SKGF_Advisory_Reexamination Practice with Concurrent District Court or USITC Patent Litigation_2009

Loading...

Flash Player 9 (or above) is needed to view presentations.
We have detected that you do not have it on your computer. To install it, go here.

0 comments

Post a comment

    Post a comment
    Embed Video
    Edit your comment Cancel

    Favorites, Groups & Events

    SKGF_Advisory_Reexamination Practice with Concurrent District Court or USITC Patent Litigation_2009 - Presentation Transcript

    1. Reexamination Practice with Concurrent District Court or USITC Patent Litigation Robert Greene Sterne, Kenneth C. Bass III, Jon E. Wright & Lori A. Gordon January 26, 2009
    2. 5HH[DPLQDWLRQ 3UDFWLFH ZLWK &RQFXUUHQW 'LVWULFW &RXUW RU 86,7& 3DWHQW /LWLJDWLRQ %\\ 5REHUW *UHHQH 6WHUQH .HQQHWK & %DVV ,,, -RQ ( :ULJKW /RUL $ *RUGRQ $XWKRUV¶ 1RWH 3DWHQW UHH[DPLQDWLRQ KDV EHHQ VHOHFWHG DV D WRSLF IRU SUHVHQWDWLRQ DW WKH DQQXDO $VVRFLDWLRQ RI &RUSRUDWH 3DWHQW &RXQVHO ³$&3&´ 0HHWLQJ RQ -DQXDU\\ DW WKH (O &RQTXLVWDGRU &RQIHUHQFH &HQWHU LQ /RV &URDEDV 3XHUWR 5LFR 7KLV SDSHU ZKLFK LV EDVHG RQ WKH SDSHU ZLWK WKH VDPH WLWOH SUHVHQWHG DW WKH 6HGRQD 3DWHQW /LWLJDWLRQ &RQIHUHQFH KDV EHHQ XSGDWHG WR DFFRPSDQ\\ 5REHUW *UHHQH 6WHUQH¶V SUHVHQWDWLRQ DW WKH $&3& PHHWLQJ )RU WKRVH QRW IDPLOLDU ZLWK WKH 6HGRQD &RQIHUHQFH LWV PLVVLRQ LV WR ³HQJDJH LQ WUXH GLDORJXH QRW GHEDWH DOO LQ DQ HIIRUW WR PRYH WKH ODZ IRUZDUG LQ D UHDVRQHG DQG MXVW ZD\\ ´ 7KH SDSHU WKHUHIRUH VXEVFULEHV WR D QHXWUDO ³6ZLVV´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³,7&´ ³WKH FRXUWV´ DQG FR SHQGLQJ UHH[DPLQDWLRQ SURFHHGLQJV LQYROYLQJ WKH SDWHQW LQ VXLW EHIRUH WKH 8QLWHG 6WDWHV 3DWHQW DQG 7UDGHPDUN 2IILFH ³372´ $V LQGHSHQGHQW DUELWHUV RI SDWHQW YDOLGLW\\ HDFK IRUXP SRVHV D GLVWLQFW VHW RI FKDOOHQJHV DQG ULVNV 7KHVH VR FDOOHG ³SDUDOOHO XQLYHUVHV´ ZRUN ZLWK VHSDUDWH UXOHV VWDQGDUGV SURFHGXUHV WLPH OLQHV DQG UHVXOWV LQ 6WHUQH .HVVOHU *ROGVWHLQ )R[ 3 / / & ZZZ VNJI FRP &RS\\ULJKW 6.*) $OO 5LJKWV 5HVHUYHG 7KLV SDSHU KDV EHHQ SUHSDUHG IRU D SUHVHQWDWLRQ RQ WKLV WRSLF DW 7KH $VVRFLDWLRQ RI &RUSRUDWH 3DWHQW &RXQVHO $QQXDO 0HHWLQJ -DQXDU\\ VHH KWWS ZZZ DFSFQHW RUJ DQG LV D FRQWLQXDWLRQ RI WKH SDSHU SUHVHQWHG GXULQJ WKH 1LQWK $QQXDO 6HGRQD &RQIHUHQFH RQ 3DWHQW /LWLJDWLRQ 2FWREHU HQWLWOHG ³5HH[DPLQDWLRQ 3UDFWLFH ZLWK &RQFXUUHQW 'LVWULFW &RXUW 3DWHQW /LWLJDWLRQ´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
    3. FDVHV LQYROYLQJ WKH VDPH SDWHQW &HOHEUDWHG FDVHV LQYROYLQJ KLJK SURILOH UHH[DPLQDWLRQV DQG FR SHQGLQJ OLWLJDWLRQ LQFOXGH 173 ,QF Y 5HVHDUFK LQ 0RWLRQ /WG SDWHQWV IRXQG WR FRYHU WKH %ODFNEHUU\\ 7L9R Y (FKRVWDU 7L9R¶V 7LPH:DUS 3DWHQWV DQG 3URFWRU *DPEOH Y .UDIW )RRGV *OREDO ,QF SDWHQWV IRU SDFNLQJ IUHVK FRIIHH 7KHVH ZHOO NQRZQ FDVHV LQYROYLQJ KLJKO\\ SURILWDEOH SURGXFWV KDYH KLJKOLJKWHG WKH FULWLFDO LQWHUSOD\\ EHWZHHQ WKHVH WZR ZRUOGV²RQH RI $UWLFOH ,,, RU $UWLFOH , FRXUWV RQ WKH RQH KDQG DQG WKH 372 RQ WKH RWKHU 7ZR SULPDU\\ IDFWRUV KDYH FRQWULEXWHG WR WKH LQFUHDVHG XVH RI UHH[DPLQDWLRQ DV DQ DOWHUQDWH YHQXH WR FKDOOHQJH SDWHQW YDOLGLW\\ ZKHUH GLVWULFW FRXUW OLWLJDWLRQ KDV EHHQ LQLWLDWHG )LUVW WKH 372 PDGH D FRPPLWPHQW WR PDNH UHH[DPLQDWLRQ D PRUH VWUHDPOLQHG DQG YLDEOH YHQXH IRU SRVW JUDQW YDOLGLW\\ FKDOOHQJHV 7R WKDW HQG LW FUHDWHG D &HQWUDO 5HH[DPLQDWLRQ 8QLW ³&58´ WKDW KDV VROH UHVSRQVLELOLW\\ IRU DOO UHH[DPLQDWLRQV 7KH &58¶V RUJDQL]DWLRQ DQG LQLWLDWLYHV DUH GHVFULEHG PRUH IXOO\\ EHORZ EXW LI WKH QXPEHU RI UHH[DPLQDWLRQV ILOHG LV DQ\\ LQGLFDWLRQ LW KDV FHUWDLQO\\ SXW UHDO WHHWK LQWR D SURFHVV SUHYLRXVO\\ SODJXHG E\\ D SHUFHSWLRQ RI RQH VLGHGQHVV SUR SDWHQW RZQHU GHOD\\ DQG XQFHUWDLQW\\ 6HFRQG WKH OHJDO ODQGVFDSH VXUURXQGLQJ SDWHQW YDOLGLW\\ DQG UHH[DPLQDWLRQ KDV EHHQ LQ JUHDW IOX[ 7KH 6XSUHPH &RXUW¶V GHFLVLRQ LQ .65 ,QW¶O &R Y 7HOHIOH[ ,QF GUDPDWLFDOO\\ FKDQJHG WKH FDOFXOXV IRU GHWHUPLQLQJ ZKHWKHU DQ LQYHQWLRQ ZDV ³REYLRXV¶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¶O &R Y 7HOHIOH[ ,QF 6 &W ,Q UH 7UDQVORJLF 7HFK ,QF ) G )HG &LU 7KH )HGHUDO &LUFXLW ZDV SUHVHQWHG ZLWK VLPXOWDQHRXV DSSHDO IURP %3$, DQG 'LVWULFW &RXUW RQ VDPH SDWHQW 7KH &RXUW GHFLGHG WKH %3$, DSSHDO ILUVW XSKHOG %3$,¶V UXOLQJ WKDW WKH SDWHQW ZDV LQYDOLG DQG YDFDWHG 7UDQVORJLF¶V PLOOLRQ GDPDJHV DZDUG IURP WKH GLVWULFW FRXUW ,Q UH 6ZDQVRQ ) G )HG &LU 7KH )HGHUDO &LUFXLW FODULILHG ZKHQ LW LV DSSURSULDWH WR EDVH DQ 614 RQ DUW SUHYLRXVO\\ FRQVLGHUHG E\\ WKH 2IILFH
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³SDUDOOHO XQLYHUVH ´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³ZRUN LQ SURJUHVV ´ 7KH DXWKRUV KDYH LGHQWLILHG D QXPEHU RI KRW LVVXHV WKDW DUH FXUUHQWO\\ FRQIURQWLQJ SDUWLHV WKDW ILQG WKHPVHOYHV LQ WKH ³SDUDOOHO XQLYHUVH ´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
    5. VLJQLILFDQW GHFLVLRQ LQ D SDWHQW VXLW RU LQ D FRQFXUUHQW UHH[DPLQDWLRQ RI WKH SDWHQW LQ VXLW VXFK DV WKH LVVXDQFH RI D QRQ ILQDO RIILFH DFWLRQ UHMHFWLQJ VRPH RU DOO RI WKH FODLPV RI WKH SDWHQW LQ UHH[DPLQDWLRQ 7KLV SUHFLSLWRXV GURS LV LQ ODUJH SDUW GXH WR ³VKRUW VHOOLQJ´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³OLWLJDWLQJ LQ WKH SUHVV ´ 7KH DXWKRUV KDYH LQWHUYLHZHG FRUSRUDWH H[HFXWLYHV DQG VHFXULWLHV OLWLJDWRUV UHJDUGLQJ ZKDW OHJDO ULJKWV DQG UHVSRQVLELOLWLHV SDWHQW RZQHUV KDYH ZLWK DQG DJDLQVW VKRUW VHOOHUV XVLQJ QRQ ILQDO UHH[DPLQDWLRQ DQG RWKHU SDWHQW HQIRUFHPHQW GHYHORSPHQWV WR PDNH TXLFN ELJ SURILWV ,Q DGGLWLRQ WKH\\ KDYH LQWHUYLHZHG H[SHUWV LQ PHGLD UHODWLRQV DQG KDYH UHFHLYHG H[FHOOHQW IHHGEDFN RQ KRZ EHVW WR GHDO ZLWK FRXUW DQG 372 GHFLVLRQV LQ WKH SDUDOOHO XQLYHUVH ,Q WKHVH GD\\V RI LQVWDQW FRUSRUDWH ³QHZV´²FUHDWHG E\\ PDVV FRPPXQLFDWLRQV DQG WKH ,QWHUQHW EORJJHUV DQG PHVVDJH ERDUGV PDLQVWUHDP SUHVV DQG VHOI SURFODLPHG DQRQ\\PRXV SXQGLWV LQYHVWRUV DQG PDQLSXODWRUV²SHUFHSWLRQ LV RIWHQ PRUH SRZHUIXO WKDQ WKH ³WUXWK´ DQG LW EHKRRYHV VHQLRU H[HFXWLYHV DQG WKHLU FRXQVHO DQG DGYLVRUV WR EH FXUUHQW RQ EHVW SUDFWLFHV RQ KRZ EHVW WR GHDO ZLWK WKLV HYHU SUHVHQW FKDOOHQJH ,Q -DQXDU\\ VKDUHV RI 5DPEXV IHOO QHDUO\\ ZKHQ WKH 8 6 'LVWULFW &RXUW IRU WKH 'LVWULFW RI 'HODZDUH UXOHG LQ D SDWHQW LQIULQJHPHQW VXLW WKDW WKH ³FRPSDQ\\ FDQQRW HQIRUFH RI LWV VHPLFRQGXFWRU SDWHQWV LQ D VXLW DJDLQVW 0LFURQ 7HFKQRORJ\\ ,QF EHFDXVH 5DPEXV GHVWUR\\HG GRFXPHQWV DERXW WKHP ´ 6HH ,3/DZ 'RFXPHQW 6KUHGGLQJ 9RLGHG 5DPEXV 3DWHQWV -DQXDU\\ 7HVVHUD 7HFKQRORJLHV VKDUHV GURSSHG QHDUO\\ IROORZLQJ D QRQ ILQDO RIILFH DFWLRQ LQ D SDWHQW UHH[DPLQDWLRQ 7HVVHUD¶V VWRFN UHFRYHUHG VRPHZKDW EXW RQO\\ DIWHU LWV JHQHUDO FRXQVHO FRQWDFWHG LQYHVWRUV DQG DVVXUHG WKHP QRQ ILQDO DFWLRQV ZHUH QRW XQXVXDO DQG WKDW ³>F@ODLPV RI D SDWHQW FDQ QRW EH LQYDOLGDWHG LQ UHH[DPLQDWLRQ XQWLO WKH SURFHVV LI IXOO\\ FRPSOHWH LQFOXGLQJ DOO DSSHDOV ´ 6HH KWWS ZZZ IRUEHV FRP PDUNHWV WHVVHUD FKLS SDWHQW PDUNHW HTXLW\\ F[BPGB PDUNHWV KWPO ,Q DQRWKHU UHSRUWHG FDVH &RPPXQLTXH¶V VWRFN IHOO PRUH WKDQ IROORZLQJ DQ DQQRXQFHPHQW WKDW LWV SDWHQW LQIULQJHPHQW FDVH DJDLQVW &LWUL[ KDG EHHQ VWD\\HG SHQGLQJ UHH[DPLQDWLRQ RI WKH SDWHQWV XQGHUO\\LQJ WKH FODLPV 6HH KWWS QHWZRUN QDWLRQDOSRVW FRP QS EORJV WUDGLQJGHVN DUFKLYH KRW VWRFN FRPPXQLTXH GRZQ RQ SDWHQW UH H[DPLQDWLRQ DVS[ )LQDOO\\ $YLVWDU &RPPXQLFDWLRQV EODPHG 0LFURVRIW LQLWLDWHG UHH[DPLQDWLRQV IRU LWV QHHG WR FXW LWV 8 6 DQG (XURSHDQ ZRUNIRUFH E\\ 6HH KWWS ZZZ VLOLFRQEHDW FRP ORFDO ILUP EODPHV MRE FXW RQ PLFURVRIW DFWLRQ
    6. 7KH DXWKRUV FRPPHQG WKH ERRN 6723 7+( 35(66(6 E\\ 5LFKDUG 6 /HYLFN (VT DQG /DUU\\ 6PLWK DV DQ H[FHOOHQW VRXUFH RI EHVW SUDFWLFHV IRU PHHWLQJ WKLV FKDOOHQJH 7KH IROORZLQJ HLJKW VXJJHVWLRQV ZHUH SURYLGHG E\\ 0HOLVVD $UQRII RI /HYLFN &RPPXQLFDWLRQV RQ KRZ EHVW WR FRQWURO DQG IUDPH LQVWDQW FRUSRUDWH ³QHZV ´ %H SRVLWLYH 'RQ¶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¶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¶W EH DIUDLG WR WHOO \\RXU VWRU\\ WR DV PDQ\\ DXGLHQFHV DV SRVVLEOH DV PDQ\\ WLPHV DV SRVVLEOH <RX GRQ¶W KDYH WR XVH WKH VDPH ZRUGV HYHU\\ WLPH EXW NHHS WKH PHVVDJH FRQVLVWHQW 8VH \\RXU IULHQGV (QOLVW WKLUG SDUWLHV WR KHOS WHOO \\RXU VWRU\\ DQG YDOLGDWH WKH VWUHQJWK RI \\RXU FRPSDQ\\ RU WKH GHWDLOV RI SDWHQW ODZ ,W DGGV FUHGLELOLW\\ DQG JLYHV \\RX PRUH ZD\\V WR WHOO \\RXU VWRU\\ $SSO\\ WKH ³3RZHU RI 7KUHH´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³3$,5´ ,Q D UHH[DPLQDWLRQ WKLV FDQ RIWHQ WDNH WR EXVLQHVV GD\\V )XUWKHU SDUWLHV WR WKH UHH[DPLQDWLRQ RIWHQ GR QRW UHFHLYH DQ\\ SDSHU QRWLILFDWLRQ IRU VHYHUDO GD\\V DIWHU D GRFXPHQW KDV EHHQ PDLOHG RU ILOHG 5LFKDUG 6 /HYLFN /DUU\\ 6PLWK 6723 7+( 35(66(6 7+( &5,6,6 $1' /,7,*$7,21 35 '(6. 1' 5()(5(1&( :DWHUVKHG 3UHVV (G
    7. 7KLV GHOD\\ LV XQVDWLVIDFWRU\\ DQG QHHGV WR EH HOLPLQDWHG E\\ WKH 372 ZKLFK XQOLNH WKH IHGHUDO FRXUWV GRHV QRW H PDLO WKH SDUWLHV WKH ODWHVW HQWULHV LQ WKH UHH[DPLQDWLRQ GRFNHW % 5HH[DPLQDWLRQ 3HQGHQF\\ (YHU\\ SDUW\\ FRQVLGHULQJ RU IDFLQJ D SDWHQW UHH[DPLQDWLRQ DVNV DERXW WKH WLPLQJ RI WKH HQWLUH SURFHHGLQJ 'HYHORSLQJ DQ H[SHFWHG WLPHOLQH IRU D UHH[DPLQDWLRQ LV VWUDWHJLFDOO\\ LPSRUWDQW IRU LQVWDQFH LQ DVVHVVLQJ WKH SRVVLELOLW\\ RI D OLWLJDWLRQ VWD\\ RU WR DYRLG SRWHQWLDO LPSDFW RQ WULDO 'HWHUPLQLQJ D WLPHOLQH UHTXLUHV DQ XQGHUVWDQGLQJ RI KRZ WKH &58 LQWHUQDOO\\ SURFHVVHV UHH[DPLQDWLRQ UHTXHVWV DQG GHWHUPLQHV WKH RUGHU LQ ZKLFK UHH[DPLQDWLRQ DUH VXEVWDQWLYHO\\ FRQVLGHUHG :H SURYLGH KHUH DQ RYHUYLHZ RI WKDW SURFHVV EDVHG RQ LQ GHSWK LQWHUYLHZV ZLWK KLJK OHYHO &58 RIILFLDOV 5HH[DPLQDWLRQ UHTXHVWV ILUVW XQGHUJR UHYLHZ E\\ WKH &58 VWDII WR HQVXUH FRPSOLDQFH ZLWK WKH UXOHV ,I WKH UHH[DPLQDWLRQ UHTXHVW SDVVHV WKLV KXUGOH D QRWLFH RI UHTXHVW LV PDGH SXEOLF LQ WKH 2IILFLDO *D]HWWH :KHQ D UHTXHVW LV GHHPHG WR VDWLVI\\ DOO WKH UHTXLUHPHQWV RI WKH H[ SDUWH RU LQWHU SDUWHV UXOHV WKH ILOLQJ GDWH EHFRPHV WKH UHH[DPLQDWLRQ ILOLQJ GDWH -XVW EHFDXVH WKH QRWLFH RI UHTXHVW LV SXEOLVKHG LQ WKH 2IILFLDO *D]HWWH GRHV QRW QHFHVVDULO\\ PHDQ WKDW WKH UHH[DPLQDWLRQ UHTXHVW ZDV VDWLVIDFWRU\\ 5RXJKO\\ RI UHTXHVWV DUH ODWHU YDFDWHG E\\ WKH H[DPLQLQJ SDQHO IRU LQIRUPDOLWLHV 7KLV QXPEHU KDV IDOOHQ IURP URXJKO\\ LQ SUHYLRXV \\HDUV 2QFH D VDWLVIDFWRU\\ UHTXHVW KDV EHHQ PDGH WKH &58 KDV D WKUHH PRQWK GHDGOLQH WR LVVXH D GHFLVLRQ RQ WKH UHTXHVW EDVHG RQ ZKHWKHU D VXEVWDQWLDO QHZ TXHVWLRQ RI SDWHQWDELOLW\\ ³614´ KDV EHHQ UDLVHG LQ WKH UHTXHVW )XUWKHU WKH &58 KDV HVWDEOLVKHG D JRDO WR LVVXH D ILQDO RIILFH DFWLRQ RU DQ $FWLRQ &ORVLQJ 3URVHFXWLRQ ZLWKLQ WZR \\HDUV RI WKH ILOLQJ GDWH RI D UHTXHVW IRU UHH[DPLQDWLRQ $OO UHH[DPLQDWLRQV DUH KDQGOHG ZLWK ³VSHFLDO GLVSDWFK´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†† H[ SDUWH UHH[DPLQDWLRQV DQG LQWHU SDUWHV UHH[DPLQDWLRQV 7KH VXEVWDQWLDO QHZ TXHVWLRQ RI SDWHQWDELOLW\\ 614 LV GLVFXVVHG LQ PRUH GHWDLO LQ VXEVHTXHQW VHFWLRQV RI WKLV SDSHU 8 6 & †† DQG & ) 5 †† DQG
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
    9. ,V WKH SHQGHQF\\ LQWURGXFHG E\\ WKH DSSHDO SURFHVV GULYHQ E\\ WKH %3$, RU WKH &58 RU D FRPELQDWLRQ RI ERWK\" 3UDFWLWLRQHUV QRWH WKDW DW OHDVW VHYHQ PRQWKV FDQ SDVV EHWZHHQ WKH ILOLQJ RI D QRWLFH RI DSSHDO WKH SDWHQW RZQHU¶V EULHI WKH WKLUG SDUW\\ UHTXHVWHU UHVSRQVH LI LQWHU SDUWHV DQG WKH H[DPLQHU¶V DQVZHU ,Q WKH LQWHU SDUWHV UHH[DPLQDWLRQV ZH DQDO\\]HG WKLV WLPH SHULRG LV RIWHQ ORQJHU GXH WR WKH SHULRG RI WLPH EHWZHHQ 5HVSRQGHQW¶V %ULHI DQG WKH ([DPLQHU¶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²ERWK LQWHU SDUWHV DQG H[ SDUWH²PXVW VXIILFLHQWO\\ HVWDEOLVK WKDW DQ 614 H[LVWV :KLOH LW PD\\ VRXQG UHODWLYHO\\ VLPSOH SUHVHQWDWLRQ RI DQ 614 LV PRUH VXEWOH WKDQ PRVW SUDFWLWLRQHUV UHDOL]H 7KLV VHFWLRQ SUHVHQWV DQ RYHUYLHZ RI WKH 614 ,W WKHQ GLVFXVVHV WKH LPSDFW RI WZR UHFHQW FRXUW GHFLVLRQV RQ WKH 614 7KH VXEVWDQWLDO QHZ TXHVWLRQ ³614´ JHQHUDOO\\ %HIRUH WKH 372 ZLOO RUGHU D UHH[DPLQDWLRQ WKH UHTXHVWRU PXVW GHPRQVWUDWH DW OHDVW RQH QHZ VXEVWDQWLDO QHZ TXHVWLRQ RI SDWHQWDELOLW\\ ³614´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³SULPD IDFLH´ FDVH RI XQSDWHQWDELOLW\\ DV PDQ\\ EHOLHYH ,QVWHDG DQ 614 LV QHZ LQIRUPDWLRQ DERXW SUHH[LVWLQJ WHFKQRORJ\\ WKDW PD\\ KDYH HVFDSHG UHYLHZ DW WKH WLPH RI WKH RULJLQDO H[DPLQDWLRQ RI WKH SDWHQW DSSOLFDWLRQ DQG LQ VXEVHTXHQW UHH[DPLQDWLRQV RI WKH SDWHQW LI WKH\\ KDYH EHHQ DQ\\ 7KH 614 FRXOG WKHUHIRUH EH PRUH DSWO\\ QDPHG D ³VXEVWDQWLDO QHZ WHFKQLFDO WHDFKLQJ ´ +RZHYHU QRW DOO SUHYLRXVO\\ FRQVLGHUHG UHIHUHQFHV ³ROG DUW´ RU XQFRQVLGHUHG UHIHUHQFHV ³QHZ DUW´ PD\\ UDLVH DQ 614 )LUVW DUW SUHYLRXVO\\ FRQVLGHUHG LQ RULJLQDO SURVHFXWLRQ PD\\ EH XVHG WR VXSSRUW DQ 614 LI VKRZQ LQ D QHZ OLJKW 6HFRQG SUHYLRXVO\\ XQFRQVLGHUHG DUW PD\\ QRW SURYLGH GH IDFWR VXSSRUW IRU DQ 614 LI LW LV PHUHO\\ FXPXODWLYH 6HH H J DQG PRQWKV EHWZHHQ 5HVSRQGHQW¶V %ULHI DQG ([DPLQHU¶V $QVZHU DQG PRQWKV EHWZHHQ 5HVSRQGHQW¶V %ULHI DQG ([DPLQHU¶V $QVZHU
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³QHZ OLJKW´ 6HFWLRQ D PDNHV WKLV H[SOLFLW ² ³>W@KH H[LVWHQFH RI D VXEVWDQWLDO QHZ TXHVWLRQ RI SDWHQWDELOLW\\ LV QRW SUHFOXGHG E\\ WKH IDFW WKDW D SDWHQW RU SULQWHG SXEOLFDWLRQ ZDV SUHYLRXVO\\ FLWHG E\\ RU WR WKH 2IILFH RU FRQVLGHUHG E\\ WKH 2IILFH ´ ,Q UH 6ZDQVRQ SURYLGHV VRPH JXLGDQFH RQ ZKDW FRQVWLWXWHV D ³QHZ OLJKW´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³ZURQJ´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³VXEVWDQWLDOO\\ QHZ ´ (YHQ D QHZO\\ GLVFRYHUHG UHIHUHQFH PD\\ QRW UDLVH D 614 LI WKH UHIHUHQFH LV PHUHO\\ FXPXODWLYH WR VLPLODU SULRU DUW DOUHDG\\ IXOO\\ FRQVLGHUHG E\\ WKH 372 LQ D SUHYLRXV H[DPLQDWLRQ DQG SUHYLRXV UHH[DPLQDWLRQV 7KLV LV DQ LPSRUWDQW SRLQW ZKHQ GHWHUPLQLQJ ZKHWKHU WR ILOH D UHH[DPLQDWLRQ UHTXHVW RU ZKDW UHIHUHQFHV WR XVH LQ D VXEVHTXHQW H[ SDUWH UHH[DPLQDWLRQ RI D SDWHQW ,Q UH 6ZDQVRQ ) G )HG &LU 86& † D SDWHQWV DQG SULQWHG SXEOLFDWLRQV 7KLV VHQWHQFH ZDV DGGHG LQ WKH DPHQGPHQW WR 86& † WR VSHFLILFDOO\\ DGGUHVV ,Q UH 3RUWROD 3DFNDJLQJ ,QF ) G )HG &LU ,Q 3RUWROD WKH )HGHUDO &LUFXLW ³LQWHUSUHWHG WKH VWDWXWRU\\ LQWHQW >RI WKH H[ SDUWH UHH[DPLQDWLRQ VWDWXWHV@ DV SUHFOXGLQJ UHH[DPLQDWLRQ EDVHG RQ µSULRU DUW SUHYLRXVO\\ FRQVLGHUHG E\\ WKH 372 LQ UHODWLRQ WR WKH VDPH RU EURDGHU FODLPV ¶´ ,Q UH 6ZDQVRQ S FLWLQJ 3RUWROD ) G DW &RQJUHVV H[SODLQHG WKDW WKH DPHQGPHQW WR 86& † D ³RYHUWXUQV WKH KROGLQJ RI ,Q UH 3RUWROD 3DFNDJLQJ ,QF D )HGHUDO FRXUW GHFLVLRQ LPSRVLQJ DQ RYHUO\\ VWULFW OLPLW WKDW UHDFKHV EH\\RQG WKH WH[W RI WKH 3DWHQW $FW ´ + 5 5HS 1R DW + 5 5HS 1R 03(3 †
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† LQ .65 ,QWHUQDWLRQDO &R Y 7HOHIOH[ ,QF .65 86 8634 G GRHV QRW DOWHU WKH OHJDO VWDQGDUG IRU GHWHUPLQLQJ ZKHWKHU D VXEVWDQWLDO QHZ TXHVWLRQ RI SDWHQWDELOLW\\ H[LVWV 7KH UHTXLUHPHQW IRU D VXEVWDQWLDO QHZ TXHVWLRQ RI SDWHQWDELOLW\\ UHPDLQV LQ SODFH HYHQ LI LW LV FOHDU IURP WKH UHFRUG RI D SDWHQW IRU ZKLFK UHH[DPLQDWLRQ LV UHTXHVWHG WKDW WKH SDWHQW ZDV JUDQWHG EHFDXVH WKH 2IILFH GLG QRW VKRZ ³PRWLYDWLRQ´ WR FRPELQH RU RWKHUZLVH VDWLVI\\ WKH WHDFKLQJ VXJJHVWLRQ RU PRWLYDWLRQ 760 WHVW 7KXV D UHH[DPLQDWLRQ UHTXHVW UHO\\LQJ RQ SUHYLRXVO\\ DSSOLHG SULRU DUW WKDW DVNV WKH 2IILFH WR ORRN DW WKH DUW DJDLQ EDVHG VROHO\\ RQ WKH 6XSUHPH &RXUW¶V FODULILFDWLRQ RI WKH OHJDO VWDQGDUG IRU GHWHUPLQLQJ REYLRXVQHVV XQGHU 86& † LQ .65 ZLWKRXW SUHVHQWLQJ WKH DUW LQ QHZ OLJKW RU GLIIHUHQW ZD\\ ZLOO QRW UDLVH D VXEVWDQWLDO QHZ TXHVWLRQ :KHQ .65 ZDV GHFLGHG DW WKH HQG RI $SULO WKH 372 IHDUHG DQ DYDODQFKH RI UHH[DPLQDWLRQV EDVHG VROHO\\ RQ DQ DUJXPHQW WKDW WKH REYLRXVQHVV VWDQGDUG DSSOLHG LQ WKH RULJLQDO SURVHFXWLRQ KDG EHHQ UHOD[HG 7KLV DUJXPHQW ZDV DGYDQFHG E\\ WKH 7KLUG 3DUW\\ 5HTXHVWHU LQ ([ 3DUWH 5HH[DPLQDWLRQ &RQWURO 1R ,Q WKLV UHTXHVW WKH 7KLUG 3DUW\\ 5HTXHVWHU DUJXHG WKDW WKH 6XSUHPH &RXUW¶V GHFLVLRQ LQ .65 SURYLGHG D ³QHZ OLJKW´ LQ ZKLFK WR YLHZ WKH UHIHUHQFHV XQGHU WKH GRFWULQH RI REYLRXVQHVV 6HH 2UGHU 'HQ\\LQJ 5HTXHVW IRU ([ 3DUWH 5HH[DPLQDWLRQ LQ 5HH[DPLQDWLRQ &RQWURO 1R S 7KH ([ 3DUWH 5HH[DPLQDWLRQ UHTXHVW ZDV GHQLHG E\\ WKH 372 ,G S ,Q WKH GHQLDO WKH 372 FODULILHG WKH VWDQGDUG IRU GHWHUPLQDWLRQ RI ZKHWKHU DQ 614 H[LVWV EDVHG RQ ³ROG DUW´ 5HH[DPLQDWLRQ LV OLPLWHG WR UHYLHZ RI QHZ LQIRUPDWLRQ DERXW SUHH[LVWLQJ WHFKQRORJ\\ ZKLFK PD\\ KDYH HVFDSHG UHYLHZ DW WKH WLPH RI LQLWLDO H[DPLQDWLRQ RI WKH SDWHQW DSSOLFDWLRQ ,W ZDV QRW GHVLJQHG IRU KDUDVVPHQW RI D SDWHQW RZQHU E\\ UHYLHZ RI ROG LQIRUPDWLRQ DERXW SUHH[LVWLQJ WHFKQRORJ\\ HYHQ LI D WKLUG SDUW\\ IHHOV WKH 2IILFH¶V FRQFOXVLRQ EDVHG RQ WKDW ROG LQIRUPDWLRQ ZDV HUURQHRXV 7KH UHH[DPLQDWLRQ OHJLVODWLYH KLVWRU\\ QRZKHUH SURYLGHV IURP UHYLHZ RI VXFK ROG LQIRUPDWLRQ HDFK WLPH D FRXUW FODULILHV RU UH LQWHUSUHWV D VWDQGDUG RU SRLQW RI ODZ WKDW HIIHFWV WKH SDWHQWDELOLW\\ GHWHUPLQDWLRQ ,I LW GLG WKH UHH[DPLQDWLRQ SURFHVV ZRXOG EH XQZLHOG\\ EHFDXVH FDVH ODZ LV FRQVWDQWO\\ HYROYLQJ « 7KH .65 GHFLVLRQ GRHV QRW SHU VH FUHDWH QHZ LQIRUPDWLRQ DERXW SUHH[LVWLQJ WHFKQRORJ\\ WKDW PD\\ KDYH HVFDSHG UHYLHZ DW WKH WLPH RI WKH LQLWLDO H[DPLQDWLRQ RI WKH SDWHQW DSSOLFDWLRQ $QG LQ WKLV LQVWDQFH WKH .65 GHFLVLRQ GRHV QRW SUHVHQW RU YLHZ WKH ³ROG DUW´ LQ D GLIIHUHQW ZD\\ RU LQ D ³QHZ OLJKW ´ DV FRPSDUHG WR ZKDW ZDV DOUHDG\\ FRQVLGHUHG LQ WKH µ UHH[DPLQDWLRQ SURFHHGLQJ ´ ,G SS HPSKDVLV LQ RULJLQDO 7KH IHDUHG DYDODQFKH GLG QRW PDWHULDOL]H EXW WKHUH LV QR GRXEW WKDW .65 VSDZQHG PRUH UHH[DPLQDWLRQV WKDQ ZRXOG KDYH RFFXUUHG RWKHUZLVH
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³WKH µ UHTXHVW´ 7KH µ UHTXHVW SURYLGHG D H[WHQVLYH GLVFXVVLRQ RI WKH YDULRXV IDFWRUV DUWLFXODWHG E\\ WKH )HGHUDO &LUFXLW DQG GLVFXVVHG LQ WKH ([DPLQDWLRQ *XLGHOLQHV ZKLFK 03(3 † 5HY -XO\\ ([DPLQDWLRQ *XLGHOLQHV IRU 'HWHUPLQLQJ 2EYLRXVQHVV 8QGHU 86& LQ 9LHZ RI WKH 6XSUHPH &RXUW 'HFLVLRQ LQ .65 ,QWHUQDWLRQDO &R Y 7HOHIOH[ ,QF )HG 5HJ S 2FWREHU ([DPLQDWLRQ *XLGHOLQHV ,W VHHPV LQ SUDFWLFH WKDW WKH &58 LV IROORZLQJ WKH OHDG RI WKH ([DPLQDWLRQ *XLGHOLQHV IRU SDWHQW DSSOLFDWLRQV .65 8 6 DW ³:KLOH WKH VHTXHQFH RI >WKH *UDKDP IDFWRUV@ PLJKW EH UHRUGHUHG LQ DQ\\ SDUWLFXODU FDVH WKH IDFWRUV FRQWLQXH WR GHILQH WKH LQTXLU\\ WKDW FRQWUROV ,I D FRXUW RU SDWHQW H[DPLQHU FRQGXFWV WKLV DQDO\\VLV DQG FRQFOXGHV WKH FODLPHG VXEMHFW PDWWHU ZDV REYLRXV WKH FODLP LV LQYDOLG XQGHU † ´
    13. PD\\ EH FRQVLGHUHG LQ GHWHUPLQLQJ WKH OHYHO RI RUGLQDU\\ VNLOO LQ WKH DUW 7KH VSHFLILF IDFWRUV DGGUHVVHG LQ WKH µ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³LQWHU SDUWHV´ UHH[DPLQDWLRQ &OHDUO\\ WKLV LV DQG VKRXOG EH SURKLELWHG RU WKH LQWHU SDUWHV QDWXUH RI WKH SURFHHGLQJ ZRXOG EH ORVW )XUWKHU QHLWKHU WKH WKLUG SDUW\\ UHTXHVWHU QRU LWV SULYLHV PD\\ UHTXHVW D VXEVHTXHQW LQWHU SDUWHV UHH[DPLQDWLRQ XQWLO WKH ILUVW RQH LV FRPSOHWHG )RU WKHVH UHDVRQV LQWHU SDUWHV UHH[DPLQDWLRQ UHTXHVWV UHTXLUH WKH WKLUG SDUW\\ UHTXHVWHU GLVFORVH WKH ³UHDO SDUW\\ LQ LQWHUHVW ´ 6XFK GLVFORVXUH PXVW EH ³WR WKH H[WHQW QHFHVVDU\\ IRU D VXEVHTXHQW SHUVRQ ILOLQJ DQ LQWHU SDUWHV UHH[DPLQDWLRQ UHTXHVW WR GHWHUPLQH ZKHWKHU WKDW SHUVRQ LV D SULY\\ ´ 7KH 372 LV FXUUHQWO\\ VWUXJJOLQJ ZLWK WKH ³UHDO SDUW\\ LQ LQWHUHVW´ UXOH ZKHUH WKHUH LV FRQFXUUHQW GLVWULFW FRXUW OLWLJDWLRQ ZLWK PXOWLSOH GHIHQGDQWV 7\\SLFDOO\\ LQ D PXOWL GHIHQGDQW OLWLJDWLRQ WKH JURXS RI GHIHQGDQWV ZLOO FUHDWH D MRLQW GHIHQVH JURXS ³-'*´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† E VHWWLQJ IRUWK LQIRUPDWLRQ UHTXLUHG IRU DQ H[ SDUWH UHH[DPLQDWLRQ UHTXHVW DQG QRW LQFOXGLQJ WKH LGHQWLW\\ RI WKDW UHTXHVWHU VHH DOVR &)5 † I UHTXLULQJ DWWRUQH\\ RU DJHQW WR KDYH SRZHU RI DWWRUQH\\ LI ³D UHTXHVW LV ILOHG E\\ DQ DWWRUQH\\ RU DJHQW LGHQWLI\\LQJ DQRWKHU SDUW\\ RQ ZKRVH EHKDOI WKH UHTXHVW LV ILOHG´ 6HH &)5 † DXWKRUL]LQJ ³DQ\\ SHUVRQ RWKHU WKDQ WKH SDWHQW RZQHU RU LWV SULYLHV´ WR ILOH DQ LQWHU SDUWHV UHH[DPLQDWLRQ UHTXHVW VHH DOVR &)5 † E UHTXLULQJ WKH LQWHU SDUWHV UHTXHVW WR LQFOXGH WKH LGHQWLW\\ RI WKH UHDO SDUW\\ LQ LQWHUHVW &)5 † D &)5 † E 8 6 & †† E DQG E
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³UHDO SDUW\\ LQ LQWHUHVW´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³UHDO SDUW\\ LQ LQWHUHVW´ LVVXHV ZKLFK DUH UHDO EXW QRZ RIWHQ HIIHFWLYHO\\ LJQRUHG 3HUKDSV PRVW LPSRUWDQWO\\ VXFK SHWLWLRQV DUH QRW KDQGOHG E\\ WKH &58 EXW DUH UHIHUUHG WR WKH 2IILFH RI 3DWHQW /HJDO $GPLQLVWUDWLRQ ³23/$´ 7KHVH SHWLWLRQV WDNH WLPH DQG RIWHQ VLJQLILFDQW UHVRXUFHV WR UHVROYH DQG DUH SHUFHLYHG E\\ VRPH DV EHLQJ GLUHFWO\\ FRQWUDU\\ WR WKH VWDWXWRU\\ UHTXLUHPHQW WKDW WKH 372 DFW ZLWK ³VSHFLDO GLVSDWFK ´ $V RQH 23/$ RIILFLDO KDV VWDWHG VXFK SHWLWLRQV DFW DV DQ ³DQFKRU´ RQ UHH[DPLQDWLRQ SURFHHGLQJV WKDW EULQJ LW WR D VWDQGVWLOO RU HYHQ SUHYHQW WKH UHH[DPLQDWLRQ IURP JHWWLQJ XQGHUZD\\ 7KHUH LV DW OHDVW RQH FDVH ZKHUH WKH 372 KDV GLVPLVVHG DQ LQWHU SDUWHV UHH[DPLQDWLRQ ZKHUH WKH UHDO SDUW\\ LQ LQWHUHVW ZDV QRW UHVROYHG WR LWV VDWLVIDFWLRQ 7KH UHTXHVW ZDV ILOHG E\\ DQ HQWLW\\ FDOOLQJ LWVHOI ³7UROO %XVWHUV ´ 7KH UHTXHVWHU¶V ZHEVLWH GHVFULEHV LWV VHUYLFH DV FRPSOHWHO\\ DQRQ\\PRXV ³7UROO %XVWHUV WDNHV DLP DQG ILUHV LQ RXU RZQ QDPH 7KH 3DWHQW 7UROO ZLOO QHYHU NQRZ ZKR RU KRZ PDQ\\ DUH EHKLQG WKH µKLW¶ ´ ,Q SUDFWLFH WKH 372 ZLOO JHQHUDOO\\ QRW ORRN EH\\RQG WKH UHTXLUHG VWDWHPHQW LGHQWLI\\LQJ WKH UHDO SDUW\\ LQ LQWHUHVW XQOHVV LW LV QRW IDFLDOO\\ DFFXUDWH RU LV DPELJXRXV ,Q WKH 7UROO %XVWHUV FDVH WKH 372 LVVXHG D VKRZ FDXVH RUGHU WR HVWDEOLVK WKH LGHQWLW\\ RI WKH UHDO SDUW\\ LQ LQWHUHVW 7KH 372 ZDV QRW SHUVXDGHG ZLWK WKH UHVSRQVH DQG WHUPLQDWHG WKH UHH[DPLQDWLRQ VWDWLQJ WKDW ³7UROO %XVWHUV FDQQRW DFW DV D µVKLOO¶ LQ DQ LQWHU SDUWHV UHH[DPLQDWLRQ UHTXHVW WR VKLHOG WKH LGHQWLW\\ RI WKH UHDO SDUW\\ RU SDUWLHV LQ LQWHUHVW ´ 7KLV LV WKH RQO\\ FDVH RI ZKLFK WKH DXWKRUV DUH DZDUH ZKHUH WKH 372 KDV WHUPLQDWHG DQ LQWHU SDUWHV UHH[DPLQDWLRQ UHTXHVW EDVHG RQ D ILQGLQJ RI D YLRODWLRQ RI WKH UHDO SDUW\\ LQ LQWHUHVW UHTXLUHPHQW 7KH 7UROO %XVWHUV FDVH SUHVHQWV VHYHUDO LPSRUWDQW OHVVRQV )LUVW ³H[WULQVLF HYLGHQFH PD\\ EH VXEPLWWHG E\\ WKH SDWHQW RZQHU WR VXSSRUW D SHWLWLRQ WR YDFDWH WKH ILOLQJ 7KH UHDO SDUW\\ LQ LQWHUHVW LVVXH DULVHV LQ LQWHU SDUWHV 5HH[DPLQDWLRQ &RQWURO 1RV DQG 6HH 5HH[DPLQDWLRQ &RQWURO 1R 6HH KWWS ZZZ WUROO EXVWHUV FRP 6HH &RQWURO 1R ³'HFLVLRQ 9DFDWLQJ )LOLQJ 'DWH ´ S PDLOHG $XJ
    15. GDWH RU WKH 2IILFH PD\\ XVH H[WULQVLF HYLGHQFH WR VXD VSRQWH RUGHU WKH UHTXHVWHU UHDO SDUW\\ LQ LQWHUHVW WR VKRZ FDXVH ´ 6HFRQG WKH 372 VWDWHG WKDW ³>D@Q HQWLW\\ QDPHG DV WKH VROH UHDO SDUW\\ LQ LQWHUHVW PD\\ QRW UHFHLYH D VXJJHVWLRQ IURP DQRWKHU SDUW\\ WKDW D SDUWLFXODU SDWHQW VKRXOG EH WKH VXEMHFW RI D UHTXHVW IRU LQWHU SDUWHV UHH[DPLQDWLRQ DQG EH FRPSHQVDWHG E\\ WKDW SDUW\\ IRU WKH ILOLQJ RI WKH UHTXHVW ZLWKRXW QDPLQJ WKH SDUW\\ ZKR VXJJHVWHG DQG FRPSHQVDWHG WKH HQWLW\\ IRU WKH ILOLQJ RI D UHTXHVW ´ )LQDOO\\ WKH 372 H[SOLFLWO\\ QRWHG WKDW H[ SDUWH UHH[DPLQDWLRQ ZDV VWLOO DQ RSWLRQ IRU 7UROO %XVWHUV ,Q VXP WKH 372 KDV D OLPLWHG DELOLW\\ DQG DSSHWLWH WR UHVROYH UHDO SDUW\\ LQ LQWHUHVW GLVSXWHV LQ WKH FRQWH[W RI LQWHU SDUWHV UHH[DPLQDWLRQ SURFHGXUHV EHFDXVH WKH 372 GRHV QRW KDYH WKH GLVFRYHU\\ PHFKDQLVPV LQ UHH[DPLQDWLRQ SURFHHGLQJV DQG UHVRXUFHV WR PHGLDWH RU GHFLGH VXFK D GLVSXWH +RZHYHU WKH ³7UROO %XVWHUV´ FDVH VKRZV WKDW DQ LQVXIILFLHQW UHVSRQVH WR D VKRZ FDXVH RUGHU ZLOO UHVXOW LQ GLVPLVVDO RI WKH LQWHU SDUWHV UHH[DPLQDWLRQ 7KLV LV D KRW DUHD RI GLVSXWH DQG WKH DXWKRUV H[SHFW WR VHH PRUH GHYHORSPHQWV RYHU WKH QH[W \\HDU ( 'XW\\ RI 'LVFORVXUH ,W LV FOHDU WKDW WKH SDWHQW RZQHU UHPDLQV XQGHU D GXW\\ RI GLVFORVXUH ZKLOH WKH SDWHQW LV LQ UHH[DPLQDWLRQ SURFHHGLQJV XQGHU & ) 5 †† DQG )XUWKHU D WKLUG SDUW\\ UHTXHVWRU SDUWLFLSDWLQJ LQ DQ LQWHU SDUWHV UHH[DPLQDWLRQ RZHV D GXW\\ RI FDQGRU DQG JRRG IDLWK WR WKH 372 XQGHU &)5 † 7KH RQJRLQJ GXW\\ RI GLVFORVXUH IRU WKH SDWHQW RZQHU UDLVHV VRPH LQWHUHVWLQJ VWUDWHJLF TXHVWLRQV WKDW ZH FRQVLGHU EHORZ )RU LQVWDQFH ZKR VKRXOG KDQGOH WKH UHH[DPLQDWLRQ\" 2SWLRQV LQFOXGH XVLQJ SDWHQW DWWRUQH\\V IURP WKH WULDO WHDP RU SURVHFXWLRQ DWWRUQH\\V IURP WKH OLWLJDWLQJ ODZ ILUP $OWHUQDWLYHO\\ RXWVLGH SDWHQW DWWRUQH\\V RU SDWHQW DWWRUQH\\V LQVLGH WKH SDWHQW RZQHU¶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
    16. UHMHFWLRQ RI WKH RULJLQDO LVVXHG FODLPV LQ D UHH[DPLQDWLRQ +RZHYHU RQO\\ VXEPLWWLQJ SDWHQWV DQG SULQWHG SXEOLFDWLRQV LQ DQ ,'6 GRHV QRW UHOLHYH WKH SDWHQW RZQHU DQG LWV UHH[DPLQDWLRQ DWWRUQH\\V RI WKH ULVNV RI YLRODWLRQ RI WKH GXW\\ RI GLVFORVXUH DQG SRVVLEO\\ FRPPLWWLQJ LQHTXLWDEOH FRQGXFW )XUWKHU &)5 † UHTXLUHV WKH SDWHQW RZQHU¶V UHH[DPLQDWLRQ DWWRUQH\\V WR FRQGXFW D UHDVRQDEOH LQTXLU\\ RI VXEPLVVLRQV WR WKH 372 ZKLFK PHDQV WKDW VRPH OHYHO RI UHYLHZ RI HDFK SULRU DUW VXEPLVVLRQ VKRXOG EH GRQH SULRU WR ILOLQJ &XUUHQWO\\ LW VHHPV WKDW GXH WR WKH ULVN RI LQHTXLWDEOH FRQGXFW SDWHQW RZQHUV DUH HUULQJ RI WKH VLGH RI YROXPLQRXV ,'6 ILOLQJV DQG DUH QRW FXOOLQJ RXW SRVVLEOH SULRU DUW WKDW GRHV QRW ILW LQWR WKH FDWHJRULHV RI SDWHQWV SULQWHG SXEOLFDWLRQV DQG DGPLVVLRQV 7KURXJKRXW WKH LQWHU SDUWHV UHH[DPLQDWLRQ SURFHHGLQJ WKH SDWHQW RZQHU DOVR KDV DQ REOLJDWLRQ WR ³FDOO WKH DWWHQWLRQ RI WKH 2IILFH WR DQ\\ SULRU RU FRQFXUUHQW SURFHHGLQJV LQ ZKLFK WKH SDWHQW LV RU ZDV LQYROYHG LQFOXGLQJ EXW QRW OLPLWHG WR LQWHUIHUHQFHV UHLVVXH UHH[DPLQDWLRQ RU OLWLJDWLRQ DQG WKH UHVXOWV RI VXFK SURFHHGLQJV ´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¶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¶V GLVFORVXUH RI LWV LQYDOLGLW\\ FRQWHQWLRQV ,I D 3DWHQW 2ZQHU FKRRVHV WR DGG QHZ FODLPV RU DPHQG FODLPV GXULQJ D UHH[DPLQDWLRQ SURFHHGLQJ WKH DGGHG ODQJXDJH LV VXEMHFWHG WR D EURDGHU H[DPLQDWLRQ VLPLODU WR WKDW RI DQ H[DPLQDWLRQ RI DQ RULJLQDO DSSOLFDWLRQ )RU H[DPSOH WKH QHZ FODLP RU QHZ OLPLWDWLRQ LV FRQVLGHUHG IRU FRPSOLDQFH XQGHU 86& † 6HH 03(3 † ,, )XUWKHUPRUH VRPH SUDFWLWLRQHUV DUJXH WKDW QRQ SDWHQW QRQ SXEOLFDWLRQ SULRU DUW H J SULRU XVH SULRU RIIHU IRU VDOH LV PDWHULDO WR QHZ FODLPV DQG RU QHZ OLPLWDWLRQV DGGHG GXULQJ UHH[DPLQDWLRQV &)5 † VHH DOVR † IRU VLPLODU H[ SDUWH UXOH
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¶V KLJKO\\ FRQILGHQWLDO WHFKQLFDO LQIRUPDWLRQ XQGHU D SURWHFWLYH RUGHU VKRXOG EH DOORZHG WR GUDIW RU VXSHUYLVH WKH GUDIWLQJ RI SHQGLQJ FODLPV LQ DSSOLFDWLRQV RU FODLPV XQGHU UHH[DPLQDWLRQ LQ WKH VDPH WHFKQLFDO VSDFH 2EYLRXVO\\ LQ GHSWK NQRZOHGJH RI D FRPSHWLWRU¶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¶V WULDO WHDP SDUWLFLSDWH LQ SURVHFXWLRQ RI LWV SHQGLQJ SDWHQW DSSOLFDWLRQV UHH[DPLQDWLRQV UHLVVXHV RU LQWHUIHUHQFHV XVLQJ LQIRUPDWLRQ GHULYHG IURP WKH OLWLJDWLRQ\" 7R ZKDW H[WHQW PD\\ WKH DFFXVHG LQIULQJHU¶V WULDO WHDP SDUWLFLSDWH LQ SURVHFXWLRQ RI WKHLU RZQ SDWHQW DSSOLFDWLRQV LQ WKH VDPH VXEMHFW PDWWHU DV WKH SDWHQWV LQ VXLW LQ UHH[DPLQDWLRQV RI WKH SDWHQW RZQHU¶V SDWHQWV RU LQ LQWHUIHUHQFHV LQYROYLQJ WKH SDWHQW RZQHU\" ,Q WKH VSHFLILF FRQWH[W RI UHH[DPLQDWLRQ SUDFWLFH ZLWK FRQFXUUHQW SDWHQW OLWLJDWLRQ WKH SURWHFWLYH RUGHU VKRXOG VSHFLILFDOO\\ DGGUHVV WKH LVVXH RI SDWHQW SURVHFXWLRQ ERWK RI DSSOLFDWLRQV DQG RI UHH[DPLQDWLRQ SURFHHGLQJV 7KH SDWHQW RZQHU¶V WULDO WHDP ZRXOG SUHVXPDEO\\ KDYH DFFHVV WR WKH DFFXVHG LQIULQJHU¶V KLJKO\\ FRQILGHQWLDO WHFKQLFDO PDWHULDO UHJDUGLQJ WKH DFFXVHG SURGXFWV DQG EDUULQJ D SURVHFXWLRQ EDQ ZRXOG EH DEOH WR VXSHUYLVH DQG RU GLUHFWO\\ FRQWURO FODLP DPHQGPHQWV 7KH SDWHQW RZQHU PD\\ DOVR EH VKDULQJ KLJKO\\ FRQILGHQWLDO WHFKQLFDO LQIRUPDWLRQ DERXW LWV RZQ SURGXFWV DQG DQ\\ QRQ SURVHFXWLRQ FODXVH VKRXOG EH UHFLSURFDO &)5 † 7KH XQFHUWDLQW\\ EHWZHHQ WKH UHTXLUHG DQG DOVR SUHIHUDEOH ERXQGV RI WKH GXW\\ RI GLVFORVXUH LQ UHH[DPLQDWLRQV DQG WKH HYHU SUHVHQW VSHFWHU RI D YLRODWLRQ RI WKH GXW\\ RI GLVFORVXUH ZKHUH HYHQ PDQ\\ DW WKH 372 ZLOO VD\\ WKH\\ GR QRW NQRZ ZKHUH WKH UHDO OLQHV DUH LV DUJXHG E\\ VRPH DV MXVW DQRWKHU H[DPSOH RI ZK\\ VLJQLILFDQW FKDQJH LQ WKH ODZ RI LQHTXLWDEOH FRQGXFW RU WKH GXW\\ RI GLVFORVXUH QHHGV WR RFFXU ZKHWKHU E\\ FRXUW GHFLVLRQ RU OHJLVODWLYH FKDQJH
    18. $FFXVHG LQIULQJHUV FRQWHPSODWLQJ UHH[DPLQDWLRQ VKRXOG HQVXUH WKDW WKH SDWHQW RZQHU¶V WULDO WHDP LV SURKLELWHG IURP SDUWLFLSDWLRQ LQ DQ\\ UHTXHVWHG UHH[DPLQDWLRQ $FFXVHG LQIULQJHUV VKRXOG DOVR HQVXUH WKDW WKH SURWHFWLYH RUGHU EDUV WKH VKDULQJ RI KLJKO\\ FRQILGHQWLDO LQIRUPDWLRQ ZLWK LQGLYLGXDOV SURVHFXWLQJ DSSOLFDWLRQV LQFOXGLQJ UHLVVXH DSSOLFDWLRQV DQG UHH[DPLQDWLRQV LQ WKH VDPH VXEMHFW PDWWHU DV WKH SDWHQWV LQ VXLW )LQDOO\\ XQUHVROYHG TXHVWLRQV UHPDLQ UHJDUGLQJ WKH LQWHUSOD\\ EHWZHHQ QRQ SURVHFXWLRQ FODXVHV LQ D SURWHFWLYH RUGHU DQG D SDWHQW RZQHU¶V GXW\\ RI GLVFORVXUH XQGHU & ) 5 †† DQG :H H[SHFW VLJQLILFDQW GHYHORSPHQWV LQ WKLV DUHD LQ WKH QH[W \\HDU DV WKH 2IILFH RI 3DWHQW DQG /HJDO $GPLQLVWUDWLRQ ³23/$´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¶V GHFLVLRQ LQ .65 Y 7HOHIOH[ DOWHUHG WKH REYLRXVQHVV FDOFXOXV LQ IXQGDPHQWDO ZD\\ E\\ PDNLQJ WKH REYLRXVQHVV GHWHUPLQDWLRQ PRUH VXEMHFWLYH 7KH IXOO VFRSH RI .65¶V LPSDFW RQ SDWHQW UHH[DPLQDWLRQ UHPDLQV WR EH VHHQ EXW LQLWLDO UHSRUWV LQGLFDWH WKDW WKH UHVXOWV PD\\ EH GLUH IRU SDWHQW RZQHUV SDUWLFXODUO\\ LQ WKH ³SUHGLFWDEOH´ DUWV ([WHQVLYH UHVHDUFK DERXW WKH LPSDFW RI .65 KDV EHHQ GRQH E\\ PDQ\\ JURXSV DQG VKRZV WKDW WKH LPSDFW LV VLJQLILFDQW LQ RULJLQDO SURVHFXWLRQ EDVHG RQ D VWDWLVWLFDOO\\ VLJQLILFDQW VDPSOH 3HUKDSV WKH PRVW H[WHQVLYH SXEOLFO\\ DYDLODEOH VDPSOH DQG DQDO\\VLV LV E\\ 0LFURVRIW¶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³FRPELQDWLRQ RI ROG HOHPHQWV ´ 7KLV DSSOLHV WR VRPH RI WKH PRVW LPSRUWDQW LQYHQWLRQV RI DOO WLPH 6HH 6XQGDQFH ,QF Y 'HPRQWH )DEULFDWLQJ /7' 1R 6OLS RS DW )HG &LU 'HF
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³VHFRQGDU\\ FRQVLGHUDWLRQV´ RU ³REMHFWLYH HYLGHQFH´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¶V WHVWLPRQ\\ VWDWLQJ WKDW ³>G@HVSLWH WKH DEVHQFH RI DQ\\ VXJJHVWLRQ RI UHOHYDQW WHFKQLFDO H[SHUWLVH >WKH SDWHQW H[SHUW@ RIIHUHG H[SHUW WHVWLPRQ\\ RQ VHYHUDO LVVXHV ZKLFK DUH H[FOXVLYHO\\ GHWHUPLQHG IURP WKH SHUVSHFWLYH RI RUGLQDU\\ VNLOO LQ WKH DUW ´ ,G
    20. LQFUHDVHV WKH VL]H RI WKH DGPLQLVWUDWLYH UHFRUG VRPHWKLQJ WKH 372 KDV LQGLFDWHG LW ZRXOG OLNH WR DYRLG DOO WKLQJV EHLQJ HTXDO 7KH VHFRQG FRQFHUQ LV WKDW WKH UHH[DPLQDWLRQ H[DPLQHUV KDYH QR PHFKDQLVP DQG OLWWOH H[SHULHQFH DW EHVW LQ DVVHVVLQJ WKH FRPSHWHQF\\ DQG YHUDFLW\\ RI WKH LQIRUPDWLRQ DQG DQDO\\VLV SUHVHQWHG LQ ZULWWHQ VXEPLVVLRQV 7KH WKLUG FRQFHUQ LV WKH VWULFW SDJH OLPLWV LPSRVHG RQ UHVSRQVHV WR RIILFH DFWLRQV 7KH SDJH OLPLW LVVXH LV VXIILFLHQWO\\ LPSRUWDQW WKDW LW LV DGGUHVVHG VHSDUDWHO\\ EHORZ DV ³KRW WRSLF ´ :H QRWH KRZHYHU WKDW LI WKH VXEPLVVLRQ LV GHQRPLQDWHG DV ³IDFWXDO´ DV RSSRVHG WR ³DUJXPHQW´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¶V GHFLVLRQV UHYHDOV WKDW WKH %3$, KDV GHFLGHG OHVV WKDQ ILYH LQWHU SDUWHV UHH[DPLQDWLRQV 6LJQLILFDQWO\\ DW OHDVW WKUHH RI WKHVH GHFLVLRQV UHVXOWHG LQ D QRQ ILQDO QRQ DSSHDODEOH GHFLVLRQ DQG ZHUH WKHUHIRUH UHPDQGHG WR WKH H[DPLQHU IRU IXUWKHU SURVHFXWLRQ 6LQFH WKH GXW\\ RI GLVFORVXUH GRHV QRW DSSO\\ WR UHH[DPLQDWLRQ FRXQVHO IRU WKLUG SDUW\\ UHTXHVWRU FDQ ³UHYHUVH´ LQHTXLWDEOH FRQGXFW EH IRXQG E\\ WKH 372 %3$, RU WKH FRXUWV IRU UHTXHVWRU VXEPLVVLRQV FOHDUO\\ KLGLQJ WKH EDOO IURP WKH UHH[DPLQDWLRQ H[DPLQHUV\" 2U LV WKH RQO\\ SRVVLEOH YLRODWLRQ WKDW RI &)5 †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³ZRUN LQ SURJUHVV´ DQG OLNH DOO VXFK HQGHDYRUV LW WDNHV WLPH WR ZRUN RXW WKH NLQNV DQG ³JHW LW ULJKW ´ %RWK RI WKHVH REVHUYDWLRQV DSSHDU FRUUHFW EXW EHOLH WKH SUDFWLFDO FRQVHTXHQFH WKDW WKH JRDOV RI LQWHU SDUWHV
    21. 2QH UHDVRQ IRU %3$,¶V LQDELOLW\\ WR LVVXH ILQDO GHFLVLRQV VHHPV WR EH D ODFN RI FODULW\\ LQ ERWK WKH UXOHV DQG VWDWXWHV IRU WKH UROH RI WKH %3$, LQ UHYLHZLQJ &58 GHFLVLRQV 0RUH VSHFLILFDOO\\ LW LV QRW FOHDU ZKHWKHU WKH %3$, VKRXOG DFW DV D MXGJH EHWZHHQ SDWHQW RZQHU DQG WKH WKLUG SDUW\\ UHTXHVWRU RU ZKHWKHU LW VKRXOG VLW LQ WKH UROH LW RIWHQ WDNHV LQ DSSHDOV DQG VLW DV D ³VXSHU H[DPLQHU ´ 7KH &KDUW HQWLWOHG ³3URFHGXUH )ROORZLQJ %RDUG 'HFLVLRQ IRU 5HH[DPLQDWLRQV &RPPHQFHG 2Q RU $IWHU 1RYHPEHU ´ LQ 03(3 † JUDSKLFDOO\\ VKRZV DW OHDVW RQH UHPDQG SUREOHP WKDW FXUUHQWO\\ H[LVWV ,Q WKLV H[DPSOH WKH UHPDQG IURP WKH %3$, WR WKH &58 RFFXUV ZKHUH D SURSRVHG JURXQG RI UHMHFWLRQ LQ WKH UHH[DPLQDWLRQ UHTXHVW LV QRW DGRSWHG E\\ WKH &58 H[DPLQHUV LQ WKH ILUVW 2IILFH $FWLRQ 2Q DSSHDO WR WKH %3$, WKH WKLUG SDUW\\ UHTXHVWHU UDLVHV WKLV DV D ³QHZ JURXQG RI UHMHFWLRQ´ WKDW VKRXOG KDYH EHHQ PDGH E\\ &58 7KH %3$, DJUHHV EXW GRHV QRW KDYH WKH IDFWXDO DQG DUJXPHQW UHFRUG WR GHFLGH WKH UHMHFWLRQ DQG WKXV UHPDQGV WKH UHH[DPLQDWLRQ EDFN WR WKH &58 WR DGGUHVV ZLWK WKH SDUWLHV 7KLV UHPDQG PD\\ RFFXU IRU RWKHU UHDVRQV RU PD\\ RFFXU D VHFRQG WLPH ,W LV WKH VSHFWHU RI PXOWLSOH UHPDQGV WKDW KDV FUHDWHG WKH FRQFHUQ WKDW LQWHU SDUWHV UHH[DPLQDWLRQ PD\\ EH IXQGDPHQWDOO\\ IODZHG $QRWKHU SRVVLEOH UHDVRQ IRU DEVHQFH RI FDVHV PDNLQJ LW WR WKH )HGHUDO &LUFXLW LV WKDW IRU D FHUWDLQ VPDOO VXEVHW RI LQWHU SDUWHV UHH[DPLQDWLRQV WKH SURFHVV LV HIIHFWLYH ZLWKRXW QHHG WR DSSHDO WR HLWKHU WKH %3$, RU WKH )HGHUDO &LUFXLW $FFRUGLQJ WR D UHFHQW 372 VWDWLVWLFV LQWHU SDUWHV UHH[DPLQDWLRQ FHUWLILFDWHV KDYH LVVXHG DV RI 'HFHPEHU RXW RI WRWDO UHTXHVWV :KLOH WKLV UHSUHVHQWV RQO\\ WHQ SHUFHQW RI WRWDO LQWHU SDUWHV UHH[DPLQDWLRQV JUDQWHG WKH VWDWLVWLFV LQGLFDWHV WKDW >W@KLUG SDUW\\ UHTXHVWHUV VXFFHHGHG LQ KDYLQJ DOO FODLPV FDQFHOOHG RU GLVFODLPHG LQ RI WKH ILUVW FRPSOHWHG LQWHU SDUWHV SURFHHGLQJV LQ ZKLFK D FHUWLILFDWH LVVXHG 7KH KLJK VXFFHVV UDWH LV VNHZHG E\\ WKH VLJQLILFDQW QRQ UHVSRQVH UDWH E\\ WKH SDWHQW RZQHU HLWKHU DIWHU D ILUVW 2IILFH $FWLRQ RU DIWHU DFWLRQV ODWHU LQ SURVHFXWLRQ 7KXV WKH GDWD PLJKW VLPSO\\ VKRZ WKDW WKH LQWHU SDUWHV SURFHVV ZRUNV ZHOO IRU D YHU\\ ZHDN SDWHQW LQ ZKLFK WKH SDWHQW RZQHU KDV OLWWOH LQFHQWLYH WR GHIHQG WKH SDWHQW¶V YDOLGLW\\ UHH[DPLQDWLRQ RI EHLQJ IDVWHU EHWWHU DQG FKHDSHU WKDW WKH GLVWULFW FRXUWV LQ DVVHVVLQJ SDWHQWDELOLW\\ EDVHG RQ SDWHQWV DQG SULQWHG SXEOLFDWLRQV KDYH IDLOHG VR IDU LQ SUDFWLFH $W 6HGRQD 3/ WKLV SRVVLELOLW\\ RI PXOWLSOH UHPDQGV GXEEHG WKH ³LQILQLWH GR ORRS´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³VXSHU H[DPLQHU´ ZKR UHPDQGV IRU DQRWKHU URXQG RI SURVHFXWLRQ LQ LWV UHYLHZ RI LQWHU SDUWHV UHH[DPLQDWLRQV ,QWHU 3DUWHV 5HH[DPLQDWLRQ )LOLQJ 'DWD 'HFHPEHU 8QLWHG 6WDWHV 3DWHQW DQG 7UDGHPDUN 2IILFH 'HFHPEHU ,G
    22. 7KH SUDFWLFDO HIIHFW RI WKLV XQFHUWDLQW\\ DSSHDUV WR EH WKDW WKH %3$, UHPDQGV DW OHDVW VRPH UHH[DPLQDWLRQV HVSHFLDOO\\ LQWHU SDUWHV EDFN WR WKH &58 %DVHG RQ WKH DXWKRUV¶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¶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³LQILQLWH GR ORRS´ SUREOHP GRHV QRW H[LVW ZLWK H[ SDUWH UHH[DPLQDWLRQ 2QH DQVZHU PD\\ EH WKH VWUXFWXUDO GLIIHUHQFH RI WKH WKLUG SDUW\\ UHTXHVWHU QRW KDYLQJ VWDQGLQJ RQFH WKH H[ SDUWH UHTXHVW LV LQVWLWXWHG $ SDWHQW RZQHU KDV QR LQFHQWLYH WR UDLVH WKH ³QHZ JURXQG RI UHMHFWLRQ´ DUJXPHQW DW WKH %3$, WKDW WKH &58 VKRXOG KDYH DGRSWHG D SURSRVHG JURXQG RI UHMHFWLRQ QRW XVHG IURP WKH UHH[DPLQDWLRQ UHTXHVW ,Q OLWLJDWLRQV LQYROYLQJ PXOWLSOH DFFXVHG LQIULQJHUV WKH DFFXVHG LQIULQJHUV WKDW DUH QRW UHTXHVWHUV WR DQ LQWHU SDUWHV UHH[DPLQDWLRQ UXQ WKH ULVN WKDW WKH UHTXHVWHU ZLOO VHWWOH DQG XVH WKLV SURVSHFW DV VHWWOHPHQW
    23. - 3DJH /LPLWV )RU ,QWHU 3DUWHV 5HH[DPLQDWLRQ 3DSHUV 7KH LQWHU SDUWHV UHH[DPLQDWLRQ UXOHV LPSRVH D SDJH OLPLW RQ 2IILFH $FWLRQ UHVSRQVHV ILOHG E\\ WKH SDWHQW RZQHU DQG ZULWWHQ FRPPHQWV ILOHG E\\ WKH WKLUG SDUW\\ DPHQGPHQWV &)5 †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³3DUDOOHO 8QLYHUVH´ ([DPLQHG 7KH WHUP ³SDUDOOHO XQLYHUVH´ KDV EHHQ XVHG WR GHVFULEH WKH VLWXDWLRQ ZKHUH SDWHQW YDOLGLW\\ LV EHLQJ VLPXOWDQHRXVO\\ FRQVLGHUHG E\\ ERWK D GLVWULFW FRXUW RU WKH ,7& DQG WKH 372 ,W VKRXOG EH QRWHG WKDW WKH SURFHHGLQJV DUH ³SDUDOOHO´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³DQ DWWHPSW WR UHRSHQ D ILQDO IHGHUDO FRXUW MXGJPHQW RI LQIULQJHPHQW RQ WKH EDVLV RI D UHH[DPLQDWLRQ ILQGLQJ RI LQYDOLGLW\\ PLJKW UDLVH FRQVWLWXWLRQDO SUREOHPV´ 7KH WUHQG LQ LQWHU SDUWHV UHH[DPLQDWLRQ DSSHDUV WR EH WKH ILOLQJ RI OHQJWK\\ UHH[DPLQDWLRQ UHTXHVWV ,Q PDQ\\ FDVHV WKH UHH[DPLQDWLRQ UHTXHVW H[FHHGV SDJHV ,W LV QRW XQFRPPRQ IRU WKH UHTXHVW WR H[FHHG SDJHV
    24. $ 6FRSH RI 3URFHHGLQJV 7KH VFRSH RI DYDLODEOH YDOLGLW\\ FKDOOHQJHV LV IDU EURDGHU LQ GLVWULFW FRXUW OLWLJDWLRQ WKDQ LW LV LQ SDWHQW UHH[DPLQDWLRQ SURFHHGLQJV ,Q GLVWULFW FRXUW OLWLJDWLRQ SDWHQW YDOLGLW\\ PD\\ EH FKDOOHQJHG XQGHU DQ\\ VWDWXWRU\\ SURYLVLRQ LQFOXGLQJ DOO SURYLVLRQV RI 8 6 & †† DQG )XUWKHU SDWHQW FKDOOHQJHUV PD\\ DOVR DUJXH WKDW WKH DVVHUWHG SDWHQW LV XQHQIRUFHDEOH GXH WR HLWKHU LQHTXLWDEOH FRQGXFW RU ODFKHV 3DWHQW UHH[DPLQDWLRQ RQ WKH RWKHU KDQG LV IDU PRUH OLPLWHG LQ VFRSH %\\ VWDWXWH UHH[DPLQDWLRQV PD\\ RQO\\ EH LQLWLDWHG ZKHQ WKH 372 LV SUHVHQWHG ZLWK D ³VXEVWDQWLDO QHZ TXHVWLRQ RI SDWHQWDELOLW\\´ RU ³614 ´ $Q 614 PD\\ RQO\\ EH SUHGLFDWHG RQ SULRU DUW SULQWHG SXEOLFDWLRQV DQG PD\\ QRW EH FXPXODWLYH WR LQIRUPDWLRQ DOUHDG\\ FRQVLGHUHG E\\ WKH 372 LQ RULJLQDO SURVHFXWLRQ RU LQ SULRU UHH[DPLQDWLRQV $Q 614 PD\\ QRW EH SUHGLFDWHG RQ DQ\\ RWKHU VWDWXWRU\\ SURYLVLRQV LQFOXGLQJ ZKHWKHU WKH FODLPV FRQWDLQ VWDWXWRU\\ VXEMHFW PDWWHU XQGHU VHFWLRQ RU ZKHWKHU WKHUH H[LVWV DQ ³RQ VDOH EDU´ RU ³SXEOLF XVH´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¶V DELOLW\\ WR DPHQG FODLPV WKH 372 DQG WKH &58 XVH D ³SUHSRQGHUDQFH RI WKH HYLGHQFH´ VWDQGDUG IRU DGMXGJLQJ SDWHQWDELOLW\\ )RU WKLV UHDVRQ FKDOOHQJLQJ D SDWHQW¶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†† 03(3 † , ³7KH VWDQGDUG WR EH DSSOLHG LQ DOO FDVHV LV WKH µSUHSRQGHUDQFH RI WKH HYLGHQFH¶ WHVW ,Q RWKHU ZRUGV DQ H[DPLQHU VKRXOG UHMHFW D FODLP LI LQ YLHZ RI WKH SULRU DUW DQG HYLGHQFH RI UHFRUG LW LV PRUH OLNHO\\ WKDQ QRW WKDW WKH FODLP LV XQSDWHQWDEOH ´ 1R SURSRVHG DPHQGHG RU QHZ FODLP HQODUJLQJ WKH VFRSH RI FODLPV RI D SDWHQW LV SHUPLWWHG LQ D UHH[DPLQDWLRQ SURFHHGLQJ 86& † 7KH WHVW IRU ZKHQ DQ DPHQGHG RU QHZ FODLP HQODUJHV WKH VFRSH RI DQ RULJLQDO FODLP LV WKH VDPH DV WKDW XQGHU WKH \\HDU OLPLWDWLRQ IRU UHLVVXH DSSOLFDWLRQV WKDW DGG HQODUJLQJ FODLPV XQGHU 86& † ODVW SDUDJUDSK 03(3 † FLWLQJ ,Q UH )UHHPDQ ) G )HG &LU $IWHU H[SLUDWLRQ RI D SDWHQW XQGHUJRLQJ UHH[DPLQDWLRQ QR DPHQGPHQWV PD\\ EH SURSRVHG IRU HQWU\\ &)5 † M )XUWKHU DQ\\ DPHQGPHQWV DQG DOO FODLPV DGGHG GXULQJ WKH SURFHHGLQJ DUH ZLWKGUDZQ LI D SDWHQW H[SLUHV GXULQJ SHQGHQF\\ RI D UHH[DPLQDWLRQ SURFHHGLQJ 03(3 †
    25. VSHFLILFDWLRQ )RU WKLV UHDVRQ D 0DUNPDQ RUGHU LQ GLVWULFW FRXUW OLWLJDWLRQ KDV QR SUHFOXVLYH HIIHFW RQ WKH 372 DQG LV QRW ELQGLQJ WKHUHRQ $ EURDG FODLP FRQVWUXFWLRQ GUDZV LQ PRUH SRWHQWLDO SULRU DUW ,Q 8 6 GLVWULFW FRXUWV RQ WKH RWKHU KDQG FODLPV DUH RIWHQ FRQVWUXHG VR WKDW WKH\\ UHPDLQ YDOLG LQ YLHZ RI SULRU DUW 7KH FRXUW ORRNV WR JHW WKH ³FRUUHFW´ FODLP FRQVWUXFWLRQ DIWHU UHYLHZLQJ WKH SDUWLHV¶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¶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³&RXUWV GR QRW ILQG SDWHQWV µYDOLG ¶ RQO\\ WKDW WKH SDWHQW FKDOOHQJHU GLG QRW FDUU\\ WKH µEXUGHQ RI HVWDEOLVKLQJ LQYDOLGLW\\ LQ WKH SDUWLFXODU FDVH EHIRUH WKH FRXUW « ¶´ $ ,Q UH <DPDPRWR ) G )HG &LU ,Q UH 7UDQV 7H[DV +ROGLQJV &RUS ) G )HG &LU :KHQ D SDWHQW RZQHU ORRVHV WKHLU DELOLW\\ WR DPHQG WKH FODLPV H J ZKHQ D SDWHQW WHUP H[SLUHV GXULQJ WKH UHH[DPLQDWLRQ SURFHHGLQJ WKH VWDQGDUG IRU FODLP FRQVWUXFWLRQ PRYHV IURP WKH EURDGHVW UHDVRQDEOH LQWHUSUHWDWLRQ VWDQGDUG WR D VWDQGDUG ³SXUVXDQW WR WKH SULQFLSOH VHW IRUWK E\\ WKH FRXUW LQ 3KLOOLSV Y $:+ &RUS ) G 8634 G )HG &LU ZRUGV RI D FODLP µDUH JHQHUDOO\\ JLYHQ WKHLU RUGLQDU\\ DQG FXVWRPDU\\ PHDQLQJ¶ DV XQGHUVWRRG E\\ D SHUVRQ RI RUGLQDU\\ VNLOO LQ WKH DUW LQ TXHVWLRQ DW WKH WLPH RI WKH LQYHQWLRQ ´ 03(3 † ,* ,Q UH 6ZDQVRQ ) G )HG &LU
    26. SULRU KROGLQJ RI YDOLGLW\\ E\\ D GLVWULFW FRXUW LV WKHUHIRUH QRW LQFRQVLVWHQW ZLWK D VXEVHTXHQW KROGLQJ RI LQYDOLGLW\\ E\\ WKH 372 :KLOH WKH 372 PD\\ DFFRUG GHIHUHQFH WR IDFWXDO ILQGLQJV PDGH E\\ WKH FRXUW WKH GHWHUPLQDWLRQ RI ZKHWKHU DQ 614 H[LVWV ZLOO EH PDGH LQGHSHQGHQWO\\ RI WKH FRXUW¶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³QRQ SDUDOOHO´ DVSHFWV RI GLVWULFW FRXUW DQG UHH[DPLQDWLRQ SURFHHGLQJV LV SURIRXQG ,W LV WKH DXWKRU¶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³XQILOH´ WKH UHH[DPLQDWLRQ DV SDUW RI VHWWOHPHQW ZLWK WKH SDWHQW RZQHU $IWHU WKH UHH[DPLQDWLRQ LV LQVWLWXWHG LW ZLOO WDNH RQ D OLIH RI LWV RZQ 0DQ\\ SLWIDOOV DZDLW WKH XQZDU\\ UHTXHVWHU ZKR KDV QRW IXOO\\ WKRXJKW RXW WKH FRQVHTXHQFHV RI ILOLQJ D UHH[DPLQDWLRQ UHTXHVW 7KH IROORZLQJ VHFWLRQV DUH SUHVHQWHG URXJKO\\ LQ FKURQRORJLFDO RUGHU (WKLFRQ ,QF Y 4XLJJ ) G )HG &LU ,Q UH 6ZDQVRQ 1R DW SS FLWLQJ (WKLFRQ ) G DW Q DQG 6WHYHQVRQ Y 6HDUV 5RHEXFN &R ) G )HG &LU HPSKDVLV LQ RULJLQDO 6HH 03(3 † ,Q D UHFHQW H[DPSOH ZH DUH WROG WKDW D WKLUG SDUW\\ UHTXHVWHU DWWHPSWHG WR KDOW D UHH[DPLQDWLRQ SURFHHGLQJ E\\ VWRSSLQJ SD\\PHQW RI D FKHFN IRU WKH UHH[DPLQDWLRQ IHH 7KH 372 LQGLFDWHG WKDW VXFK DFWLRQV FRXOG UHVXOW LQ 2(' LPSRVLQJ D VXVSHQVLRQ RI WKH DWWRUQH\\ IURP 372 SUDFWLFH IRU WDNLQJ WKH DFWLRQ
    27. $ 6HWWOHPHQW 5HH[DPLQDWLRQ FRXOG KHOS IRUFH DQ HDUO\\ VHWWOHPHQW )RU H[DPSOH VRPH SUDFWLWLRQHUV VXJJHVW SUHVHQWLQJ D UHH[DPLQDWLRQ UHTXHVW WR WKH RSSRVLQJ SDUW\\ SDWHQW RZQHU SULRU WR VXEPLWWLQJ WKH UHTXHVW WR WKH 372 L H D ³SRFNHW UHH[DPLQDWLRQ UHTXHVW´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¶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²D YHU\\ GLIILFXOW VWDQGDUG WR RYHUFRPH RQ DSSHDO )XUWKHU GLVWULFW FRXUW MXGJHV KDYH JUHDW IOH[LELOLW\\ LQ WKH W\\SHV RI VWD\\V WKH\\ LVVXH )RU LQVWDQFH LQ RQH (DVWHUQ 'LVWULFW RI 7H[DV FDVH -XGJH (YHULQJKDP JUDQWHG D PRWLRQ WR VWD\\ WKH OLWLJDWLRQ EDVHG RQ WKH DFFXVHG LQIULQJHU¶V H[ SDUWH UHH[DPLQDWLRQ UHTXHVW ,Q WKH RUGHU JUDQWLQJ WKH VWD\\ WKH FRXUW FUDIWHG D VWLSXODWLRQ WKDW WKH DFFXVHG LQIULQJHU PXVW DJUHH QRW WR FKDOOHQJH WKH YDOLGLW\\ DW WULDO RI WKH SDWHQWV LQ VXLW EDVHG RQ SULRU DUW SDWHQWV RU SULQWHG SXEOLFDWLRQV WKDW ZHUH FRQVLGHUHG LQ WKH UHH[DPLQDWLRQ SURFHHGLQJV )XUWKHU WKH DFFXVHG LQIULQJHU ZDV EDUUHG IURP GLUHFWO\\ RU LQGLUHFWO\\ LQVWLWXWLQJ DQ\\ IXUWKHU UHH[DPLQDWLRQ SURFHHGLQJV 'HVSLWH WKLV QHDUO\\ XQIHWWHUHG GLVFUHWLRQ KRZHYHU FRXUWV ZLOO JHQHUDOO\\ FRQVLGHU DW OHDVW WKH IROORZLQJ IDFWRUV LQ PDNLQJ VWD\\ GHWHUPLQDWLRQV ³ ZKHWKHU D VWD\\ ZLOO XQGXO\\ SUHMXGLFH RU SUHVHQW D FOHDU WDFWLFDO GLVDGYDQWDJH WR WKH QRQPRYLQJ SDUW\\ ZKHWKHU D VWD\\ ZLOO VLPSOLI\\ WKH LVVXHV LQ TXHVWLRQ DQG WULDO RI WKH FDVH DQG ZKHWKHU GLVFRYHU\\ LV FRPSOHWH DQG ZKHWKHU D WULDO GDWH KDV EHHQ VHW ´ )LUVW D FRXUW ZLOO ORRN DW WKH H[WHQW WR ZKLFK WKH QRQ PRYLQJ SDUW\\ ZRXOG EH SUHMXGLFHG LQ GHOD\\LQJ WKH OLWLJDWLRQ ,Q FHUWDLQ LQVWDQFHV WKH GLVWULFW FRXUW ZLOO PLWLJDWH 9LVWR &RUS Y 5HVHDUFK LQ 0RWLRQ /WG 1R FY ( ' 7H[ -XO\\ 6RYHUDLQ 6RIWZDUH //& Y $PD]RQ FRP ) 6XSS G ( ' 7H[
    28. DQ\\ SRWHQWLDO KDUP WR WKH SDWHQWHH E\\ UHTXLULQJ D VWLSXODWLRQ WKDW WKH DFFXVHG LQIULQJHU ZLOO QRW FKDOOHQJH WKH SDWHQW RQ JURXQGV FRQVLGHUHG GXULQJ UHH[DPLQDWLRQ %\\ GRLQJ VR WKH FRXUW UHDVRQV WKH SDWHQWHH ³LV DIIRUGHG ERWK WKH DGYDQWDJH RI H[ SDUWH SURFHHGLQJ DQG DQ HVWRSSHO HIIHFW ´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³WKH VWDWLVWLFV UHYHDO WKDW PRVW UHH[DPLQDWLRQV UHVXOW LQ FODLP DPHQGPHQWV RU FDQFHOODWLRQV´ $GG GLVFXVVLRQ RI UHFHQW FDVHV GHQ\\LQJ VWD\\ PRWLRQ ILOHG ZKHQ UHH[DPLQDWLRQ UHTXHVW ILOHG DQG VXEVHTXHQWO\\ ERXQFHG 6HH 2UGHU 'HQ\\LQJ 6XQ 0LFURV\\VWHP ,QF ¶V 5HQHZHG 0RWLRQ )RU 3DUWLDO 6WD\\ 1HWZRUN $SSOLFDQFH ,QF Y 6XQ 0LFURV\\VWHPV ,QF & 1' &$ FLWLQJ WKH 6HGRQD &RQIHUHQFH SDSHU HQWLWOHG 5HH[DPLQDWLRQ 3UDFWLFH ZLWK &RQFXUUHQW 'LVWULFW RU 86,7& 3DWHQW /LWLJDWLRQ LQ VXSSRUW RI WKH GHQLDO RI WKH VWD\\
    29. ,I D SDUW\\ LV VXFFHVVIXO LQ REWDLQLQJ D VWD\\ LQ WKH GLVWULFW FRXUW OLWLJDWLRQ SHQGLQJ RXWFRPH RI D UHH[DPLQDWLRQ SURFHHGLQJ WKDW IDFW VKRXOG LPPHGLDWHO\\ EH EURXJKW WR WKH DWWHQWLRQ RI WKH &58 7KH &58 KDV VHW IRUWK SURFHGXUHV WR LQFUHDVH WKH SDFH DW ZKLFK UHH[DPLQDWLRQV LQYROYHG LQ FRQFXUUHQW OLWLJDWLRQV DUH KDQGOHG )RU H[DPSOH LQ VLWXDWLRQV ZKHUH D VWD\\ LV JUDQWHG LQ D FRQFXUUHQW OLWLJDWLRQ WKH 372 ZLOO WDNH XS D UHH[DPLQDWLRQ UHTXHVW ZLWKLQ ZHHNV RI ILOLQJ DQG ³DOO DVSHFWV RI WKH SURFHHGLQJ ZLOO EH H[SHGLWHG WR WKH H[WHQW SRVVLEOH ´ 03(3 † ,W LV WKHUHIRUH FULWLFDO IRU SDUWLHV WR NHHS WKH &58 LQIRUPHG RI WKH VWDWXV RI WKH FRQFXUUHQW OLWLJDWLRQ 6WD\\V DUH DOVR WHFKQLFDOO\\ DYDLODEOH LQ UHH[DPLQDWLRQV 8QOLNH WKH GLVWULFW FRXUWV KRZHYHU WKH 372 GRHV QRW KDYH DQ XQIHWWHUHG DELOLW\\ WR FRQWURO LWV GRFNHW 7KH UXOHV SURYLGH WKH DELOLW\\ IRU WKH SDWHQW RZQHU WR UHTXHVW D VWD\\ 6HH & ) 5 ††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¶V LQIULQJHPHQW RI LWV SDWHQW ,Q D SDUDOOHO GHFLVLRQ WKH %3$, IRXQG 7UDQVORJLF¶V SDWHQW WR EH LQYDOLG DV REYLRXV %RWK DSSHDOHG WR WKH )HGHUDO &LUFXLW 7KH )HGHUDO &LUFXLW ILUVW KHDUG WKH DSSHDO IURP WKH %3$, DQG DIILUPHG WKH SDWHQWV LQYDOLGLW\\ LQ D 7KH 372 IRXQG JRRG FDXVH WR JUDQW D VWD\\ RI LQWHU SDUWHV UHH[DPLQDWLRQ DQG 7KH 372 DUJXHG WKDW ³WKHUH ZDV D VWURQJ SRVVLELOLW\\ WKDW WKH )HGHUDO &LUFXLW¶V GHFLVLRQ ZRXOG HVWRS WKH 2IILFH IURP LVVXLQJ DQ\\ GHFLVLRQV DW DOO ,Q VKRUW UHTXHVWHU FRXOG QRW KDYH LW ERWK ZD\\V 5HTXHVWHU ZDLWHG WKUHH \\HDUV DIWHU WKH GLVWULFW FRXUW FDVH EHJDQ DQG ZDLWHG XQWLO DIWHU WKH 'LVWULFW &RXUW LVVXHG D ILQDO GHFLVLRQ VXFK WKDW LWV 'LVWULFW &RXUW OLWLJDWLRQ FRXOG LQ QR ZD\\ EH DIIHFWHG E\\ DQ\\ GHFLVLRQ RQ LWV UHH[DPLQDWLRQ UHTXHVWV 5HTXHVWHU¶V GHOD\\ ZDV WKH UHDVRQV WKDW WKH µ DQG µ UHH[DPLQDWLRQV FRXOG YHU\\ ZHOO EH PRRWHG EHIRUH DQ\\ UHH[DPLQDWLRQ GHFLVLRQ LVVXHG DQG WKH 86372 'LUHFWRU IRXQG µJRRG FDXVH¶ WR VXVSHQG WKH SURFHHGLQJ ´ 03(3 † 7KH 8 6 'LVWULFW &RXUW XSKHOG WKH 372¶V ILQGLQJ RI ³JRRG FDXVH´ WR VXVSHQG WKHVH SURFHHGLQJV 6RQ\\ &RPSXWHU (QWHUWDLQPHQW $PHULFD ,QF Y 'XGDV 8634 G ( ' 9D ,Q UH 7UDQVORJLF ) G )HG &LU 7UDQVORJLF 7HFK ,QF Y +LWDFKL /WG )HG $SS[ )HG &LU
    30. SUHFHGHQWLDO GHFLVLRQ 7KH &RXUW WKHQ YDFDWHG WKH GLVWULFW FRXUW¶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³KRW WRSLF´ EDVHG RQ GLVFXVVLRQV ZLWK PDQ\\ WRS WULDO FRXQVHO :KLOH LW LV VWLOO DQWLGRWDO LW DSSHDUV WKDW WKH PRUH ³WULDO H[SHULHQFHG´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³SXQWHG´ WKH LQYDOLGLW\\ LVVXH $VVXPLQJ WKLV MXU\\ UHVHDUFK LV UHSURGXFLEOH LW IXUWKHU DUJXHV WKDW WKH MXGJH VKRXOG EH YHU\\ FRQFHUQHG DERXW WKH SUHMXGLFLDO LPSDFW RQ WKH MXU\\ RI DQ\\ LQIRUPDWLRQ DERXW WKH H[LVWHQFH RI RU GHYHORSPHQWV LQ WKH UHH[DPLQDWLRQ
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± ³,I \\RX FDQ¶W ZLQ LW DW WKH &58 WKHQ \\RX KDYH HYHQ OHVV FKDQFH WR ZLQ LW LQ FRXUW ´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³HDVLO\\ VZD\\HG´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³SUR SDWHQW´ FRXUW UHVHQW WKH LQWUXVLRQ RI WKH UHH[DPLQDWLRQ SURFHVV LQWR WKHLU MXGLFLDO SURFHHGLQJ 7KXV WKH FRQFHUQ LV WKDW LI WKHUH LV D ³IDYRUDEOH´ GHYHORSPHQW LQ WKH &58 IRU WKH SDWHQW RZQHU WKDW WKH MXGJH ZRXOG EH PRUH LQFOLQHG WR OHW WKH MXU\\ NQRZ RI WKLV GHYHORSPHQW WKDQ LI WKHUH KDV EHHQ DQ ³XQIDYRUDEOH´ GHYHORSPHQW 7ULDO FRXQVHO ZKR KDYH IDFHG WKLV LVVXH ZLWK WKHVH MXGJHV REVHUYH WKDW WKHUH LV D YHU\\ ORZ OLNHOLKRRG WKDW WKH MXGJH ZLOO DOORZ DQ\\ GHYHORSPHQWV LQ WKH UHH[DPLQDWLRQ WR EH EURXJKW WR WKH DWWHQWLRQ RI WKH MXU\\ EHFDXVH WKH\\ QHHG WR EH EDODQFHG RQ VXFK DGPLVVLELOLW\\ GHWHUPLQDWLRQV $V RQH WULDO FRXQVHO SXW LW LQ RSLQLQJ WKDW DOO GHYHORSPHQWV LQ UHH[DPLQDWLRQV ZLOO EH H[FOXGHG IURP WKH MXU\\ LV WKDW WKH EDODQFHG DSSURDFK RI H[FOXVLRQ ZLOO EH EDVHG RQ WKH DGDJH RI ³ZKDW LV JRRG IRU WKH JRRVH >SDWHQW RZQHU@ LV JRRG IRU WKH JDQGHU >WKLUG SDUW\\ UHTXHVWHU@´ 6RPH FULWLFV DVVHUW WKDW WKHUH LV LQVXIILFLHQW JUDQXODULW\\ LQ WKHVH 372 VWDWV WR UHIOHFW VLWXDWLRQV ZKHUH VRPH EXW QRW DOO DVVHUWHG FODLPV DUH IRXQG WR EH LQYDOLG RU DUH VXEVWDQWLDOO\\ DPHQGHG 8 6 & †† E E %ORRP (QJ¶J &R Y 1 $P 0IJ &R ) G )HG &LU
    32. ³VXEVWDQWLDOO\\ LGHQWLFDO ´ 7KH DQDO\\VLV LQFOXGHV H[DPLQLQJ ³WKH FODLPV RI WKH RULJLQDO DQG WKH UHH[DPLQHG SDWHQWV LQ OLJKW RI WKH SDUWLFXODU IDFWV LQFOXGLQJ SULRU DUW WKH SURVHFXWLRQ KLVWRU\\ RWKHU FODLPV DQG DQ\\ RWKHU SHUWLQHQW LQIRUPDWLRQ ´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x RI H[ SDUWH UHH[DPLQDWLRQV LQLWLDWHG E\\ D WKLUG SDUW\\ UHDFKLQJ WKH LVVXDQFH RI 5HH[DPLQDWLRQ &HUWLILFDWH UHVXOWHG LQ VRPH RU DOO RI WKH FODLPV EHLQJ FDQFHOHG RU DPHQGHG 2QO\\ VXUYLYHG ZLWK DOO FODLPV EHLQJ FRQILUPHG x RI LQWHU SDUWHV UHH[DPLQDWLRQV FRPSOHWHG UHVXOWHG LQ DOO FODLPV EHLQJ FDQFHOHG ZKLOH UHVXOWHG LQ VRPH FKDQJH WR WKH FODLPV 2QO\\ VXUYLYHG ZLWK DOO FODLPV EHLQJ FRQILUPHG $ IXOO VHW RI FXUUHQW &58 VWDWLVWLFV DUH LQFOXGHG DW WKH HQG RI WKLV SDSHU ( 3RWHQWLDO ULVNV IRU DFFXVHG LQIULQJHUV 7KH FOHDUHVW ULVN IRU DQ DFFXVHG LQIULQJHU LV WKDW DW OHDVW RQH DVVHUWHG SDWHQW FODLP VXUYLYHV WKH UHH[DPLQDWLRQ SURFHVV XQDPHQGHG DQG ZLWKRXW DQ\\ DGYHUVH SURVHFXWLRQ KLVWRU\\ HVWRSSHOV 7KH UHH[DPLQDWLRQ PD\\ DOORZ WKH SDWHQW RZQHU WR KDYH WKH &58 FRQVLGHU DOO RI WKH SULRU DUW LQ WKH OLWLJDWLRQ DQG WR SUHVHQW DUJXPHQWV DQG GHFODUDWLRQV WKDW VXSSRUW SDWHQWDELOLW\\ RI WKH FODLPV RYHU WKLV SULRU DUW 7KLV FRXOG LQFOXGH IRU LQVWDQFH SRVVLEOH VHFRQGDU\\ REMHFWLYH FRQVLGHUDWLRQV RI QRQ REYLRXVQHVV WKDW ZHUH QRW SUHVHQW ZKHQ WKH FODLPV ZHUH RULJLQDOO\\ SURVHFXWHG /DLWUDP &RUS Y 1(& &RUS ) G )HG &LU ,G DW 7HQQDQW &R Y +DNR 0LQXWHPDQ ,QF ) G )HG &LU $V RI 6HSWHPEHU H[ SDUWH UHH[DPLQDWLRQ FHUWLILFDWHV KDYH EHHQ LVVXHG E\\ WKH 372 7KLV UHSUHVHQWV DSSUR[LPDWHO\\ RI DOO H[ SDUWH UHH[DPLQDWLRQV JUDQWHG 5HFDOO WKDW H[ SDUWH UHH[DPLQDWLRQV PD\\ DOVR EH LQLWLDWHG E\\ UHTXHVW RI WKH SDWHQW RZQHU RU WKH 372 'LUHFWRU $V RI 'HFHPEHU RQO\\ LQWHU SDUWHV UHH[DPLQDWLRQ FHUWLILFDWHV KDYH EHHQ LVVXHG 7KLV UHSUHVHQWV DSSUR[LPDWHO\\ RI DOO UHH[DPLQDWLRQ UHTXHVWV JUDQWHG E\\ WKH 372 7KH 372 XSGDWHV WKHVH VWDWLVWLFV TXDUWHUO\\ 6HH KWWS ZZZ XVSWR JRY ZHE SDWHQWV FUX KWPO
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± :KHQ WR )LOH\" 2QFH D GHFLVLRQ LV PDGH WR SURFHHG ZLWK D UHH[DPLQDWLRQ VWUDWHJ\\ RQH RI WKH PRVW LPSRUWDQW FRQVLGHUDWLRQV LV GHFLGLQJ ZKHQ WR ILOH 7KH WLPLQJ RI D UHH[DPLQDWLRQ UHTXHVW ZLOO XOWLPDWHO\\ EH GHWHUPLQHG E\\ WKH UHTXHVWHU¶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³>W@KH RUGHU IRU LQWHU SDUWHV UHH[DPLQDWLRQ ZLOO XVXDOO\\ EH DFFRPSDQLHG E\\ WKH LQLWLDO 2IILFH DFWLRQ RQ WKH PHULWV RI WKH UHH[DPLQDWLRQ ´ ,Q WKH DXWKRUV¶ H[SHULHQFH KRZHYHU WKLV LV QRW DOZD\\V WKH FDVH SDUWLFXODUO\\ ZLWK WKH LQFUHDVHG SRSXODULW\\ RI LQWHU SDUWHV UHH[DPLQDWLRQV LQ WKH SDVW WZR \\HDUV (DUO\\ ILOLQJ LV DOVR KLJKO\\ UHFRPPHQGHG ZKHUH WKH UHH[DPLQDWLRQ LV ODXQFKHG DV DQ LQVXUDQFH SROLF\\ DJDLQVW DQ DGYHUVH GLVWULFW FRXUW GHFLVLRQ 2YHUDOO DW OHDVW \\HDUV DUH W\\SLFDOO\\ QHFHVVDU\\ IRU D ILQDO GHFLVLRQ IURP WKH &58 ²ZDLWLQJ WRR ORQJ WR ILOH D UHTXHVW FRXOG UHGXFH WKH HIIHFWLYHQHVV RI VXFK D VWUDWHJ\\ )RU VXFK VWUDWHJ\\ NHHSLQJ WDEV RQ WKH WULDO GDWH LV D PXVW &)5 † 7KH &58 KDV LQGLFDWHG DQ LQWHUQDO JRDO RI PRQWKV IURP LQVWLWXWLQJ WKH LQWHU SDUWHV UHH[DPLQDWLRQ UHTXHVW WR ILQDO RIILFH DFWLRQ
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³SRFNHW UHH[DPLQDWLRQ´ WR VKRZ WR WKH SDWHQW RZQHU FRXOG KHOS GULYH QHJRWLDWLRQV LQ IDYRU RI DQ DFFXVHG LQIULQJHU (YHQ LI WKH UHH[DPLQDWLRQ LV QRW LPPHGLDWHO\\ ILOHG WKH HIIRUWV LQ SUHSDULQJ WKH SRFNHW UHH[DPLQDWLRQ DUH GLUHFWO\\ DSSOLFDEOH WR DQ DFFXVHG LQIULQJHU¶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²H J DIWHU FORVH RI GLVFRYHU\\ WR HQVXUH DOO GLVFRYHUHG SULRU DUW LV LQFOXGHG RU DIWHU LQYHQWRU GHSRVLWLRQV\" 2QH DGGLWLRQDO FRQVLGHUDWLRQ ZDV UDLVHG LQ D UHFHQW )HGHUDO &LUFXLW GHFLVLRQ ZKHUH D SDUW\\ DWWHPSWHG WR REWDLQ UHOLHI IURP D ILQDO MXGJPHQW XQGHU )5&3 E EDVHG RQ DOOHJHG GLVFODLPHUV PDGH GXULQJ SRVW WULDO UHH[DPLQDWLRQ ,Q WKLV FDVH WKH DFFXVHG LQIULQJHU ZDLWHG XQWLO WKH GLVWULFW FRXUW¶V HQWU\\ RI MXGJPHQW WR ILOH LWV UHH[DPLQDWLRQ UHTXHVW 7KH UHH[DPLQDWLRQ KDG SURJUHVVHG WR D SRLQW ZKHUH WKH SDWHQW RZQHU KDG WR UHVSRQG WR DQ RIILFH DFWLRQ UHMHFWLRQ ,Q WKDW UHVSRQVH WKH SDWHQW RZQHU DOOHJHGO\\ PDGH $PDGR Y 0LFURVRIW &RUS ) G )HG &LU
    35. ³UHSUHVHQWDWLRQV WR WKH >372@´ WKH ³OLPLWHG WKH VFRSH´ RI RQH RI WKH DFFXVHG FODLPV 7KH GLVWULFW FRXUW GHQLHG WKH 5XOH E PRWLRQ VWDWLQJ WKDW WKH DFFXVHG LQIULQJHU ³ZDLWHG XQWLO DIWHU MXGJPHQW LQ WKLV FDVH WR ILOH LWV 3HWLWLRQ IRU 5HH[DPLQDWLRQ ZKLOH VLPXOWDQHRXVO\\ IDLOLQJ WR DSSHDO WKH MXU\\¶V ILQGLQJ RI YDOLGLW\\ ´ %HFDXVH 5XOH PRWLRQV DUH UHYLHZHG XQGHU DQ DEXVH RI GLVFUHWLRQ VWDQGDUG DQG W\\SLFDOO\\ UHTXLUH ³H[WUDRUGLQDU\\ FLUFXPVWDQFHV ´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³UROOLQJ´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³1RWLFH RI &KDQJHV LQ 5HTXLUHPHQW IRU D 6XEVWDQWLDO 1HZ 4XHVWLRQ RI 3DWHQWDELOLW\\ IRU 6HFRQG RU 6XEVHTXHQW 5HTXHVW IRU ,G DW ,G 6HH 9LVWR &RUS Y 5HVHDUFK LQ 0RWLRQ /WG 1R &9 ( ' 7H[ FRPSODLQW ILOHG $SU
    36. 5HH[DPLQDWLRQ :KLOH DQ (DUOLHU )LOHG 5HH[DPLQDWLRQ LV 3HQGLQJ ´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« )XUWKHU 86& D VWDWHV ³>Z@LWKLQ WKUHH PRQWKV IROORZLQJ WKH ILOLQJ RI WKLV WLWOH WKH 'LUHFWRU ZLOO GHWHUPLQH ZKHWKHU D VXEVWDQWLDO QHZ TXHVWLRQ RI SDWHQWDELOLW\\ DIIHFWLQJ DQ\\ FODLP RI WKH SDWHQW FRQFHUQHG LV UDLVHG E\\ WKH UHTXHVW ´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† 86& † E
    37. DSSOLHG@ DUW FRXOG EH ³ULSSHG´ IURP WKH OLWLJDWLRQ LI WKH UHH[DPLQDWLRQ ILQLVKHV EHIRUH WKH OLWLJDWLRQ DQG YLFH YHUVD 7KH DXWKRUV DUH DZDUH RI VRPH GLVWULFW FRXUW MXGJHV ZKR KDYH FUDIWHG VWD\\V WR SUHFOXGH WKH WKLUG SDUW\\ UHTXHVWHU IURP XVLQJ DUW WKDW FRXOG RU VKRXOG KDYH EHHQ EURXJKW GXULQJ WKH UHH[DPLQDWLRQ SURFHHGLQJ $OVR QRWH WKDW WKHUH DUH H[SUHVV OLPLWDWLRQV UHJDUGLQJ VXEVHTXHQW VXEPLVVLRQV RI SULRU DUW LQ LQWHU SDUWHV UHH[DPLQDWLRQV )XUWKHU WKH WULDO WHDP PD\\ EH VXEMHFW WR WKH 372¶V GXW\\ RI GLVFORVXUH UHTXLUHPHQWV DV GLVFXVVHG DERYH ,I WKH ZLWKKHOG DUW ZDV GLVFORVHG GXULQJ WKH OLWLJDWLRQ IRU H[DPSOH DV SDUW RI WKH DFFXVHG LQIULQJHU¶V LQYDOLGLW\\ FRQWHQWLRQV WKHQ WKH SDWHQW RZQHU RU WKH SDWHQW RZQHU¶V UHH[DPLQDWLRQ WHDP PD\\ KDYH WKH DELOLW\\ RU LQGHHG WKH GXW\\ WR VXEPLW WKDW ZLWKKHOG DUW DQG KDYH LW FRQVLGHUHG GXULQJ WKH UHH[DPLQDWLRQ 2QH TXHVWLRQ WR FRQVLGHU LV ZKHWKHU WKH OLWLJDWLRQ WHDP¶V NQRZOHGJH RI PDWHULDO SULRU DUW FRXOG EH LPSXWHG WR D SDWHQW RZQHU ,Q VKRUW PDQ\\ WUDSV H[LVW IRU WKH XQZDU\\ DQG SDWHQW RZQHUV PXVW WDNH FDUH WR DYRLG FRQGXFW WKDW FRXOG UHVXOW LQ LQHTXLWDEOH FRQGXFW FKDUJHV ([SHUWV¶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³LQGLYLGXDO DVVRFLDWHG ZLWK WKH SDWHQW RZQHU´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³PHHW DQG FRQIHU´ WR UHVROYH DQ\\ GLVFORVXUH LVVXHV ,I SDUWLHV FDQQRW DJUHH WKHQ WKH LVVXH PD\\ QHHG WR EH UDLVHG WR WKH SUHVLGLQJ MXGJH 2QH 6HH & ) 5 †† VHH DOVR † ,, $ VXSUD
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¶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³FRQFOXGH DQ\\ VXFK LQYHVWLJDWLRQ DQG PDNH LWV GHWHUPLQDWLRQ XQGHU WKLV VHFWLRQ DW WKH HDUOLHVW SUDFWLFDEOH WLPH DIWHU WKH GDWH RI SXEOLFDWLRQ RI QRWLFH RI VXFK LQYHVWLJDWLRQ ´ 'XH WR WKLV VWDWXWRU\\ PDQGDWH IRU D VZLIW LQYHVWLJDWLRQ LW VKRXOG QRW EH VXUSULVLQJ WKDW WKH ,7& LV KHVLWDQW WR VWD\\ LWV LQYHVWLJDWLRQV 2QH UHFHQW ,7& FDVH FRQILUPV WKH ,7&¶V 6HH 03(3 †† 6HH 9LYHN .RSSLNDU (YDOXDWLQJ WKH ,QWHUQDWLRQDO 7UDGH &RPPLVVLRQ¶V 6HFWLRQ ,QYHVWLJDWLRQ - 3$7 75$'(0$5. 2)) 62&¶< 86& † E HPSKDVLV DGGHG VHH DOVR &)5 † ³,W LV WKH SROLF\\ RI WKH &RPPLVVLRQ WKDW WR WKH H[WHQW SUDFWLFDEOH DQG FRQVLVWHQW ZLWK UHTXLUHPHQWV RI ODZ DOO LQYHVWLJDWLRQV DQG UHODWHG SURFHHGLQJV XQGHU WKLV SDUW VKDOO EH FRQGXFWHG H[SHGLWLRXVO\\ 7KH SDUWLHV WKHLU DWWRUQH\\V RU RWKHU UHSUHVHQWDWLYHV DQG WKH SUHVLGLQJ DGPLQLVWUDWLYH ODZ MXGJH VKDOO PDNH HYHU\\ HIIRUW DW HDFK VWDJH RI WKH LQYHVWLJDWLRQ RU UHODWHG SURFHHGLQJ WR DYRLG GHOD\\ ´
    39. UHOXFWDQFH ,Q WKLV FDVH WKH SUHVLGLQJ DGPLQLVWUDWLYH ODZ MXGJH ³$/-´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³UHDO SDUW\\ LQ LQWHUHVW´ UXOH LV DGGUHVVHG LQ PXOWLSOH GHIHQGDQW FDVHV DV GLVFXVVHG DERYH 'R WKH UHTXHVWHU¶V QRQ SDUWLFLSDWLQJ FR GHIHQGDQWV IDOO XQGHU WKH HVWRSSHO SURYLVLRQV\" ,I QRW FRXOG WKH VDPH DUW EH ³OLWLJDWHG´ DW WKH 372 DQG DW WKH GLVWULFW FRXUW E\\ WKHVH QRQ SDUWLFLSDWLQJ GHIHQGDQWV\" ,Q UH )UHHVFDOH 6HPLFRQGXFWRU ,QF 0LVF 1R :/ )HG &LU -XQH QRQ SUHFHGHQWLDO RUGHU GHQ\\LQJ ³SHWLWLRQ IRU D ZULW RI PDQGDPXV WR GLUHFW WKH >,7&@ WR YDFDWH LWV RSLQLRQ GHQ\\LQJ SHWLWLRQHU¶V PRWLRQ IRU VWD\\ SHQGLQJ UHH[DPLQDWLRQ RI WKH SDWHQWV DW LVVXH´ LQ ,QYHVWLJDWLRQ 1R 7$ ,Q UH &HUWDLQ 3HUVRQDO &RPSXWHU &RQVXPHU (OHFWURQLF &RQYHUJHQW 'HYLFHV &RPSRQHQWV 7KHUHRI DQG 3URGXFWV &RQWDLQLQJ 6DPH ,QY 1R <$ $/- 2UGHU 1R ,7& /H[LV DW 8 6 , 7 & )HE RUGHU JUDQWLQJ WHPSRUDU\\ VWD\\
    40. 7KH MXGJH¶V SHUFHSWLRQ RI UHH[DPLQDWLRQ UHTXHVWV 0LJKW D MXGJH YLHZ D UHH[DPLQDWLRQ UHTXHVW DV XVXUSLQJ WKH MXGJH¶V DXWKRULW\\\" 'RHV LW KHOS LI WKH UHH[DPLQDWLRQ UHTXHVW LV VXEPLWWHG E\\ FRXQVHO QRW DVVRFLDWHG ZLWK WULDO FRXQVHO\" .HHS LQ PLQG WKDW H[ SDUWH UHH[DPLQDWLRQ UHTXHVWV PD\\ EH ILOHG DQRQ\\PRXVO\\ &RXOG LW EH LQ WKH UHTXHVWHU¶V LQWHUHVW ZKHUH WKHUH LV FR SHQGLQJ OLWLJDWLRQ WR DQRQ\\PRXVO\\ ILOH WKH UHH[DPLQDWLRQ UHTXHVW\" 3DWHQW RZQHUV VKRXOG FRQVLGHU LQWHUURJDWRU\\ DQG RU SURGXFWLRQ UHTXHVWV GLUHFWHG WR ZKHWKHU WKH DFFXVHG LQIULQJHUV KDYH ILOHG D UHH[DPLQDWLRQ UHTXHVW RU FDXVHG D UHH[DPLQDWLRQ UHTXHVW WR EH ILOHG +LVWRULFDOO\\ PDQ\\ GLVWULFW FRXUW MXGJHV YLHZHG UHH[DPLQDWLRQV SDUWLFXODUO\\ H[ SDUWH UHH[DPLQDWLRQV ZLWK GLVEHOLHI DQG KDYH EHHQ UHOXFWDQW WR JUDQW VWD\\V HVSHFLDOO\\ LI WKHLU FRXUW RSHUDWHV RQ D ³IDVW WUDFN ´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†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¶V FRPPHQWV PXVW KRZHYHU EH OLPLWHG WR LVVXHV UDLVHG E\\ WKH RIILFH DFWLRQ RU LQ WKH SDWHQW RZQHU¶V UHVSRQVH 7KH WKLUG SDUW\\ UHTXHVWHU LV 6HH 2UGHU 'HQ\\LQJ 6XQ 0LFURV\\VWHP ,QF ¶V 5HQHZHG 0RWLRQ )RU 3DUWLDO 6WD\\ LQ 1HWZRUN $SSOLDQFH ,QF Y 6XQ 0LFURV\\VWHPV ,QF 8QLWHG 6WDWHV 'LVWULFW &RXUW IRU 1RUWKHUQ 'LVWULFW RI &DOLIRUQLD & LVVXHG 1RYHPEHU FLWLQJ 6HGRQD 3/ YHUVLRQ RI WKLV SDSHU 6HH 6HUGDUHYLF Y $GYDQFHG 0HG 2SWLFV ,QF 8634 G )HG &LU KROGLQJ WKDW WKH SUHVXPSWLRQ RI ODFKHV DSSOLHG DJDLQVW LQYHQWRUVKLS FODLP GHVSLWH LQWHUYHQLQJ UHH[DPLQDWLRQ SURFHHGLQJ
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³3DWHQW 2ZQHU &KDQJH RI &RUUHVSRQGHQFH $GGUHVV´ IRUP DQG D VHSDUDWH ³7KLUG 3DUW\\ 5HTXHVWHU &KDQJH RI &RUUHVSRQGHQFH $GGUHVV´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† )RU UHH[DPLQDWLRQV RUGHUHG RQ RU DIWHU 1RYHPEHU D ILQGLQJ RI DQ 614 DQG FODLP UHMHFWLRQV FDQ EH EDVHG VROHO\\ RQ SUHYLRXVO\\ FLWHG FRQVLGHUHG ³ROG´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¶< 5RJHU 6KDQJ <DU &KDLNRYVN\\ ,QWHU 3DUWHV 5HH[DPLQDWLRQ RI 3DWHQWV $Q (PSLULFDO (YDOXDWLRQ 7H[ ,QWHOO 3URS / - 6KHUU\\ 0 .QRZOHV HW DO ,QWHU 3DUWHV 3DWHQW 5HH[DPLQDWLRQ LQ WKH 8QLWHG 6WDWHV - 3$7 75$'(0$5. 2)) 62&¶< & ) 5 †† E E 03(3 †† ,, $ $ ,G †† E E
    42. )DLOXUH WR DGGUHVV HDFK VXEPLWWHG UHIHUHQFH LQ WKH GHWDLOHG UHTXHVW ZLOO UHVXOW LQ D GHQLDO RI D ILOLQJ GDWH ,W LV QRW XQFRPPRQ IRU UHH[DPLQDWLRQ UHTXHVWV SDUWLFXODUO\\ LQWHU SDUWHV UHH[DPLQDWLRQ UHTXHVWV WR KDYH KXQGUHGV RI SDJHV 6RPH FRPPHQWDWRUV QRWH WKDW VXFK OHQJWK\\ UHTXHVWV DUH XQGXO\\ ORQJ DQG DPRXQW WR DQ DEXVH RI WKH UHH[DPLQDWLRQ SURFHVV +RZHYHU RWKHU FRPPHQWDWRUV QRWH WKDW SDUWLFXODUO\\ LQ LQWHU SDUWHV UHH[DPLQDWLRQ ZKHUH WKH UHTXHVWHU LV IDFHG ZLWK ³XVH LW RU ORVH LW´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¶V GHFLVLRQ RQ WKH SHWLWLRQ LV QRQ DSSHDODEOH EXW FDQ EH FKDOOHQJHG YLD D GLVWULFW FRXUW DFWLRQ ,Q UHVSRQVH WR D JUDQW RI H[ SDUWH UHH[DPLQDWLRQ WKH SDWHQW RZQHU LV HQWLWOHG WR ILOH D VWDWHPHQW RQ WKH QHZ TXHVWLRQ RI SDWHQWDELOLW\\ LQFOXGLQJ DQ\\ SURSRVHG DPHQGPHQWV WKH SDWHQW RZQHU ZLVKHV WR PDNH :KHUH WKH H[ SDUWH UHH[DPLQDWLRQ ZDV UHTXHVWHG E\\ D WKLUG SDUW\\ WKH WKLUG SDUW\\ LV HQWLWOHG WR UHVSRQG WR WKH SDWHQW RZQHU¶V VWDWHPHQW 7KLV PD\\ EH RQH UHDVRQ ZK\\ SDWHQW RZQHUV UDUHO\\ VXEPLW D VWDWHPHQW SULRU WR UHFHLSW RI DQ RIILFH DFWLRQ 86& † &)5 † &)5 † ,G † E ,G † F ,G † ,G †
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³DQ RULJLQDO DSSOLFDWLRQ´ ZDV QRW IXOO\\ VHWWOHG 7KH LVVXH ZDV ZKHWKHU DQ LQWHU SDUWHV UHH[DPLQDWLRQ FDQ EH ILOHG RQ D SDWHQW IURP D FRQWLQXDWLRQ DSSOLFDWLRQ KDYLQJ D ILOLQJ GDWH RQ RU DIWHU 1RYHPEHU EXW ZKLFK FODLPV SULRULW\\ WR D ILOLQJ EHIRUH 1RYHPEHU 7KH 372¶V SRVLWLRQ ZDV WKDW ³DQ RULJLQDO DSSOLFDWLRQ´ LQFOXGHV DQ\\ DSSOLFDWLRQ ZLWK DQ DFWXDO ILOLQJ GDWH RQ RU DIWHU 1RYHPEHU UHJDUGOHVV RI ZKHWKHU WKDW DSSOLFDWLRQ FODLPHG SULRULW\\ WR DQ DSSOLFDWLRQ ILOHG EHIRUH WKDW GDWH 7KH 372¶V LQWHUSUHWDWLRQ ZDV XSKHOG LQ GLVWULFW FRXUW DQG ZDV VXEVHTXHQWO\\ DIILUPHG E\\ WKH )HGHUDO &LUFXLW LQ &RRSHU 7HFKV &R Y 'XGDV 7KH SUDFWLFDO HIIHFW LV WKDW RQO\\ SDWHQWV ZKRVH DFWXDO ILOLQJ GDWH LV RQ RU DIWHU 1RYHPEHU LV HOLJLEOH IRU LQWHU SDUWHV UHH[DPLQDWLRQ LUUHVSHFWLYH RI ZKHWKHU WKH SDWHQW¶V HIIHFWLYH ILOLQJ GDWH LV HDUOLHU 86& † 86& † &)5 † &)5 † ,G &RRSHU 7HFKV &R Y 'XGDV 8634 G ( ' 9D %ULQNHPD - 6HH &RRSHU 7HFKV &R Y 'XGDV 1R VOLS RS DW )HG &LU $XJ
    44. $V ZLWK H[ SDUWH UHH[DPLQDWLRQV D WKLUG SDUW\\ UHTXHVWHU FDQ SHWLWLRQ WKH 'LUHFWRU WR UHYLHZ D GHWHUPLQDWLRQ UHIXVLQJ LQWHU SDUWHV UHH[DPLQDWLRQ 7KH 'LUHFWRU¶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† 86& † D ,G † E ,G † F &)5 † E ,G † D ,G † F ,G †
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³VSHFLDO GLVSDWFK ´ WKH 372 VKRXOG QRW VXVSHQG WKH UHH[DPLQDWLRQ XQOHVV WKHUH ZHUH H[FHSWLRQDO FLUFXPVWDQFHV 7KLV LV HVSHFLDOO\\ WUXH GXH WR WKH SRWHQWLDO IRU H[WHQGLQJ SURVHFXWLRQ RI UHLVVXH DSSOLFDWLRQV WKURXJK FRQWLQXDWLRQ DSSOLFDWLRQV RU UHTXHVWV IRU FRQWLQXHG H[DPLQDWLRQ 7KH GHWHUPLQDWLRQ WR PHUJH RU VXVSHQG LV PDGH E\\ WKH 23/$ DQG WKH GHFLVLRQ LV PDGH RQ D FDVH E\\ FDVH EDVLV )DFWRUV LQFOXGH L WLPLQJ ZKHWKHU UHLVVXH ZDV ILOHG ILUVW LL WKH VWDWXWRU\\ PDQGDWH WR WUHDW UHH[DPLQDWLRQV ZLWK ³VSHFLDO GLVSDWFK´ LLL WKH IDFW WKDW WKH UHLVVXH FRXOG FRQWLQXH LQGHILQLWHO\\ YLD FRQWLQXDWLRQ DSSOLFDWLRQV DQG LY ZKHWKHU WKH SDWHQW RZQHU FRQVHQWHG WR D VWD\\ RI WKH UHLVVXH DSSOLFDWLRQ $ PHUJHU RUGHU ZLOO W\\SLFDOO\\ OD\\ RXW WKH JURXQG UXOHV IRU WKH PHUJHG SURFHHGLQJ WR SURFHHG VLPXOWDQHRXVO\\ ,PSRUWDQWO\\ MXULVGLFWLRQ RI D PHUJHG SURFHHGLQJ VWD\\V ZLWK WKH &58 QRW ZLWK WKH 7HFKQRORJ\\ &HQWHU UHLVVXH H[DPLQHU :KHUH WKH PHUJHU LV ZLWK DQ LQWHU SDUWHV UHH[DPLQDWLRQ WKH 23/$¶V PHUJHU RUGHU VWULFWO\\ OLPLWV WKH WKLUG SDUW\\ UHTXHVWRU¶V SDUWLFLSDWLRQ WR WKRVH LVVXHV XQLTXH WR WKH 6HH 5HLVVXH DSSOLFDWLRQ QR DQG LQWHU SDUWHV UHH[DPLQDWLRQ FRQWURO QR 6HH 86& † 6HH &)5 † G IRU UHLVVXH PHUJHU ZLWK H[ SDUWH UHH[DPLQDWLRQ DQG &)5 † IRU UHLVVXH PHUJHU ZLWK LQWHU SDUWHV UHH[DPLQDWLRQ 03(3 † 6HH H J PHUJHU GHFLVLRQ IRU LQWHU SDUWHV UHH[DPLQDWLRQ FRQWURO QXPEHU ZKLFK ZDV PHUJHG VXD VSRQWH ZLWK EURDGHQLQJ UHLVVXH DSSOLFDWLRQ VHULDO QXPEHU DQG PHUJHU GHFLVLRQ IRU LQWHU SDUWHV UHH[DPLQDWLRQ FRQWURO QXPEHU ZKLFK ZDV PHUJHG VXD VSRQWH ZLWK UHLVVXH DSSOLFDWLRQ VHULDO QXPEHU %RWK RI WKHVH FDVHV LQYROYHG FRQFXUUHQW GLVWULFW FRXUW OLWLJDWLRQ 8 6 & †† F ,Q UH $OODQ 8634 G &RP¶U 3DW 7UDGHPDUNV $SU QRQ SUHFHGHQWLDO
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³VSHFLDO GLVSDWFK ´ 3UHSDUDWLRQ RI HDFK RIILFH DFWLRQ LQYROYHV WZR SDWHQW H[DPLQHUV DQG RQH VXSHUYLVRU\\ SDWHQW H[DPLQHU 2QH RI WKH SDWHQW H[DPLQHUV SUHSDUHV WKH RIILFH DFWLRQ 7KH VHFRQG SDWHQW H[DPLQHU DQG WKH VXSHUYLVRU\\ SDWHQW H[DPLQHU UHYLHZ WKH RIILFH DFWLRQ EHIRUH WKH RIILFH DFWLRQ LV PDLOHG 7KH WKUHH H[DPLQHUV FRQIHU WR UHVROYH DQ\\ GLVDJUHHPHQWV 7KH DVVLJQHG H[DPLQHUV GR QRW LQFOXGH DQ H[DPLQHU ZKR H[DPLQHG WKH RULJLQDO SDWHQW DSSOLFDWLRQ 86& †
    47. % ,QWHUDFWLRQ %HWZHHQ &58 DQG 23/$ $V QRWHG DERYH WKH &58 ZRUNV FORVHO\\ ZLWK WKH 2IILFH RI 3DWHQW /HJDO $GPLQLVWUDWLRQ ³23/$´ WR UHVROYH SHWLWLRQV WR WKH GLUHFWRU GLVSXWHV LQYROYLQJ WKH ³UHDO SDUW\\ LQ LQWHUHVW ´ SHWLWLRQV WR PHUJH SURFHHGLQJV DQG WKH OLNH 7KH &58 DOVR ZRUNV FORVHO\\ ZLWK WKH 23/$ LQ H[DPLQLQJ WKH SUDFWLFDO HIIHFWV RI LWV RZQ UXOHV DQG LQ H[DPLQLQJ ZD\\V WR VWUHDPOLQH UHH[DPLQDWLRQ SURFHHGLQJV WR UHIOHFW WRGD\\¶V UHDOLWLHV $W OHDVW RQH 23/$ RIILFLDO KDV DFNQRZOHGJHG WKDW ZKLOH WKH SUHVHQW UXOHV ZRUNHG ZHOO LQ WKH SDVW ZKHQ WKHUH ZHUH UHODWLYHO\\ IHZ UHH[DPLQDWLRQV WKH\\ DUH ³FOXQN\\´ LQ YLHZ RI WRGD\\¶V UHDOLWLHV 7KH &58 DQG 23/$ DUH WKHUHIRUH FXUUHQWO\\ ORRNLQJ WR ³VWUHDPOLQH´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³KRW EXWWRQ´ LVVXHV DQG GHVHUYH LPPHGLDWH DQG VSHFLDO DWWHQWLRQ
    48. ([WHQVLRQV RI 7LPH ,Q UHH[DPLQDWLRQ SURFHHGLQJV GHDGOLQHV IRU ILOLQJ UHVSRQVHV RU WKLUG SDUW\\ SDSHUV DUH JHQHUDOO\\ H[WUHPHO\\ VKRUW SDUWLFXODUO\\ LQ FDVHV LQYROYLQJ D FRQFXUUHQW OLWLJDWLRQ +RZHYHU WKH 372 LV FRJQL]DQW WKDW D SDWHQW RZQHU PXVW EH SURYLGHG ZLWK D IDLU RSSRUWXQLW\\ WR SUHVHQW DQ DUJXPHQW DJDLQVW DQ\\ DWWDFN RQ WKH SDWHQW DQG KDV JUDQWHG UHTXHVWV IRU H[WHQVLRQ RI WLPH LQ D QXPEHU RI FDVHV ,I D SDWHQW RZQHU LV IDFHG ZLWK DQ DFWLRQ SUHVHQWLQJ H[WHQVLYH DQG FRPSOH[ UHMHFWLRQV RU DQ DFWLRQ UHTXLULQJ GHYHORSPHQW RI IDFWXDO DIILGDYLWV WKH SDWHQW RZQHU VKRXOG FRQVLGHU ILOLQJ D UHTXHVW IRU DQ H[WHQVLRQ RI WLPH 6XFK D UHTXHVW VKRXOG EH GHWDLOHG DQG SURYLGH VXIILFLHQW FDXVH WR MXVWLI\\ WKH H[WHQVLRQ :KHQ GHFLGLQJ VXFK UHTXHVWV WKH 372 PXVW EDODQFH WKH LQWHUHVW RI WKH SDUWLHV DJDLQVW WKH VWDWXWRU\\ PDQGDWH WKDW UHH[DPLQDWLRQV EH FRQGXFWHG ZLWK VSHFLDO GLVSDWFK 7KH LQWHU SDUWHV UHH[DPLQDWLRQ UXOHV DOORZ IRU WKH SDWHQW RZQHU WR UHTXHVW DQ H[WHQVLRQ RI WLPH WR UHSO\\ WR DQ 2IILFH $FWLRQ RU DQ\\ DFWLRQ IRU VXIILFLHQW FDXVH +RZHYHU WKH UXOHV H[SOLFLWO\\ SURKLELW WKH WKLUG SDUW\\ IRU UHFHLYLQJ DQ H[WHQVLRQ RI WLPH IRU VXEPLWWLQJ ZULWWHQ FRPPHQWV WR WKH SDWHQW RZQHU¶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³ILQGLQJV RI IDFW´ DQG ³FRQFOXVLRQV RI ODZ ´ $OWHUQDWLYHO\\ SUDFWLWLRQHUV VKRXOG FRQVLGHU D VHSDUDWH (YLGHQFH $SSHQGL[ %RWK 6HH 03(3 †† DQG &)5 † &)5 †
    49. RI WKHVH GHYLFHV ZLOO DVVLVW WKH UHVSRQGHU LQ SUHVHQWLQJ IDFWV VXUURXQGLQJ WKH VWRU\\ RI WKH LQYHQWLRQ DQG WKH SULRU WHFKQRORJ\\ IURP WKH DUJXPHQWV LQ IDYRU RU DJDLQVW SDWHQWDELOLW\\ 2QH FRPSOLFDWLQJ IDFWRU ZRUWK QRWLQJ LV WKDW WKH OLQH EHWZHHQ ³IDFWV´ DQG ³DUJXPHQW´ PD\\ EH D EOXUU\\ RQH 'LVFXVVLRQ RI WHDFKLQJV RI D UHIHUHQFH LV IDFWXDO 7KH XOWLPDWH FRQFOXVLRQ RI REYLRXVQHVV LV OHJDO ,Q EHWZHHQ KRZHYHU FRXOG H[LVW JUD\\ DUHDV 1RQHWKHOHVV SUDFWLWLRQHUV FDQ RQO\\ KHOS WKHPVHOYHV LI FOHDU GLVWLQFWLRQV DUH PDGH LQ WKH ERG\\ RI DQ\\ UHVSRQVH $GRSW DQ ³,QWHUIHUHQFH W\\SH´ $SSURDFK *LYHQ WKH FRQFHUQ UHJDUGLQJ SHQGHQFLHV RI UHH[DPLQDWLRQ SURFHHGLQJV SDUWLFXODUO\\ LQWHU SDUWHV SURFHHGLQJV VRPH H[SHUWV KDYH DUJXHG WKDW WKH UHH[DPLQDWLRQ SURFHVV VKRXOG EH PRGHOHG DIWHU WKH LQWHUIHUHQFH SURFHVV FXUUHQWO\\ LQVWLWXWHG E\\ WKH 372 7KH DXWKRUV LQWHQG WR IXUWKHU GHYHORS WKLV LGHD LQ IXWXUH YHUVLRQV RI WKLV SDSHU ( &58 &ULWLFLVPV 6RPH SUDFWLWLRQHUV KDYH QLFNQDPHG WKH &58 DV WKH ³&HQWUDO 5HMHFWLRQ 8QLW ´ ,V WKHUH DQ\\ SUDFWLFDO WUXWK WR WKLV PRQLNHU\" :LWK WKH PXFK JUHDWHU UHVRXUFHV GHYRWHG WR WKH UHH[DPLQDWLRQ SURFHVV E\\ WKH &58 FRXSOHG ZLWK WKH LPSDFW RI .65 LQ WHUPV RI KRZ SULQWHG SXEOLFDWLRQV DQG SDWHQWV ZLOO EH WUHDWHG E\\ WKH &58 DQG LQ LQWHU SDUWHV UHH[DPLQDWLRQV WKH SUHVHQFH RI WKH WKLUG SDUW\\ UHTXHVWHU WKURXJKRXW WKH SURFHVV VSHFXODWLRQ DERXQGV WKDW WKH FKDQFH RI D FODLP VXUYLYLQJ WKH UHH[DPLQDWLRQ SURFHVV LV EHFRPLQJ OHVV DQG OHVV DV WLPH JRHV RQ ,V WKLV VSHFXODWLRQ FRUUHFW LQ SUDFWLFH\" 6RPH FULWLFV DUJXH WKDW WKH &58 LV XQIDLUO\\ LQFOLQHG WR ILQG FODLPV LQYDOLG LQ UHH[DPLQDWLRQV HVSHFLDOO\\ ZKHUH WKHVH FODLPV KDYH EHHQ VXEMHFWHG WR H[WHQVLYH SULRU OLWLJDWLRQ DQG KDYH VXUYLYHG VLJQLILFDQW YDOLGLW\\ FKDOOHQJHV LQ WKH FRXUWV 7KH\\ FRQWHQG WKDW EHFDXVH WKH &58 HVVHQWLDOO\\ GRHV QR VHDUFKLQJ EXW LQVWHDG UHOLHV RQ WKH SDUWLHV WR GR WKLV WDVN WKH H[DPLQHUV GR QRW DSSUHFLDWH WKH LQQRYDWLRQ FDSWXUHG E\\ WKH FODLPHG LQYHQWLRQ EHFDXVH WKH\\ DUH ³VSRRQ IHG´ WKH SULRU DUW E\\ WKH UHTXHVWHU 0RUHRYHU FULWLFV FRQWHQG WKDW WKH &58 WHQGV WR ³UXEEHU VWDPS´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
    50. DFWLRQ WR SXW IRUWK HYLGHQFH RI QRQ REYLRXV DQG WKDW WU\\LQJ ³WR SURYH D QHJDWLYH´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³'DWD SURFHVVLQJ GDWDEDVH DQG ILOH PDQDJHPHQW RU GDWD VWUXFWXUHV ´ ³'DWD 3URFHVVLQJ ILQDQFLDO EXVLQHVV SUDFWLFH PDQDJHPHQW RU FRVW SULFH GHWHUPLQDWLRQ ´ DQG ³6XUJHU\\ ´
    51. (DFK RI WKHVH FODVVHV KDG LQWHU SDUWHV UHH[DPLQDWLRQ UHTXHVWV 7KH H[ SDUWH UHH[DPLQDWLRQ UHTXHVWV LQYROYHG GLIIHUHQW WHFKQRORJ\\ FODVVHV ZLWK WKH WRS WHQ WHFKQRORJ\\ FODVVHV UHSUHVHQWLQJ RI WKH WRWDO QXPEHU RI FODVVHV 7KH WRS WKUHH WHFKQRORJ\\ FODVVHV ZLWK WKH PRVW H[ SDUWH UHH[DPLQDWLRQ UHTXHVWV ZHUH ³6XUJHU\\´ ³(OHFWULFDO FRPSXWHUV DQG GLJLWDO SURFHVVLQJ V\\VWHPV PXOWLFRPSXWHU GDWD WUDQVIHUULQJ´ DQG ³&KHPLVWU\\ PROHFXODU ELRORJ\\ DQG PLFURELRORJ\\´ $WWDFKHG DUH WKH PRVW UHFHQW UHH[DPLQDWLRQ VWDWLVWLFV IURP WKH 372 GDWHG 6HSWHPEHU
    52. &58 5((;$0,1$7,21 67$7,67,&6
    53. Sterne, Kessler, Goldstein & Fox P.L.L.C. 1100 New York Avenue, NW Washington, DC 20005 www.skgf.com
    SlideShare Zeitgeist 2009

    + SterneKesslerSterneKessler Nominate

    custom

    93 views, 0 favs, 0 embeds more stats

    More info about this document

    © All Rights Reserved

    Go to text version

    • Total Views 93
      • 93 on SlideShare
      • 0 from embeds
    • Comments 0
    • Favorites 0
    • Downloads 1
    Most viewed embeds

    more

    All embeds

    less

    Flagged as inappropriate Flag as inappropriate
    Flag as inappropriate

    Select your reason for flagging this presentation as inappropriate. If needed, use the feedback form to let us know more details.

    Cancel
    File a copyright complaint
    Having problems? Go to our helpdesk?

    Categories