Kentland Elkhorn v. Hall

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

.(17/$1' (/.+251 &2$/ ; &25325$7,21  3HWLWLRQHU   1R  Y !   12$+ +$// ',5(&725  2)),&( 2) :25.(56j  &203(16$7,21 352*5$06  81,7(' 67$7(6 '(3$570(17   2) /$%25  5HVSRQGHQWV  1 2Q3HWLWLRQIRU5HYLHZRIDQ2UGHU RIWKH%HQHILWV5HYLHZ%RDUG 8QLWHG6WDWHV'HSDUWPHQWRI/DERU 1R%/$ $UJXHGsDQXDU\ 'HFLGHGDQG)LOHG$SULO %HIRUHs21(6DQG&2/(&LUFXLWsXGJHV*:,1'LVWULFW sXGJH

7KH +RQRUDEOH sDPHV 6 *ZLQ 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH 1RUWKHUQ 'LVWULFW RI 2KLR VLWWLQJ E\ GHVLJQDWLRQ

  .HQWODQG(ONKRUQ&RDO 1R &RUSY+DOOHWDO

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sXGJH  :LWK WKLV DSSHDO ZH GHFLGH ZKHWKHUWKH%HQHILWV5HYLHZ%RDUGRIWKH86'HSDUWPHQW RI /DERU WKH m%RDUGl HUUHG ZKHQ LW XSKHOG DQ $GPLQLVWUDWLYH /DZ sXGJHjV m$/sjVl GHFLVLRQ WR DZDUG 5HVSRQGHQW1RDK+DOOEHQHILWVXQGHUWKH&RDO0LQH+HDOWK DQG6DIHW\$FWDVDPHQGHGE\WKH%ODFN/XQJ%HQHILWV$FW RI86&††oWKHm$FWl:HDOVR GHFLGH ZKHWKHU WKH %HQHILWV 5HYLHZ %RDUG HUUHG ZKHQ LW IRXQG 3HWLWLRQHU .HQWODQG (ONKRUQ &RDO &RUSRUDWLRQ m.HQWODQGlWREHWKHUHVSRQVLEOHRSHUDWRU 3HWLWLRQHU .HQWODQG (ONKRUQ DSSHDOV WKH GHFLVLRQ RI WKH %RDUGJUDQWLQJ5HVSRQGHQW1RDK+DOODFRDOPLQHUEHQHILWV XQGHUWKH%ODFN/XQJ%HQHILWV$FWRI.HQWODQGDOOHJHV WKDWWKHHYLGHQFHGLGQRWVXSSRUW+DOOjVFODLPWREHQHILWVDQG WKDWWKH$GPLQLVWUDWLYH/DZsXGJHHUUHGLQILQGLQJ.HQWODQG WKH FRUUHFW UHVSRQVLEOH RSHUDWRU  7KH 'LUHFWRU 2IILFH RI  .HQWODQG(ONKRUQ&RDO 1R 1R .HQWODQG(ONKRUQ&RDO  &RUSY+DOOHWDO &RUSY+DOOHWDO

UHVSRQVLEOHRSHUDWRU)XUWKHU+DOOjVHQWLWOHPHQWWREHQHILWV :RUNHUVj&RPSHQVDWLRQ3URJUDPV86'HSDUWPHQWRI/DERU KDVEHHQIXOO\OLWLJDWHGRQLWVPHULWV/LNHWKHFRXUWLQ7UDFH m'LUHFWRUlMRLQVWKLVDFWLRQDVD5HVSRQGHQWSDUW\LQLQWHUHVW )RUNZHDUHXQZLOOLQJWRXSVHWWKDWILQGLQJ %HFDXVH WKHUH ZDV VXEVWDQWLDO HYLGHQFH WR VXSSRUW WKH 7KLV &RXUWjV GHFLVLRQ LQ 'LUHFWRU 2IILFH RI :RUNHUVj $/sjVGHWHUPLQDWLRQWKDW+DOOLVWRWDOO\GLVDEOHGEHFDXVHRI &RPSHQVDWLRQ3URJUDPVY2JOHED\)GWK&LU SQHXPRFRQLRVLV mEODFN OXQJ GLVHDVHl ZH $)),50 WKH LVGLVWLQJXLVKDEOHIURPWKHSUHVHQWFDVH,Q2JOHED\ $/sjVGHFLVLRQRQWKDWLVVXH+RZHYHUEHFDXVHWKHHYLGHQFH WKLV&RXUWDOORZHGWKH'LUHFWRUWRLGHQWLI\DQHZUHVSRQVLEOH ZDV LQVXIILFLHQW WR FRQFOXGH WKDW .HQWODQG ZDV WKH RSHUDWRUWHQ\HDUVDIWHUWKHILOLQJRIWKHLQLWLDOFODLP6HHLG UHVSRQVLEOH RSHUDWRU ZH 5(9(56( DQG 5(0$1' WR WKH DW7KLV&RXUWDOORZHGWKLVLQODUJHSDUWEHFDXVHmWKH %HQHILWV5HYLHZ%RDUGIRUSURFHHGLQJVLQDFFRUGDQFHZLWK FODLP KDG QRW DW WKDW WLPH EHHQ ILQDOO\ DGMXGLFDWHGl  ,G WKLVGHFLVLRQ $GGLWLRQDOO\ EHFDXVH WKH QHZ RSHUDWRU ZRXOG ERWK KDYH DFFHVVWRWKHHYLGHQFHGHYHORSHGLQWKHFDVHDQGDFKDQFHWR ,%DFNJURXQG FKDOOHQJHWKHFODLPDQWjVHQWLWOHPHQWWREHQHILWVJLYHQWKDWQR KHDULQJRQWKHPHULWVKDG\HWWDNHQSODFHWKHDGGLWLRQRID 1RDK+DOOZDVERUQRQsXQH+HZRUNHGLQFRDO QHZRSHUDWRUZRXOGQRWSUHMXGLFHWKHSDUWLHV6HHLGDW PLQLQJ IRU PXFK RI KLV DGXOW OLIH  +DOO ILOHG XQVXFFHVVIXO FODLPV IRU EHQHILWV XQGHU WKH %ODFN /XQJ %HQHILWV $FW LQ ,QWKHSUHVHQWFDVHKRZHYHU+DOOjVFODLPKDVEHHQIXOO\ DQGWKHODVWRIZKLFKWKH'LUHFWRUGHQLHG OLWLJDWHGRQLWVPHULWVDQGWRDOORZIXUWKHULQTXLU\LQWRWKH RQ 2FWREHU    %\  +DOO VD\V KH H[SHULHQFHG UHVSRQVLEOHRSHUDWRULVVXHZRXOGSUHMXGLFHWKHSDUWLHV:KLOH VKRUWQHVVRIEUHDWKFKHVWSDLQDQGGLIILFXOW\ZDONLQJORQJ ZHGRQRWKROGWKDWDFDVHFDQQHYHUEHUHPDQGHGWRQDPHD GLVWDQFHVDQGFOLPELQJVWDLUV7KDWVDPH\HDU+DOOVXIIHUHG QHZRSHUDWRUZHGRKRZHYHUKROGWKDWUHPDQGFDQQRWFRPH GLVDEOLQJLQMXULHVLQDURFNIDOOZKLOHZRUNLQJIRU'HVSDUDGR VRODWHLQWKHSURFHHGLQJV )XHOV ,QF m'HVSDUDGR )XHOVl DQG KDV QRW ZRUNHG VLQFH WKHQs$DW ,9&RQFOXVLRQ 2Q6HSWHPEHU+DOODJDLQILOHGIRUEHQHILWVXQGHU :H$)),50WKH$/sjVGHFLVLRQILQGLQJ+DOOHQWLWOHGWR WKH%ODFN/XQJ%HQHILWV$FW7KH'LUHFWRULQLWLDOO\GHQLHG EHQHILWVXQGHUWKH%ODFN/XQJ%HQHILWV$FW:H5(9(56( WKLVFODLPRQsDQXDU\7KH'LUHFWRUGHQLHGEHQHILWV WKH $/sjV GHFLVLRQ ILQGLQJ .HQWODQG WR EH WKH SURSHU DWWKDWWLPHEHFDXVH+DOOGLGQRWGHPRQVWUDWHWKDWEODFNOXQJ UHVSRQVLEOHRSHUDWRUDQGDFFRUGLQJO\5(0$1'WKDWLVVXHWR GLVHDVHWRWDOO\GLVDEOHGKLPs$DWo+DOODSSHDOHG WKH %HQHILWV 5HYLHZ %RDUG IRU SURFHHGLQJV LQ DFFRUGDQFH WKHGHFLVLRQs$DW2QsXO\WKH'LUHFWRU ZLWKWKLVGHFLVLRQ KHOG DQ LQIRUPDO FRQIHUHQFH  ,Q D SURSRVHG GHFLVLRQ DQG RUGHU WKH 'LUHFWRU IRXQG WKDW +DOO GLG KDYH EODFN OXQJ GLVHDVH WKDW FRDO PLQH ZRUN FDXVHG WKH GLVHDVH WKDW +DOO WLPHO\ILOHGKLVFODLPWKDW+DOOKDGZRUNHGDWOHDVWILIWHHQ \HDUV LQ FRDO PLQHV WKDW .HQWODQG ZDV WKH UHVSRQVLEOH RSHUDWRULQWKHFODLPDQGWKDW+DOOjVPRVWUHFHQWSHULRGRI FXPXODWLYHFRDOPLQHHPSOR\PHQWWRWDOLQJDWOHDVWRQH\HDU ZDV ZLWK .HQWODQG  7KH 'LUHFWRU KRZHYHU GHQLHG +DOOjV  .HQWODQG(ONKRUQ&RDO 1R 1R .HQWODQG(ONKRUQ&RDO  &RUSY+DOOHWDO &RUSY+DOOHWDO

FODLPIRUEHQHILWVEHFDXVHKHIRXQGWKDW+DOOGLGQRWVKRZ QRWEHGHILQLWLYHO\LGHQWLILHGl7UDFH)RUN)GDW WRWDOGLVDELOLW\DQGEHFDXVH+DOOKDGQRWVKRZQDPDWHULDO )XUWKHUWKH)RXUWK&LUFXLWXSKHOGWKH%RDUGjVGHFLVLRQQRWWR FKDQJHVLQFHWKHHDUOLHUGHQLDORIEHQHILWVs$DWo UHPDQGWKHFDVHIRUWKHDSSRLQWPHQWRIDQRWKHUUHVSRQVLEOH RSHUDWRU6HHLGDW7KHFRXUWLQ7UDFH)RUNVWDWHGWKDW 2Q $XJXVW   +DOO UHTXHVWHG D IRUPDO KHDULQJ +DYLQJ UHFHLYHG +DOOjV UHTXHVW WKH 'HSDUWPHQW RI /DERU WKH'LUHFWRUPXVWUHVROYHWKHUHVSRQVLEOHRSHUDWRULVVXH WUDQVIHUUHG+DOOjVFODLPWRWKH2IILFHRI$GPLQLVWUDWLYH/DZ LQDSUHOLPLQDU\SURFHHGLQJRUHOVHSURFHHGDJDLQVWDOO sXGJHVIRUDKHDULQJ2Q0D\$GPLQLVWUDWLYH/DZ SRWHQWLDO RSHUDWRUV DW HDFK VWDJH RI WKH FODLP sXGJH 7KRPDV 3KDOHQ sU FRQYHQHG D KHDULQJ WR UHYLHZ DGMXGLFDWLRQWRSUHYHQWSLHFHPHDOOLWLJDWLRQDQGDYRLG +DOOjVFODLP GXHSURFHVVFRQFHUQV,IWKLVFDVHZHUHUHPDQGHGDQG DQRWKHUUHVSRQVLEOHRSHUDWRUQDPHGWKDWRSHUDWRUZRXOG ,QD6HSWHPEHUGHFLVLRQWKH$/sDZDUGHG+DOO EHHQWLWOHGWRFKDOOHQJH>WKHFODLPDQWjV@HQWLWOHPHQWWR EODFNOXQJEHQHILWV,QWKDWGHFLVLRQWKH$/sIRXQGWKDW+DOO EHQHILWV  :H DUH XQZLOOLQJ WR SRWHQWLDOO\ XSVHW WKH ZRUNHGLQFRDOPLQHVIRUILIWHHQ\HDUVs$DWWKDW+DOO ILQGLQJWKDW>WKHFODLPDQW@LVHQWLWOHGWREHQHILWVDPDWWHU KDV FRDO ZRUNHUVj SQHXPRFRQLRVLV s$ DW  WKDW WKH DOUHDG\IXOO\OLWLJDWHGRQWKHPHULWV SQHXPRFRQLRVLVDURVHRXWRI+DOOjVZRUNDVDFRDOPLQHUs$ DWWKDW+DOOLVWRWDOO\GLVDEOHGEHFDXVHRIWKHGLVHDVHs$ ,GDWLQWHUQDOFLWDWLRQRPLWWHG DW o DQG WKDW VXFK D ILQGLQJ RI WRWDO GLVDELOLW\ LV D mPDWHULDOFKDQJHLQFRQGLWLRQVlIURPDSULRUGHQLDORIEHQHILWV ,Q9HQLFDVVDWKH7KLUG&LUFXLWDOVRUHIXVHGWRDOORZWKH XQGHU&)5†Gs$DW7KH IXUWKHU FRQVLGHUDWLRQ RI WKH UHVSRQVLEOH RSHUDWRU LVVXH  ,W $/sDOVRIRXQGWKDW.HQWODQGZDVWKHUHVSRQVLEOHRSHUDWRU XSKHOGWKHDVVLJQPHQWRIOLDELOLW\WRWKH7UXVW)XQGEHFDXVH s$DW,QVHOHFWLQJ.HQWODQGDVWKHUHVSRQVLEOHRSHUDWRU WKH'LUHFWRUmGLGQRWPDNHDWLPHO\GHVLJQDWLRQRIWKHSURSHU WKH$/sIRXQGWKDW+DOOjVPRUHUHFHQWHPSOR\HUV'HVSDUDGR UHVSRQVLEOHRSHUDWRUQRUGLGLWHYHQPDNHDWLPHO\DWWHPSWWR DQG &ROHPDQ  &ROHPDQ 0LQLQJ &RPSDQ\ ,QF FRUUHFW LWV PLVGHVLJQDWLRQ RU WR DGG >RWKHU@ SRWHQWLDO m&ROHPDQl ZHUHQRWUHVSRQVLEOHEHFDXVHWKH\HPSOR\HG UHVSRQVLEOHRSHUDWRU>V@l9HQLFDVVD)GDW +DOOIRUOHVVWKDQDFXPXODWLYH\HDUs$DW 7KH9HQLFDVVDFRXUWIRXQGLWVLJQLILFDQWWKDWWKH'LUHFWRU KDGVXIILFLHQWHYLGHQFHIURPHDUO\LQWKHSURFHHGLQJVWRQDPH WKH SURSHU UHVSRQVLEOH RSHUDWRU DQG \HW GLG QRW VHW IRUWK  3 sDQXDU\   UHYLVLRQV WR  &)5 SW  EHFDPH LQIRUPDWLRQ VXIILFLHQW WR LGHQWLI\ WKH UHVSRQVLEOH RSHUDWRU HIIHFWLYH $00  &)5 †   $FFRUGLQJ WR  &)5 †  6HH LG DW   ,Q GHFLGLQJ WKDW WKH FDVH VKRXOG QRW EH WKH UHYLVHG SURFHGXUHV RI SDUW  DSSO\ WR DOO FODLPV SHQGLQJ RQ sDQXDU\   ZLWK FHUWDLQ H[FHSWLRQV )RU WKH H[FHSWHG VHFWLRQV WKH &RGH RI UHPDQGHGWKHFRXUWIRXQGLWVLJQLILFDQWWKDWWKHFODLPKDG )HGHUDO 5HJXODWLRQV GLUHFWV WKDW WKH YHUVLRQ mUHYLVHG DV RI $SULO  l DOUHDG\EHHQIXOO\DGMXGLFDWHGRQLWLWVPHULWV6HHLG EH DSSOLHG  &)5 † F 0DQ\ RI WKH &RGH RI )HGHUDO 5HJXODWLRQV SURYLVLRQV DW LVVXH LQ WKLV FDVH IDOO XQGHU WKH H[FHSWLRQ DQG ,Q WKH SUHVHQW FDVH WKH 'LUHFWRU KDV VLPLODUO\ IDLOHG WR WKXV WKH &RXUW FLWHV WR WKH  YHUVLRQ ZKHQ DSSURSULDWH GHYHORS DGHTXDWH HYLGHQFH UHJDUGLQJ WKH GHVLJQDWLRQ RI D 7KH FXUUHQW YHUVLRQ RI  &)5 †  H[SODLQV WKH DSSOLFDELOLW\ RI UHVSRQVLEOH RSHUDWRU  %HFDXVH WKH 'LUHFWRU GLG QRW RIIHU SDUW  RI WKH &RGH RI )HGHUDO 5HJXODWLRQV WR SHQGLQJ FDVHV ,W VWDWHV WKDW m>W@KLV SDUW LV DSSOLFDEOH WR WKH DGMXGLFDWLRQ RI DOO FODLPV ILOHG DIWHU HYLGHQFHVXEVWDQWLDOHQRXJKWRVKRZWKDW*UDVV\&UHHNFRXOG 0DUFK      l  &)5 †   7KHUHIRUH WKH &RXUW QRW EH KHOG UHVSRQVLEOH DV D VXFFHVVRU WR &ROHPDQ WKH DSSOLHV WKH FXUUHQW YHUVLRQ RI SDUW  WR WKLV FDVH 'LUHFWRU IDLOHG WR VKRZ WKDW .HQWODQG ZDV WKH SURSHU  .HQWODQG(ONKRUQ&RDO 1R 1R .HQWODQG(ONKRUQ&RDO  &RUSY+DOOHWDO &RUSY+DOOHWDO

WRZKLFKRQHLVSURSHUO\UHVSRQVLEOHIRUEHQHILWVLQRQH .HQWODQG DSSHDOHG WKH $/sjV GHFLVLRQ WR WKH %HQHILWV SURFHHGLQJ:HKROGKRZHYHUWKDWGXHSURFHVVDVZHOO 5HYLHZ %RDUG  7KH %RDUG DIILUPHG WKH $/sjV GHFLVLRQ DVWKHHIILFLHQWDGPLQLVWUDWLRQRIWKH$FWFRPSHOVWKLV GHVLJQDWLQJ.HQWODQGDVWKHUHVSRQVLEOHRSHUDWRUDQGILQGLQJ UHVXOW +DOO HQWLWOHG WR EODFN OXQJ EHQHILWV  s$ DW   5HPDQG IRU UHFRQVLGHUDWLRQ RI WKH RSHUDWRU LVVXH .HQWODQGQRZDSSHDOVWRWKLV&RXUW ZRXOG EH WDQWDPRXQW WR UHOLWLJDWLQJ WKH FODLP  ,I WKH 'HSDUWPHQWLGHQWLILHVDQRWKHUUHVSRQVLEOHRSHUDWRUWKHQ ,,6WDQGDUGRI5HYLHZ WKDWRSHUDWRULVHQWLWOHGWRFRQWHVWWKHFODLPGHYHORSLWV RZQ HYLGHQFH UHTXHVW D KHDULQJ HWF XQWLO LW KDV 7KLV&RXUWPXVWDIILUPWKH%RDUGjVGHFLVLRQLIWKH%RDUG H[KDXVWHG WKH IXOO JDPXW RI DYDLODEOH SURFHGXUHV IRU KDVQRWFRPPLWWHGDQ\OHJDOHUURURUH[FHHGHGLWVVFRSHRI DGMXGLFDWLQJHQWLWOHPHQW7KLVSLHFHPHDODSSURDFK UHYLHZ RI WKH $/sjV GHWHUPLQDWLRQ  6HH *OHQ &RDO &R Y HQFRXUDJHV WZR XQGHVLUDEOH UHVXOWV  )LUVW D FODLPDQW 6HDOV)GWK&LU7KH&RXUWUHYLHZV ZKR KDV HVWDEOLVKHG HQWLWOHPHQW LQ WKH ILUVW URXQG RI WKH $/sjV GHFLVLRQ RQO\ WR GHFLGH ZKHWKHU VXEVWDQWLDO SURFHHGLQJVPD\ORVHKLVDZDUGLQDODWHUURXQGDJDLQVW HYLGHQFHVXSSRUWVLWDQGZKHWKHULWLVLQDFFRUGDQFHZLWKWKH DQRWKHU RSHUDWRU    6HFRQG SLHFHPHDO OLWLJDWLRQ DSSOLFDEOHODZ6HHLG:HGRQRWUHZHLJKWKHHYLGHQFHRU REYLRXVO\ LV QRW FRPSDWLEOH ZLWK WKH HIILFLHQW VXEVWLWXWHRXUMXGJPHQWIRUWKDWRIWKH$/s6HH*UD\Y6/& DGPLQLVWUDWLRQRIWKH$FWDQGH[SHGLWLRXVSURFHVVLQJRI &RDO&R)GWK&LU7KXVDVORQJDV FODLPV WKHHYLGHQFHVXSSRUWVWKH$/sjVFRQFOXVLRQVWKH&RXUWZLOO QRWUHYHUVHWKH$/sjVGHFLVLRQmHYHQLIWKHIDFWVSHUPLWDQ ,GDWIRRWQRWHRPLWWHG DOWHUQDWLYHFRQFOXVLRQl

ILQDOO\ GHQLHG WKH ODWHU FODLP VKDOO DOVR EH GHQLHG RQ WKH UHFHQWSHULRGVRIFXPXODWLYHHPSOR\PHQWRIQRWOHVVWKDQ JURXQGV RI WKH SULRU GHQLDO XQOHVV    WKHUH KDV EHHQ D \HDUl&)5†D :HGRQRW PDWHULDOFKDQJHLQFRQGLWLRQVl7RILQGWKDWDPDWHULDO KRZHYHU UHPDQG WKLV FDVH WR QDPH D QHZ UHVSRQVLEOH FKDQJHLQFRQGLWLRQKDVRFFXUUHGWKH$/s RSHUDWRURUIRUIXUWKHULQTXLU\DVWRZKHWKHU.HQWODQGLVLQ IDFWWKHSURSHUUHVSRQVLEOHRSHUDWRU PXVW FRQVLGHU DOO RI WKH QHZ HYLGHQFH IDYRUDEOH DQG XQIDYRUDEOHDQGGHWHUPLQHZKHWKHUWKHPLQHUKDVSURYHQ 7KHUHJXODWLRQVUHTXLUHWKDWWKH'LUHFWRULGHQWLI\QRWLI\ DW OHDVW RQH RI WKH HOHPHQWV RI HQWLWOHPHQW SUHYLRXVO\ DQG GHYHORS HYLGHQFH UHJDUGLQJ SRWHQWLDO UHVSRQVLEOH DGMXGLFDWHG DJDLQVW KLP  ,I WKH PLQHU HVWDEOLVKHV WKH RSHUDWRUV  6HH  &)5 †† E   H[LVWHQFH RI WKDW HOHPHQW KH KDV GHPRQVWUDWHG DV D :KHQ WKH 'LUHFWRU KDV IDLOHG WR GHYHORS WKLV HYLGHQFH PDWWHURIODZDPDWHULDOFKDQJH7KHQ WKH$/sPXVW DGHTXDWHO\RUKDVIDLOHGWRUHVROYHWKHUHVSRQVLEOHRSHUDWRU FRQVLGHU ZKHWKHU DOO RI WKH UHFRUG HYLGHQFH LQFOXGLQJ LVVXHDWDSUHOLPLQDU\VWDJHRIWKHFDVHFRXUWVKDYHUHIXVHGWR WKDW VXEPLWWHG ZLWK WKH SUHYLRXV FODLPV VXSSRUWV D UHPDQG WKH FDVH IRU IXUWKHU SURFHHGLQJV UHJDUGLQJ WKH ILQGLQJRIHQWLWOHPHQWWREHQHILWV UHVSRQVLEOHRSHUDWRU,QVWHDGWKH%ODFN/XQJ'LVDELOLW\7UXVW )XQGm7UXVW)XQGlKDVSDLGWKHEHQHILWVWRZKLFKWKHPLQHUV 6KDURQGDOH &RUS Y 5RVV  )G  o WK &LU ZHUH HQWLWOHG  6HH HJ 9HQLFDVVD Y 'LUHFWRU 2IILFH RI 7KH$/sjVFRQFOXVLRQWKDW+DOOLVQRZWRWDOO\GLVDEOHG :RUNHUVj &RPS 3URJUDPV  )G  G &LU  EHFDXVHRIEODFNOXQJGLVHDVHHVWDEOLVKHGDPDWHULDOFKDQJHLQ 'LUHFWRU2IILFHRI:RUNHUVj&RPS3URJUDPVY7UDFH)RUN FRQGLWLRQ &RDO&R)GWK&LU&UDEWUHHY%HWKOHKHP 6WHHO&RUS%ODFN/XQJ5HS%HQ5HY%G 2QDSSHDO.HQWODQGFKDOOHQJHVRQO\ZKHWKHU+DOOLVWRWDOO\ GLVDEOHG,WGRHVQRWFKDOOHQJHWKDW+DOOVXIIHUVIURPEODFN ,Q &UDEWUHH WKH %RDUG UHYLHZHG WKH $/sjV GHFLVLRQ OXQJGLVHDVHWKDWKLVGLVHDVHDURVHIURPPLQLQJHPSOR\PHQW JUDQWLQJEHQHILWVWRWKHFODLPDQWDQGILQGLQJ%HWKOHKHP6WHHO RUWKDWWKHWRWDOGLVDELOLW\LVWKHUHVXOWRIEODFNOXQJGLVHDVH WREHWKHSURSHUUHVSRQVLEOHRSHUDWRU7KH%RDUGUHYHUVHGWKH :HDFFRUGLQJO\OLPLWRXUUHYLHZWRWKHTXHVWLRQRIZKHWKHU $/sjV ILQGLQJ WKDW %HWKOHKHP 6WHHO ZDV WKH UHVSRQVLEOH VXEVWDQWLDOHYLGHQFHVXSSRUWVWKH$/sjVILQGLQJWKDW+DOOLV RSHUDWRUDQGUHIXVHGWRUHPDQGWKHFDVHIRUUHFRQVLGHUDWLRQRI WRWDOO\GLVDEOHGEHFDXVHRIEODFNOXQJGLVHDVH WKHRSHUDWRULVVXH&UDEWUHH%ODFN/XQJ5HSDW 7KH%RDUGLQVWHDGKHOGWKH7UXVW)XQGOLDEOHVWDWLQJ 6HFWLRQGHILQHVmWRWDOGLVDELOLW\l6HH&)5 WKDWm>W@KH'HSDUWPHQWRI/DERULVQRWHQWLWOHGWRDVHFRQG †E 7RVKRZmWRWDOGLVDELOLW\lDPLQHU RSSRUWXQLW\WRLGHQWLI\DQRWKHUSXWDWLYHUHVSRQVLEOHRSHUDWRUl PXVWVKRZWKDWKLVGLVHDVHSUHYHQWVKLPIURPmSHUIRUPLQJ ,GDW7KH%RDUGIXUWKHUH[SODLQHG KLV    XVXDO FRDO PLQH ZRUNl DQG SUHYHQWV KLP m>I@URP HQJDJLQJ LQ JDLQIXO HPSOR\PHQW LQ WKH LPPHGLDWH DUHD RI 7KH'HSDUWPHQWLVDXWKRUL]HGE\ODZWRLGHQWLI\WKH KLVUHVLGHQFHUHTXLULQJWKHVNLOOVRUDELOLWLHVFRPSDUDEOH SXWDWLYH UHVSRQVLEOH RSHUDWRU ZKR PD\ EH OLDEOH IRU WRWKRVHRIDQ\HPSOR\PHQWLQPLQHRUPLQHVLQZKLFKKH SD\PHQW RI EHQHILWV LQ WKH FRXUVH RI GHWHUPLQLQJ SUHYLRXVO\HQJDJHGZLWKVRPHUHJXODULW\RYHUDVXEVWDQWLDO ZKHWKHU D PLQHU LV HQWLWOHG WR EHQHILWV   &)5 SHULRGRIWLPHl&)5†E  LLL  ††7KHUHJXODWLRQVFRQWDLQQRH[SUHVV 7KHUHJXODWLRQVWKHQOLVWDVHULHVRIILYHPHGLFDOFULWHULDXQGHU SURYLVLRQ UHTXLULQJ WKH 'HSDUWPHQW WR LGHQWLI\ DOO SXWDWLYHUHVSRQVLEOHRSHUDWRUVDQGUHVROYHDQ\GLVSXWHDV  .HQWODQG(ONKRUQ&RDO 1R 1R .HQWODQG(ONKRUQ&RDO  &RUSY+DOOHWDO &RUSY+DOOHWDO

6HFXULW\ VWDWHPHQW RI HDUQLQJV VKRZV WKDW KH ZRUNHG IRU &)5†E WKDWFDQHVWDEOLVKDPLQHUjV &ROHPDQIRUSHULRGVRIWLPHLQDQG,Q+DOO WRWDOGLVDELOLW\ HDUQHG  IURP &ROHPDQ DQG LQ  KH HDUQHG   +LV HDUQLQJV IURP &ROHPDQ LQGLFDWH WKDW LI KLV 7KH$/sIRXQGWKDW+DOOKDGVKRZQKLPVHOIWRWDOO\GLVDEOHG WLPH ZLWK &ROHPDQ DQG *UDVV\ &UHHN ZHUH DJJUHJDWHG LW XQGHU  &)5 † E  LY E\ VKRZLQJ WKDW mD ZRXOGWRWDORYHUD\HDU SK\VLFLDQ H[HUFLVLQJ UHDVRQHG PHGLFDO MXGJPHQW EDVHG RQ PHGLFDOO\ DFFHSWDEOH FOLQLFDO DQG ODERUDWRU\ GLDJQRVWLF %HFDXVHVXEVWDQWLDOHYLGHQFHGRHVQRWVXSSRUWWKH$/sjV WHFKQLTXHVFRQFOXGHVWKDWDPLQHUjVUHVSLUDWRU\RUSXOPRQDU\ FRQFOXVLRQUHJDUGLQJWKHSUHGHFHVVRUVXFFHVVRUUHODWLRQVKLS FRQGLWLRQ    SUHYHQWV WKH PLQHU IURP HQJDJLQJ LQ RI &ROHPDQ DQG *UDVV\ &UHHN WKH HYLGHQFH DOVR GRHV QRW HPSOR\PHQWDVGHVFULEHGLQSDUDJUDSKE RIWKLVVHFWLRQl VXSSRUW D ILQGLQJ WKDW .HQWODQG LV WKH SURSHU UHVSRQVLEOH s$DW RSHUDWRU  .HQWODQG FRXOG RQO\ EH OLDEOH DV D UHVSRQVLEOH RSHUDWRULIQRRWKHUVXEVHTXHQWRSHUDWRUVHPSOR\HG+DOOIRU ,Q PDNLQJ WKLV GHWHUPLQDWLRQ WKH $/s FRQVLGHUHG IRXU D\HDURUPRUH7KHHYLGHQFHLVQRWVXEVWDQWLDOHQRXJKWR GRFWRUVjHYDOXDWLRQVRI+DOOs$DWo,QFKRRVLQJ VXSSRUW D ILQGLQJ WKDW *UDVV\ &UHHN FDQQRW EH KHOG ZKLFKHYDOXDWLRQVZHUHPRUHFUHGLEOHWKH$/sUHFRJQL]HG UHVSRQVLEOH,QVWHDGWKHHYLGHQFHLQGLFDWHVWKDW*UDVV\&UHHN WKDWE\ILQGLQJDPDWHULDOFKDQJHLQFRQGLWLRQWKH$/sZDV LVOLNHO\WKHmRSHUDWRUZLWKZKLFK>+DOO@KDGWKH PRVW UHTXLUHG WR FRQVLGHU DOO RI WKH HYLGHQFH RI UHFRUG  ,Q FRQVLGHULQJVXFKHYLGHQFHWKH$/sGHWHUPLQHGWKDWEHFDXVH EODFN OXQJ LV mD SURJUHVVLYH DQG LUUHYHUVLEOH GLVHDVHl LW LV  7KH 'LUHFWRU DV D SDUW\ LQ LQWHUHVW GRHV QRW DUJXH WKDW &ROHPDQ DQG mDSSURSULDWH WR DFFRUG JUHDWHU ZHLJKW WR WKH PRVW UHFHQW *UDVV\ &UHHN DUH QRW LQ D SUHGHFHVVRUVXFFHVVRU UHODWLRQVKLS 5DWKHU WKH HYLGHQFHRIUHFRUGHVSHFLDOO\ZKHUHDVLJQLILFDQWDPRXQWRI 'LUHFWRU DUJXHV WKDW QHLWKHU FRPSDQ\ FDQ EH D UHVSRQVLEOH RSHUDWRU WLPHVHSDUDWHVWKHQHZHUIURPWKHROGHUHYLGHQFHls$DW EHFDXVH QHLWKHU HPSOR\HG +DOO IRU DW OHDVW RQH \HDU 7KH 'LUHFWRU DUJXHV   $FFRUGLQJO\ WKH $/s IRFXVHG RQ WKH HYDOXDWLRQV WKDW WKH ODQJXDJH LQ  86& † L RI WKH $FW GLUHFWLQJ WKDW VXFFHVVRU SHUIRUPHG E\ 'UV 6LEX 6DKD 0DQQ

ODVWFRDOPLQLQJMREls$DW%XW'U+DOO@ GLG QRW JLYH D PD[LPXP HIIRUWl +DOOZRUNHGIRU*UDVV\&UHHNIURPsXO\RUWR s$DW+HFRQFOXGHGWKDWm>W@KHUHLVQRHYLGHQFHWKDW sXO\MXVWXQGHUD\HDUs$DW+DOOGRHV WKHREVWUXFWLRQLVRIVLJQLILFDQWGHJUHHWRSUHYHQW>+DOO@IURP QRW NQRZ KRZ ORQJ KH ZRUNHG IRU &ROHPDQ  +LV 6RFLDO UHWXUQLQJ WR KLV ODVW MRE RU D MRE UHTXLULQJ VLPLODU HIIRUWl s$DW 7KH$/sIRXQGWKDWWKHRSLQLRQVRI'UV6DKDDWLHQW@ XQDEOH WR SHUIRUP DERYH ZRUNl s$ DW   )G DW   .HQWODQG(ONKRUQ&RDO 1R 1R .HQWODQG(ONKRUQ&RDO  &RUSY+DOOHWDO &RUSY+DOOHWDO

FRQGLWLRQV@    WKH VXFFHVVRU RSHUDWRU VKDOO LI FRQFOXGHGWKDW+DOOFRXOGGRKLVSUHYLRXVFRDOPLQHZRUN DSSURSULDWHEHOLDEOHIRUWKHSD\PHQWRIVXFKEHQHILWV s$DWo,QFRQWUDVWWKH$/sQRWHGWKDW'UVW@KH\ ZHUH PRYLQJ WKH PLQLQJ HTXLSPHQW 7KH\ ZDV WDNLQJ WKHLU HTXLSPHQW ZLWK WKHP :KHQ WKH\ TXLW UHDVRQDEOHDQGLQDFFRUGDQFHZLWKWKHODZDQGWKDWWKH$/s RQH PLQH WKH\ WRRN DOO WKHLU HTXLSPHQW RXW RI LW 7KH\ PRYHG LW RYHU KHUH EDVHGWKHHYDOXDWLRQXSRQVXEVWDQWLDOHYLGHQFHLQWKHUHFRUG WR DQRWKHU PLQH WKHQ XVHG WKH HTXLSPHQW LQ LWl s$ DW  +DOO VWDWHG IXUWKHU WKDW ZKHQ &ROHPDQ PRYHG PLQH VLWHV WKH\ ZRXOG QRW QHFHVVDULO\  .HQWODQG(ONKRUQ&RDO 1R 1R .HQWODQG(ONKRUQ&RDO  &RUSY+DOOHWDO &RUSY+DOOHWDO

:HWKHUHIRUHILQGWKDWVXEVWDQWLDOHYLGHQFHVXSSRUWV+DOOjV  'XULQJ DQ\ SHULRG LQ ZKLFK WKLV VHFWLRQ LV HOLJLELOLW\IRUEODFNOXQJEHQHILWV DSSOLFDEOHWRWKHRSHUDWRURIDFRDOPLQHZKRRQRUDIWHU sDQXDU\DFTXLUHGVXFKPLQHRUVXEVWDQWLDOO\DOO %5HVSRQVLEOH2SHUDWRU WKH DVVHWV WKHUHRI IURP D SHUVRQ KHUHLQDIWHU LQ WKLV VXEVHFWLRQUHIHUUHGWRDVDmSULRURSHUDWRUlZKRZDVDQ +DYLQJGHFLGHGWKDW+DOOLVHQWLWOHGWREHQHILWVZHPXVW RSHUDWRURIVXFKPLQHRURZQHURIVXFKDVVHWVRQRUDIWHU QRZGHFLGHZKRLVUHVSRQVLEOHIRUSD\LQJWKHVHEHQHILWV7KH sDQXDU\   VXFK RSHUDWRU VKDOO EH OLDEOH IRU DQG $FWSXWVWKHEXUGHQRISD\PHQWRQHPSOR\HUV6HH86& VKDOOVHFXUHWKHSD\PHQWRIDOOEHQHILWVZKLFKZRXOG †,IQRHPSOR\HULVIRXQGOLDEOHWKHSD\PHQW KDYH EHHQ SD\DEOH E\ WKH SULRU RSHUDWRU XQGHU WKLV REOLJDWLRQIDOOVWRWKH%ODFN/XQJ'LVDELOLW\7UXVW)XQG6HH VHFWLRQZLWKUHVSHFWWRPLQHUVSUHYLRXVO\HPSOR\HGE\ 86&† VXFKSULRURSHUDWRUDVLIWKHDFTXLVLWLRQKDGQRWRFFXUUHG DQGWKHSULRURSHUDWRUKDGFRQWLQXHGWREHDQRSHUDWRURI )HGHUDOUHJXODWLRQVFUHDWHDIUDPHZRUNLQZKLFKWRGHFLGH DFRDOPLQH WKHHPSOR\HUUHVSRQVLEOHIRUSD\PHQWRIDPLQHUjVEODFNOXQJ 1RWKLQJLQWKLVVXEVHFWLRQVKDOOUHOLHYHDQ\SULRU EHQHILWV7KHmUHVSRQVLEOHRSHUDWRUlLVWKHHPSOR\HUmZLWK RSHUDWRURIDQ\OLDELOLW\XQGHUWKLVVHFWLRQ ZKLFKWKHPLQHUKDGWKHPRVWUHFHQWSHULRGVRIFXPXODWLYH HPSOR\PHQW RI QRW OHVV WKDQ  \HDUl   &)5 86&†L o † D   VHH DOVR &RUQHWW Y %HQKDP &RDO ,QF)GQWK&LU 7KH$FWIXUWKHUVWDWHVWKDWFRUSRUDWHUHRUJDQL]DWLRQVDQG OLTXLGDWLRQV TXDOLI\ DV VXFK D UHODWLRQVKLS  ,W SODFHV WKH 6HFWLRQERXWOLQHVWKHPHWKRGIRUGHWHUPLQLQJWKH EXUGHQ WR SD\ EHQHILWV RQ WKH VXFFHVVRU RSHUDWRU LI VXFK UHVSRQVLEOHRSHUDWRU7KDWVHFWLRQVWDWHV VXFFHVVRURSHUDWRUSXUFKDVHVmVXEVWDQWLDOO\DOO>RIWKHSULRU RSHUDWRUjV@DVVHWVlRULIDSULRURSHUDWRUFHDVHVWRH[LVWmDV )URP WKH HYLGHQFH SUHVHQWHG WKH LGHQWLW\ RI WKH WKHUHVXOWRIDPHUJHUFRQVROLGDWLRQRUGLYLVLRQl86& RSHUDWRURURWKHUHPSOR\HUZLWKZKLFKWKHPLQHUKDGWKH †L  $o' PRVW UHFHQW SHULRGV RI FXPXODWLYH HPSOR\PHQW RI QRW OHVVWKDQ\HDUDQGWRWKHH[WHQWHYLGHQFHSHUPLWVWKH 7KH&RGHRI)HGHUDO5HJXODWLRQVGLVFXVVHVWKHPRWLYHRI EHJLQQLQJ DQG HQGLQJ GDWHV RI VXFK SHULRGV VKDOO EH WKHVWDWXWHH[SODLQLQJWKDW DVFHUWDLQHG  )RU SXUSRVHV RI WKLV VHFWLRQ D \HDU RI HPSOR\PHQWPHDQVDSHULRGRI\HDURUSDUWLDOSHULRGV 7KH VWDWHG FRQJUHVVLRQDO REMHFWLYH VXSSRUWLQJ > WRWDOLQJ  \HDU GXULQJ ZKLFK WKH PLQHU ZDV UHJXODUO\ 86& † L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

IRUZRUNDVDPLQHU6HH*DUGQHU)GDWm7KH GHWHUPLQHGWRKDYHHVWDEOLVKHGWKDWWKHPLQHUZDVQRW GD\OLPLWUHODWHVWRWKHPLQLPXPDPRXQWRIWLPHWKHPLQHU UHJXODUO\ HPSOR\HG IRU D FXPXODWLYH \HDU E\ VXFK PD\KDYHEHHQH[SRVHGWRFRDOGXVWZKLOHLQHPSOR\PHQWE\ RSHUDWRURUHPSOR\HUIRUWKHSXUSRVHVRISDUDJUDSKDRI WKDWRSHUDWRUl WKLVVHFWLRQ$mZRUNLQJGD\lPHDQVDQ\GD\RUSDUWRI DGD\IRUZKLFKDPLQHUUHFHLYHGSD\IRUZRUNDVDPLQHU 'HVSDUDGR )XHOV WKHUHIRUH FDQQRW EH WKH UHVSRQVLEOH RSHUDWRU EHFDXVH LW GLG QRW HPSOR\ +DOO IRU WKH PLQLPXP &)5†E DPRXQWRIWLPHWKHUHJXODWLRQVUHTXLUH ,QDQDWWHPSWWRPDNHVHQVHRIZKDWLVDUJXDEO\DQRSDTXH &ROHPDQ &ROHPDQDQG*UDVV\&UHHN(QHUJLHV UHJXODWLRQWKH7KLUG&LUFXLWVWDWHG .HQWODQGQH[WDUJXHVWKDW+DOOZRUNHGIRUWZRFRPSDQLHV $V D SUDFWLFDO PDWWHU WKH RQH\HDU HPSOR\PHQW &ROHPDQ DQG *UDVV\ &UHHN DIWHU KLV HPSOR\PHQW ZLWK UHTXLUHPHQW VHWV D IORRU IRU WKH RSHUDWRUjV FRQQHFWLRQ .HQWODQG.HQWODQGDUJXHVWKDWWKH$/sHUUHGLQQRWILQGLQJ ZLWKWKHPLQHUEHORZZKLFKWKHRSHUDWRUFDQQRWEHKHOG D SUHGHFHVVRUVXFFHVVRU UHODWLRQVKLS EHWZHHQ WKH WZR UHVSRQVLEOH IRU WKH SD\PHQW RI EHQHILWV  7KH GD\ FRPSDQLHV,IVXFKDSUHGHFHVVRUVXFFHVVRUUHODWLRQVKLSLV OLPLWUHODWHVWRWKHPLQLPXPDPRXQWRIWLPHWKHPLQHU IRXQG .HQWODQG VD\V WKH $/s VKRXOG KDYH DJJUHJDWHG WKH PD\KDYHEHHQH[SRVHGWRFRDOGXVWZKLOHLQHPSOR\PHQW WLPH+DOOZRUNHGIRUHDFK E\WKHRSHUDWRU 7KH'LUHFWRUDQG+DOOFRQFHGHWKDW+DOOEHJDQZRUNLQJIRU 'LUHFWRU2IILFHRI:RUNHUVj&RPS3URJUDPVY*DUGQHU &ROHPDQRQ6HSWHPEHUEXWQHLWKHUNQHZKLVOHQJWK )Go RI HPSOR\PHQW  s$ DW   7KH GLUHFWRU DQG +DOO DOVR FRQFHGH WKDW +DOO ZRUNHG IRU *UDVV\ &UHHN IURP sXO\  7KHSDUWLHVGRQRWGLVSXWHWKDW+DOOZRUNHGDW.HQWODQGIRU RUWRsXO\s$DW7KHUHIRUH WKUHH\HDUVIURPWR8QOHVVVRPHODWHURSHUDWRU ZHGHFLGHZKHWKHULWZDVUDWLRQDOWRFRQFOXGHWKDW&ROHPDQ HPSOR\HG +DOO IRU DW OHDVW RQH \HDU .HQWODQG LV WKH DQG *UDVV\ &UHHN ZHUH QRW LQ D SUHGHFHVVRUVXFFHVVRU UHODWLRQVKLSEXWLIWKH\ZHUHZKHWKHUWKHWLPH+DOOVSHQWDW ERWKFRPSDQLHVVKRXOGEHDJJUHJDWHG  7KLV &RXUW LQ DQ XQSXEOLVKHG RSLQLRQ UHDFKHV D FRQFOXVLRQ VLPLODU WR WKDW RI WKH 7KLUG &LUFXLW LQ 'LUHFWRU 2IILFH RI :RUNHUVj &RPS 6HFWLRQ L RI WKH 8QLWHG 6WDWHV &RGH RXWOLQHV WKH 3URJUDPV Y *DUGQHU  )G  o  ,Q %*/ 0LQLQJ &R

OLDELOLW\RIVXEVHTXHQWRSHUDWRUV,WVWDWHVWKDW Y &DVK 1R   :/  WK &LU 6HSW   XQSXEOLVKHG WDEOH GHFLVLRQ WKLV &RXUW UHFRJQL]HV WZR UHTXLUHPHQWV WR GHWHUPLQH D UHVSRQVLEOH RSHUDWRU )LUVW mWKH PLQHU PXVW KDYH EHHQ HPSOR\HG E\ WKH HPSOR\HU IRU QRW OHVV WKDQ RQH \HDUl DQG VHFRQG mGXULQJ WKH RQH\HDU SHULRG WKH PLQHU PXVW KDYH EHHQ HPSOR\HG IRU DW OHDVW  µZRUNLQJ GD\Vj LQ RUGHU IRU WKH HPSOR\PHQW WR EH GHHPHG UHJXODUl %*/ 0LQLQJ &R  :/  DW

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

UHVSRQVLEOH RSHUDWRU  .HQWODQG REMHFWV WR WKH $/sjV E\IDLOLQJWRFRXQWWKHmGRZQWLPHlIURPWKHFODLPDQWjVLQMXU\ GHWHUPLQDWLRQWKDWLWZDVWKHUHVSRQVLEOHRSHUDWRURQWKUHH WRKLVILQDOUHVLJQDWLRQ JURXQGV  )LUVW LW DUJXHV WKDW WKH $/s IDLOHG DFFXUDWHO\ WR FDOFXODWH WKH WLPH WKDW +DOO ZRUNHG DW DQRWKHU PLQLQJ 7KH $/s GLVWLQJXLVKHG %R\G VWDWLQJ WKDW LQ %R\G mWKH FRPSDQ\'HVSDUDGR)XHOVEHFDXVHWKH$/sGLGQRWLQFOXGH PLQHU FRQWLQXHG WR ZRUN IRU WKH HPSOR\HU DIWHU WKH ZRUN WKHWLPHWKDW+DOOZDVRQGLVDELOLW\OHDYHDIWHUDQLQMXU\DW LQMXU\DQGZDVNHSWRQWKH SD\UROOGXULQJWKHWLPHKHZDV 'HVSDUDGR)XHOV6HFRQG.HQWODQGDUJXHVWKDWDQRWKHUPLQH LQMXUHG WKLV WLPH FXOPLQDWHG LQ D FRQWLQXRXV \HDU RI &ROHPDQ DORQJ ZLWK LWV DOOHJHG VXFFHVVRU *UDVV\ &UHHN HPSOR\PHQWl  s$ DW   +DOO RQ WKH RWKHU KDQG TXLW (QHUJLHV,QFm*UDVV\&UHHNlHPSOR\HG+DOOIRUPRUHWKDQ ZRUNLQJIRU'HVSDUDGR)XHOVDIWHUKLVLQMXU\DQGWKXVGLGQRW RQH\HDU)LQDOO\.HQWODQGDUJXHVWKH$/sDSSOLHGWKHZURQJ UHPDLQRQWKHSD\UROOIRUHYHQGD\VOHWDORQHWKH\HDU OHJDOVWDQGDUGUHJDUGLQJZKRERUHWKHEXUGHQRIILQGLQJDOO UHTXLUHGE\&)5†E SRWHQWLDOO\ UHVSRQVLEOH RSHUDWRUV  .HQWODQG VD\V WKH $/s ZURQJO\ SODFHG WKDW EXUGHQ XSRQ LW LQVWHDG RI XSRQ WKH .HQWODQGDUJXHVWKDWQRHYLGHQFHVKRZV'HVSDUDGR)XHOV 'LUHFWRU WRRN+DOORIIWKHSD\UROODIWHUKLVLQMXU\RQO\WKDW'HVSDUDGR )XHOVGLGQRWKDYHDWLPHVKHHWIRU+DOOjVSK\VLFDOSUHVHQFH :HUHYLHZWKHIDFWXDOUHFRUGWRGHFLGHZKHWKHUVXEVWDQWLDO DIWHU KLV LQMXU\  7KLV LV ZURQJ  7KH ERRNNHHSHU IRU HYLGHQFH VXSSRUWV WKH $/sjV GHFLVLRQ WKDW .HQWODQG LV WKH 'HVSDUDGR)XHOVVXEPLWWHGHYLGHQFHVKRZLQJWKDW+DOOZDV UHVSRQVLEOHRSHUDWRU6HH*UD\)GDW:HUHYLHZ QRWRQWKHSD\UROOIRUWKHUHTXLUHGRQH\HDUSHULRGs$DW LVVXHVRIODZGHQRYR6HH%DWHV)GDW o  6SHFXODWLRQ DV WR ZKHWKHU +DOO UHPDLQHG RQ WKH SD\UROO LV QRW HYLGHQFH WKDW KH ZDV RQ WKH SD\UROO 'HVSDUDGR)XHOV )XUWKHUPRUHHYHQLI+DOOKDGZRUNHGLQWKHPLQHVHYHU\GD\ GXULQJWKHSHULRGLQZKLFKKHZDVRQWKHSD\UROODW'HVSDUDGR +DOOZRUNHGDW'HVSDUDGR)XHOVIURP0DUFKWR )XHOVIURP0DUFKWRsXO\WKRVHGDWHVZRXOG sXO\+HZDVLQMXUHGRQWKHMRELQDURFNIDOODQGKH RQO\HTXDOGD\VnLQGLVSXWDEO\OHVVWKDQWKHUHTXLUHG GUHZ GLVDELOLW\ EHQHILWV IURP sXO\   XQWLO sXQH  GD\VXQGHU&)5†E   7KH TXHVWLRQ ZLWK UHJDUG WR 'HVSDUDGR )XHOV LV ZKHWKHUWKHRQH\HDUWHUPRImUHJXODUHPSOR\PHQWlLQFOXGHV $GGLWLRQDOO\WKHUHJXODWLRQVUHTXLUHWKDWWKHPLQHUZRUNIRU ERWKWKHWLPH+DOOUHFHLYHGZDJHVIURP'HVSDUDGR)XHOVDQG DQHPSOR\HUIRUDSHULRGRID\HDUZLWKWKHPLQHUUHFHLYLQJ WKH WLPH KH UHFHLYHG GLVDELOLW\ SD\PHQWV  6HH  &)5 SD\IRUDWOHDVWGD\VRIWKDWSHULRGIRUmZRUNDVDPLQHUl †E &)5†EVWDWLQJWKDWmLIWKHPLQHU ZDVQRWHPSOR\HGIRUDSHULRGRIDWOHDVWZRUNLQJ .HQWODQG UHOLHV XSRQ %R\G Y ,VODQG &UHHN &RDO &R  GD\VVXFKRSHUDWRURUHPSOR\HUVKDOOEHGHWHUPLQHGWRKDYH %ODFN /XQJ 5HS  %HQ 5HY %G sDQ   D HVWDEOLVKHGWKDWWKHPLQHUZDVQRWUHJXODUO\HPSOR\HGIRUD %HQHILWV5HYLHZ%RDUGFDVH,Q%R\GDFODLPDQWZRUNHGIRU FXPXODWLYH\HDUlDQGIXUWKHUVWDWLQJWKDWm>D@µZRUNLQJGD\j WHQ DQG RQHKDOI PRQWKV ZDV LQWHUPLWWHQWO\ RQ OHDYH IRU D PHDQVDQ\GD\RUSDUWRIDGD\IRUZKLFKDPLQHUUHFHLYHGSD\ EDFNLQMXU\EXWDFFUXHGDQDGGLWLRQDOILIW\GD\VRIZRUNIURP IRUZRUNDVDPLQHUl WKHWLPHKHLQMXUHGKLVEDFNWRWKHWLPHKHILQDOO\UHVLJQHG 7KH%RDUGIRXQGWKDW,VODQG&UHHN&RDOZDVWKHUHVSRQVLEOH ,WVWUDLQVWKHSODLQODQJXDJHRIWKHUHJXODWLRQWRDVVHUWWKDW RSHUDWRUDQGWKDW,VODQG&UHHN&RDOFRXOGQRWHVFDSHOLDELOLW\ WKHGLVDELOLW\EHQHILWV'HVSDUDGR)XHOVSDLGWR+DOOZHUHSD\