Adams v. Battle Creek

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

'$9,' $'$06 ;
3ODLQWLII$SSHOODQW 

 1R
Y 
!

&,7< 2) %$77/( &5((.D 
PXQLFLSDOFRUSRUDWLRQ 
s())5(< 3 .58,7+2))DQ 
LQGLYLGXDO 
'HIHQGDQWV$SSHOOHHV 


1
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH:HVWHUQ'LVWULFWRI0LFKLJDQDW*UDQG5DSLGV
1Rn'DYLG:0F.HDJXH'LVWULFWsXGJH
$UJXHG$XJXVW
'HFLGHGDQG)LOHG0D\
%HIRUH0(55,77.583$16.<DQG%2**6&LUFXLW
sXGJHV


 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R

BBBBBBBBBBBBBBBBB
&2816(/
$5*8('  0DUVKDOO : *UDWH 52%(576 %(7=
%/266 *UDQG 5DSLGV 0LFKLJDQ IRU $SSHOODQW  sRKQ
3DWULFN :KLWH 9$5180 5,''(5,1* 6&+0,'7
+2:/(77 *UDQG 5DSLGV 0LFKLJDQ IRU $SSHOOHHV
21 %5,()  0DUVKDOO : *UDWH 52%(576 %(7=
%/266 *UDQG 5DSLGV 0LFKLJDQ IRU $SSHOODQW  sRKQ
3DWULFN :KLWH 9$5180 5,''(5,1* 6&+0,'7
+2:/(77 *UDQG 5DSLGV 0LFKLJDQ &O\GH s 5RELQVRQ
2)),&( 2) 7+( &,7< $77251(< %DWWOH &UHHN
0LFKLJDQIRU$SSHOOHHV
0(55,77sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
%2**6sMRLQHG.583$16.<sSSGHOLYHUHG
DVHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJLQSDUW
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
0(55,77 &LUFXLW sXGJH  :LWK FHUWDLQ H[FHSWLRQV WKH
IHGHUDOZLUHWDSDFWFULPLQDOL]HVDQGFUHDWHVFLYLOOLDELOLW\IRU
LQWHQWLRQDOO\LQWHUFHSWLQJHOHFWURQLFFRPPXQLFDWLRQVZLWKRXW
DMXGLFLDOZDUUDQW7KLVFDVHZDVEURXJKWXQGHUWKHIHGHUDO
ZLUHWDSSLQJ DFW NQRZQ DV WKH (OHFWURQLF &RPPXQLFDWLRQV
3ULYDF\$FW86&††,WUDLVHVWKHTXHVWLRQ
RIZKHWKHUWKHSROLFHGHSDUWPHQWPD\WDSDSROLFHRIILFHUjV
SDJHUZLWKRXWDZDUUDQWRUQRWLFHWRWKHRIILFHU7KHSROLFH
GHSDUWPHQW WKURXJK XVH RI D GXSOLFDWH RU mFORQHl SDJHU
WDSSHGZLWKRXWDZDUUDQWWKHSODLQWLIIjVSDJHUSURYLGHGE\WKH
GHSDUWPHQWEHFDXVHLWHUURQHRXVO\WKRXJKWKHZDVDVVLVWLQJ
GUXJGHDOHUV7KHFDVHWXUQVRQZKDWLVPHDQWZKHQWKH$FW
XVHVWKHSKUDVHmLQWKHRUGLQDU\FRXUVHRIEXVLQHVVlWRFUHDWH
WZRH[FHSWLRQVWRWKHSURKLELWLRQDJDLQVWZLUHWDSSLQJ
,QWKHSUHVHQWFDVHLWLVERWKFOHDUDQGFRQFHGHGWKDWWKH
GHILQLWLRQRImLQWHUFHSWlLQWKH$FWLQFOXGHVSDJHUVZLWKLQWKH
 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R 1R $GDPVY&LW\RI%DWWOH&UHHNHWDO 

,QHQDFWLQJWKH:LUHWDSSLQJ$FW&RQJUHVVGLGQRWLQWHQGWR ODQJXDJHmDFTXLVLWLRQRIWKHFRQWHQWVRIDQ\HOHFWURQLF
SURKLELWDOOZLUHWDSSLQJRUHOHFWURQLFPRQLWRULQJ+HQFHLW GHYLFHl  7KHQ LQ WKH GHILQLWLRQ VHFWLRQ IRU mHOHFWURQLF
FUHDWHGWZRVWDWXWRU\H[FHSWLRQVWROLDELOLW\ERWKRIZKLFK GHYLFHl WKH VWDWXWH FUHDWHV WZR mLQWKHRUGLQDU\FRXUVHRI
FRYHU WKH PRQLWRULQJ VXE MXGLFH  7KH ODZ HQIRUFHPHQW EXVLQHVVl H[FHSWLRQV WR ZLUHWDS OLDELOLW\  7KH VFRSH DQG
RIILFHUV RI WKH &LW\ RI %DWWOH &UHHN 3ROLFH 'HSDUWPHQW PHDQLQJRIWKHVHWZRH[FHSWLRQVDUHXSIRULQWHUSUHWDWLRQLQ
PRQLWRUHG$GDPjVGHSDUWPHQWDOSDJHULQRUGHUWRVDIHJXDUG WKLVDSSHDO7KHWZRH[FHSWLRQVDUHQRWDOWRJHWKHUFOHDU
WKH LQWHJULW\ RI WKHLU LQYHVWLJDWLRQV  $ OHJLWLPDWH LQWHUHVW
SURYLGHGWKHLPSHWXVIRUWKHPRQLWRULQJZKLFKGLGQRWH[WHQG  mHOHFWURQLF PHFKDQLFDO RU RWKHU GHYLFHl PHDQV
EH\RQGWKDWLQWHUHVWLQLWVVFRSHRUOHQJWK,ZRXOGDIILUP DQ\GHYLFHRUDSSDUDWXVZKLFKFDQEHXVHGWRLQWHUFHSWD
WKH GLVWULFW FRXUWjV MXGJPHQW  , WKHUHIRUH UHVSHFWIXOO\ ZLUHRUDORUHOHFWURQLFFRPPXQLFDWLRQRWKHUWKDQo
GLVVHQW
DDQ\WHOHSKRQHRUWHOHJUDSKLQVWUXPHQWHTXLSPHQW
RUIDFLOLW\RUDQ\FRPSRQHQWWKHUHRILIXUQLVKHGWR
WKH VXEVFULEHU RU XVHU E\ D SURYLGHU RI ZLUH RU
HOHFWURQLF FRPPXQLFDWLRQ VHUYLFH LQ WKH RUGLQDU\
FRXUVH RI LWV EXVLQHVV DQG EHLQJ XVHG E\ WKH
VXEVFULEHU RU XVHU LQ WKH RUGLQDU\ FRXUVH RI LWV
EXVLQHVVRUIXUQLVKHGE\VXFKVXEVFULEHURUXVHUIRU
FRQQHFWLRQWRWKHIDFLOLWLHVRIVXFKVHUYLFHDQGXVHG
LQWKHRUGLQDU\FRXUVHRILWVEXVLQHVVRULLEHLQJ
XVHG E\ D SURYLGHU RU ZLUH RU HOHFWURQLF
FRPPXQLFDWLRQ VHUYLFH LQ WKH RUGLQDU\ FRXUVH RI
EXVLQHVVRUE\DQLQYHVWLJDWLYHRUODZHQIRUFHPHQW
RIILFHULQWKHRUGLQDU\FRXUVHRIKLVGXWLHV
86&†HPSKDVLVDGGHG
7KH ILUVW SUREOHP LV ZKDW WKH XQGHUOLQHG SKUDVH mRWKHU
WKDQl QRUPDOO\ DQ DGYHUELDO SKUDVH  VHH :HEVWHUjV 7KLUG
,QWjO'LFWLVVXSSRVHGWRPRGLI\'RHVLWPRGLI\WKH
LPPHGLDWHO\SUHFHGLQJDFWLRQmWRLQWHUFHSW>DQ@HOHFWURQLF
GHYLFHlRUGRHVLWDFWDVDQDGMHFWLYHPRGLI\LQJmGHYLFHRU
 DSSDUDWXVlRUGRHVLWPRGLI\VRPHRWKHUDFWLRQRUWKRXJKWQRW
%HFDXVH , ILQG WKDW WKH LPSOLFDWHG DFWLYLW\ LV ZLWKLQ WKH H[FHSWLRQV
SURYLGHG E\ WKH DFW , GR QRW UHDFK WKH LVVXH DV WR ZKHWKHU WKH DFW H[SUHVVHGLQFOHDUODQJXDJH"7KHVHFRQGSUREOHPLVGRHV
FRQWHPSODWHV KROGLQJ SROLFH GHSDUWPHQWV OLDEOH IRU WKH PDOIHDVDQFH RI WKHXVHRImLQWKHRUGLQDU\FRXUVHRIEXVLQHVVlODQJXDJHDV
WKHLU HPSOR\HHV ,Q DGGLWLRQ EHFDXVH , ILQG WKDW WKH GLVWULFW FRXUW SURSHUO\ DQH[FHSWLRQLPSO\DQGWKHUHIRUHPHDQWKDWWKHWDSSLQJRI
DZDUGHG VXPPDU\ MXGJPHQW LQ IDYRU RI WKH GHIHQGDQWV , ZRXOG DIILUP WKH
ORZHU FRXUWjV FRQVHTXHQW GHQLDO RI WKH SODLQWLIIjV PRWLRQ IRU VXPPDU\
MXGJPHQW

6HFWLRQ  VD\V mµLQWHUFHSWj PHDQV WKH DXUDO RU RWKHU

, FRQFXU LQ WKH PDMRULW\jV GLVSRVLWLRQ RI WKH )RXUWK $PHQGPHQW DFTXLVLWLRQ RI WKH FRQWHQWV RI DQ\ ZLUH HOHFWURQLF RU RUDO FRPPXQLFDWLRQ
FODLP DQG WKH TXDOLILHG LPPXQLW\ LVVXH WKURXJK WKH XVH RI DQ\ HOHFWURQLF PHFKDQLFDO RU RWKHU GHYLFH   l
 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R 1R $GDPVY&LW\RI%DWWOH&UHHNHWDO 

WKHFRPPXQLFDWLRQLVVRURXWLQHFXVWRPDU\RUZHOODFFHSWHG PRQLWRULQJRI$GDPVjGHSDUWPHQWDOSDJHU7KHPRQLWRULQJ
WKDWWKHSDUWLHVWRWKHWDSSHGFRPPXQLFDWLRQZRXOGVKRXOGRU ZDV VKRUWOLYHG HIIHFWXDWHG QR ORQJHU WKDQ UHTXLUHG E\ LWV
GLGNQRZRIWKHWDS:HZLOOGHDOZLWKWKHVHWZRLVVXHVRI VXSSRUWLQJ SXUSRVH  7KH PRQLWRULQJ LWVHOI ZDV KDUGO\
LQWHUSUHWDWLRQEHORZ LQYDVLYH DV QR SHUVRQDO PHVVDJHV ZHUH HYHU LQWHUFHSWHG RU
UHFRUGHG,QDGGLWLRQEHFDXVH$GDPVKDGEHHQLQIRUPHGWKDW
7KH0HDQLQJRIWKH3KUDVHm2WKHU7KDQlo7KHUHLV KHZDVQRWWRXVHGHSDUWPHQWDOHTXLSPHQWIRUSHUVRQDOXVHKH
QRGLVFXVVLRQLQWKHFDVHODZRIZKDWWKHSKUDVHmRWKHUWKDQl KDGDOLPLWHGH[SHFWDWLRQRISULYDF\LQWKHSHUVRQDOPHVVDJHV
LQWKHVWDWXWRU\GHILQLWLRQRImHOHFWURQLFPHFKDQLFDORURWKHU UHOD\HGE\WKHSDJHU0RUHRYHU$GDPVZDVDZDUHWKDWKLV
GHYLFHl LV WR PRGLI\  ,WV GLFWLRQDU\ ODEHO DV DQ DGYHUELDO HTXLSPHQW FRXOG EH LQVSHFWHG DW DQ\ WLPH  ,W LV WUXH WKDW
SKUDVH ZRXOG LQGLFDWH WKDW LW LV WR PRGLI\ WKH LPPHGLDWHO\ $GDPVGLGQRWKDYHVSHFLILFQRWLFHWKDWKLVSDJHUFRXOGEH
SUHFHGLQJYHUESKUDVHmWRLQWHUFHSWDZLUHRUDORUHOHFWURQLF PRQLWRUHGE\WKHSROLFHGHSDUWPHQW+RZHYHULQYLHZRIWKH
FRPPXQLFDWLRQl7KLVGRHVQRWPDNHVHQVHZKHQUHDGZLWK VHULRXVQHVV RI WKH MXVWLILFDWLRQ SURIIHUHG E\ WKH SROLFH
WKHODQJXDJHWKDWIROORZVLW GHSDUWPHQW DQG WKH OLPLWHG LQFXUVLRQ RQ $GDPVj SULYDF\
LQWHUHVWV$OVSDXJKDQG.UXLWKRIIZHUHDFWLQJLQWKHRUGLQDU\
,ImRWKHUWKDQlPRGLILHVmXVHGWRLQWHUFHSWHOHFWURQLF FRXUVH RI WKH GHSDUWPHQWjV EXVLQHVV DQG RI WKHLU ODZ
FRPPXQLFDWLRQlWKH VFRSH RI WKH mRWKHU WKDQl H[FHSWLRQ HQIRUFHPHQWGXWLHVZKHQWKH\PRQLWRUHG$GDPVjSDJHUE\
ZRXOGEHDVEURDGDVWKHVWDWXWHLWVHOI7KLVPHDQVWKHUHIRUH FORQLQJLW
WKDW mRWKHU WKDQl PXVW PRGLI\ WKH QRXQV mGHYLFH RU
DSSDUDWXVl7KHODQJXDJHLPPHGLDWHO\IROORZLQJmRWKHUWKDQl
LVmDQ\WHOHSKRQHRUWHOHJUDSKRUDQ\FRPSRQHQWWKHUHRIlDOO
RIZKLFKDUHDOVRQRXQV$EHWWHUZRUGFKRLFHWKDQWKHmRWKHU
WKDQlSKUDVHSUREDEO\ZRXOGKDYHEHHQmH[FOXGLQJlEHFDXVH 
VXESDUWVDDQGEWR†DUHH[FOXVLRQVWRWKHPDLQ $GDPV KDV FRQWHQGHG WKDW WKH WUXH PRWLYH IRU WKH FORQLQJ RI WKH
GHILQLWLRQ,QDQ\HYHQWWKHFDVHVGLVFXVVLQJWKHVHH[FHSWLRQV SDJHU ZDV IDU PRUH LQYROYHG WKDQ WKH SXUSRVH SURIIHUHG E\ WKH DSSHOOHHV

DSSO\mRWKHUWKDQlWKLVZD\DQGLWLVWKHRQO\ZD\WKDWPDNHV $GDPV KDV DOOHJHG WKDW .UXLWKRII PRQLWRUHG KLV DFWLYLW\ EHFDXVH KH KDG
KDG DQ DIIDLU ZLWK $GDPVj ZLIH D IHZ \HDUV HDUOLHU ,QGHHG .UXLWKRII KDV
VHQVH DGPLWWHG KDYLQJ DQ DIIDLU ZLWK $GDPVj ZLIH $QG IRU WKH SXUSRVH RI
UHYLHZLQJ WKH LQVWDQW PRWLRQ IRU VXPPDU\ MXGJPHQW LW LV UHDVRQDEOH WR
  ([FHSWLRQV WR /LDELOLW\  o  :H FRQFOXGH WKDW WKH LQIHU WKDW .UXLWKRII LQGHHG DXWKRUL]HG WKH XVH RI WKH FORQHG SDJHU
H[FHSWLRQV GR QRW DSSO\ WR WKLV FDVH  %RWK WKH mRUGLQDU\ +RZHYHU LW LV XQGLVSXWHG WKDW $OVSDXJK QRW .UXLWKRII UDLVHG FRQFHUQV
FRXUVHRIEXVLQHVVlH[FHSWLRQRUmEXVLQHVVXVHlH[FHSWLRQDV DERXW $GDPVj SRVVLEOH UROH LQ VDERWDJLQJ WKH GUXJ LQYHVWLJDWLRQV ,W LV

LWLVDOVRFDOOHGDVZHOODVWKHODZHQIRUFHPHQWH[FHSWLRQ XQGLVSXWHG WKDW $OVSDXJK QRW .UXLWKRII PDLQWDLQHG FRQWURO RI WKH FORQHG
SDJHU 0RUHRYHU LW LV XQGLVSXWHG WKDW $OVSDXJK GLG QRW SURYLGH .UXLWKRII
UHTXLUH WKDW WKH LQWHUFHSWLRQ RI D FRPPXQLFDWLRQ EH RU DQ\RQH HOVH ZLWK D FRS\ RI WKH OLVW KH FUHDWHG GXULQJ WKH FRXUVH RI WKH
XQGHUWDNHQE\HPSOR\HUVRUODZHQIRUFHPHQWDJHQFLHVLQWKH PRQLWRULQJ
RUGLQDU\FRXUVHRIWKHLUEXVLQHVVHVXVLQJHTXLSPHQWSURYLGHG
E\DFRPPXQLFDWLRQVFDUULHUDVSDUWRIWKHFRPPXQLFDWLRQV 
7KH FLUFXPVWDQFHV LQ %ULJJV SURYLGH D FRPPHUFLDO DQDORJ WR WKRVH

QHWZRUN)RUWKLVH[FHSWLRQWRDSSO\ZHPXVWILQGILUVWWKDW LQ WKLV FDVH WKH HPSOR\HU KDG D SDUWLFXODUL]HG VXVSLFLRQ WKDW DQ HPSOR\HH

WKHHTXLSPHQWXVHGWRPDNHWKHLQWHUFHSWLRQEHmIXUQLVKHGWR KDG EHHQ SURYLGLQJ FRPSDQ\ VHFUHWV WR WKH FRPSHWLWLRQ WKH HPSOR\HH KDG

WKH VXEVFULEHU RU XVHU E\ D SURYLGHU RI ZLUH RU HOHFWURQLF EHHQ ZDUQHG QRW WR GLVFORVH WKH VHFUHWV DQG WKH PRQLWRUHG SKRQH FDOO ZDV

%ULJJV
FRPPXQLFDWLRQVHUYLFHLQWKHRUGLQDU\FRXUVHRILWVEXVLQHVV EHWZHHQ WKH FRPSHWLWLRU DQG WKH HPSOR\HH 7KH &RXUW IRXQG WKDW

DQG EHLQJ XVHG E\ WKH VXEVFULEHU RU XVHU LQ WKH RUGLQDU\
mLW LV ZLWKLQ WKH RUGLQDU\ FRXUVH RI EXVLQHVV WR OLVWHQ LQ RQ DQ H[WHQVLRQ

SKRQH IRU DW OHDVW VR ORQJ DV WKH FDOO LQYROYHV WKH W\SH RI LQIRUPDWLRQ KH

IHDUV LV EHLQJ GLVFORVHGl %ULJJV   )G DW 
 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R 1R $GDPVY&LW\RI%DWWOH&UHHNHWDO 

)GG&LU8QLWHG6WDWHVY9DQ3R\FN FRXUVHRILWVEXVLQHVVl†DL$OWKRXJKSODLQWLII
)GWK&LU,IWKHSDUW\KDVUHFHLYHG UDLVHV WKH LVVXH RI ZKHWKHU D FORQH SDJHU ILWV ZLWKLQ WKH
DGYDQFHQRWLFHRIPRQLWRULQJWKHQWKDWSDUW\PD\RUGLQDULO\ GHILQLWLRQSUHVFULEHGLQWKHH[FHSWLRQLWLVFOHDUWKDWWKHFORQH
EH VDLG WR KDYH FRQVHQWHG WR WKH VXEVHTXHQW PRQLWRULQJ SDJHUDSLHFHRIHOHFWURQLFFRPPXQLFDWLRQHTXLSPHQWZDV
+HQFH E\ UHDGLQJ WKH EXVLQHVV XVH DQG ODZ HQIRUFHPHQW SURYLGHGWRWKH&LW\E\0RELOH&RPPD%HOO6RXWKFRPSDQ\
H[FHSWLRQV WR LQFOXGH DFWXDO QRWLFH WKH SDQHO PDMRULW\ KDV LQWKHRUGLQDU\FRXUVHRILWVEXVLQHVVDVDSURYLGHURIZLUHDQG
PDGH WKRVH H[FHSWLRQV VXSHUIOXRXV LQ OLJKW RI WKH FRQVHQW HOHFWURQLF FRPPXQLFDWLRQ VHUYLFHV  :H ILQG DV GLG WKH
H[FHSWLRQ6HH$PDWL)GDWm,IWKHUHLVDFWXDO GLVWULFWFRXUWWKDWWKHILUVWSDUWRIWKHH[FHSWLRQLVPHW
QRWLFH WKHUH ZLOO QRUPDOO\ EH LPSOLHG FRQVHQW  6R LI WKH
µRUGLQDU\FRXUVHjH[FOXVLRQUHTXLUHGSURRIRIQRWLFHLWZRXOG 7KH VHFRQG SDUW RI WKH H[FHSWLRQ UHTXLUHV WKDW WKH FORQH
KDYH QR IXQFWLRQ LQ WKH VWDWXWH EHFDXVH WKHUH LV D VHSDUDWH SDJHU EH XVHG LQ mWKH RUGLQDU\ FRXUVHl RI WKH SROLFH
VWDWXWRU\ H[FOXVLRQ IRU FDVHV LQ ZKLFK RQH SDUW\ WR WKH GHSDUWPHQWjVEXVLQHVVm2UGLQDU\FRXUVHRIEXVLQHVVlLVQRW
FRPPXQLFDWLRQKDVFRQVHQWHGWRWKHLQWHUFHSWLRQlFLWDWLRQV GHILQHGLQWKHVWDWXWHEXWLWJHQHUDOO\UHTXLUHVWKDWWKHXVHEH
RPLWWHG IRUDOHJLWLPDWHEXVLQHVVSXUSRVHURXWLQHDQGZLWK
QRWLFH  7KHUH LV VRPH GLVDJUHHPHQW LQ WKH FDVH ODZ DERXW
*LYHQWKHIDFWWKDWWKHRUGLQDU\FRXUVHH[FOXVLRQVUHTXLUH ZKHWKHU mFRYHUWl PRQLWRULQJ FDQ HYHU EH LQ WKH mRUGLQDU\
WKHUHYLHZLQJFRXUWWRHQJDJHLQDUHDVRQDEOHQHVVDQDO\VLVDV FRXUVHRIEXVLQHVVl$OWKRXJKZHGRQRWILQGWKDWWKHVWDWXWH
WRWKHQDWXUHVFRSHDQGMXVWLILFDWLRQRIWKHPRQLWRULQJLWLV UHTXLUHVDFWXDOFRQVHQWIRUWKHH[FHSWLRQWRDSSO\ZHGRKROG
LPSRUWDQWWRQRWHWKHFLUFXPVWDQFHVVXUURXQGLQJWKHLQVWDQW WKDWPRQLWRULQJLQWKHRUGLQDU\FRXUVHRIEXVLQHVVUHTXLUHV
PRQLWRULQJ,QRUGHUWRPDLQWDLQWKHLQWHJULW\RIWKHLUGUXJ QRWLFHWRWKHSHUVRQRUSHUVRQVEHLQJPRQLWRUHG%HFDXVHLW
LQYHVWLJDWLRQVWKHSROLFHGHSDUWPHQWLQLWLDWHGVXUUHSWLWLRXV LVXQGLVSXWHGKHUHWKDWSODLQWLIIZDVQRWJLYHQDQ\QRWLFHWKDW
KLVSDJHUZDVEHLQJPRQLWRUHGWKHH[FHSWLRQVFDQQRWDSSO\
0RVW FRXUWV LQWHUSUHWLQJ WKHVH H[FHSWLRQV KDYH KHOG WKDW
DGYDQFHQRWLFHLQVRPHIRUPLVQHFHVVDU\m:KDWLVRUGLQDU\
LVDSWWREHNQRZQLWLPSRUWVLPSOLFLWQRWLFHl$PDWLY&LW\
RI:RRGVWRFN)GWK&LUFHUWGHQLHG
 6&W,Q%RKDFKY&LW\RI5HQR)6XSS
7KH SDQHO PDMRULW\ SODFHV WDOLVPDQLF UHOLDQFH RQ WKH QRWLRQ WKDW WKH
'1HYSROLFHRIILFHUVFODLPHGWKDWWKHSROLFH
PRQLWRULQJ PXVW EH URXWLQH +RZHYHU WKDW ZRXOG HQFRXUDJH EXVLQHVVHV
GHSDUWPHQWjVUHWULHYDORIVWRUHGPHVVDJHVJHQHUDWHGE\WKHLU
WR UHFRUG DOO SKRQH FDOOV ZKHQ WKH DVVHUWHG EXVLQHVV MXVWLILFDWLRQ UHTXLUHG
SDJHUVZDVDYLRODWLRQRIWKH$FW7KHFRXUWKHOGWKDWWKH
RIILFHUVKDGQRUHDVRQDEOHH[SHFWDWLRQRISULYDF\ZKHQWKH
RQO\ OLPLWHG PRQLWRULQJ 6XFK D UHVXOW ZRXOG EH DQ XQQHFHVVDU\

LQIULQJHPHQW RQ WKH SULYDF\ RI DQ\ mLQQRFHQW E\VWDQGHUVl 6HH %ULJJV 

 )G DW  Q m$ JHQHUDO SUDFWLFH RI VXUUHSWLWLRXV PRQLWRULQJ SROLFHGHSDUWPHQWZDUQHGSDJHUXVHUVLQDGYDQFHWKDWWKHLU
ZRXOG EH PRUH LQWUXVLYH RQ HPSOR\HHV
SULYDF\ WKDQ PRQLWRULQJ OLPLWHG PHVVDJHV ZRXOG EH ORJJHG RQ WKH QHWZRUN  ,Q 6DQGHUV Y
WR VSHFLILF RFFDVLRQVl
5REHUW%RVFK&RUS)GWK&LUWKH
 )RXUWK&LUFXLWKHOGWKDWUHFRUGLQJDOOWHOHSKRQHFRQYHUVDWLRQV
7KH GHSDUWPHQW KDV SURYLGHG QXPHURXV UHSRUWV RI DOOHJDWLRQV RI
RQ FHUWDLQ OLQHV DIWHU ERPE WKUHDWV ZHUH UHFHLYHG E\ WKH
$GDPVj LQYROYHPHQW LQ GUXJ DFWLYLW\ 7KH IDFW WKDW QRQH RI WKHVH
FRPSDQ\ZDVQRWLQWKHRUGLQDU\FRXUVHRIEXVLQHVVZKHUHWKH
HPSOR\HHVGLGQRWUHFHLYHQRWLFHRIWKHUHFRUGLQJ
DOOHJDWLRQV KDYH EHHQ SURYHQ LV QRW GLVSRVLWLYH 5DWKHU WKH LVVXH LV

ZKHWKHU JLYHQ WKH VHULRXVQHVV RI WKHVH DOOHJDWLRQV DQG WKH KDUP ZKLFK

FRXOG RFFXU WR QDUFRWLFV LQYHVWLJDWRUV LI WKHVH DOOHJDWLRQV ZHUH WUXH

GHIHQGDQWV DFWHG LQ WKH RUGLQDU\ FRXUVH RI WKHLU GXWLHV
 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R 1R $GDPVY&LW\RI%DWWOH&UHHNHWDO 

'HIHQGDQWVKHUHGLGQRWURXWLQHO\PRQLWRURIILFHUVjSDJHUV LWVHOIEHMXVWLILHGE\DYDOLGEXVLQHVVSXUSRVHRUSHUKDSVDW
RU JLYH QRWLFH WR RIILFHUV WKDW UDQGRP PRQLWRULQJ RI WKHLU OHDVWPXVWEHVKRZQWREHXQGHUWDNHQQRUPDOO\l
GHSDUWPHQWLVVXHG SDJHUV ZDV SRVVLEOH  :H GLVDJUHH ZLWK
GHIHQGDQWV WR WKH H[WHQW WKDW WKH\ FRQWHQG WKDW SODLQWLII 0RUHRYHU WKH SDQHO PDMRULW\ KDV LJQRUHG DQ H[SUHVV
LPSOLHGO\FRQVHQWHGWRWKHLQWHUFHSWLRQRIKLVSDJHVE\WKH SURYLVLRQRIWKH:LUHWDSSLQJ$FWLQKROGLQJWKDWDFWXDOQRWLFH
FORQH SDJHU VLPSO\ EHFDXVH KH DFFHSWHG DQG XVHG D LVUHTXLUHGWKH:LUHWDSSLQJ$FWGRHVQRWSURKLELWHOHFWURQLF
GHSDUWPHQWLVVXHG SDJHU  7KH JHQHUDO SROLF\ RI WKH HDYHVGURSSLQJZKHUHRQHRIWKHSDUWLHVKDVFRQVHQWHGWRWKH
GHSDUWPHQWWKDWGHSDUWPHQWLVVXHGHTXLSPHQWZKLFKLQFOXGHV PRQLWRULQJ  6HH  86& † F m,W VKDOO QRW EH
WKHSDJHUZDVQRWWREHmFRQYHUWHGWRSHUVRQDOXVHlFDQQRW XQODZIXOXQGHUWKLVFKDSWHUIRUDSHUVRQDFWLQJXQGHUFRORURI
SURYLGH WKH QHFHVVDU\ QRWLFH WR RIILFHUV WR ILQG FRQVHQW WR ODZ WR LQWHUFHSW D ZLUH RUDO RU HOHFWURQLF FRPPXQLFDWLRQ
VXUUHSWLWLRXVLQWHUFHSWLRQRIWKHLUPHVVDJHVE\FORQHSDJHUV ZKHUHVXFKSHUVRQLVDSDUW\WRWKHFRPPXQLFDWLRQRURQHRI
7KHVRFDOOHGSROLF\SURKLELWLQJSHUVRQDOXVHFDQQRWIRUPDQ WKHSDUWLHVWRWKHFRPPXQLFDWLRQKDVJLYHQSULRUFRQVHQWWR
DIWHUWKHIDFW MXVWLILFDWLRQ IRU LQWHUFHSWLQJ SODLQWLIIjV SDJHU VXFK LQWHUFHSWLRQl  &RXUWV KDYH GHWHUPLQHG WKDW VXFK
ZKHUHWKHSROLF\KDGQRWEHHQHQIRUFHGDQGWKHGHSDUWPHQW FRQVHQW PD\ EH H[SOLFLW RU LW PD\ EH LPSOLHG IURP WKH
FRQFHGHG LW ZDV DZDUH WKDW SDJHUV ZHUH XVHG E\ PDQ\ VXUURXQGLQJIDFWV6HHHJ8QLWHG6WDWHVY:RUNPDQ
PHPEHUVRIWKHIRUFHIRUSHUVRQDOXVH
:HGRQRWILQGDQ\QHHGXQGHUWKHIDFWVSUHVHQWHGKHUHWR 
DQDO\]HWKHmEXVLQHVVXVHlDQGmODZHQIRUFHPHQWlH[FHSWLRQV 7KH SDQHO PDMRULW\ FLWHV$PDWL Y &LW\ RI :RRGVWRFN  )G 

VHSDUDWHO\&RQJUHVVPRVWOLNHO\FDUYHGRXWDQH[FHSWLRQIRU WK &LU  DQG 6DQGHUV Y 5REHUW %RVFK &RUS  )G  WK &LU

ODZHQIRUFHPHQWRIILFLDOVWRPDNHFOHDUWKDWWKHURXWLQHDQG  DV VXSSRUW IRU WKHLU PDQGDWH WKDW QRWLFH LV UHTXLUHG 1HLWKHU FDVH
VXSSRUWV UHTXLULQJ QRWLFH DV D VLQH TXD QRQ HOHPHQW RI WKH RUGLQDU\ FRXUVH
DOPRVW XQLYHUVDO UHFRUGLQJ RI SKRQH OLQHV E\ SROLFH WHVW ,Q IDFW $PDWL H[SUHVVO\ KHOG RWKHUZLVH m7KH SODLQWLIIV DUJXH WKDW
GHSDUWPHQWVDQGSULVRQVDVZHOODVRWKHUODZHQIRUFHPHQW ZLUHWDSSLQJ FDQQRW EH µLQ WKH RUGLQDU\ FRXUVH RI ODZ HQIRUFHPHQWj XQOHVV
LQVWLWXWLRQV LV H[HPSW IURP WKH VWDWXWH  6HH )LUVW Y 6WDUN WKHUH LV H[SUHVV QRWLFH WR WKH SHRSOH ZKRVH FRQYHUVDWLRQV DUH EHLQJ
&QW\%GRI&RPPjUV1R:/WK OLVWHQHG WR 7KH VWDWXWH GRHV QRW VD\ WKLV DQG LW FDQQRW EH ULJKWl $PDWL

&LU 2FW    6XFK D V\VWHP URXWLQHO\ DQG  )G DW  7KH 6DQGHUV FRXUWjV DQDO\VLV PDNHV FOHDU WKDW WKH FRXUW
ZDV EDODQFLQJ WKH DVVHUWHG EXVLQHVV LQWHUHVW DJDLQVW WKH HPSOR\HHjV
LQGLVFULPLQDWHO\UHFRUGVDOOSKRQHDFWLYLW\LQDQGRXWRIWKH LQWHUHVW LQ DGYDQFH QRWLFH
SROLFH GHSDUWPHQW  7KLV SUDFWLFH LV ZHOO NQRZQ LQ WKH
LQGXVWU\DQGLQWKHJHQHUDOSXEOLFDQGWKHFRXUWVKDYHUXOHG &RYHUW XVH RI D VXUYHLOODQFH GHYLFH PXVW EH MXVWLILHG E\ D YDOLG
WKDWHYHQSULVRQHUVDUHHQWLWOHGWRVRPHIRUPRIQRWLFHWKDW EXVLQHVV SXUSRVH +HUH WKH MXVWLILFDWLRQ DGYDQFHG IRU WKH
VXFKFRQYHUVDWLRQVPD\EHPRQLWRUHGRU UHFRUGHG 8QLWHG RQJRLQJ LQWHUFHSWLRQ RI WHOHSKRQH FDOOV LH WKH IHDU RI ERPE
WKUHDWV GRHV QRW LQ DQ\ ZD\ H[SODLQ WKH IDFW WKDW %RVFK IDLOHG WR
6WDWHVY3DXO)GWK&LUVHHDOVRHJ LQIRUP DQ\ *XDUGVPDUN SHUVRQQHO RWKHU WKDQ WKH VXSHUYLVRUV RI
8QLWHG 6WDWHV Y 9DQ 3R\FN  )G  WK &LU  WKH XVH RI WKH YRLFH ORJJHU ,Q VKRUW WKHUH LV QR EXVLQHVV UHDVRQ
GHWHQWLRQFHQWHU8QLWHG6WDWHVY'DQLHOV)G DVVHUWHG IRU WKH GHFLVLRQ QRW WR QRWLI\ DOO WKH *XDUGVPDUN
WK&LU8QLWHG6WDWHVY$PHQ)G HPSOR\HHV RI WKH XVH RI WKH YRLFH ORJJHUl
G&LU&DPSLWLY:DORQLV)GVW
&LU PRQLWRULQJ RI VSHFLILF LQPDWH FDOO ZLWKRXW 6DQGHUV  )G DW  IRRWQRWHV RPLWWHG 7KH SDQHO PDMRULW\ KDV
DOVR FLWHG D GLVWULFW FRXUW FDVH %RKDFK Y &LW\ RI 5HQR  ) 6XSS 
UHJXODWLRQRUQRWLFHDQGQRWURXWLQHO\GRQHYLRODWHVVWDWXWH ' 1HY  ZKLFK GLG QRW GHDO ZLWK WKH H[FOXVLRQV DW LVVXH KHUH EXW
LQVWHDG IRFXVHG RQ  86& †  ZKLFK SHUPLWV LQWHUQHW VHUYLFH
SURYLGHUV WR VWRUH DQG UHWULHYH HOHFWURQLF PHVVDJHV 6HH %RKDFK  )
6XSS DW 
 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R 1R $GDPVY&LW\RI%DWWOH&UHHNHWDO 

RIILFLDOVKDYHJLYHQDFWXDOQRWLFHWRWKRVHEHLQJPRQLWRUHG 0XQLFLSDO/LDELOLW\8QGHUWKH3ULYDF\$FWo3ODLQWLII
:KLOH , DJUHH WKDW D OHJLWLPDWH MXVWLILFDWLRQ LV UHTXLUHG VHHNVWRKROGWKH&LW\OLDEOHXQGHUWKHZLUHWDSSLQJDFWDVZHOO
QHYHUWKHOHVV , GR QRW ILQG VXSSRUW LQ WKH VWDWXWH RU WKH DV sHIIUH\ .UXLWKRII D SROLFH GHSDUWPHQW HPSOR\HH
DVVRFLDWHGFDVHODZIRUUHTXLULQJLQDOOFLUFXPVWDQFHVDGYDQFH 'HIHQGDQWV UDLVH WKH TXHVWLRQ RI ZKHWKHU WKH &LW\ LV D
QRWLFHRUURXWLQHPRQLWRULQJ mSHUVRQl IRU SXUSRVHV RI WKH $FW  7KH VWDWXWH GHILQHV
mSHUVRQlDVmDQ\HPSOR\HHRUDJHQWRIWKH8QLWHG6WDWHVRU
&RXUWVKDYHUHTXLUHGQRWLFHRIWKHSRVVLELOLW\RIPRQLWRULQJ DQ\6WDWHRUSROLWLFDOVXEGLYLVLRQWKHUHRIDQGDQ\LQGLYLGXDO
LQFDVHVZKHUHWKHTXDQWXPRIWKHDVVHUWHGEXVLQHVVRUODZ SDUWQHUVKLS DVVRFLDWLRQ MRLQW VWRFN FRPSDQ\ WUXVW RU
HQIRUFHPHQW LQWHUHVW LV ORZ  6HH HJ 6DQGHUV Y 5REHUW FRUSRUDWLRQl86&†
%RVFK&RUS)GWK&LUm,QVKRUW
WKHUHLVQREXVLQHVVUHDVRQDVVHUWHGIRUWKHGHFLVLRQQRWWR 0RVWFRXUWVDGGUHVVLQJWKHLVVXHKDYHKHOGWKDWWKH
QRWLI\DOOWKH*XDUGVPDUNHPSOR\HHVRIWKHXVHRIWKHYRLFH DPHQGPHQWVLQGLFDWHWKDWDJRYHUQPHQWDOHQWLW\PD\EHOLDEOH
ORJJHUl+RZHYHUZKHQFRQIURQWHGZLWKPRUHVXEVWDQWLDO LQ D FLYLO VXLW XQGHU WKH $FW  2UJDQL]DFLRQ s' /WGD Y
MXVWLILFDWLRQV FRXUWV KDYH SHUPLWWHG EXVLQHVVHV WR PRQLWRU 8QLWHG6WDWHV'HSjWRIsXVWLFH)GG&LU
ZLWKRXW DGYDQFH QRWLFH  6HH HJ %ULJJV Y $PHULFDQ $LU &RQQHUY7DWH1R&LY$&97:BBB)
)LOWHU&R,QF)GQWK&LUm6LQFH 6XSSGBBB:/DW

1'*D)HE
WKHVSHFLILFMXVWLILFDWLRQDGYDQFHGKHUHLVVRFORVHO\WLHGWRD  'RUULV Y $EVKHU  ) 6XSS   0'
OHJLWLPDWHEXVLQHVVSXUSRVHZHKDYHQRKHVLWDWLRQKROGLQJ 7HQQPXQLFLSDOOLDELOLW\H[LVWVDIIjGLQSDUWRQRWKHU
WKDW WKHUH LV QRWKLQJ H[WUDRUGLQDU\ DERXW 0F&OXUH
V DFW RI JURXQGV DQG UHYjG LQ SDUW  )G  WK &LU 
OLVWHQLQJLQ:HUHWKHEXVLQHVVMXVWLILFDWLRQOHVVFRPSHOOLQJ FODLPV DJDLQVW FRXQW\ ZHUH VHWWOHG SULRU WR DSSHDO DQG
WKH DEVHQFH RI DQ\ FRPSDQ\ SROLF\ RU SULRU ZDUQLQJV WKHUHIRUH QRW DGGUHVVHG RQ DSSHDO 3%$ /RFDO 1R  Y
FRQFHUQLQJ XVH RI FRPSDQ\ WHOHSKRQHV PLJKW EH PRUH :RRGEULGJH3ROLFH'HSjW)6XSS'1s
VLJQLILFDQWl$ULDVY0XWXDO&HQWUDO$ODUP6HUYLFH,QF 
)GG&LUm:KHWKHUQRWLFHLVUHTXLUHG
GHSHQGVRQWKHQDWXUHRIWKHDVVHUWHGEXVLQHVVMXVWLILFDWLRQ 2QO\WKH6HYHQWK&LUFXLWKDVUXOHGWRWKHFRQWUDU\$PDWL
DQGKHUHZKHUHWKHUHFRUGLQJLVDWOHDVWLQSDUWLQWHQGHGWR Y &LW\ RI :RRGVWRFN  )G   WK &LU FHUW
GHWHU FULPLQDO DFWLYLW\ WKH DEVHQFH RI QRWLFH PD\ PRUH GHQLHG6&W,WEDVHGLWVFXUVRU\GHFLVLRQWR
HIIHFWLYHO\ IXUWKHU WKLV LQWHUHVWl%HUU\ Y )XQN  )G H[HPSW JRYHUQPHQWDO HQWLWLHV IURP OLDELOLW\ XQGHU WKH $FW
m>,I@FRYHUWPRQLWRULQJLVWRWDNHSODFHLWPXVW VROHO\RQWKHSODLQODQJXDJHRIWKHGHILQLWLRQRImSHUVRQlLQ
WKHVWDWXWHZKLFKGRHVQRWH[SUHVVO\LQFOXGHJRYHUQPHQWDO
HQWLWLHV EXW LW GLG QRW GHDO ZLWK WKH PHDQLQJ RI WKH ZRUG
mHQWLW\l  )LQGLQJ QR DPELJXLW\ LW UHIXVHG WR ORRN WR WKH
OHJLVODWLYHKLVWRU\%XWZHORRNWRWKHOHJLVODWLYHKLVWRU\LQ
RUGHUWRJLYHPHDQLQJWRWKHZRUGmHQWLW\lZKLFKZDVDGGHG
WRWKHGHILQLWLRQLQ

:KLOH WKH ODZ HQIRUFHPHQW H[FHSWLRQ KDV QR VXFK UHTXLUHPHQW WKH
EXVLQHVV XVH H[FHSWLRQ UHTXLUHV WKDW WKH HOHFWURQLF PRQLWRULQJ GHYLFH EH
SURYLGHG LQ WKH FRXUVH RI WKH SURYLGHUjV EXVLQHVV , DJUHH ZLWK WKH SDQHO
PDMRULW\jV GHWHUPLQDWLRQ WKDW WKH FORQHG SDJHU ZDV SURYLGHG WR WKH SROLFH
GHSDUWPHQW LQ WKH FRXUVH RI WKH SURYLGHUjV 0RELOH&RPPjV EXVLQHVV
$GDPVj DUJXPHQWV WR WKH FRQWUDU\ DUH XQDYDLOLQJ
 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R 1R $GDPVY&LW\RI%DWWOH&UHHNHWDO 

7KH SURYLVLRQ RI WKH $FW SURYLGLQJ IRU FLYLO OLDELOLW\ WRWKHVXEVFULEHURUXVHUE\DSURYLGHURIZLUHRU
VHFWLRQZDVDPHQGHGLQDQGPDGHSDUWRIWKH HOHFWURQLFFRPPXQLFDWLRQVHUYLFHLQWKHRUGLQDU\
 3ULYDF\ $FW  7KH DPHQGPHQW DGGHG WKH ZRUGV mRU FRXUVH RI LWV EXVLQHVV DQG EHLQJ XVHG E\ WKH
HQWLW\lWRWKRVHZKRPD\EHKHOGOLDEOHXQGHUWKH$FW7KH VXEVFULEHU RU XVHU LQ WKH RUGLQDU\ FRXUVH RI LWV
DGGLWLRQRIWKHZRUGVmHQWLW\lFDQRQO\PHDQDJRYHUQPHQWDO EXVLQHVVRUIXUQLVKHGE\VXFKVXEVFULEHURUXVHU
HQWLW\EHFDXVHSULRUWRWKHDPHQGPHQWVWKHGHILQLWLRQRI IRUFRQQHFWLRQWRWKHIDFLOLWLHVRIVXFKVHUYLFHDQG
mSHUVRQlDOUHDG\LQFOXGHGEXVLQHVVHQWLWLHV,QRUGHUIRUWKH XVHGLQWKHRUGLQDU\FRXUVHRILWVEXVLQHVVRU
WHUP QRW WR EH VXSHUIOXRXV WKH WHUP mHQWLW\l QHFHVVDULO\ LLEHLQJXVHGE\DSURYLGHURIZLUHRUHOHFWURQLF
PHDQVJRYHUQPHQWDOHQWLWLHV$VVXSSRUWIRUWKLVYLHZZH FRPPXQLFDWLRQVHUYLFHLQWKHRUGLQDU\FRXUVHRI
QRWHWKDWWKHDPHQGPHQWDGGHGWKHVDPHODQJXDJHWRWKHFLYLO LWV EXVLQHVV RU E\ DQ LQYHVWLJDWLYH RU ODZ
OLDELOLW\ SURYLVLRQ IRU LQWHUFHSWLRQ RI VWRUHG ZLUH DQG HQIRUFHPHQWRIILFHULQWKHRUGLQDU\FRXUVHRIKLV
HOHFWURQLFFRPPXQLFDWLRQVXQGHU86&†D7KH GXWLHV>@
6HQDWH&RPPLWWHH5HSRUWVXPPDUL]LQJ†WKHSDUDOOHO
VHFWLRQIRUOLDELOLW\IRULQWHUFHSWLQJVWRUHGFRPPXQLFDWLRQV 86&†
VSHFLILFDOO\ VWDWHV WKDW WKH ZRUG mHQWLW\l LQFOXGHV
JRYHUQPHQWDOHQWLWLHV65HS1RWK&RQJG6HVV 7KHSDQHOPDMRULW\KDVGHWHUPLQHGWKDWWKRVHH[FHSWLRQV
UHSULQWHGLQ86&&$1 DSSO\ RQO\ ZKHQ D OHJLWLPDWH SXUSRVH VXSSRUWV WKH
PRQLWRULQJ WKH PRQLWRULQJ LV URXWLQH DQG WKH PRQLWRULQJ
%DVHGRQWKHDPHQGPHQWVWRWKHVWDWXWHDQGWKHOHJLVODWLYH
KLVWRU\EHKLQGWKHPDVZHOODVWKHFDVHODZFRQVLGHULQJWKH
LVVXHZHKROGWKDWJRYHUQPHQWDOHQWLWLHVPD\EHOLDEOHXQGHU
86&†)LQGLQJWKDWDPXQLFLSDOLW\PD\EHOLDEOH
XQGHU WKH $FW ZH FRQFOXGH WKDW TXHVWLRQV RI PDWHULDO IDFW
UHPDLQDVWRZKRZDVLQYROYHGLQDXWKRUL]LQJWKHLQWHUFHSWLRQ 
7KLV SURYLVLRQ LV QRUPDOO\ UHIHUUHG WR DV WKH mEXVLQHVV XVH
DQGKRZLWDURVH6XPPDU\MXGJPHQWLVQRWDSSURSULDWHRQ H[FHSWLRQl RU WKH mH[WHQVLRQ SKRQH H[FHSWLRQl
WKLVLVVXHDWSUHVHQWEHFDXVHWKHIDFWVDUHXQGHYHORSHG:H

UHPDQGLWWRWKHGLVWULFWFRXUWIRUIXUWKHUGHYHORSPHQWRIWKLV 7KLV SURYLVLRQ LV QRUPDOO\ UHIHUUHG WR DV WKH mODZ HQIRUFHPHQW
LVVXH H[FHSWLRQl RU WKH mSULVRQ SKRQH H[FHSWLRQl


7KH)RXUWK$PHQGPHQWo3ODLQWLIIDOVRFODLPVWKDW /DZ HQIRUFHPHQW LV WKH mEXVLQHVVl RI WKH &LW\ RI %DWWOH &UHHN
PRQLWRULQJ KLV SDJHU WKURXJK XVH RI WKH FORQH SDJHU 3ROLFH 'HSDUWPHQW %XW VHH $PDWL   )G DW  m>7KH EXVLQHVV XVH

FRQVWLWXWHVDQLOOHJDOmVHDUFKDQGVHL]XUHlLQYLRODWLRQRIKLV H[FHSWLRQ@ LV LQWHQGHG IRU VLWXDWLRQV LQ ZKLFK D EXVLQHVV RU RWKHU HQWLW\
SUHVXPDEO\ RQH QRW LQYROYHG LQ ODZ HQIRUFHPHQW IRU RWKHUZLVH WKLV
H[FOXVLRQ ZRXOG GXSOLFDWH WKH RQH IRU HDYHVGURSSLQJ LQ WKH RUGLQDU\
FRXUVH RI ODZ HQIRUFHPHQW UHFRUGV FDOOV WR RU IURP LWV SUHPLVHV LQ RUGHU
WR PRQLWRU SHUIRUPDQFH E\ LWV HPSOR\HHVl 7KH SDQHO PDMRULW\ KDV

 86& †  SURYLGHV LPSXWHG WR WKH ODZ HQIRUFHPHQW VHFWLRQ D VROLWDU\ SXUSRVHoWKDW RI
H[FOXGLQJ IURP WKH DFWjV FRYHUDJH WKH ODZ HQIRUFHPHQW SUDFWLFH RI
([FHSW DV SURYLGHG LQ LL DQ\ SHUVRQ ZKRVH ZLUH RUDO RU PRQLWRULQJ LQPDWH SKRQH FDOOVo ZLWKRXW DQ\ HYLGHQFH WKDW &RQJUHVV
HOHFWURQLF FRPPXQLFDWLRQ LV LQWHUFHSWHG GLVFORVHG RU LQWHQWLRQDOO\ XVHG LQWHQGHG WKDW WKH H[FHSWLRQ EH VR OLPLWHG 7KH FDVHV ZKLFK LW KDV FLWHG LQ
LQ YLRODWLRQ RI WKLV FKDSWHU PD\ LQ D FLYLO DFWLRQ UHFRYHU IURP WKH SHUVRQ VXSSRUW RI WKDW SURSRVLWLRQ KDYH PHUHO\ UXOHG WKDW WKH ODZ HQIRUFHPHQW
RU HQWLW\ ZKLFK HQJDJHG LQ WKDW YLRODWLRQ VXFK UHOLHI DV PD\ EH H[FHSWLRQ DSSOLHV WR LQPDWH SKRQH FDOOV 1RQH RI WKH FDVHV KDYH OLPLWHG
DSSURSULDWH WKH SXUYLHZ RI WKH ODZ HQIRUFHPHQW H[FHSWLRQ WR WKRVH FLUFXPVWDQFHV
 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R 1R $GDPVY&LW\RI%DWWOH&UHHNHWDO 

LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZl)('(5$/ 58/( )RXUWK $PHQGPHQW ULJKWV DFWLRQDEOH WKURXJK  86&
2) &,9,/ 352&('85( F &HORWH[ &RUS Y &DWUHWW  †7KHGHIHQGDQWVDUJXHGDQGWKHGLVWULFWFRXUWDJUHHG
86m>6@XPPDU\MXGJPHQWZLOOQRWOLHLIWKH WKDWSODLQWLIIKDGQRULJKWWRSULYDF\LQKLVGHSDUWPHQWLVVXHG
GLVSXWH DERXW D PDWHULDO IDFW LV µJHQXLQHj WKDW LV LI WKH SDJHUDQGWKDWQR)RXUWK$PHQGPHQWYLRODWLRQRFFXUUHG
HYLGHQFHLVVXFKWKDWDUHDVRQDEOHMXU\FRXOGUHWXUQDYHUGLFW
IRUWKHQRQPRYLQJSDUW\l6HH$QGHUVRQY/LEHUW\/REE\ 6XSUHPH&RXUWSUHFHGHQWPDNHVLWFOHDUWKDWFRXUWVVKRXOG
,QF86(]]R
V,QYHVWPHQWV,QFY DYRLG XQQHFHVVDU\ DGMXGLFDWLRQ RI FRQVWLWXWLRQDO LVVXHV
5R\DO%HDXW\6XSSO\,QF)GWK&LU $VKZDQGHUY7HQQHVVHH9DOOH\$XWKRULW\86
&RXUWVSUHVHQWHGZLWKPRWLRQVIRUVXPPDU\MXGJPHQWPXVW %UDQGHLVsFRQFXUULQJm7KH&RXUWZLOOQRWSDVVRQ
FRQVLGHUWKHWHQGHUHGHYLGHQFHDQGWKHUHDVRQDEOHLQIHUHQFHV DFRQVWLWXWLRQDOTXHVWLRQDOWKRXJKSURSHUO\SUHVHQWHGE\WKH
WKHUHIURPLQWKHOLJKWPRVWIDYRUDEOHWRWKHQRQPRYDQW6HH UHFRUGLIWKHUHLVDOVRSUHVHQWVRPHRWKHUJURXQGXSRQZKLFK
0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS86 WKH FDVH PD\ EH GLVSRVHG RIl  $FFRUG 8QLWHG 6WDWHV Y
5HGGLQJY6W(ZDUG)G 9DXJKQ1R:/
WK&LU2FW
WK&LU7KHUHYLHZLQJFRXUWFRQGXFWVDGHQRYR :KHUHDVWDWXWRU\RUQRQFRQVWLWXWLRQDOEDVLVH[LVWVIRU
H[DPLQDWLRQ RI D GLVWULFW FRXUWjV RUGHU DZDUGLQJ VXPPDU\ UHDFKLQJDGHFLVLRQDVLWGRHVKHUHLWLVQRWQHFHVVDU\WRUHDFK
MXGJPHQW6HH$PHULFDQ0HGLFDO6HFXULW\,QFY$XWR&OXE WKHFRQVWLWXWLRQDOLVVXH
,QV$VVjQRI0LFK)GWK&LU
2QHDSSOLFDWLRQRIWKLVGRFWULQHLVWKHSULQFLSOHRIVWDWXWRU\
:LUHWDSSLQJRUPRQLWRULQJHOHFWURQLFFRPPXQLFDWLRQVKDV FRQVWUXFWLRQWKDWVWDWHVWKDWDFRPSUHKHQVLYHVWDWXWHOLNHWKH
EHHQLOOHJDOL]HGDQGLVVXEMHFWWRFLYLODQGFULPLQDOSHQDOWLHV IHGHUDO ZLUHWDSSLQJ VWDWXWH GHVLJQHG WR SURWHFW VSHFLILF
6HH86&†Dm([FHSWDVRWKHUZLVHVSHFLILFDOO\ FRQVWLWXWLRQDO YDOXHV PD\ EH UHDG WR SURYLGH WKH H[FOXVLYH
SURYLGHG LQ WKLV FKDSWHU DQ\ SHUVRQ ZKRoD LQWHQWLRQDOO\ UHPHGLHVLQWKHILHOGVRORQJDVWKHVWDWXWHLWVHOIVXIIHUVQR
LQWHUFHSWV HQGHDYRUV WR LQWHUFHSW RU SURFXUHV DQ\ RWKHU FRQVWLWXWLRQDOLQILUPLW\6XWKHUODQG6WDWXWRU\&RQVWUXFWLRQ
SHUVRQWRLQWHUFHSWRUHQGHDYRUWRLQWHUFHSWDQ\ZLUHRUDORU †HG6HHHJ3UHLVHUY5RGULJXH]
HOHFWURQLFFRPPXQLFDWLRQ>LVVXEMHFWWRSHQDOWLHVGHVFULEHGLQ 86DOWKRXJK†E\LWVWHUPVZDV
86&†D@l,QGHILQLQJWKHWHUPmHOHFWURQLF OLWHUDOO\ DSSOLFDEOH WR SULVRQHUVj DFWLRQV VRPH DFWLRQV OLH
PHFKDQLFDORURWKHUGHYLFHl&RQJUHVVH[FOXGHGFHUWDLQ XQGHU KDEHDV FRUSXV DV mWKH PRUH VSHFLILF DFWl /HH Y
W\SHVRIQRQFRQVHQVXDOPRQLWRULQJIURPWKHSXUYLHZRIWKH +XJKHV  )G   WK &LU  JLYHQ
VWDWXWH FRPSUHKHQVLYHVWDWXWRU\VFKHPHHVWDEOLVKHGE\&LYLO6HUYLFH
5HIRUP $FW IHGHUDO RIILFHU ZDV SUHFOXGHG IURP UDLVLQJ
HOHFWURQLF PHFKDQLFDO RU RWKHU GHYLFH PHDQV DQ\ †  FODLP 1$$&3 'HWURLW %UDQFK Y 'HWURLW 3ROLFH
GHYLFH RU DSSDUDWXV ZKLFK FDQ EH XVHG WR LQWHUFHSW D 2IILFHUV$VVjQ)GWK&LUSODLQWLII
ZLUHRUDORUHOHFWURQLFFRPPXQLFDWLRQRWKHUWKDQ FDQQRWEULQJFODLPVXQGHU††DQGWKDWIDOOZLWKLQ
7LWOH 9,,jV SDUDPHWHUV  7KH (OHFWURQLF &RPPXQLFDWLRQV
D DQ\WHOHSKRQHRUWHOHJUDSKLQVWUXPHQWHTXLSPHQW 3ULYDF\$FWLVSDUWRIGHWDLOHGOHJLVODWLYHVFKHPHXQGHU7LWOH
RUIDFLOLW\RUDQ\FRPSRQHQWWKHUHRILIXUQLVKHG ,,, RI WKH 2PQLEXV &ULPH DQG &RQWURO $FW RI   7KH
OHJLVODWLRQ VHHNV WR EDODQFH SULYDF\ ULJKWV DQG ODZ
HQIRUFHPHQW QHHGV NHHSLQJ LQ PLQG WKH SURWHFWLRQV RI WKH
 )RXUWK$PHQGPHQWDJDLQVWXQUHDVRQDEOHVHDUFKDQGVHL]XUH
mµ>,@QWHUFHSWj PHDQV WKH DXUDO RU RWKHU DFTXLVLWLRQ RI WKH FRQWHQWV
RI DQ\ ZLUH HOHFWURQLF RU RUDO FRPPXQLFDWLRQ WKURXJK WKH XVH RI DQ\ &RQJUHVV PDGH WKH $FW WKH SULPDU\ YHKLFOH E\ ZKLFK WR
HOHFWURQLF PHFKDQLFDO RU RWKHU GHYLFHl  86& † 
 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R 1R $GDPVY&LW\RI%DWWOH&UHHNHWDO 

DGGUHVVYLRODWLRQVRISULYDF\LQWHUHVWVLQWKHFRPPXQLFDWLRQ SODLQWLII PD\ KDYH EHHQ LQYROYHG LQ OHDNLQJ GUXJ UDLG
ILHOG%HUU\Y)XQN)G'&&LU LQIRUPDWLRQ WR GUXJ WUDIILFNHUV ZDV XQGHUVWDQGDEO\ D
FLWLQJ &LW\ RI 0LOZDXNHH Y ,OOLQRLV  86   PDWWHU RI JUDYH FRQFHUQ WR 'HWHFWLYH 6HUJHDQW 3DWULFN
1RFODLPLVPDGHWKDWWKHVWDWXWHLVXQFRQVWLWXWLRQDO $OVSDXJK6XSHUYLVRURIWKH6SHFLDO,QYHVWLJDWLRQV8QLW
RUWKDWLWLVOHVVSURWHFWLYHRISULYDF\ULJKWVWKDQWKH)RXUWK ZKRVHFRQFHUQSURPSWHGWKHFORQLQJRISODLQWLIIjVSDJHU
$PHQGPHQW  7KH SODLQWLII PDNHV QR FODLP WKDW )RXUWK ,WZDVDOVRDPDWWHURIPXFKJUHDWHUVLJQLILFDQFHWRWKH
$PHQGPHQWULJKWVDVWKH\UHODWHWRZLUHWDSSLQJDUHEURDGHU SROLFH GHSDUWPHQWjV mEXVLQHVVl WKDQ DQ HPSOR\HHjV
RUPRUHFRPSUHKHQVLYHWKDQWKHIHGHUDOVWDWXWH7KHUHLVQR LPSURSHU XVH RI D WHOHSKRQH IRU SHUVRQDO SXUSRVHV
GLIIHUHQFHEHWZHHQWKHFRQGXFWUHOHYDQWWRSODLQWLIIjVVWDWXWRU\ 0RUHRYHUWKHH[WHQWRIWKHLQWUXVLRQZDVPLQLPDO7KH
FODLP DQG WKH FRQGXFW UHOHYDQW WR KLV FRQVWLWXWLRQDO FODLP PRQLWRULQJ ZDV EDVHG RQ SDUWLFXODUL]HG VXVSLFLRQ RI
%HFDXVHQRDUJXPHQWLVPDGHWKDWWKHVXEVWDQWLYHRUUHPHGLDO ZURQJGRLQJODVWHGRQO\GD\VDQG\LHOGHGZLWK
VWDQGDUGVSURYLGHGE\WKH)RXUWK$PHQGPHQWGLIIHUIURPWKH WKHH[FHSWLRQRIRQHYHUEDOPHVVDJHFRQFHUQLQJDSROLFH
IHGHUDOVWDWXWHZHGRQRWUHDFKDQ\TXHVWLRQRILQWHUSUHWDWLRQ PHPRULDOVHUYLFHPHUHO\DOLVWLQJRIWHOHSKRQHQXPEHUV
XQGHUWKH)RXUWK$PHQGPHQW$OOVXFKFRQVWLWXWLRQDOLVVXHV IURP ZKLFK SODLQWLII ZDV FDOOHG  1R PRQLWRULQJ RI
DUHSUHWHUPLWWHG FRQYHUVDWLRQV WRRN SODFH  7KH UHFRUGHG WHOHSKRQH
QXPEHUV ZHUH IRXQG QRW WR EH LQFULPLQDWLQJ DQG WKH
4XDOLILHG,PPXQLW\IRU.UXLWKRIIo$VDQDOWHUQDWLYH PRQLWRULQJZDVYROXQWDULO\GLVFRQWLQXHG
WRDIILUPLQJVXPPDU\MXGJPHQW.UXLWKRIIXUJHVXVWRDIILUP
WKH GLVWULFW FRXUW DV WR KLP RQ WKH JURXQG RI TXDOLILHG 8QGHU WKHVH FLUFXPVWDQFHV DV WR ZKLFK WKHUH LV QR
LPPXQLW\IRUERWKWKH3ULYDF\$FWDQG)RXUWK$PHQGPHQW JHQXLQHLVVXHRIPDWHULDOIDFWWKH&RXUWKROGVWKHVXEMHFW
FODLPV7KHGLVWULFWFRXUWGLGQRWUXOHRQWKLVGHIHQVHEHFDXVH PRQLWRULQJRISODLQWLIIjVSDJHUOLPLWHGLQGXUDWLRQDQG
LWIRXQGQROLDELOLW\DQGZHJHQHUDOO\GRQRWDGGUHVVLVVXHV PLQLPDOO\ LQWUXVLYH ZDV MXVWLILHG E\ D YDOLG EXVLQHVV
WKDWZHUHQRWDGGUHVVHGEHORZ,QDGGLWLRQDIDFWXDOGLVSXWH SXUSRVH
UHPDLQVDVWR.UXLWKRIIjVUROHLIDQ\LQDXWKRUL]LQJWKHFORQH
SDJHU7ZRZLWQHVVHVWHVWLILHGWKDWKHDXWKRUL]HGLWVXVHEXW $GDPVY&LW\RI%DWWOH&UHHNHWDO1RFYVOLSRSDW
.UXLWKRIIGHQLHVWKLV4XDOLILHGLPPXQLW\LVJHQHUDOO\QRW :'0LFK$SULO7KHGLVWULFWFRXUWIXUWKHU
DSSURSULDWHZKHUHTXHVWLRQVRIIDFWUHPDLQsRKQVRQYsRQHV KHOGWKDW$GDPVj)RXUWK$PHQGPHQWULJKWVZHUHQRWYLRODWHG
86 E\ WKH GHIHQGDQWVj VXUUHSWLWLRXV PRQLWRULQJ DV KH KDG QR
UHDVRQDEOH H[SHFWDWLRQ RI SULYDF\ LQ WKH XVH RI KLV
&21&/86,21 GHSDUWPHQWDOO\SURYLGHG SDJHU  7KLV DSSHDO WLPHO\
IROORZHG
)RUWKHIRUHJRLQJUHDVRQVZHUHYHUVHWKHGLVWULFWFRXUWjV
JUDQWRIVXPPDU\MXGJPHQWWRGHIHQGDQWVDIILUPWKHGHQLDO 6XPPDU\MXGJPHQWVKRXOGmEHUHQGHUHGLIWKHSOHDGLQJV
RI SODLQWLIIjV SDUWLDO PRWLRQ IRU VXPPDU\ MXGJPHQW DQG GHSRVLWLRQV DQVZHUV WR LQWHUURJDWRULHV DQG DGPLVVLRQV RQ
UHPDQGWRWKHGLVWULFWFRXUWIRUIXUWKHUSURFHHGLQJV ILOHWRJHWKHUZLWKWKHDIILGDYLWVLIDQ\VKRZWKDWWKHUHLVQR
JHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKDWWKHPRYLQJSDUW\


7KH GLVWULFW FRXUW GLVPLVVHG $GDPVj RWKHU FODLPV ZLWKRXW SUHMXGLFH
DV WKH GLVWULFW FRXUW GHFOLQHG WR H[HUFLVH VXSSOHPHQWDO MXULVGLFWLRQ RYHU
WKHP LQ WKH DEVHQFH RI DQ\ IHGHUDO FODLPV $00  86& † F
 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R 1R $GDPVY&LW\RI%DWWOH&UHHNHWDO 

2Q 0DUFK   $GDPV ILOHG WKH LQVWDQW FRPSODLQW BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
DOOHJLQJ VHYHQ FRXQWV DJDLQVW GHIHQGDQWV .UXLWKRII 3RSH
DQGWKH&LW\RI%DWWOH&UHHN3ROLFH'HSDUWPHQWFROOHFWLYHO\ &21&855,1*,13$57',66(17,1*,13$57
mGHIHQGDQWVl   GHIHQGDQWV KDG YLRODWHG WKH :LUH DQG BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB
(OHFWURQLF &RPPXQLFDWLRQV ,QWHUFHSWLRQ $FW  86&
†HWVHTGHIHQGDQWVKDGLQIULQJHGXSRQ$GDPVj .583$16.< &LUFXLW sXGJH FRQFXUULQJ LQ SDUW DQG
)RXUWK$PHQGPHQWULJKWVDJDLQVWXQUHDVRQDEOHVHDUFKVDQG GLVVHQWLQJLQSDUW7KHSDQHOPDMRULW\KDVUHYHUVHGWKHGLVWULFW
VHL]XUHVGHIHQGDQWVKDGYLRODWHG0LFKLJDQjVZLUHWDSSLQJ FRXUWjV JUDQW RI VXPPDU\ MXGJPHQW WR WKH GHIHQGDQW
VWDWXWH  GHIHQGDQWV KDG LQYDGHG $GDPV SULYDF\ LQ DSSHOOHHVILQGLQJWKDWWKHHOHFWURQLFPRQLWRULQJDWLVVXHLQ
YLRODWLRQ RI 0LFKLJDQ ODZ  GHIHQGDQWV KDG YLRODWHG WKLVFDVHGLGQRWIDOOZLWKLQRQHRIWKHVWDWXWRU\H[FOXVLRQV
0LFKLJDQjVFLYLOULJKWVDFWGHIHQGDQWVKDGLQWHQWLRQDOO\ SURYLGHGE\WKHIHGHUDOZLUHWDSSLQJODZV,QVRGRLQJWKH
LQIOLFWHGHPRWLRQDOGLVWUHVVLQYLRODWLRQRI0LFKLJDQODZ SDQHO PDMRULW\  KDV GLVUHJDUGHG WKH SODLQ ODQJXDJH RI WKH
.UXLWKRIIjVDIIDLUZLWK$GDPVjZLIHKDGUHVXOWHGLQDORVVRI FRQWUROOLQJVWDWXWHE\LPSXWLQJDQRWLFHUHTXLUHPHQWLQWRWKH
FRQVRUWLXPWR$GDPVLQYLRODWLRQRI0LFKLJDQODZ7KH RUGLQDU\FRXUVHRIEXVLQHVVDQGODZHQIRUFHPHQWWHVWVRIWKH
SDUWLHV ILOHG FURVV PRWLRQV IRU VXPPDU\ MXGJPHQW  7KH IHGHUDOZLUHWDSSLQJODZV%HFDXVH,DPSHUVXDGHGWKDWWKH
ORZHUFRXUWJUDQWHGWKHGHIHQGDQWVjPRWLRQDQGGHQLHGWKH RIILFHUV RI WKH &LW\ RI %DWWOH &UHHN 3ROLFH 'HSDUWPHQW
SODLQWLIIjVPRWLRQ7KHGLVWULFWFRXUWKHOGWKDWWKHGHIHQGDQWVj PRQLWRUHG'DYLG$GDPVjVXVHRIKLVDOSKDQXPHULFSDJHULQ
VXUUHSWLWLRXVPRQLWRULQJIHOOZLWKLQWKHEXVLQHVVXVHH[FHSWLRQ WKH RUGLQDU\ FRXUVH RI LWV EXVLQHVV VHH  86&
FRQWDLQHGLQWKHZLUHWDSSLQJDFW †DLDQGLQWKHRUGLQDU\FRXUVHRIH[HUFLVLQJWKHLU
ODZ HQIRUFHPHQW GXWLHV VHH  86& † DLL ,
7KH VHQVLWLYH QDWXUH RI LQIRUPDWLRQ UHODWLQJ WR GUXJ UHVSHFWIXOO\GLVVHQW
WUDIILFNLQJLQYHVWLJDWLRQVLVREYLRXVPDLQWHQDQFHRILWV
FRQILGHQWLDOLW\HVVHQWLDOWRWKHVXFFHVVRIWKHPLVVLRQDQG 3ODLQWLII$SSHOODQW'DYLG$GDPVm$GDPVlKDVVHUYHGDV
VDIHW\ RI ODZ HQIRUFHPHQW RIILFHUV  6XVSLFLRQ WKDW DODZHQIRUFHPHQWRIILFHUIRU'HIHQGDQW$SSHOOHH&LW\RI
%DWWOH&UHHN3ROLFH'HSDUWPHQWVLQFH,QFRQMXQFWLRQ
ZLWKKLVSRVLWLRQDVDODZHQIRUFHPHQWRIILFHU$GDPVZDV
DVVLJQHGDQDOSKDQXPHULFSDJHU1XPHURXVDOOHJDWLRQVRI
 FRPSOLFLW\ LQ GUXJ DFWLYLW\ KDYH PDUNHG KLV WHQXUH  LQ
,Q DGGLWLRQ WR OHDUQLQJ RI WKH PRQLWRULQJ $GDPV GLVFRYHUHG WKDW
.UXLWKRII KDG KDG DQ DIIDLU ZLWK $GDPVj ZLIH LQ  $GDPV KDV KLVSDWUROSDUWQHUZDVFKDUJHGZLWKGUXJWUDIILFNLQJ
FRQWHQGHG WKDW WKLV DIIDLU SURPSWHG WKH PRQLWRULQJ RI $GDPVj FORQHG D QXPEHU RI LQIRUPDQWV DOOHJHG WKDW $GDPV KDG SURWHFWHG
SDJHU

 
$OO FODLPV DJDLQVW 3RSH ZHUH YROXQWDULO\ GLVPLVVHG RQ )HEUXDU\ 
8QWLO  $GDPV VHUYHG DV D SDWUROPDQ ,Q  $GDPV ZDV

SURPRWHG WR WKH SRVLWLRQ RI GHWHFWLYH

 
$00  86& † D m([FHSW DV RWKHUZLVH VSHFLILFDOO\ SURYLGHG 7KH SROLFH GHSDUWPHQW KDG JLYHQ $GDPV D FRS\ RI GHSDUWPHQWDO
LQ WKLV FKDSWHU DQ\ SHUVRQ ZKRoD LQWHQWLRQDOO\ LQWHUFHSWV HQGHDYRUV WR
SROLF\ ZKLFK LQGLFDWHG m'HSDUWPHQW LVVXHG HTXLSPHQW VXSSOLHV DQG
LQWHUFHSW RU SURFXUHV DQ\ RWKHU SHUVRQ WR LQWHUFHSW RU HQGHDYRU WR
XQLIRUPV ZLOO DW QR WLPH EH FRQYHUWHG >WR@ SHUVRQDO XVHl 7KH SROLFH
LQWHUFHSW DQ\ ZLUH RUDO RU HOHFWURQLF FRPPXQLFDWLRQ >LV VXEMHFW WR
GHSDUWPHQW KDG QRWLILHG $GDPV WKDW m>LW ZDV@ WKH SROLF\ RI WKH 3ROLFH
SHQDOWLHV GHVFULEHG LQ  86& † D@l
'HSDUWPHQW WR SHUIRUP UHJXODU DXGLWV DQG LQVSHFWLRQV RI DOO GHSDUWPHQW
LVVXHG HTXLSPHQW 7KHVH LQVSHFWLRQV HQVXUH SURSHU PDLQWHQDQFH DQG XVH

7KLV FODLP ZDV YROXQWDULO\ GLVPLVVHG RQ 6HSWHPEHU   RI DOO GHSDUWPHQW HTXLSPHQW DQG VXSSOLHVl
 $GDPVY&LW\RI%DWWOH&UHHNHWDO 1R 1R $GDPVY&LW\RI%DWWOH&UHHNHWDO 

GUXJ GHDOHUV  $GDPV KDG DSSHDUHG WR PDLQWDLQ D FORVH LQYHVWLJDWLRQV7KHSDUWLHVKDYHGLVSXWHGZKHWKHU.UXLWKRII
IULHQGVKLSZLWKDORFDOGUXJGHDOHU+RZHYHULQYHVWLJDWRUV DXWKRUL]HGWKHXVHRIWKHFORQHGSDJHU
KDGIDLOHGWRVXUIDFHVXEVWDQWLDOHYLGHQFHRIZURQJGRLQJE\
$GDPV $V $GDPV ZDV SDJHG E\ XQLGHQWLILHG WKLUG SDUWLHV
$OVSDXJK ZURWH GRZQ WKH QXPEHUV  +H WKHQ DWWHPSWHG WR
,Q6JW3DWULFN$OVSDXJKm$OVSDXJKlKHDGRIWKH GHWHUPLQH LI DQ\ RI WKH QXPEHUV PDWFKHG DQ\ RI
6SHFLDO,QYHVWLJDWLRQV8QLWEHFDPHLQFUHDVLQJO\FRQFHUQHG .ORPSDUHQVjVSHUVRQDOSKRQHRUSDJHUQXPEHUV$OVSDXJK
WKDW WKH GHSDUWPHQWjV GUXJ LQYHVWLJDWLRQV ZHUH EHLQJ LQWHUFHSWHGRQHWH[WPHVVDJHZKLFKLQIRUPHG$GDPVRIWKH
FRPSURPLVHG E\ DQ LQVLGH VRXUFH  2Q WZR VHSDUDWH WLPHDQGSODFHRIDSROLFHIXQHUDO%HFDXVHWKHFORQHGSDJHU
RFFDVLRQV DFWLQJ RQ UHOLDEOH LQWHOOLJHQFH WKDW GUXJ KDG QRW SURYLGHG DQ\ LQFULPLQDWLQJ LQIRUPDWLRQ $OVSDXJK
WUDQVDFWLRQV ZHUH RQJRLQJ DW FHUWDLQ UHVLGHQFHV SROLFH GHVWUR\HG WKH OLVW DIWHU IRXU RU ILYH GD\V DQG GLVFRQWLQXHG
RIILFHUVDUULYHGDWWKRVHORFDWLRQVWRILQGWKDWWKHUHZHUHQR PRQLWRULQJ WKH FORQHG SDJHU  $OVSDXJK WKHQ FRQWDFWHG D
GUXJVRQWKHSUHPLVHV2QDWKLUGRFFDVLRQZKLOHDWWHPSWLQJ PHPEHURIWKH)HGHUDO%XUHDXRI,QYHVWLJDWLRQZKRLQIRUPHG
WRVHDUFKDUHVLGHQFHRIILFHUVZHUHILUHGXSRQE\SHUSHWUDWRUV KLP WKDW $OVSDXJKjV VXUUHSWLWLRXV PRQLWRULQJ RI $GDPVj
DWWHPSWLQJWRIOHHXSRQWKHRIILFHUVjDUULYDO*LYHQWKHQDWXUH SDJHUPD\KDYHEHHQLOOHJDO$OVSDXJKSURPSWO\UHWXUQHGWKH
RIWKHWDUJHWVjDELOLW\WRHYDGHSROLFHLQYHVWLJDWLRQ$OVSDXJK FORQHGSDJHUWRWKHWHOHFRPPXQLFDWLRQVFRQFHUQ
UHDVRQHGWKDWDPHPEHURIWKHSROLFHGHSDUWPHQWKDGEHHQ
LQIRUPLQJWKHWDUJHWVRIWKHLQYHVWLJDWLRQEHIRUHWKHRIILFHUV ,Q0LFKDHO/LQGDQLQWHOOLJHQFHRIILFHULQIRUPHG
ZHUHDEOHWRDUULYHDQGFRQGXFWWKHLUVHDUFK $GDPVRIWKHVXUUHSWLWLRXVPRQLWRULQJRIKLVSDJHU8QWLOWKDW
WLPH QR PHPEHU RI WKH SROLFH GHSDUWPHQW KDG LQIRUPHG
$OVSDXJK KDG DVVLJQHG 2IILFHU .DWK\ .ORPSDUHQV $GDPVWKDWKHKDGEHHQWKHWDUJHWRIDQLQYHVWLJDWLRQLQWRWKH
m.ORPSDUHQVlDPHPEHURIWKH6SHFLDO,QYHVWLJDWLRQV8QLW SRVVLELOLW\ WKDWKHKDGEHHQDLGLQJGUXJWUDIILFNHUVLQWKHLU
WRWKHVHFDVHV$OVSDXJKVXEVHTXHQWO\OHDUQHGWKDW$GDPV DWWHPSWVWRHYDGHSROLFHGHWHFWLRQ
DQG .ORPSDUHQV KDG KDG IUHTXHQW FRQWDFWV RXWVLGH RI WKH
ZRUNSODFH$OVSDXJKDOVROHDUQHGWKDW$GDPVPD\KDYHEHHQ
D FORVH FRQILGDQW RI RQH RI WKH WDUJHWV RI WKH XQVXFFHVVIXO
QDUFRWLFV LQYHVWLJDWLRQV  5HFDOOLQJ WKH HDUOLHU DOOHJDWLRQV
DJDLQVW $GDPV $OVSDXJK UHTXHVWHG RI sHIIUH\ .UXLWKRII
m.UXLWKRIIl WKHQ'HSXW\ &KLHI RI 3ROLFH WKDW $GDPVj
RIILFLDOSDJHUEHFORQHGLQRUGHUWRGHWHUPLQHLI.ORPSDUHQV
ZDV LQIRUPLQJ $GDPV RI WKH VWDWXV RI WKH DFWLYH

.UXLWKRII KDV FODLPHG WKDW WKHQ&KLHI RI 3ROLFH 7KRPDV 3RSH
DXWKRUL]HG WKH XVH RI WKH FORQHG SDJHU $V WKLV PDWWHU KDV FRPH EHIRUH
WKLV FRXUW RQ DQ DSSHDO RI WKH GLVWULFW FRXUWjV RUGHU JUDQWLQJ GHIHQGDQWVj
PRWLRQ IRU VXPPDU\ MXGJPHQW LW ZLOO EH DVVXPHG IRU WKH SXUSRVHV RI WKLV

7KH 6SHFLDO ,QYHVWLJDWLRQV 8QLW RI WKH &LW\ RI %DWWOH &UHHN 3ROLFH RSLQLRQ WKDW .UXLWKRII DXWKRUL]HG WKH XVH RI WKH FORQHG SDJHU
'HSDUWPHQW LV SULPDULO\ UHVSRQVLEOH IRU QDUFRWLFV LQYHVWLJDWLRQV

 /LQG KDG DSSOLHG WR ODZ VFKRRO LQ  DQG KDG GLVFORVHG RQ KLV ODZ
7KH SROLFH GHSDUWPHQW ZRXOG VWDWLRQ RIILFHUV RXWVLGH WKHVH VFKRRO DSSOLFDWLRQ WKDW KH PD\ KDYH FULPLQDOO\ YLRODWHG WKH IHGHUDO
UHVLGHQFHV 7KHVH RIILFHUV ZRXOG WKHQ PRQLWRU WKH UHVLGHQFHV LQ WKH KRXUV ZLUHWDSSLQJ ODZV /LQG IHOW LW QHFHVVDU\ WR DSSULVH $GDPV RI KLV SRVVLEO\
SUHFHGLQJ DQ\ JLYHQ VHDUFK IHORQLRXV FRQGXFW