Wojcik v. Romulus

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

526( :2s&,.DQLQGLYLGXDO ;
5,&+$5' :2s&,.7UXVWHHIRU 
WKH5RVH:RMFLN/LYLQJ7UXVW 
 1R
DQG('*$5 ,1&GED 
)$11RI*DPSSjV@FRQWUDFW WKHHQWHUWDLQPHQWSHUPLWWKH\ZHUHQRWHQWLWOHGWRSURFHGXUDO
RUVXEVWDQWLYHGXHSURFHVVSURWHFWLRQVSULRUWRWKHGHQLDORI
WKHLUUHTXHVWV,QDGGLWLRQEHFDXVHWKHUHZDVQROHJLVODWLYH

DFWLRQLQWKLVFDVHWRFUHDWHDFKDQJHLQODZWKH&RXQFLOjV
7KH 0/&& LV YHVWHG ZLWK FRPSOHWH DXWKRULW\ RYHU WKH VDOH RI DFWLRQVGLGQRWDPRXQWWRDQXQFRQVWLWXWLRQDOLPSDLUPHQWRI
DOFRKROLF EHYHUDJHV ZLWKLQ WKH VWDWH 0 ,&+& 2167 DUW  †  0,&+ 
FRQWUDFWV  )LQDOO\ 3ODLQWLIIV KDYH IDLOHG WR VKRZ WKDW WKH
& 203 $:6
/  7KH 0/&&jV DGPLQLVWUDWLYH UHJXODWLRQV VWDWH WKDW
UHIXVDO WR WUDQVIHU WKH HQWHUWDLQPHQW SHUPLW FRQVWLWXWHG
QR HVWDEOLVKPHQW ZLWK D OLTXRU OLFHQVH VKDOO DOORZ GDQFLQJ RU RWKHU IRUPV
RI HQWHUWDLQPHQW ZLWKRXW D SHUPLW 0 ,&+ $ '0,1  & 2'( U  DQ\WKLQJ RWKHU WKDQ D SHUPLVVLEOH WLPH SODFH DQG PDQQHU
 6XSS 0LFKLJDQ ODZ DOVR UHTXLUHV DSSURYDO RI WKH FKLHI ORFDO ODZ UHVWULFWLRQ RQ WKHLU )LUVW $PHQGPHQW ULJKWV WR IUHHGRP RI
HQIRUFHPHQW RIILFHU WKH ORFDO OHJLVODWLYH ERG\ DQG WKH 0/&& IRU DOO VSHHFKDQGH[SUHVVLRQ:HWKHUHIRUH$)),50WKHGLVWULFW
DVVLJQPHQWV RI OLFHQVHV RU SHUPLWV 0 ,&+$ '0,1 2'(
& U  FRXUWjVJUDQWRI'HIHQGDQWVjPRWLRQIRUVXPPDU\MXGJPHQW
 6XSS DQG 
DQGLWVGHQLDORI3ODLQWLIIVjPRWLRQIRUVXPPDU\MXGJPHQW

7KH 0LFKLJDQ $GPLQLVWUDWLYH &RGH SURYLGHV WKDW RQSUHPLVHV OLTXRU
OLFHQVHHV mVKDOO QRW DOORZ GDQFLQJ    RU RWKHU SHUIRUPDQFH IRU SXEOLF
YLHZLQJ RQ WKH OLFHQVHG SUHPLVHV XQOHVV WKH RQSUHPLVHV OLFHQVHH KDV
EHHQ JUDQWHG DQ HQWHUWDLQPHQW RU GDQFHHQWHUWDLQPHQW SHUPLW E\ WKH
>0/&&@l 0 ,&+$ '0,1 & 2'(U 
 :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO 

WRWUDQVIHUWKHSHUPLW6LQFHWKHEDUKDGEHHQVKXWGRZQIRU ULJKWVDQGJHQHUDOLQWDQJLEOHVQRZRZQHGRUKHUHDIWHUDFTXLUHG
VRPHWLPH:RMFLNjVDWWHPSWWRUHYLYHDQDGXOWHQWHUWDLQPHQW >VLF@    DQG DOO    SHUVRQDO SURSHUW\ RI HYHU\ NLQG DQG
YHQXHWKHQLQYLRODWLRQRID&LW\RUGLQDQFHXQGHUVWDQGDEO\ GHVFULSWLRQQRZRZQHGRUKHUHDIWHUDFTXLUHG>VLF@ls$DW
GUHZFRQFHUQIURPERWKWKH&RXQFLODVZHOODVPHPEHUVRI 
WKHFRPPXQLW\3ODLQWLIIVKDYHQRWVKRZQDQ\UHDVRQZK\WKH
&LW\ZDVQRWHQWLWOHGWRDSSO\WKHRUGLQDQFHWRWKHLUWUDQVIHU %\sDQXDU\RI*DPSSZDVLQGHIDXOW6LQFH*DPSS
UHTXHVWV QRU KDYH WKH\ DGGXFHG DQ\ HYLGHQFH WKDW ZRXOG ZDV QR ORQJHU DEOH WR PDLQWDLQ OLDELOLW\ LQVXUDQFH LWV
VXJJHVW WKDW WKH DSSOLFDWLRQ RI WKH ]RQLQJ RUGLQDQFH ZDV RSHUDWLRQVZHUHVKXWGRZQE\WKH0/&&0UV:RMFLNWKHQ
GLVFULPLQDWRU\LQDQ\ZD\ ILOHGDFRPSODLQWLQWKH:D\QH&RXQW\&LUFXLW&RXUWVHHNLQJ
WR IRUIHLW *DPSSjV DVVHWV DQG WR REWDLQ D WHPSRUDU\
,Q DGGLWLRQ ZH EHOLHYH WKDW UHIXVLQJ WR WUDQVIHU D ORQH UHVWUDLQLQJRUGHUSURKLELWLQJ*DPSSIURPLPSDLULQJRUVHOOLQJ
HQWHUWDLQPHQWSHUPLWGXHWRLWVSUR[LPLW\WRFHUWDLQIDPLO\ WKHDVVHWVRIWKHEDUs$DW2Q6HSWHPEHU
RULHQWHG HVWDEOLVKPHQWV LV SHUKDSV WKH QDUURZHVW PHDQV WKH:D\QH&RXQW\&LUFXLW&RXUWHQWHUHGDGHIDXOWMXGJPHQW
SRVVLEOH RI VHUYLQJ WKH &LW\jV VXEVWDQWLDO LQWHUHVW LQ SXUVXDQWWRDVWLSXODWLRQE\WKH SDUWLHVUHDVVLJQLQJWR0UV
SUHYHQWLQJWKHVHFRQGDU\HIIHFWVRIDGXOWHQWHUWDLQPHQW6HH :RMFLNDOORIWKHDVVHWVRIWKHEDULQFOXGLQJLWVOLTXRUOLFHQVH
L@Q WKH HYHQW RI

SURKLELWV WKLV W\SH RI DFWLYLW\ ZLWKLQ D FHUWDLQ GLVWDQFH RI VXFK GHIDXOW %X\HU DJUHHV WR DVVLJQ LQWHUHVW ZKLFK LW PD\ KDYH LQ DQG WR
FHUWDLQ /LTXRU &RQWURO &RPPLVVLRQ OLFHQVHV SUHVHQWO\ LQ H[LVWHQFH DW WKH
VSHFLILHGIDPLO\RULHQWHGFRPPXQLW\LQVWLWXWLRQV7KH&LW\ WLPH RQ WKH SUHPLVHV VXEMHFW FRQVHQW DQG DSSURYDO WKH >0/&&@    l
LVQRWREOLJDWHGWRVLJQRIIRQDQ\DQGDOOIRUPRIH[SUHVVLRQ s$ DW 
UDWKHUDVZHKDYHDOUHDG\GLVFXVVHGLWPD\SODFHUHDVRQDEOH
UHVWULFWLRQV RQ VXFK H[SUHVVLRQ LQ WKH LQWHUHVW RI WKH 
$IWHU *DPSS GHIDXOWHG RQ WKH LQVWDOOPHQW FRQWUDFW 5RVH :RMFLN
FRPPXQLW\:HILQGWKLVOLPLWHGUHVWULFWLRQUHDVRQDEOHRQLWV FUHDWHG D UHYRFDEOH OLYLQJ WUXVW s$ DW  DQG DSSRLQWHG KHU
JUDQGVRQ 5LFKDUG :RMFLN DV WUXVWHH 0UV :RMFLN DOVR H[HFXWHG D SRZHU
 :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO 

0/&&LQIRUPHG5LFKDUG:RMFLNWKDWLQRUGHUWRUHTXHVWD &RXQFLOKDGDQLQGHSHQGHQWEDVLVIRULWVGHFLVLRQLWH[SUHVVO\
UHDVVLJQPHQWKHPXVWILUVWREWDLQWKHDSSURYDORIWKH&LW\RI VWDWHGWKDWWKHEDVLVIRULWVUHIXVDOWRWUDQVIHUWKHHQWHUWDLQPHQW
5RPXOXVDVZDVUHTXLUHGXQGHU0LFKLJDQVWDWHODZ5LFKDUG SHUPLW ZDV WKDW WKH EDU ZDV ORFDWHG ZLWKLQ  IHHW RI D
:RMFLNWKHQFRQWDFWHGWKH&LW\RI5RPXOXVDQGUHTXHVWHGLWV FKXUFKRUVFKRROLQYLRODWLRQRIWKHFLW\]RQLQJRUGLQDQFH
DSSURYDORIWKHUHDVVLJQPHQWRIWKHOLTXRUOLFHQVHDORQJZLWK 7KLVRUGLQDQFHZDVGHVLJQHGWRSUHYHQWQRWWRSOHVVGDQFLQJ
DOO RI WKH UHODWHG SHUPLWV GDQFH 6XQGD\ 6DOHV DQG EXW UDWKHU WKH GHOHWHULRXV VHFRQGDU\ HIIHFWV RI VXFK
HQWHUWDLQPHQWSHUPLWIURP*DPSSWR:RMFLN HQWHUWDLQPHQW IURP SHUPHDWLQJ WKH IDEULF RI WKH ORFDO
FRPPXQLW\,WLVQRWGHEDWDEOHWKDWWKH&LW\KDVDVXEVWDQWLDO
7KH 5RPXOXV &LW\ &RXQFLO PHW WR FRQVLGHU :RMFLNjV LQWHUHVW LQ SUHYHQWLQJ WKH VHFRQGDU\ HIIHFWV RI VXFK
UHTXHVW,QWKHSURFHVVRIREWDLQLQJDSSURYDORIWKHORFDOODZ HQWHUWDLQPHQWHVSHFLDOO\LQDUHDVQHDUVFKRROVFKXUFKHVRU
HQIRUFHPHQWDXWKRULWLHVWKH&RXQFLOGLVFRYHUHGWKDWGXULQJ UHVLGHQWLDOQHLJKERUKRRGV,QRUGHUWRVKRZWKDWWKHVHFRQGDU\
WKHEDUjVODVW\HDURIRSHUDWLRQ*DPSSIDLOHGWRSD\UHDODQG HIIHFWVRIH[SUHVVLYHFRQGXFWSRVHDWKUHDWWKHFLW\QHHGQRW
SHUVRQDO SURSHUW\ WD[HV WR WKH &LW\  2Q $XJXVW   mFRQGXFWQHZVWXGLHVRUSURGXFHHYLGHQFHLQGHSHQGHQWRIWKDW
5RPXOXV 3ROLFH &KLHI 5REHUW %URZQ UHFRPPHQGHG WR WKH DOUHDG\ JHQHUDWHG E\ RWKHU FLWLHV    VR ORQJ DV ZKDWHYHU
&LW\ WKDW LW WUDQVIHU WKH OLTXRU OLFHQVH DQG GDQFH SHUPLW WR HYLGHQFH WKH FLW\ UHOLHV XSRQ LV UHDVRQDEO\ EHOLHYHG WR EH
0UV:RMFLNLIVKHSDLGDOORI*DPSSjVRXWVWDQGLQJWD[HV UHOHYDQWWRWKHSUREOHPWKDWWKHFLW\DGGUHVVHVl&LW\RI(ULH
s$DW$WLWVUHJXODUPHHWLQJRQ6HSWHPEHU Y 3DSjV  86 DW  TXRWLQJ 5HQWRQ Y 3OD\WLPH
WKH&RXQFLODGRSWHGDUHVROXWLRQFRQGLWLRQDOO\DSSURYLQJWKH 7KHDWUHV,QF86,QWKLVUHVSHFWWKH
WUDQVIHURIWKH&ODVV&OLTXRUOLFHQVHZLWKDGDQFHSHUPLWIURP RUGLQDQFHDQGLWVDSSOLFDWLRQDUHERWKFRQWHQWQHXWUDO7KH
*DPSSWR:RMFLNVXEMHFWWR:RMFLNjVSD\PHQWRI*DPSSjV &RXQFLOjVDSSOLFDWLRQRIDQH[LVWLQJ]RQLQJRUGLQDQFHLVIDU
RXWVWDQGLQJUHDODQGSHUVRQDOSURSHUW\WD[HVs$DW IURP D VKRZLQJ RI WKH W\SH RI XQEULGOHG GLVFUHWLRQ WKDW
%XWWKH&RXQFLOUHIXVHG WR WUDQVIHUWKHHQWHUWDLQPHQW 3ODLQWLIIVFODLPDPRXQWHGWRFHQVRUVKLSDQGDSULRUUHVWUDLQW
SHUPLW7KH0/&&ZRXOGQRWDFFHSWDFRQGLWLRQDODSSURYDO RQ WKHLU ULJKWV WR IUHHGRP RI VSHHFK DQG H[SUHVVLRQ  6HH
RIWKHOLTXRUOLFHQVHDQGUHIXVHGWRWUDQVIHUWKHOLTXRUOLFHQVH ):3%6,QFY&LW\RI'DOODV86
RU DQ\ RI WKH SHUPLWV  WR :RMFLN  6XEVHTXHQWO\ :RMFLN
SDUWLDOO\ FRPSOLHG ZLWK WKH &RXQFLOjV GHPDQGV E\ SD\LQJ )RFXVLQJRQWKH&RXQFLOjVVWDWHPHQWWKDWWKH&LW\GLGQRW
*DPSSjVRXWVWDQGLQJSURSHUW\WD[HVKRZHYHUVKHUHIXVHGWR QHHGDmWKLUGlWRSOHVVEDU3ODLQWLIIVDUJXHWKDWLWLVmDUELWUDU\
SD\WKHSHUVRQDOWD[HVs$DW DQGFDSULFLRXVlWRILQGWKDWLWLVSHUPLVVLEOHIRUWZRVSHDNHUV
WRH[SUHVVDQLGHDEXWQRWDWKLUG+RZHYHUZKLOHWKHRWKHU
DGXOWHQWHUWDLQPHQWIDFLOLWLHVPHQWLRQHGE\WKH&RXQFLOZHUH
ORFDWHGQHDUWKHEDUWKH\ZHUHERWKRXWVLGHRIWKHIRRW
SHULPHWHUHVWDEOLVKHGE\WKH]RQLQJRUGLQDQFH0RUHRYHUDV
RI DWWRUQH\ OHWWHU QDPLQJ 5LFKDUG :RMFLN DV KHU mDWWRUQH\ LQ IDFWl ZLWK ZH DOOXGHG WR HDUOLHU WKH IDFW WKDW WKH &LW\ KDG SUHYLRXVO\
SRZHU WR WUDQVDFW DOO RI KHU EXVLQHVV s$ DW  DSSURYHGLVVXDQFHRIWKHHQWHUWDLQPHQWSHUPLWWR*DPSSLQ
 WKHODWHV\HWUHMHFWHG:RMFLNjVWUDQVIHUUHTXHVWVRPH
7KH 0/&& VHQW :RMFLN D ORFDO DSSURYDO UHTXLUHPHQW QRWLFH GDWHG \HDUVODWHULVQRFDXVHIRUFRQFHUQWKH]RQLQJRUGLQDQFHLQ
sXO\   TXHVWLRQ ZDV QRW HQDFWHG XQWLO sXQH  ZHOO DIWHU
 *DPSSREWDLQHGWKHSHUPLWEXWORQJEHIRUH3ODLQWLIIVVRXJKW
7KH &RXQFLOjV UHVROXWLRQ GLG QRW PHQWLRQ WKH 6XQGD\ VDOHV SHUPLW
 :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO 

VXFFHHGRQWKHPHULWVDQGZDVSURSHUO\UHMHFWHGE\WKHGLVWULFW :KLOHDZDLWLQJDFWLRQE\5RPXOXVRQWKHWUDQVIHUUHTXHVW
FRXUW :RMFLNHQWHUHGLQWRDFRQGLWLRQDOVDOHVFRQWUDFWZLWK(GJDU
,QFm(GJDUlIRUWKHVDOHRIWKHEDUDVZHOODVWKHUHDOHVWDWH
' )UHHGRPRI6SHHFK&ODLP XSRQZKLFKWKHEDULVORFDWHG(QIRUFHPHQWRIWKLVFRQWUDFW
ZDVPDGHVXEMHFWWR:RMFLNjVDELOLW\WRWUDQVIHUWKHOLTXRU
3ODLQWLIIVDOVRFRQWHQGWKDWWKH&LW\jVUHIXVDOWRWUDQVIHUWKH OLFHQVHDQGDOORIWKHSHUPLWVWR(GJDU(GJDUWKHQILOHGDQ
HQWHUWDLQPHQW SHUPLW ZDV D IRUP RI FRQWHQWEDVHG DSSOLFDWLRQZLWKWKH0/&&WRWUDQVIHUWKHOLTXRUOLFHQVHDQG
GLVFULPLQDWLRQLQYLRODWLRQRIWKHLU)LUVW$PHQGPHQWULJKWVWR DOORIWKHSHUPLWVIURP:RMFLNWR(GJDUs$DW$W
IUHHGRPRIVSHHFKDQGH[SUHVVLRQ:HILQGQRVXSSRUWIRU WKLV SRLQW WKH PXOWLSOH WUDQVIHU UHTXHVWV FUHDWHG D WZRVWHS
WKLVFODLP:KLOHLWLVFOHDUWKDWWRSOHVVRUQXGHGDQFLQJLVD SURFHVVILUVWWUDQVIHURIWKHOLTXRUOLFHQVHDQGWKHUHODWHG
SURWHFWHGIRUPRIH[SUHVVLRQ%DUQHVY*OHQ7KHDWHU,QF SHUPLWVIURP*DPSSWRWKH:RMFLN7UXVWVHFRQGDWUDQVIHU
 86'/6,QFY&LW\RI&KDWWDQRRJD)G RIWKHVDPHIURP:RMFLNWR(GJDU7KH5RPXOXV&LW\3ROLFH
WK&LUJRYHUQPHQWDOHQWLWLHVPD\LPSRVH 'HSDUWPHQWVXEVHTXHQWO\FRQGXFWHGDQLQYHVWLJDWLRQRI(GJDU
UHDVRQDEOH UHVWULFWLRQV RQ WKH WLPH SODFH RU PDQQHU RI DQG:RMFLN2QsXQHWKHSROLFHFKLHIVHQWDOHWWHUWR
RWKHUZLVHSURWHFWHGVSHHFKLIWKRVHUHVWULFWLRQVKDYHDQ WKH&LW\RI5RPXOXVUHIHUHQFLQJLWVHDUOLHUUHFRPPHQGDWLRQ
LQGHSHQGHQWEDVLVQRWUHODWHGWRWKHFRQWHQWRIWKDWVSHHFK IRUFRQGLWLRQDODSSURYDORIWKHUHTXHVWWRWUDQVIHUWKHOLTXRU
DUHQDUURZO\WDLORUHGWRVHUYHDVLJQLILFDQWJRYHUQPHQWDO OLFHQVH DQG ZKDW WKH SROLFH FKLHI WHUPHG D mGDQFH
LQWHUHVWDQGOHDYHRSHQDOWHUQDWLYHFKDQQHOVRIH[SUHVVLRQ HQWHUWDLQPHQW SHUPLWl IURP *DPSS WR :RMFLN  s$ DW
RUFRPPXQLFDWLRQRIWKHLQIRUPDWLRQ&LW\RI(ULHY3DSjV 7KLVOHWWHUPHQWLRQHGWKDWLQOLJKWRIWKHIDFWWKDWWKH
86:DUGY5RFN$JDLQVW5DFLVP86 0/&&ZRXOGQRWDFFHSWVXFKDFRQGLWLRQDOWUDQVIHUWKH&LW\
 RI5RPXOXV$VVHVVRUDQG7UHDVXUHU2IILFHVKDGGHWHUPLQHG
WKDW QRWKLQJ ZRXOG EH JDLQHG E\ DWWHPSWLQJ WR FROOHFW
3ODLQWLIIVGRQRWGLUHFWO\FRQWHVWWKHYDOLGLW\RIWKH5RPXOXV *DPSSjVRXWVWDQGLQJSHUVRQDOSURSHUW\WD[HVIURP:RMFLN
]RQLQJRUGLQDQFH,QVWHDGWKH\FODLPWKDWWKHRUGLQDQFHKDV $V D UHVXOW WKH SROLFH FKLHI UHFRPPHQGHG XQFRQGLWLRQDO
EHHQDSSOLHGLQDGLVFULPLQDWRU\DQGDUELWUDU\IDVKLRQ:H DSSURYDORIVWHSRQHWUDQVIHURIWKHOLTXRUOLFHQVHDQGWKH
DUH XQSHUVXDGHG E\ 3ODLQWLIIVj FRQWHQWLRQ  $W WKH KHDUW RI mGDQFHHQWHUWDLQPHQWSHUPLWlIURP*DPSSWR:RMFLN,QD
3ODLQWLIIVj)LUVW$PHQGPHQWFODLPLVWKHLUDUJXPHQWWKDWWKH VHSDUDWHOHWWHUWKHSROLFHFKLHIDOVRFRQVLGHUHGWKHUHTXHVWHG
&LW\jVGHFLVLRQQRWWRWUDQVIHUWKHHQWHUWDLQPHQWSHUPLWZDVDQ WUDQVIHURIDOLTXRUOLFHQVHZLWKmGDQFHHQWHUWDLQPHQWSHUPLWl
DWWHPSW WR VWLIOH WKHLU FKRVHQ IRUP RI H[SUHVVLRQDGXOW IURP :RMFLN WR (GJDU  ,Q WKDW OHWWHU WKH SROLFH FKLHI
HQWHUWDLQPHQW,WGRHVDSSHDUWKDWWKH&RXQFLOPHPEHUVKDG UHFRPPHQGHGWKDWWKH&LW\GHWHUPLQHZKHWKHUGHQLDORIWKH
VRPH DQWLSDWK\ WRZDUG DOORZLQJ DQRWKHU WRSOHVV EDU  2QH UHTXHVWZRXOGEHDSSURSULDWHJLYHQ(GJDUjVLQWHQWWRRSHUDWH
&LW\&RXQFLOPHPEHUVWDWHGm:HGRQjWQHHGWRWXUQ>WKHEDU@ D ORXQJH RIIHULQJ WRSOHVV IHPDOH HQWHUWDLQPHQW LQ FORVH
LQWRWKHWKLUGWRSOHVVEDULQWRZQ,WGRHVQjWILWLQWKLVWRZQ SUR[LPLW\ WR D FKXUFK DQG WKH ORFDWLRQ RI WZR VLPLODU
LWGRHVQjWEHORQJWRWKLVWRZQDQG,WKLQN,VSHDNIRUWKHUHVW
RIXVKHUHls$DW3ODLQWLIIVFLWHWKLVDQG
VLPLODU VWDWHPHQWV DV HYLGHQFH RI WKH &RXQFLOjV JHQHUDO 
7KH UHFRUG LV UHSOHWH ZLWK FRQIXVLQJ UHIHUHQFHV WR D GDQFH SHUPLW
DYHUVLRQWRZDUGDGXOWHQWHUWDLQPHQWDQGDQDOOHJHGDWWHPSWWR HQWHUWDLQPHQW DQG D GDQFHHQWHUWDLQPHQW SHUPLW %XW WKH SDUWLHV KDYH
UHJXODWH WKH FRQWHQW RI H[SUHVVLYH VSHHFK  +RZHYHU WKH DJUHHG WKDW WKH RQO\ PDWWHU FXUUHQWO\ LQ GLVSXWH LV WKH WUDQVIHU RI WKH
HQWHUWDLQPHQW SHUPLW
 :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO 

HVWDEOLVKPHQWVZLWKLQRQHPLOHRIWKHEDUs$DW $WWHPSWLQJ WR FKDUDFWHUL]H WKH &RXQFLOjV UHVROXWLRQ DV D
,QKLVVXPPDU\WKHSROLFHFKLHIVWDWHGKLVEHOLHIWKDWLWZRXOG OHJLVODWLYH DFW 3ODLQWLIIV IRFXV RQ WKH IDFW WKDW WKH &LW\
EHLQWKH&LW\jVEHVWLQWHUHVWLIWKH(GJDUWUDQVIHUUHTXHVWZHUH &RXQFLOLVWKHOHJDOOHJLVODWLYHERG\IRUWKH&LW\RI5RPXOXV
GHQLHGLQZKROHRUWKDWWKHHQWHUWDLQPHQWSHUPLWDWOHDVWEH DQGWKDWWKH&RXQFLOKDGSUHYLRXVO\DSSURYHGWKHLVVXDQFHRI
GHQLHGs$DW DQHQWHUWDLQPHQWSHUPLWIRU*DPSS7KH\FODLPWKDWWKH&LW\
RI 5RPXOXV KDG QR DXWKRULW\ WR VXVSHQG RU UHYRNH DQ
2QsXO\WKH5RPXOXV&LW\&RXQFLOFRQVLGHUHGWKH HQWHUWDLQPHQW SHUPLW  7KXV 3ODLQWLIIV FRQWHQG WKDW D
WUDQVIHUUHTXHVWV'XULQJWKHPHHWLQJWKH&RXQFLOVWDWHGWKDW UHYRFDWLRQRUGHQLDORIWKHSHUPLWmDPRXQWHGWRDGHYLDWLRQ
LWKDGRULJLQDOO\DSSURYHGWKHLVVXDQFHRIWKHHQWHUWDLQPHQW IURP WKH ODZ DQG WKHUHIRUH FRQVWLWXWHV D µFKDQJH RI ODZj
SHUPLWWR*DPSSLQRQWKHEDVLVRIUHSUHVHQWDWLRQVWKDW XQGHUWKH&RQWUDFW&ODXVHl%ULHIIRU$SSHOODQWVDW
LWZRXOGEHXVHGIRUSXUSRVHVRIDPDOHUHYXH7KH&RXQFLO %XW3ODLQWLIIVjDUJXPHQWVDUHPRVWO\FLUFXODUDQGFRQFOXVRU\
DQWLFLSDWHGWKDW*DPSSmZRXOGSUREDEO\XVHWKLVSHUPLWRQFH $V ZH KDYH DOUHDG\ GLVFXVVHG WKH UHTXHVWV WR WUDQVIHU WKH
D\HDU$QGWKLVRQFHD\HDUZRXOGEHGXULQJGHHUVHDVRQ HQWHUWDLQPHQW SHUPLW ZHUH HVVHQWLDOO\ UHTXHVWV IRU WKH
ZKHQWKHPHQZHQWRIIWRGHHUKXQW>@WKH\ZRXOGEULQJLQ DVVLJQPHQWDQHZRIDQHQWHUWDLQPHQWSHUPLWUHTXHVWVRYHU
PDOH GDQFHUV LQ IRU WKLV VSHFLILF WLPH IRU WKH ZRPHQ WKDW ZKLFKWKH&LW\&RXQFLOZDVOHJDOO\REOLJDWHGDQGDXWKRUL]HG
>ZHUH@OHIW>DW@KRPHls$DW7KH&RXQFLOH[SUHVVHG WR H[HUFLVH LWV GLVFUHWLRQ E\ HQIRUFLQJ WKH PXQLFLSDO
FRQFHUQV UHJDUGLQJ (GJDUjV LQWHQW WR RSHUDWH DV D EXVLQHVV RUGLQDQFH
HQWLW\FDOOHGm)DQQ\jVlWKDWZRXOGSURYLGHFRQWLQXRXVWRSOHVV
HQWHUWDLQPHQWFRQWUDU\WRWKH&RXQFLOjVRULJLQDOLQWHQW7KH ,QRQHSRLQWLQWKHLUEULHI3ODLQWLIIVDOOHJHWKDWWKHSUHYLRXV
&RXQFLOWDEOHGWKHLVVXHRIWKHWUDQVIHUUHTXHVWVSHQGLQJDQ JUDQW RI DQ HQWHUWDLQPHQW SHUPLW WR *DPSS FRQVWLWXWHG D
LQYHVWLJDWLRQE\WKHFLW\DWWRUQH\RQZKHWKHUWKH\VKRXOGEH ]RQLQJ YDULDQFH ZKLFK KDG QHYHU EHHQ GLVFRQWLQXHG  %XW
DSSURYHG 3ODLQWLIIV KDYH QRW SURYLGHG DQ\ GRFXPHQWDWLRQ RU OHJDO
DXWKRULW\WRVXSSRUWWKLVFODLP7KH5RPXOXV&LW\&RXQFLO
$WDUHJXODUPHHWLQJKHOGRQ$XJXVWWKH&RXQFLO VSHFLILFDOO\ GHQLHG WUDQVIHU RI WKH HQWHUWDLQPHQW SHUPLW
DJDLQFRQVLGHUHGWKHWUDQVIHUUHTXHVWV7KH&RXQFLO6HFUHWDU\ EHFDXVHLWIRXQGWKDWWKHSHUPLWZRXOGYLRODWHDQRUGLQDQFH
VWDWHG SURKLELWLQJ WKH ORFDWLRQ RI FDEDUHWV ZLWKLQ  IHHW RI D
FKXUFKVFKRROEXLOGLQJRUUHVLGHQWLDOQHLJKERUKRRG7KLV
7KLVLVDWZRSDUWWUDQVIHU7KHILUVWSDUWLVWRWUDQVIHU RUGLQDQFHZDVDGRSWHGRQsXQHORQJEHIRUHERWK
RZQHUVKLSRIWKHFODVV&OLFHQVHGEXVLQHVVZLWKWKH WKH2FWREHUVHFXULW\DJUHHPHQWEHWZHHQ:RMFLNDQG
GDQFH DQG HQWHUWDLQPHQW SHUPLW IURP *DPS >VLF@ *DPSS SURYLGLQJ IRU UHDVVLJQPHQW RI WKH HQWHUWDLQPHQW
(QWHUSULVHV WR >WKH@ 5RVH :RMDFN >VLF@ OLYLQJ WUXVW SHUPLW LQ WKH HYHQW RI GHIDXOW DQG WKH FRQGLWLRQDO VDOHV
5LFKDUG3:RMDFN>VLF@WUXVWHH7KHVHFRQGSDUWRI DJUHHPHQW EHWZHHQ :RMFLN DQG (GJDU  7KHUHIRUH WKH
WKHUHTXHVWZRXOGEHWRQR,jPVRUU\%\FRXQFLOjV &RXQFLOjVGHFLVLRQQRWWRUHDVVLJQWKHHQWHUWDLQPHQWSHUPLW
UHVROXWLRQFRXQFLOPDGHDPRWLRQQRWWRWUDQVIHU ZDVQRWDFKDQJHLQODZEXWPHUHO\DQDSSOLFDWLRQRIH[LVWLQJ
WKH HQWHUWDLQPHQW SHUPLW DORQJ ZLWK WKLV   ZLWK WKLV ODZ WKDW SUHGDWHG WKH FRQWUDFWXDO UHODWLRQVKLSV DW LVVXH
UHTXHVW7KHVHFRQGSDUWRIWKHWUDQVIHUWKHQZRXOGEH +DYLQJIDLOHGWRPHHWWKHILUVWSURQJRIWKH(QHUJ\5HVHUYHV
WRWUDQVIHULWIURPWKH5RVH:RMDFN>VLF@OLYLQJWUXVWZLWK *URXSWHVWDQGWKHVHFRQGSURQJRIWKH*HQHUDO0RWRUVY
5RPHLQWHVW3ODLQWLIIVjLPSDLUPHQWRIFRQWUDFWVFODLPFDQQRW
 :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO 

7KH6XSUHPH&RXUWKDVUHFRJQL]HGWKUHHFRPSRQHQWVWRWKH 5LFKDUG3:RMDFN>VLF@WUXVWHHWR(GJDU,QFRUSRUDWHG
LQTXLU\ZKHWKHUDFKDQJHLQVWDWHODZKDVFUHDWHGDVXEVWDQWLDO ZLWKWKHGDQFHDQGHQWHUWDLQPHQWSHUPLW
LPSDLUPHQWRIDFRQWUDFWXDOUHODWLRQVKLSDZKHWKHUWKHUHLV
DFRQWUDFWXDOUHODWLRQVKLSEZKHWKHUDFKDQJHLQODZLPSDLUV s$ DW   7KH &RXQFLO JDYH 3ODLQWLIIVj DWWRUQH\ DQ
WKDWFRQWUDFWXDOUHODWLRQVKLSDQGFZKHWKHUWKHLPSDLUPHQW RSSRUWXQLW\ WR VSHDN RQ WKHLU EHKDOI DQG DOVR UHFHLYHG
LVVXEVWDQWLDO*HQHUDO0RWRUVY5RPHLQ86 VWDWHPHQWV IURP FRQFHUQHG FRPPXQLW\ PHPEHUV  %XW QR
/LQWRQ)GDW,QWKHFDVHDWEDUWKHSDUWLHV IRUPDO HYLGHQWLDU\ KHDULQJ ZDV KHOG  7KH &RXQFLO
GLVDJUHHDERXWZKHWKHUDYDOLGFRQWUDFWXDOUHODWLRQVKLSH[LVWV XQDQLPRXVO\DSSURYHGWKHUHDVVLJQPHQWRIWKHOLTXRUOLFHQVH
%XWHYHQDVVXPLQJWKHH[LVWHQFHRIWKHUHTXLVLWHFRQWUDFWXDO DQG WKH GDQFH SHUPLW WR :RMFLN  +RZHYHU WKH &RXQFLO
UHODWLRQVKLSV3ODLQWLIIVjFODLPPXVWIDLOIRUQRFKDQJHLQ UHIXVHGWRWUDQVIHUWKHHQWHUWDLQPHQWSHUPLWGXHWRWKHIDFW
ODZ KDV RFFXUUHG  7KLV FRQFOXVLRQ KLQJHV XSRQ RXU WKDW WKH EDU ZDV ZLWKLQ  IHHW RI D FKXUFK RU VFKRRO
FKDUDFWHUL]DWLRQRIWKH&LW\&RXQFLOjVUHVROXWLRQGHQ\LQJWKH EXLOGLQJZKLFKLVSURKLELWHGE\D&LW\RI5RPXOXV]RQLQJ
WUDQVIHURIWKHHQWHUWDLQPHQWSHUPLW7KHPHUHSDVVDJHRID
UHVROXWLRQ LV QRWSHU VH D OHJLVODWLYH DFW QRU LV LW WUXH WKDW
PXQLFLSDOUHVROXWLRQVFDQQHYHUEHGHHPHGOHJLVODWLYHDFWV
,QVWHDGGHWHUPLQLQJZKHWKHUDUHVROXWLRQLVDOHJLVODWLYHDFW
GHSHQGVXSRQLWVFRQWHQW

:H ZLVK WR PHQWLRQ D IHZ RGGLWLHV VXUURXQGLQJ WKH &RXQFLOjV
$OWKRXJK D ORFDO OHJLVODWRU PD\ YRWH RQ DQ LVVXH WKDW UHVROXWLRQ )LUVW WKH &RXQFLO UHFRUGV PDNH QR PHQWLRQ RI WKH WUDQVIHU
DORQHGRHVQRWQHFHVVDULO\GHWHUPLQHWKDWKHRUVKHZDV UHTXHVW ILOHG E\ (GJDU ZKLFK ZDV DSSDUHQWO\ PRRW GXH WR WKH GHQLDO RI WKH
DFWLQJ LQ D OHJLVODWLYH FDSDFLW\ 5DWKHU m>Z@KHWKHU WUDQVIHU IURP *DPSS WR :RMFLN ,Q DGGLWLRQ QHLWKHU WKH &RXQFLOjV

DFWLRQVDUHLQODZDQGIDFWDQH[HUFLVHRIOHJLVODWLYH UHVROXWLRQ QRU WKH PLQXWHV IURP LWV PHHWLQJ UHIOHFW FRQVLGHUDWLRQ RI WKH

SRZHUGHSHQGVQRWRQWKHLUIRUPEXWXSRQµZKHWKHUWKH\ 6XQGD\ VDOHV SHUPLW %XW HYHQ PRUH SHUSOH[LQJ LV WKH IDFW WKDW WKH SDUWLHV

FRQWDLQ PDWWHU ZKLFK LV SURSHUO\ WR EH UHJDUGHG DV RQ DSSHDO KDYH GLIIHULQJ DFFRXQWV RI ZKDW WKH &RXQFLO DFWXDOO\ GHFLGHG DW

OHJLVODWLYHLQLWVFKDUDFWHUDQGHIIHFWjl,16Y&KDGKD
WKH $XJXVW   PHHWLQJ 3ODLQWLIIV FRQWHQG WKDW WKH &RXQFLO DSSURYHG
WUDQVIHU RI WKH OLTXRU OLFHQVH DQG 6XQGD\ VDOHV SHUPLW EXW UHIXVHG WR
866&W/(GG WUDQVIHU WKH GDQFH SHUPLW DQG HQWHUWDLQPHQW SHUPLW 7KH &RPPLVVLRQHUV

 GLVFXVVLQJ &RQJUHVVLRQDO DFWLRQ FLWDWLRQ RI WKH 0/&& FODLP WKDW WKH &RXQFLO RQO\ DSSURYHG WKH WUDQVIHU RI WKH

RPLWWHGm7KHHVVHQWLDOVRIWKHOHJLVODWLYHIXQFWLRQDUH OLTXRU OLFHQVH EXW YRWHG XQDQLPRXVO\ WR GHQ\ WKH HQWHUWDLQPHQW SHUPLW

WKH GHWHUPLQDWLRQ RI WKH OHJLVODWLYH SROLF\ DQG LWV 0HDQZKLOH 'HIHQGDQW &LW\ RI 5RPXOXV LWVHOI FRQWHQGV WKDW LWV &RXQFLO

IRUPXODWLRQDQGSURPXOJDWLRQDVDGHILQHGDQGELQGLQJ DSSURYHG WKH WUDQVIHU RI WKH OLTXRU OLFHQVH EXW GHQLHG WKH UHDVVLJQPHQW RI
WKH 6XQGD\ VDOHV DQG HQWHUWDLQPHQW SHUPLWV 7KH UHFRUG FRQWDLQV D FRS\
UXOHRIFRQGXFWlQ@R6WDWHVKDOOSDVVDQ\/DZ
DQGGLVPLVVHGWKHFDVHZLWKRXWSUHMXGLFH7KHFRXUWDGYLVHG LPSDLULQJWKH2EOLJDWLRQRI&RQWUDFWVl7KH6XSUHPH&RXUW
3ODLQWLIIVWREULQJDSURSHUO\ILOHGDFWLRQLQWKH:D\QH&RXQW\ KDV DGRSWHG D WKUHHSURQJ WHVW IRU FRQVLGHULQJ FODLPV RI
&LUFXLW&RXUWRULQWKHDOWHUQDWLYHWRDSSHDOWKH&RXQFLOjV FRQWUDFWLPSDLUPHQW&RXUWVPXVWGHWHUPLQHZKHWKHUD
GHFLVLRQ WR WKH &RXQFLO LWVHOI  7KH FRXUW DOVR GHQLHG SODLQWLII KDV VKRZQ mD VXEVWDQWLDO LPSDLUPHQWl RI D
3ODLQWLIIVjPRWLRQIRUUHFRQVLGHUDWLRQs$DW FRQWUDFWXDOUHODWLRQVKLSDVVXPLQJVXEVWDQWLDOLPSDLUPHQW
LVVKRZQZKHWKHUWKHVWDWHKDVDmVLJQLILFDQWDQGOHJLWLPDWH
SXEOLFSXUSRVHEHKLQGWKHUHJXODWLRQlDOOHJHGWRLPSDLUWKH
FRQWUDFWVXFKDVWKHmUHPHG\LQJRIDEURDGDQGJHQHUDOVRFLDO
RUHFRQRPLFSUREOHPlDQGDVVXPLQJDOHJLWLPDWHSXEOLF
SXUSRVHKDVEHHQLGHQWLILHGZKHWKHUDGMXVWPHQWRIULJKWVDQG
UHVSRQVLELOLWLHV RI FRQWUDFWLQJ SDUWLHV LV EDVHG XSRQ
UHDVRQDEOHFRQGLWLRQVDQGLVRIDFKDUDFWHUDSSURSULDWHWRWKH
 mSXEOLFSXUSRVHlMXVWLI\LQJWKHOHJLVODWLRQjVDGRSWLRQ(QHUJ\
$ 5RPXOXV ]RQLQJ RUGLQDQFH SURYLGHV WKDW D FDEDUHW VKDOO QRW EH
ORFDWHG ZLWKLQ  IHHW RI DQ\ PXOWLSOHIDPLO\ UHVLGHQWLDO ]RQH D SXEOLF 5HVHUYHV*URXS,QFY.DQVDV3RZHU /LJKW&R86
RU SULYDWH VFKRRO FKXUFK RU RWKHU UHOLJLRXV IDFLOLW\ RU LQVWLWXWLRQ D SXEOLF    /LQWRQ E\ $UQROG Y &RPPLVVLRQHU RI
SDUN RU ZLWKLQ  IHHW RI DQ\ RWKHU DGXOW XVH 5 208/86  0, &2'( +HDOWKDQG(QYLURQPHQW6WDWHRI7HQQ)G
DUW ;,9 † ) s $ DW   7KLV RUGLQDQFH ZDV ODWHU
DPHQGHG WR H[FOXGH WKH SURVFULEHG DFWLYLWLHV IURP DUHDV ZLWKLQ  IHHW
WK&LU,QDVPXFKDV3ODLQWLIIVFDQQRWVDWLVI\WKHILUVW
RI WKH DIRUHPHQWLRQHG LQVWLWXWLRQV s$ DW  $ FDEDUHW LV GHILQHG
SURQJRIWKLVWHVWWKHLUFODLPFDQQRWVXFFHHG
m>D@Q HVWDEOLVKPHQW ZKLFK SHUPLWV WRSOHVV DQGRU ERWWRPOHVV GDQFHUV JR
JR GDQFHUV VWULSSHUV H[RWLF GDQFHUV PDOH RU IHPDOH LPSHUVRQDWRUV RU
VLPLODU HQWHUWDLQHUVl s$ DW 
 :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO 

%XQQY0LFKLJDQ/LTXRU&RQWURO&RPPLVVLRQ1:G ,QVWHDGRIEULQJLQJDSURSHUO\ILOHGFODLPRUDSSHDOLQJWR
0LFK&W$SSWKH0LFKLJDQ&RXUWRI$SSHDOV WKH&RXQFLOIRUUHFRQVLGHUDWLRQ3ODLQWLIIVILOHGVXLWDJDLQVW
IRXQG WKDW SODLQWLIIV ZKR KDG D VHFXULW\ LQWHUHVW LQ OLTXRU WKH&LW\DQGWKH0/&&LQWKH8QLWHG6WDWHV'LVWULFW&RXUWIRU
OLFHQVHV ZHUH HQWLWOHG WR UXGLPHQWDU\ GXH SURFHVV  7KH WKH(DVWHUQ'LVWULFWRI0LFKLJDQRQ$SULOFODLPLQJ
SODLQWLIIV VROG WKH OLFHQVHV DORQJ ZLWK WKHLU EXVLQHVVHV DQG FRQVWLWXWLRQDOYLRODWLRQVDQGDSURSHUW\ULJKWLQWKHWUDQVIHURI
WKHUHIRUHUHWDLQHGDUHYHUVLRQDU\LQWHUHVWLQWKHOLFHQVHVYLD WKH OLTXRU OLFHQVH DQG WKH UHODWHG SHUPLWV  2Q 0DUFK 
WKHUHVSHFWLYHVHFXULW\DJUHHPHQWV%XWLQERWKRIWKRVHFDVHV DW3ODLQWLIIVjUHTXHVWWKHGLVWULFWFRXUWGLVPLVVHGWKH
WKHLQGLYLGXDOVZLWKWKHVHFXULW\LQWHUHVWVZHUHWKHSUHYLRXV 0/&&DVDSDUW\DQGVXEVWLWXWHGWKH&RPPLVVLRQHUVRIWKH
RZQHUVRIWKRVHOLFHQVHV&RQYHUVHO\LQWKHFDVHDWEDUZKLOH 0/&&DVLQGLYLGXDOGHIHQGDQWVs$DW3ODLQWLIIV
0UV:RMFLNRQFHRZQHGWKHOLTXRUOLFHQVHQHLWKHUVKHQRU VXEVHTXHQWO\ ILOHG D VHFRQG FRPSODLQW RQ $SULO  
DQ\ RI WKH RWKHU SODLQWLIIV HYHU RZQHG WKH HQWHUWDLQPHQW DVVHUWLQJVLPLODUFRQVWLWXWLRQDOFODLPVSXUVXDQWWR86&
SHUPLW UDWKHU *DPSS DORQH DSSOLHG IRU DQG REWDLQHG WKH †7KHILUVWDQGVHFRQGDFWLRQVZHUHODWHUFRQVROLGDWHG
HQWHUWDLQPHQWSHUPLW7KXV0UV:RMFLNFRXOGQRWKDYHKDG E\DQXQFSURWXQFRUGHURIWKHGLVWULFWFRXUWs$DW
DUHYHUVLRQDU\LQWHUHVWLQDQHQWHUWDLQPHQWSHUPLWVKHQHYHU
SRVVHVVHG7KLVIDFWGLVWLQJXLVKHVWKHLQVWDQWFDVHIURPERWK 2Q$SULODIWHUOLWLJDWLRQLQWKHGLVWULFWFRXUWZDV
%DUUDQG%XQQ ZHOOXQGHUZD\WKH&RPPLVVLRQHUVRIWKH0/&&LVVXHGDQ
RUGHUWUDQVIHUULQJWKHOLTXRUOLFHQVHDQGVRPHRIWKHUHTXHVWHG
)XUWKHUPRUH 3ODLQWLIIV FDQQRW SRLQW WR DQ\ RIILFLDO SHUPLWVGDQFHDQG6XQGD\VDOHVWRWKH7UXVWEXWWKHWUDQVIHU
JXDUDQWHHVRULPSOLFLWSURPLVHVPDGHE\WKH&LW\RUHYHQWKH RI WKH HQWHUWDLQPHQW SHUPLW ZDV FRQGLWLRQHG XSRQ WKH
0/&& WKDW WKH\ ZRXOG EH HQWLWOHG WR D WUDQVIHU RI WKH UHVROXWLRQRIDOOOLWLJDWLRQEHWZHHQWKHSDUWLHV
HQWHUWDLQPHQWSHUPLW,QERWKWKH%DUUDQG%XQQFDVHVWKH
LQLWLDOWUDQVIHURIWKHOLFHQVHVZDVDFWXDOO\DSSURYHGE\WKH 2Q2FWREHUWKHGLVWULFWFRXUWGLVPLVVHGWKHFDVH
JRYHUQPHQW DXWKRULWLHV DORQJ ZLWK WKH VDOH RI WKH XQGHU WKH 5RRNHU)HOGPDQ GRFWULQH ILQGLQJ WKDW LW ODFNHG
HVWDEOLVKPHQWV,QVXFKDFLUFXPVWDQFHWKHSDUW\FODLPLQJD VXEMHFWPDWWHUMXULVGLFWLRQWRFRQVLGHU3ODLQWLIIVjFODLPV6HH
VHFXULW\ LQWHUHVW FRXOG OHJLWLPDWHO\ H[SHFW WR UHFHLYH EDFN 5RRNHUY)LGHOLW\7UXVWV&R86'LVWULFW
ZKDW LW RQFH KDG  %XQQ  1:G DW  m>%@HFDXVH RI &ROXPELD &RXUW RI $SSHDOV Y )HOGPDQ  86 
SODLQWLIIjV VDOH RI WKH EXVLQHVV LQFOXGLQJ WKH XQGHUO\LQJ 8QLWHG6WDWHVY2ZHQV)GWK&LU
FRQWUDFWXDODUUDQJHPHQWVZDVDSSURYHGE\WKH0/&&KLV
H[SHFWDWLRQ RI UHWUDQVIHU VKRXOG DQ\ SUREOHPV DULVH ZDV
OHJLWLPDWHl FI 3HUU\ Y 6LQGHUPDQ  86  
 KROGLQJ WKDW D VWDWHG SROLF\ RU D PXWXDOO\ H[SOLFLW
XQGHUVWDQGLQJPD\VXSSRUWDFODLPRIHQWLWOHPHQWWRDEHQHILW
WKDWZRXOGWULJJHUGXHSURFHVVSURWHFWLRQV+RZHYHULQWKH 
3ODLQWLIIV DUJXHG RQ PRWLRQ IRU UHFRQVLGHUDWLRQ EHIRUH WKH :D\QH
LQVWDQW FDVH 3ODLQWLIIV DUH IRU WKH ILUVW WLPH VHHNLQJ &RXQW\ &LUFXLW &RXUW WKDW WKHUH ZDV QR ULJKW WR DSSHDO IURP D 5RPXOXV
JRYHUQPHQWDODSSURYDORIWKHWUDQVIHURIWKHHQWHUWDLQPHQW &LW\ &RXQFLO GHFLVLRQ s$ DW 
SHUPLW3ODLQWLIIVKDYHEHHQRUVKRXOGKDYHEHHQDZDUHDW

HYHU\VWDJHRIWKLVOLWLJDWLRQWKDWDSSURYDORIWKH0/&&ZDV 7KH OLTXRU OLFHQVH DQG DOO UHODWHG SHUPLWV LQFOXGLQJ WKH
UHTXLUHGDQGWKDWVXFKDSSURYDOZDVSUHGLFDWHGXSRQDSSURYDO HQWHUWDLQPHQW SHUPLW DUH EHLQJ KHOG LQ HVFURZ SHQGLQJ UHVROXWLRQ RI WKLV
OLWLJDWLRQ
 :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO 

3ODLQWLIIVDSSHDOHGDQGRQ$SULOWKLV&RXUW RIDVHFXULW\LQWHUHVWDQGWKHIDFWWKDWVHFXULW\LQWHUHVWVDUH
UHYHUVHGILQGLQJWKDWWKHDFWLRQZDVQRWEDUUHGE\WKH5RRNHU JHQHUDOO\FRQVLGHUHGSURSHUW\0LFKLJDQFRXUWVKDYH\HWWR
)HOGPDQ GRFWULQH DQG UHPDQGLQJ IRU SURFHHGLQJV RQ WKH GLUHFWO\FRQIURQWWKHTXHVWLRQRIZKHWKHUDVHFXUHGFUHGLWRU
PHULWV:RMFLNY&LW\RI5RPXOXV1R:/ KDVDFRQVWLWXWLRQDOO\SURWHFWHGSURSHUW\LQWHUHVWSULRUWRWKH
WK&LU$SU$IWHUUHPDQGWRWKHGLVWULFW WUDQVIHU RI D OLTXRU OLFHQVH RU D UHODWHG SHUPLW  $V SDUWLHV
FRXUW 3ODLQWLIIV DQG 'HIHQGDQWV ILOHG FURVVPRWLRQV IRU UHTXHVWLQJWKHWUDQVIHURIDQHQWHUWDLQPHQWSHUPLW3ODLQWLIIV
VXPPDU\MXGJPHQW2Q1RYHPEHUWKHGLVWULFWFRXUW ZHUH HVVHQWLDOO\ LQ WKH SRVLWLRQ RI QHZ DSSOLFDQWV IRU WKH
JUDQWHG'HIHQGDQWVjVXPPDU\MXGJPHQWPRWLRQEXWGHQLHG HQWHUWDLQPHQWSHUPLWDQGGLGQRWKDYHDSURSHUW\LQWHUHVWVR
3ODLQWLIIVjPRWLRQ3ODLQWLIIVQRZDSSHDOIURPWKDWGHFLVLRQ DVWR HQWLWOHWKHPWRSURFHGXUDORUVXEVWDQWLYHGXHSURFHVV
ULJKWVLQWKHVDPHZD\WKDWDQH[LVWLQJSHUPLWKROGHUPLJKW
,, GHPDQG
7KLV&RXUWUHYLHZVDJUDQWRIVXPPDU\MXGJPHQWGHQRYR ,Q8QGHUJURXQG)OLQWWKHGLVWULFWFRXUWUHFRJQL]HGWKDWWKH
XVLQJWKHVDPHOHJDOVWDQGDUGHPSOR\HGE\WKHGLVWULFWFRXUW WUDQVIHURIDOLTXRUOLFHQVHPD\VWLOOEHVXEMHFWWRWKHDSSURYDO
KRZHYHU ZH UHYLHZ WKH GHQLDO RI D VXPPDU\ MXGJPHQW RI D VWDWH DJHQF\  2I FRXUVH WKLV UHVWULFWLRQ GRHV QRW
PRWLRQRQO\IRUDEXVHRIGLVFUHWLRQ:LOH\Y8QLWHG6WDWHV FRPSOHWHO\ LQKLELW WKH DOLHQDELOLW\ RI VXFK OLFHQVHV
 )G   WK &LU   6XPPDU\ MXGJPHQW LV 8QGHUJURXQG)OLQW%5DWm:KLOHLWLVWUXHWKDWWKH
DSSURSULDWH ZKHUH mWKH SOHDGLQJV GHSRVLWLRQV DQVZHUV WR DSSURSULDWHVWDWHDJHQF\PXVWDSSURYHWKHWUDQVIHURIDOLTXRU
LQWHUURJDWRULHV DQG DGPLVVLRQV RQ ILOH WRJHWKHU ZLWK WKH OLFHQVH WKLV GRHV QRW SUHFOXGH WKH WUXVWHH IURP VHOOLQJ WKH
DIILGDYLWVLIDQ\VKRZWKDWWKHUHLVQRJHQXLQHLVVXHDVWRDQ\ OLFHQVHWRDWKLUGSDUW\FRQWLQJHQWXSRQWKHDSSURYDORIWKH
PDWHULDO IDFW DQG WKDW WKH PRYLQJ SDUW\ LV HQWLWOHG WR D DJHQF\l  %XW WKLV KROGLQJ VWRSV VKRUW RI JUDQWLQJ D
MXGJPHQWDVDPDWWHURIODZl)(' 5 &,9 3F&HORWH[ FRQVWLWXWLRQDOO\ SURWHFWHG SURSHUW\ LQWHUHVW LQ WKDW OLFHQVH
&RUSY&DWUHWW86(VWDWHRI'LHWULFK SULRU WR JRYHUQPHQW DSSURYDO  :H EHOLHYH WKDW WKH VDPH
Y%XUURZV)GWK&LU  1RW DOO SULQFLSOHDSSOLHVWRDVVLJQPHQWRIHQWHUWDLQPHQWSHUPLWV$V
IDFWV DUH FRQVLGHUHG PDWHULDO D IDFW LV RQO\ PDWHULDO LI LWV SUHYLRXVO\ VWDWHG DVVLJQPHQW RI HQWHUWDLQPHQW SHUPLWV
UHVROXWLRQZLOODIIHFWWKHRXWFRPHRIWKHODZVXLW$QGHUVRQY UHTXLUHV DSSURYDO RI WKH 0/&&  ,Q WXUQ WKH 0/&&
/LEHUW\ /REE\ ,QF  86     :KHQ UHJXODWLRQV H[SOLFLWO\ UHTXLUH SULRU PXQLFLSDO DSSURYDO
UHYLHZLQJFURVVPRWLRQVIRUVXPPDU\MXGJPHQWZHHYDOXDWH 7KHUHIRUH WKH DSSURYDO RI WKH 0/&& DQG WKH &LW\ RI
HDFK PRWLRQ RQ LWV RZQ PHULWV DQG YLHZ DOO IDFWV DQG 5RPXOXV ZHUH H[SOLFLW FRQGLWLRQV SUHFHGHQW WR 3ODLQWLIIVj
LQIHUHQFHVLQWKHOLJKWPRVWIDYRUDEOHWRWKHQRQPRYLQJSDUW\ DFTXLULQJDFRQVWLWXWLRQDOO\SURWHFWHGSURSHUW\LQWHUHVWLQWKH
7DIW%URDGFDVWLQJ&RY8QLWHG6WDWHV)G HQWHUWDLQPHQWSHUPLW6HHHJ%LVFRjV1:GDW
QUHFRJQL]LQJWKDWDVWDWHPD\SODFHUHDVRQDEOHFRQGLWLRQV
RQOLFHQVHV8QGHUWKHVHIDFWV3ODLQWLIIVFDQQRWEHVDLGWR
 KROGDUHFRJQL]HGSURSHUW\LQWHUHVW
7KH 5RRNHU)HOGPDQ GRFWULQH LV mD FRPELQDWLRQ RI WKH DEVWHQWLRQ
DQG UHV MXGLFDWD GRFWULQHV >ZKLFK@ VWDQGV IRU WKH SURSRVLWLRQ WKDW D IHGHUDO
GLVWULFW FRXUW PD\ QRW KHDU DQ DSSHDO RI D FDVH DOUHDG\ OLWLJDWHG LQ VWDWH
2XU KROGLQJ LV VXSSRUWHG E\ D FORVH UHDGLQJ RI VRPH
FRXUW $ SDUW\ UDLVLQJ D IHGHUDO TXHVWLRQ PXVW DSSHDO D VWDWH FRXUW GHFLVLRQ 0LFKLJDQFDVHVFLWHGE\3ODLQWLIIV,QERWK%DUUY3RQWLDF
WKURXJK WKH VWDWH V\VWHP DQG WKHQ GLUHFWO\ WR WKH 6XSUHPH &RXUW RI WKH &LW\&RPPLVVLRQ1:G0LFK&W$SSDQG
8QLWHG 6WDWHVl 2ZHQV   )G DW 
 :RMFLNHWDOY&LW\RI5RPXOXVHWDO 1R 1R :RMFLNHWDOY&LW\RI5RPXOXVHWDO 

KDV DFTXLUHG DQ LQWHUHVW µVHFXUHG E\ H[LVWLQJ UXOHV RU WK&LUVHHDOVR0DWVXVKLWD(OHF,QG&RY=HQLWK
XQGHUVWDQGLQJ>Vj@l ,G DW  Q  ,Q DGGLWLRQ D VHFXULW\ 5DGLR&RUS86
LQWHUHVW JHQHUDOO\ FRQVWLWXWHV D FRQVWLWXWLRQDOO\ SURWHFWHG
SURSHUW\ ULJKW DQG XQGHU 0LFKLJDQ ODZ LQGLYLGXDOV PD\ 2QDSSHDO3ODLQWLIIVFRQWHQGWKDWWKHGLVWULFWFRXUWHUUHGE\
REWDLQDVHFXULW\LQWHUHVWLQDOLTXRUOLFHQVH8QGHUJURXQG IDLOLQJWRILQGWKDWWKHUHZDVDTXHVWLRQRIIDFWDVWRZKHWKHU
)OLQW,QFY9LUR,QF%5('0LFKFI 'HIHQGDQWV YLRODWHG WKHLU FRQVWLWXWLRQDO ULJKWV LQ
,QUH7HUZLOOLJHUjV&DWHULQJ3OXV,QF)G FRQWUDYHQWLRQ RI  86& †   ,Q RUGHU WR DVVHUW D
WK &LU  m,W LV XQGHQLDEOH WKDW D OLTXRU OLFHQVH KDV VXFFHVVIXOFODLPXQGHU†DSODLQWLIIPXVWVKRZWKDWWKH
SHFXQLDU\ YDOXH WR LWV KROGHU VLQFH WKH OLFHQVH HQDEOHV WKH GHIHQGDQWDFWHGmXQGHUFRORURIDQ\VWDWXWHRUGLQDQFH
KROGHUWRVHOODOFRKROLFEHYHUDJHVDQGFDQEHVROGIRUYDOXH UHJXODWLRQFXVWRPRUXVDJHRIDQ\VWDWHlDQGWKDWWKLV
6LQFHWKHVWDWHKDVYHVWHGWKHRZQHURIDOLTXRUOLFHQVHZLWK DFWLRQ GHSULYHG WKH SODLQWLIIV RI mDQ\ ULJKWV SULYLOHJHV RU
WKHVH EHQHILFLDO LQWHUHVWV D OLTXRU OLFHQVH FRQVWLWXWHV LPPXQLWLHVVHFXUHGE\WKH&RQVWLWXWLRQDQGWKHODZVlRIWKH
µSURSHUW\j RU µULJKWV WR SURSHUW\j ZLWKLQ WKH PHDQLQJ RI 8QLWHG6WDWHV$OWKRXJKWKHGLVWULFWFRXUWGHWHUPLQHGWKDWWKH
IHGHUDOWD[OLHQODZl &RPPLVVLRQHUVDQGWKH&LW\RI5RPXOXVZHUHVXEMHFWWRVXLW
LWXOWLPDWHO\GHFLGHGWKDW3ODLQWLIIVLQWKHLQVWDQWFDVHIDLOHG
%XWLQ6KDPLHY&LW\RI3RQWLDF)GWK&LU WRVKRZDQ\GHSULYDWLRQRIWKHLUFRQVWLWXWLRQDOULJKWV
WKLV&RXUWKHOGWKDWDILUVWWLPHOLTXRUOLFHQVHDSSOLFDQW
ZDV QRW HQWLWOHG WR SURFHGXUDO GXH SURFHVV ULJKWV XQGHU 3ODLQWLIIV DOOHJH WKDW 'HIHQGDQWV YLRODWHG WKHLU
0LFKLJDQODZ FRQVWLWXWLRQDOULJKWVE\LPSDLULQJFRQWUDFWXDOREOLJDWLRQV
LQYLRODWLRQRI$UWLFOH,†RIWKH&RQVWLWXWLRQGHSULYLQJ
>8@QGHU0LFKLJDQODZDQDSSOLFDQWIRUDOLTXRUOLFHQVH 3ODLQWLIIVRIWKHLUSURSHUW\ZLWKRXWSURFHGXUDODQGVXEVWDQWLYH
DVGLVWLQJXLVKHGIURPDOLFHQVHKROGHUIDFLQJUHQHZDORU GXH SURFHVV DV JXDUDQWHHG E\ WKH )LIWK $PHQGPHQW DQG
UHYRFDWLRQ SURFHHGLQJV GRHV QRW KDYH D SURWHFWHG YLRODWLQJ3ODLQWLIIVjULJKWVWRIUHHGRPRIVSHHFKSURWHFWHG
LQWHUHVW7KHKROGHURIDOLTXRUOLFHQVHPD\ZHOOKDYHD E\WKH)LUVW$PHQGPHQW3ODLQWLIIVUHTXHVWWKDWWKLV&RXUW
OHJLWLPDWH FODLP RI HQWLWOHPHQW WR LWV UHQHZDO  2QH UHYHUVHWKHGLVWULFWFRXUWjVMXGJPHQWDQGHQWHUMXGJPHQWLQ
DSSO\LQJ IRU D OLTXRU OLFHQVH KDV QR VXFK FODLP RI WKHLUIDYRURUGHULQJ'HIHQGDQWVWRWUDQVIHUWKHHQWHUWDLQPHQW
HQWLWOHPHQW  ,Q WKH IRUPHU FDVH WKHUH LV D µSURSHUW\j SHUPLW IURP *DPSS WR :RMFLN DQG WKHQ IURP :RMFLN WR
LQWHUHVWLQWKHODWWHUWKHUHLVQRQH (GJDU  3ODLQWLIIV DOVR VHHN D MXGJPHQW DOORZLQJ WKHP WR
SUHVHQW WHVWLPRQ\ WR HVWDEOLVK GDPDJHV  ,Q UHYLHZ RI WKH
6KDPLHY&LW\RI3RQWLDF)6XSS('0LFK SDUWLHVj DUJXPHQWV RQ DSSHDO ZH EHOLHYH WKDW VXPPDU\
 DIIjG LQ SDUW  )G   6LPLODUO\ ILUVWWLPH MXGJPHQWLQIDYRURI'HIHQGDQWVZDVSURSHU
DSSOLFDQWV IRU DQ HQWHUWDLQPHQW SHUPLW DUH OLNHZLVH QRW
HQWLWOHGWRGXHSURFHVV%UDGILHOGY%OHVPD)6XSS
:'0LFK
,Q WKH LQVWDQW FDVH 0UV :RMFLN FODLPV WR KDYH D 
UHFRJQL]HG SURSHUW\ LQWHUHVW LQ WKH WUDQVIHU RI DQ ,Q WKH GLVWULFW FRXUW 3ODLQWLIIV DOVR DVVHUWHG D FODLP XQGHU WKH
7DNLQJV &ODXVH RI WKH )LIWK $PHQGPHQW +RZHYHU WKH\ KDYH IDLOHG WR
HQWHUWDLQPHQWSHUPLWZKLFKVKHKDVQHYHUKHOG'HVSLWHWKH EULHI RU HYHQ PHQWLRQ WKLV LVVXH DQG KDYH WKHUHIRUH ZDLYHG LW RQ DSSHDO
IDFWWKDWDOLTXRUOLFHQVHRUUHODWHGSHUPLWPD\EHWKHVXEMHFW 7KXUPDQ Y