Hayes v. Equitable Engergy

Opinion

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$5*$5(7 +$<(6 ; $GPLQLVWUDWUL[RI/RXLVD  +RRYHUDQG0HOYLQ+RRYHU   1R 3ODLQWLII  !  :$1'$ )$<( 5,'*(HWDO  3ODLQWLIIV$SSHOODQWV    Y    (48,7$%/( (1(5*<   5(6285&(6 &203$1<   'HIHQGDQW$SSHOOHH    .(178&.< :(67 9,5*,1,$  *$6 &203$1< //&   'HIHQGDQW  1

$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH(DVWHUQ'LVWULFWRI.HQWXFN\DW3LNHYLOOH 1RnsRVHSK0+RRG'LVWULFWsXGJH $UJXHG$XJXVW 'HFLGHGDQG)LOHG6HSWHPEHU

  +D\HVHWDOY(TXLWDEOH(QHUJ\ 1R 5HVRXUFHV&RHWDO

%HIRUH&/$<DQG*,/0$1&LUFXLWsXGJHV:,6(0$1 'LVWULFWsXGJH BBBBBBBBBBBBBBBBB &2816(/ $5*8('  7RGG % 3RUWXQH &2+(1 72'' .,7( 67$1)25' &LQFLQQDWL 2KLR IRU $SSHOODQWV  :D\QH ) &ROOLHU .,1.($'  67,/= /H[LQJWRQ .HQWXFN\ IRU $SSHOOHH21%5,()7RGG%3RUWXQH&2+(172'' .,7(  67$1)25' &LQFLQQDWL 2KLR IRU $SSHOODQWV :D\QH ) &ROOLHU 6KHOE\ & .LQNHDG sU .,1.($' 67,/=/H[LQJWRQ.HQWXFN\IRU$SSHOOHH BBBBBBBBBBBBBBBBB 23,1,21 BBBBBBBBBBBBBBBBB &/$<&LUFXLWsXGJH,QWKLVDFWLRQZKLFKZDVUHPRYHG SXUVXDQWWRGLYHUVLW\MXULVGLFWLRQXQGHU86&††DQG HWVHT3ODLQWLIIV0DUJDUHW+D\HVHWDODSSHDOIURP WKH GLVWULFW FRXUWjV RUGHU DZDUGLQJ 'HIHQGDQW (TXLWDEOH 3URGXFWLRQ&RPSDQ\m(TXLWDEOHlIND(TXLWDEOH(QHUJ\ 5HVRXUFHV &RPSDQ\ VXPPDU\ MXGJPHQW RQ 3ODLQWLIIVj .HQWXFN\VWDWHODZFODLPVRIEUHDFKRIFRQWUDFWDQGWUHVSDVV LQFRQQHFWLRQZLWKSHUIRUPDQFHXQGHUDQRLODQGJDVOHDVHRI SURSHUW\ ORFDWHG LQ .HQWXFN\  :H $)),50 WKH GLVWULFW FRXUWjVRUGHU

7KH +RQRUDEOH 7KRPDV $ :LVHPDQ sU 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH 0LGGOH 'LVWULFW RI 7HQQHVVHH VLWWLQJ E\ GHVLJQDWLRQ 1R +D\HVHWDOY(TXLWDEOH(QHUJ\  5HVRXUFHV&RHWDO

%$&.*5281' 3URFHGXUDO+LVWRU\ 2QsXQHWKH(VWDWHRI/RXLVDDQG0HOYLQ+RRYHU 0DUJDUHW +D\HV DGPLQLVWUDWUL[ mWKH (VWDWHl WKH RULJLQDO 3ODLQWLIILQWKLVFDVHILOHGLWVFRPSODLQWDJDLQVW(TXLWDEOHLQ .HQWXFN\ VWDWH FRXUW ZKLFK (TXLWDEOH WKHQ UHPRYHG WR IHGHUDOFRXUW7KHRULJLQDOFRPSODLQWQDPHGVHYHUDOSDUWLHVDV GHIHQGDQWV LQFOXGLQJ (TXLWDEOH DQG VRXJKW GDPDJHV RI UR\DOWLHVDQGJURVVYDOXHVRIPLQHUDOVH[WUDFWHGIURPVHYHUDO ZHOOV XQGHU DQ RLO DQG JDV OHDVH mWKH /HDVHl RULJLQDOO\ H[HFXWHGRQsXQHDQGXQGHUZKLFK(TXLWDEOHLVWKH FXUUHQWOHVVHH7KHRULJLQDOFRPSODLQWDOVRVRXJKWSXQLWLYH GDPDJHV LQ FRQQHFWLRQ ZLWK WKH GHIHQGDQWVj DOOHJHG PLVFRQGXFW 2Q$XJXVW(TXLWDEOHPRYHGWRGLVPLVVWKHRULJLQDO FRPSODLQW SXUVXDQW WR )HGHUDO 5XOHV RI &LYLO 3URFHGXUH EFDQGRQDPRQJRWKHUJURXQGVWKH(VWDWHjV IDLOXUH WR VWDWH D FODLP  7KH (VWDWH UHSOLHG WR (TXLWDEOHjV PRWLRQFODLPLQJWKDWWKH(VWDWHKDGDOOHJHGVXIILFLHQWIDFWVWR VWDWH D FODLP XQGHU 5XOH E DQG DOWHUQDWLYHO\ WKDW PDWHULDOTXHVWLRQVRIIDFWH[LVWHGZKLFKSUHFOXGHGDQDZDUG RIVXPPDU\MXGJPHQWWR(TXLWDEOHXQGHU5XOH 7KH (VWDWH WZLFH DPHQGHG LWV FRPSODLQW MRLQLQJ VHYHUDO SDUWLHV DV SODLQWLIIV WKH m+RRYHU +HLUVl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F DQG  +D\HVHWDOY(TXLWDEOH(QHUJ\ 1R 1R +D\HVHWDOY(TXLWDEOH(QHUJ\  5HVRXUFHV&RHWDO 5HVRXUFHV&RHWDO

2Q 2FWREHU   WKH GLVWULFW FRXUW HQWHUHG DQ RUGHU PRWLRQWRGLVPLVVWRDPRWLRQIRUVXPPDU\MXGJPHQWDQG JUDQWLQJ(TXLWDEOHjVPRWLRQWRGLVPLVV7KHFRXUWUHDFKHGLWV WKDW (TXLWDEOH PHW LWV EXUGHQ WR VKRZ VDWLVIDFWLRQ RI WKH GHFLVLRQ RQ WKH IROORZLQJ JURXQGV   (TXLWDEOH GLG QRW DPRXQW LQ FRQWURYHUV\ UHTXLUHPHQW  $FFRUGLQJO\ ZH EUHDFK WKH /HDVH E\ ZLWKKROGLQJ UR\DOWLHV GXH XQNQRZQ $)),50WKHGLVWULFWFRXUWRUGHU OHVVRUV EHFDXVH (TXLWDEOH ZDV HQWLWOHG WR YHULI\ WKDW WKH UR\DOWLHV ZHUH SDLG WR WKH WUXH RZQHUV DQG ZDV HQWLWOHG WR SURWHFWLWVHOIIURPPXOWLSOHOLDELOLW\DQG3ODLQWLIIVjFODLPV UHJDUGLQJ(TXLWDEOHjVIDLOXUHWRGHYHORSWKH/HDVHDQGIDLOXUH WRPDUNHWRLODQGJDVZHUHXQDYDLOLQJEHFDXVHVXFKLPSOLHG FRYHQDQWVGLGQRWDSSO\WRDIODWUDWHOHDVH7KHFRXUWDOVR IRXQG WKDW WKH DSSRLQWPHQW RI 0DUJDUHW +D\HV DV DGPLQLVWUDWUL[RIWKH(VWDWHZDVFRQWUDU\WR.HQWXFN\ODZ DQGWKDW+D\HVFRXOGRQO\UHSUHVHQWKHUVHOILQWKHDFWLRQ $OWKRXJKWKHGLVWULFWFRXUWFKDUDFWHUL]HG3ODLQWLIIVjEUHDFK RI FRQWUDFW FODLPV LQ WHUPV RI IDLOXUH mWR VWDWH IDFWV XSRQ ZKLFKUHOLHIPD\EHJUDQWHGlWKHFRXUWjVXOWLPDWHFRQFOXVLRQ VWDWHGWKDW3ODLQWLIIVKDGSUHVHQWHGmQRFODLPXSRQZKLFKWR WHUPLQDWHWKH>/@HDVH>WKDW@>Q@RJHQXLQHLVVXHRIPDWHULDO IDFWH[LVWVLQWKLVPDWWHUDQGVXPPDU\MXGJPHQWLVSURSHU SXUVXDQWWR)HG5&LY3ls$DW7KHGLVWULFW FRXUW WKHQ RUGHUHG (TXLWDEOH WR GHSRVLW ZLWK WKH FRXUW DOO UR\DOW\SD\PHQWVKHOGLQHVFURZVLQFH  IRUWKH/HDVH XOWLPDWHO\ WR EH LVVXHG WR WKH SURSHUO\ LGHQWLILHG +RRYHU +HLUV  2Q 'HFHPEHU   WKH FRXUW RUGHUHG WKDW WKH UR\DOWLHVEHLQYHVWHGLQWKH&RXUW5HJLVWU\6\VWHP 2Q 1RYHPEHU   3ODLQWLIIV VRXJKW UHOLHI IURP WKH 2FWREHURUGHUSXUVXDQWWR5XOHEDQGPRYHGWR VWD\ WKH H[HFXWLRQ RI WKH RUGHU SXUVXDQW WR 5XOH E 3ODLQWLIIVDUJXHGWKDWWKHGLVWULFWFRXUWjVGHFLVLRQXQGHU5XOH VKRXOGKDYHEHHQGHIHUUHGXQWLO3ODLQWLIIVZHUHJLYHQDQ RSSRUWXQLW\WRUHVSRQGWR(TXLWDEOHjV$XJXVWPRWLRQ WRGLVPLVVDQGSUHVHQWDGGLWLRQDOVXSSRUWLQJHYLGHQFHIRUWKHLU FODLPV  2Q 'HFHPEHU   WKH GLVWULFW FRXUW VWD\HG H[HFXWLRQ RI WKH 2FWREHU   RUGHU DQG DOORZHG 3ODLQWLIIV XQWLO 'HFHPEHU   WR ILOH D UHVSRQVH WR (TXLWDEOHjV PRWLRQ WR GLVPLVV  2Q 'HFHPEHU   3ODLQWLIIVILOHGWKHLUUHVSRQVHDWWDFKLQJIRXUWHHQH[KLELWV2Q  +D\HVHWDOY(TXLWDEOH(QHUJ\ 1R 1R +D\HVHWDOY(TXLWDEOH(QHUJ\  5HVRXUFHV&RHWDO 5HVRXUFHV&RHWDO

3ODLQWLIIVDWWKHWLPHRIUHPRYDOoLHWKHGDPDJHVVRXJKWE\ sDQXDU\WKHFRXUWGHQLHG3ODLQWLIIVjPRWLRQIRUUHOLHI 3ODLQWLIIVLQWKHLURULJLQDOFRPSODLQW IURP WKH 2FWREHU   RUGHU ILQGLQJ WKDW 3ODLQWLIIVj UHVSRQVHFRQWDLQHGQRDGGLWLRQDOLQIRUPDWLRQ3ODLQWLIIVQRZ 6LJQLILFDQWO\ WKLV &RXUW IRXQG UHPRYDO WR EH SURSHU LQ DSSHDO 5RJHUVHYHQWKRXJKWKHSODLQWLIIKDGDOOHJHGDQDPRXQWLQ FRQWURYHUV\EHORZWKHMXULVGLFWLRQDODPRXQWDQGHYHQWKRXJK 2QsXO\DQG$XJXVW(TXLWDEOHILOHGPRWLRQVWR WKHSODLQWLIIKDGVWLSXODWHGWKDWKHUGDPDJHVZHUHXQGHUWKH GLVPLVV :RRGURZ +RRYHU sDPHV $OOHQ +RRYHU *DU\ UHTXLUHGDPRXQWLQFRQWURYHUV\5RJHUV)GDW (GZDUG+RRYHUDQG0DUJDUHW+D\HVDVDGPLQLVWUDWUL[RIWKH &RQYHUVHO\ LQ WKLV FDVH 3ODLQWLIIV KDYH QRW DOOHJHG DQ\ (VWDWHRI0HOYLQDQG/RXLVD+RRYHUDVSDUWLHVWR3ODLQWLIIVj VSHFLILFDPRXQWWREHLQFRQWURYHUV\DQGDWRUDODUJXPHQW DSSHDO7KLV&RXUWWKHUHDIWHUJUDQWHG(TXLWDEOHjVPRWLRQV 3ODLQWLIIVH[SUHVVO\UHIXVHGWRVWLSXODWHWRDGDPDJHVDPRXQW 0DUJDUHW+D\HVFRQWLQXHVWRUHSUHVHQWKHUVHOIDVDSODLQWLIILQ IDOOLQJXQGHUWKHDPRXQWLQFRQWURYHUV\UHTXLUHPHQW WKLVDFWLRQ $OWKRXJKWKHGHIHQGDQWLQ5RJHUVUHOLHGRQWKHSODLQWLIIjV 6XEVWDQWLYH+LVWRU\ VZRUQUHVSRQVHVWRGLVFRYHU\UHTXHVWVZKLFKVWDWHGWKDWKHU DPRXQWRIGDPDJHVZRXOGH[FHHGVHHLGZHGR ,Q$SULORI/RXLVD+RRYHUZLIHRI0HOYLQ+RRYHU QRW ILQG DQ\ OHVV UHDVRQDEOH (TXLWDEOHjV UHOLDQFH RQ WKH REWDLQHGWLWOHWRWKHVXUIDFHDQGRLODQGJDVHVWDWHVDWLVVXHLQ GDPDJHVVRXJKWE\3ODLQWLIIVLQWKLVFDVHo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 GHPRQVWUDWLQJ VDWLVIDFWLRQ RI WKH DPRXQW LQ FRQWURYHUV\ UHTXLUHPHQWIRUGLYHUVLW\MXULVGLFWLRQ 2QsXQHWKH+RRYHUVH[HFXWHGWKH/HDVHZLWKWKH .HQWXFN\&RDODQG&RNH&RPSDQ\DSUHGHFHVVRULQLQWHUHVW &21&/86,21 WR(TXLWDEOH7KH+RRYHUVWKHQFRQYH\HGDRQHKDOILQWHUHVW LQWKHRLODQGJDVHVWDWHWRWKLUGSDUWLHVLQ$XJXVW RI :HILQGWKDWQRJHQXLQHLVVXHRIIDFWH[LVWVDVWR3ODLQWLIIVj ZLWKRXWUHVHUYLQJDQ\RIWKHUR\DOWLHVIURPWKHH[LVWLQJRLO SRZHUWRWHUPLQDWHWKH/HDVHXQGHU.HQWXFN\ODZ:HDOVR DQGJDVOHDVH ILQGWKDWWKHGLVWULFWFRXUWGLGQRWDEXVHLWVGLVFUHWLRQZKHQ GHQ\LQJ3ODLQWLIIVjGLVFRYHU\UHTXHVWDQGZKHQFRQYHUWLQJWKH .HQWXFN\:HVW9LUJLQLD*DV&RPSDQ\m.HQWXFN\*DVl DFTXLUHGWLWOHWRERWKWKH'XGOH\DQG+RRYHUOHDVHKROGVRQ 'HFHPEHUIROORZLQJ\HDUVRIOLWLJDWLRQDPRQJWKH +RRYHUV'XGOH\VDQG.H\VWRQH*DV&RPSDQ\WRZKRPWKH  3ODLQWLIIVj DFWLRQV LQ WKLV FDVH DUH DOVR GLVWLQJXLVKDEOH IURP &ROH  'XGOH\VKDGJUDQWHGDOHDVHLQWHUHVW.HQWXFN\*DVWKHQSDLG ZKHUH WKH SODLQWLII KDG VWLSXODWHG WR DQ DPRXQW RI GDPDJHV IDOOLQJ XQGHU WKH DPRXQW LQ FRQWURYHUV\ UHTXLUHPHQW RQ ZKLFK WKH GLVWULFW FRXUW UR\DOWLHVWRWKH+RRYHUVDQGWKHLUKHLUVDQGDVVLJQVIURP H[SUHVVO\ UHOLHG ZKHQ UHPDQGLQJ WKH FDVH WR VWDWH FRXUW &ROH   ) XQWLO sDQXDU\   ZKHQ .HQWXFN\ *DV DVVLJQHG LWV 6XSS DW  OHDVHKROGLQWHUHVWWR(DVWHUQ.HQWXFN\3URGXFWLRQ&RPSDQ\  +D\HVHWDOY(TXLWDEOH(QHUJ\ 1R 1R +D\HVHWDOY(TXLWDEOH(QHUJ\  5HVRXUFHV&RHWDO 5HVRXUFHV&RHWDO

ZKLFKPHUJHGLQWR(TXLWDEOH(QHUJ\5HVRXUFHV&RPSDQ\RQ WRDOHJDOFHUWDLQW\WKDWWKHSODLQWLIIjVGDPDJHVDUHQRWOHVV sDQXDU\   WKHUHE\ YHVWLQJ (TXLWDEOH ZLWK IXOO WKDQWKHDPRXQWLQFRQWURYHUV\UHTXLUHPHQW6XFKDEXUGHQ SRVVHVVRU\LQWHUHVWLQWKHRLODQGJDVOHDVHV(TXLWDEOH(QHUJ\ PLJKWZHOOUHTXLUHWKHGHIHQGDQWWRUHVHDUFKVWDWHDQGSURYH 5HVRXUFHV &RPSDQ\ FKDQJHG LWV QDPH WR (TXLWDEOH WKH SODLQWLIIjV FODLP IRU GDPDJHVl  ,G  7KH GHIHQGDQW LQ 3URGXFWLRQ&RPSDQ\LQ(TXLWDEOHLVD:HVW9LUJLQLD *DIIRUGPHWWKLVEXUGHQE\RIIHULQJSUHWULDOWHVWLPRQ\WKDWWKH IRUSURILWFRUSRUDWLRQZLWKLWVSULQFLSDOSODFHRIEXVLQHVVLQ SODLQWLIIjVFODLPVIRUEDFNSD\ZRXOG H[FHHGWKHDPRXQWLQ 3LWWVEXUJK3HQQV\OYDQLD FRQWURYHUV\UHTXLUHPHQWDQGWKDWWKHSODLQWLIIKDGQRWRIIHUHG DQ\UHEXWWDOZLWQHVVHVDWWKHSUHWULDOKHDULQJ,GDW 7KH/HDVHHVWDEOLVKHGDUHQWDOSD\PHQWRISHU\HDU SHUZHOOGULOOHGRQWKH+RRYHUPLQHUDOHVWDWH)ROORZLQJWKH )DLOXUH WR DGHTXDWHO\ SOHDG WKH DPRXQW LQ FRQWURYHUV\ +RRYHUVjFRQYH\DQFHRIRIWKHLULQWHUHVWLQWKHPLQHUDO UHTXLUHPHQW PD\ EH FXUHG E\ WKH SUHVHQFH RI mFOHDU HVWDWHWRWKLUGSDUWLHVWKHUHQWDOSD\PHQWDVRIZDVWR DOOHJDWLRQVWKDWWKHFDVHLQYROYHGDVXPZHOOLQH[FHVVRI EHGLYLGHGEHWZHHQWKH+RRYHUVDQGWZRRWKHURZQHUV WKHPLQLPXPl&RRN)GDW+RZHYHU SHURZQHU$WYDULRXVWLPHVWKURXJKRXWWKHFRXUVHRI (TXLWDEOHjV SOHDGLQJ RI WKH DPRXQW LQ FRQWURYHUV\ GHDOLQJVEHWZHHQWKH+RRYHUVDQG(TXLWDEOHjVSUHGHFHVVRUV UHTXLUHPHQWZDVTXLWHDGHTXDWH,QLWVSHWLWLRQIRUUHPRYDO LQLQWHUHVWVHYHUDOZHOOVZHUHLQRSHUDWLRQRQWKHSURSHUW\ (TXLWDEOH DOOHJHG WKDW 3ODLQWLIIV ZHUH mVHHNLQJ XQVSHFLILHG )RUWKHILIWHHQ\HDUVSULRUWRWKHILOLQJRIWKHVHFRQGDPHQGHG DQGXQOLTXLGDWHGGDPDJHVWKDWEDVHGXSRQDIDLUUHDGLQJRI FRPSODLQWRQO\RQHZHOOZDVLQRSHUDWLRQRQWKHSURSHUW\ >3ODLQWLIIVj@FRPSODLQWZLOOH[FHHG6HYHQW\)LYH7KRXVDQG 'XULQJWKLVVDPHSHULRGWKHUHZHUHQRH[SORULQJGULOOLQJRU 'ROODUVLISURYHQls$DW RWKHUSURGXFWLYHDFWLYLW\E\(TXLWDEOHUHODWHGWRWKH+RRYHU SURSHUW\RUWKH/HDVH7KHWHUPRIWKH/HDVHLVWHQ\HDUVmDQG :H DJUHH WKDW D IDLU UHDGLQJ RI WKH XQVSHFLILHG DQG DVORQJWKHUHDIWHUDVRLORUJDVRUHLWKHURIWKHPLVSURGXFHG XQOLTXLGDWHGGDPDJHVVRXJKWE\3ODLQWLIIVSURYLGHGWKDWPRUH IURPVDLGODQGE\WKH/HVVHHls$DW$FFRUGLQJO\ WKDQZDVLQFRQWURYHUV\3ODLQWLIIVjLQLWLDOFRPSODLQW (TXLWDEOHQRZKROGV3ODLQWLIIVjPLQHUDOHVWDWHVXEMHFWRQO\WR DWWDFKHGWR(TXLWDEOHjVSHWLWLRQIRUUHPRYDOVRXJKWDPRQJ WKHDQQXDOUHQWDOSD\PHQWVDQGWKHUHTXLUHPHQWWKDWRLO RWKHU GDPDJHV UR\DOWLHV DQG JURVV YDOXHV RI PLQHUDOV RUJDVFRQWLQXHWREHSURGXFHGRQWKHSURSHUW\ H[WUDFWHGIURPIRXUVHSDUDWHZHOOVWZRRIZKLFKGDWHGEDFN WR  DV ZHOO DV SXQLWLYH GDPDJHV  3ODLQWLIIVj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jV EXUGHQ RI VKRZLQJ E\ D SUHSRQGHUDQFH WKDW PRUH WKDQ GHDWK LVLQFRQWURYHUV\ZHUHYLHZWKHGDPDJHVVRXJKWE\  +D\HVHWDOY(TXLWDEOH(QHUJ\ 1R 1R +D\HVHWDOY(TXLWDEOH(QHUJ\  5HVRXUFHV&RHWDO 5HVRXUFHV&RHWDO

ILOHGDVHFRQGPRWLRQWRGLVPLVVDJDLQEURXJKWSXUVXDQWWR ,Q3ODLQWLII0DUJDUHW+D\HVjPRWKHUVHQWQRWLFHWR 5XOHV E F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jIDFWXDODVVHUWLRQVWKDW(TXLWDEOH )RUGLYHUVLW\MXULVGLFWLRQ86&†UHTXLUHVWKDW GLG QRW SHUIRUP XQGHU DQ\ RI WKH LPSOLHG FRYHQDQWV RU WKHmPDWWHULQFRQWURYHUV\H[FHHGWKHVXPRUYDOXHRI REOLJDWLRQVLQRSHUDWLRQXQGHUWKH/HDVHRUWKDWDGGLWLRQDO H[FOXVLYHRILQWHUHVWDQGFRVWVlm:KHQGHWHUPLQLQJ DFWLYLW\RQWKH+RRYHUSURSHUW\ZRXOG\LHOGSURGXFWLYHUHVXOWV WKHMXULVGLFWLRQDODPRXQWLQFRQWURYHUV\ LQ GLYHUVLW\FDVHV WRWKHPXWXDOEHQHILWRI3ODLQWLIIVDQG(TXLWDEOH3ODLQWLIIV SXQLWLYHGDPDJHVPXVWEHFRQVLGHUHGXQOHVVLWLVDSSDUHQW ILQDOO\FRQWHQGWKDWWKHUHFRUGLVVLOHQWDVWRWKHDFWXDODPRXQW WRDOHJDOFHUWDLQW\WKDWVXFKFDQQRWEHUHFRYHUHGl+ROOH\ LQFRQWURYHUV\DVLGHIURPWKHDQQXDOUR\DOW\SD\PHQW (TXLS&RUSY&UHGLW$OOLDQFH&RUS)G SD\DEOHWRWKH+RRYHU+HLUVDQGWKXV(TXLWDEOHKDVIDLOHGWR WK&LUFLWDWLRQVRPLWWHG PHHW LWV EXUGHQ RI VKRZLQJ WKDW WKH  DPRXQW LQ FRQWURYHUV\ UHTXLUHPHQW IRU GLYHUVLW\ MXULVGLFWLRQ KDV EHHQ 3ODLQWLIIVDUJXHWKDWXQGHU&ROHY*UHDW$WODQWLF 3DFLILF PHW 7HD &R  ) 6XSS   (' .\  DQ LQGHSHQGHQWDSSUDLVDORIWKHDPRXQWLQFRQWURYHUV\ LQ WKLV ',6&866,21 FDVHLVDSSURSULDWH6XFKDSSUDLVDOVKRXOGEHEHJLQ3ODLQWLIIV FRQWHQG ZLWK GLVFORVXUH E\ (TXLWDEOH RI WKH SURGXFWLRQ $IHGHUDOFRXUWVLWWLQJLQGLYHUVLW\DSSOLHVWKHVXEVWDQWLYH UHFRUGVWKDW3ODLQWLIIVKDGSUHYLRXVO\UHTXHVWHGIRUWKHZHOOV ODZRIWKHVWDWHLQZKLFKLWVLWV.OD[RQ&RY6WHQWRU(OHF DWLVVXH 0IJ &R  86    0DFXUG\ Y 6LNRY /RYH3$)GWK&LU7KH)HGHUDO  7KLV &RXUW SODFHV D EXUGHQ RQ D GHIHQGDQW VHHNLQJ WR 5XOHVRI&LYLO3URFHGXUHDUHWKHUXOHVRISUDFWLFHZKLFKDSSO\ UHPRYHDQDFWLRQWRIHGHUDOFRXUWWRVKRZE\DSUHSRQGHUDQFH WRFLYLODFWLRQVLQWKHIHGHUDOFRXUWVUHJDUGOHVV RIZKHWKHU RIWKHHYLGHQFHWKDWWKHDPRXQWLQFRQWURYHUV\UHTXLUHPHQW MXULVGLFWLRQ LV EDVHG RQ IHGHUDO TXHVWLRQ RU GLYHUVLW\ RI KDVEHHQPHW*DIIRUG)GDW7KLVVWDQGDUGmGRHV QRWSODFHXSRQWKHGHIHQGDQWWKHGDXQWLQJEXUGHQRISURYLQJ  +D\HVHWDOY(TXLWDEOH(QHUJ\ 1R 1R +D\HVHWDOY(TXLWDEOH(QHUJ\  5HVRXUFHV&RHWDO 5HVRXUFHV&RHWDO

FLWL]HQVKLS*DIIRUGY*HQ(OHF&R)G 6HFRQGZHILQGLWXQOLNHO\WKDW3ODLQWLIIVZHUHVXUSULVHGE\ WK&LU DQ DZDUG RI VXPPDU\ MXGJPHQW LQ WKLV FDVH DQG WKXV WKH GLVWULFWFRXUWGLGQRWDEXVHLWVGLVFUHWLRQZKHQIDLOLQJWRJLYH 7KLV &RXUW UHYLHZV D GLVWULFW FRXUW V JUDQW RI VXPPDU\ 3ODLQWLIIVQRWLFHRIVXFKDQDZDUG3ODLQWLIIVQRWHWKDWWKLV MXGJPHQWGHQRYR%URRNVY$P%URDG&RV)G &RXUWGLVFRXUDJHVJUDQWLQJVXPPDU\MXGJPHQWVXDVSRQWH WK&LU7KLV&RXUWZLOODIILUPDGLVWULFWFRXUW V SDUWLFXODUO\ZKHQWKHFRXUWGRHVQRWJLYHDGYDQFHQRWLFHWR RUGHUJUDQWLQJVXPPDU\MXGJPHQWmRQO\LIZHGHWHUPLQHWKDW WKHDGYHUVHO\DIIHFWHGSDUW\(PSOR\HUV,QV RI :DXVDXY WKH SOHDGLQJV DIILGDYLWV DQG RWKHU VXEPLVVLRQV VKRZ WKDW 3HWUROHXP6SHFLDOLWLHV,QF)GWK&LU WKHUHLVQRJHQXLQHLVVXHDVWRDQ\PDWHULDOIDFWDQGWKDWWKH )HGHUDO5XOHRI&LYLO3URFHGXUHEHPSRZHUV D GLVWULFW PRYLQJSDUW\LVHQWLWOHGWRDMXGJPHQWDVDPDWWHURIODZjl FRXUWWRJUDQWVXPPDU\MXGJPHQWVXDVSRQWHZKHUHWKHFRXUW 0LFK3URW $GYRFDF\6HUY,QFY%DELQ)G LVSUHVHQWHGZLWKPDWHULDOVRXWVLGHWKHSOHDGLQJV:KHWKHUD WK&LUTXRWLQJ)HG5&LY3F $OOHYLGHQFH GLVWULFWFRXUWPXVWSURYLGHQRWLFHWKDWLWLQWHQGVWRFRQYHUWD PXVWEHYLHZHGLQWKHOLJKWPRVWIDYRUDEOHWRWKHQRQPRYLQJ PRWLRQ WR GLVPLVV LQWR D PRWLRQ IRU VXPPDU\ MXGJPHQW SDUW\0DWVXVKLWD(OHF,QGXV&RY=HQLWK5DGLR&RUS GHSHQGVRQWKHIDFWVDQGFLUFXPVWDQFHVRIHDFKFDVH6KHOE\ 86+RZHYHUm>W@KHPRYLQJSDUW\QHHGQRW &RXQW\  )G DW   +RZHYHU m>Z@KHUH RQH SDUW\ LV VXSSRUWLWVPRWLRQZLWKHYLGHQFHGLVSURYLQJWKHQRQPRYLQJ OLNHO\WREHVXUSULVHGE\WKHSURFHHGLQJVQRWLFHLVUHTXLUHGl SDUW\jVFODLPEXWQHHGRQO\VKRZWKDWµWKHUHLVDQDEVHQFHRI ,GTXRWDWLRQVDQGFLWDWLRQRPLWWHG HYLGHQFHWRVXSSRUWWKHQRQPRYLQJSDUW\ VFDVHjl%DELQ )GDWTXRWLQJ&HORWH[&RUSY&DWUHWW86 5HIHUHQFHVE\ERWK3ODLQWLIIVDQG(TXLWDEOHWRWKHPRWLRQ   WRGLVPLVVDVDOVREHLQJDPRWLRQIRUVXPPDU\MXGJPHQWUXQ WKURXJKRXW WKHUHFRUGDQGWKHUHE\XQGHUPLQHDQ\FODLPRI ,/HDVH7HUPLQDWLRQ VXUSULVH(TXLWDEOHjVPRWLRQWRGLVPLVVZDVEURXJKWSXUVXDQW WR)HGHUDO5XOHRI&LYLO3URFHGXUHEDVZHOODV5XOHV 3ODLQWLIIVFRQWHQGWKDWWKHGLVWULFWFRXUWHUUHGZKHQIDLOLQJ F DQG  ERWK RI ZKLFK DGGUHVV VXPPDU\ MXGJPHQW WRILQGDJHQXLQHLVVXHRIPDWHULDOIDFWUHJDUGLQJ3ODLQWLIIVj )XUWKHU3ODLQWLIIVjPHPRUDQGXPLQRSSRVLWLRQWR(TXLWDEOHjV SRZHU WR WHUPLQDWH WKH /HDVH RQ JURXQGV WKDW (TXLWDEOH PRWLRQFKDUDFWHUL]HGLWDVDm0RWLRQWR'LVPLVVDQG0RWLRQ XQUHDVRQDEO\VXVSHQGHGUR\DOW\SD\PHQWVRUDOWHUQDWLYHO\RQ IRU6XPPDU\sXGJPHQWls$DW0RUHRYHU3ODLQWLIIV JURXQGV WKDW (TXLWDEOH YLRODWHG LPSOLHG FRYHQDQWV LQ VSHFLILFDOO\DGGUHVVHGLQWKDWPHPRUDQGXPWKDWLImWKLVDFWLRQ RSHUDWLRQXQGHUWKH/HDVH >VKRXOG@EHFRQYHUWHGWRD0RWLRQIRU6XPPDU\sXGJPHQWYLD )HGHUDO5XOHVRI&LYLO3URFHGXUHFDQG(TXLWDEOHjV $5R\DOW\3D\PHQWV 0RWLRQ VWLOO PXVW IDLOl  s$ DW   3ODLQWLIIV WKHQ DUJXHGWKDWmSXUVXDQWWR5XOHIQRHQWU\RIMXGJPHQW 7KHGLVWULFWFRXUWIRXQGWKDW(TXLWDEOHGLGQRWEUHDFKWKH VKRXOG EH HQWHUHG DW WKLV SRLQW XQWLO GLVFRYHU\ KDV EHHQ /HDVHZKHQVXVSHQGLQJUR\DOW\SD\PHQWVEHFDXVH(TXLWDEOH SHUPLWWHG>@l  s$ DW   3ODLQWLIIV DWWDFKHG DQGRU LQVWHDGSDLGWKHUR\DOWLHVLQWRDQHVFURZDFFRXQW3ODLQWLIIV LQFRUSRUDWHGE\UHIHUHQFHH[KLELWVDQGDIILGDYLWVWRERWKRILWV DUJXHWKDW(TXLWDEOHKDVSURYLGHGQRHYLGHQFHWKDWLWDFWXDOO\ DPHQGHG FRPSODLQWV DV ZHOO DV WR LWV PHPRUDQGXP LQ HVFURZHG WKH UR\DOWLHV ZKLOH DWWHPSWLQJ WR GHWHUPLQH WKH RSSRVLWLRQWR(TXLWDEOHjVm0RWLRQWR'LVPLVVDQG0RWLRQIRU ULJKWIXORZQHUVRIVXFKUR\DOWLHVDQGWKXVWKHUHLVDJHQXLQH 6XPPDU\ sXGJPHQWl  s$ DW   6XEVHTXHQWO\ LQ LVVXHRIPDWHULDOIDFWDVWRZKHWKHU(TXLWDEOHEUHDFKHGWKH UHVSRQVHWR3ODLQWLIIVjVHFRQGDPHQGHGFRPSODLQW(TXLWDEOH /HDVH  +D\HVHWDOY(TXLWDEOH(QHUJ\ 1R 1R +D\HVHWDOY(TXLWDEOH(QHUJ\  5HVRXUFHV&RHWDO 5HVRXUFHV&RHWDO

)HGGHUV &RUS  )G   WK &LU   $ (TXLWDEOHUDWKHUWKDQLQVLVWLQJWKDWLWKDGLQIDFWHVFURZHG GHQLDO RI GLVFRYHU\ LV UHYLHZHG RQO\ IRU DQ DEXVH RI WKH UR\DOWLHV RIIHUV WKH DOWHUQDWLYH UHVSRQVH WKDW XQGHU GLVFUHWLRQ/DYDGRY.HRKDQH)GWK&LU .HQWXFN\ODZDOHVVRUWKDWKDVQRWUHFHLYHGUR\DOW\SD\PHQWV   $ GLVWULFW FRXUWjV IDLOXUH WR SURYLGH QRWLFH ZKHQ FDQQRWIRUIHLWWKHOHDVHEXWFDQLQVWHDGEULQJDQDFWLRQIRU FRQYHUWLQJ D PRWLRQ WR GLVPLVV WR D PRWLRQ IRU VXPPDU\ SD\PHQW7KXV(TXLWDEOHDUJXHVWKHLVVXHRIZKHWKHUWKH MXGJPHQW LV UHYLHZHG IRU DQ DEXVH RI GLVFUHWLRQ  6KHOE\ UR\DOWLHVZHUHHVFURZHGLVXQUHVSRQVLYHWRWKHTXHVWLRQRI &RXQW\+HDOWK&DUH&RUSY6&RXQFLORI,QGXV:RUNHUV ZKHWKHUDJHQXLQHLVVXHRIPDWHULDOIDFWH[LVWVDVWRDPDWHULDO )GWK&LU EUHDFK RI WKH /HDVH  ,Q DGGLWLRQ (TXLWDEOH QRWHV WKDW 3ODLQWLIIV GR QRW VHHN SD\PHQW RI WKH XQSDLG UR\DOWLHV )LUVW3ODLQWLIIVjSXUSRUWHGOLQNEHWZHHQGLVFRYHU\DQGWKHLU SUHVXPDEO\ EHFDXVH WKRVH UR\DOWLHV KDYH DOUHDG\ EHHQ SRZHU WR WHUPLQDWH WKH /HDVH DV ZHOO DV WKHLU DELOLW\ WR GHSRVLWHG ZLWK WKH &RXUW 5HJLVWU\ 6\VWHP SXUVXDQW WR WKH GHPRQVWUDWH (TXLWDEOHjV IDLOXUH WR VKRZ VDWLVIDFWLRQ RI WKH 'HFHPEHU   GLVWULFW FRXUW RUGHU  3ODLQWLIIV LQVWHDG DPRXQWLQFRQWURYHUV\UHTXLUHPHQWLVXQDYDLOLQJ3ODLQWLIIV PHUHO\ UHIHUHQFH WKH XQSDLG UR\DOWLHV DV JURXQGV IRU FRQWHQG WKDW GLVFRYHU\ ZRXOG KDYH KHOSHG GHWHUPLQH WKH WHUPLQDWLQJWKH/HDVH UHDVRQDEOHQHVV RI (TXLWDEOHjV ZLWKKROGLQJ RI UR\DOW\ SD\PHQWV  +RZHYHU ZH KDYH DOUHDG\ GHWHUPLQHG WKDW WKH 8QGHU .HQWXFN\ ODZ LQ WKH HYHQW RI QRQSD\PHQW RI TXHVWLRQRI3ODLQWLIIVjSRZHUWRWHUPLQDWHWKH/HDVHLQWKLV UR\DOWLHVDOHDVHDWPRVWSHUPLWVDQXQSDLGOHVVRUWRVHHNWR FDVH GRHV QRW WXUQ RQ WKH UHDVRQDEOHQHVV RI (TXLWDEOHjV UHFRYHUDGHILFLHQF\UDWKHUWKDQIRUIHLWWKHOHDVHDEVHQWFOHDU FRQGXFWFRQFHUQLQJWKHUR\DOW\SD\PHQWVXQGHU.HQWXFN\ODZ ODQJXDJHWRWKHFRQWUDU\.HOOH\Y,Y\WRQ2LO *DV&R 6:.\&W$SS m>$@IRUIHLWXUHRIWKH 3ODLQWLIIVDOVRFRQWHQGWKDWGLVFRYHU\ZRXOGKDYHDVVLVWHG OHDVHZLOOQRWEHGHFUHHGEHFDXVHRIDUUHDUVRIUHQWRUUR\DOW\ WKHLU GHPRQVWUDWLRQ RI (TXLWDEOHjV IDLOXUH WR VKRZ WKDW WKH H[FHSWXSRQFOHDUODQJXDJHLQWKHOHDVHSURYLGLQJWKHUHIRUl DPRXQWLQFRQWURYHUV\UHTXLUHPHQWKDGEHHQPHW+RZHYHU )XUWKHU (TXLWDEOH QRWHV HYHQ LI WKH OHDVH SHUPLWWHG D DVGLVFXVVHGEHORZXQGHU5RJHUVY:DO0DUW)G IRUIHLWXUH m>W@KH OHDVWIDYRUHG RI DOO IRUIHLWXUHV DUH WKRVH WK&LUDQG&RRNY:LQIUH\)G IRXQGHG XSRQ PHUH GHOD\ LQ WKH SD\PHQW RI PRQH\l WK&LU(TXLWDEOHSURSHUO\UHOLHGRQWKHH[WHQVLYH 'HQQLVWRQY.HQRYD2LO&R6:.\&W UHOLHIVRXJKWE\3ODLQWLIIVLQWKHLURULJLQDOFRPSODLQWZKHQ $SS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jV EUHDFK RI LPSOLHG DQDPRXQWLQFRQWURYHUV\EXUGHQRQ(TXLWDEOHmWRUHVHDUFK FRYHQDQWVWRGHYHORSSURSHUW\ VWDWHDQGSURYHWKHSODLQWLIIjVFODLPIRUGDPDJHVlZKLFKWKLV &RXUWSURKLELWV*DIIRUG)GDW)RUWKHDERYH UHDVRQV ZH ILQG WKDW WKH GLVWULFW FRXUW GLG QRW DEXVH LWV GLVFUHWLRQ ZKHQ GHFOLQLQJ WR JUDQW 3ODLQWLIIVj GLVFRYHU\ UHTXHVW  +D\HVHWDOY(TXLWDEOH(QHUJ\ 1R 1R +D\HVHWDOY(TXLWDEOH(QHUJ\  5HVRXUFHV&RHWDO 5HVRXUFHV&RHWDO

%,PSOLHG&RYHQDQWV QRWLPHSHULRGIRUWKHDJUHHPHQWSHUWDLQLQJWRWKHRULJLQDO >XWLOLW\@SROHVWRHQGl,G6LPLODUO\WKHFRXUWLQ%URZQVERUR 3ODLQWLIIV FRQWHQG WKDW WKH /HDVH LQFOXGHG LPSOLHG 5RDG5HVWDXUDQW,QFYsHUULFR,QF6:G.\ FRYHQDQWV RI UHDVRQDEOH GHYHORSPHQW IXUWKHU H[SORUDWLRQ &W $SS  ZKLFK DSSOLHG 0LG6RXWKHUQ 7R\RWD WR D PDUNHWSURGXFWLRQDQGSURWHFWLRQIURPGUDLQDJH,QGRLQJVR IUDQFKLVH DJUHHPHQW QRWHG WKDW WKHUH ZDV mQRWKLQJ LQ WKH 3ODLQWLIIVUHO\XSRQ0F0DKDQY%RJJHVV6:G DJUHHPHQWLQGLFDWLQJWKDWWKHSDUWLHVLQWHQGHGLWWRWHUPLQDWH .\&W$SS*UHJRU\Y6RKLR3HWUROHXP&R XSRQDQ\SDUWLFXODUWLPHRUHYHQWl 6:G  .\ &W $SS  0LGODQG *DV &RUS Y 5HIILWW6:G.\&W$SS6ZDPS%UDQFK (YHQLIZHZHUHWRDSSO\D.HQWXFN\EXVLQHVVFRQWUDFWUXOH 2LODQG*DV&RY5LFH6:G.\&W$SS WRDOHDVHRIUHDOSURSHUW\LQWKLV FDVH3ODLQWLIIVKDYHDOVR DQG:DUILHOG1DWXUDO*DV&RY$OOHQ6:G.\ IDLOHGWRDUJXHLQVXSSRUWRIDSSO\LQJ0LG6RXWKHUQ7R\RWDWR &W$SS6SHFLILFDOO\3ODLQWLIIVDUJXHWKDWXQGHUWKH DOHDVHWKDWWHUPLQDWHVXSRQDSDUWLFXODUHYHQWVSHFLILFDOO\ mSUXGHQW RSHUDWRUl VWDQGDUG WKH OHVVHH mRZHV D GXW\ RI WKH OHVVHHjV IDLOXUH WR SURGXFH RLO RU JDV RQ WKH SURSHUW\ GLOLJHQFHZKLFKZRXOGEHUHDVRQDEO\H[SHFWHGRIDQRSHUDWRU %HFDXVH3ODLQWLIIVKDYHQRWDGGUHVVHGZK\WKLV&RXUWVKRXOG RIRUGLQDU\SUXGHQFHKDYLQJGXHUHJDUGIRUERWKWKHLQWHUHVW DSSO\WKH0LG6RXWKHUQ7R\RWDUXOHWRDOHDVHRIUHDOSURSHUW\ RIWKHOHVVHHDQGWKHLQWHUHVWRIWKHOHVVRUl0F0DKDQ RUWRDQ\FRQWUDFWWKDWWHUPLQDWHVXSRQDSDUWLFXODUHYHQWZH 6:GDW3ODLQWLIIVPDLQWDLQWKDWDTXHVWLRQRIPDWHULDO ILQGXQDYDLOLQJ3ODLQWLIIVjFODLPWKDWWKH/HDVHZDVWHUPLQDEOH IDFWH[LVWVDVWRZKHWKHU(TXLWDEOHDQGLWVSUHGHFHVVRUVE\ DIWHUDUHDVRQDEOHWLPH PHUHO\PDNLQJRQHDQQXDOSD\PHQWRQRQHSURGXFLQJ ZHOO RQ WKH SURSHUW\ IDLOHG WR RSHUDWH WKH /HDVH ZLWK GXH $FFRUGLQJO\EHFDXVH3ODLQWLIIVRIIHUQRHYLGHQFHRIQRWLFH UHJDUGIRUWKHLQWHUHVWRI3ODLQWLIIV WRRUGHPDQGRI(TXLWDEOHUHJDUGLQJLPSOLHGFRYHQDQWVWR GHYHORSWKHSURSHUW\DQGEHFDXVH3ODLQWLIIVRIIHUQRDUJXPHQW ,Q0F0DKDQWKH.HQWXFN\&RXUWRI$SSHDOVQRWHGWKDWmLW DVWRZK\0LG6RXWKHUQ7R\RWDVKRXOGDSSO\WRDOHDVHRIUHDO LVUHFRJQL]HGLQ.HQWXFN\WKDWLQOHDVHVRIWKLVQDWXUHWKHUHLV SURSHUW\WKDWWHUPLQDWHVXSRQDSDUWLFXODUHYHQWWKHGLVWULFW DQLPSOLHGREOLJDWLRQWRGHYHORSWKHOHDVHKROGLQJRRGIDLWK FRXUWGLGQRWHUUZKHQILQGLQJQRJHQXLQHLVVXHRIPDWHULDO DQG ZLWK UHDVRQDEOH GLOLJHQFHl  6HH  6:G DW  IDFWUHJDUGLQJ3ODLQWLIIVjSRZHUWRWHUPLQDWHWKH/HDVHXQGHU FLWDWLRQVRPLWWHGHPSKDVLVDGGHG7KHOHDVHLQ0F0DKDQ .HQWXFN\ODZ ZDV DQ RLO DQG JDV OHDVH WKDW UHTXLUHG WKH OHVVHHV WR EHJLQ GULOOLQJZLWKLQRQH\HDURUSD\DGHOD\UHQWDORISHUDFUH ,,'LVFRYHU\ 7KHWHUPRIWKHOHDVHZDVILYH\HDUVDQGIRUVRORQJWKHUHDIWHU DVJDVRURLOZDVSURGXFHG7KHOHDVHVLQ*UHJRU\0LGODQG 3ODLQWLIIV FRQWHQG WKDW WKH GLVWULFW FRXUW DEXVHG LWV *DV DQG 6ZDPS %UDQFK ZHUH DOVR RI WKH mQDWXUHl RI WKH GLVFUHWLRQ ZKHQ GHFOLQLQJ WR JUDQW 3ODLQWLIIVj GLVFRYHU\ 0F0DKDQOHDVHLQWKDWHDFKSURYLGHGDVSHFLILHGOHDVHWHUP UHTXHVW  +RZHYHU 3ODLQWLIIVj GLVFXVVLRQ RI WKH LVVXH RQ IROORZHGE\DQLQGHILQLWHH[WHQVLRQRIWKHOHDVHWHUPLQWKH DSSHDOSULPDULO\UDLVHVDVHSDUDWHLVVXHFRQFHUQLQJWKHGLVWULFW HYHQWWKDWJDVRURLOZDVEHLQJSURGXFHG FRXUWjV FRQYHUVLRQ RI (TXLWDEOHjV PRWLRQ WR GLVPLVV WR D PRWLRQIRUVXPPDU\MXGJPHQWZLWKRXWQRWLFHWR3ODLQWLIIV (TXLWDEOHGLVWLQJXLVKHVWKHOHDVHVLQWKH0F0DKDQOLQHRI :HZLOOGLVFXVVHDFKLVVXHLQWXUQ FDVHV DV mSURGXFWLRQl UDWKHU WKDQ mIODWUDWHl OHDVHV D GLVWLQFWLRQDWLVVXHLQ%UXHQY&ROXPELD*DV7UDQV&RUS m>,@WLVZHOOHVWDEOLVKHGWKDWWKHVFRSHRIGLVFRYHU\LVZLWKLQ WKH VRXQG GLVFUHWLRQ RI WKH WULDO FRXUWl &KU\VOHU &RUS Y  +D\HVHWDOY(TXLWDEOH(QHUJ\ 1R 1R +D\HVHWDOY(TXLWDEOH(QHUJ\  5HVRXUFHV&RHWDO 5HVRXUFHV&RHWDO

7KH GLVWULFW FRXUW WKHUHIRUH GLG QRW HUU LQ ILQGLQJ WKDW QR 6(G:9D,Q%UXHQWKH:HVW9LUJLQLD JHQXLQH LVVXH RI IDFW H[LVWHG DV WR ZKHWKHU 3ODLQWLIIV PD\ 6XSUHPH&RXUWRI$SSHDOVIRXQGWKDWIRUmIODWUDWHlOHDVHV WHUPLQDWHWKH/HDVHXQGHU.HQWXFN\ODZ D OHVVRUjV GXW\ LV PHUHO\ WR SD\ WKH IODW UDWH UDWKHU WKDQ GHYHORS WKH OHDVH DV UHTXLUHG XQGHU mSURGXFWLRQl OHDVHV 1HYHUWKHOHVV 3ODLQWLIIV RIIHU DQ DOWHUQDWLYH DUJXPHQW LQ 6SHFLILFDOO\ WKH FRXUW RSLQHG WKDW mLI DQ RLO DQG JDV OHDVH IDYRU RI WKHLU SRZHU WR WHUPLQDWH WKH /HDVH  8QGHU 0LG FRQWDLQV D FODXVH WR FRQWLQXH WKH OHDVH IRU D WHUP µVR ORQJ 6RXWKHUQ7R\RWD/WGY%XJjV,PSRUWV,QF6:G WKHUHDIWHUDVRLODQGJDVLVSURGXFHGjEXWDOVRSURYLGHVIRU .\&W$SSWKH/HDVHEHLQJRILQGHILQLWHGXUDWLRQ µIODWUDWHjUHQWDOSD\PHQWVWKHQTXDQWLW\RISURGXFWLRQLVQRW PD\EHWHUPLQDEOHDIWHUDUHDVRQDEOHSHULRGRIWLPH0LG UHOHYDQWWRWKHH[SLUDWLRQRIWKHWHUPRIWKHOHDVHLIVXFKµIODW 6RXWKHUQ 7R\RWD QRWHG WKH JHQHUDO UXOH WKDW FRXUWV DYRLG UDWHjUHQWDOSD\PHQWVKDYHEHHQPDGHE\WKHOHVVHHl,GDW ILQGLQJ D ULJKW LQ SHUSHWXLW\ XQOHVV FRQWUDFW ODQJXDJH LV $VDQH[DPSOHRIDmIODWUDWHlUHQWDOSD\PHQW%UXHQ XQHTXLYRFDO,GDW7KHFRXUWLQ0LG6RXWKHUQ7R\RWD GHVFULEHGDOHDVHLQZKLFKWKHUHQWDOSD\PHQWKDGmQRUHODWLRQ WKHQDSSOLHGWKHUXOHmHVSHFLDOO\DSSOLFDEOHWRGLVWULEXWRUVKLS WRWKHTXDQWLW\RIJDVFRQWHPSODWHGRUDFWXDOO\SURGXFHG,W FRQWUDFWVWKDWWKHFRQWUDFWLVWHUPLQDEOHDIWHUDUHDVRQDEOH ZDVFRPSHQVDWLRQIL[HGLQDGYDQFHRISURGXFWLRQDQGZLWKRXW WLPHl  ,G FLWDWLRQ RPLWWHG  .HQWXFN\ FRXUWV KDYH DOVR DQ\GHILQLWHNQRZOHGJHDVWRZKDWWKHSURGXFWLRQZRXOGEH DSSOLHG WKLV UXOH LQ WKH PRUH JHQHUDO FRQWH[W RI mEXVLQHVV +HQFH WKH UHQWDO UHVHUYHG ZDV WKH VDPH IRU ZHOOV RI OLJKW FRQWUDFWVl(OHF :DWHU3ODQW%GY6&HQW%HOO7HO&R SURGXFWLRQ DQG ZHOOV RI KHDY\ SURGXFWLRQl  ,G DW  6:G.\&W$SS FLWDWLRQDQGHPSKDVLVRPLWWHG )LUVW3ODLQWLIIVIDLOWRDGGUHVVZK\WKLV&RXUWVKRXOGDSSO\ ,QWKHPDWWHUDWKDQGWKHGLVWULFWFRXUWDOWKRXJKQRWFLWLQJ D.HQWXFN\EXVLQHVVFRQWUDFWUXOHWRDOHDVHRIUHDOSURSHUW\ %UXHQPLUURUHGLWVUHDVRQLQJ3ODLQWLIIVjLPSOLHGFRYHQDQW 6HFRQGWKHGXUDWLRQSURYLVLRQDWLVVXHLVGLVWLQJXLVKDEOHIURP FODLP FRXOG QRW ZDUUDQW UHOLHI EHFDXVH mWKH OHDVH DW LVVXH WKH SURYLVLRQV IRXQG WR EH mLQGHILQLWHl LQ 0LG6RXWKHUQ SURYLGHVIRUWKHSD\PHQWRIDUR\DOW\RISHU\HDUUDWKHU 7R\RWDDQG6RXWK&HQWUDO%HOOEHFDXVHWKH/HDVHLQWKLVFDVH WKDQRQSURGXFWLRQ7KXVWKHDEXQGDQFHRIRLODQGJDVRU WHUPLQDWHVXSRQDSDUWLFXODUHYHQW6SHFLILFDOO\WKH/HDVH ODFNWKHUHRISURGXFHGRQWKHUHDOSURSHUW\DWLVVXH KDVQR SURYLGHVWKDWLWmVKDOOUHPDLQLQIRUFHIRUWKHWHUPRIWHQ\HDUV EHDULQJRQWKLVDFWLRQls$DW IURPWKLVGDWHDQGDVORQJWKHUHDIWHUDVRLORUJDVRUHLWKHURI WKHP LV SURGXFHG IURP VDLG ODQG E\ WKH /HVVHHl  s$ DW 3ODLQWLIIVUHVSRQGWKDWWKHIL[HGUR\DOW\SD\PHQWGRHVQRW ,QFRQWUDVWWKHGLVWULEXWRUVKLSFRQWUDFWLQ0LG6RXWKHUQ H[FOXGH RSHUDWLRQ RI LPSOLHG FRYHQDQWV XQGHU WKH /HDVH 7R\RWDSURYLGHGDWHUPRIRQH\HDUUHQHZDEOHDIWHUWKDWRQH +RZHYHU3ODLQWLIIVjFDVHODZVXSSRUWIRUWKLVFODLPFRQVLVWV \HDUWHUPVRORQJDVDFHUWDLQVDOHVOHYHOZDVPHWDWZKLFK RI WKH 0F0DKDQ OLQH RI FDVHV GLVFXVVHG DERYH ZKLFK DOO SRLQW WKH FRQWUDFW EHFDPH RI LQGHILQLWH GXUDWLRQ  0LG LQYROYHG OHDVHV ZKRVH UHQWDO SD\PHQWV ZHUH WLHG WR 6RXWKHUQ7R\RWD6:GDW7KHEXVLQHVVFRQWUDFW SURGXFWLRQOHYHOV6HH*UHJRU\6:GDWUR\DOW\ LQ 6RXWK &HQWUDO %HOO SURYLGHG WKDW QRWZLWKVWDQGLQJ LQWHUHVW LQ VHYHQHLJKWKV RI RLO SURGXFHG IURP HQWLUH WHUPLQDWLRQRIDMRLQWXVHDJUHHPHQWmWKLVDJUHHPHQWVKDOO OHDVHKROG0LGODQG*DV6:GDWJDVUR\DOW\RI UHPDLQ LQ IXOO IRUFH DQG HIIHFW ZLWK UHVSHFW WR DOO >XWLOLW\@ RQHHLJKWKRIVDOHSULFHIRUDOOJDVVROGDQGPDUNHWHGIURPWKH SROHV MRLQWO\ XVHG E\ WKH SDUWLHV DW WKH WLPH RI VXFK SUHPLVHVDQG6ZDPS%UDQFK6:GDWUR\DOW\RIRQH WHUPLQDWLRQl6&HQ%HOO6:GDW7KHFRXUWLQ HLJKWK RI DOO JDV IURP HYHU\ ZHOO GULOOHG RQ SUHPLVHV WKH 6RXWK&HQWUDO%HOOWKHQQRWHGWKDWWKHSURYLVLRQmSURYLGH>G@ SURGXFWIURPZKLFKLVPDUNHWHGDQGXVHGRIIWKHSUHPLVHV  +D\HVHWDOY(TXLWDEOH(QHUJ\ 1R 1R +D\HVHWDOY(TXLWDEOH(QHUJ\  5HVRXUFHV&RHWDO 5HVRXUFHV&RHWDO

0RUHRYHUWKHOHDVHLQ0F0DKDQH[SUHVVO\UHTXLUHGOHVVHHV WKDWQRWLFHEHSURYLGHGWRRUGHPDQGEHPDGHRI(TXLWDEOH WR EHJLQ GULOOLQJ ZLWKLQ RQH \HDU RU RWKHUZLVH SD\ D GHOD\ UHJDUGLQJWKHQHHGWRFRPSO\ZLWKDQLPSOLHGFRYHQDQW UHQWDORISHUDFUH0F0DKDQ6:GDWVHHDOVR 8QLRQ*DV 2LO&RY*LOOHP6:.\&W ,WLVZHOOVHWWOHGODZRIWKLVMXULVGLFWLRQWKDWZKHUHWKH $SSUHTXLULQJOHVVHHWREHJLQGULOOLQJZLWKLQRQH\HDU ULJKWWRKDYHDOHDVHIRUIHLWHGIRUEUHDFKRIWKHLPSOLHG RUSD\DGHOD\UHQWDORIWHQFHQWVSHUDFUH FRYHQDQWWRGHYHORSWKHSURSHUW\GLOLJHQWO\DQGSUXGHQWO\ LVDVVHUWHGWKHOHVVRUPXVWKDYHSXWWKHOHVVHHLQGHIDXOW 1HYHUWKHOHVV WKH /HDVH LQ WKLV FDVH DOVR LQFOXGHG E\PDNLQJGHILQLWHDQGXQHTXLYRFDOGHPDQGRIKLPWKDW mSURGXFWLRQlFODXVHVVLPLODUWRWKRVHLQWKH0F0DKDQOLQHRI KH GR VR ZLWKLQ D UHDVRQDEOH WLPH RU E\ JLYLQJ WKDW FDVHV6SHFLILFDOO\WKH/HDVHSURYLGHGIRUDUR\DOW\RImRQH FKDUDFWHU RI QRWLFH WKDW FRPSOLDQFH ZLWK WKH LPSOLHG HLJKW >VLF@ SDUW RI DOO RLO SURGXFHG    IURP WKH OHDVHG FRYHQDQWLVUHTXLUHG7KDWLVDFRQGLWLRQSUHFHGHQWWRWKH SUHPLVHVlDVZHOODVDUHTXLUHPHQWmWRORFDWHDQGFRPPHQFH PDLQWHQDQFHRIDVXLWWRIRUIHLWDQGWKHEXUGHQLVXSRQ DZHOORQVDLGSUHPLVHVZLWKLQWKUHHPRQWKVRUSD\ WKHOHVVRUWRSURYHLW >@SHUDFUHDQQXDOO\ls$DW7KHVHmSURGXFWLRQl FRPSRQHQWV RI WKH /HDVH FDVW GRXEW RQ WKH GLVWULFW FRXUWjV 6DSSY0DVVH\6:G.\&W$SS ILQGLQJWKDWmWKHDEXQGDQFHRIRLODQGJDVRUODFNWKHUHRI SURGXFHGRQWKHUHDOSURSHUW\DWLVVXHKDVQREHDULQJRQWKLV 3ODLQWLIIVFRQWHQGWKDWWZROHWWHUVFRQWDLQHGLQWKHUHFRUG DFWLRQl s$ DW  0RUHRYHU WKH VKDUS IODW RQH GDWHG $XJXVW   IURP WKH ZLGRZ RI *HRUJH UDWHSURGXFWLRQGLVWLQFWLRQKLJKOLJKWHGE\(TXLWDEOHZDVPDGH +RRYHU DQG RQH GDWHG s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m>:KHUH@ WKH OHVVRU GLG QRW DW DQ\ WLPH GHPDQG WKDW WKH SURGXFWLRQ ZH TXHVWLRQ WKH GLVWULFW FRXUWjV ILQGLQJ DV D OHVVHH EHJLQ RSHUDWLRQV DQG JLYH >OHVVHH@ D UHDVRQDEOH PDWWHURIODZWKDWQRLPSOLHGFRYHQDQWVZHUHLQRSHUDWLRQ RSSRUWXQLW\WRGRVRWKHUHLVQREDVLVIRUWKHFRQWHQWLRQ XQGHUWKH/HDVH+RZHYHUZHPD\DIILUPRQDQ\ JURXQGV WKDWWKHOHDVHLQTXHVWLRQZDVIRUIHLWHGEHFDXVHRIWKHOHVVHHjV VXSSRUWHGE\WKHUHFRUGHYHQLIGLIIHUHQWIURPWKHJURXQGV IDLOXUHWREHJLQRSHUDWLRQVl2KLR9DOOH\2LO *DV&RY UHOLHGRQE\WKHGLVWULFWFRXUW8QLWHG6WDWHV Y$OOHQ ,UYLQ'HY&R6:.\&W$SS )GQWK&LU%HFDXVHDVGLVFXVVHG EHORZZHILQG3ODLQWLIIVjLPSOLHGFRYHQDQWFODLPXQDYDLOLQJ $FFRUGLQJO\XQGHU6DSSDQG2KLR9DOOH\ZHILQGWKDWQR RQJURXQGVRIIDLOXUHWRSURYLGHQRWLFHWRRUPDNHGHPDQGRI JHQXLQHLVVXHRIPDWHULDOIDFWH[LVWVDVWRZKHWKHU3ODLQWLIIV (TXLWDEOH UHJDUGLQJ DQ\ LPSOLHG FRYHQDQW ZH DIILUP WKH JDYHQRWLFHWRRUPDGHGHPDQGRI(TXLWDEOHUHJDUGLQJWKH GLVWULFWFRXUWjVXOWLPDWHDZDUGRIVXPPDU\MXGJPHQW QHHGWRFRPSO\ZLWKDQ\LPSOLHGFRYHQDQW3ODLQWLIIVWKXV FDQQRWIRUIHLWWKH/HDVHRQJURXQGVRI(TXLWDEOHjVSXUSRUWHG 3ODLQWLIIVKDYHIDLOHGWRVKRZDJHQXLQHLVVXHRIIDFWDVWR EUHDFKRILPSOLHGFRYHQDQWVEHFDXVH3ODLQWLIIVKDYHSURGXFHG WKHLUVDWLVIDFWLRQRIWKHFOHDUUHTXLUHPHQWXQGHU.HQWXFN\ODZ QR HYLGHQFH WKDW WKH\ VDWLVILHG WKH FRQGLWLRQ SUHFHGHQW IRU IRUIHLWLQJDOHDVHRQWKRVHJURXQGV6DSS6:GDW