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 /<1(77( &+$30$1 ; 3ODLQWLII$SSHOODQW 1R Y ! 7+( +,*%(( &203$1<GED ',//$5' '(3$570(17 6725(6 ,1& 'HIHQGDQW$SSHOOHH 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG 1Rn3DWULFLD$+HPDQQ0DJLVWUDWHsXGJH $UJXHG2FWREHU 'HFLGHGDQG)LOHGsXO\ %HIRUH68+5+(,15,&+DQG0225(&LUFXLWsXGJHV ('081'6'LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ $5*8(' 'DYLG 5 *UDQW 60,7+ &21'(1, &OHYHODQG2KLRIRU$SSHOODQWsRKQ%/HZLV$57(5 7KH +RQRUDEOH 1DQF\ * (GPXQGV 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ &KDSPDQY7KH+LJEHH&RPSDQ\ 1R +$''(1 &OHYHODQG 2KLR IRU $SSHOOHH 21 %5,() 'DYLG5*UDQW60,7+ &21'(1,&OHYHODQG2KLRIRU $SSHOODQW sRKQ % /HZLV 7KRPDV s 3LDWDN $57(5 +$''(1&OHYHODQG2KLR*UHJRU\(2j%ULHQ7LPRWK\' sRKQVRQ :(6721 +85' )$//21 3$,6/(< +2:/(<&OHYHODQG2KLRIRU$SSHOOHH*LQRs6FDUVHOOL &OHYHODQG2KLR0LFKDHO:'RQDOGVRQ925<66$7(5 6(<0285 3($6(&ROXPEXV2KLRIRU$PLFL&XULDH ('081'6 ' s GHOLYHUHG WKH RSLQLRQ RI WKH FRXUW 68+5+(,15,&+ s SS GHOLYHUHG D VHSDUDWH FRQFXUULQJ RSLQLRQ 0225( s SS GHOLYHUHG D VHSDUDWHGLVVHQWLQJRSLQLRQ BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB ('081'6'LVWULFWsXGJH3ODLQWLII$SSHOODQW/\QHWWH &KDSPDQEURXJKWVXLWDJDLQVW'HIHQGDQW$SSHOOHH'LOODUG 'HSDUWPHQW6WRUHDOOHJLQJWKDWKHUULJKWVZHUHYLRODWHGZKHQ DGHSDUWPHQWVWRUHVHFXULW\RIILFHUVWRSSHGDQGVHDUFKHGKHU GXHWRDVXVSLFLRQRIVKRSOLIWLQJ&KDSPDQDOOHJHVWKDWWKH VWRSDQGVHDUFKZHUHUDFLDOO\PRWLYDWHGDQGYLRODWHGKHUULJKW WR WKH mIXOO DQG HTXDO EHQHILW RI WKH ODZl XQGHU 86& DQGKHUULJKWWREHIUHHIURPXQUHDVRQDEOHVHDUFKDQG VHL]XUHXQGHUWKH)RXUWK$PHQGPHQWSXUVXDQWWR86& 7KLVFDVHUDLVHVWZRLVVXHVZKHWKHUVHFWLRQ SURYLGHVDFDXVHRIDFWLRQDJDLQVWDSULYDWHSDUW\XQGHUWKH HTXDOEHQHILWFODXVHDQGZKHWKHUWKHVHFXULW\JXDUGLQWKLV FDVHDFWHGmXQGHUFRORURIODZl7KHGLVWULFWFRXUWJUDQWHG VXPPDU\MXGJPHQWLQIDYRURI'LOODUGRQWKHVHLVVXHVDQG &KDSPDQQRZDSSHDOV:H$)),50 7KH $PHULFDQ &LYLO /LEHUWLHV 8QLRQ )RXQGDWLRQ RI 2KLR ,QF ILOHG DQ DPLFXV EULHI LQ IDYRU RI &KDSPDQ 7KH IROORZLQJ PHUFKDQWVj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mNQRJRl RQ WKH IORRU$IWHUWU\LQJRQVRPHFORWKLQJ&KDSPDQGHFLGHGQRWWR SXUFKDVHDQ\WKLQJDQGKXQJLWEDFNRQWKHKDQJHUV6KHOHIW WKHILWWLQJURRPWRUHWXUQWKHFORWKLQJWRWKHUDFNV$VDOHV DVVLVWDQWWKHQHQWHUHGWKHILWWLQJURRPDQGQRWLFHGWKHVHQVRU RQWKHIORRU%HOLHYLQJWKDWWKHVHQVRUKDGQRWEHHQRQWKH IORRU SULRU WR &KDSPDQjV XVH RI WKH ILWWLQJ URRP DQG VXVSHFWLQJ&KDSPDQRIVKRSOLIWLQJWKHVDOHVDVVLVWDQWQRWLILHG VHFXULW\$'LOODUGVHFXULW\JXDUGWKHQVWRSSHG&KDSPDQDQG GLUHFWHG KHU EDFN WR WKH ILWWLQJ URRP +H DQG D IHPDOH PDQDJHUFKHFNHG&KDSPDQjVSXUVH1RWKLQJZDVIRXQG7KH IHPDOHPDQDJHUWKHQDFFRPSDQLHG&KDSPDQLQWRWKHILWWLQJ URRPDQGVHDUFKHG&KDSPDQjVFORWKLQJ7KHPDQDJHUIRXQG QRWKLQJ&KDSPDQSRLQWHGRXWWKHZKLWHZRPDQZKRPVKH KDG VHHQ H[LW WKH ILWWLQJ URRP EHIRUH VKH HQWHUHG EXW WKH VHFXULW\JXDUGGLGQRWGHWDLQWKHZKLWHZRPDQ6DWLVILHGWKDW &KDSPDQKDGQRWVWROHQDQ\WKLQJWKHPDQDJHUDSRORJL]HGWR KHUDQG&KDSPDQOHIWWKHVWRUH 7KH'LOODUGVHFXULW\JXDUGZDVDQRIIGXW\VKHULIIjVGHSXW\ +HZRUHKLVRIILFLDOVKHULIIjVGHSDUWPHQWXQLIRUPEDGJHDQG JXQZKLOHZRUNLQJDW'LOODUG:KLOHKHVWRSSHGDQGVHDUFKHG &KDSPDQKHGLGQRWWKUHDWHQWRRUDWWHPSWWRDUUHVWKHU $VDUHVXOWRIWKLVLQFLGHQW&KDSPDQEURXJKWVXLWDJDLQVW 7KH+LJEHH&RPSDQ\GRLQJEXVLQHVVDV'LOODUG'HSDUWPHQW 7HQQHVVHH &RXQFLO RI 5HWDLO 0HUFKDQWV 7KH $&/8 DUJXHV WKDW WKH HTXDO EHQHILW FODXVH RI VHFWLRQ VKRXOG EH LQWHUSUHWHG WR EURDGO\ SURKLELW UDFHEDVHG GLVFULPLQDWLRQ DQG WKDW LW DSSOLHV WR SULYDWH DFWLRQ 7KH PHUFKDQWVj DVVRFLDWLRQV DUJXH WKDW WKH\ VKRXOG EH IUHH WR HPSOR\ DQ\ ODZIXO PHDQV WR SURWHFW WKHPVHOYHV DJDLQVW VKRSOLIWLQJ DQG WKDW GRHV QRW DSSO\ WR SULYDWH DFWLRQ 6HH LQIUD &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ 6WRUHV ,QF DOOHJLQJ D YLRODWLRQ RI WKH IXOO DQG HTXDO $OWKRXJKWKHPDMRULW\VWDWHVWKDWmWKHVHFXULW\JXDUGLQWKLV EHQHILW FODXVH RI 86& DQG YLRODWLRQV RI FDVHGLGQRWSHUIRUPRUVHHNWRSHUIRUPKLVRIILFLDOGXWLHVDV &KDSPDQjV ULJKW WR EH IUHH IURP XQUHDVRQDEOH VHDUFK DQG DVKHULIIjVGHSXW\lVXSUDDW,EHOLHYHWKHUHLVDJHQXLQH VHL]XUH XQGHU WKH )RXUWK $PHQGPHQW DQG KHU ULJKW WR GXH LVVXH RI PDWHULDO IDFW DV WR ZKHWKHU DW WKH PRPHQW WKH SURFHVVXQGHUWKH)LIWK$PHQGPHQWZKLFKULJKWV&KDSPDQ VHFXULW\ JXDUG ZDV UHTXLUHG WR VHHN WKH DVVLVWDQFH RI WKH PD\ HQIRUFH YLD 86& 'LOODUG PRYHG IRU SROLFHWKDWLVZKHQWKHJXDUGDVNHG&KDSPDQWRHQWHUWKH VXPPDU\MXGJPHQW$PDJLVWUDWHMXGJHDFWLQJSXUVXDQWWR ILWWLQJURRPZLWKWKHVDOHVPDQDJHUVRWKDW&KDSPDQjVFORWKHV WKH FRQVHQW RI WKH SDUWLHV JUDQWHG 'LOODUGjV PRWLRQ IRU DQGSHUVRQFRXOGEHVHDUFKHGWKHVHFXULW\JXDUGEHFDPHD VXPPDU\ MXGJPHQW ILQGLQJ &KDSPDQ GRHV QRW KDYH D VWDWHDFWRUXQGHUWKHFRUSRUDWHSROLF\%HFDXVHWKHPDMRULW\ FODLP XQGHU WKH IXOO DQG HTXDO EHQHILW FODXVH RI IDLOHG WR FRQVLGHU WKHVH IDFWV , EHOLHYH WKDW WKH PDMRULW\jV EHFDXVH WKH FODXVH GRHV QRW DSSO\ WR SULYDWH DFWLRQ DQG DQDO\VLV LV IODZHG DQG WKDW VXPPDU\ MXGJPHQW LV &KDSPDQGRHVQRWKDYHDFODLPXQGHUEHFDXVHWKH LQDSSURSULDWH,ZRXOGUHYHUVHWKHGLVWULFWFRXUWjVMXGJPHQW 'LOODUGVHFXULW\RIILFHUZDVQRWDFWLQJmXQGHUFRORURIVWDWH RQWKLVLVVXHDVZHOO ODZl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mWR HVWDEOLVK WKH H[LVWHQFH RI DQ HOHPHQWHVVHQWLDOWRWKDWSDUW\ VFDVHDQGRQZKLFKWKDWSDUW\ EHDUVWKHEXUGHQRISURRIDWWULDOl&HORWH[&RUSY&DWUHWW 86 &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ SROLF\ RQ VWULSVHDUFKLQJ FXVWRPHUV VXVSHFWHG RI ,,, VKRSOLIWLQJSURYLGHVm6WULSVHDUFKHVDUHSURKLELWHG,I\RX VXVSHFW WKDW VWROHQ REMHFWV DUH KLGGHQ RQ >WKH VKRSSHUjV@ $ SHUVRQFDOOWKHSROLFHls$DW &KDSPDQDUJXHVWKDWWKH0DJLVWUDWHHUUHGLQILQGLQJWKDW $FFRUGLQJWRWKHGHSRVLWLRQWHVWLPRQ\RI$QJHOR0DOHQD WKHIXOODQGHTXDOEHQHILWFODXVHRIGRHVQRWDSSO\WR VHQLRUVHFXULW\RIILFHUDW'LOODUGDQGDSROLFHRIILFHUIRUWKH SULYDWHDFWLRQ6HFWLRQSURYLGHV FLW\RI&OHYHODQGDVHFXULW\JXDUGZRUNLQJDWWKH'LOODUGDW LVVXHLQWKLVFDVHFDQQRWVWULFWO\FRPSO\ZLWKWKLVFRUSRUDWH D6WDWHPHQWRIHTXDOULJKWV SROLF\ EHFDXVH DV KH REVHUYHG m, JXHVV ZH JRW WR FDOO RXUVHOYHVEHFDXVHZHDUHWKHSROLFHls$DW0DOHQD $OOSHUVRQVZLWKLQWKHMXULVGLFWLRQRIWKH8QLWHG6WDWHV 7HVW 0DOHQD WHVWLILHG WKDW KH LQIRUPHG 'LOODUGjV VKDOOKDYHWKHVDPHULJKWLQHYHU\6WDWHDQG7HUULWRU\WR PDQDJHPHQWRIWKHFRQIOLFWLQWKHSURYLVLRQEXWmWKH\VDLG PDNH DQG HQIRUFH FRQWUDFWV WR VXH EH SDUWLHV JLYH ZHOOWKLVFDPHIURPWKHFRUSRUDWHVRLWLVDJHQHUDOL]DWLRQRI HYLGHQFHDQGWRWKHIXOODQGHTXDOEHQHILWRIDOOODZVDQG 'LOODUGjVSROLF\WKURXJKRXWWKHFRXQWU\ls$DW SURFHHGLQJVIRUWKHVHFXULW\RISHUVRQVDQGSURSHUW\DV LVHQMR\HGE\ZKLWHFLWL]HQVDQGVKDOOEHVXEMHFWWROLNH $VWKHPDMRULW\FRUUHFWO\QRWHGWKH'LOODUGVHFXULW\JXDUG SXQLVKPHQW SDLQV SHQDOWLHV WD[HV OLFHQVHV DQG GLGQRWUHSUHVHQWKLPVHOIDVDSROLFHRIILFHUWKUHDWHQWRDUUHVW H[DFWLRQVRIHYHU\NLQGDQGWRQRRWKHU &KDSPDQ ZDYH KLV EDGJH RU ZHDSRQV RU HVWDEOLVK DQ\ FRQWDFWZLWKWKHVKHULIIjVGHSDUWPHQWGXULQJWKHLQFLGHQW7KH Em0DNHDQGHQIRUFHFRQWUDFWVlGHILQHG LQFLGHQW DW LVVXH LQ WKLV FDVH GRHV KRZHYHU LQFOXGH WKH PRPHQWZKHQ&KDSPDQZDVDVNHGE\WKHVHFXULW\JXDUGWR )RUSXUSRVHVRIWKLVVHFWLRQWKHWHUPmPDNHDQGHQIRUFH HQWHU D ILWWLQJ URRP ZLWK WKH VDOHV PDQDJHU WR LQVSHFW KHU FRQWUDFWVl LQFOXGHV WKH PDNLQJ SHUIRUPDQFH FORWKLQJ$FFRUGLQJWR'LOODUGjVRIILFLDOFRUSRUDWHSROLF\WKH PRGLILFDWLRQ DQG WHUPLQDWLRQ RI FRQWUDFWV DQG WKH VHFXULW\ JXDUG VKRXOG KDYH FDOOHG WKH SROLFH DW WKLV SRLQW HQMR\PHQW RI DOO EHQHILWV SULYLOHJHV WHUPV DQG EHFDXVH KH NQHZ WKDW WKH VHDUFK LQYROYHG WKH UHPRYDO RI FRQGLWLRQVRIWKHFRQWUDFWXDOUHODWLRQVKLS &KDSPDQjVFORWKLQJ+RZHYHUDV0DOHQDQRWHGWKHVHFXULW\ F3URWHFWLRQDJDLQVWLPSDLUPHQW RIILFHUFDQQRWFDOOWKHSROLFHSXUVXDQWWRWKHSROLF\EHFDXVH WKHVHFXULW\JXDUGLVWKHSROLFH 7KHULJKWVSURWHFWHGE\WKLVVHFWLRQDUHSURWHFWHGDJDLQVW LPSDLUPHQW E\ QRQJRYHUQPHQWDO GLVFULPLQDWLRQ DQG LPSDLUPHQWXQGHUFRORURI6WDWHODZ )RU WKH SXUSRVHV RI H[SODLQLQJ WKH UHODWLRQVKLS EHWZHHQ WKH 86&HPSKDVLVDGGHG VWRUHjV SROLF\ DQG &KDSPDQjV FODLP , PXVW HODERUDWH XSRQ WKH PDMRULW\jV UHFLWDWLRQ RI WKH IDFWV 7KH PDMRULW\ VWDWHV RQO\ WKDW WKH IHPDOH PDQDJHU mVHDUFKHG &KDSPDQjV FORWKLQJl 6HH VXSUD DW &KDSPDQ DOOHJHV KRZHYHU DQG LW LV QRW GLVSXWHG WKDW VKH ZDV DVNHG WR UHPRYH KHU FRDW DQG KHU VXLW MDFNHW DQG WR SXOO KHU EORXVH XS RYHU KHU KHDG EHIRUH WKH PDQDJHU 6HFWLRQ ZDV RULJLQDOO\ SDVVHG SXUVXDQW WR WKH 7KLUWHHQWK ZDV VDWLVILHG WKDW VKH KDG QRW VWROHQ DQ\ PHUFKDQGLVH $OWKRXJK 'LOODUGjV DQG )RXUWHHQWK $PHQGPHQWV LQ RUGHU WR HUDGLFDWH WKH YHVWLJHV RI VODYHU\ SROLF\ GRHV QRW GHILQH VWULSVHDUFKLQJ , EHOLHYH WKDW EHFDXVH &KDSPDQ 6HH +DZN Y 3HULOOR ) 6XSS 1' ,OO 3URYLVLRQDO ZDV IRUFHG WR UHPRYH FORWKLQJ VKH ZDV VWULSVHDUFKHG E\ WKH 'LOODUGjV *RYjW RI WKH 5HSXEOLF RI 1HZ $IULND Y $PHULFDQ %URDG &RV ) VWRUH PDQDJHU DW WKH GLUHFWLRQ RI WKH VHFXULW\ JXDUG 6XSS ''& &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ &RQJUHVV DPHQGHG LQ E\ GHVLJQDWLQJ WKH VLGHDUP+HEULHIO\VWRSSHGDQGVHDUFKHG&KDSPDQEXW RULJLQDOVHFWLRQDVVXEVHFWLRQmDlDQGE\DGGLQJVXEVHFWLRQV GLGQRWDUUHVWRUWKUHDWHQWRDUUHVWKHUQRUGLGKHFRQWDFW EDQGF3XE/ WKHVKHULIIjVGHSDUWPHQW8QGHUWKHFLUFXPVWDQFHVRIWKLV FDVH WKH RIIGXW\ GHSXW\ GLG QRW DFW SXUVXDQW WR KLV &KDSPDQFODLPVWKDWWKHDGGLWLRQRIVXEVHFWLRQFWRWKH RIILFLDOGXWLHVDQGWKXVGLGQRWHQJDJHLQVWDWHDFWLRQ VWDWXWHPDNHVLWFOHDUWKDWWKHIXOODQGHTXDOEHQHILWFODXVH DSSOLHVWRSULYDWHDFWLRQ&KDSPDQDUJXHVWKDWVXEVHFWLRQF 6XSUDDW LV XQDPELJXRXV DQG WKXV WKH &RXUW VKRXOG QRW ORRN WR OHJLVODWLYHKLVWRU\LQRUGHUWRLQWHUSUHWWKHVWDWXWH)XUWKHU $OWKRXJK LQ FHUWDLQ FLUFXPVWDQFHV mLW LV SRVVLEOH WR &KDSPDQFRQWHQGVWKDWVXEVHFWLRQFUHIHUVWRmWKHULJKWV GHWHUPLQHWKHTXHVWLRQZKHWKHUDSHUVRQDFWHGXQGHUFRORURI SURWHFWHGE\WKLVVHFWLRQlDQGWKDWWKHSOXUDOZRUGmULJKWVl VWDWH ODZ DV D PDWWHU RI ODZ WKHUH PD\ UHPDLQ LQ VRPH PXVWPHDQDOORIWKHULJKWVSURWHFWHGE\VXEVHFWLRQDWKH LQVWDQFHVXQDQVZHUHGTXHVWLRQVRIIDFWUHJDUGLQJWKHSURSHU ULJKWWRWKHIXOODQGHTXDOEHQHILWRIWKHODZVDVZHOODVWKH FKDUDFWHUL]DWLRQRIWKHDFWLRQVIRUWKHMXU\WRGHFLGHl/D\QH ULJKW WR PDNH DQG HQIRUFH FRQWUDFWV 0RUHRYHU &KDSPDQ )G DW LQWHUQDO FLWDWLRQV DQG TXRWDWLRQV RPLWWHG DUJXHVWKDWWKHDEVHQFHRIOLPLWLQJODQJXDJHGLVWLQJXLVKHVWKLV %DVHG RQ P\ UHYLHZ RI WKH UHFRUG , DP FRQYLQFHG WKDW SURYLVLRQ IURP RWKHU FLYLO ULJKWV ODZV )RU H[DPSOH &KDSPDQKDVDOOHJHGVXIILFLHQWIDFWVWRHVWDEOLVKDJHQXLQH 86& DSSOLHV WR SHUVRQV ZKR DFW mXQGHU FRORU RI LVVXH DV WR ZKHWKHU WKH VHFXULW\ JXDUGjV DFWLRQV VDWLVI\ WKH ODZl%HFDXVH&RQJUHVVFKRVHQRWWROLPLWWKHDSSOLFDWLRQRI QH[XV WHVW 7KH QH[XV WHVW UHTXLUHV D VXIILFLHQWO\ FORVH VXEVHFWLRQ F &KDSPDQ DUJXHV WKDW VXEVHFWLRQ F PXVW UHODWLRQVKLSEHWZHHQWKHVWDWHDQGWKHSULYDWHDFWRUVRWKDWWKH DSSO\WRDOORIWKHULJKWVSURWHFWHGE\ DFWLRQWDNHQE\WKHODWWHUPD\EHIDLUO\DWWULEXWHGWRWKHVWDWH LWVHOI6HH:RORWVN\)GDWVHHDOVR%UHQWZRRG ,W LV D[LRPDWLF WKDW D FRXUW PD\ QRW ORRN WR OHJLVODWLYH $FDGY7HQQHVVHH6HFRQGDU\6FK$WKOHWLF$VVjQ86 KLVWRU\LQRUGHUWRLQWHUSUHWDVWDWXWHWKDWLVFOHDURQLWVIDFH BBB6&WQRWLQJWKDWDFKDOOHQJHG m7KHUH FDQ EH QR FRQVWUXFWLRQ ZKHUH WKHUH LV QRWKLQJ WR DFWLYLW\ PD\ EH VWDWH DFWLRQ mZKHQ LW LV HQWZLQHG ZLWK FRQVWUXHl8QLWHG6WDWHVY+DUWZHOO86:DOO JRYHUQPHQWDO SROLFLHV RU ZKHQ JRYHUQPHQW LV HQWZLQHG LQ 0DKRQHY:DGGOHV)GG >LWV@PDQDJHPHQWRUFRQWUROlLQWHUQDOTXRWDWLRQRPLWWHG &LU ,I mWKH VWDWXWHjV ODQJXDJH LV SODLQ WKH VROH IXQFWLRQRIWKHFRXUWVLVWRHQIRUFHLWDFFRUGLQJWRLWVWHUPVl ,Q WKLV FDVH WKH 'LOODUG VHFXULW\ JXDUG ZDV REOLJDWHG WR 9HUJRVY*UHJJjV(QWHUV,QF)GWK&LU REH\'LOODUGjVSROLFLHVDQGUHJXODWLRQVZKLFKDUHGHYHORSHG LQWHUQDOTXRWDWLRQPDUNVDQGFLWDWLRQVRPLWWHG E\WKHFRUSRUDWLRQZKLOHKHZDVRQGXW\DWWKHVWRUHs$DW 'LOODUGjV5XOHVDQG3URFHGXUHVIRU6HFXULW\3HUVRQQHO :HDJUHHZLWK&KDSPDQWKDWWKHVWDWXWHLVXQDPELJXRXV 7KHVWDWHSOD\HGQRSDUWLQWKHSURPXOJDWLRQRIWKHVHSROLFLHV DQGWKDWLWLVQRWQHFHVVDU\WRORRNWROHJLVODWLYHKLVWRU\LQ 7KHSROLF\GRHVKRZHYHUGLUHFWO\LPSOLFDWHWKHVWDWHLQRQH RUGHUWRLQWHUSUHWWKHVWDWXWHjVODQJXDJH:HGLVDJUHHZLWK RI LWV SURYLVLRQV 7KLV SURYLVLRQ ZKLFK RIIHUV WKH VWRUHjV &KDSPDQjVFRQFOXVLRQWKDWWKHHTXDOEHQHILWFODXVHDSSOLHVWR SULYDWH DFWLRQ &KDSPDQjV UHDGLQJ RI VXEVHFWLRQ F LV SODXVLEOHRQO\LIVXEVHFWLRQFLVUHDGLQLVRODWLRQW@KHIDFWWKDWDSROLFHRIILFHULVRQRURII DDQGFLQFRQIOLFWZHUHMHFWLW GXW\RULQRURXWRIXQLIRUPLVQRWFRQWUROOLQJ,WLVWKHQDWXUH RIWKHDFWSHUIRUPHGZKLFKGHWHUPLQHVZKHWKHUWKHRIILFHU (YHQLI&KDSPDQjVLQWHUSUHWDWLRQZHUHFRUUHFWZHFRXOG KDVDFWHGXQGHUFRORURIODZl6WHQJHOY%HOFKHU)G VWLOO ORRN EH\RQG WKH ODQJXDJH RI WKH VWDWXWH LI D OLWHUDO WK&LULQWHUQDOTXRWDWLRQRPLWWHG7KXV LQWHUSUHWDWLRQZRXOGOHDGWRLQWHUQDOLQFRQVLVWHQFLHVDQ P\DQDO\VLVWXUQVSULPDULO\RQZKHWKHUWKHRIILFHUZDVDFWLQJ DEVXUG UHVXOW RU DQ LQWHUSUHWDWLRQ LQFRQVLVWHQW ZLWK WKH SXUVXDQWWRKLVRIILFLDOGXW\RUDSROLFHGHSDUWPHQWSROLF\ LQWHQW RI &RQJUHVV 6HH 9HUJRV )G DW )LUVW 6HH /D\QH Y 6DPSOH\ )G WK &LU &KDSPDQjV UHDGLQJ RI VXEVHFWLRQ F OHDGV WR DQ LQWHUQDO KROGLQJWKDWRIILFHUZKRVKRWSODLQWLIIZKLOHRIILFHUZDVRII LQFRQVLVWHQF\$VGLVFXVVHGVXEVHFWLRQFFDQQRWSURWHFWWKH GXW\DFWHGXQGHUFRORURIVWDWHODZEHFDXVHRIILFHUjVDXWKRULW\ ULJKW WR HTXDO EHQHILW RI DOO ODZV DQG SURFHHGLQJV IURP WR FDUU\ ZHDSRQ GHULYHG IURP KLV VWDWXV DV SROLFH RIILFHU QRQJRYHUQPHQWDOGLVFULPLQDWLRQZKHQRQO\WKHJRYHUQPHQW FRQIOLFWEHWZHHQRIILFHUDQGSODLQWLIIDURVHRXWRIRIILFHUjV FDQGHQ\HTXDOEHQHILWRIDOOODZVDQGSURFHHGLQJV RIILFLDO GXWLHV DQG SODLQWLII WKUHDWHQHG RIILFHU LQ RIILFHUjV RIILFLDOFDSDFLW\6WHQJHO)GDWFRQFOXGLQJWKDW 6HFRQGLQWHUSUHWLQJWKHHTXDOEHQHILWFODXVHDVDSSO\LQJWR RIIGXW\ SROLFH RIILFHU ZKR VKRW DQG NLOOHG WZR PHQ DQG SULYDWHDFWLRQFUHDWHVWKHDEVXUGUHVXOWRIIHGHUDOL]LQJVWDWH SDUDO\]HGDWKLUGLQDEDUURRPEUDZODFWHGXQGHUFRORURIODZ WRUW ODZ 7KH 6XSUHPH &RXUW KDV FDXWLRQHG DJDLQVW WKH EHFDXVH PDFH VSUD\ XVHG E\ RIILFHU ZDV LVVXHG E\ SROLFH FUHDWLRQRIDJHQHUDOIHGHUDOWRUWODZm>$@VDUXOHZHVKRXOG GHSDUWPHQWDQGRIILFHUFDUULHGKLVSLVWRODQGLQWHUYHQHGLQ EH DQG DUH µUHOXFWDQW WR IHGHUDOL]Hj PDWWHUV WUDGLWLRQDOO\ GLVSXWHSXUVXDQWWRGHSDUWPHQWUHJXODWLRQV7KHPDMRULW\KDV FRYHUHGE\VWDWHFRPPRQODZl3DWWHUVRQY0F/HDQ&UHGLW IDLOHGKRZHYHUWRH[DPLQHFORVHO\WKHUHFRUGLQWKLVFDVHWR 8QLRQ 86 $V RWKHU FRXUWV KDYH DQDO\]HZKHWKHUWKHUHLVDJHQXLQHLVVXHRIPDWHULDOIDFWWR REVHUYHGZDVGHVLJQHGWRUHPRYHREVWDFOHVWRIXOO VXSSRUW&KDSPDQjVFODLP,QVWHDGWKHPDMRULW\jVDQDO\VLV SDUWLFLSDWLRQLQWKHOHJDOV\VWHPDQGWRSURYLGHEODFNVHTXDO PHUHO\DVVHUWV DFFHVV WR OHJDO UHPHGLHV DQG SURFHVVHV QRW WR IHGHUDOL]H SULYDWHWRUWV6HH6WHUOLQJY.D]PLHUF]DN)6XSS >7@KH'LOODUGVHFXULW\JXDUGZKRVWRSSHGDQGVHDUFKHG 1',OO &KDSPDQZDVDQRIIGXW\VKHULIIjVGHSXW\ZHDULQJKLV RIILFLDO VKHULIIjV GHSDUWPHQW XQLIRUP EDGJH DQG &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ )LQDOO\&KDSPDQjVLQWHUSUHWDWLRQLVLQFRQVLVWHQWZLWKWKH WKH$FWKDGEHIRUHLWDPSOHHYLGHQFHRISULYDWHDFWVRIUDFLDO LQWHQWRI&RQJUHVV&KDSPDQFRQWHQGVWKDWWKH OHJLVODWLYH GLVFULPLQDWLRQDJDLQVWWKHQHZO\HPDQFLSDWHGVODYHV KLVWRU\HVWDEOLVKHVWKDWWKHSXUSRVHRIWKHDPHQGPHQWV ZDVWRUHVSRQGWRUHFHQWGHFLVLRQVRIWKH6XSUHPH&RXUWE\ &RQVLVWHQW ZLWK P\ XQGHUVWDQGLQJ RI jV KLVWRU\ , EURDGO\H[SDQGLQJWKHVFRSHRIUHOHYDQWFLYLOULJKWVVWDWXWHV EHOLHYHWKHVWDWXWHGHVHUYHVDEURDGLQWHUSUHWDWLRQEHFDXVHLW 7KH&RQJUHVVLRQDOUHFRUGKRZHYHUGRHVQRWVXSSRUWVXFKD LVSDUWRIDUHPHGLDOVWDWXWH7KHPDMRULW\j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jVRYHUUHOLDQFHRQWKLVSULQFLSOHLVLQHUURUDVWKHUH Y1RUWK&HQ%URQ[+RVS)6XSS6'1< LVQROLNHOLKRRGWKDWP\UHDGLQJRIWKHVWDWXWHZLOOUHVXOWLQD DFFRUG(EUDKLPLY&LW\RI+XQWVYLOOH%GRI(GXF IORRGRIOLWLJDWLRQLQIHGHUDOFRXUWVWKDWSURSHUO\EHORQJVLQ )6XSSQ1'$OD6HHDOVR'HQQLV VWDWHFRXUW%HFDXVH,DPILUPO\FRQYLQFHGWKDWWKHPDMRULW\jV Y &RXQW\ RI )DLUID[ )G WK &LU UHDVRQLQJLVIDLWKIXOQHLWKHUWRWKHVWDWXWHjVODQJXDJHQRUWRLWV DPHQGPHQWVGRQRWRYHUUXOHsHWWY'DOODV,QGHS6FK'LVW GHHSO\URRWHGFRQVWLWXWLRQDORULJLQV,GLVVHQWIURP3DUW,,,$ 86ZKLFK KHOGWKDW86&LV RIWKHPDMRULW\jVRSLQLRQUHTXLULQJVWDWHDFWLRQIRUDFDXVHRI H[FOXVLYH UHPHG\ IRU YLRODWLRQ RI E\ VWDWH DFWLRQ DFWLRQ XQGHU WKH mIXOO DQG HTXDO EHQHILWl FODXVH , ZRXOG )XUWKHULI&RQJUHVVKDGLQWHQGHGWRFUHDWHDWRUWUHPHG\IRU UHYHUVH WKH GLVWULFW FRXUWjV JUDQW RI VXPPDU\ MXGJPHQW WR YLFWLPV RI SULYDWH UDFLDOO\PRWLYDWHG GLVFULPLQDWLRQ 'LOODUGRQWKLVLVVXH m&RQJUHVVZRXOGQRWKDYHGHSDUWHGVRDEUXSWO\IURPFXUUHQW GHFLVLRQDOODZZLWKRXWVWDWLQJH[SOLFLWO\WKDWLWZDVGRLQJVRl ,,67$7($&7,21 6SHQFHUY&DVDYLOOD)6XSSQ6'1< DIIjGLQSDUWDSSHDOGLVPLVVHGLQSDUW)GG $VDQDOWHUQDWLYHWRKHUFODLPWKDW'LOODUGGHQLHG &LU m,I WKH µHTXDO EHQHILWj FODXVH RI ZHUH KHU WKH mIXOO DQG HTXDO EHQHILWl RI WKH ODZ &KDSPDQ DOVR H[WHQGHGWRUHDFKSULYDWHDFWLRQWKHFRXUWVHHVQROLPLWLQJ VHHNVUHOLHIXQGHU86&IRUDOOHJHGYLRODWLRQVRI SULQFLSOHWRSUHYHQWLWVEHFRPLQJWKHµJHQHUDOIHGHUDOWRUWODZj KHUULJKWWREHIUHHIURPXQUHDVRQDEOHVHDUFKHVDQGVHL]XUHV WKH6XSUHPH&RXUWKDVH[SUHVVO\UHMHFWHGl,GDW XQGHU WKH )RXUWK $PHQGPHQW DQG KHU GXH SURFHVV ULJKWV XQGHUWKH)LIWK$PHQGPHQW$VWKHPDMRULW\QRWHGDOLWLJDQW EULQJLQJDFODLPXQGHUPXVWVKRZWKDWKHUULJKWVZHUH 7R DSSUHFLDWH IXOO\ KRZ LPSODXVLEOH WKH PDMRULW\ DQG WKH 7KH OHJLVODWLYH KLVWRU\ RI WKH DPHQGPHQWV RQO\ EULHIO\ FRQFXUUHQFHjV UHDVRQLQJ LV RQH QHHG RQO\ WXUQ WR WKH RULJLQDO ODQJXDJH RI PHQWLRQV VXEVHFWLRQ F ,W ODUJHO\ IRFXVHV XSRQ VXEVHFWLRQ E ZKLFK WKH $FW RQ WKHLU UHDGLQJ ZH ZRXOG KDYH WR EHOLHYH WKDW WKH ILUVW ZDV HQDFWHG LQ RUGHU WR RYHUUXOH SDUW RI WKH 6XSUHPH &RXUWjV RSLQLRQ LQ FODXVH WKH ULJKW WR mPDNH DQG HQIRUFH FRQWUDFWVl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mPDNHDQGHQIRUFHFRQWUDFWVlFODXVHRI DQGQRWWRSULYDWHDFWLRQ,QRQHRIWKHILUVWFDVHVWRFRQVLGHU PXVWDSSO\WRSULYDWHDVZHOODVSXEOLFFRQWUDFWV6HH5XQ\RQ WKH LVVXH 0DKRQH VXSUD WKH 7KLUG &LUFXLW GLVWLQJXLVKHG 86DW EHWZHHQWKHWZRVXEVWDQWLYHSURYLVLRQVRIREVHUYLQJ WKDWWKHULJKWWRPDNHDQGHQIRUFHFRQWUDFWVLVFRQFHUQHGZLWK 5HYLHZLQJ WKH KLVWRU\RIWKH$FWLQ*HQHUDO%OGJ UHODWLRQV EHWZHHQ SULYDWH LQGLYLGXDOV DQG WKXV SULYDWH &RQWUDFWRUV&KLHIsXVWLFH5HKQTXLVWQRWHG LQGLYLGXDOVFDQEHKHOGOLDEOHIRUYLRODWLQJ VFRQWUDFW FODXVH ZKHUHDV WKH HTXDO EHQHILW FODXVH FRQFHUQV WKH >7@KLV&RXUWKDVIRXQGLQWKHOHJLVODWLYHKLVWRU\RIWKH UHODWLRQVEHWZHHQDQLQGLYLGXDODQGWKHVWDWHDQGWKXVRQO\ $FWHYLGHQFHWKDW&RQJUHVVVRXJKWWRDFFRPSOLVK VWDWHDFWRUVFDQEHOLDEOHXQGHUWKHHTXDOEHQHILWFODXVH PRUH WKDQ WKH GHVWUXFWLRQ RI VWDWHLPSRVHG FLYLO GLVDELOLWLHVDQGGLVFULPLQDWRU\SXQLVKPHQWV:HKDYH 7KHVWDWHQRWWKHLQGLYLGXDOLVWKHVROHVRXUFHRIWKHODZ KHOG WKDW ERWK DQG µSURKLELW DOO UDFLDO DQGLWLVRQO\WKHVWDWHDFWLQJWKURXJKLWVDJHQWVQRWWKH GLVFULPLQDWLRQZKHWKHURUQRWXQGHUFRORURIODZZLWK SULYDWHLQGLYLGXDOZKLFKLVFDSDEOHRIGHQ\LQJWREODFNV UHVSHFWWRWKHULJKWVHQXPHUDWHGWKHUHLQj WKHIXOODQGHTXDOEHQHILWRIWKHODZ7KXVZKLOHSULYDWH GLVFULPLQDWLRQPD\EHLPSOLFDWHGE\WKHFRQWUDFWFODXVH *HQHUDO%OGJ&RQWUDFWRUV86DWTXRWLQJsRQHV RIVHFWLRQWKHFRQFHSWRIVWDWHDFWLRQLVLPSOLFLWLQ 86DW,QGHHGWKH&KLHIsXVWLFHREVHUYHGWKDWLQ WKHHTXDOEHQHILWVFODXVH SDVVLQJWKH$FW&RQJUHVVmDFWHGWRSURWHFWWKH>QHZO\@ IUHHGPHQ IURP LQWHQWLRQDO GLVFULPLQDWLRQ E\ WKRVH ZKRVH )GDWHPSKDVLVDGGHG$FFRUG6KDDUH7HILOD REMHFW ZDV µWR PDNH WKHLU IRUPHU VODYHV GHSHQGHQW VHUIV &RQJUHJDWLRQY&REE)GWK&LU YLFWLPVRIXQMXVWODZVDQGGHEDUUHGIURPDOOSURJUHVVDQG UHYjGLQSDUWRQRWKHUJURXQGV86/HZLVY HOHYDWLRQ E\ RUJDQL]HG VRFLDO SUHMXGLFHVjl ,G DW s& 3HQQH\ &R ) 6XSS ' 'HO TXRWLQJ &RQJ *OREH WK &RQJ VW 6HVV 6SHQFHU ) 6XSS DW %URRNV Y $%& ) 5HS&ODUNH&OHDUO\WKHQWKHGUDIWHUVRIWKH$FWKDG 6XSS1'2KLRYDFDWHGLQSDUWRQRWKHU SULYDWHDVZHOODVVWDWHLQIOLFWHGGLVFULPLQDWLRQLQPLQGZKHQ JURXQGV)GWK&LU5RFKRQY'LOORQ WKH\SDVVHGWKH$FWIURPZKLFKWKHmIXOODQGHTXDOEHQHILWl )6XSS1',OO3URYLVLRQDO*RYjWRIWKH FODXVHGHULYHVYHUEDWLP 5HSXEOLF RI 1HZ $IULND Y $PHULFDQ %URDG &RV ) 6XSS''&(JJOHVWRQY3ULQFH(GZDUG ,EHOLHYHWKDWWKHKLVWRU\RIDVH[SOLFDWHGE\WKH 9ROXQWHHU5HVFXH6TXDG)6XSS('9D 6XSUHPH &RXUW LQ QXPHURXV GHFLVLRQV JLYHV ULVH WR WKH DIIjG ZLWKRXW RS )G WK &LU LQHVFDSDEOH FRQFOXVLRQ WKDW WKH mIXOO DQG HTXDO EHQHILWl FODXVHOLNHWKHmPDNHDQGHQIRUFHFRQWUDFWVlFODXVHDQGWKH RWKHUSURWHFWLRQVRIIHUHGE\WKHVWDWXWHGRHVQRWUHTXLUHVWDWH DFWLRQ , FDQQRW LJQRUH DV GR WKH PDMRULW\ DQG WKH &KDSPDQ GLG QRW DOOHJH D FDXVH RI DFWLRQ XQGHU WKH mPDNH DQG FRQFXUUHQFHWKDWWKH$FWZDVSDVVHGSXUVXDQWWRWKH HQIRUFH FRQWUDFWVl FODXVH RI &RXUWV KDYH UHMHFWHG VXFK D FODLP $00 7KLUWHHQWK$PHQGPHQWDQGWKH&RQJUHVVZKLFKFRQVLGHUHG PDGH E\ SODLQWLIIV ZKR ZHUH IDOVHO\ DFFXVHG RI VKRSOLIWLQJ HJ /HZLV Y s& 3HQQH\ &R ) 6XSS ' 'HO QR UHIXVDO WR FRQWUDFW ZKHUH SODLQWLII KDG FRPSOHWHG VKRSSLQJ DQG ZDV OHDYLQJ VWRUH &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ :LOOLDPV Y 1RUWKILHOG 0RXQW +HUPRQ 6FK ) 6XSS SULYDWHLQGLYLGXDOVDQGXQRIILFLDOJURXSVPLVWUHDWPHQW '0DVV6HHDOVR6WHUOLQJ)6XSS XQUHODWHGWRDQ\KRVWLOHVWDWHOHJLVODWLRQµ$FFRXQWVLQ DW HTXDO EHQHILW FODXVH GRHV QRW FUHDWH IHGHUDO WRUW QHZVSDSHUV 1RUWK DQG 6RXWK )UHHGPHQjV %XUHDX DQG UHPHG\DJDLQVWSULYDWHSDUW\ RWKHU RIILFLDO GRFXPHQWV SULYDWH UHSRUWV DQG FRUUHVSRQGHQFHZHUHDOODGGXFHGjWRVKRZWKDWµSULYDWH 7KHVHFRXUWVKDYHHPSKDVL]HGWKDWLQWHUSUHWLQJWKHFODXVH RXWUDJHDQGDWURFLW\jZHUHµGDLO\LQIOLFWHGRQIUHHGPHQ WRDSSO\WRSULYDWHDFWLRQZRXOGJLYHULVHWRDIHGHUDOFDXVHRI j 7KH FRQJUHVVLRQDO GHEDWHV DUH UHSOHWH ZLWK DFWLRQIRUHYHU\UDFLDOO\PRWLYDWHGSULYDWHWRUW6HH0DKRQH UHIHUHQFHV WR SULYDWH LQMXVWLFHV DJDLQVW 1HJURHV n )GDW UHIHUHQFHVWRZKLWHHPSOR\HUVZKRUHIXVHGWRSD\WKHLU 1HJUR ZRUNHUV ZKLWH SODQWHUV ZKR DJUHHG DPRQJ $OWKRXJKLWLVFRQFHSWXDOO\SRVVLEOHIRUDSULYDWHSDUW\WR WKHPVHOYHV QRW WR KLUH IUHHG VODYHV ZLWKRXW WKH GHSULYHDQRWKHURIWKHmHTXDOEHQHILWlRIWKRVHODZVLWLV SHUPLVVLRQRIWKHLUIRUPHUPDVWHUVZKLWHFLWL]HQVZKR GLIILFXOWWRLPDJLQHZKDWVXFK D GHSULYDWLRQZRXOGEH DVVDXOWHG1HJURHVRUZKRFRPELQHGWRGULYHWKHPRXWRI RWKHU WKDQ WKH YLRODWLRQ RI WKH VWDWH ODZV WKHPVHOYHV WKHLUFRPPXQLWLHV FRXSOHG ZLWK D UDFLDO DQLPXV 5HDGLQJ WKH FODXVH WR HQFRPSDVVWKLVNLQGRIFRQGXFWKRZHYHUULVNVFUHDWLQJ sRQHV86DWLQWHUQDOFLWDWLRQVDQGIRRWQRWHV DDFWLRQmZKHQHYHUDZKLWHPDQVWULNHVDEODFN RPLWWHG7KH6XSUHPH&RXUWUHMHFWHGWKHVXJJHVWLRQWKDWWKH >PDQ@LQDEDUURRPEUDZOl $FWZDVSDVVHGH[FOXVLYHO\LQUHVSRQVHWRUHVWULFWLYH VWDWHODZVQRWLQJWKDWmWKH&LYLO5LJKWV$FWZDVGUDIWHGWR 6SHQFHU)6XSSDW DSSO\ WKURXJKRXW WKH FRXQWU\ DQG LWV ODQJXDJH ZDV IDU EURDGHU WKDQ ZRXOG KDYH EHHQ QHFHVVDU\ WR VWULNH GRZQ $PLQRULW\RIFRXUWVKDYHKHOGWKDWWKHHTXDOEHQHILWFODXVH GLVFULPLQDWRU\ VWDWXWHVl ,G DW ,Q sRQHV WKH DSSOLHVWRSULYDWHDFWLRQ6HH)UDQFHVFKLY+\DWW&RUS 6XSUHPH&RXUWKHOGWKDWEHFDXVH86&DVLVWHU )6XSS'35FDXVHRIDFWLRQXQGHUHTXDO VWDWXWHWRZDVGHULYHGIURPRIWKH&LYLO5LJKWV EHQHILW FODXVH DJDLQVW SULYDWH KRWHO IRU GHQLDO RI $FWRIDQGWKH$FWZDVSDVVHGSXUVXDQWWRWKH7KLUWHHQWK DFFRPPRGDWLRQEDVHGRQUDFH&DUH\Y5XGHVHDO ) $PHQGPHQW PXVW UHDFK SULYDWH DFWV RI UDFLDO 6XSSQ1'*DFDXVHRIDFWLRQXQGHU GLVFULPLQDWLRQ6HHsRQHV86DWQRWLQJWKDWm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l HTXDOEHQHILWFODXVHDJDLQVWLQGLYLGXDOVZKRLQWHUIHUHGZLWK )LUVW$PHQGPHQWIUHHGRPWRZRUVKLSE\GLVUXSWLQJFKXUFK 7KHUHDIWHU LQ 5XQ\RQ Y 0F&UDU\ WKH 6XSUHPH &RXUW VHUYLFH DIILUPHG WKDW SURKLELWV UDFLDO GLVFULPLQDWLRQ LQ WKH PDNLQJ DQG HQIRUFHPHQW RI SULYDWH FRQWUDFWV E\ SULYDWH DFWRUV5XQ\RQY0F&UDU\867KH &RXUWjVKROGLQJLQ5XQ\RQZDVEDVHGXSRQLWVHDUOLHUGHFLVLRQ LQs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m>G@XULQJ WKH &RQJUHVVLRQDO $FFRUGLQJWRWKH6XSUHPH&RXUWWKHVFRSHRIWKH$FW GHEDWHVDVVDXOWVRQEODFNVE\SULYDWHFLWL]HQVZHUHUHIHUUHG ZDVQRWDOWHUHGZKHQLWZDVUHHQDFWHGLQSXUVXDQWWRWKH WRRQVHYHUDORFFDVLRQVl+DZN)6XSSDWFLWLQJ )RXUWHHQWK$PHQGPHQWGHVSLWHWKHIDFWWKDWmVRPHPHPEHUV &RQJ*OREHWK&RQJVW6HVV RI&RQJUHVVVXSSRUWHGWKH)RXUWHHQWK$PHQGPHQWLQRUGHUWR HOLPLQDWHGRXEWDVWRWKHFRQVWLWXWLRQDOYDOLGLW\RIWKH&LYLO 7KLVJHQHUDOUHIHUHQFHKRZHYHUGLGQRWPDQLIHVWLQWKH 5LJKWV$FW>RI@DVDSSOLHGWRWKH6WDWHVlsRQHV ODQJXDJHRIWKHHTXDOEHQHILWFODXVHZKLFKUHIHUVRQO\WRmWKH 86DWLQWHUQDOTXRWDWLRQRPLWWHG0RUHRYHUWKH&RXUW IXOO DQG HTXDO EHQHILW RI DOO ODZV DQG SURFHHGLQJV IRU WKH KDV UHMHFWHG WKH LGHD WKDW WKH DGRSWLRQ RI WKH )RXUWHHQWK VHFXULW\ RI SHUVRQV DQG SURSHUW\ l 7KXV +DZNjV $PHQGPHQWRUWKHUHHQDFWPHQWRIWKH$FWmZHUHPHDQW UHDVRQLQJWKDWm>W@KHDEVHQFHRIDQ\ZRUGVH[SUHVVO\OLPLWLQJ VRPHKRZWROLPLW WKHVWDWXWHjVDSSOLFDWLRQWRVWDWHDFWLRQl 6HFWLRQWRRIILFLDODFWVRIGLVFULPLQDWLRQLQGLFDWHVWKDW ,GDFFRUG*HQHUDO%OGJ&RQWUDFWRUV86DW &RQJUHVV GLG QRW LQWHQG WR UHVWULFW WKH RSHUDWLRQ RI WKDW 6HFWLRQWRVXFKFRQGXFWl)6XSSDWLVLQHUURU 7KH 6XSUHPH &RXUW KDV UHSHDWHGO\ UHPDUNHG XSRQ WKH HYLGHQFHRISULYDWHGLVFULPLQDWLRQWKDWPRWLYDWHGWKHRULJLQDO VWDWXWHjV GUDIWHUV ,Q sRQHV Y $OIUHG + 0D\HU &R WKH +DZN Y 3HULOOR KDV VLQFH EHHQ UHMHFWHG E\ DQRWKHU FRXUW LQ WKH 6XSUHPH&RXUWLQGLVFXVVLQJZK\WKH$FWZDVSDVVHG 1RUWKHUQ 'LVWULFW RI ,OOLQRLV 6HH 5RFKRQY'LOORQ ) 6XSS QRWHG WKDW &RQJUHVV KDG EHIRUH LW HYLGHQFH RI SHUYDVLYH 0DKRQH 1' ,OO FRXUW HOHFWHG WR IROORZ SULYDWHGLVFULPLQDWLRQDQGUDFLDOYLROHQFHDVZHOODVWKHIDFW RIWKHVRXWKHUQVWDWHVj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sHWW 86 DW 7KH )RXUWHHQWK $PHQGPHQW SURYLGHV WKDW m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l 86 & $% DPHQG ;,9 (PSKDVLV DGGHG &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ 7KHHTXDOEHQHILWFODXVHRILVOLPLWHGWRVWDWHDFWLRQ &RQJUHVVSDVVHGWKH$FWGXULQJWKH EHFDXVH LW LV XQGHUVWRRG WKDW RQO\ WKH VWDWH LV FDSDEOH RI 5HFRQVWUXFWLRQ(UDSXUVXDQWWRLWVSRZHUXQGHURIWKHWKHQ JUDQWLQJRUGHQ\LQJHTXDODFFHVVWRWKHODZm>7@KHFRQFHSW UHFHQWO\UDWLILHG7KLUWHHQWK$PHQGPHQWWRWKH&RQVWLWXWLRQ RI VWDWH DFWLRQ LV LPSOLFLW LQ WKH HTXDO EHQHILWV FODXVHl ZKLFKGRHVQRWUHTXLUHVWDWHDFWLRQmWRGHWHUPLQHZKDWDUH 0DKRQH)GDW WKHEDGJHVDQGWKHLQFLGHQWVRIVODYHU\DQGWRWUDQVODWH WKDWGHWHUPLQDWLRQLQWRHIIHFWLYHOHJLVODWLRQl5XQ\RQ +DZNIRXQGIXUWKHUVXSSRUWIRULWVEURDGLQWHUSUHWDWLRQE\ 86DWTXRWLQJsRQHVY$OIUHG+0D\HU&R86 ORRNLQJ WR WKUHH RWKHU VWDWXWHV VHFWLRQ RI WKH &LYLO DFFRUG :DWVRQ Y )UDWHUQDO 2UGHU RI 5LJKWV$FWRI86&DQG86& (DJOHV)GWK&LUm&RQJUHVVHQDFWHG )LUVWVHFWLRQRIWKH&LYLO5LJKWV$FWRI SXUVXDQWWRWKH7KLUWHHQWK$PHQGPHQWWRHQVXUH SURYLGHGIRUFULPLQDOVDQFWLRQVDJDLQVWSHUVRQVZKRYLRODWHG WKDWDOORIWKHEDGJHVDQGLQFLGHQWVRIVODYHU\IDGHGLQWRDQ WKHULJKWVVHFXUHGE\VHFWLRQE\DFWLQJXQGHUFRORURIODZ LJQRPLQLRXV SDVWl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m>D@OO FLWL]HQV RI WKH 8QLWHG 6WDWHV VKDOO KDYH WKH GLVFULPLQDWLRQ VDPH ULJKW LQ HYHU\ 6WDWH DQG 7HUULWRU\ DV LV HQMR\HG E\ ZKLWH FLWL]HQV WKHUHRI WR LQKHULW SXUFKDVH OHDVH VHOO KROG DQG FRQYH\ UHDO DQG SHUVRQDO SURSHUW\l 86& 6HFRQG+DZNSRLQWHGRXWWKDWVHFWLRQRIWKH&LYLO5LJKWV $FWRIZDVWKHSUHGHFHVVRUWR86&ZKLFK 7KH 7KLUWHHQWK $PHQGPHQW ZKLFK ZDV UDWLILHG RQ 'HF SURYLGHV WKDW m>Q@HLWKHU VODYHU\ QRU LQYROXQWDU\ VHUYLWXGH H[FHSW DV D SXQLVKPHQW IRU FULPH ZKHUHRI WKH SDUW\ VKDOO KDYH EHHQ GXO\ FRQYLFWHG VKDOO H[LVW ZLWKLQ WKH 8QLWHG 6WDWHV RU DQ\ SODFH VXEMHFW WR WKHLU MXULVGLFWLRQl 86 & $% DPHQG ;,,, 8QGHU WKH VHFRQG VHFWLRQ RI WKH $PHQGPHQW &RQJUHVV LV JUDQWHG WKH mSRZHU WR HQIRUFH WKLV DUWLFOH 6HFWLRQ RI WKH &LYLO 5LJKWV $FW RI SURYLGHG E\ DSSURSULDWH OHJLVODWLRQl 86 & $% DPHQG ;,,, /HVV WKDQ WKUHH ZHHNV DIWHU WKH SDVVDJH RI WKH $PHQGPHQW WKH ELOO WKDW ZDV WR EHFRPH WKH &LYLO 5LJKWV $FW RI ZDV LQWURGXFHG 6HH sHWW Y 'DOODV 7KDW DQ\ SHUVRQ ZKR XQGHU FRORU RI DQ\ ODZ VWDWXWH RUGLQDQFH ,QGHS 6FK 'LVW 86 UHJXODWLRQ RU FXVWRP VKDOO VXEMHFW RU FDXVH WR EH VXEMHFWHG DQ\ LQKDELWDQW RI DQ\ 6WDWH RU 7HUULWRU\ WR WKH GHSULYDWLRQ RI DQ\ ULJKW VHFXUHG RU SURWHFWHG E\ WKLV DFW RU WR GLIIHUHQW SXQLVKPHQW $FFRUGLQJ WR WKH 6XSUHPH &RXUW m>V@HFWLRQ GLIIHUHG IURP SDLQV RU SHQDOWLHV RQ DFFRXQW RI VXFK SHUVRQ KDYLQJ DW DQ\ WLPH RI WKH $FW LQ DW OHDVW WZR UHVSHFWV )LUVW ZKHUH RI WKH EHHQ KHOG LQ D FRQGLWLRQ RI VODYHU\ RU LQYROXQWDU\ VHUYLWXGH $FW H[WHQGHG LWV JXDUDQWHHV WR µFLWL]HQV RI HYHU\ UDFH DQG FRORUj RI H[FHSW DV D SXQLVKPHQW IRU FULPH ZKHUHRI WKH SDUW\ VKDOO KDYH WKH $FW n DQG n SURWHFWV µDOO SHUVRQVj 6HFRQG WKH EHHQ GXO\ FRQYLFWHG RU E\ UHDVRQ RI KLV FRORU RU UDFH WKDQ LV $FW RPLWWHG ODQJXDJH FRQWDLQHG LQ WKH $FW DQG HYHQWXDOO\ FRGLILHG SUHVFULEHG IRU WKH SXQLVKPHQW RI ZKLWH SHUVRQV VKDOO EH GHHPHG DV JXDUDQWHHLQJ SURSHUW\ ULJKWV HTXLYDOHQW WR WKRVH HQMR\HG E\ JXLOW\ RI D PLVGHPHDQRU DQG RQ FRQYLFWLRQ VKDOO EH SXQLVKHG ZKLWH FLWL]HQVl *HQHUDO %OGJ &RQWUDFWRUV 86 DW LQWHUQDO E\ ILQH QRW H[FHHGLQJ RQH WKRXVDQG GROODUV RU LPSULVRQPHQW QRW FLWDWLRQ RPLWWHG 7KH HQWLUH $FW ZDV DOVR UHHQDFWHG LQ RI WKH H[FHHGLQJ RQH \HDU RU ERWK LQ WKH GLVFUHWLRQ RI WKH FRXUW $FW RI FK 6WDW ,G DW Q &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ E\ WKH PDMRULW\ HVSHFLDOO\ LQ OLJKW RI WKH EURDG ODQJXDJH SURKLELWVGLVFULPLQDWLRQLQSURSHUW\WUDQVDFWLRQV%HFDXVHRI &RQJUHVVHPSOR\HGLQVXEVHFWLRQF&RQJUHVVjVIDLOXUHWR WKHLU FRPPRQ RULJLQ FRXUWV LQWHUSUHW DQG FRPPHQWXSRQVWDWXWRU\ODQJXDJHGRHVQRWRIIHUDUHYLHZLQJ VLPLODUO\ 6R LW IROORZV DFFRUGLQJ WR +DZN WKDW EHFDXVH FRXUW FDUWH EODQFKH WR UHZULWH WKH VWDWXWH WR ILW LWV RZQ DSSOLHVWRSULYDWHDFWLRQPXVWDSSO\WRSULYDWH VXEMHFWLYH XQGHUVWDQGLQJ RI &RQJUHVVjV XQVWDWHG LQWHQW DFWLRQ6HHLG$JDLQKRZHYHUWKHSURWHFWLRQIURPSULYDWH 0RUHRYHU,QRWHWKDWWKHPDMRULW\LJQRUHVWKHFRPPLWWHHjV GLVFULPLQDWLRQLQWKHFRQWH[WRISURSHUW\WUDQVIHUVZKLFKLV VWDWHG SXUSRVH LQ GUDIWLQJ WKH DPHQGPHQW mWR DIIRUGHGE\GRHVQRWHVWDEOLVKWKDWWKHHTXDOEHQHILW VWUHQJWKHQH[LVWLQJSURWHFWLRQVDQGUHPHGLHVDYDLODEOHXQGHU FODXVHRIH[WHQGVWRSULYDWHGLVFULPLQDWLRQ IHGHUDOFLYLOULJKWVODZVWRSURYLGHPRUHHIIHFWLYHGHWHUUHQFH DQGDGHTXDWHFRPSHQVDWLRQIRUYLFWLPVRIGLVFULPLQDWLRQl )LQDOO\ WKH +DZN FRXUW FRPSDUHG WR 86& +5 5! 1 ,, DW UHSULQWHG LQ DQGQRWHGWKDWFRQWDLQVVRPHODQJXDJH 86&&$1DW VLPLODUWRWKHHTXDOEHQHILWFODXVH6HFWLRQSURYLGHV m,IWZRRUPRUHSHUVRQVFRQVSLUHRUJRLQGLVJXLVHRQ )LQDOO\ , EHOLHYH WKDW WKH PDMRULW\jV DQDO\VLV IDLOV WR WKHKLJKZD\RURQWKHSUHPLVHVRIDQRWKHUIRUWKHSXUSRVHRI DFFRXQWIRUjVFRQVWLWXWLRQDOOHJDF\3UHVHQWGD\FLYLO GHSULYLQJHLWKHUGLUHFWO\RULQGLUHFWO\DQ\SHUVRQRUFODVVRI ULJKWV VWDWXWH 86& LV GHULYHG IURP RI WKH SHUVRQV RI WKH HTXDO SURWHFWLRQ RI WKH ODZV RU RI HTXDO &LYLO5LJKWV$FWRIm$FWlFK6WDW SULYLOHJHV DQG LPPXQLWLHV XQGHU WKH ODZV WKH SDUW\ VR 6HH*HQHUDO%OGJ&RQWUDFWRUV$VVjQY3HQQ86 LQMXUHG RU GHSULYHG PD\ KDYH DQ DFWLRQ IRU UHFRYHU\ RI GDPDJHVl7KH6XSUHPH&RXUWKDVLQWHUSUHWHG DVDSSO\LQJWRSULYDWHDVZHOODVRIILFLDODFWLRQ6HH*ULIIHQ Y%UHFNHQULGJH86$FFRUGLQJO\WKH sXGJH 6XKUKHLQULFK EHOLHYHV WKDW m&RQJUHVV GLG QRW QHHG WR FRXUW LQ +DZN IRXQG WKDW WKH HTXDO EHQHILW FODXVH RI H[SODLQ WKDW WKH HTXDO EHQHILW DQG OLNH SXQLVKPHQW FODXVHV RI VXEVHFWLRQ D GR QRW DSSO\ WR SULYDWH FRQGXFW EHFDXVH WKH\ ORJLFDOO\ FDQQRWl 6XSUD VLPLODUO\DSSOLHVWRSULYDWHDFWLRQ6HH+DZN)6XSS DW , KDYH DOUHDG\ H[SODLQHG ZK\ , EHOLHYH WKDW sXGJH 6XKUKHLQULFKjV ORJLF LV IODZHG ILUVW WKHUH LV QRWKLQJ LQ HLWKHU WKH ODQJXDJH RU VWDWXWRU\ KLVWRU\ RI WKDW UHVWULFWV WKH mHTXDO EHQHILWl FODXVH WR VWDWH DFWLRQ 6HFWLRQLVQRWDQDORJRXVWRHYHQWKRXJK QRWZLWKVWDQGLQJ sXGJH 6XKUKHLQULFKjV FODLPV WR WKH FRQWUDU\ DQG VHFRQG UHIHUVWRmWKHIXOODQGHTXDOEHQHILWRIDOOODZVDQG KLV DQDO\VLV RI WKH mOLNH SXQLVKPHQWl FODXVH LJQRUHV WKH KLVWRULFDO FRQWH[W SURFHHGLQJVlDQGUHIHUVWRmHTXDOSURWHFWLRQRIWKH IURP ZKLFK GHULYHV ODZVl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mWZRRUPRUHSHUVRQVlZKRFRQVSLUH FODLPDOLWLJDQWPXVWSURYHLQWHQWLRQDOGLVFULPLQDWLRQRQWKH 6HFWLRQFRQWDLQVQRVXFKODQJXDJH EDVLV RI UDFH ZKLFK LQYROYHV D KLJK WKUHVKROG RI SURRI %HFDXVHRIWKHVHVLJQLILFDQWOLPLWDWLRQV,GRQRWEHOLHYHWKDW ,QVXPZHKROGWKDWjVHTXDOEHQHILWFODXVHDSSOLHV WKH SURSHU UHDGLQJ RI WKH VWDWXWH PDNHV DFWLRQDEOH D ZLGH RQO\ WR VWDWH DFWLRQ 7KXV WKH GLVWULFW FRXUWjV JUDQW RI VZDWKRIFRQGXFWWUDGLWLRQDOO\FRYHUHGE\VWDWHFRPPRQODZ VXPPDU\MXGJPHQWDQGGLVPLVVDORI&KDSPDQjVFODLP QRUGR,IRUHVHHDIORRGRIOLWLJDWLRQLQWKHIHGHUDOFRXUWV LVDIILUPHG&KDSPDQjVUHPHG\OLHVLQVWDWHODZ 7KHPDMRULW\jVDQDO\VLVLVQHLWKHUERUQHRXWE\WKHODQJXDJH % QRUWKHOHJLVODWLYHKLVWRU\RIWKLVVWDWXWH7KHUHLVQRWKLQJLQ WKHOHJLVODWLYHKLVWRU\RIWKHDPHQGPHQWVWKDWJLYHVPH &KDSPDQDOOHJHVLQKHU&RPSODLQWWKDW'LOODUGYLRODWHGKHU UHDVRQWREHOLHYHWKDWWKHZRUGmULJKWVlKDVDPHDQLQJOHVV FRQVWLWXWLRQDOULJKWVXQGHU86&VSHFLILFDOO\KHU UREXVWWKDQDQDWXUDOUHDGLQJRIWKHZRUGZRXOGSHUPLW7KH )RXUWK$PHQGPHQWULJKWWREHIUHHIURPXQUHDVRQDEOHVHDUFK PDMRULW\DVVHUWVWKDWm>W@KHOHJLVODWLYHKLVWRU\UHIOHFWVWKDWLQ DQGVHL]XUHDQGKHU)LIWK$PHQGPHQWULJKWQRWWREHGHSULYHG DGGLQJVXEVHFWLRQFWRWKHVWDWXWH&RQJUHVVPHUHO\FRGLILHG RIOLIHOLEHUW\RUSURSHUW\ZLWKRXWGXHSURFHVV,QRUGHUWR 5XQ\RQY0F&UDU\86ZKLFKKHOGWKDW jVFRQWUDFWFODXVHDSSOLHGWRSULYDWHHQWLWLHVl6XSUDDW , ILQG WKH OHJLVODWLYH KLVWRU\ UHPDUNDEOH RQO\ IRU WKH SDXFLW\RIFRPPHQWDU\RQVXEVHFWLRQF2IWKHWZR+RXVH ,Q DGGLWLRQ WKH +DZN FRXUW LJQRUHG WKH QHHG UHFRJQL]HG LQ *ULIIHQ WR FRQILQH WKH UHDFK RI WKH IHGHUDO FLYLO ULJKWV ODZV VR DV QRW WR &RPPLWWHH5HSRUWVRQWKH&LYLO5LJKWV$FWRIRQO\RQH FUHDWH D JHQHUDO IHGHUDO WRUW ODZ 6HH *ULIIHQY%UHFNHQULGJH HYHQPHQWLRQVVXEVHFWLRQFDQGWKDWGLVFXVVLRQLVWHUVH7KH 86 +RXVHsXGLFLDU\&RPPLWWHHDXWKRUHG+55HSRUW1R ,,ZKLFKVWDWHVQRWRQO\WKDW&RQJUHVVLQWHQGHGWRFRGLI\ :KLOH LW ZDV QRW DGGUHVVHG EHORZ &KDSPDQ GRHV QRW KDYH D 5XQ\RQ EXW DOVR WKDW &RQJUHVV LQWHQGHG VXEVHFWLRQ F mWR YLDEOH )LIWK $PHQGPHQW FODLP LQ WKLV FDVH 7KH )LIWK $PHQGPHQW DSSOLHV SURKLELWUDFLDOGLVFULPLQDWLRQLQDOOFRQWUDFWVERWKSXEOLFDQG WR IHGHUDO DFWLRQ QRW WR SULYDWH DFWLRQ RU VWDWH DFWLRQ 6HH %ROOLQJ Y SULYDWHl+5 5! 1 ,,DWUHSULQWHGLQ 6KDUSH 86 %HFDXVH 'LOODUG LV QRW LQ DQ\ ZD\ DVVRFLDWHG ZLWK WKH IHGHUDO JRYHUQPHQW &KDSPDQ KDV QR FODLP XQGHU WKH 86&&$1 , GR QRW EHOLHYH WKDW )LIWK $PHQGPHQW 6HH 7KUHH 5LYHUV &DEOHYLVLRQ ,QF Y &LW\ RI &RQJUHVVjVIDLOXUHWRGLVFXVVWKHDSSOLFDWLRQRIVXEVHFWLRQF 3LWWVEXUJK ) 6XSS :' 3D 7KH &RXUW FRXOG WRWKHRWKHUULJKWVHQXPHUDWHGLQVXEVHFWLRQDPD\SURSHUO\ OLEHUDOO\ FRQVWUXH WKH &RPSODLQW DV DOOHJLQJ GXH SURFHVV FODLP XQGHU WKH JLYHULVHWRWKHQDUURZPHDQLQJDVFULEHGWRWKHZRUGmULJKWVl )RXUWHHQWK $PHQGPHQW +RZHYHU EHFDXVH &KDSPDQjV FODLP LV VSHFLILFDOO\ FRYHUHG E\ WKH )RXUWK $PHQGPHQW VKH GRHV QRW KDYH D GXH SURFHVV FODLP XQGHU WKH )RXUWHHQWK $PHQGPHQW 9LRODWLRQV RI VXEVWDQWLYH GXH SURFHVV RULJLQDOO\ ZHUH GLYLGHG LQWR WZR NLQGV DQLPXV GHSULYDWLRQ RI D SDUWLFXODU FRQVWLWXWLRQDO JXDUDQWHH DQG DFWLRQV WKDW JRYHUQPHQW RIILFLDOV PD\ QRW WDNH QR PDWWHU ZKDW SURFHGXUDO SURWHFWLRQV DFFRPSDQ\ WKHP DOWHUQDWLYHO\ NQRZQ DV DFWLRQV WKDW mVKRFN WKH 0RUHRYHU , QRWH WKDW WKH DUJXPHQW WKDW &KDSPDQjV UHDGLQJ RI FRQVFLHQFH 6HH %UDOH\ Y &LW\ RI 3RQWLDF )G WK WKH VWDWXWH ZRXOG LPSURSHUO\ IHGHUDOL]H VWDWH WRUW ODZ ZDV RQFH HPEUDFHG &LU FLWLQJ 5RFKLQ Y &DOLIRUQLD 86 $Q E\ WKH 6XSUHPH &RXUW LQ 3DWWHUVRQ 86 DW DV VXSSRUW IRU WKH XQUHDVRQDEOH VHDUFK RU VHL]XUH LV D YLRODWLRQ RI WKH )RXUWK $PHQGPHQW &RXUWjV GHFLVLRQ WKDW WKH mPDNH DQG HQIRUFH FRQWUDFWVl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lLQWHUQDOTXRWDWLRQRPLWWHG$UHVXOWLV LQSDUWRQRWKHUJURXQGV'DQLHOVY:LOOLDPV86 QRW DEVXUG PHUHO\ EHFDXVH LW GRHV QRW FRPSRUW ZLWK WKH 7KHUHTXLUHPHQWRIVWDWHDFWLRQVHUYHVWZRLPSRUWDQW UHYLHZLQJFRXUWjVQRWLRQRIZKDWFRQVWLWXWHVJRRGSROLF\:H SXEOLF SROLFLHV )LUVW LW SUHVHUYHV LQGLYLGXDO IUHHGRP E\ W\SLFDOO\ HPEDUN XSRQ WKH H[FHSWLRQDO WDVN RI GLYLQLQJ OLPLWLQJ WKH UHDFK RI IHGHUDO SRZHU 6HFRQG LW DYRLGV &RQJUHVVjVLQWHQWRXWVLGHWKHOLWHUDOODQJXDJHRIWKHVWDWXWH LPSRVLQJRQWKHVWDWHUHVSRQVLELOLW\IRUFRQGXFWIRUZKLFKLW RQO\ZKHQWKHVWDWXWHSURGXFHVDUHVXOWQRWZKLFKZHGLVOLNH FDQQRWEHIDLUO\EODPHG6HH/XJDUY(GPRQGVRQ2LO&R EXW ZKLFK LV SDWHQWO\ LOORJLFDO RU FRQWUDU\ WR &RQJUHVVjV 86 LQWHQW $ SULYDWH SDUW\jV DFWLRQV FRQVWLWXWH VWDWHDFWLRQXQGHU 6HFRQGWKHPDMRULW\KDVIDLOHGWRFRQVLGHUDGHTXDWHO\WKH ZKHUH WKH SULYDWH HQWLW\jV DFWLRQV PD\ EH mIDLUO\ OLPLWLQJ ODQJXDJH VXUURXQGLQJ WKH mIXOO DQG HTXDO EHQHILWl DWWULEXWDEOHWRWKHVWDWHl/XJDU86DW,QRUGHUWR FODXVHZKLFKVHUYHVWRFDELQERWKWKHQXPEHUDQGQDWXUHRI GHWHUPLQHZKHWKHUWKHUHZDVVWDWHDFWLRQLQDSDUWLFXODUFDVH FODLPVWKDWPD\EHEURXJKWXQGHUWKLVFODXVH2IFRXUVHmZH WKH6XSUHPH&RXUWKDVGHYHORSHGWKUHHWHVWVWKHSXEOLF VKRXOGEHDQGDUHµUHOXFWDQWWRIHGHUDOL]HjPDWWHUVWUDGLWLRQDOO\ IXQFWLRQ WHVW WKH VWDWH FRPSXOVLRQ WHVW DQG WKH FRYHUHGE\VWDWHFRPPRQODZl3DWWHUVRQY0F/HDQ&UHGLW V\PELRWLFUHODWLRQVKLSRUQH[XVWHVW6HH:RORWVN\Y+XKQ 8QLRQ86LQWHUQDOTXRWDWLRQRPLWWHG )GWK&LU,QKHUEULHIRQDSSHDO 7KHFODXVHDWLVVXHKRZHYHUPD\RQO\EHLQYRNHGZKHQRQH &KDSPDQDUJXHVWKDWVXPPDU\MXGJPHQWVKRXOGKDYHEHHQ SDUW\GHQLHVDQRWKHUWKHmIXOODQGHTXDOEHQHILWRIDOOODZVDQG GHQLHG EHFDXVH WKHUH ZDV D JHQXLQH LVVXH RI PDWHULDO IDFW SURFHHGLQJV IRU WKH VHFXULW\ RI SHUVRQV DQG SURSHUW\ DV LV UHJDUGLQJ ZKHWKHU WKHUH ZDV VWDWH DFWLRQ XQGHU HLWKHU WKH HQMR\HGE\ZKLWHFLWL]HQVl86&DHPSKDVLV SXEOLFIXQFWLRQWHVWRUWKHQH[XVWHVW DGGHG7KHmVHFXULW\RISHUVRQVDQGSURSHUW\l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mIXOO DQG HTXDO EHQHILWl FODLPV GRPDLQVHHsDFNVRQY0HWURSROLWDQ(GLVRQ&R86 WR JR IRUZDUG ZLWKRXW VWDWH DFWLRQ KDYH LQYROYHG VHULRXV WKUHDWV WR D DQGRSHUDWLQJDFRPSDQ\RZQHGWRZQVHH0DUVK SHUVRQjV VHFXULW\ LQ WKH IRUP RI SK\VLFDO YLROHQFH 6HH HJ &DUH\ Y Y $ODEDPD 86 IDOO XQGHU WKLV 5XGHVHDO ) 6XSS Q 1' *D QRWLQJ WKDW FRXUW FDWHJRU\RIVWDWHDFWLRQ&RXUWVKDYHFRQVLVWHQWO\KHOGWKDW KDG DOORZHG mIXOO DQG HTXDO EHQHILWl FODLP DJDLQVW SULYDWH DFWRU LQYROYHG LQ .X .OX[ .ODQ LQFLGHQW EHFDXVH mSURYLGHV D FDXVH RI DFWLRQ DJDLQVW SULYDWH LQGLYLGXDOV IRU UDFLDOO\PRWLYDWHG LQWHQWLRQDOO\LQIOLFWHG LQMXU\ DQG GRHV QRW UHTXLUH VWDWH DFWLRQ LQ WKH GHSULYDWLRQ RI ULJKWVl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jV TXRWLGLDQ SUHPLVH EXW , UHMHFW LWV IXQFWLRQV PD\ HQWDLO WKH LQYHVWLJDWLRQ RI D FULPH GRHV QRW FRQFOXVLRQDVORJLFDOO\IODZHG$OWKRXJKWKHVWDWHGRHVPDNH WUDQVIRUPWKHDFWLRQVRIDSULYDWHVHFXULW\RIILFHULQWRVWDWH WKHODZRQHSULYDWHDFWRUPD\GHSULYHDQRWKHURIWKHIXOODQG DFWLRQ6HH:DGHY%\OHV)GWK&LU HTXDOEHQHILWRIWKRVHODZVMXVWDVUHDGLO\DVDVWDWHDFWRUDV *DOODJKHU Y 1HLO L@PSOLFLWLQWKHFRQFHSWRIµIXOO DQGHTXDOEHQHILWRIDOOODZVDQGSURFHHGLQJVIRUWKHVHFXULW\ 7KHLQTXLU\LVIDFWVSHFLILFDQGWKHSUHVHQFHRIVWDWHDFWLRQ RISHUVRQVDQGSURSHUW\jLVVWDWHDFWLRQl6XSUDDW,EHOLHYH LV GHWHUPLQHG RQ D FDVH E\ FDVH EDVLV 6HH %XUWRQ Y WKH PDMRULW\jV DQDO\VLV LV LQKHUHQWO\ IODZHG )LUVW WKH :LOPLQJWRQ 3DUNLQJ $XWK 86 )DFWRUV PDMRULW\GRHVQRWLQWHUSUHWWKHSODLQODQJXDJHRIWKHVWDWXWH WHQGLQJWRVKRZVWDWHDFWLRQPXVWEHH[DPLQHGLQGLYLGXDOO\ DVLWVKRXOGLQVWHDGWKHPDMRULW\DGPLWWHGO\LPSXWHVPHDQLQJ DQGLQWKHDJJUHJDWH6LPHVFX)GDW$SSO\LQJWKH WR WKH ODQJXDJH ZKHQ LW ORRNV WR ZKDW LV mLPSOLFLWl LQ WKH VWDWHDFWLRQGRFWULQHKRZHYHULVmVOLSSHU\DQGWURXEOHVRPHl SKUDVH mIXOO DQG HTXDO EHQHILW RI DOO ODZVl 7KH PDMRULW\ ,QWHUQDWLRQDO 6RFj\ IRU .ULVKQD &RQVFLRXVQHVV ,QF Y $LU VWDWHVWKDWmEHFDXVHWKHVWDWHLVWKHVROHVRXUFHRIWKHODZLW &DQDGD )G G &LU ,W KDV EHHQ LVRQO\WKHVWDWHWKDWFDQGHQ\WKHIXOODQGHTXDOEHQHILWRIWKH UHIHUUHGWRDVWKHmSDUDJRQRIXQFODULW\l*DOODJKHU)G ODZl6XSUDDW%HFDXVHWKHPDMRULW\LQVLVWVRQDVVLJQLQJ DW7KLVLVSDUWLFXODUO\WUXHLQWKHDUHDRIRIIGXW\SROLFH LWV RZQ PHDQLQJ WR WKH VWDWXWHjV ODQJXDJH WKH PDMRULW\ LV RIILFHUVDFWLQJDVVHFXULW\JXDUGV FRPSHOOHG WR VHJUHJDWH DZNZDUGO\ FHUWDLQ SKUDVHV LQ VXEVHFWLRQ D IURP WKH DSSOLFDWLRQ RI WKH ODQJXDJH LQ 7KHDFWVRIDQRQGXW\SROLFHRIILFHUDUHDFWVGRQHmXQGHU VXEVHFWLRQF7KXVRQWKHPDMRULW\jVUHDGLQJRQO\RQHRI FRORU RI ODZl ZKHWKHU GRQH LQ WKH SURSHU SHUIRUPDQFH RI WKHHQXPHUDWHGULJKWVLQVXEVHFWLRQDWKHULJKWWRPDNHDQG RIILFLDO GXWLHV RU ZKHWKHU GRQH RXWVLGH RI WKH RIILFHUjV HQIRUFH FRQWUDFWV PD\ EH YLRODWHG E\ D SULYDWH DFW RI DXWKRULW\ m$FWV RI >SROLFH@ RIILFHUV ZKR XQGHUWDNH WR GLVFULPLQDWLRQZKLOHWKHRWKHUHQXPHUDWHGULJKWVPD\QRW, SHUIRUPWKHLURIILFLDOGXWLHVDUHLQFOXGHGZKHWKHUWKH\KHZWR GLVFHUQQREDVLVLQWKHVWDWXWHjVODQJXDJHIRUVXFKDVWUDLQHG WKHOLQHRIWKHLUDXWKRULW\RURYHUVWHSLWl6FUHZVY8QLWHG XQQDWXUDO UHDGLQJ RI WKH VWDWXWH &I )UDQFHVFKL Y +\DWW 6WDWHV 86 )XUWKHU FRXUWV KDYH &RUS ) 6XSS ' 35 m:H ZLOO QRW FRQVLVWHQWO\KHOGWKDWDQRIIGXW\SROLFHRIILFHUZKRZRUNVDV DGKHUHWRWKHGXELRXVDQGLOORJLFDOSRVLWLRQWKDWWKHILUVWKDOI D VHFXULW\ JXDUG HQJDJHV LQ VWDWH DFWLRQ ZKHQ KH VHHNV WR RIGRHVQRWKDYHDVWDWHDFWLRQUHTXLUHPHQWZKLOHWKH SHUIRUPRIILFLDOSROLFHGXWLHVDQGSUHVHQWVKLPVHOIDVDSROLFH VHFRQGGRHVl,QGHHG,EHOLHYHWKDWKDG&RQJUHVVLQWHQGHG RIILFHUYLDDVWDWHPHQWLGHQWLI\LQJKLPVHOIDXQLIRUPRUD WR FUDPS WKH PHDQLQJ RI WKH ZRUG mULJKWVl LW HDVLO\ FRXOG EDGJH)RUH[DPSOHLQ$EUDKDPY5DVR)GG KDYH GRQH VR ZKHQ LW DPHQGHG WKH VWDWXWH DQG DGGHG &LUWKHFRXUWIRXQGVWDWHDFWLRQLQWKHFDVHRIDQRII VXEVHFWLRQF$VQRWHGDERYHKRZHYHU&RQJUHVVLQFOXGHG GXW\RIILFHUZKRZRUNHGDVDVHFXULW\JXDUGLQDVKRSSLQJ QRVXFKOLPLWLQJODQJXDJHLQWKHVWDWXWH7KHPDMRULW\FODLPV PDOO7KHFRXUWH[SODLQHGWKDWVKHDFWHGXQGHUFRORURIODZ WKDW &KDSPDQj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jV DVVHUWLRQ WKDW WKH IXOO DQG HTXDO EHQHILW DFWHGXQGHUFRORURIODZ%HQVFKRWHUY%URZQ1R FODXVH UHTXLUHV VWDWH DFWLRQ EHFDXVH m>R@QO\ WKH VWDWH FDQ s:/86'LVW/H[LV'.DQsXQH SUHVFULEHODZVDQG>WKHUHIRUH@RQO\WKHVWDWHFDQGHSULYHDQ VHFXULW\JXDUGVZKRLGHQWLILHGWKHPVHOYHVDVSROLFHDQGWROG LQGLYLGXDORIWKHEHQHILWRIWKRVHODZVl6XSUDDW,DFFHSW SODLQWLIIKHFRXOGEHDUUHVWHGIRUXQVDIHGULYLQJZHUHQRWVWDWH &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ DFWRUV EHFDXVH WKH\ GLG QRW WDNH SROLFH DFWLRQ E\ DUUHVWLQJ HQXPHUDWHG ULJKWV LQ VXEVHFWLRQ D 7KH mIXOO DQG HTXDO SODLQWLIILQVWHDGWKH\FDOOHGWKHLUSULYDWHHPSOR\HU+HUUHUD EHQHILWlFODXVHLVRQHRIWKRVHULJKWV Y&KLVR[&RUS1R&86'LVW/H[LV 1',OO2FWZKHQRIIGXW\RXWRIXQLIRUPSROLFH RIILFHUV HPSOR\HG DV VWDGLXP VHFXULW\ JXDUGV GHWDLQHG VXVSHFWHG WLFNHW VFDOSHU LQ VWDGLXP RIILFH WKH\ GLG QRW DFW XQGHU FRORU RI ODZ EHFDXVH WKH\ GLG QRW WDNH DQ\ DFWLRQ ,Q KLV FRQFXUULQJ RSLQLRQ sXGJH 6XKUKHLQULFK VWDWHV WKDW P\ UHODWHGWRWKHLUGXWLHVDVSROLFH(ZLQJY%XGJHW5HQW$&DU DQDO\VLV RI PXVW EH LQFRUUHFW EHFDXVH m>Q@R RQH FDQ VHULRXVO\ 1R&86'LVW/H[LV1',OO6HSW DUJXH WKDW DQ LQGLYLGXDO FDQ VXEMHFW DQRWKHU LQGLYLGXDO WR XQHTXDO SXQLVKPHQW RU WD[HVl DQG WKDW WKHUHIRUH WKH mOLNH SXQLVKPHQWl FODXVH PXVW QR VWDWH DFWLRQ ZKHUH RIIGXW\ RXW RI XQLIRUP UHTXLUH VWDWH DFWLRQ 6XSUD DW +H DUJXHV WKDW m>W@KH RQO\ ZD\ WKH SROLFHZRPDQLGHQWLILHGKHUVHOIDVRIIGXW\RIILFHUDQGFDOOHG GLVVHQWjV DUJXPHQW ZRUNV LV LI RQH VWULSV WKH ODQJXDJH RI WKH VHFRQG DQG SROLFHWRPDNHDUUHVW WKLUG VXEFODXVHV RI VXEVHFWLRQ D RI WKHLU SODLQ PHDQLQJl 6XSUD DW sXGJH 6XKUKHLQULFKjV DQDO\VLV KDV VXSHUILFLDO DSSHDO EHFDXVH RXU SUHVHQW 7KH 6L[WK &LUFXLW KDV JRQH HYHQ IXUWKHU E\ KROGLQJ WKDW GD\ XQGHUVWDQGLQJ RI WKH WHUPV mSXQLVKPHQWl mSDLQVl mSHQDOWLHVl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n WKH SXQLVKPHQW SDLQV RIILFHU LV RQ RU RII GXW\ RU LQ RU RXW RI XQLIRUP GRHV QRW RU SHQDOWLHV n ZKLFK ZHUH FRPPRQSODFH LQ WKH 6RXWK 7KH &RQJUHVV WKDW GHWHUPLQHZKHWKHUKLVDFWLRQVDUHVWDWHDFWLRQV&RXUWVPXVW GHEDWHG WKH $FW KDG EHIRUH LW UHSRUWV WKDW mGHVFULEHG D SDWWHUQ RI SULYDWH YLROHQFH µE\ PHQ ZKR DQQRXQFH WKHLU GHWHUPLQDWLRQ WR WDNH WKH H[DPLQHWKHQDWXUHRIWKHDFWSHUIRUPHG6HHLGDW,Q ODZ LQWR WKHLU RZQ KDQGV j 7KLV YLROHQFH ZDV QRW UDQGRP EDVHG RQ 6WHQJHODQRIIGXW\SROLFHRIILFHULQWHUYHQHGLQDEDUURRP PHUH UDFLDO DQLPRVLW\ EXW IUHTXHQWO\ ZDV DLPHG DW SUHYHQWLQJ WKH GLVSXWH7KHRIILFHUPDFHGVKRWDQGNLOOHGWZRLQGLYLGXDOV )UHHGPHQ IURP H[HUFLVLQJ WKHLU QHZ ULJKWV l %DUU\ 6XOOLYDQ DQGSDUDO\]HGDWKLUGGXULQJWKHDOWHUFDWLRQ7KHLQGLYLGXDOV +LVWRULFDO 5HFRQVWUXFWLRQ 5HFRQVWUXFWLRQ +LVWRU\ DQG WKH 3URSHU 6FRSH EURXJKWDFLYLOULJKWVVXLWDQGWKHRIILFHUGHIHQGHGFODLPLQJ RI 6HFWLRQ < $/( /s IRRWQRWH RPLWWHG ,QGHHG WKDWKHZDVQRWOLDEOHXQGHUEHFDXVHKLVDFWLRQVZHUH WKH $FW mZDV SURSRVHG DQG ILQDOO\ DGRSWHG DJDLQVW >D@ EDFNJURXQG RI UHVWULFWLYH ODZV SULYDWH GLVFULPLQDWLRQ DQG YLROHQFHl QRWWDNHQXQGHUFRORURIODZ7KHRIILFHUFODLPHGWKDWDWWKH %DUU\ / 5HIVLQ 7KH /RVW &ODXVHV RI 6HFWLRQ $ 6RXUFH RI *UHDWHU WLPHKHZDVHQJDJHGLQSULYDWHVRFLDODFWLYLW\DQGZDVDFWLQJ 3URWHFWLRQ $IWHU 3DWWHUVRQ Y 0F/HDQ &UHGLW 8QLRQ 8 3 / 5 ' DVDSULYDWHFLWL]HQ$OWKRXJKWKHRIILFHUZDVQRWRQGXW\DQG QRWLQXQLIRUPDQGKHGLGQRWLGHQWLI\KLPVHOIDVDQRIILFHUDW $V P\ GLVFXVVLRQ LQIUD RI WKH KLVWRU\ VXUURXQGLQJ WKH SDVVDJH RI WKH $FW UHYHDOV WKH VWDWXWHjV RULJLQDO SKUDVLQJ ZKLFK LQFOXGHG WKH DQ\WLPHGXULQJWKHDOWHUFDWLRQWKHFRXUWKHOGWKDWKHZDVLQ ODQJXDJH mSXQLVKPHQW SDLQV DQG SHQDOWLHVl ZDV GLUHFWHG WR SULYDWH IDFWDVWDWHDFWRU+HXVHGPDFHDQGDSLVWROWKDWWKHSROLFH FRQGXFW :KLOH ODWHU ODQJXDJH LQFOXGLQJ WKH SKUDVH mWD[HV OLFHQVHV DQG GHSDUWPHQW UHTXLUHG KLP WR FDUU\ DW DOO WLPHV DQG PRVW H[DFWLRQVl ZKLFK ZDV DGGHG LQ PD\ LQGHHG UHIHU SULPDULO\ WR VWDWH LPSRUWDQWO\SROLFHGHSDUWPHQWSROLF\UHTXLUHGKLPWRWDNH DFWLRQ WKLV ZRXOG RQO\ PHDQ WKDW WKH mOLNH SXQLVKPHQWl FODXVH PD\ EH DFWLRQWRLQWHUYHQHLQDQ\FULPLQDODFWLYLW\HYHQZKHQKHZDV LQYRNHG E\ HLWKHU SULYDWH RU VWDWH DFWLRQ GHSHQGLQJ RQ ZKLFK H[SOLFLW RIIGXW\7KHRIILFHUDFWHGSXUVXDQWWRKLVRIILFLDOGXW\ JXDUDQWHH RI HTXDO WUHDWPHQW LV LPSOLFDWHG ODQJXDJH ZDV DGGHG WR ,QGHHG , EHOLHYH WKH H[SDQG WKH SURWHFWLRQV RI WKH mOLNH SXQLVKPHQWl FODXVH QRW WR PLQLPL]H WKHP ,Q DQ\ FDVH , GR QRW EHOLHYH WKDW SRVVLEOH ,QFRQWUDVWZKHQDSROLFHRIILFHUDFWVDVDSULYDWHFLWL]HQ DPELJXLW\ VXUURXQGLQJ WKH mOLNH SXQLVKPHQWl FODXVH GHWUDFWV IURP P\ QRW SXUVXDQW WR SROLFH GHSDUWPHQW SROLF\ DQG ZLWKRXW DUJXPHQW WKDW WKH mIXOO DQG HTXDO EHQHILWl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mIXUWKHUHGl WKH FRQVWLWXWLRQDO YLRODWLRQ FRXUWV JHQHUDOO\ ,EHOLHYHWKDWWKHODQJXDJHRIWKLVVWDWXWHLVSHUIHFWO\FOHDU UHTXLUH DGGLWLRQDO LQGLFLD RI VWDWH DXWKRULW\ EHIRUH ILQGLQJ DFFRUGLQJWRVXEVHFWLRQFWKHULJKWVSURWHFWHGE\VXEVHFWLRQ VWDWHDFWLRQ6HHLGDW DLHWKHULJKWVmWRPDNHDQGHQIRUFHFRQWUDFWVWRVXHEH SDUWLHVJLYHHYLGHQFHDQGWRWKHIXOODQGHTXDOEHQHILWRIDOO 6LPLODUO\LQ5RELQVRQY'DYLV)GWK ODZV DQG SURFHHGLQJV IRU WKH VHFXULW\ RI SHUVRQV DQG &LUWKHFRXUWKHOGWKDWWRZQSROLFHHPSOR\HGDVSDUW SURSHUW\lDUHSURWHFWHGDJDLQVWLPSDLUPHQWE\SULYDWHDFWVRI WLPHFROOHJHVHFXULW\RIILFHUVGLGQRWDFWXQGHUFRORURIODZLQ GLVFULPLQDWLRQ6XEVHFWLRQFGRHVQRWVWDWHWKDWVRPHULJKWV WKHFRXUVHRITXHVWLRQLQJVWXGHQWVGXULQJDFROOHJHLQLWLDWHG LQ WKH VHFWLRQ DUH SURWHFWHG EXW RWKHUV DUH QRW WKHUH LV QR GUXJ LQYHVWLJDWLRQ $OWKRXJK WKH RIILFHUV ZRUH WKHLU WRZQ PRGLILHUOLPLWLQJWKHZRUGmULJKWVlWRRQO\FHUWDLQSKUDVHVLQ SROLFHXQLIRUPVDQGVLGHDUPVWKH\GLGQRWSHUIRUPDQ\GXW\ VXEVHFWLRQD2QP\UHDGLQJRIWKHOLWHUDOODQJXDJHRIWKH LPSRVHGRQWKHPE\WKHVWDWHDQGWKH\GLGQRWSXUSRUWWRDFW WZRVHFWLRQVDVZULWWHQDQGWKHQSXUSRVHIXOO\DPHQGHGE\ DV WRZQ SROLFH GXULQJ WKH LQYHVWLJDWLRQ 7KH FROOHJH KDG &RQJUHVV WKH mULJKWV SURWHFWHG E\ WKLV VHFWLRQl PXVW LQVWUXFWHG WKHP QRW WR PDNH DQ\ DUUHVWV GXULQJ WKH DFFRUGLQJ WR WKDW SKUDVHjV QDWXUDO PHDQLQJ PHDQ DOO LQYHVWLJDWLRQ sXVW DV DQ RIIGXW\ SROLFH RIILFHU ZKR DFWV ZLWK DFWXDO DXWKRULW\VHH6WHQJHOVXSUDLVGHHPHGWREHDVWDWHDFWRUD SULYDWHSDUW\ZKRSXUSRUWVWRH[HUFLVHRIILFLDODXWKRULW\FDQEH D VWDWH DFWRU m,W LV >DOVR@ FOHDU WKDW XQGHU µFRORUj RI ODZ PHDQVXQGHUµSUHWHQVHjRIODZl6FUHZV86DW,Q *ULIIHQ Y 0DU\ODQG 86 D SULYDWH SDUN HPSOR\HGDVHFXULW\JXDUGZKRZDV GHSXWL]HGDVDFRXQW\ VKHULII$OWKRXJKWKHJXDUGZDVDQDJHQWRIWKHSULYDWHSDUN RZQHUDQGDFWHGDVDSULYDWHVHFXULW\JXDUGWKH&RXUWKHOG WKDW KH DFWHG XQGHU FRORU RI ODZ :KHQ KH RUGHUHG WKH SODLQWLIIWROHDYHWKHSDUNHVFRUWHGKLPRXWDQGDUUHVWHGKLP WKHJXDUGZRUHDFRXQW\VKHULIIj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sXGJHGLVVHQWLQJ, IRXQG VWDWH DFWLRQ ZKHUH WKHUH ZDV D SUHDUUDQJHG SODQ UHVSHFWIXOO\GLVVHQWIURPERWKWKHPDMRULW\jVGHWHUPLQDWLRQ EHWZHHQ WKH SROLFH DQG WKH PHUFKDQW 7KXV LQ 6PLWK Y WKDWWKHmIXOODQGHTXDOEHQHILWlFODXVHLQ86& %URRNVKLUH%URV)GWK&LUWKHFRXUWKHOG GRHV QRW DSSO\ WR SULYDWH FRQGXFW DQG LWV FRQFOXVLRQ ZLWK WKDW WKHUH ZDV VWDWH DFWLRQ EHFDXVH WKH SROLFH URXWLQHO\ UHVSHFWWRWKHFODLPWKDWWKHUHLVQRJHQXLQHLVVXHRI DUUHVWHGVXVSHFWHGVKRSOLIWHUVVROHO\EDVHGRQWKHLQIRUPDWLRQ PDWHULDOIDFWDVWRZKHWKHUWKH'LOODUGVHFXULW\JXDUGjVDFWLRQV SURYLGHG E\ WKH PHUFKDQW ZLWKRXW DQ\ LQGHSHQGHQW ZHUHIDLUO\DWWULEXWDEOHWRWKHVWDWH LQYHVWLJDWLRQ &I &UX] Y 'RQQHOO\ )G G &LU ZKHUH QR SUHH[LVWLQJ SODQ EHWZHHQ PHUFKDQW DQG ,m)8//$1'(48$/%(1(),7l&/$86( SROLFH DQG SROLFH FRQGXFWHG LQGHSHQGHQW LQYHVWLJDWLRQ PHUFKDQWjV GHWHQWLRQ RI VXVSHFWHG VKRSOLIWHU ZDV QRW VWDWH ,EHJLQDV,PXVWE\H[DPLQLQJWKHODQJXDJHRIWKHVWDWXWH DFWLRQ:KLWH)GDWVDPH:KHUHDVWDWHVWDWXWH +XGVRQY5HQR)GWK&LUm$ DXWKRUL]HVDPHUFKDQWWRGHWDLQDVXVSHFWHGVKRSOLIWHUIRUWKH IDPLOLDU FDQRQ RI VWDWXWRU\ FRQVWUXFWLRQ LV WKDW WKH VWDUWLQJ SXUSRVHRIFDOOLQJWKHSROLFHDPHUFKDQWZKRDFWVSXUVXDQWWR SRLQWIRULQWHUSUHWLQJDVWDWXWHLVWKHODQJXDJHRIWKHVWDWXWH WKHVWDWXWHLVHQJDJHGLQSULYDWHDFWLRQVRORQJDVWKHSROLFH LWVHOIl6HFWLRQVWDWHV PDNHWKHDUUHVWEDVHGRQWKHLURZQMXGJPHQWDQGQRWEDVHGRQ D SUHH[LVWLQJ SODQ RU EDVHG VROHO\ RQ WKH PHUFKDQWjV D6WDWHPHQWRIHTXDOULJKWV MXGJPHQW 6HH /HZLV ) 6XSS DW $QGHUVRQ Y 5DQGDOO3DUN0DOO&RUS)6XSS1' $OOSHUVRQVZLWKLQWKHMXULVGLFWLRQRIWKH8QLWHG6WDWHV 2KLRm>6@WDWHDFWLRQFDQQRWEHIRXQGZKHUHWKH VKDOOKDYHWKHVDPHULJKWLQHYHU\6WDWHDQG7HUULWRU\WR >VWDWH@ VWDWXWHV GR QRW FRPSHO GHWHQWLRQ RI WUHVSDVVHUV RU PDNH DQG HQIRUFH FRQWUDFWV WR VXH EH SDUWLHV JLYH VKRSOLIWHUV EXW PHUHO\ DXWKRUL]H DQG DFTXLHVFH LQ FHUWDLQ HYLGHQFHDQGWRWKHIXOODQGHTXDOEHQHILWRIDOOODZVDQG SURFHGXUHVIRUGHWHQWLRQLIDSULYDWHSDUW\HOHFWVWRGRVRl,G SURFHHGLQJVIRUWKHVHFXULW\RISHUVRQVDQGSURSHUW\DVLV DW HQMR\HG E\ ZKLWH FLWL]HQV DQG VKDOO EH VXEMHFW WR OLNH SXQLVKPHQW SDLQV SHQDOWLHV WD[HV OLFHQVHV DQG &RXUWV KDYH DOVR ORRNHG WR RWKHU IDFWRUV WR GHWHUPLQH H[DFWLRQVRIHYHU\NLQGDQGWRQRRWKHU ZKHWKHU WKHUH ZDV VWDWH DFWLRQ VXFK DV JRYHUQPHQW UHJXODWLRQWKHH[LVWHQFHRIDJRYHUQPHQWFRQWUDFWDQGGXDO HPSOR\PHQW(DFKRIWKHVHVWDQGLQJDORQHKDVEHHQGHHPHG LQVXIILFLHQWWRFRQVWLWXWHVWDWHDFWLRQ6HHsDFNVRQ86 DWH[WHQVLYHJRYHUQPHQWDOUHJXODWLRQVWDQGLQJDORQH LVQRWVXIILFLHQWWRHVWDEOLVKVWDWHDFWLRQ5HQGHOO%DNHUY .RKQ86PHUHIDFWWKDWSULYDWH HQWLW\ FRQWUDFWHG ZLWK JRYHUQPHQW GRHV QRW FRQYHUW WKH &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ ,GDW7KH5XQ\RQ&RXUWUHOLHGRQLWVHDUOLHUGHFLVLRQLQ SULYDWHDFWLRQVLQWRVWDWHDFWLRQV:RORWVN\)GDW sRQHVWRKROGWKDWWKHmPDNHDQGHQIRUFHFRQWUDFWVlFODXVHRI m$FWVRISULYDWHFRQWUDFWRUVGRQRWEHFRPHWKHDFWVRIWKH DSSOLHVWRSULYDWHDVZHOODVSXEOLFFRQWUDFWV,GDW JRYHUQPHQW E\ UHDVRQ RI WKHLU VLJQLILFDQW RU HYHQ WRWDO 7KH5XQ\RQFRXUWHPSKDVL]HGWKHFRPPRQKHULWDJHRI HQJDJHPHQWLQSHUIRUPLQJSXEOLFFRQWUDFWVl6LPHVFX DQG,G$JDLQKRZHYHUWKHLVVXHEHIRUHWKH )GDWIDFWWKDWLQGLYLGXDOLVGXDOHPSOR\HHRISULYDWH FRXUWWKHPDNLQJDQGHQIRUFLQJRIDFRQWUDFWOLNHWKHVDOHRU VHFWRU DQG RI JRYHUQPHQW IRU SXUSRVHV RI ZRUNHUVj OHDVHRISURSHUW\LVWKHNLQGRIXQGHUWDNLQJWKDWSULYDWHDV FRPSHQVDWLRQLVQRWUHOHYDQW ZHOO DV VWDWH DFWRUV DUH FDSDEOH RI SHUIRUPLQJ 7KXV WKH 5XQ\RQ &RXUWjV UHPDUNV VKRXOG QRW EH VWUHWFKHG WR ILW D +HUHWKH'LOODUGVHFXULW\JXDUGZKRVWRSSHGDQGVHDUFKHG GLVVLPLODUFDWHJRU\RIFRQGXFW &KDSPDQ ZDV DQ RIIGXW\ VKHULIIjV GHSXW\ ZHDULQJ KLV RIILFLDOVKHULIIjVGHSDUWPHQWXQLIRUPEDGJHDQGVLGHDUP+H )LQDOO\ WKH GLVVHQW XUJHV D EURDG LQWHUSUHWDWLRQ EHFDXVH EULHIO\VWRSSHGDQGVHDUFKHG&KDSPDQEXWGLGQRWDUUHVWRU LVSDUWRIDUHPHGLDOVWDWXWH+RZHYHUDVZHKDYH WKUHDWHQ WR DUUHVW KHU QRU GLG KH FRQWDFW WKH VKHULIIjV VWDWHG LQ WKH SDVW WKH PHUH IDFW WKDW D VWDWXWH KDV D EURDG GHSDUWPHQW8QGHUWKHFLUFXPVWDQFHVRIWKLVFDVHWKHRII UHPHGLDOSXUSRVHLVQRWDFDUWHEODQFKHIRUDFRXUWWRH[SDQG GXW\GHSXW\GLGQRWDFWSXUVXDQWWRKLVRIILFLDOGXWLHVDQGWKXV WKHVWDWXWHWRLQFOXGHSURWHFWLRQVQRWGHVFULEHGLQWKHVWDWXWH GLGQRWHQJDJHLQVWDWHDFWLRQ &I1L[RQY.HQW&RXQW\)GWK&LU HQEDQFKROGLQJWKDWWKHDPHQGPHQWVWRWKH9RWLQJ5LJKWV &KDSPDQDUJXHVWKDWWKHVHFXULW\JXDUGZDVDVWDWHDFWRU $FW GLG mQRW UHIOHFW D EURDG DQG ERXQGOHVV µWUHQGj WR EHFDXVHDVDQRIIGXW\VKHULIIjVGHSXW\KHKDGWKHSRZHUWR H[SDQGWKH$FWWRSURWHFWFODVVHVQRWGHVFULEHGLQWKH$FWRU DUUHVWDQGWRWUDQVSRUWVXVSHFWVWRWKHSROLFHVWDWLRQKHFRXOG WRSURWHFWFRPELQDWLRQVRIFODVVHVQRWGHVFULEHGLQWKH$FWl VLJQDQDUUHVWZDUUDQWZLWKKLVUDQNDQGEDGJHQXPEHUDQGKH FRXOGUXQDQRXWVWDQGLQJZDUUDQWFKHFNRQGHWDLQHGVXVSHFWV ,QVKRUWWKHGLVVHQWjVLQWHUSUHWDWLRQPXVWEHUHMHFWHGDVD DQGDUUHVWRQDQ\RXWVWDQGLQJZDUUDQW :KLOHWKHRIIGXW\ IDFLOH DWWHPSW DW DQDO\]LQJ D FRPSOH[ DQG PXOWLIDFHWHG RIILFHUVHFXULW\JXDUGUHWDLQHGWKHSRZHUWRDFWDVDVKHULIIjV VWDWXWH WKDW VHHNV WR HOLPLQDWH YDULRXV IRUPV RI SULYDWH GHSXW\LQWKLVFDVHKHGLGQRWH[HUFLVHWKDWSRZHU+HGLGQRW GLVFULPLQDWLRQ DQG YDULRXV IRUPV RI GLVFULPLQDWRU\ VWDWH DUUHVWRUWKUHDWHQWRDUUHVW&KDSPDQQRUGLGKHFRQWDFWWKH DFWLRQ VKHULIIjVGHSDUWPHQW7KHQDWXUHRIKLVDFWLRQVZHUHQRWVWDWH DFWLRQV &KDSPDQDOVRDUJXHVWKDWWKHUHZDVVWDWHDFWLRQEHFDXVHWKH VKHULIIjVGHSDUWPHQWUHWDLQVFRQWURORYHUWKHGHSXWLHVZKLOH WKH\ZRUNDW'LOODUG7KHVKHULIIjVGHSDUWPHQWUHTXLUHVRII GXW\RIILFHUVWRIROORZGHSDUWPHQWUXOHVDQGSURFHGXUHVWKH GHSDUWPHQWKDVWRDSSURYHRIDGHSXW\ZRUNLQJDW'LOODUGDQG WKH GHSDUWPHQW FDQ WHUPLQDWH DQ RIILFHUjV RIIGXW\ ZRUN DW 'LOODUG$OVRWKHGHSDUWPHQWSRVWVMRERSHQLQJVDW'LOODUG ,QDGGLWLRQXQWLO$SULORIWKHUHZDVDQDQQXDOZULWWHQ LQGHPQLW\DQGKROGKDUPOHVVDJUHHPHQWEHWZHHQ'LOODUGDQG WKH VKHULII GHSDUWPHQW &KDSPDQjV DUJXPHQW ODFNV PHULW EHFDXVHQRQHRIWKHIRUHJRLQJIDFWVDPRXQWVWRHYLGHQFHRID &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ SUHDUUDQJHGSODQEHWZHHQWKHVKHULIIjVGHSDUWPHQWDQG'LOODUG $JDLQVWWKLVOHJDOODQGVFDSHWKH6XSUHPH&RXUWZDVDVNHG FRQFHUQLQJ WKH H[HFXWLRQ RU VFRSH RI WKH VHFXULW\ RIILFHUjV WRGHFLGHZKHWKHUUHDFKHGDFWVRISULYDWHSDUWLHVLQ GXWLHVQRUGRHVLWFRQVWLWXWHHYLGHQFHRIDVWDWHODZZKLFK WKH VHPLQDO FDVH RI sRQHV Y $OIUHG + 0D\HU &R VXSUD FRPSHOOHGWKHVHFXULW\JXDUGWRDFW6HH/HZLV)6XSS 7KHUHDSULYDWHUHDOHVWDWHGHYHORSHUUHIXVHGWRVHOORUOHDVH DW $QGHUVRQ ) 6XSS DW 0RUHRYHU DV ODQGRUKRXVLQJWR$IULFDQ$PHULFDQV7KHLVVXHLQWKHsRQHV H[SODLQHG DERYH WKH VHFXULW\ JXDUG LQ WKLV FDVH GLG QRW FDVHZDVIUDPHGDVZKHWKHUmSXUHO\SULYDWHGLVFULPLQDWLRQ SHUIRUPRUVHHNWRSHUIRUPKLVRIILFLDOGXWLHVDVDVKHULIIjV XQDLGHGE\DQ\DFWLRQRQWKHSDUWRIWKHJRYHUQPHQWZRXOG GHSXW\LQVWHDGKHDFWHGSXUVXDQWWRKLVGXWLHVDVDSULYDWH YLRODWHLILWVHIIHFWZHUHWRGHQ\DFLWL]HQWKHULJKWWR VHFXULW\ JXDUG $FFRUGLQJO\ WKH GLVWULFW FRXUWjV UXOLQJ UHQWRUEX\SURSHUW\VROHO\EHFDXVHRIKLVUDFHRUFRORUl,G JUDQWLQJ VXPPDU\ MXGJPHQW LQ IDYRU RI 'LOODUG DQG DWHPSKDVLVDGGHG GLVPLVVLQJWKHFODLPLVDIILUPHG 7KH UHVSRQGHQWV LQ sRQHV DUJXHG WKDW mWKH RQO\ HYLO ,9 &RQJUHVV VRXJKW WR HOLPLQDWH ZDV WKDW RI UDFLDOO\ GLVFULPLQDWRU\ODZVLQWKHIRUPHU&RQIHGHUDWH6WDWHV>LHWKH 7KHHTXDOEHQHILWFODXVHRI86&UHTXLUHVVWDWH %ODFN&RGHV@l,GDW+RZHYHUDPDMRULW\RIWKH&RXUW DFWLRQDVGRHV86&%HFDXVHWKHDFWLRQVRIWKH IRXQGWKDWWKH7KLUW\QLQWK&RQJUHVVLQWHQGHGWRVHFXUHWKH RIIGXW\VKHULIIjVGHSXW\'LOODUGHPSOR\HGDVDVHFXULW\JXDUG ULJKWWRSXUFKDVHDQGOHDVHSURSHUW\DJDLQVWLQWHUIHUHQFHIURP LQWKLVFDVHZHUHSULYDWHDFWLRQVWKHGLVWULFWFRXUWjVGLVPLVVDO DQ\VRXUFHZKDWHYHUmZKHWKHUJRYHUQPHQWDORUSULYDWHl RI&KDSPDQjVFODLPVDJDLQVW'LOODUGXQGHUDQG 86 DW 7KH &RXUW KHOG mWKDW EDUV DOO UDFLDO LV$)),50(' GLVFULPLQDWLRQSULYDWHDVZHOODVSXEOLFLQWKHVDOHRUUHQWDO RISURSHUW\DQGWKDWWKHVWDWXWHWKXVFRQVWUXHGLVDYDOLG H[HUFLVHRIWKHSRZHURI&RQJUHVVWRHQIRUFHWKH7KLUWHHQWK $PHQGPHQWl,GDW7KH&RXUWDOVRRYHUUXOHG+RGJHVj KROGLQJ WKDW WKH 7KLUWHHQWK $PHQGPHQW ZDV LQWHQGHG WR SURKLELWRQO\VODYHU\,GDWQ 7KXVWKHFHQWUDOLVVXHLQsRQHVZDVZKHWKHUFRXOG EH DSSOLHG WR SULYDWH GLVFULPLQDWLRQ DW DOO EHFDXVH WKH 6XSUHPH &RXUW KDG XS WR WKDW WLPH OLPLWHG FLYLO ULJKWV HQIRUFHPHQWWRHOLPLQDWLQJVODYHU\DQGWRGLVFULPLQDWRU\VWDWH DFWLRQ)XUWKHUWKHFRQGXFWDWLVVXHLQWKHVDOHRU OHDVLQJRISURSHUW\LVWKHW\SHRIEHKDYLRULQZKLFKERWKVWDWH DQGSULYDWHDFWRUV DUHFDSDEOHRIHQJDJLQJ,QGHHGDVWKH 6XSUHPH &RXUW REVHUYHG WKH ULJKW WR SXUFKDVH DQG OHDVH SURSHUW\mFDQEHLPSDLUHGDVHIIHFWLYHO\E\µWKRVHZKRSODFH SURSHUW\RQWKHPDUNHWjDVE\WKH6WDWHLWVHOIl,GDW ,Q5XQ\RQWKHSULQFLSDOLVVXHZDVmZKHWKHUDIHGHUDOODZ QDPHO\ 86& SURKLELWV SULYDWH VFKRROV IURP H[FOXGLQJTXDOLILHGFKLOGUHQVROHO\EHFDXVHWKH\DUH1HJURHVl &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ $PHQGPHQWDVFRQIHUULQJXSRQDOO$PHULFDQVQRWMXVWIRUPHU BBBBBBBBBBBBBBBBBBBBB VODYHVWKHVWDWXVDQGULJKWVRIFLWL]HQVKLS,QUH7XUQHU &DV&&'0G1RKROGLQJWKDWD &21&855(1&( EODFNFKLOGDSSUHQWLFHVKLSWRKHUIRUPHURZQHUDIWHUVODYHU\ BBBBBBBBBBBBBBBBBBBBB ZDVGHFODUHGLOOHJDOLQ0DU\ODQGYLRODWHGWKHIXOODQGHTXDO EHQHILWFODXVHRIWKH$FW8QLWHG6WDWHVY&UXLNVKDQN 68+5+(,15,&+ &LUFXLW sXGJH FRQFXUULQJ , IXOO\ &DV&&'/D1RDIIjG86 FRQFXU LQ WKH PDMRULW\jV UHDVRQLQJ , ZULWH VHSDUDWHO\ WR sXVWLFH%UDGOH\VWDWLQJLQGLFWXPWKDWWKH UHVSRQGWRWKHGLVVHQW $FWZDVDQH[DPSOHRI&RQJUHVVjVSRZHUWRmJLYHIXOOHIIHFWl WRWKH7KLUWHHQWK$PHQGPHQWjVmEHVWRZPHQWRIOLEHUW\lVHH 7KHGLVVHQWEHOLHYHVWKDWWKHODQJXDJHRILVSHUIHFWO\ JHQHUDOO\&RPPHQW6RQGUD+HPHU\FNHG&DVVDQGUD%XWWV FOHDU mDFFRUGLQJ WR VXEVHFWLRQ F WKH ULJKWV SURWHFWHG E\ HW DO 5HFRQVWUXFWLRQ 'HFRQVWUXFWLRQ DQG /HJLVODWLYH VXEVHFWLRQDLHWKHULJKWVµWRPDNHDQGHQIRUFHFRQWUDFWV 5HVSRQVH 7KH 6XSUHPH &RXUW 7HUP DQG WKH &LYLO WR VXH EH SDUWLHV JLYH HYLGHQFH DQG WR WKH IXOO DQG HTXDO 5LJKWV$FWRI+DUY&5&//5HY EHQHILWRIDOOODZVDQGSURFHHGLQJVIRUWKHVHFXULW\RISHUVRQV 7KH/RVW&DXVHVRI6HFWLRQ83D/5HY DQG SURSHUW\j DUH SURWHFWHG DJDLQVW LPSDLUPHQW E\ SULYDWH DW WKLV SHUFHSWLRQ IDGHG DV WKH 6XSUHPH &RXUW DFWVRIGLVFULPLQDWLRQl$QWHDW7KHGLVVHQWIHHOVWKDW OLPLWHG &RQJUHVVjV DXWKRULW\ XQGHU WKH 7KLUWHHQWK DQG EHFDXVHWKHUHLVQRPRGLILHUOLPLWLQJWKHZRUGmULJKWVlWRRQO\ )RXUWHHQWK $PHQGPHQWV WR UHJXODWH SULYDWH EHKDYLRU 6HH FHUWDLQFODXVHVLQVXEVHFWLRQDWKHSKUDVHmULJKWVSURWHFWHG (UZLQ&KHPHULQVN\&RQVWLWXWLRQDO/DZDWGHG E\ WKLV VHFWLRQl PXVW PHDQ DOO HQXPHUDWHG ULJKWV LQ 5HFRQVWUXFWLRQ 'HFRQVWUXFWLRQ DQG /HJLVODWLYH VXEVHFWLRQD 5HVSRQVH+DUY&5&//5HYDW7KH/RVW &DXVHVRI6HFWLRQ83D/5HYDW ,QWKHODQGPDUN&LYLO5LJKWV&DVHV86WKH 7KH GLVVHQW DOVR DUJXHV WKDW mWKH OLPLWLQJ ODQJXDJH VXUURXQGLQJ 6XSUHPH&RXUWKHOGWKDWXQGHUWKH7KLUWHHQWK$PHQGPHQW WKH µIXOO DQG HTXDO EHQHILWj FODXVH VHUYHV WR FDELQ ERWK WKH QXPEHU DQG &RQJUHVVjVSRZHUZDVOLPLWHGWREDQQLQJVODYHU\DQGFRXOG QDWXUH RI FODLPV WKDW PD\ EH EURXJKW XQGHU WKLV FODXVHl $QWH DW RWKHU ,Q ZRUGV WKH GLVVHQW FODLPV WKDW LWV LQWHUSUHWDWLRQ RI ZRXOG QRW QRWEHXVHGWRHOLPLQDWHGLVFULPLQDWLRQ,G7KH&RXUWDOVR KDYH WKH mDEVXUG UHVXOW RI IHGHUDOL]LQJ WRUW ODZl EHFDXVH mWKH IXOO DQG KHOG WKDW WKH )RXUWHHQWK $PHQGPHQW RQO\ DSSOLHV WR HTXDO EHQHILW RI DOO ODZV DQG SURFHHGLQJVl LV OLPLWHG WR WKRVH mIRU WKH JRYHUQPHQWDFWLRQDQGFRXOGQRWEHDVRXUFHIRU&RQJUHVVWR VHFXULW\ RI SHUVRQV DQG SURSHUW\ DV LV HQMR\HG E\ ZKLWH FLWL]HQVl UHJXODWHSULYDWHEHKDYLRU,GVHHDOVR7KH6ODXJKWHU+RXVH 86& D HPSKDVLV DGGHG +RZHYHU RQH QHHG ORRN QR IXUWKHU WKDQ WKH RSHQLQJ SDJHV RI &DVHV86:DOOVWDWLQJWKDWWKHSXUSRVH 3URVVHU RQ 7RUWV WR XQGHUVWDQG WKDW WKH OLPLWLQJ SKUDVH mIRU WKH VHFXULW\ RIWKH7KLUWHHQWKDQG)RXUWHHQWK$PHQGPHQWVZDVVROHO\WR RI SHUVRQV DQG SURSHUW\l HQFRPSDVVHV WRUW ODZ SURWHFW IRUPHU VODYHV 7KLV YLHZ SHUVLVWHG IRU QHDUO\ D ,QFOXGHG XQGHU WKH KHDG RI WRUWV DUH FHQWXU\6HH&KHPHULQVN\VHHDOVR+RGJHVY8QLWHG PLVFHOODQHRXV FLYLO ZURQJV UDQJLQJ IURP VLPSOH GLUHFW 6WDWHV86KROGLQJWKDWGLGQRW LQWHUIHUHQFHV ZLWK WKH SHUVRQ VXFK DV DVVDXOW EDWWHU\ DXWKRUL]H D FDXVH RI DFWLRQ IRU FRQVSLUDF\ E\ ZKLWHV WR DQG IDOVH LPSULVRQPHQW RU ZLWK SURSHUW\ DV LQ WKH FDVH RI WUHVSDVV RU FRQYHUVLRQ XS WKURXJK YDULRXV IRUPV RI SUHYHQWEODFNVIURPZRUNLQJLQDVDZPLOOEHFDXVHmLWZDVQRW QHJOLJHQFH WR GLVWXUEDQFHV RI LQWDQJLEOH LQWHUHVWV VXFK WKHLQWHQWRIWKH>7KLUWHHQWK@$PHQGPHQWWRGHQRXQFHHYHU\ DV WKRVH LQ JRRG UHSXWDWLRQ RU FRPPHUFLDO RU VRFLDO DFWGRQHWRDQLQGLYLGXDOWKDWZDVZURQJLIGRQHWRDIUHHPDQ DGYDQWDJH >,@W LV QRW HDV\ WR GLVFRYHU DQ\ JHQHUDO DQG\HWMXVWLILHGLQDFRQGLWLRQRIVODYHU\l SULQFLSOH XSRQ ZKLFK WKH\ PD\ DOO EH EDVHG XQOHVV LW LV WKH REYLRXV RQH WKDW LQMXULHV DUH WR EH FRPSHQVDWHG &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ +RZHYHUWRUHDGWKHVWDWXWHWKLVZD\UHTXLUHVRQHWRQRW UHVSHFWWRWKHULJKWVHQXPHUDWHGWKHUHLQlsRQHVY$OIUHG UHDG WKH SKUDVH mIXOO DQG HTXDO EHQHILW RI DOO ODZV DQG +0D\HU&R86DW SURFHHGLQJVlDFFRUGLQJWRLWVRUGLQDU\DQGFRPPRQPHDQLQJ $V WKH GLFWLRQDU\ GHILQLWLRQ HVWDEOLVKHV LPSOLFLW LQ WKH *HQ%OGJ&RQWUDFWRUV86DWHPSKDVHVDGGHG FRQFHSW RI mODZl LV VWDWH DFWLRQ mD ELQGLQJ FXVWRP RU IRRWQRWHV RPLWWHG ,Q OLJKW RI WKH 8QLWHG 6WDWHV 6XSUHPH SUDFWLFHRIDFRPPXQLW\DUXOHRUPRGHRIFRQGXFWRUDFWLRQ &RXUWjVLQWHUSUHWDWLRQRIWKHOHJLVODWLYHKLVWRU\RIWKH WKDW LV SUHVFULEHG RU IRUPDOO\ UHFRJQL]HG DV ELQGLQJ E\ D GLVVHQWjVSRVLWLRQLVXQWHQDEOH VXSUHPH FRQWUROOLQJ DXWKRULW\ RU LV PDGH REOLJDWRU\ E\ D VDQFWLRQ DV DQ HGLFW GHFUHH UHVFULSW RUGHU RUGLQDQFH (TXDOO\LQYDOLGLVWKHUDWLRQDOL]DWLRQWKDWWKHHTXDOEHQHILW VWDWXWH UHVROXWLRQ UXOH MXGLFLDO GHFLVLRQ RU XVDJH PDGH DQG OLNH SXQLVKPHQW FODXVHV RI D DSSO\ WR SULYDWH UHFRJQL]HG RU HQIRUFHG E\ WKH FRQWUROOLQJ DXWKRULW\l FRQGXFWEHFDXVHWKH$FWUHVWHGRQO\RQWKH7KLUWHHQWK :(%67(5j6 7+,5' ,17(51$7,21$/ ',&7,21$5< $PHQGPHQW DQG ZDV HQDFWHG EHIRUH WKH )RXUWHHQWK $PHQGPHQWZDVIRUPDOO\SURSRVHG$OOWKLVSURYHVLVWKDW WKH 7KLUWHHQWK $PHQGPHQW ZDV WKH VRXUFH RI &RQJUHVVjV DQG DQWLVRFLDO EHKDYLRU LV WR EH GLVFRXUDJHG DXWKRULW\IRUGRLQJZKDWLWVHWRXWWRGRLQWKH$FW6HH 86&RQVWDPHQG;,,,7KH&LYLO5LJKWV&DVHV 7KHUH UHPDLQV D ERG\ RI ODZ ZKFK >VLF@ LV GLUHFWHG 86 QRWLQJ WKDW WKH 7KLUWHHQWK $PHQGPHQW WRZDUG WKH FRPSHQVDWLRQ RI LQGLYLGXDOV UDWKHU WKDQ WKH DXWKRUL]HG &RQJUHVV WR HQDFW OHJLVODWLRQ DEROLVKLQJ WKH SXEOLF IRU ORVVHV ZKLFK WKH\ KDYH VXIIHUHG ZLWKLQ WKH mEDGJHVDQGLQFLGHQWVRIVODYHU\l)XUWKHUPRUHWKHFXUUHQW VFRSH RI WKHLU OHJDOO\ UHFRJQL]HG LQWHUHVWV JHQHUDOO\ VWDWXWHKDVDVKDUHGKLVWRU\LQWKH7KLUWHHQWKDQG)RXUWHHQWK UDWKHU WKDQ RQH LQWHUHVW RQO\ ZKHUH WKH ODZ FRQVLGHUV $PHQGPHQWV7KH$FWZDVUHHQDFWHGLQSXUVXDQW WKDW FRPSHQVDWLRQ LV UHTXLUHG 7KLV LV WKH ODZ RI WRUWV WRWKH)RXUWHHQWK$PHQGPHQW6HH*HQ%OGJ&RQWUDFWRUV 86DWm>D@OWKRXJKWKH$FWUHVWHGRQO\RQWKH 7KH ODZ RI WRUWV WKHQ LV FRQFHUQHG ZLWK WKH 7KLUWHHQWK$PHQGPHQWDQGLQGHHGZDVHQDFWHGEHIRUH DOORFDWLRQV RI ORVVHV DULVLQJ RXW RI KXPDQ DFWLYLWLHV WKH)RXUWHHQWK$PHQGPHQWZDVIRUPDOO\SURSRVHGWKH DQG VLQFH WKH\ FRYHU D ZLGH VFRSH VR GRHV WKLV EUDQFK $FWZDVSDVVHGSXUVXDQWWRWKH)RXUWHHQWKDQGFKDQJHV RI ODZ m$ULVLQJ RXW RI WKH YDULRXV DQG HYHULQFUHDVLQJ FODVKHV RI WKH DFWLYLWLHV RI SHUVRQV OLYLQJ LQ D FRPPRQ LQZRUGLQJPD\KDYHUHIOHFWHGWKHODQJXDJHRIWKH)RXUWHHQWK VRFLHW\ FDUU\LQJ RQ EXVLQHVV LQ FRPSHWLWLRQ ZLWK $PHQGPHQWlLQWHUQDOTXRWDWLRQPDUNVRPLWWHG IHOORZ PHPEHUV RI WKDW VRFLHW\ RZQLQJ SURSHUW\ ZKLFK PD\ LQ DQ\ RI D WKRXVDQG ZD\V DIIHFW WKH SHUVRQV RI 7KH GLVVHQW DOVR FREEOHV WRJHWKHU VHOHFW SDVVDJHV IURP SURSHUW\ RI RWKHUV o LQ VKRUW GRLQJ DOO WKH WKLQJV WKDW sRQHV Y $OIUHG + 0D\HU &R 86 DQG FRQVWLWXWH PRGHUQ OLYLQJ o WKHUH PXVW RI QHFHVVLW\ EH 5XQ\RQ Y 0F&UDU\ 86 7KH GLVVHQWj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jV LQWHUSUHWDWLRQ WKH HTXDO EHQHILW FODXVH FRXOG EH DSSOLHG WR HYHU\ JDUGHQYDULHW\ VWDWH WRUW FODLP ZLWK D 6XSUHPH &RXUW sXVWLFH 6ZD\QH VLWWLQJ E\ GHVLJQDWLRQ RQ UDFLDO FRPSRQHQW ,I WKLV LV QRW IHGHUDOL]DWLRQ RI WRUW ODZ , GR QRW NQRZ .HQWXFN\&LUFXLW&RXUWXSKROGLQJWKHFRQVWLWXWLRQDOLW\RIWKH ZKDW LV &LYLO 5LJKWV $FW RI LQWHUSUHWLQJ WKH 7KLUWHHQWK &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ 3ULFH867KH&LYLO:DUKDG 7KLVSHUFHSWLRQRIWKHWHUPmODZlZRXOGKDYH HQGHGLQ$SULO7KH)LUVW6HVVLRQRIWKH7KLUW\ EHHQVKDUHGE\PHPEHUVRIWKH7KLUW\QLQWK&RQJUHVV QLQWK &RQJUHVV PHW RQ 'HFHPEHU VRPH VL[ PRQWKV DIWHU WKH SUHFHGLQJ &RQJUHVV KDG VHQW WR WKH /DZ 6WDWHV WKH 7KLUWHHQWK $PHQGPHQW DQG MXVW WZR ZHHNV $UXOHSDUWLFXODUO\DQHVWDEOLVKHGRUSHUPDQHQWUXOH EHIRUHWKH6HFUHWDU\RI6WDWHFHUWLILHGWKH$PHQGPHQWjV SUHVFULEHGE\WKHVXSUHPHSRZHURIDVWDWHWRLWVVXEMHFWV UDWLILFDWLRQ 2Q sDQXDU\ 6HQDWRU 7UXPEXOO IRU UHJXODWLQJ WKHLU DFWLRQV SDUWLFXODUO\ WKHLU VRFLDO LQWURGXFHGWKHELOOWKDWZRXOGEHFRPHWKH$FW DFWLRQV /DZV DUH LPSHUDWLYH RU PDQGDWRU\ FRPPDQGLQJZKDWVKDOOEHGRQHSURKLELWRU\UHVWUDLQLQJ 7KHSULQFLSDOREMHFWRIWKHOHJLVODWLRQZDVWRHUDGLFDWH IURP ZKDW LV WR EH IRUERUQH RU SHUPLVVLYH GHFODULQJ WKH%ODFN&RGHVODZVHQDFWHGE\6RXWKHUQOHJLVODWXUHV ZKDWPD\EHGRQHZLWKRXWLQFXUULQJDSHQDOW\ LPSRVLQJDUDQJHRIFLYLOGLVDELOLWLHVRQIUHHGPHQ0RVW RIWKHVHODZVHPERGLHGH[SUHVVUDFLDOFODVVLILFDWLRQVDQG 1RDK :HEVWHU $1 $0(5,&$1 ',&7,21$5< 2) 7+( DOWKRXJKRWKHUVVXFKDVWKRVHSHQDOL]LQJYDJUDQF\ZHUH (1*/,6+/$1*8$*(DWUHY HQODUJHG6SULQJILHOG IDFLDOO\QHXWUDO&RQJUHVVSODLQO\SHUFHLYHGDOORIWKHP 0DVV*HRUJH &KDUOHV0HUULDP$QGLWLVWRWKH DV FRQVFLRXVO\ FRQFHLYHG PHWKRGV RI UHVXUUHFWLQJ WKH GLFWLRQDU\WKDWZHORRNLQGHWHUPLQLQJWKHSODLQPHDQLQJRI LQFLGHQWVRIVODYHU\6HQDWRU7UXPEXOOVXPPDUL]HGWKH DZRUG6HHHJ:LOOLDPVY7D\ORU866 SDUDPRXQWDLPVRIKLVELOO &WHPSOR\LQJGLFWLRQDU\GHILQLWLRQVWR DVFHUWDLQ WKH RUGLQDU\ FRPPRQVHQVH PHDQLQJ RI ZRUGV LQ m6LQFH WKH DEROLWLRQ RI VODYHU\ WKH /HJLVODWXUHV VWDWXWH8QLWHG6WDWHVYs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l&RQJ*OREHWK&RQJ GLVFULPLQDWLRQPD\EHLPSOLFDWHGE\WKHFRQWUDFWFODXVH VW6HVV 2I FRXUVH WKLV &RXUW KDV IRXQG LQ WKH OHJLVODWLYH %\ FRQWUDVW DQ LQGLYLGXDO YLRODWHV ODZV $Q LQGLYLGXDO PD\ KLVWRU\RIWKH$FWHYLGHQFHWKDW&RQJUHVVVRXJKWWR FDXVH LQMXU\ WR DQRWKHU LQ WKH SURFHVV RI YLRODWLQJ D ODZ EXW WKLV FDQQRW DFFRPSOLVKPRUHWKDQWKHGHVWUXFWLRQRIVWDWHLPSRVHG ULJKWO\ EH YLHZHG DV D GHSULYDWLRQ RI mWKH IXOO DQG HTXDO EHQHILW RI DOO ODZ DQG SURFHHGLQJV IRU WKH VHFXULW\ RI SHUVRQV DQG SURSHUW\l 7KDW LV FLYLO GLVDELOLWLHV DQG SXQLVKPHQWV :H KDYH KHOG WKDW EHFDXVH D SULYDWH DFWRU GRHV QRW JLYH SURWHFWLRQV XQGHU WKH ODZ DQG ERWK DQG mSURKLELW DOO UDFLDO WKHUHIRUH FDQQRW WDNH WKHP DZD\ 3ULYDWH LQMXU\ FDQ EH UHGUHVVHG E\ ODZ GLVFULPLQDWLRQZKHWKHURUQRWXQGHUFRORURIODZZLWK KRZHYHU &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ RIVHFWLRQWKHFRQFHSWRIVWDWHDFWLRQLVLPSOLFLWLQ %OGJ&RQWUDFWRUV$VVjQY3HQQ86 WKHHTXDOEHQHILWFODXVH m7KHSULQFLSDOREMHFWRIWKHOHJLVODWLRQZDVWRHUDGLFDWHWKH %ODFN&RGHVODZVHQDFWHGE\6RXWKHUQOHJLVODWXUHVLPSRVLQJ 0DKRQHY:DGGOH)GG&LU D UDQJH RI FLYLO GLVDELOLWLHV RQ IUHHGPHQl DV ZHOO DV GLVFULPLQDWRU\SULYDWHFRQGXFWLHPLVWUHDWPHQWRI%ODFNVE\ ,URQLFDOO\WKHGLVVHQWRPLWVUHIHUHQFHWRWKHWKLUGFODXVHLQ SULYDWHLQGLYLGXDOVVHHLGDWm2IFRXUVHWKLV&RXUWKDV VXEVHFWLRQDWKHOLNHSXQLVKPHQWFODXVHZKLFKSURYLGHV IRXQGLQWKHOHJLVODWLYHKLVWRU\RIWKH$FWHYLGHQFHWKDW WKDWm>D@OOSHUVRQVVKDOOEHVXEMHFWWROLNHSXQLVKPHQW &RQJUHVVVRXJKWWRDFFRPSOLVKPRUHWKDQWKHGHVWUXFWLRQRI SDLQVSHQDOWLHVWD[HVOLFHQVHDQGH[DFWLRQVl1RRQHFDQ VWDWHLPSRVHG FLYLO GLVDELOLWLHV DQG GLVFULPLQDWRU\ VHULRXVO\ DUJXH WKDW DQ LQGLYLGXDO FDQ VXEMHFW DQRWKHU SXQLVKPHQWVl7KLVH[SODLQVZK\WKHWZRVWDWXWHVDGGUHVV LQGLYLGXDO WR XQHTXDO SXQLVKPHQW RU WD[HV $V 0DKRQH VXFK YDULHG FRQFHUQV VRPH RI ZKLFK GHDO ZLWK SULYDWH UHPDUNHG m2QO\ WKH VWDWH LPSRVHV RU UHTXLUHV µWD[HV FRQGXFWOLNHFRQWUDFWVDQGSURSHUW\ULJKWVDQGVRPHRIZKLFK OLFHQVHV DQG H[DFWLRQVj DQG WKH PD[LP QRVFLWXU D VRFLLV GHDOZLWKVWDWHDFWLRQOLNHSURWHFWLRQRIODZVDQGSURFHHGLQJV VXJJHVWVWKDWWKHµSXQLVKPHQWSDLQV>DQG@SHQDOWLHVjWRZKLFK DQGSXQLVKPHQWVDQGSHQDOWLHV WKHFODXVHUHIHUVDUHWKRVHLPSRVHGE\WKHVWDWHl,G:@HPXVWEHPLQGIXORIWKHmHYHQWVDQGSDVVLRQVRIWKH GLVVHQW ZHOO NQRZV IHGHUDO FRXUWV DUH QRW DW OHLVXUH WR FRPPHQW RQ LVVXHV WLPHl LQ ZKLFK WKH ODZ ZDV IRUJHG 8QLWHG 6WDWHV Y QRW SURSHUO\ EHIRUH WKHP &KDSPDQY7KH+LJEHH&RPSDQ\ 1R 1R &KDSPDQY7KH+LJEHH&RPSDQ\ H[SODLQ WKDW WKH HIIHFW RI VXEVHFWLRQ F RQ RWKHU ULJKWV QHHGHGl %DUU\ / 5HIVLQ 7KH /RVW &ODXVHV RI 6HFWLRQ HQXPHUDWHGLQVXEVHFWLRQDPHDQVWKDWmULJKWVlPXVWPHDQ $ 6RXUFH RI *UHDWHU 3URWHFWLRQ $IWHU 3DWWHUVRQ Y WKDWVXEVHFWLRQDUHIHUVWRWKHULJKWWRIXOODQGHTXDOEHQHILW 0F/HDQ&UHGLW8QLRQ83D/5HY RIDOOODZVDQGSURFHHGLQJVOLNHSXQLVKPHQWDVZHOODVWKH QRWLQJWKDWWKH$FWmZDVSURSRVHGDQGILQDOO\DGRSWHG ULJKWWRPDNHDQGHQIRUFHFRQWUDFWV+RZHYHU&RQJUHVVGRHV DJDLQVW >D@ EDFNJURXQG RI UHVWULFWLYH ODZV >DQG@ SULYDWH QRWQHHGWRVWDWHWKHREYLRXV7KDWLV&RQJUHVVGLGQRWQHHG GLVFULPLQDWLRQDQGYLROHQFHlHPSKDVLVDGGHGWKHGLVVHQWjV WRH[SODLQWKDWWKHHTXDOEHQHILWDQGOLNHSXQLVKPHQWFODXVHV UHPDUNLJQRUHVWKHFRPPRQXQGHUVWDQGLQJRIWKHVHWHUPVDW RIVXEVHFWLRQDGRQRWDSSO\WRSULYDWHFRQGXFWEHFDXVHWKH\ WKHWLPHWKH$FWZDVSDVVHG7KHIROORZLQJGHILQLWLRQV ORJLFDOO\FDQQRW DUHIRXQGLQWKHHGLWLRQRI1RDK:HEVWHUjV$0(5,&$1 ',&7,21$5<2)7+((1*/,6+/$1*8$*(VXSUD 7KH GLVVHQW DOVR GHULYHV VXSSRUW IURP jV mFRQVWLWXWLRQDOOHJDF\l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l LQIOLFWHGE\WKHVXSUHPHSRZHURIWKHVWDWHLQYLUWXHRI WKH ULJKW RI JRYHUQPHQW YHVWHG LQ WKH SULQFH RU ,Q *HQHUDO %OGJ &RQWUDFWRUV $VVjQ Y 3HQQ 86 OHJLVODWXUH 7KH ULJKW RI SXQLVKPHQW EHORQJV RQO\ WR WKH &RXUW H[SODLQHG SHUVRQV FORWKHG ZLWK DXWKRULW\ 3DLQ ORVV RU HYLO >7@KH RULJLQV RI WKH ODZ FDQ EH WUDFHG WR ERWK WKH &LYLO ZLOOIXOO\LQIOLFWHGRQDQRWKHUIRUKLVFULPHVRURIIHQVHV 5LJKWV $FW RI DQG WKH (QIRUFHPHQW $FW RI %RWK RI WKHVH ODZV LQ WXUQ ZHUH OHJLVODWLYH FRXVLQV RI E\DSULYDWHXQDXWKRUL]HGSHUVRQLVUHYHQJHUDWKHUWKDQ WKH )RXUWHHQWK $PHQGPHQW 7KH $FW UHSUHVHQWHG SXQLVKPHQW &RQJUHVVj ILUVW DWWHPSW WR HQVXUH HTXDO ULJKWV IRU WKH DW IUHHGPHQ IROORZLQJ WKH IRUPDO DEROLWLRQ RI VODYHU\ 3HQDOW\ HIIHFWHG E\ WKH 7KLUWHHQWK $PHQGPHQW $V VXFK LW FRQVWLWXWHG DQ LQLWLDO EOXHSULQW RI WKH )RXUWHHQWK $PHQGPHQW ZKLFK &RQJUHVV SURSRVHG LQ SDUW DV D PHDQV RI mLQFRUSRUDW>LQJ@ WKH JXDUDQWLHV RI WKH &LYLO 7KH GLVVHQW UHOLHV RQ D SKUDVH LQ D FRQJUHVVLRQDO UHSRUW EHIRUH 5LJKWV $FW LQ WKH RUJDQLF ODZ RI WKH ODQGl +XUG Y WKH 7KLUW\QLQWK &RQJUHVV GHVFULELQJ mD SDWWHUQ RI SULYDWH YLROHQFH µE\ +RGJH 86 DW 7KH $FW ZKLFK PHQ ZKR DQQRXQFH WKHLU GHWHUPLQDWLRQ WR WDNH WKH ODZ LQWR WKHLU RZQ FRQWDLQHG WKH ODQJXDJH WKDW QRZ DSSHDUV LQ ZDV KDQGVjl +LVWRULFDO 5HFRQVWUXFWLRQ