Court Opinion

ID: 2969421
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:48:29.476972+00
Date Added: 2024-06-11T15:02:00.374182
License: Public Domain

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 DS

81,7('67$7(6&28572)$33($/6
                   )257+(6,;7+&,5&8,7
                     BBBBBBBBBBBBBBBBB

 67(3+(1 ( '8))< 68( $11 ;
 '8))<                             
          3ODLQWLIIV$SSHOODQWV 
                                      1RV
                                      
            Y                       ! 
                                    
                                    
 )25' 02725 &203$1<                
           'HIHQGDQW$SSHOOHH 
                                    
                                   1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
    IRUWKH:HVWHUQ'LVWULFWRI7HQQHVVHHDW0HPSKLV
    1RVn%HUQDUG$)ULHGPDQ
                       'LVWULFWsXGJH
                  $UJXHG'HFHPEHU
               'HFLGHGDQG)LOHGsXQH
  %HIRUH%$7&+(/'(5DQG0225(&LUFXLWsXGJHV
              2j0$//(<
'LVWULFWsXGJH

    
     7KH +RQRUDEOH .DWKOHHQ 0F'RQDOG 2j0DOOH\ 8QLWHG 6WDWHV 'LVWULFW
sXGJH IRU WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

                                   
     'XII\HWDOY       1RV
      )RUG0RWRU&R

                     BBBBBBBBBBBBBBBBB
                          &2816(/
$5*8('3DWULFN0$UGLV:2/))$5',60HPSKLV
7HQQHVVHHIRU$SSHOODQWV/HH$OOHQ0LFNXV:+((/(5
75,** 	 .(11('< 'HQYHU &RORUDGR IRU $SSHOOHH
21%5,()3DWULFN0$UGLV*DUUHWW0(VWHS:2/))
$5',6 0HPSKLV 7HQQHVVHH IRU $SSHOODQWV  /HH $OOHQ
0LFNXV3DXO)+XOWLQ:+((/(575,**	.(11('<
'HQYHU &RORUDGR 6WHSKHQ $ 0DUFXP %$.(5
'21(/621 %($50$1 	 &$/':(// +XQWVYLOOH
7HQQHVVHHIRU$SSHOOHH
  0225(sGHOLYHUHGWKHRSLQLRQRIWKHFRXUWLQZKLFK
%$7&+(/'(5sMRLQHG2j0$//(<'sSS
GHOLYHUHGDVHSDUDWHRSLQLRQFRQFXUULQJLQSDUWDQGGLVVHQWLQJ
LQSDUW
                     BBBBBBBBBBBBBBBBB
                         23,1,21
                     BBBBBBBBBBBBBBBBB
  .$5(11(/621 0225(&LUFXLWsXGJH6WHSKHQ(
'XII\ DQG 6XH $QQ 'XII\ mWKH 'XII\Vl WKH SODLQWLIIV
DSSHOODQWVYROXQWDULO\GLVPLVVHGWKHLUSHUVRQDOLQMXU\ODZVXLW
DJDLQVW WKH GHIHQGDQWDSSHOOHH )RUG 0RWRU &RPSDQ\
m)RUGlRQWKHWKLUGGD\RIWULDO7KHZULWWHQGLVPLVVDORUGHU
HQWHUHG VHYHUDO GD\V ODWHU LPSRVHG WZR FRQGLWLRQV RQ WKH
YROXQWDU\ GLVPLVVDO WKDW WKH 'XII\V SD\ )RUGjV OLWLJDWLRQ
FRVWVLQFOXGLQJDWWRUQH\IHHVLIWKHFDVHLVUHILOHGDQGWKDW
WKH UXOLQJV IURP WKH RULJLQDO DFWLRQ LQFOXGLQJ PRVW
HYLGHQWLDU\UXOLQJVDQGDSDUWLDOJUDQWRIVXPPDU\MXGJPHQW
JRYHUQWKHUHILOHGDFWLRQDVWKHODZRIWKHFDVH:KHQWKH
'XII\V UHILOHG WKHLU FDVH DSSUR[LPDWHO\ RQH \HDU ODWHU WKH
GLVWULFW FRXUW GLVPLVVHG LW ZLWKRXW SUHMXGLFH EHFDXVH WKH
'XII\V ZHUH XQDEOH WR SD\ )RUGjV FRVWV  7KH 'XII\V QRZ
DSSHDO WKH FRQGLWLRQV LPSRVHG E\ WKH GLVWULFW FRXUW LQ
FRQQHFWLRQZLWKWKHILUVWGLVPLVVDO:HKROGWKDWXQGHUWKH
    'XII\HWDOY         1RV               1RV             'XII\HWDOY      
      )RUG0RWRU&R                                                                                                  )RUG0RWRU&R

UHQHZHGRSSRUWXQLW\WRVDWLVI\WKHFRQGLWLRQRISD\PHQWRI                  XQLTXHFLUFXPVWDQFHVRIWKLVFDVHWKHGLVWULFWFRXUWDEXVHGLWV
)RUGjVFRVWVLPSRVHGE\WKHWULDOFRXUW                                  GLVFUHWLRQ LQ IDLOLQJ WR FRQVLGHU ZKHWKHU WKH 'XII\V
                                                                            WKHPVHOYHVnUDWKHUWKDQWKHLUDWWRUQH\VnZHUHUHVSRQVLEOH
                                                                            IRUWKHGLODWRU\FRQGXFWRIWKHWULDO:HDOVRKROGWKDWLWZDV
                                                                            DQDEXVHRIGLVFUHWLRQWRLPSRVHWKRVHOLWLJDWLRQFRVWVDQGWR
                                                                            DSSO\WKHODZRIWKHRULJLQDOFDVHWRWKHUHILOHGFDVHZLWKRXW
                                                                            JLYLQJWKH'XII\VVXIILFLHQWQRWLFHRIWKRVHFRQGLWLRQVDQG
                                                                            DOORZLQJ WKHP DQ RSSRUWXQLW\ WR ZLWKGUDZ WKHLU PRWLRQ WR
                                                                            GLVPLVVSULRUWRHQWHULQJWKHILUVWGLVPLVVDO7KHUHIRUHZH
                                                                            9$&$7( WKH GLVWULFW FRXUWjV RUGHU RI GLVPLVVDO DQG WKH
                                                                            UHODWHG RUGHUV DQG 5(0$1' IRU WKH GLVWULFW FRXUW WR
                                                                            UHFRQVLGHULWVUXOLQJVLQOLJKWRIWKLVRSLQLRQ
                                                                                                 ,%$&.*5281'
                                                                               7KH 'XII\V RULJLQDOO\ ILOHG WKLV SURGXFWV OLDELOLW\ VXLW
                                                                            DJDLQVW )RUG LQ IHGHUDO FRXUW LQ )HEUXDU\  DOOHJLQJ
                                                                            VHYHUDOVWDWHODZFODLPVDULVLQJRXWRIWKHGHDWKRIWKHLUVRQ
                                                                            :LOOLDP 'XII\ ZKR ZDV NLOOHG LQ DQ DFFLGHQW ZKHQ KLV
                                                                            %URQFR,,FROOLGHGZLWKDQRWKHUYHKLFOHDQGUROOHGRYHU7KH
                                                                            GLVWULFW FRXUW GLVPLVVHG WKH 'XII\Vj IUDXG GHFHSWLRQ DQG
                                                                            PLVUHSUHVHQWDWLRQFODLPVWKURXJKDSDUWLDOJUDQWRIVXPPDU\
                                                                            MXGJPHQWWR)RUGOHDYLQJRQO\WKH'XII\VjQHJOLJHQFHDQG
                                                                            VWULFWOLDELOLW\FODLPVIRUWULDO
                                                                               $IWHU UHSHDWHG UHVFKHGXOLQJ WKH WULDO FRPPHQFHG RQ
                                                                            sDQXDU\2QWKHWKLUGGD\RIWULDOWKH'XII\VVRXJKW
                                                                            WRLQWURGXFHWKHH[SHUWWHVWLPRQ\RIWZRZLWQHVVHV7KRPDV
                                                                            s)HDKHQ\DIRUPHU)RUGHQJLQHHUZKRZDVWRWHVWLI\DVWR
                                                                            WKH LQVWDELOLW\ RI WKH %URQFRjV GHVLJQ DQG WKH YHKLFOHjV
                                                                            SURSHQVLW\WRUROORYHUDQG2IILFHU0UXND0HPSKLVSROLFH
                                                                            LQYHVWLJDWRU ZKR ZDV WR JLYH DQ RSLQLRQ DV WR ZKHWKHU
                                                                            :LOOLDP 'XII\ ZDV ZHDULQJ D VHDW EHOW DW WKH WLPH RI WKH
                                                                            DFFLGHQW$IWHUDKHDULQJWKHGLVWULFWFRXUWGHFLGHGWRH[FOXGH
                                                                            WKHWHVWLPRQ\RIWKRVHWZRZLWQHVVHVILQGLQJWKDW)HDKHQ\jV
                                                                            WHVWLPRQ\GLGQRWSDVVWKH'DXEHUWWHVWDQGWKDW0UXNFRXOG
     
      $JDLQ , ZRXOG SURYLGH WKLV UHQHZHG RSSRUWXQLW\ WR VDWLVI\ WKH FRVW
                                                                            QRWJLYHDQH[SHUWRSLQLRQDVWRVHDWEHOWXVDJHEHFDXVHWKH
FRQGLWLRQ EHFDXVH WKH YDOXH RI RU EXUGHQ LPSRVHG E\ WKDW FRQGLWLRQ LV     'XII\VKDGQRWOLVWHGKLPDVDQH[SHUWZLWQHVVLQWKHILQDO
PDWHULDOO\ GLIIHUHQW LQ WKH DEVHQFH RI WKH FRQFRPLWDQW ODZRIWKHFDVH      SUHWULDORUGHU,QWKHZDNHRIWKHVHUXOLQJVWKH'XII\VPRYHG
FRQGLWLRQ
     'XII\HWDOY        1RV             1RV                  'XII\HWDOY       
      )RUG0RWRU&R                                                                                                    )RUG0RWRU&R

IRUYROXQWDU\GLVPLVVDORIWKHLUFDVHSXUVXDQWWR)HGHUDO5XOH           WRSODLQWLIIVZKRVHHNWRGLVPLVVDFWLRQVZKLFKKDYHPDWXUHG
RI&LYLO3URFHGXUHD)RUGGLGQRWRSSRVHWKHPRWLRQ             WRWKHSRLQWRIWULDO
EXWVWDWHGWKDWLWZDVmQRWZLOOLQJWRIRUHJRFRVWVls$DW
7U7KHGLVWULFWFRXUWRUDOO\JUDQWHGWKHPRWLRQDQG               7KHWH[WRI5XOHGPRUHRYHUOHQGVIXUWKHUVXSSRUWWR
DJUHHGZLWK)RUGWKDWWKH'XII\VZRXOGEHUHVSRQVLEOHIRU                WKH FRQFOXVLRQ WKDW WKH GLVWULFW FRXUW ZDV QRW UHTXLUHG WR
)RUGjVFRVWVVKRXOGWKH\FKRRVHWRUHILOH6RPHGLVFXVVLRQ              SURYLGHDFRVWHVWLPDWHWRWKH'XII\V5XOHGJUDQWVD
HQVXHG EHWZHHQ WKH GLVWULFW FRXUW DQG WKH 'XII\Vj FRXQVHO        GLVWULFWFRXUWWKHDXWKRULW\WRLPSRVHFRVWVLQFOXGLQJDWWRUQH\
UHJDUGLQJZKHWKHUWKRVHFRVWVZRXOGLQFOXGHDWWRUQH\IHHVEXW           IHHVDFFRUGLQJWRFDVHODZRQDSODLQWLIIXSRQWKHUHILOLQJRI
WKHTXHVWLRQZDVQRWUHVROYHGDWWKDWWLPH                              DQDFWLRQSUHYLRXVO\GLVPLVVHGLQDQ\FRXUWZKHWKHURUQRW
                                                                         WKHHDUOLHUGLVPLVVDOZDVFRQGLWLRQHGXSRQWKHWKUHDWRIVXFK
   2Q sDQXDU\   WKH GLVWULFW FRXUW LVVXHG D ZULWWHQ     FRVWV7KLVUXOHQRWFLWHGE\WKHPDMRULW\DWDOOFRQWDLQVDQ
RUGHUJUDQWLQJWKH'XII\VjPRWLRQRQWKHFRQGLWLRQWKDWWKH              LQGHSHQGHQWJUDQWRIDXWKRULW\WRLPSRVHFRVWV7KHDXWKRULW\
'XII\VFRPSHQVDWH)RUGIRULWVOLWLJDWLRQFRVWVVKRXOGWKH\              JUDQWHG LQ 5XOH G LV QRW GHSHQGHQW XSRQ QRWLFH WR
FKRRVHWRUHILOHWKHDFWLRQDQGWKDWWKHUXOLQJVPDGHGXULQJ             SODLQWLIIVWKHWH[WRIWKHUXOHLWVHOIFRQVWLWXWHVVXFKQRWLFH
WKHRULJLQDOFDVHZRXOGDSSO\WRDUHILOHGFDVH8SRQ)RUGjV            7KXV,ZRXOGILQGWKDWWKHGLVWULFWFRXUWUHWDLQHGWKHDXWKRULW\
PRWLRQWKHGLVWULFWFRXUWDPHQGHGWKDWRUGHUWRFODULI\WKDWWKH        XQGHU5XOHGWRLPSRVHFRVWVXSRQWKH'XII\VHYHQLQWKH
OLWLJDWLRQmFRVWVlPHQWLRQHGLQWKHGLVPLVVDORUGHULQFOXGHG             DEVHQFHRIQRWLFHRILWVLQWHQWLRQWRGRVR
WKRVH DWWRUQH\ IHHV LQFXUUHG E\ )RUG WKDW FRXOG QRW EH
UHFRXSHGLQDVXEVHTXHQWDFWLRQ7KHGLVWULFWFRXUWGHFOLQHG                                               ,9
WRFDOFXODWHWKHWRWDODPRXQWRIWKRVHOLWLJDWLRQFRVWVDWWKDW
WLPHKRZHYHUSURSRVLQJLQVWHDGWRGRVRLIDQGZKHQWKH                   :KLOH,DPQRWZLWKRXWVRPHV\PSDWK\IRUWKHSRVLWLRQLQ
'XII\V UHILOHG WKHLU FRPSODLQW  7KH 'XII\V DWWHPSWHG WR         ZKLFKWKH'XII\VILQGWKHPVHOYHVDQGUHVSHFWWKHPDMRULW\jV
DSSHDOWKDWRUGHUEXWWKLVFRXUWKHOGLQDQXQSXEOLVKHGRUGHU         HIIRUWWRGHDOZLWKWKHVHGLIILFXOWLVVXHV,FDQQRWDJUHHZLWK
WKDWLWZDVQRWDSSHDODEOH6HH2UGHU&DVH1RWK            DOORIWKHFRQFOXVLRQVWKHPDMRULW\UHDFKHV,ZRXOGUHYHUVH
&LU6HSW6SHFLILFDOO\ZHQRWHGWKDWWKHGLVWULFW          WKHGLVPLVVDORIWKH'XII\VjUHILOHGDFWLRQYDFDWHWKHGLVWULFW
FRXUWjV RUGHU IHOO ZLWKLQ WKH VFRSH RI WKH JHQHUDO UXOH WKDW   FRXUWjV GHFLVLRQ WR LPSRVH D ODZRIWKHFDVH UXOH XSRQ
SODLQWLIIV FDQQRW DSSHDO DQ RUGHU JUDQWLQJ D YROXQWDU\            UHILOLQJDQGUHPDQGZLWKGLUHFWLRQVWRSURYLGHWKH'XII\VD
GLVPLVVDOZLWKRXWSUHMXGLFH)XUWKHUPRUHZHDGGHGWKDWWKH
DSSHDOZRXOGEHSUHPDWXUHLQDQ\FDVHVLQFHWKHDPRXQWRI
IHHVSD\DEOHWRWKHGHIHQGDQWKDGQRW\HWEHHQVSHFLILHG
   2Q sDQXDU\   WKH 'XII\V UHSUHVHQWHG E\ QHZ
                                                                             
FRXQVHOUHFRPPHQFHGWKHLUDFWLRQDJDLQVW)RUGLQ7HQQHVVHH                     6HH (VTXLYHO Y $UDX  ) 6XSS   1' &DO 

VWDWHFRXUW)RUGVXEVHTXHQWO\UHPRYHGWKHFDVHDQGLWZDV             XQGHUWDNLQJ D WKRURXJK DQDO\VLV DQG KROGLQJ WKDW DWWRUQH\ IHHV PD\
UHDVVLJQHG WR WKH GLVWULFW MXGJH ZKR KDG SUHVLGHG RYHU WKH      DOZD\V EH DZDUGHG XQGHU UXOH G (GZDUG ; &OLQWRQ sU 'RHV 5XOH
                                                                         G $XWKRUL]H DQ $ZDUG RI $WWRUQH\jV )HHV"  6W sRKQjV /5HY 
RULJLQDO FDVH  ,Q DQ RUGHU HQWHUHG RQ sXQH   WKH       m>P@RVW FRXUWV WKDW KDYH DGGUHVVHG WKH LVVXH KDYH KHOG WKDW IHHV
GLVWULFWFRXUWDVVHVVHG)RUGjVQRQRYHUODSSLQJOLWLJDWLRQFRVWV          PD\ EH DZDUGHGl EXW VHH $QGHUV Y )3$ &RUS  )5'  
DWDQGLQIRUPHGWKH'XII\VWKDWWKH\PXVWSD\WKDW            ' 1s  KROGLQJ WKDW DWWRUQH\ IHHV PD\ QRW EH DZDUGHG XQGHU 5XOH
DPRXQW ZLWKLQ WKLUW\ GD\V RU VXIIHU GLVPLVVDO RI WKHLU           G XQOHVV WKH XQGHUO\LQJ DFWLRQ DOUHDG\ DOORZV IRU VKLIWLQJ RI DWWRUQH\
                                                                         IHHV
    'XII\HWDOY        1RV              1RV              'XII\HWDOY      
      )RUG0RWRU&R                                                                                                 )RUG0RWRU&R

GLVPLVV$V,QRWHGHDUOLHUZKHQGLVFXVVLQJWKHLPSURSULHW\             FRPSODLQW7KHGLVWULFWFRXUWDOVRRUGHUHGWKDWDOOWKHUXOLQJV
RIWKHGLVWULFWFRXUWjVEHODWHGLPSRVLWLRQRIDODZRIWKHFDVH           IURPWKHRULJLQDODFWLRQZRXOGEHWKHODZRIWKHFDVHLQWKH
FRQGLWLRQRQWKH'XII\VjGLVPLVVDO,DJUHHWKDW5XOHD              UHILOHGDFWLRQH[FHSWWKDWWKH'XII\VZRXOGEHSHUPLWWHGWR
JHQHUDOO\ LPSOLHV D QRWLFH REOLJDWLRQ o LH D GLVWULFW FRXUW   QDPHRQHDGGLWLRQDOH[SHUWLQWKHUHILOHGDFWLRQ2QsXQH
JHQHUDOO\PD\QRWmFRQGLWLRQlDGLVPLVVDOXSRQDUHTXLUHPHQW              LQUHVSRQVHWR)RUGjVPRWLRQIRUUHFRQVLGHUDWLRQWKH
WKDWLVQHLWKHUGLVFORVHGQRUFRQWHPSODWHGE\WKHSDUWLHVSULRU           GLVWULFWFRXUWDGMXVWHGWKDWDPRXQW WR ILQGLQJ
WRWKHHIIHFWLYHGDWHRIWKDWGLVPLVVDO%XW,FDQQRWDJUHHWKDW        WKDWWKHFRXUWKDGHUUHGLQLWVLQLWLDOFDOFXODWLRQ7KH'XII\V
WKLVQRWLFHUHTXLUHPHQWFRPPDQGVWKHXQZLHOG\SURFHGXUHWKH               WLPHO\DSSHDOHGIURPWKRVHUXOLQJV)RUGVXEVHTXHQWO\PRYHG
PDMRULW\LPSRVHVKHUH                                                    WR GLVPLVV WKDW DSSHDO DUJXLQJ DJDLQ WKDW WKH 'XII\V ZHUH
                                                                          WU\LQJWRDSSHDOWKHLURZQYROXQWDU\GLVPLVVDODQGWKDW6L[WK
   $UHYLHZRIWKHWUDQVFULSWUHYHDOVWKDWWKH'XII\VZHUHSXW            &LUFXLW SUHFHGHQW GRHV QRW SHUPLW VXFK DSSHDOV  $ 6L[WK
RQQRWLFH WKDWWKHLUGLVPLVVDOZRXOGEHFRQGLWLRQHGRQWKH               &LUFXLW SDQHO GHQLHG WKH PRWLRQ EXW DVNHG WKH SDUWLHV WR
SD\PHQWRIFRVWVDQGZHUHSXWRQQRWLFHWKDWWKHVHmFRVWVl                DGGUHVVWKHMXULVGLFWLRQDOLVVXHVLQWKHLUDSSHOODWHEULHIV6HH
ZRXOGLQFOXGHZKDWHYHUFRVWVPLJKWEHDXWKRUL]HGXQGHUmWKH               2UGHU&DVH1RVWK&LU1RY
UXOHVl  7KXV WKHUH LV QR GRXEW WKDW WKH 'XII\V DQG WKHLU
FRXQVHOZHUHDZDUHERWKWKDWFRVWVZRXOGEHLPSRVHGDQGWKDW                )DFLQJGLVPLVVDORIWKHLUUHILOHGFDVHGXHWRWKHLULQDELOLW\
LWZDVWKH'XII\VZKRZRXOGEHDUWKHULVNWKDWWKRVHFRVWV                WRSD\WKHUHTXLUHGFRVWVWKH'XII\VILOHGDPRWLRQWRVWD\
PLJKW HQWDLO PRUH WKDQ WKH\ KRSHG 7KLV QRWLFH LV VXUHO\         HQIRUFHPHQW RI WKH GLVWULFW FRXUWjV RUGHU RI sXQH  
VXIILFLHQW WR PHHW WKH UHTXLUHPHQWV RI 5XOH D LQGHHG        ZKLFK ZDV GHQLHG LQ DQ RUGHU GDWHG $XJXVW    2Q
WKHUH LV QRWKLQJ LQ WKH WH[W RI 5XOH D RU LQ WKH FDVHV    2FWREHUWKHGLVWULFWFRXUWGHQLHGWKH'XII\VjPRWLRQ
FRQVLGHULQJLWWKDWMXVWLILHVLPSRVLQJDQ\JUHDWHUREOLJDWLRQRQ          IRU UHFRQVLGHUDWLRQ RI WKDW $XJXVW  RUGHU KROGLQJ WKDW
WKHGLVWULFWFRXUW                                                       EHFDXVHWKH'XII\VKDGDOUHDG\ILOHGDQRWLFHRIDSSHDOLQWKH
                                                                          SHQGLQJ FDVH WKH GLVWULFW FRXUW ZDV ZLWKRXW MXULVGLFWLRQ WR
   7KH PDMRULW\ KRZHYHU EHOLHYHV WKDW WKH GLVWULFW FRXUW         FRQVLGHUWKHPRWLRQ7KH'XII\VWKHQDSSHDOHGWKH2FWREHU
DEXVHGLWVGLVFUHWLRQLQWKLVFDVHEHFDXVHZKHQIDFHGZLWKD              RUGHU DQG WKH FRUUHVSRQGLQJ MXGJPHQW GLVPLVVLQJ WKHLU
PRWLRQ WR GLVPLVV PLGWULDO LW IDLOHG WR VXVSHQG WKH             UHILOHGDFWLRQ
SURFHHGLQJVUHTXLUH)RUGWRFDOFXODWHLWVFRVWVDQGDWWRUQH\
IHHVSURYLGHWKDWLQIRUPDWLRQWRWKH'XII\VDQGWKHLUFRXQVHO              7KH 'XII\V QRZ DUJXH WKDW WKH GLVWULFW FRXUWjV RUGHUV
DQG JLYH WKH 'XII\V WLPH WR FRQWHPSODWH WKHLU GHFLVLRQ WR        UHTXLULQJWKHPWRSD\)RUGjVDWWRUQH\IHHVDQGLPSRVLQJWKH
DEDQGRQSURVHFXWLRQRIWKHLUFDVH7KLVH[HUFLVHZRXOGKDYH               ODZ RI WKH FDVH RQ WKH UHILOHG DFWLRQ FDXVHG WKHP OHJDO
UHTXLUHG)RUGjVFRXQVHOWRGLYHUWLWVDWWHQWLRQIURPWULDODQG            SUHMXGLFHDQGDUHWKHUHIRUHLPPHGLDWHO\DSSHDODEOHXQGHUWKH
FDOFXODWHWKHLUWLPHDQGDFFRPSDQ\LQJIHHVDQGZRXOGKDYH                ODZRIWKH6L[WK &LUFXLW)XUWKHUPRUHWKH\FODLPWKDWWKH
UHTXLUHGWKHGLVWULFWFRXUWWRPDNHDQLQLWLDODVVHVVPHQWRIWKH          WHUPVDQGFRQGLWLRQVLPSRVHGE\WKHGLVWULFWFRXUWDPRXQWHG
UHDVRQDEOHQHVVRIWKRVHFKDUJHVDQGRIWKHOHJDOGHILQLWLRQRI            WRDQDEXVHRIGLVFUHWLRQ
FRVWVXQGHUWKH)HGHUDO5XOHVDOOZKLOHWKHMXU\ZDVEHLQJ
DVNHGWRVLWDQGZDLWDQGDOOVRWKH'XII\VFRXOGGHFLGHZKDW
VWUDWHJ\EHVWVXLWHGWKHPDWWKDWSRLQWLQWLPH,FDQQRWDJUHH
WKDW5XOHDPDQGDWHVVXFKDQDFFRPPRGDWLQJDSSURDFK
         'XII\HWDOY       1RV                 1RV                'XII\HWDOY      
          )RUG0RWRU&R                                                                                                     )RUG0RWRU&R

                            ,,$1$/<6,6                                       RI)RUGjVFRVWVIXOO\XSRQWKH'XII\V7KDWLVSUHFLVHO\ZKDW
                                                                                5XOHGDXWKRUL]HVWKHGLVWULFWFRXUWWRGRKRZHYHUDQG
$$SSHDODELOLW\RIWKH'LVWULFW&RXUWjV2UGHUV                                SUHFLVHO\ZKDWWKLVGLVWULFWFRXUWLQGLFDWHGLWZRXOGGRLIWKH
                                                                                ILUVWDFWLRQZHUHGLVPLVVHGPLGWULDO7KHUHDUHPRUHRYHU
  )RUG DUJXHV WKDW WKH GLVWULFW FRXUWjV RUGHUV JUDQWLQJ WKH             PHFKDQLVPVIRUWKHVKLIWLQJRIFRVWVEHWZHHQFOLHQWDQGHUUDQW
'XII\Vj YROXQWDU\GLVPLVVDO PRWLRQ DUH QRW LPPHGLDWHO\                     FRXQVHO HJ PDOSUDFWLFH FODLPV FRQWUDFW DFWLRQV VR RQ
DSSHDODEOH EHFDXVH WKH\ DUH QRW DGYHUVH LQYROXQWDU\                     ZKLFKDYRLGSODFLQJWKHEXUGHQRIWKHLULQWHUQHFLQHGLVSXWHV
MXGJPHQWV7KH'XII\VE\FRQWUDVWDUJXHWKDWWKLVFRXUWKDV                  XSRQWKLUGSDUWLHVVXFKDV)RUGRUWKHFRXUW,ZRXOGOHWWKH
DSSHOODWH MXULVGLFWLRQ EHFDXVH WKH WHUPV DQG FRQGLWLRQV                  'XII\VUHVRUWWRWKRVHPHFKDQLVPVIRUKHOSLQUHYLYLQJWKHLU
LPSRVHG RQ WKHLU YROXQWDU\ GLVPLVVDO E\ WKH GLVWULFW FRXUW              FODLPVRUUHGLUHFWLQJWKHPDOWRJHWKHUDQGGHFOLQHWRILQGWKDW
FDXVHGWKHPOHJDOSUHMXGLFH                                                    WKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQLQGRLQJSUHFLVHO\ZKDW
                                                                                WKH)HGHUDO5XOHVRI&LYLO3URFHGXUHDOORZLWWRGR
  7KH JHQHUDO UXOH LV WKDW D SODLQWLII ZKR UHTXHVWV DQG LV
JUDQWHGDYROXQWDU\GLVPLVVDOZLWKRXWSUHMXGLFHXQGHU)HGHUDO                                                   ,,,
5XOHRI&LYLO3URFHGXUHDFDQQRWDSSHDOWKDWGLVPLVVDO
EHFDXVH LW LV QRW DQ LQYROXQWDU\ DGYHUVH MXGJPHQW  6HH                 ,DOVRGLVDJUHHVWURQJO\ZLWKWKHPDMRULW\jVFRQFOXVLRQWKDW
6FKROO Y )HOPRQW 2LO &RUS  )G   WK &LU              WKH GLVWULFW FRXUW ZDV REOLJDWHG WR  GHWHUPLQH WKH
  &+$5/(6 $/$1 :5,*+7 	 $57+85 5 0,//(5                              DSSUR[LPDWHDPRXQWRImFRVWVlWKH'XII\VPLJKWIDFHXSRQ
)('(5$/ 35$&7,&( $1' 352&('85( DW6XSS                            UHILOLQJRIWKHLUDFWLRQDQGSURYLGHWKH'XII\VZLWKQRWLFH
6HYHUDOFLUFXLWVKDYHUHFRJQL]HGDQH[FHSWLRQWRWKLV                   RIWKDWILJXUHEHIRUHDFFHSWLQJWKH'XII\VjPRWLRQWRGLVPLVV
UXOH RI QRQDSSHDODELOLW\ KRZHYHU ZKHQ WKH SODLQWLII KDV                1RWRQO\LVVXFKDQREOLJDWLRQLQFRQVLVWHQWZLWKWKHDXWKRULW\
VXIIHUHGmOHJDOSUHMXGLFHlIURPWKHFRQGLWLRQVLPSRVHGE\WKH                   JUDQWHG WR GLVWULFW FRXUWV XQGHU WKH )HGHUDO 5XOHV RI &LYLO
GLVWULFWFRXUWDQGKDVQRWDFTXLHVFHGLQWKRVHFRQGLWLRQV6HH                 3URFHGXUHLWLPSRVHVDEXUGHQRQWULDOFRXUWVZKLFKZRXOGEH
%HOOH0LGZHVW,QFY0LVVRXUL3URSHUW\	&DV,QV*XDU                      XQZRUNDEOHLQSUDFWLFH
$VVjQ)GWK&LU0F*UHJRUY%RDUG
RI&RPPjUV)GWK&LU8QLRLO                         7KHPDMRULW\FRQFOXGHVWKDW5XOHDFRQWDLQVDQRWLFH
,QFY()+XWWRQ	&R)GWK&LU                   UHTXLUHPHQWoWKDWLVWKDWDGLVWULFWFRXUWPD\QRWFRQGLWLRQ
FHUWGHQLHG86<RIIHY.HOOHU,QGXV,QF                DYROXQWDU\GLVPLVVDOZLWKRXWSUHMXGLFHXSRQDUHTXLUHPHQW
)GWK&LUFHUWGHQLHG86                    WKDW LV QRW GLVFORVHG WR WKH SDUW\ VHHNLQJ GLVPLVVDO EHIRUH
:5,*+7 	 0,//(5VXSUDDW7KH                       GLVPLVVDO RFFXUV  7KH PDMRULW\ WKHQ FRQFOXGHV WKDW WKH
                                                                                GLVWULFWFRXUWYLRODWHGWKLVQRWLFHUHTXLUHPHQWE\IDLOLQJWR
                                                                                FDOFXODWHWKHDSSUR[LPDWHGROODUDPRXQWRIWKHFRVWVWKH
      
                                                                                'XII\VZRXOGEHUHTXLUHGWRSD\XSRQUHILOLQJLQIRUP
       5XOH  SURYLGHV LQ SHUWLQHQW SDUW                                     WKH'XII\VRIWKDWGROODUILJXUHDQGJLYHWKH'XII\VWKH
      D 9ROXQWDU\ 'LVPLVVDO (IIHFW 7KHUHRI                                   FKDQFH WR UHDVVHVV WKH PHULWV RI WKHLU SHQGLQJ PRWLRQ WR
      
       %\ 2UGHU RI &RXUW ([FHSW DV SURYLGHG LQ SDUDJUDSK  RI WKLV
VXEGLYLVLRQ RI WKLV UXOH DQ DFWLRQ VKDOO QRW EH GLVPLVVHG DW WKH SODLQWLIIjV
LQVWDQFH VDYH XSRQ RUGHU RI WKH FRXUW DQG XSRQ VXFK WHUPV DQG FRQGLWLRQV
                                                                                    
DV WKH FRXUW GHHPV SURSHU                                                         ,QGHHG DW RUDO DUJXPHQW FXUUHQW FRXQVHO IRU WKH 'XII\V LQGLFDWHG
)('         ,9
      5 &  3 D                                                      WKDW WKH 'XII\V KDYH DVVHUWHG D PDOSUDFWLFH FODLP DJDLQVW WKH 7KRPDVHV
       'XII\HWDOY        1RV                 1RV                   'XII\HWDOY         
         )RUG0RWRU&R                                                                                                         )RUG0RWRU&R

  7KHUHLVPRUHRYHUQRDSSDUHQWPHFKDQLVPE\ZKLFKWKH                        FDVH ODZ LQ WKLV FLUFXLW VXJJHVWV WKDW WKLV FRXUW ZRXOG
GLVWULFWFRXUWFRXOGKDYHLPSRVHG)RUGjVFRVWVXSRQFRXQVHO                     UHFRJQL]HDVLPLODUH[FHSWLRQ6HH0DQDJHPHQW,QYHVWRUVY
UDWKHUWKDQWKH'XII\V)LUVWDVQRWHGWKHWH[WRI5XOHG                8QLWHG0LQH:RUNHUV)GWK&LU
GLVFXVVHV WKH LPSRVLWLRQ RI FRVWV XSRQ WKH SODLQWLIIV QRW              6FKROO)GDW
FRXQVHO1H[WWKHFRVWVZHUHQRWLPSRVHGXQFRQGLWLRQDOO\
WKH\ ZHUH LPSRVHG DV D FRQGLWLRQ WR WKH UHILOLQJ RI D QHZ               1RQHWKHOHVV WKH VWDQGDUG IRU REWDLQLQJ UHYLHZ RI D
DFWLRQ:KLOHWKH'XII\VQHFHVVDULO\ZRXOGEHLQYROYHGLQ                      YROXQWDU\GLVPLVVDOZLWKRXWSUHMXGLFHLVDIDLUO\VWULQJHQWRQH
DQ\ VXFK UHILOLQJ FRXQVHO PLJKW QRW EH FRXQVHO FRXOG                  DQGWKHSODLQWLIIVKDYHQRWPHWLWLQWKLVFDVH,Q6FKROOWKLV
ZLWKGUDZ RU EH UHSODFHG EHIRUH WKH HYHQW WULJJHULQJ WKH                 FRXUWVXJJHVWHGWKDWWKHWHUPVDQGFRQGLWLRQVLPSRVHGE\WKH
REOLJDWLRQ WR SD\ FRVWV HYHU RFFXUUHG   ,QGHHG WKDW LV              GLVWULFWFRXUWXQGHU5XOHDZRXOGEHDSSHDODEOHRQO\LI
SUHFLVHO\ZKDWKDSSHQHGKHUHoWKH7KRPDVHVZHUHUHSODFHG                       WKH\ ZHUH XQUHDVRQDEOH  6HH  )G DW   ,Q
DQG ZHUH QR ORQJHU FRXQVHO RI UHFRUG ZKHQ WKH UHILOLQJ                 0DQDJHPHQW ,QYHVWRUV ZH VWDWHG WKDW DQ DSSHDO IURP D
RFFXUUHG  ,W ZRXOG EH GLIILFXOW IRU WKH GLVWULFW FRXUW WR            YROXQWDU\GLVPLVVDOZLWKRXWSUHMXGLFHmGRHVQRWOLHWRUHYLHZ
FRQGLWLRQWKH'XII\VjULJKWWRUHILOHXSRQWKHSHUIRUPDQFHRI                   UXOLQJVZKLFKGRQRWKDYHWKHHIIHFWRIGHWHUPLQLQJWKHFDVH
DQDFWE\VRPHRQHQRORQJHULQYROYHGLQWKHOLWLJDWLRQ                         DJDLQVWSODLQWLIIl)GDW,QWKDWFDVHWKHGLVWULFW
                                                                                FRXUWKDGGHFOLQHGWRH[HUFLVHVXSSOHPHQWDOMXULVGLFWLRQRYHU
  )LQDOO\DVWKHPDMRULW\PDNHVDSRLQWRIQRWLQJWKHGLVWULFW                WKHSODLQWLIIjVVWDWHODZFODLPVDQGWKHSODLQWLIIVXEVHTXHQWO\
FRXUW QHLWKHU VDQFWLRQHG WKH 7KRPDVHV QRU PDGH ILQGLQJV                GLVPLVVHGLWVIHGHUDOFODLPYROXQWDULO\%HFDXVHWKHSODLQWLII
DJDLQVWWKH7KRPDVHVHYLGHQFLQJDFOHDULQWHQWLRQWRGRVR                     KDGYROXQWDULO\GLVPLVVHGWKHFDVHWKLVFRXUWKHOGWKDWWKH
:KLOH D GLVWULFW FRXUW VXUHO\ KDV WKH GLVFUHWLRQ WR LPSRVH             SODLQWLIIFRXOGQRWDSSHDOWKHSULRUUXOLQJGLVPLVVLQJWKHVWDWH
VDQFWLRQVXSRQFRXQVHOIRUDYDULHW\RIEHKDYLRUVLWLVXQGHU                  ODZFODLPVEHFDXVHWKDWUXOLQJGLGQRWSUHYHQWWKHSODLQWLII
QRREOLJDWLRQWRGRVRLQWKHDEVHQFHRIDPRWLRQIURPWKH                      IURP EULQJLQJ VXLW DJDLQ  6HH LG DW  m>:@KLOH WKH
RSSRVLQJ SDUW\  VHHNLQJ VXFK VDQFWLRQV RU D UHFRUG ZKLFK               GLVPLVVDORIWKHVWDWHFODLPVSUHFOXGHGWKHLUDGMXGLFDWLRQRQ
UHIOHFWVDFOHDUIDFWXDOSUHGLFDWHIRUGRLQJVR                                WKHPHULWVLQWKLVODZVXLWLWGLGQRWSUHFOXGHWKHLUDGMXGLFDWLRQ
                                                                                LQ D VWDWH FRXUWl  7KH FRXUW DOVR SRLQWHG RXW WKDW WKH
   ,ILWWUXO\ZDVFRXQVHOjVIDLOXUHVDORQHZKLFKFDXVHGWKHILUVW              GLVPLVVDO KDG QR UHV MXGLFDWD HIIHFW HYHQ LQ IHGHUDO FRXUW
WULDOWREHDERUWHGLWGRHVVHHPXQIDLUWRLPSRVHWKHEXUGHQ                   EHFDXVHLWZDVZLWKRXWSUHMXGLFH6HHLGVHHDOVR/H&RPSWH
                                                                                Y 0U &KLS ,QF  )G   WK &LU 
                                                                                GHVFULELQJ OHJDO SUHMXGLFH DV D UXOLQJ WKDW mVHYHUHO\
     
      ,QGHHG LQ DOO LQVWDQFHV LQ ZKLFK D GLVWULFW FRXUW FRQGLWLRQHG UHILOLQJ
RI D FDVH XSRQ SD\PHQW RI FRVWV , FRXOG ILQG RQO\ RQH ZKHUH WKH
SODLQWLIIjV FRXQVHO DV RSSRVHG WR WKH SODLQWLII KLPVHOI ZDV RUGHUHG WR
PDNH SD\PHQW 6HH :KLWHKHDG Y 0LOOHU %UHZLQJ &R  )5'                    
                                                                                      0DQDJHPHQW ,QYHVWRUV LV GLIIHUHQW IURP WKH LQVWDQW FDVH LQ WKDW WKH
0' *D  $QG HYHQ LQ :KLWHKHDG WKH GLVWULFW FRXUW FKDUDFWHUL]HG
                                                                                UXOLQJ WKDW DVVHUWHGO\ FDXVHG OHJDO SUHMXGLFH WR WKH SODLQWLIIV LQ WKDW FDVH
LWV GHFLVLRQ WR LPSRVH SD\PHQW RI FRVWV RQ FRXQVHO DV D VDQFWLRQ IRU
                                                                                n WKH GLVWULFW FRXUWjV GLVPLVVDO RI WKH SODLQWLIIVj VWDWHODZ FODLPV n
mZLOOIXO DEXVH >RI@ MXGLFLDO SURFHVVHVl ,G DW  FLWDWLRQ RPLWWHG 7KH
                                                                                RFFXUUHG EHIRUH WKH SODLQWLIIVj YROXQWDU\ GLVPLVVDO UDWKHU WKDQ DV D
:KLWHKHDG FRXUW HQIRUFHG WKLV mVDQFWLRQl E\ DOORZLQJ FRXQVHO WR
                                                                                FRQGLWLRQ RI WKDW GLVPLVVDO :H EHOLHYH WKDW WKLV GLIIHUHQFH LV LUUHOHYDQW
ZLWKGUDZ IURP WKH UHILOHG FDVH RQO\ DIWHU SD\PHQW RI WKH FRVWV
                                                                                KRZHYHU VLQFH WKH JRDO RI WKH OHJDO SUHMXGLFH LQTXLU\ LV VLPSO\ WR
                                                                                GHWHUPLQH ZKHWKHU WKH GLVWULFW FRXUWjV DFWLRQV DPRXQW WR DQ LQYROXQWDU\
     
     7KH GLVWULFW FRXUW FKDUDFWHUL]HG WKH SHUIRUPDQFH RI WKH 7KRPDVHV DV        DGYHUVH MXGJPHQW DJDLQVW WKH SODLQWLII LUUHVSHFWLYH RI ZKHWKHU WKDW UXOLQJ
mLQHSWl EXW GLG QRW ILQG RU VXJJHVW WKDW WKHLU DFWLRQV ZHUH VDQFWLRQDEOH      LV WKH FDXVH RU WKH FRQGLWLRQ RI WKH mYROXQWDU\l GLVPLVVDO
     'XII\HWDOY       1RV            1RV                  'XII\HWDOY       
      )RUG0RWRU&R                                                                                                  )RUG0RWRU&R

FLUFXPVFULEH>V@lDSODLQWLIIjVDELOLW\WREULQJDQRWKHUVXLWVHH     UHILOLQJl SULRU WR HQWHULQJ DQ RUGHU JUDQWLQJ WKH 'XII\Vj
DOVR %RODQG Y (QJOH  )G   WK &LU      UHTXHVWIRUGLVPLVVDO0DMRULW\RSLQLRQDW
%HOOH0LGZHVW)GDW
                                                                                                           ,,
   7KH'XII\VDUJXHWKDWWKHWHUPVDQGFRQGLWLRQVLPSRVHGE\
WKHGLVWULFWFRXUWDUHXQUHDVRQDEOHDQGVHYHUHO\FLUFXPVFULEH             $V WR WKH ILUVW RI WKHVH FRQFOXVLRQV D UHYLHZ RI WKH
WKHLUDELOLW\WREULQJVXLWDJDLQ:LWKUHVSHFWWRWKHDWWRUQH\      WUDQVFULSWUHYHDOVWKDWWKHWULDOFRXUWPDGHFOHDUWRDOOSUHVHQW
IHHVFRQGLWLRQWKH'XII\VDUJXHWKDWWKH\DUHXQDEOHWRSD\           GXULQJWKHSURFHHGLQJVLQFOXGLQJWKH'XII\VWKDWSODLQWLIIV
WKRVHIHHVDQGDUHWKHUHIRUHHIIHFWLYHO\EDUUHGIURPUHILOLQJ         ZRXOGEHUHTXLUHGWRSD\GHIHQGDQWjVFRVWVDVDFRQGLWLRQRI
WKHLUVXLW7KH'XII\VjDUJXPHQWLVVXSSRUWHGE\WKHIDFWWKDW        DQ\ UHILOLQJ RI WKHLU GLVPLVVHG DFWLRQ  1HLWKHU WKH GLVWULFW
VRPH FRXUWV KDYH KHVLWDWHG WR PDNH FDWHJRULFDO VWDWHPHQWV       FRXUWQRUDQ\SDUW\QRUFRXQVHOPDGHDQ\UHIHUHQFHWRWKH
DERXW ZKDW NLQGV RI FRQGLWLRQV DPRXQW WR OHJDO SUHMXGLFH      SD\PHQWRIFRVWVE\FRXQVHODQGFRXQVHOFHUWDLQO\PDGHQR
VWDWLQJWKDWLWLVWKHHIIHFWUDWKHUWKDQWKHIRUPDOODQJXDJHRI      FRPPLWPHQWRQWKHUHFRUGWKDWWKH\ZRXOGEHZLOOLQJWRVKDUH
WKHGLVPLVVDOWKDWGHWHUPLQHVZKHWKHUOHJDOSUHMXGLFHUHVXOWV        WKH EXUGHQ RI WKRVH FRVWV  ,QGHHG LW DSSHDUV WKDW LQ
6HH/H&RPSWH)GDW)RUGUHVSRQGVE\SRLQWLQJ              FRQVLGHULQJWKHTXHVWLRQRImFRVWVlWKHSDUWLHVZHUHUHIHUULQJ
RXW WKDW FRXUWV KDYH IRXQG VLPLODU IHH FRQGLWLRQV QRW WR      WRWKHODQJXDJHRI5XOHGRIWKH)HGHUDO5XOHVRI&LYLO
FRQVWLWXWH OHJDO SUHMXGLFH LQ8QLRLO ,QF Y () +XWWRQ 	   3URFHGXUHZKLFKH[SUHVVO\SURYLGHVWKDWXSRQUHILOLQJRID
&R)GWK&LUWKHWRWDOFRVWVLPSRVHGRQ          GLVPLVVHG DFWLRQ mWKH FRXUW PD\ PDNH VXFK RUGHU IRU WKH
WKHSODLQWLIIZHUHVHHLGDWDQGLQ<RIIHY        SD\PHQWRIFRVWVRIWKHDFWLRQSUHYLRXVO\GLVPLVVHGDVLWPD\
.HOOHU,QGXV,QF)GWK&LUPRUHWKDQ           GHHPSURSHUDQGPD\VWD\WKHSURFHHGLQJVLQWKHDFWLRQXQWLO
WZRGHFDGHVDJRWKHWRWDOFRVWZDVVHHLGDW        WKH SODLQWLII KDV FRPSOLHGZLWK WKH RUGHUl  5XOH G
7KH NH\ TXHVWLRQ WKHQ LV ZKHWKHU WKH UHDVRQDEOHQHVV           )5&3HPSKDVLVDGGHG 7KXVWKHUHFRUGUHYHDOVWKDW
VWDQGDUGIRULPSRVLQJDWWRUQH\IHHVXQGHU5XOHDLVD           QRWLFHRIWKHGLVWULFWFRXUWjVLQWHQWLRQWRLPSRVHFRVWVXSRQ
VXEMHFWLYHRUREMHFWLYHRQHonWKDWLVZKHWKHUWKHXQLTXH             WKH'XII\VWKHPVHOYHVDVDFRQGLWLRQWRUHILOLQJZDVSURYLGHG
FLUFXPVWDQFHV RI WKH LQGLYLGXDO SDUWLHV DUH UHOHYDQW WR WKH    SULRUWRWKHGLVPLVVDOHQWU\
UHDVRQDEOHQHVV RI WKH IHHV DQG WR WKH ILQGLQJ RI OHJDO
SUHMXGLFH  $OWKRXJK WKHUH LV QR ELQGLQJ SUHFHGHQW RQ WKLV
LVVXHLQWKH6L[WK&LUFXLWWKLVFRXUWLVH[WUHPHO\UHOXFWDQWWR
DQQRXQFHDUXOHWKDWPDNHVLWVDSSHOODWHMXULVGLFWLRQGHSHQG
XSRQWKHILQDQFLDOZKHUHZLWKDORIWKHSDUWLHV7RGRVRZRXOG
PHDQWKDWSDUWLHVZLWKRXWWKHPHDQVWRSD\DFRVWFRQGLWLRQ
FRXOGLPPHGLDWHO\DSSHDOWKDWFRQGLWLRQZKHUHDVDZHDOWKLHU               
SDUW\IDFHGZLWKDQLGHQWLFDOFRQGLWLRQFRXOGQRWZHEHOLHYH                :KLOH QR SDUW\ VSHFLILFDOO\ UHIHUUHG WR 5XOH G RQ WKH UHFRUG LW
WKDWVXFKDUHVXOWZRXOGEHDQRPDORXVDQGZHNQRZRIQR               DSSHDUV IURP WKH FRQWH[W RI WKH GLVFXVVLRQ WKDW WKH SDUWLHV DQG WKH FRXUW

RWKHUDUHDRIDSSHOODWHMXULVGLFWLRQLQZKLFKWKHPHDQVRIWKH         ZHUH UHIHUULQJ WR WKH WH[W RI 5XOH  ZKHQ GLVFXVVLQJ WKH PRWLRQ WR
                                                                       GLVPLVV DQG WKH LPSRVLWLRQ RI FRVWV XSRQ UHILOLQJ $00 s$ DW 
SDUWLHV UDWKHU WKDQ WKH QDWXUH RI WKH GHFLVLRQ GHWHUPLQHV    ZKHUH WKH FRXUW UHIHUV WR WKH FRQFHSW RI UHILOLQJ mFRVWVl XQGHU mWKH UXOHVl
DSSHDODELOLW\  )XUWKHUPRUH DSSHOODWH FRXUWV DUH QRW ZHOO      DQG WKH 'XII\Vj FRXQVHO GLVFXVVHV H[DPLQLQJ WKH FRVW TXHVWLRQ IRU RYHU
SRVLWLRQHG WR PDNH WKH SUHGLFDWH IDFWXDO GHWHUPLQDWLRQ           WKLUW\ PLQXWHV SULRU WR PDNLQJ WKH PRWLRQ WR GLVPLVV ,W LV DOVR FOHDU
ZKHWKHUDSDUW\WUXO\FDQQRWDIIRUGWRSD\FRVWVZKLFKZRXOG          PRUHRYHU WKDW WKH RQO\ VHFWLRQ RI 5XOH  ZKLFK PHQWLRQV WKH FRQFHSW RI
                                                                       FRVWV SDUWLFXODUO\ FRVWV LPSRVHG XSRQ UHILOLQJ LV 5XOH G
       'XII\HWDOY       1RV               1RV               'XII\HWDOY      
         )RUG0RWRU&R                                                                                                  )RUG0RWRU&R

   :KHQWKH'XII\VjFRXQVHOVRXJKWGLVPLVVDOPLGWULDOWKH                  EHUHTXLUHGE\WKHUXOHWKDWWKH'XII\VDSSHDUWRDGYRFDWH
GLVWULFW FRXUW KDG VHYHUDO FKRLFHV  WR GHQ\ WKH UHTXHVW WR       7KHUHIRUHZHFRQFOXGHWKDWDQDSSHDOLQJSDUW\PXVWVKRZ
JUDQW LW XQFRQGLWLRQDOO\ RU WR JUDQW LW XSRQ VSHFLILHG              WKDW D FRVW FRQGLWLRQ LV REMHFWLYHO\ XQUHDVRQDEOH ZLWKRXW
FRQGLWLRQV7KHGLVWULFWFRXUWFKRVHWKHODVWRIWKHVHURXWHV              UHJDUGWRWKDWSDUW\jVILQDQFLDOPHDQVLQRUGHUWRGHPRQVWUDWH
WKH FRXUW H[SUHVVO\ JUDQWHG WKH 'XII\Vj UHTXHVW XSRQ WKH             OHJDOSUHMXGLFH
FRQGLWLRQWKDWWKH'XII\VSD\GHIHQGDQWjVFRVWV7KXVZKHQ
WKH'XII\VGLGGLVPLVVWKLVDFWLRQLWZDVZLWKWKHEHOLHIWKDW                7KH'XII\VKDYHQRWPDGHDQ\FODLPRUVKRZLQJWKDWWKH
DWVRPHILQDQFLDOFRVWDUHILOHGDFWLRQZRXOGSURYLGHWKHPDQ               FRVWV LPSRVHG E\ WKH GLVWULFW FRXUW DUH REMHFWLYHO\
RSSRUWXQLW\ WR FXUH WKH GLVFRYHU\ RU HYLGHQWLDU\ PLVWDNHV             XQUHDVRQDEOHIRUH[DPSOHWKH\GRQRWFODLPWKDWWKRVHFRVWV
PDGHWRGDWH7KHGLVWULFWFRXUWGLGQRWKLQJWRGLVDEXVHWKH                DUH DUELWUDU\ RU GLVSURSRUWLRQDWH WR WKH HIIRUW )RUG KDV
'XII\V RU WKHLU FRXQVHO RI WKH EHOLHI WKDW VXEMHFW WR WKH         H[SHQGHG  ,QGHHG )RUG VXEPLWWHG GHWDLOHG DIILGDYLWV
SD\PHQWRIFRVWVWKH\ZRXOGEHSHUPLWWHGWRmSUHVVWKHUHVWDUW              LWHPL]LQJ LWV H[SHQVHV ZKLFK WKH 'XII\V GR QRW FRQWHVW
EXWWRQl XSRQ GLVPLVVDO RI WKHLU ILUVW DFWLRQ  7KH GLVWULFW         5DWKHUWKH\DUJXHWKDWWKRVHIHHVDUHXQUHDVRQDEOHEHFDXVH
FRXUWjVSRVWKRFGHFLVLRQWRLPSRVHGLIIHUHQWFRQGLWLRQVDIWHU              WKH\UHVXOWLQWKH'XII\VjLQDELOLW\WREULQJDVHFRQGVXLW:H
GLVPLVVDODQGDIWHUUHOHDVHRIWKHMXU\OHIWWKH'XII\VLQWKH              WKHUHIRUHKROGWKDWWKHGLVWULFWFRXUWjVRUGHUZLWKUHVSHFWWR
SRVLWLRQRIKDYLQJWRSD\WKHGHIHQGDQWIRUWKHSULYLOHJHRI                 FRVWVGRHVQRWUHVXOWLQOHJDOSUHMXGLFHWRWKH'XII\V
UHWU\LQJWKHFDVHIRUZKLFKWKHLUFRXQVHOZDVLOOSUHSDUHGLQ
WKH ILUVW LQVWDQFH  :KLOH WKH GLVWULFW FRXUW FRXOG KDYH               7KH'XII\VDOVRFRQWHQGWKDWWKH\ZHUHOHJDOO\SUHMXGLFHG
SUHVHQWHGWKLVmFKRLFHlWRWKH'XII\VDQGWKHLUFRXQVHOEHIRUH               E\WKHGLVWULFWFRXUWjVGHFLVLRQWRLPSRVHRQWKHUHILOHGDFWLRQ
GLVPLVVDODFKRLFHWKH'XII\VOLNHO\ZRXOGKDYHUHMHFWHGLW                WKHODZRIWKHFDVHIURPWKHRULJLQDODFWLRQ7KH\DUJXHWKDW
GLGQRWGRVR7KHGLVWULFWFRXUWjV EHODWHGODZRIWKHFDVH                WKHGLVWULFWFRXUWjVHYLGHQWLDU\UXOLQJVIURPWKHRULJLQDODFWLRQ
UXOLQJUHQGHUHGWKH'XII\VGLVPLVVDOXVHOHVVIURPDVWUDWHJ\                 SUHYHQWWKH'XII\VIURPLQWURGXFLQJWKHHYLGHQFHQHFHVVDU\
VWDQGSRLQWDQGFRQVWLWXWHGDQDEXVHRIWKHFRXUWjVGLVFUHWLRQ                WRSUHYDLOLQWKHUHILOHGDFWLRQ$V)RUGSRLQWVRXWKRZHYHU
XQGHU5XOHD                                                        WKH'XII\VKDYHQRWSRLQWHGWRDQ\VSHFLILFHYLGHQFHWKDWWKH\
                                                                             QHHGWRLQWURGXFHLQRUGHUWRSUHYDLOQRUKDYHWKH\H[SODLQHG
  , UHVSHFWIXOO\ GLVVHQW KRZHYHU IURP WKH PDMRULW\jV                 ZKDW VKRZLQJV WKH\ ZLOO EH XQDEOH WR PDNH ZLWK WKH
FRQFOXVLRQWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQZKHQLW             FRQVLGHUDEOHHYLGHQFHWKH\KDGDPDVVHGIRUWKHRULJLQDOWULDO
LPSRVHG )RUGjV DWWRUQH\ IHHV DQG FRVWV XSRQ WKH 'XII\V              )XUWKHUPRUHWKHGLVWULFWFRXUWjVRUGHUSHUPLWWHGWKH'XII\VWR
UDWKHUWKDQWKHLUFRXQVHODVDFRQGLWLRQRIUHILOLQJ$QG,               QDPHRQHDGGLWLRQDOH[SHUWLQWKHUHILOHGDFWLRQ
GLVVHQW IURP WKH FRQFOXVLRQ WKDW WKH GLVWULFW FRXUW KDG DQ
REOLJDWLRQ mWR JLYH WKH 'XII\V QRWLFH RI WKH DSSUR[LPDWH                7KH&RXUWRI$SSHDOVIRUWKH6HYHQWK&LUFXLWGHDOWZLWKD
DPRXQWRIFRVWVIRUZKLFKWKH\ZRXOGEHUHVSRQVLEOHXSRQ                     VLWXDWLRQ YHU\ VLPLODU WR WKLV RQH LQ 3DUNHU Y )UHLJKWOLQHU
                                                                             &RUS)GWK&LU,QWKDWFDVHWKHGLVWULFW
                                                                             FRXUW KDG JUDQWHG WKH SODLQWLII D YROXQWDU\ GLVPLVVDO XQGHU
                                                                            5XOHDRQWKHFRQGLWLRQWKDWWKHFRXUWjVRUGHUEDUULQJ
      $JDLQ LW LV LPSRUWDQW WR HPSKDVL]H WKDW LW ZRXOG QRW EH DQ DEXVH RI
                                                                             WKHSODLQWLIIjVXVHRIH[SHUWWHVWLPRQ\ZRXOGUHPDLQLQHIIHFW
GLVFUHWLRQ WR LPSRVH FRQGLWLRQV RQ D GLVPLVVDO ZKLFK DUH VR RQHURXV DV WR
UHQGHU GLVPLVVDO XQGHVLUDEOH SURYLGHG KRZHYHU WKDW VRPH QRWLFH RI
                                                                             LQDQ\VXEVHTXHQWDFWLRQ7KHFRXUWRIDSSHDOVGHWHUPLQHG
WKRVH FRQGLWLRQV RFFXUV EHIRUH GLVPLVVDO RU DW OHDVW DW D SRLQW ZKHQ        WKDWWKLVFRQGLWLRQGLGQRWDPRXQWWROHJDOSUHMXGLFHEHFDXVH
UHLQVWDWHPHQW XSRQ UHMHFWLRQ RI WKH FRQGLWLRQV UHPDLQV IHDVLEOH 7KDW LV     WKHSODLQWLIIZRXOGKDYHEHHQDEOHXQGHUVWDWHODZWRPDNH
QRW ZKDW RFFXUUHG KHUH
    'XII\HWDOY       1RV            1RV                     'XII\HWDOY        
      )RUG0RWRU&R                                                                                                     )RUG0RWRU&R

RXWDSULPDIDFLHFDVHZLWKRXWWKHXVHRIH[SHUWWHVWLPRQ\            FRQGLWLRQVZKLFKZHUHWKHSUHGLFDWHIRUWKDWGLVPLVVDO7KLV
6HHLGDW	Q,QWKHLQVWDQWFDVHDOWKRXJKWKH           LVWUXHUHJDUGOHVVRIZKHQWKRVHFRQGLWLRQVZHUHLPSRVHG
'XII\Vj FRXQVHO GHVFULEHG )HDKHQ\ DV D mFULWLFDO ZLWQHVVl
s$ DW  7U DQG VWDWHG WKDW WKH H[FOXVLRQ RI KLV         ,QOLJKWRIWKHFRQFOXVLRQWKDWWKHGLVWULFWFRXUWjVGLVPLVVDO
WHVWLPRQ\ ZDV WKH LPSHWXV IRU UHTXHVWLQJ D YROXQWDU\            RI WKH UHILOHG DFWLRQ JDYH ULVH WR DQ DSSHDODEOH RUGHU D
GLVPLVVDO WKH 'XII\V KDYH QRW VKRZQ WKDW WKH\ ZRXOG EH       FRQFOXVLRQ ZLWK ZKLFK WKH PDMRULW\ DJUHHV , ZRXOG KDYH
XQDEOHWRPDNHRXWDSULPDIDFLHFDVHZLWKWKHHYLGHQFHWKH\           GHFOLQHGWRUHDFKWKHTXHVWLRQRIZKHWKHUWKHGLVWULFWFRXUWjV
DOUHDG\ KDYH RU ZLWK WKH DGGLWLRQ RI RQH H[SHUW ZLWQHVV WR   GLVPLVVDORIWKHRULJLQDODFWLRQZLWKLWVVWULQJHQWFRQGLWLRQV
UHSODFH)HDKHQ\,QGHHGLWVHHPVSDUWLFXODUO\LPSODXVLEOH            ZDVRWKHUZLVHDSSHDODEOH7KHTXHVWLRQRIZKDWFRQVWLWXWHV
WKDW)HDKHQ\FRXOGEHVRFHQWUDOWRWKH'XII\VjFDVHZKHQLQ         mOHJDOSUHMXGLFHlLQWKHFRQWH[WRI5XOHDGLVPLVVDOVLV
IDFW KH DGPLWWHG WKDW KH KDG QRW H[DPLQHG WKH YHKLFOH        DFRPSOH[IDFWVSHFLILFRQH,GRQRWEHOLHYHLWLVXVHIXOWR
LQYROYHG LQ WKH DFFLGHQW DQG WKDW KH GLG QRW KDYH VSHFLILF   HQJDJH LQ D GLVFXVVLRQ ZKLFK FRXOG EH UHDG WR HVWDEOLVK
NQRZOHGJH DERXW WKH HQJLQHHULQJ RI WKH SDUWLFXODU %URQFR        SDUDPHWHUV IRU WKLV OHJDO FRQFHSW ZKHQ WKDW GLVFXVVLRQ LV
PRGHOWKDW:LOOLDP'XII\ZDVGULYLQJZKHQKHZDVNLOOHG               XQQHFHVVDU\WRWKH&RXUWjVGHWHUPLQDWLRQRIWKHDSSHDOEHIRUH
7KHUHIRUHWKH'XII\VKDYHQRWVKRZQWKDWWKHGLVWULFWFRXUWjV         LW
LPSRVLWLRQ RI WKH UXOLQJV IURP WKH RULJLQDO DFWLRQ RQ WKH
UHILOHGDFWLRQFRQVWLWXWHGOHJDOSUHMXGLFH                               ,DOVRDJUHHWKDWWKHGLVWULFWFRXUWDEXVHGLWVGLVFUHWLRQLQ
                                                                       LPSRVLQJDODZRIWKHFDVHUXOHXSRQWKHUHILOLQJRIDQDFWLRQ
   :HQRQHWKHOHVVKROGWKDWZHKDYHMXULVGLFWLRQWRUHYLHZWKH         E\WKH'XII\V/LNHWKHPDMRULW\,DJUHHWKDWVXFKDQRUGHU
GLVWULFWFRXUWjVGLVPLVVDORIWKHUHILOHGFDVH$OWKRXJK WKH         FDQEHDSSURSULDWHLQVRPHFLUFXPVWDQFHVDQGWKDWWKHGLVWULFW
GLVWULFW FRXUWjV GLVPLVVDO RI WKH LQLWLDO FDVH ZDV QRW DQ     FRXUWZRXOGEHIUHHWRUHDFKWKHVDPHFRQFOXVLRQVLISUHVHQWHG
LQYROXQWDU\ DGYHUVH MXGJPHQW DQG WKHUHIRUH ZDV QRW             ZLWKWKHVDPHHYLGHQWLDU\TXHVWLRQVLQDQHZDFWLRQ$OVR
LPPHGLDWHO\ DSSHDODEOH WKH GLVPLVVDO RI WKH UHILOHG FDVH       OLNH WKH PDMRULW\ KRZHYHU , DJUHH WKDW WKH GLVWULFW FRXUW
FOHDUO\ZDVVXFKDMXGJPHQWDQGWKH'XII\VDUHDOORZHGWR             VKRXOGQRWKDYHDSSOLHGDQDFURVVWKHERDUGODZRIWKHFDVH
DSSHDOLW6HHHJ+HUULQJY&LW\RI:KLWHKDOO)G          UXOLQJDVDFRQGLWLRQSUHFHGHQWWRUHILOLQJLQWKHDEVHQFHRI
	QWK&LUDOORZLQJDQDSSHDOIURPWKH            VRPHSULRUQRWLILFDWLRQWRWKHSDUWLHVRILWVLQWHQWLRQWRGRVR
GLVWULFW FRXUWjV GLVPLVVDO ZLWK SUHMXGLFH RI WKH SODLQWLIIVj
UHILOHGVXLWZKHQWKHSODLQWLIIVIDLOHGWRSD\WKHGHIHQGDQWVj
DWWRUQH\IHHVDVUHTXLUHGE\WKHGLVWULFWFRXUWjVRUGHUJUDQWLQJ
WKHSODLQWLIIVjUHTXHVWIRUDYROXQWDU\GLVPLVVDO7KH)LIWK             
&LUFXLWKDVVXJJHVWHGWKDWDSODLQWLIIFDQREWDLQUHYLHZRID                7KH WZR FRQGLWLRQV LPSRVHG LQ WKLV FDVH PXVW EH FRQVLGHUHG LQ
FRQGLWLRQDOYROXQWDU\GLVPLVVDOE\DFFHSWLQJWKRVHFRQGLWLRQV         WDQGHP :KLOH WKH 'XII\V SULPDULO\ IRFXV RQ WKHLU LQDELOLW\ WR SD\ )RUGjV

EXW WKHQ UHIXVLQJ WR FRPSO\ ZLWK WKHP DQG VXIIHULQJ D         FRVWV DV D FRQGLWLRQ RI UHILOLQJ WKH DGGLWLRQDO ODZRIWKHFDVH FRQGLWLRQ
                                                                       DIIHFWV WKH YDOXH RI WKDW UHILOLQJ WR WKH 'XII\V DQG WKXV LV SHUWLQHQW WR WKH
GLVPLVVDOZLWKSUHMXGLFHDVDUHVXOW6HH0RUWJDJH*XDU,QV         QDWXUH RI WKH EXUGHQ FUHDWHG E\ WKH GLVWULFW FRXUWjV LPSRVLWLRQ RI FRVWV
&RUSY5LFKDUG&DUO\RQ&R)GQWK&LU
<RIIH)GDWQ7KDWLVZKDWWKH'XII\V               
                                                                            ,I SUHVVHG WR DGGUHVV WKH LVVXH , ZRXOG EH LQFOLQHG WR ILQG WKDW mOHJDO
GLG LQ WKLV FDVH  $OWKRXJK WKH GLVWULFW FRXUW WHFKQLFDOO\    SUHMXGLFHl GLG DULVH IURP LPSRVLWLRQ RI WKH ODZRIWKHFDVH FRQGLWLRQ RQ
GLVPLVVHGWKHUHILOHGFDVHZLWKRXWSUHMXGLFHWKDWGLVPLVVDO           WKH 'XII\Vj RULJLQDO GLVPLVVDO , ZRXOG GR VR IRU WKH VDPH UHDVRQV WKH
ZDVLQYROXQWDU\DQGDVWKH'XII\VSRLQWRXWLQWKHLUEULHI           PDMRULW\ ODWHU FRQFOXGHV WKH GLVWULFW FRXUW DEXVHG LWV GLVFUHWLRQ E\ LQVLVWLQJ
                                                                       RQ FRPSOLDQFH ZLWK WKDW VDPH FRQGLWLRQ
       'XII\HWDOY      1RV               1RV                    'XII\HWDOY        
         )RUG0RWRU&R                                                                                                      )RUG0RWRU&R

 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB                             RSHUDWHGDVDGLVPLVVDOZLWKSUHMXGLFHEHFDXVHWKHVWDWXWHRI
                                                                            OLPLWDWLRQVKDGUXQRQWKH'XII\VjFODLPVDWWKDWSRLQW&I
  &21&855,1*,13$57',66(17,1*,13$57                                    /H&RPSWH)GDWVWDWLQJWKDWLWLVWKHHIIHFWUDWKHU
 BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB                             WKDQ WKH IRUPDO ODQJXDJH RI WKH GLVPLVVDO WKDW GHWHUPLQHV
                                                                            ZKHWKHUOHJDOSUHMXGLFHUHVXOWV2IFRXUVHWKHGLFWDRIWKH
                                                                            )LIWK&LUFXLWLQ<RIIHDQG0RUWJDJH*XDUDQW\DUHQRWELQGLQJ
   .$7+/((10F'21$/'2j0$//(<'LVWULFWsXGJH                              RQ WKLV FRXUW EXW WKH ORJLF RI WKRVH FDVHV LV SHUVXDVLYH
FRQFXUULQJ LQ SDUW DQG GLVVHQWLQJ LQ SDUW  $OWKRXJK WKH           7KHUHIRUHZHKROGWKDWWKLVFRXUWFDQKHDUWKH'XII\VjDSSHDO
PDMRULW\HORTXHQWO\GHDOVZLWKDQXPEHURIGLIILFXOWFRQFHSWV              RIWKHGLVPLVVDORIWKHUHILOHGFDVH
, FDQ RQO\ FRQFXU LQ SDUW LQ WKH FRQFOXVLRQV WKH PDMRULW\
UHDFKHV  6SHFLILFDOO\ , FRQFXU LQ WKH UHVXOW UHDFKHG LQ          %3HUPLVVLELOLW\RIWKH'LVWULFW&RXUWjV&RQGLWLRQV
6HFWLRQV ,,$ DQG LQ ERWK WKH UHDVRQLQJ DQG FRQFOXVLRQ
FRQWDLQHG LQ 6HFWLRQ ,,% RI WKH PDMRULW\ RSLQLRQ ,               7KHWHUPVDQGFRQGLWLRQVLPSRVHGE\WKHGLVWULFWFRXUWRQ
UHVSHFWIXOO\ GLVVHQW KRZHYHU  IURP 6HFWLRQ ,,% RI WKH          WKHGLVPLVVDORIWKHRULJLQDODFWLRQUHVXOWHGLQWKHGLVPLVVDORI
PDMRULW\RSLQLRQDQGZRXOGKDYHGHFOLQHGWRDGGUHVVFHUWDLQ                WKH UHILOHG DFWLRQ  )RU WKLV UHDVRQ ZH FDQ FRQVLGHU WKH
PDWWHUV GLVFXVVHG LQ 6HFWLRQ ,,$ EHFDXVH WKH\ DUH                   SHUPLVVLELOLW\RIWKRVHWHUPVDQGFRQGLWLRQVZKHQZHUHYLHZ
XQQHFHVVDU\WRDUHVROXWLRQRIWKLVDSSHDO                                 WKHDSSURSULDWHQHVVRIWKHGLVWULFWFRXUWjVVHFRQGGLVPLVVDO
                                                                            ,Q FRQGXFWLQJ WKDW UHYLHZ ZH PXVW FRQVLGHU ZKHWKHU WKH
                                   ,                                       GLVWULFWFRXUWjVFRQGLWLRQVRQWKH'XII\VjYROXQWDU\GLVPLVVDO
                                                                            FRQVWLWXWHG DQ DEXVH RI GLVFUHWLRQ  6HH ':* &RUS Y
  ,DJUHHWKDWWKLV&RXUWKDVMXULVGLFWLRQWRFRQVLGHUWKHLVVXHV           *UDQDGD,QYV,QF)GWK&LU,I
UDLVHGLQWKH'XII\VjDSSHDO7KHGLVWULFWFRXUWjVGLVPLVVDORI            WKH\GLGQRWWKHQWKHGLVWULFWFRXUWZDVHQWLWOHGWRGLVPLVVWKH
WKH 'XII\Vj mUHILOHGl DFWLRQ ZDV D ILQDO DSSHDODEOH RUGHU          'XII\VjUHILOHGDFWLRQHYHQLIWKDWVHFRQGGLVPLVVDORSHUDWHG
YHVWLQJ WKLV &RXUW ZLWK MXULVGLFWLRQ WR FRQVLGHU WKH UXOLQJV        DVDGLVPLVVDOZLWKSUHMXGLFH6HH6WHUQY,QWHU0RXQWDLQ
XSRQ ZKLFK WKDW GLVPLVVDO ZDV SUHPLVHG  7KH 'XII\Vj               7HO&R)GWK&LU:5,*+7 	
UHILOHGDFWLRQZDVGLVPLVVHGEHFDXVHWKH'XII\VZRXOGQRWRU                0,//(5VXSUDDW,IWKRVHFRQGLWLRQVZHUH
FRXOGQRWVDWLVI\FHUWDLQFRQGLWLRQVWKHGLVWULFWFRXUWLPSRVHG             DQ DEXVH RI GLVFUHWLRQ KRZHYHU WKHQ WKH GLVWULFW FRXUWjV
RQUHILOLQJ,QRUGHUWRDVVHVVWKHSURSULHW\RIWKHGLVPLVVDO            RUGHUV LPSRVLQJ WKRVH FRQGLWLRQV DV ZHOO DV LWV RUGHU
WKLV &RXUW FDQ DQG LQGHHG PXVW DVVHVV WKH YDOLGLW\ RI WKH
                                                                                
                                                                                   8QGHU 7HQQHVVHH ODZ WKH SODLQWLII KDV RQH \HDU WR UHILOH DQ DFWLRQ
                                                                            DIWHU D GLVPLVVDO ZLWKRXW SUHMXGLFH ,I WKH VHFRQG DFWLRQ LV DOVR GLVPLVVHG
                                                                            KRZHYHU WKH VWDWXWH RI OLPLWDWLRQV LV QRW WROOHG DQG WKH SODLQWLII VWLOO KDV
                                                                            RQO\ RQH \HDU IURP WKH GLVPLVVDO RI WKH RULJLQDO DFWLRQ LQ ZKLFK WR ILOH
                                                                            DJDLQ 6HH +XQW Y 6KDZ     6:G   7HQQ &W $SS 
                                                                                                  6:G   7HQQ &W $SS  6LQFH
     
                                                                            VWDWH VWDWXWHRIOLPLWDWLRQV UXOHV DSSO\ WR D GLYHUVLW\ FDVH XQGHU
                                                                            3D\QH Y 0DWWKHZV
     $V WKH PDMRULW\ SRLQWV RXW ZKLOH WKH GLVPLVVDO HQWU\ VWDWHG WKDW LW
                                                                                           86   LW DSSHDUV WKDW 7HQQHVVHH ODZ ZRXOG EDU
                                                                                                                                                (ULH 55
ZDV mZLWKRXW SUHMXGLFHl WKH SUDFWLFDO HIIHFW RI WKH GLVPLVVDO ZDV WR
                                                                            UHLQVWLWXWLRQ RI WKH 'XII\Vj FRPSODLQW DIWHU WKH VHFRQG GLVPLVVDO
                                                                            Y 7RPSNLQV
IRUHYHU EDU WKH 'XII\Vj FODLPV 7KXV GHVSLWH WKH FKDUDFWHUL]DWLRQ WKH
                                                                                         &+$5/(6 $/$1 :5,*+7 	 $57+85 5 0,//(5 )('(5$/
                                                                                                                                                      6HH
GLVPLVVDO ZDV FHUWDLQO\ DQ mLQYROXQWDU\ DGYHUVH MXGJPHQWl IURP ZKLFK DQ
                                                                            35$&7,&( $1' 352&('85(  DW  G HG 
                                                                            JHQHUDOO\
DSSHDO GRHV OLH
    'XII\HWDOY        1RV            1RV               'XII\HWDOY      
      )RUG0RWRU&R                                                                                                )RUG0RWRU&R

GLVPLVVLQJWKHUHILOHGDFWLRQGXHWRWKH'XII\VjIDLOXUHWRPHHW        SRVLWLRQ WR GHWHUPLQH LQLWLDOO\ ZKHWKHU WKHUH LV D EDVLV IRU
WKRVHFRQGLWLRQVPXVWEHUHYHUVHG                                     UHFRQVLGHULQJLWVHYLGHQWLDU\UXOLQJVZKHWKHUWKH'XII\VDUH
                                                                        VWLOO FDSDEOH RI SUHYDLOLQJ LQ OLJKW RI WKRVH UXOLQJV DQG
  5HTXLULQJWKH'XII\VWR3D\)RUGjV&RVWV                          ZKHWKHUUHWDLQLQJWKHODZRIWKHFDVHLQWKHUHILOHGDFWLRQLV
                                                                        QHFHVVDU\IRUWKHSURWHFWLRQRI)RUGjVLQWHUHVWV
   7KH 'XII\V GR QRW FRQWHVW WKH GLVWULFW FRXUWjV DELOLW\ WR
UHTXLUHUHLPEXUVHPHQWRI)RUGjVDWWRUQH\IHHVDQGFRVWVQRU               :HWKHUHIRUHILQGLWQHFHVVDU\WRYDFDWHWKHGLVWULFWFRXUWjV
GR WKH\ FRQWHVW WKH DPRXQW RI WKRVH IHHV DQG FRVWV  7KH\    RUGHUDSSO\LQJWKHODZRIWKHRULJLQDOFDVHWRWKHUHILOHGFDVH
DUJXH RQO\ WKDW WKH GLVWULFW FRXUW DEXVHG LWV GLVFUHWLRQ LQ    DQG GLUHFW WKH GLVWULFW FRXUW RQ UHPDQG WR UHFRQVLGHU LWV
UHTXLULQJWKH'XII\VUDWKHUWKDQWKHLUWULDOFRXQVHOWRSD\7KH       GHFLVLRQLQOLJKWRIDQ\REMHFWLRQVWKDWWKH'XII\VPD\ZLVK
'XII\V FRQWHQG WKDW WKHLU IRUPHU FRXQVHO WKH 7KRPDVHV          WRPDNH:HQRWHKRZHYHUWKDWLIWKHGLVWULFWFRXUWjVUXOLQJV
VKRXOG KDYH WR SD\ )RUGjV FRVWV EHFDXVH WKH 7KRPDVHVj           IURPWKHRULJLQDODFWLRQQRORQJHUDSSO\LQWKHUHILOHGDFWLRQ
LQFRPSHWHQFHQHFHVVLWDWHGWKHYROXQWDU\GLVPLVVDO:HKROG             )RUG PD\ EH HQWLWOHG WR UHLPEXUVHPHQW IRU DQ\ DGGLWLRQDO
WKDWLWZDVDQDEXVHRIGLVFUHWLRQIRUWKHFRXUWQRWWRFRQVLGHU        FRVWV DQG IHHV WKDW LW ZLOO KDYH WR H[SHQG LQ WKH UHILOHG
WKH'XII\VjUHVSRQVLELOLW\IRU)RUGjVZDVWHGFRVWVLQDVVHVVLQJ         OLWLJDWLRQ DV D UHVXOW RI KDYLQJ WR UHOLWLJDWH WKRVH UXOLQJV
FRVWV DJDLQVW WKH 'XII\V UDWKHU WKDQ WKHLU FRXQVHO              FRQVLVWHQWZLWKRXUGLVFXVVLRQLQ3DUW,,%
)XUWKHUPRUH ZH KROG WKDW WKH GLVWULFW FRXUW DEXVHG LWV
GLVFUHWLRQLQIDLOLQJSULRUWRWKHHQWU\RIWKHsDQXDU\                             ,,,&21&/86,21
GLVPLVVDORUGHUWRJLYHWKH'XII\VQRWLFHRIWKHDSSUR[LPDWH
DPRXQWRIFRVWVIRUZKLFKWKH\ZRXOGEHUHVSRQVLEOHXSRQ                  )RUWKHIRUHJRLQJUHDVRQVZH9$&$7(WKHGLVWULFWFRXUWjV
UHILOLQJDQGWRDIIRUGWKHPDQRSSRUWXQLW\WRZLWKGUDZWKHLU            $XJXVWGLVPLVVDORUGHUDQGLWVRUGHUV RI sXQH 
PRWLRQ  7KHUHIRUH ZH YDFDWH WKH GLVWULFW FRXUWjV RUGHU RI    DQGsXQHUHTXLULQJWKH'XII\VWRSD\)RUGjV
GLVPLVVDO DQG LWV RUGHU UHTXLULQJ WKH 'XII\V WR SD\ )RUGjV     FRVWVDQGLPSRVLQJWKHODZRIWKHFDVHRQWKHUHILOHGDFWLRQ
FRVWVEHIRUHUHILOLQJDQGZHUHPDQGIRUUHFRQVLGHUDWLRQLQ             DQGZH5(0$1'WKHFDVHIRUIXUWKHUSURFHHGLQJVFRQVLVWHQW
OLJKWRIWKLVKROGLQJ                                                  ZLWKWKLVRSLQLRQ
  ,Q +HUULQJ Y &LW\ RI :KLWHKDOO  )G  WK &LU
WKH&RXUWRI$SSHDOVIRUWKH(LJKWK&LUFXLWKHOGWKDWLW
ZDVDQDEXVHRIGLVFUHWLRQIRUWKHGLVWULFWFRXUWWRUHTXLUHWKH
SODLQWLIIVWRSD\DWWRUQH\IHHVEHIRUHWKH\FRXOGUHILOHWKHLU
FDVHZLWKRXWFRQVLGHULQJZKHWKHUWKH\ZHUHUHVSRQVLEOHIRU
WKHGHIHQGDQWVjZDVWHGFRVWV,QWKDWFDVHWKHGLVWULFWFRXUW
KDGJUDQWHGWKHSODLQWLIIVjPRWLRQIRUDYROXQWDU\GLVPLVVDO
GXHWRWKHLUFRXQVHOjVXQSUHSDUHGQHVVRQWKHFRQGLWLRQWKDW
WKHSODLQWLIIVjFRXQVHOSD\WKHGHIHQGDQWVjIHHVDQGFRVWVLIWKH
SODLQWLIIVUHILOHGEXWLIWKHSODLQWLIIVUHWDLQHGQHZFRXQVHOn
ZKLFKWKH\GLGnWKHSODLQWLIIVZRXOGEHUHVSRQVLEOHIRUWKH
FRVWV6HHLGDW:KLOHQRWLQJWKDWWKHUHPD\EHVRPH
GXHSURFHVVFRQFHUQVDVVRFLDWHGZLWKDVVHVVLQJFRVWVGLUHFWO\
       'XII\HWDOY         1RV               1RV                   'XII\HWDOY       
         )RUG0RWRU&R                                                                                                        )RUG0RWRU&R

PHDQWWKDWWKH'XII\VGLGQRWKDYHDVXIILFLHQWRSSRUWXQLW\WR                 DJDLQVW WKH DWWRUQH\ UDWKHU WKDQ WKH FOLHQW VHH LG DQG
FRQWHVW WKH GLVWULFW FRXUWjV GHFLVLRQ RU WR ZLWKGUDZ WKHLU             DFNQRZOHGJLQJWKDWFOLHQWVDUHJHQHUDOO\KHOGUHVSRQVLEOHIRU
PRWLRQIRUYROXQWDU\GLVPLVVDOLIWKH\GLGQRWZLVKWRDFFHSW                  WKH DFWV RI WKHLU DWWRUQH\V ZKR DUH WKHLU mIUHHO\ VHOHFWHG
WKDW FRQGLWLRQ  $V ZH VWDWHG ZLWK UHVSHFW WR WKH FRVW              DJHQW>V@lLGDWTXRWLQJ/LQNY:DEDVK5586
FRQGLWLRQZHKROGWKDWWKHGLVWULFWFRXUWVKRXOGKDYHJLYHQ                   WKHFRXUWRIDSSHDOVQRQHWKHOHVVIRXQG
WKH'XII\VQRWLFHDQGDQRSSRUWXQLW\WRZLWKGUDZWKHLUPRWLRQ                  DQDEXVHRIGLVFUHWLRQ7KHFRXUWQRWHGWKDWLIWKHDWWRUQH\
EHIRUHLPSRVLQJWKHODZRIWKHFDVHFRQGLWLRQ6HH0DUORZ                    ZDVWREODPHIRUWKHQHJOHFWIXOSURVHFXWLRQRIWKHODZVXLWWKH
)GDW/DX)GDW*$)&RUS)GDW                   DWWRUQH\ VKRXOG EHDU WKH VDQFWLRQV  6HH LG  7KH FRXUW
                                                                           WKHUHIRUHRUGHUHGWKHGLVWULFWFRXUWWRFRQVLGHURQUHPDQGWKH
                                                                               UHODWLYH FXOSDELOLW\ RI WKH DWWRUQH\ DQG WKH SODLQWLIIV ZKHQ
   :H DOVR QRWH WKDW WKH GLVWULFW FRXUW GLG QRW H[SODLQ LWV          GHWHUPLQLQJKRZWKHGHIHQGDQWVjFRVWVVKRXOGEHDOORFDWHG
UHDVRQV IRU GHFLGLQJ WR DSSO\ LWV UXOLQJV IURP WKH RULJLQDO           6HHLGDW	Q
DFWLRQWRWKHUHILOHGDFWLRQ)RUWKLVUHDVRQLWLVSDUWLFXODUO\
GLIILFXOWWRGHWHUPLQHZKHWKHUWKHGLVWULFWFRXUWDSSURSULDWHO\                  :HILQGLWXVHIXOWRDQDORJL]HWKHLQVWDQWFDVHWRWKRVHFDVHV
H[HUFLVHG LWV GLVFUHWLRQ LQ DWWDFKLQJ WKLV FRQGLWLRQ WR WKH            GHDOLQJZLWK5XOHELQYROXQWDU\GLVPLVVDOV7KHGLVWULFW
'XII\VjYROXQWDU\GLVPLVVDO6HHHJ':*&RUS)G                   FRXUWjV DFWLRQV LQ WKH LQVWDQW FDVH DV LQ WKH FDVH RI DQ
DWFLWLQJ7DUDJDQY(OL/LOO\	&R)G                     LQYROXQWDU\GLVPLVVDOZLWKSUHMXGLFHKDYHEURXJKWDERXWWKH
'&&LU/H&RPSWH)GDW)RUG                       VHYHUHUHVXOWRIGHSULYLQJWKHSODLQWLIIVRIDGD\LQFRXUWWR
FRQWHQGV WKDW QR DGGLWLRQDO GLVFRYHU\ LV QHFHVVDU\ IRU WKH             UHVROYHWKHLUFODLPVRQWKHPHULWV6HH&ROHPDQY$PHULFDQ
'XII\VWRSUHYDLODQGWKDWWKHUHLVQROHJDORUIDFWXDOUHDVRQ                 5HG&URVV)GWK&LU7KHUHIRUH
ZK\WKHGLVWULFWFRXUWZRXOGEHLQFOLQHGWRUXOHGLIIHUHQWO\RQ                ZKLOHUHFRJQL]LQJWKDWWKH'XII\VIUHHO\FKRVHWKHLUFRXQVHO
WKHHYLGHQWLDU\LVVXHVLIWKH'XII\VZHUHJLYHQDQRSSRUWXQLW\                 DQGDUHFRQVHTXHQWO\UHVSRQVLEOHIRUPRVWRIWKHGHFLVLRQV
WRUHYLVLWWKHP$WWKHVDPHWLPHWKH'XII\VFRQWHQGWKDW                   PDGH E\ WKDW FRXQVHO ZH QRQHWKHOHVV EHOLHYH WKDW LQ WKLV
WKHGLVWULFWFRXUWjVFRQGLWLRQSUHYHQWVWKHPIURPSUHYDLOLQJLQ                SDUWLFXODUFDVHZKHUHWKH'XII\VZHUHQRWQHFHVVDULO\HYHQ
WKHLU VXLW DQG LV QRW QHFHVVDU\ IRU WKH SURWHFWLRQ RI WKH
GHIHQGDQW:HEHOLHYHWKDWWKHGLVWULFWFRXUWLVLQWKHEHWWHU
                                                                                   
                                                                                      7KH +HUULQJ FRXUW IXUWKHU VWDWHG WKDW m>Z@KHQ LPSRVLQJ FRQGLWLRQV
                                                                               IRU D 5XOH  QRQVXLW WKH GLVWULFW FRXUW PXVW LQTXLUH LQWR WKH PRYLQJ
                                                                               SDUW\jV DELOLW\ WR SHUIRUP WKH FRQGLWLRQV SDUWLFXODUO\ ZKHQ WKH SDUW\
     ,7 ,6 )857+(5 25'(5(' WKDW SODLQWLIIV PD\ DGG RQH H[SHUW
                                                                               DOOHJHV KH FDQQRW VDWLVI\ WKH FRQGLWLRQV ,Q VRPH FLUFXPVWDQFHV IDLOXUH
     WR WKHLU ZLWQHVV OLVW   3ODLQWLIIV PXVW PDNH DQ\ VXFK HOHFWLRQ
                                                                               WR GR VR PD\ EH DQ DEXVH RI GLVFUHWLRQl ,G DW  $V D UHVXOW WKH FRXUW
     ZLWKLQ  GD\V RI WKH GDWH RI WKLV RUGHU DQG QRWLI\ GHIHQGDQW
                                                                               RUGHUHG WKH GLVWULFW FRXUW RQ UHPDQG WR WDNH LQWR DFFRXQW WKH SODLQWLIIVj
     SURPSWO\   'HIHQGDQW PD\ WDNH H[SHUWjV GHSRVLWLRQ
                                                                               DELOLW\ WR SD\ WKH GHIHQGDQWjV FRVWV DQG WR FRQVLGHU DOWHUQDWLYH PHDVXUHV
s$ DW  2UGHU 
                                                                               LI WKH SODLQWLIIV DUH IRXQG WR EH FXOSDEOH EXW XQDEOH WR SD\ 6HH LG DW 
                                                                               Q :H GR QRW DJUHH WKDW WKH 'XII\Vj DELOLW\ WR SD\ )RUGjV FRVWV VKRXOG
     
      2Q $XJXVW   WKH 'XII\V ILOHG D PRWLRQ IRU UHFRQVLGHUDWLRQ        SOD\ D UROH LQ WKH GLVWULFW FRXUWjV GHWHUPLQDWLRQ RI ZKHWKHU WKH 'XII\V RU
RI WKH GLVWULFW FRXUWjV RUGHUV DVVHVVLQJ FRVWV DQG IHHV DQG HVWDEOLVKLQJ WKH   WKH 7KRPDVHV DUH DW IDXOW +RZHYHU EHFDXVH WKH UHVSRQVLEOH SDUW\ PD\
ODZ RI WKH FDVH DQG LWV RUGHU GLVPLVVLQJ WKH FDVH ZLWKRXW SUHMXGLFH           XOWLPDWHO\ EH XQDEOH WR SD\ )RUGjV FRVWV ZH QRWH WKDW WKH GLVWULFW FRXUW
+RZHYHU EHFDXVH WKH 'XII\V KDG DOUHDG\ ILOHG D QRWLFH RI DSSHDO WKH          VKRXOG FRQVLGHU WKH SRVVLELOLW\ RI DOWHUQDWLYH VROXWLRQV WKDW ZRXOG PHHW WKH
GLVWULFW FRXUW IRXQG WKDW LW ZDV ZLWKRXW MXULVGLFWLRQ WR FRQVLGHU WKRVH        JRDOV RI ERWK SURWHFWLQJ )RUG DQG HQVXULQJ WKDW WKH 'XII\V LI WKH\ DUH
PRWLRQV                                                                       EODPHOHVV DUH QRW GHSULYHG RI WKHLU GD\ LQ FRXUW
       'XII\HWDOY        1RV                1RV                 'XII\HWDOY       
         )RUG0RWRU&R                                                                                                      )RUG0RWRU&R

DZDUHRIWKHFKRLFHVIDFHGE\WKHLUFRXQVHODQGZHUHJLYHQ                       8QGHUDSSURSULDWHFLUFXPVWDQFHVZHEHOLHYHWKDWLWZRXOG
LQVXIILFLHQW QRWLFH RI WKH SRVVLEOH FRQVHTXHQFHV RI WKRVH               QRWEHDQDEXVHRIGLVFUHWLRQIRUWKHGLVWULFWFRXUWWRJUDQWD
FKRLFHV WKH 7KRPDVHV UDWKHU WKDQ WKHLU FOLHQWV VKRXOG EH              YROXQWDU\GLVPLVVDORQWKHFRQGLWLRQWKDWDOOUXOLQJVIURPWKH
UHTXLUHG WR SD\ LI WKH 7KRPDVHV DUH WR EODPH IRU )RUGjV              RULJLQDODFWLRQFDUU\RYHUWRWKHUHILOHGDFWLRQ'LVWULFWFRXUWV
ZDVWHGFRVWV6HHLG                                                         KDYH EURDG GLVFUHWLRQ WR DWWDFK FRQGLWLRQV WR YROXQWDU\
                                                                               GLVPLVVDOVXQGHU5XOHD6HHLG)XUWKHUPRUHVHYHUDO
  7KHUHLVHYLGHQFHLQWKLVFDVHWKDWWKH'XII\VjFRXQVHOZHUH                 FRXUWV RI DSSHDOV KDYH XSKHOG FRQGLWLRQV RQ YROXQWDU\
SULPDULO\WREODPHIRUWKHQHFHVVLW\RIUHTXHVWLQJDYROXQWDU\                 GLVPLVVDOVVLPLODUWRWKHRQHDWLVVXHKHUH6HHHJ3DUNHU
GLVPLVVDODQGDVGLVFXVVHGDERYHWKH'XII\VFODLPWKDWWKH                   )G DW  XSKROGLQJ WKH GLVWULFW FRXUWjV RUGHU WKDW
GLVPLVVDORIWKHILUVWDFWLRQZDVHTXLYDOHQWWRDGLVPLVVDOZLWK               H[SHUWWHVWLPRQ\H[FOXGHGLQWKHRULJLQDODFWLRQFRXOGQRWEH
SUHMXGLFHEHFDXVHWKH\DUHXQDEOHWRSD\)RUGjVFRVWV7KH                   UHLQWURGXFHG LQ WKH UHILOHG DFWLRQ 7HPSOHWRQ Y 1HGOOR\G
FRQFHUQDWWKHKHDUWRI+HUULQJDQG&ROHPDQnWKDWLQQRFHQW                    /LQHV  )G   WK &LU  QRWLQJ ZLWK
SODLQWLIIVVKRXOGQRWEHIRUFHGOLJKWO\WREHDUWKHFRVWVFUHDWHG              DSSURYDOWKHGLVWULFWFRXUWjVGHFLVLRQWRFRQGLWLRQDYROXQWDU\
E\ WKHLU LQFRPSHWHQW FRXQVHO HVSHFLDOO\ QRW LI WKH FRVW               GLVPLVVDO RQ WKH SODLQWLIIV DJUHHLQJ WKDW WKH\ ZRXOG QRW
XOWLPDWHO\WKH\EHDULVORVLQJWKHLUGD\LQFRXUWnLVWKHUHIRUH               RSSRVHWKHXVHRIH[LVWLQJGLVFRYHU\LQDVXEVHTXHQWVXLW
DSSOLFDEOH WR WKH 'XII\Vj FDVH  +RZHYHU ZH UHMHFW WKH               7KXV LI QHFHVVDU\ IRU WKH SURWHFWLRQ RI )RUGjV OHJLWLPDWH
'XII\VjDSSHOODWHFRXQVHOjVVXJJHVWLRQDWRUDODUJXPHQWWKDW                 LQWHUHVWVVHHHJ/H&RPSWH)GDW:5,*+7
WKH GLVWULFW FRXUW KDV PDGH D VSHFLILF mILQGLQJl WKDW WKH             	 0,//(5 VXSUD   DW  WKH GLVWULFW FRXUW FRXOG
'XII\VjWULDOFRXQVHOZHUHLQFRPSHWHQW$OWKRXJKWKHGLVWULFW                 YDOLGO\ LPSRVH WKH HYLGHQWLDU\ UXOLQJV IURP WKH 'XII\Vj
FRXUW GLG PHQWLRQ WKH 7KRPDVHVj LQHSWQHVV LQ RQH RI LWV               RULJLQDODFWLRQRQWKHLUUHILOHGDFWLRQ
RUGHUVGXHSURFHVVDSSHDUVWRUHTXLUHWKDWWKH7KRPDVHVKDYH
QRWLFHDQGDQRSSRUWXQLW\WREHKHDUGEHIRUHWKHGLVWULFWFRXUW                  :H DUH DJDLQ WURXEOHG KRZHYHU E\ WKH GLVWULFW FRXUWjV
FRXOGUHTXLUHWKHPWRSD\)RUGjVIHHV6HHHJ+HUULQJ                IDLOXUH WR JLYH QRWLFH WR WKH 'XII\V WKDW LW LQWHQGHG WR
)GDW                                                                  FRQGLWLRQWKHYROXQWDU\GLVPLVVDORQUHWDLQLQJWKHODZRIWKH
                                                                               FDVHLQWKHUHILOHGDFWLRQ7KHUHFRUGUHYHDOVQRGLVFXVVLRQRI
                                                                               WKDW FRQGLWLRQ RQ sDQXDU\   ZKHQ WKH 'XII\V
                                                                              UHTXHVWHG DQG WKH GLVWULFW FRXUW RUDOO\ JUDQWHG D YROXQWDU\
      :H DUH QRW SHUVXDGHG E\ )RUGjV DUJXPHQW WKDW WKH GLVWULFW FRXUW LV       GLVPLVVDO7KHILUVWPHQWLRQRIWKHODZRIWKHFDVHFRQGLWLRQ
ZLWKRXW DXWKRULW\ WR UHTXLUH WKH 7KRPDVHV WR SD\ )RUGjV DWWRUQH\ IHHV          DSSHDUHG LQ WKH GLVWULFW FRXUWjV ZULWWHQ RUGHU JUDQWLQJ WKH
XQGHU 5XOH D 6HH +HFNHWKRUQ Y 6XQDQ &RUS  )G  
WK &LU  5HO\LQJ SULPDULO\ RQ $O\HVND 3LSHOLQH 6HUY &R Y
                                                                               YROXQWDU\GLVPLVVDORQsDQXDU\,QDGGLWLRQWKH
:LOGHUQHVV 6RFj\  86   WKH &RXUW RI $SSHDOV IRU WKH
                                                                               FRXUWGLGQRWVSHFLI\WKHPDWWHUVWREHJRYHUQHGE\WKHODZRI
1LQWK &LUFXLW VWDWHG LQ +HFNHWKRUQ WKDW WKH IHGHUDO FRXUWV FDQQRW mDOWHU WKH   WKH FDVH XQWLO DQ RUGHU HQWHUHG RQ sXQH   DIWHU WKH
XQLIRUP V\VWHP RI FRVWEHDULQJ FUHDWHG E\ &RQJUHVVl +HFNHWKRUQ            'XII\V DWWHPSWHG WR UHILOH WKHLU VXLW  7KLV ODFN RI QRWLFH
)G DW  TXRWLQJ =DPEUDQR Y &LW\ RI 7XVWLQ  )G  
WK &LU  +RZHYHU ZH UHMHFW +HFNHWKRUQjV UHDGLQJ RI $O\HVND
$O\HVND VD\V QRWKLQJ DERXW WKH DOORFDWLRQ RI FRVWV DV EHWZHHQ DWWRUQH\V
                                                                                   
DQG FOLHQWV EXW UDWKHU PHUHO\ KROGV WKDW WKH FRXUWV FDQQRW SURYLGH IRU WKH          2Q WKDW GDWH LQ DQ RUGHU UHVSRQGLQJ LQ SDUW WR WKH GHIHQGDQWVj
SD\PHQW RI DWWRUQH\ IHHV ZLWKRXW VWDWXWRU\ DXWKRULW\ ZLWK FHUWDLQ QDUURZ      PRWLRQ WR GHWHUPLQH WKH LWHPV WR EH JRYHUQHG E\ WKH ODZ RI WKH FDVH WKH
H[FHSWLRQV 6HH $O\HVND  86 DW  )XUWKHUPRUH WKH 6XSUHPH             GLVWULFW FRXUW VWDWHG
&RXUW KDV VWDWHG WKDW D FRXUWjV DXWKRULW\ RYHU DWWRUQH\V LQFOXGLQJ LWV            ,7 ,6 )857+(5 25'(5(' WKDW WKH UXOLQJV PDGH LQ WKH 
DXWKRULW\ WR LPSRVH DWWRUQH\ IHHV RQ WKHP mLV DW OHDVW DV JUHDW DV LWV             DFWLRQ VKDOO EH WKH ODZ RI WKH FDVH LQ WKH  DFWLRQ
       'XII\HWDOY       1RV              1RV                 'XII\HWDOY        
         )RUG0RWRU&R                                                                                                   )RUG0RWRU&R

$1' 352&('85(DWGHG,QGHHG                        :H DOVR KROG WKDW LW ZDV DQ DEXVH RI GLVFUHWLRQ IRU WKH
5XOH G LV mLQWHQGHG WR VHUYH DV D GHWHUUHQW WR IRUXP          GLVWULFWFRXUWWRZDLWXQWLOsXQHRIWRGHWHUPLQHWKHFRVWV
VKRSSLQJ DQG YH[DWLRXV OLWLJDWLRQl RI ZKLFK WKHUH ZDV QR           IRUZKLFKWKH'XII\VZRXOGEHUHVSRQVLEOH$WWKHWLPHWKDW
HYLGHQFHLQWKLVFDVH(VTXLYHOY$UDX)6XSS                WKH 'XII\V PRYHG YROXQWDULO\ WR GLVPLVV WKH DFWLRQ WKH\
&'&DOTXRWLQJ6LPHRQHY)LUVW%DQN1DWjO                  VKRXOG KDYH EHHQ LQIRUPHG RI WKH VSHFLILF FRQGLWLRQV WKDW
$VVjQ)GWK&LU,QDQ\HYHQWD                 ZRXOGEHSODFHGRQWKHLUGLVPLVVDODQGJLYHQWKHRSSRUWXQLW\
GLVWULFWFRXUWjVDSSOLFDWLRQRI5XOHGOLNHLWVLPSRVLWLRQ             WRZLWKGUDZWKHPRWLRQLIWKH\IRXQGWKRVHFRQGLWLRQVWREH
RI WHUPV DQG FRQGLWLRQV SXUVXDQW WR 5XOH D LV VWLOO        WRRRQHURXV6HH0DUORZY:LQVWRQ	6WUDZQ)G
VXEMHFW WR UHYLHZ E\ WKH DSSHOODWH FRXUW IRU DEXVH RI              WK&LUm$FRXUWVKRXOGQRWODEHOVRPHWKLQJDV
GLVFUHWLRQ6HH'$1,(/ 5 &248,//(77( (7 $/ 0225(j6                    D WHUP DQG FRQGLWLRQ \HW QRW DIIRUG WKH DIIHFWHG SDUW\ DQ
)('(5$/ 35$&7,&(>@GHG:HWKHUHIRUH                    RSSRUWXQLW\ WR FRQVLGHU KLV RSWLRQV EHIRUH PDNLQJ KLV
EHOLHYHWKDWRXUGHFLVLRQLVLQKDUPRQ\ZLWKWKHXQGHUVWDQGLQJ              GHFLVLRQl/DXY*OHQGRUD8QLILHG6FK'LVW)G
RI5XOHGH[SUHVVHGLQWKRVHFDVHV                                     WK&LUFI*$)&RUSY7UDQVDPHULFD,QV&R
                                                                            )G'&&LU6FKROO)GDW
        ,PSRVLQJ$OO5XOLQJVIURPWKH2ULJLQDO$FWLRQRQ                  m7KHUHZDVQRUHTXLUHPHQWWKDWWKHDSSHOODQWDJUHHWRWKH
          WKH5HILOHG$FWLRQ                                                HQWU\RIWKLVRUGHU,WZDVDQDOWHUQDWLYHDYDLODEOHWRDSSHOODQW
                                                                            LQOLHXRISURFHHGLQJZLWKWKHWULDOl3DUWLFXODUO\JLYHQWKH
  7KH'XII\VDOVRDUJXHWKDWLWZDVDQDEXVHRIGLVFUHWLRQIRU              VL]H RI )RUGjV FRVWV WKHUH DSSHDUV WR EH D VLJQLILFDQW
WKHGLVWULFWFRXUWWRLPSRVHRQWKHUHILOHGDFWLRQWKHODZRIWKH           OLNHOLKRRGWKDWWKH'XII\VZRXOGKDYHZLWKGUDZQWKHLUPRWLRQ
FDVH IURP WKH RULJLQDO DFWLRQ  7KH\ FODLP WKDW WKLV UXOLQJ       IRU YROXQWDU\ GLVPLVVDO KDG WKH\ EHHQ JLYHQ WKH UHOHYDQW
UHQGHUHGWKHPXQDEOHWRSUHYDLOLQWKHUHILOHGFDVHVLQFHWKH              LQIRUPDWLRQDQGDQRSSRUWXQLW\WRGRVR:KHQIDFHGZLWK
LQHSWQHVVRIWKH'XII\VjRULJLQDOFRXQVHOKDGOHIWVLJQLILFDQW              WKH 'XII\Vj UHTXHVW IRU D YROXQWDU\ GLVPLVVDO XQGHU 5XOH
JDSV LQ WKHLU SURRI  )XUWKHUPRUH WKH\ SRLQW RXW WKDW WKH       DDQG)RUGjVUHTXHVWIRUFRVWVWKHGLVWULFWFRXUWVKRXOG
GLVWULFWFRXUWjVUXOLQJXQGHUPLQHVWKHSROLF\EHKLQG5XOH               KDYHWDNHQVWHSVWRGHWHUPLQHWKHDSSUR[LPDWHFRVWVIRUZKLFK
ZKLFK LV WR OHDYH WKH SDUWLHV DV LI WKH VXLW KDG QHYHU EHHQ     WKHSODLQWLIIVZRXOGEHUHVSRQVLEOHEHIRUHJUDQWLQJWKHPRWLRQ
EURXJKW6HH1DWLRQDO553DVVHQJHU&RUSY,QWHUQDWLRQDO                DQGGLVPLVVLQJWKHMXU\7KH'XII\VWKHQZRXOGKDYHEHHQ
$VVjQRI0DFKLQLVWV)GVW&LU)RUGLQ             IRUFHGWRGHFLGHZKHWKHUWRDFFHSWWKHFRQGLWLRQVDQGGLVPLVV
UHVSRQVHSRLQWVRXWWKDW5XOHLVDOVRLQWHQGHGWRSURWHFW               WKHFDVHRUWRZLWKGUDZWKHPRWLRQ
WKHGHIHQGDQWIURPXQIDLUQHVVLQDGGLWLRQ)RUGGLVSXWHVWKH
'XII\VjFRQWHQWLRQWKDWWKHGLVWULFWFRXUWjVUXOLQJVOHIWWKHP                :HWKHUHIRUHYDFDWHWKHGLVWULFWFRXUWjVRUGHUVGLVPLVVLQJ
XQDEOHWRSUHYDLOLQWKHLUFDVH7KHUHIRUH)RUGXUJHVWKDWWKH            WKHUHILOHGDFWLRQDQGUHTXLULQJWKH'XII\VWRSD\)RUGjVIHHV
GLVWULFWFRXUWjVUXOLQJGLGQRWFRQVWLWXWHDQDEXVHRIGLVFUHWLRQ          DQGZHUHPDQGIRUWKHGLVWULFWFRXUWWRUHFRQVLGHULWVUXOLQJV
                                                                            2Q UHPDQG WKH GLVWULFW FRXUW LV GLUHFWHG WR DVVHVV DQG
                                                                            DSSRUWLRQ WKH REOLJDWLRQ WR SD\ )RUGjV FRVWV EHWZHHQ WKH
     
       $W RUDO DUJXPHQW FRXQVHO IRU WKH 'XII\V VWDWHG WKDW WKH 'XII\V GR
                                                                            'XII\VDQGWKH7KRPDVHVDFFRUGLQJWRWKHLUUHVSHFWLYHIDXOW
QRW FRQWHVW WKH GLVWULFW FRXUWjV GHFLVLRQ WR JUDQW VXPPDU\ MXGJPHQW RQ
VHYHUDO RI WKHLU FODLPV EHIRUH WULDO WKHUHIRUH ZH FRQVLGHU RQO\ WKH
DSSURSULDWHQHVV RI WKH GLVWULFW FRXUWjV GHFLVLRQ WR DSSO\ WR WKH UHILOHG
DFWLRQ DOO UXOLQJV IURP WKH RULJLQDO DFWLRQ UHJDUGLQJ GLVFRYHU\ DQG WKH     DXWKRULW\ RYHU OLWLJDQWVl 5RDGZD\ ([SUHVV ,QF Y 3LSHU    86 
DGPLVVLELOLW\ RI HYLGHQFH                                                   
    'XII\HWDOY        1RV             1RV             'XII\HWDOY     
      )RUG0RWRU&R                                                                                               )RUG0RWRU&R

LQWKHILUVWWULDO$OWKRXJKWKHGLVWULFWFRXUWjVIDLOXUHWRJLYH       QRWEHOLHYHWKDW5XOHGZKLFKDOORZVGLVWULFWFRXUWVIDFHG
WKH'XII\VSURSHUQRWLFHZDVDQDEXVHRIGLVFUHWLRQZHILQG             ZLWKWKHUHILOLQJRIDSUHYLRXVO\GLVPLVVHGDFWLRQWRmPDNH
WKDW LW ZDV UHDVRQDEOH WR FRQGLWLRQ WKH YROXQWDU\ GLVPLVVDO      VXFKRUGHUIRUWKHSD\PHQWRIFRVWVRIWKHDFWLRQSUHYLRXVO\
XSRQWKHSD\PHQWRI)RUGjVFRVWV:HWKHUHIRUHKROGWKDWWKH            GLVPLVVHG DV LW PD\ GHHP SURSHUl DQG WR mVWD\ WKH
REOLJDWLRQ WR SD\ )RUGjV FRVWV KDV QRW EHHQ H[WLQJXLVKHG        SURFHHGLQJVLQWKHDFWLRQXQWLOWKHSODLQWLIIKDVFRPSOLHGZLWK
+RZHYHU LI WKH 'XII\V DUH WKHPVHOYHV WR EODPH EXW DUH          WKHRUGHUlLVGLUHFWO\DSSOLFDEOHKHUH)(' 5 &,9 3 G
XQDEOHWRSD\DOORUVRPHRIWKHFRVWVDOORFDWHGWRWKHPWKH            :KHQWKH'XII\VDWWHPSWHGEDVHGRQWKHODQJXDJHRI5XOH
GLVWULFWFRXUWPD\GHFLGHLQLWVGLVFUHWLRQZKHWKHUDQGRQ             GWRSHUVXDGHWKHGLVWULFWFRXUWPHUHO\WRVWD\WKHUHILOHG
ZKDWWHUPVWKHFDVHVKRXOGJRIRUZDUG6KRXOGWKH7KRPDVHV              FDVHLQVWHDGRIGLVPLVVLQJLWWKHGLVWULFWFRXUWH[SOLFLWO\VWDWHG
IDLO WR SD\ WKHLU VKDUH RI )RUGjV FRVWV WKH 'XII\V ZLOO EH   WKDWLWKDGLPSRVHGWKHSD\PHQWFRQGLWLRQSXUVXDQWWR5XOH
DOORZHG WR SURFHHG ZLWK WKHLU VXLW QRWZLWKVWDQGLQJ WKH            DQRW5XOHG6HHs$DW2UGHU'HQ3OjV
7KRPDVHVjGHIDXOW                                                       0RW IRU 6WD\ 	 2UGHU 'LVPLVVLQJ &RPSO :LWKRXW
                                                                         3UHMXGLFH
   :HEHOLHYHWKDWWKLVUHVXOWLVUHTXLUHGE\RXUKROGLQJWKDW
WKH GLVWULFW FRXUW VKRXOG KDYH JLYHQ QRWLFH WR WKH 'XII\V         0RUHRYHU ZH GR QRW EHOLHYH WKDW RXU KROGLQJ LV
EHIRUHLPSRVLQJFRQGLWLRQVRQWKHLUGLVPLVVDOWKDWWKH\ZHUH             LQFRQVLVWHQWZLWK5XOHG)LUVWDOWKRXJKDVWKHGLVVHQW
XQDEOHWRIXOILOO$GPLWWHGO\WKLVUHVXOWZRXOGHQWDLOVRPH            FRUUHFWO\ SRLQWV RXW PRVW FRXUWV WKDW KDYH FRQVLGHUHG WKH
XQIDLUQHVVWR)RUG+RZHYHUIDFHGZLWKWKHFDVHDVLWQRZ              TXHVWLRQKDYHFRQFOXGHGWKDWDWWRUQH\IHHVPD\EHDZDUGHG
VWDQGVLWVHHPVLQHYLWDEOHWKDWDQLQQRFHQWSDUW\ZLOOKDYHWR          XQGHU5XOHGWKHPDWWHULVIDUIURPVHWWOHGLQWKLVFLUFXLW
VXIIHUDQGZHEHOLHYHWKDWLWZRXOGEHZRUVHIRUWKH'XII\V             RULQPRVWRWKHUV6HHHJ(GZDUG;&OLQWRQ'RHV5XOH
WRORVHWKHLUGD\LQFRXUWZLWKRXWQRWLFHWKDQIRU)RUGWREH          G$XWKRUL]HDQ$ZDUGRI$WWRUQH\jV)HHV"67 s2+1j6
UHTXLUHG WR EHDU LWV FRVWV LQ WKLV OLWLJDWLRQ  )XUWKHUPRUH    / 5(9 	QQQRWLQJWKDWWKHIHGHUDOFRXUWV
DOWKRXJKRXUKROGLQJLVOLPLWHGWRWKHXQLTXHFLUFXPVWDQFHVRI           DUHVSOLWRQWKHLVVXHRIZKHWKHUDWWRUQH\IHHVPD\EHDZDUGHG
WKLVFDVHGLVWULFWFRXUWVZLOOEHDEOHWRDYRLGWKHGDQJHURI           XQGHU5XOHGDQGFLWLQJFDVHVRQERWKVLGHV5XOHG
VXFKXQIDLURXWFRPHVLQWKHIXWXUHE\UHTXLULQJGHIHQGDQWVWR            WKHUHIRUH GRHVQRWFRQVWLWXWHFOHDUDXWKRULW\IRUWKHGLVWULFW
DSSUR[LPDWHWKHLUFRVWVEHIRUHJUDQWLQJDYROXQWDU\GLVPLVVDO           FRXUWjV DFWLRQV  ,Q DGGLWLRQ D QXPEHU RI FRXUWV KDYH
6KRXOG WKH GLVWULFW FRXUW QHJOHFW LWV UHVSRQVLELOLW\ WKH         H[SUHVVHG UHOXFWDQFH WR H[HUFLVH WKHLU GLVFUHWLRQ WR DZDUG
GHIHQGDQWnWKHSDUW\ZLWKWKHHDVLHVWDFFHVVWRWKHUHOHYDQW            FRVWVXQGHU5XOHGZKHQWKHUHVXOWZRXOGEHWRGHSULYH
FRVWLQIRUPDWLRQnZLOOKDYHDQLQFHQWLYHWRHQFRXUDJHWKH               LQQRFHQWSODLQWLIIVRIWKHLUGD\LQFRXUWGXHWRWKHLULQDELOLW\
FRXUWWRIXOILOOLW,QGHHGLQWKHLQVWDQWFDVH)RUGFRXOGKDYH       WRSD\WKHGHIHQGDQWjVFRVWV6HH*UHJRU\Y'LPRFN
WULHG WR SURWHFW LWVHOI E\ UHTXHVWLQJ WKDW WKH GLVWULFW FRXUW   )GG&LU=XFNHUY.DW])6XSS
FODULI\ LWV WHUPV DQG FRQGLWLRQV ZKHQ WKDW FRXUW RUDOO\            6'1<  3KRHQL[ &DQDGD 2LO &R Y
DQQRXQFHG LWV LQWHQWLRQ WR JUDQW WKH 'XII\Vj YROXQWDU\            7H[DFR,QF)5'''HOVHHDOVR
GLVPLVVDOPRWLRQ                                                        /RXELHUY0RGHUQ$FRXVWLFV,QF)5''
                                                                         &RQQQRWLQJWKDWDOWKRXJKQRVKRZLQJRIEDGIDLWKLV
  )LQDOO\ ZH QRWH RXU GLVDJUHHPHQW ZLWK WKH GLVVHQWjV            UHTXLUHGEHIRUHFRVWVPD\EHLPSRVHGRQWKHSODLQWLIIXQGHU
DVVHUWLRQ WKDW )(' 5 &,9 3 G GHPRQVWUDWHV WKDW WKH           5XOH G WKH SODLQWLIIjV PRWLYH LQ GLVPLVVLQJ WKH SULRU
GLVWULFWFRXUWjVLPSRVLWLRQRI)RUGjVFRVWVDQGDWWRUQH\IHHVRQ         DFWLRQPD\EHWDNHQLQWRDFFRXQWVHHJHQHUDOO\&+$5/(6
WKH'XII\VZDVSHUPLVVLEOH$VDSUHOLPLQDU\PDWWHUZHGR              $/$1 :5,*+7 	 $57+85 5 0,//(5 )('(5$/ 35$&7,&(