02a0162p.06

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
&+$5/(6 0,&+$(/ 35$7(5
(8*(1( +2//,6DQG/<11
62:'(5
3ODLQWLIIV$SSHOODQWV
Y
&,7< 2) %8516,'(
.(178&.< 5,&+$5'
6$'/(5 &215$' %5<$17
+(15< ' &2))(< (00$
%5$180 '($1 /29,16
'(/25(6 6,=(/29(DQG
'$9,' %5800(77 -5
'HIHQGDQWV$SSHOOHHV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH(DVWHUQ'LVWULFWRI.HQWXFN\DW/RQGRQ
1R²-HQQLIHU%&RIIPDQ'LVWULFW-XGJH
$UJXHG0DUFK
'HFLGHGDQG)LOHG0D\
%HIRUH1255,66,/(5DQG*,/0$1&LUFXLW-XGJHV

-- 1 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' %U\DQ 6FRWW +LFNV &LQFLQQDWL 2KLR IRU
$SSHOODQWV -HIIUH\ 6FRWW /DZOHVV 75$9,6 358,77
/$:/(666RPHUVHW.HQWXFN\IRU$SSHOOHHV21%5,()
%U\DQ6FRWW+LFNV&LQFLQQDWL2KLRIRU$SSHOODQWV-HIIUH\
6FRWW/DZOHVV75$9,6358,77 /$:/(666RPHUVHW
.HQWXFN\IRU$SSHOOHHV
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
521$/'/((*,/0$1&LUFXLW-XGJH7KH0DLQ6WUHHW
%DSWLVW&KXUFKWKURXJKLWVSDVWRUDQGWUXVWHHVEURXJKWVXLW
LQ IHGHUDO GLVWULFW FRXUW DJDLQVW WKH &LW\ RI %XUQVLGH
.HQWXFN\ DV ZHOO DV DJDLQVW WKH &LW\¶V PD\RU DQG VHYHUDO
FRXQFLO PHPEHUV DVVHUWLQJ FODLPV SXUVXDQW WR 86&
†DQGWKH5HOLJLRXV)UHHGRP5HVWRUDWLRQ$FW 5)5$
7KHVH FODLPV DURVH IURP WKH &LW\¶V GHFLVLRQ WR GHYHORS D
SUHYLRXVO\ GHGLFDWHG URDGZD\ ORFDWHG EHWZHHQ WZR ORWV
RZQHG E\ WKH &KXUFK %RWK SDUWLHV PRYHG IRU VXPPDU\
MXGJPHQW7KHGLVWULFWFRXUWJUDQWHGVXPPDU\MXGJPHQWLQ
IDYRURIWKH&LW\RQWKH&KXUFK¶V†FODLPDQGGLVPLVVHG
VXDVSRQWHWKH&KXUFK¶V5)5$FDXVHRIDFWLRQIRUIDLOXUHWR
VWDWH D FODLP XSRQ ZKLFK UHOLHI PD\ EH JUDQWHG )RU WKH
UHDVRQVVHWIRUWKEHORZZH$)),50WKHMXGJPHQWRIWKH
GLVWULFWFRXUW
,%$&.*5281'
6XPPLW$YHQXHLVDGHGLFDWHGSXEOLFURDGZD\WKDWUXQVLQ
DQRUWKVRXWKGLUHFWLRQZLWKLQWKH&LW\7KLVURDGZD\KDV
ORQJ EHHQ GHYHORSHG QRUWK RI LWV LQWHUVHFWLRQ ZLWK &HQWUDO
$YHQXH%XWWKHSRUWLRQRI6XPPLW$YHQXHWKDWUXQVVRXWK
RI &HQWUDO $YHQXH ZDV QRW GHYHORSHG XQWLO 7KH
GHYHORSPHQWRIWKLVSRUWLRQRI6XPPLW$YHQXHUHIHUUHGWRE\
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
,G DW † FF 8QGHU WKLV GHILQLWLRQ D JRYHUQPHQW
DJHQF\LPSOHPHQWVD³ODQGXVHUHJXODWLRQ´RQO\ZKHQLWDFWV
SXUVXDQW WR D ³]RQLQJ RU ODQGPDUNLQJ ODZ´ WKDW OLPLWV WKH
PDQQHULQZKLFKDFODLPDQWPD\GHYHORSRUXVHSURSHUW\LQ
ZKLFKWKHFODLPDQWKDVDQLQWHUHVW
7KHDSSOLFDELOLW\RI5/8,3$LQWKHSUHVHQWFDVHWKHUHIRUH
WXUQV RQ ZKHWKHU WKH &LW\ DFWHG SXUVXDQW WR D ]RQLQJ RU
ODQGPDUNLQJODZZKHQLWFKRVHWRGHYHORSUDWKHUWKDQFORVH
6XPPLW $YHQXH ([WHQGHG $V H[SODLQHG DERYH LQ 3DUW
,,% WKH &LW\ REWDLQHG LWV RULJLQDO LQWHUHVW LQ 6XPPLW
$YHQXH ([WHQGHG ORQJ EHIRUH WKH &KXUFK DFTXLUHG WKH
DGMDFHQWSURSHUW\LQ7KH&LW\ODWHUDFTXLUHGLWVLQWHUHVW
LQWKHUHDOLJQHGURDGZD\XSRQWKHUHGHGLFDWLRQRI6XPPLW
$YHQXH([WHQGHGE\WKH&KXUFK7KLVSURSHUW\LQWHUHVWJDYH
WKH &LW\ WKH ULJKW WR FKRRVH ZKHWKHU WR GHYHORS 6XPPLW
$YHQXH([WHQGHG7KH&LW\¶VGHFLVLRQUHJDUGLQJWKHIDWHRI
WKH URDGZD\ ZDV WKXV QRW EDVHG XSRQ DQ\ ]RQLQJ RU
ODQGPDUNLQJ ODZ UHVWULFWLQJ WKH GHYHORSPHQW RU XVH RI WKH
&KXUFK¶VRZQSULYDWHSURSHUW\
$FFRUGLQJO\ 5/8,3$ LV LQDSSOLFDEOH WR WKH IDFWXDO
FLUFXPVWDQFHVLQWKHSUHVHQWFDVH:HWKHUHIRUHFRQFOXGHWKDW
WKHGLVWULFWFRXUWGLGQRWHUULQGLVPLVVLQJWKH&KXUFK¶V5)5$
FODLP,QOLJKWRIWKLVFRQFOXVLRQZHQHHGQRWDGGUHVVWKH
&LW\¶VDUJXPHQWWKDW5/8,3$LVXQFRQVWLWXWLRQDO/\QJY
1RUWKZHVW,QGLDQ&HPHWHU\3URW$VV¶Q86
³$IXQGDPHQWDODQGORQJVWDQGLQJSULQFLSOHRIMXGLFLDO
UHVWUDLQW UHTXLUHV WKDW FRXUWV DYRLG UHDFKLQJ FRQVWLWXWLRQDO
TXHVWLRQV LQ DGYDQFH RI WKH QHFHVVLW\ RI GHFLGLQJ WKHP´
1RUGRZHQHHGWRUXOHRQWKHIHGHUDOJRYHUQPHQW¶VPRWLRQWR
LQWHUYHQHLQWKHSUHVHQWFDVHLQRUGHUWRGHIHQG5/8,3$¶V
FRQVWLWXWLRQDOLW\7KHJRYHUQPHQW¶VPRWLRQLVWKXVGHQLHGDV
PRRW
,,,&21&/86,21
)RU DOO RI WKH UHDVRQV VHW IRUWK DERYH ZH $)),50 WKH
MXGJPHQWRIWKHGLVWULFWFRXUW

-- 2 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
$ WKHVXEVWDQWLDOEXUGHQLVLPSRVHGLQDSURJUDPRU
DFWLYLW\WKDWUHFHLYHV)HGHUDOILQDQFLDODVVLVWDQFHHYHQLI
WKHEXUGHQUHVXOWVIURPDUXOHRIJHQHUDODSSOLFDELOLW\
% WKH VXEVWDQWLDO EXUGHQ DIIHFWV RU UHPRYDO RI WKDW
VXEVWDQWLDOEXUGHQZRXOGDIIHFWFRPPHUFHZLWKIRUHLJQ
QDWLRQVDPRQJWKHVHYHUDO6WDWHVRUZLWK,QGLDQWULEHV
HYHQ LI WKH EXUGHQ UHVXOWV IURP D UXOH RI JHQHUDO
DSSOLFDELOLW\RU
& WKH VXEVWDQWLDO EXUGHQ LV LPSRVHG LQ WKH
LPSOHPHQWDWLRQRIDODQGXVHUHJXODWLRQRUV\VWHPRIODQG
XVHUHJXODWLRQVXQGHUZKLFKDJRYHUQPHQWPDNHVRUKDV
LQSODFHIRUPDORULQIRUPDOSURFHGXUHVRUSUDFWLFHVWKDW
SHUPLW WKH JRYHUQPHQW WR PDNH LQGLYLGXDOL]HG
DVVHVVPHQWV RI WKH SURSRVHG XVHV IRU WKH SURSHUW\
LQYROYHG
86&†FF D $ % &
7KH&KXUFKFRQWHQGVWKDWWKH&LW\¶VGHFLVLRQWRGHYHORS
UDWKHU WKDQ FORVH 6XPPLW $YHQXH ([WHQGHG VXEVWDQWLDOO\
EXUGHQHG LWV UHOLJLRXV H[HUFLVH LQ WKH PDQQHU VHW IRUWK LQ
†FF D & 6SHFLILFDOO\WKH&KXUFKPDLQWDLQVWKDW
WKH&LW\¶VGHFLVLRQLQYROYHGWKHLPSOHPHQWDWLRQRIDODQGXVH
UHJXODWLRQWKDWDOORZHGWKH&LW\WRPDNHDQLQGLYLGXDOL]HG
DVVHVVPHQWRIWKHSURSRVHGXVHRIWKHSURSHUW\LQYROYHG7KH
&LW\RQWKHRWKHUKDQGDUJXHVWKDWLWVGHFLVLRQWRGHYHORSWKH
GHGLFDWHGURDGZD\GLGQRWLPSOHPHQWDODQGXVHUHJXODWLRQDV
GHILQHGE\5/8,3$
5/8,3$GHILQHVD³ODQGXVHUHJXODWLRQ´DVIROORZV
>$@]RQLQJRUODQGPDUNLQJODZWKDWOLPLWVRUUHVWULFWV
D FODLPDQW V XVH RU GHYHORSPHQW RI ODQG LQFOXGLQJ D
VWUXFWXUH DIIL[HG WR ODQG LI WKH FODLPDQW KDV DQ
RZQHUVKLS OHDVHKROG HDVHPHQW VHUYLWXGH RU RWKHU
SURSHUW\LQWHUHVWLQWKHUHJXODWHGODQGRUDFRQWUDFWRU
RSWLRQWRDFTXLUHVXFKDQLQWHUHVW
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
WKHSDUWLHVDV³6XPPLW$YHQXH([WHQGHG´JLYHVULVHWRWKH
SUHVHQWFRQWURYHUV\
6XPPLW$YHQXH([WHQGHGDQG865RXWHUXQSDUDOOHO
WRHDFKRWKHUVRXWKRI&HQWUDO$YHQXHZLWK865RXWH
O\LQJWRWKHHDVWRI6XPPLW$YHQXH([WHQGHG7KH&KXUFK
RZQVDORWWKDWOLHVEHWZHHQWKHWZRVWUHHWV /RW &HQWUDO
$YHQXHPDUNVWKHQRUWKHUQERXQGDU\RI/RW7KH&KXUFK
DOVRRZQVDVHFRQGORWWKDWDEXWVWKHZHVWHUQVLGHRI6XPPLW
$YHQXH ([WHQGHG /RW &HQWUDO $YHQXH PDUNV WKH
QRUWKHUQERXQGDU\RI/RWDVZHOO7KH%XUQVLGH0DVRQLF
/RGJHRZQVDODUJHORWWKDWDEXWVERWKWKHZHVWHUQHGJHRI
865RXWHDQGWKHVRXWKHUQERXQGDU\RI/RWVDQGRQ
ZKLFKWKH/RGJHRSHUDWHVWKH%XUQVLGH&HPHWHU\6XPPLW
$YHQXH([WHQGHGWHUPLQDWHVDWWKHQRUWKHUQERXQGDU\RIWKH
&HPHWHU\
$SODWRIWKH&LW\VKRZVWKDW/RWVDQGKDGRQFH
EHHQ SODQQHG DV D UHVLGHQWLDO GHYHORSPHQW ZLWK HDFK ORW
VXEGLYLGHG LQWR QLQH LQGLYLGXDO SDUFHOV 6XPPLW $YHQXH
([WHQGHGZRXOGKDYHSURYLGHGWKHRQO\VWUHHWDFFHVVWRWKH
/RWSDUFHOV7KH&KXUFKKRZHYHUDEDQGRQHGWKHSODQQHG
UHVLGHQWLDO GHYHORSPHQW ZKHQ LW DFTXLUHG /RWV DQG LQ
,WLQWHQGHGWRORFDWHLWVEXLOGLQJDQGSDUNLQJDUHDRQ
/RWZLWK/RWUHVHUYHGIRUIXWXUHH[SDQVLRQ
7KH &KXUFK¶V GHVLJQ SODQ ORFDWHG LWV EXLOGLQJ QHDU WKH
ZHVWHUQERXQGDU\RI/RWOHVVWKDQIHHWIURP6XPPLW
$YHQXH([WHQGHG$&LW\RUGLQDQFHKRZHYHUUHTXLUHVWKDW
VWUXFWXUHVEHORFDWHGDWOHDVWIHHWIURPDSXEOLFURDGZD\
7RDYRLGYLRODWLQJWKLVRUGLQDQFHWKH&KXUFKUHTXHVWHGWKDW
WKH &LW\ FORVH WKH GHGLFDWHG URDGZD\ IRU 6XPPLW $YHQXH
([WHQGHGDQGWKXVDOORZWKH&KXUFKWRFRQVROLGDWH/RWV
DQG
7KH&LW\UHIXVHGWKHUHTXHVWDQGVXEVHTXHQWO\EURXJKWVXLW
LQVWDWHFRXUWWRHQIRUFHWKHDERYHUHIHUHQFHGRUGLQDQFH7KLV
VXLW ZDV UHVROYHG DIWHU WKH &KXUFK GHGLFDWHG WKH ODQG
QHFHVVDU\WRPRYHWKHURDGZD\IRU6XPPLW$YHQXH([WHQGHG
VHYHUDOIHHWWRWKHZHVWZKLFKJDYHWKH&KXUFK¶VEXLOGLQJWKH
QHFHVVDU\ FOHDUDQFH IURP WKH SODQQHG URDGZD\ 7KH &LW\

-- 3 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
DSSURYHGWKHUHGHGLFDWLRQRI6XPPLW$YHQXH([WHQGHGLQ
,WV VXLW DJDLQVW WKH &KXUFK ZDV WKHQ GLVPLVVHG IRU
IDLOXUHWRSURVHFXWHLQ
,Q-XQHRIWKH&LW\DGRSWHGDUHVROXWLRQWRSURFHHG
ZLWK WKH GHYHORSPHQW RI 6XPPLW $YHQXH ([WHQGHG 7KH
SXUSRVH RI WKH GHYHORSPHQW ZDV WR SURYLGH GLUHFW SXEOLF
DFFHVV WR D VKHOWHU EHLQJ FRQVWUXFWHG ZLWKLQ WKH &HPHWHU\
7KLVVKHOWHUORFDWHGQHDUWKHSRLQWZKHUH6XPPLW$YHQXH
([WHQGHGWHUPLQDWHVDWWKH&HPHWHU\¶VQRUWKHUQERXQGDU\LV
GHVLJQHGWRIDFLOLWDWHJUDYHVLGHIXQHUDOVHUYLFHV
7KH&LW\LQIRUPHGWKH&KXUFKRIWKHUHVROXWLRQLQODWH-XQH
RI7KLVOHGWKH&KXUFKWRRQFHDJDLQUHTXHVWWKDWWKH
&LW\SHUPDQHQWO\FORVH6XPPLW$YHQXH([WHQGHG7KH&LW\
WKHQSXWWKHGHYHORSPHQWRI6XPPLW$YHQXH([WHQGHGRQ
KROGDQGLQYLWHGWKH&KXUFKWRVXEPLWDQDOWHUQDWLYHSURSRVDO
%\ 1RYHPEHU RI KRZHYHU WKH &KXUFK KDG QRW \HW
UHVSRQGHG ,QVWHDG WKH &KXUFK VRXJKW D WHPSRUDU\
UHVWUDLQLQJRUGHULQVWDWHFRXUW
7KH &KXUFK¶V FRPSODLQW DOOHJHG WKDW WKH SURSRVHG
GHYHORSPHQW RI 6XPPLW $YHQXH ([WHQGHG ZRXOG YLRODWH
YDULRXV SURYLVLRQV RI WKH 8QLWHG 6WDWHV DQG .HQWXFN\
&RQVWLWXWLRQV DV ZHOO DV 5)5$ 86& †† EE
EE ,Q 1RYHPEHU RI WKH VWDWH FRXUW LVVXHG D
WHPSRUDU\ UHVWUDLQLQJ RUGHU WKDW SURKLELWHG WKH &LW\ IURP
GHYHORSLQJ 6XPPLW $YHQXH ([WHQGHG 2QH PRQWK ODWHU
KRZHYHUWKHFRXUWJUDQWHGWKH&LW\¶VPRWLRQWRGLVVROYHWKH
UHVWUDLQLQJRUGHU7KHFRXUWWKHQJUDQWHGWKH&LW\¶VPRWLRQWR
GLVPLVVWKH&KXUFK¶VFRPSODLQWLQ)HEUXDU\RIZKLFK
RYHUWKH&LW\¶VREMHFWLRQZDVGLVPLVVHGZLWKRXWSUHMXGLFH
,Q0DUFKRIWKH&KXUFKILQDOO\VXEPLWWHGDIRUPDO
SURSRVDOIRUDQDOWHUQDWLYHURXWHRIDFFHVVWRWKH&HPHWHU\
VKHOWHU7KLVSURSRVDOZDVUHMHFWHGE\WKH&LW\WKHIROORZLQJ
PRQWK7KH&LW\EHJDQWKHGHYHORSPHQWRI6XPPLW$YHQXH
([WHQGHGVKRUWO\WKHUHDIWHU
,Q0D\RIWKH&KXUFKWKURXJKLWVSDVWRUDQGWUXVWHHV
EURXJKWWKHSUHVHQWODZVXLWDJDLQVWWKH&LW\DVZHOODVDJDLQVW
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
SRLQWLQJRXWWKDW5/8,3$DPHQGHG5)5$LQ6HSWHPEHURI
5/8,3$SURYLGHVLQSHUWLQHQWSDUWDVIROORZV
1RJRYHUQPHQWVKDOOLPSRVHRULPSOHPHQWDODQGXVH
UHJXODWLRQLQDPDQQHUWKDWLPSRVHVDVXEVWDQWLDOEXUGHQ
RQ WKH UHOLJLRXV H[HUFLVH RI D SHUVRQ LQFOXGLQJ D
UHOLJLRXVDVVHPEO\RULQVWLWXWLRQXQOHVVWKHJRYHUQPHQW
GHPRQVWUDWHV WKDW LPSRVLWLRQ RI WKH EXUGHQ RQ WKDW
SHUVRQDVVHPEO\RULQVWLWXWLRQ±
$ LVLQIXUWKHUDQFHRIDFRPSHOOLQJJRYHUQPHQWDO
LQWHUHVWDQG
% LV WKH OHDVW UHVWULFWLYH PHDQV RI IXUWKHULQJ WKDW
FRPSHOOLQJJRYHUQPHQWDOLQWHUHVW
86&†FF D $ % 2QDSSHDOWKH&KXUFK
PDLQWDLQVWKDWWKH&LW\¶VGHFLVLRQWRGHYHORSUDWKHUWKDQFORVH
6XPPLW$YHQXH([WHQGHGYLRODWHG5/8,3$
%HFDXVH5/8,3$DPHQGHG5)5$ZHPD\FRQVWUXHWKH
&KXUFK¶V5/8,3$FODLPDVDQH[WHQVLRQRILWV5)5$FODLP
'LODXUD:/DW DOORZLQJWKHSODLQWLIIVWR
SXUVXH WKHLU 5)5$ FODLP XQGHU WKH VWDQGDUGV VHW IRUWK LQ
5/8,3$ $SSO\LQJ5/8,3$LQWKHSUHVHQWFDVHPRUHRYHU
GRHV QRW LPSOLFDWH WKH JHQHUDO SUHVXPSWLRQ DJDLQVW WKH
UHWURDFWLYHDSSOLFDWLRQRIVWDWXWRU\ODZEHFDXVHWKH&KXUFKLV
VHHNLQJ DQ LQMXQFWLRQ WKDW ZRXOG SURKLELW WKH &LW\ IURP
³XVLQJ´6XPPLW$YHQXH([WHQGHGLQWKHIXWXUH,GDW
³,QMXQFWLYH UHOLHI LV SURVSHFWLYH QRW UHWURDFWLYH´ FLWLQJ
.LNXPXUDY+XUOH\)GQ WK&LU
KROGLQJWKDWWKHDSSOLFDWLRQRI5/8,3$ZDVQRWUHWURDFWLYH
ZKHUHWKHSODLQWLIIVVRXJKWLQMXQFWLYHUHOLHI
%XWWKH&KXUFKPD\QRWUHO\XSRQ5/8,3$XQOHVVLWILUVW
GHPRQVWUDWHVWKDWWKHIDFWVRIWKHSUHVHQWFDVHWULJJHURQHRI
WKHEDVHVIRUMXULVGLFWLRQSURYLGHGLQWKDWVWDWXWH'LODXUD
:/DW H[DPLQLQJZKHWKHUWKHSODLQWLIIV¶
DOOHJDWLRQV VDWLVILHG RQH RI WKH MXULVGLFWLRQDO EDVHV RI
5/8,3$EHIRUHUHPDQGLQJWKHFDVHIRUWKHGLVWULFWFRXUWWR
DGGUHVVWKHPHULWVRIWKH5/8,3$FODLP 5/8,3$E\LWV
WHUPVDSSOLHVRQO\LQDFDVHZKHUH

-- 4 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
7KH&KXUFKQH[WPDLQWDLQVWKDWWKH&LW\KDVGHSULYHGLWRI
D SURWHFWHG SURSHUW\ LQWHUHVW DUJXLQJ RQFH DJDLQ WKDW WKH
6XPPLW$YHQXH([WHQGHGURDGZD\EHORQJVWRWKH&KXUFK
%XW DV H[SODLQHG DERYH LQ 3DUW ,,% DQ\ UHYHUVLRQDU\
SURSHUW\ LQWHUHVW WKDW WKH &KXUFK PLJKW KDYH LQ 6XPPLW
$YHQXH ([WHQGHG LV VXEMHFW WR WKH &LW\¶V VXSHULRU ULJKW WR
GHYHORSWKHGHGLFDWHGURDGZD\IRUDSXEOLFSXUSRVH:HKDYH
SUHYLRXVO\GHWHUPLQHGWKDWWKH&LW\LQIDFWGHYHORSHG6XPPLW
$YHQXH([WHQGHGIRUDSXEOLFSXUSRVHWKXVIRUHFORVLQJWKH
&KXUFK¶VFODLPRIDQ\ULJKWWRWKHURDGZD\SURSHUW\
$FFRUGLQJO\WKH&KXUFKKDVQRWPHWLWVEXUGHQRIVKRZLQJ
D GHSULYDWLRQ RI DQ\ FRQVWLWXWLRQDOO\ SURWHFWHG OLEHUW\ RU
SURSHUW\LQWHUHVW$VDUHVXOWWKH&KXUFKFDQQRWHVWDEOLVKD
YLRODWLRQRILWVVXEVWDQWLYHRUSURFHGXUDOGXHSURFHVVULJKWV
:HWKXVFRQFOXGHWKDWWKHGLVWULFWFRXUWGLGQRWHUULQJUDQWLQJ
VXPPDU\MXGJPHQWLQIDYRURIWKH&LW\RQWKH&KXUFK¶VFODLP
XQGHU86&†
& 5)5$DVDPHQGHGE\5/8,3$
,QLWVFRPSODLQWWKH&KXUFKDOVRDVVHUWHGDFODLPDJDLQVW
WKH &LW\ SXUVXDQW WR 5)5$ ZKLFK SURYLGHV WKDW WKH
JRYHUQPHQW ³VKDOO QRW VXEVWDQWLDOO\ EXUGHQ D SHUVRQ¶V
H[HUFLVHRIUHOLJLRQHYHQLIWKHEXUGHQUHVXOWVIURPDUXOHRI
JHQHUDODSSOLFDELOLW\´XQOHVVWKHEXUGHQ³LVLQIXUWKHUDQFHRI
D FRPSHOOLQJ JRYHUQPHQWDO LQWHUHVW ´ DQG ³LV WKH OHDVW
UHVWULFWLYHPHDQVRIIXUWKHULQJWKDWFRPSHOOLQJJRYHUQPHQWDO
LQWHUHVW´86&†EE/HVVWKDQWZRPRQWKVDIWHU
WKH&KXUFKILOHGLWVFRPSODLQWKRZHYHUWKH6XSUHPH&RXUW
GHFODUHG5)5$XQFRQVWLWXWLRQDO&LW\RI%RHUQHY)ORUHV
86 7KHGLVWULFWFRXUWWKXVGLVPLVVHG
WKH&KXUFK¶V5)5$FODLPIRUIDLOXUHWRVWDWHDFODLPXSRQ
ZKLFKUHOLHIPD\EHJUDQWHG
$IWHU WKH GLVWULFW FRXUW GLVPLVVHG WKH &KXUFK¶V 5)5$
FODLP DQG MXVW HLJKW GD\V EHIRUH WKH FRXUW LVVXHG LWV ILQDO
MXGJPHQWLQWKHSUHVHQWFDVH&RQJUHVVDPHQGHG5)5$ZLWK
LWV HQDFWPHQW RI 5/8,3$ 'LODXUD Y $QQ $UERU &KDUWHU
7RZQVKLS1R:/DW WK&LU
)HE SHU FXULDP XQSXEOLVKHG WDEOH GHFLVLRQ
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
WKH&LW\¶VPD\RUDQGVHYHUDOFRXQFLOPHPEHUVLQWKH8QLWHG
6WDWHV 'LVWULFW &RXUW IRU WKH (DVWHUQ 'LVWULFW RI .HQWXFN\
7KH&KXUFKDVVHUWHGFODLPVSXUVXDQWWR86&†
5)5$DQGYDULRXVSURYLVLRQVRIWKH.HQWXFN\&RQVWLWXWLRQ
,QVXLQJXQGHU†WKH&KXUFKDOOHJHGWKDWWKH&LW\KDG
YLRODWHG WKH )UHH ([HUFLVH )UHH 6SHHFK )UHHGRP RI
$VVHPEO\ DQG (VWDEOLVKPHQW &ODXVHV RI WKH )LUVW
$PHQGPHQWWKH7DNLQJV&ODXVHRIWKH)LIWK$PHQGPHQW
DQG WKH 'XH 3URFHVV DQG (TXDO 3URWHFWLRQ &ODXVHV RI WKH
)RXUWHHQWK$PHQGPHQW
%RWK WKH &LW\ DQG WKH &KXUFK ILOHG FURVVPRWLRQV IRU
VXPPDU\ MXGJPHQW ,Q $XJXVW RI WKH GLVWULFW FRXUW
JUDQWHGSDUWLDOVXPPDU\MXGJPHQWWRWKH&LW\RQWKHEDVLVWKDW
WKH&KXUFKKDGIDLOHGWRHVWDEOLVKDQ\YLRODWLRQRIWKH)LUVW
$PHQGPHQW5HFRJQL]LQJWKDWWKH8QLWHG6WDWHV6XSUHPH
&RXUW KDG GHFODUHG 5)5$ XQFRQVWLWXWLRQDO WKH FRXUW DOVR
GLVPLVVHG WKH &KXUFK¶V 5)5$ FODLP IRU IDLOXUH WR VWDWH D
FODLP XSRQ ZKLFK UHOLHI PD\ EH JUDQWHG $IWHU UHFHLYLQJ
DGGLWLRQDO EULHILQJ IURP WKH SDUWLHV WKH FRXUW JUDQWHG
VXPPDU\ MXGJPHQW WR WKH &LW\ RQ WKH UHPDLQGHU RI WKH
&KXUFK¶V † FODLP LQ 6HSWHPEHU RI +DYLQJ
GLVPLVVHG DOO RI WKH &KXUFK¶V IHGHUDO FODLPV WKH FRXUW
GHFOLQHGWRH[HUFLVHSHQGHQWMXULVGLFWLRQRYHUWKH&KXUFK¶V
VWDWHODZFODLPV
7KH&KXUFKQRZDSSHDOV)LUVWWKH&KXUFKPDLQWDLQVWKDW
LW RIIHUHG VXIILFLHQW HYLGHQFH WR VXVWDLQ LWV FODLP XQGHU
†UHO\LQJVSHFLILFDOO\RQWKH&LW\¶VDOOHJHGYLRODWLRQVRI
WKH 7DNLQJV &ODXVH )UHH ([HUFLVH &ODXVH (VWDEOLVKPHQW
&ODXVHDQG'XH3URFHVV&ODXVH6HFRQGWKH&KXUFKDUJXHV
WKDWLWKDVHVWDEOLVKHGDYLRODWLRQRI5)5$DVDPHQGHGE\WKH
5HOLJLRXV/DQG8VHDQG,QVWLWXWLRQDOL]HG3HUVRQV$FWRI
5/8,3$ 86&††FFFF
,,$1$/<6,6
$ 6WDQGDUGRIUHYLHZ
7KLV FRXUW UHYLHZV GH QRYR WKH GLVWULFW FRXUW¶V JUDQW RI
VXPPDU\MXGJPHQW+ROORZD\Y%UXVK)G

-- 5 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
WK&LU 6XPPDU\MXGJPHQWLVSURSHUZKHUHWKHUHDUH
QRJHQXLQHLVVXHVRIPDWHULDOIDFWLQGLVSXWHDQGWKHPRYLQJ
SDUW\LVHQWLWOHGWRMXGJPHQWDVDPDWWHURIODZ)HG5&LY
3 F ,QGHFLGLQJDPRWLRQIRUVXPPDU\MXGJPHQWWKH
FRXUW PXVW YLHZ WKH HYLGHQFH DQG GUDZ DOO UHDVRQDEOH
LQIHUHQFHVLQIDYRURIWKHQRQPRYLQJSDUW\0DWVXVKLWD(OHF
,QGXV&RY=HQLWK5DGLR&RUS86
7KHFRXUWLVQRWWR³ZHLJKWKHHYLGHQFHDQGGHWHUPLQHWKH
WUXWKRIWKHPDWWHUEXWWRGHWHUPLQHZKHWKHUWKHUHLVDJHQXLQH
LVVXHIRUWULDO´$QGHUVRQY/LEHUW\/REE\,QF86
$JHQXLQHLVVXHIRUWULDOH[LVWVRQO\ZKHUH
WKHUH LV VXIILFLHQW ³HYLGHQFH RQ ZKLFK WKH MXU\ FRXOG
UHDVRQDEO\ILQGIRUWKHSODLQWLII´,GDW
7KHGLVWULFWFRXUW¶VGLVPLVVDORIDFODLPSXUVXDQWWR5XOH
E RI WKH )HGHUDO 5XOHV RI &LYLO 3URFHGXUH LV DOVR
UHYLHZHGGHQRYR-DFNVRQY&LW\RI&ROXPEXV)G
WK &LU RYHUUXOHG RQ RWKHU JURXQGV E\
6ZLHUNLHZLF]Y6RUHPD1$6&W :KHQ
GHFLGLQJ ZKHWKHU WR GLVPLVV D FODLP XQGHU 5XOH E
³>W@KH FRXUW PXVW FRQVWUXH WKH FRPSODLQW LQ D OLJKW PRVW
IDYRUDEOH WR WKH SODLQWLII DQG DFFHSW DOO RI >WKH@ IDFWXDO
DOOHJDWLRQVDVWUXH´,G FLWDWLRQRPLWWHG $FODLPVKRXOG
QRWEHGLVPLVVHG³μXQOHVVLWDSSHDUVEH\RQGGRXEWWKDWWKH
SODLQWLII FDQ SURYH QR VHW RI IDFWV LQ VXSSRUW RI KLV FODLP
ZKLFKZRXOGHQWLWOHKLPWRUHOLHI¶´%XFKDQDQY$SIHO
)G WK&LU TXRWLQJ&RQOH\Y*LEVRQ
86
% 86&†
7KH &KXUFK PDLQWDLQV WKDW WKH GLVWULFW FRXUW HUUHG LQ
JUDQWLQJWKH&LW\VXPPDU\MXGJPHQWRQWKH&KXUFK¶VFODLP
XQGHU86&†DVWDWXWHWKDWSURYLGHVUHFRYHU\IRU
FRQVWLWXWLRQDOGHSULYDWLRQVLQFXUUHGXQGHUWKHFRORURIVWDWH
ODZ $FFRUGLQJ WR WKH &KXUFK WKH &LW\ YLRODWHG VHYHUDO
FRQVWLWXWLRQDOSURYLVLRQVZKHQLWFKRVHWRGHYHORSUDWKHUWKDQ
SHUPDQHQWO\FORVH6XPPLW$YHQXH([WHQGHG(DFKRIWKHVH
DOOHJHGYLRODWLRQVLVDQDO\]HGEHORZ
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
7RHVWDEOLVKHLWKHUDVXEVWDQWLYHRUSURFHGXUDOGXHSURFHVV
YLRODWLRQWKH&KXUFKPXVWILUVWVKRZWKDWWKH&LW\GHSULYHG
LWRIDFRQVWLWXWLRQDOO\SURWHFWHGOLEHUW\RUSURSHUW\LQWHUHVW
6WRQHY8QLYRI0DU\ODQG0HG6\V&RUS)G
WK&LU ³>,@QRUGHUWRFODLPHQWLWOHPHQWWRWKH
SURWHFWLRQVRIWKHGXHSURFHVVFODXVH²HLWKHUVXEVWDQWLYHRU
SURFHGXUDO²D SODLQWLII PXVW ILUVW VKRZ WKDW KH KDV D
FRQVWLWXWLRQDOO\SURWHFWHGOLEHUW\RUSURSHUW\LQWHUHVWDQG
WKDWKHKDVEHHQGHSULYHGRIWKDWSURWHFWHGLQWHUHVWE\VRPH
IRUP RI VWDWH DFWLRQ ´ LQWHUQDO TXRWDWLRQ PDUNV DQG
FLWDWLRQV RPLWWHG ³/LEHUW\ LQWHUHVWV WKDW DUH SURWHFWLEOH
XQGHUWKHGXHSURFHVVFODXVHFDQDULVHHLWKHUGLUHFWO\IURPWKH
&RQVWLWXWLRQ RU LQGLUHFWO\ IURP WKH ODZV RI WKH VWDWHV´
:LOOLDPVY9LGRU)G WK&LU -RQHV-
GLVVHQWLQJ 3URWHFWHG SURSHUW\ LQWHUHVWV KRZHYHU GR QRW
DULVH IURP WKH &RQVWLWXWLRQ EXW LQVWHDG ³VWHP IURP DQ
LQGHSHQGHQWVRXUFHVXFKDVVWDWHODZ´/HLVY)O\QW86
SHUFXULDP LQWHUQDOTXRWDWLRQPDUNVDQG
FLWDWLRQRPLWWHG
7KH &KXUFK FRQWHQGV WKDW WKH &LW\¶V GHYHORSPHQW RI
6XPPLW $YHQXH ([WHQGHG GHSULYHG WKH &KXUFK RI LWV
³UHOLJLRXV´ OLEHUW\ LQWHUHVWV QDPHO\ WKH OLEHUW\ LQWHUHVWV
FUHDWHGE\WKH)UHH([HUFLVHDQG(VWDEOLVKPHQW&ODXVHVRIWKH
)LUVW$PHQGPHQW$VH[SODLQHGDERYHLQ3DUWV,,%DQG
,,% KRZHYHU WKH &KXUFK KDV IDLOHG WR UDLVH D JHQXLQH
LVVXH DV WR ZKHWKHU WKH GHYHORSPHQW RI 6XPPLW $YHQXH
([WHQGHG YLRODWHG LWV ULJKWV XQGHU HLWKHU RI WKHVH &ODXVHV
7KLV IDLOXUH OHDGV WR WKH FRQFOXVLRQ WKDW WKH &LW\ KDV QRW
GHSULYHGWKH&KXUFKRIDQ\OLEHUW\LQWHUHVWVFUHDWHGE\WKH
)UHH ([HUFLVH DQG (VWDEOLVKPHQW &ODXVHV 6HH 'RVZHOO Y
6PLWK 1R :/ DW WK &LU
0DUFK XQSXEOLVKHGWDEOHGHFLVLRQ KROGLQJWKDW
WKHSODLQWLII¶VSURFHGXUDOGXHSURFHVVFODLPEDVHGXSRQWKH
GHSULYDWLRQRIKLV OLEHUW\LQWHUHVWVXQGHUWKH)UHH([HUFLVH
&ODXVH ZDV ³VXEVXPHG´ ZLWKLQ KLV IUHH H[HUFLVH FODLP
EHFDXVH³LIWKH>IUHHH[HUFLVH@FODLPIDLOHGVRPXVWWKHGXH
SURFHVVFODLP´

-- 6 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
DOOHJHG GLVFULPLQDWLRQ UXQV DIRXO RI WKH (VWDEOLVKPHQW
&ODXVH¶VSURKLELWLRQRIGLVFULPLQDWLRQDPRQJUHOLJLRQV
7RSURYHWKLVDOOHJHGYLRODWLRQRIWKH(VWDEOLVKPHQW&ODXVH
KRZHYHUWKH&KXUFKUHOLHVXSRQWKHVDPHHYLGHQFHWKDWLW
RIIHUHGLQVXSSRUWRILWVFODLPWKDWWKH&LW\YLRODWHGWKH)UHH
([HUFLVH&ODXVH7KLVHYLGHQFHDVH[SODLQHGDERYHLQ3DUW
,,% LV LQVXIILFLHQW WR UDLVH D JHQXLQH LVVXH DV WR DQ\
GLVFULPLQDWRU\DQLPXVRQWKHSDUWRIWKH&LW\$FFRUGLQJO\
HYHQDVVXPLQJWKDWWKH%XUQVLGH0DVRQLF/RGJHLVDQRQ
&KULVWLDQUHOLJLRXVRUJDQL]DWLRQWKH&KXUFKFDQQRWHVWDEOLVK
DYLRODWLRQRIWKH(VWDEOLVKPHQW&ODXVH
'XH3URFHVV&ODXVH
7KH 'XH 3URFHVV &ODXVH RI WKH )RXUWHHQWK $PHQGPHQW
SURKLELWVVWDWHVIURPGHSULYLQJ³DQ\SHUVRQRIOLIHOLEHUW\RU
SURSHUW\ZLWKRXWGXHSURFHVVRIODZ´86&RQVWDPHQG
;,9†7KLV&ODXVHFORWKHVLQGLYLGXDOVZLWKWKHULJKWWR
ERWKVXEVWDQWLYHDQGSURFHGXUDOGXHSURFHVV8QLWHG6WDWHV
Y 6DOHUQR 86 DQDO\]LQJ WKH 'XH
3URFHVV&ODXVHRIWKH)LIWK$PHQGPHQW 6XEVWDQWLYHGXH
SURFHVV³SUHYHQWVWKHJRYHUQPHQWIURPHQJDJLQJLQFRQGXFW
WKDW VKRFNV WKH FRQVFLHQFH RU LQWHUIHUHV ZLWK ULJKWV
LPSOLFLWLQWKHFRQFHSWRIRUGHUHGOLEHUW\´,G LQWHUQDO
TXRWDWLRQ PDUNV DQG FLWDWLRQV RPLWWHG 3URFHGXUDO GXH
SURFHVV UHTXLUHV WKDW WKH JRYHUQPHQW¶V GHSULYDWLRQ RI OLIH
OLEHUW\RUSURSHUW\HYHQLIFRQVLVWHQWZLWKVXEVWDQWLYHGXH
SURFHVV³EHLPSOHPHQWHGLQDIDLUPDQQHU´,G LQWHUQDO
TXRWDWLRQPDUNVDQGFLWDWLRQRPLWWHG
,Q WKH SUHVHQW FDVH WKH &KXUFK DOOHJHV WKDW WKH &LW\
GHYHORSHG 6XPPLW $YHQXH ([WHQGHG LQ YLRODWLRQ RI WKH
&KXUFK¶VGXHSURFHVVULJKWVERWKVXEVWDQWLYHDQGSURFHGXUDO
:LWKUHJDUGWRLWVULJKWWRVXEVWDQWLYHGXHSURFHVVWKH&KXUFK
FRQWHQGVWKDWWKH&LW\¶VGHFLVLRQWRGHYHORSWKHURDGZD\ZDV
DUELWUDU\ DQG LUUDWLRQDO 7KH &KXUFK PDLQWDLQV WKDW WKLV
GHFLVLRQ DOVR YLRODWHG LWV ULJKW WR SURFHGXUDO GXH SURFHVV
EHFDXVH WKH &LW\ DOOHJHGO\ UHMHFWHG WKH &KXUFK¶V SURSRVHG
DOWHUQDWLYHWRGHYHORSLQJ6XPPLW$YHQXH([WHQGHGZLWKRXW
FRQGXFWLQJDIDLUDQGRSHQKHDULQJ
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
7DNLQJV&ODXVH
7KH7DNLQJV&ODXVHRIWKH)LIWK$PHQGPHQWSURYLGHVWKDW
SULYDWHSURSHUW\VKDOOQRW³EHWDNHQIRUSXEOLFXVHZLWKRXW
MXVWFRPSHQVDWLRQ´86&RQVWDPHQG97KLVUHVWUDLQWRQ
WKHSRZHURIWKHJRYHUQPHQWWRWDNHSULYDWHSURSHUW\PDGH
DSSOLFDEOHWRWKHVWDWHVWKURXJKWKH)RXUWHHQWK$PHQGPHQW
3KLOOLSV Y :DVKLQJWRQ /HJDO )RXQG 86
LV ³GHVLJQHG WR EDU >WKH JRYHUQPHQW@ IURP IRUFLQJ
VRPH SHRSOH DORQH WR EHDU SXEOLF EXUGHQV ZKLFK LQ DOO
IDLUQHVV DQG MXVWLFH VKRXOG EH ERUQH E\ WKH SXEOLF DV D
ZKROH´3HQQ&HQWUDO7UDQVS&RY&LW\RI1HZ<RUN
86 LQWHUQDOTXRWDWLRQVPDUNVDQGFLWDWLRQ
RPLWWHG
,QWKHSUHVHQWFDVHWKH&KXUFKDOOHJHVWKDWWKH&LW\HQJDJHG
LQ DQ XQFRQVWLWXWLRQDO WDNLQJ ZKHQ LW GHYHORSHG 6XPPLW
$YHQXH([WHQGHG7KH&KXUFKPXVWHVWDEOLVKWZRHOHPHQWV
WRSURYHLWVFDVH6SHFLILFDOO\WKH&KXUFKPXVWVKRZWKDWWKH
&LW\ ³WRRN >WKH &KXUFK¶V@ SURSHUW\´ DQG ³IDLOHG WR
FRPSHQVDWH>LW@MXVWO\RUIDLOHGWRSXWWKHSURSHUW\WRSXEOLF
XVH´0XUUD\Y8QLWHG6WDWHV)G )HG
&LU
7KH&KXUFKWKHUHIRUHFDQQRWUHFRYHUXQGHUWKH7DNLQJV
&ODXVHZLWKRXWILUVWSURYLQJWKDWWKH&LW\WRRNSURSHUW\WKDW
EHORQJHG WR WKH &KXUFK ZKHQ WKH &LW\ EHJDQ WR GHYHORS
6XPPLW $YHQXH ([WHQGHG 'HWHUPLQLQJ ZKHWKHU WKH &LW\
WRRNWKH&KXUFK¶VSURSHUW\UHTXLUHVXVWRORRNEH\RQGWKH
7DNLQJV&ODXVHZKLFKSURWHFWVUDWKHUWKDQFUHDWHVSURSHUW\
ULJKWV:DVKOHIVNHY:LQVWRQ)G WK&LU
:H PXVW LQVWHDG DVVHVV WKH &KXUFK¶V SXUSRUWHG
SURSHUW\ LQWHUHVW LQ 6XPPLW $YHQXH ([WHQGHG LQ OLJKW RI
³H[LVWLQJ UXOHV RU XQGHUVWDQGLQJV WKDW VWHP IURP DQ
LQGHSHQGHQWVRXUFHVXFKDVVWDWHODZ´&DOYHUW,QYV,QFY
/RXLVYLOOH -HIIHUVRQ&RXQW\0HWUR6HZHU'LVW)G
WK&LU LQWHUQDOTXRWDWLRQPDUNVRPLWWHG
8QGHU.HQWXFN\ODZWKHGHGLFDWLRQRIDSXEOLFURDGZD\LV
JRYHUQHG E\ .HQWXFN\ 5HYLVHG 6WDWXWHV † 7KLV
VWDWXWHSURYLGHVWKDWDSDUW\PD\GHGLFDWHDSXEOLFURDGZD\E\

-- 7 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
VXEPLWWLQJDSODWWKDWGHSLFWV WKHSURSRVHGGHGLFDWLRQWRD
FLW\¶VOHJLVODWLYHERG\.\5HY6WDW† ,IWKDW
ERG\ DSSURYHV WKH GHGLFDWLRQ WKH SODW LV UHFRUGHG LQ WKH
FRXQW\FOHUN¶VRIILFHDQGWKHGHGLFDWLRQLVFRPSOHWH,G
7KH&KXUFKIROORZHGWKHSURFHGXUHRXWOLQHGDERYHZKHQLW
³UHGHGLFDWHG´ 6XPPLW $YHQXH ([WHQGHG LQ ,Q
SDUWLFXODU WKH &KXUFK VXEPLWWHG D SODW WKDW GHSLFWHG WKH
PRYHPHQWRI6XPPLW$YHQXH([WHQGHGVHYHUDOIHHWWRWKH
ZHVW D UHORFDWLRQ WKDW DOORZHG WKH &KXUFK WR FRQVWUXFW LWV
EXLOGLQJ LQ FRPSOLDQFH ZLWK WKH &LW\ RUGLQDQFH UHTXLULQJ
VWUXFWXUHVWRKDYHDWOHDVWIHHWRIFOHDUDQFHIURPDSXEOLF
URDGZD\ 7KH &LW\ DSSURYHG WKH GHGLFDWLRQ RI 6XPPLW
$YHQXH ([WHQGHG DV GHSLFWHG LQ WKH SODW ZKLFK ZDV ODWHU
UHFRUGHGLQWKHFRXQW\FOHUN¶VRIILFH
6HFWLRQ GRHVQRWLQGLFDWHZKHWKHUWKHGHGLFDWLRQ
RIDSXEOLFURDGZD\YHVWVWKHSXEOLFHQWLW\ZLWKWLWOHWRWKH
URDGZD\ QRU KDYH ZH IRXQG DQ\ .HQWXFN\ FDVHODZ WKDW
LQWHUSUHWV WKLV DVSHFW RI WKH VWDWXWH 6HH $P -XU G
'HGLFDWLRQ† ³7KHHIIHFWRIDVWDWXWRU\GHGLFDWLRQ
RU WKH H[WHQW RI WKH HVWDWH FRQYH\HG WKHUHE\ LV JHQHUDOO\
LQGLFDWHGE\WKHVWDWXWHLWVHOIDFFRUGLQJWRZKLFKWKHIHHPD\
SDVVWRWKHSXEOLFRUPD\UHPDLQLQWKHGHGLFDWRU´
8QGHUVRPHGHGLFDWLRQVWDWXWHVDGHGLFDWLRQFRQIHUVRQO\DQ
HDVHPHQWWRXVHWKHGHGLFDWHGODQGIRUDSXEOLFSXUSRVH,G
$YDOLGVWDWXWRU\GHGLFDWLRQKRZHYHUJHQHUDOO\³YHVWVWKHIHH
LQWKHGHGLFDWHHLQWUXVWIRUWKHSXEOLF´,G%XWHYHQLI
ZHDVVXPHWKDWWKH&LW\DFTXLUHGRQO\DQHDVHPHQWWRXVHWKH
GHGLFDWHGODQGIRUDSXEOLFSXUSRVHWKH&KXUFKVWLOOIDLOVWR
HVWDEOLVKDQXQODZIXO³WDNLQJ´RQWKHSDUWRIWKH&LW\
7RSURYHLWVIXOORZQHUVKLSRI6XPPLW$YHQXH([WHQGHG
WKH&KXUFKILUVWFRQWHQGVWKDWWKH&LW\¶VHDVHPHQWWHUPLQDWHG
ZKHQWKH&KXUFKDFTXLUHG/RWLQ7KH&KXUFKSRLQWV
RXWWKDW6XPPLW$YHQXH([WHQGHGZRXOGKDYHSURYLGHGWKH
RQO\ VWUHHW DFFHVV WR WKH UHVLGHQWLDO SDUFHOV WKDW ZHUH
RULJLQDOO\SODQQHGWREHVXEGLYLGHGIURP/RW2QFHWKRVH
UHVLGHQWLDO SDUFHOV ZHUH ³FRQVROLGDWHG´ E\ WKH &KXUFK WKH
SXEOLF QHHG IRU 6XPPLW $YHQXH ([WHQGHG DOOHJHGO\
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
HVWDEOLVKHVWKDWVWULFWVFUXWLQ\DSSOLHVZKHUHD
JRYHUQPHQWDFWLPSOLFDWHVDFRPELQDWLRQRIERWKWKHULJKWWR
WKH IUHH H[HUFLVH RI UHOLJLRQ DQG DQ\ RWKHU IXQGDPHQWDO
FRQVWLWXWLRQDO ULJKW %XW DEVHQW D YLRODWLRQ RI WKH )UHH
([HUFLVH&ODXVHWKH&KXUFK¶VK\EULGULJKWVWKHRU\QHFHVVDULO\
IDLOV )XUWKHUPRUH DV H[SODLQHG DERYH LQ 3DUW ,,% WKH
&KXUFK KDV QRW VKRZQ WKDW D JHQXLQH LVVXH IRU WULDO H[LVWV
UHJDUGLQJDQ\YLRODWLRQRIWKH7DNLQJV&ODXVH1RUGRHVWKH
&KXUFKRIIHUDQ\OHJDODXWKRULW\RUFRPSHOOLQJDUJXPHQWWR
H[SODLQKRZWKH&LW\¶VUHIXVDOWRDOORZWKH&KXUFKWRH[SDQG
LWVIDFLOLWLHVRQDGHGLFDWHGSXEOLFURDGZD\LPSOLFDWHVHLWKHU
WKH)UHH6SHHFKRU)UHHGRPRI$VVHPEO\&ODXVHV)LQDOO\
WKLVFRXUWKDVUHMHFWHGWKH³DVVHUWLRQWKDWWKH6XSUHPH&RXUW
HVWDEOLVKHG LQ (PSOR\PHQW 'LYLVLRQ Y 6PLWK WKDW ODZV
FKDOOHQJHG E\ K\EULG ULJKWV FODLPV DUH VXEMHFW WR VWULFW
VFUXWLQ\´:DWFKWRZHU%LEOH 7UDFW6RF¶\RI1HZ<RUN,QF
Y 9LOODJH RI 6WUDWWRQ )G WK &LU FHUW
JUDQWHG6&W
(VWDEOLVKPHQW&ODXVH
7KH(VWDEOLVKPHQW&ODXVHRIWKH)LUVW$PHQGPHQWPDGH
DSSOLFDEOHWRWKHVWDWHVWKURXJKWKH)RXUWHHQWK$PHQGPHQW
:LGPDUY9LQFHQW86Q SURYLGHV
WKDW³&RQJUHVVVKDOOPDNHQRODZUHVSHFWLQJDQHVWDEOLVKPHQW
RIUHOLJLRQ´86&RQVWDPHQG,7KLV&ODXVHDPRQJ
RWKHUWKLQJVSURKLELWVWKHJRYHUQPHQWIURPSUHIHUULQJRQH
UHOLJLRQRYHUDQRWKHU/DUVRQY9DOHQWH86
³7KHFOHDUHVWFRPPDQGRIWKH(VWDEOLVKPHQW&ODXVH
LV WKDW RQH UHOLJLRXV GHQRPLQDWLRQ FDQQRW EH RIILFLDOO\
SUHIHUUHGRYHUDQRWKHU´
,QWKHSUHVHQWFDVHWKH&KXUFKDOOHJHVWKDWWKH&LW\YLRODWHG
WKH(VWDEOLVKPHQW&ODXVHLQGHFLGLQJWRGHYHORSUDWKHUWKDQ
FORVH6XPPLW$YHQXH([WHQGHG7KH&KXUFKPDLQWDLQVWKDW
LQPDNLQJWKLVGHFLVLRQWKH&LW\GLVFULPLQDWHGDJDLQVWWKH
&KXUFK DQG LQ IDYRU RI WKH %XUQVLGH 0DVRQLF /RGJH ,W
IXUWKHU FRQWHQGV WKDW WKH %XUQVLGH 0DVRQLF /RGJH LV D
UHOLJLRXV RUJDQL]DWLRQ WKDW DGKHUHV WR WKH ³UHOLJLRQ´ RI
0DVRQU\7KH&KXUFKWKHUHIRUHFRQFOXGHVWKDWWKH&LW\¶V

-- 8 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
WKDQWKH&LW\&RXQFLOPDGHWKHGHFLVLRQWRUHMHFWWKHSURSRVDO
DQG WKDW WKH PD\RU¶V GHFLVLRQPDNLQJ SURFHVV QHHG QRW EH
RSHQDQGSXEOLF
1HLWKHU SDUW\ RIIHUHG HYLGHQFH WR VXSSRUW LWV DOOHJDWLRQ
UHJDUGLQJ ZKLFK DUP RI WKH &LW\¶V JRYHUQPHQW GHFLGHG WR
UHMHFWWKH&KXUFK¶VSURSRVDO:HDUHWKXVXQDEOHWRFRQFOXGH
ZKHWKHU WKH &LW\ UHDFKHG LWV GHFLVLRQ LQ YLRODWLRQ RI WKH
.HQWXFN\2SHQ0HHWLQJV$FW1HYHUWKHOHVVHYHQDVVXPLQJ
WKDW VXFK D YLRODWLRQ RFFXUUHG WKLV IDFW DORQH ZRXOG QRW
VXSSRUWDQLQIHUHQFHRIUHOLJLRXVGLVFULPLQDWLRQRQWKHSDUWRI
WKH&LW\6HH6FKDW]PDQY&RXQW\RI&OHUPRQW1R
:/ DW WK &LU 2FW
XQSXEOLVKHG WDEOH GHFLVLRQ FRQFOXGLQJ WKDW D GHSDUWXUH
IURPWKHSUHVFULEHGSURFHGXUHIRUUHYLHZLQJDQHPSOR\HH¶V
SHUIRUPDQFHGLGQRWLQDQGRILWVHOIVXSSRUWDQLQIHUHQFHWKDW
WKHHPSOR\HH¶VWHUPLQDWLRQZDVEDVHGXSRQGLVFULPLQDWLRQ
UDWKHUWKDQMXVWFDXVH 6KDSROLDY/RV$ODPRV1DW¶O/DE
)G WK&LU H[SUHVVLQJ³VLJQLILFDQW
GRXEWV´DVWRZKHWKHUWKHSODLQWLIIRIIHUHGVXIILFLHQWHYLGHQFH
WR HVWDEOLVK D SULPD IDFLH FDVH RI UHOLJLRXV GLVFULPLQDWLRQ
SXUVXDQW WR 7LWOH 9,, ZKHUH WKH SODLQWLII IDLOHG WR RIIHU
HYLGHQFH VKRZLQJ WKDW WKH SURFHGXUDO LUUHJXODULWLHV LQ KLV
SHUIRUPDQFH UHYLHZ ³ZHUH FRQQHFWHG WR WKH DOOHJHG
GLVFULPLQDWLRQ´
7KH &KXUFK KDV WKXV IDLOHG WR UDLVH D JHQXLQH LVVXH RI
PDWHULDO IDFW DV WR ZKHWKHU WKH &LW\ HQJDJHG LQ UHOLJLRXV
GLVFULPLQDWLRQ ZKHQ LW FKRVH WR GHYHORS UDWKHU WKDQ FORVH
6XPPLW$YHQXH([WHQGHG$VDUHVXOWWKH&KXUFKFDQQRW
VKRZWKDWWKH&LW\¶VGHFLVLRQLPSOLFDWHGLWVULJKWVXQGHUWKH
)UHH([HUFLVH&ODXVH
7KLVFRQFOXVLRQDOVRGLVSRVHVRIWKH&KXUFK¶VFODLPWKDWWKH
&LW\YLRODWHGLWV³K\EULGULJKWV´DWHUPWKDWWKH&KXUFKXVHV
WR GHVFULEH D FRPELQDWLRQ RI LWV ULJKWV XQGHU WKH )UHH
([HUFLVH)UHH6SHHFKDQG)UHHGRPRI$VVHPEO\&ODXVHVRI
WKH)LUVW$PHQGPHQWDVZHOODVWKH7DNLQJV&ODXVHRIWKH
)LIWK $PHQGPHQW 7KH &KXUFK DUJXHV WKDW WKH 6XSUHPH
&RXUW¶VGHFLVLRQLQ(PSOR\PHQW'LYLVLRQY6PLWK86
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
³GLVVLSDWHG´7KLVPHDQWDFFRUGLQJWRWKH&KXUFKWKDW³WKH
HDVHPHQWZDVJRQHDVZHOO´5HO\LQJRQ&LW\RI/RXLVYLOOHY
/RXLVYLOOH6FUDS0DWHULDO&RPSDQ\6:G .\
WKH&KXUFKPDLQWDLQVWKDWLWUHDFTXLUHGIXOORZQHUVKLS
RI 6XPPLW $YHQXH ([WHQGHG XSRQ WKH WHUPLQDWLRQ RI WKH
DOOHJHG HDVHPHQW ,G DW KROGLQJ WKDW ZKHQ SURSHUW\
FRQGHPQHG IRU SXEOLF XVH LV QR ORQJHU XVHG IRU D SXEOLF
SXUSRVH WKH UHDO SURSHUW\ ³UHYHUW>V@ WR WKH RZQHU LQ IHH
VLPSOH´
7KH FULWLFDO IODZ LQ WKH &KXUFK¶V DUJXPHQW LV WKDW WKH
UHDOLJQPHQWRI6XPPLW$YHQXH([WHQGHGWRRNSODFHLQ
WKUHH\HDUVDIWHUWKH&KXUFKDFTXLUHG/RW,QRWKHUZRUGV
WKH&KXUFKJDYHWKH&LW\WKHULJKWWRXVH6XPPLW $YHQXH
([WHQGHGIRUDSXEOLFSXUSRVHDIWHUWKH&KXUFKFRQVROLGDWHG
WKHQLQHUHVLGHQWLDOSDUFHOVIRUZKLFKWKHURDGZD\ZRXOGKDYH
SURYLGHG WKH RQO\ VWUHHW DFFHVV &RQVROLGDWLRQ RI WKRVH
UHVLGHQWLDOSDUFHOVLQWKHUHIRUHGLGQRWWHUPLQDWHWKH
&LW\¶V LQWHUHVW LQ WKH UHDOLJQHG URDGZD\ GHGLFDWHG E\ WKH
&KXUFKWKUHH\HDUVODWHU
7KHIDFWWKDW6XPPLW$YHQXH([WHQGHGZDVUHGHGLFDWHGLQ
LV DOVR IDWDO WR WKH &KXUFK¶V DEDQGRQPHQW DUJXPHQW
&LWLQJ6DUYHUY&RXQW\RI$OOHQ6:G .\
WKH&KXUFKFRQWHQGVWKDWDSXEOLFURDGLQ.HQWXFN\LV
DEDQGRQHGLIQRWXVHGE\WKHSXEOLFIRUDSHULRGRIRUPRUH
\HDUV7KH&KXUFKPDLQWDLQVWKDWVLQFHLWILUVWDSSHDUHGRQ
D SODW RI WKH &LW\ LQ 6XPPLW $YHQXH ([WHQGHG ZDV
QHYHUXVHGE\WKHSXEOLF7KXVWKH&KXUFKDUJXHVRZQHUVKLS
RI 6XPPLW $YHQXH ([WHQGHG SDVVHG WR WKH RZQHUV RI WKH
SURSHUW\ DEXWWLQJ WKDW URDGZD\ PDQ\ \HDUV DJR DQG QRZ
EHORQJV WR WKH &KXUFK %XW HYHQ DVVXPLQJ WKDW 6XPPLW
$YHQXH([WHQGHGKDGEHHQDEDQGRQHGLQLWVIRUPHUORFDWLRQ
WKH &KXUFK FDQQRW SODXVLEO\ DUJXH WKDW 6XPPLW $YHQXH
([WHQGHGKDVEHHQDEDQGRQHGVLQFHLWVUHGHGLFDWLRQLQ
EHFDXVH \HDUV KDG QRW HODSVHG SULRU WR WKH URDGZD\¶V
GHYHORSPHQWLQ
7KH&KXUFKQHYHUWKHOHVVFRQWHQGVWKDWHYHQLIWKH&LW\GLG
QRW VXUUHQGHU LWV LQWHUHVW LQ WKH URDGZD\ SULRU WR LWV

-- 9 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
ULJKWVWHUPLQDWHGZKHQWKH&LW\GHFLGHGWRGHYHORS6XPPLW
$YHQXH ([WHQGHG IRU WKH DOOHJHG SULYDWH EHQHILW RI WKH
%XUQVLGH0DVRQLF/RGJH$FFRUGLQJWRWKH&KXUFKWKH&LW\
GHYHORSHG 6XPPLW $YHQXH ([WHQGHG VROHO\ WR SURYLGH
DGGLWLRQDOVWUHHWDFFHVVWRWKHSULYDWHO\RZQHG&HPHWHU\7KH
&KXUFKPDLQWDLQVWKDWWKHGHYHORSPHQWRIDURDGZD\ ZLWK
VXFKDOLPLWHGXVHGRHVQRWVHUYH DQ\SXEOLFSXUSRVHDQG
WKHUHIRUH JRHV EH\RQG WKH VFRSH RI WKH &LW\¶V LQWHUHVW LQ
6XPPLW$YHQXH([WHQGHG$VVXSSRUWIRULWVDUJXPHQWWKH
&KXUFKUHOLHVXSRQWKHIROORZLQJODQJXDJHIURP3UHVWRQLD
$UHD1HLJKERUKRRG$VVRFLDWLRQY$EUDPVRQ6:G
.\
,I SXEOLF XVH ZHUH FRQVWUXHG WR PHDQ WKDW WKH SXEOLF
ZRXOGEHEHQHILWWHGLQWKHVHQVHWKDWWKHHQWHUSULVHRU
LPSURYHPHQWIRUWKHXVHRIZKLFKWKHSURSHUW\ZDVWDNHQ
PLJKWFRQWULEXWHWRWKHFRPIRUWRUFRQYHQLHQFHRIWKH
SXEOLFRUDSRUWLRQWKHUHRIRUEHHVWHHPHGQHFHVVDU\IRU
WKHLUHQMR\PHQWWKHUHZRXOGEHDEVROXWHO\QROLPLWRQ
WKHULJKWWRWDNHSULYDWHSURSHUW\,WZRXOGQRWEHGLIILFXOW
IRU DQ\ SHUVRQ WR VKRZ WKDW D IDFWRU\ RU KRWHO RU OLNH
LPSURYHPHQWKHFRQWHPSODWHGHUHFWLQJRUHVWDEOLVKLQJ
ZRXOGUHVXOWLQEHQHILWWRWKHSXEOLFDQGXQGHUWKLVUXOH
WKH SURSHUW\ RI WKH FLWL]HQ ZRXOG QHYHU EH VDIH IURP
LQYDVLRQ
,GDW TXRWLQJ&KHVDSHDNH6WRQH&RY0RUHODQG
6:G .\
7KHDERYHTXRWHGODQJXDJHH[SODLQVWKHUXOHLQ.HQWXFN\
WKDWSURKLELWV³WKHWDNLQJRISULYDWHSURSHUW\IRUWKHSXUSRVH
RIWUDQVIHUWRDQRWKHUSULYDWHHQWHUSULVH´,G,QWKHSUHVHQW
FDVHKRZHYHUWKH&LW\KDVQRWWUDQVIHUUHGWLWOHWRWKH6XPPLW
$YHQXH([WHQGHGURDGZD\WRWKH&HPHWHU\6XPPLW$YHQXH
([WHQGHGLVQRWDSULYDWHGULYHZD\IRUWKH&HPHWHU\EXWLV
LQVWHDGDSXEOLFURDGZD\WKDWDQ\PHPEHURIWKHSXEOLFLVIUHH
WRXVH,QGHHGWKH&KXUFKLWVHOIPD\XVHWKHURDGZD\IRUD
UHDU HQWUDQFH WR /RW RU IRU D IURQW HQWUDQFH WR /RW
)XUWKHUPRUHWKHIDFWWKDW6XPPLW$YHQXH([WHQGHGFXUUHQWO\
UXQVRQO\WRWKH&HPHWHU\GRHVQRWGHSULYHWKHURDGZD\RILWV
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
GLVFULPLQDWLRQ EDVHG XSRQ GLVSDUDWH WUHDWPHQW UHTXLUHV
HYLGHQFHWKDWDSDUW\ZDVWUHDWHGGLIIHUHQWO\IURPDVLPLODUO\
VLWXDWHGSDUW\ZLWKDGLIIHUHQWUHOLJLRXVDIILOLDWLRQ9DQGLYHU
Y+DUGLQ&RXQW\%GRI(GXF)G WK&LU
KROGLQJ WKDW WKH SODLQWLII FRXOG QRW VXVWDLQ D IUHH
H[HUFLVHFKDOOHQJHWRDSROLF\UHTXLULQJVWXGHQWVWUDQVIHUULQJ
WR SXEOLF VFKRRO WR SDVV D WHVW EHIRUH UHFHLYLQJ FUHGLW IRU
FRXUVHV VWXGLHG DW KRPH ³>D@EVHQW HYLGHQFH WKDW VLPLODUO\
VLWXDWHG WUDQVIHUHHV IURP QRQUHOLJLRXV KRPH VFKRROV ZHUH
SURYLGHGDQμH[HPSWLRQ¶ZKLFK>WKHSODLQWLII@ZDVQRW´
<HWWKH&KXUFKRIIHUVQRHYLGHQFHVKRZLQJWKDWLQWHUPVRI
WKHSDUWLHV¶UHTXHVWVIRUURDGZD\FORVXUHVLWZDVVLPLODUO\
VLWXDWHG LQ HLWKHU WLPH RU FLUFXPVWDQFHV ZLWK WKH %XUQVLGH
0DVRQLF/RGJH
6SHFLILFDOO\ WKH &KXUFK VRXJKW WKH FORVXUH RI 6XPPLW
$YHQXH ([WHQGHG DIWHU WKH %XUQVLGH 0DVRQLF /RGJH KDG
UHTXHVWHG WKDW WKH URDGZD\ EH GHYHORSHG WR SURYLGH EHWWHU
SXEOLF DFFHVV WR WKH &HPHWHU\¶V VKHOWHU &ORVLQJ 6XPPLW
$YHQXH([WHQGHGWKHUHIRUHZRXOGKDYHUHTXLUHGWKH&LW\WR
IRUJR WKH SXEOLF EHQHILW DVVRFLDWHG ZLWK WKH URDGZD\¶V
GHYHORSPHQW LQ RUGHU WR DOORZ WKH &KXUFK WR SXUVXH LWV
H[SDQVLRQ SODQV 7KH UHFRUG FRQWDLQV QR HYLGHQFH DV WR
ZKHWKHUWKH%XUQVLGH0DVRQLF/RGJHKDGDVNHGWKH&LW\WR
VXUUHQGHUDQ\VLPLODUSXEOLFEHQHILWZKHQLWDOOHJHGO\VRXJKW
WKHFORVXUHRIWKHURDGZD\VWKDWKDGUXQWKURXJKWKH&HPHWHU\
PDQ\GHFDGHVDJR$EVHQWDGGLWLRQDOHYLGHQFHUHJDUGLQJWKH
FLUFXPVWDQFHVVXUURXQGLQJWKHVHHDUOLHUFORVXUHVDQLQIHUHQFH
RISUHVHQWGLVFULPLQDWRU\DQLPXVRQWKHSDUWRIWKH&LW\LV
XQZDUUDQWHG
7KH&KXUFKQH[WPDLQWDLQVWKDWWKHPDQQHULQZKLFKWKH
&LW\UHMHFWHGLWVSURSRVHGDOWHUQDWLYHWRGHYHORSLQJ6XPPLW
$YHQXH ([WHQGHG VKRZV WKH &LW\¶V GLVFULPLQDWRU\ DQLPXV
WRZDUGWKH&KXUFK,QSDUWLFXODUWKH&KXUFKDOOHJHVWKDWWKH
&LW\UHMHFWHGLWVSURSRVDOGXULQJDPHHWLQJRIWKH&LW\&RXQFLO
WKDWZDVKHOGLQYLRODWLRQRIWKH.HQWXFN\2SHQ0HHWLQJV
$FW7KLVVWDWXWHUHTXLUHVWKDWWKHPHHWLQJVRIFLW\JRYHUQLQJ
ERGLHVEH³RSHQ´DQG³SXEOLF´.\5HY6WDW†
7KH&LW\RQWKHRWKHUKDQGFRQWHQGVWKDWLWVPD\RUUDWKHU

-- 10 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
6XPPLW$YHQXH([WHQGHGKDSSHQHGWRFRQIOLFWZLWKZKDWWKH
&KXUFKVLQFHUHO\EHOLHYHVLVLWVVSLULWXDOGXW\'LVFULPLQDWLRQ
PD\ QRW EH LQIHUUHG KRZHYHU VLPSO\ EHFDXVH D SXEOLF
SURJUDP LV LQFRPSDWLEOH ZLWK D UHOLJLRXV RUJDQL]DWLRQ¶V
VSLULWXDOSULRULWLHV7KH)UHH([HUFLVH&ODXVH³GRHVQRW
RIIHU WR UHFRQFLOH WKH YDULRXV FRPSHWLQJ GHPDQGV RQ
JRYHUQPHQWPDQ\RIWKHPURRWHGLQVLQFHUHUHOLJLRXVEHOLHI
WKDWLQHYLWDEO\DULVHLQVRGLYHUVHDVRFLHW\DVRXUV´/\QJ
86 DW $V WKH 6XSUHPH &RXUW KDV H[SODLQHG
JRYHUQPHQWDFWVRIWHQLQDGYHUWHQWO\IUXVWUDWHFHUWDLQFLWL]HQV¶
³VHDUFKIRUVSLULWXDOIXOILOOPHQW´\HWWKHJRYHUQPHQW³VLPSO\
FRXOGQRWRSHUDWHLILWZHUHUHTXLUHGWRVDWLVI\HYHU\FLWL]HQ¶V
UHOLJLRXVQHHGVDQGGHVLUHV´,G
7KH &KXUFK WKHUHIRUH PXVW VKRZ PRUH WKDQ GLVSDUDWH
LPSDFWLQRUGHUWRSURYHGLVFULPLQDWRU\DQLPXVRQWKHSDUWRI
WKH &LW\ ,W DWWHPSWV WR PHHW WKLV EXUGHQ E\ UHO\LQJ XSRQ
HYLGHQFH WKDW LQ WKH &KXUFK¶V YLHZ VKRZV WKDW WKH &LW\
FORVHGURDGZD\VRQEHKDOIRIWKH%XUQVLGH0DVRQLF/RGJH
DQG YLRODWHG.HQWXFN\ODZLQWKHPDQQHULQZKLFKWKH
&LW\UHMHFWHGWKH&KXUFK¶VDOWHUQDWLYHWRWKHGHYHORSPHQWRI
6XPPLW$YHQXH([WHQGHG7KLVHYLGHQFHLVH[DPLQHGEHORZ
7KH &KXUFK ILUVW FODLPV WKDW WKH &LW\ KDV IDYRUHG WKH
%XUQVLGH0DVRQLF /RGJHLQGHFLGLQJZKHWKHUWRDFFHSWRU
UHMHFW UHTXHVWV IRU URDGZD\ FORVXUHV 7R VXSSRUW WKLV
DOOHJDWLRQWKH&KXUFKUHOLHVXSRQDFRPSDULVRQEHWZHHQWZR
DQFLHQWSODWVDIIHFWLQJWKH&HPHWHU\7KHILUVWSODWGDWHGLQ
VKRZVWKUHHGHGLFDWHGSXEOLFURDGZD\VUXQQLQJWKURXJK
WKH&HPHWHU\7KHVHURDGZD\VGRQRWDSSHDURQDSODW
RI WKH &LW\ WKH PRVW UHFHQW RQH DYDLODEOH 7KH &KXUFK
PDLQWDLQVWKDWWKH&LW\¶VGHFLVLRQWRFORVHURDGZD\VIRUWKH
%XUQVLGH0DVRQLF/RGJHZKLOHUHIXVLQJWRH[WHQGWKHVDPH
EHQHILW WR WKH &KXUFK PDQLIHVWV LWV GLVFULPLQDWRU\ DQLPXV
WRZDUGWKH&KXUFK
(YHQDVVXPLQJWKDWDWVRPHSRLQWLQWKHGLVWDQWSDVWWKH
&LW\FORVHGURDGZD\VDWWKHUHTXHVWRIWKH%XUQVLGH0DVRQLF
/RGJHWKLVZRXOGQRWQHFHVVDULO\JLYHULVHWRDQLQIHUHQFHRI
SUHVHQW GLVFULPLQDWLRQ $Q LQIHUHQFH RI UHOLJLRXV
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
SXEOLFFKDUDFWHUEHFDXVHXVHRIWKHURDGZD\LVQRWOLPLWHGWR
PHPEHUVRIWKH/RGJHEXWLVLQIDFWRSHQWRDOOPHPEHUVRI
WKH JHQHUDO SXEOLF 7KH .HQWXFN\ &RXUW RI $SSHDOV
UHFRJQL]HGWKLVSULQFLSOHLQ6WXUJLOOY.HQWXFN\'HSDUWPHQW
RI+LJKZD\V6:G .\ ZKHQLWH[SODLQHG
WKDW
>D@Q\SXEOLFZD\QDWXUDOO\FRQIHUVDVSHFLDOEHQHILWRQ
WKRVH SHUVRQV ZKRVH SURSHUW\ DGMRLQV LW $OO URDGV
WHUPLQDWH VRPHZKHUH 'HDG HQG VWUHHWV RU KLJKZD\V
LQHYLWDEO\DQGSDUWLFXODUO\VXEVHUYHWKHSULYDWHLQWHUHVWV
RIWKHODVWSURSHUW\RZQHURQWKHOLQH<HWWKHSXEOLFKDV
DQLQWHUHVWLQUHDFKLQJRWKHUPHPEHUVWKHUHRI
,GDW
6XPPLW$YHQXH([WHQGHGWKHUHIRUHKDVEHHQGHYHORSHG
IRU D SXEOLF SXUSRVH 7KLV FRQFOXVLRQ OHDYHV WKH &KXUFK
ZLWKRXW DQ\ YLDEOH FODLP WKDW WKH &LW\ WRRN WKH &KXUFK¶V
SURSHUW\ ZKHQ LW GHYHORSHG WKH GHGLFDWHG URDGZD\
$FFRUGLQJO\WKH&KXUFKFDQQRWHVWDEOLVKDYLRODWLRQRIWKH
7DNLQJV&ODXVH
)UHH([HUFLVH&ODXVH
7KH)UHH([HUFLVH&ODXVHRIWKH)LUVW$PHQGPHQWPDGH
DSSOLFDEOHWRWKHVWDWHVWKURXJKWKH)RXUWHHQWK$PHQGPHQW
&DQWZHOOY&RQQHFWLFXW86 ³IRUELGV
DOOODZVμSURKLELWLQJWKHIUHHH[HUFLVH¶RIUHOLJLRQ´0F'DQLHO
Y 3DW\ 86 TXRWLQJ 86 &RQVW
DPHQG, 7KLV&ODXVHSURWHFWVQRWRQO\WKHULJKWWRKROGD
SDUWLFXODU UHOLJLRXV EHOLHI EXW DOVR WKH ULJKW WR HQJDJH LQ
FRQGXFWPRWLYDWHGE\WKDWEHOLHI(PSOR\PHQW'LYY6PLWK
86 UHFRJQL]LQJWKDW³WKHH[HUFLVHRI
UHOLJLRQRIWHQLQYROYHVQRWRQO\EHOLHIDQGSURIHVVLRQEXWWKH
SHUIRUPDQFH RI RU DEVWHQWLRQ IURP SK\VLFDO DFWV ´
LQWHUQDOTXRWDWLRQPDUNVRPLWWHG
7KH&KXUFKPDLQWDLQVWKDWWKH&LW\YLRODWHGLWVULJKWVXQGHU
WKH)UHH([HUFLVH&ODXVHE\FKRRVLQJWRGHYHORSLQVWHDGRI
SHUPDQHQWO\FORVLQJ6XPPLW$YHQXH([WHQGHG,WDUJXHVWKDW

-- 11 of 12 --

3UDWHUHWDOY&LW\RI%XUQVLGHHWDO 1R
WKH&LW\SUHYHQWHGWKH&KXUFKIURPIROORZLQJWKH³ZLOORU
FDOOLQJRI*RG´7KH&KXUFKLQWHUSUHWVWKLVFDOOLQJWRUHTXLUH
WKH H[SDQVLRQ RI WKH &KXUFK¶V IDFLOLWLHV RQWR WKH 6XPPLW
$YHQXH([WHQGHGGHGLFDWHGURDGZD\
:KHWKHU WKH )UHH ([HUFLVH &ODXVH SURWHFWV D UHOLJLRXV
LQVWLWXWLRQ¶VGHVLUHWRIXOILOOZKDWLWSHUFHLYHVDVLWVVSLULWXDO
GXW\WRFRQVWUXFWIDFLOLWLHVRQDGHGLFDWHGSXEOLFURDGZD\LVD
TXHVWLRQRIILUVWLPSUHVVLRQ:HRIFRXUVHZLOOQRWTXHVWLRQ
³WKHSODXVLELOLW\RIDUHOLJLRXVFODLP´6PLWK86DW
1HYHUWKHOHVV³μWKH)UHH([HUFLVH&ODXVHLVZULWWHQLQWHUPV
RIZKDWWKHJRYHUQPHQWFDQQRWGRWRWKHLQGLYLGXDOQRWLQ
WHUPV RI ZKDW WKH LQGLYLGXDO FDQ H[DFW IURP WKH
JRYHUQPHQW¶´/\QJY1RUWKZHVW,QGLDQ&HPHWHU\3URWHFWLYH
$VV¶Q86 TXRWLQJ6KHUEHUWY9HUQHU
86 'RXJODV-FRQFXUULQJ 6WURXWY
$OEDQHVH)G VW&LU UHO\LQJXSRQWKLV
SULQFLSOH LQ UHMHFWLQJ D IUHH H[HUFLVH FKDOOHQJH WR D VWDWH
VWDWXWH WKDW XQGHU FHUWDLQ FLUFXPVWDQFHV DXWKRUL]HG WKH
SD\PHQWRISXEOLFIXQGVWRSULYDWHHGXFDWLRQDOLQVWLWXWLRQVVR
ORQJDVWKHLQVWLWXWLRQZDVQRQUHOLJLRXV
7KH )UHH ([HUFLVH &ODXVH WKHUHIRUH GRHV QRW HQWLWOH D
UHOLJLRXVRUJDQL]DWLRQWRVSHFLDOEHQHILWV6ZDQVRQY*XWKULH
,QGHS 6FK 'LVW )G WK &LU
FRQFOXGLQJ WKDW WKH )UHH ([HUFLVH FODXVH GLG QRW HQWLWOH
FKLOGUHQ ZKR ZHUH KRPHVFKRROHG IRU UHOLJLRXV UHDVRQV WR
DWWHQGSXEOLFVFKRRORQDSDUWWLPHEDVLVZKHQRWKHUKRPH
VFKRROHG FKLOGUHQ ZHUH SUHFOXGHG IURP GRLQJ VR
$FFRUGLQJO\ WKH &LW\¶V UHIXVDO WR DEDQGRQ WKH GHGLFDWHG
SXEOLFURDGZD\LQIDYRURIWKH&KXUFKGLGQRWLQDQGRILWVHOI
EXUGHQWKH&KXUFK¶VULJKWVXQGHUWKH)UHH([HUFLVH&ODXVH
7KH &KXUFK KRZHYHU FODLPV WKDW WKH &LW\ HQJDJHG LQ
UHOLJLRXVGLVFULPLQDWLRQZKHQLWGHYHORSHGUDWKHUWKDQFORVHG
6XPPLW $YHQXH ([WHQGHG $ JRYHUQPHQW DFW WKDW
GLVFULPLQDWHV DJDLQVW D SDUWLFXODU UHOLJLRQ WULJJHUV WKH
SURWHFWLRQV RI WKH )UHH ([HUFLVH &ODXVH &KXUFK RI WKH
/XNXPL%DEDOX$\H,QFY&LW\RI+LDOHDK86
³$W D PLQLPXP WKH SURWHFWLRQV RI WKH )UHH
1R 3UDWHUHWDOY&LW\RI%XUQVLGHHWDO
([HUFLVH &ODXVH SHUWDLQ LI WKH ODZ DW LVVXH GLVFULPLQDWHV
DJDLQVWVRPHRUDOOUHOLJLRXVEHOLHIV´ 7KHTXHVWLRQ
WKHQ LV ZKHWKHU WKH &LW\ LQ IDFW HQJDJHG LQ UHOLJLRXV
GLVFULPLQDWLRQ
$FFRUGLQJ WR WKH &LW\ UHVROYLQJ WKLV LVVXH LV VLPSO\ D
PDWWHURIGHWHUPLQLQJZKHWKHUWKH&LW\¶VGHFLVLRQZLWKUHJDUG
WR6XPPLW$YHQXH ([WHQGHGZDVQHXWUDORQLWVIDFH%XW
³>I@DFLDOQHXWUDOLW\LVQRWGHWHUPLQDWLYH´EHFDXVH³>W@KH
)UHH([HUFLVH&ODXVHSURWHFWVDJDLQVWJRYHUQPHQWDOKRVWLOLW\
ZKLFK LVPDVNHGDVZHOODVRYHUW´,GDW:HPXVW
WKHUHIRUHFRQVLGHUZKHWKHUWKH&LW\LQGHYHORSLQJUDWKHUWKDQ
FORVLQJ 6XPPLW $YHQXH ([WHQGHG LQWHQWLRQDOO\ VRXJKW WR
EXUGHQWKH&KXUFK¶VUHOLJLRXVDFWLYLWLHV
,QWKH&KXUFK¶VYLHZWKH&LW\FKRVHWRGHYHORS6XPPLW
$YHQXH ([WHQGHG LQ RUGHU WR IDYRU WKH LQWHUHVWV RI WKH
%XUQVLGH0DVRQLF/RGJHWKHRZQHURIWKH&HPHWHU\RYHUWKH
LQWHUHVWVRIWKH&KXUFK7KH&KXUFKFRQWHQGVWKDWWKLVDOOHJHG
IDYRULWLVP LV VLJQLILFDQW IRU SXUSRVHV RI WKH )UHH ([HUFLVH
&ODXVH EHFDXVH XQOLNH WKH &KXUFK WKH %XUQVLGH 0DVRQLF
/RGJH LV D QRQ&KULVWLDQ UHOLJLRXV RUJDQL]DWLRQ ,W DUJXHV
WKDWE\DOOHJHGO\JLYLQJSUHIHUHQWLDOWUHDWPHQWWRWKH%XUQVLGH
0DVRQLF /RGJH WKH &LW\ GHPRQVWUDWHG LWV GLVFULPLQDWRU\
DQLPXV WRZDUG WKH UHOLJLRXV EHOLHIV DQG SUDFWLFHV RI WKH
&KXUFK
7KHGHYHORSPHQWRI6XPPLW$YHQXH([WHQGHGGLGLQIDFW
SURYLGHDEHQHILWWRWKH%XUQVLGH0DVRQLF/RGJHWRWKHH[WHQW
WKDWWKHURDGZD\QRZDOORZVWKH/RGJHWREHWWHUVHUYHWKRVH
ZKRYLVLWLWV&HPHWHU\%XWWKHXOWLPDWHEHQHILFLDU\RIWKLV
GHYHORSPHQWLVWKHJHQHUDOSXEOLFZKLFKQRZKDVLQFUHDVHG
DFFHVV WR WKH &HPHWHU\ DQG LQ SDUWLFXODU WR WKH VKHOWHU
HUHFWHG RQ WKH &HPHWHU\ SURSHUW\ IRU JUDYHVLGH IXQHUDO
VHUYLFHV ,Q FRQWUDVW FORVLQJ 6XPPLW $YHQXH ([WHQGHG
ZRXOGKDYHEHQHILWWHGRQO\WKH&KXUFKZLWKRXWSURYLGLQJDQ\
FRPSDUDEOHEHQHILWWRWKHJHQHUDOSXEOLF
7KH&KXUFKWKHUHIRUHLVDVNLQJXVWRLQIHUDGLVFULPLQDWRU\
LQWHQWRQWKHSDUWRIWKH&LW\EDVHGXSRQWKHIDFWWKDWLQWKH
FRXUVHRIIXUWKHULQJWKHSXEOLFLQWHUHVWWKHGHYHORSPHQWRI

-- 12 of 12 --