-
5(&200(1'(' )25 )8//7(;7 38%/,&$7,21 3XUVXDQW WR 6L[WK &LUFXLW 5XOH (/(&7521,& &,7$7,21 )(' $SS 3 WK &LU )LOH 1DPH DS 81,7('67$7(6&28572)$33($/6 )257+(6,;7+&,5&8,7 BBBBBBBBBBBBBBBBB 0,&+,*$1 %(// 7(/(3+21( ; &2GED$0(5,7(&+ 0,&+,*$1 1R 3ODLQWLII$SSHOODQW ! Y s2+1 * 675$1'DQG'$9,' $ 69$1'$&RPPLVVLRQHUV RIWKH0LFKLJDQ3XEOLF 6HUYLFH&RPPLVVLRQLQWKHLU RIILFLDOFDSDFLWLHVDQG%5( &20081,&$7,216 //& 'HIHQGDQWV$SSHOOHHV 1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI0LFKLJDQDW'HWURLW 1Rn/DZUHQFH3=DWNRII&KLHI'LVWULFWsXGJH $UJXHGsXO\ 'HFLGHGDQG)LOHG6HSWHPEHU 0LFK%HOO7HOY6WUDQGHWDO 1R %HIRUH%2**6'$8*+75( ,/(&@ LPSRVHV RQ WKLUGSDUWLHVDVZHOODVRQLWVHOIl,QUH,PSOHPHQWDWLRQRIWKH /RFDO&RPSHWLWLRQ3URYLVLRQVLQWKH7HOHFRPPXQLFDWLRQV$FW 0LFK%HOO7HOY6WUDQGHWDO 1R 1R 0LFK%HOO7HOY6WUDQGHWDO RI&&'RFNHW1R)&&5FG mWKH RUGHULQJ DQG SURYLVLRQLQJ RI XQEXQGOHG QHWZRUN $XJm)LUVW5HSRUWDQG2UGHUl HOHPHQWVlKDYHmQRUHWDLODQDORJXHl $FFHVVWRDQ,/(&jVQHWZRUNIDFLOLWLHVFRPHVRQO\WKURXJK 7KH $FW GRHV QRW IRUELG $PHULWHFK IURP GLVFULPLQDWLQJ VSHFLILHG SURFHGXUHV IRU IRUPLQJ mLQWHUFRQQHFWLRQ EHWZHHQD&/(&UHTXHVWLQJXQEXQGOHGQHWZRUNHOHPHQWVDQG DJUHHPHQWVl WKH &RQJUHVVLRQDOO\ SUHVFULEHG YHKLFOH IRU $PHULWHFKjVRZQUHWDLOFXVWRPHUVHYHQLI$PHULWHFKGHFLGHV LPSOHPHQWLQJWKHVXEVWDQWLYHULJKWVDQGREOLJDWLRQVVHWIRUWK WKDW LW FDQ EHVW VHUYH LWV FXVWRPHU E\ EXLOGLQJ WKH VDPH LQ WKH $FW 7KH $FW UHTXLUHV ,/(&V WR HQWHU LQWR WKHVH QHWZRUNPRGLILFDWLRQVDVWKH&/(&KDSSHQHGWRUHTXHVW7KH DJUHHPHQWVZLWK&/(&VVHH86&FSHUPLWV 036&jVRUGHUWKDW$PHULWHFKjVDWWHPSWWRLPSRVHRQ%5( WKHSDUWLHVWRHQWHULQWRDELQGLQJDJUHHPHQWZLWKRXWUHJDUGWR WKHVSHFLDOFRQVWUXFWLRQFKDUJHVDWLVVXHKHUHLVEDVHGRQD WKH VWDQGDUGV VHW IRUWK LQ E DQG F VHH 86& IODZHGLQWHUSUHWDWLRQRIWKHQRQGLVFULPLQDWLRQUHTXLUHPHQWRI DUHTXLUHVVXEPLVVLRQRIWKHILQDODJUHHPHQWWRWKH IHGHUDOODZ$FFRUGLQJO\WKHGLVWULFWFRXUWjVMXGJPHQWPXVW DSSURSULDWH VWDWH FRPPLVVLRQ IRU DSSURYDO VHH 86& EH UHYHUVHG DQG UHPDQGHG ZLWK LQVWUXFWLRQV WR HQMRLQ WKH HDQGJLYHVWKHVWDWHFRPPLVVLRQDXWKRULW\WR HQIRUFHPHQWRIWKH036&jVRUGHULQVRIDUDVLWUHOLHVRQWKLV LQWHUSUHWDQGHQIRUFHDJUHHPHQWVZKHQSRVWDSSURYDOGLVSXWHV IODZHGLQWHUSUHWDWLRQRIWKHQRQGLVFULPLQDWLRQUHTXLUHPHQW DULVHVHH86&FHDQGDQG0LFKLJDQ 6SHFLILFDOO\ RI WKH ILQH ZDV EDVHG RQ D %HOO7HO&RY&OLPD[7HO&R)GWK&LU ILQGLQJRIGLVFULPLQDWLRQDQGDVVHVVPHQWRIWKDWSRUWLRQRI FHUWGHQLHG86DQGSURYLGHVIRUIHGHUDO WKHILQHPXVWEHHQMRLQHG FRXUWUHYLHZmLQDQ\FDVHLQZKLFKD6WDWHFRPPLVVLRQPDNHV D GHWHUPLQDWLRQl XQGHU VHFWLRQ VHH 86& HDQG0LFKLJDQ%HOO)GDW 0LFKLJDQ %HOO 7HOHSKRQH &RPSDQ\ GED $PHULWHFK 0LFKLJDQ m$PHULWHFKl LV WKH ,/(& LQ 0LFKLJDQ %5( &RPPXQLFDWLRQV m%5(l LV RQH RI VHYHUDO &/(&V %5( GLUHFWV WKH FRXUW WR VWLOO DQRWKHU )&& 2UGHU ZKLFK UHTXLUHG DWWHPSWLQJ WR FRPSHWH ZLWK $PHULWHFK E\ GHOLYHULQJ ORFDO %HOO $WODQWLF 1HZ 7@KH 1HZ 7@R HQDEOH QHZ HQWUDQWV LQFOXGLQJ VPDOO HQWLWLHV WR VHUYLFHIURP$PHULWHFKWR%5(DQG%5(VHHNVDFFHVVWRWKH VKDUHWKHHFRQRPLHVRIVFDOHVFRSHDQGGHQVLW\ZLWKLQ VDPH ORRS $PHULWHFK XVHG WR VHUYH WKH FXVWRPHU LQ PRVW WKH>,/(&Vj@QHWZRUNVZHFRQFOXGHWKDW>,/(&V@PXVW FDVHV$PHULWHFKVLPSO\GLVFRQQHFWVWKHORRSIURPLWVVZLWFK SURYLGHFDUULHUVSXUFKDVLQJDFFHVVWRXQEXQGOHGQHWZRUN DQG FURVVFRQQHFWV LW WR %5(jV GHVLJQDWHG HTXLSPHQW RU HOHPHQWVZLWKWKHSUHRUGHULQJRUGHULQJSURYLVLRQLQJ VZLWFK$PHULWHFKGRHVQRWFKDUJHIRUWKLVVLPSOHVHUYLFH PDLQWHQDQFH DQG UHSDLU DQG ELOOLQJ IXQFWLRQV RI WKH :KHQWZRRIWKHWKUHHHOHPHQWVRIDORRSDUHLQSODFHEXWQRW >,/(&Vj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jVFRPPXQLFDWLRQVUDQRYHUWKH QRUPDO FRXUVH RI VHUYLQJ FXVWRPHUV $PHULWHFK GRHV QRW FXVWRPHUjV RZQ LQGLYLGXDO GHGLFDWHG FRSSHU ORRS 1RZ SURYLGHFXVWRPHUVDFFHVVWRGLVDJJUHJDWLQJRUFRQGLWLRQLQJ FRPSDQLHV FDQ LQFUHDVH HIILFLHQF\ E\ HOHFWURQLFDOO\ IXQFWLRQVEXWSHUIRUPVWKRVHWDVNVIRULWVHOIZKHQLWGHHPV LQWHJUDWLQJSDUWVRIORRSVLQWRGLJLWDOV\VWHPVLQZKLFKWKH VXFKDOWHUDWLRQVWRH[LVWLQJORRSVEHQHILFLDOLQRUGHUWRVHUYH PLGGOHHOHPHQWVRIVHYHUDOFXVWRPHUVjORRSVPHHWLQDVLQJOH LWV FXVWRPHUV EHWWHU ,Q FRQWUDVW $PHULWHFK PXVW SURYLGH SODFH DQG WKHQ MRLQ WRJHWKHU WR VKDUH D VLQJOH KLJKVSHHG WKHVH VHUYLFHV WR %5( HVVHQWLDOO\ RQ GHPDQG ZKHQ $PHULWHFKjV QHWZRUN GRHV QRW VHUYH %5(jV LQWHUHVW LQ FRPSHWLQJZLWK$PHULWHFK$QG%5(ZLOOZKHQWKHVHUYLFH LV FRPSOHWH REWDLQ OHDVHKROG LQWHUHVWV LQ WKH FRQGLWLRQHG ORRSV ZKLOH FXVWRPHUV REWDLQ QR VXFK LQWHUHVW $PHULWHFK UHWDLQV WKH ULJKW WR DOWHU WKH HOHPHQWV RI ORRSV VHUYLQJ FXVWRPHUVDWLWVGLVFUHWLRQ$QRWKHU)&&2UGHULVVXHGDIWHU ,Q WHFKQLFDO WHUPV D ORRS LV D WUDQVPLVVLRQ SDWK EHWZHHQ D WKH)LUVW5HSRUWDQG2UGHUFRQILUPVWKLVDQDO\VLV6HH,QUH FXVWRPHUjV SUHPLVHV DQG D VZLWFK ORFDWHG LQ D ZLUH FHQWHU $ ORRSjV WKUHH $SSOLFDWLRQRI$PHULWHFK0LFKLJDQ3XUVXDQWWR6HFWLRQ FRPSRQHQWV DUH D mIHHGHU SDLUl RI FRSSHU RU ILEHURSWLF ZLUHV WKDW UXQV RIWKH&RPPXQLFDWLRQV$FWRI&&'RFNHW1R IURP WKH VZLWFK LQ WKH ZLUH FHQWHU WR D mFURVV FRQQHFW ER[l LQ WKH ILHOG D mGLVWULEXWLRQ SDLUl WKDW UXQV IURP WKH FURVV FRQQHFW ER[ WR D SHGHVWDO )&&5FG$XJREVHUYLQJWKDW QHDU WKH FXVWRPHUjV SUHPLVHV DQG D GURS ZLUH WKDW UXQV IURP WKH SHGHVWDO WR D QHWZRUN LQWHUIDFH GHYLFH DW WKH FXVWRPHUj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mEXQGOHGORRSlDQGWKHEXQGOHGORRSVFDQQRWEH EHDUVWKHFRVWDQGFDQSDVVLWRQWRLWVFXVWRPHUDVLWVHHVILW mXQEXQGOHGl,I$PHULWHFKZLOOVWLOOVHUYHFHUWDLQFXVWRPHUV LVQRQGLVFULPLQDWRU\EHFDXVHLWWUHDWV%5(H[DFWO\WKHVDPH XVLQJWKDWEXQGOHGORRSDIWHUWKHUHTXHVWHGWUDQVIHUWR%5(LV DVLWWUHDWV$PHULWHFK,QVKRUWZKLFKHYHUFDUULHUDFWXDOO\ PDGH WKH FXVWRPHU ZKR ZDQWV WR XVH %5(jV VHUYLFH KDV SURYLGHV WKH VHUYLFH EHDUV WKH FRVW RI PXOWLSOH[LQJ DQG HVVHQWLDOO\QRSODFHWRJR:KHQ%5(UHTXHVWVDFFHVVORRSV FRQGLWLRQLQJDQGSDVVHVLWRQWRLWVFXVWRPHU UXQQLQJRYHULQWHJUDWHGSDWKV$PHULWHFKGHWHUPLQHVZKHWKHU WKHUH H[LVWV D mVSDUHl QRQLQWHJUDWHG ORRS HOHPHQW WKDW $PHULWHFK FRUUHFWO\ H[SODLQV WKH IDXOW LQ WKH 036&jV IROORZV WKH VDPH URXWH DV WKH LQWHJUDWHG ORRS ,I VR UHDVRQLQJLQLWVEULHIWRWKLVFRXUW $PHULWHFKHOHFWURQLFDOO\GLVFRQQHFWVWKHVSHFLILHGORRSIURP LWVLQWHJUDWHGHOHPHQWDQGWUDQVIHUVWKHORRSWRWKHVSDUHQRQ 8QOLNH %5( UHWDLO FXVWRPHUV GR QRW OHDVH XQEXQGOHG LQWHJUDWHGHOHPHQWDWQRH[WUDFKDUJH:KHUHQRVSDUHVLQJOH ORRSVDWFRVWEDVHGUDWHV,QVWHDGWKH\EX\VRPHWKLQJ ORRS IDFLOLW\ H[LVWV $PHULWHFK JHQHUDOO\ PXVW GHVLJQ DQG HQWLUHO\ GLIIHUHQWn QDPHO\ EXQGOHG µEDVLF ORFDO LQVWDOORQHWRSDUDOOHOWKHLQWHJUDWHGSDWKLQRUGHUIRUD&/(& H[FKDQJHjVHUYLFHnDQGWKH\SD\DGLIIHUHQWSULFHUHWDLO WRSURYLGHVHUYLFHWRLWVFXVWRPHUWKLVLVDSURFHVVNQRZQDV IRU LW :KLOH UHWDLO VHUYLFH LV DQ HQGWRHQG mGLVDJJUHJDWLQJlRUmGHPXOWLSOH[LQJl$PHULWHFKVHHNVWR WHOHFRPPXQLFDWLRQVVHUYLFHWKDWLQFOXGHVVZLWFKLQJRI ORFDO DQG ORQJGLVWDQFH FDOOV IHDWXUHV OLNH WRXFKWRQH DQGFDOOZDLWLQJDQGHQKDQFHGVHUYLFHVOLNHGLUHFWRU\ DVVLVWDQFHDQXQEXQGOHGORRSLVVLPSO\DSDWKIURPWKH ,Q WHFKQLFDO WHUPV GLVWULEXWLRQ SDLUV IURP PXOWLSOH FXVWRPHUVj SHGHVWDOV PHHW DW D FURVV FRQQHFW ER[ ZKHUH WKH\ FRQYHUJH DQG UXQ FXVWRPHUjVSUHPLVHVWRDQHQGRIILFHVZLWFK WRJHWKHU RYHU WKH VDPH ILEHURSWLF mIHHGHU SDLUl D FRQYHUJHQFH PDGH SRVVLEOH E\ WKH DELOLW\ RI ILEHU RSWLF FDEOH WR FDUU\ PDQ\ PRUH GLVFUHWH $SSHOODQWjV%ULHIDW$PHULWHFKSRLQWVRXWWKDWLI%5( OLQHV RI FRPPXQLFDWLRQ WKDQ FRSSHU ZLUHV ZDQWV WR EH WUHDWHG OLNH UHWDLO FXVWRPHUV %5( FDQ SD\ $PHULWHFKZKROHVDOHUDWHVDFFRUGLQJWRDVFKHPHEDVHGRQ &XVWRPHU WUDQVPLVVLRQV RYHU LQWHJUDWHG ORRSV FDQ UXQ WR RQO\ RQH UHWDLOUDWHVDQGWKHQUHVHOOVXFKVHUYLFHWRFXVWRPHUVLWVLJQV WHOHFRPPXQLFDWLRQV VHUYLFH SURYLGHU EHFDXVH WKH ILEHURSWLF FDEOH XS SXUVXDQW WR F DQG G ZKLFK JRYHUQ FDUU\LQJ LQIRUPDWLRQ IRU D KRVW RI GLIIHUHQW FXVWRPHUV WHUPLQDWHV DW WKH UHVDOH RI FRPPXQLFDWLRQV VHUYLFHV ,Q FRQWUDVW VHUYLFH SURYLGHUjV VZLWFK LQ WKH ZLUH FHQWHU %5( DQG $PHULWHFK FDQQRW ERWK SURYLGH VHUYLFH XVLQJ WKH VDPH FDEOH EHFDXVH WKH FDEOH WHUPLQDWHV DW G$ FUHDWHV D VHSDUDWH SULFLQJ VWUXFWXUH IRU $PHULWHFKjV VZLWFK $FFRUGLQJO\ DV H[SODLQHG LQ WKH WH[W LI D FXVWRPHU XQEXQGOHGQHWZRUNHOHPHQWVEDVHGRQWKHmFRVWl$PHULWHFK ZDQWV %5(jV VHUYLFH D FRQFHSWXDOO\ SDUDOOHO IDFLOLW\ PXVW EH HVWDEOLVKHG LQFXUVWRSURYLGHWKHQHWZRUNHOHPHQW$V$PHULWHFKDSWO\ VR WKDW WUDQVPLVVLRQV WKDW ZRXOG KDYH JRQH RYHU WKH LQWHJUDWHG ILEHURSWLF FDEOH FDQ WHUPLQDWH DW %5(jV VZLWFK LQ WKH ZLUH FHQWHU $OWKRXJK LQWHJUDWHG ILEHU FDEOHV FDQQRW EH mXQEXQGOHGl LQ WKH LH ZKHWKHU WKH FDUULHU LV D &056 SURYLGHU D &$3 RU D VHQVH RI EHLQJ GLYLGHG LQWR SDUWV FRQQHFWHG WR GLIIHUHQW FRPSDQLHVj FRPSHWLWLYH /(& $V ORQJ DV D FDUULHU PHHWV WKH VWDWXWRU\ VZLWFKHV ZRUNHUV LQ WKH WUDGH RFFDVLRQDOO\ UHIHU WR WKH mXQEXQGOLQJl RI UHTXLUHPHQWV DV GLVFXVVHG LQ WKLV VHFWLRQ LW KDV D ULJKW WR REWDLQ ORRSV 7KLV SURFHVV LV PRUH WHFKQLFDOO\ GHVFULEHG DV mGLVDJJUHJDWLQJl RU LQWHUFRQQHFWLRQ ZLWK WKH LQFXPEHQW /(& SXUVXDQW WR VHFWLRQ mGHPXOWLSOH[LQJl EXW LW LV VWLOO PRVW HDVLO\ WKRXJKW RI DV VWULQJLQJ DQ F H[WUD VHJPHQW RI ZLUH RU FDEOH DORQJVLGH WKH mEXQGOHGl GLJLWDO VHJPHQW VR )LUVW 5HSRUW DQG 2UGHU 0LFK%HOO7HOY6WUDQGHWDO 1R 1R 0LFK%HOO7HOY6WUDQGHWDO ZDV QRW mFRQQHFWHG WKURXJKl WR WKH ZLUH FHQWHU RU KDG D FKDUJH &/(&V WKH FRVW RI LQVWDOOLQJ WKHVH SDUDOOHO ORRS GHIHFWLYHVHJPHQWSUHYHQWLQJLWIURPIRUPLQJDFRQWLJXRXV HOHPHQWV FLUFXLW $UHODWHGSUREOHPDULVHVLQWZRPRUHFRPSOH[VLWXDWLRQV ,QWKHLUEULHIWRWKLVFRXUWWKH&RPPLVVLRQHUVFRQWHQGWKDW 0RVWRI$PHULWHFKjVORRSVZHUHHQJLQHHUHGDQGEXLOWWRFDUU\ $PHULWHFKjVLQWHUSUHWDWLRQRImQRQGLVFULPLQDWRU\lmVXJJHVWV YRLFHWUDIILFEXWD&/(&PD\ZDQWWRXVHWKHORRSWRFDUU\ WKDW DQ\ W\SH RI GLVFULPLQDWLRQ LV DSSURSULDWH DV ORQJ DV KLJKVSHHGGDWDWUDIILFIRULWVFXVWRPHU2ULIWKH&/(&KDV $PHULWHFKGLVFULPLQDWHVHTXDOO\DPRQJDOO&/(&V,I VHYHUDO FXVWRPHUV LQ RQH DUHD LW PD\ ZDQW WR XVH D VLQJOH $PHULWHFKjVYLHZZHUHDGRSWHG$PHULWHFKZRXOGEHIUHH KLJKFDSDFLW\ORRSLQOLHXRIPXOWLSOHLQGLYLGXDOORRSVLH WR WUHDW DOO &/(&V LQ DQ DEXVLYH GLVFULPLQDWRU\ DQG DQWL PDLQWDLQLWVRZQLQWHJUDWHGGLJLWDOORRSHOHPHQW7RILOOVXFK FRPSHWLWLYHPDQQHUDVORQJDVLWJDYHVLPLODUWUHDWPHQWWRDOO UHTXHVWVE\&/(&VOLNH%5($PHULWHFKWHFKQLFLDQVZRXOG &/(&VZLWKRXWUHJDUGWRKRZLWWUHDWVLWVHOIRULWVHQGXVHU KDYHWRSHUIRUPVSHFLDOZRUNWRXSJUDGHRUmFRQGLWLRQlWKH FXVWRPHUVl036&jV%ULHIDWHPSKDVLVDGGHG ORRSVIRUKLJKVSHHGGDWDRUKLJKFDSDFLW\WUDIILF$PHULWHFK VHHNVWRFKDUJH&/(&VIRUWKHFRVWRImFRQGLWLRQLQJlORRSV 7KHSUREOHPZLWKWKLVVWDWHPHQW$PHULWHFKFRQWHQGVLV SXUVXDQWWKHLUUHTXHVWV WKDWWKH&RPPLVVLRQHUVLPSHUPLVVLEO\DGGHGWKHFRQGLWLRQ WKDW ,/(&V FDQQRW GLVFULPLQDWH EHWZHHQ &/(&V DQG WKH 2QsXO\%5(ILOHGDFRPSODLQWDJDLQVW$PHULWHFK ,/(&jV UHWDLO FXVWRPHUV &RQWUDU\ WR WKH &RPPLVVLRQHUVj ZLWKWKH036&FRQWHVWLQJ$PHULWHFKjVFKDUJHVIRUZRUNLW DVVHUWLRQ $PHULWHFK UHDGLO\ FRQFHGHV WKDW WKH WHUP SHUIRUPHGRQORRSV%5(FODLPHGWKDWFKDUJLQJIRUWKHVH mQRQGLVFULPLQDWRU\lPHDQVWKDWLWFDQQRWGLVFULPLQDWHDPRQJ LQVWDQFHVRIZRUNEUHDFKHGWKH,QWHUFRQQHFWLRQ$JUHHPHQW &/(&V RU EHWZHHQ &/(&V DQG LWVHOI LQ WKH SURYLVLRQ RI DQG FRQVWLWXWHG XQODZIXO mGLVFULPLQDWLRQl XQGHU WKH XQEXQGOHGQHWZRUNHOHPHQWV ,QIDFW$PHULWHFKFRQWHQGV $JUHHPHQWDQGWKH$FW)ROORZLQJWKHUHFRPPHQGDWLRQRI LWV DGPLQLVWUDWLYH ODZ MXGJH WKH 036& HQWHUHG DQ RUGHU UXOLQJ LQ %5(jV IDYRU RQ )HEUXDU\ 5HMHFWLQJ 7KH )&& UHDFKHG WKH VDPH FRQFOXVLRQ ,Q LWV YLHZ *LYHQ WKDW WKH LQFXPEHQW /(& ZLOO EH SURYLGLQJ LQWHUFRQQHFWLRQ WR LWV FRPSHWLWRUV SXUVXDQW WR WKH SXUSRVH RI WKH $FW WKH WKDW D FRPSHWLQJ FRPSDQ\ OLNH %5( KDV DFFHVV WR D WUDQVPLVVLRQ SDWK >LQFXPEHQW@ /(& KDV WKH LQFHQWLYH WR GLVFULPLQDWH DJDLQVW LWV IURP LWV VZLWFK LQ WKH ZLUH FHQWHU WR WKH FURVV FRQQHFW ER[ DQG RQ WR WKH FRPSHWLWRUV E\ SURYLGLQJ WKHP OHVV IDYRUDEOH WHUPV DQG FXVWRPHUjV SUHPLVHV PDNLQJ D FRPSOHWH ORRS FRQGLWLRQV RI LQWHUFRQQHFWLRQ WKDQ LW SURYLGHV LWVHOI 3HUPLWWLQJ VXFK FLUFXPVWDQFHV LV LQFRQVLVWHQW ZLWK WKH SURFRPSHWLWLYH SXUSRVH RI WKH $FW 7KHUHIRUH ZH UHMHFW IRU SXUSRVHV RI VHFWLRQ 2I WKHVH FKDUJHV VWHPPLQJ IURP ORRS RUGHUV UHPDLQ DW LVVXH RQ RXU KLVWRULFDO LQWHUSUHWDWLRQ RI mQRQGLVFULPLQDWRU\l ZKLFK DSSHDO WR WKLV FRXUW 7KH 036& QRWHG WKDW DV RI ODWH %5( KDG ZH LQWHUSUHWHG WR PHDQ D FRPSDULVRQ EHWZHHQ ZKDW WKH DFFHVV WR DW OHDVW WHOHFRPPXQLFDWLRQV OLQHV LQ 0LFKLJDQ LQFXPEHQW /(& SURYLGHG RWKHU SDUWLHV LQ D UHJXODWHG PRQRSRO\ HQYLURQPHQW :H EHOLHYH WKDW WKH WHUP mQRQGLVFULPLQDWRU\l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mMXVWl DQG mUHDVRQDEOHl WR LWV VHUYLFH %5( PDLQWDLQV WKDW LW ORVW FXVWRPHUV DQG DFFHVV OLQHV XQGHU VHFWLRQ F' $OVR LQFXPEHQW /(&V PD\ QRW SUHVXPDEO\ EHFDXVH SD\LQJ WKH FKDUJHV PDGH GHOLYHULQJ VHUYLFH WR WKH GLVFULPLQDWH DJDLQVW SDUWLHV EDVHG XSRQ WKH LGHQWLW\ RI WKH FDUULHU SURVSHFWLYH FXVWRPHU ILQDQFLDOO\ XQDWWUDFWLYH 0LFK%HOO7HOY6WUDQGHWDO 1R 1R 0LFK%HOO7HOY6WUDQGHWDO $PHULWHFKjVLQWHUSUHWDWLRQRIWKH,QWHUFRQQHFWLRQ$JUHHPHQW ZLOO QRW DULVH +RZHYHU LQ GHFOLQLQJ WR FRQVLGHU WKLV WKH&RPPLVVLRQGHWHUPLQHGWKDWWKHORRSVDWLVVXHZHUHDOO DUJXPHQWZHQRWHWKDWLIWKH7(/5,&EDVHGWDULIIVIRURQH mDYDLODEOHl ZLWKLQ WKH PHDQLQJ RI VHFWLRQ RI WKH UHDVRQ RU DQRWKHU LQ IDFW XQGHUFRPSHQVDWH $PHULWHFK IRU $JUHHPHQW DQG WKDW WKHUHIRUH DQ\ DGGLWLRQDO ZRUN WKHVHXQXVXDOFKDUJHV$PHULWHFKFDQoDVERWK%5(DQGWKH $PHULWHFKXQGHUWRRNWRPDNHWKHVHORRSVDYDLODEOHWR%5( &RPPLVVLRQHUVDJUHHoVHHNPRGLILFDWLRQRILWVFRVWVWXGLHV ZDV URXWLQH 6LQFH WKH ZRUN ZDV URXWLQH $PHULWHFK ZDV DQGWDULIIVWRUHIOHFWWKHVHH[SHQVHV H[SHFWHGWRUHFRYHUWKHFRVWVDVVRFLDWHGZLWKGHPXOWLSOH[LQJ ORRSVRUFRQGLWLRQLQJORRSVLQLWVVWDQGDUGWDULIIRIUHFXUULQJ 7KH036&jV)LQGLQJRI'LVFULPLQDWLRQ FKDUJHV WR &/(&V 7KH &RPPLVVLRQ DOVR FRQFOXGHG WKDW $PHULWHFKjVDWWHPSWWRELOO%5(IRUVXFKVWDQGDUGZRUNZKHQ 7KH036&IRXQGWKDW$PHULWHFKj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m>W@KHHYHQWWKDWSUHFLSLWDWHVD DJDLQVW %5( SD\ UHDVRQDEOH FRVWV DQG DWWRUQH\jV IHHV ILQGLQJ RI GLVFULPLQDWLRQ LV $PHULWHFK 0LFKLJDQjV LQFXUUHG E\ %5( LQ FRQQHFWLRQ ZLWK WKH FDVH DQG SD\ WKH GHWHUPLQDWLRQWKDWXQGHUFHUWDLQFLUFXPVWDQFHVLWFDQUHTXLUH VWDWHDILQHRI %5(WRSD\VSHFLDOFRQVWUXFWLRQFKDUJHVLQFRQQHFWLRQZLWK WKHSURYLVLRQLQJRIDQXQEXQGOHGORRSZKHQXQGHULGHQWLFDO 2Q0DUFK$PHULWHFKILOHGDFRPSODLQWDJDLQVW FLUFXPVWDQFHV LW URXWLQHO\ IRUHJRHV WKH FROOHFWLRQ RI VXFK %5(DQG&RPPLVVLRQHUVRIWKH036&LQWKHGLVWULFWFRXUW FKDUJHVIURPLWVRZQFXVWRPHUVWRZKRPLWLVSURYLVLRQLQJ VHHNLQJ WR RYHUWXUQ WKH 036&jV RUGHU 7KH GLVWULFW FRXUW XQEXQGOHGORRSVl7KH036&DSSDUHQWO\UHOLHGRQ%5(jV GHQLHG WKH &RPPLVVLRQHUVj PRWLRQ WR GLVPLVV IRU ODFN RI ZLWQHVVZKRLGHQWLILHGVSHFLILFLQVWDQFHVLQZKLFK$PHULWHFK MXULVGLFWLRQ EXW LW GHFOLQHG WR H[HUFLVH VXSSOHPHQWDO DVVHVVHG VSHFLDO FRQVWUXFWLRQ FKDUJHV RQ %5( IRU MXULVGLFWLRQRYHUmH[FOXVLYHVWDWHODZLVVXHVl2QsDQXDU\ FRQGLWLRQLQJ FHUWDLQ ORRSV ZKLOH LW GLG QRW LPSRVH WKRVH WKHGLVWULFWFRXUWLVVXHGDQRSLQLRQDQGRUGHUXSKROGLQJ FKDUJHVZKHQLW$PHULWHFKGLUHFWO\VHUYHGWKHVDPHUHWDLO WKH036&jVGHWHUPLQDWLRQVDQGHQWHUHGMXGJPHQWLQIDYRURI FXVWRPHUV LQVWHDG FKDUJLQJ RQO\ WKH VWDQGDUG OLQH WKHGHIHQGDQWV$PHULWHFKWLPHO\DSSHDOHG HVWDEOLVKPHQWFKDUJHRI ,, ,QRIIHULQJDGGLWLRQDOVXSSRUWIRUWKH036&jVILQGLQJ%5( GUDZV RXU DWWHQWLRQ WR $PHULWHFKjV WDULII RIUHWDLO FKDUJHV sXULVGLFWLRQ 7KH WDULII %5( FODLPV VKRZV WKDW $PHULWHFK GRHV QRW UHFRYHUIURPLWVFXVWRPHUVWKHFRVWRIFRQGLWLRQLQJDQGGH $PHULWHFK ILOHG VXLW SXUVXDQW WR 86& H PXOWLSOH[LQJORRSVZKHQGRLQJVRLVQHFHVVDU\WRVHUYHLWV DVVHUWLQJWKDWWKH036&jVRUGHUZDVFRQWUDU\WRWKH7&$DQG FXVWRPHUV E\ PHDQV RI VSHFLDO FRQVWUXFWLRQ FKDUJHV ,W LQYROYHGDQHUURQHRXVLQWHUSUHWDWLRQRIWKH%5($PHULWHFK UHFRYHUVWKHVHFRVWVRYHUWLPHLQLWVUHFXUULQJVHUYLFHFKDUJHV RU DV SDUW RI LWV VWDQGDUG OLQHHVWDEOLVKPHQW IHH $V DQ H[DPSOHRIFLUFXPVWDQFHVLQZKLFK$PHULWHFKFDQQRWXQGHU 6HFWLRQ RI WKH ,QWHUFRQQHFWLRQ $JUHHPHQW UHDGV m$PHULWHFK WKHWDULIIILOHGZLWKWKH036&LPSRVHRQUHWDLOFXVWRPHUVD VKDOO RQO\ EH UHTXLUHG WR PDNH DYDLODEOH /RRSV DQG 3RUWV ZKHUH VXFK VSHFLDOFRQVWUXFWLRQFKDUJH%5(FLWHVFDVHVZKHUHWKHORRS /RRSV DQG 3RUWV DUH DYDLODEOHl 0LFK%HOO7HOY6WUDQGHWDO 1R 1R 0LFK%HOO7HOY6WUDQGHWDO FRVWVWXGLHVDJUHHGWKDWWKH7(/5,&EDVHGWDULIIVE\ZKLFK ,QWHUFRQQHFWLRQ$JUHHPHQW$PHULWHFKQRZDSSHDOVIURP %5(FRPSHQVDWHV$PHULWHFKIRUXVHRILWVQHWZRUNDVVXPH DILQDORUGHURIWKHGLVWULFWFRXUWGLVSRVLQJRIDOOFODLPVVR WKHVH QRQLGHDO FRQGLWLRQV GR QRW H[LVW 6HH $SSHOODQWjV WKLV FRXUW KDV VXEMHFWPDWWHU MXULVGLFWLRQ XQGHU 86& 5HSO\%ULHIDWVHHDOVR$SSHOODQWjV%ULHIDW %5(GRHVQRWFRQWHVWWKHMXULVGLFWLRQRIHLWKHUWKH GLVWULFW FRXUW RU WKLV FRXUW 7KH &RPPLVVLRQHUV KRZHYHU $VPHQWLRQHGDERYH$PHULWHFKUDLVHGWKLVDUJXPHQWIRU KDYH PDLQWDLQHG WKDW VWDWH VRYHUHLJQ LPPXQLW\ GHSULYHV WKHILUVWWLPHRQDSSHDO$PHULWHFKjVEULHIRQWKHPHULWVRILWV IHGHUDO FRXUWV RI MXULVGLFWLRQ RYHU WKHP LQ WKHLU RIILFLDO FODLPLQWKHGLVWULFWFRXUWQRZKHUHPHQWLRQV7(/5,&1RU FDSDFLWLHV GRHVLWPHQWLRQWKHWDULIIVRIUHFXUULQJFKDUJHVRUWKH036&jV IDFWXDOILQGLQJWKDW%5(FRPSHQVDWHVRUZRXOGFRPSHQVDWH ,Q KROGLQJ WKDW LW KDG MXULVGLFWLRQ RYHU WKH 0LFKLJDQ LI $PHULWHFK KDG ILOHG PRUH FRPSUHKHQVLYH FRVW VWXGLHV FRPPLVVLRQHUV WKH GLVWULFW FRXUW UHOLHG RQ 0LFKLJDQ %HOO $PHULWHFKIRUWKHVSHFLDOFRQVWUXFWLRQFRVWVDWLVVXHKHUHYLD 7HOHSKRQH&RPSDQ\Y0)6,QWHOHQHW,QF)6XSSG WKHVH7(/5,&EDVHGWDULIIV$PHULWHFKDSSDUHQWO\NQHZWKDW :'0LFKZKLFKKHOGWKDW0LFKLJDQ LWFRXOGUDLVHVXFKDQDUJXPHQW,WVEULHIUHSHDWHGO\FLWHGWKH FRQVWUXFWLYHO\ZDLYHGLWVVRYHUHLJQLPPXQLW\LHFRQVHQWHG FDQGGUHTXLUHPHQWVWKDW$PHULWHFKEH WRVXLWE\DFFHSWLQJ&RQJUHVVj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l86&H WKH)&&FUHDWHGDORQJUXQFRVWUHFRYHU\PHWKRGRORJ\FDOOHG $VDUHVXOWWKLVFRXUWjVUHYLHZRIWKH036&jVRUGHULVOLPLWHG m7RWDO(OHPHQW/RQJ5XQ,QFUHPHQWDO&RVWlRUm7(/5,&l WRGHWHUPLQLQJZKHWKHUWKHRUGHULVLQFRQVLVWHQWZLWKVHFWLRQV ZKLFKLVEDVHGRQWKHFRVWRIDK\SRWKHWLFDOmUHFRQVWUXFWHGl DQGRIWKH$FW6HH&OLPD[7HOHSKRQH)GDW QHWZRUN WKDW ZRXOG HPSOR\ QHZ mPRVW HIILFLHQW :H UHYLHZ WKH 036&jV LQWHUSUHWDWLRQ RI WKH $FW GH WHFKQRORJ\l7KHWDULIIVRIUHFXUULQJFKDUJHVDWLVVXHLQWKLV QRYRDQGGRQRWDFFRUGDQ\GHIHUHQFHWRLWVLQWHUSUHWDWLRQRI FDVHDUHEDVHGRQWKH7(/5,&PHWKRGRORJ\ WKH$FW2IFRXUVHZHFRQVLGHUWKH)&&jVLQWHUSUHWDWLRQRI WKH$FWSHUVXDVLYHDXWKRULW\EHFDXVH&RQJUHVVDXWKRUL]HGWKH $PHULWHFKjV QHZ DUJXPHQW LV WKDW 0LFKLJDQjV 7(/5,& )&&WRLVVXHUXOHVmWRLPSOHPHQWWKHUHTXLUHPHQWVlRI EDVHG WDULIIV EDVHG DV WKH\ DUH RQ D K\SRWKHWLFDO PRVW WKHVHFWLRQUHODWLQJ WR GXWLHVDQGWHUPVRILQWHUFRQQHFWLRQ HIILFLHQW PHWKRG RI PDLQWDLQLQJ QHWZRUN HOHPHQWV GR QRW XQEXQGOHGDFFHVVZKROHVDOLQJDQGRWKHUPDWWHUV+RZHYHU FRQWHPSODWHFRPSHQVDWLQJ,/(&VIRUWKHFRVWVDWLVVXHLQWKLV WKH 036& LV QRW DQ mDJHQF\l ZLWKLQ WKH PHDQLQJ RI WKH FDVHEHFDXVHWKHVHFRVWVZRXOGQHYHUDULVHLQDQHWZRUNRI $GPLQLVWUDWLYH3URFHGXUH$FWVHH86&EVR WKHNLQGWKDWWKH7(/5,&PRGHODVVXPHVH[LVWV7KDWLVQR WKHVWDQGDUGVSURYLGHGE\WKH$3$DUHQRWGLUHFWO\DSSOLFDEOH K\SRWKHWLFDOPRVWHIILFLHQWQHWZRUNZRXOGFRQWDLQHOHPHQWV 6HH *7( 6RXWK )G DW $QG D mVWDWH DJHQF\jV WKDWFDQQRWEHXQEXQGOHGDQGQRK\SRWKHWLFDOPRVWHIILFLHQW LQWHUSUHWDWLRQ RI IHGHUDO VWDWXWHV LV QRW HQWLWOHG WR WKH QHWZRUNIRUFDUU\LQJGDWDWUDQVPLVVLRQVZRXOGLQFOXGHmORDG GHIHUHQFHDIIRUGHGDIHGHUDODJHQF\jVLQWHUSUHWDWLRQRILWVRZQ FRLOVl WUDGLWLRQDOO\ XVHG WR LPSURYH WKH TXDOLW\ RI YRLFH VWDWXWHVXQGHU&KHYURQl2UWKRSDHGLF+RVSY%HOVKH FRPPXQLFDWLRQV $V $PHULWHFK SRLQWV RXW %5(jV H[SHUW )GWK&LUUHIHUULQJWR&KHYURQ86$ ZLWQHVVDQG$PHULWHFKjVZLWQHVVZKRSUHSDUHGWKH7(/5,& ,QFY1DWXUDO5HV'HI&RXQFLO,QF86 $VIRUWKH036&jVILQGLQJVRIIDFWPDGHLQWKHFRXUVHRI ,Q WKH (LJKWK &LUFXLW LQYDOLGDWHG 7(/5,& DV LQFRQVLVWHQW H[HUFLVLQJ LWV HQIRUFHPHQW DXWKRULW\ ZH MRLQ RXU VLVWHU ZLWK WKH $FW 6HH ,RZD 8WLOLWLHV %RDUG Y )HGHUDO &RPPXQLFDWLRQV FLUFXLWVLQDSSO\LQJWKHmDUELWUDU\DQGFDSULFLRXVlVWDQGDUG &RPPjQ )G WK &LU +RZHYHU DIWHU WKLV FDVH 6HHHJ6RXWKZHVWHUQ%HOO7HO&RY3XEOLF8WLO&RPPjQ ZDV DUJXHG WKH 6XSUHPH &RXUW RYHUWXUQHG WKH (LJKW &LUFXLWjV GHFLVLRQ )G WK &LU 86 :HVW DQG XSKHOG WKH 7(/5,& PHWKRGRORJ\ 6HH 9HUL]RQ &RPPXQLFDWLRQV ,QF Y )&& m9HUL]RQl 6 &W ,Q DGGLWLRQ WR WKH 7(/5,& EDVHG DUJXPHQW GLVFXVVHG LQ WKH WH[W $PHULWHFK DUJXHV LQ LWV UHSO\ EULHI WKDW WKH (LJKW &LUFXLWjV LQYDOLGDWLRQ RI 7(/5,& UHYHDOV WKH LQYDOLGLW\ RI WKH WDULIIV DW LVVXH LQ WKLV FDVH ZKLFK DUH EDVHG RQ 7(/5,& :H ZLOO QRW GLVFXVV WKLV DUJXPHQW IXUWKHU DV LW LV REYLRXVO\ IRUHFORVHG E\ 9HUL]RQ 0LFK%HOO7HOY6WUDQGHWDO 1R 1R 0LFK%HOO7HOY6WUDQGHWDO %5(FRQWHQGVDVGRWKH&RPPLVVLRQHUVFRQVLVWHQWZLWK &RPPXQLFDWLRQVY0)6,QWHOHQHW,QF)G WKHLUILQGLQJVLQWKH036&jVRUGHUWKDWDOORZLQJ$PHULWHFK QWK&LU7KLVVWDQGDUG WRFKDUJH%5(VHSDUDWHO\IRUVSHFLDOFRQVWUXFWLRQFRVWVJLYHV $PHULWHFKDmGRXEOHUHFRYHU\lEHFDXVH%5(DOUHDG\SD\VIRU LV WKH OHDVW GHPDQGLQJ IRUP RI MXGLFLDO UHYLHZ RI WKHVH FRVWV LQ LWV UHFXUULQJ PRQWKO\ IHHV SDLG SXUVXDQW WR DGPLQLVWUDWLYH DFWLRQ :KHQ LW LV SRVVLEOH WR RIIHU D $PHULWHFKjV VWDQGDUG ORRS SULFHV 7KH 036& IRXQG WKDW UHDVRQHG H[SODQDWLRQ EDVHG RQ WKH HYLGHQFH IRU D mPRVWLIQRWDOORIWKHVSHFLDOFRQVWUXFWLRQFKDUJHVDWLVVXH SDUWLFXODU RXWFRPH WKDW RXWFRPH LV QRW DUELWUDU\ RU LQWKLVSURFHHGLQJUHODWHWRQRUPDOURXWLQHW\SHVRIFRVWVWKDW FDSULFLRXV7KXVWKHVWDQGDUGUHTXLUHVWKDWWKHGHFLVLRQ DUH DOUHDG\ UHIOHFWHG LQ WKH FRVWV DQG UDWHV GHWHUPLQHG DQG EH XSKHOG LI LW LV WKH UHVXOW RI D GHOLEHUDWH SULQFLSOHG DSSURYHGE\WKH&RPPLVVLRQl,QUHDFKLQJLWVFRQFOXVLRQ UHDVRQLQJSURFHVVDQGLILWLVVXSSRUWHGE\VXEVWDQWLDO WKH 036& UHOLHG RQ WHVWLPRQ\ RI H[SHUW ZLWQHVVHV ZKR HYLGHQFH SDUWLFLSDWHGLQWKH$PHULWHFKmFRVWGRFNHWl2QHZLWQHVVDQ 036&VWDIIDXGLWRUVWDWHGKLVFRQFOXVLRQWKDWmWKHVHVSHFLDO .LOOLDQ )G DW LQWHUQDO TXRWDWLRQV DQG FLWDWLRQV FRQVWUXFWLRQFKDUJHVFRVWV>VLF@DUHUHFRYHUHGLQWKHPRQWKO\ RPLWWHG UHFXUULQJ UDWHV IRU XQEXQGOHG ORRSVl +H UHOLHG RQ 7DULII 036&1R53DUWo*HQHUDO7HUPVDQG&RQGLWLRQV ,,, 6HFWLRQo&RQVWUXFWLRQ&KDUJHV6KHHW1RZKLFKDOORZV $PHULWHFK WR LPSRVH VSHFLDO FRQVWUXFWLRQ FKDUJHV LQ RQO\ $PHULWHFKjV6SHFLDO&RQVWUXFWLRQ&KDUJHV WKUHHVLWXDWLRQVQRQHRIZKLFKKHFRQFOXGHGDSSO\WRWKH 6HFWLRQFRIWKH$FWLPSRVHVRQ,/(&Vm>W@KHGXW\ FKDUJHVDWLVVXH WR SURYLGH WR DQ\ UHTXHVWLQJ >&/(&@ QRQGLVFULPLQDWRU\ :HFRQVLGHUWKH036&j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l PHWKRGVDUHTXHVWLRQVRIODZ%XWZKHWKHUSD\PHQWVDOUHDG\ 86&F6HFWLRQGLUHFWVWKDWGHWHUPLQDWLRQV PDGHLQFOXGHGRUZHUHVXSSRVHGWRLQFOXGHFRPSHQVDWLRQIRU E\ D VWDWH FRPPLVVLRQ RI WKH MXVW DQG UHDVRQDEOH UDWH IRU FHUWDLQ VHUYLFHV LV D TXHVWLRQ RI IDFW $FFRUGLQJO\ WKH QHWZRUN HOHPHQWV m$ VKDOO EH L EDVHG RQ WKH FRVW 036&jV ILQGLQJ WKDW %5( FRPSHQVDWHV $PHULWHFK IRU WKH GHWHUPLQHGZLWKRXWUHIHUHQFHWRDUDWHRIUHWXUQRURWKHUUDWH FRVWRIGHPXOWLSOH[LQJDQGFRQGLWLRQLQJWKHORRSVDWLVVXH EDVHGSURFHHGLQJRISURYLGLQJWKHQHWZRUNHOHPHQW ZLOO EH GLVWXUEHG RQO\ LI LW LV QRW VXSSRUWHG E\ VXEVWDQWLDO HYLGHQFH6HH.LOOLDQ)GDW 7KH )RXUWK &LUFXLW KDV DSSOLHG GH QRYR UHYLHZ WR FRPPLVVLRQ ,QFKDOOHQJLQJDVQRWVXSSRUWHGE\VXEVWDQWLDOHYLGHQFHWKH LQWHUSUHWDWLRQV RI IHGHUDO ODZ DQG WKH mVXEVWDQWLDO HYLGHQFHl VWDQGDUG WR 036&ILQGLQJWKDW$PHULWHFKjV0LFKLJDQWDULIIVRIUHFXUULQJ FRPPLVVLRQ ILQGLQJV RI IDFW ,W QRWHG KRZHYHU WKDW WKHUH LV QR PHDQLQJIXO GLIIHUHQFH EHWZHHQ WKH mDUELWUDU\ DQG FDSULFLRXVl VWDQGDUG DQG WKH mVXEVWDQWLDO HYLGHQFHl VWDQGDUG 6HH *7( 6RXWK )G DW Q DFFRUG .LOOLDQ Y +HDOWKVRXUFH 3URYLGHQW $GPjUV ,QF )G 7R WKH H[WHQW WKDW WKHVH VWDQGDUG UDWHV GR QRW UHFRYHU $PHULWHFKjV WK &LU UHYLHZLQJ IRU VXEVWDQWLDO HYLGHQFH DQ DGPLQLVWUDWLYH DFWXDO FRVWV WKH &RPPLVVLRQ FRPPHQWHG $PHULWHFK VKRXOG ILOH D QHZ DJHQF\jV ILQGLQJV RI IDFW JLYHQ WKDW QR SURFHGXUDO LUUHJXODULWLHV LQIHFWHG SURSRVHG VFKHGXOH RI UDWHV ZLWK WKH &RPPLVVLRQ WKH IDFWILQGLQJ SURFHVV 0LFK%HOO7HOY6WUDQGHWDO 1R 1R 0LFK%HOO7HOY6WUDQGHWDO DQGLLQRQGLVFULPLQDWRU\DQG%PD\LQFOXGHDUHDVRQDEOH DFFRPPRGDWHDUHVHOOHU$PHULWHFKDUJXHVWKDWWKH036&jV SURILWl86&G 2UGHU FRQWUDYHQHV WKH SULQFLSOHV VHW IRUWK E\ WKH )&& DQG YLRODWHVWKH$FWEHFDXVHWKHUDWHVSDLGE\%5(IRUXQEXQGOHG ,Q LWV )LUVW 5HSRUW DQG 2UGHU WKH )&& UHYLHZHG WKHVH ORRSVDUHQRWmEDVHGRQWKHFRVWlRIWKHLUSURYLVLRQVHH VHFWLRQVRIWKH$FWDQGRSLQHGRQZKRVKRXOGEHDUWKHFRVWV 86& G$ LQVRIDU DV WKH 2UGHU SXUSRUWHGO\ RI GLVDJJUHJDWLQJ EXQGOHG ORRSV m&RPPHQWHUV LGHQWLI\ D VDGGOHV$PHULWHFKZLWKWKHFRVWRIWKHDGGLWLRQDOSURYLVLRQLQJ QXPEHURIRWKHUPHWKRGVIRUVHSDUDWLQJRXWLQGLYLGXDOORRSV ZRUNLWPXVWSHUIRUP IURP >LQWHJUDWHG GLJLWDO ORRS FDUULHU@ IDFLOLWLHV LQFOXGLQJ PHWKRGVWKDWGRQRWUHTXLUHGHPXOWLSOH[LQJ$JDLQWKHFRVWV $V%5(FRQFHGHV$PHULWHFKFRUUHFWO\FKDUDFWHUL]HVWKH DVVRFLDWHG ZLWK WKHVH PHFKDQLVPV ZLOO EH UHFRYHUHG IURP )&&jV )LUVW 5HSRUW DQG 2UGHU DV GLUHFWLQJ WKDW &/(&V UHTXHVWLQJFDUULHUVl)LUVW5HSRUWDQG2UGHU$VWR UHTXHVWLQJDFFHVVWRXQEXQGOHGORRSVVKRXOGEHDUWKHFRVWRI FRQGLWLRQLQJORRSVWKH)&&RIIHUHGWKDWm>,@IDFRPSHWLWRU FRQGLWLRQLQJ +RZHYHU WKH )&& GLG QRW VWDWH ZKHWKHU VHHNVWRSURYLGHDGLJLWDOORRSIXQFWLRQDOLW\VXFKDV$'6/ &/(&VZRXOGSD\WKHVHFRVWVDVVSHFLDOFRQVWUXFWLRQFKDUJHV DQG WKH ORRS LV QRW FXUUHQWO\ FRQGLWLRQHG WR FDUU\ GLJLWDO RULQVWHDGDVDEXLOWLQSDUWRIWKHRYHUDOOUHFXUULQJDQGQRQ VLJQDOVEXWLWLVWHFKQLFDOO\IHDVLEOHWRFRQGLWLRQWKHIDFLOLW\ UHFXUULQJ UDWHV &/(&V SD\ ,/(&V IRU DFFHVV WR UHTXHVWHG WKH>,/(&@PXVWFRQGLWLRQWKHORRSWRSHUPLWWKHWUDQVPLVVLRQ HOHPHQWVRIWKH,/(&VjQHWZRUNV,QHVVHQFHDOOSDUWLHVDJUHH RIGLJLWDOVLJQDOV7KHUHTXHVWLQJFDUULHUZRXOGKRZHYHU WKDWSXUVXDQWWRFDQGGDQGFRQVLVWHQW EHDU WKH FRVW RI FRPSHQVDWLQJ WKH >,/(&@ IRU VXFK ZLWK)LUVW5HSRUWDQG2UGHUDQG$PHULWHFKLV FRQGLWLRQLQJl)LUVW5HSRUWDQG2UGHU HQWLWOHGWRUHFRYHUWKHFRVWVLWLQFXUVLQGHPXOWLSOH[LQJDQG FRQGLWLRQLQJORRSVDW%5(jVUHTXHVW7KHTXHVWLRQLVZKHQRU ,QUHOLDQFHRQWKHVH)&&FRPPHQWV$PHULWHFKFRQWHQGV E\ZKDWPHDQV$PHULWHFKVKDOOGRVR2EYLRXVO\$PHULWHFK WKDWmWKHKDOOPDUNRIXQEXQGOHGDFFHVVLVWKDWWKHUHTXHVWLQJ VHHNV WR UHFRYHU WKHVH FRVWV E\ PHDQV RI WKH VSHFLDO FDUULHU EHDUV WKH FRVW DQG LQYHVWPHQW ULVN DVVRFLDWHG ZLWK FRQVWUXFWLRQFKDUJHVLWDVVHVVHGDJDLQVW%5(%5(FODLPV SK\VLFDOIDFLOLWLHVlDVGLVWLQJXLVKHGIURPDUHVHOOHUZKLFK WKDW $PHULWHFK DOUHDG\ UHFRYHUV WKHVH FRVWV DV SDUW RI WKH GRHV QRW REWDLQ OHDVHKROG FRQWURO RYHU SK\VLFDO DVVHWV EXW UHFXUULQJ DQG QRQUHFXUULQJ WDULIIV %5( SD\V IRU DFFHVV WR VLPSO\SXUFKDVHVWKHXVHRIDQLQFXPEHQWjVRYHUDOOEXQGOHG $PHULWHFKjVQHWZRUN VHUYLFH DW ZKROHVDOH DQG UHVHOOV LW WR FXVWRPHUV DW UHWDLO 6LQFH WKH OLQHV VR UHVROG VWLOO UXQ WR $PHULWHFK RYHU LWV $PHULWHFK DUJXHV WKDW SDUDJUDSKV DQG FUHDWH EXQGOHGORRSVWKHUHLVQRQHHGWRFRQVWUXFWSDUDOOHOORRSVWR H[FHSWLRQV WR WKH EURDGHU FRVWUHFRYHU\ DQG FRPSHQVDWLRQ VFKHPHV IRU LQWHUFRQQHFWLRQ 7KHUHIRUH $PHULWHFK FRQFOXGHV WKH PRUH VSHFLILF SURYLVLRQV FRQWURO RYHU WKH JHQHUDODQGGHFODUHWKH)&&jVLQWHQWLRQWKDW,/(&VUHFRYHU 7KH 6XSUHPH &RXUW YDFDWHG SRUWLRQV RI WKH )LUVW 5HSRUW DQG 2UGHU LQ ,RZD 8WLOLWLHV %RDUG ,, 86 7KH )&& WKHQ LVVXHG D IURP &/(&V WKH FRVW RI SURYLVLRQLQJ UHTXHVWHG QHWZRUN QHZ UHSRUW LQ ZKLFK LW UHDIILUPHG WKH SULQFLSOHV VHW IRUWK LQ WKH WH[W 6HH HOHPHQWV LQGHSHQGHQW RI UHFXUULQJ DQG QRQUHFXUULQJ WDULII ,Q UH ,PSOHPHQWDWLRQ RI WKH /RFDO &RPSHWLWLRQ 3URYLVLRQV RI WKH VFKHPHV
Document Info
Docket Number: 00-1349
Filed Date: 9/30/2002
Precedential Status: Precedential
Modified Date: 9/22/2015