Schrader v. Blackwell

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

s$0(6 6&+5$'(5 %58&( ; :,/621 /,%(57$5,$1 3$57<  2) 2+,2   1R 3ODLQWLIIV$SSHOOHHV  !  Y   s .(11(7+ %/$&.:(//  2KLR6HFUHWDU\RI6WDWH  'HIHQGDQW$SSHOODQW    &/$5. &2817< %2$5' 2)  (/(&7,216  'HIHQGDQW   1 $SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW IRUWKH6RXWKHUQ'LVWULFWRI2KLRDW'D\WRQ 1Rn0LFKDHO50HU]0DJLVWUDWHsXGJH $UJXHGsDQXDU\ 'HFLGHGDQG)LOHG)HEUXDU\

  6FKUDGHUHWDOY%ODFNZHOO 1R 1R 6FKUDGHUHWDOY%ODFNZHOO 

%HIRUH'$8*+75(<DQG*,/0$1&LUFXLWsXGJHV JDLQHGDFFHVVWRDSSHDURQWKHJHQHUDOHOHFWLRQEDOORWXQGHU +(<%851'LVWULFWsXGJH WKHLQGHSHQGHQWSHWLWLRQSURFHGXUHDVDQm,QGHSHQGHQWl BBBBBBBBBBBBBBBBB ,QFRQFOXVLRQZHDFNQRZOHGJHWKDW2KLRjVEDOORWVFKHPH SODFHV D EXUGHQ RQ SROLWLFDO SDUWLHV WR EHFRPH UHFRJQL]HG &2816(/ XQGHU2KLRODZEHIRUHDPHPEHUFDQDSSHDURQWKHJHQHUDO HOHFWLRQ EDOORW DV D FDQGLGDWH RI WKDW SDUW\  :H KROG $5*8('$UWKXUsDPHV0DU]LDOHsU2)),&(2)7+( KRZHYHU WKDW WKLV EXUGHQ LV QRW XQUHDVRQDEOH LQ OLJKW RI $77251(< *(1(5$/ &ROXPEXV 2KLR IRU $SSHOODQW 2KLRjVOHJLWLPDWHLQWHUHVWVDQGLVQRWVRRQHURXVDVWRPDNH :LOOLDP 9 6WHSKHQVRQ :22' &2817< 38%/,& WKHODZXQFRQVWLWXWLRQDOXQGHUWKH$QGHUVRQEDODQFLQJWHVW '()(1'(5 %RZOLQJ *UHHQ 2KLR IRU $SSHOOHHV (YHQ WKRXJK WKH 2KLR OHJLVODWXUH UHHQDFWHG 2KLR 5HYLVHG 21%5,()$UWKXUsDPHV0DU]LDOHsU2)),&(2)7+( &RGH†ZLWKRXWUHIOHFWLQJWKHHIIHFWRIWKLVFRXUWjV $77251(< *(1(5$/ &ROXPEXV 2KLR IRU $SSHOODQW UXOLQJLQ5RVHQDVLWSHUWDLQVWRLQGHSHQGHQWFDQGLGDWHV2KLR :LOOLDP 9 6WHSKHQVRQ :22' &2817< 38%/,& UHWDLQV WKH ULJKW WR HQVXUH WKDW FDQGLGDWHV FODLPLQJ WR '()(1'(5%RZOLQJ*UHHQ2KLRIRU$SSHOOHHV UHSUHVHQW D SROLWLFDO SDUW\ PHHW WKH VWDWXWRU\ UHTXLUHPHQWV QHFHVVDU\ WR HVWDEOLVK WKDW WKH SXWDWLYH SDUW\ KDV REWDLQHG BBBBBBBBBBBBBBBBB mVRPH SUHOLPLQDU\ VKRZLQJ RI D VLJQLILFDQW PRGLFXP RI VXSSRUWlEHIRUHDSSHDULQJRQWKHEDOORWDVDFDQGLGDWHRIWKDW 23,1,21 SDUW\sHQQHVV86DW:HWKHUHIRUHKROGWKDWWKH BBBBBBBBBBBBBBBBB GHQLDO RI SDUW\DIILOLDWLRQ YRWLQJ FXHV WR FDQGLGDWHV RI 521$/'/((*,/0$1&LUFXLWsXGJHsDPHV6FKUDGHU XQTXDOLILHG SROLWLFDO SDUWLHV XQGHU †  RI WKH 2KLR UHFHLYHGWKHQRPLQDWLRQRIWKH/LEHUWDULDQ3DUW\RI2KLRWREH 5HYLVHG&RGHVXUYLYHVFRQVWLWXWLRQDOFKDOOHQJH LWVFDQGLGDWHIRUWKH8QLWHG6WDWHV+RXVHRI5HSUHVHQWDWLYHV ,,,&21&/86,21 IURPWKH6HYHQWK&RQJUHVVLRQDO'LVWULFWRI2KLRLQWKH JHQHUDOHOHFWLRQV6FKUDGHUILOHGDQRPLQDWLQJSHWLWLRQZLWK )RUDOORIWKHUHDVRQVVHWIRUWKDERYHZH5(9(56(WKH WKH &ODUN &RXQW\ %RDUG RI (OHFWLRQV WKDW FRQWDLQHG  MXGJPHQWRIWKHGLVWULFWFRXUW VLJQDWXUHVDQXPEHUVXIILFLHQWXQGHU2KLRODZWRVHFXUHKLV SODFHRQWKHEDOORW7KH/LEHUWDULDQ3DUW\RI2KLRKRZHYHU KDGQRWPHWWKHUHTXLUHPHQWVWREHUHFRJQL]HGDVDSROLWLFDO SDUW\LQ2KLRDWWKDWWLPH$VDUHVXOW2KLRODZSURKLELWHG 6FKUDGHUIURPGHVLJQDWLQJKLVDIILOLDWLRQZLWKWKH/LEHUWDULDQ 3DUW\DVDSDUWLVDQmFXHlRQWKHEDOORW 6FKUDGHUWKH/LEHUWDULDQ3DUW\DQG%UXFH:LOVRQDYRWHU ILOHG DQ DFWLRQ XQGHU  86& †  DJDLQVW 2KLRjV 6HFUHWDU\RI6WDWHDQGWKH&ODUN&RXQW\%RDUGRI(OHFWLRQVWR

7KH +RQRUDEOH sRKQ * +H\EXUQ ,, 8QLWHG 6WDWHV 'LVWULFW sXGJH IRU WKH :HVWHUQ 'LVWULFW RI .HQWXFN\ VLWWLQJ E\ GHVLJQDWLRQ  6FKUDGHUHWDOY%ODFNZHOO 1R 1R 6FKUDGHUHWDOY%ODFNZHOO 

HPSKDVL]HV WKH LPSRUWDQFH RI RXU UROH XQGHU $QGHUVRQ WR GHVLJQDWH6FKUDGHUDVDm/LEHUWDULDQlRQWKHEDOORWFODLPLQJ EDODQFH2KLRj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 XSKROGLQJ DV FRQVWLWXWLRQDO 1RUWK &DUROLQDjV UHTXLUHPHQW WKDW D FDQGLGDWH RI D QHZ SROLWLFDO $ 2KLRHOHFWLRQODZVSHUWDLQLQJWRYRWLQJFXHV SDUW\JDWKHUVLJQDWXUHVRIRIYRWHUVVWDWHZLGHZLWKDWOHDVW VLJQDWXUHVIURPUHJLVWHUHGYRWHUVUHVLGLQJLQHDFKRI $WLVVXHLQWKLVDSSHDODUHWZRVHFWLRQVRIWKH2KLR5HYLVHG FRQJUHVVLRQDO GLVWULFWV DQG WKHQ UHTXLULQJ WKH QHZ SDUW\ &RGHWKDWFRPELQHWRUHJXODWHKRZHOLJLEOHFDQGLGDWHVDSSHDU FDQGLGDWHWRSROODWOHDVWRIYRWHVLQWKHJHQHUDOHOHFWLRQ RQWKHJHQHUDOHOHFWLRQEDOORW7KHILUVWGHVFULEHVWKHEDOORW IRUWKDWSDUW\WRUHPDLQRQWKHEDOORW5DLQERZ&RDOLWLRQY IRUPDW6HH2KLR5HY&RGH†9RWLQJFXHVZKLFK 2NODKRPD6WDWH(OHFWLRQ%G)GWK&LU DUHGHVFULSWLRQVRISROLWLFDODIILOLDWLRQDUHDOORZHGXQGHUWKLV ILQGLQJ FRQVWLWXWLRQDO 2NODKRPDjV HOHFWLRQ VFKHPH WKDW VHFWLRQEXWRQO\IRUFDQGLGDWHVRISROLWLFDOSDUWLHVWKDWDUH DXWKRUL]HV FDQGLGDWHV RI UHFRJQL]HG SDUWLHV WR EH UHFRJQL]HG XQGHU 2KLR ODZ  m8QGHU WKH QDPH RI HDFK DXWRPDWLFDOO\ LGHQWLILHG RQ WKH EDOORW E\ SDUW\ ODEHO EXW FDQGLGDWHQRPLQDWHGDWDSULPDU\HOHFWLRQDQGHDFKFDQGLGDWH UHTXLUHV XQUHFRJQL]HG SDUWLHV WR ILOH SHWLWLRQV EHDULQJ WKH FHUWLILHGE\DSDUW\FRPPLWWHHVKDOOEHSULQWHGLQOHVV VLJQDWXUHV RI DW OHDVW  RI WKH WRWDO YRWHV FDVW LQ WKH ODVW SURPLQHQWW\SHIDFHWKDQWKDWLQZKLFKWKHFDQGLGDWHjVQDPH JHQHUDOHOHFWLRQWRDFKLHYHVLPLODULGHQWLILFDWLRQ/LEHUWDULDQ LV SULQWHG WKH QDPH RI WKH SROLWLFDO SDUW\ E\ ZKLFK WKH 3DUW\ Y )ORULGD  )G   WK &LU  FDQGLGDWHZDVQRPLQDWHGRUFHUWLILHGl,G XSKROGLQJDVFRQVWLWXWLRQDODQHOHFWLRQODZXQGHUZKLFKmD PLQRU SROLWLFDO SDUW\ PD\ QRW UXQ D FDQGLGDWH LQ D ORFDO 7KHVHFRQGUHOHYDQWVHFWLRQGHILQHVDSROLWLFDOSDUW\XQGHU HOHFWLRQZLWKRXWILUVWREWDLQLQJDFFHVVWRWKHVWDWHjVJHQHUDO 2KLRODZ6HH2KLR5HY&RGH†m$SROLWLFDOSDUW\ HOHFWLRQ EDOORW WKURXJK WKH  VWDWHZLGH SHWLWLRQLQJ LVDQ\JURXSRIYRWHUVWKDWDWWKHPRVWUHFHQWUHJXODUVWDWH UHTXLUHPHQWl HOHFWLRQSROOHGIRULWVFDQGLGDWHIRUJRYHUQRULQWKHVWDWHRU QRPLQHHVIRUSUHVLGHQWLDOHOHFWRUVDWOHDVWILYHSHUFHQWRIWKH %HFDXVH mWKH 6WDWHjV LPSRUWDQW UHJXODWRU\ LQWHUHVWV DUH HQWLUHYRWHFDVWIRUWKDWRIILFHRUWKDWILOHGZLWKWKHVHFUHWDU\ JHQHUDOO\VXIILFLHQWWRMXVWLI\UHDVRQDEOHQRQGLVFULPLQDWRU\ RI VWDWHl  ,G  ,I KRZHYHU D QHZ SROLWLFDO SDUW\ VHHNV WR UHVWULFWLRQVl $QGHUVRQ  86  D SDUW\ FKDOOHQJLQJ EHFRPH TXDOLILHG WKHQ LW PXVW ILOH D mSHWLWLRQ VLJQHG E\ 2KLR5HYLVHG&RGH†EHDUVDKHDY\FRQVWLWXWLRQDO TXDOLILHGHOHFWRUVHTXDOLQQXPEHUWRDWOHDVWRQHSHUFHQWRI EXUGHQm7KDWDSDUWLFXODULQGLYLGXDOPD\QRWDSSHDURQWKH WKH WRWDO YRWH IRU JRYHUQRU RU QRPLQHHV IRU SUHVLGHQWLDO EDOORW DV D SDUWLFXODU SDUW\jV FDQGLGDWH GRHV QRW VHYHUHO\ HOHFWRUVDWWKHPRVWUHFHQWHOHFWLRQGHFODULQJWKHLULQWHQWLRQ EXUGHQWKDWSDUW\jVDVVRFLDWLRQDOULJKWVl7LPPRQV86 RIRUJDQL]LQJDSROLWLFDOSDUW\WKHQDPHRIZKLFKVKDOO EH DW:LWKRUZLWKRXWWKHFXHm/LEHUWDULDQl6FKUDGHUKDG VWDWHG LQ WKH GHFODUDWLRQ DQG RI SDUWLFLSDWLQJ LQ WKH VXFFHHGLQJSULPDU\HOHFWLRQKHOGLQHYHQQXPEHUHG\HDUV WKDWRFFXUVPRUHWKDQRQHKXQGUHGWZHQW\GD\VDIWHUWKHGDWH  6FKUDGHUHWDOY%ODFNZHOO 1R 1R 6FKUDGHUHWDOY%ODFNZHOO 

RIILOLQJl,G$VDUHVXOWDFDQGLGDWHPXVWEHWKHQRPLQHH V\VWHP WKDW GLVWLQJXLVKHV EHWZHHQ FDQGLGDWHV RI mSROLWLFDO RI D TXDOLILHG SDUW\ DV GHILQHG XQGHU 2KLR 5HYLVHG &RGH SDUWLHVl DQG XQUHFRJQL]HG mSROLWLFDO ERGLHVl DQG UHTXLUHV †  LQ RUGHU WR REWDLQ D SDUWLVDQ FXH RQ WKH EDOORW LQGHSHQGHQW FDQGLGDWHV DQG FDQGLGDWHV RI XQUHFRJQL]HG SXUVXDQWWR2KLR5HYLVHG&RGH†$QLQGHSHQGHQW SROLWLFDO ERGLHV WR ILOH QRPLQDWLQJ SHWLWLRQV FRQWDLQLQJ WKH FDQGLGDWHIRUHOHFWLRQWRDQRIILFHLQFRQWUDVWPXVWVLPSO\ VLJQDWXUHVRIILYHSHUFHQWRIWKHHOLJLEOHYRWHUVLQWKHSUHYLRXV ILOHDVWDWHPHQWRIFDQGLGDF\DQGDQRPLQDWLQJSHWLWLRQZLWK HOHFWLRQ WKH UHTXLVLWH QXPEHU RI VLJQDWXUHV  6HH 2KLR 5HY &RGH † ,QGHFODULQJ†XQFRQVWLWXWLRQDOWKHGLVWULFWFRXUW QHYHUWKHOHVV PDLQWDLQHG WKDW m>Q@RWKLQJ LQ >LWV@ 'HFLVLRQ ,QVXPDOOFDQGLGDWHVOLVWHGRQWKH2KLREDOORWPXVWJDLQ VKRXOG EH UHDG DV FDVWLQJ GRXEW RQ WKH YDOLGLW\ RI 2KLR DFFHVV HLWKHU DV WKH QRPLQHH RI D TXDOLILHG SROLWLFDO SDUW\ 5HYLVHG &RGH † l  7KLV SRVLWLRQ KRZHYHU LV WKURXJKWKHLQGHSHQGHQWSHWLWLRQSURFHGXUHRUDVDPHPEHU XQWHQDEOH%\DOORZLQJDFDQGLGDWHZKRJDLQVDFFHVVWRWKH RIDSUHYLRXVO\XQTXDOLILHGSROLWLFDOSDUW\WKDWREWDLQVHQRXJK EDOORWWKURXJKWKHLQGHSHQGHQWSHWLWLRQSURFHGXUHWRFKRRVH VLJQDWXUHV WR EHFRPH D SROLWLFDO SDUW\ DV GHILQHG LQ 2KLR DQ\SDUWLVDQFXHWKDWKHRUVKHGHVLUHVWKHGLVWULFWFRXUWKDVLQ 5HYLVHG &RGH †   %RWK 6FKUDGHU DQG WKH 2KLR HIIHFW GHQLHG 2KLR WKH ULJKW WR UHDVRQDEO\ UHJXODWH WKH $WWRUQH\*HQHUDODJUHHWKDW2KLR5HYLVHG&RGH† IRUPDWLRQRISROLWLFDOSDUWLHVZLWKLQLWVERUGHUV ZDVSURSHUO\LQWHUSUHWHGWRGHQ\6FKUDGHUDQGRWKHUIXWXUH FDQGLGDWHV ZKR OLNH KLP DUH PHPEHUV RI XQTXDOLILHG )LQDOO\WKH$QGHUVRQWHVWUHTXLUHVEDODQFLQJWKHFKDUDFWHU SROLWLFDOSDUWLHVDSDUWLVDQFXHRQWKHEDOORW DQGPDJQLWXGHRIWKHFRQVWLWXWLRQDOLQMXU\WR6FKUDGHUDQGWKH /LEHUWDULDQ3DUW\RI2KLRDJDLQVWWKHVWDWHjVLQWHUHVWV2KLR 2KLRjVHOHFWLRQODZVKDYHEHHQWKHVXEMHFWRIFRQVWLWXWLRQDO DUJXHV WKDW LWV EDOORWDFFHVV VFKHPH WKDW GLIIHUHQWLDWHV VFUXWLQ\LQVHYHUDOSULRUFDVHV2QHLV:LOOLDPVY5KRGHV EHWZHHQ WKH SDUW\SHWLWLRQ SURFHGXUH DQG WKH LQGHSHQGHQW  86    GHFODULQJ 2KLRjV EDOORWDFFHVV SHWLWLRQ SURFHGXUH LV SUHFLVHO\ WKH W\SH RI UHDVRQDEOH VFKHPHWKDWUHTXLUHGDQHZSDUW\WRFROOHFWWKHVLJQDWXUHVRI UHJXODWLRQWKDWUHTXLUHVDFDQGLGDWHRIDQXQTXDOLILHGSDUW\WR  SHUFHQW RI WKH HOHFWRUV LQ WKH SUHYLRXV JXEHUQDWRULDO VKRZDmVLJQLILFDQWPRGLFXPRIVXSSRUWlLQRUGHUWRVHFXUHD HOHFWLRQ XQFRQVWLWXWLRQDO EHFDXVH LW ZDV VR UHVWULFWLYH DQG SDUW\DIILOLDWLRQYRWLQJFXHRQWKHEDOORW7KH6XSUHPH&RXUW EHFDXVH LW HIIHFWLYHO\ SURYLGHG WKH 'HPRFUDWLF DQG LV LQ DJUHHPHQW  m7KH 6WDWH VXUHO\ KDV D YDOLG LQWHUHVW LQ 5HSXEOLFDQSDUWLHVZLWKDmFRPSOHWHPRQRSRO\l$QRWKHULV PDNLQJ VXUH WKDW PLQRU DQG WKLUG SDUWLHV ZKR DUH JUDQWHG $QGHUVRQY&HOHEUH]]H86VWULNLQJGRZQ DFFHVVWRWKHEDOORWDUHERQDILGHDQGDFWXDOO\VXSSRUWHGRQ 2KLRjV HDUO\ GHDGOLQH IRU LQGHSHQGHQW FDQGLGDWHV WR ILOH D WKHLURZQPHULWVE\WKRVHZKRKDYHSURYLGHGWKHVWDWXWRULO\ VWDWHPHQW RI FDQGLGDF\ DQG D QRPLQDWLQJ SHWLWLRQ DV DQ UHTXLUHGSHWLWLRQRUEDOORWVXSSRUWl7LPPRQVY7ZLQ&LWLHV XQFRQVWLWXWLRQDOEXUGHQRQWKHYRWLQJDQGDVVRFLDWLRQDOULJKWV $UHD1HZ3DUW\86 RIWKHLUVXSSRUWHUV0RUHUHFHQWO\KRZHYHUWKLVFRXUWKDV XSKHOG WKH VLJQDWXUH UHTXLUHPHQW RI 2KLRjV LQGHSHQGHQW 6FKUDGHU KRZHYHU PDLQWDLQV WKDW 7LPPRQV LV IDFWXDOO\ SHWLWLRQ SURFHGXUH XQGHU 2KLR 5HYLVHG &RGH †  GLVWLQJXLVKDEOHDQGVKRXOGQRWDSSO\WRWKHFDVHEHIRUHXV$W ILQGLQJ WKDW WKH EXUGHQ RI REWDLQLQJ WKH VLJQDWXUHV RI RQH LVVXHLQ7LPPRQVZDV0LQQHVRWDjVDQWLIXVLRQODZZKLFKWKH SHUFHQW RI WKH TXDOLILHG HOHFWRUV LQ WKH ODVW JXEHUQDWRULDO &RXUWXSKHOG8QGHUWKDWODZDFDQGLGDWHRQDEDOORWFDQQRW HOHFWLRQLVQRWXQFRQVWLWXWLRQDOO\EXUGHQVRPH6HH0LOOHUY DSSHDUDVWKHFDQGLGDWHRIPRUHWKDQRQHSDUW\6HHLGDW /RUDLQ&RXQW\%GRI(OHFWLRQV)GWK&LU   $OWKRXJK WKH FRQWH[W RI WKH 7LPPRQV GHFLVLRQ LV GLIIHUHQW IURP WKH 2KLR ODZ XQGHU VFUXWLQ\ KHUH 7LPPRQV  6FKUDGHUHWDOY%ODFNZHOO 1R 1R 6FKUDGHUHWDOY%ODFNZHOO 

JRYHUQPHQWE\HOHFWLQJLWVFDQGLGDWHVWRSXEOLFRIILFH 7KH VSHFLILF VHFWLRQV DW LVVXH LQ 6FKUDGHUjV FDVH )URPWKHVWDQGSRLQWRIDSRWHQWLDOVXSSRUWHUDIILOLDWLRQ ††  DQG  ZHUH VFUXWLQL]HG E\ WKLV FRXUW LQ ZLWK D QHZ SDUW\ ZRXOG PHDQ JLYLQJ XS KLV WLHV ZLWK 5RVHQY%URZQ)GWK&LU,QSDUWLFXODU DQRWKHUSDUW\RUVDFULILFLQJKLVRZQLQGHSHQGHQWVWDWXV WKHSODLQWLIILQ5RVHQFKDOOHQJHGWKHIDLOXUHRI†WR HYHQWKRXJKKLVSRVVLEOHLQWHUHVWLQWKHQHZSDUW\FHQWHUV DOORZWKHFXHRIm,QGHSHQGHQWlWREHXVHGIRUFDQGLGDWHVZKR DURXQGDSDUWLFXODUFDQGLGDWHIRUDSDUWLFXODURIILFH JDLQ DFFHVV WR WKH EDOORW WKURXJK WKH LQGHSHQGHQWSHWLWLRQ SURFHGXUH  7KLV FRXUW KHOG WKDW †  ZDV 6WRUHU Y %URZQ  86    XSKROGLQJ DV mXQFRQVWLWXWLRQDOEHFDXVHLWYLRODWHVWKH)LUVWDQG)RXUWHHQWK FRQVWLWXWLRQDO&DOLIRUQLDjVUHTXLUHPHQWWKDWDQLQGHSHQGHQW $PHQGPHQW ULJKWV RI ,QGHSHQGHQW FDQGLGDWHV WR EH VR FDQGLGDWH IRU FRQJUHVVLRQDO RU SUHVLGHQWLDO RIILFH PXVW EH GHVLJQDWHGRQ2KLRjVJHQHUDOHOHFWLRQEDOORWVl5RVHQ SROLWLFDOO\ GLVDIILOLDWHG IRU DW OHDVW RQH \HDU SULRU WR WKH )GDW LPPHGLDWHO\SUHFHGLQJSULPDU\HOHFWLRQ7KHGLVWULFWFRXUWjV KHDY\UHOLDQFHRQ5RVHQZDVWKHUHIRUHPLVSODFHGSDUWLFXODUO\ 'HVSLWHWKLVFRXUWjVUXOLQJLQ5RVHQWKH2KLROHJLVODWXUH LQOLJKWRI2KLRjVLQWHUHVWVWKDWPXVWEHEDODQFHGDJDLQVWWKH UHHQDFWHG †  LQ  ZLWKRXW DQ\ FKDQJHV WR WKH HQFURDFKPHQWXSRQ6FKUDGHUjVDQGWKH/LEHUWDULDQ3DUW\RI SRUWLRQRIWKHVWDWXWHWKDWGHDOVZLWKYRWLQJFXHVRQWKHEDOORW 2KLRjV)LUVWDQG)RXUWHHQWK$PHQGPHQWULJKWV 6FKUDGHULVWKXVFKDOOHQJLQJWKHVDPHYRWLQJFXHODQJXDJHLQ 2KLR5HYLVHG&RGH†WKDWWKLVFRXUWVWUXFNGRZQYLV 0RYLQJWRWKHVHFRQGVWHSRIWKH$QGHUVRQEDODQFLQJWHVW DYLV LQGHSHQGHQW FDQGLGDWHV LQ 5RVHQ  $W RUDO DUJXPHQW ZH PXVW QRZ LGHQWLI\ DQG HYDOXDWH 2KLRjV LQWHUHVWV WKDW KRZHYHU FRXQVHO IRU WKH VWDWH QRWHG WKDW 2KLR UHJXODUO\ ZRXOGMXVWLI\LPSRVLQJDEXUGHQRQDVVRFLDWLRQDOULJKWV6HH IROORZV5RVHQHYHQWKRXJKWKHUHOHYDQWSRUWLRQRIWKHVWDWXWH $QGHUVRQ  86 DW   1R RQH TXHVWLRQV WKH EDVLF KDVQRWFKDQJHG,WGRHVVRE\LQIRUPDOO\DVNLQJFDQGLGDWHV SUHPLVHWKDWVWDWHVDUHHQWLWOHGWRUHJXODWHHOHFWLRQVm>$@VD ZKRJDLQDFFHVVWRWKHEDOORWWKURXJKWKHLQGHSHQGHQWSHWLWLRQ SUDFWLFDO PDWWHU WKHUH PXVW EH D VXEVWDQWLDO UHJXODWLRQ RI SURFHGXUHZKHWKHUWKH\ZLVKWRKDYHWKHFXHm,QGHSHQGHQWl HOHFWLRQVLIWKH\DUHWREHIDLUDQGKRQHVWDQGLIVRPHVRUWRI DIILOLDWHGZLWKWKHLUQDPHVRQWKHJHQHUDOHOHFWLRQEDOORW RUGHU UDWKHU WKDQ FKDRV LV WR DFFRPSDQ\ WKH GHPRFUDWLF SURFHVVl6WRUHU86DW2KLRFODLPVWKDWGHQ\LQJ 6FKUDGHUQRWHVWKDWDVDUHVXOWRIWKHFRQQHFWLRQEHWZHHQ SDUW\ ODEHOV WR FDQGLGDWHV RI XQTXDOLILHG SROLWLFDO SDUWLHV †DQG†DSUHYLRXVO\XQTXDOLILHGSDUW\WKDW PLQLPL]HV YRWHU FRQIXVLRQ SUHYHQWV YRWHU GHFHSWLRQ DQG ZLVKHVWRSODFHDFDQGLGDWHRQWKHJHQHUDOHOHFWLRQEDOORWZLWK SURPRWHVSROLWLFDOVWDELOLW\ WKH SDUW\jV YRWLQJ FXH PXVW ILOH WKH UHTXLVLWH QXPEHU RI VLJQDWXUHVDSSUR[LPDWHO\RQH\HDUEHIRUHWKHJHQHUDOHOHFWLRQ 7KH 6XSUHPH &RXUW KDV DFNQRZOHGJHG D VWDWHjV VWURQJ 7KLV UHVXOWV LQ DQ HDUOLHU ILOLQJ GHDGOLQH IRU FDQGLGDWHV RI LQWHUHVWLQPDLQWDLQLQJWKHVWDELOLW\RILWVSROLWLFDOV\VWHP6HH XQTXDOLILHGSROLWLFDOSDUWLHVWKDQIRULQGHSHQGHQWFDQGLGDWHV (X86DW6WRUHU86DW$GGLWLRQDOO\ 7KH GLVFUHSDQF\ LQ WKH WLPLQJ RI WKH ILOLQJ GHDGOLQHV WKH&RXUWKDVKHOGWKDWWKHUHLVDQmLPSRUWDQWVWDWHLQWHUHVWLQ KRZHYHUZDVQRWUDLVHGDVDQLVVXHRQDSSHDODQGLVWKHUHIRUH UHTXLULQJVRPHSUHOLPLQDU\VKRZLQJRIDVLJQLILFDQWPRGLFXP QRWEHIRUHXV6FKUDGHUREWDLQHGDFFHVVWRWKHEDOORWXQGHU RI VXSSRUW EHIRUH SULQWLQJ WKH QDPH RI D SROLWLFDO WKHLQGHSHQGHQWSHWLWLRQSURFHGXUHDQGKLVRQO\FKDOOHQJHLV RUJDQL]DWLRQjV FDQGLGDWH RQ WKH EDOORW o WKH LQWHUHVW LI QR WR WKH FRQVWLWXWLRQDOLW\ RI 2KLRjV EDOORWFXH V\VWHP XQGHU RWKHULQDYRLGLQJFRQIXVLRQGHFHSWLRQDQGHYHQIUXVWUDWLRQ † RIWKHGHPRFUDWLFSURFHVVDWWKHJHQHUDOHOHFWLRQlsHQQHVVY )RUWVRQ  86    XSKROGLQJ *HRUJLDjV  6FKUDGHUHWDOY%ODFNZHOO 1R 1R 6FKUDGHUHWDOY%ODFNZHOO 

% 3URFHGXUDO KLVWRU\ RI WKH /LEHUWDULDQ 3DUW\ RI DQG PHDQLQJIXOO\ DVVRFLDWH E\ SURYLGLQJ D µYRWLQJ FXHj WR 2KLRjVFKDOOHQJHWRWKH2KLREDOORWVFKHPH 'HPRFUDWLF DQG 5HSXEOLFDQ  FDQGLGDWHVl EXW QRW WR LQGHSHQGHQWFDQGLGDWHV,GDW)XUWKHUPRUHWKHFRXUW 7KH/LEHUWDULDQ3DUW\RI2KLRZDVIRUPHGLQDQGLV KHOGWKDWmWKHVWDWXWHYLRODWHVWKH(TXDO3URWHFWLRQ&ODXVHRI WKH2KLRDIILOLDWHRIWKHQDWLRQDO/LEHUWDULDQ3DUW\IRXQGHGLQ WKH)RXUWHHQWK$PHQGPHQWEHFDXVHLWSODFHVXQHTXDOEXUGHQV &RORUDGRLQ,WREWDLQHGWKHVWDWXVRIDSROLWLFDOSDUW\DV RQ,QGHSHQGHQWDQGWKLUGSDUW\FDQGLGDWHVDQGLVGHVLJQHGWR GHILQHGXQGHU2KLR5HYLVHG&RGH†LQDQGZDV JLYH'HPRFUDWVDQG5HSXEOLFDQVDGHFLGHGDGYDQWDJHDWWKH WKHUHIRUH HOLJLEOH IRU D YRWLQJ FXH RQ WKH JHQHUDOHOHFWLRQ SROOV LQ D JHQHUDO HOHFWLRQl  ,G DW   ([SDQGLQJ RQ EDOORWWKDW\HDUDVSHUPLWWHGE\2KLR5HYLVHG&RGH† 5RVHQjV DQDO\VLV WKH GLVWULFW FRXUW GHWHUPLQHG WKDW WKH 7KH /LEHUWDULDQV IDLOHG WR SROO DW OHDVW ILYH SHUFHQW RI WKH DVVRFLDWLRQDOLQWHUHVWVRI6FKUDGHUDQGWKH/LEHUWDULDQ3DUW\ YRWHUVLQWKHHOHFWLRQKRZHYHUWKXVORVLQJWKHLUVWDWXV RI2KLRWRREWDLQDEDOORWFXHZHUHHYHQVWURQJHUWKDQWKRVH DVDUHFRJQL]HGSROLWLFDOSDUW\1RWXQWLO1RYHPEHURI RI LQGHSHQGHQW FDQGLGDWHV EHFDXVH 6FKUDGHU DFWXDOO\ oD\HDUDIWHUWKHHYHQWVLQTXHVWLRQoGLGWKH/LEHUWDULDQ3DUW\ UHSUHVHQWV D VSHFLILF LGHRORJ\ WKDW KH ZRXOG OLNH WR KDYH RI 2KLR DJDLQ VXFFHHG LQ REWDLQLQJ HQRXJK VLJQDWXUHV WR FRQYH\HGWKURXJKDYRWLQJFXHRQWKHEDOORW TXDOLI\DVDSROLWLFDOSDUW\RQWKHJHQHUDOHOHFWLRQEDOORW 7KH6XSUHPH&RXUWKDVDFNQRZOHGJHGWKDWm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l7DVKMLDQY5HSXEOLFDQ3DUW\ UHTXLVLWHVLJQDWXUHVWREHSODFHGRQWKHJHQHUDOHOHFWLRQEDOORW 86     ,Q GHFODULQJ 2KLR 5HYLVHG &RGH SULRUWRWKHFRQYHQWLRQ%HFDXVHKHZDVDSSO\LQJWKURXJKWKH †XQFRQVWLWXWLRQDOLQ5RVHQWKLVFRXUWGHWHUPLQHG LQGHSHQGHQWSHWLWLRQSURFHGXUH6FKUDGHUQHHGHGWRFROOHFWDW WKDWm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m6WDWHPHQW SURWHFWLRQRIWKHODZVl)GDW RI&DQGLGDF\lKHDGLQJRQHDFKQRPLQDWLQJSHWLWLRQKRZHYHU 6FKUDGHUW\SHGWKLVDGGLWLRQDOVWDWHPHQWmsDPHV$6FKUDGHU 1HYHUWKHOHVV WKH 6XSUHPH &RXUW KDV UHFRJQL]HG WKH LVWKHQRPLQHHRIWKH/LEHUWDULDQ3DUW\l2Q$SULO GLVWLQFWLRQEHWZHHQWKHUROHRILQGHSHQGHQWFDQGLGDWHVDQG 6FKUDGHUVXEPLWWHGSHWLWLRQVFRQWDLQLQJVLJQDWXUHVWR WKDWRISROLWLFDOSDUWLHV WKH&ODUN&RXQW\%RDUGRI(OHFWLRQV >7@KH SROLWLFDO SDUW\ DQG WKH LQGHSHQGHQW FDQGLGDWH %HFDXVH6FKUDGHUPHWWKHUHTXLUHPHQWVRIWKHLQGHSHQGHQW DSSURDFKHVWRSROLWLFDODFWLYLW\DUHHQWLUHO\GLIIHUHQWDQG SHWLWLRQSURFHGXUHWKH%RDUGRI(OHFWLRQVSODFHGKLPRQWKH QHLWKHULVDVDWLVIDFWRU\VXEVWLWXWHIRUWKHRWKHU$QHZ EDOORW DV DQ LQGHSHQGHQW FDQGLGDWH  2Q sXO\   SDUW\ RUJDQL]DWLRQ FRQWHPSODWHV D VWDWHZLGH RQJRLQJ 6FKUDGHUVHQWDOHWWHUWR%RE7DIWWKHQWKH2KLR6HFUHWDU\RI RUJDQL]DWLRQZLWKGLVWLQFWLYHSROLWLFDOFKDUDFWHU,WVJRDO 6WDWH UHTXHVWLQJ WKDW 6FKUDGHU UHFHLYH WKH YRWLQJ FXH RI LV W\SLFDOO\ WR JDLQ FRQWURO RI WKH PDFKLQHU\ RI VWDWH  6FKUDGHUHWDOY%ODFNZHOO 1R 1R 6FKUDGHUHWDOY%ODFNZHOO 

SURWHFWHG E\ WKH )LUVW DQG )RXUWHHQWK $PHQGPHQWV  6HH m/LEHUWDULDQlRQWKHJHQHUDOHOHFWLRQEDOORW6FKUDGHUGXO\ $QGHUVRQ  86 DW   1R RQH FKDOOHQJHV WKH EDVLF QRWHG LQ KLV OHWWHU WKDW WKH VWDWH KDG IDLOHG WR DPHQG WKH SULQFLSOH WKDW WKH 8QLWHG 6WDWHV &RQVWLWXWLRQ SURWHFWV WKH UHOHYDQWSRUWLRQRI2KLR5HYLVHG&RGH†GHVSLWHLWV ULJKWVRIWKRVHLQYROYHGLQWKHSROLWLFDOSURFHVV$VVWDWHGE\ KDYLQJEHHQGHFODUHGXQFRQVWLWXWLRQDOE\5RVHQ6HFUHWDU\ WKH 6XSUHPH &RXUW LQ (X Y 6DQ )UDQFLVFR &RXQW\ 7DIWGLGQRWUHVSRQGWR6FKUDGHUjVUHTXHVW6FKUDGHU:LOVRQ 'HPRFUDWLF&HQW&RPP86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m/LEHUWDULDQlDIWHU ZKR FRQVWLWXWH WKH DVVRFLDWLRQ    DQG WR VHOHFW D 6FKUDGHUjV QDPH RQ WKH EDOORW  6FKUDGHU UHFHLYHG  VWDQGDUGEHDUHUZKREHVWUHSUHVHQWVWKHSDUW\jVLGHRORJLHV YRWHV RU  SHUFHQW RI WKH YRWHV FDVW LQ WKH UDFH IRU WKH DQGSUHIHUHQFHV 6HYHQWK &RQJUHVVLRQDO 'LVWULFW ZLWK WKH YRWLQJ FXH RI m/LEHUWDULDQl DSSHDULQJ RQ WKH JHQHUDOHOHFWLRQ EDOORW LQ ,GDWFLWDWLRQVDQGLQWHUQDOTXRWDWLRQPDUNVRPLWWHG 1RYHPEHURI 6LPLODUO\WKH)LUVW$PHQGPHQWULJKWVRIYRWHUVDQGSROLWLFDO SDUWLHVDUHSURWHFWHGIURPXQHTXDOUHJXODWRU\EXUGHQVXQGHU )ROORZLQJWKHHOHFWLRQWKHGLVWULFWFRXUWDOORZHGWKHSDUWLHV WKH(TXDO3URWHFWLRQ&ODXVHRIWKH)RXUWHHQWK$PHQGPHQW WRILOHVXSSOHPHQWDOEULHIVDQGUHQHZHGPRWLRQVIRUVXPPDU\ 6HH:LOOLDPVY5KRGHV86 MXGJPHQW'HWHUPLQLQJWKDWWKHLVVXHZDVQRWPRRWEHFDXVH LWZDVmFDSDEOHRIUHSHWLWLRQ\HWHYDGLQJUHYLHZl5RVHQY ,QWKHSUHVHQWFDVHWKHGLVWULFWFRXUWUHOLHGRQWKLVFRXUWjV %URZQ)GWK&LUWKHGLVWULFWFRXUW GHFLVLRQLQ5RVHQY%URZQ)GWK&LUWR HQWHUHG DQ RUGHU JUDQWLQJ 6FKUDGHUjV PRWLRQ IRU VXPPDU\ GHWHUPLQH WKDW 2KLR 5HYLVHG &RGH †  YLRODWHG MXGJPHQW DQG GHQ\LQJ 2KLRjV PRWLRQ  7KH GLVWULFW FRXUW 6FKUDGHUjV DQG WKH /LEHUWDULDQ 3DUW\ RI 2KLRjV )LUVW DQG FRQFOXGHG WKDW 2KLRjV GHQLDO RI D SDUWLVDQ YRWLQJ FXH IRU )RXUWHHQWK $PHQGPHQW ULJKWV  7KH FRXUW LQ 5RVHQ KHDUG 6FKUDGHU DQG IRU RWKHU FDQGLGDWHV OLNH 6FKUDGHU ZKR DUH WHVWLPRQ\IURPWZRSROLWLFDOVFLHQWLVWVDQGDPDUNHWLQJDQG PHPEHUVRIXQTXDOLILHGSROLWLFDOSDUWLHVLVDYLRODWLRQRIWKH FRPPXQLFDWLRQV SURIHVVLRQDO WR WKH HIIHFW WKDW SDUW\ )LUVWDQG)RXUWHHQWK$PHQGPHQWV LGHQWLILFDWLRQ DQG WKH LQGLFDWLRQ RI D FDQGLGDWHjV SDUW\ DIILOLDWLRQRQDEDOORWLQWKHIRUPRIDYRWLQJFXHSOD\DFUXFLDO ,QWKLVDSSHDOWKH2KLR6HFUHWDU\RI6WDWHFRQWHQGVWKDWWKH UROHLQDYRWHUjVDFWLRQVDWWKHmFOLPDFWLFPRPHQWRIFKRLFHl GLVWULFWFRXUWHUUHGLQKROGLQJWKDWWKHUHHQDFWHGYHUVLRQRI LQ DQ HOHFWLRQ  5RVHQ  )G DW   %HFDXVH 2KLR 5HYLVHG &RGH †  LV XQFRQVWLWXWLRQDO  2KLR †  SURYLGHV FXHV RQO\ IRU FDQGLGDWHV RI TXDOLILHG VSHFLILFDOO\DUJXHVWKDWWKH6L[WK&LUFXLWSUHFHGHQWRI5RVHQ SROLWLFDO SDUWLHV LW GLG QRW DOORZ IRU WKH GHVLJQDWLRQ RI GRHVQRWH[WHQGWRWKLVFDVHEHFDXVHWKHVWDWHjVLQWHUHVWVLQ m,QGHSHQGHQWlDVDYRWLQJFXHIRUWKRVHZKRJDLQHGDFFHVVWR UHJXODWLQJSROLWLFDOSDUW\FDQGLGDWHVLVLQKHUHQWO\JUHDWHUWKDQ WKHEDOORWWKURXJKWKHLQGHSHQGHQWSHWLWLRQSURFHGXUH LWV LQWHUHVWV LQ UHJXODWLQJ LQGHSHQGHQW FDQGLGDWHV )XUWKHUPRUH 2KLR PDLQWDLQV WKDW LWV OHJLWLPDWH LQWHUHVW LQ 7KLV ODZ 5RVHQ FRQFOXGHG mLQIULQJHV XSRQ WKH ULJKW RI UHJXODWLQJ HOHFWLRQV DQG FRQWUROOLQJ WKH UHFRJQLWLRQ RI VXSSRUWHUV RI ,QGHSHQGHQW FDQGLGDWHV WR PHDQLQJIXOO\ YRWH  6FKUDGHUHWDOY%ODFNZHOO 1R 1R 6FKUDGHUHWDOY%ODFNZHOO 

SROLWLFDO SDUWLHV RXWZHLJKV DQ\ HQFURDFKPHQW RQ WKH  86 DW   7KH 6XSUHPH &RXUW KDV VXEVHTXHQWO\ DVVRFLDWLRQDODQGHTXDOSURWHFWLRQULJKWVRI6FKUDGHUDQGWKH UHFRJQL]HGKRZHYHUWKDWLIDVWDWHjVHOHFWLRQODZVXEMHFWVWKH /LEHUWDULDQ3DUW\RI2KLR )LUVWDQG)RXUWHHQWK$PHQGPHQWULJKWVRISDUWLFLSDQWVLQWKH SROLWLFDOSURFHVVWRmµVHYHUHjUHVWULFWLRQVWKHUHJXODWLRQPXVW ,,$1$/<6,6 EHµQDUURZO\GUDZQWRDGYDQFHDVWDWHLQWHUHVWRIFRPSHOOLQJ LPSRUWDQFHjl%XUGLFNY7DNXVKL86 $ )UDPHZRUNIRUHOHFWLRQODZDQDO\VLV KROGLQJWKDW+DZDLLjVSURKLELWLRQRIZULWHLQYRWLQJZDVQRW D VHYHUH UHVWULFWLRQ WKDW LQIULQJHG XSRQ LWV FLWL]HQVj ULJKWV :HUHYLHZGHQRYRWKHGLVWULFWFRXUWjVJUDQWRIVXPPDU\ XQGHU WKH )LUVW DQG )RXUWHHQWK $PHQGPHQWV FLWDWLRQ MXGJPHQW6HHHJ+ROORZD\Y%UXVK)G RPLWWHG  $V WKH GLVWULFW FRXUW IRXQG DQG WKH IROORZLQJ WK&LU6XPPDU\MXGJPHQWLVSURSHUZKHQWKHUHDUH DQDO\VLVZLOO VKRZWKHEXUGHQSODFHGRQ6FKUDGHUDQGWKH QRJHQXLQHLVVXHVRIPDWHULDOIDFWLQGLVSXWHDQGWKHPRYLQJ /LEHUWDULDQ3DUW\RI2KLRZDVQRWVRVHYHUHDVWRWULJJHUWKH SDUW\LVHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ)HG5&LY VWULFWVFUXWLQ\ UHYLHZ DV RXWOLQHG LQ %XUGLFN  :H ZLOO 3 F,QGHFLGLQJDPRWLRQIRUVXPPDU\MXGJPHQWWKH WKHUHIRUHIRFXVRQWKHDSSOLFDWLRQRIWKH$QGHUVRQEDODQFLQJ FRXUW PXVW YLHZ WKH HYLGHQFH DQG GUDZ DOO UHDVRQDEOH WHVWWR6FKUDGHUjVFKDOOHQJHWR2KLR5HYLVHG&RGH† LQIHUHQFHVLQIDYRURIWKHQRQPRYLQJSDUW\6HH0DWVXVKLWD (OHF,QGXV&RY=HQLWK5DGLR&RUS86 % 7KHGLVWULFWFRXUWIDLOHGWRJLYHVXIILFLHQWZHLJKW   7KH MXGJH LV QRW WR mZHLJK WKH HYLGHQFH DQG WRWKHVWDWHjVLQWHUHVWLQUHJXODWLQJHOHFWLRQVZKHQ GHWHUPLQHWKHWUXWKRIWKHPDWWHUEXWWRGHWHUPLQHZKHWKHU DSSO\LQJWKH3/07843EDODQFLQJWHVW WKHUHLVDJHQXLQHLVVXHIRUWULDOl$QGHUVRQY/LEHUW\/REE\ ,QF  86     $ JHQXLQH LVVXH IRU WULDO ,Q DSSO\LQJ WKH $QGHUVRQ EDODQFLQJ WHVW WR 6FKUDGHUjV H[LVWVRQO\ZKHQWKHUHLVVXIILFLHQWmHYLGHQFHRQZKLFKWKH FODLP WKH GLVWULFW FRXUW FRQFOXGHG WKDW WKH LQWHUHVWV SXW MXU\FRXOGUHDVRQDEO\ILQGIRUWKHSODLQWLIIl,GDW IRUZDUGE\2KLRZHUHQRWVRFRPSHOOLQJDVWRRYHUULGHWKH )LUVWDQG)RXUWHHQWK$PHQGPHQWULJKWVRI6FKUDGHUDQGRWKHU ,Q GHWHUPLQLQJ WKH FRQVWLWXWLRQDOLW\ RI HOHFWLRQ ODZV WKH VLPLODUO\VLWXDWHGFDQGLGDWHVRIXQTXDOLILHGSROLWLFDOSDUWLHV EDODQFLQJWHVWVHWIRUWKLQ$QGHUVRQY&HOHEUH]]H86 7KH GLVWULFW FRXUW WKHUHIRUH GHFODUHG 2KLR 5HYLVHG &RGH   PXVW EH DSSOLHG  $QGHUVRQ GLUHFWV FRXUWV WR †XQFRQVWLWXWLRQDO&KDOOHQJLQJWKLVGHFLVLRQ2KLR SURFHHGDVIROORZV FRQWHQGV WKDW WKH GLVWULFW FRXUW PLVWDNHQO\ UHOLHG RQ WKLV FRXUWjVGHFLVLRQLQ5RVHQLQDVVHVVLQJWKHH[WHQWWRZKLFKWKH >$FRXUW@PXVWILUVWFRQVLGHUWKHFKDUDFWHUDQGPDJQLWXGH 2KLR HOHFWLRQ ODZV GHSULYHG 6FKUDGHU DQG WKH /LEHUWDULDQ RIWKHDVVHUWHGLQMXU\WRWKHULJKWVSURWHFWHGE\WKH)LUVW 3DUW\RI2KLRRIWKHLU)LUVWDQG)RXUWHHQWK$PHQGPHQWULJKWV DQG)RXUWHHQWK$PHQGPHQWVWKDWWKHSODLQWLIIVHHNVWR )XUWKHUPRUH 2KLR DUJXHV WKDW WKH GLVWULFW FRXUW JDYH YLQGLFDWH,WWKHQPXVWLGHQWLI\DQGHYDOXDWHWKHSUHFLVH LQVXIILFLHQW ZHLJKW WR WKH VWDWHjV LQWHUHVW LQ UHJXODWLQJ LQWHUHVWVSXWIRUZDUGE\WKH6WDWHDVMXVWLILFDWLRQVIRUWKH HOHFWLRQVZKHQHYDOXDWLQJWKHEDODQFHRILQWHUHVWVXQGHUWKH EXUGHQ LPSRVHG E\ LWV UXOH  ,Q SDVVLQJ MXGJPHQW WKH $QGHUVRQ WHVW  7KH IROORZLQJ DQDO\VLV RI WKH FRPSHWLQJ &RXUW PXVW QRW RQO\ GHWHUPLQH WKH OHJLWLPDF\ DQG EXUGHQVDQGLQWHUHVWVXQGHUWKH$QGHUVRQEDODQFLQJWHVWZLOO VWUHQJWKRIHDFKRIWKRVHLQWHUHVWVLWDOVRPXVWFRQVLGHU DVVHVVWKHVHFODLPV WKHH[WHQWWRZKLFKWKRVHLQWHUHVWVPDNHLWQHFHVVDU\WR EXUGHQ WKH SODLQWLIIjV ULJKWV  2QO\ DIWHU ZHLJKLQJ DOO 7KHILUVWVWHSRIWKH$QGHUVRQWHVWUHTXLUHVXVWRH[DPLQH WKHVHIDFWRUVLVWKHUHYLHZLQJFRXUWLQDSRVLWLRQWRGHFLGH WKHFKDUDFWHUDQGPDJQLWXGHRIWKHDVVHUWHGLQMXU\WRWKHULJKWV ZKHWKHUWKHFKDOOHQJHGSURYLVLRQLVXQFRQVWLWXWLRQDO