02a0229p.06

0HG&RUS,QFY&LW\RI/LPDHWDO 1R
RQO\IURPDGHSULYDWLRQE\VWDWHDFWLRQ´-$DW 'LVW&W
2SDW TXRWDWLRQRPLWWHG
:HQRWHKRZHYHUWKDWLQ+DIHUY0HOR86
WKH6XSUHPH&RXUWUHMHFWHGWKHDUJXPHQWWKDWVWDWH
RIILFHUVFRXOGQRWEHKHOGSHUVRQDOO\OLDEOHIRUDFWLRQVWDNHQ
ZLWKLQWKHVFRSHRIWKHLURIILFLDOGXWLHV$FFRUGLQJWRWKH
&RXUWVXFKDUXOHZRXOGEHLQFRQIOLFWZLWKSULRUGHFLVLRQV
LQGLFDWLQJ ³WKDW &RQJUHVV HQDFWHG † WR HQIRUFH
SURYLVLRQVRIWKH)RXUWHHQWK$PHQGPHQWDJDLQVWWKRVHZKR
FDUU\DEDGJHRIDXWKRULW\RID6WDWHDQGUHSUHVHQWLWLQVRPH
FDSDFLW\ZKHWKHUWKH\DFWLQDFFRUGDQFHZLWKWKHLUDXWKRULW\
RUPLVXVHLW´,GDW TXRWDWLRQRPLWWHG HPSKDVLVDGGHG
7KXVWKHIDFWWKDW0D\RU%HUJHUDFWHGLQKLVRIILFLDOFDSDFLW\
DV PD\RU GRHV QRW LPPXQL]H KLP IURP EHLQJ VXHG DV DQ
LQGLYLGXDOXQGHU†7KHGLVWULFWFRXUW¶VVHFRQGUHDVRQ
IRU UHMHFWLQJ WKH LQGLYLGXDO FDSDFLW\ VXLW ² WKDW WKH
)RXUWHHQWK$PHQGPHQWSURWHFWVRQO\DJDLQVWDFWLRQVRIWKH
VWDWH ² DOVR FRQIOLFWV ZLWK +DIHU 7KH VWDWH DFWLRQ
UHTXLUHPHQW RI WKH )RXUWHHQWK $PHQGPHQW LV VDWLVILHG E\
VKRZLQJWKDWDVWDWHRIILFLDODFWHG³XQGHUFRORURI´VWDWHODZ
DVZKHQWKHRIILFLDOH[HUFLVHVDXWKRULW\FRQIHUUHGE\DVWDWH
RIILFH,GDW7KHVWDWHDFWLRQUHTXLUHPHQWGRHVQRW
OLPLWFLYLOULJKWVSODLQWLIIVWRVXLWVDJDLQVWRQO\JRYHUQPHQW
HQWLWLHV7KHGLVWULFWFRXUW¶VLQWHUSUHWDWLRQRI³VWDWHDFWLRQ´
ZRXOG HOLPLQDWH DOO † VXLWV DJDLQVW LQGLYLGXDO VWDWH
RIILFHUV3UHYDLOLQJODZGLFWDWHVDEURDGHULQWHUSUHWDWLRQRI
WKHVWDWHDFWLRQUHTXLUHPHQW$VQRWHGDERYHKRZHYHUZH
DIILUPRQRWKHUJURXQGVWKHGLVPLVVDORIWKHFODLPVDJDLQVWWKH
0D\RU
,,,&21&/86,21
)RUWKHIRUHJRLQJUHDVRQVZH$)),50WKHGHFLVLRQRIWKH
GLVWULFWFRXUW
7KH +RQRUDEOH $UWKXU - 7DUQRZ 8QLWHG 6WDWHV 'LVWULFW -XGJH IRU
WKH (DVWHUQ 'LVWULFW RI 0LFKLJDQ VLWWLQJ E\ GHVLJQDWLRQ

5(&200(1'(' )25 )8//7(;7 38%/,&$7,21
3XUVXDQW WR 6L[WK &LUFXLW 5XOH
(/(&7521,& &,7$7,21 )(' $SS 3 WK &LU
)LOH 1DPH DS
81,7('67$7(6&28572)$33($/6
)257+(6,;7+&,5&8,7
BBBBBBBBBBBBBBBBB
0(' &253 ,1&
3ODLQWLII$SSHOODQW
Y
&,7< 2) /,0$DQG'$9,' -
%(5*(5ERWKLQGLYLGXDOO\
DQGLQKLVFDSDFLW\DV0D\RU
RIWKH&LW\RI/LPD2KLR
'HIHQGDQWV$SSHOOHHV
;!

1
1R
$SSHDOIURPWKH8QLWHG6WDWHV'LVWULFW&RXUW
IRUWKH1RUWKHUQ'LVWULFWRI2KLRDW7ROHGR
1R²-DPHV*&DUU'LVWULFW-XGJH
$UJXHG0DUFK
'HFLGHGDQG)LOHG-XO\
%HIRUH0225(DQG&2/(&LUFXLW-XGJHV7$512:
'LVWULFW-XGJH

-- 1 of 10 --

0HG&RUS,QFY&LW\RI/LPDHWDO 1R
BBBBBBBBBBBBBBBBB
&2816(/
$5*8(' 6WHYHQ % :LQWHUV &/,1( &22.
:(,6(1%85*(57ROHGR2KLRIRU$SSHOODQW$QWKRQ\/
*HLJHU/LPD2KLRIRU$SSHOOHHV21%5,()-DPHV3
6LON-U63(1*/(51$7+$16213//7ROHGR2KLR
IRU$SSHOODQW$QWKRQ\/*HLJHU/LPD2KLRIRU$SSHOOHHV
BBBBBBBBBBBBBBBBB
23,1,21
BBBBBBBBBBBBBBBBB
.$5(1 1(/621 0225( &LUFXLW -XGJH 3ODLQWLII
$SSHOODQW 0HG &RUS DSSHDOV WKH GLVWULFW FRXUW¶V RUGHU
JUDQWLQJ VXPPDU\ MXGJPHQW LQ IDYRU RI 'HIHQGDQWV
$SSHOOHHV WKH &LW\ RI /LPD DQG 'DYLG - %HUJHU ERWK
LQGLYLGXDOO\DQGLQKLVRIILFLDOFDSDFLW\DV0D\RURIWKH&LW\
RI /LPD 2KLR FROOHFWLYHO\ WKH ³&LW\´ 0HG &RUS DQ
DPEXODQFH FRPSDQ\ FKDOOHQJHV WKH &LW\¶V SURSRVHG RQH
ZHHNVXVSHQVLRQRI0HG&RUSIURPUHFHLYLQJHPHUJHQF\
GLVSDWFKHVIURPWKH&LW\7KH&LW\¶VGHFLVLRQWRVXVSHQG0HG
&RUS ZDV EDVHG XSRQ DOOHJHG LQFLGHQWV LQYROYLQJ 0HG
&RUS¶VVORZUHVSRQVHWLPHVDQGLQDELOLW\WRORFDWHDGGUHVVHV
ZLWKLQ WKH &LW\ 0HG &RUS DOOHJHV WKDW WKH VXVSHQVLRQ
FRQVWLWXWHVDGHSULYDWLRQRISURSHUW\DQGOLEHUW\ZLWKRXWGXH
SURFHVVRIODZLQYLRODWLRQRIWKH)RXUWHHQWK$PHQGPHQW
8SRQWKH&LW\¶VPRWLRQIRUVXPPDU\MXGJPHQWWKHGLVWULFW
FRXUWFRQFOXGHGWKDW 0HG&RUSGLGQRWSRVVHVVDSURSHUW\
LQWHUHVWLQUHFHLYLQJFDOOVDQG QROLEHUW\LQWHUHVWZDV
LPSOLFDWHG EHFDXVH 0HG &RUS KDG QRW VKRZQ D ORVV RI
EXVLQHVV RSSRUWXQLWLHV RU GDPDJH WR UHSXWDWLRQ )RU WKH
UHDVRQVWKDWIROORZZH$)),50WKHGHFLVLRQRIWKHGLVWULFW
FRXUW
,)$&76$1'352&('85(
0HG&RUSSURYLGHVDPEXODQFHVHUYLFHVLQ1RUWKZHVW2KLR
,Q-DQXDU\RI0HG&RUSDSSOLHGIRUDQGUHFHLYHGD
1R 0HG&RUS,QFY&LW\RI/LPDHWDO
UHSXWDWLRQ RI D EXVLQHVV ZHUH WR EH FRQVWUXHG DV D
μGHSULYDWLRQ¶RIJRRGZLOO´ :HGHFOLQHWRHQGRUVHVXFK
DUHVXOW
0HG&RUSKDVQRWPDGHWKHVKRZLQJUHTXLUHGE\6XSUHPH
&RXUW DQG 6L[WK &LUFXLW SUHFHGHQW WR VWDWH D FODLP IRU
GHSULYDWLRQ RI D OLEHUW\ LQWHUHVW EDVHG XSRQ LQMXU\ WR
UHSXWDWLRQ,QSDUWLFXODU0HG&RUSKDVQRWVKRZQWKDWWKH
&LW\ GLVFORVHG LWV DOOHJDWLRQV SXEOLFO\ ZKLFK ZH WKLQN LV
HVVHQWLDOWRDQ\FODLPDOOHJLQJLQMXU\WREXVLQHVVUHSXWDWLRQ
ZKHWKHUFRXFKHGLQWHUPVRIDJRRGZLOOSURSHUW\LQWHUHVWRUD
OLYHOLKRRGOLEHUW\LQWHUHVW6HH:LPHU)6XSSDW
³$VVXPLQJDUJXHQGRWKDW3ODLQWLIILVDEOHWRGHPRQVWUDWHWKDW
ORVVRIJRRGZLOOLVDSURSHUW\LQWHUHVWZLWKLQWKHPHDQLQJRI
WKH'XH3URFHVV&ODXVHKHPXVWVWLOORIIHUWKLV&RXUWDWOHDVW
VRPH HYLGHQFH WKDW WKH DFWLRQV RI WKH VWDWH VHUYHG WR
VWLJPDWL]HKLPRUKLVEXVLQHVV´ 1RUKDV0HG&RUSVKRZQ
WKDWLWVIXWXUHEXVLQHVVRSSRUWXQLWLHVZRXOGEHIRUHFORVHGE\
WKH SURSRVHG VXVSHQVLRQ :H WKHUHIRUH FRQFOXGH WKDW
VXPPDU\MXGJPHQWZDVDSSURSULDWHDVWR0HG&RUS¶VGXH
SURFHVVFODLPVDOOHJLQJLQMXU\WRLWVEXVLQHVVJRRGZLOO
&&ODLPV$JDLQVWWKH0D\RU
+DYLQJ FRQFOXGHG WKDW 0HG &RUS KDV IDLOHG WR VKRZ D
GHSULYDWLRQ RI DQ\ FRQVWLWXWLRQDOO\ SURWHFWHG OLEHUW\ RU
SURSHUW\LQWHUHVWZHPXVWGLVPLVVWKHSODLQWLII¶VFODLPVDVWR
DOOGHIHQGDQWVVLQFH0HG&RUS¶VFODLPVDJDLQVWWKH0D\RU
DUH LGHQWLFDO WR LWV FODLPV DJDLQVW WKH &LW\ :H WKHUHIRUH
DIILUPWKHMXGJPHQWRIWKHGLVWULFWFRXUWDVWRDOOSDUWLHV:H
QRWHKRZHYHUWKDWZHGLVPLVV0HG&RUS¶VFODLPVDJDLQVW
WKH 0D\RU RQ GLIIHUHQW JURXQGV WKDQ WKRVH DVVHUWHG E\ WKH
GLVWULFWFRXUW7KHGLVWULFWFRXUWFRQFOXGHGWKDWWKHVHFODLPV
VKRXOG EH GLVPLVVHG UHJDUGOHVV RI ZKHWKHU D SURWHFWHG
SURSHUW\RUOLEHUW\LQWHUHVWKDGEHHQVKRZQ7KHGLVWULFWFRXUW
UHDVRQHG WKDW DQ LQGLYLGXDO FDSDFLW\ VXLW FRXOG QRW EH
PDLQWDLQHGDJDLQVWWKH0D\RU³EHFDXVH WKH0D\RUQHYHU
DFWHG LQ KLV LQGLYLGXDO FDSDFLW\ DQG WKH )RXUWHHQWK
$PHQGPHQWGRHVQRWDSSO\WRLQGLYLGXDODFWLRQV´ EHFDXVH
³>W@KH )RXUWHHQWK $PHQGPHQW SURWHFWV SURSHUW\ LQWHUHVW>V@

-- 2 of 10 --

0HG&RUS,QFY&LW\RI/LPDHWDO 1R
DVVHUWHGOLEHUW\LQWHUHVWDULVLQJIURPLQMXU\WRLWVUHSXWDWLRQ
7KHSURSHUW\GHSULYDWLRQRIZKLFK0HG&RUSFRPSODLQVLV
PHUHO\ WKH UHGXFWLRQ LQ WKH YDOXH RI LWV JRRGZLOO UHVXOWLQJ
IURPDQDOOHJHGLQMXU\WRLWVEXVLQHVVUHSXWDWLRQ:HKDYH
DOUHDG\H[SODLQHGWKDW0HG&RUSFDQQRWPDLQWDLQDOLEHUW\
LQWHUHVW FODLP XQGHU WKH OHJDO VWDQGDUGV DSSOLFDEOH WR GXH
SURFHVVFODLPVEDVHGXSRQGHIDPDWRU\LQMXULHVWRUHSXWDWLRQ
³7KHTXHVWLRQWKHQEHFRPHVZKHWKHUGDPDJHWRUHSXWDWLRQLV
WR EH WUHDWHG GLIIHUHQWO\ EHFDXVH WKH GDPDJH DIIHFWV WKH
SHUVRQ¶VEXVLQHVV´:0;7HFKV)GDW:HWKLQN
WKDW LW VKRXOG QRW -XVW DV LQMXULHV WR WKH UHSXWDWLRQ RI DQ
LQGLYLGXDOZLWKRXWPRUHGRQRWHVWDEOLVKDGHSULYDWLRQRID
FRQVWLWXWLRQDOO\SURWHFWHGOLEHUW\RUSURSHUW\ULJKW6LHJHUW
86 DW ³GDPDJH WR WKH UHSXWDWLRQ RI D EXVLQHVV
ZLWKRXWPRUHGRHVQRWULVHWRWKHOHYHORIDFRQVWLWXWLRQDOO\
SURWHFWHGSURSHUW\LQWHUHVW´:0;7HFKV)GDW
:HWKHUHIRUHDJUHHZLWKWKRVHFRXUWVWKDWKDYHFRQFOXGHGWKDW
³SURSHUW\´FODLPVEDVHGXSRQDOOHJHGGHSULYDWLRQVRIEXVLQHVV
JRRGZLOO UHVXOWLQJ IURP GHIDPDWRU\ VWDWHPHQWV VKRXOG EH
MXGJHGDFFRUGLQJWRWKHVWDQGDUGVDSSOLFDEOHWROLEHUW\LQWHUHVW
FODLPVEDVHGXSRQLQMXULHVWRUHSXWDWLRQ6HHHJLGDW
$P)DPLO\/LIH,QV&R)G WK&LU
&RDNOH\Y-DIIH)6XSSG 6'1<
³,WLVZHOOHVWDEOLVKHGKRZHYHUWKDWWKHLQWHUHVWRQZKLFK
SODLQWLIIVKHUHSULPDULO\UHO\²μEXVLQHVVUHSXWDWLRQ¶²IDOOV
RXWVLGHWKHSURWHFWLRQRIWKHGXHSURFHVVFODXVH´ FLWDWLRQ
RPLWWHG :LPHUY+5+RO]DSIHO)6XSS
('7H[ $QLQMXU\WRDEXVLQHVV¶VUHSXWDWLRQFRXOG
DOZD\VEHSUHVHQWHGDVDFODLPIRUORVWJRRGZLOOVLQFHWKH
ODWWHULVSDUWO\DIXQFWLRQRIUHSXWDWLRQDQGSXEOLFSUHMXGLFHV
6HH 6SD\G 1(G DW ,I ZH ZHUH WR UHFRJQL]H
LQMXULHVWREXVLQHVVUHSXWDWLRQDVDGLVWLQFWNLQGRISURSHUW\
GHSULYDWLRQ EXVLQHVVHV FRXOG HIIHFWLYHO\ FLUFXPYHQW WKH
FDUHIXOO\GHVLJQHGGRFWULQHVGHYHORSHGWROLPLWGXHSURFHVV
FODLPVDULVLQJIURPPHUHGHIDPDWLRQ6HH:0;7HFKV,QF
)GDW ³>7@KH6XSUHPH&RXUWVWUHVVHGLQWKH
FRQWH[W RI 3DXO Y 'DYLV WKH H[WHQW WR ZKLFK IHGHUDO ODZ
FRXOGVXEVXPHVWDWHWRUWODZLI†ZHUHWREHFRQVWUXHG
WRDOORZGDPDJHWRSHUVRQDOUHSXWDWLRQZLWKRXWPRUHWREH
EURXJKWDVDIHGHUDODFWLRQ7KHVDPHLVWUXHLIGDPDJHWRWKH
1R 0HG&RUS,QFY&LW\RI/LPDHWDO
OLFHQVHWRSURYLGHDPEXODQFHVHUYLFHVLQWKH&LW\RI/LPD
8QGHU † D RI WKH /LPD 0XQLFLSDO &RGH DQ
DPEXODQFHOLFHQVHLVUHTXLUHGWRHQJDJHLQWKH³EXVLQHVVRU
VHUYLFHRIWKHWUDQVSRUWDWLRQRISDWLHQWVXSRQWKHVWUHHWVDOOH\V
RURWKHUSXEOLFZD\VRUSODFHVRIWKH&LW\´$SSHOODQW¶V%U
([ $ &KDSWHU RI WKH 0XQLFLSDO &RGH VHWV IRUWK WKH
SURFHGXUHVDQGUHTXLUHPHQWVIRUREWDLQLQJDOLFHQVHWRRSHUDWH
DQDPEXODQFHVHUYLFHLQWKH&LW\7RREWDLQDQGPDLQWDLQD
OLFHQVH DPEXODQFH RSHUDWRUV PXVW DPRQJ RWKHU WKLQJV
GHPRQVWUDWHWKDWWKH\FDQUHVSRQGWRHPHUJHQF\FDOOVZLWKLQ
DVSHFLILHGWLPHIUDPH/,0$ 081 &2'(† D
$SSHOODQW¶V %U ([ $ $PEXODQFH RSHUDWRUV PXVW DOVR
GHPRQVWUDWH WKHLU FDSDFLW\ WR ³UHVSRQG WR PRUH WKDQ RQH
HPHUJHQF\ FDOO VLPXOWDQHRXVO\´ /,0$ 081 &2'(
† E $SSHOODQW¶V%U([$
7KH/LPD0XQLFLSDO&RGHDOVRSURYLGHVSURFHGXUHVIRUWKH
UHYRFDWLRQRUVXVSHQVLRQRIDQDPEXODQFHRSHUDWRU¶VOLFHQVH
6HFWLRQRIWKH&RGHVWDWHVLQUHOHYDQWSDUW
D 7KH/LFHQVH2IILFHUPD\VXVSHQGRUUHYRNHDOLFHQVH
UHTXLUHG E\ WKLV FKDSWHU IRU IDLOXUH RI D OLFHQVHH WR
FRPSO\DQGWRPDLQWDLQFRPSOLDQFHZLWKRUIRUYLRODWLRQ
RI WKLV FKDSWHU EXW RQO\ DIWHU ZDUQLQJ DQG VXFK
UHDVRQDEOH WLPH IRU FRPSOLDQFH DV PD\ EH VHW E\ WKH
/LFHQVH2IILFHU:LWKLQWKLUW\GD\VDIWHUDVXVSHQVLRQ
WKH OLFHQVHH VKDOO EH DIIRUGHG D KHDULQJ EHIRUH WKH
/LFHQVH2IILFHU

F 8SRQ VXVSHQVLRQ UHYRFDWLRQ RU WHUPLQDWLRQ RI DQ
DPEXODQFH OLFHQVH VXFK DPEXODQFH VKDOO FHDVH
RSHUDWLRQV DV VXFK DQG QR SHUVRQ VKDOO SHUPLW VXFK
DPEXODQFHWRFRQWLQXHRSHUDWLRQVDVVXFK
$SSHOODQW¶V%U([$
,Q/LPDHPHUJHQF\FDOOVUHFHLYHGIURP&LW\UHVLGHQWV
DUHGLVSDWFKHGWRDPEXODQFHFRPSDQLHVRQDURWDWLRQDOEDVLV
&LW\UHVLGHQWVGLDOLQJ³´WRUHFHLYHHPHUJHQF\VHUYLFHVDUH
URXWHGGLUHFWO\WRDGLVSDWFKV\VWHPORFDWHGLQWKH&LW\SROLFH

-- 3 of 10 --

0HG&RUS,QFY&LW\RI/LPDHWDO 1R
GHSDUWPHQW'HSHQGLQJXSRQWKHW\SHRIFDOOUHFHLYHGWKH
FDOOVDUHWKHQGLVSDWFKHGWRHLWKHUWKH&LW\SDUDPHGLFVHUYLFH
RUSULYDWHDPEXODQFHFRPSDQLHVOLFHQVHG WRRSHUDWHLQWKH
&LW\0HG&RUSFRQWHQGVWKDWLQ-DQXDU\RI0D\RU
%HUJHU LQIRUPHG 0HG &RUS WKDW WKH &LW\ ZRXOG GLVSDWFK
HYHU\ RWKHU FDOO UHFHLYHG E\ WKH &LW\¶V HPHUJHQF\
GLVSDWFKVHUYLFHWR0HG&RUS$FFRUGLQJWR0HG&RUSLW
KDV UHVSRQGHG WR RYHU FDOOV UHFHLYHG IURP WKH &LW\
GLVSDWFKHUVLQFHWKLVWLPH$OOSDUWLHVDJUHHWKDWDWDOOWLPHV
UHOHYDQW WR WKLV DSSHDO WKH &LW\ GLG QRW KDYH DQ\ ZULWWHQ
SROLF\ SURFHGXUH RU OHJLVODWLYH HQDFWPHQW JRYHUQLQJ WKH
PDQQHULQZKLFKWKH&LW\DOORFDWHGLWVFDOOVWRSULYDWH
DPEXODQFHFRPSDQLHV
2Q1RYHPEHU0D\RU%HUJHUVHQWDOHWWHUWR0HG
&RUSLQIRUPLQJWKHFRPSDQ\RIKLVGHFLVLRQWRVXVSHQGWKH
GLVSDWFKRIFDOOVWR0HG&RUSIRUDSHULRGRIRQHZHHN
7KH OHWWHU H[SODLQHG WKDW WKH GHFLVLRQ ZDV EDVHG XSRQ WKH
UHVXOWV RI WKH &LW\ )LUH &KLHI¶V LQYHVWLJDWLRQ RI HYHQWV
RFFXUULQJLQ2FWREHUDQGXSRQLQYHVWLJDWLRQVRIVLPLODU
LQFLGHQWVWKDWRFFXUUHGHDUOLHU7KH)LUH&KLHI¶VLQYHVWLJDWLRQ
UHSRUW ZDV HQFORVHG ZLWK WKH OHWWHU 7KH UHSRUW GLVFXVVHG
VHYHUDO FRPSODLQWV DJDLQVW 0HG &RUS PRVW RI ZKLFK
LQYROYHG0HG&RUSDPEXODQFHGULYHUVZKRZHUHXQDEOHWR
ORFDWHDGGUHVVHVZLWKLQWKH&LW\
8SRQUHFHLYLQJ0D\RU%HUJHU¶VOHWWHU0HG&RUSILOHGVXLW
LQWKH1RUWKHUQ'LVWULFWRI2KLRVHHNLQJWRHQMRLQWKH&LW\
IURP FDUU\LQJ RXW WKH SURSRVHG VXVSHQVLRQ 0HG &RUS
DVVHUWHG WKDW WKH SURSRVHG VXVSHQVLRQ DPRXQWHG WR D
GHSULYDWLRQRISURSHUW\DQGOLEHUW\ZLWKRXWGXHSURFHVVRIODZ
LQYLRODWLRQRIWKH)RXUWHHQWK$PHQGPHQW2Q1RYHPEHU
WKHGLVWULFWFRXUWJUDQWHGDWHPSRUDU\UHVWUDLQLQJRUGHU
HQMRLQLQJWKHVXVSHQVLRQ7KHSDUWLHVDSSDUHQWO\WKHQDJUHHG
WKDW WKH VXVSHQVLRQ ZRXOG QRW EH LPSOHPHQWHG XQWLO WKH
LQVWDQWVXLWZDVUHVROYHG2Q0D\WKH&LW\DQG
0D\RUPRYHGIRUVXPPDU\MXGJPHQW
,Q DQ RUGHU ILOHG RQ $XJXVW WKH GLVWULFW FRXUW
JUDQWHGVXPPDU\MXGJPHQWLQIDYRURIWKHGHIHQGDQWV7KH
1R 0HG&RUS,QFY&LW\RI/LPDHWDO
FODLPVWKDWWKHSURSRVHGVXVSHQVLRQZRXOGGHSULYHLWRILWV
UHSXWDWLRQ IRU VNLOO LQ WKH DPEXODQFH VHUYLFH LQGXVWU\ DQG
WKHUHIRUHFRQVWLWXWHVDGHSULYDWLRQRILWVSURSHUW\LQWHUHVWLQLWV
JRRGZLOO%HFDXVHZHILQGWKLVFODLPWREHLQGLVWLQJXLVKDEOH
IURP0HG&RUS¶VOLEHUW\LQWHUHVWFODLPEDVHGXSRQDOOHJHG
LQMXULHVWRLWVUHSXWDWLRQZKLFKZHKDYHDOUHDG\GHWHUPLQHG
WREHZLWKRXWPHULWZHOLNHZLVHUHMHFW0HG&RUS¶VFODLPWKDW
LW ZDV GHSULYHG RI LWV SURSHUW\ LQWHUHVW LQ LWV EXVLQHVV
JRRGZLOO
8QGHU2KLRODZ³JRRGZLOO´LVFRPSUHKHQVLYHO\GHILQHGDV
WKH DGYDQWDJH RU EHQHILW ZKLFK LV DFTXLUHG E\ DQ
HVWDEOLVKPHQW EH\RQG WKH PHUH YDOXH RI WKH FDSLWDO
VWRFN IXQGV RU SURSHUW\ HPSOR\HG WKHUHLQ LQ
FRQVHTXHQFH RI WKH JHQHUDO SXEOLF SDWURQDJH DQG
HQFRXUDJHPHQW ZKLFK LW UHFHLYHV IURP FRQVWDQW RU
KDELWXDOFXVWRPHUVRQDFFRXQWRILWVORFDOSRVLWLRQRU
FRPPRQFHOHEULW\RUUHSXWDWLRQIRUVNLOORUDIIOXHQFHRU
SXQFWXDOLW\RUIURPRWKHUDFFLGHQWDOFLUFXPVWDQFHVRU
QHFHVVLWLHV RU HYHQ IURP DQFLHQW SDUWLDOLWLHV RU
SUHMXGLFHV
6SD\GY7XUQHU*UDQ]RZ +ROOHQNDPS1(G
2KLR TXRWLQJ6725< &200(17$5,(6 21 7+(
/$: 2) 3$571(56+,3 † S WK (G 7KH
FRQFHSWRIJRRGZLOOJHQHUDOO\UHIHUVWRWKHYDOXHRIDEXVLQHVV
DV D JRLQJ FRQFHUQ DQG LV ³PHDVXUHG E\ WKH YDOXH RI WKH
EXVLQHVVRYHUDQGDERYHWKHYDOXHRILWVSK\VLFDOSURSHUW\´
$0 -85 ' *22' :,//† VHHDOVR:0;7HFKV
,QFY0LOOHU)G WK&LU HQEDQF
³(VVHQWLDOO\WKHJRRGZLOORIDEXVLQHVVLVLWVYDOXHDVDJRLQJ
FRQFHUQDQGLVPDGHXSRIPDQ\IDFWRUVVXFKDVORFDWLRQ
SDWURQDJHRIFXVWRPHUVUHODWLRQVZLWKVXSSOLHUVH[SHULHQFH
RIHPSOR\HHVHIIHFWLYHQHVVRIPDQDJHPHQWDQGPDQ\RWKHU
IDFWRUV´ $OWKRXJKDEXVLQHVV¶VUHSXWDWLRQZLWKWKHJHQHUDO
SXEOLFDIIHFWVWKHYDOXHRILWVJRRGZLOO³>U@HSXWDWLRQLVQRW
WKHHTXLYDOHQWRIWKHJRRGZLOORIDEXVLQHVV´,G
0HG&RUS¶VSURSHUW\FODLPEDVHGXSRQLQMXU\WRJRRGZLOO
IDLOVIRUWKHVDPHUHDVRQVGLVFXVVHGLQUHODWLRQWR0HG&RUS¶V

-- 4 of 10 --

0HG&RUS,QFY&LW\RI/LPDHWDO 1R
7KH IDFW WKDW WKH &LW\¶V DOOHJDWLRQV PLJKW EH GLVFORVHG DV D UHVXOW RI
WKH LQVWDQW OHJDO SURFHHGLQJV LV LQVXIILFLHQW WR VDWLVI\ WKH GLVFORVXUH
UHTXLUHPHQW 6HH %LVKRS 86 DW ³>6@LQFH WKH
FRPPXQLFDWLRQ ZDV PDGH LQ WKH FRXUVH RI D MXGLFLDO SURFHHGLQJ ZKLFK GLG
QRW FRPPHQFH XQWLO DIWHU SHWLWLRQHU KDG VXIIHUHG WKH LQMXU\ IRU ZKLFK KH
VHHNV UHGUHVV LW VXUHO\ FDQQRW SURYLGH UHWURDFWLYH VXSSRUW IRU LV FODLP $
FRQWUDU\ HYDOXDWLRQ ZRXOG SHQDOL]H IRUWKULJKW DQG WUXWKIXO
FRPPXQLFDWLRQ EHWZHHQ OLWLJDQWV ´
)XUWKHUPRUH0HG&RUSKDVIDLOHGWRSUHVHQWDQ\HYLGHQFH
EH\RQGWKHPHUHDVVHUWLRQVFRQWDLQHGLQLWVEULHIVWRVKRZ
WKDW WKH &LW\ GLVFORVHG LWV FRPSODLQWV DERXW 0HG &RUS¶V
VHUYLFHVWRWKHSXEOLF6XFKDVKRZLQJLVDQHVVHQWLDOHOHPHQW
RIDQ\)RXUWHHQWK$PHQGPHQWOLEHUW\FODLPEDVHGXSRQLQMXU\
WRUHSXWDWLRQ/XGZLJ)GDWVHHDOVR%LVKRS
86DW0HG&RUS¶VYHULILHGFRPSODLQWGRHVQRWDOOHJH
WKDWWKH&LW\GLVFORVHGLWVGHFLVLRQRUWKHUHDVRQVXQGHUO\LQJ
LWVGHFLVLRQWRDQ\WKLUGSDUW\1RUKDV0HG&RUSSRLQWHGWR
DQ\RWKHUHYLGHQFHLQWKHUHFRUGVXJJHVWLQJWKDWWKH&LW\¶V
DOOHJDWLRQVKDYHEHHQRUZLOOEHSXEOLFO\GLVFORVHG
)LQDOO\ 0HG &RUS GRHV QRW FRQWHQG WKDW WKH FKDUJHV
DJDLQVWLWDUHIDOVH$OWKRXJK0HG&RUSPDLQWDLQVWKDWLW
UHVSRQGHGZLWKLQWKHDFFHSWDEOHWLPHOLPLWVLQHDFKLQFLGHQW
FLWHGE\WKH&LW\LWGRHVQRWGLVSXWHWKHHYHQWVGHVFULEHGLQ
WKH)LUH&KLHI¶VUHSRUWVXJJHVWLQJWKDW0HG&RUSHPSOR\HHV
ZHUHXQIDPLOLDUZLWKWKH&LW\DQGXQDEOHWRORFDWHSDUWLFXODU
DGGUHVVHVRQDQXPEHURIRFFDVLRQV
,Q VXP 0HG &RUS KDV IDLOHG WR DOOHJH IDFWV WR VXSSRUW
VHYHUDOHVVHQWLDOHOHPHQWVRIDGXHSURFHVVFODLPEDVHGXSRQ
LQMXU\ WR LWV UHSXWDWLRQ :H WKHUHIRUH FRQFOXGH WKDW WKH
GLVWULFWFRXUWSURSHUO\DZDUGHGVXPPDU\MXGJPHQWWRWKH&LW\
DVWR0HG&RUS¶VDVVHUWHGOLEHUW\LQWHUHVWFODLP
3URSHUW\,QWHUHVWLQ*RRGZLOO
0HG &RUS IXUWKHU DVVHUWV WKDW WKH SURSRVHG VXVSHQVLRQ
ZRXOG GHSULYH LW RI D SURWHFWHG SURSHUW\ LQWHUHVW LQ LWV
EXVLQHVV JRRGZLOO 0HG &RUS REVHUYHV WKDW 2KLR ODZ
UHFRJQL]HVSURSHUW\ULJKWVLQEXVLQHVVJRRGZLOO0HG&RUS
1R 0HG&RUS,QFY&LW\RI/LPDHWDO
FRXUW FRQFOXGHG WKDW 0HG &RUS KDG QRW VKRZQ DQ\
FRQVWLWXWLRQDOSURSHUW\LQWHUHVWLQUHFHLYLQJGLVSDWFKHV
IURP WKH &LW\ EHFDXVH WKHUH ZDV QR HQIRUFHDEOH SROLF\ RU
SURFHGXUH UHVWUDLQLQJ WKH &LW\¶V GLVFUHWLRQ WR VXVSHQG WKH
GLVSDWFKHV 7KH FRXUW DOVR UHMHFWHG 0HG &RUS¶V DVVHUWHG
OLEHUW\LQWHUHVWLQLWVJRRGQDPHDQGUHSXWDWLRQEHFDXVHWKHUH
ZDVQRHYLGHQFHWKDWHLWKHUWKH&LW\¶VLQWHQWLRQWRVXVSHQG
0HG&RUSRULWVUHDVRQVIRUWKHVXVSHQVLRQZHUHGLVFORVHGWR
WKH SXEOLF )LQDOO\ WKH GLVWULFW FRXUW GLVPLVVHG DOO FODLPV
DJDLQVW0D\RU%HUJHU7KHFRXUWREVHUYHGWKDWWKH)RXUWHHQWK
$PHQGPHQW SURWHFWV DJDLQVW RQO\ VWDWH DFWLRQ VR 0D\RU
%HUJHUFRXOGQRWEHVXHGLQKLVLQGLYLGXDOFDSDFLW\7KHFRXUW
IXUWKHU REVHUYHG WKDW D VXLW DJDLQVW 0D\RU %HUJHU LQ KLV
RIILFLDO FDSDFLW\ VKRXOG EH WUHDWHG DV D FODLP DJDLQVW WKH
XQGHUO\LQJ HQWLW\ LQ WKLV FDVH WKH &LW\ RI /LPD DQG
GHWHUPLQHGWKDWWKHVXLWDJDLQVW0D\RU%HUJHULQKLVRIILFLDO
FDSDFLW\VKRXOGDOVREHGLVPLVVHG0HG&RUSILOHGDWLPHO\
QRWLFHRIDSSHDO
,,$1$/<6,6
$6WDQGDUGRI5HYLHZ
:HUHYLHZWKHGLVWULFWFRXUW¶VGHFLVLRQJUDQWLQJVXPPDU\
MXGJPHQWGHQRYR*HQ(OHF&RY*6LHPSHONDPS*PE+
&R )G WK &LU 6XPPDU\
MXGJPHQWLVSURSHURQO\LIWKHUHLVQRJHQXLQHLVVXHDVWRDQ\
PDWHULDOIDFWDQGWKHPRYLQJSDUW\LVHQWLWOHGWRDMXGJPHQWDV
DPDWWHURIODZ)(' 5 &,9 3 F 7KLVFRXUWPXVWORRN
EH\RQG WKH SOHDGLQJV DQG DVVHVV WKH SURRI WR GHWHUPLQH
ZKHWKHU WKHUH LV D JHQXLQH LVVXH IRU WULDO 6HH 0DWVXVKLWD
(OHF,QGXV&RY=HQLWK5DGLR&RUS86
7KHSURSHULQTXLU\LVZKHWKHUWKHHYLGHQFHLVVXFK
WKDW D UHDVRQDEOH MXU\ FRXOG UHWXUQ D YHUGLFW IRU WKH
QRQPRYLQJSDUW\6HH$QGHUVRQY/LEHUW\/REE\,QF
86 ³5XOH F PDQGDWHV WKH HQWU\ RI
VXPPDU\ MXGJPHQW DIWHU DGHTXDWH WLPH IRU GLVFRYHU\ DQG
XSRQPRWLRQDJDLQVWDSDUW\ZKRIDLOVWRPDNHDVKRZLQJ
VXIILFLHQWWRHVWDEOLVKWKHH[LVWHQFHRIDQHOHPHQWHVVHQWLDOWR
WKDWSDUW\¶VFDVHDQGRQZKLFKWKDWSDUW\ZLOOEHDUWKHEXUGHQ

-- 5 of 10 --

0HG&RUS,QFY&LW\RI/LPDHWDO 1R
RISURRIDWWULDO´&HORWH[&RUSY&DWUHWW86
,QFRQGXFWLQJWKHVXPPDU\MXGJPHQWDQDO\VLVWKLV
FRXUW PXVW YLHZ DOO LQIHUHQFHV WR EH GUDZQ IURP WKH
XQGHUO\LQJIDFWVLQWKHOLJKWPRVWIDYRUDEOHWRWKHQRQPRYLQJ
SDUW\6HH*HQ(OHF&R)GDW
% $OOHJHG'HSULYDWLRQVRI0HG&RUS¶V3URSHUW\DQG
/LEHUW\,QWHUHVWV
,QRUGHUWRHVWDEOLVKDSURFHGXUDOGXHSURFHVVFODLPLQD
† DFWLRQ ³SODLQWLIIV PXVW HVWDEOLVK WKUHH HOHPHQWV
WKDWWKH\KDYHDOLIHOLEHUW\RUSURSHUW\LQWHUHVWSURWHFWHG
E\WKH'XH3URFHVV&ODXVHRIWKH)RXUWHHQWK$PHQGPHQW
WKDWWKH\ZHUHGHSULYHGRIWKLVSURWHFWHGLQWHUHVWZLWKLQ
WKHPHDQLQJRIWKH'XH3URFHVV&ODXVHDQG WKDWWKHVWDWH
GLG QRW DIIRUG WKHP DGHTXDWH SURFHGXUDO ULJKWV SULRU WR
GHSULYLQJ WKHP RI WKHLU SURWHFWHG LQWHUHVW´ +DKQ Y 6WDU
%DQN)G WK&LU FHUWGHQLHG
86 7KH GLVWULFW FRXUW DZDUGHG VXPPDU\
MXGJPHQWWRWKHGHIHQGDQWVRQWKHEDVLVRILWVFRQFOXVLRQWKDW
0HG&RUSKDGIDLOHGWRVKRZDSURWHFWHGLQWHUHVWVXIILFLHQW
WRVDWLVI\WKHILUVWHOHPHQW2QDSSHDO0HG&RUSFKDOOHQJHV
WKH GHFLVLRQ RI WKH GLVWULFW FRXUW WKDW LW KDG DVVHUWHG QR
FRQVWLWXWLRQDOO\SURWHFWHGOLEHUW\RUSURSHUW\LQWHUHVW0HG
&RUSDVVHUWVLQHVVHQFHIRXUGLIIHUHQWLQWHUHVWV)LUVW0HG
&RUSDVVHUWVWKDWLWGRHVSRVVHVVDSURWHFWHGSURSHUW\LQWHUHVW
LQ UHFHLYLQJ GLVSDWFKHV IURP WKH &LW\ 6HFRQG 0HG
&RUSFODLPVWKDWWKHVXVSHQVLRQFRQVWLWXWHVDGHSULYDWLRQRI
LWVSURSHUW\LQWHUHVWLQLWVOLFHQVHWRRSHUDWHDQDPEXODQFHLQ
/LPD7KLUG0HG&RUSDVVHUWVWKDWWKHSURSRVHGVXVSHQVLRQ
ZRXOG GDPDJH LWV EXVLQHVV UHSXWDWLRQ DQG UHVXOW LQ WKH
GHSULYDWLRQ RI LWV OLEHUW\ LQWHUHVW LQ LWV DELOLW\ WR SXUVXH D
SURIHVVLRQ)RXUWK0HG&RUSFRQWHQGVWKDWWKHVXVSHQVLRQ
ZRXOG UHVXOW LQ D GHSULYDWLRQ RI LWV SURSHUW\ LQWHUHVW LQ LWV
EXVLQHVVJRRGZLOO
3URSHUW\,QWHUHVWLQ5HFHLYLQJ&DOOV
0HG &RUS FRQWHQGV WKDW LW GRHV SRVVHVV D SURWHFWHG
SURSHUW\LQWHUHVWLQUHFHLYLQJFDOOVIURPWKH&LW\GLVSDWFK
FHQWHU,Q%RDUGRI5HJHQWVY5RWK86 WKH
1R 0HG&RUS,QFY&LW\RI/LPDHWDO
TXRWLQJ 5RWK 86 DW 7KLUG ³WKH VWLJPDWL]LQJ
VWDWHPHQWV RU FKDUJHV PXVW EH PDGH SXEOLF´ ,G VHH DOVR
%LVKRS Y :RRG 86 ³)RXUWK WKH
SODLQWLIIPXVWFODLPWKDWWKHFKDUJHVPDGHDJDLQVWKLPZHUH
IDOVH´/XGZLJ)GDW$QG³>O@DVWO\WKHSXEOLF
GLVVHPLQDWLRQPXVWKDYHEHHQYROXQWDU\´,G
(YHQLIZHDVVXPHWKDW0HG&RUSKDVPDGHWKHQHFHVVDU\
WKUHVKROG VKRZLQJ WKDW LWV LQMXU\ WR UHSXWDWLRQ RFFXUUHG LQ
FRQQHFWLRQZLWKWKHORVVRIDJRYHUQPHQWDOULJKWRUEHQHILW
0HUWLN)GDWWKH&LW\ZRXOGVWLOOEHHQWLWOHGWR
VXPPDU\ MXGJPHQW )LUVW 0HG &RUS KDV IDLOHG WR
GHPRQVWUDWHDJHQXLQHLVVXHRIPDWHULDOIDFWDVWRZKHWKHUWKH
DOOHJHGLQMXU\WRLWVUHSXWDWLRQZRXOGIRUHFORVHLWVDELOLW\WR
VHHNIXWXUHEXVLQHVVRSSRUWXQLWLHVLQWKHDPEXODQFHVHUYLFH
LQGXVWU\ ³$ FKDUJH WKDW PHUHO\ PDNHV D SODLQWLII OHVV
DWWUDFWLYHWRRWKHUHPSOR\HUVEXWOHDYHVRSHQDGHILQLWHUDQJH
RI RSSRUWXQLW\ GRHV QRW FRQVWLWXWH D OLEHUW\ GHSULYDWLRQ´
/XGZLJ )G DW TXRWDWLRQ RPLWWHG VHH DOVR
:HGJHV/HGJHV )G DW ILQGLQJ QR OLEHUW\ LQWHUHVW
EHFDXVH &LW\¶V GHFLVLRQ WR EDQ WHPSRUDULO\ RQH W\SH RI
DPXVHPHQWJDPHRSHUDWHGE\WKHSODLQWLIIGLGQRWIRUHFORVH
SXUVXLQJOLYHOLKRRGLQWKHDPXVHPHQWJDPHLQGXVWU\ 0HG
&RUS KDV QRW VKRZQ WKDW LW ZLOO ORVH DQ\ EXVLQHVV
RSSRUWXQLWLHVRWKHUWKDQWKHRSSRUWXQLW\WRUHVSRQGWR
FDOOVGXULQJWKHVXVSHQVLRQ³7KHPHUHGHQLDORIDEXVLQHVV
RUHPSOR\PHQWRSSRUWXQLW\ZLWKRXWPRUHGRHVQRWGHSULYH
DSHUVRQRIDOLEHUW\LQWHUHVWIRUWKHDELOLW\WRREWDLQIXWXUH
EXVLQHVV RU HPSOR\PHQW RSSRUWXQLWLHV LV QRW MHRSDUGL]HG´
%DQQXP,QFY7RZQRI$VKODQG)G WK&LU
KROGLQJ RSHUDWRU RI D KDOIZD\ KRXVH GLG QRW VKRZ
GHSULYDWLRQRIOLEHUW\LQWHUHVWZKHUHWRZQZLWKGUHZDSSURYDO
IRUSDUWLFXODUORFDWLRQ 7KHUHLVQRHYLGHQFHLQWKHUHFRUGWR
VXJJHVW WKDW 0HG &RUS¶V RWKHU FOLHQWV ZLOO FHDVH XVLQJ LWV
VHUYLFHV DV D UHVXOW RI WKH VWLJPD IURP WKH SURSRVHG
VXVSHQVLRQ0RUHRYHUWKHUHFRUGLQGLFDWHVWKDWWKH&LW\LWVHOI
ZLOOUHVXPHXVHRI0HG&RUS¶VVHUYLFHVDIWHUWKHRQHZHHN
VXVSHQVLRQ

-- 6 of 10 --

0HG&RUS,QFY&LW\RI/LPDHWDO 1R
WKH SURSRVHG FDOO VXVSHQVLRQ ZRXOG FRQVWLWXWH DQ
HIIHFWLYHVXVSHQVLRQRUUHYRFDWLRQRILWVOLFHQVH
/LEHUW\,QWHUHVW5HSXWDWLRQ
0HG&RUSQH[WDOOHJHVWKDWWKHSURSRVHGVXVSHQVLRQZRXOG
GHSULYH LW RI LWV OLEHUW\ LQWHUHVW LQ SXUVXLQJ LWV FKRVHQ
RFFXSDWLRQ 0HG &RUS FODLPV WKDW WKH VXVSHQVLRQ ZRXOG
GDPDJHLWVEXVLQHVVUHSXWDWLRQDQGLPSDLULWVDELOLW\WRREWDLQ
EXVLQHVVLQWKHIXWXUH7KHGLVWULFWFRXUWUHMHFWHGWKLVFODLP
RQWKHJURXQGVWKDW0HG&RUSKDGQRWVKRZQWKDWHLWKHUWKH
&LW\¶V GHFLVLRQ RU LWV UHDVRQV ZHUH GLVFORVHG WR DQ\ WKLUG
SDUWLHVRUWKDWWKHVXVSHQVLRQZRXOGLPSDLUIXWXUHEXVLQHVV
RSSRUWXQLWLHV
7KH6XSUHPH&RXUWKDVVXJJHVWHGWKDWDSURWHFWHGOLEHUW\
LQWHUHVWPD\EHLPSOLFDWHGE\FHUWDLQLQMXULHVWRDSHUVRQ¶V
UHSXWDWLRQ RU JRRG QDPH ZKLFK WKUHDWHQ WR UHVWUDLQ WKH
LQGLYLGXDO¶V IUHHGRP WR SXUVXH EXVLQHVV RU HPSOR\PHQW
RSSRUWXQLWLHV:LVFRQVLQY&RQVWDQWLQHDX86
7KHVLWXDWLRQVLQZKLFKVXFKLQMXULHVWRUHSXWDWLRQ
ZLOOJLYHULVHWRD)RXUWHHQWK$PHQGPHQWFODLPDUHOLPLWHG
KRZHYHU7KH)RXUWHHQWK$PHQGPHQWGRHVQRWWUDQVIRUPDOO
WRUWODZGHIDPDWLRQFODLPVDJDLQVWWKHVWDWHLQWRFRQVWLWXWLRQDO
YLRODWLRQV6HH3DXOY'DYLV86
:HKDYHKHOGWKDWDQLQMXU\WRRQH¶VUHSXWDWLRQJRRGQDPH
KRQRU RU LQWHJULW\ FRQVWLWXWHV D GHSULYDWLRQ RI D OLEHUW\
LQWHUHVWRQO\ZKHQILYHHOHPHQWVDUHVDWLVILHG/XGZLJY%G
RI7UXVWHHVRI)HUULV6WDWH8QLY)G WK&LU
UHYLHZLQJ 6XSUHPH &RXUW DQG 6L[WK &LUFXLW
SUHFHGHQW )LUVWWKHDOOHJHGO\VWLJPDWL]LQJVWDWHPHQWVPXVW
EHPDGHLQFRQQHFWLRQZLWK³WKHORVVRIDJRYHUQPHQWDOULJKW
EHQHILWRUHQWLWOHPHQW´0HUWLNY%ODORFN)G
WK&LU VHHDOVR3DXO86DW7KHUH
LV QR FRQVWLWXWLRQDO OLEHUW\ LQWHUHVW LQ RQH¶V UHSXWDWLRQ
VWDQGLQJDORQH6LHJHUWY*LOOH\86
6HFRQGDSODLQWLIIDOOHJLQJDQLQMXU\WRDOLEHUW\LQWHUHVWPXVW
VKRZWKDWWKHGHIHQGDQWPDGHGHIDPDWRU\VWDWHPHQWV³WKDW
>ZRXOG@IRUHFORVH>@KLVIUHHGRPWRWDNHDGYDQWDJHRIRWKHU
HPSOR\PHQW RSSRUWXQLWLHV´ /XGZLJ )G DW
1R 0HG&RUS,QFY&LW\RI/LPDHWDO
6XSUHPH &RXUW HODERUDWHG XSRQ WKH NLQGV RI LQWHUHVWV
SURWHFWHG E\ WKH )RXUWHHQWK $PHQGPHQW 7KH &RXUW
H[SODLQHGWKDW³>W@RKDYHDSURSHUW\LQWHUHVWLQDEHQHILWD
SHUVRQFOHDUO\PXVWKDYHPRUHWKDQDQDEVWUDFWQHHGRUGHVLUH
IRULW+HPXVWKDYHPRUHWKDQDXQLODWHUDOH[SHFWDWLRQRILW
+HPXVWLQVWHDGKDYHDOHJLWLPDWHFODLPRIHQWLWOHPHQWWRLW´
,GDW7KH&RXUWIXUWKHUH[SODLQHGWKDWSURSHUW\LQWHUHVWV
DUH QRW FUHDWHG E\ WKH &RQVWLWXWLRQ LWVHOI EXW UDWKHU E\
³H[LVWLQJ UXOHV RU XQGHUVWDQGLQJV WKDW VWHP IURP DQ
LQGHSHQGHQW VRXUFH VXFK DV VWDWH ODZ ² UXOHV RU
XQGHUVWDQGLQJVWKDWVHFXUHFHUWDLQEHQHILWVDQGWKDWVXSSRUW
FODLPVRIHQWLWOHPHQWWRWKRVHEHQHILWV´,G$SSO\LQJWKLV
SULQFLSOHWKH5RWK&RXUWIRXQGWKDWDQXQWHQXUHGSURIHVVRU
ZKRVHDSSRLQWPHQWZDVIRURQO\RQH\HDUGLGQRWSRVVHVVD
SURWHFWHGSURSHUW\LQWHUHVWLQKLVFRQWLQXHGHPSOR\PHQWDIWHU
WKHWHUPRIKLVDSSRLQWPHQWH[SLUHG,GDW
%DVHGXSRQ5RWKDQGWKHFDVHVWKDWKDYHIROORZHGLWWKH
GLVWULFW FRXUW FRUUHFWO\ GHWHUPLQHG WKDW 0HG &RUS GLG QRW
SRVVHVV D SURWHFWHG SURSHUW\ LQWHUHVW LQ UHFHLYLQJ
GLVSDWFKHVIURPWKH&LW\:HKDYHSUHYLRXVO\UHFRJQL]HGWKDW
DSDUW\FDQQRWSRVVHVVDSURSHUW\LQWHUHVWLQWKHUHFHLSWRID
EHQHILWZKHQWKHVWDWH¶VGHFLVLRQWRDZDUGRUZLWKKROGWKH
EHQHILWLVZKROO\GLVFUHWLRQDU\5LFKDUGVRQY7RZQVKLSRI
%UDG\ )G WK &LU VHH DOVR
:HGJHV/HGJHVRI&DOLI,QFY&LW\RI3KRHQL[)G
WK &LU H[SODLQLQJ WKDW H[LVWHQFH RI D
UHDVRQDEOH H[SHFWDWLRQ RI HQWLWOHPHQW LV GHWHUPLQHG E\
ZKHWKHU ODQJXDJH RI WKH VWDWXWH FRQIHUULQJ WKH EHQHILW LV
IUDPHG LQ PDQGDWRU\ WHUPV DQG ZKHWKHU VWDWXWH LPSRVHV
VXEVWDQWLYH FRQVWUDLQWV RQ RIILFLDO GLVFUHWLRQ WR DZDUG WKH
EHQHILW ,IDQRIILFLDOKDVXQFRQVWUDLQHGGLVFUHWLRQWRGHQ\
WKH EHQHILW D SURVSHFWLYH UHFLSLHQW RI WKDW EHQHILW FDQ
HVWDEOLVKQRPRUHWKDQD³XQLODWHUDOH[SHFWDWLRQ´WRLW5RWK
86DW$SSO\LQJWKLVSULQFLSOHZHKDYHKHOGWKDW
QR SURWHFWHG SURSHUW\ LQWHUHVW LV LPSOLFDWHG ZKHQ XQGHU
FLUFXPVWDQFHVVLPLODUWRWKRVHSUHVHQWHGE\WKHLQVWDQWFDVH
WRZLQJFRPSDQLHVDUHUHPRYHGIURPDORFDOJRYHUQPHQW¶V
URWDWLRQDOGLVSDWFKOLVW/XFDVY0RQURH&RXQW\)G
WK&LU VHHDOVRHJ0RUOH\¶V$XWR%RG\

-- 7 of 10 --

0HG&RUS,QFY&LW\RI/LPDHWDO 1R
,QFY+XQWHU)G WK&LU KROGLQJ
WKDWQRSURSHUW\LQWHUHVWZDVFUHDWHGZKHUHSROLF\RIURWDWLQJ
FDOOVWRZUHFNHUFRPSDQLHVZDV³LVVXHGLQWKHVROHGLVFUHWLRQ
RIWKH6KHULII´DQGFRQFOXGLQJDIWHUDVXUYH\RIVLPLODU
FDVHV IURP RWKHU FLUFXLWV WKDW WKLV UHIOHFWHG XQDQLPRXV
SRVLWLRQ RI WKH FLUFXLWV ,Q /XFDV )G DW ZH
DIILUPHG WKH GLVPLVVDO RI VHYHUDO ZUHFNHU FRPSDQLHV¶ GXH
SURFHVV FODLPV ZKLFK DOOHJHG WKDW WKH FRXQW\ VKHULII KDG
LPSURSHUO\ UHPRYHG WKH FRPSDQLHV IURP WKH FRXQW\¶V
URWDWLRQDO GLVSDWFK OLVW DIWHU RZQHUV YRLFHG FRPSODLQWV
FKDUJLQJWKDWWKHVKHULIIZDVDGPLQLVWHULQJWKHOLVWLQDFRUUXSW
PDQQHU :H EDVHG WKLV GHFLVLRQ RQ WKH IDFW WKDW WKH
³3ODLQWLIIV F>RXOG@ SRLQW WR QR RUGLQDQFH FRQWUDFW RU RWKHU
μUXOHVRIPXWXDOO\H[SOLFLWXQGHUVWDQGLQJV¶WKDWVXSSRUW>HG@
WKHLUFODLPRIHQWLWOHPHQWWRUHPDLQRQWKHVWDQGE\OLVW´,G
TXRWLQJ3HUU\Y6LQGHUPDQQ86
$OWKRXJKWKHUHZHUHZULWWHQSROLFLHVJRYHUQLQJHOLJLELOLW\IRU
LQFOXVLRQRQWKHGLVSDWFKOLVWZHIRXQGWKDWWKHVHSROLFLHVGLG
QRWFUHDWHDSURSHUW\LQWHUHVWEHFDXVH³>W@KHZULWWHQSROLFLHV
²KRZHYHUXQIDLUWKH\PD\EH²H[SOLFLWO\SURYLGH>G@
WKDWDZUHFNHUFRPSDQ\PD\EHLPPHGLDWHO\UHPRYHGIURP
WKHOLVWXSRQPDNLQJDFRPSODLQWWRDQXQDXWKRUL]HGSHUVRQ´
,G ,Q RWKHU ZRUGV WKH SROLFLHV SURYLGHG XQFRQVWUDLQHG
GLVFUHWLRQ WR UHPRYH D FRPSDQ\ XSRQ WKH RFFXUUHQFH RI D
SDUWLFXODUHYHQW
7KHUHIRUHLQRUGHUWRDVVHUWDSURSHUW\LQWHUHVWLQUHFHLYLQJ
FDOOV 0HG &RUS PXVW SRLQW WR VRPH SROLF\ ODZ RU
PXWXDOO\H[SOLFLWXQGHUVWDQGLQJWKDWERWKFRQIHUVWKHEHQHILW
DQGOLPLWVWKHGLVFUHWLRQRIWKH&LW\WRUHVFLQGWKHEHQHILW
0HG &RUS KDV QRW PDGH WKH UHTXLUHG VKRZLQJ ,W LV
XQGLVSXWHG WKDW QR ZULWWHQ SROLF\ RU OHJLVODWLYH HQDFWPHQW
HVWDEOLVKHVDSURFHGXUHIRUPDLQWHQDQFHRIWKHGLVSDWFK
OLVW RU OLPLWV WKH GLVFUHWLRQ RI &LW\ RIILFLDOV WR UHPRYH
DPEXODQFH FRPSDQLHV IURP WKH OLVW ,Q WKLV VHQVH 0HG
&RUS¶V FODLP LV HYHQ ZHDNHU WKDQ WKH RQH ZH UHMHFWHG LQ
/XFDVLQZKLFKDZULWWHQSROLF\IRUPDLQWDLQLQJWKHGLVSDWFK
OLVWGLGH[LVWEXWGLGQRWSURYLGHIRUVXEVWDQWLYHOLPLWVRQWKH
VKHULII¶VGLVFUHWLRQWRUHPRYHZUHFNHUFRPSDQLHV
1R 0HG&RUS,QFY&LW\RI/LPDHWDO
$VVXPLQJWKDW0HG&RUSFRXOGDVVHUWDGXHSURFHVVFODLP
EDVHG XSRQ WKH LQGLUHFW ORVV LQ WKH YDOXH RI LWV DPEXODQFH
OLFHQVH WKDW ZRXOG UHVXOW IURP WKH SURSRVHG VXVSHQVLRQ
VXPPDU\ MXGJPHQW IRU WKH &LW\ ZRXOG QRQHWKHOHVV EH
DSSURSULDWH0HG&RUSKDVQRWDOOHJHGIDFWVVXIILFLHQWWR
VKRZWKDWWKHSURSRVHGVXVSHQVLRQZRXOGFRPSOHWHO\GHVWUR\
WKHYDOXHRILWVOLFHQVH$OWKRXJKRUGLQDULO\³WKHH[WHQWRIWKH
LQMXU\>WRWKHDVVHUWHGSURSHUW\LQWHUHVW@LVLUUHOHYDQWH[FHSW
IRUGHWHUPLQLQJZKDWSURFHVVLVGXH´FRXUWVKDYHW\SLFDOO\
UHFRJQL]HG LQGLUHFW LQMXULHV WR WKH YDOXH RI SURSHUW\ DV
FRQVWLWXWLRQDO ³GHSULYDWLRQV´ RQO\ ³ZKHQ VXFK LQGLUHFW
LQMXULHV HIIHFWLYHO\ UHQGHU WKH SURSHUW\ YDOXHOHVV´ :HOOV
)DUJR$UPRUHG6HUY&RUSY*HRUJLD3XE6HUY&RPP¶Q
)G WK&LU HPSKDVLVDGGHG UHMHFWLQJ
FODLP WKDW DSSURYDO RI D FHUWLILFDWLRQ IRU FRPSHWLWRU RI
SODLQWLII GHVWUR\HG YDOXH RI SODLQWLII¶V OLFHQVH ZLWKRXW GXH
SURFHVV VHHDOVR,QGXV6DIHW\(TXLS$VV¶QY(QYWO3URW
$JHQF\)G '&&LU 3LURORY&LW\
RI &OHDUZDWHU )G WK &LU
³>8@QOLNHWKHFDVHLQ5HHGZHFDQQRWVD\WKDWWKLVDFWLRQRQ
WKHSDUWRIWKHFLW\HYHQLIGRQHLQEDGIDLWKDVDOOHJHGKDG
WKHHIIHFWRIGHVWUR\LQJWKHYDOXHRI3LUROR¶VEXVLQHVV´ 7KH
HYLGHQFHLQWKHUHFRUGLVQRWVXIILFLHQWWRVXSSRUWDILQGLQJ
WKDW WKH ORVV RI GLVSDWFKHV ZRXOG UHQGHU 0HG &RUS¶V
OLFHQVH YDOXHOHVV HYHQ GXULQJ WKH OLPLWHG WHUP RI WKH
SURSRVHGVXVSHQVLRQ,QKLVDIILGDYLW0D\RU%HUJHUVWDWHG
+DG WKH VXVSHQVLRQ JRQH LQWR HIIHFW 0HG &RUS
ZRXOGKDYHKDGWKHULJKWWRUHVSRQGWRHPHUJHQF\FDOOV
PDGH GLUHFWO\ WR LWV SULYDWH WHOHSKRQH QXPEHU DQG LW
FRXOG VWLOO KDYH SURYLGHG DPEXODQFH VHUYLFHV WR RWKHU
FXVWRPHUV LW PD\ KDYH XQGHU FRQWUDFW VXFK DV QXUVLQJ
KRPHVHOGHUO\FDUHIDFLOLWLHVKRVSLWDOVRUIXQHUDOKRPHV
-$DW %HUJHU$II 0HG&RUSRIIHUVQRHYLGHQFHWR
GLVSXWHWKLVFODLP7KHUHFRUGFRQWDLQVQRHYLGHQFHWRVKRZ
WKDW GLVSDWFKHV FRQVWLWXWH DOO RU HYHQ WKH PDMRULW\ RI
0HG&RUS¶VEXVLQHVV$EVHQWVXFKDVKRZLQJ0HG&RUS
KDVQRWVKRZQDJHQXLQHLVVXHRIPDWHULDOIDFWDVWRZKHWKHU

-- 8 of 10 --

0HG&RUS,QFY&LW\RI/LPDHWDO 1R
SODLQWLII¶VFHUWLILFDWLRQWRZRUNDVDSHDFHRIILFHU VHHDOVR
:HVWERURXJK0DOO,QFY&LW\RI&DSH*LUDUGHDX)G
WK&LU FHUWGHQLHG86
5HHGY9LOODJHRI6KRUHZRRG)G WK&LU
,Q5HHGIRUH[DPSOHWKHSURSULHWRUVRIDPXVLFYHQXH
WKDW VHUYHG DOFRKRO FODLPHG WKDW YLOODJH RIILFLDOV GHSULYHG
WKHP RI WKHLU SURSHUW\ ULJKWV LQ WKHLU OLTXRU OLFHQVH E\
HQJDJLQJLQDSDWWHUQRIRIILFLDOKDUDVVPHQWZKLFKLQFOXGHG
³DUUHVWLQJ FXVWRPHUV DQG HPSOR\HHV RQ EDVHOHVV FKDUJHV
GHPDQGLQJSURRIRIDJHIURPFXVWRPHUVZKRREYLRXVO\ZHUH
PDQ\ \HDUV RYHU WKH OHJDO GULQNLQJ DJH DQG EULQJLQJ
JURXQGOHVV SURFHHGLQJV´ DQG ZKLFK XOWLPDWHO\ IRUFHG WKH
SODLQWLIIV WR FORVH WKHLU HVWDEOLVKPHQW DQG VXUUHQGHU WKHLU
OLTXRU OLFHQVH )G DW 7KH 6HYHQWK &LUFXLW
FRQFOXGHGWKDWDOWKRXJK³>W@KHGHIHQGDQWVQHYHUVXFFHHGHG
LQWDNLQJDZD\WKHSODLQWLIIV¶OLFHQVHHLWKHUE\UHYRFDWLRQRU
QRQUHQHZDO´YLOODJHRIILFLDOVPD\VWLOOKDYH³GHSULYHG´WKH
SODLQWLIIVRIWKHLUSURSHUW\LQWHUHVWVLQWKHOLTXRUOLFHQVH,G
DW7KHFRXUWH[SODLQHG
³>'@HSULYH´LQWKHGXHSURFHVVFODXVHFDQQRWMXVWPHDQ
³GHVWUR\´,IWKHVWDWHSUHYHQWV\RXIURPHQWHULQJ\RXU
KRXVHLWGHSULYHV\RXRI\RXUSURSHUW\ULJKWHYHQLIWKH
IHHVLPSOHUHPDLQVVHFXUHO\\RXUV$SURSHUW\ULJKWLV
QRW EDUH WLWOH EXW WKH ULJKW RI H[FOXVLYH XVH DQG
HQMR\PHQW
,G 7KH FRXUW GUHZ WKLV FRQFOXVLRQ LQ SDUW IURP UHODWHG
GRFWULQHVFRQFHUQLQJ)LIWK$PHQGPHQWWDNLQJVZKHUHLWLV
UHFRJQL]HG WKDW ³>L@I JRYHUQPHQW PDNHV \RXU KRXVH
XQLQKDELWDEOHWKDWLVDWDNLQJRI\RXUSURSHUW\HYHQLI\RX
UHWDLQFOHDUWLWOH´,G0HG&RUSXUJHVWKLVFRXUWWRIROORZ
WKHUHDVRQLQJRIWKHVHFDVHVDQGKROGWKDWE\GHQ\LQJ0HG
&RUS WKH ULJKW WR UHFHLYH FDOOV IURP WKH &LW\ IRU RQH
ZHHNWKHSURSRVHGVXVSHQVLRQZRXOGHIIHFWLYHO\GHSULYH0HG
&RUSRIWKHXVHDQGHQMR\PHQWRILWVSURSHUW\LQWHUHVWLQLWV
OLFHQVHZLWKRXWWKHSURFHGXUDOSURWHFWLRQVQRUPDOO\DWWHQGDQW
WRDVXVSHQVLRQRIDOLFHQVHXQGHUWKH/LPD0XQLFLSDO&RGH
:HILQG0HG&RUS¶VDUJXPHQWXQSHUVXDVLYH
1R 0HG&RUS,QFY&LW\RI/LPDHWDO
0HG &RUS DVVHUWV WKDW WKH SURYLVLRQV LQ WKH /LPD
0XQLFLSDO&RGHJRYHUQLQJHOLJLELOLW\IRUDQGLVVXDQFHDQG
UHYRFDWLRQRIDPEXODQFHOLFHQVHVHVWDEOLVKDSURSHUW\LQWHUHVW
LQUHFHLYLQJGLVSDWFKHV1RWKLQJLQWKH&RGHKRZHYHU
HYHQPHQWLRQVFDOOVRUWKHDOORFDWLRQRIGLVSDWFKHVE\
WKH&LW\$FFRUGLQJWRWKH&RGHUHFHLSWRIDOLFHQVHHQWLWOHV
WKH UHFLSLHQW WR HQJDJH LQ WKH ³EXVLQHVV RU VHUYLFH RI WKH
WUDQVSRUWDWLRQ RI SDWLHQWV XSRQ WKH VWUHHWV DOOH\V RU RWKHU
SXEOLF ZD\V RU SODFHV RI WKH &LW\´ /,0$ 081 &2'(
† D $SSHOODQW¶V%U([$%\LWVRZQWHUPVWKH
&RGHJXDUDQWHHVRQO\WKHULJKWWRGREXVLQHVVQRWWKHULJKWWR
UHFHLYHSDUWLFXODUEXVLQHVVRSSRUWXQLWLHVIURPWKH&LW\0HG
&RUSQRWHVWKDWWKH&RGHSHUWDLQVWRHPHUJHQF\FDOOV
LQVRIDUDVLWUHTXLUHVWKDWOLFHQVHHVSRVVHVVDFHUWDLQFDSDFLW\
WR UHVSRQG WR HPHUJHQF\ FDOOV $FFRUGLQJ WR 5RWK DQG LWV
SURJHQ\ KRZHYHU LW LV QRW HQRXJK WKDW WKH &RGH UHIHU WR
HPHUJHQF\FDOOVLQVWHDGLWPXVWFRQWDLQ³PXWXDOO\H[SOLFLW´
XQGHUVWDQGLQJVWKDWHVWDEOLVKDQ³HQWLWOHPHQW´WRUHFHLYHWKH
EHQHILW7KHUHLVQRH[SOLFLWJXDUDQWHHLQWKH&RGHWKDWDQ
DPEXODQFHOLFHQVHHZLOOUHFHLYHGLVSDWFKHVIURPWKH&LW\
VRWKH&RGHFDQQRWIRUPWKHEDVLVIRUDSURSHUW\ULJKWLQWKH
FRQWLQXHGUHFHLSWRIGLVSDWFKHV
0HG&RUSDOVRDVVHUWVWKDWDSURSHUW\LQWHUHVWLQUHFHLYLQJ
GLVSDWFKHVZDVFUHDWHGE\WKHRIILFLDODOEHLWXQZULWWHQ
PD\RUDOSROLF\RIDOWHUQDWLQJGLVSDWFKHVDPRQJOLFHQVHG
DPEXODQFHRSHUDWRUV7KH6XSUHPH&RXUWKDVUHFRJQL]HGWKDW
SURSHUW\LQWHUHVWVPD\EHFUHDWHGLQVRPHVLWXDWLRQVGHVSLWH
WKH DEVHQFH RI H[SOLFLW FRQWUDFWXDO RU OHJDO SURYLVLRQV
HVWDEOLVKLQJDFODLPRIHQWLWOHPHQW3HUU\86DW
)RUH[DPSOHXQGHUWUDGLWLRQDOSULQFLSOHVRIFRQWUDFWODZ
³>H@[SOLFLWFRQWUDFWXDOSURYLVLRQVPD\EHVXSSOHPHQWHGE\
RWKHU DJUHHPHQWV LPSOLHG IURP WKH SURPLVRU¶V ZRUGV DQG
FRQGXFWLQWKHOLJKWRIWKHVXUURXQGLQJFLUFXPVWDQFHV´,GDW
TXRWDWLRQ RPLWWHG 7KHUHIRUH 0HG &RUS FRXOG
HVWDEOLVKDSURWHFWHGSURSHUW\LQWHUHVWLILWFRXOGVKRZWKDWWKH
0D\RURUWKH&LW\HQJDJHGLQZRUGVRUFRQGXFWWKDWFUHDWHG
DQ LPSOLFLW EXW QRQHWKHOHVV OHJDOO\ ELQGLQJ REOLJDWLRQ WR
FRQWLQXHWRLQFOXGH0HG&RUSLQWKH&LW\¶VDOORFDWLRQRI
GLVSDWFKHV 2Q WKH UHFRUG KRZHYHU 0HG &RUS KDV QRW

-- 9 of 10 --

0HG&RUS,QFY&LW\RI/LPDHWDO 1R
0RUHRYHU 0HG &RUS¶V DVVHUWLRQ WKDW DPEXODQFH VHUYLFH SURYLGHUV
UHO\ XSRQ WKH 0D\RU¶V SROLF\ ZKHQ SURMHFWLQJ ZKHWKHU DQ DPEXODQFH
FRPSDQ\ ZLOO VXFFHHG LV LQVXIILFLHQW WR GHPRQVWUDWH D SURSHUW\ LQWHUHVW
,Q WKH DEVHQFH RI VRPH HQIRUFHDEOH OHJDO HQWLWOHPHQW WR FRQWLQXHG
SDUWLFLSDWLRQ LQ WKH &LW\¶V GLVSDWFK URWDWLRQ ³PHUH UHOLDQFH´ LV
LQVXIILFLHQW WR HVWDEOLVK D SURSHUW\ LQWHUHVW %DQQXP ,QF Y 7RZQ RI
$VKODQG )G WK &LU ³>1@RWKLQJ LQ WKH UHFRUG
VXJJHVWV WKDW $VKODQG FRXOG QRW KDYH XQLODWHUDOO\ ZLWKGUDZQ WKH DSSURYDO
DW DQ\ WLPH &HUWDLQO\ PHUH UHOLDQFH RQ WKH DSSURYDO GLG QRW HOHYDWH
%DQQXP¶V LQWHUHVW LQ LW WR DQ HQWLWOHPHQW´
DGGXFHGVXFKIDFWV7KHUHLVQRHYLGHQFHLQWKHUHFRUGIRU
H[DPSOHWKDWZRXOGVXSSRUWDFODLPWKDWDQLPSOLHGFRQWUDFW
ZDVFUHDWHGRUWKDWZRXOGGHILQHZKDWWKHWHUPVRIVXFKD
FRQWUDFWPLJKWKDYHEHHQ0HG&RUS¶VYHULILHGFRPSODLQW
DOOHJHVRQO\WKDW0D\RU%HUJHU³LQVWLWXWHGDSROLF\LQZKLFK
3ODLQWLII UHFHLYHG HYHU\ RWKHU FDOO´ -RLQW $SSHQGL[
³-$´ DW8QGHUSUHYDLOLQJODZKRZHYHUWKHH[LVWHQFHRI
DSROLF\²ZULWWHQRURWKHUZLVH²LVQRWHQRXJKWRFUHDWHD
SURSHUW\LQWHUHVW6HH/XFDV)GDW0RUOH\¶V
)GDW7KHWHUPVRIWKDWSROLF\PXVWFRQVWUDLQWKH
GLVFUHWLRQRIWKHRIILFLDOWRVXVSHQGWKHEHQHILW1RHYLGHQFH
RQWKHUHFRUGVXJJHVWVWKHH[LVWHQFHRIDQ\VXFKWHUPV
(IIHFWLYH5HYRFDWLRQ
0HG &RUS DOVR DUJXHV WKDW E\ GHSULYLQJ LW RI WKH
RSSRUWXQLW\WRUHFHLYHGLVSDWFKHVIURPWKH&LW\IRURQH
ZHHN WKH &LW\¶V SURSRVHG VXVSHQVLRQ ZRXOG HIIHFWLYHO\
GHSULYH0HG&RUSRILWVSURSHUW\LQWHUHVWLQLWVDPEXODQFH
OLFHQVHE\UHQGHULQJWKHOLFHQVHYDOXHOHVVGXULQJWKHWHUPRI
WKHVXVSHQVLRQ0HG&RUSFRQWHQGVWKDWWKHVXVSHQVLRQLV
PHUHO\ DQ DWWHPSW E\ WKH &LW\ WR VXVSHQG 0HG &RUS¶V
DPEXODQFH OLFHQVH ZLWKRXW DIIRUGLQJ 0HG &RUS WKH
SURFHGXUDOSURWHFWLRQVUHTXLUHGIRUVXVSHQVLRQVRIOLFHQVHV
XQGHU WKH /LPD 0XQLFLSDO &RGH 6HH /,0$ 081 &2'(
†$SSHOODQW¶V%U([$
7KH SURSHUW\ LQWHUHVW DVVHUWHG LQ WKLV LQVWDQFH LV 0HG
&RUS¶V LQWHUHVW LQ LWV OLFHQVH QRW LWV ULJKW WR UHFHLYH
GLVSDWFKHV 0HG &RUS GRHV SRVVHVV D SURWHFWHG SURSHUW\
1R 0HG&RUS,QFY&LW\RI/LPDHWDO
LQWHUHVWLQLWVOLFHQVHWRRSHUDWHDPEXODQFHV6HH6WLGKDPY
3HDFH2IILFHU6WDQGDUGV 7UDLQLQJ)G
WK&LU ³7KH6XSUHPH&RXUWKDVKHOGWKDWDOLFHQVH
WRSUDFWLFHRQH¶VFDOOLQJRUSURIHVVLRQLVDSURWHFWHGSURSHUW\
ULJKW´ 7KH/LPD0XQLFLSDO&RGHDXWKRUL]HVUHYRFDWLRQRU
VXVSHQVLRQ RI DPEXODQFH OLFHQVHV DV D SHQDOW\ IRU DQ
DPEXODQFHFRPSDQ\¶VIDLOXUHWRFRPSO\ZLWKWKHSURYLVLRQV
RI WKH &RGH 0RUHRYHU XQGHU WKH &RGH UHYRFDWLRQ RU
VXVSHQVLRQ FDQ RFFXU RQO\ DIWHU WKH FRPSDQ\ UHFHLYHV D
ZDUQLQJ DQG UHDVRQDEOH WLPH IRU FRPSOLDQFH /,0$ 081
&2'(† D $SSHOODQW¶V%U([$7KXVWKH/LPD
0XQLFLSDO&RGHLPSRVHVH[SOLFLWVXEVWDQWLYHFRQVWUDLQWVRQ
WKHGLVFUHWLRQRI/LPDRIILFLDOVWRUHYRNHRUVXVSHQGOLFHQVHV
WKHUHE\ FUHDWLQJ D OHJLWLPDWH FODLP RI HQWLWOHPHQW WR WKH
FRQWLQXHG HQMR\PHQW RI DPEXODQFH OLFHQVHV 6HH %DUU\ Y
%DUFKL86 ³,WLVFRQFHGHGWKDWXQGHU
1HZ<RUNODZ%DUFKL¶VOLFHQVHFRXOGKDYHEHHQVXVSHQGHG
RQO\ XSRQ D VDWLVIDFWRU\ VKRZLQJ WKDW KLV KRUVH KDG EHHQ
GUXJJHGDQGWKDWKHZDVDWOHDVWQHJOLJHQWLQIDLOLQJWRSUHYHQW
WKHGUXJJLQJ$VDWKUHVKROGPDWWHUWKHUHIRUHLWLVFOHDUWKDW
%DUFKL KDG D SURSHUW\ LQWHUHVW LQ KLV OLFHQVH VXIILFLHQW WR
LQYRNHWKHSURWHFWLRQRIWKH'XH3URFHVV&ODXVH´
7KH TXHVWLRQ KRZHYHU LV ZKHWKHU 0HG &RUS ZLOO EH
³GHSULYHG´ RI LWV SURSHUW\ LQWHUHVW LQ LWV OLFHQVH IRU WKH
SXUSRVHV RI WKH )RXUWHHQWK $PHQGPHQW LI WKH SURSRVHG
VXVSHQVLRQ WDNHV HIIHFW 7KHUH LV QR DOOHJDWLRQ WKDW 0HG
&RUS¶VOLFHQVHZLOOEHDFWXDOO\VXVSHQGHGRUUHYRNHGGXULQJ
WKHSHULRGRIVXVSHQVLRQ0HG&RUSZLOOEHDOORZHGWRUHWDLQ
LWVOLFHQVHDQGFRQGXFWEXVLQHVVLWVLPSO\ZLOOQRWUHFHLYH
GLVSDWFKHV IURP WKH &LW\ 1HYHUWKHOHVV D QXPEHU RI
FRXUWVRIDSSHDOVKDYHKHOGWKDWXQGHUFHUWDLQFLUFXPVWDQFHV
³>D@FWLRQVWDNHQE\WKH6WDWHZKLFKGHVWUR\WKHYDOXHRUXWLOLW\
RI D SURWHFWHG SURSHUW\ LQWHUHVW FRQVWLWXWH D )RXUWHHQWK
$PHQGPHQW GHSULYDWLRQ RI WKDW LQWHUHVW´ HYHQ WKRXJK WKH
VWDWH GRHV QRW IRUPDOO\ GHSULYH WKH RZQHU RI WLWOH WR WKH
SURSHUW\ 6WLGKDP )G DW KROGLQJ WKDW VWDWH
RIILFLDO¶V XOWUD YLUHV DFWLRQ LQ GLVVHPLQDWLQJ GDPDJLQJ
LQIRUPDWLRQ DERXW WKH SODLQWLII WKDW SUHYHQWHG KLP IURP
REWDLQLQJ HPSOR\PHQW FRQVWLWXWHG HIIHFWLYH UHYRFDWLRQ RI

-- 10 of 10 --