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 s2+11,( :$'( ; 3ODLQWLII$SSHOODQW 1R Y ! .12;9,//( 87,/,7,(6 %2$5' 'HIHQGDQW$SSHOOHH 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI7HQQHVVHHDW.QR[YLOOH 1Rn5/HRQsRUGDQ'LVWULFWsXGJH $UJXHGsXQH 'HFLGHGDQG)LOHGsXO\ %HIRUH*8<%2**6DQG*,/0$1&LUFXLWsXGJHV BBBBBBBBBBBBBBBBB &2816(/ $5*8('*HRUJH78QGHUZRRGsU7+(/$:2)),&( 2)*(25*(781'(5:22'.QR[YLOOH7HQQHVVHHIRU $SSHOODQW $GULHQQH / $QGHUVRQ .5$0(5 5$<621 /($.(52'*(56 025*$1.QR[YLOOH7HQQHVVHH IRU$SSHOOHH21%5,()*HRUJH78QGHUZRRGsU7+( /$:2)),&(2)*(25*(781'(5:22'.QR[YLOOH :DGHY.QR[YLOOH8WLOLWLHV%G 1R 7HQQHVVHHIRU$SSHOODQW$GULHQQH/$QGHUVRQ(GZDUG* 3KLOOLSV .5$0(5 5$<621 /($.( 52'*(56 025*$1.QR[YLOOH7HQQHVVHHIRU$SSHOOHH BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB 5$/3+ % *8< s5 &LUFXLW sXGJH 3ODLQWLII s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jV IRXU\HDU OLQHPDQ DSSUHQWLFH SURJUDP LQ 2FWREHU $OWKRXJK KH ZDV SURPRWHG WR D VHFRQG\HDU DSSUHQWLFH SRVLWLRQSODLQWLIIDQGVHYHUDORWKHUVZHUHQRWLILHGLQ2FWREHU WKDWWKH\ZRXOGQRWEHSURPRWHGWRDWKLUG\HDUSRVLWLRQ EHFDXVHRISRRUDWWHQGDQFHDQGRWKHUSUREOHPV,QsDQXDU\ SODLQWLII LQMXUHG DQ DQNOH ZKHQ KH ZDV KLW ZLWK DQ HOHFWULF FDUW GULYHQ E\ DQRWKHU HPSOR\HH $OWKRXJK GHIHQGDQWjV LQYHVWLJDWLRQ ZDV XQDEOH WR VXEVWDQWLDWH WKH FODLPSODLQWLIIEHOLHYHGWKDWWKHDFFLGHQWZDVLQWHQWLRQDODQG UDFLDOO\PRWLYDWHG 8SRQKLVUHWXUQWRZRUNLQ$SULOSODLQWLIIH[KLELWHG EHKDYLRUWKDWFDXVHG.8%WREHFRQFHUQHGDERXWKLVPHQWDO FRQGLWLRQ3ODLQWLIIZDVUHIHUUHGWR'UsHII*UHHQZRRGD SV\FKLDWULVW IRU FRXQVHOLQJ 'U *UHHQZRRG GLDJQRVHG :DGHY.QR[YLOOH8WLOLWLHV%G 1R 1R :DGHY.QR[YLOOH8WLOLWLHV%G VKRZQEHWZHHQWKHSULRU((2&FKDUJHVDQG1RHjVUHVSRQVH SODLQWLIIDVVXIIHULQJIURPSDUDQRLDWUHDWHGKLPZLWKDQWL WRWKHLQTXLU\IURP%RHLQJ SV\FKRWLF PHGLFDWLRQ DQG H[FXVHG KLP IURP ZRUN 2Q $SULOSODLQWLIIILOHGWKHILUVWRIWKUHHFKDUJHVZLWK 7+5$DQG&ODLPV WKH ((2& 7KLV FKDUJH DOOHJHG UDFH GLVFULPLQDWLRQ DQG KDUDVVPHQW GXULQJ KLV HPSOR\PHQW LQFOXGLQJ LQFLGHQWV RI 7KH GLVWULFW FRXUW DOVR JUDQWHG VXPPDU\ MXGJPHQW WR UDFLDOO\RIIHQVLYHODQJXDJHDQGIOLHUVGHURJDWRU\FRPPHQWV GHIHQGDQW RQ SODLQWLIIjV FODLPV RI UDFH GLVFULPLQDWLRQ DQG DQGSUDQNVDQGWKHGHQLDORIWUDLQLQJDQGSURPRWLRQV UHWDOLDWLRQEURXJKWXQGHUWKH7+5$DQG)LUVWDVWKH GLVWULFWFRXUWREVHUYHGWKHVHFODLPVDUHJRYHUQHGE\WKHVDPH $IWHUEHLQJUHOHDVHGWRZRUNE\'U*UHHQZRRGSODLQWLII EXUGHQVKLIWLQJVWDQGDUGVDVWKHFODLPVXQGHU7LWOH9,,6HH UHWXUQHGWR.8%RQ0D\3ODLQWLIIjVEHKDYLRUWKDW 0LWFKHOOY7ROHGR+RVS)GWK&LU GD\DQGWKHQH[WFRQFHUQHGKLVVXSHUYLVRUDQGOHGWRDOHDYH 5DLQHV Y 6KRQH\jV ,QF ) 6XSS (' 7HQQ RI DEVHQFH WR FRQWLQXH WUHDWPHQW ,Q sXQH 'U %UXFHY:$XWR6XSSO\&R6:G7HQQ *UHHQZRRG UHSRUWHG WKDW SODLQWLII KDG UHVSRQGHG WR &W $SS $V D UHVXOW WKH DQDO\VLV DQG FRQFOXVLRQV PHGLFDWLRQDQGFRXOGUHWXUQWRZRUNDVDOLQHPDQDSSUHQWLFH FRQFHUQLQJWKH7LWOH9,,FODLPVGLVFXVVHGDERYHDSSO\HTXDOO\ +HDOVRLQGLFDWHGWKDWSODLQWLIIZDVWDNLQJPJRI6WHOD]LQH WRWKHSDUDOOHOFODLPVEURXJKWXQGHUWKH7+5$DQG DW EHGWLPH ZKLFK mPD\ KDYH VRPH VXEWOH VHGDWLYH VLGH HIIHFWVlEXWWKDWSODLQWLIIKDGmQRDSSDUHQWLPSDLUPHQWIURP 0RUHRYHUSODLQWLIIjV7+5$DQGFODLPVZHUHWLPH KLVPHGLFDWLRQDQGPD\ZRUNLQKLVIRUPHUVHQVLWLYHMRERQ EDUUHG&ODLPVEURXJKWXQGHUWKH7+5$DUHVXEMHFWWRWKH KLJKSRZHUOLQHVl RQH\HDUOLPLWDWLRQVSHULRGVHWIRUWKLQ7HQQ&RGH$QQ 6HH:HEHU6:GDW%HFDXVH .8%UHTXHVWHGDILWQHVVIRUGXW\HYDOXDWLRQ'U.HQQHWK GRHVQRWVSHFLI\DVWDWXWHRIOLPLWDWLRQVZHDSSO\WKHRQH\HDU &DUSHQWHUDERDUGFHUWLILHGSV\FKLDWULVWGLDJQRVHGSODLQWLII OLPLWDWLRQVSHULRGIURP7HQQ&RGH$QQ6HH DV KDYLQJ 6FKL]RSKUHQLIRUP 'LVRUGHU DQG 3DUDQRLG sDFNVRQY5LFKDUGV0HG&R)GWK&LU 3HUVRQDOLW\ +H REVHUYHG WKDW SODLQWLII KDG GLIILFXOW\ ZLWK 6LQFH QHLWKHU SHULRG LV WROOHG E\ WKH ILOLQJ RI WKH WKLQNLQJDQGFRQFHQWUDWLRQDVZHOODVFRQWLQXHGIHHOLQJVRI DGPLQLVWUDWLYHFODLPVZLWKWKH((2&WKHVHFODLPVDFFUXHG SHUVHFXWLRQ DQG UHFRPPHQGHG WKDW KH EH SODFHG RQ D PRUHWKDQRQH\HDUEHIRUHWKHFRPSODLQWZDVILOHGRQsXQH GLIIHUHQWZRUNFUHZLQDOHVVVDIHW\VHQVLWLYHSRVLWLRQIRUVL[ PRQWKV 3ODLQWLII ZKR ZDV UHSUHVHQWHG E\ FRXQVHO DW WKH WLPHDVNHGIRUDWKLUGRSLQLRQ7KHWKLUGGRFWRUFRQFOXGHG $)),50(' WKDWSODLQWLIIVKRXOGQRWZRUNZLWKKLJKYROWDJHZKLOHWDNLQJ WKH PHGLFDWLRQ 3ODLQWLII ZDV RIIHUHG RWKHU ZRUN LQ WKH 3URSHUWLHV'HSDUWPHQWZKLFKKHYLHZHGDVDGHPRWLRQDQG UHIXVHG ,Q1RYHPEHU'U*UHHQZRRGUHPRYHGSODLQWLIIIURP %H\RQG WKLV FRQFOXVLRQ WKH GLVWULFW FRXUW DOVR REVHUYHG WKDW m:DGH VLJQHG D UHOHDVH UHJDUGLQJ %RHLQJjV DFTXLVLWLRQ RI LQIRUPDWLRQ LQ WKHPHGLFDWLRQDQGUHOHDVHGKLPWRZRUN3ODLQWLIIUHWXUQHG FRQQHFWLRQ ZLWK KLV HPSOR\PHQW DSSOLFDWLRQ ZKLFK KROGV IRUPHU WR ZRUN DV D VHFRQG\HDU OLQHPDQ DSSUHQWLFH DQG ZDV HPSOR\HUV KDUPOHVV H[FHSW IRU PLVUHSUHVHQWDWLRQl m:DGH SURYLGHG OHVV SURPRWHGWRDWKLUG\HDUSRVLWLRQLQ)HEUXDU\2YHUWKH WKDQ WUXWKIXO LQIRUPDWLRQ RQ WKH DSSOLFDWLRQ FRQFHUQLQJ FRQGLWLRQ DQG XVH RI SUHVFULEHG PHGLFDWLRQVl DQG m%RHLQJ FRXOG KDYH KLV PHQWDO QH[WVHYHUDOPRQWKVKRZHYHU%LOO1RUWRQWKHPDQDJHURI ZLWKGUDZQ LWV FRQGLWLRQDO MRE RIIHU IRU VHYHUDO UHDVRQV XQUHODWHG WR DQ\ VWDWHPHQWV E\ .8%l :DGHY.QR[YLOOH8WLOLWLHV%G 1R 1R :DGHY.QR[YLOOH8WLOLWLHV%G WKHSURJUDPUHFHLYHGYHUEDOUHSRUWVRIVHYHUDOQHDUDFFLGHQWV %RWWOHUVRI7ROHGR,QF)GWK&LUD WKDWZHUHDWWULEXWHGWRSODLQWLIIjVPHQWDOODSVHVRULQDWWHQWLRQ WLPHVSDQRIPRUHWKDQRQH\HDUIURPWKHILOLQJVXLWWR WKHILULQJPLOLWDWHGDJDLQVWILQGLQJWKDWGLVFKDUJHZDV ,QsXO\1RUWRQFRQVXOWHGZLWK'U&DUSHQWHUDERXW UHWDOLDWRU\0XFKRI:DGHjVUHVSRQVHWRWKHPRWLRQLV SODLQWLIIZKRFRQFOXGHGWKDWSODLQWLIIVKRXOGQRWUHPDLQLQ FRPSULVHGRIFRQFOXVRU\DOOHJDWLRQVDQGKLVSHUFHSWLRQV WKHOLQHPDQSURJUDPEXWFRXOGKDQGOHDOHVVVDIHW\VHQVLWLYH ZKLFKDUHQRWVXIILFLHQWWRVWDYHRIIVXPPDU\MXGJPHQW SRVLWLRQLQWKHPHWHUWHVWHUDSSUHQWLFHSURJUDP3ODLQWLIIZDV 3LOJULPY7UXVWHHVRI7XIWV&ROOHJH)G RIIHUHGDWUDQVIHUWRDPHWHUWHVWHUSRVLWLRQLQWKHILQDO\HDURI VW &LU :DGHjV VXEMHFWLYH DVVHVVPHQW LV QRW WKHWKUHH\HDUSURJUDPZLWKQRORVVRISD\7RDFFRPSOLVK HYLGHQFH,G WKH WUDQVIHU ZLWKRXW ELGGLQJ WKH SRVLWLRQ WKH WUDQVIHU ZDV VSHFLILFDOO\ UHTXHVWHG DQG JUDQWHG DV DQ DFFRPPRGDWLRQ 7KHGLVWULFWFRXUWjVGHFLVLRQLVDOVRVXSSRUWHGE\HYLGHQFHWKDW XQGHU WKH $PHULFDQV ZLWK 'LVDELOLWLHV $FW $'$ ,Q SODLQWLIIZDVDSSURYHGIRUORQJWHUPGLVDELOLW\EHQHILWVVKRUWO\ 6HSWHPEHUWKH((2&LVVXHGLWVGHWHUPLQDWLRQWKDWWKHUH DIWHU KH ILOHG WKH VHFRQG ((2& FKDUJH LQ sXQH ,Q ZDV QR HYLGHQFH RI GLVFULPLQDWLRQ 1RWDEO\ WKLV DGGLWLRQWKRVHEHQHILWVZHUHQRWWHUPLQDWHGDIWHUWKHVHFRQG GHWHUPLQDWLRQFRQFHUQHGSODLQWLIIjVFODLPVXSWRDQGLQFOXGLQJ ULJKWWRVXHOHWWHUZDVLVVXHGLQ$SULO WKHWUDQVIHUWRWKHPHWHUWHVWHUSURJUDP3ODLQWLIIKRZHYHU GLGQRWILOHVXLWZLWKLQGD\V 3ODLQWLIIHPSKDVL]HVWKDWWKHOHWWHUDFFRPSDQ\LQJ.8%jV IRUPDOQRWLFHRIWHUPLQDWLRQZDVZULWWHQRQWKHVDPHGDWHWKDW 3ODLQWLII ZRUNHG LQ WKH PHWHU WHVWHU DSSUHQWLFH SURJUDP WKH ((2& LVVXHG WKH VHFRQG ULJKWWRVXH OHWWHU ,W LV XQWLO 0DUFK 2Q WKDW GD\ SODLQWLII ZDV DVNHG WR XQGLVSXWHG KRZHYHU WKDW .8% PDGH WKH GHFLVLRQ WR PHHW ZLWK (YHUHWW 1RH 0DQDJHU RI WKH (OHFWULF 0HWHU WHUPLQDWHSODLQWLIIjVHPSOR\PHQWEHIRUHWKHULJKWWRVXHOHWWHU 'HSDUWPHQWDQG'HQQLV8SWRQ+XPDQ5HVRXUFHV0DQDJHU ZDV LVVXHG 7KH RWKHU HYLGHQFH RI UHWDOLDWRU\ LQWHQW WKDW FRQFHUQLQJFRPSODLQWVIURPVHYHUDOIHPDOHFRZRUNHUVWKDW SODLQWLIISRLQWVWRLVWKHVWDWHPHQWIURP8SWRQRQ0DUFK SODLQWLIIjVLQWHUDFWLRQVPDGHWKHPIHHOXQFRPIRUWDEOH.8% WRWKHHIIHFWWKDWSODLQWLIIjVUHIXVDOWRDSRORJL]HIRUWKH FRQVLGHUHG WKH PHHWLQJ WR EH D FRXQVHOLQJ VHVVLRQ QRW D m8QFOH7RPlFRPPHQWZRXOGmKDYHFRQVHTXHQFHVl6LQFH GLVFLSOLQDU\DFWLRQDVQRIRUPDOFRPSODLQWKDGEHHQILOHG 8SWRQ YLHZHG WKH FRPPHQW DV LQVXERUGLQDWLRQ LW LV QRW 3ODLQWLII EHFDPH DJLWDWHG GHPDQGHG WR NQRZ ZKR KDG VXUSULVLQJ WKDW KH PLJKW WKUHDWHQ GLVFLSOLQDU\ DFWLRQ FRPSODLQHG DQG GHQLHG WKDW KH KDG KDUDVVHG DQ\RQH 1RQHWKHOHVVFRQVHTXHQFHVZHUHWKUHDWHQHGLQ0DUFK 3ODLQWLIIVD\V8SWRQWROGKLPWRmVLWGRZQDQGVKXWKLVGDPQ EHIRUHSODLQWLIIILOHGWKHVHFRQG((2&FKDUJHLQsXQH PRXWKlZKLOH8SWRQFODLPVKHVDLGKHFRXOGQRWUHYHDOWKH :KLOH WKH TXHVWLRQ RI SRVVLEOH GLVFLSOLQDU\ DFWLRQ IRU WKDW QDPHVEHFDXVHmLWjVWKHGDPQODZl VWDWHPHQWZDVLQFOXGHGDVWKHODVWRIWKHFRQGLWLRQVUHTXLUHG EHIRUHSODLQWLIIFRXOGUHWXUQWRZRUNWKDWGRHVQRWVXJJHVWD 6KRUWO\ DIWHU WKH PHHWLQJ HQGHG SODLQWLII PHW 1RH DQG FRQQHFWLRQ EHWZHHQ WKH ILOLQJ RI ((2& FKDUJHV DQG WKH 8SWRQ LQ WKH KDOOZD\ DQG FDOOHG 8SWRQ DQ m8QFOH 7RPl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sRKQVRQY 'HSjWRI+HDOWKDQG+XPDQ6HUYV)GWK&LU 2Qs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j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jVWHUPLQDWLRQLQ)HEUXDU\ IURP'U*UHHQZRRGGDWHG'HFHPEHUZKLFKVWDWHG ZDVFRQQHFWHGZLWKWKH((2&FKDUJHVKHILOHGLQ m)URPKLVDSSHDUDQFHWRGD\>SODLQWLII@VHHPVDEOHWRUHWXUQWR DQG 6XEVHTXHQW WR ILOLQJ WKH ILUVW FKDUJH ZRUNDWVRPHFDSDFLW\WKRXJKKLVLOOQHVVKDVEHHQUHFXUUHQW :DGHZDVDGYDQFHGWRWKHWKLUG\HDUOLQHPDQDSSUHQWLFH DQGPD\UHTXLUHIXWXUHSHULRGVRIDEVHQFHZKHQV\PSWRPV SRVLWLRQDQGODWHUZDVJLYHQDQDFFRPPRGDWLRQE\EHLQJ PLJKWUHFXUl+RZHYHUDKDQGZULWWHQQRWHDWWKHERWWRPRI WUDQVIHUUHGWRWKHPHWHUWHVWLQJSURJUDP7KHQXPEHURI WKHOHWWHUZULWWHQE\DQRWKHUGRFWRUVDLGWKDW'U*UHHQZRRG \HDUV EHWZHHQ WKH ILUVW WZR ((2& FKDUJHV DQG WKH KDG UHOHDVHG SODLQWLII WR UHWXUQ WR KLV IRUPHU MRE ZLWK QR GLVFKDUJHLQ)HEUXDU\PLOLWDWHDJDLQVWDILQGLQJWKDW UHVWULFWLRQV 'U *UHHQZRRG WHVWLILHG WKDW WKH KDQGZULWWHQ WKHGLVFKDUJHZDVUHWDOLDWRU\LQQDWXUH6HHHJsDFNVRQ QRWHPDGHE\DQRWKHUGRFWRUZKRKDGQRWWUHDWHGSODLQWLII Y3HSVL&ROD'U3HSSHU%RWWOLQJ&RD'LYRI5.2 GLGQRWFRPSRUWZLWKKLVRSLQLRQDWWKHWLPH .8% UHVSRQGHG WR SODLQWLIIjV UHTXHVW LQ D OHWWHU GDWHG 'HFHPEHUZKLFKRXWOLQHGVHYHUDOFRQGLWLRQVWKDW 7DNLQJ WKH PDWWHU WR WKH QH[W VWHS WKH GLVWULFW FRXUW DOVR IRXQG WKDW ZRXOGKDYHWREHPHWEHIRUHSODLQWLIIFRXOGUHWXUQWRZRUN 7KHFRQGLWLRQVLQFOXGHGWKDWSODLQWLIIVXEPLWWRDILWQHVV 6HH SODLQWLII IDLOHG WR UDLVH D MXU\VXEPLVVLEOH LVVXH RQ WKH TXHVWLRQ RI ZKHWKHU 0DQ]HU WKH GHIHQGDQWjV UHDVRQV ZHUH PHUHO\ SUHWH[W IRU UDFH GLVFULPLQDWLRQ )G DW :LWKRXW UHSHDWLQJ WKH GLVWULFW FRXUWjV UHDVRQLQJ IRUGXW\SV\FKRORJLFDOH[DPLQDWLRQE\'U&DUSHQWHUWKDW ZH DJUHH WKDW SODLQWLII IDLOHG WR SUHVHQW HYLGHQFH WR VXJJHVW WKDW WKH .8%FRPSOHWHLWVUHYLHZRIDOOHJDWLRQVRISRVVLEOHFULPLQDO GHIHQGDQWjV UHDVRQV ODFNHG D IDFWXDO EDVLV GLG QRW DFWXDOO\ FRQGXFW E\ SODLQWLII WKDW SODLQWLII DJUHH WR FRPSOHWH PRWLYDWH WKH GHFLVLRQ RU ZHUH LQVXIILFLHQW WR PRWLYDWH WKH GHFLVLRQ :DGHY.QR[YLOOH8WLOLWLHV%G 1R 1R :DGHY.QR[YLOOH8WLOLWLHV%G DGGLWLRQDOFRXUVHZRUNWKDWKDGEHHQDGGHGWRWKHPHWHUWHVWHU JRRGSURJUHVV+RZHYHU%OHYLQVjH[SHULHQFHZRUNLQJ SURJUDP GXULQJ KLV DEVHQFH DQG WKDW LI WKH RWKHU ZLWK :DGH ZDV SULRU WR :DGHjV LQYROXQWDU>\@ FRQGLWLRQV ZHUH PHW SODLQWLII PHHW ZLWK 8SWRQ WR GLVFXVV FRPPLWPHQW WR D SV\FKLDWULF KRVSLWDO DQG DOPRVW WZR GLVFLSOLQDU\DFWLRQIRUKLVFRQGXFWRQ0DUFK \HDUVRIGLVDELOLW\OHDYHIRUSDUDQRLGVFKL]RSKUHQLD,W ZDVDOVRSULRUWRWKHILWQHVVIRUZRUNH[DPLQDWLRQE\'U 'U &DUSHQWHU FRQGXFWHG D ILWQHVVIRUGXW\ HYDOXDWLRQ LQ &DUSHQWHU %OHYLQVj H[SHULHQFH ZLWK :DGH DQG KLV sDQXDU\ DQG FRQFOXGHG WKDW SODLQWLII VKRXOG QRW EH HYDOXDWLRQ RI :DGHjV SHUIRUPDQFH SULRU WR WKHVH UHWXUQHGWRWKHRQJRLQJVWUHVVRIDZRUNHQYLURQPHQW+H VLJQLILFDQWHYHQWVKDVQREHDULQJRQWKHLVVXHRI:DGHjV REVHUYHG WKDW SODLQWLII ZDV QRW WDNLQJ KLV PHGLFDWLRQ DQG VWDWXVDQGDELOLW\WRSHUIRUPLQ'HFHPEHU8QGHU RSLQHGWKDWWKHUHZDVDmJUHDWOLNHOLKRRGWKDW0U:DGHZLOO WKHVHFLUFXPVWDQFHVZKHWKHU:DGHLVmTXDOLILHGlIRUWKH KDYHPRUHVWULNLQJLUUDWLRQDOEHKDYLRUDVWLPHJRHVRQl'U PHWHUWHVWLQJDSSUHQWLFHSRVLWLRQLVQRWDTXHVWLRQRIVNLOO &DUSHQWHUDOVRLQGLFDWHGWKDWSODLQWLIIjVmH[WUHPHJXDUGHGQHVV EXWWKHDELOLW\WRIXQFWLRQRQWKHMREE\SHUIRUPLQJWKH DQGYDJXHWKLQNLQJPDNHKLPGLIILFXOWWRZRUNZLWKlDQGWKDW ZRUNDQGGHDOLQJZLWKWKHVWUHVVFRZRUNHULQWHUDFWLRQ mZLWKWKHVWUHVVEDFNRQWKHMREKLVV\PSWRPVZLOOLQWHQVLI\ DQGVXSHUYLVLRQDWWHQGDQWWRWKHMRE DQGWKHUHZLOOEHIXUWKHUSUREOHPVl'U*UHHQZRRGWHVWLILHG WKDWKHGLGQRWGLVDJUHHZLWKDQ\RIWKHFRQFOXVLRQVLQ'U ,W LV FOHDU WKDW 'U *UHHQZRRGjV OHWWHU LQ 'HFHPEHU &DUSHQWHUjVUHSRUW VWDWLQJWKDWSODLQWLIIFRXOGUHWXUQWRZRUNmDWVRPH FDSDFLW\l UHSUHVHQWV D VRPHZKDW LQFRQVLVWHQW SRVLWLRQ %DVHGSULQFLSDOO\RQ'U&DUSHQWHUj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mWRVKRZ WKDW KH ZRXOG EH DEOH WR KDQGOH WKH VWUHVV RI UHWXUQLQJ WR ZRUNGHDOLQJZLWKFRZRUNHUVDQGDFFHSWLQJVXSHUYLVLRQDQG 7KH LQYHVWLJDWLRQ LQWR DOOHJDWLRQV RI FULPLQDO DFWLYLW\ ZDV SURPSWHG E\ DQ DOHUW IURP WKH 79$ (PSOR\HHV &UHGLW 8QLRQ WKDW SODLQWLII PLJKW EH FRQVWUXFWLYH FULWLFLVPl 7KH GLVWULFW FRXUW FRQFOXGHG WKDW LQYROYHG LQ D FUHGLWFDUG VFDP .8% KDG D SULYDWH LQYHVWLJDWRU ORRN LQWR m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l6HHsDFNO\QY6FKHULQJ LQDSSURSULDWHO\ ORRNHG LQWR WKH FRQGXFW WKDW ZDV EURXJKW WR LWV DWWHQWLRQ 3ORXJK+HDOWKFDUH3URGV6DOHV&RUS)G E\ WKH FUHGLW XQLRQ 1RU ZDV WKHUH HYLGHQFH WR VXJJHVW WKDW WKH WK&LU5HYLHZLQJWKHTXHVWLRQGHQRYRZHDJUHH LQYHVWLJDWLRQ ZDV UHODWHG WR RU WKH FDXVH RI SODLQWLIIj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s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jVFRPSHQVDWLRQFODLPIRUWKH SODLQWLIIDVNHGWRUHWXUQWRZRUNLQ'HFHPEHUKHKDG IDOOZKLFK.8%FRQWHVWHG2Q$SULOWKH((2& EHHQRQGLVDELOLW\OHDYHIRUDERXWPRQWKV$FFHSWLQJWKH LVVXHGDULJKWWRVXHOHWWHURQSODLQWLIIjVVHFRQG((2&FKDUJH JHQXLQHQHVVRISODLQWLIIj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sXQH$IWHUVRPHRQHDW%RHLQJFRQWDFWHG DULVLQJ RXW RI DQ HYDOXDWLRQ SHUIRUPHG RQ EHKDOI RI DQ .8%IRUDUHIHUHQFHFKHFNWKHRIIHUZDVZLWKGUDZQ1RH HPSOR\HU$VWKHGLVWULFWFRXUWFRUUHFWO\REVHUYHGWKDWIDFW WHVWLILHGWKDWVRPHRQHIURP%RHLQJFDOOHGKLPLQsXO\WR KDVQREHDULQJLQWKLVFDVH7KLVLVSDUWLFXODUO\WUXHVLQFH'U DVN DERXW SODLQWLIIjV HPSOR\PHQW 1RH VDLG SODLQWLII QR *UHHQZRRG GLG QRW GLVDJUHH ZLWK 'U &DUSHQWHUjV ORQJHUZRUNHGDW.8%:KHQDVNHGZK\1RHVDLGSODLQWLII FRQFOXVLRQV DQG QR FRQWUDU\ RSLQLRQV ZHUH RIIHUHG KDG EHHQ RXW RI ZRUN IRU D JUHDW OHQJWK RI WLPH DQG WKH\ FRQFHUQLQJSODLQWLIIjVDELOLW\WRUHWXUQWRZRUN GHFLGHGQRWWREULQJKLPEDFN%RHLQJZLWKGUHZWKHRIIHU EDVHG LQ SDUW RQ LQIRUPDWLRQ UHFHLYHG GXULQJ LWV UHIHUHQFH 3ODLQWLIIDUJXHVWKDWKHZDVTXDOLILHGWRZRUNLQWKHPHWHU FKHFNEXWLQGLFDWHGDZLOOLQJQHVVWRUHFRQVLGHULISODLQWLII WHVWHU SURJUDP EHFDXVH .8% KDG SODFHG KLP WKHUH LQ sXO\ FRXOG YHULI\ WKDW KLV VHSDUDWLRQ ZDV YROXQWDU\ DQG QRW IRU DQGKHKDGSHUIRUPHGVDWLVIDFWRULO\XQWLOJRLQJRQOHDYH FDXVH LQ0DUFK7KHGLVWULFWFRXUWDGGUHVVHGWKLVDUJXPHQW DQGGLVWLQJXLVKHGEHWZHHQSODLQWLIIjVVNLOODQGKLVDELOLW\WR 2Q$XJXVWSODLQWLIIILOHGKLVWKLUGFRPSODLQWZLWK IXQFWLRQRQWKHMRE WKH ((2& FKDUJLQJ WKDW KH ZDV KDUDVVHG DQG GLVFKDUJHG EHFDXVH RI GLVDELOLW\ DQG UDFH DQG WKDW KH ZDV UHWDOLDWHG :DGHDUJXHVWKDW.8%WUDQVIHUUHG:DGHWRWKHPHWHU DJDLQVW IRU ILOLQJ ((2& FKDUJHV 2Q 0DUFK WKH WHVWLQJ SURJUDP VR LW FDQQRW DUJXH KH LV QRW TXDOLILHG ((2&LVVXHGDULJKWWRVXHOHWWHU3ODLQWLIIFRPPHQFHGWKLV :DGH DOVR SRLQWV WR WKH WHVWLPRQ\ RI 'RQ %OHYLQV DFWLRQRQsXQHZLWKLQWKHGD\OLPLWDWLRQVSHULRG m%OHYLQVlZKRZDVKLVVXSHUYLVRULQWKHPHWHUWHVWLQJ DSSUHQWLFHSURJUDPDVVXSSRUWIRUKLVFRQWHQWLRQWKDWKH ZDVTXDOLILHGIRUWKHMRE%OHYLQVWHVWLILHGWKDWKHQHYHU KDG D SUREOHP ZLWK :DGH DQG WKDW :DGH ZDV DEOH WR ,Q EDVHG RQ LQIRUPDWLRQ SHUWDLQLQJ WR WKH FRPSHQVDWLRQ FODLP .8% KDG D SULYDWH LQYHVWLJDWRU FKHFN ZKHWKHU ZRUNHUj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mRI XQVRXQG PLQGl DW WKH WLPH WKH DPHQG WKH FRPSODLQW WR DGG FODLPV IRU GLVDELOLW\ FDXVH RI DFWLRQ DFFUXHG 7KLV WROOLQJ SURYLVLRQ KDV QR GLVFULPLQDWLRQSXUVXDQWWRWKH$'$VHH86& DSSOLFDWLRQWRWKH7LWOH9,,FODLPVKRZHYHUDVZHKDYHKHOG 6HFWLRQRIWKH5HKDELOLWDWLRQ$FWRIVHH86& WKDWVWDWHODZWROOLQJRUVDYLQJVSURYLVLRQVGRQRWDSSO\WRWKH DQGWKH7HQQHVVHH+DQGLFDS$FW7+$VHH7HQQ OLPLWDWLRQVSHULRGVH[SUHVVO\VHWIRUWKLQ7LWOH9,,6HH&ODUN &RGH$QQ7KHSURSRVHGDPHQGHGFRPSODLQW :/ DW FLWLQJ s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sDQXDU\WKHGLVWULFWFRXUWGHQLHGSODLQWLIIjV DQGZDVUHSODFHGE\DSHUVRQRXWVLGHWKHSURWHFWHGJURXS PRWLRQ WR DPHQG WKH FRPSODLQW $V D UHVXOW SODLQWLIIjV 6HH6W0DU\jV+RQRU&WUY+LFNV86 PRWLRQIRUSDUWLDOVXPPDU\MXGJPHQWZDVDOVRGHQLHG7KH 2QFH D SULPD IDFLH VKRZLQJ LV PDGH WKH EXUGHQ RI GLVWULFWFRXUWWKHQJUDQWHGGHIHQGDQWjVPRWLRQIRUVXPPDU\ SURGXFWLRQVKLIWVWRWKHGHIHQGDQWWRDUWLFXODWHDOHJLWLPDWH MXGJPHQW IRU WKH UHDVRQV VHW IRUWK LQ LWV RSLQLRQ ILOHG QRQGLVFULPLQDWRU\ UHDVRQ IRU LWV GHFLVLRQ 7KH XOWLPDWH sDQXDU\7KLVWLPHO\DSSHDOIROORZHG ,, 0RUHRYHU XQGHU 7HQQHVVHH ODZ WKH SODLQWLII EHDUV WKH EXUGHQ RI $ 0RWLRQWR$PHQG SURYLQJ WKH LQMXUHG SDUW\ ZDV RI XQVRXQG PLQG GXULQJ WKH HQWLUH WLPH LQ TXHVWLRQ 6HH 3DUKDP Y :DONHU 6:G 7HQQ &W $SS 8QGHU )HG 5 &LY 3 D OHDYH WR DPHQG D SOHDGLQJ 7R EH RI mXQVRXQG PLQGl 7HQQHVVHH ODZ UHTXLUHV WKDW RQH EH LQFDSDEOH RI DWWHQGLQJ WR DQ\ EXVLQHVV RU WDNLQJ FDUH RI KLPVHOI 6HH VKDOO EH IUHHO\ JLYHQ mZKHQ MXVWLFH VR UHTXLUHVl 6HYHUDO 6PLWK Y *UXPPDQ2OVHQ &RUS ) 6XSS (' 7HQQ IDFWRUVVKRXOGEHFRQVLGHUHGLQGHWHUPLQLQJZKHWKHUWRJUDQW 7KH ILUVW ULJKWWRVXH OHWWHU ZKLFK ZDV LVVXHG LQ 6HSWHPEHU DPRWLRQWRDPHQG SUHFHGHG WKH SODLQWLIIjV GLVDELOLW\ 7KH VHFRQG OHWWHU LVVXHG LQ $SULO ZDV IROORZHG E\ SODLQWLIIjV DSSOLFDWLRQ IRU HPSOR\PHQW ZLWK %RHLQJ DQG 8QGXH GHOD\ LQ ILOLQJ ODFN RI QRWLFH WR WKH RSSRVLQJ WKH ILOLQJ RI WKH WKLUG ((2& FKDUJH LQ $XJXVW :KLOH GHIHQGDQW GLG SDUW\EDGIDLWKE\WKHPRYLQJSDUW\UHSHDWHGIDLOXUHWR QRW GLVSXWH SODLQWLII ZDV GLVDEOHG IURP ZRUN WKH SV\FKLDWULF HYDOXDWLRQV GLG QRW VXJJHVW WKDW SODLQWLIIjV PHQWDO FRQGLWLRQ UHQGHUHG KLP XQDEOH WR FXUH GHILFLHQFLHV E\ SUHYLRXV DPHQGPHQWV XQGXH DWWHQG WR DQ\ EXVLQHVV RU WDNH FDUH RI KLPVHOI 3ODLQWLII RIIHUHG QR RWKHU SUHMXGLFH WR WKH RSSRVLQJ SDUW\ DQG IXWLOLW\ RI HYLGHQFH RQ WKLV LVVXH :DGHY.QR[YLOOH8WLOLWLHV%G 1R 1R :DGHY.QR[YLOOH8WLOLWLHV%G RU WKH VHFRQG ULJKWWRVXH OHWWHU 7KH ILUVW ((2& DPHQGPHQWDUHDOOIDFWRUVZKLFKPD\DIIHFWWKHGHFLVLRQ GHWHUPLQDWLRQ DGGUHVVHG SODLQWLIIjV FODLPV RI UDFLDO 'HOD\E\LWVHOILVQRWVXIILFLHQWUHDVRQWRGHQ\DPRWLRQ KDUDVVPHQWWKHLQLWLDOIDLOXUHWRSURPRWHKLPWRDWKLUG\HDU WR DPHQG 1RWLFH DQG VXEVWDQWLDO SUHMXGLFH WR WKH OLQHPDQDSSUHQWLFHSRVLWLRQDQGWKHODWHU$'$WUDQVIHULQWR RSSRVLQJSDUW\DUHFULWLFDOIDFWRUVLQGHWHUPLQLQJZKHWKHU WKHPHWHUWHVWHUDSSUHQWLFHSURJUDP7KHVHFRQGULJKWWRVXH DQDPHQGPHQWVKRXOGEHJUDQWHG OHWWHU SHUWDLQHG WR SODLQWLIIjV FKDUJHV RI UHWDOLDWLRQ 6LQFH SODLQWLIIZDVRQGLVDELOLW\OHDYHEHJLQQLQJLQODWH0DUFK +HDGYsHOOLFR+RXV$XWK)GWK&LU KH FDQQRW FODLP KH ZDV VXEMHFWHG WR D KRVWLOH ZRUN TXRWLQJ+DJHPDQY6LJQDO/3*DV,QF)G HQYLURQPHQW GXULQJ WKH UHOHYDQW WLPH SHULRG 7KXV DOO WK&LU6HHDOVR&RHY%HOO)G SODLQWLIIjVUDFHDQGUHWDOLDWLRQFODLPVZHUHWLPHEDUUHGH[FHSW WK&LUFHUWGHQLHG86 IRUFODLPVEDVHGRQ.8%jVGHFLVLRQWRWHUPLQDWHSODLQWLIIjV :KHQDPHQGPHQWLVVRXJKWDWDODWHVWDJHLQWKHOLWLJDWLRQ HPSOR\PHQWDQGWKHSRVWWHUPLQDWLRQUHVSRQVHWR%RHLQJjV WKHUHLVDQLQFUHDVHGEXUGHQWRVKRZMXVWLILFDWLRQIRUIDLOLQJ UHIHUHQFHFKHFN WRPRYHHDUOLHU6HH'XJJLQVY6WHDNµ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s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j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s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sXGJPHQW FRXUW GHWHUPLQHG WKDW MXVWLFH GLG QRW UHTXLUH WKDW OHDYH EH JUDQWHG RQ WKH GLVDELOLW\ FODLPV :H ILQG QR DEXVH RI :HUHYLHZGHQRYRWKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\ GLVFUHWLRQLQWKLVUHJDUG(YHQRQDSSHDOSODLQWLIIIDLOV WR MXGJPHQW6HHHJ6PLWKY$PHULWHFK)G RIIHUDQ\H[SODQDWLRQRUMXVWLILFDWLRQIRUWKHODWHQHVVRIWKH WK &LU 6XPPDU\ MXGJPHQW LV DSSURSULDWH ZKHQ PRWLRQWRDPHQG1RUGRHVSODLQWLIIGLVSXWHWKHILQGLQJRI WKHUHDUHQRLVVXHVRIPDWHULDOIDFWLQGLVSXWHDQGWKHPRYLQJ SUHMXGLFHWRWKHGHIHQGDQWWKDWZRXOGUHVXOWLISODLQWLIIKDG SDUW\LVHQWLWOHGWRMXGJPHQWDVPDWWHURIODZ)(' 5 &,9 3 EHHQDOORZHGWRDGGWKHGLVDELOLW\GLVFULPLQDWLRQFODLPVDW F,QGHFLGLQJDPRWLRQIRUVXPPDU\MXGJPHQWWKHFRXUW WKDWVWDJHRIWKHSURFHHGLQJV PXVW YLHZ WKH IDFWXDO HYLGHQFH DQG GUDZ DOO UHDVRQDEOH LQIHUHQFHVLQIDYRURIWKHQRQPRYLQJSDUW\6HH0DWVXVKLWD 7KHGLVWULFWFRXUWDOVRFRQFOXGHGWKDWWKHDPHQGPHQWZRXOG (OHF,QGXV&RY=HQLWK5DGLR&RUS86 EH IXWLOH ZLWK UHVSHFW WR WKH 733$ DQG 7LWOH 9, FODLPV EHFDXVHWKH\ZRXOGEHEDUUHGE\WKHDSSOLFDEOHVWDWXWHVRI OLPLWDWLRQV7KHUHWDOLDWRU\GLVFKDUJHFODLPXQGHUWKH733$ 7LPHOLQHVVRI7LWOH9,,&ODLPV LVJRYHUQHGE\DRQH\HDUVWDWXWHRIOLPLWDWLRQVDQGDFFUXHV ZKHQWKHSODLQWLIINQHZRUVKRXOGKDYHNQRZQWKDWDQLQMXU\ $OWKRXJK SODLQWLII DOOHJHG UDFH GLVFULPLQDWLRQ DQG KDGEHHQVXVWDLQHG6HH:HEHUY0RVHV6:G UHWDOLDWLRQFODLPVUHDFKLQJEDFNWRWKHVWDUWRIKLVHPSOR\PHQW 7HQQ 7KH SHULRG FRPPHQFHG ZKHQ SODLQWLII ZLWK .8% WKH GLVWULFW FRXUW IRXQG WKDW 7LWOH 9,, FODLPV mUHFHLYHG XQHTXLYRFDO RUDO QRWLFHl RI WKH GHFLVLRQ WR DULVLQJPRUHWKDQGD\VEHIRUHSODLQWLIIjVILOLQJRIWKHWKLUG WHUPLQDWHKLVHPSOR\PHQW,GDW,QWKLVFDVHSODLQWLII ((2&FKDUJHRQ$XJXVWZHUHWLPHEDUUHG&ODLPV ZDVDGYLVHGRI.8%jVGHFLVLRQLQ)HEUXDU\DQGZDV EDVHGRQHDUOLHUFRQGXFWZHUHEDUUHGEHFDXVHSODLQWLIIIDLOHG WRILOHDQDFWLRQZLWKLQGD\VDIWHUUHFHLYLQJHLWKHUWKHILUVW