Court Opinion

ID: 2970729
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:20:45.350223+00
Date Added: 2024-06-11T13:15:08.520686
License: Public Domain

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
                3XUVXDQW WR 6L[WK &LUFXLW 5XOH                             7KHREDOGHWDOY%GRI&RXQW\               1R
        (/(&7521,& &,7$7,21  )(' $SS 3 WK &LU
                                                                               &RPPjUVRI+DPLOWRQ&RXQW\HWDO
                    )LOH 1DPH DS

                                                                                               BBBBBBBBBBBBBBBBB
81,7('67$7(6&28572)$33($/6                                                                      &2816(/
                   )257+(6,;7+&,5&8,7                                 $5*8(''RXJODV&+ROODQG/DZUHQFHEXUJ,QGLDQDIRU
                     BBBBBBBBBBBBBBBBB                                   $SSHOODQWV  7KRPDV ( 'H\H +$0,/721 &2817<
                                                                         3526(&87,1*2)),&(&LQFLQQDWL2KLRIRU$SSHOOHHV
                                                                         21%5,()'RXJODV&+ROODQG/DZUHQFHEXUJ,QGLDQD
 .(,7+DQGs$&48(/,1(               ;                                    IRU $SSHOODQWV  7KRPDV ( 'H\H sRKQ s $UQROG
 7+(2%$/'                                                              +$0,/721 &2817< 3526(&87,1* 2)),&(
           3ODLQWLIIV$SSHOODQWV                                       &LQFLQQDWL 2KLR 5REHUW s 6XUG\N s(1.6 685'<.
                                       1R                      2;/(<7851(5	'2:''D\WRQ2KLRIRU$SSHOOHHV
                                     
             Y                       !                                     0$57,1&sGHOLYHUHGWKHRSLQLRQRIWKHFRXUW5<$1
                                     
                                                                        s SS  GHOLYHUHG D VHSDUDWH FRQFXUULQJ RSLQLRQ
 %2$5' 2) &2817<                                                        &2+1 ' s SS  GHOLYHUHG D VHSDUDWH GLVVHQWLQJ
 &200,66,21(56 2)                                                       RSLQLRQ
 +$0,/721 &2817< 2+,2HW                                                                    BBBBBBBBBBBBBBBBB
 DO                                
                                                                                                  23,1,21
          'HIHQGDQWV$SSHOOHHV 
                                                                                               BBBBBBBBBBBBBBBBB
                                    1
        $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW                       %2<&()0$57,1s5&KLHI&LUFXLWsXGJH.HLWKDQG
       IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW&LQFLQQDWL                  sDFTXHOLQH 7KHREDOG DSSHDO WKH GLVWULFW FRXUWjV JUDQW RI D
     1Rn6DQGUD6%HFNZLWK'LVWULFWsXGJH                    PRWLRQWRGLVPLVV7KH7KHREDOGVEHLQJUHVLGHQWVRI,QGLDQD
                                                                         MXULVGLFWLRQ  LV EDVHG XSRQ GLYHUVLW\ RI FLWL]HQVKLS DQG WKH
                    $UJXHG2FWREHU                            DPRXQWLQYROYHG86&D7KH\DUJXHRQDSSHDO
                                                                         WKDW D YHKLFOH DEDQGRQHG WZR IHHW RQWR WKH VKRXOGHU RI DQ
               'HFLGHGDQG)LOHGsXQH                         LQWHUVWDWHKLJKZD\IRUDWOHDVWWKLUW\KRXUVLVDQXLVDQFHXQGHU
                                                                         2KLRODZ:HFRQFOXGHWKDWVXFKDQDEDQGRQHGYHKLFOHFRXOG
  %HIRUH0$57,1&KLHI&LUFXLWsXGJH5<$1&LUFXLW                    EHDQXLVDQFHEXWWKHGHFLVLRQWRWRZWKHYHKLFOHLVDQDFW
           sXGJH&2+16HQLRU'LVWULFWsXGJH
                          ZLWKLQ WKH GLVFUHWLRQ RI WKH SDWUROOLQJ RIILFHU WKXV IDOOLQJ
                                                                         XQGHUWKHJUDQWRILPPXQLW\LQ2KLR&RGH$
                                                                         :H$)),50WKHGLVWULFWFRXUW
                                                                           :KLOH GULYLQJ ZHVW RQ ,QWHUVWDWH  .HLWK 7KHREDOG
                                                                         VXIIHUHG VHYHUH LQMXULHV LQ D FDU DFFLGHQW ZLWKLQ WKH
    
                                                                    ERXQGDULHVRIWKH&LW\RI0RQWJRPHU\DQG+DPLOWRQ&RXQW\
                                                                         2KLR+LVSLFNXSWUXFNZDVWKHIRXUWKFDULQDIRXUYHKLFOH
     7KH +RQRUDEOH $YHUQ &RKQ 6HQLRU 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU
WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

                                    
1R            7KHREDOGHWDOY%GRI&RXQW\                    7KHREDOGHWDOY%GRI&RXQW\                 1R
                     &RPPjUVRI+DPLOWRQ&RXQW\HWDO                       &RPPjUVRI+DPLOWRQ&RXQW\HWDO

FKDLQUHDFWLRQFROOLVLRQ7KLVPXOWLYHKLFOHDFFLGHQWRFFXUUHG         FDQSURYHQRVHWRIIDFWVLQVXSSRUWRIKLVFODLPZKLFKZRXOG
ERWKRQDQGRIIWKHZHVWERXQGVLGHRI,QWHUVWDWH7KH              HQWLWOHKLPWRUHOLHIl+DUWIRUG)LUH,QV&RY&DOLIRUQLD
FROOLVLRQVWDUWHGZKHQDYHKLFOHGULIWHGRIIWKHKLJKZD\DQG           86%HFDXVH WKLVDFWLRQZDVEURXJKWLQ
FROOLGHGZLWKDQDXWRPRELOHDEDQGRQHGRQWKHEHUP7KLV                2KLR DQG SUHPLVHG RQ GLYHUVLW\ MXULVGLFWLRQ WKLV &RXUW LV
FROOLVLRQSXVKHGWKHPRYLQJYHKLFOHEDFNLQWRWUDIILFVWULNLQJ          ERXQGE\2KLRjVVXEVWDQWLYHODZRQQXLVDQFH6HH(ULHY
7KHREDOGjV WUXFN  7KHREDOGjV YHKLFOH WXPEOHG DFURVV DOO         7RPSNLQV86:HUHYLHZWKHGLVWULFW
WUDIILFODQHVRIZHVWERXQG,QWHUVWDWHWKHQKLWVHYHUDOWUHHV        FRXUWjVDSSOLFDWLRQRIVWDWHODZGHQRYR=HLJOHUY,%3+RJ
RII WR WKH VLGH RI WKH KLJKZD\  0U 7KHREDOG ZDV HMHFWHG    0DUNHW,QF)GWK&LU
IURPWKHYHKLFOHDWVRPHSRLQWDQGKHZDVHYHQWXDOO\IRXQG
E\SDUDPHGLFVLQWKHZRRGVVRPHGLVWDQFHIURPKLVWUXFN                  ,QWKH2KLR*HQHUDO$VVHPEO\HQDFWHGWKH3ROLWLFDO
                                                                        6XEGLYLVLRQ 7RUW /LDELOLW\ $FW mLQ UHVSRQVH WR WKH MXGLFLDO
  7KH DEDQGRQHG YHKLFOH ZKLFK VWDUWHG WKH FKDLQ UHDFWLRQ         DEROLVKPHQWRIWKHGRFWULQHRIVRYHUHLJQLPPXQLW\l)UDQNV
PXOWLYHKLFOHFROOLVLRQZDVSDUNHGRQWKHSDYHGVKRXOGHUWZR            Y/RSH]1(G2KLR7KH$FWJUDQWHG
IHHWRIIWKHIDUULJKWWUDIILFODQH7KHRZQHUKDGDEDQGRQHG          VRYHUHLJQ LPPXQLW\ WR SROLWLFDO VXEGLYLVLRQV ZKLOH DW WKH
WKHYHKLFOHZKHQKHH[SHULHQFHGDIXHOV\VWHPSUREOHP7KH             VDPH WLPH FUHDWLQJ VHYHUDO H[FHSWLRQV WR WKLV JHQHUDO UXOH
YHKLFOHKDGEHHQDEDQGRQHGIRUDSSUR[LPDWHO\WKLUW\KRXUV              3ROLWLFDOVXEGLYLVLRQVDUHJHQHUDOO\LPPXQHIURPOLDELOLW\mIRU
7KHSRUWLRQRIWKH,QWHUVWDWHDWLVVXHZDVSDWUROOHGE\SROLFH         LQMXU\GHDWKRUORVVWRSHUVRQVRUSURSHUW\DOOHJHGO\FDXVHG
RIILFHUV IURP ERWK +DPLOWRQ &RXQW\ DQG WKH &LW\ RI              E\ DQ DFW RU RPLVVLRQ RI WKH SROLWLFDO VXEGLYLVLRQ    LQ
0RQWJRPHU\                                                             FRQQHFWLRQZLWKJRYHUQPHQWDORUSURSULHWDU\IXQFWLRQl2KLR
                                                                        &RGH$7KH$FWFDUYHVRXWVHYHUDOH[FHSWLRQV
  $IWHUZLQQLQJDVXEVWDQWLDOMXU\YHUGLFWDJDLQVWWKHRZQHU            WRWKLVJHQHUDOUXOHDQGWKHDSSHOODQWVDUJXHWKDWWKHQXLVDQFH
RI WKH DEDQGRQHG YHKLFOH WKH DSSHOODQWV ILOHG D QHZ            H[FHSWLRQIRXQGLQ2KLR&RGH%DSSOLHVLQWKLV
FRPSODLQWDJDLQVWVHYHUDOGHIHQGDQWVLQIHGHUDOGLVWULFWFRXUW          VLWXDWLRQ7KLVVHFWLRQVWDWHVmSROLWLFDOVXEGLYLVLRQVDUHOLDEOH
FODLPLQJWKDWWKRVHSDUWLHVZHUHQHJOLJHQWLQIDLOLQJWRNHHS           IRULQMXU\GHDWKRUORVVWRSHUVRQVRUSURSHUW\FDXVHGE\WKHLU
,QWHUVWDWHIUHHIURPQXLVDQFH7KHGHIHQGDQWVQDPHGLQ             IDLOXUHWRNHHSSXEOLFURDGVKLJKZD\VRSHQLQUHSDLUDQG
WKH FRPSODLQW ZHUH +DPLOWRQ &RXQW\jV 6KHULII +LJKZD\             IUHHIURPQXLVDQFHl2KLR&RGH%
'HSDUWPHQW DQG %RDUG RI &RPPLVVLRQHUV WKH &LW\ RI
0RQWJRPHU\ LWV 0D\RU LWV &KLHI RI 3ROLFH DQG WKH 6WDWH        (YHQ LI D FDVH IDOOV ZLWKLQ WKH QXLVDQFH H[FHSWLRQ  D
+LJKZD\ 'HSDUWPHQW  $W RUDO DUJXPHQW WKH &RXUW ZDV             SROLWLFDOVXEGLYLVLRQFDQVWLOODYRLGOLDELOLW\LIDQ\RIVHFWLRQ
QRWLILHGWKDWWKH&LW\RI0RQWJRPHU\GHIHQGDQWVKDGVHWWOHG             
VLPPXQLWLHVDQGGHIHQVHVDSSO\)RUH[DPSOHD
ZLWKWKHDSSHOODQWV                                                    SROLWLFDO VXEGLYLVLRQ LV LPPXQH IURP OLDELOLW\ LI WKH
                                                                        HPSOR\HHjVDFWLRQRUIDLOXUHWRDFWZDVmZLWKLQWKHGLVFUHWLRQ
   7KLV FRXUW UHYLHZV GH QRYR D GLVWULFW FRXUWjV JUDQW RI D   RIWKHHPSOR\HHZLWKUHVSHFWWRSROLF\PDNLQJSODQQLQJRU
PRWLRQWRGLVPLVV6HH3IHQQLJY+RXVHKROG&UHGLW6HUYV               HQIRUFHPHQW SRZHUV E\ YLUWXH RI WKH GXWLHV DQG
,QF)GWK&LU:HFRQVWUXHDOOIDFWV         UHVSRQVLELOLWLHV RI WKH RIILFH RU SRVLWLRQ RI WKH HPSOR\HHl
LQ WKH OLJKW PRVW IDYRUDEOH WR WKH QRQPRYLQJ SDUW\ 6HH        25&  $  $ SROLWLFDO VXEGLYLVLRQ LV DOVR
&UDLJKHDGY()+XWWRQ	&R)GWK&LU             LPPXQH LI WKH LQMXU\ UHVXOWHG IURP WKH HPSOR\HHjV
$FRPSODLQWmVKRXOGQRWEHGLVPLVVHGIRUIDLOXUHWR             mSHUIRUPDQFH RI D MXGLFLDO TXDVLMXGLFLDO SURVHFXWRULDO
VWDWHDFODLPXQOHVVLWDSSHDUVEH\RQGGRXEWWKDWWKHSODLQWLII         OHJLVODWLYH RU TXDVLOHJLVODWLYH IXQFWLRQl 25&
1R           7KHREDOGHWDOY%GRI&RXQW\                   7KHREDOGHWDOY%GRI&RXQW\                  1R
                    &RPPjUVRI+DPLOWRQ&RXQW\HWDO                      &RPPjUVRI+DPLOWRQ&RXQW\HWDO

$,PPXQLW\FDQEHPDLQWDLQHGLIWKHFRQGXFW             :HDUHXQSHUVXDGHGWKDW:LOOLDPVRQOHDGVWRWKLVUHVXOW
ZDV QRW QHJOLJHQW DQG ZDV UHTXLUHG RU DXWKRUL]HG E\ ODZ     .HHSLQJDURDGIUHHIURPQXLVDQFHKDVEHHQLQWHUSUHWHGE\WKH
25&$7KH$FWSURYLGHVVHYHUDORWKHU             2KLR6XSUHPH&RXUWWRmLQFOXGHPRUHWKDQMXVWFRQGLWLRQVRI
GHIHQVHVKRZHYHUIRUWKHSXUSRVHVRIWKLVFODLPWKH\DUH           WKHURDGZD\l+DUSY&LW\RI&OHYHODQG+HLJKWV2KLR6W
LUUHOHYDQW                                                           G     ,Q WKH FDVH DW EDU  WKH QDWXUH RI WKH
                                                                      DEDQGRQHG YHKLFOHjV REVWUXFWLRQ DQG LWV GDQJHURXVQHVV DUH
  )RUWKHDSSHOODQWVWRVXFFHVVIXOO\SOHDGWKHLUFODLPXQGHU          TXHVWLRQVRIIDFWWREHGHWHUPLQHGE\DMXU\
WKH$FWWKH\PXVWRYHUFRPHWZRKXUGOHV)LUVWWKHLUFODLP
PXVWIDOOZLWKLQWKH%QXLVDQFHH[FHSWLRQWRWKH             %HWKLVDVLWPD\WKHRXWFRPHRIWKLVFDVHGRHVQRWGHSHQG
$FWjV JHQHUDO JUDQW RI VRYHUHLJQ LPPXQLW\  6HFRQG WKH       RQ ZKHWKHU WKH DEDQGRQHG YHKLFOH FRXOG EH IRXQG WR EH D
GHIHQGDQWVjVDFWLRQVPXVWHVFDSHDQ\RIWKHLPPXQLWLHVRU             QXLVDQFH5DWKHUWKLVFDVHWXUQVRQZKHWKHUWKHIXQFWLRQRI
GHIHQVHVFRGLILHGLQVHFWLRQ$VIRUWKHILUVWLVVXH       WKH SDWUROOLQJ RIILFHUV LQ GHFLGLQJ QRW WR KDYH WKLV YHKLFOH
WKHDSSHOODQWVDVVHUWWKDWDYHKLFOHDEDQGRQHGIRUWKLUW\KRXUV       WRZHG ZDV GLVFUHWLRQDU\ WKXV IDOOLQJ XQGHU RQH RI WKH
WZRIHHWRQWRWKHIDUULJKWVKRXOGHURIDKLJKZD\DUHVXIILFLHQW      LPPXQLWLHVSURYLGHGLQVHFWLRQ$7KLVVHFWLRQ
IDFWVXQGHU2KLRODZWRFRQVWLWXWHDQXLVDQFHDQGWKXVVXUYLYH        VWDWHVWKDWSROLWLFDOVXEGLYLVLRQVDUHLPPXQHIURPOLDELOLW\LI
+DPLOWRQ&RXQW\jVPRWLRQWRGLVPLVV,QVKRUWWKHDSSHOODQWV        WKHDFWLQTXHVWLRQZDVmZLWKLQWKHGLVFUHWLRQRIWKHHPSOR\HH
DUJXH D MXU\ VKRXOG GHFLGH ZKHWKHU +DPLOWRQ &RXQW\jV           ZLWK UHVSHFW WR SROLF\ PDNLQJ SODQQLQJ RU HQIRUFHPHQW
RIILFHUVSDWUROOLQJWKLVSRUWLRQRIWKH,QWHUVWDWHIDLOHGWRNHHS     SRZHUV E\ YLUWXH RI WKH GXWLHV DQG UHVSRQVLELOLWLHV RI WKH
WKH,QWHUVWDWHRSHQDQGIUHHIURPQXLVDQFHE\IDLOLQJWRKDYH         RIILFH RU SRVLWLRQ RI WKH HPSOR\HHl  2KLR &RGH
WKHYHKLFOHWRZHG                                                   $HPSKDVLVDGGHG,QSDWUROOLQJ,QWHUVWDWH
                                                                      +DPLOWRQ&RXQW\SROLFHRIILFHUVDUHH[HUFLVLQJGLVFUHWLRQ
   7KH 2KLR FDVH ODZ DGGUHVVLQJ QXLVDQFH XQGHU VHFWLRQ         ZLWKUHVSHFWWRWKHHQIRUFHPHQWSRZHUVDQGGXWLHVRIWKHLU
%LVVXEVWDQWLDODQGHQFRPSDVVHVDEURDGDUUD\            SRVLWLRQ7KHGHFLVLRQZKHQWRKDYHDYHKLFOHWRZHGEHFDXVH
RI FLUFXPVWDQFHV  7KH GLVWULFW FRXUW RSLQLRQ IRFXVHG          RILWVGDQJHURXVQDWXUHFHUWDLQO\IDOOVXQGHUWKHSURYLQFHRI
SULPDULO\RQ:LOOLDPVRQY3DYNORYLFK2KLR6WG            VHFWLRQ $  2Q WKH IDFWV RI WKLV FDVH WKHLU
ZKHUHWKH2KLR6XSUHPH&RXUWFRQVLGHUHGZKHWKHUD             GHFLVLRQQRWWRKDYHWKHYHKLFOHWRZHGZDVGLVFUHWLRQDU\DQG
VWULQJ RI LOOHJDOO\ SDUNHG FDUV RSSRVLWH D SXEOLF VFKRRO      LQQRZD\LPSOLHVUHFNOHVVQHVVRQWKHSDUWRIWKHSDWUROOLQJ
FRQVWLWXWHG D QXLVDQFH 7KH :LOOLDPVRQ FRXUW H[DPLQHG           RIILFHUV
ZKHWKHU WKH LOOHJDOO\ SDUNHG FDUV ZHUH HLWKHU DQ mDFWXDO
SK\VLFDO FRQGLWLRQl RU DQ mREVWUXFWLRQl  WKDW FRQVWLWXWHV D     7KHUHLVVWLOODTXHVWLRQKRZHYHUZKHWKHUXQGHU2KLRODZ
QXLVDQFH,GDW7KH:LOOLDPVRQFRXUWKHOGWKDWWKH         WKH LPPXQLW\ JUDQWHG XQGHU VHFWLRQ $ LV
LOOHJDOO\ SDUNHG FDUV QHLWKHU SRVVHVVHG DQ HOHPHQW RI          FRPSDWLEOH ZLWK WKH QXLVDQFH H[FHSWLRQ IRXQG LQ VHFWLRQ
SHUPDQHQF\QRUVLJQLILFDQWO\LPSHGHGWKHIORZRIWUDIILF,G        %,Q)UDQNVY/RSH]1(G2KLR
)ROORZLQJ:LOOLDPVRQWKHGLVWULFWFRXUWIRXQGWKDWDWLPH            WKH 2KLR 6XSUHPH &RXUW FRQIURQWHG WKH TXHVWLRQ
IUDPHRIWKLUW\KRXUVLVQRWORQJHQRXJKIRUWKHDEDQGRQHG            ZKHWKHUGHVLJQDQGFRQVWUXFWLRQGHIHFWVDVZHOODVIDLOXUHWR
YHKLFOHWRSRVVHVVWKHQHFHVVDU\HOHPHQWRISHUPDQHQF\DQG            HUHFW VLJQV FRXOG EH GHHPHG QXLVDQFHV XQGHU VHFWLRQ
EHFRPHDQmDFWXDOSK\VLFDOFRQGLWLRQl                               %7KH)UDQNVFRXUWQRWHGWKDW
1R            7KHREDOGHWDOY%GRI&RXQW\                     7KHREDOGHWDOY%GRI&RXQW\            1R
                     &RPPjUVRI+DPLOWRQ&RXQW\HWDO                        &RPPjUVRI+DPLOWRQ&RXQW\HWDO

  WKHVHFDWHJRULHV>GHVLJQDQGFRQVWUXFWLRQGHIHFWIDLOXUH             WKH SODFLQJ RI VLJQV ZHUH QXLVDQFHV XQGHU 2KLR /DZ WKH
  WRLQVWDOOVLJQV@VLPSO\GRQRWFRQVWLWXWHDQXLVDQFHDV              LPPXQLW\JUDQWHGLQVHFWLRQV$DQGZRXOG
  WKLV WHUP KDV EHHQ GHILQHG  $GGLWLRQDOO\ WKHVH               DSSO\
  DOOHJDWLRQVLQYROYHGLVFUHWLRQDU\IXQFWLRQVSURYLGHGLQ
  5&$DQG7KXVWKHGHIHQVHVIRXQGLQ                 7KHIDFWVRIWKLVFDVHLQYROYHGLVFUHWLRQDU\DFWLRQVRQWKH
  $DQGSUHFOXGHWKHLPSRVLWLRQRIOLDELOLW\            SDUWRIWKHSDWUROOLQJRIILFHUV7KHUHIRUHWKHLPPXQLW\IRXQG
  RQ D SROLWLFDO VXEGLYLVLRQ IRU DQ\ DFWV RU RPLVVLRQV          LQVHFWLRQ$DSSOLHV7KHGHFLVLRQZKHWKHUDQ
  UHODWHGWRWKHVHGLVFUHWLRQDU\IXQFWLRQV,GDW                 DEDQGRQHG YHKLFOH REVWUXFWV WUDIILF RU SUHVHQWV VXIILFLHQW
                                                                        GDQJHU WR PDQGDWH WRZLQJ LQYROYHV WKH MXGJPHQW RI WKH
$ IHZ FRXUWV KDYH LQWHUSUHWHG WKLV ODQJXDJH LQ )UDQNV WR       SDWUROOLQJ RIILFHUV ZKLFK H[HUFLVHG LQ WKLV LQVWDQFH ZDV
VXJJHVW WKDW WKH DFWLRQ RI NHHSLQJ D SXEOLF URDG IUHH IURP    FOHDUO\QRWUHFNOHVV
QXLVDQFH LV QRW D GLVFUHWLRQDU\ IXQFWLRQ DQG WKHUHIRUH WKH
LPPXQLWLHVDQGGHIHQVHIRXQGLQVHFWLRQ$DQG                   7KHMXGJPHQWLVDIILUPHG
DUHQRWYDOLGUHMRLQGHUVWRDQXLVDQFHFODLPXQGHUVHFWLRQ
%  6HH %HFN H[ UH (VWDWH RI %HFN Y $GDP
:KROHVDOHUV:/
2KLR$SS'LVW6HSW
6HHsRQHVY6KHOO\&R2KLR$SSG
2KLR $SS    KROGLQJ WKDW ZKHUH DQ DOOHJHG
QHJOLJHQWDFWRIDSROLWLFDOVXEGLYLVLRQFRQVWLWXWHVDQXLVDQFH
WKHmGLVFUHWLRQDU\lGHIHQVHXQGHUVHFWLRQV$DQG
GRQRWDSSO\
   :KHQ H[DPLQLQJ WKH ODQJXDJH LQ )UDQNV LW LV ZURQJ WR
LQWHUSUHW WKLV ODQJXDJH DV VXJJHVWLQJ WKDW WKH LPPXQLWLHV
JUDQWHGLQVHFWLRQV$DQGDUHLQFRPSDWLEOH
ZLWK D QXLVDQFH FODLP XQGHU VHFWLRQ %  $IWHU
QRWLQJWKDWFRQVWUXFWLRQGHIHFWVDQGWKHSRVWLQJRIVLJQVDUH
FDWHJRULHVLQFRPSDWLEOHZLWK2KLRjVGHILQLWLRQRIQXLVDQFH
WKH)UDQNVFRXUWWKHQVWDWHVm$GGLWLRQDOO\WKHVHDOOHJDWLRQV
LQYROYH GLVFUHWLRQDU\ IXQFWLRQV SURYLGHG LQ 5&
$ DQG   7KXV WKH GHIHQVH IRXQG LQ
$DQGSUHFOXGHWKHLPSRVLWLRQRIOLDELOLW\RQ
D SROLWLFDO VXEGLYLVLRQ IRU DQ\ DFWV RU RPLVVLRQV UHODWHG WR
WKHVHGLVFUHWLRQDU\IXQFWLRQVl,GDWHPSKDVLVDGGHG
7KLV VHQWHQFH VD\V OLWWOH DERXW WKH OHJDO FKDUDFWHU RI
QXLVDQFHVZKHWKHUWKH\FDQLQYROYHGLVFUHWLRQDU\DFWVRUQRW
5DWKHUWKLVVHQWHQFHMXVWVWDWHVWKHREYLRXVWKDWLVWKHUHLVDQ
DOWHUQDWLYH PHWKRG E\ ZKLFK WKH )UDQNV FRXUW FRXOG KDYH
GLVSRVHGRIWKHFDVH,QVKRUWHYHQLIFRQVWUXFWLRQGHVLJQDQG
1R            7KHREDOGHWDOY%GRI&RXQW\                         7KHREDOGHWDOY%GRI&RXQW\             1R
                     &RPPjUVRI+DPLOWRQ&RXQW\HWDO                             &RPPjUVRI+DPLOWRQ&RXQW\HWDO

                     BBBBBBBBBBBBBBBBBBB                                      2KLR5HY&RGHHPSKDVLVDGGHG7KHXVHRIWKH
                                                                              ZRUGmPD\lLQGLFDWHVWKDWWKHSXEOLFRIILFLDOKDVGLVFUHWLRQ
                       &21&855(1&(                                            ZKHWKHUWRUHPRYHDQDEDQGRQHGYHKLFOHWKDWLVRXWVLGHWKH
                     BBBBBBBBBBBBBBBBBBB                                      WUDIILFODQHVRIDKLJKZD\DVZDVWKHFDULQWKLVFDVH
   5<$1 &LUFXLW sXGJH FRQFXUULQJ  ,Q P\ MXGJPHQW LW                 7KLVVWDWXWRU\JUDQWRILPPXQLW\WRSROLWLFDOVXEGLYLVLRQV
PDWWHUV QRW D ZLW ZKHWKHU WKH SRVLWLRQ RI WKH DEDQGRQHG              KDVQRWKLQJWRGRZLWKWKHODZRIQXLVDQFHLWKDVWRGRZLWK
YHKLFOHZKLFKRULJLQDWHGWKHFKDLQUHDFWLRQUHVXOWLQJLQWKH                  ZKHWKHU WKH DFW RU RPLVVLRQ DWWULEXWHG WR WKH SROLWLFDO
SODLQWLIIjV LQMXULHV FRQVWLWXWHG D QXLVDQFH XQGHU 2KLR 5HY            VXEGLYLVLRQV mUHVXOWHG IURP WKH H[HUFLVH RI MXGJPHQW RU
&RGH%RUDQ\RWKHUSURYLVLRQRI2KLR                    GLVFUHWLRQl2KLR5HY&RGH$
ODZ7KDWLVVREHFDXVHHYHQLIWKHYHKLFOHZDVDQXLVDQFH
WKH GHIHQGDQW SROLWLFDO VXEGLYLVLRQV DUH LPPXQH IURP                     7KXVLQP\YLHZWKHQXLVDQFHGLVFXVVLRQLQP\EURWKHU
OLDELOLW\                                                                  0DUWLQjVRSLQLRQLVLUUHOHYDQW

  6HFWLRQ$VWDWHV                                                0\EURWKHU&RKQjVYLHZKRZHYHULVWKDWWKLVVHSDUDWHDQG
                                                                              GLVWLQFWJRYHUQPHQWDOIXQFWLRQGHIHQVHLVXQDYDLODEOHWRWKH
  7KHSROLWLFDOVXEGLYLVLRQLVLPPXQHIURPOLDELOLW\LIWKH                   GHIHQGDQWVEHFDXVHmWKHSXUSRVHRIQXLVDQFHODZLVWRFUHDWH
  LQMXU\    UHVXOWHG IURP WKH H[HUFLVH RI MXGJPHQW RU            DGXW\WRUHPRYHQXLVDQFHVl7KXVKHWKLQNVWKDWZKHWKHUWKH
  GLVFUHWLRQLQGHWHUPLQLQJZKHWKHUWRDFTXLUHRUKRZWR                     YHKLFOHRQWKHVLGHRIWKHKLJKZD\FRQVWLWXWHGDQXLVDQFHLV
  XVHHTXLSPHQWVXSSOLHVPDWHULDOVSHUVRQQHOIDFLOLWLHV                 YHU\PXFKDWLVVXHDQGUHTXLUHVMXU\UHVROXWLRQ
  DQGRWKHUUHVRXUFHVXQOHVVWKHMXGJPHQWRUGLVFUHWLRQZDV
  H[HUFLVHGZLWKPDOLFLRXVSXUSRVHLQEDGIDLWKRULQD                        %XW WKDW LV D PLVUHDGLQJ RI WKH GLVFUHWLRQDU\ IXQFWLRQ
  ZDQWRQRUUHFNOHVVPDQQHU                                                VWDWXWH,WVEURDGJUDQWRILPPXQLW\PDNHVQRH[FHSWLRQIRU
                                                                              LQMXULHV UHVXOWLQJ IURP D QXLVDQFH  ,W GRHV SURYLGH WKUHH
2KLR 5HY &RGH  $ :HVW 6XSS                        H[FHSWLRQVEXWQXLVDQFHLVQRWRQHRIWKHP7KHWKUHHDUH
HPSKDVLVDGGHG                                                           mGLVFUHWLRQ    H[HUFLVHG ZLWK >@ PDOLFLRXV SXUSRVH
                                                                              >@LQEDGIDLWKRU>@LQDZDQWRQRUUHFNOHVVPDQQHUl
  8QTXHVWLRQDEO\WKHGHFLVLRQZKHWKHUWRXVHSHUVRQQHOWR                    2KLR5HY&RGH$&RQVSLFXRXVO\DEVHQWIURP
UHPRYHDFDUIURPWKHHPHUJHQF\ODQHRUEHUPRIDSXEOLF                      WKDWOLVWRIH[FHSWLRQVLVmDQXLVDQFHl
KLJKZD\ LV SXUHO\ GLVFUHWLRQDU\  7KH 2KLR VWDWXWH WKDW
LQGLFDWHVWKHGLVFUHWLRQDU\QDWXUHRIWKLVGHFLVLRQVWDWHVWKDW                 1XLVDQFHRQFHZDVDVWDWXWRU\H[FHSWLRQWRDVHSDUDWHDQG
WKHFKLHIRISROLFHRUDKLJKZD\SDWUROWURRSHU                               YHU\ GLIIHUHQW JUDQW RI JHQHUDO EODQNHW LPPXQLW\nWKH
                                                                              LPPXQLW\ JLYHQ WR SROLWLFDO VXEGLYLVLRQV HQJDJHG LQ mD
  PD\RUGHULQWRVWRUDJHDQ\PRWRUYHKLFOHWKDWKDV                     JRYHUQPHQWDO RU SURSULHWDU\ IXQFWLRQl  2KLR 5HY &RGH
  EHHQ OHIW RQ D SXEOLF VWUHHW    RU XSRQ RU ZLWKLQ WKH       $:HVW6XSS%XWHYHQWKDWH[FHSWLRQ
  ULJKWRIZD\ RI DQ\ URDG RU KLJKZD\ IRU IRUW\HLJKW                 ZKLFK KDG QRWKLQJ WR GR ZLWK mGLVFUHWLRQDU\ IXQFWLRQl
  KRXUVRUORQJHUZLWKRXWQRWLILFDWLRQH[FHSWWKDWZKHQ                 LPPXQLW\ KDV EHHQ ZLWKGUDZQ E\ WKH 2KLR OHJLVODWXUH
  VXFKDPRWRUYHKLFOHFRQVWLWXWHVDQREVWUXFWLRQWRWUDIILF                  HIIHFWLYH$SULO2KLR5HY&RGH:HVW
  LWPD\EHRUGHUHGLQWRVWRUDJHLPPHGLDWHO\                               6XSS
1R           7KHREDOGHWDOY%GRI&RXQW\                7KHREDOGHWDOY%GRI&RXQW\                1R
                    &RPPjUVRI+DPLOWRQ&RXQW\HWDO                     &RPPjUVRI+DPLOWRQ&RXQW\HWDO

  $W ERWWRP P\ EURWKHU &RKQjV WKHRU\ LV WKDW WKH 2KLR                              BBBBBBBBBBBBBB
OHJLVODWXUHFRXOGQRWKDYHLQWHQGHGWKHGLVFUHWLRQDU\IXQFWLRQ
LPPXQLW\ WR H[WHQG WR WKH GLVFUHWLRQ QRW WR HOLPLQDWH D                                ',66(17
QXLVDQFHEHFDXVHLILWGLGWKHQWKHUHZRXOGKDYHEHHQmQR                                   BBBBBBBBBBBBBB
SRLQW LQ KDYLQJ D ODZ WKDW FUHDWHV D GXW\ WR UHPRYH WKH
QXLVDQFHDWDOODVVHFWLRQ%FOHDUO\GRHVl1RW           $9(51 &2+1 6HQLRU 'LVWULFW sXGJH GLVVHQWLQJ  ,
TXLWH7KH2KLROHJLVODWXUHjVmSRLQWlPD\ZHOOKDYHEHHQWR         GLVVHQW  6WUDQJHO\ WKH OHDG RSLQLRQ ILQGV WKH DEDQGRQHG
LPSRVH DQ HQIRUFHDEOH GXW\ WR UHPRYH D QXLVDQFH ZKHQ D      YHKLFOH FRXOG EH IRXQG WR EH D QXLVDQFH LH D GDQJHURXV
PXQLFLSDOLW\ LV HQJDJHG LQ D JRYHUQPHQWDO RU SURSULHWDU\      FRQGLWLRQE\DMXU\DQGWKHQJRHVRQWRVD\DVDPDWWHURIODZ
IXQFWLRQWKDWGLGQRWLQYROYHDQH[HUFLVHRIGLVFUHWLRQ           WKDWWKHWLPLQJRIWKHUHPRYDOLVGLVFUHWLRQDU\LH+DPLOWRQ
                                                                     &RXQW\LVLPPXQHEHFDXVHLWVSROLFHRIILFHUVVLPSO\KDGQR
  ,ZRXOGEXWRQO\IRUWKHIRUHJRLQJUHDVRQV$)),50WKH            REOLJDWLRQWRUHPRYHWKHGDQJHURXVFRQGLWLRQDIWHUKRXUV
GLVWULFWFRXUWjVMXGJPHQW                                          oRUSHUKDSVIRUHYHU,VXJJHVWWKDWWKLVLVQRWGLVFUHWLRQEXW
                                                                     OLFHQVHDQGWKDWXQGHUWKLVUXOHWKHPXQLFLSDOLW\FRXOGQHYHU
                                                                     EHKHOGOLDEOHIRUDQXLVDQFHLQWKHIRUPRIDQDEDQGRQHGFDU
                                                                       7KHOHDGRSLQLRQILUVWQRWHVWKDWSROLWLFDOVXEGLYLVLRQVKDYH
                                                                     DGXW\WRNHHSSXEOLFURDGVDQGKLJKZD\VIUHHIURPQXLVDQFH
                                                                     XQGHU2KLRODZ6HH2+,2 5(9 &2'( $11%
                                                                     mSROLWLFDOVXEGLYLVLRQVDUHOLDEOHIRULQMXU\GHDWKRUORVVWR
                                                                     SHUVRQ RU SURSHUW\ FDXVHG E\ WKHLU IDLOXUH WR NHHS SXEOLF
                                                                     URDGVKLJKZD\VVWUHHWVDYHQXHVDOOH\VVLGHZDONVEULGJH
                                                                     DTXHGXFWV YLDGXFWV RU SXEOLF JURXQGV ZLWKLQ WKH SROLWLFDO
                                                                     VXEGLYLVLRQVRSHQLQUHSDLUDQGIUHHIURPQXLVDQFHl,WWKHQ
                                                                     KROGVWKDWWKHGLVWULFWFRXUWZDVLQFRUUHFWLQLWVILQGLQJWKDWD
                                                                     YHKLFOHWKDWKDVEHHQDEDQGRQHGIRUWKLUW\KRXUVFRXOGQRWEH
                                                                     mDQ DFWXDO SK\VLFDO FRQGLWLRQl DQG WKXV D QXLVDQFH XQGHU
                                                                     VHFWLRQ%,QVWHDGWKHOHDGRSLQLRQILQGVWKDW
                                                                     mWKH QDWXUH RI WKH DEDQGRQHG YHKLFOHjV REVWUXFWLRQ DQG LWV
                                                                     GDQJHURXVQHVV     DUH TXHVWLRQV RI IDFW WR EH GHWHUPLQHG E\ D
                                                                     MXU\l  ,W QH[W ILQGV WKDW mWKLV FDVH WXUQV RQ ZKHWKHU WKH
                                                                     IXQFWLRQRIWKHSDWUROOLQJRIILFHUVLQGHFLGLQJQRWWRKDYHWKLV
                                                                     YHKLFOHWRZHGZDVGLVFUHWLRQDU\lDQGGHFLGHVDVDPDWWHURI
                                                                     ODZWKDWm>R@QWKHIDFWVRIWKLVFDVHWKHLUGHFLVLRQQRWWRKDYH

                                                                          
                                                                           8QOLNH WKH FRQFXUULQJ RSLQLRQ , DJUHH ZLWK WKH OHDG RSLQLRQjV
                                                                     ILQGLQJ WKDW WKH YHKLFOH FRXOG EH D QXLVDQFH
1R            7KHREDOGHWDOY%GRI&RXQW\                      7KHREDOGHWDOY%GRI&RXQW\                          1R
                     &RPPjUVRI+DPLOWRQ&RXQW\HWDO                           &RPPjUVRI+DPLOWRQ&RXQW\HWDO

WKHYHKLFOHWRZHGZDVGLVFUHWLRQDU\DQGLQQRZD\LPSOLHV                    ORVVWRSHUVRQRUSURSHUW\DOOHJHGO\FDXVHGE\DQ\DFWRU
UHFNOHVVQHVVRQWKHSDUWRIWKHSDWUROOLQJRIILFHUVl                        RPLVVLRQRIWKHSROLWLFDOVXEGLYLVLRQRUDQHPSOR\HHRI
                                                                             WKH SROLWLFDO VXEGLYLVLRQ LQ FRQQHFWLRQ ZLWK D
   7KHVHWZRKROGLQJVDUHLQFRPSDWLEOH,QHVVHQFHWKHOHDG                JRYHUQPHQWDORUSURSULHWDU\IXQFWLRQ
RSLQLRQKROGVWKDWWKHGHFLVLRQZKHQWRUHPRYHDQXLVDQFHLV
GLVFUHWLRQDU\ HYHQ LI WKH GHFLVLRQ ZKHWKHU WR UHPRYH D          6HFWLRQ%ZKLFKIROORZVWKHQVWDWHVmSROLWLFDO
QXLVDQFH LV QRW  7KLV KRZHYHU HYLVFHUDWHV D SROLWLFDO        VXEGLYLVLRQVDUHOLDEOHIRUWKHLQMXU\GHDWKRUORVVWRSHUVRQ
VXEGLYLVLRQjVUHVSRQVLELOLW\WRUHPRYHDQXLVDQFHIURPWKH              RU SURSHUW\ FDXVHG E\ WKHLU IDLOXUH WR NHHS SXEOLF URDGV
URDG EHFDXVH GHFLGLQJ ZKHQ WR UHPRYH D QXLVDQFH ZLOO           KLJKZD\V VWUHHWV DYHQXHV DOOH\V VLGHZDONV EULGJHV
DOZD\V EH D PDWWHURIFKRLFH8QGHUWKLVLQWHUSUHWDWLRQRI          DTXHGXFWV YLDGXFWV RU SXEOLF JURXQGV ZLWKLQ WKH SROLWLFDO
VHFWLRQ % WKH GHIHQGDQW LQ +DUS Y &LW\ RI         VXEGLYLVLRQV RSHQ LQ UHSDLU DQG IUHH IURP QXLVDQFHl  $
&OHYHODQG+HLJKWV1(G2KLRVKRXOGQRW              SROLWLFDO VXEGLYLVLRQjV GXW\ WR UHPRYH D QXLVDQFH WKXV LV
KDYHEHHQKHOGOLDEOHIRUIDLOLQJWRUHPRYHDWUHHOLPEWKDW            DEVROXWHQRWGLVFUHWLRQDU\7KH2KLR&RXUWRI$SSHDOVKDV
ZDVKDQJLQJRYHUDSXEOLFURDGEHFDXVHHYHQWKRXJKWKHWUHH            PDGHWKLVODFNRIGLVFUHWLRQFOHDU
OLPE ZDV D QXLVDQFH LW ZDV ZLWKLQ WKH FLW\jV GLVFUHWLRQ WR
GHFLGH ZKHQ WR UHPRYH LW  7KH 2KLR 6XSUHPH &RXUW                  WKLV FRXUW SUHYLRXVO\ KHOG WKDW WKH mGLVFUHWLRQDU\l
KRZHYHUIRXQGWKDWLWZDVDQXLVDQFHDQGWKDWWKHFLW\ZDV                  GHIHQVHVVHWIRUWKLQ5&$DQGGRQRW
OLDEOHIRUIDLOLQJWRUHPRYHLW,GDW7KHSXUSRVHRI               SURYLGHLPPXQLW\ZKHUHWKHDOOHJHGO\QHJOLJHQWDFWRI
QXLVDQFHODZLVWRFUHDWHDGXW\WRUHPRYHQXLVDQFHV,ID                  WKH SROLWLFDO VXEGLYLVLRQ FRQVWLWXWHV D QXLVDQFH XQGHU
SROLWLFDOVXEGLYLVLRQFDQHYDGHWKHUHVSRQVLELOLW\WRUHPRYH                 5&%
DQXLVDQFHE\DUJXLQJWKDWLWLVZLWKLQLWVGLVFUHWLRQWRGHFLGH
ZKHQWRUHPRYHLWWKHQWKHUHLVQRSRLQWLQKDYLQJDODZWKDW          sRQHVY6KHOO\&R1(G2KLR&W$SS
FUHDWHV D GXW\ WR UHPRYH WKH QXLVDQFH DW DOO DV VHFWLRQ        :KLOH WKH VLWXDWLRQ KHUH LV IDLOXUH WR UHPRYH D
%FOHDUO\GRHV
   7KHFRQFXUULQJRSLQLRQDUJXHVWKDWWKHUHLVQHYHUDGXW\WR                
UHPRYH D QXLVDQFH EHFDXVH WKH SXUSRVH RI VHFWLRQ                       7KH FRQFXUULQJ RSLQLRQ FLWHV 2KLR 5HYLVHG &RGH VHFWLRQ 

%LVQRWWRFUHDWHDQDEVROXWHGXW\WRUHPRYHD             KROGLQJ WKDW WKH VKHULII mPD\ RUGHU LQWR VWRUDJH DQ\ PRWRU YHKLFOH   
                                                                        WKDW KDV EHHQ OHIW    ZLWKLQ WKH ULJKWRIZD\ RI DQ\ URDG RU KLJKZD\ IRU
QXLVDQFH EXW UDWKHU mLW PD\ ZHOO KDYH EHHQ WR LPSRVH DQ      IRUW\HLJKW KRXUV RU ORQJHU    H[FHSW WKDW ZKHQ VXFK D PRWRU YHKLFOH
HQIRUFHDEOHGXW\WRUHPRYHDQXLVDQFHZKHQWKHPXQLFLSDOLW\             FRQVWLWXWHV DQ REVWUXFWLRQ WR WUDIILF LW PD\ EH RUGHUHG LQWR VWRUDJH
LVHQJDJHGLQDJRYHUQPHQWDORUSURSULHWDU\IXQFWLRQWKDWGLG           LPPHGLDWHO\l WR VXSSRUW LWV DUJXPHQW WKDW WKH GHFLVLRQ WR UHPRYH D
QRW LQYROYH WKH H[HUFLVH RI GLVFUHWLRQl  6HFWLRQ                QXLVDQFH LV GLVFUHWLRQDU\ :KHQ UHDG LQ FRQMXQFWLRQ ZLWK VHFWLRQ 
$RIWKH2KLR5HYLVHG&RGHKRZHYHUVWDWHV                DQG 2KLR FDVH ODZ WKRXJK LW LV HYLGHQW WKDW WKH VWDWXWH PHUHO\ GHILQHV WKH
                                                                        ILUVW WLPH DW ZKLFK WKH VKHULII LV DXWKRUL]HG WR UHPRYH D PRWRU YHKLFOH DQG

  )RUWKHSXUSRVHVRIWKLVFKDSWHUWKHIXQFWLRQVRISROLWLFDO          LW VKRXOG QRW EH UHDG WR PHDQ WKDW WKH GHFLVLRQ ZKHWKHU WR UHPRYH WKH
                                                                        QXLVDQFH LV GLVFUHWLRQDU\
  VXEGLYLVLRQV DUH KHUHE\ FODVVLILHG DV JRYHUQPHQWDO
  IXQFWLRQVDQGSURSULHWDU\IXQFWLRQV([FHSWDVSURYLGHG                    
                                                                               7KH    2KLR   6XSUHPH      &RXUWjV   GLFWXP    LQ    )UDQNV   FRQFHUQLQJ    WKH
  LQGLYLVLRQ%RIWKLVVHFWLRQDSROLWLFDOVXEGLYLVLRQLV           GLVFUHWLRQDU\ QDWXUH RI WKH GHVLJQ DQG SRVWLQJ RI VLJQV SUHVHQWV D VLWXDWLRQ
  QRWOLDEOHLQGDPDJHVLQDFLYLODFWLRQIRULQMXU\GHDWKRU         GLIIHUHQW IURP WKH FDVH KHUH LW LV LPSRVVLEOH WR GHFLGH ZKHWKHU DQG ZKHUH
                                                                        WR   SRVW   VLJQV   DQG   ZKDW   WKHLU   FRQWHQW   VKRXOG    EH   ZLWKRXW   H[HUFLVLQJ
1R                 7KHREDOGHWDOY%GRI&RXQW\                              7KHREDOGHWDOY%GRI&RXQW\                                    1R
                          &RPPjUVRI+DPLOWRQ&RXQW\HWDO                                   &RPPjUVRI+DPLOWRQ&RXQW\HWDO

QXLVDQFHUDWKHUWKDQFUHDWLRQRIDQXLVDQFHWKHUHVXOWLVQR                        % LV FOHDUO\ DSSOLFDEOH DQG GHQLHV LPPXQLW\
GLIIHUHQW                                                                          $OO DFWLRQV E\ D PXQLFLSDOLW\ LQYROYH WKH XVH RI SHRSOH DW
                                                                                     VRPH SRLQW VR LW LV QRW HQRXJK WR VD\ WKDW DQ DFWLRQ LV
  'HVSLWHWKHFOHDUFUHDWLRQRIDGXW\WRUHPRYHQXLVDQFHVLQ                        GLVFUHWLRQDU\ DQG WKHUHIRUH LPPXQH IURP OLDELOLW\ MXVW
VHFWLRQ % WKH FRQFXUULQJ RSLQLRQ ILQGV WKDW                       EHFDXVHLWLQYROYHVWKHXVHRISHRSOH7KH2KLRFRXUWVKDYH
m>X@QTXHVWLRQDEO\WKHGHFLVLRQZKHWKHUWRXVHSHUVRQQHOWR                          UHFRJQL]HGDQGUHMHFWHGWKHDSSURDFKWDNHQE\WKHFRQFXUULQJ
UHPRYHDFDUIURPWKHHPHUJHQF\ODQHRUEHUPRIDSXEOLF                             RSLQLRQm>E@XWDSROLWLFDOVXEGLYLVLRQFDQQRWVLPSO\DVVHUW
KLJKZD\LVSXUHO\GLVFUHWLRQDU\lDQGWKHUHIRUHDUJXHVWKDWWKH                       WKDWDOORILWVGHFLVLRQVDUHGLVFUHWLRQDU\LQRUGHUWRREWDLQ
PXQLFLSDOLW\LVQRWOLDEOHIRUIDLOLQJWRUHPRYHLWoHYHU,WV                     SURWHFWLRQXQGHU5&$DQG$l+DFNHUY
RQO\VXSSRUWIRUWKLVILQGLQJLVWKDW                                               &LQFLQQDWL1(G2KLR&W$SS.
  7KHSROLWLFDOVXEGLYLVLRQLVLPPXQHIURPOLDELOLW\LIWKH                             (YHQWKRXJKWKHH[DFWWLPLQJRIWKHUHPRYDORIDQXLVDQFH
  LQMXU\GHDWKRUORVVWRSHUVRQVRUSURSHUW\UHVXOWHGIURP                        LVDPDWWHURIFKRLFHWKLVGRHVQRWWUDQVODWHLQWRDQXQIHWWHUHG
  WKH H[HUFLVH RI MXGJPHQW RU GLVFUHWLRQ LQ GHWHUPLQLQJ                       GLVFUHWLRQ WR GHIHU UHPRYDO LQGHILQLWHO\  $FFRUGLQJ WR WKH
  ZKHWKHUWRDFTXLUHRUKRZWRXVHHTXLSPHQWVXSSOLHV                            OHDG DQG FRQFXUULQJ RSLQLRQV D PXQLFLSDOLW\ FDQ DOORZ D
  PDWHULDOVSHUVRQQHOIDFLOLWLHVDQGRWKHUUHVRXUFHVXQOHVV                       QXLVDQFHLQWKHIRUPRIDQDEDQGRQHGYHKLFOHWRUHPDLQRQD
  WKHMXGJPHQWRUGLVFUHWLRQZDVH[HUFLVHGZLWKPDOLFLRXV                            SXEOLFKLJKZD\XQWLOLWUXVWVDZD\WRQRWKLQJVLPSO\EHFDXVH
  SXUSRVHLQEDGIDLWKRULQDZDQWRQRUUHFNOHVVPDQQHU                          WKHGHFLVLRQZKHWKHUWRUHPRYHLWLQYROYHVWKHXVHRISHUVRQV
                                                                                     DQGLVWKHUHIRUHGLVFUHWLRQDU\'LVFUHWLRQGRHVQRWFRQQRWHDQ
2+,2 5(9 &2'( $11  $  HPSKDVLV                             XQOLPLWHGFKRLFHEXWDUHDVRQHGFKRLFHDFKRLFHWKDWPXVW
DGGHG7KHFRQFXUULQJRSLQLRQGRHVQRWH[SODLQZK\VHFWLRQ                         QRWEHH[HUFLVHGDUELWUDULO\RULUUDWLRQDOO\:KLOHLWZRXOG
$ VKRXOG DSSO\ WKRXJK ZKHQ VHFWLRQ                                REYLRXVO\EHLQDSSURSULDWHLQPRVWFLUFXPVWDQFHVWRKROGD

                                                                                          
                                                                                           7KH FRQFXUUHQFH DOVR QRWHV WKDW UHPRYDO RI D QXLVDQFH LV QRW RQH RI

                                                                                     WKH H[FHSWLRQV WR VHFWLRQ $ EXW VHFWLRQ $ RQO\

                                                                                     DSSOLHV LI WKLV LV D GLVFUHWLRQDU\ DFW            7KLV FLUFXODU UHDVRQLQJ EHJV WKH UHDO

                                                                                     TXHVWLRQ LV WKLV D GLVFUHWLRQDU\ DFW"

GLVFUHWLRQ EXW LI D PXQLFLSDOLW\ KDV D GXW\ WR UHPRYH D QXLVDQFH WKHQ LW
PD\ GR VR ZLWKRXW H[HUFLVLQJ GLVFUHWLRQ              6HH )UDQNV Y /RSH]             
                                                                                           7KH 2KLR &RXUW RI $SSHDOV HDUOLHU VWDWHG
1(G   2KLR 
                                                                                          ,Q    RUDO   DUJXPHQW         EHIRUH   WKLV    FRXUW   WKH   FLW\   DVVHUWHG        WKDW

                                                                                         GLVFUHWLRQ     ZRXOG         EH   LQYROYHG    LQ   DOPRVW   DQ\    DFWLRQV      RI   FLW\

        2YHUKDQJLQJ      EUDQFKHV   DQG   IROLDJH   ZKLFK   REVFXUH   WUDIILF             HPSOR\HHV LQFOXGLQJ D VLWXDWLRQ ZKHUH D FLW\ YHKLFOH HQJDJHG

        VLJQV PDOIXQFWLRQLQJ WUDIILF VLJQDOV VLJQV ZKLFK KDYH ORVW                      LQ   D   SURSULHWDU\     IXQFWLRQ     QHJOLJHQWO\      WXUQHG     OHIW   LQ   IURQW   RI

        WKHLU FDSDFLW\ WR UHIOHFW RU HYHQ SK\VLFDO LPSHGLPHQWV VXFK                      RQFRPLQJ WUDIILF            ,Q WKH FLW\
V YLHZ VXFK DQ DFWWXUQLQJ OHIW LQ

        DV SRWKROHV DUH HDVLO\ GLVFRYHUDEOH DQG WKH HOLPLQDWLRQ RI                      WKH      H[HUFLVH   RI   D   µMXGJPHQW    FDOOjZRXOG        EH   µGLVFUHWLRQDU\j

        VXFK   KD]DUGV   LQYROYHV   QR    GLVFUHWLRQ   SROLF\PDNLQJ     RU              7KXV 5& $ ZRXOG DIIRUG WKH FLW\ D FRPSOHWH JUDQW

        HQJLQHHULQJ   MXGJPHQW     7KH   SROLWLFDO   VXEGLYLVLRQ   KDV   WKH             RI LPPXQLW\ XQOHVV WKH DFW ZDV SHUIRUPHG LQ D ZLOOIXO RU ZDQWRQ

        UHVSRQVLELOLW\ WR DEDWH WKHP DQG LW ZLOO QRW EH LPPXQH IURP                     PDQQHU +RUVHIHDWKHUV 8QIRUWXQDWHO\ WRR PDQ\ FRXUWV KDYH

        OLDELOLW\ IRU LWV IDLOXUH WR GR VR                                             IDOOHQ YLFWLP WR WKLV VSHFLRXV DUJXPHQW
)UDQNV    1(G DW                                                          0F9H\ Y &LQFLQQDWL  1(G   2KLR &W $SS 
1R          7KHREDOGHWDOY%GRI&RXQW\       
                   &RPPjUVRI+DPLOWRQ&RXQW\HWDO

SROLWLFDOVXEGLYLVLRQOLDEOHIRUQRWLPPHGLDWHO\UHPRYLQJD
PRWRUYHKLFOHZKLFKPD\EHFRPHDQXLVDQFHDWVRPHSRLQW
LQWLPHLWPXVWEHGHHPHGWRKDYHZDLWHGWRRORQJ$WWKDW
SRLQWLWZRXOGEHOLDEOHIRUDQ\LQMXU\FDXVHGE\WKHQXLVDQFH
  ,EHOLHYHWKDWMXVWDVDMXU\VKRXOGGHWHUPLQHZKHWKHUWKH
DEDQGRQHGYHKLFOHFRQVWLWXWHGDQXLVDQFHDMXU\oQRWDMXGJH
oVKRXOGGHWHUPLQHZKHWKHUWKH&RXQW\IDLOHGWRUHPRYHWKH
DEDQGRQHGYHKLFOHZLWKLQDUHDVRQDEOHDPRXQWRIWLPH