRQWRVHUYH
     
                                                                          KHUZLWKDFRPSODLQWVHHNLQJSHUPDQHQWFXVWRG\6HH7ZHOIWK
       7KH PDMRULW\ FODLPV WKDW WKH    #44   NHU)HOGPDQ GRFWULQH GRHV QRW
                                                                                 $SSHOODWH 'LVWULFW &RXUW RI $SSHDOV 2ULJLQDO $FWLRQ LQ
DSSO\ EHFDXVH QR FRXUW VDYH WKH GLVWULFW FRXUW KDV DGGUHVVHG WKH
DIILUPDWLYH GHIHQVH RI DEVROXWH LPPXQLW\ DV DSSOLHG WR 0V %UXVK
                                                                                 +DEHDV&RUSXV&DVH1R&$6WLSXODWHG6WDWHPHQW
+RZHYHU LQ IRFXVLQJ RQ WKH LPPXQLW\ GHIHQVH RQFH DJDLQ WKH PDMRULW\            RI(YLGHQFHDWˆ2FWREHU1RFRPSODLQWZDV
PLVVHV WKH SRLQW WKDW ZKDW LV DW LVVXH KHUH LV 3ODLQWLIIjV FODLPV DQG ZKHWKHU    VHUYHG2YHUD\HDUODWHUWKH2KLR6XSUHPH&RXUWWXUQHG
WKRVH FODLPV DUH LQH[WULFDEO\ LQWHUWZLQHG ZLWK WKH FXVWRG\ PDWWHUV LQ VWDWH      DVLGH+ROORZD\jVSHWLWLRQIRUDZULWRIKDEHDVFRUSXVQRWLQJ
FRXUW ,I VR WKH GLVWULFW FRXUW DQG WKLV &RXUW DV ZHOO ODFNHG MXULVGLFWLRQ WR
                                                                                 WKDW +ROORZD\ ZRXOG KDYH KHU GD\ LQ FRXUW LQ &OHUPRQW
KHDU WKH PDWWHU 7KH LPPXQLW\ GHIHQVH RQO\ FRPHV LQWR SOD\ RQFH
MXULVGLFWLRQ KDV EHHQ SURSHUO\ LQYRNHG $V VWDWHG WKURXJKRXW WKH GLVVHQW
                                                                                 &RXQW\ DV RUGHUHG E\ WKH &RXUW RI $SSHDOV  m>W@KHUH LV
DQG DV PDGH SDWHQWO\ FOHDU E\ 3ODLQWLIIjV RZQ DFWLRQV 3ODLQWLIIjV WRUW          QRWKLQJWRLQGLFDWHWKDW&&'+6ZLOOQRWSURPSWO\VHUYHVXFK
FODLPV ZHUH EURXJKW LQ DQ DWWHPSW WR VHHN D FXVWRG\ GHFUHH IURP WKH              FRPSODLQW >VHHNLQJ SHUPDQHQW FXVWRG\ DQHZ@ IROORZLQJ
IHGHUDO GLVWULFW FRXUW 3ODLQWLII PDNHV D VSHFLILF FKDOOHQJH WR D VWDWH FRXUW    FRPSOHWLRQRIWKLVDFWLRQRUWKDW+ROORZD\jVSDUWLFLSDWLRQLQ
GHFLVLRQ ZKHUH WKH UHOLHI VKH VRXJKW ZDV LQ WKH QDWXUH RI IHGHUDO DSSHOODWH      WKHMXYHQLOHFRXUWSURFHHGLQJVZLOOEHHLWKHUIXWLOHRUWLPH
UHYLHZ RI D VWDWH FRXUW GHFLVLRQ VXFK WKDW WKH 8QLWHG 6WDWHV 6XSUHPH
&RXUW ZDV WKH SURSHU IRUXP WR KHDU KHU FODLP 6HH .HHQH &RUS Y &DVV
                                                                                 FRQVXPLQJl+ROORZD\Y&OHUPRQW&RXQW\'HSjWRI+XPDQ
 )G   WK &LU  ILQGLQJ WKDW D OLWLJDQW FDQQRW                6HUYV2KLR6WG1(G2KLR
FLUFXPYHQW WKH UHTXLUHPHQW RI VHHNLQJ GLUHFW UHYLHZ LQ WKH 8QLWHG 6WDWHV         6WLOOQRFRPSODLQWZDVVHUYHGQRSURFHHGLQJVKHOG
6XSUHPH &RXUW E\ FDVWLQJ KHU ODZVXLW DV D †  DFWLRQ XQGHU )HOGPDQ
    +ROORZD\Y6WDWHRI2KLRHWDO               1R       1R                    +ROORZD\Y6WDWHRI2KLRHWDO                 

  :LWKWKLVIDFWXDOEDFNJURXQGDWRUDODUJXPHQWEHIRUHD              WKHPHULWVRI3ODLQWLIIjV† FODLPUHTXLUHGUHYLHZRID
SDQHORIWKLVFRXUWRQ$SULO&&'+6UHLWHUDWHGLWV             PDWWHULQH[WULFDEO\LQWHUWZLQHGZLWKWKHVWDWHFXVWRG\PDWWHU
LQWHQWLRQWRILOHDUHQHZHGFRPSODLQW1RQHZDVILOHG2QWKH          $OWKRXJK3ODLQWLIIFRXFKHGKHUFODLPDVDFLYLOULJKWVDFWLRQ
FRQWUDU\&&'+6DVWRQLVKHGWKLVFRXUWVLWWLQJHQEDQFZKHQ             XQGHU†WKHUHOLHIWKDWVKHFOHDUO\VRXJKWZDVWKHUHWXUQ
LQRUDODUJXPHQWRQ'HFHPEHUFRXQVHODQQRXQFHG                 RIKHUFKLOGUHQWKURXJKDILQGLQJE\WKHGLVWULFWFRXUWWKDWWKH
WKDW&&'+6KDGQRLQWHQWLRQRIREH\LQJWKHRUGHUVRILWVVWDWH          &&s&YLD6DOO\%UXVKDQG&OHUPRQW&RXQW\DFWHGZLWKRXW
FRXUWVQRLQWHQWLRQRIKRQRULQJLWVUHSHDWHGVWDWHPHQWVWRWKLV        GXH SURFHVV RI ODZ  ,Q RWKHU ZRUGV 3ODLQWLII ZDV VHHNLQJ
FRXUW DQG QR LQWHQWLRQ RI HYHU UHRSHQLQJ FXVWRG\                IHGHUDODSSHOODWHUHYLHZRIWKHVWDWHFXVWRG\GHFUHHWKURXJK
SURFHHGLQJV$VWKRXJKLWZHUHRQO\DQDIWHUWKRXJKW&&'+6             WKHILOLQJRIKHU†FODLP
UHYRNHG LWV ZRUG JLYHQ E\ LWV DWWRUQH\V DV RIILFHUV RI WKH
FRXUWWRDSDQHORIWKLVFRXUWWRLWVIDFHDVZHOODVWRWKH2KLR        ,Q DQ\ HYHQW WKH 5RRNHU)HOGPDQ GRFWULQH LV VDWLVILHG
&RXUWRI$SSHDOVDQGWKH2KLR6XSUHPH&RXUW7KLVDFWLRQ               EHFDXVH mIHGHUDO UHOLHI FRXOG RQO\ EH SUHGLFDWHG XSRQ D
ZDVQRWFRQVLVWHQWZLWKWKH&RXQW\jVGXW\RIFDQGRUWRWKLV             FRQYLFWLRQWKDWWKHVWDWHFRXUWZDVZURQJl3HQQ]RLO
FRXUW                                                                  86DW+HUHWKHGLVWULFWFRXUWFRXOGQRWKDYHDGMXGLFDWHG
                                                                        3ODLQWLIIjV †  FODLP ZLWKRXW GHWHUPLQLQJ WKDW WKH GXH
   $V RI WKLV GDWH +ROORZD\ FRQWLQXHV WR EH GHQLHG KHU
SDUHQWDOULJKWVZLWKRXWWKHLUKDYLQJEHHQVHYHUHGMXGLFLDOO\
7KH 6XSUHPH &RXUW KDV ORQJ UHFRJQL]HG WKDW m>D@ SDUHQWjV            
                                                                               $JDLQ RQH QHHG ORRN QR IXUWKHU WKDQ WKH VHTXHQFH RI ILOLQJV LQ VWDWH
LQWHUHVW LQ WKH DFFXUDF\ DQG LQMXVWLFH RI WKH GHFLVLRQ WR      DQG IHGHUDO FRXUW WR VHH P\ SRLQW )RU H[DPSOH WKH &&s& HQWHUHG WKH
WHUPLQDWHKLVRUKHUSDUHQWDOVWDWXVLVDFRPPDQGLQJRQHl        SHUPDQHQW FXVWRG\ RUGHU RQ sXQH   WZR GD\V ODWHU 3ODLQWLII ILOHG

/DVVLWHU86DW,I&OHUPRQW&RXQW\QRZLQWHQGVQRW           VXLW LQ WKH .DQVDV 'LVWULFW &RXUW VHHNLQJ WKH UHWXUQ RI KHU FKLOGUHQ RQH
                                                                        PRQWK ODWHU WKH .DQVDV 'LVWULFW &RXUW GLVPLVVHG KHU VXLW IRU ODFN RI
WRFRPSO\ZLWKWKHUXOLQJRIWKH2KLR&RXUWRI$SSHDOVWKLV            VXEMHFW PDWWHU MXULVGLFWLRQ DERXW RQH PRQWK ODWHU 3ODLQWLII ILOHG ZKDW ZDV
FRXUWZDVHQWLWOHGWRNQRZRIWKDWFKDQJHRISRVLWLRQZLWKRXW           LQWHUSUHWHG DV D 5XOH E PRWLRQ LQFRUSRUDWLQJ WKH VDPH †  FODLPV
RXUKDYLQJWRHOLFLWLWE\TXHVWLRQLQJDWRUDODUJXPHQW                WKDW VKH DVVHUWV KHUH DQG DERXW RQH PRQWK DIWHU ILOLQJ KHU PRWLRQ WKH
                                                                        .DQVDV 'LVWULFW &RXUW GLVPLVVHG KHU FDVH RQFH DJDLQ IRU ODFN RI VXEMHFW
                                                                        PDWWHU MXULVGLFWLRQ )LYH PRQWKV ODWHU RQ 0DUFK   3ODLQWLII ILOHG
                                                                        VXLW LQ WKH 2KLR 'LVWULFW &RXUW UDLVLQJ WKH VDPH FODLPV 'HIHQGDQWV ILOHG
                                                                        D PRWLRQ WR GLVPLVV WKH VXLW 3ODLQWLII UHVSRQGHG DQG RQ sDQXDU\  
                                                                        WKH PDJLVWUDWH HQWHUHG KLV UHSRUW DQG UHFRPPHQGDWLRQ WKDW WKH 6WDWH RI
                                                                        2KLR DQG WKH 2KLR 'HSDUWPHQW RI +XPDQ 6HUYLFHV EH GLVPLVVHG /HVV
                                                                        WKDQ RQH PRQWK ODWHU DIWHU LW EHFDPH REYLRXV WKDW WKH 6WDWH RI 2KLR DQG
                                                                        2KLR 'HSDUWPHQW RI +XPDQ 6HUYLFHV ZDV JRLQJ WR EH GLVPLVVHG 3ODLQWLII
                                                                        ILOHG VXLW LQ WKH &&s& VHHNLQJ D UHYHUVDO RI WKH FRXUWjV SHUPDQHQW FXVWRG\
                                                                        RUGHU   +RZHYHU E\ WKDW WLPH LW KDG EHHQ HLJKWHHQ PRQWKV VLQFH WKH
                                                                        &&s& KDG HQWHUHG LWV SHUPDQHQW FXVWRG\ RUGHU               +DG WKH GLVWULFW FRXUW
                                                                        GLVPLVVHG 3ODLQWLIIjV FODLP ZKHQ VKH ILOHG VXLW RQ 0DUFK   DV ZDV
                                                                        GRQH E\ LWV VLVWHU FRXUW LQ .DQVDV 3ODLQWLII OLNHO\ ZRXOG KDYH VRXJKW
                                                                        UHYHUVDO IURP WKH &&s& LPPHGLDWHO\ PHDQLQJ WKDW VKH ZRXOG KDYH EHHQ
                                                                        LQ WKH SURSHU IRUXP WR FKDOOHQJH WKH SHUPDQHQW FXVWRG\ RUGHU D IXOO \HDU
                                                                        EHIRUH   WKH   WLPH   VKH   XOWLPDWHO\   ILOHG   WKHUH   0RUHRYHU   KDG   3ODLQWLII
                                                                        DSSHDOHG WKH 2KLR 6XSUHPH &RXUWjV GHQLDO RI KHU ZULW RI KDEHDV FRUSXV
                                                                        WR WKH 8QLWHG 6WDWHV 6XSUHPH &RXUW LQVWHDG RI ZDLWLQJ IRU D GHWHUPLQDWLRQ
                                                                        IURP WKLV &RXUW RQ DSSHDO VKH ZRXOG KDYH EHHQ LQ WKH SURSHU IRUXP WR
                                                                        UHFHLYH WKH UHOLHI WKDW VKH ZDV DFWXDOO\ VHHNLQJ
       +ROORZD\Y6WDWHRI2KLRHWDO                     1R         1R               +ROORZD\Y6WDWHRI2KLRHWDO         

QRW KDYH MXULVGLFWLRQ    RYHU FKDOOHQJHV WR VWDWH FRXUW                                     BBBBBBBBBBBBBBBBB
GHFLVLRQV LQ SDUWLFXODU FDVHV DULVLQJ RXW RI MXGLFLDO
SURFHHGLQJV HYHQ LI WKRVH FKDOOHQJHV    DOOHJH WKDW WKH VWDWH                                        ',66(17
FRXUWjVDFWLRQZDVXQFRQVWLWXWLRQDOl)HOGPDQ86DW                                             BBBBBBBBBBBBBBBBB

                                                                                     &/$< &LUFXLW sXGJH GLVVHQWLQJ  , GLVVHQW LQ WKLV FDVH
  ,Q WKLV FDVH DV GLVFXVVHG LQ UHODWLRQ WR WKH GRPHVWLF                  EHFDXVHXQOLNHWKHPDMRULW\,UHIXVHWRWXUQDEOLQGH\HWRWKH
UHODWLRQVFKLOGFXVWRG\H[FHSWLRQWRMXULVGLFWLRQDGHFLVLRQRQ                   VLPSOHWUXWKRIWKHPDWWHU7KLVFDVHLVQRWKLQJPRUHWKDQDQ
                                                                                   LPSURSHUDWWHPSWE\3ODLQWLIIWRXVHWKHKHDY\KDQGRIWKH
                                                                                   IHGHUDO FRXUW WR XVXUS WKH VWDWH FRXUWjV DXWKRULW\ LQ D FKLOG
                                                                                  FXVWRG\FDVH,QLWVMXGLFLDODFWLYLVPWKHPDMRULW\KDVLJQRUHG
      , GLJUHVV DW WKLV MXQFWXUH WR SRLQW RXW ZKDW , EHOLHYH WR EH D ILQGLQJ
LQ &DW]  ZKLFK LV FRQWUDU\ WR )HOGPDQ 6SHFLILFDOO\ LQ &DW] WKLV &RXUW           WKH WUXWK RI WKLV PDWWHU LQ RUGHU WR VHW DQ XQZDUUDQWHG
UHOLHG XSRQ WKH DERYHTXRWHG SDVVDJH IURP )HOGPDQ ZKHQ LW IRXQG WKDW               SUHFHGHQWLQWKLVFLUFXLWUHJDUGLQJWKHOHYHORILPPXQLW\WREH
WKH VHFRQG HOHPHQW QHFHVVDU\ WR DSSO\LQJ )HOGPDQ ZDV WKDW mWKH DFWLRQ              DIIRUGHGVRFLDOZRUNHUV
EURXJKW LQ WKH GLVWULFW FRXUW >KDG WR@ EH D µJHQHUDO FKDOOHQJHj WR WKH
FRQVWLWXWLRQDOLW\ RI WKH VWDWH ODZ DSSOLHG LQ WKH VWDWH DFWLRQ UDWKHU WKDQ D
µVSHFLILF JULHYDQFHj WKDW WKH ODZ ZDV LQYDOLGO\ o HYHQ XQFRQVWLWXWLRQDOO\
                                                                                     7KH RULJLQDO GHFLVLRQ LQ WKLV FDVH KHOG WKDW VXPPDU\
o DSSOLHG LQ WKH SODLQWLIIjV SDUWLFXODU FDVHl &DW]  )G DW            MXGJPHQW ZDV DSSURSULDWHO\ JUDQWHG WR 0V %UXVK RQ
$FWXDOO\ )HOGPDQ KHOG WKDW m8QLWHG 6WDWHV 'LVWULFW &RXUWV    KDYH              LPPXQLW\ JURXQGV EHFDXVH 3ODLQWLII OLPLWHG KHU DUJXPHQW
VXEMHFW PDWWHU MXULVGLFWLRQ RYHU JHQHUDO FKDOOHQJHV WR VWDWH EDU UXOHV            UHJDUGLQJ0V%UXVKjVLPPXQLW\WRZKHWKHUWKHMXYHQLOHFRXUW
SURPXOJDWHG E\ VWDWH FRXUWV LQ QRQMXGLFLDO SURFHHGLQJV ZKLFK GR QRW              DFWHGZLWKRXWMXULVGLFWLRQ6HH+ROORZD\Y2KLR)G
UHTXLUH UHYLHZ RI D ILQDO MXGJPHQW LQ D SDUWLFXODU SURFHHGLQJl )HOGPDQ
 86 DW  ,Q RWKHU ZRUGV )HOGPDQ GLG QRW KROG WKDW DQ DFWLRQ
                                                                                   	QUHKjJHQEDQFJUDQWHGYDFDWHGE\)G
PXVW mEH D JHQHUDO FKDOOHQJH WR WKH FRQVWLWXWLRQDOLW\ RI WKH VWDWH ODZ
                                                                                   WK&LU7KHRSLQLRQRQO\DGGUHVVHGWKHLVVXHRI
DSSOLHG LQ WKH VWDWH DFWLRQl LQ RUGHU IRU WKH GRFWULQH WR DSSO\ DV FODLPHG        0V%UXVKDQGDEVROXWHLPPXQLW\LQGLFWD,G7KHUHIRUHQR
E\ &DW] UDWKHU )HOGPDQ KHOG MXVW WKH RSSRVLWH :KLFK LV WR VD\ )HOGPDQ          SUHFHGHQWZDVVHWUHJDUGLQJVRFLDOZRUNHUVDQGWKHOHYHORI
KHOG WKDW IRU WKH GRFWULQH WR EH LQYRNHG D OLWLJDQW PXVW EH mFKDOOHQJ>LQJ@        LPPXQLW\WKH\DUHDIIRUGHG
>D@ VWDWH FRXUW GHFLVLRQ>@ LQ >D@ SDUWLFXODU FDVH>@ DULVLQJ RXW RI MXGLFLDO
SURFHHGLQJV HYHQ LI WKRVH FKDOOHQJHV DOOHJH WKDW WKH VWDWH FRXUWjV DFWLRQ
ZDV XQFRQVWLWXWLRQDO 5HYLHZ RI WKRVH GHFLVLRQV PD\ EH KDG RQO\ LQ WKLV
                                                                                     $IWHUWKH RULJLQDOSDQHOLVVXHGLWVGHFLVLRQDIILUPLQJWKH
>6XSUHPH@ &RXUWl       ,G  FLWLQJ  86& †          7KH mJHQHUDO
                                                                                   GLVWULFW FRXUWjV GLVPLVVDO RI 3ODLQWLIIjV FDVH VKH GLG QRW
FKDOOHQJHl VSRNHQ RI LQ )HOGPDQ ZDV LQ UHJDUG WR VWDWH EDU UXOHV                   SHWLWLRQIRUUHKHDULQJ5DWKHU3ODLQWLIIILOHGDQRWKHUSHWLWLRQ
SURPXOJDWHG E\ VWDWH VXSUHPH FRXUWV LQ WKHLU QRQMXGLFLDO FDSDFLW\ ZKLFK          IRU D ZULW RI KDEHDV FRUSXV ZLWK WKH 2KLR 6XSUHPH &RXUW
WKH 6XSUHPH &RXUW WKHUHIRUH IRXQG GLG mQRW QHFHVVDULO\ UHTXLUH D 8QLWHG            VHHNLQJWKHUHWXUQRIKHUFKLOGUHQZKLFKWKH2KLR6XSUHPH
6WDWHV 'LVWULFW &RXUW WR UHYLHZ D ILQDO VWDWH FRXUW MXGJPHQW LQ D MXGLFLDO
                                                                                   &RXUW VXEVHTXHQWO\ GHQLHG  ,QGHHG LW ZDV RQO\ XSRQ WKH
SURFHHGLQJl VR WKDW MXULVGLFWLRQ E\ WKH GLVWULFW FRXUW FRXOG EH LQYRNHG
,G +RZHYHU )HOGPDQ DOVR VWDWHG WKDW D 8QLWHG 6WDWHV 'LVWULFW &RXUW GRHV
                                                                                   VXJJHVWLRQRIWKHDXWKRURIWKHPDMRULW\RSLQLRQKHUHLQWKDW
QRW KDYH MXULVGLFWLRQ WR KHDU D FODLP mWKDW D VWDWH FRXUW KDV XQODZIXOO\           WKLVFDVHZDVEURXJKWEHIRUHWKHHQEDQFFRXUW,QWHUHVWLQJO\
GHQLHG D SDUWLFXODU DSSOLFDQW DGPLVVLRQl            7KHUHIRUH WKH mJHQHUDO       WKLV FDVH ZDV KHDUG HQ EDQF RQ WKH LVVXH RI ZKHWKHU 0V
FKDOOHQJHl UHTXLUHPHQW RI )HOGPDQ ZDV RQO\ LQ UHIHUHQFH WR WKH IDFW WKDW           %UXVKVKRXOGEHDIIRUGHGDEVROXWHLPPXQLW\IRUKHUDFWLRQV
VXFK D FKDOOHQJH ZDV EDVHG XSRQ D QRQMXGLFLDO SURFHHGLQJ )HOGPDQ LQ              DV FRPSODLQHG RI E\ 3ODLQWLII GHVSLWH WKH IDFW WKDW WKH
QR ZD\ KHOG WKDW D VWDWH FRXUW OLWLJDQW ILOLQJ D FODLP LQ IHGHUDO GLVWULFW FRXUW
PXVW EH PDNLQJ D JHQHUDO FKDOOHQJH WR WKH FRQVWLWXWLRQDOLW\ RI D VWDWH ODZ
                                                                                   PDMRULW\RSLQLRQRIWKHRULJLQDOSDQHOGLGQRWEDVHLWVKROGLQJ
DV RSSRVHG WR D VSHFLILF JULHYDQFH DV FODLPHG LQ &DW] 5DWKHU )HOGPDQ             RQWKLVSUHPLVH
EDUV mD 8QLWHG 6WDWHV 'LVWULFW &RXUW >IURP@ UHYLHZ>LQJ@ D ILQDO VWDWH FRXUW
MXGJPHQW LQ D MXGLFLDO SURFHHGLQJl ,G
    +ROORZD\Y6WDWHRI2KLRHWDO                1R       1R               +ROORZD\Y6WDWHRI2KLRHWDO        

  %\KHDULQJWKLVFDVHHQEDQFWKHPDMRULW\DFFRPSOLVKHGLWV            REOLJDWLRQlRIHYHU\IHGHUDODSSHOODWHFRXUWWRVDWLVI\LWVHOIRI
JRDORIFUHDWLQJSUHFHGHQWRQWKHLVVXHRIDEVROXWHLPPXQLW\             WKHORZHUFRXUWjVMXULVGLFWLRQLQDFDXVHXQGHUUHYLHZ
DQGVRFLDOZRUNHUV+RZHYHULQWKHFRXUVHRIGRLQJVRWKH
PDMRULW\KDVLJQRUHGIXQGDPHQWDOSULQFLSOHVRIODZVXFKDV                    7KH 5RRNHU)HOGPDQ              'RFWULQH      WR   'LYHVW
WKHODZRIWKHFDVHGRFWULQHDQGVXEMHFWPDWWHUMXULVGLFWLRQ                   sXULVGLFWLRQ
DQG KDV HQJDJHG LQ MXGLFLDO DFWLYLVP RI WKH ZRUVW NLQG
%HFDXVH,FKRRVHQRWWRHQJDJHLQWKLVNLQGRIRYHUUHDFKLQJ                7KH 5RRNHU)HOGPDQ GRFWULQH LV EDVHG RQ  86&
DQGEHFDXVH,DOVRGLVDJUHHZLWKWKH PDMRULW\jVRXWFRPH,              †  ZKLFK JUDQWV WKH 6XSUHPH &RXUW MXULVGLFWLRQ WR
UHVSHFWIXOO\GLVVHQW                                                    UHYLHZWKHGHFLVLRQVRIWKHKLJKHVWVWDWHFRXUWVIRUFRPSOLDQFH
                                                                         ZLWK WKH &RQVWLWXWLRQ  6HH  86& †  'LVWULFW RI
, %$&.*5281'                                                            &ROXPELD&RXUWRI$SSHDOVY)HOGPDQ86
                                                                          5RRNHU Y )LGHOLW\ 7UXVW &R  86  
  7KLVLVDPHULWOHVV†DFWLRQLQYROYLQJDQHPEURLOHG               8QGHUWKHGRFWULQHmORZHUIHGHUDOFRXUWVGRQRWKDYH
FKLOGFXVWRG\GLVSXWHWKDWZDVGLVPLVVHGE\WKH8QLWHG6WDWHV            MXULVGLFWLRQ WR UHYLHZ D FDVH OLWLJDWHG DQG GHFLGHG LQ VWDWH
'LVWULFW&RXUWLQ.DQVDVWKDWZDVRQJRLQJLQWKH2KLRVWDWH            FRXUWRQO\WKH8QLWHG6WDWHV6XSUHPH&RXUWKDVMXULVGLFWLRQ
FRXUWV DW WKH WLPH WKH 2KLR 'LVWULFW &RXUW UHQGHUHG LWV         WR FRUUHFW VWDWH FRXUW MXGJPHQWVl  *RWWIULHG Y 0HGLFDO
GHFLVLRQWKDWLVVWLOORQJRLQJLQWKH2KLRVWDWHFRXUWDWWKH          3ODQQLQJ6HUYV)GWK&LUm7KLVLV
FXUUHQWWLPHDQGWKDWZDVDFWXDOO\ILOHGLQWKHIHGHUDOGLVWULFW        HTXDOO\ WUXH LQ FRQVWLWXWLRQDO FDVHV EURXJKW XQGHU † 
FRXUWVE\3ODLQWLIILQDQHIIRUWWRVHHNDFXVWRG\GHFUHHDQG            VLQFH IHGHUDO FRXUWV PXVW JLYH µIXOO IDLWK DQG FUHGLWj WR WKH
WKHUHWXUQRIKHUFKLOGUHQ8QGHUWKHVHIDFWV,EHOLHYHWKDWWKH       MXGLFLDOSURFHHGLQJVRIVWDWHFRXUWVl,GFLWLQJ86&
FDVH ZDV SURSHUO\ GLVPLVVHG E\ WKH 2KLR 'LVWULFW &RXUW           †0LJUDY:DUUHQ&LW\6FK'LVW%GRI(GXF
EHORZ  +RZHYHU LQ P\ RSLQLRQ WKH GLVWULFW FRXUW VKRXOG       86.UHPHUY&KHPLFDO&RQVWU&RUS
KDYHGLVPLVVHGWKHPDWWHUXQGHUWKHGRFWULQHRIWKHODZRI               86$OOHQY0F&XUU\86
FDVH RU IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ  3ODLQWLIIjV      6WDWHG RWKHUZLVH XQGHU WKH 5RRNHU)HOGPDQ
VRXUFHRIUHOLHIZDVZLWKWKH2KLRVWDWHFRXUWVDQGXOWLPDWHO\           GRFWULQH m>I@HGHUDO GLVWULFW FRXUWV ODFN VXEMHFW PDWWHU
LQ D SHWLWLRQ IRU D ZULW RI FHUWLRUDUL WR WKH 8QLWHG 6WDWHV   MXULVGLFWLRQWRUHYLHZVXFKILQDODGMXGLFDWLRQVRUWRHYDOXDWH
6XSUHPH&RXUWQRWLQIHGHUDOGLVWULFWFRXUW                            FRQVWLWXWLRQDOFODLPVWKDWDUHµLQH[WULFDEO\LQWHUWZLQHGZLWK
                                                                         WKHVWDWHFRXUWjV>GHFLVLRQ@LQDMXGLFLDOSURFHHGLQJjl9DOHQWL
  ,QGHHG'HIHQGDQWVEURXJKWDPRWLRQWRGLVPLVVIRUODFNRI             Y0LWFKHOO)GG&LUDOWHUDWLRQLQ
VXEMHFWPDWWHUMXULVGLFWLRQLQWKH2KLR'LVWULFW&RXUW7KH             9DOHQWL TXRWLQJ )HOGPDQ  86 DW  Q  7KH
IDFW WKDW 'HIHQGDQWVj PRWLRQ DQG WKHVH MXULVGLFWLRQDO EDUV        GRFWULQHmKDVDFORVHDIILQLW\WRWKHSULQFLSOHVHPERGLHGLQWKH
ZHUHQRWDGGUHVVHGLQWKH+ROORZD\SDQHOjVGHFLVLRQLVRIQR             OHJDOFRQFHSWVRIFODLPDQGLVVXHSUHFOXVLRQl9DOHQWL
PRPHQWWRWKHLUFRQVLGHUDWLRQQRZEHFDXVHmIHGHUDOFRXUWV              )GDW
EHLQJ RI OLPLWHG MXULVGLFWLRQ PXVW H[DPLQH WKHLU VXEMHFW
PDWWHUMXULVGLFWLRQµWKURXJKRXWWKHSHQGHQF\RIHYHU\PDWWHU               ,QRUGHUIRUWKHGRFWULQHWRDSSO\WKHmIHGHUDOFODLP>PXVW
EHIRUHWKHPjl6HH&KLOGUHQjV+HDOWKFDUHLVD/HJDO'XW\                EH@ LQH[WULFDEO\ LQWHUWZLQHG ZLWK WKH VWDWHFRXUW MXGJPHQW
,QF Y 'HWHUV  )G   Q WK &LU          >VXFKWKDW@WKHIHGHUDOFODLPVXFFHHGVRQO\WRWKHH[WHQWWKDW
HPSKDVLVLQRULJLQDOTXRWLQJ,QUH:ROYHULQH5DGLR&R               WKHVWDWHFRXUWZURQJO\GHFLGHGWKHLVVXHVEHIRUHLWl3HQQ]RLO
 )G   WK &LU   $V WKLV &RXUW KDV      &R Y 7H[DFR ,QF  86    0DUVKDOO s
REVHUYHG LW LV mEH\RQG TXHVWLRQl WKDW ZH KDYH D GXW\ WR       FRQFXUULQJ,QDGGLWLRQ8QLWHG6WDWHV'LVWULFW&RXUWVmGR
     +ROORZD\Y6WDWHRI2KLRHWDO                    1R        1R                 +ROORZD\Y6WDWHRI2KLRHWDO               

+DG WKH GLVWULFW FRXUW VLIWHG WKURXJK WKH FODLPV PDGH E\              LQTXLUHLQWRWKHEDVLVIRUVXEMHFWPDWWHUMXULVGLFWLRQDQGWR
3ODLQWLIILWZRXOGKDYHGHWHUPLQHGWKDWVKHLVLQGHHGVHHNLQJ                 GLVPLVVWKHFDVHLIMXULVGLFWLRQLVODFNLQJ6HH&DPSDQHOODY
DFXVWRG\GHFUHHIURPWKHGLVWULFWFRXUW3ODLQWLIIQRWRQO\                  &RPPHUFH([FK%DQN)GWK&LU
H[SUHVVO\UHTXHVWHGWKDWWKHFRXUWRUGHUWKHFKLOGUHQUHWXUQHG                 7KH 8QLWHG 6WDWHV 6XSUHPH &RXUW KDV H[SUHVVO\ LQVWUXFWHG
WRKHUEXWVKHVRXJKWWKHUHWXUQRIKHUFKLOGUHQWKURXJKDQ                   WKDWmHYHU\IHGHUDODSSHOODWHFRXUWKDVDVSHFLDOREOLJDWLRQWR
DGMXGLFDWLRQIURPWKHGLVWULFWFRXUWWKDWWKH&&s&jVRUGHUZDV                 VDWLVI\LWVHOIQRWRQO\RILWVRZQMXULVGLFWLRQEXWDOVRWKDWRI
XQFRQVWLWXWLRQDOO\REWDLQHG7KHUHVXOWRIJUDQWLQJ3ODLQWLII                 WKH ORZHU FRXUWV LQ D FDXVH XQGHU UHYLHZl  6HH %HQGHU Y
WKHUHOLHIWKDWVKHVHHNVLVRIDSDUWLFXODUFRQFHUQZKHUHWKH                 :LOOLDPVSRUW $UHD 6FK 'LVW  86   
2KLR6XSUHPH&RXUWH[SUHVVO\IRXQGWKDWLWmZRXOGQRWEHLQ                    7KHUHIRUH LQ OLJKW RI WKHVH H[SUHVV FRPPDQGV ZH PXVW
WKH FKLOGUHQjV EHVW LQWHUHVWl WR EH UHWXUQHG WR 3ODLQWLII             FRQVLGHUWKHLVVXHRIVXEMHFWPDWWHUMXULVGLFWLRQDVLWUHODWHVWR
+ROORZD\1(GDWVHH/HKPDQ86DW                       WKHPDWWHUDWKDQG,QGRLQJ VRLWLVFOHDUWKDWQHLWKHUWKH
m7KHUHLVOLWWOHWKDWFDQEHDVGHWULPHQWDOWRDFKLOGjV               GLVWULFW FRXUW EHORZ QRU WKLV &RXUW KDV VXEMHFW PDWWHU
VRXQG GHYHORSPHQW DV XQFHUWDLQW\ RYHU ZKHWKHU KH LV WR                 MXULVGLFWLRQ RYHU WKLV  FDXVH  7KH PDMRULW\jV DWWHPSW WR
UHPDLQLQKLVFXUUHQWµKRPHjXQGHUWKHFDUHRIKLVSDUHQWVRU                 PLQLPL]HRUEDONDWP\FRQFHUQUHJDUGLQJWKHMXULVGLFWLRQDO
IRVWHUSDUHQWV    l0RUHRYHUWKHLVVXHRIZKHWKHUWKH              LVVXHIOLHVLQWKHIDFHRIWKHRYHUZKHOPLQJDXWKRULW\GLUHFWLQJ
&&'+6SURSHUO\VHUYHG3ODLQWLIIZDVSHQGLQJLQWKH2KLR                        DQ DSSHOODWH FRXUW WR mVDWLVI\ LWVHOIl WKDW VXEMHFW PDWWHU
&RXUWRI$SSHDOVDWWKHWLPH3ODLQWLIIjVFODLPZDVEHIRUHWKH                  MXULVGLFWLRQRYHUDFDXVHH[LVWV 6HHLG
GLVWULFWFRXUWWKHUHE\DOORZLQJIRUSRWHQWLDOO\FRQWUDGLFWRU\
UHVXOWVRQWKHVDPHLVVXH$FFRUGLQJO\XQGHUWKHFRPPDQGV                      )XUWKHUPRUHHYHQLIZHFKRVHWREHGHUHOLFWLQRXUGXW\DQG
RI $QNHQEUDQGW DQG WKH GRPHVWLF UHODWLRQVFKLOG FXVWRG\                  LJQRUHWKHMXULVGLFWLRQDOLVVXH,EHOLHYHWKDW3ODLQWLIIjVFDVH
H[FHSWLRQ WKH GLVWULFW FRXUW GLG QRW KDYH MXULVGLFWLRQ RYHU           VKRXOGEHGLVPLVVHGIRUIDLOXUHWRVWDWHDGXHSURFHVVFODLP
3ODLQWLIIjVFDVHDQGVKRXOGKDYHGLVPLVVHGWKHFDVHRQWKLV                   DJDLQVW6DOO\%UXVK)LQDOO\VKRXOGWKHLPPXQLW\LVVXHEH
EDVLV  %HQGHU  86 DW  QRWLQJ WKH mVSHFLDO                  UHDFKHG,EHOLHYHWKDW0V%UXVKLVFOHDUO\HQWLWOHGWRDEVROXWH

                                                                                   
                                                                                     7KH PDMRULW\ DWWHPSWV WR FDVW D VXVSLFLRXV H\H WRZDUG P\ FRQFHUQ
$00  86       7KHUHIRUH WKLV KROGLQJ LPSOLFLWO\ SUHYHQWV   ZLWK WKH ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ E\ FDOOLQJ LW mQHZIRXQGl
D IHGHUDO GLVWULFW FRXUW IURP GHFODULQJ D GLYRUFH RU FXVWRG\ GHFUHH YRLG o     ZKLOH QRWLQJ WKDW mWKH GLVVHQW DGPLWV WKH   +ROORZD\    SDQHO VRPHKRZ IDLOHG
LH LI WKH IHGHUDO GLVWULFW FRXUW GRHV QRW KDYH WKH SRZHU WR GHFODUH D       WR FRQVLGHU >WKH LVVXH@ EHIRUHl    $ IHGHUDO FRXUWjV FRQFHUQ RYHU VXEMHFW
PDUULHG FRXSOH GLYRUFHG LW IROORZV WKDW WKH GLVWULFW FRXUW GRHV QRW KDYH      PDWWHU MXULVGLFWLRQ LV FRQWLQXLQJ LW LV QHYHU mQHZIRXQGl       7KH IDFW WKDW
WKH SRZHU WR GHFODUH D GLYRUFHG FRXSOH RQFH DJDLQ PDUULHG E\ YLUWXH RI         WKH RULJLQDO SDQHO LQ WKLV FDVH PD\ KDYH IDLOHG LQ WKHLU mVSHFLDO REOLJDWLRQl
ILQGLQJ WKDW WKH GLYRUFH ZDV XQFRQVWLWXWLRQDOO\ REWDLQHG 7KH FRQIXVLRQ        WR H[DPLQH WKH MXULVGLFWLRQDO EDVLV IRU WKLV FDVH        PDNHV LW HYHQ PRUH
FDXVHG E\ VXFK D UHVXOW WR VD\ QRWKLQJ RI WKH ODFN RI GHIHUHQFH WR VWDWH      LPSHUDWLYH IRU WKLV &RXUW VLWWLQJ   HQ EDQF   WR VDWLVI\ LWVHOI RI WKH H[LVWHQFH
FRXUWV ZKLFK DUH EHVW VXLWHG WR DGMXGLFDWH GRPHVWLF PDWWHUV LV REYLRXV n      RI MXULVGLFWLRQ QRZ SDUWLFXODUO\ ZKHUH 'HIHQGDQWV UDLVHG WKH LVVXH EHIRUH
SDUWLFXODUO\ LQ PDWWHUV RI FKLOG FXVWRG\ ZKHUH LW LV QRW PHUHO\ WKH DVVHWV     WKH 2KLR 'LVWULFW &RXUW DQG ZKHUH WKH .DQVDV 'LVWULFW &RXUW GLVPLVVHG
RI D PDUULDJH DQG FKDWWHO WKDW DUH DW VWDNH EXW WKH OLYHV RI FKLOGUHQ ZKR     WKH PDWWHU IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ    ,QGHHG LI VXVSLFLRQ LV
mUHTXLUH VHFXUH VWDEOH ORQJWHUP FRQWLQXRXV UHODWLRQVKLSV ZLWK WKHLU        WR EH FDVW LW LV WRZDUG WKH PDMRULW\ RSLQLRQjV IDLOXUH WR EULQJ WR OLJKW WKDW
SDUHQWV RU IRVWHU SDUHQWVl $00 /HKPDQ Y /\FRPLQJ &RXQW\ &KLOGUHQjV           WKLV DFWLRQ ZDV RULJLQDOO\ ILOHG E\ 3ODLQWLII DJDLQVW 0V %UXVK DQG WKH
6HUYV $JHQF\  86    $V WKH 6XSUHPH &RXUW               6WDWH RI 2KLR LQ WKH .DQVDV 'LVWULFW &RXUW RQ WKH VDPH JURXQGV DV
RSLQHG m>W@KH 6WDWHjV LQWHUHVW LQ ILQDOLW\ LV XQXVXDOO\ VWURQJ LQ FKLOG      DVVHUWHG E\ 3ODLQWLII LQ WKH 2KLR 'LVWULFW &RXUW DQG GLVPLVVHG E\ WKH
FXVWRG\ GLVSXWHVl ,G ,Q WKH FDVH DW KDQG WKH FKLOGUHQ ZHUH DGRSWHG RQ       .DQVDV 'LVWULFW &RXUW IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ DV ZHOO DV WKH
sXQH   E\ WKHLU IRVWHU SDUHQWV 6HH +ROORZD\ Y 6WDWH RI 2KLR 1R     IDFW WKDW 'HIHQGDQWV PRYHG WR GLVPLVV WKLV FDVH LQ WKH 2KLR 'LVWULFW &RXUW
 2UDO $UJXPHQW E\ 'HIHQGDQWV 'HF                              IRU ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ
    +ROORZD\Y6WDWHRI2KLRHWDO                1R       1R               +ROORZD\Y6WDWHRI2KLRHWDO          

LPPXQLW\IRUKHUDFWLRQVLQWKLVPDWWHU7RKROGRWKHUZLVH              &RXUWUHVWHGLWVGHFLVLRQRQWKHIDFWWKDW&DW]ZDVQRWDVNLQJ
XQGHUWKHVHIDFWVZLOOKDYHWKHDGYHUVHUHVXOWRIFDXVLQJVRFLDO         WKH GLVWULFW FRXUW WR LQYROYH LWVHOI mLQ WKH VRUW RI TXHVWLRQV
ZRUNHUVoPHPEHUVRIDSURIHVVLRQWKDWLVJUHDWO\XQGHUVWDIIHG           DWWHQGDQW WR GRPHVWLF UHODWLRQVl VXFK DV mZKDW FXVWRG\
IRUWKHHVVHQWLDOVRFLHWDOSXUSRVHWKDWWKH\VHUYHoWRVHFRQG           GHWHUPLQDWLRQZRXOGEHLQWKHEHVWLQWHUHVWRIDFKLOGl,G
JXHVVWKHLUDFWLRQVUHODWLQJWRFKLOGFXVWRG\PDWWHUVIRUIHDURI
UHSULVDOE\GLVJUXQWOHGSDUHQWVZKRDUHQRWSURSHUO\FDULQJIRU             ,QWKLVFDVH3ODLQWLIILVQRWPHUHO\DVNLQJWKHIHGHUDOFRXUW
WKHLU FKLOGUHQ  $V HVSRXVHG E\ WKH 6XSUHPH &RXUW mLI          WR mH[DPLQH ZKHWKHU FHUWDLQ MXGLFLDO SURFHHGLQJV ZKLFK
OLWLJDWLRQ H[SHQVHV PRXQW VRFLDO ZRUNHUV    PD\ ZHOO        KDSSHQHG WR LQYROYH D >FXVWRG\ GHWHUPLQDWLRQ@ FRPSRUWHG
EHFRPHOHVVZLOOLQJWRVHHNSODFHPHQWVIRUFKLOGUHQRYHUWKHLU           ZLWKWKHIHGHUDOFRQVWLWXWLRQDOJXDUDQWHHRIGXHSURFHVVlWKDW
SDUHQWVj REMHFWLRQV ZKHWKHU UDWLRQDO RU LUUDWLRQDO HYHQ          ZRXOGWKHUHE\DOORZWKHIHGHUDOFRXUWVMXULVGLFWLRQRYHUWKH
WKRXJK LQ WKHLU KRQHVW MXGJPHQW WKH FKLOGjV EHVW LQWHUHVWV       PDWWHU6HH&DW])GDW5DWKHU3ODLQWLIILVDVNLQJ
GHPDQGLWl/HKPDQY/\FRPLQJ&RXQW\&KLOGUHQjV6HUYV                 WKH GLVWULFW FRXUW WR JUDQW KHU FXVWRG\ RI KHU FKLOGUHQ E\
$JHQF\  86   Q   7KH PDMRULW\jV          GHFODULQJWKDWWKHFXVWRG\GHFUHHHQWHUHGE\WKH&&s&ZDV
RSLQLRQ XOWLPDWHO\ SXWV RXU FKLOGUHQ o DUJXDEO\ WKH PRVW         XQFRQVWLWXWLRQDOO\REWDLQHG7KHGLVWLQFWLRQLVVLJQLILFDQWLQ
YXOQHUDEOHPHPEHUVRIRXUVRFLHW\oDWULVNRIQHJOHFWKDUP            WKDWLWUHPRYHVWKHFDVHIURPWKHERXQGVRI&DW]DQGSODFHV
DQGSK\VLFDODEXVH                                                      LW VTXDUHO\ ZLWKLQ WKH GRPHVWLF UHODWLRQFKLOG FXVWRG\
                                                                         H[FHSWLRQWRMXULVGLFWLRQHVSRXVHGLQ$QNHQEUDQGW6HH
,, /$: 2) 7+( &$6( /$&. 2) 68%s(&7                               86DW&OHDUO\DWWKHmFRUHlRI3ODLQWLIIjVDFWLRQVKH
    0$77(5 s85,6',&7,21 81'(5 7+(                                     VHHNVDGHFODUDWLRQRISDUHQWDOVWDWXVWKHIDFWWKDWVKHDOVR
    '20(67,& 5(/$7,216&+,/' &8672'<                                   SUD\VIRUPRQH\GDPDJHVLVRIQRPRPHQWWRWKHWUXHQDWXUH
    (;&(37,21 $1' 81'(5 7+(                                           RIWKHUHOLHIVRXJKWEHFDXVHWKH6XSUHPH&RXUWKDVPDGHLW
    522.(5)(/'0$1'2&75,1(                                              FOHDUWKDWDIHGHUDOGLVWULFWFRXUWODFNVMXULVGLFWLRQWRHQWHUD
                                                                         FXVWRG\GHFUHH6HH$QNHQEUDQGW86DW&DW]
  $ 7LPH/LQHRI6WDWHDQG)HGHUDO&RXUW3URFHHGLQJV                    )GDW
  $QH[DPLQDWLRQRIWKHSURFHGXUDOHYHQWVVXEVWDQWLYHQDWXUH               $WILUVWEOXVKLWPD\DSSHDUWKDWOLNHLQ&DW]3ODLQWLIILV
RI 3ODLQWLIIjV FODLPV PDGH LQ WKHVH SURFHHGLQJV DQG              PHUHO\ VHHNLQJ D GHFODUDWLRQ WKDW WKH FXVWRG\ GHFUHH ZDV
VXSSRUWLQJFDVHODZFOHDUO\LQGLFDWHVWKDWWKLVFDVHVKRXOGQRW          XQFRQVWLWXWLRQDOO\REWDLQHGDQGWKDWWKHGRPHVWLFUHODWLRQV
KDYHSURFHHGHGLQWKHGLVWULFWFRXUWRQDQXPEHURIJURXQGV             H[FHSWLRQGRHVQRWDSSO\+RZHYHUZHDUHQRWWRDGGUHVV
)LUVWWKHGLVWULFWFRXUWVKRXOGKDYHGHIHUUHGWRWKHMXGJPHQW           FXVWRG\ FDVHV LQ D VXSHUILFLDO IDVKLRQ LW LV RXU GXW\ WR
RIWKH.DQVDV'LVWULFW&RXUWXQGHUWKHODZRIWKHFDVHDQG               H[DPLQHWKHWUXHQDWXUHRIWKHFRPSODLQWWRGHWHUPLQHZKHWKHU
GLVPLVVHG 3ODLQWLIIjV FODLP LQ WKH DOWHUQDWLYH WKH GLVWULFW     LWVHHNVDFXVWRG\GHFUHH6HH)LUHVWRQH)GDW
FRXUW VKRXOG KDYH GLVPLVVHG WKH FDVH IRU ODFN RI VXEMHFW
PDWWHUMXULVGLFWLRQXQGHUWKHGRPHVWLFUHODWLRQVFKLOGFXVWRG\
H[FHSWLRQ WR IHGHUDO FRXUW MXULVGLFWLRQ RU XQGHU WKH                  
5RRNHU)HOGPDQGRFWULQH                                                       )XUWKHUPRUH , VWURQJO\ TXHVWLRQ WKH KROGLQJ LQ &DW] ZKLFK VWDWHV
                                                                         WKDW DQ DGMXGLFDWLRQ IURP WKLV &RXUW ILQGLQJ WKDW D GLYRUFH GHFUHH ZDV
  7REHJLQDWLPHOLQHMX[WDSRVLQJWKHHYHQWVRFFXUULQJLQ              XQFRQVWLWXWLRQDOO\ REWDLQHG LV SHUPLVVLEOH XQGHU $QNHQEUDQW EHFDXVH WKH

WKH VWDWH DQG IHGHUDO FRXUW FDVHV LV EHQHILFLDO IRU D SURSHU   GLYRUFH GHFUHH ZRXOG QRQHWKHOHVV EH UHJDUGHG DV D QXOOLW\ LI LW KDG EHHQ
                                                                         XQFRQVWLWXWLRQDOO\ REWDLQHG 6HH &DW] Y &KDONHU  )G   WK
XQGHUVWDQGLQJRIWKHPDWWHU                                             &LU  ,QGHHG $QNHQEUDQGW H[SUHVVO\ KROGV WKDW D IHGHUDO GLVWULFW
                                                                         FRXUW GRHV QRW KDYH MXULVGLFWLRQ WR UHQGHU D GLYRUFH RU FXVWRG\ GHFUHH
    +ROORZD\Y6WDWHRI2KLRHWDO                  1R        1R                 +ROORZD\Y6WDWHRI2KLRHWDO               

SODLQWLIIjVFRQWHQWLRQILQGLQJWKDWWKHFRQWUDFWLQGLVSXWHZDV             'DWH            6WDWH &RXUW             'DWH         )HGHUDO &RXUW
SDUWRIDVHSDUDWLRQDJUHHPHQWZKLFKZDVLQFRUSRUDWHGLQWR
WKHGLYRUFHGHFUHH,G$VVXFKZHFRQFOXGHGWKDWm>W@KLV                    &OHUPRQW &RXQW\ sXYHQLOH          3ODLQWLII ILOHV DFWLRQ LQ
FDVHWKXVLQYROYHVLVVXHVDULVLQJRXWRIFRQIOLFWRYHUDGLYRUFH                   &RXUW m&&s&l HQWHUV                    .DQVDV 86 'LVWULFW
GHFUHH DQG DFFRUGLQJ WR $QNHQEUDQGW FRPHV ZLWKLQ WKH
                                                                                     RUGHU WHUPLQDWLQJ                        &RXUW VHHNLQJ RUGHU IRU
                                                                                     3ODLQWLIIjV SDUHQWDO ULJKWV             2KLR FRXUWV WR VWRS 	
µGRPHVWLFUHODWLRQVH[FHSWLRQj>7@KHIHGHUDOFRXUWODFNV                                                               GHVLVW DOO IXUWKHU
MXULVGLFWLRQ DV WKLV FDVH LV QRW D WRUW RU FRQWUDFW VXLW WKDW                                                     SURFHHGLQJV LQYROYLQJ
PHUHO\KDVGRPHVWLFUHODWLRQVRYHUWRQHVEXWLVRQHVHHNLQJD
                                                                                                                              KHU VRQV 	 WR VKRZ
                                                                                                                              FDXVH ZK\ WKH\ VKRXOG
GHFODUDWLRQ RI ULJKWV DQG REOLJDWLRQV DULVLQJ IURP PDULWDO                                                             QRW EH UHWXUQHG WR KHU
VWDWXVl,GDW
   3ODLQWLIIjV FODLP LQ WKH FDVH DW KDQG LV OLNH WKDW RI                                                     .DQVDV 86 'LVWULFW
0F/DXJKOLQEHFDXVHDQDGMXGLFDWLRQRIZKHWKHU3ODLQWLIIZDV                                                                   &RXUW GLVPLVVHV
GHQLHG GXH SURFHVV RI ODZ UHTXLUHV WKH IHGHUDO FRXUW WR                                                              3ODLQWLIIjV FODLP IRU
                                                                                                                              ODFN RI VXEMHFW PDWWHU
H[DPLQH WKH VXEVWDQFH RI WKH FXVWRG\ PDWWHUV YLD D                                                                    MXULVGLFWLRQ XQGHU )HG
GHWHUPLQDWLRQ RI %UXVKjV UHSUHVHQWDWLRQV WR 3ODLQWLII                                                                   5 &LY 3 K 	 DV
7KHUHIRUHDVLQ0F/DXJKOLQWKHGLVWULFWFRXUWGLGQRWKDYH                                                                  IULYRORXV XQGHU 
                                                                                                                              86& † G   6HH
MXULVGLFWLRQ RYHU WKH PDWWHU ZKHUH DQ DGMXGLFDWLRQ RI
                                                                                                                                    1R 
                                                                                                                              +ROORZD\ Y 6WDWH RI

3ODLQWLIIjVGXHSURFHVVFODLPUHTXLUHGmDGHFODUDWLRQRIULJKWVl
                                                                                                                               :/  '
                                                                                                                              2KLR


DVWRZKHWKHU3ODLQWLIIODZIXOO\QRORQJHUKDGFXVWRG\RIKHU                                                                 .DQ sXO\  
FKLOGUHQ6HH0F/DXJKOLQ)GDW0RUHRYHUDV                                                                  XQSXEOLVKHG
LQ0F/DXJKOLQWKHLVVXHRIZKHWKHU3ODLQWLIIZDVGHQLHGGXH
SURFHVVRIODZLQWKHFRXUVHRIWKH&&s&jVWHUPLQDWLRQRIKHU
SDUHQWDOULJKWVZDVSHQGLQJEHIRUHWKH2KLR&RXUWRI$SSHDOV                                                            .DQVDV 86 'LVWULFW
DWWKHWLPHWKDWWKHLVVXHZDVEHLQJDGGUHVVHGE\WKHGLVWULFW                                                              &RXUW GHQLHV 3ODLQWLIIjV
FRXUW EHORZ WKXV SURYLGLQJ D IXUWKHU EDVLV IRU WKH ODFN RI                                                         m0RWLRQ )RU WKLV
                                                                                                                              FRXUWWR >VLF@ RUGHU IDLU
MXULVGLFWLRQ6HHLGDW                                                                                                KHDULQJ DQ >VLF@ VXLW IRU
                                                                                                                              FLYLO ULJKWV YLRODWLRQVl
   ,Q&DW]Y&KDONHUDFDVHGHFLGHGEHIRUH0F/DXJKOLQLW                                                                   XQGHU WK $PHQGPHQW
ZDVIRXQGWKDWWKHGRPHVWLFUHODWLRQVH[FHSWLRQWRMXULVGLFWLRQ
                                                                                                                              IRU ODFN RI VXEMHFW
                                                                                                                              PDWWHU MXULVGLFWLRQ 6HH

GLGQRWDSSO\HYHQWKRXJKWKHSODLQWLIIVRXJKWDGHFODUDWLRQ
                                                                                                                                      1R 
                                                                                                                              +ROORZD\ Y 6WDWH RI

IURPWKHFRXUWWKDWWKHGLYRUFHGHFUHHZDVYRLGDVDYLRODWLRQ                                                                6$&  :/ 
                                                                                                                              2KLR


RIGXHSURFHVV6HH)GDW7KLV&RXUWUHDVRQHG                                                                    ' .DQ 2FW  
WKDW mLI WKH GLYRUFH MXGJPHQW ZHUH XQFRQVWLWXWLRQDOO\                                                                   XQSXEOLVKHG
REWDLQHGLWVKRXOGEHUHJDUGHGDVDQXOOLW\DQGDQ\GHFUHHVR
VWDWLQJ ZRXOG FKDQJH QRWKLQJ DW DOOl  6HH LG  FLWDWLRQ
RPLWWHG7KH&RXUWZHQWRQWRRSLQHWKDWmWKHGHFODUDWLRQ
&DW]VHHNVZRXOGQRWLWVHOIDGGUHVVWKHPHULWVRUXOWLPDWHO\
GLVSRVH RI >WKH@ GLYRUFH SHWLWLRQ VKH ZRXOG EH IUHH WR
UHOLWLJDWHKHUPDULWDOVWDWXVLQVWDWHFRXUWl,G)LQDOO\WKH
      +ROORZD\Y6WDWHRI2KLRHWDO            1R        1R                 +ROORZD\Y6WDWHRI2KLRHWDO           

 'DWH           6WDWH &RXUW        'DWH         )HGHUDO &RXUW           QRWHG LQ KHU UHVSRQVH WR 'HIHQGDQWVj PRWLRQ WR GLVPLVV
                                                                        3ODLQWLIIH[SUHVVO\FKDOOHQJHVWKHVXEVWDQFHRIWKHWHVWLPRQ\
                                     3ODLQWLII ILOHV FRPSODLQW   SUHVHQWHGDWWKHWHUPLQDWLRQKHDULQJVDQGH[SUHVVO\UHTXHVWV
                                  	         LQ 86 'LVWULFW &RXUW      DQRUGHUIURPWKHGLVWULFWFRXUWWRUHWXUQKHUFKLOGUHQWRKHU
                                      IRU WKH 6RXWKHUQ            s$DW,QDGGLWLRQDQGSHUKDSVPRVWWHOOLQJLVWKH
                                            'LVWULFW RI 2KLR
                                            FODLPLQJ YLRODWLRQ RI       IDFWWKDW3ODLQWLIIGLGQRWVHHNWKHUHWXUQRIKHUFKLOGUHQIURP
                                            KHU ULJKWV XQGHU          WKH &&s& XQWLO DIWHU WKH PDJLVWUDWH UHFRPPHQGHG WKDW WKH
                                            86& †  	 †           6WDWHRI2KLRDQGWKH2KLR'HSDUWPHQWRI+XPDQ6HUYLFHVEH
                                             DV JXDUDQWHHG E\
                                            WKH 6L[WK (LJKWK 	         GLVPLVVHGIURPVXLWoLHVKHGLGQRWVHHNWKHUHWXUQRIKHU
                                            )RXUWHHQWK                  FKLOGUHQIURPVWDWHFRXUWXQWLODIWHULWEHFDPHDSSDUHQWWKDW
                                            $PHQGPHQWV QDPLQJ
                                            WKH 6WDWH RI 2KLR WKH      VKHFRXOGQRWREWDLQVXFKDQRUGHUIURPWKHIHGHUDOGLVWULFW
                                            2KLR 'HSjW RI +XPDQ         FRXUW/LNHZLVHVKHGLGQRWILOHDVHFRQGSHWLWLRQZLWK2KLR
                                            6HUYLFHV 6DOO\ %UXVK      6XSUHPH &RXUW IRU D ZULW RI KDEHDV FRUSXV XQWLO DIWHU WKH
                                            	 &OHUPRQW &RXQW\
                                            2KLR DV GHIHQGDQWV         +ROORZD\SDQHOLVVXHGLWVRSLQLRQDIILUPLQJWKHGLVWULFWFRXUW
                                                                        ,WLVSDWHQWO\FOHDUWKDW3ODLQWLIILVDWWHPSWLQJWRXVHWKHKHDY\
                                            3ODLQWLII DPHQGV KHU        KDQGRIWKHIHGHUDOGLVWULFWFRXUWWRVWURQJDUPWKH2KLRVWDWH
                                            FRPSODLQW
                                                                        FRXUWVUHJDUGLQJWKLVFKLOGFXVWRG\PDWWHU/LNHWKHSODLQWLII
                                                                        LQ0F/DXJKOLQY&RWQHU3ODLQWLIILVVLPSO\mDWWHPSWLQJWR
                                   	     'HIHQGDQWV ILOH PRWLRQV     GLVJXLVHWKHWUXHQDWXUHRIWKHDFWLRQlE\VHHNLQJPRQHWDU\
                                     WR GLVPLVV 3ODLQWLIIjV      UHOLHI LQ KHU FRPSODLQW  6HH  )G   WK &LU
                                            FRPSODLQW IRU ODFN RI       
                                            VXEMHFW PDWWHU
                                            MXULVGLFWLRQ                 7KHSODLQWLIILQ0F/DXJKOLQY&RWQHUILOHGVXLWDJDLQVWKHU
                                                                        H[KXVEDQGFODLPLQJWKDWVKHZDVVHHNLQJGDPDJHVIRUEUHDFK
                                                                        RIFRQWUDFWDQGWRUWLRXVLQWHUIHUHQFHZLWKDFRQWUDFWLQUHJDUG
                                     3ODLQWLII UHVSRQGV WR       WRUHVLGHQWLDOSURSHUW\XQGHU2KLRWRUWDQGFRQWUDFWODZDQG
                                            'HIHQGDQWVj PRWLRQ WR
                                            GLVPLVV FODLPLQJ WKDW       WKDWWKHGRPHVWLFUHODWLRQVH[FHSWLRQWRGLYHUVLW\MXULVGLFWLRQ
                                            'HIHQGDQWV mOLHGl           GLGQRWDSSO\6HH)GDW+RZHYHUZHUHMHFWHGWKH
                                            GXULQJ WKH FXVWRG\
                                            KHDULQJ E\ FODLPLQJ WKDW
                                            3ODLQWLII DEDQGRQHG KHU
                                            FKLOGUHQ DQG VHHNLQJ
                                            PRQHWDU\ GDPDJHV DV         &R )G   WK &LU  FLWLQJ     'HQPDQ Y /HHG\    
                                            ZHOO DV DQ RUGHU IURP       )G   WK &LU 
                                            WKH FRXUW IRU
                                            'HIHQGDQWV m72                     
                                            5(7851 056                        6SHFLILFDOO\ WKH UHFRUG VKRZV WKDW 3ODLQWLII ILOHG VXLW LQ IHGHUDO

                                            +2//2:$<6 >VLF@             GLVWULFW FRXUW RQ 0DUFK   WKH PDJLVWUDWH LVVXHG KLV UHSRUW DQG
                                            &+,/'5(1 72 +(5             UHFRPPHQGDWLRQ WKDW WKH 6WDWH RI 2KLR DQG WKH 2KLR 'HSDUWPHQW RI
                                               l                    +XPDQ 6HUYLFHV EH GLVPLVVHG IURP VXLW RQ sDQXDU\   DQG LW ZDV
                                                                        QRW XQWLO WKDW WLPH RQ )HEUXDU\   WKDW 3ODLQWLII ILOHG VXLW LQ &&s&
                                                                        VHHNLQJ UHYLHZ DQG UHYHUVDO RI WKH FRXUWjV FXVWRG\ GHWHUPLQDWLRQ 6HH
                                                                        WLPH OLQH VXSUD 3DUW ,,$ 7KH GLVWULFW FRXUW ILOHG LWV RUGHU DFFHSWLQJ WKH
                                                                        PDJLVWUDWHjV UHFRPPHQGDWLRQ DQG GLVPLVVLQJ WKH 6WDWH RI 2KLR DQG 2KLR
                                                                        'HSDUWPHQW RI +XPDQ 6HUYLFHV IURP VXLW RQ )HEUXDU\   6HH LG
       +ROORZD\Y6WDWHRI2KLRHWDO                   1R        1R               +ROORZD\Y6WDWHRI2KLRHWDO              

GHWHUPLQDWLRQ6HH'UHZHVY,OQLFNL)GWK                    'DWH           6WDWH &RXUW           'DWH          )HGHUDO &RXUW
&LUVHHDOVR=DN)GDW
                                                                                                                        0DJLVWUDWH ILOHV D
  ,Q WKH FDVH DW KDQG DOWKRXJK 3ODLQWLII ILOHG KHU FODLP LQ                                                         5HSRUW 	
GLVWULFW FRXUW XQGHU WKH JXLVH RI  86& †  VHHNLQJ                                                           5HFRPPHQGDWLRQ
                                                                                                                               ILQGLQJ WKDW FRXUW KDV
PRQHWDU\GDPDJHVDFORVHH[DPLQDWLRQRIWKHWUXHFKDUDFWHU                                                                    MXULVGLFWLRQ RYHU WKH
RI 3ODLQWLIIjV FODLP DQG KHU SOHDGLQJV LQGLFDWHV   WKDW VKH LV                                                        PDWWHU 	
VHHNLQJ D FXVWRG\ GHFUHH IURP WKLV FRXUW  $V SUHYLRXVO\                                                             UHFRPPHQGLQJ WKDW
                                                                                                                               FODLPV DJDLQVW 6WDWH RI
                                                                                                                               2KLR 	 2KLR 'HSW RI
                                                                                                                               +XPDQ 6HUYLFHV EH
                                                                                                                               GLVPLVVHG EXW FODLPV
                                                                                                                              DJDLQVW &OHUPRQW
      7KH   PDMRULW\ LJQRUHV WKLV FLUFXLWjV FRPPDQGV WKDW LW LV mLQFXPEHQWl                                                    &RXQW\ 	 6DOO\ %UXVK
XSRQ XV WR H[DPLQH WKH QDWXUH RI D FRPSODLQW WR GHWHUPLQH ZKHWKHU LW                                                           JR IRUZDUG
DFWXDOO\ VHHNV D FXVWRG\ GHFUHH VXFK WKDW WKH WRUW DFWLRQ LV D PHUH SUHWHQVH
ZKHQ LW FDYDOLHUO\ VWDWHV     mWKDW +ROORZD\ ZRXOG DOVR OLNH WKLV FRXUW WR
UHVWRUH KHU FKLOGUHQ WR KHU ZKLFK LW FDQQRW GR LV LUUHOHYDQWl   ,W LV PRVW
                                                                                                                        3ODLQWLII ILOHV REMHFWLRQV
mUHOHYDQWl WKDW 3ODLQWLII LV XVLQJ WKH WRUW DFWLRQ DQG WKH VWURQJ DUP RI WKH
                                                                                                                               WR 5HSRUW 	
IHGHUDO GLVWULFW DQG DSSHOODWH FRXUWV DV D VXEWHUIXJH WR VHHN D FXVWRG\
GHFUHH    3ODLQWLIIjV SDWWHUQ RI UHWXUQLQJ WR VWDWH FRXUW RQO\ DIWHU VKH
                                                                                                                               5HFRPPHQGDWLRQ
UHFHLYHV DQ XQIDYRUDEOH UXOLQJ IURP WKH IHGHUDO IRUXP LV LQGLFDWLYH RI KHU
PRWLYDWLRQ LQ WXUQLQJ WR WKH IHGHUDO FRXUWV        $V VWDWHG E\ WKH .DQVDV
'LVWULFW &RXUW LQ WKLV UHJDUG                                                      3ODLQWLII ILOHV PRWLRQ LQ
                                                                                       &&s& VHHNLQJ UHYLHZ RI
                                                                                         FRXUWjV SHUPDQHQW FXVWRG\
                                                                                         GHWHUPLQDWLRQ 	 UHYHUVDO
     +ROORZD\ DOOHJHV WKDW WKH WHUPLQDWLRQ RI KHU SDUHQWDO ULJKWV
     YLRODWHG WKH    )RXUWHHQWK $PHQGPHQW         +ROORZD\ DOVR
                                                                                         RI FRXUWjV SUHYLRXV
     DOOHJHV YLRODWLRQ RI KHU FLYLO ULJKWV   
          +ROORZD\jV PRWLRQ DSSHDUV WR VXJJHVW WKDW EHFDXVH WKH 6WDWH
                                                                                         MXGJPHQW
     RI 2KLR GLG QRW SURYLGH KHU ZLWK D IDLU KHDULQJ LQ WKH ILUVW
                                                                                                                        'LVWULFW &RXUW HQWHUV
     LQVWDQFH WKLV FRXUW PXVW KDYH MXULVGLFWLRQ WR FRQVLGHU WKLV FDVH
                                                                                                                               RUGHU DFFHSWLQJ
     7KLV LV DQ LQFRUUHFW LQWHUSUHWDWLRQ RI IHGHUDO VXEMHFW PDWWHU
                                                                                                                               0DJLVWUDWHjV
     MXULVGLFWLRQ      7KH PHUH IDFW WKDW D OLWLJDQW KDV UHFHLYHG DQ                                                          UHFRPPHQGDWLRQ WR
     XQIDYRUDEOH UHVXOW LQ D VWDWH FRXUW GRHV QRW LQ DQG RI LWVHOI IRUP                                                      GLVPLVV 6WDWH RI 2KLR 	
                                                                                                                               2KLR 'HSW RI +XPDQ
                                                                                                                               6HUYLFHV
     WKH EDVLV RI IHGHUDO VXEMHFW PDWWHU MXULVGLFWLRQ ,Q VKRUW IHGHUDO
     FRXUWV DUH QRW VXEMHFW WR OLPLWHG H[FHSWLRQV QRW UHOHYDQW KHUH DQ
     DYHQXH E\ ZKLFK OLWLJDQWV PD\ UHOLWLJDWH FDVHV SUHYLRXVO\ GHFLGHG
     LQ VWDWH FRXUWV

                                                                                                                        'LVWULFW &RXUW RUGHUV
+ROORZD\ Y 6WDWH RI 2KLR    1R 6$&  :/  DW 


                                                                                                                               3ODLQWLII WR VKRZ FDXVH
' .DQ 2FW                                                                                                         ZK\ VXPPDU\ MXGJPHQW
                                                                                                                               VKRXOG QRW EH HQWHUHG
                                                                                                                              VXD VSRQWH DJDLQVW KHU
      7KH IDFW WKDW 3ODLQWLII EURXJKW KHU FODLP XQGHU  86& †  LQ
                                                                                                                               RUGHUV 'HIHQGDQWV WR
RUGHU WR FRQWULYH IHGHUDO FRXUW MXULVGLFWLRQ LV RI QR PRPHQW WR WKH
                                                                                                                               VXSSOHPHQW UHFRUG LQ
DSSOLFDWLRQ RI WKH GRPHVWLF UHODWLRQV H[FHSWLRQ 7KLV &RXUW KDV ORQJ
UHFRJQL]HG WKDW m>H@YHQ ZKHQ EURXJKW XQGHU WKH JXLVH RI D IHGHUDO
                                                                                                                               UHVSRQVH
TXHVWLRQ DFWLRQ D VXLW ZKRVH VXEVWDQFH LV GRPHVWLF UHODWLRQV JHQHUDOO\
ZLOO QRW EH HQWHUWDLQHG LQ D IHGHUDO FRXUWl )LUHVWRQH Y &OHYHODQG 7UXVW
       +ROORZD\Y6WDWHRI2KLRHWDO                  1R       1R              +ROORZD\Y6WDWHRI2KLRHWDO        

 'DWH             6WDWH &RXUW             'DWH         )HGHUDO &RXUW          RYHUUXOHWKHFXVWRG\GHWHUPLQDWLRQPDGHE\WKH&&s&DQG
                                                                              UHTXHVWVWKDWWKHGLVWULFWFRXUWRUGHU'HIHQGDQWVWRUHWXUQKHU
      &&s& RYHUUXOHV 3ODLQWLIIjV                                         FKLOGUHQ WR KHU  $V VXFK XQGHU WKH GLVWULFW FRXUWjV RZQ
         PRWLRQ 3ODLQWLII DSSHDOV                                          RSLQLRQ'HIHQGDQWVjPRWLRQWRGLVPLVVIRUODFNRIVXEMHFW
           WR WKH 2KLR &RXUW RI                                               PDWWHUMXULVGLFWLRQVKRXOGKDYHEHHQJUDQWHG
           $SSHDOV IRU &OHUPRQW
           &RXQW\
                                                                                 )XUWKHUPRUHEHFDXVH3ODLQWLIIjVFODLPLQWKLVFDVHDOWKRXJK
                                            'LVWULFW &RXUW RUGHUV      ILOHGXQGHUWKHJXLVHRID†FODLPLVDFWXDOO\DFKDOOHQJH
                                                   'HIHQGDQWV WR DPRQJ
                                                   RWKHU WKLQJV EULHI WKH    WR WKH VXEVWDQFH RI WKH VWDWH FXVWRG\ GHWHUPLQDWLRQ ZKLFK
                                                   LVVXH RI LPPXQLW\          VHHNVWKHUHWXUQRIKHUFKLOGUHQDQGQRWVLPSO\DFKDOOHQJHWR
                                                   UHJDUGLQJ WKH PRWLRQ       WKHSURFHGXUHVOHDGLQJXSWRWKHGHFLVLRQWKHGLVWULFWFRXUW
                                                   IRU VXPPDU\ MXGJPHQW
                                                                              HUUHG LQ FRQFOXGLQJ WKDW LW KDG MXULVGLFWLRQ RYHU WKH PDWWHU
                                                                              XQGHU WKH GRPHVWLF UHODWLRQVFKLOG FXVWRG\ H[FHSWLRQ WR
                                             'HIHQGDQWV ILOH EULHI LQ   MXULVGLFWLRQDVZHOODVWKH5RRNHU)HOGPDQGRFWULQH6HH
                                                 VXSSRUW RI LPPXQLW\       86& †  'LVWULFW RI &ROXPELD &RXUW RI $SSHDOV Y
                                                                              )HOGPDQ86m>)HGHUDOGLVWULFW
                                                                              FRXUWjV GR QRW KDYH MXULVGLFWLRQ@ mRYHU FKDOOHQJHV WR VWDWH
                                            'HIHQGDQWV &OHUPRQW        FRXUW GHFLVLRQV LQ SDUWLFXODU FDVHV DULVLQJ RXW RI MXGLFLDO
                                                   &RXQW\ 	 6DOO\ %UXVK       SURFHHGLQJV HYHQ LI WKRVH FKDOOHQJHV DOOHJH WKDW WKH VWDWH
                                                   ILOH PRWLRQ IRU VXPPDU\    FRXUWjV DFWLRQ ZDV XQFRQVWLWXWLRQDOl 5RRNHU Y )LGHOLW\
                                                   MXGJPHQW                  7UXVW&R86
                                                                                   7KH'RPHVWLF5HODWLRQV&KLOG&XVWRG\([FHSWLRQ
                                            3ODLQWLII UHVSRQGV WR             WR)HGHUDO&RXUWsXULVGLFWLRQ
                                                   PRWLRQ
                                                                                7UDGLWLRQDOO\ IHGHUDO FRXUWV KDYH GHFOLQHG WR DFFHSW
                                                                              MXULVGLFWLRQ LQ SDUHQWFKLOG GRPHVWLF UHODWLRQV RU FXVWRG\
       2KLR &RXUW RI $SSHDOV                                              GLVSXWHV DQG DGRSWLRQ PDWWHUV VXEMHFW WR VWDWH ODZ  6HH
         UHYHUVHV WKH UXOLQJ RI WKH
           &&s& RUGHUV WKDW WKH                                              $QNHQEUDQW Y 5LFKDUGV  86   
           &&s& VHW DVLGH LWV SUHYLRXV                                        FRQFOXGLQJmWKDWWKHGRPHVWLFUHODWLRQVH[FHSWLRQGLYHVWV
           RUGHU JUDQWLQJ &OHUPRQW                                            WKHIHGHUDOFRXUWVRISRZHUWRLVVXHGLYRUFHDOLPRQ\RUFKLOG
           &RXQW\ SHUPDQHQW
           FXVWRG\ 	 RUGHUV                                                  FXVWRG\GHFUHHVl&DW]Y&KDONHU)G
           &OHUPRQW &RXQW\ 'HSjW RI                                           VHHDOVR=DNY3LOOD)GWK&LUSHU
           +XPDQ 6HUYV m&&'+6l                                             FXULDP,WLVmLQFXPEHQWlXSRQDIHGHUDOFRXUWWRFDUHIXOO\
           WR REWDLQ SURSHU VHUYLFH
           RYHU 3ODLQWLII 6HH ,Q UH                                          H[DPLQHWKHQDWXUHRIDFRPSODLQWWRGHWHUPLQHZKHWKHULWLV
           +ROORZD\ 1R &$                                             DFWXDOO\ FRQFHUQHG ZLWK D FXVWRG\ LVVXH o LH ZKHWKHU LW
             :/                                                 DFWXDOO\ VHHNV D FKLOG FXVWRG\ GHFUHH  6HH )LUHVWRQH Y
           2KLR $SS  'LVW 0D\
             XQSXEOLVKHG                                            &OHYHODQG7UXVW&R)GWK&LU
                                                                              sXULVGLFWLRQ LV DEVHQW LQ WKRVH FDVHV ZKHUH WKH DOOHJHG WRUW
                                                                              DFWLRQLVDPHUHSUHWHQVHDQGWKHVXLWDFWXDOO\VHHNVDFXVWRG\
   +ROORZD\Y6WDWHRI2KLRHWDO            1R      1R                  +ROORZD\Y6WDWHRI2KLRHWDO                  

WKDWSHUMXUHGWHVWLPRQ\ZDVSUHVHQWHGUHJDUGLQJ3ODLQWLIIjV         'DWH            6WDWH &RXUW               'DWH          )HGHUDO &RXUW
DEDQGRQPHQW RI KHU FKLOGUHQ VKH DOVR H[SUHVVO\ UHTXHVWHG
WKDWWKHGLVWULFWFRXUWRUGHU'HIHQGDQWVWRUHWXUQKHUFKLOGUHQ                                                 'LVWULFW &RXUW HQWHUV

WRKHU                                                                                                                RUGHU JUDQWLQJ
                                                                                                                       'HIHQGDQWVj PRWLRQ IRU
                                                                                                                       VXPPDU\ MXGJPHQW RQ
  12721/<','7+(</,(72056+2//2:$<,1                                                                             WKH EDVLV RI DEVROXWH
  0$<%<7(//,1*+(55,*+76+$'$/5(6'<                                                                                LPPXQLW\ s$ DW 

  >VLF@%((17$.(1%87$/620867+$9(/,('
  72 7+( &28576 ,1 s81(>@ s8/<>@ $1'
  s$18$5< >YDULRXV FXVWRG\ KHDULQJ GDWHV@ :+(1                    3ODLQWLII ILOHV PRWLRQ LQ

  7+(<&/$,0('$%$1'210(1721+(53$57                                    &&s& VHHNLQJ LPPHGLDWH
                                                                            UHXQLILFDWLRQ ZLWK KHU
  :+(16+(+$'6(177+(0$//7+((9,'(1&(                                   FKLOGUHQ
  7+$77+()$7+(5+$'672/(17+(&+,/'5(1
  )520 +(5 ,1       7+(5()25( 7+(                     3UHWULDO FRQIHUHQFH RQ
                                                                            3ODLQWLIIjV PRWLRQ LV KHOG
  /2:(5 &2857j6 58/,1* >WKH GHFLVLRQ RI WKH                           &&s& GHQLHV 3ODLQWLIIjV
  &OHUPRQW&RXQW\sXYHQLOH&RXUW@0867%(29(5                              PRWLRQ &&'+6 VWDWHV LWV

  7851('$667$7(',17+($0(1'0(17                                      LQWHQWLRQ WR VHUYH 3ODLQWLII
                                                                            ZLWK D QHZ FRPSODLQW
  $1'7+,6&285725'(57+('()(1'$176                                       VHHNLQJ SHUPDQHQW
  72 5(7851 056>@ +2//2:$<6 >VLF@                                      FXVWRG\

  &+,/'5(172+(5$1'7225'(57+$77+(                                     2Q WKH VDPH GD\ 3ODLQWLII
  '()(1'$176$/623$<5(6$787,21>VLF@72                                   ILOHV D SHWLWLRQ IRU D ZULW RI
  056>@+2//2:$<)259,2/$7,1*+(5&,9,/                                   KDEHDV FRUSXV LQ WKH 2KLR

  5,*+76$1'723$<7+($028176/,67(',1                                   &RXUW RI $SSHDOV WR UHVWRUH
                                                                            FXVWRG\
  7+(25,*,1$/&203/$,17
                                                                            2KLR &RXUW RI $SSHDOV

                             


                                         WKHUHDIWHU GHQLHV KHU
                                                                            SHWLWLRQ DQG 3ODLQWLII
                                                                            DSSHDOV WR WKH 2KLR
     62:()((/7+$77+,6&2857'8(72$//                                  6XSUHPH &RXUW
  7+((9,'(1&(+$612&+2,&(%8772'(1,(
  >VLF@7+('()(1'$176>VLF@',60,66$/027,21                                                                   3ODLQWLII ILOHV QRWLFH RI
                                                                                                                       DSSHDO DW KDQG
  $1' 72 ),1' ,1 056>@ +2//2:$<6 >VLF@
  )$925$1'72*5$17+(5$//5(/,()$6.
  >VLF@)25,1+(5&203/$,17$1'7225'(5
  7+( '()(1'$176 72 5(/($6( +(5
  &+,/'5(172+(5>@
s$DWHPSKDVLVDGGHG7KHH[SUHVVODQJXDJHRI
3ODLQWLIIjV UHVSRQVLYH SOHDGLQJ FOHDUO\ FKDOOHQJHV WKH
WHVWLPRQ\ SUHVHQWHG DW WKH KHDULQJV UHJDUGLQJ 3ODLQWLIIjV
FRQWHQWLRQWKDWVKHGLGQRWDEDQGRQKHUFKLOGUHQEXWWKDWKHU
KXVEDQGDEVFRQGHGZLWKWKHPUHTXHVWVWKHGLVWULFWFRXUWWR
       +ROORZD\Y6WDWHRI2KLRHWDO                   1R        1R             +ROORZD\Y6WDWHRI2KLRHWDO       

 'DWH                6WDWH &RXUW           'DWH          )HGHUDO &RXUW            XQFHUWDLQW\RYHUZKHWKHUKHLVWRUHPDLQLQKLVFXUUHQW
                                                                                  mKRPHlXQGHUWKHFDUHRIKLVSDUHQWVRUIRVWHUSDUHQWV
      2KLR 6XSUHPH &RXUW                                                     HVSHFLDOO\ZKHQVXFKXQFHUWDLQW\LVSURORQJHG([WHQGHG
        DIILUPHG WKH FRXUW RI
           DSSHDOV GHQLDO RI WKH ZULW
                                                                                  XQFHUWDLQW\ZRXOGEHLQHYLWDEOHLQPDQ\FDVHVLIIHGHUDO
           ILQGLQJ WKDW 3ODLQWLII KDG D                                           FRXUWV KDG MXULVGLFWLRQ WR UHOLWLJDWH VWDWH FXVWRG\
           OHJDO UHPHG\ LQ WKH                                                    GHFLVLRQV
           RUGLQDU\ FRXUVH RI ODZ E\
           EHLQJ VHUYHG ZLWK D FRS\
           RI WKH DPHQGHG FRPSODLQW
                                                                                ,G DW  IRRWQRWH RPLWWHG  'HIHQGDQWV LQ WKLV FDVH
           IRU SHUPDQHQW FXVWRG\                                               DUJXHG WKDW /HKPDQ DQG WKH UHDVRQLQJ VWDWHG WKHUHLQ
           6HH +ROORZD\ Y &OHUPRQW
                                                                                FRQWUROOHGEHFDXVH3ODLQWLIIZDVDFWXDOO\VHHNLQJWRFKDOOHQJH
           &RXQW\ 'HSjW RI +XPDQ
           6HUYV
                  1(G                                                WKHVXEVWDQFHRIWKHFXVWRG\KHDULQJDVZHOODVWKHUHWXUQRI
            2KLR                                                  KHUFKLOGUHQE\ZD\RIKHU†FODLP&OHUPRQW&RXQW\
                                                                                DOVRDUJXHGWKDWWKHGLVWULFWFRXUWODFNHGMXULVGLFWLRQXQGHUWKH
                                             2UDO DUJXPHQW KHDUG E\
                                                    RULJLQDO +ROORZD\
                                                                                5RRNHU)HOGPDQGRFWULQH6HHGLVFXVVLRQLQIUD3DUW,,&
                                                    SDQHO
                                                                                   7KHGLVWULFWFRXUWUHMHFWHG'HIHQGDQWVjFRQWHQWLRQVDQGKHOG
                                                                                WKDWWKHFRXUWKDGMXULVGLFWLRQRYHU3ODLQWLIIjV†FODLP
                                             6L[WK &LUFXLW DIILUPV WKH
                                                                                7KH FRXUW EHJDQ E\ UHFRJQL]LQJ WKDW IHGHUDO FRXUWV
                                                    GLVWULFW FRXUWjV RUGHU      WUDGLWLRQDOO\KDYHGHFOLQHGWRDFFHSWMXULVGLFWLRQRYHUFKLOG
                                                    JUDQWLQJ 'HIHQGDQWVj        FXVWRG\GLVSXWHV+RZHYHUWKHFRXUWZHQWRQWRKROGWKDW
                                                    VXPPDU\ MXGJPHQW
                                                    6HH +ROORZD\ Y 2KLR
                                                                                EHFDXVHWKHXQGHUO\LQJFXVWRG\PDWWHUZDVQRWLQTXHVWLRQ
                                                     )G  UHKjJ HQ      DQG3ODLQWLIIjVFDXVHRIDFWLRQZDVFRJQL]DEOHLQWRUWWKHFKLOG
                                                    EDQF JUDQWHG YDFDWHG
                                                                                FXVWRG\H[FHSWLRQWRMXULVGLFWLRQGLGQRWDSSO\7KHGLVWULFW
                                                    E\  )G  WK
                                                    &LU 
                                                                                FRXUWWKHQTXDOLILHGLWVKROGLQJDVIROORZV
                                                                                    +RZHYHU WR WKH H[WHQW WKDW SODLQWLII VHHNV DQ RUGHU
       3ODLQWLII ILOHV D QHZ
                                                                                  IURPWKLVFRXUWIRUWKHUHWXUQRIKHUFKLOGUHQWKLV&RXUW
         SHWLWLRQ IRU ZULW RI KDEHDV                                            ODFNVMXULVGLFWLRQWRJUDQWVXFKUHOLHI6XFKUHOLHIZRXOG
           FRUSXV LQ WKH 2KLR                                                     UHTXLUHWKH&RXUWWRDGGUHVVWKHXQGHUO\LQJPHULWVRIWKH
           6XSUHPH &RXUW
                                                                                  DFWLRQWHUPLQDWLQJSODLQWLIIjVSDUHQWDOULJKWV7KLVLVWKH
      &OHUPRQW &RXQW\
                                                                                  SURYLQFHRIWKHVWDWHFRXUWVDQGDQ\UHOLHISODLQWLIIVHHNV
         'HSDUWPHQW RI +XPDQ                                                    LQWKLVUHVSHFWPXVWEHVRXJKWWKURXJKWKHVWDWHFRXUWV
           6HUYLFHV ILOHV D PRWLRQ WR
           GLVPLVV WKH SHWLWLRQ
           DUJXLQJ QR QHZ JURXQGV
                                                                                s$DWFLWDWLRQVDQGIRRWQRWHRPLWWHG
           KDG EHHQ DOOHJHG E\
           3ODLQWLII                                                             2QH QHHG ORRN QR IXUWKHU WKDQ 3ODLQWLIIjV UHVSRQVH WR
                                                                                'HIHQGDQWVjPRWLRQWRGLVPLVVWRVHHKRZWKHGLVWULFWFRXUWjV
                                                                                GHFLVLRQ WR LQYRNH MXULVGLFWLRQ FRQWUDGLFWV LWV RZQ ZULWWHQ
                                                                                RSLQLRQ6SHFLILFDOO\LQ3ODLQWLIIjVUHVSRQVHWR'HIHQGDQWVj
                                                                                PRWLRQWRGLVPLVVVKHQRWRQO\TXHVWLRQHGDQGFKDOOHQJHGWKH
                                                                                XQGHUO\LQJPHULWVRIWKHFXVWRG\GHWHUPLQDWLRQE\FODLPLQJ
    +ROORZD\Y6WDWHRI2KLRHWDO              1R       1R                  +ROORZD\Y6WDWHRI2KLRHWDO              

   5HJDUGLQJWKHODZRIWKHFDVHWKHLVVXHWREHH[DPLQHGLV           'DWH              6WDWH &RXUW            'DWH         )HGHUDO &RXUW
ZKHWKHUWKH2KLR'LVWULFW&RXUWVKRXOGKDYHGLVPLVVHGWKH
PDWWHUZKHUHWKH.DQVDV'LVWULFW&RXUWSUHYLRXVO\KDGEHIRUH               2KLR 6XSUHPH &RXUW

LWWKHVDPHFODLPVPDGHE\3ODLQWLIIoKHUFLYLOULJKWVZHUH                  XQDQLPRXVO\ GHQLHV
                                                                                3ODLQWLIIjV SHWLWLRQ IRU ZULW
YLRODWHG KHU FKLOGUHQ ZHUH WDNHQ IURP KHU ZLWKRXW GXH                  RI KDEHDV FRUSXV VXVWDLQV
SURFHVV RI ODZ DQG KHU FKLOGUHQ VKRXOG EH LPPHGLDWHO\                  'HIHQGDQWjV PRWLRQ DQG

UHWXUQHGWRKHUoDQGWKH.DQVDV'LVWULFW&RXUWUXOHGDVPDWWHU                 GLVPLVVHV WKH DFWLRQ 6HH

RIODZWKDWLWODFNHGVXEMHFWPDWWHUMXULVGLFWLRQRYHU3ODLQWLIIjV
                                                                                +ROORZD\ Y &OHUPRQW
                                                                                &RXQW\ 'HSjW RI +XPDQ

FODLPV  $Q\ DIILUPDWLYH GHIHQVH DVVHUWHG DIWHU WKH 2KLR                6HUYV 1(G 

'LVWULFW&RXUWDOORZHGWKHFDVHWRSURFHHGKDVQRWKLQJWRGR                    2KLR  WDEOH
                                                                                GHFLVLRQ
ZLWK ZKHWKHU WKH 2KLR 'LVWULFW &RXUW ZDV ERXQG E\ WKH
.DQVDV'LVWULFW&RXUWjVUXOLQJDWWKHRXWVHWRIWKHFDVH6HH                                                     &DVH UHKHDUG E\ HQ
+D\PDQ&DVK5HJLVWHU&R)GDW7KXVWKH                                                                  EDQF  FRXUW 3ODLQWLII

2KLR'LVWULFW&RXUWVKRXOG KDYHUHFRJQL]HGWKHODZRIWKH                                                                DYHUV WKURXJK FRXQVHO
                                                                                                                          WKDW WKH &&'+6 KDG
FDVH GRFWULQH ZKHQ 'HIHQGDQWV EURXJKW WKHLU PRWLRQ WR                                                              UHFHQWO\ QRWLILHG DQG
GLVPLVVIRUODFNRIVXEMHFWPDWWHUMXULVGLFWLRQ                                                                          VHUYHG KHU ZLWK D
                                                                                                                          GHSHQGHQF\ KHDULQJ
                                                                                                                          FRPSODLQW
  & 'HIHQGDQWVj 0RWLRQ WR 'LVPLVV DQG WKH 'LVWULFW
     &RXUWjV(UURQHRXV&RQFOXVLRQWKDWWKH&RXUWKDG
     6XEMHFW0DWWHUsXULVGLFWLRQ2YHUWKH&DVH
                                                                         7KHIDFWWKDW3ODLQWLIIVRXJKWUHOLHIIURPWKLV&RXUWZKLOH
  'HIHQGDQWVILOHGDPRWLRQWRGLVPLVV3ODLQWLIIjVFODLPRQ            FXVWRG\PDWWHUVZHUHRQJRLQJLQWKH2KLRVWDWHFRXUWVDORQJ
WKH EDVLV RI DPRQJ RWKHU WKLQJV ODFN RI VXEMHFW PDWWHU      ZLWKWKHIDFWWKDW3ODLQWLIIUHTXHVWHGWKHGLVWULFWFRXUWWRRUGHU
MXULVGLFWLRQ XQGHU/HKPDQ Y /\FRPLQJ &RXQW\ &KLOGUHQjV           'HIHQGDQWV WR UHWXUQ KHU FKLOGUHQ WR KHU DUH VLJQLILFDQW LQ
6HUYV$JHQF\86,Q/HKPDQWKH6XSUHPH            XQGHUVWDQGLQJ ZK\ WKLV &RXUW ODFNV VXEMHFW PDWWHU
&RXUWKHOGWKDW86&†GRHVQRWFRQIHUIHGHUDOFRXUW         MXULVGLFWLRQ+RZHYHUDVH[SODLQHGLQWKHIROORZLQJVHFWLRQ
MXULVGLFWLRQ WR FRQVLGHU FROODWHUDO FKDOOHQJHV WR VWDWH FRXUW   WKLV FDVH VKRXOG KDYH EHHQ GLVPLVVHG E\ WKH 2KLR 'LVWULFW
MXGJPHQWV LQYROXQWDULO\ WHUPLQDWLQJ SDUHQWDO ULJKWV  ,G DW    &RXUWXQGHUWKHODZRIWKHFDVHGRFWULQHZKHUHWKH8QLWHG
,QUHDFKLQJWKLVGHFLVLRQWKH&RXUWIRXQGWKDWWKHQHHG         6WDWHV'LVWULFW&RXUWIRUWKH'LVWULFWRI.DQVDVKDGSUHYLRXVO\
IRU ILQDOLW\ RI MXGJPHQWV ZDV LQ WKH EHVW LQWHUHVWV RI WKH   GLVPLVVHGWKHVDPHFODLPVE\ZKLFK3ODLQWLIIVRXJKWWKHVDPH
FKLOGUHQ                                                              UHOLHI

     7KH6WDWHjVLQWHUHVWLQILQDOLW\LVXQXVXDOO\VWURQJLQ             % 7KH /DZ RI WKH &DVH 'RFWULQH $V $SSOLHG WR
  FKLOGFXVWRG\ GLVSXWHV  7KH JUDQW RI IHGHUDO KDEHDV               3ODLQWLIIjV&ODLP)LOHGLQWKH8QLWHG6WDWHV'LVWULFW
  ZRXOG SURORQJ XQFHUWDLQW\ IRU FKLOGUHQ VXFK DV WKH                 &RXUWIRUWKH6RXWKHUQ'LVWULFWRI2KLR
  /HKPDQ VRQV SRVVLEO\ OHVVHQLQJ WKHLU FKDQFHV RI
  DGRSWLRQ,WLVXQGLVSXWHGWKDWFKLOGUHQUHTXLUHVHFXUH              mµ$VPRVWFRPPRQO\GHILQHGWKHGRFWULQHRIWKHODZRIWKH
  VWDEOH ORQJWHUP FRQWLQXRXV UHODWLRQVKLSV ZLWK WKHLU          FDVHSRVLWVWKDWZKHQDFRXUWGHFLGHVXSRQDUXOHRIODZWKDW
  SDUHQWVRUIRVWHUSDUHQWV7KHUHLVOLWWOHWKDWFDQEHDV           GHFLVLRQ VKRXOG FRQWLQXH WR JRYHUQ WKH VDPH LVVXHV LQ
  GHWULPHQWDO WR D FKLOGjV VRXQG GHYHORSPHQW DV                  VXEVHTXHQWVWDJHVLQWKHVDPHFDVHjl&KULVWLDQVRQY&ROW
                                                                       ,QGXV2SHUDWLQJ&RUS86DOWHUDWLRQ
    +ROORZD\Y6WDWHRI2KLRHWDO                1R       1R               +ROORZD\Y6WDWHRI2KLRHWDO         

RPLWWHGTXRWLQJ$UL]RQDY&DOLIRUQLD86               EHFDXVHWKHFRXUWSURSHUO\IRXQGWKDWLWODFNHGVXEMHFWPDWWHU
VHH8QLWHG6WDWHVY0RRUHG)GWK            MXULVGLFWLRQWRKHDUWKHPDWWHU6LPSO\SXWLQDQHIIRUWWRILQG
&LUm>7@KHGRFWULQHDSSOLHVDVPXFKWRWKHGHFLVLRQV            WKDWWKHODZRIWKHFDVHGRFWULQHGRHVQRWDSSO\WKHPDMRULW\
RI DFRRUGLQDWHFRXUWLQWKHVDPHFDVHDVWRDFRXUWjV RZQ             PDNHVPLVVWDWHPHQWVDQGDWWHPSWVWRFKDUDFWHUL]H3ODLQWLIIjV
GHFLVLRQVl&KULVWLDQVRQ86DWH[DPLQLQJFODLP              FDVH DV RQH DERXW DQ DIILUPDWLYH GHIHQVH DV RSSRVHG WR
WKDWRQHFLUFXLWFRXUWZDVERXQGE\DGLIIHUHQWFLUFXLWFRXUWjV          IRFXVLQJRQWKHQDWXUHRI3ODLQWLIIjVFODLPV
GHFLVLRQ XQGHU ODZ RI WKH FDVH  ,Q IDFW m>I@HGHUDO FRXUWV
URXWLQHO\ DSSO\ ODZRIWKHFDVH SULQFLSOHV WR WUDQVIHU                 ,QDQRWKHUHIIRUWWRILQGWKDWWKHODZRIWKHFDVHGRFWULQH
GHFLVLRQVRIFRRUGLQDWHFRXUWVl,G$VWKH6XSUHPH&RXUW              GRHV QRW DSSO\ WKH PDMRULW\ DWWHPSWV WR GLYRUFH WKH WZR
KDVIRXQGmWKHSROLFLHVVXSSRUWLQJWKHGRFWULQHDSSO\ZLWK              .DQVDV GHFLVLRQV DQG FRQIXVHV SULQFLSOHV DWWHQGDQW WR UHV
HYHQJUHDWHUIRUFHWRWUDQVIHUGHFLVLRQVWKDQWRGHFLVLRQVRI            MXGLFDWDoLVVXHSUHFOXVLRQDQGFODLPSUHFOXVLRQoZLWKWKH
VXEVWDQWLYH ODZ WUDQVIHUHH FRXUWV WKDW IHHO HQWLUHO\ IUHH WR    ODZ RI WKH FDVH GRFWULQH  +RZHYHU GHVSLWH LWV HIIRUWV WKH
UHYLVLWWUDQVIHUGHFLVLRQVRIDFRRUGLQDWHFRXUWWKUHDWHQWRVHQG        PDMRULW\jV DWWHPSWV VLPSO\ GR QRW FDUU\ WKH GD\  )LUVW D
OLWLJDQWVLQWRDYLFLRXVFLUFOHRIOLWLJDWLRQl,G,QGHHGWKH        UHYLHZ RI WKH .DQVDV 'LVWULFW &RXUWjV 2FWREHU  
EDVLF SUHPLVH EHKLQG WKH ODZ RI WKH FDVH GRFWULQH LV WKDW      RSLQLRQLQGLFDWHVWKDW'LVWULFWsXGJH&URZFOHDUO\FRQVLGHUHG
FRXUWV VKRXOG JHQHUDOO\ mUHIXVH WR UHRSHQ ZKDW KDV EHHQ          WKHIDFWWKDW3ODLQWLIIEURXJKWFLYLOULJKWVFODLPVWKHVDPH
GHFLGHGl0HVVLQJHUY$QGHUVRQ86              FLYLOULJKWVFODLPVWKDWVKHEURXJKWLQWKH2KLR'LVWULFW&RXUW
                                                                         WKHUHIRUH FRQWUDU\ WR WKH PDMRULW\jV SRVLWLRQ WKH .DQVDV
   +RZHYHUWKHODZRIWKHFDVHGRFWULQHLVQRWDQmLQH[RUDEOH           'LVWULFW &RXUW GLG FRQVLGHU 3ODLQWLIIjV FODLPV DV DQ
FRPPDQGl6HH8QLWHG6WDWHV6WHHO&RUSY+ROOH\)G             DPHQGPHQWWRKHURULJLQDOSOHDGLQJ8QGHU)HG5&LY3
WK&LUm$FRXUWKDVWKHSRZHUWRUHYLVLW             F WKH DPHQGPHQW UHODWHV EDFN WR WKH VDPH FRQGXFW
SULRU GHFLVLRQV RI LWV RZQ RU RI D FRRUGLQDWH FRXUW LQ DQ\    WUDQVDFWLRQDQGRFFXUUHQFHDV3ODLQWLIIjVRULJLQDOFRPSODLQW
FLUFXPVWDQFHDOWKRXJKDVDUXOHFRXUWVVKRXOGEHORDWKHWRGR           DQGWKHWZRSOHDGLQJVVKRXOGWKXVEHFRQVLGHUHGDVRQH
VR LQ WKH DEVHQFH RI H[WUDRUGLQDU\ FLUFXPVWDQFHV VXFK DV
ZKHUHWKHLQLWLDOGHFLVLRQZDVµFOHDUO\HUURQHRXVDQGZRXOG                 0RUHRYHUDVQRWHGLQ:ULJKWDQG0LOOHUXQGHUWKHm/DZRI
ZRUNDPDQLIHVWLQMXVWLFHjl&KULVWLDQVRQ86DW              WKH &DVHl m>G@LVPLVVDO IRU ZDQW RI MXULVGLFWLRQ SUHFOXGHV
TXRWLQJ $UL]RQD Y &DOLIRUQLD  86 DW  Q  :H      UHOLWLJDWLRQRIWKHVDPHMXULVGLFWLRQLVVXHl6HH&:ULJKW
KDYHKHOGWKDWDFRXUWPXVWmILQGVRPHFRJHQWUHDVRQWRVKRZ             $0LOOHU	(&RRSHU)HGHUDO3UDFWLFHDQG3URFHGXUH†
WKHSULRUUXOLQJLVQRORQJHUDSSOLFDEOHlEHIRUHUHIXVLQJWR              6XSS  7KH 2KLR 'LVWULFW &RXUW ZDV WKHUHIRUH
DSSO\ WKH ODZ RI WKH FDVH  6HH +ROOH\  )G DW      SUHFOXGHGIURPUHOLWLJDWLQJWKHLVVXHDQGHUUHGZKHQLWGHQLHG
)DFWRUVWRFRQVLGHULQGHWHUPLQLQJZKHWKHUDSULRUUXOLQJPD\            'HIHQGDQWVj PRWLRQ WR GLVPLVV IRU ODFN RI VXEMHFW PDWWHU
EHLJQRUHGLQFOXGHmVXEVWDQWLDOO\GLIIHUHQWHYLGHQFHUDLVHGRQ           MXULVGLFWLRQ7KHPDMRULW\FDQQRWHVFDSHWKLVIDFWE\DUJXLQJ
VXEVHTXHQWWULDODVXEVHTXHQWFRQWUDU\YLHZRIWKHODZE\WKH           WKDWSULQFLSOHVRIUHVMXGLFDWDDSSO\WREDUWKHODZRIWKHFDVH
FRQWUROOLQJDXWKRULW\RUDFOHDUO\HUURQHRXVGHFLVLRQZKLFK             7KHPDMRULW\LQFRUUHFWO\DSSOLHVSULQFLSOHVRIUHVMXGLFDWDWR
ZRXOGZRUNDPDQLIHVWLQMXVWLFHl 6HH LGFLWLQJ:KLWHY            WKH ODZ RI WKH FDVH GRFWULQH  ,W LV ZLWKRXW TXHVWLRQ WKDW D
0DUWKD)GWK&LU:LWKWKDW                GHFLVLRQRQWKHPHULWVLVUHTXLUHGLQRUGHUIRUUHVMXGLFDWDWR
VDLGKRZHYHUUHYLVLRQVLQWKHODZRIWKHFDVHRFFXUmYHU\              DSSO\VHHVXSUDQRWHKRZHYHUFRQWUDU\WRWKHPDMRULW\jV
LQIUHTXHQWO\lZKHQRQHFRXUWLVDVNHGWRUHYLHZWKHGHFLVLRQ             XQVXSSRUWHGFODLPDGHFLVLRQRQWKHPHULWVLVQRWQHFHVVDU\
RI D FRRUGLQDWH FRXUW  6HH 3HUNLQ(OPHU &RUS Y                IRUWKHODZRIWKHFDVHWRDSSO\6HH&KULVWLDQVRQ86
&RPSXWHUYLVLRQ&RUS)G)HG&LU                DW
    +ROORZD\Y6WDWHRI2KLRHWDO                1R       1R                 +ROORZD\Y6WDWHRI2KLRHWDO           

SXUVXDQWWRWKH.DQVDVGHFLVLRQV6HH6NLO&RUSY0LOOHUV                $OWKRXJKWKHFDVHDWKDQGLVQRWDmWUDQVIHUlFDVHLQWKH
)DOOV&R)G WK&LUm:HVKRXOG                W\SLFDOVHQVHRIWKHWHUPLWLVQRQHWKHOHVVDFDVHZKLFKZDV
QHYHUDVVXPHWKDWDFRXUWRIFRQFXUUHQWMXULVGLFWLRQQHJOHFWHG           GHFLGHG E\ D SUHYLRXV FRRUGLQDWH FRXUW RQ D UXOH RI ODZ o
WRSHUIRUPLWVGXW\SDUWLFXODUO\ZKHQLWVRUGHUFOHDUO\VKRZV           VXEMHFWPDWWHUMXULVGLFWLRQoZKLFKWKH2KLR'LVWULFW&RXUW
IXOO SHUIRUPDQFHl  7KLV LV SDUWLFXODUO\ VR ZKHUH LQ KHU      VKRXOGKDYHUHVSHFWHGDQGXVHGDVDEDVLVWRGLVPLVVWKHFDVH
UHVSRQVHWR'HIHQGDQWVjPRWLRQWRGLVPLVVILOHGLQWKHFRXUW             ,Q RWKHU ZRUGV WKH GLVWULFW FRXUW VKRXOG KDYH GLVPLVVHG
EHORZ3ODLQWLIIWZLFHUHTXHVWHGWKDWWKHGLVWULFWFRXUWRUGHU           3ODLQWLIIjVFDVHXQGHUWKHODZRIWKHFDVHGRFWULQHEDVHGXSRQ
'HIHQGDQWVWRUHWXUQKHUFKLOGUHQWRKHUs$DWDQG           WKH UXOLQJV IURP WKH .DQVDV 'LVWULFW &RXUW  6HH +D\PDQ
3ODLQWLII GLG QRW VHHN UHOLHI LQ VWDWH FRXUW XQWLO LW EHFDPH   &DVK5HJLVWHU&RY6DURNLQ)GG&LU
DSSDUHQW WKDW WKH 6WDWH RI 2KLR DQG 2KLR 'HSDUWPHQW RI          KROGLQJWKDWODZRIWKHFDVHSUHYHQWHGWKH1HZsHUVH\
+XPDQ6HUYLFHVZHUHJRLQJWREHGLVPLVVHGDVSDUWLHVIURP                'LVWULFW &RXUW IURP UHGHWHUPLQLQJ MXULVGLFWLRQDO LVVXH
WKHIHGHUDOVXLW                                                        SUHYLRXVO\GHFLGHGE\WKH'LVWULFWRI&ROXPELD'LVWULFW&RXUW
                                                                         DQGQRWLQJWKDWmWKHSULQFLSOHVRIFRPLW\DPRQJFRXUWVRIWKH
    ,QDQDWWHPSWWRGLVWLQJXLVKWKHODZRIWKHFDVHGRFWULQHDQG        VDPHOHYHORIWKHIHGHUDOV\VWHPSURYLGHIXUWKHUUHDVRQZK\
ILQGLWWREHLQDSSOLFDEOHKHUHWKHPDMRULW\PDNHVVWDWHPHQWV           DQLVVXHDOUHDG\GHFLGHGE\DFRXUWRIHTXDODXWKRULW\l
ZKLFKDUHVLPSO\IDOVHDQGPLVFKDUDFWHUL]HVWKHPDWWHU)RU             VKRXOG QRW EH UHH[DPLQHG VHH DOVR +ROORZD\ Y 6WDWH RI
H[DPSOHWKHPDMRULW\DVVHUWVWKDWWKH.DQVDV'LVWULFW&RXUW             2KLR1R6$&:/DW



'
mQHYHUHYHQPHQWLRQHGGDPDJHVZKLFK+ROORZD\ZDVQRW                    .DQ2FW+ROORZD\Y6WDWHRI2KLR1R
VHHNLQJLQWKDWDFWLRQl+RZHYHULQUXOLQJRQZKDWLWWHUPHG          6$&:/'.DQsXO\
WREH3ODLQWLIIjV5XOHEPRWLRQWKH.DQVDV'LVWULFW&RXUW
H[SUHVVO\VWDWHGWKDWm,QDGGLWLRQWRWKHUHWXUQRIKHUFKLOGUHQ          ,QGHHGDQH[DPLQDWLRQRI3ODLQWLIIjVFRPSODLQWILOHGLQWKH
   +ROORZD\ DOVR VHHNV FRPSHQVDWLRQ LQ WKH DPRXQW RI        8QLWHG 6WDWHV 'LVWULFW &RXUW LQ .DQVDV DV ZHOO DV DQ
 IRU WKH SDLQ DQG VXIIHULQJ FDXVHG E\ WKH           H[DPLQDWLRQRIKHUm0RWLRQ)RUWKLVFRXUWWR>VLF@RUGHUIDLU
WHUPLQDWLRQRIKHUSDUHQWDOULJKWV+ROORZD\DOOHJHVWKDWWKH           KHDULQJDQ>VLF@VXLWIRUFLYLOULJKWVYLRODWLRQVlILOHGLQWKDW
WHUPLQDWLRQRIKHUSDUHQWDOULJKWVYLRODWHGWKH6L[WK(LJKWK            FRXUWDVFRPSDUHGWRKHUFRPSODLQWVILOHGLQWKH2KLR'LVWULFW
DQG )RXUWHHQWK $PHQGPHQWV DV ZHOO DV FHUWDLQ VWDWXWHV
+ROORZD\ DOVR DOOHJHV YLRODWLRQ RI KHU FLYLO ULJKWVl  6HH
+ROORZD\Y6WDWHRI2KLR:/DW
'.DQ
                                                                             
2FW                                                                2I FRXUVH D GLVWULFW FRXUWjV GHFLVLRQ WR DGKHUH WR RU WR GHYLDWH IURP
                                                                         WKH ODZ RI WKH FDVH FDQQRW ELQG DQ DSSHOODWH FRXUWjV UHYLHZ RI WKH PDWWHU
  /LNHZLVHWKHPDMRULW\DVVHUWVWKDWWKH.DQVDV'LVWULFW&RXUW          6HH 0HVVLQJHU Y $QGHUVRQ  86    )XUWKHUPRUH WKH

mQHYHUHYHQPHQWLRQHG6DOO\%UXVKl+RZHYHURQHQHHG             GRFWULQH RI UHV MXGLFDWD ZRXOG QRW DSSO\ LQ WKLV LQVWDQFH EHFDXVH D
                                                                         GLVPLVVDO UHQGHUHG RQ WKH EDVLV RI ODFN RI VXEMHFW PDWWHU MXULVGLFWLRQ GRHV
ORRNQRIXUWKHUWKDQWKHFDSWLRQVRIHDFKRIWKHGHFLVLRQVIURP          QRW RSHUDWH DV D GLVPLVVDO RQ WKH PHULWV IRU SXUSRVHV RI UHV MXGLFDWD
WKH.DQVDV'LVWULFW&RXUWUHJDUGLQJ3ODLQWLIIjVFODLPVWRVHH            H[FHSW ZKHUH D VWDWXWRU\ ULJKW LV EHLQJ SXUVXHG DQG WKH SODLQWLII RU WKH
6DOO\%UXVKH[SUHVVO\QDPHGDVDGHIHQGDQW6HH+ROORZD\               GHIHQGDQW GRHV QRW FRPH ZLWKLQ WKH SXUYLHZ RI WKH VWDWXWH 6HH 5RJHUV Y
:/+ROORZD\:/,QDGGLWLRQ                  6WUDWWRQ ,QGXV ,QF   )G   WK &LU              +HUH
WKHPDMRULW\PDNHVDJUHDWGHDORIWKHIDFWWKDWWKH.DQVDV              'HIHQGDQWV &OHUPRQW &RXQW\ DQG 6DOO\ %UXVK IDOO ZLWKLQ WKH SXUYLHZ RI
                                                                         †  6HH 0RQHOO Y 'HSDUWPHQW RI 6RF 6HUYV  86  
GLVWULFWFRXUWGLGQRWDGGUHVVWKHDIILUPDWLYHGHIHQVHRI†          /LNHZLVH D GLVPLVVDO XQGHU  86& † G WKH DOWHUQDWLYH
LPPXQLW\  +RZHYHU LW ZDV QRW QHFHVVDU\ IRU WKH .DQVDV         EDVLV XSRQ ZKLFK WKH .DQVDV FRXUW GLVPLVVHG 3ODLQWLIIjV FODLP LV QRW D
'LVWULFW&RXUWWRDGGUHVVRUFRQVLGHUWKHDIILUPDWLYHGHIHQVH            GHFLVLRQ RQ WKH PHULWV IRU SXUSRVHV RI UHV MXGLFDWD 6HH 'HQWRQ Y
                                                                         +HUQDQGH]  86   
       +ROORZD\Y6WDWHRI2KLRHWDO                  1R        1R              +ROORZD\Y6WDWHRI2KLRHWDO        

&RXUWFOHDUO\LQGLFDWHWKDW3ODLQWLIIZDVILOLQJWKHVDPHFODLP                 +2/' $ )$,5 +($5,1* ,1 72 :$< >VLF@ 056
DQGVHHNLQJWKHUHWXUQRIKHUFKLOGUHQIURPWKHGLVWULFWFRXUW                  +2//2:$<6 >VLF@ &+,/'5(1 6+28/' 127 %(
EHORZMXVWDVVKHVRXJKWIURPWKHGLVWULFWFRXUWLQ.DQVDV                     5(7851('72+(5$1'$/62$6.7+,6&2857
)RUH[DPSOHLQKHUFRPSODLQWWRWKH.DQVDV'LVWULFW&RXUW                      )25 &203(16$7,21 )25 7+( 3$,1 $1'
3ODLQWLIIVWDWHGDVIROORZV                                                     68))(5,1* 7+(< $5( &217,18$,1* >VLF@ 72
                                                                                 &$86( 056 +2//2:$< $1' )25 7+(
     :H IHHO WKDW WKLV FDVH IDOOV XQGHU WKLV FRXUWV >VLF@               9,/2$7,216>VLF@72+(5&,9,/5,*+76,17+(
  MXULVGLFWLRQDVLWLVDIODJUDQWYLROLWLRQ>VLF@RIKHUDQGKHU                $028172)7:20,//,21'2//$56>@
  FKLOGUHQV>VLF@ULJKWVWRNQRZDQGWRORYHHDFKRWKHUDQG
  WKHLU ULJKW WR OLIH OLE DQG SUH VXLW >VLF@ RI KDSS\QHVV          m0RWLRQIRUWKLV&RXUWWR2UGHU)DLU+HDULQJDQ>VLF@6XLWIRU
  >VLF@$VKRZFDQVKHRUKHUFKLOGUHQEHKDSS\QRWEHLQJ                    &LYLO5LJKWV9LRODWLRQVlDW+ROORZD\:/
  WRJDWKHU>VLF@                                                              DW



'.DQ2FWHPSKDVLVLQRULJLQDO
     :HSUD\WKDWWKLVFRXUWZLOOILQGLWLQWKHLUKHDUWVDQG                  /LNHZLVH LQ KHU FRPSODLQW WR WKH 2KLR 'LVWULFW &RXUW
  ODZ WR UHXQLWH WKHVH FKLOGUHQ ZLWK WKHLU QDWXUDO ELUWK               3ODLQWLIIFODLPHGDYLRODWLRQRIKHUULJKWWRGXHSURFHVVXQGHU
  PRWKHU                                                                      WKH)RXUWHHQWK$PHQGPHQWEHFDXVHVKHKDGEHHQGHSULYHGRI
                                                                               WKHULJKWWROLIHOLEHUW\DQGWKHSXUVXLWRIKDSSLQHVVDQGWKDW
&RPSODLQWRI6DPP\H5+ROORZD\DW+ROORZD\                          'HIHQGDQWVZHUHZRUNLQJWRJHWKHUWRNHHSKHUDQGKHUVRQV
:/  ' .DQ sXO\    2QFH DJDLQ LQ D                DSDUWEDVHGXSRQWKHVDPHDOOHJDWLRQVPDGHLQWKH.DQVDV
VXEVHTXHQW SOHDGLQJ ZKLFK WKH .DQVDV 'LVWULFW &RXUW                      FRPSODLQWZKHUH3ODLQWLIISUD\HGIRULQH[FHVVRIWZRPLOOLRQ
LQWHUSUHWHGDVD5XOHEPRWLRQ3ODLQWLIIVWDWHGDQGSUD\HG                GROODUVs$DW7KXVEHFDXVH3ODLQWLIIVRXJKWWKHVDPH
DVIROORZV                                                                    FODLPVDQGWKHVDPHUHOLHILQWKH2KLR'LVWULFW&RXUWWKDWVKH
                                                                               VRXJKW IURP WKH .DQVDV 'LVWULFW &RXUW WKH 2KLR 'LVWULFW
     :( )((/ 7+$7 7+,6 &2857 '2(6 +$9(                                   &RXUW VKRXOG KDYH ERZHG WR WKH GHFLVLRQ RI LWV FRRUGLQDWH
  s85,6',&7,21 %(&$86( 2) 7+( 9,/2$7,216                                  FRXUW XQGHU WKH ODZ RI WKH FDVH DQG UHIXVHG WR UHH[DPLQH
  >VLF@2)056+2//2:$<6>VLF@6,;7+(,*+77+                                 3ODLQWLIIjVFODLPDEVHQWmH[WUDRUGLQDU\FLUFXPVWDQFHVl6HH
  >VLF@$1')2857((17+&,9,/5,*+7662                                &KULVWLDQVRQ86DW+D\PDQ&DVK5HJLVWHU&R
  :(12:&20(727+,6&285735$<,1*)25                                        )GDW
  5(/,() ,1 7+$7 :( :$17 7+,6 &2857 72
                                                                                 1RVXFKH[WUDRUGLQDU\FLUFXPVWDQFHVH[LVWLQWKLVFDVH,Q
                                                                               IDFWDVZLOOEHVKRZQLQWKHVHFWLRQWKDWIROORZVWKH.DQVDV
                                                                              'LVWULFW&RXUWUHDFKHGWKHRQO\SRVVLEOHUHVXOWDOORZHGXQGHU
      $OWKRXJK WKH SOHDGLQJV IURP WKH .DQVDV 'LVWULFW &RXUW ZHUH QRW
                                                                               SUHYDLOLQJ6XSUHPH&RXUWSUHFHGHQWZKHUH3ODLQWLIIjV†
SURYLGHG LQ WKH sRLQW $SSHQGL[ VXEPLWWHG LQ FRQQHFWLRQ ZLWK WKLV DSSHDO
ZH PD\ WDNH MXGLFLDO QRWLFH RI SURFHHGLQJV LQ RWKHU FRXUWV RI UHFRUG DQG
                                                                               GXHSURFHVVFODLPZDVILOHGLQDQHIIRUWWRJDLQFXVWRG\RIKHU
, KDYH GRQH VR KHUH E\ REWDLQLQJ WKH SOHDGLQJV FLWHG DERYH IURP WKH            FKLOGUHQDQGWRFKDOOHQJHWKHPHULWVRIWKHXQGHUO\LQJVWDWH
.DQVDV 'LVWULFW &RXUW 6HH /\RQV Y 6WRYDOO  )G   Q WK        FXVWRG\GHWHUPLQDWLRQ6HHGLVFXVVLRQLQIUD3DUW,,&VHH
&LU  FLWLQJ *UDQDGHU Y 3XEOLF %DQN  )G   WK &LU       DOVR+ROORZD\:/DW

FLWLQJ/HKPDQY
 FROOHFWLQJ FDVHV 3ODLQWLII QDPHG WKH 6WDWH RI 2KLR DQG 6DOO\         /\FRPLQJ &RXQW\ &KLOGUHQjV 6HUYV $JHQF\  86 
%UXVK DV GHIHQGDQWV LQ WKH FRPSODLQW ILOHG LQ .DQVDV VKH DGGHG &OHUPRQW
&RXQW\ DQG WKH 2KLR 'HSDUWPHQW RI 6RFLDO 6HUYLFHV WR WKH FRPSODLQW ILOHG
                                                                               7KHUHIRUHWKHGLVWULFWFRXUWVKRXOGKDYHGLVPLVVHG
LQ 2KLR +RZHYHU WKH DGGLWLRQ RI WKH WZR QDPHG GHIHQGDQWV GLG QRWKLQJ         3ODLQWLIIjV FDVH LI QRW RQ LWV RZQ DFFRUG WKHQ E\ ZD\ RI
WR FKDQJH WKH IDFW WKDW WKH IHGHUDO FRXUW ODFNHG VXEMHFW PDWWHU MXULVGLFWLRQ   'HIHQGDQWVj PRWLRQ WR GLVPLVV XQGHU WKH ODZ RI WKH FDVH
RYHU WKH FDVH