Court Opinion

ID: 2970197
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:07:06.952849+00
Date Added: 2024-06-11T11:43:28.861743
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

 *5$+$0 $ 3(7(56                 ;
         3ODLQWLII$SSHOODQW       
                                    
                                      1R
            Y                      
                                     !
                                    
 7+( /,1&2/1 (/(&75,&               
 &203$1<                           
           'HIHQGDQW$SSHOOHH 
                                    
                                   1
       $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
      IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW&OHYHODQG
  1Rn3DWULFLD$+HPDQQ0DJLVWUDWHsXGJH
                     $UJXHG$XJXVW
              'HFLGHGDQG)LOHG0DUFK
   %HIRUH0225(DQG&2/(&LUFXLWsXGJHV526(1
                   'LVWULFWsXGJH
                       BBBBBBBBBBBBBBBBB
                             &2816(/
$5*8('  $QQ0DULH $KHUQ 6,021 /$: ),50
&OHYHODQG 2KLR IRU $SSHOODQW  /HH s +XWWRQ '89,1
&$+1 	 +87721 &OHYHODQG 2KLR IRU $SSHOOHH

    
     7KH +RQRUDEOH *HUDOG ( 5RVHQ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH
(DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

                                   
      3HWHUVY/LQFROQ(OHF&R                        1R

21 %5,()  $QQ0DULH $KHUQ (OOHQ 6 6LPRQ 6,021
/$:),50&OHYHODQG2KLRIRU$SSHOODQW/HHs+XWWRQ
.HQQHWK ' 6FKZDUW] '89,1 &$+1 	 +87721
&OHYHODQG2KLRIRU$SSHOOHH
                       BBBBBBBBBBBBBBBBB
                           23,1,21
                       BBBBBBBBBBBBBBBBB
    526(1'LVWULFWsXGJH
                       ,,1752'8&7,21
   2QsXQH3ODLQWLII$SSHOODQW*UDKDP$3HWHUV
ILOHG VXLW LQ 2KLR VWDWH FRXUW DJDLQVW KLV IRUPHU HPSOR\HU
'HIHQGDQW$SSHOOHH/LQFROQ(OHFWULF&RPSDQ\DOOHJLQJWKDW
KLVmIRUFHGlUHWLUHPHQWIURPWKHFRPSDQ\ZDVWKHUHVXOWRI
DJHGLVFULPLQDWLRQSURKLELWHGXQGHUWKH2KLR5HYLVHG&RGH
   3HWHUV DOVR DVVHUWHG 2KLR FRPPRQ ODZ FODLPV RI
EUHDFKRIFRQWUDFWGHWULPHQWDOUHOLDQFHDQGEUHDFKRISXEOLF
SROLF\/LQFROQVXEVHTXHQWO\UHPRYHGWKHFDVHWRWKH8QLWHG
6WDWHV 'LVWULFW &RXUW IRU WKH 1RUWKHUQ 'LVWULFW RI 2KLR RQ
IHGHUDOTXHVWLRQJURXQGVFRQWHQGLQJWKDW3HWHUVjGHSRVLWLRQ
WHVWLPRQ\HVWDEOLVKHGWKDWDPRQJKLVFODLPVLQWKLVODZVXLW
3HWHUVZDVDVVHUWLQJDQ(5,6$FODLP2QsXO\WKH
'LVWULFW&RXUWGHQLHG3ODLQWLIIjV0RWLRQWR5HPDQGKLVFODLPV
WR2KLRVWDWHFRXUW7KHFRXUWVXEVHTXHQWO\JUDQWHG/LQFROQjV
0RWLRQIRU6XPPDU\sXGJPHQWRQWKHVWDWHODZFODLPVRQ
sDQXDU\   DQG GHQLHG 3HWHUVj 0RWLRQ WR $OWHU RU
$PHQG sXGJPHQW RQ )HEUXDU\   EHIRUH XOWLPDWHO\
HQWHULQJ sXGJPHQW IRU 'HIHQGDQW RQ 0DUFK  
3ODLQWLIIWLPHO\DSSHDOHGWKH'LVWULFW&RXUWjVGHFLVLRQV
 )RU WKH UHDVRQV VHW IRUWK EHORZ ZH DIILUP WKH 'LVWULFW
&RXUWjVJUDQWRI'HIHQGDQWjV0RWLRQIRU6XPPDU\sXGJPHQW

    
      !09078 DOVR VWLSXODWHG WR WKH GLVPLVVDO RI KLV m(5,6$ FODLPl ZLWKRXW
SUHMXGLFH WKHUHE\ UHQGHULQJ WKH 0DUFK  sXGJPHQW D m)LQDO sXGJPHQWl
1R                       3HWHUVY/LQFROQ(OHF&R            

DQGLWVGHQLDORI3ODLQWLIIjV0RWLRQWR5HPDQGDQG0RWLRQWR
$OWHURU$PHQGsXGJPHQW
                ,,)$&78$/%$&.*5281'
  3ODLQWLII *UDKDP 3HWHUV ZRUNHG IRU 'HIHQGDQW /LQFROQ
(OHFWULF &RPSDQ\ m/LQFROQl IRU  \HDUV  +H EHJDQ KLV
HPSOR\PHQWZLWK/LQFROQLQDVDMXQLRUDFFRXQWDQWDQG
ZDV SURPRWHG WZR WLPHV ZLWKLQ KLV ILUVW  \HDUV RI
HPSOR\PHQW  ,Q  3HWHUV EHFDPH WKH &RUSRUDWH
&RQWUROOHU RQH RI WKH WRS IRUW\ PDQDJHPHQW SRVLWLRQV DW
/LQFROQ DQG WKH VHFRQG KLJKHVW ILQDQFLDO PDQDJHPHQW
SRVLWLRQ VHFRQG RQO\ WR WKH FRPSDQ\jV &KLHI )LQDQFLDO
2IILFHUm&)2l$OWKRXJK3HWHUVQHYHUEHFDPHD&HUWLILHG
3XEOLF$FFRXQWDQWKHUHPDLQHGUHVSRQVLEOHIRUDOODUHDVRI
GRPHVWLFFRUSRUDWHDFFRXQWLQJDQGILQDQFLDOUHSRUWLQJZLWK
DSSUR[LPDWHO\SHRSOHUHSRUWLQJWRKLP
   /LQFROQ(OHFWULF&RPSDQ\LVDPDQXIDFWXUHURIDUFZHOGLQJ
ZKLFKEHJDQDVDGRPHVWLFFRPSDQ\DQGH[SDQGHGWRLQFOXGH
RSHUDWLRQVLQVL[WHHQFRXQWULHVE\%\WKHHDUO\V
KRZHYHU /LQFROQ ZDV H[SHULHQFLQJ ILQDQFLDO WURXEOHV
HYLGHQFHGLQSDUWE\WKHLU&)2jVDQQRXQFHGUHWLUHPHQW7KH
&)2 (OOLV 6PROLN m6PROLNl DQQRXQFHG KLV LQWHQWLRQ WR
UHWLUH E\  DW DJH  DQG KDQGSLFNHG sD\ (OOLRWW
m(OOLRWWlWRUHSODFHKLP(OOLRWWMRLQHG/LQFROQLQDQG
IRUPDOO\DVVXPHGWKHUROHRI&)2ZKHQ6PROLNXOWLPDWHO\
UHWLUHGLQ(OOLRWWFDPHIURPRXWVLGHRIWKHFRPSDQ\
DQGKDGH[WHQVLYHTXDOLILFDWLRQVLQFOXGLQJDQ0%$IURPWKH
8QLYHUVLW\RI0LFKLJDQ+DUYDUGPDQDJHPHQWWUDLQLQJDQG
ILQDQFLDO PDQDJHPHQW H[SHULHQFH DV WKH 9LFH 3UHVLGHQW RI
)LQDQFH IRU *RRG\HDU 7LUH DQG 5XEEHU &RPSDQ\jV
LQWHUQDWLRQDOEXVLQHVVHV

    
       3HWHUV FODLPV WKDW GXULQJ WKH WUDQVLWLRQ SHULRG ZKHQ (OOLRWW DQG
6PROLN ZHUH ERWK HPSOR\HG DW /LQFROQ (OOLRWW RQFH UHIHUUHG WR 6PROLN DV
mD OLWWOH ROG JUD\KDLUHG PDQ ZDLWLQJ WR UHWLUHl 3HWHUV 'HS DW  s$
DW 
     3HWHUVY/LQFROQ(OHF&R                    1R       1R                   3HWHUVY/LQFROQ(OHF&R       

  7KURXJKRXW3ODLQWLIIjVWLPHZLWK/LQFROQKLVVXERUGLQDWHV           HPSOR\HHV1RQHRI3HWHUVjHYLGHQFHREMHFWLYHO\HVWDEOLVKHV
KHOGKLPLQKLJKHVWHHPDQGFRQVLGHUHGKLPDJRRGPDQDJHU             WKDW3HWHUVZDVFRPSHOOHGWRUHVLJQEHFDXVHRIKLVDJH
6HQLRU PDQDJHUV UHFRJQL]HG 3HWHUV IRU KLV GHGLFDWLRQ WR
HIIHFWLYHFRQWURORIWKHFRPSDQ\jVILQDQFHVDQGIRUSURSHUO\             ,Q VXP WKH 'LVWULFW &RXUW GLG QRW HUU LQ GLVPLVVLQJ
VHUYLQJWKHLQWHUHVWVRI/LQFROQjVVKDUHKROGHUVDQGHPSOR\HHV         3ODLQWLIIjVFRQVWUXFWLYHGLVFKDUJHFODLP
7KH 'HIHQGDQWjV IRUPHU 3UHVLGHQW 'RQ +DVWLQJV WHVWLILHG
WKDW ZKLOH 3HWHUV GLG QRW JHQHUDOO\ ZRUN GLUHFWO\ IRU KLP                        ,9&21&/86,21
+DVWLQJV ZDV VDWLVILHG ZLWK 3ODLQWLIIjV SHUIRUPDQFH LQ WKH
ZRUN KH GLG LQ WKHLU OLPLWHG LQWHUDFWLRQV  'XULQJ KLV          )RU WKH IRUHJRLQJ UHDVRQV WKH 'LVWULFW &RXUWjV GHQLDO RI
GHSRVLWLRQ +DVWLQJV WHVWLILHG WKDW KH QHYHU UHFHLYHG            3ODLQWLIIjV 0RWLRQ WR 5HPDQG LWV JUDQW RI 'HIHQGDQWjV
FRPSODLQWVIURPRWKHUHPSOR\HHVDERXW3HWHUVEXWQRWHGLQ             0RWLRQIRU6XPPDU\sXGJPHQWDQGLWVGHQLDORI3ODLQWLIIjV
KLVDIILGDYLWWKDW6PROLNRQFHWROGKLPWKDWKHGLGQRWIHHO           0RWLRQIRU5HFRQVLGHUDWLRQDUH$)),50('
WKDW3HWHUVZDVGHYHORSLQJDVTXLFNO\DVKH6PROLNWKRXJKW
KHVKRXOGEH
   +DVWLQJV DOVR WHVWLILHG WKDW ZKHQ GHWHUPLQLQJ \HDUO\
ERQXVHV3HWHUVUHFHLYHGUHODWLYHO\KLJKPHULWUDWLQJVZKLFK
DUHEDVHGLQSDUWRQSHHUHYDOXDWLRQ:KLOH3HWHUVjUDWLQJV
VWD\HG KLJK LQ FRPSDULVRQ WR RWKHU H[HFXWLYHV WKURXJK WKH
\HDUVWKH\DOVRVWHDGLO\GHFOLQHGLQQXPHULFYDOXH
  7KH SDUWLHV KDYH YDU\LQJ DFFRXQWV DV WR WKH OHYHO RI
SHUIRUPDQFH3ODLQWLIIDFKLHYHGDIWHU(OOLRWWWRRNRYHUWKH&)2
SRVLWLRQ  (OOLRWW FODLPV WKDW KH EHFDPH LQFUHDVLQJO\
GLVVDWLVILHGZLWK3HWHUVjSHUIRUPDQFH>(OOLRWW'HSSS
@6SHFLILFDOO\KHZDVGLVVDWLVILHGZLWK3HWHUVjIDLOXUHWR
NHHS KLP DQG RWKHU H[HFXWLYHV DEUHDVW RI ILQDQFLDO
LQIRUPDWLRQ,GDW(OOLRWWGLVWUXVWHG3HWHUVDQGFODLPV
WKDW 3HWHUV GLG QRW KDYH DQ DGHTXDWH XQGHUVWDQGLQJ RI WKH
UHODWLRQVKLS EHWZHHQ RXWVLGH DXGLWRUV DQG /LQFROQ  (OOLRWW
LQIRUPHG 3HWHUV WKDW KH ODFNHG WKH QHFHVVDU\ LQWHUQDWLRQDO
H[SHULHQFH LQ OLJKW RI /LQFROQjV JURZLQJ LQWHUQDWLRQDO
SUHVHQFH
  3HWHUV FRQWHQGV WKDW KLV FRQWLQXHG HPSOR\PHQW ZLWK
/LQFROQ DQG KLV ULVH WKURXJK WKH UDQNV HYLGHQFHV KLV
FRPSHWHQF\ DV WKH &RUSRUDWH &RQWUROOHU  $V SURRI RI KLV
JRRG PDQDJHPHQW VNLOOV 3HWHUV RIIHUV PXOWLSOH DIILGDYLWV
IURPIRUPHUVXERUGLQDWHVDQGFRZRUNHUV
      3HWHUVY/LQFROQ(OHF&R                  1R       1R                            3HWHUVY/LQFROQ(OHF&R                  

FRPSHOOHGWRUHVLJQLIKHWRRNWKHmLQWROHUDEOHlQHZSRVLWLRQ           ,Q  3HWHUV EHFDPH D SURMHFW FRRUGLQDWRU IRU
ZKLFK PXVW EH VKRZQ XQGHU ERWK WKH 2KLR DQG IHGHUDO           m,QIR6RXUFH2QHlDSURMHFWWKDWFRQFHUQHGLPSOHPHQWLQJD
VWDQGDUGV                                                             QHZ DXWRPDWHG    LQIRUPDWLRQ V\VWHP IRU /LQFROQjV ILQDQFLDO
                                                                       DUHDV  'XULQJ WKH SURMHFW 3HWHUV UHSRUWHG WR )UHGHULFN
  ,Q DSSO\LQJ WKLV WHVW 0DX]\ GLUHFWV FRXUWV WR FRQVLGHU D   $QGHUVRQ3HWHUVFODLPVWKDWKLVILUVWLQGLFDWLRQRI/LQFROQjV
QXPEHURIIDFWRUV                                                     GLVVDWLVIDFWLRQLQKLVORQJFDUHHUZLWK/LQFROQZDVDPHPR
                                                                       $QGHUVRQ GUDIWHG LQ  DOOHJLQJ FHUWDLQ SHUIRUPDQFH
  1RVLQJOHIDFWRULVGHWHUPLQDWLYH,QVWHDGDP\ULDGRI              GHILFLHQFLHVLQUHODWLRQWRKLVZRUNRQ,QIR6RXUFH2QH7KH
  IDFWRUV DUH FRQVLGHUHG LQFOXGLQJ UHGXFWLRQV LQ VDOHV          PHPRRXWOLQHG$QGHUVRQjVGLVVDWLVIDFWLRQZLWK3HWHUVjIDLOXUH
  WHUULWRU\SRRUSHUIRUPDQFHHYDOXDWLRQVFULWLFLVPLQIURQW          WRPHHWFHUWDLQGHDGOLQHVZKLFKHYHQWXDOO\OHGWR/LQFROQjV
  RI FRHPSOR\HHV LQTXLULHV DERXW UHWLUHPHQW LQWHQWLRQV          GHFLVLRQWRUHSODFHKLPDVWKHSURMHFWFRRUGLQDWRU3ODLQWLII
  DQGH[SUHVVLRQVRIDSUHIHUHQFHIRUHPSOR\HHVRXWVLGH                FODLPVWKDW$QGHUVRQZURWHWKHPHPRDWWKHLQVWUXFWLRQRI
  WKHSURWHFWHGJURXS                                                 (OOLRWW  /LQFROQ FRQWHQGV WKDW ZKHQ $QGHUVRQ GHFLGHG WR
                                                                       UHSODFH 3HWHUV RQ WKH ,QIR6RXUFH SURMHFW (OOLRWW  PHUHO\
,G                                                                  DGYLVHGKLPWRGRFXPHQWKLVUHDVRQVIRUGRLQJVR
   +HUH3HWHUVFRQFHGHVWKDWWKHRQO\SUREOHPKHKDGZLWKWKH           'XULQJ WKH \HDU WKDW 3HWHUV ZDV ZRUNLQJ RQ ,QIR6RXUFH
WUDQVIHUZDVWKDWsD\(OOLRWWZRXOGVWLOOEHKLVVXSHULRULIKH        2QHKLV&RQWUROOHUGXWLHVZHUHGLYLGHGDPRQJWZR\RXQJHU
WRRNWKHQHZ'LUHFWRUjVMRE+RZHYHUXQOLNH0DX]\ZKHUH             PDQDJHUV9LQFH3HWUHOODZKRZDV\HDUVROGDQG*DEH
ZKHQDQHZPDQDJHUWRRNRYHUDVWKHSODLQWLIIjVVXSHUYLVRU           %UXQRZKRZDV7KH\UHFHLYHGPL[HGUHYLHZVRQWKHLU
VKH H[SUHVVHG KHU SUHIHUHQFH IRU \RXQJHU HPSOR\HHV              SHUIRUPDQFH  :KLOH LQ FRPSDULVRQ WR 3HWHUV 3HWUHOOD DQG
UHSHDWHGO\LQTXLUHGLQWR0DX]\jVSODQVWRUHWLUHWROGKHUWR         %UXQRDSSHDUHGWREHOHVVOLNHGDQGOHVVUHVSHFWHGE\WKHLU
mWDNHWKHPRQH\DQGUXQlIUHTXHQWO\EHUDWHG0DX]\LQIURQW            VXERUGLQDWHV(OOLRWWEHFDPHLQFUHDVLQJO\VDWLVILHGZLWKWKH
RIKHUFRZRUNHUVJDYHKHUQHJDWLYHHYDOXDWLRQVUHGXFHGKHU
VWDIIDQGWHUULWRU\LQWURGXFHGD\RXQJHUHPSOR\HHWR0DX]\jV
NH\ FXVWRPHUV DQG QRWHG LQ KHU ILQDO HYDOXDWLRQ WKDW m\RX         
FDQjW WHDFK DQ ROG GRJ QHZ WULFNVl WKHUH LV QR REMHFWLYH          %\ ERWK SDUWLHVj DFFRXQWV KRZHYHU 3HWHUV ZDV VXSSRVHG WR UHWXUQ
                                                                       WR WKH &RQWUROOHU SRVLWLRQ XSRQ FRPSOHWLRQ RI ,QIR6RXUFH 2QH 3ODLQWLII
HYLGHQFHWRVXSSRUW3HWHUVjFODLP3HWHUVGLGQRWWHVWLI\WKDW        YLHZV ,QIRVRXUFH 2QH DV D GLVJXLVHG GHVLJQ WR IRUFH ROGHU HPSOR\HHV RXW
KHIHOWKHZRXOGEHWHUPLQDWHGLIKHWRRNWKHQHZSRVLWLRQ            RI   /LQFROQ    E\   UHDVVLJQLQJ   WKHP    DQG   WKHQ   IRUFLQJ   HDUO\    UHWLUHPHQW

+H DFNQRZOHGJHG WKDW WKH SRVLWLRQ KH ZDV RIIHUHG ZDV           'HIHQGDQW KRZHYHU DVVHUWV WKDW LWV IXWXUH H[LVWHQFH GHSHQGHG RQ WKH

mSURIHVVLRQDOlDQGmPHDQLQJIXOl                                       VXFFHVVIXO FRPSOHWLRQ RI ,QIRVRXUFH 2QH ZKLFK WKH FRPSDQ\ GHHPHG WR
                                                                       EH RQH RI WKH PRVW DPELWLRXV SURMHFW HYHU XQGHUWDNHQ

   3HWHUVjRQO\UHDOFRPSODLQWZDVWKDWKHFRXOGQRWZRUNZLWK              
VRPHRQHZKRKDGGHPRWHGKLP+RZHYHUDVWKH'LVWULFW                       $QGHUVRQ JDYH WHVWLPRQ\ LQ WZR VHSDUDWH DIILGDYLWV 7KH ILUVW ZDV

&RXUWQRWHGKXUWIHHOLQJVDUHQRWHQRXJKWRFUHDWHDFDVHRI          LQ UHJDUG WR KLV GLVVDWLVIDFWLRQ ZLWK 3HWHUV
                                                                       VXSSOHPHQWDO     LQ   QDWXUH   DQG   LQFOXGHG
                                                                                                                               7KH VHFRQG DIILGDYLW ZDV
                                                                                                                        DGGLWLRQDO     SRVLWLYH   WHVWLPRQ\
FRQVWUXFWLYH GLVFKDUJH  :KLOH 3HWHUV WHVWLILHG WKDW KH KDG    $QGHUVRQ       FRQWHQGV   WKDW   (OOLRWW   DGYLVHG   KLP   WR     GRFXPHQW    3HWHUVj
VRPH JHQHUDO mVXVSLFLRQVl DERXW D V\VWHPDWLF SORW WR            GHILFLHQFLHV EHFDXVH WKH\ ZHUH OHWWLQJ KLP JR IURP WKH 5HYHQXH 7HDP RQ

HOLPLQDWH ROGHU HPSOR\HHV KLV IHHOLQJV DUH EDVHG XSRQ          ,QIR6RXUFH 2QH         +LV VXSSOHPHQWDO SHUIRUPDQFH DSSUDLVDO GRHV QRW

QRWKLQJPRUHWKDQVXVSLFLRQDQGFRQMHFWXUH+LVRQHDIILGDYLW         FRQWUDGLFW KLV ILUVW EXW PHUHO\ LQFOXGHV SRVLWLYH FRPPHQWV WKDW $QGHUVRQ

RIIHUHGLQVXSSRUWLVIURPDSODQWZRUNHUZKRDOVRKDGRQO\            GLG QRW WHVWLI\ WR LQ WKH ILUVW DIILGDYLW 7DNLQJ WKH WZR DIILGDYLWV WRJHWKHU
                                                                       SURYLGHV D FRPSOHWH DVVHVVPHQW RI 3HWHUVj ZRUN RQ ,QIRVRXUFH UDWKHU WKDQ
KLV RZQ VXVSLFLRQV WKDW /LQFROQ ZDV WDUJHWLQJ ROGHU             WKH FRQWUDGLFWLQJ DVVHVVPHQW WKDW 3HWHUV FODLPV
       3HWHUVY/LQFROQ(OHF&R                          1R       1R                    3HWHUVY/LQFROQ(OHF&R       

ZD\WKHILQDQFHGHSDUWPHQWZDVUXQQLQJ(OOLRWWjVDSSDUHQW                    RQHGLUHFWDJHUHODWHGFRPPHQWWRHPSOR\HHZDVWRRLVRODWHG
VDWLVIDFWLRQZLWKWKHGHSDUWPHQWLQ3ODLQWLIIjVDEVHQFHOHGWR                 VLQFHQRQH[XVWRDGYHUVHHPSOR\PHQWGHFLVLRQZDVVKRZQ
KLVGHFLVLRQWRUHPRYH3HWHUVIURPWKH&RQWUROOHUSRVLWLRQ
(OOLRWWWROG3HWHUVWKDWKHODFNHGWKHLQWHUQDWLRQDOH[SHULHQFH                  7KHIRUHJRLQJGHPRQVWUDWHVWKDWWKH'LVWULFW&RXUWGLGQRW
QHHGHG IRU /LQFROQjV JURZLQJ QHHGV WR UHPDLQ LQ WKH                    mZHLJKl WKH HYLGHQFH EXW UDWKHU SURSHUO\ GHWHUPLQHG WKDW
&RQWUROOHU SRVLWLRQ DQG LQVWHDGRIIHUHG KLP D SRVLWLRQ DV              WKHUHZDVQRWHQRXJKOHJDOO\FRJQL]DEOHHYLGHQFHIRUDMXU\WR
'LUHFWRURI%HQHILWV$FFRXQWLQJ                                              UHDVRQDEO\ILQGIRU3HWHUVRQKLVFODLPRIDJHGLVFULPLQDWLRQ
  7KLVQHZ'LUHFWRUjVSRVLWLRQUHGXFHG3HWHUVjWKHQFXUUHQW                         7KH 'LVWULFW &RXUW 'LG 1RW (UU LQ *UDQWLQJ
VDODU\RIWR7KHEDVHVDODU\ZDV                           6XPPDU\sXGJPHQWWR'HIHQGDQWRQ3ODLQWLIIjV
mUHGFLUFOHGl ZKLFK SHUPDQHQWO\ ORFNHG WKH VDODU\ DW                           &RQVWUXFWLYH'LVFKDUJH&ODLP
7KHmUHGFLUFOLQJlKDGWKHHIIHFWRIRQRQHKDQG
EDUULQJ3HWHUVIURPHYHUUHFHLYLQJUDLVHVEXWRQWKHRWKHU                    3HWHUV QH[W DUJXHV WKDW WKH 'LVWULFW &RXUW HUURQHRXVO\
KDQGDOVRSUHYHQWLQJKLVVDODU\IURPDQ\IXUWKHUUHGXFWLRQ                   DSSOLHGIHGHUDOODZLQVWHDGRI2KLRODZLQJUDQWLQJ/LQFROQjV
7KHSRVLWLRQZDVDOVRDFFRPSDQLHGE\DERQXVEDVHGRQWKH                     0RWLRQIRU6XPPDU\sXGJPHQWRQKLVFRQVWUXFWLYHGLVFKDUJH
VDPHW\SHRImPHULWUDWLQJVlWKDW3HWHUVKDGEHHQVXEMHFWWR                   FODLP
IRU KLV HQWLUH H[HFXWLYH FDUHHU ZLWK /LQFROQ  7KHUH ZDV
KRZHYHU DQ LQGLFDWLRQ WKDW 3HWHUVj mH[HFXWLYHl VWDWXV DQG                7KH'LVWULFW&RXUWDSSOLHGWKHWZRSURQJWHVWVHWIRUWKLQ
FRQWLQXHGSDUWLFLSDWLRQLQ/LQFROQjV6XSSOHPHQWDO([HFXWLYH                   <DWHV Y $YFR &RUS  )G   WK &LU  D
5HWLUHPHQW3URJUDPm6(53lZRXOGEHXQGHUUHYLHZVKRXOG                      7LWOH 9,, FDVH ZKLFK UHTXLUHV FRXUWV WR LQTXLUH LQWR mWKH
KHDFFHSWWKHQHZSRVLWLRQ,QWKHQHZ'LUHFWRUjVSRVLWLRQ                  REMHFWLYH IHHOLQJV RI DQ HPSOR\HHl  7KLV UHTXLUHV D
                                                                               GHWHUPLQDWLRQ RI ZKHWKHU mD UHDVRQDEOH SHUVRQ LQ WKH
                                                                               HPSOR\HHjVVKRHVZRXOGKDYHIHOWFRPSHOOHGWRUHVLJQl,G
                                                                              <DWHV IXUWKHU UHTXLUHV mVRPH LQTXLU\ LQWR WKH HPSOR\HUjV
                                                                               LQWHQWDQGWKHUHDVRQDEO\IRUHVHHDEOHLPSDFWRILWVFRQGXFWRQ
      (OOLRWW FODLPV WR KDYH PHW ZLWK WKH 3UHVLGHQW RI +XPDQ 5HVRXUFHV
WR FUHDWH WKLV QHZ SRVLWLRQ VSHFLILFDOO\ GHVLJQHG WR XWLOL]H WKH EHVW RI
3HWHUVj NQRZOHGJH EDFNJURXQG DQG H[SHULHQFH                                  WKHHPSOR\HHl,G
                                                                                 2KLRXWLOL]HVDVOLJKWO\ORZHUWKUHVKROG8QGHU2KLRODZ
      3HWHUV SRLQWV WR WKH mUHGFLUFOLQJl DV /LQFROQjV HIIRUW WR VWDOO KLV
JURZWK   /LQFROQ KRZHYHU FODLPV WR KDYH mUHGFLUFOHGl WKH VDODU\ LQ         FRXUWVDOVRDSSO\DQREMHFWLYHWHVWLQGHWHUPLQLQJZKHQDQ
3HWHUVj EHVW LQWHUHVWV EHFDXVH WKH MRE ZDV DOUHDG\ RYHUYDOXHG DQG WKH         HPSOR\HHZDVFRQVWUXFWLYHO\GLVFKDUJHGDQGOLNHWKHIHGHUDO
VDODU\ ZRXOG FRQWLQXH WR GHFUHDVH LI QRW mUHGFLUFOHGl                        FRXUWVLQTXLUHmZKHWKHUHPSOR\HUjVDFWLRQVPDGHZRUNLQJ
                                                                              FRQGLWLRQVVRLQWROHUDEOHWKDWDUHDVRQDEOHSHUVRQXQGHUWKH
      $ OHWWHU IURP (OOLRWW WR 3HWHUV DGGUHVVLQJ WKH GHWDLOV RI WKH 'LUHFWRU   FLUFXPVWDQFHVZRXOGKDYHIHOWFRPSHOOHGWRUHVLJQl0DX]\
SRVLWLRQ VWDWHG LQ UHOHYDQW SDUW
                                                                               Y.HOO\6HUYV,QF2KLR6WG1(G
    m<RX    ZLOO   UHPDLQ   LQ   >6(53@   SHQGLQJ   D   UHYLHZ   RI   SODQ
                                                                               7KH2KLR6XSUHPH&RXUWKRZHYHUKDV
    SDUWLFLSDWLRQ JXLGHOLQHV ZKLFK ZH H[SHFW WR FRPSOHWH ZLWKLQ              QRWUHTXLUHGVDWLVIDFWLRQRIDWZRSURQJHGWHVWLHLWGRHVQRW
    GD\V , VKRXOG DJDLQ SRLQW RXW WKDW , EHOLHYH \RX ZLOO QRW TXDOLI\         UHTXLUHDQREMHFWLYHLQTXLU\LQWRWKHHPSOR\HUjVLQWHQW
    IRU FRQWLQXHG SDUWLFLSDWLRQ KRZHYHU ZH ZLOO QRW NQRZ XQWLO WKH
    VWXG\ LV FRPSOHWHG 6KRXOG \RXU SDUWLFLSDWLRQ EH GLVFRQWLQXHG               5HJDUGOHVVRIZKLFKODZWKLV&RXUWDSSOLHVKRZHYHU3HWHUV
    \RXU FUHGLWHG VHUYLFH DQG SDUWLFLSDWLRQ IDFWRU XQGHU WKH SODQ ZLOO
                                                                               ZRXOG QRW VXFFHHG XQGHU HLWKHU WKH IHGHUDO RU WKH 2KLR
    EH mIUR]HQl :KHQ \RX FKRRVH WR UHWLUH EHQHILWV SD\DEOH ZLOO EH
    GHWHUPLQHG RQ WKH EDVLV RI SODQ SURYLVLRQVl
                                                                               VWDQGDUG EHFDXVH KH IDLOHG WR HVWDEOLVK WKDW KH ZRXOG IHHO
    3HWHUVY/LQFROQ(OHF&R                     1R       1R                         3HWHUVY/LQFROQ(OHF&R           

PDWWHUHGLQDVVHVVLQJ/LQFROQjVVDWLVIDFWLRQZLWKKLVZRUN             3HWHUV ZRXOG DOVR EH UHTXLUHG WR UHSRUW WR (OOLRWW DQG 5D\
SURGXFW                                                                9RJWWKH9LFH3UHVLGHQWRI+XPDQ5HVRXUFHV
  6LPLODUO\WKHFRXUWDOVRFRQVLGHUHGHYLGHQFH3HWHUVRIIHUHG            ,QWKHZDNHRIZKDW3ODLQWLIIEHOLHYHGWREHDmKXPLOLDWLQJl
SXUSRUWHGO\DVmGLUHFWlHYLGHQFHRIGLVFULPLQDWLRQ$VZLWK            DQGILQDQFLDOO\FDWDVWURSKLFGHPRWLRQ3HWHUVLQTXLUHGDVWR
WKHDIILGDYLWVWKHFRXUWH[DPLQHGWKHSURIIHUHGHYLGHQFHDQG           RWKHUWUDQVIHUVRUUHDVVLJQPHQWVZLWKLQWKHFRPSDQ\8SRQ
FRQFOXGHGWKDWLWGLGQRWFRQVWLWXWHOHJDOO\FRJQL]DEOHmGLUHFWl        OHDUQLQJWKDWWKHVHSRVLWLRQVZRXOGSD\VXEVWDQWLDOO\OHVVWKDQ
HYLGHQFHRIGLVFULPLQDWLRQ7KLVHYLGHQFHFRQVLVWHGVROHO\RI          WKH 'LUHFWRUjV SRVLWLRQ 3HWHUV RSWHG IRU mHDUO\ UHWLUHPHQWl
RQHFRPPHQWPDGHE\sD\(OOLRWWUHIHUULQJWR(OOLV6PROLNDV           IURP/LQFROQ
WKHmOLWWOHROGJUD\KDLUHGPDQlWKDWZDVmZDLWLQJWRUHWLUHl
                                                                          2QsXQH3HWHUVILOHGD&RPSODLQWLQVWDWHFRXUWLQ
   &RQWH[WXDOO\ WKHUH LV QRWKLQJ GLVFULPLQDWLQJ DERXW WKDW       2KLR DOOHJLQJ WKDW LQ mIRUFLQJl KLP LQWR HDUO\ UHWLUHPHQW
FRPPHQWFRQVLGHULQJWKDW6PROLNZDV\HDUVROGDQGKDG                /LQFROQ GLVFULPLQDWHG DJDLQVW KLP EHFDXVH RI KLV DJH LQ
DQQRXQFHG KLV UHWLUHPHQW SODQV  8QGHU QR UHDVRQDEOH             YLRODWLRQRI2KLR5HYLVHG&RGH3HWHUVDOVRDOOHJHG
FLUFXPVWDQFHVZRXOGDMXU\ILQGWKDWWKLVFRPPHQWDPRXQWHG              2KLRFRPPRQODZFODLPVRIEUHDFKRIFRQWUDFWGHWULPHQWDO
WRDJHGLVFULPLQDWLRQWRZDUGV3HWHUV                                   UHOLDQFHDQGEUHDFKRISXEOLFSROLF\/LQFROQVXEVHTXHQWO\
                                                                        UHPRYHGWKHFDVHWRWKH8QLWHG6WDWHV'LVWULFW&RXUWIRUWKH
   )XUWKHUPRUH DV WKH 'LVWULFW &RXUW REVHUYHG WKH mJUD\        1RUWKHUQ 'LVWULFW RI 2KLR RQ IHGHUDO TXHVWLRQ JURXQGV
KDLUHGl PDQ FRPPHQW ZDV DQ LVRODWHG UHPDUN QRW PDGH             FRQWHQGLQJWKDW3HWHUVjGHSRVLWLRQWHVWLPRQ\PDGHFOHDUWKDW
SUR[LPDWHLQWLPHWR3HWHUVjWHUPLQDWLRQQRUZDVLWGLUHFWHG           KHZDVDOOHJLQJYLRODWLRQVRI(5,6$WKXVSURYLGLQJDEDVLV
DW3HWHUVVSHFLILFDOO\,Q&RROH\Y&DUPLNH&LQHPDV,QF         IRUUHPRYDOXQGHUIHGHUDOTXHVWLRQMXULVGLFWLRQ
)GWK&LUZHKHOGWKDWLQDJHGLVFULPLQDWLRQ
FDVHVVWDWHPHQWVDOOHJHGO\VKRZLQJDQHPSOR\HUjVDJHELDV                3HWHUVPRYHGWRUHPDQGWKHFDVHEDFNWRVWDWHFRXUW2Q
DUHWREHHYDOXDWHGE\FRQVLGHULQJIRXUIDFWRUVZKHWKHU           sXO\WKH'LVWULFW&RXUWGHQLHG3ODLQWLIIjV0RWLRQWR
WKHVWDWHPHQWVZHUHPDGHE\DGHFLVLRQPDNHURUE\DQDJHQW             5HPDQG  7KH FRXUW WKHQ VXEVHTXHQWO\ JUDQWHG /LQFROQjV
ZLWKLQ WKH VFRSH RI KLV HPSOR\PHQW  ZKHWKHU WKH             0RWLRQIRU6XPPDU\sXGJPHQWRQWKHVWDWHODZFODLPVDQG
VWDWHPHQWV ZHUH UHODWHG WR WKH GHFLVLRQPDNLQJ SURFHVV           DIWHU3ODLQWLIIVWLSXODWHGWRWKHGLVPLVVDORIKLV(5,6$FODLP
 ZKHWKHU WKH VWDWHPHQWV ZHUH PRUH WKDQ PHUHO\ YDJXH         WKH&RXUWHQWHUHGDILQDOsXGJPHQW
DPELJXRXVRULVRODWHGUHPDUNVDQGZKHWKHU WKH\ZHUH
PDGHSUR[LPDWHLQWLPHWRWKHDFWRIWHUPLQDWLRQ,GDW
1RQH RI WKHVH IDFWRUV LV LQGLYLGXDOO\ GLVSRVLWLYH RI DJH
GLVFULPLQDWLRQEXWUDWKHUWKH\PXVWEHHYDOXDWHGDVDZKROH
WDNLQJDOORIWKHFLUFXPVWDQFHVLQWRDFFRXQW,G7KHUHFRUG
GRHVQRWHYLGHQFHDQ\UHPDUNVEHLQJGLUHFWHGDW3HWHUVWKDW
ZRXOG EH UHODWHG WR /LQFROQjV GHFLVLRQPDNLQJ SURFHVV LQ
WHUPLQDWLQJ 3HWHUV DV WKH &RUSRUDWH &RQWUROOHU  6HH DOVR       >   $00 s$ DW @
*DJQHY1RUWKZHVWHUQ1DWjO,QV&R)GWK&LU                   
KROGLQJVXSHUYLVRUjVDJHUHODWHGFRPPHQWQRWGLUHFWHG                     $IWHU 3ODLQWLII UHWLUHG (OOLRWW GHFLGHG WR SHUPDQHQWO\ UHSODFH KLP

DW SODLQWLII LQVXIILFLHQW WR VXVWDLQ DJH GLVFULPLQDWLRQ FDVH   ZLWK WKH WZR LQGLYLGXDOV ZKR KDG DVVXPHG 3ODLQWLIIjV GXWLHV ZKLOH KH
                                                                        ZRUNHG RQ WKH ,QIR6RXUFH SURMHFW 3HWUHOOD DVVXPHG 3ODLQWLIIjV GXWLHV DV
%ROWRQY6FULYQHU,QF)GWK&LUKROGLQJ         &RUSRUDWH &RQWUROOHU DQG %UXQR EHFDPH 3HWUHOODjV VXERUGLQDWH LQ WKH
                                                                        GRPHVWLF EXVLQHVV DFFRXQWLQJ DUHD
        3HWHUVY/LQFROQ(OHF&R                1R      1R                    3HWHUVY/LQFROQ(OHF&R       

                         ,,,$1$/<6,6                                :KLOHWKH5XOHVDUHVLOHQWDVWRWLPLQJPDWWHUVZLWKUHSO\
                                                                     DIILGDYLWV SUHFHGHQW HVWDEOLVKHV WKDW LQ WKH IDFH RI QHZ
$ 67$1'$5'2)5(9,(:                                                HYLGHQFH WKH FRXUW VKRXOG SHUPLW WKH RSSRVLQJ SDUW\ DQ
                                                                     RSSRUWXQLW\WRUHVSRQG+HUH3HWHUVKDGDQRSSRUWXQLW\DWWKH
   7KHVWDQGDUGRIWKLV&RXUWjVUHYLHZRIWKH'LVWULFW&RXUWjV       KHDULQJDVZHOODVWKHHQWLUHZHHNSULRUWRUHVSRQGEXWGLGQRW
GHQLDO RI 3ODLQWLIIjV 0RWLRQ WR 5HPDQG LV GH QRYR  6HH    GRVR7KHUHIRUHQRHOHPHQWRIVXUSULVHH[LVWVLQWKLVFDVH
sHURPH'XQFDQ,QFY$XWR%\7HO//&)G
 WK &LU  $KHDUQ Y &KDUWHU 7RZQVKLS RI                7KH'LVWULFW&RXUW'LG1RW([FHHGWKH6FRSHRI
%ORRPILHOG)GWK&LU6LPLODUO\WKH              ,WV 'XW\ 8QGHU 5XOH  DQG (UURQHRXVO\
VWDQGDUGRIUHYLHZDSSOLFDEOHWRWKH'LVWULFW&RXUWjVGHFLVLRQ              m:HLJKl,VVXHVRI)DFW
WRJUDQW'HIHQGDQWjV0RWLRQIRU6XPPDU\sXGJPHQWDQGWR
GHQ\3ODLQWLIIjV0RWLRQWR$PHQGRU$OWHUsXGJPHQWLVGH                ,QWKHIDFHRIDVXPPDU\MXGJPHQWPRWLRQSXUVXDQWWR5XOH
QRYR'DUUDKY&LW\RI2DN3DUN)GWK            FWKHFRXUWjVGXW\LVWRGHFLGHZKHWKHUWKHUHLVJHQXLQH
&LU3HUH]Y$HWQD/LIH,QV&R)G          LVVXHDVWRPDWHULDOIDFW6HH&HORWH[&RUSY&DWUHWW
WK&LU                                                     867KHEXUGHQUHPDLQVZLWKWKHPRYLQJ
                                                                     SDUW\ WR GHPRQVWUDWH WKDW LQ WKH ZDNH RI GLVFRYHU\ DQG
% 7+( ',675,&7 &2857 ',' 127 (55 ,1                           SOHDGLQJVWKHFODLPV DUHIDFWXDOO\XQVXSSRUWHGDQGGRQRW
   '(1<,1* 3/$,17,))j6 027,21 72                                  ZDUUDQWDWULDO6HHLG:KLOHWKHFRXUWLVUHTXLUHGWRYLHZWKH
   5(0$1'                          IDFWVLQDOLJKWPRVWIDYRUDEOHWRWKHQRQPRYLQJSDUW\WKLV
                                                                     GRHVQRWPHDQWKDWWKHQRQPRYLQJSDUW\FDQFUHDWHDQLVVXHRI
        3ODLQWLIIjV'HSRVLWLRQ7HVWLPRQ\&RQVWLWXWHVDQ            IDFWE\ILOLQJDQDIILGDYLWZLWKFRQWUDU\DOOHJDWLRQV6HH6WUHHW
          m2WKHU3DSHUl8QGHU86&E                   Ys&%UDGIRUG	&R)GWK&LU
   86&DOORZVDGHIHQGDQWWRUHPRYHDQDFWLRQ             3HWHUVDUJXHVWKDWWKHORZHUFRXUWH[FHHGHGWKHVFRSHRILWV
IURPVWDWHWRIHGHUDOFRXUWZKHQWKHIHGHUDOGLVWULFWFRXUWKDV      GLVFUHWLRQE\ZHLJKLQJIDFWVUDWKHUWKDQPHUHO\GHWHUPLQLQJ
mRULJLQDO MXULVGLFWLRQ IRXQGHG RQ D FODLP RU ULJKW DULVLQJ   ZKHWKHU WKHUH ZHUH VXIILFLHQW IDFWV IRU D IDFWILQGHU WR
XQGHUlIHGHUDOODZ6HH86&E7KHSURFHGXUDO        UHDVRQDEO\FRQVLGHU:KLOHWKHFRXUWVKRXOGQRWZHLJKWKH
VWDSOHIRUGHWHUPLQLQJWKHSUHVHQFHRUDEVHQFHRIDIHGHUDO          HYLGHQFHDVDMXU\ZRXOGLWPXVWDQDO\]HWKHHYLGHQFHHQRXJK
TXHVWLRQLVWKHmZHOOSOHDGHGFRPSODLQWUXOHl6HH5LYHWY         WRGHWHUPLQHZKHWKHUWKHUHLVDQLVVXHWKDWmPD\UHDVRQDEO\
5HJLRQV%DQNRI/RXLVLDQD86                      EH UHVROYHG LQ IDYRU RI HLWKHU SDUW\l $QGHUVRQ Y /LEHUW\
                                                                     /REE\,QF86
  ,QKLVRULJLQDO&RPSODLQW3HWHUVDOOHJHGLQUHOHYDQWSDUW
WKDW 'HIHQGDQW EUHDFKHG FHUWDLQ XQVSHFLILHG SURPLVHV DQG         ,QUHDFKLQJLWVGHFLVLRQJUDQWLQJVXPPDU\MXGJPHQWWRWKH
UHSUHVHQWDWLRQVDQGWKDWDVDUHVXOWRIWKLVDOOHJHGEUHDFKRI      'HIHQGDQW WKH 'LVWULFW &RXUW KHUH FRQVLGHUHG WKH PXOWLSOH
SURPLVHV DQG UHSUHVHQWDWLRQV KH VXIIHUHG GDPDJHV >6HH        DIILGDYLWV 3HWHUV RIIHUHG LQ VXSSRUW RI KLV FRPSHWHQF\ DV
&RPSODLQW@7KH&RPSODLQWLWVHOIKRZHYHUGRHV           &RQWUROOHU  $V GLVFXVVHG DERYH QRQH RI WKH HYLGHQFH
QRWVSHFLILFDOO\GHWDLOWKHSURPLVHVQRUGRHVLWPHQWLRQWKH        SUHVHQWHG E\ 3HWHUV ZDV IURP KLV FXUUHQW VXSHULRUV
(PSOR\PHQW5HWLUHPHQWDQG,QFRPH6HFXULW\ $FW RI              7KHUHIRUH WKH WULDO FRXUW ZDV QRW mZHLJKLQJ FRQIOLFWLQJ
m(5,6$l86&HWVHT3HWHUVWKXVDUJXHVWKDW       UHYLHZVl E\ WKRVH LQ WKH SRVLWLRQ WR HYDOXDWH 3HWHUVj
'HIHQGDQWjVUHPRYDORIWKLVDFWLRQZDVLPSURSHU                     FRPSHWHQF\  5DWKHU WKH FRXUW VLPSO\ SURSHUO\ QRWHG WKDW
                                                                     3HWHUV RIIHUHG QR HYLGHQFH IURP WKRVH ZKRVH RSLQLRQ
    3HWHUVY/LQFROQ(OHF&R                       1R        1R                       3HWHUVY/LQFROQ(OHF&R           

   +HUH3HWHUVjEULHIRSSRVLQJVXPPDU\MXGJPHQWDVVHUWHG                     $GHIHQGDQWjVUHPRYDOULJKWKRZHYHUPD\H[WHQGEH\RQG
WKDW KLV FRPSHWHQF\ LQ WKH &RQWUROOHU SRVLWLRQ HYLGHQFHG            ZKDWLVDVVHUWHGLQWKHSODLQWLIIjVFRPSODLQWWRWKHWLPHZKHQ
SUHWH[WLQ/LQFROQjVUHDVRQVIRUUHSODFLQJKLP3HWHUVjSUHWH[W           LW PD\ ILUVW EH DVFHUWDLQHG WKDW WKH FDVH LV RQH ZKLFK LV
DOOHJDWLRQVZDUUDQWHGDUHSO\EULHIDQGVXSSRUWLQJDIILGDYLWV              UHPRYDEOH86&ESURYLGHV
WKDW ZRXOG QRW KDYH EHHQ ILOHG ZLWK WKH RULJLQDO VXPPDU\
MXGJPHQWEULHI)HG5&LY3URjVUHTXLUHPHQWWKDWFDXVH                   ,IWKHFDVHVWDWHGE\WKHLQLWLDOSOHDGLQJLVQRWUHPRYDEOH
EHVKRZQIRUDIILGDYLWVQRWDWWDFKHGWRWKHRULJLQDOPRWLRQLV                 DQRWLFHRIUHPRYDOPD\EHILOHGZLWKLQWKLUW\GD\VDIWHU
GHVLJQHG WR SUHYHQW WKH PRYLQJ SDUW\ IURP VSULQJLQJ QHZ                 UHFHLSWE\WKHGHIHQGDQWWKURXJKVHUYLFHRURWKHUZLVHRI
IDFWVRQWKHQRQPRYLQJSDUW\mZKHQLWLVWRRODWHIRUWKDWSDUW\                DFRS\RIDQDPHQGHGSOHDGLQJPRWLRQRUGHURURWKHU
WR FRQWHVWWKHPl5HSXEOLFEDQN'DOODVY)LUVW:LV1DWjO                     SDSHUIURPZKLFKLWPD\ILUVWEHDVFHUWDLQHGWKDWWKHFDVH
%DQN RI 0LOZDXNHH  ) 6XSS   (' :LV                  LVRQHZKLFKLVRUKDVEHFRPHUHPRYDEOH
DOORZLQJGHIHQGDQWjVUHSO\EULHIDQGQHZDIILGDYLWV
DQG SODLQWLIIjV DQVZHU WR GHIHQGDQWjV UHSO\ EULHI                    /LQFROQDUJXHVLQWKLVFDVHWKDWZKLOHWKHUHLVQRWDVSHFLILF
)XUWKHUPRUHVHYHQGD\VHODSVHGEHWZHHQWKHGDWH/LQFROQ                   m(5,6$FODLPlRQWKHIDFHRI3ODLQWLIIjV&RPSODLQW3HWHUVj
ILOHG6PROLNjVGHFODUDWLRQDQGWKHKHDULQJGDWH7KHVXUSULVH              GHSRVLWLRQWHVWLPRQ\HVWDEOLVKHVWKDWKHLVDVVHUWLQJDFODLP
DQGUHVXOWLQJSUHMXGLFHDGGUHVVHGLQ$UFRZHUHWKHUHVXOWRI               XQGHU(5,6$
ILOLQJRQWKHKHDULQJGDWHZKLFKIDLOHGWRDOORZWKHSODLQWLII
WRH[DPLQHDQGUHSO\WRWKHPRYLQJSDUW\jVSDSHUV6HH$UFR                 $OWKRXJKWKLV&LUFXLWKDVQRWVTXDUHO\DGGUHVVHGWKHLVVXH
)GDW                                                         RIZKHWKHUDGHSRVLWLRQPD\FRQVWLWXWHDQmRWKHUSDSHUlIRU
                                                                           SXUSRVHVRI6HFWLRQEWKHPDMRULW\RIFRXUWVWKDWKDYH
  3HWHUVDOVRFLWHV/LWWRQ,QGXV,QFY/HKPDQ%URV.XKQ               FRQVLGHUHG WKLV LVVXH KDYH DQVZHUHG WKH TXHVWLRQ LQ WKH
/RHE ,QF  ) 6XSS   6'1<             DIILUPDWLYHKROGLQJWKDWDSODLQWLIIjVDQVZHUVWRGHSRVLWLRQ
UHYjGRQRWKHUJURXQGV)GQG&LUIRUWKH              TXHVWLRQVFDQFRQVWLWXWHDQmRWKHUSDSHUlIRUSXUSRVHVRIWKH
SURSRVLWLRQ WKDW LQ WKH HYHQW RI D ODWH DIILGDYLW ILOLQJ WKH   UHPRYDOVWDWXWH6HH+XIIPDQY6DXO+ROGLQJV/WG3jVKLS
FRXUWPXVWJLYHWKHRSSRVLQJSDUW\DQRSSRUWXQLW\WRUHVSRQG              )GWK&LU6:6(UHFWRUV,QFY,QID[
:KLOH WKH FRXUW GLG DQQRXQFH WKH QHFHVVLW\ RI QRWLFH DQG          ,QF  )G   WK &LU  (IILQJHU Y 3KLOOLS
RSSRUWXQLW\WRUHVSRQGLWDOVRZHQWRQWRGLVSHOWKHSODLQWLIIjV          0RUULV,QF)6XSS:'.\+DEHUY
DVVHUWLRQ WKDW 5XOH G UHQGHUV UHSO\ DIILGDYLWV XQWLPHO\          &KU\VOHU&RUS)6XSS('0LFK
EHFDXVH WKH\ ZHUH QRW RULJLQDOO\ ILOHG ZLWK WKH VXPPDU\            5LJJV Y &RQWjO %DNLQJ &R  ) 6XSS  1' &DO
MXGJPHQWPRWLRQ6HHLGDW,QDFFRUGDQFHZLWK5XOH                 =DZDFNL Y 3HQSDF ,QF  ) 6XSS  
GjV ODQJXDJH WKDW mZKHQ D PRWLRQ LV VXSSRUWHG E\               0'3D)LVKHUY8QLWHG$LUOLQHV,QF)6XSS
DIILGDYLWWKHDIILGDYLWVKDOOEHVHUYHGZLWKWKHPRWLRQlUHSO\           6'1<)XTXDY*XOI&RORUDGR	6DQWD)H
DIILGDYLWVWKDWUHVSRQGRQO\WRWKHRSSRVLQJSDUW\jVEULHIDUH             5\ &R  ) 6XSS  (' 2NOD  *LODUGL Y
SURSHUO\ILOHGZLWKWKHUHSO\EULHI6HHLGDWVHHDOVR            $WFKLVRQ7RSHND	6DQWD)H5\&R)6XSS1'
0F*LQQLVY6RXWKHDVW$QHVWHVLD$VVRFV)5'                 ,OO
DQGQ:'1&DOORZLQJDIILGDYLWVWRDFFRPSDQ\
UHSO\EHFDXVHWKH\VXSSRUWHGUHSO\EULHIQRWRULJLQDOPRWLRQ
6PROLNjV DIILGDYLW VXSSRUWHG /LQFROQjV UHSO\ EULHI ZKLFK                  
                                                                                  :9 VHH 0LOO %HUQ $VVRFV ,QF Y 'DOODV 6HPLFRQGXFWRU &RUS 
FRQWHVWHGLVVXHVEURXJKWWROLJKWLQ3HWHUVjRSSRVLQJEULHI               ) 6XSS G  ' 0DVV  UHMHFWLQJ PDMRULW\ YLHZ DQG KROGLQJ WKDW
                                                                           D GHSRVLWLRQ LV QRW DQ mRWKHU SDSHUl XQGHU  E +DUUHOO Y 5H\QROGV
                                                                           0HWDOV &R  ) 6XSS  1' $OD  WR OLNH HIIHFW
     3HWHUVY/LQFROQ(OHF&R                     1R      1R                     3HWHUVY/LQFROQ(OHF&R        

   7KLV FRXUW DJUHHV ZLWK DQG QRZ MRLQV WKH PDMRULW\ RI      6'1<UHO\LQJXSRQXQVZRUQGRFXPHQWV
FRXUWV DQG ILQGV WKDW D SODLQWLIIjV UHVSRQVHV WR GHSRVLWLRQ     SXUVXDQWWRWRJUDQWVXPPDU\MXGJPHQW
TXHVWLRQLQJPD\FRQVWLWXWHDQmRWKHUSDSHUlXQGHU6HFWLRQ
E  7KH LQWHQW RI  E LV WR mPDNH VXUH WKDW D     :KLOH RWKHUZLVH FRPSOLDQW ZLWK   WKH 6PROLN
GHIHQGDQW KDV DQ RSSRUWXQLW\ WR DVVHUW WKH FRQJUHVVLRQDOO\       GRFXPHQW ODFNV WKH VWDWXWHjV UHTXLUHG mGDWH RI VWDWHPHQWl
EHVWRZHG ULJKW WR UHPRYH XSRQ EHLQJ JLYHQ QRWLFH LQ WKH        +RZHYHUFRXUWVKDYHKHOGWKDWWKHDEVHQFHRIDGDWHRQVXFK
FRXUVHRIWKHFDVHWKDWWKHULJKWH[LVWVl6HH+XIIPDQY6DXO         GRFXPHQWVGRHVQRWUHQGHUWKHPLQYDOLGLIH[WULQVLFHYLGHQFH
+ROGLQJV/WG3jVKLS)GDWTXRWLQJ:5,*+7                FRXOGGHPRQVWUDWHWKHSHULRGZKHQWKHGRFXPHQWZDVVLJQHG
0,//(5 (7 $/ )('(5$/ 35$&7,&( $1' 352&('85(                       6HH((2&Y:RUOGjV)LQHVW&KRFRODWH,QF)6XSS
DWGHG8QTXHVWLRQDEO\LQIRUPDWLRQ                1',OO  ILQGLQJ DSSUR[LPDWH GDWH QHHG
HOLFLWHGGXULQJDGHSRVLWLRQPD\VHUYHWKDWSXUSRVH,G               PHUHO\EHGHPRQVWUDEOHWRYDOLGDWHGDWHOHVVGRFXPHQW7KH
                                                                        SUHVHQW VLWXDWLRQ EHDUV PRUH WKDQ VXIILFLHQW HYLGHQFH WR
  $VWKH)LIWK&LUFXLWH[SODLQHGLQ$GGRY*OREH/LIHDQG              GHPRQVWUDWH WKH mSHULRGl LQ ZKLFK 6PROLN VLJQHG WKH
$FFLGHQW,QV&R)GWK&LU                        GRFXPHQW)XUWKHUPRUHVXEVHTXHQWWRUHFRJQL]LQJLWVHUURU
                                                                        /LQFROQUHPHGLHGWKHVLWXDWLRQZLWKDVHFRQG)HEUXDU\
  +ROGLQJWKDWDSODLQWLIIjVGHSRVLWLRQWHVWLPRQ\PD\EHDQ              DIILGDYLW VLJQHG E\ 6PROLN DWWHVWLQJ WR WKH GDWH
  mRWKHU SDSHUl XQGHU  E LV FRQVLVWHQW ZLWK WKH          sDQXDU\   WKH RULJLQDO DIILGDYLW ZDV ILOHG LH WKH
  SXUSRVH RI WKH UHPRYDO VWDWXWH WR HQFRXUDJH SURPSW             GDWHRIWKHUHSO\EULHI6HHs$DW
  UHVRUWWRIHGHUDOFRXUWZKHQDGHIHQGDQWILUVWOHDUQVWKDW
  WKH SODLQWLII LV DOOHJLQJ D IHGHUDO FODLP  )XUWKHU WKLV      ,QDGGLWLRQWR3HWHUVjIDFLDODWWDFNRIWKH6PROLNGRFXPHQW
  KROGLQJGLVFRXUDJHVGLVLQJHQXRXVSOHDGLQJE\SODLQWLIIV               KHFKDOOHQJHVLWVWLPLQJ3HWHUVFRQWHQGVWKDWWKHGRFXPHQW
  LQVWDWHFRXUWWRDYRLGUHPRYDO                                      ZDVXQWLPHO\VXEPLWWHGZLWK/LQFROQjVUHSO\EULHIDQGWKDW
                                                                        WKH'LVWULFW&RXUWGLGQRWDOORZDPSOHRSSRUWXQLW\IRUKLPWR
,GDW                                                             UHVSRQG,QVXSSRUW3HWHUVFLWHVWRWKHIDLUQHVVDQGSUHMXGLFH
                                                                        SULQFLSOHV LOOXVWUDWHG LQ &LD 3HWUROHUD &DULEH ,QF Y $UFR
   :HILQGWKH7HQWKDQG)LIWK&LUFXLWVjUHDVRQLQJSHUVXDVLYH          &DULEEHDQ ,QF  )G   WK &LU   7KDW
7KHUHIRUHZHKROGWKDWLIDGHIHQGDQWLVDEOHWRDVFHUWDLQIRU         FDVHKRZHYHULVUHDGLO\GLVWLQJXLVKDEOHIURPWKHLQVWDQWFDVH
WKHILUVWWLPHIURPWKHSODLQWLIIjVGHSRVLWLRQWHVWLPRQ\WKDWD         7KH$UFRFDVHZDVFRQFHUQHGZLWKWKHIDLUQHVVRIDOORZLQJ
FDVHLVUHPRYDEOHWKHQDQRWLFHRIUHPRYDOLVSURSHUO\ILOHG           GHIHQGDQWVWRILOHDUHSO\EULHIZLWKDIILGDYLWVRQWKHGD\RI
LILWLVILOHGZLWKLQGD\VRIWKDWGHSRVLWLRQ                       WKHPRWLRQKHDULQJ7KHGHIHQGDQWVLQ$UFRFRXOGQRWVKRZ
                                                                        FDXVH DV WR ZK\ WKH DIILGDYLWV ZHUH QRW ILOHG ZLWK WKHLU
      3ODLQWLIIjV 'HSRVLWLRQ 7HVWLPRQ\ 3URYLGHV D                 RULJLQDOPRWLRQIRUVXPPDU\MXGJPHQW&RPSRXQGLQJWKH
        %DVLVIRUDQ(5,6$&ODLP                                       SUREOHPZDVWKHIDFWWKDWWKHPDWHULDOSUHMXGLFHGWKHSODLQWLII
                                                                        E\QRWDOORZLQJLWWKHRSSRUWXQLW\WR UHEXW WKHGHIHQGDQWVj
  3ODLQWLIIGRHVQRWGLVSXWHWKDW'HIHQGDQW/LQFROQILOHGLWV           QHZHYLGHQFH6HHLGDW
1RWLFHRI5HPRYDORIWKLVFDVHZLWKLQGD\VRIWKHGDWHRI
KLV GHSRVLWLRQ  +H DUJXHV KRZHYHU WKDW KLV GHSRVLWLRQ
WHVWLPRQ\GRHVQRWPDNHRXWDIHGHUDOFODLP
                                                                            
  ,Q3ODLQWLIIjVGHSRVLWLRQ/LQFROQDVNHGDVHULHVRITXHVWLRQV              7KH VXEVHTXHQW DIILGDYLW DOVR LGHQWLILHV VHYHUDO FRQYHUVDWLRQV

DLPHG DW GLVFRYHULQJ WKH SUHFLVH QDWXUH RI WKH XQVSHFLILHG      EHWZHHQ 6PROLN DQG 3HWHUVj FRXQVHO WKDW ZRXOG OLNHO\ EH VXIILFLHQW WR
                                                                        HYLGHQFH WKH mSHULRGl LQ ZKLFK KH VLJQHG WKH GRFXPHQW
     3HWHUVY/LQFROQ(OHF&R                     1R        1R                   3HWHUVY/LQFROQ(OHF&R       

      7KH'LVWULFW&RXUW'LG1RW(UURQHRXVO\5HO\RQ                    mEURNHQ SURPLVHVl IRU ZKLFK 3HWHUV VRXJKW UHGUHVV LQ KLV
        WKHm6PROLN'RFXPHQWlLQ*UDQWLQJ6XPPDU\                         &RPSODLQW3HWHUVWHVWLILHGWKDWKHZDVVXLQJ/LQFROQLQSDUW
        sXGJPHQW                        EHFDXVH WKH FRPSDQ\ EUHDFKHG D SURPLVH WR FRQWLQXH KLV
                                                                          SDUWLFLSDWLRQLQLWV6XSSOHPHQWDO([HFXWLYH5HWLUHPHQW3ODQ
    3ODLQWLII DOVR DUJXHV WKDW WKH 'LVWULFW &RXUW FRPPLWWHG        m6(53l$WKLVGHSRVLWLRQ3HWHUVWHVWLILHGDVIROORZV
UHYHUVLEOH HUURU LQ FRQVLGHULQJ RQH SDUWLFXODU SLHFH RI
HYLGHQFHWKHm6PROLNGRFXPHQWlZKLFKZDVVXEPLWWHGE\                     4 :HUH\RXXOWLPDWHO\WDNHQRXWRIWKH6(5SURJUDP
/LQFROQZLWKLWVUHSO\EULHI&DSWLRQHGDVDQmDIILGDYLWlWKLV                RUWROGWKDW\RXZRXOGOLNHO\EHWDNHQRXWRILW"
GRFXPHQWLVDGHFODUDWLRQE\(OOLV6PROLN/LQFROQjVIRUPHU
&)2UHJDUGLQJKLVREVHUYDWLRQVRI3HWHUVjLQDGHTXDFLHVLQ                  $ , ZDV LQLWLDOO\ WROG , ZDV JRLQJ WR EH RXW RIWKH
WKH&RQWUROOHUSRVLWLRQ3ODLQWLIIILUVWFKDOOHQJHVWKHXVHRI                 SURJUDP
6PROLNjV GHFODUDWLRQ RQ mODFN RI DXWKHQWLFLW\l JURXQGV
EHFDXVH LW ZDV QRW QRWDUL]HG RU GDWHG  3HWHUV IXUWKHU             4 $QG VR SDUW RI ZK\ \RXjUH VXLQJ LV RYHUWKH
FKDOOHQJHVWKHWLPLQJRIVXEPLVVLRQRIWKHGRFXPHQWEHFDXVH                     FRPSDQ\jVGHFLVLRQQRWWROHW\RXSDUWLFLSDWHLQWKH
LW ZDV ILOHG ZLWK /LQFROQjV UHSO\ EULHI UDWKHU WKDQ ZLWK LWV         6(5SURJUDP"
RULJLQDO0RWLRQIRU6XPPDU\sXGJPHQW
                                                                            $ 9HU\PXFKVR
  :LWK UHVSHFW WR 3ODLQWLIIjV ILUVW FKDOOHQJH RI WKH 6PROLN
GRFXPHQW3HWHUVFRQWHQGVWKDWEHFDXVHWKHGRFXPHQWZDV                  >3ODLQWLIIjV'HSSSs$SHPSKDVLVDGGHG@
QRWQRWDUL]HGRUGDWHGLWLVQRWDYDOLGmDIILGDYLWl:KLOHDQ
mDIILGDYLWlLVUHTXLUHGWREHVZRUQWRE\WKHDIILDQWLQIURQWRI            :KLOHKLVVWDWHPHQWDWWKHGHSRVLWLRQLVQRWLWVHOIDmFLYLO
DQmRIILFHUDXWKRUL]HGWRDGPLQLVWHURDWKVlVHH%ODFNjV/DZ              DFWLRQlVHHNLQJWRUHFRYHUEHQHILWVXQGHU6(53WKH'LVWULFW
'LFWLRQDU\WKHG86&DOORZVIRU                &RXUW UHDVRQHG WKDW WKH VWDWHPHQW FODULILHV KLV &RPSODLQW
mXQVZRUQGHFODUDWLRQVXQGHUSHQDOW\RISHUMXU\lWRVXSSRUW                DOOHJDWLRQV RI XQVSHFLILHG mEURNHQ SURPLVHVl  7KH FRXUW
DQ\ PDWWHU WKDW OHJDOO\ UHTXLUHV DQ DIILGDYLW WR VXSSRUW LW     UHMHFWHG3ODLQWLIIjVDUJXPHQWWKDWKHLVRQO\VHHNLQJGDPDJHV
$FFRUGLQJ WR   WKH GHFODUDWLRQ PXVW FRPSRUW WR WKH         LQFLGHQWDOWRKLVZURQJIXOVHSDUDWLRQIURPWKHFRPSDQ\7KH
IROORZLQJIRUPm,GHFODUHRUFHUWLI\YHULI\RUVWDWHXQGHU            FRXUW IXUWKHU UHDVRQHG WKDW EHFDXVH LW PXVW UHDG WKH 6(53
SHQDOW\ RI SHUMXU\ WKDW WKH IRUHJRLQJ LV WUXH DQG FRUUHFW       SODQMXGJHWKHYDOLGLW\RI3ODLQWLIIjVFODLPVDQGUHVROYHDQ\
([HFXWHGRQGDWHl86&                               LVVXHVFRQFHUQLQJWKHLQWHUSUHWDWLRQRIWKHSODQWKLVXOWLPDWHO\
                                                                          FRQVWLWXWHG PRUH WKDQ D PHUH GHWHUPLQDWLRQ RI LQFLGHQWDO
   7KH6PROLNGRFXPHQWLVFRPSRVHGLQQHDUO\LGHQWLFDOIRUP               GDPDJHV
WRDOORI/LQFROQjVVXSSRUWLQJDIILGDYLWV7KHGRFXPHQWRSHQV
ZLWK m, (OOLV 6PROLN KHUHE\ GHSRVH DQG VZHDU WKDW WKH           :HDJUHHZLWKWKH'LVWULFW&RXUW3HWHUVjWHVWLPRQ\FOHDUO\
IROORZLQJIDFWVDUHWUXHDQGFRUUHFWEDVHGRQP\RZQSHUVRQDO             VKRZHGWKDWKHZDVFODLPLQJ'HIHQGDQWZURQJIXOO\GHQLHG
NQRZOHGJHl7KHDIILDQWWKHQVZRUHXQGHUSHQDOW\RISHUMXU\            KLP FRQWLQXHG SDUWLFLSDWLRQ LQ 6(53 LQ mEUHDFK RI LWV
DQG FORVHG WKH GRFXPHQW ZLWK KLV VLJQDWXUH  &RXUWV DUH          SURPLVHVDQGUHSUHVHQWDWLRQVl,QDPHPRXUJLQJ3HWHUVWR
JHQHUDOO\FRQVLVWHQWLQYDOLGDWLQJGRFXPHQWVWKDWZHUHVZRUQ              DFFHSWWKHGHPRWLRQWR'LUHFWRURI%HQHILWV$FFRXQWLQJsD\
WRXQGHUSHQDOW\RISHUMXU\QRWZLWKVWDQGLQJWKHIDFWWKDWWKH\           (OOLRWWZURWHLQSHUWLQHQWSDUW
ZHUHQRWQRWDUL]HG6HHHJ+DPHHGY3XQGW)6XSS                 <RX ZLOO UHPDLQ LQ WKH 6XSSOHPHQWDO ([HFXWLYH
                                                                              5HWLUHPHQW 3ODQ 6(53 SHQGLQJ D UHYLHZ RI SODQ
    3HWHUVY/LQFROQ(OHF&R                          1R       1R                        3HWHUVY/LQFROQ(OHF&R            

     SDUWLFLSDWLRQJXLGHOLQHVZKLFKZHH[SHFWWRFRPSOHWH                    VLWXDWLRQDQG3ODLQWLIIKDVQRWRIIHUHGDQ\HYLGHQFHWRUHIXWH
     ZLWKLQ  GD\V  , VKRXOG DJDLQ SRLQW RXW WKDW ,              WKLVFRPSODLQW
     EHOLHYH \RX ZLOO QRW TXDOLI\ IRU FRQWLQXHG
     SDUWLFLSDWLRQ KRZHYHU ZH ZLOO QRW NQRZ XQWLO WKH                 3ODLQWLII DOVR DUJXHV WKDW 'HIHQGDQWjV mVKLIWLQJl UHDVRQV
     VWXG\ LV FRPSOHWHG  6KRXOG \RXU SDUWLFLSDWLRQ EH                LQGLFDWHDVHQVHRIIDOVLW\LQLWVSURIIHUHGUHDVRQ/LQFROQ
     GLVFRQWLQXHG\RXUFUHGLWHGVHUYLFHDQGSDUWLFLSDWLRQ                   KRZHYHUGLGQRWmVKLIWlRUFKDQJHLWVUHDVRQVUDWKHUYDULRXV
     IDFWRU XQGHU WKH SODQ ZLOO EH mIUR]HQl  :KHQ \RX              PHPEHUV RI PDQDJHPHQW PHUHO\ FLWHG GLIIHUHQW DUHDV RI
     FKRRVHWRUHWLUHEHQHILWVSD\DEOHZLOOEHGHWHUPLQHGRQ                GHILFLHQF\WKDWWKH\GHHPHGLPSRUWDQW$VLQGLFDWHGWKHVH
     WKHEDVLVRISODQSURYLVLRQV                                           LQFOXGHG3HWHUjVODFNRILQWHUQDWLRQDOH[SHULHQFHKLVIDLOXUH
                                                                             WR LQWHUDFW ZHOO ZLWK H[WHUQDO DXGLWRUV DQG KLV ODFN RI
>s$SHPSKDVLVDGGHG@                                               OHDGHUVKLS DQG FRPPXQLFDWLRQ VNLOOV  7KXV WKLV GRHV QRW
                                                                             DPRXQW WR HYLGHQFH IURP ZKLFK D IDFWILQGHU FRXOG LQIHU
  1RWZLWKVWDQGLQJWKHIDFWWKDW(OOLRWWWROG3HWHUVKHZRXOG                 IDOVLW\RI/LQFROQjVSURIIHUHGQRQGLVFULPLQDWRU\UHDVRQ
QRW NQRZ IRU DQRWKHU  GD\V ZKHWKHU LW ZDV FHUWDLQ WKDW
3HWHUV ZRXOG QRW TXDOLI\ IRU FRQWLQXHG SDUWLFLSDWLRQ LQ WKH             $V WKH 6XSUHPH &RXUW LQ 5HHYHV ZDV FDUHIXO WR QRWH D
6(53LQWKHGHPRWHGSRVLWLRQKHZDVEHLQJRIIHUHG(OOLRWW                   SULPDIDFLHFDVHFRXSOHGZLWKHYLGHQFHRIDIDOVHSURIIHUHG
GHPDQGHGWKDW3HWHUVUHVSRQGWRWKHRIIHURIWKH'LUHFWRUjV                  UHDVRQmPD\SHUPLWlDIDFWILQGHUWRLQIHUDGLVFULPLQDWRU\
SRVLWLRQZLWKLQWHQGD\V,G                                               SXUSRVHmDOWKRXJKVXFKDILQGLQJZLOOQRWDOZD\VEHDGHTXDWH
                                                                             WRVXVWDLQlDILQGLQJRIOLDELOLW\6HH5HHYHV86DW
  ,WLVXQGLVSXWHGWKDWWKH6(53LVDQHPSOR\HHEHQHILWSODQ                 7KLVLVRQHVXFKLQVWDQFHWKDWWKH6XSUHPH&RXUWSUHGLFWHG
VXEMHFW WR WKH HQIRUFHPHQW SURYLVLRQV RI WKH (PSOR\HH                 ZDV FHUWDLQ WR RFFXU ZKHUH mQR UDWLRQDO IDFWILQGHU FRXOG
5HWLUHPHQW ,QFRPH 6HFXULW\ $FW m(5,6$l
  ,Q                        FRQFOXGHWKDWGLVFULPLQDWLRQKDGRFFXUUHGl,G
0HWURSROLWDQ /LIH ,QV &R Y 7D\ORU  86  
 WKH 6XSUHPH &RXUW KHOG WKDW WKH mFRPSOHWH                       ,QWKHZDNHRI/LQFROQjVGRZQWXUQDQGVXEVHTXHQW
SUHHPSWLRQH[FHSWLRQlWRWKHmZHOOSOHDGHGFRPSODLQWUXOHl                   RYHUKDXORIWKHHQWLUHPDQDJHPHQW/LQFROQjVH[SODQDWLRQWKDW
DSSOLHVWRFODLPVDULVLQJXQGHU(5,6$7KH6XSUHPH&RXUW                  WKHFRPSDQ\ZDVUHRUJDQL]LQJLWVPDQDJHPHQWLQDQHIIRUWWR
                                                                             VSXUHFRQRPLFJURZWK LVQRWFRQWUDGLFWHGE\DQ\HYLGHQFH
                                                                             WKDW LWV WUHDWPHQW RI 3ODLQWLII ZDV QRW SDUW RI WKLV FKDQJH
                                                                           :KLOH WKLV PD\ KDYH UHVXOWHG LQ WKH LQFLGHQWDO WXUQRYHU RI
       $OWKRXJK WKH 6(53 LV DQ XQIXQGHG SODQ GHVLJQHG mSULPDULO\ IRU
                                                                             ROGHU HPSOR\HHVLW GRHV QRW PHDQ WKDW DJH PRWLYDWHG
WKH SXUSRVH RI SURYLGLQJ GHIHUUHG FRPSHQVDWLRQ WR D VHOHFW JURXS RI
PDQDJHPHQW RU KLJKO\ FRPSHQVDWHG HPSOR\HHVl>       800   /LQFROQ (OHFWULF
                                                                             /LQFROQjVDFWLRQV
&RPSDQ\   6XSSOHPHQWDO ([HFXWLYH 5HWLUHPHQW 3ODQ s$ SS @ WKH
6(53 LV DQ HPSOR\HH EHQHILW SODQ DV GHILQHG E\ (5,6$ DQG LV VXEMHFW WR
WKH HQIRUFHPHQW SURYLVLRQV RI WKH VWDWXWH LQFOXGLQJ VHFWLRQ D ,G
      6HH DOVR .HPPHUHU Y ,&, $PHULFDQ ,QF 
)G   UG &LU  GHIHUUHG FRPSHQVDWLRQ SODQV DUH
H[HPSW IURP PXFK RI (5,6$jV UHJXODWRU\ VFKHPH EXW DUH FRYHUHG E\ WKH
GHILQLWLRQV DQG HQIRUFHPHQW SURYLVLRQV RI (5,6$

                                                                               
        7R GHWHUPLQH ZKHWKHU D FODLP DULVHV XQGHU IHGHUDO ODZ D FRXUW             :H QRWH KHUH WKDW 3ODLQWLII GRHV QRW UHO\ XSRQ          QXPHULFDO RU
XQGHU WKH mZHOOSOHDGHG FRPSODLQWl UXOH JHQHUDOO\ ORRNV RQO\ WR WKH         VWDWLVWLFDO HYLGHQFH RI D SDWWHUQ RU SUDFWLFH UHODWLQJ WR WHUPLQDWLRQ RI ROGHU
SODLQWLIIjV FRPSODLQW *XOO\ Y )LUVW 1DWLRQDO %DQN  86      HPSOR\HHV WR FRUURERUDWH KLV SRVLWLRQ
    3HWHUVY/LQFROQ(OHF&R                      1R       1R                        3HWHUVY/LQFROQ(OHF&R            

ZDVQRWLWVWUXHUHDVRQIRUUHSODFLQJKLPRUWKDWRWKHUQRQ            UHFRJQL]HGWKDW&RQJUHVVjLQWHQWZLWKFHUWDLQIHGHUDOVWDWXWHV
SURWHFWHGFODVV HPSOR\HHV ZKR ZRUNHG IRU WKH VDPH                  LV WR FRPSOHWHO\ SUHHPSW VWDWH ODZ DQG FUHDWH IHGHUDO
VXSHUYLVRUV ZHUH QRW ILUHG HYHQ WKRXJK WKH\ HQJDJHG LQ           MXULVGLFWLRQ XQGHU  86&    (5,6$ LV RQH VXFK
VXEVWDQWLDOO\LGHQWLFDOFRQGXFWDVKH                                   VWDWXWH   86&  D WKH FRGLILHG  D RI
  3HWHUVjRQO\HYLGHQFHFRQVLVWVRIDIILGDYLWVIURPFRZRUNHUV
ZKLFK GR OLWWOH LI DQ\WKLQJ WR UHEXW /LQFROQjV SURIIHUHG
OHJLWLPDWHEXVLQHVVUHDVRQ7KHVHDIILGDYLWVPHUHO\VKRZWKDW           /RXLVYLOOH 	 15 5 &R Y 0RWWOH\         86          ,I WKH
3HWHUVKDGDJRRGUDSSRUWZLWKVRPHRIKLVVXERUGLQDWHVZKR             FRPSODLQW UHOLHV RQO\ RQ VWDWH ODZ WKH GLVWULFW FRXUW JHQHUDOO\ ODFNV VXEMHFW
JHQHUDOO\ WHQGHG WR SUHIHU KLV PDQDJHPHQW VW\OH WR WKDW RI      PDWWHU MXULVGLFWLRQ DQG WKH DFWLRQ LV QRW UHPRYDEOH 7KDW D GHIHQGDQW
                                                                         UDLVHV D IHGHUDO GHIHQVH WR D VWDWH ODZ FODLP LQFOXGLQJ D SUHHPSWLRQ
3HWUHOOD DQG %UXQR  7KH\ GR QRW UHEXW WKH HPSOR\HUjV           GHIHQVH LV LPPDWHULDO IRU MXULVGLFWLRQDO SXUSRVHV &DWHUSLOODU ,QF Y
SURIIHUHGUHDVRQVIRUQRWUHWDLQLQJ3HWHUVLQWKH&RQWUROOHU             :LOOLDPV  86   6&W   
SRVLWLRQ QRU GR WKH\ FDOO LQWR TXHVWLRQ WKH YHUDFLW\ RI WKH
HPSOR\HUjVMXVWLILFDWLRQ,QRUGHUWRUHEXWRUXQGHUPLQHWKH                +RZHYHU WKH 6XSUHPH &RXUW KDV GHYHORSHG DQ H[FHSWLRQ WR WKH ZHOO
FUHGLELOLW\ RI /LQFROQjV FRQWHQWLRQV WKDW 3HWHUV ODFNHG           SOHDGHG FRPSODLQW UXOH      ,I &RQJUHVV LQWHQGV WKDW D IHGHUDO VWDWXWH

FRPSHWHQF\LQYLWDODUHDVKHZRXOGQHHGWRRIIHUSURRIWKDW             mFRPSOHWHO\ SUHHPSWl DQ DUHD RI VWDWH ODZ DQ\ FRPSODLQW DOOHJLQJ FODLPV
                                                                         XQGHU WKDW DUHD RI VWDWH ODZ LV SUHVXPHG WR DOOHJH D FODLP DULVLQJ XQGHU
KHZDVLQGHHGSURILFLHQWLQWKHVHDUHDVDFFRUGLQJWRWKHQHZ             IHGHUDO ODZ 6HH 0HWURSROLWDQ /LIH ,QV &R Y 7D\ORU  86  
PDQDJHPHQW$VWKH'LVWULFW&RXUWIRXQG3HWHUVjHYLGHQFH                7KH FRPSODLQW PD\ WKXV EH UHPRYHG WR IHGHUDO FRXUW DQG ZLOO EH
PHUHO\LOOXVWUDWHVDmFODVKRIFXOWXUHVlEHWZHHQWKHROGDQG             WUHDWHG DV DOOHJLQJ D IHGHUDO FDXVH RI DFWLRQ QRWZLWKVWDQGLQJ WKDW RQ LWV
WKHQHZPDQDJHPHQWVW\OHV                                               IDFH WKH SODLQWLIIjV FRPSODLQW DOOHJHV RQO\ D VWDWHODZ FDXVH RI DFWLRQ

  3ODLQWLII SXUSRUWV WR UHEXW (OOLRWjV FRPSODLQWV DERXW KLV            m&RPSOHWH SUHHPSWLRQl DSSOLHV RQO\ LQ WKH H[WUDRUGLQDU\
                                                                         FLUFXPVWDQFH ZKHQ &RQJUHVV LQWHQGV QRW PHUHO\ WR SUHHPSW D FHUWDLQ
TXDOLILFDWLRQVWRSHUIRUPHIILFLHQWO\LQWKH&RQWUROOHUSRVLWLRQ         DPRXQW RI VWDWH ODZ EXW DOVR WR WUDQVIHU MXULVGLFWLRQ WR GHFLGH WKH
E\ LQWURGXFLQJ DIILGDYLWV IURP /LQFROQjV IRUPHU VHQLRU             SUHHPSWLRQ TXHVWLRQ IURP VWDWH WR IHGHUDO FRXUWV 6HH 0HWURSROLWDQ /LIH
H[HFXWLYHV6HYHUDOVXERUGLQDWHVIXUWKHUDWWHVWHGWR3HWHUVj            VXSUD  86 DW  ILQGLQJ D VWDWHPHQW RI VXFK LQWHQW LQ WKH

FRPPXQLFDWLRQ VNLOOV DQG GHHPHG KLP IXOO\ FDSDEOH RI              OHJLVODWLYH KLVWRU\ RI (5,6$ :LWKRXW HYLGHQFH RI &RQJUHVVjV LQWHQW WR

SHUIRUPLQJ WKH GXWLHV RI &RQWUROOHU  3HWHUV DOVR RIIHUV         WUDQVIHU MXULVGLFWLRQ WR IHGHUDO FRXUWV WKHUH LV QR EDVLV IRU LQYRNLQJ
                                                                         IHGHUDO MXGLFLDO SRZHU 6WURQJ Y 7HOHFWURQLFV 3DFLQJ 6\V ,QF  )G
HYDOXDWLRQVE\DIRUPHUFRPSDQ\SUHVLGHQWZKRDSSURYHGWKH                WK &LU 0XVVRQ 7KHDWULFDO ,QF Y )HG ([S &RUS 
KLJKPHULWUDWLQJV3HWHUVUHFHLYHGDVSDUWRIWKHHPSOR\HHVj             )G   WK &LU 
DQQXDOERQXVUHYLHZ
                                                                             7KXV ZH KHOG LQ :DUQHU Y )RUG 0RWRU &R  )G  WK &LU
  ,WLVVLPSO\VWDWLQJWKHREYLRXVWRREVHUYHWKDWZKDWPD\               DQG UHFHQWO\ UHDIILUPHG LQ :ULJKW Y *HQHUDO 0RWRUV &RUS 

KDYHVDWLVILHGRQHPDQDJHPHQWUHJLPHGRHVQRWQHFHVVDULO\                )G  WK &LU 

VDWLVI\LWVVXFFHVVRUDQG3ODLQWLIIjVSURIIHUHGHYLGHQFHGRHV               >,@Q RUGHU WR FRPH ZLWKLQ WKH >FRPSOHWH SUHHPSWLRQ@ H[FHSWLRQ
QRW VHUYH WR UHEXW /LQFROQjV FXUUHQW PDQDJHPHQWjV YLHZV               D FRXUW PXVW FRQFOXGH WKDW WKH FRPPRQ ODZ RU VWDWXWRU\ FODLP
UHJDUGLQJ3HWHUVjLQVXIILFLHQWVNLOOVWRFRQWLQXHSHUIRUPLQJLQ              XQGHU VWDWH ODZ VKRXOG EH FKDUDFWHUL]HG DV D VXSHUVHGLQJ (5,6$
WKH&RQWUROOHUSRVLWLRQ(OOLRWWZDVVSHFLILFDOO\GLVSOHDVHG                DFWLRQ mWR UHFRYHU EHQHILWV GXH WR KLP XQGHU WKH WHUPV RI KLV

ZLWK 3ODLQWLIIjV IDLOXUH WR FRPPXQLFDWH ZLWK XSSHU                     SODQ WR HQIRUFH KLV ULJKWV XQGHU WKH WHUPV RI WKH SODQ RU WR
                                                                             FODULI\ KLV ULJKWV WR IXWXUH EHQHILWV XQGHU WKH WHUPV RI WKH SODQl
PDQDJHPHQW WR NHHS WKHP DEUHDVW RI /LQFROQjV ILQDQFLDO                DV SURYLGHG LQ  D%

                                                                         :DUQHU Y )RUG 0RWRU &R      )G  
    3HWHUVY/LQFROQ(OHF&R                       1R       1R                    3HWHUVY/LQFROQ(OHF&R       

(5,6$VWDWHVLQUHOHYDQWSDUWWKDWDEHQHILFLDU\PD\EULQJ               'HVSLWH /LQFROQjV DUJXPHQW WR WKH FRQWUDU\ 3HWHUV
DFLYLODFWLRQmWRUHFRYHUEHQHILWVGXHWRKLPXQGHUWKHWHUPV            HVWDEOLVKHG D SULPD IDFLH FDVH RI GLVFULPLQDWLRQ  $V WKH
RIKLVSODQWRHQIRUFHKLVULJKWVXQGHUWKHWHUPVRIWKHSODQ           'LVWULFW&RXUWQRWHGWKHSODLQWLIIjVEXUGHQDWmVWHSRQHlLV
RUWRFODULI\KLVULJKWVWRIXWXUHEHQHILWVXQGHUWKHWHUPVRIWKH        UHODWLYHO\ OLJKW XQGHU WKH 0F'RQQHOO 'RXJODV%XUGLQH
SODQl86&D7KHSXUSRVHRIDLVWR               SDUDGLJP6HH%DUNHUY6FRYLOO,QF2KLR6WG
SURYLGHEHQHILFLDULHVZLWKDFDXVHRIDFWLRQWRHQIRUFHWKHLU             1(G&OLQHY&DWKROLF'LRFHVHRI7ROHGR
(5,6$FRQWUDFWV6HH:DUQHUY)RUG0RWRU&RPSDQ\                    )GWK&LU,Q&OLQHZHFDXWLRQHGWKDW
)GWK&LU6HHDOVR0DUWLQY*HQHUDO                GLVWULFW FRXUWV PXVW QRW XVH WKH mTXDOLILHGl HOHPHQW RI WKH
0RWRUV&RUS)6XSS('0LFK                   SULPDIDFLHFDVHWRKHLJKWHQWKHSODLQWLIIjVLQLWLDOEXUGHQ,Q
(5,6$jVFLYLOHQIRUFHPHQWSURYLVLRQVFRPSOHWHO\SUHHPSW                  DQHIIRUWWRHQVXUHWKDWWKHILUVWWZRVWDJHVRIWKH0F'RQQHOO
VWDWHODZFDXVHVRIDFWLRQmZLWKUHVSHFWWRERWKSHUVRQVZKR              'RXJODV LQTXLU\ UHPDLQ DQDO\WLFDOO\ GLVWLQFW DQG WKDW D
DUH DFWXDOO\ µSDUWLFLSDQWVj RU µEHQHILFLDULHVj RI HPSOR\HH          SODLQWLIIjVLQLWLDOEXUGHQQRWEHWRRRQHURXVZHKHOGWKDWWKH
EHQHILWVSODQVDQGSHUVRQVZKRFODLPWREHµSDUWLFLSDQWVjRU              mTXDOLILHGlSURQJRIWKHSULPDIDFLHFDVHPXVWEHHYDOXDWHG
µEHQHILFLDULHVjRIHPSOR\HHEHQHILWSODQVl,G(PSKDVLVLQ              LQ OLJKW RI WKH SODLQWLIIjV HPSOR\PHQW UHFRUG mSULRU WR WKH
RULJLQDO                                                               RQVHWRIWKHHYHQWVWKDWWKHHPSOR\HUFLWHVDVLWVUHDVRQlIRULWV
                                                                          GHFLVLRQ   )G   :H IXUWKHU LQVWUXFWHG WKDW WKH
   7KH 'LVWULFW &RXUW UHDVRQHG WKDW 3HWHUVj GHSRVLWLRQ              OHJLWLPDWHQRQGLVFULPLQDWRU\UHDVRQRIIHUHGE\WKHHPSOR\HU
WHVWLPRQ\HVWDEOLVKHGWKDW3ODLQWLIIZDVmVHHNLQJWRFODULI\KLV          DWWKHVHFRQGVWDJHRIWKH0F'RQQHOO'RXJODVLQTXLU\PD\
ULJKWVWRIXWXUHEHQHILWVlXQGHUWKH6(53DQGWKHUHIRUHKLV            QRWEHFRQVLGHUHGLQGHWHUPLQLQJZKHWKHUWKHHPSOR\HHKDV
mEUHDFKRISURPLVHVlFODLPZDVFRPSOHWHO\SUHHPSWHGXQGHU                 SURGXFHGVXIILFLHQWHYLGHQFHWRHVWDEOLVKDSULPDIDFLHFDVH
(5,6$  :H DJUHH  3HWHUVj FODLP LV WKDW KH VKRXOG EH D       ,GDW
SDUWLFLSDQW LQ WKH SODQ EXW WKDW WKH FRPSDQ\ GHQLHG KLP
FRQWLQXHGSDUWLFLSDWLRQ+LVFODLPWKXVLVRQHmWRHQIRUFH               3HWHUV PHW VWHS RQH RI WKH 0F'RQQHOO 'RXJODV WHVW E\
KLV ULJKWV XQGHU WKH SODQ RU WR FODULI\ KLV ULJKWV WR IXWXUH   RIIHULQJ HYLGHQFH WKDW  KH ZDV D PHPEHU RI D FODVV
EHQHILWVXQGHUWKHWHUPVRIWKHSODQl                                   SURWHFWHG XQGHU WKH 2KLR VWDWXWH  KH ZDV VXEMHFW WR DQ
                                                                          DGYHUVH HPSOR\PHQW DFWLRQ  KH ZDV TXDOLILHG IRU WKH
   3ODLQWLIIDUJXHVWKDWKLVEUHDFKRISURPLVHVFODLPUHODWHVWR          &RQWUROOHU SRVLWLRQ IURP ZKLFK KH ZDV UHPRYHG DQG
(5,6$ WRR WHQXRXVO\ WR FUHDWH D IHGHUDO FDXVH RI DFWLRQ         /LQFROQ UHSODFHGKLPLQWKDWSRVLWLRQZLWKWZR\RXQJHU
:KLOHFRXUWVKDYHKHOGWKDWFODLPVWKDWPHUHO\SHULSKHUDOO\               SHUVRQV0HVVUV3HWUHOODDJHDQG%UXQRDJH
mUHODWH WRl (5,6$ SXUVXDQW WR LWV SUHHPSWLRQ FODXVH LQ
 D GR QRW FUHDWH D IHGHUDO FDXVH RI DFWLRQ VHH            3HWHUV KDYLQJ HVWDEOLVKHG D SULPD IDFLH FDVH /LQFROQ
&URPZHOOY(TXLFRU(TXLWDEOH+&$&RUS)G                   SURIIHUHGDQRQGLVFULPLQDWRU\UHDVRQVXSSRUWHGE\UHFRUG
 WK &LU  WKLV LV QRW VXFK D FDVH  5DWKHU DV    HYLGHQFHIRULWVDFWLRQWKDW3HWHUVODFNHGOHDGHUVKLSDQG
LQGLFDWHGZHILQGWKDWWKLVFDVHDULVHVXQGHU(5,6$jVFLYLO              FRPPXQLFDWLRQVNLOOVZDVXQDEOHWRDGHTXDWHO\LQWHUIDFHZLWK
HQIRUFHPHQWSURYLVLRQVLQ6HFWLRQDRIWKH$FW6HH                H[WHUQDODXGLWRUVDQGODFNHGLQWHUQDWLRQDOH[SHULHQFHQHHGHG
:DUQHU Y )RUG 0RWRU &R  )G DW  QRWLQJ              IRUWKHFRPSDQ\jVH[SDQGLQJLQWHUQDWLRQDOQHHGV
GLIIHUHQFHVEHWZHHQFODLPVDULVLQJXQGHU(5,6$jVD
DQGWKRVHPHUHO\UHODWLQJWR(5,6$XQGHUD                         /LQFROQKDYLQJDUWLFXODWHGDQRQGLVFULPLQDWRU\UHDVRQIRU
                                                                          LWV DFWLRQ 3HWHUV ZDV UHTXLUHG WR DGYDQFH VRPH HYLGHQFH
                                                                          GHPRQVWUDWLQJDWDPLQLPXPWKDW/LQFROQjVSURIIHUHGUHDVRQ
    3HWHUVY/LQFROQ(OHF&R                    1R       1R                      3HWHUVY/LQFROQ(OHF&R        

  mPD\UHO\RQWKHHYLGHQFHWRHVWDEOLVKWKHSULPDIDFLH            )RU H[DPSOH LQ D ZURQJIXO GLVFKDUJH FODLP ZKHUH
  FDVHDQGDQ\LQIHUHQFHVSURSHUO\GUDZQWKHUHIURPl,G              SODLQWLIIjVLQFLGHQWDOGDPDJHVDZDUGPHUHO\LQFOXGHVDORVVRI
                                                                       EHQHILWVXQGHUDQ(5,6$EDVHGSODQWKHVWDWHFODLPLVQRW
>s$SS@                                                      SUHHPSWHG6HH(WKULGJHY+DUERU+RXVH5HVWDXUDQW
                                                                       )G   WK &LU   ,Q VXFK D FDVH DOO WKDW LV
  +RZHYHULQDQDO\]LQJWKHHYLGHQFHSUHVHQWHGE\3ODLQWLII           QHHGHGLVDVLPSOHPDWKHPDWLFDOFDOFXODWLRQRIEHQHILWV7KH
WKHFRXUWVXEVHTXHQWO\VWDWHG                                         FODLPHGGDPDJHVWKXVUHODWHRQO\SHULSKHUDOO\WRWKH(5,6$
                                                                       SODQ+HUHKRZHYHU3HWHUVjFODLPRImEUHDFKRISURPLVHVl
    >3@ODLQWLIIKDVQRWmSURGXFHGVXIILFLHQWHYLGHQFHIURP             IDOOV VTXDUHO\ ZLWKLQ  D DV KH VHHNV WR mUHFRYHU
  ZKLFK WKH MXU\ PD\ UHDVRQDEO\ UHMHFW WKH HPSOR\HUjV           EHQHILWVGXHWRKLPXQGHUWKHSODQlRUmFODULI\KLVULJKWVWR
  H[SODQDWLRQl0DQ]HU)GDW7KHSODLQWLIIjV             IXWXUHEHQHILWVXQGHUWKHWHUPVRIWKHSODQl,WLVQRWWKHODEHO
  EXUGHQDWWKHVHFRQGVWDJHLVWRVKRZmERWKWKDWWKH                 SODFHG RQ D VWDWH ODZ FODLP WKDW GHWHUPLQHV ZKHWKHU LW LV
  UHDVRQZDVIDOVHDQGWKDWGLVFULPLQDWLRQZDVWKHUHDO               SUHHPSWHG EXW ZKHWKHU LQ HVVHQFH VXFK D FODLP LV IRU WKH
  UHDVRQl6W0DU\jV+RQRU&WUY+LFNV/(GG                UHFRYHU\RIDQ(5,6$SODQEHQHILW&URPZHOO)GDW
         ,Q 0DQ]HU WKH 6L[WK &LUFXLW      
  FODULILHGSODLQWLIIjVEXUGHQDWWKLVSRLQWm$FFRUGLQJO\
  RQFH WKH HPSOR\HU KDV FRPH IRUZDUG ZLWK D                       )RU WKH IRUHJRLQJ UHDVRQV ZH ILQG WKDW 3ODLQWLIIjV WKLUG
  QRQGLVFULPLQDWRU\UHDVRQIRUILULQJWKHSODLQWLIIZHKROG           FDXVHRIDFWLRQLQZKLFK3ODLQWLIIDOOHJHVDFODLPRIEUHDFKRI
  WKDWWKHSODLQWLIIPXVWSURGXFHVXIILFLHQWHYLGHQFHIURP             SURPLVHVDQGUHSUHVHQWDWLRQVRQWKHSDUWRI'HIHQGDQW/LQFROQ
  ZKLFK WKH MXU\ PD\ UHDVRQDEO\ UHMHFW WKH HPSOR\HUjV           SUHVHQWVDIHGHUDOTXHVWLRQWKDWLVFRPSOHWHO\SUHHPSWHGXQGHU
  H[SODQDWLRQl)GDW                                       D RI (5,6$  7KHUHIRUH UHPRYDO RI 3ODLQWLIIjV
                                                                       &RPSODLQW EDVHG XSRQ IHGHUDO TXHVWLRQ MXULVGLFWLRQ ZDV
    3ODLQWLIIRIIHUVQRHYLGHQFHIURPZKLFKDMXU\FRXOG               SURSHUDQGWKH'LVWULFW&RXUWSURSHUO\H[HUFLVHGVXSSOHPHQWDO
  FRQFOXGHWKDW/LQFROQ(OHFWULFjVH[SODQDWLRQLVIDOVHDQG            MXULVGLFWLRQ RYHU 3ODLQWLIIjV UHPDLQLQJ VWDWH ODZ FODLPV
  WKDWKLVDJHZDVWKHUHDOUHDVRQIRUKHU>VLF@WHUPLQDWLRQ          SXUVXDQWWR86&
  0RVW VLJQLILFDQW 3HWHUV RIIHUV DEVROXWHO\ QR HYLGHQFH
  WKDWDJHZDVWKHUHDOUHDVRQIRUWKHWHUPLQDWLRQ                    & 7+( ',675,&7 &2857 ',' 127 (55 ,1
                                                                          *5$17,1* 6800$5< s8'*0(17 72
>s$SHPSKDVLVDGGHG@                                            '()(1'$17
   7KH FRXUW WKHQ SURFHHGHG WR H[DPLQH WKH UHFRUG DQG            6XPPDU\ MXGJPHQW LV DSSURSULDWH ZKHQ WKHUH H[LVWV QR
FRQFOXGHGWKDW/LQFROQjVSXUSRUWHGEXVLQHVVUHDVRQIRUWKH             JHQXLQHLVVXHRIPDWHULDOIDFWDQGWKHPRYDQWLVHQWLWOHGWR
DFWLRQLWWRRNZLWKUHVSHFWWR3ODLQWLIImLVVXSSRUWHGE\WKH          MXGJPHQWDVDPDWWHURIODZ)HG5&LY3F&HORWH[
HYLGHQFHlDQG3HWHUVmKDVQRWUHEXWWHGWKHUHDVRQVDUWLFXODWHG        &RUSY&DWUHWW867KHFRXUWjVMRELVWR
E\/LQFROQl,GDW 1RWZLWKVWDQGLQJZKDWDSSHDUVWREH          GHFLGH ZKHWKHU D WULDO LV UHTXLUHG WR DOORZ D IDFWILQGHU WR
DPLVVWDWHPHQWRIODZRQWKH'LVWULFW&RXUWjVSDUWZLWKUHJDUG         GHWHUPLQH JHQXLQH LVVXHV RI IDFW WKDW FRXOG EH UHVROYHG LQ
WR3ODLQWLIIjVEXUGHQDWWKHSUHWH[WVWDJHWKHUHFRUGHVWDEOLVKHV     IDYRURIHLWKHUSDUW\6HH$QGHUVRQY/LEHUW\/REE\,QF
WKDW 3HWHUV KDV QRW VDWLVILHG KLV EXUGHQ XQGHU 5HHYHV  $Q    86     3ODLQWLII FKDOOHQJHV WKH WULDO
RXWFRPHFRQVLVWHQWZLWK5HHYHVLVVWLOOGHSHQGHQWRQ3HWHUVj           FRXUWjVGHFLVLRQWRJUDQWVXPPDU\MXGJPHQWEDVHGRQVHYHUDO
SULPDIDFLHFDVHDQGKLVVKRZLQJE\DSUHSRQGHUDQFHRIWKH             GLIIHUHQWJURXQGV
HYLGHQFHWKDW/LQFROQjVDVVHUWHGUHDVRQZDVIDOVH
     3HWHUVY/LQFROQ(OHF&R                  1R      1R                   3HWHUVY/LQFROQ(OHF&R      

      7KH 'LVWULFW &RXUWjV 'HFLVLRQ *UDQWLQJ                       XSRQ KLV SULPD IDFLH HYLGHQFH EXW PXVW LQVWHDG
        6XPPDU\sXGJPHQWWR'HIHQGDQWRQ3ODLQWLIIjV                     LQWURGXFH DGGLWLRQDO HYLGHQFH RI >SURKLELWHG@
        $JH'LVFULPLQDWLRQ&ODLPV&RPSRUWVZLWKWKH                      GLVFULPLQDWLRQ
        6XSUHPH&RXUWjV5XOLQJLQ5HHYHVY6DQGHUVRQ
        3OXPELQJ3URGXFWV                                             ,G  2XU KROGLQJ LV EROVWHUHG E\ WKH 6XSUHPH &RXUWjV
                                                                       FRQFOXVLRQLQ5HHYHVWKDWmDSODLQWLIIjVSULPDIDFLHFDVH
  2KLR5HYLVHG&RGHUHQGHUVLWXQODZIXOIRUDQ               FRPELQHG ZLWK VXIILFLHQW HYLGHQFH WR ILQG WKDW WKH
HPSOR\HUWRGLVFULPLQDWHDJDLQVWDQ\SHUVRQEHFDXVHRIKLV             HPSOR\HUjVDVVHUWHGMXVWLILFDWLRQLVIDOVHPD\SHUPLWWKH
DJH ZLWK UHVSHFW WR KLUH WHQXUH WHUPV FRQGLWLRQV RU        WULHU RI IDFW WR FRQFOXGH WKDW WKH HPSOR\HU XQODZIXOO\
SULYLOHJHVRIHPSOR\PHQWRUDQ\PDWWHUGLUHFWO\RULQGLUHFWO\         GLVFULPLQDWHGl5HHYHV86DW6&W
UHODWHGWRHPSOR\PHQW
                                                                     )GDW
  ,QDQDO\]LQJFODLPVDULVLQJXQGHU2+,2 5(9 &2'(
2KLR FRXUWV KDYH DGRSWHG WKH IUDPHZRUN HVWDEOLVKHG LQ           7XUQLQJWRWKH'LVWULFW&RXUWjVVXPPDU\MXGJPHQWUXOLQJLQ
IHGHUDO FDVH ODZ FRQFHUQLQJ 7LWOH 9,, DQG WKH $JH            WKLVFDVHWREHVXUHWKHODQJXDJHDQGVWUXFWXUHRIWKHFRXUWjV
'LVFULPLQDWLRQ LQ (PSOR\PHQW DFW m$'($l  6HH HJ        RSLQLRQOHQGVRPHFUHGHQFHWR3ODLQWLIIjVFRQWHQWLRQWKDWWKH
3OXPEHUV	6WHDPILWWHUVsRLQW$SSUHQWLFHVKLS&RPPY2KLR           'LVWULFW&RXUWPLVFRQVWUXHGKLVEXUGHQDWWKHSUHWH[WVWDJHRI
&LYLO5LJKWV&RPPjQ2KLR6WG1(G             WKH 0F'RQQHOO 'RXJODV SDUDGLJP  7KH FRXUW LQLWLDOO\ VHW
0DX]\Y.HOO\6HUYV,QF2KLR6WG         IRUWKWKH3ODLQWLIIjVEXUGHQDWWKLVVWDJHDVIROORZV
1(G)UDQNY7ROHGR
+RVSLWDO  2KLR $SSG    1(G            2QFH WKH GHIHQGDQW DUWLFXODWHV D OHJLWLPDWH QRQ
7KXVDSODLQWLIIPD\HVWDEOLVKDSULPDIDFLHFDVHRI         GLVFULPLQDWRU\EDVLVIRULWVDFWLRQWKHXOWLPDWHEXUGHQRI
DJHGLVFULPLQDWLRQXQGHU2KLRODZE\VKRZLQJWKDWKHRUVKH            SURRIUHVWVZLWKWKHSODLQWLIIWRSURYHE\DSUHSRQGHUDQFH
ZDVDPHPEHURIWKHVWDWXWRULO\SURWHFWHGFODVVWKDWKHRUVKH        RIWKHHYLGHQFHWKDWWKHDUWLFXODWHGEXVLQHVVUHDVRQZDV
VXIIHUHGDQDGYHUVHHPSOR\PHQWDFWLRQWKDWKHRUVKHZDV              DSUHWH[WIRUGLVFULPLQDWLRQ7H[DV'HSjWRI&RPPXQLW\
TXDOLILHGIRUWKHSRVLWLRQKHOGDQGWKDWKHRUVKHZDVUHSODFHG       $IIDLUV Y %XUGLQH  86   &RROH\ Y
E\ D SHUVRQ QRW EHORQJLQJ WR WKH SURWHFWHG FODVV RU WKDW     &DUPLNH&LQHPDV>)G@>WK&LU@
FRPSDUDEOH QRQSURWHFWHG SHUVRQV ZHUH WUHDWHG PRUH               7KDW LV WR VD\ WKH SODLQWLII mPXVW SURGXFH VXIILFLHQW
IDYRUDEO\6HH%\UQHVY/&,&RPPXQLFDWLRQ+ROGLQJV&R               HYLGHQFHIURPZKLFKWKHMXU\PD\UHDVRQDEO\UHMHFWWKH
 2KLR 6WG1(G0\HUVY              HPSOR\HUjVH[SODQDWLRQl0DQ]HUY'LDPRQG6KDPURFN
*RRGZLOO,QGXVRI$NURQ,QF2KLR$SSG              &KHPV&R)GWK&LU7KH
1(G                                                 SODLQWLII FDQ VKRZ WKDW GHIHQGDQWjV UHDVRQV ZHUH
                                                                       SUHWH[WXDOE\VKRZLQJWKDWWKH\ZHUHQRWUHDOO\IDFWRUV
  7KHHPSOR\HUPD\RYHUFRPHWKHSUHVXPSWLRQLQKHUHQWLQ                PRWLYDWLQJ WKH GLVFKDUJH RU LI WKH\ ZHUH IDFWRUV E\
WKHSULPDIDFLHFDVHE\SURGXFLQJHYLGHQFHRIDOHJLWLPDWH            VKRZLQJWKDWWKH\ZHUHMRLQWO\LQVXIILFLHQWWRPRWLYDWH
QRQGLVFULPLQDWRU\UHDVRQIRUWKHDGYHUVHHPSOR\PHQWDFWLRQ            WKHGLVFKDUJH5LGHQRXUY/DZVRQ&R)G
6HH0DX]\Y.HOO\6HUYV,QF2KLR6WGDW7KH            WK &LU  TXRWLQJ /D 0RQWDJQH Y $PHULFDQ
SODLQWLIILVWKHQSHUPLWWHGWRVKRZWKDWWKHHPSOR\HUjVUHDVRQ         &RQYHQLHQFH3URGV,QF)GWK
ZDVPHUHO\DSUHWH[WIRUXQODZIXOGLVFULPLQDWLRQ,G                 &LU0DQ]HUVXSUD)GDW$VWRWKH
                                                                       HYLGHQFH LQWURGXFHG WR VKRZ SUHWH[W WKH WULHU RI IDFW
    3HWHUVY/LQFROQ(OHF&R                       1R     1R                    3HWHUVY/LQFROQ(OHF&R       

 ,GDWLQWHUQDOTXRWDWLRQVDQGHPSKDVLVRPLWWHG                  3UHWH[W FDQ EH HVWDEOLVKHG E\  D GLUHFW HYLGHQWLDU\
 7KHILUVWW\SHRIUHEXWWDOZHVDLGFRQVLVWVRIHYLGHQFH              VKRZLQJWKDWDGLVFULPLQDWRU\UHDVRQPRUHOLNHO\PRWLYDWHG
 WKDWWKHUHDVRQVJLYHQE\WKHHPSOR\HUVLPSO\GLGQRW                  WKHHPSOR\HURUE\DQLQGLUHFWHYLGHQWLDU\VKRZLQJWKDW
 KDSSHQ  ,G  7KH WKLUG W\SH mRUGLQDULO\ FRQVLVWV RI         WKH HPSOR\HUjV H[SODQDWLRQ LV QRW FUHGLEOH &DUQH\ Y
 HYLGHQFH WKDW RWKHU HPSOR\HHV SDUWLFXODUO\ HPSOR\HHV             &OHYHODQG+HLJKWV8QLYHUVLW\+HLJKWV6FK'LVW2KLR
 QRW LQ WKH SURWHFWHG FODVV ZHUH QRW ILUHG HYHQ WKRXJK        $SSG1(G +RZHYHU
 WKH\ HQJDJHG LQ VXEVWDQWLDOO\ LGHQWLFDO FRQGXFW WR WKDW         m>P@HUH FRQMHFWXUH WKDW >WKH@ HPSOR\HUjV H[SODQDWLRQ LV D
 ZKLFKWKHHPSOR\HUFRQWHQGVPRWLYDWHGLWVGLVFKDUJHRI                 SUHWH[WIRULQWHQWLRQDOGLVFULPLQDWLRQLVDQLQVXIILFLHQWEDVLV
 WKHSODLQWLIIl,G7KHILUVWDQGWKLUGW\SHVRIUHEXWWDOV          IRU GHQLDO RI VXPPDU\ MXGJPHQWl  &DUQH\  1(G DW
 ZH KHOG mDUH GLUHFW DWWDFNV RQ WKH FUHGLELOLW\ RI WKH        7RDYRLGVXPPDU\MXGJPHQWWKHSODLQWLIILVUHTXLUHGWR
 HPSOR\HUjVSURIIHUHGPRWLYDWLRQIRUILULQJWKHSODLQWLII              SURGXFHHYLGHQFHWKDWWKHHPSOR\HUjVSURIIHUHGUHDVRQVZHUH
 DQGLIVKRZQSURYLGHDQHYLGHQWLDU\EDVLVIRUZKDWWKH                IDFWXDOO\XQWUXH,GFLWLQJ5HHYHVY6DQGHUVRQ3OXPELQJ
 6XSUHPH&RXUWKDVWHUPHGDmVXVSLFLRQRIPHQGDFLW\l                   3URGV ,QF  86    6&W  
 ,G  ,W LV WKXV FOHDU LQ OLJKW RI5HHYHV DQG 6W 0DU\jV   'HVSLWH WKH VKLIWLQJ EXUGHQV RI SURGXFWLRQ WKH XOWLPDWH
 +RQRU &HQWHU DV ZHOO DV RXU RSLQLRQ LQ 0DQ]HU WKDW          EXUGHQRISHUVXDVLRQUHPDLQVDWDOOWLPHVZLWKWKHSODLQWLII
 ZKHWKHU WKH SODLQWLII KDV LQ IDFW SUHVHQWHG HYLGHQFH            ,G6HHDOVR6W0DU\jV+RQRU&WUY+LFNV86
 VXSSRUWLQJ HDFK HOHPHQW RI KHU SULPD IDFLH FDVH LV             6&W
 PDWHULDO WR WKH GHWHUPLQDWLRQ WKDW WKH HPSOR\HUjV
 DUWLFXODWHGUHDVRQIRUWKHGLVFKDUJHLVQRWFUHGLEOH                    3ODLQWLII3HWHUVFRQWHQGVWKDWWKH'LVWULFW&RXUWLQWKLVFDVH
                                                                        LPSURSHUO\ UHTXLUHG KLP WR VKRZ mSUHWH[W SOXVl LH  WKDW
   +HUH7RVKLEDDUWLFXODWHGDQRQGLVFULPLQDWRU\UHDVRQ                /LQFROQjVDGYHUVHWUHDWPHQWZDVSUHWH[WXDODQGWKDWKLVDJH
 IRU ILULQJ *UD\     *UD\ KRZHYHU KDV SURGXFHG QR      ZDVWKHUHDOUHDVRQIRUVXFKWUHDWPHQWLQRUGHUWRHVWDEOLVK
 HYLGHQFH FDVWLQJ GRXEW RQ WKH FUHGLELOLW\ RI WKLV               KLVDJHGLVFULPLQDWLRQFODLPLQWKLVFDVH,QVXSSRUWRIKLV
 DUWLFXODWHG UHDVRQ  +HQFH WKHUH LV QR HYLGHQFH WKDW          FRQWHQWLRQ3HWHUVSRLQWVWR5HHYHVY6DQGHUVRQ3OXPELQJ
 7RVKLEDjVDUWLFXODWHGUHDVRQKDVQREDVLVLQIDFW6HFRQG            3URGV,QF86DWLQZKLFKWKH6XSUHPH&RXUW
 WKHUH LV QR HYLGHQFH LQ WKH UHFRUG WKDW >WKH DUWLFXODWHG      UHMHFWHGWKHmSUHWH[WSOXVlHYLGHQWLDU\EXUGHQ
 UHDVRQ@ LV QRW VXIILFLHQW WR ZDUUDQW GLVFKDUJH XQGHU
 7RVKLEDjVUXOHV                                                    7KH6XSUHPH&RXUWJUDQWHGFHUWLRUDULLQ5HHYHVWRUHVROYH
                                                                        DFRQIOLFWDPRQJWKH&LUFXLWVDVWRZKHWKHUDSODLQWLIIjVSULPD
                               


                                    IDFLHFDVHFRPELQHGZLWKVXIILFLHQWHYLGHQFHIRUDUHDVRQDEOH
                                                                        IDFWILQGHU WR UHMHFW WKH HPSOR\HUjV QRQGLVFULPLQDWRU\
   7KDWOHDYHVRQO\WKHVHFRQG0DQ]HURSWLRQWKDWWKH                H[SODQDWLRQIRULWVGHFLVLRQLVDGHTXDWHWRVXVWDLQDILQGLQJRI
 HPSOR\HUjVDUWLFXODWHGUHDVRQGLGQRWDFWXDOO\PRWLYDWH                OLDELOLW\IRULQWHQWLRQDOGLVFULPLQDWLRQ6HH5HHYHV86
 WKHGLVFKDUJH$VWRWKDWW\SHRIUHEXWWDOZHKHOG                  DW7KH)LIWK&LUFXLWLQ5HHYHVKDGSURFHHGHGIURPWKH
                                                                        DVVXPSWLRQ WKDW D SULPD IDFLH FDVH RI GLVFULPLQDWLRQ
     >L@IWKHEDUHERQHVHOHPHQWVRISODLQWLIIjVSULPDIDFLH            FRPELQHG ZLWK VXIILFLHQW HYLGHQFH IRU WKH WULHU RI IDFW WR
     FDVHZHUHVXIILFLHQWWRPDNHWKLVVKRZLQJWKH               GLVEHOLHYH WKH GHIHQGDQWjV OHJLWLPDWH QRQGLVFULPLQDWRU\
     HQWLUH µEXUGHQ VKLIWLQJj DQDO\VLV RI 0F'RQQHOO                UHDVRQIRULWVGHFLVLRQLVLQVXIILFLHQWDVDPDWWHURIODZWR
     'RXJODV DQG LWV VXFFHVVRUV ZRXOG EH LOOXVRU\            VXVWDLQDILQGLQJRILQWHQWLRQDOGLVFULPLQDWLRQ,GDW
     $FFRUGLQJO\ZHKROGWKDWLQRUGHUWRPDNHWKLVW\SH
     RIUHEXWWDOVKRZLQJWKHSODLQWLIIPD\QRWUHO\VLPSO\
    3HWHUVY/LQFROQ(OHF&R                    1R     1R                   3HWHUVY/LQFROQ(OHF&R       

  &ODULI\LQJLWVHDUOLHUGHFLVLRQLQ6W0DU\jV+RQRU&WUY          QRUDWLRQDOIDFWILQGHUFRXOGFRQFOXGHWKDWWKHDFWLRQZDV
+LFNV VXSUD WKH 5HHYHV &RXUW KHOG WKDW ZKLOH WKH IDFW     GLVFULPLQDWRU\  )RU LQVWDQFH DQ HPSOR\HU ZRXOG EH
ILQGHUjV UHMHFWLRQ RI WKH HPSOR\HUjV OHJLWLPDWH                  HQWLWOHG WR MXGJPHQW DV D PDWWHU RI ODZ LI WKH UHFRUG
QRQGLVFULPLQDWRU\UHDVRQIRULWVDFWLRQGRHVQRWQHFHVVDULO\           FRQFOXVLYHO\ UHYHDOHG VRPH RWKHU QRQGLVFULPLQDWRU\
FRPSHO MXGJPHQW IRU WKH SODLQWLII LW LV QRQHWKHOHVV            UHDVRQ IRU WKH HPSOR\HUjV GHFLVLRQ RU LI WKH SODLQWLII
SHUPLVVLEOHIRUWKHWULHURIIDFWWRLQIHUWKHXOWLPDWHIDFWRI        FUHDWHG RQO\ D ZHDN LVVXH RI IDFW DV WR ZKHWKHU WKH
GLVFULPLQDWLRQIURPWKHIDOVLW\RIWKHHPSOR\HUjVH[SODQDWLRQ         HPSOR\HUjVUHDVRQZDVXQWUXHDQGWKHUHZDVDEXQGDQW
7KH&RXUWWKHUHIRUHFRQFOXGHGWKDWLWLVQRWDOZD\VQHFHVVDU\        DQG XQFRQWURYHUWHG LQGHSHQGHQW HYLGHQFH WKDW QR
IRU D GLVFULPLQDWLRQ SODLQWLII WR LQWURGXFH LQGHSHQGHQW          GLVFULPLQDWLRQKDVRFFXUUHG
HYLGHQFH RI GLVFULPLQDWLRQ LQ DGGLWLRQ WR HVWDEOLVKLQJ WKH
IDOVLW\RIWKHHPSOR\HUjVDUWLFXODWHGUHDVRQIRULWVDFWLRQ        :KHWKHUMXGJPHQWDVDPDWWHURIODZLVDSSURSULDWHLQ
86DW7KH&RXUWH[SODLQHG                                     DQ\SDUWLFXODUFDVHZLOOGHSHQGRQDQXPEHURIIDFWRUV
                                                                       7KRVHLQFOXGHWKHVWUHQJWKRIWKHSODLQWLIIjVSULPDIDFLH
  3URRI WKDW WKH GHIHQGDQWjV H[SODQDWLRQ LV XQZRUWK\ RI         FDVHWKHSUREDWLYHYDOXHRIWKHSURRIWKDWWKHHPSOR\HUjV
  FUHGHQFHLVVLPSO\RQHIRUPRIFLUFXPVWDQWLDOHYLGHQFH               H[SODQDWLRQLVIDOVHDQGDQ\RWKHUHYLGHQFHWKDWVXSSRUWV
  WKDWLVSUREDWLYHRILQWHQWLRQDOGLVFULPLQDWLRQDQGLWPD\          WKHHPSOR\HUjVFDVHDQGWKDWSURSHUO\PD\EHFRQVLGHUHG
  EHTXLWHSHUVXDVLYH,QDSSURSULDWHFLUFXPVWDQFHV            RQDPRWLRQIRUMXGJPHQWDVDPDWWHURIODZ
  WKHWULHURIIDFWFDQUHDVRQDEO\LQIHUIURPWKHIDOVLW\RI
  WKHH[SODQDWLRQWKDWWKHHPSOR\HULVGLVVHPEOLQJWRFRYHU          ,GDW
  XS D GLVFULPLQDWRU\ SXUSRVH     0RUHRYHU RQFH WKH
  HPSOR\HUjV MXVWLILFDWLRQ KDV EHHQ HOLPLQDWHG                     :H UHFHQWO\ UHYLVLWHG WKH TXHVWLRQ RI ZKDW LV D
  GLVFULPLQDWLRQPD\ZHOOEHWKHPRVWOLNHO\DOWHUQDWLYH             GLVFULPLQDWLRQ SODLQWLIIjV HYLGHQWLDU\ EXUGHQ DW WKH SUHWH[W
  H[SODQDWLRQHVSHFLDOO\VLQFHWKHHPSOR\HULVLQWKHEHVW          VWDJHLQOLJKWRI5HHYHVLQ*UD\Y7RVKLED$P&RQVXPHU
  SRVLWLRQWRSXWIRUWKWKHDFWXDOUHDVRQIRULWVGHFLVLRQ    3URG)GWK&LUDQGFRQFOXGHGLQWKDW
  7KXVDSODLQWLIIjVSULPDIDFLHFDVHFRPELQHGZLWK                FDVH WKDW 5HHYHV EROVWHUHG WKH UHEXWWDO IUDPHZRUN ZH
  VXIILFLHQW HYLGHQFH WR ILQG WKDW WKH HPSOR\HUjV              HVWDEOLVKHGLQ0DQ]HUY'LDPRQG6KDPURFN&KHP&R
  DVVHUWHGMXVWLILFDWLRQLVIDOVHPD\SHUPLWWKHWULHURI           )GWK&LU,Q*UD\ZHVWDWHG
  IDFW WR FRQFOXGH WKDW WKH HPSOR\HU XQODZIXOO\
  GLVFULPLQDWHG                                                         7KLVFLUFXLWKDVKHOGWKDWm>W@KHMXU\PD\QRWUHMHFW
                                                                       DQHPSOR\HUjVH[SODQDWLRQ>RILWVDFWLRQ@XQOHVVWKHUHLV
5HHYHV VXSUD  86  FLWDWLRQV RPLWWHG DQG           VXIILFLHQWEDVLVLQWKHHYLGHQFHIRUGRLQJVRl0DQ]HU
HPSKDVLVDGGHG                                                       )GDWHPSKDVLVLQRULJLQDO

  7KH&RXUWKRZHYHUZDVFDUHIXOWRSRLQWRXWWKDWVXFKD               7RPDNHDVXEPLVVLEOHFDVHRQWKHFUHGLELOLW\RIKLV
VKRZLQJPD\QRWEHVXIILFLHQWLQHYHU\FDVH                             HPSOR\HUjVH[SODQDWLRQWKHSODLQWLIILVUHTXLUHGWR
                                                                         VKRZ E\ D SUHSRQGHUDQFH RI WKH HYLGHQFH HLWKHU
    7KLVLVQRWWRVD\WKDWVXFKDVKRZLQJE\SODLQWLIIZLOO             WKDWWKHSURIIHUHGUHDVRQVKDGQREDVLVLQIDFW
  DOZD\VEHDGHTXDWHWRVXVWDLQDMXU\jVILQGLQJRIOLDELOLW\            WKDW WKH SURIIHUHG UHDVRQV GLG QRW DFWXDOO\
  &HUWDLQO\ WKHUH ZLOO EH LQVWDQFHV ZKHUH DOWKRXJK WKH           PRWLYDWH KLV GLVFKDUJH RU  WKDW WKH\ ZHUH
  SODLQWLIIKDVHVWDEOLVKHGDSULPDIDFLHFDVHDQGVHWIRUWK             LQVXIILFLHQWWRPRWLYDWHGLVFKDUJH
  VXIILFLHQWHYLGHQFHWRUHMHFWWKHGHIHQGDQWjVH[SODQDWLRQ