5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 $VKNLY,16 1R 3XUVXDQW WR 6L[WK &LUFXLW 5XOH (/(&7521,& &,7$7,21 )(' $SS 3 WK &LU )GWK&LU*XWLHUUH]&HQWURY,16 )LOH 1DPH DS )GWK&LUDQGsDUD1DYDUHWWHY ,16)GWK&LU 81,7('67$7(6&28572)$33($/6 :KLOHWKHVHFDVHVGRXUJHWKHFRQVLGHUDWLRQRIDOOUHOHYDQW IDFWRUVWKH\IRFXVRQWKHVFRSHRILQTXLU\WKDWDQ,PPLJUDWLRQ )257+(6,;7+&,5&8,7 sXGJH PXVW XQGHUWDNH RQFH WKH VHYHQ \HDUV RI SK\VLFDO BBBBBBBBBBBBBBBBB SUHVHQFHUHTXLUHPHQWKDVDOUHDG\EHHQPHW7KHFDVHVWKDW WKHSHWLWLRQHUFLWHVGRQRWVXSSRUWKHUSRVLWLRQWKDWWKH%RDUG PD\QRWUHVWLWVGHFLVLRQWRGHQ\VXVSHQVLRQRIGHSRUWDWLRQ 0$+,1 $6+., ; VROHO\ RQ DQ DOLHQjV IDLOXUH WR PHHW WKH SK\VLFDO SUHVHQFH 3HWLWLRQHU UHTXLUHPHQW 1R 7KHSODLQODQJXDJHRIVHFWLRQLQGLFDWHVWKDWVHYHQ\HDUV Y RI SK\VLFDO SUHVHQFH LV D QHFHVVDU\ UHTXLUHPHQW IRU D ! GLVFUHWLRQDU\JUDQWRIVXVSHQVLRQRIGHSRUWDWLRQ,WVWDWHVWKDW ,00,*5$7,21 $1' WKH$WWRUQH\*HQHUDOPD\JUDQWDVXVSHQVLRQRIGHSRUWDWLRQ 1$785$/,=$7,21 6(59,&( WR DQ DOLHQ ZKR PHHWV WKH SK\VLFDO SUHVHQFH UHTXLUHPHQW 5HVSRQGHQW mDQGl LV D SHUVRQ RI JRRG PRUDO FKDUDFWHU mDQGl ZKRVH GHSRUWDWLRQ ZRXOG FDXVH H[WUHPH KDUGVKLS 6HH 86& 1 D&RQJUHVVjXVHRIWKHZRUGmDQGlPDNHV LWFOHDUWKDWDOOWKUHHUHTXLUHPHQWVPXVWEHPHW6LQFH$VKNL 2Q3HWLWLRQIRU5HYLHZRIDQ2UGHURIWKH KDV QRW PHW WKH ILUVW UHTXLUHPHQW VKH LV QRW HOLJLEOH IRU D %RDUGRI,PPLJUDWLRQ$SSHDOV VXVSHQVLRQRIGHSRUWDWLRQXQGHUVHFWLRQm$VDJHQHUDO 1R$ UXOHFRXUWVDQGDJHQFLHVDUHQRWUHTXLUHGWRPDNHILQGLQJVRQ LVVXHVWKHGHFLVLRQRIZKLFKLVXQQHFHVVDU\WRWKHUHVXOWVWKH\ 6XEPLWWHG6HSWHPEHU UHDFKl6HH,16Y%DJDPDVEDG86SHU FXULDP$FFRUGLQJO\WKH%RDUGGLGQRWDEXVHLWVGLVFUHWLRQ 'HFLGHGDQG)LOHG'HFHPEHU LQIDLOLQJWRFRQVLGHUHOLJLELOLW\UHTXLUHPHQWVWKDWFRXOGQRW KDYH DIIHFWHG WKH XOWLPDWH UHVROXWLRQ RI 0V $VKNLjV %HIRUHs21(66,/(5DQG&/$<&LUFXLWsXGJHV DSSOLFDWLRQIRUVXVSHQVLRQRIGHSRUWDWLRQ BBBBBBBBBBBBBBBBB ,9&21&/86,21 &2816(/ )RU WKH UHDVRQV VHW IRUWK DERYH ZH DIILUP WKH %RDUG RI ,PPLJUDWLRQ$SSHDOVjRUGHUGLVPLVVLQJ0V$VKNLjVPRWLRQ 21 %5,() *UHWFKHQ 0 :ROILQJHU 81,7(' 67$7(6 WRUHRSHQGHSRUWDWLRQSURFHHGLQJV '(3$570(172)s867,&(&,9,/',9,6,212)),&( 2),00,*5$7,21/,7,*$7,21:DVKLQJWRQ'&IRU 5HVSRQGHQW0DKLQ$VKNL/H[LQJWRQ.HQWXFN\SURVH $VKNLY,16 1R 1R $VKNLY,16 BBBBBBBBBBBBBBBBB GLVFUHWLRQDU\UHOLHIIURPGHSRUWDWLRQ$VWKH)RXUWK&LUFXLW SRLQWHGRXWLQ$SSLDKY,16 23,1,21 BBBBBBBBBBBBBBBBB (OLJLELOLW\IRUVXVSHQVLRQLVQRWDULJKWSURWHFWHGE\WKH &RQVWLWXWLRQ6XVSHQVLRQRIGHSRUWDWLRQLVUDWKHUDQmDFW s21(6&LUFXLWsXGJH3HWLWLRQHU0DKLQ$VKNLFKDOOHQJHV RIJUDFHlWKDWUHVWVLQWKHmXQIHWWHUHGGLVFUHWLRQlRIWKH DILQDORUGHURIWKH%RDUGRI,PPLJUDWLRQ$SSHDOVm%RDUGl $WWRUQH\*HQHUDO%HFDXVHVXVSHQVLRQRIGHSRUWDWLRQLV RU m%,$l GHQ\LQJ KHU PRWLRQ WR UHRSHQ GHSRUWDWLRQ GLVFUHWLRQDU\LWGRHVQRWFUHDWHDSURWHFWLEOHOLEHUW\RU SURFHHGLQJV IRU WKH SXUSRVH RI DSSO\LQJ IRU VXVSHQVLRQ RI SURSHUW\ LQWHUHVW 7KLV LV WUXH HYHQ ZKHUH WKH VWDWH GHSRUWDWLRQSXUVXDQWWRVHFWLRQRIWKH,PPLJUDWLRQDQG mIUHTXHQWO\lKDVJUDQWHGWKHUHOLHIVRXJKW)GDW 1DWLRQDOLW\ $FW ,1$ 86& )RU WKH FLWLQJ ,16 Y D@FODVVLILFDWLRQ FDXVH WKDW KDG SUHYLRXVO\ EHHQ XVHG WR LQLWLDWH GHSRUWDWLRQ GRHV QRW IDLO UDWLRQDOEDVLV UHYLHZ EHFDXVH LW µLV QRW PDGH ZDVUHSODFHGZLWKWKHQRWLFHWRDSSHDU,GD ZLWKPDWKHPDWLFDOQLFHW\RUEHFDXVHLQSUDFWLFHLWUHVXOWVLQ VRPHLQHTXDOLW\j7KHSUREOHPVRIJRYHUQPHQWDUHSUDFWLFDO ,,5,5$DOVRFKDQJHGWKHPHWKRGIRUFDOFXODWLQJDQDOLHQjV RQHV DQG PD\ MXVWLI\ LI WKH\ GR QRW UHTXLUH URXJK SHULRGRIFRQWLQXRXVSK\VLFDOSUHVHQFH,GEG DFFRPPRGDWLRQV l +HOOHU 86 DW FLWLQJ 6HFWLRQDDPHQGHG,1$VHFWLRQ$WRSURYLGHWKDW 0HWURSROLV 7KHDWHU &R Y &KLFDJR 86 mDQ\SHULRGRIFRQWLQXRXVUHVLGHQFHRUFRQWLQXRXVSK\VLFDO FLWDWLRQVRPLWWHG SUHVHQFHLQWKH8QLWHG6WDWHVVKDOOEHGHHPHGWRHQGZKHQWKH DOLHQLVVHUYHGDQRWLFHWRDSSHDUl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m7UDQVLWLRQDO 5XOHV :LWK 5HJDUG WR 6XVSHQVLRQ RI ,G 'HSRUWDWLRQl WRRN HIIHFW LPPHGLDWHO\ XSRQ HQDFWPHQW >6HSWHPEHU@DQGVHHPHGWREHUHWURDFWLYH6WDW $OWKRXJKWKH1$&$5$H[HPSWLRQVFOHDUO\GRQRWFRYHUDOO DW DOLHQVZKRZLOOIDFHKRVWLOHFRQGLWLRQVLQWKHLUKRPHODQGV $VKNLY,16 1R 1R $VKNLY,16 ,Q KHU EULHI $VKNL FRQWHQGV WKH 1$&$5$ H[HPSWLRQV 8QIRUWXQDWHO\ WKH ODQJXDJH RI WKLV VHFWLRQ ZDV QRW VKRXOGUHFHLYHLQWHUPHGLDWHVFUXWLQ\EHFDXVHmLOOHJDODOLHQVl SHUIHFWO\FOHDURQWKHLVVXHRIZKHWKHUWKHQHZmVWRSWLPHl QHHGDGGLWLRQDOSURWHFWLRQGXHWRmWKHLUSRZHUOHVV QDWXUHl SURYLVLRQVKRXOGEHDSSOLHGUHWURDFWLYHO\6HFWLRQF 3HWU%UDW,QVXSSRUWRIWKLVSURSRVLWLRQVKHFLWHV3O\OHU ZKLFKVWDWHGWKDWWKHmVWRSWLPHlSURYLVLRQmVKDOODSSO\WR Y 'RH LQ ZKLFK WKH 6XSUHPH &RXUW VWUXFN GRZQ D 7H[DV QRWLFHV WR DSSHDU LVVXHG EHIRUH RQ RU DIWHU WKH GDWH RI VWDWXWH WKDW GHQLHG HGXFDWLRQDO EHQHILWV WR LOOHJDO DOLHQ HQDFWPHQW RI WKLV $FWl ZDV HVSHFLDOO\ SUREOHPDWLF ,G FKLOGUHQ 86 +RZHYHU WKH 6XSUHPH $OWKRXJKWKLVVHFWLRQPDGHLWFOHDUWKDWWKHQHZmVWRSWLPHl &RXUWjVKROGLQJLQ3O\OHUGRHVQRWDSSO\WRWKHFDVHDWEDU SURYLVLRQDSSOLHGWRQRWLFHVWRDSSHDULVVXHGEHIRUHWKHGDWH 8QOLNH3O\OHUZKLFKLQYROYHGGLVWLQFWLRQVWKDWWKH6WDWHRI RIHQDFWPHQWRI,,5,5$LWGLGQRWLQGLFDWHZKHWKHUWKHmVWRS 7H[DVPDGHEHWZHHQDOLHQVDQGQRQDOLHQVWKHLQVWDQWFDVH WLPHlSURYLVLRQZRXOGDSSO\UHWURDFWLYHO\WRRUGHUVWRVKRZ FRQFHUQVGLVWLQFWLRQVWKDWWKHIHGHUDOJRYHUQPHQWKDVPDGH FDXVH 7KLV RPLVVLRQ OHIW WKH DFW RSHQ WR FRQIOLFWLQJ DPRQJDOLHQV LQWHUSUHWDWLRQV 6RPH FRPPHQWDWRUV DUJXHG WKDW WKH mVWRS WLPHl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mWUDQVLWLRQDO UXOHVl LPSOLHGO\ %HOO867KLVGHIHUHQFHLVEDVHGRQ LQFOXGHG WKHP ,Q WKH 0DWWHU RI 1s% WKH %,$ WRRN WKH WKH&RXUWjVXQGHUVWDQGLQJWKDWmWKHSRZHUWRH[SHORUH[FOXGH ODWWHUSRVLWLRQE\LQWHUSUHWLQJWKHSKUDVHmQRWLFHVWRDSSHDUl DOLHQVlLVmDIXQGDPHQWDOVRYHUHLJQDWWULEXWHlDQGWKDWWKLV WRHQFRPSDVVDOOFKDUJLQJGRFXPHQWVLQLWLDWLQJGHSRUWDWLRQ SRZHULVPRVWDSSURSULDWHO\mH[HUFLVHGE\WKHJRYHUQPHQWjV UHPRYDOSURFHHGLQJVLQFOXGLQJRUGHUVWRVKRZFDXVH6HH,Q SROLWLFDOGHSDUWPHQWVl6KDXJKQHVV\Y0H]HL86 UH1s%,QW'HF%,$ $VsXVWLFH3RZHOOH[SODLQHGLQ)LDOORY%HOO 2Q1RYHPEHU&RQJUHVVHQDFWHGWKH1LFDUDJXDQ GHFLVLRQV LQ WKHVH PDWWHUV PD\ LPSOLFDWH RXU UHODWLRQV $GMXVWPHQWDQG&HQWUDO$PHULFDQ5HOLHI$FW1$&$5$ ZLWK IRUHLJQ SRZHUV DQG VLQFH D ZLGH YDULHW\ RI 3XE/1R6WDW7KLVDFWFRGLILHGWKH FODVVLILFDWLRQVPXVWEHGHILQHGLQWKHOLJKWRIFKDQJLQJ %,$jVGHFLVLRQLQ1s%E\DPHQGLQJWKHmWUDQVLWLRQDOUXOHVl SROLWLFDODQGHFRQRPLFFLUFXPVWDQFHVVXFKGHFLVLRQVDUH LQVHFWLRQGRI,,5,5$$VDPHQGHG,,5,5$VHFWLRQ IUHTXHQWO\RIDFKDUDFWHUPRUHDSSURSULDWHWRHLWKHUWKH FVWLSXODWHVWKDW /HJLVODWXUHRUWKH([HFXWLYHWKDQWRWKHs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mVWRSWLPHlSURYLVLRQVHWIRUWKLQ,1$VHFWLRQ$GDQG WKLVmVWRSWLPHlSURYLVLRQGRHVQRWUHDFKKHUDQGWKDWVKHLV DSSOLHVLQWKHFDVHVRIDOLHQVZKRZKHUHLVVXHGRUGHUVWR WKHUHIRUHHOLJLEOHIRUWKHVXVSHQVLRQRIGHSRUWDWLRQ VKRZFDXVHEHIRUHRQRUDIWHU,,5,5$jV6HSWHPEHU HQDFWPHQWGDWH $OWKRXJK 0V $VKNLjV FRQVWUXFWLRQ RI WKH mWUDQVLWLRQDO UXOHVl PD\ KDYH EHHQ SODXVLEOH SULRU WR WKH SDVVDJH RI 7KLVLQWHUSUHWDWLRQRI1$&$5$KDVEHHQHQGRUVHGE\WKH 1$&$5$ WKDW DFW KDV IRUHFORVHG WKLV LQWHUSUHWDWLRQ $V 8QLWHG6WDWHV&RXUWVRI$SSHDOVIRUWKH)RXUWK)LIWK(LJKWK QRWHG DERYH 1$&$5$ DPHQGHG ,,5,5$jV mWUDQVLWLRQDO DQGWKH(OHYHQWK&LUFXLWV6HH$SSLDKY,16)G UXOHVl,QGRLQJVR&RQJUHVVFOHDUO\LQGLFDWHGWKDWWKHQHZ WK&LU*RQ]DOH]7RUUHVY,16)G mVWRSWLPHlSURYLVLRQDSSOLHVUHWURDFWLYHO\WRRUGHUVWRVKRZ WK&LU$IROD\DQY,16)G FDXVH$FFRUGLQJO\WKH%RDUGRI,PPLJUDWLRQ$SSHDOVGLG WK&LU7HIHOY5HQR)GIQ QRW HUU LQ DSSO\LQJ WKH VWRS WLPH SURYLVLRQ WR 0V $VKNLjV WK &LU ,W LV DOVR VXSSRUWHG E\ WKH %RDUG RI FDVH ,PPLJUDWLRQ$SSHDOVjGHFLVLRQLQWKHFDVHRI,QUH1RODVFR ,QW'HF%,$HQEDQF &3HWLWLRQHUjV&RQVWLWXWLRQDO&ODLPV %3HWLWLRQHUjV6WDWXWRU\&ODLPV :KLOH WKH SDVVDJH RI 1$&$5$ HQVXUHG WKDW ,,5,5$jV mVWRS WLPHl SURYLVLRQ ZRXOG JHQHUDOO\ EH DSSOLHG $VQRWHGDERYHWKH%RDUGRI,PPLJUDWLRQ$SSHDOVDSSOLHG UHWURDFWLYHO\WKHDFWDOVRH[HPSWHGFHUWDLQDOLHQVIURPWKH WKHmVWRSWLPHlSURYLVLRQWR0V$VKNLjVFDVH7KH%RDUG mVWRSWLPHlSURYLVLRQ)RUH[DPSOH1$&$5$VHFWLRQ FRQFOXGHGWKDWVLQFHVKHKDGRQO\EHHQLQWKH8QLWHG6WDWHV DOORZV1LFDUDJXDQVDQG&XEDQVZKRKDYHEHHQSUHVHQWLQWKH IRUDOLWWOHRYHUWZR\HDUVZKHQDRUGHUWRVKRZFDXVHZDV 8QLWHG6WDWHVVLQFH'HFHPEHUWRDSSO\WRDGMXVWWKHLU LVVXHG DJDLQVW KHU VKH KDG QRW IXOILOOHG WKH VHYHQ\HDU VWDWXVWRODZIXOSHUPDQHQWUHVLGHQFHLQGHSHQGHQWRIWKHQHZ UHVLGHQFH UHTXLUHPHQW RI DQG ZDV QRW HOLJLEOH IRU VWRSWLPHUXOH6HH1$&$5$,QDGGLWLRQ1$&$5$ VXVSHQVLRQRIGHSRUWDWLRQ VHFWLRQDPHQGHGWKHWUDQVLWLRQUXOHVLQ,,5,5$VHFWLRQ FWRH[HPSWFHUWDLQQDWLRQDOLWLHVIURPWKHUHWURDFWLYH 0V$VKNLFRQWHQGVWKDWWKHmVWRSWLPHlSURYLVLRQVKRXOG DSSOLFDWLRQ RI WKH mVWRS WLPHl UXOH GLVFXVVHG DERYH 7KH QRW EH DSSOLHG LQ KHU FDVH EHFDXVH WKH OLWHUDO ODQJXDJH RI QDWLRQDOVH[HPSWHGLQFOXGHWKRVHRI(O6DOYDGRU*XDWHPDOD ,,5,5$jVRULJLQDOWUDQVLWLRQDOUXOHVVHFWLRQFVWDWHV WKH6RYLHW8QLRQRULWVVXFFHVVRUUHSXEOLFV/DWYLD(VWRQLD WKDW WKH mVWRS WLPHl SURYLVLRQ LQ ,1$ VHFWLRQ $ mVKDOO /LWKXDQLD 3RODQG &]HFKRVORYDNLD 5RPDQLD +XQJDU\ DSSO\WRQRWLFHVWRDSSHDUl$VKNLDUJXHVWKDWVLQFHVKHZDV %XOJDULD $OEDQLD (DVW *HUPDQ\ DQG